Atmos Energy Corporation Reports Earnings for Fiscal Year 2007; Initiates Fiscal 2008 Guidance.DALLAS -- Atmos Energy Atmos Energy (NYSE: ATO), headquartered in Dallas, Texas, is the largest distributor of natural gas in the United States, serving 3.1 million customers nationwide. Atmos acquired TXU's natural gas and pipeline holdings in 2004. Corporation (NYSE NYSE See: New York Stock Exchange :ATO ATO Australian Taxation Office ATO Ambito Territoriale Ottimale (Italy) ATO Alpha Tau Omega ATO Air Traffic Organization (FAA) ATO Arab Towns Organization ATO Air Tasking Order ATO Assemble To Order ) today reported consolidated results for its 2007 fiscal year and fourth quarter ended September 30, 2007. * Fiscal year 2007 net income was $168.5 million, or $1.92 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, which includes a noncash, after-tax charge of $4.1 million, or $0.05 per diluted share, related to the write-off of obsolete software and a nonregulated gas gathering project. * Fiscal 2006 net income was $147.7 million, or $1.82 per diluted share, which included a noncash after-tax charge of $14.6 million, or $0.18 per diluted share to reflect the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of certain irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice. properties. * Regulated operations, comprised of the company's natural gas distribution and Atmos Pipeline - Texas operations, contributed $107.9 million of net income, or $1.23 per diluted share during fiscal 2007, compared with $79.5 million of net income or $0.98 per diluted share during fiscal 2006. * Nonregulated operations, which include the company's natural gas marketing operations and the nonregulated pipeline, storage and other operations, contributed $60.6 million of net income during fiscal 2007, or $0.69 per diluted share, compared with $68.2 million of net income or $0.84 per diluted share during fiscal 2006. * Atmos Energy expects fiscal 2008 earnings to be in the range of $1.95 to $2.05 per diluted share. For the three months ended September 30, 2007, net loss was $5.9 million, or ($0.07) per diluted share, compared with net income of $6.1 million or $0.07 per diluted share for the same period last year. Regulated operations reported a net loss of $13.7 million, or ($0.15) per diluted share during the fiscal 2007 fourth quarter, compared with a net loss of $27.2 million or ($0.33) per diluted share in the prior-year period. Nonregulated operations contributed $7.8 million of net income during the fourth quarter of fiscal 2007, or $0.08 per diluted share, compared with $33.3 million of net income, or $0.40 per diluted share in the prior-year quarter. Results for the three months ended September 30, 2007, include an after-tax charge of $2.0 million, or $0.02 per diluted share to write off costs associated with a nonregulated natural gas gathering project. Results for the fiscal 2006 fourth quarter included an after-tax charge of $14.6 million, or $0.18 per diluted share to recognize the impairment of irrigation properties in the West Texas Division. "We are pleased to deliver on our stated earnings guidance for the sixth consecutive year," said Robert W. Best, chairman, president and chief executive officer of Atmos Energy Corporation. "Our complementary business strategy continues to yield solid results. Our regulated operations, which contributed 64 percent of our consolidated net income, were boosted by more normal weather, rate increases and enhanced rate design across our service territory. And, our nonregulated operations exceeded our expectations, despite reduced natural gas market volatility, primarily in the natural gas marketing business." Best continued: "As part of our ongoing effort to promote safety and reliability of our distribution service and to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. the required operations and maintenance costs to do so, we made a rate filing in September with the cities we serve in our regulated Mid-Tex division for about $52 million in rate adjustments. We cannot predict whether or when these adjustments will be approved, and we have not included any related rate relief in our fiscal 2008 guidance." "Looking forward to fiscal 2008 and beyond, we remain focused on continuing to enhance the stability and predictability of our regulated earnings, while optimizing our nonregulated assets to deliver