AGL Resources Reports First Quarter 2009 Results



    
    -- Diluted earnings per share (EPS) of $1.55 versus $1.16 in first quarter
2008

    
    -- Results reflect improved results in the distribution operations,
retail energy operations and wholesale services segments
    

    
    ATLANTA, April 29 /PRNewswire-FirstCall/ -- AGL Resources Inc. (NYSE:  
AGL) today reported first quarter net income of $119 million, or $1.55 per
basic (and diluted) share, compared to net income of $89 million, or $1.17 per
basic share ($1.16 per diluted share) reported for the same period last year.
    

    
    First quarter 2009 results reflect improved earnings contributions from
each of the company's three largest operating segments - distribution
operations, retail energy operations and wholesale services.
    

    
    "We are off to a good start and are on track to meet our goals for 2009,"
said John W. Somerhalder II, AGL Resources chairman, president and chief
executive officer.  "We also continue to make very good progress on two key
areas of focus for us this year - remaining on track to complete our major
capital projects and executing on our regulatory strategy to recover prudently
incurred investments made in our utility business."
    

    Q1 2009 RESULTS BY BUSINESS SEGMENT

    Distribution Operations
    
    The distribution operations segment contributed EBIT (earnings before
interest and taxes) of $130 million, compared to $123 million in the first
quarter of 2008.  The increase over the previous year's quarter was primarily
driven by higher charges to marketers in Georgia for the storage of natural
gas inventory and increased pipeline replacement revenues at Atlanta Gas
Light, offset slightly by reduced customer growth and usage.  During the first
quarter of 2009, customer growth decreased 0.1 percent as compared to the
first quarter of 2008, reflecting a net decline of about 3,000 customers.
    Operating expenses of $124 million for first quarter 2009 were $2 million
lower than during the same period last year.  The decline was driven primarily
by lower outside services and marketing expenses, which offset increased bad
debt and depreciation expenses.
    
    Retail Energy Operations
    
    The retail energy operations segment, consisting of SouthStar Energy
Services, contributed EBIT of $63 million for the first quarter of 2009,
compared to $62 million for the same period in 2008.
    Operating margin increased $2 million, with a $14 million improvement due
to increased opportunities driven by more favorable market conditions and
decreasing commodity prices as well as higher customer usage, offset by a $12
million decrease in operating margin, resulting from a 3 percent decline in
average customer count and an increase in the number of customers switching to
less profitable retail pricing plans, reflecting the increased competitiveness
of the retail pricing market for natural gas in Georgia.  Operating margins
also were higher due to increased contributions from SouthStar's growth
markets (Ohio and Florida) of $3 million, and to a $3 million charge related
to a consent agreement with the Georgia Public Service Commission in 2008 that
was not incurred in 2009.  These increases were substantially offset by a
lower-of-cost-or-market natural gas inventory valuation adjustment in the
amount of $6 million as prices declined during the quarter.
    Operating expenses were up $1 million, mainly due to higher incentive
compensation costs.
    
    Wholesale Services
    
    The wholesale services segment, consisting primarily of Sequent Energy
Management, contributed $38 million in EBIT in first quarter 2009, compared to
$1 million reported for the first quarter of 2008.
    A $44 million increase in operating margin as compared to last year was
driven mainly by a $47 million increase in reported hedge gains on the
instruments used to hedge transportation capacity and natural gas inventory in
storage and a $5 million increase in commercial activity.  The increases were
partially offset by an $8 million lower-of-cost-or-market inventory valuation
adjustment during the quarter.
    Operating expenses were up $7 million as compared to the prior-year
period, mainly due to higher incentive compensation expenses associated with
the higher earnings results.
    
    Energy Investments
    
    The energy investments segment contributed EBIT of $2 million for the
first quarter of 2009, compared to EBIT of $5 million during the prior-year
period.  Operating margin was down $1 million year-over-year, primarily
reflecting lower revenues from Jefferson Island and AGL Networks.  Operating
expenses were up $2 million, reflecting higher Jefferson Island legal expenses
as well as higher property tax and depreciation expenses for the Golden
Triangle Storage project.
    
    INTEREST EXPENSE AND INCOME TAXES
    
    Interest expense for the first quarter of 2009 was $25 million, down $5
million from the first quarter of 2008.  The decline in interest expense
resulted from a decrease in short-term interest rates, partially offset by
higher average debt outstanding.
    

