AGL Resources Reports Net Income Up 32 Percent in Second Quarter.Business Editors ATLANTA--(BUSINESS WIRE)--July 25, 2002 Company Exceeds FirstCall Consensus Estimates; Operating Efficiencies, Energy Investments Drive Improvements AGL Resources AGL Resources, Inc. is a Fortune 1000, Forbes 2000 energy services holding company. Their principal business is distribution of natural gas in Florida, Georgia, Maryland, New Jersey, Tennessee and Virginia, providing gas for more than 2.2 million customers. Inc. (NYSE NYSE See: New York Stock Exchange : ATG ATG antithymocyte globulin. lymphocyte immune globulin (antithymocyte globulin equine, ATG, ATG equine, LIG) Atgam Pharmacologic class: Immunoglobulin Therapeutic class: Immunosuppressant ) today reported a 32 percent increase in second quarter net income compared to the same period in 2001. Net income in the quarter was $12.3 million, or $0.22 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $9.3 million, or $0.17 per basic and diluted share, reported in the second quarter of last year. These results exceeded FirstCall consensus estimates for the quarter of $0.20 per share. The key drivers of earnings for the quarter were lower operation and maintenance costs and depreciation expense in the distribution operations segment, improved contributions in the energy investments segment from SouthStar SouthStar (born ca. 1980 in Hawaii as Robert Campman) is an Asian American hip-hop artist who is best known for his music in the hip-hop duo Smilez and Southstar based in Orlando, Florida. Southstar is Chinese/Filipino-American. Energy Services, and lower corporate interest expense. "The seas are more turbulent, but we're we're Contraction of we are. we're we are still on course," said Paula PAULA Possession of Alcohol Under the Legal Age G. Rosput, chairman, president and chief executive officer of AGL Resources. "Despite the challenges within our industry, we are able to stay focused on strategies that are strengthening our cash flows, balance sheet and earnings." DISTRIBUTION OPERATIONS The distribution operations segment contributed earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) of $47.5 million for the quarter, a $3.0 million increase over the $44.5 million contributed in the same quarter last year. The increase in EBIT was achieved despite a decline in operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the segment, primarily as a result of lower utility operating and maintenance costs. The segment operating margin of $133.7 million represents a $5.9 million decline compared to operating margin of $139.6 million in the same period last year. The decline was driven primarily by lower margins at Atlanta Gas Light Atlanta Gas Light Company (AGLC), commonly known as Atlanta Gas Light, is the largest natural gas wholesaler in the Southeast U.S., and is the AGL in AGL Resources. It was founded in 1856 and is headquartered in Atlanta, as is AGL Resources. Company resulting from the new performance-based rate plan implemented on May 1, 2002, as well as a loss of customers at Atlanta Gas Light Company and a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. adjustment related to inventory costs of natural gas stored underground recorded during the prior year. The margin decline was more than offset by a $9.0 million decline in operating and maintenance costs, from $97.5 million in 2001 to $88.5 million in 2002. The lower operating costs operating costs npl → gastos mpl operacionales resulted from operational efficiencies and synergies related to the company's acquisition and integration of Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). Natural Gas, particularly through headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reductions achieved in 2001, as well as a decrease in corporate allocations to the segment and a decrease in bad debt expense at Virginia Natural Gas and Chattanooga Chattanooga (chăt'ən  `gə), city (1990 pop. 152,466), seat of Hamilton co., E Tenn., on both sides of the Tennessee River near the Georgia line; inc. 1839. Gas Company. Also, depreciation
expense was lower in second quarter 2002 than in the same period last
year principally due to a change in depreciation rates established as
part of Atlanta Gas Light Company's new performance-based rate
plan.
