þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Large Accelerated Filer þ | Accelerated Filer ¨ | Non-Accelerated Filer ¨ | Smaller Reporting Company ¨ |
Class | Shares Outstanding | |
No Par Value | 90,640,211 |
AEC | Atmos Energy Corporation |
AEH | Atmos Energy Holdings, Inc. |
AEM | Atmos Energy Marketing, LLC |
AOCI | Accumulated other comprehensive income |
APS | Atmos Pipeline and Storage, LLC |
Bcf | Billion cubic feet |
CFTC | Commodity Futures Trading Commission |
FASB | Financial Accounting Standards Board |
Fitch | Fitch Ratings, Ltd. |
GAAP | Generally Accepted Accounting Principles |
GRIP | Gas Reliability Infrastructure Program |
GSRS | Gas System Reliability Surcharge |
Mcf | Thousand cubic feet |
MMcf | Million cubic feet |
Moody’s | Moody’s Investors Services, Inc. |
NYMEX | New York Mercantile Exchange, Inc. |
PPA | Pension Protection Act of 2006 |
PRP | Pipeline Replacement Program |
RRC | Railroad Commission of Texas |
RRM | Rate Review Mechanism |
S&P | Standard & Poor’s Corporation |
SEC | United States Securities and Exchange Commission |
WNA | Weather Normalization Adjustment |
Item 1. | Financial Statements |
June 30, 2013 | September 30, 2012 | ||||||
(Unaudited) | |||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Property, plant and equipment | $ | 7,494,175 | $ | 7,134,470 | |||
Less accumulated depreciation and amortization | 1,652,960 | 1,658,866 | |||||
Net property, plant and equipment | 5,841,215 | 5,475,604 | |||||
Current assets | |||||||
Cash and cash equivalents | 31,979 | 64,239 | |||||
Accounts receivable, net | 350,237 | 234,526 | |||||
Gas stored underground | 209,101 | 256,415 | |||||
Other current assets | 90,936 | 272,782 | |||||
Total current assets | 682,253 | 827,962 | |||||
Goodwill and intangible assets | 740,814 | 740,847 | |||||
Deferred charges and other assets | 538,516 | 451,262 | |||||
$ | 7,802,798 | $ | 7,495,675 | ||||
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, 2013 — 90,639,520 shares; September 30, 2012 — 90,239,900 shares | $ | 453 | $ | 451 | |||
Additional paid-in capital | 1,757,059 | 1,745,467 | |||||
Retained earnings | 800,643 | 660,932 | |||||
Accumulated other comprehensive income (loss) | 23,289 | (47,607 | ) | ||||
Shareholders’ equity | 2,581,444 | 2,359,243 | |||||
Long-term debt | 2,455,593 | 1,956,305 | |||||
Total capitalization | 5,037,037 | 4,315,548 | |||||
Current liabilities | |||||||
Accounts payable and accrued liabilities | 229,876 | 215,229 | |||||
Other current liabilities | 348,706 | 489,665 | |||||
Short-term debt | 141,998 | 570,929 | |||||
Current maturities of long-term debt | — | 131 | |||||
Total current liabilities | 720,580 | 1,275,954 | |||||
Deferred income taxes | 1,197,274 | 1,015,083 | |||||
Regulatory cost of removal obligation | 360,578 | 381,164 | |||||
Pension and postretirement liabilities | 444,540 | 457,196 | |||||
Deferred credits and other liabilities | 42,789 | 50,730 | |||||
$ | 7,802,798 | $ | 7,495,675 |
Three Months Ended June 30 | |||||||
2013 | 2012 | ||||||
(Unaudited) (In thousands, except per share data) | |||||||
Operating revenues | |||||||
Natural gas distribution segment | $ | 467,144 | $ | 315,634 | |||
Regulated transmission and storage segment | 74,041 | 67,073 | |||||
Nonregulated segment | 421,808 | 256,250 | |||||
Intersegment eliminations | (105,058 | ) | (62,543 | ) | |||
857,935 | 576,414 | ||||||
Purchased gas cost | |||||||
Natural gas distribution segment | 227,649 | 120,575 | |||||
Regulated transmission and storage segment | — | — | |||||
Nonregulated segment | 418,548 | 224,829 | |||||
Intersegment eliminations | (104,759 | ) | (62,161 | ) | |||
541,438 | 283,243 | ||||||
Gross profit | 316,497 | 293,171 | |||||
Operating expenses | |||||||
Operation and maintenance | 121,258 | 106,045 | |||||
Depreciation and amortization | 58,129 | 58,956 | |||||
Taxes, other than income | 50,714 | 46,624 | |||||
Total operating expenses | 230,101 | 211,625 | |||||
Operating income | 86,396 | 81,546 | |||||
Miscellaneous expense | (467 | ) | (2,075 | ) | |||
Interest charges | 32,741 | 34,909 | |||||
Income from continuing operations before income taxes | 53,188 | 44,562 | |||||
Income tax expense | 19,714 | 16,548 | |||||
Income from continuing operations | 33,474 | 28,014 | |||||
Income from discontinued operations, net of tax ($0 and $1,792) | — | 3,118 | |||||
Gain on sale of discontinued operations, net of tax ($2,909 and $0) | 5,294 | — | |||||
Net income | $ | 38,768 | $ | 31,132 | |||
Basic earnings per share | |||||||
Income per share from continuing operations | $ | 0.37 | $ | 0.31 | |||
Income per share from discontinued operations | 0.06 | 0.03 | |||||
Net income per share — basic | $ | 0.43 | $ | 0.34 | |||
Diluted earnings per share | |||||||
Income per share from continuing operations | $ | 0.36 | $ | 0.31 | |||
Income per share from discontinued operations | 0.06 | 0.03 | |||||
Net income per share — diluted | $ | 0.42 | $ | 0.34 | |||
Cash dividends per share | $ | 0.350 | $ | 0.345 | |||
Weighted average shares outstanding: | |||||||
Basic | 90,603 | 90,118 | |||||
Diluted | 91,550 | 90,993 |
Nine Months Ended June 30 | |||||||
2013 | 2012 | ||||||
(Unaudited) (In thousands, except per share data) | |||||||
Operating revenues | |||||||
Natural gas distribution segment | $ | 2,039,107 | $ | 1,862,814 | |||
Regulated transmission and storage segment | 196,570 | 181,869 | |||||
Nonregulated segment | 1,250,650 | 1,071,189 | |||||
Intersegment eliminations | (285,241 | ) | (229,955 | ) | |||
3,201,086 | 2,885,917 | ||||||
Purchased gas cost | |||||||
Natural gas distribution segment | 1,172,975 | 1,011,832 | |||||
Regulated transmission and storage segment | — | — | |||||
Nonregulated segment | 1,200,624 | 1,028,592 | |||||
Intersegment eliminations | (284,123 | ) | (228,857 | ) | |||
2,089,476 | 1,811,567 | ||||||
Gross profit | 1,111,610 | 1,074,350 | |||||
Operating expenses | |||||||
Operation and maintenance | 338,871 | 329,989 | |||||
Depreciation and amortization | 174,888 | 176,742 | |||||
Taxes, other than income | 146,355 | 144,170 | |||||
Total operating expenses | 660,114 | 650,901 | |||||
Operating income | 451,496 | 423,449 | |||||
Miscellaneous income (expense) | 1,943 | (3,585 | ) | ||||
Interest charges | 96,594 | 107,278 | |||||
Income from continuing operations before income taxes | 356,845 | 312,586 | |||||
Income tax expense | 133,683 | 120,104 | |||||
Income from continuing operations | 223,162 | 192,482 | |||||
Income from discontinued operations, net of tax ($3,986 and $9,339) | 7,202 | 16,268 | |||||
Gain on sale of discontinued operations, net of tax ($2,909 and $0) | 5,294 | — | |||||
Net income | $ | 235,658 | $ | 208,750 | |||
Basic earnings per share | |||||||
Income per share from continuing operations | $ | 2.46 | $ | 2.13 | |||
Income per share from discontinued operations | 0.14 | 0.18 | |||||
Net income per share — basic | $ | 2.60 | $ | 2.31 | |||
Diluted earnings per share | |||||||
Income per share from continuing operations | $ | 2.43 | $ | 2.10 | |||
Income per share from discontinued operations | 0.14 | 0.18 | |||||
Net income per share — diluted | $ | 2.57 | $ | 2.28 | |||
Cash dividends per share | $ | 1.050 | $ | 1.035 | |||
Weighted average shares outstanding: | |||||||
Basic | 90,497 | 90,131 | |||||
Diluted | 91,445 | 91,006 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) (In thousands) | |||||||||||||||
Net income | $ | 38,768 | $ | 31,132 | $ | 235,658 | $ | 208,750 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Net unrealized holding gains (losses) on available-for-sale securities, net of tax of $(202), $(523), $(532) and $1,194 | (348 | ) | (888 | ) | (921 | ) | 2,059 | ||||||||
Cash flow hedges: | |||||||||||||||
Amortization and unrealized gain (loss) on interest rate agreements, net of tax of $17,865, $(18,399), $38,427 and $(9,995) | 31,079 | (31,328 | ) | 66,852 | (17,019 | ) | |||||||||
Net unrealized gains (losses) on commodity cash flow hedges, net of tax of $(2,243), $11,401, $3,174 and $(2,595) | (3,508 | ) | 17,830 | 4,965 | (4,060 | ) | |||||||||
Total other comprehensive income (loss) | 27,223 | (14,386 | ) | 70,896 | (19,020 | ) | |||||||||
Total comprehensive income | $ | 65,991 | $ | 16,746 | $ | 306,554 | $ | 189,730 |
Nine Months Ended June 30 | |||||||
2013 | 2012 | ||||||
(Unaudited) (In thousands) | |||||||
Cash Flows From Operating Activities | |||||||
Net income | $ | 235,658 | $ | 208,750 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on sale of discontinued operations | (8,203 | ) | — | ||||
Depreciation and amortization: | |||||||
Charged to depreciation and amortization | 176,737 | 183,884 | |||||
Charged to other accounts | 446 | 310 | |||||
Deferred income taxes | 130,365 | 120,713 | |||||
Other | 14,460 | 22,386 | |||||
Net assets / liabilities from risk management activities | (6,386 | ) | 12,759 | ||||
Net change in operating assets and liabilities | (33,502 | ) | (29,996 | ) | |||
Net cash provided by operating activities | 509,575 | 518,806 | |||||
Cash Flows From Investing Activities | |||||||
Capital expenditures | (582,473 | ) | (497,374 | ) | |||
Proceeds from the sale of discontinued operations | 153,023 | — | |||||
Other, net | (3,139 | ) | (4,247 | ) | |||
Net cash used in investing activities | (432,589 | ) | (501,621 | ) | |||
Cash Flows From Financing Activities | |||||||
Net decrease in short-term debt | (435,084 | ) | (6,688 | ) | |||
Net proceeds from issuance of long-term debt | 493,793 | — | |||||
Settlement of Treasury lock agreements | (66,626 | ) | — | ||||
Repayment of long-term debt | (131 | ) | (2,369 | ) | |||
Cash dividends paid | (96,060 | ) | (94,338 | ) | |||
Repurchase of common stock | — | (12,535 | ) | ||||
Repurchase of equity awards | (5,146 | ) | (5,219 | ) | |||
Issuance of common stock | 8 | 251 | |||||
Net cash used in financing activities | (109,246 | ) | (120,898 | ) | |||
Net decrease in cash and cash equivalents | (32,260 | ) | (103,713 | ) | |||
Cash and cash equivalents at beginning of period | 64,239 | 131,419 | |||||
Cash and cash equivalents at end of period | $ | 31,979 | $ | 27,706 |
• | the natural gas distribution segment, which includes our regulated natural gas distribution and related sales operations, |
• | the regulated transmission and storage segment, which includes the regulated pipeline and storage operations of our Atmos Pipeline — Texas Division and |
• | the nonregulated segment, which includes our nonregulated natural gas management, nonregulated natural gas transmission, storage and other services. |
June 30, 2013 | September 30, 2012 | ||||||
(In thousands) | |||||||
Regulatory assets: | |||||||
Pension and postretirement benefit costs(1) | $ | 280,136 | $ | 296,160 | |||
Merger and integration costs, net | 5,376 | 5,754 | |||||
Deferred gas costs | 1,271 | 31,359 | |||||
Regulatory cost of removal asset | 6,058 | 10,500 | |||||
Rate case costs | 6,207 | 4,661 | |||||
Deferred franchise fees | 242 | 2,714 | |||||
Texas Rule 8.209(2) | 21,351 | 5,370 | |||||
APT annual adjustment mechanism | 5,167 | 4,539 | |||||
Other | 1,935 | 7,262 | |||||
$ | 327,743 | $ | 368,319 | ||||
Regulatory liabilities: | |||||||
Deferred gas costs | $ | 30,773 | $ | 23,072 | |||
Deferred franchise fees | 2,097 | — | |||||
Regulatory cost of removal obligation | 426,656 | 459,688 | |||||
Other | 5,398 | 5,637 | |||||
$ | 464,924 | $ | 488,397 |
(1) | Includes $15.5 million and $7.6 million of pension and postretirement expense deferred pursuant to regulatory authorization. |
(2) | Texas Rule 8.209 is a Railroad Commission rule that allows for the deferral of all expenses associated with capital expenditures incurred pursuant to this rule, including the recording of interest on the deferred expenses until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recovered through base rates. |
Contract Type | Hedge Designation | Natural Gas Distribution | Nonregulated | |||||
Quantity (MMcf) | ||||||||
Commodity contracts | Fair Value | — | (22,250 | ) | ||||
Cash Flow | — | 26,520 | ||||||
Not designated | 14,649 | 75,520 | ||||||
14,649 | 79,790 |
Balance Sheet Location | Natural Gas Distribution | Nonregulated | Total | ||||||||||
(In thousands) | |||||||||||||
June 30, 2013 | |||||||||||||
Designated As Hedges: | |||||||||||||
Asset Financial Instruments | |||||||||||||
Current commodity contracts | Other current assets | $ | — | $ | 12,250 | $ | 12,250 | ||||||
Noncurrent commodity contracts | Deferred charges and other assets | 84,432 | 401 | 84,833 | |||||||||
Liability Financial Instruments | |||||||||||||
Current commodity contracts | Other current liabilities | — | (13,771 | ) | (13,771 | ) | |||||||
Noncurrent commodity contracts | Deferred credits and other liabilities | — | (1,912 | ) | (1,912 | ) | |||||||
Total | 84,432 | (3,032 | ) | 81,400 | |||||||||
Not Designated As Hedges: | |||||||||||||
Asset Financial Instruments | |||||||||||||
Current commodity contracts | Other current assets | 2,015 | 68,972 | 70,987 | |||||||||
Noncurrent commodity contracts | Deferred charges and other assets | 1,035 | 49,651 | 50,686 | |||||||||
Liability Financial Instruments | |||||||||||||
Current commodity contracts | Other current liabilities | (1,094 | ) | (69,710 | ) | (70,804 | ) | ||||||
Noncurrent commodity contracts | Deferred credits and other liabilities | — | (50,204 | ) | (50,204 | ) | |||||||
Total | 1,956 | (1,291 | ) | 665 | |||||||||
Total Financial Instruments | $ | 86,388 | $ | (4,323 | ) | $ | 82,065 |
Balance Sheet Location | Natural Gas Distribution | Nonregulated | Total | ||||||||||
(In thousands) | |||||||||||||
September 30, 2012 | |||||||||||||
Designated As Hedges: | |||||||||||||
Asset Financial Instruments | |||||||||||||
Current commodity contracts | Other current assets | $ | — | $ | 19,301 | $ | 19,301 | ||||||
Noncurrent commodity contracts | Deferred charges and other assets | — | 1,923 | 1,923 | |||||||||
Liability Financial Instruments | |||||||||||||
Current commodity contracts | Other current liabilities | (85,040 | ) | (23,787 | ) | (108,827 | ) | ||||||
Noncurrent commodity contracts | Deferred credits and other liabilities | — | (4,999 | ) | (4,999 | ) | |||||||
Total | (85,040 | ) | (7,562 | ) | (92,602 | ) | |||||||
Not Designated As Hedges: | |||||||||||||
Asset Financial Instruments | |||||||||||||
Current commodity contracts | Other current assets(1) | 7,082 | 98,393 | 105,475 | |||||||||
Noncurrent commodity contracts | Deferred charges and other assets | 2,283 | 60,932 | 63,215 | |||||||||
Liability Financial Instruments | |||||||||||||
Current commodity contracts | Other current liabilities(2) | (585 | ) | (99,824 | ) | (100,409 | ) | ||||||
Noncurrent commodity contracts | Deferred credits and other liabilities | — | (67,062 | ) | (67,062 | ) | |||||||
Total | 8,780 | (7,561 | ) | 1,219 | |||||||||
Total Financial Instruments | $ | (76,260 | ) | $ | (15,123 | ) | $ | (91,383 | ) |
(1) | Other current assets not designated as hedges in our natural gas distribution segment include $0.1 million related to risk management assets that were classified as assets held for sale at September 30, 2012. |
(2) | Other current liabilities not designated as hedges in our natural gas distribution segment include $0.3 million related to risk management liabilities that were classified as liabilities held for sale at September 30, 2012. |
Three Months Ended June 30 | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
Commodity contracts | $ | 14,453 | $ | (14,942 | ) | ||
Fair value adjustment for natural gas inventory designated as the hedged item | (15,143 | ) | 34,296 | ||||
Total (increase) decrease in purchased gas cost | $ | (690 | ) | $ | 19,354 | ||
The (increase) decrease in purchased gas cost is comprised of the following: | |||||||
Basis ineffectiveness | $ | (2,361 | ) | $ | 2,077 | ||
Timing ineffectiveness | 1,671 | 17,277 | |||||
$ | (690 | ) | $ | 19,354 |
Nine Months Ended June 30 | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
Commodity contracts | $ | 3,921 | $ | 38,211 | |||
Fair value adjustment for natural gas inventory designated as the hedged item | 13,261 | (16,039 | ) | ||||
Total decrease in purchased gas cost | $ | 17,182 | $ | 22,172 | |||
The decrease in purchased gas cost is comprised of the following: | |||||||
Basis ineffectiveness | $ | (1,143 | ) | $ | 2,179 | ||
Timing ineffectiveness | 18,325 | 19,993 | |||||
$ | 17,182 | $ | 22,172 |
Three Months Ended June 30, 2013 | |||||||||||
Natural Gas Distribution | Nonregulated | Consolidated | |||||||||
(In thousands) | |||||||||||
Gain reclassified from AOCI for effective portion of commodity contracts | $ | — | $ | 558 | $ | 558 | |||||
Gain arising from ineffective portion of commodity contracts | — | 260 | 260 | ||||||||
Total impact on purchased gas cost | — | 818 | 818 | ||||||||
Loss on settled interest rate agreements reclassified from AOCI into interest expense | (1,057 | ) | — | (1,057 | ) | ||||||
Total Impact from Cash Flow Hedges | $ | (1,057 | ) | $ | 818 | $ | (239 | ) |
Three Months Ended June 30, 2012 | |||||||||||
Natural Gas Distribution | Nonregulated | Consolidated | |||||||||
(In thousands) | |||||||||||
Loss reclassified from AOCI for effective portion of commodity contracts | $ | — | $ | (19,534 | ) | $ | (19,534 | ) | |||
Loss arising from ineffective portion of commodity contracts | — | (328 | ) | (328 | ) | ||||||
Total impact on purchased gas cost | — | (19,862 | ) | (19,862 | ) | ||||||
Loss on settled interest rate agreements reclassified from AOCI into interest expense | (502 | ) | — | (502 | ) | ||||||
Total Impact from Cash Flow Hedges | $ | (502 | ) | $ | (19,862 | ) | $ | (20,364 | ) |
Nine Months Ended June 30, 2013 | |||||||||||
Natural Gas Distribution | Nonregulated | Consolidated | |||||||||
(In thousands) | |||||||||||
Loss reclassified from AOCI for effective portion of commodity contracts | $ | — | $ | (9,802 | ) | $ | (9,802 | ) | |||
