UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
|
[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2009
or
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Commission
File Number 1-7297
NICOR
INC.
(Exact
name of registrant as specified in its charter)
|
Illinois
|
36-2855175
|
|
(State
of Incorporation)
|
(I.R.S.
Employer
|
|
Identification
No.)
|
|
1844
Ferry Road
|
|
|
Naperville,
Illinois 60563-9600
|
(630)
305-9500
|
|
(Address
of principal executive offices) (Zip Code)
|
(Registrant’s
telephone number, including area
code)
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No
[ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months. Yes [ ] No
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer [X]
|
Accelerated
filer [ ]
|
|
Non-accelerated
filer [ ]
|
Smaller
reporting
company [ ]
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. Common stock, par value
$2.50, outstanding at July 24, 2009, were 45,221,593 shares.
|
ii
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|||
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Part
I - Financial Information
|
|||
|
Item
1.
|
Financial
Statements (Unaudited)
|
||
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1
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|||
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2
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|||
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3
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|||
|
4
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|||
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Item
2.
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21
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Item
3.
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34
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Item
4.
|
34
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||
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Part
II - Other Information
|
|||
|
Item
1.
|
35
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||
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Item
2.
|
35
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||
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Item
4.
|
35
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||
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Item
6.
|
36
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||
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38
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|||
ALJs. Administrative
Law Judges.
Chicago Hub. A
venture of Nicor Gas, which provides natural gas storage and
transmission-related services to marketers and other gas distribution
companies.
Degree day. The
extent to which the daily average temperature falls below 65 degrees
Fahrenheit. Normal weather for Nicor Gas’ service territory, for
purposes of this report, is considered to be 5,600 degree days per year for 2009
and 5,830 degree days per year for 2008.
EN Engineering. EN
Engineering, L.L.C., a previously owned joint
venture that provides engineering and consulting services. Nicor sold
its ownership on March 31, 2009.
FASB. Financial
Accounting Standards Board.
FERC. Federal
Energy Regulatory Commission, the agency that regulates the interstate
transportation of natural
gas, oil and electricity.
FSP. FASB Staff
Position.
GSA. General
Services Administration, a governmental agency of the United
States.
ICC. Illinois
Commerce Commission, the agency that establishes the rules and regulations
governing utility rates and services in Illinois.
IRS. Internal
Revenue Service.
Jobs Act. American
Jobs Creation Act of 2004.
LIFO. Last-in,
first-out.
Mcf, MMcf,
Bcf. Thousand cubic feet, million cubic feet, billion cubic
feet.
MMBtus. Million
British thermal units.
Nicor. Nicor Inc.,
or the registrant.
Nicor Advanced
Energy. Prairie Point Energy, L.L.C. (doing business as Nicor
Advanced Energy), a wholly owned business that provides natural gas and related
services on an unregulated basis to residential and small commercial
customers.
Nicor
Enerchange. Nicor Enerchange, L.L.C., a wholly owned business
that engages in wholesale marketing of natural gas supply services primarily in
the Midwest, administers the Chicago Hub for Nicor Gas, serves commercial and
industrial customers in the Chicago market area, and manages Nicor Solutions’
and Nicor Advanced Energy’s product risks, including the purchase of natural gas
supplies.
Nicor Gas. Northern
Illinois Gas Company (doing business as Nicor Gas Company) is a
regulated wholly owned public utility business and one of the
nation’s largest distributors of natural gas.
Nicor
Services. Nicor Energy Services Company, a wholly owned business
that provides move connection services for other utilities and product warranty
contracts, heating, ventilation and air conditioning repair, maintenance and
installation services and equipment to retail markets, including residential and
small commercial customers.
ii
Nicor
Solutions. Nicor Solutions, L.L.C., a wholly owned business
that offers residential and small commercial customers energy-related products
that provide for natural gas cost stability and management of their utility
bill.
NYMEX. New York
Mercantile Exchange.
PBR. Performance-based rate, a regulatory plan which ended on January 1, 2003, that provided economic incentives based on natural gas cost performance.
PCBs. Polychlorinated
Biphenyls.
PGA. Purchased Gas
Adjustment, a rate rider that passes natural gas costs directly through to
customers without markup, subject to ICC review.
SEC. The United
States Securities and Exchange Commission.
SFAS. Statement of
Financial Accounting Standards.
TEL. Tropic
Equipment Leasing Inc., a wholly owned subsidiary of Nicor, holds the company’s
interests in Triton.
TEU. Twenty-foot
equivalent unit, a measure of volume in containerized shipping equal to one
20-foot-long container.
Triton. Triton
Container Investments L.L.C., a cargo container leasing company in which Nicor
Inc. has an investment.
Tropical
Shipping. A wholly owned business and a carrier of
containerized freight in the Bahamas and the Caribbean region.
USEPA. United
States Environmental Protection Agency.
