Atos
Annual Report 2015

Plain-text annual report

Atmos Energy Corporation 2015 Summary Annual Report Safety: Our Core Value For Atmos Energy, safety is far more than a program, department or investment. It is a value that we ascribe to and observe in all we do. It is all-inclusive in our strategy and inherent in our culture. Cover Travis Cooper (left), an operations manager, and Quint Nance, a senior field construction coordinator, both in the Mid-Tex Division, inspect construction in East Texas on Atmos Energy’s largest current capital project. The multi-year job will install about 62 miles of 30-inch coated steel pipe in two segments on Atmos Pipeline –Texas’ transmission system. When completed in fiscal 2016, the new pipeline will transport natural gas from our storage fields to help meet rising demands in the Dallas-Fort Worth Metroplex from Mid-Tex customers and from other local distribution companies. The project also will substantially improve service reliability. Although hampered by heavy rains, the pipeline project remains on schedule— a tribute to the engineering and project management expertise of the teams responsible for our infrastructure program. Atmos Energy continues to modernize its pipeline infrastructure to make it even safer and more reliable. During the past five years, we have invested approximately $4.0 billion to fortify, replace or expand our system. We plan to increase our spending on pipeline modernization by more than 50 percent through fiscal 2020. Atmos Energy’s natural gas transmission and distribution pipelines span almost 76,000 miles and range in size from 2 inches to 36 inches in diameter. We also have some 3.1 million service lines that carry gas from our mains to our customers’ premises. Our pipelines, which were installed over many decades, are made of various materials. The most common types are coated steel and polyethylene plastic. However, we also have pipelines made of cast iron, bare steel and vintage plastic. Our modernization program along with federal and state compliance rules and regulations determine the pipeline assets selected for repair or replacement every year. Investing in Infrastructure Distribution Main Annual Replacement Mileage 25%–30% 120% s e l i M 600 500 400 300 200 100 0 2010 2015 2020 During the past five years, the number of miles of pipeline we have replaced annually has increased by 120 percent. We expect that our annual replacements will go up another 25 percent to 30 percent during the next five years. Modernizing and Improving Our Pipeline Infrastructure A major replacement project in our West Texas Division near Amarillo involves constructing a new 16-inch coated steel pipeline to retire an aging bare steel line installed in the 1930s. Engineer Matt McDonald (left) and Dustin Crosley, Amarillo operations supervisor, test the wall thickness of the existing pipe before it is tied in with the new line. 2 3 In Marrero, Louisiana, the main natural gas artery serving our customers on the west bank of the Mississippi River in the Greater New Orleans Region is being replaced by our Louisiana Division. The pipeline, installed some 70 to 80 years ago, is one of our many modernization projects across the state. The division expects to replace over many years a significant portion of its distribution mains as well as aging meters, risers, regulator stations and town border stations. Below: A collection of sensitive instruments, called a “smart pig,” is sent through a pipeline to detect cracks, corrosion, dents or deterioration that might cause a failure. We regularly inspect our pipelines as part of our pipeline integrity management programs. Training Our Employees To assist in assessing a pipeline’s condition, we use field instrumenta- tion and engineering analysis to identify anomalies, cracks, deterioration or corrosion that might occur. We also conduct hydrostatic testing when needed to ensure that a pipeline can operate in excess of its normal oper- ating pressure and during peak-service periods. The obvious benefit of our modernization program is safer and more reliable service for our customers and the communities we serve. Fortu- nately, we have received approvals for very balanced regulatory mechanisms to support the necessary investments to make these improvements. Furthermore, our customers’ bills have remained relatively flat despite our modernization expenditures. The abundance and low cost of natural gas in the United States today is keeping our average residential bills very affordable—a situation that we anticipate will remain for years to come. Our natural gas customers are seeing virtually no effect on their bills from our investing in pipeline infrastructure. Since fiscal 2007, our average monthly residential bills, adjusted for seasonality, have been below $62. We expect our bills to remain affordable through fiscal 2020 because of the country’s abun- dant supplies of low-cost natural gas. In fiscal 2015, our average monthly residential bill of $52 was the lowest among all household utility bills, based on comparable regional or national data. Monthly Utility Bills Atmos Energy Annualized Monthly Residential Bills Natural Gas $52 Cable TV $77 Electricity $128 Water & Sewer $137 Mobile Phone $138 See data sources on page 36. Average Customer Bill Remains Affordable $70 $60 $50 $40 $30 $20 $10 $0 $58 $58 $52 07 08 09 10 11 12 13 14 15 16E 17E 18E 19E 20E Estimated bills for fiscal 2016 through fiscal 2020 are based on normal weather. On the surface, natural gas distribution and transmission may appear to be simple, but underground it’s another story. There, complicated technologies, nearly $7.5 billion of net assets and thousands of pages of federal and state regulations and our own standards all interact. To render safe and reliable service requires that our service tech- nicians and construction and maintenance operators be not only dedicated, but also highly trained. Since opening in 2010, Atmos Energy’s Charles K. Vaughan Center has conducted more than 37,000 hours of training for nearly 3,800 employees, who have taken about 400 classes. The center offers some 15 standard courses and is in use nearly full time. Our Charles K. Vaughan Center marked its fifth anniversary in 2015 as the gas industry’s best-in-class training facility. The center offers fully equipped classrooms and labs along with two highly advanced facilities for hands-on learning. Inside the 48,600-square-foot center is the Flow Lab, containing every type of gas regulation, control and metering device used on our system. Outside on the 11-acre site is Gas City, a simu- lated neighborhood with apartments, single-residence houses, commercial buildings and city streets. Its flexibility reinforces our employees’ training for all types of real-life scenarios. 