Atmos Energy 2003 Annual Report Download - page 4

Our consistent dividend increases, along with
recent cuts in the federal income tax on dividends,
have made our stock more attractive to investors
seeking value and growth. To the extent our operating
results and financial condition permit, the Board
of Directors remains committed to raising the dividend
annually and to lowering the payout ratio in the
future to around 65 percent of earnings.
2003IN REVIEW
Fiscal 2003 was not without challenges. One of the
major hurdles we had to overcome was natural gas
prices that were both high and volatile.
Zig-zagging gas prices put additional
demands on our collection efforts and
cut into both our utility and nonutility
earnings. Like other corporations,
we also faced the added challenge of
controlling rapidly rising costs for
our employee pension plan, medical
coverage and liability insurance.
Through the dedicated determi-
nation of our employees, we not only
managed those matters, but also achieved other
successes. Ten achievements stand out because they
will contribute to our long-term success.
10MAJOR ACHIEVEMENTS
First, we took advantage of a window of opportunity
to sell 4.1 million common shares. The sale strength-
ened our balance sheet by improving our debt-to-equity
ratio and bolstered our high credit ratings.
5
DEAR FELLOW SHAREHOLDERS:
I am extremely proud of all the work by Atmos
Energy’s employees who made our 20th anniversary
year such a success.
Atmos Energy is a company that works. Our 2,905
employees work hard to serve our customers and to
deliver strong financial results. For the past two
decades, their efforts have produced consistent growth
and above-average returns for our 70,000 owners.
That was true again in fiscal 2003. We achieved
a 20 percent increase in net income and a 6percent
rise in earnings per diluted share.
In fiscal 2003, Atmos Energy earned
$71.7 million. Earnings per diluted
share were $1.54 and were within our
stated guidance of $1.52 to $1.58 per
diluted share. Moreover, we exceeded
our industry peer group’s average
total return of 16.4 percent, delivering
a solid 17.2 percent total return to
our shareholders. Return on average
shareholders’ equity was 9.9 percent.
Recognizing these successful results, the Board
of Directors in November 2003 increased the annual
dividend rate by 2 cents per share. In fiscal 2003,
Atmos Energy paid total cash dividends of $1.20 per
share. The indicated annual dividend rate for fiscal
2004 is $1.22 per share.
Paying cash dividends consistently is one of the
best measures of a company’s financial strength.
Atmos Energy’s record of consecutive annual dividend
increases ranks it among the top 2.5 percent of
corporations that pay dividends.
Year ended September 30 (Dollars in thousands, except per share data) 2003 2002 Change
Operating revenues $ 2,799,916 $ 1,650,964 69.6%
Gross profit $ 534,976 $ 431,140 24.1%
Utility net income $ 62,137 $ 42,994 44.5%
Natural gas marketing net income (loss) (970) 12,614 -107.7%
Other nonutility net income 10,521 4,048 159.9%
Total $ 71,688 $ 59,656 20.2%
Total assets $ 2,518,508 $ 1,981,385 27.1%
Total capitalization $ 1,721,435 $ 1,243,698 38.4%
Net income per share – diluted $ 1.54 $ 1.45 6.2%
Cash dividends per share $ 1.20 $ 1.18 1.7%
Book value per share at end of year $ 16.66 $ 13.75 21.2%
Consolidated utility segment throughput (MMcf) 247,965 208,541 18.9%
Consolidated natural gas marketing segment throughput (MMcf) 225,961 204,027 10.8%
Heating degree days 3,473 3,368 3.1%
Degree days as a percentage of normal 101% 94% 7.4%
Meters in service at end of year 1,672,798 1,389,341 20.4%
Return on average shareholders’ equity 9.9% 9.9% —
Shareholders’ equity as a percentage
of total capitalization (including short-term
debt) at end of year 46.4% 40.6% 14.3%
Shareholders of record 28,510 28,829 -1.1%
Weighted average shares outstanding – diluted (000s) 46,496 41,250 12.7%
Letter to Shareholders
Letter to
Shareholders
5 8 22 30 31 32
Operational
Review
Financial
Review
Atmos Energy
Officers
Board of
Directors
Corporate
Information
0.00
0.60
1.20
$1.80
1.50
0.90
0.30
1999 2000 2001 2002 2003
Cash dividends per share
Earnings per share