Gain arising from ineffective portion of commodity contracts | — | 158 | 158 | ||||||||
Total impact on purchased gas cost | — | (9,644 | ) | (9,644 | ) | ||||||
Loss on settled interest rate agreements reclassified from AOCI into interest expense | (2,432 | ) | — | (2,432 | ) | ||||||
Total Impact from Cash Flow Hedges | $ | (2,432 | ) | $ | (9,644 | ) | $ | (12,076 | ) |
Nine Months Ended June 30, 2012 | |||||||||||
Natural Gas Distribution | Nonregulated | Consolidated | |||||||||
(In thousands) | |||||||||||
Loss reclassified from AOCI for effective portion of commodity contracts | $ | — | $ | (52,358 | ) | $ | (52,358 | ) | |||
Loss arising from ineffective portion of commodity contracts | — | (996 | ) | (996 | ) | ||||||
Total impact on purchased gas cost | — | (53,354 | ) | (53,354 | ) | ||||||
Loss on settled interest rate agreements reclassified from AOCI into interest expense | (1,506 | ) | — | (1,506 | ) | ||||||
Total Impact from Cash Flow Hedges | $ | (1,506 | ) | $ | (53,354 | ) | $ | (54,860 | ) |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||||
Increase (decrease) in fair value: | |||||||||||||||
Interest rate agreements | $ | 30,408 | $ | (31,644 | ) | $ | 65,308 | $ | (17,968 | ) | |||||
Forward commodity contracts | (3,168 | ) | 5,914 | (1,015 | ) | (35,998 | ) | ||||||||
Recognition of (gains) losses in earnings due to settlements: | |||||||||||||||
Interest rate agreements | 671 | 316 | 1,544 | 949 | |||||||||||
Forward commodity contracts | (340 | ) | 11,916 | 5,980 | 31,938 | ||||||||||
Total other comprehensive income (loss) from hedging, net of tax(1) | $ | 27,571 | $ | (13,498 | ) | $ | 71,817 | $ | (21,079 | ) |
(1) | Utilizing an income tax rate ranging from 37 percent to 39 percent based on the effective rates in each taxing jurisdiction. |
Interest Rate Agreements | Commodity Contracts | Total | |||||||||
(In thousands) | |||||||||||
Next twelve months | $ | (2,686 | ) | $ | (3,133 | ) | $ | (5,819 | ) | ||
Thereafter | (28,350 | ) | (897 | ) | (29,247 | ) | |||||
Total(1) | $ | (31,036 | ) | $ | (4,030 | ) | $ | (35,066 | ) |
(1) | Utilizing an income tax rate ranging from 37 percent to 39 percent based on the effective rates in each taxing jurisdiction. |
Available- for-Sale Securities | Interest Rate Agreement Cash Flow Hedges | Commodity Contracts Cash Flow Hedges | Total | ||||||||||||
(In thousands) | |||||||||||||||
September 30, 2012 | $ | 5,661 | $ | (44,273 | ) | $ | (8,995 | ) | $ | (47,607 | ) | ||||
Other comprehensive income before reclassifications | 449 | 65,308 | (1,015 | ) | 64,742 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | (1,370 | ) | 1,544 | 5,980 | 6,154 | ||||||||||
Net current-period other comprehensive income | (921 | ) | 66,852 | 4,965 | 70,896 | ||||||||||
June 30, 2013 | $ | 4,740 | $ | 22,579 | $ | (4,030 | ) | $ | 23,289 |
Three Months Ended June 30, 2013 | |||||
Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Statement of Income | |||
(In thousands) | |||||
Available-for-sale securities | $ | (531 | ) | Operation and maintenance expense | |
(531 | ) | Total before tax | |||
193 | Tax benefit | ||||
$ | (338 | ) | Net of tax | ||
Cash flow hedges | |||||
Interest rate agreements | $ | (1,057 | ) | Interest charges | |
Commodity contracts | 558 | Purchased gas cost | |||
(499 | ) | Total before tax | |||
168 | Tax benefit | ||||
$ | (331 | ) | Net of tax | ||
Total reclassifications | $ | (669 | ) | Net of tax |
Nine Months Ended June 30, 2013 | |||||
Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Statement of Income | |||
(In thousands) | |||||
Available-for-sale securities | $ | 2,158 | Operation and maintenance expense | ||
2,158 | Total before tax | ||||
(788 | ) | Tax expense | |||
$ | 1,370 | Net of tax | |||
Cash flow hedges | |||||
Interest rate agreements | $ | (2,432 | ) | Interest charges | |
Commodity contracts | (9,803 | ) | Purchased gas cost | ||
(12,235 | ) | Total before tax | |||
4,711 | Tax benefit | ||||
$ | (7,524 | ) | Net of tax | ||
Total reclassifications | $ | (6,154 | ) | Net of tax |
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2)(1) | Significant Other Unobservable Inputs (Level 3) | Netting and Cash Collateral(2) | June 30, 2013 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Financial instruments | |||||||||||||||||||
Natural gas distribution segment | $ | — | $ | 87,482 | $ | — | $ | — | $ | 87,482 | |||||||||
Nonregulated segment | 1,196 | 130,078 | — | (119,278 | ) | 11,996 | |||||||||||||
Total financial instruments | 1,196 | 217,560 | — | (119,278 | ) | 99,478 | |||||||||||||
Hedged portion of gas stored underground | 76,706 | — | — | — | 76,706 | ||||||||||||||
Available-for-sale securities | |||||||||||||||||||
Money market funds | — | 5,122 | — | — | 5,122 | ||||||||||||||
Registered investment companies | 39,051 | — | — | — | 39,051 | ||||||||||||||
Bonds | — | 27,473 | — | — | 27,473 | ||||||||||||||
Total available-for-sale securities | 39,051 | 32,595 | — | — | 71,646 | ||||||||||||||
Total assets | $ | 116,953 | $ | 250,155 | $ | — | $ | (119,278 | ) | $ | 247,830 | ||||||||
Liabilities: | |||||||||||||||||||
Financial instruments | |||||||||||||||||||
Natural gas distribution segment | $ | — | $ | 1,094 | $ | — | $ | — | $ | 1,094 | |||||||||
Nonregulated segment | 179 | 135,418 | — | (133,530 | ) | 2,067 | |||||||||||||
Total liabilities | $ | 179 | $ | 136,512 | $ | — | $ | (133,530 | ) | $ | 3,161 |
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2)(1) | Significant Other Unobservable Inputs (Level 3) | Netting and Cash Collateral(3) | September 30, 2012 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Financial instruments | |||||||||||||||||||
Natural gas distribution segment | $ | — | $ | 9,365 | $ | — | $ | — | $ | 9,365 | |||||||||
Nonregulated segment | 714 | 179,835 | — | (162,776 | ) | 17,773 | |||||||||||||
Total financial instruments | 714 | 189,200 | — | (162,776 | ) | 27,138 | |||||||||||||
Hedged portion of gas stored underground | 67,192 | — | — | — | 67,192 | ||||||||||||||
Available-for-sale securities | |||||||||||||||||||
Money market funds | — | 1,634 | — | — | 1,634 | ||||||||||||||
Registered investment companies | 40,212 | — | — | — | 40,212 | ||||||||||||||
Bonds | — | 22,552 | — | — | 22,552 | ||||||||||||||
Total available-for-sale securities | 40,212 | 24,186 | — | — | 64,398 | ||||||||||||||
Total assets | $ | 108,118 | $ | 213,386 | $ | — | $ | (162,776 | ) | $ | 158,728 | ||||||||
Liabilities: | |||||||||||||||||||
Financial instruments | |||||||||||||||||||
Natural gas distribution segment | $ | — | $ | 85,625 | $ | — | $ | — | $ | 85,625 | |||||||||
Nonregulated segment | 4,563 | 191,109 | — | (186,451 | ) | 9,221 | |||||||||||||
Total liabilities | $ | 4,563 | $ | 276,734 | $ | — | $ | (186,451 | ) | $ | 94,846 |
(1) | Our Level 2 measurements consist of over-the-counter options and swaps which are valued using a market-based approach in which observable market prices are adjusted for criteria specific to each instrument, such as the strike price, notional amount or basis differences, municipal and corporate bonds which are valued based on the most recent available quoted market prices and money market funds which are valued at cost. |
(2) | This column reflects adjustments to our gross financial instrument assets and liabilities to reflect netting permitted under our master netting agreements and the relevant authoritative accounting literature. In addition, as of June 30, 2013, we had $14.3 million of cash held in margin accounts to collateralize certain financial instruments. Of this amount, $2.5 million was used to offset current risk management liabilities under master netting arrangements and the remaining $11.8 million is classified as current risk management assets. |
(3) | This column reflects adjustments to our gross financial instrument assets and liabilities to reflect netting permitted under our master netting agreements and the relevant authoritative accounting literature. In addition, as of September 30, 2012 we had $23.7 million of cash held in margin accounts to collateralize certain financial instruments. Of this amount, $5.9 million was used to offset current risk management liabilities under master netting arrangements and the remaining $17.8 million is classified as current risk management assets. |
Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
As of June 30, 2013 | |||||||||||||||
Domestic equity mutual funds | $ | 26,993 | $ | 6,611 | $ | — | $ | 33,604 | |||||||
Foreign equity mutual funds | 4,536 | 925 | (14 | ) | 5,447 | ||||||||||
Bonds | 27,390 | 132 | (49 | ) | 27,473 | ||||||||||
Money market funds | 5,122 | — | — | 5,122 | |||||||||||
$ | 64,041 | $ | 7,668 | $ | (63 | ) | $ | 71,646 | |||||||
As of September 30, 2012 | |||||||||||||||
Domestic equity mutual funds | $ | 25,779 | $ | 8,183 | $ | — | $ | 33,962 | |||||||
Foreign equity mutual funds | 5,568 | 682 | — | 6,250 | |||||||||||
Bonds | 22,358 | 196 | (2 | ) | 22,552 | ||||||||||
Money market funds | 1,634 | — | — | 1,634 | |||||||||||
