!/2H5    d 1$&%*'ATMOS ENERGY CORPORATION"'CONSOLIDATED BALANCE SHEETS' ^Septem ber 30,^Septem ber 30,^-----------^----------- ^1999 ^1998^----------^----------('(In thousands, except share data) 'ASSETS$ 'Property, plant and equipment "$1,526,834 "$1,333,556 'Construction in progress  "22,424 "112,864 "---------- "---------- "1,549,258 "1,446,420$'Less accumulated depreciation'and amortization"583,476"528,560"----------"----------('Net property, plant and equipment"965,782"917,860'Current assets 'Cash and cash equivalents "8,585 "4,735*'Accounts receivable, less allowance&'for doubtful accounts of $9,231!'in 1999 and $1,969 in 1998 "70,564 "34,887'Inventories "8,209 "15,219'Gas stored underground "44,653 "48,909'Prepayments "3,142 "3,630"----------"----------'Total current assets"135,153"107,380('Deferred charges and other assets"129,602"116,150"----------"----------"$1,230,537"$1,141,390"=========="========== ' !'ATMOS ENERGY CORPORATION."'CONSOLIDATED BALANCE SHEETS (continued)$^September 30,$^September 30,%^------------%^--------------- &^1999 &^1998'^----------'^----------(('(In thousands, except share data)%*'CAPITALIZATION AND LIABILITIES+'Shareholders' equity),'Common stock, no par value (stated'-'at $.005 per share); 100,000,000$.'shares authorized; issued and%/'outstanding: 1999 - 31,247,800'0'shares, 1998 - 30,398,319 shares0"$ 1560"$ 152!1'Additional paid-in capital1"293,3591"271,6372'Retained earnings 2"83,231 2"99,369&3'Accumulated other comprehensive 4'income 4"9174"-5"----------5"----------!6'Total shareholders' equity6"377,6636"371,1587'Long-term debt7"377,4837"398,5488"----------8"----------9'Total capitalization9"755,1469"769,706:'Current liabilities+;'Current maturities of long-term debt ;"17,848 ;"57,783<'Short-term debt<"168,304 <"66,400='Accounts payable ="64,167 ="44,742>'Taxes payable >"848 >"12,736?'Customers' deposits ?"9,657 ?"12,029 @'Other current liabilities @"25,951 @"30,369A"----------A"---------- B'Total current liabilitiesB"286,775B"224,059C'Deferred income taxesC"112,610 C"80,213-D'Deferred credits and other liabilities D"76,006 D"67,412E"----------E"----------F"$1,230,537F"$1,141,390G"==========G"==========H' CI'See accompanying notes to consolidated financial statements.K'ATMOS ENERGY CORPORATION(L'CONSOLIDATED STATEMENTS OF INCOMEL^Year endedL^Year endedL^Year ended M^ September 30,M^ September 30,M^September 30,N^----------N^---------------N^----------- O^1999 O^1998 O^1997P^--------P^--------P^--------,Q'(In thousands, except per share data)Q" Q" S'Operating revenuesS"$690,196S"$848,208S"$906,835T'Purchased gas costT"390,402T"516,372T"577,181U"--------U"--------U"--------V'Gross profitV"299,794V"331,836V"329,654W'Operating expensesX'OperationX"144,815X"131,336X"173,683Y'Maintenance Y"9,141 Y"10,278 Y"11,974Z'Litigation settlement Z"3,250Z"-Z"-$['Depreciation and amortization ["56,874 ["47,555 ["45,257\'Taxes, other than income \"31,475 \"29,788 \"32,131]"--------]"--------]"--------^'Total operating expenses^"245,555^"218,957^"263,045_"--------_"--------_"--------`'Operating income `"54,239`"112,879 `"66,609a'Other income (expense)b'Equity in earnings of c'unconsolidated investment c"7,156 c"3,920 c"3,254d'Interest income d"765 d"1,510 d"2,156e'Other, net e"2,202 e"4,341 e"(288)f"--------f"--------f"--------g'Total other income g"10,123 g"9,771 g"5,122h'Interest charges, net h"37,063 h"35,579 h"33,595i"--------i"--------i"--------!j'Income before income taxes j"27,299 j"87,071 j"38,136k'Income taxes k"9,555 k"31,806 k"14,298l"--------l"--------l"--------m'Net incomem"$ 17,744m"$ 55,265m"$ 23,838n"========n"========n"========!o'Basic net income per shareo"$ .58o"$ 1.85o"$ .81p"========p"========p"========#q'Diluted net income per shareq"$ .58q"$ 1.84q"$ .81r"========r"========r"========s'Cash dividends per shares"$ 1.10s"$ 1.06s"$ 1.01t"========t"========t"========u'Weighted averagev'shares outstanding: w'Basic w"30,566 w"29,822 w"29,409x"========x"========x"========y'Diluted y"30,819 y"30,031 y"29,422z"========z"========z"========C|'See accompanying notes to consolidated financial statements.