UNITED
STATES
|
|
SECURITIES
AND EXCHANGE COMMISSION
|
|
Washington,
D.C. 20549
|
|
FORM
10-Q
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(Mark One)
|
|
þ QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
|
|
For
the Quarterly Period Ended June 30, 2008
|
|
OR
|
|
¨ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
|
|
For
the transition period
from to
|
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Commission
File Number 1-14174
|
|
AGL
RESOURCES INC.
|
|
(Exact
name of registrant as specified in its charter)
|
|
Georgia
|
58-2210952
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
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Ten
Peachtree Place NE, Atlanta, Georgia 30309
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|
(Address
and zip code of principal executive offices)
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404-584-4000
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(Registrant's
telephone number, including area code)
|
|
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90
days. Yes þ No ¨
|
|
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” ”accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer þ
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨ (Do not check if a smaller
reporting company)
|
Smaller
reporting company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Exchange Act Rule 12b-2). Yes ¨ No
þ
|
|
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.
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Class
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Outstanding
as of July 22, 2008
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Common
Stock, $5.00 Par Value
|
76,671,051
|
TABLE OF CONTENTS | |||||||
Page(s)
|
|||||||
Glossary of Key Terms & Referenced Accounting Standards | 3 | ||||||
Item Number | |||||||
4-37 | |||||||
1 | 4-7 | ||||||
4 | |||||||
5 | |||||||
6 | |||||||
7 | |||||||
8-19 | |||||||
8-10 | |||||||
11-13 | |||||||
13-14 | |||||||
14 | |||||||
15 | |||||||
16-17 | |||||||
17-19 | |||||||
2 | 20-33 | ||||||
20 | |||||||
20 | |||||||
20-21 | |||||||
21-22 | |||||||
22 | |||||||
23 | |||||||
24 | |||||||
24 | |||||||
24-29 | |||||||
29-32 | |||||||
33 | |||||||
33 | |||||||
3 | 33-37 | ||||||
4 | 37 | ||||||
38-39 | |||||||
1 | 38 | ||||||
2 | 38 | ||||||
4 | 39 | ||||||
6 | 39 | ||||||
40 |
AFUDC
|
Allowance
for funds used during construction, which has been authorized by
applicable state regulatory agencies to record the cost of debt and equity
funds as part of the cost of construction projects
|
AGL
Capital
|
AGL
Capital Corporation
|
AGL
Networks
|
AGL
Networks, LLC
|
Atlanta
Gas Light
|
Atlanta
Gas Light Company
|
Bcf
|
Billion
cubic feet
|
Chattanooga
Gas
|
Chattanooga
Gas Company
|
Credit
Facility
|
Credit
agreement supporting our commercial paper program
|
EBIT
|
Earnings
before interest and taxes, a non-GAAP measure that includes operating
income, other income, equity in SouthStar’s income, minority interest in
SouthStar’s earnings, donations and gain on sales of assets and excludes
interest and income tax expense; as an indictor of our operating
performance, EBIT should not be considered an alternative to, or more
meaningful than, operating income or net income as determined in
accordance with GAAP
|
EITF
|
Emerging
Issues Task Force
|
ERC
|
Environmental
remediation costs
|
FASB
|
Financial
Accounting Standards Board
|
FERC
|
Federal
Energy Regulatory Commission
|
FIN
|
FASB
Interpretation Number
|
Fitch
|
Fitch
Ratings
|
Florida
Commission
|
Florida
Public Service Commission
|
FSP
|
FASB
Staff Position
|
GAAP
|
Accounting
principles generally accepted in the United States of
America
|
Georgia
Commission
|
Georgia
Public Service Commission
|
GNG
|
Georgia
Natural Gas, or the name under which SouthStar does business in
Georgia
|
Golden
Triangle Storage
|
Golden
Triangle Storage, Inc.
|
Heating
Degree Days
|
A
measure of the effects of weather on our businesses, calculated when the
average daily actual temperatures are less than a baseline temperature of
65 degrees Fahrenheit. Generally, increased heating degree days result in
greater demand for gas on our distribution systems.
|
Heating
Season
|
The
period from November to March when natural gas usage and operating
revenues are generally higher because more customers are connected to our
distribution systems when weather is colder
|
Jefferson
Island
|
Jefferson
Island Storage & Hub, LLC
|
LOCOM
|
Lower
of weighted average cost or current market price
|
Maryland
Commission
|
Maryland
Public Service Commission
|
Marketers
|
Marketers
selling retail natural gas in Georgia and certificated by the Georgia
Commission
|
Medium-term
notes
|
Notes
issued by Atlanta Gas Light with scheduled maturities between 2012 and
2027 bearing interest rates ranging from 6.6% to 9.1%
|
MMBtu
|
NYMEX
equivalent contract units of 10,000 million British thermal
units
|
Moody’s
|
Moody’s
Investors Service
|
New
Jersey Commission
|
New
Jersey Board of Public Utilities
|
NUI
|
NUI
Corporation
|
NYMEX
|
New
York Mercantile Exchange, Inc.
|
OCI
|
Other
comprehensive income
|
Operating
margin
|
A
measure of income, calculated as revenues minus cost of gas, that excludes
operation and maintenance expense, depreciation and amortization, taxes
other than income taxes, and the gain or loss on the sale of our assets;
these items are included in our calculation of operating income as
reflected in our statements of consolidated income.
|
OTC
|
Over-the-counter
|
Piedmont
|
Piedmont
Natural Gas
|
Pivotal
Utility
|
Pivotal
Utility Holdings, Inc., doing business as Elizabethtown Gas, Elkton Gas
and Florida City Gas
|
PGA
|
Purchased
gas adjustment
|
PP&E
|
Property,
plant and equipment
|
PRP
|
Pipeline
replacement program for Atlanta Gas Light
|
S&P
|
Standard
& Poor’s Ratings Services
|
SEC
|
Securities
and Exchange Commission
|
Sequent
|
Sequent
Energy Management, L.P.
|
SFAS
|
Statement
of Financial Accounting Standards
|
SouthStar
|
SouthStar
Energy Services LLC
|
VaR
|
Value
at risk is defined as the maximum potential loss in portfolio value over a
specified time period that is not expected to be exceeded within a given
degree of probability
|
Virginia
Natural Gas
|
Virginia
Natural Gas, Inc.
|
Virginia
Commission
|
Virginia
State Corporation Commission
|
WACOG
|
Weighted
average cost of gas
|
WNA
|
Weather
normalization adjustment
|
FSP
FIN 39-1
|
FASB
Staff Position 39-1 “Amendment of FIN 39”
|
FIN
46 & FIN 46R
|
FIN
46, “Consolidation of Variable Interest Entities”
|
FIN
48
|
FIN
48, “Accounting for Uncertainty in Income Taxes, an interpretation of SFAS
Statement No. 109”
|
FSP
EITF 03-6-1
|
FSP
EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities”
|
FSP EITF 06-3 | FSP EITF 06-3, "How Taxes Collected from Customers and Remitted to Governmental Authorities Should be Presented in the Income Statement (That Is, Gross versus Net Presentation)" |
SFAS
71
|
SFAS
No. 71, “Accounting for the Effects of Certain Types of
Regulation”
|
SFAS
133
|
SFAS
No. 133, “Accounting for Derivative Instruments and Hedging
Activities”
|
SFAS
141
|
SFAS
No. 141, “Business Combinations”
|
SFAS
157
|
SFAS
No. 157, “Fair Value Measurements”
|
SFAS
160
|
SFAS
No. 160, “Noncontrolling Interests in Consolidated Financial
Statements”
|
SFAS
161
|
SFAS
No. 161, “Disclosure about Derivative Instruments and Hedging Activities,
an amendment of SFAS 133”
|
SFAS
162
|
SFAS
No. 162, “The Hierarchy of Generally Accepted Accounting
Principles”
|
As
of
|
||||||||||||
In
millions, except share data
|
June
30, 2008
|
December
31, 2007
|
June
30, 2007
|
|||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 19 | $ | 19 | $ | 14 | ||||||
Energy
marketing receivables
|
807 | 598 | 421 | |||||||||
Inventories
|
708 | 551 | 608 | |||||||||
Receivables
(less allowance for uncollectible accounts of $19 at June 30, 2008, $14 at
Dec. 31, 2007 and $19 at June 30, 2007)
|
239 | 391 | 180 | |||||||||
Energy
marketing and risk management assets
|
107 | 69 | 66 | |||||||||
Unrecovered
PRP costs – current portion
|
37 | 31 | 27 | |||||||||
Unrecovered
ERC – current portion
|
20 | 23 | 25 | |||||||||
Other
current assets
|
106 | 117 | 77 | |||||||||
Total
current assets
|
2,043 | 1,799 | 1,418 | |||||||||
Property,
plant and equipment
|
||||||||||||
Property,
plant and equipment
|
5,284 | 5,177 | 5,100 | |||||||||
Less
accumulated depreciation
|
1,621 | 1,611 | 1,598 | |||||||||
Property,
plant and equipment-net
|
3,663 | 3,566 | 3,502 | |||||||||
Deferred
debits and other assets
|
||||||||||||
Goodwill
|
420 | 420 | 420 | |||||||||
Unrecovered
PRP costs
|
216 | 254 | 236 | |||||||||
Unrecovered
ERC
|
130 | 135 | 139 | |||||||||
Other
|
119 | 86 | 70 | |||||||||
Total
deferred debits and other assets
|
885 | 895 | 865 | |||||||||
Total
assets
|
$ | 6,591 | $ | 6,260 | $ | 5,785 | ||||||
Current
liabilities
|
||||||||||||
Energy
marketing trade payables
|
$ | 927 | $ | 578 | $ | 510 | ||||||
Short-term
debt
|
513 | 580 | 339 | |||||||||
Accounts
payable - trade
|
158 | 172 | 145 | |||||||||
Energy
marketing and risk management liabilities – current
portion
|
111 | 18 | 12 | |||||||||
Accrued
expenses
|
106 | 87 | 127 | |||||||||
Accrued
PRP costs – current portion
|
48 | 55 | 39 | |||||||||
Customer
deposits
|
33 | 35 | 42 | |||||||||
Deferred
purchased gas adjustment
|
20 | 28 | 16 | |||||||||
Accrued
ERC – current portion
|
15 | 10 | 11 | |||||||||
Other
current liabilities
|
48 | 73 | 67 | |||||||||
Total
current liabilities
|
1,979 | 1,636 | 1,308 | |||||||||
Accumulated
deferred income taxes
|
604 | 566 | 507 | |||||||||
Long-term
liabilities and other deferred credits (excluding long-term
debt)
|
||||||||||||
Accumulated
removal costs
|
175 | 169 | 166 | |||||||||
Accrued
PRP costs
|
162 | 190 | 187 | |||||||||
Accrued
ERC
|
92 | 97 | 90 | |||||||||
Accrued
pension obligations
|
44 | 43 | 82 | |||||||||
Accrued
postretirement benefit costs
|
21 | 24 | 27 | |||||||||
Other
long-term liabilities and other deferred credits
|
157 | 152 | 161 | |||||||||
Total
long-term liabilities and other deferred credits (excluding long-term
debt)
|
651 | 675 | 713 | |||||||||
Commitments
and contingencies (Note 6)
|
||||||||||||
Minority
interest
|
34 | 47 | 40 | |||||||||
Capitalization
|
||||||||||||
Long-term
debt
|
1,637 | 1,675 | 1,545 | |||||||||
Common
shareholders’ equity, $5 par value; 750,000,000 shares
authorized
|
1,686 | 1,661 | 1,672 | |||||||||
Total
capitalization
|
3,323 | 3,336 | 3,217 | |||||||||
Total
liabilities and capitalization
|
$ | 6,591 | $ | 6,260 | $ | 5,785 |
Three
months ended
|
Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
In
millions, except per share amounts
|
2008 | 2007 | 2008 | 2007 | ||||||||||||
Operating
revenues
|
$ | 444 | $ | 467 | $ | 1,456 | $ | 1,440 | ||||||||
Operating
expenses
|
||||||||||||||||
Cost
of gas
|
275 | 233 | 932 | 828 | ||||||||||||
Operation
and maintenance
|
114 | 111 | 233 | 227 | ||||||||||||
Depreciation
and amortization
|
38 | 36 | 74 | 71 | ||||||||||||
Taxes
other than income taxes
|
11 | 9 | 23 | 20 | ||||||||||||
Total
operating expenses
|
438 | 389 | 1,262 | 1,146 | ||||||||||||
Operating
income
|
6 | 78 | 194 | 294 | ||||||||||||
Other
income
|
3 | - | 4 | 1 | ||||||||||||
Minority
interest
|
(1 | ) | (2 | ) | (17 | ) | (24 | ) | ||||||||
Interest
expense, net
|
(26 | ) | (27 | ) | (56 | ) | (58 | ) | ||||||||
(Loss)
earnings before income taxes
|
(18 | ) | 49 | 125 | 213 | |||||||||||
Income
tax expense (benefit)
|
(7 | ) | 19 | 47 | 81 | |||||||||||
Net
(loss) income
|
$ | (11 | ) | $ | 30 | $ | 78 | $ | 132 | |||||||
Per
common share data
|
||||||||||||||||
Basic
(loss) earnings per common share
|
$ | (0.15 | ) | $ | 0.40 | $ | 1.02 | $ | 1.71 | |||||||
Diluted
(loss) earnings per common share
|
$ | (0.15 | ) | $ | 0.40 | $ | 1.01 | $ | 1.70 | |||||||
Cash
dividends declared per common share
|
$ | 0.42 | $ | 0.41 | $ | 0.84 | $ | 0.82 | ||||||||
Weighted-average
number of common shares outstanding
|
||||||||||||||||
Basic
|
76.2 | 77.5 | 76.2 | 77.5 | ||||||||||||
Diluted
|
76.2 | 77.9 | 76.4 | 77.9 |
Other
|
Shares
held
|
|||||||||||||||||||||||||||
Common
stock
|
Premium
on
|
Earnings
|
comprehensive
|
in
treasury
|
||||||||||||||||||||||||
In
millions, except per share amount
|
Shares
|
Amount
|
common
stock
|
reinvested
|
loss
|
and
trust
|
Total
|
|||||||||||||||||||||
Balance
as of December 31, 2007
|
76.4 | $ | 390 | $ | 667 | $ | 680 | $ | (13 | ) | $ | (63 | ) | $ | 1,661 | |||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | 78 | - | - | 78 | |||||||||||||||||||||
Net
realized gains from hedging activities (net of tax of $1)
|
- | - | - | - | (1 | ) | - | (1 | ) | |||||||||||||||||||
Total
comprehensive income
|
77 | |||||||||||||||||||||||||||
Dividends
on common stock ($0.84 per share)
|
- | - | - | (64 | ) | - | - | (64 | ) | |||||||||||||||||||
Issuance
of treasury shares
|
0.3 | - | - | (3 | ) | - | 11 | 8 | ||||||||||||||||||||
Stock-based
compensation expense (net of tax of $1)
|
- | - | 4 | - | - | - | 4 | |||||||||||||||||||||
Balance
as of June 30, 2008
|
76.7 | $ | 390 | $ | 671 | $ | 691 | $ | (14 | ) | $ | (52 | ) | $ | 1,686 |
Six
months ended
|
||||||||
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Cash
flows from operating activities
|
||||||||
Net
income
|
$ | 78 | $ | 132 | ||||
Adjustments
to reconcile net income to net cash flow provided by operating
activities
|
||||||||
Depreciation
and amortization
|
74 | 71 | ||||||
Change
in energy marketing and risk management assets and
liabilities
|
51 | 75 | ||||||
Minority
interest
|
17 | 24 | ||||||
Deferred
income taxes
|
(34 | ) | (15 | ) | ||||
Changes
in certain assets and liabilities
|
||||||||
Gas,
unbilled and other receivables
|
152 | 194 | ||||||
Energy
marketing receivables and energy marketing trade payables,
net
|
140 | 84 | ||||||
Accrued
expenses
|
19 | 7 | ||||||
Gas
and trade payables
|
(14 | ) | (68 | ) | ||||
Inventories
|
(157 | ) | (11 | ) | ||||
Other
– net
|
33 | (4 | ) | |||||
Net
cash flow provided by operating activities
|
359 | 489 | ||||||
Cash
flows from investing activities
|
||||||||
Property,
plant and equipment expenditures
|
(166 | ) | (125 | ) | ||||
Net
cash flow used in investing activities
|
(166 | ) | (125 | ) | ||||
Cash
flows from financing activities
|
||||||||
Payments
of long-term debt
|
(161 | ) | (11 | ) | ||||
Net
payments of short-term debt
|
(67 | ) | (265 | ) | ||||
Dividends
paid on common shares
|
(64 | ) | (62 | ) | ||||
Distribution
to minority interest
|
(30 | ) | (23 | ) | ||||
Issuance
of treasury shares
|
8 | 13 | ||||||
Issuance
of variable rate gas facility revenue bonds
|
122 | - | ||||||
Purchase
of treasury shares
|
- | (20 | ) | |||||
Other
|
(1 | ) | 1 | |||||
Net
cash flow used in financing activities
|
(193 | ) | (367 | ) | ||||
Net
decrease in cash and cash equivalents
|
- | (3 | ) | |||||
Cash
and cash equivalents at beginning of period
|
19 | 17 | ||||||
Cash
and cash equivalents at end of period
|
$ | 19 | $ | 14 | ||||
Cash
paid during the period for
|
||||||||
Interest
|
$ | 59 | $ | 57 | ||||
Income
taxes
|
$ | 24 | $ | 55 |
Three
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Cash
flow hedges:
|
||||||||
Net derivative unrealized gains
(losses) arising during the period (net of taxes of $1 in 2008 and
$- in 2007)
|
$ | 2 | $ | (1 | ) | |||
Less
reclassification of realized gains included in income (net of taxes of $1 in 2008 and
$- in 2007)
|
(1 | ) | - | |||||
Pension
adjustments (net of taxes
of $- in 2007)
|
- | 1 | ||||||
Total
|
$ | 1 | $ | - |
Six
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Cash
flow hedges:
|
||||||||
Net
derivative unrealized gains arising during the period (net of taxes of $2 in 2008 and
$- in 2007)
|
$ | 4 | $ | - | ||||
Less
reclassification of realized gains included in income (net of taxes of $3 in 2008 and
$3 in 2007)
|
(5 | ) | (6 | ) | ||||
Pension
adjustments (net of taxes
of $- in 2007)
|
- | 1 | ||||||
Total
|
$ | (1 | ) | $ | (5 | ) |
Three
months ended
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Denominator
for basic earnings per share (1)
|
76.2 | 77.5 | ||||||
Assumed
exercise of restricted stock, restricted stock units and stock
options
|
- | 0.4 | ||||||
Denominator
for diluted earnings per share
|
76.2 | 77.9 | ||||||
(1) Daily
weighted-average shares outstanding.
|
||||||||
Six
months ended
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Denominator
for basic earnings per share (1)
|
76.2 | 77.5 | ||||||
Assumed
exercise of restricted stock, restricted stock units and stock
options
|
0.2 | 0.4 | ||||||
Denominator
for diluted earnings per share
|
76.4 | 77.9 | ||||||
(1) Daily
weighted-average shares outstanding.
|
June
30,
|
||||||||
In
millions
|
2008
|
2007
(1)
|
||||||
Three
months ended
|
1.7 | 0.0 | ||||||
Six
months ended
|
1.6 | 0.0 | ||||||
June
30,
|
Dec.
31,
|
June
30,
|
||||||||||
In
millions
|
2008
|
2007
|
2007
|
|||||||||
Regulatory
assets
|
||||||||||||
Unrecovered
PRP costs
|
$ | 253 | $ | 285 | $ | 263 | ||||||
Unrecovered
ERC
|
150 | 158 | 164 | |||||||||
Elizabethtown
Gas hedging program
|
35 | - | - | |||||||||
Unrecovered
postretirement benefit costs
|
11 | 12 | 12 | |||||||||
Unrecovered
seasonal rates
|
- | 11 | - | |||||||||
Unrecovered
PGA
|
22 | 23 | 5 | |||||||||
Other
|
28 | 24 | 24 | |||||||||
Total
regulatory assets
|
499 | 513 | 468 | |||||||||
Associated
assets
|
||||||||||||
Elizabethtown
Gas hedging program
|
- | 4 | 8 | |||||||||
Total
regulatory and associated assets
|
$ | 499 | $ | 517 | $ | 476 | ||||||
Regulatory
liabilities
|
||||||||||||
Accumulated
removal costs
|
$ | 175 | $ | 169 | $ | 166 | ||||||
Elizabethtown
Gas hedging program
|
- | 4 | 8 | |||||||||
Unamortized
investment tax credit
|
15 | 16 | 17 | |||||||||
Deferred
PGA
|
20 | 28 | 16 | |||||||||
Deferred
seasonal rates
|
9 | - | 9 | |||||||||
Regulatory
tax liability
|
19 | 20 | 21 | |||||||||
Other
|
20 | 19 | 17 | |||||||||
Total regulatory
liabilities
|
258 | 256 | 254 | |||||||||
Associated
liabilities
|
||||||||||||
PRP
costs
|
210 | 245 | 226 | |||||||||
ERC
|
97 | 96 | 91 | |||||||||
Elizabethtown
Gas hedging program
|
35 | - | - | |||||||||
Total
associated liabilities
|
342 | 341 | 317 | |||||||||
Total regulatory and associated
liabilities
|
$ | 600 | $ | 597 | $ | 571 |
As
of
|
||||||||||||
In
millions
|
June
30, 2008
|
Dec.
31, 2007
|
June
30, 2007
|
|||||||||
Right
to reclaim cash collateral
|
$ | 103 | $ | 3 | $ | 15 | ||||||
Obligations
to return cash collateral
|
(8 | ) | (10 | ) | (3 | ) | ||||||
Total
cash collateral
|
$ | 95 | $ | (7 | ) | $ | 12 |
Recurring
fair value measurements as of June 30, 2008
|
||||||||||||||||||||
In
millions
|
Quoted
prices in active markets (Level 1)
|
Significant
other observable inputs
(Level
2)
|
Significant
unobservable inputs
(Level
3)
|
Netting
of cash collateral
|
Total
carrying value
|
|||||||||||||||
Assets:
(1)
|
||||||||||||||||||||
Derivatives
at wholesale services
|
$ | 14 | $ | 52 | $ | - | $ | 24 | $ | 90 | ||||||||||
Derivatives
at distribution operations
|
2 | 33 | - | 2 | 37 | |||||||||||||||
Derivatives
at retail energy operations
|
12 | 1 | - | (8 | ) | 5 | ||||||||||||||
Total
assets
|
$ | 28 | $ | 86 | $ | - | $ | 18 | $ | 132 | ||||||||||
Liabilities:
(2)
|
||||||||||||||||||||
Derivatives
at wholesale services
|
$ | 77 | $ | 85 | $ | - | $ | (77 | ) | $ | 85 | |||||||||
Derivatives
at distribution operations
|
2 | 33 | - | - | 35 | |||||||||||||||
Derivatives
at retail energy operations
|
5 | - | - | - | 5 | |||||||||||||||
Total
liabilities
|
$ | 84 | $ | 118 | $ | - | $ | (77 | ) | $ | 125 | |||||||||
(1)
Includes $107 million of current assets and $25 million of long-term
assets reflected within our condensed consolidated balance
sheet.
(2) Includes
$111 million of current liabilities and $14 million of long-term
liabilities reflected within our condensed consolidated balance
sheet.
|
In
millions
|
Six
months ended June 30, 2008
|
|||
Balance
as of January 1, 2008
|
$ | (2 | ) | |
Realized
and unrealized gains
|
- | |||
Settlements
|
2 | |||
Transfers
in or out of level 3
|
- | |||
Balance
as of June 30, 2008
|
$ | - | ||
Change
in unrealized gains (losses) relating to instruments held as of June 30,
2008
|
$ | - |
·
|
forward
contracts
|
·
|
futures
contracts
|
·
|
options
contracts
|
·
|
financial
swaps
|
·
|
treasury
locks
|
·
|
weather
derivative contracts
|
·
|
storage
and transportation capacity
transactions
|
·
|
foreign
currency forward contracts
|
Three
months ended
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Service
cost
|
$ | 2 | $ | 2 | ||||
Interest
cost
|
6 | 6 | ||||||
Expected
return on plan assets
|
(8 | ) | (8 | ) | ||||
Amortization
of prior service cost
|
- | - | ||||||
Recognized
actuarial loss
|
1 | 1 | ||||||
Net
pension cost
|
$ | 1 | $ | 1 |
Six
months ended
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Service
cost
|
$ | 4 | $ | 4 | ||||
Interest
cost
|
13 | 12 | ||||||
Expected
return on plan assets
|
(16 | ) | (16 | ) | ||||
Amortization
of prior service cost
|
(1 | ) | (1 | ) | ||||
Recognized
actuarial loss
|
2 | 3 | ||||||
Net
pension cost
|
$ | 2 | $ | 2 |
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
In
millions
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost
|
$ | 1 | $ | - | $ | 1 | $ | - | ||||||||
Interest
cost
|
2 | 2 | 3 | 3 | ||||||||||||
Expected
return on plan assets
|
(2 | ) | (1 | ) | (3 | ) | (2 | ) | ||||||||
Amortization
of prior service cost
|
(1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||
Net
postretirement benefit cost
|
$ | - | $ | - | $ | (1 | ) | $ | (1 | ) |
Weighted
average
|
Outstanding
as of
|
|||||||||||||||||||||||
In
millions
|
Year(s)
due (1)
|
Interest
rate (1)
|
interest
rate (1)
|
June
30,
2008
|
Dec.
31,
2007
|
June
30,
2007
|
||||||||||||||||||
Short-term
debt
|
||||||||||||||||||||||||
Commercial
paper borrowings
|
2008
|
3.0 | % | 3.7 | % | $ | 465 | $ | 566 | $ | 250 | |||||||||||||
Sequent
lines of credit
|
2008
|
3.2 | 2.7 | 38 | 1 | - | ||||||||||||||||||
Pivotal
Utility line of credit
|
2008
|
2.5 | 3.1 | 9 | 12 | 11 | ||||||||||||||||||
Capital
leases
|
2008
|
4.9 | 4.9 | 1 | 1 | 1 | ||||||||||||||||||
Notes
payable to Trusts
|
-
|
- | - | - | - | 77 | ||||||||||||||||||
Total
short-term debt
|
3.0 | % | 3.6 | % | $ | 513 | $ | 580 | $ | 339 | ||||||||||||||
Long-term
debt - net of current portion
|
||||||||||||||||||||||||
Senior
notes
|
2011-2034 | 4.5-7.1 | % | 5.9 | % | $ | 1,275 | $ | 1,275 | $ | 1,150 | |||||||||||||
Medium-term
notes
|
2012-2027 | 6.6-9.1 | 7.8 | 196 | 196 | 196 | ||||||||||||||||||
Gas
facility revenue bonds
|
2022-2033 | 1.7-5.3 | 3.9 | 161 | 200 | 200 | ||||||||||||||||||
Capital
leases
|
2013
|
4.9 | 4.9 | 5 | 6 | 5 | ||||||||||||||||||
AGL
Capital interest rate swaps
|
-
|
- | - | - | (2 | ) | (6 | ) | ||||||||||||||||
Total
long-term debt
|
5.7 | % | 5.9 | % | $ | 1,637 | $ | 1,675 | $ | 1,545 | ||||||||||||||
Total
debt
|
5.1 | % | 5.6 | % | $ | 2,150 | $ | 2,255 | $ | 1,884 |
(1)
|
As
of June 30, 2008
|
Commitments
due before
Dec.
31,
|
||||||||||||
In
millions
|
Total
|
2008
|
2009
& thereafter
|
|||||||||
Standby
letters of credit and performance and surety bonds
|
$ | 56 | $ | 29 | $ | 27 |
Three
months ended
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Operating
revenues
|
$ | 444 | $ | 467 | ||||
Operating
expenses
|
438 | 389 | ||||||
Operating
income
|
6 | 78 | ||||||
Minority
interest
|
(1 | ) | (2 | ) | ||||
Other
income
|
3 | - | ||||||
EBIT
|
8 | 76 | ||||||
Interest
expense, net
|
26 | 27 | ||||||
(Loss)
earnings before income taxes
|
(18 | ) | 49 | |||||
Income
tax expense (benefit)
|
(7 | ) | 19 | |||||
Net
(loss) income
|
$ | (11 | ) | $ | 30 |
Six
months ended
June
30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Operating
revenues
|
$ | 1,456 | $ | 1,440 | ||||
Operating
expenses
|
1,262 | 1,146 | ||||||
Operating
income
|
194 | 294 | ||||||
Minority
interest
|
(17 | ) | (24 | ) | ||||
Other
income
|
4 | 1 | ||||||
EBIT
|
181 | 271 | ||||||
Interest
expense, net
|
56 | 58 | ||||||
Earnings
before income taxes
|
125 | 213 | ||||||
Income
taxes
|
47 | 81 | ||||||
Net
income
|
$ | 78 | $ | 132 |
In
millions
|
Identifiable
and total assets (1)
|
Goodwill
|
|||||||
Distribution
operations
|
$ | 4,847 | $ | 406 | |||||
Retail
energy operations
|
284 | - | |||||||
Wholesale
services
|
890 | - | |||||||
Energy
investments
|
287 | 14 | |||||||
Corporate and intercompany
eliminations (2)
|
(48 | ) | - | ||||||
Consolidated
AGL Resources
|
$ | 6,260 | $ | 420 |
(1)
|
Identifiable
assets are those assets used in each segment’s
operations.
|
(2)
|
Our
corporate segment’s assets consist primarily of cash and cash
equivalents
and property, plant and equipment and reflect the effect of
intercompany
eliminations.
|
In
millions
|
Distribution
operations
|
Retail
energy
operations
|
Wholesale
services
|
Energy
investments
|
Corporate
and intercompany eliminations (3)
|
Consolidated
AGL Resources
|
||||||||||||||||||
Operating
revenues from external parties
|
$ | 299 | $ | 177 | $ | (51 | ) | $ | 19 | $ | - | $ | 444 | |||||||||||
Intercompany
revenues (1)
|
46 | - | - | - | (46 | ) | - | |||||||||||||||||
Total
operating revenues
|
345 | 177 | (51 | ) | 19 | (46 | ) | 444 | ||||||||||||||||
Operating
expenses
|
||||||||||||||||||||||||
Cost
of gas
|
165 | 153 | 2 | 1 | (46 | ) | 275 | |||||||||||||||||
Operation
and maintenance
|
83 | 16 | 10 | 6 | (1 | ) | 114 | |||||||||||||||||
Depreciation
and amortization
|
31 | 1 | 2 | 2 | 2 | 38 | ||||||||||||||||||
Taxes
other than income taxes
|
9 | 1 | - | - | 1 | 11 | ||||||||||||||||||
Total
operating expenses
|
288 | 171 | 14 | 9 | (44 | ) | 438 | |||||||||||||||||
Operating
income (loss)
|
57 | 6 | (65 | ) | 10 | (2 | ) | 6 | ||||||||||||||||
Other
income
|
- | - | - | - | 3 | 3 | ||||||||||||||||||
Minority
interest
|
- | (1 | ) | - | - | - | (1 | ) | ||||||||||||||||
EBIT
|
$ | 57 | $ | 5 | $ | (65 | ) | $ | 10 | $ | 1 | $ | 8 | |||||||||||
Capital
expenditures for property, plant and equipment
|
$ | 64 | $ | 1 | $ | - | $ | 18 | $ | 3 | $ | 86 |
In
millions
|
Distribution
operations
|
Retail
energy
operations
|
Wholesale
services
|
Energy
investments
|
Corporate
and intercompany eliminations (3)
|
Consolidated
AGL Resources
|
||||||||||||||||||
Operating
revenues from external parties
|
$ | 268 | $ | 171 | $ | 18 | $ | 9 | $ | 1 | $ | 467 | ||||||||||||
Intercompany
revenues (1)
|
41 | - | - | - | (41 | ) | - | |||||||||||||||||
Total
operating revenues
|
309 | 171 | 18 | 9 | (40 | ) | 467 | |||||||||||||||||
Operating
expenses
|
||||||||||||||||||||||||
Cost
of gas
|
126 | 145 | 3 | - | (41 | ) | 233 | |||||||||||||||||
Operation
and maintenance
|
83 | 17 | 8 | 5 | (2 | ) | 111 | |||||||||||||||||
Depreciation
and amortization
|
30 | 2 | - | 1 | 3 | 36 | ||||||||||||||||||
Taxes
other than income taxes
|
7 | - | 1 | - | 1 | 9 | ||||||||||||||||||
Total
operating expenses
|
246 | 164 | 12 | 6 | (39 | ) | 389 | |||||||||||||||||
Operating
income (loss)
|
63 | 7 | 6 | 3 | (1 | ) | 78 | |||||||||||||||||
Other
income (expense)
|
1 | - | - | (1 | ) | - | - | |||||||||||||||||
Minority
interest
|
- | (2 | ) | - | - | - | (2 | ) | ||||||||||||||||
EBIT
|
$ | 64 | $ | 5 | $ | 6 | $ | 2 | $ | (1 | ) | $ | 76 | |||||||||||
Capital
expenditures for property, plant and equipment
|
$ | 52 | $ | 1 | $ | - | $ | 6 | $ | 13 | $ | 72 |
In
millions
|
Distribution
operations
|
Retail energy operations
|
Wholesale
services
|
Energy investments
|
Corporate
and intercompany eliminations (3)
|
Consolidated
AGL Resources
|
||||||||||||||||||
Operating
revenues from external parties
|
$ | 909 | $ | 552 | $ | (34 | ) | $ | 30 | $ | (1 | ) | $ | 1,456 | ||||||||||
Intercompany
revenues (1)
|
112 | - | - | - | (112 | ) | - | |||||||||||||||||
Total
operating revenues
|
1,021 | 552 | (34 | ) | 30 | (113 | ) | 1,456 | ||||||||||||||||
Operating
expenses
|
||||||||||||||||||||||||
Cost
of gas
|
593 | 446 | 4 | 1 | (112 | ) | 932 | |||||||||||||||||
Operation
and maintenance
|
169 | 35 | 22 | 10 | (3 | ) | 233 | |||||||||||||||||
Depreciation
and amortization
|
62 | 2 | 3 | 3 | 4 | 74 | ||||||||||||||||||
Taxes
other than income taxes
|
18 | 1 | 1 | 1 | 2 | 23 | ||||||||||||||||||
Total
operating expenses
|
842 | 484 | 30 | 15 | (109 | ) | 1,262 | |||||||||||||||||
Operating
income (loss)
|
179 | 68 | (64 | ) | 15 | (4 | ) | 194 | ||||||||||||||||
Other
income
|
1 | - | - | - | 3 | 4 | ||||||||||||||||||
Minority
interest
|
- | (17 | ) | - | - | - | (17 | ) | ||||||||||||||||
EBIT
|
$ | 180 | $ | 51 | $ | (64 | ) | $ | 15 | $ | (1 | ) | $ | 181 | ||||||||||
Identifiable
and total assets (2)
|
$ | 4,805 | $ | 253 | $ | 1,361 | $ | 310 | $ | (138 | ) | $ | 6,591 | |||||||||||
Goodwill
|
$ | 406 | $ | - | $ | - | $ | 14 | $ | - | $ | 420 | ||||||||||||
Capital
expenditures for property, plant and equipment
|
$ | 123 | $ | 7 | $ | - | $ | 29 | $ | 7 | $ | 166 |
In
millions
|
Distribution
operations
|
Retail energy operations
|
Wholesale
services
|
Energy investments
|
Corporate
and intercompany eliminations (3)
|
Consolidated
AGL Resources
|
||||||||||||||||||
Operating
revenues from external parties
|
$ | 860 | $ | 525 | $ | 37 | $ | 18 | $ | - | $ | 1,440 | ||||||||||||
Intercompany
revenues (1)
|
100 | - | - | - | (100 | ) | - | |||||||||||||||||
Total
operating revenues
|
960 | 525 | 37 | 18 | (100 | ) | 1,440 | |||||||||||||||||
Operating
expenses
|
||||||||||||||||||||||||
Cost
of gas
|
529 | 396 | 3 | - | (100 | ) | 828 | |||||||||||||||||
Operation
and maintenance
|
171 | 34 | 17 | 10 | (5 | ) | 227 | |||||||||||||||||
Depreciation
and amortization
|
59 | 3 | 1 | 2 | 6 | 71 | ||||||||||||||||||
Taxes
other than income taxes
|
16 | - | 1 | 1 | 2 | 20 | ||||||||||||||||||
Total
operating expenses
|
775 | 433 | 22 | 13 | (97 | ) | 1,146 | |||||||||||||||||
Operating
income (loss)
|
185 | 92 | 15 | 5 | (3 | ) | 294 | |||||||||||||||||
Other
income (expense)
|
2 | - | - | (1 | ) | - | 1 | |||||||||||||||||
Minority
interest
|
- | (24 | ) | - | - | - | (24 | ) | ||||||||||||||||
EBIT
|
$ | 187 | $ | 68 | $ | 15 | $ | 4 | $ | (3 | ) | $ | 271 | |||||||||||
Identifiable
and total assets (2)
|
$ | 4,694 | $ | 221 | $ | 776 | $ | 272 | $ | (178 | ) | $ | 5,785 | |||||||||||
Goodwill
|
$ | 406 | $ | - | $ | - | $ | 14 | $ | - | $ | 420 | ||||||||||||
Capital
expenditures for property, plant and equipment
|
$ | 93 | $ | 1 | $ | 1 | $ | 10 | $ | 20 | $ | 125 |
(1)
|
Intercompany
revenues – Wholesale services records its energy marketing and risk
management revenue on a net basis. Wholesale services’ total operating
revenues include intercompany revenues of $303 million and $171 million
for the three months ended June 30, 2008 and 2007, respectively; and $517
million and $353 million for the six months ended June 30, 2008 and 2007,
respectively.
|
(2)
|
Identifiable
assets are those used in each segment’s
operations.
|
(3)
|
Our
corporate segment’s assets consist primarily of cash and cash equivalents,
property, plant and equipment and reflect the effect of intercompany
eliminations.
|
·
|
Atlanta
Gas Light in Georgia
|
·
|
Chattanooga
Gas in Tennessee
|
·
|
Elizabethtown
Gas in New Jersey
|
·
|
Elkton
Gas in Maryland
|
·
|
Florida
City Gas in Florida
|
·
|
Virginia
Natural Gas in Virginia
|
%
of shared
|
||||
Expiration
date
|
profits
or annual fee
|
|||
Florida
City Gas
|
Oct 2008
|
50%
|
||
Virginia
Natural Gas
|
Mar
2009
|
(A)
|
||
Elkton
Gas
|
Mar
2009
|
(B)
|
||
Chattanooga
Gas
|
Mar
2011
|
50%
(C)
|
||
Elizabethtown
Gas
|
Mar
2011
|
(A)
(C)
|
||
Atlanta
Gas Light
|
Mar
2012
|
up
to 60% (C)
|
(A)
|
Shared
on a tiered structure.
|
(B)
|
Annual
fixed fee to customers is $10,800.
|
(C)
|
Includes
aggregate annual minimum payments of $12 million for Chattanooga Gas,
Elizabethtown Gas and Atlanta Gas
Light.
|
Withdrawal
schedule
(in NYMEX
equivalent contract units of 10,000 MMBtu’s)
|
||||||||||||
Salt dome (WACOG
$9.58)
|
Reservoir (WACOG
$9.78)
|
Expected
operating revenues
(in
millions)
|
||||||||||
2008
|
||||||||||||
Third
quarter
|
57 | 1,259 | $ | 28 | ||||||||
Fourth
quarter
|
359 | 451 | 27 | |||||||||
2009
|
||||||||||||
First
quarter
|
67 | 395 | 16 | |||||||||
Total
|
483 | 2,105 | $ | 71 |
Three
months ended June 30,
|
Six
months ended June 30,
|
|||||||||||||||||||||||
In
millions, except per share data
|
2008
|
2007
|
Change
|
2008
|
2007
|
Change
|
||||||||||||||||||
Operating
revenues
|
$ | 444 | $ | 467 | $ | (23 | ) | $ | 1,456 | $ | 1,440 | $ | 16 | |||||||||||
Cost
of gas
|
275 | 233 | 42 | 932 | 828 | 104 | ||||||||||||||||||
Operating
margin (1)
|
169 | 234 | (65 | ) | 524 | 612 | (88 | ) | ||||||||||||||||
Operating
expenses
|
163 | 156 | 7 | 330 | 318 | 12 | ||||||||||||||||||
Operating
income
|
6 | 78 | (72 | ) | 194 | 294 | (100 | ) | ||||||||||||||||
Other
income
|
3 | - | 3 | 4 | 1 | 3 | ||||||||||||||||||
Minority
interest
|
(1 | ) | (2 | ) | 1 | (17 | ) | (24 | ) | 7 | ||||||||||||||
EBIT
(1)
|
8 | 76 | (68 | ) | 181 | 271 | (90 | ) | ||||||||||||||||
Interest
expense, net
|
26 | 27 | (1 | ) | 56 | 58 | (2 | ) | ||||||||||||||||
(Loss)
earnings before income taxes
|
(18 | ) | 49 | (67 | ) | 125 | 213 | (88 | ) | |||||||||||||||
Income
tax expense (benefit)
|
(7 | ) | 19 | (26 | ) | 47 | 81 | (34 | ) | |||||||||||||||
Net
(loss) income
|
$ | (11 | ) | $ | 30 | $ | (41 | ) | $ | 78 | $ | 132 | $ | (54 | ) | |||||||||
Basic
(loss) earnings per common share
|
$ | (0.15 | ) | $ | 0.40 | $ | (0.55 | ) | $ | 1.02 | $ | 1.71 | $ | (0.69 | ) | |||||||||
Diluted
(loss) earnings per common share
|
$ | (0.15 | ) | $ | 0.40 | $ | (0.55 | ) | $ | 1.01 | $ | 1.70 | $ | (0.69 | ) | |||||||||
Weighted-average
number of common shares outstanding
|
||||||||||||||||||||||||
Basic
|
76.2 | 77.5 | (1.3 | ) | 76.2 | 77.5 | (1.3 | ) | ||||||||||||||||
Diluted
|
76.2 | 77.9 | (1.7 | ) | 76.4 | 77.9 | (1.5 | ) |
Weather | ||||||||||||||||||||||||||||||||||||||||
Heating
degree days (1)
|
2008
vs.
|
2008 vs.
|
2008
vs.
|
2008
vs.
|
||||||||||||||||||||||||||||||||||||
normal
|
2007
|
|
normal
|
2007
|
||||||||||||||||||||||||||||||||||||
Three months ended June 30, |
colder
|
colder
|
Six months ended June 30, |
colder
|
colder
|
|||||||||||||||||||||||||||||||||||
Normal
|
2008
|
2007
|
(warmer)
|
(warmer)
|
Normal
|
2008
|
2007
|
(warmer)
|
(warmer)
|
|||||||||||||||||||||||||||||||
Florida
|
17
|
18
|
17
|
6 | % | 6 | % |
336
|
215
|
281
|
(36 | )% | (23 | )% | ||||||||||||||||||||||||||
Georgia
|
144
|
144
|
177
|
- | (19 | )% |
1,580
|
1,654
|
1,489
|
5 | % |
11
|
% | |||||||||||||||||||||||||||
Maryland
|
504
|
471
|
537
|
(7 | )% | (12 | )% |
2,995
|
2,810
|
3,040
|
(6 | )% | (8 | )% | ||||||||||||||||||||||||||
New
Jersey
|
498
|
475
|
549
|
(5 | )% | (13 | )% |
3,002
|
2,897
|
3,143
|
(3
|
)% | (8 | )% | ||||||||||||||||||||||||||
Tennessee
|
167
|
167
|
240
|
- | (30 | )% |
1,799
|
1,888
|
1,753
|
5 | % | 8 | % | |||||||||||||||||||||||||||
Virginia
|
280
|
279
|
348
|
- | (20 | )% |
2,047
|
1,880
|
2,090
|
(8 | )% | (10 | )% |
(1) Obtained
from weather stations relevant to our service areas at the National
Oceanic and Atmospheric Administration, National
Climatic
Data Center. Normal represents ten-year averages from July 1999 through
June 2008.
|
Customers
|
Three
months ended June 30,
|
Six months
ended June 30,
|
||||||||||||||||||||||
2008
|
2007
|
%
change
|
2008
|
2007
|
%
change
|
|||||||||||||||||||
Distribution
Operations
|
||||||||||||||||||||||||
Average
end-use customers (in
thousands)
|
||||||||||||||||||||||||
Atlanta
Gas Light
|
1,574
|
1,575
|
(0.1 | )% |
1,578
|
1,576
|
0.1 | % | ||||||||||||||||
Chattanooga
Gas
|
62
|
62
|
-
|
62
|
62
|
-
|
||||||||||||||||||
Elizabethtown
Gas
|
273
|
272
|
0.4 | % |
274
|
272
|
0.7 | % | ||||||||||||||||
Elkton
Gas
|
6
|
6
|
-
|
6
|
6
|
-
|
||||||||||||||||||
Florida
City Gas
|
104
|
104
|
- |
104
|
104
|
- | ||||||||||||||||||
Virginia
Natural Gas
|
272
|
270
|
0.7 | % |
273
|
271
|
0.7 | % | ||||||||||||||||
Total
|
2,291
|
2,289
|
0.1 | % |
2,297
|
2,291
|
0.3 | % | ||||||||||||||||
Operation
and maintenance expenses per customer
|
$ |
36
|
$ |
36
|
- | $ |
74
|
$ |
75
|
(1 | )% | |||||||||||||
EBIT
per customer
|
$ |
25
|
$ |
28
|
(11 | )% | $ |
78
|
$ |
82
|
(5 | )% | ||||||||||||
Retail Energy
Operations
|
||||||||||||||||||||||||
Average
customers (in
thousands)
|
535
|
546
|
(2 | )% |
535
|
547
|
(2 | )% | ||||||||||||||||
Market
share in Georgia
|
35 | % | 35 | % |
-
|
35 | % | 35 | % |
-
|
Throughput
Volumes
In
billion cubic feet (Bcf)
|
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||||||||||||
2008
|
2007
|
%
change
|
2008
|
2007
|
%
change
|
|||||||||||||||||||
Distribution Operations -
firm
|
|
|
|
|
||||||||||||||||||||
Firm | 29.0 | 32.7 | (11 | )% | 126.8 | 128.8 | (2 | )% | ||||||||||||||||
Interruptible | 24.6 | 25.6 | (4 | )% | 54.0 | 55.8 | (3 | )% | ||||||||||||||||
Total | 53.6 | 58.3 | (8 | )% | 180.8 | 184.6 | (2 | )% | ||||||||||||||||
Retail Energy
Operations
|
||||||||||||||||||||||||
Georgia
firm
|
4.9
|
5.6
|
(13 | )% |
23.5
|
23.7
|
(1 | )% | ||||||||||||||||
Ohio
and Florida
|
0.6
|
0.6
|
-
|
3.0
|
2.8
|
7 | % | |||||||||||||||||
Wholesale
Services
|
||||||||||||||||||||||||
Daily
physical sales (Bcf / day)
|
2.4
|
2.0
|
20
|
% |
2.5
|
2.2
|
14 | % |
In
millions
|
Operating
revenues
|
Operating
margin (1)
|
Operating
expenses
|
EBIT
(1)
|
||||||||||||
2008
|
||||||||||||||||
Distribution
operations
|
$ | 345 | $ | 180 | $ | 123 | $ | 57 | ||||||||
Retail
energy operations
|
177 | 24 | 18 | 5 | ||||||||||||
Wholesale
services
|
(51 | ) | (53 | ) | 12 | (65 | ) | |||||||||
Energy
investments
|
19 | 18 | 8 | 10 | ||||||||||||
Corporate
(2)
|
(46 | ) | - | 2 | 1 | |||||||||||
Consolidated
|
$ | 444 | $ | 169 | $ | 163 | $ | 8 |
In
millions
|
Operating
revenues
|
Operating
margin (1)
|
Operating
expenses
|
EBIT
(1)
|
||||||||||||
2007
|
||||||||||||||||
Distribution
operations
|
$ | 309 | $ | 183 | $ | 120 | $ | 64 | ||||||||
Retail
energy operations
|
171 | 26 | 19 | 5 | ||||||||||||
Wholesale
services
|
18 | 15 | 9 | 6 | ||||||||||||
Energy
investments
|
9 | 9 | 6 | 2 | ||||||||||||
Corporate
(2)
|
(40 | ) | 1 | 2 | (1 | ) | ||||||||||
Consolidated
|
$ | 467 | $ | 234 | $ | 156 | $ | 76 |
(1)
|
These
are non-GAAP measures. A reconciliation of operating margin and EBIT to
our operating income, (loss) earnings before income taxes and net income
is located in “Results of Operations”
herein.
|
(2)
|
Includes
intercompany eliminations.
|
In
millions
|
||||
Operating
margin for second quarter of 2007
|
$ | 183 | ||
Revision
in estimated unbilled natural gas volumes at Elizabethtown
Gas
|
(3 | ) | ||
Reduced
customer growth and lower natural gas storage carrying costs at Atlanta
Gas Light
|
(2 | ) | ||
Higher
PRP revenues at Atlanta Gas Light
|
2 | |||
Operating
margin for second quarter of 2008
|
$ | 180 |
In
millions
|
||||
Operating
margin for second quarter of 2007
|
$ | 26 | ||
Warmer
weather
|
(2 | ) | ||
Operating
margin for second quarter of 2008
|
$ | 24 |
In
millions
|
2008
|
2007
|
||||||
Commercial
activity
|
$ | 2 | $ | (1 | ) | |||
(Loss)
gain on storage hedges
|
(48 | ) | 16 | |||||
(Loss)
gain on transportation hedges
|
(7 | ) | 3 | |||||
Inventory
LOCOM
|
- | (3 | ) | |||||
Operating
margin
|
$ | (53 | ) | $ | 15 |
In
millions
|
|||||
Operating
expenses for second quarter of 2007
|
$ | 156 | |||
Increased
bad debt expenses at distribution operations due to higher natural gas
prices
|
2 | ||||
Increased
payroll and other operating costs at wholesale services due to continued
growth
|
3 | ||||
Increased
bad debt expenses at retail energy operations due to higher natural gas
prices
|
1 | ||||
Decreased operating costs at retail energy operations due to slightly lower compensation and marketing costs | (2 | ) | |||
Increased
depreciation expenses at distribution operations due to PP&E placed
into service
|
2 | ||||
Other
|
1 | ||||
Operating
expenses for second quarter of 2008
|
$ | 163 |
Three
months ended June 30,
|
||||||||||||
In
millions
|
2008
|
2007
|
Change
|
|||||||||
Average
debt outstanding (1)
|
$ | 1,853 | $ | 1,725 | $ | 128 | ||||||
Average
rate
|
5.6 | % | 6.3 | % | (0.7 | )% |
In
millions
|
Operating
revenues
|
Operating
margin (1)
|
Operating
expenses
|
EBIT
(1)
|
||||||||||||
2008
|
||||||||||||||||
Distribution
operations
|
$ | 1,021 | $ | 428 | $ | 249 | $ | 180 | ||||||||
Retail
energy operations
|
552 | 106 | 38 | 51 | ||||||||||||
Wholesale
services
|
(34 | ) | (38 | ) | 26 | (64 | ) | |||||||||
Energy
investments
|
30 | 29 | 14 | 15 | ||||||||||||
Corporate
(2)
|
(113 | ) | (1 | ) | 3 | (1 | ) | |||||||||
Consolidated
|
$ | 1,456 | $ | 524 | $ | 330 | $ | 181 |
In
millions
|
Operating
revenues
|
Operating
margin (1)
|
Operating
expenses
|
EBIT
(1)
|
||||||||||||
2007
|
||||||||||||||||
Distribution
operations
|
$ | 960 | $ | 431 | $ | 246 | $ | 187 | ||||||||
Retail
energy operations
|
525 | 129 | 37 | 68 | ||||||||||||
Wholesale
services
|
37 | 34 | 19 | 15 | ||||||||||||
Energy
investments
|
18 | 18 | 13 | 4 | ||||||||||||
Corporate
(2)
|
(100 | ) | - | 3 | (3 | ) | ||||||||||
Consolidated
|
$ | 1,440 | $ | 612 | $ | 318 | $ | 271 |
|
(1) These
are non-GAAP measures. A reconciliation of operating margin and EBIT to
our
operating
income, earnings before income taxes and net income is located in “Results
of Operations” herein.
