SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared by NJR in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) and Accounting Standards Codification (ASC) 270. The September 30, 2012, Balance Sheet data is derived from the audited financial statements of the Company. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and the notes thereto included in NJR's 2012 Annual Report on Form 10-K.

The Unaudited Condensed Consolidated Financial Statements include the accounts of NJR and its subsidiaries. In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements reflect all adjustments necessary, for a fair presentation of the results of the interim periods presented. These adjustments are of a normal and recurring nature. Because of the seasonal nature of NJR's utility and wholesale energy services operations, in addition to other factors, the financial results for the interim periods presented are not indicative of the results that are to be expected for the fiscal year ended September 30, 2013.

Intercompany transactions and accounts have been eliminated.

Gas in Storage

The following table summarizes gas in storage, at average cost by company as of:



	March 31, 2013				September 30, 2012
($ in thousands)	Gas in Storage			Bcf	Gas in Storage			Bcf
NJNG		$	14,891	2.4		$	145,379	22.2
NJRES		152,772		43.8		119,814		45.5
Total		$	167,663	46.2		$	265,193	67.7

Available for Sale Securities

Included in other noncurrent assets on the Unaudited Condensed Consolidated Balance Sheets are certain investments in equity securities of a publicly traded energy company that have a fair value of $11.6 million and $11 million as of March 31, 2013 and September 30, 2012, respectively. Total unrealized gains associated with these equity securities, which are included as a part of accumulated other comprehensive income, a component of common stock equity, were $8.9 million ($5.2 million, after tax) and $8.3 million ($4.9 million, after tax) as of March 31, 2013 and September 30, 2012, respectively.

Disposal of Equipment

In October 2012, certain of NJRCEV's solar assets sustained damage as a result of Post Tropical Cyclone Sandy, commonly referred to as Superstorm Sandy (Superstorm Sandy). To the extent that any of the assets were deemed irreparable, the Company disposed of the damaged equipment. As a result, the Company recognized a pre-tax loss of $766,000, which is included in other income on the Unaudited Condensed Consolidated Statements of Operations as of March 31, 2013. During the second quarter of fiscal 2013, the Company received confirmation from its insurance carrier that its claim to recover the loss was approved and, therefore, recorded a gain in other income on the Unaudited Condensed Consolidated Statements of Operations in the amount of $954,000, representing replacement value of the disposed assets.

Recent Updates to the Accounting Standards Codification (ASC)

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, an amendment to ASC Topic 210, Balance Sheet, requiring additional disclosures about the nature of an entity's rights of setoff and related master netting arrangements associated with its financial and derivative instruments. The objective of the disclosures is to facilitate comparison between financial statements prepared on the basis of U.S. generally accepted accounting principles (U.S. GAAP) and those prepared on the basis of International Financial Reporting Standards (IFRS). The amended guidance will become effective for annual periods beginning on or after January 1, 2013, as well as interim periods within those annual periods, and will be applied retrospectively. The Company has determined that the new guidance will not impact its financial position, results of operations or cash flows upon adoption.

In February 2013, the FASB issued ASU No. 2013-02, an amendment to ASC Topic 220, Comprehensive Income, requiring information about amounts reclassified out of accumulated other comprehensive income as well as income statement line items that are affected by the reclassifications. The new guidance does not change existing requirements for reporting net income or other comprehensive income in the financial statements. ASU 2013-02 became effective for reporting periods beginning after December 15, 2012. There was no impact to the Company's financial position, results of operations or cash flows upon adoption.

NJR applied the provisions of the new guidance prospectively effective January 1, 2013, as follows:

Accumulated Other Comprehensive Income



(Thousands)	Unrealized gain on available for sale securities		Net unrealized gain on derivatives				Adjustment to postemployment benefit obligation				Total
Beginning balance as of January 1, 2013	$	4,601	$	41			$	(15,330	)		$	(10,688	)
Other comprehensive income, excluding reclassifications, net of tax of $(447), $(9), $-, $(456)	647		15				—				662
Amounts reclassified from accumulated other comprehensive income, net of tax of $-, $13, $(203), $(190)	—		(22		)	⁽¹⁾	296			⁽²⁾	274
Net current-period other comprehensive income, net of tax of $(447), $4, $(203), $(646)	647		(7		)		296				936
Ending balance as of March 31, 2013	$	5,248	$	34			$	(15,034	)		$	(9,752	)


(1)	Reclassified to gas purchases in the Unaudited Consolidated Statements of Operations.


(2)	Included in the computation of net periodic pension cost, a component of operations and maintenance expense in the Unaudited Consolidated Statements of Operations.