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 December 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 February 1, 1996.
Class Shares Outstanding
----- ------------------
No Par Value 15,921,562<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ATMOS ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, September 30,
1995 1995
------------ ------------
ASSETS (Unaudited)
Property, plant and equipment $615,366 $595,359
Less accum. depreciation and amort. 242,728 232,107
-------- --------
Net property, plant and equipment 372,638 363,252
Current assets
Cash and cash equivalents 4,624 2,294
Accounts receivable, net 68,802 25,690
Inventories 6,910 6,747
Gas stored underground 8,280 10,758
Prepayments 2,278 2,747
-------- --------
Total current assets 90,894 48,236
Deferred charges and other assets 35,961 34,295
-------- --------
$499,493 $445,783
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock outstanding: 15,905,570
shares at 12/31/95 and 15,519,112
shares at 9/30/95 $ 80 $ 78
Additional paid-in capital 108,252 106,496
Retained earnings 57,792 51,704
-------- --------
Total shareholders' equity 166,124 158,278
Long-term debt 125,303 131,303
-------- --------
Total capitalization 291,427 289,581
Current liabilities
Current maturities of long-term debt 13,000 7,000
Notes payable to banks 40,700 33,500
Accounts payable 53,955 24,945
Taxes payable 5,605 1,926
Customers' deposits 10,011 9,343
Other current liabilities 12,744 10,641
-------- --------
Total current liabilities 136,015 87,355
Deferred income taxes 33,913 33,120
Deferred credits and other liabilities 38,138 35,727
-------- --------
$499,493 $445,783
======== ========
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 Twelve months ended
December 31, December 31,
----------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
Operating revenues $130,468 $117,848 $448,440 $472,155
Purchased gas cost 79,743 74,366 274,187 308,857
-------- -------- -------- -------
Gross profit 50,725 43,482 174,253 163,298
Operating expenses
Operation 21,721 19,808 85,344 88,541
Maintenance 1,075 1,004 4,347 5,362
Depreciation and
amortization 5,591 5,160 21,172 19,334
Taxes, other than
income 4,198 4,078 16,731 16,349
Income taxes 5,195 3,646 11,123 7,762
-------- -------- -------- --------
Total operating
expenses 37,780 33,696 138,717 137,348
-------- ------- -------- --------
Operating income 12,945 9,786 35,536 25,950
Other income 160 139 238 554
Interest charges, net 3,872 3,449 14,144 12,437
-------- -------- -------- --------
Net income $ 9,233 $ 6,476 $ 21,630 $ 14,067
======== ======== ======== ========
Net income per share $ .59 $ .42 $ 1.40 $ .92
======== ======== ======== ========
Cash dividends per
share $ .24 $ .23 $ .93 $ .89
======== ======== ======== ========
Average shares
outstanding 15,674 15,331 15,503 15,266
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
- 3 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Three months ended
December 31,
1995 1994
-------- --------
Cash Flows From Operating Activities
Net income $ 9,233 $ 6,476
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization
Charged to depreciation and
amortization 5,591 5,160
Charged to other accounts 120 904
Deferred income taxes (benefit) 793 (393)
Other 98 1,488
-------- --------
15,835 13,635
Net change in operating assets and
liabilities (4,221) 2,622
-------- --------
Net cash provided by operating
activities 11,614 16,257
Cash Flows From Investing Activities
Retirements of property, plant and
equipment 4,064 (34)
Capital expenditures (19,161) (13,464)
-------- --------
Net cash used in investing activities (15,097) (13,498)
Cash Flows From Financing Activities
Net increase (decrease) in notes
payable to banks 7,200 (35,100)
Cash dividends paid (3,739) (3,528)
Issuance of long-term debt - 40,000
Repayment of long-term debt - (4,000)
Issuance of common stock 2,352 823
-------- --------
Net cash provided (used) by financing
activities 5,813 (1,805)
-------- --------
Net increase in cash and cash equivalents 2,330 954
Cash and cash equivalents at beginning
of period 2,294 2,766
-------- --------
Cash and cash equivalents at end
of period $ 4,624 $ 3,720
======== ========
See accompanying notes to consolidated financial statements.
- 4 -<PAGE>
ATMOS ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 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 three month period ended
December 31, 1995 are not indicative of expected results of
operations for the year ending September 30, 1996. 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 1995 annual
report to shareholders of Atmos Energy Corporation ("Atmos" or
the "Company"). The condensed consolidated balance sheet of
Atmos Energy Corporation, as of December 31, 1995, and the
related condensed consolidated statements of income for the
three-month and twelve-month periods ended December 31, 1995 and
1994, and consolidated statements of cash flows for the three-
month periods ended December 31, 1995 and 1994, included herein
have been subjected to a review by Ernst & Young LLP, the
Company's independent accountants, whose report is included
herein.
Common stock - As of December 31, 1995, the Company had
75,000,000 shares of common stock, no par value (stated at $.005
per share), authorized and 15,905,570 shares outstanding.
2. Business Combination
In November 1995, Atmos acquired by means of a merger, all of the
assets and liabilities of Oceana Heights Gas Company ("Oceana")
of Thibodaux, Louisiana. The transaction was accounted for as a
pooling of interests. The outstanding shares of Oceana capital
stock were converted into 313,411 shares of Atmos common stock
having a market value of $6.4 million. Subsequent to the merger,
the business of Oceana has been operated through the Company's
Trans Louisiana Gas Company division ("Trans La Division"). The
acquisition increased the Trans La Division's customer base by
approximately 9,200 customers, or 13 percent, to over 79,000
customers. Although significant for the Trans La Division's
operations, the acquisition did not have a material impact on the
Company's financial condition and results of operations. The
acquisition transaction and Oceana's operating results for the
quarter ended December 31, 1995 are reflected in the Company's
financial statements for the quarter ended December 31, 1995.
- 5 -<PAGE>
3. 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
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
- 6 -<PAGE>
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 was named 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 claimed that the fire resulted from a leak in a
severed gas service line owned by the Greeley Division. On
January 12, 1996, the jury awarded the plaintiffs an amount
totalling approximately $4.9 million, which amount included both
compensatory and punitive damages. The jury assessed the Company
with liability for all of the damages awarded. The Company has
adequate insurance to cover the damages awarded against the
Company in this matter. The Company is considering an appeal of
the case.
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.
4. Long-term and short-term debt
At December 31, 1995, the Company had committed, short-term,
unsecured bank credit facilities totaling $90,000,000, all of
which was unused. The Company also had aggregate uncommitted
lines of $140,000,000, of which $99,300,000 was unused at
December 31, 1995.
5. Statements of cash flows
Supplemental disclosures of cash flow information for the three
month periods ended December 31, 1995 and 1994 are presented
below.
