UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended September 30, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from __________ to ____________
Commission File Number 1-10042
ATMOS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-1743247
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Three Lincoln Centre, Suite 1800
5430 LBJ Freeway, Dallas, Texas 75240
(Address of principal executive offices (Zip code)
Registrant's telephone number, including area code:
(214) 934-9227
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ----------------------
Common stock, No Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) 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. Yes X. No ___.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]<PAGE>
The aggregate market value of the voting stock held by non-
affiliates of the registrant was $301,605,820 as of December 1,
1995. On December 1, 1995, the registrant had 15,900,392 shares
of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant's definitive proxy statement filed
for the annual meeting of shareholders on February 14, 1996 are
incorporated by reference into Part III.<PAGE>
PART I
ITEM 1. BUSINESS
Atmos Energy Corporation (the "Company") was organized under
the laws of the State of Texas in 1983 as a subsidiary of Pioneer
Corporation ("Pioneer") for the purposes of owning and operating
Pioneer's natural gas distribution business in Texas. Immediate-
ly following the transfer of such business, which had been opera-
ted by Pioneer and its predecessors since 1906, Pioneer distrib-
uted the outstanding stock of the Company, then known as Energas
Company, to Pioneer shareholders. In September 1988, the Company
changed its name from Energas Company to Atmos Energy
Corporation.
The Company distributes and sells natural gas to
residential, commercial, industrial, agricultural, and other
customers in 414 cities, towns, and communities in parts of
Texas, Louisiana, Kentucky, Colorado, Kansas, and Missouri. The
Company also transports gas for others through parts of its
distribution system. The Company is also helping promote the
development of a market for natural gas as a clean burning
vehicular fuel by opening six public refueling facilities in its
service areas.
The Company's Texas distribution system is operated through
its Energas Company division (the "Energas Division") and is
located in the western part of Texas covering an area having a
population of approximately 950,000 people. The economy of the
area is based primarily on oil and gas production and agricul-
ture. The principal cities served by the Energas Division
include Amarillo, Lubbock, Midland, and Odessa. At September 30,
1995, the Company had 310,765 gas meters in service in Texas.
The Company's Louisiana distribution system is operated
through its Trans Louisiana Gas Company division (the "Trans La
Division") and is located in Louisiana covering an area having a
population of approximately 250,000 people. The economy of the
area is based primarily on oil and gas production, agriculture,
and food processing. The principal cities served by the Trans La
Division are Lafayette, Pineville, and Natchitoches. At
September 30, 1995, the Company had 70,570 gas meters in service
in Louisiana.
The Company's Kentucky distribution system is operated
through its Western Kentucky Gas Company division (the "Western
Kentucky Division") and covers an area having a population of
approximately 680,000 people. The economy of the area is based
primarily on industry and agriculture. The principal cities
served by the Western Kentucky Division include Bowling Green,
Owensboro, and Paducah. At September 30, 1995, the Company had
168,529 gas meters in service in Kentucky.
In December 1993, the Company acquired Greeley Gas Company
("GGC") of Denver, Colorado in a merger accounted for as a pool-
1<PAGE>
ing of interests, and accordingly, all amounts included herein
have been restated to include GGC's operating results. Since the
merger, the business of GGC has been operated through the
Company's Greeley Gas Company division (the "Greeley Gas
Division"). It serves customers in areas of Colorado, Kansas,
and Missouri having a combined population of approximately
228,000 people. The economies of the areas served are based on
oil and gas production, agriculture and resort business in
Colorado. The principal cities served include Greeley, Durango
and Lamar, Colorado and Bonner Springs, Herington and Ulysses,
Kansas. At September 30, 1995 the Greeley Gas Division had
108,250 meters in service.
The natural gas distribution industry is subject to numerous
special factors, many of which affect the Company from time to
time. These include (i) adequate and timely rate relief from
regulatory authorities to recover costs of service and earn a
fair return on invested capital; (ii) inherent seasonality of the
business in local gas distribution service areas; (iii)
competition from alternate fuels; (iv) competition with other gas
sources for industrial customers, including bypass of the
Company's facilities, which could result in loss of revenues and
reduction in the Company's net income; and (v) possible
volatility in the supply and price of natural gas.
ACQUISITIONS
Since its organization in 1983, the Company has sought to
expand its customer base and to diversify the weather patterns,
local economic conditions, and regulatory environments to which
its operations are subject. As part of this strategy, the
Company acquired Trans Louisiana Gas Company, Inc. ("TLG") in
January 1986, Western Kentucky Gas Utility Corporation ("WKG") in
December 1987, and Greeley Gas Company ("GGC") in December 1993.
Subsequent to September 30, 1995, the Company acquired Oceana
Heights Gas Company ("Oceana") of Thibodaux, Louisiana. Oceana
provides natural gas service to approximately 9,200 customers.
The Company continues to consider and pursue, where appropriate,
additional acquisitions of natural gas distribution properties
and other business opportunities. For further information
regarding acquisitions, see Note 2 of notes to consolidated
financial statements, and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
FIVE-YEAR OPERATING STATISTICS
Certain information with respect to the Company's natural
gas operations for the past five years is shown on the following
page.
2<PAGE>
<TABLE>
<CAPTION>
Year ended September 30,
---------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NUMBER OF ACCOUNTS, at end of year
Residential 551,269 549,129 539,309 534,762 529,498
Commercial 55,894 55,027 54,275 55,562 54,703
Industrial (including agricultural) 8,331 8,781 8,924 9,331 9,793
Public authority and other 3,377 3,351 3,267 1,745 1,788
------- ------- ------- ------- -------
Total 618,871 616,288 605,775 601,400 595,782
======= ======= ======= ======= =======
METERS IN SERVICE, at end of year 658,114 649,319 636,159 630,365 619,111
======= ======= ======= ======= =======
METERS IN SERVICE, average 656,259 646,165 635,074 631,130 618,736
======= ======= ======= ======= =======
HEATING DEGREE DAYS, system average (1)
Actual 3,579 3,953 4,046 3,676 3,583
Normal 3,983 3,983 3,983 3,983 3,983
Percent of normal 90% 99% 102% 92% 90%
SALES VOLUMES - MMcf (2)
Residential 46,765 51,209 51,763 48,223 47,484
Commercial 19,756 21,134 21,872 20,675 20,778
Industrial (including agricultural) 38,046 38,502 31,367 27,489 29,788
Public authority and other 4,779 5,242 4,403 3,333 3,385
------- ------- ------- ------- -------
Total 109,346 116,087 109,405 99,720 101,435
TRANSPORTATION VOLUMES - MMcf (2) 30,463 35,308 39,782 32,203 35,201
------- ------- ------- ------- -------
TOTAL VOLUMES HANDLED - MMcf (2) 139,809 151,395 149,187 131,923 136,636
======= ======= ======= ======= =======
OPERATING REVENUES (000's)
Gas Revenues
Residential $210,165 $245,931 $237,914 $211,767 $202,486
Commercial 79,982 92,507 91,250 82,311 81,414
Industrial (including agricultural 110,815 119,722 92,455 77,218 81,746
Public authority and other 18,185 22,463 18,315 13,232 13,290
-------- -------- -------- -------- --------
Total gas revenues 419,147 480,623 439,934 384,528 378,936
Transportation Revenues 11,711 14,118 15,013 13,674 16,348
Other Revenue 4,962 5,067 4,694 5,151 4,383
-------- -------- -------- -------- --------
Total operating revenues $435,820 $499,808 $459,641 $403,353 $399,667
======== ======== ======== ======== ========
AVERAGE SALES PRICE/Mcf
Residential $4.49 $4.80 $4.60 $4.39 $4.26
Commercial 4.05 4.38 4.17 3.98 3.92
Industrial (including agricultural) 2.91 3.11 2.95 2.81 2.74
Public authority and other 3.81 4.29 4.16 3.97 3.93
Total 3.83 4.14 4.02 3.86 3.74
AVERAGE COST OF GAS/Mcf SOLD 2.46 2.86 2.71 2.58 2.58
<FN>
See footnotes on page 4.
</FN>
</TABLE>
3 <PAGE>
<TABLE>
SALES AND STATISTICAL DATA BY STATE - 1995
<CAPTION>
Year ended September 30, 1995
----------------------------------------------------------------
Texas Louisiana Kentucky Colorado Kansas Mo. Total
------- --------- -------- -------- ------ --- -------
<S> <C> <C> <C> <C> <C> <C> <C>
METERS IN SERVICE, at end of year
Residential 265,192 64,612 149,567 69,865 24,225 519 573,980
Commercial 24,893 4,937 16,989 9,862 3,284 71 60,036
Industrial (including agricultural) 18,130 115 447 98 326 - 19,116
Public authority and other 2,550 906 1,526 - - - 4,982
------- ------ ------- ------ ------ --- -------
Total 310,765 70,570 168,529 79,825 27,835 590 658,114
======= ====== ======= ====== ====== === =======
HEATING DEGREE DAYS, system average (1)
Actual 3,152 1,448 3,792 6,243 5,093 5,044 3,579
Normal 3,528 1,760 4,376 6,556 5,158 5,028 3,983
Percent of normal 89% 82% 87% 95% 99% 100% 90%
SALES VOLUMES (2)
Residential 22,338 3,163 11,949 7,007 2,265 43 46,765
Commercial 7,300 1,183 5,276 4,905 1,081 11 19,756
Industrial (including agricultural) 23,875 1,864 9,992 725 1,590 - 38,046
Public authority and other 2,547 789 1,443 - - - 4,779
------ ----- ------ ------ ----- -- ------
Total 56,060 6,999 28,660 12,637 4,936 54 109,346
TRANSPORTATION VOLUMES (2) 9,571 490 17,103 3,180 119 - 30,463
------ ----- ------ ------ ----- -- -------
TOTAL VOLUMES HANDLED (2) 65,631 7,489 45,763 15,817 5,055 54 139,809
====== ===== ====== ====== ===== == =======
OTHER STATISTICS
Operating revenues (000's) $207,149 $38,716 $117,154 $51,199 $21,254 $348 $435,820
Gross plant (000's) $245,173 $93,677 $142,699 $73,216 $40,000 $594 $595,359
Net plant (000's) $138,479 $70,899 $87,705 $41,995 $23,772 $402 $363,252
Miles of pipe 13,090 1,863 3,509 2,400 1,318 32 22,212
Employees (3) 833 161 383 204 65 - 1,646
Communities served 92 37 163 62 58 2 414
Estimated population in service area 950,000 250,000 680,000 160,000 66,000 2,000 2,108,000
Estimated square miles in service
area 30,000 7,000 12,000 1,050 580 20 50,650
Vehicles in fleet 452 144 295 169 53 - 1,113
Franchises 72 58 63 34 42 2 271
<FN>
(1) A heating degree day is equivalent to each degree that the
average of the high and the low temperatures for a day is
below 65 degrees. The greater the number of heating degree
days, the colder the climate. Heating degree days are used
in the natural gas industry to measure the coldness of wea-
ther experienced and to compare relative temperatures be-
tween one geographic area and another.
4 <PAGE>
(2) Volumes are reported as metered in million cubic feet
("MMcf").
(3) The Texas column includes 223 and 224 employees in the
Dallas general office in 1995 and 1994, respectively.
</FN>
</TABLE>
5 <PAGE>
<TABLE>
SALES AND STATISTICAL DATA BY STATE - 1994
<CAPTION>
Year ended September 30, 1994
---------------------------------------------------------------
Texas Louisiana Kentucky Colorado Kansas Mo. Total
------- ------ ------- ------ ------ --- -------
<S> <C> <C> <C> <C> <C> <C> <C>
METERS IN SERVICE, at end of year
Residential 263,330 64,401 146,384 67,062 23,692 546 565,415
Commercial 24,899 4,944 16,653 9,594 3,228 71 59,389
Industrial (including agricultural) 18,749 108 268 108 333 - 19,566
Public authority and other 2,518 908 1,523 - - - 4,949
------- ------ ------- ------ ------ --- -------
Total 309,496 70,361 164,828 76,764 27,253 617 649,319
======= ====== ======= ====== ====== === =======
HEATING DEGREE DAYS, system average (1)
Actual 3,561 1,922 4,342 6,116 5,108 4,990 3,953
Normal 3,528 1,760 4,376 6,556 5,158 5,028 3,983
Percent of normal 101% 109% 99% 93% 99% 99% 99%
SALES VOLUMES (2)
Residential 24,276 3,604 13,776 7,041 2,464 48 51,209
Commercial 7,933 1,260 5,820 4,943 1,167 11 21,134
Industrial (including agricultural) 25,791 1,606 8,766 734 1,605 - 38,502
Public authority and other 2,714 885 1,643 - - - 5,242
------ ----- ------ ----- ----- -- ------
Total 60,714 7,355 30,005 12,718 5,236 59 116,087
TRANSPORTATION VOLUMES (2) 14,179 500 17,498 3,071 60 - 35,308
------ ----- ------ ------ ----- -- -------
TOTAL VOLUMES HANDLED (2) 74,893 7,855 47,503 15,789 5,296 59 151,395
====== ===== ====== ====== ===== == =======
OTHER STATISTICS
Operating revenues (000's) $234,628 $43,374 $143,508 $55,010 $22,880 $408 $499,808
Gross plant (000's) $221,516 $86,771 $127,169 $70,852 $36,819 $565 $543,692
Net plant (000's) $119,616 $66,220 $79,410 $40,355 $21,446 $360 $327,407
Miles of pipe 13,007 1,815 3,425 2,352 1,295 33 21,927
Employees (3) 859 166 387 221 76 - 1,709
Communities served 92 36 163 62 58 2 413
Estimated population in service area 950,000 250,000 680,000 160,000 66,000 2,000 2,108,000
Estimated square miles in service
area 30,000 7,000 12,000 1,050 580 20 50,650
Vehicles in fleet 446 137 268 154 52 - 1,057
Franchises 71 58 62 36 42 2 271
<FN>
See footnotes on page 4.
</FN>
</TABLE>
6 <PAGE>
GAS SALES
The Company's natural gas distribution business is seasonal
and highly dependent on weather conditions in the Company's
service areas. Gas sales to residential and commercial customers
are greater during the winter months than during the remainder of
the year. The volumes of such sales during the winter months
will vary with the temperatures during such months. The seasonal
nature of the Company's sales to residential and commercial
customers is offset partially by the Company's sales in the
spring and summer months to its agricultural customers in Texas,
Colorado and Kansas who utilize natural gas to operate irrigation
equipment. The Company's management believes that the Company
has lessened its sensitivity to weather risk by diversifying its
operations into geographic areas having different weather
patterns.
In addition to weather, the Company's revenues are affected
by the cost of natural gas and economic conditions in the areas
that the Company serves. Higher gas costs, which the Company is
generally able to pass through to its customers under purchased
gas adjustment clauses, may cause customers to conserve, or, in
the case of industrial customers, to use alternative energy
sources.
In recent years, natural gas market conditions have changed.
Natural gas prices to distributors have become more volatile and
the number of competing marketers of natural gas has increased.
The Company's gas marketing subsidiaries purchase gas to address
these changing markets.
In certain instances, customers purchase gas directly from
others and the Company transports such gas through its
distribution systems to the customers' facilities for a fee.
Although transportation of customer-owned gas reduces the
Company's operating revenues and corresponding purchased gas
cost, the transportation revenues received by the Company may
offset the loss of gross profit.
The Company's distribution systems have experienced
aggregate peak day deliveries of approximately 1 billion cubic
feet ("Bcf") per day. The Company has the ability to curtail
deliveries to certain customers under the terms of interruptible
contracts and applicable state statutes or regulations which
enables it to maintain its deliveries to high priority customers.
The Company has not imposed curtailment in its Energas Division
since the Company began independent operations in 1983 or in its
Trans La Division since the Company acquired TLG in 1986. The
Western Kentucky Division curtailed deliveries to certain
interruptible customers during exceptionally cold periods in
December 1989 and January 1994. GGC has not curtailed deliveries
to its sales customers since prior to 1980.
7<PAGE>
GAS SUPPLY
The principal gas suppliers to the Company in 1995, 1994 and
1993 included Westar Transmission Company ("Westar"), an affil-
iate of KNEnergy; Anthem Energy Company, L.P. ("Anthem"), an
affiliate of KNEnergy; Mesa Operating Company ("Mesa"); Louisiana
Intrastate Gas Corporation ("LIG"), an affiliate of Equitable
Resources Inc.; Tennessee Gas Pipeline Company ("Tennessee Gas"),
an affiliate of Tenneco, Inc.; Texas Gas Transmission Corporation
("Texas Gas"), an affiliate of The Williams Companies, Inc.;
Texaco Gas Marketing; Union Pacific Fuels; Vastar, an affiliate
of ARCO; Associated Natural Gas, Inc. ("ANGI"), an affiliate of
Panhandle Eastern Corporation; and Astra Resources Marketing,
Inc. ("Astra"), an affiliate of Western Resources, Inc. The
prices paid by the Company for natural gas delivered to it are
set by contracts with gas suppliers and/or ratemaking proceedings
before regulatory authorities. Charges for gas costs are passed
through to the Company's customers under approved or negotiated
tariffs or pursuant to contract.
8<PAGE>
The following table sets forth volumes purchased from the
Company's principal gas suppliers for the years ended September
30, 1995, 1994, and 1993.
Volumes
purchased
(MMcf as metered)
1995:
Associated Natural Gas, Inc. 7,077
Astra Resources Marketing, Inc. 2,565
Chevron 2,154
Hadson Gas 2,902
LIG 2,698
Mesa 9,369
Texaco Gas Marketing 8,427
Union Pacific Fuels 5,298
Vastar 3,490
Westar and Anthem 43,950
1994:
Associated Natural Gas, Inc. 3,283
Astra Resources Marketing, Inc. 2,210
LIG 4,254
Mesa 9,926
Texaco Gas Marketing 5,453
Union Pacific Fuels 5,825
Vastar 6,881
Westar and Anthem 47,842
1993:
Associated Natural Gas, Inc. 3,291
Astra Resources Marketing, Inc. 1,946
LIG 4,490
Mesa 10,659
Tennessee Gas 2,575
Texas Gas 10,329
Westar and Anthem 45,031
Westar and Anthem supply natural gas to most of the Energas
Division under multiple contracts. The Westar contract expires in
1998. The Anthem contracts are renegotiated annually. Westar
purchases gas from various pipeline companies and natural gas
processing plants and at the wellhead. Westar's gas price to the
Company is subject to an annual adjustment in accordance with the
existing contract.
The principal gas supply for the Company's Amarillo, Texas
distribution system is furnished by Mesa under a long-term con-
tract that expires upon the depletion of the field from which the
gas is produced. Mesa owns the gas rights in certain specified
acreage in the West Panhandle field. Pursuant to a contract
between Colorado Interstate Gas Company ("CIG") and Mesa, CIG is
obligated to deliver to Mesa the volumes of gas required for sale
to customers in Amarillo and its environs, subject to certain
contractual volume limitations, so long as the gas reserves from
the West Panhandle field are commercially producible. The price
9<PAGE>
under the contract is determined each year pursuant to a formula
until December 1997. The contract also provides a mechanism for
price redetermination each two year period thereafter beginning
January 1, 1998.
On October 28, 1991, the Company and LIG entered into new
agreements which were approved by the Louisiana Public Service
Commission ("Louisiana Commission") on November 26, 1991, and
became effective June 1, 1992. These agreements provide
continued supply by LIG for most of the Trans La Division's gas
requirements for a term of ten years (but subject to cancellation
by either party after five years). The agreements provide for
market sensitive pricing and allow the Company to purchase
certain volumes of gas from other suppliers. LIG is required to
provide standby service to back up the purchases from the other
suppliers.
The Company's Louisiana industrial sales subsidiary, Trans
Louisiana Industrial Gas Company, Inc., purchases some gas
supplies for resale to certain of its Louisiana industrial
customers from suppliers other than LIG.
The Western Kentucky Division requirements are delivered by
Texas Gas and Tennessee Gas with the exception of a small
percentage of the requirements being purchased directly from
intrastate producers. The Western Kentucky Division purchases
its supply under staggered term contracts from major producers
and marketers including Texaco, Union Pacific, Vastar, Associated
Natural, Hadson and Chevron.
The Company's distribution system in the Western Kentucky
Division includes six underground storage facilities, which are
used to help meet customer requirements during peak demand per-
iods and to reduce the need to contract for additional pipeline
capacity to meet such peak demand periods. See "Item 2. Proper-
ties" for further information regarding the underground storage
facilities. The Company also contracted for storage service in
underground storage facilities of Tennessee Gas and Texas Gas
under FERC Order No. 636.
The Greeley Gas Division purchases or transports approximat-
ely 82% of its natural gas requirements on eight pipelines. Five
of these are regulated by the FERC and the remaining three are
state regulated. The FERC pipelines are Colorado Interstate Gas
Company, Williams Natural Gas Company, KNEnergy, Northwest Pipe-
line Corporation, and NorAm. The state regulated pipelines are
Public Service Company of Colorado, Western Resources, Inc. and
Kansas Pipeline Partnership in Kansas. Approximately 18% of the
Divisions's gas supply is purchased from local sources. Several
of the operating areas are in or adjacent to natural gas produc-
ing fields.
Associated Natural Gas, Inc. is the main supplier to the
Greeley Gas Division's largest district, the Greeley District.
10<PAGE>
Astra is the principal gas supplier for the Kansas and
Missouri districts. Gas is transported through three different
pipeline systems (Williams Natural Gas, Western Resources, Inc.
and NorAm).
The Company has not experienced supply curtailment in its
Texas distribution system since it began independent operations
in 1983, in its Louisiana system since its acquisition, or in
Colorado, Kansas or Missouri since prior to 1980. A large
proportion of the Company's sales are made to high priority
residential and commercial consumers; therefore, any curtailment
of supply for these customers is unlikely.
