EXHIBIT 99.2
SUPPLEMENTAL INFORMATION ON THE CHANGE IN REVENUE RECOGNITION METHOD:
Annual Impact
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The Company has restated its 2002 and 2001 financial statements in order to
reflect its Delaware and Maryland natural gas divisions on the "accrual" rather
than the "as billed" revenue recognition method. This change, which had an
insignificant effect on the Company's annual results for the last three years,
reflects gas consumed by the Company's customers through the last day of the
year as revenue. The Company's Florida division has historically used the
"accrual" method in accordance with Florida Public Service Commission
requirements. The Delaware and Maryland divisions have historically used the "as
billed" method to recognize revenues consistent with the rate-setting processes
in those states. In order to consistently apply the "accrual" method, the
Company met separately with the staffs of the Delaware and Maryland Public
Service Commissions to determine the regulatory impact of the change. Having
determined that there is little to no impact, the Company has conformed the
revenue recognition method used in its Delaware and Maryland divisions to the
method used by its Florida division. In order to provide comparable information,
the Company is restating its 2002 and 2001 financial statements to reflect the
"accrual" revenue recognition method. As a result of the restatement, retained
earnings of the Company as of January 1, 2001 has increased by $697,000 compared
to previously reported amounts. As indicated below, the change has no impact on
basic earnings per share. There is no impact on fully diluted earnings per share
in 2002 and a $0.01 decrease in 2001. Dollars are shown in thousands, except per
share amounts.
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DECEMBER 31, IMPACT OF DECEMBER 31, DECEMBER 31, IMPACT OF DECEMBER 31,
2002 REVENUE 2002 2001 REVENUE 2001
AS PREVIOUSLY RECOGNITION AS PREVIOUSLY RECOGNITION
REPORTED (1) CHANGE AS RESTATED REPORTED (1) CHANGE AS RESTATED
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SELECTED INCOME STATEMENT INFORMATION
Operating Revenues . . . . . . . . $ 134,101 $ 42 $ 134,143 $ 157,670 $ (519) $ 157,151
Operating Income . . . . . . . . . 16,618 (13) 16,605 16,270 (49) 16,221
Income from Continuing Operations. 7,543 (8) 7,535 7,371 (30) 7,341
Net Income . . . . . . . . . . . . 3,729 (8) 3,721 6,722 (30) 6,692
EARNINGS PER SHARE OF COMMON STOCK
Basic
From Continuing Operations . . . . $ 1.37 $ - $ 1.37 $ 1.37 $ - $ 1.37
Net Income . . . . . . . . . . . . $ 0.68 $ - $ 0.68 $ 1.25 $ - $ 1.25
Diluted
From Continuing Operations . . . . $ 1.37 $ - $ 1.37 $ 1.35 $ - $ 1.35
Net Income . . . . . . . . . . . . $ 0.68 $ - $ 0.68 $ 1.24 $ (0.01) $ 1.23
SELECTED BALANCE SHEET INFORMATION
Assets
Accounts receivable. . . . . . . . $ 24,046 $ 3,298 $ 27,344
Underrecovered purchased
gas costs. . . . . . . . . . . . . 2,969 (2,206) 763
Income taxes . . . . . . . . . . . 488 27 515
Other regulatory assets. . . . . . 2,021 8 2,029
Liabilities
Deferred income taxes. . . . . . . $ (418) $ 468 $ 50
Stockholders' Equity
Retained earnings. . . . . . . . . $ 32,239 $ 659 $ 32,898
<FN>
(1) December 31, 2002 and 2001 Operating Revenue, Operating Income and
Income from Continuing Operations exclude the results of the
operations discontinued in 2003 and include minor reclassifications
to conform with the presentation of the 2003 results.
</FN>
Quarterly Impact
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Under the "as billed" method, revenue is recorded after the customer's meter has
been read. Under the "accrual" method, revenue is based on an estimate of actual
deliveries during any accounting period. The change from the "as billed" method
to the "accrual" method has the effect of eliminating the delay inherent in the
"as billed" revenue recognition method. As a result, during periods where
temperatures are getting increasingly colder, the "accrual" method recognizes
more revenue than the "as billed" method. During periods where temperatures are
getting increasingly warmer, the "accrual" method recognizes less revenue than
the "as billed" method. Over a twelve-month period the differences are
relatively small, because twelve months consist of a complete weather cycle.
However, there are more significant differences when looking at quarterly data,
because the temperatures at the beginning of any individual quarter can be
significantly different than at the end of that quarter. For example, as
indicated below, while the "accrual" revenue recognition method increased net
income for 2003 by only $4,000, seasonal variances affect quarterly net income
by up to $400,000.
The following schedules detail the impact on quarterly results. Dollars are
shown in thousands, except per share amounts.
