Atmos Energy (ATO) 8-K Atmos Energy Corporation Reports Solid Results

Exhibit 99.1

News Release

Analysts and Media Contact:

Susan Kappes (972) 855-3729

Atmos Energy Corporation Reports Solid Results

for Fiscal 2004 Second Quarter and Six Months

DALLAS (May 11, 2004)—Atmos Energy Corporation (NYSE: ATO) today reported net income of $58.3 million, or $1.12 per diluted share, for the fiscal 2004 second quarter ended March 31, 2004, compared with net income of $48.5 million, or $1.07 per diluted share (after the cumulative effect of a change in accounting principle), for the fiscal 2003 second quarter ended March 31, 2003.

For the six months ended March 31, 2004, net income was $87.8 million, or $1.69 per diluted share, compared with net income of $74.3 million, or $1.68 per diluted share (after the cumulative effect of a change in accounting principle), for the six months ended March 31, 2003.

The change in accounting principle adopted in the 2003 second quarter reflected the final provisions of EITF 02-03, which prompted the company to change the way it accounts for gas storage and transportation contracts, resulting in a cumulative noncash net of tax charge of $7.8 million. Income before the cumulative effect of the accounting change was $56.3 million for the fiscal 2003 second quarter, or $1.24 per diluted share. For the six-month period of fiscal 2003, income before the cumulative effect of the accounting change was $82.1 million, or $1.86 per diluted share.

Results for the first six months of fiscal 2004 represent a 7 percent year-over-year increase in net income before the cumulative effect of the accounting change, despite weather that was 6 percent warmer than last year. Earnings per diluted share before the cumulative effect of the accounting change decreased 9 percent because the company’s average number of diluted shares outstanding rose by 7.9 million shares, or 18 percent, from March 31, 2003, to March 31, 2004.

“Solid results from our nonutility operations helped overcome lower volumes in both our utility and nonutility segments caused by unseasonably warm weather during the first six months of our 2004 fiscal year,” said Robert W. Best, chairman, president and chief executive officer of Atmos Energy Corporation. “As in the first quarter of 2004, our complementary strategy of operating both utility and nonutility businesses proved beneficial for our shareholders. We continue to be on-track to meet our earlier-announced guidance for fiscal 2004 of earning between $1.55 and $1.60 per diluted share.”

Results for the 2004 Second Quarter Ended March 31, 2004

Consolidated gross profit for the 2004 second quarter ended March 31, 2004, was $206.1 million, compared with $203.0 million for the same period last year. Utility gas throughput for the 2004 second quarter was 97.8 billion cubic feet (Bcf), compared with 100.2 Bcf for the same period a year ago. Lower throughput in the current quarter primarily was due to lower consumption, resulting from weather that was 2 percent warmer than the prior-year quarter and 3 percent warmer than normal, as adjusted for jurisdictions with weather-normalized operations. Strong results in the nonutility natural gas marketing segment more than offset the negative effect of weather in the utility segment.

Atmos Energy’s net income from nonutility operations, which operate under Atmos Energy Holdings, Inc., was $7.7 million for the second quarter of 2004, compared with net income of $2.3 million for the same period last year, before the cumulative effect of the accounting change. Nonutility net income was higher in the 2004 second quarter primarily due to enhanced margins, improved optimization of managed proprietary and third-party storage assets and improved management of full-requirements customers. Nonutility operations also were favorably affected by a $2.9 million net of tax gain on the sale of the company’s indirect interest in Heritage Propane Partners, L.P. (Heritage) during the 2004 second quarter. Nonutility operations contributed 13 percent of the 2004 second quarter consolidated net income, compared with 4 percent for the prior-year quarter, excluding the cumulative effect of the accounting change. Consolidated natural gas marketing sales volumes were 67.2 Bcf for the 2004 second quarter, compared with 73.4 Bcf for the prior-year quarter. The decrease in natural gas marketing sales volumes in the current quarter primarily was due to weather that was warmer than the prior-year quarter.

Operation and maintenance expense for the 2004 second quarter was $59.1 million, compared with $55.7 million in the 2003 quarter. Excluding the provision for doubtful accounts, operation and maintenance expense for the 2004 second quarter increased $4.1 million from the second quarter last year, primarily due to an increase in compensation and insurance costs. The provision for doubtful accounts was $4.5 million in the second quarter of 2004, compared with $5.2 million last year. In the utility segment, the average cost of natural gas for the 2004 second quarter was $6.72 per thousand cubic feet (Mcf), compared with $6.13 per Mcf for the 2003 period.

