form10-q.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
(Mark one)
x
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

o
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________________ to __________________

Commission File Number 1-6364

SOUTH JERSEY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

New Jersey
22-1901645
(State of incorporation)
(IRS employer identification no.)
1 South Jersey Plaza, Folsom, NJ 08037
(Address of principal executive offices, including zip code)

(609) 561-9000
(Registrant’s telephone number, including area code)
Common Stock
 
($1.25 par value per share)
New York Stock Exchange
(Title of each class)
(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   T
 
Accelerated filer                      £
Non-accelerated filer     £ (Do not check if a smaller reporting company)
 
Smaller reporting company    £
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £  No T

As of November 2, 2009, there were 29,796,232 shares of the registrant’s common stock outstanding.



 
SJI - 1

 

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements - See Pages 3 through 35
 
SJI - 2

 
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
 
             
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
(In Thousands Except for Per Share Data)
 
             
   
Three Months Ended
 
   
September 30,
 
   
2009
   
2008
 
             
             
Operating Revenues:
           
Utility
  $ 55,958     $ 63,687  
Nonutility
    71,129       146,726  
                 
Total Operating Revenues
    127,087       210,413  
                 
Operating Expenses:
               
Cost of Sales - (Excluding depreciation)
               
- Utility
    31,377       40,324  
- Nonutility
    63,751       61,935  
Operations
    20,044       17,923  
Maintenance
    2,301       1,925  
Depreciation
    7,880       7,333  
Energy and Other Taxes
    1,649       1,646  
                 
Total Operating Expenses
    127,002       131,086  
                 
Operating Income
    85       79,327  
                 
Other Income and Expense
    294       437  
                 
Interest Charges
    (5,298 )     (5,745 )
                 
(Loss) Income Before Income Taxes
    (4,919 )     74,019  
                 
Income Taxes
    3,206       (30,367 )
                 
Equity in Earnings of Affiliated Companies
    (314 )     147  
                 
(Loss) Income  from Continuing Operations
    (2,027 )     43,799  
                 
Loss from Discontinued Operations - (Net of tax benefit)
    (16 )     (76 )
                 
Net (Loss) Income
    (2,043 )     43,723  
                 
Less: Net Loss Attributable to Noncontrolling Interest in Subsidiaries
    169       59  
                 
Net (Loss) Income  - Attributable to South Jersey Industries, Inc.
  $ (1,874 )   $ 43,782  
                 
Amounts Attributable to South Jersey Industries, Inc. Shareholders
               
(Loss) Income from Continuing Operations
  $ (1,858 )   $ 43,858  
Loss from Discontinued Operations - (Net of tax benefit)
    (16 )     (76 )
                 
Net (Loss) Income
  $ (1,874 )   $ 43,782  
                 
Basic Earnings Per Common Share Attributable to South Jersey Industries, Inc. Shareholders:
               
Continuing Operations
  $ (0.062 )   $ 1.475  
Discontinued Operations
    (0.001 )     (0.002 )
                 
Basic Earnings Per Common Share
  $ (0.063 )   $ 1.473  
                 
Average Shares of Common Stock Outstanding - Basic
    29,796       29,729  
                 
Diluted Earnings Per Common Share Attributable to South Jersey Industries, Inc. Shareholders:
               
Continuing Operations
  $ (0.062 )   $ 1.469  
Discontinued Operations
    (0.001 )     (0.003 )
                 
Diluted Earnings Per Common Share
  $ (0.063 )   $ 1.466  
                 
Average Shares of Common Stock Outstanding - Diluted
    29,796       29,865  
                 
Dividends Declared per Common Share
  $ 0.298     $ 0.270  
                 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
         

 
SJI - 3

 

SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
 
             
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
(In Thousands Except for Per Share Data)
 
             
   
Nine Months Ended
 
   
September 30,
 
   
2009
   
2008
 
             
             
Operating Revenues:
           
Utility
  $ 360,522     $ 393,262  
Nonutility
    263,224       301,038  
                 
Total Operating Revenues
    623,746       694,300  
                 
Operating Expenses:
               
Cost of Sales - (Excluding depreciation)
               
- Utility
    223,876       261,604  
- Nonutility
    227,392       231,141  
Operations
    65,034       56,805  
Maintenance
    6,162       5,412  
Depreciation
    23,169       21,758  
Energy and Other Taxes
    8,483       8,628  
                 
Total Operating Expenses
    554,116       585,348  
                 
Operating Income
    69,630       108,952  
                 
Other Income and Expense
    638       1,070  
                 
Interest Charges
    (14,303 )     (17,246 )
                 
Income Before Income Taxes
    55,965       92,776  
                 
Income Taxes
    (20,068 )     (38,245 )
                 
Equity in Earnings of Affiliated Companies
    (1,247 )     593  
                 
Income from Continuing Operations
    34,650       55,124  
                 
Loss from Discontinued Operations - (Net of tax benefit)
    (58 )     (101 )
                 
Net Income
    34,592       55,023  
                 
Less: Net Loss Attributable to Noncontrolling Interest in Subsidiaries
    145       165  
                 
Net Income - Attributable to South Jersey Industries, Inc.
  $ 34,737     $ 55,188  
                 
Amounts Attributable to South Jersey Industries, Inc. Shareholders
               
Income from Continuing Operations
  $ 34,795     $ 55,289  
Loss from Discontinued Operations - (Net of tax benefit)
    (58 )     (101 )
                 
Net Income
  $ 34,737     $ 55,188  
                 
Basic Earnings Per Common Share Attributable to South Jersey Industries, Inc. Shareholders:
               
