UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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.)
1800 Three Lincoln Centre
5430 LBJ Freeway, Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
(214) 934-9227
(Registrant's telephone number, including area code)
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 .
Number of shares outstanding of each of the issuer's classes of
common stock, as of May 1, 1995.
Class Shares Outstanding
----- ------------------
No Par Value 15,413,011<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ATMOS ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, September 30,
1995 1994
------------ ------------
ASSETS (Unaudited)
Property, plant and equipment $570,056 $543,692
Less accum. depreciation and amort. 228,263 216,285
-------- --------
Net property, plant and equipment 341,793 327,407
Current assets
Cash and cash equivalents 6,241 2,766
Accounts receivable, net 44,641 29,678
Inventories 6,268 5,888
Gas stored underground 3,251 12,657
Prepayments 1,916 2,309
-------- --------
Total current assets 62,317 53,298
Deferred charges and other assets 35,661 35,973
-------- --------
$439,771 $416,678
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock outstanding: 15,404,098
shares at 3/31/95 and 15,297,166
shares at 9/30/94 $ 77 $ 77
Additional paid-in capital 104,155 102,456
Retained earnings 60,377 47,023
-------- --------
Total shareholders' equity 164,609 149,556
Long-term debt 131,303 138,303
-------- --------
Total capitalization 295,912 287,859
Current liabilities
Current maturities of long-term debt 7,000 4,000
Notes payable to banks - 18,100
Accounts payable 39,530 21,975
Taxes payable 12,070 4,864
Customers' deposits 9,237 8,257
Other current liabilities 12,915 7,038
-------- --------
Total current liabilities 80,752 64,234
Deferred income taxes 29,398 30,184
Deferred credits and other liabilities 33,709 34,401
-------- --------
$439,771 $416,678
======== ========
See accompanying notes to consolidated financial statements.
- 2 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Three months ended
March 31,
--------------------
1995 1994
-------- --------
Operating revenues $157,294 $186,944
Purchased gas cost 97,717 127,578
-------- --------
Gross profit 59,577 59,366
Operating expenses
Operation 22,335 23,620
Maintenance 1,148 1,466
Depreciation and amortization 5,163 4,672
Taxes, other than income 5,387 5,810
Income taxes 7,855 7,453
-------- --------
Total operating expenses 41,888 43,021
-------- --------
Operating income 17,689 16,345
Other expense (225) (3)
Interest charges, net 3,519 3,100
-------- --------
Net income $ 13,945 $ 13,242
======== ========
Net income per share $ .91 $ .87
======== ========
Atmos dividends declared
per share (See Note 2) $ .23 $ .22
======== ========
Average shares outstanding 15,381 15,224
======== ========
See accompanying notes to consolidated financial statements.
- 3 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Six months ended
March 31,
---------------------
1995 1994
-------- --------
Operating revenues $275,142 $332,445
Purchased gas cost 172,083 224,658
-------- --------
Gross profit 103,059 107,787
Operating expenses
Operation 42,143 47,019
Maintenance 2,152 2,996
Depreciation and amortization 10,323 9,339
Taxes, other than income 9,465 10,347
Income taxes 11,501 11,439
-------- --------
Total operating expenses 75,584 81,140
-------- --------
Operating income 27,475 26,647
Other income (expense) (86) 85
Interest charges 6,968 6,402
-------- --------
Net income $ 20,421 $ 20,330
======== ========
Net income per share $ 1.33 $ 1.34
======== ========
Atmos dividends declared
per share (See Note 2) $ .46 $ .44
======== ========
Average shares outstanding 15,355 15,135
======== ========
See accompanying notes to consolidated financial statements.
- 4 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Twelve months ended
March 31,
--------------------
1995 1994
-------- --------
Operating revenues $442,505 $495,148
Purchased gas cost 278,996 325,496
-------- --------
Gross profit 163,509 169,652
Operating expenses
Operation 87,256 87,772
Maintenance 5,044 6,362
Depreciation and amortization 19,825 17,759
Taxes, other than income 15,926 17,161
Income taxes 8,164 10,761
-------- --------
Total operating expenses 136,215 139,815
-------- --------
Operating income 27,294 29,837
Other income 332 119
Interest charges 12,856 12,606
-------- --------
Net income $ 14,770 $ 17,350
======== ========
Net income per share $ .97 $ 1.17
======== ========
Atmos dividends declared
per share (See Note 2) $ .90 $ .87
======== ========
Average shares outstanding 15,305 14,840
======== ========
See accompanying notes to consolidated financial statements.
