UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1999 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.) Three Lincoln Centre, Suite 1800 5430 LBJ Freeway, Dallas, Texas 75240 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (972) 934-9227 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ---------------------- Common stock, No Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 --- --- "continued"
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant was $660,086,573 as of November 24, 1999. On November 24, 1999 the registrant had 31,316,186 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report to Shareholders for the year ended September 30, 1999 are incorporated by reference into Parts I, II and IV of this report. Portions of the registrant's Definitive Proxy Statement to be filed for the Annual Meeting of Shareholders on February 9, 2000 are incorporated by reference into Part III of this report.
ATMOS ENERGY CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999 TABLE OF CONTENTS Page no. Cautionary statement regarding forward-looking statements 5 PART I Item 1. Business 6 Acquisitions and Mergers 8 Operating Statistics 9 Utility Energy Services and Propane Data 14 Gas Sales 15 Gas Supply 16 Regulation and Rates 18 Competition 22 Employees 23 Item 2. Properties 23 Item 3. Legal Proceedings 24 Item 4. Submission of Matters to a Vote of Security Holders 24 Executive Officers of the Registrant 25 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 26 Item 6. Selected Financial Data 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 26 3
Page no. Item 8. Financial Statements and Supplementary Data 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 27 PART III Item 10. Directors and Executive Officers of the Registrant 28 Item 11. Executive Compensation 28 Item 12. Security Ownership of Certain Beneficial Owners and Management 28 Item 13. Certain Relationships and Related Transactions 28 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 29 4
Cautionary Statement under the Private Securities Litigation Reform Act of 1995 The matters discussed or incorporated by reference in this Annual Report on Form 10-K 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 Report 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 other 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 and competitive conditions, regulatory and business trends and decisions, technological developments, Year 2000 issues, 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. 5
PART I ITEM 1. BUSINESS Atmos Energy Corporation (the "Company") was organized under the laws of the State of Texas in 1983 as a subsidiary of Pioneer Corporation ("Pioneer") for the purposes of owning and operating Pioneer's natural gas distribution business in Texas. Immediately following the transfer of such business, which had been operated by Pioneer and its predecessors since 1906, Pioneer distributed the outstanding stock of the Company, then known as Energas Company, to Pioneer shareholders. In September 1988, the Company changed its name from Energas Company to Atmos Energy Corporation. As a result of its merger with United Cities Gas Company in July 1997, the Company became incorporated in the Commonwealth of Virginia as well as the State of Texas. The Company distributes and sells natural gas and propane to approximately 1,078,000 residential, commercial, industrial, agricultural, and other customers. The Company distributes and sells natural gas through approximately 1,038,000 meters in 802 cities, towns, and communities in service areas located in Texas, Louisiana, Kentucky, Colorado, Kansas, Illinois, Tennessee, Iowa, Virginia, Georgia, South Carolina and Missouri. The Company also transports gas for others through parts of its distribution system. It also distributes propane to approximately 40,000 customers in Kentucky, North Carolina, Virginia, and Tennessee. The Company's Texas distribution system is operated through its Energas Company division (the "Energas Division") and covers an area having a population of approximately 950,000 people. The economy of the area is based primarily on oil and gas production and agriculture. The principal cities served by the Energas Division include Amarillo, Lubbock, Midland, and Odessa. At September 30, 1999, the Company had approximately 316,000 regulated and non-regulated meters in service in Texas. The Company's Louisiana distribution system is operated through its Trans Louisiana Gas Company division (the "Trans La Division") and covers an area having a population of approximately 250,000 people. The economy of the area is based primarily on oil and gas production, agriculture, and food processing. The principal cities served by the Trans La Division are Lafayette, Pineville, and Natchitoches. At September 30, 1999, the Company had approximately 81,000 meters in service in Louisiana. The Company's Kentucky distribution system is operated through its Western Kentucky Gas Company division (the "Western Kentucky Division") and covers an area having a population of approximately 680,000 people. The economy of the area is based primarily on industry and agriculture. The principal cities served by the Western Kentucky Division include Bowling Green, Owensboro, and 6
Paducah. At September 30, 1999, the Company had approximately 180,000 meters in service in Kentucky. The Company's distribution systems in Colorado and parts of Kansas and Missouri are operated through its Greeley Gas Company division (the "Greeley Division") and covers an area having a combined population of approximately 530,000 people. The economies of the areas served are based on oil and gas production, agriculture and resort business. The principal cities and counties served by the Greeley Division include Greeley, Durango and Lamar, Colorado; Bonner Springs, Herington and Ulysses, Kansas; and Wyandotte and Johnson Counties in Kansas. At September 30, 1999 the Greeley Division had approximately 202,000 meters in service. The Company operates natural gas distribution systems in Georgia, Illinois, Iowa, South Carolina, Tennessee, Virginia and Missouri through its United Cities Gas Company division (the "United Cities Division") and covers an area having a combined population of approximately 6.4 million people. The economies of the areas served include customers engaged in the manufacture of asphalt, automobiles, auto parts, chemicals, electronics, food products, metals, textiles and wire, among others. The division also serves several colleges and a major army base. The principal cities served by the United Cities Division include Franklin and Murfreesboro, Tennessee; Hannibal, Missouri; and Gainesville and Columbus, Georgia. At September 30, 1999, the United Cities Division had approximately 259,000 meters in service. The Company also operates certain non-regulated businesses through various wholly-owned subsidiaries. One subsidiary, Atmos Storage, Inc. ("Storage"), provides natural gas storage services. It owns natural gas storage fields in Kentucky and Kansas to supplement natural gas used by customers in Kansas, Tennessee, and other states. Another subsidiary, Atmos Energy Marketing, LLC, owns a 45% interest in Woodward Marketing, LLC ("WMLLC"), a Delaware limited liability company that provides natural gas services. WMLLC provides gas marketing and energy management services to industrial customers, municipalities and local distribution companies, including the Trans La, Western Kentucky and United Cities Divisions. In addition, Atmos Energy Services, Inc. markets gas to industrial and irrigation customers primarily in West Texas through Enermart Energy Services Trust ("Enermart") and to industrial customers in Louisiana, and is developing plans for marketing various non-regulated services and products. United Cities Propane Gas, Inc. ("Propane") is engaged primarily in the retail distribution of propane ("LP") gas, and on a much smaller scale, the wholesale supply of LP gas. It exited 7
the direct merchandising and repair of propane gas appliances in 1999. Propane currently has operation and storage centers and storefront offices located in Tennessee, Kentucky, and North Carolina, with a total company storage capacity of approximately 2.5 million gallons. As of September 30, 1999, Propane served approximately 40,000 customers in the states listed above as well as Virginia. During the three-year period ended September 30, 1999, the propane operations added approximately 10,900 customers through acquisitions of six propane distribution companies and a propane transport company. Finally, Atmos Leasing Inc. and Atmos Energy Marketing, LLC, leases real estate and vehicles to the United Cities Division and leases appliances to residential customers. The natural gas distribution business is subject to a number of factors, many of which affect the Company from time to time. These include (i) the ongoing need to obtain adequate and timely rate relief from regulatory authorities to recover costs of service and earn a fair return on invested capital; (ii) inherent seasonality of the business; (iii) competition with alternate fuels; (iv) competition with other gas sources for industrial customers, including the ability of some customers to bypass the Company's facilities, which could result in loss of revenues and reduction in the Company's net income; and (v) possible volatility in the supply and price of natural gas and propane. The propane distribution business is also subject to seasonality and competition with alternate fuels and other suppliers. ACQUISITIONS AND MERGERS Since its organization in 1983, the Company has sought to expand its customer base and to diversify the weather patterns, local economic conditions, and regulatory environments to which its operations are subject. As part of this strategy, the Company acquired Trans Louisiana Gas Company, Inc. ("TLG") in January 1986, Western Kentucky Gas Utility Corporation ("WKG") in December 1987, Greeley Gas Company ("GGC") in December 1993, Oceana Heights Gas Company of Thibodaux, Louisiana in November 1995 and United Cities Gas Company ("UCGC") in July 1997. Subsequent to September 30, 1999, the Company entered into a definitive agreement with Southwestern Energy Company ("Southwestern") on October 15, 1999 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 by mid-year 2000, subject to approvals by the Missouri Public Service Commission and the Federal Energy Regulatory Commission. 8