Continuing Operations
  $ 1.168     $ 1.862  
Discontinued Operations
    (0.002 )     (0.004 )
                 
Basic Earnings Per Common Share
  $ 1.166     $ 1.858  
                 
Average Shares of Common Stock Outstanding - Basic
    29,782       29,699  
                 
Diluted Earnings Per Common Share Attributable to South Jersey Industries, Inc. Shareholders:
               
Continuing Operations
  $ 1.164     $ 1.854  
Discontinued Operations
    (0.002 )     (0.004 )
                 
Diluted Earnings Per Common Share
  $ 1.162     $ 1.850  
                 
Average Shares of Common Stock Outstanding - Diluted
    29,885       29,828  
                 
Dividends Declared per Common Share
  $ 0.893     $ 0.810  
                 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
         

 
SJI - 4

 

SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
 
             
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
(In Thousands)
 
             
   
Three Months Ended
 
   
September 30,
 
   
2009
   
2008
 
             
             
Net (Loss) Income
  $ (2,043 )   $ 43,723  
                 
Other Comprehensive Loss, Net of Tax:*
               
                 
Unrealized Gain (Loss) on Available-for-Sale Securities
    344       (355 )
Unrealized Loss on Derivatives - Other
    (339 )     (20 )
Other Comprehensive Loss of Affiliated Companies
    (600 )     (347 )
                 
Other Comprehensive Loss - Net of Tax*
    (595 )     (722 )
                 
Comprehensive (Loss) Income
    (2,638 )     43,001  
                 
Less: Comprehensive Loss Attributable to Noncontrolling Interest in Subsidiaries
    169       59  
                 
Comprehensive (Loss) Income Attributable to South Jersey Industries, Inc.
  $ (2,469 )   $ 43,060  
                 
                 
   
Nine Months Ended
 
   
September 30,
 
    2009     2008  
                 
                 
Net Income
  $ 34,592     $ 55,023  
                 
Other Comprehensive Income (Loss), Net of Tax:*
               
                 
Unrealized Gain (Loss) on Available-for-Sale Securities
    441       (635 )
Unrealized Gain on Derivatives - Other
    605       499  
Other Comprehensive Income (Loss) of Affiliated Companies
    1,800       (154 )
                 
Other Comprehensive Income (Loss)- Net of Tax*
    2,846       (290 )
                 
Comprehensive Income
    37,438       54,733  
                 
Less: Comprehensive Loss Attributable to Noncontrolling Interest in Subsidiaries
    145       165  
                 
Comprehensive Income Attributable to South Jersey Industries, Inc.
  $ 37,583     $ 54,898  
                 
                 
* Determined using a combined statutory tax rate of 41.08%.
               
                 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
         

 
SJI - 5

 

SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
 
             
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
(In Thousands)
 
   
Nine Months Ended
 
   
September 30,
 
   
2009
   
2008
 
             
             
Net Cash Provided by Operating Activities
  $ 121,591     $ 32,072  
                 
Cash Flows from Investing Activities:
               
Capital Expenditures
    (61,314 )     (45,048 )
Net Proceeds from (Purchase of) Restricted Investments in Margin Account
    28,958       (11,150 )
Purchase of Restricted Investments with Escrowed Loan Proceeds
    -       (75 )
Investment in Long-Term Receivables
    (3,486 )     (2,857 )
Proceeds from Long-Term Receivables
    3,633       2,923  
Purchase of Company Owned Life Insurance
    (4,444 )     (4,287 )
Investment in Affiliate
    (2,436 )     (781 )
Advances on Notes Receivable - Affiliate
    (11,647 )     (4,832 )
Repayment of Notes Receivable - Affiliate
    1,100       -  
Other
    175       -  
                 
Net Cash Used in Investing Activities
    (49,461 )     (66,107 )
                 
Cash Flows from Financing Activities:
               
Net (Repayments of) Borrowings from Lines of Credit
    (56,750 )     40,835  
Proceeds from Issuance of Long-Term Debt
    -       25,000  
Payments for Issuance of Long-Term Debt
    (96 )     (247 )
Principal Repayments of Long-Term Debt
    (100 )     (25,079 )
Dividends on Common Stock
    (17,729 )     (16,042 )
Proceeds from Sale of Common Stock
    -       2,076  
                 
Net Cash (Used in) Provided by Financing Activities
    (74,675 )     26,543  
                 
Net Decrease in Cash and Cash Equivalents
    (2,545 )     (7,492 )
Cash and Cash Equivalents at Beginning of Period
    5,775       11,678  
                 
Cash and Cash Equivalents at End of Period
  $ 3,230     $ 4,186  
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
               

 
SJI - 6

 
 
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Thousands)
 
   
September 30,
   
December 31,
 
   
2009
   
2008
 
             
             
Assets
           
             
Property, Plant and Equipment:
           
Utility Plant, at original cost
  $ 1,224,350     $ 1,172,014  
Accumulated Depreciation
    (309,473 )     (295,432 )
Nonutility Property and Equipment, at cost
    127,594       121,658  
Accumulated Depreciation
    (18,778 )     (15,632 )
                 
Property, Plant and Equipment - Net
    1,023,693       982,608  
                 
Investments:
               
Available-for-Sale Securities
    5,712       4,859  
Restricted
    2,140       31,098  
Investment in Affiliates
    2,310       1,966  
                 
Total Investments
    10,162       37,923  
                 
Current Assets:
               
