10-KPeriod: FY2002

ATMOS ENERGY CORP Annual Report, Year Ended Sep 30, 2002

Filed November 22, 2002For Securities:ATO

Summary

Atmos Energy Corporation's 2002 10-K filing details its operations as a natural gas utility across multiple states, alongside non-regulated energy businesses. The company reported a decrease in operating revenues for the fiscal year ended September 30, 2002, primarily due to lower natural gas prices and warmer weather conditions impacting sales volumes. However, gross profit saw a modest increase, aided by the acquisition of Louisiana Gas Service operations and full consolidation of Woodward Marketing. A significant development during the year was the pending acquisition of Mississippi Valley Gas Company, which was expected to close in December 2002, significantly expanding the company's customer base. The company also highlighted its strategy of efficient utility operations, profitable growth in non-utility segments, and strategic acquisitions to deliver shareholder value. Management expressed confidence in the company's liquidity and future capital needs being met through internally generated funds and existing credit facilities.

Key Highlights

  • 1Operating revenues decreased by 34% to $950.8 million in fiscal 2002 compared to $1.4 billion in fiscal 2001, primarily due to a 31% decrease in average sales price and a 17% decrease in sales volumes.
  • 2Gross profit increased by 5% to $392.6 million in fiscal 2002 from $374.7 million in fiscal 2001, driven by acquisitions and full consolidation of Woodward Marketing, partially offset by warmer weather.
  • 3The company was in the process of acquiring Mississippi Valley Gas Company for $150 million, with an expected closing in December 2002, which would add approximately 261,500 customers.
  • 4Operating expenses increased to $275.8 million in fiscal 2002 from $244.9 million in fiscal 2001, mainly due to the inclusion of Louisiana Gas Service operations and increased pension costs.
  • 5Net income increased by 6.3% to $59.7 million in fiscal 2002 from $56.1 million in fiscal 2001.
  • 6Atmos Energy continued to hedge gas costs for the 2002-2003 heating season using a combination of storage, financial hedges, and fixed forward contracts.
  • 7The company's strategy focuses on efficient utility operations, profitable growth in non-utility segments, and growth through acquisitions.

Frequently Asked Questions

The primary reasons for the decrease in operating revenues were a 31% decrease in the average sales price of natural gas, largely due to lower commodity costs, and a 17% decrease in sales volumes, attributed to warmer weather conditions compared to the previous year.

Atmos Energy's core strategy involves delivering superior shareholder value by efficiently managing its utility operations, profitably growing its non-utility businesses to complement its utility segment, and pursuing profitable growth through acquisitions.

At the time of this filing, Atmos Energy had entered into a definitive agreement to acquire Mississippi Valley Gas Company, a privately held natural gas utility, for $150 million. The acquisition was expected to close in December 2002 and would add approximately 261,500 customers.

Atmos Energy manages its exposure to natural gas price volatility through various hedging strategies. For its utility operations, it uses a combination of storage, financial hedges, and fixed forward contracts to stabilize gas costs. For its natural gas marketing segment, it employs futures, forwards, options, and swap contracts for risk management purposes related to its physical trading positions.