- 5 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six months ended
March 31,
-------------------
1995 1994
-------- --------
Cash Flows From Operating Activities
Net income $ 20,421 $ 20,330
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization
Charged to depreciation and
amortization 10,323 9,339
Charged to other accounts 1,847 1,768
Deferred income taxes (benefit) (786) (2,486)
Other 1,663 403
-------- --------
33,468 29,354
Net change in operating assets and
liabilities 24,031 10,704
-------- --------
Net cash provided by operating
activities 57,499 40,058
Cash Flows From Investing Activities
Retirements of property, plant and
equipment 2,646 319
Capital expenditures (29,202) (22,976)
-------- --------
Net cash used in investing activities (26,556) (22,657)
Cash Flows From Financing Activities
Net decrease in notes payable to banks (58,100) (7,900)
Cash dividends and distributions paid (7,067) (6,019)
Issuance of long-term debt 40,000 -
Repayment of long-term debt (4,000) (9,850)
Issuance of common stock 1,699 6,749
-------- --------
Net cash used in financing
activities (27,468) (17,020)
-------- --------
Net increase in cash and cash equivalents 3,475 381
Cash and cash equivalents at beginning
of period 2,766 2,286
-------- --------
Cash and cash equivalents at end
of period $ 6,241 $ 2,667
======== ========
See accompanying notes to consolidated financial statements.
- 6 -<PAGE>
ATMOS ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1995
1. Unaudited interim financial information
In the opinion of management, all material adjustments necessary
for a fair presentation have been made to the unaudited interim
period financial statements. Such adjustments consisted only of
normal recurring accruals. Because of seasonal and other fac-
tors, the results of operations for the six month period ended
March 31, 1995 are not indicative of expected results of
operations for the year ending September 30, 1995. These interim
financial statements and notes are condensed as permitted by the
instructions to Form 10-Q, and should be read in conjunction with
the audited consolidated financial statements in the 1994 annual
report to shareholders of Atmos Energy Corporation ("Atmos" or
the "Company"). The condensed consolidated balance sheet of
Atmos Energy Corporation, as of March 31, 1995, and the related
condensed consolidated statements of income for the three-month
and six-month periods ended March 31, 1995, and statement of cash
flows for the six-month period ended March 31, 1995, included
herein have been subjected to a review by Ernst & Young LLP, the
Company's independent accountants, whose report is included
herein.
Deferred charges and other assets - Deferred charges and other
assets at March 31, 1995 and September 30, 1994 include assets of
the Company's qualified defined benefit retirement plans in
excess of the plans' recorded obligations in the amounts of
$10,465,000 and $12,275,000, respectively, and Company assets
related to the Company's nonqualified retirement plans at March
31, 1995 and September 30, 1994 of $16,796,000 and $15,735,000,
respectively.
Common stock - 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.
For further information regarding results of shareholder votes,
please see Part II, Item 5 herein. As of March 31, 1995, the
Company had 75,000,000 shares of common stock, no par value
(stated at $.005 per share), authorized and 15,404,098 shares
outstanding. In May 1994, the Company implemented a three-for-
two split of its common stock. All share information in this
report is adjusted for the 3-for-2 stock split unless otherwise
noted.
2. Business Combination
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. Subsequent to the merger,
- 7 -<PAGE>
the business of GGC has been operated through the Company's
Greeley Gas Company division (the "Greeley Gas Division").
The Atmos dividends declared per share for the prior periods
presented below and on the consolidated statements of income
reflect Atmos' dividends declared per share as adjusted for the
3-for-2 stock split in May 1994. The restated cash dividends and
distributions per share presented below reflect the total amounts
paid by Atmos and GGC to their shareholders in each of those
periods, divided by the total number 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.
For the periods ended March 31, 1994
------------------------------------
Three Six Twelve
months months months
------ ------ ------
Atmos dividends
declared per share $.22 $.44 $.87
Restated cash dividends
and distributions per
share, including GGC $.22 $.40 $.76
3. Postemployment Benefits
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, 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, were not material.
4. 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
- 8 -<PAGE>
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
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 Louisiana Commission has instituted a docketed proceeding for
the purpose of investigating the costs included in the Trans La
Division's purchased gas adjustment component of its rates. Both
the Trans La Division and LIG are parties to the proceeding.
Much of the discovery in this proceeding has been conducted and a
procedural schedule has been established. The Company believes
the allegations as they relate to the Company, whether brought in
court or at the Louisiana Commission, are without merit, and that
the chances of a material adverse outcome are remote. The
Company will continue to 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.
5. Long-term and short-term debt
In November 1994, the Company entered into note purchase agree-
ments with two insurance companies and issued at par $20,000,000
of unsecured Senior Notes at 8.07% payable in annual installments
of $4,000,000 beginning October 31, 2002 through October 31, 2006
with semiannual interest payments and $20,000,000 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.
