Atos Annual Report 2004 | Quarterlytics

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FY2004 Annual Report · Atos

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2004 witnessed the most signiﬁcant
growth in the history of our company.
Yet one thing remains the same.

at the beginning of 2004

1,672,798
45,267
2,905
1,012
49Bcf
5

at the beginning of 2005

3,161,136
80,209
4,208
1,565
84 Bcf
5*

*Byany measure,

it’s been a year of incredible growth. But we believe the most important number,

by far, is the one that did not change — our five core values of customer focus,

employee focus, enterprise thinking, value creation, and honesty and integrity.

In fact, we believe our values made such growth possible. And that’s why,

in this year’s summary annual report, we illustrate how each of these values

shines in our employees and in our way of doing business. Since these core

values are a constant, they help us — even in times of incredible growth and

change — to maintain our focus and stability. After all, a company must fully

understand where it comes from in order to know where it is going.

The acquisition of TXU Gas was measured carefully against each of these
core values. That’s because, while growth is important, it’s counterproductive

if it’s haphazard or unmanaged. In our case, TXU Gas was not only a good ﬁt,

but also an evolution— one that increases our resources and better prepares us

for continued growth and strength.

Atmos Energy embraces growth, knowing that it helps us better serve our

customers and our investors in the coming years. But rest assured , we never

will undertake growth just for the sake of achieving bigger numbers.

2 F I N A N C I A L H I G H L I G H T S

L E T T E R T O S H A R E H O L D E R S 3

Y E A R E N D E D S E P T E M B E R 3 0 (Dollars in thousands, except per share data)

2004

2003

Change

D E A R F E L L O W S H A R E H O L D E R :

natural gas distribution and pipeline operations of TXU

Operating revenues

Gross profit

Utility net income

Natural gas marketing net income (loss)

Other nonutility net income

Total

Total assets

Total capitalization

Net income per share – diluted

Cash dividends per share

Book value per share at end of year

Consolidated utility segment throughput (MMcf)

Consolidated natural gas marketing segment 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)

$ 2,920,037

562,191

$ 2,799,916

534,976

63,096

62,137

16,633

6,498

(970)

10,521

86,227

71,688

$ 2,869,883

$ 1,994,770

1.58

1.22

18.05

246,033

222,572

3,271

$ 2,625,495

$ 1,720,017

1.54

1.20

16.66

247,965

225,961

3,473

96%

101%

1,679,136

1,672,798

9.1%

9.9%

56.7%

27,555

54,416

46.4%

28,510

46,496

4.3%

5.1%

1.5%

1814.7%

-38.2%

20.3%

9.3%

16.0%

2.6%

1.7%

8.3%

-0.8%

-1.5%

-5.8%

-5.0%

0.4%

-8.1%

22.2%

-3.3%

17.0%

Letter to
Shareholders

Operations
Review

Financial
Review

Atmos Energy
Ofﬁcers

Board of
Directors

Corporate
Information

Our 2004 ﬁscal year will stand as one of the biggest years

Gas Company. This acquisition added 1.5 million utility

in Atmos Energy’s history. Not only did we do well

customers in one of the more dynamic American growth

financially, we virtually doubled in size to become the

markets. It also placed us in an excellent position to

largest pure-gas utility in America. However, size is

beneﬁt in the future for the following reasons:

only important if it is accompanied by performance, and

Immediate contribution to 2005 earnings. We expect that

Atmos Energy performed exceptionally well in 2004.

the operations of our new Mid-Tex Division will con-

Consolidated net income rose to $86.2 million, or

tribute from 5 cents to 10 cents to earnings per share in

$1.58 per diluted share, compared with $71.7 million,

2005. We are forecasting our earnings per diluted share

or $1.54 per diluted share, in 2003. Our total return to

in ﬁscal 2005 to be between $1.65 and $1.75.

shareholders was an enviable 10.4 percent, including

Above-average residential and commercial growth. Our

cash dividends of $1.22 paid during fiscal 2004. Return

new division serves rapidly growing communities in

on average shareholders’ equity was 9.1 percent.

the Dallas-Fort Worth Metroplex and northern suburbs

Based on these strong results and our positive

of Austin. The division’s net growth in customers

forecast for 2005, the Board of Directors increased the

is approximately 2 percent a year, almost double our

annual indicated dividend rate by 2 cents to $1.24 per

former growth rate.

share. The increase marked our 17th consecutive annual

Added value from new gas pipeline operations. The

dividend increase. When adjusted for mergers and

intrastate pipeline we acquired as part of the TXU Gas

acquisitions, Atmos Energy has paid higher dividends every

operations runs from one end of Texas to the other.

year since its founding in 1983. Fewer than 2.5 percent

It interconnects at three of the state’s major hubs, or gas

of American corporations can match

our dividend history.

T X U G A S A C Q U I S I T I O N

Our 2004 results were exceeded only

by the leap we made in our regulated

operations. On October 1, 2004, we

completed our acquisition of the

transfer points, with dozens of other

intrastate and interstate gas pipelines.

The 6,162-mile pipeline system delivers

gas to the 550 cities served by the

new division. Owning this asset gives us

expansion opportunities to transport

more natural gas for others besides our

own utility operations.

EARNINGS REVIEW$1.80(cid:13)1.50(cid:13)1.20(cid:13)0.90(cid:13)0.60(cid:13)0.30(cid:13)0.0020002001200220032004Earnings per diluted share4 L E T T E R T O S H A R E H O L D E R S

L E T T E R T O S H A R E H O L D E R S 5

Dedicated and experienced employees. Our new division

S U C C E S S F U L F I N A N C I N G S

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

intense focus on improving efﬁciency and managing costs,

already was a well-run natural gas system. Its 1,344 gas

Atmos Energy paid approximately $1.905 billion in cash

Our nonutility operations achieved impressive results in

mitigating the effects of weather on our utility operations

professionals who transferred to Atmos Energy are work-

for the TXU Gas operations. To finance the acquisition,

fiscal 2004, building on initiatives begun in 2003 to

and fostering productive relationships with the regulators

ing to integrate the operations as soon as possible and

we sold 9.9 million shares of common stock through

reduce the risk from volatile natural gas prices. The con-

in our operating jurisdictions.

are contributing their “knowledge capital” to beneﬁt our

a public offering in July. Because of strong interest, the

tribution to net income from our nonutility operations

We also have been successful because of our focus

entire system.

offering raised approximately $235.7 million in net

in 2004 was 27 percent. We expect these contributions to

on the basics. While many in the industry are claiming

Prompt recovery of new capital investment. Texas law

proceeds, with the purchasers mainly being retail holders.

remain strong during the next ﬁve years.

a return to the basics, we can conﬁdently say we never

permits a utility to make annual adjustments for additions

In October 2004, we made another public offering,

One of the keys to our nonutility growth will

left the basics. We always have been dedicated to natural

to net plant, using its most recent return on investment,

selling 16.1 million common shares to raise approximately

be managing the pipeline and storage assets acquired with

gas distribution as our core business.

depreciation rate and tax rates. The law lets us recover our

$382.5 million in net proceeds before other offering costs.

