ATMOS ENERGY CORP.

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 June 30, 2008
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		75240 (Zip code)
(Address of principal executive offices)

(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, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer þ Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company o

(Do not check if a smaller reporting company)

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 July 31, 2008.


Class		Shares Outstanding

No Par Value		90,627,522

TABLE OF CONTENTS


GLOSSARY OF KEY TERMS
PART I. FINANCIAL INFORMATION
ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME
ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME
ATMOS ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
ATMOS ENERGY CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	1. Nature of Business
	2. Unaudited Interim Financial Information
	3. Derivative Instruments and Hedging Activities
	4. Debt
	5. Shareholders’ Equity
	6. Earnings Per Share
	7. Interim Pension and Other Postretirement Benefit Plan Information
	8. Commitments and Contingencies
	9. Concentration of Credit Risk
	10. Segment Information
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PART II. OTHER INFORMATION
SIGNATURES
EXHIBITS INDEX Item 6(a)
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

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
KCC		Kansas Corporation Commission
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

PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30,		September 30,
	2008		2007
	(Unaudited)
	(In thousands, except
	share data)

ASSETS
Property, plant and equipment	$	5,604,416	$	5,396,070
Less accumulated depreciation and amortization		1,591,528		1,559,234

Net property, plant and equipment		4,012,888		3,836,836
Current assets
Cash and cash equivalents		46,501		60,725
Cash held on deposit in margin account		62,152		—
Accounts receivable, net		601,164		380,133
Gas stored underground		571,532		515,128
Other current assets		115,609		112,909

Total current assets		1,396,958		1,068,895
Goodwill and intangible assets		737,221		737,692
Deferred charges and other assets		237,723		253,494

	$	6,384,790	$	5,896,917


CAPITALIZATION AND LIABILITIES
Shareholders’ equity
Common stock, no par value (stated at $.005 per share); 200,000,000 shares authorized; issued and outstanding: June 30, 2008 — 90,571,457 shares; September 30, 2007 — 89,326,537 shares	$	453	$	447
Additional paid-in capital		1,732,775		1,700,378
Retained earnings		371,486		281,127
Accumulated other comprehensive income (loss)		693		(16,198	)

Shareholders’ equity		2,105,407		1,965,754
Long-term debt		2,119,729		2,126,315

Total capitalization		4,225,136		4,092,069
Current liabilities
Accounts payable and accrued liabilities		582,353		355,255
Other current liabilities		472,088		409,993
Short-term debt		113,257		150,599
Current maturities of long-term debt		1,059		3,831

Total current liabilities		1,168,757		919,678
Deferred income taxes		450,669		370,569
Regulatory cost of removal obligation		280,108		271,059
Deferred credits and other liabilities		260,120		243,542

	$	6,384,790	$	5,896,917

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended
	June 30
	2008			2007
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Natural gas distribution segment	$	676,639		$	548,251
Regulated transmission and storage segment		46,286			36,707
Natural gas marketing segment		1,189,722			854,167
Pipeline, storage and other segment		3,880			2,073
Intersegment eliminations		(277,382	)		(223,046	)

		1,639,145			1,218,152
Purchased gas cost
Natural gas distribution segment		476,711			357,608
Regulated transmission and storage segment		—			—
Natural gas marketing segment		1,192,353			854,743
Pipeline, storage and other segment		706			228
Intersegment eliminations		(276,847	)		(222,443	)

		1,392,923			990,136

Gross profit		246,222			228,016
Operating expenses
Operation and maintenance		117,822			115,141
Depreciation and amortization		50,356			48,974
Taxes, other than income		57,335			52,881
Impairment of long-lived assets		—			3,289

Total operating expenses		225,513			220,285

Operating income		20,709			7,731
Miscellaneous income		1,600			4,266
Interest charges		33,470			34,479

Loss before income taxes		(11,161	)		(22,482	)
Income tax benefit		(4,573	)		(9,122	)

Net loss	$	(6,588	)	$	(13,360	)

Basic net loss per share	$	(0.07	)	$	(0.15	)