4 5 Gas Games, a friendly competition among Atmos Energy’s field employees, rein- forces technical skills and the underlying principle that safety is integral to everything we do. Technical Training FISCAL YEAR 2011 2012 2013 2014 2015 Number of Classes Number of Employees Total Training Hours 79 77 53 75 104 802 708 415 762 1,070 24,508 20,150 12,123 21,016 37,209 Our employees are well-trained professionals. Field employees spend approximately one-fifth of their time in the classroom and four-fifths practicing skills. Back at work, their learning continues with on- the-job training guided by senior technicians at their locations. In addition, a cadre of Safety Champions lead monthly safety huddles to discuss best practices with their peers. Continual training and certification for all field employees is mandatory, so that they meet federal Operator Qualification (OQ) standards. A field employee cannot turn a valve, set a meter or locate an underground pipeline without having up-to-date OQ certification. One of the most valuable lessons we teach is not a technical skill—it’s a leadership skill. Called Coaching in the Moment, this important technique prepares our employees to talk courteously, but clearly, with others about working safely. Our employees are empowered to protect them- selves, their fellow workers and the public by commu- nicating openly and honestly at all times. Safety is always our first priority. Table-top safety exercises stress internal de- velopment and coordination with our communities. At a drill for our Mississippi Division employees, Scott Powell, Atmos Energy’s director of safety, security and compliance, outlines a scenario to test emergency plans and responses and to help ensure our employees are prepared. Fiscal 2015 Training Hours Technical training at Vaughan Center Offsite technical training Safety training Operator Qualification and compliance training 37,209 8,988 81,945 19,816 We make annual evaluations of our emer- gency plans and provide e-learning for field employees to inform them about changes in procedures, such as installing excess flow valves on new and replaced customer service lines. 6 7 Our service employees are much better trained today, using improved techniques, technologies and tools. They rely on care- fully designed safety procedures when re- sponding to all natural gas service requests. They are especially vigilant when handling any emergency call, whether it’s a suspect- ed gas leak or a situation involving a haz- ardous gas release. We train our employees to evaluate every situa- tion carefully, to rely on engineering controls, to always protect customers and the public first and to safeguard local first responders from taking undue risks. Hazard prevention is standard procedure at Atmos Energy and is rooted in our safety policies, personal protective equipment practices, Material Safety Data Sheet procedures, hazardous sub- stance training as well as basic and advanced skills courses. Trevor Brewer (center), a senior service technician in our Kentucky/Mid-States Division at Columbia, Tennessee, is one of the company’s Safety Champions. They share their knowledge about proper operating procedures with fellow employees and encourage their peers to discuss ways to improve safety on the job and at home. Protecting Our Employees Shoring is an extension of the personal protective equipment that our employees must use. All excavations below a specific depth must be protected with proper shoring equipment or the ditch must be tiered to proper standards to avoid a cave-in. Advanced training is required for employees who are authorized to supervise these types of excavations. 8 9  Equally critical is driving safety for our 4,000 vehicles. We provide employees training for backing, Smith System driver’s education and first-person videos by our own employees who impart lessons learned to their colleagues. We are installing on all vehicles new flashing lights to signal when the vehicle’s brakes are applied; the warning lights have proved highly effective at reducing collisions. We also are using inside our vehicles DriveCam® video technology, which records an employee’s performance behind the wheel for training and accident prevention. Our Enterprise Safety Committee sponsors some 220 operational safety-team leads. They organize safety hud- dles at company locations and develop Safety Champions who coach their peers. In safety huddles, employees share stories about their own experiences to help our organiza- tion improve based on the real-life learning of these em- ployees and their inherent credibility with fellow employees. Improved technologies, such as this remote methane leak detector, help keep our employees safe while they protect the public. An RMLD can quickly and efficiently detect a natural gas leak up to 100 feet away and is used for leak surveying and respond- ing to emergency calls. Professional driver’s training and backing training are part of our core learning program for all field technicians, who operate some 4,000 vehicles in daily service. Health and Wellness 33,000 pounds lost by 3,900 employees and spouses since 2010 Our health and wellness programs have helped 3,900 employees and their spouses work and live at their best by shedding 33,000 pounds since the programs began in 2010. Besides improving fitness and lowering medical insurance costs, our programs encourage employees to avoid injuries. Damage prevention seminars for professional excavators encourage calling 811 before digging and stress industry best practices for safe excavation. In Austin, Texas, Texas811, the Austin Fire Department and Atmos Energy demonstrated not only how to dig safely, but also steps to take if a natural gas line is hit. Pipeline leaks are a primary safety focus of all natural gas utilities, with extensive precautions taken to prevent, detect and repair them. Eliminating Leaks and Third-Party Damages Leaks occur for various reasons, but one of the leading causes is damage to pipelines caused by third parties. This typically is the result of careless excavation, often when an excavator violates state law by failing to have buried utility facilities located and marked. Anyone excavating at depths greater than the state requirement must, by law, call the universal toll-free 811 number. The 811 Center then dis- patches professional line locators to find all underground utility lines in the area and to mark them with colored flags and paint to guide safe digging. This service is provided at no cost to the excavator. 