Three months ended
December 31,
1995 1994
------ ------
(In thousands)
Cash paid for
Interest $3,987 $4,096
Income taxes 98 -
- 7 -<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 December 31, 1995, and
the related condensed consolidated statements of income for the
three-month and twelve-month periods ended December 31, 1995 and
1994 and the statements of cash flows for the three-month periods
ended December 31, 1995 and 1994. These financial statements are
the responsibility of the Company's management.
We conducted our reviews 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
conducted 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 state-
ments taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying condensed
consolidated financial statements at December 31, 1995, and for
the three-month and twelve-month periods ended December 31, 1995
and 1994 for them to be in conformity with generally accepted ac-
counting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Atmos
Energy Corporation as of September 30, 1995, 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 8, 1995, 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, 1995, 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
February 7, 1996
- 8 -<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, competitive factors within the energy industry,
and economic conditions in the areas that the Company serves.
Revenues and sales volume statistics for the three-month and
twelve-month periods ended December 31, 1995 and 1994 appear on
pages 14 and 15.
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
increase of approximately $7.7 million, or 5.5 percent, to be
effective March 12, 1995. 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 annual 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 ("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
Commission of Texas in January 1995, the Company implemented an
annual increase of approximately $.2 million relating to the
22,000 remaining rural customers.
- 9 -<PAGE>
Greeley Gas Company ("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,
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 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 provided for an annual adjustment to
the Company's rates to reflect changes in expenses, revenues and
invested capital following an annual review. The RSC provided 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 an increase of $1.1
million annually or 2.0% went into effect on March 6, 1995.
FINANCIAL CONDITION
For the three months ended December 31, 1995 net cash provided by
operating activities totaled $11.6 million compared with $16.3
million net cash provided by operating activities for the three
months ended December 31, 1994. Net operating assets and
liabilities increased $4.2 million for the three months ended
December 31, 1995 compared with an decrease of $2.6 million for
the three months ended December 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 three months
ended December 31, 1995 included capital expenditures of $19.2
million compared with $13.5 million for the three months ended
December 31, 1994. The capital expenditures budget for fiscal
1996 is currently $67.6 million, as compared with actual capital
- 10 -<PAGE>
expenditures of $62.9 million in fiscal 1995. Capital projects
planned for 1996 include major expenditures for mains, services,
meters, vehicles and computer equipment. These expenditures will
be financed from internally generated funds and financing
activities.
For the three months ended December 31, 1995, cash flows provided
by financing activities amounted to $5.8 million as compared with
$1.8 million used by financing activities for the three months
ended December 31, 1994. During the quarter, notes payable to
banks increased $7.2 million, as compared with a decrease of
$35.1 million in the quarter ended December 31, 1994, due to
seasonal factors and the refinancing of short-term debt with
proceeds from the issuance of $40.0 million of long-term debt in
the quarter ended December 31, 1994. There was no issuance or
repayment of long-term debt during the quarter ended December 31,
1995. The Company paid $3.7 million in cash dividends during the
three months ended December 31, 1995, compared with dividends of
$3.5 million paid during the three months ended December 31,
1994. This reflects increases in the quarterly dividend rate and
in the number of shares outstanding. In the quarter ended
December 31, 1995, the Company issued 386,458 shares of common
stock including 313,411 shares issued in connection with the
Oceana acquisition.
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 1996. At December 31, 1995 the Company had $90.0 million
in committed short-term credit facilities, all of which was
available for additional borrowing. The committed lines are
renewed or renegotiated at least annually. At December 31, 1995,
the Company also had $140.0 million of uncommitted short-term
lines, of which $99.3 million was unused.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED WITH THREE MONTHS
ENDED DECEMBER 31, 1994
Operating revenues increased to $130.5 million for the three
months ended December 31, 1995 from $117.8 million for the three
months ended December 31, 1994. The increase in operating
revenues was due to increased gas sales volumes related primarily
to colder weather. The weather for the three months ended
December 31, 1995 was 2% warmer than the 30-year normal but 12%
colder than the weather for the corresponding quarter of the
prior year. Volumes sold increased to 33.0 billion cubic feet
("Bcf") from 28.1 Bcf. Changes in cost of gas are reflected in
regulated sales prices through purchased gas adjustment
mechanisms. The average sales price per thousand cubic feet
("Mcf") sold decreased $.17 to $3.86 while the average cost of
gas per Mcf sold decreased $.22 to $2.42. The decrease in the
average sales price reflects the decreased gas cost, partially
- 11 -<PAGE>
offset by rate increases implemented during the past year.
Recent rate increases include the following: a $2.3 million
annual rate increase in Kentucky effective in November 1995, a
$1.7 million annual increase in West Texas effective in November
1994 and a $1.1 million rate stabilization clause annual increase
in Louisiana effective in March, 1995. Transportation revenues
decreased $1.2 million, due to a decrease of 2.4 Bcf in volumes
transported and a decrease of $.05 in average transportation
revenue per Mcf. The decrease in transportation revenue per Mcf
was related to a change in the mix of transportation services,
which include firm, interruptible and special contracts.
Gross profit increased by 17% to $50.7 million for the three
months ended December 31, 1995, from $43.5 million for the three
months ended December 31, 1994. The primary factor contributing
to the increased gross profit was the increased sales volumes due
to colder weather. Operating expenses, excluding income taxes,
increased approximately 8% to $32.6 million for the three months
ended December 31, 1995 from $30.1 million for the three months
ended December 31, 1994. Factors contributing to the increase
were higher distribution and employee welfare expenses. Income
taxes increased primarily due to higher pre-tax profits.
Operating income increased for the three months ended December
31, 1995 by 32% to $12.9 million from $9.8 million for the three
months ended December 31, 1994. The increase in operating income
resulted from increased gross profit.
Interest charges increased slightly due to higher interest rates
on short-term debt in the three months ended December 31, 1995.
The Company's weighted average short-term interest rate increased
to 6.3% for the quarter ended December 31, 1995, as compared with
5.5% for the quarter ended December 31, 1994.
Net income increased for the three months ended December 31, 1995
by approximately 42% to $9.2 million from $6.5 million for the
three months ended December 31, 1994. This increase primarily
resulted from the increase in operating income. Earnings per
share increased by 40% to $.59. Average shares outstanding
increased 2.2% as compared with the first quarter of fiscal 1995.
Dividends per share increased approximately 4.3% to $.24 due to a
$.01 per share increase in the quarterly dividend rate beginning
with the dividend paid in December 1995.