The Company continues to consider and pursue, where appropriate, additional acquisitions of natural gas distribution properties and other business opportunities. For further information regarding the UCGC merger, see Note 2 of notes to consolidated financial statements in the Company's Annual Report to Shareholders. OPERATING STATISTICS The table on the following page reflects the operating statistics of Atmos including the United Cities Division for fiscal 1999 and 1998 and the restated operating statistics for 1997, 1996 and 1995 on a pooled basis with UCGC. It is followed by two tables of utility sales and operating statistics by business unit for 1999 and 1998, respectively. Certain prior year amounts have been reclassified to conform with the current year presentation. 9
ATMOS ENERGY CORPORATION CONSOLIDATED OPERATING STATISTICS <TABLE> <CAPTION> Year ended September 30, ------------------------------------------------------------- 1999 1998 1997 1996 1995 ----------- ----------- ----------- ----------- --------- <S> <C> <C> <C> <C> <C> METERS IN SERVICE, end of year Residential 919,012 889,074 870,747 860,229 834,376 Commercial 98,268 94,302 92,703 91,960 90,093 Industrial 14,329 16,322 17,217 19,403 19,762 Public authority and other 6,386 4,834 4,781 4,716 4,982 ----------- ----------- ----------- ----------- --------- Total meters 1,037,995 1,004,532 985,448 976,308 949,213 Propane customers 39,539 37,400 29,097 26,108 23,359 ----------- ----------- ----------- ----------- --------- Total 1,077,534 1,041,932 1,014,545 1,002,416 972,572 =========== =========== =========== =========== ========= HEATING DEGREE DAYS (2) Actual (weighted average) 3,374 3,799 3,909 4,043 3,706 Percent of normal 85% 95% 98% 101% 93% SALES VOLUMES - MMcf (3) Residential 67,128 73,472 75,215 77,001 69,666 Commercial 31,457 36,083 37,382 38,247 34,921 Industrial(including agricultural) 35,741 44,881 46,416 57,863 57,290 Public authority and other 5,793 4,937 5,195 5,182 4,779 ----------- ----------- ----------- ----------- --------- Total sales volumes 140,119 159,373 164,208 178,293 166,656 Transportation volumes - MMcf (3) 55,468 56,224 48,800 44,146 47,647 ----------- ----------- ----------- ----------- --------- TOTAL THROUGHPUT - MMcf (3) 195,587 215,597 213,008 222,439 214,303 =========== =========== =========== =========== ========= PROPANE - Gallons (000's) 22,291 23,412 25,204 33,637 28,854 =========== =========== =========== =========== ========= OPERATING REVENUES (000's) Gas sales revenues Residential $ 349,691 $ 410,538 $ 452,864 $ 409,039 $ 337,768 Commercial 144,836 184,046 193,302 186,032 150,949 Industrial(including agricultural) 117,382 161,382 168,386 187,693 171,591 Public authority and other 22,330 20,504 23,898 21,738 18,185 ----------- ----------- ----------- ----------- --------- Total gas sales revenues 634,239 776,470 838,450 804,502 678,493 Transportation revenues 23,101 23,971 19,885 18,872 19,813 Other gas revenues 4,500 8,121 6,385 13,751 9,374 ----------- ----------- ----------- ----------- --------- Total gas revenues 661,840 808,562 864,720 837,125 707,680 Propane revenues 22,944 29,091 33,194 38,372 24,651 Other revenues 5,412 10,555 8,921 11,194 17,224 ----------- ----------- ----------- ----------- --------- Total operating revenues $ 690,196 $ 848,208 $ 906,835 $ 886,691 $ 749,555 =========== =========== =========== =========== ========= AVERAGE SALES PRICE/Mcf $4.53 $4.87 $5.11 $4.51 $4.07 AVERAGE COST OF GAS/Mcf SOLD 2.79 3.24 3.51 3.15 2.70 AVERAGE TRANSPORTATION REVENUES/Mcf .42 .43 .41 .43 .42 </TABLE> See footnotes on page 13. 10
UTILITY SALES AND STATISTICAL DATA BY BUSINESS UNIT - 1999 (1) <TABLE> <CAPTION> Year ended September 30, 1999 ------------------------------------------------------------------ Western United Total Energas Trans La Kentucky Greeley Cities Utility --------- --------- --------- --------- --------- ----------- <S> <C> <C> <C> <C> <C> <C> METERS IN SERVICE, at end of year Residential 274,452 74,890 159,449 181,859 228,362 919,012 Commercial 26,300 5,567 18,371 17,736 30,294 98,268 Industrial (incl. agricultural) 13,014 128 238 339 610 14,329 Public authority and other 2,230 893 1,559 1,704 - 6,386 -------- ------- -------- -------- -------- ---------- Total 315,996 81,478 179,617 201,638 259,266 1,037,995 ======== ======= ======== ======== ======== ========== HEATING DEGREE DAYS(2) Actual 3,083 1,265 3,472 4,992 3,168 3,374 Normal 3,531 1,771 4,333 5,696 3,784 3,990 Percent of normal 87% 71% 80% 88% 84% 85% SALES VOLUMES-MMcf(3) Residential 20,871 3,111 11,822 16,748 14,576 67,128 Commercial 6,825 1,334 5,122 6,642 11,534 31,457 Industrial (incl. agricultural) 1,514 - 2,973 1,462 14,952 20,901 Public authority and other 2,234 769 1,371 1,419 - 5,793 -------- ------- -------- -------- -------- ---------- Total 31,444 5,214 21,288 26,271 41,062 125,279 TRANSPORTATION VOLUMES-MMcf(3) 4,637 696 25,814 10,021 14,300 55,468 -------- ------- -------- -------- -------- ---------- TOTAL THROUGHPUT-MMcf(3) 36,081 5,910 47,102 36,292 55,362 180,747 ======== ======= ======== ======== ======== ========== OTHER STATISTICS Operating revenues (000's) $123,656 $36,644 $100,165 $132,093 $224,755 $ 617,313 Miles of pipe 13,244 2,276 3,668 5,676 5,806 30,670 Employees(4) 372 128 258 286 427 1,471 Communities served 92 41 163 123 383 802 </TABLE> See footnotes on page 13. 11
UTILITY SALES AND STATISTICAL DATA BY BUSINESS UNIT - 1998 (1) <TABLE> <CAPTION> Year ended September 30, 1998 ------------------------------------------------------------------ Western United Total Energas Trans La Kentucky Greeley Cities Utility --------- --------- --------- --------- --------- ----------- <S> <C> <C> <C> <C> <C> <C> METERS IN SERVICE, at end of year Residential 272,190 74,522 156,107 176,316 209,939 889,074 Commercial 25,982 5,526 18,000 19,367 25,427 94,302 Industrial (incl. agricultural) 14,753 123 442 409 595 16,322 Public authority and other 2,278 977 1,579 - - 4,834 -------- ------- -------- -------- -------- ---------- Total 315,203 81,148 176,128 196,092 235,961 1,004,532 ======== ======= ======== ======== ======== ========== HEATING DEGREE DAYS(2) Actual 3,669 1,725 3,771 5,322 3,544 3,799 Normal 3,531 1,771 4,333 5,696 3,784 3,989 Percent of normal 104% 97% 87% 93% 94% 95% SALES VOLUMES-MMcf(3) Residential 23,594 3,670 12,413 17,602 16,193 73,472 Commercial 7,754 1,433 5,530 9,321 12,045 36,083 Industrial (incl. agricultural) 2,076 - 3,415 1,783 14,982 22,256 Public authority and other 2,559 917 1,461 - - 4,937 -------- ------- -------- -------- -------- ---------- Total 35,983 6,020 22,819 28,706 43,220 136,748 TRANSPORTATION VOLUMES-MMcf(3) 5,526 949 25,813 10,244 13,692 56,224 -------- ------- -------- -------- -------- ---------- TOTAL THROUGHPUT-MMcf(3) 41,509 6,969 48,632 38,950 56,912 192,972 ======== ======= ======== ======== ======== ========== OTHER STATISTICS Operating revenues (000's) $156,170 $36,326 $123,588 $148,331 $274,030 $ 738,445 Miles of pipe 13,217 2,248 3,647 5,322 5,674 30,108 Employees(4) 401 134 267 193 621 1,616 Communities served 92 41 163 123 383 802 </TABLE> See footnotes on page 13. 12
Notes to preceding tables: - -------------------------- (1) These tables present data for Atmos' five utility business units. Their operations include the regulated local distribution companies located in their respective service areas. (2) A heating degree day is equivalent to each degree that the average of the high and the low temperatures for a day is below 65 degrees. The greater the number of heating degree days, the colder the climate. Heating degree days are used in the natural gas industry to measure the relative coldness of weather experienced and to compare relative temperatures between one geographic area and another. Normal degree days are based on 30-year average National Weather Service data for selected locations. (3) Volumes are reported as metered in million cubic feet ("MMcf"). (4) The number of employees excludes 427 and 391 Atmos shared services and customer support center employees and 164 and 186 non-utility employees in 1999 and 1998, respectively. 13
UTILITY, ENERGY SERVICES AND PROPANE DATA The following table summarizes certain information regarding the operation of the utility, energy services and propane segments of the Company for each of the three years as of and for the period ended September 30, 1999. Amounts for 1997 have been restated to reflect the pooling of interests with UCGC on July 31, 1997. Energy Utility Services Propane Total ---------- -------- -------- ---------- (In thousands) 1999 Operating revenues (1) $ 617,313 $49,939 $22,944 $ 690,196 Operating income (loss) 49,000 5,782 (543) 54,239 Net income (loss) 10,800 7,813 (869) 17,744 Identifiable assets (1) 1,125,691 71,115 33,731 1,230,537 1998 Operating revenues (1) $ 738,445 $80,672 $29,091 $ 848,208 Operating income 100,665 11,595 619 112,879 Net income (loss) 43,332 11,999 (66) 55,265 Identifiable assets (1) 1,052,225 52,616 36,549 1,141,390 1997 Operating revenues (1) $ 805,252 $68,389 $33,194 $ 906,835 Operating income 61,213 4,991 405 66,609 Net income (loss) 19,739 4,189 (90) 23,838 Identifiable assets (1) 1,002,690 62,511 23,110 1,088,311 (1) Net of intersegment eliminations The utility segment is comprised of the Company's five regulated utility divisions: Energas Division, Greeley Division, Trans La Division, United Cities Division and Western Kentucky Division. The energy services segment is currently composed of four parts. Atmos Storage Inc., owns underground storage fields in Kansas and Kentucky and provides storage services to the United Cities Division and Greeley Division and other non-regulated customers. Atmos Energy Services, Inc., markets gas to irrigation and industrial customers in West Texas through Enermart Energy Services Trust, and to industrial customers in Louisiana and is developing plans for marketing various non-regulated services and products. Atmos Energy Marketing, LLC, owns the Company's 45% investment in WMLLC, a gas marketing and energy management services business. Atmos Leasing, Inc., leases buildings and vehicles to the United Cities Division and gas appliances to residential customers. 14