Cash and Cash Equivalents
    3,230       5,775  
Accounts Receivable
    112,039       121,683  
Unbilled Revenues
    17,266       52,907  
Provision for Uncollectibles
    (6,743 )     (5,757 )
Natural Gas in Storage, average cost
    112,963       162,387  
Materials and Supplies, average cost
    13,993       12,778  
Prepaid Taxes
    25,789       14,604  
Derivatives - Energy Related Assets
    45,656       63,201  
Other Prepayments and Current Assets
    7,536       7,506  
                 
Total Current Assets
    331,729       435,084  
                 
Regulatory and Other Noncurrent Assets:
               
Regulatory Assets
    246,791       270,434  
Derivatives - Energy Related Assets
    13,141       19,712  
Unamortized Debt Issuance Costs
    6,844       7,166  
Notes Receivable - Affiliates
    18,003       7,457  
Contract Receivables
    13,194       13,565  
Other
    23,044       19,478  
                 
Total Regulatory and Other Noncurrent Assets
    321,017       337,812  
                 
Total Assets
  $ 1,686,601     $ 1,793,427  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

 
SJI - 7

 
 
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
 
             
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
(In Thousands)
 
             
             
   
September 30,
   
December 31,
 
   
2009
   
2008
 
             
             
Capitalization and Liabilities
           
             
Common Equity:
           
Common Stock
  $ 37,245     $ 37,161  
Premium on Common Stock
    253,643       252,495  
Treasury Stock (at par)
    (171 )     (176 )
Accumulated Other Comprehensive Loss
    (21,353 )     (24,199 )
Retained Earnings
    258,116       249,973  
                 
Total South Jersey Industries, Inc. Shareholders' Equity
    527,480       515,254  
                 
Noncontrolling Interest in Subsidiaries
    1,048       1,194  
                 
Total Equity
    528,528       516,448  
                 
Long-Term Debt
    332,684       332,784  
                 
Total Capitalization
    861,212       849,232  
                 
Current Liabilities:
               
Notes Payable
    155,800       212,550  
Current Portion of Long-Term Debt
    25,112       25,112  
Accounts Payable
    65,672       120,162  
Customer Deposits and Credit Balances
    19,914       14,449  
Environmental Remediation Costs
    18,604       13,670  
Taxes Accrued
    4,864       5,510  
Derivatives - Energy Related Liabilities
    32,372       50,925  
Deferred Income Taxes - Net
    20,246       25,009  
Deferred Contract Revenues
    6,924       5,840  
Dividends Payable
    8,864       -  
Interest Accrued
    4,797       6,519  
Pension and Other Postretirement Benefits
    1,031       1,031  
Other Current Liabilities
    12,522       19,130  
                 
Total Current Liabilities
    376,722       499,907  
                 
Deferred Credits and Other Noncurrent Liabilities:
               
Deferred Income Taxes - Net
    203,237       184,294  
Investment Tax Credits
    1,596       1,832  
Pension and Other Postretirement Benefits
    77,733       80,835  
Environmental Remediation Costs
    51,090       54,495  
Asset Retirement Obligations
    23,047       22,553  
Derivatives - Energy Related Liabilities
    12,255       15,699  
Derivatives - Other
    8,464       14,088  
Regulatory Liabilities
    50,950       50,447  
Other
    20,295       20,045  
                 
Total Deferred Credits and Other Noncurrent Liabilities
    448,667       444,288  
                 
Commitments and Contingencies  (Note 12)
               
                 
Total Capitalization and Liabilities
  $ 1,686,601     $ 1,793,427  
                 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
         

 
SJI - 8

 

Notes to Unaudited Condensed Consolidated Financial Statements

1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

GENERAL - South Jersey Industries, Inc. (SJI or the Company) currently provides a variety of energy related products and services primarily through the following subsidiaries:

 
South Jersey Gas Company (SJG) is a regulated natural gas utility. SJG distributes natural gas in the seven southernmost counties of New Jersey.

 
South Jersey Resources Group, LLC (SJRG) markets wholesale natural gas storage, commodity and transportation in the mid-Atlantic and southern states.

 
Marina Energy, LLC (Marina) develops and operates on-site energy-related projects.

 
South Jersey Energy Company (SJE) acquires and markets natural gas and electricity to retail end users and provides total energy management services to commercial and industrial customers.

 
South Jersey Energy Service Plus, LLC (SJESP) installs residential and small commercial HVAC systems, provides plumbing services and services appliances via the sale of  appliance service programs.

BASIS OF PRESENTATION — The condensed consolidated financial statements include the accounts of SJI, its wholly owned subsidiaries and subsidiaries in which we have a controlling interest. All significant intercompany accounts and transactions have been eliminated. In management’s opinion, the condensed consolidated financial statements reflect all normal and recurring adjustments needed to fairly present SJI’s financial position and operating results at the dates and for the periods presented. SJI’s businesses are 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 unaudited condensed consolidated financial statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). These financial statements should be read in conjunction with SJI’s 2008 Annual Report on Form 10-K for a more complete discussion of the Company’s accounting policies and certain other information.

 
SJI - 9

 

The Company evaluated subsequent events through November 6, 2009, the date on which this Quarterly Report on Form 10-Q was filed with the Securities and Exchange Commission.

REVENUE BASED TAXES — SJI collects certain revenue-based energy taxes from 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 utility revenue and cost of sales and totaled $1.0 million and $0.9 million for the three months periods ended  September 30, 2009 and 2008, respectively, and $6.3 million and $5.9 million for the nine months ended  September 30, 2009 and 2008, respectively.