----------------- 2003 ----------------- ----------------- 2002 -----------------
AS BILLED IMPACT OF ACCRUAL AS BILLED IMPACT OF ACCRUAL
METHOD REVENUE METHOD METHOD REVENUE METHOD
AS PREVIOUSLY RECOGNITION AS PREVIOUSLY RECOGNITION
REPORTED (1) CHANGE AS RESTATED REPORTED (1) CHANGE AS RESTATED
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SELECTED FINANCIAL INFORMATION
Operating Revenues
First quarter . . . . . . . . . . . $ 63,924 $ (965) $ 62,959 $ 45,851 $ (735) $ 45,116
Second quarter. . . . . . . . . . . 32,237 (1,452) 30,785 28,633 (1,845) 26,788
Third quarter . . . . . . . . . . . 23,174 275 23,449 20,617 160 20,777
Fourth quarter. . . . . . . . . . . 42,388 2,717 45,105 39,000 2,462 41,462
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Total Operating Revenues. . . . . . . . $ 161,723 $ 575 $ 162,298 $ 134,101 $ 42 $ 134,143
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Operating Income
First quarter . . . . . . . . . . . $ 12,566 $ (256) $ 12,310 $ 9,152 $ (187) $ 8,965
Second quarter. . . . . . . . . . . 3,268 (406) 2,862 2,093 (553) 1,540
Third quarter . . . . . . . . . . . 144 9 153 (153) 14 (139)
Fourth quarter. . . . . . . . . . . 5,594 660 6,254 5,526 713 6,239
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Total Operating Income. . . . . . . . . $ 21,572 $ 7 $ 21,579 $ 16,618 $ (13) $ 16,605
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Income from Continuing Operations
First quarter . . . . . . . . . . . $ 6,789 $ (153) $ 6,636 $ 5,057 $ (112) $ 4,945
Second quarter. . . . . . . . . . . 1,177 (242) 935 620 (330) 290
Third quarter . . . . . . . . . . . (715) 5 (710) (721) 8 (713)
Fourth quarter. . . . . . . . . . . 2,824 394 3,218 2,587 426 3,013
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Total Income from Continuing Operations $ 10,075 $ 4 $ 10,079 $ 7,543 $ (8) $ 7,535
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Net Income
First quarter . . . . . . . . . . . $ 6,628 $ (153) $ 6,475 $ 2,967 $ (112) $ 2,855
Second quarter. . . . . . . . . . . 1,176 (242) 934 530 (330) 200
Third quarter . . . . . . . . . . . (865) 5 (860) (939) 8 (931)
Fourth quarter. . . . . . . . . . . 2,349 394 2,743 1,171 426 1,597
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Total Net Income. . . . . . . . . . . . $ 9,288 $ 4 $ 9,292 $ 3,729 $ (8) $ 3,721
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<FN>
(1) Operating Revenue, Operating Income and Income from Continuing Operations
for the quarters of 2002 and previously filed quarters of 2003
exclude the results of the operations discontinued in 2003 and include
minor reclassifications to conform with the presentation of the
year-end 2003 results.
</FN>
----------------- 2003 ----------------- ----------------- 2002 -----------------
AS BILLED IMPACT OF ACCRUAL AS BILLED IMPACT OF ACCRUAL
METHOD REVENUE METHOD METHOD REVENUE METHOD
AS PREVIOUSLY RECOGNITION AS PREVIOUSLY RECOGNITION
REPORTED (1) CHANGE AS RESTATED REPORTED (1) CHANGE AS RESTATED
- -----------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE OF COMMON STOCK
Basic
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From Continuing Operations
First quarter . . . . . . . . . . . $ 1.22 $ (0.03) $ 1.19 $ 0.93 $ (0.02) $ 0.91
Second quarter. . . . . . . . . . . $ 0.21 $ (0.04) $ 0.17 $ 0.11 $ (0.06) $ 0.05
Third quarter . . . . . . . . . . . $ (0.13) $ - $ (0.13) $ (0.13) $ - $ (0.13)
Fourth quarter. . . . . . . . . . . $ 0.50 $ 0.07 $ 0.57 $ 0.47 $ 0.07 $ 0.54
FISCAL YEAR . . . . . . . . . . . . $ 1.80 $ - $ 1.80 $ 1.37 $ - $ 1.37
Net Income
First quarter . . . . . . . . . . . $ 1.19 $ (0.03) $ 1.16 $ 0.55 $ (0.03) $ 0.52
Second quarter. . . . . . . . . . . $ 0.21 $ (0.04) $ 0.17 $ 0.10 $ (0.06) $ 0.04
Third quarter . . . . . . . . . . . $ (0.15) $ - $ (0.15) $ (0.17) $ - $ (0.17)
Fourth quarter. . . . . . . . . . . $ 0.42 $ 0.07 $ 0.49 $ 0.21 $ 0.08 $ 0.29
FISCAL YEAR . . . . . . . . . . . . $ 1.66 $ - $ 1.66 $ 0.68 $ - $ 0.68
Diluted
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From Continuing Operations
First quarter . . . . . . . . . . . $ 1.19 $ (0.03) $ 1.16 $ 0.90 $ (0.02) $ 0.88
Second quarter. . . . . . . . . . . $ 0.21 $ (0.04) $ 0.17 $ 0.11 $ (0.06) $ 0.05
Third quarter . . . . . . . . . . . $ (0.13) $ - $ (0.13) $ (0.13) $ - $ (0.13)
Fourth quarter. . . . . . . . . . . $ 0.49 $ 0.07 $ 0.56 $ 0.47 $ 0.07 $ 0.54
FISCAL YEAR . . . . . . . . . . . . $ 1.76 $ - $ 1.76 $ 1.37 $ - $ 1.37
Net Income
First quarter . . . . . . . . . . . $ 1.16 $ (0.03) $ 1.13 $ 0.53 $ (0.02) $ 0.51
Second quarter. . . . . . . . . . . $ 0.21 $ (0.04) $ 0.17 $ 0.10 $ (0.06) $ 0.04
Third quarter . . . . . . . . . . . $ (0.15) $ - $ (0.15) $ (0.17) $ - $ (0.17)
Fourth quarter. . . . . . . . . . . $ 0.41 $ 0.07 $ 0.48 $ 0.21 $ 0.08 $ 0.29
FISCAL YEAR . . . . . . . . . . . . $ 1.63 $ - $ 1.63 $ 0.68 $ - $ 0.68
<FN>
(1) Operating Revenue, Operating Income and Income from Continuing Operations
for the quarters of 2002 and previously filed quarters of 2003
exclude the results of the operations discontinued in 2003 and include
minor reclassifications to conform with the presentation of the
year-end 2003 results.
</FN>