    
    Income taxes for the first quarter of 2009 were $72 million, up $18
million compared to the first quarter of 2008, reflecting higher consolidated
earnings for the quarter relative to the prior year.
    

    2009 EARNINGS OUTLOOK

    
    AGL Resources continues to expect its 2009 earnings to be in the range of
$2.65 to $2.75 per diluted share.  This earnings expectation assumes normal
weather and average volatility in natural gas prices. However, unanticipated
changes in these events or other circumstances could materially impact
earnings, and could result in earnings for 2009 significantly above or below
this outlook.
    

    EARNINGS CONFERENCE CALL/WEBCAST

    
    AGL Resources will host its first quarter 2009 earnings conference call
and webcast on Wednesday, April 29, 2009, at 4 p.m. Eastern Time.  The webcast
can be accessed via the Investor Relations section of the AGL Resources Web
site at www.aglresources.com, or by dialing 800/299-7635 in the United States
or 617/786-2901 outside the United States. The confirmation code is 80368894.
A replay of the conference call will be available by dialing 888/286-8010 in
the United States or 617/801-6888 outside the United States, with a
confirmation code of 14021043. A replay of the call also will be available on
the Investor Relations section of the company's Web site for seven days
following the call.
    

    About AGL Resources

    
    AGL Resources (NYSE:   AGL), an Atlanta-based energy services company,
serves approximately 2.3 million customers in six states. The company also
owns Houston-based Sequent Energy Management, an asset manager serving natural
gas wholesale customers throughout North America. As a 70 percent owner in the
SouthStar partnership, AGL Resources markets natural gas to consumers in
Georgia under the Georgia Natural Gas brand. The company also owns and
operates Jefferson Island Storage & Hub, a high-deliverability natural gas
storage facility near the Henry Hub in Louisiana. For more information, visit
www.aglresources.com.
    

    Forward-Looking Statements
    
    Certain expectations and projections regarding our future performance
referenced in this press release are forward-looking statements. Forward-
looking statements involve matters that are not historical facts and because
these statements involve anticipated events or conditions, forward-looking
statements often include words such as "anticipate," "assume," "believe,"
"can," "could," "estimate," "expect," "forecast," "future," "goal,"
"indicate," "intend," "may," "outlook," "plan," "potential," "predict,"
"project," "seek," "should," "target," "would," or similar expressions.
Forward-looking statements contained in this press release include, without
limitation, the information under the heading "2009 Earnings Outlook." Our
expectations are not guarantees and are based on currently available
competitive, financial and economic data along with our operating plans. While
we believe our expectations are reasonable in view of the currently available
information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that
could cause results to differ significantly from our expectations.
    Such events, risks and uncertainties include, but are not limited to,
changes in price, supply and demand for natural gas and related products; the
impact of changes in state and federal legislation and regulation including
changes related to climate change; actions taken by government agencies on
rates and other matters; concentration of credit risk; utility and energy
industry consolidation; the impact on cost and timeliness of construction
projects by government and other approvals, development project delays,
adequacy of supply of diversified vendors, unexpected change in project costs,
including the cost of funds to finance these projects; the impact of
acquisitions and divestitures; direct or indirect effects on our business,
financial condition or liquidity resulting from a change in our credit ratings
or the credit ratings of our counterparties or competitors; interest rate
fluctuations; financial market conditions, including recent disruptions in the
capital markets and lending environment and the current economic downturn; and
general economic conditions; uncertainties about environmental issues and the
related impact of such issues; the impact of changes in weather, including
climate change, on the temperature-sensitive portions of our business; the
impact of natural disasters such as hurricanes on the supply and price of
natural gas; acts of war or terrorism; and other factors which are provided in
detail in our filings with the Securities and Exchange Commission, which we
incorporate by reference in this press release. Forward-looking statements are
only as of the date they are made, and we do not undertake to update these
statements to reflect subsequent changes.
    
