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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, 2004
 
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)

(Registrant’s telephone number, including area code)

(972) 934-9227

          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 May 3, 2004.

     
Class Shares Outstanding
No Par Value
  52,319,505

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
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 and Reports on Form 8-K
SIGNATURES
Amendment & Joinder Agreement to Credit Agreement
Amendment to Credit Agreement
Lease Agreement
Computation of Ratio of Earnings to Fixed Charges
Letter Re: Unaudited Interim Financial Information
Rule 13a-14(a)/15d-14(a) Certifications
Section 1350 Certifications

Table of Contents

PART 1. FINANCIAL INFORMATION

 
Item 1. Financial Statements

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

                     
March 31, September 30,
2004 2003
(Unaudited)
(In thousands)
ASSETS
Property, plant and equipment
  $ 2,552,376     $ 2,480,139  
 
Less accumulated depreciation and amortization
    891,040       855,745  
     
     
 
   
Net property, plant and equipment
    1,661,336       1,624,394  
Current assets
               
 
Cash and cash equivalents
    114,983       15,683  
 
Cash held on deposit in margin account
    —       17,903  
 
Accounts receivable, net
    396,879       216,783  
 
Gas stored underground
    74,570       168,765  
 
Other current assets
    54,057       38,863  
     
     
 
   
Total current assets
    640,489       457,997  
Goodwill and intangible assets
    275,873       273,499  
Deferred charges and other assets
    243,494       271,023  
     
     
 
    $ 2,821,192     $ 2,626,913  
     
     
 
CAPITALIZATION AND LIABILITIES
Shareholders’ equity
               
 
Common stock, no par value (stated at $.005 per share); 100,000,000 shares authorized; issued and outstanding:
March 31, 2004 — 52,235,980 shares;
September 30, 2003 — 51,475,785 shares
  $ 261     $ 257  
 
Additional paid-in capital
    753,770       736,180  
 
Retained earnings
    178,769       122,539  
 
Accumulated other comprehensive income (loss)
    49       (1,459 )
     
     
 
   
Shareholders’ equity
    932,849       857,517  
Long-term debt
    864,624       863,918  
     
     
 
   
Total capitalization
    1,797,473       1,721,435  
Current liabilities
               
 
Accounts payable and accrued liabilities
    365,996       179,852  
 
Other current liabilities
    171,822       133,957  
 
Short-term debt
    —       118,595  
 
Current maturities of long-term debt
    8,093       9,345  
     
     
 
   
Total current liabilities
    545,911       441,749  
Deferred income taxes
    234,355       223,350  
Regulatory cost of removal obligation
    104,152       102,371  
Deferred credits and other liabilities
    139,301       138,008  
     
     
 
    $ 2,821,192     $ 2,626,913  
     
     
 

See accompanying notes to condensed consolidated financial statements

1

Table of Contents

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                       
Three Months Ended
March 31
2004 2003
(Unaudited)
(In thousands, except
per share data)
Operating revenues
               
 
Utility segment
  $ 708,282     $ 696,561  
 
Natural gas marketing segment
    517,218       620,402  
 
Other nonutility segment
    10,654       9,657  
 
Intersegment eliminations
    (118,669 )     (132,478 )
     
     
 
      1,117,485       1,194,142  
Purchased gas cost
               
 
Utility segment
    518,820       502,728  
 
Natural gas marketing segment
    505,356       618,752  
 
Other nonutility segment
    5,681       2,134  
 
Intersegment eliminations
    (118,498 )     (132,440 )
     
     
 
      911,359       991,174  
     
     
 
 
Gross profit
    206,126       202,968  
Operating expenses
               
 
Operation and maintenance
    59,093       55,665  
 
Depreciation and amortization
    23,138       20,887  
 
Taxes, other than income
    18,481       18,538  
     
     
 
     
Total operating expenses
    100,712       95,090  
     
     
 
Operating income
    105,414       107,878  
Miscellaneous income (expense)
    4,456       (1,489 )
Interest charges
    16,160       16,158  
     
     
 
Income before income taxes and cumulative effect of accounting change
    93,710       90,231  
Income tax expense
    35,405       33,926  
     
     
 
Income before cumulative effect of accounting change
    58,305       56,305  
Cumulative effect of accounting change, net of income tax benefit
    —       (7,773 )
     
     
 
     
Net income
  $ 58,305     $ 48,532  
     
     
 
Per share data
               
 
Basic income per share:
               
   
Income before cumulative effect of accounting change
  $ 1.12     $ 1.24  
   
Cumulative effect of accounting change, net of income tax benefit
    —       (.17 )
     
     
 
   
Net income
  $ 1.12     $ 1.07  
     
     
 
