<PAGE> 1
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES
AND ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
Filed Pursuant to Rule 424B3
Registration No. 333-93705
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED DECEMBER 1, 2000
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 7, 2000)
5,000,000 SHARES
[ATMOS ENERGY CORPORATION LOGO]
ATMOS ENERGY CORPORATION
COMMON STOCK
----------------------
Atmos Energy Corporation is selling all of the shares.
The shares trade on the New York Stock Exchange under the symbol
"ATO." On November 30, 2000, the last sale price of the shares as reported
on the New York Stock Exchange was $25 1/8 per share.
----------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Atmos......................... $ $
</TABLE>
The underwriters may also purchase up to an additional 750,000
shares at the public offering price, less the underwriting discount, within
30 days from the date of this prospectus to cover overallotments.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
The shares will be ready for delivery on or about ,
2000.
----------------------
MERRILL LYNCH & CO. UBS WARBURG LLC
----------------------
The date of this prospectus supplement is , 2000.
<PAGE> 2
Inside Cover
Title: Atmos' Operating Regions
Graphic: Map of the United States displaying the:
o areas where Atmos offers natural gas sales and distribution
services,
o location of each of the business unit headquarters of Atmos'
five utility divisions and
o location of Atmos' headquarters.
<PAGE> 3
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............................... S-1
Use of Proceeds............................................. S-4
Market Price of Common Stock and Dividends.................. S-4
Description of Common Stock................................. S-4
Capitalization.............................................. S-5
Selected Consolidated Operating Statistics and Financial
Data...................................................... S-6
Business.................................................... S-9
Underwriting................................................ S-14
Legal Matters............................................... S-16
Experts..................................................... S-16
Incorporation by Reference.................................. S-16
PROSPECTUS
Forward-Looking Statements.................................. 1
Atmos Energy Corporation.................................... 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Securities We May Issue..................................... 4
Prospectus Supplements...................................... 4
Description of Debt Securities.............................. 4
Description of Common Stock................................. 19
Plan of Distribution........................................ 22
Legal Matters............................................... 22
Experts..................................................... 22
Where You Can Find More Information......................... 23
</TABLE>
----------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference is accurate only as of
their respective dates. Our business, financial condition, results of operations
and prospects may have changed since those dates.
i
<PAGE> 4
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus supplement that are not historical
facts are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933. Forward-looking statements are based on management's
beliefs as well as assumptions made by, and information currently available to,
management. Because such statements are based on expectations as to future
economic performance and are not statements of fact, actual results may differ
materially from those projected. Important factors that could cause future
results to differ include, but are not limited to:
- national, regional and local economic conditions,
- competition from other energy suppliers and alternative forms of energy,
- regulatory and business trends and decisions,
- successful implementation of new technologies and systems,
- adverse weather conditions,
- successful completion and integration of pending acquisitions,
- inflation rates,
- hedging and market risk factors,
- further deregulation or "unbundling" of the natural gas distribution
industry, and
- other factors discussed in this and our other filings with the SEC.
All of these factors are difficult to predict and many are beyond our control.
Accordingly, while we believe these forward-looking statements to be reasonable,
there can be no assurance that they will approximate actual experience or that
the expectations derived from them will be realized. When used in our documents
or oral presentations, the words "anticipate," "believe," "estimate," "expect,"
"objective," "projection," "forecast," "goal" or similar words are intended to
identify forward-looking statements. We undertake no obligation to update or
revise our forward-looking statements, whether as a result of new information,
future events or otherwise.
----------------------
The terms "we," "our" and "us" refer to Atmos Energy Corporation unless the
context suggests otherwise. The term "you" refers to a prospective investor.
----------------------
The abbreviations "Mcf," "MMcf" and "Bcf" mean thousand cubic feet, million
cubic feet and billion cubic feet of natural gas, respectively.
ii
<PAGE> 5
PROSPECTUS SUPPLEMENT SUMMARY
This is a summary which does not contain all the information that may be
important to you. You should read the more detailed information included
elsewhere in this prospectus supplement, the accompanying prospectus and
documents incorporated by reference.
Our fiscal year ends on September 30 of each year, and references to fiscal
year 2000 and the like are to the year ended September 30 of the referenced
year.
OUR COMPANY
We distribute and sell natural gas to over one million residential,
commercial, industrial, agricultural and other customers. We operate through
five divisions in over 800 cities, towns and communities in service areas
located in Colorado, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana,
Missouri, Tennessee, Texas and Virginia. In addition, we transport natural gas
for others through our distribution system.
We provide natural gas storage services and own natural gas storage fields
in Kansas and Kentucky to supplement natural gas used by customers in Kansas,
Kentucky, Tennessee and other states. We also own a 45% equity interest, and
have agreed to acquire the remaining equity interest, in Woodward Marketing,
L.L.C., a privately held company that provides energy management and gas
marketing services to industrial customers, municipalities and local
distribution companies, including several of our own divisions. In addition, we
market natural gas to industrial and agricultural customers primarily in West
Texas and to industrial customers in Louisiana.
RECENT DEVELOPMENTS
Pending acquisition of natural gas operations in Louisiana. In April 2000,
we entered into an agreement with Citizens Communications Company to acquire the
natural gas operations of its Louisiana Gas Service Company division and its LGS
Natural Gas Company subsidiary for $375 million. Louisiana Gas provides natural
gas distribution services to approximately 276,000 residential and commercial
customers in southeastern and northern Louisiana, and LGS Natural Gas Company
provides gas transportation services to industrial customers in Louisiana. Upon
completion of the acquisition, we believe we will become the largest natural gas
distributor in Louisiana, and our national customer base will increase to
approximately 1.4 million customers, making us the fifth largest pure natural
gas local distribution company in the United States. This transaction is subject
to federal and state regulatory approval. Please see "-- Pending Acquisition of
Louisiana Natural Gas Operations" for more information.
Acquisition of natural gas distribution assets in Missouri. In May 2000,
we completed the acquisition of the Missouri natural gas distribution assets of
Associated Natural Gas from a subsidiary of Southwestern Energy Corporation for
$32 million. The acquisition increased our presence in Missouri by more than
48,000 customers.
Restructuring and sale of our propane operations. In August 2000, as part
of our strategy to restructure our non-regulated operations, we participated in
the formation of US Propane, LLC, a joint venture which combined our propane
operations with the propane operations of AGL Resources, Inc., Piedmont Natural
Gas Company, Inc. and TECO Energy, Inc. US Propane then sold its propane
business to Heritage Propane Partners, L.P. for cash and limited partner
interests in Heritage Propane Partners. Through our interest in US Propane, we
indirectly own approximately 19% of the general partner interests and
approximately 6.5% of the limited partner interests in Heritage Propane
Partners, whose common units, representing limited partner interests, are traded
on the New York Stock Exchange under the symbol "HPG." We believe Heritage
Propane Partners now has approximately 480,000 customers in 28 states, making it
the fifth largest retail marketer of propane in the United States based on
gallons sold.
Pending acquisition of remaining equity interest in Woodward Marketing. In
August 2000, we entered into an agreement with Woodward Marketing, Inc. to
acquire the 55% interest in Woodward Marketing that we do not already own in
exchange for 1,423,193 restricted shares of our common stock.
S-1
<PAGE> 6
The consideration is subject to an upward adjustment based on our future share
price. The upward adjustment will not exceed 232,547 shares, plus an amount of
shares to compensate for dividends paid after the completion of the acquisition.
Upon the completion of the acquisition, our subsidiary's guaranty of Woodward
Marketing's $100 million short-term working capital and letter of credit
facility will increase from 45% to 100% of any amounts outstanding under the
facility. This transaction is subject to state and federal regulatory approval.
Completion of technology upgrades. In fiscal 2000, we completed a
significant upgrade of our 24-hour customer call support center, billing systems
and financial, accounting and human resources computerized system. We believe
that our new call center, together with our new customer information and billing
system, will enable us to significantly increase our customer base without any
significant changes to our existing technology. We intend to continue to use our
technology to better serve our customers and optimize the efficiency of our
operations.
Pending sale of our natural gas utility operations in South Carolina. In
October 2000, we entered into an agreement to sell all of our natural gas
utility operations in South Carolina for approximately $5.8 million. This
transaction is subject to state regulatory approval.
STRATEGY
Our overall strategy is:
- continuing to manage our utility operations efficiently,
- growing our non-utility operations to complement our utility operations
and developing a retail marketing plan and
- growing our utility business through acquisitions.
We are managing our utility operations efficiently by:
- managing our operating and maintenance expenses,
- leveraging our investments in technology, such as our 24-hour call
center, to achieve more efficient operations,
- focusing on regulatory rate proceedings to increase revenue, which
resulted in rate increases totaling $12.1 million in fiscal 2000,
- mitigating weather-related risks through weather normalized rates in some
jurisdictions and purchasing weather hedges in others and
- disposing of non-growth assets, such as the pending sale of our South
Carolina natural gas utility operations.
We are growing our non-utility operations by:
- agreeing to purchase the remaining interest in Woodward Marketing,
- restructuring our propane business and
- increasing our non-regulated gas sales to industrial and agricultural
customers.
We are growing our utility business by acquiring natural gas operations,
such as our recent acquisition of natural gas distribution assets in Missouri
and our pending acquisition of natural gas operations in Louisiana.
S-2
<PAGE> 7
PENDING ACQUISITION OF LOUISIANA NATURAL GAS OPERATIONS
In April 2000, we entered into an agreement with Citizens Communications
Company to acquire the gas operations of its Louisiana Gas Service Company
division and its LGS Natural Gas Company subsidiary. The acquisition is subject
to several conditions, including federal and state regulatory approvals. We
anticipate that the acquisition will close in the third quarter of our current
fiscal year.
Louisiana Gas provides natural gas distribution service to approximately
276,000 residential and commercial customers in communities in southeastern and
northern Louisiana. Its service territory includes the suburban areas of
metropolitan New Orleans (excluding Orleans Parish), the north shore of Lake
Pontchartrain and the Monroe/West Monroe metropolitan area. The non-regulated
operations are conducted primarily by LGS Natural Gas, an intrastate pipeline
company, which provides gas transportation service to industrial customers and
Louisiana Gas.
On June 1, 2000, we and Citizens filed a joint application with the
Louisiana Public Service Commission requesting approval of the purchase by us of
the assets of Louisiana Gas and LGS Natural Gas. The commission is evaluating,
among other things, the allocation of the purchase price between the regulated
and non-regulated assets and the amount of savings that should be shared with
ratepayers. Although the resolution of these issues may affect the rates that we
will be able to charge, we do not expect them to have a material adverse effect
on our future operations.
In addition, the commission has indicated that prior to the approval of the
application, two separate proceedings involving Citizens must be addressed to
the satisfaction of the commission. These proceedings involve costs associated
with the construction of a pipeline and costs associated with the purchase of
gas that were charged to ratepayers through the purchased gas adjustment clause
of Louisiana Gas. We believe the outcome of these proceedings will not have any
material adverse future impact on us, since Citizens will be responsible for any
liability arising from these proceedings.
The current rate order that Louisiana Gas received from the commission has
an incentive clause that allows Louisiana Gas to earn a specified return on
common equity and provides for a mechanism that requires Louisiana Gas to share
any amount in excess of this specified return with its gas ratepayers. In
October 1999, the commission began to review the earnings of Louisiana Gas. We
anticipate that the commission will adjust the amount of the specified return
and the mechanism by which any excess is shared with gas ratepayers, but we do
not believe any adjustment will result in a material adverse effect on the
operations of Louisiana Gas.
THE OFFERING
Common stock offered by us.......... 5,000,000 shares
Shares outstanding after the
offering............................ 37,016,217 shares
Use of proceeds..................... We estimate that our net proceeds from
this offering without exercise of the
overallotment options will be
approximately $119.0 million. We intend
to use these net proceeds to pay down
outstanding indebtedness and for
general corporate purposes.
NYSE symbol......................... ATO
The number of shares outstanding after the offering is based on our shares
outstanding on November 29, 2000, and excludes 693,350 shares reserved for
issuance under outstanding options and the shares to be issued in connection
with the Woodward Marketing acquisition. This number assumes that the
underwriters' overallotment options are not exercised. If the overallotment
options are exercised in full, we will issue and sell an additional 750,000
shares.
S-3
<PAGE> 8
USE OF PROCEEDS
We estimate that we will receive net proceeds from this offering of
approximately $119.0 million ($136.9 million if the underwriters' overallotment
options are exercised in full), after deducting the underwriting discount and
commissions and estimated offering expenses payable by us. The net proceeds will
be used to reduce the $250 million of commercial paper outstanding as of
September 30, 2000, which has a weighted average interest rate of 6.94% as of
November 30, 2000, and has maturities ranging from one day to several months. We
will also use a portion of the net proceeds for general corporate purposes.
