AGL Resources Reports Net Income up 54 Percent for Second Quarter.Business Editors ATLANTA--(BUSINESS WIRE)--July 31, 2003 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 net income of $18.9 million, or $0.30 per basic share ($0.29 per 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), for the second quarter of 2003, reflecting a 54 percent improvement over comparable quarterly net income for 2002 of $12.3 million, or $0.22 per basic and diluted share. Weighted average basic shares outstanding were 63.5 million for the quarter ended June June: see month. 30, 2003, an increase of 7.5 million shares, or about 13.4 percent, from the quarter ended June 30, 2002. Shares outstanding increased primarily as a result of the Company's 6.4 million share offering completed on February February: see month. 14, 2003. "We continue to do our laps in a challenging race, but we were on target in every business segment during the quarter," said Paula PAULA Possession of Alcohol Under the Legal Age G. Rosput, chairman, president and chief executive officer of AGL Resources. "We delivered the promised operating results and took further steps to strengthen the company financially. Moreover, we continue to be relentless in searching for new sources of value." FINANCIAL RESULTS CONSOLIDATED Consolidated 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). ) for the quarter were $49.2 million, as compared with $40.2 million in 2002. The key drivers of the $9.0 million increase in EBIT as compared to last year were: -- $9.9 million of increased EBIT from the energy investments segment, primarily resulting from improved performance at 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 the increase in our SouthStar ownership interest from 50 percent to 70 percent as a result of our February 2003 purchase of Dynegy's equity interest in SouthStar. -- $2.7 million of higher EBIT from the wholesale services segment as physical volumes sold during the quarter increased to 1.7 Bcf/d (billions of cubic feet/day) from 1.4 Bcf/d in the second quarter of 2002. -- Decreased EBIT in the distribution operations segment of $3.6 million principally due to higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. related to increased corporate overhead costs overhead costs see fixed costs. and increased bad debt allowances. The increase in consolidated EBIT was further enhanced by lower corporate interest expense of $3.0 million for the quarter as a result of lower average debt balances attributable to the equity offering in February 2003 and lower working capital needs. This increase in EBIT and decrease in interest expense, however, was partly offset by higher income taxes of $5.4 million. Income tax expense increased because of improved earnings and a higher projected effective state tax rate. DISTRIBUTION OPERATIONS The distribution operations segment contributed $44.0 million of EBIT for the quarter, a $3.6 million decrease as compared to a $47.6 million EBIT contribution in the second quarter of 2002. Distribution operations performed as expected with respect to growth in operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . Operating margin was $0.5 million higher during the quarter as compared to 2002 as a result of increases of $1.8 million 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 due to the pipeline replacement program and $1.5 million at 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 due to increased customer usage, as well as an overall increase in the average number of connected customers to 1.85 million during the second quarter of 2003 as compared to 1.84 million in 2002. These increases were offset by lower operating margins as compared to last year due to an expected decrease of $0.8 million at Atlanta Gas Light Company resulting from the performance-based rate plan (effective May 1, 2002), a $0.5 million decrease resulting from lower industrial customer volumes, lower service revenues of $0.6 million and $0.8 million in lower carrying charges Payments made to satisfy expenses incurred as a result of ownership of property, such as land taxes and mortgage payments. Disbursements paid to creditors, in addition to interest, for extending credit. Consumer Protection laws require full disclosure of all carrying charges. on natural gas stored underground resulting from Atlanta Gas Light Company not owning the natural gas stored underground during the current quarter as compared to last year when it did own the gas. This increase in operating margin was offset by an increase in total operating expenses of $4.1 million, to $92.5 million, for the quarter as compared with $88.4 million in the same period last year. The increase in operating expenses in the second quarter of 2003 was primarily due to increased corporate overhead costs, including higher building lease costs and increased 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 as a result of higher customer bills.WHOLESALE SERVICES The wholesale services segment, comprised primarily of 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. , contributed $0.3 million in EBIT for the quarter as compared to an EBIT loss of $2.4 million last year, a $2.7 million increase. This EBIT increase is primarily due to an increase in operating margin of $3.2 million to $4.1 million for the quarter as compared to $0.9 million in the prior year. Increased operating margin was the result of a 27% increase in physical volumes sold during the quarter as compared to second quarter 2002. During the quarter, Sequent increased the number of 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. with whom it conducts transactions and continued its expansion into the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians and the upper mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic natural gas markets. The increase in operating margin was partially offset by an increase in operating expenses of $0.5 million as compared to the prior year as staffing levels were increased to support Sequent's growth. ENERGY INVESTMENTS The energy investments segment realized EBIT of $6.6 million for the current quarter as compared to an EBIT loss of $3.3 million in the same period one year ago. The $9.9 million increase in EBIT is primarily a result of improved results at SouthStar which contributed $10.3 million of the increase. $7.5 million of the increase from SouthStar relates to AGL (programming) AGL - (Atelier de Genie Logiciel) French for IPSE. Resources' share of increased operating margins and $2.8 million relates to an increase in earnings contributions from AGL Resources' increased ownership percentage in SouthStar. The increase at SouthStar was partially offset by decreased EBIT contributions for the current quarter from AGL Networks due to increased operating expenses which were partially offset by increased monthly recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. 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. . CORPORATE Corporate EBIT remained flat year-over-year. Consolidated interest expense decreased by $3.0 million for the second quarter of 2003, principally due to lower average debt balances resulting from the repayment of debt from proceeds generated by the equity offering in February 2003, and to lower working capital needs. Consolidated income taxes increased $5.4 million as compared to the prior year. $4.2 million of this increase is due to higher earnings before income taxes and $1.2 million is due to an increase in the projected effective tax rate resulting from new state tax law. 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 30, 2003, net income was $70.7 million, or $1.14 per basic share ($1.13 per diluted share), compared to $62.4 million, or $1.12 per basic share ($1.11 per diluted share), for the same period in 2002. As reported in the first quarter of 2003, net income for the six-month period ended June 30, 2003 includes a $7.8 million 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. charge resulting from the cumulative effect of a change in accounting principle resulting from the final provisions of Emerging Issues Task Force (EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation ) 02-03, which rescinded EITF 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." Operating revenues increased $106.0 million for the six months ended June 30, 2003 from $433.1 million in the prior year to $539.1 million for 2003. This increase resulted primarily from increased distribution operation revenues of $79.2 million primarily due to weather-related volumes and revenues at Virginia Natural Gas and from increased wholesale services revenues of $23.1 million. Consolidated EBIT for the six months ended June 30, 2003 was $166.8 million, up $26.3 million from the $140.5 million reported in the previous year. This increase in EBIT reflects increased EBIT contributions from all segments of the business. For the six months ended June 30, 2003, EBIT increased $5.9 million for distribution operations due to increased operating margins of $6.9 million, primarily resulting from the weather normalization In relational database management, a process that breaks down data into record groups for efficient processing. There are six stages. By the third stage (third normal form), data are identified only by the key field in their record. program and colder weather in 2003 at Virginia Natural Gas, offset by increased total operating expenses of $1.1 million. Additionally, for the six months ended June 30, 2003, wholesale services' EBIT increased $17.5 million, of which $12.6 million relates to Sequent's first quarter 2003 sale of substantially all of its inventory balances that were impacted on January January: see month. 1, 2003 by the now rescinded EITF 98-10; energy investments' EBIT increased $1.3 million; and corporate EBIT increased $1.6 million. Earnings Conference Call Webcast: The AGL Resources second quarter 2003 earnings conference call, scheduled for July July: see month. 31, 2003, 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 quarter and six months ended June 30, 2003, as well as other general corporate updates. The webcast replay of the call will be available on the website through the close of business on August 7, 2003. AGL Resources Inc. (NYSE:ATG) is an Atlanta-based energy services holding company. Its utility subsidiaries -- Atlanta Gas Light Company, Virginia Natural Gas and Chattanooga Gas Company -- serve approximately 1.8 million customers in three states. 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 Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. and Phoenix. 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. . We wish to caution readers that the assumptions, which form the basis for the forward-looking statements, include many factors that are beyond our ability to control or estimate precisely. Those factors include, but are not limited to, the following: changes in industrial, commercial, and residential growth in our service territories and those of our subsidiaries; changes in price and demand for natural gas and related products; impact of changes in state and federal legislation and regulation, including various orders of the state public service commissions and the 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. , on the gas and electric industries and on us, including the impact of Atlanta Gas Light Company's performance based rate plan; 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 and our wholesale services segment's counterparties; 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; performance of equity and bond markets and the impact on pension fund costs; impact of acquisitions and divestitures; changes in accounting policies and practices issued periodically by accounting standard-setting bodies; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our credit ratings or the credit ratings of our competitors or counterparties; 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 our business; and other risks described in our documents on file with the Securities and Exchange Commission. Supplemental Information Company management evaluates the financial performance and operational effectiveness of its segments on an earnings before interest and taxes (EBIT) measure, which includes other income, but excludes financing costs, including interest and debt expense, income taxes and the cumulative effect of changes in accounting principles, each of which we evaluate on a consolidated level. We believe EBIT is a useful measurement of our performance for you 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 are directly relevant to the efficiency of those operations. However, EBIT should not be considered an alternative to, or a more meaningful indicator of our operating performance than operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. or net income as determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, . In addition, our EBIT may not be comparable to a similarly titled measure of another company.