WHOLESALE SERVICES Sequent (Sequent Computer Systems, Inc., Beaverton, OR, www.sequent.com) A computer company founded in 1983 by 17 ex-employees of Intel that specialized in multiprocessing systems for the client/server environment. Energy Management's EBIT contribution in second quarter 2002 declined approximately $0.9 million to a loss of $2.3 million, compared with a loss of $1.4 million for the same period last year. Despite increased volumes and revenue contribution, Sequent's overall contribution was limited by lower volatility in the Southeast energy market and increased expenses for the continued implementation of the back- and mid-offices. ENERGY INVESTMENTS The energy investments segment's EBIT contribution in the quarter increased $2.2 million, or about 40 percent, compared to the same period one year ago. This increase is principally due to increased contributions from SouthStar Energy Services compared with last year, the result of lower wholesale gas costs relative to retail prices. Despite improved contributions on a quarterly comparative basis, the energy investments segment had an EBIT loss of $3.3 million in the current quarter (as compared to an EBIT loss of $5.5 million in the prior year), primarily because of the seasonality of SouthStar and AGL (programming) AGL - (Atelier de Genie Logiciel) French for IPSE. Resources' investment in Heritage Propane. CORPORATE Corporate EBIT decreased $2.1 million compared with the previous year, due to costs related to liabilities accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. at the corporate level in 2002 that were not allocated to operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon . Consolidated interest expense decreased by $2.0 million for the second quarter of 2002, principally due to a decrease in average interest rates for the period as compared to last year. YEAR-TO-DATE Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. RESULTS For the six months ended June June: see month. 30, 2002, net income was $62.4 million, compared to $61.6 million for the same period in 2001. Net income for the period in 2001 included a non-recurring after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $7.1 million related to the sale of Utilipro. Excluding that gain, net income was $54.5 million. Consolidated EBIT for the six months ended June 30, 2002 was $140.5 million, down from the $144.8 million reported in the previous year. Excluding the Utilipro pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of $10.9 million, EBIT for the 2001 period was $133.9 million. Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for the six months ended June 30, 2002 were $1.1 billion, compared to $526.3 million in the prior year. This increase reflects the increased activities in the wholesale services segment. EARNINGS OUTLOOK Looking ahead, AGL Resources management said it expects to meet or exceed the earnings guidance previously stated for fiscal year 2002 of $1.65 to $1.70 per share. "Given the year-to-date performance of our business units in executing our strategy, we continue to be comfortable with the current consensus estimates for fiscal 2002," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a T. O'Brien, executive vice president and chief financial officer. Earnings Conference Call Webcast: The AGL Resources second quarter 2002 earnings conference call, scheduled for July 25, 2002, at 9 a.m. (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ), can be accessed via the AGL Resources website at www.aglresources.com. The call will address the company's financial results for the three-month and six-month periods ended June 30, 2002, as well as other general corporate updates. The call will be archived on the website through the close of business on August 1, 2002. AGL Resources Inc. (NYSE: ATG) is an Atlanta-based energy services holding company. Nearly 2 million natural gas customers are served through subsidiaries Atlanta Gas Light Company, Virginia Natural Gas and Chattanooga Gas Company. Houston-based subsidiary Sequent Energy Management provides asset management services, including the wholesale trading, marketing, gathering and transportation of natural gas. As a member of the SouthStar partnership, AGL Resources markets natural gas to consumers in Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. under the Georgia Natural Gas brand. AGL Networks, the company's telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. subsidiary, owns and operates a fiber optic network in Atlanta. For more information, visit www.aglresources.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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: industrial, commercial, and residential growth in the service territories of AGL Resources Inc. and its subsidiaries; changes in price and demand for natural gas and related products; impact of changes in state and federal legislation and regulation, including Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. orders, on the gas and electric industries and on AGL Resources, including the impact of the performance based rate plan issued by the Georgia Public Service Commission in connection with the review of Atlanta Gas Light Company's rates; effects and uncertainties of deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. and competition, particularly in markets where prices and providers historically have been regulated, unknown risks related to nonregulated businesses, and unknown issues such as the stability of certificated marketers; impact of Georgia's Natural Gas Consumers' Relief Act of 2002; concentration of credit risk in certificated marketers; excess network capacity and demand/growth for dark fiber in metro network areas of AGL Networks' customers; AGL Networks' introduction and market acceptance of new technologies and products, as well as the adoption of new networking standards; ability of AGL Networks to produce sufficient capital to fund its business; ability to negotiate new contracts with telecommunications providers for the provision of AGL Networks' dark-fiber services; industry consolidation; impact of acquisitions and divestitures; changes in accounting policies and practices issued periodically by accounting standard-setting bodies; direct or indirect effects on AGL Resources' business, financial condition or liquidity resulting from a change in the company's credit ratings or the credit ratings of its competitors or counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. ; interest rate fluctuations, financial market conditions, and general economic conditions; uncertainties about environmental issues and the related impact of such issues; impact of changes in weather upon the temperature-sensitive temperature-sensitive living organisms that are sensitive to air temperatures outside of a narrow range, e.g. virus vaccine that does not replicate at deep body temperature, but does replicate in the respiratory tract. portions of the business; and other risks described in our documents on file with the Securities and Exchange Commission.
