Atmos Energy Corporation
2013 Summary Annual Report
threeon30
30 years: A solid foundation.
30 years: A solid foundation. A prosperous future.
three perspectives.
LEFT: In 1983, Charles K. Vaughan
was named CEO of Energas Company,
a newly independent natural gas
utility serving West Texas. The compa-
ny’s former owner, Pioneer Corpora-
tion, had given the fledgling company
few resources but had required it to
pay its first dividend within 90 days
after the spinoff. Charlie recalled,
“We had no cash and no ability to pay
that dividend.” Then, the coldest West
Texas winter in 50 years turned the
Texas Panhandle as white as cotton,
and Energas sold a record amount of
gas. “We made more money than we
knew what to do with,” Charlie said.
Nature’s beneficence helped save
the company and put it on the road
to success.
ABOVE: Continuity and consistency of
leadership have served Atmos Energy
well. In 1997, newly named chairman,
president and chief executive officer
Robert W. Best (left) began meeting
monthly for dinner with previous
chairman Charles K. Vaughan (cen-
ter) to discuss business, make plans
and enjoy each other’s company.
Current CEO Kim R. Cocklin (right)
joined the dinners in 2008 when he
was named president and chief oper-
ating officer. Friends, colleagues and
mentors, the three share a commit-
ment to the heritage, the present and
the future of Atmos Energy.
Atmos Energy was nurtured by the snows of the Texas Panhandle 30 eventful years ago. Among
many people who have helped build the company’s legacy, three leaders stand out for their dedication
to its customers, shareholders and employees. The vision of growth and independence of Charles
Vaughan ... the creation of lasting assets and a remarkable culture by Bob Best ... and today’s strategic
and sustainable leadership under Kim Cocklin ... endow Atmos Energy with a solid foundation
and a prosperous future.
three perspectives.
3
ChArles VAughAn:
establishing growth
and independence
1
With grit and determination, Charles K. Vaughan bootstrapped Atmos Energy from a small
West Texas natural gas utility into a nationally known gas distributor. His 56 years of service to
the company have made him not only the company’s guiding force, but also its moral compass.
His passion for keeping the company independent and prosperous is matched by his heartfelt
dedication to the company’s employees.
BELOW: To raise capital for
expansion, Charlie Vaughan
worked to attract attention from
the financial community. A major
move was listing the company on
the New York Stock Exchange.
On October 3, 1988, Charlie
and his wife, Barbara, toured the
NYSE, and Charlie bought share
No. 1 of Atmos Energy
Corporation common stock.
When you were named CeO in 1983,
many said the company wouldn’t
survive, but it did. how did you do it?
It was the result of a bit of luck and a lot
of dedication. We had just been spun
off in October from Pioneer Corpora-
tion, and our employees were being told
by former colleagues that the company
couldn’t survive the first year.
Then in late November, the coldest
winter in half a century swept across
West Texas, and the freezing tempera-
tures lasted for weeks. We sold more
natural gas than ever, and we made a lot
of money that first year.
The employees who came with us were
courageous, and I was dedicated to them.
I was determined to do whatever we had
to do to survive. I think that same dedi-
cation and courage and determination
still exist at Atmos Energy today.
What is the most important character-
istic of a strong organization?
Focus. You have to maintain the focus
that will carry your vision forward.
In the past, our corporate vision was
about growth and development through
acquisitions. That strategy requires
appropriate risk-taking, a bit of gambling
and a lot of courage.
Bob Best was extremely courageous
as CEO in taking steps that tripled the
4
ChArles VAughAn:
establishing growth
and independence
determination >>
“ Together, we’re
going to make this
company grow.”
—CHA RLES K. VAUGHAN
LEFT: Creating a strong, separate
brand for the company was one of
Charlie’s goals. “We wanted a new
name that was distinctive and tied to
the energy industry,” Charlie said. Af-
ter considering more than 100 choic-
es, he announced the winner, Atmos
Energy. The corporation changed to its
present name on October 1, 1988.
ABOVE: “At the time of the spinoff from
Pioneer, we began thinking about a new
vision for the company. We needed to
change the direction to better reflect our
intent to eventually become a nationally
known utility company,” Charlie said. He
personally recruited the highly respected
former Dallas Cowboys Hall of Famer
Bob Lilly, who appeared in television and
newspaper advertising as the company’s
spokesperson.
the company’s mission today, not what
it was when Bob was CEO or when I
was CEO. Kim is a brilliant thinker and
financial strategist as well as a dedicated
people person. He’s transitioning the
company’s focus from acquiring assets
to investing in existing assets; he’s rein-
forcing the infrastructure to seek stable
earnings growth in the years ahead.
5
size of the company. Current CEO Kim
Cocklin is showing a great deal of cour-
age, too, by investing billions of dollars
in the company’s infrastructure through
strategic capital spending. Not to men-
tion, he’s already made tough choices to
divest operations when it made sense. It
takes courage to sell profitable opera-
tions. But, it’s all based on your focus for
the future.
You became an industry maverick
in late 1985 when you launched the
first-ever hostile takeover of a utility.
We had to do something, or the company
wouldn’t have survived. Our service
territory was limited to West Texas,
and it was not growing. What’s more,
the natural gas business in this country
was being deregulated. So, with support
from the board, we devised a plan to
expand and made a tender offer for
Trans Louisiana Gas Company, which
had recently been in play.
CEOs at other utilities and securities
analysts told me I was crazy, that the deal
would never close. But, in time, our
negotiations turned friendly, and we
completed the acquisition. Buying Trans
La increased our number of customers
by about 25 percent. We also added many
large industrial users to our customer
mix, and we diversified operations with
a different economy, different customer
demands and different state regulations.
Most important of all, we proved we
could grow by acquiring utility assets.
We could build on a bigger base, so that
we could buy an even larger property
the next time around. And, that’s what
we did, again and again.
What kind of investments is Atmos
energy making today?
We’re investing in growth by putting
pipe in the ground rather than by
acquiring companies. Kim is focusing on
chart in progress
ABOVE: Acquiring Trans Louisiana
Gas Company in 1986 diversified
operations and added large indus-
trial users. One of those long-time
customers, Weyerhaeuser Company,
uses natural gas at its plants for
drying lumber and manufacturing
wood products.
6
how do you invest in the long-term
future when Wall street is so interested
in the present?
easier to see the longer-term, larger pic-
ture. That’s what makes Atmos Energy
enduring … financially or otherwise.
There’s more to success than just the bot-
tom line and the latest quarterly finan-
cials. Kim, Bob and I share a common
commitment to Atmos Energy’s employ-
ees. That dedication to the employees has
built a stronger base than anything else
this company could ever have done.
You can talk to a company meter
reader you see on the street—and I’ve
literally done it—and he’ll tell you how
much he and his fellow employees love
this company and how dedicated they
are to its success. It’s quite contagious.
Bob carries this enthusiasm for people
forward, and Kim demonstrates the
same passion, too. With such a spirit, it’s
The utility industry expects an exodus
of employees during the next five
years, as more than two out of five
current workers reach retirement.
What would you say to a new employee
starting at Atmos energy today?
One thing that should never change is
what’s inside you—honesty, good moral
character, integrity and dedication to
those around you. A selfish view of the
world undercuts your own effort and
career while it causes the company to
start going downhill. I’m confident
Atmos Energy is prepared for the
future because of the strong character
“ One thing that should never change is what’s
inside you—honesty, good moral character,
integrity and dedication to those around you.”
