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, 1996
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 April 26, 1996.
Class Shares Outstanding
----- ------------------
No Par Value 15,955,858<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ATMOS ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, September 30,
1996 1995
------------ ------------
ASSETS (Unaudited)
Property, plant and equipment $633,483 $595,359
Less accum. depreciation and amort. 246,104 232,107
-------- --------
Net property, plant and equipment 387,379 363,252
Current assets
Cash and cash equivalents 3,791 2,294
Accounts receivable, net 71,108 25,690
Inventories 6,994 6,747
Gas stored underground 2,023 10,758
Prepayments 1,984 2,747
-------- --------
Total current assets 85,900 48,236
Deferred charges and other assets 36,186 34,295
-------- --------
$509,465 $445,783
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock outstanding: 15,941,815
shares at 3/31/96 and 15,519,112
shares at 9/30/95 $ 80 $ 78
Additional paid-in capital 109,073 106,496
Retained earnings 72,352 51,704
-------- --------
Total shareholders' equity 181,505 158,278
Long-term debt 125,303 131,303
-------- --------
Total capitalization 306,808 289,581
Current liabilities
Current maturities of long-term debt 6,000 7,000
Notes payable to banks 26,100 33,500
Accounts payable 53,322 24,945
Taxes payable 15,469 1,926
Customers' deposits 10,041 9,343
Other current liabilities 18,934 10,641
-------- --------
Total current liabilities 129,866 87,355
Deferred income taxes 34,801 33,120
Deferred credits and other liabilities 37,990 35,727
-------- --------
$509,465 $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
March 31,
--------------------
1996 1995
-------- --------
Operating revenues $191,104 $157,294
Purchased gas cost 125,710 97,717
-------- --------
Gross profit 65,394 59,577
Operating expenses
Operation 20,947 22,335
Maintenance 1,066 1,148
Depreciation and amortization 5,335 5,163
Taxes, other than income 5,506 5,387
Income taxes 10,368 7,855
-------- --------
Total operating expenses 43,222 41,888
-------- --------
Operating income 22,172 17,689
Other income (expense) (145) (225)
Interest charges, net 3,644 3,519
-------- --------
Net income $ 18,383 $ 13,945
======== ========
Net income per share $ 1.15 $ .91
======== ========
Cash dividends per share $ .24 $ .23
======== ========
Average shares outstanding 15,927 15,381
======== ========
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,
--------------------
1996 1995
-------- --------
Operating revenues $321,572 $275,142
Purchased gas cost 205,453 172,083
-------- --------
Gross profit 116,119 103,059
Operating expenses
Operation 42,668 42,143
Maintenance 2,141 2,152
Depreciation and amortization 10,926 10,323
Taxes, other than income 9,704 9,465
Income taxes 15,563 11,501
-------- --------
Total operating expenses 81,002 75,584
-------- --------
Operating income 35,117 27,475
Other income (expense) 15 (86)
Interest charges 7,516 6,968
-------- --------
Net income $ 27,616 $ 20,421
======== ========
Net income per share $ 1.75 $ 1.33
======== ========
Cash dividends per share $ .48 $ .46
======== ========
Average shares outstanding 15,800 15,355
======== ========
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,
--------------------
1996 1995
-------- --------
Operating revenues $482,250 $442,505
Purchased gas cost 302,180 278,996
-------- --------
Gross profit 180,070 163,509
Operating expenses
Operation 83,956 87,256
Maintenance 4,265 5,044
Depreciation and amortization 21,344 19,825
Taxes, other than income 16,850 15,926
Income taxes 13,636 8,164
-------- --------
Total operating expenses 140,051 136,215
-------- --------
Operating income 40,019 27,294
Other income 318 332
Interest charges 14,269 12,856
-------- --------
Net income $ 26,068 $ 14,770
======== ========
Net income per share $ 1.67 $ .97
======== ========
Cash dividends per share $ .94 $ .90
======== ========
Average shares outstanding 15,638 15,305
======== ========
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,
-------------------
1996 1995
------- --------
Cash Flows From Operating Activities
Net income $27,616 $ 20,421
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization
Charged to depreciation and
amortization 10,926 10,323
Charged to other accounts 1,795 1,847
Deferred income taxes (benefit) 1,681 (786)
Other (223) 1,663
-------- --------
41,795 33,468
Net change in operating assets and
liabilities 15,339 24,031
-------- --------
Net cash provided by operating
activities 57,134 57,499
Cash Flows From Investing Activities
Retirements of property, plant and
equipment 2,769 2,646
Capital expenditures (39,617) (29,202)
