Page 1 of 29
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2001 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)
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 [ ]
As of May 4, 2001, there were 11,669,366 shares of the registrant's common
stock outstanding.
- Cover -
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements -- See Pages 3 through 16
SJI-2
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands Except for Per Share Data)
Three Months Ended
March 31,
--------------------------
2001 2000
------------ ------------
Operating Revenues:
Utility $202,441 $146,118
Nonutility 140,184 21,404
------------ ------------
Total Operating Revenues 342,625 167,522
------------ ------------
Operating Expenses:
Cost of Gas Sold - Utility 144,340 87,915
Cost of Sales - Nonutility 134,542 18,377
Operations 10,427 10,600
Maintenance 2,885 2,776
Depreciation 5,201 4,944
Income Taxes 15,447 13,626
Energy and Other Taxes 4,476 4,383
------------ ------------
Total Operating Expenses 317,318 142,621
------------ ------------
Operating Income 25,307 24,901
------------ ------------
Unrealized Gain on Derivatives (Note 1) 2,821 -
----------- -----------
Interest Charges:
Long-Term Debt 4,232 3,833
Short-Term Debt and Other 1,447 1,226
------------ ------------
Total Interest Charges 5,679 5,059
------------ ------------
Preferred Dividend Requirements of Subsidiary 766 771
------------ ------------
Income from Continuing Operations 21,683 19,071
Loss from Discontinued Operations - Net (149) (90)
Cumulative Effect of Accounting Change - Net
(Note 1) 148 -
------------ ------------
Net Income Applicable to Common Stock $21,682 $18,981
============ ============
Average Shares of Common Stock Outstanding 11,588 11,284
============ ============
Earnings Per Common Share:
Continuing Operations $1.87 $1.69
Discontinued Operations - Net (0.01) (0.01)
Cumulative Effect of Accounting Change -
Net (Note 1) 0.01 -
------------ ------------
Earnings Per Common Share $1.87 $1.68
============ ============
Dividends Declared Per Common Share $0.370 $0.365
============ ============
<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
SJI-3
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
March 31, December 31,
-------------------------- ------------
2001 2000 2000
------------ ------------ ------------
Assets
Property, Plant and Equipment:
Utility Plant, at original cost $773,229 $731,658 $765,561
Accumulated Depreciation (211,993) (195,958) (208,292)
Nonutility Property and Equipment, at cost 6,898 3,487 6,042
Accumulated Depreciation (1,008) (960) (988)
------------ ------------ ------------
Property, Plant and Equipment - Net 567,126 538,227 562,323
------------ ------------ ------------
Investments:
Available-for-Sale Securities 2,528 1,747 2,540
Investment in Affiliate 1,447 2,313 4,451
------------ ------------ ------------
Total Investments 3,975 4,060 6,991
------------ ------------ ------------
Current Assets:
Cash and Cash Equivalents 5,097 9,061 7,227
Notes Receivable - Affiliate 2,870 2,165 1,055
Accounts Receivable 108,457 67,619 80,480
Unbilled Revenues 35,598 16,590 45,022
Provision for Uncollectibles (2,031) (1,034) (2,043)
Natural Gas in Storage, average cost 10,960 10,227 31,957
Materials and Supplies, average cost 3,894 3,952 4,037
Prepaid Taxes - - 3,960
Derivatives 27,880 - -
Prepayments and Other Current Assets 2,814 3,149 3,128
------------ ------------ ------------
Total Current Assets 195,539 111,729 174,823
------------ ------------ ------------
Accounts Receivable - Merchandise 606 987 705
------------ ------------ ------------
Regulatory and Other Non-Current Assets:
Environmental Remediation Costs:
Expended - Net 9,853 17,840 18,474
Liability for Future Expenditures 51,029 51,029 51,029
Gross Receipts & Franchise Taxes 2,587 3,030 2,698
Income Taxes - Flowthrough Depreciation 10,308 11,286 10,553
Deferred Fuel Costs - Net 30,949 6,517 28,810
Deferred Postretirement Benefit Costs 4,441 4,820 4,536
Derivatives 1,068 - -
Other 9,025 6,791 9,037
------------ ------------ ------------
Total Regulatory and Other Non-Current
Assets 119,260 101,313 125,137
------------ ------------ ------------
Total Assets $886,506 $756,316 $869,979
============ ============ ============
<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
SJI-4
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
March 31, December 31,
-------------------------- ------------
2001 2000 2000
------------ ------------ ------------
Capitalization and Liabilities
Common Equity:
Common Stock $14,479 $14,105 $14,375
Premium on Common Stock 132,108 124,400 129,360
Retained Earnings 75,399 65,330 58,004
------------ ------------ ------------
Total Common Equity 221,986 203,835 201,739
------------ ------------ ------------
Preferred Stock and Securities of Subsidiary:
Redeemable Cumulative Preferred Stock:
South Jersey Gas Company, Par Value $100
per share
Authorized - 43,104, 45,504 and 43,104
shares
Outstanding Shares:
Series A, 4.7% - 300, 1,200 and 300
shares 30 120 30
Series B, 8% - 17,742, 19,242 and
17,742 shares 1,774 1,924 1,774
South Jersey Gas Company-Guaranteed
Manditorily Redeemable Preferred Securities
of Subsidiary Trust:
Par Value $25 per share, 1,400,000 shares
Authorized and Outstanding 35,000 35,000 35,000
------------ ------------ ------------
Total Preferred Stock and Securities
of Subsidiary 36,804 37,044 36,804
------------ ------------ ------------
Long-Term Debt 199,793 178,373 204,981
------------ ------------ ------------
Total Capitalization 458,583 419,252 443,524
------------ ------------ ------------
Current Liabilities:
Notes Payable 99,850 82,000 121,200
Current Maturities of Long-Term Debt 11,876 11,876 11,876
Accounts Payable 62,033 34,114 84,004
Customer Deposits 5,455 5,462 5,366
Environmental Remediation Costs 17,266 13,965 17,286
Taxes Accrued 17,424 16,683 1,479
Derivatives 25,680 - -
Interest Accrued and Other Current Liabilities 13,931 13,839 15,816
------------ ------------ ------------
Total Current Liabilities 253,515 177,939 257,027
------------ ------------ ------------
Deferred Credits and Other Non-Current Liabilities:
Deferred Income Taxes - Net 110,461 92,091 105,037
Investment Tax Credits 4,427 4,757 4,513
Pension and Other Postretirement Benefits 13,828 13,791 13,394
Environmental Remediation Costs 37,886 41,354 37,886
Derivatives 196 - -
Other 7,610 7,132 8,598
------------ ------------ ------------
Total Deferred Credits
and Other Non-Current Liabilities 174,408 159,125 169,428
------------ ------------ ------------
