Operating Segments

12 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

Our Company has two reportable segments: a regulated segment and a non-regulated segment. Our regulated segment includes our natural gas distribution and transportation services, which are regulated by the Kentucky Public Service Commission. Our non-regulated segment includes our natural gas marking activities and the sales of natural gas liquids. The non-regulated segment produces a portion of the natural gas it markets to its customers. The division of these segments into separate revenue generating components is based upon regulation, products and services. Both segments operate in the single geographic area of central and southeastern Kentucky. Our chief operating decision maker is our Chief Executive Officer. We evaluate performance based on net income of the respective segment.

In our non-regulated segment, two customers each provided more than 5% of our operating revenues for 2016. Our largest customer provided approximately $11,555,000, $17,852,000 and $12,569,000 of non-regulated revenues during 2016, 2015 and 2014, respectively. Our second largest customer provided approximately $5,656,000, $7,127,000 and $9,494,000 of non-regulated revenues during 2016, 2015 and 2014, respectively. There is no assurance that revenues from these customers will continue at these levels.

Our regulated segment purchased approximately 99% of its natural gas from Atmos Energy Marketing and Midwest Energy Services in 2016 and 2015. In 2014, we purchased approximately 98% of our natural gas from Atmos Energy Marketing, M & B Gas Services and Midwest Energy Services.

Our non-regulated segment purchased approximately 99% of its natural gas from Atmos Energy Marketing and Midwest Energy Services in 2016. In 2015, we purchased approximately 99% of our natural gas from Atmos Energy Marketing, M & B Gas Services and Midwest Energy Services. In 2014, we purchased approximately 96% of our natural gas from Atmos Energy Marketing and M&B Services.

The reportable segments follow the accounting policies as described in the Summary of Significant Accounting Policies in Note 1 of the Notes to Consolidated Financial Statements. Intersegment revenues and expenses represent the natural gas transportation costs from the regulated segment to the non-regulated segment at our tariff rates. Operating expenses, taxes and interest are allocated to the non-regulated segment.

Segment information is shown in the following table:

($000)	2016		2015		2014
Operating Revenues
Regulated
External customers	41,242		52,681		57,054
Intersegment	3,591		3,869		4,041
Total Regulated	44,833		56,550		61,095
Non-regulated
External customers	22,888		33,507		38,792
Eliminations for intersegment	(3,591	)	(3,869	)	(4,041	)
Total operating revenues	64,130		86,188		95,846
Operating Expenses
Regulated
Purchased natural gas	11,704		22,729		27,215
Depreciation and amortization	6,328		6,293		6,068
Other	16,033		15,819		15,285
Total regulated	34,065		44,841		48,568
Non-regulated
Purchased natural gas	17,621		26,713		29,059
Depreciation and amortization	88		84		80
Other	4,513		5,455		6,576
Total non-regulated	22,222		32,252		35,715
Eliminations for intersegment	(3,591	)	(3,869	)	(4,041	)
Total operating expenses	52,696		73,224		80,242
Other Income
Regulated	4		25		183
Non-regulated	—		—		18
Total other income	4		25		201
Interest Charges
Regulated	2,486		2,551		2,633
Non-regulated	45		50		38
Total interest charges	2,531		2,601		2,671
Income Tax Expense
Regulated	3,238		3,553		3,907
Non-regulated	139		339		952
Total income tax expense	3,377		3,892		4,859
Net Income
Regulated	4,982		5,748		6,407
Non-regulated	547		748		1,868
Total net income	5,529		6,496		8,275
Assets
Regulated	185,634		183,482		181,440
Non-regulated	3,245		4,229		4,495
Total assets	188,879		187,711		185,935
Capital Expenditures
Regulated	6,293		8,991		8,078
Non-regulated	10		20		—
Total capital expenditures	6,303		9,011		8,078