|
Part
I - FINANCIAL INFORMATION
|
|||||||||||||||||
| Item 1. Financial Statements | |||||||||||||||||
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|||||||||||||||||
|
(millions,
except per share data)
|
|||||||||||||||||
|
Three
months ended
|
Six
months ended
|
||||||||||||||||
|
June
30
|
June
30
|
||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||||||
|
Operating
revenues
|
|||||||||||||||||
|
Gas
distribution (includes revenue taxes of $26.6, $36.7,
|
|||||||||||||||||
|
$101.3
and $117.0, respectively)
|
$ | 326.3 | $ | 560.1 | $ | 1,310.3 | $ | 2,024.3 | |||||||||
|
Shipping
|
83.8 | 102.6 | 173.2 | 200.3 | |||||||||||||
|
Other
energy ventures
|
51.2 | 52.7 | 128.3 | 122.9 | |||||||||||||
|
Corporate
and eliminations
|
(13.7 | ) | (15.6 | ) | (53.4 | ) | (52.0 | ) | |||||||||
|
Total
operating revenues
|
447.6 | 699.8 | 1,558.4 | 2,295.5 | |||||||||||||
|
Operating
expenses
|
|||||||||||||||||
|
Gas
distribution
|
|||||||||||||||||
|
Cost
of gas
|
156.6 | 396.2 | 873.0 | 1,582.9 | |||||||||||||
|
Operating
and maintenance
|
69.1 | 59.7 | 159.7 | 148.3 | |||||||||||||
|
Depreciation
|
44.6 | 42.9 | 89.0 | 85.7 | |||||||||||||
|
Taxes,
other than income taxes
|
30.9 | 40.6 | 109.7 | 124.4 | |||||||||||||
|
Shipping
|
81.3 | 96.9 | 164.1 | 190.7 | |||||||||||||
|
Other
energy ventures
|
38.5 | 41.7 | 113.0 | 110.9 | |||||||||||||
|
Other
corporate expenses and eliminations
|
(12.9 | ) | (18.8 | ) | (49.5 | ) | (51.2 | ) | |||||||||
|
Total
operating expenses
|
408.1 | 659.2 | 1,459.0 | 2,191.7 | |||||||||||||
|
Operating
income
|
39.5 | 40.6 | 99.4 | 103.8 | |||||||||||||
|
Interest
expense, net of amounts capitalized
|
8.8 | 9.1 | 18.1 | 19.7 | |||||||||||||
|
Equity
investment income, net
|
1.6 | 2.8 | 13.3 | 4.3 | |||||||||||||
|
Interest
income
|
.5 | 4.2 | 1.1 | 5.5 | |||||||||||||
|
Other
income, net
|
.3 | .2 | .5 | .2 | |||||||||||||
|
Income
before income taxes
|
33.1 | 38.7 | 96.2 | 94.1 | |||||||||||||
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Income
tax expense, net of benefits
|
10.2 | 9.8 | 29.5 | 23.8 | |||||||||||||
|
Net
income
|
$ | 22.9 | $ | 28.9 | $ | 66.7 | $ | 70.3 | |||||||||
|
Average
shares of common stock outstanding
|
|||||||||||||||||
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Basic
|
45.4 | 45.3 | 45.4 | 45.3 | |||||||||||||
|
Diluted
|
45.5 | 45.3 | 45.5 | 45.3 | |||||||||||||
|
Earnings
per average share of common stock
|
|||||||||||||||||
|
Basic
|
$ | .50 | $ | .64 | $ | 1.47 | $ | 1.55 | |||||||||
|
Diluted
|
.50 | .64 | 1.47 | 1.55 | |||||||||||||
|
Dividends
declared per share of common stock
|
$ | .465 | $ | .465 | $ | .930 | $ | .930 | |||||||||
|
The
accompanying notes are an integral part of these
statements.
|
|||||||||||||||||
1
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
||||||||
|
(millions)
|
||||||||
|
Six
months ended
|
||||||||
|
June
30
|
||||||||
|
2009
|
2008
|
|||||||
|
Operating
activities
|
||||||||
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Net
income
|
$ | 66.7 | $ | 70.3 | ||||
|
Adjustments
to reconcile net income to net cash flow provided from operating
activities:
|
||||||||
|
Depreciation
|
98.1 | 95.1 | ||||||
|
Deferred
income tax expense (benefit)
|
1.0 | (20.5 | ) | |||||
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Gain
on sale of equity investment
|
(10.1 | ) | - | |||||
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Changes
in assets and liabilities:
|
||||||||
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Receivables, less allowances
|
379.2 | 128.2 | ||||||
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Gas in storage
|
179.9 | 78.3 | ||||||
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Deferred/accrued gas costs
|
56.9 | 41.2 | ||||||
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Derivative instruments
|
(21.2 | ) | (163.4 | ) | ||||
|
Margin accounts - derivative instruments
|
29.1 | 91.2 | ||||||
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Other assets
|
17.1 | (32.2 | ) | |||||
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Accounts payable and customer credit balances and deposits
|
(189.4 | ) | 30.9 | |||||
|
Temporary LIFO inventory liquidation
|
82.9 | 399.2 | ||||||
|
Other liabilities
|
(29.6 | ) | (13.8 | ) | ||||
|
Other
items
|
9.6 | 9.5 | ||||||
|
Net
cash flow provided from operating activities
|
670.2 | 714.0 | ||||||
|
Investing
activities
|
||||||||
|
Additions
to property, plant & equipment
|
(111.2 | ) | (97.1 | ) | ||||
|
Purchases
of held-to-maturity securities
|
- | (1.1 | ) | |||||
|
Proceeds
from maturities of held-to-maturity securities
|
1.3 | 1.4 | ||||||
|
Net
increase in other short-term investments
|
(3.7 | ) | (5.5 | ) | ||||
|
Proceeds
from sale of equity investment
|
13.0 | - | ||||||
|
Business
acquisition, net of cash acquired
|
(.4 | ) | (5.6 | ) | ||||
|
Other
investing activities
|
2.3 | 6.2 | ||||||
|
Net
cash flow used for investing activities
|
(98.7 | ) | (101.7 | ) | ||||
|
Financing
activities
|
||||||||
|
Repayments
of long-term debt
|
(50.0 | ) | - | |||||
|
Net
repayments of commercial paper
|
(462.9 | ) | (351.0 | ) | ||||
|
Dividends
paid
|
(42.3 | ) | (42.2 | ) | ||||
|
Borrowing
against cash surrender value of life insurance policies
|
3.4 | - | ||||||
|
Repayment
of loan against cash surrender value of life insurance
policies
|
- | (11.2 | ) | |||||
|
Other
financing activities
|
(1.8 | ) | (.1 | ) | ||||
|
Net
cash flow used for financing activities
|
(553.6 | ) | (404.5 | ) | ||||
|
Net
increase in cash and cash equivalents
|
17.9 | 207.8 | ||||||
|
Cash
and cash equivalents, beginning of period
|
26.0 | 42.8 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 43.9 | $ | 250.6 | ||||
|
The
accompanying notes are an integral part of these
statements.
