10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2014
Commission File Number 1-14174
AGL RESOURCES INC.
Ten Peachtree Place NE, Atlanta, Georgia 30309
404-584-4000
Georgia	58-2210952
(State of incorporation)	(I.R.S. Employer Identification No.)
AGL Resources Inc.: (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
AGL Resources Inc. has submitted electronically and posted on its corporate website every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.

AGL Resources Inc. is a large accelerated filer and is not a shell company.

The number of shares of AGL Resources Inc.’s common stock, $5.00 Par Value, outstanding as of July 23, 2014 was 119,478,539.

AGL RESOURCES INC.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2014

TABLE OF CONTENTS

			Page
Glossary of Key Terms				3
Item Number.
		PART I - FINANCIAL INFORMATION
	1	Condensed Consolidated Financial Statements (Unaudited)		4
		Condensed Consolidated Statements of Financial Position		4
		Condensed Consolidated Statements of Income		5
		Condensed Consolidated Statements of Comprehensive Income		6
		Condensed Consolidated Statements of Equity		7
		Condensed Consolidated Statements of Cash Flows		8
		Notes to Condensed Consolidated Financial Statements (Unaudited)		9
		Note 1 - Organization and Basis of Presentation		9
		Note 2 - Significant Accounting Policies and Methods of Application		9
		Note 3 - Regulated Operations		13
		Note 4 - Fair Value Measurements		14
		Note 5 - Derivative Instruments		15
		Note 6 - Employee Benefit Plans		17
		Note 7 - Debt and Credit Facilities		18
		Note 8 - Equity		19
		Note 9 - Non-Wholly Owned Entities		20
		Note 10 - Commitments, Guarantees and Contingencies		21
		Note 11 - Segment Information		22
		Note 12 - Discontinued Operations		24
		Note 13 - Subsequent Event		25
	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
		Forward-Looking Statements		26
		Executive Summary		26
		Results of Operations		29
		Liquidity and Capital Resources		36
		Critical Accounting Policies and Estimates		39
		Accounting Developments		40
	3	Quantitative and Qualitative Disclosures About Market Risk		40
	4	Controls and Procedures		42
		PART II - OTHER INFORMATION
	1	Legal Proceedings		43
	1A	Risk Factors		43
	2	Unregistered Sales of Equity Securities and Use of Proceeds		43
	6	Exhibits		43
		SIGNATURE		44

2

GLOSSARY OF KEY TERMS

2013 Form 10-K	Our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 6, 2014
AFUDC	Allowance for funds used during construction, which represents the estimated cost of funds, from both debt and equity sources, used to finance the construction of major projects, capitalized in PP&E and considered rate base for ratemaking purposes
AGL Capital	AGL Capital Corporation
AGL Credit Facility	$1.3 billion credit agreement entered into by AGL Capital to support its commercial paper program, which matures in November 2017
AGL Resources	AGL Resources Inc., together with its consolidated subsidiaries
Atlanta Gas Light	Atlanta Gas Light Company
Bcf	Billion cubic feet
Central Valley	Central Valley Gas Storage, LLC
Compass Energy	Compass Energy Services, Inc., which was sold in 2013
EBIT	Earnings before interest and taxes, the primary measure of our operating segments’ profit or loss, which includes operating income and other income and excludes financing costs, including interest on debt and income tax expense
ERC	Environmental remediation costs
FASB	Financial Accounting Standards Board
Fitch	Fitch Ratings
GAAP	Accounting principles generally accepted in the United States of America
Georgia Commission	Georgia Public Service Commission, the state regulatory agency for Atlanta Gas Light
Golden Triangle	Golden Triangle Storage, Inc.
Heating Degree Days	A measure of the weather, calculated when the average daily temperatures are less than 65 degrees Fahrenheit
Heating Season	The period from November through March when natural gas usage and operating revenues are generally higher
Horizon Pipeline	Horizon Pipeline Company, LLC
Illinois Commission	Illinois Commerce Commission, the state regulatory agency for Nicor Gas
Jefferson Island	Jefferson Island Storage & Hub, LLC
LIFO	Last-in, first-out
LNG	Liquefied natural gas
LOCOM	Lower of weighted average cost or market price
Marketers	Marketers selling retail natural gas in Georgia and certificated by the Georgia Commission
MGP	Manufactured Gas Plant
Moody’s	Moody’s Investors Service
New Jersey BPU	New Jersey Board of Public Utilities, the state regulatory agency for Elizabethtown Gas
Nicor	Nicor Inc.
Nicor Gas	Northern Illinois Gas Company, doing business as Nicor Gas Company
Nicor Gas Credit Facility	$700 million credit facility entered into by Nicor Gas to support its commercial paper program, which matures in December 2017
NYMEX	New York Mercantile Exchange, Inc.
OCI	Other comprehensive income
Operating margin	A non-GAAP measure of income, calculated as operating revenues minus cost of goods sold and revenue tax expense
OTC	Over-the-counter
PBR	Performance-based rate
Piedmont	Piedmont Natural Gas Company, Inc.
Pivotal Home Solutions	Nicor Energy Services Company, doing business as Pivotal Home Solutions
PP&E	Property, plant and equipment
QIP	Nicor Gas’ Qualified Infrastructure Program
S&P	Standard & Poor’s Ratings Services
Sawgrass Storage	Sawgrass Storage, LLC
SEC	Securities and Exchange Commission
Sequent	Sequent Energy Management, L.P.
SouthStar	SouthStar Energy Services, LLC
STRIDE	Atlanta Gas Light’s Strategic Infrastructure Development and Enhancement program
Triton	Triton Container Investments, LLC
Tropical Shipping	Tropical Shipping and Construction Company Limited, and also the name used throughout this filing to describe the business operations of our former cargo shipping segment (excluding Triton), which now has been classified as discontinued operations and held for sale
U.S.	United States
VaR	Value-at-risk is the maximum potential loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability
VIE	Variable interest entity
Virginia Commission	Virginia State Corporation Commission, the state regulatory agency for Virginia Natural Gas
Virginia Natural Gas	Virginia Natural Gas, Inc.
WACOG	Weighted average cost of gas

3

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

AGL RESOURCES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

	As of
In millions, except share amounts	June 30, 2014			December 31, 2013			June 30, 2013
Current assets
Cash and cash equivalents	$	122		$	81		$	153
Short-term investments		8			49			41
Receivables
Energy marketing		677			786			608
Gas, unbilled and other		520			736			403
Less allowance for uncollectible accounts		51			29			41
Total receivables, net		1,146			1,493			970
Inventories, net		460			658			522
Assets held for sale		257			283			289
Regulatory assets		211			162			120
Derivative instruments		105			99			113
Other		122			120			69
Total current assets		2,431			2,945			2,277
Long-term assets and other deferred debits
Property, plant and equipment		11,202			10,952			10,613
Less accumulated depreciation		2,401			2,295			2,240
Property, plant and equipment, net		8,801			8,657			8,373
Goodwill		1,827			1,827			1,822
Regulatory assets		775			737			898
Intangible assets		147			154			164
Derivative instruments		9			20			17
Other		312			316			244
Total long-term assets and other deferred debits		11,871			11,711			11,518
Total assets	$	14,302		$	14,656		$	13,795
Current liabilities
Energy marketing trade payables	$	724		$	671		$	628
Short-term debt		448			1,171			521
Other accounts payable - trade		319			421			336
Accrued expenses		213			203			164
Current portion of long-term debt		200			-			-
Regulatory liabilities		149			183			216
Temporary LIFO liquidation		116			-			84
Customer deposits and credit balances		107			136			114
Accrued environmental remediation liabilities		90			70			62
Derivative instruments		50			75			33
Liabilities held for sale		39			40			38
Other		141			153			153
Total current liabilities		2,596			3,123			2,349
Long-term liabilities and other deferred credits
Long-term debt		3,607			3,813			3,819
Accumulated deferred income taxes		1,721			1,667			1,567
Regulatory liabilities		1,565			1,518			1,510
Accrued pension and retiree welfare benefits		405			404			510
Accrued environmental remediation liabilities		379			377			406
Derivative instruments		12			5			6
Other		83			73			73
Total long-term liabilities and other deferred credits		7,772			7,857			7,891
Total liabilities and other deferred credits		10,368			10,980			10,240
Commitments, guarantees and contingencies (see Note 10)
Equity
Common stock, $5 par value; 750,000,000 shares authorized:		598			595			594
outstanding: 119,464,063 shares at June 30, 2014, 118,888,876 shares at December 31, 2013 and 118,560,687 shares at June 30, 2013
Additional paid-in capital		2,072			2,054			2,035
Retained earnings		1,363			1,126			1,127
Accumulated other comprehensive loss		(133	)		(136	)		(209	)
Treasury shares, at cost: 216,523 shares at June 30, 2014 and December 31, 2013 and June 30, 2013		(8	)		(8	)		(8	)
Total common shareholders’ equity		3,892			3,631			3,539
Noncontrolling interest		42			45			16
Total equity		3,934			3,676			3,555
Total liabilities and equity	$	14,302		$	14,656		$	13,795
See Notes to Condensed Consolidated Financial Statements (Unaudited).

4

AGL RESOURCES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three months ended						Six months ended
	June 30,						June 30,
In millions, except per share amounts	2014			2013			2014			2013
Operating revenues (includes revenue taxes of $26 and $94 for the three and six months in 2014 and $24 and $74 for the three and six months in 2013)	$	902		$	816		$	3,376		$	2,438
Operating expenses
Cost of goods sold		402			353			1,802			1,273
Operation and maintenance		211			205			500			437
Depreciation and amortization		95			103			188			206
Taxes other than income taxes		42			43			130			112
Total operating expenses		750			704			2,620			2,028
Gain on disposition of assets		-			11			-			11
Operating income		152			123			756			421
Other income		2			7			5			12
Interest expense, net		(48	)		(46	)		(96	)		(92	)
Income before income taxes		106			84			665			341
Income tax expense		41			33			248			127
Income from continuing operations		65			51			417			214
Income (loss) from discontinued operations, net of tax		1			(1	)		(49	)		-
Net income		66			50			368			214
Less net income attributable to the noncontrolling interest		2			1			14			11
Net income attributable to AGL Resources Inc.	$	64		$	49		$	354		$	203
Per common share information
Basic earnings (loss) per common share
Continuing operations	$	0.53		$	0.42		$	3.40		$	1.72
Discontinued operations		0.01			(0.01	)		(0.42	)		-
Basic earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54		$	0.41		$	2.98		$	1.72
Diluted earnings (loss) per common share
Continuing operations	$	0.53		$	0.42		$	3.39		$	1.72
Discontinued operations		0.01			(0.01	)		(0.42	)		-
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54		$	0.41		$	2.97		$	1.72
Cash dividends declared per common share	$	0.49		$	0.47		$	0.98		$	0.94
Weighted average number of common shares outstanding
Basic		118.8			117.8			118.7			117.6
Diluted		119.2			118.2			119.1			117.9

See Notes to Condensed Consolidated Financial Statements (Unaudited).

5

AGL RESOURCES INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three months ended						Six months ended
	June 30,						June 30,
In millions	2014			2013			2014			2013
Net income	$	66		$	50		$	368		$	214
Less income (loss) from discontinued operations, net of tax		1			(1	)		(49	)		-
Income from continuing operations		65			51			417			214
Other comprehensive income (loss), net of tax
Retirement benefit plans
Reclassification of actuarial losses to net benefit cost (net of income tax of $2 and $3 for the three and six months ended June 30, 2014, and $3 and $5 for the three and six months ended June 30, 2013)		4			4			5			8
Reclassification of prior service credits to net benefit cost (net of income tax of $(1) for the six months ended June 30, 2013)		(1	)		-			(1	)		(1	)
Retirement benefit plans		3			4			4			7
Cash flow hedges, net of tax
Net derivative instrument (losses) gains arising during the period (net of income tax of $1 for the three months ended June 30, 2013)		-			(1	)		4			1
Reclassification of realized derivative instrument (gains) losses to net income (net of income tax of $(1) for the three and six months ended June 30, 2014 and $1 for the six months ended June 30, 2013)		(1	)		(1	)		(5	)		1
Cash flow hedges, net		(1	)		(2	)		(1	)		2
Other comprehensive income, net of tax		2			2			3			9
Comprehensive income		67			53			420			223
Less comprehensive income attributable to noncontrolling interest		2			1			14			11
Comprehensive income from continuing operations attributable to AGL Resources Inc.	$	65		$	52		$	406		$	212

See Notes to Condensed Consolidated Financial Statements (Unaudited).

6

AGL RESOURCES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

	AGL Resources Inc. Shareholders
	Common stock				Additional			Retained			Accumulated other			Treasury			Noncontrolling
In millions, except per share amounts	Shares		Amount		paid-in capital			earnings			comprehensive loss			shares			interest			Total
Balance as of December 31, 2012		117.9	$	590	$	2,014		$	1,035		$	(218	)	$	(8	)	$	22		$	3,435
Net income		-		-		-			203			-			-			11			214
Other comprehensive income		-		-		-			-			9			-			-			9
Dividends on common stock ($0.94 per share)		-		-		-			(111	)		-			-			-			(111	)
Distributions to noncontrolling interests		-		-		-			-			-			-			(17	)		(17	)
Stock granted, share-based compensation, net of forfeitures		-		-		(6	)		-			-			-			-			(6	)
Stock issued, dividend reinvestment plan		0.1		1		5			-			-			-			-			6
Stock issued, share-based compensation, net of forfeitures		0.6		3		18			-			-			-			-			21
Stock-based compensation expense, net of tax		-		-		4			-			-			-			-			4
Balance as of June 30, 2013		118.6	$	594	$	2,035		$	1,127		$	(209	)	$	(8	)	$	16		$	3,555

	AGL Resources Inc. Shareholders
	Common stock				Additional			Retained			Accumulated other			Treasury			Noncontrolling
In millions, except per share amounts	Shares		Amount		paid-in capital			earnings			comprehensive loss			shares			interest			Total
Balance as of December 31, 2013		118.9	$	595	$	2,054		$	1,126		$	(136	)	$	(8	)	$	45		$	3,676
Net income		-		-		-			354			-			-			14			368
Other comprehensive income		-		-		-			-			3			-			-			3
Dividends on common stock ($0.98 per share)		-		-		-			(117	)		-			-			-			(117	)
Distributions to noncontrolling interests		-		-		-			-			-			-			(17	)		(17	)
Stock granted, share-based compensation, net of forfeitures		-		-		(12	)		-			-			-			-			(12	)
Stock issued, dividend reinvestment plan		-		-		5			-			-			-			-			5
Stock issued, share-based compensation, net of forfeitures		0.6		3		17			-			-			-			-			20
Stock-based compensation expense, net of tax		-		-		8			-			-			-			-			8
Balance as of June 30, 2014		119.5	$	598	$	2,072		$	1,363		$	(133	)	$	(8	)	$	42		$	3,934

See Notes to Condensed Consolidated Financial Statements (Unaudited).

7

AGL RESOURCES INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six months ended
	June 30,
In millions	2014			2013
Cash flows from operating activities
Net income	$	368		$	214
Adjustments to reconcile net income to net cash flow provided by operating activities
Depreciation and amortization		188			206
Loss from discontinued operations, net of taxes		49			-
Deferred income taxes		21			(14	)
Change in derivative instrument assets and liabilities		(13	)		14
Gain on disposition of assets		-			(11	)
Changes in certain assets and liabilities
Inventories, net of temporary LIFO liquidation		314			261
Receivables, other than energy marketing		238			267
Energy marketing receivables and trade payables, net		162			86
Accrued expenses		10			31
Prepaid taxes		(11	)		57
Trade payables, other than energy marketing		(61	)		(15	)
Deferred/accrued natural gas costs		(129	)		40
Other, net		35			14
Net cash flow provided by operating activities for discontinued operations		4			11
Net cash flow provided by operating activities		1,175			1,161
Cash flows from investing activities
Expenditures for property, plant and equipment		(332	)		(315	)
Net decrease in short-term investments		41			15
Acquisitions of assets		-			(122	)
Disposition of assets		-			12
Other		4			-
Net cash flow used in investing activities for discontinued operations		(13	)		(3	)
Net cash flow used in investing activities		(300	)		(413	)
Cash flows from financing activities
Net repayments of commercial paper		(723	)		(857	)
Dividends paid on common shares		(117	)		(111	)
Distribution to noncontrolling interest		(17	)		(17	)
Payment of senior notes		-			(225	)
Issuance of senior notes		-			494
Other, net		14			21
Net cash flow used in financing activities		(843	)		(695	)
Net increase in cash and cash equivalents - continuing operations		41			45
Net (decrease) increase in cash and cash equivalents - discontinued operations		(9	)		8
Cash and cash equivalents (including held for sale) at beginning of period		105			131
Cash and cash equivalents (including held for sale) at end of period		137			184
Less cash and cash equivalents held for sale at end of period		15			31
Cash and cash equivalents (excluding held for sale) at end of period	$	122		$	153
Cash paid during the period for
Interest	$	95		$	89
Income taxes	$	207		$	60
Non cash financing transaction
Refinancing of gas facility revenue bonds	$	-		$	200

See Notes to Condensed Consolidated Financial Statements (Unaudited).

8

AGL RESOURCES INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 - Organization and Basis of Presentation

General

AGL Resources Inc. is an energy services holding company that conducts substantially all its operations through its subsidiaries. Unless the context requires otherwise, references to “we,” “us,” “our,” the “company,” or “AGL Resources” mean consolidated AGL Resources Inc. and its subsidiaries.

The December 31, 2013 Condensed Consolidated Statement of Financial Position data was derived from our audited financial statements, but does not include all disclosures required by GAAP. We have prepared the accompanying unaudited Condensed Consolidated Financial Statements under the rules and regulations of the SEC. In accordance with such rules and regulations, we have condensed or omitted certain information and notes normally included in financial statements prepared in conformity with GAAP. Our unaudited Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature that are, in the opinion of management, necessary for a fair presentation of our financial results for the interim periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K.

Due to the seasonal nature of our business and other factors, our results of operations and our financial condition for the periods presented are not necessarily indicative of the results of operations or financial condition to be expected for or as of any other period.

Basis of Presentation

Our unaudited Condensed Consolidated Financial Statements include our accounts, the accounts of our wholly owned subsidiaries, the accounts of our majority owned or otherwise controlled subsidiaries and the accounts of our consolidated VIE for which we are the primary beneficiary. For unconsolidated entities that we do not control, but exercise significant influence over, we use the equity method of accounting and our proportionate share of income or loss is recorded on the unaudited Condensed Consolidated Statements of Income. See Note 9 for additional information. We have eliminated intercompany profits and transactions in consolidation except for intercompany profits where recovery of such amounts is probable under the affiliates’ rate regulation process.

On April 4, 2014 we entered into a definitive agreement to sell Tropical Shipping, which historically operated within our cargo shipping segment. The assets and liabilities of these businesses are classified as held for sale on the unaudited Condensed Consolidated Statements of Financial Position, and the financial results of these businesses are reflected as discontinued operations on the unaudited Condensed Consolidated Statements of Income. Amounts shown in the following notes, unless otherwise indicated, exclude assets held for sale and discontinued operations. Cargo shipping also included our investment in Triton, which is not a part of the sale and has been reclassified into our other segment. See Note 12 for additional information.

Note 2 - Significant Accounting Policies and Methods of Application

Our accounting policies are described in Note 2 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. There were no significant changes to our accounting policies during the six months ended June 30, 2014.

Use of Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our estimates may involve complex situations requiring a high degree of judgment either in the application and interpretation of existing literature or in the development of estimates that impact our financial statements. The most significant estimates relate to our rate-regulated subsidiaries, uncollectible accounts and other allowances for contingent losses, goodwill and other intangible assets, retirement plan benefit obligations, derivative and hedging activities and provisions for income taxes. We evaluate our estimates on an ongoing basis, and our actual results could differ from our estimates.

Cash and Cash Equivalents

Our cash and cash equivalents primarily consist of cash on deposit, money market accounts and certificates of deposit held by domestic subsidiaries with original maturities of three months or less. As of June 30, 2014 and 2013, and December 31, 2013, $15 million, $31 million and $24 million, respectively, of cash and short and long-term investments held by Tropical Shipping are excluded from cash and cash equivalents and are included in assets held for sale. For more information on the sale of Tropical Shipping, see Note 12.

9

Energy Marketing Receivables and Payables

Our wholesale services segment provides services to retail and wholesale marketers and utility and industrial customers. These customers, also known as counterparties, utilize netting agreements that enable our wholesale services segment to net receivables and payables by counterparty upon settlement. Wholesale services also nets across product lines and against cash collateral, provided the master netting and cash collateral agreements include such provisions. While the amounts due from, or owed to, wholesale services’ counterparties are settled net, they are recorded on a gross basis in our unaudited Condensed Consolidated Statements of Financial Position as energy marketing receivables and energy marketing payables.

Our wholesale services segment has trade and credit contracts that contain minimum credit rating requirements. These credit rating requirements typically give counterparties the right to suspend or terminate credit if our credit ratings are downgraded to non-investment grade status. Under such circumstances, wholesale services would need to post collateral to continue transacting business with some of its counterparties. To date, our credit ratings have exceeded the minimum requirements. As of June 30, 2014 and 2013, and December 31, 2013, the collateral that wholesale services would have been required to post if our credit ratings had been downgraded to non-investment grade status would not have had a material impact to our consolidated results of operations, cash flows or financial condition. If such collateral were not posted, wholesale services’ ability to continue transacting business with these counterparties would be negatively impacted.

Inventories

For our regulated utilities, except Nicor Gas, our natural gas inventories and the inventories we hold for Marketers in Georgia are carried at cost on a WACOG basis. In Georgia’s competitive environment, Marketers sell natural gas to firm end-use customers at market-based prices. Part of the unbundling process, which resulted from deregulation and provides this competitive environment, is the assignment to Marketers of certain pipeline services that Atlanta Gas Light has under contract. On a monthly basis, Atlanta Gas Light assigns the majority of the pipeline storage services that it has under contract to Marketers, along with a corresponding amount of inventory. Atlanta Gas Light also retains and manages a portion of its pipeline storage assets and related natural gas inventories for system balancing and to serve system demand. See Note 10 for information regarding a regulatory filing by Atlanta Gas Light related to natural gas inventory.

Nicor Gas’ inventory is carried at cost on a LIFO basis. Inventory decrements occurring during interim periods that are expected to be restored prior to year-end are charged to cost of goods sold at the estimated annual replacement cost, and the difference between this cost and the actual liquidated LIFO layer cost is recorded as a temporary LIFO inventory liquidation. Any temporary LIFO liquidation is included as a current liability in our unaudited Condensed Consolidated Statements of Financial Position. Interim inventory decrements that are not expected to be restored prior to year-end are charged to cost of goods sold at the actual LIFO cost of the layers liquidated. The inventory decrement as of June 30, 2014 is expected to be restored prior to year-end. The inventory decrement as of June 30, 2013 was restored prior to December 31, 2013.

Our retail operations, wholesale services and midstream operations segments carry inventory at the lower of cost or market value, where cost is determined on a WACOG basis. For these segments, we evaluate the weighted average cost of their natural gas inventories against market prices to determine whether any declines in market prices below the WACOG are other than temporary. For any declines considered to be other than temporary, we record adjustments to reduce the weighted average cost of the natural gas inventory to market value. For the three and six months ended June 30, 2014, we recorded $4 million and $6 million, respectively, total LOCOM adjustment to reduce the value of our inventories to market value and $8 million for the three and six months ended June 30, 2013.

Midstream operations’ primary activity is operating non-utility storage and pipeline facilities. Mechanical integrity tests and engineering studies are periodically performed on these storage facilities in accordance with certain state regulatory requirements. However, such tests may be performed in advance of such state requirements for operational purposes. During the first half of 2014, an engineering study and mechanical integrity tests were performed at one of our storage facilities, identifying a lower amount of working gas capacity that is the result of naturally occurring shrinkage of the storage caverns. Further, based on the lower capacity and an analysis of the volume of natural gas stored in the facility, we recorded additional gas costs to true-up the amount of retained fuel at this facility in the amount of $2 million and $9 million for the three and six months ended June 30, 2014, respectively.

Fair Value Measurements

We have financial and nonfinancial assets and liabilities subject to fair value measurement. The financial assets and liabilities measured and carried at fair value include cash and cash equivalents, and derivative assets and liabilities. The carrying values of receivables, short- and long-term investments, accounts payable, short-term debt, other current assets and liabilities, and accrued interest approximate fair value. Our nonfinancial assets and liabilities include pension and other retirement benefits, which are presented in Note 4 to our Consolidated Financial Statements and in related notes included in Item 8 of our 2013 Form 10-K.

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As defined in the authoritative guidance related to fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We classify fair value balances based on the observance of those inputs in accordance with the fair value hierarchy.

Derivative Instruments

The fair value of the natural gas and weather derivative instruments that we use to manage exposures arising from changing natural gas prices and weather risk reflects the estimated amounts that we would receive or pay to terminate or close the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts. We use external market quotes and indices to value substantially all of our derivative instruments. See Note 4 and Note 5 for additional derivative disclosures.

Goodwill

During the first quarter of 2014, we completed an engineering study at our midstream operations storage facilities that indicated a reduced forecast of working gas capacity from what was projected when our 2013 annual goodwill impairment analysis was performed during the fourth quarter of 2013. Given that the 2013 annual goodwill impairment test indicated that the estimated fair value of this reporting unit exceeded its carrying amount by less than 5%, we considered this reduced storage capacity as an indicator of potential impairment and, accordingly, conducted an interim goodwill impairment analysis during the first quarter of 2014.

The estimated fair value of this reporting unit was determined utilizing the income approach, which estimated the fair value based upon the present value of estimated future cash flows. The forecasts used in the income approach, which were updated during the first quarter of 2014 to reflect the contracting activity that occurred during the quarter, assume discrete period revenue growth through fiscal 2022 to reflect the recovery of subscription rates, stabilization of earnings and establishment of a reasonable base year that was used to estimate the terminal value in the valuation model. Consistent with our 2013 annual goodwill impairment testing, we assumed a long-term earnings growth rate in the terminal year of 2.5%, which we believe is appropriate given the current economic and industry specific expectations. As of the valuation date, we utilized a discount rate of 7.0%, which we believe is appropriate as it reflects the relative risk and the time value of money, and is consistent with the peer group of this reporting unit as well as the discount rates that were utilized in our 2013 annual goodwill impairment tests.

Our interim goodwill impairment test, which utilized cash flow forecasts providing for growth over the next eight years, indicated that the estimated fair value of this reporting unit continues to exceed its carrying amount with a cushion of less than 10%. However, continued declines in capacity or subscription rates, reductions to our cash flow forecasts, a sustained period at the current subscription rates or other changes to the assumptions and factors used in this analysis may result in a future failure of step one of the goodwill impairment test and require us to proceed to step two of the goodwill impairment test in a future period.

The risk of impairment of the underlying long-lived assets is not estimated to be significant as the assets have long remaining useful lives, and authoritative guidance requires such assets to be tested for impairment on the basis of undiscounted cash flows over their remaining useful lives. We will continue to monitor this reporting unit for potential impairment. Changes in the amount of goodwill for the six months ended June 30, 2014 and 2013 are provided in the following table.

In millions	Distribution Operations		Retail Operations		Midstream Operations		Consolidated (1)
Goodwill - December 31, 2012	$	1,640	$	122	$	14	$	1,776
2013 activity		-		46		-		46
Goodwill - June 30, 2013	$	1,640	$	168	$	14	$	1,822
Goodwill - December 31, 2013	$	1,640	$	173	$	14	$	1,827
Goodwill - June 30, 2014	$	1,640	$	173	$	14	$	1,827

(1)   Excludes goodwill at Tropical Shipping now classified as held for sale. See Note 12 for additional information.

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Other Income

Our other income is detailed in the following table. For more information on our equity method investment income, see Note 9.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Equity method investment income	$	1	$	2	$	4	$	5
AFUDC - equity		1		3		1		6
Other, net		-		2		-		1
Total other income	$	2	$	7	$	5	$	12

Earnings Per Common Share

We compute basic earnings per common share attributable to AGL Resources Inc. common shareholders by dividing our net income attributable to AGL Resources Inc. by the daily weighted average number of common shares outstanding. Diluted earnings per common share attributable to AGL Resources Inc. common shareholders reflect the potential reduction in earnings per common share attributable to AGL Resources Inc. common shareholders that occurs when potentially dilutive common shares are added to common shares outstanding.

We derive our potentially dilutive common shares by calculating the number of shares issuable under restricted stock, restricted stock units and stock options. The vesting of certain shares of the restricted stock and restricted stock units depends on the satisfaction of defined performance and/or time-based criteria. The future issuance of shares underlying the outstanding stock options depends on whether the market price of the common shares underlying the options exceeds the respective exercise prices of the stock options.

The following table shows the calculation of our diluted shares attributable to AGL Resources Inc. common shareholders for the periods presented, as if performance units currently earned under the plan ultimately vest and as if stock options currently exercisable at prices below the average market prices are exercised.

	Three months ended June 30,					Six months ended June 30,
In millions (except per share amounts)	2014		2013			2014			2013
Income from continuing operations	$	63	$	50		$	403		$	203
Income (loss) from discontinued operations, net of tax		1		(1	)		(49	)		-
Net income attributable to AGL Resources Inc.	$	64	$	49		$	354		$	203
Denominator:
Basic weighted average number of shares outstanding (1)		118.8		117.8			118.7			117.6
Effect of dilutive securities		0.4		0.4			0.4			0.3
Diluted weighted average number of shares outstanding		119.2		118.2			119.1			117.9
Basic earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.40		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Basic earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.98		$	1.72
Diluted earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.39		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.97		$	1.72

(1)   Daily weighted average shares outstanding.

Accounting Developments

On April 10, 2014, the FASB issued authoritative guidance related to reporting discontinued operations. The guidance generally raises the threshold for disposals to qualify as discontinued operations and requires new disclosures of both discontinued operations and certain other material disposals that do not meet the definition of a discontinued operation. The guidance will be effective for us prospectively beginning January 1, 2015. It is not expected to have a material impact on our consolidated financial statements, and it will have no impact on our accounting for the sale of Tropical Shipping.

On May 28, 2014, the FASB issued an update to authoritative guidance related to revenue from contracts with customers. The update replaces most of the existing guidance with a single set of principles for recognizing revenue from contracts with customers. The guidance will be effective for us beginning January 1, 2017. Early adoption is not permitted. The new guidance must be applied retrospectively to each prior period presented or via a cumulative effect upon the date of initial application. We have not yet determined the impact of this new guidance, nor have we selected a transition method.

On June 19, 2014, the FASB issued an update to authoritative guidance related to accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The guidance will be effective for us beginning January 1, 2016 and it is not expected to have a material impact on our consolidated financial statements.

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Note 3 - Regulated Operations

We account for the financial effects of regulation in accordance with authoritative guidance related to regulated entities whose rates are designed to recover the costs of providing service. In accordance with this guidance, incurred costs and estimated future expenditures that would otherwise be charged to expense in the current period are capitalized as regulatory assets when it is probable that such costs or expenditures will be recovered in rates in the future. Similarly, we recognize regulatory liabilities when it is probable that regulators will require customer refunds through future rates or when revenue is collected from customers for estimated expenditures that have not yet been incurred. Generally, regulatory assets are amortized into expense, and regulatory liabilities are amortized into income over the period authorized by the regulatory commissions. The following table summarizes our regulatory assets and liabilities as of the dates presented. In addition, see Note 13 for a subsequent event that impacts our regulatory assets.

In millions	June 30, 2014		December 31, 2013		June 30, 2013
Regulatory assets
Deferred natural gas costs	$	79	$	1	$	-
Recoverable regulatory infrastructure program costs		47		48		46
Recoverable ERC		33		45		27
Recoverable pension and retiree welfare benefit costs		9		9		19
Other		43		59		28
Total regulatory assets - current		211		162		120
Recoverable ERC		454		433		458
Recoverable regulatory infrastructure program costs		107		87		116
Recoverable pension and retiree welfare benefit costs		94		99		188
Long-term debt fair value adjustment		78		82		86
Other		42		36		50
Total regulatory assets - long-term		775		737		898
Total regulatory assets	$	986	$	899	$	1,018
Regulatory liabilities
Accrued natural gas costs	$	41	$	92	$	130
Bad debt over collection		39		41		39
Accumulated removal costs		27		27		17
Deferred seasonal rates		8		-		8
Other		34		23		22
Total regulatory liabilities - current		149		183		216
Accumulated removal costs		1,478		1,445		1,431
Regulatory income tax liability		27		27		26
Unamortized investment tax credit		24		26		27
Bad debt over collection		9		17		20
Other		27		3		6
Total regulatory liabilities - long-term		1,565		1,518		1,510
Total regulatory liabilities	$	1,714	$	1,701	$	1,726

Base rates are designed to provide the opportunity for both a recovery of cost and a return on investment during the period rates are in effect. As such, all of our regulatory assets recoverable through base rates are subject to review by the respective state regulatory commission during future rate proceedings. We believe that we will be able to recover such costs consistent with our historical recoveries.

Natural Gas Costs We charge our utility customers for natural gas consumed using natural gas cost recovery mechanisms set by the state regulatory agencies. Under these mechanisms, all prudently incurred natural gas costs are passed through to customers without markup, subject to regulatory review. We defer or accrue the difference between the actual cost of gas and the amount of commodity revenue earned in a given period, such that no operating margin is recognized related to these costs. The deferred or accrued amount is either billed or refunded to our customers prospectively through adjustments to the commodity rate. Deferred natural gas costs are reflected as regulatory assets and accrued natural gas costs are reflected as regulatory liabilities. The following table illustrates the change in net position of these costs from June 30, 2013 to June 30, 2014.

In millions	June 30, 2014			June 30, 2013			Change
Deferred natural gas costs	$	79		$	-		$	79
Accrued natural gas costs		(41	)		(130	)		89
Total (1)	$	38		$	(130	)	$	168

(1)   The $168 million change resulted from increased natural gas prices during the first half of 2014 compared to the first half of 2013, primarily driven by colder weather experienced in 2014. These costs will be fully recovered in future periods.

Environmental Remediation Costs We are subject to federal, state and local laws and regulations governing environmental quality and pollution control that require us to remove or remedy the effect on the environment of the disposal or release of specified substances at our current and former operating sites, substantially all of which is related to our MGP sites. The ERC assets and liabilities are associated with our distribution operations segment and remediation costs are generally recoverable from customers through rate mechanisms approved by regulators. Accordingly, both costs incurred to remediate the former MGP sites, plus the future estimated cost recorded as liabilities, net of amounts previously collected, are recognized as a regulatory asset until recovered from customers.

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Our ERC liabilities are estimates of future remediation costs for investigation and cleanup of our current and former operating sites that are contaminated. These estimates are based on conventional engineering estimates and the use of probabilistic models of potential costs when such estimates cannot be made, on an undiscounted basis. As cleanup options and plans mature and cleanup contracts are entered into, we are increasingly able to provide conventional engineering estimates of the likely costs of many elements of the remediation program. These estimates contain various engineering assumptions, which we refine and update on an ongoing basis. These liabilities do not include other potential expenses, such as unasserted property damage claims, personal injury or natural resource damage claims, legal expenses or other costs for which we may be held liable but for which we cannot reasonably estimate an amount. The following table provides additional information on the costs related to remediation of our current and former operating sites as of June 30, 2014 and reflects changes in estimates since we filed our 2013 Form 10-K.

In millions	Probabilistic model cost estimates		Engineering estimates		Amount recorded			Expected costs over next 12 months
Illinois	$	205 - 462	$	46	$	251		$	37
New Jersey		126 - 196		3		129			32
Georgia and Florida		66 - 106		9		78			14
North Carolina (1)		n/a		11		11			7
Total	$	397 - 764	$	69	$	469	(2)	$	90

(1)   We have no regulatory recovery mechanisms for the site in North Carolina. Therefore, this amount is not included in our regulatory assets and changes in estimated costs are recognized in income in the period of change.

(2)   Increase of $22 million from December 31, 2013 primarily relates to a scope increase required by the Georgia Environmental Protection Division for a site in Georgia and an adjustment for a site in Florida. This was partially offset by a decrease for a site in New Jersey where remediation is almost complete.

Note 4 - Fair Value Measurements

The methods used to determine the fair values of our assets and liabilities are described within Note 2.

Derivative Instruments

The following table summarizes, by level within the fair value hierarchy, our derivative assets and liabilities that were carried at fair value on a recurring basis in our unaudited Consolidated Statements of Financial Position as of the dates presented. See Note 5 for additional derivative instrument information.

	June 30, 2014					December 31, 2013					June 30, 2013
In millions	Assets (1)		Liabilities			Assets (1)		Liabilities			Assets (1)		Liabilities
Natural gas derivatives
Quoted prices in active markets (Level 1)	$	8	$	(38	)	$	6	$	(79	)	$	4	$	(51	)
Significant other observable inputs (Level 2)		57		(60	)		67		(79	)		78		(35	)
Netting of cash collateral		46		36			43		78			47		47
Total carrying value (2) (3)	$	111	$	(62	)	$	116	$	(80	)	$	129	$	(39	)

(1)   Balances of $3 million at June 30, 2014, $3 million at December 31, 2013 and $1 million at June 30, 2013 associated with certain weather derivatives have been excluded, as they are accounted for based on intrinsic value rather than fair value.

(2)   There were no significant unobservable inputs (Level 3) for any of the dates presented.

(3)   There were no significant transfers between Level 1, Level 2 or Level 3 for any of the dates presented.

Debt

Our long-term debt is recorded at amortized cost, with the exception of Nicor Gas’ first mortgage bonds, which are recorded at their acquisition date fair value. The fair value adjustment of Nicor Gas’ first mortgage bonds is being amortized over the lives of the bonds. The following table lists the carrying amount and fair value of our long-term debt as of the dates presented.

In millions	June 30, 2014		December 31, 2013		June 30, 2013
Long-term debt carrying amount	$	3,807	$	3,813	$	3,819
Long-term debt fair value (1)		4,191		3,956		4,070

(1)   Fair value determined using Level 2 inputs.

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Note 5 - Derivative Instruments

A description of our objectives and strategies for using derivative instruments, related accounting policies and methods used to determine their fair values are described in Note 2 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. See Note 4 for additional fair value disclosures.

Certain of our derivative instruments contain credit risk-related or other contingent features that could require us to post collateral in the normal course of business when our financial instruments are in net liability positions. As of June 30, 2014, for agreements with such features, derivative instruments with liability fair values for which we had posted no collateral to our counterparties totaled $62 million. The maximum collateral that could be required with these features is $11 million. For more information, see “Energy Marketing Receivables and Payables” in Note 2, which also have credit risk-related or other contingent features. Our derivative instrument activities are included within operating cash flows as an adjustment to net income of $(13) million and $14 million for the six months ended June 30, 2014 and 2013, respectively. See Note 4 for additional derivative instrument information. The following table summarizes the various ways in which we account for our derivative instruments and the impact on our unaudited Condensed Consolidated Financial Statements.

Accounting Treatment	Recognition and Measurement
	Statements of Financial Position	Statements of Income
Cash flow hedge	Derivative carried at fair value	Ineffective portion of the gain or loss on the derivative instrument is recognized in earnings
	Effective portion of the gain or loss on the derivative instrument is reported initially as a component of accumulated OCI (loss)	Effective portion of the gain or loss on the derivative instrument is reclassified out of accumulated OCI (loss) and into earnings when the hedged transaction affects earnings
Fair value hedge	Derivative carried at fair value	Gains or losses on the derivative instrument and the hedged item are recognized in earnings. As a result, to the extent the hedge is effective, the gains or losses will offset and there is no impact on earnings. Any hedge ineffectiveness will impact earnings
	Changes in fair value of the hedged item are recorded as adjustments to the carrying amount of the hedged item
Not designated as hedges	Derivative carried at fair value	Realized and unrealized gains or losses on the derivative instrument are recognized in earnings
	Distribution operations’ gains and losses on derivative instruments are deferred as regulatory assets or liabilities until included in cost of goods sold	Gains or losses on these derivative instruments are ultimately included in billings to customers and are recognized in cost of goods sold in the same period as the related revenues

Quantitative Disclosures Related to Derivative Instruments

As of the dates presented, our derivative instruments were comprised of both long and short natural gas positions. A long position is a contract to purchase natural gas, and a short position is a contract to sell natural gas. We had a net long natural gas contracts position outstanding in the following quantities:

In Bcf (1)	June 30, 2014 (2)			December 31, 2013			June 30, 2013
Cash flow hedges		6			6			3
Not designated as hedges		140			183			221
Total volumes		146			189			224
Short position		(2,530	)		(2,622	)		(2,311	)
Long position		2,676			2,811			2,535
Net long position		146			189			224

(1)   Volumes related to Nicor Gas exclude variable-priced contracts, which are carried at fair value, but whose fair values are not directly impacted by changes in commodity prices.

(2)   Approximately 98% of these contracts have durations of 2 years or less and the remaining 2% expire between 2 and 5 years.

Derivative Instruments in our Unaudited Condensed Consolidated Statements of Financial Position

In accordance with regulatory requirements, gains and losses on derivative instruments used to hedge natural gas purchases for customer use at distribution operations are reflected in accrued natural gas costs within our Consolidated Statements of Financial Position until billed to customers. The following amounts deferred as a regulatory asset or liability on our Condensed Consolidated Statements of Financial Position represent the net realized gains (losses) related to these natural gas cost hedges for the periods presented.

	Three months ended June 30,					Six months ended June 30,
In millions	2014		2013			2014		2013
Nicor Gas	$	10	$	9		$	12	$	8
Elizabethtown Gas		2		(1	)		5		(4	)

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The following table presents the fair values and unaudited Condensed Consolidated Statements of Financial Position classifications of our derivative instruments as of the dates presented.

		June 30, 2014						December 31, 2013						June 30, 2013
In millions	Classification	Assets			Liabilities			Assets			Liabilities			Assets			Liabilities
Designated as cash flow or fair value hedges
Natural gas contracts	Current	$	2		$	(1	)	$	3		$	(1	)	$	2		$	(1	)
Not designated as hedges
Natural gas contracts	Current		702			(721	)		691			(761	)		456			(445	)
Natural gas contracts	Long-term		77			(89	)		206			(220	)		124			(139	)
Total			779			(810	)		897			(981	)		580			(584	)
Gross amount of recognized assets and liabilities (1) (2)			781			(811	)		900			(982	)		582			(585	)
Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position (2)			(667	)		749			(781	)		902			(452	)		546
Net amounts of assets and liabilities presented in our unaudited Condensed Consolidated Statements of Financial Position (3)		$	114		$	(62	)	$	119		$	(80	)	$	130		$	(39	)

(1)   The gross amounts of recognized assets and liabilities are netted within our unaudited Condensed Consolidated Statements of Financial Position to the extent that we have netting arrangements with the counterparties.

(2)   As required by the authoritative guidance related to derivatives and hedging, the gross amounts of recognized assets and liabilities above do not include cash collateral held on deposit in broker margin accounts of $82 million as of June 30, 2014, $121 million as of December 31, 2013 and $94 million as of June 30, 2013. Cash collateral is included in the “Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position” line of this table.

(3)   At June 30, 2014, December 31, 2013 and June 30, 2013 we held letters of credit from counterparties that would offset, under master netting arrangements, an insignificant portion of these assets.

Derivative Instruments in the Unaudited Condensed Consolidated Statements of Income

The following table presents the impacts of our derivative instruments in our unaudited Condensed Consolidated Statements of Income for the periods presented.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Designated as cash flow or fair value hedges
Natural gas contracts - net gain reclassified from OCI into cost of goods sold	$	2		$	1		$	5		$	1
Natural gas contracts - net gain reclassified from OCI into operation and maintenance expense		-			-			1			-
Interest rate swaps - net loss reclassified from OCI into interest expense		-			-			-			(3	)
Income tax benefit		(1	)		-			(1	)		1
Net of tax		1			1			5			(1	)
Not designated as hedges (1)
Natural gas contracts - net fair value adjustments recorded in operating revenues		30			22			-			(2	)
Natural gas contracts - net fair value adjustments recorded in cost of goods sold (2)		(1	)		(1	)		1			(1	)
Income tax benefit		(11	)		(8	)		-			1
Net of tax		18			13			1			(2	)
Total gains (losses) on derivative instruments	$	19		$	14		$	6		$	(3	)

(1)   Associated with the fair value of derivative instruments held at June 30, 2014 and 2013.

(2)   Excludes losses recorded in cost of goods sold associated with weather derivatives of $6 million and $3 million for the six months ended June 30, 2014 and 2013, respectively.

Any amounts recognized in operating income, related to ineffectiveness or due to a forecasted transaction that is no longer expected to occur, were immaterial for the three and six months ended June 30, 2014 and 2013. Our expected gains to be reclassified from OCI into cost of goods sold, operation and maintenance expense, interest expense and operating revenues and recognized in our unaudited Condensed Consolidated Statements of Income over the next 12 months are $1 million. These deferred gains and losses are related to natural gas derivative contracts associated with retail operations and Nicor Gas’ system use. The expected gains are based upon the fair values of these financial instruments at June 30, 2014. The effective portion of gains and losses on derivative instruments qualifying as cash flow hedges that was recognized in OCI during the periods is presented on our Condensed Consolidated Statements of income. See Note 8 for these amounts.

There have been no other significant changes to our derivative instruments, as described in Note 2, Note 4 and Note 5 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K.

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Note 6 - Employee Benefit Plans

Pension Benefits

We sponsor the AGL Resources Inc. Retirement Plan, a tax-qualified defined benefit retirement plan for our eligible employees, which is described in Note 6 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. Following are the components of our pension costs for the periods indicated.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Service cost	$	6		$	7		$	12		$	15
Interest cost		11			11			23			21
Expected return on plan assets		(16	)		(15	)		(32	)		(31	)
Net amortization of prior service cost		(1	)		(1	)		(1	)		(1	)
Recognized actuarial loss		6			9			11			17
Net periodic pension benefit cost	$	6		$	11		$	13		$	21

Welfare Benefits

The benefits of our Health and Welfare Plan for Retirees and Inactive Employees of AGL Resources Inc. (AGL Welfare Plan) are described in Note 6 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. Following are the components of our welfare costs for the periods indicated.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Service cost	$	-		$	-		$	1		$	1
Interest cost		3			4			7			7
Expected return on plan assets		(1	)		(2	)		(3	)		(3	)
Net amortization of prior service cost		-			(1	)		(1	)		(2	)
Recognized actuarial loss		2			2			3			4
Net periodic welfare benefit cost	$	4		$	3		$	7		$	7

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Note 7 - Debt and Credit Facilities

The following table provides maturity dates, year-to-date weighted average interest rates and amounts outstanding for our various debt securities and facilities for the periods presented. We fully and unconditionally guarantee all debt issued by AGL Capital. For additional information on our debt, see Note 8 in our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K.

		June 30, 2014							June 30, 2013
Dollars in millions	Year(s) due	Weighted average interest rate (1)			Outstanding		Outstanding at December 31, 2013		Weighted average interest rate (1)			Outstanding
Short-term debt
Commercial paper - AGL Capital (2)	2014		0.3	%	$	236	$	857		0.5	%	$	521
Commercial paper - Nicor Gas (2)	2014		0.2			212		314		0.4			-
Total short-term debt			0.3	%	$	448	$	1,171		0.5	%	$	521
Current portion of long-term debt	2015		5.0	%	$	200	$	-		4.5	%	$	-
Long-term debt - excluding current portion
Senior notes	2016-2043		5.0	%	$	2,625	$	2,825		5.1	%	$	2,825
First mortgage bonds	2016-2038		5.6			500		500		5.6			500
Gas facility revenue bonds	2022-2033		0.9			200		200		0.5			200
Medium-term notes	2017-2027		7.8			181		181		7.8			181
Total principal long-term debt			4.9	%		3,506		3,706		4.9	%		3,706
Fair value adjustment of long-term debt (3)	2016-2038		n/a			85		91		n/a			97
Unamortized debt premium, net	n/a		n/a			16		16		n/a			16
Total non-principal long-term debt			n/a			101		107		n/a			113
Total long-term debt					$	3,607	$	3,813				$	3,819
Total debt					$	4,255	$	4,984				$	4,340

(1)   Interest rates are calculated based on the daily weighted average balance outstanding for the six months ended June 30.

(2)   As of June 30, 2014, the effective interest rates on our commercial paper borrowings were 0.3% for AGL Capital and 0.2% for Nicor Gas.

(3)   See Note 4 for additional information on our fair value measurements.

Commercial Paper Programs

We maintain commercial paper programs at AGL Capital and Nicor Gas that consist of short-term, unsecured promissory notes used in conjunction with cash from operations to fund our seasonal working capital requirements. Working capital needs fluctuate during the year and are highest during the injection period in advance of the Heating Season. The Nicor Gas commercial paper program supports working capital needs at Nicor Gas, while all of our other subsidiaries and SouthStar participate in the AGL Capital commercial paper program. During the first six months of 2014, our commercial paper maturities ranged from 1 to 108 days, and at June 30, 2014, remaining terms to maturity ranged from 1 to 10 days. Total borrowings and repayments netted to a payment of $723 million during the first six months of 2014. For commercial paper issuances with original maturities over three months, borrowings and repayments were $50 million and $145 million, respectively, during the first six months of 2014.

Financial and Non-Financial Covenants

The AGL Credit Facility and the Nicor Gas Credit Facility each include a financial covenant that requires us to maintain a ratio of total debt to total capitalization of no more than 70% at the end of any fiscal month. These ratios, as calculated in accordance with the debt covenants, include standby letters of credit and surety bonds and exclude accumulated OCI items related to non-cash pension adjustments, welfare benefits liability adjustments and accounting adjustments for cash flow hedges. Adjusting for these items, the following table contains our debt-to-capitalization ratios for the dates presented, which are below the maximum allowed.

	June 30, 2014			December 31, 2013			June 30, 2013
AGL Credit Facility		51	%		57	%		54	%
Nicor Gas Credit Facility		52	%		55	%		43	%

The credit facilities contain certain non-financial covenants that, among other things, restrict liens and encumbrances, loans and investments, acquisitions, dividends and other restricted payments, asset dispositions, mergers and consolidations and other matters customarily restricted in such agreements.

Default Provisions

Our credit facilities and other financial obligations include provisions that, if not complied with, could require early payment or similar actions. The most important default events include the following:

·   a maximum leverage ratio

·   insolvency events and nonpayment of scheduled principal or interest payments

·   acceleration of other financial obligations

·   change of control provisions

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We have no triggering events in our debt instruments that are tied to changes in our specified credit ratings or our stock price, and have not entered into any transaction that requires us to issue equity based on credit ratings or other triggering events. We were in compliance with all existing debt provisions and covenants, both financial and non-financial, for all periods presented.

Note 8 - Equity

Our OCI amounts are aggregated within our accumulated other comprehensive loss. The following table provides changes in the components of our accumulated other comprehensive loss balance, net of the related income tax effects.

	2014									2013
In millions (1)	Cash flow hedges			Retirement benefit plans			Total			Cash flow hedges			Retirement benefit plans			Total
For the three months ended June 30
As of beginning of period	$	1		$	(136	)	$	(135	)	$	1		$	(212	)	$	(211	)
OCI, before reclassifications		-			-			-			(1	)		-			(1	)
Amounts reclassified from accumulated OCI		(1	)		3			2			(1	)		4			3
Net current-period other comprehensive (loss) income		(1	)		3			2			(2	)		4			2
As of end of period	$	-		$	(133	)	$	(133	)	$	(1	)	$	(208	)	$	(209	)
For the six months ended June 30
As of beginning of period	$	1		$	(137	)	$	(136	)	$	(3	)	$	(215	)	$	(218	)
OCI, before reclassifications		4			-			4			1			-			1
Amounts reclassified from accumulated OCI		(5	)		4			(1	)		1			7			8
Net current-period other comprehensive income		(1	)		4			3			2			7			9
As of end of period	$	-		$	(133	)	$	(133	)	$	(1	)	$	(208	)	$	(209	)

(1)   All amounts are net of income taxes. Amounts in parentheses indicate debits to accumulated other comprehensive loss.

The following table provides details of the reclassifications out of accumulated other comprehensive loss and the impact on net income.

	Three months ended June 30,						Six months ended June 30,
In millions (1)	2014			2013			2014			2013
Cash flow hedges
Cost of goods sold (natural gas contracts)	$	2		$	1		$	5		$	1
Operation and maintenance expense (natural gas contracts)		-			-			1			-
Interest expense (interest rate contracts)		-			-			-			(3	)
Total before income tax		2			1			6			(2	)
Income tax benefit		(1	)		-			(1	)		1
Total cash flow hedges		1			1			5			(1	)
Retirement benefit plans
Operation and maintenance expense (actuarial losses)(2)		(6	)		(7	)		(8	)		(13	)
Operation and maintenance expense (prior service credits) (2)		1			-			1			2
Total before income tax		(5	)		(7	)		(7	)		(11	)
Income tax benefit		2			3			3			4
Total retirement benefit plans		(3	)		(4	)		(4	)		(7	)
Total reclassification for the period	$	(2	)	$	(3	)	$	1		$	(8	)

(1)   Amounts in parentheses indicate debits, or reductions, to our net income and credits to accumulated other comprehensive loss. Except for retirement benefit plan amounts, the net income impacts are immediate.

(2)   Amortization of these accumulated other comprehensive loss components is included in the computation of net periodic benefit cost. See Note 6 for additional details about net periodic benefit cost.