—CHARLES K. VAUGHAN
chart in progress
commitment >>
Atmos Energy Dividend History
In dollars, adjusted for mergers and acquisitions
$1.48E
BELOW: Charlie’s management style
was to meet every employee and to
personally welcome those at the utili-
ties Atmos Energy acquired. The lasting
bond between company leaders and
employees “has built a stronger base
than anything else this company could
ever have done,” he said.
$1.50
$1.25
$1.00
$0.75
$0.50
$0.25
$0.00
84
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88
90 92
94
96
98 00
02
04
06
08 10
12
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Charlie Vaughan, Bob Best and Kim Cocklin concur that only a financially healthy utility
can serve its customers and communities well. The company’s 30-year history of consecu-
tively raising its annual cash dividend is one of the best indicators of this financial strength.
of its employees. Our success is due to
the individual integrity and morality of
each employee.
As a young manager, you often chal-
lenged the status quo and constantly
pushed for improvements.
In my case, I guess that’s where igno-
rance came in. I was a thorn in the side
of management. I was always looking
for better ways to do things and was
always curious. I roamed around all the
departments after I was transferred
to the company headquarters. I saw
things that could be tied together to be
improved. So, I was always in my boss’s
office, recommending how we could do
things better.
I was nosy, and I wasn’t afraid to speak
up. When you speak up, it should never
be about you, but about all of us and the
good of the company as a whole.
The 1980s and 1990s were years of
egregious corporate excess. how did
you steer clear of that?
We were building a company to last, not
one to flip. I gave up raises and stock
options, so employees could get them. I
could have sold the company and made
a lot of money personally and retired.
But, I could never take advantage of the
situation for personal gain. I had worked
my way up from humble beginnings, and
so had most of the company’s employees.
The trust among us would never have
allowed me to betray their dedication to
the company.
If you want a good, clean, high-quality
company, you have to make decisions
that are good, clean and high-quality.
How do you stay true to your prom-
ise? Again, it’s focus. Many leaders begin
to think they’re untouchable. Once they
get to the top, they get carried away and
go off in selfish directions. They want
to buy this company, expand into that
territory, join the jet set, or whatever.
Their decision-making deteriorates from
what’s good for the company to what’s
exciting for them.
That kind of thinking wasn’t for me.
And, when I look at our company
leaders today, it’s the same. They’re all
working together, pulling for the team.
Why did you retire at an early age?
I knew it was time for a change. We
needed a personality different from mine
to run the company. We needed some-
one to succeed me who could take the
company to the next level. It took me a
while to find the right person, but I knew
what qualities were needed, and the board
agreed with me. After a few attempts, we
were finally able to hire Bob Best, and he
was truly the right leader. Selecting him
gave me the physical and mental freedom
to move on, because I knew the company
would be in the right hands.
how do you feel, looking back at all
you achieved?
I feel good; however, I often feel guilty
about the management style I had to
use. Needless to say, in looking at the
company today, I feel good about where
it is and where it’s going. The future is so
bright for Atmos Energy, with solid
leadership, motivated employees, a
sound business model and valuable con-
tributions to the communities we serve.
7
2
BOB BesT:
Continuing growth
and a strong culture
When Robert W. Best joined Atmos Energy as chairman, president and CEO in
1997, he was already a well-known industry leader. Best followed the visionary
strategy set by Charles K. Vaughan, making major acquisitions that tripled
the size of Atmos Energy. He also burnished a culture that is now the envy of other
utilities and a major force driving the company’s safety efforts, service excellence
and financial performance.
Most important, we developed an
engaging culture. Our culture continues
to bloom; our people are engaged. It’s
exciting to see the company progressing
so well in so many ways.
Working at Atmos Energy has been
the highlight of my career. I wouldn’t
have had that opportunity had Charlie
not called me one Sunday morning at
the urging of his wife, Barbara. I can’t
thank Charlie and Barbara enough for
all their support and friendship for my
family and me through the years. I deeply
respect and love them both.
I am also proud of working with
Charlie and the board to bring Kim
Cocklin to Atmos Energy. Kim and I
have been friends for more than 30
years. He is an excellent leader who
cares deeply about our employees. He
is doing an exceptional job as CEO.
how will Atmos energy’s culture con-
tinue to move the company forward?
I’ve always said, if you make business
about business, it’s hard to rally your
employees. It really is. Instead, you’ve
As CeO, you led acquisitions that
made Atmos energy one of the
country’s largest natural gas distribu-
tors. You also came to epitomize the
spirit of Atmos energy by developing
a strong organizational culture. What
are you most proud of after more than
16 years with the company?
I’ll tell you what I feel the best about:
Atmos Energy is in really good shape.
Like Charlie Vaughan, I left at the right
time. I wanted the company to be not
only financially strong, but culturally
sound, as well.
We completed six major acquisitions.
We improved customer service, put in
new customer-support systems, built a
world-class technical training center, set
up a community foundation and forged
supportive political alliances.
8
ABOVE: Charlie Vaughan greeted Bob Best
on his first day as Atmos Energy’s chairman,
president and chief executive officer. The
two had known each other for years through
industry associations and Bob’s leadership
of an interstate natural gas transmission
company that supplied Atmos Energy.
“ Hiring Bob Best was
the ‘best’ decision
I ever made.”
—CHARLES K. VAUGHAN
community >> BELOW: As new acquisitions caused
Atmos Energy’s workforce to grow,
Bob launched quarterly satellite
broadcasts in 2001 to personally stay
in touch with all employees about
company goals, new projects and
financial results.
got to build a business on the foundation
of a great culture.
To cultivate a great culture means a
lot of things. It means picking the right
people, promoting the right people and
treating everyone fairly. What employees
believe drives everything. Their attitude
and spirit drive customer service, which
is our reputation, safety practices, com-
munity service and financial perfor-
mance. Culture drives everything.
You have to focus on financial per-
formance, too, because we’re measured
by our results. But, to grow the financial
performance, you have to create the right
chemistry and the right environment.
Unlike most companies, Atmos Energy
has had tremendous continuity with
Charlie Vaughan, myself and now Kim
Cocklin. Our genuine mutual respect,
admiration and friendship show that
we are like-minded about the value of
creating a great culture.
What is so special about Atmospirit?
It’s always intrigued me that companies
spend millions of dollars on what I
would call technical training. Yet, they
don’t spend much on what I call spiritual
training to develop the individual in his
or her career.
When I was first named CEO of
another company at age 38, I thought
you could tell people how to behave. But,
everyone hears it differently if there’s no
common language. Without a defined
culture that every employee can see and
experience, there’s no sense of commu-
nity feeling or personal commitment.
So, when we embarked on our Atmo-
Spirit training, I felt strongly that culture
isn’t just something for the rank and file.
It’s for everyone—and our company’s
leaders are required to participate as
much, if not more, than everyone else.
AtmoSpirit is a hands-on experience.
In group meetings, our employees
discuss different situations and role-play
concepts like, “What does teamwork
mean? What does coaching mean?”
In one example, a participant is blind-
folded and instructed to hit a bull’s-eye
on a target with a dart, which is almost
impossible. Then, the group leader says,
“Well, let’s try harder!” It’s obvious that
kind of indirection is not coaching. But,
once the group leader tells the employee
that the target is 4 feet away and 6 feet
high, the employee’s chances of hitting
the bull’s-eye go up dramatically. That’s
coaching, and that’s the essence of the
culture we instill.
Is it more difficult for a CeO to make
decisions today?
People talk about decisions as though
they’re right or wrong—black or white.
Decisions aren’t innately right or wrong;
they are decisions, and they usually are
colored with lots of grays.