|
|
(2) Includes
intercompany eliminations.
|
In
millions
|
||||
Operating
margin for the first six months of 2007
|
$ | 431 | ||
Revision
in estimated unbilled natural gas volumes at Elizabethtown
Gas
|
(3 | ) | ||
Lower
natural gas storage carrying costs at Atlanta Gas Light
|
(2 | ) | ||
Higher
PRP revenues at Atlanta Gas Light
|
2 | |||
Operating
margin for the first six months of 2008
|
$ | 428 |
In
millions
|
||||
Operating
margin for the first six months of 2007
|
$ | 129 | ||
Lower
contributions from the management of storage and transportation assets
largely due to rising commodity prices in 2008
|
(16 | ) | ||
Retail
pricing settlement with Georgia Commission
|
(3 | ) | ||
Ohio
and Florida margins
|
(2 | ) | ||
Colder
weather
|
5 | |||
Loss
on weather derivatives
|
(7 | ) | ||
Operating
margin for the first six months of 2008
|
$ | 106 |
In
millions
|
2008
|
2007
|
||||||
Commercial
activity
|
$ | 32 | $ | 24 | ||||
(Loss)
gain on storage hedges
|
(59 | ) | 10 | |||||
(Loss)
gain on transportation hedges
|
(11 | ) | 3 | |||||
Inventory
LOCOM
|
- | (3 | ) | |||||
Operating
margin
|
$ | (38 | ) | $ | 34 |
In
millions
|
|||||
Operating
expenses for the first six months of 2007
|
$ | 318 | |||
Increased
payroll and other operating costs at wholesale services due to continued
growth
|
7 | ||||
Increased
bad debt expenses at distribution operations due to higher natural gas
prices
|
2 | ||||
Increased
bad debt expenses at retail energy operations due to higher natural gas
prices
|
2 | ||||
Decreased
operating costs at retail energy operations due to lower compensation and
other costs
|
(2 | ) | |||
Increased
depreciation expenses at distribution operations due to PP&E placed
into service
|
4 | ||||
Other
|
(1 | ) | |||
Operating
expenses for the first six months of 2008
|
$ | 330 |
Six
months ended June 30,
|
||||||||||||
In
millions
|
2008
|
2007
|
Change
|
|||||||||
Average
debt outstanding (1)
|
$ | 1,933 | $ | 1,859 | $ | 74 | ||||||
Average
rate
|
5.8 | % | 6.2 | % | (0.4 | )% |
Six
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Net
cash provided by (used in):
|
||||||||
Operating
activities
|
$ | 359 | $ | 489 | ||||
Investing
activities
|
(166 | ) | (125 | ) | ||||
Financing
activities
|
(193 | ) | (367 | ) | ||||
Net
decrease in cash and cash equivalents
|
$ | - | $ | (3 | ) |
S&P
|
Moody’s
|
Fitch
|
|
Corporate
rating
|
A-
|
||
Commercial
paper
|
A-2
|
P-2
|
F-2
|
Senior
unsecured
|
BBB+
|
Baa1
|
A-
|
Ratings
outlook
|
Stable
|
Stable
|
Stable
|
·
|
the
maintenance of a ratio of total debt to total capitalization of no greater
than 70%; however, our goal is to maintain this ratio at levels between
50% and 60%. As of June 30, 2008, our ratio of total debt of 56% to total
capitalization was within our targeted and required
ranges
|
·
|
the
continued accuracy of representations and warranties contained in the
agreement
|
In
millions
|
June
30, 2008
|
Dec.
31, 2007
|
June
30, 2007
|
||||||||||||||||||||||
Short-term
debt
|
$ | 513 | 13 | % | $ | 580 | 15 | % | $ | 339 | 10 | % | |||||||||||||
Long-term
debt (1)
|
1,637 | 43 | 1,675 | 43 | 1,545 | 43 | |||||||||||||||||||
Total
debt
|
2,150 | 56 | 2,255 | 58 | 1,884 | 53 | |||||||||||||||||||
Common
shareholders’ equity
|
1,686 | 44 | 1,661 | 42 | 1,672 | 47 | |||||||||||||||||||
Total
capitalization
|
$ | 3,836 | 100 | % | $ | 3,916 | 100 | % | $ | 3,556 | 100 | % |
(1)
|
Net
of interest rate swaps, which were terminated in March
2008.
|
2009
&
|
2011
&
|
2013
&
|
||||||||||||||||||
In
millions
|
Total
|
2008
|
2010
|
2012
|
thereafter
|
|||||||||||||||
Recorded
contractual obligations:
|
||||||||||||||||||||
Long-term
debt
|
$ | 1,637 | $ | - | $ | 1 | $ | 319 | $ | 1,317 | ||||||||||
Short-term
debt
|
513 | 513 | - | - | - | |||||||||||||||
PRP costs
(1)
|
210 | 19 | 113 | 60 | 18 | |||||||||||||||
ERC (1)
|
107 | 6 | 36 | 36 | 29 | |||||||||||||||
Total
|
$ | 2,467 | $ | 538 | $ | 150 | $ | 415 | $ | 1,364 |
(1)
|
Includes
charges recoverable through rate rider
mechanisms.
|
2009
&
|
2011
&
|
2013
&
|
||||||||||||||||||
In
millions
|
Total
|
2008
|
2010
|
2012
|
thereafter
|
|||||||||||||||
Unrecorded
contractual obligations and commitments (1):
|
||||||||||||||||||||
Pipeline charges, storage
capacity and gas supply (2)
|
$ | 1,780 | $ | 344 | $ | 677 | $ | 387 | $ | 372 | ||||||||||
Interest
charges
(3)
|
1,055 | 48 | 192 | 149 | 666 | |||||||||||||||
Operating
leases
|
146 | 15 | 54 | 32 | 45 | |||||||||||||||
Standby
letters of credit, performance / surety bonds
|
56 | 29 | 27 | - | - | |||||||||||||||
Asset management
agreements (4)
|
46 | 6 | 24 | 16 | - | |||||||||||||||
Total
|
$ | 3,083 | $ | 442 | $ | 974 | $ | 584 | $ | 1,083 |
(1)
|
In
accordance with generally accepted accounting principles, these items are
not reflected in our condensed consolidated balance
sheet.
|
(2)
|
Charges
recoverable through a PGA mechanism or alternatively billed to Marketers.
Also includes SouthStar’s gas commodity purchase commitments of 1.4 Bcf at
floating gas prices calculated using forward natural gas prices as of June
30, 2008, and valued at $185 million. Additionally, includes amounts
associated with a subsidiary of NUI which entered into two long-term
agreements for the firm transportation and storage of natural gas during
2003 with annual aggregate demand charges of approximately $5 million. As
a result of our acquisition of NUI and in accordance with SFAS 141, we
valued the contracts at fair value and established a long-term liability
of $38 million for the excess liability. This excess liability is being
amortized to our condensed consolidated statements of income over the
remaining lives of the contracts of $2 million annually through November
2023 and $1 million annually from November 2023 to November
2028.
|
(3)
|
Floating
rate debt is based on the interest rate as of June 30, 2008, and the
maturity of the underlying debt instrument. As of June 30, 2008, we have
$35 million of accrued interest on our condensed consolidated balance
sheet that will be paid in 2008.
|
(4)
|
Represent
fixed-fee or guaranteed minimum payments for Sequent’s asset management
agreements between its affiliated
utilities.
