UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number 1-10042
ATMOS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS AND VIRGINIA 75-1743247
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1800 Three Lincoln Centre
5430 LBJ Freeway, Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
(972) 934-9227
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares outstanding of each of the issuer's classes of
common stock, as of May 1, 2000.
Class Shares Outstanding
----- ------------------
No Par Value 31,608,359
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
March 31, September 30,
2000 1999
----------- -------------
ASSETS
Property, plant and equipment $1,574,105 $1,549,258
Less accum. depreciation and amort. 606,716 583,476
---------- ----------
Net property, plant and equipment 967,389 965,782
Current assets
Cash and cash equivalents 22,994 8,585
Accounts receivable, net 119,116 70,564
Inventories of supplies and mdse. 8,199 8,209
Gas stored underground 19,013 44,653
Prepayments 2,381 3,142
---------- ----------
Total current assets 171,703 135,153
Deferred charges and other assets 137,589 129,602
---------- ----------
$1,276,681 $1,230,537
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock $ 158 $ 156
Additional paid-in capital 300,053 293,359
Retained earnings 109,212 83,231
Accumulated other comprehensive
income 2,753 917
---------- ----------
Total shareholders' equity 412,176 377,663
Long-term debt 372,543 377,483
---------- ----------
Total capitalization 784,719 755,146
Current liabilities
Current maturities of long-term debt 14,475 17,848
Short-term debt 126,739 168,304
Accounts payable 83,963 64,167
Taxes payable 28,777 848
Customers' deposits 7,894 9,657
Other current liabilities 33,426 25,951
---------- ----------
Total current liabilities 295,274 286,775
Deferred income taxes 117,643 112,610
Deferred credits and other liabilities 79,045 76,006
---------- ----------
$1,276,681 $1,230,537
========== ==========
See accompanying notes to condensed consolidated financial
statements.
ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Three months ended
March 31,
-------------------------
2000 1999
-------- --------
Operating revenues $314,197 $261,426
Purchased gas cost 196,070 149,031
-------- --------
Gross profit 118,127 112,395
Operating expenses
Operation 34,609 37,562
Maintenance 1,845 1,156
Depreciation and amortization 16,490 13,800
Taxes, other than income 9,196 9,034
-------- --------
Total operating expenses 62,140 61,552
-------- --------
Operating income 55,987 50,843
Other income 1,688 2,355
Interest charges, net 11,027 8,166
-------- --------
Income before income taxes 46,648 45,032
Income taxes 17,075 16,237
-------- --------
Net income $ 29,573 $ 28,795
======== ========
Basic net income per share $ .94 $ .95
======== ========
Diluted net income per share $ .94 $ .94
======== ========
Cash dividends per share $ .285 $ .275
======== ========
Weighted average
shares outstanding:
Basic 31,332 30,449
======== ========
Diluted 31,544 30,698
======== ========
See accompanying notes to condensed consolidated financial
statements.
ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Six months ended
March 31,
------------------------
2000 1999
-------- --------
Operating revenues $538,655 $471,653
Purchased gas cost 330,978 268,050
-------- --------
Gross profit 207,677 203,603
Operating expenses
Operation 67,691 73,440
Maintenance 4,187 3,827
Depreciation and amortization 32,990 27,400
Taxes, other than income 16,681 16,405
-------- --------
Total operating expenses 121,549 121,072
-------- --------
Operating income 86,128 82,531
Other income 5,646 4,075
Interest charges, net 22,244 17,239
-------- --------
Income before income taxes 69,530 69,367
Income taxes 25,633 25,192
-------- --------
Net income $ 43,897 $ 44,175
======== ========
Basic net income per share $ 1.41 $ 1.45
======== ========
Diluted net income per share $ 1.40 $ 1.44
======== ========
Cash dividends per share $ .57 $ .55
======== ========
Weighted average
shares outstanding:
Basic 31,226 30,361
======== ========
Diluted 31,440 30,601
======== ========
See accompanying notes to condensed consolidated financial
statements.
ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six months ended
March 31,
-----------------------
2000 1999
------- -------
Cash Flows From Operating Activities
Net income $43,897 $44,175
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization:
Charged to depreciation and
amortization 32,990 27,400
Charged to other accounts 2,290 2,100
Deferred income taxes 3,987 4,281
Net change in operating assets and
liabilities 29,230 (4,625)
------- --------
Net cash provided by
operating activities 112,394 73,331
Cash Flows From Investing Activities
Capital expenditures (38,400) (51,130)
Retirements of property, plant and
equipment 1,513 (2,055)
------- --------
Net cash used in investing activities (36,887) (53,185)
Cash Flows From Financing Activities
Net increase(decrease) in short-term debt (41,565) 45,747
Cash dividends paid (17,916) (16,828)
Repayment of long-term debt (8,313) (50,695)
Issuance of common stock 6,696 11,504
------- --------
Net cash used in financing activities (61,098) (10,272)
------- --------
Net increase in cash and cash equivalents 14,409 9,874
Cash and cash equivalents at beginning
of period 8,585 4,735
------- --------
Cash and cash equivalents at end
of period $22,994 $14,609
======= ========
See accompanying notes to condensed consolidated financial
statements.
ATMOS ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2000
1. Unaudited interim financial information
In the opinion of management, all material adjustments
necessary for a fair presentation have been made to the unaudited
interim period financial statements. Such adjustments consisted
only of normal recurring accruals. Because of seasonal and other
factors, the results of operations for the six month period ended
March 31, 2000 are not indicative of expected results of
operations for the year ending September 30, 2000. These interim
financial statements and notes are condensed as permitted by the
instructions to Form 10-Q, and should be read in conjunction with
the audited consolidated financial statements of Atmos Energy
Corporation ("Atmos" or the "Company") in its 1999 Annual Report
on Form 10-K.
Common stock - As of March 31, 2000, the Company had
100,000,000 shares of common stock, no par value (stated at $.005
per share), authorized and 31,582,305 shares outstanding. At
September 30, 1999, the Company had 31,247,800 shares outstanding.
Comprehensive income - In accordance with Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income", the Company is required to report
comprehensive income and its components (revenues, expenses, gains
and losses) in its financial statements. Comprehensive income
includes all changes, except those resulting from investments by
owners and distributions to owners, in the equity of a business
enterprise from transactions and other events including, as
applicable, foreign-currency items, minimum pension liability
adjustments and unrealized gains and losses on certain investments
in debt and equity securities.
The following table presents the components of comprehensive
income, net of related tax, for the three-month and six-month
periods ended March 31, 2000.
Three months ended Six months ended
March 31, 2000 March 31, 2000
------------------ ----------------
(In thousands)
Net income $29,573 $43,897
Unrealized holding gains
on investments 391 1,836
------- -------
Comprehensive income $29,964 $45,733
======= =======
The only component of accumulated other comprehensive income,
net of related tax, at March 31, 2000, relates to unrealized gains
and losses associated with certain available for sale investments.