TWELVE MONTHS ENDED DECEMBER 31, 1995 COMPARED WITH TWELVE MONTHS
ENDED DECEMBER 31, 1994
Operating revenues decreased to $448.4 million for the 12 months
ended December 31, 1995 from $472.2 million for the 12 months
ended December 31, 1994 due to decreased gas cost which is
reflected in revenues, decreased sales to non-weather related
industrial (including agricultural) customers and decreased
transportation volumes. Transportation volumes decreased to 28.0
Bcf from 35.0 Bcf, resulting in a $2.0 million decrease in
transportation revenues. Total sales and transportation volumes
decreased 3% to approximately 142.2 Bcf for the 12 months ended
- 12 -<PAGE>
December 31, 1995 from approximately 146.6 Bcf for the 12 months
ended December 31, 1994. However, the company-wide weather for
calendar year 1995 was 3% colder than for calendar year 1994 but
6% warmer than normal. The Company experienced increased sales
volumes with all weather sensitive customer types in the 12
months ended December 31, 1995. The average sales price per Mcf
sold decreased $.28 to $3.79. The average cost of gas per Mcf
sold decreased $.37 to $2.40. Changes in cost of gas are
reflected in regulated sales prices through purchased gas
adjustment mechanisms.
Gross profit increased by 7% to $174.3 million from $163.3
million for the 12 months ended December 31, 1994. The increase
in gross profit for the 12 months ended December 31, 1995 was due
to colder weather and increased sales volumes. Operating
expenses exclusive of income taxes decreased from $129.6 million
for the 12 months ended December 31, 1994 to $127.6 million for
the 12 months ended December 31, 1995. Factors contributing to
the decrease in operating expenses were decreased distribution,
employee welfare, and pension expense. Income taxes increased
$3.4 million for the 12 months ended December 31, 1995, compared
with the 12 months ended December 31, 1994. The primary reason
was higher pre-tax income. Operating income increased from the
12 months ended December 31, 1994 by 37% to $35.5 million for the
12 months ended December 31, 1995. The increase in operating
income was due to increased gross profit.
Interest charges increased due to higher interest rates on short-
term debt in the 12 months ended December 31, 1995. The
Company's weighted average short-term interest rate increased to
6.8% for the 12 months ended December 31, 1995, as compared with
4.8% for the 12 months ended December 31, 1994.
Net income for the 12 months ended December 31, 1995 was $21.6
million compared with $14.1 million for the 12 months ended
December 31, 1994. The increase in net income resulted primarily
from the increase in operating income. Earnings per share
increased by 52% to $1.40. Average shares outstanding increased
approximately 1.6% as compared with the prior year. Dividends
per share increased approximately 4.5% to $.93.
- 13 -<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Quarter ended
December 31,
-------------------
1995 1994
------- -------
Average Meters in Service
Residential 582,705 569,354
Commercial 61,086 60,196
Industrial (including agricultural) 19,062 19,475
Public authority and other 5,026 4,957
------- -------
Total 667,879 653,982
<TABLE>
<CAPTION>
Quarter ended 12 Months ended
December 31, December 31,
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales Volumes -- MMcf (1)
Residential 16,856 14,205 49,416 47,069
Commercial 6,970 6,097 20,629 19,847
Industrial (including
agricultural) 7,272 6,274 39,044 39,903
Public authority and other 1,876 1,565 5,090 4,782
-------- -------- -------- --------
Total 32,974 28,141 114,179 111,601
Transportation Volumes --
MMcf (1) 7,210 9,640 28,033 34,985
-------- -------- -------- --------
Total Volumes Handled 40,184 37,781 142,212 146,586
======== ======== ======== ========
Operating Revenues (000's)
Gas Revenues
Residential $ 71,553 $ 62,884 $218,834 $225,574
Commercial 27,061 24,674 82,369 85,950
Industrial (including
agricultural) 21,448 19,940 112,323 123,062
Public authority and other 7,123 6,012 19,296 19,968
-------- -------- -------- --------
Total gas revenues 127,185 113,510 432,822 454,554
Transportation Revenues 2,165 3,332 10,544 12,587
Other Revenues 1,118 1,006 5,074 5,014
-------- -------- -------- -------
Total Operating Revenues $130,468 $117,848 $448,440 $472,155
======== ======== ======== ========
Average Gas Sales Revenues per Mcf $ 3.86 $ 4.03 $ 3.79 $ 4.07
Average Transportation Revenue per Mcf $ .30 $ .35 $ .38 $ .36
Cost of Gas per Mcf Sold $ 2.42 $ 2.64 $ 2.40 $ 2.77
<FN>
(1) Volumes are reported as metered in million cubic feet ("MMcf").
</TABLE>
- 15 - <PAGE>
<TABLE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
(Continued)
HEATING DEGREE DAYS (2)
<CAPTION>
Weather Quarter ended December 31, 12 Months ended December 31,
Service Sensitive -------------------------- ----------------------------
Area Customers % 1995 1994 Normal 1995 1994 Normal
- ------- ----------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Texas (Energas) 47 1,249 1,185 1,382 3,216 3,215 3,528
Kentucky (WKG) 26 1,769 1,351 1,576 4,210 4,049 4,376
Louisiana (Trans La) 11 735 500 676 1,683 1,617 1,760
Colorado, Kansas and
Missouri (GGC) 16 2,162 2,211 2,339 5,929 5,651 6,234
----
System Average 100% 1,473 1,315 1,507 3,737 3,643 3,983
<FN>
(2) 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
weather experienced and to compare relative temperatures
between one geographic area and another. Normal heating
degree days are derived from a 30-year average of actual
heating degree days compiled by the National Weather
Service.
</TABLE>
- 16 - <PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 3 of notes to consolidated financial statements on pages
6 and 7 herein for a description of legal proceedings.
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
- 17 - <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: February 14, 1996 By: /s/ James F. Purser
------------------------------
James F. Purser
Executive Vice President
and Chief Financial Officer
Date: February 14, 1996 By: /s/ David L. Bickerstaff
------------------------------
David L. Bickerstaff
Vice President and Controller
(Principal Accounting Officer)
- 18 - <PAGE>
EXHIBITS INDEX
Item 6(a)
Exhibit Page
Number Description Number
------- ----------- -------
10.1 Atmos Energy Corporation Restricted
Stock Grant Plan (Restated as of
November 9, 1994)
10.2 Amendment No. 1 to the Atmos Energy
Corporation Restricted Stock Grant
Plan (Restated as of November 9,
1994)
10.3 Amendment No. 1 to the Atmos Energy
Corporation Supplemental Executive
Benefits Plan (Restated as of
November 11, 1992)
15 Letter regarding unaudited interim
financial information
27 Financial Data Schedule for Atmos for
the quarter ended December 31, 1995
<PAGE>
EXHIBIT 15
----------
February 14, 1996
Board of Directors
Atmos Energy Corporation
We are aware of the incorporation by reference in the Registra-
tion 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 of our report dated
February 7, 1996, relating to the unaudited condensed
consolidated interim financial statements of Atmos Energy
Corporation which are included in its Form 10-Q for the quarter
ended December 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 THREE
MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 372,638
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 90,894
<TOTAL-DEFERRED-CHARGES> 35,961
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 499,493
<COMMON> 80
<CAPITAL-SURPLUS-PAID-IN> 108,252
<RETAINED-EARNINGS> 57,792
<TOTAL-COMMON-STOCKHOLDERS-EQ> 166,124
0
0
<LONG-TERM-DEBT-NET> 125,303
<SHORT-TERM-NOTES> 40,700
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 13,000
0
<CAPITAL-LEASE-OBLIGATIONS> 2,648
<LEASES-CURRENT> 207
<OTHER-ITEMS-CAPITAL-AND-LIAB> 151,511
<TOT-CAPITALIZATION-AND-LIAB> 499,493
<GROSS-OPERATING-REVENUE> 130,468
<INCOME-TAX-EXPENSE> 5,195
<OTHER-OPERATING-EXPENSES> 112,328
<TOTAL-OPERATING-EXPENSES> 117,523
<OPERATING-INCOME-LOSS> 12,945
<OTHER-INCOME-NET> 160
<INCOME-BEFORE-INTEREST-EXPEN> 13,105
<TOTAL-INTEREST-EXPENSE> 3,872
<NET-INCOME> 9,233
0
<EARNINGS-AVAILABLE-FOR-COMM> 9,233
<COMMON-STOCK-DIVIDENDS> 3,739
<TOTAL-INTEREST-ON-BONDS> 405
<CASH-FLOW-OPERATIONS> 11,614
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
EXHIBIT 10.1
THE ATMOS ENERGY CORPORATION
RESTRICTED STOCK GRANT PLAN
Effective October 1, 1987
Restated as of November 9, 1994<PAGE>
THE ATMOS ENERGY CORPORATION
RESTRICTED STOCK GRANT PLAN
(Restated as of November 9, 1994)
I. PURPOSE OF PLAN
This Plan has been established to align the interest of its
participants more directly with those of the Company's
shareholders, to retain and attract managerial and professional
personnel of exceptional ability and to encourage strong
commitment to corporate objectives.