The propane segment includes United Cities Propane Gas, Inc., which is primarily engaged in the retail and wholesale distribution of propane gas in Tennessee, Kentucky, North Carolina and Virginia. GAS SALES The Company's natural gas distribution business is seasonal and highly dependent on weather conditions in the Company's service areas. Gas sales to residential and commercial customers are greater during the winter months than during the remainder of the year. The volumes of such sales during the winter months will vary with the temperatures during such months. The seasonal nature of the Company's sales to residential and commercial customers is offset partially by the Company's sales in the spring and summer months to its agricultural customers in Texas, Colorado and Kansas who utilize natural gas to operate irrigation equipment. The Company also has weather normalization adjustments in its rate jurisdictions in Tennessee and Georgia, which serve approximately 186,000 customers. The Company believes that it has lessened its sensitivity to weather risk by diversifying its operations into geographic areas having different weather patterns. In addition to weather, the Company's revenues are affected by the cost of natural gas and economic conditions in the areas that the Company serves. Higher gas costs, which the Company is generally able to pass through to its customers under purchased gas adjustment clauses, may cause customers to conserve, or, in the case of industrial customers, to use alternative energy sources. In recent years, natural gas market conditions have changed. Natural gas prices to distributors have become more volatile and the number of competing marketers of natural gas has increased. The Company's gas marketing subsidiaries purchase gas to address requirements for large volume customers in certain highly competitive markets. In certain instances, customers purchase gas directly from others instead of from the Company and the Company transports such gas through its distribution systems to the customers' facilities for a fee. Although transportation of customer-owned gas reduces the Company's operating revenues and corresponding purchased gas cost, the transportation revenues received by the Company generally offset the loss to gross profit. The Company's distribution systems have experienced aggregate peak day deliveries of approximately 1.5 billion cubic feet ("Bcf") per day. The Company has the ability to curtail deliveries to certain customers under the terms of interruptible contracts and applicable state statutes or regulations which enables it to maintain its deliveries to high priority customers. The Company has not imposed curtailment in its Energas Division since the Company began independent operations in 1983 or in its Trans La 15
Division since the Company acquired TLG in 1986. The Western Kentucky Division curtailed deliveries to certain interruptible customers during exceptionally cold periods in December 1989, January 1994 and during the winter of 1996. Neither the Greeley Division nor its predecessor, GGC, have curtailed deliveries to its sales customers since prior to 1980. The United Cities Division curtails interruptible service customers from time to time each year in accordance with the interruptible contracts and tariffs. GAS SUPPLY The Company receives gas deliveries through some 28 pipeline transportation companies, both interstate and intrastate, to satisfy its firm sales market requirements. The transportation agreements are firm and many of them have pipeline no-notice storage service which provide for daily balancing between system requirements and nominated flowing supplies. These agreements have been negotiated with the shortest term available to maintain the Company's Right of First Refusal which provides the right to roll over the term and yet reduce the risk of stranded demand costs in the event of unbundling its services. The Western Kentucky Division's gas supply is delivered by the following pipelines: Williams Pipeline-Texas Gas, Tennessee Gas, Trunkline, Midwestern Pipeline and ANR, except that a small percentage of the requirements are being purchased directly from intrastate producers that are connected directly to its distribution system. During 1998, WKG sought and was granted approval by the Kentucky Public Service Commission for a Performance-based Rate ("PBR") program. This three-year supply and asset management program commenced in July 1998. The United Cities Division is served by 13 interstate pipelines. The majority of the volumes are transported through East Tennessee Pipeline, Southern Natural Gas and Williams Pipeline-Central. Colorado Interstate Gas Company, Williams Pipeline-Central, Public Service Company of Colorado, and Northwest Pipeline are the principal transporters of the Greeley Division's requirements. Additionally, the Greeley Division purchased substantial volumes from producers that are connected directly to its distribution system. The Energas Division receives sales and transportation service from various KN pipeline affiliates. Also, the Energas Division purchases a significant portion of its supply from Pioneer Natural Resources (formerly Mesa) which is connected directly to the Company's Amarillo, Texas distribution system. 16
Louisiana Intrastate Gas Company ("LIG"), Acadian Pipeline, Koch Gateway and Williams Pipeline-Texas Gas pipelines deliver most of the Trans La Division's requirements. The Company also owns and operates numerous natural gas storage facilities in Kentucky and Kansas which are used to help meet customer requirements during peak demand periods and to reduce the need to contract for additional pipeline capacity to meet such peak demand periods. Additionally, the Company operates various propane plants and a liquified natural gas ("LNG") plant for peak shaving purposes. The Company also contracts for storage service in underground storage facilities of many of the interstate pipelines serving it. See "Item 2. Properties" below for further information regarding the peak shaving facilities. The United Cities and Western Kentucky Gas Divisions normally injects gas into pipeline storage systems and company owned storage facilities during the summer months and withdraws it in the winter months. At the present time, the underground storage facilities of Storage have a maximum daily output capability of approximately 15,000 thousand cubic feet ("Mcf"). The United Cities Division has the ability to serve approximately 60% of its peak day load through the use of company owned storage facilities, storage contracts with its suppliers and peaking facilities throughout the system. This ability provides the operational flexibility and security of supply required to meet the needs of the highly weather sensitive residential and commercial markets. During 1999, the Company purchased its gas supply from various producers and marketers. The suppliers were selected through a bidding process (except for local production purchases) by sending out a Request for Proposal ("RFP") to suppliers that have demonstrated that they can provide reliable service. These suppliers were selected based on their ability to deliver gas supply to our designated firm pipeline receipt points and the best cost. Major suppliers during 1999 were Reliant Energy, Sonat Marketing, KN Marketing, Pioneer Natural, CIG the Merchant, WMLLC, Oneok Gas Marketing, Barrett Resources, Anadarko and Tenaska Marketing. 17
REGULATION AND RATES Regulation - ---------- Energas Division In the Energas Division, the governing body of each municipality served by the Company has original jurisdiction over all utility rates, operations, and services within its city limits except with respect to sales of natural gas for vehicle fuel and agricultural use. The Company operates pursuant to non- exclusive franchises granted by the municipalities it serves, which franchises are subject to renewal from time to time. The franchises granted to the Company permit it to conduct natural gas distribution within the municipalities' incorporated limits. The Railroad Commission of Texas has exclusive appellate jurisdiction over all rate and regulatory orders and ordinances of the municipalities and exclusive original jurisdiction over rates and services to customers not located within the limits of a municipality. In Texas, rates for large industrial customers are routinely set by contract negotiation between the Company and its customers pursuant to statutory standards and are filed with and subject to the governmental authority of the municipalities or the Railroad Commission, depending on whether the customer is located inside or outside the limits of a municipality. Historically, the Company's rates for large industrial customers have been accepted as filed. Agricultural sales in Texas are not regulated, except that prices for agricultural sales cannot exceed the prices the Company charges the majority of its commercial or other similar large-volume users in Texas. Trans La Division The Trans La Division is regulated by the Louisiana Public Service Commission, which regulates utility services, rates, and other matters. In most of the parishes and incorporated areas in which the Company operates in Louisiana, it does so pursuant to a non-exclusive franchise granted by the governing authority of each parish or incorporated area. The franchise gives the Company the general privilege to operate its gas distribution business in, as well as the right to install its distribution lines along the roadways of, the parish or the incorporated area. Direct sales of natural gas to industrial customers in Louisiana who utilize the gas for fuel or in manufacturing processes and sales of natural gas for vehicle fuel are exempt from regulation. Western Kentucky Division The Western Kentucky Division is regulated by the Kentucky Public Service Commission, which regulates utility services, rates, issuance of securities, and other matters. The Company operates in the various incorporated cities served by it in Kentucky pursuant to non-exclusive franchises granted by such cities. The franchises 18