 
Diluted income per share:
               
   
Income before cumulative effect of accounting change
  $ 1.12     $ 1.24  
   
Cumulative effect of accounting change, net of income tax benefit
    —       (.17 )
     
     
 
   
Net income
  $ 1.12     $ 1.07  
     
     
 
Cash dividends per share
  $ .305     $ .300  
     
     
 
Weighted average shares outstanding:
               
 
Basic
    51,850       45,306  
     
     
 
 
Diluted
    52,240       45,493  
     
     
 

See accompanying notes to condensed consolidated financial statements

2

Table of Contents

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                       
Six Months Ended
March 31
2004 2003
(Unaudited)
(In thousands, except
per share data)
Operating revenues
               
 
Utility segment
  $ 1,168,770     $ 1,096,529  
 
Natural gas marketing segment
    891,047       963,900  
 
Other nonutility segment
    14,282       12,557  
 
Intersegment eliminations
    (192,998 )     (198,412 )
     
     
 
      1,881,101       1,874,574  
Purchased gas cost
               
 
Utility segment
    840,884       773,223  
 
Natural gas marketing segment
    861,687       958,260  
 
Other nonutility segment
    6,008       1,008  
 
Intersegment eliminations
    (192,657 )     (198,051 )
     
     
 
      1,515,922       1,534,440  
     
     
 
 
Gross profit
    365,179       340,134  
Operating expenses
               
 
Operation and maintenance
    116,009       106,169  
 
Depreciation and amortization
    46,611       42,081  
 
Taxes, other than income
    33,604       31,382  
     
     
 
     
Total operating expenses
    196,224       179,632  
     
     
 
Operating income
    168,955       160,502  
Miscellaneous income
    5,663       2,635  
Interest charges
    33,495       31,637  
     
     
 
Income before income taxes and cumulative effect of accounting change
    141,123       131,500  
Income tax expense
    53,277       49,402  
     
     
 
Income before cumulative effect of accounting change
    87,846       82,098  
Cumulative effect of accounting change, net of income tax benefit
    —       (7,773 )
     
     
 
     
Net income
  $ 87,846     $ 74,325  
     
     
 
Per share data
               
 
Basic income per share:
               
   
Income before cumulative effect of accounting change
  $ 1.70     $ 1.87  
   
Cumulative effect of accounting change, net of income tax benefit
    —       (.18 )
     
     
 
   
Net income
  $ 1.70     $ 1.69  
     
     
 
 
Diluted income per share:
               
   
Income before cumulative effect of accounting change
  $ 1.69     $ 1.86  
   
Cumulative effect of accounting change, net of income tax benefit
    —       (.18 )
     
     
 
   
Net income
  $ 1.69     $ 1.68  
     
     
 
Cash dividends per share
  $ .61     $ .60  
     
     
 
Weighted average shares outstanding:
               
 
Basic
    51,666       44,007  
     
     
 
 
Diluted
    52,057       44,178  
     
     
 

See accompanying notes to condensed consolidated financial statements

3

Table of Contents

ATMOS ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                       
Six Months Ended
March 31
2004 2003
(Unaudited)
(In thousands)
Cash Flows from Operating Activities
               
 
Net income
  $ 87,846     $ 74,325  
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
   
Cumulative effect of accounting change, net of income tax benefit
    —       7,773  
   
Gain on the sale of assets
    (4,898 )     —  
   
Depreciation and amortization:
               
     
Charged to depreciation and amortization
    46,611       42,081  
     
Charged to other accounts
    601       1,004  
   
Deferred income taxes
    10,081       14,912  
   
Other
    (944 )     (4,911 )
   
Net assets/liabilities from risk management activities
    924       (7,188 )
   
Net change in operating assets and liabilities
    150,382       55,792  
     
     
 
     
Net cash provided by operating activities
    290,603       183,788  
Cash Flows from Investing Activities
               
 
Capital expenditures
    (83,729 )     (72,876 )
 
Proceeds from the sale of assets
    24,661       —  
 
Retirements of property, plant and equipment, net
    2,878       576  
 
Acquisitions
    (1,950 )     (74,650 )
     
     
 
     
Net cash used in investing activities
    (58,140 )     (146,950 )
Cash Flows from Financing Activities
               
 
Net decrease in short-term debt
    (118,595 )     (116,091 )
 
Cash dividends paid
    (31,616 )     (26,168 )
 
Repayment of long-term debt
    (5,546 )     (69,058 )
 
Net proceeds from issuance of long-term debt
    5,000       249,282  
 
Issuance of common stock
    17,594       12,486  
 
Repayment of Mississippi Valley Gas debt
    —       (70,938 )
 
Proceeds from bridge loan
    —