-------- --------
Net cash used in investing activities (36,848) (26,556)
Cash Flows From Financing Activities
Net decrease in notes payable to banks (7,400) (58,100)
Cash dividends paid (7,562) (7,067)
Issuance of long-term debt - 40,000
Repayment of long-term debt (7,000) (4,000)
Issuance of common stock 3,173 1,699
-------- --------
Net cash used in financing
activities (18,789) (27,468)
-------- --------
Net increase in cash and cash equivalents 1,497 3,475
Cash and cash equivalents at beginning
of period 2,294 2,766
-------- --------
Cash and cash equivalents at end
of period $3,791 $ 6,241
======== ========
See accompanying notes to consolidated financial statements.
6<PAGE>
ATMOS ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
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, 1996 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 March 31, 1996, and the related
condensed consolidated statements of income for the three-month,
six-month, and twelve-month periods ended March 31, 1996 and
1995, and the condensed consolidated statements of cash flows for
the six-month periods ended March 31, 1996 and 1995, 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 March 31, 1996, the Company had 75,000,000
shares of common stock, no par value (stated at $.005 per share),
authorized and 15,941,815 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
six months ended March 31, 1996 are reflected in the Company's
financial statements for the six months ended March 31, 1996.
3. Contingencies
On March 15, 1991, suit was filed in the 15th Judicial District
7<PAGE>
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
interest calculated through October 1, 1995, began in September
1995 and will be credited to customer bills along with interest
8<PAGE>
that accrues after October 1, 1995. The Company refunded
$533,000 under the settlement in the six months ended March 31,
1996. 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 has filed a Notice of Appeal
with the Colorado Court of Appeals with respect to this 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
During the six months ended March 31, 1996, the Company paid
installments due of $2,000,000 on its 9.75% Senior Notes,
$3,000,000 on its 9.76% Senior Notes and $2,000,000 on its 11.2%
Senior Notes.
At March 31, 1996, 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 $150,000,000, $123,900,000 of which was unused at March
31, 1996.
5. Statements of cash flows
Supplemental disclosures of cash flow information for the six-
month periods ended March 31, 1996 and 1995 are presented below.
Six months ended
March 31,
1996 1995
------ ------
(In thousands)
Cash paid for
Interest $7,755 $6,000
Income taxes 1,245 6,062
9 <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, 1996, and the
related condensed consolidated statements of income for the
three-month, six-month, and twelve-month periods ended March 31,
1996 and 1995 and the condensed consolidated statements of cash
flows for the six-month periods ended March 31, 1996 and 1995.
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 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 reviews, we are not aware of any material modifi-
cations that should be made to the accompanying condensed con-
solidated financial statements referred to above 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, 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
May 1, 1996
10<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, 1996 and 1995
appear on pages 16-18. Average meters in service are as follows:
Six months ended
March 31,
-------------------
1996 1995
------- -------
Average Meters in Service
Residential 586,437 570,925
Commercial 61,454 60,408
Industrial (including agricultural) 19,020 19,422
Public authority and other 5,038 4,967
------- -------
Total 671,949 655,722
======= =======
Rate Activity
In February 1995, the Company filed with the Kentucky Commission
for a rate increase for its Western Kentucky Gas Company
Division. In October 1995, the Kentucky Commission issued an
order authorizing the Company to increase its rates by $2.3
million annually effective November 1, 1995, and by an additional
$1.0 million annually beginning in March 1996. The settlement
included a decrease in depreciation rates, recovery of expenses
related to adoption of SFAS No. 106 and included 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 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
11<PAGE>
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%. An increase of $1.1 million annually
or 2.0% went into effect on March 6, 1995. In April 1996, the
Company filed a request with the Louisiana Commission to continue
the RSC.