|
||||||||
Condensed
Consolidated Balance Sheets (Unaudited)
(millions)
|
June
30
|
December
31
|
June
30
|
||||||||||
|
2009
|
2008
|
2008
|
||||||||||
|
Assets
|
||||||||||||
|
Current
assets
|
||||||||||||
|
Cash
and cash equivalents
|
$ | 43.9 | $ | 26.0 | $ | 250.6 | ||||||
|
Short-term
investments
|
72.4 | 69.5 | 53.2 | |||||||||
|
Receivables,
less allowances of $51.9, $44.9 and $55.5, respectively
|
310.9 | 690.1 | 514.6 | |||||||||
|
Gas
in storage
|
28.6 | 208.5 | 75.7 | |||||||||
|
Derivative
instruments
|
53.3 | 49.7 | 226.4 | |||||||||
|
Margin
accounts - derivative instruments
|
116.8 | 134.4 | 17.0 | |||||||||
|
Other
|
117.4 | 160.7 | 106.4 | |||||||||
|
Total
current assets
|
743.3 | 1,338.9 | 1,243.9 | |||||||||
|
Property,
plant and equipment, at cost
|
||||||||||||
|
Gas
distribution
|
4,536.8 | 4,460.6 | 4,348.2 | |||||||||
|
Shipping
|
323.2 | 315.1 | 312.2 | |||||||||
|
Other
|
29.3 | 26.7 | 25.1 | |||||||||
| 4,889.3 | 4,802.4 | 4,685.5 | ||||||||||
|
Less
accumulated depreciation
|
1,990.1 | 1,943.8 | 1,905.3 | |||||||||
|
Total
property, plant and equipment, net
|
2,899.2 | 2,858.6 | 2,780.2 | |||||||||
|
Pension
benefits
|
36.5 | 36.4 | 223.2 | |||||||||
|
Long-term
investments
|
128.4 | 136.8 | 141.8 | |||||||||
|
Other
assets
|
380.2 | 413.3 | 166.6 | |||||||||
|
Total
assets
|
$ | 4,187.6 | $ | 4,784.0 | $ | 4,555.7 | ||||||
|
Liabilities and
Capitalization
|
||||||||||||
|
Current
liabilities
|
||||||||||||
|
Long-term
debt due within one year
|
$ | - | $ | 50.0 | $ | 125.0 | ||||||
|
Short-term
debt
|
227.0 | 739.9 | 18.0 | |||||||||
|
Accounts
payable
|
266.1 | 411.3 | 555.1 | |||||||||
|
Customer
credit balances and deposits
|
143.1 | 187.3 | 138.5 | |||||||||
|
Temporary
LIFO inventory liquidation
|
82.9 | - | 399.2 | |||||||||
|
Derivative
instruments
|
152.4 | 167.3 | 66.4 | |||||||||
|
Other
|
104.5 | 112.2 | 259.2 | |||||||||
|
Total
current liabilities
|
976.0 | 1,668.0 | 1,561.4 | |||||||||
|
Deferred
credits and other liabilities
|
||||||||||||
|
Regulatory
asset retirement cost liability
|
774.7 | 751.7 | 739.8 | |||||||||
|
Deferred
income taxes
|
399.0 | 400.0 | 399.4 | |||||||||
|
Health
care and other postretirement benefits
|
197.5 | 196.6 | 186.2 | |||||||||
|
Asset
retirement obligation
|
188.9 | 185.0 | 181.6 | |||||||||
|
Other
|
146.9 | 161.0 | 129.5 | |||||||||
|
Total
deferred credits and other liabilities
|
1,707.0 | 1,694.3 | 1,636.5 | |||||||||
|
Commitments
and contingencies
|
||||||||||||
|
Capitalization
|
||||||||||||
|
Long-term
obligations
|
||||||||||||
|
Long-term
debt, net of unamortized discount
|
498.1 | 448.0 | 372.9 | |||||||||
|
Mandatorily
redeemable preferred stock
|
.6 | .6 | .6 | |||||||||
|
Total
long-term obligations
|
498.7 | 448.6 | 373.5 | |||||||||
|
Common
equity
|
||||||||||||
|
Common
stock
|
113.0 | 113.0 | 112.9 | |||||||||
|
Paid-in
capital
|
52.2 | 49.5 | 46.6 | |||||||||
|
Retained
earnings
|
854.6 | 830.3 | 823.5 | |||||||||
|
Accumulated
other comprehensive income (loss), net
|
(13.9 | ) | (19.7 | ) | 1.3 | |||||||
|
Total
common equity
|
1,005.9 | 973.1 | 984.3 | |||||||||
|
Total
capitalization
|
1,504.6 | 1,421.7 | 1,357.8 | |||||||||
|
Total
liabilities and capitalization
|
$ | 4,187.6 | $ | 4,784.0 | $ | 4,555.7 | ||||||
|
The
accompanying notes are an integral part of these
statements.
|
||||||||||||
3
Nicor
Inc.
|
1.
|
BASIS
OF PRESENTATION
|
The
unaudited Condensed Consolidated Financial Statements of Nicor have been
prepared by the company pursuant to the rules and regulations of the
SEC. Certain information and note disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to SEC
rules and regulations. The unaudited Condensed Consolidated Financial
Statements and Notes should be read in conjunction with the financial statements
and the notes thereto included in the company’s 2008 Annual Report on Form
10-K.
The
information furnished reflects, in the opinion of the company, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair statement
of the results for the interim periods presented. Results for the
interim periods presented are not necessarily indicative of the results to be
expected for the full fiscal year due to seasonal and other
factors.
The
company’s management evaluated subsequent events for potential recognition and
disclosure through July 31, 2009, the date the financial statements were
issued.
|
2.
|
ACCOUNTING
POLICIES
|
Gas in storage. Gas
distribution segment inventory is carried at cost on a LIFO
basis. Inventory decrements occurring during interim periods that are
expected to be restored prior to year-end are charged to cost of gas at the
estimated annual replacement cost, and the difference between this cost and the
actual LIFO layer cost is recorded on the balance sheet as a temporary LIFO
inventory liquidation. Interim inventory decrements not expected to
be restored prior to year-end are charged to cost of gas at the actual LIFO cost
of the layers liquidated. The inventory decrement as of June 30, 2009
is expected to be restored prior to year-end.
Nicor
Enerchange inventory is carried at the lower of weighted-average cost or market
(market is represented by the cash price per the close of business on the last
trading day of the period). In 2009, Nicor Enerchange recorded a
charge of $2.8 million in the first quarter resulting from a lower of cost or
market valuation.
Regulatory assets and
liabilities. Nicor Gas is regulated by the ICC, which
establishes the rules and regulations governing utility rates and services in
Illinois. As a rate-regulated company, Nicor Gas applies SFAS No. 71,
Accounting for the Effects of
Certain Types of Regulation, which requires Nicor Gas to recognize the
economic effects of rate regulation and, accordingly, has recorded regulatory
assets and liabilities. Regulatory assets represent probable future
revenue associated with certain costs that are expected to be recovered from
customers through rate riders or base rates, upon approval by the
ICC. Regulatory liabilities represent probable future reductions in
revenues collected from ratepayers through a rate rider or base rates, or
probable future expenditures. If Nicor Gas’ operations become no
longer subject to the provisions of SFAS No. 71, a write-off of net regulatory
liabilities would be required.
