ATMOS ENERGY CORP (Form: 10-Q)

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, 2006
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 July 31, 2006.


Class		Shares Outstanding

No Par Value		81,595,723

TABLE OF CONTENTS


GLOSSARY OF KEY TERMS
PART I. FINANCIAL INFORMATION
	Item 1. 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 6. Exhibits
SIGNATURES
EXHIBITS INDEX
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


AEH		Atmos Energy Holdings, Inc.
AEM		Atmos Energy Marketing, LLC
AES		Atmos Energy Services, LLC
APB		Accounting Principles Board
APS		Atmos Pipeline and Storage, LLC
Bcf		Billion cubic feet
EITF		Emerging Issues Task Force
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FIN		FASB Interpretation
Fitch		Fitch Ratings, Ltd.
GPSC		Georgia Public Service Commission
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.
MPSC		Mississippi Public Service Commission
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
TLGP		Trans Louisiana Gas Pipeline
TRA		Tennessee Regulatory Authority
TXU Gas		TXU Gas Company, which was acquired on October 1, 2004
WNA		Weather Normalization Adjustment

PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements*

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30,			September 30,
	2006			2005
	(Unaudited)
	(In thousands, except
	share data)

ASSETS
Property, plant and equipment	$	4,993,093		$	4,765,610
Less accumulated depreciation and amortization		1,414,010			1,391,243

Net property, plant and equipment		3,579,083			3,374,367
Current assets
Cash and cash equivalents		26,849			40,116
Cash held on deposit in margin account		58,176			80,956
Accounts receivable, net		409,087			454,313
Gas stored underground		437,069			450,807
Other current assets		118,990			238,238

Total current assets		1,050,171			1,264,430
Goodwill and intangible assets		737,349			737,787
Deferred charges and other assets		249,874			276,943

	$	5,616,477		$	5,653,527

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, 2006 — 81,538,149 shares; September 30, 2005 — 80,539,401 shares	$	408		$	403
Additional paid-in capital		1,456,032			1,426,523
Retained earnings		243,956			178,837
Accumulated other comprehensive loss		(35,840	)		(3,341	)

Shareholders’ equity		1,664,556			1,602,422
Long-term debt		2,180,752			2,183,104

Total capitalization		3,845,308			3,785,526
Current liabilities
Accounts payable and accrued liabilities		306,805			461,314
Other current liabilities		407,575			503,368
Short-term debt		297,087			144,809
Current maturities of long-term debt		3,331			3,264

Total current liabilities		1,014,798			1,112,755
Deferred income taxes		283,757			292,207
Regulatory cost of removal obligation		275,955			263,424
Deferred credits and other liabilities		196,659			199,615

	$	5,616,477		$	5,653,527

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended
	June 30
	2006			2005
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Utility segment	$	402,044		$	501,735
Natural gas marketing segment		562,447			466,835
Pipeline and storage segment		35,862			33,449
Other nonutility segment		1,413			1,421
Intersegment eliminations		(138,523	)		(96,563	)

		863,243			906,877
Purchased gas cost
Utility segment		232,192			326,502
Natural gas marketing segment		563,333			456,440
Pipeline and storage segment		379			(1,733	)
Other nonutility segment		—			—
Intersegment eliminations		(137,161	)		(95,606	)

		658,743			685,603

Gross profit		204,500			221,274
Operating expenses
Operation and maintenance		104,380			91,443
Depreciation and amortization		46,838			43,448
Taxes, other than income		48,479			46,915

Total operating expenses		199,697			181,806

Operating income		4,803			39,468
Miscellaneous income		963			1,524
Interest charges		35,944			33,689

Income (loss) before income taxes		(30,178	)		7,303
Income tax expense (benefit)		(12,033	)		2,817

Net income (loss)	$	(18,145	)	$	4,486

Basic net income (loss) per share	$	(0.22	)	$	0.06

Diluted net income (loss) per share	$	(0.22	)	$	0.06

Cash dividends per share	$	0.315		$	0.310

Weighted average shares outstanding:
Basic		80,840			79,683

Diluted		80,840			80,144

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Nine Months Ended
	June 30
	2006			2005
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Utility segment	$	3,254,674		$	2,650,793
Natural gas marketing segment		2,482,921			1,473,527
Pipeline and storage segment		121,057			122,685
Other nonutility segment		4,500			4,058
Intersegment eliminations		(682,243	)		(290,477	)

		5,180,909			3,960,586
Purchased gas cost
Utility segment		2,488,906			1,895,181
Natural gas marketing segment		2,413,511			1,425,128
Pipeline and storage segment		590			8,895
Other nonutility segment		—			—
Intersegment eliminations		(678,591	)		(287,889	)

		4,224,416			3,041,315

Gross profit		956,493			919,271
Operating expenses
Operation and maintenance		325,295			305,640
Depreciation and amortization		137,174			132,771
Taxes, other than income		158,691			140,537

Total operating expenses		621,160			578,948

Operating income		335,333			340,323
Miscellaneous income (expense)		(1,028	)		2,867
Interest charges		107,625			99,304

Income before income taxes		226,680			243,886
Income tax expense		85,002			91,299

Net income	$	141,678		$	152,587

Basic net income per share	$	1.76		$	1.96

Diluted net income per share	$	1.75		$	1.94

Cash dividends per share	$	0.945		$	0.930

Weighted average shares outstanding:
Basic		80,520			78,009

Diluted		81,013			78,478

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended
	June 30
	2006			2005
	(Unaudited)
	(In thousands)

Cash Flows From Operating Activities
Net income	$	141,678		$	152,587
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization:
Charged to depreciation and amortization		137,174			132,771
Charged to other accounts		359			634
Deferred income taxes		36,160			17,703
Other		12,063			7,593
Net assets / liabilities from risk management activities		(3,940	)		14,276
Net change in operating assets and liabilities		(100,051	)		61,846

Net cash provided by operating activities		223,443			387,410
Cash Flows From Investing Activities
Capital expenditures		(322,691	)		(226,851	)
Acquisitions		—			(1,916,654	)
Other, net		(4,811	)		(1,648	)

Net cash used in investing activities		(327,502	)		(2,145,153	)
Cash Flows From Financing Activities
Net increase in short-term debt		152,278			—
Net proceeds from issuance of long-term debt		—			1,385,847
Repayment of long-term debt		(2,618	)		(102,801	)
Settlement of Treasury lock agreements		—			(43,770	)
Cash dividends paid		(76,559	)		(74,048	)
Issuance of common stock		17,691			32,206
Net proceeds from equity offering		—			382,014

Net cash provided by financing activities		90,792			1,579,448

Net decrease in cash and cash equivalents		(13,267	)		(178,295	)
Cash and cash equivalents at beginning of period		40,116			201,932

Cash and cash equivalents at end of period	$	26,849		$	23,637