REGULATION AND RATES
Regulation. In the Energas Division, the governing body of
each municipality served by the Company has original jurisdiction
over all utility rates, operations, and services within its city
limits except with respect to sales of natural gas for vehicle
fuel and agricultural use. The Company operates pursuant to non-
exclusive franchises granted by the municipalities it serves,
which franchises are subject to renewal from time to time. The
franchises granted to the Company permit it to conduct natural
gas distribution within the municipalities' incorporated limits.
The Railroad Commission of Texas ("Railroad Commission") has
exclusive appellate jurisdiction over all rate and regulatory
orders and ordinances of the municipalities and exclusive
original jurisdiction over rates and services to customers not
located within the limits of a municipality. In Texas, rates for
large industrial customers are routinely set by contract
negotiation between the Company and its customers pursuant to
statutory standards and are filed with and subject to the
governmental authority of the municipalities or the Railroad
Commission, depending on whether the customer is located inside
or outside the limits of a municipality. Historically, the
Company's rates for large industrial customers have been accepted
as filed. Agricultural sales in Texas are not regulated, except
that prices for agricultural sales cannot exceed the prices the
Company charges the majority of its commercial or other similar
large-volume users in Texas.
The Trans La Division is regulated by the Louisiana Commis-
sion, which regulates utility services, rates, and other matters.
In most of the parishes and incorporated areas in which the
Company operates in Louisiana, it does so pursuant to a non-
exclusive franchise granted by the governing authority of each
parish or incorporated area. The franchise gives the Company the
general privilege to operate its gas distribution business in, as
well as the right to install its distribution lines along the
roadways of, the parish or the incorporated area. Direct sales
of natural gas to industrial customers in Louisiana who utilize
the gas for fuel or in manufacturing processes and sales of
natural gas for vehicle fuel are exempt from regulation.
11<PAGE>
The Western Kentucky Division is regulated by the Kentucky
Public Service Commission ("Kentucky Commission"), which
regulates utility services, rates, issuances of securities, and
other matters. The Company operates in the various incorporated
cities served by it in Kentucky pursuant to non-exclusive
franchises granted by such cities. The franchises grant to the
Company the right to operate its gas distribution business in the
city and to install its distribution lines and related equipment
in and along the city's public rights-of-way. Sales of natural
gas for use as vehicle fuel in Kentucky are not subject to
regulation.
The Greeley Gas Division is regulated by the Colorado Public
Utilities Commission ("Colorado Commission"), the Kansas
Corporation Commission, and the Missouri Public Service Commis-
sion with respect to accounting, rates and charges, operating
matters, and the issuance of securities. The Company operates in
the various incorporated cities served by it in the states of
Colorado, Kansas and Missouri under terms of non-exclusive
franchises granted by the various cities. The franchises grant
to the Company, among other things, the right to install and
operate its gas distribution system within the city limits. Most
of the Greeley Gas Division's wholesale gas suppliers are
regulated by various federal and state commissions.
The Company is also subject to regulation by the United
States Department of Transportation with respect to safety
requirements in the operation and maintenance of its gas
distribution facilities. The Company's distribution operations
are also subject to various state and federal laws regulating
environmental matters. From time to time the Company receives
inquiries regarding various environmental matters. The Company
believes that its properties and operations substantially comply
with and are operated in substantial conformity with applicable
safety and environmental statutes and regulations. There are no
administrative or judicial proceedings arising under
environmental quality statutes pending or known to be
contemplated by governmental agencies which, if adversely
determined, would have a material adverse effect on the Company.
Rates. Approximately 87% of the Company's revenues in fis-
cal 1995 was derived from sales at rates set by or subject to
approval by local or state authorities. The method of determin-
ing regulated rates varies among the six states in which the
Company operates. For the most part, the regulatory bodies which
establish the Company's rates have not yet instituted widespread
"incentive regulation" or "performance based rates." Generally,
the Company applies for a specific rate structure based upon
requirements of the regulatory authority. The regulatory
authority reviews the Company's rate request and establishes a
rate structure intended to generate revenue sufficient to cover
the Company's costs of doing business and a reasonable return on
invested capital.
12<PAGE>
Substantially all of the sales rates charged by the Company
to its customers fluctuate with the cost of gas purchased by the
Company. Base rates established by regulatory authorities are
adjusted for increases and decreases in the Company's purchased
gas cost through automatic purchased gas adjustment mechanisms.
Therefore, while the Company's operating revenues may fluctuate,
gross profit (which is defined as operating revenues less
purchased gas cost) is generally not eroded or enhanced because
of gas cost increases or decreases.
13 <PAGE>
The following table sets forth the major rate requests made
by the Company and the action taken on such requests:
Effective Amount Amount
Jurisdiction Date Requested Received
------------ --------- --------- --------
Texas
West Texas System 11/01/84 $8,915,000 $5,000,000
09/09/91 5,987,000 4,600,000
11/18/94 2,581,000 1,702,000 (a)
Amarillo 12/11/85 4,850,000 3,400,000
11/25/92 4,398,000 2,130,000
Louisiana 04/01/87 5,195,000 3,610,000
09/03/92 3,409,000 974,000 (b,c)
03/01/93 (c) 730,000 (c)
03/01/94 (c) 1,058,000 (c)
03/01/95 (c) 1,071,000 (c)
Kentucky 05/29/91 8,973,000 3,632,000
11/01/95 7,665,000 2,300,000 (d)
03/01/96 1,000,000 (d)
Colorado 05/09/85 1,651,000 1,575,000
11/06/90 2,677,000 1,405,000
05/01/94 4,527,000 3,246,000
Kansas 07/28/83 1,214,000 1,003,000
11/14/86 934,000 844,000
10/22/90 2,485,000 1,376,000
01/06/92 1,495,000 505,000
12/01/93 2,604,000 2,088,000
Missouri 06/01/90 N/A (e) 49,000
- --------------
(a) The increase includes $200,000 applicable to areas outside
the city limits which became effective in January 1995.
(b) The September 1992 rate order provided for recovery of an
additional $800,000 for franchise tax expense.
(c) The September 1992 rate order also approved a Rate
Stabilization Clause ("RSC") for three years which provided
for an annual adjustment of rates to reflect changes in
expenses and investment. The RSC provided the Company the
opportunity to earn a return on common equity between 11.75%
and 12.25%.
(d) The Kentucky rate order provided an increase of $2,300,000,
lowered depreciation rates effective November 1, 1995 and
provided an additional $1,000,000 beginning March 1, 1996.
The order also included a provision for a pilot demand side
management program which could cost up to $450,000 annually.
(e) The Company applied for relief under alternative rate
request procedures in Missouri which do not require a
specific dollar request amount.
14<PAGE>
COMPETITION
The Company is not currently in significant direct
competition with any other distributors of natural gas to
residential and commercial customers within its service areas.
However, the Company does compete with other natural gas
suppliers and suppliers of alternate fuels for sales to
industrial and agricultural customers.
The Company competes in all aspects of its business with
alternative energy sources, including, in particular, electrici-
ty. Competition for the residential and commercial customers is
increasing. Promotional incentives, improved equipment efficien-
cies, and promotional rates all contribute to the acceptability
of electric equipment.
Beginning in 1985, changes in the federal regulatory
environment through FERC orders and conditions related to markets
and gas supply in the United States have brought increased
competition into the natural gas industry. In 1993, the FERC's
Order 636 was implemented by the interstate pipelines in the
Company's service territories. The FERC policies apply only to
interstate pipelines and have not had a direct impact upon the
Company's operations which are primarily supplied by intrastate
pipelines. However, the Company has felt the impact of increased
competitiveness in the large volume market in some areas result-
ing from these changes. The Company has sought regulatory
approvals for competitive pricing on a case by case basis.
The Company has opened six public retail facilities for the
sale of compressed natural gas ("CNG") for vehicular use. The
most recent of these were opened in Owensboro, Kentucky in April
1995 and at West Texas A&M University in Canyon, Texas in August
1995. Prior to that time, the Company provided CNG for vehicular
use only in limited situations (such as for school buses in cer-
tain school districts and for the fleet vehicles of certain busi-
nesses). With the opening of these public refueling stations the
Company began competing with gasoline for vehicular fuel sales.
All of these facilities, except those at West Texas A&M, are
located at existing local gasoline stations.
Employees
At September 30, 1995, the Company employed 1,646 persons.
See page 4 for number of employees by state.
ITEM 2. PROPERTIES
The Company owns an aggregate of 22,212 miles of underground
pipelines throughout its gas distribution systems. These pipe-
lines are located on easements or rights-of-way granted to the
Company, which generally provide for perpetual use. The Company
maintains its pipelines through a program of continuous
inspection and repair and believes that the pipeline system is in
good condition. The Company also owns or operates six under-
15<PAGE>
ground gas storage facilities in Kentucky that have a total
storage capacity of approximately 10.7 Bcf. However,
approximately 6.5 Bcf of gas in the storage facilities must be
retained as cushion gas. The maximum daily delivery capability
of the storage facilities is approximately 109 MMcf.
Substantially all of the Company's properties in its Greeley
Gas Division with a recorded value of approximately $66.2 million
are subject to a lien under First Mortgage Bonds assumed by the
Company in the acquisition of GGC. At September 30, 1995, the
lien secured approximately $17.0 million of outstanding 9.4%
Series J First Mortgage Bonds due May 1, 2021.
The Company has leased its administrative offices in Dallas,
Texas under two leases. In 1995 one lease was renegotiated which
will allow for the consolidation of its office space. The
Company also maintains field offices throughout its distribution
system, substantially all of which are located in leased pre-
mises.
The Company holds franchises granted by the incorporated
cities and towns and by each Louisiana parish that it serves. At
September 30, 1995, the Company held 271 such franchises having
terms generally ranging from five to 25 years. The Company
believes that each of its franchises will be renewed.
ITEM 3. LEGAL PROCEEDINGS
See Note 10 of notes to consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
16 <PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information as of
September 30, 1995, regarding the executive officers of the
Company:
Name Age Office Currently Held
---- --- ---------------------
Robert F. Stephens 47 President and Chief Operating
Officer, Director
James F. Purser 45 Executive Vice President and
Chief Financial Officer,
Director
J. Charles Goodman 34 Executive Vice President of
Corporate Operations
H.F. Harber 53 Senior Vice President of
Corporate Services
Donald E. James 48 Senior Vice President of
Public Affairs
Mary S. Lovell 44 Senior Vice President of
Utility Services
Glen A. Blanscet 38 Vice President, General
Counsel and Corporate
Secretary
Robert F. Stephens was named President and Chief Operating
Officer and was appointed to the Board of Directors in February
1995. He previously served as Executive Vice President -
Corporate Operations from May 1989 through February 1995, as
Senior Vice President, Corporate Operations from January 1988
until May 1989 and as Senior Vice President, Corporate Services
from April 1986 until January 1988, and as Vice President,
Corporate Development and Regulatory Affairs from August 1984
until April 1986.
James F. Purser was appointed to the Board of Directors in
February 1995. He was named Executive Vice President and Chief
Financial Officer in May 1989. He previously served as Senior
Vice President and Chief Financial Officer from August 1988 until
May 1989 and as Vice President from September 1986 until August
1988.
J. Charles Goodman was named Executive Vice President,
Corporate Operations in April 1995. He previously served as
President of the Company's Trans La Gas Division from February
1993 until April 1995 and as Chief Engineer from February 1989
until February 1993.
H.F. Harber was named Senior Vice President - Corporate
Services in August 1993. He previously served as Vice President,
Human Resources and Administration from July 1991 to August 1993,
and as Vice President, Human Resources from May 1990 to July
1991.
17<PAGE>
Donald E. James was named Senior Vice President - Public
Affairs in May 1995. He previously served as Senior Vice
President and General Counsel from January, 1994 to May, 1995, as
Senior Vice President - General Counsel and Corporate Secretary
from May 1993 until August 1993, as Senior Vice President and
General Counsel from May 1989 until May 1993, as Vice President
and General Counsel from January 1986 until May 1989, as
Assistant Vice President and General Counsel from August 1985
until January 1986, and as Assistant Vice President and Assistant
General Counsel from February 1984 until August 1985.
Mary S. Lovell was named Senior Vice President, Utility
Services in May, 1995. She previously served as Vice President,
Rates and Regulatory Affairs from August 1990 to May 1995, as
Vice President, Rates from February 1989 to August 1990, as
Operating Companies Senior Vice President, Rates from October
1988 until February 1989 and as System Vice President, Rates from
May 1988 until October 1988.
Glen A. Blanscet was named Vice President, General Counsel
and Corporate Secretary in May 1995. He previously served as
Assistant General Counsel and Corporate Secretary from January,
1994 to May, 1995, and as Assistant General Counsel from July
1988 to December 1993.
18<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's stock trades on the New York Stock Exchange
under the trading symbol "ATO". The high and low sale prices and
dividends paid per share of the Company's common stock, as
adjusted for the 3-for-2 stock split in May 1994, for fiscal 1995
and 1994 are listed below.
<TABLE>
<CAPTION>
1995 1994
---------------------------------- ---------------------------------
Dividends Dividends
High Low paid High Low paid
Quarter ended: --------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
December 31 $18 $15 7/8 $ .23 $21 1/8 $16 3/4 $ .22
March 31 18 1/2 16 1/8 .23 20 17 3/4 .22
June 30 20 1/4 17 1/2 .23 20 1/4 18 .22
September 30 20 5/8 19 .23 19 16 3/8 .22
----- -----
$ .92 $ .88
===== =====
</TABLE>
Prior to its acquisition, GGC made distributions to its
shareholders in fiscal 1994 of $120,000. The "Dividends paid"
information above has not been restated for the pooling of
interests in December 1993, but reflects historical cash
dividends paid per share of Atmos common stock as restated for
the 3-for-2 stock split in May 1994.
See Note 3 of notes to consolidated financial statements for
restriction on payment of dividends. The number of record holders
of the Company's common stock on September 30, 1995 was 23,625.
19 <PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data with
respect to the Company and should be read in conjunction with the
consolidated financial statements included herein.
Year ended September 30,
--------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(In thousands, except per share data)
Operating revenues $435,820 $499,808 $459,641 $403,353 $399,667
======== ======== ======== ======== ========
Net income $ 18,873 $ 14,679 $ 17,544 $ 10,998 $ 9,612
======== ======== ======== ======== ========
Net income per
share $ 1.22 $ .97 $ 1.22 $ .80 $ .71
======== ======== ======== ======== ========
Cash dividends
per share $ .92 $ .88 $ .85 $ .83 $ .80
======== ======== ======== ======== ========
Total assets at
end of year $445,783 $416,678 $391,618 $358,363 $338,714
======== ======== ======== ======== ========
Long-term debt at
end of year $131,303 $138,303 $105,853 $112,153 $116,461
======== ======== ======== ======== ========
Supplemental net
income (1) $ 18,132 $ 10,570 $ 10,130
======== ======== ========
Supplemental net
income per
share (1) $ 1.26 $ .77 $ .75
======== ======== ========
(1) Supplemental net income reflects results if GGC had not made
an S Corporation election in 1987.
20<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company distributes and sells natural gas to
residential, commercial, industrial and agricultural customers in
six states. Such business is subject to federal and state
regulation and/or regulation by local authorities in each of the
states in which the Company operates. In addition, the Company's
business is affected by seasonal weather patterns, competitive
factors within the energy industry, and economic conditions in
the areas that the Company serves.
RATE ACTIVITY
On February 10, 1995, the Company filed with the Kentucky
Commission for a rate increase for its Western Kentucky Gas
Company Division. The filing requested an annual revenue in-
crease of approximately $7.7 million, or 5.5 percent. In July
1995 a settlement agreement was filed with the Kentucky
Commission. The Company withdrew from the settlement on August
31, 1995, after the Kentucky Commission issued an order that made
modifications which the Company found unacceptable. The Company
and all intervenors filed a revised settlement, which was
approved by the Kentucky Commission without modifications on
October 20, 1995, effective November 1, 1995. The order issued
by the Kentucky Commission authorizes the Company to increase its
rates by $2.3 million annually, and by an additional $1.0 million
annually beginning in March 1996. The settlement includes a
decrease in depreciation rates, recovery of expenses related to
adoption of SFAS No. 106 and includes a provision for the Company
to begin a three-year demand-side management pilot program for
the 1996-97 heating season, which could cost up to $450,000
annually, resulting in a total operating income increase of
approximately $4.0 million. The Company provides natural gas
service to approximately 168,000 customers in Kentucky.
In September 1994, the Company filed to increase revenues by
approximately $2.6 million for a portion of its Energas Company
service area, which includes approximately 217,000 customers.
The Company requested recovery of accrual accounting for post-
retirement benefits in accordance with SFAS No. 106. See Note 8
of the accompanying notes to consolidated financial statements
for SFAS No. 106 information. In November 1994, the Company
implemented an annual revenue increase of approximately $1.5
million affecting approximately 195,000 customers located inside
the city limits of towns in this portion of its Energas Division.
Upon approval of the Railroad Commission of Texas in January
1995, the Company implemented an annual increase of approximately
$.2 million relating to the 22,000 remaining rural customers.
GGC filed a request for an increase in annual revenues of
$4.5 million with the Colorado Public Utility Commission in
21<PAGE>
September, 1993. On May 1, 1994, the Company implemented an
annual increase of $3.2 million or 6.9% in Phase I of this
proceeding. The Phase I rates reflect recovery of SFAS No. 106
expenses with external funding, consistent with the recommended
decision of the presiding administrative law judge. In October
1994, the Colorado Commission issued its order affirming the
increase as set forth in Phase I. In March 1995, the Greeley Gas
Division filed Phase II in the rate proceeding, which addressed
rate structure. In September 1995 all parties to the proceeding
entered into a stipulation and agreement which became final in
November 1995 upon the recommendation by an administrative law
judge of the Colorado Commission.
Effective December 1, 1993, GGC received an annual rate
increase of approximately $2.1 million or 10.6% in its Kansas
service area. The increase reflects recovery of SFAS No. 106
expenses with external funding and a moratorium on rate requests
in Kansas until December 1, 1996.
On February 11, 1992, the Company filed a rate case with the
city of Amarillo, Texas seeking to increase annual revenues by
approximately $4.4 million, or 12%. In June 1992 the city denied
the Company's request for rate relief and the Company appealed to
the Railroad Commission. In November 1992, the Railroad
Commission issued its decision resulting in a total annual
increase of $2.1 million. The Company and the city requested a
rehearing of the Order. On January 11, 1993, the Railroad
Commission denied rehearing to both parties. In February 1993,
the city appealed the Railroad Commission's rate order to the
District Court of Travis County, Texas. In January 1994, the
District Court denied the city's appeal. The city appealed to
the Court of Appeals. On March 1, 1995 the Austin Court of
Appeals issued its decision affirming the Railroad Commission's
1993 Amarillo Rate Order in all respects. The Texas Supreme
Court has declined to review the case.
During the period of 1991 through 1993, the Company also
filed for and received other rate increases in certain other rate
jurisdictions in its Energas Division totaling approximately $.3
million annually.
In September 1992, the Louisiana Commission issued a rate
order for the Company's Louisiana service area, which included a
rate stabilization clause ("RSC") for three years that provides
for an annual adjustment to the Company's rates to reflect
changes in expenses, revenues and invested capital following an
annual review. The RSC provides an opportunity for a return on
jurisdictional common equity of between 11.75% and 12.25%. As a
result of the Company's filings under the RSC, an increase of
$730,000 annually or 2% went into effect on March 1, 1993, an
increase of $1.1 million annually or 2.7% went into effect on
March 1, 1994, and the third increase of $1.1 million annually or
2.0% went into effect on March 6, 1995. The Company expects to
have a hearing before the Louisiana Commission on extending the
rate stabilization mechanism.
22<PAGE>
ACQUISITIONS
The Company has expanded its customer base and sought to
diversify the regulations, weather patterns and local economic
conditions to which it is subject through acquisitions in 1986,
1987 and 1993. The Company continues to consider and pursue,
where appropriate, additional acquisitions of natural gas
distribution properties and other business opportunities.
In December 1993, the Company acquired Greeley Gas Company
("GGC") of Denver, Colorado in a merger transaction accounted for
as a pooling of interests; therefore, all historical financial
statements and notes thereto have been restated to retroactively
reflect this merger. At that time, GGC was a privately held
company providing natural gas service to nearly 100,000 customers
in 122 communities in Colorado, Kansas and a small service area
in Missouri. The transaction was structured to be a tax-free
reorganization. The Company exchanged 2,329,330 shares of its
common stock before the 3-for-2 stock split (3,493,995 shares on
a post-split basis) for all of the outstanding stock of GGC. For
further information regarding the merger, see Note 2 of notes to
consolidated financial statements.
Subsequent to September 30, 1995, the Company acquired
privately held Oceana Heights Gas Company ("Oceana") of
Thibodaux, Louisiana. Oceana provides natural gas service to
approximately 9,200 customers and is located adjacent to a system
in LaFourche Parish that was acquired by Atmos in 1994. The
transaction will be accounted for as a pooling of interests. The
outstanding shares of Oceana Heights capital stock were converted
into shares of Atmos common stock having a market value equal to
the $6.4 million purchase price. The Louisiana Commission's
approval included regulatory and rate making terms acceptable to
Atmos. Although significant for the Trans La Division's opera-
tions which currently serve over 70,000 customers in Louisiana,
the transaction is not expected to have a material impact on the
Company's financial condition and results of operations. The
acquisition is consistent with the Company's long-standing
corporate development strategy.
RESULTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995 COMPARED WITH YEAR ENDED SEPTEMBER
30, 1994
Operating revenues decreased 13% to $435.8 million in 1995
from $499.8 million in 1994 due to weather that was 9% warmer
than in 1994 and a 14% decrease in the average cost of gas per
thousand cubic feet ("Mcf") sold. Average gas sales revenues per
Mcf decreased from 1994 by $.31 to $3.83 in 1995, while the
average cost of gas per Mcf sold decreased $.40 to $2.46 in 1995.
The number of meters in service increased to 658,114 at September
30, 1995 compared with 649,319 at September 30, 1994. Sales to
weather sensitive residential, commercial and public authority
23<PAGE>
customers decreased approximately 6.3 billion cubic feet ("Bcf")
in 1995 while sales to industrial and agricultural customers
decreased approximately .5 Bcf. Total sales volumes decreased
5.8% to 109.3 Bcf in 1995, as compared with 1994. Revenues from
gas transported for others decreased $2.4 million to
approximately $11.7 million in fiscal 1995 due to a decrease in
volumes transported of 4.8 Bcf to 30.5 Bcf in 1995.
Gross profit decreased by approximately 1% to $167.0 million
in 1995 from $168.2 million in 1994. The primary factor
contributing to the lower gross profit was lower volumes sold and
transported due to warmer weather. The effect of warmer weather
on gross profit was substantially reduced by implementing rate
increases totaling $2.8 million and $6.4 million in 1995 and
1994, respectively. Operating expenses, excluding income taxes,
decreased 6% to $125.1 million in 1995 from $133.7 million in
1994, due primarily to decreased operation and maintenance
expense. Operation and maintenance expense decreased $10.3
million due to decreased distribution expense, customer accounts
expenses, employee welfare and pension expenses, rent expense,
and outside services expense. In 1994 GGC acquisition and
assimilation costs were approximately $1.5 million and the cost
of an early retirement program was approximately $1.3 million.
The acquisition and assimilation costs as well as the early
retirement program were one-time costs associated with the GGC
acquisition. The Company also adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" in 1994. It has
been successful in seeking recovery of SFAS No. 106 expenses in
the majority of its service areas in 1994 and 1995 and will
continue to seek recovery in its remaining service areas (Note
8). Income taxes increased to $9.6 million for 1995 from $8.1
million for 1994. The primary reason for the increase was higher
pre-tax profits. The effective tax rate decreased to 33.7% in
1995 from 35.6% in 1994. This was primarily due to the impact of
permanent differences on the higher pre-tax profits in 1995.
Operating income increased in 1995 by approximately 22% to $32.4
million from $26.5 million in 1994. The increase in operating
income resulted primarily from decreases in 1995 operating
expenses as discussed above. The Company expects to see
operating expenses return to a more normal level in 1996.
Net income increased in 1995 by approximately 29% to $18.9
million from $14.7 million in the prior year. This increase in
net income resulted primarily from an increase in operating
income, which was partially offset by a $1.4 million increase in
interest expense. Net income per share increased to $1.22 for
1995 from $.97 for 1994.
The Company estimates that the impact of the weather being
10% warmer than normal for 1995 caused net income to be
approximately $4.0 million less than it would have been had the
Company experienced normal temperatures in its respective service
areas. Weather was approximately 1% warmer than normal for 1994.
24<PAGE>
YEAR ENDED SEPTEMBER 30, 1994 COMPARED WITH YEAR ENDED SEPTEMBER
30, 1993
Operating revenues increased to $499.8 million in 1994 from
$459.6 million in 1993 due to rate increases implemented in
Kansas, Colorado and Louisiana, an increase in the number of
customers, changes in cost of gas and increased volumes sold.
Average gas sales revenues per Mcf increased from 1993 by $.12 to
$4.14 in 1994, while the average cost of gas per Mcf sold
increased $.15 to $2.86 in 1994. The number of meters in service
increased to 649,319 at September 30, 1994 compared with 636,159
at September 30, 1993. Although the weather was 2% warmer in
1994 than in 1993, it was only slightly warmer than normal.
Sales to residential, commercial and public authority customers
decreased approximately .5 Bcf in 1994, but sales to industrial
and agricultural customers increased approximately 7 Bcf. Total
sales volumes increased 6.7 Bcf to 116.1 Bcf in 1994, as compared
with 1993. Revenues from gas transported for others decreased
$.9 million to approximately $14.1 million in fiscal 1994 due to
a decrease in volumes transported of 4.5 Bcf to 35.3 Bcf in 1994.
Gross profit increased by approximately 3% to $168.2 million
in 1994 from $163.1 million in 1993. The primary factors
contributing to the higher gross profit were increased prices and
volumes, as discussed above. Operating expenses, excluding
income taxes, increased to $133.7 million in 1994 from $122.8
million in 1993 due to increased operation expense and
depreciation. Operation expense increased $9.9 million due to
increased distribution expense, employee welfare expenses
including adoption of SFAS No. 106, GGC acquisition and assimi-
lation costs, and the cost of an early retirement program in the
Greeley Gas Division in the fourth quarter. SFAS No. 106
expenses in excess of pay-as-you-go expenses were approximately
$3.8 million in 1994. The Company has been successful in seeking
recovery of SFAS No. 106 expenses in a portion of its service
areas and will continue to seek recovery in its remaining service
areas (Note 8). GGC acquisition and assimilation costs were
approximately $1.5 million in 1994 compared with approximately
$.5 million in 1993. The cost of the early retirement program
was approximately $1.3 million in 1994. The acquisition and
assimilation costs as well as the early retirement program are
one-time costs associated with the GGC acquisition. Income taxes
decreased to $8.1 million for 1994 from $10.1 million for 1993.
The primary reasons for the decrease were lower pre-tax profits
and a lower effective tax rate. The effective tax rate
decreased to 35.6% in 1994 from 36.5% in 1993. This was
primarily due to the impact of permanent differences on the lower
pre-tax profits in 1994. Operating income decreased in 1994 by
approximately 13% to $26.5 million from $30.3 million in 1993.
The decrease in operating income resulted primarily from
increased operating expenses as discussed above.
Net income decreased in 1994 by approximately 16% to $14.7
million from $17.5 million in the prior year. This decrease in
net income resulted primarily from a decrease in operating
25<PAGE>
income, which was partially offset by a $1.0 million decrease in
interest expense. Net income per share decreased to $.97 for
1994 from $1.22 for 1993, reflecting the effects of an increase
in average shares outstanding of approximately 6%. One-time
acquisition costs, assimilation expenses and an early retirement
program in Greeley Gas Company, as well as the effect of adopting
SFAS No. 106, reduced earnings per share by approximately $.22 in
1994.
CAPITAL RESOURCES AND LIQUIDITY (See "Consolidated Statements of
Cash Flows")
Cash Flows from Operating Activities
Cash flows from operating activities totaled $58.5 million
for 1995 compared with $41.2 million for 1994 and $37.1 million
for 1993. In 1995 the Company experienced increases in both net
income and in cash provided by changes in assets and liabilities
as compared with 1994 and 1993. Depreciation increased in 1995
because of increasing capital expenditures. Gas stored under-
ground decreased in 1995 and 1994 because of substantially lower
gas prices during the summers of 1995 and 1994 when the storage
reservoirs were being refilled. The $10.9 million increase in
deferred charges and other assets in 1993 related to the $8.4
million increase in deferred credits and other liabilities and
recognized funding for the Supplemental Executive Benefits Plan.
See "Consolidated Statements of Cash Flows" for other changes in
assets and liabilities.
Cash Flows from Investing Activities
Net cash used in investing activities totaled $60.2 million
in 1995 compared with $48.4 million in 1994 and $42.2 million in
1993. Capital expenditures in fiscal 1995 amounted to $62.9
million compared with $50.4 million in 1994 and $43.1 million in
1993. Currently budgeted capital expenditures for 1996 total
$66.3 million and include major expenditures for mains, services,
meters, vehicles and computer software. Such expenditures will
be financed from internally generated funds and financing
activities, as discussed below.
Cash Flows from Financing Activities
Net cash provided by financing activities totaled $1.2
million for 1995 compared with $7.7 million for 1994 and $3.7
million for 1993. Financing activities during these periods
included issuance of common stock, dividend payments, borrowings
from banks, and issuance and repayments of long-term debt.
Cash dividends and distributions paid. The Company paid
$14.2 million in cash dividends during 1995 compared with $12.7
million in 1994 and $10.2 million in 1993. The $1.5 million
increase over 1994 primarily reflects an increase in the
Company's quarterly dividend rate and an increase in the number
26<PAGE>
of shares of common stock outstanding in 1995. The Company has
increased its historical dividend rate in each of the last seven
years.
Short-term financing activities. At September 30, 1995, the
Company had committed lines of credit totaling $90.0 million, all
of which was unused, in order to provide for short-term cash
requirements. These credit facilities are negotiated at least
annually. At September 30, 1995, the Company also had
uncommitted short-term credit lines of $140.0 million, of which
$106.5 million was unused. During 1995, notes payable decreased
$24.6 million compared with increases of $22.4 million during
1994 and $2.6 million in 1993. The decrease in 1995 was
primarily due to repayment of short-term debt with the proceeds
from the issuance of long-term debt in November 1994. The
increase in 1993 was less than the increase in 1994, partly
because of funds provided in 1993 from stock issued under the
Direct Stock Purchase Plan.
Long-term financing activities. Payments of long-term debt
decreased $5.85 million to $4.0 million for the year ended
September 30, 1995 compared with the year ended September 30,
1994. Payments of long-term debt in 1995 consisted of a $2.0
million installment on the Company's 9.75% Senior Notes due in
1996 and a $2.0 million installment on the 11.2% Senior Notes.
In November 1994, the Company entered into note purchase agree-
ments totaling $40.0 million with two insurance companies and
issued at par $20.0 million of unsecured Senior Notes at 8.07%
payable in annual installments of $4.0 million beginning October
31, 2002 through October 31, 2006 with semiannual interest
payments and $20.0 million of unsecured Senior Notes at 8.26%
payable in annual installments of $1,818,182 beginning October
31, 2004 through October 31, 2014 with semiannual interest
payments. No long-term debt was issued in 1994 or 1993. Pay-
ments of long-term debt during fiscal 1994 consisted of a $3.0
million installment on the Company's 9.75% Senior Notes due in
1996, a $2.0 million installment on the 11.2% Senior Notes, the
balance of $3.25 million on the 13.75% Series I First Mortgage
Bonds and the balance of $1.6 million on the 13% Series G First
Mortgage Bonds. The loan agreements pursuant to which all the
Company's Senior Notes have been issued contain covenants by the
Company with respect to the maintenance of certain debt-to-equity
ratios and cash flows, and restrictions on the payment of
dividends. Also see Note 3 of notes to consolidated financial
statements.
Issuance of common stock. The Company issued 221,946,
428,264 and 897,089 shares of common stock in 1995, 1994 and
1993, respectively, for its Direct Stock Purchase Plan ("DSPP"),
Employee Stock Ownership Plan, Restricted Stock Grant Plan, and
Incentive Stock Option Plan. See the Consolidated Statements of
Shareholders' Equity for the number of shares issued under each
of the plans. The DSPP was implemented in August 1992. In 1993
the DSPP was amended to remove the direct stock purchase feature
of the plan and the plan was renamed the Atmos Energy Corporation
27<PAGE>
Dividend Reinvestment and Stock Purchase Plan ("DRSPP"). How-
ever, in January 1995 the direct stock purchase feature was rein-
stated and the name was changed back to the Direct Stock Purchase
Plan. Shares purchased under the DSPP in 1995 were purchased on
the open market. No new shares were issued under the DSPP in
1995. In 1994 and 1993, 173,801 and 760,089 shares, respective-
ly, were issued under the DRSPP, generating proceeds of $3.0
million and $13.4 million, respectively. At September 30, 1995,
712,596 shares were available for future issuance under the DSPP.
The Company believes that internally generated funds, its
short-term credit facilities and access to the debt and equity
capital markets will provide necessary working capital and
liquidity for capital expenditures and other cash needs for 1996.
Seasonality
The Company's natural gas distribution business is seasonal
due to weather conditions in the Company's service areas. Gas
sales are affected by winter heating season requirements, and
sales to agricultural customers (who use natural gas as fuel in
the operation of irrigation pumps) during the period from April
through September may be affected by rainfall amounts. These
factors generally result in higher operating revenues and net
income during the period from October through March of each year
and lower operating revenues and either net losses or lower net
income during the period from April through September of each
year.
The following table sets forth, on an unaudited basis, the
Company's quarterly operating revenues, quarterly operating
revenues as a percentage of annual operating revenues, quarterly
net income (loss) and quarterly net income (loss) as a percentage
of annual net income for its past two fiscal years.
28 <PAGE>
<TABLE>
<CAPTION>
Quarter ended
---------------------------------------------------
December 31 March 31 June 30 September 30 Total
------------ --------- -------- ------------ ----------
(In thousands, except for percentages)
<S> <C> <C> <C> <C> <C>
1995
- ----
Operating revenues $117,848 $157,294 $84,685 $75,993 $435,820
27% 36% 19% 18% 100%
Net income (loss) $ 6,476 $ 13,945 $ 82 $(1,630) $ 18,873
34% 74% 1% (9)% 100%
1994
- ----
Operating revenues $145,501 $186,944 $90,013 $77,350 $499,808
29% 37% 18% 16% 100%
Net income (loss) $ 7,088 $ 13,242 $(1,224) $(4,427) $ 14,679
48% 90% (8)% (30)% 100%
</TABLE>
Inflation
The Company believes that inflation has caused and will
continue to cause increases in certain operating expenses and has
required and will continue to require assets to be replaced at
higher costs. The Company continually reviews the adequacy of
its gas rates in relation to the increasing cost of providing
service and the inherent regulatory lag in adjusting those gas
rates.
Environmental Matters
From time to time, the Company receives inquiries regarding
various environmental matters. The Company believes that its
properties and operations substantially comply with and are oper-
ated in substantial conformity with all applicable environmental
statutes and regulations. There are no administrative or judi-
cial proceedings arising under environmental quality statutes
pending or known to be contemplated by governmental agencies
which, if adversely determined, would have a material adverse
effect on the Company.
29 <PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page no.
Report of independent auditors 30
Consolidated balance sheets 31
Consolidated statements of income 32
Consolidated statements of shareholders' equity 33
Consolidated statements of cash flows 34
Notes to consolidated financial statements 36
Supplementary data (unaudited) 57
30 <PAGE>
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
Board of Directors
Atmos Energy Corporation
We have audited the accompanying consolidated balance sheets
of Atmos Energy Corporation at September 30, 1995 and 1994, and
the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period
ended September 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Atmos Energy Corporation at September 30,
1995 and 1994, and its consolidated results of operations and its
cash flows for each of the three years in the period ended
September 30, 1995 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Dallas, Texas
November 8, 1995
31 <PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS September 30,
1995 1994
-------- --------
ASSETS (In thousands, except share data)
Property, plant and equipment
Utility plant $589,801 $537,834
Construction in progress 5,558 5,858
-------- --------
595,359 543,692
Less accumulated depreciation and amort. 232,107 216,285
-------- --------
Net property, plant and equipment 363,252 327,407
Current assets
Cash and cash equivalents 2,294 2,766
Accounts receivable, less allowance
for doubtful accounts of $916 in
1995 and $787 in 1994 25,690 29,678
Inventories 6,747 5,888
Gas stored underground 10,758 12,657
Prepayments 2,747 2,309
-------- --------
Total current assets 48,236 53,298
Deferred charges and other assets 34,295 35,973
-------- --------
$445,783 $416,678
======== ========
CAPITALIZATION AND LIABILITIES
Shareholders' equity
Common stock, no par value (stated at $.005
per share); authorized 75,000,000 shares;
issued and outstanding 1995 - 15,519,112
shares, 1994 - 15,297,166 shares $ 78 $ 77
Additional paid-in capital 106,496 102,456
Retained earnings 51,704 47,023
-------- --------
Total shareholders' equity 158,278 149,556
Long-term debt 131,303 138,303
-------- --------
Total capitalization 289,581 287,859
Current liabilities
Current maturities of long-term debt 7,000 4,000
Notes payable to banks 33,500 18,100
Accounts payable 24,945 21,975
Taxes payable 1,926 4,864
Customers' deposits 9,343 8,257
Other current liabilities 10,641 7,038
-------- --------
Total current liabilities 87,355 64,234
Deferred income taxes 33,120 30,184
Deferred credits and other liabilities 35,727 34,401
-------- --------
$445,783 $416,678
======== ========
See accompanying notes to consolidated financial statements.
32<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Year ended September 30,
--------------------------------
1995 1994 1993
-------- -------- --------
(In thousands, except per share data)
Operating revenues $435,820 $499,808 $459,641
Purchased gas cost 268,810 331,571 296,532
-------- -------- --------
Gross profit 167,010 168,237 163,109
Operating expenses
Operation 83,431 92,132 82,185
Maintenance 4,276 5,888 6,335
Depreciation and amortization 20,741 18,841 17,433
Taxes, other than income 16,611 16,808 16,806
Income taxes 9,574 8,102 10,073
-------- -------- --------
Total operating expenses 134,633 141,771 132,832
-------- -------- --------
Operating income 32,377 26,466 30,277
Other income (expense)
Interest income 459 168 327
Other, net (242) 335 239
-------- -------- --------
Total other income 217 503 566
Interest charges 13,721 12,290 13,299
-------- -------- --------
Net income $ 18,873 $ 14,679 $ 17,544
======== ======== ========
Net income per share $ 1.22 $ .97 $ 1.22
======== ======== ========
Cash dividends per share $ .92 $ .88 $ .85
======== ======== ========
Average shares outstanding 15,416 15,195 14,338
======== ======== ========
See accompanying notes to consolidated financial statements.
33<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY
Common stock
----------------- Additional
Number of Stated paid-in Retained
shares value capital earnings
----------- ------ --------- --------
(In thousands, except share data)
Balance, September 30, 1992 13,971,813 $70 $ 78,541 $38,637
Net income - - - 17,544
Cash dividends ($.85 per
share) - - - (9,262)
GGC distributions - - - (893)
Common stock issued
Stock option plan 6,000 - 60 -
Direct stock purchase
plan 760,089 3 13,401 -
Employee stock ownership
plan 131,000 1 2,277 -
Less: GGC net income for
the quarter ended
December 31, 1992 (Note 2) - - - (950)
---------- --- ------- -------
Balance, September 30, 1993 14,868,902 74 94,279 45,076
Net income - - - 14,679
Cash dividends ($.88 per
share) - - - (12,612)
GGC distributions - - - (120)
Common stock issued
Restricted stock
grant plan 105,000 1 2,134 -
Direct stock purchase
plan 173,801 1 3,037 -
Employee stock ownership
plan 149,463 1 2,713 -
Other - - 293 -
---------- --- ------- -------
Balance, September 30, 1994 15,297,166 77 102,456 47,023
Net income - - - 18,873
Cash dividends ($.92
per share) - - - (14,192)
Common stock issued
Restricted stock
grant plan 7,000 - 119 -
Employee stock
ownership plan 214,946 1 3,876 -
Other - - 45 -
---------- --- -------- -------
Balance, September 30, 1995 15,519,112 $78 $106,496 $51,704
========== === ======== =======
See accompanying notes to consolidated financial statements.
34 <PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended September 30,
-------------------------
1995 1994 1993
--------------- -------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $18,873 $14,679 $16,594
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization
Charged to depreciation and
amortization 20,741 18,841 16,480
Charged to other accounts 3,592 1,476 3,377
Deferred income taxes 2,809 244 2,733
Other 2,011 2,101 622
------- ------- -------
48,026 37,341 39,806
Change in assets and liabilities
(Increase) decrease in accounts
receivable 3,988 (478) 1,564
(Increase) decrease in inventories (859) 176 708
(Increase) decrease in gas stored
underground 1,899 4,946 (6,176)
(Increase) decrease in prepayments (438) 1,931 1,873
Decrease in deferred charges and
other assets (333) (3,824) (10,908)
Increase (decrease) in accounts
payable 2,970 (7,128) (58)
Increase (decrease) in taxes
payable (2,766) (1,314) 195
Increase (decrease) in customers'
deposits 1,086 395 (61)
Increase in other current
liabilities 3,603 583 1,804
Increase in deferred credits and
other liabilities 1,326 8,596 8,398
------- ------- -------
Net cash provided by operating
activities 58,502 41,224 37,145
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (62,927)(50,355) (43,143)
Retirements of property, plant and
equipment 2,749 1,906 935
------- ------- -------
Net cash used in investing
activities (60,178)(48,449) (42,208)
- Continued -
35<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Year ended September 30,
1995 1994 1993
-------- -------- --------
(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in notes
payable $(24,600)$ 22,400 $ 2,563
Proceeds from issuance of
long-term debt 40,000 - -
Repayment of long-term debt (4,000) (9,850) (4,500)
Cash dividends and distributions
paid (14,192) (12,732) (10,155)
Issuance of common stock 3,996 7,887 15,742
------- ------- -------
Net cash provided by financing
activities 1,204 7,705 3,650
------- ------- -------
Net increase (decrease) in cash and
cash equivalents (472) 480 (1,413)
Cash and cash equivalents at
beginning of year 2,766 2,286 3,699
------- ------- -------
Cash and cash equivalents at end
of year $ 2,294 $ 2,766 $ 2,286
======= ======= =======
See accompanying notes to consolidated financial statements.
36 <PAGE>
ATMOS ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of significant accounting policies
Description of business - Atmos Energy Corporation and its
subsidiaries ("Atmos" or the "Company") are in the business of
distributing natural gas to residential, commercial, industrial
and agricultural customers within service areas located in Texas,
Louisiana, Kentucky, Colorado, Kansas and a small portion of
Missouri. Such business is subject to federal and state
regulation and/or regulation by local authorities in each of the
six states in which the Company operates. The Company has no
other material business segments.
Principles of consolidation - The accompanying consolidated
financial statements include the accounts of Atmos Energy
Corporation and its subsidiaries. Each subsidiary is wholly-
owned and all material intercompany items have been eliminated.
Revenue recognition - Sales of natural gas are billed on a
monthly cycle basis; however, the billing cycle periods for
certain classes of customers do not necessarily coincide with ac-
counting periods used for financial reporting purposes. The
Company follows the revenue accrual method of accounting for
natural gas revenues whereby revenues applicable to gas delivered
to customers but not yet billed under the cycle billing method
are estimated and accrued and the related costs are charged to
expense. Estimated losses due to credit risk are reserved at the
time revenue is recognized.
Property, plant and equipment - Property, plant and
equipment is stated at original cost net of contributions in aid
of construction. The cost of additions includes an allowance for
funds used during construction and applicable overhead charges.
Major renewals and betterments are capitalized, while the costs
of maintenance and repairs are charged to expense as incurred.
Property, plant and equipment is depreciated at various rates on
a straight-line basis over the estimated useful lives of the
assets. In the first quarter of fiscal 1993, the Company changed
the estimated average useful lives used to compute depreciation
for certain utility plant assets. These changes resulted from
revised estimates of the projected economic life of the affected
assets based on recent orders received from regulatory bodies
having jurisdiction over the Company and independently performed
depreciation service life studies. The effect of this change on
net income for the year ended September 30, 1993 was an increase
of $1,104,000. The composite rates were 4.1% and 3.5% for the
years ended September 30, 1995 and 1994, respectively. At the
time property, plant and equipment is retired, the cost, plus
removal expenses and less salvage, is charged to accumulated
depreciation.
37<PAGE>
Inventories - Inventories consist of materials and supplies
and merchandise held for resale. Inventories are stated at the
lower of average cost or market.
Gas stored underground - Net additions of inventory gas to
underground storage and withdrawals of inventory gas from storage
are priced using the average cost method. Non-current gas in
storage is classified as property, plant and equipment and is
priced at cost.
Income taxes - The Company provides deferred income taxes
for significant temporary differences in the recognition of
revenues and expenses for tax and financial reporting purposes.
Cash and cash equivalents - The Company considers all highly
liquid debt instruments purchased with a maturity of three months
or less to be cash equivalents.
Deferred charges and other assets - Deferred charges and
other assets at September 30, 1995 and 1994 include assets of the
Company's qualified defined benefit retirement plans in excess of
the plans' obligations in the amounts of $9,962,000 and
$12,275,000, respectively, and Company assets related to the
nonqualified retirement plans at September 30, 1995 and 1994 of
$16,510,000 and $15,735,000, respectively.
Deferred credits and other liabilities - Deferred credits
and other liabilities include customer advances for construction
of $8,212,000 and $8,428,000 at September 30, 1995 and 1994,
respectively; obligations under capital leases of $2,882,000 and
$6,294,000 at September 30, 1995 and 1994, respectively; and
obligations under the Company's nonqualified retirement plans of
$16,125,000 and $11,151,000 at September 30, 1995 and 1994,
respectively. At September 30, 1994, a payable of $1,300,000 was
recorded for expenses related to an early retirement program
under Greeley Gas Company's qualified defined benefit retirement
plan.
Earnings per share - The calculation of primary earnings per
share is based on reported net income divided by weighted average
common shares outstanding. The Company does not have other
classes of stock or dilutive common stock equivalents. See Note
2 for a discussion of supplemental net income per share.
2. Greeley Gas Company acquisition
On December 22, 1993, Atmos acquired by means of a merger
all of the assets and liabilities of Greeley Gas Company ("GGC")
in accordance with the terms and provisions of an Agreement and
Plan of Reorganization dated July 2, 1993. GGC is a natural gas
utility engaged in the distribution and sale of natural gas to
residential, commercial, industrial, agricultural, and other
customers throughout Colorado, Kansas, and a small portion of
Missouri. All of the shares of GGC's common stock were exchanged
for a total of 3,493,995 shares of Atmos common stock as adjusted
38<PAGE>
for a 3-for-2 stock split (2,329,330 shares on a pre-split
basis). See Note 5 for information regarding the stock split in
May 1994. This merger transaction was accounted for as a pooling
of interests; therefore, all historical financial statements and
notes thereto have been restated. Subsequent to the merger, the
business of GGC has been operated through the Company's Greeley
Gas Company division (the "Greeley Gas Division").
GGC prepared its financial statements on a December 31
fiscal year end. GGC's fiscal year has been changed to September
30 to conform to the Company's year end. The restated consoli-
dated statement of income for the year ended September 30, 1993
includes Atmos and GGC operations for the twelve months then
ended. As a result, GGC's operations for the three months ended
December 31, 1992 (operating revenue of $18,322,842 and net
income of $950,185) are included in both the 1993 and 1992
restated statements of income, and the GGC net income for this
period has been deducted in calculating the shareholders' equity
balances at September 30, 1993 and cash flows for the year then
ended.
In 1987, GGC elected classification as an S Corporation
(small business corporation) under the provisions of the Internal
Revenue Code. Normally, income taxes are not reported in the
financial statements of S Corporations as the liability for
payment of federal and state income taxes is the direct
responsibility of the shareholders. However, during 1991, as
part of the settlement of rate cases filed in the states of
Colorado and Kansas, GGC was ordered to begin providing for
current and deferred income taxes. Accordingly, the Company's
restated 1991 financial statements include a one-time charge to
income of $1,081,202 to reinstate deferred income taxes for GGC.
Supplemental net income and earnings per share of the Company are
presented below to eliminate the one-time charge and to reflect
income tax expense in periods prior to 1994 as if GGC had not
made the S Corporation election in 1987.
Year ended
September 30, 1993
------------------
(In thousands, except
per share data)
Supplemental net income $ 18,132
========
Supplemental net income
per share $ 1.26
========
39<PAGE>
Results of operations and net income for the previously
separate companies for periods prior to the merger are as
follows:
Quarter ended Year ended
December 31, 1993 September 30,1993
----------------- -----------------
(In thousands)
Operating revenues
Atmos $119,223 $388,495
GGC 26,278 71,146
-------- --------
$145,501 $459,641
======== ========
Net income
Atmos $ 5,458 $ 15,712
GGC 1,630 1,832
-------- --------
$ 7,088 $ 17,544
======== ========
The dividends per share presentation on the consolidated
statements of income reflects Atmos dividends declared per share
as adjusted for the 3-for-2 stock split in May 1994. The cash
dividends per share reflect the per share dividends declared by
Atmos Energy Corporation for the years ended September 30, 1994
and 1993. The restated cash dividends and distributions per
share reflect the total amounts paid by Atmos and GGC to their
shareholders in each of those two years, divided by the total
amount of weighted average shares outstanding in those periods as
restated for the shares issued to effect the merger between Atmos
and GGC and the 3-for-2 stock split in May 1994.
Year ended
September 30,
--------------
1994 1993
---- ----
Cash dividends per share $.88 $.85
==== ====
Restated cash dividends and
distributions per share,
including GGC $.84 $.71
==== ====
40<PAGE>
3. Long-term debt and notes payable
Long-term debt at September 30, 1995 and 1994 consisted of
the following:
1995 1994
--------- --------
(In thousands)
Unsecured 7.95% Senior Notes, payable
in annual installments of $1,000,000
beginning August 31, 1997 through
August 31, 2006 with semiannual
interest payments $ 10,000 $ 10,000
Unsecured 9.57% Senior Notes, payable
in annual installments of $2,000,000
beginning September 30, 1997 through
September 30, 2006 with semiannual
interest payments 20,000 20,000
Unsecured 9.76% Senior Notes, payable
in annual installments of $3,000,000
beginning December 30, 1995 through
December 30, 2004 with semiannual
interest payments 30,000 30,000
Unsecured 9.75% Senior Notes, payable
in varying annual installments
through December 30, 1996 3,000 5,000
Unsecured 11.2% Senior Notes, payable in
annual installments of $2,000,000
beginning December 30, 1993 through
December 30, 2002 with semiannual
interest payments 16,000 18,000
First Mortgage Bonds, 9.4% Series J, due
May 1, 2021 17,000 17,000
Unsecured 10% Notes, due December 31,
2011 2,303 2,303
Unsecured 8.07% Senior Notes, payable in
annual installments of $4,000,000
beginning October 31, 2002 through
October 31, 2006 with semiannual
interest payments 20,000 20,000
Unsecured 8.26% Senior Notes, payable in
annual installments of $1,818,182
beginning October 31, 2004 through
October 31, 2014 with semiannual
interest payments 20,000 20,000
-------- --------
138,303 142,303
Less amounts classified as current (7,000) (4,000)
-------- --------
$131,303 $138,303
======== ========
In November 1994, the Company entered into note purchase
agreements with two insurance companies and issued at par
$20,000,000 of unsecured Senior Notes at 8.07% and $20,000,000 of
unsecured Senior Notes at 8.26%. As a result of this financing,
41<PAGE>
$40,000,000 of notes payable to banks was classified as long-term
at September 30, 1994.
During the quarter ended December 31, 1994, the Company paid
installments due of $2,000,000 on its 9.75% Senior Notes and
$2,000,000 on its 11.2% Senior Notes.
The Company may prepay any of the Senior Notes in whole at
any time, subject to a prepayment premium. The note agreements
provide for certain cash flow requirements and restrictions on
additional indebtedness, sale of assets and payment of dividends.
Under the most restrictive of such covenants, cumulative cash
dividends paid after September 30, 1988 may not exceed the sum of
75% of accumulated net income for periods after September 30,
1988 plus $12,000,000 plus the proceeds from the sale of common
stock after September 30, 1988. At September 30, 1995,
approximately $48,451,000 of shareholders' equity was not so
restricted.
As of September 30, 1995, all of the Company's utility plant
assets in Colorado, Kansas and Missouri with a net book value of
approximately $66,170,000 are subject to a lien under the 9.4%
Series J First Mortgage Bonds assumed by the Company in the
acquisition of GGC.
Maturities of long-term debt are as follows (in thousands):
1996 $ 7,000
1997 9,000
1998 8,000
1999 8,000
2000 8,000
Thereafter 98,303
--------
$138,303
========
Notes payable to banks
The Company has committed short-term, unsecured bank credit
facilities totaling $90,000,000, all of which was unused at
September 30, 1995. One facility of $80,000,000 requires a
commitment fee of 1/10 of 1% on the unused portion. A second
facility for $10,000,000 requires a commitment fee of 3/16 of 1%
on the unused portion. The committed lines are renewed or
renegotiated at least annually.
The Company also had aggregate uncommitted credit lines of
$140,000,000, of which $106,500,000 was unused as of September
30, 1995. The uncommitted lines have varying terms and the
Company pays no fee for the availability of the lines.
Borrowings under these lines are made on a when and as-available
basis at the discretion of the banks.
42<PAGE>
The weighted average interest rate on short-term borrowings
outstanding at September 30, 1995 and 1994 were 7.0% and 5.6%,
respectively.
4. Income taxes
The components of income tax expense for 1995, 1994 and 1993
are as follows:
1995 1994 1993
------- ------- -------
(In thousands)
Current $6,765 $7,858 $ 7,340
Deferred 2,809 244 2,733
------ ------ -------
$9,574 $8,102 $10,073
====== ====== =======
Included in the provision for income taxes are state income
taxes of $506,000, $328,000, and $890,000 for 1995, 1994, and
1993, respectively.
Effective October 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109") and, as permitted under these rules,
prior years' financial statements have not been restated.
Adoption of the new standard in 1994 had no significant effect on
net income.
This standard changes the Company's method of accounting for
income taxes from the deferred method (APB 11) to the liability
method. Previously the Company deferred the past tax effects of
timing differences between financial reporting and taxable
income. Under the liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the estimated future
tax effects of differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases.
43<PAGE>
Deferred income taxes reflect the tax effect of differences
between the basis of assets and liabilities for book and tax
purposes. The tax effect of temporary differences that give rise
to significant components of the deferred tax liabilities and
deferred tax assets at September 30, 1995 and 1994 are presented
below:
1995 1994
------- -------
(In thousands)
Deferred tax assets
Costs expensed for book purposes
and capitalized for tax purposes $ 872 $ 914
Accruals not currently deductible
for tax purposes 1,045 1,929
Customer advances 2,020 2,365
Nonqualified benefit plans 7,107 5,074
Postretirement benefits 2,187 1,442
Other, net 2,902 1,198
------- -------
Total deferred tax assets 16,133 12,922
Deferred tax liabilities
Tax and book basis of utility plant 43,549 37,316
Prepaid pensions 4,528 4,640
Other, net 1,176 1,150
------- -------
Total deferred tax liabilities 49,253 43,106
------- -------
Net deferred tax liabilities $33,120 $30,184
======= =======
SFAS No. 109 deferred accounts for
rate regulated entities (included
in other deferred credits):
Liabilities $ 2,580 $ 2,647
======= =======
44<PAGE>
During 1993, deferred income taxes were provided for
significant timing differences in recognition of revenues and
expenses for tax and financial reporting purposes. The effects
of these timing differences at September 30, 1993 were as
follows:
1993
------
(In thousands)
Excess of tax over financial
depreciation and amortization $1,754
Items capitalized for financial
reporting and recognized currently
for tax reporting 416
Deferred gas service revenue
recognized currently for tax
reporting 1,464
Other, net (901)
------
Total deferred income taxes $2,733
======
Reconciliations of the provisions for income taxes computed
at the statutory rate to the reported provisions for income taxes
for 1995, 1994 and 1993 are set forth below:
Deferred
Liability Method Method
---------------- --------
1995 1994 1993
------ ------- -------
(In thousands)
Tax at statutory rate of 34%
through December 31, 1992
and 35% thereafter $9,956 $ 7,992 $ 9,603
Financial expenses, not deductible
for tax reporting 35 503 680
Common stock dividends deductible
for tax reporting (619) (573) (462)
State taxes 261 328 682
Other, net (59) (148) (430)
------ ------- -------
Provision for income taxes $9,574 $ 8,102 $10,073
====== ======= =======
5. Stock split
On February 9, 1994, the Board of Directors of Atmos ap-
proved a 3-for-2 split of its common stock implemented in the
form of a stock dividend, which resulted in shareholders
receiving one new share for every two shares held. Fractional
shares were not issued but were paid in cash or credited to the
accounts of participants of the Dividend Reinvestment and Stock
Purchase Plan ("DRSPP") and ESOP. The record date for the split
was May 4, 1994 and the payment date for mailing the new shares
and cash for fractional shares to shareholders was May 16, 1994.
45<PAGE>
All share and per share amounts in the financial statements and
notes thereto have been restated to reflect this split, unless
otherwise noted.
6. Common stock and stock options
At the annual meeting of shareholders on February 8, 1995,
the shareholders approved an increase in the number of authorized
shares of common stock from 50,000,000 to 75,000,000.
The Company issued 221,946 shares of its common stock in
fiscal 1995 in connection with its Restricted Stock Grant Plan
and Employee Stock Ownership Plan.
The Company has an Employee Stock Ownership Plan as dis-
cussed in Note 7. The Company has registered 1,600,000 shares
for issuance under the plan, of which 874,830 shares were
available for future issuance on September 30, 1995.
In August 1992, the Company announced a Direct Stock
Purchase Plan ("DSPP") which was the successor to and replacement
for the Dividend Reinvestment Plan ("DRP"). Members of the DRP
were automatically enrolled in the DSPP. In November 1993, the
Company amended the DSPP to remove the direct stock purchase
feature of the plan and to rename the plan the Atmos Energy
Corporation Dividend Reinvestment and Stock Purchase Plan
("DRSPP"). In January 1995, the direct stock purchase feature
was reinstated and the name was changed back to the Direct Stock
Purchase Plan. Participants in the DSPP may have all or part of
their dividends reinvested at a 3% discount from market prices.
DSPP participants may purchase additional shares of Company com-
mon stock as often as weekly with voluntary cash payments of at
least $25, up to an annual maximum of $100,000. At September 30,
1995, 712,596 shares were available for future issuance under the
plan.
On April 27, 1988, the Company adopted a Shareholders'
Rights Plan (the "Rights Plan") and declared a dividend of one
right (a "Right") for each outstanding pre-split share of common
stock of the Company, payable to shareholders of record as of May
10, 1988. Each Right will entitle the holder thereof, until the
earlier of May 10, 1998 or the date of redemption of the Rights,
to buy one share of common stock of the Company at an exercise
price of $30 per share, subject to adjustment by the Board of
Directors upon the occurrence of certain events. The Rights will
be represented by the common stock certificates and are not
exercisable or transferable apart from the common stock until a
"Distribution Date" (which is defined in the Rights Agreement
between the Company and the Rights Agent as the date upon which
the Rights become separate from the common stock).
At no time will the Rights have any voting rights. The
exercise price payable and the number of shares of common stock
or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent
46<PAGE>
dilution. Until the Distribution Date, the Company will issue
one Right with each share of common stock that becomes
outstanding so that all shares of common stock will have attached
Rights. After a Distribution Date, the Company may issue Rights
when it issues common stock if the Board deems such issuance to
be necessary or appropriate.
The Rights have certain anti-takeover effects and may cause
substantial dilution to a person or entity that attempts to
acquire the Company on terms not approved by the Board of
Directors except pursuant to an offer conditioned upon a
substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination
approved by the Board of Directors because, prior to the time the
Rights become exercisable or transferable, the Rights may be
redeemed by the Company at $.05 per Right.
The Company had an Incentive Stock Option Plan for key
employees covering an aggregate of 100,000 shares of common
stock. The plan provided for options to be granted at prices not
less than the fair market value of the stock on the date of grant
and to be exercisable over ten years from such date in cumulative
annual installments of 25% of the aggregate shares granted,
commencing one year after the date of grant. At September 30,
1993, no options were outstanding under the plan. The Company
allowed the plan to expire in October 1993 without granting
additional options.
The following table summarizes the status of the expired
Incentive Stock Option Plan as of September 30, 1993:
1993
--------------------
Price
Shares per share
------- -----------
Outstanding options at beginning
of year 6,000 $9.25-10.63
Exercised (6,000) 9.25-10.63
------
Outstanding options at end
of year - -
======
Exercisable options at end
of year -
Options available for future
grants (pre-split) 8,150
The Company's Restricted Stock Grant Plan for management and
key employees of the Company, which became effective October 1,
1987, provides for awards of common stock that are subject to
certain restrictions. The plan is administered by the Board of
Directors. The members of the Board who are not employees of the
47<PAGE>
Company make the final determinations regarding participation in
the plan, awards under the plan, and restrictions on the re-
stricted stock awarded. The restricted stock may consist of
previously issued shares purchased on the open market or shares
issued directly from the Company. The Company registered 600,000
shares (900,000 post-split shares) for issuance under the plan.
Compensation expense of $1,015,000, $1,164,000 and $735,000 was
recognized in 1995, 1994 and 1993, respectively, in connection
with the issuance of shares under the plan. At September 30,
1995, 377,300 shares were available for future award under the
plan.
In November 1994, the Board adopted the Outside Directors
Stock-for-Fee Plan, which plan was approved by the shareholders
of the Company in February 1995. The plan permits non-employee
directors to receive all or part of their annual retainer and
meeting fees in stock rather than in cash. The Company has
registered 50,000 shares, all of which were available for future
issuance under the plan as of September 30, 1995.
7. Employee retirement and stock ownership plans
At September 30, 1995, the Company had three defined benefit
pension plans. One covers the Western Kentucky Division employ-
ees, one covers the Greeley Gas Division employees, and the third
covers all other Atmos employees. The plans provide essentially
the same benefits to all employees. Benefits are based on years
of service and the employee's compensation during the highest
paid five consecutive calendar years within the last 10 years of
employment. The Company's funding policy is to contribute
annually an amount in accordance with the requirements of the Em-
ployee Retirement Income Security Act of 1974. Contributions are
intended to provide not only for benefits attributed to service
to date but also for those expected to be earned in the future.
48 <PAGE>
The following table sets forth the Atmos plan's funded
status at September 30, 1995 and 1994:
1995 1994
-------- --------
(In thousands)
Actuarial present value of benefit
obligations
Accumulated benefit obligation,
including vested benefits of
$74,967 and $63,658 in 1995
and 1994, respectively $(75,529) $(64,805)
======== ========
Projected benefit obligation $(84,182) $(73,895)
Plan assets at fair value 82,464 73,454
-------- --------
Funded status (1,718) (441)
Unrecognized net asset being
recognized over 15 years (416) (633)
Unrecognized prior service cost (1,812) (1,955)
Unrecognized net loss 3,514 3,326
-------- --------
(Accrued) prepaid pension cost $ (432) $ 297
======== ========
Net periodic pension cost for the Atmos plan for 1995, 1994
and 1993 included the following components:
1995 1994 1993
------- ------ ------
(In thousands)
Service cost $ 1,862 $1,846 $1,543
Interest cost on projected
benefit obligation 6,060 5,614 5,242
Actual return on plan assets (12,200) (955) (9,445)
Net amortization and deferral 5,007 (5,778) 3,206
------- ------ ------
Net periodic pension cost $ 729 $ 727 $ 546
======= ====== ======
49<PAGE>
The following table sets forth the Western Kentucky Gas
Division plan's funded status at September 30, 1995 and 1994:
1995 1994
--------- ---------
(In thousands)
Actuarial present value of benefit
obligations
Accumulated benefit obligation,
including vested benefits of
$27,236 and $24,247 in 1995
and 1994, respectively $(27,262) $(24,874)
======== ========
Projected benefit obligation $(31,642) $(28,328)
Plan assets at fair value 42,216 37,409
-------- --------
Funded status 10,574 9,081
Unrecognized prior service cost 2,855 3,378
Unrecognized net gain (2,468) (1,442)
-------- --------
Prepaid pension cost $ 10,961 $ 11,017
======== ========
Net periodic pension cost for 1995, 1994 and 1993 included
the following components:
1995 1994 1993
-------- -------- --------
(In thousands)
Service cost $ 706 $ 729 $ 639
Interest cost 2,306 2,160 2,016
Actual return on plan assets (6,355) 324 (5,604)
Net amortization and deferral 3,399 (3,097) 3,110
-------- -------- --------
Net periodic pension cost $ 56 $ 116 $ 161
======== ======== ========
The weighted-average discount rates used in determining the
actuarial present value of the projected benefit obligations of
the Atmos and WKG retirement plans were 7.5% and 8.375% at June
30, 1995 and 1994, respectively. The rate of increase in future
compensation levels reflected in such determination was 4.0% and
4.5% for the years ended September 30, 1995 and 1994,
respectively. The expected long-term rate of return on plan
assets was 10.0%, 9.5% and 8.5% for the years ended September 30,
1995, 1994 and 1993, respectively. The plan assets consist
primarily of investments in common stocks, interest bearing
securities and interests in commingled pension trust funds.
Prepaid pension cost is included in deferred charges and other
assets.
50<PAGE>
The following table sets forth the Greeley Gas Division
plan's funded status at September 30, 1995 and 1994:
1995 1994
-------- --------
(In thousands)
Actuarial present value of benefit
obligations
Accumulated benefit obligation,
including vested benefits of
$13,134 and $12,849 in 1995
and 1994, respectively $(13,385) $(13,206)
======== ========
Projected benefit obligation $(15,148) $(15,020)
Plan assets at fair value 14,607 13,140
-------- --------
Funded status (541) (1,880)
Unrecognized net asset being
recognized over 15 years (1,810) (2,100)
Unrecognized prior service cost 419 455
Unrecognized net loss 1,370 3,186
-------- --------
Accrued pension cost $ (562) $ (339)
======== ========
Net periodic pension cost (credit) for the Greeley Gas
Division plan for 1995, 1994 and 1993 included the following
components:
1995 1994 1993
------ ------- -------
(In thousands)
Service cost $ 328 $ 486 $ 374
Interest cost on projected
benefit obligation 1,208 1,039 954
Actual return on plan assets (2,530) 441 (1,180)
Net amortization and deferral 1,217 (1,795) (257)
------ ------- -------
Net periodic pension
cost (credit) $ 223 $ 171 $ (109)
====== ======= =======
Accumulated plan benefits were computed using the Projected
Unit Credit funding method. The discount rate and rate of in-
crease in future compensation levels used in determining the
actuarial present value of the projected benefit obligations were
7.5% and 4.0%, respectively, in 1995 and 8.375% and 4.5%, respec-
tively, in 1994. The expected long-term rate of return on plan
assets was 10.0%, 9.5% and 9.0% in 1995, 1994 and 1993,
respectively. Plan assets consist primarily of corporate bonds,
equity securities, mutual funds, partnership interests, and other
miscellaneous investments. The actual return on plan assets in
1994 resulted in a loss of $.4 million due to writedowns of
certain plan assets to reflect current market value.
51<PAGE>
Effective October 1, 1987, the Company adopted a nonquali-
fied Supplemental Executive Benefits Plan ("Supplemental Plan")
which provides additional pension, disability and death benefits
to the officers and certain other employees of the Company.
Expense recognized in connection with the Supplemental Plan
during fiscal 1995, 1994 and 1993 was $2,158,000, $2,062,000 and
$1,492,000, respectively.
The Company sponsors an Employee Stock Ownership Plan
("ESOP"). Full time employees who have completed one year of
service, as defined in the plan, are eligible to participate.
Each participant enters into a salary reduction agreement with
the Company pursuant to which the participant's salary is reduced
by an amount not less than 2% nor more than 10%. Taxes on the
amount by which the participant's salary is reduced are deferred
pursuant to Section 401(k) of the Internal Revenue Code. The
amount of the salary reduction is contributed by the Company to
the ESOP for the account of the participant. The Company may
make a matching contribution for the account of the participant
in an amount determined each year by the Board of Directors,
which amount must be at least equal to 25% of all or a portion of
the participant's salary reduction. For the 1995 plan year, the
Board of Directors elected to match 100% of each participant's
salary reduction contribution up to 4% of the participant's
salary. These matching percentages have also been approved for
the 1996 plan year. Matching contributions to the ESOP amounted
to $1,977,000, $1,780,000, and $1,413,000 for 1995, 1994 and
1993, respectively. The Directors may also approve discretionary
contributions, subject to the provisions of the Internal Revenue
Code of 1986 and applicable regulations of the Internal Revenue
Service. The Company recorded a charge of $1,000,000 for a
discretionary contribution in the year ended September 30, 1993.
Company contributions to the plan are expensed as incurred.
Effective January 1, 1988, the Greeley Gas Division adopted
a 401(k) plan that covers substantially all the Greeley Gas
Division employees. Employee contributions were limited to 6% of
base compensation. The Company matched 50% of employee
contributions. Total employer contributions to the 401(k) plan
were $141,000 and $230,000 for the periods ended September 30,
1994 and 1993 respectively. Contributions to the plan were
discontinued on March 31, 1994 and participants were enrolled in
the Atmos ESOP on April 1, 1994.
8. Other postretirement benefits
In addition to providing pension benefits, the Company
provides certain other postretirement benefits for retired
employees, the major benefit being health care. To be eligible
for these benefits, an employee must retire under the terms of
the Company's retirement plans. Prior to 1994, the cost of other
postretirement benefits was recognized by expensing claims and
annual insurance premiums as incurred. In fiscal 1993, these
costs totaled $1,453,000.
52<PAGE>
Effective October 1, 1993, the Company adopted Financial
Accounting Standards No. 106 ("SFAS No. 106"), "Employers'
Accounting for Postretirement Benefits Other Than Pensions".
SFAS No. 106 focuses principally on postretirement health care
benefits and significantly changed the practice of accounting for
postretirement benefits on a pay-as-you-go basis by requiring
accrual of such benefit costs at Atmos on an actuarial basis from
the date each employee reaches age 45 until the date of full
eligibility for such benefits. The Company is amortizing on a
straight line basis the initial transition obligation of
$33,354,000 over 20 years. The effect of adopting the new rules
increased net periodic postretirement benefit cost for the year
ended September 30, 1994 by $3,789,000 and decreased net income
by $2,440,000. Approximately $746,000 of this increased cost was
recovered through rates during 1994.
Atmos sponsors two defined benefit postretirement plans
other than pensions. One plan provides medical, dental, and
vision benefits to retired employees of Greeley Gas Company. The
other offers medical benefits to all other retired Atmos
employees. Substantially all of the Company's employees may
become eligible for these benefits if they reach retirement age
while working for the Company and attain 10 consecutive years of
service. Participant contributions are required under these
plans. Prior to June 1994, the plans were not funded. In June
1994, the Company made its first quarterly payment to the
external trust set up to fund SFAS No. 106 costs in excess of the
pay-as-you-go cost in Kansas in accordance with an order of the
Kansas Corporation Commission. In April, 1995 it began external
funding in Colorado in accordance with an order of the Colorado
Public Utility Commission. The amount of funding will ultimately
depend upon the ratemaking treatment allowed in the Company's
various rate jurisdictions.
The components of net periodic postretirement benefit cost
for each of the years ended September 30, 1995 and 1994 are as
follows:
1995 1994
------ ------
(In thousands)
Service cost $1,497 $1,817
Interest cost 2,322 2,269
Actual return on plan assets (18) -
Amortization of transition obligation 1,549 1,668
Net amortization and deferral (150) -
------ ------
Net periodic postretirement benefit cost $5,200 $5,754
====== ======
53 <PAGE>
The following is a reconciliation of the funded status of
the plans to the net postretirement benefits liability on the
balance sheet as of September 30, 1995 and 1994:
1995 1994
-------- --------
(In thousands)
Accumulated postretirement
benefit obligation
Retirees $(20,402) $(18,083)
Fully eligible employees (5,906) (6,827)
Other employees (4,468) (4,206)
-------- --------
(30,776) (29,116)
Plan assets 594 274
-------- --------
Accumulated postretirement benefit
obligation in excess of plan assets (30,182) (28,842)
Unrecognized prior service cost - (2,256)
Unrecognized net gain (3,807) (4,105)
Unrecognized transition obligation 27,892 31,686
-------- --------
Accrued postretirement benefits liability $ (6,097) $ (3,517)
======== ========
In the latest actuarial calculation of the accrued postre-
tirement benefits liability, the assumed health care cost trend
rate used to estimate the cost of postretirement benefits was
9.5% for 1995, 8.5% for 1996 and is assumed to decrease gradually
to 5.0% for 2000 and remain at that level thereafter. Similarly,
the dental trend rate is 7.5% for 1995 and decreases to 7.0% for
1996 at which time dental benefits will be discontinued. The
trend for vision benefits is assumed to remain level for all
years at 4.5%. The effect of a 1% increase in the assumed health
care cost trend rate for each future year is $353,000 and
$410,000 on the annual aggregate of the service and interest cost
components of net periodic postretirement benefit costs and
$2,355,000 and $2,279,000 on the accumulated postretirement
benefit obligation as of September 30, 1995 and 1994,
respectively. The assumed discount rate, the rate at which
liabilities could be settled, was 7.5% and 8.25% as of September
30, 1995 and 1994, respectively.
The Company is currently recovering other postretirement
benefit ("OPEB") costs through its regulated rates under SFAS No.
106 accrual accounting in Colorado, Kansas, the majority of its
Texas service area and in Kentucky (effective November 1, 1995).
It recovers OPEB costs on the pay-as-you-go basis in Louisiana.
Management believes that accrual accounting in accordance with
SFAS No. 106 is appropriate and will continue to seek rate
recovery of accrual-based expenses in its ratemaking jurisdic-
tions that have not yet approved the recovery of these expenses.
The ultimate impact of the adoption of SFAS No. 106 on the
54<PAGE>
Company's financial position and results of operations will not
be known with certainty until the regulatory treatment that will
be allowed in each of the Company's ratemaking jurisdictions is
determined.
9. Postemployment benefits
The Company also provides postemployment benefits, primarily
workers' compensation, to former or inactive employees after
employment but before retirement. Effective October 1, 1994, the
Company adopted Statement of Financial Accounting Standards No.
112, "Employers Accounting for Postemployment Benefits" ("SFAS
No. 112"). SFAS No. 112 requires that certain benefits provided
to former or inactive employees, after employment but before
retirement, such as workers' compensation, disability benefits
and health care continuation coverage be accrued if attributable
to the employees' prior service. Prior to October 1, 1994, such
postemployment benefit costs were recorded and recovered in rates
on the pay-as-you-go basis. Both the cumulative effect of
adopting SFAS No. 112, as well as the effect of the new standard
upon the recurring expense being recognized for these benefits in
1995, were not material.
10. Contingencies
On March 15, 1991, suit was filed in the 15th Judicial
District Court of Lafayette Parish, Louisiana, by the "Lafayette
Daily Advertiser" and others against the Trans La Division, Trans
Louisiana Industrial Gas Company, Inc. ("TLIG"), a wholly owned
subsidiary of the Company, and Louisiana Intrastate Gas
Corporation and certain of its affiliates ("LIG"). LIG is the
Company's primary supplier of natural gas in Louisiana and is not
otherwise affiliated with the Company.
The plaintiffs purported to represent a class consisting of
all residential and commercial gas customers in the Trans La
Division's service area. Among other things, the lawsuit alleged
that the defendants violated antitrust laws of the state of
Louisiana by manipulating the cost-of-gas component of the Trans
La Division's gas rate to the purported customer class, thereby
causing such purported class members to pay a higher rate. The
plaintiffs made no specific allegation of an amount of damages.
The defendants brought an appeal to the Louisiana Supreme
Court of rulings by the trial court and the Third Circuit Court
of Appeal which denied defendants' exceptions to the jurisdiction
of the trial court. It was the position of the defendants that
the plaintiffs' claims amount to complaints about the level of
gas rates and should be within the exclusive jurisdiction of the
Louisiana Commission.
On January 19, 1993, the Louisiana Supreme Court issued a
decision reversing in part the lower courts' rulings, dismissing
all of plaintiffs' claims against the defendants which seek
damages due to alleged overcharges and further ruling that all
55<PAGE>
such claims are within the exclusive jurisdiction of the
Louisiana Commission. Any claims which seek damages other than
overcharges were remanded to the trial court but were stayed
pending the completion of the Louisiana Commission proceeding
referred to below.
The Company has reached a tentative settlement with the
plaintiffs in the context of the Louisiana Commission proceeding
referred to below, which settlement will resolve all outstanding
issues relating to the Company, subject to certain procedural
conditions.
On July 14, 1995, the Louisiana Commission entered an order
approving a settlement with the Company and TLIG in connection
with its investigation of the costs included in the Trans La
Division's purchased gas adjustment component in its rates. The
order exonerated the Company of any wrongdoing or manipulation of
the cost of gas component of its gas rate to residential and
commercial customers. In the settlement, the Company agreed to
refund approximately $541,000 plus interest to the Trans La
Division's customers over a two-year period due to certain issues
related to the calculation of the weighted average cost of gas.
The refund totaling approximately $1,016,000, which includes
interest calculated through October 1, 1995, began in September
1995 and will be credited to customer bills along with interest
that accrues after October 1, 1995. Most of the issues that
generated the refunds arose before Trans Louisiana Gas Company
was acquired by the Company in 1986.
The Greeley Gas Company Division of the Company is a
defendant in several lawsuits filed as a result of a fire in a
building in Steamboat Springs, Colorado on February 3, 1994. The
plaintiffs claim that the fire resulted from a leak in a severed
gas service line owned by the Greeley Division. The Company
believes that the evidence shows that any damage to the line was
caused by a third party or parties and occurred prior to the
Company's acquisition of Greeley Gas Company in 1993. The
Company has adequate insurance and/or reserves to cover any
potential damages that may be awarded against the Company in this
matter and has been informed by its insurance carrier that the
Company's insurance policy will cover punitive damages. The
Company believes that the allegations against it are without
merit and will vigorously protect its interest in this matter.
From time to time, claims are made and lawsuits are filed
against the Company arising out of the ordinary business of the
Company. In the opinion of the Company's management,
liabilities, if any, arising from these actions are either
covered by insurance, adequately reserved for by the Company or
would not have a material adverse effect on the financial
condition of the Company.
56<PAGE>
11. Statement of cash flows
Supplemental disclosures of cash flow information for 1995,
1994 and 1993 are presented below:
1995 1994 1993
------- ------- -------
(In thousands)
Cash paid for
Interest $11,503 $12,756 $13,436
Income taxes 10,123 6,352 8,190
12. Leases
The Company has entered into noncancelable leases involving
office space and warehouse space. The remaining lease terms
range from one to 20 years and generally provide for the payment
of taxes, insurance and maintenance by the lessee. Net property,
plant and equipment included amounts for capital leases of
$2,694,000 and $5,664,000 at September 30, 1995 and 1994,
respectively.
The related future minimum lease payments at September 30,
1995 were as follows:
Capital Operating
leases leases
-------- --------
(In thousands)
1996 $ 568 $ 7,163
1997 568 7,118
1998 568 6,951
1999 568 6,905
2000 568 6,827
Thereafter 3,415 45,399
------ -------
Total minimum lease payments 6,255 $80,363
=======
Less amount representing interest (3,373)
------
Present value of net minimum
lease payments $2,882
======
Consolidated rent expense amounted to $6,643,000, $6,490,000
and $5,277,000 for fiscal 1995, 1994 and 1993, respectively.
Rents are expensed and recovered in rates on a pay-as-you-go
basis.
57 <PAGE>
SUPPLEMENTARY DATA
Quarterly Financial Data (Unaudited)
Summarized unaudited quarterly financial data are presented
below. The sum of net income per share by quarter may not equal
the net income per share for the year due to variations in the
weighted average shares outstanding used in computing such
amounts.
<TABLE>
<CAPTION>
Quarter ended
----------------------------------------------------------------------------------
December 31, March 31, June 30, September 30,
----------------- ----------------- ----------------- ----------------
1994 1993 1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- -------- -------- ------- -------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $117,848 $145,501 $157,294 $186,944 $84,685 $90,013 $75,993 $77,350
Gross profit 43,482 48,421 59,577 59,366 34,069 31,790 29,882 28,660
Operating income (loss) 9,786 10,302 17,689 16,345 2,987 1,433 1,915 (1,614)
Net income (loss) 6,476 7,088 13,945 13,242 82 (1,224) (1,630) (4,427)
Net income (loss) per
share .42 .47 .91 .87 .01 (.08) (.11) (.29)
</TABLE>
58<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors is incorporated herein by
reference from the Company's definitive proxy statement for the
annual meeting of shareholders on February 14, 1996.
Information regarding executive officers is included in Part
I.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference from the Company's
definitive proxy statement for the annual meeting of shareholders
on February 14, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated herein by reference from the Company's
definitive proxy statement for the annual meeting of shareholders
on February 14, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference from the Company's
definitive proxy statement for the annual meeting of shareholders
on February 14, 1996.
59<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1 and 2. Financial statements and financial statement
schedules.
The financial statements listed in the accompanying Index to
Financial Statements are filed as part of this annual report. No
financial statement schedules are required in this filing.
3. Exhibits
The exhibits listed in the accompanying Exhibits Index are
filed as part of this annual report. The exhibits numbered
10.19(a) through 10.27(c) and 10.29 are management contracts or
compensatory plans or arrangements.
(b) Reports on Form 8-K
None.
60<PAGE>
INDEX TO FINANCIAL STATEMENTS
(Item 8, 14(a) 1 and 2)
Page
Number
Financial statements:
Consolidated balance sheets at September 30,
1995 and 1994 31
Consolidated statements of income for the
years ended September 30, 1995, 1994 and 1993 32
Consolidated statements of shareholders'
equity for the years ended September 30,
1995, 1994 and 1993 33
Consolidated statements of cash flows for the years
ended September 30, 1995, 1994 and 1993 34
Notes to consolidated financial statements 36-56
Independent auditors' report 30
All financial statement schedules are omitted because the
required information is not present, or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the financial statements and
accompanying notes thereto.
61<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ATMOS ENERGY CORPORATION
(Registrant)
By /s/ JAMES F. PURSER
-----------------------
James F. Purser
Executive Vice President and
Chief Financial Officer
Date: December 14, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints James F.
Purser, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments to this Form 10-K, and to file the same, with all
exhibits thereto, and all other documents in connection there-
with, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do
and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated:
/s/ CHARLES K. VAUGHAN Chairman of December 14, 1995
- ------------------------- the Board
Charles K. Vaughan
/s/ ROBERT F. STEPHENS President and December 14, 1995
- ------------------------- Chief Operating
Robert F. Stephens Officer, Director
62<PAGE>
/s/ JAMES F. PURSER Executive Vice December 14, 1995
- ------------------------- President and
James F. Purser Chief Financial
Officer, Director
/s/ DAVID L. BICKERSTAFF Vice President December 14, 1995
- ------------------------- and Controller
David L. Bickerstaff (Principal
accounting officer)
/s/ TRAVIS W. BAIN, II Director December 14, 1995
- -------------------------
Travis W. Bain, II
/s/ DAN BUSBEE Director December 14, 1995
- -------------------------
Dan Busbee
/s/ THOMAS C. MEREDITH Director December 14, 1995
- -------------------------
Thomas C. Meredith
/s/ PHILLIP E. NICHOL Director December 14, 1995
- -------------------------
Phillip E. Nichol
/s/ JOHN W. NORRIS, JR. Director December 14, 1995
- -------------------------
John W. Norris, Jr.
/s/ CARL S. QUINN Director December 14, 1995
- -------------------------
Carl S. Quinn
63<PAGE>
Director December 14, 1995
- -------------------------
Lee E. Schlessman
/s/ RICHARD WARE II Director December 14, 1995
- -------------------------
Richard Ware II
64<PAGE>
EXHIBITS INDEX
Item 14. (a) (3)
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
3.1 Restated Articles of Incorporation,
as amended as of February 9, 1995
3.2 By-Laws of Atmos Energy Corporation
(As amended as of November 9, 1994)
4.1 Specimen Common Stock Certificate Exhibit (4) of the
(Energas Company) October 28, 1983 Form 10
(File No. 0-11249)
4.2 Specimen Common Stock Certificate Exhibit (4) (b) of Form
(Atmos Energy Corporation) 10-K for fiscal year
ended September 30, 1988
(File No. 1-10042)
4.3(a) Rights Agreement, dated as of April Exhibit (1) of Form 8-K
27, 1988, between the Company and filed May 10, 1988 (File
Morgan Shareholder Services Trust No. 0-11249)
Company
4.3(b) Amendment No. 1 to Rights Agreement, Exhibit 4.3(b) of Form
dated August 10, 1994 10-K for fiscal year
ended September 30, 1994
(File No. 1-10042)
4.3(c) Certificate of Adjusted Price, dated Exhibit 4.3(c) of Form
August 15, 1994 10-K for fiscal year
ended September 30, 1994
(File No. 1-10042)
9 Not applicable
10.1(a) Note Purchase Agreement, dated Exhibit (10)(a)(i) of
December 30, 1986, by and between Form 10-K for fiscal year
the Company and John Hancock Mutual ended September 30, 1991
Life Insurance Company (File No. 1-10042)
Note Purchase Agreement, dated
December 30, 1986, by and between
the Company and Mellon Bank, N.A.,
Trustee under Master Trust Agreement
of NYNEX Corporation dated January
1, 1984 for Employee Pension Plans -
NYNEX - John Hancock - Private
Placement. (Agreement is identical
to the Hancock Agreement listed
above except as to the parties
thereto.)
65 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.1(b) Letter, dated November 13, 1987, Exhibit 28(a) of Form 8-K
from John Hancock Mutual Life filed January 7, 1988
Insurance Company to the Company (File No. 0-11249)
Letter, dated November 13, 1987,
from Mellon Bank, N.A., Trustee
under Master Trust Agreement of
NYNEX Corporation dated January 1,
1984 for Employee Pension Plans -
NYNEX - John Hancock - Private
Placement to the Company (Mellon
letter is identical to the Hancock
letter listed above except as to the
parties thereto.)
10.1(c) Amendment to Note Purchase Exhibit (10)(a)(iii) of
Agreement, dated October 11, 1989, Form 10-K for fiscal year
by and between the Company and John ended September 30, 1989
Hancock Mutual Life Insurance (File No. 1-10042)
Company revising Note Purchase
Agreement dated December 30, 1986
Amendment to Note Purchase
Agreement, dated October 11, 1989,
by and between the Company and
Mellon Bank, N.A., Trustee under
Master Trust Agreement of NYNEX
Corporation dated January 1, 1984
for Employee Pension Plans - NYNEX -
John Hancock - Private Placement
revising Note Purchase Agreement
dated December 30, 1986. (This
amendment is identical to the
Hancock amendment listed above
except as to the parties thereto.)
10.1(d) Amendment to Note Purchase Exhibit (10)(a)(iv) of
Agreement, dated November 12, 1991, Form 10-K for fiscal year
by and between the Company and John ended September 30, 1991
Hancock Mutual Life Insurance (File No. 1-10042)
Company revising Note Purchase
Agreement dated December 30, 1986.
66<PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
Amendment to Note Purchase
Agreement, dated November 12, 1991,
by and between the Company and
Mellon Bank, N.A., Trustee under
Master Trust Agreement of NYNEX
Corporation dated January 1, 1984
for Employee Pension Plans - NYNEX -
John Hancock - Private Placement
revising Note Purchase Agreement
dated December 30, 1986. (This
amendment is identical to the
Hancock amendment listed above
except as to the parties thereto.)
10.2(a) Note Purchase Agreement, dated as of Exhibit 10(c) of Form 8-K
December 21, 1987, by and between filed January 7, 1988
the Company and John Hancock Mutual (File No. 0-11249)
Life Insurance Company
Note Purchase Agreement, dated as of
December 21, 1987, by and between
the Company and John Hancock
Charitable Trust I (Agreement is
identical to Hancock Agreement
listed above except as to the
parties thereto.)
Note Purchase Agreement dated as of
December 21, 1987, by and between
the Company and Mellon Bank, N.A.,
Trustee under Master Trust Agreement
of AT&T Corporation, dated January
1, 1984, for Employee Pension Plans
- AT&T - John Hancock - Private
Placement (Agreement is identical to
Hancock Agreement listed above
except as to the parties thereto.)
10.2(b) Amendment to Note Purchase Exhibit (10)(b)(ii) of
Agreement, dated October 11, 1989, Form 10-K for fiscal year
by and between the Company and John ended September 30, 1989
Hancock Mutual Life Insurance (File No. 1-10042)
Company revising Note Purchase
Agreement dated December 21, 1987
67<PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
Amendment to Note Purchase
Agreement, dated October 11, 1989,
by and between the Company and John
Hancock Charitable Trust I revising
Note Purchase Agreement dated
December 21, 1987. (Amendment is
identical to Hancock amendment
listed above except as to the
parties thereto.)
Amendment to Note Purchase
Agreement, dated October 11, 1989,
by and between the Company and
Mellon Bank, N.A., Trustee under
Master Trust Agreement of AT&T
Corporation, dated January 1, 1984,
for Employee Pension Plans - AT&T -
John Hancock - Private Placement
revising Note Purchase Agreement
dated December 21, 1987 (Amendment
is identical to Hancock amendment
listed above except as to the
parties thereto.)
10.2(c) Amendment to Note Purchase Exhibit 10(b)(iii) of
Agreement, dated November 12, 1991, Form 10-K for fiscal year
by and between the Company and John ended September 30, 1991
Hancock Mutual Life Insurance (File No. 1-10042)
Company revising Note Purchase
Agreement dated December 21, 1987
Amendment to Note Purchase
Agreement, dated November 12, 1991,
by and between the Company and John
Hancock Charitable Trust I revising
Note Purchase Agreement dated
December 21, 1987. (Amendment is
identical to Hancock amendment
listed above except as to the
parties thereto.)
68 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
Amendment to Note Purchase
Agreement, dated November 12, 1991,
by and between the Company and
Mellon Bank, N.A., Trustee under
Master Trust Agreement of AT&T
Corporation, dated January 1, 1984,
for Employee Pension Plans - AT&T -
John Hancock - Private Placement
revising Note Purchase Agreement
dated December 21, 1987. (Amendment
is identical to Hancock amendment
above except as to the parties
thereto.)
10.3(a) Note Purchase Agreement, dated as of Exhibit 10(c) of Form 10-
October 11, 1989, by and between the K for fiscal year ended
Company and John Hancock Mutual Life September 30, 1989 (File
Insurance Company No. 1-10042)
10.3(b) Amendment to Note Purchase Exhibit 10(c)(ii) of Form
Agreement, dated as of November 12, 10-K for fiscal year
1991, by and between the Company and ended September 30, 1991
John Hancock Mutual Life Insurance (File No. 1-10042)
Company revising Note Purchase
Agreement dated October 11, 1989
10.4(a) Note Purchase Agreement, dated as of Exhibit 10(f)(i) of Form
August 29, 1991, by and between the 10-K for fiscal year
Company and The Variable Annuity ended September 30, 1991
Life Insurance Company (File No. 1-10042)
10.4(b) Amendment to Note Purchase Exhibit 10(f)(ii) of Form
Agreement, dated November 26, 1991, 10-K for fiscal year
by and between the Company and The ended September 30, 1991
Variable Annuity Life Insurance (File No. 1-10042)
Company revising Note Purchase
Agreement dated August 29, 1991
10.5 Note Purchase Agreement, dated as of Exhibit (10)(f) of Form
August 31, 1992, by and between the 10-K for fiscal year
Company and The Variable Annuity ended September 30, 1992
Life Insurance Company (File No. 1-10042)
69<PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.6 Note Purchase Agreement, dated Exhibit 10.1 of Form 10-Q
November 14, 1994, by and among the for quarter ended
Company and New York Life Insurance December 31, 1994 (File
Company, New York Life Insurance and No. 1-10042)
Annuity Corporation, The Variable
Annuity Life Insurance Company,
American General Life Insurance
Company, and Merit Life Insurance
Company
10.7(a) Service Agreement No. 50772 between Exhibit 10.6(a) of Form
Greeley Gas Company and Public 10-K for fiscal year
Service Company of Colorado (West ended September 30, 1994
Gas Supply Co. prior to merger with (File No. 1-10042)
PSCO) dated August 1, 1992
10.7(b) Transportation Storage Service Exhibit 10.6(b) of Form
Agreement No. TA-0544 between 10-K for fiscal year
Greeley Gas Company and Williams ended September 30, 1994
Natural Gas Company dated October 1, (File No. 1-10042)
1993
10.7(c) No-Notice Transportation Service Exhibit 10.6(c) of Form
Agreement No. 31013, Rate Schedule 10-K for fiscal year
NNT-1, between Greeley Gas Company ended September 30, 1994
and Colorado Interstate Gas Company, (File No. 1-10042)
as amended, dated October 1, 1993
10.7(d) Firm Transportation Service Exhibit 10.6(d) of Form
Agreement No. 35009, Rate Schedule 10-K for fiscal year
TF2, between Greeley Gas Company and ended September 30, 1994
Colorado Interstate Gas Company, as (File No. 1-10042)
amended, dated October 1, 1993
10.8(a) Amarillo Supply Agreement dated Exhibit 10.7(a) of Form
January 2, 1993 between the Company 10-K for fiscal year
and Mesa Operating Company ended September 30, 1994
(File No. 1-10042)
10.8(b) Interruptible Gas Transportation and Exhibit (10)(g)(iv) of
Sales Agreement dated January 1, Form 10-K for fiscal year
1991, between Mesa Operating Limited ended September 30, 1992
Partnership and Energas Company (File No. 1-10042)
regarding transportation charges to
Mesa
10.8(c) Letter agreement between the Company Exhibit (10)(h)(vi) of
and Mesa Operating Limited Form 10-K for fiscal year
Partnership dated March 21, 1989, ended September 30, 1989
regarding transportation rates (File No. 1-10042)
70 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.9(a) Gas Sales Agreement between the Exhibit (10)(i)(i) of
Company and Westar Transmission Form 10-K for fiscal year
Company dated January 1, 1986, as ended September 30, 1989
amended by Letter Agreement dated (File No. 1-10042)
November 21, 1986, and Agreement
dated December 9, 1988, revising the
pricing formula for city gate sales
10.9(b) Amendment to Gas Sales Agreement, Exhibit (10)(h)(ii) of
dated February 27, 1987, between the Form 10-K for fiscal year
Company and Westar Transmission ended September 30, 1992
Company (File No. 1-10042)
10.9(c) Amendment to Gas Sales Agreement, Exhibit (10)(h)(iii) of
dated January 1, 1988, between Cabot Form 10-K for fiscal year
Gas Supply Corporation ("CGSC") and ended September 30, 1992
the Company (File No. 1-10042)
10.10(a) Gas Transportation Agreement between Exhibit 10(i)(i) of Form
the Company and Westar Transmission 10-K for fiscal year
Company dated January 1, 1986, as ended September 30, 1991
amended by letter agreement dated (File No. 1-10042)
November 21, 1986
10.10(b) Amendment to Gas Transportation Exhibit (10)(i)(ii) of
Agreement, dated January 1, 1988, Form 10-K for fiscal year
between CGSC and the Company ended September 30, 1992
(File No. 1-10042)
10.11 Supplemental Gas Sales Agreement, Exhibit (10)(j) of Form
dated January 1, 1988, between CGSC 10-K for fiscal year
and the Company ended September 30, 1992
(File No. 1-10042)
10.12 Gas Purchase and Sales Agreement, Exhibit (10)(k) of Form
dated January 1, 1988, between Cabot 10-K for fiscal year
Energy Marketing Corporation and ended September 30, 1992
EnerMart, Inc. (File No. 1-10042)
10.13 Gas Sales Agreement, dated January Exhibit (10)(l) of Form
1, 1988, between the Company and Gas 10-K for fiscal year
Marketing, Inc. ("GMI"), relating to ended September 30, 1992
Amarillo supplemental supplies (File No. 1-10042)
10.14 Gas Sales Agreement, dated January Exhibit (10)(m) of Form
1, 1988, between the Company and 10-K for fiscal year
GMI, relating to West Texas ended September 30, 1992
supplemental supplies (File No. 1-10042)
71 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.15 Settlement Agreement, dated January Exhibit (10)(n) of Form
15, 1988, between CGSC and the 10-K for fiscal year
Company ended September 30, 1992
(File No. 1-10042)
10.16(a) Agreement for Natural Gas Service Exhibit 10(o)(ii) of Form
for Distribution and Resale between 10-K for fiscal year
Trans La and LIG dated October 28, ended September 30, 1991
1991 (File No. 1-10042)
10.16(b) Agreement for Intrastate Exhibit 10(o)(iii) of
Transportation of Natural Gas Form 10-K for fiscal year
between Trans La and LIG dated ended September 30, 1991
October 28, 1991 (File No. 1-10042)
10.17(a) Gas Transportation Agreement between Exhibit 10.1 of Form 10-Q
Texas Gas Transmission Corporation for quarter ended
("Texas Gas") and Western Kentucky December 31, 1993 (File
Gas Company, a division of Atmos No. 1-10042)
Energy Corporation ("Western Ken-
tucky") dated November 1, 1993
(Contract no. T3817, zone 2)
10.17(b) Gas Transportation Agreement between Exhibit 10.2 of Form 10-Q
Texas Gas and Western Kentucky dated for quarter ended
November 1, 1993 (Contract no. December 31, 1993 (File
T3770, zone 2) No. 1-10042)
10.17(c) Gas Transportation Agreement between Exhibit 10.3 of Form 10-Q
Texas Gas and Western Kentucky Gas for quarter ended
dated November 1, 1993 (Contract no. December 31, 1993 (File
T3355, zone 3) No. 1-10042)
10.17(d) Gas Transportation Agreement between Exhibit 10.4 of Form 10-Q
Texas Gas and Western Kentucky Gas for quarter ended
dated November 1, 1993 (Contract no. December 31, 1993 (File
T3819, zone 4) No. 1-10042)
10.17(e) Gas Transportation Agreement between Exhibit 10.5 of Form 10-Q
Texas Gas and Western Kentucky Gas for quarter ended
dated November 1, 1993 (Contract no. December 31, 1993 (File
N0210, zone 2, Contract no. N0340, No. 1-10042)
zone 3, Contract no. N0435, zone 4)
10.18(a) Gas Transportation Agreement, Exhibit 10.17(a) of Form
Contract No. 2550, dated September 10-K for fiscal year
1, 1993, between Tennessee Gas ended September 30, 1993
Pipeline Company, a division of (File No. 1-10042)
Tenneco, Inc. ("Tennessee Gas"), and
Western Kentucky, Campbellsville
Service Area
72 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.18(b) Gas Transportation Agreement, Exhibit 10.17(b) of Form
Contract No. 2546, dated September 10-K for fiscal year
1, 1993, between Tennessee Gas and ended September 30, 1993
Western Kentucky, Danville Service (File No. 1-10042)
Area
10.18(c) Gas Transportation Agreement, Exhibit 10.17(c) of Form
Contract No. 2385, dated September 10-K for fiscal year
1, 1993, between Tennessee Gas and ended September 30, 1993
Western Kentucky, Greensburg et al (File No. 1-10042)
Service Area
10.18(d) Gas Transportation Agreement, Exhibit 10.17(d) of Form
Contract No. 2551, dated September 10-K for fiscal year
1, 1993, between Tennessee Gas and ended September 30, 1993
Western Kentucky, Harrodsburg (File No. 1-10042)
Service Area
10.18(e) Gas Transportation Agreement, Exhibit 10.17(e) of Form
Contract No. 2548, dated September 10-K for fiscal year
1, 1993, between Tennessee Gas and ended September 30, 1993
Western Kentucky, Lebanon Service (File No. 1-10042)
Area
10.19(a) *Employment Agreement dated April 1, Exhibit 10.3 of Form 10-Q
1995 between the Company and J. for quarter ended June
Charles Goodman 30, 1995 (File No. 1-
10042)
10.19(b) *Employment Agreement amended and Exhibit 10(r)(ii) of Form
(i) restated as of August 8, 1991, 10-K for fiscal year
between the Company and Robert F. ended September 30, 1991
Stephens (File No. 1-10042)
10.19(b) *Letter dated May 3, 1995 amending Exhibit 10.1 of Form 10-Q
(ii) the employment agreement between the for quarter ended June
Company and Robert F. Stephens 30, 1995 (File No. 1-
10042)
10.19(c) *Employment Agreement amended and Exhibit 10(r)(iii) of
restated as of August 8, 1991, Form 10-K for fiscal year
between the Company and Don E. James ended September 30, 1991
(File No. 1-10042)
10.19(d) *Employment Agreement amended and Exhibit 10(r)(iv) of Form
restated as of August 8, 1991, 10-K for fiscal year
between the Company and James F. ended September 30, 1991
Purser (File No. 1-10042)
73 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.19(e) *Employment Agreement dated August Exhibit 10.18(g) of Form
11, 1993, between the Company and 10-K for fiscal year
H.F. Harber ended September 30, 1993
(File No. 1-10042)
10.19(f) *Employment Agreement dated May 3, Exhibit 10.2 of Form 10-Q
1995 between the Company and Mary S. for quarter ended June
Lovell 30, 1995 (File No. 1-
10042)
10.20 *1983 Incentive Stock Option Plan of Exhibit 10(u) of Form 10-
Energas Company K for fiscal year ended
September 30, 1990 (File
No. 1-10042)
10.21 *The Atmos Energy Corporation Exhibit (10)(t) of Form
Supplemental Executive Benefits 10-K for fiscal year
Plan, effective October 1, 1987, ended September 30, 1992
Restated as of November 11, 1992 (File No. 1-10042)
10.22(a) *The Atmos Energy Corporation Exhibit (10)(u) of Form
Restricted Stock Grant Plan, 10-K for fiscal year
effective October 1, 1987, amended ended September 30, 1992
and restated as of May 13, 1992 (File No. 1-10042)
10.22(b) *Amendment No. 1 to the Atmos Energy Exhibit 10.1 of Form 10-Q
Corporation Restricted Stock Grant for the quarter ended
Plan (Restated as of May 13, 1992) December 31, 1992 (File
No. 1-10042)
10.22(c) *Amendment No. 2 to the Atmos Energy Exhibit 10 of Form 10-Q
Corporation Restricted Stock Grant for the quarter ended
Plan (Restated as of May 13, 1992) June 30, 1993 (File No.
1-10042)
10.22(d) *Amendment No. 3 to the Atmos Energy Exhibit 10.21(d) of Form
Corporation Restricted Stock Grant 10-K for fiscal year
Plan (Restated as of May 13, 1992) ended September 30, 1993
(File No. 1-10042)
10.23 *Atmos Energy Corporation Annual Exhibit 10(x) of Form 10-
Performance Bonus Plan for Corporate K for fiscal year ended
Officers, restated as of November 8, September 30, 1990 (File
1989 No. 1-10042)
10.24(a) *Atmos Energy Corporation Mini-Med Exhibit 10(w)(i) of Form
Plan, as restated effective April 1, 10-K for fiscal year
1989 ended September 30, 1992
(File No. 1-10042)
74 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.24(b) *Amendment No. 1 to the Atmos Energy Exhibit (10)(w)(ii) of
Corporation Mini-Med Plan Form 10-K for fiscal year
ended September 30, 1992
(File No. 1-10042)
10.24(c) *Amendment No. 2 to the Atmos Energy Exhibit (10)(w)(iii) of
Corporation Mini-Med Plan Form 10-K for fiscal year
ended September 30, 1992
(File No. 1-10042)
10.24(d) *Amendment No. 3 to the Atmos Energy Exhibit 10(w)(iv) of Form
Corporation Mini-Med Plan 10-K for fiscal year
ended September 30, 1992
(File No. 1-10042)
10.24(e) *Amendment No. 4 to the Atmos Energy Exhibit 10.23(e) of Form
Corporation Mini-Med Plan 10-K for fiscal year
ended September 30, 1993
(File No. 1-10042)
10.25 *Atmos Energy Corporation Deferred Exhibit 10(x) of Form 10-
Compensation Plan for Outside K for fiscal year ended
Directors September 30, 1992 (File
No. 1-10042)
10.26 *Atmos Energy Corporation Retirement Exhibit 10(y) of Form 10-
Plan for Outside Directors K for fiscal year ended
September 30, 1992 (File
No. 1-10042)
10.27(a) *Description of Car Allowance Exhibit 10.26(a) of Form
Payments 10-K for fiscal year
ended September 30, 1993
(File No. 1-10042)
10.27(b) *Description of Financial and Estate Exhibit 10.26(b) of Form
Planning Program 10-K for fiscal year
ended September 30, 1993
(File No. 1-10042)
10.27(c) *Description of Sporting Events Exhibit 10.26(c) of Form
Program 10-K for fiscal year
ended September 30, 1993
(File No. 1-10042)
10.28(a) Seventh Supplemental Indenture, Exhibit 10.1 of Form 10-Q
dated as of October 1, 1983 between for quarter ended June
Greeley Gas Company ("The Greeley 30, 1994 (File No. 1-
Gas Division") and the Central Bank 10042)
of Denver, N.A. ("Central Bank")
75 <PAGE>
Page Number or
Exhibit Incorporation by
Number Description Reference to
-------- ------------------------------------ -------------------------
10.28(b) Ninth Supplemental Indenture, dated Exhibit 10.2 of Form 10-Q
as of April 1, 1991, between The for quarter ended June
Greeley Gas Division and Central 30, 1994 (File No. 1-
Bank 10042)
10.28(c) Bond Purchase Agreement, dated as of Exhibit 10.3 of Form 10-Q
April 1, 1991, between The Greeley for quarter ended June
Gas Division and Central Bank 30, 1994 (File No. 1-
10042)
10.28(d) Tenth Supplemental Indenture, dated Exhibit 10.4 of Form 10-Q
as of December 1, 1993, between the for quarter ended June
Company and Colorado National Bank, 30, 1994 (File No. 1-
formerly Central Bank 10042)
10.29 *The Atmos Energy Corporation Exhibit 4.5 of Form S-8
Outside Directors Stock-for-Fee Plan for Atmos' Outside
Directors Stock-for-Fee
Plan filed February 14,
1995 (Registration No.
33-57695)
11 Not applicable
12 Not applicable
13 Not applicable
16 Not applicable
18 Not applicable
21 Subsidiaries of the registrant
22 Not applicable
23 Consent of independent auditors
24 Power of Attorney Signature page of Form
10-K for fiscal year
ended September 30, 1995
27 Financial Data Schedule for Atmos
for year ended September 30, 1995
28 Not applicable
99 Not applicable
_________________________
* This exhibit constitutes a "management contract or compensatory plan,
contract, or arrangement."