|
·
|
Pipeline
Replacement Program
|
·
|
Environmental
Remediation Liabilities
|
·
|
Derivatives
and Hedging Activities
|
·
|
Allowance
for Uncollectible Accounts and other
Contingencies
|
·
|
Pension
and Other Postretirement Plans
|
·
|
Income
Taxes
|
Three
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Net
fair value of contracts outstanding at beginning of
period
|
$ | 6 | $ | 8 | ||||
Contracts
realized or otherwise settled during period
|
9 | (8 | ) | |||||
Change
in net fair value of contracts
|
(7 | ) | 3 | |||||
Net
fair value of contracts outstanding at end of period
|
8 | 3 | ||||||
Netting
of cash collateral
|
(8 | ) | 2 | |||||
Cash
collateral and net fair value of contracts outstanding at end of
period
|
$ | - | $ | 5 |
Six
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Net
fair value of contracts outstanding at beginning of period
|
$ | 10 | $ | 17 | ||||
Contracts
realized or otherwise settled during period
|
(4 | ) | (18 | ) | ||||
Change
in net fair value of contracts
|
2 | 4 | ||||||
Net
fair value of contracts outstanding at end of period
|
8 | 3 | ||||||
Netting
of cash collateral
|
(8 | ) | 2 | |||||
Cash
collateral and net fair value of contracts outstanding at end of
period
|
$ | - | $ | 5 |
In
millions
|
Prices
actively quoted (1)
|
Prices
provided by other external sources
|
||||||
Mature through 2008 | $ | 4 | $ | - | ||||
Mature through 2009 | 3 | 1 | ||||||
Total
net fair value
|
$ | 7 | $ | 1 |
(1)
|
Valued
using NYMEX futures prices.
|
Average
values at June 30,
|
||||||||
In millions
|
2008
|
2007
|
||||||
Asset (1)
|
$ | 7 | $ | 8 | ||||
Liability
(1)
|
1 | 3 |
Cash
collateral and fair values at
|
||||||||||||
In
millions
|
June
30,
2008
|
Dec.
31,
2007
|
June
30,
2007
|
|||||||||
Asset
|
$ | 5 | $ | 12 | $ | 7 | ||||||
Liability
|
5 | 2 | 2 |
Average
values at June 30,
|
||||||||
In millions
|
2008
|
2007
|
||||||
Asset (1)
|
$ | 48 | $ | 42 | ||||
Liability
(1)
|
78 | 22 |
Cash
collateral and fair values at
|
||||||||||||
In
millions
|
June
30,
2008
|
Dec.
31,
2007
|
June
30,
2007
|
|||||||||
Asset
|
$ | 90 | $ | 61 | $ | 60 | ||||||
Liability
|
85 | 13 | 12 |
Three
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Net
fair value of contracts outstanding at beginning of period
|
$ | (18 | ) | $ | 4 | |||
Contracts
realized or otherwise settled during period
|
5 | (6 | ) | |||||
Change
in net fair value of contracts
|
(83 | ) | 53 | |||||
Net
fair value of contracts outstanding at end of period
|
(96 | ) | 51 | |||||
Netting
of cash collateral
|
101 | (3 | ) | |||||
Cash
collateral and net fair value of contracts outstanding at end of
period
|
$ | 5 | $ | 48 |
Six
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Net
fair value of contracts outstanding at beginning of period
|
$ | 57 | $ | 119 | ||||
Contracts
realized or otherwise settled during period
|
(45 | ) | (98 | ) | ||||
Change
in net fair value of contracts
|
(108 | ) | 30 | |||||
Net
fair value of contracts outstanding at end of
period
|
(96 | ) | 51 | |||||
Netting
of cash collateral
|
101 | (3 | ) | |||||
Cash
collateral and net fair value of contracts outstanding at end of
period
|
$ | 5 | $ | 48 |
In
millions
|
Prices
actively quoted (1)
|
Prices
provided by other external sources (2)
|
||||||
Mature
through 2008
|
$ | (77 | ) | $ | (30 | ) | ||
Mature
2009 – 2010
|
15 | (3 | ) | |||||
Mature
2011 – 2013
|
(1 | ) | - | |||||
Total
net fair value
|
$ | (63 | ) | $ | (33 | ) |
(1)
|
Valued
using NYMEX futures prices and other quoted
sources.
|
(2)
|
Valued
using basis transactions that represent the cost to transport the
commodity from a NYMEX delivery point to the contract delivery point.
These transactions are based on quotes obtained either through electronic
trading platforms or directly from
brokers.
|
Three
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Period
end
|
$ | 2.3 | $ | 1.6 | ||||
Average
|
1.8 | 1.5 | ||||||
High
|
2.5 | 1.8 | ||||||
Low
|
1.2 | 1.3 |
Six
months ended June 30,
|
||||||||
In
millions
|
2008
|
2007
|
||||||
Period
end
|
$ | 2.3 | $ | 1.6 | ||||
Average
|
1.6 | 1.4 | ||||||
High
|
2.9 | 2.1 | ||||||
Low
|
0.8 | 0.9 |
Gross
receivables
|
Gross
payables
|
|||||||||||||||||||||||
June
30,
|
Dec.
31,
|
June
30,
|
June
30,
|
Dec.
31,
|
June
30,
|
|||||||||||||||||||
In
millions
|
2008
|
2007
|
2007
|
2008
|
2007
|
2007
|
||||||||||||||||||
Netting
agreements in place:
|
||||||||||||||||||||||||
Counterparty
is investment grade
|
$ | 590 | $ | 437 | $ | 302 | $ | 551 | $ | 356 | $ | 306 | ||||||||||||
Counterparty
is non-investment grade
|
37 | 24 | 54 | 40 | 18 | 29 | ||||||||||||||||||
Counterparty
has no external rating
|
177 | 134 | 65 | 334 | 204 | 175 | ||||||||||||||||||
No
netting agreements in place:
|
||||||||||||||||||||||||
Counterparty
is investment grade
|
3 | 3 | - | 2 | - | - | ||||||||||||||||||
Amount
recorded on balance sheet
|
$ | 807 | $ | 598 | $ | 421 | $ | 927 | $ | 578 | $ | 510 |
Period
|
Total
number of shares purchased (1) (2) (3)
|
Average
price paid per share
|
Total
number of shares purchased as part of publicly announced plans or programs
(3)
|
Maximum
number of shares that may yet be purchased under the publicly announced
plans or programs (3)
|
||||||||||||
April
2008
|
1,073 | $ | 34.91 | - | 4,950,951 | |||||||||||
May
2008
|
- | - | - | 4,950,951 | ||||||||||||
June
2008
|
235 | 35.70 | - | 4,950,951 | ||||||||||||
Total
second quarter
|
1,308 | $ | 35.05 | - |
(1)
|
The
total number of shares purchased includes an aggregate of 1,308 shares
surrendered to us to satisfy tax withholding obligation in connection with
the vesting of shares of restricted stock and the exercise of stock
options.
|
(2)
|
On
March 20, 2001, our Board of Directors approved the purchase of up to
600,000 shares of our common stock in the open market to be used for
issuances under the Officer Incentive Plan (Officer Plan). We did not
purchase any shares for such purposes in the second quarter of 2008. As of
June 30, 2008, we had purchased a total 307,567 of the 600,000 shares
authorized for purchase, leaving 292,433 shares available for purchase
under this program.
|
(3)
|
On
February 3, 2006, we announced that our Board of Directors had authorized
a plan to repurchase up to a total of 8 million shares of our common
stock, excluding the shares remaining available for purchase in connection
with the Officer Plan as described in note (2) above, over a five-year
period.
|
For
|
Withheld
|
|||||||
Sandra
N. Bane
|
67,530,144 | 513,974 | ||||||
Arthur
E. Johnson
|
66,308,117 | 1,736,001 | ||||||
James
A. Rubright
|
66,142,663 | 1,901,455 | ||||||
John
W. Somerhalder II
|
65,484,073 | 2,560,045 | ||||||
Bettina
M. Whyte
|
65,587,873 | 2,456,245 |
For
|
67,702,841 | |||
Against
|
156,950 | |||
Abstain
|
184,327 | |||
Broker
Non-Votes
|
- |
3.1
|
Amended
and Restated Articles of Incorporation filed November 2, 2005 with the
Secretary of State of the state of Georgia (incorporated herein by
reference to Exhibit 3.1, AGL Resources Inc.’s Form 8-K dated November 2,
2005).
|
3.2
|
Bylaws,
as amended on October 31, 2007.
|
10
|
Letter
of Credit dated as of June 5, 2008 by and among Pivotal Utility Holdings
Inc. as borrower, AGL Resources Inc. as Guarantor, Suntrust Bank
as Administrative Agent, The Bank of Tokyo-Mitsubishi UFJ, LTD. as
Syndication Agent and Wells Fargo Bank, National Association as
Issuing Bank.
|
31.1
|
Certification
of John W. Somerhalder II pursuant to Rule 13a -
14(a).
|
31.2 | Certification of Andrew W. Evans pursuant to Rule 13a - 14(a). |
32.1
|
Certification
of John W. Somerhalder II pursuant to 18 U.S.C. Section
1350.
|
32.2
|
Certification
of Andrew W. Evans pursuant to 18 U.S.C. Section
1350.
|