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Atmos Energy Posts Strong Fiscal 2005 Results

Atmos Energy Corp.'s net income for its fiscal year 2005 ended Sept. 30 was $135.8 million, or $1.72 per diluted share, compared with net income of $86.2 million, or $1.58 per diluted share the prior year. The company noted that its results exceeded First Call's mean estimate of $1.71 per diluted share.

For the fourth quarter ended Sept. 30, the net loss was $16.8 million, or $0.21 per diluted share, compared with a net loss of $6.4 million, or $0.11 per diluted share in the prior year quarter. Atmos Energy said that while it has historically reported a loss in the fourth quarter because customers' natural gas usage is lowest in the summer months, the net loss widened in this year's quarter due to the acquisition of TXU Gas Co.

Addressing Hurricane Katrina's impact on the company, Atmos Energy said the storm "adversely affected" net income by $3.8 million or $0.05 per diluted share for fiscal 2005.

"Atmos Energy had a record-breaking year, with more than $1 billion in gross profit for the first time in our company's history," said Robert W. Best, chairman, president and CEO of Atmos Energy Corp. "We also saw our net income increase 57% to $136 million, while our gas marketing earnings rose 41% to $23 million.

"Our TXU Gas acquisition was a major contributor, surpassing our original estimate of a contribution to earnings of $0.05 to $0.10 per diluted share," Best added. "Acquiring the TXU Gas operations nearly doubled the number of utility customers to make Atmos Energy the largest pure-gas provider in the nation. In our nonutility business, gas marketing operations contributed an outstanding $0.30 per diluted share to set a new company record."

The company said net income for fiscal 2005 was adversely affected by approximately $22.8 million, or $0.29 per diluted share, by weather that was 11% warmer than normal, as adjusted for jurisdictions with weather-normalized rates. However, because of solid results in Atmos Energy's nonutility operations, coupled with the acceleration of $12.4 million after-tax ($20.0 million pretax) of expense reductions from the TXU Gas acquisition that were originally anticipated in fiscal 2006, Atmos Energy substantially overcame the negative effect of weather on fiscal 2005 results. The realization of these operational synergies improved net income by $0.16 per diluted share in the current fiscal year, the company said.

Looking ahead, Atmos Energy said it expects fiscal 2006 earnings to be in the range of $1.80 to $1.90 per diluted share, assuming normal weather conditions and the negative impact of Hurricane Katrina, which is expected to reduce fiscal 2006 earnings by as much as $0.08 to $0.10 per diluted share. The company said capital expenditures for fiscal 2006 are expected to be in the range of $400 to $415 million.

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