Commitments and Contingencies (Note 8)
Total Capitalization and Liabilities $886,506 $756,316 $869,979
============ ============ ============
<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
SJI-5
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
Three Months Ended
March 31,
---------------------------
2001 2000
------------ ------------
Cash Flows from Operating Activities:
Net Income Applicable to Common Stock $21,682 $18,981
Adjustments to Reconcile Net Income to Cash Flows
Provided by Operating Activities:
Depreciation and Amortization 5,791 5,860
Unrealized Gain on Derivatives (2,821) -
Provision for Losses on Accounts Receivable 519 61
Revenues and Fuel Costs Deferred - Net (2,139) 6,657
Deferred and Non-Current Income Taxes and
Credits - Net 5,186 1,029
Environmental Remediation Costs - Net 8,601 7,800
Changes in:
Accounts Receivable (19,084) (18,895)
Inventories 21,140 16,972
Prepayments and Other Current Assets 314 54
Prepaid and Accrued Taxes - Net 19,905 20,189
Accounts Payable and Other Accrued Liabilities (23,767) (6,356)
Other - Net (397) 1,399
------------ ------------
Net Cash Provided by Operating Activities 34,930 53,751
------------ ------------
Cash Flows from Investing Activities:
Investment in Affiliate 3,004 (63)
Loan to Affiliate (1,815) 485
Capital Expenditures, Cost of Removal and Salvage (10,262) (10,177)
------------ ------------
Net Cash Used in Investing Activities (9,073) (9,755)
------------ ------------
Cash Flows from Financing Activities:
Net Repayments of Lines of Credit (21,350) (37,950)
Principal Repayments of Long-Term Debt (5,188) (2,188)
Dividends on Common Stock (4,286) (4,117)
Proceeds from Sale of Common Stock 2,837 3,686
------------ ------------
Net Cash Used in Financing Activities (27,987) (40,569)
------------ ------------
Net (Decrease)Increase in Cash and Cash Equivalents (2,130) 3,427
Cash and Cash Equivalents at Beginning of Period 7,227 5,634
------------ ------------
Cash and Cash Equivalents at End of Period $5,097 $9,061
============ ============
<FN>
The accompanying footnotes are an integral part of the financial statements.
</FN>
SJI-6
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1. Summary of Significant Accounting Policies:
Consolidation - The consolidated financial statements include the accounts
of South Jersey Industries, Inc. (SJI) and its subsidiaries. All significant
intercompany accounts and transactions were eliminated. SJI reclassified some
previously reported amounts to conform with current year classifications. In
our opinion, the condensed consolidated financial statements reflect all
adjustments needed to fairly present SJI's financial position and operating
results at the dates and for the periods presented. Our 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.
Estimates and Assumptions - Our financial statements are prepared to
conform with generally accepted accounting principles. Management makes
estimates and assumptions that affect the amounts reported in the financial
statements and related disclosures. Therefore, actual results could differ
from those estimates.
Equity-Based Investments in Affiliates - SJI, either directly or through
its wholly-owned subsidiaries, currently holds a 50% non-controlling interest
in several affiliated companies and accounts for the investments under the
equity method. The operations of these affiliated companies are not material
to the accompanying condensed consolidated financial statements.
Derivative Instruments - The regulated and unregulated subsidiaries of
South Jersey Industries are involved in the buying, selling, transporting and
storing of natural gas for their own accounts as well as managing these
activities for others. As such, these subsidiaries are subject to market risk
due to fluctuations in price. To hedge against this risk, the Company enters
into a variety of physical and financial transactions including forward
contracts, swaps, futures, and options agreements.
SJI has structured its subsidiaries such that South Jersey Gas Company and
South Jersey Energy Company transact commodities on a physical basis only and
enter into no financial derivative positions directly. South Jersey Resources
Group, LLC (SJRG) performs this function for these entities and enters into the
types of transactions noted above. It is management's policy, to the extent
that is practical, to have no open positions while conducting these activities.
Effective January 1, 2001, SJI adopted Financial Accounting Standards
Board (FASB) Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities, as amended." All derivatives, whether designated in
hedging relationships or not, are required to be recorded on the balance sheet
at fair value. If the derivative is designated as a fair value hedge, the
changes in the fair value of the derivative and of the hedged item attributable
SJI-7
to the hedged risk are recognized in earnings. If the derivative is designated
as a cash flow hedge, the effective portions of changes in the fair value of
the derivative are recorded in other comprehensive income and are recognized in
the income statement when the hedged item affects earnings. Ineffective
portions of changes in the fair value of cash flow hedges are recognized in
earnings. SJI has elected to not designate any derivative instruments as fair
value or cash flow hedges.
The adoption of FASB No. 133 on January 1, 2001 resulted in an increase to
net income of $148,000 which is reported as a cumulative effect of a change in
accounting principle.
In accordance with SJI's accounting policy for derivative instruments, all
derivative instruments that were not exempted by SJI from the requirements of
FASB No. 133 are recorded on the balance sheet at fair market value. In
connection with those derivative instruments that were not designated as
hedging instruments, it is SJI's policy to record changes in the fair value in
the condensed consolidated statements of income under Unrealized Gain on
Derivatives. For the three months ended March 31, 2001, the change in fair
value of non-designated derivative instruments was determined to be $2.8
million. Such an amount is specifically attributable to contracts for the
purchase and sale of natural gas executed by SJRG that (i) were expected to be
financially-settled but which SJI elected not to designate as either
fair value or cash flow hedges and (ii) were expected to be physically-
settled, but which SJI elected not to exempt as normal purchases and normal
sales pursuant to paragraph 10(b) of FASB No. 133.
