Reportable Segments

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Reportable Segments

REPORTABLE SEGMENTS:

The Company’s primary operating segments, which are individually disclosed as its reportable business segments, are:  Transportation and Storage, Gathering and Processing, and Distribution.  These operating segments are organized for segment reporting purposes based on the way internal managerial reporting presents the results of the Company’s various businesses to its chief operating decision maker for use in determining the performance of the businesses.

The Transportation and Storage segment operations are conducted through Panhandle and the Company’s investment in Citrus (through March 26, 2012, the date of the Citrus Merger).  The Gathering and Processing segment operations were conducted through SUGS, which was contributed to Regency on April 30, 2013.  The Distribution segment is primarily engaged in the local distribution of natural gas in Missouri and Massachusetts, through its Missouri Gas Energy and New England Gas Company operating divisions, respectively. See Note 1 for additional information associated with the Company’s reportable segments.

Sales of products or services between segments are billed at regulated rates or at market rates, as applicable.  There were no material intersegment revenues during the six months ended June 30, 2013, the period from Acquisition (March 26, 2012) to June 30, 2012 and the period from January 1, 2012 to March 25, 2012.

The remainder of the Company’s business operations, which do not meet the quantitative threshold for segment reporting, are presented as Corporate and other activities.  Corporate and other activities consist of the Company’s investment in Regency, unallocated corporate costs, a wholly-owned subsidiary with ownership interests in electric power plants, and other miscellaneous activities.

The Company reports Segment Adjusted EBITDA as a measure of segment performance.  The Company defines Segment Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization and other non-cash items, such as non-cash compensation expense, unrealized gains and losses on unhedged derivative activities, accretion expense and amortization of regulatory assets and other non-operating income or expense items.  Segment Adjusted EBITDA reflects amounts for less-than-wholly-owned subsidiaries and unconsolidated affiliates based on the Company’s proportionate ownership.

Segment Adjusted EBITDA may not be comparable to measures used by other companies and should be considered in conjunction with net earnings and other performance measures such as operating income or net cash flows provided by operating activities.

The following tables set forth certain selected financial information for the Company’s segments:

	Three Months Ended June 30, 2013		Three Months Ended June 30, 2012
Operating revenues from external customers:
Transportation and Storage	$	232	$	186
Gathering and Processing	81		197
Total segment operating revenues	313		383
Corporate and other activities	3		4
	$	316	$	387

	Successor				Predecessor
	Six Months Ended June 30, 2013		Period from Acquisition (March 26, 2012) to June 30, 2012		Period from January 1, 2012 to March 25, 2012
Operating revenues from external customers:
Transportation and Storage	$	431	$	199	$	194
Gathering and Processing	271		217		246
Total segment operating revenues	702		416		440
Corporate and other activities	7		2		3
	$	709	$	418	$	443

Results from the Distribution segment were included in discontinued operations and therefore were not reflected in the tables above.

	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012
Segment Adjusted EBITDA:
Transportation and Storage	$	169		$	112
Gathering and Processing	(1		)	22
Distribution	24			25
Corporate and other activities	16			2
Total Segment Adjusted EBITDA	208			161
Depreciation and amortization	(47		)	(66		)
Interest expense	(12		)	(57		)
Non-cash equity-based compensation, accretion expense and amortization of regulatory assets	(2		)	(1		)
Other, net	(2		)	1
Earnings from unconsolidated investments	5			1
Adjusted EBITDA attributable to unconsolidated investments	(21		)	(4		)
Adjusted EBITDA attributable to discontinued operations	(23		)	(25		)
Income from continuing operations before income tax expense	$	106		$	10

	Successor						Predecessor
	Six Months Ended June 30, 2013			Period from Acquisition (March 26, 2012) to June 30, 2012			Period from January 1, 2012 to March 25, 2012
Segment Adjusted EBITDA:
Transportation and Storage	$	293		$	79		$	186
Gathering and Processing	(7		)	11			25
Distribution	63			29			34
Corporate and other activities	20			(13		)	(19		)
Total Segment Adjusted EBITDA	369			106			226
Depreciation and amortization	(106		)	(70		)	(49		)
Interest expense	(45		)	(61		)	(50		)
Net gain on curtailment of OPEB plans	—			15			—
Non-cash equity-based compensation, accretion expense and amortization of regulatory assets	(4		)	(1		)	(1		)
Other, net	(1		)	1			(2		)
Earnings from unconsolidated investments	6			1			16
Adjusted EBITDA attributable to unconsolidated investments	(26		)	(4		)	(61		)
Adjusted EBITDA attributable to discontinued operations	(63		)	(29		)	(34		)
Income (loss) from continuing operations before income tax expense	$	130		$	(42	)	$	45

	June 30, 2013		December 31, 2012
Total assets:
Transportation and Storage	$	6,312	$	6,219
Gathering and Processing (1)	—		1,965
Distribution (2)	1,106		1,190
Total segment assets	7,418		9,374
Corporate and other activities	2,070		619
Total assets	$	9,488	$	9,993

⁽¹⁾  The Gathering and Processing segment was contributed to Regency on April 30, 2013. See Note 2.

⁽²⁾  Distribution segment assets have been reported as assets held for sale in the condensed consolidated balance sheets at June 30, 2013 and December 31, 2012.