$ | 55,339 | $ | 9,061 | $ | (2 | ) | $ | 64,398 |
June 30, 2013 | |||
(In thousands) | |||
Carrying Amount | $ | 2,460,000 | |
Fair Value | $ | 2,707,340 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||||
Operating revenues | $ | — | $ | 18,162 | $ | 37,962 | $ | 103,107 | |||||||
Purchased gas cost | — | 6,803 | 21,464 | 57,936 | |||||||||||
Gross profit | — | 11,359 | 16,498 | 45,171 | |||||||||||
Operating expenses | — | 6,522 | 5,858 | 20,069 | |||||||||||
Operating income | — | 4,837 | 10,640 | 25,102 | |||||||||||
Other nonoperating income | — | 73 | 548 | 505 | |||||||||||
Income from discontinued operations before income taxes | — | 4,910 | 11,188 | 25,607 | |||||||||||
Income tax expense | — | 1,792 | 3,986 | 9,339 | |||||||||||
Income from discontinued operations | — | 3,118 | 7,202 | 16,268 | |||||||||||
Gain on sale of discontinued operations, net of tax | 5,294 | — | 5,294 | — | |||||||||||
Net income from discontinued operations | $ | 5,294 | $ | 3,118 | $ | 12,496 | $ | 16,268 |
September 30, 2012 | |||
(In thousands) | |||
Net plant, property & equipment | $ | 142,865 | |
Gas stored underground | 4,688 | ||
Other current assets | 6,931 | ||
Deferred charges and other assets | 87 | ||
Assets held for sale | $ | 154,571 | |
Accounts payable and accrued liabilities | $ | 2,114 | |
Other current liabilities | 3,776 | ||
Regulatory cost of removal | 3,257 | ||
Deferred credits and other liabilities | 2,426 | ||
Liabilities held for sale | $ | 11,573 |
June 30, 2013 | September 30, 2012 | ||||||
(In thousands) | |||||||
Unsecured 4.95% Senior Notes, due October 2014 | $ | 500,000 | $ | 500,000 | |||
Unsecured 6.35% Senior Notes, due 2017 | 250,000 | 250,000 | |||||
Unsecured 8.50% Senior Notes, due 2019 | 450,000 | 450,000 | |||||
Unsecured 5.95% Senior Notes, due 2034 | 200,000 | 200,000 | |||||
Unsecured 5.50% Senior Notes, due 2041 | 400,000 | 400,000 | |||||
Unsecured 4.15% Senior Notes, due 2043 | 500,000 | — | |||||
Medium term note Series A, 1995-1, 6.67%, due 2025 | 10,000 | 10,000 | |||||
Unsecured 6.75% Debentures, due 2028 | 150,000 | 150,000 | |||||
Rental property term note due in installments through 2013 | — | 131 | |||||
Total long-term debt | 2,460,000 | 1,960,131 | |||||
Less: | |||||||
Original issue discount on unsecured senior notes and debentures | 4,407 | 3,695 | |||||
Current maturities | — | 131 | |||||
$ | 2,455,593 | $ | 1,956,305 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Basic Earnings Per Share from continuing operations | |||||||||||||||
Income from continuing operations | $ | 33,474 | $ | 28,014 | $ | 223,162 | $ | 192,482 | |||||||
Less: Income from continuing operations allocated to participating securities | 91 | 116 | 760 | 808 | |||||||||||
Income from continuing operations available to common shareholders | $ | 33,383 | $ | 27,898 | $ | 222,402 | $ | 191,674 | |||||||
Basic weighted average shares outstanding | 90,603 | 90,118 | 90,497 | 90,131 | |||||||||||
Income from continuing operations per share — Basic | $ | 0.37 | $ | 0.31 | $ | 2.46 | $ | 2.13 | |||||||
Basic Earnings Per Share from discontinued operations | |||||||||||||||
Income from discontinued operations | $ | 5,294 | $ | 3,118 | $ | 12,496 | $ | 16,268 | |||||||
Less: Income from discontinued operations allocated to participating securities | 14 | 13 | 43 | 68 | |||||||||||
Income from discontinued operations available to common shareholders | $ | 5,280 | $ | 3,105 | $ | 12,453 | $ | 16,200 | |||||||
Basic weighted average shares outstanding | 90,603 | 90,118 | 90,497 | 90,131 | |||||||||||
Income from discontinued operations per share — Basic | $ | 0.06 | $ | 0.03 | $ | 0.14 | $ | 0.18 | |||||||
Net income per share — Basic | $ | 0.43 | $ | 0.34 | $ | 2.60 | $ | 2.31 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Diluted Earnings Per Share from continuing operations | |||||||||||||||
Income from continuing operations available to common shareholders | $ | 33,383 | $ | 27,898 | $ | 222,402 | $ | 191,674 | |||||||
Effect of dilutive stock options and other shares | — | — | 5 | 4 | |||||||||||
Income from continuing operations available to common shareholders | $ | 33,383 | $ | 27,898 | $ | 222,407 | $ | 191,678 | |||||||
Basic weighted average shares outstanding | 90,603 | 90,118 | 90,497 | 90,131 | |||||||||||
Additional dilutive stock options and other shares | 947 | 875 | 948 | 875 | |||||||||||
Diluted weighted average shares outstanding | 91,550 | 90,993 | 91,445 | 91,006 | |||||||||||
Income from continuing operations per share — Diluted | $ | 0.36 | $ | 0.31 | $ | 2.43 | $ | 2.10 | |||||||
Diluted Earnings Per Share from discontinued operations | |||||||||||||||
Income from discontinued operations available to common shareholders | $ | 5,280 | $ | 3,105 | $ | 12,453 | $ | 16,200 | |||||||
Effect of dilutive stock options and other shares | — | — | — | — | |||||||||||
Income from discontinued operations available to common shareholders | $ | 5,280 | $ | 3,105 | $ | 12,453 | $ | 16,200 | |||||||
Basic weighted average shares outstanding | 90,603 | 90,118 | 90,497 | 90,131 | |||||||||||
Additional dilutive stock options and other shares | 947 | 875 | 948 | 875 | |||||||||||
Diluted weighted average shares outstanding | 91,550 | 90,993 | 91,445 | 91,006 | |||||||||||
Income from discontinued operations per share — Diluted | $ | 0.06 | $ | 0.03 | $ | 0.14 | $ | 0.18 | |||||||
Net income per share — Diluted | $ | 0.42 | $ | 0.34 | $ | 2.57 | $ | 2.28 |
Three Months Ended June 30 | |||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||||
Components of net periodic pension cost: | |||||||||||||||
Service cost | $ | 5,194 | $ | 4,297 | $ | 4,700 | $ | 4,089 | |||||||
Interest cost | 6,019 | 6,677 | 3,241 | 3,465 | |||||||||||
Expected return on assets | (5,739 | ) | (5,368 | ) | (997 | ) | (651 | ) | |||||||
Amortization of transition asset | — | — | 271 | 377 | |||||||||||
Amortization of prior service cost | (35 | ) | (35 | ) | (363 | ) | (362 | ) | |||||||
Amortization of actuarial loss | 5,432 | 4,142 | 1,049 | 662 | |||||||||||
Curtailment | 3,161 | — | — | — | |||||||||||
Net periodic pension cost | $ | 14,032 | $ | 9,713 | $ | 7,901 | $ | 7,580 |
Nine Months Ended June 30 | |||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||||
Components of net periodic pension cost: | |||||||||||||||
Service cost | $ | 15,599 | $ | 12,893 | $ | 14,100 | $ | 12,265 | |||||||
Interest cost | 18,067 | 20,032 | 9,723 | 10,396 | |||||||||||
Expected return on assets | (17,216 | ) | (16,105 | ) | (2,991 | ) | (1,955 | ) | |||||||
Amortization of transition asset | — | — | 811 | 1,133 | |||||||||||
Amortization of prior service cost | (106 | ) | (106 | ) | (1,088 | ) | (1,087 | ) | |||||||
Amortization of actuarial loss | 16,555 | 12,427 | 3,147 | 1,986 | |||||||||||
Curtailment | 3,161 | — | — | — | |||||||||||
Net periodic pension cost | $ | 36,060 | $ | 29,141 | $ | 23,702 | $ | 22,738 |
Supplemental Executive Benefit Plans | Pension Benefits | Other Benefits | |||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Discount rate | 4.21 | % | 5.05 | % | 4.04 | % | 5.05 | % | 4.04 | % | 5.05 | % | |||||
Rate of compensation increase | 3.50 | % | 3.50 | % | 3.50 | % | 3.50 | % | N/A | N/A | |||||||
Expected return on plan assets | N/A | N/A | 7.75 | % | 7.75 | % | 4.70 | % | 4.70 | % |
2013 | $ | 32,791 | |
2014 | 237,444 | ||
2015 | — | ||
2016 | — | ||
2017 | — | ||
Thereafter | — | ||
$ | 270,235 |
• | The natural gas distribution segment, which includes our regulated natural gas distribution and related sales operations, |
• | The regulated transmission and storage segment, which includes the regulated pipeline and storage operations of our Atmos Pipeline — Texas Division and |
• | The nonregulated segment, which is comprised of our nonregulated natural gas management, nonregulated natural gas transmission, storage and other services. |
Three Months Ended June 30, 2013 | |||||||||||||||||||
Natural Gas Distribution | Regulated Transmission and Storage | Nonregulated | Eliminations | Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Operating revenues from external parties | $ | 465,982 | $ | 26,730 | $ | 365,223 | $ | — | $ | 857,935 | |||||||||
Intersegment revenues | 1,162 | 47,311 | 56,585 | (105,058 | ) | — | |||||||||||||
467,144 | 74,041 | 421,808 | (105,058 | ) | 857,935 | ||||||||||||||
Purchased gas cost | 227,649 | — | 418,548 | (104,759 | ) | 541,438 | |||||||||||||
Gross profit | 239,495 | 74,041 | 3,260 | (299 | ) | 316,497 | |||||||||||||
Operating expenses | |||||||||||||||||||
Operation and maintenance | 93,490 | 17,035 | 11,034 | (301 | ) | 121,258 | |||||||||||||
Depreciation and amortization | 48,368 | 8,676 | 1,085 | — | 58,129 | ||||||||||||||
Taxes, other than income | 45,686 | 4,287 | 741 | — | 50,714 | ||||||||||||||
Total operating expenses | 187,544 | 29,998 | 12,860 | (301 | ) | 230,101 | |||||||||||||
Operating income (loss) | 51,951 | 44,043 | (9,600 | ) | 2 | 86,396 | |||||||||||||
