XML 82 R20.htm IDEA: XBRL DOCUMENT v2.4.1.9
BUSINESS SEGMENT AND OTHER OPERATIONS DATA
 3 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
BUSINESS SEGMENT AND OTHER OPERATIONS DATA
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 consists of capital investments in distributed power projects; the Midstream segment consists of NJR's investments in natural gas transportation and storage facilities; the Home Services and Other operations consist of heating, cooling and water appliance sales, installations and services, commercial real estate development, other investments and general corporate activities.

Information related to the Company's various business segments and other operations is detailed below:
 
Three Months Ended
 
December 31,
(Thousands)
2014
2013
Operating revenues
 
 
Natural Gas Distribution
 
 
External customers
$
208,727

$
233,469

Energy Services
 
 
External customers (1)
600,562

633,691

Intercompany
3,126

4,018

Clean Energy Ventures
 
 
External customers
6,235

2,173

Subtotal
818,650

873,351

Home Services and Other
 
 
External customers
8,600

9,072

Intercompany
411

202

Eliminations
(3,537
)
(4,220
)
Total
$
824,124

$
878,405

Depreciation and amortization
 
 
Natural Gas Distribution
$
10,545

$
9,835

Energy Services
22

12

Clean Energy Ventures
3,591

2,511

Midstream
2

1

Subtotal
14,160

12,359

Home Services and Other
238

207

Eliminations
(12
)
—

Total
$
14,386

$
12,566

Interest income (2)
 
 
Natural Gas Distribution
$
90

$
261

Midstream
239

268

Subtotal
329

529

Home Services and Other
—

—

Eliminations
(239
)
(233
)
Total
$
90

$
296

(1)
Includes sales to Canada, which accounted for 4.7 percent and 3.8 percent of total operating revenues during the three months ended December 31, 2014 and 2013, respectively.
(2)
Included in other income on the Unaudited Condensed Consolidated Statements of Operations.
 
Three Months Ended
 
December 31,
(Thousands)
2014
2013
Interest expense, net of capitalized interest
 
 
Natural Gas Distribution
$
4,609

$
3,984

Energy Services
513

616

Clean Energy Ventures
1,817

1,186

Midstream
250

398

Subtotal
7,189

6,184

Home Services and Other
6

111

Total
$
7,195

$
6,295

Income tax provision (benefit)
 
 
Natural Gas Distribution
$
14,166

$
14,183

Energy Services
45,877

(11,273
)
Clean Energy Ventures
(19,721
)
(2,044
)
Midstream
1,492

996

Subtotal
41,814

1,862

Home Services and Other
(452
)
(191
)
Eliminations
(495
)
(166
)
Total
$
40,867

$
1,505

Equity in earnings of affiliates
 
 
Midstream
$
3,775

$
2,942

Eliminations
(980
)
(800
)
Total
$
2,795

$
2,142

Net financial earnings (loss)
 
 
Natural Gas Distribution
$
28,186

$
27,639

Energy Services
16,436

7,374

Clean Energy Ventures
9,008

3,614

Midstream
2,120

1,434

Subtotal
55,750

40,061

Home Services and Other
(592
)
(201
)
Eliminations
(49
)
—

Total
$
55,109

$
39,860

Capital expenditures
 
 
Natural Gas Distribution
$
36,748

$
35,401

Clean Energy Ventures
55,345

24,917

Subtotal
92,093

60,318

Home Services and Other
11

205

Total
$
92,104

$
60,523

Investments in equity investees
 
 
Midstream
$
547

$
—

Total
$
547

$
—


The chief operating decision maker of the Company is the Chief Executive Officer who uses NFE as a measure of profit or loss in measuring the results of the Company's segments and operations. A reconciliation of consolidated NFE to consolidated net income is as follows:
 
Three Months Ended
 
December 31,
(Thousands)
2014
2013
Consolidated net financial earnings
$
55,109

$
39,860

Less:
 
 
Unrealized (gain) loss from derivative instruments and related transactions
(88,673
)
65,652

Effects of economic hedging related to natural gas inventory
(8,765
)
(22,880
)
Tax adjustments
29,227

(10,605
)
Consolidated net income
$
123,320

$
7,693



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 when 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.

NFE 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 NFE, current period unrealized gains and losses on the derivatives are excluded from NFE as a reconciling item. Additionally, realized derivative gains and losses are also included in current period net income. However, NFE includes 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. NJR also calculates a quarterly tax adjustment based on an estimated annual effective tax rate for NFE purposes.

The Company's assets for the various business segments and business operations are detailed below:
(Thousands)
December 31,
2014
September 30,
2014
Assets at end of period:
 
 
Natural Gas Distribution
$
2,236,569

$
2,143,684

Energy Services
597,702

457,080

Clean Energy Ventures
450,030

380,707

Midstream
152,539

153,891

Subtotal
3,436,840

3,135,362

Home Services and Other
93,480

82,413

Intercompany assets (1)
(86,028
)
(58,971
)
Total
$
3,444,292

$
3,158,804

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