Total accumulated other comprehensive income at March 31, 2000,
was $2.8 million.
2. Rates
The Company's ratemaking activity over the three-year period
ended September 30, 1999 was discussed in Note 3 of notes to
consolidated financial statements in the Company's Form 10-K for
the year ended September 30, 1999. New developments in ratemaking
activity since September 30, 1999 are discussed below.
In May 1999, the Western Kentucky Division requested from the
Kentucky Public Service Commission ("KPSC") an increase in
revenues of approximately $14.1 million, a weather normalization
adjustment and changes in rate design to shift a portion of
revenues from commodity charges to fixed rates. In December 1999,
the KPSC granted an increase in annual revenues of approximately
$9.9 million to the Western Kentucky Division. The new rates were
effective for services rendered on or after December 21, 1999. In
addition, the KPSC approved a five-year pilot program for weather
normalization beginning in November 2000. This program will be
similar to the Company's program in Georgia and Tennessee and will
be in effect from November through April. The Western Kentucky
Division serves approximately 180,000 customers in Kentucky.
In August 1999, the Energas Division filed rate cases in its
West Texas System cities and Amarillo, Texas, requesting rate
increases of approximately $8.8 million and $4.4 million,
respectively. In December 1999, the City of Amarillo, Texas,
granted an increase in annual revenues of approximately $2.05
million in base rates plus an increase of $.1 million in service
charges to the Energas Division. The new rates became effective
for bills rendered on or after January 1, 2000. The increase in
service charges allows the Energas Division to recover a larger
portion of the actual cost of service calls. In addition, rate
design was restructured to reduce the impact of warmer than normal
weather and a zero-based gas cost adjustment was implemented to
position the Energas Division for possible future deregulation.
The Company and the West Texas System cities could not agree on
the amount of a rate increase, and the Company appealed to the
Railroad Commission of Texas, with a final resolution expected in
September 2000. In January 2000, the Company requested an
increase of approximately $48,000 in the environs area outside the
city limits of Amarillo and will likewise request an increase of
approximately $1.0 million in the environs of the West Texas
System cities when that case is settled. Rates in areas outside
the city limits in Texas are subject to the jurisdiction of the
Railroad Commission of Texas. At this time, management cannot
predict the outcome of these rate proceedings.
In February 2000, the United Cities Gas Division filed a rate
case in Illinois with the Illinois Commerce Commission requesting
an increase in revenues of approximately $3.1 million. The
Illinois Commerce Commission is currently in the process of
reviewing this request. The Company expects this process to be
completed and new rates implemented in January 2001. In addition,
in March 2000, the United Cities Gas Division filed a rate case in
Virginia with the State Corporation Commission of the Commonweath
of Virginia requesting an increase in revenues of approximately
$2.3 million. The State Corporation Commission of Virginia is
currently in the process of reviewing the filing to determine if
it meets the appropriate rules and regulations. Once the
Commission accepts the filing, they will have five months to make
the final decision. The Company expects this increase to be
effective in the fall of 2000. At this time, management cannot
predict the outcome of these rate proceedings.
3. Contingencies
Litigation
Greeley Division
In Colorado, the Greeley Division has been a defendant in
several lawsuits filed as a result of a fire in a building in
Steamboat Springs, Colorado on February 3, 1994. The plaintiffs
claimed that the fire resulted from a leak in a severed gas
service line owned by the Greeley Division. On January 12, 1996,
the jury awarded the plaintiffs approximately $2.5 million in
compensatory damages and approximately $2.5 million in punitive
damages. The jury assessed the Company with liability for all of
the damages awarded. The Company appealed the judgment to the
Colorado Court of Appeals, which reversed the trial court verdict
and ordered a new trial. The Colorado Supreme Court upheld the
Court of Appeals reversal and order for a new trial. As previously
reported, as a result of mediation, a settlement had been reached
with five of the claimants, leaving only three remaining claimants
with aggregate claims of approximately $2 million. On April 7,
2000, as a result of mediation, the Company agreed to settle with
the three remaining claimants for an aggregate total of $1.5
million, which amounts are to be paid by the Company's insurance
carrier, thus effectively concluding this litigation against the
Company.
On September 23, 1999, a suit was filed in the District Court
of Stevens County, Kansas, by Quinque Operating Company, Tom Boles
and Robert Ditto, against more than 200 companies in the natural
gas industry, including the Company and the Greeley Gas Division.
The plaintiffs, who purport to represent a class consisting of gas
producers, royalty owners, overriding royalty owners, working
interest owners and state taxing authorities, accuse the
defendants of underpaying royalties on gas taken from wells
situated on non-federal and non-Indian lands throughout the United
States and offshore waters predicated upon allegations that the
defendants' gas measurements are simply inaccurate and that the
defendants failed to comply with applicable regulations and
industry standards over the last 25 years. Although the plaintiffs
do not specifically allege an amount of damages, they contend that
this suit is brought to recover billions of dollars in revenues
that the defendants have allegedly unlawfully diverted from the
plaintiffs to themselves.
On April 10, 2000, this case was consolidated for pre-trial
proceedings with other similar pending litigation in federal court
in Wyoming in which the Company is also a defendant along with
over 200 other defendants in the case of In Re Natural Gas
Royalties Quitam Litigation. The Company believes that the
plaintiffs' claims are lacking in merit and intends to vigorously
defend this action. However, the Company cannot assess, at this
time, the likelihood of whether or not the plaintiffs may prevail
on any one or more of their asserted claims. In any event, the
Company does not expect the final outcome of this case to have a
material adverse effect on the financial condition, the results of
operations or the net cash flows of the Company because the
Company believes that it has adequate reserves to cover any
damages that may ultimately be awarded.
The Company is a party to other litigation matters and claims
that arise out of the ordinary business of the Company. While the
results of these litigation matters and claims cannot be predicted
with certainty, the Company does not believe the final outcome of
such litigation and claims will have a material adverse effect on
the financial condition, the results of operations or the cash
flows of the Company because the Company believes that it has
adequate insurance and reserves to cover any damages that may
ultimately be awarded.
Guarantees
The Company's wholly-owned subsidiary, Atmos Energy Marketing,
LLC ("AEM"), and Woodward Marketing, Inc. ("WMI"), sole members of
Woodward Marketing, LLC ("WMLLC"), act as guarantors of up to
$12.5 million of balances outstanding under a $30.0 million bank
credit facility for WMLLC. AEM guarantees the payment of up to
approximately $5.6 million of borrowings under this facility. At
March 31, 2000, $15.2 million was outstanding under this credit
facility. AEM and WMI also act as joint and several guarantors on
payables of WMLLC up to $40.0 million of natural gas purchases and
transportation services from suppliers. WMLLC payable balances
outstanding that were subject to these guarantees amounted to $6.1
million at March 31, 2000.
