UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
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þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended March 31, 2011
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OR
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¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number 1-14174
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AGL RESOURCES INC.
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(Exact name of registrant as specified in its charter)
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Georgia
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58-2210952
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(State or other jurisdiction of incorporation or organization)
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(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)
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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 ¨
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
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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.
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Large accelerated filer þ
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Accelerated filer ¨
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Non-accelerated filer ¨ (Do not check if a smaller reporting company)
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Smaller reporting company ¨
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Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨ No þ
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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 April 28, 2011
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Common Stock, $5.00 Par Value
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78,258,498
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Atlanta Gas Light
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Atlanta Gas Light Company
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Bcf
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Billion cubic feet
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Bridge Facility
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Credit agreement entered into by AGL Capital Corporation to finance a portion of the proposed merger with Nicor that was originally $1.05 billion, but per the terms of the agreement was reduced to $852 million in March 2011
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Chattanooga Gas
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Chattanooga Gas Company
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Credit Facility
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$1.0 billion credit agreement entered into by AGL Capital Corporation
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EBIT
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Earnings before interest and taxes, a non-GAAP measure that includes operating income and other income and excludes financing costs, including interest and debt and income tax expense each of which we evaluate on a consolidated level; as an indicator of our operating performance, EBIT should not be considered an alternative to, or more meaningful than, earnings before income taxes, or net income attributable to AGL Resources Inc. as determined in accordance with GAAP
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ERC
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Environmental remediation costs associated with our distribution operations segment which are generally recoverable through rate mechanisms
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FASB
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Financial Accounting Standards Board
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FERC
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Federal Energy Regulatory Commission
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Fitch
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Fitch Ratings
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GAAP
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Accounting principles generally accepted in the United States of America
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Georgia Commission
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Georgia Public Service Commission, the state regulatory agency for Atlanta Gas Light
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Golden Triangle Storage
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Golden Triangle Storage, Inc.
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Hampton Roads
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Virginia Natural Gas’ pipeline project which connects its northern and southern pipelines
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Heating Degree Days
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A measure of the effects of weather on our businesses, calculated when the average daily temperatures are less than 65 degrees Fahrenheit
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Heating Season
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The period from November through March when natural gas usage and operating revenues are generally higher because more customers are connected to our distribution systems when weather is colder
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Jefferson Island
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Jefferson Island Storage & Hub, LLC
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LOCOM
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Lower of weighted-average cost or current market price
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Magnolia
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Magnolia Enterprise Holdings, Inc.
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Marketers
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Marketers selling retail natural gas in Georgia and certificated by the Georgia Commission
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Moody’s
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Moody’s Investors Service
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New Jersey BPU
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New Jersey Board of Public Utilities, the state regulatory agency for Elizabethtown Gas
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Nicor
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Nicor Inc., an Illinois corporation
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NYMEX
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New York Mercantile Exchange, Inc.
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OCI
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Other comprehensive income
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Operating margin
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A non-GAAP measure of income, calculated as operating 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 Condensed Consolidated Statements of Income. Operating margin should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP
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Piedmont
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Piedmont Natural Gas Company, Inc.
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PP&E
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Property, plant and equipment
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Regulatory
Infrastructure Program
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Programs that update or expand our distribution systems and liquefied natural gas facilities to improve system reliability and meet operational flexibility and growth. These programs include the pipeline replacement program and the STRIDE program at Atlanta Gas Light and Elizabethtown Gas’ utility infrastructure enhancements program.
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S&P
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Standard & Poor’s Ratings Services
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SEC
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Securities and Exchange Commission
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Sequent
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Sequent Energy Management, L.P.
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SouthStar
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SouthStar Energy Services LLC
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STRIDE
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Atlanta Gas Light’s Strategic Infrastructure Development and Enhancement program
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Term Loan Facility
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$300 million credit agreement entered into by AGL Capital Corporation of which $150 million was drawn in January 2011 and subsequently repaid and the agreement terminated in February 2011
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VaR
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Value at risk is defined as the maximum potential loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability
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Virginia Natural Gas
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Virginia Natural Gas, Inc.
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WACOG
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Weighted-average cost of gas
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As of
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||||||||||||
In millions
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Mar. 31, 2011
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Dec. 31, 2010
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Mar. 31, 2010
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|||||||||
Current assets
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||||||||||||
Cash and cash equivalents
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$ | 85 | $ | 24 | $ | 19 | ||||||
Receivables
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||||||||||||
Energy marketing receivables (Note 2)
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565 | 788 | 563 | |||||||||
Gas, unbilled and other receivables
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367 | 390 | 417 | |||||||||
Less: allowance for uncollectible accounts
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21 | 16 | 21 | |||||||||
Total receivables
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911 | 1,162 | 959 | |||||||||
Inventories, net (Note 2)
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361 | 639 | 370 | |||||||||
Derivative financial instruments – current portion (Note 2, Note 4 and Note 5)
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124 | 182 | 205 | |||||||||
Recoverable regulatory infrastructure program costs – current portion (Note 2)
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49 | 48 | 45 | |||||||||
Recoverable environmental remediation costs – current portion (Note 2 and Note 9)
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7 | 7 | 10 | |||||||||
Other current assets
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50 | 104 | 46 | |||||||||
Total current assets
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1,587 | 2,166 | 1,654 | |||||||||
Long-term assets and other deferred debits
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||||||||||||
Property, plant and equipment
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6,348 | 6,266 | 6,025 | |||||||||
Less: accumulated depreciation
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1,830 | 1,861 | 1,814 | |||||||||
Property, plant and equipment-net
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4,518 | 4,405 | 4,211 | |||||||||
Goodwill
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418 | 418 | 418 | |||||||||
Recoverable regulatory infrastructure program costs (Note 2)
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231 | 244 | 258 | |||||||||
Recoverable environmental remediation costs (Note 2)
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162 | 164 | 159 | |||||||||
Derivative financial instruments (Note 2, Note 4 and Note 5)
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29 | 46 | 56 | |||||||||
Other
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81 | 79 | 74 | |||||||||
Total long-term assets and other deferred debits
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5,439 | 5,356 | 5,176 | |||||||||
Total assets
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$ | 7,026 | $ | 7,522 | $ | 6,830 | ||||||
Current liabilities
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Energy marketing trade payable (Note 2)
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$ | 628 | $ | 744 | $ | 620 | ||||||
Accounts payable – trade
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161 | 184 | 156 | |||||||||
Accrued expenses
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141 | 139 | 137 | |||||||||
Accrued regulatory infrastructure program costs – current portion (Note 2)
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69 | 62 | 75 | |||||||||
Short-term debt (Note 4 and Note 7)
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26 | 733 | 154 | |||||||||
Derivative financial instruments – current portion (Note 2, Note 4 and Note 5)
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25 | 44 | 74 | |||||||||
Accrued environmental remediation liabilities – current portion (Note 2 and Note 9)
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15 | 14 | 31 | |||||||||
Current portion of long-term debt
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- | 300 | 300 | |||||||||
Other current liabilities
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248 | 212 | 241 | |||||||||
Total current liabilities
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1,313 | 2,432 | 1,788 | |||||||||
Long-term liabilities and other deferred credits
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Long-term debt (Note 4 and Note 7)
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2,173 | 1,673 | 1,674 | |||||||||
Accumulated deferred income taxes
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803 | 768 | 711 | |||||||||
Accumulated removal costs
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250 | 182 | 186 | |||||||||
Accrued pension obligations (Note 6)
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153 | 186 | 146 | |||||||||
Accrued regulatory infrastructure program costs (Note 2)
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143 | 166 | 169 | |||||||||
Accrued environmental remediation liabilities (Note 2 and Note 9)
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126 | 129 | 113 | |||||||||
Accrued postretirement benefit costs (Note 6)
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34 | 36 | 36 | |||||||||
Derivative financial instruments (Note 2, Note 4 and Note 5)
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3 | 4 | 8 | |||||||||
Other long-term liabilities and other deferred credits
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108 | 110 | 148 | |||||||||
Total long-term liabilities and other deferred credits
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3,793 | 3,254 | 3,191 | |||||||||
Total liabilities and other deferred credits
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5,106 | 5,686 | 4,979 | |||||||||
Commitments and contingencies (Note 9)
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Equity
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AGL Resources Inc. common shareholders’ equity, $5 par value; 750,000,000 shares authorized
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1,903 | 1,813 | 1,834 | |||||||||
Noncontrolling interest (Note 8)
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17 | 23 | 17 | |||||||||
Total equity
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1,920 | 1,836 | 1,851 | |||||||||
Total liabilities and equity
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$ | 7,026 | $ | 7,522 | $ | 6,830 | ||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
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Three months ended
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March 31,
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In millions, except per share amounts
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2011
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2010
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Operating revenues
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$ | 878 | $ | 1,003 | ||||
Operating expenses
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Cost of gas
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455 | 571 | ||||||
Operation and maintenance
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131 | 125 | ||||||
Depreciation and amortization
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41 | 40 | ||||||
Taxes other than income taxes
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13 | 14 | ||||||
Total operating expenses
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640 | 750 | ||||||
Operating income
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238 | 253 | ||||||
Other income
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1 | 2 | ||||||
Interest expense, net
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(29 | ) | (28 | ) | ||||
Earnings before income taxes
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210 | 227 | ||||||
Income tax expense
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76 | 82 | ||||||
Net income
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134 | 145 | ||||||
Less net income attributable to the noncontrolling interest (Note 8)
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10 | 11 | ||||||
Net income attributable to AGL Resources Inc.