Fair value of the derivative investments is determined by reference to
quoted market prices of listed contracts, published quotations or quotations
from independent parties.
Currently, there are ongoing discussions surrounding the implementation
and interpretation of FASB No. 133 by the Financial Accounting Standards
Board's Derivatives Implementation Group. SJI implemented FASB No. 133 based
on current rules and guidance in place as of January 1, 2001 and through March
31, 2001. However, if such guidance is altered, this may impact subsequent
reported operating results.
SJI-8
Note 2. Discontinued Operations and Affiliations:
Discontinued Operations - Summarized operating results of the discontinued
operations were (in thousands):
Three Months Ended
March 31,
2001 2000
-------- --------
Income (Loss) before Income Taxes:
Sand Mining (See Note 8) $ 944 $ (32)
Construction 3 (1)
Fuel Oil (20) (20)
Wholesale Electric (See Note 8) (1,177) (95)
Income Tax Credits 101 58
-------- --------
Loss from Discontinued
Operations - Net $ (149) $ (90)
======== ========
Earnings per Common Share
from Discontinued Operations $ (0.01) $ (0.01)
======== ========
Affiliations - SJRG was formed to provide natural gas storage, peaking
services and transportation capacity for wholesale customers in New Jersey and
surrounding states. Prior to January 1, 2001, SJRG was formerly owned by SJ
EnerTrade, Inc., a wholly-owned subsidiary of South Jersey Energy (SJE), and
UPR Energy Marketing, Inc. (UPR) who each held a 50% non-controlling interest.
In January 2001, SJRG became a wholly-owned subsidiary of SJI when UPR redeemed
its 50% interest in SJRG for the book value of their investment.
In January 1999, SJI and Conectiv Solutions, LLC, formed Millennium
Account Services, LLC to provide meter reading services in southern New Jersey.
In June 1999, SJE and Energy East Solutions, Inc. formed South Jersey
Energy Solutions, LLC (SJES) to market retail electricity and energy management
services. SJES began supplying retail electric during the first quarter of
2000.
In April 2000, SJE and GZA GeoEnvironmental, Inc. (GZA) formed AirLogics,
LLC to market a jointly developed air monitoring system designed to assist
companies involved in environmental cleanup activities.
In October 2000, SJI formed Marina Energy LLC (Marina), a wholly-owned
subsidiary, to develop energy related projects in southern New Jersey. In
December 2000, Marina Energy entered into a 20-year contract with Marina
District Development Corporation to supply heat, hot water and cooling to The
Borgata Resort. Marina will develop, construct and operate a $40 million
thermal energy plant. The plant is scheduled for completion in July 2003.
SJI-9
Note 3. Common Stock:
SJI has 20,000,000 shares of authorized Common Stock. The following
shares were issued and outstanding:
2001 2000
---------- ----------
Beginning Balance, January 1 11,499,701 11,152,175
New Issues During Quarter:
Dividend Reinvestment Plan 82,757 125,307
Employees' Stock Ownership Plan 948 957
Stock Option, Stock Appreciation
Rights, and Restricted Stock
Award Plan - 5,545
Directors' Restricted Stock Plan - 180
---------- ----------
Ending Balance, March 31 11,583,406 11,284,164
========== ==========
The par value ($1.25 per share) of stock issued in 2001 and 2000 was
credited to Common Stock. Net excess over par value of approximately $2.7
million and $3.5 million was credited to Premium on Common Stock for the three
months ended March 31, 2001 and 2000, respectively.
Dividend Reinvestment Plan (DRP) and Employees' Stock Ownership Plan
(ESOP) - All shares offered through the DRP and ESOP are issued directly by
SJI. As of March 31, 2001, SJI reserved 276,277 and 22,487 shares of
authorized, but unissued, common stock for future issuance to the DRP and ESOP,
respectively.
Stock Option, Stock Appreciation Rights, and Restricted Stock Award Plan -
Under this plan, no more than 306,000 shares in the aggregate may be issued to
SJI's officers and other key employees. No options or stock appreciation
rights may be granted under the Plan after November 22, 2006. At both March
31, 2001 and 2000, SJI had 4,500 options outstanding, all exercisable at $24.69
per share. No options and no stock appreciation rights were granted in 2001 or
2000. In 1999, the Plan was amended to include restricted stock awards. As of
March 31, 2001, 36,665 restricted shares were granted.
Earnings Per Common Share - We present basic EPS based on the weighted-
average number of common shares outstanding. Our stock options and restricted
stock outstanding at March 31, 2001 and 2000, do not dilute our EPS as
calculated in accordance with FASB No. 128, "Earnings Per Share."
SJI-10
Note 4. Income Taxes:
The significant components of federal and state income taxes reflected in
the condensed consolidated statements of income are as follows (in thousands):
Three Months Ended
March 31,
2001 2000
-------- --------
Current:
Federal $ 7,375 $ 9,484
State 2,638 3,114
-------- --------
Total Current 10,013 12,598
-------- --------
Deferred:
Federal 4,483 984
State 1,038 136
-------- --------
Total Deferred 5,521 1,120
-------- --------
Investment Tax Credits (87) (92)
-------- --------
Income Taxes - Continuing Operations 15,447 13,626
Income Taxes - Discontinued Operations (101) (58)
-------- --------
Net Income Taxes $ 15,346 $ 13,568
======== ========
Note 5. Recent Regulatory Actions:
In January 1997, the New Jersey Board of Public Utilities (BPU) granted
SJG a total rate increase of $10.3 million. The $6.0 million base rate portion
of the increase was based on a 9.62% rate of return on rate base, which
included an 11.25% return on common equity. Additionally, SJG's threshold for
sharing pre-tax margins generated by interruptible and off-system sales and
transportation (Sharing Formula) increased from $4.0 million to $5.0 million.
With the completion of major construction projects, this $5.0 million threshold
increased to $7.8 million. SJG keeps 100% of pre-tax margins up to the
threshold level and 20% of margins above that level. In October 1998, the BPU
approved a revision to the Sharing Formula as part of an agreement to modify
SJG's Temperature Adjustment Clause (TAC). The revision credits the first
$750,000 above the current threshold level to the Levelized Gas Adjustment
Clause (LGAC) customers. Thereafter, SJG keeps 20% of the pre-tax margins as
it has historically.