AGL Resources Inc.
Condensed Statements of Consolidated Income
For the Three and Six Months Ended
June 30, 2003 and 2002
(In millions, except per share amounts)
Three Months Six Months
----------------------- -----------------------
6/30 6/30 Fav/ 6/30 6/30 Fav/
2003 2002 (Unfav) 2003 2002 (Unfav)
------- ------- ------- ------- ------- -------
Operating Revenues $186.6 $161.2 $25.4 $539.1 $433.1 $106.0
Cost of Sales 45.4 24.4 (21.0) 194.0 121.5 (72.5)
------- ------- ------- ------- ------- -------
Operating Margin 141.2 136.8 4.4 345.1 311.6 33.5
Total Operating
Expenses 100.3 94.9 (5.4) 202.7 195.7 (7.0)
------- ------- ------- ------- ------- -------
Operating Income 40.9 41.9 (1.0) 142.4 115.9 26.5
Other (Loss) Income 8.3 (1.7) 10.0 24.4 24.6 (0.2)
------- ------- ------- ------- ------- -------
Earnings Before
Interest & Taxes 49.2 40.2 9.0 166.8 140.5 26.3
Interest Expense 18.2 21.2 3.0 38.1 43.9 5.8
------- ------- ------- ------- ------- -------
Earnings Before Income
Taxes 31.0 19.0 12.0 128.7 96.6 32.1
Income Taxes 12.1 6.7 (5.4) 50.2 34.2 (16.0)
------- ------- ------- ------- ------- -------
Income Before
Cumulative Effect of
Change in Accounting
Principle 18.9 12.3 6.6 78.5 62.4 16.1
Cumulative Effect of
Change in Accounting
Principle - - - (7.8) - (7.8)
------- ------- ------- ------- ------- -------
Net Income $18.9 $12.3 $6.6 $70.7 $62.4 $8.3
======= ======= ======= ======= ======= =======
EPS Before Cumulative
Effect of Change in
Accounting Principle
Basic $0.30 $0.22 $0.08 $1.27 $1.12 $0.15
Diluted $0.29 $0.22 $0.07 $1.26 $1.11 $0.15
EPS
Basic $0.30 $0.22 $0.08 $1.14 $1.12 $0.02
Diluted $0.29 $0.22 $0.07 $1.13 $1.11 $0.02
Shares Outstanding
Basic 63.5 56.0 7.5 61.9 55.9 6.0
Diluted 64.2 56.5 7.7 62.4 56.2 6.2
AGL Resources Inc.
EBIT Schedule
For the Three and Six Months Ended
June 30, 2003 and 2002
(In millions, except per share amounts)
Three Months Six Months
--------------------- -----------------------
6/30 6/30 Fav/ 6/30 6/30 Fav/
2003 2002 (Unfav) 2003 2002 (Unfav)
------ ------ ------- ------- ------- -------
Distribution Operations $44.0 $47.6 $(3.6) $124.9 $119.0 $5.9
Wholesale Services 0.3 (2.4) 2.7 21.0 3.5 17.5
Energy Investments 6.6 (3.3) 9.9 22.6 21.3 1.3
Corporate (1.7) (1.7) 0.0 (1.7) (3.3) 1.6
------ ------ ------- ------- ------- -------
Consolidated EBIT 49.2 40.2 9.0 166.8 140.5 26.3
------ ------ ------- ------- ------- -------
Interest Expense 18.2 21.2 3.0 38.1 43.9 5.8
Income Taxes 12.1 6.7 (5.4) 50.2 34.2 (16.0)
------ ------ ------- ------- ------- -------
Income Before Cumulative
Effect of Change in
Accounting Principle 18.9 12.3 6.6 78.5 62.4 16.1
Cumulative Effect of
Change in Accounting
Principle - - - (7.8) - (7.8)
Net Income $18.9 $12.3 $6.6 $70.7 $62.4 $8.3
------ ------ ------- ------- ------- -------
Earnings per Common
Share Before Cumulative
Effect of Change in
Accounting Principle
Basic $0.30 $0.22 $0.08 $1.27 $1.12 $0.15
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Diluted $0.29 $0.22 $0.07 $1.26 $1.11 $0.15
====== ====== ======= ======= ======= =======
Earnings per Common Share
Basic $0.30 $0.22 $0.08 $1.14 $1.12 $0.02
====== ====== ======= ======= ======= =======
Diluted $0.29 $0.22 $0.07 $1.13 $1.11 $0.02
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