Filed pursuant to Rule 424(b)(5)
Registration Statement No. 333-102200
Subject to Completion
Preliminary Prospectus Supplement dated February 12, 2003
PROSPECTUS SUPPLEMENT
---------------------
(To prospectus dated January 22, 2003)
$200,000,000
NATIONAL FUEL GAS COMPANY
% Notes due 2013
---------------
National Fuel Gas Company will pay interest on the notes on March 1 and
September 1 of each year, beginning on September 1, 2003. The notes will be
issued in denominations of $1,000 and integral multiples of $1,000. The notes
will mature on March 1, 2013. National may redeem some or all of the notes at
any time at the "make-whole" redemption price discussed in this prospectus
supplement under the heading "Description of the Notes--Optional Redemption."
INVESTING IN THE NOTES INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE S-6 OF THIS PROSPECTUS SUPPLEMENT.
---------------
Per Note Total
-------- -----
Public offering price (1)..................... % $
Underwriting discount ........................ % $
Proceeds, before expenses, to National ....... % $
(1) Plus accrued interest from February 18, 2003, if settlement occurs
after that date.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through the
facilities of The Depository Trust Company against payment on or about
February 18, 2003.
---------------
MERRILL LYNCH & CO.
---------------
The date of this prospectus supplement is February , 2003.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND
MAY BE CHANGED. NEITHER THIS PRELIMINARY PROSPECTUS SUPPLEMENT NOR THE
ACCOMPANYING PROSPECTUS IS AN OFFER TO SELL THESE SECURITIES AND NEITHER IS
SOLICITING ANY OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER
OR SALE IS NOT PERMITTED.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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Summary......................................................................S-3
Risk Factors.................................................................S-6
Description of the Notes.....................................................S-8
Underwriting................................................................S-13
PROSPECTUS
About this Prospectus..........................................................2
National Fuel Gas Company......................................................2
Where You Can Find More Information............................................3
Incorporation by Reference.....................................................3
Ratio of Earnings to Fixed Charges.............................................4
Use of Proceeds................................................................4
Description of Debt Securities.................................................4
Description of Common Stock...................................................14
Description of Stock Purchase Contracts and Stock Purchase Units..............18
Plan of Distribution..........................................................18
Experts.......................................................................19
Validity......................................................................19
---------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus supplement
or the accompanying prospectus. You must not rely on any unauthorized
information or representations. This prospectus supplement and the accompanying
prospectus is an offer to sell only the notes offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus supplement and the accompanying prospectus is
current only as of its date.
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SUMMARY
THE OFFERING
ISSUER............................. National Fuel Gas Company
NOTES OFFERED...................... $200,000,000 aggregate principal amount
of % Notes due 2013
MATURITY DATE...................... March 1, 2013
DATE INTEREST STARTS ACCRUING...... February 18, 2003
INTEREST PAYMENT DATES............. March 1 and September 1, beginning
September 1, 2003
USE OF PROCEEDS.................... National will use the net proceeds from
the issuance and sale of the notes to
refund $150 million of National's 7.30%
medium-term notes due February 18, 2003
and to repay approximately $50 million
of short-term debt or commercial paper.
As of February 11, 2003, National had an
aggregate of approximately $386 million
of short-term debt and commercial paper
outstanding, which had maturities of up
to 60 days and which had annual interest
rates ranging from 1.40% to 1.69%.
REDEMPTION......................... National may redeem some or all of the
notes at any time at the "make-whole"
redemption price discussed in this
prospectus supplement under the heading
"Description of the Notes--Optional
Redemption."
RANKING............................ The notes will constitute National's
direct unsecured general obligations and
will rank equally with all of National's
other senior, unsecured and
unsubordinated debt.
RISK FACTORS....................... See "Risk Factors" and other information
in this prospectus supplement for a
discussion of factors you should
carefully consider before deciding to
invest in the notes.
NATIONAL FUEL GAS COMPANY
National, a holding company registered under the Public Utility Holding
Company Act of 1935, was organized under the laws of New Jersey in 1902.
National is engaged in the business of owning and holding securities issued by
its subsidiaries: National Fuel Gas Distribution Corporation, National Fuel Gas
Supply Corporation, Seneca Independence Pipeline Company, Seneca Resources
Corporation, Horizon Energy Development, Inc., National Fuel Resources, Inc.,
Highland Forest Resources, Inc., Upstate Energy Inc., Niagara Independence
Marketing Company, Leidy Hub, Inc., Data-Track Account Services, Inc. and
Horizon Power, Inc.
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National and its subsidiaries comprise a diversified energy company
consisting of six major business segments:
o the Utility segment, which sells natural gas and provides natural gas
transportation services through a local distribution system located in
western New York and northwestern Pennsylvania;
o the Pipeline and Storage segment, which provides interstate natural
gas transportation and storage services;
o the Exploration and Production segment, which is engaged in the
exploration for, and the development and purchase of, natural gas and
oil reserves in California, the Appalachian region of the United
States, Wyoming and the Gulf Coast region of Texas and Louisiana, as
well as in the provinces of Manitoba, Alberta, Saskatchewan and
British Colombia in Canada;
o the International segment, which is engaged in foreign energy projects
through investments as a sole or substantial owner in various business
entities;
o the Energy Marketing segment, which is engaged in the marketing and
brokerage of natural gas and the performance of energy management
services for industrial, commercial, public authority and residential
end-users in the northeastern United States; and
o the Timber segment, which engages in the marketing of timber, the
operation of sawmills and the processing of timber.
National's other businesses are engaged in wholesale natural gas marketing and
other energy-related activities, the providing of various natural gas hub
services to customers, the providing of collection services for other
subsidiaries of National, and the development or operation of mid-range
independent power production facilities.
RECENT DEVELOPMENTS
On February 6, 2003, National acquired the Empire State Pipeline from Duke
Energy Corporation for $180.0 million in cash plus approximately $58.0 million
of project debt. Empire is a 157-mile, 24-inch pipeline that begins at the
United States/Canadian border at the Chippawa Channel of the Niagara River near
Buffalo, New York, which is within National's service territory, and terminates
in Central New York just north of Syracuse, New York. Empire can transport 525
million cubic feet of gas per day and currently has almost all of its capacity
under contract, with a substantial portion being long-term contracts. The
initial financing of the acquisition was accomplished through short-term
borrowings. Long-term financing alternatives include issuing common stock and
selling non-regulated assets such as timber acreage and Exploration and
Production reserves. Presently, negotiations are ongoing for the sale of 70,000
acres of timber and National expects that a purchase agreement will be finalized
soon.
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SELECTED FINANCIAL DATA
The following material, which is presented in this prospectus supplement
solely to furnish limited introductory information, is qualified in its entirety
by, and should be considered in conjunction with, the more detailed information
incorporated by reference or provided in this prospectus supplement or in the
accompanying prospectus. In the opinion of National, all adjustments
(constituting only normal recurring accruals) necessary for a fair statement of
the results of operations for the three months ended December 31, 2002 and 2001
have been made. The income statement data for the three months ended December
31, 2002 and December 31, 2001 are not necessarily indicative of the results
that may be expected for an entire year.
(IN THOUSANDS)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- ----------------------------------------
2002 2001 2002 2001 2000
-------- -------- ---------- ---------- ----------
SUMMARY OF OPERATIONS:
Operating revenues.................... $479,706 $392,327 $1,464,496 $2,059,836 $1,412,416
Net income available for
common stock....................... $46,296 $33,207 $117,682 $65,499 $127,207
The following table shows National's ratio of earnings to fixed charges for
the periods indicated:
FISCAL YEARS ENDED SEPTEMBER 30,
TWELVE MONTHS ENDED --------------------------------------------------------------
DECEMBER 31, 2002 2002 2001 2000 1999 1998
--------------------------------------------- ------ ------ ------ ------ ------
2.93 2.74 1.94 2.98 3.02 1.66
The following table shows National's consolidated capitalization and
short-term debt at December 31, 2002 and as adjusted for this offering and the
reclassification of certain medium-term notes.
