Atos Annual Report 2001 | Quarterlytics

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FY2001 Annual Report · Atos

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Atmos

Energy

Corporation

2001

Summary

Annual Report

The Spirit That Binds Us.

Reaffirming our commitment

to our strategy, continuing

our growth and making the

most of our opportunities

require vision, determination,

passion, creativity, excellence

and, above all, energy.

A T M O S E N E R G Y C O R P O R A T I O N

F i n a n c i a l H i g h l i g h t s

Operating revenues
Gross profit

Utility net income
Nonregulated net income

Total

Total assets
Total capitalization
Net income per share – diluted
Cash dividends per share
Book value per share at end of year

Total throughput (MMcf)
Heating degree days
Degree days as a percentage of normal
Meters in service at end of year
Return on average shareholders’ equity
Shareholders’ equity as a percentage of total
capitalization (including short-term debt) at
end of year

Shareholders of record
Weighted average shares outstanding – diluted (000s)

T a b l e o f C o n t e n t s

Letter to Shareholders

Our Spirit of…Service

Our Spirit of…Resilience

Our Spirit of…Unity

Our Spirit of…Commitment

Our Spirit of…Enterprise

Financial Review

Atmos Officers

Board of Directors

Corporate Information

Year ended September 30
2001

2000

Change

(Dollars in thousands,
except per share data)

$1,442,275
374,720

$ 850,152
325,706

49,881
6,209

22,459
13,459

56,090

35,918

$2,036,180
$1,276,263
$1.47
$1.16
$14.31

$1,348,758
$ 755,664
$1.14
$1.14
$12.28

217,774
2,753

107%

197,564
2,096

82%

1,386,323

1,096,599

10.4%

9.3%

39.0%

30,524
38,247

38.4%

32,394
31,594

69.6%
15.0%

122.1%
-53.9%

56.2%

51.0%
68.9%
28.9%
1.8%
16.5%

10.2%
31.3%
30.5%
26.4%
11.8%

1.6%
-5.8%
21.1%

Our vision for Atmos is to be one of the largest
providers of natural gas distribution and related services

in the United States, a producer of superior financial

results, recognized for excellent customer service and an

employer of choice.
Our strategy is to deliver superior shareholder
value, manage utility operations exceptionally well,

expand through acquisitions and profitably grow our

nonutility operations.
During fiscal 2001 (cid:228) We combined our existing gas
utility operations in Louisiana with a major acquisition

to form Atmos Energy Louisiana, the state’s largest pure

gas utility; we also announced plans to grow further by

acquiring the largest pure gas utility in Mississippi. (cid:228)

our nonutility operations, we acquired full ownership of

Woodward Marketing, launched a new venture to build

small electric power plants, purchased two gas marketing

companies and agreed to purchase a major gas storage

field in Kentucky. (cid:228) All five of our natural gas distribution

utilities delivered expanded customer service during one

of the coldest winters in history and in the face of record-

high gas prices; we also reduced our operation and main-

tenance expense to below the level in 1998, concluded

three rate cases to add to revenues and purchased weather

insurance to mitigate risks to our earnings.

Putting the Pieces Together

Greeley Gas Company(cid:13)
Denver, Colorado

Energas Company(cid:13)
Lubbock, Texas

Atmos Energy Corporation, headquartered

in Dallas, Texas, is the fifth-largest pure

natural gas distributor in the United States.

It distributes natural gas to about 1.4 million

Atmos’ nonutility operations are organized

customers in Colorado, Georgia, Illinois,

under Atmos Energy Holdings, which

Iowa, Kansas, Kentucky, Louisiana, Missouri,

includes Atmos Energy Marketing, Atmos

Tennessee, Texas and Virginia through its

Pipeline and Storage, Atmos Power Systems,

five operating divisions —Atmos Energy

and an indirect equity interest in Heritage

Louisiana; Energas Company, which includes

Propane Partners, L.P., the nation’s fourth-

nonutility sales of gas for irrigation; Greeley

largest retail propane marketer. In September

Gas Company; United Cities Gas Company;

2001, Atmos agreed to acquire Mississippi

and Western Kentucky Gas Company.

Valley Gas Company.

Western Kentucky(cid:13)
Gas Company(cid:13)
Owensboro, Kentucky

Atmos Energy Corporation(cid:13)
Dallas, Texas

United Cities Gas Company(cid:13)
Franklin, Tennessee

Mississippi(cid:13)
Valley Gas(cid:13)
Company(cid:13)
Jackson, Mississippi

Atmos Energy Louisiana(cid:13)
Lafayette, Louisiana

Business Unit Headquarters

Utility Operations

Atmos Headquarters

Pending Acquisition

L e t t e r t o S h a r e h o l d e r s

Dear Fellow Shareholder:
Atmos Energy Corporation achieved new heights in 2001 as we continued our tradition

of growth and increased our earnings significantly.

For the year, Atmos’ net income grew 56 percent from $35.9 million in 2000 to $56.1

million. Earnings per diluted share increased 29 percent from $1.14

in 2000 to $1.47. Eliminating a one-time gain of 12 cents a share

in 2000 from the sale of our propane assets, the year-over-year

increase in earnings per diluted share was 44 percent.

Return on average shareholders’ equity was 10.4 percent, and

total return to shareholders was 10.0 percent—well above that of

the major market indices and the 6.7 percent average return of

our industry peer group.

Atmos paid cash dividends in fiscal 2001 of $1.16 per common

share. In November 2001, the Board of Directors declared Atmos’

14th consecutive annual dividend increase. The 2-cents-per-share

increase makes our fiscal 2002 annual indicated dividend rate $1.18.

G r o w i n g t h r o u g h a c q u i s i t i o n s

15%

10%

-5%

-10%

-15%

-20%

-25%

-30%

Total Return in Fiscal 2001

Peer Group
Average

SMNGAS

5.5%

6.7%

Atmos

10.0%

S&P
500

S&P
Utilities

Dow Jones
Industrials

-15.6%

-24.9%

-26.7%

Atmos’ total return to shareholders in fiscal 2001 led
all the major market indices as well as the average
return of other peer gas utilities.

Our vision for Atmos is to be one of the largest pure natural gas providers in the

United States. In 2001, we advanced to the rank of the fifth-largest pure gas provider

in the U.S., based on customer count, when we completed in July our purchase of the

assets of Louisiana Gas Service Company and LGS Natural Gas Company. The LGS

acquisition added about 279,000 customers to our utility system and provided valuable

assets and relationships for our nonutility business.

LGS’s utility operations were smoothly integrated with those of our Trans Louisiana

Gas Company to form a new business unit, Atmos Energy Louisiana. Teams of our

employees from all functional areas made this transition virtually transparent to our

Louisiana customers. These teams were aided by the advanced customer information

and communication technologies that Atmos has developed during the past five years.

LGS was our eighth acquisition since 1983. The results demonstrate how adept

Atmos has become at acquiring sound properties and integrating them profitably. In

particular, our LGS experience proved the value of our investments in technology. By

reducing our overall operating costs and helping us integrate new assets quickly, our

advanced systems give us a major advantage in making future acquisitions.

During fiscal 2001, we strengthened our balance sheet by issuing equity in

December 2000. Investor demand was strong, and our original offering of 5 million

common shares was oversubscribed. We increased the offering to 6.7 million shares

and used the net proceeds of $142 million to reduce short-term debt in preparation

for completing the acquisition of LGS.

In May, Atmos issued $350 million of 73⁄8 percent Senior Notes due 2011. The debt

offering provided net proceeds to fund the LGS acquisition.

Atmos has solid investment-grade ratings. Our senior unsecured debt and commercial

paper are rated A-/A2 by Standard & Poor’s, A3/P2 by Moody’s and A-/F2 by Fitch. All

Atmos Dividends Since 1991
In U.S. dollars

$1.20

1.00

.80

.75

.79

.82

.96

.98

1.01

.91

1.10

1.06

.60

.40

.20

three credit-rating agencies have affirmed their “stable”

outlook for our current ratings.