Environmental Matters
The United Cities Division is the owner or previous owner of
manufactured gas plant sites in Keokuk, Iowa; Johnson City and
Bristol, Tennessee; and Hannibal, Missouri, which were used to
supply gas prior to availability of natural gas. The gas
manufacturing process resulted in certain by-products and residual
materials including coal tar. The manufacturing process used by
the Company was an acceptable and satisfactory process at the time
such operations were being conducted. Under current environmental
protection laws and regulations, the Company may be responsible
for response actions with respect to such materials, if response
actions are necessary.
As of March 31, 2000, the Company had accrued and deferred for
recovery $1.1 million, including $258,000 that was incurred for an
insurance recoverability study, and $750,000 for the
investigations of the Johnson City and Bristol, Tennessee and
Hannibal, Missouri sites. As of March 31, 2000, the Company has
incurred costs of approximately $631,000 for these sites.
Iowa sites
In June 1995, United Cities Gas Company ("UCGC") entered into
an agreement to pay $1.8 million to Union Electric Company, now
Ameren, whereby Union Electric agreed to assume responsibility for
UCGC's continuing investigation and environmental response action
obligations as outlined in the feasibility study related to a
former manufactured gas plant in Keokuk. The $1.8 million was
paid in five annual installments, with the last installment being
paid in July 1999. In a rate case effective June 1, 1996, UCGC
began collecting increased rates, which included a 10-year
amortization of the $1.8 million payment to Union Electric.
Tennessee sites
UCGC and the Tennessee Department of Environment and
Conservation ("TDEC") entered into a consent order effective
January 23, 1997, for the purpose of facilitating the
investigation, removal and remediation of the Johnson City site.
UCGC began the implementation of the consent order in the first
quarter of 1997, which continued through March 31, 2000. In March
1998, UCGC submitted a Preliminary Site Investigation Report to
the TDEC. From October 1999 through February 2000, Phase II
remedial investigation fieldwork was conducted pursuant to the
consent order. A Phase II Remedial Investigation Report was
submitted to the TDEC on April 25, 2000.
The Company is unaware of any information that suggests the
Bristol site would give rise to a present health or environmental
risk as a result of the manufactured gas process or that any
response action will be necessary.
The Tennessee Regulatory Authority granted UCGC permission to
defer, until its next rate case, all costs incurred in Tennessee
in connection with state and federally mandated environmental
control requirements.
Missouri sites
On July 22, 1998, Atmos entered into an Abatement Order on
Consent with the Missouri Department of Natural Resources
addressing the former manufactured gas plant located in Hannibal,
Missouri. Atmos, through its United Cities Division, agreed in
the order to perform a removal action, a subsequent site
evaluation and to reimburse the response costs incurred by the
state of Missouri in connection with the property. The removal
action was conducted and completed in August 1998. The site
evaluation fieldwork was conducted from August through December
1999. On March 9, 1999, the Missouri Public Service Commission
issued an order authorizing Atmos to defer the costs associated
with this site. The order is effective for two years.
Kansas sites
Atmos is currently conducting investigation and remediation
activities pursuant to Consent Orders between the Kansas
Department of Health and Environment ("KDHE") and UCGC. The
Orders provide for the investigation and remediation of mercury
contamination at gas pipeline sites, which utilize or formerly
utilized mercury meter equipment in Kansas. As of March 31, 2000,
the Company had identified approximately 720 sites where mercury
may have been used and had incurred $100,000 for recovery. In
addition, based upon available current information, the Company
accrued and deferred for recovery an additional $271,000 for the
investigation of these sites. The Kansas Corporation Commission
has authorized the Company to defer these costs and seek recovery
in a future rate case.
The Company is a party to other environmental matters and
claims that arise out of the ordinary business of the Company.
While the ultimate results of response actions to these
environmental matters and claims cannot be predicted with
certainty, the Company does not believe the final outcome of such
response actions will have a material adverse effect on the
financial condition, the results of operations or the cash flows
of the Company because the Company believes that the expenditures
related to such response actions will either be recovered through
rates, shared with other parties, or covered by adequate insurance
or reserves.
4. Short-term debt
At March 31, 2000, short-term debt was composed of $116.6
million of commercial paper and $10.1 million outstanding under
bank credit facilities.
The Company has two short-term committed credit facilities.
One short-term unsecured credit facility is for $250.0 million.
No amounts were outstanding under this facility at March 31, 2000.
A second facility is for $12.0 million with $10.1 million
outstanding at March 31, 2000.
The Company also has unsecured short-term uncommitted credit
lines totaling $74.0 million. No borrowings were outstanding
under these lines at March 31, 2000.
The Company has a $250.0 million commercial paper program that
is supported by the $250.0 million committed line of credit
described above.
5. Statements of cash flows
Supplemental disclosures of cash flow information for the six-
month periods ended March 31, 2000 and 1999 are presented below.
Six months ended
March 31,
----------------------
2000 1999
------- -------
(In thousands)
Cash paid (received) for
Interest $22,618 $20,833
Income taxes (6,906) 13,374
6. Earnings per share
Basic earnings per share has been computed by dividing net
income available to common stockholders for the period by the
weighted average number of common shares outstanding during the
period. Diluted earnings per share has been computed by dividing
net income available to common stockholders for the period by the
weighted average number of common shares outstanding during the
period adjusted for the assumed exercise of restricted stock and
other contingently issuable shares of common stock. Net income
for basic and diluted earnings per share are the same, as there
are no contingently issuable shares of stock whose issuance would
have impacted net income. A reconciliation between basic and
diluted weighted average common shares outstanding follows:
For the three months ended
March 31,
--------------------------
2000 1999
------ ------
(Thousands of shares)
Weighted average common
shares - basic 31,332 30,449
Effect of dilutive securities:
Restricted stock 207 243
Stock options 5 6
------ ------
Weighted average common
shares - assuming dilution 31,544 30,698
====== ======
For the six months ended
March 31,
--------------------------
2000 1999
------ ------
(Thousands of shares)
Weighted average common
shares - basic 31,226 30,361
Effect of dilutive securities:
Restricted stock 207 234
Stock options 7 6
------ ------
Weighted average common
shares - assuming dilution 31,440 30,601
====== ======
7. Segment Information
In accordance with SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information", the Company has
identified the following three segments: Utility, Propane and
Energy Services. For a more complete description of these
segments, please refer to Note 1 of notes to consolidated
financial statements in the Company's Annual Report on Form 10-K
for the year ended September 30, 1999.