CAPITALIZED INTEREST — SJG capitalizes interest on construction at the rate of return on rate base utilized by the New Jersey Board of Public Utilities (BPU) to set rates in its last base rate proceeding. Marina capitalizes interest on construction projects in progress based on the actual cost of borrowed funds. SJG’s amounts are included in Utility Plant and Marina’s amounts are included in Nonutility Property and Equipment on the condensed consolidated balance sheets. Interest Charges are presented net of capitalized interest on the condensed consolidated statements of income. The amount of interest capitalized by SJI for the three and nine months ended September 30, 2009 and 2008 was not significant.

DERIVATIVE INSTRUMENTS — Certain SJI subsidiaries are involved in buying, selling, transporting and storing natural gas and buying and selling retail electricity for their own accounts as well as managing these activities for other third parties. These subsidiaries are subject to market risk on expected future purchases and sales due to commodity price fluctuations. The Company 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, swap agreements, options contracts and futures contracts. As of September 30, 2009, the Company had outstanding derivative contracts intended to limit the exposure to market risk on 24.5 MMdts of expected future purchases of natural gas, 23.6 MMdts of expected future sales of natural gas and 2.1 MMmwh of expected future purchases of electricity. These contracts, which 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 consolidated balance sheets. The net unrealized pre-tax gains and losses for these energy related commodity contracts are included with realized gains and losses in Operating Revenues – Nonutility.

 
SJI - 10

 

As part of its gas purchasing strategy, SJG uses financial contracts through SJRG to hedge against forward price risk. 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 of September 30, 2009 and December 31, 2008, SJG had $12.3 million and $29.0 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, some of which have been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives-Other on the condensed consolidated balance sheets. The fair value represents the amount SJI 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, 2008 which are described in Note 1 to the Consolidated Financial Statements in Item 8 of SJI’s Annual Report on Form 10-K as of December 31, 2008.

The interest rate derivatives that have been designated as cash flow hedges have been determined to be highly effective.  Therefore, the changes in fair value of the effective portion of these swaps along with the cumulative unamortized costs, net of taxes, have been recorded in Accumulated Other Comprehensive Loss. These unrealized gains and losses will be reclassified into earnings when the forecasted cash flows of the related variable-rate debt occurs, or when it is probable that it will not occur. The ineffective portion of these swaps have been included in Interest Charges.

The unrealized gains and losses on the interest rate derivatives that have not been designated as cash flow hedges have also been included in Interest Charges. However, for selected interest rate derivatives at SJG, management believes that, subject to BPU approval, the market value upon termination can be recovered in rates and therefore these unrealized losses have been included in Other Regulatory Assets in the condensed consolidated balance sheets.

 
SJI - 11

 

 The fair values of all derivative instruments, as reflected in the condensed consolidated balance sheets as of September 30, 2009 and December 31, 2008, are as follows (in thousands): 
 
 
Fair Values of Derivative Instruments
                 
 
Asset Derivatives
 
                 
 
September 30, 2009
 
December 31, 2008
 
                 
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
 
Derivatives not designated as hedging instruments under GAAP
                   
                     
Energy related commodity contracts
Derivatives - Energy Related Assets-Current
 
$
45,656
 
Derivatives - Energy Related Assets-Current
 
$
63,201
 
                     
 
Noncurrent
   
13,141
 
Noncurrent
   
19,712
 
Total asset derivatives
   
$
58,797
     
$
82,913
 
                     
 
Liability Derivatives
 
         
 
September 30, 2009
 
December 31, 2008
 
                 
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
 
Derivatives designated as hedging instruments under GAAP
               
                 
 Interest rate contracts
Derivatives - Other
 
$
2,678
 
Derivatives - Other
 
$
3,551
 
                     
Derivatives not designated as hedging instruments under GAAP
                   
                     
 Energy related commodity contracts
Derivatives - Energy Related Liabilities-Current
   
32,372
 
Derivatives - Energy Related Liabilities-Current
   
50,925
 
                     
 
Noncurrent
   
12,255
 
Noncurrent
   
15,699
 
                     
 Interest rate contracts
Derivatives - Other
   
5,786
 
Derivatives - Other
   
10,537
 
Total derivatives not designated as hedging instruments under GAAP
     
50,413
       
77,161
 
                     
Total liability derivatives
   
$
53,091
     
$
80,712
 

The effect of derivative instruments on the condensed consolidated statements of income for the three and nine months ended September 30, 2009 and 2008 are as follows (in thousands):
 
Derivatives in Cash Flow Hedging Relationships
 
   
Amount of Gain or
(Loss) Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain or (Loss)
Reclassified From
Accumulated OCI
into Income
(Effective Portion)
 
Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Location of Gain
or (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amount Excluded
from Effectiveness
Testing)
 
Amount of Gain or (Loss)
Recognized in
Income on Derivative
(Ineffective Portion
and Amount
Excluded from
Effectiveness
Testing)
 
   
Three Months Ended
     
Three Months Ended
     
Three Months Ended
 
   
September 30,
     
September 30,
     
September 30,
 
   
2009
   
2008
     
2009
   
2008
     
2009
   
2008
 
                                         
Interest rate contracts
  $ (390 )        $ (27 )      
Interest Charges
  $ (192 )        $ (164 )    
Interest Charges
  $ -     $ -  

 
SJI - 12

 
 
   
Amount of Gain or (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain
or (Loss)
Reclassified
From Accumulated
OCI into Income
(Effective Portion)
 
Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Location of Gain
or (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amount Excluded
from Effectiveness
Testing)
 
Amount of Gain or
(Loss) Recognized
in Income on Derivative
(Ineffective Portion
and Amount
Excluded from
Effectiveness Testing)
 
   
Nine Months Ended
     
Nine Months Ended
     
Nine Months Ended
 
   
September 30,
     
September 30,
     
September 30,
 
   
2009
   
2008
     
2009
   
2008
     
2009
   
2008
 
                                         
Interest rate contracts
  $ 514     $ 113  
Interest Charges
  $ (548 )       $ (443 )    
Interest Charges
  $  -     $  -  
 
Derivatives Not Designated as Hedging Instruments under GAAP
 
   
 
Location of Gain or (Loss) Recognized in Income on Derivative
 
Amount of Gain or (Loss)
 Recognized in Income on
 Derivative
 
Amount of Gain or (Loss) Recognized in Income
 on Derivative
 
     
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
     
2009
 
2008
 
2009
 
2008
 
                     
Energy related commodity contracts
Operating Revenues  - Non Utility
   
$
1,541
   
$
71,903
   
$
(12,019
)
 
$
2,116
 
                                     
Interest rate contracts
Interest Charges
     
(300
)
   
-
     
855
     
-
 
                                     
Total
     
$
1,241
   
$
71,903
   
$
(11,164
)
 
$
2,116
 

Net realized losses associated with SJG’s energy related financial commodity contracts of $12.5 million and $45.2 million for the three and nine months ended September 30, 2009, 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.

Certain of the Company's derivative instruments contain provisions that require immediate payment or demand immediate and ongoing collateralization on derivative instruments in net liability positions in the event of a material adverse change in the credit standing of the Company. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position on September 30, 2009, is $28.6 million.   If the credit-risk-related contingent features underlying these agreements were triggered on September 30, 2009, the Company would have been required to settle the instruments immediately or post collateral to its counterparties of approximately $31.4 million after offsetting asset positions with the same counterparties under master netting arrangements.

 
SJI - 13

 

GAS EXPLORATION AND DEVELOPMENT - The Company capitalizes all costs associated with gas property acquisition, exploration and development activities under the full cost method of accounting. Capitalized costs include costs related to unproved properties, which are not amortized until proved reserves are found or it is determined that the unproved properties are impaired. All costs related to unproved properties are reviewed quarterly to determine if impairment has occurred. As of September 30, 2009, $3.5 million related to the acquisition of interests in proved and unproved properties in Pennsylvania is included with Nonutility Property and Equipment on the condensed consolidated balance sheets.
 
TREASURY STOCK – SJI uses the par value method of accounting for treasury stock. As of September 30, 2009, SJI held 137,037 shares of treasury stock. These shares are related to deferred compensation arrangements where the amounts earned are held in the stock of SJI.
 
NEW ACCOUNTING PRONOUNCEMENTS — In September 2006, the FASB issued new accounting guidance which defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. In October 2008, the FASB issued additional guidance to provide clarification in a market that is not active and to provide an example to illustrate key considerations in determining the fair value of a financial asset in such a non-active market. This guidance was effective in fiscal years beginning after November 15, 2007. However, for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis, this guidance was effective in fiscal years beginning after November 15, 2008.  The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

In December 2007, the FASB issued new accounting guidance on business combinations which requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. This guidance was effective for the first fiscal year beginning after December 15, 2008. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

 
SJI - 14

 

In December 2007, the FASB issued new accounting guidance on noncontrolling interests in consolidated financial statements. The new guidance requires all entities to report noncontrolling (minority) interests in subsidiaries in the same way—as equity in the consolidated financial statements. Moreover, this guidance eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. This guidance was effective for the first fiscal year beginning after December 15, 2008.   As a result of adopting this guidance, we have disclosed on the face of our financial statements the portion of equity and net income attributable to the noncontrolling interests in consolidated subsidiaries. Additionally, we reclassified $1.2 million of noncontrolling interests from Minority Interest to Equity on the December 31, 2008 condensed consolidated balance sheet. The amount of net income attributable to noncontrolling interests for the three and nine months ended September 30, 2008 that was reclassed from Other Income and Expense to Net Loss Attributable to Noncontrolling Interest in Subsidiaries was not material. The adoption of this guidance modified our financial statement presentation, but did not have an impact on our financial statement results.

In March 2008, the FASB issued new accounting guidance on disclosures about derivative instruments and hedging activities. This guidance requires disclosures of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This guidance was effective for fiscal years beginning after November 15, 2008. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.  See disclosures in Note 1.

In December 2008, the FASB issued new accounting guidance on employers’ disclosures about postretirement benefit plan assets. This guidance requires more detailed disclosures about employers’ plan assets, including employers’ investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets. This guidance is effective for reporting periods ending after December 15, 2009. Management is currently evaluating the impact that the adoption of this guidance will have on the Company’s condensed consolidated financial statements.

