The shares trade on the New York Stock Exchange under the symbol “ATO.” On October 21, 2004, the last sale price of the shares as reported on the New York Stock Exchange was $25.20 per share.

Investing in our common stock involves risks. See the “Risk Factors” section beginning on page S-11 of this prospectus supplement.

The underwriters may also purchase up to an additional 2,100,000 shares at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus supplement to cover overallotments.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Merrill Lynch & Co.


	Banc of America Securities LLC


	JPMorgan


	SunTrust Robinson Humphrey


	Wachovia Securities

We have not, and the underwriters have not, authorized any other person to provide you with any information or to make any representation that is different from, or in addition to, the information and representations contained in this prospectus supplement, the accompanying prospectus or any of the documents that are incorporated by reference in this prospectus supplement or the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer of any securities other than the shares by means of this prospectus supplement. This document is in two parts. The first part is this prospectus supplement, which describes specific terms of this offering and other matters relating to us and our financial condition. The second part is the accompanying prospectus, dated September 15, 2004, which gives more general information about securities we may offer from time to time, some of which may not apply to the shares we are currently offering. If the description of this offering or our operations varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement. You should assume that the information appearing in this prospectus supplement and the accompanying prospectus, as well as the information contained in any document incorporated by reference, is accurate as of the date of each such document only, unless the information specifically indicates that another date applies.

The distribution of this prospectus supplement and the accompanying prospectus, and the offering of the shares, may be restricted by law in certain jurisdictions. You should inform yourself about, and observe, any of these restrictions. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer or solicitation by anyone in any jurisdiction in which the offer or solicitation is not authorized, or in which the person making the offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make the offer or solicitation.

The SEC allows us to “incorporate by reference” information in this prospectus supplement and the accompanying prospectus that we have filed with it. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus, except for any information that is superseded by information that is included directly in this prospectus supplement or the accompanying prospectus.

We incorporate by reference in this prospectus supplement and the accompanying prospectus the documents listed below and any future filings we make with the SEC under sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the termination of this offering. These additional documents include periodic reports, such as annual reports on Form 10-K and quarterly reports on Form 10-Q, and current reports on Form 8-K (other than information furnished under Items 2.02 and 7.01, which is deemed not to be incorporated by reference in this prospectus supplement or the accompanying prospectus), as well as proxy statements. You should review these filings as they may disclose a change in our business, prospects, financial condition or other affairs after the date of this prospectus supplement. The information that we file later with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and before the termination of this offering will automatically update and supersede previous information included or incorporated by reference in this prospectus supplement and the accompanying prospectus.

This prospectus supplement and the accompanying prospectus incorporate by reference the documents listed below that we have filed with the SEC but have not been included or delivered with this document:


	•	Our annual report on Form 10-K for the year ended September 30, 2003;

	•	Our proxy statement dated December 29, 2003;

	•	Our quarterly reports on Form 10-Q for the quarterly periods ended December 31, 2003, March 31, 2004 and June 30, 2004; and

	•	Our current reports on Form 8-K filed with the SEC on January 22, 2004, July 7, 2004, July 16, 2004, August 31, 2004, September 29, 2004, October 6, 2004 and October 19, 2004, Item 5 in our current report on Form 8-K/ A filed with the SEC on July 2, 2004 and Item 8.01 in our current report on Form 8-K filed with the SEC on October 5, 2004.

These documents contain important information about us and our financial condition.

You may obtain a copy of any of these filings, or any of our future filings, from us without charge by requesting it in writing or by telephone at the following address or telephone number:

Statements contained or incorporated by reference in this prospectus supplement that are not statements of historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future results and are not statements of fact, actual results may differ materially from those stated. Important factors that could cause future results to differ include, but are not limited to:


	•	the successful integration of our acquisition of the natural gas distribution and pipeline operations of TXU Gas Company;

	•	adverse weather conditions, such as warmer-than-normal weather in our utility service territories or colder-than-normal weather that could adversely affect our natural gas marketing activities;

	•	national, regional and local economic conditions;

	•	increased competition from other energy suppliers and alternative forms of energy;

	•	regulatory trends and decisions, including deregulation initiatives and the impact of rate proceedings before various state regulatory commissions;

	•	changes in the availability and prices of natural gas, including the volatility of natural gas prices;

	•	effects of inflation;

	•	market risks beyond our control affecting our risk management activities, including market liquidity, commodity price volatility and counterparty creditworthiness;

	•	our increased indebtedness and our ability to continue to access the capital markets; and

	•	other factors discussed in this prospectus supplement, the accompanying prospectus and our other filings with the SEC.

All of these factors are difficult to predict and many are beyond our control. Accordingly, while we believe 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. When used in our documents or oral presentations, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “objective,” “plan,” “projection,” “seek,” “strategy” or similar words are intended to identify forward-looking statements. We undertake no obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise.

For further factors you should consider, please refer to the “Risk Factors” section beginning on page S-11 of this prospectus supplement and on page 1 of the accompanying prospectus and the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our annual report on Form 10-K for the year ended September 30, 2003 and in our quarterly reports on Form 10-Q for the quarterly periods ended December 31, 2003, March 31, 2004 and June 30, 2004.

In this prospectus supplement, the terms “we,” “our,” “us” and “Atmos” refer to Atmos Energy Corporation and its subsidiaries unless the context suggests otherwise, the term “you” refers to a prospective investor and the abbreviations “Mcf,” “MMcf” and “Bcf” mean thousand cubic feet, million cubic feet and billion cubic feet, respectively.

Except as otherwise indicated, all information in this prospectus supplement assumes that the underwriters have not exercised their overallotment option.

PROSPECTUS SUPPLEMENT SUMMARY

You should read the following summary in conjunction with the more detailed information contained elsewhere in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus.

Atmos Energy Corporation

Atmos Energy Corporation and its subsidiaries are engaged primarily in the natural gas utility business, as well as other natural gas nonutility businesses. We distribute natural gas through sales and transportation arrangements to more than 3.1 million residential, commercial, public authority and industrial customers, including approximately 1.5 million residential and business customers in Texas that we recently acquired through the acquisition of the natural gas distribution and pipeline operations of TXU Gas Company. The TXU Gas acquisition makes us one of the largest publicly-traded companies in the United States whose primary business is the transmission and distribution of natural gas and the provision of related services. It also makes us one of the largest intrastate pipeline operators in Texas.

We operate our utility business through our seven regulated utility divisions, which cover service areas located in 12 states. Our primary service areas are located in Colorado, Kansas, Kentucky, Louisiana, Mississippi, Tennessee and Texas. We have more limited service areas in Georgia, Illinois, Iowa, Missouri and Virginia. In addition, we transport natural gas for others through our distribution and pipeline systems.

Through our nonutility businesses, we provide natural gas management and marketing services to municipalities, other local gas distribution companies and industrial customers in 18 states. We own or hold an interest in natural gas storage fields in Kentucky, Louisiana and Texas that we use to supply natural gas to our customers. We market natural gas to industrial and agricultural customers primarily in West Texas and to industrial customers in Louisiana.

Our operations are currently divided into three segments:

• the utility segment, which includes our related natural gas distribution operations;

• the natural gas marketing segment, which includes a variety of natural gas management services; and

• our other nonutility segment, which primarily includes our pipeline and storage operations.

Our overall strategy is to:

• integrate the operations of TXU Gas that we acquired;

• improve the quality and consistency of earnings growth, while operating our natural gas utility and nonutility businesses exceptionally well; and

• enhance and strengthen a culture built on our core values.

Over the last five years, we have grown through several acquisitions, including our acquisition in April 2001 of the remaining 55% interest in Woodward Marketing, L.L.C. that we did not already own, our acquisition in July 2001 of the assets of Louisiana Gas Service Company, our acquisition in December 2002 of Mississippi Valley Gas Company and our acquisition in October 2004 of the natural gas distribution and pipeline operations of TXU Gas.

We have experienced over 20 consecutive years of increasing dividends and consistent earnings growth after giving effect to our acquisitions. We have achieved this record of growth while operating our utility operations efficiently by managing our operating and maintenance expenses, leveraging our technology, such as our 24-hour call center, to achieve more efficient operations, focusing on regulatory rate proceedings to increase revenue as our costs increased, and mitigating weather-related risks through weather-normalized rates in many of our service areas. Additionally, we have strengthened our nonutility

business by ceasing speculative trading activities and actively pursuing opportunities to increase the amount of storage available to us.

Our core values include focusing on our employees and customers while conducting our business with honesty and integrity. We are strengthening our culture through ongoing communication with our employees and enhanced employee training.

Our principal executive offices are at 1800 Three Lincoln Centre, 5430 LBJ Freeway, Dallas, Texas 75240, our telephone number is (972) 934-9227, and our Internet website address is www.atmosenergy.com. Information contained in or connected to our Internet website is not a part of this prospectus supplement or the accompanying prospectus.

The TXU Gas Acquisition

On October 1, 2004, we completed our acquisition of the natural gas distribution and pipeline operations of TXU Gas Company.

The TXU Gas operations we acquired are regulated businesses engaged in the purchase, transmission, distribution and sale of natural gas in the north-central, eastern and western parts of Texas. Through these newly acquired operations, we provide gas distribution services to approximately 1.5 million residential and business customers in Texas, including the Dallas/Fort Worth metropolitan area. We also now own and operate a system consisting of 6,162 miles of gas transmission and gathering lines and five underground storage reservoirs, all within Texas.

The purchase price for the TXU Gas acquisition was approximately $1.905 billion (after preliminary closing adjustments), which we paid in cash. We acquired approximately $121 million of working capital of TXU Gas and did not assume any indebtedness of TXU Gas in connection with the acquisition. TXU Gas provided for the repayment of all of its indebtedness and redeemed all of its preferred stock prior to closing and retained and agreed to pay certain other liabilities under the terms of the acquisition agreement. The purchase price is subject to further adjustment after closing for the actual amount of working capital we acquired and other specified matters. We anticipate that any post-closing adjustments will not be material.

We funded the purchase price for the TXU Gas acquisition with approximately $235.8 million in net proceeds from our offering of 9,939,393 shares of common stock, which we completed on July 19, 2004, and approximately $1.7 billion in net proceeds from our issuance on October 1, 2004 of commercial paper backstopped by a senior unsecured revolving credit agreement, which we entered into on September 24, 2004 for bridge financing for the TXU Gas acquisition. In this prospectus supplement, we refer to the July offering of our common stock as the July 2004 common stock offering, the senior unsecured revolving credit agreement as the bridge financing facility and the $1.7 billion of commercial paper that we issued backstopped by the bridge financing facility, together with any commercial paper we may issue to refinance this commercial paper, as the acquisition commercial paper. We expect to use the net proceeds of this offering and our senior notes offering described below to repay in full the acquisition commercial paper. The proceeds of this offering and our senior notes offering will reduce permanently the availability under the bridge financing facility.

In June 2004, we entered into two agreements to fix the Treasury yield component of $675 million principal amount of the senior unsecured notes to be issued in our senior notes offering described below, which we refer to as the June 2004 Treasury lock agreements. In September 2004, we entered into two additional agreements to fix the Treasury yield component of an additional $200 million principal amount of the notes. We intend to terminate and settle the June 2004 Treasury lock agreements on October 22, 2004, using additional short-term borrowings. The fair value of the June 2004 Treasury lock agreements, as of October 18, 2004, represented an obligation of approximately $44.0 million, which is the amount we expect to pay to settle the June 2004 Treasury lock agreements. In this prospectus supplement, we refer to

the settlement of the June 2004 Treasury lock agreements as the Treasury lock settlement. We intend to use a portion of the remaining net proceeds from this offering, following the repayment in full of the balance of the acquisition commercial paper, to repay in full the short-term debt to be incurred in connection with the Treasury lock settlement.

In this prospectus supplement, we refer to TXU Gas Company as TXU Gas and our acquisition of the natural gas distribution and pipeline operations of TXU Gas as the TXU Gas acquisition. For more information on the terms of the TXU Gas acquisition, the TXU Gas operations we acquired in the TXU Gas acquisition and the terms of the financing for the TXU Gas acquisition, see “The TXU Gas Acquisition” beginning on page S-18.

Senior Notes Offering

On October 18, 2004, we commenced and priced an offering of $1.4 billion of our senior unsecured notes, consisting of $400 million of our 4.00% senior notes due 2009, $500 million of our 4.95% senior notes due 2014, $200 million of our 5.95% senior notes due 2034 and $300 million of our floating rate senior notes due 2007. The floating rate senior notes will bear interest at an annual rate equal to the three-month LIBOR rate plus 0.375%. The net proceeds from the senior notes offering will be approximately $1.39 billion, after the payment of the underwriting discounts and commissions and estimated offering expenses. We intend to use the net proceeds from the offering of our senior unsecured notes to repay a portion of the acquisition commercial paper. The offering of our senior unsecured notes is expected to close on October 22, 2004.

In this prospectus supplement, we refer to our offering of the multiple series of senior unsecured notes described above as the senior notes offering and the various series of senior unsecured notes we intend to issue, collectively, as the senior notes. Neither the completion of this offering nor the completion of the senior notes offering is contingent upon the other.

Summary Consolidated Historical Financial Data

(in thousands, except per share data)

Atmos Energy Corporation

The following table presents summary consolidated financial data of Atmos Energy Corporation for the periods and as of the dates indicated. We derived the summary consolidated financial data for our fiscal years ended September 30, 2003, 2002 and 2001 from our audited consolidated financial statements, which are incorporated by reference in this prospectus supplement from our annual report on Form 10-K for the year ended September 30, 2003. We have reclassified some prior year amounts to conform with the current year presentation. We derived the summary consolidated financial data for the nine months ended June 30, 2004 and 2003 from our unaudited consolidated financial statements, which are also incorporated by reference in this prospectus supplement from our quarterly report on Form 10-Q for the quarterly period ended June 30, 2004. Please note that because of seasonal and other factors, the results of operations for the nine-month periods presented below are not indicative of results of operations for the entirety of each fiscal year.

The information in the following table is only a summary and does not provide all of the information contained in our financial statements. Therefore, you should read the information presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended September 30, 2003, and our quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, each of which is incorporated by reference in this prospectus supplement.