SJI-11
In August 1998, SJG filed with the BPU to recover increased remediation
costs expended from August 1995 through July 1998. In September 1999, the BPU
approved the requested annual recovery level of $6.5 million. This represents
an annual increase of approximately $4.5 million over the recovery previously
included in rates. In July 1999, SJG filed its annual Remediation Adjustment
Clause (RAC) with the BPU requesting recovery of carrying costs on unrecovered
remediation costs and proposed no change in the current RAC rate for the next 3
years. In January 2000, the BPU approved the recovery of carrying costs on
unrecovered remediation costs and SJG's proposal to keep its current RAC rate
in effect through October 2002.
Effective January 10, 2000, the BPU approved full unbundling of SJG's
system. This allows all natural gas consumers to select their natural gas
supplier. As of March 31, 2001, 33,156 of SJG's residential customers were
purchasing their gas commodity from someone other than SJG. The bills of those
using a gas supplier other than SJG are reduced for cost of gas charges and
applicable taxes. The resulting decrease in revenues is offset by a
corresponding decrease in gas costs and taxes under SJG's BPU-approved fuel
clause. SJG's net income and financial condition are not affected as a result
of the unbundling.
In addition to allowing all customers to select their own supplier, the
unbundling settlement also created an incentive to customers to select a
supplier, other than SJG, in the form of a Market Development Credit (MDC).
This credit is being provided to customers over a two-year period beginning
January 2000, and will approximate $2.5 million plus carrying costs through
December 2001. This credit was provided for on SJG's books as a Deferred
Credit. Therefore, the impact of the MDC will not materially impact future
periods.
Also approved was the recovery of carrying costs on the RAC, as previously
discussed, and a modification to SJG's LGAC. Underrecovered gas costs of
$11.9 million as of October 31, 1999, and carrying costs thereon, are being
recovered over a three-year period beginning January 2000.
In August 2000, SJG filed its annual LGAC and TAC for 2000-2001. The
filing requested a $35.0 million increase to its LGAC. However, due to
unprecedented natural gas price run-ups, SJG filed for an additional increase
in October 2000.
On November 16, 2000, SJG received approval to increase its LGAC. The
impact of this increase will be approximately 19.0% to a typical residential
heating customer. The BPU also approved the creation of a flexible pricing
mechanism, allowing for five additional 2.0% increases effective for December
2000 and January, February, March and April of 2001. In March 2001, the BPU
approved additional LGAC rate increases for SJG using a flexible pricing
mechanism. Additional rate increases of 2% in May, June and July 2001 were
approved. In addition, the ruling permits SJG to recover unrecovered gas costs
as of October 31, 2001 with interest at 5.5% over a three-year period,
beginning December 1, 2001. Recoverable interest costs will begin accruing on
April 1, 2001.
SJI-12
Note 6. Segments of Business:
Information about SJI's operations in different industry segments is
presented below (in thousands):
Three Months Ended
March 31,
2001 2000
-------- --------
Operating Revenues:
Gas Utility Operations $219,456 $147,002
Wholesale Gas Operations 130,593 -
Retail Gas and Other Nonutility Operations 34,965 21,762
-------- --------
Subtotal 385,014 168,764
Intersegment Sales (42,389) (1,242)
-------- --------
Total Operating Revenues $342,625 $167,522
======== ========
Operating Income:
Gas Utility Operations $ 35,759 $ 36,000
Wholesale Gas Operations 994 -
Retail Gas and Other Nonutility Operations 3,679 2,438
-------- --------
Subtotal 40,432 38,438
Income Taxes (15,447) (13,626)
General Corporate 322 89
-------- --------
Total Operating Income $ 25,307 $ 24,901
======== ========
Depreciation and Amortization:
Gas Utility Operations $ 5,769 $ 5,829
Retail Gas and Other Nonutility Operations 15 26
Discontinued Operations 7 5
-------- --------
Total Depreciation and Amortization $ 5,791 $ 5,860
======== ========
Property Additions:
Gas Utility Operations $ 9,275 $ 9,770
Retail Gas and Other Nonutility Operations 876 240
-------- --------
Total Property Additions $ 10,151 $ 10,010
======== ========
SJI-13
Three Months Ended
March 31,
2001 2000
-------- --------
Identifiable Assets:
Gas Utility Operations $825,962 $732,229
Wholesale Gas Operations 40,575 -
Retail Gas and Other Nonutility Operations 28,042 15,020
Discontinued Operations 2,220 2,296
-------- --------
Subtotal 896,799 749,545
Corporate Assets 22,549 18,213
Intersegment Assets (32,842) (11,442)
-------- --------
Total Identifiable Assets $886,506 $756,316
======== ========
Gas Utility Operations consist primarily of natural gas distribution to
residential, commercial and industrial customers. Wholesale Gas Operations
include the activities of SJRG. Retail Gas and Other Nonutility Operations
include the natural gas and electric acquisition and transportation service
companies.
SJI's interest expense relates primarily to SJG's borrowing and financing
activities. Interest income is essentially derived from borrowings between the
subsidiaries and is eliminated during consolidation. These amounts are
included in our condensed consolidated statements of income and not shown
above.
Note 7. Retained Earnings:
Restrictions exist under various loan agreements regarding the amount of
cash dividends or other distributions that we may pay on SJG's common stock.
SJI's total equity in its subsidiaries' retained earnings, which is free of
these restrictions, was $71.8 million as of March 31, 2001.
Note 8. Commitments and Contingencies:
Construction and Environmental - SJI's estimated cost of construction and
environmental remediation programs for 2001 totals $58.6 million. Commitments
were made regarding some of these programs.
