Atmos Energy 1998 Annual Report Download - page 50

its customer information system, accounting and financial reporting
system, and human resources system with systems that are Year
2000 compliant, which should substantially diminish the risk of
Year 2000 issues. Nevertheless, the Company will be developing
contingency plans by March 31,1999 in case the billing and pay-
ment systems prove not to be Year 2000 compliant.
Despite the Company’s efforts, there can be no assurance that
all material risks associated with Year 2000 issues relating to sys-
tems within its control will have been adequately identified and
corrected before the end of 1999. However, as the result of its
Year 2000 plan and the replacement of the customer information
system, accounting and financial reporting system, and human
resources system in 1999, the Company does not believe that in
the aggregate, Year 2000 issues with respect to both its own IT
and non-IT systems will be material to its business, operations or
financial condition. On the other hand, while the Company is in
the process of researching the Year 2000 readiness of its suppliers
and vendors, the Company can make no representation regarding
the Year 2000 compliance status of systems or parties outside its
control, and currently cannot assess the effect on it of any non-
compliance by such systems or parties.
All statements concerning Year 2000 issues other than historical
statements, including, without limitation, estimated costs and the
projected timetable of Year 2000 compliance, constitute “forward-
looking statements,” as defined in the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements should be
read in conjunction with the Company’s disclosures under the
heading “Cautionary Statement for the Purposes of the Safe Harbor
under the Private Securities Litigation Reform Act of 1995” at the
beginning of Management’s Discussion and Analysis.
Environmental Matters The Company is involved in certain envi-
ronmental matters as discussed in Note 5“Contingencies” of notes
to consolidated financial statements.
Results of Operations
Year ended September 30, 1998 compared with
year ended September 30, 1997
To assist in management’s discussion of results of operations,
the following table presents the effects of certain non-recurring
charges and weather on reported consolidated net income.
Earnings per share amounts presented in this discussion are
on a diluted basis.
Year ended September 30,
1998 1997 1996
Per Per Per
Amount Share Amount Share Amount Share
(In thousands, except per share data)
Net income as reported $55,265 $1.84 $23,838 $ .81 $41,151 $1.42
Non-recurring charges:
Management reorganization – – 2,800 .10 – –
Reserve for
integration costs – – 12,630 .43 – –
Sale of assets (2,244) (.07) – – – –
Normalized net income
except for effects
of weather 53,021 1.77 39,268 1.34 41,151 1.42
Effects of weather 3,485 .11 3,571 .12 (1,838) (.06)
Normalized net income $56,506 $1.88 $42,839 $1.46 $39,313 $1.36
Net Income as Reported For the fiscal year ended September 30,
1998, the Company reported net income of $55.3million, or $1.84
per diluted share, on operating revenues of $848.2million. The
1998 net income includes one-time gains totaling $2.2million or
$.07 per diluted share, from the sales of real estate and equipment
owned by UCG Energy. Although revenues for 1998 were lower as
a result of winter weather that was 5% warmer than normal, as
well as warmer than last year, earnings improved due to gains on
asset sales, lower operation and maintenance expenses and
increased irrigation sales. Operations and maintenance expenses
were lower for 1998 due to a company-wide restructuring of the
organization and Atmos’ integration of United Cities Gas
Company. Sales of gas in Texas to farmers for fueling irrigation
pumps increased due to hot and dry summer weather in 1998.
Irrigation volumes increased 34% in 1998 compared with 1997.
Utility operations contributed about 76% of 1998 net income,
with non-utility operations generating about 24%.
For the fiscal year ended September 30,1997, the Company
reported net income of $23.8million, or $.81 per share, on operat-
ing revenues of $906.8million. The 1997 net income included the
effects of non-recurring after-tax charges related to management
46 ATMOS ENERGY CORPORATION