Summarized financial information concerning the Company's
reportable segments for the three months and six months ended
March 31, 2000 and 1999 is shown in the following table:
Energy
Utility Propane Services Total
---------- ------- -------- --------
(In thousands)
As of and for the
three months ended
March 31, 2000:
- -------------------
Operating revenues $ 283,922 $11,603 $20,276 $ 315,801
Intersegment revenues 708 - 896 1,604
Net income 26,486 967 2,120 29,573
Energy
Utility Propane Services Total
---------- ------- -------- --------
(In thousands)
As of and for the
three months ended
March 31, 1999:
- -------------------
Operating revenues $ 239,502 $10,026 $12,682 $ 262,210
Intersegment revenues 784 - - 784
Net income 24,918 1,306 2,571 28,795
Energy
Utility Propane Services Total
---------- ------- -------- --------
(In thousands)
As of and for the
six months ended
March 31, 2000:
- -------------------
Operating revenues $ 493,218 $19,441 $29,067 $ 541,726
Intersegment revenues 1,304 - 1,767 3,071
Net income 37,590 1,389 4,918 43,897
Total assets 1,181,535 17,069 81,955 1,280,559
Energy
Utility Propane Services Total
---------- ------- -------- --------
(In thousands)
As of and for the
six months ended
March 31, 1999:
- -------------------
Operating revenues $ 436,484 $17,321 $19,096 $ 472,901
Intersegment revenues 1,248 - - 1,248
Net income 39,290 1,716 3,169 44,175
Total assets 1,136,132 23,687 76,370 1,236,189
The following tables present a reconciliation of the operating
revenues by segment to total consolidated revenues for the three
months and six months ended March 31, 2000 and 1999.
Three months ended
March 31,
--------------------
2000 1999
-------- --------
(In thousands)
Total revenues for
reportable segments $315,801 $262,210
Elimination of
intersegment revenues (1,604) (784)
-------- --------
Total consolidated operating revenues $314,197 $261,426
======== ========
Six months ended
March 31,
--------------------
2000 1999
-------- --------
(In thousands)
Total revenues for
reportable segments $541,726 $472,901
Elimination of
intersegment revenues (3,071) (1,248)
-------- --------
Total consolidated operating revenues $538,655 $471,653
======== ========
A reconciliation of total assets for the reportable segments
to total consolidated assets for March 31, 2000 and 1999 is
presented below.
March 31,
----------------------
2000 1999
---------- ----------
(In thousands)
Total assets for
reportable segments $1,280,559 $1,236,189
Elimination of
intercompany receivables (3,878) (14,526)
---------- ----------
Total consolidated
assets $1,276,681 $1,221,663
========== ==========
8. Related party transactions
Atmos owns a 45% interest in Woodward Marketing, LLC, a
limited liability company headquartered in Houston, Texas, which
is engaged in gas marketing and energy services. The Company
holds its interest in WMLLC through its ownership of Atmos Energy
Marketing, LLC. Included in purchased gas cost were purchases
from WMLLC of approximately $50.3 million and $42.1 million for
the three-month periods ended March 31, 2000 and 1999, respective
ly, and approximately $98.7 million and $62.8 million for the six-
month periods ended March 31, 2000 and 1999, respectively.
9. Recently issued accounting standards not yet adopted
The Company has not yet adopted Statement of Financial
Accounting Standards No. 133 " Accounting for Derivative
Instruments and Hedging Activities." The Statement will be
effective for the Company's fiscal year 2001. It establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities. The Statement does not
allow retroactive application to financial statements of prior
periods. The Company's management is currently in the process of
evaluating the impact of adopting this statement on its reported
financial condition, results of operations and cash flows.
10. Subsequent event
Subsequent to March 31, 2000, the Company entered into a
definitive agreement to acquire the Louisiana gas operations of
Louisiana Gas Service Company, a division of Citizens Utilities
Company, and LGS Natural Gas Company, a subsidiary of Citizens
Utilities Company. Under the terms of the agreement, the Company
will purchase the assets of Louisiana Gas Service Company and LGS
Natural Gas Company for $375.0 million. This transaction, which
will add approximately 279,000 customers, is expected to be
completed within 12 months, subject to approval by the Louisiana
Public Service Commission and compliance with the Hart-Scott
Rodino Act.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
Atmos Energy Corporation
We have reviewed the accompanying condensed consolidated
balance sheet of Atmos Energy Corporation as of March 31, 2000,
and the related condensed consolidated statements of income and
cash flows for the three-month and six-month periods ended March
31, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data,
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards in the United States, which will be performed for the
full year with the objective of expressing an opinion regarding
the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying condensed
consolidated financial statements at March 31, 2000, and for the
three-month and six-month periods ended March 31, 2000 and 1999
for them to be in conformity with generally accepted accounting
principles in the United States.
We have previously audited, in accordance with generally
accepted auditing standards in the United States, the consolidated
balance sheet of Atmos Energy Corporation as of September 30,
1999, and the related consolidated statements of income,
shareholders' equity, and cash flows for the year then ended (not
presented herein) and in our report dated November 9, 1999, we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of September
30, 1999, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
ERNST & YOUNG LLP
Dallas, Texas
April 26, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The following discussion should be read in conjunction with
the condensed consolidated financial statements contained in this
Quarterly Report on Form 10-Q and Management's Discussion and
Analysis contained in the Company's 1999 Annual Report to
Shareholders and the Company's Annual Report on Form 10-K for the
year ended September 30, 1999.
The Company distributes and sells natural gas and propane to
residential, commercial, industrial and agricultural customers in
thirteen states. Such business is subject to regulation by state
and/or local authorities in each of the states in which the
Company operates. In addition, the Company's business is affected
by seasonal weather patterns, competitive factors within the
energy industry, and economic conditions in the areas that the
Company serves.
Cautionary Statement under the Private Securities Litigation
Reform Act of 1995
The matters discussed or incorporated by reference in this
Quarterly Report on Form 10-Q may contain "forward-looking
statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of
historical facts included in this Quarterly Report including, but
not limited to, those contained in the following sections, Item 2,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations", and Note 3 to condensed consolidated
financial statements, regarding the Company's financial position,
business strategy and plans and objectives of management of the
Company for future operations, are forward-looking statements made
in good faith by the Company and are intended to qualify for the
safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. When used in this Report or in any
of the Company's other documents or oral presentations, the words
"anticipate," "expect," "estimate," "plans," "believes,"
"objective," "forecast," "goal" or similar words are intended to
identify forward-looking statements. Such forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed or
implied in the statements relating to the Company's operations,
markets, services, rates, recovery of costs, availability of gas
supply, and other factors. These risks and uncertainties include,
but are not limited to, national, regional and local economic
competitive conditions, regulatory and business trends and
decisions, technological developments, inflation rates, weather
conditions, and other uncertainties, all of which are difficult to
predict and many of which are beyond the control of the Company.
Accordingly, while the Company believes that the expectations
reflected in the forward-looking statements are reasonable, there
can be no assurance that such expectations will be realized or
will approximate actual results.