The
company had regulatory assets and liabilities as follows (in
millions):
|
June
30
|
December
31
|
June
30
|
||||||||||
|
2009
|
2008
|
2008
|
||||||||||
|
Regulatory
assets
|
||||||||||||
|
Regulatory
postretirement asset – current
|
$ | 23.3 | $ | 23.3 | $ | 5.2 | ||||||
|
Regulatory
postretirement asset – noncurrent
|
222.7 | 232.3 | 61.9 | |||||||||
|
Deferred
gas costs – current
|
- | 31.5 | - | |||||||||
|
Deferred
gas costs – noncurrent
|
15.2 | 22.5 | - | |||||||||
|
Deferred
environmental costs
|
11.8 | 19.5 | 8.0 | |||||||||
|
Unamortized
losses on reacquired debt
|
14.8 | 15.4 | 15.9 | |||||||||
|
Other
|
15.0 | 6.2 | 4.3 | |||||||||
| $ | 302.8 | $ | 350.7 | $ | 95.3 | |||||||
|
Regulatory
liabilities
|
||||||||||||
|
Regulatory
asset retirement cost liability – current
|
$ | 15.0 | $ | 15.0 | $ | 8.0 | ||||||
|
Regulatory
asset retirement cost liability – noncurrent
|
774.7 | 751.7 | 739.8 | |||||||||
|
Accrued
gas costs
|
18.1 | - | 91.3 | |||||||||
|
Regulatory
income tax liability
|
44.7 | 46.3 | 48.1 | |||||||||
|
Other
|
1.2 | .8 | 6.1 | |||||||||
| $ | 853.7 | $ | 813.8 | $ | 893.3 | |||||||
The
current portion of the regulatory postretirement asset, the deferred gas costs
and $2.3 million of other regulatory assets are classified in current assets –
other. All other regulatory assets are classified in noncurrent other
assets. The current portion of the regulatory asset retirement cost
liability and accrued gas costs are classified in current liabilities –
other. All other regulatory liabilities are classified in noncurrent
other liabilities.
The ICC
does not presently allow Nicor Gas the opportunity to earn a return on its
regulatory postretirement asset. The regulatory postretirement asset
is expected to be recovered from ratepayers over a period of approximately 10 to
13 years. The regulatory assets related to debt are not included in
rate base, but are recovered over the term of the debt through the rate of
return authorized by the ICC. Nicor Gas is allowed to recover and is
required to pay, using short-term interest rates, the carrying costs related to
temporary under or overcollections of natural gas costs and certain
environmental costs charged to its customers.
Revenue taxes. Nicor Gas
classifies revenue taxes billed to customers as operating revenues and related
taxes incurred as operating expenses. Revenue taxes included in
operating expense for the three and six months ended June 30, 2009 were $26.3
million and $99.9 million, respectively, and $36.1 million and $115.0 million,
respectively, for the same periods ending June 30, 2008.
Derivative
instruments.
Cash flows from derivative
instruments are recognized in the Condensed Consolidated Statements of Cash
Flows, and gains and losses are recognized in the Condensed Consolidated
Statements of Operations, in the same categories as the underlying
transactions.
Cash flow
hedge accounting may be elected only for highly effective hedges, based upon an
assessment, performed at least quarterly, of the historical and probable future
correlation of cash flows from the derivative instrument to changes in the
expected future cash flows of the hedged item. To the extent cash
flow hedge accounting is applied, the effective portion of any changes in the
fair value of the derivative instruments is reported as a component of
accumulated other comprehensive income. Ineffectiveness, if any, is
immediately recognized in operating income. The amount in accumulated
other comprehensive income is reclassified to earnings when the forecasted
transaction is recognized in the income statement,
5
even if
the derivative instrument is sold, extinguished or terminated prior to the
transaction occurring. If the forecasted transaction is no longer
expected to occur, the amount in accumulated other comprehensive income is
immediately reclassified to earnings.
Nicor
Gas. Derivative instruments, such as futures contracts,
options and swap agreements, are utilized primarily in the purchase of natural
gas for customers. These derivative instruments are reflected at fair
value. Realized gains or losses on such instruments are included in
the cost of gas delivered and are passed directly through to customers, subject
to ICC review, and therefore have no direct impact on
earnings. Unrealized changes in the fair value of these derivative
instruments are deferred as regulatory assets or liabilities and classified on
the balance sheet as deferred or accrued gas costs, respectively.
At times,
Nicor Gas enters into futures contracts, options, swap agreements and
fixed-price purchase agreements to reduce the earnings volatility of certain
forecasted operating costs arising from fluctuations in natural gas prices, such
as the purchase of natural gas for use in company operations. These
derivative instruments are carried at fair value, unless they qualify for the
normal purchases and normal sales exception, in which case they are carried at
cost. To the extent hedge accounting is not elected, changes in such
fair values are immediately recorded in current period earnings as operating and
maintenance expense.
Nicor
Enerchange. Derivative instruments, such as futures contracts,
options, forward contracts, swap agreements and other energy-related contracts
are held by Nicor’s wholesale natural gas marketing business, Nicor Enerchange,
for trading purposes. Certain of these derivative instruments are
used to economically hedge price risk associated with inventories of natural
gas, fixed-price purchase and sale agreements and other future natural gas
commitments. Nicor Enerchange records such derivative instruments at
fair value and generally does not elect hedge accounting. As a
result, changes in derivative fair values may have a material impact on Nicor’s
financial statements. Other derivative instruments are used by Nicor
Enerchange to hedge price risks related to certain utility-bill management
products. These derivative instruments are carried at fair value and
cash flow hedge accounting may or may not be elected.
Nicor. For derivative
instruments that were designated as hedges of interest payments on 30-year bonds
issued by Nicor Gas in December 2003, the amount deferred in accumulated other
comprehensive income is being amortized to interest expense on a straight-line
basis over the remaining life of the bonds.
|
3.
|
NEW
ACCOUNTING PRONOUNCEMENTS
|
Fair value measurements.
Effective January 1, 2008, the company adopted SFAS No. 157, Fair Value Measurements,
which defines fair value, establishes a consistent framework for measuring fair
value, and expands disclosure requirements about fair value
measurements. This Statement does not require any new fair value
measurements, rather it provides guidance on how to perform fair value
measurements as required or permitted under other accounting
pronouncements. It also provides for immediate recognition of trade-date
gains and losses related to certain derivative transactions whose fair value has
been determined using unobservable market inputs. In 2008, Nicor
elected the one-year deferral allowed by FSP SFAS 157-2, Effective Date of FASB Statement No.
157, for
certain nonfinancial assets and liabilities. As it applies to Nicor,
the deferral pertained to fair value measurements for business combinations,
impairment testing of goodwill and other intangible assets, as well as asset
retirement obligations. The
effect of adopting SFAS No. 157, in its entirety, was not material to Nicor’s
results of operations or financial condition.
|
4.
|
INVESTMENTS
|
FSP No.
SFAS 115-2 and SFAS 124-2, Recognition and Presentation of
Other –Than-Temporary Impairments, is effective for interim reporting
periods ending after June 15, 2009. This FSP extends existing
disclosure requirements for investments to interim reporting periods as well as
provides new disclosure requirements.
The
company’s investments are as follows (in millions):
|
June
30
|
December
31
|
June
30
|
||||||||||
|
2009
|
2008
|
2008
|
||||||||||
|
Money
market funds
|
$ | 100.8 | $ | 81.2 | $ | 290.5 | ||||||
|
Corporate
bonds
|
3.5 | 4.8 | 7.1 | |||||||||
|
Certificates
of deposit
|
.7 | .6 | .7 | |||||||||
|
Other
investments
|
3.2 | 2.0 | 2.2 | |||||||||
|
Total
investments
|
$ | 108.2 | $ | 88.6 | $ | 300.5 | ||||||
Investments
are classified on the Condensed Consolidated Balance Sheets as follows (in
millions):
|
June
30
|
December
31
|
June
30
|
||||||||||
|
2009
|
2008
|
2008
|
||||||||||
|
Cash
equivalents
|
$ | 31.2 | $ | 15.3 | $ | 240.5 | ||||||
|
Short-term
investments
|
72.4 | 69.5 | 53.2 | |||||||||
|
Long-term
investments
|
4.6 | 3.8 | 6.8 | |||||||||
|
Total
investments
|
$ | 108.2 | $ | 88.6 | $ | 300.5 | ||||||
Money
market funds held by domestic subsidiaries are included in cash equivalents,
whereas such funds held by non-U.S subsidiaries are included in short-term
investments.
Investments
categorized as trading (including money market funds) are carried at fair value,
and totaled $102.2 million, $82.2 million and $291.7 million at June 30, 2009,
December 31, 2008 and June 30, 2008, respectively. Corporate bonds
are categorized as held-to-maturity, and their carrying value approximates fair
value. The contractual maturities of the held-to-maturity corporate
bonds at June 30, 2009 are as follows (in millions):
Years to
maturity
|
Less
than
1
year
|
1-5
Years
|
Total
|
||||||||
| $ |
2.7
|
$ |
.8
|
$ |
3.5
|
|||||
Nicor’s
investments also include certain restricted investments, including certificates
of deposit and bank accounts, maintained to fulfill statutory or contractual
requirements. These investments totaled $2.5 million, $1.6 million
and $1.7 million at June 30, 2009, December 31, 2008 and June 30, 2008,
respectively.
Any gains
or losses included in earnings resulting from the sale of investments were not
significant.
|
5.
|
SHORT-TERM
AND LONG-TERM DEBT
|
In
February 2009, the $50 million 5.37 percent First Mortgage Bond series matured
and was retired. On July 30, 2009, Nicor Gas, through a private
placement, issued $50 million First Mortgage Bonds at 4.70 percent, due in
2019. As a result of this issuance, the company reclassified $50
million of short-term debt outstanding as of June 30, 2009 as a long-term
obligation.
In August
2008, Nicor Gas, through a private placement, issued $75 million First Mortgage
Bonds at 6.25 percent, due in 2038. Nicor Gas retired the $75 million
5.875 percent First Mortgage Bond series that became due in August
2008.
In May
2009, Nicor Gas established a $550 million, 364-day revolver, expiring May 2010,
to replace the $600 million, 9-month seasonal revolver, which expired in May
2009. In September 2005, Nicor and Nicor Gas established a $600
million, five-year revolver, expiring September 2010. These
facilities were established with major domestic and foreign banks and serve as
backup for the issuance of commercial paper. The company had $277.0
million, $739.9 million and $18.0 million of commercial paper borrowings
outstanding at June 30, 2009, December 31, 2008 and June 30, 2008,
respectively.
The
company believes it is in compliance with all debt covenants.
6. INCOME
TAXES
The
effective income tax rate for the three months ended June 30, 2009 increased to
30.9 percent from 25.3 percent in the prior-year period. The
effective income tax rate for the six months ended June 30, 2009 increased to
30.7 percent from 25.3 percent in the prior-year period. The higher
effective income tax rate for the three and six months ended June 30, 2009 is
due primarily to higher forecasted annual pretax income (which causes a higher
effective income tax rate since permanent differences and tax credits are a
smaller share of pretax income).
In 2006,
the company reorganized certain shipping and related operations. The
reorganization allows the company to take advantage of certain provisions of the
Jobs Act that provide the opportunity for tax savings subsequent to the date of
the reorganization. Generally, to the extent foreign shipping
earnings are not repatriated to the United States, such earnings are not
expected to be subject to current taxation. In addition, to the
extent such earnings are determined to be indefinitely reinvested offshore, no
deferred income tax expense would be recorded by the company. For the
six months ended June 30, 2009, income tax expense has not been provided on
approximately $5 million of foreign company shipping earnings that are expected
to be indefinitely reinvested offshore compared to approximately $3 million for
the three and six months ended June 30, 2008. As of June 30, 2009,
Nicor has not recorded deferred income taxes of approximately $53 million on
approximately $151 million of cumulative undistributed foreign earnings that are
expected, in management’s judgment, to be indefinitely reinvested
offshore.
The
company has approximately $6 million of net interest receivable accrued at June
30, 2009 compared with $9 million of interest receivable as of December 31,
2008. The change is due primarily to the settlement of interest in
the first quarter of 2009 related to a state income tax matter.
The
balance of unamortized investment tax credits at June 30, 2009, December 31,
2008 and June 30, 2008 was $24.7 million, $26.0 million and $26.4 million,
respectively.