(IN THOUSANDS)
ADJUSTED*
------------------------
AT DECEMBER 31, 2002 AMOUNT PERCENT
-------------------- ------ -------
Capitalization:
Comprehensive shareholders' equity................. $ 1,037,397 $ 1,037,397 42.71%
Long-term debt, net of current portion............. 1,143,070 1,391,504 57.29
----------- ----------- -------
Total capitalization............................... $ 2,180,467 $ 2,428,901 100.00%
=========== =========== =======
Short-term debt, including current portion of
long-term debt..................................... $ 432,893 $ 422,227
----------- -----------
------------------
* To give effect to (i) the issuance of $200 million in principal amount of
the notes being offered by this prospectus supplement and the expected use
of proceeds thereof as described in this prospectus supplement under the
heading "Use of Proceeds" and (ii) the Empire acquisition discussed in this
prospectus supplement under the heading "Recent Developments" (which
increased short-term debt by approximately $180 million, long-term debt by
approximately $48 million, and the current portion of long-term debt by
approximately $9 million). Adjusted amounts do not reflect any sales by
National of common stock subsequent to December 31, 2002 pursuant to
National's Direct Stock Purchase and Dividend Reinvestment Plan and
employee benefit plans or any possible future issuance and sale from time
to time by National or its subsidiaries of additional debt and equity
securities as needed.
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RISK FACTORS
You should carefully consider the risks and uncertainties described and the
other information in this prospectus supplement and the accompanying prospectus
before investing in the notes.
NATIONAL'S LIQUIDITY, AND IN CERTAIN CIRCUMSTANCES, ITS EARNINGS, COULD BE
ADVERSELY AFFECTED BY THE COST OF PURCHASING NATURAL GAS DURING PERIODS IN WHICH
NATURAL GAS PRICES ARE RISING SIGNIFICANTLY.
Tariff rate schedules in each of the Utility segment's service territories
contain purchased gas adjustment clauses which permit National to file for rate
adjustments to recover increases in the cost of purchased gas. Increases in the
cost of purchased gas have no direct impact on profit margins, but do affect
cash flows and can therefore impact the amount of National's capital resources.
Natural gas prices have been trending upward since November 2002, the beginning
of the "heating season" in the Utility segment's service territories. National
has used short-term borrowings in the past to temporarily finance storage
inventories and purchased gas costs, and National expects to do so in the
future.
National is required to file an accounting reconciliation with the
regulators in each of the Utility segment's service territories regarding the
costs of purchased gas. Due to the nature of the regulatory process, there is a
risk of a disallowance of full recovery of these costs during any period in
which there has been a substantial upward spike in these costs. Any material
disallowance of purchased gas costs could have a material impact on cash flow
and earnings.
UNCERTAIN ECONOMIC CONDITIONS MAY AFFECT NATIONAL'S ABILITY TO FINANCE CAPITAL
EXPENDITURES AND TO REFINANCE MATURING DEBT.
National's ability to finance capital expenditures, to refinance maturing
debt and other matters will depend upon general economic conditions in the
capital markets. The direction in which interest rates may move is uncertain.
Declining interest rates have generally been believed to be favorable to
utilities, while rising interest rates are generally believed to be unfavorable,
because of the levels of debt that utilities may have outstanding. In addition,
National's authorized rate of return in its regulated businesses is based upon
certain assumptions regarding interest rates. If interest rates are lower than
assumed rates, National's authorized rate of return could be reduced. If
interest rates are higher than assumed rates, National's ability to earn its
authorized rate of return may be adversely impacted.
DECREASED OIL AND GAS PRICES COULD ADVERSELY AFFECT REVENUES, CASH FLOWS AND
PROFITABILITY.
National's exploration and production operations are materially dependent
on prices received for its oil and gas production. Both short-term and long-term
price trends affect the economics of exploring for, developing, producing,
gathering and processing oil and gas. Oil and gas prices can be volatile.
National sells most of its oil and gas at current market prices rather than
through fixed-price contracts, although as discussed below, National frequently
hedges the price of a significant portion of its future production in the
financial markets. The prices National receives depend upon factors beyond
National's control, which include: weather conditions; the supply and price of
foreign oil and gas; the level of consumer product demand; worldwide economic
conditions, including economic disruptions caused by terrorist activities or
acts of war; political conditions in foreign countries; the price and
availability of alternative fuels; the proximity to and capacity of
transportation facilities; worldwide energy conservation measures; and
government regulations, such as regulation of natural gas transportation and
price controls. National believes that any prolonged reduction in oil and gas
prices would restrict its ability to continue the level of activity National
otherwise would pursue, which could have a material adverse effect on its
revenues, cash flows and results of operations.
S-6
NATIONAL HAS SIGNIFICANT TRANSACTIONS INVOLVING PRICE HEDGING OF ITS OIL AND GAS
PRODUCTION.
In order to protect itself to some extent against unusual price volatility
and to lock in favorable pricing on oil and gas production, National
periodically enters into commodity price derivatives contracts (hedging
arrangements) with respect to a portion of its expected production. These
contracts may at any time cover as much as 70% of National's expected energy
production during the upcoming 12 month period. These contracts reduce exposure
to subsequent price drops but can also limit National's ability to benefit when
commodity prices rise. Use of energy price hedges also exposes National to the
risk of non-performance by a contract counterparty. National carefully evaluates
the financial strength of all contract counterparties but these parties might
not be able to perform their obligations under the hedge arrangements. It is
National's policy that the use of commodity derivatives contracts be strictly
confined to the price hedging of existing and forecast production, and National
maintains a system of internal controls to assure there is no unauthorized
trading or speculation on commodity prices. However, unauthorized speculative
trades could occur that may expose National to substantial losses to cover
positions in these contracts.
YOU SHOULD NOT PLACE UNDUE RELIANCE ON RESERVE INFORMATION BECAUSE SUCH
INFORMATION REPRESENTS ESTIMATES.
The registration statement to which this prospectus supplement relates
contains estimates of National's proved oil and gas reserves and the future net
cash flows from those reserves that were prepared by independent petroleum
engineers. Petroleum engineers consider many factors and make assumptions in
estimating National's oil and gas reserves and future net cash flows. These
factors include: historical production from the area compared with production
from other producing areas; the assumed effect of governmental regulation; and
assumptions concerning oil and gas prices, production and development costs,
severance and excise taxes and capital expenditures. Lower oil and gas prices
generally cause lower estimates of proved reserves. Estimates of reserves and
expected future cash flows prepared by different engineers, or by the same
engineers at different times, may differ substantially. Ultimately, actual
production, revenues and expenditures relating to National's reserves will vary
from any estimates, and these variations may be material. Accordingly, the
accuracy of National's reserve estimates is a function of the quality of
available data and of engineering and geological interpretation and judgment. If
conditions remain constant, then National is reasonably certain that its reserve
estimates represent economically recoverable oil and gas reserves and future net
cash flows. If conditions change in the future, then subsequent reserve
estimates may be revised accordingly. You should not assume that the present
value of future net cash flows from National's proved reserves is the current
market value of National's estimated oil and gas reserves. In accordance with
Securities and Exchange Commission requirements, National bases the estimated
discounted future net cash flows from its proved reserves on prices and costs as
of the date of the estimate. Actual future prices and costs may differ
materially from those used in the net present value estimate.
AS A HOLDING COMPANY, NATIONAL DEPENDS ON ITS SUBSIDIARIES TO MEET ITS FINANCIAL
OBLIGATIONS.
National is a holding company with no significant assets other than the
stock of its subsidiaries. In order to meet its financial needs, National relies
exclusively on repayments of principal and interest on intercompany loans made
by National to its operating subsidiaries and income from dividends and other
cash flow from the subsidiaries. Such operating subsidiaries may not generate
sufficient net income to pay upstream dividends or cash flow to make payments of
principal or interest on such intercompany loans.
S-7
NATIONAL IS DEPENDENT ON BANK CREDIT FACILITIES AND CONTINUED ACCESS TO CAPITAL
MARKETS TO SUCCESSFULLY EXECUTE ITS OPERATING STRATEGIES.
National has relied, and continues to rely, upon bank borrowings to finance
a portion of the execution of its operating strategies. National is dependent on
these capital sources to provide capital to its subsidiaries to allow them to
acquire and develop their properties. The availability and cost of these credit
sources is cyclical and these capital sources may not remain available to
National or National may not be able to obtain money at a reasonable cost in the
future. In addition, all of National's bank loans are in the form of floating
rate debt. At present, National has no active interest rate hedges in place to
protect against interest rate fluctuations on bank debt other than at the
project level of the Empire State Pipeline, which National recently acquired,
where there is an interest rate collar on the approximate $58 million of project
debt. In addition, the interest rate on National's bank loan is affected by its
debt credit ratings published by Standard & Poor's Ratings Service, Moody's
Investors Service and Fitch Ratings Service. A ratings down grade could increase
the interest cost of this debt and decrease future availability of money from
banks and other sources. National believes it is important to maintain
investment grade credit ratings to conduct its business.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
and supersedes, to the extent inconsistent, the description of the general terms
and provisions of the notes set forth under "Description of Debt Securities" in
the accompanying prospectus, to which reference is hereby made. Certain
capitalized terms used and not defined in this prospectus supplement are defined
under "Description of Debt Securities" in the accompanying prospectus.