    Supplemental Information
    
    Company management evaluates segment financial performance based on
earnings before interest and taxes (EBIT), which includes the effects of
corporate expense allocations and on operating margin. EBIT is a non-GAAP
(accounting principles generally accepted in the United States of America)
financial measure that includes operating income, other income and expenses.
Items that are not included in EBIT are financing costs, including debt and
interest expense and income taxes. The company evaluates each of these items
on a consolidated level and believes EBIT is a useful measurement of our
performance because it provides information that can be used to evaluate the
effectiveness of our businesses from an operational perspective, exclusive of
the costs to finance those activities and exclusive of income taxes, neither
of which is directly relevant to the efficiency of those operations.
    Operating margin is a non-GAAP measure calculated as operating revenues
minus cost of gas, excluding operation and maintenance expense, depreciation
and amortization, and taxes other than income taxes. These items are included
in the company's calculation of operating income. The company believes
operating margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas is generally
passed directly through to customers.
    EBIT and operating margin should not be considered as alternatives to, or
more meaningful indicators of, the company's operating performance than
operating income or net income attributable to AGL Resources Inc. as
determined in accordance with GAAP. In addition, the company's EBIT and
operating margin may not be comparable to similarly titled measures of another
company.
    Reconciliation of non-GAAP financial measures referenced in this press
release and otherwise in the earnings conference call and webcast is attached
to this press release and is available on the company's website at
www.aglresources.com under the Investor Relations section.
    


    

    
                                  AGL Resources Inc.
                      Condensed Consolidated Statements of Income
                               For the Three Months Ended
                                March 31, 2009 and 2008
                       (In millions, except per share amounts)
                                      (Unaudited)
    


    
                                                    Three Months
                                          3/31/2009  3/31/2008 Fav/(Unfav)
    


    
    Operating Revenues                        $995    $1,012     $(17)
    Cost of Gas                                589       657       68
    Operation and Maintenance                  125       119       (6)
    Depreciation and Amortization               39        36       (3)
    Taxes Other Than Income Taxes               12        12        -
    Total Operating Expenses                   765       824       59
    Operating Income                           230       188       42
    Other Income                                 2         1        1
    Earnings Before Interest & Taxes           232       189       43
    Interest Expense, Net                       25        30        5
    Earnings Before Income Taxes               207       159       48
    Income Tax Expense                          72        54      (18)
    Net Income                                 135       105       30
    Less Net Income Attributable to
     Noncontrolling                             16        16        -
     Interest
    Net Income Attributable to AGL Resources
     Inc.                                     $119       $89      $30
    

    
    Earnings Per Common Share
    Basic Attributable to AGL Resources Inc.
     Common Shareholders                     $1.55     $1.17    $0.38
    

    
    Diluted Attributable to AGL Resources
     Inc. Common Shareholders                $1.55     $1.16    $0.39
    

    
    Shares Outstanding
    Basic                                     76.7     76.0     (0.7)
    Diluted                                   76.8     76.3     (0.5)



    

    
                                   AGL Resources Inc.
                                     EBIT Schedule
                              For the Three Months Ended
                               March 31, 2009 and 2008
                       (In millions, except per share amounts)
                                     (Unaudited)
    

    
                                                   Three Months
                                          3/31/2009   3/31/2008  Fav/(Unfav)
    

    
    Distribution Operations                   $130       $123         $7
    Retail Energy Operations                    63         62          1
    Wholesale Services                          38          1         37
    Energy Investments                           2          5         (3)
    Corporate                                   (1)        (2)         1
    Consolidated EBIT                          232        189         43
    Interest Expense                            25         30          5
    Income Taxes                                72         54        (18)
    Net Income                                 135        105         30
    Less Net Income Attributable to
     Noncontrolling Interest                    16         16          -
    

    
    Net Income Attributable to AGL
     Resources Inc.                           $119        $89        $30
    

    
    Earnings per Common Share
    Basic Attributable to AGL Resources
     Inc. Common Shareholders                $1.55      $1.17      $0.38
    Diluted Attributable to AGL Resources
     Inc. Common Shareholders                $1.55      $1.16      $0.39


    


    
                           AGL Resources Inc.
         Reconciliation of Operating Margin to Operating Revenues
                      For the Three Months Ended
                        March 31, 2009 and 2008
                            (In millions)
                             (Unaudited)
    


    
                                         Three Months
    

    
                              3/31/2009   3/31/2008    Fav/(Unfav)
    


    
    Operating Revenues         $995        $1,012          $(17)
    Cost of Gas                 589           657            68
    Operating Margin           $406          $355           $51





    




For further information:

For further information: Financial, Steve Cave, +1-404-584-3801, Cell:
+1-678-642-4258, scave@aglresources.com; Media, Tami Gerke, +1-404-584-3873,
Cell: +1-404-358-2307, tgerke@aglresources.com, both of AGL Resources Inc. Web
Site: http://www.aglresources.com

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AGL RESOURCES INC.

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