AGL Resources Reports Earnings Decline, Positive Impact of Nonregulated Business Units

ATLANTA, May 1 -- AGL Resources Inc. (NYSE:ATG) today reported results for the second quarter that ended March 31, 1998. Consolidated net income was $45.1 million, compared with $49 million for the same period a year ago. Basic earnings per share were 79 cents versus 88 cents for the second quarter in fiscal 1997.

The primary reason for the earnings decline is because of lower natural gas usage per customer of the company's natural gas distribution business. As a result, margins for the utility were down $11.1 million, or 6 percent. However, partly offsetting that decline was a $4.2 million, or 90 percent, increase in margins from the company's propane and gas supply subsidiaries. The company also reported an increase in income from its energy marketing joint ventures for the quarter.

J. Michael Riley, senior vice president and chief financial officer of AGL Resources, said, "We continue to see a pattern of lower gas consumption per customer in the company's natural gas utility, which is adversely affecting operating income and the bottom line of the company. However, we're pleased that utility operating expenses remain in check -- even down slightly from 1997 -- and that we continue to show income growth from our nonutility businesses."

Six-Month Results Announced

For the six-month period that ended March 31, 1998, the company reported net income of $70.8 million, compared with $78.6 million a year ago and basic earnings per share of $1.25 versus $1.41 per share. The continuing trend of lower normalized gas usage per customer in the company's natural gas distribution business is the primary factor in the lower income and earnings per share.

Dividend Declared

The company's board of directors today declared a quarterly dividend of 27 cents per share on its common stock. Payment will be made on June 1, 1998, to shareholders of record on May 15, 1998.

The dividend, which remains unchanged from the previous quarter, equates to $1.08 per share on an annualized basis. The June dividend will be the 202nd consecutive dividend paid.

The company also announced that L.L. Gellerstedt III has resigned from the board of directors. Gellerstedt recently became chief executive officer at American Business Products and said his new commitment would not allow him to continue his involvement on AGL Resources' board. "We regret Larry's decision, but we fully understand it. He has been a tremendous resource for our company, and we wish him the best in the future," said Walter M. Higgins, president and chief executive officer of AGL Resources. Effective with Gellerstedt's resignation, the board reduced the number of its members by one -- to 11 members.

AGL Resources Inc. is a regional energy holding company with operations in six southeastern states. Atlanta Gas Light, the largest natural gas distribution company in the Southeast, is the company's primary subsidiary and serves more than 1.4 million customers in Georgia and, through Chattanooga Gas Company, in southern Tennessee. Although natural gas distribution is AGL Resources' core business, it also is engaged in other energy-related businesses, including natural gas and power marketing, wholesale and retail propane sales, energy management services, and energy-related consumer products.

The company's home page address on the Internet is www.aglr.com.

                  AGL RESOURCES INC. AND SUBSIDIARY COMPANIES
                       CONSOLIDATED FINANCIAL INFORMATION
                                MARCH 31, 1998
                                  (Unaudited)

                  Millions of Dollars, Except Per Share Data

                                    3 Months Ended         6 Months Ended
                                       March 31,              March 31,
                                  1998        1997        1998       1997

    Operating Revenues          $ 483.9     $ 496.7     $ 886.2     $ 876.3
      Cost of Gas                 309.8       315.7       566.9       546.8
    Operating Margin              174.1       181.0       319.3       329.5

    Operating Income            $  83.3     $  89.0     $ 135.7     $ 149.2

    Consolidated Net Income     $  45.1     $  49.0     $  70.8     $  78.6

    Earnings Per Share of
     Common Stock
       Basic                    $  0.79     $  0.88     $  1.25     $  1.41
       Diluted                  $  0.79     $  0.87     $  1.24     $  1.40

    Average Number of Shares
     Outstanding (millions)
       Basic                       56.9        56.0        56.8        55.9
       Diluted                     57.0        56.0        56.9        56.0

SOURCE: AGL Resources Inc.