GENERAL
The notes will be issued as a series of debt securities under an Indenture,
dated as of October 1, 1999, between National and The Bank of New York, as
trustee. An Officer's Certificate will supplement the Indenture and establish
the specific terms of the notes. The notes will be issued in book-entry only
form, that is as one or more global certificates registered in the name of The
Depository Trust Company or its nominee, and in denominations of $1,000 and
integral multiples of $1,000.
INTEREST AND PAYMENT
Each note will bear interest at % per year, payable semianually in
arrears on March 1 and September 1 of each year. Interest on the notes will
initially accrue from (and including) the date of original issuance. The record
date for interest payable on any interest payment date on the notes shall be the
close of business (1) on the business day immediately preceding such interest
payment date so long as the notes remain in book-entry only form or (2) on the
15th calendar day before each interest payment date if the notes do not remain
in book-entry only form. See "Book-Entry Only Issuance--The Depository Trust
Company."
Interest accrued on the notes that is payable at maturity or earlier
redemption will be payable to the persons entitled to payment of principal as a
result of maturity or redemption, as the case may be. The initial interest
payment date will be September 1, 2003, and the payment on that date will
include all interest accrued from the date of original issuance. The amount of
interest payable will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period shorter than a full calendar month, on
the basis of the actual number of days elapsed. In the event that any interest
payment date is not a business day, then payment of the interest will be made on
the next business day, without any interest or other payment in respect of the
delay. In addition, if there has been a default in the payment of interest on
S-8
any note, the defaulted interest may be payable to the holder of the note as of
the close of business on a date selected by the trustee not more than 15 days
and not less than 10 days prior to the date proposed by National for payment of
this defaulted interest, and not less than 10 days after the receipt by the
trustee of National's notice of the proposed payment, or in any other lawful
manner as provided in the Indenture.
MATURITY
The entire principal amount of the notes, unless previously redeemed or
otherwise repaid, will mature and become due and payable, together with any
unpaid interest accrued to (but excluding) the maturity date, on March 1, 2013.
In the event that the maturity date or any redemption date is not a business
day, then payment of principal and any interest will be made on the next
business day, without any interest or other payment in respect of the delay.
OPTIONAL REDEMPTION
National will be permitted to redeem the notes at its option before their
stated maturity, as described below. The notes will not be entitled to the
benefit of any sinking fund, which means that National will not deposit money on
a regular basis into any separate custodial account to repay your note.
National will have the right to redeem the notes, in whole or in part, at
its option, at any time and from time to time prior to their stated maturity.
National will provide written notice of its intent to redeem the notes not less
than 30 nor more than 60 days prior to the redemption date. If National redeems
all or any part of the notes, it will pay a "make-whole" redemption price equal
to the greater of
o 100% of the principal amount of the notes being redeemed, or
o the sum of the present values of the remaining scheduled payments of
principal and interest on the notes being redeemed (excluding the
portion of any such interest accrued to the redemption date),
discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate
plus . %
plus, in each case, accrued interest on those notes to the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the H. 15 Daily
Update of the Federal Reserve Bank or (ii) if such release (or any successor
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release) is not published or does not contain prices on such business day, the
Reference Treasury Dealer Quotation actually provided to the trustee for such
redemption date.
"H.15(519)" means the weekly statistical release entitled "H.15 (519)
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519) available through
the worldwide website of the Board of Governors of the Federal Reserve System or
any successor site or publication.
"Independent Investment Banker" means the Reference Treasury Dealer.
"Reference Treasury Dealer" means Merrill Lynch Government Securities,
Inc., and its successors; provided, however, that if the foregoing shall cease
to be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), National shall substitute therefor another Primary Treasury
Dealer.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by the Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.
If, at the time notice of redemption is given, the redemption moneys are
not held by the trustee, the redemption may be made subject to their receipt on
or before the date fixed for redemption and such notice shall be of no effect
unless such moneys are so received. If the redemption notice is given and funds
deposited as required by the Indenture, then interest will cease to accrue on
and after the redemption date on the notes or portions of notes called for
redemption. If any redemption date is not a business day, National will pay the
redemption price on the next business day without any interest or other payment
due to the delay. If National does not deposit redemption moneys on or before
the date fixed for redemption, the principal amount of the notes called for
redemption will continue to bear interest at the rate indicated on the cover of
this prospectus supplement until paid.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company, which is known as DTC, will act as securities
depositary for the notes. The notes will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates for the notes, representing the aggregate
principal amount of notes, will be issued and will be deposited with DTC.
The following is based upon information furnished by DTC:
o DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct participants" in DTC include
securities brokers and dealers, banks, trust companies, clearing
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corporations and certain other organizations. DTC is owned by a number
of its direct participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange LLC and the NASD Inc. Access to the DTC
system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through or
maintain a custodial relationship with a direct participant either
directly or indirectly ("indirect participants"). The rules applicable
to DTC and its participants are on file with the Securities and
Exchange Commission.
o Purchases of notes within the DTC system must be made by or through
direct participants, which will receive a credit for the notes on
DTC's records. The ownership interest of each actual purchaser of each
note ("beneficial owner") is in turn to be recorded on the direct and
indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchase, but beneficial owners
are expected to receive written confirmation providing details of the
transaction, as well as periodic statements of their holdings, from
the direct or indirect participants through which the beneficial
owners entered into the transaction. Transfers of the ownership
interests in the notes are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their
ownership interests in the notes, except in the event that use of the
book-entry system for the notes is discontinued, as discussed below.
o To facilitate subsequent transfers, all notes deposited by
participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the
notes. DTC's records reflect only the identity of the direct
participants to whose accounts such notes are credited, which may or
may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
o The delivery of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by
direct participants and indirect participants to beneficial owners
will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Beneficial owners of notes may wish to take certain steps to augment
the transmission to them of notices of significant events with respect
to the notes, such as redemptions, tenders, defaults and proposed
amendments.
o Redemption notices will be sent to DTC. If less than all of the notes
are being redeemed, DTC's practice is to determine by lot the amount
of the interest of each direct participant to be redeemed.
o Neither DTC nor Cede & Co. will itself consent or vote with respect to
notes unless authorized by a direct participant in accordance with
DTC's procedures. Under its usual procedures, DTC mails an Omnibus
Proxy to National as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those direct participants to whose accounts the notes are credited on
the record date (identified in a listing attached to the Omnibus
Proxy).
o Payments on the notes will be made to Cede & Co., or such other
nominee as may be requested by DTC. DTC's practice is to credit direct
participants' accounts upon DTC's receipt of funds on the relevant
payment date in accordance with their respective holdings shown on
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DTC's records. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants and not of DTC, National or the trustee, subject to any
statutory or regulatory requirements as may be in effect from time to
time. Payment to Cede & Co. (or such other nominee as may be requested
by an authorized representative of DTC) will be the responsibility of
National or the trustee, disbursement of payments to direct
participants will be the responsibility of DTC, and further
disbursement of payments to the beneficial owners will be the
responsibility of direct participants and indirect participants.
DTC may discontinue providing its services as securities depositary for the
notes at any time by giving written notice to National or the trustee. Under
such circumstances, in the event that a successor securities depositary is not
obtained, note certificates will be printed and delivered to the beneficial
owners. National may decide to replace DTC or any successor depositary.
Additionally, National may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary). In that event, certificates
for the notes will be printed and delivered.
According to DTC, the foregoing information with respect to DTC is provided
to the financial community for informational purposes only and is not intended
to serve as a representation, warranty or contract modification of any kind. The
information in this section concerning DTC and DTC's book-entry system and
procedures has been obtained from sources that National believes to be reliable,
but neither National, the underwriter nor the trustee takes any responsibility
for the accuracy thereof. Neither National, the underwriter nor the trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership of the notes or for
maintaining, supervising or reviewing any records relating thereto.
Except as provided herein, a beneficial owner of the notes may not receive
physical delivery of notes. Accordingly, each beneficial owner must rely on the
procedures of DTC to exercise any rights under the notes.
S-12
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
dated the date of this prospectus supplement between National and the
underwriter, Merrill Lynch, Pierce, Fenner & Smith Incorporated, National has
agreed to sell to the underwriter, and the underwriter has agreed to purchase
$200,000,000 principal amount of notes.
The underwriting agreement provides that the obligations of the underwriter
to pay for and accept delivery of the notes are subject to, among other things,
the approval of certain legal matters by its counsel and certain other
conditions. The underwriter reserves the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part. The underwriter
is obligated to take and pay for all the notes if any are taken.