TXU Gas. Although these assets remain regulated, we

capital invest-

ment in new

pipelines and

other facilities

much faster

without having

to ﬁle a general

Excellence in customer service stands
as a key part of our corporate vision–
we call it our Spirit of Service.SM

The purchasers

were mainly

large institu-

tional holders.

In a separate

offering at the

same time, we

expect to operate them to deliver more volumes to whole-

K E E P I N G R A T E S C U R R E N T

sale customers. We also are working on optimizing our

In 2004, we added $16.2 million in net revenues through

nonutility natural gas marketing and storage operations.

rate increases. During the next ﬁve years, we expect to

During 2004, for example, we made changes in the

receive approximately $15 million to $20 million in average

way we procure the billions of cubic feet of natural gas

annual rate increases. One of our goals is to monitor our

for our utility system to take better advantage of our

rates of return in all jurisdictions to keep our actual

nonutility operations’ expertise.

returns as close as possible to our allowed rates of return.

rate case. As we invest in our expanding Texas markets,

also sold four series of senior unsecured notes to raise net

In states that have warmer winters, we have sought

we will be able to earn a return on our investment faster

proceeds of approximately $1.39 billion.

C O N C E N T R A T I O N O N P E R F O R M A N C E

to adjust our rates using a weather normalization adjust-

than in most of our other jurisdictions.

We are gratified by the success of all three

Our goal has been to provide an attractive rate of return

ment. We now have WNA or higher base rates in our eight

About 90 percent of earnings from regulated operations.

offerings. We believe the prices that investors bid indicate

through both capital appreciation and dividends. We

largest states. Only about 17 percent of our margins

Adding the TXU Gas properties has increased the propor-

the market’s conﬁdence in our ability to integrate and

expect earnings per share to grow between 3 percent and

are exposed to weather in the 2004–2005 heating season.

tion of our assets regulated by state commissions. Many

operate the TXU Gas operations successfully. Within the

6 percent a year and our dividend yield to remain an

We have proposed other rate adjustments to offset

investors see this increase as positive because, although it

next three to ﬁve years, we expect to apply some of the

attractive 4 percent to 5 percent.

the effects of declining natural gas consumption. Nationally,

does not guarantee our profitability, it increases our

additional cash flow from the new operations to return

We expect to provide investors with a total annual

gas consumption has been going down about 2 percent a

opportunity for consistent, long-term earnings growth.

to a 50 percent to 55 percent debt-to-capitalization

return between 8 percent and 11 percent. We have done

year during the past decade. We also have sought to recoup

ratio, as we have done consistently after completing our

this consistently in the past and expect to continue to do

higher collection expenses and to recover bad debt expense

nine previous major acquisitions.

so in the future. We have accomplished this through an

incurred during winter cutoff moratoriums.

6 L E T T E R T O S H A R E H O L D E R S

L E T T E R T O S H A R E H O L D E R S 7

In addition, we have advocated that states adopt a

major acquisitions into our operations, we have found

Industry experts estimate that large

F U T U R E E X P E C T A T I O N S

measure similar to a Texas law that allows for faster

that our values make a tangible difference. Having the

resources of natural gas remain to be

recognition in rates of essential capital investment needed

right corporate culture guides us in dealing appropriately

tapped. However, only when additional

to maintain the system and serve new customers. The

with business issues. Moreover, the right corporate

Gas Reliability Infrastructure Program in Texas reduces

culture emphasizes to our employees the values and

the effects of regulatory lag on cash ﬂow and earnings.

integrity on which we will continue to grow.

C U S T O M E R S E R V I C E E X C E L L E N C E

N E E D F O R A N A T I O N A L E N E R G Y P O L I C Y

supplies come to market will gas com-

modity prices moderate and reduce

the volatility of gas price spikes that are

hurting consumers, businesses and

utilities alike.

As we look to 2005, we are excited about

the tremendous potential that we

foresee. Our acquisition of TXU Gas has

given us greater size and scale. Our

existing utility operations continue to

achieve exceptional results. Our non-

utility operations are positioned to make

Excellence in customer service stands as a key part of our

With the contentious 2004 elections now past, we

complementary contributions in the future.

corporate vision—we call it our Spirit of Service.SM

trust that Congress and the Administration can focus on

B O A R D C H A N G E S

We remain committed to keeping Atmos Energy a

Our reputation in the community is directly influenced

one of the most pressing national issues that received

Two signiﬁcant milestones in our corporate governance

ﬁnancially successful company by showing respect for

by how we perform. During the past two years, we

almost no attention during the campaign—the need for

occurred during 2004. The ﬁrst was the retirement of one

all who deal with us and by expecting the highest ethical

have conducted extensive training efforts and intend to

a comprehensive national energy policy.

of our longtime directors, Carl S. Quinn. Carl’s service

behavior of all who work for us. We anticipate growing

expand the programs further in 2005. We also are

Natural gas prices have continued to rise during

to Atmos Energy was matched only by his legacy in the

earnings at 3 percent to 6 percent a year and continuing

organizing programs to help our employees better under-

the past ﬁve years. In the 2004–2005 heating season,

natural gas industry as one of its leading statesmen.

to pay higher annual dividends. Being ﬁnancially successful

stand the dynamics of our business as it grows.

home heating bills will likely go up from 10 percent

We shall miss his wise counsel, steady direction and

is the best way we can reward our investors, serve our

to 15 percent above bills of last winter. These price

solid integrity.

customers, invest in our employees and contribute to our

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

C O R P O R A T E C U L T U R E

increases are the result of normal market responses.

However, we were pleased in August when we

1,500 communities.

Yet, that response is prompted by our nation’s lack

marked a second milestone, the addition of our ﬁrst

We intend to continue to operate the business

Another intangible, but essential, investment that we are

of a national energy policy.

woman director, Nancy K. Quinn. Ms. Quinn brings a

through a dedication to a strong ﬁnancial foundation,

pursuing is to build a strong corporate

culture. In 2004, we took additional

steps to invest in our employees through

expanded training, improved beneﬁts

programs and increased communications.