Pending Litigation - SJI is subject to claims arising from the ordinary
course of business and other legal proceedings. In November 1999, Goldin
Associates LLC, Trustee for the Power Company of America Liquidating Trust
(PCA), filed a complaint in bankruptcy court against SJE seeking damages and
attorneys' fees. PCA was a wholesale electricity trading company with whom SJE
did business. SJE formally exited the wholesale electric business in 1999 and
all related activity is recorded as discontinued operations. We believe SJE
SJI-14
acted prudently, responsibly and in accordance with contractual obligations in
its transactions with PCA. However, to avoid protracted litigation, SJE has
entered into a settlement agreement with PCA to resolve all issues related to
this litigation. The settlement agreement did not materially affect SJI's
financial position, results of operations or liquidity.
In 1998, we recognized a loss from discontinued operations that was in a
large part due to a product liability settlement related to The Morie Company,
Inc. (Morie), a former sand mining subsidiary. During the first quarter of
2001, we reached an agreement in principle with certain of the subsidiary's
primary insurers under which we will recover a portion of the previously
recognized loss.
Standby Letter of Credit - SJI has provided a $17 million standby letter
of credit to Marina District Development Corporation in support of Marina
Energy's contractual obligations to construct the thermal energy plant and to
supply heat, hot water and cooling to The Borgata Resort.
Environmental Remediation Costs - SJI incurred and recorded costs for
environmental cleanup of sites where SJG or its predecessors operated gas
manufacturing plants. SJG stopped manufacturing gas in the 1950s. SJI and
some of its nonutility subsidiaries also recorded costs for environmental
cleanup of sites where South Jersey Fuel, Inc. (SJF) previously operated a fuel
oil business and Morie maintained equipment, fueling stations and storage.
SJI has successfully entered into settlements with all of its historic
comprehensive general liability carriers regarding the environmental
remediation expenditures at the SJG sites. In addition, SJG has purchased a
Cleanup Cost Cap Insurance Policy which limits the amount of remediation
expenditures that SJG will be required to make at 11 of its sites. This Policy
will be in force for a 25-year period at 10 sites and for a 30-year period at
one site. The following future cost estimates have not been reduced by any
insurance recoveries from settlements or the Cleanup Cost Cap Insurance Policy.
Since the early 1980s, SJI accrued environmental remediation costs of
$129.0 million, of which $73.9 million was spent as of March 31, 2001. With
the assistance of an outside consulting firm, we estimate that future costs to
clean up SJG's sites will range from $51.0 million to $148.5 million. We
recorded the lower end of this range as a liability. It is reflected on the
2001 condensed consolidated balance sheet under the captions Current
Liabilities and Deferred Credits and Other Non-Current Liabilities. SJG did
not adjust the accrued liability for future insurance recoveries, which we were
successful in pursuing. We used these proceeds to offset related legal fees
and to reduce the balance of deferred environmental remediation costs.
Recorded amounts include estimated costs based on projected investigation
and remediation work plans using existing technologies. Actual costs could
differ from the estimates due to the long-term nature of the projects, changing
technology, government regulations and site-specific requirements.
SJI-15
The major portion of accrued environmental costs relate to the cleanup of
SJG's former gas manufacturing sites. SJG recorded $122.3 million for the
remediation of these sites and spent $71.3 million through March 31, 2001.
SJG has two regulatory assets associated with environmental cost. The
first asset is titled Environmental Remediation Cost: Expended - Net. These
expenditures represent what was actually spent to clean up former gas
manufacturing plant sites. These costs meet the requirements of FASB No. 71,
"Accounting for the Effects of Certain Types of Regulation." The BPU allows
SJG to recover expenditures through the RAC. SJG's current recovery level
includes remediation costs expended through July 1998, and petitions to recover
costs through July 2000 are pending.
The other asset titled Environmental Remediation Cost: Liability for
Future Expenditures relates to estimated future expenditures determined under
the guidance of FASB No. 5, "Accounting for Contingencies." This amount, which
relates to former manufactured gas plant sites, was recorded as a deferred
debit with the corresponding amount reflected on the condensed consolidated
balance sheet under the captions, Current Liabilities and Deferred Credits and
Other Non-Current Liabilities. The deferred debit is a regulatory asset under
FASB No. 71. The BPU's intent, evidenced by current practice, is to allow SJG
to recover the deferred costs after they are spent.
SJG files with the BPU to recover these costs in rates through its RAC.
The BPU has consistently allowed the full recovery over 7-year periods, and SJG
believes this will continue. As of March 31, 2001, SJG's unamortized
remediation costs of $9.9 million are reflected on the condensed consolidated
balance sheet under the caption, Regulatory and Other Non-Current Assets.
Since implementing the RAC in 1992, SJG recovered $25.9 million through rates
as of March 31, 2001.
With Morie's sale, Energy and Minerals, Inc. (EMI) assumed responsibility
for environmental liabilities estimated between $2.8 million and $8.8 million.
The information available on these sites is sufficient only to establish a
range of probable liability, and no point within the range is more likely than
any other. Therefore, EMI continues to accrue the lower end of the range.
Changes in the accrual are included in the condensed consolidated statements of
income under the caption, Loss from Discontinued Operations - Net.
SJI and SJF estimated their potential exposure for the future remediation
of four sites where fuel oil operations existed years ago. Estimates for SJI's
site range between $0.1 million and $0.2 million, while SJF's estimated
liability ranges from $1.1 million to $3.1 million for its three sites.
Amounts sufficient to cover the lower ends of these ranges were recorded and
are reflected on the 2001 condensed consolidated balance sheet under Current
Liabilities and Deferred Credits and Other Non-Current Liabilities as of
March 31, 2001.
SJI-16
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Overview
South Jersey Industries (SJI) is an energy services holding company
which provides a variety of products and services through the following
subsidiaries:
1) South Jersey Gas Company (SJG) is a regulated natural gas utility.
SJG distributes natural gas to almost 284,000 customers in the seven
southernmost counties of New Jersey. SJG also:
* makes off-system sales of natural gas on a wholesale basis to
various customers on the interstate pipeline system;
* transports natural gas purchased directly from producers or
suppliers for our own sales and for some of our customers;
* services appliances via the sale of appliance warranty programs, as
well as on a time and materials basis.
2) South Jersey Energy Company (SJE) acquires and markets natural gas
to retail end users and provides total energy management services to
commercial and industrial customers. SJE has one subsidiary, SJ EnerTrade
(EnerTrade), that primarily provides services for the sale of natural gas to
the casino industry in Atlantic City, New Jersey. SJE operates South Jersey
Energy Solutions, a limited liability corporation equally owned with Energy
East Solutions, Inc., which markets retail electricity in New Jersey. SJE also
markets an air quality monitoring system through AirLogics, LLC. SJE has a
50% equity interest in AirLogics. GZA GeoEnvironmental, Inc., an
environmental consulting firm, also has a 50% equity interest in AirLogics.
3) South Jersey Resources Group, LLC (SJRG) is a marketer of natural
gas storage, commodity and transportation in the mid-Atlantic and southern
states.
4) Marina Energy LLC (Marina Energy) is a wholly owned subsidiary
established in 2000 to develop energy related projects in southern New Jersey.
SJI also invested in a joint venture with Conectiv Solutions, LLC,
forming Millennium Account Services, LLC (Millennium). Millennium provides
meter reading services to SJG and Conectiv Power Delivery in southern New
Jersey.
SJI-17
Forward Looking Statements
This report contains certain forward-looking statements concerning
projected financial and operating performance, future plans and courses of
action and future economic conditions. All statements in this report other
than statements of historical fact are forward-looking statements. These
forward-looking statements are made based upon management's expectations and
beliefs concerning future events impacting the company and involve a number of
risks and uncertainties. We caution that forward-looking statements are not
guarantees and actual results could differ materially from those expressed or
implied in the forward-looking statements. Also, in making forward-looking
statements, we assume no duty to update these statements should expectations
change or actual results and events differ from current expectations.
A number of factors could cause our actual results to differ materially
from those anticipated, including, but not limited to the following: general
economic conditions on an international, national, state and local level;
weather conditions in our marketing areas; changes in commodity costs;
regulatory and court decisions; competition in our regulated and deregulated
activities; the availability and cost of capital; our ability to maintain
existing and/or establish successful new alliances and joint ventures to take
advantage of marketing opportunities; costs and effects of legal proceedings
and environmental liabilities; and changes in business strategies.
Customer Choice Legislation
Effective January 1, 2000, all residential natural gas customers in New
Jersey are able to choose their gas supplier under the terms of the Electric
Discount and Energy Competition Act of February 1999. Commercial and
industrial customers have had the ability to choose gas suppliers since 1987.
SJG's residential customers have been able to choose a gas supplier since April
of 1997 under a pilot program. As of March 31, 2001, 33,156 SJG residential
customers chose a natural gas supplier other than the utility. This number
decreased from 47,281 at March 31, 2000 as third party marketers were unable to
offer natural gas at prices competitive with those available to consumers under
regulated utility tariffs. The bills of customers choosing to purchase natural
gas from providers other than the utility are reduced for cost of gas charges
and applicable taxes. The resulting decrease in SJG's revenues is offset by a
corresponding decrease in gas costs and taxes. While customer choice can
reduce utility revenues, it does not negatively affect SJG's net income or
financial condition.
SJI-18
Energy Adjustment Clauses
SJG's Board of Public Utilities approved Temperature Adjustment Clause
(TAC) had the following impacts on 2001 and 2000 first quarter net earnings:
2001 2000
-------- --------
TAC Adjustment (Decrease) Increase to
Net Income ($ in thousands)
Quarter Ended 3/31 $(140) $1,290
While the revenue and income impacts of TAC adjustments are recorded as
incurred, cash inflows or outflows directly attributable to TAC adjustments
generally do not begin until the next TAC year. Each TAC year begins
October 1.
Results of Operations - Three Months Ended March 31, 2001
Compared to Three Months Ended March 31, 2000
Operating Revenues - Utility
Revenues increased $56.3 million in the first quarter of 2001 compared
with the prior year period. The primary reasons for the increase were
increased off-system sales; higher rates resulting from increases in the
Levelized Gas Adjustment Clause (LGAC) that reflect higher gas costs at SJG;
and 7,856 additional customers at SJG. The increase in off-system revenues was
due to higher prices for natural gas sold. Total volumes of gas sold
off-system were lower in 2001 than in the prior year.
Weather in the first quarter of 2001 was 8.1% colder than the prior
year period. Weather was also .2% colder for the first quarter than the
20-year average. Revisions to SJG's TAC that became effective in October 1998
significantly reduced the weather related volatility in SJI's utility revenues.
Revenues for 2001 will be closely tied to the 20-year normal temperatures and
not actual weather conditions.
The following is a comparison of operating revenue and throughput for
the three month period ended March 31, 2001 vs. the same period ended March 31,
2000.
SJI-19
1st Quarter
2001 2000
-------- --------
Utility Operating Revenues (Thousands):
Firm
Residential $ 96,359 $ 70,673
Commercial 39,833 16,280
Industrial 1,948 2,000
Cogeneration & Electric Generation 648 1,222
Firm Transportation 9,432 14,012
-------- --------
Total Firm Utility Operating Revenues 148,220 104,187
Interruptible 686 499
Interruptible Transportation 312 484
Off-System 67,195 39,226
Capacity Release & Storage 1,826 1,861
Other 1,217 745
Intercompany Sales (17,015) (884)
-------- --------
Total Utility Operating Revenues $202,441 $146,118
======== ========
Throughput (MMcf):
Firm
Residential 9,157 8,481
Commercial 4,214 2,166
Industrial 148 106
Cogeneration & Electric Generation 24 138
Firm Transportation 5,784 8,465
-------- --------
Total Firm Throughput 19,327 19,356
Interruptible 59 49
Interruptible Transportation 621 840
Off-System 9,470 12,070
Capacity Release & Storage 6,054 10,539
-------- --------
Total Throughput 35,531 42,854
======== ========
Operating Revenues - Nonutility
Nonutility operating revenues increased by $118.8 million for the first
quarter of 2001. The majority of the increase is due to SJRG becoming a wholly
owned subsidiary of SJI as of January 1, 2001. Results at SJRG are now
consolidated into SJI. Previously, only SJRG's net income was recorded by SJI
SJI-20
under the equity method of accounting. Higher natural gas prices also
contributed to the increase.
Cost of Gas Sold - Utility
Cost of gas sold - utility increased $56.4 million for the first
quarter of 2001 compared with the same period in 2000 due principally to
increased gas costs for both local distribution and off-system sales. SJG's
gas cost during the first quarter of 2001 averaged $6.87/dt compared with
$2.87/dt in 2000. Unlike gas costs associated with off-system sales, changes
in the cost of gas sold to utility ratepayers are not reflected in Cost of Gas
Sold - Utility as incurred. Fluctuations in gas costs to ratepayers not
reflected in current rates are deferred and addressed in future periods under
the LGAC. Higher gas costs were reflected in rates via a series of LGAC
increases since November 2000. Gas supply sources include contract and open-
market purchases. SJG secures and maintains its own gas supplies to serve its
customers.
Cost of Sales - Nonutility
Cost of sales - nonutility increased $116.2 million for the first
quarter of 2001 due to the consolidation of SJRG's expenses, described in the
Operating Revenues - Nonutility section of this report, and higher natural gas
costs.
Operations
A summary of net changes in Operations (in thousands):
Three Months Ended
March 31,
2001 vs. 2000
-------------
Utility:
Other Production Expense $ (18)
Transmission (23)
Distribution (249)
Appliance Service - Net (138)
Customer Accounts and Services 250
Sales (36)
Administration and General (135)
Other 6
Nonutility 170
--------
Total Operations $ (173)
========
SJI-21
Distribution expenses decreased in the first quarter of 2001 as costs
related to our unionized workforce were avoided as a result of a work stoppage
that ended on January 17, 2001. Expenses related to performing critical
operational functions during the work stoppage were recognized under
Administration and General. Customer Accounts and Services costs increased due
to higher bad debt expenses directly related to a significant increase in gas
costs.
Other Operating Expenses
A summary of principal changes in other consolidated operating expenses
(in thousands):
Three Months Ended
March 31,
2001 vs. 2000
-------------
Maintenance $109
Depreciation 257
Income Taxes 1,821
Energy and Other Taxes 93
Depreciation is higher due to increased investment in property, plant
and equipment by SJG. Income Tax changes reflect the impact of changes in
pre-tax income.
Unrealized Gain on Derivatives
Unrealized gain on derivatives is new for the first quarter of 2001 and
is the result of adopting FASB No. 133, effective January 1, 2001. See
Note 1 for a full discussion of FASB No. 133.
Interest Charges
Interest charges increased in the first quarter of 2001 compared with
the prior year period. The rise in interest expense was due to increased debt
outstanding and higher interest rates. The debt was incurred primarily to
support the expansion and upgrade of SJG's gas transmission and distribution
system, as well as higher levels of unrecovered gas costs.
SJI-22
Net Income Applicable to Common Stock
Net income (in thousands) and earnings per common share reflect the
following changes:
Three Months Ended
March 31,
2001 vs. 2000
-------------
Income from Continuing Operations $2,612
Loss from Discontinued Operations - Net (59)
Cumulative Effect of Accounting Change - Net 148
------
Net Income Increase $2,701
======
Earnings per Common Share:
Continuing Operations $ 0.18
Discontinued Operations - Net 0.00
Cumulative Effect of Accounting Change - Net 0.01
------
Earnings per Share Increase $ 0.19
======
The details affecting the changes in net income and earnings per share
are discussed under the appropriate captions above.
Liquidity
The seasonal nature of gas operations; the timing of construction and
remediation expenditures and related permanent financing; as well as mandated
tax and sinking fund payment dates require large, short-term cash requirements.
These requirements are generally met by cash from operations and short-term
lines of credit. We maintain short-term lines of credit with a number of
banks, totaling $175.0 million, of which $75.2 million was available at March
31, 2001. The credit lines are uncommitted and unsecured with interest rates
typically available based upon the Federal Funds Rates or London Interbank
Offered Rates (LIBOR).
SJI-23
The changes in cash flows from operating activities (in thousands):
Three Months Ended
March 31,
2001 vs. 2000
-------------
Increases/(Decreases):
Net Income Applicable to Common Stock $ 2,701
Depreciation and Amortization (69)
Unrealized Gain on Derivatives (2,821)
Provision for Losses on Accounts Receivable 458
Revenues and Fuel Costs Deferred - Net (8,796)
Deferred and Non-Current Income Taxes and
Credits - Net 4,157
Environmental Remediation Costs-Net 801
Accounts Receivable (189)
Inventories 4,168
Prepayments and Other Current Assets 260
Prepaid and Accrued Taxes - Net (284)
Accounts Payable and Other Accrued
Liabilities (17,411)
Other - Net (1,796)
--------
Net Cash Provided by Operating
Activities ($18,821)
========
Depreciation and Amortization are non-cash charges to income and do not
impact cash flow. Changes in depreciation cost reflect the effect of additions
and reductions to fixed assets.
Decreases in Revenues and Fuel Costs Deferred - Net reflect the impact
of payments or credits to customers for amounts previously overcollected and
the undercollection of fuel costs resulting from increases in natural gas
costs. Increases reflect the impact of overcollection of fuel costs or the
recovery of previously deferred fuel costs.
Unrealized Gain on Derivatives is a non-cash credit to income and does
not impact cash flows until the underlying positions are settled. Changes
reflect movement in the fair market value of our derivative investments and
the recognition of realized gains and losses on settled positions.
Changes in Deferred and Non-Current Income Taxes and Credits - Net
represent the differences between taxes accrued and amounts paid. Generally,
deferred income taxes related to deferred fuel costs will be paid in the next
year.
Changes in Environmental Remediation Costs - Net represent the
differences between amounts expended for environmental remediation compared
with amounts collected under the RAC and insurance recoveries.
SJI-24
Changes in Accounts Receivable are primarily due to changes in off-
system sales activity and sales volumes of SJG and SJE. Weather and commodity
prices are the variables that impact these sales. Changes impact cash flows
when receivables are collected in subsequent periods.
Changes in Inventories reflect the impact of seasonal requirements,
temperatures and price changes.
Changes in Prepaid and Accrued Taxes - Net reflect the impact of
differences between taxes paid and taxes accrued. Significant timing
differences exist in cash flows during the year. Approximately 50% of SJG's
taxes are paid in installments during the first half of the year and the
remaining 50% are paid on May 15 of each year. SJG uses short-term borrowings
to pay taxes, resulting in a temporary increase in the short-term debt level.