National and the underwriter have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933, or
to contribute to payments National or the underwriter may be required to make in
respect of those liabilities.
COMMISSIONS AND DISCOUNTS
Notes sold by the underwriter to the public will initially be offered at
the public offering price set forth on the cover of this prospectus supplement,
and to dealers at that price less a concession not in excess of % of the
principal amount of the notes. The underwriter may allow, and the dealers may
reallow, a discount not in excess of % of the principal amount of the notes to
other dealers. If all the notes are not sold at the public offering price, the
underwriter may change the public offering price and the other selling terms.
The expenses in connection with the offer and sale of the notes, other than
underwriting discounts, are estimated at $325,000.
NEW ISSUE OF SECURITIES
The notes are a new issue of securities with no established trading market.
National does not intend to apply for listing of the notes on any national
securities exchange or for quotation of the notes on any automated dealer
quotation system. National has been advised by the underwriter that the
underwriter intends to make a market in the notes but is not obligated to do so
and may discontinue market-making at any time without notice. National cannot
assure the liquidity of the trading market for the notes or that an active
public market for the notes will develop. If an active trading market for the
notes does not develop, the market price and liquidity of the notes may be
adversely affected.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the offering, the underwriter may purchase and sell
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriter of a greater number of
notes than it is required to purchase in the offering. Stabilizing transactions
consist of certain bids or purchases to peg, fix or maintain the price of the
notes.
These activities by the underwriter may stabilize, maintain or otherwise
affect the market price of the notes. As a result, the price of the notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the underwriter at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
S-13
Neither National nor the underwriter makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, neither National nor the
underwriter makes any representation that the underwriter will engage in these
transactions or that these transactions, once commenced, will not be
discontinued without notice.
The underwriter has in the past engaged, and the underwriter and its
affiliates expect in the future to engage, in transactions with, and have
provided, and may in the future provide, services for, National and National's
affiliates, for which they have in the past received, and may in the future
receive, customary fees.
S-14
PROSPECTUS
----------
$800,000,000
NATIONAL FUEL GAS COMPANY
DEBT SECURITIES
COMMON STOCK
STOCK PURCHASE CONTRACTS
and
STOCK PURCHASE UNITS
National Fuel Gas Company may offer from time to time up to an aggregate of
$800,000,000 of its securities. National Fuel Gas Company will provide specific
terms of its securities, including their offering prices, in supplements to this
prospectus. The supplements may also add, update or change information contained
in this prospectus. You should read this prospectus and any supplements
carefully before you invest.
National Fuel Gas Company's common stock is listed on the New York Stock
Exchange and trades under the symbol "NFG."
National Fuel Gas Company may offer these securities directly or through
underwriters, agents or dealers. The supplements to this prospectus will
describe the terms of any particular plan of distribution, including any
underwriting arrangements. The "Plan of Distribution" section on page 19 of this
prospectus also provides more information on this topic.
National Fuel Gas Company's principal executive offices are located at 10
Lafayette Square, Buffalo, New York 14203 and its telephone number is
(716) 857-7000.
----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
The date of this prospectus is January 22, 2003.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that National Fuel Gas
Company (National) has filed with the Securities and Exchange Commission (SEC)
using a "shelf" registration process. Under this shelf registration process,
National may sell the securities or combinations of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$800,000,000. This prospectus provides you with a general description of the
securities that National may offer. Each time National sells securities,
National will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under the heading "Where You Can Find More Information."
For more detailed information about the securities, you can read the
exhibits to the registration statement. Those exhibits have been either filed
with the registration statement or incorporated by reference to earlier SEC
filings listed in the registration statement.
NATIONAL FUEL GAS COMPANY
National, a holding company registered under the Public Utility Holding
Company Act of 1935, was organized under the laws of New Jersey in 1902.
National is engaged in the business of owning and holding securities issued by
its subsidiaries: National Fuel Gas Distribution Corporation, National Fuel Gas
Supply Corporation, Seneca Independence Pipeline Company, Seneca Resources
Corporation, Horizon Energy Development, Inc., National Fuel Resources, Inc.,
Highland Forest Resources, Inc., Upstate Energy Inc., Niagara Independence
Marketing Company, Leidy Hub, Inc., Data-Track Account Services, Inc. and
Horizon Power, Inc.
National and its subsidiaries comprise a diversified energy company
consisting of six major business segments:
o the Utility segment, which sells natural gas and provides natural gas
transportation services through a local distribution system located in
western New York and northwestern Pennsylvania;
o the Pipeline and Storage segment, which provides interstate natural
gas transportation and storage services;
o the Exploration and Production segment, which is engaged in the
exploration for, and the development and purchase of, natural gas and
oil reserves in California, the Appalachian region of the United
States, Wyoming and the Gulf Coast region of Texas and Louisiana, as
well as in the provinces of Manitoba, Alberta, Saskatchewan and
British Colombia in Canada;
o the International segment, which is engaged in foreign and domestic
energy projects through investments as a sole or substantial owner in
various business entities;
o the Energy Marketing segment, which is engaged in the marketing and
brokerage of natural gas and the performance of energy management
services for industrial, commercial, public authority and residential
end-users in the northeastern United States; and
2
o the Timber segment, which engages in the marketing of timber, the
operation of sawmills and the processing of timber.
National's other businesses are engaged in wholesale natural gas marketing and
other energy-related activities, the providing of various natural gas hub
services to customers, the providing of collection services for other
subsidiaries of National, and the development or operation of mid-range
independent power production facilities.
WHERE YOU CAN FIND MORE INFORMATION
National files annual, quarterly and other reports and other information
with the SEC. You can read and copy any information filed by National with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can obtain additional information about the Public Reference
Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including National.
National also maintains an Internet site (http://www.nationalfuelgas.com).
Information contained on National's Internet site does not constitute part of
this prospectus.
INCORPORATION BY REFERENCE
The SEC allows National to "incorporate by reference" the information that
National files with the SEC, which means that National may disclose important
information to you by referring you to those documents in this prospectus. The
information incorporated by reference is an important part of this prospectus.
National is incorporating by reference the document listed below and any future
documents that are filed by National with the SEC under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until National sells all of
these securities. Any of those future filings will update, supersede and replace
the information contained in any documents incorporated by reference in this
prospectus at the time of the future filings.
o National's Annual Report on Form 10-K for the fiscal year ended
September 30, 2002.
You may request a copy of these documents, at no cost to you, by writing or
calling Anna Marie Cellino, Secretary, National Fuel Gas Company, 10 Lafayette
Square, Buffalo, New York 14203, telephone (716) 857-7858.
You should rely only on the information contained in, or incorporated by
reference in, this prospectus and any prospectus supplement. National has not,
and any underwriters, agents or dealers have not, authorized anyone else to
provide you with different information. National is not, and any underwriters,
agents or dealers are not, making an offer of these securities or soliciting
offers to buy these securities in any state where the offer or solicitation is
not permitted. You should not assume that the information contained in this
prospectus and any prospectus supplement is accurate as of any date other than
the date on the front of such document or that the information incorporated by
reference in this prospectus is accurate as of any date other than the date of
the document incorporated by reference.
3
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows National's ratio of earnings to fixed charges for
the periods indicated:
FISCAL YEARS ENDED SEPTEMBER 30,
-------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
2.74 1.94 2.98 3.02 1.66
USE OF PROCEEDS
Except as may otherwise be set forth in a prospectus supplement, the
proceeds from the sale of these securities may be used to reduce short-term
indebtedness, to redeem or discharge higher cost indebtedness, to finance a
portion of National's capital expenditures, for corporate development purposes,
including, without limitation, acquisitions made by or on behalf of National or
its subsidiaries, and for other general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and provisions
of National's unsecured debt securities, consisting of debentures and
medium-term notes, that National may offer by this prospectus. National will
describe the particular terms of the debt securities, and provisions that vary
from those described below, in one or more prospectus supplements.
The debt securities will be National's direct unsecured general
obligations. The debt securities will be senior debt securities. National may
issue the debt securities from time to time in one or more series, under an
indenture, dated as of October 1, 1999, between National and The Bank of New
York, as trustee (Trustee). This indenture, as it may be amended and
supplemented from time to time, is referred to in this prospectus as the
"Indenture."
The following descriptions of the debt securities and the Indenture are
summaries and are qualified by reference to the Indenture. This summary does not
contain a complete description of the debt securities. You should read this
summary together with the Indenture and the officer's certificates or other
documents establishing the debt securities for a complete understanding of the
provisions that may be important to you. References to certain sections of the
Indenture are included in parentheses. Whenever particular provisions or defined
terms in the Indenture are referred to under this "Description of Debt
Securities," such provisions or defined terms are incorporated by reference
herein. The Indenture is qualified under the Trust Indenture Act of 1939. You
should refer to the Trust Indenture Act of 1939 for provisions that apply to the
debt securities.
The debt securities will rank equally with all of National's other senior,
unsecured and unsubordinated debt.
Because National is a holding company that conducts all of its operations
through subsidiaries, holders of debt securities will generally have a position
junior to claims of creditors (including trade creditors of and holders of
indebtedness issued by any such subsidiary) and preferred stockholders of the
subsidiaries of National. No subsidiary currently has outstanding shares of
preferred stock.
4
The prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to that offering. These terms will
include any of the following terms that apply to that series:
o the title of the debt securities;
o the total principal amount of the debt securities;
o the date or dates on which the principal of the debt securities will
be payable and how it will be paid;
o the rate or rates at which the debt securities will bear interest, or
how such rate or rates will be determined;
o the date or dates from which interest on the debt securities will
accrue, the interest payment dates on which interest will be paid, and
the record dates for interest payments;
o any right to extend the interest payment periods for the debt
securities and the duration of the extension;
o the percentage, if less than 100%, of the principal amount of the debt
securities that will be payable if the maturity of the debt securities
is accelerated;
o any date or dates on which, and the price or prices at which, the debt
securities may be redeemed at the option of National and any
restrictions on such redemptions;
o any sinking fund or other provisions or options held by holders of
debt securities that would obligate National to repurchase or
otherwise redeem the debt securities;
o any changes or additions to the events of default under the Indenture
or changes or additions to the covenants of National under the
Indenture;
o if the debt securities will be issued in denominations other than
$1,000;
o if payments on the debt securities may be made in a currency or
currencies other than United States dollars;
o any convertible feature or options regarding the debt securities;
o any rights or duties of another person to assume the obligations of
National with respect to the debt securities;
o any collateral, security, assurance or guarantee for the debt
securities; and
o any other terms of the debt securities not inconsistent with the terms
of the Indenture.
(See Section 301.)
The Indenture does not limit the principal amount of debt securities that
may be issued. The Indenture allows debt securities to be issued up to the
principal amount that may be authorized by National. Unless otherwise specified
in the prospectus supplement, any limit upon the aggregate principal amount of
5
the debt securities of any series may be increased without the consent of any
holders and additional debt securities of such series may be authenticated and
delivered up to the limit on the aggregate principal amount authorized with
respect to such series as so increased. Accordingly, the debt securities of any
series may be increased on the same terms and conditions, except for the issue
price and the issue date, and with the same CUSIP numbers as the debt securities
of such series initially offered.
Debt securities may be sold at a discount below their principal amount.
United States federal income tax considerations applicable to debt securities
sold at an original issue discount may be described in the prospectus
supplement. In addition, certain United States federal income tax or other
considerations applicable to any debt securities which are denominated or
payable in a currency or currency unit other than United States dollars may be
described in the prospectus supplement.
Except as may otherwise be described in a prospectus supplement, the
covenants contained in the Indenture will not afford holders of debt securities
protection in the event of a highly leveraged or similar transaction involving
National or in the event of a change in control.
PAYMENT AND PAYING AGENTS
Except as may be provided in the prospectus supplement, interest, if any,
on each debt security payable on each interest payment date will be paid to the
person in whose name such debt security is registered as of the close of
business on the regular record date for the interest payment date. However,
interest payable at maturity will be paid to the person to whom the principal is
paid. If there has been a default in the payment of interest on any debt
security, the defaulted interest may be paid to the holder of such debt security
as of the close of business on a date to be fixed by the Trustee, which will be
between 10 and 15 days prior to the date proposed by National for payment of
such defaulted interest or in any other manner permitted by any securities
exchange on which such debt security may be listed, if the Trustee finds it
practicable. (See Section 307.)
Unless otherwise specified in the prospectus supplement, principal of, and
premium, if any, and interest, if any, on the debt securities at maturity will
be payable upon presentation of the debt securities at the corporate trust
office of the Trustee, in The City of New York, as paying agent for National.
National may change the place of payment on the debt securities, may appoint one
or more additional paying agents (including National) and may remove any paying
agent, all at the discretion of National. (See Section 602.)
REGISTRATION AND TRANSFER
Unless otherwise specified in a prospectus supplement, the transfer of debt
securities may be registered, and debt securities may be exchanged for other
debt securities of the same series or tranche, of authorized denominations and
with the same terms and principal amount, at the corporate trust office of the
Trustee in The City of New York. National may change the place for registration
of transfer and exchange of the debt securities and may designate additional
places for such registration and exchange. Unless otherwise provided in the
prospectus supplement, no service charge will be made for any transfer or
exchange of the debt securities. However, National may require payment to cover
any tax or other governmental charge that may be imposed. National will not be
required to execute or to provide for the registration of transfer of, or the
exchange of, (a) any debt security during a period of 15 days prior to giving
any notice of redemption or (b) any debt security selected for redemption except
the unredeemed portion of any debt security being redeemed in part. (See
Section 305.)
6
SATISFACTION AND DISCHARGE
National will be discharged from its obligations on the debt securities of
a particular series, or any portion of the principal amount of the debt
securities of such series, if it irrevocably deposits with the Trustee
sufficient cash or government securities to pay the principal, or portion of
principal, interest, any premium and any other sums when due on the debt
securities of such series at their maturity, stated maturity date, or
redemption. (See Section 701.)
The Indenture will be deemed satisfied and discharged when no debt
securities remain outstanding and when National has paid all other sums payable
by National under the Indenture. (See Section 702.)
All moneys National pays to the Trustee or any paying agent on debt
securities which remain unclaimed at the end of two years after payments have
become due will be paid to or upon the order of National. Thereafter, the holder
of such debt security may look only to National for payment thereof. (See
Section 603.)
LIMITATION ON LIENS ON SUBSIDIARY CAPITAL STOCK
The Indenture provides that, except as otherwise specified with respect to
a particular series of debt securities, National will not pledge, mortgage,
hypothecate or grant a security interest in, or permit any pledge, mortgage,
security interest or other lien upon, any capital stock of any of its
majority-owned subsidiaries, which capital stock National now or hereafter
directly owns, to secure any Indebtedness, as defined below, without also
securing the outstanding debt securities (so long as the other Indebtedness
shall be so secured) equally and ratably, with or, at National's option, prior
to, the other Indebtedness and any other Indebtedness similarly entitled to be
so secured.
This limitation does not apply to, or prevent the creation or existence of:
(1) any pledge, mortgage, security interest, lien or encumbrance upon any
such capital stock created at the time National acquires that capital
stock or within 270 days after that time to secure the purchase price
for that capital stock so acquired;
(2) any pledge, mortgage, security interest, lien or encumbrance upon any
such capital stock existing at the time National acquires that capital
stock, whether or not National assumes the secured obligations; or
(3) any extension, renewal, replacement or refunding of any pledge,
mortgage, security interest, lien or encumbrance permitted by (1) and
(2) above, or of any Indebtedness secured thereby; provided, that,
(a) the principal amount of Indebtedness so secured immediately after
the extension, renewal, replacement or refunding may not exceed
the principal amount of Indebtedness so secured immediately
before the extension, renewal, replacement or refunding, and
(b) the extension, renewal, replacement or refunding of such pledge,
mortgage, security interest, lien or encumbrance is limited to no
more than the same proportion of all shares of capital stock as
were covered by the pledge, mortgage, security interest, lien or
encumbrance that was extended, renewed, refunded or replaced; or
7
(4) any judgment, levy, execution, attachment or other similar lien
arising in connection with court proceedings, provided that:
(1) the execution or enforcement of the lien is effectively stayed
within 30 days after entry of the corresponding judgment, or the
corresponding judgment has been discharged within such 30 day
period, and the claims secured thereby are being contested in
good faith by appropriate proceedings timely commenced and
diligently prosecuted; or
(2) the payment of the lien is covered in full by insurance and the
insurance company has not denied or contested coverage thereof;
or
(3) so long as the lien is adequately bonded, any appropriate legal
proceedings that may have been duly initiated for the review of
the corresponding judgment, decree or order shall not have been
fully terminated or the period within which these proceedings may
be initiated shall not have expired.
Any pledge, mortgage, security interest, lien or encumbrance on any shares
of the capital stock of any of the majority-owned subsidiaries of National,
which shares of capital stock National now or hereafter directly owns, to secure
any Indebtedness other than as described in (1) through (4) above, is referred
to in this prospectus as a "Restricted Lien." This limitation on liens does not
apply to the extent that National creates any Restricted Liens to secure
Indebtedness that, together with all other Indebtedness of National secured by
Restricted Liens, does not at the time exceed 5% of National's Consolidated
Capitalization. (See Section 608.)
For this purpose, "Consolidated Capitalization" means the sum of:
(1) Consolidated Common Shareholders' Equity;
(2) Consolidated Indebtedness, exclusive of any that is due and payable
within one year of the date the sum is determined; and, without
duplication
(3) any preference or preferred stock of National or any Consolidated
Subsidiary, as defined below, which is subject to mandatory redemption
or sinking fund provisions.
The term "Consolidated Common Shareholders' Equity," as used above, means
the total assets of National and its Consolidated Subsidiaries that would, in
accordance with generally accepted accounting principles in the United States,
be classified on a balance sheet as assets, less: (a) all liabilities of
National and its Consolidated Subsidiaries that would, in accordance with
generally accepted accounting principles in the United States, be classified on
a balance sheet as liabilities; (b) minority interests owned by third parties in
Consolidated Subsidiaries of National; and (c) preference or preferred stock of
National and its Consolidated Subsidiaries only to the extent any such
preference or preferred stock is subject to mandatory redemption or sinking fund
provisions.
The term "Consolidated Indebtedness," as used above, means total
indebtedness as shown on the consolidated balance sheet of National and its
Consolidated Subsidiaries.
The term "Consolidated Subsidiary," as used above, means at any date any
majority-owned subsidiary the financial statements of which under generally
accepted accounting principles in the United States would be consolidated with
those of National in its consolidated financial statements as of such date.
8
For purposes of the limitation described in the first paragraph under this
heading, "Indebtedness" means:
(1) all indebtedness created or assumed by National for the repayment of
money borrowed;
(2) all indebtedness for money borrowed secured by a lien upon capital
stock owned by National and upon which indebtedness for money borrowed
National customarily pays interest, although National has not assumed
or become liable for the payment of such indebtedness for money
borrowed; and
(3) all indebtedness of others for money borrowed which is guaranteed as
to payment of principal by National or in effect guaranteed by
National through a contingent agreement to purchase such indebtedness
for money borrowed, but excluding from this definition any other
contingent obligation of National in respect of indebtedness for money
borrowed or other obligations incurred by others.
The foregoing limitation does not limit in any manner the ability of:
(1) National to place liens on any of its assets other than the capital stock of
directly held, majority-owned subsidiaries; (2) National to cause the transfer
of its assets or those of its subsidiaries, including the capital stock covered
by the foregoing restrictions; or (3) any of the direct or indirect subsidiaries
of National to place liens on any of their assets.
In addition, the Indenture provides that if debentures issued by National
under the indenture dated as of October 15, 1974, as supplemented (1974
Indenture), between National and The Bank of New York, as trustee, in an
aggregate principal amount in excess of 5% of National's Consolidated
Capitalization become secured pursuant to the provisions of the 1974 Indenture,
National will secure any outstanding debt securities equally and ratably with
those debentures. If National secures the outstanding debt securities, as
provided in the prior sentence, then if and for so long as the aggregate
principal amount of the debentures secured pursuant to the 1974 Indenture at any
time decreases and as a result constitutes 5% or less of National's Consolidated
Capitalization, the outstanding debt securities will no longer be secured. (See
Section 608.)
As of September 30, 2002, the Consolidated Capitalization of National was
approximately $2,152,199,000.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the Indenture, National may not consolidate with or
merge into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, unless:
o the surviving or successor entity is organized and validly existing
under the laws of any domestic jurisdiction and it expressly assumes
National's obligations on all debt securities and under the Indenture;
o immediately after giving effect to the transaction, no event of
default and no event which, after notice or lapse of time or both,
would become an event of default shall have occurred and be
continuing; and
o National shall have delivered to the Trustee an officer's certificate
and an opinion of counsel as to compliance with the foregoing.
9
The terms of the Indenture do not restrict National in a merger in which
National is the surviving entity. (See Section 1101.)
EVENTS OF DEFAULT
"Event of default" when used in the Indenture with respect to any series of
debt securities, means any of the following:
o failure to pay interest, if any, on any debt security of the
applicable series for 30 days after it is due;
o failure to pay the principal of or premium, if any, on any debt
security of the applicable series when due (whether at maturity or
upon earlier redemption);
o failure to perform any other covenant in the Indenture, other than a
covenant that does not relate to that series of debt securities, that
continues for 90 days after National receives written notice from the
Trustee, or National and the Trustee receive a written notice from the
holders of at least 33% in principal amount of the debt securities of
such series; however, the Trustee or the Trustee and the holders of
such principal amount of debt securities of this series can agree to
an extension of the 90 day period and such an agreement to extend will
be automatically deemed to occur if National is diligently pursuing
action to correct the default;
o certain events in bankruptcy, insolvency or reorganization of
National; or
o any other event of default included in any supplemental indenture or
officer's certificate for a specific series of debt securities.
(See Section 801).
The Trustee may withhold notice to the holders of debt securities of any
default, except default in the payment of principal, premium or interest, if it
considers such withholding of notice to be in the interests of the holders. An
event of default for a particular series of debt securities does not necessarily
constitute an event of default for any other series of debt securities issued
under the Indenture.
REMEDIES
Acceleration of Maturity
If an event of default with respect to fewer than all the series of debt
securities occurs and continues, either the Trustee or the holders of at least
33% in principal amount of the debt securities of such series may declare the
entire principal amount of all the debt securities of such series, together with
accrued interest, to be due and payable immediately. However, if the event of
default is applicable to all outstanding debt securities under the Indenture,
only the Trustee or holders of at least 33% in principal amount of all
outstanding debt securities of all series, voting as one class, and not the
holders of any one series, may make such a declaration of acceleration.
At any time after a declaration of acceleration with respect to the debt
securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the event of default giving rise to
such declaration of acceleration will be considered waived, and such declaration
and its consequences will be considered rescinded and annulled, if:
10
o National has paid or deposited with the Trustee a sum sufficient to
pay:
- all overdue interest, if any, on all debt securities of the
series; the principal of and
- premium, if any, on any debt securities of the series which have
otherwise become due and interest, if any, that is currently due;
- interest, if any, on overdue interest; and
- all amounts due to the Trustee under the Indenture; and
o any other event of default with respect to the debt securities of that
series shall have been cured or waived as provided in the Indenture.
There is no automatic acceleration, even in the event of bankruptcy,
insolvency or reorganization of National. (See Section 802.)
Right to Direct Proceedings
Other than its duties in case of an event of default, the Trustee is not
obligated to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders, unless the holders offer the
Trustee a reasonable indemnity. (See Section 903.) If they provide a reasonable
indemnity, the holders of a majority in principal amount of any series of debt
securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any power conferred upon the Trustee. However, if the event of default relates
to more than one series, only the holders of a majority in aggregate principal
amount of all affected series will have the right to give this direction. (See
Section 812). The Trustee is not obligated to comply with directions that
conflict with law or other provisions of the Indenture.
Limitation on Right to Institute Proceedings
No holder of debt securities of any series will have any right to institute
any proceeding under the Indenture, or to exercise any remedy under the
Indenture, unless:
o the holder has previously given to the Trustee written notice of a
continuing event of default;
o the holders of a majority in aggregate principal amount of the
outstanding debt securities of all series in respect of which an event
of default shall have occurred and be continuing have made a written
request to the Trustee, and have offered reasonable indemnity to the
Trustee to institute proceedings; and
o the Trustee has failed to institute any proceeding for 60 days after
notice and has not received any direction inconsistent with the
written request of holders during such period.
(See Section 807.)
No Impairment of Right to Receive Payment
However, such limitations do not apply to a suit by a holder of a debt
security for payment of the principal of or premium, if any, or interest, if
any, on such debt security on or after the applicable due date. (See
Section 808.)
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Annual Notice to Trustee
National will provide to the Trustee an annual statement by an appropriate
officer as to National's compliance with all conditions and covenants under the
Indenture. (See Section 606.)
Modification and Waiver
National and the Trustee may enter into one or more supplemental indentures
without the consent of any holder of debt securities for any of the following
purposes:
o to evidence the assumption by any permitted successor of the covenants
of National in the Indenture and in the debt securities;
o to add additional covenants of National or to surrender any right or
power of National under the Indenture;
o to add additional events of default;
o to change, eliminate, or add any provision to the Indenture; provided,
however, if the change, elimination, or addition will adversely affect
the interests of the holders of debt securities of any series in any
material respect, such change, elimination, or addition will become
effective only:
- when the consent of the holders of debt securities of such series
has been obtained in accordance with the Indenture; or
- when no debt securities of the affected series remain outstanding
under the Indenture;
o to provide collateral security for all but not part of the debt
securities;
o to establish the form or terms of debt securities of any other series
as permitted by the Indenture;
o to provide for the authentication and delivery of bearer securities
and coupons attached thereto;
o to evidence and provide for the acceptance of appointment of a
successor trustee;
o to provide for the procedures required for use of a noncertificated
system of registration for the debt securities of all or any series;
o to change any place where principal, premium, if any, and interest
shall be payable, debt securities may be surrendered for registration
of transfer or exchange and notices to National may be served; or
o to cure any ambiguity or inconsistency or to make any other provisions
with respect to matters and questions arising under the Indenture;
provided that such action shall not adversely affect the interests of
the holders of debt securities of any series in any material respect.
12
(See Section 1201.)
The holders of at least a majority in aggregate principal amount of the
debt securities of all series then outstanding may waive compliance by National
with certain restrictive provisions of the Indenture. (See Section 607.) The
holders of not less than a majority in principal amount of the outstanding debt
securities of any series may waive any past default under the Indenture with
respect to that series, except a default in the payment of principal, premium,
if any, or interest and certain covenants and provisions of the Indenture that
cannot be modified or be amended without the consent of the holder of each
outstanding debt security of the series affected. (See Section 813.)
If the Trust Indenture Act of 1939 is amended after the date of the
Indenture in such a way as to require changes to the Indenture, the Indenture
will be deemed to be amended so as to conform to such amendment of the Trust
Indenture Act of 1939. National and the Trustee may, without the consent of any
holders, enter into one or more supplemental indentures to evidence such an
amendment. (See Section 1201.)
The consent of the holders of a majority in aggregate principal amount of
the debt securities of all series then outstanding is required for all other
modifications to the Indenture. However, if less than all of the series of debt
securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate
principal amount of all series that are directly affected will be required. No
such amendment or modification may:
o change the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security, or reduce the
principal amount of any debt security or its rate of interest or
change the method of calculating such interest rate or reduce any
premium payable upon redemption, or change the currency in which
payments are made, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any debt
security, without the consent of the holder;
o reduce the percentage in principal amount of the outstanding debt
securities of any series which consent is required for any
supplemental indenture or any waiver of compliance with a provision of
the Indenture or any default thereunder and its consequences, or
reduce the requirements for quorum or voting, without the consent of
all the holders of the series; or
o modify certain of the provisions of the Indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults with respect to the debt securities of any series,
without the consent of the holder of each outstanding debt security
affected thereby.
A supplemental indenture which changes the Indenture solely for the benefit
of one or more particular series of debt securities, or modifies the rights of
the holders of debt securities of one or more series, will not affect the rights
under the Indenture of the holders of the debt securities of any other series.
(See Section 1202.)
The Indenture provides that debt securities owned by National or anyone
else required to make payment on the debt securities shall be disregarded and
considered not to be outstanding in determining whether the required holders
have given a request or consent. (See Section 101.)
National may fix in advance a record date to determine the required number
of holders entitled to give any request, demand, authorization, direction,
notice, consent, waiver or other such act of the holders, but National shall
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have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other act of the
holders may be given before or after such record date, but only the holders of
record at the close of business on that record date will be considered holders
for the purposes of determining whether holders of the required percentage of
the outstanding debt securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other act
of the holders. For that purpose, the outstanding debt securities shall be
computed as of the record date. Any request, demand, authorization, direction,
notice, consent, election, waiver or other act of a holder shall bind every
future holder of the same debt securities and the holder of every debt security
issued upon the registration of transfer of or in exchange of such debt
securities. A transferee will be bound by acts of the Trustee or National taken
in reliance thereon, whether or not notation of such action is made upon such
debt security. (See Section 104.)
RESIGNATION OF THE TRUSTEE
The Trustee may resign at any time by giving written notice to National or
may be removed at any time by act of the holders of a majority in principal
amount of all series of debt securities then outstanding delivered to the
Trustee and National. No resignation or removal of the Trustee and no
appointment of a successor trustee will be effective until the acceptance of
appointment by a successor trustee. So long as no event of default or event
which, after notice or lapse of time, or both, would become an event of default
has occurred and is continuing and except with respect to a Trustee appointed by
act of the holders, if National has delivered to the Trustee a resolution of its
Board of Directors appointing a successor trustee and such successor has
accepted such appointment in accordance with the terms of the Indenture, the
Trustee will be deemed to have resigned and the successor will be deemed to have
been appointed as trustee in accordance with the Indenture. (See Section 910.)
NOTICES
Notices to holders of debt securities will be given by mail to the
addresses of such holders as they may appear in the security register therefor.
(See Section 106.)
TITLE
National, the Trustee, and any agent of National or the Trustee, may treat
the person in whose name debt securities are registered as the absolute owner
thereof, whether or not such debt securities may be overdue, for the purpose of
making payments and for all other purposes irrespective of notice to the
contrary. (See Section 308.)
GOVERNING LAW
The Indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York. (See Section 112.)
REGARDING THE TRUSTEE
The Trustee will be The Bank of New York. In addition to acting as Trustee,
The Bank of New York acts, and may act, as trustee under various indentures and
trusts of National and its affiliates.
DESCRIPTION OF COMMON STOCK
The following description of National's common stock is a summary and is
qualified by reference to the terms and provisions of National's Restated
Certificate of Incorporation, its By-Laws, and the Amended and Restated Rights
14
Agreement between National and HSBC Bank USA (Rights Agreement), which are filed
as exhibits to the registration statement and incorporated herein by reference.
Reference is also made to National's 1974 Indenture.
No shares of preferred stock of National are currently outstanding.
However, the Board of Directors of National has the ability to issue one or more
series of preferred stock from time to time. The actual effect of the preferred
stock upon the rights of the holders of National's common stock will not be
known until National's Board of Directors determines the respective rights of
the holders of one or more series of preferred stock. Such effects, however,
might include: (a) restrictions on dividends on National's common stock if
dividends on the preferred stock are in arrears; (b) dilution of the voting
power of National's common stock; (c) restrictions on the rights of the holders
of National's common stock to share in National's assets upon liquidation due to
satisfaction of any liquidation preference granted to the preferred stock; and
(d) dilution of rights of holders of National's common stock to share in
National's assets upon liquidation if the preferred stock is participating with
respect to distributions upon such liquidation.
DIVIDEND RIGHTS
The holders of common stock are entitled to receive dividends as declared
by the Board of Directors, out of funds legally available for the purpose and
subject to a limitation in the 1974 Indenture. The 1974 Indenture prohibits the
payment of cash dividends on, and the purchase or redemption of, common stock if
the cumulative dividends on and amounts paid for purchase or redemption of
common or preferred stock since December 31, 1967 exceed or would exceed
consolidated net income available for dividends for that same period plus $10
million plus any additional amount authorized or approved, upon application of
National, by the SEC. The amount available for the declaration and payment of
dividends on National's common stock pursuant to this restriction will be
described in the applicable prospectus supplement.
The Board of Directors' ability to declare dividends on common stock may
also be limited by the rights and preferences of certain series of preferred
stock, which may be issued from time to time, and by the terms of instruments
defining the rights of holders of outstanding indebtedness of National.
VOTING RIGHTS AND CLASSIFICATION OF THE BOARD OF DIRECTORS
The holders of common stock are entitled to one vote per share. The
affirmative vote of the majority of the votes cast by the holders of the common
stock is required for the merger or consolidation of National or for the sale of
substantially all of its assets. The Board of Directors is divided into three
classes, each with, as nearly as possible, an equal number of directors.
LIQUIDATION RIGHTS
Upon any dissolution, liquidation or winding up of National, the holders of
common stock are entitled to receive pro rata all of National's assets and funds
remaining after payment of or provision for creditors and subject to the rights
and preferences of each series of preferred stock.
PREEMPTIVE RIGHTS
Holders of common stock and any series of preferred stock that may be
issued have no preemptive right to purchase or subscribe for any shares of
capital stock of National.
15
COMMON STOCK PURCHASE RIGHTS
The holders of the common stock have one right for each of their shares.
Each right, which will initially be evidenced by the common stock certificates
representing the outstanding shares of common stock, entitles the holder to
purchase one-half of one share of common stock at a purchase price of $65.00 per
share, being $32.50 per half share, subject to adjustment (Purchase Price).
The rights become exercisable upon the occurrence of a distribution date.
At any time following a distribution date, each holder of a right may exercise
its right to receive common stock (or, under certain circumstances, other
property of National) having a value equal to two times the Purchase Price of
the right then in effect. However, the rights are subject to redemption or
exchange by National prior to their exercise as described below.
A distribution date would occur upon the earlier of:
o ten days after the public announcement that a person or group has
acquired, or obtained the right to acquire, beneficial ownership of
National's common stock or other voting stock having 10% or more of
the total voting power of National's common stock and other voting
stock; and
o ten days after the commencement or announcement by a person or group
of an intention to make a tender or exchange offer that would result
in that person acquiring, or obtaining the right to acquire,
beneficial ownership of National's common stock or other voting stock
having 10% or more of the total voting power of National's common
stock and other voting stock.
In certain situations after a person or group has acquired beneficial
ownership of 10% or more of the total voting power of National's stock as
described above, each holder of a right will have the right to exercise its
rights to receive common stock of the acquiring company having a value equal to
two times the Purchase Price of the right then in effect. These situations would
arise if National is acquired in a merger or other business combination or if
50% or more of National's assets or earning power are sold or transferred.
At any time prior to the end of the business day on the tenth day following
the announcement that a person or group has acquired, or obtained the right to
acquire, beneficial ownership of 10% or more of the total voting power of
National, National may redeem the rights in whole, but not in part, at a price
of $.005 per right, payable in cash or stock. A decision to redeem the rights
requires the vote of 75% of National's full Board of Directors. Also, at any
time following the announcement that a person or group has acquired, or obtained
the right to acquire, beneficial ownership of 10% or more of the total voting
power of National, 75% of National's full Board of Directors may vote to
exchange the rights, in whole or in part, at an exchange rate of one share of
common stock, or other property deemed to have the same value, per right,
subject to certain adjustments.
After a distribution date, rights that are owned by an acquiring person
will be null and void. Upon exercise of the rights, National may need additional
regulatory approvals to satisfy the requirements of the Rights Agreement. The
rights will expire on July 31, 2008, unless they are exchanged or redeemed
earlier than that date.
The rights have anti-takeover effects because they will cause substantial
dilution of the common stock if a person attempts to acquire National on terms
not approved by the Board of Directors.
16
BUSINESS COMBINATIONS
National's Restated Certificate of Incorporation provides that certain
conditions must be met before the consummation of any merger or other business
combination by National or any of its subsidiaries with any stockholder who is
directly or indirectly the beneficial owner of 5% or more of National's
outstanding common stock (substantial stockholder) or with an affiliate of any
substantial stockholder. The term substantial stockholder does not include
National, any of its subsidiaries, or any trustee holding common stock of
National for the benefit of the employees of National or any of its subsidiaries
pursuant to one or more employee benefit plans or arrangements. The conditions,
which are in addition to those otherwise required by law, prescribe the minimum
amount per share that must be paid to holders of common stock and the form of
consideration paid, and require that the holders of common stock be furnished
certain information about the business combination prior to voting on it. A
business combination, as defined in the Restated Certificate of Incorporation,
generally means any of the following transactions:
o a merger, consolidation or share exchange;
o a sale, lease, exchange or other disposition of any assets in exchange
for property having a fair market value of more than $10 million, if
determined to be a business combination by certain directors of
National in accordance with provisions of the Restated Certificate of
Incorporation;
o the issuance or transfer of securities in exchange for property having
a fair market value of more than $10 million, if determined to be a
business combination by certain directors of National in accordance
with provisions of the Restated Certificate of Incorporation;
o the adoption of a plan of liquidation or dissolution of National; or
o any reclassification of securities, recapitalization or reorganization
that has the effect of increasing the proportionate share of the
outstanding shares of any class of securities of National that is
owned by any substantial stockholder or by any affiliate of a
substantial stockholder.
The approval of at least three-fourths of the entire Board of Directors or,
in the event that the Board of Directors consists of directors elected by the
holders of preferred stock, the approval of a majority of the entire Board, is
required to amend or repeal the classified board or business combination
provisions contained in the Restated Certificate of Incorporation.
LISTING
The common stock is, and will be, listed on the New York Stock Exchange.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Computershare
Investor Services, LLC, Chicago, Illinois.
17
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
National may issue stock purchase contracts, including contracts that
obligate holders to purchase from National, and National to sell to these
holders, a specified number of shares of common stock at a future date or dates.
The consideration per share of common stock may be fixed at the time the stock
purchase contracts are issued or may be determined by reference to a specific
formula set forth in the stock purchase contracts. The stock purchase contracts
may be issued separately or as a part of stock purchase units consisting of a
stock purchase contract and either debt securities of National or U.S. Treasury
securities that are pledged to secure the holders' obligations to purchase the
common stock under the stock purchase contracts. The stock purchase contracts
may require National to make periodic payments to the holders of some or all of
the stock purchase units or vice versa, and such payments may be unsecured or
prefunded on some basis. The stock purchase contracts may require holders to
secure their obligations under these stock purchase contracts in a specified
manner.
A prospectus supplement will describe the terms of any stock purchase
contracts or stock purchase units being offered. The description in the
prospectus supplement will not necessarily be complete, and reference will be
made to the stock purchase contracts. Some of the important United States
federal income tax considerations applicable to the stock purchase units and
stock purchase contracts will be discussed in the related prospectus supplement.
PLAN OF DISTRIBUTION
National may sell the securities offered pursuant to this prospectus
(Offered Securities) in one or more series in any of three ways: (1) through
underwriters or dealers; (2) through agents; or (3) directly to a limited number
of purchasers or to a single purchaser.
THROUGH UNDERWRITERS OR DEALERS. If underwriters are used in the sale, the
Offered Securities will be acquired by the underwriters for their own account
and may be resold from time to time in one or more transactions, including
negotiated transactions, at the initial public offering price or at varying
prices determined at the time of the sale. The Offered Securities may be offered
to the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more managing underwriters. The
underwriter or underwriters with respect to Offered Securities will be named in
the prospectus supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover page of such prospectus supplement. Unless otherwise set forth in such
prospectus supplement, the obligations of the underwriters to purchase the
Offered Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of the Offered Securities if any
are purchased.
THROUGH AGENTS. Offered Securities may be sold through agents designated by
National from time to time. A prospectus supplement will set forth the name of
any agent involved in the offer or sale of the Offered Securities in respect of
which such prospectus supplement is delivered as well as any commissions payable
by National to such agent. Unless otherwise indicated in such prospectus
supplement, any such agent will be acting on a reasonable best efforts basis for
the period of its appointment.
DIRECTLY. National may sell the Offered Securities directly to one or more
purchasers. In this case, no underwriters or agents would be involved.
GENERAL INFORMATION. The prospectus supplement with respect to the Offered
Securities will set forth the terms of the offering of such Offered Securities,
including:
18
o the name or names of any underwriters, dealers or agents;
o the purchase price of such Offered Securities and the proceeds to
National from such sale;
o any underwriting discounts, agents' commissions and other items
constituting underwriting compensation;
o any initial public offering price; and
o any discounts or concessions allowed or reallowed or paid to dealers.
Any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
If so indicated in the prospectus supplement with respect to the Offered
Securities, National may authorize agents, underwriters or dealers to solicit
offers by certain specified institutions to purchase the Offered Securities from
National at the initial public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject to
those conditions set forth in such prospectus supplement, and such prospectus
supplement will set forth the commission payable for solicitation of such
contracts.
Agents, underwriters and dealers may be entitled under agreements entered
into with National to indemnification by National against certain civil
liabilities, including certain liabilities under the Securities Act of 1933 or
to contribution by National with respect to payments which such agents,
underwriters and dealers may be required to make in respect thereof.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to National's Annual Report on Form 10-K for the year ended
September 30, 2002 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The information incorporated in this prospectus by reference to National's
most recent Annual Report on Form 10-K relating to the oil and gas reserves of
Seneca Resources Corporation, National Fuel Exploration Corp. and Player
Resources, Ltd., which has been specifically attributed to Ralph E. Davis
Associates, Inc., has been reviewed and verified by said firm and has been
included herein in reliance upon the authority of said firm as an expert.
VALIDITY
The validity of the securities will be passed upon for National by Thelen
Reid & Priest LLP, New York, New York, and for the underwriters, dealers, or
agents by Pillsbury Winthrop LLP, New York, New York. However, all matters of
New Jersey law, including the incorporation of National, will be passed upon
only by Stryker, Tams & Dill LLP, Newark, New Jersey.
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$200,000,000
NATIONAL FUEL GAS COMPANY
% Notes due 2013
[NATIONAL LOGO]
--------------------------
PROSPECTUS SUPPLEMENT
--------------------------
MERRILL LYNCH & CO.
FEBRUARY , 2003
================================================================================
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