76 <PAGE>
EXHIBIT 3.1
-----------
RESTATED ARTICLES OF INCORPORATION
OF
ATMOS ENERGY CORPORATION
ARTICLE I.
The name of the corporation shall be Atmos Energy
Corporation (the "Corporation").
ARTICLE II.
The purpose for which the Corporation is organized is the
transaction of any or all lawful business for which
corporations may be incorporated under the Texas Business
Corporation Act, including, but not limited to, the following:
the transportation and distribution of natural gas by pipeline
as a public utility.
ARTICLE III.
The post office address of the registered office of this
Corporation is Three Lincoln Centre, Suite 1800, 5430 LBJ
Freeway, Dallas, Texas 75246, and the registered agent for
service of this Corporation at the same address is Don E.
James.
ARTICLE IV.
The period of the Corporation's duration shall be
perpetual.
ARTICLE V.
The Corporation shall not commence business until it has
received for the shares consideration of the value of One
Thousand Dollars ($1,000) consisting of money, labor done or
property actually received.
ARTICLE VI.
The number of directors constituting the present board of
directors is nine (9); however, thereafter the number of
directors constituting the Board of Directors shall be fixed
by the Bylaws of the Corporation. No director shall be
removed during his term of office except for cause and by the
affirmative vote of the holders of seventy-five percent (75%)
of the shares then entitled to vote at an election of
directors. The names and addresses of the persons who are to<PAGE>
serve as directors until the next annual meeting of the
shareholders or until their successors are duly elected and
qualified are as follows:
Name Address
Charles K. Vaughan Three Lincoln Centre
Suite 1800
5430 LBJ Freeway
Dallas, TX 75246
Travis W. Bain II 502 Genesco Park
Nashville, TN 37202
Paul L. Bell 1401 Elm Street
Suite 1818
Dallas, Texas 75202
Dan Busbee 2200 Ross Avenue
Suite 2200
Dallas, TX 75201
Ronald L. Fancher 1409 French
Odessa, TX 79761
Phillip E. Nichol P.O. Box 32500
Amarillo, TX 79120
John W. Norris, Jr. P.O. Box 809000
Dallas, TX 75380
William M. Quackenbush 2315 Harmony
Amarillo, TX 79106
Dewey G. Williams P.O. Box 2759
Dallas, TX 75221
ARTICLE VII.
1. Capitalization.
The aggregate number of shares which the Corporation
shall have the authority to issue is Seventy-Five Million
(75,000,000) shares of Common Stock having no par value.
- 2 -<PAGE>
2. Designation and Statement of Preferences,
Limitations and Relative Rights of Common Stock.
2.01 Subject to the provisions of the Texas Business
Corporation Act and to the conditions set forth in any
Resolution of the Board of Directors of the Corporation, such
dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid
on the Common Stock from time to time out of any funds legally
available therefor.
2.02 The holders of the Common Stock shall exclusively
possess full voting power for the election of directors and
for all other purposes. In the exercise of its voting power,
the Common Stock shall be entitled to one vote for each share
held.
3. Provisions Applicable to All Classes of Stock.
3.01 Subject to applicable law, the Board of Directors
may in its discretion issue from time to time authorized but
unissued shares for such consideration as it may determine.
The shareholders shall have no pre-emptive rights, as such
holders, to purchase any shares or securities of any class
which may at any time be sold or offered for sale by the
Corporation.
3.02 At each election for directors every shareholder
entitled to vote at any meeting shall have the right to vote,
in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected.
Cumulative voting of shares of stock in the election of
directors or otherwise is hereby expressly prohibited.
3.03 The Corporation shall be entitled to treat the
person in whose name any share or other security is registered
as the owner thereof, for all purposes, and shall not be bound
to recognize any equitable or other claim to or interest in
such shares or other security on the part of any other person,
whether or not the Corporation shall have notice thereof.
4. Provisions Applicable to Certain Business
Combinations.
- 3 -<PAGE>
4.01 The affirmative vote of the holders of not less than
seventy-five percent (75%) of the outstanding shares of
"Voting Stock" (as hereinafter defined) held by stockholders
other than a "Substantial Shareholder" (as hereinafter
defined) shall be required for the approval or authorization
of any "Business Combination" (as hereinafter defined) of the
Corporation with any Substantial Shareholder; provided,
however, that the seventy-five percent (75%) voting
requirement shall not be applicable if either:
(i) The "Continuing Directors" (as hereinafter
defined) of the Corporation by the affirmative vote of at
least a majority (a) have expressly approved in advance
the acquisition of the outstanding shares of Voting Stock
that caused such Substantial Shareholder to become a
Substantial Shareholder, or (b) have expressly approved
such Business Combination either in advance of or
subsequent to such Substantial Shareholder's having
become a Substantial Shareholder; or
(ii) The cash or fair market value (as determined
by at least a majority of the Continuing Directors) of
the property, securities or other consideration to be
received per share by holders of Voting Stock of the
Corporation in the Business Combination is not less than
the "Highest Per Share Price" or the "Highest Equivalent
Price" (as these terms are hereinafter defined) paid by
the Substantial Shareholder in acquiring any of its
holdings of the Corporation's Voting Stock.
4.02 For purposes of this paragraph 4 of Article VII:
(i) The term "Business Combination" shall include,
without limitation, (a) any merger or consolidation of
the Corporation, or any entity controlled by or under
common control with the Corporation, with or into any
Substantial Shareholder, or any entity controlled by or
under common control with the Substantial Shareholder,
(b) any merger or consolidation of a Substantial
Shareholder, or any entity controlled by or under common
control with the Corporation, (c) any sale, lease,
exchange, transfer or other disposition of all or
substantially all of the property and assets of the
Corporation, or any entity controlled by or under common
control with the Corporation, to a Substantial
Shareholder, or any entity controlled by or under common
control with the Substantial Shareholder, (d) any
purchase, lease, exchange, transfer or other acquisition
of all or substantially all of the property and assets of
a Substantial Shareholder or any entity controlled by or
under common control with the Corporation, (e) any
recapitalization of the Corporation that would have the
- 4 -<PAGE>
effect of increasing the voting power of a Substantial
Shareholder, and (f) any agreement, contract or other
arrangement providing for any of the transactions
described in this definition of Business Combination.
(ii) The term "Substantial Shareholder" shall mean
and include any individual, corporation, partnership or
other person or entity which, together with its
"Affiliates" and "Associates" (as those terms are defined
in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") as in effect at the date of the
adoption hereof), "Beneficially Owns" (as defined in Rule
13d-3 of the Exchange Act) an aggregate of 10 percent or
more of the outstanding Voting Stock of the Corporation,
and any Affiliate or Associate of any such individual,
corporation, partnership or other person or entity.
(iii) Without limitation, any share of Voting Stock
of the Corporation that any Substantial Shareholder has
the right to acquire at any time (notwithstanding that
Rule 13d-3 of the Exchange Act deems such shares to be
beneficially owned only if such right may be exercised
within 60 days) pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or
otherwise, shall be deemed to be Beneficially Owned by
the Substantial Shareholder and to be outstanding for
purposes of clause (ii) above.
(iv) For the purposes of subparagraph 4.01(ii) of
this paragraph 4 of Article VII, the term "other
consideration to be received" shall include, without
limitation, Common Stock or other capital stock of the
Corporation retained by its existing stockholders other
than Substantial Shareholders or other parties to such
Business Combination in the event of a Business
Combination in which the Corporation is the surviving
corporation.
(v) The term "Voting Stock" shall mean all of the
outstanding shares of Common Stock entitled to vote on
each matter on which the holders of record of Common
Stock shall be entitled to vote, and each reference to a
proportion of shares of Voting Stock shall refer to such
proposition of the votes entitled to be cast by such
shares.
(vi) The term "Continuing Director" shall mean a
Director who was a member of the Board of Directors of
the Corporation immediately prior to the time that the
Substantial Shareholder involved in a Business
Combination became a Substantial Shareholder.
- 5 -<PAGE>
(vii) A Substantial Shareholder shall be deemed to
have acquired a share of the Voting Stock of the
Corporation at the time when such Substantial Shareholder
became the Beneficial Owner thereof. With respect to the
shares owned by Affiliates, Associates or other persons
whose ownership is attributed to a Substantial
Shareholder under the foregoing definition of Substantial
Shareholder, if the price is paid by such Substantial
Shareholder for such shares is not determinable by a
majority of the Continuing Directors, the price so paid
shall be deemed to be the higher of (a) the price paid
upon the acquisition thereof by the Affiliate, Associate
or other person or (b) the market price of the shares in
question at the time when the Substantial Shareholder
became the Beneficial Owner thereof.
(viii) The terms "Highest Per Share Price" and
"Highest Equivalent Price" as used in this paragraph 4 of
Article VII shall mean the highest price that can be
determined to have been paid at any time by the
Substantial Shareholder for any share or shares of that
class of capital stock. If there is more than one class
of capital stock of the Corporation issued and
outstanding, the Highest Equivalent Price shall mean with
respect to each class and series of capital stock of the
Corporation the amount determined by a majority of the
Continuing Directors, on whatever basis they believe is
appropriate, to be the highest per share price equivalent
to the highest price that can be determined to have been
paid at any time by the Substantial Shareholder for any
share or shares of any class or series of capital stock
of the Corporation. In determining the Highest Per Share
Price and Highest Equivalent Price, all purchases by the
Substantial Shareholder shall be taken into account
regardless of whether the shares were purchased before or
after the Substantial Shareholder became a Substantial
Shareholder. The Highest Per Share Price and the Highest
Equivalent Price shall include any brokerage commissions,
transfer taxes and soliciting dealers' fees paid by the
Substantial Shareholder with respect to the shares of
capital stock of the Corporation acquired by the
Substantial Shareholder. In the case of any Business
Combination with a Substantial Shareholder, the
Continuing Directors shall determine the Highest Per
Share Price or the Highest Equivalent Price for each
class and series of the capital stock of the Corporation.
4.03 The provisions set forth in this paragraph 4 of
Article VII may not be amended, altered, changed or repealed
in any respect unless such action is approved by the
affirmative vote of the holders of not less than seventy-five
percent (75%) of the outstanding shares of Voting Stock (as
- 6 -<PAGE>
defined in this Article VII) of the Corporation at a meeting
of the shareholders duly called for the consideration of such
amendment, alteration, change or repeal; provided, however,
that if there is a Substantial Shareholder (as defined in this
Article VII), such action must also be approved by the
affirmative vote of the holders of not less than seventy-five
percent (75%) of the outstanding shares of Voting Stock held
by the shareholders other than the Substantial Shareholder.
ARTICLE VIII.
The power to alter, amend or repeal the Corporation's
bylaws, and to adopt new bylaws, is hereby vested in the Board
of Directors, subject, however, to repeal or change by the
affirmative vote of the holders of seventy-five percent (75%)
of the outstanding shares entitled to vote thereon.
ARTICLE IX.
The Corporation shall indemnify, to the fullest extent
permitted by law, any person who was, is, or is threatened to
be made a named defendant or respondent in any threatened,
pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, arbitrative, or
investigative, any appeal in such action, suit, or proceeding,
and any inquiry or investigation that could lead to such an
action, suit, or proceeding, by reason of the fact that such
person is or was a director or officer of the Corporation, or,
while such person was a director of the Corporation, is or was
serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another corporation,
partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, against judgments,
penalties (including excise and similar taxes), fines,
settlements, and reasonable expenses (including attorney's
fees) actually incurred by such person in connection with such
action, suit, or proceeding. In addition to the foregoing,
the Corporation shall, upon request of any such person
described above and to the fullest extent permitted by law,
pay or reimburse the reasonable expenses incurred by such
person in any action, suit, or proceeding described above in
advance of the final disposition of such action, suit, or
proceeding.
ARTICLE X.
No director of the Corporation shall be personally liable
to the Corporation or its shareholders for monetary damages
for an act or omission in such director's capacity as a
- 7 -<PAGE>
director, except for liability for (i) a breach of the
director's duty of loyalty to the Corporation or its
shareholders; (ii) an act or omission not in good faith or
that involves intentional misconduct or a knowing violation of
the law; (iii) a transaction from which the director received
an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the director's office;
(iv) an act or omission for which the liability of a director
is expressly provided by statute; or (v) an act related to an
unlawful stock repurchase or payment of a dividend. If the
laws of the State of Texas are hereafter amended to authorize
corporate action further eliminating or limiting the personal
liability of a director of the Corporation, then the liability
of a director of the Corporation shall thereupon automatically
be eliminated or limited to the fullest extent permitted by
such laws. Any repeal or modification of this Article X by
the shareholders of the Corporation shall not adversely affect
any right or protection of a director existing at the time of
such repeal or modification with respect to such events or
circumstances occurring or existing prior to such time.
- 8 -<PAGE>
EXHIBIT 3.2
-----------
BYLAWS
OF
ATMOS ENERGY CORPORATION
ARTICLE I
OFFICES
1.01 Registered Office. The registered office shall be
located in the City of Dallas, County of Dallas, State of Texas.
1.02 Other Offices. The corporation also may have offices
at such other places both within and without the State of Texas
as the Board of Directors may from time to time determine or as
the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01 Place of Meetings. All meetings of shareholders for
the election of directors or for any other proper purposes shall
be held at such place within or without the State of Texas as the
Board of Directors may from time to time designate, as stated in
the notice of such meeting or a duly executed waiver of notice
thereof.
2.02 Annual Meeting. An annual meeting of shareholders
shall be held at 11:00 a.m. on the second Wednesday of February
of each year commencing in 1989, unless such day is a legal
holiday, in which case such meeting shall be held at the
specified time on the next full business day thereafter which is
not a legal holiday. At such meeting the shareholders entitled
to vote thereat shall elect a Board of Directors and may transact
such other business as may properly be brought before the
meeting.
2.03 Special Meetings. Special meetings of shareholders
may be called by the Chairman of the Board of Directors, the
President, a majority of the Board of Directors, or as otherwise
provided in the Articles of Incorporation or the Texas Business
Corporation Act.
2.04 Notice of Annual or of Special Meeting. Written or
printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of
the Chairman of the Board, President, Secretary, or the officer
or person calling the meeting to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall
be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears<PAGE>
on the stock transfer books of the corporation, with postage
thereon prepaid.
2.05 Notice of Shareholder Proposals. At any annual
meeting, only such business shall be conducted as shall have been
brought before the annual meeting by or at the direction of the
Board of Directors or by any shareholder who complies with the
procedures set forth in this Section 2.05.
Except as otherwise provided by the Articles of
Incorporation, the only business which shall be conducted at any
annual meeting of the shareholders shall (i) have been specified
in the written notice of the meeting (or any supplement thereto)
given as provided in Section 2.04 of the Bylaws, (ii) be brought
before the meeting at the direction of the Board of Directors or
the Chairman of the meeting or (iii) have been specified in a
written notice (a "Shareholder Meeting Notice") given to the
corporation, in accordance with all of the following
requirements, by or on behalf of any shareholder who shall have
been a shareholder of record on the record date for such meeting
and who shall continue to be entitled to vote thereat. Each
Shareholder Meeting Notice must be delivered or mailed by first
class United States mail, postage prepaid, to and received by,
the Secretary of the corporation, at the principal executive
offices of the corporation, not less than 50 days nor more than
75 days prior to the annual meeting; provided, however, that if
less than 65 days' notice or prior public disclosure of the date
of the annual meeting is given or made to shareholders, notice by
the shareholder to be timely must be received by the Secretary of
the corporation not later than the close of business on the tenth
day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made.
Each Shareholder Meeting Notice shall set forth: (i) a
description of each item of business proposed to be brought
before the meeting; (ii) the name and address of the shareholder
proposing to bring such item of business before the meeting;
(iii) the class and number of shares of stock held of record,
owned beneficially and represented by proxy by such shareholder
as of the record date for the meeting (if such date shall then
have been made publicly available) and as of the date of such
Shareholder Meeting Notice; and (iv) all other information which
would be required to be included in a proxy statement filed with
the Securities and Exchange Commission if, with respect to any
such item of business, such shareholder were a participant in a
solicitation subject to Section 14 of the Securities Exchange Act
of 1934. No business shall be brought before any meeting of
shareholders of the corporation otherwise than as provided in
this paragraph or the Articles of Incorporation.
2.06 Business at Special Meeting. The business transacted
at any special meeting of shareholders shall be limited to the
purposes stated in the notice thereof.
- 2 -<PAGE>
2.07 Quorum of Shareholders. Unless otherwise provided in
the Articles of Incorporation, the holders of a majority of the
shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If, however, a
quorum shall not be present or represented at any meeting of the
shareholders, the shareholders present in person or represented
by proxy shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
2.08 Act of Shareholders' Meeting. The vote of the
holders of a majority of the shares entitled to vote and thus
represented at a meeting at which a quorum is present shall be
the act of the shareholders' meeting, unless the vote of a
greater number is required by law, the Articles of Incorporation,
or these Bylaws.
2.09 Voting of Shares. Each outstanding share, regardless
of class, shall be entitled to one vote on each matter submitted
to a vote at a meeting of shareholders, except to the extent that
the voting rights of the shares of any class are limited or
denied by the Articles of Incorporation or are otherwise provided
by law. Cumulative voting in the election of directors or
otherwise is expressly prohibited by the Articles of
Incorporation. At each election for directors, every shareholder
entitled to vote at such election shall have the right to vote,
in person or by proxy, the number of shares owned by him for as
many persons as there are directors to be elected and for whose
election he has the right to vote.
2.10 Proxies. At any meeting of the shareholders, each
shareholder having the right to vote shall be entitled to vote
either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. Any such
proxy shall be delivered to the secretary of such meeting at or
prior to the time designated by the chairman of the meeting or in
the order of business for so delivering such proxies. No proxy
shall be valid after eleven (11) months from the date of its
execution unless otherwise provided in the proxy. Each proxy
shall be revocable unless expressly provided therein to be
irrevocable and unless otherwise made irrevocable by law. Unless
required by statute or determined by the chairman of the meeting
to be advisable, the vote on any question need not be by ballot.
On a vote by ballot, each ballot shall be signed by the
shareholder voting or by such shareholder's proxy, if there be
such proxy.
2.11 Voting List. The officer or agent having charge of
the stock transfer books for shares of the corporation shall
make, at least ten (10) days before each meeting of shareholders,
- 3 -<PAGE>
a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical
order, with the address of and number of shares held by each
shareholder, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of
the corporation and shall be subject to the inspection by any
shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock
transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or
to vote at any such meeting of shareholders.
2.12 Order of Business. The order of business of each
meeting of the shareholders of the corporation shall be
determined by the chairman of the meeting. The chairman of the
meeting shall have the right and authority to prescribe such
rules, regulations, and procedures and to do all such acts and
things as are necessary or desirable for the conduct of the
meeting, including, without limitation, the establishment of the
procedures for the dismissal of business not properly presented,
maintenance of order and safety, limitations on the time allotted
to questions or comments on the affairs of the corporation,
restrictions on entry to such meetings after the time prescribed
for commencement thereof, and the opening and closing of the
voting polls.
2.13 Action by Written Consent Without a Meeting. Any
action required or permitted by law, the Articles of
Incorporation or these Bylaws to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all of
the shareholders entitled to vote with respect to the subject
matter thereof. Such consent shall have the same force and
effect as a unanimous vote of shareholders.
ARTICLE III
BOARD OF DIRECTORS
3.01 Powers. The business and affairs of the corporation
shall be managed by its Board of Directors which may exercise all
such powers of the corporation and do all such lawful acts and
things as are not by law, the Articles of Incorporation or these
Bylaws directed or required to be exercised and done by the
shareholders.
3.02 Number of Directors. The number of directors of the
corporation constituting the Board of Directors shall be not less
than three (3) nor more than fifteen (15). The first Board of
Directors shall consist of three (3) directors; thereafter, the
number of directors shall be determined in accordance with these
- 4 -<PAGE>
Bylaws by resolution of the Board of Directors or of the
shareholders, but no decrease shall have the effect of shortening
the term of any incumbent director.
3.03 Election and Term. The directors shall be divided
into three classes, designated Class I, Class II and Class III.
Each class shall consist, as nearly as may be possible, of one-
third of the total number of directors constituting the entire
Board of Directors. At the 1989 annual meeting of shareholders,
Class I directors shall be elected for a one-year term, Class II
directors for a two-year term and Class III directors for a
three-year term. At each succeeding annual meeting of
shareholders beginning in 1990, successors to the class of
directors whose term expires at that annual meeting shall be
elected for a three-year term. Directors shall be elected by a
majority vote of the shares entitled to vote in the election of
directors and represented in person or by proxy at a meeting of
shareholders at which a quorum is present. If the number of
directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class,
but in no case will a decrease in the number of directors shorten
the term of any incumbent director. A director shall hold office
until the annual meeting for the year in which his term expires
and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
3.04 Nominations of Directors. Nominations for election
to the Board of Directors of the corporation at a meeting of
shareholders may be made by the Board of Directors, or by any
shareholder of the corporation entitled to vote for the election
of directors at such meeting. Such nominations, other than those
made by the Board of Directors, shall be made by notice in
writing delivered or mailed by first class United States mail,
postage prepaid, to and received by the Secretary of the
corporation, at the principal executive offices of the
corporation, not less than 50 days nor more than 75 days prior to
any meeting of shareholders called for the election of directors;
provided, however, that if less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made to
shareholders, such nomination shall have been received by the
Secretary of the corporation not later than the close of business
on the tenth day following the day on which the notice of meeting
was mailed or such public disclosure was made. Such notice shall
set forth: (i) the name and address of the shareholder who
intends to make the nomination and of the person or persons to be
nominated; (ii) the class and number of shares of stock held of
record, owned beneficially and represented by proxy by such
shareholder as of the record date for the meeting (if such date
- 5 -<PAGE>
shall then have been made publicly available) and of the date of
such notice; (iii) a representation that the shareholder is a
holder of record of stock of the corporation entitled to vote at
such meeting and that the shareholder intends to appear in person
or by proxy at the meeting to nominate the person or persons
specified in the notice; (iv) a description of all arrangements
or understandings between such shareholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by
such shareholder; (v) such other information regarding each
nominee proposed by such shareholder as would be required to be
disclosed in solicitations for proxies for election of directors
pursuant to the proxy rules of the Securities and Exchange
Commission; and (vi) the consent of each nominee to serve as a
director of the corporation if so elected. The presiding officer
of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
3.05 Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors although less than a quorum of the Board
of Directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any
directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or
special meeting of shareholders called for that purpose or may be
filled by the board of directors for a term of office continuing
only until the next election of one or more directors by the
shareholders; provided, however, that the board of directors may
not fill more than two such directorships during the period
between any two successive annual meetings of shareholders.