II. PLAN DEFINITIONS
All rights and conditions under this Plan are specified in
the following paragraphs subject to compliance with
applicable laws and regulations. As used in this Plan, the
following terms and phrases shall have the meanings ascribed
to them below:
A. "Administrator" shall mean the non-employee members of
the Board who qualify as disinterested administrators under the
provisions of Rule 16b-3 as promulgated by the Securities and
Exchange Commission and as may hereafter be amended from time to
time.
B. "Board" or "Board of Directors" shall mean the Board of
Directors of Atmos Energy Corporation.
C. "Common Stock" shall mean the common stock of Atmos
Energy Corporation.
D. "Company" shall mean Atmos Energy Corporation and
Subsidiaries.
E. "Disability" shall mean such total and permanent
disability as qualifies the participant for benefits under the
Company's Long-Term Disability Plan covering the participant at
the time.
F. "Fair Market Value" with regard to the Restricted Stock
on a particular date shall mean the closing price of the Common
Stock as reported in the Southwest edition of The Wall Street
Journal for that date, or if no prices are quoted for that date,
on the last preceding date for which such prices of Common Stock
are so quoted. In the event "NASDAQ Over-The-Counter Markets"
cease to be reported as such or in the event the Common Stock of
the Company is traded over a different exchange, a new,
appropriate published stock quotation system shall be selected by
the Committee, consistent with appropriate regulatory provisions.
- 2 -<PAGE>
G. "Plan" shall mean the Atmos Energy Corporation
Restricted Stock Grant Plan as evidenced in this document and any
amendments hereto.
III. ELIGIBILITY
The participants in the Plan shall be such employees of the
Company as may be selected from time to time by the Administrator
in its discretion. Directors of the Company who are not also
employees of the Company shall not be eligible to participate in
this Plan. In order to receive Restricted Stock, participants
must not, at the time the grant of Restricted Stock is made, be
subject to any agreement with the Company that restricts the
acquisition of shares of Common Stock of the Company.
IV. STOCK SUBJECT TO PLAN
The stock subject to this Plan shall consist of shares of
the Company's Common Stock to which the restrictions specified in
Section V(F) are attached. This stock is hereafter referred to
as "Restricted Stock". The total number of shares of Restricted
Stock, subject to adjustment as provided in Section XII, that may
be awarded by the Company under this Plan shall not be more than
900,000 shares. Restricted Stock awarded under this Plan shall,
in the sole discretion of the Board of Directors, consist of
either previously issued shares purchased on the open market or
shares purchased from the Company as original issue shares or
treasury shares.
V. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
Each share of Restricted Stock awarded under this Plan shall
be subject to the following restrictions:
A. Shares of Restricted Stock awarded to a Plan
participant may not be sold, transferred, pledged, hypothecated,
encumbered, or otherwise alienated in any manner, whether
voluntarily, by operation of law, or otherwise, until the
restrictions on such shares are removed pursuant to this Plan and
said shares are delivered to the participant.
B. Shares of Restricted Stock awarded to a Plan
participant will be forfeited if, prior to the removal of
restrictions on Stock awarded hereunder, the recipient terminates
employment for any reason other than death, disability, or
retirement.
C. At the time and on the date of a participant's death,
disability, or retirement while employed by the Company, all
restrictions placed on each share of Restricted Stock awarded to
that participant shall be removed and such shares shall be
delivered to the participant or to his legal representatives,
- 3 -<PAGE>
beneficiaries, or heirs. From and after such date, the
participant or the participant's estate, personal representative
or beneficiary, as the case may be, shall have full rights of
transfer or resale with respect to such stock subject to
applicable state and federal regulations.
D. Stock certificates representing the number of shares of
Restricted Stock granted to an employee of the Company shall be
registered in the employee's name, but the certificates
representing any shares of Restricted Stock shall be held in the
custody of the Company for the participant's account. All
dividends and distributions (other than stock dividends and
distributions) on shares held in the custody of the Company shall
be paid to the participant, however, regardless of the fact that
the shares are being held in behalf of the participant. Any new,
additional, or different shares or securities issued (due to a
stock split, stock dividend, or other stock distribution) with
respect to Restricted Stock previously awarded under the Plan
shall be held by the Company as Restricted Stock for the
participant's account and shall have the same restrictions as the
underlying Restricted Stock with respect to which such new,
additional, or different shares or securities were issued. At
such time as restrictions are removed from any portion of the
Restricted Stock held by the Company for the participant,
certificates representing such shares shall be delivered free of
all restrictions to the participant or to the participant's legal
representatives, beneficiaries, or heirs.
E. Additional grants of Restricted Stock after the initial
grant may have restriction provisions different from those
provided in Section VI. If such is the case, the award of such
stock will be conditioned upon the acceptance by the participant
of such different provisions.
F. Each certificate issued in respect of shares of
Restricted Stock granted to a participant under this Plan shall
bear the following (or similar) legend:
"The transferability of this certificate and the shares
of stock represented hereby are subject to the terms and
conditions (including forfeitures) contained in The Atmos Energy
Corporation Restricted Stock Grant Plan. A copy of the Plan is
on file in the office of Atmos Energy Corporation, 1800 Three
Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240."