1.14

1.16

1.18

A c q u i r i n g M i s s i s s i p p i V a l l e y G a s

In September, we continued our track record of growth

through acquisitions by agreeing to acquire Mississippi

Valley Gas Company, the state’s largest gas utility.

Headquartered in Jackson, Mississippi Valley Gas has

approximately 261,500 customers.

'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02

We will acquire Mississippi Valley Gas for $75 million

Atmos Energy Corporation paid dividends during 2001 of $1.16
per share. Our annual indicated dividend rate for 2002 is $1.18.

cash and $75 million in Atmos common stock. We also

will assume Mississippi Valley Gas’ outstanding debt,

net of working capital, of about $45 million. At an

acquisition cost of about $746 a customer, our cost to acquire Mississippi Valley Gas

compares very favorably with recent industry transactions.

The transaction and the issuance of Atmos common stock are subject to federal and

state regulatory approvals. We expect to receive all the needed approvals over the next

several months to complete the acquisition by the end of fiscal 2002. The acquisition

will be accounted for as a purchase and should be accretive to earnings within the first

full year of operation, excluding one-time charges related to the transaction.

E x p a n d i n g o u r n o n u t i l i t y b u s i n e s s

Atmos’ growth will be bolstered not only by acquisitions, but also by expansion of our

nonutility business. We expect this segment will contribute one-quarter to one-third of

our future earnings.

In April, we acquired the remaining 55 percent of Woodward Marketing, L.L.C.,

that we did not already own, giving us full ownership of Woodward Marketing. J. D.

Woodward, Woodward Marketing’s founder, now heads Atmos Energy Holdings, the

holding company for all of Atmos’ nonutility operations.

Atmos Energy Holdings includes Atmos Energy Marketing, which provides bundled

and unbundled gas services to Atmos, municipalities and industrial customers through

Woodward Marketing and Trans Louisiana Industrial Gas Company; Atmos Pipeline

and Storage, which owns, has interests in and manages gas storage fields and intra-

state gas pipelines; Atmos Power Systems, Inc., a new venture that builds and leases

small electric power plants; and an indirect equity interest in Heritage Propane Partners,

the country’s fourth-largest propane marketer.

Woodward Marketing’s business is marketing and trading natural gas and providing

overall management of gas-supply requirements for customers in 17 states. In a 2000

gas-marketing survey, it was rated the No. 1 mid-tier and industrial gas marketer in the

U.S. Its customers are extremely loyal because of its reputation for providing exceptional

customer service.

In 2001, Woodward Marketing acquired two Kentucky-based natural gas marketing

companies, adding about 50 million cubic feet (MMcf) per day of nonutility gas sales.

We estimate that Atmos Energy Holdings has the ability to increase its earnings by

10 percent to 15 percent annually. In turn, its growth should help Atmos’ consolidated

returns achieve an annual average growth rate in earnings per share of 5 percent to

7 percent, including acquisitions.

A d d i n g n o n u t i l i t y v e n t u r e s

In July, Atmos Pipeline and Storage agreed to acquire a Kentucky-based gas storage

field and associated pipeline facilities; it completed the transaction in November 2001.

Including these new storage assets, Atmos Pipeline and Storage owns or manages more

than 6 Bcf of working gas storage. It provides gas storage services to Atmos, municipal-

ities and industrial customers.

Atmos’ newest nonutility venture, Atmos Power Systems, completed its first project

in June, a 20-megawatt power plant in Bolivar, Tennessee. The plant is being leased by

the City of Bolivar’s municipal electric department to supply electricity to the Tennessee

Valley Authority during periods of peak demand.

Atmos Power Systems is exploring prospects for similar projects in communities

where Atmos and Woodward Marketing have existing relationships.

U t i l i t y o p e r a t i o n s w e a t h e r t h e c o l d

The 2000–2001 heating season was the coldest winter on record for the Company.

In our 2001 first quarter, temperatures were 21 percent colder than normal and 46

percent colder than the previous year. For the entire year, the weather was 7 percent

colder than normal and 31 percent colder than in 2000, excluding our weather-

normalized states. The cold weather contributed about $2.7 million, or 7 cents per

diluted share, to our 2001 results, but it also put extreme demands on our employees

and resources.

The cold weather, combined with tight natural gas supplies, pushed up gas prices

to an unprecedented $10 per million Btu (MMBtu) in December 2000, as compared

with the historical winter peak prices of about $2.60 per MMBtu. This steep rise in gas

prices caused many customers to have difficulty in paying their higher gas bills and to

Natural Gas Prices in Fiscal 2001
NYMEX monthly closing prices in dollars per million Btu

conserve more on their energy use.

Higher gas prices caused an equally unprecedented 15-fold

rise in calls to our Customer Support Center in Amarillo, Texas.

Our employees undertook extraordinary efforts to cut the customer

hold time by setting up satellite call centers, enhancing Web-based

customer service options and staffing local offices to be available for

customers who wanted to talk to a company representative in person.

Our employees also provided information to help those

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

customers concerned about paying their bills. They helped

$10

Natural gas prices reached an unprecedented $10 per
million Btu during the 2001 heating season. High gas prices
created many challenges in handling customer relations,
collecting accounts receivable and financing gas purchases.

customers arrange for budget billing over a 12-month period, apply

for extended payment plans and sign up for low-income energy

assistance through government and private social service agencies.

T h e s o c i a l c o s t a n d b u s i n e s s e f f e c t o f h i g h - c o s t g a s

Unfortunately, a much larger than normal number of our customers—more than

60,000—were disconnected for delinquency in paying their bills. As a result, customer

accounts receivable increased sizably and necessitated an increase in our provision for

doubtful accounts. The additional provision required for doubtful accounts, compared with

the provision in 2000, lowered our 2001 earnings per diluted share by about 14 cents.

Some of this additional reserve could be recouped in 2002. As the weather turns

cooler, we believe many disconnected customers will seek to return to our system. They

will be required to pay any amounts they owe us as well as a reconnection fee and a

higher deposit. Collecting delinquent accounts will remain a top priority in 2002.

Because of the unusually large number of customers disconnected, we have been

working with regulatory commissions, social services and public assistance agencies to

assist customers in getting their gas service reconnected.

We don’t want any of our customers to go without gas for heat during the winter.

Therefore, we have increased promotion of our bill-payment options. We have sent

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their service before the winter heating season and to seek help if they need it.

P r o t e c t i n g e a r n i n g s f r o m t h e w e a t h e r

In recent years, colder weather has not been our challenge; warmer weather has

been. Unseasonably warm winters in both fiscal 1999 and 2000 dampened gas demand

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and our earnings.

To offset a similar effect in fiscal 2001, we purchased weather hedges for Atmos’

Texas and Louisiana operations. For most of fiscal 2001, about one-third of our cus-

tomer base was located in these two states, both of which lack weather-normalized

rates. By the end of fiscal 2001, the percentage had increased to 46 percent as a result

of completing the LGS acquisition.

For fiscal 2002 to 2004, we have purchased a three-year weather insurance policy

for Texas and Louisiana. We have an option to cancel the third year of coverage if we

are able to get weather protection through rates. The policy is designed to safeguard

our earnings from weather that’s warmer than normal by at least 7 percent or more in

both states, while preserving the upside.

Atmos’ goal is to limit its weather sensitivity primarily through rate design. Today,

just over a fourth of our customer accounts have weather-normalized rates. We have

obtained the provision in Tennessee and Georgia and a trial program in Kentucky

extending through 2005. To ensure stability of rates for our customers in the future, we

would like to achieve weather normalization in our other major states, particularly

Texas and Louisiana.

