-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FCTtm3AYjmHp7+3poBRa4VpY2cueO42ox+/hm/GUqe1UvNEC4/rsP6G3pOuFv9oN R7kTaFSy4gGWjU5/11YVTA== 0000731802-96-000005.txt : 19960509 0000731802-96-000005.hdr.sgml : 19960509 ACCESSION NUMBER: 0000731802-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960508 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATMOS ENERGY CORP CENTRAL INDEX KEY: 0000731802 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 751743247 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10042 FILM NUMBER: 96557681 BUSINESS ADDRESS: STREET 1: 1800 THREE LINCOLN CTR STREET 2: 5430 LBJ FREEWAY CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2149349227 MAIL ADDRESS: STREET 1: 1800 THREE LINCOLN CTR STREET 2: 5430 LBJ FREEWAY CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: ENERGAS CO DATE OF NAME CHANGE: 19881024 10-Q 1 ATMOS ENERGY CORP 10-Q FOR QUARTER ENDED 3/31/96 WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 1-10042 ATMOS ENERGY CORPORATION (Exact name of registrant as specified in its charter) TEXAS 75-1743247 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 1800 Three Lincoln Centre 5430 LBJ Freeway, Dallas, Texas 75240 (Address of principal executive offices) (Zip Code) (214) 934-9227 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . Number of shares outstanding of each of the issuer's classes of common stock, as of April 26, 1996. Class Shares Outstanding ----- ------------------ No Par Value 15,955,858 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements ATMOS ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, September 30, 1996 1995 ------------ ------------ ASSETS (Unaudited) Property, plant and equipment $633,483 $595,359 Less accum. depreciation and amort. 246,104 232,107 -------- -------- Net property, plant and equipment 387,379 363,252 Current assets Cash and cash equivalents 3,791 2,294 Accounts receivable, net 71,108 25,690 Inventories 6,994 6,747 Gas stored underground 2,023 10,758 Prepayments 1,984 2,747 -------- -------- Total current assets 85,900 48,236 Deferred charges and other assets 36,186 34,295 -------- -------- $509,465 $445,783 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity Common stock outstanding: 15,941,815 shares at 3/31/96 and 15,519,112 shares at 9/30/95 $ 80 $ 78 Additional paid-in capital 109,073 106,496 Retained earnings 72,352 51,704 -------- -------- Total shareholders' equity 181,505 158,278 Long-term debt 125,303 131,303 -------- -------- Total capitalization 306,808 289,581 Current liabilities Current maturities of long-term debt 6,000 7,000 Notes payable to banks 26,100 33,500 Accounts payable 53,322 24,945 Taxes payable 15,469 1,926 Customers' deposits 10,041 9,343 Other current liabilities 18,934 10,641 -------- -------- Total current liabilities 129,866 87,355 Deferred income taxes 34,801 33,120 Deferred credits and other liabilities 37,990 35,727 -------- -------- $509,465 $445,783 ======== ======== See accompanying notes to consolidated financial statements. 2 ATMOS ENERGY CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data) Three months ended March 31, -------------------- 1996 1995 -------- -------- Operating revenues $191,104 $157,294 Purchased gas cost 125,710 97,717 -------- -------- Gross profit 65,394 59,577 Operating expenses Operation 20,947 22,335 Maintenance 1,066 1,148 Depreciation and amortization 5,335 5,163 Taxes, other than income 5,506 5,387 Income taxes 10,368 7,855 -------- -------- Total operating expenses 43,222 41,888 -------- -------- Operating income 22,172 17,689 Other income (expense) (145) (225) Interest charges, net 3,644 3,519 -------- -------- Net income $ 18,383 $ 13,945 ======== ======== Net income per share $ 1.15 $ .91 ======== ======== Cash dividends per share $ .24 $ .23 ======== ======== Average shares outstanding 15,927 15,381 ======== ======== See accompanying notes to consolidated financial statements. 3 ATMOS ENERGY CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data) Six months ended March 31, -------------------- 1996 1995 -------- -------- Operating revenues $321,572 $275,142 Purchased gas cost 205,453 172,083 -------- -------- Gross profit 116,119 103,059 Operating expenses Operation 42,668 42,143 Maintenance 2,141 2,152 Depreciation and amortization 10,926 10,323 Taxes, other than income 9,704 9,465 Income taxes 15,563 11,501 -------- -------- Total operating expenses 81,002 75,584 -------- -------- Operating income 35,117 27,475 Other income (expense) 15 (86) Interest charges 7,516 6,968 -------- -------- Net income $ 27,616 $ 20,421 ======== ======== Net income per share $ 1.75 $ 1.33 ======== ======== Cash dividends per share $ .48 $ .46 ======== ======== Average shares outstanding 15,800 15,355 ======== ======== See accompanying notes to consolidated financial statements. 