Instilling our core values through-

out the organization is essential to

our future success. As we have integrated

We need a policy that permits

additional drilling for natural gas in

the United States and incentives to

build new pipeline capacity, such as

a pipeline to transport abundant

natural gas supplies from the North

Slope of Alaska to the contiguous

48 states.

wealth of experience in investment banking and energy

a disciplined attitude to operations, a successful approach

industry financing. She also is a respected woman entre-

to making and integrating acquisitions, a devotion to

preneur and benefactor of the arts. We feel honored

serve our customers exceptionally well and an adherence

that she agreed to join our board.

to our core values.

Robert W. Best
Chairman, President and Chief Executive Ofﬁcer

November 19, 2004

NET INCOME$90.075.060.045.030.015.00.0020002001200220032004Consolidated net income (in millions)8

Anthony Ponter, Ph.D. University of Louisiana, Lafayette

When you focus on your customers, right away you realize no

two are exactly the same. That’s how we know our job is not

just about supplying energy, it’s about helping our customers

do their jobs better. Natural gas supplied by Atmos Energy is

used by the University of Louisiana, Lafayette, to dehumidify

the air so that Dean Ponter’s engineering students can

conduct more precise science experiments. At Atmos Energy,

our job is not just about getting more customers, it’s about

getting to know our customers’ needs.

Spirit of ServiceSM Training is

designed to help our employees

go beyond simply what our

customers “expect” and focus on

building customer relationships.

Highly interactive and participative,

Spirit of Service Training gives

our employees the approach

they need to effectively address

customer needs.

New payment kiosks allow

customers to pay their bills

24 hours a day, seven days

a week. Our kiosks accept

cash or checks, operate in

both English and Spanish,

and are secure and fast.

VALUE
11

Paid-time-off pools let employees

donate, on a strictly voluntary basis,

unused paid time off to a donation bank

used by other Atmos Energy employees

for personal or family illnesses that

require extended time off work. It’s a

simple way for all of us to help others

in their time of need.

Jack Britton At mos Ene r g y Custome r Se r v ic e Age nt

When Jack Britton was called upon to serve his country in

Iraq, he and his family were facing enough uncertainty. At

Atmos Energy, we felt it was our responsibility not to add to

that. So, even as he joined his engineering battalion in Fallujah,

Jack knew he would have his job and full benefits. In fact,

Jack’s fellow employees took care of the lawn and invited his

wife to company functions. Now safely back in Mississippi,

Jack says, “I was okay. Uncle Sam was going to take care of me.

But Atmos Energy took care of my wife.” It was just our way

of thanking Jack for his teamwork, with a little teamwork of

our own. We’re proud of the many Atmos Energy employees

who’ve served bravely and of all our employees at home who

volunteered to help these soldiers’ families.

Rising Spirit Award. Each year, Atmos

Energy recognizes employees who’ve gone

above and beyond in offering superior

service to our customers. This past May,

13 employees were recognized for their

commitment both to our customers and

to our core values.

VALUE
12

David Anglin Vice President of Operations —Colorado

David Anglin had this crazy idea. Fortunately, David works

for a company that encourages original thinking. He works

for us. In his travels throughout Colorado, David kept seeing

outdated satellite dishes just sitting in people’s yards. David

suggested we offer to remove them and put them to good use

once again as part of the company’s satellite network for

training and employee broadcasts. Turns out, it wasn’t such a

crazy idea after all. It makes us a lot more efﬁcient, saves us

a lot of money and forever made us believe that sometimes the

best ideas are the craziest ideas.

Technology isn’t just a buzz word with us;

it’s something we’re constantly seeking to

improve upon. In addition to the big dishes

David suggested we put to good use, you’ll

also see small domes on our service trucks.

They keep us in contact with cell towers or

satellite dishes when cell coverage is intermit-

tent. This allows us to update service orders

to our trucks en route, saving time and money.

Our Blueprint Program.

A while back, we created a

benchmark for stafﬁng in

our utility divisions.This

helps us keep a handle

on staffing needs without

layoffs or understafﬁng.

Not only is it a job protection

program, it’s an incentive

program to move employees

from overstaffed to under-

staffed locations.

VALUE
15

W
O

Bob Davison Project Manager for New Const ruction

Where some see wide open spaces, others see wide open

opportunities. Bob Davison is one of the latter. As a manager

of new construction in the Dallas-Fort Worth area, Bob

helps guide the growth brought about by our acquisition of

TXU Gas. At Sendera Ranch, a planned development of

more than 20,000 lots, Atmos Energy will supply natural gas

to a booming community. By adding natural gas appliances,

builders increase the value and energy efficiency of their

new homes. Growing by acquisitions is just one of the ways we

assure our shareholders of growth in their investment for

years to come.

C
B
N
C
f
o
y
s
e
t
r
u
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C

Atmos Energy’s

commitment to value

creation has been

recognized all over

the world, such as

when CEO Bob Best

appeared live on

CNBC’s “Squawk Box”

to announce the

acquisition of TXU Gas

on June 17, 2004.

Increasing dividends is one of Atmos Energy’s commitments
to value creation that has yielded tangible and consistent results

over the years. We’re proud to have provided our shareholders

21 consecutive years of annual increases in dividends (adjusted

for mergers and acquisitions).

VALUE$1.24.40.20.60.801.001.20$1.40.0084858687888990919293949596979899000102030405

West Texas Rate Cases. In both

1999 and 2003, Atmos Energy was

able to reach agreements with the

City of Amarillo without litigation

on rate increases. Settling without

hearings saved time and money for

the city and, ultimately, for our

customers and shareholders.

Don Cozart Cit y of Lebanon Gas Manager

Prices fluctuate. Markets constantly change. Your character

shouldn’t. That’s how Don Cozart sees it. And that’s what he

looks for in suppliers and associates. As the gas manager for

the City of Lebanon, Tennessee, Don has been working

with Atmos Energy since 1986. Ask him why, and he’ll tell you

how in 1989, when cold weather in the Gulf froze out

many gas wells, Atmos Energy was there honoring $3 contracts

when prices had jumped to $28 per Mcf. Yes, markets can be

erratic. Which is all the more reason why we refuse to be.

In 2001, Atmos Energy received
the inaugural Greater Dallas
Business Ethics Award for

demonstrating a commitment

to ethical business practices.

Our value system isn’t just a

statement. It’s a way of life.

“Our commitment to ethical behavior
is not driven by the letter of the law
but, more importantly, by the spirit of
the law.” - Bob Best, Chairman, President and CEO

VALUE
18 O P E R A T I O N S R E V I E W

O P E R A T I O N S R E V I E W 19

R E S U L T S O F O P E R A T I O N S

adjustments and the opportunity to deliver more

W E A T H E R A N D T H R O U G H P U T

R A T E A D J U S T M E N T S

Atmos Energy’s consolidated net income for ﬁscal 2004

gas to wholesale customers through one of the largest

Weather during ﬁscal 2004 was 6 percent warmer than in

During 2004, we added $16.2 million in net revenues from

was $86.2 million, or $1.58 per diluted share. That compares

intrastate gas pipeline systems in Texas.

ﬁscal 2003 and 4 percent warmer than normal, as adjusted

rate ﬁlings in Kansas, Texas and Mississippi. We expect

with $71.7 million, or $1.54 per diluted share, in ﬁscal

Because of these factors, we estimate that the

for jurisdictions with weather-normalized operations.

to add $15 million to $20 million a year in average annual

2003. Utility operations contributed 73 percent of earnings,

TXU Gas operations, since renamed our Mid-Tex Division,

Primarily because of lower consumption, our

rate increases over the next five years. To keep our

and nonutility operations provided 27 percent. Return

will contribute from 5 cents to 10 cents to earnings

utility gas throughput in 2004 declined about 1 percent

actual rates of return as close as possible to our allowed

on average shareholders’ equity was 9.1 percent, and total

per diluted share in fiscal 2005. Adding the TXU Gas

from that in 2003 to 246.0 billion cubic feet (Bcf). Of

returns, we are seeking other rate adjustments, as well.

return to our shareholders was 10.4 percent. We paid

operations increased Atmos Energy’s proportion of

this total, utility gas transportation volumes were 72.8

We are proposing weather normalization in juris-

cash dividends in 2004 of $1.22 per share for an annualized

operating income from regulated operations to about

Bcf. In our nonutility segment, natural gas marketing

dictions with warmer weather, shifting more revenue

dividend yield at year-end of 4.8 percent.

90 percent.

T X U G A S A C Q U I S I T I O N

O T H E R A C Q U I S I T I O N S A N D D I V E S T I T U R E S

On June 17, Atmos Energy announced it would acquire

In February, we acquired the natural gas distribution

the natural gas distribution and pipeline operations of

assets of ComFurT Gas, Inc., a privately held gas utility

TXU Gas Company, the largest

gas utility in Texas. After receiving

the required approvals from

three state utility regulatory

commissions, we completed the

transaction on October 1, 2004,

paying an adjusted cash price

of $1.905 billion.

Adding TXU Gas’ 1.5

system in Buena Vista, Colorado.

We paid $1.95 million cash for

a 49-mile distribution system,

serving approximately 1,800

utility customers.

During 2004, we and three

other utility partners completed

the sale of our interests in the

general partnership and limited

sales volumes

declined 1.5

percent from

those in 2003

to 222.6 Bcf.

In states

with warmer

Adding TXU Gas’1.5 million customers
made Atmos Energy the largest natural-
gas-only utility in the United States.

from the gas

commodity

charge to base

rates, improv-

ing our rate

design to miti-

gate the effects

winter weather, we have sought weather-normalization

of declining usage per customer, recovering the gas

adjustments in our rates. Weather normalization protects

cost portion of bad debt expense and working to eliminate

our customers from steep increases in their winter gas

regulatory lag for capital spending on gas utility infra-

bills when the weather turns unusually cold and it protects

structure improvements.

our earnings when the winter is unseasonably warm.

We now have weather normalization or higher base

N A T U R A L G A S P R I C E S

rates in eight of our largest states. About 17 percent of our

Natural gas prices continued to rise during fiscal 2004.

million utility customers made Atmos Energy the largest

partnerships of Heritage Propane Partners, L.P. We

margins are exposed to weather in the 2004–2005 heating

Our utility system’s average cost of gas purchased for

natural-gas-only utility in the United States. The

received cash proceeds of approximately $26.6 million

season, an increase from 10 percent due to the addition

customers was $6.55 per thousand cubic feet (Mcf), an

operations also provide us above-average annual growth

and recorded a $5.9 million pretax book gain, ending

of the Mid-Tex operations.

increase of 13.7 percent over the $5.76 per Mcf we paid

in customer accounts, the ability to earn a return on

our interest in the propane business.

capital investments promptly through automatic rate

in ﬁscal 2003. The increase was largely due to a tightening of

natural gas supply and demand. Although gas resources

CUSTOMER COMPARISONAtmos Energy(cid:13)AGL Resources(cid:13)ONEOK(cid:13)Southwest Gas(cid:13)WGL Holdings(cid:13)(cid:13)3.02.52.01.51.00.50.0Customers (millions)Customers before TXU Gas acquisition (millions)20 O P E R A T I O N S R E V I E W

O P E R A T I O N S R E V I E W 21

remain abundant in North America, gas production has

Hedging is good ﬁnancial management because it

employee, compared to the industry peer group’s average

A major development was the acquisition of

not kept pace with the steady rise in demand.

protects our capital and cash ﬂow. It also cushions the

of 546 customers.

the natural gas pipeline and storage assets of TXU Gas.

During the 2004–2005 heating season, residential

effects of higher gas prices on our customers’ winter bills,

Our control of operating expenses is even more

Although regulated, these assets will be managed

heating bills will likely increase 10 percent to 15 percent

on our receivables and, ultimately, on our collections.

remarkable, considering that we have operated primarily

under our nonutility operations.

above bills of the previous heating season, according to the

Despite rising natural gas prices, we have contin-

in rural and smaller communities across 12 states. The

The 6,162-mile pipeline extends across Texas to

federal Energy Information Administration. Tight sup-

ued to keep our utility bad-debt expense low. Our

structure of our operations has made it more difﬁcult to

transport natural gas to third parties. It has extensive

plies also are causing greater volatility in natural gas prices.

collection efforts, coupled with credit qualiﬁcation before

achieve efﬁciencies, compared with a company serving

connections in nine major gas-producing basins and three

To help protect our customers, we offer budget

reconnecting customers and expanded customer

a large customer base in a metropolitan area or limited

interconnection hubs to other major producing areas

billing plans, assistance for low-income customers and

payment options, helped us maintain our allowance for

geographical area.

and many interstate pipelines. Five underground gas storage

information about lowering energy costs. We also

doubtful accounts in 2004 at just 0.29 percent of

reservoirs contain 39 Bcf of working storage, including

have advocated vigorously for federal energy legislation

residential and commercial revenues, which is consider-

C U S T O M E R S A T I S F A C T I O N

one salt-dome facility with higher delivery capabilities.

to offer incentives for more natural gas production

ably lower than our historical accrual rate.

Customer service excellence is one of our major goals.

We believe this pipeline and storage system is

and for increased energy assistance to aid indigent and

The most recent independent survey of our customers’

well situated to transport larger volumes of natural gas.

low-income customers.

O P E R A T I N G E F F I C I E N C Y

attitudes, conducted in the fall of 2004, found an overall

Its operations create additional gas marketing and

Atmos Energy has earned a reputation for being one of

satisfaction rating among residential and commercial

other opportunities for our nonutility businesses.

C O N T R O L L I N G K E Y E X P E N S E S

the most efﬁcient natural gas utilities in the country.

customers of 94 percent. Compared with other utility

To control our purchased gas costs, we use a combination

We continue to be an industry leader in two key indicators:

service providers, Atmos Energy ranked among the

F I S C A L 2 0 0 5 F O R E C A S T

of gas storage, ﬁxed physical contracts and ﬁxed ﬁnancial

operation and maintenance expense per customer and

industry’s leaders in overall satisfaction.

We anticipate our earnings will increase at 3 percent to

contracts. We have ﬁxed the price for about 50 percent of

customers served per employee.

6 percent a year, on average, during the next ﬁve years. We

our expected 2004–2005 winter gas supply requirements.

We benchmark our performance each year against

N O N U T I L I T Y O P E R A T I O N S

also expect to continue paying higher annual dividends.

Of the total amount hedged, about

45 percent is a combination of our

underground storage assets and con-

tracted pipeline storage; this storage

provides a natural hedge for our gas

supply purchases. The other 55 per-

cent of the quantity hedged is through

ﬁnancial contracts.

our industry peer group. Since 1997,

we have reduced operating costs and

expenses by about $57 per customer,

Our nonutility operations during 2004 achieved major

In fiscal 2005, we expect to earn between $1.65

improvements in margins and in reduced exposure to

and $1.75 per diluted share and to pay an indicated

risks from volatile gas commodity prices. Our natural gas

dividend rate of $1.24 per share. Our capital expenditures

or 31 percent. For ﬁscal 2004, our O&M-

marketing business expanded into the Mobile Bay area

are expected to approximate $340 million to $350

per-customer expense was $126,

compared to our peer group’s average

of $193, which is 53 percent higher

than ours. We served 566 customers per

of Alabama. In Kansas, nonutility gas storage facilities

million, with about 60 percent of that total being spent

were transferred to our Colorado-Kansas Division for

on projects in our new Mid-Tex Division.

utility operations.

O&M EXPENSES$140(cid:13)$130(cid:13)$120(cid:13)$110(cid:13)$100Operation and maintenance(cid:13)expense per customer20002001200220032004
20 O P E R A T I O N S R E V I E W

remain abundant in North America, gas production has

Hedging is good ﬁnancial management because it

not kept pace with the steady rise in demand.

protects our capital and cash ﬂow. It also cushions the

During the 2004–2005 heating season, residential

effects of higher gas prices on our customers’ winter bills,

heating bills will likely increase 10 percent to 15 percent

on our receivables and, ultimately, on our collections.

above bills of the previous heating season, according to the

Despite rising natural gas prices, we have contin-

federal Energy Information Administration. Tight sup-

ued to keep our utility bad-debt expense low. Our

plies also are causing greater volatility in natural gas prices.

collection efforts, coupled with credit qualiﬁcation before

To help protect our customers, we offer budget

reconnecting customers and expanded customer

billing plans, assistance for low-income customers and

payment options, helped us maintain our allowance for

information about lowering energy costs. We also

doubtful accounts in 2004 at just 0.29 percent of

have advocated vigorously for federal energy legislation

residential and commercial revenues, which is consider-

to offer incentives for more natural gas production

ably lower than our historical accrual rate.

and for increased energy assistance to aid indigent and

low-income customers.

O P E R A T I N G E F F I C I E N C Y

Atmos Energy has earned a reputation for being one of

C O N T R O L L I N G K E Y E X P E N S E S

the most efﬁcient natural gas utilities in the country.

To control our purchased gas costs, we use a combination

We continue to be an industry leader in two key indicators:

of gas storage, ﬁxed physical contracts and ﬁxed ﬁnancial

operation and maintenance expense per customer and

contracts. We have ﬁxed the price for about 50 percent of

customers served per employee.

our expected 2004–2005 winter gas supply requirements.

We benchmark our performance each year against

Of the total amount hedged, about

45 percent is a combination of our

underground storage assets and con-

tracted pipeline storage; this storage

provides a natural hedge for our gas

supply purchases. The other 55 per-

cent of the quantity hedged is through

ﬁnancial contracts.

our industry peer group. Since 1997,

we have reduced operating costs and

expenses by about $57 per customer,

or 31 percent. For ﬁscal 2004, our O&M-

per-customer expense was $126,

compared to our peer group’s average

of $193, which is 53 percent higher

than ours. We served 566 customers per

From rural to urban communities, Atmos

Energy spans the largest geographic area of any

natural gas utility in the country. Diversity in

economic conditions, weather patterns, regional

climates and regulatory conditions allows us to

accommodate extremes without signiﬁcant risk.

A T M O S E N E R G Y A C Q U I R E D T E R R I T O R Y

The acquisition of TXU Gas gives Atmos Energy the

opportunity to serve 550 additional communities, including

two within the Top-10 largest gas markets in the U.S. as well

as several others equal to or larger than cities elsewhere

in our territory.The acquisition also

included a 6,162-mile intrastate

pipeline in Texas and hubs with

interstate lines to deliver gas to

cities like Chicago and New York.

Our acquisition of TXU Gas increased

our miles of pipeline by approximately

68 percent. Our Texas intrastate system

allows us to deliver more natural gas

to wholesale customers, thereby bringing

more revenue to our business.

47,616
miles

80,209
miles

Waha HubKaty HubCarthageHubDALLASMid-Tex DivisionWest Texas DivisionIntrastate PipelineCorporate HeadquartersMajor Gas Delivery Hub LongviewBryanWacoRound RockSan AngeloAbileneWichita FallsFort WorthDentonALABAMAARKANSASCOLORADOGEORGIAILLINOISINDIANAIOWAKANSASKENTUCKYLOUISIANAMISSISSIPPIMISSOURIOHIOOKLAHOMATENNESSEETEXASVIRGINIAAtmos Energy HeadquartersStates with Both Utility and Nonutility OperationsStates with Only Nonutility OperationsUtility Service AreasAtmos Energy Utility Division OfficesAtmos Energy Marketing HeadquartersAtmos Energy Marketing Regional OfficesDENVERDALLASLUBBOCKHOUSTONJACKSONBATON ROUGENEW ORLEANSFRANKLINOWENSBOROSOUTHCAROLINAO&M EXPENSES$140(cid:13)$130(cid:13)$120(cid:13)$110(cid:13)$100Operation and maintenance(cid:13)expense per customer20002001200220032004
22

F I N A N C I A L R E V I E W

A T M O S E N E R G Y A T A G L A N C E 23

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 about

Atmos Energy Corporation is condensed. Our complete

ﬁnancial statements, including notes as well as manage-

ment’s discussion and analysis of ﬁnancial condition and

results of operations, are presented in our Annual

Report on Form 10-K. Atmos Energy’s chief executive

ofﬁcer and its chief ﬁnancial ofﬁcer have complied with,

and have executed, all certiﬁcations of these ﬁnancial

statements required under the Sarbanes-Oxley Act of

2002 and all related rules of the Securities and Exchange

Commission with respect to the ﬁnancial statements

contained therein. Investors may request, without charge,

our Annual Report on Form 10-K for the ﬁscal year

ended September 30, 2004, by calling Shareholder Relations

at (972) 855-3729 between 8 a.m. and 5 p.m. Central

time. Our Form 10-K also is available on Atmos Energy’s

Web site at www.atmosenergy.com. Additional investor

information is presented on page 32 of this report.

Atmos Energy
at a Glance

Condensed
Consolidated
Balance Sheets

Condensed
Consolidated
Statements of Income

Condensed
Consolidated
Statementsof Cash Flows

Report of Independent
Registered Public
Accounting Firm

Consolidated Financial
and Statistical
Summary (2000-2004)

Forward-
Looking
Statements

Y E A R E N D E D S E P T E M B E R 3 0

2004

2003

Meters in service
Residential
Commercial
Industrial
Agricultural
Public authority and other

Total meters

Heating degree days

Actual (weighted average)
Percent of normal

Utility sales volumes (MMcf)

Residential
Commercial
Industrial
Agricultural
Public authority and other

Total

Utility transportation volumes (MMcf)

Total utility throughput (MMcf)

Intersegment activity (MMcf)

Consolidated utility throughput (MMcf)

Consolidated natural gas marketing throughput (MMcf)

Operating revenues (000s)

Gas utility sales revenues

Residential
Commercial
Industrial (including agricultural)
Public authority and other

Total gas sales revenues

Transportation revenues
Other gas revenues

Total utility revenues

Natural gas marketing revenues
Other nonutility revenues
Total operating revenues (000s)

Other statistics

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

1,506,777
151,381
2,436
8,397
10,145
1,679,136

1,498,586
151,008
3,799
9,514
9,891
1,672,798

3,271

96%

3,473

101%

92,208
44,226
22,330
4,642
9,813
173,219

87,746

260,965

97,953
45,611
23,738
7,884
9,326
184,512

70,159

254,671

(14,932)

(6,706)

246,033

222,572

247,965

225,961

923,773
400,704
187,187
77,178
1,588,842
30,622
17,172
1,636,636
1,279,424
3,977
$ 2,920,037

$ 2,633,651
$ 1,722,521
47,616
2,864

873,375
367,961
192,676
65,921
1,499,933
29,583
23,341
1,552,857
1,234,447
12,612
$ 2,799,916

$ 2,480,139
$ 1,624,394
45,267
2,905

24 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

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 25

S E P T E M B E R 3 0 (Dollars in thousands, except share data)

2004

2003

S E P T E M B E R 3 0 (Dollars in thousands, except per share data)

2004

2003

2002

Assets

Property, plant and equipment
Construction in progress

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, less allowance for doubtful accounts of $7,214 in 2004

and $13,051 in 2003
Gas stored underground
Other current assets

Total current assets
Goodwill and intangible assets
Deferred charges and other assets

Capitalization and Liabilities

Shareholders’ equity

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

100,000,000 shares authorized, issued and outstanding:
2004 – 62,799,710 shares, 2003 – 51,475,785 shares

Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss

Shareholders’ equity

Long-term debt

Total capitalization

Current liabilities

Accounts payable and accrued liabilities
Other current liabilities
Short-term debt
Current maturities of long-term debt

Total current liabilities

Deferred income taxes
Regulatory cost of removal obligation
Deferred credits and other liabilities

$ 2,595,374
38,277
2,633,651
911,130
1,722,521

201,932
—

211,810
200,134
63,236
677,112
238,272
231,978
$ 2,869,883

314
1,005,644
142,030
(14,529)
1,133,459
861,311
1,994,770

185,295
223,265
—
5,908
414,468
213,930
103,579
143,136
$ 2,869,883

$ 2,463,992
16,147
2,480,139
855,745
1,624,394

15,683
17,903

216,783
168,765
38,863
457,997
273,499
269,605
$ 2,625,495

257
736,180
122,539
(1,459)
857,517
862,500
1,720,017

179,852
133,957
118,595
9,345
441,749
223,350
102,371
138,008
$ 2,625,495

Operating revenues
Utility segment
Natural gas marketing segment
Other nonutility segment
Intersegment eliminations

Purchased gas cost
Utility segment
Natural gas marketing segment
Other nonutility segment
Intersegment eliminations

Gross profit
Operating expenses

Operation and maintenance
Depreciation and amortization
Taxes, other than income

Total operating expenses

Operating income
Miscellaneous income (expense)
Interest charges
Income before income taxes and cumulative effect of accounting change
Income tax expense
Income before cumulative effect of accounting change
Cumulative effect of accounting change, net of income tax benefit

Net income

Per share data

Basic income per share:

Income before cumulative effect of accounting change
Cumulative effect of accounting change, net of income tax benefit
Net income

Diluted income per share:

Income before cumulative effect of accounting change
Cumulative effect of accounting change, net of income tax benefit
Net income

Weighted average shares outstanding:

Basic
Diluted

$ 1,637,728
1,618,602
23,151
(359,444)
2,920,037

1,134,594
1,571,971
9,383
(358,102)
2,357,846
562,191

214,470
96,647
57,379
368,496
193,695
9,507
65,437
137,765
51,538
86,227
—
86,227

1.60
—
1.60

1.58
—
1.58

54,021
54,416

$ 1,554,082
1,668,493
21,630
(444,289)
2,799,916

1,062,679
1,644,328
1,540
(443,607)
2,264,940
534,976

205,090
87,001
55,045
347,136
187,840
2,191
63,660
126,371
46,910
79,461
(7,773)
71,688

1.72
(.17)
1.55

1.71
(.17)
1.54

46,319
46,496

937,526
1,031,874
24,705
(343,141)
1,650,964

559,891
994,318
8,022
(342,407)
1,219,824
431,140

158,119
81,469
36,221
275,809
155,331
(1,321)
59,174
94,836
35,180
59,656
—
59,656

1.45
—
1.45

41,171
41,250

26 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

R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M 27

Y E A R E N D E D S E P T E M B E R 3 0 (Dollars in thousands)

2004

2003

2002

Cash Flows from Operating Activities

Net income
Adjustments to reconcile net income to net cash
provided by operating activities:

Cumulative effect of accounting change,

net of income tax benefit

Gain on sales of assets
Depreciation and amortization:

Charged to depreciation and amortization
Charged to other accounts

Deferred income taxes
Other

Changes in assets and liabilities

Net cash provided by operating activities

Cash Flows Used in Investing Activities

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

Net cash used in investing activities

Cash Flows from Financing Activities
Net decrease in short-term debt
Net proceeds from issuance of long-term debt
Proceeds from bridge loan
Repayment of bridge loan
Repayment of long-term debt
Repayment of Mississippi Valley Gas debt
Cash dividends paid
Issuance of common stock
Net proceeds from equity offering

Net cash provided (used) by financing activities

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

86,227

71,688

59,656

—
(6,700)

96,647
1,465
36,997
(1,772)
57,870
270,734

(190,285)
(1,957)
(570)
—
27,919
(164,893)

(118,595)
5,000
—
—
(9,713)
—
(66,736)
34,715
235,737
80,408
186,249
15,683
201,932

7,773
—

87,001
2,193
53,867
(5,885)
(167,186)
49,451

(159,439)
(74,650)
704
—
—
(233,385)

(27,196)
253,267
147,000
(147,000)
(73,165)
(70,938)
(55,291)
25,720
99,229
151,626
(32,308)
47,991
15,683

—
—

81,469
2,452
14,509
(3,371)
142,680
297,395

(132,252)
(15,747)
(1,725)
(8,511)
—
(158,235)

(55,456)
—
—
—
(20,651)
—
(48,646)
18,321
—
(106,432)
32,728
15,263
47,991

B O A R D O F D I R E C T O R S

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, in accordance with the standards of the

Public Company Accounting Oversight Board (United

States), the consolidated balance sheets of Atmos Energy

Corporation at September 30, 2004 and 2003, and the

related consolidated statements of income, shareholders’

equity and cash ﬂows for each of the three years in the

period ended September 30, 2004 (not presented herein)

and in our report dated November 9, 2004, 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 9, 2004

28 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 0 - 2 0 0 4 )

F O R W A R D - L O O K I N G S T A T E M E N T S 29

Y E A R E N D E D S E P T E M B E R 3 0

2004

2003

2002

2001

2000

Balance Sheet Data at September 30 (000s)
Capital expenditures
Net property, plant and equipment
Working capital
Total assets
Shareholders’ equity
Long-term debt, excluding current maturities
Total capitalization

Income Statement Data
Operating revenues* (000s)
Gross profit* (000s)
Net income (000s)
Net income per diluted share

Common Stock Data
Shares outstanding (000s)

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

Customers and Volumes (As metered)
Consolidated utility gas sales volumes (MMcf)
Consolidated utility gas transportation

volumes (MMcf)
Consolidated utility throughput (MMcf)

Consolidated natural gas marketing

throughput (MMcf)

Meters in service at end of year
Heating degree days#
Degree days as a percentage of normal
Utility average cost of gas per Mcf sold
Utility average transportation fee per Mcf

Statistics
Return on average shareholders’ equity
Number of employees
Net utility plant per meter
Utility operation, maintenance and
administrative expense per meter

Meters per employee – utility
Times interest earned before income taxes

190,285
1,722,521
262,644
2,869,883
1,133,459
861,311
1,994,770

$ 2,920,037
562,191
86,227
1.58

$
$
$
$

$
$

62,800
54,416
1.22
27,555
26.86
23.68
25.19
18.05
15.94
1.40
4.8%

173,219

72,814
246,033

222,572
1,679,136
3,271

96%

6.55
.36

9.1%

2,864
994

116
612
3.05

159,439
1,624,394
16,248
2,625,495
857,517
862,500
1,720,017

$ 2,799,916
534,976
71,688
1.54

$
$
$
$

$
$

51,476
46,496
1.20
28,510
25.45
20.70
23.94
16.66
15.55
1.44
5.0%

184,512

63,453
247,965

225,961
1,672,798
3,473

101%
5.76
.43

9.9%

2,905
930

115
594
2.75

132,252
1,380,070
(139,150)
2,059,631
573,235
668,959
1,242,194

$ 1,650,964
431,140
59,656
1.45

$
$
$
$

$
$

41,676
41,250
1.18
28,829
24.46
18.37
21.50
13.75
14.83
1.56
5.5%

145,488

63,053
208,541

204,027
1,389,341
3,368

94%

3.87
.41

9.9%

2,338
939

101
616
2.55

113,109
1,409,432
(90,968)
2,108,841
583,864
691,026
1,274,890

$ 1,725,481
375,208
56,090
1.47

$
$
$
$

$
$

40,792
38,247
1.16
30,524
26.25
19.31
21.60
14.31
14.69
1.51
5.4%

156,544

61,230
217,774

55,469
1,386,323
4,124

115%
6.82
.41

10.4%
2,361
977

130+
603
2.83

$
$
$
$

$
$

75,557
1,045,484
(185,267)
1,410,668
392,466
361,970
754,436

850,152
325,706
35,918
1.14

31,952
31,594
1.14
32,394
25.00
14.75
20.63
12.28
18.09
1.68
5.5%

119,470

59,365
178,835

—
1,096,599
2,096

82%

3.67
.37

9.3%

1,885
931

135
591
2.28

* In conjunction with the adoption of EITF 02-03 in fiscal 2003, energy trading contracts resulting in delivery of a commodity where we are the principal in the transaction are included as operating

revenues or purchased gas cost. Fiscal years 2000-2002 have been reclassified to conform with this new presentation.

# Heating degree days for ﬁscal years 2001-2004 are adjusted for service areas with weather-normalized operations. Heating degree days for 2000 are not adjusted for 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.

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 fact 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,”“believes,”“estimate,”

“expect,” “forecast,” “goal,” “intends,” “objective,”

“plans,”“projection,”“seek,”“strategy” 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 discussed in this report, including

the successful integration of the Company’s acquisition

of the operations of TXU Gas, the Company’s ability to

continue to access the capital markets and other

factors discussed in the Company’s SEC ﬁlings. These

factors include the risks and uncertainties discussed

in the Company’s Form 10-K for the fiscal year ended

September 30, 2004. Although the Company believes

these forward-looking statements to be reasonable, there

can be no assurance that they will approximate actual

experience or that the expectations derived from them

will be realized. Further, the Company undertakes no

obligation to update or revise its forward-looking statements,

whether as a result of new information, future events

or otherwise.

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

B O A R D O F D I R E C T O R S 31

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

Robert W. Best

Richard A. Erskine

Chairman, President and Chief Executive Ofﬁcer

President, Atmos Pipeline and Storage, LLC

J. Patrick Reddy

Ron W. McDowell

Senior Vice President and Chief Financial Ofﬁcer

Vice President, New Business Ventures

R. Earl Fischer

Senior Vice President, Utility Operations, and
President, Mid-Tex Division

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

Verlon R. Aston, Jr.

Vice President, Governmental Affairs

JD Woodward

Senior Vice President, Nonutility Operations

Leslie H. Duncan

Louis P. Gregory

Senior Vice President and General Counsel

Conrad E. Gruber

Vice President and Chief Information Ofﬁcer

Wynn D. McGregor

Vice President, Human Resources

U T I L I T Y D I V I S I O N S

J. Kevin Akers

President, Mississippi Valley Gas Division

Thomas R. Blose, Jr.

President, Mid-States Division

Gary W. Gregory

President, West Texas Division

Tom S. Hawkins, Jr.

President, Louisiana Division

John A. Paris

President, Kentucky Division

Gary L. Schlessman

President, Colorado-Kansas Division

Vice President, Strategic Planning

Susan C. Kappes

Vice President, Investor Relations and Corporate Communications

Dwala J. Kuhn

Corporate Secretary

Robert E. Mattingly

Vice President, Gas Supply

Fred E. Meisenheimer

Vice President and Controller

Gordon J. Roy

Vice President, Security and Compliance

Laurie M. Sherwood

Vice President, Corporate Development, and Treasurer

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

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

Dan Busbee
Adjunct Professor, Dedman School of Law, Southern
Methodist University; Senior Visiting Fellow, Centre for
Commercial Law Studies, University of London
Dallas, Texas
Board member since 1988
Committees: Audit (Chairman), Human Resources

Richard W. Cardin
Retired partner of Arthur Andersen LLP
Nashville, Tennessee
Board member since 1997
Committees: Audit, Nominating and
Corporate Governance

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

Richard K. Gordon
General Partner
Juniper Capital LP and Juniper Advisory LP
Houston, Texas
Board member since 2001
Committees: Human Resources, Nominating and
Corporate Governance

Gene C. Koonce
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

Dr. Thomas C. Meredith
Chancellor of the University System of Georgia
Atlanta, Georgia
Board member since 1995
Committees: Audit, Nominating and
Corporate Governance

Phillip E. Nichol
Formerly Senior Vice President of Central Division Staff
UBS PaineWebber Incorporated
Dallas, Texas
Board member since 1985
Committees: Nominating and Corporate Governance
(Chairman), Human Resources, Work Session/Annual Meeting

Nancy K. Quinn
Principal, Hanover Capital, LLC
East Hampton, New York
Board member since 2004
Committees: Audit, Nominating and Corporate Governance

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

Richard Ware II
President, Amarillo National Bank
Amarillo, Texas
Board member since 1994
Committees: Nominating and Corporate
Governance, Work Session/Annual Meeting

Lee E. Schlessman
Honorary Director
President, Dolo Investment Company
Denver, Colorado
Retired from Board in 1998

32 C O R P O R A T E I N F O R M A T I O N

C O M M O N S T O C K L I S T I N G

A N N U A L M E E T I N G O F S H A R E H O L D E R S

New York Stock Exchange. Trading symbol: ATO

S T O C K T R A N S F E R A G E N T A N D R E G I S T R A R

American Stock Transfer and Trust Company
59 Maiden Lane
Plaza Level
New York, New York 10038
(800) 543-3038

To inquire about your Atmos Energy stock, please call AST at the
telephone number above. You may use the agent’s interactive voice
response system 24 hours a day to learn about transferring stock
or to check your recent account activity—all without the assistance
of a customer service representative. Please have available
your Atmos Energy shareholder account number and your
Social Security or federal taxpayer ID number.

To speak to an AST customer service representative, please call
the same number between 8 a.m. and 7 p.m. Eastern time, Monday
through Thursday, and 8 a.m. to 5 p.m. Eastern time on Friday.

You also may send an e-mail message on our agent’s Web site at
http://www.amstock.com. Please refer to Atmos Energy in your
e-mail and include your Atmos Energy shareholder account
number and your Social Security or federal taxpayer ID number.

The Annual Meeting of Shareholders will be held in the Lincoln
West Ballroom at the Hilton Hotel Lincoln Centre, 5410 Lyndon B.
Johnson Freeway, Dallas, Texas 75240 on Wednesday, February 9,
2005, at 11 a.m. Central time.

D I R E C T S T O C K P U R C H A S E P L A N

Atmos Energy Corporation has a Direct Stock Purchase Plan
that is available to all investors. For an Enrollment
Application Form and a Plan Prospectus, please call AST at
(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, or a solicitation to buy, any securities
of Atmos Energy Corporation. Shares of Atmos Energy common
stock purchased through the Direct Stock Purchase Plan will be
offered only by Prospectus.

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

Information about Atmos Energy is available on the Internet
at http://www.atmosenergy.com. Our Web site includes news
releases, current and historical ﬁnancial reports, other investor data,
corporate governance documents, management biographies,
customer information and facts about Atmos Energy’s operations.

I N D E P E N D E N T R E G I S T E R E D P U B L I C

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 T A C T S

A C C O U N T I N G F I R M

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

F O R M 1 0 - K

Atmos Energy Corporation’s Annual Report on Form 10-K is
available upon request from Shareholder Relations, Atmos Energy
Corporation, P.O. Box 650205, Dallas, Texas 75265-0205 or by
calling (972) 855-3729 between 8 a.m. and 5 p.m. Central time.
Atmos Energy’s Form 10-K may also be viewed on Atmos Energy’s
Web site at http://www.atmosenergy.com.

To contact Atmos Energy’s Shareholder Relations, call
(972) 855-3729 between 8 a.m. and 5 p.m. Central time or send
an e-mail message to InvestorRelations@atmosenergy.com.

For ﬁnancial information for securities analysts and investment
managers, contact:
Susan C. Kappes
Vice President, Investor Relations and Corporate Communications
(972) 855-3729 (972) 855-3040 (fax)
InvestorRelations@atmosenergy.com

registered trademark and Spirit of ServiceSM is a service mark of Atmos Energy Corporation.

Atmos Energy Corporation P.O. Box 650205 Dallas, Texas 75265-0205 atmosenergy.com