MARKET PRICE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed on the New York Stock Exchange under the symbol
"ATO." The following table indicates the high and low closing prices of our
common stock, as reported by the New York Stock Exchange, and the dividends that
we paid per share during the periods indicated.
<TABLE>
<CAPTION>
CASH
HIGH LOW DIVIDENDS PAID
---- --- --------------
<S> <C> <C> <C>
Quarter Ended
December 31, 2000 (through November 30, 2000)............. $25 5/16 $19 5/16 --
Quarter Ended
September 30, 2000........................................ $23 1/4 $18 1/2 $.285
June 30, 2000............................................. 20 9/16 14 3/4 .285
March 31, 2000............................................ 20 3/16 15 9/16 .285
December 31, 1999......................................... 25 20 .285
Quarter Ended
September 30, 1999........................................ $26 3/8 $23 7/8 $.275
June 30, 1999............................................. 26 5/16 24 .275
March 31, 1999............................................ 32 11/16 23 1/16 .275
December 31, 1998......................................... 32 1/4 28 3/8 .275
</TABLE>
The last reported sale price of our common stock on the New York Stock
Exchange on November 30, 2000, was $25 1/8 per share.
In November 2000, we declared a quarterly dividend of $.29 per share,
payable on December 11, 2000, to shareholders of record on November 22, 2000.
This dividend would indicate an annual dividend for fiscal 2001 of $1.16, which
would represent our thirteenth consecutive annual dividend increase. However,
additional dividends for fiscal 2001 have not been declared and dividends on our
shares of common stock are payable at the discretion of our board of directors
out of legally available funds. Future payments of dividends, and the amounts of
these dividends, will depend on our financial condition, results of operations,
capital requirements and other factors.
DESCRIPTION OF COMMON STOCK
We refer you to "Description of Common Stock" in the accompanying
prospectus for a description of our common stock, including the shares offered
by this prospectus supplement.
S-4
<PAGE> 9
CAPITALIZATION
The following table presents our debt and capitalization as of September
30, 2000:
- on an actual basis and
- on an adjusted basis, which gives effect to the sale of 5,000,000 shares
in this offering at a public offering price of $25 1/8, after deducting
the underwriting discount and commissions and estimated offering
expenses, and application of the net proceeds of $119.0 million to repay
outstanding commercial paper, as if the issuance occurred on September
30, 2000. For more information, please see "Use of Proceeds."
You should read this table in conjunction with the consolidated financial
statements and related notes, included in our Annual Report for the fiscal year
ended September 30, 2000, which is incorporated by reference to this prospectus
supplement. Total capitalization excludes short-term debt.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
------------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt
Current portion of long-term debt......................... $ 17,566 $ 17,566
Other short-term debt..................................... 250,047 131,053
-------- --------
Total short-term debt............................. $267,613 $148,619
======== ========
Long-term debt.............................................. $363,198 $363,198
Shareholders' equity
Common stock, no par value (stated at $.005 per share);
100,000,000 shares authorized; 31,952,340 shares issued
and outstanding........................................... 160 185
Additional paid-in capital............................. 306,887 425,856
Retained earnings...................................... 83,154 83,154
Accumulated other comprehensive income................. 2,265 2,265
-------- --------
Shareholders' equity.............................. 392,466 511,460
-------- --------
Total capitalization.............................. $755,664 $874,658
======== ========
</TABLE>
The "As Adjusted" column does not include debt that we may incur or assume in
connection with our pending acquisitions. In addition, it does not include
693,350 shares of our common stock issuable upon exercise of outstanding
options, shares to be issued in connection with the Woodward Marketing
acquisition and up to 750,000 shares of our common stock issuable upon the
exercise of the underwriters' overallotment options.
S-5
<PAGE> 10
SELECTED CONSOLIDATED OPERATING STATISTICS AND FINANCIAL DATA
The following tables present our summary consolidated operating statistics
for our fiscal years 1998, 1999 and 2000, our restated operating statistics for
our fiscal years 1996 and 1997 on a pooled basis with United Cities Gas Company,
which we acquired in July 1997, and other audited financial data for our fiscal
years 1996, 1997, 1998, 1999 and 2000. Some prior year amounts have been
reclassified to conform with the current year presentation. Since the
information in these tables is only a summary and does not provide all of the
information contained in our financial statements, you should read the
information in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and related notes included in our Annual Report for the fiscal year
ended September 30, 2000, which is incorporated by reference to this prospectus
supplement.
In addition, the information presented below includes the financial results
for the propane segment of our operations for the ten-month period ended August
2000, at which time we restructured our propane operations. Our propane assets
are now owned by Heritage Propane Partners, and we indirectly own approximately
6.5% of the limited partner interests in Heritage Propane Partners. Our equity
investment in Heritage Propane Partners, for the periods after August 2000, has
been and will be accounted for in our results of operations on an equity basis.
S-6
<PAGE> 11
SELECTED OPERATING STATISTICS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
METERS IN SERVICE
Residential........................ 860,229 870,747 889,074 919,012 970,873
Commercial......................... 91,960 92,703 94,302 98,268 104,019
Industrial (including
agricultural)................... 19,403 17,217 16,322 14,329 14,259
Public authority and other......... 4,716 4,781 4,834 6,386 7,448
---------- ---------- ---------- ---------- ----------
Total meters............... 976,308 985,448 1,004,532 1,037,995 1,096,599
Propane customers.................. 26,108 29,097 37,400 39,539 --
---------- ---------- ---------- ---------- ----------
Total...................... 1,002,416 1,014,545 1,041,932 1,077,534 1,096,599
========== ========== ========== ========== ==========
HEATING DEGREE DAYS(1)
Actual (weighted average).......... 4,043 3,909 3,799 3,374 3,302
Percent of normal.................. 101% 98% 95% 85% 82%
SALES VOLUMES -- MMcf(2)
Residential........................ 77,001 75,215 73,472 67,128 63,285
Commercial......................... 38,247 37,382 36,083 31,457 30,707
Industrial (including
agricultural)................... 57,863 46,416 44,881 35,741 38,687
Public authority and other......... 5,182 5,195 4,937 5,793 5,520
---------- ---------- ---------- ---------- ----------
Total sales volumes........ 178,293 164,208 159,373 140,119 138,199
Transportation volumes -- MMcf..... 44,146 48,800 56,224 55,468 59,365
---------- ---------- ---------- ---------- ----------
TOTAL THROUGHPUT -- MMcf............. 222,439 213,008 215,597 195,587 197,564
========== ========== ========== ========== ==========
PROPANE -- Gallons (in thousands).... 33,637 25,204 23,412 22,291 19,329
AVERAGE SALES PRICE OF GAS -- per
Mcf................................ $ 4.51 $ 5.11 $ 4.87 $ 4.53 $ 5.65
AVERAGE COST OF GAS SOLD -- per
Mcf................................ 3.15 3.51 3.24 2.79 3.79
AVERAGE TRANSPORTATION
REVENUES -- per Mcf................ .43 .41 .43 .42 .40
</TABLE>
---------------
(1) A heating degree day is equivalent to each degree that the average of the
high and the low temperatures for a day is below 65 degrees Fahrenheit. 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 relative
coldness of weather experienced and to compare relative temperatures between
one geographic area and another. Normal degree days are based on 30-year
average National Weather Service data for selected locations.
(2) Utility sales volumes reflect utility segment operations including
intercompany sales and transportation amounts.
S-7
<PAGE> 12
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Gas sales revenues
Residential................. $ 409,039 $ 452,864 $ 410,538 $ 349,691 $ 405,552
Commercial.................. 186,032 193,302 184,046 144,836 176,712
Industrial (including
agricultural)............. 187,693 168,386 161,382 117,382 171,447
Public authority and
other..................... 21,738 23,898 20,504 22,330 27,198
---------- ---------- ---------- ---------- ----------
Total gas sales
revenues............. 804,502 838,450 776,470 634,239 780,909
Transportation revenues........ 18,872 19,885 23,971 23,101 23,610
Other gas revenues............. 13,751 6,385 8,121 4,500 4,674
---------- ---------- ---------- ---------- ----------
Total gas revenues..... 837,125 864,720 808,562 661,840 809,193
Propane revenues............... 38,372 33,194 29,091 22,944 22,550
Other revenues................. 11,194 8,921 10,555 5,412 18,409
---------- ---------- ---------- ---------- ----------
Total operating
revenues............. $ 886,691 $ 906,835 $ 848,208 $ 690,196 $ 850,152
========== ========== ========== ========== ==========
NET INCOME....................... $ 41,151 $ 23,838 $ 55,265 $ 17,744 $ 35,918
DILUTED NET INCOME PER SHARE..... 1.42 .81 1.84 .58 1.14
CASH DIVIDENDS PER SHARE......... .98 1.01 1.06 1.10 1.14
</TABLE>
SELECTED BALANCE SHEET DATA
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
TOTAL ASSETS..................... $1,010,610 $1,088,311 $1,141,390 $1,230,537 $1,348,758
DEBT
Short-term debt................ $ 145,167 $ 182,501 $ 124,183 $ 186,152 $ 267,613
Long-term debt................. 276,162 302,981 398,548 377,483 363,198
---------- ---------- ---------- ---------- ----------
Total Debt............. $ 421,329 $ 485,482 $ 522,731 $ 563,635 $ 630,811
========== ========== ========== ========== ==========
SHAREHOLDERS' EQUITY............. $ 329,582 $ 327,260 $ 371,158 $ 377,663 $ 392,466
</TABLE>
S-8
<PAGE> 13
BUSINESS
Our operations are divided into two segments, a utility operations segment,
which includes our natural gas distribution and sales operations, and our
non-regulated segment, which includes all of our other operations. Until August
2000, our operations also included a propane segment, which was primarily
engaged in the retail and wholesale distribution of propane gas. In August 2000,
we merged our propane operations into Heritage Propane Partners. Through our
interest in US Propane, we indirectly hold approximately 6.5% of the limited
partner interests in Heritage Propane Partners, which is accounted for on an
equity basis.
UTILITY OPERATIONS SEGMENT OVERVIEW
Our utility operations segment is operated through our five regulated
natural gas divisions:
- Energas Company,
- Greeley Gas Company,
- Trans Louisiana Gas Company,
- United Cities Gas Company and
- Western Kentucky Gas Company.
Energas. Our Energas division operates in Texas. The governing body of
each municipality we serve has original jurisdiction over all utility rates,
operations and services within its city limits, except with respect to sales of
natural gas for vehicle fuel and agricultural use. We operate pursuant to
non-exclusive franchises granted by the municipalities we serve, which are
subject to renewal from time to time. The Railroad Commission of Texas has
exclusive appellate jurisdiction over all rate and regulatory orders and
ordinances of the municipalities and exclusive original jurisdiction over rates
and services to customers not located within the limits of a municipality. We
received a rate increase of $2.2 million effective January 1, 2000, for our
Amarillo system. In August 1999, Energas filed a rate request for its West Texas
System, which was initially denied. Subsequently, 59 cities representing
approximately 58% of our Energas customers ratified a non-binding settlement
agreement which would cap the rate increase at $3 million, and would entitle
ratifying cities to accept a rate increase below $3 million in the event the
Railroad Commission of Texas adopts a lesser increase for the non-ratifying
cities. We expect a final resolution in December 2000. At and for the year ended
September 30, 2000, we had 302,662 utility meters in service, total throughput
of 53,992 MMcf and operating revenues of $146.1 million, representing 19.7% of
our total utility operating revenues.
Greeley Gas. Our Greeley Gas division operates in Colorado, Kansas and
Missouri and is regulated by the public service commission in each state, with
respect to accounting, rates and charges, operating matters and the issuance of
securities. We operate under terms of non-exclusive franchises granted by the
cities in which we offer services. In November 2000, Greeley Gas filed a rate
case with the Colorado Public Utilities Commission for approximately $4.2
million annually. We expect a decision in the case by July 2001. At and for the
year ended September 30, 2000, we had 207,161 meters in service, total
throughput of 34,455 MMcf and operating revenues of $147.1 million, representing
19.9% of our total utility operating revenues.
Trans Louisiana. Our Trans Louisiana division operates in Louisiana and is
regulated by the Louisiana Public Service Commission, which regulates utility
services, rates and other matters. In most of the areas in which we operate in
Louisiana, we do so pursuant to a non-exclusive franchise granted by the
governing authority of each area. Direct sales of natural gas to industrial
customers in Louisiana who use gas for fuel or in manufacturing processes and
sales of natural gas for vehicle fuel are exempt from regulation. At and for the
year ended September 30, 2000, we had 81,419 meters in service, total throughput
of 7,448 MMcf and operating revenues of $45.5 million, representing 6.1% of our
total utility operating revenues.