4 ATMOS ENERGY CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data) Twelve months ended March 31, -------------------- 1996 1995 -------- -------- Operating revenues $482,250 $442,505 Purchased gas cost 302,180 278,996 -------- -------- Gross profit 180,070 163,509 Operating expenses Operation 83,956 87,256 Maintenance 4,265 5,044 Depreciation and amortization 21,344 19,825 Taxes, other than income 16,850 15,926 Income taxes 13,636 8,164 -------- -------- Total operating expenses 140,051 136,215 -------- -------- Operating income 40,019 27,294 Other income 318 332 Interest charges 14,269 12,856 -------- -------- Net income $ 26,068 $ 14,770 ======== ======== Net income per share $ 1.67 $ .97 ======== ======== Cash dividends per share $ .94 $ .90 ======== ======== Average shares outstanding 15,638 15,305 ======== ======== See accompanying notes to consolidated financial statements. 5 ATMOS ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Six months ended March 31, ------------------- 1996 1995 ------- -------- Cash Flows From Operating Activities Net income $27,616 $ 20,421 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Charged to depreciation and amortization 10,926 10,323 Charged to other accounts 1,795 1,847 Deferred income taxes (benefit) 1,681 (786) Other (223) 1,663 -------- -------- 41,795 33,468 Net change in operating assets and liabilities 15,339 24,031 -------- -------- Net cash provided by operating activities 57,134 57,499 Cash Flows From Investing Activities Retirements of property, plant and equipment 2,769 2,646 Capital expenditures (39,617) (29,202) -------- -------- Net cash used in investing activities (36,848) (26,556) Cash Flows From Financing Activities Net decrease in notes payable to banks (7,400) (58,100) Cash dividends paid (7,562) (7,067) Issuance of long-term debt - 40,000 Repayment of long-term debt (7,000) (4,000) Issuance of common stock 3,173 1,699 -------- -------- Net cash used in financing activities (18,789) (27,468) -------- -------- Net increase in cash and cash equivalents 1,497 3,475 Cash and cash equivalents at beginning of period 2,294 2,766 -------- -------- Cash and cash equivalents at end of period $3,791 $ 6,241 ======== ======== See accompanying notes to consolidated financial statements. 6 ATMOS ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1996 1. Unaudited interim financial information In the opinion of management, all material adjustments necessary for a fair presentation have been made to the unaudited interim period financial statements. Such adjustments consisted only of normal recurring accruals. Because of seasonal and other fac- tors, the results of operations for the six-month period ended March 31, 1996 are not indicative of expected results of operations for the year ending September 30, 1996. These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q, and should be read in conjunction with the audited consolidated financial statements in the 1995 annual report to shareholders of Atmos Energy Corporation ("Atmos" or the "Company"). The condensed consolidated balance sheet of Atmos Energy Corporation, as of March 31, 1996, and the related condensed consolidated statements of income for the three-month, six-month, and twelve-month periods ended March 31, 1996 and 1995, and the condensed consolidated statements of cash flows for the six-month periods ended March 31, 1996 and 1995, included herein have been subjected to a review by Ernst & Young LLP, the Company's independent accountants, whose report is included herein. Common stock - As of March 31, 1996, the Company had 75,000,000 shares of common stock, no par value (stated at $.005 per share), authorized and 15,941,815 shares outstanding. 