- 9 -<PAGE>
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.
At March 31, 1995, the Company had committed, short-term,
unsecured bank credit facilities totaling $72,000,000, all of
which was unused. The Company also had aggregate uncommitted
lines of $130,000,000, all of which was unused at March 31, 1995.
6. Statements of cash flows
Supplemental disclosures of cash flow information for the six
month periods ended March 31, 1995 and 1994 are presented below.
Six months ended
March 31,
1995 1994
------ ------
(In thousands)
Cash paid for
Interest $6,000 $6,930
Income taxes 6,062 5,263
- 10 -<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
Atmos Energy Corporation
We have reviewed the accompanying condensed consolidated balance
sheet of Atmos Energy Corporation as of March 31, 1995, and the
related condensed consolidated statements of income for the
three-month and six-month periods ended March 31, 1995 and the
statement of cash flows for the six month period ended March 31,
1995. These financial statements are the responsibility of the
Company's management. We did not make a similar review of the
condensed consolidated financial statements for the three-month
and six-month periods ended March 31, 1994.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data, and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit con-
ducted in accordance with generally accepted auditing standards,
which will be performed for the full year with the objective of
expressing an opinion regarding the financial statements taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifi-
cations that should be made to the accompanying condensed con-
solidated financial statements at March 31, 1995, and for the
three-month and six-month periods then ended for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Atmos
Energy Corporation as of September 30, 1994, and the related
consolidated statements of income, shareholders' equity, and cash
flows for the year then ended (not presented herein) and in our
report dated November 9, 1994, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of September 30, 1994, is fairly
stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ERNST & YOUNG LLP
Dallas, Texas
May 3, 1995
- 11 -<PAGE>
ITEM 2. 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 regulation by state and/or local
authorities in each of the states in which the Company operates.
In addition, the Company's business is affected by seasonal
weather patterns, competition within the energy industry, and
economic conditions in the areas that the Company serves.
Revenues and sales volume statistics for the three-month, six-
month, and twelve-month periods ended March 31, 1995 and 1994
appear on pages 19-21. Meters in service are as follows:
March 31,
-------------------
1995 1994
------- -------
Meters in Service
Residential 573,214 562,246
Commercial 60,602 59,881
Industrial (including agricultural) 19,371 19,812
Public authority and other 4,971 4,935
------- -------
Total 658,158 646,874
Rate Activity
In September 1994, the Company filed to increase revenues by ap-
proximately $2.6 million for a portion of its Energas Company
service area ("Energas Division"), which affects approximately
217,000 customers and reflects recovery of accrual accounting of
postretirement benefits in accordance with SFAS No. 106. 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 Commis-
sion 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 ("Colorado
Commission") in 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. 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 will address rate
structure.
- 12 -<PAGE>
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 SFAS No. 106 expenses with external
funding and a moratorium on rate requests in Kansas until
December 1, 1996.
In September 1992, the Louisiana Public Service Commission
("Louisiana Commission") issued a rate order to the Company's
Trans La Division 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
$1.0 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.
In September 1990, the Kentucky Public Service Commission (the
"Kentucky Commission") issued an order that increased annual
revenues approximately $1.0 million for the Company's Kentucky
service area. In May 1991, the Kentucky Commission issued an
Order on Rehearing increasing allowed revenues an additional $2.6
million. The Attorney General and the Company separately pursued
unsuccessful appeals of the Rehearing Order.
On February 10, 1995, the Company filed with the Kentucky
Commission for a rate increase for its Western Kentucky Gas
Company Division. The filing requests an annual revenue increase
of approximately $7.7 million, or 5.5 percent, to be effective
March 12, 1995. The Kentucky Commission has suspended the in-
crease until August 12, 1995, and statutes provide that they act
on the filing within 10 months of the filing date. The Company
provides natural gas service to approximately 165,000 customers
in Kentucky.
On February 11, 1992, the Company filed a rate case with the city
of Amarillo, Texas seeking to increase annual revenues by approx-
imately $4.4 million, or 12%. 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.
- 13 -<PAGE>
FINANCIAL CONDITION
For the six months ended March 31, 1995, net cash provided by
operating activities totaled $57.5 million compared with $40.1
million for the six months ended March 31, 1994. The net change
in operating assets and liabilities was $24.0 million for the six
months ended March 31, 1995 compared with $10.7 million for the
six months ended March 31, 1994. Due to the seasonal nature of
the natural gas distribution business, large swings in accounts
receivable, accounts payable and inventories of gas in
underground storage will occur when entering and leaving the
winter or heating season.
