SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)DECEMBER 22, 1993
-----------------
ATMOS ENERGY CORPORATION
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 1-10042 75-1743247
- --------------- --------------------- ----------------------
(State or other (Commission File No.) (IRS Employer ID. No.)
jurisdiction of
incorporation)
1800 THREE LINCOLN CENTRE, 5430 LBJ FREEWAY, DALLAS, TEXAS 75240
- ---------------------------------------------------------- -----
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code (214) 934-9227
--------------
- -----------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits
(as amended on January 28, 1994 to include additional
financial statements of the business acquired and pro
forma financial information.)
(a) Financial statements of businesses acquired.
See accompanying "Index to Financial Statements and Pro
Forma Financial Information" for listing of financial
statements which are included herein.
Certain financial statements and the related
independent auditors' report listed in the following
index are included in Atmos' Amendment No. 2 to Form
S-4 (Reg. No. 33-67098) filed October 8, 1993, and are
incorporated herein by reference.
(b) Pro forma financial information.
See accompanying "Index to Financial Statements and Pro
Forma Financial Information" for listing of pro forma
financial information included herein.
(c) Exhibits.
See the Exhibits Index for a list of exhibits filed
with this report.
2
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
Item 7(a) and (b)
Page Reference
-------------------
This Amendment
Form No. 2 to
8-K/A Form S-4
--------- ---------
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Annual Financial Statements of Greeley
Gas Company:
Report of Independent Auditors F-1
Balance Sheets as of December 31, F-2 and
1991 and 1992 F-3
Statements of Operations and Retained
Earnings for the years ended
December 31, 1991 and 1992 F-4
Statements of Cash Flows for the
years ended December 31, 1991 and
1992 F-5
Notes to Financial Statements F-6
through
F-12
Interim Financial Statements of Greeley
Gas Company: 5
Report of Independent Auditors 6
Balance Sheet as of September 30,
1993 7
Statements of Operations and Retained
Earnings for the nine months ended
September 30, 1992 (Unaudited) and
1993 9
Statements of Cash Flows for the
nine months ended September 30,
1992 (Unaudited) and 1993 11
Notes to Financial Statements 13 - 24
3
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
(Continued)
Page Reference
--------------------
This Amendment
Form No. 2 to
8-K/A Form S-4
--------------------
PRO FORMA FINANCIAL INFORMATION
Atmos Energy Corporation for 1991 and
1992:
Unaudited Pro Forma Condensed
Statements of Income for Atmos'
year ended September 30, 1991 and
Greeley's year ended December 31,
1991 33
Unaudited Pro Forma Condensed
Statements of Income for Atmos'
year ended September 30, 1992 and
Greeley's year ended December 31,
1992 32
Notes to Unaudited Pro Forma
Condensed Financial Statements 35
Atmos Energy Corporation for the twelve
months ended September 30, 1993: 25
Unaudited Pro Forma Condensed
Balance Sheet as of September 30,
1993 27
Unaudited Pro Forma Condensed
Statement of Income 29
Notes to Unaudited Pro Forma
Condensed Financial Statements 30 - 31
4
INTERIM FINANCIAL STATEMENTS
OF
GREELEY GAS COMPANY
5
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Greeley Gas Company
We have audited the accompanying balance sheet of Greeley Gas
Company as of September 30, 1993, and the related statements of
operations and retained earnings and cash flows for the nine
months ended September 30, 1993. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Greeley Gas Company at September 30, 1993, and the results of
its operations and its cash flows for the nine months ended
September 30, 1993 in conformity with generally accepted
accounting principles.