annual earnings growth in the 4 percent to 6 percent range, on average," Best concluded. Results for the Year Ended September 30, 2007 Consolidated gross profit, increased from $1.2 billion in fiscal 2006 to $1.3 billion in fiscal 2007, primarily due to margin improvements across most of the company's operations. Natural gas distribution gross profit increased to $952.7 million for the year ended September 30, 2007, compared with $925.1 million in the same period last year, before intersegment eliminations. The year-over-year increase of $27.6 million primarily was attributable to a $38.6 million increase associated with a 9 percent rise in throughput and the impact of having weather-normalized rate design covering over 90 percent of residential and commercial meters in the current year. Other key factors responsible for the margin improvement include a net $15.3 million year-over-year increase resulting from the company's regulatory activities, a $7.5 million decrease associated with estimated unrecoverable gas costs and a $6.0 million decrease in transportation margins associated with increased transportation costs and tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic reductions implemented following the completion of the Mid-Tex Division rate case in March 2007. The regulated transmission and storage segment is comprised of the regulated operations of Atmos Pipeline - Texas. Gross profit for this segment increased to $163.2 million for the year ended September 30, 2007, compared with $141.1 million in the prior year, before intersegment eliminations. The $22.1 million increase in gross profit was primarily the result of a 23 percent increase in pipeline throughput, including $10.8 million of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. margin received from the company's North Side Loop and other compression projects completed in fiscal 2006. The increase also reflects higher capacity enhancement fees, gains associated with the routine sale of excess inventory and a $3.1 million increase from the company's 2005 Gas Reliability Infrastructure Program (GRIP) filing in Texas. Natural gas marketing gross profit was $104.3 million for the year ended September 30, 2007, compared with $130.6 million in the prior year, before intersegment eliminations. The $26.3 million decrease reflects a $30.2 million decrease in delivered gas margins primarily attributable to lower unit margins earned in a less volatile market, which provided fewer opportunities to maximize margins. This decrease in unit margins was partially offset by a 31 percent increase in natural gas sales volumes and slightly higher asset optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. margins. Unrealized margins from hedging activities did not vary significantly from the prior year. The pipeline, storage and other segment primarily is comprised of the nonregulated operations of Atmos Pipeline and Storage, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (APS) and Atmos Power Systems, Inc. Gross profit for this segment was $32.6 million for the year ended September 30, 2007, compared with $24.5 million for the prior year. The $8.1 million improvement primarily reflects increased gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. from APS's asset optimization activities and increased transportation margins. These increases were partially offset by lower unrealized margins associated with derivatives utilized by APS in its asset optimization activities. Consolidated operation and maintenance expense for the year ended September 30, 2007, was $463.4 million, compared with $433.4 million in the prior year. The $30.0 million increase primarily reflects increased employee, insurance and other administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . However, these increases were partially offset by the deferral deferral - Waiting for quiet on the Ethernet. of $4.3 million of operation and maintenance expenses incurred in connection with the company's Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. recovery efforts and a decrease in bad
debt expense. The $2.1 million decrease in bad debt expense was largely
due to improved collections in the natural gas distribution segment as a
result of lower natural gas prices year over year. The average cost of
natural gas for fiscal 2007 was $8.09 per Mcf, compared with $10.02 per
Mcf during fiscal 2006.
