[X]
|
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
[
]
|
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
New Jersey
|
22-1901645
|
(State of
incorporation)
|
(IRS employer identification
no.)
|
Common
Stock
|
|
($1.25 par value per
share)
|
New York Stock
Exchange
|
(Title of each
class)
|
(Name of exchange on which
registered)
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
||||||||
(In
Thousands Except for Per Share Data)
|
||||||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
Operating
Revenues:
|
||||||||
Utility
|
$ | 236,412 | $ | 265,285 | ||||
Nonutility
|
111,635 | 103,142 | ||||||
Total
Operating Revenues
|
348,047 | 368,427 | ||||||
Operating
Expenses:
|
||||||||
Cost
of Sales - (Excluding depreciation)
|
||||||||
-
Utility
|
161,425 | 192,965 | ||||||
-
Nonutility
|
105,331 | 90,505 | ||||||
Operations
|
19,994 | 18,908 | ||||||
Maintenance
|
1,852 | 1,472 | ||||||
Depreciation
|
7,187 | 7,012 | ||||||
Energy
and Other Taxes
|
4,866 | 5,084 | ||||||
Total
Operating Expenses
|
300,655 | 315,946 | ||||||
Operating
Income
|
47,392 | 52,481 | ||||||
Other
Income and Expense
|
281 | 364 | ||||||
Interest
Charges
|
(6,014 | ) | (6,969 | ) | ||||
Income
Before Income Taxes
|
41,659 | 45,876 | ||||||
Income
Taxes
|
(17,164 | ) | (18,910 | ) | ||||
Equity
in Affiliated Companies
|
217 | 205 | ||||||
Income
from Continuing Operations
|
24,712 | 27,171 | ||||||
Loss
from Discontinued Operations - (Net of tax benefit)
|
(24 | ) | (148 | ) | ||||
Net
Income
|
$ | 24,688 | $ | 27,023 | ||||
Basic
Earnings Per Common Share:
|
||||||||
Continuing
Operations
|
$ | 0.834 | $ | 0.925 | ||||
Discontinued
Operations
|
(0.001 | ) | (0.005 | ) | ||||
Basic
Earnings Per Common Share
|
$ | 0.833 | $ | 0.920 | ||||
Average
Shares of Common Stock Outstanding - Basic
|
29,640 | 29,361 | ||||||
Diluted
Earnings Per Common Share:
|
||||||||
Continuing
Operations
|
$ | 0.830 | $ | 0.922 | ||||
Discontinued
Operations
|
(0.001 | ) | (0.005 | ) | ||||
Diluted
Earnings Per Common Share
|
$ | 0.829 | $ | 0.917 | ||||
Average
Shares of Common Stock Outstanding - Diluted
|
29,764 | 29,483 | ||||||
Dividends
Declared per Common Share
|
$ | 0.270 | $ | 0.246 | ||||
The
accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
||||||||
(In
Thousands)
|
||||||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
Net
Income
|
$ | 24,688 | $ | 27,023 | ||||
Other
Comprehensive (Loss) Income, Net of Tax:*
|
||||||||
Unrealized
(Loss) Gain on Available-for-Sale Securities
|
(238 | ) | 66 | |||||
Unrealized
(Loss) Gain on Derivatives - Other
|
(779 | ) | 65 | |||||
Unrealized
Loss on Derivatives - Other from Affiliated Companies
|
(1,931 | ) | - | |||||
Other
Comprehensive (Loss) Income - Net of Tax*
|
(2,948 | ) | 131 | |||||
Comprehensive
Income
|
$ | 21,740 | $ | 27,154 | ||||
*
Determined using a combined statutory tax rate of 41.08%.