grant to the Company the right to operate its gas distribution business in the city and to install its distribution lines and related equipment in and along the city's public rights-of-way. Sales of natural gas for use as vehicle fuel in Kentucky are not subject to regulation. Greeley Division The Greeley Division is regulated by the Colorado Public Utilities Commission, the Kansas Corporation Commission, and the Missouri Public Service Commission with respect to accounting, rates and charges, operating matters, and the issuance of securities. The Company operates in the various incorporated cities served by it in the states of Colorado, Kansas and Missouri under terms of non-exclusive franchises granted by the various cities. The franchises grant to the Company, among other things, the right to install and operate its gas distribution system within the city limits. Most of the Greeley Division's wholesale gas suppliers are regulated by various federal and state commissions. United Cities Division In each state in which the United Cities Division operates, its rates, services and operations as a natural gas distribution company is subject to general regulation by the state public service commission. In addition, the issuance of securities by the Company is subject to approval by the state commissions, except in South Carolina and Iowa. Missouri only regulates the issuance of secured debt. The United Cities Division operates in each community, where necessary, under a franchise granted by the municipality for a fixed term of years. To date, it has been able to renew franchises and expects to continue to do so in the future. The Company is also subject to regulation by the United States Department of Transportation with respect to safety requirements in the operation and maintenance of its gas distribution facilities. The Company's distribution operations are also subject to various state and federal laws regulating environmental matters. From time to time the Company receives inquiries regarding various environmental matters. The Company believes that its properties and operations substantially comply with and are operated in substantial conformity with applicable safety and environmental statutes and regulations. There are no administrative or judicial proceedings arising under environmental quality statutes pending or known to be contemplated by governmental agencies which, if adversely determined, would have a material adverse effect on the Company. 19
Rates - ----- Approximately 89% of the Company's revenues in fiscal 1999 were derived from sales at rates set by or subject to approval by local or state authorities. The method of determining regulated rates varies among the twelve states in which the Company has utility operations. As a general rule, the regulatory authority reviews the Company's rate request and establishes a rate structure intended to generate revenue sufficient to cover the Company's costs of doing business and provide a reasonable return on invested capital. Substantially all of the sales rates charged by the Company to its customers fluctuate with the cost of gas purchased by the Company. Rates established by regulatory authorities are adjusted for increases and decreases in the Company's purchased gas cost through automatic purchased gas adjustment mechanisms. Therefore, while the Company's operating revenues may fluctuate, gross profit (which is defined as operating revenues less purchased gas cost) is generally not eroded or enhanced because of gas cost increases or decreases. The Georgia Public Service Commission and Tennessee Regulatory Authority have approved Weather Normalization Adjustments ("WNA") that allow the United Cities Division to increase the base rate portion of customers' bills when weather is warmer than normal and decrease the base rate when weather is colder than normal. The net effect of the WNAs was an increase (decrease) in revenues of $4,394,000, $682,000 and $2,643,000 in 1999, 1998 and 1997, respectively. 20
The following table sets forth the major rate requests made by the Company or other parties during the most recent five years and the action taken on such requests: Effective Amount Amount Jurisdiction Date Requested Received ------------ -------- --------- -------- (In thousands) Texas West Texas System 11/18/94 $ 2,581 $ 1,702 (a) 11/01/96 7,676 5,800 (a) Pending 8,827 Pending (g) Amarillo System Pending 4,354 Pending (g) Louisiana 11/01/99 (b) - (b) Kentucky 11/01/95 7,665 2,300 (c) 03/01/96 1,000 (c) Pending 14,127 Pending (h) Colorado 05/01/94 4,527 3,246 01/21/98 - (1,600) (e) Kansas 09/01/95 4,230 2,700 (d) Missouri 10/14/95 1,100 903 South Carolina 02/07/95 341 253 Tennessee 11/15/95 3,951 2,227 Iowa 05/17/96 750 410 Georgia 12/02/96 5,003 3,160 Illinois 07/09/97 1,234 428 Virginia 09/29/95 810 103 10/01/98 - (248) (f) (a) These increases include $200,000 and $500,000 applicable to areas outside the city limits which became effective in January 1995 and April 1997, respectively. (b) The Louisiana Public Service Commission approved a Rate Stabilization Clause ("RSC") for three years with an allowed return on common equity between 10.5% and 11.5%. This decision increased the service charge amounts from about 20% to about 70% of actual costs, and increased the monthly customer charges from $6 to $9, both effective November 1, 1999. (c) The Kentucky rate order provided an increase of $2,300,000, lowered depreciation rates effective November 1, 1995 and 21
provided an additional $1,000,000 beginning March 1, 1996. The order also included a provision for a pilot demand side management program which could cost up to $450,000 annually. (d) This increase applied to the Kansas area previously served by the United Cities Division and transferred to the Greeley Division in 1999. (e) Rate reduction as a result of settlement in a case initiated by the Colorado Consumer Counsel. (f) Rate reduction as a result of a settlement with the Virginia State Corporation Commission staff regarding investigation of earnings. (g) The Energas Division applied for rate increases in August 1999. The proposed rates have been suspended until December 8, 1999. (h) The Western Kentucky Gas Division applied for an increase in May 1999. A hearing is scheduled for December 14, 1999. COMPETITION The Company is not currently in significant direct competition with any other distributors of natural gas to residential and commercial customers within its service areas. However, the Company does compete with other natural gas suppliers and suppliers of alternate fuels for sales to industrial and agricultural customers. The Company competes in all aspects of its business with alternative energy sources, including, in particular, electricity. Competition for the residential and commercial customers is increasing. Promotional incentives, improved equipment efficiencies, and promotional rates all contribute to the acceptability of electric equipment. In the United Cities Division, #2 and #6 fuel oil are the primary competition for industrial customers. In addition, certain customers, primarily industrial, may have the ability to by-pass the Company's distribution system by connecting directly with a pipeline. Beginning in 1985, changes in the federal regulatory environment through Federal Energy Regulatory Commission ("FERC") orders and conditions related to markets and gas supply in the United States have brought increased competition into the natural gas industry. In 1993, FERC Order 636 was implemented by the interstate pipelines that serve the United Cities and Western Kentucky Divisions, but FERC policies have not had a direct impact upon the Company's Energas, Greeley and Trans La Divisions which are primarily supplied by intrastate pipelines. However, competition for large volume customers in the United Cities and Western Kentucky Divisions and other service areas has increased as a result of FERC Order 636. The Company has sought regulatory approvals for competitive pricing on a case by case basis. 22
The United Cities Division has received approval from all the regulatory authorities in the states in which it operates, except Iowa, to place into effect a negotiated tariff rate which allows the United Cities Division to maintain industrial loads at lower margin rates. Iowa has rules which allow for flexible rates, which are competitive with the price of alternative fuels. In addition, certain industrial customers have changed from firm to interruptible rate schedules in order to obtain natural gas at a lower cost. Additionally, the United Cities Division has received approval from all state regulatory authorities to provide transportation service of customer-owned gas. United Cities Propane Gas, Inc. is in competition with other suppliers of propane, natural gas and electricity with respect to price and service. The wholesale cost of propane is subject to fluctuations primarily based on demand, availability of supply and product transportation costs. Through its 45% interest in WMLLC, Atmos Energy Marketing, LLC competes with other natural gas brokers in obtaining natural gas supplies for customers. Atmos Leasing, Inc. also competes with other companies in the leasing of real estate, vehicles, and appliances. Atmos Storage, Inc. charges rates to the United Cities Division that are subject to review by the various commissions in the states within which the storage service is provided. Therefore, Storage's rates must be competitive with other storage facilities. Storage also stores natural gas for WMLLC. As a result, Storage is in competition with other companies that store natural gas as to rates charged and deliverability of natural gas. Agreements between Storage and the United Cities Division give the United Cities Division first priority to any storage services. EMPLOYEES At September 30, 1999, the Company employed 2,062 persons. See "Utility Sales and Statistical Data by Business Unit - 1999" for the number of employees by business unit. As discussed in Note 2 of notes to consolidated financial statements in the Company's Annual Report to Shareholders, the Company underwent downsizing and restructuring in 1997 and 1998 in connection with the integration of UCGC and the reorganization of the Company's other divisions. ITEM 2. PROPERTIES The Company owns an aggregate of 30,670 miles of underground distribution and transmission mains throughout its gas distribution systems. These mains are located on easements or right-of-ways granted to the Company, which generally provide for perpetual use. The Company maintains its mains through a program of continuous 23