2. Business Combination In November 1995, Atmos acquired by means of a merger, all of the assets and liabilities of Oceana Heights Gas Company ("Oceana") of Thibodaux, Louisiana. The transaction was accounted for as a pooling of interests. The outstanding shares of Oceana capital stock were converted into 313,411 shares of Atmos common stock having a market value of $6.4 million. Subsequent to the merger, the business of Oceana has been operated through the Company's Trans Louisiana Gas Company division ("Trans La Division"). The acquisition increased the Trans La Division's customer base by approximately 9,200 customers, or 13 percent, to over 79,000 customers. Although significant for the Trans La Division's operations, the acquisition did not have a material impact on the Company's financial condition and results of operations. The acquisition transaction and Oceana's operating results for the six months ended March 31, 1996 are reflected in the Company's financial statements for the six months ended March 31, 1996. 3. Contingencies On March 15, 1991, suit was filed in the 15th Judicial District 7 Court of Lafayette Parish, Louisiana, by the "Lafayette Daily Advertiser" and others against the Trans La Division, Trans Louisiana Industrial Gas Company, Inc. ("TLIG"), a wholly owned subsidiary of the Company, and Louisiana Intrastate Gas Corporation and certain of its affiliates ("LIG"). LIG is the Company's primary supplier of natural gas in Louisiana and is not otherwise affiliated with the Company. The plaintiffs purported to represent a class consisting of all residential and commercial gas customers in the Trans La Division's service area. Among other things, the lawsuit alleged that the defendants violated antitrust laws of the state of Louisiana by manipulating the cost-of-gas component of the Trans La Division's gas rate to the purported customer class, thereby causing such purported class members to pay a higher rate. The plaintiffs made no specific allegation of an amount of damages. The defendants brought an appeal to the Louisiana Supreme Court of rulings by the trial court and the Third Circuit Court of Appeal which denied defendants' exceptions to the jurisdiction of the trial court. It was the position of the defendants that the plaintiffs' claims amount to complaints about the level of gas rates and should be within the exclusive jurisdiction of the Louisiana Commission. On January 19, 1993, the Louisiana Supreme Court issued a decision reversing in part the lower courts' rulings, dismissing all of plaintiffs' claims against the defendants which seek damages due to alleged overcharges and further ruling that all such claims are within the exclusive jurisdiction of the Louisiana Commission. Any claims which seek damages other than overcharges were remanded to the trial court but were stayed pending the completion of the Louisiana Commission proceeding referred to below. The Company has reached a tentative settlement with the plaintiffs in the context of the Louisiana Commission proceeding referred to below, which settlement will resolve all outstanding issues relating to the Company, subject to certain procedural conditions. On July 14, 1995, the Louisiana Commission entered an order approving a settlement with the Company and TLIG in connection with its investigation of the costs included in the Trans La Division's purchased gas adjustment component in its rates. The order exonerated the Company of any wrongdoing or manipulation of the cost of gas component of its gas rate to residential and commercial customers. In the settlement, the Company agreed to refund approximately $541,000 plus interest to the Trans La Division's customers over a two-year period due to certain issues related to the calculation of the weighted average cost of gas. The refund totaling approximately $1,016,000, which includes interest calculated through October 1, 1995, began in September 1995 and will be credited to customer bills along with interest 8 that accrues after October 1, 1995. The Company refunded $533,000 under the settlement in the six months ended March 31, 1996. Most of the issues that generated the refunds arose before Trans Louisiana Gas Company was acquired by the Company in 1986. The Greeley Gas Company Division of the Company was named a defendant in several lawsuits filed as a result of a fire in a building in Steamboat Springs, Colorado on February 3, 1994. The plaintiffs claimed that the fire resulted from a leak in a severed gas service line owned by the Greeley Division. On January 12, 1996, the jury awarded the plaintiffs an amount totalling approximately $4.9 million, which amount included both compensatory and punitive damages. The jury assessed the Company with liability for all of the damages awarded. The Company has adequate insurance to cover the damages awarded against the Company in this matter. The Company has filed a Notice of Appeal with the Colorado Court of Appeals with respect to this case. From time to time, claims are made and lawsuits are filed against the Company arising out of the ordinary business of the Company. In the opinion of the Company's management, liabilities, if any, arising from these actions are either covered by insurance, adequately reserved for by the Company or would not have a material adverse effect on the financial condition of the Company. 