VI. REMOVAL OF RESTRICTIONS
A participant who receives a Restricted Stock award pursuant
to this Plan shall be entitled to delivery of shares free and
clear of all restrictions, if such participant is an employee of
the Company at the time [subject to the provisions of Section
V(C) hereof, according to the following schedule:
- 4 - <PAGE>
Percentage of Original
Completed Years of Service Grant Delivered
After Date of Grant to Participant
3 25%
4 25%
5 25%
6 25%
Notwithstanding the foregoing provisions, each participant
shall, in the event of a Change of Control of the Company,
receive free of restriction all Restricted Stock granted to the
participant on or before the effective date of such Change of
Control. As used in this Plan, a "Change in Control" of the
Company shall be deemed to have occurred if:
A. any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 33-1/3% or more of the combined voting power
of the Company's then outstanding securities; or
B. during any period of two consecutive years individuals
who at the beginning of such period constitute the Board of
Directors and any new director (other than a director designated
by a person who has entered into an agreement with the Company to
effect a transaction described in clauses A or C of this
paragraph) whose election by the Board of Directors or nomination
for election by the Company's shareholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof;
or
C. the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the
shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
- 5 -<PAGE>
VII. STOCK WITHHOLDING REQUIREMENT
Upon the removal or lapse of the restrictions on any
Restricted Stock, the number of shares issuable by the Company to
the participant shall be reduced by an amount (i) not less than
the amount necessary to satisfy the participant's federal, state,
and local tax withholding obligations (including FICA
requirements) arising from the removal or lapse of the
restrictions on the Restricted Stock and (ii) not more than an
amount equal to the value of the Restricted Stock on which the
restrictions were removed or lapsed as of the date of such
removal or lapse multiplied by the participant's maximum marginal
tax rate as of such date.
VIII. FORFEITED SHARES
If shares of Restricted Stock are forfeited according to the
terms of this Plan, such shares may be added back to the number
of shares available for issuance under the Plan only to the
extent that no dividends from the forfeited shares were paid to
the forfeiting participant.
IX. RIGHTS OF RECIPIENTS AS SHAREHOLDERS
Except as otherwise provided in the Plan, a recipient of a
Restricted Stock grant under this Plan shall have all of the
rights of a shareholder of the Company with respect to such
shares of Restricted Stock, including the right to vote such
shares and receive the dividends and other distributions paid or
made with respect to such shares in accordance with Section V(D)
above.
X. ADMINISTRATION OF THE PLAN
The Administrator shall have full authority to manage and
control the operation and administration of the Plan. Action
taken by the Administrator with respect to the Plan shall be
taken upon the affirmative vote of a majority of the directors
constituting the Administrator.
The Administrator shall have the power to construe and
interpret this Plan in accordance with its terms and to establish
and amend the rules and regulations for its administration. All
determinations of the Administrator shall be final and shall not
be subject to appeal.
The Administrator shall designate those employees of the
Company and its Subsidiaries who are eligible to participate in
the Plan subject to the provisions of Section III and shall
designate the amounts of Restricted Stock to be granted.
- 6 -<PAGE>
XI. AMENDMENT AND TERMINATION
The Board of Directors in its discretion may terminate the
Plan at any time with respect to any shares of Restricted Stock
which have not theretofore been granted. The Board of Directors
shall have the right to alter or amend the Plan or any part
thereof from time to time; provided, that no change in any
Restricted Stock theretofore granted may be made which would
impair the rights of the grantee without the consent of such
grantee; and provided, further, that the Board of Directors may
not make any alteration or amendment which would materially
increase the benefits accruing to participants under the Plan,
materially increase the aggregate number of shares which may be
issued pursuant to the provisions of the Plan, change the class
of employees eligible to receive grants under the Plan, withdraw
the administration of the Plan from the Administrator, or permit
any non-employee member of the Board to be eligible to receive a
grant under the Plan without the approval of the stockholders of
the Company.
XII. ADJUSTMENT UPON CHANGES IN STOCK
If there shall be any change in the Common Stock subject to
the Plan or to any Restricted Stock granted thereunder, through
subdivision, combination, or reclassification of shares, or
through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split or other change in the corporate
structure, appropriate adjustment shall be made by the Board of
Directors in the aggregate number of shares subject to the Plan.
XIII. NO EMPLOYMENT RIGHTS
The adoption of the Plan does not confer upon any employee
of the Company or a Subsidiary any right to continue employment
with the Company or Subsidiary, as the case may be, nor does it
interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at
any time.
IN WITNESS WHEREOF, and as conclusive evidence of its
adoption of this Restated Plan, the Employer has caused this Plan
to be duly executed as of November 9, 1994.
ATMOS ENERGY CORPORATION
By: /s/Ronald L. Fancher
----------------------------
Ronald L. Fancher, President
and Chief Executive Officer
- 7 -<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO
THE ATMOS ENERGY CORPORATION
RESTRICTED STOCK GRANT PLAN
(Restated as of November 9, 1994)
WHEREAS, effective October 1, 1987, ATMOS ENERGY CORPORATION
(the "Company") adopted THE ATMOS ENERGY CORPORATION RESTRICTED
STOCK GRANT PLAN, as amended and restated as of November 9, 1994
(the "Plan"); and
WHEREAS, on November 9, 1994, the Company restated the Plan
in its entirety; and
WHEREAS, pursuant to Section XI of the Plan, the Company
desires to amend the Plan as hereinafter set forth;
NOW, THEREFORE, the Plan shall be, and hereby is, amended,
effective as of the date this Amendment is executed, in the
following respects:
Section VIII of the Plan shall be, and hereby is, amended
and revised to read in its entirety as follows:
"If shares of Restricted Stock are forfeited according to
the terms of this Plan, the number of shares forfeited may be
added back to the number of shares available for issuance under
the Plan. Any shares of Restricted Stock that are forfeited
according to the terms of this Plan shall be held by the Company
as treasury shares and shall be available for reissuance under
this Plan."
IN WITNESS WHEREOF, the Company has executed this Amendment
No. 1 to The Atmos Energy Corporation Restricted Stock Grant Plan
this 8th day of November, 1995 to be effective as of this date.
ATMOS ENERGY CORPORATION
By: /s/ Robert F. Stephens
---------------------------
Robert F. Stephens
President and Chief
Operating Officer<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 1 TO
THE ATMOS ENERGY CORPORATION
SUPPLEMENTAL EXECUTIVE BENEFITS PLAN
(Restated as of November 11, 1992)
WHEREAS, effective October 1, 1987, ATMOS ENERGY CORPORATION
(the "Employer") adopted THE ATMOS ENERGY CORPORATION
SUPPLEMENTAL EXECUTIVE BENEFITS PLAN (the "Plan"); and
WHEREAS, on November 11, 1992, the Employer restated the
Plan in its entirety; and
WHEREAS, pursuant to Section 9.1 of the Plan, the Employer
desires to amend the Plan as hereinafter set forth;
NOW, THEREFORE, the Plan shall be, and hereby is, amended,
effective as of the date this Amendment is executed, in the
following respects:
1. The first sentence of the definition of "Pension Plan"
in Section 2.1(j) of the Plan shall be, and hereby is, amended
and revised to read in its entirety as follows:
"The Employees' Retirement Plan of Atmos Energy Corporation,
the Western Kentucky Gas Retirement Plan, or the Greeley Gas
Company Employees' Pension Plan, whichever is applicable, as
amended from time to time."