Major cash flows from investing activities for the six months
ended March 31, 1995 included capital expenditures of $29.2
million compared with $23.0 million for the six months ended
March 31, 1994. The capital expenditures budget for fiscal year
1995 is currently $56.1 million, as compared with actual capital
expenditures of $50.4 million in fiscal 1994. Capital projects
planned for 1995 include major expenditures for mains, services,
meters, and vehicles. These expenditures will be financed from
internally generated funds and financing activities.
For the six months ended March 31, 1995, cash used in financing
activities amounted to $27.5 million compared with $17.0 million
for the six months ended March 31, 1994. During November 1994
the Company issued $40 million unsecured Senior Notes. The
proceeds were used to repay short-term borrowings. During the
six months ended March 31, 1995, notes payable to banks was
reduced $58.1 million, as compared with $7.9 million for the six
months ended March 31, 1994. Payments of long-term debt
decreased $5.9 million to $4.0 million for the six months ended
March 31, 1995. Payments of long-term debt 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.
The Company paid $7.1 million in cash dividends during the six
months ended March 31, 1995, compared with $6.0 million in cash
dividends and distributions paid during the six months ended
March 31, 1994. This reflects a $.01 per share increase in the
quarterly dividend rate and an increase in the number of shares
outstanding. In the quarter ended December 31, 1993, the Company
issued 3,849,294 shares of common stock as adjusted for the 3-
for-2 stock split in May 1994 (2,566,196 shares on a pre-split
basis). This included 3,493,995 shares (2,329,330 pre-split
shares) issued in connection with the merger and 355,299 shares
(236,866 pre-split shares) issued under its Employee Stock
Ownership Plan ("ESOP"), its Restricted Stock Grant Plan and its
Dividend Reinvestment and Stock Purchase Plan ("DRSPP") prior to
the merger on December 22, 1993. In the six month period ended
March 31, 1995, the Company issued 106,932 shares under its
plans.
In January 1995, the Company amended its DRSPP to a Direct Stock
Purchase Plan ("DSPP") allowing customers and other investors to
- 14 -<PAGE>
purchase common stock directly from the Company with a $200
minimum initial investment.
In May 1994 the Company implemented a three-for-two split of its
common stock in the form of a stock dividend, which resulted in
shareholders receiving one new share for every two shares pre-
viously held. Fractional shares were paid in cash or credited to
DRSPP or ESOP accounts.
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 the remainder of
fiscal 1995. At March 31, 1995 the Company had $72.0 million
committed short-term credit facilities, all of which was avail-
able for additional borrowing. The committed lines are renewed
or renegotiated at least annually. At March 31, 1995, the
Company also had $130.0 million of uncommitted short-term lines,
all of which was unused.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995, COMPARED WITH THREE MONTHS
ENDED MARCH 31, 1994
Operating revenues decreased by approximately 16% to $157.3
million for the three months ended March 31, 1995 from $186.9
million for the three months ended March 31, 1994. Factors
contributing to the decrease in operating revenues were decreased
sales to weather sensitive customers and decreased cost of gas.
During the quarter ended March 31, 1995, temperatures averaged 9%
warmer than in the corresponding quarter of the prior year, and
approximately 13% warmer than normal. The total volume of gas
sold and transported for the three months ended March 31, 1995
was 48.6 billion cubic feet ("Bcf") compared with 49.7 Bcf for
the three months ended March 31, 1994. The primary reason for
the decreased volumes was decreased weather sensitive sales due
to warmer weather in all service areas. The average sales price
per Mcf sold decreased $.55 to $3.74 primarily due to a decrease
in the average cost of gas. Partially offsetting the cost of gas
decreases were annual rate increases implemented in the Company's
Texas, Colorado and Louisiana service areas since the beginning
of the corresponding quarter of the prior year.
Gross profit (defined as operating revenues less purchased gas
cost) increased slightly to $59.6 million for the three months
ended March 31, 1995, from $59.4 million for the three months
ended March 31, 1994. Operating expenses, excluding income
taxes, decreased from $35.6 million for the three months ended
March 31, 1994 to $34.0 million for the three months ended March
31, 1995. Factors contributing to the decrease in operating
expenses in the 1995 quarter were lower operation expense,
employee welfare expense, outside services, and taxes other than
income taxes. Expenses for the quarter ended March 31, 1994
included assimilation expenses related to the pooling of
- 15 -<PAGE>
interests with GGC. Operating income increased for the three
months ended March 31, 1995 to $17.7 million from $16.3 million
for the three months ended March 31, 1994. The increase in
operating income primarily resulted from decreased operating
expenses.