4. Long-term and short-term debt During the six months ended March 31, 1996, the Company paid installments due of $2,000,000 on its 9.75% Senior Notes, $3,000,000 on its 9.76% Senior Notes and $2,000,000 on its 11.2% Senior Notes. At March 31, 1996, the Company had committed, short-term, unsecured bank credit facilities totaling $90,000,000, all of which was unused. The Company also had aggregate uncommitted lines of $150,000,000, $123,900,000 of which was unused at March 31, 1996. 5. Statements of cash flows Supplemental disclosures of cash flow information for the six- month periods ended March 31, 1996 and 1995 are presented below. Six months ended March 31, 1996 1995 ------ ------ (In thousands) Cash paid for Interest $7,755 $6,000 Income taxes 1,245 6,062 9 INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors Atmos Energy Corporation We have reviewed the accompanying condensed consolidated balance sheet of Atmos Energy Corporation as of March 31, 1996, and the related condensed consolidated statements of income for the three-month, six-month, and twelve-month periods ended March 31, 1996 and 1995 and the condensed consolidated statements of cash flows for the six-month periods ended March 31, 1996 and 1995. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit con- ducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifi- cations that should be made to the accompanying condensed con- solidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Atmos Energy Corporation as of September 30, 1995, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated November 8, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of September 30, 1995, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ERNST & YOUNG LLP Dallas, Texas May 1, 1996 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The Company distributes and sells natural gas to residential, commercial, industrial and agricultural customers in six states. Such business is subject to regulation by state and/or local authorities in each of the states in which the Company operates. In addition, the Company's business is affected by seasonal weather patterns, competition within the energy industry, and economic conditions in the areas that the Company serves. Revenues and sales volume statistics for the three-month, six- month, and twelve-month periods ended March 31, 1996 and 1995 appear on pages 16-18. Average meters in service are as follows: Six months ended March 31, ------------------- 1996 1995 ------- ------- Average Meters in Service Residential 586,437 570,925 Commercial 61,454 60,408 Industrial (including agricultural) 19,020 19,422 Public authority and other 5,038 4,967 ------- ------- Total 671,949 655,722 ======= ======= Rate Activity In February 1995, the Company filed with the Kentucky Commission for a rate increase for its Western Kentucky Gas Company Division. In October 1995, the Kentucky Commission issued an order authorizing the Company to increase its rates by $2.3 million annually effective November 1, 1995, and by an additional $1.0 million annually beginning in March 1996. The settlement included a decrease in depreciation rates, recovery of expenses related to adoption of SFAS No. 106 and included a provision for the Company to begin a three-year demand-side management pilot program for the 1996-97 heating season, which could cost up to $450,000 annually, resulting in a total annual operating income increase of approximately $4.0 million. The Company provides natural gas service to approximately 168,000 customers in Kentucky. In September 1992, the Louisiana Public Service Commission ("Louisiana Commission") issued a rate order to the Company's Trans La Division which included a rate stabilization clause ("RSC") for three years that provided for an annual adjustment to the Company's rates to reflect changes in expenses, revenues and 11 invested capital following an annual review. The RSC provided an opportunity for a return on jurisdictional common equity of between 11.75% and 12.25%. An increase of $1.1 million annually or 2.0% went into effect on March 6, 1995. In April 1996, the Company filed a request with the Louisiana Commission to continue the RSC. FINANCIAL CONDITION For the six months ended March 31, 1996, net cash provided by operating activities totaled $57.1 million compared with $57.5 million for the six months ended March 31, 1995. Net income for the six months ended March 31, 1996 increased $7.2 million from $20.4 million for the six months ended March 21, 1995, as discussed under "Results of Operations." The net change in operating assets and liabilities was $15.3 million for the six months ended March 31, 1996 compared with $24.0 million for the six months ended March 31, 1995. Due to the seasonal nature of the natural gas distribution business, large swings in accounts receivable, accounts payable and inventories of gas in under- ground storage will occur when entering and leaving the winter or heating season. Major cash flows used in investing activities for the six months ended March 31, 1996 included capital expenditures of $39.6 million compared with $29.2 million for the six months ended March 31, 1995. The capital expenditures budget for fiscal year 1996 is currently $67.6 million, as compared with actual capital expenditures of $62.9 million in fiscal 1995. Capital projects planned for 1996 include major expenditures for mains, services, meters, vehicles, and computer equipment. These expenditures will be financed from internally generated funds and financing activities. For the six months ended March 31, 1996, cash used in financing activities amounted to $18.8 million compared with $27.5 million for the six months ended March 31, 1995. During the six months ended March 31, 1996, notes payable to banks was reduced $7.4 million, as compared with $58.1 million for the six months ended March 31, 1995 due to seasonal factors and the refinancing of short-term debt with proceeds from the issuance of $40.0 million of long-term debt in the quarter ended December 31, 1994. Payments of long-term debt increased $3.0 million to $7.0 million for the six months ended March 31, 1996. Payments of long-term debt consisted of a $2.0 million installment on the Company's 9.75% Senior Notes due in 1996, a $3.0 million installment on the 9.76% Senior Notes and a $2.0 million installment on the 11.2% Senior Notes. The Company paid $7.6 million in cash dividends during the six months ended March 31, 1996, compared with $7.1 million in cash dividends paid during the six months ended March 31, 1995. This reflects a $.01 per share increase in the quarterly dividend rate and an increase in the number of shares outstanding. In the six-month period ended March 31, 1996, the Company issued 422,703 shares of common stock including 313,411 12 shares issued in connection with the Oceana acquisition. The Company believes that internally generated funds, its short- 13 term credit facilities and access to the debt and equity capital markets will provide necessary working capital and liquidity for capital expenditures and other cash needs for the remainder of fiscal 1996. At March 31, 1996 the Company had $90.0 million of committed short-term credit facilities, all of which was avail- able for additional borrowing. The committed lines are renewed or renegotiated at least annually. At March 31, 1996, the Company also had $150.0 million of uncommitted short-term lines, $123.9 million of which was unused. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996, COMPARED WITH THREE MONTHS ENDED MARCH 31, 1995 Operating revenues increased by 21% to $191.1 million for the three months ended March 31, 1996 from $157.3 million for the three months ended March 31, 1995. The most significant factor contributing to the increase in operating revenues was increased sales to weather sensitive customers. During the quarter ended March 31, 1996, temperatures averaged 15% colder than in the corresponding quarter of the prior year, and were approximately equal to the 30-year normal weather. The total volume of gas sold and transported for the three months ended March 31, 1996 was 52.4 billion cubic feet ("Bcf") compared with 48.6 Bcf for the three months ended March 31, 1995. The average sales price per Mcf sold increased $.34 to $4.08 primarily due to an increase in the average cost of gas and rate increases implemented during the past year. The average cost of gas per Mcf sold increased to $2.74 for the three months ended March 31, 1996, from $2.40 for