Atlas America, Inc. Reports Operating Results for First Fiscal Quarter and Year Ended December 31, 2004.PHILADELPHIA Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. -- Atlas Atlas, in Greek mythology Atlas (ăt`ləs), in Greek mythology, a Titan; son of Iapetus and Clymene and the brother of Prometheus. America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ATLS ATLS Advanced Trauma Life Support ATLS Aerial Target Launch Ship ) ("ATLS" or the "Company") reported net income of $8.9 million for the first fiscal quarter ended December December: see month. 31, 2004 as compared to $4.9 million for the first fiscal quarter ended December 31, 2003, an increase of 82%. Net income per common share-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. was $0.67 for the first fiscal quarter ended December 31, 2004 as compared to net income per common share-basic and diluted of $0.46 for the first fiscal quarter December 31, 2003, an increase of $0.21. Earnings before interest, taxes, depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) was $21.5 million for the first fiscal quarter ended December 31, 2004 as compared to $11.3 million for the first fiscal quarter ended December 31, 2003, an increase of 91%. The following table reconciles EBITDA to our net income for the three months ended December 31, 2004 and 2003 (in thousands).
Three Months Ended
December 31,
-------------------
2004 2003
--------- ---------
Net income $ 8,892 $ 4,893
Plus:
Interest expense 1,690 487
Provision for income taxes 5,002 2,635
Depreciation, depletion and amortization 5,872 3,245
--------- ---------
EBITDA $ 21,456 $ 11,260
========= =========
Management of ATLS believes that EBITDA provides additional information with respect to ATLS's ability to meet its debt service, capital expense and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . EBITDA is a commonly used measure of a business' ability to generate cash flow without consideration of its financing structure. This measure is widely used by commercial banks, investment bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. , rating agencies and investors in evaluating performance relative to peers and pre-set performance standards. It is also a financial measurement that, with certain negotiated adjustments, is reported to ATLS's banks to establish conformance con·for·mance n. Conformity. Noun 1. conformance - correspondence in form or appearance conformity agreement, correspondence - compatibility of observations; "there was no agreement between theory and with its financial covenants under its current credit facility. EBITDA is not a measure of financial performance under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and, accordingly, should not be considered as a substitute for net income or cash flows from operating activities prepared 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 GAAP. Pro-forma net income, a non-GAAP measure, was $8.2 million for the three months ended December 31, 2004, or $0.61 per share-basic and diluted for the period. Pro-forma net income excludes ATLS's share of Atlas Pipeline Partners, L.P.'s (NYSE NYSE See: New York Stock Exchange :APL (A Programming Language) A high-level mathematical programming language noted for its brevity and matrix generation capabilities. Developed by Kenneth Iverson in the mid-1960s, it runs on micros to mainframes and is often used to develop mathematical models. ) ("APL") "net arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the settlement" related to the purported pur·port·ed adj. Assumed to be such; supposed: the purported author of the story. pur·port  ed·ly adv. terminated acquisition of Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States Pipeline Company ("APC (1) (American Power Conversion Corporation, West Kingston, RI, www.apcc.com) The leading manufacturer of UPS systems and surge suppressors, founded in 1981 by Rodger Dowdell, Neil Rasmussen and Emanual Landsman, three electronic power engineers who had worked at MIT. "). The
following table reconciles net income to pro-forma net income for the
three months ended December 31, 2004 and 2003 (in thousands).
Three Months Ended
December 31,
-------------------
2004 2003
--------- ---------
Net income $ 8,892 $ 4,893
Less: Company's share of net arbitration
settlement resulting from terminated acquisition,
net of taxes of $390 692 -
========= =========
Pro-forma net income $ 8,200 $ 4,893
========= =========
Pro-forma net income per share-basic and diluted $ 0.61 $ 0.46
========= =========
On December 30, 2004, APL entered into an agreement with SEMCO SEMCO Southeastern Michigan Computer Organization, Inc. SEMCO Samsung Electro-Mechanics Co., Ltd. SEMCO Systems Engineering and Management Company SEMCO Salisbury Engineering Manufacturing Company (Missouri) settling all issues and matters related to SEMCO's termination of the sale of APC to APL, and SEMCO paid APL $5.5 million. SEMCO Energy, Inc., the owner of APC, had sent APL a notice purporting to terminate the acquisition. APL pursued its remedies under the acquisition agreement. In connection with the termination and settlement, APL incurred approximately $1.1 million of costs during the three months ended December 31, 2004, which, have been netted against the $5.5 million settlement. In addition, APL incurred $3.0 million of costs in our fiscal year ended September September: see month. 30, 2004. The management of ATLS believes that the net income excluding our share of the "net arbitration settlement" is more fairly indicative of the continuing performance of the Company during the three months ended December 31, 2004. Further, the resulting pro-forma net income and pro-forma net income per share-basic and diluted have been presented for information purposes only. Drilling & Fundraising
--The number of wells we drilled, net to both our interest and that of our sponsored drilling investment partnerships, increased to 136 wells in the three months ended December 31, 2004 from 111 wells in the three months ended December 31, 2003, up 23%. --We expect to drill approximately 725 net wells in fiscal 2005. --We raised $52.2 million in the first quarter of fiscal 2005. Acreage --Atlas has an acreage position of approximately 438,900 net acres at December 31, 2004 up from 411,000 net acres at December 31, 2003, an increase of 7% in net acres. --Undeveloped acreage at December 31, 2004 was 239,500 net acres, up from 220,400 net acres at December 31, 2003, an increase of 9% in net acres. --We have identified 2,415 geologically ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. sites for drilling additional wells, of which 296 were set aside for the funds raised in the first quarter of fiscal 2005. Wells & Production --We had interests in 5,896 gross wells at December 31, 2004, an increase of 499 gross wells (9%) from interests in 5,397 gross wells at December 31, 2003. --We operate approximately 4,986 wells out of 5,896 wells or 84% of the wells in which we have an interest. --Natural gas production for our account was 20.3 million cubic feet per day in the three months ended December 31, 2004, up from 19.5 million cubic feet per day in the three months ended December 31, 2003, an increase of 4%. --Oil production was 447 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. in the three months ended December 31, 2004, down from 453 barrels per day in the three months ended December 31, 2003, a decrease of 1%. Atlas America, Inc. is an energy company engaged primarily in the development and production of natural gas in the Appalachian Basin for its own account and for its investors through the offering of tax advantaged investment programs. Atlas America also owns 100% of the general partner of Atlas Pipeline Partners, L.P. (NYSE:APL). APL owns and operates more than 3,300 miles of natural gas gathering pipelines in Oklahoma, Texas, Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Ohio and a gas processing facility in Oklahoma. For more information, please visit our website at www.atlasamerica.com, or contact investor relations Investor relations The process by which the corporation communicates with its investors. at pschreiber@atlasamerica.com. Certain matters discussed within this press release are 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. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Although Atlas America, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. . Factors that could cause actual results to differ materially from expectations include financial performance, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in the Company's reports filed with the SEC, including quarterly reports on Form 10Q, reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. and annual reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . The remainder of this release contains the Company's consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , statements of income and other related information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's operations during the periods indicated.
