Atmos Energy 2005 Annual Report Download - page 3

2 3
f i n a n c i a l ฀ h i g h l i g h t s l e t t e r ฀ t o ฀ s h a r e h o l d e r s
YEAR฀ENDED฀SEPTEMBER฀30฀(Dollars฀in฀thousands,฀except฀per฀share฀data)฀ ฀ ฀ 2 0 0 5 ฀ ฀ 2 0 0 4 ฀ ฀ C h a n g e
Operating฀revenues฀ ฀ ฀ ฀ ฀ $฀4,973,326฀ $฀ 2,920,037฀ ฀ 70.3%
Gross฀profit฀ ฀ ฀ ฀ ฀ ฀ $฀1,129,090฀ $฀ 562,191฀ ฀ 100.8%
Utility฀net฀income฀ ฀ ฀ ฀ ฀ $฀81,117฀ $฀ 63,096฀ ฀ 28.6%
Natural฀gas฀marketing฀net฀income฀ ฀ ฀ ฀ ฀ ฀ 23,404฀ ฀ 16,633฀ ฀ 40.7%
Pipeline฀and฀storage฀net฀income฀ ฀ ฀ ฀ ฀ ฀ 30,599฀ ฀ 2,767฀ ฀ 1,005.9%
Other฀nonutility฀net฀income฀ ฀ ฀ ฀ ฀ ฀ 665฀ ฀ 3,731฀ ฀ -82.2%
฀ Total฀ ฀ ฀ ฀ ฀ ฀ $฀135,785฀ $฀ 86,227฀ ฀ 57.5%
Total฀assets฀ ฀ ฀ ฀ ฀ ฀ $฀5,653,527฀ $฀ 2,912,627฀ ฀ 94.1%
Total฀capitalization*฀ ฀ ฀ ฀ ฀ $฀3,785,526฀ $฀ 1,994,770฀ ฀ 89.8%
Net฀income฀per฀share฀–฀diluted฀ ฀ ฀ ฀ ฀ $฀1.72฀ $฀ 1.58฀ ฀ 8.9%
Cash฀dividends฀per฀share฀ ฀ ฀ ฀ ฀ $฀1.24฀ $฀ 1.22฀ ฀ 1.6%
Book฀value฀per฀share฀at฀end฀of฀year฀ ฀ ฀ ฀ ฀ $฀19.90฀ $฀ 18.05฀ ฀ 10.2%
Consolidated฀utility฀segment฀throughput฀(MMcf)฀ ฀ ฀ ฀ ฀ 411,134฀ ฀ 246,033฀ ฀ 67.1%
Consolidated฀natural฀gas฀marketing฀segment฀throughput฀(MMcf)฀ ฀ ฀ 238,097฀ ฀ 222,572฀ ฀ 7.0%
Consolidated฀pipeline฀and฀storage฀segment฀฀
฀ transportation฀volumes฀(MMcf)฀ ฀ ฀ ฀ ฀ ฀ 375,604฀ ฀ —฀ ฀ —
Heating฀degree฀days฀ ฀ ฀ ฀ ฀ ฀ 2,587฀ ฀ 3,271฀ ฀ -20.9%
Degree฀days฀as฀a฀percentage฀of฀normal฀ ฀ ฀ ฀ ฀ ฀ 89%฀ ฀ 96%฀ ฀ -7.3%
Meters฀in฀service฀at฀end฀of฀year฀ ฀ ฀ ฀ ฀ ฀ 3,157,840฀ ฀ 1,679,136฀ ฀ 88.1%
Return฀on฀average฀shareholders’฀equity฀ ฀ ฀ ฀ ฀ ฀ 9.0%฀ ฀ 9.1%฀ ฀ -1.1%
Shareholders’฀equity฀as฀a฀percentage฀of฀total฀capitalization฀
฀ (including฀short-term฀debt)฀at฀end฀of฀year฀ ฀ ฀ ฀ ฀ ฀ 40.7%฀ ฀ 56.7%฀ ฀ -28.2%
Shareholders฀of฀record฀ ฀ ฀ ฀ ฀ ฀ 26,242฀ ฀ 27,555฀ ฀ -4.8%
Weighted฀average฀shares฀outstanding฀–฀diluted฀(000s)฀ ฀ ฀ ฀ ฀ 79,012฀ ฀ 54,416฀ ฀ 45.2%
*฀Total฀capitalization฀represents฀the฀sum฀of฀shareholders’฀equity฀and฀long-term฀debt฀(excluding฀current฀maturities).฀
D E A R ฀ F E L L O W ฀ S H A R E H O L D E R :
Our฀acquisition฀of฀the฀distribution฀and฀pipeline฀
operations฀of฀TXU฀Gas฀has฀created฀a฀powerful฀union—
which฀is฀the฀subject฀of฀much฀of฀this฀year’s฀report.