3.06 Resignation and Removal. Any director may resign at
any time upon giving written notice to the corporation. No
director shall be removed during his term of office except for
cause and by the affirmative vote of the holders of seventy-five
percent (75%) of the shares then entitled to vote at an election
of directors. If the shareholders of this corporation are then
entitled to cumulative voting in the election of directors and if
less than the entire Board is to be removed, no one of the
directors may be removed if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an
election of the entire Board of Directors, or if there be classes
of directors, at an election of the class of directors of which
he is a part.
3.07 Compensation of Directors. As specifically
prescribed from time to time by resolution of the Board of
Directors, the directors of the corporation may be paid their
expenses of attendance at each meeting of the Board and may be
paid a fixed sum for attendance at each meeting of the Board or a
stated salary in their capacity as directors. This provision
shall not preclude any director from serving the corporation in
- 6 -<PAGE>
any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE IV
MEETINGS OF THE BOARD
4.01 First Meeting. The first meeting of each newly
elected Board of Directors shall be held without further notice
immediately following and at the same place as the annual meeting
of shareholders unless, by unanimous consent of the directors
then elected and serving, such time or place shall be changed.
At such meeting, the Board of Directors shall elect one of its
members to be Chairman of the Board, who shall preside at all
meetings of the shareholders and the Board of Directors and
perform such other duties as the Board of Directors shall
prescribe and who shall serve as an ex-officio member of all
committees of the Board.
4.02 Regular Meeting. Regular meetings of the Board of
Directors may be held with or without notice at such time and at
such place either within or without the State of Texas as from
time to time shall be prescribed by resolution of the Board of
Directors.
4.03 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors
or the President, and shall be called by the Chairman of the
Board of Directors, the President or the Secretary on the written
request of two directors. Written notice of special meetings of
the Board of Directors shall be given to each director at least
two (2) days before the date of the meeting.
4.04 Business at Regular or Special Meeting. Neither the
business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
4.05 Quorum of Directors. A majority of the Board of
Directors shall constitute a quorum for the transaction of
business, unless a greater number is required by law or the
Articles of Incorporation. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice
other than announcement of the meeting, until a quorum shall be
present.
4.06 Act of Directors' Meeting. The act of a majority of
the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors unless the act of a
greater number is required by law, the Articles of Incorporation,
or these Bylaws.
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4.07 Action by Written Consent Without a Meeting. Any
action required or permitted by law, the Articles of
Incorporation or these Bylaws to be taken at a meeting of the
Board of Directors or any committee thereof may be taken without
a meeting if a consent in writing, setting forth the action so
taken, is signed by all members of the Board of Directors or
committee, as the case may be. Such consent shall have the same
force and effect as a unanimous vote at such meeting.
ARTICLE V
COMMITTEES
The Board of Directors, by resolution adopted by a majority
of the full Board of Directors, may designate from among its
members an executive committee and one or more other committees,
each of which shall be comprised of one or more members and, to
the extent provided in such resolution or in the Articles of
Incorporation or in these Bylaws, shall have and may exercise all
of the authority of the Board of Directors, except that no such
committee shall have the authority of the Board of Directors in
reference to amending the Articles of Incorporation, approving a
plan of merger or consolidation, recommending to the shareholders
the sale, lease, or exchange of all or substantially all of the
property and assets of the corporation otherwise than in the
usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a
revocation thereof, amending, altering, or repealing the Bylaws
of the corporation or adopting new Bylaws for the corporation,
filling vacancies in the Board of Directors or any such
committee, electing or removing officers, members of the Board of
directors or members of any such committee, fixing the
compensation of any member of such committee, or altering or
repealing any resolution of the Board of Directors which by its
terms provides that it shall not be so amendable or repealable.
No such committee shall have the power or authority to declare a
dividend or to authorize the issuance of shares of the
corporation. Vacancies in the membership of the committee shall
be filled by the Board of Directors at a regular or special
meeting of the Board. The executive committee shall keep regular
minutes of its proceedings and report the same to the Board when
required. The designation of such committee and the delegation
thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
ARTICLE VI
NOTICES
6.01 Methods of Giving Notice. Whenever any notice is
required to be given to any shareholder or director under the
provisions of any statute, the Articles of Incorporation or these
- 8 -<PAGE>
Bylaws, it shall be given in writing and delivered personally or
mailed to such shareholder or director at such address as appears
on the books of the corporation, and such notice shall be deemed
to be given at the time when the same shall be deposited in the
United States mail with sufficient postage thereon prepaid.
Notice to directors may also be given by telegram or electronic
communication, and notice given by such means shall be deemed
given at the time it is delivered to the telegraph office or
transmitted by means of electronic communication.
6.02 Waiver of Notice. Whenever any notice is required to
be given to any shareholder or director under the provisions of
any law, the Articles of Incorporation or these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to
said notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
6.03 Attendance as Waiver. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose
of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
ARTICLE VII
ACTION WITHOUT A MEETING BY USE OF
CONFERENCE TELEPHONE
OR SIMILAR COMMUNICATIONS EQUIPMENT
Subject to the provisions requiring or permitting notice of
meeting, unless otherwise restricted by the Articles of
Incorporation or these Bylaws, shareholders, members of the Board
of Directors or members of any committee designated by such Board
may participate in and hold a meeting of such shareholders, Board
or committee by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE VIII
OFFICERS
8.01 Executive Officers. The officers of the corporation
shall consist of a President, one or more Vice Presidents, a
Secretary, and a Treasurer, and may also include the Chairman of
the Board if so designated as an officer by the Board of
Directors and such other officers as are provided for in Section
8.03 of this Article. Any Vice President of the corporation may,
- 9 -<PAGE>
by the addition of a number or a word or words before or after
the title "Vice President", be designated "Senior Executive",
"Executive", "Senior", "Trust", "Second" or "Assistant" Vice
President. Each officer of the corporation shall be elected by
the Board of Directors as provided in Section 8.02 of this
Article. Any two or more offices may be held by the same person.
8.02 Election and Qualification. The Board of Directors,
at its first meeting after each annual meeting of shareholders,
shall choose a President, one or more Vice Presidents, a
Secretary, and a Treasurer, none of whom need be a member of the
Board. The Board also may elect one or more Assistant
Secretaries and Assistant Treasurers.
8.03 Other Officers and Agents. The Board of Directors
may elect or appoint such other officers, assistant officers and
agents as may be necessary, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
8.04 Salaries. The salaries of all officers and agents of
the corporation shall be fixed by resolution of the Board of
Directors.
8.05 Term, Removal and Vacancies. Each officer of the
corporation shall hold office until his successor is chosen and
qualified or until his death, resignation or removal. Any
officer may resign at any time upon giving written notice to the
corporation. Any officer or agent or member of a committee
elected or appointed by the Board of Directors may be removed by
the Board of Directors whenever in its judgment the best interest
of the corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or
agent or member of a committee shall not of itself create
contract rights. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be
filled by the Board of Directors.
8.06 Chief Executive Officer. The Board of Directors
shall designate whether the Chairman of the Board or the
President shall be the chief executive officer of the
corporation. The chief executive officer shall have all of the
powers and duties as usually pertain to such position, including
the power to make and sign contracts and agreements in the name
of and on behalf of the corporation and all other powers and
duties granted by these Bylaws to the President of the
corporation. In the event the Chairman of the Board is
designated the chief executive officer of the corporation, the
Chairman of the Board shall have supervisory powers over the
President, all other officers of the corporation, and the
business activities of the corporation.
- 10 -<PAGE>
8.07 President. The President shall be the chief
operating officer of the corporation and shall have such powers
and duties as usually pertain to such office, except as the same
may be modified by the Board of Directors. The President shall
have general powers of oversight, supervision and management of
the business and affairs of the corporation, shall see that all
orders and resolutions of the Board of Directors are carried into
effect, and shall have the power to make and sign contracts and
agreements in the name and on behalf of the corporation and to do
or perform all other acts incident to the office of President or
that are authorized or required by law. The President shall
preside at meetings of the shareholders in the absence of the
Chairman of the Board. If the President is also a member of the
Board, he shall be ex-officio a member of all committees of the
Board and shall preside, in the absence of the Chairman of the
Board, at meetings of the Board.
8.08 Vice President. Unless otherwise determined by the
Board of Directors, one of the Vice Presidents shall, in the
absence or disability of the President, perform the duties and
exercise the powers of the President. The various Vice
Presidents shall perform such other duties and have such other
powers as the Board of Directors shall prescribe.
8.09 Secretary. The Secretary shall attend all meetings
of the Board of Directors and of the shareholders, record all the
proceedings of the meetings of the Board of Directors and of the
shareholders in a book to be kept for that purpose and shall
perform like duties for the standing committees when required.
He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings as may be prescribed by the
Board of Directors, Chairman of the Board, or the President. He
shall keep in safe custody the seal of the corporation, and, when
authorized by the Board of Directors, affix the same to any
instrument requiring it, and, when so affixed, it shall be
attested by his signature or by the signature of the Treasurer or
an Assistant Secretary.
8.10 Assistant Secretaries. An Assistant Secretary,
unless otherwise determined by the Board of Directors, shall, in
the absence or disability of the Secretary, perform the duties
and exercise the powers of the Secretary. They shall perform
such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
8.11 Treasurer. The Treasurer shall have the custody of
the corporate funds and securities, shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors. He
shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for such
- 11 -<PAGE>
disbursements, and shall render to the Chairman of the Board (if
he is the chief executive officer), President, and the Board of
Directors at its regular meetings, or when the Board of Directors
so requires, an account of all his transactions as Treasurer, and
of the financial condition of the corporation.
8.12 Assistant Treasurers. An Assistant Treasurer, unless
otherwise determined by the Board of Directors, shall, in the
absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer. They shall perform such
other duties and have such other powers as the Board of Directors
from time to time may prescribe.
8.13 Officer's Bond. If required by the Board of
Directors, any officer so required shall give the corporation a
bond (which shall be renewed as the Board may require) in such
sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties
of his office and for the restoration to the corporation, in
case of his death, resignation, retirement or removal from
office, of any and all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation.
ARTICLE IX
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Subject to any limitation which may be contained in the
Articles of Incorporation, the corporation shall indemnify, to
the fullest extent permitted by law, any person who was, is, or
is threatened to be made a named defendant or respondent in any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such action, suit, or proceeding,
and any inquiry or investigation that could lead to such an
action, suit or proceeding, by reason of the fact that such
person is or was a director or officer of the corporation, or,
while such person was a director of the corporation, is or was
serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or
other enterprise, against judgments, penalties (including excise
and similar taxes), fines, settlements, and reasonable expenses
(including attorney's fees) actually incurred by such person in
connection with such action, suit, or proceeding. In addition to
the foregoing, the corporation shall, upon request of any such
person described above and to the fullest extent permitted by
law, pay or reimburse the reasonable expenses incurred by such
person in any action, suit, or proceeding described above in
advance of the final disposition of such action, suit, or
proceeding.
- 12 -<PAGE>
ARTICLE X
CERTIFICATES FOR SHARES
10.01 Certificates Representing Shares. The corporation
shall deliver certificates representing all shares to which
shareholders are entitled. Such certificates shall be numbered
and shall be entered in the books of the corporation as they are
issued, and shall be signed by the Chairman of the Board,
President, or a Vice President, and the Secretary or an Assistant
Secretary of the corporation, and may be sealed with the seal of
the corporation or a facsimile thereof. The signatures of the
Chairman of the Board, President, or Vice President, and the
Secretary or Assistant Secretary, upon a certificate may be
facsimiles, if the certificate is countersigned by a transfer
agent or registered by a registrar, either of which is other than
the corporation itself or an employee of the corporation. In
case any officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by
the corporation with the same effect as if he were such officer
at the date of its issuance. If the corporation is authorized to
issue shares of more than one class, each certificate
representing shares issued by such corporation (1) shall
conspicuously set forth on the face or back of the certificate a
full statement of (a) all of the designations, preferences,
limitations and relative rights of the shares of each class
authorized to be issued and, (b) if the corporation is authorized
to issue shares of any preferred or special class in series, the
variations in the relative rights and preferences of the shares
of each such series to the extent the same have been fixed and
determined and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent
series; or (2) shall conspicuously state on the face or back of
the certificate that (a) such a statement is set forth in the
Articles of Incorporation on file in the office of the Secretary
of State of Texas and (b) the corporation will furnish a copy of
such statement to the record holder of the certificate without
charge on written request to the corporation at its principal
place of business or registered office. If the corporation has
by its Articles of Incorporation limited or denied the preemptive
right of shareholders to acquire unissued or treasury shares of
the corporation, each certificate representing shares issued by
such corporation (1) shall conspicuously set forth on the face or
back of the certificate a full statement of the limitation or
denial of preemptive rights contained in the Articles of
Incorporation, or (2) shall conspicuously state on the face or
back of the certificate that (a) such a statement is set forth in
the Articles of Incorporation on file in the office of the
Secretary of State of Texas and (b) the corporation will furnish
a copy of such statement to the record holder of the certificate
without charge on request to the corporation at its principal
place of business or registered office. Each certificate
- 13 -<PAGE>
representing shares shall state upon the face thereof that the
corporation is organized under the laws of the State of Texas,
the name of the person to whom issued, the number and class of
shares and the designation of the series, if any, which such
certificate represents and the par value of each share
represented by such certificate or a statement that the shares
are without par value. No certificate shall be issued for any
share until the consideration therefor, fixed as provided by law,
has been fully paid.
10.02 Restriction on Transfer of Shares. If any
restriction on the transfer, or registration of the transfer, of
shares shall be imposed or agreed to by the corporation, as
permitted by law, the Articles of Incorporation or these Bylaws,
each certificate representing shares so restricted (1) shall
conspicuously set forth a full or summary statement of the
restrictions on the face of the certificate, or (2) shall set
forth such statement on the back of the certificate and
conspicuously refer to the same on the face of the certificate,
or (3) shall conspicuously state on the face or back of the
certificate that such a restriction exists pursuant to a
specified document and (a) that the corporation will furnish to
the record holder of the certificate without charge upon written
request to the corporation at its principal place of business or
registered office a copy of the specified document, or (b) if
such document is one required or permitted to be and has been
filed under applicable law, that such specified document is on
file in the Office of the Secretary of State of Texas and
contains a full statement of such restrictions. Unless such
document was on file in the Office of the Secretary of State of
Texas at the time of the request, if the corporation fails within
a reasonable time to furnish the record holder of a certificate,
upon such request and without charge, a copy of the specified
document, the corporation shall not be permitted thereafter to
enforce its rights under the restriction imposed on the shares
represented by such certificate. Any restriction on the
transfer, or registration of transfer, of shares of the
corporation, if reasonable and noted conspicuously on the
certificates representing such shares, may be enforced against
the holder of the restricted shares or any successor or
transferee of the holder, including an executor, administrator,
trustee, guardian, or other fiduciary entrusted with like
responsibility for the person or estate of the holder. Unless
noted conspicuously on the certificates representing such shares,
a restriction, even though otherwise enforceable, is ineffective
except against a person with actual knowledge of the restriction.
10.03 Transfer of Shares. Upon surrender to the
corporation or the transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate
- 14 -<PAGE>
to the person entitled thereto, cancel the old certificate, and
record the transaction upon its books.
10.04 Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors, in its discretion and as a
condition precedent to the issuance thereof, may require the
owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the corporation
a bond in such sum as it may direct as indemnity against any
claim that may be made against the corporation with respect to
the certificate alleged to have been lost, stolen or destroyed.
10.05 Closing of Transfer Books and Fixing Record Date.
For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other
proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period but not to
exceed, in any case, sixty (60) days. If the stock transfer
books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date
in any case to be not more than sixty (60) days and, in case of a
meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action requiring such determination
of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or
the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section 10.05,
such determination shall apply to any adjournment thereof, except
where the determination has been made through the closing of
stock transfer books and the stated period of closing has
expired.
10.06 Registered Shareholders. The corporation shall be
entitled to recognize the exclusive right of a person registered
- 15 -<PAGE>
on its books as the owner of shares to receive dividends, and to
vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by
the laws of the State of Texas
ARTICLE XI
GENERAL PROVISIONS
11.01 Dividends. The Board of Directors from time to time
may declare, and the corporation may pay, dividends on its
outstanding shares in cash, in property, or in its own shares,
except when the corporation is insolvent or when the payment
thereof would render the corporation insolvent or when the
declaration or payment thereof would be contrary to any
restrictions contained in the Articles of Incorporation. Such
dividends may be declared at any regular or special meeting of
the Board, and the declaration and payment shall be subject to
all applicable provisions of law, the Articles of Incorporation
and these Bylaws.
11.02 Reserves. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in
their absolute discretion, deem proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall deem conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
11.03 Reports. The Board of Directors shall, when
requested by the holders of at least a majority of the
outstanding shares of the corporation, present full and clear
written reports, not more often than quarterly, of the amount of
business and the financial condition of the corporation.
11.04 Checks. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors from time
to time may designate.
11.05 Fiscal Year. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.
11.06 Seal. The corporation may have a corporate seal and,
if the Board of Directors adopts a corporate seal, the corporate
seal shall have inscribed thereon the name of the corporation and
may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
- 16 -<PAGE>
ARTICLE XII
AMENDMENTS
The initial Bylaws of the corporation shall be adopted by
the Board of Directors. The power to alter, amend, or repeal the
Bylaws or adopt new Bylaws, subject to repeal or change by action
of the shareholders, is vested in the Board of Directors. Thus,
these Bylaws may be altered, amended, or repealed or new Bylaws
may be adopted at any regular or special meeting of the Board of
Directors by the affirmative vote of a majority of the Board of
Directors, subject to repeal or change at any regular or special
meeting of shareholders at which a quorum is present or
represented by the affirmative vote of seventy-five (75%) of the
shares entitled to vote at such meeting and present or
represented thereat provided notice of the proposed repeal or
change is contained in the notice of such meeting of
shareholders. The Bylaws may contain any provision for the
regulation and management of the affairs of the corporation not
inconsistent with law or the Articles of Incorporation.
- 17 -<PAGE>
EXHIBIT 21
----------
LIST OF SUBSIDIARIES
OF THE COMPANY
Names Under Which
Name of State of Subsidiary Does
Subsidiary Incorporation Business
----------- ------------- ------------------
EGASCO, Inc. Texas EGASCO, Inc.
EnerMart, Inc. Delaware EnerMart, Inc.
Enermart Trust Pennsylvania Enermart Trust
Trans Louisiana Louisiana Trans Louisiana
Industrial Gas Industrial Gas
Company, Inc. Company, Inc.
Western Kentucky Gas Delaware Western Kentucky Gas
Resources Company Resources Company
NRG Corp.<PAGE>
EXHIBIT 23
----------
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference in the
Registration Statements (Form S-3 No. 33-58220, Form S-3 No.
33-56915, Form S-8 No. 33-57687, Form S-8 No. 33-68852, and
Form S-8 No. 33-57695) of Atmos Energy Corporation and in the
related Prospectuses of our report dated November 8, 1995,
with respect to the consolidated financial statements of Atmos
Energy Corporation included in this Annual Report (Form 10-K)
for the year ended September 30, 1995.
ERNST & YOUNG LLP
Dallas, Texas
December 14, 1995<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE
YEAR ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 363,252
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 48,236
<TOTAL-DEFERRED-CHARGES> 34,295
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 445,783
<COMMON> 78
<CAPITAL-SURPLUS-PAID-IN> 106,496
<RETAINED-EARNINGS> 51,704
<TOTAL-COMMON-STOCKHOLDERS-EQ> 158,278
0
0
<LONG-TERM-DEBT-NET> 131,303
<SHORT-TERM-NOTES> 33,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 7,000
0
<CAPITAL-LEASE-OBLIGATIONS> 2,620
<LEASES-CURRENT> 262
<OTHER-ITEMS-CAPITAL-AND-LIAB> 112,820
<TOT-CAPITALIZATION-AND-LIAB> 445,783
<GROSS-OPERATING-REVENUE> 435,820
<INCOME-TAX-EXPENSE> 9,574
<OTHER-OPERATING-EXPENSES> 393,869
<TOTAL-OPERATING-EXPENSES> 403,443
<OPERATING-INCOME-LOSS> 32,377
<OTHER-INCOME-NET> 217
<INCOME-BEFORE-INTEREST-EXPEN> 32,594
<TOTAL-INTEREST-EXPENSE> 13,721
<NET-INCOME> 18,873
0
<EARNINGS-AVAILABLE-FOR-COMM> 18,873
<COMMON-STOCK-DIVIDENDS> 14,192
<TOTAL-INTEREST-ON-BONDS> 1,621
<CASH-FLOW-OPERATIONS> 58,502
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
</TABLE>