ERNST & YOUNG
Denver, Colorado
November 24, 1993
6
GREELEY GAS COMPANY
BALANCE SHEET
September 30
1993
------------
ASSETS
Utility plant, at cost (Note 2) $101,398,734
Less accumulated depreciation 43,098,387
------------
Net utility plant 58,300,347
Investments:
Nonutility plant, less accumulated
depreciation of $244,217 465,343
Cash surrender value of life insurance on
officers less policy loans of $895,531 798,633
Other investments 1,100
------------
Total investments 1,265,076
Current assets:
Cash 730,829
Accounts receivable, less provision for
uncollectible accounts of $140,000 2,294,859
Inventories 1,980,799
Storage gas 362,892
Cost of gas delivered but not billed to
customers 879,261
Prepayments 4,760
Deferred income taxes receivable from
shareholders, net (Note 9) 605,294
-----------
Total current assets 6,858,694
Deferred charges, less amortization:
Prepaid pension costs 1,132,145
Debt expense 624,058
Other deferred charges 348,791
------------
Total deferred charges 2,104,994
------------
Total assets $ 68,529,111
============
7
GREELEY GAS COMPANY
BALANCE SHEET (Continued)
September 30
1993
------------
CAPITAL AND LIABILITIES
Capital stock (Note 3) $ 958,204
Retained earnings (Note 4) 20,244,227
-----------
Total capital stock and retained earnings 21,202,431
Long-term debt (Note 4) 20,603,308
Capital lease obligations (Note 2) 2,973,460
-----------
Total capitalization 44,779,199
Commitments and contingencies (Notes 2, 4 and 8)
Current liabilities:
Long-term debt due within one year 300,000
Capital lease obligations due within one year
(Note 2) 133,360
Notes payable to banks (Note 6) 4,500,000
Accounts payable 5,573,363
Customers deposits 3,316,220
Accrued liabilities:
Property taxes 832,759
Interest 1,295,511
-----------
Total current liabilities 15,951,213
Deferred credits:
Customers advances for construction 1,722,538
Other deferred credits (Note 9) 1,415,486
Investment tax credit 995,534
Deferred income taxes payable by shareholders,
net (Note 9) 3,665,141
-----------
Total deferred credits 7,798,699
-----------
Total capital and liabilities $68,529,111
===========
See accompanying notes.
8
GREELEY GAS COMPANY
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Nine months ended
September 30
1993 1992
------------ ------------
(Unaudited)
Operating revenues $52,823,283 $44,912,758
Operating expenses:
Gas purchased for resale 30,500,306 24,967,097
Other operating expenses 12,861,675 12,431,691
Maintenance and repairs 1,946,819 1,856,907
Depreciation 2,860,484 2,685,591
Taxes, other than income taxes 1,507,697 1,552,236
Income taxes (benefit)(Note 9) 369,642 (416,334)
----------- ------------
50,046,623 43,077,188
----------- ------------
Operating income 2,776,660 1,835,570
Other income and deductions:
Merchandise and jobbing, net 306,509 243,300
Other nonoperating revenue, net 34,040 299,483
----------- -----------
340,549 542,783
Interest expense:
Interest on long-term debt 1,914,611 1,953,460
Other interest charges 319,973 408,377
----------- ------------
2,234,584 2,361,837
----------- ------------
Net income 882,625 16,516
Retained earnings at beginning
of period 20,255,104 19,690,377
----------- ------------
21,137,729 19,706,893
Distributions to shareholders (484,005) (360,006)
Amount shown as income taxes
receivable from stockholders
(Note 9) (409,497) (41,968)
------------ ------------
Retained earnings at end of
of period $20,244,227 $19,304,919
============ ============
9
GREELEY GAS COMPANY
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Continued)
Nine months ended
September 30
1993 1992
--------- ---------
(Unaudited)
Earnings per share $5.65 $0.11
Dividends per common share $3.10 $2.31
Weighted average common shares
outstanding 156,166 156,166
See accompanying notes.