Interest expense increased approximately $.4 million for the
three months ended March 31, 1995 compared with the three months
ended March 31, 1994, because of the $40 million of Senior Notes
issued in November 1994 and higher short-term interest rates in
the quarter ended March 31, 1995. Weighted average short-term
borrowing rates increased from 3.8% for the quarter ended March
31, 1994 to 6.9% for the quarter ended March 31, 1995. Net
income increased for the three months ended March 31, 1995 by
approximately 5% to $13.9 million from $13.2 million for the
three months ended March 31, 1994. This increase in net income
primarily resulted from the increase in operating income.
The Company estimates that the impact of the weather being 13%
warmer than normal for the three months ended March 31, 1995
caused net income to be approximately $2.9 million less than it
would have been had the Company experienced "thirty year normal"
temperatures in its respective service areas. Weather was
approximately 5% warmer than normal for the three months ended
March 31, 1994.
SIX MONTHS ENDED MARCH 31, 1995, COMPARED WITH SIX MONTHS ENDED
MARCH 31, 1994
Operating revenues decreased by approximately 17% to $275.1
million for the six months ended March 31, 1995 from $332.4
million for the six months ended March 31, 1994. The primary
factor contributing to the lower operating revenues was weather
in the Company's service areas which was 13% warmer than normal
and 13% warmer than weather in the corresponding quarter of the
prior fiscal year. Volumes sold to irrigation customers
increased from the corresponding period of the prior year. The
average sales price per Mcf decreased from $4.28 for the six
months ended March 31, 1994 to $3.86 for the six months ended
March 31, 1995. The decrease in the average sales price reflects
decreased cost of gas and rate increases in Texas, Louisiana,
Colorado, and Kansas implemented since October 1, 1993. The
average cost of gas per Mcf sold decreased from $2.99 for the six
months ended March 31, 1994 to $2.50 for the six months ended
March 31, 1995 because of generally lower gas supply costs.
Gross profit decreased to $103.1 million for the six months ended
March 31, 1995, compared with $107.8 million for the six months
ended March 31, 1994. The impact on gross profit for the six
months ended March 31, 1995 of warmer weather, compared with the
corresponding period of the prior year, was offset somewhat by
increased irrigation sales volumes and rate increases implemented
in the Company's Texas, Colorado, Kansas and Louisiana service
areas since October 1, 1993. Operating expenses, excluding
income taxes, decreased from $69.7 million in the six months
- 16 -<PAGE>
ended March 31, 1994, to $64.1 million in the six months ended
March 31, 1995. The principal factors contributing to the
decrease in operating expenses were decreases in operation
expense, employee welfare expenses, GGC acquisition costs, and
outside services. The provision for income taxes for the six
months ended March 31, 1995 did not change significantly from the
provision for the corresponding period of the prior year.
Net income increased slightly for the six months ended March 31,
1995, to $20.4 million from $20.3 million for the six months end-
ed March 31, 1994. Earnings per share decreased to $1.33 for the
six months ended March 31, 1995 from $1.34 for the six months
ended March 31, 1994. Dividends per share increased approximate-
ly 5% to $.46 for the six months ended March 31, 1995.
The Company estimates that the impact of the weather being 13%
warmer than normal for the six months ended March 31, 1995 caused
net income to be approximately $4.8 million less than it would
have been had the Company experienced "thirty year normal"
temperatures in its respective service areas. Weather was
approximately normal for the six months ended March 31, 1994.
TWELVE MONTHS ENDED MARCH 31, 1995, COMPARED WITH TWELVE MONTHS
ENDED MARCH 31, 1994
Operating revenues decreased by approximately 11% to $442.5
million for the 12 months ended March 31, 1995 from $495.1
million for the 12 months ended March 31, 1994. The decreased
revenues for the 12 months ended March 31, 1995 were caused by
decreased sales volumes and lower gas costs as a result of warmer
winter weather and decreased demand. Sales and transportation
volumes decreased to 145.5 Bcf for the 12 months ended March 31,
1995 compared with 152.3 Bcf for the corresponding prior period.
The average sales price per Mcf decreased from $4.16 to $3.86.
The average cost of gas per Mcf sold decreased from $2.85 to
$2.54 for the 12 months ended March 31, 1995, reflecting a
general decline in gas supply costs over the last two years. The
average sales price reflects the decreased cost of gas and rate
increases implemented in Texas, Louisiana, Colorado and Kansas
since March 31, 1993.