~'ATMOS ENERGY CORPORATION6'CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY^Common stock^Accumulated^-----------^Additional ^other^Number of ^Stated^paid-in^comprehensive^Retained ^shares ^value^capital ^income^earnings ^Total^------------ ^------^----------^-------------^--------^--------('(In thousands, except share data)"'Balance, September 30, 1996"29,241,859 "$146"$241,658"$ -"$ 87,778"$329,582'Net income"-"-"-"- "23,838 "23,838 'Cash dividends ($1.01 per 'share)"-"-"-"-"(26,415)"(26,415)'Common stock issued:'Restricted stock grant 'plan"100,000"1 "2,443"-"- "2,444'Direct stock purchase 'plans "85,243"- "1,888"-"- "1,888'Outside directors'stock-for-fee plan "3,008"- "72"-"- "72 'ESOP"212,327"1 "5,113"-"- "5,114'Less: UCGC net income'for the quarter ended'December 31, 1996"-"-"-"-"(9,263)"(9,263)"---------- "----"--------"-------------"--------"--------"'Balance, September 30, 1997"29,642,437 "148"251,174"- "75,938"327,260'Net income"-"-"-"- "55,265 "55,265 'Cash dividends ($1.06 per 'share)"-"-"-"-"(31,834)"(31,834)'Common stock issued:'Restricted stock'grant plan"114,250"1 "2,898"-"- "2,899'Direct stock purchase 'plan"531,353"3 "14,482"-"- "14,485 'ESOP "52,473"- "1,485"-"- "1,485'Long-term stock plan for'United Cities Division "55,500"- "1,533"-"- "1,533'Outside directors'stock-for-fee plan "2,306"- "65"-"- "65"---------- "----"--------"-------------"--------"--------"'Balance, September 30, 1998"30,398,319 "152"271,637"- "99,369"371,158' 'ATMOS ENERGY CORPORATIONB'CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (continued) ^Common ^stock^Accumulated^----------^-------^Additional ^other^Number of ^Stated^paid-in^comprehensive^Retained ^shares ^value^capital ^income^earnings ^Total^---------- ^------^----------^-------------^---------^---------('(In thousands, except share data)"'Balance, September 30, 1998"30,398,319 "$ 152"$271,637"$ -"$ 99,369"$371,158'Comprehensive income'Net income"-"-"-"- "17,744 "17,744'Unrealized holding gains'on investments, net"-"-"- "917"- "917'Cash dividends ($1.10'per share)"-"-"-"-"(33,882)"(33,882)'Common stock issued:'Restricted stock'grant plan "56,850"- "1,732"-"- "1,732'Direct stock purchase 'plan"694,905"4 "17,429"-"- "17,433 'ESOP "89,435"- "2,362"-"- "2,362'Long-term stock plan for'United Cities Division "6,450"- "150"-"- "150'Outside directors'stock-for-fee plan "1,841"- "49"-"- "49"---------- "------"--------"-------------"--------"--------"'Balance, September 30, 1999"31,247,800 "$ 156"$293,359"$ 917"$ 83,231"$377,663"========== "======"========"============="========"========C'See accompanying notes to consolidated financial statements.'ATMOS ENERGY CORPORATION,'CONSOLIDATED STATEMENTS OF CASH FLOWS' ^Year ended^Year ended^Year ended ^ September 30,^ September 30,^September 30,^----------^-----------^--------- ^1999 ^1998 ^1997^--------^--------^--------'(In thousands)+'CASH FLOWS FROM OPERATING ACTIVITIES'Net income"$ 17,744"$ 55,265"$ 14,575#'Adjustments to reconcile net%'income to net cash provided by'operating activities:%'Depreciation and amortization:"'Charged to depreciation and'amortization "56,874 "47,555 "39,970 'Charged to other accounts "4,800 "5,861 "2,237'Deferred income taxes "31,874"(3,968) "5,807#'Gain on sales of non-utility 'assets"-"(3,335)"-)'Changes in assets and liabilities:&'(Increase) decrease in accounts'receivable"(35,677) "36,330 "32,198'(Increase) decrease in'inventories "7,010"(2,886) "1,562!'(Increase) decrease in gas'stored underground "4,256 "(787)"(4,772)'(Increase) decrease in'prepayments "488 "2,387"(3,208)#'Increase in deferred charges'and other assets"(12,012)"(20,671)"(29,683)'Increase (decrease) in'accounts payable "19,425"(17,884)"(17,695)#'Increase (decrease) in taxes'payable"(11,888) "8,673 "(837)'Decrease in customers''deposits"(2,372)"(3,069)"(1,714)#'Increase (decrease) in other'current liabilities"(4,418)"(22,213) "28,716#'Increase in deferred credits'and other liabilities "8,594 "10,393 "1,593"--------"--------"--------'Net cash provided by'operating activities "84,698 "91,651 "68,749'ATMOS ENERGY CORPORATION8'CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)^Year ended^Year ended ^Year ended^ September 30,^September 30,^ September 30,^-----------^-------------^--------- ^1999 ^1998 ^1997^---------^---------^---------'(In thousands)+'CASH FLOWS FROM INVESTING ACTIVITIES'Capital expenditures"$(110,353)"$(134,989)"$(122,312)%'Retirements of property, plant'and equipment, net "757 "178 "1,189$'Proceeds from sales of assets"- "15,997"-"---------"---------"---------!'Net cash used in investing'activities"(109,596)"(118,814)"(121,123)+ 'CASH FLOWS FROM FINANCING ACTIVITIES! 'Net increase (decrease) in 'short-term debt "101,904 "(100,900)  "38,812 'Proceeds from issuance of'long-term debt"-"154,445 "40,000"'Repayment of long-term debt"(61,000)"(16,296)"(14,659)'Cash dividends paid"(33,882)"(31,834)"(26,415)'Issuance of common stock "21,726 "20,467 "9,518"---------"---------"---------'Net cash provided by'financing activities "28,748 "25,882 "47,256"---------"---------"---------&'Net increase (decrease) in cash'and cash equivalents "3,850"(1,281)"(5,118)#'Cash and cash equivalents at'beginning of year "4,735 "6,016 "11,134"---------"---------"--------- 'Cash and cash equivalents'at end of year"$ 8,585"$ 4,735"$ 6,016"========="========="=========' C'See accompanying notes to consolidated financial statements..!'