2. Section 2.3 of the Plan shall be, and hereby is, amended
and revised to read in its entirety as follows:
"GOVERNING LAW: This Plan shall be construed in accordance
with and governed by the laws of the State of Texas except to the
extent otherwise preempted by the Employee Retirement Income
Security Act of 1974, as amended, or any other federal law."
3. Section 3.1 of the Plan shall be, and hereby is,
amended and revised to read in its entirety as follows:
"EMPLOYEES ELIGIBLE TO PARTICIPATE: All corporate officers
of the Employer elected by the Board of Directors (excluding any
assistant officers that may be elected from time to time) shall
participate in this Plan; provided, however, that all benefits
payable under this Plan are subject to the provisions of Section
9.5 hereof. Any Participant who ceases being a corporate officer
of the Employer during his employment with the Employer shall
immediately cease participation in this Plan except as otherwise
set forth in this Plan."
4. The first paragraph of Section 5.1 of the Plan shall be,
and hereby is, amended and revised to read in its entirety as
follows:<PAGE>
"Except as otherwise provided elsewhere in this Plan or in a
Participation Agreement entered into in the form attached to this
Plan as Exhibit C-2, if a Participant (i) has been a corporate
officer of the Employer for at least two years, (ii) has at least
five years of vesting service under the Pension Plan, and (iii)
has reached the age when he is eligible for the immediate
commencement of his Pension Plan benefit when his employment with
the Employer terminates, he shall be entitled to a monthly
Supplemental Pension calculated pursuant to Exhibit A-1 attached
hereto; provided, however, in no event shall the combined annual
payment from this Plan and the Pension Plan to any Participant
listed on the Minimum Benefit Schedule attached to this Plan as
Exhibit A be less than the minimum Annual Amount for such
Participant specified in the Minimum Benefit Schedule."
5. The first paragraph of Section 5.6 of the Plan shall be,
and hereby is, amended and revised to read in its entirety as
follows:
"Notwithstanding anything expressly or impliedly to the
contrary contained in this Plan, if, following a Change in
Control of the Employer, a Participant's employment is
terminated, or he is demoted or reassigned to a position that is
no longer a corporate officer position, for any reason other than
for Cause (as defined in Section 9.2 of this Plan), the
Participant shall nevertheless be entitled to receive a
Supplemental Pension at such time as he becomes entitled to
receive a benefit under the Pension Plan regardless of whether
the Participant has been a corporate officer for at least two
years or has five years of vesting service under the Pension Plan
at the time of such termination, demotion, or reassignment. Such
Supplemental Pension shall be calculated in the same manner as
set forth in Section 9.1 of this Plan for benefits payable in the
event of a termination of the Plan."
6. Section 6.3 of the Plan shall be, and hereby is, amended
and revised to read in its entirety as follows:
"COMMENCEMENT OF SUPPLEMENTAL PENSION: Notwithstanding the
requirement contained in Section 5.1 hereof that a Participant
have been a corporate officer of the Employer for at least two
years, have at least five years of vesting service under the
Pension Plan, and have reached the age when he is eligible for
the immediate commencement of his Pension Plan benefit when his
employment with Employer terminates, a Participant receiving a
Disability Pension hereunder will be eligible for a Supplemental
Pension under Article V hereof, provided his disability continues
until the commencement of the Supplemental Pension. However, all
applicable provisions of Article V relating to a reduction in the
amount of a Participant's Supplemental Pension shall apply to any
Supplemental Pension received hereunder unless the terms of the
Plan provide otherwise."
- 2 -<PAGE>
7. The first sentence of the fourth paragraph of Section
9.1 of the Plan shall be, and hereby is, amended and revised to
read in its entirety as follows:
"In the event the Board of Directors terminates the Plan or
any portion thereof and such termination affects the Supplemental
Pension described in the Plan, a Participant's right to a
Supplemental Pension shall immediately vest regardless of whether
the Participant has been a corporate officer of the Employer for
at least two years or has five years of vesting service under the
Pension Plan."
8. The first paragraph of Section 9.2 shall be, and hereby
is, amended and revised to read in its entirety as follows:
"Nothing contained in this Plan shall be construed as a
contract of employment between the Employer and any employee, or
as a right of any employee to be continued in the employment of
the Employer, or as a limitation of the right of the Employer to
discharge any of its employees, with or without Cause. If a
Participant's employment with the Employer is terminated without
Cause or if the Participant's participation in the Plan is
terminated for any reason other than resignation or termination
of employment for Cause (except as otherwise provided in a
Participation Agreement entered into in the form attached hereto
as Exhibit C-2), the Participant shall be entitled to the
benefits payable under this Plan that have accrued prior to the
termination of employment or Plan participation. If such
termination occurs upon or after a 'Change in Control' (as
defined in Section 5.6 hereof), the Participant's right to a
Supplemental Pension shall immediately vest regardless of whether
the Participant has been a corporate officer of the Employer for
at least two years or has five years of vesting service under the
Pension Plan as of the date of such termination. The amount of
the benefits payable under this Plan to a Participant whose
employment with the Employer has been terminated without Cause or
whose participation in the Plan has been terminated for any
reason other than resignation or termination of employment for
Cause (except as otherwise provided in a Participation Agreement
entered into in the form attached hereto as Exhibit C-2) shall,
if such termination occurs upon or after a 'Change of Control'
(as defined in Section 5.6 hereof), be calculated in the same
manner as set forth in Section 9.1 above for benefits payable in
the event of a termination of the Plan. Notwithstanding any
provision to the contrary herein contained, if, prior to a
'Change of Control' (as defined in Section 5.6 hereof), a
Participant's employment with the Employer is terminated without
Cause or if the Participant's participation in the Plan is
terminated for any reason other than resignation or termination
of employment for Cause, then, except as otherwise provided in a
Participation Agreement entered into in the form attached hereto
as Exhibit C-2, the amount of the benefits payable under this
Plan to such Participant shall be calculated in the manner set
forth in Section 5.1 above and the Participant's right to a
Supplemental Pension shall vest only if the Participant has been
- 3 -<PAGE>
a corporate officer of the Employer for at least two years and
has five years of vesting service under the Pension Plan as of
the date of such termination."
9. Exhibit B shall be, and hereby is, replaced with
Exhibit B attached to this Amendment.
10. Exhibit C-1 shall be, and hereby is, replaced with
Exhibit C-1 attached to this Amendment.
IN WITNESS WHEREOF, the Employer has executed this Amendment
No. 1 to The Atmos Energy Corporation Supplemental Executive
Benefits Plan this day of November, 1995 to be effective as
of this date.