Miscellaneous income (expense) | 268 | (247 | ) | 215 | (703 | ) | (467 | ) | |||||||||||
Interest charges | 25,001 | 8,049 | 392 | (701 | ) | 32,741 | |||||||||||||
Income (loss) from continuing operations before income taxes | 27,218 | 35,747 | (9,777 | ) | — | 53,188 | |||||||||||||
Income tax expense (benefit) | 11,401 | 12,650 | (4,337 | ) | — | 19,714 | |||||||||||||
Income (loss) from continuing operations | 15,817 | 23,097 | (5,440 | ) | — | 33,474 | |||||||||||||
Income from discontinued operations, net of tax | — | — | — | — | — | ||||||||||||||
Gain (loss) on sale of discontinued operations, net of tax | 5,649 | — | (355 | ) | — | 5,294 | |||||||||||||
Net income (loss) | $ | 21,466 | $ | 23,097 | $ | (5,795 | ) | $ | — | $ | 38,768 | ||||||||
Capital expenditures | $ | 114,606 | $ | 78,012 | $ | 738 | $ | — | $ | 193,356 |
Three Months Ended June 30, 2012 | |||||||||||||||||||
Natural Gas Distribution | Regulated Transmission and Storage | Nonregulated | Eliminations | Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Operating revenues from external parties | $ | 315,420 | $ | 26,551 | $ | 234,443 | $ | — | $ | 576,414 | |||||||||
Intersegment revenues | 214 | 40,522 | 21,807 | (62,543 | ) | — | |||||||||||||
315,634 | 67,073 | 256,250 | (62,543 | ) | 576,414 | ||||||||||||||
Purchased gas cost | 120,575 | — | 224,829 | (62,161 | ) | 283,243 | |||||||||||||
Gross profit | 195,059 | 67,073 | 31,421 | (382 | ) | 293,171 | |||||||||||||
Operating expenses | |||||||||||||||||||
Operation and maintenance | 82,224 | 16,427 | 7,777 | (383 | ) | 106,045 | |||||||||||||
Depreciation and amortization | 50,157 | 7,797 | 1,002 | — | 58,956 | ||||||||||||||
Taxes, other than income | 42,011 | 3,839 | 774 | — | 46,624 | ||||||||||||||
Total operating expenses | 174,392 | 28,063 | 9,553 | (383 | ) | 211,625 | |||||||||||||
Operating income | 20,667 | 39,010 | 21,868 | 1 | 81,546 | ||||||||||||||
Miscellaneous income (expense) | (1,053 | ) | (298 | ) | 136 | (860 | ) | (2,075 | ) | ||||||||||
Interest charges | 27,820 | 7,353 | 595 | (859 | ) | 34,909 | |||||||||||||
Income (loss) from continuing operations before income taxes | (8,206 | ) | 31,359 | 21,409 | — | 44,562 | |||||||||||||
Income tax expense (benefit) | (3,299 | ) | 11,215 | 8,632 | — | 16,548 | |||||||||||||
Income (loss) from continuing operations | (4,907 | ) | 20,144 | 12,777 | — | 28,014 | |||||||||||||
Income from discontinued operations, net of tax | 3,118 | — | — | — | 3,118 | ||||||||||||||
Net income (loss) | $ | (1,789 | ) | $ | 20,144 | $ | 12,777 | $ | — | $ | 31,132 | ||||||||
Capital expenditures | $ | 149,531 | $ | 34,191 | $ | 2,529 | $ | — | $ | 186,251 |
Nine Months Ended June 30, 2013 | |||||||||||||||||||
Natural Gas Distribution | Regulated Transmission and Storage | Nonregulated | Eliminations | Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Operating revenues from external parties | $ | 2,035,712 | $ | 65,084 | $ | 1,100,290 | $ | — | $ | 3,201,086 | |||||||||
Intersegment revenues | 3,395 | 131,486 | 150,360 | (285,241 | ) | — | |||||||||||||
2,039,107 | 196,570 | 1,250,650 | (285,241 | ) | 3,201,086 | ||||||||||||||
Purchased gas cost | 1,172,975 | — | 1,200,624 | (284,123 | ) | 2,089,476 | |||||||||||||
Gross profit | 866,132 | 196,570 | 50,026 | (1,118 | ) | 1,111,610 | |||||||||||||
Operating expenses | |||||||||||||||||||
Operation and maintenance | 266,570 | 48,745 | 24,679 | (1,123 | ) | 338,871 | |||||||||||||
Depreciation and amortization | 146,059 | 25,756 | 3,073 | — | 174,888 | ||||||||||||||
Taxes, other than income | 132,029 | 12,513 | 1,813 | — | 146,355 | ||||||||||||||
Total operating expenses | 544,658 | 87,014 | 29,565 | (1,123 | ) | 660,114 | |||||||||||||
Operating income | 321,474 | 109,556 | 20,461 | 5 | 451,496 | ||||||||||||||
Miscellaneous income (expense) | 2,728 | (473 | ) | 1,791 | (2,103 | ) | 1,943 | ||||||||||||
Interest charges | 74,228 | 22,777 | 1,687 | (2,098 | ) | 96,594 | |||||||||||||
Income from continuing operations before income taxes | 249,974 | 86,306 | 20,565 | — | 356,845 | ||||||||||||||
Income tax expense | 94,874 | 30,574 | 8,235 | — | 133,683 | ||||||||||||||
Income from continuing operations | 155,100 | 55,732 | 12,330 | — | 223,162 | ||||||||||||||
Income from discontinued operations, net of tax | 7,202 | — | — | — | 7,202 | ||||||||||||||
Gain (loss) on sale of discontinued operations, net of tax | 5,649 | — | (355 | ) | — | 5,294 | |||||||||||||
Net income | $ | 167,951 | $ | 55,732 | $ | 11,975 | $ | — | $ | 235,658 | |||||||||
Capital expenditures | $ | 391,942 | $ | 189,051 | $ | 1,480 | $ | — | $ | 582,473 |
Nine Months Ended June 30, 2012 | |||||||||||||||||||
Natural Gas Distribution | Regulated Transmission and Storage | Nonregulated | Eliminations | Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
Operating revenues from external parties | $ | 1,862,053 | $ | 66,421 | $ | 957,443 | $ | — | $ | 2,885,917 | |||||||||
Intersegment revenues | 761 | 115,448 | 113,746 | (229,955 | ) | — | |||||||||||||
1,862,814 | 181,869 | 1,071,189 | (229,955 | ) | 2,885,917 | ||||||||||||||
Purchased gas cost | 1,011,832 | — | 1,028,592 | (228,857 | ) | 1,811,567 | |||||||||||||
Gross profit | 850,982 | 181,869 | 42,597 | (1,098 | ) | 1,074,350 | |||||||||||||
Operating expenses | |||||||||||||||||||
Operation and maintenance | 262,255 | 49,239 | 19,597 | (1,102 | ) | 329,989 | |||||||||||||
Depreciation and amortization | 151,042 | 23,240 | 2,460 | — | 176,742 | ||||||||||||||
Taxes, other than income | 130,232 | 11,538 | 2,400 | — | 144,170 | ||||||||||||||
Total operating expenses | 543,529 | 84,017 | 24,457 | (1,102 | ) | 650,901 | |||||||||||||
Operating income | 307,453 | 97,852 | 18,140 | 4 | 423,449 | ||||||||||||||
Miscellaneous income (expense) | (2,327 | ) | (634 | ) | 739 | (1,363 | ) | (3,585 | ) | ||||||||||
Interest charges | 84,775 | 22,176 | 1,686 | (1,359 | ) | 107,278 | |||||||||||||
Income from continuing operations before income taxes | 220,351 | 75,042 | 17,193 | — | 312,586 | ||||||||||||||
Income tax expense | 86,282 | 26,864 | 6,958 | — | 120,104 | ||||||||||||||
Income from continuing operations | 134,069 | 48,178 | 10,235 | — | 192,482 | ||||||||||||||
Income from discontinued operations, net of tax | 16,268 | — | — | — | 16,268 | ||||||||||||||
Net income | $ | 150,337 | $ | 48,178 | $ | 10,235 | $ | — | $ | 208,750 | |||||||||
Capital expenditures | $ | 392,666 | $ | 97,182 | $ | 7,526 | $ | — | $ | 497,374 |
June 30, 2013 | |||||||||||||||||||
Natural Gas Distribution | Regulated Transmission and Storage | Nonregulated | Eliminations | Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Property, plant and equipment, net | $ | 4,646,302 | $ | 1,134,633 | $ | 60,280 | $ | — | $ | 5,841,215 | |||||||||
Investment in subsidiaries | 819,806 | — | (2,096 | ) | (817,710 | ) | — | ||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | 5,870 | — | 26,109 | — | 31,979 | ||||||||||||||
Assets from risk management activities | 2,015 | — | 11,996 | — | 14,011 | ||||||||||||||
Other current assets | 413,030 | 15,941 | 503,007 | (295,715 | ) | 636,263 | |||||||||||||
Intercompany receivables | 685,107 | — | — | (685,107 | ) | — | |||||||||||||
Total current assets | 1,106,022 | 15,941 | 541,112 | (980,822 | ) | 682,253 | |||||||||||||
Intangible assets | — | — | 131 | — | 131 | ||||||||||||||
Goodwill | 573,550 | 132,422 | 34,711 | — | 740,683 | ||||||||||||||
Noncurrent assets from risk management activities | 85,467 | — | — | — | 85,467 | ||||||||||||||
Deferred charges and other assets | 426,179 | 18,380 | 8,490 | — | 453,049 | ||||||||||||||
$ | 7,657,326 | $ | 1,301,376 | $ | 642,628 | $ | (1,798,532 | ) | $ | 7,802,798 | |||||||||
CAPITALIZATION AND LIABILITIES | |||||||||||||||||||
Shareholders’ equity | $ | 2,581,444 | $ | 383,895 | $ | 435,911 | $ | (819,806 | ) | $ | 2,581,444 | ||||||||
Long-term debt | 2,455,593 | — | — | — | 2,455,593 | ||||||||||||||
Total capitalization | 5,037,037 | 383,895 | 435,911 | (819,806 | ) | 5,037,037 | |||||||||||||
Current liabilities | |||||||||||||||||||
Current maturities of long-term debt | — | — | — | — | — | ||||||||||||||
Short-term debt | 419,298 | — | — | (277,300 | ) | 141,998 | |||||||||||||
Liabilities from risk management activities | 1,094 | — | 3 | — | 1,097 | ||||||||||||||
Other current liabilities | 446,483 | 9,983 | 137,338 | (16,319 | ) | 577,485 | |||||||||||||
Intercompany payables | — | 627,933 | 57,174 | (685,107 | ) | — | |||||||||||||
Total current liabilities | 866,875 | 637,916 | 194,515 | (978,726 | ) | 720,580 | |||||||||||||
Deferred income taxes | 909,925 | 278,898 | 8,451 | — | 1,197,274 | ||||||||||||||
Noncurrent liabilities from risk management activities | — | — | 2,064 | — | 2,064 | ||||||||||||||
Regulatory cost of removal obligation | 360,578 | — | — | — | 360,578 | ||||||||||||||
Deferred credits and other liabilities | 482,911 | 667 | 1,687 | — | 485,265 | ||||||||||||||
$ | 7,657,326 | $ | 1,301,376 | $ | 642,628 | $ | (1,798,532 | ) | $ | 7,802,798 |