 
SJI - 15

 

In December 2008, the Emerging Issue Task Force issued new accounting guidance on issuer’s accounting for liabilities measured at fair value with a third-party credit enhancement.  The Task Force reached a consensus that an issuer of a liability with a third-party credit enhancement that is inseparable from the liability must treat the liability and the credit enhancement as two units of accounting. Under the guidance, the fair value measurement of the liability does not include the effect of the third-party credit enhancement; therefore, changes in the issuer’s credit standing without the support of the credit enhancement affect the fair value measurement of the issuer’s liability. Entities will need to disclose the existence of any third-party credit enhancements related to their liabilities that are within the scope of this guidance (i.e., that are measured at fair value). This guidance was effective in the first reporting period beginning on or after December 15, 2008. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

In December 2008, the Emerging Issue Task Force issued new accounting guidance on equity method investment accounting considerations. In this guidance, the Task Force considered the effects of existing guidance which became effective for fiscal years beginning on or after December 15, 2008, on an entity’s application of the equity method. Questions have arisen regarding the application of equity method accounting guidance because of the significant changes to the guidance on business combinations and subsidiary equity transactions and the increased use of fair value measurements. The Task Force reached a consensus clarifying the application of equity method accounting. This guidance was effective for transactions occurring in fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

In April 2009, the FASB issued new accounting guidance on interim disclosures about fair value of financial instruments. This guidance requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This guidance also requires those disclosures in summarized financial information at interim reporting periods. This guidance was effective for interim reporting periods ending after June 15, 2009. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

 
SJI - 16

 

In April 2009, the FASB issued new accounting guidance on the recognition and presentation of other-than-temporary impairments. This guidance amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This guidance requires management to assert (a) it does not have the intent to sell the security; and (b) it is more likely than not it will not have to sell the security before recovery of its cost basis. Declines in fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are to be reflected in earnings as realized losses to the extent the impairment is related to credit losses. This guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This new guidance was effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

In April 2009, the FASB issued new accounting guidance on determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This guidance was effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

In May 2009, the FASB issued new accounting guidance on management’s assessment of subsequent events. Historically, management had relied on U.S. auditing literature for guidance on assessing and disclosing subsequent events. This new guidance represents the inclusion of specific guidance on subsequent events in U.S. GAAP and is directed specifically to management. The new guidance clarifies that management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date “through the date that the financial statements are issued or are available to be issued.” The new guidance was effective for interim or annual financial periods ending after June 15, 2009. Management must perform its assessment for both interim and annual periods. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements.

In June 2009, the FASB issued new accounting guidance on the consolidation of variable interest entities (VIEs). Accordingly, companies will need to carefully reconsider previous conclusions, including (1) whether an entity is a VIE, (2) whether the company is the VIE’s primary beneficiary, and (3) what type of financial statement disclosures are required. The new guidance is effective for fiscal years beginning after November 15, 2009. Management is currently evaluating the impact that the adoption of this guidance will have on the Company’s condensed consolidated financial statements.

 
SJI - 17

 

In June 2009, the FASB issued new accounting guidance on The FASB Accounting Standards Codification™ (the “Codification”) which will become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles. The current GAAP hierarchy consists of four levels of authoritative accounting and reporting guidance. The Codification eliminates this hierarchy and replaces current GAAP (other than rules and interpretive releases of the SEC) as used by all nongovernmental entities, with just two levels of literature: authoritative and nonauthoritative. The Codification was effective for interim and annual periods ending after September 15, 2009. Calendar year-end companies are required to initially apply the Codification to their third-quarter interim financial statements. The application of the Codification did not have a material effect on the Company’s condensed consolidated financial statements.

In August 2009 the FASB issued new accounting guidance for measuring the fair value of a liability in circumstances in which a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique that is consistent with existing principles, such as an income approach or market approach. The new accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. This guidance will be effective for the period ending December 31, 2009 and is not expected to have a significant impact on the Company’s condensed consolidated financial statements.
 
2.
STOCK-BASED COMPENSATION PLAN:

Under the Amended and Restated 1997 Stock-Based Compensation Plan, no more than 2,000,000 shares in the aggregate may be issued to SJI's officers (Officers), non-employee directors (Directors) and other key employees. The plan will terminate on January 26, 2015, unless terminated earlier by the Board of Directors. No options were granted or outstanding during the nine months ended September 30, 2009 and 2008. No stock appreciation rights have been issued under the plan. During the nine months ended September 30, 2009 and 2008, SJI granted 41,437 and 45,241 restricted shares to Officers and other key employees, respectively.   These restricted shares vest over a three-year period and are subject to SJI achieving certain market based performance targets as compared to a peer group average, which can cause the actual amount of shares that ultimately vest to range from between 0% to 150% of the original share units granted. During the nine months ended September 30, 2009 and 2008, SJI granted 9,559 and 8,667 restricted shares to Directors, respectively.  Shares issued to Directors vest over a three-year service period but contain no performance conditions. As a result, 100% of the shares granted generally vest.

SJI - 18

 
See Note 1 to the Consolidated Financial Statements in Item 8 of SJI’s Annual Report on Form 10-K as of December 31, 2008 for the related accounting policy.

The following table summarizes the nonvested restricted stock awards outstanding at September 30, 2009 and the assumptions used to estimate the fair value of the awards:

 
Grant Date
 
Shares Outstanding
 
Fair Value Per Share
 
Expected Volatility
Risk-Free Interest Rate
                   
 Officers & Key Employees -
Jan. 2007
 
37,991
 
$
29.210
 
18.5%
4.9%
 
Jan. 2008
 
42,823
 
$
34.030
 
21.7%
2.9%
 
Jan. 2009
 
39,037
 
$
39.350
 
28.6%
1.2%
                   
 Directors -
Dec. 2006
 
9,261
 
$
34.020
 
-
-
 
Jan. 2008
 
8,667
 
$
36.355
 
-
-
 
Jan. 2009
 
9,559
 
$
40.265
 
-
-
                   

Expected volatility is based on the actual daily volatility of SJI’s share price over the preceding three-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 three-year term of the Officers’ and other key employees’ restricted shares. As notional dividend equivalents are credited to the holders, which are reinvested during the three-year service period, no reduction to the fair value of the award is required. As the Directors’ restricted stock awards contain no performance conditions and dividends are paid or credited to the holder during the three-year service period, the market value of these awards on the date of grant approximates the fair value.

