Atmos Energy 1999 Annual Report Download - page 36

Atmos
Energy
Corporation
32
fueling irrigation pumps increased due to hot and dry summer
weather in 1998. Irrigation volumes increased 34% in 1998
compared with 1997.
For fiscal year 1997, the Company reported net income of $23.8
million, or $.81 per share, on operating revenues of $906.8 million.
The 1997 net income included the effects of special after-tax charges
related to management reorganization ($2.8 million or $.10 per share)
and reserves related to the UCGC merger and integration ($12.6 mil-
lion or $.43 per share). Excluding the effect of these charges, the
Company’s net income would have been $39.3 million or $1.34 per
share in 1997, compared with $41.2 million, or $1.42 per share for
1996. The 1997 results include UCGC, which merged with Atmos
effective July 31, 1997.
Special Items The Company became successor in interest in connec-
tion with a lawsuit filed against a gas company it acquired in
Louisiana in 1995. In 1999, the Company settled the lawsuit for
$3.25 million or $2.07 million after-tax.
In 1998, the Company sold UCGC’s former headquarters office
building in Brentwood, Tennessee; two office buildings and a piece of
land in Franklin, Tennessee that UCGC had held for investment; and
an airplane. The Company realized a pre-tax gain on the sale of
assets totaling $3.3 million or $2.2 million after-tax.
In 1997, the Company completed a management reorganiza-
tion and recorded a charge of $4.4 million ($2.8 million after-tax) in
related costs.
In connection with the UCGC merger and integration in 1997,
the Company recorded approximately $17.0 million of transaction
costs and $42.8 million for separation and other costs. The Company
believes a significant amount of these costs will be recovered through
rates and future operating efficiencies of the combined operations.
Therefore, the Company recorded these costs as regulatory assets
and established a reserve of $20.3 million ($12.6 million after-tax), to
account for costs that may not be recovered. For further information
regarding the merger, see Note 2 of notes to consolidated financial
statements.
Consolidated Other Income, Interest Charges and
Income Taxes
Other Income Equity in earnings of unconsolidated investment
amounted to $7.2 million, $3.9 million and $3.3 million for 1999,
1998 and 1997, respectively. The increase for 1999 was primarily
attributable to a change in accounting principle adopted by WMLLC.
WMLLC adopted EITF 98-10, the effect of which added $2.4 million
to equity in earnings of unconsolidated investment.
Interest income was $.8 million, $1.5 million and $2.2 million for
1999, 1998 and 1997, respectively. The decreases in 1998 and 1999
were due to maintaining lower overnight cash balances for short-
term investing.
Other, net was $2.2 million, $4.3 million and $(.3) million for
1999, 1998 and 1997, respectively. The increase from 1997 to 1998
was primarily due to the $3.3 million gain from sale of certain assets
obtained in the merger with UCGC. The $2.2 million in 1999 was pri-
marily due to income from performance-based rates (“PBR”) which
were implemented in Kentucky in 1998.
Interest Charges Interest charges totaled $37.1 million, $35.6 million
and $33.6 million in 1999, 1998 and 1997, respectively. The increases
for 1998 and 1999 were related to increases in total debt outstanding
for funding the infrastructure, technology, process changes and cus-
tomer support investments made in 1997, 1998 and 1999.
Income Taxes The provision for income taxes was $9.6 million,
$31.8 million and $14.3 million for 1999, 1998 and 1997, respective-
ly. Changes in income taxes are primarily related to changes in pre-
tax income. For further information regarding income taxes, see Note
5 of notes to consolidated financial statements.
Net Income by Segment The Company has three business seg-
ments: utility operations, propane operations and energy services,
which includes the Company’s 45% interest in WMLLC. The follow-
ing table sets forth the net income (loss) of each of these segments
for 1999, 1998 and 1997.
Year ended September 30,
1999 1998 1997
(In thousands)
Utility $10,800 $ 43,332 $19,739
Propane (869) (66) (90)
Energy Services 7,813 11,999 4,189
Reported net income $17,744 $ 55,265 $23,838
For additional financial information regarding the Company’s
segments, see Note 12 of notes to consolidated financial statements
and the following discussion of the “Results of Operations” for each
segment.