|
||||||||
The
accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
|
||||||||
SOUTH
JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
||||||||
(In
Thousands)
|
||||||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2008
|
2007
|
|||||||
Net
Cash Provided by Operating Activities
|
$ | 102,149 | $ | 119,524 | ||||
Cash
Flows from Investing Activities:
|
||||||||
Capital
Expenditures
|
(15,352 | ) | (12,074 | ) | ||||
Net
Proceeds from Sale of Restricted Investments in Margin
Account
|
- | 10,404 | ||||||
Purchase
of Restricted Investments with Escrowed Loan Proceeds
|
(37 | ) | (163 | ) | ||||
Merchandise
Loans
|
(1,166 | ) | (1,124 | ) | ||||
Proceeds
from Merchandise Loans
|
928 | 1,099 | ||||||
Investment
in Affiliate
|
(411 | ) | - | |||||
Net
Cash Used in Investing Activities
|
(16,038 | ) | (1,858 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Net
Repayments of Lines of Credit
|
(86,490 | ) | (112,400 | ) | ||||
Other
|
614 | 726 | ||||||
Net
Cash Used in Financing Activities
|
(85,876 | ) | (111,674 | ) | ||||
Net
Increase in Cash and Cash Equivalents
|
235 | 5,992 | ||||||
Cash
and Cash Equivalents at Beginning of Period
|
11,678 | 7,932 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 11,913 | $ | 13,924 | ||||
The
accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
|
||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
||||||||
(In
Thousands)
|
||||||||
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Property,
Plant and Equipment:
|
||||||||
Utility
Plant, at original cost
|
$ | 1,134,288 | $ | 1,123,992 | ||||
Accumulated
Depreciation
|
(281,588 | ) | (276,301 | ) | ||||
Nonutility
Property and Equipment, at cost
|
116,877 | 112,971 | ||||||
Accumulated
Depreciation
|
(12,681 | ) | (11,793 | ) | ||||
Property,
Plant and Equipment - Net
|
956,896 | 948,869 | ||||||
Investments:
|
||||||||
Available-for-Sale
Securities
|
6,271 | 6,734 | ||||||
Restricted
|
6,497 | 6,460 | ||||||
Investment
in Affiliates
|
1,925 | 1,694 | ||||||
Total
Investments
|
14,693 | 14,888 | ||||||
Current
Assets:
|
||||||||
Cash
and Cash Equivalents
|
11,913 | 11,678 | ||||||
Accounts
Receivable
|
183,156 | 111,899 | ||||||
Unbilled
Revenues
|
34,924 | 48,304 | ||||||
Provision
for Uncollectibles
|
(5,548 | ) | (5,491 | ) | ||||
Natural
Gas in Storage, average cost
|
49,933 | 123,790 | ||||||
Materials
and Supplies, average cost
|
3,037 | 2,777 | ||||||
Prepaid
Taxes
|
- | 6,878 | ||||||
Derivatives
- Energy Related Assets
|
34,869 | 23,270 | ||||||
Other
Prepayments and Current Assets
|
5,675 | 5,225 | ||||||
Total
Current Assets
|
317,959 | 328,330 | ||||||
Regulatory
and Other Noncurrent Assets:
|
||||||||
Regulatory
Assets
|
184,702 | 188,688 | ||||||
Prepaid
Pension
|
7,622 | 1,970 | ||||||
Derivatives
- Energy Related Assets
|
5,847 | 10,941 | ||||||
Unamortized
Debt Issuance Costs
|
7,252 | 7,386 | ||||||
Contract
Receivables
|
13,236 | 13,220 | ||||||
Other
|
15,159 | 15,149 | ||||||
Total
Regulatory and Other Noncurrent Assets
|
233,818 | 237,354 | ||||||
Total
Assets
|
$ | 1,523,366 | $ | 1,529,441 | ||||
The
accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
||||||||
(In
Thousands)
|
||||||||
March
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Capitalization and
Liabilities
|
||||||||
Common
Equity:
|
||||||||
Common
Stock
|
$ | 37,108 | $ | 37,010 | ||||
Premium
on Common Stock
|
249,326 | 248,449 | ||||||
Treasury
Stock (at par)
|
(180 | ) | (187 | ) | ||||
Accumulated
Other Comprehensive Loss
|
(13,263 | ) | (10,315 | ) | ||||
Retained
Earnings
|
222,796 | 206,123 | ||||||
Total
Common Equity
|
495,787 | 481,080 | ||||||
Long-Term
Debt
|
357,871 | 357,896 | ||||||
Total
Capitalization
|
853,658 | 838,976 | ||||||
Minority
Interest
|
439 | 440 | ||||||
Current
Liabilities:
|
||||||||
Notes
Payable
|
31,800 | 118,290 | ||||||
Current
Maturities of Long-Term Debt
|
106 | 106 | ||||||
Accounts
Payable
|
123,256 | 101,154 | ||||||
Customer
Deposits and Credit Balances
|
14,940 | 18,475 | ||||||
Margin
Account Liability
|
2,888 | 4,112 | ||||||
Environmental
Remediation Costs
|
20,904 | 25,827 | ||||||
Taxes
Accrued
|
31,169 | 5,310 | ||||||
Derivatives
- Energy Related Liabilities
|
25,801 | 13,735 | ||||||
Deferred
Income Taxes - Net
|
10,182 | 20,251 | ||||||
Deferred
Contract Revenues
|
4,060 | 5,231 | ||||||
Dividends
Payable
|
8,015 | - | ||||||
Interest
Accrued
|
4,808 | 6,657 | ||||||
Pension
and Other Postretirement Benefits
|
841 | 805 | ||||||
Other
Current Liabilities
|
6,725 | 8,358 | ||||||
Total
Current Liabilities
|
285,495 | 328,311 | ||||||
Deferred
Credits and Other Noncurrent Liabilities:
|
||||||||
Deferred
Income Taxes - Net
|
177,507 | 175,686 | ||||||
Investment
Tax Credits
|
2,070 | 2,150 | ||||||
Pension
and Other Postretirement Benefits
|
28,916 | 29,036 | ||||||
Environmental
Remediation Costs
|
49,975 | 52,078 | ||||||
Asset
Retirement Obligations
|
23,950 | 24,604 | ||||||
Derivatives
- Energy Related Liabilities
|
2,519 | 4,190 | ||||||
Derivatives
- Other
|
4,803 | 2,484 | ||||||
Regulatory
Liabilities
|
75,908 | 55,779 | ||||||
Other
|
18,126 | 15,707 | ||||||
Total
Deferred Credits
|
||||||||
and
Other Noncurrent Liabilities
|
383,774 | 361,714 | ||||||
Commitments
and Contingencies (Note 12)
|
||||||||
Total
Capitalization and Liabilities
|
$ | 1,523,366 | $ | 1,529,441 | ||||
The
accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
|
||||||||
|
▪
|
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.