S-9
<PAGE> 14
United Cities. Our United Cities division operates in Georgia, Illinois,
Iowa, Missouri, Tennessee and Virginia. In each state in which we operate, our
rates, services and operations as a natural gas distribution company are subject
to general regulation by the public service commission in each state. We operate
in each community, where necessary, under a franchise granted by the
municipality for a fixed term of years. In Tennessee and Georgia, we have
performance based rates which provide incentives for us to find ways to lower
costs. Any cost savings are then shared with our customers. We also have weather
normalization adjustments to our rates in Tennessee and Georgia. We received an
annual rate increase of $1.4 million in Illinois, effective October 23, 2000. We
also applied for a rate increase in Virginia in March 2000. We expect to
implement a rate increase under bond in December 2000, and expect a resolution
of the rate case during the second quarter of the current fiscal year. At and
for the year ended September 30, 2000, we had 312,018 meters in service, total
throughput of 56,698 MMcf and operating revenues of $280.0 million, representing
37.9% of our total utility operating revenues.
Western Kentucky Gas. Our Western Kentucky Gas division operates in
various incorporated cities in Kentucky pursuant to non-exclusive franchises
granted by these cities. We are regulated by the Kentucky Public Service
Commission which regulates utility services, rates, issuance of securities and
other matters. Sales of natural gas for use as vehicle fuel in Kentucky are
unregulated. We have been operating under a performance based rate program since
July 1998. We also have weather normalization adjustments to our rates in
Kentucky. Effective December 1999, we received a rate increase of $9.9 million.
At and for the year ended September 30, 2000, we had 181,066 meters in service,
total throughput of 47,129 MMcf and operating revenues of $121.2 million,
representing 16.4% of our total utility operating revenues.
NON-REGULATED SEGMENT OVERVIEW
Our non-regulated segment is primarily composed of the following three
parts:
- Atmos Storage Inc. Atmos Storage owns underground storage fields in
Kansas and Kentucky and provides storage services primarily to our United
Cities and Greeley Gas divisions and also to other non-regulated
customers.
- Atmos Energy Services, Inc. Atmos Energy Services markets gas to
irrigation and industrial customers in West Texas and to industrial
customers in Louisiana.
- Atmos Energy Marketing, LLC. Atmos Energy Marketing owns our 45%
investment in Woodward Marketing. Woodward Marketing provides a variety
of natural gas management services to natural gas utility systems and
industrial natural gas consumers in several states and to our Greeley
Gas, Trans Louisiana, United Cities and Western Kentucky Gas divisions.
These services consist primarily of the acquisition and provision of
natural gas supplies at fixed and market-based prices, load forecasting
and management, gas storage and transportation services, peaking sales
and balancing services and gas hedging through the use of derivative
products.
S-10
<PAGE> 15
FINANCIAL OVERVIEW OF SEGMENTS
The following table summarizes certain information regarding the operation
of our utility, non-regulated and propane segments for each of the three years
as of and for the period ended September 30, 2000. Amounts for the propane
segment for fiscal 2000 reflect operations for 10 months until its sale to
Heritage Propane Partners, effective August 10, 2000. After August 10, 2000, our
share of propane results is reflected on an equity basis. The information below
is presented net of intersegment eliminations.
<TABLE>
<CAPTION>
NON-
UTILITY REGULATED PROPANE TOTAL
---------- --------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
2000
Operating revenues............................. $ 734,835 $92,767 $22,550 $ 850,152
Operating income (loss)........................ 77,207 8,717 (608) 85,316
Net income..................................... 22,459 10,857 2,602 35,918
Identifiable assets............................ 1,246,782 101,277 699 1,348,758
1999
Operating revenues............................. $ 617,313 $49,939 $22,944 $ 690,196
Operating income (loss)........................ 49,000 5,782 (543) 54,239
Net income (loss).............................. 10,800 7,813 (869) 17,744
Identifiable assets............................ 1,125,691 71,115 33,731 1,230,537
1998
Operating revenues............................. $ 738,445 $80,672 $29,091 $ 848,208
Operating income............................... 100,665 11,595 619 112,879
Net income (loss).............................. 43,332 11,999 (66) 55,265
Identifiable assets............................ 1,052,225 52,616 36,549 1,141,390
</TABLE>
GAS SALES
Our natural gas distribution business is seasonal and highly dependent on
weather conditions in our service areas. Gas sales to residential and commercial
customers are greater during the winter months than during the remainder of the
year. The volumes of gas sales during the winter months will vary with the
temperature during these months. The seasonal nature of our sales to residential
and commercial customers is offset to a limited extent by our sales in the
spring and summer months to our agricultural customers in Texas, Colorado and
Kansas, who use natural gas to operate irrigation equipment. We also have
weather normalization adjustments in our rate jurisdictions in Tennessee,
Georgia and Kentucky. We have purchased weather hedges for our Texas and
Louisiana operations effective for the 2000-2001 heating season which we believe
will reduce the impact of warmer than normal temperatures in winter months.
GAS SUPPLY
We receive natural gas deliveries through 28 pipeline transportation
companies, both interstate and intrastate, to satisfy our firm sales market
requirements. The transportation agreements are firm and many of them have
pipeline no-notice storage service which provide for daily balancing between
system requirements and nominated flowing supplies. These agreements have
generally been negotiated with the shortest term available to maintain our right
to roll over the term. The agreements reduce the risk of paying fixed fees to
reserve pipeline capacity on a long-term basis.
S-11
<PAGE> 16
PROPERTIES
We own 30,029 miles of underground distribution and transmission mains
throughout our gas distribution systems. These mains are located on easements or
rights-of-way granted to us which generally provide for perpetual use. We
maintain our mains through a program of continuous inspection and repair and
believe that our system of mains is in good condition. We also own and operate
two propane peak shaving plants with a total capacity of approximately 330,000
gallons which can produce the equivalent of approximately 4,500 Mcf daily. We
also own a liquefied natural gas storage facility with a capacity of 500,000 Mcf
which can inject a daily volume of 30,000 Mcf into the system as well as
underground storage fields which are used to supplement the supply of natural
gas in periods of peak demand. We have seven underground gas storage facilities
in Kentucky and four in Kansas that have a total storage capacity of
approximately 21.1 Bcf. However, approximately 10.0 Bcf of gas in the storage
facilities must be retained as cushion gas to maintain reservoir pressure. The
maximum daily delivery capability of the storage facilities is approximately
135,000 Mcf.
Net property, plant and equipment at September 30, 2000, included
approximately $958.4 million for utility, $23.2 million for non-regulated and
$.7 million for propane.
We hold franchises granted by the incorporated cities and towns that we
serve. At September 30, 2000, we held 460 such franchises having terms generally
ranging from five to 25 years. We believe that each of our franchises will be
renewed.
Our administrative offices are consolidated in Dallas, Texas under one
lease. We also maintain field offices throughout our distribution system, the
majority of which are located in leased premises.
REGULATION
Each of our utility divisions is regulated by various state or local public
utility authorities. We are also subject to regulation by the United States
Department of Transportation with respect to safety requirements in the
operation and maintenance of our gas distribution facilities.
Our distribution operations are also subject to various state and federal
laws regulating environmental matters. From time to time we receive inquiries
regarding various environmental matters. We believe that our properties and
operations substantially comply with and are operated in substantial conformity
with applicable safety and environmental statutes and regulations. There are no
administrative or judicial proceedings arising under environmental quality
statutes pending or known to be contemplated by governmental agencies which
would have a material adverse effect on us.
RATES
Approximately 87% of our revenues in fiscal 2000 were derived from sales at
rates set, or subject to approval, by local or state authorities. Generally, the
regulatory authority in each state in which we operate reviews our rate request
and establishes a rate structure which is intended to allow us to generate
revenue sufficient to cover our costs of doing business and provide a reasonable
return on invested capital.
The method of determining regulated rates varies among the states in which
we operate. The regulators have the responsibility of ensuring that utilities
under their jurisdiction operate in the best interests of customers while
providing the utilities the opportunity to earn a reasonable return on
investment. In a general rate case, the applicable regulatory authority, which
is typically the state public utility commission, establishes a base margin,
which is the amount of revenue authorized to be collected from customers to
recover authorized operating expense (other than the cost of gas), depreciation,
interest, taxes and return on rate base. The divisions in our utility operations
segment perform annual deficiency studies for each rate jurisdiction to
determine when to file rate cases, which are typically filed every two to five
years.
S-12
<PAGE> 17
COMPETITION
We are not currently in significant direct competition with any other
distributors of natural gas to residential and commercial customers within our
service areas. However, we do compete with other natural gas suppliers and
suppliers of alternate fuels for sales to industrial and agricultural customers.
We compete in all aspects of our business with alternative energy sources,
including, in particular, electricity. Competition for residential and
commercial customers is increasing. Promotional incentives, improved equipment
efficiencies and promotional rates all contribute to the acceptability of
electric equipment. Electric utilities offer electricity as a rival energy
source and compete for the space heating, water heating and cooking markets. The
principal means to compete against alternative fuels is lower prices, and
natural gas historically has maintained its price advantage in the residential,
commercial and industrial markets.
S-13
<PAGE> 18
UNDERWRITING
We intend to offer the shares in the U.S. and Canada through the
underwriters. Merrill Lynch, Pierce, Fenner & Smith Incorporated and UBS Warburg
LLC are acting as representatives of the underwriters named below. Subject to
the terms and conditions described in a purchase agreement among us and the
underwriters, we have agreed to sell to the underwriters, and the underwriters
severally have agreed to purchase from us, the number of shares listed opposite
their names below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
------------------------------------------------------------ ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
UBS Warburg LLC.............................................
---------
Total.......................................... 5,000,000
=========
</TABLE>
The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of these shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
underwriters may be required to make in respect of those liabilities.
Merrill Lynch will be facilitating Internet distribution for this offering
to certain of its Internet subscription customers. Merrill Lynch intends to
allocate a limited number of shares for sale to its online brokerage customers.
An electronic prospectus is available on the Web site maintained by Merrill
Lynch. Other than the prospectus in electronic format, the information on the
Merrill Lynch Web site relating to this offering is not a part of this
prospectus.
The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreement, such as the receipt by the underwriters of
officer's certificates and legal opinions. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject orders in whole or
in part.
COMMISSIONS AND DISCOUNTS
The representatives have advised us that the underwriters propose initially
to offer the shares to the public at the initial public offering price on the
cover page of this prospectus supplement and to dealers at that price less a
concession not in excess of $ per share. The underwriters may allow, and the
dealers may reallow, a discount not in excess of $ per share to other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The following table shows the public offering price, underwriting discount
and proceeds before expenses to us. The information assumes either no exercise
or full exercise by the underwriters of their overallotment options.
<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- --------------- -----------
<S> <C> <C> <C>
Public offering price........................... $ $ $
Underwriting discount........................... $ $ $
Proceeds, before expenses, to us................ $ $ $
</TABLE>
The expenses of the offering, not including the underwriting discount, are
estimated at $350,000 and are payable by us.
S-14
<PAGE> 19
OVERALLOTMENT OPTIONS
We have granted options to the underwriters to purchase up to 750,000
additional shares at the public offering price less the underwriting discount.
The underwriters may exercise these options for 30 days from the date of this
prospectus supplement solely to cover any overallotments. If the underwriters
exercise these options, each will be obligated, subject to conditions contained
in the purchase agreement, to purchase a number of additional shares
proportionate to that underwriter's initial amount reflected in the above table.
NO SALES OF SIMILAR SECURITIES
We and our executive officers and directors have agreed, with exceptions,
not to sell or transfer any common stock for 90 days after the date of this
prospectus without first obtaining the written consent of Merrill Lynch.
Specifically, we and these other individuals have agreed not to directly or
indirectly
- offer, pledge, sell or contract to sell any common stock,
- sell any option or contract to purchase any common stock,
- purchase any option or contract to sell any common stock,
- grant any option, right or warrant for the sale of any common stock,
- lend or otherwise dispose of or transfer any common stock,
- request or demand that we file a registration statement related to the
common stock, or
- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of any common stock, whether
any such swap or transaction is to be settled by delivery of shares or
other securities, in cash or otherwise.
This lockup provision applies to common stock and to securities convertible
into or exchangeable or exercisable for or repayable with common stock. It also
applies to common stock owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later acquires the
power of disposition.
NEW YORK STOCK EXCHANGE LISTING
The shares are listed on the New York Stock Exchange under the symbol
"ATO."
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of our common stock is completed, SEC rules may
limit the underwriters from bidding for or purchasing our common stock. However,
the representatives may engage in transactions that stabilize the price of our
common stock, such as bids or purchases that peg, fix or maintain that price.
The underwriters may purchase and sell our common stock in the open market.