10 11  Our damage prevention efforts have yielded a steady decline in damages to our pipeline systems. Since 2010, we have reduced damages per 1,000 line locates by 11 percent. That improvement is all the more impressive in light of the economic development activities in our service areas that have caused annual requests for facility-locates to rise by 24 percent since 2010 to more than 1.9 million annual requests. Eliminating third-party damages requires vigilance and diligence by our damage prevention specialists, who contact repeat offenders to seek their cooperation to observe the law and to protect their workers and the public. An especially important part of our damage prevention program is sponsoring training and meetings by our state One-Call organizations to reach professional excavators. We are a Gold Sponsor of the national Common Ground Alliance and we are a strong ally with our states’ damage prevention councils to promote safety. Along with fewer damages, the number of active leaks on our system has declined by 31 percent since 2010. We continue to seek better leak detection technologies as part of our comprehensive safety strategy. Innovative gas-analysis instruments, involving mass spectroscopy, are approximately 1,000 times more sensitive than traditional leak detection equipment and are capable of sensing gas leaks down to one part per billion in ambient air while reducing false positives from naturally occurring methane. We are conducting tests with this equipment mounted in a vehicle to determine whether the technology can measure and monitor methane levels from gas pipeline leaks, as compared to methane emissions from countless other sources, such as farm animals, vehicles and pollution. In the center of downtown Dallas, Atmos Energy is testing an advanced leak detection technology that is much more sensitive for identifying methane releases than conventional methods. The instrumentation is installed in a standard SUV, making it highly mobile and allowing sampling to occur at driving speeds. The tech- nician driving the vehicle also is informed in real time of potential leaks that can be investigated promptly. Right: Brandon Nelson, a compliance specialist in the Mid-Tex Division, and Tamera Hewitt, a geographic information system specialist in the division, evaluate maps from a survey to help identify areas needing closer attention for potential leaks. An existing natural gas pipeline (below) is located by Jeff Knight, a crew leader in the Louisiana Division, in preparation to install a new main to serve additional customers in Covington. Line locators use colored flags and temporary spray paint to mark the routes of all underground utility facilities, so that excavators know to dig only by hand within tolerance zones around the buried lines. Line-locating of utility lines is provided to the public free of charge. Targeted Infrastructure Replacement Bare Steel, Cast Iron and Early Generation Plastic 975 1,950 s e l i M 8,000 6,000 4,000 2,000 0 2010 2015 2020 Replacing aging pipeline infrastructure and service lines helps reduce potential leaks on our system. Since fiscal 2010, we have replaced nearly 1,000 miles of pipelines. We plan to double our replacements by fiscal 2020. 12 13 Increasing public awareness about natural gas safety is the best and most effective defense to prevent pipeline incidents. Since 2006, Atmos Energy has conducted one of the industry’s best public awareness programs to reach the 23 million adults in our service areas, 31,000 public and school officials, 13,000 emergency officials and 219,000 professional excavators. Independent opinion research shows that our messages are getting through. A compelling example is Call 811. Since the national One-Call number went into effect in 2007, pipeline damages on Atmos Energy’s system have dropped dramatically, declining from 4.0 damages per 1,000 line locates in 2008 to 2.8 in 2015. According to the Common Ground Alliance, calling 811 has reduced the risk of damaging a pipeline to less than 1 percent if an excavator calls 811, waits until the buried utility lines are marked and then observes the markings on the ground while digging. Calling 811, the national toll-free number to have all underground utility lines located and marked, has dra- matically reduced third-party damages to pipelines and utility facilities. We publicize calling 811 through regional and national advertising, cus- tomer bill inserts, community safety events, damage preven- tion programs for professional excavators and support for the national Common Ground Alliance and our states’ dam- age prevention councils. At a day-long, free workshop about the science, engineering and technology of natural gas distri- bution systems, pipeline inspectors from states in which we operate learn to fuse high-density polyethylene pipe. The training, held at our Charles K. Vaughan Center, gives the officials, many who are new to their job, hands-on experi- ence with typical assets they will find in our operations. Increasing Public Awareness about Pipeline Safety Raising awareness with school officials about pipeline safety, especially at schools near our high-pressure pipeline rights of way, is a major program we began in 2015. At the Caddo Mills Middle School in Caddo Mills, Texas, Terry Katenkamp, a field construction coordinator in our Mid-Tex Division, shows Principal Anne Payne the safest route for buses to take away from our trans- mission line in case of an evacuation. 14 15 Anthony Tetto, a senior consultant for AEGIS, our primary insurance provider, leads a Loss Control Review at our Mississippi Division. Drawing upon utility engineering and risk assessment expertise from throughout North America, AEGIS provides an objective review of our operating procedures and practices to help us identify potential problem areas and improve public and employee safety. In the assessment meetings, key operating, engineering and support personnel review safety policies, practices and programs. We cooperate and coordinate with first responders to safeguard our communities. In Basehor, Kansas, Bruce Main, a crew leader in our Colorado-Kansas Division, conducts Natural Gas 101 training for the Fairmount Township Fire Department. Atmos Energy employees have provided this training for more than 1,700 first responders in 46 communities. Chiefs and training officers from many fire departments have praised our program, but those who lead rural or volunteer fire departments have been especially appreciative because of their limited training resources. In Mississippi, our program has been adopted as part of the state fire marshal training. To protect our customers and the