Diluted net loss per share	$	(0.07	)	$	(0.15	)

Cash dividends per share	$	0.325		$	0.320

Weighted average shares outstanding:
Basic		89,648			88,366

Diluted		89,648			88,366

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Nine Months Ended
	June 30
	2008			2007
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Natural gas distribution segment	$	3,126,672		$	2,973,528
Regulated transmission and storage segment		142,772			122,647
Natural gas marketing segment		3,159,092			2,360,902
Pipeline, storage and other segment		20,629			27,483
Intersegment eliminations		(668,525	)		(588,193	)

		5,780,640			4,896,367
Purchased gas cost
Natural gas distribution segment		2,296,020			2,174,071
Regulated transmission and storage segment		—			—
Natural gas marketing segment		3,099,428			2,275,291
Pipeline, storage and other segment		1,773			682
Intersegment eliminations		(666,835	)		(585,971	)

		4,730,386			3,864,073

Gross profit		1,050,254			1,032,294
Operating expenses
Operation and maintenance		359,064			342,373
Depreciation and amortization		147,659			149,035
Taxes, other than income		153,170			149,694
Impairment of long-lived assets		—			3,289

Total operating expenses		659,893			644,391

Operating income		390,361			387,903
Miscellaneous income		2,974			7,683
Interest charges		103,803			109,273

Income before income taxes		289,532			286,313
Income tax expense		110,783			111,907

Net income	$	178,749		$	174,406

Basic net income per share	$	2.00		$	2.02

Diluted net income per share	$	1.99		$	2.00

Cash dividends per share	$	0.975		$	0.960

Weighted average shares outstanding:
Basic		89,281			86,378

Diluted		89,937			87,011

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended
	June 30
	2008			2007
	(Unaudited)
	(In thousands)

Cash Flows From Operating Activities
Net income	$	178,749		$	174,406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization:
Charged to depreciation and amortization		147,659			149,035
Charged to other accounts		106			148
Deferred income taxes		77,864			37,266
Other		12,767			17,959
Net assets / liabilities from risk management activities		35,169			12,325
Net change in operating assets and liabilities		(34,933	)		161,531

Net cash provided by operating activities		417,381			552,670
Cash Flows From Investing Activities
Capital expenditures		(312,878	)		(263,023	)
Other, net		(4,303	)		(9,867	)

Net cash used in investing activities		(317,181	)		(272,890	)
Cash Flows From Financing Activities
Net decrease in short-term debt		(35,721	)		(382,416	)
Net proceeds from long-term debt offering		—			247,461
Settlement of Treasury lock agreement		—			4,750
Repayment of long-term debt		(9,945	)		(2,685	)
Cash dividends paid		(87,821	)		(83,118	)
Issuance of common stock		19,063			18,883
Net proceeds from equity offering		—			191,913

Net cash used in financing activities		(114,424	)		(5,212	)

Net increase (decrease) in cash and cash equivalents		(14,224	)		274,568
Cash and cash equivalents at beginning of period		60,725			75,815

Cash and cash equivalents at end of period	$	46,501		$	350,383

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

June 30, 2008


1.	Nature of Business

Atmos Energy Corporation (“Atmos Energy” or the “Company”) and our subsidiaries are engaged primarily in the regulated natural gas distribution and transmission and storage businesses as well as certain other nonregulated businesses. Through our natural gas distribution business, we deliver natural gas through sales and transportation arrangements to approximately 3.2 million residential, commercial, public authority and industrial customers through our six regulated natural gas distribution divisions in the service areas described below:


Division		Service Area

Atmos Energy Colorado-Kansas Division		Colorado, Kansas, Missouri ⁽¹⁾
Atmos Energy Kentucky/Mid-States Division		Georgia ⁽¹⁾ , Illinois ⁽¹⁾ , Iowa ⁽¹⁾ , Kentucky, Missouri ⁽¹⁾ Tennessee, Virginia ⁽¹⁾
Atmos Energy Louisiana Division		Louisiana
Atmos Energy Mid-Tex Division		Texas, including the Dallas/Fort Worth met

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