Atos
Annual Report 2008

Plain-text annual report

0091_ARcvrR1:Layout 1 12/13/08 10:25 PM Page 1 N O I T A R O P R O C Y G R E N E S O M T A T R O P E R L A U N N A Y R A M M U S 8 0 0 2 Blue skies, clear skies: 4 reasons to be optimistic 0091_ARcvrR1:Layout 1 12/13/08 10:25 PM Page 2 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 1 A Future as L i m i t l e s s a s t h e S k y NAT U R A L G A S I S O U R F U T U R E . Not just for our company and our customers, but for the future of our country. As our nation’s policymakers seek new energy possibilities, natural gas—with its reliable delivery infrastructure and clean-burning efficiency—offers the country a bridge to the future. At Atmos Energy, our brand reflects this optimistic outlook—a tomorrow without limits. As the largest all-natural-gas provider in the United States, our brand stands for four essential values: SAFE AND 1 RELIABLE SERVICE AS OUR TOP PRIORITY. 2 THE COMFORT, CONVENIENCE, EFFICIENCY AND ENVIRONMENTAL BENEFITS OF NATURAL GAS. 3 EXCEL- LENCE IN SERVING OUR CUSTOMERS AND LO OKING FOR WAYS TO IMPROVE. 4 TRUST BET WEEN OUR COMPANY AND THE COMMUNITIES WE SERVE. For our company and our country, 2008 was a pivotal year. Energy was front and center. From global warming to the price at the pump, from the national elections to the world economy, energy was in the news. As we have for more than 100 years, Atmos Energy continued to meet our customers’ energy demands, improve our service promise, uphold our high standards for safety and reliability, enhance our communities by taking care of our customers and, all the while, keep our focus on financial performance with a keen eye toward tomorrow. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 1 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 2 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 3 FINANCIAL HIGHLIGHTS Year Ended September 30 Dollars in thousands, except per share data 2008 2007 Change Operating revenues Gross profit Natural gas distribution net income Regulated transmission and storage net income Natural gas marketing net income Pipeline, storage and other 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 natural gas distribution throughput (MMcf) Consolidated regulated transmission and storage transportation volumes (MMcf) Consolidated natural gas marketing 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 $ 7,221,305 $ 1,321,326 $ 5,898,431 $ 1,250,082 $ $ 92,648 41,425 29,989 16,269 180,331 $ 6,386,699 $ 4,172,284 2.00 $ 1.30 $ 22.60 $ 429,354 595,542 389,392 2,820 $ 73,283 34,590 45,769 14,850 $ 168,492 $ 5,895,197 $ 4,092,069 1.92 $ 1.28 $ 22.01 $ 427,869 505,493 370,668 2,879 100% 100% 3,191,779 3,187,127 8.8% 8.8% (including short-term debt) at end of year 45.4% 46.3% Shareholders of record Weighted average shares outstanding – diluted (000s) 21,756 90,272 22,829 87,745 * Total capitalization represents the sum of shareholders’ equity and long-term debt, excluding current maturities. 22.4% 5.7% 26.4 % 19.8% (34.5)% 9.6% 7.0% 8.3% 2.0% 4.2% 1.6% 2.7% 0.3% 17.8% 5.1% (2.0)% — 0.1% — (1.9)% (4.7)% 2.9% Summary Annual Report 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 executed all certifications with respect to the fi- nancial statements contained therein and have completed management’s report on internal control over financial reporting, which are required under the Sarbanes- Oxley Act of 2002 and all related rules and regulations of the Securities and Ex- change Commission. Investors may request, without charge, our Annual Report on Form 10-K for the fiscal year ended September 30, 2008, by calling Investor Relations at 972-855-3729 between 8 a.m. and 5 p.m. Central time. Our Annual Report on Form 10-K also is available on Atmos Energy’s Web site at www.atmosenergy.com. Additional investor information is presented on pages 33 and 34 of this report. Opposite: Atmos Energy construction and maintenance technicians inspect new plastic piping destined for installation to help ensure the integrity of our pipelines. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 3 AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 2 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 4 Dear Fellow S h a r e h o l d e r OU R 2 0 0 8 F I S C A L Y E A R , E N D E D S E P T E M B E R 3 0 , WA S H I G H LY SU C C E S SF U L . Yet, at year-end, the economy was overshadowed by the world’s worst financial and credit crisis since the Great Depression— causing growing uncertainties for both our customers and investors. Such a sobering situation makes our latest record earnings all the more valuable while it emphasizes the importance of prudent strategies to achieve continued performance. Fiscal 2008 consolidated net income increased 7 percent, year over year, to $180.3 million, and earnings per diluted share went up 4.2 percent from $1.92 in fiscal 2007 to $2.00 in fiscal Rate strategy aids regulated operations 2008. Looking at the longer trend, Atmos Energy’s compound Net income from regulated operations in 2008 contributed average growth rate for diluted earnings per share over the almost three-fourths of net income, or $1.49 per diluted past five years was 5.4 percent—furthering our stated goal share. Combined earnings from our natural gas distribution of increasing earnings, on average, between 4 percent and 6 segment and from our regulated transmission and storage percent a year. $1.82 $1.92 $2.00 $1.72 $1.58 04 05 06 07 08 Net Income per Diluted Share segment increased 24 percent to $134.1 million. During the fiscal year, we resolved 12 rate cases and other regulatory proceedings, which contributed $34.5 million of incremental revenues. In the largest of these cases, we negoti- ated a three-year settlement with 438 of the 439 Texas cities served by our Mid-Tex Division. We obtained desired outcomes in other cases that were concluded in Georgia, Louisiana, Kansas, Tennessee, Virginia and West Texas. These rate-case results support our goal of stabilizing our regulated earnings by decoupling our distribution revenues from our customers’ gas consumption. Today about 97 percent of our distribution margins are unaffected by changes in weather due to weather normalization and similar rate-design mechanisms. We are continuing to seek In fiscal 2008, we paid dividends totaling $1.30 per share, additional improvements in our rate design to eliminate or with a dividend payout ratio of 65 percent. In November 2008, reduce price volatility and provide more predictable and the board of directors again raised the annual dividend by stable utility bills for our customers. 2 cents a share to an indicated rate of $1.32. This increase, Traditional rate structures have discouraged utilities taking into account all mergers and acquisitions, marked the from offering energy-saving products and services by tying company’s 25th consecutive annual dividend increase. the recovery of their allowed rate of return to the amount of 4 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 5 BL UE SKIES , C LEAR SKIES To ensure continued reliability for serving our regulated distribution customers in Texas as well as to com- pete for new transportation business, Atmos Pipeline–Texas is expanding its system to serve the growing area north of Austin. When completed in our fiscal 2009 third quarter, this new loop will add sufficient transmission capacity along the I-35 corridor in the southern part of our system to serve new customer growth for many years in the future. Nonregulated operations contribute 26% of net income Net income for nonregulated opera- Robert W. Best, chairman and chief executive officer, (left) and Kim R. Cocklin, president and chief operating officer natural gas delivered to customers. In return for more rate tions in 2008 declined 24 percent, year over year, to $46.2 stabilization, we are launching energy efficiency and conser- million, or 51 cents per diluted share. vation programs in Texas and are enhancing our existing Lower volatility in natural gas prices reduced the oppor- Missouri program. In Colorado, we also are developing a tunities for Atmos Energy Marketing to take advantage of demand-side management program to meet new state seasonal and basis pricing spreads. Although our sales regulations. These programs typically involve weatherizing volumes to large industrial customers and municipal gas homes for low-income customers and promoting utilities increased 5 percent over 2007 volumes, delivered gas energy conservation. Texas intrastate pipeline benefits from Barnett Shale unit margins remained flat compared to those in 2007. Atmos Pipeline and Storage added incremental earnings when it completed its Park City Gathering System in Edmonson County, Kentucky, in May 2008. It also closed on October 1, 2008, its purchase of the Shrewsbury Gathering Our Texas intrastate pipeline turned in an exceptional System. This smaller nearby system has the potential to performance in 2008. The drilling boom in the Barnett Shale double the number of gas wells now connected to the gathering natural gas field near Fort Worth increased the total system and to interconnect with the Park City system and throughput of Atmos Pipeline–Texas by 18 percent over its our other pipeline and storage assets in western Kentucky. 2007 delivered volumes and enhanced our ability to provide Assessment work proceeded in northeast Louisiana on reliable service to our customers. our Fort Necessity Storage Project. In July, we completed a In July, wellhead prices for natural gas began to decline, successful nonbinding “open season,” which identified and many producers in Texas began cutting back on drilling many parties interested in contracting for service from the new wells. Even so, the state’s natural gas production remains proposed facility. We also engaged a financial adviser to seek high, and much of that gas flows to market through our potential project partners to mitigate the market risk and pipeline system. to assure access to development capital. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 5 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 6 BL UE SKIES , C LEAR SKIES Fiscal 2009 outlook remains positive We believe that both the company and its business will remain healthy and that we will be able to achieve our financial targets for fiscal 2009. We forecast that earnings per diluted share will range from $2.05 to $2.15. Because of the uncertain economy, we have taken steps to preserve our credit and control discretionary costs. We are pursuing a prudent approach toward new construction and the borrowings needed for expansion. We forecast that fiscal 2009 capital expenditures will be approximately $510 million to $525 million, compared to $472.3 million in fiscal 2008. We have existing credit facilities in place to guarantee sufficient liquidity for all of our operations. Our cash flow Atmos Energy Corporation celebrated 20 years of trading on the New York Stock Exchange on October 1, 2008, as Charles K. Vaughan, retired company chairman and CEO, rang the NYSE closing bell. He was accompanied by the company’s Management Committee and guests. remains solid, and our collections are among the best in the global climate change will likely encourage a greater use of industry, as evidenced by the fact that our uncollectibles natural gas for reducing the greenhouse gas emissions that constitute less than 0.5 percent of total revenues. contribute to climate change. Natural gas offers the United We have assured our employees and the state agencies States a bridge to the future, leading to cleaner, renewable that regulate our operations that we will preserve all essential energy while providing the most versatile fuel available for functions to serve our customers. We will not make any many needs. cutbacks that might undermine the reliability and safety of In fact, a 2008 study by the American Gas Foundation our service. We also will continue to assist our customers found that the increased direct use of natural gas in residential who are having difficulty paying their monthly gas bills during and commercial applications can increase the productivity these trying economic times. Natural gas serves the nation of our country’s existing energy supplies, reduce our overall energy costs and cut carbon-related emissions. Natural gas is an all-American resource, with 97 percent of our supply coming from North America. The Potential Gas Committee estimates the U.S. has at least an 82-year supply, We expect the Obama administration and Congress will and that estimate likely will go up significantly when updated enact new policies to promote energy efficiency and in 2009. New exploration technologies are unlocking natural environmental improvements. Natural gas already is an gas reserves once thought impossible to recover from shale anchor in the new administration’s energy proposals, and and other difficult-to-produce formations. As a result, we will the president-elect has called for producing more gas on the continue to work with all appropriate regulatory bodies to Outer Continental Shelf and building an Alaskan pipeline advocate the development and use of this critical resource. to tap shut-in North Slope gas reserves. A public policy measure that’s very important to our Global climate change now occupies a place of unprece- shareholders is preserving the current limitation on capital dented importance in American politics. The concerns about gains taxes, especially for capital-intensive businesses like 6 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 7 BL UE SKIES , C LEAR SKIES 9% 17% 23% 51% Natural Gas Distribution Regulated Transmission and Storage Natural Gas Marketing Pipeline, Storage and Other Net Income by Segment We appreciate his long and distinguished service. We also announced on December 2, 2008, that J. Patrick Reddy resigned as senior vice president and chief financial officer, effective December 31. Pat joined the company in 1998 and served as vice president, corporate development, and as treasurer before being promoted to his current position in 2000. During his tenure, Atmos Energy made five significant acquisitions to more than triple in size. On behalf of the board of directors, I thank him for his many contributions and wish him the best. In the interim, Fred E. Meisenheimer, vice president and controller, has been appointed by the board of directors to also serve as chief financial officer. On September 1, we welcomed Ruben E. Esquivel to the natural gas distribution companies. Extending this limit on board of directors. Mr. Esquivel is vice president for the capital gains tax could help raise new funding and main- community and corporate relations at The University of tain investors’ confidence. We encourage you to ask your Texas Southwestern Medical Center at Dallas. Previously, he members of Congress to vote to preserve the full value of your served for more than a decade as president and CEO and dividends by making the capital gains cap permanent. as vice chairman of a manufacturer of test and measurement Leadership changes announced equipment for electrical power applications. He has been extremely active in Dallas civic affairs and has been honored repeatedly for his tireless commitment to the community. One of the most important duties of senior management is to prepare for the continued successful leadership of the business. As part of our succession planning, we made two Our brand represents strength high-level management changes. Twenty years ago, the board of directors chose the name Kim R. Cocklin, who had served as senior vice president, Atmos Energy not only to differentiate a developing enter- regulated operations, since June 2006, was promoted to the prise, but also to distinguish its way of doing business. As newly created position of president and chief operating officer, Atmos Energy has grown because of the board’s clear vision, effective October 1, 2008. Kim has had extensive experience it has become a major American company, and our brand has in all segments of the natural gas industry and has proved come to reflect a set of consistent characteristics. In these himself to be an excellent leader. In his current role, he oversees unsettled times, our employees demonstrate these qualities all regulated and nonregulated operations of the company. everyday in all they do, and I thank them for their loyal Michael E. Haefner was named senior vice president, and dedicated service. human resources, to succeed Wynn D. McGregor, who Our annual report presents the four characteristics of our retired October 1, 2008. Mike had been president of his own brand and what the enterprise stands for today. More than consulting firm and had worked for 10 years as senior vice a trademark, our brand represents the strength of our president of human resources for Sabre Holdings Corpora- reputation. It is one of our most valuable assets—if not the tion. He also had held leadership positions within Sabre while most valuable one of all. it was part of AMR Corporation and at Xerox Corporation and Eastman Kodak Company. Wynn McGregor, who joined Atmos Energy in 1987, had served as senior vice president, human resources, since Robert W. Best October 2005. Previously, he had been vice president, human Chairman and Chief Executive Officer resources, for 11 years and had held other human-resources management positions at Atmos Energy and other companies. December 5, 2008 AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 7 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 8 A Natural Gas F u t u r e Natural gas has long been the bedrock of affordable energy for homes and businesses in this country. While the energy focus of the last century was on domestic and foreign oil, the 21st century holds the possibilities of new energy sources—and the possibility of our country making the leap from petroleum and coal to cleaner sources. As entrepreneurs and governments alike focus on wind, hydro, solar and even nuclear energy to power our future, natural gas offers us an energy platform we can depend on today and tomorrow. Energy That’s Responsible Natural gas is not only available; it’s clean, efficient, safe and reliable. A clean-burning fuel, natural gas is easy to use and easy on the environment. An efficient fuel, natural gas can be transported thousands of miles without losing its energy the way electricity does. Because it moves through extensive pipeline networks that span the country, natural gas has transmission costs and carbon emissions that are minimal compared to the rail and truck transportation requirements for coal. A safe and reliable fuel, natural gas has a proven history of serving America. More than 68 million U.S. homes and businesses enjoy its benefits. TOTAL EMISSIONS (Pounds per Billion Btu of Energy Input) POLLUTANT NATURAL GAS OIL COAL Carbon Dioxide 117,000 164,000 208,000 Carbon Monoxide Nitrogen Oxides Sulfur Dioxide Particulates Mercur y 40 92 1 7 33 448 208 457 1,122 2,591 84 2,744 0.000 0.007 0.016 SOURCE: ENERGY INFORMATION ADMINISTRATION OF THE U.S. DEPARTMENT OF ENERGY 8 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT Homes using natural gas appliances produce up to 50% LESS carbon dioxide. 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 9 Under the ground, safe and out of sight, Atmos Energy operates approximately 83,500 miles of underground pipelines to deliver more than 1 billion cubic feet of natural gas annually while protecting communities, farms and ranches, livestock and wildlife, and the environment. 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 10 > We have at least 100 years of natural gas resources right here in America. Natural gas distribution areas From our founding in Amarillo, Texas, 102 years ago, we have grown to be the country’s largest all-natural-gas distribution company with operations primarily in the Southeastern and Midwestern states. U . S . E N E R G Y C O N S U M P T I O N Natural Gas 23% Coal 22% Oil 40% Nuclear 8% Biomass, Solar, Wind 4% Hydroelectric 3% Highly Efficient As American as Natural Gas Natural gas is a terrific value. Unlike coal, oil or electricity, Right now, right here in America, we have supplies natural gas comes out of the ground clean and ready to use. of natural gas that experts say should last the rest of this Virtually no refining, converting or energy-depleting century. Our country owns a ready-to-use energy and costly processes are required to provide natural gas source. And, new technologies are opening up geologic to consumers. frontiers, like natural gas shale and deep offshore With 2.3 million miles of natural gas pipelines running deposits, which were once thought impossible to tap. As underground, our country has a solid infrastructure that a result, our country’s natural gas resources could carry delivers nearly 97 percent of the original energy potential of us at current demand far into the 22nd century. each unit of natural gas. Electricity, on the other hand, can Availability and environmental purity make natural lose up to two-thirds of its original energy potential from fuel gas the primary choice to reduce our dependence on conversion at generating plants and losses in power lines. foreign oil. The abundance of natural gas in the United That just doesn’t happen with natural gas. States makes it a reliable energy platform on which we can add other clean and renewable forms of energy, such as wind, solar and biofuels. 10 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 11 Restaurant cuisine simply isn’t done without natural gas cooktops. Dallas Culinary Institute chef and instructor Brendan Mesch demonstrates the responsiveness and elegance of a commercial- quality gas range. 3.2million T O MERS IN THE U N A TUR CUS S . GA AL S . Clean and Pristine Warm and Comforting Natural gas produces significantly fewer harmful emissions and greenhouse gases on its way to our homes and businesses. But that’s just part of the story. Homes with natural gas appliances Homes with natural gas are just more comfortable. Natural gas heating is more even, and the warmth is more consistent than it is with electric heating. The heat from a natural gas furnace enters a room at a higher temperature, helping to produce up to 50 percent less carbon dioxide than homes with eliminate drafts and cool spots. all-electric appliances. Natural gas helps us preserve our dwindling unspoiled countryside. It doesn’t require the acquisition and transporta- tion processes, such as surface mining and 100-car unit trains, needed to deliver coal for power plants. It doesn’t require fleets of ocean tankers that spill millions of barrels of oil on coastal beaches. And, it doesn’t require intrusive high-voltage transmission lines running across the country and through neighborhoods. Homes served with natural gas are more attractive to prospective buyers and have better resale value. Newer amenities, such as outdoor kitchens, gas fireplaces and on- demand water heaters, rely on the immediacy of the natural gas flame. That’s also why professional chefs and home gourmets alike appreciate gas ranges and cooktops. They offer simmer-to-sizzle responsiveness. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 1 1 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 12 Safe, R eliable and A v a i l a b l e Delivering natural gas to customers safely and reliably is what we do. Our company works together with federal, state and local officials and public safety agencies to make natural gas pipelines the safest and most dependable energy delivery system in the country. Our natural gas pipelines and storage facilities are inherently safer than other transportation methods because they are buried in the ground. This keeps them relatively free from the effects of weather, tampering and accidents. The Gas Is Always On Atmos Energy’s gas control centers in Dallas and in the Greater Nashville area monitor our system demand and supplies 24 hours a day, 7 days a week, to ensure that natural gas is flowing and there is enough to meet peak demands. In addition, the company has professional trading operations in Dallas and Houston to buy gas supplies on the spot market and for longer-term contracts. Monitoring usage, anticipating needs and buying natural gas efficiently help keep our product available and reasonably priced even in the coldest winter seasons. Where we operate, most people know us as the local natural gas distribution company. However, other segments of our company keep natural gas powering industrial facilities, power plants, municipal gas systems and military installations. Our nonregulated gas marketing subsidiary, Atmos Energy Marketing, sells natural gas to approximately 1,000 large users. It also provides gas supply and asset management services to help ensure that our customers’ gas supplies are available, economical and compliant with regulations. Our Atmos Pipeline and Storage subsidiary operates our nonregulated pipeline, gathering and storage assets. Recently, it has been developing or acquiring gathering systems to move natural gas from wells to pipelines in western Kentucky. It also is developing a salt-dome gas storage project in northeastern Louisiana. In our Dallas trading room, Atmos Energy gas supply professionals buy natural gas for upcoming needs and negotiate longer-term supply contracts to ensure we have sufficient resources to serve our customers reliably. 12 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 13 Atmos Energy constantly inspects its pipelines with special trucks, handheld equipment and even airplanes. Here, an all-terrain vehicle with sensitive gas “sniffing” equipment checks a pipeline right of way in the Tennessee countryside. 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 14 > Atmos Energy works closely with firefighters, EMTs, police and first-responders to help prevent accidents and prepare for handling critical situations. Above: Atmos Energy technicians and field employees undergo continual training and qualification to help ensure the safe and reliable operation of our distribution and transmission system. Below: We use pipeline inspection and repair devices, called pigs, to locate and repair cracks, corrosion and other anomalies to ensure the integrity of our gas pipelines. for example, Atmos Energy was among a selected group of major corporations that participated with security officials and international governments in the worldwide Cyber Storm II drill to help prevent attacks on critical infrastructure. We have long been tending to our pipelines and the gas flowing in our system with extra precautions. The forerunner to Atmos Energy was one of the first distributors to inject an odorant into the natural gas flowing through pipelines in the early 1930s. Today, we also “pig our pipes,” running specialized equipment through our pipelines and using sensitive instruments to detect cracks, remove corrosion and inspect anomalies to prevent problems. Smart Business Means Safe Customers Pipeline safety depends on good information and skilled experts who constantly monitor the status of our transmis- sion and distribution systems. We qualify or requalify more than 900 Atmos Energy employees annually to make sure they meet federal requirements for pipeline operators. We also continually inspect our pipelines for leaks and degradation to ensure integrity and reliability. We work closely with firefighters, police and emergency workers by providing training and specialized information to prevent pipeline incidents and promote safety measures. We also work with the Department of Homeland Security and other agencies to prevent terrorism and cybercrime. In 2008, 14 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 15 Calling 811 three days before digging allows Atmos Energy, the electric utility, cable and telephone companies and others to mark buried lines to keep everyone safe. Our fleet of service trucks displays the 811 emblem to remind the public to dig safely. Call 811 Safety at Home We actively support the “Call Before You Dig” nationwide Using natural gas is extremely safe because distributors program for adults and school children. The program com- like Atmos Energy put an odorant into the natural gas stream municates in both English and Spanish to call 811 toll-free to so that any leak is easy to detect. But we go much further have all buried utility lines marked before digging or excavat- than that. We produce safety programs, bill inserts and ing. More than 60 percent of all pipeline accidents are caused advertisements in English and Spanish to tell consumers by third-party damage from digging or careless activities. what to do and what not to do if they smell gas. Calling 811, which is now the law in all states, is helping We also inform our customers about the hazard of reduce damage to natural gas and other pipelines. carbon monoxide—what it is and the importance of having carbon monoxide monitors. Furthermore, we distribute safety information about other topics, such as using space heaters, preventing accidental scalding and removing snow from gas meters and roof vents during the winter. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 1 5 0091_AtmosARr3:AtmosAR 12/14/08 4:06 PM Page 16 Our Business Is S e r v i c e Service has always been a hallmark of our business. And, Atmos Energy has always taken pride in the men and women who serve our customers firsthand. From field technicians who install new service and maintain our underground infrastructure, to customer billing associates who keep bills accurate and up to date, to customer call center agents who strive for resolution on the first call, to team leaders who look for ways to improve our service—everyone at Atmos Energy is focused on the customer. A Customer-Centered Vision Most companies say they focus on the customer. But, with customer contact spread out among separate groups—and even to foreign countries, it’s difficult to get customer service right. One group might be responsible for billing, another for collections, another for customers’ calls and yet another for dispatching service technicians. Today, Atmos Energy has reshaped that process by putting all customer-service functions under one organization. We put our customers in the center and we put ourselves in our customers’ shoes, redesigning and relearning processes from their point of view. We are striving to bring fairness, positive resolution and transparency to every interaction. And, to make that second- Our customer call center agents work nature, we treat our closely with our service employees that way, too. technicians. To better understand each other’s job, agents ride with technicians on service calls, and tech- nicians listen in as agents handle calls. ClearBill, our free, online bill-analysis tool, can help customers understand how the weather, number of billing days and various charges affect monthly gas bills. 16 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 17 A surprise visit to a customer by Jeff Hardgrave, vice president of customer service, is business as usual. Atmos Energy employees who directly serve our customers take turns doing other customer-focused jobs to see the customer experience as a seamless opportunity to form loyal relationships. 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 18 Courtesy and Professionalism 82% Responsiveness Inquiry Resolution Customer Communications Competence Convenience Safety Consciousness 0% 25% 50% 77% 76% 76% 75% 73% 70% 75% Customers responding Very Good or Good on a five-point scale in fiscal year 2008 100% Only the best is good enough for us. We continually measure our customers’ attitudes about our service. In one survey, we ask how we’re doing on seven traits that make up service excellence. Customers are asked to rate us against the best brands they use. We far outperform most products, services and other utilities. Our commitment to training, technology and one-call solutions are helping us build even stronger relationships. AhHa! The “Ah Ha!” Moments natural gas usage, to offer a payment plan that suits their needs and to give them options to stay current in their payments. Part of our redesigned customer focus includes learning how It’s a completely new focus. an action in one department affects another’s ability to serve customers. We are encouraging our call center agents to ride with service technicians, billing people to take turns handling customer calls and executives to talk directly with customers. Technology with a Human Touch We’ve even asked customers with unusual or complex We also are deploying improved technology—not to reduce issues to address our Leadership Team. These are valuable contacts with customers, but to make those contacts more learning experiences for all of us. The eye-opening, “Ah Ha!” personal and meaningful. Our Advanced Metering Infra- moments are helping us improve customer satisfaction. structure program has proven to be a boon to understanding We also have learned to look beyond our own walls to when and how individual customers use natural gas. New better understand the lives of our customers. At one time, we wireless meters continuously record usage and automatically had a department of employees whose job was to collect interface with our billing and customer service departments. bills. Now, the job of that same group of employees is to learn In this way, if a question arises about a bill, we can see about our customers, to help them find ways to manage their the customer’s actual day-by-day usage. If it’s our mistake, we 18 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 19 Atmos Energy is expanding its Advanced Metering Infrastructure pilot project in Louisiana and Texas to read customers’ meters by wireless radio technology. This state-of-the-art metering system measures a customer’s hourly gas usage. Atmos Energy’s innovative customer service delivers creative solutions, such as using natural-gas-heated water in underground pipes to melt snow off streets and sidewalks in Colorado. Customers come in all shapes and sizes and with all kinds of needs, including those of the State Fair of Texas, symbolized by Big Tex. Atmos Energy serves the giant exhibition, which attracts more than 3 million visitors and ranks as the largest state fair in the country. correct it. If not, we can ask the customer about usage on a Another program, Sharing the Warmth, assists those who certain day. For example, a spike in usage might coincide with need help paying their gas bills by putting them in touch with heating up a pool for a backyard birthday party or hosting vis- local energy-assistance agencies. iting family members who took lots of showers. More Ways to Pay We have expanded our customers’ payment options. Besides accepting checks by mail, we take online payments by credit cards and electronic funds transfers from checking, savings and other accounts. We also have an extensive network of authorized local merchants that can transact bill payments in person. In some communities, automated kiosks can accept payments 24 hours a day. We offer our Budget Billing plan to make bill amounts more predictable and to level out monthly payments. Call Centers That Break the Mold Our call centers are different for many reasons. First, they are right here in the United States. Second, they’re staffed by full-time Atmos Energy employees—not outsourced to generic centers handling calls for multiple businesses. And, third, every call we receive is recorded as we continuously strive for resolving issues with one call. This approach has greatly improved the quality of our service. As we solve issues for our customers, we build those solutions back into our processes to improve continuously. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 1 9 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 20 A Trust We H o l d D e a r We are one of the country’s larger infrastructure businesses. We not only have a physical presence in our communities, but also we hold a presence of trust—the trust communities and neighbors place in us. As the local gas company in more than 1,600 cities and towns, we are always conscious of how to responsibly support the communities we serve. With Atmos Energy, this trust goes beyond providing a product. It encompasses how we bring better service along with our natural gas product. It’s how we actively participate in civic events and celebrations that boost community spirit. It’s how we support, with funds and volunteer time, local charitable activities as well as individuals, families and children with a helping hand. It’s how we respond in times of disaster, crisis or uncertainty. Promoting Conservation and the Environment We work to help customers conserve on natural gas consumption. On our Web site and in our customer communications, we offer energy- saving tips and detailed information to keep homes warm and energy usage down. We also underwrite energy conservation and efficiency programs to weatherize homes, particularly for our low-income customers. We support numerous environmental and recycling programs in the communities where we live and work. For example, we have been honored for our work to remediate former town gas sites. The residues and contamination buried at these old gas works must be removed carefully to protect the public. Weatherizing homes helps keep families warm and energy bills low. Our Web site at atmosenergy.com has easy conservation tips as well as more detailed information for using natural gas wisely. 20 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 21 Atmos Energy helps those with low or fixed incomes make the most of their energy dollars by weatherizing their homes against leaks and drafts. 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 22 > As a Junior Achievement volunteer in Glasgow, Kentucky, Operations Supervisor Butch Chidester taught five one-hour lessons about “Our City.” In the final meeting about banking, Chidester gave each of the third-graders a calculator. More than two dozen Atmos Energy employees in Murfreesboro, Tennessee, volunteered their weekends and days off to build a new Habitat for Humanity home for a local deserving family. Using laser technologies and special techniques, we’ve our regulators to help keep our costs low. By avoiding lengthy, been able to return a number of these sites to safe and litigated cases, we forge better agreements and reduce legal productive community uses. In recognition of our efforts, costs that ultimately increase service charges to customers. the company received the Environmental Excellence New Technology Award from the Southern Gas Association. Atmos Energy also is the recipient of the Continuing Excellence Award from the U.S. Environmental Protection Agency for continual improvement in the STAR Program, a voluntary partnership to reduce emissions of methane. The company joined the Natural Gas STAR program in 1999. Keeping Rates Affordable Sharing Our Warmth Our Sharing the Warmth program raises funds for commu- nity energy-assistance agencies that help those who are unable to pay their heating bills. Sharing the Warmth primarily assists low-income working families and elderly and disabled customers living on fixed incomes. Voluntary donations from our customers and employees are matched dollar-for-dollar by the company. In our distribution business, which is regulated by cities and Most funding for energy assistance agencies comes from states, we work to establish standards and fair rates for our the federal Low Income Home Energy Assistance Program. service. In rate filings, we try to negotiate settlements with Atmos Energy works with state energy-assistance officials to 22 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 23 > For the Dallas Public Library, Atmos Energy, working with many private donors and the Friends of the Dallas Public Library, contributed major funding for a new bookmobile to serve both the young and elderly in neighborhoods across the city. You’ll find our Big Blue cookers and Atmos Energy grill chefs supporting their communities at many charitable events. Atmos Energy employees gener- ously support the United Way campaigns in the communities we serve. They also volunteer their time to assist others during company-sponsored “Days of Caring” community-service events. support expanding LIHEAP benefits for working and home- Education and Adopt-A-School programs particularly bound families who need help paying their energy bills. The touch our hearts. Across our vast service territory, hundreds company also coordinates with community groups, senior- of our employees mentor students, teach reading, raise funds citizens centers and churches to inform people who are eligi- for schools and support higher education institutions. ble for LIHEAP. Strong Hands and a Big Heart In serving a community, we become part of its fabric. Local firefighters and emergency responders work alongside Atmos Energy employees to promote safety around pipelines and to protect the community if incidents should occur. When hurri- canes, tornadoes, floods or other disasters strike, our employ- ees are among the first on the scene to safely restore service to our customers and to help the community recover. We support numerous other charitable programs, as well, such as United Way, Meals on Wheels, Komen Race for the Cure, Habitat for Humanity and Special Olympics. You can often find our “Big Blue” cooking trailers staffed by volunteer employees grilling burgers and hot dogs at community events or feeding disaster victims and emergency workers. Atmos Energy’s employees throughout the country work with community leaders, civic groups and chambers of com- merce to meet local needs where and when they arise. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 2 3 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 24 A TMOS ENERG Y A T A GLANCE Year Ended September 30 2008 2007 Meters in service Residential Commercial Industrial Public authority and other Total meters Heating degree days Actual (weighted average) Percent of normal Natural gas distribution sales volumes (MMcf) Residential Commercial Industrial Public authority and other Total Natural gas distribution transportation volumes (MMcf) Total natural gas distribution throughput (MMcf) Intersegment activity (MMcf) Consolidated natural gas distribution throughput (MMcf) Consolidated regulated transmission and storage transportation volumes (MMcf) Consolidated natural gas marketing throughput (MMcf) Operating revenues (000s) Natural gas distribution sales revenues Residential Commercial Industrial Public authority and other Total gas distribution sales revenues Transportation revenues Other gas revenues Total natural gas distribution revenues Regulated transmission and storage revenues Natural gas marketing revenues Pipeline, storage and other revenues Total operating revenues (000s) Other statistics Gross plant (000s) Net plant (000s) Miles of pipe Employees 24 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 2,911,475 268,845 2,241 9,218 3,191,779 2,893,543 272,081 2,339 19,164 3,187,127 2,820 100% 2,879 100 % 163,229 93,953 21,734 13,760 292,676 141,083 433,759 (4,405) 429,354 595,542 389,392 166,612 95,514 22,914 12,287 297,327 135,109 432,436 (4,567) 427,869 505,493 370,668 $ 2,131,447 1,077,056 212,531 137,821 3,558,855 59,712 35,771 3,654,338 108,116 3,436,563 22,288 $ 7,221,305 $ 1,982,801 970,949 195,060 114,298 3,263,108 59,195 35,844 3,358,147 84,344 2,432,280 23,660 $ 5,898,431 $ 5,730,156 $ 4,136,859 83,645 4,750 $ 5,396,070 $ 3,836,836 82,725 4,653 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 25 CO NDENSED CONSOLID A T ED BALANCE SHEETS September 30 Dollars in thousands, except share data 2008 2007 Assets Property, plant and equipment Construction in progress Less accumulated depreciation and amortization Net property, plant and equipment Current assets Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $15,301 in 2008 and $16,160 in 2007 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); 200,000,000 shares authorized; issued and outstanding: 2008 – 90,814,683 shares, 2007 – 89,326,537 shares Additional paid-in capital Accumulated other comprehensive loss Retained earnings 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 $ 5,650,096 80,060 5,730,156 1,593,297 4,136,859 $ 5,326,621 69,449 5,396,070 1,559,234 3,836,836 46,717 60,725 477,151 576,617 184,619 1,285,104 739,086 225,650 $ 6,386,699 380,133 515,128 111,189 1,067,175 737,692 253,494 $ 5,895,197 $ 454 1,744,384 (35,947) 343,601 2,052,492 2,119,792 4,172,284 395,388 460,372 350,542 785 1,207,087 441,302 298,645 267,381 $ 6,386,699 $ 447 1,700,378 (16,198) 281,127 1,965,754 2,126,315 4,092,069 355,255 408,273 150,599 3,831 917,958 370,569 271,059 243,542 $ 5,895,197 AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 2 5 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 26 CONDENSED CONSOLID A TED ST A T EMENTS OF INCOME Year Ended September 30 Dollars in thousands, except per share data 2008 2007 2006 $ 3,655,130 195,917 4,287,862 31,709 (949,313) 7,221,305 $ 3,358,765 163,229 3,151,330 33,400 (808,293) 5,898,431 $ 3,650,591 141,133 3,156,524 25,574 (821,459) 6,152,363 2,649,064 2,406,081 2,725,534 —— — 4,194,841 3,396 (947,322) 5,899,979 1,321,326 3,047,019 792 (805,543) 4,648,349 1,250,082 3,025,897 1,080 (816,718) 4,935,793 1,216,570 500,234 200,442 192,755 — 893,431 427,895 2,731 137,922 292,704 112,373 180,331 2.02 2.00 89,385 90,272 $ $ $ 463,373 198,863 182,866 6,344 851,446 398,636 9,184 145,236 262,584 94,092 168,492 433,418 185,596 191,993 22,947 833,954 382,616 881 146,607 236,890 89,153 $ 147,737 1.94 1.92 $ $ 1.83 1.82 86,975 87,745 80,731 81,390 $ $ $ Operating revenues Natural gas distribution segment Regulated transmission and storage segment Natural gas marketing segment Pipeline, storage and other segment Intersegment eliminations Purchased gas cost Natural gas distribution segment Regulated transmission and storage segment Natural gas marketing segment Pipeline, storage and other segment Intersegment eliminations Gross profit Operating expenses Operation and maintenance Depreciation and amortization Taxes, other than income Impairment of long-lived assets Total operating expenses Operating income Miscellaneous income, net Interest charges Income before income taxes Income tax expense Net income Per share data Basic net income per share Diluted net income per share Weighted average shares outstanding: Basic Diluted 26 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 27 CONDENSED CONSOLID A TED ST A T EMENTS OF CASH FL OWS Year Ended September 30 Dollars in thousands Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Impairment of long-lived assets Depreciation and amortization: Charged to depreciation and amortization Charged to other accounts Deferred income taxes Stock-based compensation Debt financing costs Other Changes in assets and liabilities Net cash provided by operating activities Cash Flows Used in Investing Activities Capital expenditures Other, net Net cash used in investing activities Cash Flows from Financing Activities Net increase (decrease) in short-term debt Net proceeds from issuance of long-term debt Settlement of Treasury lock agreement Repayment of long-term debt Cash dividends paid Issuance of common stock Net proceeds from equity offering Net cash provided by (used in) 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 2008 2007 2006 $ 180,331 $ 168,492 $ 147,737 — 6,344 22,947 200,442 147 97,940 14,032 10,665 (5,492) (127,132) 370,933 (472,273) (10,736) (483,009) 200,174 — — (10,284) (117,288) 25,466 — 98,068 (14,008) 60,725 46,717 $ 198,863 192 62,121 11,934 10,852 (1,516) 89,813 547,095 185,596 371 86,178 10,234 11,117 (2,871) (149,860) 311,449 (392,435) (10,436) (402,871) (425,324) (5,767) (431,091) (213,242) 247,217 4,750 (303,185) (111,664) 24,897 191,913 (159,314) (15,090) 75,815 60,725 237,607 — — (3,264) (102,275) 23,273 — 155,341 35,699 40,116 75,815 $ $ AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 2 7 0091_AtmosARr3:AtmosAR 12/14/08 4:07 PM Page 28 REPORT OF INDEPENDENT REGISTERED PUBLIC A CCOUNTING FIRM ON CONDENSED FINANCIAL ST A T EMENTS The Board of Directors and Shareholders of Atmos Energy Corporation 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, 2008 and 2007, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended September 30, 2008 (not presented herein); and in our report dated November 18, 2008, we expressed an unqualified opin- ion on those consolidated financial statements. In our opinion, the information set forth in the accompany- ing condensed consolidated financial statements is fairly stated, in all material respects, in relation to the consoli- dated financial statements from which it has been derived. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Atmos Energy Corporation’s internal control over financial reporting as of September 30, 2008, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsor- ing Organizations of the Treadway Commission and our report dated November 18, 2008 (not presented separately herein) expressed an unqualified opinion thereon. Dallas, Texas November 18, 2008 28 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 5:24 PM Page 29 CONSOLID A TED FINANCIAL AND ST A TISTICAL SUMMAR Y 2004–2008 Year Ended September 30 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 distribution gas sales volumes (MMcf) Consolidated distribution gas transportation volumes (MMcf) Consolidated distribution throughput (MMcf) Consolidated transmission and storage transportation volumes (MMcf) Consolidated natural gas marketing throughput (MMcf) Meters in service at end of year Heating degree days* Degree days as a percentage of normal Gas distribution average cost of gas per Mcf sold Gas distribution average transportation fee per Mcf Statistics Return on average shareholders’ equity Number of employees Net gas distribution plant per meter Gas distribution operation and maintenance expense per meter Meters per employee – gas distribution Times interest earned before income taxes 2008 2007 2006 2005 2004 $ 472,273 4,136,859 78,017 6,386,699 2,052,492 2,119,792 4,172,284 $ 392,435 3,836,836 149,217 5,895,197 1,965,754 2,126,315 4,092,069 $ 425,324 3,629,156 (1,616) 5,719,547 1,648,098 2,180,362 3,828,460 $ 333,183 3,374,367 151,675 5,610,547 1,602,422 2,183,104 3,785,526 $ 190,285 1,722,521 283,310 2,902,658 1,133,459 861,311 1,994,770 $7,221,305 1,321,326 180,331 2.00 $5,898,431 1,250,082 168,492 1.92 $6,152,363 1,216,570 147,737 1.82 $4,961,873 1,117,637 135,785 1.72 $2,920,037 562,191 86,227 1.58 $ $ $ $ $ 90,815 90,272 1.30 21,756 29.46 25.09 26.62 22.60 13.31 1.18 4.9% $ $ $ $ $ 89,327 87,745 1.28 22,829 33.11 26.47 28.32 22.01 14.75 1.29 4.5% $ $ $ $ $ 81,740 81,390 1.26 24,690 29.11 25.79 28.55 20.16 15.69 1.42 4.4% $ $ $ $ $ 80,539 79,012 1.24 26,242 29.76 24.85 28.25 19.90 16.42 1.42 4.4% $ $ $ $ $ 62,800 54,416 1.22 27,555 26.86 23.68 25.19 18.05 15.94 1.40 4.8% 292,676 297,327 272,033 296,283 173,219 136,678 429,354 130,542 427,869 121,962 393,995 114,851 411,134 72,814 246,033 595,542 505,493 410,505 373,879 — 389,392 3,191,779 2,820 370,668 3,187,127 2,879 283,962 3,181,199 2,527 238,097 3,157,840 2,587 222,572 1,679,136 3,271 $ $ $ $ 100% 9.05 .43 8.8% 4,750 1,091 122 700 3.06 $ $ $ $ 100% 8.09 .44 87% $ $ 10.02 .49 8.8% 4,653 1,020 119 713 2.75 $ $ 8.9% 4,632 969 112 723 2.55 $ $ $ $ 89% 7.41 .49 9.0% 4,543 927 110 730 2.59 $ $ $ $ 96% 6.55 .36 9.1% 2,864 994 116 612 3.05 *Heating degree days are adjusted for service areas with weather-normalized operations. AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 2 9 A T M O S E N E R G Y O F F I C E R S Senior Management Team Regulated Divisions Robert W. Best Chairman and Chief Executive Officer Kim R. Cocklin President and Chief Operating Officer J. Patrick Reddy* Senior Vice President and Chief Financial Officer Mark H. Johnson Senior Vice President, Nonregulated Operations Louis P. Gregory Senior Vice President and General Counsel Michael E. Haefner Senior Vice President, Human Resources * Resigned effective December 31, 2008 30 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT J. Kevin Akers President, Kentucky/Mid-States Division Richard A. Erskine President, Atmos Pipeline–Texas Division David E. Gates President, Mississippi Division Gary W. Gregory President, West Texas Division Tom S. Hawkins, Jr. President, Louisiana Division John A. Paris President, Mid-Tex Division Gary L. Schlessman President, Colorado-Kansas Division A T M O S E N E R G Y O F F I C E R S Nonregulated Operations Shared Services (continued) Mark H. Johnson President, Atmos Energy Marketing, LLC Richard J. Gius Vice President and Chief Information Officer Shared Services Ronald W. McDowell Vice President, New Business Ventures Verlon R. Aston, Jr. Vice President, Governmental and Public Affairs Mark S. Bergeron Vice President, Gas Supply and Services Charles M. Davis, Jr. Vice President, Corporate Development Susan K. Giles Vice President, Investor Relations Conrad E. Gruber Vice President, Strategic Planning John J. Hardgrave Vice President, Customer Service Dwala J. Kuhn Corporate Secretary Fred E. Meisenheimer† Vice President and Controller Laurie M. Sherwood Vice President and Treasurer †Appointed interim Chief Financial Officer effective Januay 1, 2009 AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 3 1 B O A R D O F D I R E C T O R S Travis W. Bain II Chairman, Texas Custom Pools, Inc. Plano, Texas Board member since 1988 Committees: Work Session/Annual Meeting (Chairman), Audit, Executive, Human Resources Robert W. Best Chairman and Chief Executive Officer, Atmos Energy Corporation Dallas, Texas Board member since 1997 Dan Busbee Adjunct Professor, Dedman School of Law, Southern Methodist University, Dallas, Texas Board member since 1988 Committees: Audit (Chairman), Executive, Human Resources Richard W. Cardin Retired partner of Arthur Andersen LLP Nashville, Tennessee Board member since 1997 Committees: Audit, Nominating and Corporate Governance Richard W. Douglas Executive Vice President, Jones Lang LaSalle LLC Dallas, Texas Board member since 2007 Committees: Human Resources, Work Session/ Annual Meeting Ruben E. Esquivel Vice President for Community and Corporate Relations, The University of Texas Southwestern Medical Center at Dallas Dallas, Texas Board member since 2008 Committees: Audit, Human Resources 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 Energy LP, Juniper Capital LP and Juniper Advisory LP Houston, Texas Board member since 2001 Committees: Human Resources (Chairman), Executive, Nominating and Corporate Governance Dr. Thomas C. Meredith Retired, formerly Commissioner of Mississippi Institutions of Higher Learning Jackson, Mississippi Board member since 1995 Committees: Audit, Nominating and Corporate Governance Phillip E. Nichol Retired Senior Vice President of Central Division Staff, UBS PaineWebber Incorporated Dallas, Texas Board member since 1985 Committees: Nominating and Corporate Governance (Chairman), Executive, 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 Stephen R. Springer Retired Senior Vice President and General Manager, Midstream Division, The Williams Companies, Inc. Syracuse, Indiana Board member since 2005 Committee: Work Session/ Annual Meeting Charles K. Vaughan Retired 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 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_AtmosARr3:AtmosAR 12/14/08 4:08 PM Page 33 CORPORA TE INFORMA TION Common Stock Listing New York Stock Exchange. Trading symbol: ATO Stock Transfer Agent and Registrar 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, or 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. Independent Registered Public Accounting Firm Ernst & Young LLP 2100 Ross Avenue, Suite 1500 Dallas, Texas 75201 214-969-8000 Form 10-K Atmos Energy Corporation’s Annual Report on Form 10-K is available at no charge from Investor 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 also may be viewed on Atmos Energy’s Web site at http://www.atmosenergy.com. Annual Meeting of Shareholders The 2009 Annual Meeting of Shareholders will be held in the Pavilion Ballroom at the Belo Mansion, 2101 Ross Avenue, Dallas, Texas 75201 on Wednesday, February 4, 2009, at 11 a.m. Central time. Direct Stock Purchase Plan 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 Investor 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. Atmos Energy on the Internet 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. Atmos Energy Corporation Contacts To contact Atmos Energy’s Investor 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. Securities analysts and investment managers, please contact: Susan K. Giles Vice President, Investor Relations 972-855-3729 972-855-3040 (fax) InvestorRelations@atmosenergy.com AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT | 3 3 0091_AtmosARr3:AtmosAR 12/14/08 4:08 PM Page 34 Forward-Looking Statements Other Information You can view this Summary Annual Report, our Annual Report on Form 10-K and other financial documents for fiscal 2008 and previous years on our Web site at http://www.atmosenergy.com. If you are a shareholder who would like to receive our Summary Annual Report and other company documents in the future electronically, please sign up for electronic distribution. It’s convenient and easy, and it saves costs to produce and distribute these materials. To receive these documents over the Internet next year, please visit http://www.amstock.com and access your account to give your consent. Please remember that accessing the Summary Annual Report and other company documents over the Internet may result in charges to you from your Internet service provider or telephone company. 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 and 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 any other of the Company’s documents or oral presentations, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “objective,” “plan,” “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. These risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008. Although the Company believes these forward-looking statements to be reason- able, 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 any of its forward-looking statements, whether as a result of new information, future events or otherwise. Front Cover: General Plant Operator Wayne Eads checks a customer’s gas meter in Steamboat Springs, Colorado. Ensuring safe and reliable performance of our natural gas distribution system in the 1,600 communities we serve is our highest priority. Back Cover: Jay Clapper, general plant operator in our Colorado-Kansas Division, is one of 4,750 Atmos Energy employees dedicated to serving our customers. © 2008 Atmos Energy Corporation. All rights reserved. Atmos Energy® is a registered trademark, and Atmos Energy–The Spirit of Service® is a registered service mark of Atmos Energy Corporation. 34 | AT M O S E N E R G Y 2 0 0 8 SUM M A RY A N N UA L R E P O RT 0091_ARcvrR2:Layout 1 12/14/08 4:09 PM Page 3 0091_ARcvrR1:Layout 1 12/13/08 10:25 PM Page 4 A T M O S E N E R G Y C O R P O R A T I O N P . O . B O X 6 5 0 2 0 5 D A L L A S , T E X A S 7 5 2 6 5 - 0 2 0 5 A T M O S E N E R G Y . C O M 

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