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, 2007
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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large Accelerated Filer  þ           Accelerated Filer  o           Non-Accelerated Filer  o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes  o       No  þ
 
Number of shares outstanding of each of the issuer’s classes of common stock, as of April 25, 2007.
 
         
Class
 
Shares Outstanding
 
No Par Value     88,806,235  
 

GLOSSARY OF KEY TERMS
 
     
AEC
  Atmos Energy Corporation
AEH
  Atmos Energy Holdings, Inc.
AEM
  Atmos Energy Marketing, LLC
AES
  Atmos Energy Services, LLC
APS
  Atmos Pipeline and Storage, LLC
Bcf
  Billion cubic feet
EITF
  Emerging Issues Task Force
FASB
  Financial Accounting Standards Board
FIN
  FASB Interpretation
Fitch
  Fitch Ratings, Ltd.
GRIP
  Gas Reliability Infrastructure Program
KPSC
  Kentucky Public Service Commission
LGS
  Louisiana Gas Service Company and LGS Natural Gas Company, which were acquired July 1, 2001
LPSC
  Louisiana Public Service Commission
Mcf
  Thousand cubic feet
MMcf
  Million cubic feet
Moody’s
  Moody’s Investors Services, Inc.
NYMEX
  New York Mercantile Exchange, Inc.
RRC
  Railroad Commission of Texas
RSC
  Rate Stabilization Clause
S&P
  Standard & Poor’s Corporation
SEC
  United States Securities and Exchange Commission
SFAS
  Statement of Financial Accounting Standards
TRA
  Tennessee Regulatory Authority
WNA
  Weather Normalization Adjustment


1

PART I. 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
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
Amendment to the Performance-Based Supplemental Executive Benefits Plan
1998 Long-Term Incentive Plan - as Amended and Restated
Annual Incentive Plan for Management - as Amended and Restated
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 I. FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
ATMOS ENERGY CORPORATION
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
                 
    March 31,
    September 30,
 
    2007     2006  
    (Unaudited)        
    (In thousands, except
 
    share data)  
 
ASSETS
Property, plant and equipment
  $ 5,228,334     $ 5,101,308  
Less accumulated depreciation and amortization
    1,516,504       1,472,152  
                 
Net property, plant and equipment
    3,711,830       3,629,156  
Current assets
               
Cash and cash equivalents
    176,280       75,815  
Cash held on deposit in margin account
    40,763       35,647  
Accounts receivable, net
    721,058       374,629  
Gas stored underground
    364,478       461,502  
Other current assets
    126,838       169,952  
                 
Total current assets
    1,429,417       1,117,545  
Goodwill and intangible assets
    738,217       738,521  
Deferred charges and other assets
    229,634       234,325  
                 
    $ 6,109,098     $ 5,719,547  
                 
 
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, 2007 — 88,764,353 shares;
September 30, 2006 — 81,739,516 shares
  $ 444     $ 409  
Additional paid-in capital
    1,679,228       1,467,240  
Retained earnings
    357,425       224,299  
Accumulated other comprehensive loss
    (15,144 )     (43,850 )
                 
Shareholders’ equity
    2,021,953       1,648,098  
Long-term debt
    1,878,331       2,180,362  
                 
Total capitalization
    3,900,284       3,828,460  
Current liabilities
               
Accounts payable and accrued liabilities
    665,212       345,108  
Other current liabilities
    421,386       388,451  
Short-term debt
    —       382,416  
Current maturities of long-term debt
    303,232       3,186  
                 
Total current liabilities
    1,389,830       1,119,161  
Deferred income taxes
    342,328       306,172  
Regulatory cost of removal obligation
    261,984       261,376  
Deferred credits and other liabilities
    214,672       204,378  
                 
    $ 6,109,098     $ 5,719,547  
                 
 
See accompanying notes to condensed consolidated financial statements


2

ATMOS ENERGY CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
                 
    Three Months Ended
 
    March 31  
    2007     2006  
    (Unaudited)  
    (In thousands, except
 
    per share data)  
 
Operating revenues
               
Utility segment
  $ 1,461,033     $ 1,447,620  
Natural gas marketing segment
    795,041       818,629  
Pipeline and storage segment
    59,362       45,483  
Other nonutility segment
    783       1,595  
Intersegment eliminations
    (240,637 )     (279,481 )
                 
      2,075,582       2,033,846  
Purchased gas cost
               
Utility segment
    1,114,787       1,131,885  
Natural gas marketing segment
    771,988       774,652  
Pipeline and storage segment
    229       211  
Other nonutility segment
    —       —  
Intersegment eliminations
    (240,108 )     (278,305 )
                 
