South Jersey Industries Form 8-K dated 02/12/07
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
____________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): February
12, 2007
South
Jersey Industries, Inc.
(Exact
name of registrant as specified in its charter)
|
New
Jersey
|
1-6364
|
22-1901645
|
|
(State
or other jurisdiction
|
(Commission
File
Number)
|
(I.R.S.
Employer Identification
No.)
|
|
of
incorporation)
|
|
|
|
1
South Jersey Plaza, Route 54, Folsom, NJ
|
08037
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (609)
561-9000
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[_]
Written communications pursuant to Rule 425 under the Securities
Act.
[_]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act.
[_]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act.
[_]
Pre-commencement communications pursuant to Rule 13(3)-4(c) under the Exchange
Act.
Item 4.02(a).
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report
or Completed Interim Review.
On
February 12, 2007, South Jersey Industries, Inc. (SJI or the Company) determined
that it is necessary to amend and restate its consolidated financial statements
for each of the years ended December 31, 2004 and 2005 as well as each of the
Company’s quarterly reports with respect to 2005 and 2006. Selected financial
data for each of the years ended December 31, 2002 through 2005 will likewise
be
restated with respect to the accounting and disclosures for certain derivative
transactions under Statement of Financial Accounting Standards 133 “Accounting
for Derivative Instruments and Hedging Activities” (SFAS 133). The Company’s
quarterly reports for 2006 will also be restated to appropriately reflect costs
incurred during those quarters related to a supply contract. The Audit Committee
of the SJI Board of Directors has discussed the restatement with Deloitte &
Touche, LLP, which served as the Company’s independent registered public
accounting firm for all affected periods. Restated financial information for
these periods will be included in the SJI Annual Report on Form 10-K for the
year ended December 31, 2006.
The
decision to undertake the restatement was announced in a press release on
February 13, 2007, which is attached as an exhibit to this Form 8-K. In light
of
the conclusion to restate the Company’s consolidated financial statements, the
Audit Committee has concluded that readers should no longer rely on the
Company’s previously filed consolidated financial statements and related
independent registered public accounting firm’s reports for each of the years
ended December 31, 2004 and 2005, each of the Company’s quarterly reports with
respect to 2005 and 2006, and the selected financial data for each of the years
ended December 31, 2002 through 2005 as being in compliance with Generally
Accepted Accounting Principles (GAAP).
SJI
has
determined that its documentation for selected cash flow hedge transactions
did
not meet the requirements of paragraph 28 of SFAS 133. Paragraph 28 states
that
a forecasted transaction being hedged should be described with sufficient
specificity so that when the transaction occurs, it is clear whether that
transaction is or is not the hedged transaction. Management has now determined
that documentation of these hedges did not contain sufficient specificity to
qualify them for hedge accounting treatment.
The
primary effect of this change is that any increases or decreases in the fair
value of the derivative instruments are included in the calculation of the
Company’s net income for the period in which the increases or decreases in fair
value occur. Under the previous accounting treatment used by the Company,
increases and decreases in fair value of the derivative instruments were
initially recorded on the balance sheet under Accumulated Other Comprehensive
Income (AOCI) and did not increase or decrease net income until the transaction
being hedged affected earnings. While the impact of this change on net income
in
any reporting period can be significant, there is no change in the overall
impact on operating income and net income over the life of a derivative
instrument. Moreover, total cash flows from operating activities are the same
in
any accounting period under either accounting treatment. By recognizing
increases and decreases in the fair value of derivative instruments in net
income in each period during the existence of the hedge, rather than when the
hedge expires and the underlying transaction is completed, the restatement
will
result in quarterly changes to previously reported AOCI, operating income,
income from continuing operations and net income. Due to the change in
accounting treatment, SJI will recognize the changes in the fair value of these
derivative instruments in accounting periods earlier than those in which the
related purchases or sales of the natural gas actually occur.
Management
estimates that the cumulative effects of the restatements will significantly
increase retained earnings as of September 30, 2006. The Company is in the
process of determining the impact on any individual year or quarter being
restated. In addition, management estimates that the results of the restatement
will significantly increase net income from operations for the year ended
December 31, 2006.
Item 9.01.
Financial Statements and Exhibits
(d)
Exhibits
99.
South
Jersey Industries press release dated February 13, 2007.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SOUTH
JERSEY
INDUSTRIES, INC.
Date:
February 14, 2007 By:
/s/
David A. Kindlick
David
A.
Kindlick
Vice President & Chief Financial Officer