		Nine Months Ended
		June 30,					Year Ended September 30,

		2004		2003			2003			2002		2001


		(unaudited)
Income Statement Data
	Operating revenues	$	2,427,159	$	2,363,044		$	2,799,916		$	1,650,964	$	1,725,481
	Gross profit		472,671		435,198			534,976			431,140		375,208
	Operating expenses		282,256		260,640			347,136			275,809		244,927
	Operating income		190,415		174,558			187,840			155,331		130,281
	Cumulative effect of accounting change, net of income tax benefit		—		(7,773	)		(7,773	)		—		—
	Net income		92,611		74,124			71,688			59,656		56,090
	Diluted net income per share before cumulative effect of accounting change, net of tax	$	1.78	$	1.82		$	1.71		$	1.45	$	1.47
	Diluted net income per share	$	1.78	$	1.65		$	1.54		$	1.45	$	1.47
	Cash dividends paid per share	$	0.915	$	0.900		$	1.20		$	1.18	$	1.16



			As of June 30,				As of September 30,

			2004		2003		2003		2002		2001


			(unaudited)
Balance Sheet Data
	Total assets(1)		$	2,680,532	$	2,460,079	$	2,626,913	$	2,061,135	$	2,110,214
	Debt
		Long-term debt	$	863,266	$	864,348	$	863,918	$	670,463	$	692,399
		Short-term debt(2)		5,918		10,447		127,940		167,771		221,942

	Total debt		$	869,184	$	874,795	$	991,858	$	838,234	$	914,341
	Shareholders’ equity		$	926,846	$	827,453	$	857,517	$	573,235	$	583,864

(1) For the unaudited balance sheet as of June 30, 2004 and all previous periods, we have reclassified our regulatory removal obligation from accumulated depreciation to a liability. The amounts presented above for total assets reflect this reclassification for all periods presented.

(2) Short-term debt is comprised of current maturities of long-term debt and short-term debt.

TXU Gas Company

The following table presents summary historical consolidated financial data of TXU Gas Company for the periods and as of the dates indicated. We derived the summary historical consolidated financial data for the fiscal years ended December 31, 2003, 2002 and 2001 from the audited consolidated financial statements of TXU Gas, which are incorporated by reference in this prospectus supplement from our current report on Form 8-K filed with the SEC on July 7, 2004. We derived the summary historical consolidated financial data for the six months ended June 30, 2004 and 2003 from the unaudited consolidated financial statements of TXU Gas, which are incorporated by reference in this prospectus supplement from our current report on Form 8-K filed with the SEC on August 31, 2004. Please note that because of seasonal and other factors, the results of operations for the six-month periods presented below are not indicative of results of operations for the entirety of each fiscal year.

Please note that the summary consolidated financial data of TXU Gas presented below and the consolidated financial statements for TXU Gas incorporated by reference in this prospectus supplement reflect the entire assets and operations of TXU Gas for the periods and as of the dates indicated. However, we acquired only the natural gas distribution and pipeline operations of TXU Gas. Following the completion of the TXU Gas acquisition, all of the equity of TXU Gas continues to be beneficially owned by TXU Corp. Please refer to “The TXU Gas Acquisition” and the “Unaudited Pro Forma Combined Financial Information” for more information.

The information in the following table is only a summary and does not provide all of the information contained in the financial statements of TXU Gas. Therefore, you should read the information presented below in conjunction with the historical consolidated financial statements and related notes of TXU Gas for the fiscal years ended December 31, 2003, 2002 and 2001, which are included in our current report on Form 8-K filed with the SEC on July 7, 2004 and incorporated by reference in this prospectus supplement, and for the quarterly periods ended June 30, 2004 and 2003, which are included in our current report on Form 8-K filed with the SEC on August 31, 2004 and incorporated by reference in this prospectus supplement. See “Incorporation by Reference.”



		Six Months Ended
		June 30,					Year Ended December 31,

		2004			2003		2003		2002			2001


		(unaudited)
Income Statement Data(1)
	Operating revenues	$	724,283		$	819,737	$	1,344,106	$	980,568		$	1,229,513
	Operating expenses		732,821			748,133		453,279		407,962			428,595
	Operating income (loss)		(8,538	)		71,604		100,285		70,621			41,912
	Net income (loss)		(123,378	)		32,776		41,016		(12,810	)		28,712



			As of June 30,				As of December 31,

			2004		2003		2003		2002		2001


			(unaudited)
Balance Sheet Data(1)
	Total assets(2)		$	2,198,624	$	2,217,580	$	2,327,954	$	2,297,430	$	4,551,221
	Debt
		Long-term debt(2)	$	280,077	$	275,737	$	430,285	$	580,466	$	708,090
		Short-term debt		450,000		150,000		150,000		125,000		200,000

	Total debt		$	730,077	$	425,737	$	580,285	$	705,466	$	908,090
	Shareholder’s equity		$	751,453	$	862,346	$	879,033	$	827,804	$	1,060,105

footnotes on following page

Summary Unaudited Pro Forma Combined Financial Information

(in thousands, except per share data)

The following table presents summary unaudited pro forma combined financial information for the periods and as of the dates indicated. This information is based on our historical consolidated financial statements and TXU Gas’s historical financial statements, adjusted to give effect to the July 2004 common stock offering, the consummation of the TXU Gas acquisition, the use of the net proceeds from the July 2004 common stock offering and the issuance of the acquisition commercial paper to pay the purchase price for the TXU Gas acquisition and related fees and expenses and the use of the net proceeds of this offering and the senior notes offering to repay in full the acquisition commercial paper and short-term debt incurred in connection with the Treasury lock settlement.

The unaudited pro forma combined income statement information for the nine months ended June 30, 2004 and for the twelve months ended September 30, 2003 each give effect to each of these matters as if each had occurred on October 1, 2002. The unaudited pro forma combined balance sheet information as of June 30, 2004 gives effect to each of these matters as if each had occurred on June 30, 2004. The summary unaudited pro forma combined financial information presented below is not necessarily indicative of either our future results, or the results that might have been achieved if these matters had all occurred on such dates.

The fair value of the June 2004 Treasury lock agreements, as of June 30, 2004, represented an obligation of approximately $7.1 million. The balance sheet data presented below reflects the application of the remaining net proceeds from this offering to repay, in full, the acquisition commercial paper, to repay $9.2 million of short-term debt, to pay the $7.1 million obligation related to the Treasury lock agreements and to increase cash by $35.0 million. However, as of October 18, 2004, the fair value of the June 2004 Treasury lock agreements represented an obligation of approximately $44.0 million. The change since June 30, 2004 in the fair value of the obligation representing the June 2004 Treasury lock agreements, which we will pay on October 22, 2004 with additional short-term borrowings, will reduce the amount of cash and cash equivalents by $35.0 million and increase the amount of short-term debt by $1.9 million, compared to the amounts shown below and in the unaudited pro forma combined balance sheet. See “— The TXU Gas Acquisition,” for more information on the June 2004 Treasury lock agreements and the Treasury lock settlement.

The summary unaudited pro forma combined financial information below should be read in conjunction with “Unaudited Pro Forma Combined Financial Information.” See “The TXU Gas Acquisition” for a description of the TXU Gas acquisition and the financing for the TXU Gas acquisition. See “— Senior Notes Offering” for a description of the senior notes offering.


		Nine Months Ended		Year Ended
		June 30, 2004		September 30, 2003(1)


		(unaudited)
Income Statement Data
	Operating revenues	$	3,496,155	$	4,126,293
	Gross profit		908,138		1,070,811
	Operating expenses		605,583		756,746
	Operating income		302,555		314,065
	Net income		133,003		115,950
	Diluted net income per share	$	1.75	$	1.65


			As of
			June 30, 2004

			(unaudited)
Balance Sheet Data
	Total assets		$	4,904,556
	Debt
		Long-term debt	$	2,260,447
		Short-term debt(2)		5,918

	Total debt		$	2,266,365
	Shareholders’ equity		$	1,494,846

(1) The results for TXU Gas used to prepare the unaudited pro forma combined income statement information for the year ended September 30, 2003 are derived from TXU Gas’s statement of income for the year ended December 31, 2003. See “— Summary Consolidated Historical Financial Data — TXU Gas Company.”

(2) Short-term debt is comprised of current maturities of long-term debt and short-term debt.

The Offering


Common stock offered by us		14,000,000 shares

Shares outstanding after the offering		76,518,696 shares

Use of proceeds		We estimate that our net proceeds from this offering, without exercise of the underwriters’ overallotment option and after deducting the underwriting discount and commissions and estimated offering expenses payable by us, will be approximately $332.2 million. We intend to use a portion of the net proceeds from this offering, along with the net proceeds from the senior notes offering, to repay in full the acquisition commercial paper that is outstanding on October 27, 2004. We intend to use the remaining net proceeds from this offering to repay in full the short-term debt to be incurred on October 22, 2004 in connection with the Treasury lock settlement, and, to the extent there are remaining net proceeds from this offering, to repay any other short-term debt outstanding on October 27, 2004 and for working capital and other general corporate purposes. Neither the completion of this offering nor the completion of the senior notes offering is contingent upon the other. See “Use of Proceeds” on page S-14.

NYSE symbol		ATO

The number of shares outstanding after the offering is based on our shares outstanding on June 30, 2004, together with the shares issued in the July 2004 common stock offering, and excludes 1,783,779 shares reserved for issuance under outstanding options and share unit awards as of June 30, 2004. This number assumes that the underwriters’ overallotment option is not exercised. If the overallotment option is exercised, we will issue and sell up to an additional 2,100,000 shares.

See “Risk Factors” beginning on page S-11 and other information included and incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of the factors you should consider carefully before deciding to invest in our common stock.

You should consider carefully all of the information that is included or incorporated by reference in this prospectus supplement and the accompanying prospectus before investing in the shares. In particular, you should evaluate the uncertainties and risks referred to or described below, which may adversely affect our business, financial condition or results of operations. Additional uncertainties and risks that are not presently known to us or that we currently deem immaterial, including those associated with the TXU Gas acquisition, may also adversely affect our business, financial condition or results of operations.

The factors affecting our company and our industry that could impact our business, financial condition or results of operations include those factors described in this prospectus supplement and in the information incorporated by reference in this prospectus supplement and the accompanying prospectus. In particular, please refer to “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that May Affect Our Future Performance” in our annual report on Form 10-K for the year ended September 30, 2003, which is incorporated by reference in this prospectus supplement, and those factors listed in this prospectus supplement in “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of some of the factors that could affect our future operations or performance.

In addition to the factors affecting our company and our industry, the risks outlined below relating to the TXU Gas acquisition could also adversely affect our business, financial condition or results of operations.

On October 1, 2004, we incurred approximately $1.7 billion of short-term indebtedness, through the issuance of the acquisition commercial paper, to finance a portion of the TXU Gas acquisition. On an adjusted basis, giving effect to the incurrence of this short-term indebtedness and the use of the net proceeds from the senior notes offering, which is expected to close on October 22, 2004, to repay a portion of this short-term indebtedness, our total debt, as of June 30, 2004, would have increased from $869.2 million to $2.6 billion and our ratio of total debt to capitalization (including short-term debt and current maturities of long-term debt), as of June 30, 2004, would have increased from 48.4% to 68.7%. On a pro forma as adjusted basis, giving effect to the incurrence of this short-term indebtedness, the use of the net proceeds from the senior notes offering to repay a portion of this short-term indebtedness and the use of the net proceeds from this offering to repay in full the balance of this short-term indebtedness and repay short-term debt incurred in connection with the Treasury lock settlement, our total debt, as of June 30, 2004, would have increased from $869.2 million to $2.3 billion and our ratio of total debt to capitalization (including short-term debt and current maturities of long-term debt), as of June 30, 2004, would have increased from 48.4% to 60.3%. Our ratio of total debt to capitalization is expected to be greater during the current winter heating season as we make additional short-term borrowings to fund natural gas purchases and meet our working capital requirements. We expect to increase our working capital facility from $350 million to $600 million on October 22, 2004. This will help us to meet our increased working capital requirements as a result of the TXU Gas acquisition. This increase in our indebtedness could limit our flexibility in planning for, or reacting to, changes in our business or economic conditions.

Our long-term debt is currently rated as “investment grade” by Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc., the three credit rating agencies that rate our long-term debt securities. There can be no assurance that these rating agencies will maintain investment grade ratings for our long-term debt. If we were to lose our investment-grade rating, the commercial paper

The TXU Gas acquisition is larger than any of the nine other acquisitions we have made since 1986. In addition to operating the natural gas distribution system we acquired in the TXU Gas acquisition, we will manage pipeline operations on a scale greater than in the past. As a consequence, we may experience the need for additional management attention and resources, we may be required to develop relationships with additional regulatory authorities in the service areas of the TXU Gas operations we acquired or we may face unanticipated challenges or delays in integrating the TXU Gas operations we acquired into our business. In addition, employees important to the TXU Gas operations we acquired may decide not to continue employment with us. If these events occur, the acquired operations may not achieve the results or otherwise perform as expected.

The financial results of the TXU Gas operations we acquired are subject to many of the same factors that affect our financial condition and results of operations, including weather sensitivity, extensive federal, state and local regulation, increasing gas costs, competition, market risks and national, regional and local economic conditions.

In addition, the TXU Gas distribution operations we acquired do not have weather-normalized rates. This means we will not be able to increase customers’ bills to offset lower gas usage when the weather is warmer than normal. As a result, the financial results for the TXU Gas operations we acquired may be adversely affected in the event of a warmer-than-normal heating season.

The TXU Gas transmission operations we acquired include interconnected natural gas transmission lines, underground storage reservoirs, compressor stations and related properties within Texas. The operation of these transmission facilities also involves risks. These include the possibility of breakdown or failure of equipment or pipelines, the impact of unusual or adverse weather conditions or other natural events and the risk of performance below expected levels of throughput or efficiency. Breakdown or reduced performance of a transmission facility may prevent the facility from performing under applicable sales agreements which, in certain situations, could result in termination of those agreements or incurring a liability for liquidated damages. Insurance, warranties, indemnities or performance guarantees may not cover any or all of the liquidated damages, lost revenues or increased expenses associated with a breakdown or reduction in performance of a transmission facility. If we are unsuccessful in managing these risks, our business, financial condition and results of operations could be adversely affected.