Gross profit decreased by approximately 4% to $163.5 million from
$169.7 million in the 12 months ended March 31, 1994. Operating
expenses, excluding income taxes, decreased from $129.1 million
in the 12 months ended March 31, 1994, to $128.1 million in the
12 months ended March 31, 1995. Factors contributing to the
decrease in operating expenses were decreased distribution
expense and outside services expense. Income taxes decreased
$2.6 million for the 12 months ended March 31, 1995, compared
with the 12 months ended March 31, 1994. The primary reason was
decreased pre-tax income. Operating income decreased in the 12
months ended March 31, 1995 by approximately 9% to $27.3 million
from $29.8 million for the 12 months ended March 31, 1994. The
primary reason for the decrease in operating income was decreased
- 17 -<PAGE>
operating revenues resulting from weather that was 14% warmer
than in the prior year.
Interest charges increased $.3 million to $12.9 million, compared
with $12.6 million for the prior year. This was caused by the
issuance of $40 million of Senior Notes in November 1994 and
higher short-term borrowing rates for the twelve months ended
March 31, 1995. Net income for the 12 months ended March 31,
1995 was $14.8 million compared with $17.4 million for the 12
months ended March 31, 1994. The decrease in net income resulted
from the decrease in operating income discussed above. Earnings
per share decreased by 17% to $.97. Average shares outstanding
increased approximately 3% as compared with the prior year.
Dividends per share increased approximately 3% to $.90. All per
share information is adjusted for the 3-for-2 stock split.
The Company estimates that the impact of the weather being 13%
warmer than normal for the twelve months ended March 31, 1995
caused net income to be approximately $5.8 million less than it
would have been had the Company experienced "thirty year normal"
temperatures in its respective service areas. Weather was
approximately 1% colder than normal for the twelve months ended
March 31, 1994.
- 18 - <PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Quarter ended March 31,
1995 1994
------- -------
Sales Volumes - MMcf (1)
Residential 21,551 22,549
Commercial 8,410 8,647
Industrial (including agricultural) 8,642 9,009
Public authority and other 2,196 2,306
------- -------
Total 40,799 42,511
Transportation Volumes - MMcf (1) 7,783 7,150
------- -------
Total Volumes Handled - MMcf (1) 48,582 49,661
======= =======
Operating Revenues (000's)
Gas Sales Revenues
Residential $ 86,925 $104,481
Commercial 31,738 38,372
Industrial (including agricultural) 25,943 29,670
Public authority and other 7,908 9,837
-------- --------
Total Gas Revenues 152,514 182,360
Transportation Revenues 3,339 3,132
Other Revenues 1,441 1,452
-------- --------
Total Operating Revenues $157,294 $186,944
======== ========
Average Gas Sales Revenues per Mcf $ 3.74 $ 4.29
Average Transportation Revenue per Mcf $ .43 $ .44
Cost of Gas per Mcf Sold $ 2.40 $ 3.00
HEATING DEGREE DAYS
Weather
Service Sensitive Quarter ended March 31,
Area Customers % 1995 1994 Normal
- -------------- ----------- ----- ----- ------
Texas 47% 1,617 1,765 1,893
Kentucky 26% 2,121 2,359 2,416
Louisiana 11% 892 1,046 1,047
Colorado, Kansas
and Missouri 16% 2,611 2,751 2,953
----
System Average 100% 1,827 1,997 2,104
See footnotes on page 21.
- 19 - <PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS (2)
Six months ended March 31,
1995 1994
------- -------
Sales Volumes - MMcf (1)
Residential 35,756 40,894
Commercial 14,507 16,031
Industrial (including agricultural) 14,916 13,882
Public authority and other 3,761 4,331
------- -------
Total 68,940 75,138
Transportation Volumes - MMcf (1) 17,423 17,113
------- -------
Total Volumes Handled - MMcf (1) 86,363 92,251
======= =======
Operating Revenues (000's)
Gas Sales Revenues
Residential $149,809 $187,722
Commercial 56,412 69,603
Industrial (including agricultural) 45,883 46,270
Public authority and other 13,920 18,344
-------- --------
Total Gas Revenues 266,024 321,939
Transportation Revenues 6,671 7,995
Other Revenues 2,447 2,511
-------- --------
Total Operating Revenues $275,142 $332,445
======== ========
Average Gas Sales Revenues per Mcf $ 3.86 $ 4.28
Average Transportation Revenue per Mcf $ .38 $ .47
Cost of Gas per Mcf Sold $ 2.50 $ 2.99
HEATING DEGREE DAYS
Weather
Service Sensitive Six months ended March 31,
Area Customers % 1995 1994 Normal
- -------------- ----------- ----- ----- ------
Texas 47% 2,802 3,296 3,275
Kentucky 26% 3,472 4,003 3,992
Louisiana 11% 1,392 1,851 1,723
Colorado, Kansas
and Missouri 16% 4,822 5,194 5,292
----
System Average 100% 3,142 3,622 3,611
See footnotes on page 21.