These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' option to purchase additional shares from the
issuer in the offering. The underwriters may close out any covered short
position by either exercising their option to purchase additional shares or
purchasing shares in the open market. In determining the source of shares to
close out the covered short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
overallotment options. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of our common stock in the open market after pricing that could adversely
affect investors who purchase in the
S-15
<PAGE> 20
offering. Stabilizing transactions consist of various bids for or purchases of
common stock made by the underwriters in the open market prior to the completion
of the offering.
The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchase shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
Similar to other purchase transactions, the underwriters' purchases to
cover the syndicate short sales may have the effect of raising or maintaining
the market price of our common stock or preventing or retarding a decline in the
market price of our common stock. As a result, the price of our common stock may
be higher than the price that might otherwise exist in the open market.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the representatives
will engage in these transactions or that these transactions, once commenced,
will not be discontinued without notice.
OTHER RELATIONSHIPS
Merrill Lynch, Pierce, Fenner & Smith Incorporated and UBS Warburg LLC have
engaged in, and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with us. They have
received customary fees and commissions for these transactions.
LEGAL MATTERS
Gibson, Dunn & Crutcher LLP, Dallas, Texas, and Hunton & Williams,
Richmond, Virginia, will opine for us as to the validity of the offered
securities. Shearman & Sterling, New York, New York, will pass upon certain
legal matters related to the offered securities for the underwriters.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended September 30, 2000, as set forth in their report, which is incorporated by
reference in this prospectus supplement and elsewhere in the prospectus. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus supplement and the accompanying prospectus that we have filed with
it. This means that we can disclose important information to you by referring
you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus supplement
and the accompanying prospectus, except for any information that is superseded
by information that is included directly in this document.
This prospectus supplement and the accompanying prospectus incorporate by
reference our Annual Report on Form 10-K for the year ended September 30, 2000,
which we have previously filed with the SEC but have not included or delivered
with this document. The Annual Report contains important information about us,
our common stock and our financial condition.
S-16
<PAGE> 21
You may obtain a copy of the Annual Report, excluding exhibits, from us
without charge by requesting it in writing or by telephone from us at the
following address or telephone number:
ATMOS ENERGY CORPORATION
1800 Three Lincoln Centre
5430 LBJ Freeway
Dallas, Texas 75240
Attention: Lynn Hord
(972) 934-9227
S-17
<PAGE> 22
PROSPECTUS
[LOGO]
ATMOS ENERGY CORPORATION
BY THIS PROSPECTUS, WE OFFER UP TO
$500,000,000
OF DEBT SECURITIES AND COMMON STOCK
----------------------
We will provide specific terms of these securities in supplements to this
prospectus. This prospectus may not be used to sell securities unless
accompanied by a prospectus supplement. You should read this prospectus and the
prospectus supplement carefully before you invest.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
----------------------
This prospectus is dated November 7, 2000
<PAGE> 23
TABLE OF CONTENTS
<TABLE>
<S> <C>
Forward-Looking Statements.................................. 1
Atmos Energy Corporation.................................... 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Securities We May Issue..................................... 4
Prospectus Supplements...................................... 4
Description of Debt Securities.............................. 4
Description of Common Stock................................. 19
Plan of Distribution........................................ 22
Legal Matters............................................... 22
Experts..................................................... 22
Where You Can Find More Information......................... 23
</TABLE>
----------------------
The terms "we," "our," and "us" refer to Atmos Energy Corporation unless
the context suggests otherwise. The term "you" refers to a prospective investor.
i
<PAGE> 24
FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus, including the documents that are
incorporated by reference as set forth in "Incorporation of Certain Documents by
Reference," that are not historical facts are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933. Forward-
looking statements are based on management's beliefs as well as assumptions made
by, and information currently available to, management. Because such statements
are based on expectations as to future economic performance and are not
statements of fact, actual results may differ materially from those projected.
Important factors that could cause future results to differ include, but are not
limited to:
- national, regional and local economic and competitive conditions,
- regulatory and business trends and decisions,
- technological developments,
- inflation rates,
- weather conditions, and
- other factors discussed in this and our other filings with the SEC.
All of these factors are difficult to predict and many are beyond our control.
Accordingly, while we believe these forward-looking statements to be reasonable,
there can be no assurance that they will approximate actual experience or that
the expectations derived from them will be realized. When used in our documents
or oral presentations, the words "anticipate," "believe," "estimate," "expect,"
"objective," "projection," "forecast," "goal" or similar words are intended to
identify forward-looking statements.
1
<PAGE> 25
ATMOS ENERGY CORPORATION
We distribute and sell natural gas to over one million residential,
commercial, industrial, agricultural and other customers. We operate through
five divisions in over 800 cities, towns and communities in service areas
located in Colorado, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana,
Missouri, Tennessee, Texas and Virginia. We also transport natural gas for
others through our distribution system.
We provide natural gas storage services and own natural gas storage fields
in Kansas and Kentucky to supplement natural gas used by customers in Kansas,
Kentucky, Tennessee and other states. We also own a 45% equity interest, and
have agreed to acquire the remaining equity interest, in Woodward Marketing,
L.L.C., a privately held company that provides gas marketing and energy
management services to industrial customers, municipalities and local
distribution companies, including our Trans Louisiana Gas Company, Western
Kentucky Gas Company and United Cities Gas Company divisions. In addition, we
market natural gas to industrial and agricultural customers primarily in West
Texas and to industrial customers in Louisiana.
HISTORY AND STRATEGY
We were organized under the laws of Texas in 1983 as Energas Company, a
subsidiary of Pioneer Corporation, for the purposes of owning and operating
Pioneer's natural gas distribution business in Texas. Immediately following the
transfer by Pioneer to us of its gas distribution business, which Pioneer and
its predecessors operated since 1906, Pioneer distributed our outstanding stock
to its shareholders. In September 1988, we changed our name from Energas Company
to Atmos Energy Corporation. As a result of our merger with United Cities Gas
Company in July 1997, we also became incorporated in Virginia.
Through the recent transactions outlined below, we have begun implementing
a strategy intended to increase our presence in our larger service areas, sell
our smaller, non-strategic natural gas utility operations and restructure our
other operations.
RECENT DEVELOPMENTS
In April 2000, we entered into an agreement with Citizens Communications
Company to acquire the Louisiana natural gas operations of its Louisiana Gas
Service Company division and its LGS Natural Gas Company subsidiary for $375
million. Louisiana Gas Service Company provides natural gas distribution service
to approximately 276,000 residential and commercial customers in approximately
190 communities in southeastern and northern Louisiana, which is an area with a
combined population of more than 600,000. Its service territory includes the
suburban areas of metropolitan New Orleans (excluding Orleans Parish), the north
shore of Lake Pontchartrain and the Monroe/West Monroe metropolitan area. LGS
Natural Gas Company provides gas transportation services to industrial customers
in Louisiana. Upon closing, we will become the largest natural gas distributor
in Louisiana, and our national customer base will increase to approximately 1.4
million customers, making us the fifth largest pure natural gas local
distribution company in the United States. The acquisition is subject to federal
and state regulatory approval.
In May 2000, we completed the acquisition of the Missouri natural gas
distribution assets of Associated Natural Gas from a subsidiary of Southwestern
Energy Corporation for $32 million. The acquisition increased our presence in
Missouri by more than 48,000 customers.
As part of our strategy to restructure our non-natural gas utility
operations, in August 2000, we formed US Propane, LLC, a joint venture combining
our propane operations with the propane operations of AGL Resources, Inc.,
Piedmont Natural Gas Company, Inc., and TECO Energy, Inc. US Propane then sold
its propane business to Heritage Propane Partners, L.P. for approximately $181
million in cash and limited partnership units of Heritage Propane Partners and
purchased all of the outstanding stock of the general partner of Heritage
Propane Partners for approximately $120 million. As a result of these
transactions, we own approximately 19% of US Propane and US Propane owns all of
the general partnership interest and approximately 34% of the limited
partnership interest in Heritage Propane
2
<PAGE> 26
Partners. Through our interest in US Propane, we indirectly own approximately
19% of the general partnership interest and approximately 6.5% of the limited
partnership interest in Heritage Propane Partners. Heritage Propane Partners now
has approximately 480,000 customers in 28 states, making it the fifth largest
retail marketer of propane in the United States, based on gallons sold.
In August 2000, we entered into an agreement with Woodward Marketing, Inc.
to acquire the 55% interest in Woodward Marketing, LLC that we do not own in
exchange for 1,423,193 restricted shares of our common stock. The consideration
is subject to an upward adjustment if our average share price does not equal $25
per share during a period immediately prior to the fifth anniversary of the
completion of the acquisition or an earlier change in control, unless during the
period beginning on the first anniversary of the completion of the acquisition
and ending on the fifth anniversary or an earlier change in control our share
price reaches $25 per share for any 30 consecutive trading-day period. The
maximum additional shares that could be issued under the adjustment provision is
232,547, plus an amount to compensate for dividends paid after the completion of
the acquisition. Upon the completion of the acquisition, our subsidiary's
guaranty of Woodward Marketing, LLC's $100 million short-term working capital
and letter of credit facility will increase from 45% to 100% of any amounts
outstanding under the facility. This transaction is subject to state and federal
regulatory approval.
In August 2000, we entered into a $485 million short-term unsecured credit
facility with an interest rate equal to the London Interbank Offered Rate, or
LIBOR, plus 0.75%. The facility provides $385 million for the acquisition of the
assets of Louisiana Gas Service Company and LGS Natural Gas Company, and $100
million to refinance existing debt which have interest rates ranging from 7.95%
to 11.20%. We also entered into a $300 million short-term unsecured credit
facility with an interest rate equal to LIBOR plus 0.625%, which replaced a $250
million short-term unsecured credit facility that had an interest rate of LIBOR
plus 0.375%. The interest rate on these new credit facilities will change if our
debt rating changes. The credit facilities contain covenants which set limits on
our ratio of debt to total capitalization and limit our ability to make
investments, pay cash dividends, incur additional indebtedness, dispose of
assets and create liens.
In October 2000, we entered into an agreement to sell all of our natural
gas utility operations in South Carolina for approximately $5.8 million. This
transaction is subject to state regulatory approval.
LOCATION OF EXECUTIVE OFFICES
Our address is 1800 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas
75240, and our telephone number is (972) 934-9227.
USE OF PROCEEDS
Except as may be stated in the applicable prospectus supplement, we intend
to use the net proceeds from the sale of the securities for general corporate
purposes, including acquisitions, in our business and related businesses and the
repayment of indebtedness. Please refer to the section entitled "Recent
Developments" for additional information about our proposed acquisitions and
recent financings.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
-------------------------------- ---------------
1999 1998 1997 1996 1995 2000 1999
---- ---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio.......................................... 1.53 2.94 1.95 2.82 2.31 2.78 2.73
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consists of the sum of our pretax income from continuing operations and fixed
charges. Fixed charges consist of interest expense,
3
<PAGE> 27
amortization of debt discount, premium and expense, capitalized interest and a
portion of lease payments considered to represent an interest factor.
SECURITIES WE MAY ISSUE
We may use this prospectus to offer up to $500,000,000 of:
- our debt securities, and
- our common stock.
PROSPECTUS SUPPLEMENTS
This prospectus provides you with a general description of the debt
securities and common stock we may offer. Each time we offer securities, we will
provide a prospectus supplement that will contain specific information about the
terms of the offering. The prospectus supplement may also add to or change
information contained in this prospectus. If so, the prospectus supplement
should be read as superseding this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information."
The prospectus supplement to be attached to the front of this prospectus
will describe the terms of any debt securities that we offer, the terms of any
common shares that we offer and any initial public offering price, the purchase
price and net proceeds that we will receive and the other specific terms related
to the offering of the securities.
For more details on the terms of the securities, you should read the
exhibits filed with our registration statement.
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities from time to time in one or more distinct
series. This section summarizes the material terms of the debt securities that
we anticipate will be common to all series. Most of the financial and other
terms of any series of debt securities that we offer and any differences from
the common terms will be described in the prospectus supplement to be attached
to the front of this prospectus. As used in this section, "we," "us" and "our"
refer to Atmos Energy Corporation and not to its subsidiaries, unless the
context otherwise requires.
As required by U.S. federal law for all bonds and notes of companies that
are publicly offered, a document called an "indenture" will govern any debt
securities that we issue. An indenture is a contract between us and a financial
institution acting as trustee on your behalf. We anticipate entering into an
indenture with SunTrust Bank, which will act as trustee. The indenture will be
subject to the Trust Indenture Act of 1939. The trustee has the following two
main roles:
- the trustee can enforce your rights against us if we default; there are
some limitations on the extent to which the trustee acts on your behalf
which are described later in this prospectus, and
- the trustee will perform certain administrative duties for us, which
include sending you interest payments and notices.