FINANCIAL CONDITION
For the six months ended March 31, 1996, net cash provided by
operating activities totaled $57.1 million compared with $57.5
million for the six months ended March 31, 1995. Net income for
the six months ended March 31, 1996 increased $7.2 million from
$20.4 million for the six months ended March 21, 1995, as
discussed under "Results of Operations." The net change in
operating assets and liabilities was $15.3 million for the six
months ended March 31, 1996 compared with $24.0 million for the
six months ended March 31, 1995. Due to the seasonal nature of
the natural gas distribution business, large swings in accounts
receivable, accounts payable and inventories of gas in under-
ground storage will occur when entering and leaving the winter or
heating season.
Major cash flows used in investing activities for the six months
ended March 31, 1996 included capital expenditures of $39.6
million compared with $29.2 million for the six months ended
March 31, 1995. The capital expenditures budget for fiscal year
1996 is currently $67.6 million, as compared with actual capital
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 six months ended March 31, 1996, cash used in financing
activities amounted to $18.8 million compared with $27.5 million
for the six months ended March 31, 1995. During the six months
ended March 31, 1996, notes payable to banks was reduced $7.4
million, as compared with $58.1 million for the six months ended
March 31, 1995 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.
Payments of long-term debt increased $3.0 million to $7.0 million
for the six months ended March 31, 1996. Payments of long-term
debt consisted of a $2.0 million installment on the Company's
9.75% Senior Notes due in 1996, a $3.0 million installment on the
9.76% Senior Notes and a $2.0 million installment on the 11.2%
Senior Notes. The Company paid $7.6 million in cash dividends
during the six months ended March 31, 1996, compared with $7.1
million in cash dividends paid during the six months ended March
31, 1995. This reflects a $.01 per share increase in the
quarterly dividend rate and an increase in the number of shares
outstanding. In the six-month period ended March 31, 1996, the
Company issued 422,703 shares of common stock including 313,411
12<PAGE>
shares issued in connection with the Oceana acquisition.
The Company believes that internally generated funds, its short-
13 <PAGE>
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 March 31, 1996 the Company had $90.0 million of
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, 1996, the
Company also had $150.0 million of uncommitted short-term lines,
$123.9 million of which was unused.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996, COMPARED WITH THREE MONTHS
ENDED MARCH 31, 1995
Operating revenues increased by 21% to $191.1 million for the
three months ended March 31, 1996 from $157.3 million for the
three months ended March 31, 1995. The most significant factor
contributing to the increase in operating revenues was increased
sales to weather sensitive customers. During the quarter ended
March 31, 1996, temperatures averaged 15% colder than in the
corresponding quarter of the prior year, and were approximately
equal to the 30-year normal weather. The total volume of gas
sold and transported for the three months ended March 31, 1996
was 52.4 billion cubic feet ("Bcf") compared with 48.6 Bcf for
the three months ended March 31, 1995. The average sales price
per Mcf sold increased $.34 to $4.08 primarily due to an increase
in the average cost of gas and rate increases implemented during
the past year. The average cost of gas per Mcf sold increased to
$2.74 for the three months ended March 31, 1996, from $2.40 for
the three months ended March 31, 1995 due to increased supply
costs. Recent rate increases implemented include the following:
a $2.3 million annual rate increase in Kentucky effective in
November 1995 and an additional $1.0 million annual increase
effective in March 1996, and a $1.1 million rate stabilization
clause annual increase in Louisiana effective in March 1995.