Taxes, other than income taxes, for the year ended September 30, 2007, were $182.9 million, compared with $192.0 million for the year ended September 30, 2006. The $9.1 million decrease was primarily related to lower franchise fees and state gross receipts taxes A gross receipts tax, sometimes referred to as a gross excise tax, is a tax on the total gross revenues of a company, regardless of their source. It is similar to a sales tax, but it is levied on the seller of goods or services rather than the consumer. , both of which are calculated as a percentage of revenue and are paid by natural gas distribution customers as a component of their monthly bills. Although these amounts are included as a component of revenue 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 the company's tariffs This is a list of tariffs and trade legislation:
adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. or unfavorably affect net income in a reporting period. However, these timing differences should offset over time with no permanent impact on net income. 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. for the year ended September 30, 2007 included a $6.3 million noncash charge Noncash charge A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow. That is, this is treated as an accounting expense -- not a real expense that demands cash. associated with the write-off of approximately $3.0 million of costs related to a nonregulated natural gas gathering project and about $3.3 million of obsolete software costs. The results in fiscal 2006 included a $22.9 million noncash charge reflecting the impairment of the West Texas Division irrigation properties. Miscellaneous income for the year ended September 30, 2007, was $9.2 million, compared with $0.9 million for the year ended September 30, 2006. The $8.3 million increase was primarily related to a $5.9 million increase in interest income earned on higher average cash and short-term investment balances year-over-year and $2.1 million of income earned from leasing certain mineral interests owned by the company's pipeline, storage and other segment in fiscal 2007. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the year ended September 30, 2007, increased to $547.1 million, compared with $311.4 million during fiscal 2006. The $235.7 million increase was the result of increased net income, more timely gas cost recoveries and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. changes in working capital compared to the prior year. Capital expenditures decreased to $392.4 million for the year ended September 30, 2007, from $425.3 million for the year ended September 30, 2006. The $32.9 million decrease in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. primarily reflects the absence of capital expenditures associated with the company's North Side Loop and other pipeline compression projects, which were completed in the third quarter of fiscal 2006. Results for the 2007 Fourth Quarter Ended September 30, 2007 Consolidated gross profit for the three months ended September 30, 2007 was $217.8 million, compared with $260.1 million for the three months ended September 30, 2006. The decrease in consolidated gross profit margin primarily was attributable to lower unrealized margins from hedging activities in the natural gas marketing segment. Natural gas distribution gross profit decreased $6.1 million to $153.2 million in the current quarter, compared with $159.3 million in the same period last year, before intersegment eliminations. The decrease primarily reflects the $7.5 million accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for estimated unrecoverable gas costs, partially offset by a net quarter-over-quarter increase of $4.8 million from the company's regulatory activities. Regulated transmission and storage gross profit increased $6.0 million to $40.6 million for the three months ended September 30, 2007, compared with $34.6 million for the prior-year quarter. The increase in gross profit was primarily the result of a 10 percent increase in pipeline throughput, including $2.1 million of incremental margin received from the company's North Side Loop and other compression projects completed in fiscal 2006 and a $1.0 million increase due to rate adjustments from the company's 2005 GRIP filing. Natural gas marketing gross profit for the three months ended September 30, 2007 was $18.7 million, compared to $61.2 million for the three months ended September 30, 2006, before intersegment eliminations. The $42.5 million decrease primarily reflects lower unrealized margins recorded during the current-year quarter compared with the prior-year quarter. The fiscal 2007 fourth quarter gross profit included a $15.7 million unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. compared with a $55.6 million unrealized gain in the prior-year quarter. The quarter-over-quarter decrease primarily was due to less price volatility during the current-year quarter compared with the prior-year quarter. Additionally, delivered gas margins decreased $11.2 million as a result of a less volatile market, which provided fewer opportunities to maximize unit margins. These decreases were partially offset by a 39 percent increase in natural gas sales volumes and reduced margin losses from asset optimization activities. Pipeline, storage and other gross profit was $5.8 million for the three months ended September 30, 2007, compared with $6.1 million for the three months ended September 30, 2006, before intersegment eliminations. The $0.3 million decrease in gross profit primarily was due to higher transportation margins, partially offset by lower unrealized margins. Consolidated operation and maintenance expense for the three months ended September 30, 2007, was $121.0 million, compared with $108.1 million for the three months ended September 30, 2006. The $12.9 million increase primarily was due to higher employee, insurance and other administrative costs. Additionally, bad debt expense increased $3.0 million, primarily reflecting