      1,646,896       1,628,443  
                 
Gross profit
    428,686       405,403  
Operating expenses
               
Operation and maintenance
    111,862       112,698  
Depreciation and amortization
    51,066       47,076  
Taxes, other than income
    56,746       64,796  
                 
Total operating expenses
    219,674       224,570  
                 
Operating income
    209,012       180,833  
Miscellaneous income (expense)
    1,838       (2,439 )
Interest charges
    35,262       35,492  
                 
Income before income taxes
    175,588       142,902  
Income tax expense
    69,083       54,106  
                 
Net income
  $ 106,505     $ 88,796  
                 
Basic net income per share
  $ 1.21     $ 1.10  
                 
Diluted net income per share
  $ 1.20     $ 1.10  
                 
Cash dividends per share
  $ 0.320     $ 0.315  
                 
Weighted average shares outstanding:
               
Basic
    88,078       80,573  
                 
Diluted
    88,735       81,040  
                 
 
See accompanying notes to condensed consolidated financial statements


3

ATMOS ENERGY CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
                 
    Six Months Ended
 
    March 31  
    2007     2006  
    (Unaudited)
 
    (In thousands, except
 
    per share data)  
 
Operating revenues
               
Utility segment
  $ 2,425,277     $ 2,852,630  
Natural gas marketing segment
    1,506,735       1,920,474  
Pipeline and storage segment
    109,214       85,195  
Other nonutility segment
    2,136       3,087  
Intersegment eliminations
    (365,147 )     (543,720 )
                 
      3,678,215       4,317,666  
Purchased gas cost
               
Utility segment
    1,816,463       2,256,714  
Natural gas marketing segment
    1,420,548       1,850,178  
Pipeline and storage segment
    454       211  
Other nonutility segment
    —       —  
Intersegment eliminations
    (363,528 )     (541,430 )
                 
      2,873,937       3,565,673  
                 
Gross profit
    804,278       751,993  
Operating expenses
               
Operation and maintenance
    227,232       220,915  
Depreciation and amortization
    100,061       90,336  
Taxes, other than income
    96,813       110,212  
                 
Total operating expenses
    424,106       421,463  
                 
Operating income
    380,172       330,530  
Miscellaneous income (expense)
    3,417       (1,991 )
Interest charges
    74,794       71,681  
                 
Income before income taxes
    308,795       256,858  
Income tax expense
    121,029       97,035  
                 
Net income
  $ 187,766     $ 159,823  
                 
Basic net income per share
  $ 2.20     $ 1.99  
                 
Diluted net income per share
  $ 2.18     $ 1.98  
                 
Cash dividends per share
  $ 0.64     $ 0.63  
                 
Weighted average shares outstanding:
               
Basic
    85,404       80,444  
                 
Diluted
    86,061       80,911  
                 
 
See accompanying notes to condensed consolidated financial statements


4

ATMOS ENERGY CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                 
    Six Months Ended
 
    March 31  
    2007     2006  
    (Unaudited)
 
    (In thousands)  
 
Cash Flows From Operating Activities
               
Net income
  $ 187,766     $ 159,823  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization:
               
Charged to depreciation and amortization
    100,061       90,336  
Charged to other accounts
    118       334  
Deferred income taxes
    72,755       58,199  
Other
    9,472       7,587  
Net assets / liabilities from risk management activities
    50,540       (24,041 )
Net change in operating assets and liabilities
    91,215       (143,847 )
                 
Net cash provided by operating activities
    511,927       148,391  
Cash Flows From Investing Activities
Capital expenditures
    (172,792 )     (213,230 )
Other, net
    (3,749 )     (2,842 )
                 
Net cash used in investing activities
    (176,541 )     (216,072 )
Cash Flows From Financing Activities
               
Net increase (decrease) in short-term debt
    (382,416 )     117,506  
Repayment of long-term debt
    (2,206 )     (2,162 )
Cash dividends paid
    (54,640 )     (50,933 )
Issuance of common stock
    12,428       12,053  
Net proceeds from equity offering
    191,913       —  
                 
Net cash provided by (used in) financing activities
    (234,921 )     76,464  
                 
Net increase in cash and cash equivalents
    100,465       8,783  
Cash and cash equivalents at beginning of period
    75,815       40,116  
                 
Cash and cash equivalents at end of period
  $ 176,280     $ 48,899  
                 
 
See accompanying notes to condensed consolidated financial statements


5

ATMOS ENERGY CORPORATION
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2007
 
1.   Nature of Business
 
Atmos Energy Corporation (“Atmos” or “the Company”) and our subsidiaries are engaged primarily in the natural gas utility business as well as other natural gas nonutility businesses. Our natural gas utility business distributes natural gas through sales and transportation arrangements to approximately 3.2 million residential, commercial, public authority and industrial customers throughout our six regulated natural gas utility divisions, in the service areas described below: