Segment Information

12 Months Ended

Dec. 31, 2011

Notes To Financial Statements [Abstract]

Segment Information

Note 13 - Segment Information

Our operating segments comprise revenue-generating components of our company for which we produce separate financial information internally that we regularly use to make operating decisions and assess performance.Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers in differing regulatory environments. We manage our businesses through five operating segments – distribution operations, retail operations, wholesale services, midstream operations, cargo shipping and one non-operating segment, other.

Our distribution operations segment is the largest component of our business and includes natural gas local distribution utilities in seven states - Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee and Maryland. These utilities construct, manage, and maintain intrastate natural gas pipelines and distribution facilities. Although the operations of our distribution operations segment are geographically dispersed, the operating subsidiaries within the distribution operations segment are regulated utilities, with rates determined by individual state regulatory commissions. These natural gas distribution utilities have similar economic and risk characteristics.

We are also involved in several related and complementary businesses. Our retail operations segment includes retail natural gas marketing to end-use customers primarily in Georgia as well as various businesses that market retail energy-related products and services to residential and small business customers in Illinois. Additionally, our retail operations segment provides warranty protection solutions to customers and customer move connection services for utilities. Our wholesale services segment includes natural gas asset management and related logistics activities for each of our utilities as well as for nonaffiliated companies, natural gas storage arbitrage and related activities. Our midstream operations segment includes the development and operation of high-deliverability natural gas storage assets.

Our cargo shippingsegment transports containerized freight between Florida, the eastern coast of Canada, the Bahamas and the Caribbean region. The cargo shipping segment also includes amounts related to cargo insurance coverage sold to its customers and other third parties. The cargo shipping segment’s vessels are under foreign registry, and its containers are considered instruments of international trade. Although the majority of its long-lived assets are foreign owned and its revenues are derived from foreign operations, the functional currency is generally the United States dollar. Our cargo shipping segment also includes an equity investment in Triton, a cargo container leasing business. Profits and losses are generally allocated to investor’s capital accounts in proportion to their capital contributions. Our investment in Triton is accounted for under the equity method, and our share of earnings are reported within “Other Income” on our Consolidated Statements of Income.

Our other segment includes intercompany eliminations and aggregated subsidiaries that are not significant enough on a stand-alone basis and that do not fit into one of our other five operating segments.

We evaluate segment performance using the non-GAAP measure of EBIT, that includes operating income, other income and expenses, and equity investment income. Items we do not include in EBIT are income taxes and financing costs, including interest and debt expense, each of which we evaluate on a consolidated basis. We believe EBIT is a useful measurement of our performance because it provides information that can be used to evaluate the effectiveness of our businesses from an operational perspective, exclusive of the costs to finance those activities and exclusive of income taxes, neither of which is directly relevant to the efficiency of those operations.

You should not consider EBIT an alternative to, or a more meaningful indicator of, our operating performance than operating income or net income as determined in accordance with GAAP. In addition, our EBIT may not be comparable to a similarly titled measure of another company. The reconciliations of EBIT to operating income, earnings before income taxes and net income for 2011, 2010 and 2009 are presented below.

In millions	2011	2010	2009
Operating income	$440	$500	$476
Other (expense) income	7	(1)	9
EBIT	447	499	485
Interest expense	136	109	101
Earnings before income taxes	311	390	384
Income taxes	125	140	135
Net income	$186	$250	$249

Summarized Statements of Income, Statements of Financial Position and capital expenditure information by segment as of and for the years ended December 31, 2011, 2010 and 2009 are shown in the following tables. Please note that our segments have changed as a result of our merger with Nicor and amounts from the periods presented have been reclassified between the segments to reflect these changes.

2011

In millions	Distribution operations	Retail operations	Wholesale services	Midstream operations	Cargo shipping	Other and intercompany eliminations (4)	Consolidated
Operating revenues from external parties	$1,451	$702	$95	$70	$19	$1	$2,338
Intercompany revenues (1)	146	0	3	0	0	(149)	0
Total operating revenues	1,597	702	98	70	19	(148)	2,338
Operating expenses
Cost of goods sold	625	534	41	33	12	(148)	1,097
Operation and maintenance	362	71	48	15	7	(13)	490
Depreciation and amortization	160	2	1	10	1	12	186
Nicor merger expenses (2)	0	0	0	0	0	68	68
Taxes other than income taxes	44	2	3	3	0	5	57
Total operating expenses	1,191	609	93	61	20	(76)	1,898
Operating income (loss)	406	93	5	9	(1)	(72)	440
Other income	6	0	0	0	1	0	7
EBIT	$412	$93	$5	$9	$0	$(72)	$447
Identifiable and total assets (3)	$11,020	$501	$1,214	$635	$714	$(171)	$13,913
Goodwill	$1,586	$124	$2	$16	$77	$8	$1,813
Capital expenditures	$365	$2	$1	$35	$0	$24	$427

2010

In millions	Distributionoperations	Retail operations	Wholesale services	Midstream operations	Cargo shipping	Other and intercompany eliminations (4)	Consolidated
Operating revenues from external parties	$1,349	$840	$121	$46	$0	$17	$2,373
Intercompany revenues (1)	145	0	0	0	0	(145)	0
Total operating revenues	1,494	840	121	46	0	(128)	2,373
Operating expenses
Cost of goods sold	615	657	16	16	0	(140)	1,164
Operation and maintenance	358	76	52	17	0	(6)	497
Depreciation and amortization	138	2	2	5	0	13	160
Nicor merger expenses (2)	0	0	0	0	0	6	6
Taxes other than income taxes	35	2	3	2	0	4	46
Total operating expenses	1,146	737	73	40	0	(123)	1,873
Operating income (loss)	348	103	48	6	0	(5)	500
Other income (expense)	4	0	1	0	0	(6)	(1)
EBIT	$352	$103	$49	$6	$0	$(11)	$499
Identifiable and total assets (3)	$5,484	$259	$1,326	$471	$0	$(20)	$7,520
Goodwill	$404	$0	$0	$14	$0	$0	$418
Capital expenditures	$357	$3	$2	$126	$0	$22	$510

2009
In millions	Distribution operations	Retail operations	Wholesale services	Midstream operations	Cargo shipping	Other and intercompany eliminations (4)	Consolidated
Operating revenues from external parties	$1,348	$801	$121	$22	$0	$25	$2,317
Intercompany revenues (1)	138	0	0	0	0	(138)	0
Total operating revenues	1,486	801	121	22	0	(113)	2,317
Operating expenses
Cost of goods sold	646	620	10	0	0	(134)	1,142
Operation and maintenance	352	71	59	15	0	0	497
Depreciation and amortization	135	4	3	3	0	13	158
Nicor merger expenses (2)	0	0	0	0	0	0	0
Taxes other than income taxes	35	1	2	1	0	5	44
Total operating expenses	1,168	696	74	19	0	(116)	1,841
Operating income (loss)	318	105	47	3	0	3	476
Other income (expense)	9	0	0	0	0	0	9
EBIT	$327	$105	$47	$3	$0	$3	$485
Identifiable and total assets (3)	$5,222	$261	$1,168	$332	$0	$96	$7,079
Goodwill	$404	$0	$0	$14	$0	$0	$418
Capital expenditures	$354	$2	$1	$110	$0	$9	$476

(1)Intercompany revenues – wholesale services records its energy marketing and risk management revenues on a net basis and its total operating revenues include intercompany revenues of $449 million in 2011, $473 million in 2010 and $425 million in 2009.

(2)Non-recurring transaction expenses associated with the Nicor merger are shown separately to better compare year-over-year results.

(3)Identifiable assets are those used in each segment’s operations.

(4)Our other segment’s assets consist primarily of cash and cash equivalents, property, plant and equipment and the effect of intercompany eliminations.