Reportable Segments

9 Months Ended

Sep. 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 and Gathering and Processing.  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.  MGE and NEG were previously reported within the Company’s Distribution segment. These operations are reported as discontinued operations for all periods presented, as discussed in Note 2, and are now included in Corporate and other activities in the segment information below. The reportable segment information has been recast to reflect the removal of the Distribution segment. 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 nine months ended September 30, 2013, the period from Acquisition (March 26, 2012) to September 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 September 30, 2013		Three Months Ended September 30, 2012
Operating revenues from external customers:
Transportation and Storage	$	180	$	188
Gathering and Processing	—		213
Total segment operating revenues	180		401
Corporate and other activities	2		3
	$	182	$	404

	Successor				Predecessor
	Nine Months Ended September 30, 2013		Period from Acquisition (March 26, 2012) to September 30, 2012		Period from January 1, 2012 to March 25, 2012
Operating revenues from external customers:
Transportation and Storage	$	611	$	387	$	194
Gathering and Processing	271		430		246
Total segment operating revenues	882		817		440
Corporate and other activities	9		5		3
	$	891	$	822	$	443

	Three Months Ended September 30, 2013			Three Months Ended September 30, 2012
Segment Adjusted EBITDA:
Transportation and Storage	$	114		$	119
Gathering and Processing	—			25
Corporate and other activities (1)	39			25
Total Segment Adjusted EBITDA	153			169
Depreciation and amortization	(41		)	(67		)
Interest expense, net of interest capitalized	(39		)	(34		)
Non-cash equity-based compensation, accretion expense and amortization of regulatory assets	(3		)	—
Other, net	3			(1		)
Earnings (losses) from unconsolidated investments	9			(1		)
Adjusted EBITDA attributable to unconsolidated investments	(30		)	(4		)
Adjusted EBITDA attributable to discontinued operations	(12		)	(23		)
Income from continuing operations before income tax expense	$	40		$	39

⁽¹⁾ Corporate and other activities includes the operations of MGE and NEG, which have been reported as discontinued operations for all periods presented. MGE and NEG were previously reported within the Distribution segment.

	Successor						Predecessor
	Nine Months Ended September 30, 2013			Period from Acquisition (March 26, 2012) to September 30, 2012			Period from January 1, 2012 to March 25, 2012
Segment Adjusted EBITDA:
Transportation and Storage	$	407		$	198		$	186
Gathering and Processing	(7		)	36			25
Corporate and other activities (1)	122			41			15
Total Segment Adjusted EBITDA	522			275			226
Depreciation and amortization	(147		)	(137		)	(49		)
Interest expense, net of interest capitalized	(84		)	(95		)	(50		)
Net gain on curtailment of OPEB plans	—			15			—
Non-cash equity-based compensation, accretion expense and amortization of regulatory assets	(7		)	(1		)	(1		)
Other, net	2			—			(2		)
Earnings from unconsolidated investments	15			—			16
Adjusted EBITDA attributable to unconsolidated investments	(56		)	(8		)	(61		)
Adjusted EBITDA attributable to discontinued operations	(75		)	(52		)	(34		)
Income (loss) from continuing operations before income tax expense	$	170		$	(3	)	$	45

⁽¹⁾  Corporate and other activities includes the operations of MGE and NEG, which have been reported as discontinued operations for all periods presented. MGE and NEG were previously reported within the Distribution segment.

	September 30, 2013		December 31, 2012
Total assets:
Transportation and Storage	$	6,152	$	6,219
Gathering and Processing (1)	—		1,965
Total segment assets	6,152		8,184
Corporate and other activities (2)	2,514		1,809
Total assets	$	8,666	$	9,993

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

⁽²⁾  Corporate and other activities includes the assets of NEG, which have been reported as assets held for sale in the condensed consolidated balance sheets at September 30, 2013 and December 31, 2012. MGE is also included in the balance at December 31, 2012.