Atmos Energy Senior Notes Rated 'A-' By Fitch Ratings.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 13, 2003

Atmos Energy Corp.'s (Atmos) proposed $250 million senior notes due 2013 are rated 'A-' by Fitch Ratings. The Rating Outlook is Stable. Note proceeds will be used to repay debt and for general corporate purposes.

Fitch affirmed Atmos' ratings on Dec. 20, 2002, following a review of its operating performance, business strategy, and financial projections. Included in the analysis was an update on the recent acquisition by Atmos of Mississippi Valley Gas Co. (MVG) and related financing plans. On Dec. 3, 2002, Atmos completed its purchase of MVG for $150 million in the form of $75 million in cash and $75 million in common stock, and refinanced approximately $45 million of MVG's long-term debt. Atmos will pay off its acquisition bridge loan and certain other debt with the proceeds from the sale of the senior notes.

Near-term credit measures factoring in the note financing are expected to remain consistent with current ratings. Cash flow coverage of interest should approach 4.0 times (x) for fiscal 2003 and total debt to capitalization, including seasonal borrowings and assuming no new equity financing, should end the year at approximately 57%. Atmos' $300 million 364-day committed credit facility provides adequate liquidity and there are no material debt maturities over the coming year.

Atmos' distribution operations span twelve states and benefit from regulatory, demographic, and weather diversification. To further mitigate exposure to weather, Atmos continues to restructure its rates and utilize other protection measures. For the 2002-2003 heating season, 38% of its customer base is now fully weather normalized and 41% are protected by weather insurance. Furthermore, Atmos has made a major investment in information technology. This has resulted in more efficient operations and the ability to better extract cost savings when integrating acquisitions including MVG.

Atmos subsidiary, Atmos Energy Holdings (AEH), is an intermediate holding company for its non-regulated operations. AEH, through Woodward Marketing, LLC and other subsidiaries, provides gas supply management, marketing, and pipeline and storage services for certain of Atmos' utility divisions, 130 municipal utilities, and over 600 industrial customers. Non-regulated operations generally provide about 25% of earnings. While these operations have moderately higher business risk than the utilities, activities are generally complementary to core operations and the long-term operating record is good. Woodward has a standalone $210 million credit facility, non-recourse to Atmos, that is primarily used to provide letters of credit to support its operations. Woodward also has $100 million available through borrowings from AEH if needed.