Atmos Energy 1999 Annual Report Download - page 38

Atmos
Energy
Corporation
34
1997, and a significant reduction in 1998 operating expenses due to the
company-wide restructuring of the organization and the integration of
the United Cities Division. Interest charges increased 7% to $33.2 mil-
lion primarily due to an increased level of debt and slightly higher aver-
age short-term rates in 1998 as compared with 1997.
Results of Operations – Propane
Key financial and operating data for the propane operations are
presented in the following table.
Year ended September 30,
1999 1998 1997
(Dollars in thousands, except per gallon data)
Financial
Operating revenues $ 22,944 $29,091 $ 33,194
Purchased gas cost 11,155 17,709 21,193
Gross profit 11,789 11,382 12,001
Operating expenses 12,332 10,763 11,596
Operating income (loss) (543) 619 405
Other income 482 174 159
Interest charges 1,231 897 744
Income tax benefit (423) (38) (90)
Net income (loss) $ (869) $ (66) $ (90)
Operating
Propane heating degree days:
Actual 3,440 3,799 3,847
% of normal 85% 94% 96%
Sales volumes (000 gallons):
Retail 19,700 17,229 17,145
Wholesale 2,591 6,183 8,059
Total 22,291 23,412 25,204
Average selling price/gallon $ .88 $ .88 $ .90
Average cost/gallon $ .44 $ .53 $ .65
Customers, end of year 39,539 37,400 29,097
YEAR ENDED SEPTEMBER 30, 1999 COMPARED WITH YEAR ENDED
SEPTEMBER 30, 1998
Propane revenues decreased $6.2 million from $29.1 million in
1998 to $22.9 million in 1999 primarily due to decreased wholesale
volumes sold as a result of the implementation of the Company’s
plan to exit the wholesale propane supply and transportation busi-
ness. Partially offsetting this decrease was an increase in the retail
gallons sold as a result of the acquisitions of Ingas, Inc. in May, 1998;
Harris Propane Gas Company, Inc. in July 1998; Massey Propane Gas
Company and E-Con Gas, Inc. in August 1998; and Shaw LP Gas,
Inc. in September 1998. The Company exited the less profitable
propane transportation, cylinder exchange, and appliance sales and
service businesses in 1999.
Purchased gas cost decreased $6.5 million from $17.7 million in
1998 to $11.2 million in 1999 due primarily to decreased wholesale
volumes sold. Additionally, the average cost per gallon decreased
$.09 per gallon from $.53 per gallon in 1998 to $.44 per gallon in
1999. This decrease was partially offset by the cost of increased retail
gallons sold due to the acquisitions made during fiscal 1998.
Operating expenses increased $1.6 million from $10.8 million in
1998 to $12.3 million in 1999 due primarily to the acquisitions made
during fiscal 1998.
Interest expense increased $.3 million due to increased debt related
to the acquisitions in 1998 and slightly higher interest rates in 1999.
YEAR ENDED SEPTEMBER 30, 1998, COMPARED WITH YEAR ENDED
SEPTEMBER 30, 1997
Revenues from propane operations decreased from $33.2 million
in 1997 to $29.1 million in 1998 primarily due to the decreased sell-
ing price per gallon to retail and wholesale customers. This decreased
selling price was the result of the lower demand because of warmer
weather and increased competition for customers as compared to the
prior year. Partially offsetting this decrease was an increase in retail
gallon sales. The increase in retail volumes sold resulted from the
acquisitions discussed above.
Purchased gas cost decreased from $21.2 million in 1997 to
$17.7 million in 1998 primarily due to the decreased market cost of
propane to the Company amounting to approximately $.12 per gal-
lon. Partially offsetting this decrease was increased gas purchased for
retail sales in 1998 as compared to 1997.
Operating expenses decreased from $11.6 million in 1997 to
$10.8 million in 1998 primarily due to decreased administrative
and general expenses due to decreased bad debt expense and a
reduction of staff through attrition during 1998. Partially reducing
this decrease was an increase in depreciation and amortization
from $2.1 million in 1997 to $2.3 million in 1998 due to the
acquisitions in 1997 and in 1998, and depreciation on additional
plant placed in service.
Interest expense increased from $.7 million in 1997 to $.9 million
in 1998 due to increased short-term borrowings and long-term debt
associated with the acquisitions in 1998, as well as increased short-
term borrowings to cover cash flow deficits from decreased sales.