|
·
|
Cash flows related to merchandise
loans to customers for the purpose of attracting conversions to natural
gas heating systems should have been classified under the caption Cash
Flows from Investing Activities on the statements of condensed consolidated cash flows. Accordingly, cash outflows
for loans originated of $1.1 million and cash inflows
from the principal collection on these loans of $1.1 million during the three months
ended March 31, 2007 are now included within Cash Flows from
Investing Activities. The overall net impact resulted
in an
insignificant amount
of Cash Flows from Operating Activities for the three months ended March
31, 2007 now being included within Cash Flows from Investing
Activities.
|
·
|
Cash flows related to unused loan
proceeds that are held in restricted escrow accounts were incorrectly
presented on a net basis with the cash flows related to the restricted
margin account that is used to support the Company’s risk management
activities within Cash Flows from Investing Activities on the statements of condensed consolidated cash flows. Accordingly, purchases of
restricted investments with unused loan proceeds of $0.2 million during
the three months ended March 31, 2007 is now included in Purchase of
Restricted Investments with Escrowed Loan Proceeds. The cash flows related
to the restricted margin account remain in Net Proceeds from Sale of
Restricted Investments in Margin Account. This change had no overall
impact on total Cash Flows from Investing Activities on the statements of condensed consolidated cash flows.
|
Grant
|
Shares
|
Fair Value
|
Expected
|
Risk-Free
|
||||||
Date
|
Outstanding
|
Per Share
|
Volatility
|
Interest
Rate
|
||||||
Officers &
Key Employees -
|
Jan. 2006
|
35,526
|
$
|
27.950
|
16.9%
|
4.5%
|
||||
Jan. 2007
|
39,105
|
$
|
29.210
|
18.5%
|
4.9%
|
|||||
Jan. 2008
|
45,241
|
$
|
34.030
|
21.7%
|
2.9%
|
|||||
Directors
-
|
Dec. 2005
|
6,340
|
$
|
29.970
|
-
|
-
|
||||
Dec. 2006
|
9,261
|
$
|
34.020
|
-
|
-
|
|||||
Jan. 2008
|
8,667
|
$
|
36.355
|
Three Months
Ended
March 31,
|
||||||||
2008
|
2007
|
|||||||
Officers & Key
Employees
|
$
|
301
|
$
|
248
|
||||
Directors
|
67
|
52
|
||||||
Total Cost
|
368
|
300
|
||||||
Capitalized
|
(37
|
)
|
(27
|
)
|
||||
Net Expense
|
$
|
331
|
$
|
273
|
Officers &
Other
Key
Employees
|
Directors
|
Weighted Average
Grant Date
Fair
Value
|
||||||
Nonvested Shares Outstanding,
January 1, 2008
|
110,968
|
15,601
|
$
|
28.136
|
||||
Granted
|
45,241
|
8,667
|
34.404
|
|||||
Vested*
|
(34,311
|
)
|
-
|
25.155
|
||||
Forfeited
|
(2,026
|
)
|
-
|
28.548
|
||||
Nonvested Shares Outstanding,
March 31, 2008
|
119,872
|
24,268
|
$
|
31.184
|
||||
* Actual shares awarded to
officers upon vesting, including dividend equivalents and adjustments for
performance measures totaled 51,838
shares.