Ratemaking Activity
During the six months ended March 31, 2000, the Western
Kentucky Division received a rate increase in Kentucky of
approximately $9.9 million in annual revenues, effective
December 21, 1999, and a five-year weather normalization pilot
program beginning in November 2000. The Energas Division received
an increase in annual revenues of approximately $2.05 million in
base rates plus an increase of $.1 million in service charges in
Amarillo, Texas, effective for bills rendered on or after January
1, 2000. The agreement also provided for changes in rate
structure to reduce the impact of warmer than normal weather and
to improve the recovery of the actual cost of service calls. The
Energas Division's request for an annual increase of $8.8 million
from the 67 cities served by its West Texas System could not be
settled. In March 2000, it was appealed to the Railroad
Commission of Texas, with a final decision expected in September
2000. Upon the settlement of these cases, the Railroad Commission
is expected to act upon requests for similar increases totaling
approximately $1.05 million in the environs outside Amarillo and
the West Texas System cities. In February 2000, the United Cities
Gas Division filed a rate case in Illinois for $3.1 million and in
March 2000, filed a rate case in Virginia for $2.3 million. For
further information regarding rate activity, see Note 2 of notes
to condensed consolidated financial statements. The Company
continues to monitor rates in all its service areas for recovery
of its service costs and an adequate return on its investment.
Weather and Seasonality
The Company's natural gas and propane distribution businesses
are seasonal due to weather conditions in the Company's service
areas. Sales are affected by winter heating season requirements.
Sales to agricultural customers (who use natural gas as fuel in
the operation of irrigation pumps) during the period from April
through September are affected by rainfall amounts. These factors
generally result in higher operating revenues and net income
during the period from October through March of each year and
lower operating revenues and either net losses or lower net income
during the period from April through September of each year.
Weather for the six months ended March 31, 2000 was 19% warmer
than normal and 3% warmer than weather in the corresponding period
of the prior year. Decreased sales to weather sensitive customers
reduced net income for the six months ended March 31, 2000 by
approximately $26.7 million or $.85 per diluted share.
The Company has weather normalization adjustments ("WNAs") in
Georgia and Tennessee, where it serves approximately 186,000
customers or approximately 18% of the Company's total customers
and revenues. The WNAs increase the base rate when weather is
warmer than normal and decrease it when weather is colder than
normal. The effect of the WNAs was to increase revenues
approximately $3.9 million for the six months ended March 31,
2000, as compared with an increase of approximately $4.4 million
for the six months ended March 31, 1999. The Company did not have
WNAs in its other service areas during the six months ended March
31, 2000.
Status of Pending Acquisitions and Joint Venture
On April 13, 2000, the Company announced a definitive
agreement to acquire the assets of Louisiana Gas Service Company,
a division of Citizens Utilities Company and LGS Natural Gas
Company, a subsidiary of Citizens Utilities Company. Under the
terms of the agreement, Atmos will purchase the assets of the
companies for $375.0 million. The transaction would be accounted
for as a purchase. Bridge financing will be provided by a bank
credit facility. The transaction is expected to close within 12
months and is subject to approval by the Louisiana Public Service
Commission and compliance with the Hart-Scott Rodino Act. With
this acquisition Atmos will become the largest natural gas
distributor in the state of Louisiana with approximately 359,000
customers.
In February 2000, the Company announced that it had entered
into an agreement to form a joint venture which combines its
United Cities Propane Gas operations with the propane operations
of AGL Resources, Inc., Atlanta, Georgia; Piedmont Natural Gas
Company, Inc., Charlotte, North Carolina; and TECO Energy, Tampa,
Florida. The combined entity, to be named US Propane, L.P., will
be among the 10 largest propane retailers in the nation with
nearly 200,000 customers. Focused on the Southeast, US Propane
will have operations in Alabama, Florida, Georgia, Kentucky, North
Carolina, South Carolina and Tennessee. The participating
companies expect the transaction to be completed in the summer of
2000.
In October 1999, the Company entered into a definitive
agreement with Southwestern Energy Company ("Southwestern") to
acquire the Missouri natural gas distribution assets of Associated
Natural Gas, a division of Arkansas Western Gas, which is a wholly-
owned subsidiary of Southwestern. Under the terms of the
agreement, the Company will purchase the Missouri gas system for
approximately $32.0 million in cash plus working capital
adjustments. This transaction, which will add approximately
48,000 customers, is expected to be completed June 1, 2000. The
Company has received approvals from the Missouri Public Service
Commission and the Federal Energy Regulatory Commission.
FINANCIAL CONDITION
For the six months ended March 31, 2000 net cash provided by
operating activities totaled $112.4 million compared with $73.3
million for the six months ended March 31, 1999. Net income
decreased $.3 million to $43.9 million for the six months ended
March 31, 2000 from $44.2 million for the six months ended March
31, 1999. Depreciation and amortization increased $5.6 million
for the six months ended March 31, 2000 because of utility
property additions placed in service during the past year. Net
operating assets and liabilities decreased $29.2 million for the
six months ended March 31, 2000 compared with an increase of $4.6
million for the six months ended March 31, 1999. This decrease in
net operating assets and liabilities resulted primarily from large
fluctuations in accounts receivable, accounts payable and
inventories of gas in underground storage that occur when entering
and leaving the winter or heating season. It also reflected an
increase of $7.5 million in other current liabilities related to
borrowing storage gas inventories.
Major cash flows used in investing activities for the six
months ended March 31, 2000 included capital expenditures of $38.4
million compared with $51.1 million for the six months ended March
31, 1999. The capital expenditures budget for fiscal 2000 is
approximately $75.0 million, as compared with actual capital
expenditures of $110.4 million in fiscal 1999. The capital budget
and capital expenditures are lower for 2000 than for 1999 because
the Company's major technology projects were completed in 1999.
Also, non-essential capital expenditures are being postponed in
fiscal 2000 under the Company's warm winter weather plan.
Budgeted capital projects for fiscal 2000 include major
expenditures for mains, services, meters, vehicles and computer
software and equipment. These expenditures will be financed from
internally generated funds and financing activities.
For the six months ended March 31, 2000, cash flows used by
financing activities amounted to $61.1 million as compared with
$10.3 million for the six months ended March 31, 1999. During the
six-month period ended March 31, 2000, commercial paper and short-
term debt decreased $41.6 million, as compared with an increase of
$45.7 million for the six months ended March 31, 1999, due to
seasonal factors, project costs of the Customer Service Initiative
and the implementation of Oracle financials in fiscal 1999.
Payments of long-term debt totaled $8.3 million for the six months
ended March 31, 2000, as compared with $50.7 million for the six
months ended March 31, 1999. The Company paid $17.9 million in
cash dividends during the six months ended March 31, 2000,
compared with dividends of $16.8 million paid during the six
months ended March 31, 1999. This reflects increases in the
quarterly dividend rate and in the number of shares outstanding.
In the six months ended March 31, 2000, the Company issued 334,505
shares of common stock.
The following table presents the number of shares issued under
the various plans for the six-month periods ended March 31, 2000
and 1999.