Miscellaneous income for the 2004 second quarter was $4.5 million, compared with expense of $1.5 million for the same period in 2003. The $6.0 million change was primarily attributable to the $4.9 million pretax gain associated with the sale of the company’s indirect interest in Heritage during the 2004 second quarter. Miscellaneous income (expense) also was favorably affected by the absence in 2004 of $2.5 million of weather insurance amortization resulting from the termination of a weather insurance policy in the third quarter of fiscal 2003. These increases were partially offset by lower equity earnings of $0.8 million from the investment in Heritage resulting from the sale of Atmos Energy’s indirect interest in January 2004.

Results for the Six Months Ended March 31, 2004

Consolidated gross profit for the six months ended March 31, 2004, was $365.2 million, compared with $340.1 million for the six-month period last year. The increase in utility gross profit primarily reflects the effect of a full six months of results in the current period from

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Mississippi Valley Gas Company (MVG), which was acquired in December 2002, compared with four months of results in the prior-year period. Utility gas throughput in the 2004 six-month period was 166.0 Bcf, compared with 171.1 Bcf for the same period a year ago. Lower throughput in the current period primarily was due to lower consumption, resulting from weather that was 6 percent warmer than the prior-year period and 4 percent warmer than normal, as adjusted for jurisdictions with weather-normalized operations. Also contributing to consolidated gross profit were strong results in the nonutility natural gas marketing segment.

Net income from nonutility operations was $16.2 million for the six months ended March 31, 2004, compared with net income of $7.0 million before the $7.8 million cumulative effect of the accounting change (described above) for the same period in fiscal 2003. Nonutility net income was higher in the first six months of 2004 primarily due to enhanced margins, improved optimization of managed proprietary and third-party storage assets and improved management of full-requirements customers. Nonutility operations contributed 18 percent of consolidated net income for the first six months of 2004, compared with 9 percent of consolidated net income before the cumulative effect of the accounting change for the prior-year period. Consolidated natural gas marketing sales volumes were 126.1 Bcf for the first six months of 2004, compared with 132.7 Bcf for the prior-year period.

Operation and maintenance expense for the six months ended March 31, 2004, was $116.0 million, compared with $106.2 million in the 2003 period. Excluding the provision for doubtful accounts and the $6.1 million increase attributable to the acquired MVG assets, operation and maintenance expense for the first six months of 2004 increased $4.1 million compared to the first six months of 2003 primarily due to an increase in compensation and insurance costs. The provision for doubtful accounts was $7.7 million in the six months ended March 31, 2004, compared with $8.1 million last year. In the utility segment, the average cost of natural gas for the 2004 six-month period was $6.58 per Mcf, compared with $5.70 per Mcf for the same period last year.

Depreciation and amortization expense for the six months ended March 31, 2004, was $46.6 million, compared to $42.1 million in the 2003 period, which primarily reflects the results of a full six months of depreciation on the MVG assets.

Taxes, other than income taxes, for the six months ended March 31, 2004, were $33.6 million, compared with $31.4 million for the same period last year. The increase primarily was attributable to additional franchise, payroll and property taxes associated with the acquired MVG assets and higher franchise taxes due to higher revenues.

Miscellaneous income for the first six months of 2004 was $5.7 million, compared with miscellaneous income of $2.6 million for the same period in 2003. The $3.1 million increase primarily was attributable to a $4.9 million pretax gain associated with the sale of the company’s indirect interest in Heritage during the second quarter of 2004. Miscellaneous income (expense) also was favorably affected by $4.4 million related to the absence of weather insurance amortization resulting from the termination of a weather insurance policy in the third quarter of fiscal 2003. These increases were partially offset by the absence in the first six months of 2004 of a $3.9 million pretax gain recognized in the prior year associated with a sales-type lease of a distributed electric generation plant and a $1.3 million reduction in the 2004 period of equity earnings from the company’s investment in Heritage resulting from the sale of its indirect interest in January 2004.

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For the six months ended March 31, 2004, operating activities provided cash of $290.6 million, compared with $183.8 million during the six months ended March 31, 2003. The year-over-year increase was primarily due to improved accounts-receivable collections and favorable changes in various working capital accounts, partially offset by increased payments for accounts payable and other accrued liabilities.

Highlights and Recent Developments

City of Lubbock approves new Atmos Energy rates

On February 24, 2004, the company announced that the City of Lubbock, Texas, had approved an overall rate increase of $1.525 million in the annual revenues of the company’s natural gas utility operations. As part of its decision, the city also granted a weather-normalization adjustment rider for residential, commercial, public-authority and state-institution customers in Lubbock.

