UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
     
(Mark One)
   
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the quarterly period ended March 31, 2005
 
or
 
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the transition period from           to
Commission File Number 1-10042
Atmos Energy Corporation
(Exact name of registrant as specified in its charter)
     
Texas and Virginia   75-1743247
(State or other jurisdiction of
incorporation or organization) 		  (IRS employer
identification no.)
 
Three Lincoln Centre, Suite 1800
5430 LBJ Freeway, Dallas, Texas
(Address of principal executive offices) 		  75240
(Zip code)
(972) 934-9227
(Registrant’s telephone number, including area code)
           Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  þ           No  o
          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)     Yes  þ           No  o
          Number of shares outstanding of each of the issuer’s classes of common stock, as of April 25, 2005.
     
Class   Shares Outstanding
     
No Par Value
  79,939,319

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits
SIGNATURES
EXHIBITS INDEX Item 6(a)
Amended and Restated Articles of Incorporation
Computation of Ratio of Earnings to Fixed Charges
Letter Regarding Unaudited Interim Financial Information
Rule 13a-14(a)/15d-14(a) Certifications
Section 1350 Certifications

PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
                     
    March 31,   September 30,
    2005   2004
         
    (Unaudited)    
    (In thousands, except
    share data)
ASSETS
Property, plant and equipment
  $ 4,606,713     $ 2,633,651  
 
Less accumulated depreciation and amortization
    1,355,118       911,130  
             
   
Net property, plant and equipment
    3,251,595       1,722,521  
Current assets
               
 
Cash and cash equivalents
    247,126       201,932  
 
Cash held on deposit in margin account
    16,990       —  
 
Accounts receivable, net
    527,411       211,810  
 
Gas stored underground
    273,811       200,134  
 
Other current assets
    112,428       63,236  
             
   
Total current assets
    1,177,766       677,112  
Goodwill and intangible assets
    722,044       238,272  
Deferred charges and other assets
    261,039       231,978  
             
    $ 5,412,444     $ 2,869,883  
             
CAPITALIZATION AND LIABILITIES
Shareholders’ equity
               
 
Common stock, no par value (stated at $.005 per share); 200,000,000 shares authorized; issued and outstanding:
               
   
March 31, 2005 — 79,877,473 shares;
               
   
September 30, 2004 — 62,799,710 shares
  $ 399     $ 314  
 
Additional paid-in capital
    1,408,721       1,005,644  
 
Retained earnings
    240,920       142,030  
 
Accumulated other comprehensive loss
    (17,770 )     (14,529 )
             
   
Shareholders’ equity
    1,632,270       1,133,459  
Long-term debt
    2,254,817       861,311  
             
   
Total capitalization
    3,887,087       1,994,770  
Current liabilities
               
 
Accounts payable and accrued liabilities
    533,232       185,295  
 
Other current liabilities
    298,802       223,265  
 
Current maturities of long-term debt
    5,887       5,908  
             
   
Total current liabilities
    837,921       414,468  
Deferred income taxes
    245,836       213,930  
Regulatory cost of removal obligation
    246,285       103,579  
Deferred credits and other liabilities
    195,315       143,136  
             
    $ 5,412,444     $ 2,869,883  
             
See accompanying notes to condensed consolidated financial statements

1

ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     
    Three Months Ended
    March 31
     
    2005   2004
         
    (Unaudited)
    (In thousands, except per
    share data)
Operating revenues
               
 
Utility segment
  $ 1,235,377     $ 708,282  
 
Natural gas marketing segment
    512,891       517,218  
 
Pipeline and storage segment
    45,546       9,967  
 
Other nonutility segment
    1,278       687  
 
Intersegment eliminations
    (110,007 )     (118,669 )
             
      1,685,085       1,117,485  
Purchased gas cost
               
 
Utility segment
    912,309       518,820  
 
Natural gas marketing segment
    501,731       505,356  
 
Pipeline and storage segment
    1,718       5,681  
 
Other nonutility segment
    —       —  
 
Intersegment eliminations
    (109,256 )     (118,498 )
             
      1,306,502       911,359  
             
 
Gross profit
    378,583       206,126  
Operating expenses
               
 
Operation and maintenance
    106,109       59,093  
 
Depreciation and amortization
    45,326       23,138  
 
Taxes, other than income
    54,967       18,481  
             
   
Total operating expenses
    206,402       100,712  
             
Operating income
    172,181       105,414  
Miscellaneous income
    958       4,456  
Interest charges
    33,073       16,160  
             
Income before income taxes
    140,066       93,710  
Income tax expense
    51,564       35,405  
             