September 30, 2012 | |||||||||||||||||||
Natural Gas Distribution | Regulated Transmission and Storage | Nonregulated | Eliminations | Consolidated | |||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Property, plant and equipment, net | $ | 4,432,017 | $ | 979,443 | $ | 64,144 | $ | — | $ | 5,475,604 | |||||||||
Investment in subsidiaries | 747,496 | — | (2,096 | ) | (745,400 | ) | — | ||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | 12,787 | — | 51,452 | — | 64,239 | ||||||||||||||
Assets from risk management activities | 6,934 | — | 17,773 | — | 24,707 | ||||||||||||||
Other current assets | 546,187 | 11,788 | 404,097 | (223,056 | ) | 739,016 | |||||||||||||
Intercompany receivables | 636,557 | — | — | (636,557 | ) | — | |||||||||||||
Total current assets | 1,202,465 | 11,788 | 473,322 | (859,613 | ) | 827,962 | |||||||||||||
Intangible assets | — | — | 164 | — | 164 | ||||||||||||||
Goodwill | 573,550 | 132,422 | 34,711 | — | 740,683 | ||||||||||||||
Noncurrent assets from risk management activities | 2,283 | — | — | — | 2,283 | ||||||||||||||
Deferred charges and other assets | 417,893 | 24,353 | 6,733 | — | 448,979 | ||||||||||||||
$ | 7,375,704 | $ | 1,148,006 | $ | 576,978 | $ | (1,605,013 | ) | $ | 7,495,675 | |||||||||
CAPITALIZATION AND LIABILITIES | |||||||||||||||||||
Shareholders’ equity | $ | 2,359,243 | $ | 328,161 | $ | 419,335 | $ | (747,496 | ) | $ | 2,359,243 | ||||||||
Long-term debt | 1,956,305 | — | — | — | 1,956,305 | ||||||||||||||
Total capitalization | 4,315,548 | 328,161 | 419,335 | (747,496 | ) | 4,315,548 | |||||||||||||
Current liabilities | |||||||||||||||||||
Current maturities of long-term debt | — | — | 131 | — | 131 | ||||||||||||||
Short-term debt | 782,719 | — | — | (211,790 | ) | 570,929 | |||||||||||||
Liabilities from risk management activities | 85,366 | — | 15 | — | 85,381 | ||||||||||||||
Other current liabilities | 526,089 | 12,478 | 90,116 | (9,170 | ) | 619,513 | |||||||||||||
Intercompany payables | — | 584,578 | 51,979 | (636,557 | ) | — | |||||||||||||
Total current liabilities | 1,394,174 | 597,056 | 142,241 | (857,517 | ) | 1,275,954 | |||||||||||||
Deferred income taxes | 789,288 | 220,647 | 5,148 | — | 1,015,083 | ||||||||||||||
Noncurrent liabilities from risk management activities | — | — | 9,206 | — | 9,206 | ||||||||||||||
Regulatory cost of removal obligation | 381,164 | — | — | — | 381,164 | ||||||||||||||
Deferred credits and other liabilities | 495,530 | 2,142 | 1,048 | — | 498,720 | ||||||||||||||
$ | 7,375,704 | $ | 1,148,006 | $ | 576,978 | $ | (1,605,013 | ) | $ | 7,495,675 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | the natural gas distribution segment, which includes our regulated natural gas distribution and related sales operations, |
• | the regulated transmission and storage segment, which includes the regulated pipeline and storage operations of our Atmos Pipeline — Texas Division and |
• | the nonregulated segment, which includes our nonregulated natural gas management, nonregulated natural gas transmission, storage and other services. |
• | Regulation |
• | Unbilled revenue |
• | Financial instruments and hedging activities |
• | Fair value measurements |
• | Impairment assessments |
• | Pension and other postretirement plans |
• | Contingencies |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Operating revenues | $ | 857,935 | $ | 576,414 | $ | 3,201,086 | $ | 2,885,917 | |||||||
Gross profit | 316,497 | 293,171 | 1,111,610 | 1,074,350 | |||||||||||
Operating expenses | 230,101 | 211,625 | 660,114 | 650,901 | |||||||||||
Operating income | 86,396 | 81,546 | 451,496 | 423,449 | |||||||||||
Miscellaneous income (expense) | (467 | ) | (2,075 | ) | 1,943 | (3,585 | ) | ||||||||
Interest charges | 32,741 | 34,909 | 96,594 | 107,278 | |||||||||||
Income from continuing operations before income taxes | 53,188 | 44,562 | 356,845 | 312,586 | |||||||||||
Income tax expense | 19,714 | 16,548 | 133,683 | 120,104 | |||||||||||
Income from continuing operations | 33,474 | 28,014 | 223,162 | 192,482 | |||||||||||
Income from discontinued operations, net of tax | — | 3,118 | 7,202 | 16,268 | |||||||||||
Gain on sale of discontinued operations, net of tax | 5,294 | — | 5,294 | — | |||||||||||
Net income | $ | 38,768 | $ | 31,132 | $ | 235,658 | $ | 208,750 | |||||||
Diluted net income per share from continuing operations | $ | 0.36 | $ | 0.31 | $ | 2.43 | $ | 2.10 | |||||||
Diluted net income per share from discontinued operations | 0.06 | 0.03 | 0.14 | 0.18 | |||||||||||
Diluted net income per share | $ | 0.42 | $ | 0.34 | $ | 2.57 | $ | 2.28 |
Three Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands) | |||||||||||
Natural gas distribution segment from continuing operations | $ | 15,817 | $ | (4,907 | ) | $ | 20,724 | ||||
Regulated transmission and storage segment | 23,097 | 20,144 | 2,953 | ||||||||
Nonregulated segment | (5,440 | ) | 12,777 | (18,217 | ) | ||||||
Net income from continuing operations | 33,474 | 28,014 | 5,460 | ||||||||
Net income from discontinued operations | 5,294 | 3,118 | 2,176 | ||||||||
Net income | $ | 38,768 | $ | 31,132 | $ | 7,636 |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands) | |||||||||||
Natural gas distribution segment from continuing operations | $ | 155,100 | $ | 134,069 | $ | 21,031 | |||||
Regulated transmission and storage segment | 55,732 | 48,178 | 7,554 | ||||||||
Nonregulated segment | 12,330 | 10,235 | 2,095 | ||||||||
Net income from continuing operations | 223,162 | 192,482 | 30,680 | ||||||||
Net income from discontinued operations | 12,496 | 16,268 | (3,772 | ) | |||||||
Net income | $ | 235,658 | $ | 208,750 | $ | 26,908 |
Three Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, except per share data) | |||||||||||
Regulated operations | $ | 38,914 | $ | 15,237 | $ | 23,677 | |||||
Nonregulated operations | (5,440 | ) | 12,777 | (18,217 | ) | ||||||
Net income from continuing operations | 33,474 | 28,014 | 5,460 | ||||||||
Net income from discontinued operations | 5,294 | 3,118 | 2,176 | ||||||||
Net income | $ | 38,768 | $ | 31,132 | $ | 7,636 | |||||
Diluted EPS from continuing regulated operations | $ | 0.42 | $ | 0.17 | $ | 0.25 | |||||
Diluted EPS from nonregulated operations | (0.06 | ) | 0.14 | (0.20 | ) | ||||||
Diluted EPS from continuing operations | 0.36 | 0.31 | 0.05 | ||||||||
Diluted EPS from discontinued operations | 0.06 | 0.03 | 0.03 | ||||||||
Consolidated diluted EPS | $ | 0.42 | $ | 0.34 | $ | 0.08 |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, except per share data) | |||||||||||
Regulated operations | $ | 210,832 | 182,247 | $ | 28,585 | ||||||
Nonregulated operations | 12,330 | 10,235 | 2,095 | ||||||||
Net income from continuing operations | 223,162 | 192,482 | 30,680 | ||||||||
Net income from discontinued operations | 12,496 | 16,268 | (3,772 | ) | |||||||
Net income | $ | 235,658 | $ | 208,750 | $ | 26,908 | |||||
Diluted EPS from continuing regulated operations | $ | 2.30 | $ | 1.99 | $ | 0.31 | |||||
Diluted EPS from nonregulated operations | 0.13 | 0.11 | 0.02 | ||||||||
Diluted EPS from continuing operations | 2.43 | 2.10 | 0.33 | ||||||||
Diluted EPS from discontinued operations | 0.14 | 0.18 | (0.04 | ) | |||||||
Consolidated diluted EPS | $ | 2.57 | $ | 2.28 | $ | 0.29 |
Kansas, West Texas | October — May |
Kentucky, Mississippi, Tennessee, Mid-Tex | November — April |
Louisiana | December — March |
Virginia | January — December |
Three Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, unless otherwise noted) | |||||||||||
Gross profit | $ | 239,495 | $ | 195,059 | $ | 44,436 | |||||
Operating expenses | 187,544 | 174,392 | 13,152 | ||||||||
Operating income | 51,951 | 20,667 | 31,284 | ||||||||
Miscellaneous income (expense) | 268 | (1,053 | ) | 1,321 | |||||||
Interest charges | 25,001 | 27,820 | (2,819 | ) | |||||||
Income (loss) from continuing operations before income taxes | 27,218 | (8,206 | ) | 35,424 | |||||||
Income tax expense (benefit) | 11,401 | (3,299 | ) | 14,700 | |||||||
Income (loss) from continuing operations | 15,817 | (4,907 | ) | 20,724 | |||||||
Income from discontinued operations, net of tax | — | 3,118 | (3,118 | ) | |||||||
Gain on sale of discontinued operations, net of tax | 5,649 | — | 5,649 | ||||||||
Net income (loss) | $ | 21,466 | $ | (1,789 | ) | $ | 23,255 | ||||
Consolidated natural gas distribution sales volumes from continuing operations — MMcf | 43,190 | 32,535 | 10,655 | ||||||||
Consolidated natural gas distribution transportation volumes from continuing operations — MMcf | 29,179 | 29,856 | (677 | ) | |||||||
Consolidated natural gas distribution throughput from continuing operations — MMcf | 72,369 | 62,391 | 9,978 | ||||||||
Consolidated natural gas distribution throughput from discontinued operations — MMcf | — | 3,309 | (3,309 | ) | |||||||
Total consolidated natural gas distribution throughput — MMcf | 72,369 | 65,700 | 6,669 | ||||||||
