Filed pursuant to Rule 424(b)(5)
Registration Statement No. 333-102200
PROSPECTUS SUPPLEMENT
(To prospectus dated January 22, 2003)
$250,000,000
NATIONAL FUEL GAS COMPANY
5 1/4% 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)................................... 99.866% $249,665,000
Underwriting discount ...................................... .461% $1,152,500
Proceeds, before expenses, to National ..................... 99.405% $248,512,500
(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 12, 2003.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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
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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........................... $250,000,000 aggregate principal
amount of 5 1/4% 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 $98 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:
TWELVE MONTHS ENDED FISCAL YEARS ENDED SEPTEMBER 30,
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
Empire acquisition discussed in this prospectus supplement under the heading
"Recent Developments."
(IN THOUSANDS)
ADJUSTED*
---------------------------
AT DECEMBER 31,
2002 AMOUNT PERCENT
--------------- ----------- ----------
Capitalization:
Comprehensive shareholders' equity................. $ 1,037,397 $ 1,037,397 41.85%
Long-term debt, net of current portion............. 1,143,070 1,441,503 58.15
------------ ----------- ------
Total capitalization............................... $ 2,180,467 $ 2,478,900 100.00%
============ =========== ======
Short-term debt, including current portion of
long-term debt..................................... $ 432,893 $ 374,039
------------ -----------
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* To give effect to (i) the issuance of $250 million in principal amount of the
notes being offered by this prospectus supplement and the expected use of net
proceeds thereof and (ii) the Empire acquisition (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.
S-6
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.
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 5 1/4% 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 .20%
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
release) is not published or does not contain prices on such business day, the
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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 corporations and
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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
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holdings shown on 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
$250,000,000 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
..375% of the principal amount of the notes. The underwriter may allow, and the
dealers may reallow, a discount not in excess of .25% 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 18 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
13
National shall 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.
19
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$250,000,000
NATIONAL FUEL GAS COMPANY
5 1/4% Notes due 2013
[NATIONAL LOGO]
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
FEBRUARY 12, 2003
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