|
Three Months
Ended
March 31,
|
||||||||
2008
|
2007
|
|||||||
Loss before Income
Taxes:
|
||||||||
Sand Mining
|
$
|
(27
|
)
|
$
|
(217
|
)
|
||
Fuel Oil
|
(11
|
)
|
(11
|
)
|
||||
Income Tax
Benefits
|
14
|
80
|
||||||
Loss from Discontinued Operations
— Net
|
$
|
(24
|
)
|
$
|
(148
|
)
|
||
Earnings Per Common Share
from
|
||||||||
Discontinued Operations —
Net:
|
||||||||
Basic and
Diluted
|
$
|
(0.001
|
)
|
$
|
(0.005
|
)
|
2008
|
||||
Beginning Balance, January
1
|
29,607,802
|
|||
New Issues During
Period:
|
||||
Dividend Reinvestment
Plan
|
18,190
|
|||
Stock-Based Compensation
Plan
|
60,505
|
|||
Ending Balance, March
31
|
29,686,497
|
Three Months
Ended
March 31,
|
||||||||
2008
|
2007
|
|||||||
Operating
Revenues:
|
||||||||
Gas Utility
Operations
|
$
|
237,904
|
$
|
277,864
|
||||
Wholesale Gas
Operations
|
26,264
|
21,094
|
||||||
Retail Gas and Other
Operations
|
57,377
|
58,717
|
||||||
Retail Electric
Operations
|
16,259
|
12,444
|
||||||
On-Site Energy
Production
|
10,763
|
9,724
|
||||||
Appliance Service
Operations
|
4,970
|
3,968
|
||||||
Corporate &
Services
|
4,468
|
3,383
|
||||||
Subtotal
|
358,005
|
387,194
|
||||||
Intersegment
Sales
|
(9,958
|
)
|
(18,767
|
)
|
||||
Total Operating
Revenues
|
$
|
348,047
|
$
|
368,427
|
Operating
Income:
|
||||||||
Gas Utility
Operations
|
$
|
47,348
|
$
|
46,271
|
||||
Wholesale Gas
Operations
|
(6,007
|
)
|
3,667
|
|||||
Retail Gas and Other
Operations
|
1,882
|
(307
|
)
|
|||||
Retail Electric
Operations
|
461
|
555
|
||||||
On-Site Energy
Production
|
2,434
|
2,005
|
||||||
Appliance Service
Operations
|
996
|
203
|
||||||
Corporate and
Services
|
278
|
87
|
||||||
Total Operating
Income
|
$
|
47,392
|
$
|
52,481
|
||||
Depreciation and
Amortization:
|
||||||||
Gas Utility
Operations
|
$
|
7,717
|
$
|
7,212
|
||||
Wholesale Gas
Operations
|
16
|
16
|
||||||
Retail Gas and Other
Operations
|
4
|
2
|
||||||
On-Site Energy
Production
|
752
|
782
|
||||||
Appliance Service
Operations
|
77
|
62
|
||||||
Corporate and
Services
|
97
|
57
|
||||||
Total Depreciation and
Amortization
|
$
|
8,663
|
$
|
8,131
|
||||
Interest
Expense:
|
||||||||
Gas Utility
Operations
|
$
|
4,975
|
$
|
5,241
|
||||
Wholesale Gas
Operations
|
144
|
751
|
||||||
Retail Gas and Other
Operations
|
76
|
104
|
||||||
On-Site Energy
Production
|
831
|
876
|
||||||
Corporate and
Services
|
381
|
1,103
|
||||||
Subtotal
|
6,407
|
8,075
|
||||||
Intersegment
Borrowings
|
(393
|
)
|
(1,106
|
)
|
||||
Total Interest
Expense
|
$
|
6,014
|
$
|
6,969
|
Property
Additions:
|
||||||||
Gas Utility
Operations
|
$
|
11,135
|
$
|
11,549
|
||||
Wholesale Gas
Operations
|
3,338
|
-
|
||||||
Retail Gas and Other
Operations
|
-
|
9
|
||||||
On-Site Energy
Production
|
229
|
1,748
|
||||||
Appliance Service
Operations
|
2
|
28
|
||||||
Corporate and
Services
|
366
|
207
|
||||||
Total Property
Additions
|
$
|
15,070
|
$
|
13,541
|
March 31,
2008
|
December 31,
2007
|
|||||||
Identifiable
Assets:
|
||||||||
Gas Utility
Operations
|
$
|
1,218,982
|
$
|
1,227,162
|
||||
Wholesale Gas
Operations
|
155,498
|
142,848
|
||||||
Retail Gas and Other
Operations
|
51,443
|
42,735
|
||||||
Retail Electric
Operations
|
10,066
|
7,082
|
||||||
On-Site Energy
Production
|
122,435
|
124,982
|
||||||
Appliance Service
Operations
|
15,260
|
16,060
|
||||||
Discontinued
Operations
|
2,365
|
2,604
|
||||||
Corporate and
Services
|
44,846
|
58,274
|
||||||
Subtotal
|
1,620,895
|
1,621,747
|
||||||
Intersegment
Assets
|
(97,529
|
)
|
(92,306
|
)
|
||||
Total Identifiable
Assets
|
$
|
1,523,366
|
$
|
1,529,441
|
March 31,
2008
|
December 31,
2007
|
|||||||
Environmental Remediation
Costs:
|
||||||||
Expended -
Net
|
$
|
29,738
|
$
|
25,960
|
||||
Liability for Future
Expenditures
|
66,902
|
73,880
|
||||||
Income Taxes-Flowthrough
Depreciation
|
3,463
|
3,707
|
||||||
Deferred Asset Retirement
Obligation Costs
|
21,757
|
21,572
|
||||||
Deferred Pension and Other
Postretirement Benefit Costs
|
32,591
|
32,686
|
||||||
Temperature Adjustment Clause
Receivable
|
2,580
|
6,516
|
||||||
Conservation Incentive Program
Receivable
|
22,202
|
18,173
|
||||||
Societal Benefit Costs
Receivable
|
1,253
|
2,952
|
||||||
Premium for Early Retirement of
Debt
|
1,329
|
1,370
|
||||||
Other Regulatory
Assets
|
2,887
|
1,872
|
||||||
$
|
184,702
|
$
|
188,688
|
March 31,
2008
|
December 31,
2007
|
|||||||
Excess Plant Removal
Costs
|
$
|
48,782
|
$
|
48,705
|
||||
Liability for
NJCEP
|
2,404
|
2,797
|
||||||
Deferred Gas Costs and Revenues -
Net
|
23,014
|
2,586
|
||||||
Other
|
1,708
|
1,691
|
||||||
Total Regulatory
Liabilities
|
$
|
75,908
|
$
|
55,779
|
Pension
Benefits
|
Other Postretirement
Benefits
|
|||||||||||||
Three Months
Ended
March 31,
|
Three Months Ended
March 31,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||
Service
Cost
|
$
|
838
|
$
|
912
|
$
|
265
|
$
|
267
|
||||||
Interest
Cost
|
1,991
|
2,077
|
737
|
752
|
||||||||||
Expected Return on Plan
Assets
|
(2,512
|
)
|
(2,561
|
)
|
(538
|
)
|
(527
|
)
|
||||||
Amortizations:
|
||||||||||||||
Prior Service Cost
(Credits)
|
72
|
73
|
(86
|
)
|
(87)
|
|||||||||
Actuarial
Loss
|
398
|
471
|
184
|
170
|
||||||||||
Net Periodic Benefit
Cost
|
787
|
972
|
562
|
575
|
||||||||||
Capitalized Benefit
Costs
|
(256
|
)
|
(367
|
)
|
(209
|
)
|
(233
|
)
|
||||||
Total Net Periodic Benefit
Expense
|
$
|
531
|
$
|
605
|
$
|
353
|
$
|
342
|
|
·
|
Level
1: Observable inputs such as quoted prices in active markets
for identical assets or
liabilities.
|
|
·
|
Level
2: Inputs other than quoted prices that are observable for the
asset or liability, either directly or indirectly; these include quoted
prices for similar assets or liabilities in active markets and quoted
prices for identical or similar assets or liabilities in markets that are
not active.
|
|
·
|
Level
3: Unobservable inputs that reflect the reporting entity’s own
assumptions.
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets
|
||||||||||||||||
Available-for-Sale
Securities (A)
|
$ | 6,271 | $ | 6,271 | $ | - | $ | - | ||||||||
Derivatives
– Energy Related Assets (B)
|
40,716 | 29,820 | 10,896 | - | ||||||||||||
$ | 46,987 | $ | 36,091 | $ | 10,896 | $ | - | |||||||||
Liabilities
|
||||||||||||||||
Derivatives
– Energy Related Liabilities
(B)
|
$ | 28,320 | $ | 21,855 | $ | 6,465 | $ | - | ||||||||
Derivatives
– Other (C)
|
4,803 | - | 4,803 | - | ||||||||||||
$ | 33,123 | $ | 21,855 | $ | 11,268 | $ | - | |||||||||