As this section is a summary of the material terms of the form of
indenture, it does not describe every aspect of the debt securities. We urge you
to read the indenture because it, and not this description, will define your
rights as a holder of debt securities. For example, in this section, we use
capitalized words to signify terms that are specifically defined in the form of
indenture. Some of the definitions are repeated in this prospectus, but for the
rest you will need to read the indenture. We have filed or will file the form of
indenture, the final indenture and any supplements to it as exhibits to the
registration statement that we have filed with the SEC, or as an exhibit to the
annual, quarterly or other reports that we file with the
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SEC. See "Where You Can Find More Information," for information on how to obtain
copies of the indenture and any supplements. References to the "indenture" in
this prospectus mean the form of indenture we have filed as an exhibit to the
registration statement relating to this offering that we have filed with the
SEC.
GENERAL
The debt securities will be our unsecured obligations and will rank equally
with all of our other unsecured and unsubordinated Indebtedness.
You should read the prospectus supplement for the following terms of the
series of debt securities offered by the prospectus supplement. Our board of
directors will establish the following terms before issuance of the series:
- the title of the debt securities,
- the aggregate principal amount of the debt securities, the percentage of
their principal amount at which the debt securities will be issued, and
the date or dates when the principal of the debt securities will be
payable or how those dates will be determined,
- the interest rate or rates, which may be fixed or variable, that the debt
securities will bear, if any, and how the rate or rates will be
determined,
- the date or dates from which any interest will accrue or how the date or
dates will be determined, the date or dates on which any interest will be
payable, any regular record dates for these payments or how these dates
will be determined and the basis on which any interest will be
calculated, if other than on the basis of a 360-day year of twelve 30-day
months,
- the place or places, if any, other than or in addition to New York City,
of payment, transfer or exchange of the debt securities, and where
notices or demands to or upon us in respect of the debt securities may be
served,
- any optional redemption provisions,
- any sinking fund or other provisions that would obligate us to repurchase
or redeem the debt securities,
- whether the amount of payments of principal of, any premium on, or
interest on the debt securities will be determined with reference to an
index, formula or other method, which could be based on one or more
commodities, equity indices or other indices, and how these amounts will
be determined,
- any changes or additions to the events of default or our covenants with
respect to the debt securities,
- if not the principal amount of the debt securities, the portion of the
principal amount that will be payable upon acceleration of the maturity
of the debt securities or how that portion will be determined,
- any changes or additions to the provisions concerning defeasance and
covenant defeasance contained in the indenture that will be applicable to
the debt securities,
- any provisions granting special rights to the holders of the debt
securities upon the occurrence of specified events,
- if other than the trustee, the name of the paying agent, security
registrar or transfer agent for the debt securities,
- if we do not issue the debt securities in book-entry form only to be held
by The Depository Trust Company, as depository, whether we will issue the
debt securities in global form or fully registered form and the identity
of any alternative depository,
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- the person to whom any interest in a debt security will be payable, if
other than the registered holder at the close of business on the regular
record date,
- the denomination or denominations in which the debt securities will be
issued, if other than denominations of $1,000 or any integral multiples,
- any provisions requiring us to pay Additional Amounts on the debt
securities to any holder who is not a United States person in respect of
any tax, assessment or governmental charge and, if so, whether we will
have the option to redeem the debt securities rather than pay the
Additional Amounts, and
- any other material terms of the debt securities or the indenture, which
may not be consistent with the terms set forth in this prospectus.
For purposes of this prospectus, any reference to the payment of principal
of, any premium on, or interest on the debt securities will include Additional
Amounts if required by the terms of the debt securities.
The indenture will not limit the amount of debt securities that we are
authorized to issue from time to time. The indenture will also provide that
there may be more than one trustee thereunder, each for one or more series of
debt securities. If a trustee is acting under the indenture with respect to more
than one series of debt securities, the debt securities for which it is acting
would be treated as if issued under separate indentures. If there is more than
one trustee under the indenture, the powers and trust obligations of each
trustee will apply only to the debt securities of the separate series for which
it is trustee.
We may issue debt securities with terms different from those of debt
securities already issued. Without the consent of the holders of the outstanding
debt securities, we may reopen a previous issue of a series of debt securities
and issue additional debt securities of that series unless the reopening was
restricted when we created that series.
There is no requirement that we issue debt securities in the future under
the indenture, and we may use other indentures or documentation, containing
different provisions in connection with future issues of other debt securities.
We may issue the debt securities as "Original Issue Discount Securities,"
which are debt securities, including any zero-coupon debt securities, that are
issued and sold at a discount from their stated principal amount. Original Issue
Discount Securities provide that, upon acceleration of their maturity, an amount
less than their principal amount will become due and payable. We will describe
the U.S. federal income tax consequences and other considerations applicable to
original issue discount securities in any prospectus supplement relating to
them.
HOLDERS OF DEBT SECURITIES
Book-Entry Holders. We will issue debt securities in book-entry form only,
unless we specify otherwise in the applicable prospectus supplement. This means
debt securities will be represented by one or more global securities registered
in the name of a financial institution that holds them as depository on behalf
of other financial institutions that participate in the depository's book-entry
system. These participating institutions, in turn, hold beneficial interests in
the debt securities on behalf of themselves or their customers.
Under the indenture, we will recognize as a holder only the person in whose
name a debt security is registered. Consequently, for debt securities issued in
global form, we will recognize only the depository as the holder of the debt
securities and we will make all payments on the debt securities to the
depository. The depository passes along the payments it receives to its
participants, which in turn pass the payments along to their customers who are
the beneficial owners.
The depository and its participants do so under agreements they have made
with one another or with their customers; they are not obligated to do so under
the terms of the debt securities.
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As a result, you will not own debt securities directly. Instead, you will
own beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depository's book-entry system or
holds an interest through a participant. As long as the debt securities are
issued in global form, you will be an indirect holder, and not a holder, of the
debt securities.
Street Name Holders. In the future we may terminate a global security or
issue debt securities initially in non-global form. In these cases, you may
choose to hold your debt securities in your own name or in "street name." Debt
securities held in street name would be registered in the name of a bank, broker
or other financial institution that you choose, and you would hold only a
beneficial interest in those debt securities through an account you maintain at
that institution.
For debt securities held in street name, we will recognize only the
intermediary banks, brokers and other financial institutions in whose names the
debt securities are registered as the holders of those debt securities, and we
will make all payments on those debt securities to them. These institutions pass
along the payments they receive to their customers who are the beneficial
owners, but only because they agree to do so in their customer agreements or
because they are legally required to do so. If you hold debt securities in
street name you will be an indirect holder, and not a holder, of those debt
securities.
Legal Holders. Our obligations, as well as the obligations of the trustee
and those of any third parties employed by us or the trustee, run only to the
legal holders of the debt securities. We do not have obligations to you if you
hold beneficial interests in global securities, in street name or by any other
indirect means. This will be the case whether you choose to be an indirect
holder of a debt security or have no choice because we are issuing the debt
securities only in global form.
For example, once we make a payment or give a notice to the holder, we have
no further responsibility for the payment or notice even if that holder is
required, under agreements with depository participants or customers or by law,
to pass it along to the indirect holders but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose (for example, to
amend the indenture or to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of the indenture) we would seek
the approval only from the holders, and not the indirect holders, of the debt
securities. Whether and how the holders contact the indirect holders is up to
the holders.
When we refer to you, we mean those who invest in the debt securities being
offered by this prospectus, whether they are the holders or only indirect
holders of those debt securities. When we refer to your debt securities, we mean
the debt securities in which you hold a direct or indirect interest.
Special Considerations for Indirect Holders. If you hold debt securities
through a bank, broker or other financial institution, either in book-entry form
or in street name, you should check with your own institution to find out:
- how it handles securities payments and notices,
- whether it imposes fees or charges,
- how it would handle a request for the holders' consent, if ever required,
- whether and how you can instruct it to send you debt securities
registered in your own name so you can be a holder, if that is permitted
in the future,
- how it would exercise rights under the debt securities if there were a
default or other event triggering the need for holders to act to protect
their interests, and
- if the debt securities are in book-entry form, how the depository's rules
and procedures will affect these matters.
GLOBAL SECURITIES
What is a Global Security? We will issue each debt security under the
indenture in book-entry form only, unless we specify otherwise in the applicable
prospectus supplement. A global security represents one
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or any other number of individual debt securities. Generally, all debt
securities represented by the same global securities will have the same terms.
We may, however, issue a global security that represents multiple debt
securities that have different terms and are issued at different times. We call
this kind of global security a master global security.
Each debt security issued in book-entry form will be represented by a
global security that we deposit with and register in the name of a financial
institution or its nominee that we select. The financial institution that we
select for this purpose is called the depository. Unless we specify otherwise in
the applicable prospectus supplement, The Depository Trust Company, New York,
New York, known as DTC, will be the depository for all debt securities issued in
book-entry form.
A global security may not be transferred to or registered in the name of
anyone other than the depository or its nominee, unless special termination
situations arise. We describe those situations below under "Special Situations
When a Global Security Will Be Terminated." As a result of these arrangements,
the depository, or its nominee, will be the sole registered owner and holder of
all debt securities represented by a global security, and investors will be
permitted to own only beneficial interests in a global security. Beneficial
interests must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the depository or with
another institution that does. Thus, if your security is represented by a global
security, you will not be a holder of the debt security, but only an indirect
holder of a beneficial interest in the global security.
Special Considerations for Global Securities. As an indirect holder, your
rights relating to a global security will be governed by the account rules of
your financial institution and of the depository, as well as general laws
relating to securities transfers. We do not recognize an indirect holder as a
holder of debt securities and instead deal only with the depository that holds
the global security.
If we issue debt securities only in the form of a global security, you
should be aware of the following:
- you cannot cause the debt securities to be registered in your name, and
cannot obtain non-global certificates for your interest in the debt
securities, except in the special situations that we describe below,
- you will be an indirect holder and must look to your own bank or broker
for payments on the debt securities and protection of your legal rights
relating to the debt securities, as we describe under "Holders of Debt
Securities" above,
- you may not be able to sell interests in the debt securities to some
insurance companies and to other institutions that are required by law to
own their securities in non-book-entry form,
- you may not be able to pledge your interest in a global security in
circumstances where certificates representing the debt securities must be
delivered to the lender or other beneficiary of the pledge in order for
the pledge to be effective,
- the depository's policies, which may change from time to time, will
govern payments, transfers, exchanges and other matters relating to your
interest in a global security. We and the trustee have no responsibility
for any aspect of the depository's actions or for its records of
ownership interests in a global security. We and the trustee also do not
supervise the depository in any way,
- DTC requires that those who purchase and sell interests in a global
security within its book-entry system use immediately available funds and
your broker or bank may require you to do so as well, and
- financial institutions that participate in the depository's book-entry
system, and through which you hold your interest in a global security,
may also have their own policies affecting payments, notices and other
matters relating to the debt security. Your chain of ownership may
contain more than one financial intermediary. We do not monitor and are
not responsible for the actions of any of those intermediaries.
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Special Situations When a Global Security Will Be Terminated. In a few
special situations described below, a global security will be terminated and
interests in it will be exchanged for certificates in non-global form
representing the debt securities it represented. After that exchange, the choice
of whether to hold the debt securities directly or in street name will be up to
you. You must consult your own bank or broker to find out how to have your
interests in a global security transferred on termination to your own name, so
that you will be a holder. We have described the rights of holders and street
name investors above under "Holders of Debt Securities."
The special situations for termination of a global security are as follows:
- if the depository notifies us that it is unwilling, unable or no longer
qualified to continue as depository for that global security and we do
not appoint another institution to act as depository within 60 days,
- if we notify the trustee that we wish to terminate that global security,
or
- if an event of default has occurred with regard to debt securities
represented by that global security and has not been cured or waived; we
discuss defaults later under "Events of Default."
If a global security is terminated, only the depository, and not we or the
trustee, is responsible for deciding the names of the institutions in whose
names the debt securities represented by the global security will be registered
and, therefore, who will be the holders of those debt securities.