Atmos Energy completes the purchase of ComFurT natural gas distribution system

On March 1, 2004, the company announced it had completed its acquisition of the natural gas assets of ComFurT Gas, Inc., a privately held company in Buena Vista, Colorado. The company paid $1.95 million cash for the natural gas distribution system, which serves approximately 1,800 utility customers.

66 West Texas cities agree to new Atmos Energy rates

On April 12, 2004, the company announced that a steering committee representing 66 cities in West Texas had recommended the approval of an overall increase of $3.2 million in the annual revenues of the company’s natural gas utility operations. As part of its recommendation, the steering committee also recommended the approval of a weather-normalization adjustment rider for residential, commercial, public-authority and state-institution customers.

Conference Call to be Webcast May 12, 2004

Atmos Energy Corporation will host a webcast conference call on May 12 at 7 a.m. CDT to discuss financial results for the second quarter and six months of fiscal 2004. Atmos Energy officers who will participate in the conference call will be: Bob Best, chairman, president and chief executive officer; Pat Reddy, senior vice president and chief financial officer; Earl Fischer, senior vice president, utility operations; JD Woodward, senior vice president, nonutility operations; Fred Meisenheimer, vice president and controller; Laurie Sherwood, vice president, corporate development, and treasurer, and Susan Kappes, vice president, investor relations and corporate communications. To listen to the call, dial 1-800-240-2134. Slides for the webcast may be viewed on the Internet at www.atmosenergy.com.

Forward-Looking Statements

The matters discussed or incorporated by reference in this news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release 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 news release or in any of the company’s other documents or oral presentations, the words “anticipate,” “expect,” “estimate,”

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“plans,” “believe,” “objective,” “forecast,” “goal” 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 expressed or implied in the statements relating to the company’s strategy, operations, markets, services, rates, recovery of costs, availability of gas supply and other factors. A discussion of these risks and uncertainties may be found in the company’s Form 10-K for the fiscal year ended September 30, 2003. 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. The company undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Atmos Energy Corporation, headquartered in Dallas, Texas, is one of the largest natural gas distributors in the United States, serving about 1.7 million utility customers. Atmos Energy’s utility operations serve more than 1,000 small and medium-size communities in 12 states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy’s nonutility operations, organized under Atmos Energy Holdings, Inc., operate in 18 states. They provide natural gas marketing and procurement services to industrial, commercial and municipal customers, manage company-owned natural gas storage and pipeline assets and construct small distributed generating plants for industrial and municipal customers. For more information, visit www.atmosenergy.com.

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Atmos Energy Corporation

Financial Highlights(Unaudited)

Statements of Income	Three Months Ended March 31						Six Months Ended March 31
(000s except per share)	2004			2003			2004			2003
Operating revenues:
Utility segment	$	708,282		$	696,561		$	1,168,770		$	1,096,529
Natural gas marketing segment		517,218			620,402			891,047			963,900
Other nonutility segment		10,654			9,657			14,282			12,557
Intersegment eliminations		(118,669	)		(132,478	)		(192,998	)		(198,412	)
		1,117,485			1,194,142			1,881,101			1,874,574
Purchased gas cost:
Utility segment		518,820			502,728			840,884			773,223
Natural gas marketing segment		505,356			618,752			861,687			958,260
Other nonutility segment		5,681			2,134			6,008			1,008
Intersegment eliminations		(118,498	)		(132,440	)		(192,657	)		(198,051	)
		911,359			991,174			1,515,922			1,534,440
Gross profit		206,126			202,968			365,179			340,134
Operation and maintenance expense		59,093			55,665			116,009			106,169
Depreciation and amortization		23,138			20,887			46,611			42,081
Taxes, other than income		18,481			18,538			33,604			31,382
Total operating expenses		100,712			95,090			196,224			179,632
Operating income		105,414			107,878			168,955			160,502
Miscellaneous income (expense)		4,456			(1,489	)		5,663			2,635
Interest charges		16,160			16,158			33,495			31,637
Income before income taxes and cumulative effect of accounting change		93,710			90,231			141,123			131,500
Income tax expense		35,405			33,926			53,277			49,402
Income before cumulative effect of accounting change		58,305			56,305			87,846			82,098
Cumulative effect of accounting change, net of income tax benefit		—			(7,773	)		—			(7,773	)
Net income	$	58,305		$	48,532		$	87,846		$	74,325
Basic income per share:
Income before cumulative effect of accounting change	$	1.12		$	1.24		$	1.70		$	1.87
Cumulative effect of accounting change, net of income tax benefit		—			(.17	)		—			(.18	)
Net income	$	1.12		$	1.07		$	1.70		$	1.69
Diluted income per share:
Income before cumulative effect of accounting change	$	1.12		$	1.24		$	1.69		$	1.86
Cumulative effect of accounting change, net of income tax benefit		—			(.17	)		—			(.18	)
Net income	$	1.12		$	1.07		$	1.69		$	1.68
Cash dividends per share	$	.305		$	.300		$	0.61		$	0.60
Weighted average shares outstanding:
Basic		51,850			45,306			51,666			44,007
Diluted		52,240			45,493			52,057			44,178