Consolidated natural gas distribution average transportation revenue per Mcf | $ | 0.45 | $ | 0.43 | $ | 0.02 | |||||
Consolidated natural gas distribution average cost of gas per Mcf sold | $ | 5.27 | $ | 3.73 | $ | 1.54 |
• | $28.6 million increase from rate design changes and rate increases, primarily in the Mid-Tex and West Texas Divisions. |
• | $10.5 million increase due to colder weather experienced across most of our service territories after the weather normalization adjustment period. |
• | $4.8 million increase in labor costs primarily due to less labor capitalized in the current year. |
• | $2.3 million increase in bad debt expense primarily attributable to an increase in revenue arising from the rate design changes and the temporary suspension of active customer collection activities following the implementation of a new customer information system during the current quarter. |
• | $2.6 million increase in pension and postretirement benefit costs. |
• | $1.8 million increase primarily associated with higher line locate activities, pipeline and right-of-way maintenance activities. |
Three Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands) | |||||||||||
Mid-Tex | $ | 30,457 | $ | 5,845 | $ | 24,612 | |||||
Kentucky/Mid-States | 5,498 | 1,946 | 3,552 | ||||||||
Louisiana | 7,543 | 6,880 | 663 | ||||||||
West Texas | 3,678 | 353 | 3,325 | ||||||||
Mississippi | 1,634 | 1,785 | (151 | ) | |||||||
Colorado-Kansas | 2,076 | 1,466 | 610 | ||||||||
Other | 1,065 | 2,392 | (1,327 | ) | |||||||
Total | $ | 51,951 | $ | 20,667 | $ | 31,284 |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, unless otherwise noted) | |||||||||||
Gross profit | $ | 866,132 | $ | 850,982 | $ | 15,150 | |||||
Operating expenses | 544,658 | 543,529 | 1,129 | ||||||||
Operating income | 321,474 | 307,453 | 14,021 | ||||||||
Miscellaneous income (expense) | 2,728 | (2,327 | ) | 5,055 | |||||||
Interest charges | 74,228 | 84,775 | (10,547 | ) | |||||||
Income from continuing operations before income taxes | 249,974 | 220,351 | 29,623 | ||||||||
Income tax expense | 94,874 | 86,282 | 8,592 | ||||||||
Income from continuing operations | 155,100 | 134,069 | 21,031 | ||||||||
Income from discontinued operations, net of tax | 7,202 | 16,268 | (9,066 | ) | |||||||
Gain on sale of discontinued operations, net of tax | 5,649 | — | 5,649 | ||||||||
Net income | $ | 167,951 | $ | 150,337 | $ | 17,614 | |||||
Consolidated natural gas distribution sales volumes from continuing operations — MMcf | 242,066 | 217,322 | 24,744 | ||||||||
Consolidated natural gas distribution transportation volumes from continuing operations — MMcf | 98,608 | 98,374 | 234 | ||||||||
Consolidated natural gas distribution throughput from continuing operations — MMcf | 340,674 | 315,696 | 24,978 | ||||||||
Consolidated natural gas distribution throughput from discontinued operations — MMcf | 4,731 | 16,646 | (11,915 | ) | |||||||
Total consolidated natural gas distribution throughput — MMcf | 345,405 | 332,342 | 13,063 | ||||||||
Consolidated natural gas distribution average transportation revenue per Mcf | $ | 0.45 | $ | 0.44 | $ | 0.01 | |||||
Consolidated natural gas distribution average cost of gas per Mcf sold | $ | 4.86 | $ | 4.70 | $ | 0.16 |
• | $12.5 million increase in rates in our Kentucky/Mid-States, Colorado-Kansas, Mississippi and Louisiana divisions. |
• | $7.4 million increase due to colder weather, primarily in the Mississippi, Kentucky/Mid-States and Colorado-Kansas divisions. |
• | $4.0 million increase in transportation revenues. |
• | $6.6 million increase primarily associated with higher line locate activities, pipeline and right-of-way maintenance activities. |
• | $4.3 million increase in labor costs primarily due to less labor capitalized in the current year. |
• | $2.1 million increase in bad debt expense primarily attributable to an increase in revenue arising from the rate design changes and the temporary suspension of active customer collection activities following the implementation of a new customer information system during the current quarter. |
• | $1.8 million increase in pension and postretirement benefit costs. |
• | $5.6 million decrease in legal and other administrative costs. |
• | $5.0 million decrease in depreciation expense due to new depreciation rates approved in the most recent Mid-Tex rate case that went into effect in January 2013. |
• | $2.4 million gain realized on the sale of certain investments. |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands) | |||||||||||
Mid-Tex | $ | 135,747 | $ | 142,595 | $ | (6,848 | ) | ||||
Kentucky/Mid-States | 45,700 | 32,053 | 13,647 | ||||||||
Louisiana | 48,432 | 44,551 | 3,881 | ||||||||
West Texas | 28,264 | 29,017 | (753 | ) | |||||||
Mississippi | 33,072 | 29,454 | 3,618 | ||||||||
Colorado-Kansas | 27,497 | 23,627 | 3,870 | ||||||||
Other | 2,762 | 6,156 | (3,394 | ) | |||||||
Total | $ | 321,474 | $ | 307,453 | $ | 14,021 |
Rate Action | Annual Increase to Operating Income | |||
(In thousands) | ||||
Rate case filings | $ | 56,700 | ||
Infrastructure programs | 4,206 | |||
Annual rate filing mechanisms | 8,244 | |||
Other rate activity | 1,322 | |||
$ | 70,472 |
Division | Rate Action | Jurisdiction | Operating Income Requested | |||||
(In thousands) | ||||||||
Colorado-Kansas | Rate Case(1) | Colorado | $ | 10,891 | ||||
Kentucky/Mid-States | Rate Case | Kentucky | 13,133 | |||||
Kentucky/Mid-States | Infrastructure Replacement | Virginia | 213 | |||||
Louisiana | Rate Stabilization Clause (2) | LGS | 1,570 | |||||
$ | 25,807 |
(1) | This rate case seeks a multi-year step increase in annual operating income of $4.5 million on January 1, 2014, $2.9 million on July 1, 2014 and $3.5 million on July 1, 2015. |
(2) | In June 2013, the Company accepted the Staff's recommended adjustments and implemented an annual increase to operating income of $0.9 million effective in rates on July 1, 2013. |
Division | State | Increase in Annual Operating Income | Effective Date | |||||
(In thousands) | ||||||||
2013 Rate Case Filings: | ||||||||
Mid-Tex | Texas | $ | 42,601 | 12/04/2012 | ||||
Kentucky/Mid-States | Tennessee | 7,530 | 11/08/2012 | |||||
West Texas | Texas | 6,569 | 10/01/2012 | |||||
Total 2013 Rate Case Filings | $ | 56,700 |
Division | Period End | Incremental Net Utility Plant Investment | Increase in Annual Operating Income | Effective Date | ||||||||
(In thousands) | (In thousands) | |||||||||||
2013 Infrastructure Programs: | ||||||||||||
Colorado-Kansas — Kansas | 09/2012 | $ | 5,376 | $ | 601 | 01/09/2013 | ||||||
Kentucky/Mid-States — Georgia(1) | 09/2011 | 6,519 | 1,079 | 10/01/2012 | ||||||||
Kentucky/Mid-States — Kentucky | 09/2013 | 19,296 | 2,425 | 10/01/2012 | ||||||||
Kentucky/Mid-States — Virginia | 09/2013 | 756 | 101 | 10/01/2012 | ||||||||
Total 2013 Infrastructure Programs | $ | 31,947 | $ | 4,206 |
(1) | On April 1, 2013, we completed the sale of our Georgia operations to Liberty Energy (Georgia) Corp., an affiliate of Algonquin Power & Utilities Corp. The increase in operating income arising from the implementation of the approved infrastructure program is included as a component of discontinued operations through March 31, 2013. |
Division | Jurisdiction | Test Year Ended | Additional Annual Operating Income | Effective Date | ||||||
(In thousands) | ||||||||||
2013 Filings: | ||||||||||
Mid-Tex | City of Dallas | 9/30/2012 | $ | 1,800 | 06/01/2013 | |||||
Louisiana | TransLa | 9/30/2012 | 2,260 | 04/01/2013 | ||||||
Kentucky/Mid-States | Georgia(1) | 9/30/2013 | 743 | 02/01/2013 | ||||||
Mississippi | Mississippi | 6/30/2012 | 3,441 | 11/01/2012 | ||||||
Total 2013 Filings | $ | 8,244 |
(1) | On April 1, 2013, we completed the sale of our Georgia operations to Liberty Energy (Georgia) Corp., an affiliate of Algonquin Power & Utilities Corp. The increase in operating income arising from the implementation of new rates is included as a component of discontinued operations through March 31, 2013. |
Division | Jurisdiction | Rate Activity | Additional Annual Operating Income | Effective Date | ||||||
(In thousands) | ||||||||||
2013 Other Rate Activity: | ||||||||||
Colorado-Kansas | Kansas | Ad Valorem(1) | $ | 1,322 | 02/01/2013 | |||||
Total 2013 Other Rate Activity | $ | 1,322 |
(1) | The Ad Valorem filing relates to a collection of property taxes in excess of the amount included in our Kansas service area’s base rates. |
Three Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, unless otherwise noted) | |||||||||||
Mid-Tex transportation | $ | 47,117 | $ | 43,693 | $ | 3,424 | |||||
Third-party transportation | 18,122 | 17,281 | 841 | ||||||||
Storage and park and lend services | 1,412 | 1,484 | (72 | ) | |||||||
Other | 7,390 | 4,615 | 2,775 | ||||||||
Gross profit | 74,041 | 67,073 | 6,968 | ||||||||
Operating expenses | 29,998 | 28,063 | 1,935 | ||||||||
Operating income | 44,043 | 39,010 | 5,033 | ||||||||
Miscellaneous expense | (247 | ) | (298 | ) | 51 | ||||||
Interest charges | 8,049 | 7,353 | 696 | ||||||||