10
GREELEY GAS COMPANY
STATEMENTS OF CASH FLOWS
Nine months ended
September 30
1993 1992
---------- ----------
(Unaudited)
OPERATING ACTIVITIES
Net income $ 882,625 $ 16,516
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 3,555,496 3,249,077
Income taxes receivable from
shareholders (409,497) (41,968)
Deferred income taxes 830,081
Investment tax credit (50,942) (54,666)
Changes in operating assets
and liabilities:
Accounts receivable 4,711,756 4,188,057
Inventories 87,844 (512,581)
Storage gas (362,892)
Cost of gas delivered but not
billed to customers 2,300,007 1,956,702
Prepayments 657,273 616,908
Accounts payable (4,933,239) (5,466,790)
Customers deposits 12,395 (66,554)
Accrued liabilities 474,786 590,769
Deferred charges (195,519) (18,538)
Deferred credits 572,107 214,340
---------- -----------
Net cash provided by operating
activities 8,132,281 4,671,272
11
GREELEY GAS COMPANY
STATEMENTS OF CASH FLOWS (Continued)
Nine months ended
September 30
1993 1992
---------- ----------
(Unaudited)
INVESTING ACTIVITIES
Additions to utility plant (4,611,740) (6,536,294)
Additions to investments (151,221) (133,250)
Receipts from collections of
investments 495,518 63,909
----------- -----------
Net cash used in investing
activities (4,267,443) (6,605,635)
FINANCING ACTIVITIES
Principal payments on capital
lease obligations (88,508) (64,396)
Proceeds of short-term borrowings 17,402,500 3,320,200
Repayment of short-term borrowings (21,239,550) (1,467,700)
Distributions to shareholders (484,005) (360,006)
------------ -----------
Net cash provided by (used in)
financing activities (4,409,563) 1,428,098
------------ -----------
Net change in cash (544,725) (506,265)
Cash at beginning of period 1,275,554 1,195,022
------------ -----------
Cash at end of period $ 730,829 $ 688,757
============ ===========
See accompanying notes.
12
GREELEY GAS COMPANY
NOTES TO FINANCIAL STATEMENTS
September 30, 1993
(Information relative to the nine-month period ended
September 30, 1992 not covered by independent auditors report)
The Company's operations are predominantly those of a public utility,
consisting of the distribution and transportation of natural gas to
residential, commercial and industrial customers in the states of Colorado,
Kansas and Missouri.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The financial information for the nine-month period ended September 30,
1992 is unaudited. Accordingly, it does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. For further
information, refer to the financial statements and footnotes thereto
included in the Greeley Gas Company (the Company) annual report for the
year ended December 31, 1992 incorporated in the Form S-4 Registration
Statement filed by Atmos Energy Corporation on October 8, 1993.
Operating results for the nine-month period ended September 30, 1993 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1993 due to seasonal factors affecting gas utility,
construction and other operations.
Investments
The Company's marketable securities and other investments are carried at
the lower of cost or market.
13
Inventories
Inventory details at September 30, 1993 were as follows:
Plant materials and operating supplies $1,596,441
Merchandise held for resale 384,358
----------
$1,980,799
==========
Plant materials and operating supplies are carried at average cost.
Merchandise is carried at the lower of specific cost or market.
Utility Plant, Depreciation and Amortization
Depreciation is provided on the straight-line method over the estimated
useful lives of the assets. Total depreciation expense approximates an
annual rate of 3.25% of the average cost of depreciable plant assets and
from 10% to 33 1/3% of the average cost of transportation equipment and
furniture and fixtures.
Assets related to capital lease obligations are classified as utility
plant. Amortization of the assets is included in depreciation expense and
approximates an annual rate of 5%.
Amortization of deferred charges is provided on the straight-line method
over periods ranging from 5 to 25 years.
14
Business Combination
The merger between the Company and Atmos Energy Corporation became final on
December 22, 1993. The statement of operations for the nine-month period
ended September 30, 1993 includes $205,000 of merger-related expenses.
There were no items of comparable nature included in the corresponding
period of 1992.
Earnings Per Common and Common Equivalent Share
Earnings per common share are computed based on the weighted average number
of common shares issued and outstanding and common stock equivalents if
dilutive.
Investment Tax Credit
Investment tax credit (ITC) earned prior to January 1, 1986 is being
deferred and amortized to income over the productive lives of the related
property. The income tax (benefit) includes the amortization of investment
tax credit of $50,942 for the nine-month period ended September 30, 1993.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments, other than money market funds, with a
maturity of three months or less at date of purchase to be cash
equivalents.
Interest paid during the nine-month period ended September 30, 1993 was
$1,739,297.
2. LEASES
The Company leases certain office and warehouse facilities and equipment
under capital leases which generally contain no options to purchase but are
renewable at the option of the lessee. A substantial number of the leases
are with shareholders. The cost of the leased property ($3,808,655 at
September 30, 1993) has been included in utility plant, and the related
amortization ($701,835 at September 30, 1993) has been included in
accumulated depreciation.