The diligence conducted in connection with the TXU Gas acquisition and the indemnification provided in the acquisition agreement may not be sufficient to protect us from, or compensate us for, all losses resulting from the acquisition or TXU Gas’s prior operations. For example, under the terms of the acquisition agreement, the first $15 million of many indemnifiable losses are to be borne by us, and the agreement provides for sharing of losses with respect to unknown environmental matters that may affect the assets we acquired after we have borne $10 million in costs relating to such matters. In addition, under the terms of the acquisition agreement, the maximum aggregate amount of such losses for which TXU

We may not be aware of all of the risks associated with the TXU Gas acquisition. Any discovery of adverse information concerning the assets or operations we acquired could be material and, in many cases, would be subject to only limited rights of recovery. In addition, we will likely have to make capital expenditures, which may be significant, but which amount has not been fixed, to enhance or integrate the assets and operations we acquired.

We estimate that we will receive net proceeds from this offering of approximately $332.2 million ($382.1 million if the underwriters’ overallotment option is exercised in full), after deducting the underwriting discount and commissions and estimated offering expenses payable by us.

We intend to use a portion of the net proceeds from this offering, along with the estimated $1.39 billion of net proceeds from the senior notes offering, to repay in full the acquisition commercial paper that is outstanding on October 27, 2004. We intend to use the remaining net proceeds from this offering to repay in full the approximately $44.0 million of short-term debt to be incurred on October 22, 2004 in connection with the Treasury lock settlement and, to the extent there are remaining net proceeds from this offering, to repay any other short-term debt outstanding on October 27, 2004 and for working capital and other general corporate purposes. Neither the completion of this offering nor the completion of the senior notes offering is contingent upon the other.

As of October 21, 2004, we had approximately $1.7 billion of acquisition commercial paper outstanding, and the acquisition commercial paper had a weighted average interest rate of approximately 2.48% per year and a weighted average remaining maturity of approximately four days. As of October 18, 2004, the fair value of the June 2004 Treasury lock agreements represented an obligation of approximately $44.0 million. We intend to incur short-term debt on October 22, 2004 in the form of commercial paper to fund the Treasury lock settlement, with interest rates and maturities consistent with our existing commercial paper. See “Prospectus Supplement Summary — The TXU Gas Acquisition” for more information on the June 2004 Treasury lock agreements and the Treasury lock settlement.

For more information on the financing for the TXU Gas acquisition, please see “The TXU Gas Acquisition — Financing for the TXU Gas Acquisition.”

Our common stock is listed on the New York Stock Exchange under the symbol “ATO.” The following table indicates the high and low closing prices of our common stock, as reported by the New York Stock Exchange, and the dividends that we paid per share during the periods indicated.

The last reported sale price of our common stock on the New York Stock Exchange on October 21, 2004 was $25.20 per share.

The quarterly dividends of $.305 per share paid during the four quarters of fiscal 2004 yielded an annual dividend for fiscal 2004 of $1.22 per share. We do not expect to change our current dividend policy as a result of the TXU Gas acquisition or the related financings. However, no dividends for fiscal 2005 have been declared and dividends on our shares of common stock are payable at the discretion of our board of directors out of legally available funds. Future payments of dividends, and the amounts of these dividends, will depend on our financial condition, results of operations, capital requirements and other factors.

The following table presents our cash and cash equivalents, short-term debt and capitalization as of June 30, 2004:


	•	on an actual basis;

	•	on an as adjusted basis, giving effect to the application of the $235.8 million of net proceeds from our July 2004 common stock offering and the $1.7 billion of net proceeds from our initial issuance of the acquisition commercial paper to finance the TXU Gas acquisition, and the application of the approximately $1.39 billion net proceeds from the senior notes offering, which is expected to close on October 22, 2004, to repay a portion of the acquisition commercial paper, as if each had occurred on June 30, 2004; and

	•	on a pro forma as adjusted basis, giving effect to the transactions referred to in the immediately preceding bullet point and as further adjusted to give effect to the application of the approximately $332.2 million net proceeds from this offering to repay in full the balance of the acquisition commercial paper, $9.2 million of other short-term debt and the $7.1 million obligation incurred in connection with the Treasury lock settlement, as if each had occurred on June 30, 2004.

The fair value of the June 2004 Treasury lock agreements represented an obligation of approximately $7.1 million as of June 30, 2004. However, as of October 18, 2004, the fair value of the June 2004 Treasury lock agreements represented an obligation of approximately $44.0 million. The table below assumes, as of June 30, 2004, $7.1 million is required for the Treasury lock settlement, which results in approximately $53.1 million of additional proceeds being available to repay other short-term debt and as cash for working capital and other general corporate purposes. The change since June 30, 2004 in the fair value of the obligation representing the June 2004 Treasury lock agreements, which we will pay on October 22, 2004 with additional short-term borrowings, will reduce the amount of cash and cash equivalents by $35.0 million and increase the amount of short-term debt by $1.9 million compared to the amounts shown in the table below and in the unaudited pro forma combined balance sheet. See “Prospectus Supplement Summary — The TXU Gas Acquisition,” for more information on the June 2004 Treasury lock agreements and the Treasury lock settlement.

You should read this table in conjunction with the unaudited consolidated financial statements and related notes included in our quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, which is incorporated by reference in this prospectus supplement. For more information on the terms of the TXU Gas acquisition and the financing for the TXU Gas acquisition, see “The TXU Gas Acquisition.”


(1)	The pro forma as adjusted cash and cash equivalents reflects an increase in cash of $35.0 million. However, as a result of the change since June 30, 2004 in the fair value of the obligation representing the June 2004 Treasury lock agreements, we may not have available proceeds from the common stock offering that we will retain in cash.

(2)	The as adjusted amount of other short-term debt reflects short-term borrowings of approximately $7.5 million to pay costs and expenses associated with the TXU Gas acquisition and short-term borrowings of approximately $1.7 million to pay costs and expenses associated with the bridge financing facility and the acquisition commercial paper. The pro forma as adjusted amount of other short-term debt reflects the repayment of $9.2 million in other short-term debt. However, we intend to incur additional short-term debt in connection with the Treasury lock settlement as a result of the change since June 30, 2004, in the fair value of the obligation representing the June 2004 Treasury lock agreements.

(3)	The as adjusted long-term debt amount reflects the issuance of $1.4 billion in aggregate principal amount at maturity of notes priced at a discount of approximately $2.8 million.

(4)	The number of shares of common stock issued and outstanding excludes 1,783,779 shares of our common stock then issuable upon exercise of outstanding options and share unit awards and the pro forma as adjusted number of shares of common stock issued and outstanding excludes the up to 2,100,000 shares issuable upon the exercise of the underwriters’ overallotment option.

(5)	Total capitalization excludes the acquisition commercial paper, the current portion of long-term debt and other short- term debt.

On October 1, 2004, we completed the acquisition of the natural gas distribution and pipeline operations of TXU Gas. TXU Gas is a subsidiary of TXU Corp., a public company. The TXU Gas acquisition was structured as a merger between a wholly-owned subsidiary of ours and TXU Gas, with both our subsidiary and TXU Gas as surviving entities following the merger. Accordingly, we will treat the TXU Gas acquisition as an asset acquisition for accounting purposes. Immediately following the merger, our subsidiary was merged into us, and the acquired operations now constitute a new operating division of ours.

Acquisition Agreement. In the acquisition agreement, TXU Gas made representations and warranties as to its historical financial statements, material liabilities, operation in the ordinary course and absence of any material adverse change in its assets or business. It also provided a representation and warranty as to the compliance of its prior SEC filings with the applicable SEC requirements. Other representations and warranties addressed its permits, title to assets, material contracts, environmental matters, regulatory matters, labor matters, benefits matters, tax matters, insurance matters, transactions with affiliates and other matters. TXU Gas agreed to indemnify us against a breach of specified representations and warranties for a period of 15 months after the closing for aggregate losses that exceed $15 million. However, TXU Gas also agreed to retain all liabilities relating to pre-closing tax and employee matters and environmental liabilities that are related to its former manufactured gas plants, which we did not acquire, or that are not related to the assets we acquired. The indemnity from TXU Gas relating to these retained liabilities is without limit as to time or amount. In addition, for three years after the closing, we have agreed to share any environmental liabilities associated with the assets we acquired that are not disclosed in the acquisition agreement. In this regard, TXU Gas agreed to indemnify us against environmental liabilities involving at least $1 million once these liabilities exceed $10 million in the aggregate and TXU Gas will pay 50% of the amount of these liabilities between $10 million and $20 million and 100% of these liabilities thereafter. The maximum aggregate indemnity payable by TXU Gas on account of these representations and warranties or environmental liabilities associated with the assets we acquired is approximately $192.5 million. TXU Corp. has guaranteed all of TXU Gas’s payment obligations under the acquisition agreement.

Employees. Upon the closing of the TXU Gas acquisition, we added approximately 1,350 employees who, prior to the closing, were employees of TXU Gas or involved in the TXU Gas operations we acquired. The initial positions and base salaries of the transitioned employees are comparable to the positions and base salaries held by them immediately prior to the closing of the TXU Gas acquisition, and we have agreed that the employees’ base salaries will not be reduced for at least one year after the closing of the TXU Gas acquisition. The other terms of employment and employee benefit plans applicable for the transitioned employees are generally comparable to our similarly situated non-union gas utility employees. Although we did not assume the existing employee benefit liabilities or plans of TXU Gas, for purposes of determining the annual pension cost we have agreed to give the transitioned employees credit for years of TXU Gas service under our pension plan. For purposes of our post-retirement medical plan, we received a credit of $20 million (subject to post-closing adjustment) against the purchase price to permit us to provide partial past service credits for retiree medical benefits under our retiree medical plan. The

Transitional Services. At closing, TXU Gas and some of its affiliates entered into transitional services agreements with us to provide call center, meter reading, customer billing, collections, information reporting, software, accounting, treasury, administrative and other services traditionally provided by TXU Gas and its affiliates to the TXU Gas operations we acquired. The initial term of each of these agreements will expire on October 1, 2005. Any particular service may be terminated during the initial term on 90 days notice, except for call center, customer billing, collections, information reporting, administrative and other services provided under our agreement with TXU Gas, which may not be terminated during the initial term. After the initial term, all of the service agreements continue on a month-to-month basis until canceled by either party with at least 30 days prior written notice. In addition, we have an option to extend the business services provided during the initial term by TXU Gas for a period of six months beyond the initial term, so long as we exercise our option at least 120 days before the expiration of the initial term. The agreements require us to pay the service providers’ costs for the services. Also at closing, we entered into a transitional access agreement with TXU Gas and some of its affiliates in order to allow the parties the same level of access to certain properties, facilities, software applications and other items that they were provided prior to the closing. The initial term of this agreement also expires on October 1, 2005, and the agreement also continues on a month-to-month basis thereafter until canceled by either party with at least 30 days prior written notice.

The foregoing is a summary of certain provisions of the relevant agreements. This summary is qualified in its entirety by reference to the agreements, which are included as exhibits to our current reports on Form 8-K filed with the SEC on July 7, 2004 and October 6, 2004, and incorporated by reference in this prospectus supplement. See “Incorporation by Reference.”

In connection with the TXU Gas acquisition, we acquired the franchises held by TXU Gas to provide natural gas utility services to cities, towns and other municipalities in Texas. As part of the TXU Gas acquisition, we determined, on the basis of representations and warranties in the acquisition agreement and our diligence, that we needed the consent of two such cities for the acquisition of their franchises and we received the necessary consents prior to closing. However, we have received letters from two other cities, including the City of Dallas, raising the issue of whether, under the terms of their franchises, we should have also obtained their consents. We are currently in discussions with the City of Dallas on this issue. As these discussions are at an early stage, we cannot predict the outcome, but one alternative suggested by the City of Dallas is that we consider renewing our non-exclusive franchise with the City of Dallas prior to its 2009 expiration date. We do not currently know what changes, if any, the City of Dallas might propose in the terms of the franchise, were we to agree to an early renewal, or whether the City of Dallas will take other action with respect to the franchise, were we not to do so. However, we believe that the costs to us associated with a renewal would not be material. We have not received any similar inquiries from other cities, towns or municipalities, but we cannot assure you that we will not receive similar inquiries in the future.

The TXU Gas operations we acquired are regulated businesses engaged in the purchase, transmission, storage, distribution and sale of natural gas in the north-central, eastern and western parts of Texas.

Through the TXU Gas operations we acquired, we are able to provide gas distribution service through 26,431 miles of distribution mains and purchase, distribute and sell natural gas to approximately 1.5 million residential and business customers in approximately 550 cities and towns, including the 11-county Dallas/Fort Worth metropolitan area. The distribution service rates we are able to charge these residential and business customers generally have been established by the municipal governments of the cities and towns served, with the Texas Railroad Commission having appellate, or in some instances,

Among the TXU Gas operations we acquired are interconnected natural gas transmission lines, five underground storage reservoirs (including a salt dome facility), 24 compressor stations and related properties, all within Texas. With our acquisition from TXU Gas of a system consisting of 6,162 miles of transmission and gathering lines, we are now one of the largest intrastate pipeline operators in Texas. Through these facilities, we transport natural gas to our distribution system and other customers, with the rates for such transmission services being regulated by the Texas Railroad Commission.

For more information on TXU Gas, please see the historical consolidated financial statements and related notes of TXU Gas for the years ended December 31, 2003, 2002 and 2001 and for the quarterly period ended March 31, 2004, which are included in our current report on Form 8-K filed with the SEC on July 7, 2004 and incorporated by reference in this prospectus supplement, and the historical consolidated financial statements and related notes of TXU Gas for the three and six month periods ended June 30, 2004, which are included in our current report on Form 8-K filed with the SEC on August 31, 2004 and incorporated by reference in this prospectus supplement. Please note that the historical consolidated financial statements for TXU Gas included in our current reports on Form 8-K reflect the entire assets and operations of TXU Gas. However, we only acquired the natural gas distribution and pipeline operations of TXU Gas. For more information on the operations of TXU Gas that we acquired, see “Unaudited Pro Forma Combined Financial Information” and “Our Business.”

We funded the purchase price for the TXU Gas acquisition with the $235.8 million net proceeds from the July 2004 common stock offering and approximately $1.7 billion in net proceeds from our issuance on October 1, 2004 of the acquisition commercial paper, which is backstopped by the bridge financing facility. The bridge financing facility is a 364-day, $1.7 billion senior unsecured revolving credit agreement that we entered into on September 24, 2004 with nine financial institutions. We may use the bridge financing facility as a backup liquidity facility for issuances of acquisition commercial paper, or we may borrow directly under the bridge financing facility. We expect to use the proceeds of this offering, along with the proceeds of the senior notes offering, to repay in full the acquisition commercial paper. Neither the completion of this offering nor the completion of the senior notes offering is contingent upon the other. We have hedged the Treasury yield component of $875 million of the $1.4 billion in senior notes we intend to issue in the senior notes offering, which is expected to close on October 22, 2004. For more information on these arrangements, see “Prospectus Supplement Summary — The TXU Gas Acquisition.”