The carrying costs of timing differences are recognized in base utility rates.
Changes in Accounts Payable and Other Current Liabilities reflect the
impact of timing differences between the accrual and payment of costs.
Changes in Other - Net reflect numerous changes in noncurrent assets
and liabilities, including accrued deferred income taxes.
Cash flow from nonutility operations is generally retained by those
companies with amounts in excess of cash requirements passed up to SJI either
as dividends or as temporary short-term loans. Nonutility operations are
service oriented and did not require significant investment in capital
facilities, inventories or personnel.
Regulatory Matters
Rate Actions
In August 2000, SJG filed its annual LGAC, TAC and Demand Side
Management Clause for 2000-2001. The filing requested a $35.0 million increase
to its LGAC. However, due to unprecedented natural gas price run-ups, SJG
filed for an additional increase in October 2000.
On November 16, 2000, SJG received approval to increase its LGAC. The
impact of this increase was approximately 19.0% to a typical residential
heating customer. The BPU also approved the creation of a flexible pricing
mechanism, allowing for five additional 2.0% increases effective for December
2000 and January, February, March and April of 2001. In March 2001, the BPU
approved additional LGAC rate increases for SJG using a flexible pricing
mechanism. Additional rate increases of 2% in May, June and July 2001 were
approved. In addition, the ruling permits SJG to recover unrecovered gas costs
as of October 31, 2001 with interest at 5.5% over a three-year period,
beginning December 1, 2001. Recoverable interest costs will begin accruing on
April 1, 2001.
SJI-25
Other matters are incorporated by reference to Note 5 to the condensed
consolidated financial statements included as part of this report.
Capital Resources
SJI has a continuing need for cash resources and capital, primarily to
invest in new and replacement facilities and equipment and for environmental
remediation costs. Net construction and remediation expenditures for the first
quarter of 2001 amounted to $1.7 million. The costs for 2001, 2002 and 2003
are estimated at approximately $58.6 million, $71.2 million and $60.7 million,
respectively. We expect to fund these expenditures from several sources, which
may include cash generated by operations, temporary use of short-term debt,
sale of medium-term notes or other debt instruments, capital leases, RAC
recoveries, insurance recoveries and the issuance of equity.
SJI raised $2.4 million of equity capital via the issuance of 82,757
shares under our Dividend Reinvestment Plan (DRP) in the first quarter. SJI
raised an additional $2.4 million on 84,652 shares issued through the DRP in
April 2001.
Other Events
During the first quarter of 2001, SJI reached an agreement in principle
to settle all claims related to the bankruptcy of Power Company of America
(PCA). PCA was a wholesale electricity trading company with whom SJE had done
business.
In 1998, we recognized a loss from discontinued operations that was in
a large part due to a product liability settlement related to a former
subsidiary. During the first quarter of 2001, we reached an agreement in
principle with certain of the subsidiary's primary insurers under which we
will recover a portion of the previously recognized loss.
Results of these agreements are reflected in our condensed consolidated
statement of income under Loss from Discontinued Operations - Net.
SJG employs 401 workers who are members of two separate unions.
Following the expiration of a labor contract, the 354 members of our largest
union commenced a work stoppage on November 9, 2000. The remaining 47
unionized employees also commenced a work stoppage on December 13, 2000.
SJG's unionized employees returned to work on January 17, 2001, agreeing to a
new 4-year contract. Key elements of the contract include employee
contributions toward healthcare costs, wage increases, revised wage structures
for new employees, and revisions to sick-time policies. During the work
stoppage, operation critical work was conducted mostly by SJI's non-union
personnel. As a result of the nature of SJG's operations, the work stoppage
did not materially effect the operational or financial condition of SJG or
SJI.
SJI-26
Item 3. Quantitative and Qualitative Disclosures About
Market Risks of the Company
Commodity Market Risks - The regulated and unregulated subsidiaries of
South Jersey Industries are involved in the buying, selling, transporting and
storing of natural gas for their own accounts as well as managing these
activities for others. As such, these subsidiaries are subject to market
risk due to fluctuations in price. To hedge against this risk, we enter into
a variety of physical and financial transactions including forward contracts,
swaps, futures, and options agreements.
SJI's subsidiaries are structured such that South Jersey Gas Company and
South Jersey Energy Company transact commodities on a physical basis only and
enter into no financial derivative positions directly. South Jersey Resources
Group, LLC (SJRG) performs this function for these entities and enters into the
types of transactions noted above. It is management's policy, to the extent
that is practical, to have no open positions while conducting these activities.
As a result of holding open positions to a minimal level, the financial impact
to SJRG of changes in value of a particular transaction is substantially offset
by an opposite change in the related hedge transaction.
Interest Rate Risk - Our exposure to interest rate risk relates primarily
to short-term, variable rate borrowings. A hypothetical 100 basis point
increase in interest rates on $121.2 million of variable rate debt outstanding
at December 31, 2000 would result in a $715,000 increase in our interest
expense net of tax. Our high point for variable rate borrowings typically
occurs around year-end. As of March 31, 2001, variable rate borrowings
outstanding totaled $99.9 million. The same hypothetical 100 basis point
increase applied to that amount would increase our interest expense net of tax
by $589,000. Our long-term debt is all issued at fixed rates and,
consequently, interest expense to the company is not impacted by changes in
market interest rates. Our debt has typically been issued with provisions that
do not permit us to retire debt early to take advantage of changes in interest
rates. We do not currently use any derivatives to hedge interest rates.
SJI-27
PART II -- OTHER INFORMATION
Item l. Legal Proceedings
Information required by this Item is incorporated by reference to Part
I, Item 1, Note 8, beginning on page 14.
Item 6. Exhibits and Reports on Form 8-K
None
SJI-28
SIGNATURES
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.
(Registrant)
Dated: May 18, 2001 By: /s/ David A. Kindlick
David A. Kindlick
Vice President and Treasurer
Dated: May 18, 2000 By: /s/ George L. Baulig
George L. Baulig
Vice President & Corporate Secretary
SJI-29