COVENANTS
Limitations on Liens. We will covenant in the indenture that we will not,
and will not permit any of our Restricted Subsidiaries to, create, incur, issue
or assume any Indebtedness secured by any Lien on any Principal Property, or on
shares of stock or Indebtedness of any Restricted Subsidiary, known as
Restricted Securities, without making effective provision for the outstanding
debt securities, other than any outstanding debt securities not entitled to this
covenant, to be secured by the Lien equally and ratably with, or prior to, the
Indebtedness and obligations secured or to be secured thereby for so long as the
Indebtedness or obligations are so secured, except that the foregoing
restriction will not apply to:
- any Lien existing on the date of the first issuance of debt securities
under the indenture, including the Liens on property or after-acquired
property of ours or our Subsidiaries under the Greeley Indenture or the
United Cities Indenture, or such other date as may be specified in a
prospectus supplement for an applicable series of debt securities,
- any Lien on any Principal Property or Restricted Securities of any person
existing at the time that person is merged or consolidated with or into
us or a Restricted Subsidiary, or this person becomes a Restricted
Subsidiary, or arising thereafter otherwise than in connection with the
borrowing of money arranged thereafter and pursuant to contractual
commitments entered into prior to and not in contemplation of the
person's becoming a Restricted Subsidiary,
- any Lien on any Principal Property existing at the time we or a
Restricted Subsidiary acquire the Principal Property, whether or not the
Lien is assumed by us or the Restricted Subsidiary, provided that this
Lien may not extend to any other Principal Property of ours or any
Restricted Subsidiary,
- any Lien on any Principal Property, including any improvements on an
existing Principal Property, of ours or any Restricted Subsidiary, and
any Lien on the shares of stock of a Restricted Subsidiary that was
formed or is held for the purpose of acquiring and holding the Principal
Property, in each case to secure all or any part of the cost of
acquisition, development, operation, construction, alteration, repair or
improvement of all or any part of the Principal Property, or to secure
Indebtedness incurred by us or a Restricted Subsidiary for the purpose of
financing all or any part of that cost, provided that the Lien is created
prior to, at the time of, or within 12 months after the latest of, the
acquisition, completion of construction or improvement or commencement of
commercial operation of that Principal Property and, provided further,
that the Lien may not
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extend to any other Principal Property of ours or any Restricted Subsidiary,
other than any currently unimproved real property on which the Principal
Property has been constructed or developed or the improvement is located,
- any Lien on any Principal Property or Restricted Securities to secure
Indebtedness owed to us or to a Restricted Subsidiary,
- any Lien in favor of a governmental body to secure advances or other
payments under any contract or statute or to secure Indebtedness incurred
to finance the purchase price or cost of constructing or improving the
property subject to the Lien,
- any Lien created in connection with a project financed with, and created
to secure, Non-Recourse Indebtedness,
- any Lien required to be placed on any of our property or any of the
property of our Subsidiaries under the provisions of the Greeley
Indenture, the United Cities Indenture or the Note Purchase Agreements,
- any extension, renewal, substitution or replacement, or successive
extensions, renewals, substitutions or replacements, in whole or in part,
of any Lien referred to in any of the bullet points above, provided that
the Indebtedness secured may not exceed the principal amount of
Indebtedness that is secured at the time of the renewal or refunding, and
that the renewal or refunding Lien must be limited to all or any part of
the same property and improvements, shares of stock or Indebtedness that
secured the Lien that was renewed or refunded, or
- any Lien not permitted above securing Indebtedness that, together with
the aggregate outstanding principal amount of other secured Indebtedness
that would otherwise be subject to the above restrictions, excluding
Indebtedness secured by Liens permitted under the above exceptions, and
the Attributable Debt in respect of all Sale and Leaseback Transactions,
not including Attributable Debt in respect of any Sale and Leaseback
Transactions described in the last two bullet points in the next
succeeding paragraph, would not then exceed 15% of our Consolidated Net
Tangible Assets.
Limitation on Sale and Leaseback Transactions. We will covenant in the
indenture that we will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction unless
- we or a Restricted Subsidiary would be entitled, without securing the
Outstanding Securities, to incur Indebtedness secured by a Lien on the
Principal Property that is the subject of the Sale and Leaseback
Transaction,
- the Attributable Debt associated with the Sale and Leaseback Transaction
would be in an amount permitted under the last bullet point of the
preceding paragraph,
- the proceeds received in respect of the Principal Property so sold and
leased back at the time of entering into the Sale and Leaseback
Transaction are used for our business and operations or the business and
operations of any Subsidiary, or
- within 12 months after the sale or transfer, an amount equal to the
proceeds received in respect of the Principal Property sold and leased
back at the time of entering into the Sale and Leaseback Transaction is
applied to the prepayment, other than mandatory prepayment, of any
Outstanding Securities or any Funded Indebtedness owed by us or a
Restricted Subsidiary, other than Funded Indebtedness that is held by us
or any Restricted Subsidiary or our Funded Indebtedness that is
subordinate in right of payment to any Outstanding Securities.
Definitions. Following are definitions of some of the terms used in the
covenants described above.
"Attributable Debt" means, as to any lease under which a person is at the
time liable for rent, at a date that liability is to be determined, the total
net amount of rent required to be paid by that person
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under the lease during the remaining term, excluding amounts required to be paid
on account of maintenance and repairs, services, insurance, taxes, assessments,
water rates and similar charges and contingent rents, discounted from the
respective due dates thereof at the weighted average of the rates of interest,
or Yield to Maturity, in the case of Original Issue Discount Securities, borne
by the then Outstanding Securities, compounded annually.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests, however
designated, in stock issued by a corporation.
"Consolidated Net Tangible Assets" means the aggregate amount of assets,
less applicable reserves and other properly deductible items, after deducting
- all current liabilities, excluding any portion thereof constituting
Funded Indebtedness, and
- all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles,
all as set forth on our most recent consolidated balance sheet contained in our
latest quarterly or Annual Report filed with the SEC under the Securities
Exchange Act of 1934 and computed in accordance with generally accepted
accounting principles.
"Funded Indebtedness" means, as applied to any person, all Indebtedness of
the person maturing after, or renewable or extendible at the option of the
person beyond, 12 months from the date of determination.
"Greeley Indenture" means the Indenture of Mortgage and Deed of Trust,
dated as of March 1, 1957, from Greeley Gas Company to U.S. Bank National
Association, formerly The Central Bank and Trust Company, as Trustee, as amended
and supplemented through December 1, 1993, the Indenture of Mortgage and Deed of
Trust through the Tenth Supplemental Indenture by Atmos to U.S. Bank National
Association, formerly The Central Bank and Trust Company, as Trustee, as
amended, supplemented or otherwise modified from time to time.
"Indebtedness" means obligations for money borrowed, evidenced by notes,
bonds, debentures or other similar evidences of indebtedness.
"Lien" means any lien, mortgage, pledge, encumbrance, charge or security
interest securing Indebtedness; provided, however, that the following types of
transactions will not be considered, for purposes of this definition, to result
in a Lien:
- any acquisition by us or any Restricted Subsidiary of any property or
assets subject to any reservation or exception under the terms of which
any vendor, lessor or assignor creates, reserves or excepts or has
created, reserved or excepted an interest in oil, gas or any other
mineral in place or the proceeds of that interest,
- any conveyance or assignment whereby we or any Restricted Subsidiary
conveys or assigns to any person or persons an interest in oil, gas or
any other mineral in place or the proceeds of that interest,
- any Lien upon any property or assets either owned or leased by us or a
Restricted Subsidiary or in which we or any Restricted Subsidiary owns an
interest that secures for the benefit of the person or persons paying the
expenses of developing or conducting operations for the recovery,
storage, transportation or sale of the mineral resources of the property
or assets, or property or assets with which it is unitized, the payment
to the person or persons of our proportionate part or the Restricted
Subsidiary's proportionate part of the development or operating expenses,
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- any hedging arrangements entered into in the ordinary course of business,
including any obligation to deliver any mineral, commodity or asset, or
- any guarantees that we make for the repayment of Indebtedness of any
Subsidiary or guarantees by any Subsidiary of the repayment of
Indebtedness of any entity, including Indebtedness of Woodward Marketing,
L.L.C.
"Non-Recourse Indebtedness" means, at any time, Indebtedness incurred after
the date of the indenture by us or a Restricted Subsidiary in connection with
the acquisition of property or assets by us or a Restricted Subsidiary or the
financing of the construction of or improvements on property, whenever acquired,
provided that, under the terms of this Indebtedness and under applicable law,
the recourse at the time and thereafter of the lenders with respect to this
Indebtedness is limited to the property or assets so acquired, or the
construction or improvements, including Indebtedness as to which a performance
or completion guarantee or similar undertaking was initially applicable to the
Indebtedness or the related property or assets if the guarantee or similar
undertaking has been satisfied and is no longer in effect. Indebtedness which is
otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse
Indebtedness because there is recourse to the borrower, any guarantor or any
other person for (a) environmental representations, warranties or indemnities,
or (b) indemnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received from secured assets to be paid to the
lender, waste and mechanics' liens or similar matters.
"Note Purchase Agreements" refers to the following note purchase
agreements, as amended, supplemented or otherwise modified from time to time,
between us and the following parties:
- John Hancock Mutual Life Insurance Company, dated December 21, 1987,
- Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T
Corporation, dated January 1, 1984, for Employee Pension
Plans -- AT&T -- John Hancock -- Private Placement, dated December 21,
1987, which agreement is identical to the Hancock agreement listed above
except for the parties and the amounts,
- John Hancock Mutual Life Insurance Company, dated October 11, 1989,
- The Variable Annuity Life Insurance Company, dated August 29, 1991,
- The Variable Annuity Life Insurance Company, dated August 31, 1992, and
- New York Life Insurance Company, New York Life Insurance and Annuity
Corporation, The Variable Annuity Life Insurance Company, American
General Life Insurance Company and Merit Life Insurance Company, dated
November 14, 1994.
"Principal Property" means any natural gas distribution property or propane
property located in the United States, except any property that in the opinion
of our board of directors is not of material importance to the total business
conducted by us and of our consolidated Subsidiaries.
"Restricted Subsidiary" means any Subsidiary the amount of Consolidated Net
Tangible Assets of which constitutes more than 5% of the aggregate amount of
Consolidated Net Tangible Assets of us and our Subsidiaries.
"Sale and Leaseback Transaction" means any arrangement with any person in
which we or any Restricted Subsidiary leases any Principal Property that has
been or is to be sold or transferred by us or the Restricted Subsidiary to that
person, other than
- a lease for a term, including renewals at the option of the lessee, of
not more than three years or classified as an operating lease under
generally accepted accounting principles,
- leases between us and a Restricted Subsidiary or between Restricted
Subsidiaries, and
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- leases of a Principal Property executed by the time of, or within 12
months after the latest of, the acquisition, the completion of
construction or improvement, or the commencement of commercial operation,
of the Principal Property.
"Subsidiary" of ours means
- a corporation, a majority of whose Capital Stock with rights, under
ordinary circumstances, to elect directors is owned, directly or
indirectly, at the date of determination, by us, by one or more of our
Subsidiaries or by us and one or more of our Subsidiaries, or
- any other person, other than a corporation, in which at the date of
determination we, one or more of our Subsidiaries or we and one or more
of our Subsidiaries, directly or indirectly, have at least a majority
ownership and power to direct the policies, management and affairs of
that person.
"United Cities Indenture" means the Indenture of Mortgage, dated as of July
15, 1959, from United Cities Gas Company to U.S. Bank Trust National
Association, formerly First Trust of Illinois, National Association, and M.J.
Kruger, as Trustees, as amended, supplemented or otherwise modified from time to
time, the Indenture of Mortgage through the Twenty-Second Supplemental Indenture
by us to U.S. Bank Trust National Association, formerly First Trust National
Association, and Russell C. Bergman, as Trustees, as amended, supplemented, or
otherwise modified from time to time.
CONSOLIDATION, MERGER OR SALE OF ASSETS
Under the terms of the indenture, we are generally permitted to consolidate
with or merge into another entity. We are also permitted to sell or transfer our
assets substantially as an entirety to another entity. However, we may not take
any of these actions unless all of the following conditions are met:
- the resulting entity must agree to be legally responsible for all our
obligations under the debt securities and the indenture,
- the transaction must not cause a default or an Event of Default,
- the resulting entity must be organized under the laws of the United
States or one of the states or the District of Columbia, and
- we must deliver an officers' certificate and legal opinion to the trustee
with respect to the transaction.
In the event that we engage in one of these transactions and comply with
the conditions listed above, we would be discharged from all our obligations and
covenants under the indenture and all obligations under the Outstanding
Securities, with the successor corporation or person succeeding to our
obligations and covenants.
In the event that we engage in one of these transactions, the indenture
provides that, if any Principal Property or Restricted Securities would
thereupon become subject to any Lien, the debt securities, other than any debt
securities not entitled to the benefit of specified covenants, must be secured,
as to such Principal Property or Restricted Securities, equally and ratably
with, or prior to, the indebtedness or obligations that upon the occurrence of
such transaction would become secured by the Lien, unless the Lien could be
created under the indenture without equally and ratably securing the debt
securities.
MODIFICATION OR WAIVER
There are two types of changes that we can make to the indenture and the
debt securities.