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Note 9 - Non-Wholly Owned Entities

Variable Interest Entities

SouthStar, a joint venture owned by us and Piedmont, is our only significant VIE for which we are the primary beneficiary, which requires us to consolidate its assets, liabilities and statements of income. For additional information on SouthStar, see Note 10 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. Earnings from SouthStar in 2014 and 2013 were allocated entirely in accordance with the ownership interests.

Cash flows used in our investing activities include capital expenditures for SouthStar of $4 million for the six months ended June 30, 2014 and $1 million for the six months ended June 30, 2013. Cash flows used in our financing activities include SouthStar’s distribution to Piedmont for its portion of SouthStar’s annual earnings from the previous year. Generally, this distribution occurs in the first quarter of each fiscal year. For each of the six months ended June 30, 2014 and 2013, SouthStar distributed $17 million to Piedmont. The following table provides additional information about SouthStar’s assets and liabilities as of the dates presented, which are consolidated within our unaudited Condensed Consolidated Statements of Financial Position.

	June 30, 2014						December 31, 2013						June 30, 2013
In millions	Consolidated		SouthStar (1)		% (2)			Consolidated	SouthStar (1)		% (2)		Consolidated		SouthStar (1)		% (2)
Current assets	$	2,431	$	250	10	%	$	2,945	$	264	9	%	$	2,277	$	135	6		%
Goodwill and intangible assets		1,974		137	7			1,981		139	7			1,986		-		-
Long-term assets and other deferred debits		9,897		21	-			9,730		12	-			9,532		10		-
Total assets	$	14,302	$	408	3	%	$	14,656	$	415	3	%	$	13,795	$	145		1	%
Current liabilities	$	2,596	$	124	5	%	$	3,123	$	95	3	%	$	2,349	$	40		2	%
Long-term liabilities and other deferred credits		7,772		16	-			7,857		-	-			7,891		-		-
Total Liabilities		10,368		140	1			10,980		95	1			10,240		40		-
Equity		3,934		268	7			3,676		320	9			3,555		105		3	%
Total liabilities and equity	$	14,302	$	408	3	%	$	14,656	$	415	3	%	$	13,795	$	145		1	%

(1)   These amounts reflect information for SouthStar and exclude intercompany eliminations and the balances of our wholly owned subsidiary with an 85% ownership interest in SouthStar.

(2)   SouthStar’s percentage of the amount on our Statements of Financial Position.

The following table provides information on SouthStar’s operating revenues and operating expenses for the periods presented, which are consolidated within our unaudited Condensed Consolidated Statements of Income.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Operating revenues	$	145	$	116	$	519	$	366
Operating expenses
Cost of goods sold		111		95		381		259
Operation and maintenance		20		15		44		33
Depreciation and amortization		2		-		4		1
Taxes other than income taxes		1		1		1		1
Total operating expenses		134		111		430		294
Operating income	$	11	$	5	$	89	$	72

Equity Method Investments

Income from our equity method investments is classified as other income in our unaudited Condensed Consolidated Statements of Income. For more information about our equity method investments, see Note 10 to our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K. The carrying amounts of our investments that are accounted for under the equity method at June 30 were as follows:

In millions	2014		2013
Triton	$	65	$	71
Horizon Pipeline		15		16
Other (1)		1		9
Total	$	81	$	96

(1)   Includes our investment in Sawgrass Storage. In December 2013, the joint venture decided to terminate the development of the Sawgrass Storage facility and reduced the carrying amount of the joint venture’s long-lived assets to fair value.

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The following table provides the income from our equity method investments for the periods presented.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Triton	$	1	$	2	$	3	$	4
Other		-		-		1		1

Note 10 - Commitments, Guarantees and Contingencies

We have incurred various contractual obligations and financial commitments in the normal course of our operating and financing activities that are reasonably likely to have a material effect on liquidity or the availability of capital resources. Contractual obligations include future cash payments required under existing contractual arrangements, such as debt and lease agreements. These obligations may result from both general financing activities and from commercial arrangements that are directly supported by related revenue-producing activities.

We also are involved in legal or administrative proceedings before various courts and agencies with respect to general claims, taxes, environmental, gas cost prudence reviews and other matters. Although we are unable to determine the ultimate outcomes of these other contingencies, we believe that our financial statements appropriately reflect these amounts, including the recording of liabilities when a loss is probable and reasonably estimable. For more information on these matters, see Note 11 in our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K.

Contingencies and Guarantees

Contingent financial commitments, such as financial guarantees, represent obligations that become payable only if certain predefined events occur. We have certain subsidiaries that enter into various financial and performance guarantees and indemnities providing assurance to third parties. We believe the likelihood of payment under our guarantees is remote. No liability has been recorded for such guarantees and indemnifications as the fair value was inconsequential at inception.

Regulatory Matters

On December 21, 2012 Atlanta Gas Light filed a petition with the Georgia Commission for approval to resolve an imbalance of approximately 4.8 Bcf of natural gas related to Atlanta Gas Light’s use of retained storage assets to operationally balance the system for the benefit of the natural gas market. We believe that any costs associated with resolving the imbalance are recoverable from Marketers. We are currently working with the Marketers to settle this matter, and the resolution of this imbalance will ultimately be decided by the Georgia Commission. We are currently unable to predict the ultimate outcome.

Environmental Matters

We are subject to federal, state and local laws and regulations governing environmental quality and pollution control that require us to remove or remedy the effect on the environment of the disposal or release of specified substances at our current and former operating sites. See Note 3 for additional information.

Litigation

We are involved in litigation arising in the normal course of business. Although in some cases the company is unable to estimate the amount of loss reasonably possible in addition to any amounts already recognized, it is possible that the resolution of these contingencies, either individually or in aggregate, will require us to take charges against, or will result in reductions in, future earnings. Management believes that while the resolution of these contingencies, whether individually or in aggregate, could be material to earnings in a particular period, they will not have a material adverse effect on our consolidated financial position or cash flows. For additional litigation information, see Note 11 in our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K.

PBR Proceeding Nicor Gas’ PBR plan was a regulatory plan that provided economic incentives based on natural gas cost performance. The PBR plan went into effect in 2000 and was terminated effective January 1, 2003, following allegations that Nicor Gas acted improperly in connection with the plan. Under this plan, Nicor Gas’ total gas supply costs were compared to a market-sensitive benchmark. Savings and losses relative to the benchmark were determined annually and shared equally with sales customers. Since 2002 the amount of the savings and losses required to be shared has been disputed by the Citizens Utility Board (CUB) and others, with the Illinois Attorney General (IAG) intervening, and subject to extensive contested discovery and other regulatory proceedings before administrative law judges and the Illinois Commission. In 2009 the staff of the Illinois Commission, IAG and CUB requested refunds of $85 million, $255 million and $305 million, respectively.

In February 2012 we committed to a stipulation with the staff of the Illinois Commission for a resolution of the dispute through the crediting to Nicor Gas customers of $64 million. On November 5, 2012 the Administrative Law Judges issued a proposed order for a refund of $72 million to ratepayers. In the fourth quarter of 2012, we increased our accrual for this dispute by $8 million for a total of $72 million as a result of these developments and their effect on the estimated liability.

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On June 7, 2013 the Illinois Commission issued an order requiring us to refund $72 million to current Nicor Gas customers over a 12-month period. On July 1, 2013 we began refunding customers the full $72 million through our purchased gas adjustment mechanism based on natural gas throughput. As of June 30, 2014 the full amount has been refunded, with $43 million having been paid during the six months ended June 30, 2014.

CUB appealed the Illinois Commission’s order to the appellate court in Illinois. On February 28, 2014 CUB filed its initial brief with the appellate court requesting refunds consistent with its 2009 request. Nicor Gas filed its reply on July 25, 2014.

Note 11 - Segment Information

Our operating segments comprise revenue-generating components of our company for which we produce separate financial information internally that is regularly used to make operating decisions and assess performance. Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers in differing regulatory environments. We manage our businesses through four operating segments - distribution operations, retail operations, wholesale services and midstream operations - and other, a non-operating segment.

On April 4, 2014 we entered into a definitive agreement to sell Tropical Shipping, which historically operated within our cargo shipping segment. The assets and liabilities of these businesses are classified as held for sale on the unaudited Condensed Consolidated Statements of Financial Position, and the financial results of these businesses are reflected as discontinued operations on the unaudited Condensed Consolidated Statements of Income. Amounts shown in this note, unless otherwise indicated, exclude assets held for sale and discontinued operations. Cargo shipping also included our investment in Triton, which is not a part of the sale and has been reclassified into our other segment. See Note 12 for additional information.

Our distribution operations segment is the largest component of our business and includes natural gas local distribution utilities in seven states. These utilities construct, manage and maintain intrastate natural gas pipelines and distribution facilities. Although the operations of our distribution operations segment are geographically dispersed, the operating subsidiaries within the distribution operations segment are all regulated utilities, with rates determined by individual state regulatory commissions. These natural gas distribution utilities have similar economic and risk characteristics.

We also are involved in several related and complementary businesses. Our retail operations segment includes retail natural gas marketing to end-use customers primarily in Georgia and Illinois. Additionally, retail operations provide home protection products and services. Our wholesale services segment engages in natural gas storage and gas pipeline arbitrage and related activities. Additionally, they provide natural gas asset management and/or related logistics services for each of our utilities except Nicor Gas, as well as for nonaffiliated companies. Our midstream operations segment includes our non-utility storage and pipeline operations, including the operation of high-deliverability natural gas storage assets. Our other segment includes intercompany eliminations and aggregated subsidiaries that are individually not significant on a stand-alone basis and that do not fit into one of our operating segments.

The chief operating decision maker of the company is the Chairman, President and Chief Executive Officer who utilizes EBIT as the primary measure of profit and loss in assessing the results of each segment’s operations. EBIT includes operating income and other income and expenses. Items we do not include in EBIT are income taxes and financing costs, including interest expense, each of which we evaluate on a consolidated basis.

Information by segment on our Statements of Financial Position as of December 31, 2013 is as follows:

In millions	Identifiable and total assets (1)		Goodwill
Distribution operations	$	11,727	$	1,640
Retail operations		694		173
Wholesale services		1,166		-
Midstream operations		713		14
Other (2) (3)		73		-
Consolidated	$	14,373	$	1,827

(1)   Identifiable assets are those assets used in each segment’s operations and exclude assets held for sale.

(2)   The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations.

(3)   Includes our investment in Triton that was previously part of the cargo shipping segment.

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Summarized Statements of Income, Statements of Financial Position and capital expenditure information by segment as of and for the periods presented are shown in the following tables.

Three months ended June 30, 2014

In millions	Distribution operations		Retail operations		Wholesale services (1)			Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	668	$	176	$	47		$	17		$	(6	)	$	902
Intercompany revenues		43		1		-			-			(44	)		-
Total operating revenues		711		177		47			17			(50	)		902
Operating expenses
Cost of goods sold		315		119		7			11			(50	)		402
Operation and maintenance		159		34		13			7			(2	)		211
Depreciation and amortization		80		5		1			4			5			95
Taxes other than income taxes		40		1		-			2			(1	)		42
Total operating expenses		594		159		21			24			(48	)		750
Operating income (loss)		117		18		26			(7	)		(2	)		152
Other income (expense)		3		-		(3	)		-			2			2
EBIT	$	120	$	18	$	23		$	(7	)	$	-		$	154
Capital expenditures	$	158	$	3	$	-		$	5		$	5		$	171

Three months ended June 30, 2013

In millions	Distribution operations		Retail operations		Wholesale services (1)		Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	615	$	165	$	21	$	15		$	-		$	816
Intercompany revenues		43		-		-		-			(43	)		-
Total operating revenues		658		165		21		15			(43	)		816
Operating expenses
Cost of goods sold		266		115		10		4			(42	)		353
Operation and maintenance		159		32		10		6			(2	)		205
Depreciation and amortization		90		5		1		4			3			103
Taxes other than income taxes		38		1		-		2			2			43
Total operating expenses		553		153		21		16			(39	)		704
Gain on disposition of assets		-		-		11		-			-			11
Operating income (loss)		105		12		11		(1	)		(4	)		123
Other income		4		-		-		1			2			7
EBIT	$	109	$	12	$	11	$	-		$	(2	)	$	130
Capital expenditures	$	158	$	3	$	-	$	4		$	3		$	168

Six months ended June 30, 2014

In millions	Distribution operations		Retail operations		Wholesale services (1)			Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	2,406	$	582	$	380		$	61		$	(53	)	$	3,376
Intercompany revenues		118		1		-			-			(119	)		-
Total operating revenues		2,524		583		380			61			(172	)		3,376
Operating expenses
Cost of goods sold		1,517		399		10			47			(171	)		1,802
Operation and maintenance		370		71		49			13			(3	)		500
Depreciation and amortization		160		11		1			9			7			188
Taxes other than income taxes		122		2		1			3			2			130
Total operating expenses		2,169		483		61			72			(165	)		2,620
Operating income (loss)		355		100		319			(11	)		(7	)		756
Other income (expense)		4		-		(3	)		1			3			5
EBIT	$	359	$	100	$	316		$	(10	)	$	(4	)	$	761
Identifiable and total assets (2)	$	11,624	$	683	$	1,207		$	699		$	(168	)	$	14,045
Capital expenditures	$	308	$	6	$	1		$	5		$	12		$	332

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Six months ended June 30, 2013

In millions	Distribution operations		Retail operations		Wholesale services (1)		Midstream operations		Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	1,879	$	467	$	60	$	39	$	(7	)	$	2,438
Intercompany revenues		98		-		-		-		(98	)		-
Total operating revenues		1,977		467		60		39		(105	)		2,438
Operating expenses
Cost of goods sold		1,031		310		20		16		(104	)		1,273
Operation and maintenance		344		63		23		12		(5	)		437
Depreciation and amortization		180		10		1		8		7			206
Taxes other than income taxes		102		2		1		3		4			112
Total operating expenses		1,657		385		45		39		(98	)		2,028
Gain on disposition of assets		-		-		11		-		-			11
Operating income (loss)		320		82		26		-		(7	)		421
Other income		7		-		-		2		3			12
EBIT	$	327	$	82	$	26	$	2	$	(4	)	$	433
Identifiable and total assets (2)	$	11,166	$	641	$	1,008	$	715	$	(24	)	$	13,506
Capital expenditures	$	295	$	4	$	-	$	8	$	8		$	315

(1)   Wholesale services records its energy marketing and risk management revenues on a net basis. A reconciliation of our operating revenues and our intercompany revenues is shown in the following table.

In millions	Third party gross revenues		Intercompany revenues		Total gross revenues		Less gross gas costs		Operating revenues
Three months ended June 30, 2014	$	2,379	$	160	$	2,539	$	2,492	$	47
Three months ended June 30, 2013		1,982		103		2,085		2,064		21
Six months ended June 30, 2014		6,430		458		6,888		6,508		380
Six months ended June 30, 2013		4,076		243		4,319		4,259		60

(2) Identifiable assets are those used in each segment’s operations and exclude assets held for sale.

(3)   The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations. Our other segment now also includes our investment in Triton, which was part of our cargo shipping segment and has been classified as discontinued operations. For more information see Note 12.

Note 12 - Discontinued Operations

On April 4, 2014, we entered into a definitive agreement to sell Tropical Shipping and expect to close the transaction during the third quarter of 2014. After-tax cash proceeds and distributions from the transaction are expected to be approximately $220 million, subject to certain defined post-closing adjustments. Accordingly, we determined that the cumulative foreign earnings of Tropical Shipping would no longer be indefinitely reinvested offshore, and recognized income tax expense of $31 million in the first quarter of 2014 related to the cumulative foreign earnings for which no tax liabilities had previously been recorded. As of June 30, 2014, we had $55 million of deferred income tax liabilities on our unaudited Condensed Consolidated Statements of Financial Position related to the cumulative earnings of our foreign subsidiaries that have not been repatriated.

During the first quarter of 2014, based upon the negotiated sales price, we recorded a goodwill impairment charge of $19 million, for which there is no income tax benefit. Additionally, we suspended depreciation and amortization of the Tropical Shipping assets for which we recognized a $4 million pre-tax loss in the second quarter of 2014. Completion of the transaction is conditioned upon certain factors, including approval by the Florida Office of Insurance Regulation. The assets and liabilities of Tropical Shipping classified as held for sale on the unaudited Condensed Consolidated Statements of Financial Position are as follows:

24

	June 30,		December 31,		June 30,
In millions	2014		2013		2013
Current assets
Cash and cash equivalents	$	15	$	24	$	31
Short-term investments		3		1		1
Receivables		35		36		34
Inventories		9		9		8
Other		2		1		1
Total current assets		64		71		75
Long-term assets and other deferred debits
Property, plant and equipment, net		127		124		125
Goodwill		42		61		61
Intangible assets		19		19		20
Other		5		8		8
Total long-term assets and other deferred debits		193		212		214
Total assets held for sale	$	257	$	283	$	289
Current liabilities
Other accounts payable - trade	$	9	$	11	$	8
Accrued expenses		7		7		6
Other		23		22		24
Total liabilities held for sale	$	39	$	40	$	38

The financial results of these businesses are reflected as discontinued operations, and all prior periods presented have been recast to reflect the discontinued operations. The components of discontinued operations recorded on the unaudited Condensed Consolidated Statements of Income are as follows:

	Three months ended June 30,					Six months ended June 30,
In millions	2014		2013			2014			2013
Operating revenues	$	92	$	88		$	181		$	175
Operating expenses
Cost of goods sold		57		54			111			107
Operation and maintenance		27		29			55			55
Depreciation and amortization (1)		-		6			5			10
Taxes other than income taxes		3		-			4			3
Loss on sale and goodwill impairment (2)		4		-			23			-
Total operating expenses		91		89			198			175
Operating income (loss)		1		(1	)		(17	)		-
Income (loss) before income taxes		1		(1	)		(17	)		-
Income tax expense (3)		-		-			(32	)		-
Income (loss) from discontinued operations, net of tax	$	1	$	(1	)	$	(49	)	$	-

(1)   We ceased depreciating and amortizing Tropical Shipping’s assets on April 4, 2014 as a result of entering into an agreement to sell this business and the assets were classified as held for sale.

(2)   Relates to the suspension of depreciation and amortization of $4 million and $19 million of goodwill attributable to Tropical Shipping that was impaired as of March 31, 2014 based on the negotiated sales price.

(3)   Expense for the six months ended 2014 includes $31 million that was recorded in the first quarter of 2014 related to the cumulative foreign earnings for which no tax liabilities previously had been recorded.

Note 13 - Subsequent Event

As discussed in Note 3, our ERC assets and liabilities are associated with our distribution operations segment and are generally recoverable through rate mechanisms. Our ERC liabilities are estimates of future remediation costs for investigation and cleanup of our former MGP operating sites that may be contaminated. The corresponding recoverable ERC regulatory assets are recorded for environmental remediation costs until the costs are recovered from our customers. We primarily recover these costs through rate riders that authorize dollar-for-dollar recovery. 

In July 2014, we reached a $77 million settlement with an insurance company of environmental claims relating to potential contamination at several of our MGP sites. Under the terms of the settlement, we will receive the $77 million settlement in two installments: $45 million within 30 days of the effective date of the settlement and the remaining $32 million within one year after the effective date of the settlement. The settlement will not affect our recorded ERC liabilities but is expected to reduce our recorded ERC regulatory assets because the vast majority of the settlement amount relates to New Jersey sites for which we receive regulatory recovery of ERC expenditures. We intend to seek approval of the New Jersey BPU to utilize the insurance proceeds related to the New Jersey sites to reduce the ERC expenditures that otherwise would have been recovered from our New Jersey customers in future periods. As such, the settlement, once approved, is expected to reduce our recoverable ERC regulatory asset and have a favorable impact on the rates for our Elizabethtown Gas customers.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the notes to our unaudited Condensed Consolidated Financial Statements in this quarterly filing, as well as our 2013 Form 10-K. Results for the interim periods presented are not necessarily indicative of the results to be expected for the full fiscal period due to seasonal and other factors.

Forward-Looking Statements

Certain expectations and projections regarding our future performance referenced in this section and elsewhere in this report, as well as in other reports and proxy statements we file with the SEC or otherwise release to the public and on our website are forward-looking statements and are subject to uncertainties and risks. Senior officers and other employees may also make verbal statements to analysts, investors, regulators, the media and others that are forward-looking.

Forward-looking statements often include words such as "anticipate," "assume," “believe,” "can," "could," "estimate," "expect," "forecast," "future," “goal,” "indicate," "intend," "may," “outlook,” "plan," “potential,” "predict," "project,” “proposed,” "seek," "should," "target," "would," or similar expressions. You are cautioned not to place undue reliance on our forward-looking statements. While we believe that our expectations are reasonable in view of the available information that we currently have, our expectations are subject to future events, risks and uncertainties, and there are numerous factors - many beyond our control - that could cause our actual results to vary from our expectations.

Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural gas and related products; the impact of changes in state and federal legislation and regulation including any changes related to climate change; actions taken by government agencies on rates and other matters; concentration of credit risk; utility and energy industry consolidation; the impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, unexpected change in project costs, including the cost of funds to finance these projects and our ability to recover our project costs from our customers; limits on pipeline capacity; the impact of acquisitions and divestitures; our ability to successfully integrate operations that we have or may acquire or develop in the future; direct or indirect effects on our business, financial condition or liquidity resulting from any change in our credit ratings, or any change in the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including disruptions in the capital markets and lending environment; general economic conditions; uncertainties about environmental issues and the related impact of such issues, including our environmental remediation plans; conditions to closing the sale of Tropical Shipping; the capacity of our gas storage caverns; the impact of our construction projects and related capital expenditures; the impact of changes in weather, including climate change, on the temperature-sensitive portions of our business; the impact of natural disasters, such as hurricanes, on the supply and price of natural gas; acts of war or terrorism; the outcome of litigation; and other factors discussed elsewhere herein and in our other filings with the SEC. There also may be other factors that we do not anticipate or that we do not recognize as material that are not described in this report that could cause our actual results to differ materially from our expectations.

Forward-looking statements speak only as of the date they are made. We expressly disclaim any obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise, except as required under U.S. federal securities law.

Executive Summary

We are an energy services holding company whose principal business is the distribution of natural gas in seven states - Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee and Maryland - through our seven natural gas distribution utilities. We are also involved in several other businesses that are primarily related and complementary to the distribution of natural gas. Our operating segments consist of the following four operating and reporting segments - distribution operations, retail operations, wholesale services and midstream operations and one non-operating segment - other. These segments are consistent with how management views and operates our business. For additional information on our operating segments, see Note 11 to our unaudited Condensed Consolidated Financial Statements herein and Item 1, “Business” of our 2013 Form 10-K.

In April 2014, we entered into a definitive agreement to sell Tropical Shipping, and we anticipate closing the transaction in the third quarter of 2014. After-tax cash proceeds and distributions from the transaction are expected to be approximately $220 million, subject to certain defined post-closing adjustments. As a result of the sale, we expect to pay income taxes of approximately $60 million. During the first quarter of 2014, we recorded income tax expense of $31 million related to Tropical Shipping’s cumulative foreign earnings for which income taxes had not previously been recorded. We also recorded a goodwill impairment charge of $19 million, for which there is no income tax benefit, during the first quarter of 2014 based upon the negotiated sale price. Upon closing, we expect to record income tax expense of $29 million associated with the taxable gain on the sale. On a combined basis, this is expected to result in a reported income tax and impairment expense of approximately $0.66 per share, of which $0.42 was recorded in the first quarter of 2014 with the remainder to be recorded upon closing.

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Tropical Shipping operated as part of our cargo shipping segment and beginning in the second quarter of 2014 the financial results were classified as discontinued operations. The cargo shipping segment also included our investment in Triton, which has been reclassified into our other segment. Accordingly, all references to continuing operations exclude the operations of Tropical Shipping.

For the second quarter of 2014, our net income attributable to AGL Resources Inc. was $64 million, an increase of $15 million compared to the same period in 2013. The increase was primarily the result of increased EBIT at distribution operations and retail operations due to increased average customer usage, increased regulatory infrastructure program revenues at Atlanta Gas Light, the acquisition of retail energy customers in June 2013, as well as lower depreciation expense at Nicor Gas. The increase was also favorably impacted by increases in operating margin at wholesale services due to higher commercial activity and net hedge gains. These increases were partially offset by a decrease in margin at midstream operations due to a retained fuel true-up at one of our storage facilities as a result of naturally occurring shrinkage of the caverns and the $11 million pre-tax gain on sale of Compass Energy in the second quarter of 2013 at wholesale services.

Our operating and maintenance expenses in the second quarter of 2014 were slightly higher compared to the same period last year mainly as a result of our June 2013 acquisition at retail operations. For the second quarter of 2014, our income tax expense increased by $8 million compared to the second quarter of 2013. The increase was primarily due to higher consolidated earnings, as previously discussed.

In the first six months of 2014, our net income attributable to AGL Resources Inc. was $354 million, an increase of $151 million compared to the same period in 2013, as we benefited from significantly colder-than-normal weather in most of our businesses as compared to slightly colder-than-normal weather in the first half of 2013. This cold weather contributed an additional $11 million of operating margin for distribution operations compared to the first half of 2013, particularly in Illinois due to the near-record cold. This cold weather also increased the operating margin for retail operations by $12 million, primarily related to Georgia compared to the first half of 2013. Excluding the favorable weather impacts at distribution operations and retail operations, we also achieved growth in our operating margins of $15 million during the first half of 2014 primarily as a result of our 2013 acquisitions at retail operations. Additionally, we experienced natural gas volatility that enabled us to capture value and increase wholesale services’ operating margin by $330 million. These increases were partially offset by decrease in margin at midstream operations due to a retained fuel true-up at one of our storage facilities as a result of naturally occurring shrinkage of the caverns and the $11 million pre-tax gain on sale of Compass Energy in the second quarter of 2013.

In the first half of 2014, our operating expenses were higher compared to the same period last year as a result of an increase in incentive compensation, as we experienced a higher concentration of our annual forecasted earnings in the first half of 2014 as compared to last year. Additionally, our operation and maintenance expense increased at Nicor Gas associated with the significantly colder-than-normal weather, as our employees worked extensive hours to ensure the safe and reliable delivery of natural gas to our customers. Our income tax expense increased by $121 million for the first half of 2014 compared to the first half of 2013, primarily due to higher consolidated earnings.

Several of our business objectives are as follows:

·   Distribution Operations: Invest necessary capital to enhance and maintain safety and reliability; remain a low-cost leader within the industry; opportunistically expand the system and capitalize on potential customer conversions. We intend to continue investing in our regulatory infrastructure programs in Georgia, Virginia, New Jersey and Tennessee to minimize regulatory lag and the recovery cycle. We continue to effectively manage costs and leverage our shared services model across our businesses to largely overcome inflationary effects.

Nicor Gas In 2013 Illinois enacted legislation that will allow Nicor Gas to provide more widespread safety and reliability enhancements to its distribution system. The legislation stipulates that rate increases to customer bills as a result of any infrastructure investments shall not exceed an annual average 4.0% of base rate revenues. In April 2014 we filed for a QIP under this legislation that would allow us to implement rates under the program effective in January 2015. Our filing included QIP cost estimates for three years of $171 million in 2015, $173 million in 2016 and $171 million in 2017. The statutory deadline for a decision by the Illinois Commission is August 5, 2014.

In May 2014 the Illinois Commission approved Nicor Gas’ Energy Smart Plan, which outlines energy efficiency program offerings and therm reduction goals with spending of $93 million over a three-year period beginning in June 2014. Nicor Gas’ first energy efficiency program ended in May 2014.

Atlanta Gas Light In accordance with an order issued by the Georgia Commission, when AGL Resources makes a business acquisition that reduces the costs allocated or charged to Atlanta Gas Light for shared services, the net savings to Atlanta Gas Light will be shared equally between the firm customers of Atlanta Gas Light and our shareholders for a 10-year period. In December 2013 we filed a Report of Synergy Savings with the Georgia Commission in connection with the Nicor acquisition. If and when approved, the net savings are expected to result in annual rate reductions to the firm customers of Atlanta Gas Light of $5 million. We expect the Georgia Commission to rule on the report in the second half of 2014.

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Virginia Natural Gas In April 2014 the Governor of Virginia signed into law legislation that enables the state's natural gas utilities, including Virginia Natural Gas, to acquire long-term supplies of natural gas and make capital investments to facilitate the delivery of low-cost shale and coal-bed methane gas to Virginia homeowners and businesses. Under the terms of the new statute, Virginia Natural Gas could enter into commercial agreements to obtain up to 25% of its annual firm sales demand for natural gas through long-term contracts or investments such as purchases of reserves. Recovery on investments would be based upon the utility's authorized return on rate base, which would flow through the purchased gas adjustment mechanism or similar mechanism, and approval in advance by the Virginia Commission. The new statute also will allow us to build pipelines and other infrastructure that deliver shale and coal-bed methane gas into the state's markets that seek to reduce natural gas supply costs or reduce price volatility for consumers, if approved by the Virginia Commission.

Elizabethtown Gas: In March 2013 the New Jersey BPU issued an order inviting the submission of proposals from utilities in New Jersey for infrastructure upgrades designed to protect utility infrastructure from future major storm events. In September 2013, in response to this request, Elizabethtown Gas filed for a Natural Gas Distribution Utility Reinforcement Effort (ENDURE), a program that will improve our distribution system’s resiliency against coastal storms and floods. Under the proposed plan, Elizabethtown Gas will invest $15 million in infrastructure and related facilities and communication planning over a one-year period beginning January 2014. In July 2014, the New Jersey BPU approved a modified ENDURE plan that allows for Elizabethtown Gas to increase its base rates effective November 1, 2015 for investments made under the program.

·   Retail Operations: Maintain operating margin in Georgia and Illinois while continuing to expand into other profitable retail markets; integrate our warranty businesses and expand our overall market reach through partnership opportunities with our affiliates. With the continued adoption of fixed-price plans, we expect the Georgia retail market to remain highly competitive; however, our operating margins are forecasted to remain stable with modest growth from the acquisitions completed in 2013 and expansion into new markets. The segment’s results in the second quarter of 2014 are 50% higher than last year primarily as a result of the successful integration of the acquisitions completed in 2013.

·   Wholesale Services: Maximize strong storage and transportation positions, including the creation of additional economic value in 2014; effectively perform on existing asset management agreements and expand customer base and maintain cost structure in line with market fundamentals. We anticipate low volatility in certain areas of our portfolio; however, we expect a continuation of volatility in the supply-constrained Northeast corridor in the near-term. We continue to position our business model to secure sufficient supplies of natural gas to meet the needs of our utility customers and to hedge gas prices to effectively manage costs, reduce price volatility and maintain a competitive advantage. We experienced increased natural gas price volatility that enabled us to capture value in wholesale services. As a result, wholesale services’ operating margin for the first half of 2014 was $330 million higher than the same period in 2013. Wholesale services operating margin for the first half of 2014 also includes $31 million related to year-to-date transportation and forward commodity derivative losses associated with July 2014 and forward transportation capacity. This is compared to $18 million of similar transportation derivative losses in the first half of 2013 related to July 2013 and forward transportation capacity.

·   Midstream Operations: Optimize storage portfolio, including contracts that have expired or will expire, pursue LNG transportation and natural gas pipeline opportunities and evaluate alternate uses for our storage facilities. In April 2014 we entered into a collaborative arrangement to construct a lateral pipeline in Georgia that will connect with the Transco pipeline system and entered into an agreement to lease our 50% ownership in this lateral pipeline extension once it is placed in-service.

The sale of Tropical Shipping will allow us to focus on growing our core business of operating regulated utilities and complementary non-regulated businesses. We will also continue to maintain our strong balance sheet and liquidity profile, solid investment grade ratings and our commitment to sustainable annual dividend growth.

Natural Gas Market Fundamentals Volatility in the natural gas market arises from a number of factors, such as weather fluctuations or changes in supply or demand for natural gas in different regions of the country. The volatility of natural gas commodity prices has a significant impact on our customer rates, our long-term competitive position against other energy sources and the ability of retail operations and wholesale services to capture value from location and seasonal spreads. Additionally, changes in commodity prices subject a significant portion of our operations to earnings variability.

While natural gas supply increased during the 2013/2014 Heating Season in the U.S., it was not enough to meet the increased demand, resulting in the lowest storage levels in over a decade. Assuming normal weather during the next year, higher natural gas prices may occur as storage levels are restored.

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Our non-utility businesses principally use physical and financial arrangements to reduce the risks associated with both weather-related seasonal fluctuations in market conditions and changing commodity prices. Additionally, our hedging strategies and physical natural gas supplies in storage enable us to reduce earnings risk exposure due to higher gas costs. These economic hedges may not qualify, or may not be designated, for hedge accounting treatment. As a result, our reported earnings for the wholesale services, retail operations and midstream operations segments reflect changes in the fair values of certain derivatives. Accordingly, a decline in natural gas prices or decreases in transportation spreads generally results in derivative gains and corresponding increases is EBIT, while an increase in natural gas prices or a widening of transportation spreads generally results in derivative losses and corresponding decreases in EBIT. These values may change significantly from period to period and are reflected as gains or losses within our operating revenues or our OCI for those derivative instruments that qualify and are designated as accounting hedges.

Results of Operations

We generate the majority of our operating revenues through the sale, distribution and storage of natural gas. We include in our consolidated revenues an estimate of revenues from natural gas distributed, but not yet billed to residential, commercial and industrial customers from the date of the last bill to the end of the reporting period. No individual customer or industry accounts for a significant portion of our revenues.

The operating revenues and EBIT of distribution operations and retail operations are seasonal. During the Heating Season, natural gas usage and operating revenues are generally higher as more customers are connected to our distribution systems and natural gas usage is higher in periods of colder weather. Our base operating expenses, excluding cost of gas, revenue taxes, interest expense and certain incentive compensation costs, are incurred relatively evenly over any given year. Thus, our operating results vary significantly from quarter to quarter as a result of seasonality.

We evaluate segment performance using the measures of EBIT and operating margin. EBIT includes operating income and other income and expenses. Items that we do not include in EBIT are financing costs (including interest) and income taxes, each of which we evaluate on a consolidated basis. Operating margin is a non-GAAP measure that is calculated as operating revenues minus cost of goods sold and revenue tax expense in distribution operations. Operating margin excludes operation and maintenance expense, depreciation and amortization, certain taxes other than income taxes, and the gain or loss on the sale of our assets, if any. These items are included in our calculation of operating income as reflected in our unaudited Condensed Consolidated Statements of Income.

We believe operating margin is a better indicator than operating revenues of the contribution resulting from customer growth in distribution operations, since the cost of goods sold and revenue tax expenses can vary significantly and are generally billed directly to our customers. We also consider operating margin to be a better indicator in retail operations, wholesale services and midstream operations, since it is a direct measure of earnings generated before overhead costs. You should not consider operating margin an alternative to, or a more meaningful indicator of, our operating performance than operating income or net income attributable to AGL Resources Inc. as determined in accordance with GAAP. In addition, our operating margin may not be comparable to similarly titled measures of other companies.

The following table reconciles operating revenue and operating margin to operating income, and EBIT to income before income taxes and net income, together with other consolidated financial information for the periods presented.

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	Three months ended June 30,									Six months ended June 30,
In millions, except per share amounts	2014			2013			Change			2014			2013			Change
Operating revenues	$	902		$	816		$	86		$	3,376		$	2,438		$	938
Cost of goods sold		(402	)		(353	)		(49	)		(1,802	)		(1,273	)		(529	)
Revenue tax expense (1)		(25	)		(24	)		(1	)		(92	)		(73	)		(19	)
Operating margin		475			439			36			1,482			1,092			390
Operating expenses		(348	)		(351	)		3			(818	)		(755	)		(63	)
Revenue tax expense (1)		25			24			1			92			73			19
Gain on disposition of assets		-			11			(11	)		-			11			(11	)
Operating income		152			123			29			756			421			335
Other income		2			7			(5	)		5			12			(7	)
EBIT		154			130			24			761			433			328
Interest expenses		(48	)		(46	)		(2	)		(96	)		(92	)		(4	)
Income before income taxes		106			84			22			665			341			324
Income tax expenses		(41	)		(33	)		(8	)		(248	)		(127	)		(121	)
Income from continuing operations		65			51			14			417			214			203
Income (loss) from discontinued operations, net of tax		1			(1	)		2			(49	)		-			(49	)
Net income		66			50			16			368			214			154
Less net income attributable to the noncontrolling interest		2			1			1			14			11			3
Net income attributable to AGL Resources Inc.	$	64		$	49		$	15		$	354		$	203		$	151
Diluted earnings per common share information
Continuing operations	$	0.53		$	0.42		$	0.11		$	3.39		$	1.72		$	1.67
Discontinued operations (2)		0.01			(0.01	)		0.02			(0.42	)		-			(0.42	)
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54		$	0.41		$	0.13		$	2.97		$	1.72		$	1.25

(1)   Adjusted for Nicor Gas’ revenue tax expenses, as they are passed directly through to customers.

(2)   In April 2014 we entered into a definitive agreement to sell Tropical Shipping. We anticipate closing the transaction in the third quarter of 2014. For more information see Note 12 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein.

Operating Metrics

Weather We measure the effects of weather on our business through Heating Degree Days. Generally, increased Heating Degree Days result in higher demand for natural gas on our distribution systems. With the exception of Nicor Gas and Florida City Gas, we have various regulatory mechanisms, such as weather normalization, which limit our exposure to weather changes within typical ranges in each of our utilities’ respective service areas. However, our customers in Illinois and retail operations’ customers in Georgia can be impacted by warmer or colder-than-normal weather. We have presented the Heating Degree Day information for those locations in the following table.

	Three months ended June 30,						2014 vs. 2013			2014 vs. normal			Six months ended June 30,						2014 vs. 2013			2014 vs. normal
	Normal		2014		2013		(warmer)			(warmer) colder			Normal		2014		2013		colder			colder
Illinois (1) (2)		620		610		715		(15	)%		(2	)%		3,605		4,366		3,868		13	%		21	%
Georgia (1)		141		146		178		(18	)%		4	%		1,583		1,879		1,639		15	%		19	%

(1)   Normal represents the ten-year average from January 1, 2004 through June 30, 2013, for Illinois at Chicago Midway International Airport, and for Georgia at Atlanta Hartsfield-Jackson International Airport as obtained from the National Oceanic and Atmospheric Administration, National Climatic Data Center.

(2)   The 10-year average Heating Degree Days for the period, as established by the Illinois Commission in our last rate case, is 617 for the second quarter and 3,519 for the first six months from 1998 through 2007.

For our weather risk associated with Nicor Gas, we implemented a corporate weather hedging program in 2013 that utilizes OTC weather derivatives to reduce the risk of lower operating margins potentially resulting from decreased customer usage in the event of significantly warmer-than-normal weather in Illinois. We will continue to evaluate and use available methods to mitigate our exposure to weather in Illinois for future periods.

The 2013/2014 Heating Season was one of the coldest on record for Illinois, which positively impacted our operating margin by $17 million in the first half of 2014 compared to normal weather. Georgia also experienced 19% colder-than-normal weather, and 15% colder than last year. This colder weather positively impacted our operating margin in Georgia by $20 million in the first half of 2014 compared to normal weather.

Customers The number of customers at distribution operations and energy customers at retail operations can be impacted by natural gas prices, economic conditions and competition from alternative fuels. Our energy customers at retail operations are primarily located in Georgia and Illinois. Our customer metrics highlight the average number of customers for which we provide services and are provided in the following table.

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	Three months ended June 30,						2014 vs.2013			Six months ended June 30,						2014 vs.2013
	2014			2013			% change			2014			2013			% change
Distribution operations		4,508			4,492			-	%		4,520			4,496			1	%
Retail operations
Energy customers (1)		631			618			2	%		634			616			3	%
Service contracts		1,201			1,164			3	%		1,199			1,081			11	%
Market share in Georgia		31	%		32	%		(3	)%		31	%		32	%		(3	)%

(1)   Increase primarily represents the addition of approximately 33,000 residential and commercial customer relationships acquired in Illinois in June 2013.

Our year-over-year consolidated utility customer growth rate was 1% for the six months ended June 30, 2014. We anticipate overall utility customer growth trends for 2014 to continue improving based on an expectation of improvement in the economy and relatively low natural gas prices.

Retail operations’ market share in Georgia has decreased slightly primarily as a result of a highly competitive marketing environment, which we expect will continue for the foreseeable future. In 2014 our retail operations segment intends to continue its efforts to enter into targeted markets and expand its energy customers and its service contracts. We anticipate this expansion will provide growth opportunities in future years.

Volumes Our natural gas volume metrics for distribution operations and retail operations, as shown in the following table, present the effects of weather and our customers’ demand for natural gas compared to prior year. Wholesale services’ daily physical sales volumes represent the daily average natural gas volumes sold to its customers.

	Three months ended June 30,				2014 vs. 2013			Six months ended June 30,				2014 vs. 2013
	2014		2013		% change			2014		2013		% change
Distribution operations (In Bcf)
Firm		105		107		(2	)%		467		416		12	%
Interruptible		26		26		-	%		54		56		(4	)%
Total		131		133		(2	)%		521		472		10	%
Retail operations (In Bcf)
Georgia firm		5		5		-	%		25		23		9	%
Illinois		2		1		100	%		12		5		140	%
Other (including Florida, Maryland, New York and Ohio)		2		1		100	%		6		4		50	%
Wholesale services
Daily physical sales (Bcf / day)		5.7		5.3		8	%		6.5		5.8		12	%

Within our midstream operations segment, our natural gas storage businesses seek to have a significant percentage of their working natural gas capacity under firm subscription, but also take into account current and expected market conditions. This allows our natural gas storage business to generate additional revenue during times of peak market demand for natural gas storage services, but retain some consistency with their earnings and maximize the value of the investments.

However, our midstream operations storage business is cyclical and the abundant supply of natural gas in recent years and the resulting lack of market and price volatility have negatively impacted the profitability of our storage facilities. Consistent with our expectations, we had contracts expire on March 31, 2014 that were subscribed at lower prices as compared to prior years. We anticipate these lower natural gas prices to continue throughout 2014 as compared to historical averages. The prices for natural gas storage capacity are expected to increase as supply and demand quantities reach equilibrium as the economy improves, expected exports of LNG occur and/or natural gas demand increases in response to low prices and expanded uses for natural gas. As of the periods presented the overall monthly average firm subscription rates per facility and amount of firm capacity subscription were as follows:

	June 30, 2014				June 30, 2013
	Avg. rates (1)		Firm capacity under subscription (1)		Avg. rates (1)		Firm capacity under subscription (1)
Jefferson Island	$	0.108		4.6	$	0.122		5.6
Golden Triangle		0.114		5.0		0.240		2.0
Central Valley		0.062		2.5		0.130		3.0

(1)   Rates are per dekatherm. Firm capacity under subscription excludes 7.0 Bcf contracted by Sequent as of June 30, 2014 at an average monthly rate of $0.050 and 3.5 Bcf as of June 30, 2013 at an average monthly rate of $0.091.

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Segment Information Operating margin, operating expenses and EBIT information for each of our segments are contained in the following tables:

	Three months ended June 30, 2014							Three months ended June 30, 2013
In millions	Operating margin (1) (2)		Operating expenses (2)		EBIT (1)			Operating margin (1) (2)			Operating expenses (2)		EBIT (1)
Distribution operations	$	371	$	254	$	120		$	368		$	263	$	109
Retail operations		58		40		18			50			38		12
Wholesale services		40		14		23			11			11		11
Midstream operations		6		13		(7	)		11			12		-
Other (3)		-		2		-			(1	)		3		(2	)
Consolidated	$	475	$	323	$	154		$	439		$	327	$	130

	Six months ended June 30, 2014								Six months ended June 30, 2013
In millions	Operating margin (1) (2)			Operating expenses (2)		EBIT (1)			Operating margin (1) (2)			Operating expenses (2)		EBIT (1)
Distribution operations	$	915		$	560	$	359		$	873		$	553	$	327
Retail operations		184			84		100			157			75		82
Wholesale services		370			51		316			40			25		26
Midstream operations		14			25		(10	)		23			23		2
Other (3)		(1	)		6		(4	)		(1	)		6		(4	)
Consolidated	$	1,482		$	726	$	761		$	1,092		$	682	$	433

(1)   Operating margin is a non-GAAP measure. A reconciliation of operating revenue and operating margin to operating income, and EBIT to income before income taxes and net income is contained in “Results of Operations” herein. See Note 11 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein for additional segment information.

(2)   Operating margin and operating expenses are adjusted for revenue tax expenses which are passed directly through to our customers.

(3)   Our other segment includes our investment in Triton, which was formerly part of our cargo shipping segment that is now classified as discontinued operations. For more information see Note 12 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein.

Distribution Operations

Our distribution operations segment is the largest component of our business and is subject to regulation and oversight by agencies in each of the seven states we serve. These agencies approve natural gas rates designed to provide us the opportunity to generate revenues to recover the cost of natural gas delivered to our customers and our fixed and variable costs, such as depreciation, interest, maintenance and overhead costs, and to earn a reasonable return for our shareholders.

With the exception of Atlanta Gas Light, our second-largest utility, the earnings of our regulated utilities can be affected by customer consumption patterns that are a function of weather conditions, price levels for natural gas and general economic conditions that may impact our customers’ ability to pay for natural gas consumed. Depreciation expense at distribution operations decreased for the three and six months ended June 30, 2014 by $10 million and $20 million, respectively, primarily due to Nicor Gas’ new composite depreciation rate that became effective August 30, 2013, partially offset by capital investments. Nicor Gas’ lower composite depreciation rate did not impact customer rates. For the three and six months ended June 30, 2014 distribution operations’ EBIT increased by $11 million and $32 million, or 10%, respectively, compared to the same periods during the prior year, as shown in the following table.

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In millions	Three months ended			Six months ended
EBIT - for June 30, 2013	$	109		$	327
Operating margin
Increased operating margin mainly driven by significantly colder-than-normal weather, higher customer usage and customer growth compared to prior year		1			25
(Decreased) increased rider revenues primarily as a result of bad debt and energy efficiency program recoveries at Nicor Gas		(2	)		9
Increased revenues from regulatory infrastructure replacement programs, primarily at Atlanta Gas Light		4			8
Increase in operating margin		3			42
Operating expenses
Increased payroll and variable compensation costs as a result of merit increases, overtime costs related to colder-than-normal weather, higher earnings and the seasonality of earnings		4			20
Increased outside services and other expenses primarily from costs related to weather		1			4
Decreased depreciation expense primarily due to the impact of Nicor Gas’ new composite depreciation rate		(10	)		(20	)
(Decreased) increased rider expenses primarily as a result of energy efficiency program expenses at Nicor Gas		(2	)		9
Decreased pension and health benefits expenses primarily related to retiree health care costs and change in actuarial gains and losses		(2	)		(6	)
(Decrease) increase in operating expenses		(9	)		7
Decreased AFUDC equity from STRIDE projects at Atlanta Gas Light		(1	)		(3	)
EBIT - for June 30, 2014	$	120		$	359

Retail Operations

Our retail operations segment, which consists of SouthStar and Pivotal Home Solutions, is also weather sensitive and uses a variety of hedging strategies, such as weather derivative instruments and other risk management tools, to mitigate potential weather impacts. For the three and six months ended June 30, 2014 retail operations’ EBIT increased by $6 million, or 50%, and $18 million, or 22%, respectively, compared to the same periods during the prior year, as shown in the following table.

In millions	Three months ended		Six months ended
EBIT - for June 30, 2013	$	12	$	82
Operating margin
Increased margin primarily due to retail acquisitions in 2013		3		15
Increased margin primarily related to average customer usage in Georgia due to colder-than-normal weather and increased demand relative to prior year, net of weather hedges		1		10
Increased margin in Illinois mainly due to weather and hedge gains		4		2
Increase in operating margin		8		27
Operating expenses
Increased variable compensation expense related to higher earnings and increased marketing expenses		1		5
Increased bad debt expenses primarily related to colder-than-normal weather and higher natural gas prices		1		2
Increased expenses primarily due to retail acquisitions in 2013		-		2
Increase in operating expenses		2		9
EBIT - for June 30, 2014	$	18	$	100

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Wholesale Services

Our wholesale services segment is involved in asset management and optimization, storage, transportation, producer and peaking services, natural gas supply, natural gas services and wholesale marketing. Sequent has positioned the business to generate positive economic earnings even under low volatility market conditions. However, when market price volatility increases as we experienced in the first half of 2014, we believe Sequent is well positioned to capture significant value and generate stronger results. EBIT for wholesale services is impacted by volatility in the natural gas market arising from a number of factors, including weather fluctuations and changes in supply or demand for natural gas in different regions of the country. For the three and six months ended June 30, 2014, wholesale services’ EBIT increased by $12 million and $290 million, respectively, compared to the same periods during the prior year, as shown in the following table.

In millions	Three months ended			Six months ended
EBIT - for June 30, 2013	$	11		$	26
Operating margin
Change in commercial activity associated with the transportation and storage portfolios in the Northeast and Midwest largely driven by price volatility resulting largely from the extreme cold in the first quarter of 2014		24			359
Change in value on storage derivatives as a result of changes in NYMEX natural gas prices		(24	)		(15	)
Change in value on transportation and forward commodity derivatives from price movements related to natural gas transportation positions		25			(13	)
Change in LOCOM adjustment, net of derivative recoveries		4			3
Decreased operating margin due to sale of Compass Energy in May 2013		-			(4	)
Increase in operating margin		29			330
Operating expenses
Increased incentive compensation costs at Sequent due to higher operating revenues		2			28
Decreased expenses due to sale of Compass Energy in May 2013		-			(2	)
Other - largely higher corporate allocated costs		1			-
Increase in operating expenses		3			26
Decrease in other income, primarily related to the gain on sale of Compass Energy in May 2013		(14	)		(14	)
EBIT - for June 30, 2014	$	23		$	316

The following table illustrates the components of wholesale services’ operating margin for the periods presented.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Commercial activity recognized	$	30		$	6		$	403		$	48
Gain on storage derivatives		5			29			3			18
Gain (loss) on transportation and forward commodity derivatives		9			(16	)		(31	)		(18	)
Inventory LOCOM adjustment, net of estimated current period recoveries		(4	)		(8	)		(5	)		(8	)
Operating margin	$	40		$	11		$	370		$	40

Change in commercial activity The commercial activity at wholesale services includes recognized storage and transportation values that were generated in prior periods, which reflect the impact of prior period derivative gains and losses as associated physical transactions occur in the period. Additionally, the commercial activity includes significantly higher operating margin generated and recognized in the second quarter and year to date of 2014. For the first six months of 2014, commercial activity increased significantly due to the following:

·   the recognition of operating margin associated with our transportation and storage portfolios, particularly in the Northeast and Midwest regions, from price volatility generated by significantly colder-than-normal weather in the first quarter of 2014, in part reflecting Sequent’s strategy and focus on providing asset management type services to producers around the major shale producing regions and to gas fired power generators, enabling Sequent to optimize the associated pipeline transportation and storage capacity assets,

·   the recognition of operating margin resulting from the withdrawal of storage inventory at the end of 2013 that was included in the storage withdrawal schedule with a value of $28 million as of December 31, 2013,

·   the recognition of operating margin resulting from mark-to-market accounting derivative losses at the end of 2013

Change in storage and transportation derivatives The first half of 2014 showed a return of significantly higher price volatility benefitting Sequent’s portfolio of pipeline transportation and storage capacity assets throughout the country, primarily in the Gulf Coast, Northeast and Midwest markets. Although we do not expect this high level of price volatility to continue, we see the potential for market fundamentals indicating some level of increased volatility which would continue to benefit Sequent’s portfolio of pipeline transportation capacity should this occur. Gains in our transportation and forward commodity hedge positions in the second quarter of 2014 are the result primarily of the tightening of transportation basis spreads which resulted in hedge gains in the second quarter.

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The storage derivative gains are primarily due to the change in natural gas prices applicable to the locations of our specific storage assets. Losses in our transportation and forward commodity derivative positions during the first half of 2014 are the result primarily of widening transportation basis spreads. Significantly colder-than-normal weather and higher demand together with natural gas transportation constraints due to growing shale production, impacted forward prices at natural gas receipt and delivery points primarily in the Northeast and the Midwest regions. These losses are temporary and, based on current expectations, will largely be recovered in 2014 through 2016 with the physical flow of natural gas and utilization of the contracted transportation capacity.

Withdrawal schedule and physical transportation transactions The expected natural gas withdrawals from storage and expected recovery of derivative losses associated with Sequent’s transportation portfolio is presented in the following table, along with the net operating revenues expected at the time of withdrawal from storage and the physical flow of natural gas between contracted transportation receipt and delivery points. Sequent’s expected net operating revenues exclude storage and transportation demand charges, as well as other variable fuel, withdrawal, receipt and delivery charges, but are net of the estimated impact of profit sharing under our asset management agreements. The amounts that are realizable in future periods are based on the inventory withdrawal schedule, planned physical flow of natural gas between the transportation receipt and delivery points and forward natural gas prices at June 30, 2014. A portion of Sequent’s storage inventory and transportation capacity is economically hedged with futures contracts, which results in realization of substantially fixed net operating revenues, timing notwithstanding. For more information on Sequent’s energy marketing and risk management activities, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk - Commodity Price Risk” of our 2013 Form 10-K.