Any borrowings that we may make under the bridge financing facility will bear interest at a rate dependent on our credit ratings at the time of such borrowing and based, at our election, on LIBOR or a base rate. Borrowings based on LIBOR would bear interest at an annual rate ranging from LIBOR plus 0.5% to 1.75%. At our current credit ratings, LIBOR-based borrowings would bear interest at an annual rate of LIBOR plus 1.0%. In addition, we must pay quarterly commitment and utilization fees at rates dependent on our credit ratings. At our current credit ratings, the commitment fee is 0.15% per year and the utilization fee, payable only when utilization exceeds 33 1/3% of the aggregate commitment, would be 0.125% per year. As of October 21, 2004, we had no borrowings outstanding under the bridge financing facility.

The bridge financing facility will expire on September 23, 2005, at which time any outstanding indebtedness under the bridge financing facility will be due and payable. We are required to reduce any indebtedness outstanding and the availability under the bridge financing facility to the extent of the net cash proceeds from the sale of the shares being offered by this prospectus supplement, the sale of senior notes offered in the senior notes offering and any other public issuances of debt or equity securities, with exceptions for issuances of capital stock under any dividend reinvestment plan, direct stock purchase plan, employee benefit plan or to employee, directors or officers, purchase money financings and any commercial paper backstopped by or borrowings under our working capital credit facility.

The bridge financing facility contains usual and customary covenants for transactions of this type. In addition, the bridge financing facility provides that our ratio of total debt to capitalization (including short-term debt and current maturities of long-term debt) may not exceed 70% as of the last day of any fiscal quarter. For the purpose of calculating this ratio as of December 31, 2004, up to $200 million of our outstanding borrowings made for working capital purposes in the fiscal quarter ended December 31, 2004, whether under our existing $350 million working capital facility or any refinancing thereof or through the issuance of commercial paper other than acquisition commercial paper, will be excluded from total debt.

The proceeds of this offering and the senior notes offering will reduce permanently the availability under the bridge financing facility.

For more information on the bridge financing facility, please see our current report on Form 8-K filed with the SEC on September 29, 2004, which includes, as an exhibit thereto, a copy of the bridge financing facility.

The following unaudited pro forma combined financial statements are based on our historical consolidated financial statements and TXU Gas’s historical financial statements, each incorporated by reference in this prospectus supplement, adjusted to give effect to the July 2004 common stock offering, the consummation of the TXU Gas acquisition, the use of the net proceeds from the July 2004 common stock offering and the issuance of the acquisition commercial paper to pay the purchase price for the TXU Gas acquisition and related fees and expenses and the use of the net proceeds of this offering and the senior notes offering to repay in full the acquisition commercial paper and short-term debt incurred in connection with the Treasury lock settlement. The unaudited pro forma combined statement of income for the nine months ended June 30, 2004 and for the twelve months ended September 30, 2003 gives effect to these matters as if each had occurred on October 1, 2002. The unaudited pro forma combined balance sheet as of June 30, 2004 gives effect to these matters as if each had occurred on June 30, 2004.

The unaudited pro forma combined financial statements reflect pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions we believe are reasonable but are subject to change. In our opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The unaudited pro forma combined financial statements do not purport to represent what our results of operations or financial position would actually have been had the matters described above occurred on such dates or to project our results of operations or financial position for any future date or period. The unaudited pro forma combined financial statements include adjustments that reflect our preliminary estimates of the allocation of the purchase price to the acquired assets and assumed liabilities of TXU Gas. The preliminary purchase price allocation is subject to change as more detailed analyses are completed and additional information related to the fair values of TXU Gas’s assets acquired and liabilities assumed in the TXU Gas acquisition become available. Final purchase accounting adjustments may differ materially from the pro forma adjustments presented herein. The unaudited pro forma combined financial statements do not reflect any operating efficiencies and cost savings that we may achieve with respect to the combined entities nor any expense associated with achieving these benefits.

The historical financial statements of TXU Gas are based on TXU Gas’s historical financial statements as filed with the SEC. To prepare the unaudited pro forma combined statement of income for the year ended September 30, 2003, we used our consolidated statement of income for the twelve months ended September 30, 2003 and TXU Gas’s statement of income for the twelve months ended December 31, 2003. To prepare the unaudited pro forma combined statement of income for the nine months ended June 30, 2004, we used our consolidated statement of income for the nine months ended June 30, 2004 and derived TXU Gas’s statement of income for the nine months ended June 30, 2004 using TXU Gas’s unaudited statement of income for the six months ended June 30, 2004 and its audited statement of income for the twelve months ended December 31, 2003, which are incorporated by reference in this prospectus supplement, and TXU Gas’s unaudited statement of income for the nine months ended September 30, 2003, which is not incorporated by reference in this prospectus supplement. Please note that the historical financial information of TXU Gas presented in the unaudited pro forma combined balance sheet and the unaudited pro forma combined statements of income reflect the entire assets and operations of TXU Gas for the periods and as of the dates indicated. However, in the TXU Gas acquisition we acquired only the natural gas distribution and pipeline operations of TXU Gas. See Note 2(a) in the Notes to Unaudited Pro Forma Combined Financial Statements.

You should read the following unaudited pro forma combined financial information in conjunction with our audited and unaudited consolidated financial statements and the related notes incorporated by reference in this prospectus supplement and TXU Gas’s audited and unaudited financial statements and related notes, which are included in our current reports on Form 8-K filed with the SEC on July 7, 2004 and August 31, 2004 and incorporated by reference in this prospectus supplement. See “Incorporation by Reference.”

The accompanying notes are an integral part of the unaudited pro forma combined financial statements.

The unaudited pro forma combined financial statements give effect to the July 2004 common stock offering, the consummation of the TXU Gas acquisition, the use of the $235.8 million of net proceeds from the July 2004 common stock offering and the approximately $1.7 billion of net proceeds from the issuance of the acquisition commercial paper to pay the purchase price for the TXU Gas acquisition and related fees and expenses, and the use of the approximately $332.2 million net proceeds of this offering and the approximately $1.39 billion net proceeds from the senior notes offering to repay in full the acquisition commercial paper and acquisition related costs and expenses and short-term debt incurred in connection with the Treasury lock settlement.

The cash purchase price paid to TXU Gas for the assets that were acquired was approximately $1.905 billion (after preliminary closing adjustments). We incurred approximately $7.5 million in related transaction costs for a total purchase price of $1.913 billion. To finance the TXU Gas acquisition, we used the proceeds of our July 2004 common stock offering and our issuance of the acquisition commercial paper. We intend to use the proceeds of this offering and the senior notes offering to repay in full the acquisition commercial paper. Neither the completion of this offering nor the completion of the senior notes offering is contingent upon the other. See “The TXU Gas Acquisition — Financing for the TXU Gas Acquisition” for more information on the financing of the TXU Gas acquisition.

We have prepared the unaudited combined pro forma financial statements based on:


	•	our sale of shares in this offering, generating net proceeds of approximately $332.2 million, after deducting approximately $14.3 million of estimated offering related fees and expenses, including the underwriting discount and commissions, and assuming the underwriters will not exercise their overallotment option to purchase up to 2,100,000 shares of our common stock; and

	•	our sale of $1.4 billion principal amount of the senior notes, having an initial weighted average effective interest rate of approximately 4.76% per year (see Note 2(b) for more information on the calculation of the initial weighted average effective interest rate of the senior notes), generating net proceeds of approximately $1.39 billion, after deducting approximately $11.7 million of estimated offering related fees and expenses, including the underwriting discount and commissions.

The TXU Gas acquisition will be accounted for as an asset purchase with Atmos acquiring substantially all of the assets of TXU Gas. For more information on the assets and liabilities of TXU Gas that will not be acquired, see Note 2.

The unaudited pro forma combined balance sheet gives effect to the July 2004 common stock offering, the consummation of the TXU Gas acquisition, the use of the net proceeds from the July 2004 common stock offering and the issuance of the acquisition commercial paper to pay the purchase price for the TXU Gas acquisition and related fees and expenses and the use of the net proceeds of this offering and the senior notes offering to repay in full the acquisition commercial paper and short-term debt incurred in connection with the Treasury lock settlement, as if each had occurred on June 30, 2004. The unaudited pro forma combined statements of income assume these matters all occurred on October 1, 2002, the first day of our 2003 fiscal year. The historical amounts used as the basis for the unaudited pro forma combined financial statements have been derived from the historical financial statements as follows:


	•	Unaudited pro forma combined balance sheet. Both the Atmos and TXU Gas historical amounts are derived from the respective company’s unaudited balance sheets as of June 30, 2004 incorporated by reference in this prospectus supplement.


	•	Unaudited pro forma combined statements of income. The Atmos historical amounts are derived from our audited income statement for the year ended September 30, 2003 and the unaudited income statement for the nine months ended June 30, 2004, both of which are incorporated by reference in this prospectus supplement.


		As TXU Gas uses a calendar year end and Atmos uses a September 30 fiscal year end, for purposes of the unaudited pro forma combined statement of income for the twelve months ended September 30, 2003, TXU Gas’s audited income statement for the twelve months ended December 31, 2003 has been used, which is incorporated by reference in this prospectus supplement.

		For purposes of the unaudited pro forma combined statement of income for the nine months ended June 30, 2004, TXU Gas’s actual nine months ended June 30, 2004 have been used. The historical amounts for TXU Gas for the nine months ended June 30, 2004 are derived by subtracting the corresponding amounts in TXU Gas’s unaudited income statement for the nine months ended September 30, 2003 from the corresponding amounts in TXU Gas’s audited income statement for the twelve months ended December 31, 2003 and then adding the corresponding amounts in TXU Gas’s unaudited income statement for the six months ended June 30, 2004. TXU Gas’s audited income statement for the twelve months ended December 31, 2003 and its unaudited income statement for the six months ended June 30, 2004 are incorporated by reference into this prospectus supplement. TXU Gas’s income statement for the nine months ended September 30, 2003 is not included or incorporated by reference in this prospectus supplement.

		The following table illustrates how the historical amounts for TXU Gas for the nine months ended June 30, 2004 were derived:

The unaudited pro forma combined income statement for the twelve months ended September 30, 2003 excludes the cumulative effect of an accounting change which was recognized by Atmos for the adoption of EITF Consensus 02-03 in 2003, which resulted in a charge of $7.8 million, net of tax. Further, the unaudited pro forma combined income statements exclude a charge of $2.8 million, net of tax, for a discontinued operation that was recognized by TXU Gas in the fourth quarter of calendar 2003. As previously discussed, due to the differing year ends used to prepare the unaudited pro forma combined statements of income, TXU Gas’s fourth quarter of calendar 2003 is reflected in the unaudited pro forma combined income statements for both the twelve months ended September 30, 2003 and the nine months ended June 30, 2004.

The respective pro forma adjustments are explained below beside the corresponding footnote.

(a) Adjusts the historical balance sheet of TXU Gas for the assets and liabilities of TXU Gas that Atmos did not acquire. As previously discussed, we acquired substantially all the assets of TXU Gas through a merger. However, TXU Gas retained its utility asset management services subsidiary, its cash position, certain vehicles and certain other insignificant assets and operations. Further, we did not assume any of TXU Gas’s debt, preferred stock, employee benefit liabilities, intercompany assets or liabilities and certain other insignificant liabilities.

While we did not assume the existing employee benefit liabilities of TXU Gas, we agreed to include the acquired employees in our benefit plans and for purposes of determining the annual service cost under our defined benefit plan give them credit for their years of service as TXU Gas employees. The employees are not receiving a retroactive adjustment for prior service as only their prospective annual service cost will be affected by their prior service. However, for purposes of our post-retirement medical plan, we received a credit of $20 million (subject to post-closing adjustment) against the purchase price to permit us to provide partial past service credits for retiree medical benefits under our retiree medical plan. The $20 million credit approximates the actuarially determined present value of the accumulated benefits related to the past services of the transferred employees. We believe the historical benefit costs recognized by TXU Gas will approximate our benefit costs, and no pro forma adjustment has been recognized for the transition of these employees to the Atmos benefit plans in the unaudited pro forma combined statements of income.

TXU Gas’s accounts receivable at June 30, 2004 had $41.8 million of intercompany payables netted against its third-party receivables as a result of its intercompany securitization program. This adjustment reflects the elimination of that intercompany payable as well as the elimination of TXU Gas’s intercompany long-term debt.


		The following is a summary of the assets and liabilities retained by TXU Gas (in thousands):


		(b) The purchase price for the acquired assets and assumed liabilities has been allocated as follows (in thousands):

This adjustment also reverses TXU Gas’s remaining equity ($1.9 billion) after adjustment for the retained assets and liabilities and its deferred income taxes ($146.7 million) and goodwill ($299.8 million). Because the TXU Gas acquisition is treated as an asset purchase, our initial basis in the acquired assets and liabilities is the same for both accounting and tax purposes. Thus, there are no deferred taxes related to the TXU Gas acquisition.

The sale of TXU Gas’s assets was held through a competitive bid process. We believe the resulting goodwill is recoverable given the expected synergies we can achieve as a result of the acquisition. To that end, the TXU Gas acquisition significantly expands our existing utility operations in Texas. The North Texas operations of TXU Gas bridge our geographic operations between our existing utility operations in West Texas and Louisiana. TXU Gas’s headquarters and service area are centered in Dallas, Texas, which is also the location of our corporate headquarters. Further, the addition of the regulated pipelines in North Texas may create additional gas marketing and other opportunities for our non-regulated subsidiaries, which include gas marketing and storage operations. We believe we will take several

years to realize these synergies. Further, for the initial 12 months of the integration, we have entered into agreements with TXU Gas and affiliates of TXU Gas to provide transitional services at their cost. Thus, for the initial 12 months of the transition, we expect no significant changes to the acquired operations’ cost structure, and no pro forma adjustment has been recognized for any synergies, economies of scale and cost savings we may achieve. However, except for our agreement directly with TXU Gas relating to certain services, the transitional services agreements may be terminated with 90 days notice.

The amount allocated to property, plant and equipment represents our estimate of the fair value of the assets acquired. We have based that estimate on the amount we believe will ultimately be approved as rate base for rate setting purposes.

(c) Reflects the July 2004 common stock offering, the consummation of the TXU Gas acquisition, the use of the net proceeds ($235.8 million) from the July 2004 common stock offering and the net proceeds ($1.7 billion, net of $1.7 million in estimated deferred financing costs reflected in other short-term debt) from the issuance of the acquisition commercial paper to pay the purchase price for the acquisition ($1.905 billion) and related fees and expenses reflected in other short-term debt ($7.5 million), and the use of the net proceeds ($332.2 million, net of $14.3 million in estimated offering costs) of this offering and the net proceeds ($1.39 billion, net of $8.9 million in estimated offering costs and $2.8 million in original issue discount) from the senior notes offering to repay in full the acquisition commercial paper and short-term debt incurred in connection with the Treasury lock settlement. Further, for purposes of the unaudited pro forma combined financial statements, we have assumed that the underwriters will not exercise their overallotment option.

(d) Reflects the reclassification of $36.2 million of regulatory assets from deferred credits and other liabilities to deferred charges and other assets to conform TXU Gas’s presentation with our presentation.

(e) Reflects the elimination of the income statement effects of the assets and liabilities retained by TXU Gas, including TXU Gas retained subsidiaries, which were substantially comprised of its utility asset management services operations.

(f) Reflects the elimination of certain income statement effects of the disallowance of certain assets and liabilities in TXU Gas’s rate case on May 25, 2004. We estimate that the rate case will prospectively increase our revenue from utility operations by approximately $11.7 million. However, as the effect on demand of increased rates cannot be precisely determined, no pro forma adjustment to revenues or operating expenses has been recognized in the unaudited pro forma combined income statements other than for the specific items that were disallowed in the rate case.

(g) Reflects the anticipated change in depreciation and amortization given the change in basis to property, plant and equipment caused by purchase accounting.

(h) Adjusts the historical interest expense to reflect the interest expense and amortization of the deferred financing costs, original issue discount and fees related to the senior notes (see Note 1 — Basis of Presentation), and the elimination of TXU Gas’s interest expense. Interest expense was calculated using the initial weighted average effective interest rate of 4.76%. This rate was partially based on the initial interest rate of floating rate notes due 2007 of 2.465%, which will reset on each quarterly interest payment date of the floating rate notes due 2007. A 0.125% change in the weighted average effective interest rate would change interest expense by $0.3 million and $0.4 million for the nine months ended June 30, 2004 and the year ended September 30, 2003.

(i) Adjusts tax expense to reflect Atmos’s effective tax rate and for the effect of the pro forma adjustments.

(j) Reflects the Treasury lock settlement ($7.1 million as of June 30, 2004), the repayment of other short-term debt and a $35.0 million increase in cash available for working capital and other general

corporate purposes from the net proceeds from the common stock offering following the repayment in full of the acquisition commercial paper. However, we expect to pay, on October 22, 2004, approximately $44.0 million in connection with the Treasury lock settlement, which represents the fair value of the June 2004 Treasury lock agreements as of October 18, 2004. The change since June 30, 2004 in the fair value of the obligation representing the June 2004 Treasury lock agreements was attributable to a decline in long-term Treasury rates for the period from June 30, 2004 through October 18, 2004. Approximately $11.6 million of the $44.0 million obligation will be recognized as a component of interest expense over the next five years, and the remaining amount, approximately $32.4 million, will be recognized as a component of interest expense over the next ten years. This payment will reduce cash and cash equivalents by $35.0 million and increase the amount of short-term debt by $1.9 million compared to the amounts shown in the unaudited pro forma combined balance sheet.

The following tables reconcile our historical earnings per share calculation to the unaudited pro forma combined earnings per share calculation (in thousands):

Atmos Energy Corporation and its subsidiaries are engaged primarily in the natural gas utility business as well as other natural gas nonutility businesses. We distribute natural gas through sales and transportation arrangements to more than 3.1 million residential, commercial, public authority and industrial customers, including approximately 1.5 million residential and business customers in Texas that we recently acquired when we completed the acquisition of the natural gas distribution and pipeline operations of TXU Gas. The TXU Gas acquisition makes us one of the largest publicly-traded companies in the United States whose primary business is the transmission and distribution of natural gas and the provision of related services. It also makes us one of the largest intrastate pipeline operators in Texas.


	•	the utility segment, which includes our related natural gas distribution operations;

	•	the natural gas marketing segment, which includes a variety of natural gas management services; and

	•	our other nonutility segment, which primarily includes our pipeline and storage operations.

We operate our utility segment through the following seven regulated natural gas utility divisions:


	•	Atmos Energy Colorado-Kansas Division;

	•	Atmos Energy Kentucky Division;

	•	Atmos Energy Louisiana Division;

	•	Atmos Energy Mid-States Division;

	•	Atmos Energy Texas Division;

	•	Mississippi Valley Gas Company Division (acquired in December 2002); and

	•	Our new division formed for the TXU Gas operations we acquired in October 2004.

Our natural gas utility distribution business is seasonal and dependent on weather conditions in our service areas. Gas sales to residential and commercial customers are greater during the winter months than during the remainder of the year. The volumes of gas sales during the winter months will vary with the temperatures during these months. The seasonal nature of our sales to residential and commercial customers is partially offset by our sales in the spring and summer months to our agricultural customers in Texas, Colorado and Kansas who use natural gas to operate irrigation equipment.

In addition to weather, our revenues are affected by the cost of natural gas and economic conditions in the areas that we serve. Higher gas costs, which we are generally able to pass through to our customers under purchased gas adjustment clauses, may cause customers to conserve, or, in the case of industrial customers, to use alternative energy sources.

The effects of weather that is above or below normal are partially offset through weather normalization adjustments, or WNA, in many of our service areas. WNA allows us to increase the base rate portion of customers’ bills when weather is warmer than normal and decrease customers bills when weather is colder than normal. As of June 30, 2004, we had, or had received regulatory approvals for, WNA in the following service areas for the following periods, which covered approximately 1.1 million of our meters in service:


(1)	Effective for the 2004-2005 winter heating season.

(2)	Effective beginning in April 2004.

The TXU Gas operations we acquired do not have WNA. However, the operations benefit from a rate structure that combines a monthly customer charge with a declining block rate to mitigate the impact of warmer-than-normal weather on revenue. The combination of the monthly customer charge and the first block of the declining block rate schedule provides for the recovery of most of our fixed costs for such operations under most weather conditions.

We receive gas deliveries for our six historical divisions through 36 pipeline transportation companies, both interstate and intrastate, to satisfy our sales market requirements. The pipeline transportation agreements are firm and many of them have “pipeline no-notice” storage service which provides for daily balancing between system requirements and nominated flowing supplies. These agreements have been negotiated with the shortest term necessary while still maintaining our right of first refusal.

We purchase our gas supply for our six historical divisions from various producers and marketers. Supply arrangements are contracted on a firm basis with various terms at market prices. The firm supply consists of both base load and swing supply quantities. Base load quantities are those that flow at a constant level throughout the month and swing supply quantities provide the flexibility to change daily quantities to match increases or decreases in requirements related to weather conditions. Except for local production purchases, we select suppliers through a competitive bidding process by requesting proposals from suppliers that have demonstrated that they can provide reliable service. We select these suppliers based on their ability to deliver gas supply to our designated firm pipeline receipt points at the lowest cost. Major suppliers for our historical operations during fiscal 2004 were Anadarko Energy Services, BP Energy Company, ChevronTexaco Natural Gas, Cinergy Marketing and Trading, Duke Energy Trading and Marketing, Pioneer Natural Resources, Prior Energy Corporation, Sempra Energy Trading Corporation, Tenaska Marketing and Atmos Energy Marketing, LLC, our natural gas marketing subsidiary. We do not anticipate problems with obtaining additional gas supply as needed for our customers.

The natural gas supply for our seventh division, formed with the TXU Gas operations we acquired, is delivered by the natural gas transmission and storage operations that we also acquired in the TXU Gas acquisition. This natural gas supply generally consists of a combination of base load, peaking and spot purchase agreements, as well as withdrawals of gas in storage held under gas storage capacity agreements. We estimate that the gas demand for this division for the upcoming winter heating season, assuming normal weather conditions, is approximately 113.0 Bcf. We have existing purchase agreements to cover a total gas demand of up to approximately 133.9 Bcf, consisting of approximately 35.3 Bcf under base load purchase agreements, up to approximately 47.2 Bcf under peaking purchase agreements, up to

To maintain our deliveries to high priority customers, we have the ability, and have exercised our right, to curtail deliveries to certain customers under the terms of interruptible contracts, applicable state statutes or regulations. Our estimate of natural gas demand for our new division is not necessarily indicative of our ability to meet current or anticipated market demands or immediate delivery requirements because of factors such as the physical limitations of gathering, storage and transmission systems, the duration and severity of cold weather, the availability of gas reserves from our suppliers, the ability to purchase additional supplies on a short-term basis and actions by federal and state regulatory authorities. Curtailment rights provide us flexibility to meet the human-needs requirements of our customers on a firm basis. Priority allocations imposed by federal and state regulatory agencies, as well as other factors beyond our control, may affect our ability to meet the demands of our customers.

We also contract for storage service in underground storage facilities on many of the interstate pipelines serving us.

We estimate the peak-day availability of natural gas supply from long-term contracts, short-term contracts and withdrawals from underground storage to be approximately 4.2 Bcf, including approximately 2.2 Bcf associated with the TXU Gas operations we acquired. The peak-day demand for our historical operations in fiscal 2004 was on January 6, 2004, when sales to customers reached approximately 1.8 Bcf. The peak-day demand for the TXU Gas operations in the 12 months ended September 30, 2004 was also on January 6, 2004, when sales to customers reached approximately 1.6 Bcf.

The following is a brief description of the operations of our six historical natural gas utility divisions and our new division created following the TXU Gas acquisition.

Atmos Energy Colorado-Kansas Division. Our Colorado-Kansas Division operates in Colorado, Kansas and the southwestern corner of Missouri and is regulated by each respective state’s public service commission with respect to accounting, rates and charges, operating matters and the issuance of securities. We operate under terms of non-exclusive franchises granted by the various cities. In May 2003, we received approval for WNA in Kansas which began with the 2003-2004 winter heating season. Colorado Interstate Gas Company, Williams Pipeline-Central, Public Service Company of Colorado and Northwest Pipeline are the principal transporters of the Colorado-Kansas Division’s gas supply requirements. Additionally, the Colorado-Kansas Division purchases substantial volumes from producers that are connected directly to its distribution system.

Atmos Energy Kentucky Division. Our Kentucky Division operates in Kentucky and is regulated by the Kentucky Public Service Commission, which regulates utility services, rates, issuance of securities and other matters. We operate in the various incorporated cities pursuant to non-exclusive franchises granted by these cities. Sales of natural gas for use as vehicle fuel in Kentucky are unregulated. We have been operating under a performance-based rate program since July 1998, which was extended for another four years in 2002. Under the performance-based program, we and our customers jointly share in any actual gas cost savings achieved when compared to pre-determined benchmarks. Our rates are also subject to WNA. The Kentucky Division’s gas supply is delivered primarily by Williams Pipeline-Texas Gas, Tennessee Gas, Trunkline, Midwestern Pipeline and ANR.

Atmos Energy Louisiana Division. Our Louisiana Division operates in Louisiana and includes the operations of the assets of Louisiana Gas Service Company acquired in July 2001 and our previously existing Trans La Division. Our Louisiana Division is regulated by the Louisiana Public Service

Atmos Energy Mid-States Division. Our Mid-States Division operates in Georgia, Illinois, Iowa, Missouri, Tennessee and Virginia. In each of these states, our rates, services and operations as a natural gas distribution company are subject to general regulation by each state’s public service commission. We operate in each community, where necessary, under a franchise granted by the municipality for a fixed term of years. In Tennessee and Georgia, we have WNA and a performance-based rate program, which provides incentives for us to find ways to lower gas commodity costs and share the cost savings with our customers. Our Mid-States Division is served by 13 interstate pipelines; however, the majority of the volumes are transported through East Tennessee Pipeline, Southern Natural Gas, Tennessee Gas Pipeline and Columbia Gulf.

Atmos Energy Texas Division. Our Texas Division operates in Texas in three primary service areas: the Amarillo service area, the Lubbock service area and the West Texas service area. The governing body of each municipality we serve has original jurisdiction over all utility rates, operations and services within its city limits, except with respect to sales of natural gas for vehicle fuel and agricultural use. We operate pursuant to non-exclusive franchises granted by the municipalities we serve, which are subject to renewal from time to time. The Texas Railroad Commission has exclusive appellate jurisdiction over all rate and regulatory orders and ordinances of the municipalities and exclusive original jurisdiction over rates and services to customers not located within the limits of a municipality. The Texas Division has WNA for its Amarillo service area and has recently received approvals for WNA for its West Texas and Lubbock service areas. Our Texas Division receives transportation service from ONEOK Pipeline. In addition, the Texas Division purchases a significant portion of its natural gas supply from Pioneer Natural Resources which is connected directly to our Amarillo, Texas distribution system.

Mississippi Valley Gas Company Division. Our Mississippi Valley Gas Company Division, acquired in December 2002, operates in Mississippi and is regulated by the Mississippi Public Service Commission with respect to rates, services and operations. We operate under non-exclusive franchises granted by the municipalities we serve. Since the acquisition, we have been operating under a rate structure that allows us over a five-year period to recover a portion of our integration costs associated with the acquisition, and operations and maintenance costs in excess of an agreed-upon benchmark. In addition, we are required to file for rate adjustments based on our expenses every six months. We also have WNA in Mississippi. This division’s gas supply is delivered by Gulf South Pipeline Company, Tennessee Gas Pipeline Company, Southern Natural Gas Company, Texas Eastern Transmission, Texas Gas Transmission LLC, Trunkline Gas Co. LLC and Enbridge Marketing LP.