inspection and repair and believes that its system of mains is in good condition. The Company also owns and operates nine propane peak shaving plants with a total capacity of approximately 1,050,000 gallons that can produce an equivalent of 19,459 Mcf daily and an LNG storage facility with a capacity of 500,000 Mcf which can inject a daily volume of 30,000 Mcf in the system, as well as underground storage fields which are used to supplement the supply of natural gas in periods of peak demand. It has seven underground gas storage facilities in Kentucky and four in Kansas that have a total storage capacity of approximately 21.1 Bcf. However, approximately 10.0 Bcf of gas in the storage facilities must be retained as cushion gas to maintain reservoir pressure. The maximum daily delivery capability of the storage facilities is approximately 154 MMcf. Substantially all of the Company's properties in its Greeley Division and United Cities Division with net values of approximately $173.7 million and $293.0 million, respectively, are subject to liens under First Mortgage Bonds assumed by the Company in its mergers with GGC and UCGC. At September 30, 1999, the liens secured $17.0 million of outstanding 9.4% Series J First Mortgage Bonds due May 1, 2021, and $102.2 million of outstanding Series N, P, Q, R, T, U and V First Mortgage Bonds due at various dates from 2000 through 2022. The Company's administrative offices are consolidated in Dallas, Texas under one lease. The Company also maintains field offices throughout its distribution system, the majority of which are located in leased premises. Net property, plant and equipment at September 30, 1999 included approximately $918.2 million for utility, $23.8 million for energy services, and $23.8 million for propane. The Company holds franchises granted by the incorporated cities and towns that it serves. At September 30, 1999, the Company held 408 such franchises having terms generally ranging from five to 25 years. The Company believes that each of its franchises will be renewed. ITEM 3. LEGAL PROCEEDINGS Incorporated by reference from the 1999 Annual Report to Shareholders, Note 6 of notes to consolidated financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1999. 24
EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information as of September 30, 1999, regarding the executive officers of the Company. It is followed by a brief description of the business experience of each executive officer during the past five years. Years of Name Age Service Office Currently Held - ---------------------------------------------------------------------------- Robert W. Best 52 2 Chairman, President and Chief Executive Officer Larry J. Dagley 51 2 Executive Vice President and Chief Financial Officer J. Charles Goodman 38 15 Executive Vice President, Utility Operations Wynn D. McGregor 46 11 Vice President, Human Resources Robert W. Best was named Chairman of the Board, President and Chief Executive Officer in March 1997. He previously served as Senior Vice President- Regulated Businesses of Consolidated Natural Gas Company (1996 - March 1997) and was responsible for its transmission and distribution companies. Prior to that, he served as Senior Vice President of Transco Energy Company and President of Transcontinental Gas Pipe Line Corporation (1992-1995); and President of Texas Gas Transmission Corporation (1985 - 1995). Larry J. Dagley was named Executive Vice President and Chief Financial Officer effective May 1, 1997. From August 1995 to May 1997, he served as Senior Vice President and Chief Financial Officer of Pacific Enterprises, a Los Angeles, California based utility holding company whose principal subsidiary was Southern California Gas Co., the nation's largest gas distribution utility. From 1985 until joining Pacific Enterprises, he served as Senior Vice President and Controller (1985-1993) and Senior Vice President and Chief Financial Officer (1993-1995) of Transco Energy Company, a Houston, Texas based natural gas pipeline company. Prior to joining Transco, Mr. Dagley was an audit partner with Arthur Andersen & Co., where he supervised audits and financial consulting engagements in the energy industry. J. Charles Goodman was named Executive Vice President, Operations in April 1995. He previously served as President of the Company's Trans La Gas Division from February 1993 until April 1995 and as Chief Engineer of the Company from February 1989 until February 1993. Wynn D. McGregor was named Vice President, Human Resources in January 1994. He previously served the Company as Director of Human Resources from February 1991 to December 1993 and as Manager, Compensation and Employment from December 1987 to January 1991. 25
PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information required by this item is set forth under the caption "Market Price of Common Stock and Related Matters" in the Financial Review section of Atmos' 1999 Annual Report to Shareholders filed as Exhibit 13 to this Annual Report on Form 10-K. Such information is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is set forth under the caption "Selected Financial Data" in the Financial Review section of Atmos' 1999 Annual Report to Shareholders filed as Exhibit 13 to this Annual Report on Form 10-K. Such information is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Financial Review section of Atmos' 1999 Annual Report to Shareholders filed as Exhibit 13 to this Annual Report on Form 10-K. Such information is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The risk inherent in the Company's market risk sensitive instruments is the potential loss arising from adverse changes in natural gas commodity prices and interest rates as discussed below. The sensitivity analysis does not, however, consider the effects that such adverse changes may have on overall economic activity nor do they consider additional actions the Company may take to mitigate its exposure to such changes. Actual results may differ. Gas Prices The Company purchases natural gas for its regulated and non-regulated natural gas operations. Substantially all of the gas purchased for regulated operations is recovered through purchased gas adjustment mechanisms. The Company's market risk in gas prices is related to gas purchases in the open market at spot prices for sale to non-regulated energy services customers at fixed prices. As a result, the Company's earnings could be 26
affected by changes in the price and availability of such gas. As market conditions dictate, the Company from time to time will lock-in future gas prices, using various hedging techniques including swap agreements with suppliers. The Company does not use such financial instruments for trading purposes and is not a party to any leveraged derivatives. Market risk is estimated as a hypothetical 10% increase in the portion of the Company's gas cost related to fixed-price non-regulated sales. Based on projected fiscal 2000 non-regulated gas sales at fixed prices, such an increase would result in an increase to cost of gas of approximately $2.8 million in fiscal 2000, before considering the effect of swap agreements outstanding as of September 30, 1999. As of September 30, 1999, the Company had entered into swap agreements to lock in gas costs for all outstanding fixed-price sales agreements. The Company plans to mitigate the risk of increased gas purchase costs for fixed-price customers by entering into swap agreements to lock in purchased gas cost for estimated sales volumes in fiscal 2000. Interest Rates The Company's earnings are affected by changes in short-term interest rates as a result of its issuance of short-term commercial paper. If market interest rates for commercial paper average 2% more in fiscal 2000 than they did during fiscal 1999, the Company's interest expense, would increase by approximately $2.0 million. Market risk for fixed-rate long-term obligations is estimated as the potential increase in fair value resulting from a hypothetical one percent decrease in interest rates and amounts to approximately $31.6 million based on discounted cash flow analyses. As of September 30, 1999, the Company was not engaged in other activities which would cause exposure to the risk of material earnings or cash flow loss due to changes in interest rates, foreign currency exchange rates, or market commodity prices. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this Item is submitted as a separate section of this Annual Report on Form 10-K on page 33. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 27
PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding directors and compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by reference from the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on February 9, 2000. Information regarding executive officers is included in Part I of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference from the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on February 9, 2000. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated herein by reference from the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on February 9, 2000. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated herein by reference from the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders on February 9, 2000. 28
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. and 2. Financial statements and financial statement schedules. The response to this portion of Item 14 is submitted as a separate section of this Annual Report on Form 10-K on page 33. 3. Exhibits The exhibits listed in the accompanying Exhibits Index are filed as part of this Annual Report on Form 10-K. The exhibits numbered 10.21(a) through 10.32 are management contracts or compensatory plans or arrangements. (b) Reports on Form 8-K (1) The Company did not file a Form 8-K Current Report in the quarter ended September 30, 1999. 29