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$ | 124 | $ | 134 | ||||
Per common share data (Note 2)
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Basic earnings per common share attributable to AGL Resources Inc. common shareholders
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$ | 1.60 | $ | 1.74 | ||||
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders
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$ | 1.59 | $ | 1.73 | ||||
Cash dividends declared per common share
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$ | 0.45 | $ | 0.44 | ||||
Weighted-average number of common shares outstanding (Note 2)
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Basic
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77.7 | 77.2 | ||||||
Diluted
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78.0 | 77.6 |
AGL Resources Inc. Shareholders
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In millions, except per share |
Common stock
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Premium on common |
Earnings
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Accumulated other comprehensive |
Treasury
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Noncontrolling | ||||||||||||||||||||||||||
amounts
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Shares
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Amount
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stock
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reinvested
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loss
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shares
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interest
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Total
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||||||||||||||||||||||||
Balance as of Dec. 31, 2009
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77.5 | $ | 390 | $ | 679 | $ | 848 | $ | (116 | ) | $ | (21 | ) | $ | 39 | $ | 1,819 | |||||||||||||||
Net income
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- | - | - | 134 | - | - | 11 | 145 | ||||||||||||||||||||||||
Other comprehensive loss
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- | - | - | - | (2 | ) | - | - | (2 | ) | ||||||||||||||||||||||
Dividends on common stock ($0.44 per share)
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- | - | (1 | ) | (34 | ) | - | 2 | - | (33 | ) | |||||||||||||||||||||
Purchase of additional 15% ownership interest in SouthStar
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- | - | (51 | ) | - | (1 | ) | - | (6 | ) | (58 | ) | ||||||||||||||||||||
Distributions to noncontrolling interest (Note 8)
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- | - | - | - | - | - | (27 | ) | (27 | ) | ||||||||||||||||||||||
Issuance of treasury shares
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0.3 | - | (9 | ) | - | - | 12 | - | 3 | |||||||||||||||||||||||
Stock-based compensation expense (net of tax)
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- | - | 4 | - | - | - | - | 4 | ||||||||||||||||||||||||
Balance as of Mar. 31, 2010
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77.8 | $ | 390 | $ | 622 | $ | 948 | $ | (119 | ) | $ | (7 | ) | $ | 17 | $ | 1,851 |
AGL Resources Inc. Shareholders
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||||||||||||||||||||||||||||||||
In millions, except per share |
Common stock
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Premium on common |
Earnings
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Accumulated other comprehensive |
Treasury
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Noncontrolling | ||||||||||||||||||||||||||
amounts
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Shares
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Amount
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stock
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reinvested
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loss
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shares
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interest
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Total
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||||||||||||||||||||||||
Balance as of Dec. 31, 2010
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78.0 | $ | 391 | $ | 631 | $ | 943 | $ | (150 | ) | $ | (2 | ) | $ | 23 | $ | 1,836 | |||||||||||||||
Net income
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- | - | - | 124 | - | - | 10 | 134 | ||||||||||||||||||||||||
Other comprehensive loss
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- | - | - | - | (1 | ) | - | - | (1 | ) | ||||||||||||||||||||||
Dividends on common stock ($0.45 per share)
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- | - | 1 | (35 | ) | - | - | - | (34 | ) | ||||||||||||||||||||||
Distributions to noncontrolling interest (Note 8)
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- | - | - | - | - | - | (16 | ) | (16 | ) | ||||||||||||||||||||||
Benefit, dividend reinvestment and stock purchase plans
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0.2 | 1 | 2 | - | - | (2 | ) | - | 1 | |||||||||||||||||||||||
Purchase of treasury shares
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- | - | - | - | - | (2 | ) | - | (2 | ) | ||||||||||||||||||||||
Stock-based compensation expense (net of tax)
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- | - | 2 | - | - | - | - | 2 | ||||||||||||||||||||||||
Balance as of Mar. 31, 2011
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78.2 | $ | 392 | $ | 636 | $ | 1,032 | $ | (151 | ) | $ | (6 | ) | $ | 17 | $ | 1,920 |
See Notes to Condensed Consolidated Financial Statements (Unaudited).
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Three months ended
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||||||||
March 31,
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||||||||
In millions
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2011
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2010
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||||||
Comprehensive income attributable to AGL Resources Inc. (net of tax)
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||||||||
Net income attributable to AGL Resources Inc.
