SEGMENTS OF BUSINESS | SEGMENTS OF BUSINESS: SJI operates in several different reportable operating segments which reflect the financial information regularly evaluated by the chief operating decision maker. These segments are as follows: • Gas utility operations (SJG) consist primarily of natural gas distribution to residential, commercial and industrial customers. • Wholesale energy operations include the activities of SJRG and SJEX. • SJE is involved in both retail gas and retail electric activities. ◦ Retail gas and other operations include natural gas acquisition and transportation service business lines. ◦ Retail electric operations consist of electricity acquisition and transportation to commercial, industrial and residential customers. • On-site energy production consists of Marina's thermal energy facility and other energy-related projects. Also included in this segment are the activities of ACB, ACLE, BCLE, SCLE, SXLE, MCS, NBS and SBS. These entities became wholly-owned subsidiaries of Marina on December 31, 2015 (see Note 3). • Appliance service operations includes SJESP, which services residential and small commercial HVAC systems, installs small commercial HVAC systems, provides plumbing services and services appliances under warranty via a subcontractor arrangement as well as on a time and materials basis. • The activities of Midstream are a part of the Corporate and Services segment. SJI groups its nonutility operations into two categories: Energy Group and Energy Services. Energy Group includes wholesale energy, retail gas and other, and retail electric operations. Energy Services includes on-site energy production and appliance service operations. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are treated as if the sales or transfers were to third parties at current market prices. Information about SJI’s operations in different reportable operating segments is presented below (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Operating Revenues: Gas Utility Operations $ 62,025 $ 58,634 $ 318,553 $ 402,104 Energy Group: Wholesale Energy Operations 67,926 9,352 131,691 77,973 Retail Gas and Other Operations 11,865 11,757 63,903 67,900 Retail Electric Operations 51,585 44,240 134,141 110,203 Subtotal Energy Group 131,376 65,349 329,735 256,076 Energy Services: On-Site Energy Production 31,034 18,898 70,398 47,606 Appliance Service Operations 1,812 2,290 5,750 7,346 Subtotal Energy Services 32,846 21,188 76,148 54,952 Corporate and Services 7,059 6,925 24,352 23,776 Subtotal 233,306 152,096 748,788 736,908 Intersegment Sales (14,224 ) (11,034 ) (42,269 ) (35,183 ) Total Operating Revenues $ 219,082 $ 141,062 $ 706,519 $ 701,725 Three Months Ended Nine Months Ended 2016 2015 2016 2015 Operating Income (Loss): Gas Utility Operations $ (2,453 ) $ (2,501 ) $ 83,251 $ 82,649 Energy Group: Wholesale Energy Operations 8,014 (11,813 ) 15,109 3,675 Retail Gas and Other Operations (2,520 ) (4,821 ) 2,971 (1,581 ) Retail Electric Operations 1,223 1,034 4,085 1,026 Subtotal Energy Group 6,717 (15,600 ) 22,165 3,120 Energy Services: On-Site Energy Production 8,077 2,265 12,549 3,960 Appliance Service Operations 277 216 579 411 Subtotal Energy Services 8,354 2,481 13,128 4,371 Corporate and Services (28 ) 567 313 1,518 Total Operating Income (Loss) $ 12,590 $ (15,053 ) $ 118,857 $ 91,658 Depreciation and Amortization: Gas Utility Operations $ 15,954 $ 14,911 $ 47,368 $ 43,317 Energy Group: Wholesale Energy Operations 39 191 447 238 Retail Gas and Other Operations 85 39 253 79 Subtotal Energy Group 124 230 700 317 Energy Services: On-Site Energy Production 11,274 7,650 32,088 22,158 Appliance Service Operations 73 85 248 232 Subtotal Energy Services 11,347 7,735 32,336 22,390 Corporate and Services 373 261 856 961 Total Depreciation and Amortization $ 27,798 $ 23,137 $ 81,260 $ 66,985 Interest Charges: Gas Utility Operations $ 4,058 $ 4,809 $ 13,397 $ 15,112 Energy Group: Wholesale Energy Operations — 150 32 280 Retail Gas and Other Operations 86 — 296 120 Subtotal Energy Group 86 150 328 400 Energy Services: On-Site Energy Production 3,032 2,433 9,936 6,409 Corporate and Services 2,896 2,857 9,206 8,784 Subtotal 10,072 10,249 32,867 30,705 Intersegment Borrowings (2,717 ) (2,142 ) (8,123 ) (6,523 ) Total Interest Charges $ 7,355 $ 8,107 $ 24,744 $ 24,182 Three Months Ended Nine Months Ended 2016 2015 2016 2015 Income Taxes: Gas Utility Operations $ (2,007 ) $ (2,871 ) $ 26,812 $ 26,593 Energy Group: Wholesale Energy Operations 3,125 (4,615 ) 5,604 2,238 Retail Gas and Other Operations (1,062 ) (2,038 ) 1,220 (370 ) Retail Electric Operations 499 422 1,669 419 Subtotal Energy Group 2,562 (6,231 ) 8,493 2,287 Energy Services: On-Site Energy Production 2,118 (2,015 ) (784 ) (26,923 ) Appliance Service Operations 102 94 254 191 Subtotal Energy Services 2,220 (1,921 ) (530 ) (26,732 ) Corporate and Services 32 55 110 218 Total Income Taxes $ 2,807 $ (10,968 ) $ 34,885 $ 2,366 Property Additions: Gas Utility Operations $ 53,623 $ 55,335 $ 155,126 $ 160,836 Energy Group: Wholesale Energy Operations — 4 7 383 Retail Gas and Other Operations 455 642 1,180 1,763 Subtotal Energy Group 455 646 1,187 2,146 Energy Services: On-Site Energy Production 9,152 36,805 14,468 67,226 Appliance Service Operations 73 51 425 379 Subtotal Energy Services 9,225 36,856 14,893 67,605 Corporate and Services 174 193 901 1,794 Total Property Additions $ 63,477 $ 93,030 $ 172,107 $ 232,381 September 30, 2016 December 31, 2015 Identifiable Assets (See Note 1): Gas Utility Operations $ 2,456,312 $ 2,281,576 Energy Group: Wholesale Energy Operations 180,492 231,660 Retail Gas and Other Operations 36,496 55,111 Retail Electric Operations 48,286 55,528 Subtotal Energy Group 265,274 342,299 Energy Services: On-Site Energy Production 758,084 790,231 Appliance Service Operations 3,435 4,885 Subtotal Energy Services 761,519 795,116 Discontinued Operations 1,766 1,545 Corporate and Services 638,168 652,325 Intersegment Assets (565,923 ) (600,928 ) Total Identifiable Assets $ 3,557,116 $ 3,471,933 |