the three months ended March 31, 1995 due to increased supply costs. Recent rate increases implemented include the following: a $2.3 million annual rate increase in Kentucky effective in November 1995 and an additional $1.0 million annual increase effective in March 1996, and a $1.1 million rate stabilization clause annual increase in Louisiana effective in March 1995. Gross profit increased by 10% to $65.4 million for the three months ended March 31, 1996, from $59.6 million for the three months ended March 31, 1995. Operating expenses, excluding income taxes, decreased to $32.9 million for the three months ended March 31, 1996 from $34.0 million for the three months ended March 31, 1995. Factors contributing to the decrease in operating expenses in the 1996 quarter were lower administrative and general expense and customer accounts expense. Operating income increased for the three months ended March 31, 1996 to $22.2 million from $17.7 million for the three months ended March 31, 1995. The increase in operating income primarily resulted from increased gross profit. Income taxes increased $2.5 million or 32% in the quarter ended March 31, 1996 compared with the corresponding quarter of the prior year due to increased pre-tax income. 14 Interest expense increased slightly for the three months ended March 31, 1996 compared with the three months ended March 31, 1995. Net income increased for the three months ended March 31, 1996 by 32% to $18.4 million from $13.9 million for the three months ended March 31, 1995. This increase in net income primarily resulted from the increase in operating income. SIX MONTHS ENDED MARCH 31, 1996, COMPARED WITH SIX MONTHS ENDED MARCH 31, 1995 Operating revenues increased by 17% to $321.6 million for the six months ended March 31, 1996 from $275.1 million for the six months ended March 31, 1995. The primary factor contributing to the higher operating revenues was weather in the Company's service areas which was 14% colder than weather in the corresponding six month period of the prior fiscal year and approximately equal to the 30-year normal weather. The average sales price per Mcf increased to $3.99 for the six months ended March 31, 1996 from $3.86 for the six months ended March 31, 1995. The increase in the average sales price reflects increased cost of gas and rate increases in Texas, Louisiana, and Kentucky implemented since October 1, 1994. The average cost of gas per Mcf sold increased to $2.60 for the six months ended March 31, 1996 from $2.50 for the six months ended March 31, 1995 because of generally higher gas supply costs. Gross profit increased to $116.1 million for the six months ended March 31, 1996, compared with $103.1 million for the six months ended March 31, 1995. Operating expenses, excluding income taxes, increased to $65.4 million in the six months ended March 31, 1996, from $64.1 million in the six months ended March 31, 1995. The principal factors contributing to the increase in operating expenses were increases in distribution expense, depreciation expense, and taxes other than income taxes. The provision for income taxes for the six months ended March 31, 1996 increased $4.1 million from the provision for the corres- ponding period of the prior year due to increased pre-tax income. Net income increased 35% for the six months ended March 31, 1996, to $27.6 million from $20.4 million for the six months ended March 31, 1995. The increase in net income resulted primarily from the increase in operating income. Dividends per share increased approximately 4% to $.48 for the six months ended March 31, 1996. Interest expenses increased 8% from the corresponding six-month period of the prior year. Average shares outstanding increased 3% due primarily to shares issued for the Oceana acquisition. TWELVE MONTHS ENDED MARCH 31, 1996, COMPARED WITH TWELVE MONTHS ENDED MARCH 31, 1995 Operating revenues increased by 9% to $482.3 million for the 12 months ended March 31, 1996 from $442.5 million for the 12 months ended March 31, 1995. The increased revenues were caused by 15 increased sales volumes and higher average sales prices as a result of colder winter weather, rate increases and higher gas costs. Sales and transportation volumes increased to 146.1 Bcf for the 12 months ended March 31, 1996 compared with 145.5 Bcf for the corresponding prior period. The average sales price per Mcf increased to $3.92 from $3.86. The average cost of gas per Mcf sold decreased from $2.54 to $2.53 for the 12 