 
SJI - 19

 

 The following table summarizes the total compensation cost for the three and nine months ended September 30, 2009 and 2008 (in thousands):

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Officers & Key Employees
 
$
335
   
$
286
   
$
1,005
   
$
858
 
Directors
   
82
     
67
     
247
     
201
 
Total Cost
   
417
     
353
     
1,252
     
1,059
 
                                 
Capitalized
   
  (43
)
   
(37
)
   
(128
)
   
(112
)
Net Expense
 
$
374
   
$
316
   
$
1,124
   
$
947
 
 

As of September 30, 2009, there was $2.2 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 1.8 years.
 
The following table summarizes information regarding restricted stock award activity during the nine months ended September 30, 2009 excluding accrued dividend equivalents:
 
               
Weighted Average
 
   
Officers & Other
         
Grant Date
 
   
Key Employees
   
Directors
   
Fair Value
 
                   
Nonvested Shares Outstanding, January 1, 2009
   
83,103
     
17,928
   
$
32.386
 
Granted
   
41,437
     
9,559
     
39.522
 
Forfeited
   
(4,689
)
   
-
     
36.102
 
Nonvested Shares Outstanding, September 30, 2009
   
119,851
     
27,487
   
$
34.737
 

 
During the nine months ended September 30, 2009 and 2008, SJI awarded 57,976 shares, which had vested at December 31, 2008, at a market value of $2.3 million, and 51,838 shares, which had vested at December 31, 2007, at a market value of $1.9 million, respectively. The Company has a policy of issuing new shares to satisfy its obligations under these plans; therefore, there are no cash payment requirements resulting from the normal operation of this plan. However, a change in control could result in such shares becoming nonforefeitable or immediately payable in cash.  At the discretion of the Officers, Directors and other key employees, the receipt of vested shares can be deferred until future periods.  These deferred shares are included in Treasury Stock on the condensed consolidated balance sheets.

 
SJI - 20

 

3.
DISCONTINUED OPERATIONS:

Discontinued Operations consist of the environmental remediation activities related to the properties of South Jersey Fuel, Inc. (SJF) and the product liability litigation and environmental remediation activities related to the prior business of The Morie Company, Inc. (Morie). SJF is a subsidiary of Energy & Minerals, Inc. (EMI), an SJI subsidiary, which previously operated a fuel oil business. Morie is the former sand mining and processing subsidiary of EMI. EMI sold the common stock of Morie in 1996. 

SJI conducts tests annually to estimate the environmental remediation costs for these properties.

Summarized operating results of the discontinued operations for the three and nine months ended September 30, were (in thousands, except per share amounts):
 
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2009
   
2008
   
2009
   
2008
 
Loss before Income Taxes:
                       
Sand Mining
 
$
(22
)
 
$
(22
)
 
$
(77
)
 
$
(73
)
Fuel Oil
   
(3
)
   
(95
)
   
(12
)
   
(83
Income Tax Benefits
   
9
     
41
     
31
     
55
 
Loss from Discontinued Operations — Net
 
$
(16
)
 
$
(76
)
 
$
(58
)
 
$
(101
)
Earnings Per Common Share from
                               
Discontinued Operations — Net:
                               
Basic
 
$
(0.001
)
 
$
(0.002
)
 
$
(0.002
)
 
$
(0.004
)
Diluted
 
$
(0.001
)
 
$
(0.003
)
 
$
(0.002
)
 
$
(0.004
)
 

4.
COMMON STOCK:


The following shares were issued and outstanding at September 30:

   
2009
 
Beginning Balance, January 1
   
29,728,697
 
New Issues During Period:
       
Stock-Based Compensation Plan
   
67,535
 
Ending Balance, September 30
   
29,796,232
 

The par value ($1.25 per share) of stock issued was recorded in Common Stock and the net excess over par value of approximately $0.3 million, was recorded in Premium on Common Stock.
 
EARNINGS PER COMMON SHARE — Basic EPS is based on the weighted-average number of common shares outstanding.    The incremental shares required for inclusion in the denominator for the diluted EPS calculation were 136,718 for the three months ended September 30, 2008, and 103,196 and 129,124 shares for the nine months ended September 30, 2009 and 2008, respectively. For the three months ended September 30, 2009, incremental shares of 105,422 were not included in the denominator for the diluted EPS calculation because they would have an antidilutive effect on EPS. These shares relate to SJI’s restricted stock as discussed in Note 2.

 
SJI - 21

 

DIVIDEND REINVESTMENT PLAN (DRP) — Through April 2008, shares of common stock offered through the DRP were issued directly by SJI. Beginning in April 2008, shares of common stock offered by the DRP have been purchased in open market transactions. 
 
5.
FINANCIAL INSTRUMENTS:

RESTRICTED INVESTMENTS - In accordance with the terms of the Marina and certain SJG loan agreements, unused proceeds are required to be escrowed pending approved construction expenditures. As of September 30, 2009 and December 31, 2008, the escrowed proceeds, including interest earned, totaled $1.4 million.