New Division. Our new division, which represents the assets and operations that we acquired from TXU Gas on October 1, 2004, includes natural gas distribution operations that operate in the north-central, eastern and western parts of Texas and natural gas transmission and storage operations. This division purchases, distributes and sells natural gas to approximately 1.5 million residential and business customers in approximately 550 cities and towns, including the 11-county Dallas/ Fort Worth metropolitan area. Under a May 2004 rate filing, this division operates under a system-wide rate jurisdiction with the pipeline operations we acquired in the acquisition. Similar to our Atmos Energy Texas Division, the governing body of each municipality served through this division has original jurisdiction over all utility rates, operations and services within its city limits, except with respect to sales of natural gas for vehicle fuel and agricultural use. We operate pursuant to non-exclusive franchises granted by the municipalities we serve, which are subject to renewal from time to time. The Texas Railroad Commission has exclusive appellate jurisdiction over all rate and regulatory orders and ordinances of the municipalities and exclusive original jurisdiction over rates and services to customers not located within the limits of a municipality. This division does not have WNA. However, the operations benefit from a rate structure that mitigates the

The natural gas transmission and storage operations that we acquired in the TXU Gas acquisition also transport natural gas to third parties and represent one of the largest intrastate pipeline operations in Texas. These operations include interconnected natural gas transmission lines, five underground storage reservoirs (including a salt dome facility), 24 compressor stations and related properties, all within Texas.

The gas distribution and transmission lines we acquired have been constructed over lands of others pursuant to easements or along public highways, streets and rights-of-way as permitted by law. In addition to being heavily concentrated in the established natural gas-producing areas of central, northern and eastern Texas, the intrastate pipeline system we acquired also extends into or near the major producing areas of the Texas Gulf Coast and the Delaware and Val Verde Basins of West Texas. Nine basins located in Texas are estimated to contain a substantial portion of the nation’s remaining onshore natural gas reserves. This pipeline system provides access to all of these basins. We believe that we are well situated to receive large volumes into this pipeline system at the major hubs, such as Katy and Waha, as well as from storage facilities where we maintain high delivery capabilities.

Our natural gas marketing segment, which is organized under Atmos Energy Holdings, Inc., has operations in 18 states. Through September 30, 2003, Atmos Energy Marketing, LLC, together with its wholly-owned subsidiaries Woodward Marketing, L.L.C. and Trans Louisiana Industrial Gas Company, Inc., comprised our natural gas marketing segment. Effective October 1, 2003, our natural gas marketing segment was reorganized. The operations of Atmos Energy Marketing, L.L.C. and Trans Louisiana Industrial Gas Company, Inc. were merged into Woodward Marketing, L.L.C., which was renamed Atmos Energy Marketing, LLC.

Atmos Energy Marketing provides a variety of natural gas management services to municipalities, natural gas utility systems and industrial natural gas consumers primarily in the southeastern and midwestern states and to our Kentucky, Louisiana and Mid-States divisions. These services primarily consist of furnishing natural gas supplies at fixed and market-based prices, contract negotiation and administration, load forecasting, gas storage acquisition and management services, transportation services, peaking sales and balancing services, capacity utilization strategies and gas price management through the use of derivative products. We use proprietary and customer-owned transportation and storage assets to provide the various services our customers request. As a result, our revenues arise from the types of commercial transactions we have structured with our customers and include the value we extract by optimizing the storage and transportation capacity we own or control as well as fees for services we deliver.

We participate in transactions in which we combine the natural gas commodity and transportation costs to minimize our costs incurred to serve our customers. Additionally, we participate in natural gas storage transactions in which we seek to find the pricing differences that occur over time. We purchase or sell physical natural gas and then sell or purchase financial contracts at a price sufficient to cover our carrying costs and provide a gross profit margin. Through the use of transportation and storage services and derivatives, we are able to capture gross profit margin through the arbitrage of pricing differences in various locations and by recognizing pricing differences that occur over time.

Atmos Energy Marketing’s management of natural gas requirements involves the sale of natural gas and the management of storage and transportation supplies under contracts with customers generally having one to two year terms. At June 30, 2004, Atmos Energy Marketing had a total of 760 industrial customers and 95 municipal customers. Atmos Energy Marketing also sells natural gas to some of its industrial customers on a delivered burner tip basis under contract terms from 30 days to two years.

Our other nonutility segment consists primarily of the operations of Atmos Pipeline and Storage, L.L.C. and Atmos Energy Services, LLC, which are wholly-owned by our subsidiary, Atmos Energy Holdings, Inc. Through Atmos Pipeline and Storage, we own or have an interest in underground storage fields in Kentucky and Louisiana. Atmos Pipeline and Storage’s underground storage fields in Kansas were transferred to our Atmos Energy Colorado-Kansas division of our utility segment during 2004. Atmos Pipeline and Storage provides storage services to our customers for a fee and captures pricing arbitrage through the use of derivatives. We also use these storage facilities to reduce the need to contract for additional pipeline capacity to meet customer demand during peak periods. Through Atmos Energy Services, we provide natural gas management services for our own utility operations. Prior to April 1, 2004, this entity conducted limited operations. However, beginning April 1, 2004, Atmos Energy Services began providing natural gas supply management services to our utility operations in a limited number of states. These services include aggregating and purchasing gas supply, arranging transportation and storage logistics and ultimately delivering the gas to our utility service areas at competitive prices. We have expanded these services to substantially all of our utility service areas as of the end of fiscal 2004.

At June 30, 2004, we owned an aggregate of 45,267 miles of underground distribution and transmission mains throughout our gas distribution systems. These mains are located on easements or rights-of-way which generally provide for perpetual use. We maintain our mains through a program of continuous inspection and repair and believe that our system of mains is in good condition. As a result of the TXU Gas acquisition, we added 26,431 miles of underground distribution mains and a pipeline system consisting of 6,162 miles of transmission and gathering lines in Texas.

We also hold franchises granted by the incorporated cities and towns that our historical operations serve. At June 30, 2004, we held 651 of these franchises having initial terms generally ranging from five to 25 years. As a result of the TXU Gas acquisition, the number of franchises we held increased to 1,087. The additional franchises have initial terms generally ranging from ten to 35 years. We believe that each of these franchises will be renewed.

Our utility and other nonutility segments include eight underground gas storage facilities in Kentucky, four in Kansas and two in Mississippi. As of June 30, 2004, our total storage capacity in these storage facilities was approximately 29.1 Bcf. However, approximately 13.6 Bcf of gas in these storage facilities must be retained as cushion gas to maintain reservoir pressure. The maximum daily delivery capability of these storage facilities is approximately 280,100 Mcf. In addition, we own a liquefied natural gas storage facility in Georgia with a capacity of 500,000 Mcf, which can inject a daily volume of 30,000 Mcf into the system. We also own a 25% interest in a gas storage facility in Napoleonville, Louisiana, with a usable capacity of 438,583 Mcf and 300,973 Mcf of cushion gas. Our maximum daily delivery capability at this facility is approximately 56,000 Mcf. Additionally, we contract for storage service in underground storage facilities on many of the interstate pipelines serving us to supplement our proprietary storage capacity. As of June 30, 2004, our total storage capacity under these arrangements was 33.1 Bcf with a total maximum daily delivery capability of 938,550 Mcf.

The TXU Gas operations we acquired include five underground storage reservoirs (including a salt dome facility), all within Texas. Our total storage capacity in these storage reservoirs is approximately 51.9 Bcf. However, approximately 12.9 Bcf of gas in these storage facilities must be retained as cushion gas to maintain reservoir pressure. The maximum daily delivery capability of these storage facilities is approximately 1,235,000 Mcf.

Other Facilities. We own and operate one propane peak shaving plant with a total capacity of approximately 180,000 gallons that can produce an equivalent of approximately 3,300 Mcf daily.

Offices. Our administrative offices are consolidated in Dallas, Texas under one lease. We also maintain field offices throughout our distribution system, the majority of which are located in leased

The method of determining regulated rates varies among the states in which our natural gas utility divisions operate. The regulators have the responsibility of ensuring that utilities under their jurisdictions operate in the best interests of customers while providing utility companies the opportunity to earn a reasonable return on investment. In a general rate case, the applicable regulatory authority, which is typically the state public utility commission, establishes rates which allow a utility company an opportunity to collect revenue from customers to recover the cost of providing utility service.

Rates established by regulatory authorities are adjusted for increases and decreases in our purchased gas cost through purchased gas adjustment mechanisms. Purchased gas adjustment mechanisms provide gas utility companies a method of recovering purchased gas costs on an ongoing basis without filing a rate case to address all of the utility’s non-gas costs. These mechanisms are commonly utilized when regulatory authorities recognize a particular type of expense, such as purchased gas costs, that (i) is subject to significant price fluctuations compared to the utility’s other costs, (ii) represents a large component of the utility’s cost of service and (iii) is generally outside the control of the gas utility. There is no margin generated through purchased gas adjustments, but they do provide a dollar-for-dollar offset to increases or decreases in utility gas costs. Although substantially all of our utility sales to our customers fluctuate with the cost of gas that we purchase, utility gross profit (which is defined as operating revenues less purchased gas cost) is generally not affected by fluctuations in the cost of gas due to the purchased gas adjustment mechanism. Additionally, certain jurisdictions have introduced performance-based ratemaking adjustments to provide incentives to natural gas utilities to minimize purchased gas costs through improved storage management and use of financial instruments to lock in gas costs. Under the performance-based ratemaking adjustment, purchased gas costs savings are shared between the utility and its customers.

Approximately 97% of our utility revenues in the fiscal year ended September 30, 2003 and approximately 96% of our revenues in fiscal 2002 were derived from sales at rates set by or subject to approval by local or state authorities. On a pro forma basis, giving effect to the TXU Gas acquisition as if it occurred on October 1, 2002, we estimate that approximately 98% of our revenues in fiscal 2003 would have been derived from sales at rates set or approved by local or state authorities.

Generally, the regulatory authority reviews our rate request and establishes a rate structure intended to generate revenue sufficient to cover our costs of doing business and provide a reasonable return on invested capital.

In May 2003, TXU Gas filed, for the first time, a system-wide rate case for the distribution and pipeline operations that we acquired. The case was filed in all incorporated cities served by the distribution operations, and at the Texas Railroad Commission for the pipeline business and for unincorporated areas served by the distribution operations. All of the cities took action on the case, and TXU Gas appealed their actions to the Texas Railroad Commission. Although significant portions of the relief requested by TXU Gas were denied, on May 25, 2004, the Texas Railroad Commission ruled that TXU Gas could increase its charges to its pipeline and distribution customers by approximately $11.7 million per year. TXU Gas filed a motion for rehearing requesting the Texas Railroad Commission to reconsider and reverse significant judgments. The Texas Railroad Commission has denied the motion for rehearing. TXU Gas filed an appeal in district court, which we intend to continue to prosecute.

Each of our utility divisions is regulated by various state or local public utility authorities. We are also subject to regulation by the United States Department of Transportation with respect to safety requirements in the operation and maintenance of our gas distribution facilities. The TXU Gas operations we acquired are wholly intrastate in character and are subject to regulation by municipalities in Texas and

Our distribution and pipeline operations are also subject to various state and federal laws regulating environmental matters. From time to time we receive inquiries regarding various environmental matters. We believe that our properties and operations substantially comply with and are operated in substantial conformity with applicable safety and environmental statutes and regulations. There are no administrative or judicial proceedings arising under environmental quality statutes pending or known to be contemplated by governmental agencies which would have a material adverse effect on us or our operations. All of our environmental claims have arisen out of manufactured gas plant sites in Tennessee, Iowa and Missouri and mercury contamination sites in Kansas. These claims are more fully described in Note 13 to our consolidated financial statements, which are included in our annual report on Form 10-K for the year ended September 30, 2003, which is incorporated by reference in this prospectus supplement. We did not acquire any manufactured gas plant sites in the TXU Gas acquisition. Our acquisition agreement with TXU Gas addresses other environmental matters, which we do not expect to have a material adverse effect on us or our operations.

Our utility operations are not currently in significant direct competition with any other distributors of natural gas to residential and commercial customers within our service areas. However, we do compete with other natural gas suppliers and suppliers of alternative fuels for sales to industrial, agricultural and gas transportation customers. We compete in all aspects of our business with alternative energy sources, including, in particular, electricity. Competition for residential and commercial customers is increasing. Promotional incentives, improved equipment efficiencies and promotional rates all contribute to the acceptability of electrical equipment. Electric utilities offer electricity as a rival energy source and compete for the space heating, water heating and cooking markets. The principal means to compete against alternative fuels is lower prices, and natural gas historically has maintained its price advantage in the residential, commercial and industrial markets. In addition, our natural gas marketing segment competes with other natural gas brokers in obtaining natural gas supplies for customers.

Our authorized capital stock consists of 100,000,000 shares of common stock, of which 62,859,032 shares were outstanding on October 21, 2004. Each of our shares of common stock is entitled to one vote on all matters voted upon by shareholders. Our shareholders do not have cumulative voting rights. Our issued and outstanding shares of common stock are fully paid and nonassessable. There are no redemption or sinking fund provisions applicable to the shares of our common stock, and such shares are not entitled to any preemptive rights. Since we are incorporated in both Texas and Virginia, we must comply with the laws of both states when issuing shares of our common stock.

Holders of our shares of common stock are entitled to receive such dividends as may be declared from time to time by our board of directors from our assets legally available for the payment of dividends and, upon our liquidation, a pro rata share of all of our assets available for distribution to our shareholders.

Under the provisions of some of our debt agreements, we have agreed to restrictions on the payment of cash dividends. Under these restrictions, our cumulative cash dividends paid after December 31, 1988 may not exceed the sum of our accumulated consolidated net income for periods after December 31, 1988, plus approximately $15.0 million. As of June 30, 2004, approximately $129.1 million was available for the declaration of dividends under these restrictions.

American Stock Transfer & Trust Company is the registrar and transfer agent for our common stock.

As part of the consideration for our Mississippi Valley Gas Company acquisition in December 2002, we issued shares of common stock under an exemption from registration under the Securities Act. In the transaction, we entered into a registration rights agreement with the former stockholders of Mississippi Valley Gas Company that requires us, on no more than two occasions, and with some limitations, to file a registration statement under the Securities Act within 60 days of their request for an offering designed to achieve a wide distribution of shares through underwriters selected by us. We also granted rights, subject to some limitations, to participate in future registered offerings of our securities to these shareholders. As of October 21, 2004, 1,193,143 shares were covered by the registration rights agreement. The holder of these shares has not elected to include any of these shares in offerings covered by the registration statement of which this prospectus supplement and the accompanying prospectus are a part. Each of these shareholders has also agreed, for up to five years from the closing of the acquisition, and with some exceptions, not to sell or transfer shares representing more than 1% of our total outstanding voting securities to any person or group or any shares to a person or group who would hold more than 9.9% of our total outstanding voting securities after the sale or transfer. This restriction, and other agreed restrictions on the ability of these shareholders to acquire additional shares, participate in proxy solicitations or act to seek control, may be deemed to have an “anti-takeover” effect.