Six months ended
March 31,
---------------------
2000 1999
------- -------
Shares issued:
Restricted Stock Grant Plan - 56,850
Employee Stock Ownership Plan 118,277 21,291
Direct Stock Purchase Plan 215,101 349,307
Outside Directors Stock-for-Fee Plan 1,127 824
United Cities Long-term Stock Plan - 1,250
------- -------
Total shares issued 334,505 429,522
======= =======
The Company believes that internally generated funds, its
short-term credit facilities, commercial paper program and access
to the debt and equity capital markets will provide necessary
working capital and liquidity for capital expenditures and other
cash needs for the remainder of fiscal 2000. At March 31, 2000
the Company had $262.0 million in committed short-term credit
facilities, of which $10.1 million was outstanding and $116.6
million supported commercial paper outstanding. The committed
lines of credit are renewed or renegotiated at least annually. At
March 31, 2000, the Company also had $74.0 million of uncommitted
short-term lines of credit, all of which was unused. The Company
plans to finance the $32.0 million Missouri acquisition closing on
June 1, 2000 from its commercial paper program. A bank has
provided a $385.0 million credit facility for bridge financing for
the Louisiana acquisition which will terminate when the Company
completes permanent financing or as of August 2001.
In December 1999, the Company filed a universal shelf
registration statement with the Securities and Exchange Commission
("SEC") to issue, from time to time, up to $500 million in new
common stock and/or debt. The Company also filed applications for
approval to issue securities with six state utility commissions.
The Company has received approvals from five of the six required
states and expects to receive the final state approval in the near
future. Once the shelf filing is declared effective by the SEC
and is approved by the various state utility commissions, the
Company will be authorized to "take securities off the shelf" and
issue them to investors and lenders. The proceeds are planned to
be used for general corporate purposes, including acquisitions,
debt repayment, and other business-related matters. The universal
shelf should provide the Company with greater flexibility in its
financing options.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000, COMPARED WITH THREE MONTHS
ENDED MARCH 31, 1999
Operating revenues increased by 20% to $314.2 million for the
three months ended March 31, 2000 from $261.4 million for the
three months ended March 31, 1999. The most significant factor
contributing to the increase in operating revenues was a higher
average sales price due to rate increases and the pass through of
higher gas cost. Rate increases were implemented in Kentucky in
December 1999 and in Amarillo, Texas in January 2000. The impact
of a higher average sales price was partially offset by lower
sales volumes due to warmer winter weather. During the quarter
ended March 31, 2000, temperatures were 4% warmer than in the
corresponding quarter of the prior year, and were 21% warmer than
the 30-year normal weather for the quarter. The total volume of
gas sold and transported for the three months ended March 31, 2000
was 70.1 billion cubic feet ("Bcf") compared with 71.5 Bcf for the
three months ended March 31, 1999. The average sales price per
Mcf sold increased $1.01 to $5.29 due to an increase in the
average cost of gas and the rate increases. The average cost of
gas per Mcf sold increased 33% to $3.36 for the three months ended
March 31, 2000 from $2.52 for the three months ended March 31,
1999 due to decreased supply availability in the current market.
Changes in cost of gas do not directly affect the Company's gross
profit.
Gross profit increased by 5% to $118.1 million for the three
months ended March 31, 2000, from $112.4 million for the three
months ended March 31, 1999. The increase in gross profit was
primarily due to the increase in average sales price. Also,
transportation revenues increased $.9 million due to an increase
of .9 Bcf in transportation volumes and an increase of $.04 in
average transportation revenue per Mcf.
Operating expense increased 1% to $62.1 million for the three
months ended March 31, 2000 from $61.6 million for the three
months ended March 31, 1999. The major factors contributing to
the increase were the $2.7 million increase in depreciation and
amortization and the $.7 million increase in maintenance expenses.
The increase in depreciation and amortization was due to
technology improvements placed in service in 1999. The increase
in maintenance expense was due to increased material and supplies
expense, outside services and rents. This increase was offset by
the $3.25 million litigation settlement recorded in the three
months ended March 31, 1999.
Operating income increased 10% for the three months ended
March 31, 2000 to $56.0 million from $50.8 million for the three
months ended March 31, 1999. The increase in operating income
resulted from increased operating revenues and gross profit, as
discussed above.
Other income decreased $.7 million for the three months ended
March 31, 2000 compared with the three months ended March 31, 1999
primarily due to a decrease in the earnings recorded from the
Company's 45 percent interest in Woodward Marketing, LLC.
Propane statistics for the three months ended March 31, 2000
and 1999 are included in the "Operating Statistics" tables which
appear at the end of Management's Discussion and Analysis. The
propane operation sold 10.1 million gallons of propane for the
three months ended March 31, 2000, as compared with 10.6 million
gallons for the three months ended March 31, 1999. The decrease
of $.3 million in propane net income for the three months ended
March 31, 2000 compared with the same period last year was the
result of lower sales volumes due to comparatively warmer winter
weather. Propane customers at March 31, 2000 increased 2,365, or
6%, as compared with March 31, 1999.
Interest expense increased $2.9 million, or 35%, for the three
months ended March 31, 2000 compared with the three months ended
March 31, 1999. The increase was primarily due to approximately
$1.8 million of interest capitalized in connection with the
Customer Service Initiative in process during the three months
ended March 31, 1999, as well as higher rates and average short-
term balances outstanding during the three months ended March 31,
2000.
Net income increased for the three months ended March 31, 2000
by $.8 million to $29.6 million from $28.8 million for the three
months ended March 31, 1999. This increase in net income resulted
primarily from the increase in gross profit discussed above.
SIX MONTHS ENDED MARCH 31, 2000, COMPARED WITH SIX MONTHS ENDED
MARCH 31, 1999
Operating revenues increased by 14% to $538.7 million for the
six months ended March 31, 2000 from $471.7 million for the six
months ended March 31, 1999. The primary factor contributing to
the higher operating revenues was a 19% increase in the average
gas sales revenue per Mcf. The higher sales price reflects the
rate increases discussed in Note 2 of notes to condensed
consolidated financial statements and a 27% increase in the
average cost of gas per Mcf sold, which is passed through to the
customer and does not affect gross profit. The increase in
revenues due to increased average sales price was partially offset
by lower throughput due to warmer winter weather. Total volumes
delivered decreased 3.0 Bcf or 2% for the six months ended March
31, 2000, as compared with the six months ended March 31, 1999.
The volume transported increased 1.0 Bcf compared with the six
months ended March 31, 1999 due to switching from sales to
transportation service by some industrial customers. Sales
volumes decreased 4.0 Bcf for the six months ended March 31, 2000
compared with the corresponding period of the prior year due to
warmer weather. Sales revenues from all customer classes increased
due to higher sales prices. Weather in the Company's service
areas was 3% warmer than weather in the corresponding six-month
period of the prior fiscal year, and 19% warmer than 30-year
normal weather. The average sales price per Mcf increased to
$5.31 for the six months ended March 31, 2000 from $4.47 for the
six months ended March 31, 1999. The increase in the average
sales price reflects an increase in the average cost of gas. The
average cost of gas per Mcf sold increased to $3.36 for the six
months ended March 31, 2000 from $2.65 for the six months ended
March 31, 1999 because of generally higher gas supply costs. The
increased cost of gas did not directly affect gross profit.
