1004155--2/7/2007--AGL_RESOURCES

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{operation, natural, condition}

{cost, contract, operation}

{cost, regulation, environmental}

{financial, litigation, operation}

{debt, indebtedness, cash}

{capital, credit, financial}

{condition, economic, financial}

{gas, price, oil}

{competitive, industry, competition}

{interest, director, officer}

{regulation, change, law}

{stock, price, operating}

{acquisition, growth, future}

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Forward-looking statements are only as of the date they are made, and we do not undertake any obligation to update these statements to reflect subsequent circumstances or events. You are advised, however, to review any further disclosures we make on related subjects in our Form 10-Q and Form 8-K reports to the SEC. Risks Related to Our Business Risks related to the regulation of our businesses could affect the rates we are able to charge, our costs and our profitability. A significant portion of our accounts receivable are subject to collection risks, due in part to a concentration of credit risk in Georgia and at Sequent. We face increasing competition, and if we are unable to compete effectively, our revenues, operating results and financial condition will be adversely affected and may limit our ability to grow our business. The asset management arrangements between Sequent and our local distribution companies, and between Sequent and its nonaffiliated customers, may not be renewed or may be renewed at lower levels, which could have a significant impact on Sequent s business. Our infrastructure improvement and customer growth may be restricted by the capital-intensive nature of our business. Changes in weather conditions may affect our earnings. Our business is subject to environmental regulation in all jurisdictions in which we operate, and our costs to comply are significant. Any changes in existing environmental regulation could negatively affect our results of operations and financial condition. We could incur additional material costs for the environmental condition of some of our assets, including former manufactured gas plants. Our profitability may decline if the counterparties to Sequent s asset management transactions fail to perform in accordance with Sequent s agreements. We are exposed to market risk and may incur losses in wholesale services and retail energy operations. Our accounting results may not be indicative of the risks we are taking or the economic results we expect for wholesale services. Inflation and increased gas costs could adversely impact our ability to control operating expenses, increase our level of indebtedness and adversely impact our customer base. A decrease in the availability of adequate pipeline transportation capacity could reduce our revenues and profits. The cost of providing pension and postretirement health care benefits to eligible employees and qualified retirees is subject to changes in pension fund values and changing demographics and may have a material adverse effect on our financial results. Transporting and storing natural gas involves numerous risks that may result in accidents and other operating risks and costs. Natural disasters, terrorist activities and the potential for military and other actions could adversely affect our businesses. Risks Related to Our Corporate and Financial Structure We depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets may limit our ability to execute our business plan or pursue improvements that we may rely on for future growth. The use of derivative contracts in the normal course of our business could result in financial losses that negatively impact our results of operations. We are vulnerable to interest rate risk with respect to our debt, which could lead to changes in interest expense and adversely affect our earnings. If we breach any of the financial covenants under our various credit facilities, our debt service obligations could be accelerated. As a result of cross-default provisions in our borrowing arrangements, we may be unable to satisfy all our outstanding obligations in the event of a default on our part. A downgrade in our credit rating could negatively affect our ability to access capital.

Full 10-K form ▸

1004155--2/7/2007--AGL_RESOURCES_INC