Gross profit increased by 10% to $65.4 million for the three
months ended March 31, 1996, from $59.6 million for the three
months ended March 31, 1995. Operating expenses, excluding
income taxes, decreased to $32.9 million for the three months
ended March 31, 1996 from $34.0 million for the three months
ended March 31, 1995. Factors contributing to the decrease in
operating expenses in the 1996 quarter were lower administrative
and general expense and customer accounts expense. Operating
income increased for the three months ended March 31, 1996 to
$22.2 million from $17.7 million for the three months ended March
31, 1995. The increase in operating income primarily resulted
from increased gross profit. Income taxes increased $2.5 million
or 32% in the quarter ended March 31, 1996 compared with the
corresponding quarter of the prior year due to increased pre-tax
income.
14<PAGE>
Interest expense increased slightly for the three months ended
March 31, 1996 compared with the three months ended March 31,
1995. Net income increased for the three months ended March 31,
1996 by 32% to $18.4 million from $13.9 million for the three
months ended March 31, 1995. This increase in net income
primarily resulted from the increase in operating income.
SIX MONTHS ENDED MARCH 31, 1996, COMPARED WITH SIX MONTHS ENDED
MARCH 31, 1995
Operating revenues increased by 17% to $321.6 million for the six
months ended March 31, 1996 from $275.1 million for the six
months ended March 31, 1995. The primary factor contributing to
the higher operating revenues was weather in the Company's
service areas which was 14% colder than weather in the
corresponding six month period of the prior fiscal year and
approximately equal to the 30-year normal weather. The average
sales price per Mcf increased to $3.99 for the six months ended
March 31, 1996 from $3.86 for the six months ended March 31,
1995. The increase in the average sales price reflects increased
cost of gas and rate increases in Texas, Louisiana, and Kentucky
implemented since October 1, 1994. The average cost of gas per
Mcf sold increased to $2.60 for the six months ended March 31,
1996 from $2.50 for the six months ended March 31, 1995 because
of generally higher gas supply costs.
Gross profit increased to $116.1 million for the six months ended
March 31, 1996, compared with $103.1 million for the six months
ended March 31, 1995. Operating expenses, excluding income
taxes, increased to $65.4 million in the six months ended March
31, 1996, from $64.1 million in the six months ended March 31,
1995. The principal factors contributing to the increase in
operating expenses were increases in distribution expense,
depreciation expense, and taxes other than income taxes. The
provision for income taxes for the six months ended March 31,
1996 increased $4.1 million from the provision for the corres-
ponding period of the prior year due to increased pre-tax income.
Net income increased 35% for the six months ended March 31, 1996,
to $27.6 million from $20.4 million for the six months ended
March 31, 1995. The increase in net income resulted primarily
from the increase in operating income. Dividends per share
increased approximately 4% to $.48 for the six months ended March
31, 1996. Interest expenses increased 8% from the corresponding
six-month period of the prior year. Average shares outstanding
increased 3% due primarily to shares issued for the Oceana
acquisition.
TWELVE MONTHS ENDED MARCH 31, 1996, COMPARED WITH TWELVE MONTHS
ENDED MARCH 31, 1995
Operating revenues increased by 9% to $482.3 million for the 12
months ended March 31, 1996 from $442.5 million for the 12 months
ended March 31, 1995. The increased revenues were caused by
15<PAGE>
increased sales volumes and higher average sales prices as a
result of colder winter weather, rate increases and higher gas
costs. Sales and transportation volumes increased to 146.1 Bcf
for the 12 months ended March 31, 1996 compared with 145.5 Bcf
for the corresponding prior period. The average sales price per
Mcf increased to $3.92 from $3.86. The average cost of gas per
Mcf sold decreased from $2.54 to $2.53 for the 12 months ended
March 31, 1996. The average sales price reflects rate increases
implemented in Texas, Louisiana, Colorado and Kentucky since
March 31, 1994.