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$ | 124 | $ | 134 | ||||
Cash flow hedges:
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||||||||
Derivative financial instruments unrealized losses arising during the period
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(1 | ) | (6 | ) | ||||
Reclassification of derivative financial instruments realized losses included in net income
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- | 4 | ||||||
Other comprehensive loss
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(1 | ) | (2 | ) | ||||
Comprehensive income
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$ | 123 | $ | 132 | ||||
Comprehensive income attributable to noncontrolling interest (net of tax)
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||||||||
Net income attributable to noncontrolling interest (Note 8)
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$ | 10 | $ | 11 | ||||
Cash flow hedges:
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||||||||
Derivative financial instruments unrealized losses arising during the period
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- | (1 | ) | |||||
Reclassification of derivative financial instruments realized losses included in net income
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- | 1 | ||||||
Other comprehensive income
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- | - | ||||||
Comprehensive income
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$ | 10 | $ | 11 | ||||
Total comprehensive income, including portion attributable to noncontrolling interest (net of tax)
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||||||||
Net income
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$ | 134 | $ | 145 | ||||
Cash flow hedges:
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||||||||
Derivative financial instruments unrealized losses arising during the period
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(1 | ) | (7 | ) | ||||
Reclassification of derivative financial instruments realized losses included in net income
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- | 5 | ||||||
Other comprehensive loss
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(1 | ) | (2 | ) | ||||
Comprehensive income
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$ | 133 | $ | 143 |
Three months ended
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||||||||
March 31,
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||||||||
In millions
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2011
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2010
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||||||
Cash flows from operating activities
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||||||||
Net income
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$ | 134 | $ | 145 | ||||
Adjustments to reconcile net income to net cash flow provided by operating activities
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||||||||
Change in derivative financial instrument assets and liabilities
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55 | (1 | ) | |||||
Depreciation and amortization
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41 | 40 | ||||||
Deferred income taxes
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23 | 14 | ||||||
Changes in certain assets and liabilities
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||||||||
Inventories
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278 | 302 | ||||||
Energy marketing receivables and energy marketing trade payables, net (Note 2)
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107 | 148 | ||||||
Deferred natural gas costs
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29 | 6 | ||||||
Gas, unbilled and other receivables
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28 | (48 | ) | |||||
Gas and trade payables
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(23 | ) | (40 | ) | ||||
Other – net
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46 | 107 | ||||||
Net cash flow provided by operating activities
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718 | 673 | ||||||
Cash flows from investing activities
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||||||||
Payments to acquire property, plant and equipment
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(94 | ) | (114 | ) | ||||
Other
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- | (3 | ) | |||||
Net cash flow used in investing activities
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(94 | ) | (117 | ) | ||||
Cash flows from financing activities
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||||||||
Net payments and borrowings of short-term debt
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(707 | ) | (448 | ) | ||||
Payment of senior notes
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(300 | ) | - | |||||
Dividends paid on common shares
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(34 | ) | (33 | ) | ||||
Distribution to noncontrolling interest (Note 8)
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(16 | ) | (27 | ) | ||||
Purchase of treasury shares
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(2 | ) | - | |||||
Issuance of senior notes
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495 | - | ||||||
Purchase of additional 15% ownership interest in SouthStar
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- | (58 | ) | |||||
Benefit, dividend reinvestment and stock purchase plans
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1 | 3 | ||||||
Net cash flow used in financing activities
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(563 | ) | (563 | ) | ||||
Net increase (decrease) in cash and cash equivalents
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61 | (7 | ) | |||||
Cash and cash equivalents at beginning of period
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24 | 26 | ||||||
Cash and cash equivalents at end of period
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$ | 85 | $ | 19 | ||||
Cash paid during the period for
|
||||||||
Interest
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$ | 36 | $ | 34 | ||||
Income taxes
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$ | 1 | $ | 1 |
Mar. 31,
|
Dec. 31,
|
Mar. 31,
|
||||||||||
In millions
|
2011
|
2010
|
2010
|
|||||||||
Regulatory assets
|
||||||||||||
Recoverable regulatory infrastructure program costs
|
$ | 280 | $ | 292 | $ | 303 | ||||||
Recoverable ERC
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169 | 171 | 169 | |||||||||
Recoverable seasonal rates
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- | 11 | - | |||||||||
Recoverable postretirement benefit costs
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9 | 9 | 10 | |||||||||
Other
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36 | 42 | 34 | |||||||||
Total regulatory assets
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494 | 525 | 516 | |||||||||
Associated assets
|
||||||||||||
Derivative financial instruments
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13 | 20 | 32 | |||||||||
Total regulatory and associated assets
|
$ | 507 | $ | 545 | $ | 548 | ||||||
Regulatory liabilities
|
||||||||||||
Accumulated removal costs
|
$ | 250 | $ | 182 | $ | 186 | ||||||
Derivative financial instruments
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13 | 20 | 32 | |||||||||
Regulatory tax liability
|
15 | 15 | 17 | |||||||||
Unamortized investment tax credit
|
11 | 12 | 13 | |||||||||
Deferred natural gas costs
|
52 | 23 | 41 | |||||||||
Deferred seasonal rates
|
19 | - | 22 | |||||||||
Other
|
26 | 24 | 20 | |||||||||
Total regulatory liabilities
|
386 | 276 | 331 | |||||||||
Associated liabilities
|
||||||||||||
Regulatory infrastructure program costs
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212 | 228 | 244 | |||||||||
ERC
|
129 | 132 | 132 | |||||||||
Total associated liabilities
|
341 | 360 | 376 | |||||||||
Total regulatory and associated liabilities
|
$ | 727 | $ | 636 | $ | 707 |
Three months ended March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Denominator for basic earnings per share (1)
|
77.7 | 77.2 | ||||||
Assumed exercise of restricted stock, restricted stock units and stock options
|
0.3 | 0.4 | ||||||
Denominator for diluted earnings per share
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78.0 | 77.6 | ||||||
(1) Daily weighted-average shares outstanding.
|
March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Three months ended
|
0.7 | 0.8 |
Recurring fair values
Derivative financial instruments
|
||||||||||||||||||||||||
March 31, 2011
|
December 31, 2010
|
March 31, 2010
|
||||||||||||||||||||||
In millions
|
Assets (1)
|
Liabilities
|
Assets (1)
|
Liabilities
|
Assets
|
Liabilities
|
||||||||||||||||||
Quoted prices in active markets (Level 1)
|
$ | 14 | $ | (63 | ) | $ | 22 | $ | (71 | ) | $ | 44 | $ | (109 | ) | |||||||||
Significant other observable inputs (Level 2)
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101 | (15 | ) | 153 | (29 | ) | 185 | (46 | ) | |||||||||||||||
Netting of cash collateral
|
38 | 50 | 53 | 52 | 32 | 73 | ||||||||||||||||||
Total carrying value (2) (3)
|
$ | 153 | $ | (28 | ) | $ | 228 | $ | (48 | ) | $ | 261 | $ | (82 | ) |
(1)
|
Less than $1 million premium at March 31, 2011 and December 31, 2010 associated with weather derivatives has been excluded as they are based on intrinsic value, not fair value.
|
(2)
|
There were no material unobservable inputs (Level 3) for any of the periods presented.
|
(3)
|
There were no material transfers between Level 1, Level 2, or Level 3 for any of the periods presented.
|
As of
|
||||||||||||
In millions
|
March 31, 2011
|
December 31, 2010
|
March 31, 2010
|
|||||||||
Carrying amount
|
$ | 2,199 | $ | 2,706 | $ | 2,128 | ||||||
Fair value
|
$ | 2,329 | $ | 2,854 | $ | 2,233 |
·
|
forward contracts;
|
·
|
futures contracts;
|
·
|
options contracts;
|
·
|
financial swaps;
|
·
|
treasury locks;
|
·
|
weather derivative contracts;
|
·
|
storage and transportation capacity transactions; and
|
·
|
foreign currency forward contracts.