months ended March 31, 1996. The average sales price reflects rate increases implemented in Texas, Louisiana, Colorado and Kentucky since March 31, 1994. Gross profit increased by 10% to $180.1 million from $163.5 million in the 12 months ended March 31, 1995. Operating expenses, excluding income taxes, decreased from $128.1 million in the 12 months ended March 31, 1995, to $126.4 million in the 12 months ended March 31, 1996. Factors contributing to the decrease in operating expenses were decreased operation and maintenance expense. Income taxes increased $5.5 million for the 12 months ended March 31, 1996, compared with the 12 months ended March 31, 1995. The primary reason was increased pre-tax income. Operating income increased in the 12 months ended March 31, 1996 by 47% to $40.0 million from $27.3 million for the 12 months ended March 31, 1995. The primary reason for the increase in operating income was increased operating revenues resulting from weather that was 16% colder than in the prior year and approximately equal to the thirty-year normal weather. Interest charges increased $1.4 million to $14.3 million, compared with $12.9 million for the prior year. This was caused by the issuance of $40 million of Senior Notes in November 1994 and higher short-term borrowing rates for the twelve months ended March 31, 1996. Net income for the 12 months ended March 31, 1996 was $26.1 million compared with $14.8 million for the 12 months ended March 31, 1995. The increase in net income resulted from the increase in operating income discussed above. Earnings per share increased by 72% to $1.67. Average shares outstanding increased approximately 2% as compared with the prior year. Dividends per share increased approximately 4% to $.94. 16 ATMOS ENERGY CORPORATION CONSOLIDATED OPERATING STATISTICS Quarter ended March 31, 1996 1995 ------- ------- Sales Volumes - MMcf (1) Residential 24,276 21,551 Commercial 9,561 8,410 Industrial (including agricultural) 9,788 8,642 Public authority and other 2,334 2,196 ------- ------- Total 45,959 40,799 Transportation Volumes - MMcf (1) 6,473 7,783 ------- ------- Total Volumes Handled - MMcf (1) 52,432 48,582 ======= ======= Operating Revenues (000's) Gas Sales Revenues Residential $108,000 $ 86,925 Commercial 39,182 31,738 Industrial (including agricultural) 30,630 25,943 Public authority and other 9,850 7,908 -------- -------- Total Gas Revenues 187,662 152,514 Transportation Revenues 1,833 3,339 Other Revenues 1,609 1,441 -------- -------- Total Operating Revenues $191,104 $157,294 ======== ======== Average Gas Sales Revenues per Mcf $ 4.08 $ 3.74 Average Transportation Revenue per Mcf $ .28 $ .43 Cost of Gas per Mcf Sold $ 2.74 $ 2.40 HEATING DEGREE DAYS Weather Service Sensitive Quarter ended March 31, Area Customers % 1996 1995 Normal - -------------- ----------- ----- ----- ------ Texas 47% 1,845 1,617 1,893 Kentucky 26% 2,442 2,121 2,416 Louisiana 11% 1,163 892 1,047 Colorado, Kansas and Missouri 16% 2,983 2,611 2,953 ---- System Average 100% 2,106 1,827 2,104 (1) Volumes are reported as metered in million cubic feet ("MMcf"). 17 ATMOS ENERGY CORPORATION CONSOLIDATED OPERATING STATISTICS Six months ended March 31, 1996 1995 ------- ------- Sales Volumes - MMcf (1) Residential 41,132 35,756 Commercial 16,531 14,507 Industrial (including agricultural) 17,060 14,916 Public authority and other 4,210 3,761 ------- ------- Total 78,933 68,940 Transportation Volumes - MMcf (1) 13,683 17,423 ------- ------- Total Volumes Handled - MMcf (1) 92,616 86,363 ======= ======= Operating Revenues (000's) Gas Sales Revenues Residential $179,553 $149,809 Commercial 66,243 56,412 Industrial (including agricultural) 52,078 45,883 Public authority and other 16,973 13,920 -------- -------- Total Gas Revenues 314,847 266,024 Transportation Revenues 3,998 6,671 Other Revenues 2,727 2,447 -------- -------- Total Operating Revenues $321,572 $275,142 ======== ======== Average Gas Sales Revenues per Mcf $ 3.99 $ 3.86 Average Transportation Revenue per Mcf $ .29 $ .38 Cost of Gas per Mcf Sold $ 2.60 $ 2.50 HEATING DEGREE DAYS Weather Service Sensitive Six months ended March 31, Area Customers % 1996 1995 Normal - -------------- ----------- ----- ----- ------ Texas 47% 3,094 2,802 3,275 Kentucky 26% 4,211 3,472 3,992 Louisiana 11% 1,898 1,392 1,723 Colorado, Kansas and Missouri 16% 5,145 4,822 5,292 ---- System Average 100% 3,579 3,142 3,611 (1) Volumes are reported as metered in million cubic feet ("MMcf"). 