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) By /s/ LARRY J. DAGLEY ------------------------ Larry J. Dagley Executive Vice President and Chief Financial Officer Date: December 14, 1999 30
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert W. Best and Larry J. Dagley, or either of them acting alone or together, as his true and lawful attorney-in-fact and agent with full power to act alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Form 10-K, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated: /s/ ROBERT W. BEST Chairman, President December 14, 1999 - ------------------------- and Chief Executive Robert W. Best Officer /s/ LARRY J. DAGLEY Executive Vice December 14, 1999 - ------------------------- President and Chief Larry J. Dagley Financial Officer /s/ TOM S. HAWKINS, JR. Vice President, December 14, 1999 - ------------------------- Planning and Budgeting Tom S. Hawkins, Jr. and Interim Controller (Principal Accounting Officer) 31
/s/ TRAVIS W. BAIN, II Director December 14, 1999 - ------------------------- Travis W. Bain, II /s/ DAN BUSBEE Director December 14, 1999 - ------------------------- Dan Busbee /s/ RICHARD W. CARDIN Director December 14, 1999 - ------------------------- Richard W. Cardin /s/ THOMAS J. GARLAND Director December 14, 1999 - ------------------------- Thomas J. Garland /s/ GENE C. KOONCE Director December 14, 1999 - ------------------------- Gene C. Koonce /s/ VINCENT J. LEWIS Director December 14, 1999 - ------------------------- Vincent J. Lewis /s/ THOMAS C. MEREDITH Director December 14, 1999 - ------------------------- Thomas C. Meredith /s/ PHILLIP E. NICHOL Director December 14, 1999 - ------------------------- Phillip E. Nichol /s/ CARL S. QUINN Director December 14, 1999 - ------------------------- Carl S. Quinn /s/ CHARLES K. VAUGHAN Director December 14, 1999 - ------------------------- Charles K. Vaughan /s/ RICHARD WARE II Director December 14, 1999 - ------------------------- Richard Ware II 32
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (Item 8, 14(a) 1 and 2) Form 10-K Page no. --------- Financial statements and supplementary data: Consolidated balance sheets at September 30, 1999 and 1998 (Contained in Exhibit 13) Consolidated statements of income for the years ended September 30, 1999, 1998 and 1997 (Contained in Exhibit 13) Consolidated statements of shareholders' equity for the years ended September 30, 1999, 1998 and 1997 (Contained in Exhibit 13) Consolidated statements of cash flows for the years ended September 30, 1999, 1998 and 1997 (Contained in Exhibit 13) Notes to consolidated financial statements (Contained in Exhibit 13) Supplementary Quarterly Financial Data (unaudited) (Contained in Exhibit 13) Independent auditors' report (Contained in Exhibit 13) Financial statement schedule for the years ended September 30, 1999, 1998 and 1997: II. Valuation and Qualifying Accounts 34 All other financial statement schedules are omitted because the required information is not present, or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and accompanying notes thereto. The financial statements and the independent auditors' report of Ernst & Young LLP listed in the above index, which are included in the Financial Review section of the Annual Report to Shareholders of Atmos Energy Corporation for the year ended September 30, 1999, are incorporated herein by reference. 33
Atmos Energy Corporation Schedule II Valuation and Qualifying Accounts Three Years Ended September 30, 1999 (In thousands) <TABLE> <CAPTION> Additions Balance at ---------------------- Balance beginning Charged to Charged to at end of costs & other of period expenses accounts Deductions period ---------- ---------------------- ----------- ------- <S> <C> <C> <C> <C> <C> 1999 - ---- Allowance for doubtful accounts $1,969 $8,899 - $1,637 (1) $9,231 1998 - ---- Allowance for doubtful accounts $2,188 $2,140 - $2,359 (1) $1,969 1997 - ---- Allowance for doubtful accounts $2,462 $2,003 - $2,277 (1) $2,188 </TABLE> (1) Uncollectible accounts written off 34
EXHIBITS INDEX Item 14. (a) (3) <TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to ------- ------------------------------- --------------------- Plan of Reorganization ---------------------- <S> <C> <C> 2.1 Agreement and Plan of Reorganization dated July 19, Exhibit 2.1 to Registration 1996, by and between the Registrant and United Statement on Form S-4 filed Cities Gas Company October 4, 1996 (File No. 333-13429) 2.2 Amendment No. 1 to Agreement and Plan of Exhibit 2.1(a) to Registration Reorganization dated October 3, 1996 Statement on Form S-4 filed October 4, 1996 (File No. 333-13429) Articles of Incorporation and Bylaws ------------------------------------ 3.1(a) Restated Articles of Incorporation of the Company, Exhibit 3.1 of Form 10-K for as Amended (as of July 31, 1997) fiscal year ended September 30, 1997 (File No. 1-10042) 3.1(b) Articles of Amendment to the Restated Articles of Exhibit 3a of Form 10-Q for Incorporation of Atmos Energy Corporation as quarter ended March 31, 1999 (File Amended (Texas) No. 1-10042) 3.1(c) Articles of Amendment to the Restated Articles of Exhibit 3b of Form 10-Q for Incorporation of Atmos Energy Corporation as quarter ended March 31, 1999 (File Amended (Virginia) No. 1-10042) 3.2 Bylaws of the Company (Amended and Restated as of Exhibit 3.2 of Form 10-K for November 12, 1997) fiscal year ended September 30, 1997 (File No. 1-10042) </TABLE> 35
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to - --------- ------------------------------ ------------------------ Instruments Defining Rights of Security Holders ----------------------------------------------- <S> <C> <C> 4.1 Specimen Common Stock Certificate (Atmos Energy Exhibit (4)(b) of Form 10-K for Corporation) fiscal year ended September 30, 1988 (File No. 1-10042) 4.2 Rights Agreement, dated as of November 12, 1997, Exhibit 4.1 of Form 8-K dated between the Company and BankBoston, N.A. November 12, 1997 (File no. 1-10042) 4.3 First Amendment to Rights Agreement dated as of Exhibit 2 of Form 8-A, Amendment August 11, 1999, between the Company and No. 1, dated August 12, 1999 (File BankBoston, N.A., as Rights Agent No. 1-10042) 9 Not Applicable Material Contracts ------------------ 10.1(a) Note Purchase Agreement, dated as of December 21, Exhibit 10(c) of Form 8-K filed 1987, by and between the Company and John Hancock January 7, 1988 (File No. 0-11249) Mutual Life Insurance Company Note Purchase Agreement, dated as of December 21, 1987, by and between the Company and John Hancock Charitable Trust I (Agreement is identical to Hancock Agreement listed above except as to the parties thereto.) </TABLE> 36
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ------------------------------------------------ ---------------------- <S> <C> <C> Note Purchase Agreement dated as of December 21, 1987, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans - AT&T - John Hancock - Private Placement (Agreement is identical to Hancock Agreement listed above except as to the parties thereto.) 10.1(b) Amendment to Note Purchase Agreement, dated Exhibit (10)(b)(ii) of Form 10-K October 11, 1989, by and between the Company for fiscal year ended September and John Hancock Mutual Life Insurance Company 30, 1989 revising Note Purchase Agreement dated December (File No. 1-10042) 21, 1987 Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and John Hancock Charitable Trust I revising Note Purchase Agreement dated December 21, 1987. (Amendment is identical to Hancock amendment listed above except as to the parties thereto.) </TABLE> 37
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ----------------------------------------- ---------------------- <S> <C> <C> Amendment to Note Purchase Agreement, dated October 11, 1989, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans - AT&T - John Hancock - Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto.) 10.1(c) Amendment to Note Purchase Agreement, dated Exhibit 10(b)(iii) of Form 10-K November 12, 1991, by and between the Company for fiscal year ended September and John Hancock Mutual Life Insurance Company 30, 1991 (File No. 1-10042) revising Note Purchase Agreement dated December 21, 1987 Amendment to Note Purchase Agreement, dated November 12, 1991, by and between the Company and John Hancock Charitable Trust I revising Note Purchase Agreement dated December 21, 1987. (Amendment is identical to Hancock amendment listed above except as to the parties thereto.) </TABLE> 38
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ------------------------------------------- ---------------------- <S> <C> <C> Amendment to Note Purchase Agreement, dated November 12, 1991, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans - AT&T - John Hancock - Private Placement revising Note Purchase Agreement dated December 21, 1987. (Amendment is identical to Hancock amendment above except as to the parties thereto.) 10.1(d) Amendment to Note Purchase Agreement, dated Exhibit 4.3(d) to Registration December 22, 1993, by and between the Company Statement on Form S-3 filed April and John Hancock Mutual Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated December 21, 1987 Amendment to Note Purchase Agreement, dated December 22, 1993, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1982, for Employee Pension Plans - AT&T - John Hancock - Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto and the amounts thereof) </TABLE> 39
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ------------------------------------------------ ---------------------- <S> <C> <C> 10.1(e) Amendment to Note Purchase Agreement, dated Exhibit 4.3(e) to Registration December 20, 1994, by and between the Company Statement on Form S-3 filed April and John Hancock Mutual Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated December 21, 1987 Amendment to Note Purchase Agreement, dated December 20, 1994, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans - AT&T - John Hancock - Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above) 10.1(f) Amendment to Note Purchase Agreement, dated Exhibit 4.3(f) to Registration July 29, 1997, by and between the Company and Statement on Form S-3 filed April John Hancock Mutual Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated December 21, 1987 </TABLE> 40