15
Minimum annual rentals for the five years subsequent to 1993 and in the
aggregate are:
Capital Operating
Year ending September 30 Leases Leases
------------------------ ---------- ----------
1994 $ 752,000 $ 229,000
1995 752,000 230,000
1996 752,000 230,000
1997 719,000 202,000
1998 and thereafter 5,238,000 966,000
---------- ----------
Total minimum lease payments 8,213,000 1,857,000
Less amount representing
contingent rentals from
increases in the Consumer
Price Index 1,087,000 20,000
---------- ----------
Net minimum lease 7,126,000 $1,837,000
==========
Less amount representing interest 4,019,180
----------
Present value of net minimum
lease payments $3,106,820
==========
Rental expense for operating leases including contingent rentals related to
capitalized leases during the nine-month period ended September 30, 1993
was:
Operating leases $219,000
Contingent rentals 106,000
--------
$325,000
========
16
3. CAPITAL STOCK
September 30
1993
------------
Common stock, $.01 par value, 1,000,000
shares authorized, 156,166 shares issued
and outstanding $ 1,562
Capital in excess of stated value 956,642
---------
$ 958,204
=========
4. LONG-TERM DEBT
Long-term debt at September 30, 1993 includes the following:
First mortgage bonds (secured by all utility
plant assets):
9.4% series, due May 1, 2021 $17,000,000
13% series, due $300,000 annually, balance
of $1,000,000 due November 1, 1995 1,600,000
10% notes payable, due December 31, 2011 2,303,308
-----------
20,903,308
Less long-term debt due within one year 300,000
-----------
Long-term debt due after one year $20,603,308
===========
As long as any of the first mortgage bonds are outstanding, the Company
shall not pay dividends upon, acquire or redeem any shares of its capital
stock, except out of earnings accumulated after December 31, 1982, plus
$800,000. Approximately $6,548,000 of retained earnings at September 30,
1993 is restricted.
17
The aggregate annual maturities of long-term debt for the four years
subsequent to 1993 are:
Year ending September 30 Annual maturities
------------------------ -----------------
1994 $ 300,000
1995 300,000
1996 1,000,000
1997 0
5. NOTES PAYABLE TO SHAREHOLDERS AND EMPLOYEES
Notes payable to shareholders and employees are for six-month terms and
bear interest at rates ranging from 4.0% to 4.5%. Interest incurred on
such notes aggregated $11,326 and $28,593 for the period ended September
30, 1993.
6. NOTES PAYABLE TO BANKS
The Company has unsecured lines of credit with banks totaling $11,500,000.
The lines of credit bear interest at the bank s prime rate and expire May
1, 1994 and June 30, 1994. The agreements require the Company to maintain
certain financial ratios. At September 30, 1993, $7,000,000 of such lines
was available for borrowing.
7. RETIREMENT PLANS
The Company has a defined benefit pension plan covering substantially all
regular employees who have completed one year of service. Benefits are
based on years of service and the employee s compensation during the last
ten years of employment. The Company s funding policy is to contribute
annually the maximum amount that can be deducted for federal income tax
purposes. Plan assets include corporate bonds, equity securities, mutual
funds, bond coupons, partnership interests, U.S. Treasury notes, Federal
Home Loan Mortgage Corporation Participation Certificates and other
miscellaneous notes.
18
The following table sets forth the plan's funded status at September 30,
1993:
Actuarial present value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of
$9,958,766 at September 30, 1993 $(10,088,315)
Additional amounts related to
projected pay increases (3,270,495)
-------------
Projected benefit obligation (13,358,810)
Plan assets at fair value 14,203,586
-------------
Excess of plan assets over projected
benefit obligation 844,776
Unrecognized net asset (2,389,929)
Unrecognized net loss from past
experience different from
that assumed 2,677,298
------------
Prepaid pension cost $ 1,132,145
============
Net pension expense (benefit) includes the following components at
September 30, 1993:
Service cost $ 277,517
Interest cost on projected benefit
obligations 716,477
Actual return on plan assets (893,565)
Net amortization and deferral (202,671)
----------
Net pension expense (benefit) $(102,242)
==========
Accumulated plan benefits were computed using the Projected Unit Credit
funding method. The discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligations were 7.75% and 6.25%, respectively. The
expected long-term rate of return on plan assets was 9%.