Gross profit increased by 10% to $180.1 million from $163.5
million in the 12 months ended March 31, 1995. Operating
expenses, excluding income taxes, decreased from $128.1 million
in the 12 months ended March 31, 1995, to $126.4 million in the
12 months ended March 31, 1996. Factors contributing to the
decrease in operating expenses were decreased operation and
maintenance expense. Income taxes increased $5.5 million for the
12 months ended March 31, 1996, compared with the 12 months ended
March 31, 1995. The primary reason was increased pre-tax income.
Operating income increased in the 12 months ended March 31, 1996
by 47% to $40.0 million from $27.3 million for the 12 months
ended March 31, 1995. The primary reason for the increase in
operating income was increased operating revenues resulting from
weather that was 16% colder than in the prior year and
approximately equal to the thirty-year normal weather.
Interest charges increased $1.4 million to $14.3 million,
compared with $12.9 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, 1996. Net income for the 12 months ended March 31,
1996 was $26.1 million compared with $14.8 million for the 12
months ended March 31, 1995. The increase in net income resulted
from the increase in operating income discussed above. Earnings
per share increased by 72% to $1.67. Average shares outstanding
increased approximately 2% as compared with the prior year.
Dividends per share increased approximately 4% to $.94.
16<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Quarter ended March 31,
1996 1995
------- -------
Sales Volumes - MMcf (1)
Residential 24,276 21,551
Commercial 9,561 8,410
Industrial (including agricultural) 9,788 8,642
Public authority and other 2,334 2,196
------- -------
Total 45,959 40,799
Transportation Volumes - MMcf (1) 6,473 7,783
------- -------
Total Volumes Handled - MMcf (1) 52,432 48,582
======= =======
Operating Revenues (000's)
Gas Sales Revenues
Residential $108,000 $ 86,925
Commercial 39,182 31,738
Industrial (including agricultural) 30,630 25,943
Public authority and other 9,850 7,908
-------- --------
Total Gas Revenues 187,662 152,514
Transportation Revenues 1,833 3,339
Other Revenues 1,609 1,441
-------- --------
Total Operating Revenues $191,104 $157,294
======== ========
Average Gas Sales Revenues per Mcf $ 4.08 $ 3.74
Average Transportation Revenue per Mcf $ .28 $ .43
Cost of Gas per Mcf Sold $ 2.74 $ 2.40
HEATING DEGREE DAYS
Weather
Service Sensitive Quarter ended March 31,
Area Customers % 1996 1995 Normal
- -------------- ----------- ----- ----- ------
Texas 47% 1,845 1,617 1,893
Kentucky 26% 2,442 2,121 2,416
Louisiana 11% 1,163 892 1,047
Colorado, Kansas
and Missouri 16% 2,983 2,611 2,953
----
System Average 100% 2,106 1,827 2,104
(1) Volumes are reported as metered in million cubic feet
("MMcf").
17<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Six months ended March 31,
1996 1995
------- -------
Sales Volumes - MMcf (1)
Residential 41,132 35,756
Commercial 16,531 14,507
Industrial (including agricultural) 17,060 14,916
Public authority and other 4,210 3,761
------- -------
Total 78,933 68,940
Transportation Volumes - MMcf (1) 13,683 17,423
------- -------
Total Volumes Handled - MMcf (1) 92,616 86,363
======= =======
Operating Revenues (000's)
Gas Sales Revenues
Residential $179,553 $149,809
Commercial 66,243 56,412
Industrial (including agricultural) 52,078 45,883
Public authority and other 16,973 13,920
-------- --------
Total Gas Revenues 314,847 266,024
Transportation Revenues 3,998 6,671
Other Revenues 2,727 2,447
-------- --------
Total Operating Revenues $321,572 $275,142
======== ========
Average Gas Sales Revenues per Mcf $ 3.99 $ 3.86
Average Transportation Revenue per Mcf $ .29 $ .38
Cost of Gas per Mcf Sold $ 2.60 $ 2.50
HEATING DEGREE DAYS
Weather
Service Sensitive Six months ended March 31,
Area Customers % 1996 1995 Normal
- -------------- ----------- ----- ----- ------
Texas 47% 3,094 2,802 3,275
Kentucky 26% 4,211 3,472 3,992
Louisiana 11% 1,898 1,392 1,723
Colorado, Kansas
and Missouri 16% 5,145 4,822 5,292
----
System Average 100% 3,579 3,142 3,611
(1) Volumes are reported as metered in million cubic feet
("MMcf").
