BUSINESS SEGMENT AND OTHER OPERATIONS DATA

6 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

BUSINESS SEGMENT AND OTHER OPERATIONS DATA

NJR organizes its businesses based on its products and services as well as regulatory environment. As a result, the Company manages the businesses through the following reportable segments and other operations: the Natural Gas Distribution segment consists of regulated energy and off-system, capacity and storage management operations; the Energy Services segment consists of unregulated wholesale energy operations; the Clean Energy Ventures segment consist of capital investments in renewable energy projects; the Energy Holdings segment (previously Midstream Assets) consists of NJR's investments in natural gas transportation and storage facilities; the Retail and Other operations consist of appliance and installation services, commercial real estate development, renewable energy and other investments and general corporate activities.

Information related to the Company's various business segments and other operations is detailed below:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
(Thousands)	2012			2011			2012			2011
Operating revenues
Natural Gas Distribution
External customers	$	226,023		$	433,248		$	417,397		$	723,924
Intercompany	—			—			—			—
Energy Services
External customers	378,356			535,987			820,162			950,418
Intercompany	2,654			37,088			2,848			53,431
Clean Energy Ventures
External customers	527			—			907			—
Segment subtotal	607,560			1,006,323			1,241,314			1,727,773
Retail and Other
External customers	8,014			7,751			16,866			15,796
Intercompany	263			75			442			156
Eliminations	(2,916		)	(37,162		)	(3,290		)	(53,586		)
Total	$	612,921		$	976,987		$	1,255,332		$	1,690,139
Depreciation and amortization
Natural Gas Distribution	$	8,749		$	8,235		$	17,381		$	16,458
Energy Services	16			15			32			31
Clean Energy Ventures	1,511			28			2,321			28
Energy Holdings	2			2			3			3
Segment subtotal	10,278			8,280			19,737			16,520
Retail and Other	161			197			302			411
Total	$	10,439		$	8,477		$	20,039		$	16,931
Interest income (1)
Natural Gas Distribution	$	214		$	280		$	460		$	540
Energy Services	(5		)	3			26			8
Energy Holdings	285			224			533			452
Segment subtotal	494			507			1,019			1,000
Retail and Other	1			1			1			1
Eliminations	(268		)	(217		)	(503		)	(438		)
Total	$	227		$	291		$	517		$	563

(1) Included in other income in the Unaudited Condensed Consolidated Statements of Operations.

	Three Months Ended						Six Months Ended
	March 31,						March 31,
(Thousands)	2012			2011			2012			2011
Interest expense, net of capitalized interest
Natural Gas Distribution	$	3,713		$	3,808		$	7,450		$	7,824
Energy Services	245			323			515			599
Clean Energy Ventures	198			3			340			7
Energy Holdings	683			817			1,397			1,625
Segment subtotal	4,839			4,951			9,702			10,055
Retail and Other	588			127			730			286
Total	$	5,427		$	5,078		$	10,432		$	10,341
Income tax provision (benefit)
Natural Gas Distribution	$	27,016		$	26,278		$	42,612		$	40,879
Energy Services	(2,105		)	7,525			9,403			6,683
Clean Energy Ventures	(14,826		)	(6,071		)	(26,997		)	(6,710		)
Energy Holdings	1,393			1,487			2,624			2,670
Segment subtotal	11,478			29,219			27,642			43,522
Retail and Other	(312		)	(588		)	(371		)	(1,044		)
Eliminations	(72		)	(19		)	(140		)	(13		)
Total	$	11,094		$	28,612		$	27,131		$	42,465
Equity in earnings of affiliates
Energy Holdings	$	3,967		$	4,360		$	7,582		$	7,980
Segment subtotal	3,967			4,360			7,582			7,980
Eliminations	(949		)	(750		)	(1,910		)	(1,453		)
Total	$	3,018		$	3,610		$	5,672		$	6,527
Net financial earnings (loss)
Natural Gas Distribution	$	44,936		$	44,040		$	70,910		$	68,396
Energy Services	15,871			16,001			23,486			19,168
Clean Energy Ventures	11,862			5,171			21,959			5,225
Energy Holdings	2,021			2,145			3,804			3,858
Segment subtotal	74,690			67,357			120,159			96,647
Retail and Other	(543		)	(328		)	(689		)	(488		)
Eliminations	(21		)	—			(36		)	—
Total	$	74,126		$	67,029		$	119,434		$	96,159
Capital expenditures
Natural Gas Distribution	$	27,427		$	18,988		$	49,145		$	47,186
Clean Energy Ventures	14,175			9,038			61,786			9,937
Segment subtotal	41,602			28,026			110,931			57,123
Retail and Other	370			1,717			459			1,963
Total	$	41,972		$	29,743		$	111,390		$	59,086

The chief operating decision maker of the Company is the Chief Executive Officer (CEO). The CEO uses net financial earnings as a measure of profit or loss in measuring the results of the Company's segments and operations. A reconciliation of consolidated net financial earnings to consolidated net income is as follows:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
(Thousands)	2012		2011		2012			2011
Consolidated net financial earnings	$	74,126	$	67,029	$	119,434		$	96,159
Less:
Unrealized loss (gain) from derivative instruments and related transactions, net of taxes (1)	7,664		2,306		(9,708		)	36,710
Effects of economic hedging related to natural gas inventory, net of taxes	11,927		796		17,250			(28,987		)
Consolidated net income	$	54,535	$	63,927	$	111,892		$	88,436

(1) Excludes unrealized losses related to an intercompany transaction between NJNG and NJRES that have been eliminated in consolidation of approximately $79,000 and $30,000, for the three months ended March 31, 2012 and March 31, 2011, respectively, and $197,000, and $32,000 for the six months endedMarch 31, 2012 and 2011, respectively.

The Company uses derivative instruments as economic hedges of purchases and sales of physical gas inventory. For GAAP purposes, these derivatives are recorded at fair value and related changes in fair value are included in reported earnings. Revenues and cost of gas related to physical gas flow is recognized as the gas is delivered to customers. Consequently, there is a mismatch in the timing of earnings recognition between the economic hedges and physical gas flows. Timing differences occur in two ways:

• Unrealized gains and losses on derivatives are recognized in reported earnings in periods prior to physical gas inventory flows; and

• Unrealized gains and losses of prior periods are reclassified as realized gains and losses when derivatives are settled in the same period as physical gas inventory movements occur.

Net financial earnings is a measure of the earnings based on eliminating these timing differences, to effectively match the earnings effects of the economic hedges with the physical sale of gas. Consequently, to reconcile between GAAP and net financial earnings, current period unrealized gains and losses on the derivatives are excluded from net financial earnings as a reconciling item. Additionally, realized derivative gains and losses are also included in current period net income. However, net financial earnings include only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the derivatives with realized margins on physical gas flows.

The Company's assets for the various business segments and business operations are detailed below:

(Thousands)	March 31, 2012			September 30, 2011
Assets at end of period:
Natural Gas Distribution	$	1,951,497		$	1,942,691
Energy Services	346,995			400,882
Clean Energy Ventures	166,478			80,234
Energy Holdings	157,987			159,940
Segment subtotal	2,622,957			2,583,747
Retail and Other	66,742			87,066
Intercompany assets (1)	(19,960		)	(21,369		)
Total	$	2,669,739		$	2,649,444

(1) Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.