Effective January 1, 1988, the Company adopted a 401(k) plan that covers
substantially all employees. Employee contributions are limited to 6% of
19
base compensation. The Company matches 50% of employee contributions.
Total employer contributions to the 401(k) plan were $229,733 for the
period ended September 30, 1993.
8. COMMITMENTS AND CONTINGENCIES
The Company is a party to various suits arising in the ordinary course of
business. While the ultimate outcome of such actions cannot be ascertained
at this time, in the opinion of management, the liabilities, if any, which
may arise from such actions would not have a material adverse effect on the
financial position of the Company.
9. INCOME TAXES
The Company is classified as an S Corporation (small business corporation)
under the provisions of the Internal Revenue Code. Accordingly, the
liability for payment of federal and state income taxes is the
responsibility of the Company's stockholders.
Normally, income taxes are not reported in the financial statements of S
Corporations. However, during 1991, as part of the settlement of rate
cases filed in the states of Colorado and Kansas, the Company was
stipulated or ordered to begin providing for current and deferred income
taxes. The rulings stipulated that the provision for income taxes should
be calculated as if the Company were a taxable corporation, except using
individual income tax rates not to exceed the corporate tax rate. These
rate cases impact only utility operations; no income taxes are provided for
the Company's nonutility operations because of the Company's status as an S
Corporation. As a result of the 1993 Budget Reconciliation Act, the
maximum federal individual income tax rate is now higher than the maximum
corporate income tax rate. As a result of this tax rate increase, on
January 1, 1993 the Company began using the federal corporate income tax
rate applicable to the Company's taxable income from utility operations.
The net effect of the tax increase was recognized in income tax expense for
the nine months ended September 30, 1993 because it is not probable that
rate regulators will allow the recovery of that amount.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income
Taxes. Deferred income tax assets and liabilities reflect the tax effects
of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes. These amounts, if required, reflect the gross of
tax presentation under SFAS No. 109, and result from the following.
20
September 30
1993
------------
Deferred tax liabilities:
Tax over book depreciation $3,930,078
Prepaid pension plan expenses 424,555
----------
Total deferred tax liabilities 4,354,633
Deferred tax assets:
Unbilled revenues 287,512
Customer advances for construction 640,565
Vacation accrual 265,279
Other 101,430
----------
Total deferred tax assets 1,294,786
----------
Net deferred tax liabilities $3,059,847
==========
SFAS No. 109 deferred accounts for
rate regulated entities (included in
other deferred credits):
Liabilities $ 750,909
==========
As reported:
Deferred income taxes:
Receivable from stockholders, net $ 605,294
Payable by stockholders, net 3,665,141
----------
Net deferred tax liabilities $3,059,847
==========
21
Significant components of the provision for income taxes for the nine
months ended September 30, 1993 are as follows:
Current:
Federal $(354,937)
State (54,560)
----------
Total current (409,497)
Deferred:
Federal 647,256
State 99,578
----------
746,834
Tax rate change 103,443
Amortization of excess deferred
income taxes (20,196)
----------
Total deferred 830,081
Amortization of deferred ITC (50,942)
----------
$ 369,642
==========
Generally, the Company makes distributions from retained earnings to
shareholders to cover current income taxes attributable to the Company's
earnings.
Internal Revenue Service rules require the Company to amortize excess
deferred income taxes over a period approximating the remaining lives of
the related assets. The excess deferred income taxes resulted from a
decrease in the federal tax rate from 46% to 34% and are being amortized
over a period approximating 29 years. The unamortized balance at September
30, 1993, which is included in other deferred credits on the Company s
September 30, 1993 balance sheet, was $443,550 and reflects the gross of
tax presentation under SFAS No. 109.
22
The components of the Company's provision for deferred income taxes for the
nine-month period ended September 30, 1993 are as follows:
Depreciation $337,431
Unbilled revenues 594,833
Customer advances for construction (209,224)
Other 23,794
--------
$746,834
========
10. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
In addition to providing pension benefits, the Company also provides
certain other postretirement benefits to employees retiring under the terms
of the Company's retirement plans. The most significant of these benefits
is the continuation of medical insurance. The Company s cost of providing
these postretirement benefits is recognized by expensing the monthly
insurance premiums as paid, net of contributions from retirees. Net
Company contributions were $264,059 for the period ended September 30,
1993.