ATMOS ENERGY CORPORATION
By: /s/ Robert F. Stephens
-----------------------------
Robert F. Stephens
President and Chief Operating
Officer
- 4 -<PAGE>
EXHIBIT B
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into as of the ____
day of , 19 by and between ATMOS ENERGY CORPORATION,
a Texas corporation (the "Employer"), and ("Participant").
W I T N E S S E T H:
WHEREAS, the Employer has adopted the Atmos Energy
Corporation Supplemental Executive Benefits Plan (the "Plan"),
pursuant to which the corporate officers may receive supplemental
retirement, disability, and death benefits; and
WHEREAS, in accordance with the requirements of the Plan and
as an inducement to the Employer to allow Participant's
participation in the Plan, Participant has agreed to execute and
enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Participant agrees that, during the term of this
Agreement, Participant shall not (a) participate, directly or
indirectly, as an employee, agent, representative, officer,
director, stockholder, partner, joint venturer, or otherwise or
(b) have any direct or indirect financial interest in any form in
any business that sells or offers for sale, directly or
indirectly, any products or services that are competitive with
the products or services sold or offered for sale by the Employer
in any geographic location which the Employer shall be doing
business during such period of time as Participant is a
participant in the Plan; provided, however, that the ownership by
Participant of any stock listed on a national securities exchange
of any corporation conducting a competing business shall not be
deemed a violation of this Agreement if the aggregate amount of
such stock owned by Participant does not exceed one percent (1%)
of the total outstanding stock of such corporation.
2. In the event of a breach or threatened breach of the
provisions of this Agreement by Participant, the Employer shall
be entitled (as an absolute right and without the necessity of
proving irreparable injury or damages and in addition to any
other remedies available under the Plan or otherwise) to an
injunction restraining Participant from such violation.
3. If any provision of this Agreement shall, for any
reason, be adjudged by any court of competent jurisdiction to be
invalid or unenforceable, such judgment shall not affect, impair,
or invalidate the remainder of this Agreement but shall be
- 5 -<PAGE>
confined in its operation to the provisions of this Agreement
directly involved in the controversy in which such judgment shall
have been rendered. To the extent that the provisions of this
Agreement are adjudged to be invalid or unenforceable, this
Agreement shall be construed and (in the absence of such
construction) reformed so as to allow the maximum benefit of the
provisions of this Agreement permitted by law. If, however, this
Agreement shall for any reason be held by a court of competent
jurisdiction to be excessively broad as to time, duration,
geographical scope, activity, or subject matter, it shall be
construed by limiting and reducing it so as to be enforceable to
the extent compatible with the applicable laws as they shall then
appear.
4. This Agreement shall become effective as of the
commencement of Supplemental Pension or Disability Pension
benefits from the Plan and shall terminate upon the earliest to
occur of (i) five (5) years from the date Participant begins
receiving Supplemental Pension or Disability Pension benefits
from the Plan, (ii) the attainment of age 67 by Participant, or
(iii) Participant's death.
5. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this
Noncompetition Agreement as of the date first written above.
PARTICIPANT: ATMOS ENERGY CORPORATION
By:
- ------------------------------ --------------------
- 6 -<PAGE>
EXHIBIT C-1
(FORM OF AGREEMENT FOR ALL PARTICIPANTS
OTHER THAN MR. VAUGHAN)
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is entered into as of the
day of , 19 by and between ATMOS ENERGY CORPORATION,
a Texas corporation (the "Employer"), and ("Participant").
W I T N E S S E T H:
WHEREAS, the Employer has adopted the Atmos Energy
Corporation Supplemental Executive Benefits Plan (the "Plan"),
pursuant to which the corporate officers may receive supplemental
retirement, disability, and death benefits; and
WHEREAS, in accordance with Section 9.6 of the Plan, the
Employer and Participant have agreed to execute and enter into
this Agreement;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. The Employer hereby agrees to provide to Participant the
benefits described in the Plan pursuant to the terms and
conditions set forth therein. Employer further agrees that, in
the event it amends or terminates the Plan in such a manner that
results in a decrease in the amount of the benefits to be paid
under the Plan to Participant or terminates Participant's
employment without Cause or Participant's participation in the
Plan for any reason other than Participant's resignation or
termination of Participant's employment for Cause, Participant
shall have the right to, and the Employer agrees to pay to
Participant, any benefits accrued prior to the effective date of
such amendment or termination of the Plan or of such termination
of Participant's employment with the Employer or participation in
the Plan, the amount of which benefit shall be calculated as
follows:
(a) In the event the Employer amends the Plan and such
amendment results in a decrease in the amount of the Supplemental
Pension, Disability Pension, or death benefit that would be paid
under the Plan but for the amendment thereof, the amount of
Participant's benefit shall be the sum of (i) Participant's
benefit as calculated pursuant to the terms of the Plan in effect
immediately prior to the amendment thereof and based upon
Participant's Compensation as of the date of his retirement,
disability, or death multiplied by a fraction, the numerator of
which shall be the number of years of vesting service by
Participant in the Pension Plan prior to the effective date of
the amendment (which number shall not be less than 5 nor greater
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than 20) and the denominator of which shall be the total number
of years of vesting service by Participant in the Pension Plan
(which number, for purposes of calculating Participant's
Supplemental Pension, shall not be greater than 20), plus (ii)
Participant's benefit as calculated pursuant to the terms of the
Plan as amended based upon Participant's Compensation as of the
date of his retirement, disability, or death multiplied by a
fraction, the numerator of which shall be the number of years
that Participant participated in the Pension Plan after the
effective date of the amendment (which number, for purposes of
calculating Participant's Supplemental Pension, when added to the
numerator of the fraction in clause (i) above, may not exceed 20)
and the denominator of which shall be the total number of years
of vesting service by Participant in the Pension Plan (which
number for purposes of calculating Participant's Supplemental
Pension, shall not be greater than 20); provided, however, that
if the Plan is so amended prior to Participant's fifth year of
vesting service in the Pension Plan, Participant's Supplemental
Pension payable hereunder shall be calculated solely in
accordance with the terms of the Plan as amended; provided
further that, in the event of any such amendment occurring upon
and after a "Change in Control" (as defined in Paragraph 2
hereof), Participant's Supplemental Pension must be at least
equal to that calculated pursuant to the provisions of Section
9.1 of the Plan for benefits payable in the event of a
termination of the Plan.
(b) In the event the Employer terminates the Plan or any
portion thereof and such termination affects the Disability
Pension or death benefit described in the Plan, Participant's
Disability Pension and death benefit shall be calculated as of
the date of termination of such benefit as though the date of
such termination was the date that Participant became disabled or
died. Such Disability Pension and death benefit shall become
payable, however, only upon Participant's disability or death
occurring in accordance with the terms of the Plan in effect
immediately prior to the date of its termination.