Changes Requiring Majority Approval. First, there are changes that we
cannot make to the indenture or the debt securities under the indenture without
the specific written approval of the holders of
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not less than a majority in principal amount of all outstanding debt securities
of each series affected by the change. We cannot:
- change the stated maturity of the principal of, any premium on, or the
interest on a debt security,
- change any of our obligations to pay Additional Amounts,
- reduce the amount payable upon acceleration of maturity following the
default of an Indexed Indenture security or an Original Issue Discount
Security,
- adversely affect any right of repayment at your option,
- change the place of payment of a debt security,
- impair your right to sue for payment,
- adversely affect any right to convert or exchange a debt security,
- reduce the percentage of holders of debt securities whose consent is
needed to modify or amend the indenture,
- reduce the percentage of holders of debt securities whose consent is
needed to waive compliance with any provisions of the indenture or to
waive any defaults, and
- modify any of the provisions of the indenture dealing with modification
and waiver in any other respect, except to increase any percentage of
consents required to amend the indenture or for any waiver or to add to
the provisions that cannot be modified without the approval of each
affected holder.
The same majority approval would be required for us to obtain a waiver of
any of our covenants in the indenture.
Changes Not Requiring Approval. The second type of change does not require
any vote by the holders of the debt securities. This type is limited to
clarifications and certain other changes that would not adversely affect holders
of the outstanding debt securities in any material respect. Nor do we need any
approval to make any change that affects only debt securities to be issued under
the indenture after the changes take effect.
Further Details Concerning Voting. When taking a vote, we will use the
following rules to decide how much principal amount to attribute to a debt
security:
- for Original Issue Discount Securities, we will use the principal amount
that would be due and payable on the voting date if the maturity of the
debt securities were accelerated to that date because of a default, and
- for debt securities whose principal amount is not known (for example,
because it is based on an index) we will use a special rule for that debt
security described in the prospectus supplement.
Debt securities will not be considered outstanding, and therefore not
eligible to vote, if we have deposited or set aside in trust money for their
payment or redemption. Debt securities will also not be eligible to vote if they
have been fully defeased as described later under "Defeasance and Covenant
Defeasance."
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE
THE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
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EVENTS OF DEFAULT
You will have special rights if an Event of Default occurs as to the debt
securities of your series that is not cured, as described later in this
subsection. Please refer to the prospectus supplement for information about any
changes to the Events of Default or our covenants, including any addition of a
covenant or other provision providing event risk or similar protection.
What is an Event of Default? The term "Event of Default" as to the debt
securities of your series means any of the following:
- we do not pay interest on a debt security of the series within 30 days of
its due date,
- we do not pay the principal of or any premium, if any, on a debt security
of the series on its due date,
- we do not deposit any sinking fund payment when and as due by the terms
of any debt securities requiring such payment,
- we remain in breach of a covenant or agreement in the indenture, other
than a covenant or agreement for the benefit of less than all of the
holders of the debt securities, for 60 days after we receive written
notice stating that we are in breach from the trustee or the holders of
at least 25% of the principal amount of the debt securities of the
series,
- we or a Restricted Subsidiary of ours is in default under any matured or
accelerated agreement or instrument under which we have outstanding
Indebtedness for borrowed money or guarantees, which individually are in
excess of $25,000,000, and we have not cured any acceleration within 15
days after we receive notice of this default from the trustee or the
holders of at least 25% of the principal amount of the debt securities of
the series, unless prior to the entry of judgment for the trustee, we or
the Restricted Subsidiary remedy the default or the default is waived by
the holders of the indebtedness,
- we file for bankruptcy or other events of bankruptcy, insolvency or
reorganization occur, or
- any other Event of Default provided for the benefit of debt securities of
the series.
An Event of Default for a particular series of debt securities will not
necessarily constitute an Event of Default for any other series of debt
securities issued under the indenture.
The trustee may withhold notice to the holders of debt securities of a
particular series of any default if it considers its withholding of notice to be
in the interest of the holders of that series, except that the trustee may not
withhold notice of a default in the payment of the principal of, any premium on,
or the interest on the debt securities.
Remedies if an Event of Default Occurs. If an event of default has
occurred and is continuing, the trustee or the holders of 25% in principal
amount of the debt securities of the affected series may declare the entire
principal amount of all the debt securities of that series to be due and
immediately payable by notifying us, and the trustee, if the holders give
notice, in writing. This is called a declaration of acceleration of maturity.
If the maturity of any series of debt securities is accelerated and a
judgment for payment has not yet been obtained, the holders of a majority in
principal amount of the debt securities of that series may cancel the
acceleration upon our compliance with certain conditions.
Except in cases of default, where the trustee has some special duties, the
trustee is not required to take any action under the indenture at the request of
any holders unless the holders offer the trustee reasonable protection from
expenses and liability. This is called an indemnity. If reasonable indemnity is
provided, the holders of a majority in principal amount of the outstanding debt
securities of the relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any remedy available
to the trustee. The trustee may refuse to follow those directions in certain
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circumstances. No delay or omission in exercising any right or remedy will be
treated as a waiver of that right, remedy or Event of Default.
Before you are allowed to bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your rights or protect
your interest relating to the debt securities, the following must occur:
- you must give the trustee written notice that an Event of Default has
occurred and remains uncured,
- the holders of 25% in principal amount of all outstanding debt securities
of the relevant series must make a written request that the trustee take
action because of the default and must offer reasonable indemnity to the
trustee against the cost and other liabilities of taking that action,
- the trustee must not have instituted a proceeding for 60 days after
receipt of the above notice and offer of indemnity, and
- the holders of a majority in principal amount of the debt securities must
not have given the trustee a direction inconsistent with the above notice
during the 60-day period.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt securities on or after the due date without complying
with the foregoing.
Holders of a majority in principal amount of the debt securities of the
affected series may waive any past defaults other than the following:
- the payment of principal, any premium, interest or Additional Amounts on
any debt security or related coupon, or
- in respect of a covenant that under the indenture cannot be modified or
amended without the consent of each holder.
Each year, we will furnish the trustee with a written statement of two of
our officers certifying that, to their knowledge, we are in compliance with the
indenture and the debt securities, or else specifying any default.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE
TRUSTEE AND HOW TO DECLARE OR CANCEL AN ACCELERATION.
DEFEASANCE AND COVENANT DEFEASANCE
Unless we provide otherwise in the applicable prospectus supplement, the
provisions for full defeasance and covenant defeasance described below apply to
each series of debt securities. In general, we expect these provisions to apply
to each debt security that is not a floating rate or indexed debt security.
Full Defeasance. If there is a change in U.S. federal tax law, as
described below, we can legally release ourselves from all payment and other
obligations on the debt securities, called "full defeasance," if we put in place
the following arrangements for you to be repaid:
- we must deposit in trust for the benefit of all holders of the debt
securities a combination of money and obligations issued or guaranteed by
the U.S. government that will generate enough cash to make interest,
principal and any other payments on the debt securities on their various
due dates, and
- we must deliver to the trustee a legal opinion confirming that there has
been a change in current federal tax law or an IRS ruling that lets us
make the above deposit without causing you to be taxed on the debt
securities any differently than if we did not make the deposit and just
repaid the debt securities ourselves at maturity. Under current federal
tax law, the deposit and our legal
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release from the debt securities would be treated as though we paid you
your share of the cash and notes or bonds at the time the cash and notes
or bonds are deposited in trust in exchange for your debt securities, and
you would recognize gain or loss on the debt securities at the time of
the deposit.
If we ever did accomplish defeasance, as described above, you would have to
rely solely on the trust deposit for repayment of the debt securities. You could
not look to us for repayment in the event of any shortfall. Conversely, the
trust deposit would most likely be protected from claims of our lenders and
other creditors if we ever become bankrupt or insolvent. If we accomplish a
defeasance, we would retain only the obligations to register the transfer or
exchange of the debt securities, to maintain an office or agency in respect of
the debt securities and to hold moneys for payment in trust.
Covenant Defeasance. Under current federal tax law, we can make the same
type of deposit described above and be released from the restrictive covenants
in the indenture discussed above and specified in a prospectus supplement. This
is called "covenant defeasance." In that event, you would lose the protection of
those covenants but would gain the protection of having money and obligations
issued or guaranteed by the U.S. government set aside in trust to repay the debt
securities. In order to achieve covenant defeasance, we must do the following:
- deposit in trust for your benefit and the benefit of all other direct
holders of the debt securities a combination of money and obligations
issued or guaranteed by the U.S. government that will generate enough
cash to make interest, principal and any other payments on the debt
securities on their various due date, and
- deliver to the trustee a legal opinion of our counsel confirming that,
under current federal income tax law, we may make the above deposit
without causing you to be taxed on the debt securities any differently
than if we did not make the deposit and just repaid the debt securities
ourselves at maturity.
If we accomplish covenant defeasance, you can still look to us for
repayment of the debt securities if there were a shortfall in the trust deposit
or the trustee is prevented from making payment. In fact, if one of the
remaining Events of Default occurred, such as our bankruptcy, and the debt
securities became immediately due and payable, there may be a shortfall.
Depending on the event causing the default, you may not be able to obtain
payment of the shortfall.
DEBT SECURITIES ISSUED IN NON-GLOBAL FORM
If the debt securities cease to be issued in global form, they will be
issued:
- only in fully registered form,
- without interest coupons, and
- unless we indicate otherwise in the prospectus supplement, in
denominations of $1,000 and amounts that are multiples of $1,000.
Holders may exchange their debt securities that are not in global form for
debt securities of smaller denominations or combined into fewer debt securities
of larger denominations, as long as the total principal amount is not changed.
Holders may exchange or transfer their debt securities at the office of the
trustee. We will appoint the trustee to act as our agent for registering debt
securities in the names of holders transferring debt securities. We may appoint
another entity to perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or
exchange their debt securities, but they may be required to pay for any tax or
other governmental charge associated with the transfer or
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exchange. The transfer or exchange will be made only if our transfer agent is
satisfied with the holder's proof of legal ownership.
If we have designated additional transfer agents for your debt security,
they will be named in your prospectus supplement. We may appoint additional
transfer agents or cancel the appointment of any particular transfer agent. We
may also approve a change in the office through which any transfer agent acts.
If any debt securities are redeemable and we redeem less than all those
debt securities, we may stop the transfer or exchange of those debt securities
during the period beginning 15 days before the day we mail the notice of
redemption and ending on the day of that mailing, in order to freeze the list of
holders to prepare the mailing. We may also refuse to register transfers or
exchanges of any debt securities selected for redemption, except that we will
continue to permit transfers and exchanges of the unredeemed portion of any debt
security that will be partially redeemed.
If a debt security is issued as a global security, only the depository will
be entitled to transfer and exchange the debt security as described in this
subsection, since it will be the sole holder of the debt security.
PAYMENT MECHANICS
Who Receives Payment? If interest is due on a debt security on an interest
payment date, we will pay the interest to the person or entity in whose name the
debt security is registered at the close of business on the regular record date,
discussed below, relating to the interest payment date. If interest is due at
maturity but on a day that is not an interest payment date, we will pay the
interest to the person or entity entitled to receive the principal of the debt
security. If principal or another amount besides interest is due on a debt
security at maturity, we will pay the amount to the holder of the debt security
against surrender of the debt security at a proper place of payment, or, in the
case of a global security, in accordance with the applicable policies of the
depository.
Payments on Global Securities. We will make payments on a global security
in accordance with the applicable policies of the depository as in effect from
time to time. Under those policies, we will pay directly to the depository, or
its nominee, and not to any indirect holders who own beneficial interests in the
global security. An indirect holder's right to those payments will be governed
by the rules and practices of the depository and its participants, as described
under "What Is a Global Security?".
Payments on Non-Global Securities. For a debt security in non-global form,
we will pay interest that is due on an interest payment date by check mailed on
the interest payment date to the holder at his or her address shown on the
trustee's records as of the close of business on the regular record date. We
will make all other payments by check, at the paying agent described below,
against surrender of the debt security. We will make all payments by check in
next-day funds; for example, funds that become available on the day after the
check is cashed.
Alternatively, if a non-global security has a face amount of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City on the due date. To request wire payment, the
holder must give the paying agent appropriate transfer instructions at least
five business days before the requested wire payment is due. In the case of any
interest payment due on an interest payment date, the instructions must be given
by the person who is the holder on the relevant regular record date. In the case
of any other payment, we will make payment only after the debt security is
surrendered to the paying agent. Any wire instructions, once properly given,
will remain in effect unless and until new instructions are given in the manner
described above.
Regular Record Dates. We will pay interest to the holders listed in the
trustee's records as the owners of the debt securities at the close of business
on a particular day in advance of each interest payment date. We will pay
interest to these holders if they are listed as the owner even if they no longer
own the debt security on the interest payment date. That particular day, usually
about two weeks in
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advance of the interest payment date, is called the "regular record date" and
will be identified in the prospectus supplement.