the timing of customer account write-offs. Current-year quarter natural gas prices were flat compared with the prior-year quarter. Additionally, as previously discussed, operating expenses for the quarter include the $3.0 million noncash charge related to the write-off of costs associated with a nonregulated natural gas gathering project. Outlook Atmos Energy has successfully reduced its debt to capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. ratio within its targeted range of 50 to 55 percent and remains committed to preserving this ratio in fiscal 2008. Cash flows available for debt reduction or growth projects during fiscal 2008 are expected to range between $113 million and $118 million. Capital expenditures during fiscal 2008 are projected to be in the range of $450 million to $465 million, with about $135 million to $140 million earmarked for growth capital. Further, the leadership of Atmos Energy remains focused on enhancing shareholder value by delivering consistent earnings growth. Atmos Energy projects fiscal 2008 earnings to be in the range of $1.95 to $2.05 per diluted share. Major assumptions underlying the earnings projection include a reduced contribution from the natural gas marketing segment due to less volatility in natural gas prices, continued successful execution of the rate strategy in the gas distribution segment, normal weather, an average annual short term-interest rate of 6.5 percent and no material acquisitions. However, the mark-to-market impact on the nonregulated marketing company's physical storage inventory at September 30, 2008, and changes in events or other circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or that the company cannot currently anticipate or predict, could result in earnings for fiscal 2008 that are significantly above or below this outlook. Conference Call to be Web Cast November 8, 2007 Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal year ended September 30, 2007 on Thursday, November 8, 2007, at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The telephone number is 800-240-5318. The conference call will be web cast live on the Atmos Energy Web site at www.atmosenergy.com. A slide presentation and a playback Playback could mean:
The process by which the corporation communicates with its investors. . Other Highlights and Recent Developments Mid-Tex Division Rate Filing On September 19, 2007, Atmos Energy filed a request to increase rates in its Mid-Tex Division covering 439 incorporated cities in that division. The company is seeking incremental annual revenues of $51.9 million and rate design changes that would encourage energy efficiency and stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders of rates. Natural Gas Gathering Project In May 2006, Atmos Energy announced plans to construct a natural gas gathering system in Eastern Kentucky, which was subsequently reconfigured and renamed the Phoenix Gas Gathering Project. During the fiscal 2007 fourth quarter, the anchor producers were further delayed in their ability to commit critical volumes necessary to meet the project's threshold returns. As a result, the company has ceased development of the project. Approximately $3.0 million of capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs associated with the project were written off during the fourth quarter of fiscal 2007. This news release should be read in conjunction with the attached unaudited financial information. 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. The matters discussed in this news release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. from liability established by 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. When used in this news release or in any of the company's other documents or oral presentations, the words "anticipate," "believe," "estimate," "expect," "forecast," "goal," "intend," "objective," "plan," "projection," "seek," "strategy" or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this news release, including the risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc regulatory trends and decisions, the company's ability to continue to access the capital markets and the other factors discussed in the company's SEC filings. These factors include the risks and uncertainties discussed in the company's Annual Report 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. for the fiscal year ended September 30, 2006. Although the company believes these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. The company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. About Atmos Energy Atmos Energy Corporation, headquartered in Dallas, is the country's largest natural gas-only distributor, serving about 3.2 million natural gas distribution customers in more than 1,600 communities in 12 states from the Blue Ridge Mountains Blue Ridge also Blue Ridge Mountains A range of the Appalachian Mountains extending from southern Pennsylvania to northern Georgia. It rises to 2,038.6 m (6,684 ft) at Mount Mitchell in the Black Mountains of western North Carolina. in the East to the Rocky Mountains Rocky Mountains, major mountain system of W North America and easternmost belt of the North American cordillera, extending more than 3,000 mi (4,800 km) from central N.Mex. to NW Alaska; Mt. Elbert (14,431 ft/4,399 m) in Colorado is the highest peak. in the West. Atmos Energy also provides natural gas marketing and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. services to industrial, commercial and municipal customers in 22 states and manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate in·tra·state adj. Relating to or existing within the boundaries of a state. Adj. 1. intrastate - relating to or existing within the boundaries of a state; "intrastate as well as interstate commerce" natural gas pipeline systems in Texas. Atmos Energy is a Fortune 500 company. For more information, visit www.atmosenergy.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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