18<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Twelve months ended March 31,
1996 1995
------- -------
Sales Volumes - MMcf (1)
Residential 52,141 46,071
Commercial 21,780 19,610
Industrial (including agricultural) 40,190 39,536
Public authority and other 5,228 4,672
------- -------
Total 119,339 109,889
Transportation Volumes - MMcf (1) 26,723 35,618
------- -------
Total Volumes Handled - MMcf (1) 146,062 145,507
======= =======
Operating Revenues (000's)
Gas Sales Revenues
Residential $239,909 $208,018
Commercial 89,813 79,316
Industrial (including agricultural) 117,010 119,335
Public authority and other 21,238 18,039
-------- --------
Total Gas Sales Revenues 467,970 424,708
Transportation Revenues 9,038 12,794
Other Revenues 5,242 5,003
-------- --------
Total Operating Revenues $482,250 $442,505
======== ========
Average Gas Sales Revenues per Mcf $ 3.92 $ 3.86
Average Transportation Revenue per Mcf $ .34 $ .36
Cost of Gas per Mcf Sold $ 2.53 $ 2.54
HEATING DEGREE DAYS
Weather
Service Sensitive Twelve months ended March 31,
Area Customers % 1996 1995 Normal
- -------------- ----------- ----- ----- ------
Texas 47% 3,444 3,067 3,528
Kentucky 26% 4,531 3,811 4,376
Louisiana 11% 1,954 1,463 1,760
Colorado, Kansas
and Missouri 16% 6,301 5,511 6,234
----
System Average 100% 4,016 3,473 3,983
(1) Volumes are reported as metered in million cubic feet
("MMcf").
19<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 3 of notes to consolidated financial statements on pages
7-9 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 14, 1996, 14,164,753 votes were cast as follows:
VOTES VOTES BROKER
FOR WITHHELD NON-VOTE
---------- ---------- --------
Class I Directors:
Travis W. Bain II 14,031,884 132,869 -
Dan Busbee 14,031,267 133,486 -
John W. Norris, Jr. 14,019,378 145,375 -
Class II Directors:
Robert F. Stephens 13,978,195 186,558 -
Thomas C Meredith 13,999,316 165,437 -
Class III Directors:
James F. Purser 13,980,331 184,422 -
The other directors will continue to serve until the expiration
of their terms. The term of the Class II directors, Carl S.
Quinn and Richard Ware II will expire in 1997. The term of the
Class III directors, Phillip E. Nichol, Lee E. Schlessman, and
Charles K. Vaughan will expire in 1998. The term of the Class I
directors, listed above, will expire in 1999.
Item 5. 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
20<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 8, 1996 By: /s/ JAMES F. PURSER
------------------------------
James F. Purser
Executive Vice President
and Chief Financial Officer
Date: May 8, 1996 By: /s/ DAVID L. BICKERSTAFF
------------------------------
David L. Bickerstaff
Vice President and Controller
(Principal Accounting Officer)
21<PAGE>
EXHIBITS INDEX
Item 6(a)
Page Number or
Exhibit Incorporation
Number Description by Reference to
------- ----------------------------------- ---------------
15 Letter regarding unaudited interim
financial information
27 Financial Data Schedule for Atmos
for the quarter ended March 31, 1996
<PAGE>
EXHIBIT 15
----------
May 8, 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 May 1,
1996, 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, 1996.
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>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE SIX MONTHS
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
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<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
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<TOTAL-NET-UTILITY-PLANT> 387,379
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<LONG-TERM-DEBT-NET> 125,303
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<EARNINGS-AVAILABLE-FOR-COMM> 27,616
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