- 20 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS (2)
Twelve months ended March 31,
1995 1994
------- -------
Sales Volumes - MMcf (1)
Residential 46,071 52,634
Commercial 19,610 21,324
Industrial (including agricultural) 39,536 34,800
Public authority and other 4,672 5,351
------- -------
Total 109,889 114,109
Transportation Volumes - MMcf (1) 35,618 38,226
------- -------
Total Volumes Handled - MMcf (1) 145,507 152,335
======= =======
Operating Revenues (000's)
Gas Sales Revenues
Residential $208,018 $252,239
Commercial 79,316 93,929
Industrial (including agricultural) 119,335 105,946
Public authority and other 18,039 22,978
-------- --------
Total Gas Sales Revenues 424,708 475,092
Transportation Revenues 12,794 15,226
Other Revenues 5,003 4,830
-------- --------
Total Operating Revenues $442,505 $495,148
======== ========
Average Gas Sales Revenues per Mcf $ 3.86 $ 4.16
Average Transportation Revenue per Mcf $ .36 $ .40
Cost of Gas per Mcf Sold $ 2.54 $ 2.85
HEATING DEGREE DAYS
Weather
Service Sensitive Twelve months ended March 31,
Area Customers % 1995 1994 Normal
- -------------- ----------- ----- ----- ------
Texas 47% 3,067 3,577 3,528
Kentucky 26% 3,811 4,358 4,376
Louisiana 11% 1,463 1,975 1,760
Colorado, Kansas
and Missouri 16% 5,511 6,185 6,234
----
System Average 100% 3,473 4,018 3,983
(1) Volumes are reported as metered in million cubic feet
("MMcf").
(2) Consolidated operating statistics have been restated to
include Greeley Gas operations for all periods presented.
- 21 -<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 4 of notes to consolidated financial statements on pages
8 and 9 herein for a description of legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of Atmos Energy Corporation
on February 8, 1995, 13,985,141 votes were cast as follows:
VOTES BROKER
VOTES FOR WITHHELD NON-VOTE
--------- -------- --------
Election of Directors:
Class II:
Ronald L. Fancher 13,610,328 374,813 -
Class III:
Phillip E. Nichol 13,603,761 381,380 -
Lee E. Schlessman 13,607,286 377,855 -
Charles K. Vaughan 13,605,207 379,934 -
The other directors will continue to serve until the expiration of their
terms. The term of the Class I directors, Travis W. Bain II, Dan Busbee and
John W. Norris, Jr. will expire in 1996. The term of the Class II
directors, Ronald L. Fancher, Carl S. Quinn, Richard Ware II, and Dewey G.
Williams will expire in 1997. The term of the Class III directors, listed
above, will expire in 1998.
The votes cast for other matters brought before the meeting are summarized
as follows:
VOTES BROKER
VOTES FOR WITHHELD ABSTAIN NON-VOTE
--------- -------- ------- --------
Amendment of the Restated
Articles of Incorporation
to increase the number of
authorized shares of common
stock from 50,000,000 to
75,000,000 12,894,385 935,221 155,534 1
Approval of Outside
Directors Stock-for-Fee
Plan 12,513,100 768,449 703,590 2
- 22 -<PAGE>
Item 5. Other Information
Effective February 21, 1995, Ronald L. Fancher resigned as president and
chief executive officer. He also resigned from the Company's Board of
Directors. Mr. Fancher joined the Company as president in March 1993, and
was named to the additional position of chief executive officer in June 1994
with the announcement of Charles Vaughan's retirement. Mr. Vaughan,
Chairman of the Board of Directors, will continue to be involved as a
consultant to senior management.
On February 24, 1995, the Company announced that Robert F. Stephens had been
elected president and chief operating officer, replacing Mr. Fancher. Mr.
Stephens, 46, joined the Company in 1983, and has served as executive vice
president of corporate operations since 1989, overseeing the Company's four
operating divisions, gas supply, marketing and technical services.
In addition, Mr. Stephens and James F. Purser, executive vice president and
chief financial officer, were appointed as members of the Board of
Directors.
J. Charles Goodman has been named executive vice president of corporate
operations for Atmos Energy Corporation. He will be responsible for all
four of the Company's operating divisions, as well as the technical services
function. Mr. Goodman previously served as president of the Company's Trans
Louisiana Gas Company division. He joined the Company in 1981, and served
as chief engineer for Atmos from 1989 until being named to head the
Company's Louisiana operations in 1993.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
A list of exhibits required by Item 601 of Regulation
S-K and filed as part of this report is set forth in the Exhibits
Index, which immediately precedes such exhibits.