You might decide differently than
I would, yet somebody has to be the
quarterback. Somebody’s got to be the
coach. Somebody’s got to make critical
decisions, and you can’t disregard plays
sent in from the sidelines.
So, you take everything into account,
make the best decision you can at the
time and then watch the results.
No one bats 1,000. So, I’ve always felt
that you cannot let pride, ego or just
plain stubbornness keep you from mod-
ifying a decision to make it better. CEOs
are not omniscient or infallible; we’re
just human beings.
You’ve always considered yourself not
just a manager, but a coach. What’s
the distinction?
My dad was a coach; so, I really thought
I might become a coach one day, too.
However, he passed away when I was a
sophomore in high school, and I decided
not to go that route. I feel though I have
been a coach in a business setting.
Getting people to understand their
roles. Creating the right environment.
Picking the right people. Achieving the
right chemistry. Expecting certain things
of people. Asking people to work together
and creating a common good. That’s
coaching, and winning in business is the
financial score. I feel coaching has been
my calling.
9
RIGHT: Charlie Vaughan moved the
company’s headquarters to Dallas
in 1986, but it wasn’t until 2004,
when Atmos Energy acquired the
distribution and transmission assets
of TXU Gas, that it began serving
the Dallas-Fort Worth Metroplex, the
country’s fourth-largest metropolitan
area. The acquisition of TXU Gas
assets made Atmos Energy one of the
largest natural gas distributors in the
United States.
Many companies develop complex,
even overreaching, strategies. Why
has Atmos energy been so focused on
the natural gas utility business?
We’ve stuck to our knitting. We’ve had a
clear strategic and tactical path as to what
we need to get done. We’ve stayed focused
on what we know, with our eye on the
ball. We’ve gotten very good at it, and
we’re improving our game all the time.
A highlight of your tenure was acquir-
ing the distribution and pipeline assets
of TXu gas. That acquisition nearly
doubled the size of Atmos energy
overnight. What gave you the confi-
dence to do so big a deal?
The vision of Charlie and the board was
a clear expectation that the company
would grow through acquisitions. As
a result, Atmos Energy made 10 major
acquisitions. Each one added growth and
diversity and expanded the foundation
to make succeeding acquisitions. The
company became very good at managing
210
“ Americans finally are
coming around to real-
ize how energy efficient
and environmentally
beneficial natural gas
is for the country.”
—RobERt W. bESt
ABOVE: Bob Best, one of the natural
gas industry’s leading advocates,
testified in 2000 at a U.S. Senate
hearing. As CEO of Atmos Energy,
he distinguished himself by serving
as chairman of the American Gas
Association, American Gas Founda-
tion and Southern Gas Association.
Kim Cocklin has observed, “Bob is a
missionary for natural gas.”
infrastructure, transitioning systems and
integrating new customers. It also had
a reputation for a sound culture and a
deep commitment to its employees.
Acquiring the TXU Gas assets in
2004 was the largest acquisition the
company had made; it doubled our size.
It was exciting because we acquired
outstanding assets, extremely talented
employees and the opportunity to serve
550 additional communities in Texas
as well as Dallas, the city where we are
headquartered.
You also were successful in achieving
timely recovery in rates for major
capital investments and decoupling
the company’s rates from its customers’
throughput. Why were those goals
so important?
prosperity >>
We have worked to improve our rate
structure to help our customers and
the company.
When you’re investing billions of dol-
lars in infrastructure improvements, the
saying “time is money” is very true. We
have sought to begin recovering in rates
the investments we make in infrastruc-
ture as soon as possible as well as to
start earning a return on those invest-
ments. Regulatory lag, as it’s called, can
hinder such a vigorous replacement and
expansion program like ours. We want
our pipelines, compressor stations and
other facilities that deliver natural gas
to be in top working order to ensure safe
and reliable service for our customers
and communities.
We also want our income to be inde-
pendent from our customers’ consump-
tion. Weather patterns, more-efficient
appliances, customer conservation, even
high gas prices—none of which we can
control—can dramatically affect total
throughput. And, that same volatility
can play havoc with the customers’ bills
or the company’s earnings.
Therefore, we have put in place rate
mechanisms based on the investments
we’ve made in our system and a fair
compensation for the utility service we
deliver. We earn our income from
operating, maintaining and enhancing
our infrastructure, not from the price of
gas we deliver or the volumes of gas we
deliver. That way our customers get the
best deal from the natural gas they use,
while promoting energy efficiency to
help the environment.
It’s a far more certain way to manage a
gas distribution system while it provides
the quality of service customers demand.
Not surprisingly, our regulators have
agreed with this approach, too.
Is natural gas an environmentally
sustainable fuel?
Strictly defined, natural gas is a fossil
fuel, having a finite volume locked
within the Earth. The supply is not un-
ending, like that of wind or solar energy.
Nevertheless, for years, even energy
experts tended to underestimate the gas
resource base and the role technology
could play in obtaining more natural gas.
Not that long ago, people in our own
industry were warning that we’d have gas
shortages or run out entirely.
Natural gas is an abundant and ver-
satile fuel. It’s the best fuel for cooking,
heating, water heating and industrial
manufacturing. One of the biggest chal-
lenges for our industry is to explain the
enormous potential of gas. Coal always
outflanked us in the past, but the claim
of “clean coal” is an oxymoron. There’s
no such thing. Now Americans finally
are coming around to realize how energy
efficient and environmentally beneficial
natural gas is for the country.
What do you hope will be the legacy
of your tenure at Atmos energy?
It was always my goal to retire when the
company was in excellent shape and to
leave with dignity. Equally important
to me was to be viewed as one who had
stayed true to his personal values and
had made decisions based on a strong
moral compass.
I hope to be remembered for creating
a culture in which employees are re-
spected, appreciated and developed, both
personally and professionally. Also, I’m
proud that, with the help of many others
along the way, we were able to grow the
company’s asset base threefold and to
develop a talented leadership team to
guide the company into the future.
I am full of gratitude for the wonderful
opportunity I was given to lead Atmos
Energy Corporation for 15 years. With
Kim in place as CEO and with the strong
support of the board of directors and
our enterprise leadership team, Atmos
Energy’s future is very bright indeed.
LEFT: Gas City at the company’s Charles
K. Vaughan Center simulates a mini-
community with buildings, streets, pipelines
and other utility infrastructure. Employees
practice what they learn in the center’s
classrooms in hands-on situations. Called
the finest facility of its kind, the center
underscores Atmos Energy’s commitment to
advancing safe and reliable service.
11
3
KIM COCKlIn:
Building shareholder
value Kim R. Cocklin leads Atmos Energy today, continuing the
continuity from Charles K. Vaughan and Robert W.
Best. Witty and warm, he is a respected strategist who is
investing in the company’s impressive portfolio of existing
assets to modernize its distribution and transmission
system. These significant infusions of capital help ensure
safe and reliable customer service as they create a
platform for steady earnings growth.
“ There’s no better
spot to be than in
natural gas right
now, especially if
you’re delivering gas
to residential and
commercial users.”
—K IM R. CoCK LIN
RIGHT: Supporting economic
development and new jobs is one
way we build shareholder value.
At West Point, Mississippi, Atmos
Energy marketing and engi-
neering representatives confer
with officials of Yokohama Tire
Company about plans to fuel a
new multi-million-dollar tire
manufacturing plant.
212
You are following in the footsteps of
two successful leaders. What lessons
have you learned from them?
Following Charles Vaughan and Bob
Best is like taking over at quarterback
for a team that had Tom Brady or
Peyton Manning playing. The whole
was always greater than the sum of the
parts with Charlie and Bob. They always
helped all the players on the team seek
to reach their full potential. They made
them better.