|
Recognition and Measurement
|
||
Accounting Treatment
|
Statement of Financial Position
|
Income Statement
|
Cash flow
hedge
|
Recorded at fair value
|
Ineffective portion of the gain or loss on the derivative instrument is recognized in earnings
|
Effective portion of the gain or loss on the derivative instrument is reported initially as a component of accumulated other comprehensive income (loss)
|
Effective portion of the gain or loss on the derivative instrument is reclassified out of accumulated other comprehensive income (loss) into earnings when the forecasted transaction affects earnings
|
|
Not designated as hedges
|
Recorded at fair value
|
The gain or loss on the derivative instrument is recognized in earnings
|
Elizabethtown Gas’ derivative financial instruments are recorded as a regulatory asset or liability until included in natural gas costs
|
The gain or loss on these derivative instruments is reflected in natural gas costs and is ultimately included in billings to customers
|
|
Change in fair value of the derivative instrument is recorded as an adjustment to book value
|
Change in fair value of the derivative instrument is recognized in earnings
|
Natural gas contracts
|
||||||||||||
As of | ||||||||||||
In Bcf
|
March 31, 2011 (1)
|
December 31, 2010 |
|
March 31, 2010
|
||||||||
Hedge designation:
|
||||||||||||
Cash flow
|
3 | 4 | 8 | |||||||||
Not designated
|
278 | 220 | 268 | |||||||||
Total
|
281 | 224 | 276 | |||||||||
Hedge position:
|
||||||||||||
Short
|
(1,617 | ) | (1,605 | ) | (1,457 | ) | ||||||
Long
|
1,898 | 1,829 | 1,733 | |||||||||
Net long position
|
281 | 224 | 276 |
(1)
|
Approximately 96% of these contracts have durations of two years or less and the remaining 4% expire in 3 to 6 years.
|
As of
|
|||||||||||||
In millions
|
Statement of financial position location (1) (2)
|
Mar. 31, 2011 |
Dec. 31, 2011
|
Mar. 31, 2010
|
|||||||||
Designated as cash flow hedges
|
|||||||||||||
Asset Financial Instruments
|
|||||||||||||
Current natural gas contracts
|
Derivative financial instruments assets and liabilities – current portion
|
$ | 1 | $ | 3 | $ | 5 | ||||||
Liability Financial Instruments
|
|||||||||||||
Current natural gas contracts
|
Derivative financial instruments assets and liabilities – current portion
|
(2 | ) | (5 | ) | (14 | ) | ||||||
Total
|
(1 | ) | (2 | ) | (9 | ) | |||||||
Not designated as cash flow hedges
|
|||||||||||||
Asset Financial Instruments
|
|||||||||||||
Current natural gas contracts
|
Derivative financial instruments assets and liabilities – current portion
|
346 | 541 | 771 | |||||||||
Noncurrent natural gas contracts
|
Derivative financial instruments assets and liabilities
|
77 | 105 | 147 | |||||||||
Liability Financial Instruments
|
|||||||||||||
Current natural gas contracts
|
Derivative financial instruments assets and liabilities – current portion
|
(323 | ) | (489 | ) | (714 | ) | ||||||
Noncurrent natural gas contracts
|
Derivative financial instruments assets and liabilities
|
(62 | ) | (80 | ) | (121 | ) | ||||||
Total
|
38 | 77 | 83 | ||||||||||
Total derivative financial instruments
|
$ | 37 | $ | 75 | $ | 74 |
(1)
|
These amounts are netted within our Condensed Consolidated Statements of Financial Position. Some of our derivative financial instruments have asset positions which are presented as a liability in our Condensed Consolidated Statements of Financial Position, and we have derivative instruments that have liability positions which are presented as an asset in our consolidated statements of financial position.
|
(2)
|
As required by the authoritative guidance related to derivatives and hedging, the fair value amounts above are presented on a gross basis. As a result, the amounts above do not include cash collateral held on deposit in broker margin accounts of $88 million as of March 31, 2011 and $105 million as of March 31, 2010 and December 31, 2010. Accordingly, the amounts above will differ from the amounts presented on our Condensed Consolidated Statements of Financial Position and the fair value information presented for our derivative financial instruments in the recurring values table of this note.
|
For the three months ended March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Designated as cash flow hedges
|
||||||||
Natural gas contracts – loss reclassified from OCI into cost of gas for settlement of hedged item (1)
|
$ | - | $ | (7 | ) | |||
Not designated as hedges
|
||||||||
Natural gas contracts – fair value adjustments recorded in operating revenues (2)
|
11 | 18 | ||||||
Natural gas contracts – net fair value adjustments recorded in cost of gas (3)
|
(1 | ) | (2 | ) | ||||
Total gains on derivative instruments
|
$ | 10 | $ | 9 |
(1)
|
We expect that $1 million of pre-tax net losses will be reclassified from OCI into cost of gas for the settlement of hedged items over the next twelve months.
|
(2)
|
Associated with the fair value of existing derivative instruments at March 31, 2011 and 2010.
|
(3)
|
Excludes gains recorded in cost of gas associated with weather derivatives of $3 million for the three months ended March 31, 2011 and losses of $20 million for the three months ended March 31, 2010.
|
Three months ended | ||||||||
March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Service cost
|
$ | 3 | $ | 3 | ||||
Interest cost
|
7 | 7 | ||||||
Expected return on plan assets
|
(8 | ) | (8 | ) | ||||
Amortization of prior service cost
|
(1 | ) | (1 | ) | ||||
Recognized actuarial loss
|
4 | 3 | ||||||
Net pension benefit cost
|
$ | 5 | $ | 4 |
Three months ended
March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Service cost
|
$ | - | $ | - | ||||
Interest cost
|
1 | 1 | ||||||
Expected return on plan assets
|
(1 | ) | (1 | ) | ||||
Amortization of prior service cost
|
(1 | ) | (1 | ) | ||||
Recognized actuarial loss
|
1 | 1 | ||||||
Net postretirement benefit cost
|
$ | - | $ | - |
March 31, 2011
|
March 31, 2010
|
|||||||||||||||||||
In millions
|
Year(s) due
|
Weighted- average interest rate
|
Outstanding
|
Outstanding at
December 31, 2010
|
Weighted- average interest rate
|
Outstanding
|
||||||||||||||
Short-term debt
|
||||||||||||||||||||
Commercial paper
|
2011
|
0.4 | % | $ | 25 | $ | 732 | 0.4 | % | $ | 153 | |||||||||
Capital leases
|
2011-2012 | 4.9 | 1 | 1 | 4.9 | 1 | ||||||||||||||
Current portion of long-term debt
|
2011 | - | - | 300 | 7.1 | 300 | ||||||||||||||
Total short-term debt and current portion of long-term debt
|
0.4 | % | $ | 26 | $ | 1,033 | 3.3 | % (1) | $ | 454 | ||||||||||
Long-term debt - net of current portion
|
||||||||||||||||||||
Senior notes
|
2013-2041 | 5.5 | % | $ | 1,775 | $ | 1,275 | 5.5 | % | $ | 1,275 | |||||||||
Gas facility revenue bonds
|
2022-2033 | 1.2 | 200 | 200 | 1.2 | 200 | ||||||||||||||
Medium-term notes
|
2012-2027 | 7.8 | 196 | 196 | 7.8 | 196 | ||||||||||||||
Capital leases
|
2013 | 4.9 | 2 | 2 | 4.9 | 3 | ||||||||||||||
Total long-term debt
|
5.3 | % | $ | 2,173 | $ | 1,673 | 5.1 | % (2) | $ | 1,674 | ||||||||||
Total debt
|
4.0 | % | $ | 2,199 | $ | 2,706 | 4.6 | % | $ | 2,128 |
(1)
|
Excluding the $300 million of senior notes repaid in January 2011, the weighted-average short-term interest rate for the three months ended March 31, 2010 was 0.4%.
|
(2)
|
Including the $300 million of senior notes repaid in January 2011, the weighted-average long-term interest rate for the three months ended March 31, 2010 was 5.4%.
|
·
|
a maximum leverage ratio
|
·
|
insolvency events and nonpayment of scheduled principal or interest payments
|
·
|
acceleration of other financial obligations
|
·
|
change of control provisions
|
In millions
|
Premium on common stock
|
Accumulated other comprehensive loss
|
Total
|
|||||||||
Purchase of additional 15% ownership interest
|
$ | (51 | ) | $ | (1 | ) | $ | (52 | ) |
As of March 31, 2011
|
||||||||||||
In millions
|
Consolidated
|
SouthStar (1)
|
% | (2) | ||||||||
Current assets
|
$ | 1,587 | $ | 170 | 11 | % | ||||||
Long-term assets and other deferred debits
|
5,439 | 9 | - | |||||||||
Total assets
|
$ | 7,026 | $ | 179 | 3 | % | ||||||
Current liabilities
|
$ | 1,313 | $ | 61 | 5 | % | ||||||
Long-term liabilities and other deferred credits
|
3,793 | - | - | |||||||||
Equity
|
1,920 | 118 | 6 | |||||||||
Total liabilities and equity
|
$ | 7,026 | $ | 179 | 3 | % |
As of December 31, 2010
|
||||||||||||
In millions
|
Consolidated
|
SouthStar (1)
|
% | (2) | ||||||||
Current assets
|
$ | 2,166 | $ | 239 | 11 | % | ||||||
Long-term assets and other deferred debits
|
5,356 | 9 | - | |||||||||
Total assets
|
$ | 7,522 | $ | 248 | 3 | % | ||||||
Current liabilities
|
$ | 2,432 | $ | 93 | 4 | % | ||||||
Long-term liabilities and other deferred credits
|
3,254 | - | - | |||||||||
Equity
|
1,836 | 155 | 8 | |||||||||
Total liabilities and equity
|
$ | 7,522 | $ | 248 | 3 | % |
As of March 31, 2010
|
||||||||||||
In millions
|
Consolidated
|
SouthStar (1)
|
% | (2) | ||||||||
Current assets
|
$ | 1,654 | $ | 212 | 13 | % | ||||||
Long-term assets and other deferred debits
|
5,176 | 9 | - | |||||||||
Total assets
|
$ | 6,830 | $ | 221 | 3 | % | ||||||
Current liabilities
|
$ | 1,788 | $ | 105 | 6 | % | ||||||
Long-term liabilities and other deferred credits
|
3,191 | - | - | |||||||||
Equity
|
1,851 | 116 | 6 | |||||||||
Total liabilities and equity
|
$ | 6,830 | $ | 221 | 3 | % |
(1)
|
These amounts reflect information for SouthStar and do not include intercompany eliminations and the balances of our wholly-owned subsidiary with an 85% ownership interest in SouthStar. Accordingly, the amounts will not agree to the identifiable and total assets for our retail energy operations segment reported in Note 10.
|
(2)
|
SouthStar’s percentage of the amount on our Condensed Consolidated Statements of Financial Position.
|
Commitments due before
December 31,
|
||||||||||||
In millions
|
Total
|
2011
|
2012 & thereafter
|
|||||||||
Standby letters of credit and performance and surety bonds
|
$ | 16 | $ | 12 | $ | 4 |
Three months ended
March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Operating income
|
$ | 238 | $ | 253 | ||||
Other income
|
1 | 2 | ||||||
EBIT
|
239 | 255 | ||||||
Interest expense, net
|
29 | 28 | ||||||
Earnings before income taxes
|
210 | 227 | ||||||
Income taxes
|
76 | 82 | ||||||
Net income
|
$ | 134 | $ | 145 |
In millions
|
Identifiable and total assets (1)
|
Goodwill
|
||||||
Distribution operations
|
$ | 5,498 | $ | 404 | ||||
Retail energy operations
|
259 | - | ||||||
Wholesale services
|
1,326 | - | ||||||
Energy investments
|
479 | 14 | ||||||
Corporate (2)
|
(40 | ) | - | |||||
Consolidated
|
$ | 7,522 | $ | 418 |
(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.
|
2011
|
||||||||||||||||||||||||
In millions
|
Distribution operations |
Retail energy operations
|
Wholesale services |
Energy investments
|
Corporate (3) |
Consolidated
|
||||||||||||||||||
Operating revenues from external parties
|
$ | 505 | $ | 290 | $ | 53 | $ | 30 | $ | - | $ | 878 | ||||||||||||
Intercompany revenues (1)
|
38 | - | - | - | (38 | ) | - | |||||||||||||||||
Total operating revenues
|
543 | 290 | 53 | 30 | (38 | ) | 878 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Cost of gas
|
268 | 201 | 3 | 21 | (38 | ) | 455 | |||||||||||||||||
Operation and maintenance
|
90 | 20 | 16 | 5 | - | 131 | ||||||||||||||||||
Depreciation and amortization
|
36 | 1 | - | 2 | 2 | 41 | ||||||||||||||||||
Taxes other than income taxes
|
9 | - | 1 | 1 | 2 | 13 | ||||||||||||||||||
Total operating expenses
|
403 | 222 | 20 | 29 | (34 | ) | 640 | |||||||||||||||||
Operating income (loss)
|
140 | 68 | 33 | 1 | (4 | ) | 238 | |||||||||||||||||
Other income
|
1 | - | - | - | - | 1 | ||||||||||||||||||
EBIT
|
$ | 141 | $ | 68 | $ | 33 | $ | 1 | $ | (4 | ) | $ | 239 | |||||||||||
Identifiable and total assets (2)
|
$ | 5,495 | $ | 222 | $ | 981 | $ | 483 | $ | (155 | ) | $ | 7,026 | |||||||||||
Goodwill
|
$ | 404 | $ | - | $ | - | $ | 14 | $ | - | $ | 418 | ||||||||||||
Capital expenditures
|
$ | 80 | $ | 1 | $ | - | $ | 7 | $ | 6 | $ | 94 | ||||||||||||
2010
|
||||||||||||||||||||||||
In millions
|
Distribution operations |
Retail energy operations
|
Wholesale services
|
Energy investments
|
Corporate (3) |
Consolidated
|
||||||||||||||||||
Operating revenues from external parties
|
$ | 528 | $ | 393 | $ | 67 | $ | 14 | $ | 1 | $ | 1,003 | ||||||||||||
Intercompany revenues (1)
|
38 | - | - | - | (38 | ) | - | |||||||||||||||||
Total operating revenues
|
566 | 393 | 67 | 14 | (37 | ) | 1,003 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Cost of gas
|
302 | 297 | 8 | 2 | (38 | ) | 571 | |||||||||||||||||
Operation and maintenance
|
87 | 20 | 15 | 6 | (3 | ) | 125 | |||||||||||||||||
Depreciation and amortization
|
34 | 1 | - | 2 | 3 | 40 | ||||||||||||||||||
Taxes other than income taxes
|
9 | 1 | 1 | 1 | 2 | 14 | ||||||||||||||||||
Total operating expenses
|
432 | 319 | 24 | 11 | (36 | ) | 750 | |||||||||||||||||
Operating income (loss)
|
134 | 74 | 43 | 3 | (1 | ) | 253 | |||||||||||||||||
Other income
|
2 | - | - | - | - | 2 | ||||||||||||||||||
EBIT
|
$ | 136 | $ | 74 | $ | 43 | $ | 3 | $ | (1 | ) | $ | 255 | |||||||||||
Identifiable and total assets (2)
|
$ | 5,240 | $ | 242 | $ | 981 | $ | 489 | $ | (122 | ) | $ | 6,830 | |||||||||||
Goodwill
|
$ | 404 | $ | - | $ | - | $ | 14 | $ | - | $ | 418 | ||||||||||||
Capital expenditures
|
$ | 70 | $ | 1 | $ | - | $ | 40 | $ | 3 | $ | 114 |
(1)
|
Wholesale services records its energy marketing and risk management revenues on a net basis, which includes intercompany revenues of $147 million for the three months ended March 31, 2011 and $180 million for the three months ended March 31, 2010.
|
(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.
|
·
|
In January 2011, we filed a joint application with Nicor with the Illinois Commerce Commission for approval of the proposed merger. The application did not request a rate increase and included a commitment to maintain 2,070 full-time equivalent employees involved in the operation of Nicor’s gas distribution subsidiary for a period of three years following the completion of the merger. The Illinois Commerce Commission has eleven months to act on the application; however, we and Nicor have asked for approval of the merger by October 1, 2011.
