AGL Resources Inc. Reports Second Quarter Results
ATLANTA, April 30 -- AGL Resources Inc. (NYSE: ATG) today
reported financial results for fiscal 1999's second quarter, which ended
March 31, 1999. Consolidated net income was $24.2 million, or 42 cents per
share, compared with $45.1 million, or 79 cents per share, from a year ago. The primary reason for the decrease in net income and earnings per share
was expected declines in utility revenues and operating margin due to the
July 1, 1998 change in rate design for delivery service for Georgia utility
operations. Instead of collecting revenues predominantly in the winter months
(the company's second fiscal quarter) the new rate design collects utility
delivery service revenues and operating margin more evenly throughout the
year. ``Although there is a shift of utility delivery service revenues among
quarters, under the new rate design the utility's annual base revenue stream
remains the same,'' commented J. Michael Riley, senior vice president and chief
financial officer. ``Analysts who follow the company factored this intrayear
shift of revenues and margins into their second quarter earnings estimates.''
The consensus of all analysts for the second quarter of fiscal year 1999 was
44 cents per share. Revenues for the second quarter were $375.1 million, compared with
$479.7 million for the same period last year, a decrease of $104.6 million.
Operating margin for the quarter was $143.1 million, compared with
$174.0 million for the same period last year, a decrease of $30.9 million. Revenues also were affected by the rapid pace at which customers are
switching from the utility to marketers for their gas sales service. As
utility sales service revenues decline, there is a comparable decline in
utility gas costs. The decrease in revenues does not affect net income. Earnings were affected by a slight increase in utility operation and
maintenance expenses that was attributable to higher than expected customer
service activity associated with customers switching to marketers. Customers
have switched to marketers at a much more rapid pace than originally
anticipated. Customers are embracing the Georgia natural gas deregulation model by
choosing marketers at a pace that far exceeds expectations. More than 50% of
the utility's Georgia customers, approximately 726,000, now have selected a
marketer. A final factor affecting earnings was further losses from the company's
natural gas marketing joint venture with Sonat Inc. AGL Resources owns a 35%
interest in the joint venture. The joint venture's results account for three
cents of the decrease in AGL Resources' earnings per share compared with the
second quarter of 1998. AGL Resources announced that it has exercised its right under the
agreement governing the joint venture to put its 35% interest to Sonat. ``We
are extremely disappointed with the results of the natural gas marketing joint
venture,'' said Walter M. Higgins, president and chief executive officer. ``But
for that factor, we believe our second quarter earnings would have met or
exceeded market expectations. ``Under the terms of our joint venture agreement, Sonat is required to
repurchase our interest at market value, but at no less than the amount of our
original investment plus interest.'' Six-Month Results Announced For the six months ended March 31, 1999, the company reported net income
of $40.1 million, compared with $70.8 million a year ago and basic earnings
per share of 70 cents versus $1.25 per share. Although the change in rate
design was the predominant reason for the decreases, losses attributable to
the gas marketing joint venture with Sonat also were a significant factor. AGL Resources Inc. is a regional energy holding company with operations in
the Southeast. Atlanta Gas Light Company, the largest natural gas distributor
in the Southeast and the company's primary subsidiary, provides delivery
service to more than 1.5 million customers in Georgia and Chattanooga,
Tennessee. Although natural gas distribution is AGL Resources' core business,
it also is engaged in other energy-related businesses, including wholesale and
retail energy marketing, customer care services for energy marketers, and
wholesale and retail propane sales. The company's home page address on the Internet is www.aglresources.com . This press release contains forward-looking statements. AGL Resources
wishes to caution readers that the assumptions, which form the basis for the
forward-looking statements, include many factors that are beyond AGL
Resources' ability to control or estimate precisely. Those factors include,
but are not limited to, the following: changes in the price and demand for
natural gas; the impact of changes in state and federal legislation and
regulation on the company and the natural gas industry; the effects of
competition, particularly in markets where prices and providers historically
have been regulated; financial market conditions; and other risks described in
our documents on file with the Securities and Exchange Commission.
AGL RESOURCES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 1999
(Unaudited)
Millions of Dollars, Except Per Share Data
3 Months Ended 6 Months Ended
March 31, March 31,
1999 1998 1999 1998
Operating Revenues $375.1 $479.7 $699.0 $878.8
Cost of Gas 232.0 305.7 419.0 559.7
Operating Margin 143.1 174.0 280.0 319.1
Operating Income $52.4 $83.3 $100.1 $135.7
Consolidated Net
Income $24.2 $45.1 $40.1 $70.8
Earnings Per Share of
Common Stock
Basic $0.42 $0.79 $0.70 $1.25
Diluted $0.42 $0.79 $0.70 $1.24
Average Number of
Shares Outstanding
(millions)
Basic 57.6 56.9 57.5 56.8
Diluted 57.6 57.0 57.7 56.9
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