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Reference to -------- ------------------------------------------------ ---------------------- <S> <C> <C> Amendment to Note Purchase Agreement, dated July 29,1997, by and between the Company and Mellon Bank, N.A., Trustee under Master Trust Agreement of AT&T Corporation, dated January 1, 1984, for Employee Pension Plans - AT&T - John Hancock - Private Placement revising Note Purchase Agreement dated December 21, 1987 (Amendment is identical to Hancock amendment listed above except as to the parties thereto and the amounts thereof) 10.2(a) Note Purchase Agreement, dated as of October Exhibit 10(c) of Form 10-K for 11, 1989, by and between the Company and John fiscal year ended September 30, Hancock Mutual Life Insurance Company 1989 (File No. 1-10042) 10.2(b) Amendment to Note Purchase Agreement, dated as Exhibit 10(c)(ii) of Form 10-K for of November 12, 1991, by and between the fiscal year ended September 30, Company and John Hancock Mutual Life Insurance 1991 (File No. 1-10042) Company revising Note Purchase Agreement dated October 11, 1989 10.2(c) Amendment to Note Purchase Agreement, dated Exhibit 4.4(c) to Registration December 22, 1993, by and between the Company Statement on Form S-3 filed April and John Hancock Mutual Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated October 11, 1989 </TABLE> 41
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ---------------------------------------------- ---------------------- <S> <C> <C> 10.2(d) Amendment to Note Purchase Agreement, dated Exhibit 4.4(d) to Registration December 20,1994, by and between the Company Statement on Form S-3 filed April and John Hancock Mutual Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated October 11, 1989 10.2(e) Amendment to Note Purchase Agreement, dated Exhibit 4.4(e) to Registration July 29, 1997, by and between the Company and Statement on Form S-3 filed April John Hancock Mutual Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated October 11, 1989 10.3(a) Note Purchase Agreement, dated as of August 29, Exhibit 10(f)(i) of Form 10-K for 1991, by and between the Company and The fiscal year ended September 30, Variable Annuity Life Insurance Company 1991 (File No. 1-10042) 10.3(b) Amendment to Note Purchase Agreement, dated Exhibit 10(f)(ii) of Form 10-K for November 26, 1991, by and between the Company fiscal year ended September 30, and The Variable Annuity Life Insurance Company 1991 (File No. 1-10042) revising Note Purchase Agreement dated August 29, 1991 10.3(c) Amendment to Note Purchase Agreement, dated Exhibit 4.5(c) to Registration December 22, 1993, by and between the Company Statement on Form S-3 filed April and The Variable Annuity Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated August 29, 1991 </TABLE> 42
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ----------------------------------------- ---------------------- <S> <C> <C> 10.3(d) Amendment to Note Purchase Agreement, dated Exhibit 4.5(d) to Registration July 29, 1997, by and between the Company and Statement on Form S-3 filed April The Variable Annuity Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated August 29, 1991 10.4(a) Note Purchase Agreement, dated as of August 31, Exhibit (10)(f) of Form 10-K for 1992, by and between the Company and The fiscal year ended September 30, Variable Annuity Life Insurance Company 1992 (File No. 1-10042) 10.4(b) Amendment to Note Purchase Agreement, dated Exhibit 4.6(b) to Registration December 22, 1993, by and between the Company Statement on Form S-3 filed April and The Variable Annuity Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated August 31, 1992 10.4(c) Amendment to Note Purchase Agreement, dated Exhibit 4.6(c) to Registration July 29, 1997, by and between the Company and Statement on Form S-3 filed April The Variable Annuity Life Insurance Company 20, 1998 (File No. 333-50477) revising Note Purchase Agreement dated August 31, 1992 10.5(a) Note Purchase Agreement, dated November 14, Exhibit 10.1 of Form 10-Q for 1994, by and among the Company and New York quarter ended December 31, 1994 Life Insurance Company, New York Life Insurance (File No. 1-10042) and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company, and Merit Life Insurance Company </TABLE> 43
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ------------------------------------------ ---------------------- <S> <C> <C> 10.5(b) Amendment to Note Purchase Agreement, dated Exhibit 4.7(b) to Registration July 29, 1997 by and among the Company and New Statement on Form S-3 filed April York Life Insurance Company, New York Life 20, 1998 (File No. 333-50477) Insurance and Annuity Corporation, The Variable Annuity Life Insurance Company, American General Life Insurance Company and Merit Life Insurance Company revising Note Purchase Agreement dated November 14, 1994 10.6(a) Indenture of Mortgage, dated as of July 15, Exhibit to Registration Statement 1959, from United Cities Gas Company to First of United Cities Gas Company on Trust of Illinois, National Association, and Form S-3 (File No. 33-56983) M.J. Kruger, as Trustees, as amended and supplemented through December 1, 1992 (the Indenture of Mortgage through the 20th Supplemental Indenture) 10.6(b) Twenty-First Supplemental Indenture dated as of Exhibit 10.7(a) of Form 10-K for February 5, 1997 by and among United Cities Gas fiscal year ended September 30, Company and Bank of America Illinois and First 1997 (File No. 1-10042) Trust National Association and Russell C. Bergman supplementing Indenture of Mortgage dated as of July 15, 1959 </TABLE> 44
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- --------------------------------------------- ---------------------- <S> <C> <C> 10.6(c) Twenty-Second Supplemental Indenture dated as Exhibit 10.7(b) of Form 10-K for of July 29, 1997 by and among the Company and fiscal year ended September 30, First Trust National Association and Russell C. 1997 (File No. 1-10042) Bergman supplementing Indenture of Mortgage dated as of July 15, 1959 10.7(a) Form of Indenture between United Cities Gas Exhibit to Registration Statement Company and First Trust of Illinois, National of United Cities Gas Company on Association, as Trustee dated as of November Form S-3 (File No. 33-56983) 15, 1995 10.7(b) First Supplemental Indenture between the Exhibit 10.8(a) of Form 10-K for Company and First Trust of Illinois, National fiscal year ended September 30, Association, as Trustee dated as of July 29, 1997 (File No. 1-10042) 1997 10.8(a) Seventh Supplemental Indenture, dated as of Exhibit 10.1 of Form 10-Q for October 1, 1983 between Greeley Gas Company quarter ended June 30, 1994 (File ("Greeley Division") and the Central Bank of No. 1-10042) Denver, N.A. ("Central Bank") 10.8(b) Ninth Supplemental Indenture, dated as of April Exhibit 10.2 of Form 10-Q for 1, 1991, between the Greeley Division and quarter ended June 30, 1994 (File Central Bank No. 1-10042) 10.8(c) Bond Purchase Agreement, dated as of April 1, Exhibit 10.3 of Form 10-Q for 1991, between the Greeley Division and Central quarter ended June 30, 1994 (File Bank No. 1-10042) </TABLE> 45
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ------------------------------------------ ---------------------- <S> <C> <C> 10.8(d) Tenth Supplemental Indenture, dated as of Exhibit 10.4 of Form 10-Q for December 1, 1993, between the Company and quarter ended June 30, 1994 (File Colorado National Bank, formerly Central Bank No. 1-10042) 10.9(a) Purchase Agreement for 6-3/4% Debentures due Exhibit 99.1 of Form 8-K dated 2028 by and among Merrill Lynch Co., July 22, 1998 (File No. 1-10042) NationsBanc Montgomery Securities LLC, Edward D. Jones & Co., L.P. and Atmos Energy Corporation dated July 22, 1998 10.9(b) Form of Indenture between Atmos Energy Exhibit 4.1 to Registration Corporation and U.S. Bank Trust National Statement on Form S-3 filed April Association, Trustee 20, 1998 (File No. 333-50477) Gas Supply Contracts -------------------- 10.10(a) Firm Gas Transportation Agreement No. 123535 dated November 1, 1998 between Greeley Gas and Public Service Company of Colorado 10.10(b) Transportation Storage Service Agreement No. Exhibit 10.6(b) of Form 10-K for TA-0544 between Greeley Gas and Williams fiscal year ended September 30, Natural Gas Company dated October 1, 1993 1994 (File No. 1-10042) 10.10(c) Firm Transportation Service Agreement No. Exhibit 10.10(d) of Form 10-K for 33180A, Rate Schedule TF-1, between Greeley Gas fiscal year ended September 30, Company and Colorado Interstate Gas Company, 1998 (File No. 1-10042) dated July 1, 1998. </TABLE> 46
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ------------------------------------------- ---------------------- <S> <C> <C> 10.10(d) Firm Transportation Service Agreement No. 33181A, Rate Schedule TF-1, between Colorado Interstate Gas Company and Greeley Gas Company dated July 1, 1998 10.10(e) No-Notice Storage and Transportation Delivery Exhibit 10.10(e) of Form 10-K for Service Agreement No. 31028A, Rate Schedule fiscal year ended September 30, NNT-1, between Colorado Interstate Gas Company 1998 (File No. 1-10042) and Greeley Gas Company dated October 1, 1996 10.11 Amarillo Supply Agreement dated January 2, 1993 Exhibit 10.7(a) of Form 10-K for between Energas and Pioneer Natural Resources, fiscal year ended September 30, USA, Inc. (formerly Mesa Operating Company) 1994 (File No. 1-10042) 10.12(a) Agreement for Firm Intrastate Transportation of Exhibit 10.1 of Form 10-Q for Natural Gas in the State of Louisiana between quarter ended March 31, 1998 Trans La and Louisiana Intrastate Gas Company (File No. 1-10042) L.L.C. (LIG) dated December 22, 1997 and effective July 1, 1997 10.12(b) Agreement for Firm 311(a)(2) Transportation of Exhibit 10.2 of Form 10-Q for Natural Gas in the State of Louisiana between quarter ended March 31, 1998 Trans La and Louisiana Intrastate Gas Company (File No. 1-10042) L.L.C. (LIG) dated December 22, 1997 and effective July 1, 1997 10.13(a) Gas Transportation Agreement between Texas Gas Exhibit 10.3 of Form 10-Q for and Western Kentucky Gas dated November 1, 1993 quarter ended December 31, 1993 (Contract no. T3355, zone 3) (File No. 1-10042) </TABLE> 47