In April 2011, the Staff of the Illinois Commerce Commission and several intervenors who are participating in the proceeding submitted initial testimony recommending that the Illinois Commerce Commission deny the joint application or that it impose various requirements on the joint applicants as conditions of approval. We and Nicor anticipate submitting joint rebuttal testimony to the Illinois Commerce Commission in May 2011.
|
·
|
In January 2011, we filed a joint application with Nicor with the California Public Utilities Commission for approval to transfer ownership of Central Valley Gas Storage from Nicor to us. We currently anticipate receipt of this approval during the first half of 2011.
|
·
|
Shareholder approval by both companies. We and Nicor have scheduled our special shareholder meetings for June 14, 2011. The results of the shareholder votes will be announced at these meetings.
|
Three months ended March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Pipeline replacement program
|
$ | 15 | $ | 16 | ||||
Integrated System Reinforcement Program
|
26 | 1 | ||||||
Integrated Customer Growth Program
|
1 | - | ||||||
Enhanced infrastructure program
|
- | 5 | ||||||
Total
|
$ | 42 | $ | 22 |
Withdrawal schedule
|
||||||||||||
(in Bcf)
|
Expected
|
|||||||||||
Salt dome (WACOG $3.87)
|
Reservoir (WACOG $3.36)
|
operating revenues
(in millions)
|
||||||||||
2011
|
||||||||||||
Second quarter
|
- | 2 | $ | 2 | ||||||||
Third quarter
|
1 | 3 | $ | 3 | ||||||||
Fourth quarter
|
1 | 3 | $ | 3 | ||||||||
2012
|
||||||||||||
First quarter
|
- | 2 | $ | 3 | ||||||||
Total at Mar. 31, 2011
|
2 | 10 | $ | 11 | ||||||||
Total at Mar. 31, 2010
|
2 | 12 | $ | 6 |
Three months ended March 31,
|
||||||||||||
In millions
|
2011
|
2010
|
Change
|
|||||||||
Operating revenues
|
$ | 878 | $ | 1,003 | $ | (125 | ) | |||||
Cost of gas
|
455 | 571 | (116 | ) | ||||||||
Operating margin (1)
|
423 | 432 | (9 | ) | ||||||||
Operating expenses
|
185 | 179 | 6 | |||||||||
Operating income
|
238 | 253 | (15 | ) | ||||||||
Other income
|
1 | 2 | (1 | ) | ||||||||
EBIT (1)
|
239 | 255 | (16 | ) | ||||||||
Interest expense, net
|
29 | 28 | 1 | |||||||||
Earnings before income taxes
|
210 | 227 | (17 | ) | ||||||||
Income tax expense
|
76 | 82 | (6 | ) | ||||||||
Net income
|
134 | 145 | (11 | ) | ||||||||
Net income attributable to the noncontrolling interest
|
10 | 11 | (1 | ) | ||||||||
Net income attributable to AGL Resources Inc.
|
$ | 124 | $ | 134 | $ | (10 | ) |
Weather
|
|||||||||||||||||||||
Heating Degree Days (1)
|
|||||||||||||||||||||
Three months ended
March 31,
|
2011 vs. normal colder
|
2011 vs. 2010 colder
|
|||||||||||||||||||
Normal
|
2011
|
2010
|
(warmer)
|
(warmer)
|
|||||||||||||||||
Georgia
|
1,498 | 1,470 | 1,952 | (2 | )% | (25 | )% | ||||||||||||||
Virginia
|
1,829 | 1,908 | 2,029 | 4 | % | (6 | )% | ||||||||||||||
New Jersey
|
2,528 | 2,549 | 2,397 | 1 | % | 6 | % | ||||||||||||||
Florida
|
363 | 241 | 719 | (34 | )% | (66 | )% | ||||||||||||||
Tennessee
|
1,691 | 1,673 | 2,116 | (1 | )% | (21 | )% | ||||||||||||||
Maryland
|
2,521 | 2,630 | 2,477 | 4 | % | 6 | % | ||||||||||||||
Ohio |
|
2,599 | 2,616 | 2,831 | 1 | % | (8 | )% | |||||||||||||
(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 2002 through March 31, 2011. |
Customers
|
Three months ended March 31,
|
||||||||||||
2011
|
2010
|
% change
|
|||||||||||
Distribution Operations
|
|||||||||||||
Average end-use customers (in thousands)
|
|
||||||||||||
Atlanta Gas Light
|
1,569 | 1,567 | 0.1 | % | |||||||||
Virginia Natural Gas
|
280 | 278 | 0.7 | % | |||||||||
Elizabethtown Gas
|
276 | 275 | 0.4 | % | |||||||||
Florida City Gas
|
104 | 104 | - | ||||||||||
Chattanooga Gas
|
63 | 63 | - | ||||||||||
Elkton Gas
|
6 | 6 | - | ||||||||||
Total
|
2,298 | 2,293 | 0.2 | % | |||||||||
Retail Energy Operations
|
|||||||||||||
Average customers (in thousands)
|
|||||||||||||
Georgia
|
498 | 507 | (2 | )% | |||||||||
Ohio and Florida (2)
|
71 | 106 | (33 | )% | |||||||||
Total
|
569 | 613 | (7 | )% | |||||||||
Market share in Georgia
|
32 | % | 33 | % | (3 | )% | |||||||
(2)
|
A portion of the Ohio customers represents customer equivalents, which are computed by the actual delivered volumes divided by the expected average customer usage. |
Volumes
In billion cubic feet (Bcf)
|
Three months ended March 31,
|
|||||||||||
2011
|
2010
|
% change
|
||||||||||
Distribution Operations
|
||||||||||||
Firm
|
101 | 122 | (17 | )% | ||||||||
Interruptible
|
27 | 27 | - | |||||||||
Total
|
128 | 149 | (14 | )% | ||||||||
Retail Energy Operations
|
||||||||||||
Georgia firm
|
18 | 24 | (25 | )% | ||||||||
Ohio and Florida
|
4 | 6 | (33 | )% | ||||||||
Wholesale Services
|
||||||||||||
Daily physical sales (Bcf/day)
|
5.8 | 4.9 | 18 | % | ||||||||
Energy Investments
|
||||||||||||
Working natural gas capacity
|
13.5 | 7.5 | 80 | % | ||||||||
% of capacity under subscription
|
66 | % | 93 | % | (29 | )% |
In millions
|
Operating margin (1)
|
Operating expenses
|
EBIT (1)
|
|||||||||
2011
|
||||||||||||
Distribution operations
|
$ | 275 | $ | 135 | $ | 141 | ||||||
Retail energy operations
|
89 | 21 | 68 | |||||||||
Wholesale services
|
50 | 17 | 33 | |||||||||
Energy investments
|
9 | 8 | 1 | |||||||||
Corporate (2)
|
- | 4 | (4 | ) | ||||||||
Consolidated
|
$ | 423 | $ | 185 | $ | 239 |
In millions
|
Operating margin (1)
|
Operating expenses
|
EBIT (1)
|
|||||||||
2010
|
||||||||||||
Distribution operations
|
$ | 264 | $ | 130 | $ | 136 | ||||||
Retail energy operations
|
96 | 22 | 74 | |||||||||
Wholesale services
|
59 | 16 | 43 | |||||||||
Energy investments
|
12 | 9 | 3 | |||||||||
Corporate (2)
|
1 | 2 | (1 | ) | ||||||||
Consolidated
|
$ | 432 | $ | 179 | $ | 255 |
(1)
|
These are non-GAAP measures. A reconciliation of operating margin to operating income and EBIT to earnings before income taxes and net income is contained in “Results of Operations” herein.
|
(2)
|
Includes intercompany eliminations.
|
In millions
|
||||||||
EBIT for first quarter of 2010
|
$ | 136 | ||||||
Operating margin
|
||||||||
Increased revenues from new rates and regulatory infrastructure program revenues at Atlanta Gas Light
|
$ | 9 | ||||||
Increased revenues from enhanced infrastructure program revenues at Elizabethtown Gas
|
3 | |||||||
Decreased revenues from lower usage at Florida City Gas due to warmer weather in 2011
|
(1 | ) | ||||||
Increase in operating margin
|
11 | |||||||
Operating expenses
|
||||||||
Increased compensation expenses
|
$ | 3 | ||||||
Increased pension expense
|
1 | |||||||
Increased depreciation expense
|
2 | |||||||
Decreased bad debt and other expenses
|
(1 | ) | ||||||
Increase in operating expenses
|
5 | |||||||
Decrease in other income
|
(1 | ) | ||||||
EBIT for first quarter of 2011
|
$ | 141 |
In millions
|
||||||||
EBIT for first quarter of 2010
|
$ | 74 | ||||||
Operating margin
|
||||||||
Decreased average customer usage due to warmer weather
|
$ | (4 | ) | |||||
Decrease related to retail pricing plan mix and optimization of storage and transportation
|
(2 | ) | ||||||
Other
|
(1 | ) | ||||||
Decrease in operating margin
|
(7 | ) | ||||||
Operating expenses
|
||||||||
Decreased bad debt expense
|
$ | (1 | ) | |||||
Decrease in operating expenses
|
(1 | ) | ||||||
EBIT for first quarter of 2011
|
$ | 68 |
In millions
|
||||||||
EBIT for first quarter of 2010
|
$ | 43 | ||||||
Operating margin
|
||||||||
Change in commercial activity
|
$ | 8 | ||||||
Change in LOCOM adjustment
|
4 | |||||||
Change in transportation hedge gains from the narrowing of transportation basis spreads
|
(10 | ) | ||||||
Change in storage hedge gains as a result of changing NYMEX natural gas prices
|
(11 | ) | ||||||
Decrease in operating margin
|
(9 | ) | ||||||
Operating expenses
|
||||||||
Increased incentive compensation costs
|
$ | 1 | ||||||
Increase in operating expenses
|
1 | |||||||
EBIT for first quarter of 2011
|
$ | 33 |
In millions
|
2011
|
2010
|
||||||
Commercial activity recognized
|
$ | 49 | $ | 41 | ||||
Gain on transportation hedges
|
1 | 11 | ||||||
Gain on storage hedges
|
- | 11 | ||||||
Inventory LOCOM adjustment
|
- | (4 | ) | |||||
Operating margin
|
$ | 50 | $ | 59 |
In millions
|
||||||||
EBIT for first quarter of 2010
|
$ | 3 | ||||||
Operating margin
|
||||||||
Decreased operating revenues due to sale of AGL Networks, LLC
|
$ | (6 | ) | |||||
Increased revenues at Golden Triangle Storage as a result of the start of commercial service in September 2010
|
3 | |||||||
Decrease in operating margin
|
(3 | ) | ||||||
Operating expenses
|
||||||||
Decreased operating expenses due to sale of AGL Networks, LLC
|
$ | (3 | ) | |||||
Increase in operating and depreciation expenses at Golden Triangle Storage as a result of the start of commercial service in September 2010
|
2 | |||||||
Decrease in operating expenses
|
(1 | ) | ||||||
EBIT for first quarter of 2011
|
$ | 1 |
Three months ended March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Net cash provided by (used in):
|
||||||||
Operating activities
|
$ | 718 | $ | 673 | ||||
Investing activities
|
(94 | ) | (117 | ) | ||||
Financing activities
|
(563 | ) | (563 | ) | ||||
Net increase (decrease) in cash and cash equivalents
|
$ | 61 | $ | (7 | ) |
S&P
|
Moody’s
|
Fitch
|
|||||
Corporate rating
|
A- | A- | |||||
Commercial paper
|
A-2 | P-2 | F2 | ||||
Senior unsecured
|
BBB+
|
Baa1
|
A- | ||||
Ratings outlook
|
Negative
|
Stable
|
Stable
|
Mar. 31, 2011
|
Dec. 31, 2010
|
Mar. 31, 2010
|
|||||||
Short-term debt
|
1 | % | 23 | % | 11 | % | |||
Long-term debt
|
53 | 37 | 42 | ||||||
Total debt
|
54 | 60 | 53 | ||||||
Equity
|
46 | 40 | 47 | ||||||
Total capitalization
|
100 | % | 100 | % | 100 | % |
Period end balance outstanding
|
Daily average balance outstanding
|
Largest balance outstanding
|
||||||||
In millions
|
(1) | (2) | (2) | |||||||
Commercial paper
|
$ | 25 | $ | 623 | $ | 835 | ||||
Capital leases
|
1 | 1 | 1 | |||||||
Current portion of long-term debt
|
- | 47 | 300 | |||||||
Term loan facility
|
- | 50 | 150 |
(1)
|
As of March 31, 2011.
|
(2)
|
For the three months ended March 31, 2011.
|
2012 &
|
2014 &
|
2016 &
|
||||||||||||||||||
In millions
|
Total
|
2011
|
2013
|
2015
|
thereafter
|
|||||||||||||||
Recorded contractual obligations:
|
||||||||||||||||||||
Long-term debt
|
$ | 2,173 | $ | - | $ | 242 | $ | 200 | $ | 1,731 | ||||||||||
Regulatory infrastructure program costs (1)
|
212 | 47 | 165 | - | - | |||||||||||||||
Environmental remediation liabilities (1)
|
141 | 11 | 63 | 53 | 14 | |||||||||||||||
Short-term debt
|
26 | 26 | - | - | - | |||||||||||||||
Total
|
$ | 2,552 | $ | 84 | $ | 470 | $ | 253 | $ | 1,745 |
Unrecorded contractual obligations and commitments (2) (7):
|
||||||||||||||||||||
Pipeline charges, storage capacity and gas supply (3)
|
$ | 1,909 | $ | 446 | $ | 704 | $ | 290 | $ | 469 | ||||||||||
Interest charges (4)
|
1,740 | 88 | 224 | 201 | 1,227 | |||||||||||||||
Operating leases (5)
|
111 | 20 | 40 | 20 | 31 | |||||||||||||||
Asset management agreements (6)
|
26 | 10 | 14 | 2 | - | |||||||||||||||
Standby letters of credit, performance / surety bonds
|
16 | 12 | 4 | - | - | |||||||||||||||
Total
|
$ | 3,802 | $ | 576 | $ | 986 | $ | 513 | $ | 1,727 |
(1)
|
Includes charges recoverable through rate rider mechanisms.