In December 1990, the Financial Accounting Standards Board issued new rules
that require that the projected future cost of providing postretirement
benefits, such as health care and life insurance (referred to as OPEBs), be
recognized as an expense as employees render service instead of when the
benefits are paid. Companies can elect to record the cumulative effect of
the accounting change as a charge against income in the year the rules are
adopted, or alternatively, on a prospective basis as a part of the future
annual benefit cost.
The Company currently is accumulating the necessary data and expects to
apply the new rules starting in the first quarter of 1994 on a prospective
basis. Based on preliminary estimates, the new rules are expected to
result in an increase in 1994 net periodic postretirement benefit cost of
approximately $2,100,000. The unrecognized accumulated postretirement
benefit obligation is estimated to be approximately $13,400,000 at December
31, 1993.
23
11. LONG-TERM NATURAL GAS PURCHASE COMMITMENTS
The Company has entered into various natural gas supply contracts which
expire at various dates from 1993 through 2004. The contracts generally
require certain monthly minimum payments. Based on current prices, the
minimum take or pay obligation at September 30, 1993 is as follows:
Year ending September 30
------------------------
1994 $3,649,000
1995 3,636,000
1996 13,000
1997 and thereafter 101,000
----------
Total $7,399,000
==========
Natural gas purchases under these contracts for the nine months ended
September 30, 1993 approximated $2,793,000.
On October 1, 1993, the Federal Energy Regulatory Commission's (FERC) order
number 636 became effective for interstate gas pipeline companies, from
whom the Company purchases much of its natural gas supplies. This order
required pipeline companies to unbundle their gas sales and transportation
services and offer them separately to customers. The effect of this order
is that the Company now has long-term commitments for the transportation of
natural gas with its interstate suppliers but must secure its natural gas
supplies from other parties.
24
PRO FORMA FINANCIAL INFORMATION
ATMOS ENERGY CORPORATION
Unaudited Pro Forma Condensed Balance Sheet
at September 30, 1993
Unaudited Pro Forma Condensed Statement of Income
for the Twelve Months Ended September 30, 1993
Notes to Unaudited Pro Forma Condensed Financial
Statements
25
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial
statements give effect to the Merger of Atmos and Greeley on a pooling of
interests basis of accounting. The pro forma condensed balance sheet
assumes that the Merger took place on September 30, 1993 and combines the
September 30, 1993 balance sheets of Atmos and Greeley. The pro forma
condensed statement of income for the year ended September 30, 1993 was
prepared based on the historical financial statements of Atmos for the year
then ended and the financial statements of Greeley for two interim periods.
Since Greeley's fiscal year ends on December 31, the historical data for
Greeley used in the pro forma condensed income statement for the twelve
months ended September 30, 1993 was computed by adding the unaudited
interim results for the quarter ended December 31, 1992 to the interim
results for the nine months ended September 30, 1993. The pro forma income
statement was computed assuming the Merger was consummated at the beginning
of the period presented. Greeley's operating results for the three months
ended December 31, 1992 were included in both the pro forma condensed
statement of income for the year ended September 30, 1992 which is
incorporated by reference herein, and in the pro forma condensed statement
of income for the year ended September 30, 1993. Greeley's operating
revenues and net income for the three months ended December 31, 1992 were
$18,323,000 and $950,000, respectively.
These pro forma condensed financial statements should be
read in conjunction with the historical consolidated financial statements
and notes of Atmos included in its Form 10-K for the fiscal year ended
September 30, 1993 and the financial statements and notes of Greeley for
the year ended December 31, 1992, incorporated herein by reference. The
unaudited pro forma condensed statement of income is not necessarily
indicative of future operations or the actual results that would have
occurred had the Merger been consummated at the beginning of the period
presented.
