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BUSINESS SEGMENT AND OTHER OPERATIONS DATA
 9 Months Ended
Jun. 30, 2015
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
Nine Months Ended
 
June 30,
June 30,
(Thousands)
2015
2014
2015
2014
Operating revenues
 
 
 
 
Natural Gas Distribution
 
 
 
 
External customers
$
116,307

$
111,383

$
699,737

$
739,380

Energy Services
 
 
 
 
External customers (1)
320,221

560,115

1,546,890

2,367,641

Intercompany
1,554

518

60,777

72,285

Clean Energy Ventures
 
 
 
 
External customers
7,861

3,155

18,164

8,007

Subtotal
445,943

675,171

2,325,568

3,187,313

Home Services and Other
 
 
 
 
External customers
14,078

13,604

30,890

31,203

Intercompany
514

194

1,300

693

Eliminations
(2,068
)
(712
)
(62,077
)
(72,978
)
Total
$
458,467

$
688,257

$
2,295,681

$
3,146,231

Depreciation and amortization
 
 
 
 
Natural Gas Distribution
$
10,810

$
10,567

$
32,002

$
30,374

Energy Services
23

15

68

40

Clean Energy Ventures
4,504

2,823

12,392

7,969

Midstream
1

1

4

4

Subtotal
15,338

13,406

44,466

38,387

Home Services and Other
238

212

714

627

Eliminations
(2
)
2

(16
)
—

Total
$
15,574

$
13,620

$
45,164

$
39,014

Interest income (2)
 
 
 
 
Natural Gas Distribution
$
(25
)
$
137

$
75

$
579

Energy Services
250

210

263

210

Clean Energy Ventures
—

—

22

—

Midstream
246

171

727

709

Subtotal
471

518

1,087

1,498

Home Services and Other
13

1

214

1

Eliminations
(509
)
(241
)
(990
)
(709
)
Total
$
(25
)
$
278

$
311

$
790

(1)
Includes sales to Canada, which accounted for 3.6 percent of total operating revenues during the nine months ended June 30, 2015 and 2014.
(2)
Included in other income, net on the Unaudited Condensed Consolidated Statements of Operations.
 
Three Months Ended
Nine Months Ended
 
June 30,
June 30,
(Thousands)
2015
2014
2015
2014
Interest expense, net of capitalized interest
 
 
 
 
Natural Gas Distribution
$
5,005

$
4,540

$
14,002

$
12,412

Energy Services
209

166

1,010

1,443

Clean Energy Ventures
2,078

1,382

5,556

3,817

Midstream
163

333

623

1,108

Subtotal
7,455

6,421

21,191

18,780

Home Services and Other
134

86

76

328

Eliminations
$
(262
)
$
—

$
(262
)
$
—

Total
$
7,327

$
6,507

$
21,005

$
19,108

Income tax (benefit) provision
 
 
 
 
Natural Gas Distribution
$
3,754

$
4,348

$
41,698

$
42,256

Energy Services
(9,958
)
(16,256
)
39,842

36,816

Clean Energy Ventures
(423
)
1,286

(29,186
)
(18,146
)
Midstream
1,737

1,321

5,048

3,890

Subtotal
(4,890
)
(9,301
)
57,402

64,816

Home Services and Other
720

1,680

(704
)
360

Eliminations
(148
)
(187
)
(5
)
201

Total
$
(4,318
)
$
(7,808
)
$
56,693

$
65,377

Equity in earnings of affiliates
 
 
 
 
Midstream
$
4,266

$
3,511

$
12,622

$
10,594

Eliminations
(899
)
(830
)
(2,873
)
(2,538
)
Total
$
3,367

$
2,681

$
9,749

$
8,056

Net financial earnings (loss)
 
 
 
 
Natural Gas Distribution
$
7,172

$
4,882

$
83,952

$
79,564

Energy Services
(5,270
)
(8,628
)
47,482

90,153

Clean Energy Ventures
(3,792
)
3,865

18,226

20,286

Midstream
2,487

1,896

7,211

5,584

Subtotal
597

2,015

156,871

195,587

Home Services and Other
1,909

2,485

(42
)
708

Eliminations
(29
)
14

(100
)
—

Total
$
2,477

$
4,514

$
156,729

$
196,295

Capital expenditures
 
 
 
 
Natural Gas Distribution
$
45,749

$
38,186

$
115,740

$
109,071

Clean Energy Ventures
23,218

46,166

111,588

91,569

Subtotal
68,967

84,352

227,328

200,640

Home Services and Other
29

159

90

636

Total
$
68,996

$
84,511

$
227,418

$
201,276

Investments in equity investees
 
 
 
 
Midstream
$
1,049

$
—

$
2,313

$
—

Total
$
1,049

$
—

$
2,313

$
—


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
Nine Months Ended
 
June 30,
June 30,
(Thousands)
2015
2014
2015
2014
Consolidated net financial earnings
$
2,477

$
4,514

$
156,729

$
196,295

Less:
 
 
 
 
Unrealized loss (gain) from derivative instruments and related transactions
1,188

(6,585
)
(19,010
)
45,811

Effects of economic hedging related to natural gas inventory
16,464

38,139

(15,751
)
(3,409
)
Tax adjustments
(7,715
)
(12,766
)
14,727

(12,497
)
Consolidated net (loss) income
$
(7,460
)
$
(14,274
)
$
176,763

$
166,390



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)
June 30,
2015
September 30,
2014
Assets at end of period:
 
 
Natural Gas Distribution
$
2,239,870

$
2,143,684

Energy Services
261,485

457,080

Clean Energy Ventures
490,090

380,707

Midstream
152,593

153,891

Subtotal
3,144,038

3,135,362

Home Services and Other
115,005

82,413

Intercompany assets (1)
(50,119
)
(58,971
)
Total
$
3,208,924

$
3,158,804

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