Gross profit increased 2% to $207.7 million for the six months
ended March 31, 2000, compared with $203.6 million for the six
months ended March 31, 1999. This increase was primarily due to
rate increases implemented in Kentucky and Amarillo, Texas.
Operating expenses increased slightly to $121.5 million in the
six months ended March 31, 2000, from $121.1 million in the six
months ended March 31, 1999. The increase was primarily due to an
increase of $5.6 million in depreciation and amortization for the
six months ended March 31, 2000. The increase in depreciation
related to utility plant additions placed in service during fiscal
1999. The increases in depreciation and amortization, maintenance
expense and taxes other than income were partially offset by a
decrease of $5.7 million in operation expense for the six months
ended March 31, 2000. The decrease in operation expense resulted
from savings of approximately $2.5 million as a result of the
Company's warm winter plan for the six months ended March 31, 2000
and the $3.25 million litigation settlement which was recorded in
the six months ended March 31, 1999.
Operating income increased for the six months ended March 31,
2000 to $86.1 million from $82.5 million for the six months ended
March 31, 1999. The increase in operating income was primarily
related to the increased operating revenues and related gross
profit, as discussed above.
Other income increased $1.6 million for the six months ended
March 31, 2000 compared with the six months ended March 31, 1999
due to an increase of $1.7 million in the earnings from the
Company's 45 percent interest in Woodward Marketing, LLC
("WMLLC"). This improvement is a result of growth in WMLLC's core
pre-tax earnings and net unrealized gains calculated in accordance
with Emerging Issues Task Force 98-10.
The propane operation sold 16.5 million gallons of propane for
the six months ended March 31, 2000, as compared with 16.7 million
gallons for the six months ended March 31, 1999. Gross profit
decreased $.8 million for the six months ended March 31, 2000
compared with the same period last year due to a combination of
factors including warmer weather and a lower average profit margin
due to comparatively higher cost of supply.
Interest charges increased $5.0 million, or 29%, due to higher
average interest rates and debt outstanding for the six months
ended March 31, 2000, as well as capitalized interest of $3.7
recorded on technology projects in process for the six months
ended March 31, 1999.
Net income decreased 1% for the six months ended March 31,
2000, to $43.9 million from $44.2 million for the six months ended
March 31, 1999. The decrease in net income resulted from
increased interest charges and the decrease in operating revenues
which resulted from 3% warmer weather in fiscal 2000. The Company
estimates that the impact of the weather being 19% warmer than
normal for the six months ended March 31, 2000 caused net income
to be approximately $26.7 million less than it would have been had
the Company experienced normal temperatures and rainfall in its
respective service areas. Dividends per share increased
approximately 4% to $.57 for the six months ended March 31, 2000.
Diluted average shares outstanding increased 3% due to shares
issued under the Employee Stock Ownership Plan and the Direct
Stock Purchase Plan.
Total natural gas meters and propane customers at March 31,
2000 increased 22,559, or 2%, compared with March 31, 1999.
March 31,
--------------------------
2000 1999
---------- ----------
Meters-in-service at end of period
Residential 925,293 906,945
Commercial 98,338 95,724
Public authority and other 7,427 6,553
Industrial (including agricultural) 14,513 16,155
--------- ----------
Total meters 1,045,571 1,025,377
Propane customers 41,273 38,908
--------- ----------
Total 1,086,844 1,064,285
========= ==========
UTILITY, PROPANE AND ENERGY SERVICES OPERATING DATA
Atmos' Utility business is conducted by the Company's
regulated utility divisions: Energas Division, Greeley Gas
Division, Trans La Division, United Cities Division, Western
Kentucky Division as well as Shared Services. The Propane
business is conducted through United Cities Propane and includes
wholesale and retail propane sales to approximately 41,000
customers in four states. As discussed under "Status of Pending
Acquisitions and Joint Venture," Atmos has entered into an
agreement with three other companies to form a joint venture to
combine United Cities Propane Gas with the propane operations of
the other companies. The combined entity will be named US
Propane, L.P. The transaction is expected to be completed in the
summer of 2000. The Energy Services business includes non-
regulated irrigation sales, energy services to large volume
customers, non-regulated underground storage operations, a 45%
interest in Woodward Marketing, LLC, leasing of real estate,
vehicles and appliances and non-regulated shared services. The
following tables of operating statistics by segment summarizes
data of the utility, propane, and energy services segments of the
Company for the three-month and six-month periods ended March 31,
2000 and 1999. For further information regarding operating results
of the segments, see Note 7 of notes to condensed consolidated
financial statements.
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Three months ended March 31,
2000 1999
Sales volumes -- MMcf(1) -------- --------
Residential 29,612 31,378
Commercial 12,588 13,069
Public authority and other 2,462 2,275
Industrial (including agricultural) 9,245 9,492
------- ------
Total 53,907 56,214
Transportation volumes -- MMcf(1) 16,211 15,265
------- ------
TOTAL THROUGHPUT - MMcf (1) 70,118 71,479
======= ======
Propane - Gallons (000's) 10,113 10,568
======= ======
OPERATING REVENUES (000's)
Gas sales revenues
Residential $168,635 $145,845
Commercial 67,299 56,377
Public authority and other 11,051 7,903
Industrial (including agricultural) 38,008 30,680
-------- --------
Total gas sales revenues 284,993 240,805
Transportation revenues 6,590 5,645
Propane revenues 11,603 10,026
Other revenues 11,011 4,950
-------- --------
Total operating revenues $314,197 $261,426
======== ========
Cost of gas (excluding propane and other)$181,317 $141,588
======== ========
Average gas sales revenues per Mcf $ 5.29 $ 4.28
Average transportation revenue per Mcf $ .41 $ .37
Average cost of gas per Mcf sold $ 3.36 $ 2.52
(1) Volumes are reported as metered in million cubic feet
("MMcf").
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS
Six months ended March 31,
2000 1999
Sales volumes -- MMcf(1) -------- --------
Residential 49,541 52,493
Commercial 22,668 23,195
Public authority and other 4,295 4,468
Industrial (including agricultural) 16,555 16,932
-------- -------
Total 93,059 97,088
Transportation volumes -- MMcf(1) 30,721 29,703
-------- -------
TOTAL THROUGHPUT - MMcf (1) 123,780 126,791
======== =======
Propane - Gallons (000's) 16,467 16,706
======== =======
OPERATING REVENUES (000's)
Gas sales revenues
Residential $285,939 $257,056
Commercial 119,737 103,670
Public authority and other 19,853 17,021
Industrial (including agricultural) 69,015 56,460
-------- --------
Total gas sales revenues 494,544 434,207
Transportation revenues 12,207 12,450
Propane revenues 19,441 17,321
Other revenues 12,463 7,675
-------- --------
Total operating revenues $538,655 $471,653
======== ========
Cost of gas (excluding propane and other)$313,132 $257,461
======== ========
Average gas sales revenues per Mcf $ 5.31 $ 4.47
Average transportation revenue per Mcf $ .40 $ .42
Average cost of gas per Mcf sold $ 3.36 $ 2.65
(1) Volumes are reported as metered in million cubic feet
("MMcf").