7. ACCRUED
UNBILLED REVENUES
Receivables
include accrued unbilled revenues of $31.9 million, $199.1 million and $58.6
million at June 30, 2009, December 31, 2008 and June 30, 2008, respectively,
related primarily to gas distribution operations. Nicor Gas accrues
revenues for estimated deliveries to customers from the date of their last bill
until the balance sheet date.
8. FAIR
VALUE MEASUREMENTS
SFAS No.
157, Fair Value
Measurements, defines a three-level hierarchy which prioritizes the
inputs to valuation techniques used to measure fair value into three broad
levels, with Level 1 considered the most reliable. For assets and
liabilities measured at fair value on a recurring basis on the Condensed
Consolidated Balance Sheets, the tables below categorize those fair values
across the three levels (in millions):
|
Fair
value amount
|
||||||||||||||||
|
Quoted
prices in active markets
|
Significant
observable inputs
|
Significant
unobservable inputs
|
||||||||||||||
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
Total
|
|||||||||||||
|
June
30, 2009
|
||||||||||||||||
|
Assets
|
||||||||||||||||
|
Money
market funds
|
$ | 100.8 | $ | - | $ | - | $ | 100.8 | ||||||||
|
Derivatives
|
29.9 | 25.5 | 8.1 | 63.5 | ||||||||||||
|
Total
|
$ | 130.7 | $ | 25.5 | $ | 8.1 | $ | 164.3 | ||||||||
|
Liabilities
|
||||||||||||||||
|
Derivatives
|
$ | 143.0 | $ | 28.8 | $ | 2.8 | $ | 174.6 | ||||||||
|
December
31, 2008
|
||||||||||||||||
|
Assets
|
||||||||||||||||
|
Money
market funds
|
$ | 81.2 | $ | - | $ | - | $ | 81.2 | ||||||||
|
Derivatives
|
33.8 | 21.7 | 8.5 | 64.0 | ||||||||||||
|
Total
|
$ | 115.0 | $ | 21.7 | $ | 8.5 | $ | 145.2 | ||||||||
|
Liabilities
|
||||||||||||||||
|
Derivatives
|
$ | 161.4 | $ | 28.0 | $ | 6.9 | $ | 196.3 | ||||||||
|
June
30, 2008
|
||||||||||||||||
|
Assets
|
||||||||||||||||
|
Money
market funds
|
$ | 290.5 | $ | - | $ | - | $ | 290.5 | ||||||||
|
Derivatives
|
158.1 | 62.9 | 10.0 | 231.0 | ||||||||||||
|
Total
|
$ | 448.6 | $ | 62.9 | $ | 10.0 | $ | 521.5 | ||||||||
|
Liabilities
|
||||||||||||||||
|
Derivatives
|
$ | 53.2 | $ | 10.2 | $ | 3.1 | $ | 66.5 | ||||||||
When
available and appropriate, the company uses quoted market prices in active
markets to determine fair value, and classifies such items within Level
1. For derivatives, Level 1 values include only those derivative
instruments traded on the NYMEX. The company enters into
over-the-counter instruments with values that are similar to, and correlate
with, quoted prices for exchange-traded instruments in active markets; these
over-the-counter items are classified within Level 2. In certain
instances, the company
9
may be
required to use one or more significant unobservable inputs for a model-derived
valuation; the resulting valuation is classified as Level 3.
The net
fair value of derivatives relates largely to Nicor Gas. The majority
of derivatives held by Nicor Gas are for the purpose of hedging natural gas
purchases for its customers, and therefore their fair values do not affect net
income, as their settlement is passed directly through to customers without
markup, subject to ICC review. The change in fair value for these
derivatives is accounted for through regulatory assets and
liabilities.
The
following table presents a reconciliation of the Level 3 beginning and ending
net derivative asset balances (in millions):
|
Three
months ended
June
30
|
Six
months ended
June
30
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Beginning
of period
|
$ | 15.7 | $ | 9.3 | $ | 1.6 | $ | 8.2 | ||||||||
|
Net
realized/unrealized gains (losses)
|
||||||||||||||||
|
Included
in regulatory assets and liabilities
|
(1.6 | ) | - | (1.7 | ) | 5.9 | ||||||||||
|
Included
in net income
|
.9 | - | 10.3 | 2.5 | ||||||||||||
|
Settlements,
net of purchases
|
.2 | (1.0 | ) | 1.3 | (8.2 | ) | ||||||||||
|
Transfers
in and/or out of Level 3
|
(9.9 | ) | (1.4 | ) | (6.2 | ) | (1.5 | ) | ||||||||
|
End
of period
|
$ | 5.3 | $ | 6.9 | $ | 5.3 | $ | 6.9 | ||||||||
|
Net
realized/unrealized gains (losses) included in net income relating to
derivatives still held at June 30
|
$ | 2.2 | $ | - | $ | 11.5 | $ | 2.5 | ||||||||
Net
realized/unrealized gains (losses) included in net income are attributable to
Nicor Enerchange and are classified as operating revenues.
Nicor
maintains margin accounts related to financial derivative
transactions. The company’s policy is not to offset the fair value of
assets and liabilities recognized for derivative instruments or any related
margin account. The following table represents the balances of margin
accounts related to derivative instruments (in millions):
|
June
30
|
December
31
|
June
30
|
||||||||||
|
2009
|
2008
|
2008
|
||||||||||
|
Assets
|
||||||||||||
|
Margin
accounts – derivative instruments
|
$ | 116.8 | $ | 134.4 | $ | 17.0 | ||||||
|
Other
– noncurrent
|
17.7 | 29.3 | - | |||||||||
|
Liabilities
|
||||||||||||
|
Other
– current
|
$ | - | $ | .1 | $ | 79.4 | ||||||
In
addition, the recorded amount of restricted short-term investments and
short-term borrowings approximates fair value. Long-term debt
outstanding, including current maturities, is recorded at the principal balance
outstanding, net of unamortized discounts. The principal balance of
Nicor Gas’ First Mortgage Bonds outstanding at June 30, 2009 was $450 million
and at December 31, 2008 and June 30, 2008 was $500
million. Based on quoted market interest rates, the fair value of the
company’s First Mortgage Bonds outstanding was approximately $485 million
at June 30, 2009, $520 million at December 31, 2008 and $503 million
at June 30, 2008.