|
(2)
|
In accordance with GAAP, these items are not reflected in our Condensed Consolidated Statements of Financial Position.
|
(3)
|
Charges recoverable through a natural gas cost recovery mechanism or alternatively billed to Marketers, and includes demand charges associated with Sequent. Also includes SouthStar’s natural gas purchase commitments of 23 Bcf at floating gas prices calculated using forward natural gas prices as of March 31, 2011, and are valued at $97 million.
|
(4)
|
Floating rate debt is based on the interest rate as of March 31, 2011, and the maturity of the underlying debt instrument. As of March 31, 2011, we have $30 million of accrued interest on our Condensed Consolidated Statements of Financial Position that will be paid over the next 12 months.
|
(5)
|
We have certain operating leases with provisions for step rent or escalation payments and certain lease concessions. We account for these leases by recognizing the future minimum lease payments on a straight-line basis over the respective minimum lease terms, in accordance with authoritative guidance related to leases. However, this lease accounting treatment does not affect the future annual operating lease cash obligations as shown herein. Additionally, minimum payments have not been reduced by minimum sublease rentals of $15 million due in the future under noncancelable subleases.
|
(6)
|
Represent fixed-fee minimum payments for Sequent’s asset management agreements.
|
(7)
|
The Merger Agreement with Nicor contains termination rights for both us and Nicor and provides that, if we terminate the agreement under specified circumstances, we may be required to pay a termination fee of $67 million. In addition, if we terminate the agreement due to a failure to obtain the necessary financing for the transaction, we may also be required to pay Nicor $115 million.
|
·
|
Regulatory Infrastructure Program Liabilities
|
·
|
Environmental Remediation Liabilities
|
·
|
Derivatives and Hedging Activities
|
·
|
Contingencies
|
·
|
Pension and Other Postretirement Plans
|
·
|
Income Taxes
|
Derivative financial instruments average values (1) at March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Asset
|
$ | 210 | $ | 209 | ||||
Liability
|
47 | 7 |
(1)
|
Excludes cash collateral amounts.
|
Derivative financial instruments fair values netted with cash collateral at
|
||||||||||||
In millions
|
Mar. 31,
2011
|
Dec. 31,
2010
|
Mar. 31,
2010
|
|||||||||
Asset
|
$ | 153 | $ | 228 | $ | 261 | ||||||
Liability
|
28 | 48 | 82 |
Three months ended March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Net fair value of derivative financial instruments outstanding at beginning of period
|
$ | 75 | $ | 121 | ||||
Derivative financial instruments realized or otherwise settled during period
|
(55 | ) | (64 | ) | ||||
Change in net fair value of derivative financial instruments
|
17 | 16 | ||||||
Net fair value of derivative financial instruments outstanding at end of period
|
37 | 73 | ||||||
Netting of cash collateral
|
88 | 105 | ||||||
Cash collateral and net fair value of derivative financial instruments outstanding at end of period
|
$ | 125 | $ | 178 |
In millions
|
Prices actively quoted
(Level 1) (1)
|
Significant other observable inputs
(Level 2) (2)
|
|||||||
Mature through
|
|||||||||
2011
|
$ | (32 | ) | $ | 43 | ||||
2012 – 2013 | (17 | ) | 41 | ||||||
2014 – 2016 | - | 2 | |||||||
Total derivative financial instruments (3)
|
$ | (49 | ) | $ | 86 |
(1)
|
Valued using NYMEX futures prices and other quoted sources.
|
(2)
|
Values primarily related to basis transactions that represent the cost to transport natural gas 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.
|
(3)
|
Excludes cash collateral amounts.
|
Three months ended March 31,
|
||||||||
In millions
|
2011
|
2010
|
||||||
Period end
|
$ | 1.8 | $ | 0.7 | ||||
Average
|
1.4 | 1.4 | ||||||
High
|
1.8 | 3.0 | ||||||
Low
|
0.9 | 0.7 |
Gross receivables
|
Gross payables
|
|||||||||||||||||||||||
Mar. 31,
|
Dec. 31,
|
Mar. 31,
|
Mar. 31,
|
Dec. 31,
|
Mar. 31,
|
|||||||||||||||||||
In millions
|
2011
|
2010
|
2010
|
2011
|
2010
|
2010
|
||||||||||||||||||
Netting agreements in place:
|
||||||||||||||||||||||||
Counterparty is investment grade
|
$ | 337 | $ | 515 | $ | 449 | $ | 255 | $ | 341 | $ | 328 | ||||||||||||
Counterparty is non-investment grade
|
8 | 11 | 3 | 37 | 40 | 19 | ||||||||||||||||||
Counterparty has no external rating
|
208 | 260 | 101 | 317 | 363 | 265 | ||||||||||||||||||
No netting agreements in place:
|
||||||||||||||||||||||||
Counterparty is investment grade
|
9 | 2 | 10 | 14 | - | 8 | ||||||||||||||||||
Counterparty has no external rating
|
2 | - | - | 2 | - | - | ||||||||||||||||||
Amount recorded on statements of financial position
|
$ | 564 | $ | 788 | $ | 563 | $ | 625 | $ | 744 | $ | 620 |
Period
|
Total number of shares purchased
(1) (2)
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs (2)
|
Maximum number of shares that may yet be purchased under the publicly announced plans or programs (2)
|
||||||||||||
January 2011
|
54,450 | $ | 36.22 | 54,450 | 4,707,051 | |||||||||||
February 2011
|
10,800 | 36.38 | 10,800 | 4,696,251 | ||||||||||||
March 2011
|
30,000 | 21.91 | - | 4,696,251 | ||||||||||||
Total first quarter
|
95,250 | $ | 31.73 | 65,250 |
(1)
|
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 purchased 30,000 shares for such purposes in the first quarter of 2011. As of March 31, 2011, we had purchased a total of 377,153 of the 600,000 shares authorized for purchase, leaving 222,847 shares available for purchase under this program.
|
(2)
|
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 (1) above, over a five-year period. This plan expired January 31, 2011 and 10,800 shares that were purchased in January 2011 settled in February 2011.
|
12
|
Statement of Computation of Ratio of Earnings to Fixed Charges.
|
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.
|
101.INS
|
XBRL Instance Document. (1)
|
101.SCH
|
XBRL Taxonomy Extension Schema. (1)
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase. (1)
|
101.DEF
|
XBRL Taxonomy Definition Linkbase. (1)
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase. (1)
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase.(1)
|
(1) Furnished, not filed
Attached as Exhibit 101 to this Quarterly Report are the following documents formatted in extensible business reporting language (XBRL): (i) Document and Entity Information; (ii) Condensed Consolidated Statements of Financial Position at March 31, 2011, December 31, 2010 and March 31, 2010; (iii) Condensed Consolidated Statements of Income for the three months ended March 31, 2011 and 2010; (iv) Condensed Consolidated Statements of Equity for the three months ended March 31, 2011 and 2010; (v) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2011 and 2010; (vi) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010; and (vii) Notes to Condensed Consolidated Financial Statements.
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. We also make available on our web site the Interactive Data Files submitted as Exhibit 101 to this Quarterly Report.
|