public, our centralized dispatch center maintains around-the-clock readiness for emergency calls. We regularly audit our emergency-call procedures and closely monitor response times. We constantly strive to improve our performance. Atmos Energy has been a supporter of stronger safety legislation and regulations. A showcase example of effective regulation is the natural-gas pipe testing requirement for all Texas schools. It has virtu- ally eliminated school gas leaks. Similarly, pipeline damage preven- tion laws in Virginia and Louisiana have lowered third-party damages and have helped dissuade careless excavators from working in these states. We are presently advocating, along with other members of the American Gas Association, reauthorization by Congress of the federal Pipeline Safety Act. Cross-bore Safety Our new cross-bore safety program warns those most at risk, such as Leon Molinario of Leon’s Plumbing in Metairie, Louisiana, while the program seeks to eliminate an unforeseen hazard. A cross bore is a natural gas or other utility line that inadvertently was installed through a sewer pipe. If a clog develops, plumbers and drain-cleaning technicians usually use a power augur to remove the blockage. Instead, we encourage them to use a video camera first to see if a cross bore is present. Here, Joseph Dimm, a senior service technician in the Louisiana Division, provides assistance. Measuring Our Safety Progress How do you know whether your company is the safest natural gas distributor in the country? Atmos Energy consistently rates better than industry averages on all safety measures reported by the American Gas Associ- ation and by other industry organizations. We also score below the national averages for employee accidents reported by the federal Occupational Safety and Health Administration. We focus on measuring three areas of safety. System safety includes excavation damages, leaks found, age of open leaks and unprotected bare-steel pipeline mileage. Employee safety tracks primarily employee injuries and vehicle collisions. Public safety looks at emergency response times. Although we have multiple safety goals to achieve within each of these three areas, we are more concerned with mea- suring our overall progress of being incident-free every day, the top goal we strive for in our culture of safety. 3 Types of Safety Measures System Safety Employee Safety Public Safety 16 17  To improve our performance, we participate in the AGA’s peer-evaluation program of safety practices. Beginning with 10 pilot companies, the program now has 50 participating utilities. Its key topics are: a culture of safety, worker procedures and risk management. We also participate in quarterly outside audits of company safety processes. Conducted by our primary insurance provider, these Loss Control Reviews are rotated among our operating divisions to examine and assess safety procedures and to share best practices. We are especially proud that Atmos Energy em- ployees have taken leading roles on safety commit- tees at both the AGA and the Southern Gas Asso- ciation. And, in key safety measures, Atmos Energy has a robust process for continuous improvement. It encourages enhancements to safety procedures and processes as we adopt new technologies and modernize our pipeline infrastructure. Accurate and up-to-date records are essential to document all the work we do on our pipelines, whether installing a new facility, repairing it, reconfiguring it or replacing it. We have launched a major information technology project to deliver state-of- the-art recordkeeping for our construction and replacement projects. Above, Daniel Waguespack, Lousiana Division compliance manager, notes changes to be made to an existing installation. Key Safety Results: 2010–2015 Active leaks down Enterprise damage rate down Employee injuries down Approximate miles of bare steel, cast iron and early-generation plastic pipe replaced 31% 19% 35% 1,000 Our goal at Atmos Energy is to be the safest natural gas provider in the United States. We take pride in all our achievements and improvements. Yet, we remain focused on being incident-free every day. Safety is our core value. Staying Focused on Safety Invest in employees and infrastructure Explore innovative technologies to enhance safety Conduct rigorous, multi-year planning for continuous improvement 18 19 Pipeline Modernization Our strategy is to grow by investing in our regulated assets to increase their safety and reliability. Through fiscal 2020, we expect to spend between $5.4 billion and $6.4 billion to replace, fortify and expand pipelines and service lines. Work is under way near Canton, Texas, on one of our largest projects. We are adding 62 miles of new pipelines to boost reliability and to meet our customers’ growing demand for natural gas. To Our Shareholders In fiscal 2015, we made spectacular progress on our quest to become the nation’s safest natural gas distributor. 575 miles 148,000 hours Highly Advanced Technology We replaced 575 miles of aging natural gas distribution and trans- mission pipelines to enhance the safety and reliability of our system. We provided nearly 148,000 hours of technical and safety training to our service and construction tech- nicians to help them render even safer, more reliable and superior customer service. We also did very well financially. We began evaluating the latest and most advanced technology designed to detect pipeline leaks, and we launched a multi-year information technology project to manage and document the construction in our pipeline modernization program. $3.09 EPS $1.56|share 25.5 percent $63.77|share Earnings per diluted share grew for the 13th consecutive year in fiscal 2015, and net income increased by 8.7 percent to $315.1 million, as compared to $289.8 million in fiscal 2014. Our fiscal 2015 cash dividend was $1.56 per share. In November 2015, the board of directors continued our consecutive annual div- idend increases for the 32nd year by raising the indicated rate for fiscal 2016 by 7.7 percent to $1.68 per share. The capital investments we are making to replace, fortify and expand our distribution and transmission assets are driving our financial results. Since fiscal 2010, our capital spending has risen at a compounded annual growth rate of 12.4 percent to reach $975 million in fiscal 2015. More than 75 percent of our investment during the past five years has been dedicated to safety and reliability projects. This significant increase in capital investment has oc- curred because most regulators in our market areas have approved constructive and balanced rate mechanisms. These mechanisms provide for the recovery of more than 90 percent of our capital within six months of the test year. Total shareholder return in fiscal 2015 was 25.5 percent. The market price of our stock reached an all- time high on November 4, 2015, of $63.77 a share. Kim R. Cocklin Chief Executive Officer The balanced regulatory environments in our markets today are the result of relationships built on trust with our regulators, legislators, community leaders and custom- ers. These relations were fostered by our former CEO and current chairman, Robert W. Best. Bob built upon the foundation laid by our founder, Charles K. Vaughan, that a successful utility is one that is trusted and is focused on providing safe, reliable and competitively priced service. 21  Earnings Growth Through Infrastructure Investments and Rate Mechanisms Constructive regulatory mechanisms support efficient conversion of our rate-base growth opportunities into our financial results. $1.0 billion to $1.4 billion in annual capital investments through 2020 Constructive rate mechanisms reducing regulatory lag 6% to 8% annual EPS growth s r a l l o d f o s n o i l l i b n i e s a b e t a R $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 >90% 2015 2020E Regulated Pipeline Regulated Distribution Earning on Annual Investments: Within 0–6 Months Within 7–12 Months Greater than 12 Months $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2015 2016E 2020E Large Investments, Yet Low Customer Bills Regulatory authorities in the states we serve recognize the critical need to accelerate capital outlays to continue to make our safe system even safer. With the resulting rate mechanisms in place today, we plan to continue investing in our pipeline infrastructure program far into the future. Equally important, even with these large expenditures for improvements, the average monthly bill for our service remains very affordable. Our average residential bill, adjusted for seasonality, has averaged less than $60 a month since 2007, and we expect our residential bills will remain in that range for at least several more years. After taking inflation into account, we expect our bills will actually go down. This positive benefit is occurring because natural gas continues to be abundant, affordable, domestically available and clean. Reputable forecasts show prices supporting this outcome for at least the next decade. The net effect is that we are significantly upgrading our infrastructure—with all the incumbent benefits of public safety and reliability of gas deliveries even on the coldest days—without our customers paying more for these service improvements. Atmos Energy’s annualized monthly gas bills, in fact, may be one of the lowest costs in the household budget of our average residential customer, as shown on page 4. Financial Results Contributions to fiscal 2015 net income were $205 million from regulated distribution operations, $94 million from regulated pipeline operations and $16 million from nonregulated operations. Our financial performance continues to reflect the successful implementation of our long-term strategy of enhancing the safety and reliability of our infrastructure. Fiscal 2015 benefited from rate outcomes approved in fiscal 2014 and 2015; they increased our regulated gross profit by $118 million. Additionally, weather, which was 8 percent colder than normal in fiscal 2015, contributed 5 cents per diluted share of earnings for the year. Recent rate-design changes in Tennessee, Mississippi and Colorado are expected to support increased capital investments in those states in the future. At September 30, 2015, our balance sheet had a debt- to-capitalization ratio of 47.7 percent, compared to 46.2 percent at year-end in fiscal 2014. The company also had nearly $900 million in net liquidity to meet anticipated financial needs. In late September 2015, we replaced an existing $1.25 billion revolving credit agreement, which was set to expire in August 2019, with a new $1.25 billion revolving credit agreement through September 2020 on substantially the same terms. The new credit agreement retains an “accordion” feature, which allows us the opportunity to increase the facility to $1.5 billion. Our strong financial position contributed to the recent upgrade of our corporate credit rating to A by Fitch Ratings and to an improvement in our outlook to Positive by Standard & Poor’s. Outlook We will continue to execute our strategy of growth by investing in our existing assets. Our announced guidance for earnings per diluted share in fiscal 2016 ranges between $3.20 and $3.40, excluding unrealized margins. Contributions to net income from regulated operations are forecast to be between $315 million and $355 million, and net income from nonregulated operations is expected to be in the range of $14 million to $19 million. We operate approximately 76,000 miles of distribution and transmission pipelines and more than 3.1 million service lines connected to customers’ premises. Our primary focus is to replace as soon as possible all the remaining cast iron pipe in our system and to evaluate for replacement all existing bare steel pipelines. In addition, our modernization program will continue to emphasize the replacement or fortification of older coated steel pipelines and early-vintage plastic pipe. We have replaced nearly 1,000 miles of cast iron, bare steel and early-generation plastic pipe since 2010, and we expect to double our replacement mileage during the next five years. We project our capital expenditures in fiscal 2016 to be between $1.0 billion and $1.1 billion and our annual capital expenditures from fiscal 2017 through fiscal 2020 to range between $1.1 billion and $1.4 billion. Our total regulated rate base value is expected to grow at a compounded annual growth rate between 9 percent and 10 percent, from approximately $5.5 billion at year- end of fiscal 2015 to between $8.5 billion and $9.0 billion by fiscal 2020. Accordingly, we project that earnings per diluted share will increase between 6 percent and 8 percent a year. This growth rate, combined with an attractive dividend, should yield an overall shareholder return between 9 percent and 11 percent each year through fiscal 2020. Management Changes As part of our senior-management succession planning, the board of directors announced promotions for two key officers, effective October 1, 2015. Michael E. Haefner, 55, was promoted from executive vice president to president and chief operating officer of Atmos Energy Corporation. In this role, he has oversight for Atmos Energy’s regulated distribution divisions, customer service operations, regulated intrastate pipeline division, nonregulated operations and the gas supply and services group. Mike also was elected to the board of directors, effective November 4, 2015. One of the most important responsibilities of the board is to establish for the CEO position a succession plan that is seamless and transparent to continue the success of the company. It is equally important that the plan is controlled by the board—that it is not required due to poor operational performance, failing health or financial distress. This plan reflects the board’s deliberate and careful consideration and their confidence that succession will be successful. Mike had been executive vice president from January 2015 through September 2015 and had previously served as senior vice president of human resources. Before joining Atmos Energy in 2008, he had worked for 10 years as senior vice president, human resources, at Sabre Holdings Corporation, the parent company of Sabre Airline Solutions, Sabre Travel Network and Travelocity. He also held leadership positions within Sabre from 1991 to 1997 while it was a division of AMR Corporation, the parent of American Airlines. Earlier, he had worked as an outside management consultant for Xerox Corporation and in computing research at Eastman Kodak Company. Mike earned a bachelor’s degree in mathematics from St. John Fisher College and a master’s degree in computer science from State University of New York at Buffalo. Mike has the vision, experience and leadership skills, as well as the understanding of our culture and values, to ensure our continued financial and operational success. The board of directors also named Marvin L. Sweetin, 52, to the newly created position of senior vice president, safety and enterprise services. Marvin had been senior vice president, utility operations, since 2011. He also had served as vice president of customer service, director of technical training and director of procurement. Before joining Atmos Energy in 2000, Marvin worked at Atlantic Richfield for 13 years in various roles, supporting petroleum exploration and production activities around the world. He earned a bachelor’s degree in petroleum engineering technology from Oklahoma State University and a master’s degree in business administration from the University of Dallas. Investing these two officers with increased responsibilities for the company’s success helps ensure our progress toward becoming the safest natural gas provider. Both leaders have demonstrated managerial excellence and made valuable contributions to our company. They are supported by our 4,800 employees, who are committed to serving our customers exceptionally well while ensuring safety for themselves, their fellow employees and the people in the 1,408 communities we serve. On our journey to becoming the safest natural gas company, we have the right employees in the right place, getting the right results the right way. Kim R. Cocklin Chief Executive Officer November 6, 2015 22 23 An Attractive Investment Atmos Energy’s High-Growth Natural Gas Delivery Investment Proposition One of the largest all-natural-gas distributors in the U.S. • Competitve total shareholder return of 9% to 11% • 6% to 8% forecasted EPS growth through fiscal 2020; attractive dividend yield • About 95% of earnings are regulated and rate base driven Diversified asset base with constructive rate regulation • Regulated distribution assets in 8 states serving more than 3 million customers • Favorably positioned regulated pipeline spans Texas shale-gas supply basins • Constructive rate mechanisms reduce or eliminate regulatory lag Strong rate base growth and minimal regulatory lag • Strong forecasted regulated rate-base growth through fiscal 2020 • Annual regulated capital expenditures between $1.0 billion and $1.4 billion through fiscal 2020; more than 80% to be spent on safety and reliability • Earning on more than 90% of annual capital within 6 months; 96% within 12 months Solid financial foundation with consistent performance • 13 consecutive years of EPS growth; 32 consecutive years of dividend growth • 7.7% increase in indicated dividend for fiscal 2016 • High investment-grade credit ratings (A-, A2, A) with ample liquidity Financial Highlights Year Ended September 30 — Dollars in thousands, except per share data 2015 2014 Change Operating revenues Gross profit Regulated distribution net income Regulated pipeline net income Nonregulated net income Total Total assets Total capitalization* Net income per share — diluted Cash dividends per share Book value per share at end of year Consolidated regulated distribution throughput (MMcf) Consolidated regulated pipeline 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) $ 4,142,136 $ 1,680,017 $ 4,940,916 $ 1,582,426 (16.2)% 6.2% $ $ 204,813 94,662 15,600 315,075 $ $ 171,585 86,191 32,041 289,817 19.4% 9.8% (51.3)% 8.7% $ 9,092,945 $ 5,650,185 3.09 $ 1.56 $ 31.48 $ $ 8,594,704 $ 5,542,218 2.96 $ 1.48 $ 30.74 $ 429,322 528,068 351,427 3,151,312 10.0% 451,803 493,360 377,441 3,115,069 9.9% 52.3% 14,940 101,892 53.8% 15,807 97,608 5.8% 1.9% 4.4% 5.4% 2.4% (5.0)% 7.0% 6.9% 1.2% 1.0% (2.8)% (5.5)% 4.4% *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 our 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 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, 2015, 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 avail- able on Atmos Energy’s website at www.atmosenergy.com. Additional investor information is presented on pages 35 and 36 of this report. 24 25  Atmos Energy at a Glance Condensed Consolidated Balance Sheets Year Ended September 30 Meters in service Residential Commercial Industrial Public authority and other Total meters Heating degree days* Actual (weighted average) Percent of normal Regulated distribution sales volumes (MMcf) Residential Commercial Industrial Public authority and other Total Regulated distribution transportation volumes (MMcf) Total regulated distribution throughput (MMcf) Intersegment activity (MMcf) Consolidated regulated distribution throughput (MMcf) Consolidated regulated pipeline transportation volumes (MMcf) Consolidated nonregulated delivered gas sales volumes (MMcf) Operating revenues (000s) Regulated distribution sales revenues Residential Commercial Industrial Public authority and other Total regulated distribution sales revenues Transportation revenues Other gas revenues Total regulated distribution revenues Regulated pipeline 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. 2015 2014 Year Ended September 30 — Dollars in thousands, except share data 2015 2014 2,878,740 262,655 1,508 8,409 3,151,312 2,846,664 258,404 1,530 8,471 3,115,069 2,608 2,685 98% 102% 170,522 100,323 14,452 8,053 293,350 148,998 442,348 (13,026) 429,322 528,068 351,427 $ 1,761,689 772,187 74,981 53,401 2,662,258 67,475 27,852 2,757,585 97,662 1,286,889 $ 4,142,136 187,431 105,074 15,746 9,069 317,320 147,776 465,096 (13,293) 451,803 493,360 377,441 $ 1,933,099 876,042 90,536 64,779 2,964,456 64,049 27,707 3,056,212 92,166 1,792,538 $ 4,940,916 $ 9,240,100 $ 7,430,580 75,806 4,753 $ 8,447,700 $ 6,725,906 73,248 4,761 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 $15,283 in 2015 and $23,992 in 2014 Gas stored underground Other current assets Total current assets Goodwill Deferred charges and other assets Capitalization and Liabilities Shareholders’ equity Common stock, no par value (stated at $0.005 per share); 200,000,000 shares authorized; issued and outstanding: 2015 – 101,478,818 shares, 2014 – 100,388,092 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 Total current liabilities Deferred income taxes Regulatory cost of removal obligation Pension and postretirement liabilities Deferred credits and other liabilities $ 8,959,702 280,398 9,240,100 1,809,520 7,430,580 $ 8,200,121 247,579 8,447,700 1,721,794 6,725,906 28,653 42,258 295,160 236,603 70,569 630,985 742,702 288,678 $ 9,092,945 343,400 278,917 111,265 775,840 742,029 350,929 $ 8,594,704 507 $ 2,230,591 (109,330) 1,073,029 3,194,797 2,455,388 5,650,185 238,942 457,954 457,927 1,154,823 1,411,315 427,553 287,373 161,696 $ 9,092,945 502 $ 2,180,151 (12,393) 917,972 3,086,232 2,455,986 5,542,218 308,086 405,869 196,695 910,650 1,286,616 445,387 340,963 68,870 $ 8,594,704 26 27  Condensed Consolidated Statements of Income Condensed Consolidated Statements of Cash Flows Year Ended September 30 — Dollars in thousands, except per share data 2015 2014 2013 Year Ended September 30 — Dollars in thousands 2015 2014 2013 Operating revenues Regulated distribution segment Regulated pipeline segment Nonregulated segment Intersegment eliminations Purchased gas cost Regulated distribution segment Regulated pipeline segment Nonregulated segment Intersegment eliminations Gross profit Operating expenses Operation and maintenance Depreciation and amortization Taxes, other than income Total operating expenses Operating income Miscellaneous 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 ($0, $0 and $3,986) Gain on sale of discontinued operations, net of tax ($0, $0 and $2,909) 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 $ 2,763,835 370,112 1,472,209 (464,020) 4,142,136 1,526,258 — 1,399,349 (463,488) 2,462,119 1,680,017 541,868 274,796 231,958 1,048,622 631,395 (4,389) 116,241 510,765 195,690 315,075 — — 315,075 $ $ $ $ $ 3.09 — 3.09 3.09 — 3.09 $ 3,061,546 318,459 2,067,292 (506,381) 4,940,916 $ 2,399,493 268,900 1,587,914 (380,847) 3,875,460 1,885,031 — 1,979,337 (505,878) 3,358,490 1,582,426 1,318,257 — 1,524,583 (379,430) 2,463,410 1,412,050 505,154 253,987 211,936 971,077 611,349 (5,235) 129,295 476,819 187,002 289,817 — — 289,817 2.96 — 2.96 2.96 — 2.96 $ $ $ $ $ 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 $ $ $ $ $ 101,892 101,892 97,606 97,608 90,533 91,711 Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: 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 Net proceeds from equity offering Settlement of Treasury lock agreements Repayment of long-term debt Cash dividends paid Repurchase of equity awards Issuance of common stock Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ 315,075 $ 289,817 $ 243,194 — — (8,203) 274,796 1,209 192,886 27,491 5,922 (850) 19,990 836,519 (975,132) — 377 (974,755) 254,780 493,538 — 13,364 (500,000) (160,018) (7,985) 30,952 124,631 (13,605) 42,258 28,653 253,987 969 189,952 25,531 9,409 (428) (29,251) 739,986 (835,251) — (2,325) (837,576) (165,865) — 390,205 — — (146,248) (8,717) 4,274 73,649 (23,941) 66,199 42,258 $ 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 $ $ 28 29  Report of Independent Registered Public Accounting Firm on Condensed Financial Statements Condensed Financial and Statistical Summary 2011–2015 The Board of Directors and Shareholders of Atmos Energy Corporation Year Ended September 30 2015 2014 2013 2012 2011 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, 2015 and 2014, 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, 2015 (not presented separately herein); and in our report dated November 6, 2015, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements as of September 30, 2015 and 2014 and for each of the three years in the period ended September 30, 2015 (presented on pages 27 through 29) 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, 2015, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 6, 2015 (not presented separately herein) expressed an unqualified opinion thereon. Dallas, Texas November 6, 2015 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) 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 975,132 $ 7,430,580 (523,838) 9,092,945 3,194,797 2,455,388 5,650,185 $ 4,142,136 1,680,017 315,075 — 315,075 3.09 — 3.09 835,251 $ 845,033 $ 732,858 $ $ 6,725,906 (134,810) 8,594,704 3,086,232 2,455,986 5,542,218 6,030,655 (301,353) 7,934,268 2,580,409 2,455,671 5,036,080 5,475,604 (447,992) 7,495,675 2,359,243 1,956,305 4,315,548 622,965 5,147,918 143,355 7,282,871 2,255,421 2,206,117 4,461,538 $ 4,940,916 $ 3,875,460 $ 3,436,162 $ 4,286,435 1,300,820 1,582,426 189,588 289,817 18,013 — 207,601 289,817 2.07 2.96 0.20 — 2.27 2.96 1,323,739 192,196 24,521 216,717 2.10 0.27 2.37 1,412,050 230,698 12,496 243,194 2.50 0.14 2.64 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 regulated distribution sales volumes (MMcf) Consolidated regulated distribution transportation volumes (MMcf) Consolidated regulated distribution throughput (MMcf) Consolidated regulated pipeline transportation volumes (MMcf) Consolidated nonregulated delivered gas sales volumes (MMcf) Meters in service at end of year Regulated distribution average cost of gas per Mcf sold Regulated distribution average transportation fee per Mcf Statistics Return on average shareholders’ equity Number of employees Net regulated distribution plant per meter Regulated distribution operation and maintenance expense per meter Meters per employee—regulated distribution Times interest earned before income taxes $ $ $ $ $ 101,479 101,892 1.56 14,940 58.81 47.35 58.18 31.48 18.83 1.85 2.7% $ $ $ $ $ 100,388 97,608 90,640 91,711 90,240 91,172 1.48 $ 1.40 $ 1.38 $ 15,807 16,662 17,775 53.40 $ 41.08 $ 47.70 $ 30.74 $ 16.11 1.55 3.1% 45.19 $ 33.20 $ 42.59 $ 28.47 $ 16.13 1.50 3.3% 36.94 $ 30.60 $ 35.79 $ 26.14 $ 15.10 1.37 3.9% 90,296 90,652 1.36 18,680 34.98 28.87 32.45 24.98 14.30 1.30 4.2% 293,350 317,320 272,773 255,725 289,927 135,972 429,322 134,483 451,803 124,264 397,037 135,258 390,983 134,093 424,020 528,068 493,360 467,178 466,527 435,012 351,427 3,151,312 5.20 $ 0.49 $ 377,441 3,115,069 $ $ 5.94 $ 0.47 $ 343,669 3,011,980 351,628 3,116,589 384,799 3,213,191 5.30 0.46 4.64 $ 0.43 $ 4.91 $ 0.45 $ $ $ 10.0% 4,753 1,799 123 688 4.19 $ $ 9.9% 4,761 1,670 $ 9.7% 4,720 1,567 $ 9.3% 4,759 1,468 $ 9.1% 4,949 1,362 124 $ 679 4.63 126 $ 662 4.01 118 $ 680 3.27 111 676 3.13 30 31  Atmos Energy Officers Atmos Energy Officers Senior Management Team Regulated Divisions Nonregulated Operations Shared Services (continued) Kim R. Cocklin Chief Executive Officer J. Kevin Akers President, Kentucky/Mid-States Division Mark S. Bergeron President, Atmos Energy Holdings, Inc. Conrad E. Gruber Vice President, Strategic Planning Michael E. Haefner President and Chief Operating Officer Richard A. Erskine President, Atmos Pipeline–Texas Division Bret J. Eckert Senior Vice President and Chief Financial Officer David E. Gates President, Mississippi Division Louis P. Gregory Senior Vice President, General Counsel and Corporate Secretary Marvin L. Sweetin Senior Vice President, Safety and Enterprise Services 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 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 Kelli L. Martin Vice President, Workforce Development John S. McDill Vice President, Pipeline Safety Christopher T. Forsythe Vice President and Controller Edward Pace McDonald IV Vice President, Tax Susan K. Giles Vice President, Investor Relations Richard J. Gius Vice President and Chief Information Officer Daniel M. Meziere Vice President and Treasurer John M. Robbins Vice President, Human Resources 32 33  Board of Directors 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 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 avail- able at no charge from Investor Relations, Atmos Energy Corpo- ration, 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 website at www.atmosenergy.com. Annual Meeting of Shareholders The 2016 Annual Meeting of Shareholders will be held at the Charles K. Vaughan Center, 3697 Mapleshade Lane, Plano, Texas 75075 on Wednesday, February 3, 2016, 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 Corpo- ration, 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, corpo- rate 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 Robert W. Best Chairman of the Board, Kim R. Cocklin Chief Executive Officer, Richard W. Douglas Executive Vice President, Ruben E. Esquivel Vice President for Richard K. Gordon General Partner of Juniper Atmos Energy Corporation Atmos Energy Corporation Jones Lang LaSalle LLC Community and Corporate Energy LP and Co-founder Dallas, Texas Dallas, Texas Dallas, Texas Relations, UT Southwestern of Juniper Capital II Board member since 1997 Board member since 2009 Board member since 2007 Medical Center Houston, Texas Committee: Executive (Chair) Committees: Human Dallas, Texas Board member since 2001 Resources, Nominating and Board member since 2008 Committees: Human Corporate Governance, Committees: Audit, Resources (Chair), Work Session/Annual Meeting Human Resources Executive, Nominating and Corporate Governance Robert C. Grable Partner, Kelly Hart & Hallman LLP Fort Worth, Texas Michael E. Haefner President and Chief Operating Officer, Dr. Thomas C. Meredith President, Effective Nancy K. Quinn Independent Energy Richard A. Sampson General Partner and Founder, Leadership LLC Consultant RS Core Capital, LLC Atmos Energy Corporation Oxford, Mississippi Key Biscayne, Florida Denver, Colorado Board member since 2009 Dallas, Texas Board member since 1995 Board member since 2004 Board member since 2012 Committees: Audit, Board member since 2015 Committees: Work Session/ Lead Director since 2013 Committees: Audit, Human Resources, Work Session/Annual Meeting Annual Meeting (Chair), Committees: Audit (Chair), Human Resources Executive, Human Resources, Executive, Nominating and Nominating and Corporate Corporate Governance Governance Stephen R. Springer Retired Senior Vice President Richard Ware II Chairman and President, Charles K. Vaughan Honorary Director, and General Manager, Midstream Division, Amarillo National Bank Amarillo, Texas Retired Chairman of the Board and The Williams Companies, Inc. Board member since 1994 Retired Lead Director, Fort Myers Beach, Florida Committees: Nominating Atmos Energy Corporation Board member since 2005 and Corporate Governance Dallas, Texas Committee: Work Session/ (Chair), Audit, Board member from Annual Meeting Executive, Work Session/ 1983 to 2012 Annual Meeting 34 35 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 “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, 2015. 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 information, 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 2015 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 www.proxyvote.com to give your consent. Please remember that accessing our Summary Annual Report and other company documents over the Internet may result in charges to you from your Internet service provider or telephone company. Opposite: The High Five Interchange, the first-ever confluence of five stacked highways, is a Dallas landmark. Its height exceeds a 12-story building and its roadways include 37 permanent bridges and other unusual design and construction features. One other feature is a natural gas transmission pipeline beneath the site. To assure greater safety and reliability, our Mid-Tex Division is replacing a segment of the 20-inch pipeline that crosses a creek and runs through a highly developed urban area. Data sources for the chart Monthly Utility Bills on page 4 • Natural Gas $52: Atmos Energy enterprise average monthly residential billing for fiscal 2015, adjusted for seasonality • Cable $77: Federal Communications Commission 2013 research at www.fcc.gov; Table 1, overall average, “Next Most Popular Service” category • Electricity $128: U.S. Energy Information Administration report; Average Annual Energy Bills by Census Division, 2009–2040 Table of Energy Expenditure, Residential, Electricity. Average of monthly electric bills for 2014 of the following regions: West North Central, East South Central, West South Central, Mountain • Water & Sewer $137: www.circleofblue.org; average of the 30 major U.S. cities, excluding the highest and lowest values • Mobile Phone $138: www.usnews.com; average of four service providers referred to in first paragraph of article © 2015 Atmos Energy Corporation. All rights reserved. Atmos Energy® is a registered trademark of Atmos Energy Corporation. 36 Atmos Energy Corporation P.O. Box 650205 Dallas, Texas 75265-0205 atmosenergy.com 

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