Atmos Energy 1999 Annual Report Download - page 55

Atmos
Energy
Corporation
51
Missouri Sites On July 22, 1998, Atmos entered into an Abatement
Order on Consent with the Missouri Department of Natural Resources
addressing the former manufactured gas plant located in Hannibal,
Missouri. Atmos, through its United Cities Division, agreed in the
order to perform a removal action, a subsequent site evaluation and
to reimburse the response costs incurred by the state of Missouri in
connection with the property. The removal action was conducted and
completed in August 1998 and the site evaluation field work was
conducted in August 1999. On March 9, 1999, the Missouri Public
Service Commission issued an Order authorizing Atmos to defer
the costs associated with this site until the next rate increase, which
must be proposed before March 9, 2001.
Kansas Sites Atmos is currently conducting investigation and reme-
diation activities pursuant to Consent Orders between the Kansas
Department of Health and Environment (“KDHE”) and UCGC. The
Orders provide for the investigation and remediation of mercury
contamination at gas pipeline sites which utilize or formerly utilized
mercury meter equipment in Kansas. As of September 30, 1999, the
Company had identified approximately 720 sites where mercury may
have been used and had incurred $100,000 for recovery. In addition,
based upon available current information, the Company accrued and
deferred for recovery an additional $280,000 for the investigation of
these sites. The Kansas Corporation Commission has authorized the
Company to defer these costs and seek recovery in a future rate case.
The Company is a party to other environmental matters and
claims that arise out of the ordinary business of the Company. While
the ultimate results of response actions to these environmental mat-
ters and claims cannot be predicted with certainty, the Company
does not believe the final outcome of such response actions will have
a material adverse effect on the financial condition, the results of
operations or the cash flows of the Company because the Company
believes that the expenditures related to such response actions will
either be recovered through rates, shared with other parties, or cov-
ered by adequate insurance or reserves.
7) COMMON STOCK AND STOCK OPTIONS
Shareholders’ Rights Plan On November 12, 1997, the Board of
Directors approved a new Rights Agreement to become effective
upon the expiration of the then existing Rights Agreement on May
10, 1998. Under the Rights Agreement, each right (“Right”) will enti-
tle the holder thereof, until May 10, 2008 or the date of redemption
of the Rights, to buy one share of Common Stock of the Company at
the exercise price of $80.00, subject to adjustment. At no time will
the Rights have any voting rights. The exercise price payable and the
number of shares of Common Stock or other securities or property
issuable upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution. At the date upon which the rights
become separate from the Company’s Common Stock (the
“Distribution Date”), the Company will issue one right with each
share of Common Stock that becomes outstanding so that all shares
of Common Stock will have attached Rights. After the Distribution
Date, the Company may issue Rights when it issues Common Stock if
the Board deems such issuance to be necessary or appropriate.
The Rights will separate from the Common Stock and a
Distribution Date will occur upon the occurrence of certain events
specified in the Agreement, including but not limited to, the acquisi-
tion by certain persons of at least 15% of the beneficial ownership of
the Company’s Common Stock. The Rights have certain anti-takeover
effects and may cause substantial dilution to a person or entity that
attempts to acquire the Company on terms not approved by the
Board of Directors except pursuant to an offer conditioned upon a
substantial number of Rights being acquired. The Rights should not
interfere with any merger or other business combination approved by
the Board of Directors because, prior to the time that the Rights
become exercisable or transferable, the Rights may be redeemed by
the Company at $.01 per Right.