26
ATMOS ENERGY CORPORATION AND GREELEY GAS COMPANY
PRO FORMA CONDENSED BALANCE SHEET
(Unaudited)
September 30, 1993
ATMOS GREELEY PRO FORMA
ENERGY GAS ADJUSTMENTS PRO
CORP. COMPANY (NOTE 2) FORMA
-------- -------- ----------- --------
(In thousands)
ASSETS
Property, plant and equipment $399,404 $102,108 $501,512
Accumulated depreciation and amortization 158,894 43,343 202,237
-------- -------- ------- --------
Net property, plant and equipment 240,510 58,765 299,275
Current assets
Cash and cash equivalents 1,584 731 $(1,500) (E) 815
Accounts receivable 26,905 2,295 1,317 (F) 30,517
Inventories 4,083 1,981 6,064
Gas stored underground 17,240 363 17,603
Other current assets 3,327 1,489 (605) (C)
(879) (F) 3,332
-------- -------- ------- --------
Total current assets 53,139 6,859 (1,667) 58,331
Deferred charges and other assets 30,045 2,905 (57) (F) 32,893
-------- -------- ------- --------
$323,694 $ 68,529 $(1,724) $390,499
======== ======== ======== ========
<FN>
See notes to unaudited pro forma condensed financial statements.
27
ATMOS ENERGY CORPORATION AND GREELEY GAS COMPANY
PRO FORMA CONDENSED BALANCE SHEET (Continued)
(Unaudited)
September 30, 1993
ATMOS GREELEY PRO FORMA
ENERGY GAS ADJUSTMENTS PRO
CORP. COMPANY (NOTE 2) FORMA
---------- -------- ----------- --------
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock $ 38 $ 2 $ 10 (B) $ 50
Additional paid-in capital 93,357 956 (10) (B) 94,303
Retained earnings 24,832 20,244 533 (C)
(1,500) (E)
236 (F) 44,345
-------- -------- -------- --------
Total shareholders' equity 118,227 21,202 (731) 138,698
Long-term debt 85,250 20,603 105,853
-------- -------- -------- --------
Total capitalization 203,477 41,805 (731) 244,551
Current liabilities:
Current maturities of long-term debt 6,000 300 6,300
Notes payable to banks 31,200 4,500 35,700
Accounts payable 22,819 5,573 28,392
Taxes payable 2,964 833 145 (F) 3,942
Customers' deposits 4,547 3,316 7,863
Other current liabilities 4,707 1,429 6,136
-------- -------- ------- --------
Total current liabilities 72,237 15,951 145 88,333
Deferred income taxes 28,802 4,661 75 (C) 33,538
Deferred credits and other liabilities 19,178 6,112 (1,213) (C) 24,077
-------- -------- -------- --------
$323,694 $ 68,529 $(1,724) $390,499
======== ======== ======== ========
<FN>
See notes to unaudited pro forma condensed financial statements.
28
ATMOS ENERGY CORPORATION AND GREELEY GAS COMPANY
PRO FORMA CONDENSED STATEMENT OF INCOME
(Unaudited)
Year ended September 30, 1993
ATMOS GREELEY PRO FORMA
ENERGY GAS ADJUSTMENTS PRO
CORP COMPANY (NOTE 2) FORMA
-------- -------- ------------- --------
(In thousands, except per share data)
Operating revenues $388,495 $71,146 $ (235) (G) $459,406
Purchased gas cost 255,454 41,078 102 (G) 296,634
-------- -------- -------- --------
Gross profit 133,041 30,068 (337) 162,772
Operating expenses:
Operation 65,230 16,954 82,184
Maintenance 3,804 2,531 6,335
Depreciation and amortization 13,620 3,813 17,433
Taxes, other than income 14,915 1,891 16,806
Income taxes 9,405 668 362 (D)
(128) (G) 10,307
-------- -------- -------- --------
Total operating expenses 106,974 25,857 234 133,065
-------- -------- -------- --------
Operating income 26,067 4,211 (571) 29,707
Other income (expense) (153) 719 566
Interest charges 10,202 3,097 13,299
-------- -------- -------- --------
Net income $ 15,712 $ 1,833 $ (571) $ 16,974
======== ======= ======== ========
Net income per share $ 2.17 $ 1.78
======== ========
Average shares outstanding 7,229 2,329 (A) 9,558
======== ======== ========
<FN>
See notes to unaudited pro forma condensed financial statements.