ATLAS AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, September 30,
2004 2004
------------ -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 29,159 $ 29,192
Accounts receivable 28,561 24,113
Prepaid expenses 3,571 2,433
------------ -------------
Total current assets 61,291 55,738
Property and equipment, net 325,033 313,091
Other assets, net 8,030 7,955
Intangible assets, net 7,010 7,243
Goodwill, net of accumulated amortization
of $4,532 37,470 37,470
------------ -------------
$ 438,834 $ 421,497
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,621 $ 3,401
Accounts payable 28,138 20,869
Liabilities associated with drilling
contracts 52,610 29,375
Accrued producer liabilities 10,881 8,815
Accrued liabilities 12,823 14,767
------------ -------------
Total current liabilities 107,073 77,227
Long-term debt 59,966 82,239
Advance from parent 5,341 10,413
Deferred tax liability 22,828 21,442
Other liabilities 6,340 6,949
Minority interest 135,040 132,224
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $0.01 par value:
1,000,000 authorized shares - -
Common stock, $0.01 par value:
49,000,000 authorized shares 133 133
Additional paid-in capital 75,584 75,584
Accumulated other comprehensive loss (202) (2,553)
Retained earnings 26,731 17,839
------------ -------------
Total stockholders' equity 102,246 91,003
------------ -------------
$ 438,834 $ 421,497
============ =============
ATLAS AMERICA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months
Ended
December 31,
-----------------
2004 2003
-------- --------
REVENUES
Well drilling $30,558 $21,959
Gas and oil production 14,659 10,196
Gathering, transmission and processing 43,782 1,599
Well services 2,248 1,937
-------- --------
91,247 35,691
COSTS AND EXPENSES
Well drilling 26,573 19,095
Gas and oil production and exploration 1,802 1,685
Gathering, transmission and processing 35,680 596
Well services 1,191 1,041
General and administrative 1,873 911
Depreciation, depletion and amortization 5,872 3,245
-------- --------
72,991 26,573
OPERATING INCOME 18,256 9,118
OTHER INCOME (EXPENSE)
Interest expense (1,690) (487)
Minority interest in Atlas Pipeline Partners, L.P. (7,220) (1,271)
Arbitration settlement, net 4,446 ?
Other, net 102 168
-------- --------
(4,362) (1,590)
Income from continuing operations before income
taxes 13,894 7,528
Provision for income taxes 5,002 2,635
-------- --------
Net income $ 8,892 $ 4,893
======== ========
Net income per common share - basic
Net income per common share - basic $ 0.67 $ 0.46
======== ========
Weighted average common shares outstanding 13,333 10,688
======== ========
Net income per common share - diluted
Net income per common share - diluted $ 0.67 $ 0.46
======== ========
Weighted average common shares outstanding 13,338 10,688
======== ========
Results of Operations
The following table sets forth information relating to our
production revenues, production volumes, sales prices, production
costs and depletion:
Three Months
Ended
December 31,
-----------------
2004 2003
-------- --------
Production revenues (in thousands):
Gas (1) $12,697 $ 9,066
Oil $ 1,942 $ 1,123
Production volume:
Gas (mcf/day) (1) (2) (4) 20,286 19,479
Oil (bbls/day) (2) (4) 447 453
Average sales prices:
Gas (per mcf) $ 6.80 $ 5.06
Oil (per bbl) $ 47.17 $ 26.94
Production costs (3):
As a percent of production revenues 12% 16%
Per mcf equivalent unit $ 0.83 $ 0.80
Depletion per mcfe (4) $ 1.28 $ 1.08
(1) Excludes sales of residual gas and sales to landowners.
(2) Our average sales price before the effects of hedging was $6.80
and $5.19 for the three months ended December 31, 2004 and 2003,
respectively.
(3) Production costs include labor to operate the wells and related
equipment, repairs and maintenance, materials and supplies,
property taxes, severance taxes, insurance, gathering charges and
production overhead.
(4) As used in this discussion, "mcf" and "mmcf" means thousand cubic
feet and million cubic feet; "mcfe" and "mmcfe" means thousand
cubic feet equivalent and million cubic feet equivalent, and
"bbls" means barrels. Bbls are converted to mcfe using the ratio
of six mcfs to one bbl.
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