฀ The฀acquisition,฀which฀closed฀on฀October฀1,฀2004,฀
has฀exceeded฀our฀best฀expectations,฀as฀measured฀on฀
several฀dimensions.฀It฀contributed฀to฀Atmos฀Energy’s฀
extraordinary฀financial฀results฀in฀fiscal฀2005.฀It฀
transformed฀Atmos฀Energy฀into฀the฀largest฀all-natural-
gas฀distribution฀company฀in฀the฀country,฀and฀it฀
created฀major฀opportunities฀for฀future฀growth.
฀ Atmos฀Energy’s฀gross฀profit฀in฀fiscal฀2005฀doubled฀฀
to฀exceed฀$1฀billion฀for฀the฀first฀time฀in฀our฀company’s฀
history.฀Net฀income฀increased฀58฀percent฀to฀a฀record฀
$135.8฀million,฀and฀earnings฀per฀diluted฀share฀grew฀by฀
14฀cents฀to฀$1.72.฀
฀ Fiscal฀2005฀marked฀our฀fifth฀year฀of฀consistently฀
improved฀performance.฀Our฀total฀return฀to฀shareholders฀
was฀17.2฀percent,฀and฀our฀return฀on฀average฀shareholders’฀
equity฀was฀9.0฀percent.
฀ Recognizing฀these฀accomplishments,฀the฀Board฀of฀
Directors฀raised฀the฀dividend฀by฀2฀cents฀to฀an฀indicated฀
annual฀rate฀of฀$1.26฀per฀share.฀This฀marked฀our฀18th฀
consecutive฀annual฀increase.฀Moreover,฀when฀adjusted฀
for฀mergers฀and฀acquisitions,฀Atmos฀Energy’s฀dividend฀
has฀gone฀up฀every฀year฀since฀it฀was฀formed฀in฀1983.
E X C E P T I O N A L ฀ P E R F O R M A N C E
Atmos฀Energy’s฀employees฀did฀more฀than฀just฀deliver฀on฀
the฀company’s฀promise฀of฀$1.65฀to฀$1.75฀in฀earnings฀per฀
diluted฀share฀for฀fiscal฀2005.฀They฀overcame฀warmer-
than-normal฀weather฀that฀reduced฀earnings฀by฀29฀cents฀
per฀diluted฀share,฀dilution฀from฀a฀year-over-year฀
increase฀of฀24.6฀million฀more฀shares฀outstanding฀and฀
the฀ravages฀of฀two฀hurricanes฀that฀affected฀two-thirds฀
of฀our฀Louisiana฀operations฀and฀a฀portion฀of฀our฀
Mississippi฀territory.
฀ The฀TXU฀Gas฀acquisition฀was฀a฀major฀contributor฀
to฀earnings.฀It฀was฀accretive฀in฀the฀first฀year—adding฀
18฀cents฀to฀earnings฀per฀diluted฀share.฀That฀result฀far฀
surpassed฀our฀original฀estimate฀of฀a฀contribution฀from฀
5฀cents฀to฀10฀cents฀per฀diluted฀share.
฀
฀ The฀acquisition฀has฀nearly฀doubled฀the฀size฀of฀฀
our฀utility฀operations฀by฀adding฀1.5฀million฀gas฀฀
utility฀customers฀in฀Texas.฀Overall,฀the฀additional฀
territory฀exceeds฀national฀averages฀for฀customer฀
growth.฀In฀particular,฀the฀Dallas฀and฀Fort฀Worth฀
metropolitan฀areas฀as฀well฀as฀the฀northern฀suburbs฀฀
of฀Austin฀are฀experiencing฀strong฀residential฀and฀
commercial฀development.
฀ Integrating฀the฀former฀TXU฀Gas฀employees฀and฀
operations฀has฀gone฀exceptionally฀well.฀Our฀integration฀
teams฀have฀exceeded฀goals฀and฀completed฀work฀well฀
ahead฀of฀deadlines.฀In฀particular,฀we฀are฀proud฀of฀the฀
conversion฀of฀all฀the฀former฀back-office฀and฀information฀
technology฀systems.฀We฀no฀longer฀are฀using฀any฀
outsourced฀services฀for฀meter฀reading,฀customer฀billing฀
or฀telephone฀call฀centers.฀We฀expect฀that฀using฀our฀own฀
state-of-the-art฀systems฀will฀lead฀to฀improved฀customer฀
satisfaction฀and฀lower฀long-term฀operating฀costs.
$1.72
$1.58
$1.54
$1.47 $1.45
$1.80
฀
1.50
฀
1.20
0.90
0.60
฀ 2001฀ 2002฀ 2003฀ 2004฀ 2005
E a r n i n g s ฀ R e v i e w
Net฀income฀per฀diluted฀share