29
ATMOS ENERGY CORPORATION AND GREELEY GAS COMPANY
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. MERGER
Pursuant to the terms of the Reorganization Agreement, the outstanding
shares of Greeley Stock were converted into the right to receive a total of
2,329,330 shares of Atmos Stock. The pro forma financial statements assume
the issuance of the Atmos stock in connection with the merger and that the
transaction will be accounted for as a pooling of interests.
2. PRO FORMA ADJUSTMENTS
The pro forma adjustments in the accompanying unaudited pro forma condensed
financial statements are listed below. Certain reclassifications have been
made to make classifications for similar items consistent between the
companies.
(A) The pro forma net income per share is based on the
historical weighted average of Atmos Stock outstanding
plus 2,329,330 shares issued at the date of the Merger.
(B) The balance sheets were combined to reflect the
combination of Atmos and Greeley as a pooling of
interests. Since 2,329,330 shares of Atmos Stock (stated
value of $.005) were issued, the common stock caption was
increased $12,000. This was offset against the
elimination of Greeley's common stock ($2,000) and the net
effect reduced additional paid-in capital by $10,000.
(C) Reflects the recording of deferred income taxes to be
restored to the balance sheet of Greeley as a result of
terminating its status as a Subchapter S corporation in
connection with the Merger. Timing differences of Greeley
relate to differences between income tax reporting and
financial statement reporting treatments of such items as
vacation accruals, depreciation and the allowance for
doubtful accounts. These deferred income taxes have been
recorded in accordance with APB Opinion No. 11,
"Accounting for Income Taxes."
(D) Greeley filed income taxes as a Subchapter S corporation.
For purposes of determining the pro forma effect of the
Greeley acquisition on Atmos' consolidated statements of
income, income tax expense of Greeley has been increased
to reflect corporate tax rates on Greeley's operations.
This income tax provision assumes that Greeley had adopted
the same accounting principles as Atmos (APB Opinion No.
11, "Accounting for Income Taxes").
30
(E) The pro forma statement of income does not include an
adjustment for approximately $1,500,000 in nonrecurring
expenses relating to the proposed pooling of interest
which are estimated and expected to be incurred within the
12-month period following the transaction date. The pro
forma balance sheet reflects the net effect of these
expenses through a reduction of cash and retained earnings
as of September 30, 1993.
(F) To adjust Greeley's balance sheet to include unbilled
receivables for natural gas delivered through September
30, 1993 and to eliminate related deferred gas costs to
conform accounting policy to the policy of Atmos.
(G) To conform Greeley's revenue recognition method from
recognizing revenue and related costs in the period in
which customers are billed to recognizing such items in
the period in which gas deliveries are made.
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to be signed on
its behalf by the undersigned hereunto duly authorized.
ATMOS ENERGY CORPORATION
(registrant)
DATE: January 28, 1994 By: /s/ JAMES F. PURSER
---------------------------
James F. Purser
Executive Vice President
and Chief Financial Officer
32
EXHIBITS INDEX
Item 7(c)
Sequentially Numbered
Exhibit Page or Incorporation
Number Description by Reference to
--------- ----------------------------- ----------------------
2.1 Agreement and Plan of Exhibit 2 to Amendment
Reorganization dated July 2, No. 2 to Form S-4
1993 by and among Atmos, (Reg. No. 33-67098)
Greeley Gas Acquisition filed October 8, 1993.
Corporation, and Greeley.
2.2 List of schedules omitted Exhibit 2.2 to Form
from Exhibit 2.1. 8-K filed January 5,
1994.
4.1 Restated Articles of Exhibit 3(a) of Form
Incorporation of Atmos dated 10-K for fiscal year
November 10, 1989. ended September 30,
1991.
4.2 Bylaws of Atmos (Amended and Exhibit 3 of Form 10-Q
restated as of February 12, for quarter ended
1992). March 31, 1992.
4.3 Specimen Common Stock Exhibit 4(b) of Form
Certificate (Atmos Energy 10-K for fiscal year
Corporation). ended September 30,
1988 (File No. 1-
10042).
4.4 Rights Agreement dated as of Exhibit 1 of Form 8-K
April 27, 1988 between Atmos filed May 10, (File
and Morgan Shareholder No. 0-11249).
Services Trust Company.
23 Consent of Ernst & Young,
Denver, Colorado.
33