2008
|
2007
|
|||||||||||||||
Utility
Throughput – dth:
|
||||||||||||||||
Firm Sales
-
|
||||||||||||||||
Residential
|
10,183
|
28
|
%
|
11,281
|
30
|
%
|
||||||||||
Commercial
|
2,584
|
7
|
%
|
2,929
|
8
|
%
|
||||||||||
Industrial
|
75
|
-
|
106
|
-
|
||||||||||||
Cogeneration
and electric generation
|
16
|
-
|
31
|
-
|
||||||||||||
Firm Transportation
-
|
||||||||||||||||
Residential
|
952
|
3
|
%
|
871
|
2
|
%
|
||||||||||
Commercial
|
2,460
|
7
|
%
|
2,610
|
7
|
%
|
||||||||||
Industrial
|
3,280
|
9
|
%
|
3,111
|
8
|
%
|
||||||||||
Cogeneration
and electric generation
|
352
|
-
|
414
|
1
|
%
|
|||||||||||
Total
Firm Throughput
|
19,902
|
54
|
%
|
21,353
|
56
|
%
|
||||||||||
Interruptible
Sales
|
9
|
-
|
10
|
-
|
||||||||||||
Interruptible
Transportation
|
912
|
3
|
%
|
651
|
3
|
%
|
||||||||||
Off-System
|
4,239
|
12
|
%
|
6,835
|
18
|
%
|
||||||||||
Capacity
Release
|
11,230
|
31
|
%
|
8,814
|
23
|
%
|
||||||||||
Total
Throughput
|
36,292
|
100
|
%
|
37,663
|
100
|
%
|
Utility
Operating Revenues:
|
|||||||||||||||||
Firm Sales-
|
Residential
|
$
|
143,468
|
60
|
%
|
$
|
168,072
|
60
|
%
|
||||||
Commercial
|
31,186
|
13
|
%
|
36,578
|
13
|
%
|
||||||||
Industrial
|
3,555
|
2
|
%
|
3,983
|
1
|
%
|
||||||||
Cogeneration
and electric generation
|
327
|
-
|
449
|
-
|
||||||||||
Firm Transportation
-
|
||||||||||||||
Residential
|
4,469
|
2
|
%
|
3,574
|
2
|
%
|
||||||||
Commercial
|
7,653
|
3
|
%
|
7,028
|
3
|
%
|
||||||||
Industrial
|
3,192
|
2
|
%
|
3,090
|
1
|
%
|
||||||||
Cogeneration
and electric generation
|
322
|
-
|
394
|
-
|
||||||||||
Total
Firm Revenues
|
194,172
|
82
|
%
|
223,168
|
80
|
%
|
||||||||
Interruptible
Sales
|
125
|
-
|
140
|
-
|
||||||||||
Interruptible
Transportation
|
596
|
-
|
463
|
-
|
||||||||||
Off-System
|
39,990
|
17
|
%
|
52,066
|
19
|
%
|
||||||||
Capacity
Release
|
2,800
|
1
|
%
|
1,744
|
1
|
%
|
||||||||
Other
|
221
|
-
|
283
|
-
|
||||||||||
237,904
|
100
|
%
|
277,864
|
100
|
%
|
|||||||||
Less: Intercompany
Sales
|
(1,492
|
)
|
(12,579
|
)
|
||||||||||
Total Utility Operating
Revenues
|
236,412
|
265,285
|
||||||||||||
Less:
|
||||||||||||||
Cost of
sales
|
161,425
|
192,965
|
||||||||||||
Conservation recoveries
*
|
3,065
|
1,213
|
||||||||||||
RAC recoveries
*
|
695
|
472
|
||||||||||||
Revenue
taxes
|
3,790
|
4,035
|
||||||||||||
Utility
Margin
|
$
|
67,437
|
$
|
66,600
|
||||||||||
Margin:
|
||||||||||||||
Residential
|
$
|
40,982
|
61
|
%
|
$
|
44,262
|
67
|
%
|
||||||
Commercial and
industrial
|
14,318
|
21
|
%
|
15,360
|
23
|
%
|
||||||||
Cogeneration and electric
generation
|
289
|
-
|
359
|
-
|
||||||||||
Interruptible
|
65
|
-
|
57
|
-
|
||||||||||
Off-system & capacity
release
|
1,081
|
2
|
%
|
991
|
2
|
%
|
||||||||
Other
revenues
|
220
|
-
|
282
|
-
|
||||||||||
Margin before weather normalization &
decoupling
|
56,955
|
84
|
%
|
61,311
|
92
|
%
|
||||||||
CIP
mechanism
|
10,482
|
16
|
%
|
5,289
|
8
|
%
|
||||||||
Utility
Margin
|
$
|
67,437
|
100
|
%
|
$
|
66,600
|
100
|
%
|
||||||
Degree
Days:
|
2,264
|
2,418
|
||||||||||||
* Represents revenues for which
there is a corresponding charge in operating
expenses. Therefore, such recoveries have no impact on our
financial results.
