SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 29, 1999
AGL RESOURCES INC.
(Exact Name of Registrant as Specified in Charter)
Georgia 1-14174 58-2210952
(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
817 West Peachtree Street, 10th Floor, Atlanta, Georgia 30308
(Address of Principal Executive Offices) (Zip Code)
(404) 584-9470
(Registrant's telephone number, including area code)
ITEM 7. EXHIBITS
99 Form of Press Release, dated July 29, 1999. See the Exhibit Index on
page 4 hereof.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AGL RESOURCES INC.
(Registrant)
/s/ J. Michael Riley
--------------------------------------
J. Michael Riley
Senior Vice President and
Chief Financial Officer
Date: July 29, 1999
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EXHIBIT INDEX
Exhibit No. Description
---------- ------------
99 Form of Press Release, dated
July 29, 1999
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Exhibit 99
[AGL RESOURCES LOGO APPEARS HERE]
For Immediate Release
Contacts
Financial Community Media
Melanie M. Platt Maureen Clayton
Vice President Investor Relations Director Corporate Communications
and Corporate Secretary (404) 584-3472
(404) 584-3420
Joseph P. Heffron
Investor Relations Specialist
(404) 584-3427
AGL RESOURCES INC. REPORTS THIRD QUARTER RESULTS - ANNOUNCES AGREEMENT TO EXIT
MARKETING JOINT VENTURES WITH SONAT
ATLANTA, GEORGIA, July 29, 1999 -- AGL Resources Inc. (NYSE: ATG) today reported
financial results for its third quarter in fiscal 1999. For the three months
ended June 30, 1999, the company posted net income of $7.2 million compared with
a net loss of $1.2 million for the year-ago quarter. Basic earnings per share
for the third quarter were 12 cents compared with a loss of 2 cents a year ago.
The primary reason for the increases in net income and earnings per share
was an expected increase in operating margin for utility operations 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 new rate design spreads utility delivery service revenues and margins more
evenly throughout the year.
Earnings also were affected by a $6.3 million increase in utility operating
expenses for the quarter compared with last year's third quarter. Customer
service activity associated with the rapid pace at which customers are switching
from the utility to marketers for their gas sales service and increased
depreciation expense were the primary factors for this increase.
A final factor affecting earnings was the start-up costs of approximately
$5.0 million from the company's retail energy marketing joint venture associated
with establishing market share in Georgia's deregulated natural gas market.
Operating revenues for the third quarter were $185.9 million compared with
$246.4 million for the same period last year, a decrease of $60.5 million. The
decrease in operating revenues is primarily the result of the effect of
customers switching from the utility to marketers for their gas sales service, a
transition that is occurring at a very rapid pace. As utility sales service
revenues decline, there is a comparable decline in utility purchased gas costs.
The decrease in revenues therefore does not affect earnings.
AGL Resources Inc.
page 2
Nine-Month Results Announced
For the nine months ended June 30, 1999, the company reported net income of
$47.3 million, compared with $69.6 million a year ago and basic earnings per
share of $.82 versus $1.22 per share. The lower year-to-date earnings are
attributable to losses from the company's gas marketing joint venture with
Sonat, the change in rate design for utility delivery service discussed earlier
and start-up costs from the company's retail energy marketing joint venture.
Agreement to Exit Marketing Joint Ventures with Sonat
The company also announced an agreement with Sonat Inc. (NYSE: SNT) which
contemplates the sale of AGL Resources' interests in two joint ventures - Sonat
Marketing Company L.P., a natural gas marketer, and Sonat Power Marketing L.P.,
a power marketer. Completion of both transactions is subject to, among other
things, termination of applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Additionally, completion of the sale of the
company's interest in Sonat Power Marketing L.P. is subject to approval of the
Federal Energy Regulatory Commission under Section 203 of the Federal Power Act.
The company expects to close the sale of its interest in Sonat Marketing Company
L.P. some time during its fourth quarter. The company expects the sale of its
interest in Sonat Power Marketing L.P. to close by the end of 1999.
AGL Resources acquired a 35-percent interest in Sonat Marketing Company
L.P. in August 1995 for approximately $32 million and acquired a 35-percent
interest in Sonat Power Marketing L.P. in June 1996 for approximately $1.0
million. This agreement contemplates that AGL Resources will receive $40 million
in exchange for its interest in Sonat Marketing Company L.P. and $25 million in
exchange for its interest in Sonat Power Marketing L.P. Under terms of the
agreement, upon completion of the transactions, the company will not be
allocated any gain or loss from either joint venture for any period subsequent
to June 30, 1999.
Walter M. Higgins, chairman and chief executive officer, commented, "We are
pleased with the terms of our agreement with Sonat, but are disappointed with
our results for third quarter despite the posted increases in AGL Resources' net
income and earnings per share. The costs associated with the extremely rapid
pace of customer migration are putting downward pressure on the earnings of the
utility. The utility is pursuing solutions aggressively, including cost
management and regulatory alternatives."
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 approximately 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,
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AGL Resources, Inc.
page 3
including 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.
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AGL Resources Inc.
page 4
AGL RESOURCES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL INFORMATION
June 30, 1999
(Unaudited)
Millions of Dollars, Except Per Share Data
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
June 30, June 30,
1999 1998 1999 1998
------ ------ ------ --------
<S> <C> <C> <C> <C>
Operating Revenues $185.9 $246.4 $884.9 $1,125.2
------ ------ ------ --------
Cost of Gas 61.4 150.1 480.4 709.8
------ ------ ------ --------
Operating Margin 124.5 96.3 404.5 415.4
====== ====== ====== ========
Operating Income $ 29.5 $ 8.9 $129.6 $ 144.6
====== ====== ====== ========
Consolidated Net
Income (Loss) $ 7.2 $ (1.2) $ 47.3 $ 69.6
====== ====== ====== ========
Earnings Per Share of
Common Stock (Loss)
Basic $ 0.12 $(0.02) $ 0.82 $ 1.22
Diluted $ 0.12 $(0.02) $ 0.82 $ 1.22
Average Number of
Shares Outstanding
(millions)
Basic 57.4 57.1 57.5 56.9
Diluted 57.5 57.2 57.6 57.0
</TABLE>
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