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to --------- ---------------------------------------------- ------------------------- <S> <C> <C> 10.13(b) Gas Transportation Agreement between Texas Gas Exhibit 10.4 of Form 10-Q for and Western Kentucky Gas dated November 1, 1993 quarter ended December 31, 1993 (Contract no. T3819, zone 4) (File No. 1-10042) 10.13(c) Gas Transportation Agreement between Texas Gas Exhibit 10.5 of Form 10-Q for and Western Kentucky Gas dated November 1, 1993 quarter ended December 31, 1993 (Contract no. N0210, zone 2, Contract no. (File No. 1-10042) N0340, zone 3, Contract no. N0435, zone 4) 10.14(a) Gas Transportation Agreement, Contract No. Exhibit 10.17(a) of Form 10-K for 2550, dated September 1, 1993, between fiscal year ended September 30, Tennessee Gas Pipeline Company, a division of 1993 (File No. 1-10042) Tenneco, Inc. ("Tennessee Gas"), and Western Kentucky, Campbellsville Service Area 10.14(b) Gas Transportation Agreement, Contract No. Exhibit 10.17(b) of Form 10-K for 2546, dated September 1, 1993, between fiscal year ended September 30, Tennessee Gas and Western Kentucky, Danville 1993 (File No. 1-10042) Service Area 10.14(c) Gas Transportation Agreement, Contract No. Exhibit 10.17(c) of Form 10-K for 2385, dated September 1, 1993, between fiscal year ended September 30, Tennessee Gas and Western Kentucky, Greensburg 1993 (File No. 1-10042) et al Service Area 10.14(d) Gas Transportation Agreement, Contract No. Exhibit 10.17(d) of Form 10-K for 2551, dated September 1, 1993, between fiscal year ended September 30, Tennessee Gas and Western Kentucky, Harrodsburg 1993 (File No. 1-10042) Service Area </TABLE> 48
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ----------------------------------------------- ---------------------- <S> <C> <C> 10.14(e) Gas Transportation Agreement, Contract No. Exhibit 10.17(e) of Form 10-K for 2548, dated September 1, 1993, between fiscal year ended September 30, Tennessee Gas and Western Kentucky, Lebanon 1993 (File No. 1-10042) Service Area 10.15 Gas Service Agreement (Service for Firm Exhibit 10.5 of Form 10-Q for Transportation) between Energas and Westar quarter ended December 31, 1996 Transmission Company dated January 1, 1996 (File No. 1-10042) 10.16 Gas Service Agreement (Service for Firm Exhibit 10.7 of Form 10-Q for Transportation) between Westar Transmission quarter ended December 31, 1996 Company and EnerMart dated January 1, 1996 (File No. 1-10042) (Irrigation) 10.17 Gas Service Agreement (Service for Firm Exhibit 10.8 of Form 10-Q for Transportation) between KN Westex and Enermart quarter ended December 31, 1996 Trust dated January 1, 1996 (File No. 1-10042) 10.18 Gas Sales Agreement (Irrigation) between KN Exhibit 10.11 of Form 10-Q for Marketing and EnerMart Trust dated March 1, 1996 quarter ended December 31, 1996 (File No. 1-10042) 10.19 Gas Sales Agreement (Swing) between Energas and Exhibit 10.13 of Form 10-Q for KN Marketing, dated January 1, 1996 quarter ended December 31, 1996 (File No. 1-10042) 10.20(a) Operating Agreement between Energas and Westar Exhibit 10.15 of Form 10-Q for Transmission Company, effective December 1, 1996 quarter ended December 31, 1996(File No. 1-10042) </TABLE> 49
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ----------------------------------------------- ---------------------- <S> <C> <C> 10.20(b) Gas Transportation Agreement Service Package Exhibit 10.4 of Form 10-Q for No. 4272 between United Cities Gas Company and quarter ended March 31, 1998(File East Tennessee Natural Gas Company dated No. 1-10042) November 1, 1993 10.20(c) Gas Transportation Agreement Service Package Exhibit 10.5 of Form 10-Q for No. 4219 between United Cities Gas Company and quarter ended March 31, 1998(File Tennessee Gas Pipeline Company dated November No. 1-10042) 1, 1993 10.20(d) Transportation-Storage Contract No. TA-0614 Exhibit 10.6 of Form 10-Q for (Request 0180) between United Cities Gas quarter ended March 31, 1998(File Company and Williams Natural Gas Company dated No. 1-10042) October 1, 1993 10.20(e) Transportation-Storage Contract No. TA-0611 Exhibit 10.7 of Form 10-Q for (Request 0002) between United Cities Gas quarter ended March 31, 1998(File Company and Williams Natural Gas Company dated No. 1-10042) October 1, 1993 10.20(f) Service Agreement No. 867760 Under Rate Exhibit 10.8 of Form 10-Q for Schedule FT between United Cities Gas Company quarter ended March 31, 1998(File and Southern Natural Gas Company dated November No. 1-10042) 1, 1993 10.20(g) Service Agreement No. 867761 Under Rate Exhibit 10.9 of Form 10-Q for Schedule FT-NN between United Cities Gas quarter ended March 31, 1998(File Company and Southern Natural Gas Company dated No. 1-10042) November 1, 1993 </TABLE> 50
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- --------------------------------------------- ---------------------- <S> <C> <C> Executive Compensation Plans and Arrangements --------------------------------------------- 10.21(a) *Severance Agreement dated April 1, 1995 Exhibit 10.3 of Form 10-Q for between the Company and J. Charles Goodman quarter ended June 30, 1995 (File No. 1-10042) 10.21(b) *Form of Atmos Energy Corporation Change in Exhibit 10.21(b) of Form 10-K for Control Severance Agreement--Tier I fiscal year ended September 30, 1998 (File No. 1-10042) 10.21(c) *Form of Atmos Energy Corporation Change in Exhibit 10.21(c) of Form 10-K for Control Severance Agreement--Tier II fiscal year ended September 30, 1998 (File No. 1-10042) 10.22(a) *Atmos Energy Corporation Mini-Med Plan, as Exhibit 10.22 of Form 10-K for restated effective July 1, 1996 fiscal year ended September 30, 1996 (File No. 1-10042) 10.22(b) *Amendment No. One to the Atmos Energy Exhibit 10.22(b) of Form 10-K for Corporation Mini-Med Plan fiscal year ended September 30, 1998 (File No. 1-10042) 10.23 *Long Term Stock Plan for the United Cities Gas Exhibit 99.1 of Form S-8 filed Company Division July 29, 1997 (File No. 333-32343) 10.24(a) *Atmos Energy Corporation Retirement Plan for Exhibit 10(y) of Form 10-K for Outside Directors fiscal year ended September 30, 1992 (File No. 1-10042) </TABLE> 51
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- -------------------------------------------- ------------------------ <S> <C> <C> 10.24(b) *Amendment No. 1 to the Atmos Energy Exhibit 10.2 of Form 10-Q for Corporation Retirement Plan for Outside quarter ended December 31, 1996 Directors (File No. 1-10042) 10.25(a) *Description of Financial and Estate Planning Exhibit 10.25(b) of Form 10-K for Program fiscal year ended September 30, 1997 (File No. 1-10042) 10.25(b) *Description of Sporting Events Program Exhibit 10.26(c) of Form 10-K for fiscal year ended September 30, 1993 (File No. 1-10042) 10.26(a) *Atmos Energy Corporation Supplemental Exhibit 10.26 of Form 10-K for Executive Benefits Plan, Amended and Restated fiscal year ended September 30, in its Entirety August 12, 1998 1998 (File No. 1-10042) 10.26(b) *Atmos Energy Corporation Performance-Based Exhibit 10.32 of Form 10-K for Supplemental Executive Benefits Plan, Effective fiscal year ended September 30, Date August 12, 1998 1998 (File No. 1-10042) 10.27 *Atmos Energy Corporation Restricted Stock Exhibit 10.27 of Form 10-K for Grant Plan (Amended and Restated as of November fiscal year ended Septmeber 30, 12, 1997) 1997 (File No. 1-10042) </TABLE> 52
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ----------------------------------------------- ---------------------- <S> <C> <C> 10.28 *Atmos Energy Corporation Outside Directors Exhibit 10.28 of Form 10-K fiscal Stock-for-Fee Plan (Amended and Restated as of year ended September 30, 1997 November 12, 1997) (File No. 1-10042) 10.29 *Atmos Energy Corporation Executive Exhibit 10.33 of Form 10-K for Nonqualified Deferred Compensation Plan fiscal year ended September 30, 1998 (File No. 1-10042) 10.30(a) *Consulting Agreement between the Company and Exhibit 10.2 of Form 10-Q for Charles K. Vaughan, effective October 1, 1994 quarter ended June 30, 1997 (File No. 1-10042) 10.30(b) *Amendment No.1 to Consulting Agreement between Exhibit 10.3 of Form 10-Q for the Company and Charles K. Vaughan, dated May quarter ended June 30, 1997 (File 14, 1997 No. 1-10042) 10.30(c) *Amendment No. 2 to Consulting Agreement Exhibit 10.30(c) of Form 10-K for between the Company and Charles K. Vaughan, fiscal year ended September 30, dated August 12, 1998 1998 (File No. 1-10042) 10.30(d) *Amendment No. 3 to Consulting Agreement between the Company and Charles K. Vaughan, dated November 10, 1999 10.31(a) *Atmos Energy Corporation Executive Retiree Exhibit 10.31 of Form 10-K for Life Plan fiscal year ended September 30, 1997 (File No. 1-10042) </TABLE> 53
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- --------------------------------------------- ---------------------- <S> <C> <C> 10.31(b) *Amendment No. 1 to The Atmos Energy Exhibit 10.31(a) of Form 10-K for Corporation Executive Retiree Life Plan fiscal year ended September 30, 1997 (File No. 1-10042) 10.32 *Atmos Energy Corporation Equity Incentive and Exhibit 99.1 of Form S-8 filed Deferred Compensation Plan for Non-Employee March 1, 1999 (File No. 333-73145) Directors 11 Not applicable 12 Not applicable 13 Financial Review section of the Company's 1999 Annual Report to Shareholders (with exception of the information incorporated by reference included in Part I and Part II hereof, the 1999 Annual Report to Shareholders is not deemed filed or part of this Form 10-K) 16 Not applicable 18 Not applicable Other Exhibits, as indicated ---------------------------- 21 Subsidiaries of the registrant 22 Not applicable 23 Consent of independent auditor, Ernst & Young LLP </TABLE> 54
<TABLE> <CAPTION> Page Number or Exhibit Incorporation by Number Description Reference to -------- ----------------------------------------------- ---------------------- <S> <C> <C> 24 Power of Attorney Signature page of Form 10-K for fiscal year ended September 30, 1999 27 Financial Data Schedule for Atmos for year ended September 30, 1999 </TABLE> -------------------------- * This exhibit constitutes a "management contract or compensatory plan, contract, or arrangement." 55