SJRG maintains a margin account with a national investment firm to support its risk management activities. The balance required to be held in this margin account increases as the net value of the outstanding energy related financial contracts with this investment firm decrease.  As of September 30, 2009 and December 31, 2008, the balance in this account was $0.8 million and $29.7 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 $10.2 million and $10.1 million as of September 30, 2009 and December 31, 2008, respectively. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Contract Receivables on the condensed consolidated balance sheets. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest in the amounts of $1.3 million and $1.2 million as of September 30, 2009 and December 31, 2008, respectively.  The annual amortization to interest is not material to the Company’s condensed consolidated financial statements. 

 
SJI - 22

 

CONCENTRATION OF CREDIT RISK - As of September 30, 2009, approximately 39.3% of the current and noncurrent Derivatives – Energy Related Assets or $23.1 million are with a single retail counterparty. This counterparty has contracts with a large number of diverse customers which minimizes the concentration of this risk. A portion of these contracts may be assigned to SJI in the event of a default by the counterparty.

OTHER FINANCIAL INSTRUMENTS – The estimated fair values of SJI’s long-term debt, including current maturities, as of September 30, 2009 and December 31, 2008, were $416.6 million and $436.6 million, respectively. The carrying amounts as of September 30, 2009 and December 31, 2008, were $357.8 million and $357.9 million, respectively.  We based the estimates on interest rates available to SJI at the end of each period for debt with similar terms and maturities.  The carrying amounts of SJI’s other financial instruments approximate their fair values at September 30, 2009 and December 31, 2008.

6.
SEGMENTS OF BUSINESS:

SJI operates in several different reportable operating segments. Gas Utility Operations (SJG) consists primarily of natural gas distribution to residential, commercial and industrial customers. Wholesale Gas Operations include SJRG’s activities. SJE is involved in both retail gas and retail electric activities. Retail Gas and Other Operations include natural gas acquisition and transportation service business lines. Retail Electric Operations consist of electricity acquisition and transportation to commercial and industrial customers. On-Site Energy Production consists of Marina’s thermal energy facility and other energy-related projects. Appliance Service Operations includes SJESP’s servicing of appliances via the sale of appliance service programs as well as on a time and materials basis, and the installation of residential and small commercial HVAC systems.  The accounting policies of the segments are the same as those described in the summary of significant accounting policies.  Intersegment sales and transfers are treated as if the sales or transfers were to third parties at current market prices.

 Information about SJI's operations in different reportable operating segments is presented below (in thousands):

 
SJI - 23

 
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
   
2009
   
2008
   
2009
   
2008
 
Operating Revenues:
                       
Gas Utility Operations
 
$
56,305
   
$
64,563
   
$
364,253
   
$
396,038
 
Wholesale Gas Operations
   
4,337
     
79,828
     
78,352
     
76,225
 
Retail Gas and Other Operations
   
20,482
     
37,670
     
81,641
     
138,635
 
Retail Electric Operations
   
35,725
     
15,313
     
70,187
     
48,876
 
On-Site Energy Production
   
9,528
     
14,123
     
28,228
     
37,092
 
Appliance Service Operations
   
4,002
     
4,891
     
13,233
     
14,100
 
Corporate & Services
   
4,375
     
4,139
     
14,536
     
13,135
 
Subtotal
   
134,754
     
220,527
     
650,430
     
724,101
 
Intersegment Sales
   
(7,667
)
   
(10,114
)
   
(26,684
)
   
(29,801
)
Total Operating Revenues
 
$
127,087
   
$
210,413
   
$
623,746
   
$
694,300
 
                                 
Operating Income:
                               
Gas Utility Operations
 
$
233
   
$
1,184
   
$
55,522
   
$
58,613
 
Wholesale Gas Operations
   
(898
)
   
72,122
     
17,843
     
34,474
 
Retail Gas and Other Operations
   
(49
)
   
322
     
(134
)
   
2,311
 
Retail Electric Operations
   
(753
)
   
619
     
(10,441
)
   
1,656
 
On-Site Energy Production
   
1,140
     
4,094
     
5,082
     
9,030
 
Appliance Service Operations
   
142
     
752
     
757
     
1,780
 
Corporate and Services
   
270
     
234
     
1,001
     
1,088
 
Total Operating  Income
 
$
85
   
$
79,327
   
$
69,630
   
$
108,952
 
                                 
Depreciation and Amortization:
                               
Gas Utility Operations
 
$
7,287
   
$
7,804
   
$
24,101
   
$
23,283
 
Wholesale Gas Operations
   
78
     
28
     
68
     
59
 
Retail Gas and Other Operations
   
6
     
4
     
16
     
13
 
Appliance Services Operations
   
76
     
73
     
219
     
227
 
On-Site Energy Production
   
933
     
784
     
2,747
     
2,289
 
Corporate and Services
   
135
     
111
     
378
     
312
 
Total Depreciation and Amortization
 
$
8,515
   
$
8,804
   
$
27,529
   
$
26,183
 
                                 
Interest Charges:
                               
Gas Utility Operations
 
$
4,085
   
$
4,586
   
$
12,334
   
$
14,179
 
Wholesale Gas Operations
   
43
     
201
     
305
     
407
 
Retail Gas and Other Operations
   
7
     
3
     
7
     
111
 
On-Site Energy Production
   
1,133
     
905
     
1,479
     
2,515
 
Corporate and Services
   
136
     
317
     
575
     
942
 
Subtotal
   
5,404
     
6,012
     
14,700
     
18,154
 
Intersegment Borrowings
   
(106
)
   
(267
)
   
(397
)
   
(908
)
Total Interest Charges
 
$
5,298
   
$
5,745
   
$
14,303
   
$
17,246