AGL Resources Inc.
Condensed Statements of Consolidated Income
For the Three Months and Six Months Ended
June 30, 2002 and 2001
(In millions, except per share amounts)
Three Months Six Months
-------------------------------------------
06/30/2002 06/30/2001 06/30/2002 06/30/2001
---------- ---------- ---------- ----------
Operating Revenues $ 570.1 $ 175.7 $ 1,063.0 $ 526.3
Cost of Sales 435.4 37.0 756.0 206.5
------- ------- --------- -------
Operating Margin 134.7 138.7 307.0 319.8
Total Operating Expenses 94.9 97.6 195.7 204.4
------- ------- --------- -------
Operating Income 39.8 41.1 111.3 115.4
Other Income (Loss) 0.4 (3.1) 29.2 29.4
------- ------- --------- -------
Earnings Before Interest & Taxes 40.2 38.0 140.5 144.8
Interest Expense 21.2 23.2 43.9 48.7
------- ------- --------- -------
Earnings Before Income Taxes 19.0 14.8 96.6 96.1
Income Taxes 6.7 5.5 34.2 34.5
------- ------- --------- -------
Net Income $ 12.3 $ 9.3 $ 62.4 $ 61.6
======= ======= ======== =======
EPS
Basic $ 0.22 $ 0.17 $ 1.12 $ 1.13
Diluted $ 0.22 $ 0.17 $ 1.11 $ 1.12
Shares Outstanding
Basic 56.0 54.6 55.9 54.5
Diluted 56.5 55.2 56.2 54.8
AGL Resources Inc.
EBIT Schedule
For the Three Months and Six Months Ended
June 30, 2002 and 2001
(In millions, except per share amounts)
Three Months
-------------------------------------------
06/30/2002 06/30/2001 Fav/(Unfav)
-------------------------------------------
Distribution Operations $ 47.5 $ 44.5 $ 3.0
Wholesale Services (2.3) (1.4) (0.9)
Energy Investments (3.3) (5.5) 2.2
Corporate (1.7) 0.4 (2.1)
-------------------------------------------
Consolidated EBIT 40.2 38.0 2.2
-------------------------------------------
Interest Expense 21.2 23.2 2.0
Income Taxes 6.7 5.5 (1.2)
-------------------------------------------
Net Income $ 12.3 $ 9.3 $ 3.0
-------------------------------------------
Earnings per Common Share
Basic $ 0.22 $ 0.17 $ 0.05
====== ====== ======
Diluted $ 0.22 $ 0.17 $ 0.05
====== ====== ======
Throughput (millions of dekatherms)
Georgia 42.9 42.8 0.1
Virginia 6.0 4.8 1.2
Tennessee 3.3 3.0 0.3
Degree Days (Actual)
Georgia 136 128 8
Virginia 299 299 -
Tennessee 160 136 24
Six Months
-------------------------------------------
06/30/2002 06/30/2001 Fav/(Unfav)
-------------------------------------------
Distribution Operations $ 119.0 $ 111.7 $ 7.3
Wholesale Services 3.5 8.6 (5.1)
Energy Investments 21.3 24.8 (3.5)
Corporate (3.3) (0.3) (3.0)
-------------------------------------------
Consolidated EBIT 140.5 144.8 (4.3)
-------------------------------------------
Interest Expense 43.9 48.7 4.8
Income Taxes 34.2 34.5 0.3
-------------------------------------------
Net Income $ 62.4 $ 61.6 $ 0.8
-------------------------------------------
Earnings per Common Share
Basic $ 1.12 $ 1.13 $ (0.01)
====== ====== ======
Diluted $ 1.11 $ 1.12 $ (0.01)
====== ====== ======
Throughput (millions of dekatherms)
Georgia 134.2 138.6 (4.4)
Virginia 20.0 18.7 1.3
Tennessee 9.5 9.7 (0.2)
Degree Days (Actual)
Georgia 1,562 1,668 (106)
Virginia 1,854 2,228 (374)
Tennessee 1,747 1,954 (207)
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