(b) Reports on Form 8-K
None
- 23 -<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ATMOS ENERGY CORPORATION
(Registrant)
Date: May 10, 1995 By: /s/ JAMES F. PURSER
------------------------------
James F. Purser
Executive Vice President
and Chief Financial Officer
Date: May 10, 1995 By: /s/ DAVID L. BICKERSTAFF
------------------------------
David L. Bickerstaff
Vice President and Controller
(Principal Accounting Officer)
- 24 -<PAGE>
EXHIBITS INDEX
Item 6(a)
Page Number or
Exhibit Incorporation
Number Description by Reference to
------- ----------------------------------- ---------------
3.1 Restated Articles of Incorporation
of Registrant
3.2 Articles of Amendment to Restated
Articles of Incorporation of Atmos
Energy Corporation, dated February
8, 1995.
10.1 The Atmos Energy Corporation Outside Exhibit 4.5 of
Directors Stock-for-Fee Plan Form S-8 for
Atmos' Outside
Directors
Stock-for-Fee
Plan filed
February 14,
1995 (Registra-
tion No. 33-
57695)
15 Letter regarding unaudited interim
financial information
27 Financial Data Schedule for Atmos
Energy Corporation for the six
months ended March 31, 1995
<PAGE>
EXHIBIT 3.1
-----------
RESTATED ARTICLES OF INCORPORATION
OF
ATMOS ENERGY CORPORATION
ARTICLE ONE
Atmos Energy Corporation, pursuant to the provisions of
Article 4.07 of the Texas Business Corporation Act, hereby adopts
these Restated Articles of Incorporation, which accurately copy
the Articles of Incorporation and all amendments thereto that are
in effect to date and such Restated Articles of Incorporation
contain no change in any provision thereof.
ARTICLE TWO
These Restated Articles of Incorporation were adopted by
resolution of the board of directors of the corporation on the
8th day of November, 1989.
ARTICLE THREE
The Articles of Incorporation and all amendments and
supplements thereto are hereby superseded by the following
Restated Articles of Incorporation, which accurately copy the
entire text thereof:
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.<PAGE>
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 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
2<PAGE>
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 Fifty Million (50,000,000) shares
of Common Stock having no par value.
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.
4.01 The affirmative vote of the holders of not less than
seventy-five percent (75%) of the outstanding shares of "Voting
3<PAGE>
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 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
4<PAGE>
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.
(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
5<PAGE>
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 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.
6<PAGE>
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 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
7<PAGE>
right or protection of a director existing at the time of such
repeal or modification with respect to such events or circum-
stances occurring or existing prior to such time.
DATED: November 8, 1989.
ATMOS ENERGY CORPORATION
By: /s/ Charles K. Vaughan
----------------------------------
Charles K. Vaughan
President
8<PAGE>
Exhibit 3.2
-----------
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
ATMOS ENERGY CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas
Business Corporation Act, the undersigned corporation
(hereinafter referred to as the "Corporation") adopts the
following Articles of Amendment to its Restated Articles of
Incorporation, which increase the number of authorized shares of
the common stock of the Corporation.
ARTICLE ONE
The name of the Corporation is Atmos Energy Corporation.
ARTICLE TWO
The following amendment to the Restated Articles of
Incorporation was adopted by the shareholders of the Corporation
on February 8, 1995:
Section 1 of Article VII of the Restated Articles of
Incorporation be amended to read as follows:
"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."
ARTICLE THREE
The number of shares of the Corporation outstanding as of
the record date was 15,347,247.011 and the number of shares
entitled to vote on the amendment was 15,347,247.011.
ARTICLE FOUR
The number of shares voting for the amendment to increase
the number of authorized shares of common stock of the
Corporation was 12,894,385, the number of shares voting against
such amendment was 935,221, and the number of shares abstaining
was 115,534.
DATED: February 8, 1995.
ATMOS ENERGY CORPORATION
By: /s/ Ronald L. Fancher
-------------------------------------
Ronald L. Fancher
President and Chief Executive Officer<PAGE>
EXHIBIT 15
----------
May 10, 1995
Board of Directors
Atmos Energy Corporation
We are aware of the incorporation by reference in the Registra-
tion Statements (Form S-8 No. 33-57687, Form S-8 No. 33-68852,
Form S-8 No. 33-57695, Form S-3 No. 33-58220, and Form S-3 No.
33-56915) of Atmos Energy Corporation of our report dated May 3,
1995, relating to the unaudited condensed consolidated interim
financial statements of Atmos Energy Corporation which are in-
cluded in its Form 10-Q for the quarter ended March 31, 1995.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report
is not a part of the registration statement prepared or certified
by accountants within the meaning of Section 7 or 11 of the
Securities Act of 1933.
ERNST & YOUNG LLP
Dallas, Texas<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 SIX
MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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