	Storage withdrawal schedule
Dollars in millions	Total storage (in Bcf) (WACOG $4.14)		Expected operating revenues (1)		Physical transportation transactions – expected net operating revenues (2)
2014		18	$	7	$	4
2015		11		6		25
2016 and thereafter		-		-		2
Total at June 30, 2014		29	$	13	$	31
Total at December 31, 2013		36	$	28	$	73
Total at June 30, 2013		50	$	14	$	18

(1)   Represents expected operating revenues from planned storage withdrawals associated with existing inventory positions and could change as Sequent adjusts its daily injection and withdrawal plans in response to changes in future market conditions and forward NYMEX price fluctuations.

(2)   Represents the periods associated with the transportation derivative losses during which the derivatives will be settled and the physical transportation transactions will occur that offset the derivative losses recognized in 2013 and during the first half of 2014.

The unrealized storage and transportation derivative losses do not change the underlying economic value of our storage and transportation positions, and based on current expectations, will largely be reversed in 2014 and 2015 when the related transactions occur and are recognized. For more information on Sequent’s energy marketing and risk management activities, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk” under the caption “Natural Gas Price Risk” of our 2013 Form 10-K.

Midstream Operations

Our midstream operations segment’s primary activity is operating non-utility storage and pipeline facilities, including the development and operation of high-deliverability underground natural gas storage assets. While this business can also generate additional revenue during times of peak market demand for natural gas storage services, certain of our storage services are covered under short, medium and long-term contracts at fixed market rates. Based on an engineering study and mechanical integrity tests performed in the first half of 2014, we identified a lower amount of working gas capacity, further resulting in the true-up of retained fuel at one of our storage facilities, negatively impacting EBIT by $2 million and $9 million for the three and six months ended June 30, 2014, respectively. The decrease in working gas capacity is a result of naturally occurring shrinkage of the storage cavern and we are evaluating and developing strategies to recover the decreased working capacity. For the three and six months ended June 30, 2014 midstream operations’ EBIT decreased by $7 million and $12 million, respectively, compared to the same periods during the prior year, as shown in the following table.

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In millions	Three months ended			Six months ended
EBIT - for June 30, 2013	$	-		$	2
Operating margin
Decreased margin at one of our storage facilities related to true-up of retained fuel, partially offset on a year-to-date basis by higher interruptible operating margins largely at Golden Triangle in the first quarter of 2014 due to optimizing the facilities during the colder weather in 2014		(3	)		(6	)
Decreased margin at Jefferson Island, Golden Triangle and Central Valley as a result of lower subscription rates as well as lower revenues from LNG sales		(2	)		(3	)
Decrease in operating margin		(5	)		(9	)
Operating expenses
Increased maintenance, outside service costs, depreciation expense and other		1			2
Increase in operating expenses		1			2
Decrease in other income from equity investment in Horizon Pipeline		(1	)		(1	)
EBIT - for June 30, 2014	$	(7	)	$	(10	)

Liquidity and Capital Resources

OverviewThe acquisition of natural gas and pipeline capacity, payment of dividends and funding of working capital needs primarily related to our natural gas inventory are our most significant short-term financing requirements. The liquidity required to fund these short-term needs is primarily provided by our operating activities, and any needs not met are primarily satisfied with short-term borrowings under our commercial paper programs, which are supported by the AGL Credit Facility and the Nicor Gas Credit Facility. The need for long-term capital is driven primarily by capital expenditures and maturities of long-term debt. Periodically, we raise funds supporting our long-term cash needs from the issuance of long-term debt or equity securities. We regularly evaluate our funding strategy and profile to ensure that we have sufficient liquidity for our short-term and long-term needs in a cost-effective manner.

Our financing activities, including long-term and short-term debt and equity, are subject to customary approval or review by state and federal regulatory bodies, including the various commissions of the states in which we conduct business. Certain financing activities we undertake may also be subject to approval by state regulatory agencies. A substantial portion of our consolidated assets, earnings and cash flows is derived from the operation of our regulated utility subsidiaries, whose legal authority to pay dividends or make other distributions to us is subject to regulation. Nicor Gas is restricted by regulation to the extent of its retained earnings balance in the amount it can dividend and is not permitted to make money pool loans to affiliates.

We believe the amounts available to us under our long-term debt and credit facilities as well as through the issuance of debt and equity securities, combined with cash provided by operating activities, will continue to allow us to meet our needs for working capital, pension and retiree welfare benefits, capital expenditures, anticipated debt redemptions, interest payments on debt obligations, dividend payments and other cash needs through the next several years. Our ability to satisfy our working capital requirements and our debt service obligations, or fund planned capital expenditures, will substantially depend upon our future operating performance (which will be affected by prevailing economic conditions), and financial, business and other factors, some of which we are unable to control. These factors include, among others, regulatory changes, the price of and demand for natural gas and operational risks.

Upon closing our sale of Tropical Shipping, which we anticipate to occur during the third quarter of 2014, we expect to receive after-tax cash proceeds and distributions of approximately $220 million, subject to certain defined post-closing adjustments. These proceeds and distributions combined with our cash flow from operating activities, provide us flexibility around our long-term financing plans.

Our capitalization and financing strategy is intended to ensure that we are properly capitalized with the appropriate mix of debt securities and equity. This strategy includes active management of the percentage of total debt relative to total capitalization, appropriate mix of debt with fixed to floating interest rates (our variable debt target is 20% to 45% of total debt), as well as the term and interest rate profile of our debt securities. At June 30, 2014, our variable-rate debt was 16% of our total debt, compared to 28% as of December 31, 2013 and 17% as of June 30, 2013. The decrease from December 31, 2013 was primarily due to decreased commercial paper borrowings.

We will continue to evaluate our need to increase available liquidity based on our view of working capital requirements, including the impact of changes in natural gas prices, liquidity requirements established by rating agencies and other factors. See Item 1A, “Risk Factors,” in our 2013 Form 10-K for additional information on items that could impact our liquidity and capital resource requirements.

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Capital Projects We continue to focus on capital discipline and cost control while moving ahead with projects and initiatives that we expect will have current and future benefits to us and our customers, provide an appropriate return on invested capital and ensure the safety, reliability and integrity of our utility infrastructure.The following table and discussions provide updates on some of our larger capital projects under various programs at distribution operations. These programs update or expand our distribution systems to improve system reliability and meet operational flexibility and growth. Our anticipated expenditures for these programs in 2014 are discussed in “Liquidity and Capital Resources” under the caption ‘Cash Flow from Investing Activities’ under Item 7 in our 2013 Form 10-K.

Dollars in millions	Utility	Expenditures in 2014		Expenditures since project inception		Miles of pipe installed		Year project began		Scheduled year of completion
STRIDE program
Integrated System Reinforcement Program (i-SRP)	Atlanta Gas Light	$	6	$	257		n/a		2009		2017
Integrated Customer Growth Program (i-CGP)	Atlanta Gas Light		2		41		n/a		2010		2017
Integrated Vintage Plastic Replacement Program (i-VPR)	Atlanta Gas Light		28		33		85		2013		2017
Enhanced infrastructure program	Elizabethtown Gas		11		127		125		2009		2017
Accelerated infrastructure replacement program (SAVE)	Virginia Natural Gas		13		53		107		2012		2017
Total		$	60	$	511		317

Short-Term Debt Our short-term debt comprises borrowings under our commercial paper programs and current portion of our senior notes. Our commercial paper borrowings are supported by the $1.3 billion AGL Capital Credit Facility and $700 million Nicor Gas Credit Facility. The Nicor Gas Credit Facility can only be used for the working capital needs of Nicor Gas. The following table provides additional information on our short-term debt.

In millions	Period end balance outstanding(1)		Daily average balance outstanding(2)		Minimum balance outstanding (2)		Largest balance outstanding(2)
Commercial paper - AGL Capital	$	236	$	433	$	-	$	1,006
Commercial paper - Nicor Gas		212		193		58		344
Senior notes (3)		200		185		-		200
Total short-term debt and current portion of long-term debt	$	648	$	811	$	58	$	1,550

(1)   As of June 30, 2014.

(2)   For the six months ended June 30, 2014. The minimum and largest balances outstanding for each debt instrument occurred at different times during the period. Consequently, the total balances are not indicative of actual borrowings on any one day during the period.

(3)   These senior notes mature in January 2015.

The largest, minimum and daily average balances borrowed under our commercial paper programs are important when assessing the intra-period fluctuations of our short-term borrowings and potential liquidity risk. The fluctuations are due to our seasonal cash requirements to fund working capital needs, in particular the purchase of natural gas inventory, margin calls and collateral.

Increasing natural gas commodity prices can have a significant impact on our commercial paper borrowings. Based on current natural gas prices and our expected injection plan, a $1 NYMEX price increase could result in an approximately $140 million change of working capital requirements during the 2014 injection season. This range is sensitive to the timing of storage injections and withdrawals, collateral requirements and our portfolio position. Based upon our total debt outstanding as of June 30, 2014 and our 70% debt to total capitalization financial covenants, we could potentially borrow an additional $1.1 billion of commercial paper under the AGL Capital Credit Facility and an additional $500 million of commercial paper under the Nicor Gas Credit Facility. As a result, based on current natural gas prices and our expected purchases during the remainder of the injection season, we believe that we have sufficient liquidity to cover our working capital needs for the upcoming Heating Season.

Credit Ratings Our borrowing costs and our ability to obtain adequate and cost-effective financing are directly impacted by our credit ratings, as well as the availability of financial markets. Credit ratings are important to our counterparties when we engage in certain transactions, including OTC derivatives. It is our long-term objective to maintain or improve our credit ratings in order to manage our existing financing costs and enhance our ability to raise additional capital on favorable terms.

Credit ratings and outlooks are opinions subject to ongoing review by the rating agencies and may periodically change. The rating agencies regularly review our performance and financial condition and reevaluate their ratings of our long-term debt and short-term borrowings, our corporate ratings and our ratings outlook. There is no guarantee that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. A credit rating is not a recommendation to buy, sell or hold securities and each rating should be evaluated independently of other ratings.

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Factors we consider important to assessing our credit ratings include our Consolidated Statements of Financial Position, leverage, capital spending, earnings, cash flow generation, available liquidity and overall business risks. We do not have any triggering events in our debt instruments that are tied to changes in our specified credit ratings or our stock price and have not entered into any agreements that would require us to issue equity based on credit ratings or other trigger events. The following table summarizes our credit ratings as of June 30, 2014 and reflects no change from what was reported in our 2013 Form 10-K.

	AGL Resources			Nicor Gas
	S&P	Moody’s	Fitch	S&P	Moody’s	Fitch
Corporate rating	BBB+	n/a	BBB+	BBB+	n/a	A
Commercial paper	A-2	P-2	F2	A-2	P-1	F1
Senior unsecured	BBB+	A3	BBB+	BBB+	A2	A+
Senior secured	n/a	n/a	n/a	A	Aa3	AA-
Ratings outlook	Stable	Stable	Stable	Stable	Stable	Stable

A downgrade in our current ratings, particularly below investment grade, would increase our borrowing costs and could limit our access to the commercial paper market. In addition, we would likely be required to pay a higher interest rate in future financings, and our potential pool of investors and funding sources could decrease.

Default ProvisionsOur debt instruments and other financial obligations include provisions that, if not complied with, could require early payment or similar actions. Our credit facilities contain customary events of default, including, but not limited to, the failure to comply with certain affirmative and negative covenants, cross-defaults to certain other material indebtedness and a change of control.

Our credit facilities contain certain non-financial covenants that, among other things, restrict liens and encumbrances, loans and investments, acquisitions, dividends and other restricted payments, asset dispositions, mergers and consolidations, and other matters customarily restricted in such agreements.

Our credit facilities each include a financial covenant that requires us to maintain a ratio of total debt to total capitalization of no more than 70% at the end of any fiscal month. However, we typically seek to maintain these ratios at levels between 50% and 60%, except for temporary increases related to the timing of acquisition and financing activities. Adjusting for these items, the following table contains our debt-to-capitalization ratios for the dates presented, which are below the maximum allowed. We were in compliance with all of our debt provisions and covenants, both financial and non-financial, for all periods presented.

	AGL Resources									Nicor Gas
	June 30,			December 31,			June 30,			June 30,			December 31,			June 30,
	2014			2013			2013			2014			2013			2013
Debt-to-capitalization ratio as calculated from our unaudited Condensed Consolidated Statement of Financial Position		52	%		58	%		55	%		51	%		54	%		43	%
Adjustments (1)		(1	)		(1	)		(1	)		1			1			-
Debt-to-capitalization ratio as calculated within our credit facilities		51	%		57	%		54	%		52	%		55	%		43	%

(1)   As defined in credit facilities, includes standby letters of credit, performance/surety bonds and excludes accumulated OCI items related to non-cash pension adjustments, other post-retirement benefits liability adjustments and accounting adjustments for cash flow hedges.

Cash Flows The following table provides a summary of our operating, investing and financing cash flows for the periods presented.

	Six months ended June 30,
In millions	2014			2013			Variance
Net cash provided by (used in) (1):
Operating activities	$	1,175		$	1,161		$	14
Investing activities		(300	)		(413	)		113
Financing activities		(843	)		(695	)		(148	)
Net increase in cash and cash equivalents - continuing operations		41			45			(4	)
Net (decrease) increase in cash and cash equivalents - discontinued operations		(9	)		8			(17	)
Cash and cash equivalents (including held for sale) at beginning of period		105			131			(26	)
Cash and cash equivalents (including held for sale) at end of period		137			184			(47	)
Less cash and cash equivalents held for sale at end of period		15			31			(16	)
Cash and cash equivalents (excluding held for sale) at end of period	$	122		$	153		$	(31	)

(1)   Includes activity for discontinued operations.

Cash Flow from Operating Activities The $14 million increase in cash from operating activities for the six months ended June 30, 2014 compared to the same period in 2013 primarily was related to increased cash provided by (i) higher earnings year over year largely attributed to significantly colder-than-normal weather in the current year and increased price volatility that enabled us to capture value in wholesale services, (ii) inventories, net of LIFO liquidation, due to increased LIFO liquidation at Nicor Gas and increased withdrawals at our distribution and midstream operations, partially offset by a decrease in withdrawals at Sequent, and (iii) net energy marketing receivables and payables, due to higher cash received in 2014 that related to December 2013. This increase in cash provided by operating activities was largely offset by decreased cash provided by (i) trade payables, other than energy marketing, due to higher accrued volumes in December 2013 compared to December 2012, (ii) deferred natural gas costs, due to an increase in the price paid for natural gas in the first half of 2014 associated with the extremely cold weather, primarily in Illinois, that led to an under-collected position in the current year, and (iii) receivables, other than energy marketing, due to colder weather in 2014, which resulted in higher volumes primarily at distribution operations and retail operations that will be collected in future periods.

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Cash Flow from Investing ActivitiesThe $113 million decrease in cash flow used in investing activities was primarily the result of our $122 million acquisition of approximately 500,000 service plans during the first quarter of 2013. This decrease was partially offset by increased spending for PP&E expenditures of $17 million.

Cash Flow from Financing Activities The increased use of cash for our financing activities for the six months ended June 30, 2014 compared to the same period in 2013 was primarily the result of our issuance of senior notes in May 2013 and recovery of working capital at wholesale services, partially offset by lower commercial paper repayments due to higher working capital needs at distribution operations. For more information on our debt, see Note 7 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein.

Contractual Obligations and Commitments We have incurred various contractual obligations and financial commitments in the normal course of business that are reasonably likely to have a material effect on liquidity or the availability of requirements for capital resources. Contractual obligations include future cash payments required under existing contractual arrangements, such as debt and lease agreements. These obligations may result from both general financing activities and from commercial arrangements that are directly supported by related revenue-producing activities. Contingent financial commitments represent obligations that become payable only if certain predefined events occur, such as financial guarantees, and include the nature of the guarantee and the maximum potential amount of future payments that could be required of us as the guarantor.

Other than the changes in our short-term debt, see Note 7 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein, there were no significant changes to our contractual obligations described in Note 11 to our Consolidated Financial Statements and related notes as filed in Item 8 of our 2013 Form 10-K.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts in our unaudited Condensed Consolidated Financial Statements and accompanying notes. Those judgments and estimates have a significant effect on our financial statements, primarily due to the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ from those estimates. We frequently reevaluate our judgments and estimates that are based upon historical experience and various other assumptions that we believe to be reasonable under the circumstances.

Each of our critical accounting estimates involves complex situations requiring a high degree of judgment either in the application and interpretation of existing literature or in the development of estimates that impact our financial statements. Except as described below, there have been no significant changes to our critical accounting estimates from those disclosed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations as filed on our 2013 Form 10-K. Our critical accounting estimates used in the preparation of our unaudited Condensed Consolidated Financial Statements include the following:

·Accounting for Rate-Regulated Subsidiaries

·Derivatives and Hedging Activities

·Goodwill and Long-Lived Assets, including Other Intangible Assets

·Contingencies

·Pension and Other Retirement Plans

·Provisions for Income Taxes

Goodwill During the first quarter of 2014 we conducted an engineering study that indicated a reduction in our estimated working gas capacity for a storage facility from what was projected when our 2013 annual goodwill impairment analysis was performed in the fourth quarter of 2013. Given that the 2013 annual goodwill impairment test indicated that the estimated fair value of the storage and fuels reporting unit exceeded its carrying amount by less than 5%, we considered this reduced forecast of storage capacity as an indicator of potential impairment and, accordingly, conducted an interim goodwill impairment analysis during the first quarter of 2014. See “Goodwill” in Note 2 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein for additional information.

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Accounting Developments

See “Accounting Developments” in Note 2 to our unaudited Condensed Consolidated Financial Statements under Part I, Item 1 herein.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to risks associated with natural gas prices, interest rates and credit. Natural gas price risk results from changes in the fair value of natural gas. Interest rate risk is caused by fluctuations in interest rates related to our portfolio of debt and equity instruments that we issue to provide financing and liquidity for our business. Credit risk results from the extension of credit throughout all aspects of our business, but is particularly concentrated at Atlanta Gas Light in distribution operations and in wholesale services. We use derivative instruments to manage these risks. Our use of derivative instruments is governed by a risk management policy, approved and monitored by our Risk Management Committee (RMC), which prohibits the use of derivatives for speculative purposes.

Our RMC is responsible for establishing the overall risk management policies and monitoring compliance with, and adherence to, the terms within these policies, including approval and authorization levels and delegation of these levels. Our RMC consists of members of senior management who monitor open natural gas price risk positions and other types of risk, corporate exposures, credit exposures and overall results of our risk management activities. It is chaired by our chief risk officer, who is responsible for ensuring that appropriate reporting mechanisms exist for the RMC to perform its monitoring functions. Our risk management activities and related accounting treatment for our derivative instruments are described in further detail in Note 5 of our unaudited Condensed Consolidated Financial Statements included herein.

Natural Gas Price Risk

The following tables include the fair values and average values of our consolidated derivative instruments as of the dates indicated. We base the average values on monthly averages for the six months ended June 30, 2014 and 2013.

	Derivative instruments average values at June 30,(1)
In millions	2014		2013
Asset	$	166	$	107
Liability		131		36

(1)Excludes cash collateral amounts.

	Derivative instruments fair values netted with cash collateral at
In millions	June 30, 2014		December 31, 2013		June 30, 2013
Asset	$	114	$	119	$	130
Liability		62		80		39

The following table illustrates the change in the net fair value of our derivative instruments during the periods presented, and provides details of the net fair value of contracts outstanding as of the dates presented.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Net fair value of derivative instruments outstanding at beginning of period	$	(44	)	$	10		$	(82	)	$	36
Derivative instruments realized or otherwise settled during period		(15	)		(15	)		43			(46	)
Change in net fair value of derivative instruments		29			2			9			7
Net fair value of derivative instruments outstanding at end of period		(30	)		(3	)		(30	)		(3	)
Netting of cash collateral		82			94			82			94
Cash collateral and net fair value of derivative instruments outstanding at end of period	$	52		$	91		$	52		$	91

The sources of our net fair value at June 30, 2014, are as follows.

In millions	Prices actively quoted (Level 1) (1)			Significant other observable inputs (Level 2) (2)
Mature through 2014	$	(3	)	$	17
Mature 2015 - 2016		(25	)		(17	)
Mature 2017 - 2018		(2	)		-
Total derivative instruments (3)	$	(30	)	$	-

(1)Valued using NYMEX futures prices.

(2)  Valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers.

(3)Excludes cash collateral amounts.

VaROur VaR may not be comparable to that of other entities due to differences in the factors used to calculate VaR. Our VaR is determined on a 95% confidence interval and a 1-day holding period, which means that 95% of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated. Our open exposure is managed in accordance with established policies that limit market risk and require daily reporting of potential financial exposure to senior management, including the chief risk officer. Because we generally manage physical gas assets and economically protect our positions by hedging in the futures markets, our open exposure is generally mitigated. We employ daily risk testing, using both VaR and stress testing, to evaluate the risks of our open positions.

40

Natural gas markets experienced levels of high volatility and increased prices due to the extended extreme cold weather during the first quarter of 2014, resulting in our VaR to be at elevated levels during the quarter as compared to prior periods. We actively managed and monitored the open positions and exposures that were driving the elevated VaR levels to not only remain in compliance with established policies, but to also mitigate the operational risks of not being able to meet customer needs under these extreme conditions. As conditions moderated at the end of the first quarter, our period-end VaR was consistent with historical periods. We actively monitor open commodity positions and the resulting VaR. We also continue to maintain a relatively matched book, where our total buy volume is close to our sell volume, with minimal open natural gas price risk. Based on a 95% confidence interval and employing a 1-day holding period, we had the following VaRs.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Period end	$	3.5	$	1.7	$	3.5	$	1.7
Average		3.0		1.8		4.6		1.8
High		3.7		2.2		19.7		2.6
Low		2.2		1.2		2.2		1.2

Interest Rate Risk

Interest rate fluctuations expose our variable-rate debt to changes in interest expense and cash flows. Our policy is to manage interest expense using a combination of fixed-rate and variable-rate debt. Based on $0.6 billion of variable-rate debt outstanding at June 30, 2014, a 100 basis point change in market interest rates would have resulted in an increase in pre-tax interest expense of $6 million on an annualized basis.

We utilize interest rate swaps to help us achieve our desired mix of variable to fixed-rate debt. Our variable-rate debt target generally ranges from 20% to 45% of total debt. We also may use forward-starting interest rate swaps and interest rate lock agreements to lock in fixed interest rates on our forecasted issuances of debt. The objective of these hedges is to offset the variability of future payments associated with the interest rate on debt instruments we expect to issue. The gain or loss on the interest rate swaps designated as cash flow hedges is generally deferred in accumulated OCI until settlement, at which point it is amortized to interest expense over the period of the related hedge interest payments. For additional information, see Note 5 to our unaudited Condensed Consolidated Financial Statements included under Part 1, Item 1 herein.

Credit Risk

Wholesale Services We have established credit policies to determine and monitor the creditworthiness of counterparties, as well as the quality of pledged collateral. We also utilize master netting agreements whenever possible to mitigate exposure to counterparty credit risk. When we are engaged in more than one outstanding derivative transaction with the same counterparty and we also have a legally enforceable netting agreement with that counterparty, the “net” mark-to-market exposure represents the netting of the positive and negative exposures with that counterparty and a reasonable measure of our credit risk. We also use other netting agreements with certain counterparties with whom we conduct significant transactions. Master netting agreements enable us to net certain assets and liabilities by counterparty. We also net across product lines and against cash collateral, provided the master netting and cash collateral agreements include such provisions.

Additionally, we may require counterparties to pledge additional collateral when deemed necessary. We conduct credit evaluations and obtain appropriate internal approvals for a counterparty’s line of credit before any transaction with the counterparty is executed. In most cases, the counterparty must have an investment grade rating, which includes a minimum long-term debt rating of Baa3 from Moody’s and BBB- from S&P. Generally, we require credit enhancements by way of guaranty, cash deposit or letter of credit for transaction counterparties that do not have investment grade ratings.

We have a concentration of credit risk as measured by our 30-day receivable exposure plus forward exposure. As of June 30, 2014, our top 20 counterparties represented 44% of the total counterparty exposure of $428 million, derived by adding together the top 20 counterparties’ exposures, exclusive of customer deposits, and dividing by the total of our counterparties’ exposures.

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As of June 30, 2014, our counterparties, or the counterparties’ guarantors, had a weighted average S&P equivalent credit rating of A-, which is consistent with the prior year. The S&P equivalent credit rating is determined by a process of converting the lower of the S&P or Moody’s ratings to an internal rating ranging from 9 to 1, with 9 being equivalent to AAA/Aaa by S&P and Moody’s and 1 being D or Default by S&P and Moody’s. A counterparty that does not have an external rating is assigned an internal rating based on the strength of the financial ratios of that counterparty. To arrive at the weighted average credit rating, each counterparty is assigned an internal ratio, which is multiplied by their credit exposure and summed for all counterparties. The sum is divided by the aggregate total counterparties’ exposures, and this numeric value is then converted to an S&P equivalent. The following table shows our third-party natural gas contracts receivable and payable positions.

	Gross receivables						Gross payables
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
In millions	2014		2013		2013		2014		2013		2013
Netting agreements in place:
Counterparty is investment grade	$	439	$	496	$	206	$	248	$	265	$	107
Counterparty is non-investment grade		2		-		1		9		10		7
Counterparty has no external rating		199		260		396		450		393		514
No netting agreements in place:
Counterparty is investment grade		32		29		5		4		2		-
Counterparty has no external rating		5		1		-		13		1		-
Amount recorded on unaudited Condensed Consolidated Statements of Financial Position	$	677	$	786	$	608	$	724	$	671	$	628

We have certain trade and credit contracts that have explicit minimum credit rating requirements. These credit rating requirements typically give counterparties the right to suspend or terminate credit if our credit ratings are downgraded to non-investment grade status. Under such circumstances, we would need to post collateral to continue transacting business with some of our counterparties. If such collateral were not posted, our ability to continue transacting business with these counterparties would be impaired. If our credit ratings had been downgraded to non-investment grade status, the required amounts to satisfy potential collateral demands under such agreements with our counterparties would have totaled $11 million at June 30, 2014, which would not have a material impact on our consolidated results of operations, cash flows or financial condition.

There have been no significant changes to our credit risk related to any of our segments other than wholesale services, as described in Item 7A ”Quantitative and Qualitative Disclosures about Market Risk” of our 2013 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures.Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of June 30, 2014, the end of the period covered by this report. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2014, in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods in SEC rules and forms, including a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The nature of our business ordinarily results in periodic regulatory proceedings before various state and federal authorities. In addition, we are party, as both plaintiff and defendant, to a number of lawsuits related to our business on an ongoing basis. Management believes that the outcome of all regulatory proceedings and litigation in which we are currently involved will not have a material adverse effect on our consolidated financial condition. For more information, see Note 10 to our unaudited Condensed Consolidated Financial Statements in this quarterly filing under the caption “Litigation” and Part I, Item 3. Legal Proceedings in our 2013 Form 10-K.

Item 1A. Risk Factors.

For information regarding our risk factors, see the factors discussed in Part I, Item 1A. Risk Factors in our 2013 Form 10-K. These risk factors could materially affect our business, financial condition or future results. There have been no significant changes to our risk factors included in Item 1A of our 2013 Form 10-K. The risks described in the referenced document are not the only risks facing the company. Additional risks and uncertainties not currently known to us or that we currently do not recognize as material also may materially adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no purchases of our common stock by us or any affiliated purchasers during the second quarter of 2014 and no unregistered sales of equity securities were made during this period.

Item 6. Exhibits.

Exhibit Number		Description of Exhibit	Filer	The Filings Referenced for Incorporation by Reference
	2	Stock Purchase Agreement by and among Aqua Acquisition Corp., Ottawa Acquisition LLC and Birdsall, Inc.	AGL Resources	Filed herewith
	12	Statement of Computation of Ratio of Earnings to Fixed Charges	AGL Resources	Filed herewith
	31.1	Certification of John W. Somerhalder II	AGL Resources	Filed herewith
	31.2	Certification of Andrew W. Evans	AGL Resources	Filed herewith
	32.1	Certification of John W. Somerhalder II	AGL Resources	Filed herewith
	32.2	Certification of Andrew W. Evans	AGL Resources	Filed herewith
	101.INS	XBRL Instance Document	AGL Resources	Filed herewith
	101.SCH	XBRL Taxonomy Extension Schema	AGL Resources	Filed herewith
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase	AGL Resources	Filed herewith
	101.DEF	XBRL Taxonomy Definition Linkbase	AGL Resources	Filed herewith
	101.LAB	XBRL Taxonomy Extension Labels Linkbase	AGL Resources	Filed herewith
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase	AGL Resources	Filed herewith

43

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AGL RESOURCES INC.

(Registrant)

Date: July 30, 2014                                                                           /s/ Andrew W. Evans

Executive Vice President and Chief Financial Officer

44

EX-2.1

Exhibit 2.1

STOCK PURCHASE AGREEMENT

BY AND AMONG

AQUA ACQUISITION CORP.,

OTTAWA ACQUISITION LLC

and

BIRDSALL, INC.

Dated as of April 4, 2014

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

		TABLE OF CONTENTS
			Page
Article I		DEFINITIONS	1
Article II		PURCHASE AND SALE; CLOSING	11
	2.1	Purchase and Sale	11
	2.2	Purchase Price	11
	2.3	Closing	14
	2.4	Deliveries at Closing	14
Article III		REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER	15
	3.1	Organization; Qualification and Limited Liability Company Power	15
	3.2	Authorization of Transaction	15
	3.3	Non-contravention	16
	3.4	Brokers’ Fees	16
	3.5	Ownership of Outstanding Stock	16
	3.6	Assets	16
	3.7	Litigation	16
Article IV		REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER	16
	4.1	Organization of the Buyer	17
	4.2	Authorization of Transaction	17
	4.3	Non-contravention	17
	4.4	Brokers’ Fees	18
	4.5	Litigation	18
	4.6	Sufficient Funds	18
	4.7	No Other Representations	18
Article V		REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE SUBSIDIARIES	18
	5.1	Organization, Qualification, and Corporate Power	19
	5.2	Capitalization	19
	5.3	Authorization of Transaction	19
	5.4	Non-contravention	20
	5.5	Brokers’ Fees	20
	5.6	Assets	20
	5.7	Subsidiaries	20
	5.8	Financial Statements	21
	5.9	Events Subsequent to Most Recent Fiscal Year End	22
	5.10	Undisclosed Liabilities	22
	5.11	Legal Compliance	22
	5.12	Tax Matters	23
	5.13	Owned Real Property	26
	5.14	Real Property Leases	27
	5.15	Vessels	27
	5.16	Intellectual Property	29
	5.17	Contracts	29
	5.18	Powers of Attorney	31
	5.19	Insurance	31
	5.20	Litigation	31
	5.21	Employees	32
	5.22	Employee Benefits	34
	5.23	Environmental Matters	36
	5.24	Customers and Suppliers	37
	5.25	Permits	37
	5.26	Certain Business Relationships with Affiliates	38
	5.27	Books and Records	38
	5.28	Government Contracts	38
	5.29	Accounts Receivable	39
Article VI		INTERIM COVENANTS	39
	6.1	General	39
	6.2	Notices and Consents	39
	6.3	Operation of Business	40
	6.4	Access to, Return or Deletion of Confidential Information	42
	6.5	Notice of Developments	43
	6.6	Excluded Subsidiaries	43
	6.7	Change of Corporate Name	43
	6.8	Excluded Cash	43
	6.9	Intercompany Accounts; Tax Liabilities	43
	6.10	AGL Stock Investment Option; AGL Employee Stock Purchase Plan	44
	6.11	FIRPTA	44
	6.12	Employee Reassignment	44
	6.13	Insurance	44
	6.14	Drydocking	44
	6.15	Change of Control Payments	45
	6.16	***	45
Article VII		POST-CLOSING COVENANTS	45
	7.1	General	45
	7.2	Litigation Support	45
	7.3	Benefits	45
	7.4	Directors’ and Officers’ Indemnification	47
Article VIII		CONDITIONS TO OBLIGATION TO CLOSE	47
	8.1	Conditions to the Buyer’s Obligation	47
	8.2	Conditions to the Seller’s Obligation	49
Article IX		INDEMNIFICATION	50
	9.1	Survival of Representations and Warranties	50
	9.2	Indemnification by the Seller	50
	9.3	Indemnification by the Buyer	51
	9.4	Indemnification Limitations	51
	9.5	Third Party Actions	52
	9.6	Indemnification Procedures	54
	9.7	Treatment of Indemnity Payments	54
	9.8	Exclusive Remedy	54
	9.9	Mitigation	55
Article X		TAX MATTERS	55
	10.1	Preparation and Filing of Tax Returns; Payment of Taxes	55
	10.2	Tax Indemnification	55
	10.3	Allocation of Certain Taxes	56
	10.4	Cooperation on Tax Matters	57
	10.5	Termination of Tax Sharing Agreements	57
	10.6	Section 338 Elections	58
	10.7	Refunds and Tax Credits	58
	10.8	Scope of Article X	59
Article XI		TERMINATION	59
	11.1	Termination of Agreement	59
	11.2	Effect of Termination	59
Article XII		MISCELLANEOUS	60
	12.1	Press Releases and Public Announcements	60
	12.2	No Third-Party Beneficiaries	60
	12.3	Entire Agreement	60
	12.4	Succession and Assignment	60
	12.5	Counterparts	60
	12.6	Headings	60
	12.7	Notices	60
	12.8	Governing Law and Consent to Exclusive Jurisdiction and Venue	61
	12.9	Amendments and Waivers	61
	12.10	Severability	62
	12.11	Expenses	62
	12.12	Construction	62
	12.13	Incorporation of Exhibits, Annexes, Schedules and Due Diligence Documents	62
	12.14	Governing Language	62

* Disclosure Schedules

* The registrant agrees to furnish supplementally a copy of the omitted schedules to the Securities and Exchange Commission upon request.

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is entered into as of April 4, 2014 (the “Effective Date”), by and among Aqua Acquisition Corp., a Washington corporation (the “Buyer”), Ottawa Acquisition LLC, an Illinois limited liability company (the “Seller”) and Birdsall, Inc., a Florida corporation (the “Company”).  The Buyer, the Seller and the Company are sometimes referred to herein as a “Party” and collectively as the “Parties”.  Certain capitalized and other terms used in this Agreement are defined in Article I.

RECITALS

A.           The Seller is the beneficial and record holder of all of the issued and outstanding capital stock of the Company (the “Outstanding Stock”).

B.           The Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, all of the Outstanding Stock, on and subject to the terms and conditions set forth herein.

Now, therefore, in consideration of the premises and the mutual promises made in this Agreement, and in consideration of the representations, warranties, and covenants contained in this Agreement, the Parties agree as follows.

ARTICLE I

DEFINITIONS

For purposes of this Agreement, each of the following terms shall have the meaning set forth below.

“Accounting Firm” means a nationally recognized independent registered public accounting firm agreed upon by Buyer and Seller.

“Affiliate” of a Person, or a Person “affiliated” with a specified Person, is a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.   The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

“Affiliated Group” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local or foreign law.

“Agreed Amount” means part, but not all, of the Claimed Amount.

1

“Business Day” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

“Buyer” has the meaning set forth in the preface above.

“Cash” means cash and cash equivalents (including marketable securities and short-term investments) of the Company and the Consolidated Subsidiaries (excluding Excluded Cash) calculated on a basis consistent with the preparation of the Company’s Financial Statements.

“CERCLA” means the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

“Chartered Vessels” has the meaning set forth in Section 5.15(a) below.

“Claimed Amount” means the amount of any Losses incurred or reasonably expected to be incurred by an Indemnified Person in connection with a claim for indemnification pursuant to Article IX.

“Claim Notice” means written notification which contains (a) a reasonably detailed and specific description of the Losses incurred or reasonably expected to be incurred by an Indemnified Person and the Claimed Amount of such Losses, to the extent then known, (b) a statement that the Indemnified Person is entitled to indemnification under Article IX for such Losses and a reasonable explanation of the basis and (c) a demand for payment in the amount of such Losses.

“Closing” has the meaning set forth in Section 2.3 below.

“Closing Balance Sheet” means the consolidated balance sheet of the Company and the Consolidated Subsidiaries as of the close of business on the Closing Date prepared in accordance with the provisions of Section 2.2(c) hereof.

“Closing Balance Sheet Backup Materials” has the meaning set forth in Section 2.2(c) below.

“Closing Balance Sheet Preparation Period” has the meaning set forth in Section 2.2(c) below.

“Closing Balance Sheet Review Period” has the meaning set forth in Section 2.2(c) below.

“Closing Book Value” means the book value of the Company and the Consolidated Subsidiaries determined on a consolidated basis and in accordance with GAAP as of the close of business on the Closing Date, but subject to the adjustments set forth on the Pro Forma Balance Sheet whether or not such adjustments are consistent with GAAP.  For clarification, Closing Book Value shall reflect all pre-Closing operations and activities, including without limitation, those obligations and actions required by Sections 6.6, 6.8 and 6.9 hereof.

2

“Closing Date” has the meaning set forth in Section 2.3 below.

“Closing Indebtedness” means the Indebtedness as of the close of business on the Closing Date as shown on the Estimate Statement or the Closing Statement, as the case may be.

“Closing Transaction Expenses” means the Transaction Expenses outstanding as of the close of business on the Closing Date as shown on the Estimate Statement or the Closing Statement, as the case may be.

“COBRA” means Part 6 of Title I of ERISA, as amended.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preface above.

“Company Bylaws” means the by-laws of the Company, as amended, duly adopted and in effect in accordance with applicable law as of the Closing Date.

“Company Charter” means the articles of incorporation of the Company, as amended, duly adopted and in effect as of the Closing Date.

“Company Employees” has the meaning set forth in Section 7.3(a) below.

“Company Intellectual Property” has the meaning set forth in Section 5.16 below.

“Company Share” means any share of the common stock, no par value per share, of the Company.

“Competing Trades” has the meaning set forth in Section 6.3(b) below.

“Confidential Information” means any information concerning the business and affairs of the Company and the Subsidiaries that is not already generally available to the public.

“Consolidated Subsidiaries” means the Subsidiaries, excluding the Excluded Subsidiaries.

“Continuation Period” has the meaning set forth in Section 7.3(a) below.

“Continuity Agreements” has the meaning set forth in Section 6.15 below.

“Controlling Party” means the party controlling the defense of any Third Party Action.

“Disclosure Schedule” has the meaning set forth in Article V below.

3

“Dispute” means the dispute resulting if the Indemnifying Person in a Response disputes the Liability of the Indemnifying Person for all or part of a Claimed Amount.

“Effective Date” has the meaning set forth in the preamble of this Agreement.

“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in ERISA Section 3(3)) and any other material employee benefit plan, program or arrangement, including any nonqualified deferred compensation plan (as defined in Treas. Reg. §1.409A-1(a)).

“Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2).

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).

“Environmental Reports” has the meaning set forth in Section 5.23(d).

“Environmental Requirements” means all federal, state, local and foreign statutes, regulations, and ordinances concerning public health and safety, worker health and safety, pollution, or protection of the environment, including those relating to (a) the treatment, storage, disposal, generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, investigation or remediation of Hazardous Materials; (b) air, water and noise pollution; (c) groundwater and soil contamination; (d) the release or threatened release, of Hazardous Materials into the environment; (e) transfer of interests in or control of real property which may be contaminated by Hazardous Materials; (f) community or worker right-to-know disclosures with respect to Hazardous Materials; (g) the protection of wildlife, marine life and wetlands, and endangered and threatened species; (h) storage tanks, vessels, containers, abandoned or discarded barrels and other closed receptacles; and (i) health and safety of employees.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISAAffiliate” means each entity that is treated as a single employer with the Company for purposes of Code Section 414 or ERISA Section 4001.

“Estimated Purchase Price” has the meaning set forth in Section 2.2(b).

“Excluded Cash” means cash and cash equivalents (including marketable securities and short-term investments) of the Company or any Consolidated Subsidiary held in any off-shore account, and cash and cash equivalents (including marketable securities and short-term investments) of Seven Seas and its Subsidiaries.

“Excluded Subsidiaries” means Tropic Equipment Leasing Inc., a Delaware corporation, and its Subsidiaries.

4

“Facilities”means any vessels, barges, real property, leaseholds, or other interests currently or formerly owned or operated by the Company or any of the Consolidated Subsidiaries and any buildings, plants, lots, structures, or equipment currently owned or operated by the Company or any of the Consolidated Subsidiaries.

“Financial Statements” means:

(a)           the audited consolidated statements of financial position and statements of operations, shareholder’s equity and cash flows of the Company as of and for the fiscal years ended 2013, 2012, 2011 and 2010, as certified without qualification by PricewaterhouseCoopers LLP in the case of 2013, 2012 and 2011 and Deloitte & Touche LLP in the case of 2010, the Company’s auditors; and

(b)           the consolidated and consolidating statements of financial position and statements of operations, shareholder’s equity and cash flows of the Company as of and for the month ended February 28, 2014.

“Fundamental Representations” has the meaning set forth in Section 9.1(a).

“GAAP” means United States generally accepted accounting principles as in effect and consistently applied from time to time, and applied consistently with the Company’s and Consolidated Subsidiaries’ past practices (to the extent such past practices are consistent with GAAP).

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Hazardous Materials” means any: hazardous substances (as such terms are defined under CERCLA), solid wastes and hazardous wastes (as such terms are defined under the Resource Conservation and Recovery Act), radioactive or toxic materials, oil, petroleum and petroleum products (and fractions thereof), and any other substances which are listed, defined or regulated as hazardous or toxic under any Environmental Requirements.

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191) and Health Information Technology for Economic and Clinical Health Act (Pub. L. 111-5), and all the regulations thereunder.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Income Tax” means any federal, state, local, or foreign income tax measured by or imposed on taxable income, including any interest, penalty, or addition thereto, whether disputed or not.

5

“Indebtedness” means the following, except to the extent reflected in the calculation of Closing Book Value:  (1) all indebtedness of the Company or any Consolidated Subsidiary for borrowed money, together with all prepayment premiums or penalties and other amounts becoming due as a result of this transaction; (2) all obligations of the Company or any Consolidated Subsidiary evidenced by notes, bonds, debentures or similar instruments; (3) all capitalized lease obligations (calculated in accordance with GAAP) of the Company or any Consolidated Subsidiary; (4) payment obligations of the Company or any Consolidated Subsidiary for the deferred purchase price for purchases of property outside the Ordinary Course of Business arising in connection with transactions occurring prior to the Closing; (5) any off-balance sheet financing of the Company or any Consolidated Subsidiary (including any obligation under swap transactions); and (6) any unpaid interest, prepayment premiums or penalties accrued or owing on any such indebtedness.

“Indemnified Person” has the meaning set forth in Section 9.6(a) below.

“Indemnifying Person” has the meaning set forth in Section 9.6(a) below.

“Intellectual Property” means copyrights, trade secrets, patents, patent rights, trademarks, trademark rights, trade names, service marks, domain names, websites, URLs, licenses, information and proprietary rights and processes, registrations, filings and applications related to the foregoing, and any other intellectual property rights.

“IRS” means the United States Internal Revenue Service, or any successor agency, and, to the extent relevant, the United States Department of Treasury.

“Knowledge of the Company,” “Company’s Knowledge,” “Knowledge of the Seller,” “Seller’s Knowledge,” and phrases of like import means the actual knowledge of the individuals set forth on Schedule I and such knowledge as any such individual would have had after reasonable inquiry consistent with such individual’s position and normal duties within the Company or Subsidiary, as applicable.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real property that is used in the Company’s or any of the Consolidated Subsidiaries’ business.

“Leases” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which the Company or any of the Consolidated Subsidiaries leases or subleases any real property.

“Legal Proceeding” means any action, suit, proceeding, claim, complaint, hearing, arbitration or investigation before any Governmental Authority or before any arbitrator.

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“Liability” means any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, cost, expense, fine, penalty, responsibility or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether secured or unsecured, whether choate or inchoate, whether fixed or unfixed, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due and regardless of when asserted), net of all offsetting third-party indemnification or contribution and insurance amounts actually received.

“Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security interest (whether arising by contract or operation of law), other than (a) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

“Losses” means, with respect to a Person, any and all losses, damages, costs, penalties, fines, expenses (including reasonable and direct fees for attorneys, accountants, consultants and experts), judgments, awards or reasonable amounts paid in settlement, net of all offsetting third-party indemnification or contribution and insurance amounts actually received, that are imposed upon or otherwise incurred by such Person, but not including internal management, administrative or overhead costs.

“Material Adverse Effect” means any effect or change that would be or reasonably be expected to be, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), prospects or assets of the Company and the Consolidated Subsidiaries, taken as a whole (including, without limitation, adverse effects or changes in the Company’s and the Consolidated Subsidiaries’ relationships with customers, vendors, independent contractors or consultants), or (b) the ability of any Party to consummate timely the transactions contemplated hereby; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect: any adverse change, event, development, or effect arising from or relating to (1) general business or economic conditions; (2) financial, banking, credit or securities markets in general; (3) changes in GAAP, (4) changes in laws, rules, regulations, orders or other binding directives issued by any governmental entity, (5) changes in the industries in which the Company and Consolidated Subsidiaries operate, (6) any failure by Company or Consolidated Subsidiaries to meet internal projections or forecasts, and normal seasonal changes in the results of operations, (7) the announcement of or taking of any action contemplated by this Agreement and the other agreements contemplated hereby, or (8) war, terrorism, military operations or escalations, provided that none of the foregoing changes, events, developments or effects affects the Company and Consolidated Subsidiaries in a disproportionate manner.

“Most Recent Balance Sheet” means the unaudited balance sheet of the Company as of the Most Recent Balance Sheet Date.

“Most Recent Balance Sheet Date” means February 28, 2014.

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“Non-Controlling Party” means the party not controlling the defense of any Third Party Action.

“Notice of Disagreement” has the meaning set forth in Section 2.2(c)(ii) below.

“Ordinary Course of Business” means the ordinary course of business of the Company and each Consolidated Subsidiary, including the purchase and sale of marine shipping containers and freight handling equipment and parts and accessories for repair and maintenance of such containers and equipment, consistent with the Company’s or such Consolidated Subsidiary’s past custom and practice (including, without limitation, with respect to frequency and amount).

“Outstanding Stock” has the meaning set forth in the recitals above.

“Owned Personal Property” means all personal property, including Vessels and vehicles, owned by the Company or any of the Consolidated Subsidiaries and used in the business of the Company and the Consolidated Subsidiaries.

“Owned Real Property” means all land, together with all buildings, structures, improvements, and fixtures located thereon, and all easements and other rights and interests appurtenant thereto, owned by the Company or any of the Consolidated Subsidiaries and used in the business of the Company and the Consolidated Subsidiaries.

“Owned Vessels” has the meaning set forth in Section 5.15(a) below.

“Party” has the meaning set forth in the preface above.

“Permits” means all permits, licenses, registrations, certificates, orders, clearances, approvals, franchises, variances and similar rights issued by or obtained from any Governmental Authority (including those issued or required under Environmental Requirements and those relating to the occupancy or use of Owned Real Property or Leased Real Property).

“Permitted Encumbrances” means (1) with respect to each parcel of Owned Real Property:  (a) real estate taxes, assessments and other governmental levies, fees, or charges imposed with respect to such Owned Real Property that are (i) not due and payable as of the Closing Date or (ii) being contested by appropriate proceedings; (b) mechanic’s liens and similar liens for labor, materials, or supplies provided with respect to such Owned Real Property incurred in the Ordinary Course of Business for amounts that are (i) not delinquent and would not, in the aggregate, be material to the Company or any of the Consolidated Subsidiaries or (ii) being contested by appropriate proceedings; (c) zoning, building codes, and other land use laws regulating the use or occupancy of such Owned Real Property or the activities conducted thereon that are imposed by any governmental authority having jurisdiction over such Owned Real Property; and (d) easements, covenants, conditions, restrictions, and other similar matters affecting title to such Owned Real Property and other title defects that do not materially impair the use or occupancy of such Owned Real Property; and (2) with respect to each item of Owned Personal Property: (a) personal property taxes, assessments and other governmental levies, fees, or charges imposed with respect to such Owned Personal Property that are (i) not due and payable as of the Closing Date or (ii) being contested by appropriate proceedings; (b) any Lien arising (i) by operation of law in the Ordinary Course of Business in operating, maintaining or repairing a Vessel for amounts that are not delinquent and would not, in the aggregate, be material to the Company or any of the Consolidated Subsidiaries or (ii) for damages arising from maritime torts, but only to the extent paid or covered by policies of insurance and with respect to which coverage has not been denied or the right to contest coverage reserved and only to the extent such liens arose from operations of the Vessel by the Company or a Consolidated Subsidiary; (c) mechanic’s liens and similar liens for services, labor, materials, or supplies provided with respect to such Owned Personal Property other than Vessels and incurred in the Ordinary Course of Business for amounts that are (i) not delinquent and would not, in the aggregate, be material to the Company or any of the Consolidated Subsidiaries or (ii) being contested by appropriate proceedings; (d) laws and regulations limiting or affecting the use of such Owned Personal Property or the activities conducted thereby, including trading limits, sale or charters of Vessels, that are imposed by any governmental authority having jurisdiction over such Owned Personal Property; and (e) other title defects that do not or would not materially impair the use of such Owned Personal Property in the operation of the business of the Company and the Consolidated Subsidiaries taken as a whole.

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“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency, or political subdivision thereof).

“Purchase Price” has the meaning set forth in Section 2.2(a) below.

“Pre-Closing Period” has the meaning set forth in Section 6.3(a) below.

“Preliminary Closing Balance Sheet” has the meaning set forth in Section 2.2(b) below.

“Pro Forma Balance Sheet” means the pro forma balance sheet of the Company and the Consolidated Subsidiaries as set forth on Schedule II hereto.

“Reasonable Best Efforts” means best efforts, to the extent commercially reasonable.

“Required Filings” means the filings made pursuant to the requirements of the HSR Act and the requirements of the Florida Office of Insurance Regulation, each as contemplated by Section 6.2 below.

“Release” as used in Section 5.24 and Section 9.2 and in the definition of Environmental Requirements means any spilling, leaking, emitting, discharging, depositing, escaping, dispersing, leaching, dumping, migrating, or other releasing into the environment, whether intentional or unintentional, active or passive.

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“Response” means a written response containing the information provided for in Section 9.6(b).

“Scheduled Contract” has the meaning set forth in Section 5.17(a) below.

“Section 338(h)(10) Election” has the meaning set forth in Section 10.6(a) below.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Seller” has the meaning set forth in the preface above.

“Seven Seas” means Seven Seas Insurance Company, Inc., a Florida corporation.

“Subsidiary” means any corporation, partnership, trust, limited liability company or other non-corporate business enterprise in which the Company (or another Subsidiary) holds stock or other ownership interests representing (a) more than fifty percent (50%) of the voting power of all outstanding stock or ownership interests of such entity or (b) the right to receive more than fifty percent (50%) of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.

 “Tax” and “Taxes” means any and all taxes, charges, fees, duties, contributions, levies or other similar assessments or Liabilities in the nature of a tax, including income, gross income, gross receipts, corporation, ad valorem, premium, value-added, net worth, capital stock, capital gains, documentary, recapture, alternative or add-on minimum, disability, estimated, registration, recording, excise, real property, personal property, sales, use, license, lease, service, service use, transfer, withholding, employment, unemployment, insurance, social security, national insurance, business license, business organization, environmental, workers compensation, payroll, profits, severance, stamp, occupation, windfall profits, customs duties, franchise and other taxes of any kind whatsoever or any foreign equivalent imposed by the United States or any state, local or foreign government, or any agency or political subdivision thereof, and any interest, fines, penalties, assessments or additions to tax imposed with respect to such items or any contest or dispute thereof.

“Tax Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Taxes for such Governmental Authority, including, without limitation, any governmental or quasi-governmental entity or agency that imposes, or is charged with collecting, social security or similar charges or premiums.

“Tax Proceeding” means any Tax audit, examination or administrative or judicial proceeding, including any assessment, notice of deficiency or other adjustment or proposed adjustment relating to Taxes.

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“Tax Returns” means any and all reports, returns, declarations, statements or information returns relating to Taxes, any claims for a refund of Taxes paid, any information return with respect to Taxes and ownership in foreign entities or foreign accounts, including any schedule or attachment thereto and any related or supporting workpapers or information with respect to any of the foregoing, including any amendment thereof.

“Threshold” has the meaning set forth in Section 9.4(a) below.

“Third Party Action” means any suit or proceeding by a Person other than a Party for which indemnification may be sought by an Indemnified Person under Article IX.

“Third Party Action Indemnitee” has the meaning set forth in Section 9.5(a).

“Third Party Action Indemnitor” has the meaning set forth in Section 9.5(a).

“Transaction Documents” means, collectively, this Agreement and each of the other documents and agreements to be delivered pursuant to this Agreement.

“Transaction Expenses” means all out-of-pocket costs, fees and expenses for investment banking, legal, accounting, tax and other professional services incurred or arising at or prior to Closing by the Company or any of the Consolidated Subsidiaries in connection with the transactions contemplated by this Agreement.

“Uncompleted Drydocking Costs” shall mean the costs or partial costs specified in Schedule 6.14 associated with those activities in Schedule 6.14 that are scheduled to be performed prior to Closing but remain uncompleted as of Closing, except to the extent such costs are fully accrued on the Company’s books and records and reflected in the calculation of Closing Book Value.

“Vessel” means each ocean-going vessel (including vessels under construction) owned, chartered, leased or operated by the Company or any of the Consolidated Subsidiaries.

“Vessel Charters” has the meaning set forth in Section 5.15(c) below.

“Work Permit” has the meaning set forth in Section 5.22(i) below.

ARTICLE II

PURCHASE AND SALE; CLOSING

2.1Purchase and Sale. At the Closing, on and subject to the terms and conditions of this Agreement, the Buyer shall purchase from Seller, and Seller shall sell, convey, assign, transfer and deliver to the Buyer, all of the Outstanding Stock, free and clear of all Liens, for the consideration specified below in this Article II.

2.2Purchase Price.

(a)Purchase Price.  The purchase price for the Outstanding Stock shall be equal to (i) Closing Book Value(ii) less Closing Indebtedness, (iii) less Closing Transaction Expenses and (iv) less any Uncompleted Drydocking Costs (the “Purchase Price”).  At Closing, the Buyer shall pay to the Seller, by wire transfer of immediately available funds to the account specified by Seller, an amount equal to the Estimated Purchase Price.

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(b)Estimated Purchase Price.  Not less than five (5) Business Days prior to the anticipated Closing Date, the Seller shall deliver or cause the Company to deliver to the Buyer a good faith estimate of the consolidated balance sheet of the Company and the Consolidated Subsidiaries as of the close of business on the Closing Date (the “Preliminary Closing Balance Sheet”) together with the Seller’s good faith estimate of the Purchase Price (the “Estimated Purchase Price”).  The Preliminary Closing Balance Sheet (i) shall be prepared in a manner consistent with the format and methodology of the Pro Forma Balance Sheet, (ii) subject to the adjustments set forth on the Pro Forma Balance Sheet, shall be in accordance with GAAP applied consistently with the Company’s past practices (to the extent such past practices are consistent with GAAP), and (iii) may exclude all footnotes.  The Preliminary Closing Balance Sheet shall be certified as meeting the foregoing requirements by the Seller.  The Preliminary Closing Balance Sheet and the Estimated Purchase Price shall be accompanied by all relevant backup materials and schedules, in detail reasonably acceptable to the Buyer, including, without limitation, the Seller’s good faith estimate of the Closing Book Value, Closing Indebtedness and Closing Transaction Expenses.  As promptly as practicable, but in no event more than two (2) Business Days after the Seller’s delivery of the Preliminary Closing Balance Sheet, the Buyer shall identify to the Seller any adjustments to the Preliminary Closing Balance Sheet that the Buyer reasonably believes are required to accurately calculate the Estimated Purchase Price.  In the event the Buyer has identified any adjustments to the Preliminary Closing Balance Sheet, then not later than two (2) Business Days prior to the anticipated Closing Date, the Seller shall re-deliver or cause the Company to re-deliver to the Buyer a revised Preliminary Closing Balance Sheet, setting forth the adjustments that the Seller believes in good faith to be required to accurately calculate the Estimated Purchase Price based on the Seller’s discussions with the Buyer, together with the Seller’s resulting estimate of the Estimated Purchase Price.

(c)Purchase Price Adjustment.

(i)Within ninety (90) days after the Closing Date, the Buyer shall deliver or cause to be delivered to the Seller the Closing Balance Sheet together with the Buyer’s calculation of the Purchase Price.  The Closing Balance Sheet (A) shall be prepared in a manner consistent with the format and methodology of the Pro Forma Balance Sheet, (B) subject to the adjustments set forth on the Pro Forma Balance Sheet, shall be in accordance with GAAP applied consistently with the Company’s past practices (to the extent such past practices are consistent with GAAP), and (C) may exclude all footnotes.  The Closing Balance Sheet shall be certified as meeting the foregoing requirements by the Buyer.  The Closing Balance Sheet shall be accompanied by all relevant backup materials and schedules that are necessary to confirm the Closing Balance Sheet and the Buyer’s calculation of the Purchase Price, the Closing Book Value, Closing Indebtedness and Closing Transaction Expenses, and that are reasonably requested by the Seller within the Closing Balance Sheet Review Period (the “Closing Balance Sheet Backup Materials”).  During the period from the Closing Date until Seller’s receipt of the Closing Balance Sheet (such period the “Closing Balance Sheet Preparation Period”), Buyer shall assure that the Company and Consolidated Subsidiaries do not take any action with respect to the accounting books and records of the Company and Consolidated Subsidiaries on which the Closing Balance Sheet is to be based that is not consistent with GAAP.  Without limiting the generality of the foregoing, no changes shall be made in any reserve or other account existing as of the date of the audited consolidated financial statements as of December 31, 2013 except (i) to the extent that such reserve or other account was inconsistent with GAAP, or (ii) as a result of events occurring after the date of the audited consolidated financial statements as of December 31, 2013 and, in such event, only in a manner consistent with GAAP.

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(ii)During the thirty (30) day period following the Seller’s receipt of the Closing Balance Sheet (the “Closing Balance Sheet Review Period”), Buyer will cause Company and Consolidated Subsidiaries to permit Seller and Seller’s counsel and accountants and financial advisors  retained in connection with any adjustment to the Purchase Price contemplated in this Section 2.2 reasonable access to all properties, books, contracts, personnel and records of Company and Consolidated Subsidiaries relevant to such adjustment, provided Company and Consolidated Subsidiaries may withhold any document or information that is prohibited from being disclosed by any applicable law or confidentiality agreement with a third party or that is subject to attorney client privilege.  Seller and its independent auditors shall be permitted to review the Closing Balance Sheet and the Closing Balance Sheet Backup Materials.  The Closing Balance Sheet and the Buyer’s calculation of the Purchase Price shall become final and binding upon the parties on the thirtieth (30th) day following the Seller’s receipt thereof, unless the Seller gives written notice of its disagreement thereof (a “Notice of Disagreement”) to the Buyer on or prior to such date.  Any Notice of Disagreement shall specify in reasonable detail the amount, nature and basis of any disagreement so asserted.  If a Notice of Disagreement is given by the Seller in a timely manner, then the Closing Balance shall become final and binding upon Seller and Buyer on the earlier of (A) the date Seller and Buyer resolve in writing the matters specified in the Notice of Disagreement and (B) the date the matters specified in the Notice of Disagreement are finally resolved in writing by the Accounting Firm.  During the fifteen (15) day period following the delivery of a Notice of Disagreement, the Seller and the Buyer shall seek in good faith to resolve in writing the matters specified in the Notice of Disagreement.  During such period, the Buyer and its independent auditors shall be permitted to review the working papers prepared in connection with the Seller’s preparation of the Notice of Disagreement.  At the end of such fifteen (15) day period, if the Buyer and the Seller are unable to resolve any differences, the Parties shall submit to the Accounting Firm for arbitration any and all matters that remain in dispute and were properly included in the Notice of Disagreement.  The Seller and the Buyer agree to use reasonable efforts to cause the Accounting Firm to render a decision resolving the matters submitted to the Accounting Firm within thirty (30) days following such submission.  The determination of the Accounting Firm shall be final and binding upon all Parties and not subject to appeal; provided, that (1) the jurisdiction of the Accounting Firm is limited to the Closing Balance Sheet and calculating the Purchase Price, (2) all determinations and calculations made by the Accounting Firm pursuant to this Section 2.2(c) shall consider only those items or amounts on the Closing Balance Sheet or the Buyer’s calculation of the Purchase Price that the Seller has specifically disputed in the Notice of Disagreement and (3) the Accounting Firm shall have no authority to resolve other issues that may arise under this Agreement, including, without limitation, whether the Notice of Disagreement has been timely given.  Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the Party against which such determination is to be enforced; provided, that this shall not affect such court’s authority to resolve other disputes that may arise under this Agreement, including, without limitation, whether the Notice of Disagreement has been timely given.

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(iii)The cost of any arbitration (including the fees and expenses of the Accounting Firm and reasonable attorney fees and expenses of the parties) pursuant to this Section 2.2(c)(iii) shall be borne by the Buyer, on the one hand, and the Seller, on the other hand, in inverse proportion as they may prevail on matters resolved by the Accounting Firm, which proportionate allocations shall also be determined by the Accounting Firm at the time its determination on the merits of the matters submitted is rendered.  The fees and disbursements of the Seller’s independent auditors incurred in connection with their review of the Closing Balance Sheet and any Notice of Disagreement shall be borne by the Seller, and the fees and disbursements of the Buyer’s independent auditors incurred in connection with their review of the Closing Balance Sheet and any Notice of Disagreement shall be borne by the Buyer.

(iv)If, upon final determination pursuant to Section 2.2(c), the Purchase Price exceeds the Estimated Purchase Price, the Buyer will pay the Seller the difference, and, if the Purchase Price is less than the Estimated Purchase Price, the Seller will pay the Buyer the difference, in each case within ten (10) Business Days of such final determination by wire transfer of immediately available funds.

2.3Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Holland & Knight in West Palm Beach, Florida, commencing at 11:00 a.m. local time on the last day of the month following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as the Buyer and the Seller may mutually determine (the “Closing Date”); provided, however, that the Closing Date shall be no earlier than sixty (60) days after the Effective Date; and provided, further, that if the Closing Date occurs on a day that is not a Business Day, the Purchase Price shall be calculated as of the Closing Date and the Closing activities and deliveries (including, without limitation, the payment of the Estimated Purchase Price) shall take place on the first Business Day following the Closing Date.

2.4Deliveries at Closing.   At the Closing, (i) the Seller shall deliver to the Buyer the various certificates, instruments, and documents referred to in Section 8.1 below, (ii) the Buyer will deliver to the Seller the various certificates, instruments, and documents referred to in Section 8.2 below, (iii) Seller will deliver or transfer to the Buyer stock certificates representing all of the Outstanding Stock, endorsed in blank or accompanied by duly executed assignment documents in form and substance reasonably satisfactory to the Buyer, (iv) Seller will deliver to the Buyer duly executed assignment documents in form and substance reasonably satisfactory to the Buyer transferring ownership of the shares of capital stock of the Consolidated Subsidiaries not held by the Seller or another Consolidated Subsidiary to the Person or Persons designed by the Buyer and (v) the Buyer will deliver to Seller the Estimated Purchase Price in accordance with instructions provided by the Seller not less than two (2) Business Days prior to the Closing Date.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

Seller represents and warrants to the Buyer that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III) with respect to itself.

3.1Organization; Qualification and Limited Liability Company Power.  The Seller is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Illinois.  The Seller is duly qualified to conduct business and is in good standing under the laws of each jurisdiction in which such qualification is required to perform this Agreement and transactions contemplated herein.  The Seller has all requisite power and authority (limited liability company and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Seller has furnished to the Buyer complete and accurate copies of its certificate of formation, limited liability company agreement and other organizational documents, each as amended and/or restated to date.  The Seller is not in default under or in violation of any provision of its certificate of formation, limited liability company agreement or other organizational documents.

3.2Authorization of Transaction.  The Seller has all requisite power and authority (limited liability company or otherwise) to execute and deliver this Agreement and the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.  No other actions or proceedings (limited liability company or otherwise) on the part of the Seller is necessary to approve and authorize the execution and delivery of this Agreement and the Transaction Documents to which the Seller is a party or the consummation of the transactions contemplated hereby and thereby.  This Agreement and the Transaction Documents to which the Seller is a party have been (and, in the case of the Transaction Documents, at Closing will be) duly executed and delivered by the Seller and constitute (or in the case of the Transaction Documents, will constitute) the valid and binding agreements of the Seller enforceable against the Seller in accordance with their terms.  Except for the Required Filings, the Seller is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement.

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3.3Non-contravention.  Subject to the Required Filings, neither the execution and delivery of this Agreement or any of the Transaction Documents to which the Seller is a party, nor the consummation of the transactions contemplated hereby or thereby, will (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority to which the Seller is subject, (b) conflict with or violate any provision of the charter, bylaws or other governing documents of the Seller, or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, consent or waiver under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party or by which it is bound or to which any of its assets is subject, or result in the imposition or creation of any Lien upon or with respect to the Outstanding Stock.

3.4Brokers’ Fees.  The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

3.5Ownership of Outstanding Stock.  The Seller holds of record and owns beneficially all of the Outstanding Stock, free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands.  The Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require the Seller to sell, transfer, or otherwise dispose of the Outstanding Stock.  The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of the Outstanding Stock.  Upon consummation of the purchase contemplated hereby, the Buyer will acquire from the Seller good and marketable title to the Outstanding Stock, free and clear of all Liens.

3.6Assets.  The Seller does not own or otherwise hold any assets (tangible or intangible) that are used or may be materially necessary for the conduct of the businesses of the Company or the Consolidated Subsidiaries as presently conducted or as presently proposed to be conducted.

3.7Litigation.  There is no Legal Proceeding pending or, to the Knowledge of the Seller, threatened, against the Seller and the Seller is not subject to any outstanding order, writ, judgment, injunction or decree of any Governmental Authority that, in either case, would, individually or in the aggregate, (a) prevent or materially delay the consummation of the transactions contemplated herein or (b) otherwise prevent or materially delay performance by the Seller of any of its material obligations under this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER

The Buyer represents and warrants to Seller that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV).

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4.1Organization of the Buyer.  The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington.  The Buyer is duly qualified to conduct business and is in good standing under the laws of each jurisdiction in which such qualification is required to perform this Agreement and the transactions contemplated herein.  The Buyer has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Buyer has furnished to the Seller complete and accurate copies of the Buyer’s Articles of Incorporation and bylaws, each as amended and/or restated to date.  The Buyer is not in default under or in violation of any provision of its Articles of Incorporation or bylaws.

4.2Authorization of Transaction.  The Buyer has all requisite power and authority (corporate or otherwise) to execute and deliver this Agreement and the Transaction Documents to which it is a party, and to perform its obligations hereunder and thereunder.  No other actions or proceedings on the part of the Buyer are necessary to approve and authorize the execution and delivery of this Agreement and the Transaction Documents to which the Buyer is a party or the consummation of the transactions contemplated hereby and thereby.  The execution and delivery by the Buyer of this Agreement and the Transaction Documents to which it is a party, and the consummation by the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Buyer.  This Agreement and Transaction Documents to which Buyer is a party have been (and, in the case of the Transaction Documents, at Closing will be) duly and validly executed and delivered by the Buyer and constitute (or in the case of the Transaction Documents, will constitute) the valid and binding agreements of the Buyer, enforceable against the Buyer in accordance with its terms.  Except for the Required Filings, the Buyer is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement.

4.3Non-contravention.  Subject to the filing requirements of the HSR Act and the Florida Office of Insurance Regulation, as contemplated by Section 6.2 neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its charter, bylaws, or other governing documents or (b) conflict with or violate, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, consent or waiver under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject.

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4.4Brokers’ Fees.  The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

4.5Litigation.  There is no Legal Proceeding pending or, to the knowledge of the Buyer, threatened, against the Buyer and the Buyer is not subject to any outstanding order, writ, judgment, injunction or decree of any Governmental Authority that, in either case, would, individually or in the aggregate, (a) prevent or materially delay the consummation of the transactions contemplated herein or (b) otherwise prevent or materially delay performance by the Buyer of any of its material obligations under this Agreement.

4.6Sufficient Funds.  The Buyer has sufficient funds to purchase, and, subject to the terms and conditions set forth in this Agreement, will purchase, the Outstanding Stock in accordance with this Agreement at Closing.

4.7No Other Representations. The Buyer acknowledges that (a) none of the Seller, the Company or any of the Subsidiaries or any of their representatives make any representation or warranty with respect to (i) any projections, estimates or budgets delivered to or made available to the Buyer of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company or the Subsidiaries or the future business and operations of the Company or the Subsidiaries or (ii) any other information or documents made available to the Buyer or its counsel, accountants or advisors with respect to the Company or the Subsidiaries or any of their respective businesses, assets, liabilities or operations, except as expressly set forth in this Agreement and the Transaction Documents, and (b) the Buyer has not relied, and will not rely, upon any information, representation or warranty except the information, representations and warranties set forth in  this Agreement and the Transaction Documents in executing, delivering and performing this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby; provided, however, that in no event shall this Section 4.7 limit the Buyer’s ability to bring a claim against the Seller based on fraud.

ARTICLE V

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE SUBSIDIARIES

The Seller and the Company, jointly and severally, represent and warrant to the Buyer that the statements contained in this Article V are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article V), except as set forth in the disclosure schedule delivered by the Seller to the Buyer on the Effective Date (the “Disclosure Schedule”).  The Disclosure Schedule shall be arranged in sections and paragraphs corresponding to the numbered and lettered sections and paragraphs contained in this Article V.  The disclosures in any section or paragraph of the Disclosure Schedule shall qualify only (a) the corresponding section or paragraph in this Article V and (b) other sections or paragraphs in this Article V to the extent that it is clear from the face of the disclosure that such disclosure also qualifies or applies to such other section or paragraph.  Buyer acknowledges that certain historical information presented on a consolidated basis, such as the Financial Statements, may include the Excluded Subsidiaries’ information.

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5.1Organization, Qualification, and Corporate Power.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida.  The Company is duly qualified to conduct business and is in good standing under the laws of each jurisdiction listed in Section 5.1 of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Company’s businesses or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified would not reasonably be expected to result in a Material Adverse Effect.  The Company has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Company has furnished to the Buyer complete and accurate copies of its articles of incorporation and bylaws, each as amended and/or restated to date.  The Company is not in default under or in violation of any provision of its articles of incorporation or bylaws.

5.2Capitalization.  The entire authorized capital stock of the Company consists of one hundred (100) Company Shares, of which one (1) Company Share is issued and outstanding and comprises all of the issued and outstanding capital stock of the Company.  The Outstanding Stock has been duly authorized, and is validly issued, fully paid, and non-assessable.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any shares of its capital stock.  The Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of capital stock of the Company or any interest therein or to pay any dividend or to make any other distribution in respect thereof.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company.

5.3Authorization of Transaction.  The Company has full power and authority (corporate or otherwise) to execute and deliver this Agreement and the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.  No other actions or proceedings (corporate or otherwise) on the part of the Company are necessary to approve and authorize the execution and delivery of this Agreement and the Transaction Documents to which the Company is a party or the consummation of the transactions contemplated hereby and thereby.  This Agreement and the Transaction Documents to which the Company is a party have been (and, in the case of the Transaction Documents, at Closing will be) duly executed and delivered by the Company and constitute (or in the case of the Transaction Documents, will constitute) the valid and binding agreements of the Company enforceable against the Company in accordance with their terms.  Except for the Required Filings, neither the Company nor any of the Subsidiaries is required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement.

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5.4Non-contravention.  Subject to the Required Filings, neither the execution and delivery of this Agreement or any of the Transaction Documents to which the Company or any of the Subsidiaries is a party, nor the consummation of the transactions contemplated hereby or thereby, will: (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority to which the Company or any of the Subsidiaries are subject; (b) conflict with or violate any provision of the charter, bylaws or other governing documents of the Company or any of the Subsidiaries; or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, consent or waiver under any agreement, contract, lease, license, instrument, or other arrangement to which the Company or any of the Consolidated Subsidiaries is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Lien upon any of its assets) except where the violation, conflict, breach, default acceleration, termination, modification, cancellation, failure to give notice, or Lien would not be material.

5.5Brokers’ Fees.  Neither the Company nor any of the Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

5.6Assets.

(a)Except as listed in Section 5.6(a) of the Disclosure Schedule, the Company or the applicable Consolidated Subsidiary is the true and lawful owner of, and has good title to, all of the assets (tangible or intangible) purported to be owned by the Company or such Consolidated Subsidiary, free and clear of all Liens (other than Permitted Encumbrances).  No Excluded Subsidiary owns or otherwise holds any assets (tangible or intangible) that are used or may be materially necessary for the conduct of the businesses of the Company or the Consolidated Subsidiaries as presently conducted.

(b)Section 5.6(b) of the Disclosure Schedule sets forth (i) a list grouped by major asset category of all fixed assets (within the meaning of GAAP) of the Company or any Consolidated Subsidiary indicating the cost, accumulated book depreciation (if any) and the net book value of each major asset category as of the Most Recent Balance Sheet Date, and (ii) an itemized list of all assets of a tangible nature (other than inventories) of the Company or any Consolidated Subsidiary with a cost in excess of $***.

5.7Subsidiaries.

(a)Section 5.7(a) of the Disclosure Schedule sets forth: (i) the name of each Consolidated Subsidiary; (ii) the type of entity of each Consolidated Subsidiary; (iii) the number and type of outstanding equity securities of each Consolidated Subsidiary and a complete and accurate list of the holder(s) thereof; (iv) the jurisdiction of organization of each Consolidated Subsidiary; (v) the names of the officers and directors or managers of each Consolidated Subsidiary; and (vi) the jurisdictions in which each Consolidated Subsidiary is qualified or holds licenses to do business as a foreign corporation or other entity.

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(b)Each Consolidated Subsidiary is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.  Each Consolidated Subsidiary is duly qualified to conduct business and is in good standing under the laws of each jurisdiction listed in Section 5.7(a) of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of such Consolidated Subsidiary’s businesses or the ownership or leasing of its properties requires such qualification, except where the failure to so qualify would not reasonably be expected to be materially adverse with respect to such Consolidated Subsidiary.  Each Consolidated Subsidiary has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Company has delivered to the Buyer complete and accurate copies of the certificate of formation, limited liability company agreement, charter, bylaws or other organizational documents of each Consolidated Subsidiary currently in effect.  No Consolidated Subsidiary is in default under or in violation of any provision of its charter, bylaws or other organizational documents except where the effect of any such default or violation would not reasonably be expected to be materially adverse with respect to such Consolidated Subsidiary.  All of the issued and outstanding equity interests of each Consolidated Subsidiary are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights.  All equity interests of each Consolidated Subsidiary are held of record and owned beneficially by either the Company or another Consolidated Subsidiary and are held or owned free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), claims, Liens, options, warrants, rights, contracts, calls, commitments, equities and demands.  There are no outstanding or authorized options, warrants, rights, agreements or commitments providing for the issuance, disposition or acquisition of any equity interests of any Consolidated Subsidiary.  There are no outstanding stock appreciation, phantom stock or similar rights with respect to any Consolidated Subsidiary.  There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any equity interests of any Consolidated Subsidiary.

(c)Except as set forth in Section 5.7(c) of the Disclosure Schedule, the Company does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other entity that is not a Subsidiary.

(d)Effective as of the consummation of the Closing, the Company will not hold any direct or indirect equity interest in any of the Excluded Subsidiaries.

5.8Financial Statements.

(a)Section 5.8(a) of the Disclosure Schedule sets forth true and complete copies of the Financial Statements.  The Financial Statements (i) comply as to form with all applicable accounting requirements and (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby; provided, however, that the Financial Statements referred to in clause (b) of the definition of such term are subject to normal recurring year-end adjustments and do not include footnotes.

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(b)Each of the Financial Statements fairly presents in all material respects and in accordance with GAAP the consolidated assets, Liabilities, business, financial condition, results of operations and cash flows of the Company and the Consolidated Subsidiaries as of the date thereof and for the period referred to therein, and is consistent with the books and records of the Company and the Consolidated Subsidiaries.  The accruals for vacation expenses, severance payments and Taxes are accounted for on the Most Recent Balance Sheet and are adequate and properly reflect the expenses associated therewith in accordance with GAAP in all material respects.

(c)The Company and each Consolidated Subsidiary maintains materially accurate books and records reflecting its assets and Liabilities and maintains proper and adequate internal accounting controls which provide assurance in all material respects that (i) transactions are executed with management’s authorization, (ii) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s and each Consolidated Subsidiary’s assets, (iii) access to assets of the Company and each Consolidated Subsidiary is permitted only in accordance with management’s authorization, (iv) the reporting of assets of the Company and each Consolidated Subsidiary is compared with existing assets at regular intervals and (v) accounts, notes and other receivables and inventory were recorded accurately.

(d)Section 5.8(d) of the Disclosure Schedule lists, and the Company has delivered to the Buyer copies of the documentation creating or governing all “off-balance sheet arrangements” (as defined in Item 303(a)(4) of Regulation S-K promulgated by the United States Securities and Exchange Commission) effected by the Company or any Consolidated Subsidiary and currently effective.

(e)Neither the Company nor any Consolidated Subsidiary has extended or maintained credit, arranged for the extension of credit, modified or renewed an extension of credit, in the form of a personal loan or otherwise that is currently effective, to or for any director or executive officer of the Company or any Consolidated Subsidiary.

5.9Events Subsequent to Most Recent Fiscal Year End.  Since December 31, 2013, except as set forth on Section 5.9 of the Disclosure Schedule, (a) there has occurred no event or development to the Seller’s and Company’s Knowledge which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Material Adverse Effect, and (b) neither the Company nor any Consolidated Subsidiary has taken any of the actions set forth in Section 6.3(a).

5.10Undisclosed Liabilities.  Neither the Company nor any Consolidated Subsidiary has any Liability, except for (a) Liabilities shown on the Most Recent Balance Sheet, a true and complete copy of which is attached to Section 5.8(a) of the Disclosure Schedule, (b) Liabilities which have arisen since the Most Recent Balance Sheet Date in the Ordinary Course of Business, and (c) other Liabilities which are not required by GAAP to be reflected on a balance sheet and that are not in the aggregate material.

5.11Legal Compliance.

(a)The Company and each Consolidated Subsidiary is currently in compliance in all material respects with all Laws that apply to or affect the Company and the Consolidated Subsidiaries, their business practices, employees, operations and any of their owned or leased real or personal properties.

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(b)Except as set forth on Section 5.11(b) of the Disclosure Schedule, to Seller’s and Company’s Knowledge, none of the Company or any of the Consolidated Subsidiaries, any director or officer of the Company or any of the Consolidated Subsidiaries, or to the Knowledge of the Company, any employee, agent or other Person or entity acting on behalf of the Company or any of the Consolidated Subsidiaries, has used any funds of the Company or any Consolidated Subsidiary for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity, to or for the benefit of domestic or foreign government officials or others.  Except as set forth in Section 5.11(b) of the Disclosure Schedule, to Seller’s and Company’s Knowledge, the Company and the Consolidated Subsidiaries have at all times complied, and are in compliance, with all applicable provisions of the Foreign Corrupt Practices Act and other applicable Laws addressing similar issues.

5.12Tax Matters.

(a)The Company and each Consolidated Subsidiary has properly completed and filed on a timely basis all Tax Returns that it was required to file with any Tax Authority during each of the four (4) most recently completed years ended prior to the Closing Date for which Tax Returns were required to be filed, and all such Tax Returns were complete and accurate in all material respects.  Neither the Company nor any Consolidated Subsidiary is or has ever been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns, other than a group of which the common parent is the Company.  In particular, and without in any manner limiting the foregoing, none of the foregoing Tax Returns contains any position which is or would be subject to penalties under Section 6662 of the Code (or any corresponding provision of state, local or foreign Tax law.)  The Company and the Consolidated Subsidiaries have paid on a timely basis all Taxes that were due and payable.  Neither the Company nor any Consolidated Subsidiary has any actual or potential Liability under Treasury Regulations Section 1.1502-6 (or any comparable or similar provision of federal, state, local or foreign law), as a transferee or successor, pursuant to any contractual obligation, or otherwise for any Taxes of any Person other than the Company or a Consolidated Subsidiary.  Neither the Company nor any Consolidated Subsidiary is a party to or bound by any Tax indemnity, Tax sharing, Tax allocation or similar agreement or arrangement.  All Taxes that the Company and the Consolidated Subsidiaries were required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been properly paid to the appropriate Governmental Authority.

(b)The Company has delivered or made available to the Buyer (i) complete and accurate copies of all Tax Returns of the Company and the Consolidated Subsidiaries relating to Taxes for all taxable periods for which the applicable statute of limitations has not yet expired and (ii) complete and accurate copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements and pending ruling requests submitted by, received by, or agreed to by or on behalf of the Company or a Consolidated Subsidiary relating to Taxes for all taxable periods for which the statute of limitations has not yet expired.  The federal income Tax Returns of the Company and each Consolidated Subsidiary that have been audited by the Internal Revenue Service (or equivalent state or foreign Tax Authority) are specified in Section 5.12(b) of the Disclosure Schedule.  Except as noted in Section 5.12(b) of the Disclosure Schedule, no examination or audit of any Tax Return of the Company or any Subsidiary by any Governmental Authority is currently in progress or, to the Knowledge of the Company, threatened or contemplated.  Neither the Company nor any Consolidated Subsidiary has been informed by any jurisdiction that the jurisdiction believes that the Company or any Consolidated Subsidiary was required to file any Tax Return that was not filed.  Neither the Company nor any Consolidated Subsidiary has (A) knowingly waived any statute of limitations with respect to Taxes or agreed to extend the period for assessment or collection of any Taxes, (B) requested any extension of time within which to file any Tax Return, which Tax Return has not yet been filed, or (C) executed or filed any power of attorney with any taxing authority, which power of attorney remains in effect.

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(c)Neither the Company nor any Consolidated Subsidiary is or has ever been required to make a basis reduction pursuant to Treasury Regulations Section 1.337(d)-2(b) or 1.1502-36(c), or make an attribute reduction under Treasury Regulations Section 1.1502-36(d).

(d)There are no adjustments under Section 481 of the Code (or any similar adjustments under any provision of the Code or the corresponding foreign, state or local Tax laws) that are required to be taken into account by the Company or any Consolidated Subsidiary in any period ending after the Closing Date by reason of a change in method of accounting in any taxable period ending on or before the Closing Date.

(e)Neither the Company nor any Consolidated Subsidiary has been a U.S. real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii).

(f)Neither the Company nor any Subsidiary has ever participated in an international boycott as defined in Section 999 of the Code.

(g)Neither the Company nor any Consolidated Subsidiary has ever distributed to their stockholders or security holders stock or securities of a controlled corporation, nor has stock or securities of the Company or any Consolidated Subsidiary been distributed, in a transaction to which Section 355 of the Code applies (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.

(h)Neither the Company nor any Consolidated Subsidiary owns any interest in an entity that is characterized as a partnership for federal income Tax purposes.

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(i)Section 5.12(i) of the Disclosure Schedule sets forth each jurisdiction (other than U.S. federal) in which the Company or any Consolidated Subsidiary files, is required to file or has been required to file a Tax Return, is or has been liable for any Taxes on a “nexus” basis, is conducting business activities or has a permanent establishment, and each jurisdiction that has sent notices or communications of any kind requesting information relating to the Company’s nexus, business activities or permanent establishment with or in such jurisdiction.

(j)Except as set forth in Section 5.12(j) of the Disclosure Schedule neither the Company nor any Consolidated Subsidiary has ever (A) owned an interest in a passive foreign investment company within the meaning of Sections 1291 through 1297 of the Code, (B) is a party to a lease that is treated as a “Section 467 Rental Agreement” within the meaning of Section 467(d) of the Code, (C) owned a controlled foreign corporation as defined in Section 957 of the Code, (C) has ever incurred (or been allocated) an “overall foreign loss” as defined in Section 904(f)(2) of the Code which has not been previously recaptured in full as provided in Sections 904(f)(1) and/or 904(f)(3) of the Code, (D) owned or maintained a permanent establishment outside its country of formation, or (E) is subject to Tax except in its country of formation.

(k)Neither the Company nor any Consolidated Subsidiary is a party to a gain recognition agreement under Section 367 of the Code.

(l)Neither the Company nor any Consolidated Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or any portion thereof) ending after the Closing Date as a result of any (i) deferred intercompany gain or any excess loss account described in the Treasury Regulations under Section 1502 of the Code (or any corresponding provision of state, local or foreign Tax law), (ii) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date, (iii) installment sale or other open transaction disposition made on or prior to the Closing Date or (iv) prepaid amount received on or prior to the Closing Date.

(m)There are no liens or other encumbrances with respect to Taxes upon any of the assets or properties of the Company or any Consolidated Subsidiary, other than with respect to Taxes not yet due and payable.

(n)Neither the Company nor any Consolidated Subsidiary has ever engaged in any “listed transaction” for purposes of Treasury Regulations Section 1.6011-4(b)(2) or 301.6111-2(b)(2) or any analogous provision of state or local law.

(o)Section 5.12(o) of the Disclosure Schedule sets forth a complete and accurate list of all agreements, rulings, settlements or other Tax documents relating to Tax incentives between the Company or any Consolidated Subsidiary and a Governmental Authority.

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(p)Except as set forth in Section 5.12(p) of the Disclosure Schedule, since January 1, 2010, neither the Company nor any Subsidiary has incurred a change (by election, merger, reorganization or otherwise) in its classification of entity for federal tax purposes.

5.13Owned Real Property.  Section 5.13 of the Disclosure Schedule contains a full, complete and accurate list of the property address of all Owned Real Property, along with the specific entity that owns each parcel of Owned Real Property.  With respect to each piece of Owned Real Property:

(a)the Company or the applicable Consolidated Subsidiary, as listed on Section 5.13 of the Disclosure Schedule, has good and clear record and marketable fee simple title to such Owned Real Property, and to Seller’s and Company’s Knowledge, is insurable by a recognized national title insurance company at standard rates, free and clear of any Lien (other than Permitted Encumbrances), easement, environmental lien, environmental use restriction, covenant or other restriction, except for recorded easements, covenants and other non-environmental restrictions which do not impair the uses, occupancy or value of such Owned Real Property;

(b)there are no (i) pending or, to the Knowledge of the Company, threatened condemnation proceedings relating to such Owned Real Property, (ii) pending or, to the Knowledge of the Company, threatened litigation or administrative actions relating to such Owned Real Property or (iii) other matters affecting adversely the Company’s or any Consolidated Subsidiary’s use of the Owned Real Property for the operation of its business or the value thereof], other than such proceedings, claims or matters that would not have a Material Adverse Effect;

(c)except as set forth on Section 5.13(c) of the Disclosure Schedule, there are no leases, subleases, licenses or agreements, written or oral, granting to any third party or parties the right of use or occupancy of any portion of such Owned Real Property, provided leases under negotiation as of the Effective Date are not included in Section 5.13(c) but will be added if executed prior to Closing; no one, other than the owner of each parcel of Owned Real Property, is in possession of all or any portion of the Owned Real Property under any unrecorded leases, tenancy at will or otherwise; and all Consolidated Subsidiary or Affiliate leases are completely and accurately set forth on Section 5.13(c) of the Disclosure Schedule;

(d)the Company has no Knowledge of any material violation of any covenants, restrictions, easements, agreements, conditions, codes or zoning ordinances affecting the Owned Real Property;

(e)there are no outstanding options or rights of first refusal to purchase, lease or use such Owned Real Property, or any material portion thereof or interest therein; and

(f)neither the Company nor any Consolidated Subsidiary has received notice of, and to the Knowledge of the Company, there is no proposed or pending proceeding to change or redefine the zoning classification of all or any portion of such Owned Real Property.

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5.14Real Property Leases.  Section 5.14 of the Disclosure Schedule lists all Leases.  With respect to each Lease:

(a)such Lease is legal, valid, binding, enforceable and in full force and effect against the landlord, the Company or the Consolidated Subsidiary that is the party thereto and, to the Company’s Knowledge, against each other party thereto, if any;

(b)such Lease will continue to be legal, valid, binding, enforceable and in full force and effect against the landlord, the Company or the Consolidated Subsidiary that is the party thereto and, to the Company’s Knowledge, against each other party thereto, if any, immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing;

(c)neither the Company nor the Consolidated Subsidiary that is the party thereto is in breach or violation of, or default under, any such Lease, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by the Company or any Consolidated Subsidiary or, any other party under such Lease, if any;

(d)to Seller's and Company's Knowledge, there are no material disputes, oral agreements, offsets, or forbearance programs in effect as to such Lease and no party to any Lease has exercised a right of self help to remedy a breach or default by the any other party to such Lease;

(e)neither the Company nor any Consolidated Subsidiary has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold; and

(f)there is no Lien, easement, covenant, code, law or to Seller’s or Company’s Knowledge, other restriction applicable to the real property subject to such Lease that would reasonably be expected to impair materially the current uses or the occupancy by the Company or a Consolidated Subsidiary of the property subject thereto.

5.15Vessels.

(a)Section 5.15(a) of the Disclosure Schedule sets forth a true and correct list of each Vessel used in the businesses of the Company or any Consolidated Subsidiary and the Vessel’s record owner and vessel type.  Copies of each Vessel’s classification certificate and records have been provided to Buyer showing other information and particulars, classification status (as applicable, and including any recommendations), all of which are true and correct.  Vessels identified in Section 5.15(a) of the Disclosure Schedule as owned by the Company or a Consolidated Subsidiary are referred to hereinafter singularly as an “Owned Vessel” and, in the plural, as “Owned Vessels”.  Those Vessels identified in Section 5.15(c) of the Disclosure Schedule as chartered in by the Company or a Consolidated Subsidiary are referred to hereinafter singularly as a “Chartered Vessel” and, in the plural, as “Chartered Vessels”.

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(b)The Consolidated Subsidiaries, as indicated on Section 5.15(a) of the Disclosure Schedule, are the sole owners of each of the Owned Vessels with good and merchantable title thereto, and except for charters or obligations as between or among the Company and Consolidated Subsidiaries or as otherwise shown in Section 5.15(b) of the Disclosure Schedule, none of the Owned Vessels is the subject of any outstanding charter, purchase option, right of first refusal, right of first offer or other contractual obligation binding on the Seller, the Company or any Consolidated Subsidiary.  At the Closing, the Owned Vessels shall be free and clear of all liens, claims and encumbrances of any nature whatsoever, except Permitted Encumbrances.

(c)Section 5.15(c) of the Disclosure Schedule sets forth a true and correct list of each charter and other agreement governing the Company’s and Consolidated Subsidiaries’ use of the Chartered Vessels (each, a “Vessel Charter” and  collectively the “Vessel Charters”).  The Seller has provided to the Buyer true and complete copies of each Vessel Charter, as now in effect, including all amendments and other modifications thereto, and all such charters and agreements remain valid and binding on the parties thereto in accordance with their terms.  None of the Seller, the Company or any of the Consolidated Subsidiaries has committed any breach of a Vessel Charter that would permit termination of such charter or agreement prior to the expiration of its stated term.

(d)The Seller has provided the Buyer access to (1) true and complete copies of the most recent reports, surveys or inspections of the Owned Vessels by any classification society; and (2) to the Seller's and Company's Knowledge, all true and complete copies of the other most recent reports, surveys, or inspection of the Owned Vessels in its possession by any marine surveyor, governmental authority, naval architect or other person.  Except as set forth in Section 5.15(d) of the Disclosure Schedule, no violation, recommendation or exception noted in the course of any such survey or inspection remains uncorrected.

(e)At Closing, the Owned Vessels will be in substantially the same condition as at the time of the Buyer’s inspection, ordinary wear and tear excepted, except for any casualty that is an insured claim and would not result in a Material Adverse Effect.

(f)Except as set forth in Section 5.15(f) of the Disclosure Schedule, each of the Owned Vessels is duly and validly documented in the name of one of the Consolidated Subsidiaries, as indicated on Section 5.15(a) of the Disclosure Schedule, under the laws and flag of St. Vincent & the Grenadines.

(g)Each Owned Vessel and Chartered Vessel has all licenses, permits, certificates, registrations, approvals and other authorizations (including Certificates of Financial Responsibility (Water Pollution)) that are required by applicable Law or otherwise necessary to permit operation of the Owned Vessels and Chartered Vessels as currently operated and all such licenses, permits, certificates, registrations, approvals and other authorizations are valid and current.  There are no material outstanding restrictions or limitations imposed by any governmental agency or authority with respect to the Owned Vessels or Chartered Vessels or the operations thereof.

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(h)None of the Owned Vessels has been used in violation of any Laws that would subject such vessel to an in rem claim or to arrest, seizure or forfeiture by any governmental agency or authority.

5.16Intellectual Property.  The Company and/or the Consolidated Subsidiaries own and possess all right, title and interest in and to, or have a valid and enforceable license to use, all of the Intellectual Property described on Section 5.16 of the Disclosure Schedule (the “Company Intellectual Property”).  The Company Intellectual Property constitutes all of the Intellectual Property materially necessary in the conduct of the Company’s and each Consolidated Subsidiary’s respective business as presently conducted.  To the Knowledge of the Seller, as of the date hereof, (i) no Intellectual Property rights of the Company or the Consolidated Subsidiaries are being infringed, misappropriated or otherwise violated by any third party, and (ii) neither the Company nor any Subsidiary is infringing, misappropriating, or otherwise violating any third party’s right, title or interest in any Intellectual Property.  The Company has granted the right to use the name “Tropical Global Logistics” to certain shipping agencies at various destinations outside the United States, as set forth in Section 5.16 of the Disclosure Schedules, for the purposes of carrying out the business of the Company and Consolidated Subsidiaries.

5.17Contracts.

(a)Section 5.17(a) of the Disclosure Schedule lists the following agreements (each, a “Scheduled Contract”) to which the Company or any Consolidated Subsidiary is a party and which are currently effective:

(b) any agreement (or group of related agreements) for the lease of personal property from or to third parties in effect after the Effective Date pertaining to the Company or any Consolidated Subsidiary that involve payments from or to the Company or any Consolidated Subsidiary or any other obligations in excess of $***;

(c) any agreement (or group of related agreements) for the purchase of products or services pertaining to the Company or any Consolidated Subsidiary, excluding service agreements by and between the Company or any Consolidated Subsidiary and any of their respective customers, in effect after the Effective Date that involve payments for a sum in excess of $***, or in which the Company or any Consolidated Subsidiary has granted “most favored nation” pricing provisions under which the counterparty is entitled to more favorable pricing if the Company or Consolidated Subsidiary grants such pricing to a third party, marketing or distribution rights relating to any services, products or territory, has agreed to purchase a minimum quantity of goods or services, or has agreed to purchase goods or services exclusively from a certain party;

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(i)any agreement concerning the establishment or operation of a partnership, joint venture or limited liability company;

(ii)any agreement (or group of related agreements) under which the Company or any Consolidated Subsidiary has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) a material amount of indebtedness (including capitalized lease obligations, except those entered into in the Ordinary Course of Business) or under which it has imposed a Lien on any of its assets, tangible or intangible;

(iii)any agreement for the disposition of any significant portion of the assets or business of the Company or any Consolidated Subsidiary or any agreement for the acquisition of the assets or business of any other entity (other than dispositions and acquisitions of containers and cargo handling equipment in the Ordinary Course of Business) or purchases or dispositions of marine shipping containers, freight handling equipment and parts and supplies for maintenance and repair thereof;

(iv)any agreement concerning non-competition or non-solicitation;

(v)any severance agreement (or agreement that includes provisions for the payment of severance) or retention agreement under which payments shall be due and owing as of the Closing Date;

(vi)any material settlement agreement or settlement-related agreement (including any agreement in connection with which any employment-related claim is settled)  under which payments shall be due and owing as of the Closing Date;

(vii)any agreement involving any current or former officer, director or shareholder of the Company or any Affiliate thereof expected to be in effect and not fully performed at the Closing Date;

(viii)any agreement not otherwise listed in any other section of the Disclosure Schedule under which the consequences of a default or termination would reasonably be expected to have a Material Adverse Effect;

(ix)any agency agreements to which the Company or any Consolidated Subsidiary is a party or by which the Company or any Consolidated Subsidiary is bound;

(x)any change of control or other agreement that includes rights or obligations triggered by this Agreement or consummation of the transactions contemplated hereby;

(xi)any other agreement (or group of related agreements) involving more than $*** and not entered into in the Ordinary Course of Business.

(d)The Company has made available to the Buyer a complete and accurate copy of each Contract (as amended to date).  With respect to each Contract: (i) the Contract is legal, valid, binding and enforceable and in full force and effect against the Company or the Consolidated Subsidiary that is the party thereto and, to the Company’s Knowledge, against each other party thereto; (ii) the Contract will continue to be legal, valid, binding and enforceable and in full force and effect against the Company or the Consolidated Subsidiary that is the party thereto and, to the Company’s Knowledge, against each other party thereto immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing; and (iii) neither the Company, any Consolidated Subsidiary nor, to the Knowledge of the Company, any other party, is in material breach or violation of, or material default under, any such Contract, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by the Company or any Consolidated Subsidiary, or, to the Knowledge of the Company, any other party under such Contract.

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(e)Neither the Company nor any Consolidated Subsidiary is a party to any oral contract, agreement or other arrangement which, if reduced to written form, would be required to be listed in Section 5.17(a) of the Disclosure Schedule under the terms of Section 5.17(a).

5.18Powers of Attorney.  There are no outstanding powers of attorney as to any material item executed on behalf of the Company or any Consolidated Subsidiary except as set forth on Section 5.18 of the Disclosure Schedule.

5.19Insurance.  A summary description of all insurance policies (including, without limitation, fire, liability, workers’ compensation, property, casualty and other forms of insurance policies) maintained by the Company or the Consolidated Subsidiaries have been furnished to the Buyer.  Each such insurance policy is in full force and effect and all premiums due with respect to all such have been paid, neither the Company nor any Consolidated Subsidiary is liable for retroactive premiums or similar payments, except for Worker’s Compensation and Automobile Liability insurance policies which are subject to audit at the end of the policy period, and the Company and the Consolidated Subsidiaries are otherwise in compliance with the terms of such policies.  Except as set forth in Section 5.19 of the Disclosure Schedule, other than claims made to Seven Seas, there is no claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy.  The Company has made available to Buyer a true and complete claims history describing all claims submitted during the prior twenty four (24) months under all insurance policies and all similar arrangements covering the Company and the Consolidated Subsidiaries or their business or assets.  Except as set forth in Section 5.19 of the Disclosure Schedule, neither the Company nor any Consolidated Subsidiary has received (a) other than in the Ordinary Course of Business, any refusal of coverage or any notice that a defense will be afforded with reservation of rights as to any material amount, or (b) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the insurer of any policy is not willing or able to perform its obligations thereunder.

5.20Litigation.  Section 5.20 of the Disclosure Schedule sets forth each instance in which the Company or any of the Consolidated Subsidiaries (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any Legal Proceeding.  Except as described on Section 5.20 of the Disclosure Schedule, there are no injunctions, orders, decrees, rulings, charges or Legal Proceedings outstanding or pending against the Company or any of the Consolidated Subsidiaries.

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5.21Employees.

(a)Section 5.21(a) of the Disclosure Schedule sets forth a complete and accurate list, as of the date of this Agreement, of (i) all officers, directors and managers of the Company and each Consolidated Subsidiary, (ii) their current annual compensation (and the portions thereof attributable to salary, bonus and other compensation respectively) as of (A) the Most Recent Balance Sheet Date and (B) the date of this Agreement, and (iii) any agreement or arrangement to modify the current annual compensation of any employee except as provided for by established promotion and merit related increases in the Ordinary Course of Business.  Section 5.21(a)(ii) of the Disclosure Schedule sets forth a list of employees of the Seller and its Affiliates other than Company and Consolidated Subsidiaries that are rendering services (including tax, legal, internal audit and regional accounting services of Tropic Equipment Leasing and Tropical Express Container Services Trinidad Unlimited) for the benefit of the Company and Consolidated Subsidiaries whose employment will be transferred to the Company or appropriate Consolidated Subsidiary as of the Closing.

(b)Except as set forth in Section 5.21(b) of the Disclosure Schedule, none of the Company, any Consolidated Subsidiary, or to Company’s Knowledge, any of their respective predecessors (or any other Person for whose conduct any of them are or may be responsible) has breached or violated in a manner that can reasonably be expected to result in any Liability after the Closing Date any (i) Laws related to labor or employment, including, but not limited to Occupational Safety and Health Administration and Immigration Reform and Control Act laws and regulations, or (ii) employment agreement or other agreement covering individual employees; and no claims, investigations or suits are pending, or to the Knowledge of the Company, threatened by any person or entity with respect to the aforementioned.  Neither the Company nor any Consolidated Subsidiary has incurred, and the Company has no Knowledge of acts that might cause the Company or any Consolidated Subsidiary to incur, any Liability after the Closing Date arising from the misclassification of employees, consultants or independent contractors under applicable law.  Except as set forth in Section 5.21(b) of the Disclosure Schedule, all employees of the Company and the Consolidated Subsidiaries working in the United States are employed on an at-will basis. All employees of the Company and the Consolidated Subsidiaries working in a foreign country are subject to the local employment laws.  No employment protection beyond the local legal requirements has been offered or inferred.

(c)Since January 1, 2011, neither the Company nor any Consolidated Subsidiary has been found to be in violation of any Law related to any unfair labor practice, or threatened in writing with any complaint before the National Labor Relations Board or other foreign or domestic authority.

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(d)Except as set forth on Section 5.21(d) of the Disclosure Schedule, neither the Company nor any Consolidated Subsidiary has been a party to or bound by any collective bargaining agreement, trade union agreement, works council, employee representative agreement or information or consultation agreement; and the Company and each Consolidated Subsidiary have complied with their respective obligations to inform, consult with and/or obtain consent under any such arrangement or from any such entity or covered employee about the transactions contemplated hereby.  Except as set forth on Section 5.21(d) of the Disclosure Schedule, since January 1, 2011 there have been no labor unions or other organizations representing or, to the Knowledge of the Company, purporting or attempting to represent any employee of the Company or any Consolidated Subsidiary.  To the Knowledge of the Company, since January 1, 2011, no employee of the Company or any Consolidated Subsidiary has attempted to organize a labor union or other organization to represent any employee of the Company or any Consolidated Subsidiary (including any filing of a petition for certification).  Except as set forth in Section 5.21(d) of the Disclosure Schedule, no strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any current employee of the Company or any Consolidated Subsidiary is currently ongoing or, to the Knowledge of the Company, has been threatened since January 1, 2011.

(e)Section 5.21(e) of the Disclosure Schedule contains a list of all independent contractors currently engaged by the Company or the Consolidated Subsidiaries under a contract that is binding on the Company or applicable Consolidated Subsidiary that may not be unilaterally terminated by the Company or applicable Consolidated Subsidiary on or after the Closing Date, along with the position, date of retention and rate of remuneration for each such Person.  To the Company’s Knowledge, all Persons currently engaged who have performed services in the United States for the Company or any Consolidated Subsidiary since January 1, 2011 while classified as independent contractors have satisfied the requirements of applicable Law to be so classified, and the Company and each Subsidiary has fully and accurately reported their compensation on IRS Forms 1099 or other applicable Tax forms for independent contractors when required to do so.

(f)Neither the Company nor any Consolidated Subsidiary has since January 1, 2011 caused (i) a plant closing as defined in the WARN Act affecting any site of employment or one or more operating units within any site of employment of the Company or any Consolidated Subsidiary or (ii) a mass layoff as defined in the WARN Act, nor has the Company or any Consolidated Subsidiary been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar Laws.  No employee of the Company or any Consolidated Subsidiary has suffered an employment loss as defined in the WARN Act within the ninety (90) day period ending on the Closing Date.

(g)To the Company's Knowledge, no director, officer or key employee of the Company or any Consolidated Subsidiary, or any Affiliate of any of the foregoing, has any  undisclosed contractual relationship with anyone, or material ownership in any entity, in a business similar or competitive to the businesses of the Company or the Consolidated Subsidiaries.

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(h)Section 5.21(h) of the Disclosure Schedule contains a listing (by fiscal year) of workers’ compensation claims of the Company and the Consolidated Subsidiaries since January 1, 2011.

(i)Section 5.21(i) of the Disclosure Schedule sets forth a list of each employee of the Company or any Consolidated Subsidiary providing services in the United States or Canada and who holds a temporary work authorization (a “Work Permit”) including H, TN, E, L, F or J visa status, but for avoidance of doubt, excluding officers, crewmembers and others serving aboard Vessels or entering the United States on C or D visa status, setting forth the employees’ name and the type and length of time remaining on the Work Permit.  All other individuals employed by the Company or any Consolidated Subsidiary in the United States or Canada are citizens or permanent residents of the country in which they provide services to the Company or any Consolidated Subsidiary. To the Company’s Knowledge, all information supplied to governmental agencies in the applications for a Work Permit was complete and accurate. The Company or the applicable Consolidated Subsidiary received appropriate documentation establishing the employee’s entitlement to the Work Permit when granted and has received no notice of revocation or intent to revoke such Work Permit.

(j)The Company or the appropriate Consolidated Subsidiary has in its possession for all employees hired after November 6, 1986, (i) a currently valid and fully executed Form I-9 (Employment Eligibility Verification) for each of the employees of the Company and the Consolidated Subsidiaries who provide services in the United States, and (ii) any and all required documentation confirming the identity and work authorization for each of the employees of the Company and the Consolidated Subsidiaries who provide services in each other jurisdiction in which the Company or any Consolidated Subsidiary operates.

5.22Employee Benefits.

(a)Section 5.22(a) of the Disclosure Schedule lists each Employee Benefit Plan that Company or any of the Consolidated Subsidiaries or their respective ERISA Affiliates maintains or to which any of the Company or the Consolidated Subsidiaries or their respective ERISA Affiliates contributes.

(i)Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered in accordance with the terms of such Employee Benefit Plan and complies in form and in operation in all material respects with the applicable requirements of ERISA and the Code.

(ii)All contributions (including all employer contributions and employee salary reduction contributions) that are due have been timely made to each such Employee Benefit Plan that is an Employee Pension Benefit Plan.  All premiums or other payments that are due have been timely paid with respect to each such Employee Benefit Plan that is an Employee Welfare Benefit Plan.

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(iii)Each such Employee Benefit Plan that is intended to meet the requirements of a “qualified plan” under Code Section 401(a) has received a determination letter from the Internal Revenue Service to the effect that it meets the requirements of Code Section 401(a).

(b)Neither Company nor any of the Consolidated Subsidiaries or their respective ERISA Affiliates maintains, sponsors or contributes to any Employee Pension Benefit Plan that is a “defined benefit plan” (as defined in ERISA Section 3(35)).

(c)The Company, the Consolidated Subsidiaries and their respective ERISA Affiliates, as applicable, have fiduciary liability insurance in effect covering the fiduciaries of their Employee Benefit Plans; and to the Company’s Knowledge no act or omission has occurred and no condition exists with respect to any Employee Benefit Plan that could reasonably be expected to subject the Company, its Consolidated Subsidiaries or ERISA Affiliates to (i) any fine, penalty, tax or Liability of any kind imposed under ERISA or the Code or (ii) any contractual indemnification or contribution obligation protecting any fiduciary, insurer or service provider with respect to any Employee Benefit Plan.

(d)No Employee Benefit Plan, plan documentation or agreement, summary plan description or other written communication distributed to employees by its terms prohibits the Company or the applicable Consolidated Subsidiary or ERISA Affiliate from amending or terminating any such plans or arrangements.

(e)There are no pending claims (other than routine benefit claims and proceedings with respect to qualified domestic relations orders) or lawsuits that have been asserted or instituted by, against or relating to, any Employee Benefit Plan (including any such claim or lawsuit against any fiduciary of any such Employee Benefit Plan).  No Employee Benefit Plan is or has been under audit, investigation or examination (nor has notice been received of a potential audit, investigation or examination) by any Governmental Authority (including the IRS and DOL).  Except as listed in Section 5.22(e) of the Disclosure Schedule, no voluntary or required corrections procedures under either an internal or a governmental corrections program, are in progress or are contemplated and no such corrections procedures have been undertaken since January 1, 2011.

(f)To the Company’s Knowledge, all group health plans of the Company, the Consolidated Subsidiaries and their respective ERISA Affiliates comply with the requirements of the Affordable Care Act, COBRA, Section 5000 of the Code, HIPAA and any other comparable Laws and Regulations.  Neither the Company nor any Subsidiary or ERISA Affiliate provides benefits through a voluntary employee beneficiary association as defined in Section 501(c)(9) of the Code.

(g)Neither Company nor any of the Consolidated Subsidiaries or their respective ERISA Affiliates contributes to any multiemployer pension plan (as defined in ERISA Section 3(37)) or has any obligation to pay withdrawal liability (as defined in ERISA Section 4201) to any such plan.

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(h)Except as listed in Section 5.22(h) of the Disclosure Schedule, no Employee Benefit Plan or other contract, agreement, plan or arrangement of the Company or any Consolidated Subsidiary covering any one or more individuals contains any provision or is subject to any Laws that, as a result of the transactions contemplated by this Agreement would (i) increase, accelerate or vest any compensation or benefit, (ii) require severance, termination or retention payments, (iii) provide any term of employment or compensation guaranty, (iv) trigger any Liability, (v) forgive any indebtedness, (vi) require or provide any payment or compensation subject to Section 280G of the Code (and no such payment or compensation has previously been made after January 1, 2011), (vii) promise or provide any tax gross-ups or indemnification, whether under Section 280G or 409A of the Code or otherwise, or (viii) measure any values of benefits on the basis of any of the transactions contemplated hereby.  No shareholder, member, equity owner, employee, officer, manager or director of the Company or the Consolidated Subsidiaries or their respective ERISA Affiliates has been promised or paid any bonus or incentive compensation by the Company or any Consolidated Subsidiaries related to the transactions contemplated hereby.

5.23Environmental Matters.

(a)Except as set forth in the Environmental Reports and Section 5.23(d) of the Disclosure Schedule, the Company and each Consolidated Subsidiary are in compliance with all applicable Environmental Requirements.  There is no pending or, to the Knowledge of Seller, threatened civil or criminal litigation, written notice of violation, administrative proceeding, or any investigation, inquiry or information request by any Governmental Authority, relating to any Environmental Requirements or Hazardous Materials involving the Company or any Consolidated Subsidiary.  Neither the Company nor any Consolidated Subsidiary has received, or expects to receive, any order, notice, complaint, claim or other communication from anyone regarding any actual or potential violation or failure to comply with any Environmental Requirements or any actual or threatened obligation to undertake or bear the cost of any Liabilities under Environmental Requirements.

(b)To the Company's Knowledge, and except as set forth in the Environmental Reports and Section 5.23(d) of the Disclosure Schedule, there has been no Release or, to the Knowledge of the Company, threatened Release of any Materials of Environmental Concern at or from any Facilities or operations of the Company or the Consolidated Subsidiaries.  Neither the Company nor any Consolidated Subsidiary has any Liability arising from the Release or threatened Release of any Materials of Environmental Concern into the environment.

(c)Except as set forth in the Environmental Reports and Section 5.23(d) of the Disclosure Schedule, neither the Company nor any Consolidated Subsidiary is a party to or bound by any court order, administrative order, consent order or by any agreement between the Company or any Consolidated Subsidiary and any Governmental Authority in connection with any Liability arising under any Environmental Requirements.

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(d)Set forth in Section 5.23(d) of the Disclosure Schedule is a full and complete list of all documents (whether in hard copy or electronic form) (the “Environmental Reports”) that contain any environmental reports, investigations, assessments or audits relating to operations by the Company or any Consolidated Subsidiary as well as to Facilities currently or previously owned, leased, or operated by the Company or any Consolidated Subsidiary (whether conducted by or on behalf of the Company, the Consolidated Subsidiaries or a third party, and whether done at the initiative of the Company or a Consolidated Subsidiary or directed by a Governmental Authority or other third party) which the Company has possession of or access to, since January 1, 2010.  A complete and accurate copy of each such document has been made available to the Buyer.

(e)Set forth in Section 5.23(e) of the Disclosure Schedule is a full and complete list of all above and below ground storage tanks on or about the Owned Real Property or Leased Real Property, that do currently, or that once did, to the Company's Knowledge, contain petroleum or hazardous substances.

(f)The Company has no Knowledge of any Liability under any Environmental Requirements relating to any solid or hazardous waste transport, treatment, storage, or disposal by the Company or any Consolidated Subsidiary.

(g)The representations and warranties in this Section 5.23 do not extend to any acts or violations with respect to Environmental Matters or Hazardous Materials that may have occurred or that may exist on the basis of materials in containers or cargo shipped aboard the Vessel by third-party customers, or any releases of materials by Customers, except and to the extent of the Company’s Knowledge.

(h)This Section 5.23 contains the sole and exclusive representations and warranties of the Seller with respect to any environmental, health, or safety matters, including without limitation any arising under any Environmental Requirements.

5.24Customers and Suppliers.  Section 5.24 of the Disclosure Schedule sets forth a summary of the top 25 customers of the Company by sales revenue for each of the three (3) most recent full fiscal years, with customer names redacted. Section 5.24 of the Disclosure Schedule sets forth a list of the top 25 vendors and suppliers ranked by amount of accounts payable for each of the three (3) most recent full fiscal years, with vendor and supplier  names redacted.

5.25Permits.  Section 5.25 of the Disclosure Schedule sets forth a list of all material Permits of the Company and the Consolidated Subsidiaries.  The Company and the Consolidated Subsidiaries have been issued and hold all Permits that are required for the Company and the Subsidiaries to conduct their business as presently conducted or as proposed to be conducted.  Each such Permit is in full force and effect, and the Company or the applicable  Consolidated Subsidiary is in compliance with all terms of each such Permit.  To the Knowledge of the Company, no material suspension, revocation or cancellation of such Permit is threatened.  Neither the Company nor any Consolidated Subsidiary has received any notice or other communication from any Governmental Authority regarding (a) any actual, alleged, possible, or potential violation or failure to comply with any term or requirement of any Permit, or (b) any actual, proposed, possible, or potential revocation, withdrawal, suspension, cancellation, termination of, or material modification to any Permit.  Each such Permit will continue in full force and effect immediately following the Closing.

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5.26Certain Business Relationships with Affiliates.  Except as set forth on Section 5.26 of the Disclosure Schedule, no Affiliate of the Company or any Consolidated Subsidiary other than another Consolidated Subsidiary as of the Closing (a) owns any property or right, tangible or intangible, which is materially necessary in the business of the Company or any Consolidated Subsidiary, (b) has any claim or cause of action against the Company or any Consolidated Subsidiary, (c) owes any money to, or is owed any money by, the Company or any Consolidated Subsidiary or (d) is a party to any contract or other arrangement (written or oral) in effect as of the Closing with the Company or any Consolidated Subsidiary.  Section 5.26 of the Disclosure Schedule describes any transactions or relationships between the Company or a Consolidated Subsidiary and any Affiliate thereof which are currently effective.

5.27Books and Records.  The minute books and other similar records of the Company and each Consolidated Subsidiary contain materially complete and accurate records of all actions taken at any meetings of the Company’s or such Consolidated Subsidiary’s shareholders, board of directors, members or any committee thereof and of all written consents executed in lieu of the holding of any such meeting.  To the extent required by applicable Law, the books and records of the Company and each Consolidated Subsidiary accurately reflect the assets, Liabilities, business, financial condition and results of operations of the Company or such Consolidated Subsidiary and have been maintained in all material respects in accordance with good business and bookkeeping practices.  Section 5.27 of the Disclosure Schedule contains a list of all current bank accounts and to the Company’s Knowledge, safe deposit boxes of the Company and the Consolidated Subsidiaries and the names of persons having signature authority with respect thereto or access thereto.

5.28Government Contracts.   Neither the Company nor any Consolidated Subsidiary has been suspended or debarred from bidding on contracts or subcontracts with any Governmental Authority; no such suspension or debarment has been initiated or, to the Knowledge of the Company, threatened or notified; and the consummation of the transactions contemplated by this Agreement will not result in any such suspension or debarment of the Company, any Consolidated Subsidiary or the Buyer (assuming that no such suspension or debarment will result solely from the identity of the Buyer).  Other than routine or recurring reviews conducted in the Ordinary Course of Business, neither the Company nor any Consolidated Subsidiary has been or is now being audited or investigated by the United States Government Accountability Office, the United States Department of Defense or any of its agencies, the Defense Contract Audit Agency, the contracting or auditing function of any Governmental Authority with which it is contracting, the United States Department of Justice, the Inspector General of any United States Governmental Authority, any prime contractor with a Governmental Authority or any similar foreign Governmental Authority; nor, to the Knowledge of the Company, has any such audit or investigation been threatened.  Except as set forth in Section 5.28 of the Disclosure Schedule, neither the Company nor any Consolidated Subsidiary has any agreements, contracts or commitments which require it to obtain or maintain a security clearance with any Governmental Authority.

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5.29Accounts Receivable.   All accounts receivable of the Company and the Consolidated Subsidiaries reflected on the Most Recent Balance Sheet (other than those paid since such date), and all accounts receivable reflected on the Closing Balance Sheet, (a) arose in the Ordinary Course of Business and (b) are valid receivables and to the Knowledge of Company and Consolidated Subsidiaries, subject to no setoffs or counterclaims, and are collectible within one hundred fifty (150) calendar days after the date on which it first became due and payable, net of the applicable reserve for bad debts on the Most Recent Balance Sheet or Closing Balance Sheet, as applicable.  Subsequent to Closing, Company and Consolidated Subsidiaries shall make commercially reasonable efforts to  collect all such accounts receivable and will provide quarterly aging reports to Seller tracking the collections status of such accounts receivable.

ARTICLE VI

INTERIM COVENANTS

6.1General.  During the Pre-Closing Period, each of the Parties will use Reasonable Best Efforts to take all actions and to do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using its Reasonable Best Efforts to ensure that (a) each of their respective representations and warranties remain true and correct through the Closing Date, and (b) the conditions to the obligations of the other Parties to consummate the Closing are satisfied.   For avoidance of doubt, this general interim covenant shall obligate each Party to undertake diligent pursuit of successful completion of the HSR Act review process and approval of the Florida Office of Insurance Regulation review and approval.

6.2Notices and Consents. During the Pre-Closing Period, each of the Parties shall (and the Seller shall cause each of the Company and the Subsidiaries to) give any notices to, make any filings with, and use Reasonable Best Efforts to obtain any authorizations, consents, and approvals of Governmental Authorities in connection with the consummation of the transactions contemplated by this Agreement.  Without limiting the generality of the foregoing, as soon as practicable after the date hereof, each of the Parties will file (and the Seller will cause each of the Company and the Subsidiaries to file) (a) any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act or other applicable U.S. or foreign antitrust laws, shall diligently pursue (and the Seller will cause each of the Company and the Subsidiaries to diligently pursue) a waiver from the applicable waiting period, and shall make (and the Seller will cause each of the Company and the Subsidiaries to make) any further filings or information submissions pursuant thereto that may be necessary, proper or advisable in connection therewith; provided, however, that notwithstanding anything to the contrary in this Agreement, the Buyer shall not be obligated to sell or dispose of or hold separately (through a trust or otherwise) any assets or businesses of the Buyer or its Affiliates, and (b) such materials as are required to be filed in connection with the Florida Office of Insurance Regulation’s review and approval of the transactions contemplated by this Agreement.

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6.3Operation of Business.

(a)Except as expressly contemplated by this Agreement or consented to by the Buyer in writing (which consent will not be unreasonably withheld, conditioned or delayed), during the period from the date of this Agreement to the Closing or the earlier termination of this Agreement in accordance with Article XI hereof (the “Pre-Closing Period”), the Company shall, and shall cause each Consolidated Subsidiary to, conduct its operations only in the Ordinary Course of Business and in compliance with all applicable Laws and, to the extent consistent therewith, use its Reasonable Best Efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, vendors and independent contractors and consultants.  Without limiting the generality of the foregoing, and except as expressly contemplated by this Agreement, during the Pre-Closing Period the Company shall not, and shall cause each Consolidated Subsidiary not to, without the written consent of the Buyer (which consent will not be unreasonably withheld, conditioned or delayed):

(i)issue or sell any stock or other securities of the Company or any Consolidated Subsidiary or any options, warrants or rights to acquire any such stock or other securities;

(ii)split, combine or reclassify any shares of its capital stock; or declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock;

(iii)create, incur or assume any Indebtedness in excess of $*** per occurrence or $*** in the aggregate, except accounts payable arising in the Ordinary Course of Business; assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; or make any loans, advances or capital contributions to, or investments in, any other Person, other than in the Ordinary Course of Business;

(iv)except as required to comply with applicable Law or agreements, plans or arrangements existing on the date of this Agreement and listed in the Disclosure Schedule (A) take any action with respect to, adopt, enter into, terminate or amend any Employee Benefit Plan or any collective bargaining agreement (other than matters with respect to longshore unions in Canada, following consultation with Buyer) (B) increase the compensation or benefits of, or pay or promise any bonus to, any director or officer, or materially modify their terms of employment or engagement, (C) amend or accelerate the payment, right to payment or vesting of any compensation or benefits, including any outstanding equity compensation, except in the Ordinary Course of Business, (D) hire any new officers or (except in the Ordinary Course of Business) any new employees, (E) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of performance units or the removal of existing restrictions in any benefit plans or agreements or awards made thereunder, or (F) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or benefit plan;

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(v)acquire, sell, lease, license or dispose of any material assets or property (including any shares or other equity interests in or securities of any Consolidated Subsidiary or any other corporation, partnership, association or other business organization or division thereof), other than (A) acquisition of capital assets permitted by subsection (xii) below, and (B) sales of obsolete or worn-out inventory or assets in the Ordinary Course of Business and having a fair market value of not more than $*** in the aggregate;

(vi)mortgage or pledge any of its property or assets or subject any such property or assets to any Lien (other than Permitted Encumbrances);

(vii)amend its charter, bylaws, certificate of formation, limited liability company agreement or other organizational documents;

(viii)change the flag or registry of a Vessel;

(ix)change its accounting methods, principles or practices, except insofar as may be required by a generally applicable change in GAAP;

(x)make or change any Tax election, change an annual accounting period, file any amended Tax Return, enter into any closing agreement, waive or extend any statute of limitation with respect to Taxes, settle or compromise any Tax Liability, claim or assessment, surrender any right to claim a refund of Taxes or take any other similar action relating to the filing of any Tax Return or the payment of any Tax;

(xi)enter into, amend, terminate, take or omit to take any action that would constitute a violation of or default under, or waive any rights under, any contract or agreement of a nature required to be listed in Section 5.17 of the Disclosure Schedule, except in the Ordinary Course of Business, provided, for avoidance of doubt, amendments, modifications  and termination of ocean service contracts with customers shall be deemed to be in the Ordinary Course of Business;

(xii)make or commit to make any capital expenditures in an aggregate amount exceeding by more than *** the year-to-date budgeted expenditures set forth on Schedule 6.3(a)(xii);

(xiii)institute or settle any material Legal Proceeding, except in the Ordinary Course of Business, provided for avoidance of doubt, settlements of cargo damage and loss claims by customers and claims of salvors or declaration and settlement of any general average shall be deemed in the Ordinary Course of Business; or

(xiv)agree in writing or otherwise to take any of the foregoing actions.

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(b)Notwithstanding anything to the contrary herein, certain business conducted by the Company and Consolidated Subsidiaries may be in competition with business conducted by one or more subsidiaries of Buyer (such businesses referred to herein as the “Competing Trades”).  Nothing in this Agreement is intended to restrict the Company, the Consolidated Subsidiaries or the Buyer and its subsidiaries from continuing to engage in business in competition with each other.

6.4Access to, Return or Deletion of Confidential Information.

(a)The Seller shall permit, and the Seller shall cause the Company and each of the Consolidated Subsidiaries to permit, representatives of the Buyer (including legal counsel, accountants and other third parties engaged by the Buyer in connection with the transaction contemplated by this Agreement) to have access at reasonable times, and in a manner so as not to interfere with the normal business operations of the Company and the Consolidated Subsidiaries, to accurate records or summaries of material customer and vendor information, with names of customers and vendors redacted, books, records (including tax records), contracts, and documents of or pertaining to the Company and each of the Consolidated Subsidiaries and each of the Vessels.  From the time of such disclosure until the Closing Date, the Buyer will treat and hold as such any Confidential Information it receives from any of the Seller, the Company, and the Consolidated Subsidiaries in the course of the reviews contemplated by this Section 6.4, and will not use any of the Confidential Information except in connection with this Agreement.  Upon termination of this Agreement for any reason whatsoever, each Party shall cause all Confidential Information of the other Party in its possession to be returned to such other Party or deleted or destroyed, provided if deleted or destroyed, the Party shall certify the deletion or destruction in writing.  Documents containing Confidential Information shall be shredded or otherwise altered before placing in any waste stream to preclude any view or use of information thereon.  Electronic media will be erased, and files in hard drives will be deleted in a manner reasonably designed to prevent any future access or unauthorized copying.

(b)Each confidentiality, non-disclosure and non-circumvention agreement entered by, between or among the Parties with respect to exchange and restriction on use of Confidential Information will remain in full force and effect, and is not terminated or superseded by this Agreement except and to the extent expressly provided therein and in this Agreement.

(c)For a period of three (3) years following the Effective Date, each of the Buyer and the Seller shall not, and shall cause their respective Affiliates not to, without prior written consent of the other Party: (A) employ, offer employment to or solicit employment of or solicit confidential or proprietary information about any customer, shipper, carrier, vendor terminal, supplier, agent, forwarder or business opportunity from any officer, director or employee of the other Party or any of its Affiliates other than pursuant to general solicitations of employment that are not specifically targeted to such other Party’s officers, directors or employees, (B) interfere with or induce any modification, breach or termination of any contract or business arrangement between the other Party or any of its Affiliates and any officer, director or employee of the other Party or any of its Affiliates, or (C) use any Confidential Information for the purpose of securing, developing or exploiting any business, commercial opportunity or relationship with any shipper, customer, carrier, terminal, vendor, supplier, agent or forwarder of the other Party or any of its Affiliates.

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6.5Notice of Developments.  During the Pre-Closing Period, the Company and the Seller shall (a) promptly deliver to the Buyer supplemental information concerning events or circumstances occurring subsequent to the Effective Date which (i) have resulted in or would be reasonably likely to result in a Material Adverse Effect, or (ii) cause any of the conditions to Closing set forth in Article VIII to fail to be satisfied as of the Closing; and (b) promptly notify Buyer with respect to any changes or circumstances that, if existing or occurring on or prior to the Effective Date, would have been required to be disclosed in the Disclosure Schedules; provided, however, that no such supplemental information shall (x) be deemed to avoid or cure any misrepresentation or breach of warranty contained in this Agreement, either as of the Effective Date or as of the Closing, (y) be considered when determining whether the Seller or the Company has breached any of its respective representations or warranties either as of the Effective Date or as of the Closing or (z) prevent, limit or otherwise restrict the Buyer’s right to indemnification or termination rights contained in this Agreement with respect to any matter that is the subject of any such supplemental information or supplements or amendments.  In providing such supplemental information the Company and Consolidated Subsidiaries are not required to, and shall not be deemed to, amend the Disclosure Schedules.

6.6Excluded Subsidiaries.  Effective prior to the Closing Date, the Seller shall, or shall cause the Company to divest of all of the Company’s ownership interests in the Excluded Subsidiaries (including, without limitation, the investment interest in Triton Container Investments, L.L.C.).

6.7Change of Corporate Name.  Effective as of the Closing Date, the Seller shall, or shall cause each of the Excluded Subsidiaries to, amend the governing documents of each of the Excluded Subsidiaries and take or cause to be taken all other actions necessary to change the name of each Excluded Subsidiary to a name that does not use and is sufficiently dissimilar from the terms “Tropic”, “Tropical” or any derivation thereof.

6.8Excluded Cash.  Prior to the Closing, the Seller shall cause the Company (and the Company shall cause each of the Consolidated Subsidiaries) to distribute to the Seller all Excluded Cash; provided,that with respect to Excluded Cash held by Seven Seas and its Subsidiaries, such distribution shall be in the maximum amount authorized by the Florida Office of Insurance Regulation.

6.9Intercompany Accounts; Tax Liabilities.  Effective prior to the Closing Date, the Seller shall, or shall cause the Company and each of the Subsidiaries to, pay and settle, through capital contributions or dividends, (a) all accounts receivable, accounts payable and other intercompany assets and liabilities, whether arising in the Ordinary Course of Business or otherwise, of the Company or any Subsidiary owed by or to the Company, any Affiliate of the Company, or any Subsidiary, and (b) all current and deferred Tax liabilities of the Company and any Subsidiary.  For the avoidance of doubt, the settlement of these intercompany accounts and Tax liabilities will be reflected in the Closing Balance Sheet within the book value of the Company.  Excluded Cash will not be used to settle these amounts prior to the Closing Date.

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6.10AGL Stock Investment Option; AGL Employee Stock Purchase Plan.  Effective prior to the Closing Date, the Seller shall: (a) cause the Company to (i) amend the Company’s Retirement Savings Plan to eliminate its ESOP component and remove the company stock fund; (ii) promptly following the announcement of the Company’s sale under this Agreement, direct that plan’s fiduciaries and administrator(s), to, as soon as administratively and prudently feasible: (I) eliminate the Company’s Retirement Savings Plan’s AGL Stock Fund as an investment option under the Company’s Retirement Savings Plan; (II) sell the AGL Resources, Inc. stock held in that fund; and (III) allocate the sales proceeds to the accounts of the participants in the Company’s Retirement Savings Plan in accordance with the Company’s Retirement Savings Plan’s provisions for transferring amounts invested in a discontinued investment fund option to the other options available under the Company’s Retirement Savings Plan; (b) take all actions necessary to discontinue allowing employees of the Company and any Subsidiary to participate in the AGL Employee Stock Purchase Plan from and after Closing; and (c) settle or assume all Liabilities of the Company or any Subsidiary, ERISA Affiliate or other Person related to or arising in connection with the actions described in the foregoing subsections (a) and (b).

6.11FIRPTA.  Prior to the Closing, the Seller shall deliver to the Buyer and to the Internal Revenue Service a notice, in form and substance reasonably satisfactory to the Buyer, certifying that the Outstanding Stock is not a “U.S. real property interest” in accordance with Treasury Regulations under Sections 897 and 1445 of the Code.  If the Buyer does not receive the notice described above on or before the Closing Date, the Buyer shall be permitted to withhold from the payments to be made pursuant to this Agreement any required withholding Tax under Section 1445 of the Code.

6.12Employee Reassignment.  Effective as of the Closing Date, Seller and Buyer shall cooperate to arrange for transfer to the Company or applicable Consolidated Subsidiaries the employment of all employees of Seller or its Affiliates other than the Company or Consolidated Subsidiaries set forth in Section 5.21(a)(ii) of the Disclosure Schedule effective as of the Closing Date.

6.13Insurance.   Prior to the Closing, Buyer shall arrange replacement insurance policies for coverage under Seller’s corporate group policies that will terminate as of the Closing.

6.14Drydocking.  Schedule 6.14 lists the scheduled drydocking activities to be undertaken by Company or the appropriate Consolidated Subsidiary, along with the budgeted costs associated with such activities.  Prior to the Closing, Seller shall, or shall cause the Company or the appropriate Consolidated Subsidiary to make commercially reasonable efforts to arrange, complete and fully pay for the drydocking activities detailed in Schedule 6.14, to the extent such activities in such schedule are planned prior to Closing.  Seller shall provide Buyer and its representatives reasonable access to the vessels during drydocking to inspect the vessels and the work required by this Section 6.14.

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6.15Change of Control Payments.  Seller shall pay at or prior to Closing, or shall cause the Company and/or the Consolidated Subsidiaries to fully pay or accrue prior to Closing, any and all amounts that are or will become payable by the Company and/or the Consolidated Subsidiaries to the extent such amounts are in any way triggered by or payable in connection with the transactions contemplated by this Agreement, including without limitation, payments with respect to employee bonuses, change of control bonuses, success bonuses, severance obligations with respect to pre-Closing terminations, stay bonuses, profit sharing obligations, or liquidity payments.  For clarification, the foregoing obligation shall not apply ***.

6.16***

ARTICLE VII

POST-CLOSING COVENANTS

The Parties agree as follows with respect to the period following the Closing.

7.1General.  In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Article IX).

7.2Litigation Support.  In the event and for so long as any Party actively is contesting or defending against any Legal Proceeding in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction occurring on or prior to the Closing Date involving the Company or any of the Consolidated Subsidiaries, each of the other Parties shall cooperate with its counsel in the defense or contest, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the defense or contest, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Article IX).

7.3Benefits.

(a)For a period of *** following the Closing Date (the “Continuation Period”), Buyer shall either (1) assume and maintain, or cause its subsidiaries (including the Company and the Consolidated Subsidiaries) to assume and maintain, for the benefit of the employees of the Company and the Consolidated Subsidiaries who were employed by the Company or a Consolidated Subsidiary immediately prior to the Closing Date and who remain employees of the Company or a Consolidated Subsidiary during the Continuation Period (the “Company Employees”), the Employee Benefit Plans and other compensation arrangements of the Company Employees at the compensation and benefit levels in effect immediately prior to the Closing Date as disclosed pursuant to Section 5.21 and Section 5.22 of the Disclosure Schedule or (2) provide, or cause its subsidiaries (including the Company and the Consolidated Subsidiaries) to provide (A) compensation to the Company Employees that, in the aggregate, is no less favorable than the compensation provided to the Company Employees immediately prior to the Closing Date and (B) benefits (including pension and retiree medical benefits) to the Company Employees that, in the aggregate, are no less favorable than the benefits provided to the Company Employees immediately prior to the Closing Date.  Buyer shall provide each Company Employee who is terminated during the Continuation Period with severance payments and benefits that are no less favorable than those that would have been provided to such Company Employee immediately prior to the Closing as disclosed on Schedule 7.3(a); provided, however, that no Company Employee shall be deemed to have been terminated as a result of such Company Employee’s transfer or reassignment to an Affiliate of the Buyer.

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(b)During the Continuation Period, Buyer shall provide or cause its subsidiaries (including the Company and the Consolidated Subsidiaries) to provide each former employee of the Company or any Consolidated Subsidiary who, immediately prior to the Closing Date, is receiving long-term disability payments or benefits (which shall be deemed to include medical benefits) or retiree medical benefits under any Employee Benefit Plan, long-term disability payments or benefits or retiree medical benefits (as applicable) at a level that is no less favorable than the level of such payments or benefits provided to such individuals immediately prior to the Closing Date.

(c)From and after the Closing Date, Buyer shall, and shall cause its subsidiaries (including the Company and the Consolidated Subsidiaries) to, honor all obligations under the Employee Benefit Plans in accordance with their terms as in effect immediately prior to the Closing Date and as disclosed pursuant to Section 5.22 of the Disclosure Schedule.

(d)Buyer shall, and shall cause its subsidiaries (including the Company and its Subsidiaries) to, cause any Employee Benefit Plan (whether or not subject to ERISA but excluding all nonqualified deferred compensation plans as defined in Treas. Reg. §1.409A-1(a)) maintained by Buyer or any of its subsidiaries (including the Company and its Subsidiaries) (including any vacation, paid time-off and severance plans) to recognize each Company Employee’s service with the Company or any of its Consolidated Subsidiaries (as well as service with any predecessor of the Company or any Consolidated Subsidiary, to the extent service with such predecessor is recognized by the Company or such Consolidated Subsidiary), for all purposes, including determining eligibility to participate, level of benefits, vesting, benefit accruals and early retirement subsidies; provided, however, that such service need not be recognized to the extent that such recognition would result in any duplication of benefits.

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7.4Directors’ and Officers’ Indemnification.

(a)For a period of six (6) years from and after the Closing, the Buyer shall, to the fullest extent permitted by law, cause the Company and the Consolidated Subsidiaries to honor all the Company’s and the Consolidated Subsidiaries’ obligations to indemnify (including all obligations to advance funds for expenses) the current or former directors or officers of the Company or any Consolidated Subsidiary for acts or omissions by such directors and officers occurring prior to the Closing Date to the extent that such obligations of the Company or such Consolidated Subsidiary exist on the date of this Agreement, whether pursuant to the Company Charter, the Company Bylaws, the respective charters or bylaws of the Consolidated Subsidiaries, individual indemnity agreements or otherwise, and such obligations shall survive and shall continue in full force and effect in accordance with the current terms of the Company Charter, the Company Bylaws, the respective charters or bylaws of the Consolidated Subsidiaries and such individual indemnity agreements from the Closing Date until the expiration of the applicable statute of limitations with respect to any claims against such directors or officers arising out of such acts or omissions; provided, however, that such indemnification obligations shall only be with respect to matters arising in connection with such director’s or officer’s service as a director or officer of the Company or any Consolidated Subsidiary, and not in any other capacity; and provided, further, that in no event shall the Buyer, the Company or any Consolidated Subsidiary have any obligation pursuant to this Section 7.4 with respect to matters for which the Buyer is entitled to indemnification pursuant to Article IX.

(b)Prior to the Closing, the Seller shall purchase a six (6) year pre-paid extended reporting period endorsement under the Company’s and the Consolidated Subsidiaries’ current directors’ and officers’ liability insurance policy or policies covering acts or omissions occurring prior to the Closing Date with respect to those directors and officers of the Company and the Consolidated Subsidiaries who are currently covered by such policy on terms with respect to coverage and amount no less favorable to such directors and officers than those of such policy in effect on the date hereof.  The Seller shall maintain such policy in effect and shall not amend, terminate or otherwise modify such policy during the six (6) year period following the Closing.

ARTICLE VIII

CONDITIONS TO OBLIGATION TO CLOSE

8.1Conditions to the Buyer’s Obligation.  The Buyer’s obligation to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction or waiver on or prior to the Closing Date of the following conditions:

(a)the representations and warranties of the Seller in Sections 3.1 and 3.2 and the representations and warranties of the Company in Sections 5.1, 5.2, 5.7(a)(i)-(iv), 5.15(b) and 5.15(e) shall be true and correct in all respects as of the Effective Date and as of the Closing as though made at the Closing and all other representations and warranties of the Seller shall be true and correct in all respects as of the Effective Date and as of the Closing as though made at the Closing except for any inaccuracy that would not constitute a Material Adverse Effect;

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(b)the Seller and the Company shall have performed and complied with all of their covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material,” or “Material Adverse Effect,” in which case the Seller shall have performed and complied with all of such covenants (as so written, including the term “material” and “Material”) in all respects through the Closing; provided however that if Seller, Company or Consolidated Subsidiaries do not complete the covenants contained in Section 6.14, such incompletion shall not delay Closing;

(c)no Legal Proceeding shall be pending or threatened in writing against the Seller, the Company or any Consolidated Subsidiary wherein an unfavorable judgment, order, decree, stipulation or injunction could reasonably be expected to prevent consummation of the transactions contemplated by this Agreement or cause the transactions contemplated by this Agreement to be rescinded following consummation of any such transaction;

(d)the Seller and the Company shall have delivered to the Buyer a certificate  (without qualification as to knowledge, materiality or otherwise) to the effect that each of the conditions specified above in Sections 8.1(a) through 8.1(c) is satisfied in all respects;

(e)all applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or otherwise been terminated and the Florida Office of Insurance Regulation shall have approved the consummation of the transactions contemplated by this Agreement;

(f)the Seller shall have delivered to the Buyer a certificate of organization, or its equivalent, and certificate(s) of good standing and/or existence, or its equivalent, of the Company and each of the Consolidated Subsidiaries, certified by an appropriate authority of the applicable governmental authority issuing such certificate in the jurisdiction of each entity’s creation, formation, or organization;

(g)the Seller shall have delivered to the Buyer a certificate of a secretary or assistant secretary of such Seller certifying to such Seller’s organizational documents (including any operating agreements) and the resolutions of the board of directors of the Seller approving this Agreement and the transactions contemplated hereby;

(h)the Seller shall have delivered to the Buyer a certificate of a secretary or assistant secretary of the Company and each of the Consolidated Subsidiaries certifying to the Company’s and the Consolidated Subsidiaries’ organizational documents (including any operating agreements) and, to the extent required by the organizational documents of such entities, the resolutions of the Board of Directors or other governing bodies of such entities approving this Agreement, the Transaction Documents to which the Company or such Consolidated Subsidiary is a party, and the transactions contemplated hereby and thereby;

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(i)the Seller shall have delivered to the Buyer the certificate representing the Outstanding Stock duly endorsed in blank, and all other proper forms for transfer of the Outstanding Stock;

(j)the Seller shall have delivered to the Buyer, to the extent so requested by Buyer, duly executed resignations from the directors and officers of the Company and the Consolidated Subsidiaries, effective as of the Closing; and

(k)Seller shall have arranged for transfer of employees identified in Section 5.22(a)(ii) of the Disclosure Schedule to employment of the Company or applicable Consolidated Subsidiary, to be effective as of the Closing Date.

8.2Conditions to the Seller’s Obligation.  The Seller’s obligation to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction or waiver on or prior to the Closing Date of the following conditions:

(a)the representations and warranties of the Buyer set forth in Sections 4.1 and 4.2 of this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing as though made as of the Closing;

(b)the Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” and “Material Adverse Effect,” in which case the Buyer shall have performed and complied with all of such covenants (as so written, including the term “material” or “Material”) in all respects through the Closing;

(c)no Legal Proceeding shall be pending or threatened in writing against the Buyer wherein an unfavorable judgment, order, decree, stipulation or injunction could reasonably be expected to prevent consummation of the transactions contemplated by this Agreement;

(d)the Buyer shall have delivered to the Seller a certificate to the effect that each of the conditions specified above in Sections 8.2(a) through 8.2(c) is satisfied in all respects;

(e)all applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or otherwise been terminated and the Florida Office of Insurance Regulation shall have approved the consummation of the transactions contemplated by this Agreement;

(f)the Buyer shall have made arrangements reasonably for insurance policies reasonably similar to Seller’s existing policies to replace coverages under existing Seller corporate group policies that will cease as of the Closing; and

(g)the Buyer shall have paid the Estimated Purchase Price to the Seller.

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ARTICLE IX

INDEMNIFICATION

9.1Survival of Representations and Warranties.

(a)Unless otherwise specified in this Section 9.1 or elsewhere in this Agreement, all provisions of this Agreement shall survive the Closing and the consummation of the transactions contemplated hereby and shall continue in full force and effect in accordance with their terms.  Except for claims based on fraud or intentional misrepresentation, all representations and warranties that are covered by the indemnification obligations in Sections 9.2 and Section 9.3 shall expire on the date that is *** following the Closing Date; provided, however, that the Fundamental Representations and the Buyer’s representations and warranties set forth in Sections 3.1, 3.2, 3.5, 5.1, 5.2, 5.3, 5.7, 5.11(b), 5.12, 5.15(b), 5.15(f), 5.15(h), 5.21(b) and 5.22(a) of this Agreement (collectively, the “Fundamental Representations”)shall survive until sixty (60) days after the expiration of the applicable statute of limitations.

(b)If an Indemnified Person delivers to an Indemnifying Person, before expiration of a representation, warranty, covenant or agreement, a Claim Notice based upon a breach of such representation, warranty, covenant or agreement, then, notwithstanding any provision of this Section 9.1 to the contrary, the applicable representation, warranty, covenant or agreement shall survive until, but only for purposes of, the resolution of the matter covered by such Claim Notice.

9.2Indemnification by the Seller.  The Seller shall indemnify the Buyer in respect of, and hold it harmless against, any and all Losses incurred or suffered by the Company, the Buyer or any of its Affiliates (collectively, the “Buyer Indemnitees”) resulting from, relating to or constituting:

(a)any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty contained in Article III or Article V of this Agreement or any Transaction Document to which the Seller, the Company or any Subsidiary is a party, without regard to any supplemental information or supplements or amendments to the Disclosure Schedules provided on or after the Effective Date and whether provided pursuant to Section 6.5 or otherwise;

(b)any failure to perform any covenant or agreement of any of the Seller, the Company or any Subsidiary contained in this Agreement or any Transaction Document to which the Seller, the Company or any Subsidiary is a party;

(c)subject to the conditions set forth under Section 9.4(d), any Liabilities under Environmental Requirements, regardless of whether set forth in the Disclosure Schedule, arising from or relating to: (i) the ownership, operation, or condition at any time on or before the Closing Date of any Facilities, (ii) any Hazardous Materials that were present on or had been released in such Facilities at any time on or before the Closing Date; or (iii) any Hazardous Materials, wherever located, that were, or were allegedly, generated, transported, stored, treated, Released or otherwise handled by the Seller, the Company or any of the Subsidiaries at any time on or before the Closing Date;

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(d)without duplication, any Liabilities for Taxes, to the extent required by Article X hereto; and

(e)the matters set forth on Schedule 9.2(e).

9.3Indemnification by the Buyer.  The Buyer shall indemnify the Seller in respect of, and hold it harmless against, any and all Losses incurred or suffered by the Seller or any of its Affiliates (collectively, the “Seller Indemnitees”), resulting from, relating to or constituting:

(a)any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty contained in Article IV of this Agreement or any Transaction Document to which the Buyer is a party;

(b)any failure to perform any covenant or agreement of the Buyer contained in this Agreement or any Transaction Document to which the Buyer is a party;

(c)the ownership and conduct of the businesses of the Company and the Consolidated Subsidiaries after the Closing Date; and

(d)without duplication, any Liabilities for Taxes, to the extent required by Article X hereto.

9.4Indemnification Limitations.

(a)With respect to claims for Losses arising under Section 9.2(a), the Seller shall not be liable for Losses until the aggregate amount of all such Losses under Section 9.2(a) exceeds *** (the “Threshold”), at which point the Seller shall become liable only for aggregate Losses under Section 9.2(a) in excess of the Threshold; provided, that any Losses or series of related Losses with respect to a particular breach or series of related breaches must equal or exceed *** to count toward the Threshold; and provided, further, that the limitations set forth in this Section 9.4(a) shall not apply to claims based on fraud, intentional misrepresentation or a breach of any of the Fundamental Representations.

(b)Notwithstanding anything to the contrary herein, except for claims based on fraud, intentional misrepresentation or a breach of any of the Fundamental Representations, (i) the Seller shall not be liable for any Losses under Section 9.2(a) in excess of ***.

(c)Notwithstanding anything to the contrary herein, but subject to the limitations set forth in Section 9.4(b), the aggregate liability of (i) the Seller for all Losses under this Article IX shall not exceed ***, and (ii) the Buyer for all Losses under this Article IX shall not exceed ***.

*** Represents material omitted per the registrant's Confidential Treatment Request and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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(d)The Seller shall not have any right of contribution against the Company with respect to any breach by the Company of any of its representations, warranties, covenants or agreements.

(e)Each Party shall have the right, in addition to any other rights and remedies existing in its favor hereunder, to enforce its rights and the obligations of the other Parties hereto, not only by an action or actions for Losses but also by an action or actions for specific performance, injunctive and/or other equitable relief.

(f)An Indemnified Person may not assert multiple claims under Section 9.2 or Section 9.3, as applicable, in order to recover duplicative Losses in respect of a single set of facts or circumstances that give rise to a breach of more than one representation, warranty, covenant or agreement in this Agreement; provided, however, that neither the foregoing limitation nor any other limitation set forth in this Article IX, shall restrict an Indemnified Person’s ability to elect the particular representation, warranty, covenant or agreement, or combination of any one or more of the foregoing, under which it will seek indemnification with respect to a single set of facts or circumstances that has given rise to a breach under more than one representation, warranty, covenant or agreement in this Agreement.

(g)The rights to indemnification set forth in this Article IX shall not be affected or limited by (i) any investigation conducted by or on behalf of the Indemnified Person or any knowledge acquired (or capable of being acquired) by the Indemnified Person, whether before or after the date of this Agreement, with respect to the inaccuracy or non-compliance with any representation, warranty, covenant or obligation which is the subject of indemnification hereunder, or (ii) any waiver by the Indemnified Person of any closing condition relating to the accuracy of representations and warranties or the performance of or compliance with agreements and covenants.

9.5Third Party Actions.

(a)A party entitled to indemnification under this Article IX (a “Third Party Action Indemnitee”) shall give written notification to the other Party (the “Third Party Action Indemnitor”) of the commencement of any Third Party Action for which indemnification is sought by the Third Party Action Indemnitee pursuant to Section 9.2 or 9.3.  Such notification shall be given promptly, and in any case within thirty (30) calendar days after receipt by the Third Party Action Indemnitee of notice of such Third Party Action, and shall describe in reasonable detail (to the extent then known by the Third Party Action Indemnitee) the facts constituting the basis for such Third Party Action and the amount of the claimed damages.  No delay or failure on the part of the Third Party Action Indemnitee in so notifying the Third Party Action Indemnitor shall relieve the Third Party Action Indemnitor of any Liability hereunder except to the extent of any actual prejudice, damage or Liability caused by, resulting from or arising out of such delay or failure.  Within thirty (30) calendar days after delivery of such notification, the Third Party Action Indemnitor may, upon written notice thereof to the Third Party Action Indemnitee, assume control of the defense of such Third Party Action with counsel approved by the Third Party Action Indemnitee, which approval shall not unreasonably be withheld, conditioned or delayed; provided that (i) the Third Party Action Indemnitor may only assume control of the defense if it acknowledges in writing to the Third Party Action Indemnitee that any and all damages, fines, costs or other Liabilities that may be assessed against or incurred by the Third Party Action Indemnitee in connection with such Third Party Action constitute Losses for which the Third Party Action Indemnitee shall be indemnified pursuant to this Article IX, and (ii) the Third Party Action Indemnitor may not assume control of the defense of any Third Party Action involving Taxes or criminal Liability or in which equitable relief is sought against the Third Party Action Indemnitee (or if Third Party Action Indemnitee is Buyer, the Company or any Consolidated Subsidiary).  If the Third Party Action Indemnitor does not, or is not permitted under the terms hereof to, assume control of the defense of a Third Party Action, the Third Party Action Indemnitee shall control such defense, provided Third Party Action Indemnitee shall select counsel approved by Third Party Action Indemnitor, which approval shall not unreasonably be withheld, conditioned or delayed.  The Non-Controlling Party may participate in such defense at its own expense.  The Controlling Party shall keep the Non-Controlling Party advised of the status of such Third Party Action and the defense thereof and shall consider in good faith recommendations made by the Non-Controlling Party with respect thereto.  The Non-Controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third Party Action (including copies of any summons, complaint or other pleading which may have been served on such party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in the defense of such Third Party Action.  The fees and expenses of counsel to the Third Party Action Indemnitee with respect to a Third Party Action shall be considered Losses for purposes of this Agreement if such Party controls the defense of such Third Party Action pursuant to the terms of this Section 9.5.  The Third Party Action Indemnitor shall not agree to any settlement of, or the entry of any judgment arising from, any Third Party Action without the prior written consent of the Third Party Action Indemnitee, which shall not be unreasonably withheld, conditioned or delayed; provided that the consent of the Third Party Action Indemnitee shall not be required if the Third Party Action Indemnitor agrees in writing to pay any amounts payable pursuant to such settlement or judgment and such settlement or judgment includes a complete release of the Third Party Action Indemnitee, (and if Third Party Action Indemnitee is Buyer, the Company and the Consolidated Subsidiaries, as applicable), from further Liability and has no other adverse effect on the Third Party Action Indemnitee, (or if the Third Party Indemnitee is Buyer, the Company or the Consolidated Subsidiaries, as applicable).  Except as provided in Section 9.5(b), the Third Party Action Indemnitee shall not make any admission against interest or agree to any settlement of, or the entry of any judgment arising from, any such Third Party Action without the prior written consent of the Third Party Action Indemnitor, which shall not be unreasonably withheld, conditioned or delayed.  For avoidance of doubt, matters arising under Sections 9.2(c) and (e) shall be considered Third Party Actions for purposes of this Section 9.5.

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(b)Notwithstanding the other provisions of this Section 9.5, if a third party asserts (other than by means of a lawsuit) that the Third Party Action Indemnitee is liable to such third party for a monetary or other obligation which may constitute or result in Losses for which the Third Party Action Indemnitee may be entitled to indemnification pursuant to this Article IX, and the Third Party Action Indemnitee reasonably determines that it has a valid business reason to fulfill such obligation, then (i) the Third Party Action Indemnitee shall be entitled to satisfy such obligation, without prior notice to or consent from the Third Party Action Indemnitor, (ii) the Third Party Action Indemnitee may subsequently make a claim for indemnification in accordance with the provisions of this Article IX and (iii) the Third Party Action Indemnitee shall be reimbursed, in accordance with the provisions of this Article IX, for any such Losses for which it is entitled to indemnification pursuant to this Article IX (subject to the right of the Third Party Action Indemnitor to dispute the Third Party Action Indemnitee’s entitlement to indemnification, or the amount for which it is entitled to indemnification, under the terms of this Article IX).

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9.6Indemnification Procedures.

(a)Any Buyer Indemnitee or Seller Indemnitee seeking indemnification under this Article IX other than as to a Third Party Action (such Person, an “Indemnified Person”) shall deliver a Claim Notice to the Person from which indemnification is sought (the “Indemnifying Person”).

(b)Within twenty (20) calendar days after delivery of a Claim Notice, the Indemnifying Person shall deliver to the Indemnified Person a Response, in which the Indemnifying Person shall (i) agree that the Indemnified Person is entitled to receive all of the Claimed Amount, or (ii) agree that the Indemnified Person is entitled to receive the Agreed Amount, or (iii) dispute that the Indemnified Person is entitled to receive any of the Claimed Amount.  The Indemnifying Person may contest the payment of all or a portion of the Claimed Amount only based upon a good faith belief that all or such portion of the Claimed Amount does not constitute Losses for which the Indemnified Person is entitled to indemnification under this Article IX.  If no Response is delivered by the Indemnifying Person within such twenty (20) day period, the Indemnifying Person shall be deemed to have agreed that all of the Claimed Amount is owed to the Indemnified Person.  Acceptance by the Indemnified Person of partial payment of any Claimed Amount shall be without prejudice to the Indemnified Person’s right to claim the balance of any such Claimed Amount.

(c)During the thirty (30) day period following the delivery of a Response that reflects a Dispute, the Indemnified Person and the Indemnifying Person shall use good faith efforts to resolve the Dispute.  If the Dispute is not resolved within such thirty (30) day period, then the Indemnified Person may, at its sole option, elect to resolve such Dispute in a state or federal court sitting in the State of Florida, in accordance with Section 12.8.

9.7Treatment of Indemnity Payments.  All indemnification payments under this Article IX shall be deemed adjustments to the Purchase Price.

9.8Exclusive Remedy.  The Buyer and the Seller acknowledge and agree that the foregoing indemnification provisions in this Article IX and the provisions of Article X shall be the exclusive remedy of the Buyer and the Seller with respect to the Company, the Subsidiaries, and the transactions contemplated by this Agreement.  In furtherance of the foregoing, the Buyer and the Seller hereby waive, effective upon the occurrence of the Closing, to the fullest extent permitted by applicable law, any and all other rights, claims and causes of action (including rights of contribution, if any, and claims for rescission) known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against the shareholders or any of their representatives, any member of the board of directors of the Company or any of the Subsidiaries, the Seller or the Buyer or any of their representatives, as the case may be, arising under or based upon any federal, state or local law (including any such law relating to environmental matters or arising under or based upon any securities law, common law or otherwise) for any breach of the representations and warranties or covenants and agreements contained in this Agreement.

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9.9Mitigation.  The Buyer and the Seller shall take all reasonable steps to mitigate Losses for which indemnification may be claimed by it pursuant to this Agreement upon and after becoming aware of any event that could reasonably be expected to give rise to any such Losses.

ARTICLE X

TAX MATTERS

10.1Preparation and Filing of Tax Returns; Payment of Taxes.

(a)The Seller shall cause to be timely prepared and filed when due all Tax Returns of the Company and each Subsidiary required to be filed (taking into account extensions) on or prior to the Closing Date.

(b)Except as provided in Section 10.1(a), the Buyer shall prepare and timely file or shall cause to be prepared and timely filed all Tax Returns of the Company or any Consolidated Subsidiary not filed on or before the Closing Date, including Tax Returns which were required to be filed before the Closing but were not filed and all other Tax Returns with respect to the Company or any Consolidated Subsidiary or in respect of their businesses, assets or operations. The Buyer shall make all payments required with respect to any such Tax Returns; provided, however, that the Seller shall, within fifteen (15) calendar days after receipt of written notification that such a payment was made by the Buyer, reimburse the Buyer to the extent any payment the Buyer is required to make relates to the operations of the Company or any Consolidated Subsidiary for any period ending (or deemed pursuant to Section 10.3(b) to end) on or before the Closing Date to the extent such portion of the payment exceeds the amount of the accruals for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Closing Balance Sheet.

(c)Any Tax Return to be prepared and filed by the Buyer for taxable periods beginning before the Closing Date shall be prepared on a basis consistent with the last previous filed Tax Return (if any) if the previous Tax Return was prepared consistent with applicable Tax rules and regulations, and the Buyer shall consult with the Seller concerning each such Tax Return.

10.2Tax Indemnification.

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(a)The Seller shall indemnify the Buyer, the Company and the Consolidated Subsidiaries in respect of, and hold the Buyer, the Company and the Consolidated Subsidiaries harmless against (1) any and all Losses resulting from, relating to, or constituting a breach of any representation contained in Section 5.12 hereof, (2) any and all Losses resulting from, relating to, or constituting any failure to perform any covenant or agreement set forth in Article VI relating to Taxes or in this Article X and (3) without duplication, the Seller shall be liable for, and shall indemnify the Buyer with respect to the following Taxes imposed upon or with respect to the Company and the Consolidated Subsidiaries, reduced by the amount of any net tax benefit realized by the Buyer with respect to the indemnity claim:

(i)Any and all Taxes and Tax Liabilities that are or will become due and payable by the Company or any Consolidated Subsidiary for any taxable period that ends (or is deemed pursuant to Section 10.3(b) to end) on or before the Closing Date in excess of any accruals for current Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) on the Closing Balance Sheet, including, without limitation, any of the foregoing arising out of or associated with the settlement and discharge of any accounts receivable, accounts payable or other intercompany asset or liability, whether arising in the Ordinary Course of Business or otherwise, of the Company or any Subsidiary owed by or to any Affiliate of the Company or any Subsidiary;

(ii)Any Liability of such entities for Taxes of other entities whether pursuant to Treasury Regulation Section 1.1502-6 (or comparable or similar provision under state, local or foreign law), as transferee or successor or pursuant to any contractual obligation for any taxable period that ends (or is deemed pursuant to Section 10.3(b) to end) on or before the Closing Date; and

(iii)Any sales, use, transfer, stamp, conveyance, value added, recording, registration, documentary, filing or other similar Taxes and fees levied on the Seller, the Company, any Consolidated Subsidiary or any of their respective Affiliates, resulting from the transactions contemplated hereby.

(b)The Buyer shall indemnify the Seller in respect of, and hold the Seller harmless against any and all Taxes for which the Buyer is responsible pursuant to Section 10.1(b).

10.3Allocation of Certain Taxes.

(a)If the Company is permitted, but not required, under applicable Tax Laws to treat the Closing Date as the last day of a taxable period, such day shall be treated as the last day of a taxable period.

(b)The portion of any Taxes for a taxable period beginning before and ending after the Closing allocable to the portion of such period ending on the Closing Date shall be deemed to equal (i) in the case of Taxes that (A) are based upon or related to income or receipts or (B) imposed in connection with any sale or other transfer or assignment of property, other than Taxes described in Section 10.2(a)(iii), the amount which would be payable if the taxable year ended with the Closing Date, and (ii) in the case of other Taxes imposed on a periodic basis (including property Taxes), the amount of such Taxes for the entire period multiplied by a fraction, the numerator of which is the number of calendar days in the period ending with the Closing Date, and the denominator of which is the number of calendar days in the entire period.  For purposes of the provisions of Section 10.2, each portion of such period shall be deemed to be a taxable period (whether or not it is in fact a taxable period).  For purposes of computing the Taxes attributable to the two (2) portions of a taxable period pursuant to this Section 10.3(b), the amount of any item that is taken into account only once for each taxable period (e.g., the benefit of graduated tax rates, exemption amounts, etc.) shall be allocated between the two (2) portions of the period in proportion to the number of calendar days in each portion.

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10.4Cooperation on Tax Matters.

(a)The Buyer and the Seller shall cooperate in (i) the preparation of all Tax Returns for any Tax periods and (ii) the conduct of any Tax Proceeding, for which one Party could reasonably require the assistance of the other Party in obtaining any necessary information.  Such cooperation shall include, but not be limited to, furnishing prior years’ Tax Returns or return preparation packages illustrating previous reporting practices or containing historical information relevant to the preparation of such Tax Returns, and furnishing such other information within such Party’s possession requested by the other Party as is relevant to the preparation of the Tax Returns, including, without limitation, operations, ownership, assets or activities of the Company or any Consolidated Subsidiary for periods prior to the Closing to the extent such information is relevant to any Tax Returns that the Buyer has the obligation to file, or the conduct of the Tax Proceeding.  Such cooperation and information also shall include promptly forwarding copies of appropriate notices and forms or other communications received from or sent to any Governmental Authority which relate to the Company or any Consolidated Subsidiary, and providing copies of all relevant Tax Returns, together with accompanying schedules and related work papers, documents relating to rulings or other determinations by any Governmental Authority and records concerning the ownership and tax basis of property, which the requested party may possess.

(b)The Party responsible for filing the applicable Tax Return under Section 10.1  shall manage and control any Tax Proceeding arising from or related to such Tax Return; provided that, to the extent the non-controlling Party shall become obligated to pay any amounts as a result of such Tax Proceeding, the controlling Party shall consult with the non-controlling Party and not settle any such issue without the consent of the non-controlling Party (which consent shall not be unreasonably withheld, conditioned or delayed).   The controlling Party may elect to forego control of any Tax Proceeding that it is entitled to control pursuant to this Section 10.4(b), and shall notify the other Party if it elects to forgo such control, in which case such other Party may elect to control the Tax Proceeding.

10.5Termination of Tax Sharing Agreements. All Tax sharing agreements or similar arrangements with respect to or involving the Company or any Subsidiary shall be terminated prior to the Closing Date and, after the Closing Date, neither the Company nor any Subsidiary shall be bound thereby or have any Liability thereunder for amounts due in respect of periods ending on or before the Closing Date.

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10.6Section 338 Elections.

(a)The Buyer and the Seller will join in making an election under Code Section 338(h)(10) (and any corresponding elections under state, local, or foreign Law) with respect to the Outstanding Stock of the Company (the “Section 338(h)(10) Election”).  The Buyer shall be responsible for the preparation and filing of all forms and documents required in connection with the Section 338(h)(10) Election and shall provide the Seller with properly completed copies of IRS Form 8023 (and any corresponding state, local, or foreign Tax forms) before the Closing Date.  The Seller agrees to execute and deliver to the Buyer on the Closing Date any forms related to the Section 338(h)(10) Election for filing by the Buyer.  The Parties shall cooperate fully with each other and make available to each other such Tax information as may be reasonably required by the Buyer or the Seller in order to timely file the Section 338(h)(10) Election.

(b)The Buyer shall make an election under Code Section 338(g) with respect to the stock of Tropical Shipping and Construction Company Limited.  The Buyer shall be responsible for the preparation and filing of all forms and documents (including IRS Form 8023) required in connection with the Section 338(g) Election.

(c)Unless otherwise agreed to by the Buyer and the Seller, no election shall be made under Code Section 338 with respect to Seven Seas.

(d)The Company, the Buyer and the Seller, as applicable, shall file all Tax Returns, documents, and forms (including IRS Form 8883) in a manner consistent with the allocation schedule attached hereto as Schedule 10.6(d) and shall take no position inconsistent therewith upon examination of any Tax Return, in any refund claim, in any litigation, investigation or otherwise.

10.7Refunds and Tax Credits.

(a)The Seller shall be entitled to receive and to retain any and all credits or refunds (including any interest) of Taxes of the Company or any Consolidated Subsidiary (i) for which the Seller is responsible pursuant to this Article X and (ii) which are not accrued on the Closing Balance Sheet.  Such payment shall be net of any Tax cost to the Buyer or any of its Affiliates attributable to the receipt of such refund (including interest).  In the event that any such Tax refund is subsequently reduced as a result of any adjustment required by any Governmental Authority, the Seller shall promptly pay the amount of such reduction to the Buyer, net of any Tax cost to the Seller or any of its Affiliates attributable to the receipt of such reduction (including interest).

(b)The Buyer and the Seller shall cooperate, and shall cause their respective Affiliates to cooperate, with respect to claiming any refund or credit with respect to Taxes referred to in Section 10.7(a).  Such cooperation shall include:  providing all relevant information available with respect to any such claim; filing and diligently pursuing such claim (including by litigation, if appropriate); paying over to the Seller in accordance with Section 10.7(a) any amount received by the Buyer or any of its Affiliates with respect to such claim; provided, that the foregoing shall be done in a manner so as not to interfere unreasonably with the conduct of the business of the Buyer or any of its Affiliates.  The Seller shall bear the reasonable out-of-pocket expenses (including attorneys and accountants fees) of the Buyer and its Affiliates in seeking such refund.

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10.8Scope of Article X.  Except as otherwise provided in Section 10.1(b), any claim by the Buyer under this Article X shall be pursued in accordance with the procedures for indemnification claims, and shall otherwise be subject to the terms and conditions, set forth in Article IX.  Notwithstanding the foregoing or any other term or condition of Article IX, (a) claims under this Article X may be made by the Buyer any time prior to the sixtieth (60th) day after the expiration of the statute of limitations applicable to the Tax matter to which the claim relates and (b) to the extent there is any inconsistency between the terms of Article IX and this Article X with respect to the allocation of responsibility among the Seller and the Buyer for Taxes, the provisions of this Article X shall govern.  Any limitation upon the Seller’s indemnification obligations pursuant to Section 9.1 shall not apply to any claim made by the Buyer under this Article X.

ARTICLE XI

TERMINATION

11.1Termination of Agreement.  The Buyer or the Seller may terminate this Agreement prior to the Closing as provided below:

(a)the Buyer and the Seller may terminate this Agreement by mutual written consent at any time prior to the Closing;

(b)the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing in the event that a Material Adverse Effect has occurred;

(c)the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing if the Closing shall not have occurred on or before the date that is one hundred fifty (150) days from the Effective Date, by reason of the failure of any condition precedent under Section 8.1 hereof (unless the failure results primarily from the Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and

(d)the Seller may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing if the Closing shall not have occurred on or before the date that is one hundred fifty (150) days from the Effective Date, by reason of the failure of any condition precedent under Section 8.2 hereof (unless the failure results primarily from Seller breaching any representation, warranty, or covenant contained in this Agreement).

11.2Effect of Termination.  If any Party terminates this Agreement pursuant to Section 11.1 above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); provided, however, that the provisions contained in Section 6.4 above shall survive termination.

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ARTICLE XII

MISCELLANEOUS

12.1Press Releases and Public Announcements.  No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the Buyer and the Seller; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will use Reasonable Best Efforts to advise the other Parties prior to making the disclosure).

12.2No Third-Party Beneficiaries.  This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

12.3Entire Agreement.  This Agreement (including the Transaction Documents and the other documents referred to in this Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.

12.4Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties named in this Agreement and their respective successors and permitted assigns.  No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; provided that the Buyer may assign its rights, interests and obligations hereunder to an Affiliate of the Buyer.

12.5Counterparts.  This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together will constitute one and the same instrument.

12.6Headings.  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

12.7Notices.  All notices, requests, demands, claims, and other communications hereunder shall be in writing.  Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one (1) Business Day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) four (4) Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:

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To the Buyer:	with a copy to:
Aqua Acquisition Corp. 1111 Fairview Avenue North Seattle, WA 98109-1110 Attn: Mark Tabbutt and John Hoerster Facsimile:  (206) 652-1100 Telephone:  (206) 651-1111	Garvey Schubert Barer 1191 Second Avenue, Ste. 1800 Seattle, WA 98101-2939 Attn: Brent L. Jones Facsimile: (206) 464-0125 Telephone: (206) 464-3939
To the Seller or, if prior to the Closing, the Company:	with a copy to:
AGL Resources Inc. Ten Peachtree Place Atlanta, GA 30309 Attn: Stephen Cave Facsimile: (404) 584-3509 Telephone: (404) 584-3801 and AGL Resources Inc. 1200 Smith St., Suite 900 Houston, TX 77002 Attn: Dat Tran Facsimile: (832) 397-1749 Telephone: (832) 397-1760	Holland & Knight 800 17th Street, NW Suite 1100 Washington, D.C. 20006 Attn: Michael Cavanaugh Facsimile: (202) 955-5564 Telephone: (202) 828-5084

Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner set forth in this Agreement.

12.8Governing Law and Consent to Exclusive Jurisdiction and Venue.  This Agreement and the rights and obligations of the parties hereto, shall be interpreted, construed and enforced in accordance with the laws of the State of Florida, without regard to Florida choice of law rules or decisions.  The parties agree to submit to the jurisdiction of the state or federal courts within the State of Florida and agree to the venue of Palm Beach County, Florida. The parties also agree to waive any defense as to venue or personal jurisdiction, or that the forum is inconvenient.

12.9Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Seller.  No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver, nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

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12.10Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction, provided, in the event performance or enforcement of this Agreement in the absence of any invalid or unenforceable provision would deprive a party of a material element of its originally-intended bargain, the partiers will discuss in good faith and agree upon a reformation of this Agreement to reflect the parties’ original intent as nearly as possible in the absence of the invalid or unenforceable provision.

12.11Expenses.  Subject to Section 2.2(a), each of the Buyer, the Seller, the Company and the Subsidiaries will bear its own costs and expenses (including, without limitation, legal fees and expenses, transfer, stamp, registration and other such Taxes, fees and charges) incurred in connection with this Agreement and the transactions contemplated hereby.

12.12Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.  Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  The word “including” shall mean including without limitation.

12.13Incorporation of Exhibits, Annexes, Schedules and Due Diligence Documents.  The Exhibits, Annexes, and Schedules identified in this Agreement are incorporated by reference in this Agreement and made a part hereof.  For purposes of the representations and warranties set forth in Article III and Article V of this Agreement, the phrases “made available” and “furnished to” (and phrases of similar import) shall mean that the Seller provided such documents to the Buyer via the Seller’s SharePoint website located at https://sp.aglresources.com/sites/TropShipInternalDocs/default.aspx, the definitive version of which is recorded on two (2) DVDs, identical copies of which are held by the Seller and the Buyer.

12.14Governing Language.  This Agreement has been negotiated and executed by the Parties in English.  In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall prevail.

* * * * *

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written.

BUYER:

AQUA ACQUISITION CORP.

By: /s/ Mark N. Tabbutt

Name: Mark N. Tabbutt

Title: Secretary

SELLER:

OTTAWA ACQUISITION LLC

By: /s/ Andrew W. Evans

Name: Andrew W. Evans

Title: EVP & CFO

COMPANY:

BIRDSALL, INC.

By: /s/ Andrew W. Evans

Name: Andrew W. Evans

Title: Vice Chairman, EVP & CFO

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EX-12

Exhibit 12

AGL Resources Inc.

Statement Setting Forth Ratio of Earnings to Fixed Charges

	Six months ended			Fiscal			Fiscal			Fiscal			Fiscal			Fiscal
Dollars in millions	June 30, 2014			2013			2012			2011			2010			2009
Earnings before income taxes	$	665		$	522		$	450		$	311		$	390		$	384
Add:
Fixed charges (see “B” below)		100			200			203			145			123			115
Amortization of capitalized interest (1)		-			-			-			1			-			-
Distributed income of equity investees		4			3			14			-			-			-
Less:
Interest capitalized (1)		-			-			(1	)		(1	)		(5	)		(3	)
Noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges		(14	)		(18	)		(15	)		(14	)		(16	)		(27	)
Adjusted earnings (A)	$	755		$	707		$	651		$	442		$	492		$	469
Fixed charges
Interest on long-term debt	$	93		$	182		$	177		$	101		$	109		$	98
Other interest, including amortized premiums, discounts and capitalized expenses related to indebtedness liability		4			6			13			37			7			10
Estimated interest components of rentals		3			12			13			7			7			7
Total fixed charges (B)	$	100		$	200		$	203		$	145		$	123		$	115
Ratio of earnings to fixed charges (A)/(B)		7.55			3.54			3.21			3.05			4.00			4.08

(1)   Includes interest capitalized and related amortization for our nonregulated segments.

EX-31.1

Exhibit 31.1 – Certification of John W. Somerhalder II pursuant to Rule 13a – 14(a)

CERTIFICATIONS

I, John W. Somerhalder II, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of AGL Resources Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 30, 2014	/s/ John W. Somerhalder II
	Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2 – Certification of Andrew W. Evans pursuant to Rule 13a – 14(a)

CERTIFICATIONS

I, Andrew W. Evans, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of AGL Resources Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 30, 2014	/s/ Andrew W. Evans
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1                      Certification of John W. Somerhalder II pursuant to 18 U.S.C. Section 1350

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

The undersigned, as the chief executive officer of AGL Resources Inc., certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)   the Form 10-Q for the quarterly period ended June 30, 2014 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2)   the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of AGL Resources Inc.

Date: July 30, 2014	/s/ John W. Somerhalder II
	Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2                      Certification of Andrew W. Evans pursuant to 18 U.S.C. Section 1350

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

The undersigned, as the chief financial officer of AGL Resources Inc., certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)   the Form 10-Q for the quarterly period ended June 30, 2014 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2)   the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of AGL Resources Inc.

Date: July 30, 2014	/s/ Andrew W. Evans
	Executive Vice President and Chief Financial Officer

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Note 3 - Regulated Operations (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended		18 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Natural Gas Costs [Member]
Note 3 - Regulated Operations (Details) [Line Items]
Increase (Decrease) in Other Regulatory Assets	$ 129	$ (40)	$ 168
Other Increase (Decrease) in Environmental Liabilities	$ 22

XML

Note 7 - Debt and Credit Facilities (Details) - Debt-to-Capitalization Ratios	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
AGL Resources Inc [Member]
Schedule of Capitalization [Line Items]
Debt-to-capitalization ratios	0.51	0.57	0.54
Nicor Gas [Member]
Schedule of Capitalization [Line Items]
Debt-to-capitalization ratios	0.52	0.55	0.43

XML

Note 5 - Derivative Instruments (Details) - Gains and Losses on Derivative Instruments (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Nicor Gas [Member]
Note 5 - Derivative Instruments (Details) - Gains and Losses on Derivative Instruments [Line Items]
Realized losses related to hedging natural gas costs	$ 10	$ 9	$ 12	$ 8
Elizabethtown Gas [Member]
Note 5 - Derivative Instruments (Details) - Gains and Losses on Derivative Instruments [Line Items]
Realized losses related to hedging natural gas costs	$ 2	$ (1)	$ 5	$ (4)

XML

Note 13 - Subsequent Events (Details) (Subsequent Event [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2014
Note 13 - Subsequent Events (Details) [Line Items]
Insurance Recoveries	$ 77
Installment 1 [Member]
Note 13 - Subsequent Events (Details) [Line Items]
Insurance Recoveries	45
Installment 2 [Member]
Note 13 - Subsequent Events (Details) [Line Items]
Insurance Recoveries	$ 32

XML

Note 8 - Equity (Details) - Other Comprehensive Income (Loss) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Other Comprehensive Income (Loss) [Abstract]
As of beginning of period	$ 1	$ 1	$ 1	$ (3)
As of beginning of period	(136)	(212)	(137)	(215)
As of beginning of period	(135)	(211)	(136)	(218)
As of end of period		(1)		(1)
As of end of period	(133)	(208)	(133)	(208)
As of end of period	(133)	(209)	(133)	(209)
OCI, before reclassifications		(1)	4	1
OCI, before reclassifications		(1)	4	1
Amounts reclassified from accumulated OCI	(1)	(1)	(5)	1
Amounts reclassified from accumulated OCI	3	4	4	7
Amounts reclassified from accumulated OCI	2	3	(1)	8
Net current-period other comprehensive (loss) income	(1)	(2)	(1)	2
Net current-period other comprehensive (loss) income	3	4	4	7
Net current-period other comprehensive (loss) income	$ 2	$ 2	$ 3	$ 9

XML

Note 5 - Derivative Instruments (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Note 5 - Derivative Instruments (Details) [Line Items]
Derivative Liability, Fair Value, Amount Not Offset Against Collateral	$ 62
Increase (Decrease) in Risk Management Assets and Liabilities	13	(14)
Collateral Already Posted, Aggregate Fair Value	82	94	121
Price Risk Cash Flow Hedge Unrealized Gain (Loss) to be Reclassified During Next 12 Months	1
Less Than Two Years [Member] | Natural Gas Derivatives [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Percent Of Derivative Contracts	98.00%
Less Than Two Years [Member] | Natural Gas Derivatives [Member] | Maximum [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Derivative, Term of Contract	2 years
Expiring in Two to Five Years [Member] | Natural Gas Derivatives [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Percent Of Derivative Contracts	2.00%
Expiring in Two to Five Years [Member] | Natural Gas Derivatives [Member] | Maximum [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Derivative, Term of Contract	5 years
Expiring in Two to Five Years [Member] | Natural Gas [Member] | Minimum [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Derivative, Term of Contract	2 years
Weather Derivatives [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(6)	(3)
Maximum [Member]
Note 5 - Derivative Instruments (Details) [Line Items]
Derivative, Collateral, Obligation to Return Cash	$ 11

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Note 11 - Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Schedule Of Segment Reporting Information By Segment Total Assets Goodwill [Table Text Block]

In millions	Identifiable and total assets (1)		Goodwill
Distribution operations	$	11,727	$	1,640
Retail operations		694		173
Wholesale services		1,166		-
Midstream operations		713		14
Other (2) (3)		73		-
Consolidated	$	14,373	$	1,827

Schedule of Segment Reporting Information, by Segment [Table Text Block]

In millions	Distributionoperations		Retail operations		Wholesale services (1)			Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	668	$	176	$	47		$	17		$	(6	)	$	902
Intercompany revenues		43		1		-			-			(44	)		-
Total operating revenues		711		177		47			17			(50	)		902
Operating expenses
Cost of goods sold		315		119		7			11			(50	)		402
Operation and maintenance		159		34		13			7			(2	)		211
Depreciation and amortization		80		5		1			4			5			95
Taxes other than income taxes		40		1		-			2			(1	)		42
Total operating expenses		594		159		21			24			(48	)		750
Operating income (loss)		117		18		26			(7	)		(2	)		152
Other income (expense)		3		-		(3	)		-			2			2
EBIT	$	120	$	18	$	23		$	(7	)	$	-		$	154
Capital expenditures	$	158	$	3	$	-		$	5		$	5		$	171

In millions	Distributionoperations		Retail operations		Wholesale services (1)		Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	615	$	165	$	21	$	15		$	-		$	816
Intercompany revenues		43		-		-		-			(43	)		-
Total operating revenues		658		165		21		15			(43	)		816
Operating expenses
Cost of goods sold		266		115		10		4			(42	)		353
Operation and maintenance		159		32		10		6			(2	)		205
Depreciation and amortization		90		5		1		4			3			103
Taxes other than income taxes		38		1		-		2			2			43
Total operating expenses		553		153		21		16			(39	)		704
Gain on disposition of assets		-		-		11		-			-			11
Operating income (loss)		105		12		11		(1	)		(4	)		123
Other income		4		-		-		1			2			7
EBIT	$	109	$	12	$	11	$	-		$	(2	)	$	130
Capital expenditures	$	158	$	3	$	-	$	4		$	3		$	168

In millions	Distributionoperations		Retail operations		Wholesale services (1)			Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	2,406	$	582	$	380		$	61		$	(53	)	$	3,376
Intercompany revenues		118		1		-			-			(119	)		-
Total operating revenues		2,524		583		380			61			(172	)		3,376
Operating expenses
Cost of goods sold		1,517		399		10			47			(171	)		1,802
Operation and maintenance		370		71		49			13			(3	)		500
Depreciation and amortization		160		11		1			9			7			188
Taxes other than income taxes		122		2		1			3			2			130
Total operating expenses		2,169		483		61			72			(165	)		2,620
Operating income (loss)		355		100		319			(11	)		(7	)		756
Other income (expense)		4		-		(3	)		1			3			5
EBIT	$	359	$	100	$	316		$	(10	)	$	(4	)	$	761
Identifiable and total assets (2)	$	11,624	$	683	$	1,207		$	699		$	(168	)	$	14,045
Capital expenditures	$	308	$	6	$	1		$	5		$	12		$	332

In millions	Distributionoperations		Retail operations		Wholesale services (1)		Midstream operations		Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	1,879	$	467	$	60	$	39	$	(7	)	$	2,438
Intercompany revenues		98		-		-		-		(98	)		-
Total operating revenues		1,977		467		60		39		(105	)		2,438
Operating expenses
Cost of goods sold		1,031		310		20		16		(104	)		1,273
Operation and maintenance		344		63		23		12		(5	)		437
Depreciation and amortization		180		10		1		8		7			206
Taxes other than income taxes		102		2		1		3		4			112
Total operating expenses		1,657		385		45		39		(98	)		2,028
Gain on disposition of assets		-		-		11		-		-			11
Operating income (loss)		320		82		26		-		(7	)		421
Other income		7		-		-		2		3			12
EBIT	$	327	$	82	$	26	$	2	$	(4	)	$	433
Identifiable and total assets (2)	$	11,166	$	641	$	1,008	$	715	$	(24	)	$	13,506
Capital expenditures	$	295	$	4	$	-	$	8	$	8		$	315

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

In millions	Third party gross revenues		Intercompany revenues		Total gross revenues		Less gross gas costs		Operating revenues
Three months ended June 30, 2014	$	2,379	$	160	$	2,539	$	2,492	$	47
Three months ended June 30, 2013		1,982		103		2,085		2,064		21
Six months ended June 30, 2014		6,430		458		6,888		6,508		380
Six months ended June 30, 2013		4,076		243		4,319		4,259		60

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Note 9 - Non-Wholly Owned Entities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Note 9 - Non-Wholly Owned Entities (Details) [Line Items]
Payments to Acquire Property, Plant, and Equipment	$ 171	$ 168	$ 332	$ 315
Payments of Ordinary Dividends, Noncontrolling Interest			17	17
South Star [Member] | AGL Resources Inc [Member]
Note 9 - Non-Wholly Owned Entities (Details) [Line Items]
Equity Method Investment, Ownership Percentage	85.00%		85.00%
South Star [Member] | Piedmont [Member]
Note 9 - Non-Wholly Owned Entities (Details) [Line Items]
Payments of Ordinary Dividends, Noncontrolling Interest			17	17
South Star [Member]
Note 9 - Non-Wholly Owned Entities (Details) [Line Items]
Payments to Acquire Property, Plant, and Equipment			$ 4	$ 1

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Note 2 - Significant Accounting Policies and Methods of Application (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Schedule of Goodwill [Table Text Block]

In millions	Distribution Operations		Retail Operations		Midstream Operations		Consolidated (1)
Goodwill - December 31, 2012	$	1,640	$	122	$	14	$	1,776
2013 activity		-		46		-		46
Goodwill - June 30, 2013	$	1,640	$	168	$	14	$	1,822
Goodwill - December 31, 2013	$	1,640	$	173	$	14	$	1,827
Goodwill - June 30, 2014	$	1,640	$	173	$	14	$	1,827

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Equity method investment income	$	1	$	2	$	4	$	5
AFUDC - equity		1		3		1		6
Other, net		-		2		-		1
Total other income	$	2	$	7	$	5	$	12

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three months ended June 30,					Six months ended June 30,
In millions (except per share amounts)	2014		2013			2014			2013
Income from continuing operations	$	63	$	50		$	403		$	203
Income (loss) from discontinued operations, net of tax		1		(1	)		(49	)		-
Net income attributable to AGL Resources Inc.	$	64	$	49		$	354		$	203
Denominator:
Basic weighted average number of shares outstanding (1)		118.8		117.8			118.7			117.6
Effect of dilutive securities		0.4		0.4			0.4			0.3
Diluted weighted average number of shares outstanding		119.2		118.2			119.1			117.9
Basic earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.40		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Basic earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.98		$	1.72
Diluted earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.39		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.97		$	1.72

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Note 5 - Derivative Instruments (Details) - Derivative Instruments on the Consolidated Statements of Income (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Designated as cash flow or fair value hedges
Natural gas contracts - gain (loss) reclassified from OCI							$ (3)
Income tax benefit	(1)				(1)		1
Net of tax	1		1		5		(1)
Not designated as hedges (1)
Total gains (losses) on derivative instruments	19		14		6		(3)
Cost of Sales [Member] | Cash Flow Hedging [Member]
Designated as cash flow or fair value hedges
Natural gas contracts - gain (loss) reclassified from OCI	2		1		5		1
Cost of Sales [Member] | Fair Value Hedging [Member]
Not designated as hedges (1)
Natural gas contracts - net value adjustments	(1)	[1]	(1)	[1]	1	[1]	(1)	[1]
Operating Expense [Member] | Cash Flow Hedging [Member]
Designated as cash flow or fair value hedges
Natural gas contracts - gain (loss) reclassified from OCI					1
Sales [Member] | Fair Value Hedging [Member]
Not designated as hedges (1)
Natural gas contracts - net value adjustments	30	[2]	22	[2]		[2]	(2)	[2]
Cash Flow Hedging [Member]
Designated as cash flow or fair value hedges
Income tax benefit	(1)				(1)		1
Net of tax	1		1		5		(1)
Fair Value Hedging [Member]
Not designated as hedges (1)
Income tax benefit	(11)		(8)				1
Net of tax	$ 18		$ 13		$ 1		$ (2)

[1] Excludes losses recorded in cost of goods sold associated with weather derivatives of $6 million and $3 million for the six months ended June 30, 2014 and 2013, respectively.

[2] Associated with the fair value of derivative instruments held at June 30, 2014 and 2013.

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Note 3 - Regulated Operations (Details) - Costs Related to Remediation of Former Operating Sites (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, high estimate	$ 69
Engineering estimates	469	[1]
Amount recorded	90
Illinois Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, high estimate	46
Engineering estimates	251
Amount recorded	37
New Jersey Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, high estimate	3
Engineering estimates	129
Amount recorded	32
Georgia And Florida [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, high estimate	9
Engineering estimates	78
Amount recorded	14
North Carolina Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate
Probabilistic model cost estimates, high estimate	11	[2]
Engineering estimates	11	[2]
Amount recorded	7	[2]
Minimum [Member] | Illinois Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	205
Minimum [Member] | New Jersey Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	126
Minimum [Member] | Georgia And Florida [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	66
Minimum [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	397
Maximum [Member] | Illinois Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	462
Maximum [Member] | New Jersey Environmental [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	196
Maximum [Member] | Georgia And Florida [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	106
Maximum [Member]
Environmental Exit Cost [Line Items]
Probabilistic model cost estimates, low estimate	$ 764

[1] Increase of $22 million from December 31, 2013 primarily relates to a scope increase required by the Georgia Environmental Protection Division for a site in Georgia and an adjustment for a site in Florida. This was partially offset by a decrease for a site in New Jersey where remediation is almost complete.

[2] We have no regulatory recovery mechanisms for the site in North Carolina. Therefore, this amount is not included in our regulatory assets and changes in estimated costs are recognized in income in the period of change.

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Note 2 - Significant Accounting Policies and Methods of Application (Details) - Other Income (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Other Income [Abstract]
Equity method investment income	$ 1	$ 2	$ 4	$ 5
AFUDC - equity	1	3	1	6
Other, net		2		1
Total other income	$ 2	$ 7	$ 5	$ 12

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Note 7 - Debt and Credit Facilities (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended				6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Commercial Paper [Member] AGL Capital [Member]	Jun. 30, 2014 Commercial Paper [Member] Nicor Gas [Member]	Jun. 30, 2014 Commercial Paper [Member]	Jun. 30, 2014 Commercial Paper [Member] Minimum [Member]	Jun. 30, 2014 Commercial Paper [Member] Maximum [Member]	Jun. 30, 2014 Nicor Gas [Member]	Dec. 31, 2013 Nicor Gas [Member]	Jun. 30, 2013 Nicor Gas [Member]	Jun. 30, 2014 Maximum [Member]
Note 7 - Debt and Credit Facilities (Details) [Line Items]
Debt Instrument, Interest Rate, Effective Percentage			0.30%	0.20%
Debt Instrument, Term						1 day	108 days
Debt Instrument, Remaining Maturity Term						1 day	10 days
Proceeds from (Repayments of) Commercial Paper (in Dollars)	$ (723)	$ (857)
Proceeds from Short-term Debt, Maturing in More than Three Months (in Dollars)					50
Repayments of Short-term Debt, Maturing in More than Three Months (in Dollars)					$ 145
Ratio of Indebtedness to Net Capital								0.52	0.55	0.43	0.70

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Note 12 - Discontinued Operations (Details) (Tropical Shipping [Member], USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Sep. 30, 2014 Subsequent Event [Member]	Mar. 31, 2014 Cumulative Foreign Earnings, No Tax Liabilities Previously Recorded [Member]	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2014
Note 12 - Discontinued Operations (Details) [Line Items]
Proceeds from Divestiture of Businesses	$ 220
Deferred Foreign Income Tax Expense (Benefit)		31
Deferred Tax Liabilities, Undistributed Foreign Earnings			55		55
Goodwill, Impairment Loss, Net of Tax				19	19
Gain (Loss) on Disposition of Property Plant Equipment			4
Depreciation and Amortization, Discontinued Operations			$ 4

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Note 9 - Non-Wholly Owned Entities (Details) - Income from Equity Method Investments (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Note 9 - Non-Wholly Owned Entities (Details) - Income from Equity Method Investments [Line Items]
Income from Equity Methdod Investment	$ 1	$ 2	$ 4	$ 5
Triton [Member]
Note 9 - Non-Wholly Owned Entities (Details) - Income from Equity Method Investments [Line Items]
Income from Equity Methdod Investment	1	2	3	4
Other Equity Investments [Member]
Note 9 - Non-Wholly Owned Entities (Details) - Income from Equity Method Investments [Line Items]
Income from Equity Methdod Investment			$ 1	$ 1

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Note 5 - Derivative Instruments (Details) - Net Long Natural Gas Contracts	Jun. 30, 2014 ft3		Dec. 31, 2013 ft3		Jun. 30, 2013 ft3
Net Long Natural Gas Contracts [Abstract]
Cash flow hedges	6,000,000,000	[1],[2]	6,000,000,000	[1]	3,000,000,000	[1]
Not designated as hedges	140,000,000,000	[1],[2]	183,000,000,000	[1]	221,000,000,000	[1]
Total volumes	146,000,000,000	[1],[2]	189,000,000,000	[1]	224,000,000,000	[1]
Short position	(2,530,000,000,000)	[1],[2]	(2,622,000,000,000)	[1]	(2,311,000,000,000)	[1]
Long position	2,676,000,000,000	[1],[2]	2,811,000,000,000	[1]	2,535,000,000,000	[1]
Net long position	146,000,000,000	[1],[2]	189,000,000,000	[1]	224,000,000,000	[1]

[1] Volumes related to Nicor Gas exclude variable-priced contracts, which are carried at fair value, but whose fair values are notdirectly impacted by changes in commodity prices.

[2] Approximately 98% of these contracts have durations of 2 years or less and the remaining 2% expire between 2 and 5 years.

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Condensed Consolidated Statements of Equity (Unaudited) (Parentheticals) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Dividends on common stock, per share	$ 0.98	$ 0.94

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Note 10 - Commitments, Guarantees and Contingencies (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 07, 2013	Nov. 05, 2012	Dec. 31, 2012	Jun. 30, 2014	Dec. 31, 2009	Feb. 01, 2012
Note 10 - Commitments, Guarantees and Contingencies (Details) [Line Items]
Gas Balancing Volume Amount (in Cubic Feet)			4,800,000,000
Illinois Commission [Member]
Note 10 - Commitments, Guarantees and Contingencies (Details) [Line Items]
Loss Contingency, Damages Sought, Value					$ 85
Loss Contingency, Estimate of Possible Loss						64
Loss Contingency, Damages Awarded, Value	72	72
Loss Contingency Accrual, Period Increase (Decrease)			8
Loss Contingency Accrual			72
Loss Contingency, Damages Paid, Value				43
IAGO [Member]
Note 10 - Commitments, Guarantees and Contingencies (Details) [Line Items]
Loss Contingency, Damages Sought, Value					255
CUB [Member]
Note 10 - Commitments, Guarantees and Contingencies (Details) [Line Items]
Loss Contingency, Damages Sought, Value					$ 305

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Note 4 - Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Fair Value Disclosures [Abstract]
Weather Derivative Premium	$ 3	$ 3	$ 1

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Note 6 - Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Service cost	$	6		$	7		$	12		$	15
Interest cost		11			11			23			21
Expected return on plan assets		(16	)		(15	)		(32	)		(31	)
Net amortization of prior service cost		(1	)		(1	)		(1	)		(1	)
Recognized actuarial loss		6			9			11			17
Net periodic pension benefit cost	$	6		$	11		$	13		$	21

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Service cost	$	-		$	-		$	1		$	1
Interest cost		3			4			7			7
Expected return on plan assets		(1	)		(2	)		(3	)		(3	)
Net amortization of prior service cost		-			(1	)		(1	)		(2	)
Recognized actuarial loss		2			2			3			4
Net periodic welfare benefit cost	$	4		$	3		$	7		$	7

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Note 5 - Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

In Bcf (1)	June 30, 2014 (2)			December 31, 2013			June 30, 2013
Cash flow hedges		6			6			3
Not designated as hedges		140			183			221
Total volumes		146			189			224
Short position		(2,530	)		(2,622	)		(2,311	)
Long position		2,676			2,811			2,535
Net long position		146			189			224

Loss Recognized In Income [Table Text Block]

	Three months ended June 30,					Six months ended June 30,
In millions	2014		2013			2014		2013
Nicor Gas	$	10	$	9		$	12	$	8
Elizabethtown Gas		2		(1	)		5		(4	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

		June 30, 2014						December 31, 2013						June 30, 2013
In millions	Classification	Assets			Liabilities			Assets			Liabilities			Assets			Liabilities
Designated as cash flow or fair value hedges
Natural gas contracts	Current	$	2		$	(1	)	$	3		$	(1	)	$	2		$	(1	)
Not designated as hedges
Natural gas contracts	Current		702			(721	)		691			(761	)		456			(445	)
Natural gas contracts	Long-term		77			(89	)		206			(220	)		124			(139	)
Total			779			(810	)		897			(981	)		580			(584	)
Gross amount of recognized assets and liabilities (1) (2)			781			(811	)		900			(982	)		582			(585	)
Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position (2)			(667	)		749			(781	)		902			(452	)		546
Net amounts of assets and liabilities presented in our unaudited Condensed Consolidated Statements of Financial Position (3)		$	114		$	(62	)	$	119		$	(80	)	$	130		$	(39	)

Schedule of Derivative Instruments [Table Text Block]

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Designated as cash flow or fair value hedges
Natural gas contracts - net gain reclassified from OCI into cost of goods sold	$	2		$	1		$	5		$	1
Natural gas contracts - net gain reclassified from OCI into operation and maintenance expense		-			-			1			-
Interest rate swaps - net loss reclassified from OCI into interest expense		-			-			-			(3	)
Income tax benefit		(1	)		-			(1	)		1
Net of tax		1			1			5			(1	)
Not designated as hedges (1)
Natural gas contracts - net fair value adjustments recorded in operating revenues		30			22			-			(2	)
Natural gas contracts - net fair value adjustments recorded in cost of goods sold (2)		(1	)		(1	)		1			(1	)
Income tax benefit		(11	)		(8	)		-			1
Net of tax		18			13			1			(2	)
Total gains (losses) on derivative instruments	$	19		$	14		$	6		$	(3	)

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Note 8 - Equity (Details) - Reclassifications Out of Accumulated Other Comprehensive Loss (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Cash flow hedges
Interest expense (interest rate contracts)	$ (48)		$ (46)		$ (96)		$ (92)
Total before income tax	106		84		665		341
Income tax benefit	41		33		248		127
Net of tax	64		49		354		203
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | Natural Gas Derivatives [Member]
Cash flow hedges
Cost of goods sold (natural gas contracts)	2	[1]	1	[1]	5	[1]	1	[1]
Operation and maintenance expense (natural gas contracts)					1
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Cash flow hedges
Interest expense (interest rate contracts)		[1]		[1]		[1]	(3)	[1]
Total before income tax	2	[1]	1	[1]	6	[1]	(2)	[1]
Income tax benefit	(1)	[1]		[1]	(1)	[1]	1	[1]
Net of tax	1	[1]	1	[1]	5	[1]	(1)	[1]
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Cash flow hedges
Total before income tax	(5)	[1]	(7)	[1]	(7)	[1]	(11)	[1]
Income tax benefit	2	[1]	3	[1]	3	[1]	4	[1]
Net of tax	(3)	[1]	(4)	[1]	(4)	[1]	(7)	[1]
Retirement benefit plans
Operation and maintenance expense (actuarial losses)(2)	(6)	[1],[2]	(7)	[1],[2]	(8)	[1],[2]	(13)	[1],[2]
Operation and maintenance expense (prior service credits) (2)	1	[1],[2]		[1],[2]	1	[1],[2]	2	[1],[2]
Reclassification out of Accumulated Other Comprehensive Income [Member]
Cash flow hedges
Net of tax	$ (2)	[1]	$ (3)	[1]	$ 1	[1]	$ (8)	[1]

[1] Amounts in parentheses indicate debits, or reductions, to our net income and credits to accumulated other comprehensive loss. Except for retirement benefit plan amounts, the net income impacts are immediate.

[2] Amortization of these accumulated other comprehensive loss components is included in the computation of net periodic benefit cost. See Note 6 for additional details about net periodic benefit cost.

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Note 4 - Fair Value Measurements (Details) - Derivative Assets and Liabilities (Natural Gas Derivatives [Member], USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Natural gas derivatives
Derivative Assets	$ 111	[1],[2],[3]	$ 116	[1],[2],[3]	$ 129	[1],[2],[3]
Derivative Liabilities	(62)	[2],[3]	(80)	[2],[3]	(39)	[2],[3]
Netting of cash collateral	46	[1]	43	[1]	47	[1]
Netting of cash collateral	36		78		47
Fair Value, Inputs, Level 1 [Member]
Natural gas derivatives
Derivative Assets	8	[1]	6	[1]	4	[1]
Derivative Liabilities	(38)		(79)		(51)
Fair Value, Inputs, Level 2 [Member]
Natural gas derivatives
Derivative Assets	57	[1]	67	[1]	78	[1]
Derivative Liabilities	$ (60)		$ (79)		$ (35)

[1] Balances of $3 million at June 30, 2014, $3 million at December 31, 2013 and $1 million at June 30, 2013 associated with certain weather derivatives have been excluded, as they are accounted for based on intrinsic value rather than fair value.

[2] There were no significant unobservable inputs (Level 3) for any of the dates presented.

[3] There were no significant transfers between Level 1, Level 2 or Level 3 for any of the dates presented.

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Note 7 - Debt and Credit Facilities (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

			June 30, 2014							June 30, 2013
Dollars in millions	Year(s) due		Weighted average interest rate (1)			Outstanding		Outstanding at December 31, 2013		Weighted average interest rate (1)			Outstanding
Short-term debt
Commercial paper - AGL Capital (2)	2014			0.3	%	$	236	$	857		0.5	%	$	521
Commercial paper - Nicor Gas (2)	2014			0.2			212		314		0.4			-
Total short-term debt				0.3	%	$	448	$	1,171		0.5	%	$	521
Current portion of long-term debt	2015			5.0	%	$	200	$	-		4.5	%	$	-
Long-term debt - excluding current portion
Senior notes		2016-2043		5.0	%	$	2,625	$	2,825		5.1	%	$	2,825
First mortgage bonds		2016-2038		5.6			500		500		5.6			500
Gas facility revenue bonds		2022-2033		0.9			200		200		0.5			200
Medium-term notes		2017-2027		7.8			181		181		7.8			181
Total principal long-term debt				4.9	%		3,506		3,706		4.9	%		3,706
Fair value adjustment of long-term debt (3)		2016-2038	n/a				85		91	n/a				97
Unamortized debt premium, net	n/a		n/a				16		16	n/a				16
Total non-principal long-term debt			n/a				101		107	n/a				113
Total long-term debt						$	3,607	$	3,813				$	3,819
Total debt						$	4,255	$	4,984				$	4,340

Schedule of Capitalization [Table Text Block]

	June 30, 2014			December 31, 2013			June 30, 2013
AGL Credit Facility		51	%		57	%		54	%
Nicor Gas Credit Facility		52	%		55	%		43	%

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Note 8 - Equity (Tables)

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	2014									2013
In millions (1)	Cash flow hedges			Retirement benefit plans			Total			Cash flow hedges			Retirement benefit plans			Total
For the three months ended June 30
As of beginning of period	$	1		$	(136	)	$	(135	)	$	1		$	(212	)	$	(211	)
OCI, before reclassifications		-			-			-			(1	)		-			(1	)
Amounts reclassified from accumulated OCI		(1	)		3			2			(1	)		4			3
Net current-period other comprehensive (loss) income		(1	)		3			2			(2	)		4			2
As of end of period	$	-		$	(133	)	$	(133	)	$	(1	)	$	(208	)	$	(209	)

For the six months ended June 30
As of beginning of period	$	1		$	(137	)	$	(136	)	$	(3	)	$	(215	)	$	(218	)
OCI, before reclassifications		4			-			4			1			-			1
Amounts reclassified from accumulated OCI		(5	)		4			(1	)		1			7			8
Net current-period other comprehensive income		(1	)		4			3			2			7			9
As of end of period	$	-		$	(133	)	$	(133	)	$	(1	)	$	(208	)	$	(209	)

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

	Three months ended June 30,						Six months ended June 30,
In millions (1)	2014			2013			2014			2013
Cash flow hedges
Cost of goods sold (natural gas contracts)	$	2		$	1		$	5		$	1
Operation and maintenance expense (natural gas contracts)		-			-			1			-
Interest expense (interest rate contracts)		-			-			-			(3	)
Total before income tax		2			1			6			(2	)
Income tax benefit		(1	)		-			(1	)		1
Total cash flow hedges		1			1			5			(1	)
Retirement benefit plans
Operation and maintenance expense (actuarial losses)(2)		(6	)		(7	)		(8	)		(13	)
Operation and maintenance expense (prior service credits) (2)		1			-			1			2
Total before income tax		(5	)		(7	)		(7	)		(11	)
Income tax benefit		2			3			3			4
Total retirement benefit plans		(3	)		(4	)		(4	)		(7	)
Total reclassification for the period	$	(2	)	$	(3	)	$	1		$	(8	)

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Condensed Consolidated Statements of Equity (Unaudited) (USD $) In Millions, except Share data	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2012	$ 590	$ 2,014	$ 1,035	$ (218)	$ (8)	$ 22	$ 3,435
Balance (in Shares) at Dec. 31, 2012	117,900,000
Net income			203			11	214
Other comprehensive income				9			9
Dividends on common stock			(111)				(111)
Distributions to noncontrolling interest						(17)	(17)
Stock granted, share-based compensation, net of forfeitures		(6)					(6)
Stock issued, dividend reinvestment plan	1	5					6
Stock issued, dividend reinvestment plan (in Shares)	100,000
Stock issued, share-based compensation, net of forfeitures	3	18					21
Stock issued, share-based compensation, net of forfeitures (in Shares)	600,000
Stock-based compensation expense, net of tax		4					4
Balance at Jun. 30, 2013	594	2,035	1,127	(209)	(8)	16	3,555
Balance (in Shares) at Jun. 30, 2013	118,600,000						118,560,687
Balance at Dec. 31, 2013	595	2,054	1,126	(136)	(8)	45	3,676
Balance (in Shares) at Dec. 31, 2013	118,900,000						118,888,876
Net income			354			14	368
Other comprehensive income				3			3
Dividends on common stock			(117)				(117)
Distributions to noncontrolling interest						(17)	(17)
Stock granted, share-based compensation, net of forfeitures		(12)					(12)
Stock issued, dividend reinvestment plan		5					5
Stock issued, share-based compensation, net of forfeitures	3	17					20
Stock issued, share-based compensation, net of forfeitures (in Shares)	600,000
Stock-based compensation expense, net of tax		8					8
Balance at Jun. 30, 2014	$ 598	$ 2,072	$ 1,363	$ (133)	$ (8)	$ 42	$ 3,934
Balance (in Shares) at Jun. 30, 2014	119,500,000						119,464,063

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Note 9 - Non-Wholly Owned Entities (Tables)

6 Months Ended

Jun. 30, 2014

Noncontrolling Interest [Abstract]

Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Table Text Block]

	June 30, 2014							December 31, 2013							June 30, 2013
In millions	Consolidated		SouthStar (1)		% (2)			Consolidated		SouthStar (1)		% (2)			Consolidated		SouthStar (1)		% (2)
Current assets	$	2,431	$	250		10	%	$	2,945	$	264		9	%	$	2,277	$	135		6	%
Goodwill and intangible assets		1,974		137		7			1,981		139		7			1,986		-		-
Long-term assets and other deferred debits		9,897		21		-			9,730		12		-			9,532		10		-
Total assets	$	14,302	$	408		3	%	$	14,656	$	415		3	%	$	13,795	$	145		1	%
Current liabilities	$	2,596	$	124		5	%	$	3,123	$	95		3	%	$	2,349	$	40		2	%
Long-term liabilities and other deferred credits		7,772		16		-			7,857		-		-			7,891		-		-
Total Liabilities		10,368		140		1			10,980		95		1			10,240		40		-
Equity		3,934		268		7			3,676		320		9			3,555		105		3
Total liabilities and equity	$	14,302	$	408		3	%	$	14,656	$	415		3	%	$	13,795	$	145		1	%

Schedule of Variable Interest Entities [Table Text Block]

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Operating revenues	$	145	$	116	$	519	$	366
Operating expenses
Cost of goods sold		111		95		381		259
Operation and maintenance		20		15		44		33
Depreciation and amortization		2		-		4		1
Taxes other than income taxes		1		1		1		1
Total operating expenses		134		111		430		294
Operating income	$	11	$	5	$	89	$	72

Equity Method Investments [Table Text Block]

In millions	2014		2013
Triton	$	65	$	71
Horizon Pipeline		15		16
Other (1)		1		9
Total	$	81	$	96

Schedule of Other Nonoperating Income, by Component [Table Text Block]

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Triton	$	1	$	2	$	3	$	4
Other		-		-		1		1

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Note 3 - Regulated Operations (Details) - Summary of Regulatory Assets and Liabilities (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Regulatory assets
Regulatory assets, current	$ 211	$ 162	$ 120
Regulatory assets, long-term	775	737	898
Total regulatory assets	986	899	1,018
Regulatory liabilities
Regulatory liabilities, current	149	183	216
Regulatory liabilities, long-term	1,565	1,518	1,510
Total regulatory liabilities	1,714	1,701	1,726
Accrued natural gas costs [Member]
Regulatory liabilities
Regulatory liabilities, current	41	92	130
Bad Debt Rider [Member]
Regulatory liabilities
Regulatory liabilities, current	39	41	39
Regulatory liabilities, long-term	9	17	20
Accumulated removal costs [Member]
Regulatory liabilities
Regulatory liabilities, current	27	27	17
Regulatory liabilities, long-term	1,478	1,445	1,431
Seasonal Rates [Member]
Regulatory liabilities
Regulatory liabilities, current	8		8
Other Regulatory Liabilities [Member]
Regulatory liabilities
Regulatory liabilities, current	34	23	22
Regulatory liabilities, long-term	27	3	6
Regulatory Income Tax Liability [Member]
Regulatory liabilities
Regulatory liabilities, long-term	27	27	26
Unamortized investment tax credit [Member]
Regulatory liabilities
Regulatory liabilities, long-term	24	26	27
Deferred Natural Gas Costs [Member]
Regulatory assets
Regulatory assets, current	79	1
Recoverable Regulatory Infrastructure Program Costs [Member]
Regulatory assets
Regulatory assets, current	47	48	46
Regulatory assets, long-term	107	87	116
Recoverable Environmental Remediation Costs [Member]
Regulatory assets
Regulatory assets, current	33	45	27
Regulatory assets, long-term	454	433	458
Recoverable Pension And Other Retirement Benefit Costs [Member]
Regulatory assets
Regulatory assets, current	9	9	19
Regulatory assets, long-term	94	99	188
Other Regulatory Assets [Member]
Regulatory assets
Regulatory assets, current	43	59	28
Regulatory assets, long-term	42	36	50
Long-Term Debt Fair Value Adjustment [Member]
Regulatory assets
Regulatory assets, long-term	$ 78	$ 82	$ 86

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Note 7 - Debt and Credit Facilities (Details) - Debt Schedule (USD $) In Millions, unless otherwise specified																																																															6 Months Ended
	Jun. 30, 2014		Dec. 31, 2013	Jun. 30, 2013		Jun. 30, 2014 Commercial Paper [Member] AGL Capital [Member]		Dec. 31, 2013 Commercial Paper [Member] AGL Capital [Member]		Jun. 30, 2013 Commercial Paper [Member] AGL Capital [Member]		Jun. 30, 2014 Commercial Paper [Member] Nicor Gas [Member]		Dec. 31, 2013 Commercial Paper [Member] Nicor Gas [Member]		Jun. 30, 2013 Commercial Paper [Member] Nicor Gas [Member]		Jun. 30, 2014 Commercial Paper [Member]		Dec. 31, 2013 Commercial Paper [Member]	Jun. 30, 2013 Commercial Paper [Member]		Jun. 30, 2014 Current Portion Long-Term Debt [Member]		Jun. 30, 2013 Current Portion Long-Term Debt [Member]		Jun. 30, 2014 Senior Notes [Member]		Dec. 31, 2013 Senior Notes [Member]	Jun. 30, 2013 Senior Notes [Member]		Jun. 30, 2014 First Mortgage Bonds [Member]		Dec. 31, 2013 First Mortgage Bonds [Member]	Jun. 30, 2013 First Mortgage Bonds [Member]		Jun. 30, 2014 Gas Facility Revenue Bonds [Member]		Dec. 31, 2013 Gas Facility Revenue Bonds [Member]	Jun. 30, 2013 Gas Facility Revenue Bonds [Member]		Jun. 30, 2014 Medium-term Notes [Member]		Dec. 31, 2013 Medium-term Notes [Member]	Jun. 30, 2013 Medium-term Notes [Member]		Jun. 30, 2014 Long-Term Debt Principal [Member]		Dec. 31, 2013 Long-Term Debt Principal [Member]	Jun. 30, 2013 Long-Term Debt Principal [Member]		Jun. 30, 2014 Fair Value Adjustment [Member]		Dec. 31, 2013 Fair Value Adjustment [Member]		Jun. 30, 2013 Fair Value Adjustment [Member]		Jun. 30, 2014 Long-Term Debt Non-Principal [Member]		Dec. 31, 2013 Long-Term Debt Non-Principal [Member]	Jun. 30, 2013 Long-Term Debt Non-Principal [Member]		Jun. 30, 2014 Minimum [Member]
Short-term debt
Weighted average interest rate						0.30%	[1],[2]			0.50%	[1],[2]	0.20%	[1],[2]			0.40%	[1],[2]	0.30%	[1]		0.50%	[1]	5.00%	[1]	4.50%	[1]
Outstanding						$ 236	[2]	$ 857	[2]	$ 521	[2]	$ 212	[2]	$ 314	[2]		[2]	$ 448		$ 1,171	$ 521		$ 200
Long-term debt - excluding current portion
Weighted average interest rate																											5.00%	[1]		5.10%	[1]	5.60%	[1]		5.60%	[1]	0.90%	[1]		0.50%	[1]	7.80%	[1]		7.80%	[1]	4.90%	[1]		4.90%	[1]		[1],[3]				[1],[3]		[1]			[1]
Outstanding	3,607		3,813	3,819																							2,625		2,825	2,825		500		500	500		200		200	200		181		181	181		3,506		3,706	3,706		85	[3]	91	[3]	97	[3]	101		107	113
Unamortized debt premium, net																																																															. NaN, NaN
Unamortized debt premium, net		[1]			[1]
Unamortized debt premium, net	16		16	16
Total debt	$ 4,255		$ 4,984	$ 4,340

[1] Interest rates are calculated based on the daily weighted average balance outstanding for the six months ended June 30.

[2] As of June 30, 2014, the effective interest rates on our commercial paper borrowings were 0.3% for AGL Capital and 0.2% for Nicor Gas.

[3] See Note 4 for additional information on our fair value measurements.