What I’ve learned from them is a
tremendous recipe for success. They
took a genuine interest in everybody
they met. They built a great company by
developing a great team.
What’s the future for natural gas?
The road to recovery in this economy is
natural gas. We must have affordable
energy, telecommunications, financial
services and consumer products. Those
are the four food groups necessary for a
strong economy.
Natural gas is all-American. It’s
affordable and abundant, and it’s going
to remain abundant for decades into the
future. It’s also environmentally clean
and safe.
To President Obama’s credit, he has
pushed for a national energy policy
that takes advantage of natural gas. At
the same time, the public is starting to
understand the many benefits of natural
gas. So, the future seems very bright.
What’s your view on investing today in
natural gas distribution?
There’s no better spot to be than in
natural gas right now, especially if
you’re delivering gas to residential and
commercial users. That’s primarily what
we do for a living at Atmos Energy. We
touch more than 3 million natural gas
strength >>
LEFT: Our strategy today is to invest in
our infrastructure to ensure safe and
reliable service. A major transmission
project during fiscal 2013 was our
24-inch Line WX, being installed
west of Fort Worth, Texas. It will help
Atmos Pipeline–Texas supply the
needs of local gas distribution utilities
in the state.
our adoption of a delivered-gas energy
services model was part of the reason
that Standard & Poor’s upgraded Atmos
Energy in late 2013.
What does Atmos energy’s portfolio
of businesses and territories look
like today?
When I became CEO, Atmos Energy was
distributing natural gas in 12 states. Our
acquisitions had helped us to grow in
size, but we also needed to grow smarter.
After a healthy discussion and debate
with Charlie and Bob and the board, we
stepped back and evaluated the com-
pany’s portfolio of assets, looking at it
jurisdiction by jurisdiction.
The key question was: Were we get-
ting too stretched out? Were there costly
inefficiencies? For instance, we had
5,000 customers in Iowa. Did it make
sense to serve only 5,000 customers in
one state that requires the filings, taxes,
licensing, fees and compliances as does a
state where we have a significantly larger
customer base?
Consequently, we elected to sell our
operations in Iowa, Illinois, Missouri and
Georgia when we were approached with
an offer. It’s a better situation for us, but
more importantly, it’s a better deal for
our former employees, customers and
communities there, too.
13
customers in a positive way, and we
contribute to the economic well-being of
the 1,406 communities we serve because
of our continuing investments in infra-
structure and people.
how does Atmos energy’s nonregulat-
ed business add to shareholder value?
Today, there’s more pipe and more
supply for natural gas than ever. Much of
it is the result of shale-gas development.
Therefore, our nonregulated business
doesn’t seek to make money from selling
the gas itself, but from delivering it.
Our natural gas marketing group
provides a value-added service to more
than 1,000 steady customers, including
municipalities, smaller commercial busi-
nesses and some industrial customers
that do not have an energy manager.
For example, the City of Rising Star,
Texas, hires our gas marketing company
to provide the energy services that the
city needs to serve the community.
Atmos Energy Marketing essentially
contracts for transportation and storage.
It buys the gas supply and nominates
that supply at the wellhead. It schedules
the delivery at the city gate. It bills the
city and then allocates those bills for the
residential, commercial and industrial
customers.
Our nonregulated segment is gener-
ating about 10 cents of annual earnings
per diluted share, which is a tremendous
contribution. Many other natural gas
marketing companies are struggling or
out of business, but we have a lot of
traction around how we’re managing
our gas marketing company. In fact,
ABOVE AND RIGHT: Atmos Energy’s
leaders have long advocated using
clean-burning and abundant natural
gas to fuel fleet vehicles efficiently. In
1991, Charlie Vaughan demonstrated
a compressed natural gas fueling sta-
tion at a press conference in Lubbock,
Texas. Today, a natural-gas-fueled
bus of the Lafayette, Louisiana, Transit
System reflects the growing public
approval of this idea to save money
and reduce air pollution.
Does Atmos energy view ratemaking
differently than other utilities do?
For a regulated utility, ratemaking is how
rates of compensation are set for serving
customers. A lot of technical know-how
goes into the process. But, ultimately, the
focus should be on win-win outcomes.
Ratemaking is all about balancing
the economic interests of the consumer
against the operational needs of the utility.
The utility’s needs are always to invest in
assets to enhance safety and reliability—
not necessarily to make money, but to
modernize assets and ensure that they’re
rehabilitated or replaced or repaired
sufficiently, so that you’re continuing to
serve customers safely and reliably.
You can never win a rate case at the
expense of the customers. If you do,
it’s going to be very, very short-lived.
That’s why we’ve sought out negotiated
solutions with our communities. We’ve
developed rate mechanisms with fair
compromises to avoid filing rate cases
every year. And, we have opted for settle-
ments whenever we can achieve them.
If you consider ratemaking not as an
adversarial exercise, but as relationship
214
Growth Fueled by Increased Capital Spend
Financed with a Blend of Cash Flow, Debt and Equity
Average of
$850 million–$950 million
annually
$1,000
$800
$600
$400
$200
$0
)
s
n
o
i
l
l
i
m
$
(
i
g
n
d
n
e
p
S
l
a
t
i
p
a
C
2012
2013 2014E 2015–2018E
Atmos Energy’s capital spending has grown
significantly as we invest more in our natural
gas distribution and regulated transmission
and storage infrastructure. These investments
will modernize and improve operations for
safety and reliability.
“ Ratemaking is all about
balancing the eco-
nomic interests of the
consumer against the
operational needs of
the utility.” —KIM R. CoCKLIN
building, this otherwise mandatory
process can help establish long-term
partnerships.
What is the state of Atmos energy’s
infrastructure today?
We’ve invested more than $1.4 billion
during the past three years to improve
safety and reliability while not increasing
our customers’ bills. About 85 percent
of an average gas customer’s bill is the
cost of natural gas. Our customers have
seen average winter gas-heating bills at
or below what they experienced three
years ago. The difference between today’s
lower cost of natural gas and our allowed
rate allows us to invest more in our com-
munities’ natural gas infrastructure.
Unlike other entities that haven’t paid
attention to the state of their infrastruc-
ture, natural gas utilities have done a
results >>
good job getting ahead of the need for
modernization. Atmos Energy’s own
infrastructure is strong, safe and ready to
support more natural gas customers.
Atmos energy has a unique culture.
how does culture play a role in the
company’s success?
Culture is going to trump strategy every
time. You have to give employees more
than just a paycheck, because they’re
looking for more than money. We have a
culture that is worth belonging to. Every
company has a business plan or a finan-
cial plan, HR plan or strategic plan. But,
most of them don’t have a culture plan,
because they don’t know how to create it,
live it and measure it. We do.
ABOVE: Atmos Energy emphasizes ex-
cellence in customer service. Foremost
is the selection and training of our
customer service representatives, who
handle up to 2,000 calls an hour at
our two domestic call centers in Am-
arillo and Waco, Texas. In fiscal 2011,
the company opened a new state-of-
the-art call center in Amarillo. In fiscal
2013, a team involving hundreds of
employees completed installation of
a new customer-service, billing and
dispatch software system.
Central to the company’s culture is
Atmospirit. Why is it so important to
success?
People are mystified by AtmoSpirit.
They have absolutely no idea how we
can invest in that program and take the
time that we dedicate to it. You might
think that’s the soft stuff but, in reality,
that’s the gray matter. It is integral to our
success, and our results prove it works.
In 10-year stock returns, Atmos Energy
ranks with Exxon Mobil, AT&T, Coca-
Cola, Johnson & Johnson, the Dow, S&P,
JPMorgan Chase and GE. Much of our
success has to do with AtmoSpirit.
Atmos energy seems to focus more on
outcomes than on financials.
We do. If you get the right results the
right way with the right people—because
it’s the right thing to do, then you’re
going to be successful, and the numbers
usually take care of themselves. Now,
that’s not to say we don’t maintain a keen
eye on our financials. Nevertheless, we
don’t judge our performance by numbers
alone. Real outcomes are much more
about how we operate, the opportunities
we create, the people we serve and the
returns our shareholders earn from their
investments.
LEFT: Supporting communities is an-
other major point of continuity during
the past 30 years. Atmos Energy
generously supports the United Way,
energy assistance programs, Habitat
for Humanity, chambers of commerce,
disease prevention and treatment
campaigns, and many local appeals.
An important area of support is public
education and literacy. Inside Dallas’
largest shopping mall, Atmos Energy
sponsors the Dallas Public Library’s
Bookmarks branch, where children
are entranced by librarians, storytell-
ers and performers through the magic
of reading.
15
To Our shareholders
By all accounts, Atmos Energy’s 2013 fiscal year was outstanding,
and its prospects for future growth and prosperity are excellent.
Fiscal 2013 Highlights
$2.64 earnings per diluted share,
an 11% increase over fiscal 2012
$1.40 per share annual dividend
23% total shareholder return
$845.0 million in capital
expenditures
$122.3 million annual operating
income increase from rate activities
georgia distribution assets sold
for $153 million
reduced weighted average cost
of long-term debt to 6.23%
standard & Poor’s credit rating
upgrade to A-
16
Earnings per diluted share went up 27
cents over fiscal 2012 results to $2.64.
Consolidated net income rose 12
percent, year over year, to $243.2 million,
marking our 11th consecutive year of
increased earnings.
Return on average shareholders’ equi-
ty was 9.7 percent, and total shareholder
return was 23 percent.
Shareholders received annual divi-
dends per share of $1.40. In November
2013, the board of directors raised
the dividend by 8 cents a share, or 5.7
percent, to an annual indicated rate of
$1.48 in fiscal 2014. Taking into account
the effects of the company’s mergers and
acquisitions, our dividend has increased
every year for the past 30 years.
Our results came from successfully
executing our strategy of investing in
our natural gas distribution system and
seeking recovery of, and earnings on,
such investments as soon as possible.
We received approvals during fiscal
2013 for $122.3 million in annualized
operating income increases as a result
of rate filings and the effects of efficient
rate mechanisms.
We also recorded a net-of-tax gain of
$5.3 million, or 6 cents per diluted share,
Kim r. Cocklin
President and Chief Executive Officer
from the sale of our natural gas distribu-
tion assets in Georgia. The sale proceeds
of $153 million were redeployed to fund
growth opportunities in the remaining
jurisdictions the company serves. By
selling those assets, we streamlined our
regulated operations to eight states and
became more geographically efficient.
Regulated operations provided 95
percent of fiscal 2013 consolidated net
income, with natural gas distribution
contributing 67 percent and regulated
transportation and storage providing
28 percent.
Capital Spending Results in Rate Base Growth
Dollars in millions
$6.9–$7.1 billion
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
2013
2014E
2015E 2016E 2017E 2018E
n Natural Gas Distribution n Regulated Transmission and Storage
Our rate base of regulated assets is projected to grow to between $6.9 billion and
$7.1 billion by the end of fiscal 2018. Our continuing investments in infrastructure
improvements will be the primary driver for the growth in our future earnings.
Nonregulated operations contributed
the remaining 5 percent of net income
in fiscal 2013. The segment’s $11 million
of earnings reflected strong performance
from focusing on its core delivered-gas
business. Our gas marketing business
continues to score high ratings in cus-
tomer satisfaction and to maintain the
loyalty of our long-time gas customers.
Focused strategy
About 95 percent of our consolidated net
income today comes from predictable
rate-base-driven earnings. Our focused
strategy is to modernize our infra-
structure and ensure safe and reliable
operations.
We have invested more than $1.4 bil-
lion during the past three years to repair,
rehabilitate or replace aging segments of
our pipeline network. We plan to accel-
erate our capital spending through the
end of fiscal 2018 to advance our highest
priorities of safety and reliability.
Investors are applauding natural gas
utilities for making these critical infra-
structure investments. The market rec-
ognizes the potential gains and reduced
operational risks for innovative distribu-
tion companies like Atmos Energy that
increase safeguards for the public. This
support was evident on November 14,
2013, when our share price set an all-
time high of $47.44.
In fiscal 2013, we invested a record
$845.0 million in capital expenditures
primarily for system improvements. For
nearly 93 percent of that investment, we
expect to begin earning a return on it
within one year. Approximately 70
percent, or $589 million, of our fiscal
2013 capital spending was dedicated to
safety and reliability projects.
The $112.1 million year-over-year
increase in our fiscal 2013 capital
expenditures was due to major pipeline
expansion projects and more spend-
ing on cathodic protection to prevent
corrosion of pipelines in our regulated
transmission and storage segment.
Atmos Pipeline–Texas (APT), our
regulated intrastate transmission and
storage unit, completed major pipeline
expansions that added capacity and
capability to serve local gas utility distri-
bution systems, including our Mid-Tex
Division. Of note was the installation
of 69 miles of 24-inch Line WX west of
Fort Worth.
APT also added two 1,590-horsepower
compressors at the Waha Hub, which is
a confluence of several large pipelines,
gas treatment plants and processors
southwest of Monahans, Texas. These
powerful compressors increase the
opportunity to connect more natural gas
supplies from the Permian Basin.
solid Financial Foundation
Atmos Energy’s solid financial foun-
dation is reflected by its strong balance
sheet. At fiscal year-end on September
30, 2013, our debt capitalization ratio
was 52.2 percent, compared with 51.7
percent at September 30, 2012. At year-
end, available liquidity of approximately
$715 million was sufficient to meet our
anticipated needs.
In January 2013, we reduced the
weighted average cost of our long-term
debt to 6.23 percent when we issued
$500 million of 4.15 percent 30-year
“ We have invested more
than $1.4 billion during
the past three years to
repair, rehabilitate or
replace aging segments
of our pipeline network.”
—KIM R. CoCKLIN
senior notes. Earlier, in October 2012, we
executed forward starting interest-rate
swaps. These swaps effectively fixed the
treasury component of future debt issues
at 3.13 percent for an expected $500 mil-
lion issuance in fiscal 2015 and at 3.37
percent for an expected $250 million
issuance in fiscal 2017.
The company’s dividend payout ratio,
which we expect to be between 53 per-
cent and 55 percent in fiscal 2014, allows
for continued dividend growth.
Recognizing the strength of the
company’s financial position, Standard &
Poor’s Corporation upgraded our senior
secured debt rating from BBB+ to A- in
October 2013. S&P cited an improved
17
growth >>
RIGHT: Modernization and expansion
work is under way across our system to
replace aging cast-iron and bare-steel
pipelines with the latest technology.
business risk profile from an increas-
ing contribution of earnings from our
regulated operations and the focus of
our nonregulated operations on its core
delivered-gas business.
Creating shareholder Value
We expect to invest between $830 mil-
lion and $850 million in capital improve-
ments in fiscal 2014. For the fiscal years
2015 to 2018, we estimate that our
annual capital spending will average
between $850 million and $950 million
per year. We plan to finance our capital
spending with cash flows, long-term
debt and, to a lesser extent, equity.
We project that our rate base of regu-
latory assets will increase from approxi-
mately $4.4 billion today to between $6.9
billion and $7.1 billion by the end
of fiscal 2018.
Due to our growing rate base, we
estimate that our earnings per diluted
share will rise at a compounded average
growth rate of between 6 percent and
8 percent annually from fiscal 2013
through fiscal 2018.
18
For fiscal 2014, we forecast that earn-
ings per diluted share will be between
$2.66 and $2.76, excluding unrealized
margins. For fiscal 2018, we project
earnings per diluted share could be
between $3.45 and $3.65.
Board and Management Changes
Charles K. Vaughan, who retired from
the board of directors and as lead
director on December 27, 2012, was
named by the board to serve as honorary
director.
After becoming chairman, president
and chief executive office in 1983, Charlie
virtually saved the company from
imminent failure and likely acquisition
by a much larger utility. His watchwords
of independence and prosperity led to
his devising an innovative strategy to
expand and diversify operations. As a re-
sult, he built Atmos Energy into a leader
in the natural gas distribution industry.
With more than 56 years of service
to the company, Charlie continues to
provide his wise counsel and strength
of character to help guide and encour-
age our progress. We thank him for
his willingness to continue serving our
shareholders, customers and employees
with the deep dedication that he has
demonstrated throughout his career.
On April 1, 2013, Robert W. Best
retired as executive chairman and as an
employee of the company. Subsequent to
his retirement, the board of directors ap-
pointed him to be chairman of the board.
Earnings per Diluted Share
Contributions to Fiscal 2013 Net Income
7
0
2
$
.
0
2
2
$
.
7
2
2
$
.
7
3
2
$
.
4
6
2
$
.
Natural gas distribution 67%
Regulated transmission and storage 28%
Nonregulated operations 5%
$3.00
$2.00
$1.00
$0.00
2009
2010
2011
2012
2013
“ Due to our growing rate base, we estimate that our earnings
per diluted share will rise at a compounded average growth rate
of between 6 percent and 8 percent annually from fiscal 2013
through fiscal 2018.” —KI M R. CoCKLIN
Bob joined Atmos Energy in 1997 as
chairman, president and chief executive
officer. He was responsible for complet-
ing six major acquisitions that tripled
the size of the company. Also, under his
leadership, the company added non-
regulated operations, modernized its
customer-service facilities and technology
systems, rebranded under the Atmos
Energy® trademark in all states where
it had operations, built the Charles K.
Vaughan Center for training employees
and put heightened emphasis on excel-
lence in customer service.
Bob also stressed community service.
He has long been active in national and
local civic, charitable, educational and
industry organizations, having served as
chairman of the American Gas Associa-
tion, American Gas Foundation, South-
ern Gas Association, the Dallas Regional
Chamber, United Way of Greater Dallas,
The Senior Source and many other
organizations.
His foremost achievement, though,
was developing our AtmoSpirit culture—
which reflects in so many ways his own
genuine respect for everyone and his gift
as a coach who brings out the best in
people. We thank Bob for all that he has
contributed during the past 16 years and
wish him the best in retirement—even
though he still devotes many hours in
the office, working to make Atmos Energy
even better.
All of us at Atmos Energy appreciate
your ownership of the company.
Investing in a natural gas distribution
company is a wise choice today because
gas is an exceptional fuel. Natural gas
provides comfort and convenience, an
abundance of supply, energy efficiency,
environmental benefits and the security
of an all-American energy source.
Atmos Energy is proud to deliver
natural gas to its 3 million customers in
1,406 communities.
We pledge, as we continue to invest
for safety and to build for the future,
always to seek the right things for the
right reasons with the right people.
Kim R. Cocklin
President and Chief Executive Officer
December 4, 2013
19
ABOVE: The importance of a common
culture to the success of Atmos Energy’s
strategy led to the launch of AtmoSpirit
for Leaders. The program provides
selected employees with advanced
training, so that they can serve as
facilitators of the culture. By developing
highly capable leaders, strengthen-
ing team results, solving enterprise
problems and engaging employees
to perform at their best, the program
increases shareholder value.
20
Financial Highlights
Year Ended September 30 — Dollars in thousands, except per share data
2013
2012
Change
Operating revenues
gross profit
$ 3,886,257
$ 1,412,050
$ 3,438,483
$ 1,323,739
13.0%
6.7%
natural gas distribution net income — continuing operations
natural gas distribution net income — discontinued operations
regulated transmission and storage net income
nonregulated net income — continuing operations
nonregulated net loss — discontinued operations
Total
Total assets
Total capitalization*
net income per share from continuing operations — diluted
net income per share from discontinued operations — diluted
net income per share — diluted
Cash dividends per share
Book value per share at end of year
natural gas distribution throughput — continuing operations (MMcf)
natural gas distribution throughput — discontinued operations (MMcf)
Consolidated natural gas distribution throughput (MMcf)
Consolidated regulated transmission and storage transportation volumes (MMcf)
Consolidated nonregulated delivered gas sales volumes (MMcf)
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)
$ 150,856
12,851
68,260
11,582
(355)
$ 243,194
$ 7,940,401
$ 5,036,080
2.50
$
0.14
$
2.64
$
1.40
$
28.47
$
392,306
4,731
397,037
467,178
343,669
3,011,980
9.7%
47.8%
16,662
91,711
$ 123,848
24,521
63,059
5,289
—
$ 216,717
$ 7,495,675
$ 4,315,548
2.10
$
0.27
$
2.37
$
1.38
$
26.14
$
21.8%
(47.6)%
8.2%
119.0%
(100.0)%
12.2%
5.9%
16.7%
19.0%
(48.1)%
11.4%
1.4%
8.9%
372,688
18,295
390,983
466,527
351,628
3,116,589
5.3%
(74.1)%
1.5%
0.1%
(2.3)%
(3.4)%
9.3% 4.3%
48.3%
17,775
91,172
(1.0)%
(6.3)%
0.6%
* Total capitalization represents the sum of shareholders’ equity and long-term debt, excluding current maturities.
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 management’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 financial 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 exchange Commission. Investors may request, without charge, our Annual Report on Form 10-K
for the fiscal year ended september 30, 2013, 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 website at www.atmosenergy.com. Additional investor information is presented on pages 31
and 32 of this report.
21
Atmos Energy at a Glance
Year Ended September 30
2013
2012
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 — continuing operations (MMcf)
residential
Commercial
Industrial
Public authority and other
Total
Natural gas distribution transportation volumes — continuing operations (MMcf)
total natural gas distribution throughput — continuing operations (MMcf)
Natural gas distribution sales volumes — discontinued operations (MMcf)
Natural gas distribution transportation volumes — discontinued operations (MMcf)
Intersegment activity (MMcf)
Consolidated natural gas distribution throughput (MMcf)
Consolidated regulated transmission and storage transportation volumes (MMcf)
Consolidated nonregulated delivered gas sales volumes (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
nonregulated revenues
total operating revenues (000s)
other statistics
gross plant (000s)
net plant (000s)
Miles of pipe
employees
* heating degree days are adjusted for service areas with weather-normalized operations.
2,755,831
244,652
1,500
9,997
3,011,980
2,846,134
258,386
1,891
10,178
3,116,589
2,729
2,692
103%
97%
154,823
88,850
15,678
9,811
269,162
136,357
405,519
3,611
1,120
(13,213)
397,037
467,178
343,669
s 1,512,495
661,930
81,155
60,557
2,316,137
55,938
22,343
2,394,418
89,011
1,402,828
$ 3,886,257
137,049
82,516
15,673
9,228
244,466
132,595
377,061
11,259
7,036
(4,373)
390,983
466,527
351,628
$1,351,479
587,651
71,960
54,334
2,065,424
53,924
25,028
2,144,376
92,604
1,201,503
$ 3,438,483
$ 7,722,019
$ 6,030,655
72,884
4,720
$ 7,134,470
$ 5,475,604
73,875
4,759
22
Condensed Consolidated balance Sheets
Year Ended September 30 — Dollars in thousands, except share data
2013
2012
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
$20,624 in 2013 and $9,425 in 2012
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:
2013 – 90,640,211 shares, 2012 – 90,239,900 shares
Additional paid-in capital
Accumulated other comprehensive income (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
Pension and postretirement liabilities
Deferred credits and other liabilities
$ 7,446,272
275,747
7,722,019
1,691,364
6,030,655
$ 6,860,358
274,112
7,134,470
1,658,866
5,475,604
66,199
64,239
301,992
244,741
70,334
683,266
741,484
484,996
$ 7,940,401
234,526
256,415
272,782
827,962
740,847
451,262
$ 7,495,675
$
453
1,765,811
38,878
775,267
2,580,409
2,455,671
5,036,080
241,611
368,891
367,984
—
978,486
1,164,053
359,299
358,787
43,696
$ 7,940,401
$
451
1,745,467
(47,607)
660,932
2,359,243
1,956,305
4,315,548
215,229
489,665
570,929
131
1,275,954
1,015,083
381,164
457,196
50,730
$ 7,495,675
23
Condensed Consolidated Statements of Income
Year Ended September 30 — Dollars in thousands, except per share data
2013
2012
2011
operating revenues
natural gas distribution segment
regulated transmission and storage segment
nonregulated segment
Intersegment eliminations
Purchased gas cost
natural gas distribution segment
regulated transmission and storage segment
nonregulated segment
Intersegment eliminations
Gross profit
operating expenses
Operation and maintenance
Depreciation and amortization
Taxes, other than income
Asset impairments
Total operating expenses
operating income
Miscellaneous income (expense), net
Interest charges
Income from continuing operations before income taxes
Income tax expense
Income from continuing operations
Income from discontinued operations, net of tax ($3,986, $10,066 and $12,372)
gain on sale of discontinued operations, net of tax ($2,909, $3,519 and $0)
net income
basic earnings per share
Income per share from continuing operations
Income per share from discontinued operations
net income per share — basic
Diluted earnings per share
Income per share from continuing operations
Income per share from discontinued operations
net income per share — diluted
Weighted average shares outstanding:
Basic
Diluted
$ 2,399,493
268,900
1,598,711
(380,847)
3,886,257
1,318,257
—
1,535,380
(379,430)
2,474,207
1,412,050
488,020
235,079
187,072
—
910,171
501,879
(197)
128,385
373,297
142,599
230,698
7,202
5,294
$ 243,194
$
$
$
$
2.54
0.14
2.68
2.50
0.14
2.64
$ 2,145,330
247,351
1,351,303
(305,501)
3,438,483
1,122,587
—
1,296,179
(304,022)
2,114,744
1,323,739
453,613
237,525
181,073
5,288
877,499
446,240
(14,644)
141,174
290,422
98,226
192,196
18,172
6,349
$ 216,717
$
$
$
$
2.12
0.27
2.39
2.10
0.27
2.37
$ 2,470,664
219,373
2,024,893
(428,495)
4,286,435
1,452,721
—
1,959,893
(426,999)
2,985,615
1,300,820
442,965
223,832
177,767
30,270
874,834
425,986
21,184
150,763
296,407
106,819
189,588
18,013
—
$ 207,601
$
$
$
$
2.08
0.20
2.28
2.07
0.20
2.27
90,533
91,711
90,150
91,172
90,201
90,652
24
Condensed Consolidated Statements of Cash Flows
Year Ended September 30 — Dollars in thousands
2013
2012
2011
Cash Flows from operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Asset impairments
gain on sale of discontinued operations
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
Proceeds from the sale of discontinued operations
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 agreements
unwinding of Treasury lock agreements
repayment of long-term debt
Cash dividends paid
repurchase of common stock
repurchase of equity awards
Issuance of common stock
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
$ 243,194
$ 216,717
$ 207,601
—
(8,203)
236,928
679
141,336
17,814
8,480
(2,887)
(24,214)
613,127
(845,033)
153,023
(4,904)
(696,914)
(208,070)
493,793
(66,626)
—
(131)
(128,115)
—
(5,150)
46
85,747
1,960
64,239
66,199
$
5,288
(9,868)
30,270
—
246,093
484
104,319
19,222
8,147
(493)
(2,992)
586,917
(732,858)
128,223
(4,625)
(609,260)
354,141
—
—
—
(257,034)
(125,796)
(12,535)
(5,219)
1,606
(44,837)
(67,180)
131,419
64,239
$
233,155
228
117,353
11,586
9,438
(961)
(25,826)
582,844
(622,965)
—
(4,421)
(627,386)
83,306
394,466
20,079
27,803
(360,131)
(124,011)
—
(5,299)
7,796
44,009
(533)
131,952
$ 131,419
25
Report of Independent Registered Public Accounting Firm on Condensed Financial Statements
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, 2013
and 2012, and the related consolidated statements of income, comprehensive income, shareholders’
equity, and cash flows for each of the three years in the period ended september 30, 2013 (not presented
separately herein); and in our report dated november 13, 2013, we expressed an unqualified opinion on
those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements
is fairly stated in all material respects in relation to the consolidated 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, 2013, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of sponsoring Organizations of the Treadway Commission (1992
framework) and our report dated november 13, 2013 (not presented separately herein) expressed an
unqualified opinion thereon.
Dallas, Texas
november 13, 2013
26
Condensed Financial and Statistical Summary 2009-2013
Year Ended September 30
2013
2012
2011
2010
2009
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
7,495,675
Income Statement Data
Operating revenues (000s)
gross profit (000s)
Income from continuing operations (000s)
Income from discontinued operations, net of tax (000s)
net income (000s)
Income per share from continuing operations—diluted
Income per share from discontinued operations—diluted
net income per diluted share
90,240
Common Stock Data
shares outstanding (000s)
end of year
Weighted average — diluted
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 nonregulated delivered gas
sales volumes (MMcf)
Meters in service at end of year
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
845,033
$
6,030,655
(295,220)
7,940,401
2,580,409
2,455,671
5,036,080
$ 3,886,257
1,412,050
230,698
12,496
243,194
2.50
0.14
2.64
$
$
$
$
$
90,640
91,711
1.40
16,662
45.19
33.20
42.59
28.47
16.13
1.50
$ 732,858
5,475,604
(447,992)
7,495,675
2,359,243
1,956,305
4,315,548
$ 3,438,483
1,323,739
192,196
24,521
216,717
2.10
0.27
2.37
$
$
$
$
$
90,240
91,172
1.38
17,775
36.94
30.60
35.79
26.14
15.10
1.37
$ 622,965
5,147,918
143,355
7,282,871
2,255,421
2,206,117
4,461,538
$ 4,286,435
1,300,820
189,588
18,013
207,601
2.07
0.20
2.27
$
$
$
$
$
90,296
90,652
1.36
18,680
34.98
28.87
32.45
24.98
14.30
1.30
$ 542,636
4,793,075
(290,887)
6,763,791
2,178,348
1,809,551
3,987,899
$ 509,494
4,439,103
91,519
6,367,083
2,176,761
2,169,400
4,346,161
$ 4,661,060
1,314,136
189,851
15,988
205,839
2.03
0.17
2.20
$ 4,793,248
1,297,682
175,026
15,952
190,978
1.90
0.17
2.07
$
$
$
$
$
90,164
92,422
1.34
19,738
30.06
26.41
29.25
24.16
13.30
1.21
$
$
$
$
$
92,552
91,620
1.32
20,790
28.80
20.20
28.18
23.52
13.61
1.20
3.3%
3.9%
4.2%
4.6%
4.7%
272,773
255,725
289,927
322,628
282,117
124,264
397,037
135,258
390,983
134,093
424,020
131,547
454,175
126,768
408,885
467,178
466,527
435,012
428,599
528,689
343,669
3,011,980
4.91
$
.45
$
351,628
3,116,589
4.64
$
.43
$
384,799
3,213,191
5.30
$
.46
$
353,853
3,186,040
5.77
$
.46
$
370,569
3,178,844
6.95
$
.46
$
$
$
9.7%
4,720
1,567
126
662
4.01
$
$
9.3%
4,759
1,468
118
680
3.27
$
$
9.1%
4,949
1,362
111
676
3.13
$
$
9.1%
4,913
1,243
114
676
3.09
$
$
8.9%
4,891
1,165
116
678
2.82
27
Atmos Energy officers
Senior Management Team
Regulated Divisions
Kim R. Cocklin
President and
Chief executive Officer
J. Kevin Akers
President,
Kentucky/Mid-states Division
bret J. Eckert
senior Vice President and
Chief Financial Officer
Richard A. Erskine
President,
Atmos Pipeline–Texas Division
Louis P. Gregory
senior Vice President,
general Counsel and
Corporate secretary
Michael E. Haefner
senior Vice President,
human resources
Marvin L. Sweetin
senior Vice President,
utility Operations
28
David E. Gates
President,
Mississippi Division
Gary W. Gregory
President,
Colorado-Kansas Division
tom S. Hawkins, Jr.
President,
louisiana Division
John A. Paris
President,
Mid-Tex Division
David J. Park
President,
West Texas Division
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,
Colorado-Kansas Division
tom S. Hawkins, Jr.
President,
louisiana Division
John A. Paris
President,
Mid-Tex Division
David J. Park
President,
West Texas Division
Atmos Energy officers
Nonregulated Operations
Shared Services (continued)
Mark S. bergeron
President,
Atmos energy holdings, Inc.
Conrad E. Gruber
Vice President,
strategic Planning
Shared Services
Verlon R. Aston, Jr.
Vice President,
governmental and
Public Affairs
Clay C. Cash
Vice President,
Customer service
Kenneth M. Malter
Vice President,
gas supply and services
John S. McDill
Vice President,
Pipeline safety
Edward Pace McDonald IV
Vice President, Tax
Christopher t. Forsythe
Vice President and Controller
Daniel M. Meziere
Vice President and Treasurer
Susan K. Giles
Vice President,
Investor relations
Richard J. Gius
Vice President and
Chief Information Officer
29
board of Directors
Robert W. best
Chairman of the Board,
Atmos energy Corporation
Dallas, Texas
Board member since 1997
Committee: executive
(Chairman)
Kim R. Cocklin
President and
Chief executive Officer,
Atmos energy Corporation
Dallas, Texas
Board member since 2009
Richard W. Douglas
executive Vice President,
Jones lang lasalle llC
Dallas, Texas
Board member since 2007
Committees: human
resources, nominating and
Corporate governance,
Work session/Annual Meeting
Ruben E. Esquivel
Vice President for
Community and Corporate
relations, uT southwestern
Medical Center
Dallas, Texas
Board member since 2008
Committees: Audit,
human resources
Richard K. Gordon
general Partner,
Juniper Capital lP and
Juniper energy lP
houston, Texas
Board member since 2001
Committees: human
resources (Chairman),
executive, nominating and
Corporate governance
Robert C. Grable
Partner, Kelly hart &
hallman llP
Fort Worth, Texas
Board member since 2009
Committees: Audit,
human resources,
Work session/Annual Meeting
Dr. thomas C. Meredith
President, effective
leadership llC
Oxford, Mississippi
Board member since 1995
Committees: Work session/
Annual Meeting (Chairman),
executive, human resources,
nominating and Corporate
governance
Nancy K. Quinn
Independent energy
Consultant
east hampton, new York,
and Key Biscayne, Florida
Board member since 2004
lead Director since 2013
Committees: Audit (Chair),
executive, nominating and
Corporate governance
Richard A. Sampson
retired Managing Director
and Client Adviser,
JPMorgan Chase & Co.
Denver, Colorado
Board member since 2012
Committees: Audit, human
resources
Stephen R. Springer
retired senior Vice President
and general Manager,
Midstream Division,
The Williams Companies, Inc.
Fort Myers Beach, Florida
Board member since 2005
Committee: Work session/
Annual Meeting
Richard Ware II
President, Amarillo
national Bank
Amarillo, Texas
Board member since 1994
Committees: nominating
and Corporate governance
(Chairman), Audit,
executive, Work session/
Annual Meeting
Charles K. Vaughan
honorary Director,
retired Chairman
of the Board and lead Director,
Atmos energy Corporation
Dallas, Texas
Board member from
1983 to 2012
30
Corporate Information
Common Stock Listing
new York stock exchange. Trading symbol: ATO
Stock transfer Agent and Registrar
American stock Transfer & Trust Company, llC
Operations Center
6201 15th Avenue
Brooklyn, new York 11219
800-543-3038
To inquire about your Atmos energy common 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 8 p.m. eastern time, Monday
through Thursday, or 8 a.m. to 5 p.m. eastern time on Friday.
You also may send an email message on our transfer agent’s website
at www.amstock.com. Please refer to Atmos energy in your email
message and include your Atmos energy shareholder account number.
Independent Registered Public Accounting Firm
ernst & Young llP
One Victory Park
suite 2000
2323 Victory Avenue
Dallas, Texas 75219
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 be-
tween 8 a.m. and 5 p.m. Central time. Atmos energy’s Form 10-K also
may be viewed on Atmos energy’s website at www.atmosenergy.com.
Annual Meeting of Shareholders
The 2014 Annual Meeting of shareholders will be held at the Charles
K. Vaughan Center, 3697 Mapleshade lane, Plano, Texas 75075 on
Wednesday, February 5, 2014, at 9:00 a.m. Central time.
Direct Stock Purchase Plan
Atmos energy 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 at
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 www.
atmosenergy.com. Our website 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 email message to
Investorrelations@atmosenergy.com.
securities analysts and investment managers, please contact:
susan K. giles
Vice President, Investor relations
972-855-3729 (voice) 972-855-3040 (fax)
Investorrelations@atmosenergy.com
31
Forward-looking Statements
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 “antici-
pate,” “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, 2013. 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 any of its forward-looking statements, whether as a result of new infor-
mation, future events or otherwise.
other Information
You can view this Summary Annual Report, our Annual Report on Form 10-K and other financial documents
for fiscal 2013 and previous years at www.atmosenergy.com.
If you are a shareholder who would like to receive our Summary Annual Report and other company
documents electronically in the future, please sign up for electronic distribution. It’s convenient and easy,
and it saves the costs to produce and distribute these materials.
To receive these documents by electronic delivery next year, please visit www.atmosenergy.com or
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provider or telephone company.
© 2013 Atmos Energy Corporation. All rights reserved.
Atmos Energy® is a registered trademark of Atmos Energy Corporation.
32
Atmos Energy Corporation
P.O. Box 650205
Dallas, Texas 75265-0205
atmosenergy.com