18 ATMOS ENERGY CORPORATION CONSOLIDATED OPERATING STATISTICS Twelve months ended March 31, 1996 1995 ------- ------- Sales Volumes - MMcf (1) Residential 52,141 46,071 Commercial 21,780 19,610 Industrial (including agricultural) 40,190 39,536 Public authority and other 5,228 4,672 ------- ------- Total 119,339 109,889 Transportation Volumes - MMcf (1) 26,723 35,618 ------- ------- Total Volumes Handled - MMcf (1) 146,062 145,507 ======= ======= Operating Revenues (000's) Gas Sales Revenues Residential $239,909 $208,018 Commercial 89,813 79,316 Industrial (including agricultural) 117,010 119,335 Public authority and other 21,238 18,039 -------- -------- Total Gas Sales Revenues 467,970 424,708 Transportation Revenues 9,038 12,794 Other Revenues 5,242 5,003 -------- -------- Total Operating Revenues $482,250 $442,505 ======== ======== Average Gas Sales Revenues per Mcf $ 3.92 $ 3.86 Average Transportation Revenue per Mcf $ .34 $ .36 Cost of Gas per Mcf Sold $ 2.53 $ 2.54 HEATING DEGREE DAYS Weather Service Sensitive Twelve months ended March 31, Area Customers % 1996 1995 Normal - -------------- ----------- ----- ----- ------ Texas 47% 3,444 3,067 3,528 Kentucky 26% 4,531 3,811 4,376 Louisiana 11% 1,954 1,463 1,760 Colorado, Kansas and Missouri 16% 6,301 5,511 6,234 ---- System Average 100% 4,016 3,473 3,983 (1) Volumes are reported as metered in million cubic feet ("MMcf"). 19 PART II. OTHER INFORMATION Item 1. Legal Proceedings See Note 3 of notes to consolidated financial statements on pages 7-9 herein for a description of legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of Shareholders of Atmos Energy Corporation on February 14, 1996, 14,164,753 votes were cast as follows: VOTES VOTES BROKER FOR WITHHELD NON-VOTE ---------- ---------- -------- Class I Directors: Travis W. Bain II 14,031,884 132,869 - Dan Busbee 14,031,267 133,486 - John W. Norris, Jr. 14,019,378 145,375 - Class II Directors: Robert F. Stephens 13,978,195 186,558 - Thomas C Meredith 13,999,316 165,437 - Class III Directors: James F. Purser 13,980,331 184,422 - The other directors will continue to serve until the expiration of their terms. The term of the Class II directors, Carl S. Quinn and Richard Ware II will expire in 1997. The term of the Class III directors, Phillip E. Nichol, Lee E. Schlessman, and Charles K. Vaughan will expire in 1998. The term of the Class I directors, listed above, will expire in 1999. Item 5. Exhibits and Reports on Form 8-K (a) Exhibits A list of exhibits required by Item 601 of Regulation S-K and filed as part of this report is set forth in the Exhibits Index, which immediately precedes such exhibits. (b) Reports on Form 8-K None 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ATMOS ENERGY CORPORATION (Registrant) Date: May 8, 1996 By: /s/ JAMES F. PURSER ------------------------------ James F. Purser Executive Vice President and Chief Financial Officer Date: May 8, 1996 By: /s/ DAVID L. BICKERSTAFF ------------------------------ David L. Bickerstaff Vice President and Controller (Principal Accounting Officer) 21 EXHIBITS INDEX Item 6(a) Page Number or Exhibit Incorporation Number Description by Reference to ------- ----------------------------------- --------------- 15 Letter regarding unaudited interim financial information 27 Financial Data Schedule for Atmos for the quarter ended March 31, 1996 EX-15 2 EXHIBIT 15 FOR 10-Q 3/31/96 - AUDITOR REVIEW LTR EXHIBIT 15 ---------- May 8, 1996 Board of Directors Atmos Energy Corporation We are aware of the incorporation by reference in the Registra- tion Statements (Form S-3 No. 33-58220, Form S-3 No. 33-56915, Form S-8 No. 33-57687, Form S-8 No. 33-68852, and Form S-8 No. 33-57695) of Atmos Energy Corporation of our report dated May 1, 1996, relating to the unaudited condensed consolidated interim financial statements of Atmos Energy Corporation which are in- cluded in its Form 10-Q for the quarter ended March 31, 1996. Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. ERNST & YOUNG LLP Dallas, Texas EX-27 3 FINANCIAL DATA SCHEDULE FOR 6-MO ENDED 3/31/96
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF ATMOS ENERGY CORPORATION FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS SEP-30-1996 MAR-31-1996 PER-BOOK 387,379 0 85,900 36,186 0 509,465 80 109,073 72,352 181,505 0 0 125,303 26,100 0 0 6,000 0 2,602 225 167,730 509,465 321,572 15,563 270,892 286,455 35,117 15 35,132 7,516 27,616 0 27,616 7,562 810 57,134 1.75 1.75
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