In addition, in connection with our funding of the Atmos Energy Corporation Pension Account Plan, we issued, in June 2003, to the Atmos Energy Corporation Master Retirement Trust, for the benefit of the Pension Account Plan, 1,169,700 shares of common stock under an exemption from registration under the Securities Act. In the transaction, we entered into a registration rights agreement with the asset manager of the Pension Account Plan that requires us, on no more than three occasions, and with some limitations, to file a registration statement under the Securities Act within 60 days of its request for an offering designed to achieve a wide distribution of shares through underwriters selected by us. We also granted rights, subject to some limitations, to participate in future registered offerings of our securities to the asset manager. The asset manager has elected not to include any of these 1,169,700 shares in offerings covered by the registration statement of which this prospectus supplement and the accompanying prospectus are a part.

Some provisions of our restated articles of incorporation and bylaws may be deemed to have an “anti-takeover” effect. The following description of these provisions is only a summary, and we refer you to our restated articles of incorporation and bylaws for more information since their terms affect your rights as a shareholder.

Classification of the Board. Our board of directors is divided into three classes, each of which consists, as nearly as may be possible, of one-third of the total number of directors constituting the entire board. There are currently 12 directors serving on the board. Each class of directors serves a three-year term. At each annual meeting of our shareholders, successors to the class of directors whose term expires at the annual meeting are elected for three-year terms. Our restated articles of incorporation prohibit cumulative voting. In general, in the absence of cumulative voting, one or more persons who hold a majority of our outstanding shares can elect all of the directors who are subject to election at any meeting of shareholders.

The classification of directors could have the effect of making it more difficult for shareholders, including those holding a majority of the outstanding shares, to force an immediate change in the composition of our board. Two shareholder meetings, instead of one, generally will be required to effect a change in the control of our board. Our board believes that the longer time required to elect a majority of a classified board will help to ensure the continuity and stability of our management and policies since a majority of the directors at any given time will have had prior experience as our directors.

Removal of Directors. Our restated articles of incorporation and bylaws also provide that our directors may be removed only for cause and upon the affirmative vote of the holders of at least 75% of the shares then entitled to vote at an election of directors.

Fair Price Provisions. Article VII of our articles of incorporation provides certain “Fair Price Provisions” for our shareholders. Under Article VII, a merger, consolidation, sale of assets, share exchange, recapitalization or other similar transaction, between us or a company controlled by or under common control with us and any individual, corporation or other entity which owns or controls 10% or more of our voting capital stock, would be required to satisfy the condition that the aggregate consideration per share to be received in the transaction for each class of our voting capital stock be at least equal to the highest per share price, or equivalent price for any different classes or series of stock, paid by the 10% shareholder in acquiring any of its holdings of our stock. If a proposed transaction with a 10% shareholder does not meet this condition, then the transaction must be approved by the holders of at least 75% of the outstanding shares of voting capital stock held by our shareholders other than the 10% shareholder unless a majority of the directors who were members of our board immediately prior to the time the 10% shareholder involved in the proposed transaction became a 10% shareholder have either:


	•	expressly approved in advance the acquisition of the outstanding shares of our voting capital stock that caused the 10% shareholder to become a 10% shareholder, or

	•	approved the transaction either in advance of or subsequent to the 10% shareholder becoming a 10% shareholder.

The provisions of Article VII may not be amended, altered, changed, or repealed except by the affirmative vote of at least 75% of the votes entitled to be cast thereon at a meeting of our shareholders duly called for consideration of such amendment, alteration, change, or repeal. In addition, if there is a 10% shareholder, such action must also be approved by the affirmative vote of at least 75% of the outstanding shares of our voting capital stock held by the shareholders other than the 10% shareholder.

Shareholder Proposals and Director Nominations. Our shareholders can submit shareholder proposals and nominate candidates for the board of directors if the shareholders follow the advance notice procedures described in our bylaws.

Shareholder proposals must be submitted to our corporate secretary at least 60 days, but not more than 85 days, before the annual meeting of shareholders; provided, however, that if less than 75 days’

To nominate directors, shareholders must submit a written notice to our corporate secretary at least 60 days, but not more than 85 days, before a scheduled meeting; provided, however, that if less than 75 days’ notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, such nomination shall have been received by our Secretary not later than the close of business on the 25th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. The notice must include the name and address of the shareholder and of the shareholder’s nominee, the number of shares held by the shareholder, a representation that the shareholder is a holder of record of common stock entitled to vote at the meeting, and that the shareholder intends to appear in person or by proxy to nominate the persons specified in the notice, a description of any arrangements between the shareholder and the shareholder’s nominee, information about the shareholder’s nominee required by the SEC, and the written consent of the shareholder’s nominee to serve as a director.

Shareholder proposals and director nominations that are late or that do not include all required information may be rejected. This could prevent shareholders from bringing certain matters before an annual or special meeting or making nominations for directors.

On November 12, 1997, our board of directors declared a dividend distribution of one right for each outstanding share of our common stock to shareholders of record at the close of business on May 10, 1998. Each right entitles the registered holder to purchase from us one-tenth share of our common stock at a purchase price of $8.00 per share, subject to adjustment. The description and terms of the rights are set forth in a rights agreement between us and the rights agent.

Subject to exceptions specified in the rights agreement, the rights will separate from our common stock and a distribution date will occur upon the earlier of:


	•	ten business days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of our common stock, other than as a result of repurchases of stock by us or specified inadvertent actions by institutional or other shareholders;

	•	ten business days, or such later date as our board of directors shall determine, following the commencement of a tender offer or exchange offer that would result in a person or group having acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of our common stock; or

	•	ten business days after our board of directors shall declare any person to be an adverse person within the meaning of the rights plan.

The rights expire at 5:00 P.M., Eastern time, on May 10, 2008, unless extended prior thereto by our board or earlier if redeemed by us.

The rights will not have any voting rights. The exercise price payable and the number of shares of our common stock or other securities or property issuable upon exercise of the rights are subject to

The rights have “anti-takeover” effects and may cause substantial dilution to a person or entity that attempts to acquire us on terms not approved by our board of directors except pursuant to an offer conditioned upon a substantial number of rights being acquired. The rights should not interfere with any merger or other business combination approved by our board of directors because, prior to the time that the rights become exercisable or transferable, we can redeem the rights at $.01 per right.

We intend to offer the shares of common stock through the underwriters named below, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as the representative. Subject to the terms and conditions described in a purchase agreement between us and the underwriters, we have agreed to sell to the underwriters, and the underwriters severally have agreed to purchase from us, the number of shares of our common stock listed opposite their names below.

The underwriters have agreed to purchase all of the shares sold under the purchase agreement if any of these shares are purchased. If an underwriter defaults, the purchase agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreement may be terminated.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make with respect to those liabilities.

The underwriters are offering the shares of our common stock, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreement, such as the receipt by the underwriters of officers’ certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

The representative has advised us that the underwriters propose initially to offer the shares of our common stock to the public at the public offering price on the cover page of this prospectus supplement and to dealers at that price less a concession not in excess of $.59 per share. The underwriters may allow, and the dealers may reallow, a discount not in excess of $.10 per share to other dealers. After the initial public offering, the public offering price, concession and discount may be changed.

The following table shows the public offering price, underwriting discount and proceeds before expenses to us. This information assumes either no exercise or full exercise by the underwriters of their overallotment option.

The expenses of the offering, not including the underwriting discount and commissions, are estimated at $400,000 and are payable by us.

We have granted an option to the underwriters to purchase up to 2,100,000 additional shares of our common stock at the public offering price less the underwriting discount. The underwriters may exercise this option for 30 days from the date of this prospectus supplement solely to cover any overallotments. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the purchase agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.

We and our directors and senior officers have agreed, subject to some limited exceptions, not to sell or transfer any of our common stock for a period of 90 days after the date of this prospectus supplement without first obtaining the written consent of Merrill Lynch on behalf of the underwriters. Specifically, we and these other individuals have agreed not to directly or indirectly


	•	offer, pledge, sell or contract to sell any common stock,

	•	sell any option or contract to purchase any common stock,

	•	purchase any option or contract to sell any common stock,

	•	grant any option, right or warrant for the sale of any common stock,

	•	lend or otherwise dispose of or transfer any common stock, or

	•	enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.

In addition, the foregoing individuals have also agreed not to request or demand that we file registration statements related to their shares of common stock.

This lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. The restrictions described above do not apply to the sale of shares by us to the underwriters solely to cover overallotments in this offering.

Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day lock-up period we issue an earnings release or material news or a material event relating to us occurs; or (2) prior to the expiration of the 90-day lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 90-day lock-up period, then the restrictions described above will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

The shares of our common stock are listed on the New York Stock Exchange under the symbol “ATO.”

More than 10% of the proceeds of this offering, not including underwriting compensation, may be received by entities who are affiliated with the underwriters, each of whom are National Association of Securities Dealers, Inc., or NASD, members. As a result, this offering is being conducted in compliance with the NASD Conduct Rule 2710(h). Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering, because a bona fide independent market, as defined in the NASD Conduct Rules, exists in our common stock.

Until the distribution of shares of our common stock is completed, SEC rules may limit the underwriters from bidding for or purchasing our common stock. However, the underwriters may engage in transactions that stabilize the price of our common stock, such as bids or purchases that peg, fix or maintain that price.

The underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from the issue in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase the shares through the overallotment option. “Naked” short sales are sales in excess of the overallotment option. The underwriters must close out any naked short position by purchasing shares of our common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of our common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the underwriter has repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the underwriters’ purchases to cover syndicate short positions may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that would otherwise exist in the open market.

Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters makes any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Merrill Lynch will be facilitating Internet distribution for this offering to certain of its Internet subscription customers. Merrill Lynch intends to allocate a limited number of shares for sale to its online brokerage customers. An electronic prospectus supplement is available on the Internet website maintained by Merrill Lynch. Other than this prospectus supplement in electronic format, the information on the Merrill Lynch website is not a part of this prospectus supplement. One or more of the other underwriters may also facilitate Internet distribution for this offering to certain of their Internet subscription customers.

Each of the underwriters and certain of their affiliates have provided, and may in the future provide, certain investment banking, financial advisory and commercial banking services for us, for which they have received, and will receive, customary fees and commissions.

An affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated holds a portion of the acquisition commercial paper and will, therefore, receive a portion of the proceeds of this offering. Merrill

Gibson, Dunn & Crutcher LLP, Dallas, Texas, and Hunton & Williams LLP, Richmond, Virginia, will opine for us as to the validity of the offered shares. Shearman & Sterling LLP, New York, New York, will pass upon certain legal matters related to the offered shares for the underwriters.

Ernst & Young LLP, independent registered public accounting firm, have audited our consolidated financial statements and schedule included in our Annual Report on Form 10-K for the year ended September 30, 2003, as set forth in their report, which is incorporated by reference in this prospectus supplement and elsewhere in the prospectus. Our financial statements and schedule are incorporated by reference in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.

With respect to our unaudited condensed consolidated interim financial statements for the three-and nine-month periods ended June 30, 2004 and 2003, the three- and six-month periods ended March 31, 2004 and 2003 and the three-month periods ended December 31, 2003 and 2002, incorporated by reference in this prospectus supplement, Ernst & Young LLP reported that they have applied limited procedures in accordance with professional standards for a review of such financial statements. However, their separate reports dated August 13, 2004, included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, dated May 10, 2004, included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and dated February 6, 2004 included in our Quarterly Report on Form 10-Q for the quarter ended December 31, 2003, and incorporated in this prospectus supplement by reference, state that they did not audit and they do not express an opinion on those interim financial statements. Accordingly, the degree of reliance on their reports on such financial statements should be restricted in light of the limited nature of the review procedures applied. Ernst & Young LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended, for their reports on the unaudited interim financial statements because each report is not a “report” or a “part” of the registration statement prepared or certified by Ernst & Young LLP within the meaning of Sections 7 and 11 of the Securities Act.

The historical consolidated financial statements of TXU Gas and subsidiaries as of December 31, 2003 and 2002 and for the three years ended December 31, 2003, which have been included in our current report on Form 8-K filed with the SEC on July 7, 2004 and incorporated by reference in this prospectus supplement, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report (which report expresses an unqualified opinion and includes explanatory paragraphs related to the adoption of Statement of Financial Accounting Standards No. 142 and 145), and have been so incorporated by reference herein in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

With respect to the unaudited condensed consolidated interim financial statements of TXU Gas and subsidiaries as of June 30, 2004 and March 31, 2004 and for the three-and six-month periods ended June 30, 2004 and 2003, and the three-month periods ended March 31, 2004 and 2003, incorporated by reference in this prospectus supplement, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with professional standards of the Public

Company Accounting Oversight Board (United States) for a review of such financial statements. However, as stated in their separate reports, included in the unaudited condensed consolidated interim financial statements of TXU Gas and subsidiaries as of June 30, 2004 and March 31, 2004 and for the three-month and six-month periods ended June 30, 2004 and 2003, and for the three-month periods ended March 31, 2004 and 2003, which are included in our current reports on Form 8-K filed with the SEC on July 7, 2004 and August 31, 2004, respectively, and incorporated in this prospectus supplement by reference, they did not audit and they do not express an opinion on those interim financial statements. Accordingly, the degree of reliance on their reports on such financial statements should be restricted considering the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended, for their reports on the unaudited interim financial statements because each report is not a “report” or a “part” of the registration statement prepared or certified by the auditors within the meaning of Sections 7 and 11 of the Securities Act.

We will provide specific terms of these securities in supplements to this prospectus. This prospectus may not be used to sell securities unless accompanied by a prospectus supplement. You should read this prospectus and the prospectus supplement carefully before you invest.

Investing in these securities involves risks that are described in the “Risk Factors” section beginning on page 1 of this prospectus.

Our common stock is listed on the New York Stock Exchange under the symbol “ATO.”

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We have not authorized any other person to provide you with any information or to make any representation that is different from, or in addition to, the information and representations contained in this prospectus or in any of the documents that are incorporated by reference in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus, as well as the information contained in any document incorporated by reference, is accurate as of the date of each such document only, unless the information specifically indicates that another date applies.

The distribution of this prospectus may be restricted by law in certain jurisdictions. You should inform yourself about, and observe, any of these restrictions. This prospectus does not constitute, and may not be used in connection with, an offer or solicitation by anyone in any jurisdiction in which the offer or solicitation is not authorized, or in which the person making the offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make the offer or solicitation.

