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, 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		(IRS employer
incorporation or organization)		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, 2007.


Class		Shares Outstanding

No Par Value		89,160,099

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

TABLE OF CONTENTS


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 6. Exhibits
SIGNATURES
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


	June 30,			September 30,
	2007			2006
	(Unaudited)
	(In thousands, except
	share data)

ASSETS
Property, plant and equipment	$	5,289,268		$	5,101,308
Less accumulated depreciation and amortization		1,531,792			1,472,152

Net property, plant and equipment		3,757,476			3,629,156
Current assets
Cash and cash equivalents		350,383			75,815
Cash held on deposit in margin account		13,576			35,647
Accounts receivable, net		429,119			374,629
Gas stored underground		463,896			461,502
Other current assets		77,519			169,952

Total current assets		1,334,493			1,117,545
Goodwill and intangible assets		738,065			738,521
Deferred charges and other assets		225,775			234,325

	$	6,055,809		$	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:
June 30, 2007 — 89,112,585 shares; September 30, 2006 — 81,739,516 shares	$	446		$	409
Additional paid-in capital		1,688,482			1,467,240
Retained earnings		315,587			224,299
Accumulated other comprehensive loss		(16,373	)		(43,850	)

Shareholders’ equity		1,988,142			1,648,098
Long-term debt		2,126,526			2,180,362

Total capitalization		4,114,668			3,828,460
Current liabilities
Accounts payable and accrued liabilities		428,806			345,108
Other current liabilities		360,920			388,451
Short-term debt		—			382,416
Current maturities of long-term debt		303,992			3,186

Total current liabilities		1,093,718			1,119,161
Deferred income taxes		367,025			306,172
Regulatory cost of removal obligation		261,436			261,376
Deferred credits and other liabilities		218,962			204,378

	$	6,055,809		$	5,719,547

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended
	June 30
	2007			2006
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Utility segment	$	548,251		$	402,044
Natural gas marketing segment		854,167			562,447
Pipeline and storage segment		37,937			35,862
Other nonutility segment		843			1,413
Intersegment eliminations		(223,046	)		(138,523	)

		1,218,152			863,243
Purchased gas cost
Utility segment		357,608			232,192
Natural gas marketing segment		854,743			563,333
Pipeline and storage segment		228			379
Other nonutility segment		—			—
Intersegment eliminations		(222,443	)		(137,161	)

		990,136			658,743

Gross profit		228,016			204,500
Operating expenses
Operation and maintenance		118,430			104,380
Depreciation and amortization		48,974			46,838
Taxes, other than income		52,881			48,479

Total operating expenses		220,285			199,697

Operating income		7,731			4,803
Miscellaneous income		4,266			963
Interest charges		34,479			35,944

Loss before income taxes		(22,482	)		(30,178	)
Income tax benefit		(9,122	)		(12,033	)

Net loss	$	(13,360	)	$	(18,145	)

Basic net loss per share	$	(0.15	)	$	(0.22	)

Diluted net loss per share	$	(0.15	)	$	(0.22	)

Cash dividends per share	$	0.320		$	0.315

Weighted average shares outstanding:
Basic		88,366			80,840

Diluted		88,366			80,840

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Nine Months Ended
	June 30
	2007			2006
	(Unaudited)
	(In thousands, except
	per share data)

Operating revenues
Utility segment	$	2,973,528		$	3,254,674
Natural gas marketing segment		2,360,902			2,482,921
Pipeline and storage segment		147,151			121,057
Other nonutility segment		2,979			4,500
Intersegment eliminations		(588,193	)		(682,243	)

		4,896,367			5,180,909
Purchased gas cost
Utility segment		2,174,071			2,488,906
Natural gas marketing segment		2,275,291			2,413,511
Pipeline and storage segment		682			590
Other nonutility segment		—			—
Intersegment eliminations		(585,971	)		(678,591	)

		3,864,073			4,224,416

Gross profit		1,032,294			956,493
Operating expenses
Operation and maintenance		345,662			325,295
Depreciation and amortization		149,035			137,174
Taxes, other than income		149,694			158,691

Total operating expenses		644,391			621,160

Operating income		387,903			335,333
Miscellaneous income (expense)		7,683			(1,028	)
Interest charges		109,273			107,625

Income before income taxes		286,313			226,680
Income tax expense		111,907			85,002

Net income	$	174,406		$	141,678

Basic net income per share	$	2.02		$	1.76

Diluted net income per share	$	2.00		$	1.75

Cash dividends per share	$	0.960		$	0.945

Weighted average shares outstanding:
Basic		86,378			80,520

Diluted		87,011			81,013

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended
	June 30
	2007			2006
	(Unaudited)
	(In thousands)

Cash Flows From Operating Activities
Net income	$	174,406		$	141,678
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization:
Charged to depreciation and amortization		149,035			137,174
Charged to other accounts		148			359
Deferred income taxes		37,266			36,160
Other		17,959			12,063
Net assets / liabilities from risk management activities		12,325			(3,940	)
Net change in operating assets and liabilities		161,531			(100,051	)

Net cash provided by operating activities		552,670			223,443
Cash Flows From Investing Activities
Capital expenditures		(263,023	)		(322,691	)
Other, net		(9,867	)		(4,811	)

Net cash used in investing activities		(272,890	)		(327,502	)
Cash Flows From Financing Activities
Net increase (decrease) in short-term debt		(382,416	)		152,278
Net proceeds from debt offering		247,461			—
Settlement of Treasury lock agreement		4,750			—
Repayment of long-term debt		(2,685	)		(2,618	)
Cash dividends paid		(83,118	)		(76,559	)
Issuance of common stock		18,883			17,691
Net proceeds from equity offering		191,913			—

Net cash provided by (used in) financing activities		(5,212	)		90,792

Net increase (decrease) in cash and cash equivalents		274,568			(13,267	)
Cash and cash equivalents at beginning of period		75,815			40,116

Cash and cash equivalents at end of period	$	350,383		$	26,849

See accompanying notes to condensed consolidated financial statements

ATMOS ENERGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 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: