Atmos Energy 2003 Annual Report Download - page 5

We have pursued a consistent strategy of running
our utilities well, of making sound acquisitions
and of expanding our nonutility business. Our reputa-
tion has grown not from our size, but from the
neighborliness, mettle and strength of character of
Atmos Energy’s employees.
Our commitment to strong ethics and integrity has
been part of the company since its founding, long
before the Sarbanes-Oxley Act was passed. To reiterate
that commitment, the Board of Directors this past year
reviewed and revised its committee charters and our
code of conduct for all directors, officers and employees.
We pledge to continue to manage
Atmos Energy for long-term success,
not for immediate or personal gains.
Our goals remain to grow and prosper
financially, to foster great customer
service, to be a safe and rewarding
place to work and to benefit all those
who associate with Atmos Energy—
our shareholders, customers, communities and
employees. I thank you, our owners, and all of our
employees for supporting these goals.
Consistency in purpose, financial results and
ethical conduct stands as Atmos Energy’s foremost
strength as we observe our 20th year.
Robert W. Best
Chairman, President and Chief Executive Officer
December 1, 2003
Second, we made a $77 million contribution to
our pension plan to adequately fund the plan. This
should help to protect our employees and retirees
and to reduce our future pension funding requirements.
Third, we closed our acquisition of Mississippi
Valley Gas Company and welcomed some 260,000 new
utility customers and 600 employees of Valley Gas
into Atmos Energy. The transaction was the company’s
ninth major acquisition.
Fourth, we renewed our credit facilities in both
our utility and nonutility operations. These credit
agreements have allowed us to finance all of our oper-
ations in an orderly and disciplined fashion.
Fifth, we received rate increases in Louisiana and in
Amarillo, Texas,
and we achieved
weather normaliza-
tion adjustments
in Kansas and Amarillo. Our ability to grow our
earnings relies on our continual success in achieving
fair rate designs and keeping rates current.
Sixth, by using our 49.4 billion cubic feet of
usable and contracted natural gas storage and fixed-
forward supply contracts, we hedged about half
of our winter gas supply to save our utility customers
more than $67 million last year in gas costs.
Seventh, we took steps to enhance the profitability
of our nonutility operations by contracting for an
additional 1.25 billion cubic feet of natural gas storage,
installing a new billing system and renegotiating
contracts to reduce the risk of price volatility.
7
Eighth, we pursued our passion for customer service.
Excellence in customer service is an attitude and it
starts with each employee. During 2003, we launched
a systemwide customer service training program.
Ninth, our investments in technology yielded increas-
ing dividends. Our Enterprise Asset Management
Project, as described on page 18, is the latest in a long
list of information and telecommunications advances
we’ve made. With our highly automated Customer
Support Center and Internet site, we’re serving customers
better and at lower costs.
Tenth, we continued to manage our total spending
in strategic ways. Both our capital outlays and
operation and maintenance expense were under budget.
Capital expen-
ditures during
fiscal 2003 were
$159 million.
Our O&M expense per customer of $122 continues to
compare favorably to our peer group’s average
expense of $195. Closely managing capital and O&M
expenditures helps us stay highly competitive.
These 10 achievements reflect many of the
characteristics that differentiate Atmos Energy in the
business of delivering natural gas. This summary
annual report discusses those characteristics that
during the past 20 years have made Atmos Energy
a company that works.
2004OUTLOOK
We expect fiscal 2004 will be a challenging
year. High gas costs will make collecting customer
bills more difficult and will require us to make
higher cash outlays for gas supplies. We have targeted
annual earnings growth of 3percent to 5percent,
with our earnings per diluted share expected to range
from $1.55 to $1.60.
As Atmos Energy enters its third decade, the
company is well positioned for long-term growth and
continued success. Our balance sheet is strong;
our credit ratings are high; our rate filings have added
to revenues and have reduced the effects of weather
on profitability; and our earnings have grown at a steady
pace, enabling us to pay higher dividends each year.
FOUNDATION OF SUCCESS
The foundation of Atmos Energy’s success has
been built on our utility operations,
which provide about 80 percent of
our net income. Through acquisitions,
we have evolved from a regional Texas
gas utility to one of the country’s largest
natural gas distribution companies.
We are known for making responsible,
disciplined and accretive acquisitions.
To strengthen the company’s foundation, we
have added opportunities for long-term growth
through our nonutility operations. Our natural
gas marketing business, for instance, ranks as one
of the best in the industry based on independent
customer satisfaction surveys.
6
These 10 achievements reflect many of the
characteristics that differentiate Atmos Energy
in the business of delivering natural gas.