(c) In the event the Employer terminates the Plan or any
portion thereof and such termination affects the Supplemental
Pension described in the Plan, Participant's right to a
Supplemental Pension shall immediately vest regardless of whether
Participant has been a corporate officer of the Employer for at
least two years or has five years of vesting service under the
Pension Plan. In such event, Participant's Supplemental Pension
shall be the amount determined in accordance with Section 5.1 of
the Plan (i) except that it shall be based upon Participant's
Compensation as of the date of the termination of the Plan,
(ii) except that Participant shall be treated as having the
number of years of benefits service under the Pension Plan as he
would have if he remains in the Pension Plan until he reaches his
Earliest Commencement Age as set forth in the Minimum Benefit
Schedule attached to the Plan as Exhibit A or, if Participant is
not listed on the Minimum Benefit Schedule, age 62, and (iii)
except that, if Participant is not fully vested under the Pension
- 8 -<PAGE>
Plan, the calculation made under paragraph (b) of Exhibit A-1 to
the Plan shall be made on the basis of the monthly amount of
pension that would be payable to Participant if he were so fully
vested.
(d) If, at any time prior to a "Change in Control" (as
defined in Paragraph 2 hereof), Participant's employment with the
Employer is terminated without Cause (as defined in this
Paragraph 1(d)) or if Participant's participation in the Plan is
terminated for any reason other than resignation or termination
of employment for Cause, Participant shall nevertheless be
entitled to the benefits payable under the Plan that have accrued
prior to the termination of Participant's employment or Plan
participation, the amount of such benefits to be calculated in
the manner set forth in Section 5.1 of the Plan; provided,
however, that Participant's right to a Supplemental Pension shall
vest only if Participant has been a corporate officer of the
Employer for at least two years and has at least five years of
vesting service under the Pension Plan as of the date of such
termination. The amount of the benefits payable under the Plan
to Participant in such event shall be calculated in the same
manner as set forth in Subparagraph 1(c) above for benefits
payable in the event of a termination of the Plan. As used in
this Paragraph 1, "Cause" for termination of employment shall
mean termination upon (i) the willful and continued failure by
Participant to substantially perform his duties with the Employer
(other than any such failure resulting from Participant's
incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to Participant by
the Employer that specifically identifies the manner in which the
Employer believes that Participant has not substantially
performed his duties or (ii) Participant's willful engagement in
conduct that is demonstrably and materially injurious to the
Employer, monetarily or otherwise. For purposes of this
paragraph, no act, or failure to act, on Participant's part shall
be deemed "willful" unless done, or omitted to be done, by
Participant not in good faith and without a reasonable belief
that the action or omission was in the best interests of the
Employer. Notwithstanding the foregoing, Participant shall not
be deemed to have been terminated for Cause unless and until
there shall have been delivered to Participant a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board of
Directors of the Employer at a meeting of such Board of Directors
called and held for such purpose (after reasonable notice to
Participant and an opportunity for Participant, together with
Participant's counsel, to be heard before the Board of
Directors), finding that in the good faith opinion of the Board
of Directors that Participant was guilty of conduct set forth
above in clauses (i) or (ii) of this Subparagraph 1(d) and
specifying the particulars thereof in detail.
2. Notwithstanding anything expressly or impliedly to the
contrary contained in this Agreement or the Plan, if, following a
Change in Control of the Employer, Participant's employment is
- 9 -<PAGE>
terminated, or he is demoted or reassigned to a position that is
no longer a corporate officer position, for any reason other than
for Cause (as defined in Paragraph 1 of this Plan), Participant
shall nevertheless be entitled to receive a Supplemental Pension
at such time as he becomes entitled to receive a benefit under
the Pension Plan regardless of whether Participant has been a
corporate officer of the Employer for at least two years or has
five years of vesting service under the Pension Plan at the time
of such termination, demotion, or reassignment. Such
Supplemental Pension shall be calculated in the same manner as
set forth in Subparagraph 1(c) above for benefits payable in the
event of a termination of the Plan. As used in this Paragraph 2,
a "Change in Control" of the Employer shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Employer, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Employer representing 33-1/3% or more of the
combined voting power of the Employer's then outstanding
securities; or (ii) during any period of two consecutive years
individuals who at the beginning of such period constitute the
Board of Directors and any new director (other than a director
designated by a person who has entered into an agreement with the
Employer to effect a transaction described in clauses (i) or (ii)
of this Paragraph) whose election by the Board or nomination for
election by the Employer's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or (iii)
the shareholders of the Employer approve a merger or
consolidation of the Employer with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Employer outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 60% of the combined voting power of the voting
securities of the Employer or such surviving entity outstanding
immediately after such merger or consolidation, or the
shareholders of the Employer approve a plan of complete
liquidation of the Employer or an agreement for the sale or
disposition by the Employer of all or substantially all the
Employer's assets.
3. Except as otherwise provided in Paragraph 2 of this
Agreement, Participant agrees that nothing in this Agreement or
the Plan shall entitle him, or be deemed to entitle him, to
receive a Supplemental Pension under the Plan if (i) he has not
met the requirements for a Supplemental Pension as set forth in
the Plan, (ii) his employment with the Employer is terminated
prior to his reaching the age of eligibility for the immediate
commencement of his Pension Plan benefit due to resignation, or
- 10 -<PAGE>
(iii) his employment with the Employer is terminated for Cause
(as defined in Paragraph 1 above).
4. No amendment or termination of the Plan by the Employer
shall constitute an amendment or termination of this Agreement.
This Agreement may be amended or modified only by the written
agreement of the parties hereto, and will terminate only upon the
occurrence of the earlier of the following events: (i) the
execution of a written agreement to terminate this Agreement
signed by all of the parties hereto, (ii) the satisfaction of
all of the Employer's obligations to Participant under the Plan
and this Agreement, (iii) the termination by Participant of
Participant's employment with the Employer by resignation
effective prior to Participant reaching age 55 unless such
resignation occurs after a Change in Control, (iv) the
termination for Cause of Participant's employment with the
Employer, or (v) the breach by Participant of any of the terms or
provisions of the Noncompetition Agreement executed by
Participant in accordance with the Plan.
5. Nothing contained in this Agreement shall be construed
as a contract of employment between the Employer and Participant,
or as a right of Participant to be continued in the employment of
the Employer, or as a limitation of the right of the Employer to
discharge Participant with or without cause.
6. The Employer agrees to pay any and all legal fees and
expenses incurred by Participant in seeking to obtain or enforce
any right or benefit provided by this Agreement.
7. Each capitalized term used in this Agreement that is not
otherwise defined herein shall have the same meaning attributed
to it in the Plan.
8. Any successor to the Employer hereunder, which successor
continues or acquires any of the business of the Employer, shall
be bound by the terms of this Agreement in the same manner and to
the same extent as the Employer.
9. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this
Participation Agreement as of the date first written above.
PARTICIPANT: ATMOS ENERGY CORPORATION
By:
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