|
2008
|
2007
|
|||||||
Net Income
Benefit:
|
||||||||
CIP
– Weather Related
|
$
|
1.6
|
$
|
0.3
|
||||
CIP
– Usage Related
|
4.6
|
2.8
|
||||||
Total
Net Income Benefit
|
$
|
6.2
|
$
|
3.1
|
||||
Weather Compared to 20-Year TAC
Average
|
6.8 % warmer
|
0.5 % warmer
|
||||||
Weather Compared to Prior
Year
|
6.4 % warmer
|
11.8 % colder
|
2008
|
2007
|
Change
|
||||||||||
SJRG
Revenue
|
$
|
26.1
|
$
|
20.9
|
$
|
5.2
|
||||||
Add:
Unrealized Losses
|
26.4
|
19.2
|
7.2
|
|||||||||
SJRG
Revenue,
Excluding
Unrealized Losses
|
$
|
52.5
|
$
|
40.1
|
$
|
12.4
|
||||||
|
·
|
Gross Margin for SJRG decreased
$9.4 million in the three months ended March 31, 2008 compared with the
same period in 2007. Excluding the impact of the net change in unrealized
gains and losses recorded on forward financial contracts as discussed
above, gross margin for SJRG decreased $2.2 million in the first three
months of 2008 compared with the same period in 2007. Operationally,
margins decreased in 2008 due primarily to less favorable time spreads on
storage asset positions than in 2007. These storage assets allow SJRG to
lock in the differential between purchasing natural gas at low current
prices and selling equivalent quantities at higher future prices. Gross
margin is generated via seasonal pricing differentials. Future margins
could fluctuate significantly due to the volatile nature of wholesale gas
prices.
|
|
·
|
Gross Margin for Marina increased
$0.5 million for the three months ended March 31, 2008 compared with the
same period in 2007 due mainly to lower commodity costs related to hot
water sales and from an additional landfill engine that came on line in
November 2007. Gross margin as a percentage of Operating Revenues did not
change significantly in 2008 compared with
2007.
|
|
·
|
Gross margin from SJE’s retail gas
sales increased $2.1 million in the three months ended March 31, 2008
compared with the same period in 2007. Gross margin as a percentage of
Operating Revenues increased 3.6 percentage points in the first three
months of 2008 compared to the same period in 2007. This increase is due
mainly to the partial recovery of losses from a full requirements
customer in the commercial market that were recognized in 2006. The 2008
margin also includes the impact of our initiatives to actively capitalize
on market volatility which resulted in securing more attractive
spreads.
|
|
·
|
Gross margin from SJE’s retail
electricity sales did not change significantly during the three months
ended March 31, 2008 compared with the same period in 2007. Gross
margin as a percentage of Operating Revenues has decreased 1.8 percentage
points in the first three months of 2008 compared to the same period in
2007. This decrease is due mainly to the loss of one large high margin
customer which was partially offset by the addition of several lower
margin customers and lower transmission
credits.
|
|
·
|
Gross Margin for SJESP increased
$0.5 million in the three months ended March 31, 2008 compared with the
same period in 2007. Gross margin as a percentage of Operating Revenues
has increased 2.0 percentage points in the first three months of 2008
compared to the same period in 2007. This increase is due mainly to higher
margins from strong installation, time and materials, and heater
maintenance contract sales as well as several cost-cutting
initiatives.
|
Three Months
Ended
|
||||
March 31,
|
||||
2008 vs. 2007
|
||||
Utility
|
$
|
1,224
|
||
Nonutility:
|
||||
Wholesale
Gas
|
256
|
|||
Retail Gas and
Other
|
99
|
|||
Retail
Electricity
|
(46
|
)
|
||
On-Site Energy
Production
|
122
|
|||
Appliance
Service
|
(261
|
)
|
||
Total
Nonutility
|
170
|
|||
Intercompany
Eliminations and
Other
|
(308
|
)
|
||
Total
Operations
|
$
|
1,086
|
As of
March 31,
2008
|
As of
December 31,
2007
|
|||||||
Common
Equity
|
56.0
|
%
|
50.3
|
%
|
||||
Long-Term
Debt
|
40.4
|
37.3
|
||||||
Short-Term
Debt
|
3.6
|
12.4
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
|
·
|
In April 2007, SJI guaranteed certain
obligations of LVE Energy Partners, LLC (LVE), an unconsolidated joint
venture in which Marina has a 50% equity interest. LVE entered
into a 25 year contract with a resort developer to design, build, own and
operate a district energy system and central energy center for a planned
resort in Las Vegas, Nevada. LVE began construction of the
facility in 2007 and expects to provide full energy services when the
resort is completed in 2010. SJI holds a significant variable
interest in LVE but is not the primary beneficiary. SJI has
issued a performance guarantee for up to $180.0 million to the resort
developer to ensure that certain construction milestones relating to the
development of the thermal facility are met. Concurrently, SJI
is the beneficiary of a surety bond purchased by the project’s general
contractor that provides SJI with assurance that construction of the
thermal facility will meet those same milestones. In addition,
SJI has guaranteed the obligations of LVE under certain insurance policies
during the construction period. The maximum amount that SJI
could be obligated for, in the event that LVE does not have sufficient
resources to make deductible payments on future claims under these
insurance policies, is approximately $6.0 million. SJI has also
guaranteed certain performance obligations of LVE under the operating
agreements between LVE and the resort, up to $20 million each year for the
term of the agreement, commencing with the first year of
operations. SJI and the partner in this joint venture have
entered into reimbursement agreements that secure reimbursement for SJI of
a proportionate share of any payments made by SJI on these
guarantees.