9. DERIVATIVE
INSTRUMENTS
A
description of the company’s objectives and strategies for using derivative
instruments, and related accounting policies, is included in Note 2 – Accounting
Policies – Derivative instruments. All derivatives recognized on the
Condensed Consolidated Balance Sheets are measured at fair value, as described
in Note 8 – Fair Value Measurements.
Balance
sheet. Derivative assets and liabilities as of June 30, 2009,
carried at fair value on the Condensed Consolidated Balance Sheets, are shown in
the table below (in millions):
|
Derivatives
designated
as
hedging instruments
|
Derivatives
not
designated
as
hedging
instruments
|
|||||||
|
Assets
|
||||||||
|
Derivative
instruments
|
$ |
.1
|
$ | 53.2 | ||||
|
Other
– noncurrent
|
-
|
10.2 | ||||||
|
Total
|
$ | .1 | $ | 63.4 | ||||
|
Liabilities
|
||||||||
|
Derivative
instruments
|
$ | 3.5 | $ | 148.9 | ||||
|
Other
– noncurrent
|
.2 | 22.0 | ||||||
|
Total
|
$ | 3.7 | $ | 170.9 | ||||
Volumes. As of June
30, 2009, Nicor Gas held outstanding derivative contracts of approximately 71
Bcf to hedge natural gas purchases for customer use, spanning approximately
three years. Commodity price-risk exposure arising from Nicor
Enerchange’s activities and Nicor Gas’ natural gas purchases for company use is
mitigated with derivative instruments that total to a net short position of 1.6
Bcf as of June 30, 2009. The above volumes exclude contracts such as
variable-priced contracts and basis swaps, which are accounted for as
derivatives but are not directly impacted by changes in commodity
prices.
Income statement – cash flow hedges.
Changes in the fair value of derivatives designated as a cash flow hedge are
recognized in other comprehensive income until the hedged transaction is
recognized in the income statement. Cash flow hedges used by the
company’s other energy ventures, to hedge utility-bill management products, are
eventually recognized within operating revenues. Cash flow hedges used by
Nicor Gas, to hedge purchases of natural gas for company use, are
eventually recorded within operating and maintenance expense. Cash
flow hedges affected accumulated other comprehensive income and income as shown
in the following tables (in millions):
|
Three
months ended June 30, 2009
|
|||||||||||
|
Pretax
gain (loss)
recognized
in other comprehensive income
(Effective
portion)
|
Location
|
Pretax
gain (loss)
reclassified
from
accumulated
other
comprehensive
income
into
income
(Effective
portion)
|
Pretax
gain (loss) recognized in income(Ineffective
portion)
|
||||||||
| $ |
(.2)
|
Operating
revenues
|
$ |
(1.7)
|
$ | - | |||||
|
.1
|
Operating
and maintenance
|
(1.2)
|
- | ||||||||
| $ |
(.1)
|
$ |
(2.9)
|
$ | - | ||||||
|
Six
months ended June 30, 2009
|
|||||||||||
|
Pretax
gain (loss)
recognized
in other
comprehensive
income
(Effective
portion)
|
Location
|
Pretax
gain (loss)
reclassified
from
accumulated
other
comprehensive
income
into
income
(Effective
portion)
|
Pretax
gain (loss) recognized in income
(Ineffective
portion)
|
||||||||
| $ |
(2.8)
|
Operating
revenues
|
$ |
(10.0)
|
$ | .2 | |||||
|
(3.8)
|
Operating
and maintenance
|
(5.7)
|
- | ||||||||
| $ |
(6.6)
|
$ |
(15.7)
|
$ | .2 | ||||||
As of
June 30, 2009, the time horizon of cash flow hedges of natural gas purchases for
Nicor Gas company use and for utility-bill management products sold by Nicor’s
other energy ventures extends to as long as 17 months. For these
hedges, the total pretax loss deferred in accumulated other comprehensive income
at June 30, 2009 was $4.4 million (or $2.6 million after taxes), of which $4.1
million (or $2.5 million after taxes) is expected to be reclassified to earnings
within the next 12 months.
Income statement – derivatives not
designated as hedges. The earnings of the company are subject
to volatility for those derivatives not designated as
hedges. Non-designated derivatives used by the company’s other energy
ventures, to hedge energy trading activities and utility-bill management
products, are recorded in operating revenues. Non-designated
derivatives used by Nicor Gas, to hedge purchases of natural gas for company
use, are recorded within operating and maintenance expense. Pretax
earnings effects of these items are summarized in the table below for the
periods ended June 30, 2009 (in millions):
|
Net
gain (loss) recognized in income
|
||||||||
|
Location
|
Three
months ended
|
Six
months ended
|
||||||
|
Operating
revenues
|
$ | (7.9 | ) | $ | (8.7 | ) | ||
|
Operating
and maintenance
|
(.1 | ) | (1.8 | ) | ||||
| $ | (8.0 | ) | $ | (10.5 | ) | |||
Nicor
Gas’ derivatives to hedge the purchase of natural gas for its customers are also
not designated as hedging instruments. Gains or losses on these
derivatives are not recognized in pretax earnings, but are deferred as
regulatory assets or liabilities until the related revenue is
recognized. Net losses of $8.4 million and $125.5 million were
recognized in regulatory assets for the three and six months ended June 30,
2009, respectively.
Credit-risk-related contingent
features. Provisions within certain derivative agreements
require the company to post collateral if the company’s net liability position
exceeds a specified threshold. Also, certain derivative agreements
contain credit-risk-related contingent features, whereby the company would be
required to provide additional collateral or pay the amount due to the
counterparty when a credit event occurs, such as if the company’s credit rating
was to be lowered. As of June 30, 2009, for agreements with such
features, derivative contracts with liability fair values totaled approximately
$25 million, for which the company had posted no collateral to its
counterparties. If it was assumed that the company had to post the
maximum contractually specified collateral or settle the liability, the company
would have been required to pay approximately $22 million.
Concentrations of credit
risk. In instances in which the company holds an
uncollateralized net asset per an over-the-counter derivative contract, there is
potential credit risk in the event the counterparty defaults on a settlement or
fails to perform under the agreed-upon terms. To manage this credit
risk, the company maintains prudent credit policies to determine and monitor the
creditworthiness of counterparties, seeks guarantees or collateral, in the form
of cash or letters of credit, acquires credit insurance in certain instances and
limits its exposure to any one counterparty. The company also, in
some instances, enters into netting arrangements to mitigate counterparty credit
risk.
|
10.
|
POSTRETIREMENT
BENEFITS
|
Nicor Gas
maintains a noncontributory defined benefit pension plan covering substantially
all employees hired prior to 1998. Pension benefits are based on
years of service and highest average salary for management employees and job
level for collectively bargained employees. The benefit obligation
related to collectively bargained benefits considers the company’s past practice
of regular benefit increases to reflect current wages. Nicor Gas also
provides health care and life insurance benefits to eligible retired employees
under a plan that includes a limit on the company’s share of cost for employees
hired after 1982.