The terms “we,” “our,” “us” and “Atmos” refer to Atmos Energy Corporation and its subsidiaries unless the context suggests otherwise. The term “you” refers to a prospective investor.

Statements contained or incorporated by reference in this prospectus that are not statements of historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future results and are not statements of fact, actual results may differ materially from those stated. Important factors that could cause future results to differ include, but are not limited to:


	•	successful completion, financing and integration of our pending acquisition of the operations of TXU Gas Company and other acquisitions we have made or may make in the future;

	•	adverse weather conditions, such as warmer-than-normal weather in our utility service territories or colder-than-normal weather that could adversely affect our natural gas marketing activities;

	•	national, regional and loca


	Per Share	Total

Public offering price	$24.75	$346,500,000
Underwriting discount	$.99	$13,860,000
Proceeds, before expenses, to Atmos	$23.76	$332,640,000


						Cash
		High		Low		Dividends Paid

Quarter Ending
	December 31, 2004 (through October 21, 2004)	$	25.80	$	24.85		—
Quarter Ended
	September 30, 2004	$	26.18	$	24.40	$	.305
	June 30, 2004		25.60		24.38		.305
	March 31, 2004		26.86		24.32		.305
	December 31, 2003		24.99		24.15		.305
Quarter Ended
	September 30, 2003	$	25.07	$	23.20	$	.300
	June 30, 2003		25.45		21.43		.300
	March 31, 2003		24.20		20.95		.300
	December 31, 2002		23.63		20.70		.300
Quarter Ended
	September 30, 2002	$	22.75	$	18.37	$	.295
	June 30, 2002		24.46		21.25		.295
	March 31, 2002		24.20		20.26		.295
	December 31, 2001		22.10		19.46		.295



				As of June 30, 2004

										Pro Forma
				Actual			As Adjusted			As Adjusted


				(in thousands)
Cash and cash equivalents(1)				$	126,895		$	126,895		$	161,925

Short-term debt
	Acquisition commercial paper			$	—		$	280,909		$	—
	Current portion of long-term debt				5,918			5,918			5,918
	Other short-term debt(2)				—			9,240			—

		Total short-term debt		$	5,918		$	296,067		$	5,918

Long-term debt, less current portion(3)				$	863,266		$	2,260,447		$	2,260,447
Shareholders’ equity
	Common stock, no par value (stated at $.005 per share); 100,000,000 shares authorized; 52,579,303 shares issued and outstanding, actual; 62,518,696 shares issued and outstanding, as adjusted; and 76,518,696 shares issued and outstanding, pro forma as adjusted(4)				263			313			383
	Additional paid-in capital				762,464			998,174			1,330,344
	Retained earnings				167,535			167,535			167,535
	Accumulated other comprehensive loss				(3,416	)		(3,416	)		(3,416	)

		Shareholders’ equity			926,846			1,162,606			1,494,846

			Total capitalization(5)	$	1,790,112		$	3,423,053		$	3,755,293


			Historical			Historical			Pro Forma
			Atmos			TXU Gas			Adjustments			Pro Forma


			(in thousands)
ASSETS
Property, plant and equipment			$	2,588,059		$	2,008,888		$	(147,629	)(a)(b)	$	4,449,318
Less accumulated depreciation and amortization				903,313			384,619			(884	)(a)(b)		1,287,048

	Net property, plant and equipment			1,684,746			1,624,269			(146,745	)		3,162,270
Current assets
	Cash and cash equivalents			126,895			8,001			27,029	(a)(j)		161,925
	Accounts receivable, net			243,719			28,751			41,760	(a)		314,230
	Gas stored underground			90,141			129,528			—			219,669
	Other current assets			18,710			56,071			(34,930	)(a)		39,851

		Total current assets		479,465			222,351			33,859			735,675
Goodwill and intangible assets				275,844			299,768			139,440	(b)		715,052
Deferred charges and other assets				240,477			52,236			(1,154	)(a)(c)(d)		291,559

			$	2,680,532		$	2,198,624		$	25,400		$	4,904,556


CAPITALIZATION AND LIABILITIES
Shareholders’ equity
	Preferred stock		$	—		$	75,000		$	(75,000	)(a)	$	—
	Common stock			263			4			116	(b)(c)		383
	Additional paid-in capital			762,464			815,521			(247,641	)(b)(c)		1,330,344
	Retained earnings			167,535			(135,173	)		135,173	(b)		167,535
	Accumulated other comprehensive income (loss)			(3,416	)		(3,899	)		3,899	(b)		(3,416	)

		Shareholders’ equity		926,846			751,453			(183,453	)		1,494,846
Long-term debt				863,266			280,077			1,117,104	(a)(c)		2,260,447

		Total capitalization		1,790,112			1,031,530			933,651			3,755,293
Current liabilities
	Accounts payable and accrued liabilities			201,123			89,273			(54,469	)(a)		235,927
	Other current liabilities			210,759			129,588			(95,904	)(a)(j)		244,443
	Short-term debt			—			300,000			(300,000	)(a)(c)(j)		—
	Current maturities of long-term debt			5,918			150,000			(150,000	)(a)		5,918

		Total current liabilities		417,800			668,861			(600,373	)		486,288
Deferred income taxes				227,899			29,722			(29,722	)(b)		227,899
Regulatory cost of removal obligation				105,059			134,661			—			239,720
Deferred credits and other liabilities				139,662			333,850			(278,156	)(a)(d)		195,356

			$	2,680,532		$	2,198,624		$	25,400		$	4,904,556


			Historical			Historical			Pro Forma
			Atmos			TXU Gas			Adjustments			Pro Forma


			(in thousands, except per share data)
Operating revenues
	Utility segment		$	1,425,022		$	1,075,050		$	(6,054	)(e)	$	2,494,018
	Natural gas marketing segment			1,255,386			—			—			1,255,386
	Other nonutility segment			20,492			—			—			20,492
	Intersegment eliminations			(273,741	)		—			—			(273,741	)

				2,427,159			1,075,050			(6,054	)		3,496,155
Purchased gas cost
	Utility segment			1,003,977			633,529			—			1,637,506
	Natural gas marketing segment			1,214,395			—			—			1,214,395
	Other nonutility segment			9,158			—			—			9,158
	Intersegment eliminations			(273,042	)		—			—			(273,042	)

				1,954,488			633,529			—			2,588,017

Gross profit				472,671			441,521			(6,054	)		908,138
Operating expenses
	Operation and maintenance			166,476			280,548			(87,442	)(e)(f)		359,582
	Depreciation and amortization			69,879			56,988			(5,739	)(e)(f)(g)		121,128
	Taxes, other than income			45,901			78,962			10	(e)		124,873

		Total operating expenses		282,256			416,498			(93,171	)		605,583

Operating income				190,415			25,023			87,117			302,555
Miscellaneous income (expense)				7,850			(120,306	)		123,317	(e)(f)		10,861
Interest charges				49,506			26,086			23,916	(e)(h)		99,508

Income (loss) before income taxes				148,759			(121,369	)		186,518			213,908
Income tax expense (benefit)				56,148			(15,654	)		40,411	(i)		80,905

Net income (loss)			$	92,611		$	(105,715	)	$	146,107		$	133,003

Per share data
	Basic income per share		$	1.79								$	1.76

	Diluted income per share		$	1.78								$	1.75

Weighted average shares outstanding
	Basic			51,788						23,939			75,727

	Diluted			52,166						23,939			76,105


	Page

Prospectus Supplement

Incorporation by Reference		ii
Cautionary Statement Regarding Forward-Looking Statements		iii
Prospectus Supplement Summary		S-1
Risk Factors		S-11
Use of Proceeds		S-14
Market Price of Common Stock and Dividends		S-15
Capitalization		S-16
The TXU Gas Acquisition		S-18
Unaudited Pro Forma Combined Financial Information		S-22
Our Business		S-32
Description of Common Stock		S-40
Underwriting		S-44
Legal Matters		S-47
Experts		S-47
Prospectus

Cautionary Statement Regarding Forward-Looking Statements		ii
Risk Factors		1
Atmos Energy Corporation		5
Securities We May Offer		7
Use of Proceeds		7
Ratio of Earnings to Fixed Charges		8
The TXU Gas Acquisition		8
Description of Debt Securities		12
Description of Common Stock		27
Plan of Distribution		31
Legal Matters		32
Experts		32
Where You Can Find More Information		33
Incorporation of Certain Documents by Reference		33


	•	integrate the operations of TXU Gas that we acquired;

	•	improve the quality and consistency of earnings growth, while operating our natural gas utility and nonutility businesses exceptionally well; and

	•	enhance and strengthen a culture built on our core values.


(1)	For the unaudited balance sheet as of June 30, 2004 and all previous periods, we have reclassified our regulatory removal obligation from accumulated depreciation to a liability. The amounts presented above for total assets reflect this reclassification for all periods presented.

(2)	Short-term debt is comprised of current maturities of long-term debt and short-term debt.


(1)	As a result of the implementation of Financial Accounting Standards Board Interpretation No. 46R, “Consolidation of Variable Interest Entities,” in December 2003, a wholly-owned subsidiary financing trust that issued preferred securities ceased to be consolidated. We did not purchase the assets or assume the liabilities of the financing trust.

(2)	Total asset and long-term debt amounts were restated for all periods to include an investment in the wholly-owned subsidiary financing trust that ceased to be consolidated as described above and subordinated debentures issued by TXU Gas that were the sole assets of the financing trust. We did not purchase the assets or assume the liabilities of the financing trust.


(1)	The results for TXU Gas used to prepare the unaudited pro forma combined income statement information for the year ended September 30, 2003 are derived from TXU Gas’s statement of income for the year ended December 31, 2003. See “— Summary Consolidated Historical Financial Data — TXU Gas Company.”

(2)	Short-term debt is comprised of current maturities of long-term debt and short-term debt.


	*Our indebtedness and leverage increased materially with the TXU Gas acquisition.*


	*We may not be able to implement the TXU Gas acquisition successfully.*


	*The TXU Gas operations we acquired are subject to their own risks, which we may not be able to manage successfully.*


	*We have only limited recourse under the acquisition agreement for losses relating to the TXU Gas acquisition.*


	*There may be other risks or costs resulting from the TXU Gas acquisition that are not known to us.*


1.	Basis of Presentation


			(a)		(b)		(c)			(a) - (b) + (c)
			Twelve Months		Nine Months		Six Months			Nine Months
			Ended		Ended		Ended			Ended
			December 31,		September 30,		June 30,			June 30,
			2003		2003		2004			2004


			(in thousands)
Operating revenues			$	1,344,106	$	993,339	$	724,283		$	1,075,050
Purchased gas cost				790,542		584,674		427,661			633,529

	Gross profit			553,564		408,665		296,622			441,521
Operating expenses
	Operation and maintenance			287,811		212,785		205,522			280,548
	Depreciation and amortization			74,054		55,264		38,198			56,988
	Taxes, other than income			91,414		73,893		61,441			78,962

		Total operating expenses		453,279		341,942		305,161			416,498

Operating income (loss)				100,285		66,723		(8,539	)		25,023
Miscellaneous income (expense)				3,658		2,735		(121,229	)		(120,306	)
Interest charges				40,862		30,960		16,184			26,086

Income (loss) before income taxes				63,081		38,498		(145,952	)		(121,369	)
Income tax expense (benefit)				19,287		12,367		(22,574	)		(15,654	)

Net income (loss)			$	43,794	$	26,131	$	(123,378	)	$	(105,715	)


Cash		$	8,001
Accounts receivable			(41,760	)
Other current assets			13,535
Other non-current assets			47,922
Preferred stock			(75,000	)
Long-term debt			(430,077	)
Short-term debt			(300,000	)
Accounts payable and accrued liabilities			(54,469	)
Other current liabilities			(88,843	)
Deferred credits and other liabilities			(334,374	)

	Total	$	(1,255,065	)


Cash purchase price		$	1,925,000
Retiree medical benefit credit			(20,000	)
Transaction costs and expenses			7,540

	Total purchase price	$	1,912,540

Net property, plant and equipment		$	1,477,524
Accounts receivable			70,511
Gas stored underground			129,528
Other current assets			21,141
Goodwill and intangible assets			439,208
Deferred charges and other assets			40,532
Accounts payable and accrued liabilities			(34,804	)
Other current liabilities			(40,745	)
Regulatory cost of removal obligation			(134,661	)
Deferred credits and other liabilities			(55,694	)

	Total	$	1,912,540


Nine months ended June 30, 2004:
	Atmos historical net income			$	92,611
	Effect of TXU Gas acquisition and other pro forma adjustments				40,392

			Pro forma net income	$	133,003

	Atmos historical weighted average shares outstanding				51,788
	Shares issued in July 2004 common stock offering				9,939
	Shares to be issued in common stock offering				14,000

			Denominator for pro forma basic earnings per share		75,727
	Effect of dilutive securities:
		Restricted stock			258
		Stock options			120

			Denominator for pro forma diluted earnings per share		76,105


Twelve months ended September 30, 2003:
	Atmos historical net income			$	79,461
	Effect of TXU Gas acquisition and other pro forma adjustments				36,489

			Pro forma net income	$	115,950

	Atmos historical weighted average shares outstanding				46,319
	Shares issued in July 2004 common stock offering				9,939
	Shares to be issued in common stock offering				14,000

			Denominator for pro forma basic earnings per share		70,258
	Effect of dilutive securities:
		Restricted stock			109
		Stock options			68

			Denominator for pro forma diluted earnings per share		70,435


Tennessee		November — April
Georgia		October — May
Mississippi		November — May
Kentucky		November — April
Kansas		October — May
Amarillo, Texas		October — May
West Texas(1)		October — May
Lubbock, Texas(2)		October — May


	Number of
Underwriter	Shares

Merrill Lynch, Pierce, Fenner & Smith Incorporated		8,400,000
Banc of America Securities LLC		1,680,000
J.P. Morgan Securities Inc.		1,680,000
SunTrust Capital Markets, Inc.		1,680,000
Wachovia Capital Markets, LLC		560,000

Total		14,000,000


	Per Share		Without Option		With Option

Public offering price		$24.75		$346,500,000		$398,475,000
Underwriting discount		$.99		$13,860,000		$15,939,000
Proceeds, before expenses, to Atmos		$23.76		$332,640,000		$382,536,000