|
|
·
|
SJI has also guaranteed certain
obligations of BC Landfill Energy, LLC (BCLE), an unconsolidated joint
venture in which Marina has a 50% equity interest. BCLE has
entered into a 20-year agreement with a county government to lease and
operate a facility that will produce electricity from landfill methane
gas. The facility went online in the fourth quarter of
2007. Although unlikely, the maximum amount that SJI could be
obligated for, in the event that BCLE does not meet minimum specified
levels of operating performance and no mitigating action is taken, or is
unable to meet certain financial obligations as they become due, is
approximately $4.0 million each year. SJI and the partner in
this joint venture have entered into reimbursement agreements that secure
reimbursement for SJI of a proportionate share of any payments made by SJI
on these guarantees. SJI holds a variable interest in BCLE but
is not the primary
beneficiary.
|
Assets
|
Maturity
|
||||||||||||||||
Source of
Fair
Value
|
Maturity
< 1 Year
|
Maturity
1 - 3 Years
|
Beyond
3 Years
|
Total
|
|||||||||||||
|
|||||||||||||||||
Prices Actively
Quoted
|
NYMEX
|
$
|
26,425
|
$
|
3,355
|
$
|
40
|
$
|
29,820
|
||||||||
Other External
Sources
|
Basis
|
8,444
|
2,297
|
155
|
10,896
|
||||||||||||
Total
|
$
|
34,869
|
$
|
5,652
|
$
|
195
|
$
|
40,716
|
Maturity
|
|||||||||||||||||
Liabilities
|
Source of
|
Maturity
|
Maturity
|
Beyond
|
|||||||||||||
Fair
Value
|
< 1 Year
|
1 - 3 Years
|
3 Years
|
Total
|
|||||||||||||
Prices Actively
Quoted
|
NYMEX
|
$
|
19,404
|
$
|
2,439
|
$
|
12
|
$
|
21,855
|
||||||||
Other External
Sources
|
Basis
|
6,397
|
67
|
1
|
6,465
|
||||||||||||
Total
|
$
|
25,801
|
$
|
2,506
|
$
|
13
|
$
|
28,320
|
Net Derivatives — Energy Related
Assets, January 1, 2008
|
$
|
16,286
|
||
Contracts Settled During
Three Months Ended March 31, 2008, Net
|
(17,202
|
)
|
||
Other Changes in Fair Value
from Continuing and New Contracts, Net
|
13,312
|
|||
Net Derivatives — Energy Related
Assets March 31, 2008
|
$
|
12,396
|
Amount
|
Fixed
Interest
Rate
|
Start
Date
|
Maturity
|
Type
|
Obligor
|
||||||
$ 3,900,000
|
4.795
|
%
|
12/01/2004
|
12/01/2014
|
Taxable
|
Marina
|
|||||
$ 8,000,000
|
4.775
|
%
|
11/12/2004
|
11/12/2014
|
Taxable
|
Marina
|
|||||
$ 20,000,000
|
4.080
|
%
|
11/19/2001
|
12/01/2011
|
Tax-exempt
|
Marina
|
|||||
$ 14,500,000
|
3.905
|
%
|
03/17/2006
|
01/15/2026
|
Tax-exempt
|
Marina
|
|||||
$
500,000
|
3.905
|
%
|
03/17/2006
|
01/15/2026
|
Tax-exempt
|
Marina
|
|||||
$
330,000
|
3.905
|
%
|
03/17/2006
|
01/15/2026
|
Tax-exempt
|
Marina
|
|||||
$ 7,100,000
|
4.895
|
%
|
02/01/2006
|
02/01/2016
|
Taxable
|
Marina
|
|||||
$ 12,500,000
|
3.430
|
%
|
12/01/2006
|
02/01/2036
|
Tax-exempt
|
SJG
|
|||||
$ 12,500,000
|
3.430
|
%
|
12/01/2006
|
02/01/2036
|
Tax-exempt
|
SJG
|
|||||
Exhibit No.
|
Description
|
31.1
|
Certification of Chief Executive
Officer Pursuant to Rule 13a-14(a) of the Exchange
Act.
|
31.2
|
Certification of Chief Financial
Officer Pursuant to Rule 13a-14(a) of the Exchange
Act.
|
32.1
|
Certification of Chief Executive
Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b)
of Section 1350, Chapter 63 of Title 18, United States
Code).
|
32.2
|
Certification of Chief Financial
Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b)
of Section 1350, Chapter 63 of Title 18, United States
Code).
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Dated: May 12,
2008
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By: /s/ Edward J. Graham
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Edward J. Graham
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Chairman, President & Chief Executive
Officer
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Dated: May 12,
2008
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By: /s/ David A. Kindlick
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David A. Kindlick
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Vice President & Chief Financial
Officer
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