We plan to seek regulatory relief for declining usage—a national trend in the gas

utility industry, which we estimate is reducing our net income by more than $4 million

a year. We also are continuing to apply for regulatory adjustments to base rates and

to keep our utilities’ gas price adjustments current. During the past two years, Atmos

has received approval for more than $20 million in additional revenues through rate

proceedings and other regulatory provisions.

H e d g i n g o u r g a s s u p p l y

Atmos has focused on minimizing the effects of natural gas price fluctuations on

its customers and its earnings by using physical and financial hedges to stabilize gas

purchase costs. For example, we normally buy and store during the lower-use summer

months about one-fifth of the gas supply we will need for the next winter. Our gas

storage provides a natural hedge against buying large volumes of gas at market prices

during the winter. The gas we purchased this summer ranged in price from $2.34 to

$4.87 per MMBtu, which is much lower than the past winter-season prices.

To hedge further against volatility in gas prices during the 2002 heating season,

we are using futures contracts, call options, pricing collars and fixed-forward physical

pricing contracts. These financial hedges lock in gas prices in most states for up to

half of our flowing gas supply requirements. The hedges also help to moderate the

effects on customer bills of spikes in gas prices and, in turn, should help lower our

customer accounts receivable caused by higher gas prices.

In presenting our gas-supply hedging program to state regulatory agencies, we

received approvals in some states and broad support from all the commissions.

G a s s u p p l y o u t l o o k

The outlook for natural gas supplies this winter seems favorable. Abundant gas

supplies lowered gas prices to a 29-month low in September, and energy analysts

predict the United States will have sufficient gas supplies during the 2001–2002 winter

season. Although gas prices may average above historical levels, they are not expected

to return to last winter’s peak prices.

That will be good for Atmos because we do not profit from the cost of natural gas.

Our cost of gas is passed through to customers with no markup. Colder weather

typically causes customers to use greater volumes, which do contribute to our earnings.

But extreme gas prices impose a hardship not only on our customers, but also on Atmos.

High gas costs increase our interest expense for borrowings to pay the higher gas

prices, decrease our cash flow, require higher reserves for doubtful accounts receivable,

delay matching purchased gas adjustments with actual gas purchases and cause

customer-service issues.

A normal winter would be welcomed by all of us in the gas utility industry. We need

prices high enough to stimulate long-term production and new exploration but not so

high that they dampen demand and cause hardships for our customers.

B u s i n e s s l e a d e r s h i p

This past May, Atmos received a gratifying award when it won the inaugural

Greater Dallas Business Ethics Award. The award, sponsored by the Society of

Financial Services Professionals, honors companies that demonstrate ethical business

practices in everyday operations, in management philosophies and in responses to

crises or challenges.

Atmos’ employees subscribe to the highest ethical standards and values in the ways

they conduct our business and treat our customers. We stress adhering not just to the

letter of the law, but to the spirit of the law. This award recognizes that companies like

Atmos that follow this policy can be successful financially and still be committed to

fairness and mutual respect.

Atmos has benefited in 2001 from the strong contributions of its Board of Directors.

In this regard, I’m pleased that Richard K. Gordon, a vice chairman of investment

banking for Merrill Lynch & Co., has joined Atmos’ board. Mr. Gordon has provided

advice to Atmos and major energy companies around the world for more than 30

years. He contributes his exceptional knowledge of the energy industry and a very high

standard of personal integrity to help us guide Atmos’ future.

Among our senior management, we honored B. J. Hackler, formerly president of

Atmos Energy Louisiana, who retired after 35 years of service and Cleaburne H. Fritz,

formerly vice president, information technology, who retired after 33 years of service.

Mr. Hackler was succeeded as president of Atmos Energy Louisiana by Conrad E.

Gruber. Mr. Gruber, in turn, was succeeded as president of Western Kentucky Gas by

John A. Paris. Succeeding Mr. Fritz as our chief information officer is Leslie H. Duncan,

who brings to us many years of senior management experience in information technology.

A b r i g h t f u t u r e f o r A t m o s

Atmos’ future is bright. Natural gas continues to grow in demand and in value as

the most efficient and most environmentally beneficial fuel source. In North America,

we enjoy an abundant gas supply, which experts predict will last for generations to come.

Natural gas provides greater energy independence for our nation and contributes

to our economic freedom. It is indigenous to our land and provides nearly a quarter of

our country’s energy supply.

Because of the need for greater national security following the events of September

11, Atmos, like other energy providers, has taken added steps to safeguard our delivery

networks, our employees and our customers.

Delivering natural gas to our customers safely, reliably and efficiently is Atmos’

expertise. We are passionate about providing exceptional customer service. We are a

low-cost leader in the gas industry, and our utility acquisitions and nonutility expansions

offer continuing opportunities for profitable growth and returns to our shareholders.

We are especially proud of our industry’s role in providing for America’s energy

future. That future is no better characterized than by the men and women of Atmos

who do their work well and serve their country in so

many other ways. Our report this year honors a

representative few who, in their own communities and

in their own deeds, exemplify their fellow employees.

On behalf of the Atmos board, management

and employees, I thank you for your continued

investment in Atmos. We promise to continue

executing our strategy well—just as we did in 2001—

demonstrating the spirit and results worthy of

your confidence.

Sincerely,

Leading Atmos Energy Corporation is its Management Committee composed
of (left to right) J. D. Woodward, senior vice president, nonutility operations;
R. Earl Fischer, senior vice president, utility operations; Robert W. Best,
chairman, president and chief executive officer; Louis P. Gregory, senior vice
president and general counsel; J. Patrick Reddy, senior vice president and chief
financial officer; and Wynn D. McGregor, vice president, human resources.

Robert W. Best

Chairman,President and Chief Executive Officer
November 2, 2001

For Atmos, excellence in customer service is defined by doing

even the small things exceptionally well. We use technology to

improve our efficiency, but we never forget the importance of

the human touch. The true measure is in receiving outstanding

marks for service from our customers. Shown is Greeley Gas

Company Supervisor Mike Lehman of Steamboat Springs,

Colorado, where we use snowmobiles to

reach remote homes during times of

heavy snowfall.

10 Our Spirit of. . .

Our Dedication to
Serving Customers
Exceptionally Well

Delivering natural gas safely, reliably and at reason-

able cost is the goal of Atmos’ five utility business

units. Our employees have shown their dedication

again and again to serve our customers exceptionally

well under all types of conditions.

The 2000–2001 winter season was one of those

times. Bitter cold—the coldest winter on record for

Atmos—swept the country, causing the price of natu-

ral gas to soar to an unprecedented $10

per million Btu. Customers, concerned

about their high gas bills, turned to our

Customer Support Center, where call

volumes rose 15-fold to 25,000 a day.

E x t r a e f f o r t s

Atmos’ customer service represen-

tatives took extraordinary efforts to

reduce the length of customer hold

times by setting up satellite call centers,

enhancing Web-based customer service

options and staffing local offices to

be available for customers who wanted

to talk with a company representative

in person.

Energas Meter Reader Stella Guerra of Plainview, Texas, has

served more than nine years in the U.S. Army Reserve after

eight years of active duty and currently is an instructor for the

9th Battalion (QM) 95th Division of Des Moines, Iowa.

Service

Employees also provided helpful information to

those customers concerned about paying their bills.

They helped them arrange for budget billing over a

12-month period, apply for extended payment plans

and sign up for low-income energy assistance through

government and private social service agencies.

Atmos is known not only for its courteous and helpful customer service, but also

for the efficiency of its operations. One industry efficiency measure is the number of

customers served per employee. The average for Atmos’ industry peer group in 2001

was 439 customers served per employee, compared to 587

customers served by each Atmos employee.

Another efficiency measure is our operation and mainte-

Operation and Maintenance Expense
per Customer
In U.S. dollars

nance expense per customer. Atmos’ $130 per customer in

$200

$183

2001 was well below the peer-group average of $224. In 2001,

we held O&M spending to below the amount we spent in 1998,

which was a substantial achievement.

E c o n o m i e s o f s c a l e

150

100

$146

$136

$135

$130

These measures show how efficient and cost-conscious

1997 1998 1999 2000 2001

we are. Indeed, our results are all the more impressive,

considering we serve hundreds of small and rural communities in 11 states. We have

achieved economies of scale even though the areas we serve are widely dispersed

geographically with no large urban areas where greater centralization is possible.

To lower costs, we have begun a new initiative called Operations Blueprint. It

is designed to improve the profitability and cost structure of our utility operations.

It will guide us in operating our utilities to meet our long-range financial plans through

organizational design and employee staffing, training and development. It is geared

to create greater efficiencies and productivity improvements by ensuring common work

practices and workforce management goals.

U t i l i t y o p e r a t i n g r e s u l t s

Utility operations in 2001 earned net income of $49.9 million on revenues of

$1,378.2 million. Approximately 80 percent of our utility gross operating margins were

earned from residential and commercial customers. Utility operations provided 89

percent of net income and 96 percent of consolidated revenues for the year. These

operations benefited from the colder winter weather, with a 13 percent increase in gas

sales volumes to 157 billion cubic feet.

2001 Utility Gross Margins

Irrigation 2%

Transportation 8%

Public Authority 4%

Industrial 5%

However, the colder weather also led to higher delinquencies

by customers who did not pay their bills. As a result, our customer

accounts receivable increased, as did our provision for doubtful

accounts. In part, the delinquencies rose as a result of state regula-

tory rules that prohibit disconnecting customers for nonpayment

Commercial
21%

Residential
60%

during the winter-heating months and extremely lenient payment

options permitted by some states.

We have stepped up collection efforts and have installed new

measures to qualify customers before they are initially connected

or reconnected to our distribution system. We also have worked with social service

and public assistance agencies as well as state regulators to help customers restore

their service as soon as possible.

I n c r e a s e d s e c u r i t y

To protect our customers, employees and assets, Atmos always has stressed safety

as the highest priority in all its operations.

Because of the terrorist strikes on September 11, our business units have heightened

their security precautions. We have reviewed our business continuity plans, discussed

security matters with public officials and law enforcement agencies and increased the

vigilance at our facilities.

Our business units have well-established coordination and communication

procedures with firefighters, law enforcement agencies and other emergency officials.

We also have relationships with other gas companies in the region to assist each

other in case of an emergency.

Our Spirit

Our Determination
to Face Challenges
and Achieve Goals

One of our strategies is to run our utility operations

exceptionally well. To do this, we want to provide

excellent customer service and be one of the most

profitable gas providers in the industry.

Our fiscal 2001 results proved how we are accom-

plishing these two goals by successfully overcoming

business challenges.

R e g u l a t o r y r e l a t i o n s

As a regulated business, we

need a reasonable opportunity

to earn our allowed rates of

return and to recover our pru-

dent expenditures in a timely

manner without the burden of

“regulatory lag.” However, it is

equally incumbent upon us to

keep our regulatory filings up

to date.

Operating in 11 states, we

face wide-ranging requirements

that control our tariffs and the

way we do business. As a result,

we work with local officials

and state utility commission staffs to explain our

operating results. We file promptly when revenue

deficiencies occur and we keep our purchased gas

Energas Service Technician Henry Cruz, his

wife, Stacey, and daughter Lauren intended to

adopt two children, but instead found room in

their home and hearts to adopt five children

from the same family and reunite them.

of. . .Resilience

To lessen the effects of higher gas prices during the winter on customers with fixed incomes and on

low income customers, Greeley Gas Public Affairs Manager Karen Wilkes (shown left) formed a

coalition of industry representatives and energy assistance agencies throughout Colorado. Together,

this group successfully lobbied for additional energy assistance funds, developed a massive public

awareness campaign and created a single toll-free number that customers of all natural gas

companies in Colorado could call for assistance information. The coalition continues to operate.

adjustments current to recover the cost of natural gas that we purchase to deliver

to our customers.

Atmos has been successful in pursuing regulatory relief. During the past two years,

Atmos’ utility operations have been granted $20 million in additional revenues by six

regulatory commissions. In 2001, we concluded rate cases in Texas, Illinois, Colorado

and Virginia.

We will continue to seek regulatory approvals for changes that have significant

financial effects, such as weather-normalized rate structures, declining usage and

gas-supply hedging.

Because of the past winter’s high gas costs, we have undertaken a program to

hedge about half of our gas supply for the 2001–2002 heating season. In addition to

the gas we buy and place in storage during the summer months, we are using a variety

of financial derivatives to stabilize our future gas costs.

Our hedging measures will benefit our customers as well as Atmos by moderating

some of the negative effects of spiking gas costs. We’re gratified that all the regulatory

commissions in the states we serve have either approved outright or indicated broad

support for the objectives of our plan.

F u t u r e f i l i n g s

Through approvals for marketing efforts and changes in rate design, we will seek to

overcome the financial effects of an industrywide trend of declining volume consumption,

owing to energy-efficient appliances, conservation and better-insulated houses and

commercial buildings.

We also will seek to recover extraordinary items, such as the significant increase

in bad debts resulting from the past winter’s high gas prices. In two states, we already

have been granted approval to recover a portion of these bad debts.

Although weather normalization is now in effect for 26 percent of our customer

base, much warmer-than-normal winter weather in recent years has hurt our financial

results. Our gas sales volumes are directly related to heating requirements during winter

weather. Rates that are weather-normalized help stabilize rates for our customers and

operating revenues for our utility business units. As a result, Atmos has a long-term

strategy to obtain weather-normalized rates in Texas, Louisiana and possibly other states.

To further mitigate the effects of adverse weather conditions on our earnings, we will

seek to shift more of our costs from the commodity to the base portion of rates.

Atmos also has purchased a three-year weather insurance policy, beginning in

fiscal 2002, for its Texas and Louisiana operations. We have the option to cancel in

the third year if we are able to get weather protection through rates. This weather

policy protects against weather that is at least 7 percent warmer than normal, with a

potential payout of up to $20 million each year. The full break-

2002 Atmos Utility Customer Base

even of the premium cost occurs with weather that is at least 11

100%

80%

60%

40%

20%

Weather
insurance
47%

Weather
normalized
26%

Weather
sensitive
27%

percent warmer than normal.

For fiscal 2002, weather-normalized rates and weather insurance

will be in place for nearly three-fourths of our rate base. Mississippi

Valley Gas has weather-normalized rates, as well.

Weather is a critical factor affecting our sales of natural gas

for irrigation. Many West Texas farmers use gas to power irrigation

pumps during the spring and summer. Early in the 2001 season,

rainfall and high gas prices limited demand; however, declining

gas prices and hot weather during the summer helped sales that recouped some of

the early losses. Our total irrigation revenues were $35 million, or 2 percent, of 2001

consolidated revenues.

O p t i m i z i n g u t i l i t y o p e r a t i o n s

Atmos will continue to evaluate how best to use its regulated assets to benefit its

customers and its shareholders. In some cases, we will consider divesting nonstrategic

assets and redeploying the proceeds to assets or ventures that offer greater opportuni-

ties for profitable growth.

Such a situation arose in December 2000, when Atmos sold its natural gas distri-

bution assets in Gaffney, South Carolina, for approximately $6.6 million in cash. The

South Carolina assets, which were operated by our United Cities Gas division, served

only 5,400 customers, and there was virtually no opportunity for Atmos to increase its

scope and scale within the state.

Combining People
and Assets to Form
a Louisiana Leader

Atmos completed its acquisition of the assets of

Louisiana Gas Service Company and LGS Natural

Gas Company in July 2001 to become the largest pure

natural gas distributor in Louisiana.

The addition of about 279,000 LGS customers

also made Atmos the fifth-largest pure natural gas

utility in the country. LGS was combined with our

Trans Louisiana Gas Company to form a new business

unit, Atmos Energy Louisiana.

The integration of the two companies went very

smoothly because of the excellent teamwork by the

employees of the two companies. In addition, Atmos’

investments in advanced information technology and

financial systems helped the combination proceed

quickly. Just three days after completing the acquisition,

we successfully billed our new LGS customers through

the Atmos billing system.

Our acquisition strategy is not just to grow. It is to

grow profitably and to optimize our assets. LGS is a

good example of how we are increasing our scale and

scope and achieving this strategy. With LGS, we

added new areas with customer-growth rates higher

than in many of our other communities. LGS also is

providing additional nonutility revenues through its

pipeline and storage assets and nonutility gas sales to

industrial customers. We are proud of our record not

Our

Atmos completed the acquisition of Louisiana Gas Service Company in July

only of adding profitable assets like LGS, but also of

and combined it with our Trans Louisiana Gas operations to form Atmos Energy

maintaining our customers’ trust and satisfaction.

Louisiana. Atmos is now the largest pure natural gas distributor in Louisiana.

Shown are Anthony McGehee (left), senior construction operator who worked

for Trans La, and Roy Moss Sr. (right), service technician who was with LGS.

Spirit of. . .Unity

United Cities Gas Journeyman Serviceman Leigh Jackson serves as a

volunteer firefighter in Ironton, Missouri.

Our Spirit of. . .

Continued Growth
with Mississippi(cid:213)s
No. 1 Gas Company

We concluded fiscal 2001 by announcing in September

our ninth acquisition since 1983. Atmos will acquire

Mississippi Valley Gas Company, Mississippi’s largest

gas utility.

Mississippi Valley Gas will expand our utility

operations into 12 states and will increase our customer

base to nearly 1.7 million customers, making Atmos

the country’s third-largest pure natural gas utility.

Atmos will gain a successful utility, which operates

efficiently, offers some of the lowest rates in the

Southeast and ranks high in customer satisfaction.

The utility serves 144 communities and has a rate

structure designed to mitigate

the effect of weather on earn-

ings, provide stable cash flow

and reward the utility for

excellent customer service.

Atmos will acquire Missis-

sippi Valley Gas for $75 million

in cash and $75 million in

Atmos common stock. We also

will assume Mississippi Valley

Gas’ outstanding debt, net of

working capital, of about $45

million. We expect to complete

the acquisition in fiscal 2002.

Dave Doggette, vice presi-
dent of Technical Services
for Western Kentucky Gas,
is an Eagle Scout and
scoutmaster for a new Boy
Scout program devoted to
high adventure activities,
such as rock climbing and
whitewater rafting.

Commitment

We continued our acquisition strategy

with an agreement in September 2001 to

acquire Mississippi Valley Gas Company,

the state's largest gas utility, which will

make Atmos the country’s third-largest

pure gas distributor. Mississippi Valley

Gas serves approximately 261,500

Mississippi customers in 144 communi-

ties, including Natchez, known for its

antebellum homes. Stanton Hall

(pictured) is one of the most visited

National Historic Landmarks in America.

Our Spirit of. . .En

Atmos has developed an innovative strategy to enter the electric generation market with minimal risk. In the

summer of 2001, Atmos Power Systems completed a 20-megawatt electric generating plant and leased it to

the Electric Department of the City of Bolivar, Tennessee. The plant provides additional peak load electric power

typically required during the summer months. With the success of this first project, Atmos Power Systems is

considering opportunities to build and lease similar-sized power plants.

terprise

Pursuing New Ways
to Profitably Grow
Nonutility Earnings

Atmos expects its nonutility operations to provide

opportunities for future growth and earnings.

In April, we expanded these operations by

acquiring the remaining 55 percent of Woodward

Marketing, L.L.C., that Atmos did not already own.

Woodward provides natural gas marketing and

trading in 17 states to Atmos, municipalities and indus-

trial customers. A 2000 national survey ranked it as the

No. 1 U.S. mid-tier gas marketer in customer service.

We have organized Woodward

and Atmos’ other nonutility operations

under a new subsidiary, Atmos Energy

Holdings, Inc. Its operations include a

variety of natural gas management

services, such as the acquisition and

provision of gas supplies, load fore-

casting and management, gas storage

and transportation management

services, peaking sales and balancing

services, and gas-price hedging.

Atmos has also formed Atmos Power

Systems, Inc., to build and lease small

electric power plants and related facilities.

Atmos Power Systems completed its first

Atmos Energy Louisiana Corrosion Control Technician Kenneth

Wilson is president of the Interstate 20 Economic Development

Board in Monroe, Louisiana, which works to bring new businesses

and new jobs to the area, such as this site for a shopping center

being developed by a national discount department store.

project, a 20-megawatt power plant that is leased

to the Electric Department of the City of Bolivar,

Tennessee, and provides peak-demand electricity to

the Tennessee Valley Authority. Atmos Power Systems

is pursuing other similar power projects.

A T M O S E N E R G Y C O R P O R A T I O N

F i n a n c i a l R e v i e w

Atmos at a Glance

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Cash Flows

Report of Independent Auditors

Consolidated Financial and Statistical Summary

(2001-1997)

Consolidated Financial and Statistical Summary

(1996-1991)

Forward-Looking Statements

S u m m a r y A n n u a l R e p o r t

The financial information presented in this report regarding

Atmos Energy Corporation is condensed. Our complete financial

statements, including notes, as well as management’s discussion

and analysis of financial condition and results of operations are

presented in our Annual Report on Form 10-K. Investors may

request, without charge, our Annual Report on Form 10-K for

the year ended September 30, 2001, by calling Investor Relations

at 1-800-382-8667 between 7:30 a.m. and 4:30 p.m. Central

time. Our Form 10-K may also be viewed on Atmos’ Web site at

http://www.atmosenergy.com. Additional investor information

can be found inside the back cover of this report.

A T M O S E N E R G Y C O R P O R A T I O N

A t m o s a t a G l a n c e

Year ended September 30
2000
2001

1,243,625
122,274
13,020
7,404

970,873
104,019
14,259
7,448

Meters in service
Residential
Commercial
Industrial (including agricultural)
Public authority and other

Total meters

1,386,323

1,096,599

Heating degree days

Actual (weighted average)
Percent of normal

Sales volumes (MMcf)

Residential
Commercial
Industrial (including agricultural)
Public authority and other

Total

Transportation volumes (MMcf)

Total throughput (MMcf)

Propane – gallons (000s)

Operating revenues (000s)

Gas sales revenues
Residential
Commercial
Industrial (including agricultural)
Public authority and other

Total

Transportation revenues
Other gas revenues

Total gas revenues

Propane revenues
Other revenues

2,753

107%

2,096

82%

79,000
36,922
33,730
6,892

156,544
61,230

217,774

—

$ 788,902
342,945
208,168
58,539

1,398,554
28,668
10,925

1,438,147
—
4,128

63,285
30,707
38,687
5,520

138,199
59,365

197,564

19,329

$ 405,552
176,712
171,447
27,198

780,909
23,610
4,674

809,193
22,550
18,409

Total operating revenues

$1,442,275

$ 850,152

Other statistics

Gross plant (000s)
Net plant (000s)
Miles of pipe
Employees

$2,109,867
$1,335,398
38,938
2,361

$1,579,803
$ 982,346
30,029
1,885

A T M O S E N E R G Y C O R P O R A T I O N

C o n d e n s e d C o n s o l i d a t e d B a l a n c e S h e e t s

September 30

2001

2000

(Dollars in thousands, except share data)

$2,055,986
53,881

2,109,867
774,469

1,335,398

$1,546,569
33,234

1,579,803
597,457

982,346

15,263
66,666
124,046
6,041
89,555
95,968
10,999
15,713

424,251
12,125
64,745
29,771
169,890

7,379
—
77,264
6,456
64,222
—
37,184
8,101

200,606
878
3,110
—

161,818

$2,036,180

$1,348,758

204
489,948
95,132
(1,420)

583,864
692,399

1,276,263

20,695
201,247
84,471
11,620
32,351
119,484
41,161

511,029
138,934
7,412
102,542

160
306,887
83,154
2,265

392,466
363,198

755,664

17,566
250,047
73,031
10,844
9,923
—
21,085

382,496
131,619

—
78,979

$2,036,180

$1,348,758

A S S E T S

Property, plant and equipment
Construction in progress

Total property, plant and equipment, at cost
Less accumulated depreciation and amortization

Net property, plant and equipment

Current assets

Cash and cash equivalents
Cash held on deposit in margin account
Accounts receivable, net
Inventories
Gas stored underground
Assets from risk management activities
Deferred gas cost
Other current assets and prepayments

Total current assets

Intangible assets
Goodwill
Noncurrent assets from risk management activities
Deferred charges and other assets

C A P I T A L I Z A T I O N A N D L I A B I L I T I E S

Shareholders’ equity

Common stock, no par value (stated at $.005 per share);

100,000,000 shares authorized; issued and outstanding:
2001 – 40,791,501 shares, 2000 – 31,952,340 shares

Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)

Shareholders’ equity

Long-term debt

Total capitalization

Current liabilities

Current maturities of long-term debt
Short-term debt
Accounts payable and accrued liabilities
Taxes payable
Customers’ deposits
Liabilities from risk management activities
Other current liabilities

Total current liabilities

Deferred income taxes
Noncurrent liabilities from risk management activities
Deferred credits and other liabilities

C o n d e n s e d C o n s o l i d a t e d S t a t e m e n t s o f I n c o m e

A T M O S E N E R G Y C O R P O R A T I O N

Operating revenues
Purchased gas cost

Gross profit

Gas trading margin
Operating expenses

Operation
Maintenance
Depreciation and amortization
Taxes, other than income

Total operating expenses

Operating income
Other income

Equity in earnings of Woodward

Marketing, L.L.C.

Miscellaneous income (expense), net

Total other income

Interest charges, net

Income before income taxes
Income taxes

Year ended September 30
2000

1999

2001

(Dollars in thousands, except per share data)

$1,442,275
1,067,555

$850,152
524,446

$690,196
390,402

374,720

325,706

299,794

488

—

133,240
6,368
67,664
37,655

244,927

130,281

8,062
(1,874)

6,188
47,011

89,458
33,368

140,249
7,648
63,855
28,638

240,390

85,316

7,307
7,437

14,744
43,823

56,237
20,319

148,065
9,141
56,874
31,475

245,555

54,239

7,156
2,967

10,123
37,063

27,299
9,555

Net income

56,090

$035,918

$017,744

Basic net income per share

Diluted net income per share

Cash dividends per share

Weighted average shares outstanding:

Basic

Diluted

$1.47

$1.16

38,156

38,247

$1.14

31,461

31,594

$.58

$1.10

30,566

30,819

A T M O S E N E R G Y C O R P O R A T I O N

C o n d e n s e d C o n s o l i d a t e d S t a t e m e n t s o f C a s h F l o w s

Year ended September 30
2000

1999

2001

(Dollars in thousands)

C A S H F L O W S F R O M O P E R A T I N G A C T I V I T I E S

Net income
Adjustments to reconcile net income to net cash

56,090

35,918

17,744

provided by operating activities:
Depreciation and amortization:

Charged to depreciation and amortization
Charged to other accounts

Deferred income taxes
Deferred lease income
Net assets/liabilities from risk management

activities

Gain on sale of nonregulated assets

Changes in assets and liabilities

Net cash provided by operating activities

67,664
2,806
18,501
(979)

13,881
—

(74,968)

82,995

C A S H F L O W S U S E D I N I N V E S T I N G A C T I V I T I E S

Capital expenditures
Acquisitions
Retirements of property, plant and equipment, net
Assets for leasing activities
Increase in cash from acquisition
Proceeds from sale of assets, net

(113,109)
(363,399)
(1,460)
(5,377)
8,644
6,625

63,855
3,065
18,251
—

—
(5,831)
(61,062)

54,196

(75,557)
(32,000)
957

—
—
6,467

56,874
4,800
31,874
—

—
—

(26,594)

84,698

(110,353)

757

—

—
—
—

Net cash used in investing activities

(468,076)

(100,133)

(109,596)

C A S H F L O W S F R O M F I N A N C I N G A C T I V I T I E S

Net increase (decrease) in short-term debt
Net proceeds from issuance of long-term debt
Repayment of long-term debt
Cash dividends paid
Issuance of common stock
Net proceeds from equity offering

Net cash provided by financing activities

Net increase (decrease) in cash and cash

equivalents

Cash and cash equivalents at beginning

of year

(48,800)
347,099
(17,670)
(44,112)
14,405
142,043

392,965

7,884

7,379

81,743
—

(14,567)
(35,995)
13,550
—

44,731

(1,206)

8,585

101,904

—

(61,000)
(33,882)
21,726
—

28,748

3,850

4,735

Cash and cash equivalents at end of year

15,263

7,379

8,585

A T M O S E N E R G Y C O R P O R A T I O N

R e p o r t o f I n d e p e n d e n t A u d i t o r s

T o S h a r e h o l d e r s o f A t m o s E n e r g y C o r p o r a t i o n :

We have audited the consolidated balance sheets of Atmos Energy Corporation at September 30, 2001

and 2000, and the related consolidated statements of income, shareholders’ equity and cash flows for each

of the three years in the period ended September 30, 2001 (not presented separately herein) and in our report

dated November 2, 2001, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying condensed consolidated balance sheets

and statements of income and cash flows are fairly stated in all material respects in relation to the basic

consolidated financial statements from which they have been derived.

Dallas, Texas
November 2, 2001

A T M O S E N E R G Y C O R P O R A T I O N

C o n s o l i d a t e d F i n a n c i a l a n d S t a t i s t i c a l S u m m a r y ( 2 0 0 1 - 1 9 9 7 )

2001

Year ended September 30
1999

2000

1998

1997*

B A L A N C E S H E E T D A T A A T S E P T E M B E R 3 0

( D o l l a r s i n t h o u s a n d s )

Capital expenditures
Net property, plant and equipment
Working capital
Total assets
Shareholders’ equity
Long-term debt, excluding current

maturities

Total capitalization

$ 113,109
1,335,398
(86,778)
2,036,180
583,864

75,557
982,346
(181,890)
1,348,758
392,466

$ 110,353
965,782
(151,622)
1,230,537
377,663

$ 134,989
917,860
(116,679)
1,141,390
371,158

$ 122,312
849,127
(169,518)
1,088,311
327,260

692,399
1,276,263

363,198
755,664

377,483
755,146

398,548
769,706

302,981
630,241

I N C O M E S T A T E M E N T D A T A

( D o l l a r s i n t h o u s a n d s , e x c e p t p e r s h a r e d a t a )

Operating revenues
Gross profit
Net income
Net income per share – diluted

C O M M O N S T O C K D A T A

Shares outstanding (in thousands)

End of year
Weighted average
Cash dividends per share
Shareholders of record
Market price – High
Low
End of year

Book value per share at end of year
Price/Earnings ratio at end of year
Market/Book ratio at end of year
Annualized dividend yield at end of year

$1,442,275
374,720
56,090
1.47

$850,152
325,706
35,918
1.14

$690,196
299,794
17,744
.58

$848,208
331,836
55,265
1.84

$906,835
329,654
23,838
.81

40,792
38,247
$1.16
30,524
$26.25
$19.31
$21.60
$14.31
14.69
1.51

31,952
31,594
$1.14
32,394
$25.00
$14.75
$20.63
$12.28
18.09
1.68

31,248
30,819
$1.10
35,179
$32.69
$23.06
$24.13
$12.09
41.59
2.00

30,398
30,031
$1.06
36,949
$31.06
$24.63
$28.56
$12.21
15.52
2.34

29,642
29,422
$1.01
29,867
$27.88
$22.13
$24.88
$11.04
30.71
2.25

5.4%

5.5%

4.6%

3.7%

4.1%

C U S T O M E R S A N D V O L U M E S ( A s m e t e r e d )

Gas sales volumes (MMcf)
Gas transportation volumes (MMcf)

Total throughput (MMcf)
Meters in service at end of year
Total meters and propane customers
Heating degree days#
Degree days as a percentage of normal
Average gas sales price per Mcf sold
Average purchased gas cost per Mcf sold
Average transportation fee per Mcf

S T A T I S T I C S

Return on average shareholders’ equity
Number of employees
Net plant per meter
Operating, maintenance and administrative

expense per meter

Customers per employee
Times interest earned before

income taxes

156,544
61,230

217,774
1,386,323
1,386,323
2,753

138,199
59,365

197,564
1,096,599
1,096,599
2,096

140,119
55,468

195,587
1,037,995
1,077,534
3,374

159,373
56,224

215,597
1,004,532
1,041,932
3,799

164,208
48,800

213,008
985,448
1,014,545
3,909

107%

82%

85%

95%

98%

$8.93
$6.83
$.47

10.4%

2,361
$963

$130‡
587

2.83

$5.65
$3.79
$.40

$4.53
$2.79
$.42

9.3%

1,885
$896

$135
582

2.28

4.7%

2,062
$930

$146
523

1.56

$4.87
$3.24
$.43

15.8%

2,193
$914

$136
475

3.09

$5.11
$3.51
$.41

7.3%

2,679
$862

$183
379

2.04

* Amounts for years before 1997 have been restated for pooling of interests with United Cities Gas Company in July 1997.
# Heating degree days for 2001 and 2000 are presented excluding service areas with weather-normalized operations. Heating degree days for years prior
to 2000 do not exclude service areas with weather-normalized operations, as that information was not available.
‡ Adjusted for partial-year results of Louisiana Gas Service Company, which was acquired in July 2001.

C o n s o l i d a t e d F i n a n c i a l a n d S t a t i s t i c a l S u m m a r y ( 1 9 9 6 - 1 9 9 1 ) †

A T M O S E N E R G Y C O R P O R A T I O N

1996

1995

1994

1993

1992

1991

Year ended September 30

B A L A N C E S H E E T D A T A A T S E P T E M B E R 3 0

( D o l l a r s i n t h o u s a n d s )

Capital expenditures
Net property, plant and equipment
Working capital
Total assets
Shareholders’ equity
Long-term debt, excluding current

maturities

Total capitalization

$ 117,589
770,211
(102,764)
1,010,610
329,582

$103,904
697,287
(41,980)
900,948
304,349

$ 85,471
638,787
(32,340)
829,385
267,584

$ 74,110
592,887
(31,830)
786,739
251,317

$ 71,056
552,599
(16,398)
723,632
223,984

$ 69,247
522,234
(39,349)
701,185
197,582

276,162
605,744

294,463
598,812

282,647
550,231

257,696
509,013

269,887
493,871

243,891
441,473

I N C O M E S T A T E M E N T D A T A

( D o l l a r s i n t h o u s a n d s , e x c e p t p e r s h a r e d a t a )

Operating revenues
Gross profit
Net income
Net income per share – diluted

$886,691
324,412
41,151
1.42

$749,555
300,158
28,808
1.06

$826,302
297,020
26,772
1.05

$794,893
289,394
29,694
1.21

$708,968
264,098
21,216
.91

$672,265
243,211
17,487
.81

C O M M O N S T O C K D A T A

Shares outstanding (in thousands)

End of year
Weighted average
Cash dividends per share
Shareholders of record
Market price – High
Low
End of year

Book value per share at end of year
Price/Earnings ratio at end of year
Market/Book ratio at end of year
Annualized dividend yield at end of year

29,242
28,994
$.98
36,472
$31.00
$18.00
$23.38
$11.27
16.46
2.07

28,246
27,208
$.96
31,782
$20.63
$15.88
$19.38
$10.77
18.28
1.80

25,911
25,604
$.91
27,005
$21.13
$16.38
$17.75
$10.33
16.90
1.72

25,183
24,535
$.82
24,649
$20.63
$13.50
$20.25
$9.98
16.74
2.03

24,100
23,324
$.79
12,989
$15.25
$12.63
$14.88
$9.29
16.35
1.60

22,277
21,582
$.75
11,064
$14.13
$10.38
$14.00
$8.87
17.28
1.58

4.2%

5.0%

5.1%

4.1%

5.3%

5.4%

C U S T O M E R S A N D V O L U M E S ( A s m e t e r e d )

Gas sales volumes (MMcf)
Gas transportation volumes (MMcf)

S T A T I S T I C S

Return on average shareholders’ equity
Number of employees
Net plant per meter
Operating, maintenance and

administrative expense per meter

Customers per employee
Times interest earned before

income taxes

178,293
44,146

222,439
976,308
1,002,416
4,043

166,656
47,647

214,303
949,213
972,572
3,706

170,691
47,882

218,573
943,728
965,421
3,855

166,065
51,665

217,730
888,315
908,813
4,080

151,316
43,320

194,636
876,142
897,262
3,676

151,060
44,685

195,745
863,089
887,569
3,583

101%

93%

97%

102%

92%

90%

$4.51
$3.15
$.43

13.0%

2,863
$789

$160
350

3.00

$4.07
$2.70
$.42

10.1%

2,944
$735

$163
330

2.44

$4.41
$3.10
$.45

10.3%

3,052
$677

$169
316

2.45

$4.32
$3.04
$.42

12.5%

3,105
$645

$169
293

2.47

$4.20
$2.94
$.50

10.1%

3,102
$611

$163
289

2.07

$4.03
$2.84
$.52

9.4%

3,139
$589

$152
283

1.82

† Share data have been adjusted for a 3-for-2 stock split in May 1994, and amounts have been restated for pooling of interests with Greeley Gas Company
in December 1993.
# Heating degree days for 2001 and 2000 are presented excluding service areas with weather-normalized operations. Heating degree days for years prior
to 2000 do not exclude service areas with weather-normalized operations, as that information was not available.

F o r w a r d - L o o k i n g S t a t e m e n t s

The matters discussed or incorporated by reference in this Summary

Annual Report may contain “forward-looking statements” within

the meaning of Section 27A of the Securities Act of 1933 or Section

21E of the Securities Exchange Act of 1934. All statements other

than statements of historical facts included in this report are

forward-looking statements made in good faith by the Company

and are intended to qualify for the safe harbor from liability

established by the Private Securities Litigation Reform Act of

1995. When used in this report or in any of the Company’s other

documents or oral presentations, the words “anticipate,” “expect,”

“estimate,” “plans,” “believes,” “objective,” “forecast,” “goal” or similar

words are intended to identify forward-looking statements. Such

forward-looking statements are subject to risks and uncertainties

that could cause actual results to differ materially from those

expressed or implied in the statements relating to the Company’s

earnings per share projections, operations, markets, services, rates,

recovery of costs, availability of gas supply and other factors. A

discussion of these risks and uncertainties may be found in the

Company’s Form 10-K for the year ended September 30, 2001.

Although the Company believes these forward-looking statements

to be reasonable, there can be no assurance that they will approxi-

mate actual experience or that the expectations derived from them

will be realized. The Company undertakes no obligation to update

or revise its forward-looking statements, whether as a result of new

information, future events or otherwise.

A t m o s O f f i c e r s

S E N I O R M A N A G E M E N T T E A M

N O N U T I L I T Y B U S I N E S S U N I T S

Robert W. Best

Robert E. Mattingly

Chairman, President and Chief Executive Officer

Vice President, New Business Ventures –

J. Patrick Reddy

Senior Vice President and Chief Financial Officer

Ron W. McDowell

Retail Services

Vice President, New Business Ventures

R. Earl Fischer

Senior Vice President, Utility Operations

J. D. Woodward

Senior Vice President, Nonutility Operations

Louis P. Gregory

Senior Vice President and General Counsel

Wynn D. McGregor

Vice President, Human Resources

U T I L I T Y B U S I N E S S U N I T S

Thomas R. Blose, Jr.

President, United Cities Gas Company

Conrad E. Gruber
President, Atmos Energy Louisiana

Tom S. Hawkins, Jr.

President, Energas Company

John A. Paris

President, Western Kentucky Gas Company

Gary L. Schlessman

President, Greeley Gas Company

S H A R E D S E R V I C E S

Leslie H. Duncan

Vice President and Chief Information Officer

Shirley A. Hines

Corporate Secretary

Lynn L. Hord

Vice President, Investor Relations and

Corporate Communications

Fred E. Meisenheimer

Vice President and Controller

Gordon J. Roy

Vice President, Gas Supply

Laurie M. Sherwood

Vice President, Corporate Development,

and Treasurer

B o a r d o f D i r e c t o r s

T r a v i s W . B a i n I I

P h i l l i p E . N i c h o l

Senior Vice President of Central Division Staff
PaineWebber Incorporated
Dallas, Texas
Board member since 1985
Committees: Nominating (Chairman),
Human Resources, Work Session/Annual Meeting

C a r l S . Q u i n n

General Partner, Quinn Oil Company, Ltd.
East Hampton, New York
Board member since 1994
Committees: Executive, Nominating

C h a r l e s K . V a u g h a n

Formerly Chairman of the Board
Atmos Energy Corporation
Dallas, Texas
Board member since 1983
Committee: Executive (Chairman)

R i c h a r d W a r e I I

President, Amarillo National Bank
Amarillo, Texas
Board member since 1994
Committees: Nominating, Work Session/Annual Meeting

L e e E . S c h l e s s m a n

Honorary Director
President, Dolo Investment Company
Denver, Colorado
Retired from Board in 1998

Chairman, Texas Custom Pools, Inc.
President, Bain Enterprises, Inc.
Plano, Texas
Board member since 1988
Committees: Work Session/Annual Meeting
(Chairman), Audit, Human Resources

R o b e r t W . B e s t

Chairman, President and Chief Executive Officer
Atmos Energy Corporation
Dallas, Texas
Board member since 1997
Committee: Executive

D a n B u s b e e

Attorney
Dallas, Texas
Board member since 1988
Committees: Audit (Chairman), Human Resources

R i c h a r d W . C a r d i n

Consultant, and retired partner
of Arthur Andersen LLP
Nashville, Tennessee
Board member since 1997
Committees: Audit, Nominating

T h o m a s J . G a r l a n d

Chairman of the Tusculum Institute for
Public Leadership and Policy
Greeneville, Tennessee
Board member since 1997
Committees: Human Resources, Work Session/
Annual Meeting

R i c h a r d K . G o r d o n

Vice Chairman, Investment Banking
Merrill Lynch & Company
Houston, Texas
Board member since 2001
Committee: Human Resources

G e n e C . K o o n c e

Formerly Chairman of the Board, President
and Chief Executive Officer
United Cities Gas Company
Nashville, Tennessee
Board member since 1997
Committees: Human Resources (Chairman), Executive,
Work Session/Annual Meeting

D r . T h o m a s C . M e r e d i t h

Chancellor of The University of Alabama System
Tuscaloosa, Alabama
Board member since 1995
Committees: Audit, Nominating

Seated

Lee Schlessman

(Honorary Board Member)

Standing, from left

Carl Quinn,

Thomas Meredith,

Richard Cardin,

Richard Ware,

Robert Best

Seated, from left

Thomas Garland, Dan Busbee

Standing, from left

Gene Koonce, Phillip Nichol,

Richard Gordon, Travis Bain,

Charles Vaughan

Common Stock Listing
New York Stock Exchange. Trading symbol: ATO

Stock Transfer Agent and Registrar
Shareholder inquiries on stock transfers may be
directed to EquiServe Trust Company, N.A., P.O.
Box 43010, Providence, RI 02940-3010. You
may also call the interactive voice response system
24 hours a day at 1-800-543-3038. To speak to
a customer service representative, call between
9 a.m. and 6 p.m. Eastern time, Monday through
Friday. You may also send an e-mail through our
agent’s website at http://www.equiserve.com and
reference Atmos in your e-mail.

Independent Auditors
Ernst & Young LLP
2121 San Jacinto, Suite 1500
Dallas, Texas 75201
(214) 969-8000

Form 10-K
Atmos Energy Corporation’s Annual Report on
Form 10-K is available upon request from Investor
Relations, Atmos Energy Corporation, P.O. Box
650205, Dallas, Texas 75265-0205 or by calling
1-800-38-ATMOS (382-8667) between 7:30 a.m.
and 4:30 p.m. Central time. Atmos’ Form 10-K
may also be viewed on Atmos’ website:
http://www.atmosenergy.com.

Annual Meeting of Shareholders
The 2002 Annual Meeting of Shareholders will
be held at RiverPark Center, 101 Daviess Street,
Owensboro, Kentucky 42303 at 11 a.m. CST on
February 13, 2002.

Direct Stock Purchase Plan
Atmos Energy Corporation has a Direct Stock
Purchase Plan that is available to all investors.

For an initial Investment Form or Enrollment
Authorization Form and a Plan Prospectus, please
call Atmos Shareholder Relations at 1-800-38-
ATMOS (382-8667) between 7:30 a.m. and 4:30
p.m. Central time or EquiServe at 1-800-543-
3038. The Prospectus is also available on the
Internet at http://www.atmosenergy.com. You may
also obtain information by writing to Shareholder
Relations, Atmos Energy Corporation, P.O. Box
650205, Dallas, Texas 75265-0205.

This is not an offer to sell, nor a solicitation to buy,
any securities of Atmos. Shares of Atmos common
stock purchased through the Direct Stock Purchase
Plan will be offered only by Prospectus.

C o r p o r a t e I n f o r m a t i o n

Atmos Information by Telephone
Atmos Energy Corporation shareholder information
is available by phone seven days a week, 24 hours a
day through EquiServe’s interactive voice response
system. To transfer stock, listen to current company
information and access daily stock quotes without
the assistance of a customer service representative,
call 1-800-543-3038 and have your Atmos Energy
shareholder account number and your Social
Security or federal taxpayer ID number.

Atmos on the Internet
Information about Atmos and its business units is
available on the Internet at http://atmosenergy.com.
Atmos’ Web site includes news releases, current
and historical financial reports and other investor
information, management biographies, employment
opportunities and information about Atmos’ opera-
tions and utility service areas. Each Atmos business
unit has its own home page, containing details about
services and products. You can reach the business
units directly at the following Internet addresses:

http://www.atmosenergylouisiana.com

http://www.energas.com

http://www.greeleygas.com

http://www.unitedcitiesgas.com

http://www.westernkentuckygas.com

http://www.woodwardmarketing.com

Atmos Energy Corporation Contacts
Shareholder and Direct Stock Purchase Plan
Information:
1-800-38-ATMOS (382-8667) between 7:30 a.m.
and 4:30 p.m. Central time.

InvestorRelations@atmosenergy.com

Financial Information for Securities Analysts,
Investment Managers and General Information:

Lynn Hord
Vice President, Investor Relations and Corporate

Communications

(972) 855-3729 (office)
(972) 855-3040 (fax)
lynn.hord@atmosenergy.com