Payment When Offices Are Closed. If any payment is due on a debt security
on a day that is not a business day, we will make the payment on the next day
that is a business day. Payments postponed to the next business day in this
situation will be treated under the indenture as if they were made on the
original due date. A postponement of this kind will not result in a default
under any debt security or the indenture, and no interest will accrue on the
postponed amount from the original due date to the next day that is a business
day.
Paying Agents. We may appoint one or more financial institutions to act as
our paying agents, at whose designated offices debt securities in non-global
form may be surrendered for payment at their maturity. We call each of those
offices a paying agent. We may add, replace or terminate paying agents from time
to time. We may also choose to act as our own paying agent. Initially, we have
appointed the trustee, at its corporate trust office in New York City, as the
paying agent. We must notify you of changes in the paying agents.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS ON THEIR DEBT SECURITIES.
THE TRUSTEE UNDER THE INDENTURE
We anticipate that SunTrust Bank will be trustee under the indenture.
SunTrust is among the banks with which we maintain ordinary banking
relationships.
The trustee may resign or be removed with respect to one or more series of
indenture securities and a successor trustee may be appointed to act with
respect to these series.
DESCRIPTION OF COMMON STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock, of which 31,999,121 shares were outstanding on November 2, 2000. Each of
our shares of common stock is entitled to one vote on all matters voted upon by
shareholders. Our shareholders do not have cumulative voting rights. Our issued
and outstanding shares of common stock are fully paid and nonassessable. There
are no redemption or sinking fund provisions applicable to the shares of our
common stock, and such shares are not entitled to any preemptive rights. Since
we are incorporated in both Texas and Virginia, we must comply with the laws of
both states when issuing shares of our common stock.
Holders of our shares of common stock are entitled to receive such
dividends as may be declared from time to time by our board of directors from
our assets legally available for the payment of dividends and, upon our
liquidation, a pro rata share of all of our assets available for distribution to
our shareholders.
Under the provisions of some of our debt agreements, we have agreed to
restrictions on the payment of cash dividends. Under these restrictions, our
cumulative cash dividends paid after December 31, 1988 may not exceed the sum of
our and our Subsidiaries' accumulated consolidated net income for periods after
December 31, 1988, plus $15,038,000. As of August 31, 2000, $57,900,000 was
available for the declaration of dividends.
The registrar and transfer agent for our common stock is Fleet National
Bank, formerly known as BankBoston, N.A.
Some provisions of our restated articles of incorporation and bylaws may be
deemed to have an "anti-takeover" effect. The following summary description of
these provisions is necessarily general, and we refer you to our restated
articles of incorporation and bylaws for more information since their terms
affect your rights as a shareholder.
Classification of the Board. Our board of directors is divided into three
classes, each of which consists, as nearly as may be possible, of one-third of
the total number of directors constituting the entire
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board. There are currently 12 directors serving on the board. Each class of
directors serves a three-year term. At each annual meeting of our shareholders,
successors to the class of directors whose term expires at the annual meeting
are elected for three-year terms. Our restated articles of incorporation
prohibit cumulative voting. In general, in the absence of cumulative voting, one
or more persons who hold a majority of our outstanding shares can elect all of
the directors who are subject to election at any meeting of shareholders.
The classification of directors could have the effect of making it more
difficult for shareholders, including those holding a majority of the
outstanding shares, to force an immediate change in the composition of our
board. Two shareholder meetings, instead of one, generally will be required to
effect a change in the control of our board. Our board believes that the longer
time required to elect a majority of a classified board will help to ensure the
continuity and stability of our management and policies since a majority of the
directors at any given time will have had prior experience as our directors.
Removal of Directors. Our restated articles of incorporation and bylaws
also provide that our directors may be removed only for cause and upon the
affirmative vote of the holders of at least 75% of the shares then entitled to
vote at an election of directors.
Fair Price Provisions. Article VII of our restated articles of
incorporation provides certain "Fair Price Provisions" for our shareholders.
Under Article VII, a merger, consolidation, sale of assets, share exchange,
recapitalization or other similar transaction, between us or a company
controlled by or under common control with us and any individual, corporation or
other entity which owns or controls 10% or more of our voting capital stock,
would be required to satisfy the condition that the aggregate consideration per
share to be received in the transaction for each class of our voting capital
stock be at least equal to the highest per share price, or equivalent price for
any different classes or series of stock, paid by the 10% shareholder in
acquiring any of its holdings of our stock. If a proposed transaction with a 10%
shareholder does not meet this condition, then the transaction must be approved
by the holders of at least 75% of the outstanding shares of voting capital stock
held by our shareholders other than the 10% shareholder unless a majority of the
directors who were members of our board immediately prior to the time the 10%
shareholder involved in the proposed transaction became a 10% shareholder have
either:
- expressly approved in advance the acquisition of the outstanding shares
of our voting capital stock that caused the 10% shareholder to become a
10% shareholder, or
- approved the transaction either in advance of or subsequent to the 10%
shareholder becoming a 10% shareholder.
The provisions of Article VII may not be amended, altered, changed, or
repealed except by the affirmative vote of at least 75% of the votes entitled to
be cast thereon at a meeting of our shareholders duly called for consideration
of such amendment, alteration, change, or repeal. In addition, if there is a 10%
shareholder, such action must also be approved by the affirmative vote of at
least 75% of the outstanding shares of our voting capital stock held by the
shareholders other than the 10% shareholder.
Shareholder Proposals and Director Nominations. Our shareholders can
submit shareholder proposals and nominate candidates for the board of directors
if the shareholders follow the advance notice procedures described in our
bylaws.
Shareholder proposals must be submitted to our corporate secretary at least
60 days, but not more than 85 days, before the annual meeting. The notice must
include a description of the proposal, the shareholder's name and address and
the number of shares held, and all other information which would be required to
be included in a proxy statement filed with the SEC if the shareholder were a
participant in a solicitation subject to the SEC proxy rules. To be included in
our proxy statement for an annual meeting, we must receive the proposal at least
120 days prior to the anniversary of the date we mailed the proxy statement for
the prior year's annual meeting.
To nominate directors, shareholders must submit a written notice to our
corporate secretary at least 60 days, but not more than 85 days, before a
scheduled meeting. The notice must include the name and
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address of the shareholder and of the shareholder's nominee, the number of
shares held by the shareholder, a representation that the shareholder is a
holder of record of common stock entitled to vote at the meeting, and that the
shareholder intends to appear in person or by proxy to nominate the persons
specified in the notice, a description of any arrangements between the
shareholder and the shareholder's nominee, information about the shareholder's
nominee required by the SEC, and the written consent of the shareholder's
nominee to serve as a director.
Shareholder proposals and director nominations that are late or that do not
include all required information may be rejected. This could prevent
shareholders from bringing certain matters before an annual or special meeting
or making nominations for directors.
Shareholder Rights Plan. On November 12, 1997, our board of directors
declared a dividend distribution of one right for each outstanding share of our
common stock to shareholders of record at the close of business on May 10, 1998.
Each right entitles the registered holder to purchase from us one share of our
common stock at a purchase price of $80 per share, subject to adjustment. The
description and terms of the rights are set forth in a rights agreement between
us and Fleet National Bank, formerly known as BankBoston, N.A., as rights agent.
Subject to exceptions specified in the rights agreement, the rights will
separate from our common stock and a distribution date will occur upon the
earlier of:
- ten business days following a public announcement that a person or group
of affiliated or associated persons has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares
of our common stock, other than as a result of repurchases of stock by us
or specified inadvertent actions by institutional or other shareholders,
- ten business days, or such later date as our board of directors shall
determine, following the commencement of a tender offer or exchange offer
that would result in a person or group having acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding
shares of our common stock, or
- ten business days after our board of directors shall declare any person
to be an adverse person within the meaning of the rights plan.
The rights expire at 5:00 P.M., Boston, Massachusetts time on May 10, 2008,
unless extended prior thereto by our board or earlier if redeemed by us.
The rights will not have any voting rights. The exercise price payable and
the number of shares of our common stock or other securities or property
issuable upon exercise of the rights are subject to adjustment from time to time
to prevent dilution. We issue rights when we issue our common stock until the
rights have separated from the common stock. After the rights have separated
from the common stock, we may issue additional rights if the board of directors
deems such issuance to be necessary or appropriate.
The rights have anti-takeover effects and may cause substantial dilution to
a person or entity that attempts to acquire us on terms not approved by our
board of directors except pursuant to an offer conditioned upon a substantial
number of rights being acquired. The rights should not interfere with any merger
or other business combination approved by our board of directors because, prior
to the time that the rights become exercisable or transferable, we can redeem
the rights at $.01 per right.
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PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus and the prospectus
supplement as follows:
- through agents,
- to or through underwriters, or
- directly to other purchasers.
We will identify any underwriters or agents and describe their compensation
in a prospectus supplement.
We, directly or through agents, may sell, and the underwriters may resell,
the offered securities in one or more transactions, including negotiated
transactions. These transactions may be:
- at a fixed public offering price or prices, which may be changed,
- at market prices prevailing at the time of sale,
- at prices related to the prevailing market prices, or
- at negotiated prices.
In connection with the sale of offered securities, the underwriters or
agents may receive compensation from us or from purchasers of the offered
securities for whom they may act as agents. The underwriters may sell offered
securities to or through dealers, who may also receive compensation from
purchasers of the offered securities for whom they may act as agents.
Compensation may be in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of the
offered securities may be underwriters as defined in the Securities Act, and any
discounts or commissions received by them from us and any profit on the resale
of the offered securities by them may be treated as underwriting discounts and
commissions under the Securities Act of 1933.
We will indemnify the underwriters and agents against certain civil
liabilities, including liabilities under the Securities Act of 1933.
Underwriters, dealers and agents or their affiliates may engage in
transactions with us or perform services for us.
If we indicate in the prospectus supplement relating to a particular series
or issue of offered securities, we will authorize underwriters, dealers or
agents to solicit offers by institutions to purchase the offered securities from
us under delayed delivery contracts providing for payment and delivery at a
future date. These contracts will be subject only to those conditions that we
specify in the prospectus supplement, and we will specify in the prospectus
supplement the commission payable for solicitation of these contracts.
LEGAL MATTERS
Gibson, Dunn & Crutcher LLP, Dallas, Texas, and Hunton & Williams,
Richmond, Virginia, will opine for us as to the validity of the offered
securities. Shearman & Sterling, New York, New York, will pass upon certain
legal matters related to the offered securities for any underwriters, dealers or
agents.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of Atmos Energy Corporation for the year ended September
30, 1999, incorporated by reference in our Annual Report on Form 10-K for the
year ended September 30, 1999, as set forth in its report dated November 9,
1999. We incorporate by reference such consolidated financial statements in this
prospectus in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Securities Exchange Act. You may read and
copy this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Judiciary Plaza, Room 1024 Seven World Trade Center, Citicorp Center
450 Fifth Street, N.W. Street Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661
</TABLE>
You can also obtain copies of this information by mail from the Public
Reference Room of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the
Public Reference Room by calling the SEC at (800) SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
Our common stock is listed on the New York Stock Exchange and you can
inspect reports, proxy statements and other information about us at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
We have filed with the SEC a registration statement on Form S-3 that
registers the securities we are offering. The registration statement, including
the attached exhibits and schedules, contains additional relevant information
about us and the securities offered. The rules and regulations of the SEC allow
us to omit certain information included in the registration statement from this
prospectus.
The SEC allows us to "incorporate by reference" information into this
prospectus that we have filed with it. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be part of
this prospectus, except for any information that is superseded by information
that is included directly in this document.
This prospectus incorporates by reference the following documents that we
have previously filed with the SEC and that we have not included or delivered
with this document:
- our Annual Report on Form 10-K for the year ended September 30, 1999,
- our Quarterly Reports on Form 10-Q for the quarters ended December 31,
1999, March 31, 2000, and June 30, 2000, and
- our Current Reports on Form 8-K filed with the SEC on February 22, 2000,
April 18, 2000, May 8, 2000, June 13, 2000, June 22, 2000, and August 17,
2000.
These documents contain important information about us, our common stock
and our financial condition.
We incorporate by reference additional documents that we may file with the
SEC between the date of this prospectus and the date of the closing of each
offering. These documents include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
proxy statements.
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You can obtain any of the documents incorporated by reference in this
document from us without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit to
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address or telephone number:
ATMOS ENERGY CORPORATION
1800 Three Lincoln Centre
5430 LBJ Freeway
Dallas, Texas 75240
Attention: Louis P. Gregory
(972) 934-9227
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5,000,000 SHARES
[ATMOS ENERGY CORPORATION LOGO]
ATMOS ENERGY CORPORATION
COMMON STOCK
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
UBS WARBURG LLC
, 2000
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