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Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

	Three Months Ended March 31					Six Months Ended March 31
Summary Net Income (Loss) by Segment (000s)	2004		2003			2004		2003
Utility	$	50,558	$	54,052		$	71,669	$	75,111
Natural gas marketing		3,422		(8,847	)		10,958		(8,079	)
Other nonutility		4,325		3,327			5,219		7,293
Consolidated net income	$	58,305	$	48,532		$	87,846	$	74,325

Condensed Balance Sheets (000s)	March 31, 2004		September 30, 2003
Net property, plant and equipment	$	1,661,336	$	1,624,394
Cash and cash equivalents		114,983		15,683
Cash held on deposit in margin account		—		17,903
Accounts receivable, net		396,879		216,783
Gas stored underground		74,570		168,765
Other current assets		54,057		38,863
Total current assets		640,489		457,997
Goodwill and intangible assets		275,873		273,499
Deferred charges and other assets		243,494		271,023
	$	2,821,192	$	2,626,913
Shareholders’ equity	$	932,849	$	857,517
Long-term debt		864,624		863,918
Total capitalization		1,797,473		1,721,435
Accounts payable and accrued liabilities		365,996		179,852
Other current liabilities		171,822		133,957
Short-term debt		—		118,595
Current maturities of long-term debt		8,093		9,345
Total current liabilities		545,911		441,749
Deferred income taxes		234,355		223,350
Deferred credits and other liabilities		243,453		240,379
	$	2,821,192	$	2,626,913

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Atmos Energy Corporation

Financial Highlights, continued (Unaudited)

Condensed Statements of Cash Flows (000s)	Six Months Ended March 31
	2004			2003
Net income	$	87,846		$	74,325
Cash flows from operating activities
Cumulative effect of accounting change, net of income tax benefit		—			7,773
Gain on the sale of assets		(4,898	)		—
Depreciation and amortization		47,212			43,085
Deferred income taxes		10,081			14,912
Changes in assets and liabilities		151,306			48,604
Other		(944	)		(4,911	)
Net cash provided by operating activities		290,603			183,788
Cash flows from investing activities
Capital expenditures		(83,729	)		(72,876	)
Acquisitions		(1,950	)		(74,650	)
Proceeds from the sale of assets		24,661			—
Other		2,878			576
Net cash used in investing activities		(58,140	)		(146,950	)
Cash flows from financing activities
Net decrease in short-term debt		(118,595	)		(116,091	)
Net proceeds from issuance of long-term debt		5,000			249,282
Proceeds from bridge loan		—			147,000
Repayment of bridge loan		—			(147,000	)
Repayment of long-term debt		(5,546	)		(69,058	)
Repayment of Mississippi Valley Gas debt		—			(70,938	)
Cash dividends paid		(31,616	)		(26,168	)
Issuance of common stock		17,594			12,486
Net cash used by financing activities		(133,163	)		(20,487	)
Net increase in cash and cash equivalents		99,300			16,351
Cash and cash equivalents at beginning of period		15,683			46,827
Cash and cash equivalents at end of period	$	114,983		$	63,178

	Three Months Ended March 31						Six Months Ended March 31
Statistics	2004			2003			2004			2003
Heating degree days *		1,772			1,812			3,012			3,219
Percent of normal *		97	%		100	%		96	%		102	%
Consolidated utility gas throughput (MMcf as metered)		97,831			100,158			166,010			171,087
Consolidated natural gas marketing sales volumes (MMcf)		67,172			73,371			126,089			132,697
Natural gas meters in service		1,682,401			1,677,634			1,682,401			1,677,634
Utility average cost of gas	$	6.72		$	6.13		$	6.58		$	5.70

* Adjusted for weather-normalized operations. For periods beginning October 1, 2002, the normal heating degree day calculation utilized updated 30-year normal weather data.

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