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Condensed Consolidated Statements of Financial Position (Unaudited) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Current assets
Cash and cash equivalents	$ 122		$ 81		$ 153
Short-term investments	8		49		41
Receivables
Energy marketing	677		786		608
Gas, unbilled and other	520		736		403
Less allowance for uncollectible accounts	51		29		41
Total receivables, net	1,146		1,493		970
Inventories, net	460		658		522
Assets held for sale	257		283		289
Regulatory assets	211		162		120
Derivative instruments	105		99		113
Other	122		120		69
Total current assets	2,431		2,945		2,277
Long-term assets and other deferred debits
Property, plant and equipment	11,202		10,952		10,613
Less accumulated depreciation	2,401		2,295		2,240
Property, plant and equipment, net	8,801		8,657		8,373
Goodwill	1,827	[1]	1,827	[1]	1,822	[1]
Regulatory assets	775		737		898
Intangible assets	147		154		164
Derivative instruments	9		20		17
Other	312		316		244
Total long-term assets and other deferred debits	11,871		11,711		11,518
Total assets	14,302		14,656		13,795
Current liabilities
Energy marketing trade payables	724		671		628
Short-term debt	448		1,171		521
Other accounts payable - trade	319		421		336
Accrued expenses	213		203		164
Current portion of long-term debt	200
Regulatory liabilities	149		183		216
Temporary LIFO liquidation	116				84
Customer deposits and credit balances	107		136		114
Accrued environmental remediation liabilities	90		70		62
Derivative instruments	50		75		33
Liabilities held for sale	39		40		38
Other	141		153		153
Total current liabilities	2,596		3,123		2,349
Long-term liabilities and other deferred credits
Long-term debt	3,607		3,813		3,819
Accumulated deferred income taxes	1,721		1,667		1,567
Regulatory liabilities	1,565		1,518		1,510
Accrued pension and retiree welfare benefits	405		404		510
Accrued environmental remediation liabilities	379		377		406
Derivative instruments	12		5		6
Other	83		73		73
Total long-term liabilities and other deferred credits	7,772		7,857		7,891
Total liabilities and other deferred credits	10,368		10,980		10,240
Equity
Common stock, $5 par value; 750,000,000 shares authorized: outstanding: 119,464,063 shares at June 30, 2014, 118,888,876 shares at December 31, 2013 and 118,560,687 shares at June 30, 2013	598		595		594
Additional paid-in capital	2,072		2,054		2,035
Retained earnings	1,363		1,126		1,127
Accumulated other comprehensive loss	(133)		(136)		(209)
Treasury shares, at cost: 216,523 shares at June 30, 2014 and December 31, 2013 and June 30, 2013	(8)		(8)		(8)
Total common shareholders’ equity	3,892		3,631		3,539
Noncontrolling interest	42		45		16
Total equity	3,934		3,676		3,555
Total liabilities and equity	$ 14,302		$ 14,656		$ 13,795

[1] Excludes goodwill at Tropical Shipping now classified as held for sale. See Note 12 for additional information.

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Note 4 - Fair Value Measurements (Details) - Amortized Cost and Fair Value of Long-Term Debt (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Note 4 - Fair Value Measurements (Details) - Amortized Cost and Fair Value of Long-Term Debt [Line Items]
Long-term debt carrying amount	$ 3,807		$ 3,813		$ 3,819
Fair Value, Inputs, Level 2 [Member]
Note 4 - Fair Value Measurements (Details) - Amortized Cost and Fair Value of Long-Term Debt [Line Items]
Long-term debt fair value (1)	$ 4,191	[1]	$ 3,956	[1]	$ 4,070	[1]

[1] Fair value determined using Level 2 inputs.

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net income	$ 66	$ 50	$ 368	$ 214
Less income (loss) from discontinued operations, net of tax	1	(1)	(49)
Income from continuing operations	65	51	417	214
Retirement benefit plans
Reclassification of actuarial losses to net benefit cost (net of income tax of $2 and $3 for the three and six months ended June 30, 2014, and $3 and $5 for the three and six months ended June 30, 2013)	4	4	5	8
Reclassification of prior service credits to net benefit cost (net of income tax of $(1) for the six months ended June 30, 2013)	(1)		(1)	(1)
Retirement benefit plans	3	4	4	7
Cash flow hedges, net of tax
Net derivative instrument (losses) gains arising during the period (net of income tax of $1 for the three months ended June 30, 2013)		(1)	4	1
Reclassification of realized derivative instrument (gains) losses to net income (net of income tax of $(1) for the three and six months ended June 30, 2014 and $1 for the six months ended June 30, 2013)	(1)	(1)	(5)	1
Cash flow hedges, net	(1)	(2)	(1)	2
Other comprehensive income, net of tax	2	2	3	9
Comprehensive income	67	53	420	223
Less comprehensive income attributable to noncontrolling interest	2	1	14	11
Comprehensive income from continuing operations attributable to AGL Resources Inc.	$ 65	$ 52	$ 406	$ 212

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Note 9 - Non-Wholly Owned Entities (Details) - SouthStar’s Revenues and Expenses (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Variable Interest Entity [Line Items]
Operating revenues	$ 902	$ 816	$ 3,376	$ 2,438
Operating income	152	123	756	421
Cost of goods sold	402	353	1,802	1,273
Operation and maintenance	211	205	500	437
Depreciation and amortization	95	103	188	206
Taxes other than income taxes	42	43	130	112
Total operating expenses	750	704	2,620	2,028
South Star [Member]
Variable Interest Entity [Line Items]
Operating revenues	145	116	519	366
Operating income	11	5	89	72
Cost of goods sold	111	95	381	259
Operation and maintenance	20	15	44	33
Depreciation and amortization	2		4	1
Taxes other than income taxes	1	1	1	1
Total operating expenses	$ 134	$ 111	$ 430	$ 294

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Note 2 - Significant Accounting Policies and Methods of Application (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended					3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Midstream Operations [Member] Goodwill [Member]	Dec. 31, 2013 Midstream Operations [Member]	Jun. 30, 2014 Midstream Operations [Member] Less Than [Member]	Jun. 30, 2014 Integrity Tests Performed at Storage Facilities [Member]	Jun. 30, 2014 Integrity Tests Performed at Storage Facilities [Member]	Jun. 30, 2014 Tropical Shipping [Member]	Dec. 31, 2013 Tropical Shipping [Member]	Jun. 30, 2013 Tropical Shipping [Member]
Note 2 - Significant Accounting Policies and Methods of Application (Details) [Line Items]
Investments and Cash										$ 15	$ 24	$ 31
Inventory Write-down	$ 4	$ 8	$ 6	$ 8				$ 2	$ 9
Percent Goodwill Exceeds Carrying Value						5.00%	10.00%
Fair Value Inputs, Long-term Revenue Growth Rate					2.50%
Fair Value Inputs, Discount Rate					7.00%

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Note 11 - Segment Information (Details) - Intersegment Reporting (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013		Dec. 31, 2013
Segment Reporting Information [Line Items]
Revenues	$ 902		$ 816		$ 3,376		$ 2,438
Operating expenses
Cost of goods sold	402		353		1,802		1,273
Operation and maintenance	211		205		500		437
Depreciation and amortization	95		103		188		206
Taxes other than income taxes	42		43		130		112
Total operating expenses	750		704		2,620		2,028
Gain on disposition of assets			11				11
Operating income (loss)	152		123		756		421
Other income	2		7		5		12
EBIT	154		130		761		433
Identifiable and total assets	14,302		13,795		14,302		13,795		14,656
Capital expenditures	171		168		332		315
Intersegment Eliminations [Member] | Distribution Operations [Member]
Segment Reporting Information [Line Items]
Revenues	43		43	[1]	118		98
Intersegment Eliminations [Member] | Retail Operations [Member]
Segment Reporting Information [Line Items]
Revenues	1			[1]	1
Intersegment Eliminations [Member] | Wholesale Services [Member]
Segment Reporting Information [Line Items]
Revenues		[1]		[1]		[1]		[1]
Intersegment Eliminations [Member] | Midstream Operations [Member]
Segment Reporting Information [Line Items]
Revenues				[1]
Intersegment Eliminations [Member] | Other Segments [Member]
Segment Reporting Information [Line Items]
Revenues	(44)	[2]	(43)	[2]	(119)	[2]	(98)	[2]
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues				[1]
Operating Segments [Member] | Distribution Operations [Member]
Segment Reporting Information [Line Items]
Revenues	711		658		2,524		1,977
Operating Segments [Member] | Retail Operations [Member]
Segment Reporting Information [Line Items]
Revenues	177		165		583		467
Operating Segments [Member] | Wholesale Services [Member]
Segment Reporting Information [Line Items]
Revenues	47	[1]	21	[1]	380	[1]	60	[1]
Operating Segments [Member] | Midstream Operations [Member]
Segment Reporting Information [Line Items]
Revenues	17		15		61		39
Operating Segments [Member] | Other Segments [Member]
Segment Reporting Information [Line Items]
Revenues	(50)	[2]	(43)	[2]	(172)	[2]	(105)	[2]
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	902		816		3,376		2,438
Distribution Operations [Member] | Continuing Operations [Member]
Operating expenses
Identifiable and total assets	11,624	[3]	11,166	[3]	11,624	[3]	11,166	[3]
Distribution Operations [Member]
Segment Reporting Information [Line Items]
Revenues	668		615		2,406		1,879
Operating expenses
Cost of goods sold	315		266		1,517		1,031
Operation and maintenance	159		159		370		344
Depreciation and amortization	80		90		160		180
Taxes other than income taxes	40		38		122		102
Total operating expenses	594		553		2,169		1,657
Operating income (loss)	117		105		355		320
Other income	3		4		4		7
EBIT	120		109		359		327
Identifiable and total assets									11,727	[4]
Capital expenditures	158		158		308		295
Retail Operations [Member] | Continuing Operations [Member]
Operating expenses
Identifiable and total assets	683	[3]	641	[3]	683	[3]	641	[3]
Retail Operations [Member]
Segment Reporting Information [Line Items]
Revenues	176		165		582		467
Operating expenses
Cost of goods sold	119		115		399		310
Operation and maintenance	34		32		71		63
Depreciation and amortization	5		5		11		10
Taxes other than income taxes	1		1		2		2
Total operating expenses	159		153		483		385
Operating income (loss)	18		12		100		82
EBIT	18		12		100		82
Identifiable and total assets									694	[4]
Capital expenditures	3		3		6		4
Wholesale Services [Member] | Continuing Operations [Member]
Operating expenses
Identifiable and total assets	1,207	[1],[3]	1,008	[1],[3]	1,207	[1],[3]	1,008	[1],[3]
Wholesale Services [Member]
Segment Reporting Information [Line Items]
Revenues	47	[1]	21	[1]	380	[1]	60	[1]
Operating expenses
Cost of goods sold	7	[1]	10	[1]	10	[1]	20	[1]
Operation and maintenance	13	[1]	10	[1]	49	[1]	23	[1]
Depreciation and amortization	1	[1]	1	[1]	1	[1]	1	[1]
Taxes other than income taxes		[1]		[1]	1	[1]	1	[1]
Total operating expenses	21	[1]	21	[1]	61	[1]	45	[1]
Gain on disposition of assets			11	[1]			11	[1]
Operating income (loss)	26	[1]	11	[1]	319	[1]	26	[1]
Other income	(3)	[1]		[1]	(3)	[1]		[1]
EBIT	23	[1]	11	[1]	316	[1]	26	[1]
Identifiable and total assets									1,166	[4]
Capital expenditures		[1]		[1]	1	[1]		[1]
Midstream Operations [Member] | Continuing Operations [Member]
Operating expenses
Identifiable and total assets	699	[3]	715	[3]	699	[3]	715	[3]
Midstream Operations [Member]
Segment Reporting Information [Line Items]
Revenues	17		15		61		39
Operating expenses
Cost of goods sold	11		4		47		16
Operation and maintenance	7		6		13		12
Depreciation and amortization	4		4		9		8
Taxes other than income taxes	2		2		3		3
Total operating expenses	24		16		72		39
Operating income (loss)	(7)		(1)		(11)
Other income			1		1		2
EBIT	(7)				(10)		2
Identifiable and total assets									713	[4]
Capital expenditures	5		4		5		8
Other Segments [Member] | Continuing Operations [Member]
Operating expenses
Identifiable and total assets	(168)	[2],[3]	(24)	[2],[3]	(168)	[2],[3]	(24)	[2],[3]
Other Segments [Member]
Segment Reporting Information [Line Items]
Revenues	(6)	[2]		[2]	(53)	[2]	(7)	[2]
Operating expenses
Cost of goods sold	(50)	[2]	(42)	[2]	(171)	[2]	(104)	[2]
Operation and maintenance	(2)	[2]	(2)	[2]	(3)	[2]	(5)	[2]
Depreciation and amortization	5	[2]	3	[2]	7	[2]	7	[2]
Taxes other than income taxes	(1)	[2]	2	[2]	2	[2]	4	[2]
Total operating expenses	(48)	[2]	(39)	[2]	(165)	[2]	(98)	[2]
Gain on disposition of assets				[2]				[2]
Operating income (loss)	(2)	[2]	(4)	[2]	(7)	[2]	(7)	[2]
Other income	2	[2]	2	[2]	3	[2]	3	[2]
EBIT		[2]	(2)	[2]	(4)	[2]	(4)	[2]
Identifiable and total assets									73	[4],[5],[6]
Capital expenditures	5	[2]	3	[2]	12	[2]	8	[2]
Continuing Operations [Member]
Operating expenses
Identifiable and total assets	$ 14,045	[3]	$ 13,506	[3]	$ 14,045	[3]	$ 13,506	[3]	$ 14,373	[4]

[1] Wholesale services records its energy marketing and risk management revenues on a net basis. A reconciliation of our operating revenues and our intercompany revenues is shown in the following table.

[2] The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations. Our other segment now also includes our investment in Triton, which was part of our cargo shipping segment and has been classified as discontinued operations. For more information see Note 12.

[3] Identifiable assets are those used in each segment's operations and do not include the assets held for sale.

[4] Identifiable assets are those assets used in each segment's operations and exclude the assets held for sale.

[5] The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations.

[6] Includes our investment in Triton that was previously part of the cargo shipping segment.

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Note 12 - Discontinued Operations

6 Months Ended

Jun. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 12 - Discontinued Operations

On April 4, 2014, we entered into a definitive agreement to sell Tropical Shipping and expect to close the transaction during the third quarter of 2014. After-tax cash proceeds and distributions from the transaction are expected to be approximately $220 million, subject to certain defined post-closing adjustments. Accordingly, we determined that the cumulative foreign earnings of Tropical Shipping would no longer be indefinitely reinvested offshore, and recognized income tax expense of $31 million in the first quarter of 2014 related to the cumulative foreign earnings for which no tax liabilities had previously been recorded. As of June 30, 2014, we had $55 million of deferred income tax liabilities on our unaudited Condensed Consolidated Statements of Financial Position related to the cumulative earnings of our foreign subsidiaries that have not been repatriated.

During the first quarter of 2014, based upon the negotiated sales price, we recorded a goodwill impairment charge of $19 million, for which there is no income tax benefit. Additionally, we suspended depreciation and amortization of the Tropical Shipping assets for which we recognized a $4 million pre-tax loss in the second quarter of 2014. Completion of the transaction is conditioned upon certain factors, including approval by the Florida Office of Insurance Regulation. The assets and liabilities of Tropical Shipping classified as held for sale on the unaudited Condensed Consolidated Statements of Financial Position are as follows:

	June 30,		December 31,		June 30,
In millions	2014		2013		2013
Current assets
Cash and cash equivalents	$	15	$	24	$	31
Short-term investments		3		1		1
Receivables		35		36		34
Inventories		9		9		8
Other		2		1		1
Total current assets		64		71		75
Long-term assets and other deferred debits
Property, plant and equipment, net		127		124		125
Goodwill		42		61		61
Intangible assets		19		19		20
Other		5		8		8
Total long-term assets and other deferred debits		193		212		214
Total assets held for sale	$	257	$	283	$	289
Current liabilities
Other accounts payable - trade	$	9	$	11	$	8
Accrued expenses		7		7		6
Other		23		22		24
Total liabilities held for sale	$	39	$	40	$	38

The financial results of these businesses are reflected as discontinued operations, and all prior periods presented have been recast to reflect the discontinued operations. The components of discontinued operations recorded on the unaudited Condensed Consolidated Statements of Income are as follows:

	Three months ended June 30,					Six months ended June 30,
In millions	2014		2013			2014			2013
Operating revenues	$	92	$	88		$	181		$	175
Operating expenses
Cost of goods sold		57		54			111			107
Operation and maintenance		27		29			55			55
Depreciation and amortization (1)		-		6			5			10
Taxes other than income taxes		3		-			4			3
Loss on sale and goodwill impairment (2)		4		-			23			-
Total operating expenses		91		89			198			175
Operating income (loss)		1		(1	)		(17	)		-
Income (loss) before income taxes		1		(1	)		(17	)		-
Income tax expense (3)		-		-			(32	)		-
Income (loss) from discontinued operations, net of tax	$	1	$	(1	)	$	(49	)	$	-

(1) We ceased depreciating and amortizing Tropical Shipping’s assets on April 4, 2014 as a result of entering into an agreement to sell this business and the assets were classified as held for sale.

(2) Relates to the suspension of depreciation and amortization of $4 million and $19 million of goodwill attributable to Tropical Shipping that was impaired as of March 31, 2014 based on the negotiated sales price.

(3) Expense for the six months ended 2014 includes $31 million that was recorded in the first quarter of 2014 related to the cumulative foreign earnings for which no tax liabilities previously had been recorded.

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Note 2 - Significant Accounting Policies and Methods of Application (Details) - Changes in Amount of Goodwill (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2014		Dec. 31, 2013		Dec. 31, 2012
Goodwill [Line Items]
Goodwill	$ 1,822	[1]	$ 1,827	[1]	$ 1,827	[1]	$ 1,776	[1]
2013 activity	46	[1]
Distribution Operations [Member]
Goodwill [Line Items]
Goodwill	1,640		1,640		1,640		1,640
Retail Operations [Member]
Goodwill [Line Items]
Goodwill	168		173		173		122
2013 activity	46
Midstream Operations [Member]
Goodwill [Line Items]
Goodwill	$ 14		$ 14		$ 14		$ 14

[1] Excludes goodwill at Tropical Shipping now classified as held for sale. See Note 12 for additional information.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our estimates may involve complex situations requiring a high degree of judgment either in the application and interpretation of existing literature or in the development of estimates that impact our financial statements. The most significant estimates relate to our rate-regulated subsidiaries, uncollectible accounts and other allowances for contingent losses, goodwill and other intangible assets, retirement plan benefit obligations, derivative and hedging activities and provisions for income taxes. We evaluate our estimates on an ongoing basis, and our actual results could differ from our estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Our cash and cash equivalents primarily consist of cash on deposit, money market accounts and certificates of deposit held by domestic subsidiaries with original maturities of three months or less. As of June 30, 2014 and 2013, and December 31, 2013, $15 million, $31 million and $24 million, respectively, of cash and short and long-term investments held by Tropical Shipping are excluded from cash and cash equivalents and are included in assets held for sale. For more information on the sale of Tropical Shipping, see Note 12.

Energy Marketing Receivables And Payables [Policy Text Block]

Energy Marketing Receivables and Payables

Our wholesale services segment provides services to retail and wholesale marketers and utility and industrial customers. These customers, also known as counterparties, utilize netting agreements that enable our wholesale services segment to net receivables and payables by counterparty upon settlement. Wholesale services also nets across product lines and against cash collateral, provided the master netting and cash collateral agreements include such provisions. While the amounts due from, or owed to, wholesale services’ counterparties are settled net, they are recorded on a gross basis in our unaudited Condensed Consolidated Statements of Financial Position as energy marketing receivables and energy marketing payables.

Our wholesale services segment has trade and credit contracts that contain minimum credit rating requirements. These credit rating requirements typically give counterparties the right to suspend or terminate credit if our credit ratings are downgraded to non-investment grade status. Under such circumstances, wholesale services would need to post collateral to continue transacting business with some of its counterparties. To date, our credit ratings have exceeded the minimum requirements. As of June 30, 2014 and 2013, and December 31, 2013, the collateral that wholesale services would have been required to post if our credit ratings had been downgraded to non-investment grade status would not have had a material impact to our consolidated results of operations, cash flows or financial condition. If such collateral were not posted, wholesale services’ ability to continue transacting business with these counterparties would be negatively impacted.

Inventory, Policy [Policy Text Block]

Inventories

For our regulated utilities, except Nicor Gas, our natural gas inventories and the inventories we hold for Marketers in Georgia are carried at cost on a WACOG basis. In Georgia’s competitive environment, Marketers sell natural gas to firm end-use customers at market-based prices. Part of the unbundling process, which resulted from deregulation and provides this competitive environment, is the assignment to Marketers of certain pipeline services that Atlanta Gas Light has under contract. On a monthly basis, Atlanta Gas Light assigns the majority of the pipeline storage services that it has under contract to Marketers, along with a corresponding amount of inventory. Atlanta Gas Light also retains and manages a portion of its pipeline storage assets and related natural gas inventories for system balancing and to serve system demand. See Note 10 for information regarding a regulatory filing by Atlanta Gas Light related to natural gas inventory.

Nicor Gas’ inventory is carried at cost on a LIFO basis. Inventory decrements occurring during interim periods that are expected to be restored prior to year-end are charged to cost of goods sold at the estimated annual replacement cost, and the difference between this cost and the actual liquidated LIFO layer cost is recorded as a temporary LIFO inventory liquidation. Any temporary LIFO liquidation is included as a current liability in our unaudited Condensed Consolidated Statements of Financial Position. Interim inventory decrements that are not expected to be restored prior to year-end are charged to cost of goods sold at the actual LIFO cost of the layers liquidated. The inventory decrement as of June 30, 2014 is expected to be restored prior to year-end. The inventory decrement as of June 30, 2013 was restored prior to December 31, 2013.

Our retail operations, wholesale services and midstream operations segments carry inventory at the lower of cost or market value, where cost is determined on a WACOG basis. For these segments, we evaluate the weighted average cost of their natural gas inventories against market prices to determine whether any declines in market prices below the WACOG are other than temporary. For any declines considered to be other than temporary, we record adjustments to reduce the weighted average cost of the natural gas inventory to market value. For the three and six months ended June 30, 2014, we recorded $4 million and $6 million, respectively, total LOCOM adjustment to reduce the value of our inventories to market value and $8 million for the three and six months ended June 30, 2013.

Midstream operations’ primary activity is operating non-utility storage and pipeline facilities. Mechanical integrity tests and engineering studies are periodically performed on these storage facilities in accordance with certain state regulatory requirements. However, such tests may be performed in advance of such state requirements for operational purposes. During the first half of 2014, an engineering study and mechanical integrity tests were performed at one of our storage facilities, identifying a lower amount of working gas capacity that is the result of naturally occurring shrinkage of the storage caverns. Further, based on the lower capacity and an analysis of the volume of natural gas stored in the facility, we recorded additional gas costs to true-up the amount of retained fuel at this facility and in the amount of $2 million and $9 million for the three and six months ended June 30, 2014, respectively

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value Measurements

We have financial and nonfinancial assets and liabilities subject to fair value measurement. The financial assets and liabilities measured and carried at fair value include cash and cash equivalents, and derivative assets and liabilities. The carrying values of receivables, short- and long-term investments, accounts payable, short-term debt, other current assets and liabilities, and accrued interest approximate fair value. Our nonfinancial assets and liabilities include pension and other retirement benefits, which are presented in Note 4 to our Consolidated Financial Statements and in related notes included in Item 8 of our 2013 Form 10-K.

As defined in the authoritative guidance related to fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We classify fair value balances based on the observance of those inputs in accordance with the fair value hierarchy.

Derivatives, Policy [Policy Text Block]

Derivative Instruments

The fair value of the natural gas and weather derivative instruments that we use to manage exposures arising from changing natural gas prices and weather risk reflects the estimated amounts that we would receive or pay to terminate or close the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts. We use external market quotes and indices to value substantially all of our derivative instruments. See Note 4 and Note 5 for additional derivative disclosures.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

During the first quarter of 2014, we completed an engineering study at our midstream operations storage facilities that indicated a reduced forecast of working gas capacity from what was projected when our 2013 annual goodwill impairment analysis was performed during the fourth quarter of 2013. Given that the 2013 annual goodwill impairment test indicated that the estimated fair value of this reporting unit exceeded its carrying amount by less than 5%, we considered this reduced storage capacity as an indicator of potential impairment and, accordingly, conducted an interim goodwill impairment analysis during the first quarter of 2014.

The estimated fair value of this reporting unit was determined utilizing the income approach, which estimated the fair value based upon the present value of estimated future cash flows. The forecasts used in the income approach, which were updated during the first quarter of 2014 to reflect the contracting activity that occurred during the quarter, assume discrete period revenue growth through fiscal 2022 to reflect the recovery of subscription rates, stabilization of earnings and establishment of a reasonable base year that was used to estimate the terminal value in the valuation model. Consistent with our 2013 annual goodwill impairment testing, we assumed a long-term earnings growth rate in the terminal year of 2.5%, which we believe is appropriate given the current economic and industry specific expectations. As of the valuation date, we utilized a discount rate of 7.0%, which we believe is appropriate as it reflects the relative risk and the time value of money, and is consistent with the peer group of this reporting unit as well as the discount rates that were utilized in our 2013 annual goodwill impairment tests.

Our interim goodwill impairment test, which utilized cash flow forecasts providing for growth over the next eight years, indicated that the estimated fair value of this reporting unit continues to exceed its carrying amount with a cushion of less than 10%. However, continued declines in capacity or subscription rates, reductions to our cash flow forecasts, a sustained period at the current subscription rates or other changes to the assumptions and factors used in this analysis may result in a future failure of step one of the goodwill impairment test and require us to proceed to step two of the goodwill impairment test in a future period.

The risk of impairment of the underlying long-lived assets is not estimated to be significant as the assets have long remaining useful lives, and authoritative guidance requires such assets to be tested for impairment on the basis of undiscounted cash flows over their remaining useful lives. We will continue to monitor this reporting unit for potential impairment. Changes in the amount of goodwill for the six months ended June 30, 2014 and 2013 are provided in the following table.

In millions	Distribution Operations		Retail Operations		Midstream Operations		Consolidated (1)
Goodwill - December 31, 2012	$	1,640	$	122	$	14	$	1,776
2013 activity		-		46		-		46
Goodwill - June 30, 2013	$	1,640	$	168	$	14	$	1,822
Goodwill - December 31, 2013	$	1,640	$	173	$	14	$	1,827
Goodwill - June 30, 2014	$	1,640	$	173	$	14	$	1,827

(1) Excludes goodwill at Tropical Shipping now classified as held for sale. See Note 12 for additional information.

Other Income [Policy Text Block]

Other Income

Our other income is detailed in the following table. For more information on our equity method investment income, see Note 9.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Equity method investment income	$	1	$	2	$	4	$	5
AFUDC - equity		1		3		1		6
Other, net		-		2		-		1
Total other income	$	2	$	7	$	5	$	12

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Common Share

We compute basic earnings per common share attributable to AGL Resources Inc. common shareholders by dividing our net income attributable to AGL Resources Inc. by the daily weighted average number of common shares outstanding. Diluted earnings per common share attributable to AGL Resources Inc. common shareholders reflect the potential reduction in earnings per common share attributable to AGL Resources Inc. common shareholders that occurs when potentially dilutive common shares are added to common shares outstanding.

We derive our potentially dilutive common shares by calculating the number of shares issuable under restricted stock, restricted stock units and stock options. The vesting of certain shares of the restricted stock and restricted stock units depends on the satisfaction of defined performance and/or time-based criteria. The future issuance of shares underlying the outstanding stock options depends on whether the market price of the common shares underlying the options exceeds the respective exercise prices of the stock options.

The following table shows the calculation of our diluted shares attributable to AGL Resources Inc. common shareholders for the periods presented, as if performance units currently earned under the plan ultimately vest and as if stock options currently exercisable at prices below the average market prices are exercised.

	Three months ended June 30,					Six months ended June 30,
In millions (except per share amounts)	2014		2013			2014			2013
Income from continuing operations	$	63	$	50		$	403		$	203
Income (loss) from discontinued operations, net of tax		1		(1	)		(49	)		-
Net income attributable to AGL Resources Inc.	$	64	$	49		$	354		$	203
Denominator:
Basic weighted average number of shares outstanding (1)		118.8		117.8			118.7			117.6
Effect of dilutive securities		0.4		0.4			0.4			0.3
Diluted weighted average number of shares outstanding		119.2		118.2			119.1			117.9
Basic earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.40		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Basic earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.98		$	1.72
Diluted earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.39		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.97		$	1.72

(1) Daily weighted average shares outstanding

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Developments

On April 10, 2014, the FASB issued authoritative guidance related to reporting discontinued operations. The guidance generally raises the threshold for disposals to qualify as discontinued operations and requires new disclosures of both discontinued operations and certain other material disposals that do not meet the definition of a discontinued operation. The guidance will be effective for us prospectively beginning January 1, 2015. It is not expected to have a material impact on our consolidated financial statements, and it will have no impact on our accounting for the sale of Tropical Shipping.

On May 28, 2014, the FASB issued an update to authoritative guidance related to revenue from contracts with customers. The update replaces most of the existing guidance with a single set of principles for recognizing revenue from contracts with customers. The guidance will be effective for us beginning January 1, 2017. Early adoption is not permitted. The new guidance must be applied retrospectively to each prior period presented or via a cumulative effect upon the date of initial application. We have not yet determined the impact of this new guidance, nor have we selected a transition method.

On June 19, 2014, the FASB issued an update to authoritative guidance related to accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The guidance will be effective for us beginning January 1, 2016 and it is not expected to have a material impact on our consolidated financial statements.

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Note 12 - Discontinued Operations (Details) - Assets and Liabilities of Tropical Shipping (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Current assets
Cash and cash equivalents	$ 15		$ 31
Total current assets	257	283	289
Tropical Shipping [Member]
Current assets
Cash and cash equivalents	15	24	31
Short-term investments	3	1	1
Receivables	35	36	34
Inventories	9	9	8
Other	2	1	1
Total current assets	64	71	75
Long-term assets and other deferred debits
Property, plant and equipment, net	127	124	125
Goodwill	42	61	61
Intangible assets	19	19	20
Other	5	8	8
Total long-term assets and other deferred debits	193	212	214
Total assets held for sale	257	283	289
Current liabilities
Other accounts payable - trade	9	11	8
Accrued expenses	7	7	6
Other	23	22	24
Total liabilities held for sale	$ 39	$ 40	$ 38

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Reclassification of losses to net benefit cost, income tax	$ 2	$ 3	$ 3	$ 5
Reclassification of prior service credits to net benefit cost, income tax				(1)
Net derivative instrument gains (losses) arising during the period, income tax		1
Reclassification of realized derivative losses to net income, income tax	$ (1)		$ (1)	$ 1

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Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Common stock, par value (in Dollars per share)	$ 5	$ 5	$ 5
Common stock, shares authorized	750,000,000	750,000,000	750,000,000
Common stock, shares outstanding	119,464,063	118,888,876	118,560,687
Treasury shares, shares	216,523	216,523	216,523

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Note 7 - Debt and Credit Facilities

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 7 - Debt and Credit Facilities

The following table provides maturity dates, year-to-date weighted average interest rates and amounts outstanding for our various debt securities and facilities for the periods presented. We fully and unconditionally guarantee all debt issued by AGL Capital. For additional information on our debt, see Note 8 in our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K.

			June 30, 2014							June 30, 2013
Dollars in millions	Year(s) due		Weighted average interest rate (1)			Outstanding		Outstanding at December 31, 2013		Weighted average interest rate (1)			Outstanding
Short-term debt
Commercial paper - AGL Capital (2)	2014			0.3	%	$	236	$	857		0.5	%	$	521
Commercial paper - Nicor Gas (2)	2014			0.2			212		314		0.4			-
Total short-term debt				0.3	%	$	448	$	1,171		0.5	%	$	521
Current portion of long-term debt	2015			5.0	%	$	200	$	-		4.5	%	$	-
Long-term debt - excluding current portion
Senior notes		2016-2043		5.0	%	$	2,625	$	2,825		5.1	%	$	2,825
First mortgage bonds		2016-2038		5.6			500		500		5.6			500
Gas facility revenue bonds		2022-2033		0.9			200		200		0.5			200
Medium-term notes		2017-2027		7.8			181		181		7.8			181
Total principal long-term debt				4.9	%		3,506		3,706		4.9	%		3,706
Fair value adjustment of long-term debt (3)		2016-2038	n/a				85		91	n/a				97
Unamortized debt premium, net	n/a		n/a				16		16	n/a				16
Total non-principal long-term debt			n/a				101		107	n/a				113
Total long-term debt						$	3,607	$	3,813				$	3,819
Total debt						$	4,255	$	4,984				$	4,340

(1) Interest rates are calculated based on the daily weighted average balance outstanding for the six months ended June 30.

(2) As of June 30, 2014, the effective interest rates on our commercial paper borrowings were 0.3% for AGL Capital and 0.2% for Nicor Gas.

(3) See Note 4 for additional information on our fair value measurements.

Commercial Paper Programs

We maintain commercial paper programs at AGL Capital and Nicor Gas that consist of short-term, unsecured promissory notes used in conjunction with cash from operations to fund our seasonal working capital requirements. Working capital needs fluctuate during the year and are highest during the injection period in advance of the Heating Season. The Nicor Gas commercial paper program supports working capital needs at Nicor Gas, while all of our other subsidiaries and SouthStar participate in the AGL Capital commercial paper program. During the first six months of 2014, our commercial paper maturities ranged from 1 to 108 days, and at June 30, 2014, remaining terms to maturity ranged from 1 to 10 days. Total borrowings and repayments netted to a payment of $723 million during the first six months of 2014. For commercial paper issuances with original maturities over 3 months, borrowings and repayments were $50 million and $145 million, respectively, during the first six months of 2014.

Financial and Non-Financial Covenants

The AGL Credit Facility and the Nicor Gas Credit Facility each include a financial covenant that requires us to maintain a ratio of total debt to total capitalization of no more than 70% at the end of any fiscal month. These ratios, as calculated in accordance with the debt covenants, include standby letters of credit and surety bonds and exclude accumulated OCI items related to non-cash pension adjustments, welfare benefits liability adjustments and accounting adjustments for cash flow hedges. Adjusting for these items, the following table contains our debt-to-capitalization ratios for the dates presented, which are below the maximum allowed.

	June 30, 2014			December 31, 2013			June 30, 2013
AGL Credit Facility		51	%		57	%		54	%
Nicor Gas Credit Facility		52	%		55	%		43	%

The credit facilities contain certain non-financial covenants that, among other things, restrict liens and encumbrances, loans and investments, acquisitions, dividends and other restricted payments, asset dispositions, mergers and consolidations and other matters customarily restricted in such agreements.

Default Provisions

Our credit facilities and other financial obligations include provisions that, if not complied with, could require early payment or similar actions. The most important default events include the following:

● a maximum leverage ratio

● insolvency events and nonpayment of scheduled principal or interest payments

● acceleration of other financial obligations

● change of control provisions

We have no triggering events in our debt instruments that are tied to changes in our specified credit ratings or our stock price, and have not entered into any transaction that requires us to issue equity based on credit ratings or other triggering events. We were in compliance with all existing debt provisions and covenants, both financial and non-financial, for all periods presented.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 23, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	AGL RESOURCES INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		119,478,539
Amendment Flag	false
Entity Central Index Key	0001004155
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note 8 - Equity

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 8 - Equity

Our OCI amounts are aggregated within our accumulated other comprehensive loss. The following table provides changes in the components of our accumulated other comprehensive loss balance, net of the related income tax effects.

	2014									2013
In millions (1)	Cash flow hedges			Retirement benefit plans			Total			Cash flow hedges			Retirement benefit plans			Total
For the three months ended June 30
As of beginning of period	$	1		$	(136	)	$	(135	)	$	1		$	(212	)	$	(211	)
OCI, before reclassifications		-			-			-			(1	)		-			(1	)
Amounts reclassified from accumulated OCI		(1	)		3			2			(1	)		4			3
Net current-period other comprehensive (loss) income		(1	)		3			2			(2	)		4			2
As of end of period	$	-		$	(133	)	$	(133	)	$	(1	)	$	(208	)	$	(209	)

For the six months ended June 30
As of beginning of period	$	1		$	(137	)	$	(136	)	$	(3	)	$	(215	)	$	(218	)
OCI, before reclassifications		4			-			4			1			-			1
Amounts reclassified from accumulated OCI		(5	)		4			(1	)		1			7			8
Net current-period other comprehensive income		(1	)		4			3			2			7			9
As of end of period	$	-		$	(133	)	$	(133	)	$	(1	)	$	(208	)	$	(209	)

(1) All amounts are net of income taxes. Amounts in parentheses indicate debits to accumulated other comprehensive loss.

The following table provides details of the reclassifications out of accumulated other comprehensive loss and the impact on net income.

	Three months ended June 30,						Six months ended June 30,
In millions (1)	2014			2013			2014			2013
Cash flow hedges
Cost of goods sold (natural gas contracts)	$	2		$	1		$	5		$	1
Operation and maintenance expense (natural gas contracts)		-			-			1			-
Interest expense (interest rate contracts)		-			-			-			(3	)
Total before income tax		2			1			6			(2	)
Income tax benefit		(1	)		-			(1	)		1
Total cash flow hedges		1			1			5			(1	)
Retirement benefit plans
Operation and maintenance expense (actuarial losses)(2)		(6	)		(7	)		(8	)		(13	)
Operation and maintenance expense (prior service credits) (2)		1			-			1			2
Total before income tax		(5	)		(7	)		(7	)		(11	)
Income tax benefit		2			3			3			4
Total retirement benefit plans		(3	)		(4	)		(4	)		(7	)
Total reclassification for the period	$	(2	)	$	(3	)	$	1		$	(8	)

(1) Amounts in parentheses indicate debits, or reductions, to our net income and credits to accumulated other comprehensive loss. Except for retirement benefit plan amounts, the net income impacts are immediate.

(2) Amortization of these accumulated other comprehensive loss components is included in the computation of net periodic benefit cost. See Note 6 for additional details about net periodic benefit cost.

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Condensed Consolidated Statements of Income (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Operating revenues (includes revenue taxes of $26 and $94 for the three and six months in 2014 and $24 and $74 for the three and six months in 2013)	$ 902	$ 816	$ 3,376	$ 2,438
Operating expenses
Cost of goods sold	402	353	1,802	1,273
Operation and maintenance	211	205	500	437
Depreciation and amortization	95	103	188	206
Taxes other than income taxes	42	43	130	112
Total operating expenses	750	704	2,620	2,028
Gain on disposition of assets		11		11
Operating income	152	123	756	421
Other income	2	7	5	12
Interest expense, net	(48)	(46)	(96)	(92)
Income before income taxes	106	84	665	341
Income tax expense	41	33	248	127
Income from continuing operations	65	51	417	214
Income (loss) from discontinued operations, net of tax	1	(1)	(49)
Net income	66	50	368	214
Less net income attributable to the noncontrolling interest	2	1	14	11
Net income attributable to AGL Resources Inc.	$ 64	$ 49	$ 354	$ 203
Basic earnings (loss) per common share
Continuing operations (in Dollars per share)	$ 0.53	$ 0.42	$ 3.40	$ 1.72
Discontinued operations (in Dollars per share)	$ 0.01	$ (0.01)	$ (0.42)
Basic earnings per common share attributable to AGL Resources Inc. common shareholders (in Dollars per share)	$ 0.54	$ 0.41	$ 2.98	$ 1.72
Diluted earnings (loss) per common share
Continuing operations (in Dollars per share)	$ 0.53	$ 0.42	$ 3.39	$ 1.72
Discontinued operations (in Dollars per share)	$ 0.01	$ (0.01)	$ (0.42)
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders (in Dollars per share)	$ 0.54	$ 0.41	$ 2.97	$ 1.72
Cash dividends declared per common share (in Dollars per share)	$ 0.49	$ 0.47	$ 0.98	$ 0.94
Weighted average number of common shares outstanding
Basic (in Shares)	118.8	117.8	118.7	117.6
Diluted (in Shares)	119.2	118.2	119.1	117.9

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Note 2 - Significant Accounting Policies and Methods of Application

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2 - Significant Accounting Policies and Methods of Application

Our accounting policies are described in Note 2 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. There were no significant changes to our accounting policies during the six months ended June 30, 2014.

Use of Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our estimates may involve complex situations requiring a high degree of judgment either in the application and interpretation of existing literature or in the development of estimates that impact our financial statements. The most significant estimates relate to our rate-regulated subsidiaries, uncollectible accounts and other allowances for contingent losses, goodwill and other intangible assets, retirement plan benefit obligations, derivative and hedging activities and provisions for income taxes. We evaluate our estimates on an ongoing basis, and our actual results could differ from our estimates.

Cash and Cash Equivalents

Our cash and cash equivalents primarily consist of cash on deposit, money market accounts and certificates of deposit held by domestic subsidiaries with original maturities of three months or less. As of June 30, 2014 and 2013, and December 31, 2013, $15 million, $31 million and $24 million, respectively, of cash and short and long-term investments held by Tropical Shipping are excluded from cash and cash equivalents and are included in assets held for sale. For more information on the sale of Tropical Shipping, see Note 12.

Energy Marketing Receivables and Payables

Our wholesale services segment provides services to retail and wholesale marketers and utility and industrial customers. These customers, also known as counterparties, utilize netting agreements that enable our wholesale services segment to net receivables and payables by counterparty upon settlement. Wholesale services also nets across product lines and against cash collateral, provided the master netting and cash collateral agreements include such provisions. While the amounts due from, or owed to, wholesale services’ counterparties are settled net, they are recorded on a gross basis in our unaudited Condensed Consolidated Statements of Financial Position as energy marketing receivables and energy marketing payables.

Our wholesale services segment has trade and credit contracts that contain minimum credit rating requirements. These credit rating requirements typically give counterparties the right to suspend or terminate credit if our credit ratings are downgraded to non-investment grade status. Under such circumstances, wholesale services would need to post collateral to continue transacting business with some of its counterparties. To date, our credit ratings have exceeded the minimum requirements. As of June 30, 2014 and 2013, and December 31, 2013, the collateral that wholesale services would have been required to post if our credit ratings had been downgraded to non-investment grade status would not have had a material impact to our consolidated results of operations, cash flows or financial condition. If such collateral were not posted, wholesale services’ ability to continue transacting business with these counterparties would be negatively impacted.

Inventories

For our regulated utilities, except Nicor Gas, our natural gas inventories and the inventories we hold for Marketers in Georgia are carried at cost on a WACOG basis. In Georgia’s competitive environment, Marketers sell natural gas to firm end-use customers at market-based prices. Part of the unbundling process, which resulted from deregulation and provides this competitive environment, is the assignment to Marketers of certain pipeline services that Atlanta Gas Light has under contract. On a monthly basis, Atlanta Gas Light assigns the majority of the pipeline storage services that it has under contract to Marketers, along with a corresponding amount of inventory. Atlanta Gas Light also retains and manages a portion of its pipeline storage assets and related natural gas inventories for system balancing and to serve system demand. See Note 10 for information regarding a regulatory filing by Atlanta Gas Light related to natural gas inventory.

Nicor Gas’ inventory is carried at cost on a LIFO basis. Inventory decrements occurring during interim periods that are expected to be restored prior to year-end are charged to cost of goods sold at the estimated annual replacement cost, and the difference between this cost and the actual liquidated LIFO layer cost is recorded as a temporary LIFO inventory liquidation. Any temporary LIFO liquidation is included as a current liability in our unaudited Condensed Consolidated Statements of Financial Position. Interim inventory decrements that are not expected to be restored prior to year-end are charged to cost of goods sold at the actual LIFO cost of the layers liquidated. The inventory decrement as of June 30, 2014 is expected to be restored prior to year-end. The inventory decrement as of June 30, 2013 was restored prior to December 31, 2013.

Our retail operations, wholesale services and midstream operations segments carry inventory at the lower of cost or market value, where cost is determined on a WACOG basis. For these segments, we evaluate the weighted average cost of their natural gas inventories against market prices to determine whether any declines in market prices below the WACOG are other than temporary. For any declines considered to be other than temporary, we record adjustments to reduce the weighted average cost of the natural gas inventory to market value. For the three and six months ended June 30, 2014, we recorded $4 million and $6 million, respectively, total LOCOM adjustment to reduce the value of our inventories to market value and $8 million for the three and six months ended June 30, 2013.

Midstream operations’ primary activity is operating non-utility storage and pipeline facilities. Mechanical integrity tests and engineering studies are periodically performed on these storage facilities in accordance with certain state regulatory requirements. However, such tests may be performed in advance of such state requirements for operational purposes. During the first half of 2014, an engineering study and mechanical integrity tests were performed at one of our storage facilities, identifying a lower amount of working gas capacity that is the result of naturally occurring shrinkage of the storage caverns. Further, based on the lower capacity and an analysis of the volume of natural gas stored in the facility, we recorded additional gas costs to true-up the amount of retained fuel at this facility and in the amount of $2 million and $9 million for the three and six months ended June 30, 2014, respectively

Fair Value Measurements

We have financial and nonfinancial assets and liabilities subject to fair value measurement. The financial assets and liabilities measured and carried at fair value include cash and cash equivalents, and derivative assets and liabilities. The carrying values of receivables, short- and long-term investments, accounts payable, short-term debt, other current assets and liabilities, and accrued interest approximate fair value. Our nonfinancial assets and liabilities include pension and other retirement benefits, which are presented in Note 4 to our Consolidated Financial Statements and in related notes included in Item 8 of our 2013 Form 10-K.

As defined in the authoritative guidance related to fair value measurements and disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in valuing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We classify fair value balances based on the observance of those inputs in accordance with the fair value hierarchy.

Derivative Instruments

The fair value of the natural gas and weather derivative instruments that we use to manage exposures arising from changing natural gas prices and weather risk reflects the estimated amounts that we would receive or pay to terminate or close the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts. We use external market quotes and indices to value substantially all of our derivative instruments. See Note 4 and Note 5 for additional derivative disclosures.

Goodwill

During the first quarter of 2014, we completed an engineering study at our midstream operations storage facilities that indicated a reduced forecast of working gas capacity from what was projected when our 2013 annual goodwill impairment analysis was performed during the fourth quarter of 2013. Given that the 2013 annual goodwill impairment test indicated that the estimated fair value of this reporting unit exceeded its carrying amount by less than 5%, we considered this reduced storage capacity as an indicator of potential impairment and, accordingly, conducted an interim goodwill impairment analysis during the first quarter of 2014.

The estimated fair value of this reporting unit was determined utilizing the income approach, which estimated the fair value based upon the present value of estimated future cash flows. The forecasts used in the income approach, which were updated during the first quarter of 2014 to reflect the contracting activity that occurred during the quarter, assume discrete period revenue growth through fiscal 2022 to reflect the recovery of subscription rates, stabilization of earnings and establishment of a reasonable base year that was used to estimate the terminal value in the valuation model. Consistent with our 2013 annual goodwill impairment testing, we assumed a long-term earnings growth rate in the terminal year of 2.5%, which we believe is appropriate given the current economic and industry specific expectations. As of the valuation date, we utilized a discount rate of 7.0%, which we believe is appropriate as it reflects the relative risk and the time value of money, and is consistent with the peer group of this reporting unit as well as the discount rates that were utilized in our 2013 annual goodwill impairment tests.

Our interim goodwill impairment test, which utilized cash flow forecasts providing for growth over the next eight years, indicated that the estimated fair value of this reporting unit continues to exceed its carrying amount with a cushion of less than 10%. However, continued declines in capacity or subscription rates, reductions to our cash flow forecasts, a sustained period at the current subscription rates or other changes to the assumptions and factors used in this analysis may result in a future failure of step one of the goodwill impairment test and require us to proceed to step two of the goodwill impairment test in a future period.

The risk of impairment of the underlying long-lived assets is not estimated to be significant as the assets have long remaining useful lives, and authoritative guidance requires such assets to be tested for impairment on the basis of undiscounted cash flows over their remaining useful lives. We will continue to monitor this reporting unit for potential impairment. Changes in the amount of goodwill for the six months ended June 30, 2014 and 2013 are provided in the following table.

In millions	Distribution Operations		Retail Operations		Midstream Operations		Consolidated (1)
Goodwill - December 31, 2012	$	1,640	$	122	$	14	$	1,776
2013 activity		-		46		-		46
Goodwill - June 30, 2013	$	1,640	$	168	$	14	$	1,822
Goodwill - December 31, 2013	$	1,640	$	173	$	14	$	1,827
Goodwill - June 30, 2014	$	1,640	$	173	$	14	$	1,827

(1) Excludes goodwill at Tropical Shipping now classified as held for sale. See Note 12 for additional information.

Other Income

Our other income is detailed in the following table. For more information on our equity method investment income, see Note 9.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Equity method investment income	$	1	$	2	$	4	$	5
AFUDC - equity		1		3		1		6
Other, net		-		2		-		1
Total other income	$	2	$	7	$	5	$	12

Earnings Per Common Share

We compute basic earnings per common share attributable to AGL Resources Inc. common shareholders by dividing our net income attributable to AGL Resources Inc. by the daily weighted average number of common shares outstanding. Diluted earnings per common share attributable to AGL Resources Inc. common shareholders reflect the potential reduction in earnings per common share attributable to AGL Resources Inc. common shareholders that occurs when potentially dilutive common shares are added to common shares outstanding.

We derive our potentially dilutive common shares by calculating the number of shares issuable under restricted stock, restricted stock units and stock options. The vesting of certain shares of the restricted stock and restricted stock units depends on the satisfaction of defined performance and/or time-based criteria. The future issuance of shares underlying the outstanding stock options depends on whether the market price of the common shares underlying the options exceeds the respective exercise prices of the stock options.

The following table shows the calculation of our diluted shares attributable to AGL Resources Inc. common shareholders for the periods presented, as if performance units currently earned under the plan ultimately vest and as if stock options currently exercisable at prices below the average market prices are exercised.

	Three months ended June 30,					Six months ended June 30,
In millions (except per share amounts)	2014		2013			2014			2013
Income from continuing operations	$	63	$	50		$	403		$	203
Income (loss) from discontinued operations, net of tax		1		(1	)		(49	)		-
Net income attributable to AGL Resources Inc.	$	64	$	49		$	354		$	203
Denominator:
Basic weighted average number of shares outstanding (1)		118.8		117.8			118.7			117.6
Effect of dilutive securities		0.4		0.4			0.4			0.3
Diluted weighted average number of shares outstanding		119.2		118.2			119.1			117.9
Basic earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.40		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Basic earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.98		$	1.72
Diluted earnings (loss) per share
From continuing operations	$	0.53	$	0.42		$	3.39		$	1.72
From discontinued operations		0.01		(0.01	)		(0.42	)		-
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$	0.54	$	0.41		$	2.97		$	1.72

(1) Daily weighted average shares outstanding.

Accounting Developments

On April 10, 2014, the FASB issued authoritative guidance related to reporting discontinued operations. The guidance generally raises the threshold for disposals to qualify as discontinued operations and requires new disclosures of both discontinued operations and certain other material disposals that do not meet the definition of a discontinued operation. The guidance will be effective for us prospectively beginning January 1, 2015. It is not expected to have a material impact on our consolidated financial statements, and it will have no impact on our accounting for the sale of Tropical Shipping.

On May 28, 2014, the FASB issued an update to authoritative guidance related to revenue from contracts with customers. The update replaces most of the existing guidance with a single set of principles for recognizing revenue from contracts with customers. The guidance will be effective for us beginning January 1, 2017. Early adoption is not permitted. The new guidance must be applied retrospectively to each prior period presented or via a cumulative effect upon the date of initial application. We have not yet determined the impact of this new guidance, nor have we selected a transition method.

On June 19, 2014, the FASB issued an update to authoritative guidance related to accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The guidance will be effective for us beginning January 1, 2016 and it is not expected to have a material impact on our consolidated financial statements.

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Note 1 - Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 - Organization and Basis of Presentation

General

AGL Resources Inc. is an energy services holding company that conducts substantially all its operations through its subsidiaries. Unless the context requires otherwise, references to “we,” “us,” “our,” the “company,” or “AGL Resources” mean consolidated AGL Resources Inc. and its subsidiaries.

The December 31, 2013 Condensed Consolidated Statement of Financial Position data was derived from our audited financial statements, but does not include all disclosures required by GAAP. We have prepared the accompanying unaudited Condensed Consolidated Financial Statements under the rules and regulations of the SEC. In accordance with such rules and regulations, we have condensed or omitted certain information and notes normally included in financial statements prepared in conformity with GAAP. Our unaudited Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature that are, in the opinion of management, necessary for a fair presentation of our financial results for the interim periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K.

Due to the seasonal nature of our business and other factors, our results of operations and our financial condition for the periods presented are not necessarily indicative of the results of operations or financial condition to be expected for or as of any other period.

Basis of Presentation

Our unaudited Condensed Consolidated Financial Statements include our accounts, the accounts of our wholly owned subsidiaries, the accounts of our majority owned or otherwise controlled subsidiaries and the accounts of our consolidated VIE for which we are the primary beneficiary. For unconsolidated entities that we do not control, but exercise significant influence over, we use the equity method of accounting and our proportionate share of income or loss is recorded on the unaudited Condensed Consolidated Statements of Income. See Note 9 for additional information. We have eliminated intercompany profits and transactions in consolidation except for intercompany profits where recovery of such amounts is probable under the affiliates’ rate regulation process.