   
Net income
  $ 88,502     $ 58,305  
             
Basic net income per share
  $ 1.12     $ 1.12  
             
Diluted net income per share
  $ 1.11     $ 1.12  
             
Cash dividends per share
  $ 0.310     $ 0.305  
             
Weighted average shares outstanding:
               
 
Basic
    79,270       51,850  
             
 
Diluted
    79,760       52,240  
             
See accompanying notes to condensed consolidated financial statements

2

ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     
    Six Months Ended
    March 31
     
    2005   2004
         
    (Unaudited)
    (In thousands, except per
    share data)
Operating revenues
               
 
Utility segment
  $ 2,149,058     $ 1,168,770  
 
Natural gas marketing segment
    1,006,692       891,047  
 
Pipeline and storage segment
    89,236       12,886  
 
Other nonutility segment
    2,637       1,396  
 
Intersegment eliminations
    (193,914 )     (192,998 )
             
      3,053,709       1,881,101  
Purchased gas cost
               
 
Utility segment
    1,568,679       840,884  
 
Natural gas marketing segment
    968,688       861,687  
 
Pipeline and storage segment
    5,590       6,008  
 
Other nonutility segment
    —       —  
 
Intersegment eliminations
    (192,283 )     (192,657 )
             
      2,350,674       1,515,922  
             
 
Gross profit
    703,035       365,179  
Operating expenses
               
 
Operation and maintenance
    219,235       116,009  
 
Depreciation and amortization
    89,323       46,611  
 
Taxes, other than income
    93,622       33,604  
             
   
Total operating expenses
    402,180       196,224  
             
Operating income
    300,855       168,955  
Miscellaneous income
    1,343       5,663  
Interest charges
    65,615       33,495  
             
Income before income taxes
    236,583       141,123  
Income tax expense
    88,482       53,277  
             
   
Net income
  $ 148,101     $ 87,846  
             
Basic net income per share
  $ 1.92     $ 1.70  
             
Diluted net income per share
  $ 1.90     $ 1.69  
             
Cash dividends per share
  $ 0.62     $ 0.61  
             
Weighted average shares outstanding:
               
 
Basic
    77,290       51,666  
             
 
Diluted
    77,769       52,057  
             
See accompanying notes to condensed consolidated financial statements

3

ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       
    Six Months Ended
    March 31
     
    2005   2004
         
    (Unaudited)
    (In thousands)
Cash Flows From Operating Activities
               
 
Net income
  $ 148,101     $ 87,846  
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
   
Gain on the sale of assets
    —       (4,898 )
   
Depreciation and amortization:
               
     
Charged to depreciation and amortization
    89,323       46,611  
     
Charged to other accounts
    477       601  
   
Deferred income taxes
    42,605       10,081  
   
Other
    3,315       (944 )
   
Net assets/ liabilities from risk management activities
    20,247       924  
   
Net change in operating assets and liabilities
    96,025       150,382  
             
     
Net cash provided by operating activities
    400,093       290,603  
Cash Flows From Investing Activities
               
 
Capital expenditures
    (137,466 )     (83,729 )
 
Acquisitions
    (1,912,532 )     (1,950 )
 
Proceeds from the sale of assets
    —       24,661  
 
Other
    (1,957 )     2,878  
             
     
Net cash used in investing activities
    (2,051,955 )     (58,140 )
Cash Flows From Financing Activities
               
 
Net decrease in short-term debt
    —       (118,595 )
 
Net proceeds from issuance of long-term debt
    1,385,847       5,000  
 
Repayment of long-term debt
    (3,849 )     (5,546 )
 
Settlement of Treasury lock agreements
    (43,770 )     —  
 
Cash dividends paid
    (49,211 )     (31,616 )
 
Issuance of common stock
    26,025       17,594  
 
Net proceeds from equity offering
    382,014       —  
             
     
Net cash provided by (used in) financing activities
    1,697,056       (133,163 )
             
Net increase in cash and cash equivalents
    45,194       99,300  
Cash and cash equivalents at beginning of period
    201,932       15,683  
             
Cash and cash equivalents at end of period
  $ 247,126     $ 114,983  
             
See accompanying notes to condensed consolidated financial statements

4

ATMOS ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2005
1. Nature of Business
      Atmos Energy Corporation (“Atmos” or “the Company”) and its subsidiaries are engaged primarily in the natural gas utility business as well as certain nonutility businesses. Through our natural gas utility business, we distribute natural gas through sales and transportation arrangements to approximately 3.2 million residential, commercial, public-authority and industrial customers through our seven regulated natural gas utility divisions, in the service areas described below:
     