The
company’s postretirement benefit costs have historically been considered in rate
proceedings in the period they are accrued. As a regulated utility,
Nicor Gas expects continued rate recovery of the eligible costs of its defined
benefit postretirement plans and, accordingly, associated changes in the plan’s
funded status have been deferred as a regulatory asset or liability until
recognized in income, instead of being recorded in accumulated other
comprehensive income. However, to the extent Nicor Gas employees
perform services for non-regulated affiliates and to the extent such employees
are eligible to participate in these plans, the affiliates are charged for the
cost of these benefits and the changes in the funded status relating to these
employees are recorded in accumulated other comprehensive income.
About
one-fourth of the net periodic benefit cost or credit related to these plans has
been capitalized as a cost of constructing gas distribution facilities and the
remainder is included in gas distribution operating and maintenance expense, net
of amounts charged to affiliates. Net periodic benefit cost (credit)
included the following components (in millions):
|
Pension
benefits
|
Health
care and
other
benefits
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Three
months ended June 30
|
||||||||||||||||
|
Service
cost
|
$ | 2.1 | $ | 2.2 | $ | .5 | $ | .5 | ||||||||
|
Interest
cost
|
4.1 | 3.9 | 3.0 | 3.0 | ||||||||||||
|
Expected
return on plan assets
|
(6.3 | ) | (10.0 | ) | - | - | ||||||||||
|
Recognized
net actuarial loss
|
3.9 | - | 1.2 | 1.1 | ||||||||||||
|
Amortization
of prior service cost
|
.1 | .1 | - | - | ||||||||||||
|
Net
periodic benefit cost (credit)
|
$ | 3.9 | $ | (3.8 | ) | $ | 4.7 | $ | 4.6 | |||||||
13
|
|
Pension
benefits
|
Health
care and
other
benefits
|
||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Six
months ended June 30
|
||||||||||||||||
|
Service
cost
|
$ | 4.3 | $ | 4.3 | $ | 1.1 | $ | 1.0 | ||||||||
|
Interest
cost
|
8.2 | 7.9 | 6.0 | 6.0 | ||||||||||||
|
Expected
return on plan assets
|
(12.6 | ) | (20.0 | ) | - | - | ||||||||||
|
Recognized
net actuarial loss
|
7.7 | - | 2.3 | 2.3 | ||||||||||||
|
Amortization
of prior service cost
|
.2 | .2 | - | - | ||||||||||||
|
Net
periodic benefit cost (credit)
|
$ | 7.8 | $ | (7.6 | ) | $ | 9.4 | $ | 9.3 | |||||||
Due to
the significant decline in the fair value of the pension plan’s assets during
2008, the expected return on plan assets has decreased in 2009 as compared to
2008. Also, the fair value decline in 2008 has created an actuarial
loss that is being amortized over the average remaining service lives of
employees covered by the plan.
|
11.
|
EQUITY
INVESTMENT INCOME, NET
|
On March
31, 2009, the company sold its 50-percent interest in EN
Engineering. The company’s share of the sale price is $16.0 million,
with an additional $1.5 million which is contingent on EN Engineering’s 2010
performance and would be due in 2011. After closing costs and other
adjustments, Nicor received cash of $13.0 million and recorded a gain on the
sale of $10.1 million. Equity investment income also includes
investment income from Triton of $1.3 million and $2.5 million for the three and
six months ended June 30, 2009, respectively, and $2.2 million and $3.2 million,
for the same periods ended June 30, 2008, respectively. Nicor
received cash distributions from equity investees for the three and six months
ended June 30, 2009 of $3.7 million and $6.5 million, respectively, and $4.0
million and $7.3 million, respectively for the same periods ended June 30,
2008.
12. COMPREHENSIVE
INCOME
Total
comprehensive income is as follows (in millions):
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
|
June
30
|
June
30
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Net
income
|
$ | 22.9 | $ | 28.9 | $ | 66.7 | $ | 70.3 | ||||||||
|
Other
comprehensive income, after tax
|
1.8 | 4.0 | 5.8 | 9.2 | ||||||||||||
|
Total
comprehensive income
|
$ | 24.7 | $ | 32.9 | $ | 72.5 | $ | 79.5 | ||||||||
Other
comprehensive income consists primarily of net unrealized gains and losses from
derivative financial instruments accounted for as cash flow hedges, including
Nicor’s share of such amounts from joint ventures and other equity-method
investees.
13. BUSINESS
SEGMENT INFORMATION
Financial
data by major business segment is presented below (in millions):
|
Gas
distribution
|
Shipping
|
Other
energy ventures
|
Corporate
and
eliminations
|
Consolidated
|
||||||||||||||||
|
Three
months ended June 30, 2009
|
||||||||||||||||||||
|
Operating
revenues
|
||||||||||||||||||||
|
External
customers
|
$ | 318.4 | $ | 83.8 | $ | 45.4 | $ | - | $ | 447.6 | ||||||||||
|
Intersegment
|
7.9 | - | 5.8 | (13.7 | ) | - | ||||||||||||||
| $ | 326.3 | $ | 83.8 | $ | 51.2 | $ | (13.7 | ) | $ | 447.6 | ||||||||||
|
Operating
income (loss)
|
$ | 25.1 | $ | 2.5 | $ | 12.7 | $ | (.8 | ) | $ | 39.5 | |||||||||
|
Three
months ended June 30, 2008
|
||||||||||||||||||||
|
Operating
revenues
|
||||||||||||||||||||
|
External
customers
|
$ | 543.3 | $ | 102.6 | $ | 53.9 | $ | - | $ | 699.8 | ||||||||||
|
Intersegment
|
16.8 | - | (1.2 | ) | (15.6 | ) | - | |||||||||||||
| $ | 560.1 | $ | 102.6 | $ | 52.7 | $ | (15.6 | ) | $ | 699.8 | ||||||||||