On April 4, 2014 we entered into a definitive agreement to sell Tropical Shipping, which historically operated within our cargo shipping segment. The assets and liabilities of these businesses are classified as held for sale on the unaudited Condensed Consolidated Statements of Financial Position, and the financial results of these businesses are reflected as discontinued operations on the unaudited Condensed Consolidated Statements of Income. Amounts shown in the following notes, unless otherwise indicated, exclude assets held for sale and discontinued operations. Cargo shipping also included our investment in Triton, which is not a part of the sale and has been reclassified into our other segment. See Note 12 for additional information.

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Note 13 - Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 13 - Subsequent Event

As discussed in Note 3, our ERC assets and liabilities are associated with our distribution operations segment and are generally recoverable through rate mechanisms. Our ERC liabilities are estimates of future remediation costs for investigation and cleanup of our former MGP operating sites that may be contaminated. The corresponding recoverable ERC regulatory assets are recorded for environmental remediation costs until the costs are recovered from our customers. We primarily recover these costs through rate riders that authorize dollar-for-dollar recovery. 

In July 2014, we reached a $77 million settlement with an insurance company of environmental claims relating to potential contamination at several of our MGP sites. Under the terms of the settlement, we will receive the $77 million settlement in two installments: $45 million within 30 days of the effective date of the settlement and the remaining $32 million within one year after the effective date of the settlement. The settlement will not affect our recorded ERC liabilities but is expected to reduce our recorded ERC regulatory assets because the vast majority of the settlement amount relates to New Jersey sites for which we receive regulatory recovery of ERC expenditures. We intend to seek approval of the New Jersey BPU to utilize the insurance proceeds related to the New Jersey sites to reduce the ERC expenditures that otherwise would have been recovered from our New Jersey customers in future periods. As such, the settlement, once approved, is expected to reduce our recoverable ERC regulatory asset and have a favorable impact on the rates for our Elizabethtown Gas customers.

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Note 9 - Non-Wholly Owned Entities

6 Months Ended

Jun. 30, 2014

Noncontrolling Interest [Abstract]

Noncontrolling Interest Disclosure [Text Block]

Note 9 - Non-Wholly Owned Entities

Variable Interest Entities

SouthStar, a joint venture owned by us and Piedmont, is our only significant VIE for which we are the primary beneficiary, which requires us to consolidate its assets, liabilities and statements of income. For additional information on SouthStar, see Note 10 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. Earnings from SouthStar in 2014 and 2013 were allocated entirely in accordance with the ownership interests.

Cash flows used in our investing activities include capital expenditures for SouthStar of $4 million for the six months ended June 30, 2014 and $1 million for the six months ended June 30, 2013. Cash flows used in our financing activities include SouthStar’s distribution to Piedmont for its portion of SouthStar’s annual earnings from the previous year. Generally, this distribution occurs in the first quarter of each fiscal year. For each of the six months ended June 30, 2014 and 2013, SouthStar distributed $17 million to Piedmont. The following table provides additional information about SouthStar’s assets and liabilities as of the dates presented, which are consolidated within our unaudited Condensed Consolidated Statements of Financial Position.

	June 30, 2014							December 31, 2013							June 30, 2013
In millions	Consolidated		SouthStar (1)		% (2)			Consolidated		SouthStar (1)		% (2)			Consolidated		SouthStar (1)		% (2)
Current assets	$	2,431	$	250		10	%	$	2,945	$	264		9	%	$	2,277	$	135		6	%
Goodwill and intangible assets		1,974		137		7			1,981		139		7			1,986		-		-
Long-term assets and other deferred debits		9,897		21		-			9,730		12		-			9,532		10		-
Total assets	$	14,302	$	408		3	%	$	14,656	$	415		3	%	$	13,795	$	145		1	%
Current liabilities	$	2,596	$	124		5	%	$	3,123	$	95		3	%	$	2,349	$	40		2	%
Long-term liabilities and other deferred credits		7,772		16		-			7,857		-		-			7,891		-		-
Total Liabilities		10,368		140		1			10,980		95		1			10,240		40		-
Equity		3,934		268		7			3,676		320		9			3,555		105		3
Total liabilities and equity	$	14,302	$	408		3	%	$	14,656	$	415		3	%	$	13,795	$	145		1	%

(1) These amounts reflect information for SouthStar and exclude intercompany eliminations and the balances of our wholly owned subsidiary with an 85% ownership interest in SouthStar.

(2) SouthStar’s percentage of the amount on our Statements of Financial Position.

The following table provides information on SouthStar’s operating revenues and operating expenses for the periods presented, which are consolidated within our unaudited Condensed Consolidated Statements of Income.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Operating revenues	$	145	$	116	$	519	$	366
Operating expenses
Cost of goods sold		111		95		381		259
Operation and maintenance		20		15		44		33
Depreciation and amortization		2		-		4		1
Taxes other than income taxes		1		1		1		1
Total operating expenses		134		111		430		294
Operating income	$	11	$	5	$	89	$	72

Equity Method Investments

Income from our equity method investments is classified as other income in our unaudited Condensed Consolidated Statements of Income. For more information about our equity method investments, see Note 10 to our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K. The carrying amounts of our investments that are accounted for under the equity method at June 30 were as follows:

In millions	2014		2013
Triton	$	65	$	71
Horizon Pipeline		15		16
Other (1)		1		9
Total	$	81	$	96

(1) Includes our investment in Sawgrass Storage. In December 2013, the joint venture decided to terminate the development of the Sawgrass Storage facility and reduced the carrying amount of the joint venture’s long-lived assets to fair value.

The following table provides the income from our equity method investments for the periods presented.

	Three months ended June 30,				Six months ended June 30,
In millions	2014		2013		2014		2013
Triton	$	1	$	2	$	3	$	4
Other		-		-		1		1

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Note 5 - Derivative Instruments

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 5 - Derivative Instruments

A description of our objectives and strategies for using derivative instruments, related accounting policies and methods used to determine their fair values are described in Note 2 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. See Note 4 for additional fair value disclosures.

Certain of our derivative instruments contain credit risk-related or other contingent features that could require us to post collateral in the normal course of business when our financial instruments are in net liability positions. As of June 30, 2014, for agreements with such features, derivative instruments with liability fair values for which we had posted no collateral to our counterparties totaled $62 million. The maximum collateral that could be required with these features is $11 million. For more information, see “Energy Marketing Receivables and Payables” in Note 2, which also have credit risk-related or other contingent features. Our derivative instrument activities are included within operating cash flows as an adjustment to net income of ($13) million and $14 million for the six months ended June 30, 2014 and 2013, respectively. See Note 4 for additional derivative instrument information. The following table summarizes the various ways in which we account for our derivative instruments and the impact on our unaudited Condensed Consolidated Financial Statements.

	Recognition and Measurement
Accounting Treatment	Statements of Financial Position	Statements of Income
Cash flow hedge	Derivative carried at fair value	Ineffective portion of the gain or loss on the derivative instrument is recognized in earnings
	Effective portion of the gain or loss on the derivative instrument is reported initially as a component of accumulated OCI (loss)	Effective portion of the gain or loss on the derivative instrument is reclassified out of accumulated OCI (loss) and into earnings when the hedged transaction affects earnings
Fair value hedge	Derivative carried at fair value	Gains or losses on the derivative instrument and the hedged item are recognized in earnings. As a result, to the
	Changes in fair value of the hedged item are recorded as adjustments to the carrying amount of the hedged item	extent the hedge is effective, the gains or losses will offset and there is no impact on earnings. Any hedge ineffectiveness will impact earnings
Not designated as hedges	Derivative carried at fair value	Realized and unrealized gains or losses on the derivative instrument are recognized in earnings
	Distribution operations’ gains and losses on derivative instruments are deferred as regulatory assets or liabilities until included in cost of goods sold	Gains or losses on these derivative instruments are ultimately included in billings to customers and are recognized in cost of goods sold in the same period as the related revenues

Quantitative Disclosures Related to Derivative Instruments

As of the dates presented, our derivative instruments were comprised of both long and short natural gas positions. A long position is a contract to purchase natural gas, and a short position is a contract to sell natural gas. We had a net long natural gas contracts position outstanding in the following quantities:

In Bcf (1)	June 30, 2014 (2)			December 31, 2013			June 30, 2013
Cash flow hedges		6			6			3
Not designated as hedges		140			183			221
Total volumes		146			189			224
Short position		(2,530	)		(2,622	)		(2,311	)
Long position		2,676			2,811			2,535
Net long position		146			189			224

(1) Volumes related to Nicor Gas exclude variable-priced contracts, which are carried at fair value, but whose fair values are not directly impacted by changes in commodity prices.

(2) Approximately 98% of these contracts have durations of 2 years or less and the remaining 2% expire between 2 and 5 years.

Derivative Instruments in our Unaudited Condensed Consolidated Statements of Financial Position

In accordance with regulatory requirements, gains and losses on derivative instruments used to hedge natural gas purchases for customer use at distribution operations are reflected in accrued natural gas costs within our Consolidated Statements of Financial Position until billed to customers. The following amounts deferred as a regulatory asset or liability on our Condensed Consolidated Statements of Financial Position represent the net realized gains (losses) related to these natural gas cost hedges for the periods presented.

	Three months ended June 30,					Six months ended June 30,
In millions	2014		2013			2014		2013
Nicor Gas	$	10	$	9		$	12	$	8
Elizabethtown Gas		2		(1	)		5		(4	)

The following table presents the fair values and unaudited Condensed Consolidated Statements of Financial Position classifications of our derivative instruments as of the dates presented.

		June 30, 2014						December 31, 2013						June 30, 2013
In millions	Classification	Assets			Liabilities			Assets			Liabilities			Assets			Liabilities
Designated as cash flow or fair value hedges
Natural gas contracts	Current	$	2		$	(1	)	$	3		$	(1	)	$	2		$	(1	)
Not designated as hedges
Natural gas contracts	Current		702			(721	)		691			(761	)		456			(445	)
Natural gas contracts	Long-term		77			(89	)		206			(220	)		124			(139	)
Total			779			(810	)		897			(981	)		580			(584	)
Gross amount of recognized assets and liabilities (1) (2)			781			(811	)		900			(982	)		582			(585	)
Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position (2)			(667	)		749			(781	)		902			(452	)		546
Net amounts of assets and liabilities presented in our unaudited Condensed Consolidated Statements of Financial Position (3)		$	114		$	(62	)	$	119		$	(80	)	$	130		$	(39	)

(1) The gross amounts of recognized assets and liabilities are netted within our unaudited Condensed Consolidated Statements of Financial Position to the extent that we have netting arrangements with the counterparties.

(2) As required by the authoritative guidance related to derivatives and hedging, the gross amounts of recognized assets and liabilities above do not include cash collateral held on deposit in broker margin accounts of $82 million as of June 30, 2014, $121 million as of December 31, 2013 and $94 million as of June 30, 2013. Cash collateral is included in the “Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position” line of this table.

(3) At June 30, 2014, December 31, 2013 and June 30, 2013 we held letters of credit from counterparties that would offset, under master netting arrangements, an insignificant portion of these assets.

Derivative Instruments in the UnauditedCondensed Consolidated Statements of Income

The following table presents the impacts of our derivative instruments in our unaudited Condensed Consolidated Statements of Income for the periods presented.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Designated as cash flow or fair value hedges
Natural gas contracts - net gain reclassified from OCI into cost of goods sold	$	2		$	1		$	5		$	1
Natural gas contracts - net gain reclassified from OCI into operation and maintenance expense		-			-			1			-
Interest rate swaps - net loss reclassified from OCI into interest expense		-			-			-			(3	)
Income tax benefit		(1	)		-			(1	)		1
Net of tax		1			1			5			(1	)
Not designated as hedges (1)
Natural gas contracts - net fair value adjustments recorded in operating revenues		30			22			-			(2	)
Natural gas contracts - net fair value adjustments recorded in cost of goods sold (2)		(1	)		(1	)		1			(1	)
Income tax benefit		(11	)		(8	)		-			1
Net of tax		18			13			1			(2	)
Total gains (losses) on derivative instruments	$	19		$	14		$	6		$	(3	)

(1) Associated with the fair value of derivative instruments held at June 30, 2014 and 2013.

(2) Excludes losses recorded in cost of goods sold associated with weather derivatives of $6 million and $3 million for the six months ended June 30, 2014 and 2013, respectively.

Any amounts recognized in operating income, related to ineffectiveness or due to a forecasted transaction that is no longer expected to occur, were immaterial for the three and six months ended June 30, 2014 and 2013. Our expected gains to be reclassified from OCI into cost of goods sold, operation and maintenance expense, interest expense and operating revenues and recognized in our unaudited Condensed Consolidated Statements of Income over the next 12 months are $1 million. These deferred gains and losses are related to natural gas derivative contracts associated with retail operations and Nicor Gas’ system use. The expected gains are based upon the fair values of these financial instruments at June 30, 2014. The effective portion of gains and losses on derivative instruments qualifying as cash flow hedges that was recognized in OCI during the periods is presented on our Condensed Consolidated Statements of income. See Note 8 for these amounts.

There have been no other significant changes to our derivative instruments, as described in Note 2, Note 4 and Note 5 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K.

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Note 9 - Non-Wholly Owned Entities (Details) - Equity Method Investments (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Jun. 30, 2013
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 81		$ 96
Triton [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	65		71
Horizon Pipeline [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	15		16
Other Equity Investments [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 1	[1]	$ 9	[1]

[1] Includes our investment in Sawgrass Storage. In December 2013, the joint venture decided to terminate the development of the Sawgrass storage facility and reduced the carrying amount of the joint venture's long-lived assets to fair value.

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Note 3 - Regulated Operations

6 Months Ended

Jun. 30, 2014

Regulatory Assets and Liabilities Disclosure [Abstract]

Schedule of Regulatory Assets and Liabilities [Text Block]

Note 3 - Regulated Operations

We account for the financial effects of regulation in accordance with authoritative guidance related to regulated entities whose rates are designed to recover the costs of providing service. In accordance with this guidance, incurred costs and estimated future expenditures that would otherwise be charged to expense in the current period are capitalized as regulatory assets when it is probable that such costs or expenditures will be recovered in rates in the future. Similarly, we recognize regulatory liabilities when it is probable that regulators will require customer refunds through future rates or when revenue is collected from customers for estimated expenditures that have not yet been incurred. Generally, regulatory assets are amortized into expense, and regulatory liabilities are amortized into income over the period authorized by the regulatory commissions. The following table summarizes our regulatory assets and liabilities as of the dates presented. In addition, see Note 13 for a subsequent event that impacts our regulatory assets.

In millions	June 30, 2014		December 31, 2013		June 30, 2013
Regulatory assets
Deferred natural gas costs	$	79	$	1	$	-
Recoverable regulatory infrastructure program costs		47		48		46
Recoverable ERC		33		45		27
Recoverable pension and retiree welfare benefit costs		9		9		19
Other		43		59		28
Total regulatory assets - current		211		162		120
Recoverable ERC		454		433		458
Recoverable regulatory infrastructure program costs		107		87		116
Recoverable pension and retiree welfare benefit costs		94		99		188
Long-term debt fair value adjustment		78		82		86
Other		42		36		50
Total regulatory assets - long-term		775		737		898
Total regulatory assets	$	986	$	899	$	1,018
Regulatory liabilities
Accrued natural gas costs	$	41	$	92	$	130
Bad debt over collection		39		41		39
Accumulated removal costs		27		27		17
Deferred seasonal rates		8		-		8
Other		34		23		22
Total regulatory liabilities - current		149		183		216
Accumulated removal costs		1,478		1,445		1,431
Regulatory income tax liability		27		27		26
Unamortized investment tax credit		24		26		27
Bad debt over collection		9		17		20
Other		27		3		6
Total regulatory liabilities - long-term		1,565		1,518		1,510
Total regulatory liabilities	$	1,714	$	1,701	$	1,726

Base rates are designed to provide the opportunity for both a recovery of cost and a return on investment during the period rates are in effect. As such, all of our regulatory assets recoverable through base rates are subject to review by the respective state regulatory commission during future rate proceedings. We believe that we will be able to recover such costs consistent with our historical recoveries.

Natural Gas Costs We charge our utility customers for natural gas consumed using natural gas cost recovery mechanisms set by the state regulatory agencies. Under these mechanisms, all prudently incurred natural gas costs are passed through to customers without markup, subject to regulatory review. We defer or accrue the difference between the actual cost of gas and the amount of commodity revenue earned in a given period, such that no operating margin is recognized related to these costs. The deferred or accrued amount is either billed or refunded to our customers prospectively through adjustments to the commodity rate. Deferred natural gas costs are reflected as regulatory assets and accrued natural gas costs are reflected as regulatory liabilities. The following table illustrates the change in net position of these costs from June 30, 2013 to June 30, 2014.

In millions	June 30, 2014			June 30, 2013			Change
Deferred natural gas costs	$	79		$	-		$	79
Accrued natural gas costs		(41	)		(130	)		89
Total (1)	$	38		$	(130	)	$	168

(1) The $168 million change resulted from increased natural gas prices during the first half of 2014 compared to the first half of 2013, primarily driven by colder weather experienced in 2014. These costs will be fully recovered in future periods.

Environmental Remediation Costs We are subject to federal, state and local laws and regulations governing environmental quality and pollution control that require us to remove or remedy the effect on the environment of the disposal or release of specified substances at our current and former operating sites, substantially all of which is related to our MGP sites. The ERC assets and liabilities are associated with our distribution operations segment and remediation costs are generally recoverable from customers through rate mechanisms approved by regulators. Accordingly, both costs incurred to remediate the former MGP sites, plus the future estimated cost recorded as liabilities, net of amounts previously collected, are recognized as a regulatory asset until recovered from customers.

Our ERC liabilities are estimates of future remediation costs for investigation and cleanup of our current and former operating sites that are contaminated. These estimates are based on conventional engineering estimates and the use of probabilistic models of potential costs when such estimates cannot be made, on an undiscounted basis. As cleanup options and plans mature and cleanup contracts are entered into, we are increasingly able to provide conventional engineering estimates of the likely costs of many elements of the remediation program. These estimates contain various engineering assumptions, which we refine and update on an ongoing basis. These liabilities do not include other potential expenses, such as unasserted property damage claims, personal injury or natural resource damage claims, legal expenses or other costs for which we may be held liable but for which we cannot reasonably estimate an amount. The following table provides additional information on the costs related to remediation of our current and former operating sites as of June 30, 2014 and reflects changes in estimates since we filed our 2013 Form 10-K.

In millions	Probabilistic model cost estimates		Engineering estimates		Amount recorded			Expected costs over next 12 months
Illinois		$205 - $462	$	46	$	251		$	37
New Jersey		126-196		3		129			32
Georgia and Florida		66-106		9		78			14
North Carolina (1)		n/a		11		11			7
Total		$397 - $764	$	69	$	469	(2)	$	90

(1) We have no regulatory recovery mechanisms for the site in North Carolina. Therefore, this amount is not included in our regulatory assets and changes in estimated costs are recognized in income in the period of change.

(2) Increase of $22 million from December 31, 2013 primarily relates to a scope increase required by the Georgia Environmental Protection Division for a site in Georgia and an adjustment for a site in Florida. This was partially offset by a decrease for a site in New Jersey where remediation is almost complete.

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Note 4 - Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 4 - Fair Value Measurements

The methods used to determine the fair values of our assets and liabilities are described within Note 2.

Derivative Instruments

The following table summarizes, by level within the fair value hierarchy, our derivative assets and liabilities that were carried at fair value on a recurring basis in our unaudited Consolidated Statements of Financial Position as of the dates presented. See Note 5 for additional derivative instrument information.

	June 30, 2014					December 31, 2013					June 30, 2013
In millions	Assets (1)		Liabilities			Assets (1)		Liabilities			Assets (1)		Liabilities
Natural gas derivatives
Quoted prices in active markets (Level 1)	$	8	$	(38	)	$	6	$	(79	)	$	4	$	(51	)
Significant other observable inputs (Level 2)		57		(60	)		67		(79	)		78		(35	)
Netting of cash collateral		46		36			43		78			47		47
Total carrying value (2) (3)	$	111	$	(62	)	$	116	$	(80	)	$	129	$	(39	)

(1) Balances of $3 million at June 30, 2014, $3 million at December 31, 2013 and $1 million at June 30, 2013 associated with certain weather derivatives have been excluded, as they are accounted for based on intrinsic value rather than fair value.

(2) There were no significant unobservable inputs (Level 3) for any of the dates presented.

(3) There were no significant transfers between Level 1, Level 2 or Level 3 for any of the dates presented.

Debt

Our long-term debt is recorded at amortized cost, with the exception of Nicor Gas’ first mortgage bonds, which are recorded at their acquisition date fair value. The fair value adjustment of Nicor Gas’ first mortgage bonds is being amortized over the lives of the bonds. The following table lists the carrying amount and fair value of our long-term debt as of the dates presented.

In millions	June 30, 2014		December 31, 2013		June 30, 2013
Long-term debt carrying amount	$	3,807	$	3,813	$	3,819
Long-term debt fair value (1)		4,191		3,956		4,070

(1) Fair value determined using Level 2 inputs.

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Note 6 - Employee Benefit Plans

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 6 - Employee Benefit Plans

Pension Benefits

We sponsor the AGL Resources Inc. Retirement Plan, a tax-qualified defined benefit retirement plan for our eligible employees, which is described in Note 6 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. Following are the components of our pension costs for the periods indicated.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Service cost	$	6		$	7		$	12		$	15
Interest cost		11			11			23			21
Expected return on plan assets		(16	)		(15	)		(32	)		(31	)
Net amortization of prior service cost		(1	)		(1	)		(1	)		(1	)
Recognized actuarial loss		6			9			11			17
Net periodic pension benefit cost	$	6		$	11		$	13		$	21

Welfare Benefits

The benefits of our Health and Welfare Plan for Retirees and Inactive Employees of AGL Resources Inc. (AGL Welfare Plan) are described in Note 6 to our Consolidated Financial Statements and related notes included in Item 8 of our 2013 Form 10-K. Following are the components of our welfare costs for the periods indicated.

	Three months ended June 30,						Six months ended June 30,
In millions	2014			2013			2014			2013
Service cost	$	-		$	-		$	1		$	1
Interest cost		3			4			7			7
Expected return on plan assets		(1	)		(2	)		(3	)		(3	)
Net amortization of prior service cost		-			(1	)		(1	)		(2	)
Recognized actuarial loss		2			2			3			4
Net periodic welfare benefit cost	$	4		$	3		$	7		$	7

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Note 11 - Segment Information (Details) - Segment Reporting (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013		Dec. 31, 2012
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	$ 14,302		$ 14,656		$ 13,795
Goodwill	1,827	[1]	1,827	[1]	1,822	[1]	1,776	[1]
Distribution Operations [Member] | Continuing Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	11,624	[2]			11,166	[2]
Distribution Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets			11,727	[3]
Goodwill	1,640		1,640		1,640		1,640
Retail Operations [Member] | Continuing Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	683	[2]			641	[2]
Retail Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets			694	[3]
Goodwill	173		173		168		122
Wholesale Services [Member] | Continuing Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	1,207	[2],[4]			1,008	[2],[4]
Wholesale Services [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets			1,166	[3]
Midstream Operations [Member] | Continuing Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	699	[2]			715	[2]
Midstream Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets			713	[3]
Goodwill	14		14		14		14
Other Segments [Member] | Continuing Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	(168)	[2],[5]			(24)	[2],[5]
Other Segments [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets			73	[3],[6],[7]
Goodwill				[6],[7]
Continuing Operations [Member]
Note 11 - Segment Information (Details) - Segment Reporting [Line Items]
Identifiable and total assets	14,045	[2]	14,373	[3]	13,506	[2]
Goodwill			$ 1,827

[1] Excludes goodwill at Tropical Shipping now classified as held for sale. See Note 12 for additional information.

[2] Identifiable assets are those used in each segment's operations and do not include the assets held for sale.

[3] Identifiable assets are those assets used in each segment's operations and exclude the assets held for sale.

[4] Wholesale services records its energy marketing and risk management revenues on a net basis. A reconciliation of our operating revenues and our intercompany revenues is shown in the following table.

[5] The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations. Our other segment now also includes our investment in Triton, which was part of our cargo shipping segment and has been classified as discontinued operations. For more information see Note 12.

[6] The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations.

[7] Includes our investment in Triton that was previously part of the cargo shipping segment.

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Note 11 - Segment Information (Details) - Operating Revenues (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 902		$ 816		$ 3,376		$ 2,438
Thrid Party Gross Costs	402		353		1,802		1,273
Wholesale Services [Member] | Third Party Gross Revenues [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	2,379		1,982		6,430		4,076
Wholesale Services [Member] | Intercompany Revenues [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	160		103		458		243
Wholesale Services [Member] | Total Gross Revenues [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	2,539		2,085		6,888		4,319
Wholesale Services [Member] | Third Party Gross Costs [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Thrid Party Gross Costs	2,492		2,064		6,508		4,259
Wholesale Services [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	47	[1]	21	[1]	380	[1]	60	[1]
Thrid Party Gross Costs	$ 7	[1]	$ 10	[1]	$ 10	[1]	$ 20	[1]

[1] Wholesale services records its energy marketing and risk management revenues on a net basis. A reconciliation of our operating revenues and our intercompany revenues is shown in the following table.

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Note 11 - Segment Information (Details)	6 Months Ended
	Jun. 30, 2014
Note 11 - Segment Information (Details) [Line Items]
Number of Operating Segments	4
Distribution Operations [Member]
Note 11 - Segment Information (Details) [Line Items]
Number of States in which Entity Operates	7

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Note 12 - Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2014

Balance Sheet [Member]

Note 12 - Discontinued Operations (Tables) [Line Items]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

	June 30,		December 31,		June 30,
In millions	2014		2013		2013
Current assets
Cash and cash equivalents	$	15	$	24	$	31
Short-term investments		3		1		1
Receivables		35		36		34
Inventories		9		9		8
Other		2		1		1
Total current assets		64		71		75
Long-term assets and other deferred debits
Property, plant and equipment, net		127		124		125
Goodwill		42		61		61
Intangible assets		19		19		20
Other		5		8		8
Total long-term assets and other deferred debits		193		212		214
Total assets held for sale	$	257	$	283	$	289
Current liabilities
Other accounts payable - trade	$	9	$	11	$	8
Accrued expenses		7		7		6
Other		23		22		24
Total liabilities held for sale	$	39	$	40	$	38

Income Statement [Member]

Note 12 - Discontinued Operations (Tables) [Line Items]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

	Three months ended June 30,					Six months ended June 30,
In millions	2014		2013			2014			2013
Operating revenues	$	92	$	88		$	181		$	175
Operating expenses
Cost of goods sold		57		54			111			107
Operation and maintenance		27		29			55			55
Depreciation and amortization (1)		-		6			5			10
Taxes other than income taxes		3		-			4			3
Loss on sale and goodwill impairment (2)		4		-			23			-
Total operating expenses		91		89			198			175
Operating income (loss)		1		(1	)		(17	)		-
Income (loss) before income taxes		1		(1	)		(17	)		-
Income tax expense (3)		-		-			(32	)		-
Income (loss) from discontinued operations, net of tax	$	1	$	(1	)	$	(49	)	$	-

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Note 6 - Employee Benefit Plans (Details) - Components of Pension and Other Retirement Benefit Costs (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Pension Plan [Member]
Note 6 - Employee Benefit Plans (Details) - Components of Pension and Other Retirement Benefit Costs [Line Items]
Service cost	$ 6	$ 7	$ 12	$ 15
Interest cost	11	11	23	21
Expected return on plan assets	(16)	(15)	(32)	(31)
Net amortization of prior service cost	(1)	(1)	(1)	(1)
Recognized actuarial loss	6	9	11	17
Net periodic benefit cost	6	11	13	21
Other Postretirement Benefit Plan [Member]
Note 6 - Employee Benefit Plans (Details) - Components of Pension and Other Retirement Benefit Costs [Line Items]
Service cost			1	1
Interest cost	3	4	7	7
Expected return on plan assets	(1)	(2)	(3)	(3)
Net amortization of prior service cost		(1)	(1)	(2)
Recognized actuarial loss	2	2	3	4
Net periodic benefit cost	$ 4	$ 3	$ 7	$ 7

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Note 11 - Segment Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 11 - Segment Information

Our operating segments comprise revenue-generating components of our company for which we produce separate financial information internally that is regularly used to make operating decisions and assess performance. Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers in differing regulatory environments. We manage our businesses through four operating segments - distribution operations, retail operations, wholesale services and midstream operations - and other, a non-operating segment.

On April 4, 2014 we entered into a definitive agreement to sell Tropical Shipping, which historically operated within our cargo shipping segment. The assets and liabilities of these businesses are classified as held for sale on the unaudited Condensed Consolidated Statements of Financial Position, and the financial results of these businesses are reflected as discontinued operations on the unaudited Condensed Consolidated Statements of Income. Amounts shown in this note, unless otherwise indicated, exclude assets held for sale and discontinued operations. Cargo shipping also included our investment in Triton, which is not a part of the sale and has been reclassified into our other segment. See Note 12 for additional information.

Our distribution operations segment is the largest component of our business and includes natural gas local distribution utilities in seven states. These utilities construct, manage and maintain intrastate natural gas pipelines and distribution facilities. Although the operations of our distribution operations segment are geographically dispersed, the operating subsidiaries within the distribution operations segment are all regulated utilities, with rates determined by individual state regulatory commissions. These natural gas distribution utilities have similar economic and risk characteristics.

We also are involved in several related and complementary businesses. Our retail operations segment includes retail natural gas marketing to end-use customers primarily in Georgia and Illinois. Additionally, retail operations provide home protection products and services. Our wholesale services segment engages in natural gas storage and gas pipeline arbitrage and related activities. Additionally, they provide natural gas asset management and/or related logistics services for each of our utilities except Nicor Gas, as well as for nonaffiliated companies. Our midstream operations segment includes our non-utility storage and pipeline operations, including the operation of high-deliverability natural gas storage assets. Our other segment includes intercompany eliminations and aggregated subsidiaries that are individually not significant on a stand-alone basis and that do not fit into one of our operating segments.

The chief operating decision maker of the company is the Chairman, President and Chief Executive Officer who utilizes EBIT as the primary measure of profit and loss in assessing the results of each segment’s operations. EBIT includes operating income and other income and expenses. Items we do not include in EBIT are income taxes and financing costs, including interest expense, each of which we evaluate on a consolidated basis.

Information by segment on our Statements of Financial Position as of December 31, 2013 is as follows:

In millions	Identifiable and total assets (1)		Goodwill
Distribution operations	$	11,727	$	1,640
Retail operations		694		173
Wholesale services		1,166		-
Midstream operations		713		14
Other (2) (3)		73		-
Consolidated	$	14,373	$	1,827

(1) Identifiable assets are those assets used in each segment’s operations and exclude assets held for sale.

(2) The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations.

(3) Includes our investment in Triton that was previously part of the cargo shipping segment.

Summarized Statements of Income, Statements of Financial Position and capital expenditure information by segment as of and for the periods presented are shown in the following tables.

Three months ended June 30, 2014

In millions	Distributionoperations		Retail operations		Wholesale services (1)			Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	668	$	176	$	47		$	17		$	(6	)	$	902
Intercompany revenues		43		1		-			-			(44	)		-
Total operating revenues		711		177		47			17			(50	)		902
Operating expenses
Cost of goods sold		315		119		7			11			(50	)		402
Operation and maintenance		159		34		13			7			(2	)		211
Depreciation and amortization		80		5		1			4			5			95
Taxes other than income taxes		40		1		-			2			(1	)		42
Total operating expenses		594		159		21			24			(48	)		750
Operating income (loss)		117		18		26			(7	)		(2	)		152
Other income (expense)		3		-		(3	)		-			2			2
EBIT	$	120	$	18	$	23		$	(7	)	$	-		$	154
Capital expenditures	$	158	$	3	$	-		$	5		$	5		$	171

Three months ended June 30, 2013

In millions	Distributionoperations		Retail operations		Wholesale services (1)		Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	615	$	165	$	21	$	15		$	-		$	816
Intercompany revenues		43		-		-		-			(43	)		-
Total operating revenues		658		165		21		15			(43	)		816
Operating expenses
Cost of goods sold		266		115		10		4			(42	)		353
Operation and maintenance		159		32		10		6			(2	)		205
Depreciation and amortization		90		5		1		4			3			103
Taxes other than income taxes		38		1		-		2			2			43
Total operating expenses		553		153		21		16			(39	)		704
Gain on disposition of assets		-		-		11		-			-			11
Operating income (loss)		105		12		11		(1	)		(4	)		123
Other income		4		-		-		1			2			7
EBIT	$	109	$	12	$	11	$	-		$	(2	)	$	130
Capital expenditures	$	158	$	3	$	-	$	4		$	3		$	168

Six months ended June 30, 2014

In millions	Distributionoperations		Retail operations		Wholesale services (1)			Midstream operations			Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	2,406	$	582	$	380		$	61		$	(53	)	$	3,376
Intercompany revenues		118		1		-			-			(119	)		-
Total operating revenues		2,524		583		380			61			(172	)		3,376
Operating expenses
Cost of goods sold		1,517		399		10			47			(171	)		1,802
Operation and maintenance		370		71		49			13			(3	)		500
Depreciation and amortization		160		11		1			9			7			188
Taxes other than income taxes		122		2		1			3			2			130
Total operating expenses		2,169		483		61			72			(165	)		2,620
Operating income (loss)		355		100		319			(11	)		(7	)		756
Other income (expense)		4		-		(3	)		1			3			5
EBIT	$	359	$	100	$	316		$	(10	)	$	(4	)	$	761
Identifiable and total assets (2)	$	11,624	$	683	$	1,207		$	699		$	(168	)	$	14,045
Capital expenditures	$	308	$	6	$	1		$	5		$	12		$	332

Six months ended June 30, 2013

In millions	Distributionoperations		Retail operations		Wholesale services (1)		Midstream operations		Other and intercompany eliminations (3)			Consolidated
Operating revenues from external parties	$	1,879	$	467	$	60	$	39	$	(7	)	$	2,438
Intercompany revenues		98		-		-		-		(98	)		-
Total operating revenues		1,977		467		60		39		(105	)		2,438
Operating expenses
Cost of goods sold		1,031		310		20		16		(104	)		1,273
Operation and maintenance		344		63		23		12		(5	)		437
Depreciation and amortization		180		10		1		8		7			206
Taxes other than income taxes		102		2		1		3		4			112
Total operating expenses		1,657		385		45		39		(98	)		2,028
Gain on disposition of assets		-		-		11		-		-			11
Operating income (loss)		320		82		26		-		(7	)		421
Other income		7		-		-		2		3			12
EBIT	$	327	$	82	$	26	$	2	$	(4	)	$	433
Identifiable and total assets (2)	$	11,166	$	641	$	1,008	$	715	$	(24	)	$	13,506
Capital expenditures	$	295	$	4	$	-	$	8	$	8		$	315

(1) Wholesale services records its energy marketing and risk management revenues on a net basis. A reconciliation of our operating revenues and our intercompany revenues is shown in the following table.

In millions	Third party gross revenues		Intercompany revenues		Total gross revenues		Less gross gas costs		Operating revenues
Three months ended June 30, 2014	$	2,379	$	160	$	2,539	$	2,492	$	47
Three months ended June 30, 2013		1,982		103		2,085		2,064		21
Six months ended June 30, 2014		6,430		458		6,888		6,508		380
Six months ended June 30, 2013		4,076		243		4,319		4,259		60

(2) Identifiable assets are those used in each segment’s operations and exclude assets held for sale.

(3) The assets of our other segment consist primarily of cash and cash equivalents and PP&E, and reflect the effect of intercompany eliminations. Our other segment now also includes our investment in Triton, which was part of our cargo shipping segment and has been classified as discontinued operations. For more information see Note 12.

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Note 3 - Regulated Operations (Tables)

6 Months Ended

Jun. 30, 2014

Regulatory Assets and Liabilities Disclosure [Abstract]

Schedule of Regulatory Assets [Table Text Block]

In millions	June 30, 2014		December 31, 2013		June 30, 2013
Regulatory assets
Deferred natural gas costs	$	79	$	1	$	-
Recoverable regulatory infrastructure program costs		47		48		46
Recoverable ERC		33		45		27
Recoverable pension and retiree welfare benefit costs		9		9		19
Other		43		59		28
Total regulatory assets - current		211		162		120
Recoverable ERC		454		433		458
Recoverable regulatory infrastructure program costs		107		87		116
Recoverable pension and retiree welfare benefit costs		94		99		188
Long-term debt fair value adjustment		78		82		86
Other		42		36		50
Total regulatory assets - long-term		775		737		898
Total regulatory assets	$	986	$	899	$	1,018
Regulatory liabilities
Accrued natural gas costs	$	41	$	92	$	130
Bad debt over collection		39		41		39
Accumulated removal costs		27		27		17
Deferred seasonal rates		8		-		8
Other		34		23		22
Total regulatory liabilities - current		149		183		216
Accumulated removal costs		1,478		1,445		1,431
Regulatory income tax liability		27		27		26
Unamortized investment tax credit		24		26		27
Bad debt over collection		9		17		20
Other		27		3		6
Total regulatory liabilities - long-term		1,565		1,518		1,510
Total regulatory liabilities	$	1,714	$	1,701	$	1,726

Schedule of Net Regulatory Assets [Table Text Block]

In millions	June 30, 2014			June 30, 2013			Change
Deferred natural gas costs	$	79		$	-		$	79
Accrued natural gas costs		(41	)		(130	)		89
Total (1)	$	38		$	(130	)	$	168

Environmental Exit Costs by Cost [Table Text Block]

In millions	Probabilistic model cost estimates		Engineering estimates		Amount recorded			Expected costs over next 12 months
Illinois		$205 - $462	$	46	$	251		$	37
New Jersey		126-196		3		129			32
Georgia and Florida		66-106		9		78			14
North Carolina (1)		n/a		11		11			7
Total		$397 - $764	$	69	$	469	(2)	$	90

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Note 5 - Derivative Instruments (Details) - Derivative Instruments on the Condensed Consolidated Statements of Financial Position (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Designated as cash flow or fair value hedges
Net amounts of assets and liabilities presented in our unaudited Condensed Consolidated Statements of Financial Position (3)	$ (62)
Current Natural Gas Contracts [Member] | Designated as Hedging Instrument [Member]
Designated as cash flow or fair value hedges
Assets	2		3		2
Liabilities	(1)		(1)		(1)
Current Natural Gas Contracts [Member] | Not Designated as Hedging Instrument [Member]
Designated as cash flow or fair value hedges
Assets	702		691		456
Liabilities	(721)		(761)		(445)
Long-Term Natural Gas Contracts [Member] | Not Designated as Hedging Instrument [Member]
Designated as cash flow or fair value hedges
Assets	77		206		124
Liabilities	(89)		(220)		(139)
Long-Term Natural Gas Contracts [Member]
Designated as cash flow or fair value hedges
Assets	781	[1],[2]	900	[1],[2]	582	[1],[2]
Liabilities	(811)	[1],[2]	(982)	[1],[2]	(585)	[1],[2]
Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position (2)	(667)	[2]	(781)	[2]	(452)	[2]
Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position (2)	749	[2]	902	[2]	546	[2]
Designated as Hedging Instrument [Member]
Designated as cash flow or fair value hedges
Net amounts of assets and liabilities presented in our unaudited Condensed Consolidated Statements of Financial Position (3)	114	[3]	119	[3]	130	[3]
Net amounts of assets and liabilities presented in our unaudited Condensed Consolidated Statements of Financial Position (3)	(62)	[3]	(80)	[3]	(39)	[3]
Not Designated as Hedging Instrument [Member]
Designated as cash flow or fair value hedges
Assets	779		897		580
Liabilities	$ (810)		$ (981)		$ (584)

[1] The gross amounts of recognized assets and liabilities are netted within our unaudited Condensed Consolidated Statements of Financial Position to the extent that we have netting arrangements with the counterparties.

[2] As required by the authoritative guidance related to derivatives and hedging, the gross amounts of recognized assets and liabilities above do not include cash collateral held on deposit in broker margin accounts of $82 million as of June 30, 2014, $121 million as of December 31, 2013 and $94 million as of June 30, 2013. Cash collateral is included in the "Gross amounts offset in our unaudited Condensed Consolidated Statements of Financial Position" line of this table.

[3] At June 30, 2014, December 31, 2013 and June 30, 2013 we held letters of credit from counterparties that would offset, under master netting arrangements, an insignificant portion of these assets.

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Note 3 - Regulated Operations (Details) - Change in Net Position of Deferred and Accrued Natural Gas Costs (USD $) In Millions, unless otherwise specified	6 Months Ended			12 Months Ended			12 Months Ended				12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Accrued natural gas costs [Member]	Dec. 31, 2013 Accrued natural gas costs [Member]	Jun. 30, 2013 Accrued natural gas costs [Member]	Jun. 30, 2014 Natural Gas Costs [Member]		Jun. 30, 2013 Natural Gas Costs [Member]		Jun. 30, 2014 Deferred Natural Gas Costs [Member]	Dec. 31, 2013 Deferred Natural Gas Costs [Member]
Note 3 - Regulated Operations (Details) - Change in Net Position of Deferred and Accrued Natural Gas Costs [Line Items]
Deferred natural gas costs	$ 211	$ 120	$ 162								$ 79	$ 1
Deferred natural gas costs	129	(40)									79
Accrued natural gas costs	(149)	(216)	(183)	(41)	(92)	(130)
Accrued natural gas costs				89
Total (1)							38	[1]	(130)	[1]
Total (1)							$ 168	[1]

[1] The $168 million change resulted from increased natural gas prices during the first half of 2014 compared to the first half of 2013, primarily driven by colderweather experienced in 2014. These costs will be fully recovered in future periods.

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Condensed Consolidated Statements of Income (Unaudited) (Parentheticals) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Operating revenues, revenue taxes	$ 26	$ 24	$ 94	$ 74

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities
Net income	$ 368	$ 214
Adjustments to reconcile net income to net cash flow provided by operating activities
Depreciation and amortization	188	206
Loss from discontinued operations, net of taxes	49
Deferred income taxes	21	(14)
Change in derivative instrument assets and liabilities	(13)	14
Gain on disposition of assets		(11)
Changes in certain assets and liabilities
Inventories, net of temporary LIFO liquidation	314	261
Receivables, other than energy marketing	238	267
Energy marketing receivables and trade payables, net	162	86
Accrued expenses	10	31
Prepaid taxes	(11)	57
Trade payables, other than energy marketing	(61)	(15)
Deferred/accrued natural gas costs	(129)	40
Other, net	35	14
Net cash flow provided by operating activities for discontinued operations	4	11
Net cash flow provided by operating activities	1,175	1,161
Cash flows from investing activities
Expenditures for property, plant and equipment	(332)	(315)
Net decrease in short-term investments	41	15
Acquisitions of assets		(122)
Disposition of assets		12
Other	4
Net cash flow used in investing activities for discontinued operations	(13)	(3)
Net cash flow used in investing activities	(300)	(413)
Cash flows from financing activities
Net repayments of commercial paper	(723)	(857)
Dividends paid on common shares	(117)	(111)
Distribution to noncontrolling interest	(17)	(17)
Payment of senior notes		(225)
Issuance of senior notes		494
Other, net	14	21
Net cash flow used in financing activities	(843)	(695)
Net increase in cash and cash equivalents - continuing operations	41	45
Net (decrease) increase in cash and cash equivalents - discontinued operations	(9)	8
Cash and cash equivalents (including held for sale) at beginning of period	105	131
Cash and cash equivalents (including held for sale) at end of period	137	184
Less cash and cash equivalents held for sale at end of period	15	31
Cash and cash equivalents (excluding held for sale) at end of period	122	153
Cash paid during the period for
Interest	95	89
Income taxes	207	60
Non cash financing transaction
Refinancing of gas facility revenue bonds		$ 200

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Note 9 - Non-Wholly Owned Entities (Details) - SouthStar’s Assets and Liabilities (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013		Dec. 31, 2012
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Current assets	$ 2,431		$ 2,945		$ 2,277
Goodwill and intangible assets	1,974		1,981		1,986
Long-term assets and other deferred debits	9,897		9,730		9,532
Total assets	14,302		14,656		13,795
Current liabilities	2,596		3,123		2,349
Long-term liabilities and other deferred credits	7,772		7,857		7,891
Total Liabilities	10,368		10,980		10,240
Equity	3,934		3,676		3,555		3,435
Total liabilities and equity	14,302		14,656		13,795
South Star [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Current assets	250	[1]	264	[1]	135	[1]
Goodwill and intangible assets	137	[1]	139	[1]		[1]
Long-term assets and other deferred debits	21	[1]	12	[1]	10	[1]
Total assets	408	[1]	415	[1]	145	[1]
Current liabilities	124	[1]	95	[1]	40	[1]
Long-term liabilities and other deferred credits	16	[1]		[1]		[1]
Total Liabilities	140	[1]	95	[1]	40	[1]
Equity	268	[1]	320	[1]	105	[1]
Total liabilities and equity	$ 408	[1]	$ 415	[1]	$ 145	[1]
South Star Percentage To Consolidated [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Current assets	10.00%	[2]	9.00%	[2]	6.00%	[2]
Goodwill and intangible assets	7.00%	[2]	7.00%	[2]		[2]
Long-term assets and other deferred debits		[2]		[2]		[2]
Total assets	3.00%	[2]	3.00%	[2]	1.00%	[2]
Current liabilities	5.00%	[2]	3.00%	[2]	2.00%	[2]
Long-term liabilities and other deferred credits		[2]		[2]		[2]
Total Liabilities	1.00%	[2]	1.00%	[2]		[2]
Equity	7.00%	[2]	9.00%	[2]	3.00%	[2]
Total liabilities and equity	3.00%	[2]	3.00%	[2]	1.00%	[2]

[1] These amounts reflect information for SouthStar and exclude intercompany eliminations and the balances of our wholly owned subsidiary with an 85% ownership interest in SouthStar.

[2] SouthStar's percentage of the amount on our Statements of Financial Position.

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Note 12 - Discontinued Operations (Details) - Discontinued Operations from Statement of Income (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Operating revenues	$ 92		$ 88		$ 181		$ 175
Operating expenses
Cost of goods sold	57		54		111		107
Operation and maintenance	27		29		55		55
Depreciation and amortization (1)		[1]	6	[1]	5	[1]	10	[1]
Taxes other than income taxes	3				4		3
Loss on sale and goodwill impairment (2)			(11)				(11)
Total operating expenses	91		89		198		175
Operating income (loss)	1		(1)		(17)
Income (loss) before income taxes	1		(1)		(17)
Income tax expense (3)		[2]		[2]	(32)	[2]		[2]
Income (loss) from discontinued operations, net of tax	1		(1)		(49)
Goodwill Impairment Charges [Member]
Operating expenses
Loss on sale and goodwill impairment (2)	$ 4	[3]		[3]	$ 23	[3]		[3]

[1] We ceased depreciating and amortizing Tropical Shipping's assets on April 4, 2014 as a result of entering into an agreement to sell this business and the assetswere classified as held for sale.

[2] Expense for the six months ended 2014 includes $31 million that was recorded in the first quarter of 2014 related to the cumulative foreign earnings for which no taxliabilities previously had been recorded.

[3] Relates to the suspension of depreciation and amortization of $4 million and $19 million of goodwill attributable to Tropical Shipping that was impaired as of March31, 2014 based on the negotiated sales price.

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Note 4 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 30, 2014					December 31, 2013					June 30, 2013
In millions	Assets (1)		Liabilities			Assets (1)		Liabilities			Assets (1)		Liabilities
Natural gas derivatives
Quoted prices in active markets (Level 1)	$	8	$	(38	)	$	6	$	(79	)	$	4	$	(51	)
Significant other observable inputs (Level 2)		57		(60	)		67		(79	)		78		(35	)
Netting of cash collateral		46		36			43		78			47		47
Total carrying value (2) (3)	$	111	$	(62	)	$	116	$	(80	)	$	129	$	(39	)

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

In millions	June 30, 2014		December 31, 2013		June 30, 2013
Long-term debt carrying amount	$	3,807	$	3,813	$	3,819
Long-term debt fair value (1)		4,191		3,956		4,070

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Note 2 - Significant Accounting Policies and Methods of Application (Details) - Potentially Dilutive Common Share Calculation (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Potentially Dilutive Common Share Calculation [Abstract]
Income from continuing operations (in Dollars)	$ 63	$ 50	$ 403	$ 203
Income (loss) from discontinued operations, net of tax (in Dollars)	1	(1)	(49)
Net income attributable to AGL Resources Inc. (in Dollars)	$ 64	$ 49	$ 354	$ 203
Basic weighted average number of shares outstanding (1) (in Shares)	118.8	117.8	118.7	117.6
Effect of dilutive securities (in Shares)	0.4	0.4	0.4	0.3
Diluted weighted average number of shares outstanding (in Shares)	119.2	118.2	119.1	117.9
Basic earnings (loss) per share
From continuing operations	$ 0.53	$ 0.42	$ 3.40	$ 1.72
From discontinued operations	$ 0.01	$ (0.01)	$ (0.42)
Basic earnings per common share attributable to AGL Resources Inc. common shareholders	$ 0.54	$ 0.41	$ 2.98	$ 1.72
Diluted earnings (loss) per share
From continuing operations	$ 0.53	$ 0.42	$ 3.39	$ 1.72
From discontinued operations	$ 0.01	$ (0.01)	$ (0.42)
Diluted earnings per common share attributable to AGL Resources Inc. common shareholders	$ 0.54	$ 0.41	$ 2.97	$ 1.72

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Note 10 - Commitments, Guarantees and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 10 - Commitments, Guarantees and Contingencies

We have incurred various contractual obligations and financial commitments in the normal course of our operating and financing activities that are reasonably likely to have a material effect on liquidity or the availability of capital resources. Contractual obligations include future cash payments required under existing contractual arrangements, such as debt and lease agreements. These obligations may result from both general financing activities and from commercial arrangements that are directly supported by related revenue-producing activities.

We also are involved in legal or administrative proceedings before various courts and agencies with respect to general claims, taxes, environmental, gas cost prudence reviews and other matters. Although we are unable to determine the ultimate outcomes of these other contingencies, we believe that our financial statements appropriately reflect these amounts, including the recording of liabilities when a loss is probable and reasonably estimable. For more information on these matters, see Note 11 in our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K.

Contingencies and Guarantees

Contingent financial commitments, such as financial guarantees, represent obligations that become payable only if certain predefined events occur. We have certain subsidiaries that enter into various financial and performance guarantees and indemnities providing assurance to third parties. We believe the likelihood of payment under our guarantees is remote. No liability has been recorded for such guarantees and indemnifications as the fair value was inconsequential at inception.

Regulatory Matters

On December 21, 2012 Atlanta Gas Light filed a petition with the Georgia Commission for approval to resolve an imbalance of approximately 4.8 Bcf of natural gas related to Atlanta Gas Light’s use of retained storage assets to operationally balance the system for the benefit of the natural gas market. We believe that any costs associated with resolving the imbalance are recoverable from Marketers. We are currently working with the Marketers to settle this matter, and the resolution of this imbalance will ultimately be decided by the Georgia Commission. We are currently unable to predict the ultimate outcome.

Environmental Matters

We are subject to federal, state and local laws and regulations governing environmental quality and pollution control that require us to remove or remedy the effect on the environment of the disposal or release of specified substances at our current and former operating sites. See Note 3 for additional information.

Litigation

We are involved in litigation arising in the normal course of business. Although in some cases the company is unable to estimate the amount of loss reasonably possible in addition to any amounts already recognized, it is possible that the resolution of these contingencies, either individually or in aggregate, will require us to take charges against, or will result in reductions in, future earnings. Management believes that while the resolution of these contingencies, whether individually or in aggregate, could be material to earnings in a particular period, they will not have a material adverse effect on our consolidated financial position or cash flows. For additional litigation information, see Note 11 in our Consolidated Financial Statements and related notes in Item 8 of our 2013 Form 10-K.

PBR Proceeding Nicor Gas’ PBR plan was a regulatory plan that provided economic incentives based on natural gas cost performance. The PBR plan went into effect in 2000 and was terminated effective January 1, 2003, following allegations that Nicor Gas acted improperly in connection with the plan. Under this plan, Nicor Gas’ total gas supply costs were compared to a market-sensitive benchmark. Savings and losses relative to the benchmark were determined annually and shared equally with sales customers. Since 2002 the amount of the savings and losses required to be shared has been disputed by the Citizens Utility Board (CUB) and others, with the Illinois Attorney General (IAG) intervening, and subject to extensive contested discovery and other regulatory proceedings before administrative law judges and the Illinois Commission. In 2009 the staff of the Illinois Commission, IAG and CUB requested refunds of $85 million, $255 million and $305 million, respectively.

In February 2012 we committed to a stipulation with the staff of the Illinois Commission for a resolution of the dispute through the crediting to Nicor Gas customers of $64 million. On November 5, 2012 the Administrative Law Judges issued a proposed order for a refund of $72 million to ratepayers. In the fourth quarter of 2012, we increased our accrual for this dispute by $8 million for a total of $72 million as a result of these developments and their effect on the estimated liability.

On June 7, 2013 the Illinois Commission issued an order requiring us to refund $72 million to current Nicor Gas customers over a 12-month period. On July 1, 2013 we began refunding customers the full $72 million through our purchased gas adjustment mechanism based on natural gas throughput. As of June 30, 2014 the full amount has been refunded, with $43 million having been paid during the six months ended June 30, 2014.

CUB appealed the Illinois Commission’s order to the appellate court in Illinois. On February 28, 2014 CUB filed its initial brief with the appellate court requesting refunds consistent with its 2009 request. Nicor Gas filed its reply on July 25, 2014.