Division   Service Area
     
Atmos Energy Colorado-Kansas Division
  Colorado, Kansas, Missouri (3)
Atmos Energy Kentucky Division
  Kentucky
Atmos Energy Louisiana Division
  Louisiana
Atmos Energy Mid-States Division
  Georgia (3) , Illinois (3) , Iowa (3) , Missouri (3) Tennessee, Virginia (3)
Atmos Energy Mississippi Division (1)
  Mississippi
Atmos Energy Mid-Tex Division (2)
  Texas, including the Dallas/Fort Worth metropolitan area
Atmos Energy West Texas Division
  West Texas
 
(1)   The name of this division was changed from the Mississippi Valley Gas Company Division in April 2005.
 
(2)   Acquired in October 2004.
 
(3)   Denotes locations where we have more limited service areas.
      As further described in Note 3, on October 1, 2004, we completed our acquisition of the natural gas distribution and pipeline operations of TXU Gas Company (TXU Gas). 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. We also acquired a system consisting of 6,162 miles of gas transmission and gathering lines and five underground storage reservoirs, all within Texas. On October 1, 2004, we created the Atmos Energy Mid-Tex Division, which provides gas distribution services to the approximately 1.5 million residential and business customers in Texas, including the Dallas/ Fort Worth metropolitan area as a result of the TXU Gas acquisition. We also created the Atmos Pipeline — Texas Division to manage the TXU Gas pipeline and storage operations we acquired.
      In addition, we transport natural gas for others through our distribution system. Our utility business is subject to federal and state regulation and/or regulation by local authorities in each of the states in which the utility divisions operate. Our shared-services division is located in Dallas, Texas, and our customer support centers are located in Amarillo, Texas, and Metairie, Louisiana. In addition, on April 1, 2005, we assumed the operations of a Waco, Texas call center, and all call center services provided by TXU Gas under a transitional services agreement were terminated. We intend to close the purchase of the related assets on October 1, 2005.
      Our nonutility businesses include our natural gas marketing operations, our pipeline and storage operations and our other nonutility operations which are provided in 18 states. These operations are either organized under or managed by Atmos Energy Holdings, Inc. (AEH), which is wholly-owned by Atmos Energy Corporation.
      Our natural gas marketing operations are managed by Atmos Energy Marketing, LLC (AEM), which is wholly-owned by AEH. AEM provides a variety of natural gas management services to municipalities, natural gas utility systems and industrial natural gas customers, primarily in the southeastern and midwestern states and to our Colorado-Kansas, Kentucky, Louisiana and Mid-States divisions. These services consist primarily

5

ATMOS ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 hedging through the use of derivative instruments.
      Our pipeline and storage operations consist of the operations of the Atmos Pipeline — Texas Division, a division of Atmos Energy Corporation, and of Atmos Pipeline and Storage, LLC (APS), which is wholly-owned by AEH. The Atmos Pipeline — Texas Division was purchased from TXU Gas and supplies natural gas to the Atmos Energy Mid-Tex Division, transports natural gas to third parties and manages five underground storage reservoirs in Texas. Through APS, we own or have an interest in underground storage fields in Kentucky and Louisiana. We also use these storage facilities to reduce the need to contract for additional pipeline capacity to meet customer demand during peak periods.
      Our other nonutility businesses consist primarily of the operations of Atmos Energy Services, LLC (AES) and Atmos Power Systems, Inc., which are wholly-owned by AEH. Through AES, we provide natural gas management services to our utility operations. These services, which began April 1, 2004, include aggregating and purchasing gas supply, arranging transportation and storage logistics and ultimately delivering the gas to our utility service areas at competitive prices. Through Atmos Power Systems, Inc., we construct electric peaking power-generating plants and associated facilities and may enter into agreements to either lease or sell these plants.
2. Unaudited Interim Financial Information
      In the opinion of management, all material adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been made to the unaudited consolidated interim-period financial statements. These consolidated interim-period financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated financial statements of Atmos Energy Corporation (“Atmos” or “the Company”) in its Annual Report on Form 10-K for the fiscal year ended September 30, 2004. Because of seasonal and other factors, the results of operations for the three and six-month periods ended March 31, 2005 are not indicative of expected results of operations for the fiscal year ending September 30, 2005. Further, the impact of the TXU Gas acquisition on the statement of cash flows is reflected in the acquisitions line item; therefore, the net changes in operating assets and liabilities will not reflect balance sheet changes attributable to the acquisition.