ATMOS ENERGY CORPORATION
OPERATING STATISTICS BY SEGMENT
Three months ended
March 31,
-----------------------
2000 1999
--------- ---------
UTILITY
Operating revenues ($000) $ 283,214 $ 238,718
Sales volumes (MMcf) 51,099 53,161
Transportation volumes (MMcf) 16,211 15,265
------ ------
Total throughput 67,310 68,426
====== ======
Heating degree days
Actual 1,686 1,758
30-year normal 2,130 2,130
Percent of normal 79% 83%
Meters, end of period 1,045,571 1,025,377
PROPANE
Operating revenues ($000) $11,603 $10,026
Sales volumes (000 gallons):
Retail 9,098 9,149
Wholesale 1,015 1,419
------- -------
Total 10,113 10,568
======= =======
Propane degree days 1,829 1,933
Percent of normal 85% 89%
Customers, end of period 41,273 38,908
ENERGY SERVICES
Operating revenues ($000) $19,380 $12,682
Gas revenues ($000) $ 9,216 $ 9,173
Gas sales volumes (MMcf):
Irrigation 1,418 1,653
Industrial 1,390 1,400
------- -------
Total 2,808 3,053
======= =======
Atmos equity in earnings of WMLLC ($000) $ 1,355 $ 1,447
NOTE: Segment operating revenues and volumes are net of inter-
segment eliminations. See Note 7 for intersegment revenues.
ATMOS ENERGY CORPORATION
OPERATING STATISTICS BY SEGMENT
Six months ended
March 31,
-----------------------
2000 1999
--------- ---------
UTILITY
Operating revenues ($000) $ 491,914 $ 435,236
Sales volumes (MMcf) 88,003 92,500
Transportation volumes (MMcf) 30,721 29,703
------- -------
Total throughput 118,724 122,203
======= =======
Heating degree days
Actual 2,947 3,042
30-year normal 3,647 3,647
Percent of normal 81% 83%
Meters, end of period 1,045,571 1,025,377
PROPANE
Operating revenues ($000) $19,441 $17,321
Sales volumes (000 gallons):
Retail 14,834 14,647
Wholesale 1,633 2,059
------- -------
Total 16,467 16,706
======= =======
Propane degree days 3,152 3,210
Percent of normal 86% 87%
Customers, end of period 41,273 38,908
ENERGY SERVICES
Operating revenues ($000) $27,300 $19,096
Gas revenues ($000) $16,478 $13,981
Gas sales volumes (MMcf):
Irrigation 2,018 1,676
Industrial 3,038 2,912
------- -------
Total 5,056 4,588
======= =======
Atmos equity in earnings of WMLLC ($000) $ 4,387 $ 2,661
NOTE: Segment operating revenues and volumes are net of inter-
segment eliminations. See Note 7 for intersegment revenues.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
There have been no material changes from the information
provided in Item 7A of the Company's Annual Report on Form 10-K
for the year ended September 30, 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 3 of notes to condensed consolidated financial
statements herein for a description of legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of Atmos Energy
Corporation on February 9, 2000, 27,660,982 votes were cast as
follows:
VOTES VOTES
FOR WITHHELD
---------- --------
Class II Directors:
Richard W. Cardin 27,138,839 522,143
Thomas C. Meredith 27,130,278 530,704
Carl S. Quinn 27,140,521 520,461
Richard Ware II 27,135,150 525,832
The other directors will continue to serve until the
expiration of their terms. The term of the Class III directors,
Robert W. Best, Thomas J. Garland, Phillip E. Nichol and Charles
K. Vaughan will expire in 2001. The term of the Class I
directors, Travis W. Bain II, Dan Busbee, Gene C. Koonce and
Vincent J. Lewis, will expire in 2002. The term of the Class II
directors, listed above, will expire in 2003.
Item 5. Other Information
In March 2000, Thomas Pearson was named Vice President,
Customer Information and Technology. Mr. Pearson began working
with Atmos in March 1999 as an Arthur Andersen consultant. He was
project manager for several information technology initiatives.
In March 2000, Shirley Morgan Hines was elected Corporate
Secretary by the Atmos Board of Directors. Mrs. Hines joined the
Company as a Legal Assistant in 1986 and was named Assistant
Corporate Secretary in 1995.
In April 2000, J. Charles Goodman resigned from his position
with the Company as Executive Vice President of Utility
Operations. R. Earl Fischer, President of Energas Company, was
promoted to the additional title of Senior Vice President, Utility
Operations.
In April 2000, Larry J. Dagley resigned from his position with
the Company as Executive Vice President and Chief Financial
Officer. Mr. Dagley was elected Chief Operating Officer of US
Propane, L.P. J. Patrick Reddy was promoted to Senior Vice
President, Chief Financial Officer and Treasurer.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
A list of exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Exhibits
Index, which immediately precedes such exhibits.
(b) Reports on Form 8-K
The Company filed a Form 8-K Current Report, Item 5, Other
Events, dated February 16, 2000, announcing that it had
entered into an agreement to form a joint venture to combine
the operations of its wholly-owned subsidiary, United Cities
Propane Gas, Inc., with the propane operations of AGL
Resources, Inc., Piedmont Natural Gas Company, Inc., and TECO
Energy.
Under Item 7, Financial Statements and Exhibits, an exhibit
was attached: a copy of a related press release dated
February 16, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ATMOS ENERGY CORPORATION
(Registrant)
Date: May 11, 2000 By: /s/ DONALD P. BURMAN
------------------------------
Donald P. Burman
Assistant Controller
(Chief Accounting Officer
and duly authorized signatory)
EXHIBITS INDEX
Item 6(a)
Exhibit Page
Number Description Number
- ------- ----------- -------
15 Letter regarding unaudited interim
financial information
27 Financial Data Schedule for Atmos Energy
Corporation for the six months ended
March 31, 2000
EXHIBIT 15
----------
Board of Directors
Atmos Energy Corporation
We are aware of the incorporation by reference in the Registration
Statements (Form S-3 No. 33-37869, Form S-3 No. 33-70212, Form S-3
D/A No. 33-58220, Form S-3 No. 33-56915, Form S-3/A No. 333-03339,
Form S-3/A No. 333-32475, Form S-3/A No. 333-50477, Form S-3 No. 333-
93705, Form S-3 No. 333-95525, Form S-4 No. 333-13429, Form S-8 No.
33-57687, Form S-8 No. 33-68852, Form S-8 No. 33-57695, Form S-8 No.
333-32343, Form S-8 No. 333-46337, Form S-8 No. 333-73143, and Form
S-8 No. 333-73145) of Atmos Energy Corporation of our report dated
April 26, 2000, relating to the unaudited condensed consolidated
interim financial statements of Atmos Energy Corporation which are
included in its Form 10-Q for the quarter ended March 31, 2000.
ERNST & YOUNG LLP
May 11, 2000
Dallas, Texas
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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