Income before income taxes | 35,747 | 31,359 | 4,388 | ||||||||
Income tax expense | 12,650 | 11,215 | 1,435 | ||||||||
Net income | $ | 23,097 | $ | 20,144 | $ | 2,953 | |||||
Gross pipeline transportation volumes — MMcf | 153,216 | 146,170 | 7,046 | ||||||||
Consolidated pipeline transportation volumes — MMcf | 121,194 | 118,678 | 2,516 |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, unless otherwise noted) | |||||||||||
Mid-Tex transportation | $ | 130,849 | $ | 120,150 | $ | 10,699 | |||||
Third-party transportation | 47,440 | 46,529 | 911 | ||||||||
Storage and park and lend services | 4,484 | 5,157 | (673 | ) | |||||||
Other | 13,797 | 10,033 | 3,764 | ||||||||
Gross profit | 196,570 | 181,869 | 14,701 | ||||||||
Operating expenses | 87,014 | 84,017 | 2,997 | ||||||||
Operating income | 109,556 | 97,852 | 11,704 | ||||||||
Miscellaneous expense | (473 | ) | (634 | ) | 161 | ||||||
Interest charges | 22,777 | 22,176 | 601 | ||||||||
Income before income taxes | 86,306 | 75,042 | 11,264 | ||||||||
Income tax expense | 30,574 | 26,864 | 3,710 | ||||||||
Net income | $ | 55,732 | $ | 48,178 | $ | 7,554 | |||||
Gross pipeline transportation volumes — MMcf | 493,721 | 483,360 | 10,361 | ||||||||
Consolidated pipeline transportation volumes — MMcf | 335,036 | 333,341 | 1,695 |
• | The demand for natural gas. Higher prices may cause customers to conserve or use alternative energy sources. Conversely, lower prices could cause customers such as electric power generators to switch from alternative energy sources to natural gas. |
• | Collection of accounts receivable from customers, which could affect the level of bad debt expense recognized by this segment. |
• | The level of borrowings under our credit facilities, which affects the level of interest expense recognized by this segment. |
• | Price volatility influences basis differentials, which provide opportunities to profit from identifying the lowest cost alternative among the natural gas supplies, transportation and markets to which we have access. |
• | Price volatility also influences the spreads between the current (spot) prices and forward natural gas prices, which creates opportunities to earn higher arbitrage spreads. |
• | Increased volatility impacts the amounts of unrealized margins recorded in our gross profit and could impact the amount of cash required to collateralize our risk management liabilities. |
Three Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, unless otherwise noted) | |||||||||||
Realized margins | |||||||||||
Gas delivery and related services | $ | 5,945 | $ | 9,637 | $ | (3,692 | ) | ||||
Storage and transportation services | 3,689 | 3,313 | 376 | ||||||||
Other | 846 | 791 | 55 | ||||||||
10,480 | 13,741 | (3,261 | ) | ||||||||
Asset optimization(1) | 2,476 | 14,600 | (12,124 | ) | |||||||
Total realized margins | 12,956 | 28,341 | (15,385 | ) | |||||||
Unrealized margins | (9,696 | ) | 3,080 | (12,776 | ) | ||||||
Gross profit | 3,260 | 31,421 | (28,161 | ) | |||||||
Operating expenses | 12,860 | 9,553 | 3,307 | ||||||||
Operating income (loss) | (9,600 | ) | 21,868 | (31,468 | ) | ||||||
Miscellaneous income | 215 | 136 | 79 | ||||||||
Interest charges | 392 | 595 | (203 | ) | |||||||
Income (loss) from continuing operations before income taxes | (9,777 | ) | 21,409 | (31,186 | ) | ||||||
Income tax expense (benefit) | (4,337 | ) | 8,632 | (12,969 | ) | ||||||
Income (loss) from continuing operations | (5,440 | ) | 12,777 | (18,217 | ) | ||||||
Loss on sale of discontinued operations, net of tax | (355 | ) | — | (355 | ) | ||||||
Net income (loss) | $ | (5,795 | ) | $ | 12,777 | $ | (18,572 | ) | |||
Gross nonregulated delivered gas sales volumes — MMcf | 97,388 | 89,682 | 7,706 | ||||||||
Consolidated nonregulated delivered gas sales volumes — MMcf | 83,341 | 79,658 | 3,683 | ||||||||
Net physical position (Bcf) | 19.2 | 30.3 | (11.1 | ) |
(1) | Net of storage fees of $2.3 million and $4.2 million. |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands, unless otherwise noted) | |||||||||||
Realized margins | |||||||||||
Gas delivery and related services | $ | 31,279 | $ | 35,021 | $ | (3,742 | ) | ||||
Storage and transportation services | 10,806 | 9,953 | 853 | ||||||||
Other | 2,643 | 2,804 | (161 | ) | |||||||
44,728 | 47,778 | (3,050 | ) | ||||||||
Asset optimization(1) | (10,625 | ) | (17,039 | ) | 6,414 | ||||||
Total realized margins | 34,103 | 30,739 | 3,364 | ||||||||
Unrealized margins | 15,923 | 11,858 | 4,065 | ||||||||
Gross profit | 50,026 | 42,597 | 7,429 | ||||||||
Operating expenses | 29,565 | 24,457 | 5,108 | ||||||||
Operating income | 20,461 | 18,140 | 2,321 | ||||||||
Miscellaneous income | 1,791 | 739 | 1,052 | ||||||||
Interest charges | 1,687 | 1,686 | 1 | ||||||||
Income from continuing operations before income taxes | 20,565 | 17,193 | 3,372 | ||||||||
Income tax expense | 8,235 | 6,958 | 1,277 | ||||||||
Income from continuing operations | 12,330 | 10,235 | 2,095 | ||||||||
Loss on sale of discontinued operations, net of tax | (355 | ) | — | (355 | ) | ||||||
Net income | $ | 11,975 | $ | 10,235 | $ | 1,740 | |||||
Gross nonregulated delivered gas sales volumes — MMcf | 306,120 | 307,800 | (1,680 | ) | |||||||
Consolidated nonregulated delivered gas sales volumes — MMcf | 265,791 | 270,372 | (4,581 | ) | |||||||
Net physical position (Bcf) | 19.2 | 30.3 | (11.1 | ) |
(1) | Net of storage fees of $11.4 million and $13.7 million. |
Nine Months Ended June 30 | |||||||||||
2013 | 2012 | Change | |||||||||
(In thousands) | |||||||||||
Total cash provided by (used in) | |||||||||||
Operating activities | $ | 509,575 | $ | 518,806 | $ | (9,231 | ) | ||||
Investing activities | (432,589 | ) | (501,621 | ) | 69,032 | ||||||
Financing activities | (109,246 | ) | (120,898 | ) | 11,652 | ||||||
Change in cash and cash equivalents | (32,260 | ) | (103,713 | ) | 71,453 | ||||||
Cash and cash equivalents at beginning of period | 64,239 | 131,419 | (67,180 | ) | |||||||
Cash and cash equivalents at end of period | $ | 31,979 | $ | 27,706 | $ | 4,273 |
Nine Months Ended June 30 | |||||
2013 | 2012 | ||||
Shares issued: | |||||
1998 Long-Term Incentive Plan | 531,372 | 414,778 | |||
Outside Directors Stock-for-Fee Plan | 1,599 | 1,823 | |||
Total shares issued | 532,971 | 416,601 |
S&P | Moody’s | Fitch | ||||||
Unsecured senior long-term debt | BBB+ | Baa1 | A- | |||||
Commercial paper | A-2 | P-2 | F-2 |
June 30, 2013 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||
Short-term debt(1) | $ | 141,998 | 2.7 | % | $ | 570,929 | 11.7 | % | $ | 213,491 | 4.5 | % | ||||||||
Long-term debt | 2,455,593 | 47.4 | % | 1,956,436 | 40.0 | % | 2,206,420 | 46.2 | % | |||||||||||
Shareholders’ equity | 2,581,444 | 49.9 | % | 2,359,243 | 48.3 | % | 2,354,925 | 49.3 | % | |||||||||||
Total | $ | 5,179,035 | 100.0 | % | $ | 4,886,608 | 100.0 | % | $ | 4,774,836 | 100.0 | % |
(1) | Short-term debt at September 30, 2012 included $260 million outstanding related to a short-term facility we used to redeem our $250 million 5.125% Senior notes in August 2012. The balance outstanding under this short-term facility was repaid in January 2013. |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||||
Fair value of contracts at beginning of period | $ | 40,126 | $ | (47,532 | ) | $ | (76,260 | ) | $ | (79,277 | ) | ||||
Contracts realized/settled | 81 | (351 | ) | 2,610 | (31,888 | ) | |||||||||
Fair value of new contracts | 541 | 1,251 | 1,554 | 874 | |||||||||||
Other changes in value | 45,640 | (46,227 | ) | 158,484 | 17,432 | ||||||||||
Fair value of contracts at end of period | $ | 86,388 | $ | (92,859 | ) | $ | 86,388 | $ | (92,859 | ) |
Fair Value of Contracts at June 30, 2013 | |||||||||||||||||||
Maturity in Years | |||||||||||||||||||
Source of Fair Value | Less Than 1 | 1-3 | 4-5 | Greater Than 5 | Total Fair Value | ||||||||||||||
(In thousands) | |||||||||||||||||||
Prices actively quoted | $ | 921 | $ | 85,467 | $ | — | $ | — | $ | 86,388 | |||||||||
Prices based on models and other valuation methods | — | — | — | — | — | ||||||||||||||
Total Fair Value | $ | 921 | $ | 85,467 | $ | — | $ | — | $ | 86,388 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||||
Fair value of contracts at beginning of period | $ | (4,019 | ) | $ | (2,574 | ) | $ | (15,123 | ) | $ | (25,050 | ) | |||
Contracts realized/settled | (2,193 | ) | (7,066 | ) | 10,051 | 24,162 | |||||||||
Fair value of new contracts | — | — | — | — | |||||||||||
Other changes in value | 1,889 | 5,080 | 749 | (3,672 | ) | ||||||||||
Fair value of contracts at end of period | (4,323 | ) | (4,560 | ) | (4,323 | ) | (4,560 | ) | |||||||
Netting of cash collateral | 14,252 | 5,684 | 14,252 | 5,684 | |||||||||||
Cash collateral and fair value of contracts at period end | $ | 9,929 | $ | 1,124 | $ | 9,929 | $ | 1,124 |
Fair Value of Contracts at June 30, 2013 | |||||||||||||||||||
Maturity in Years | |||||||||||||||||||
Source of Fair Value | Less Than 1 | 1-3 | 4-5 | Greater Than 5 | Total Fair Value | ||||||||||||||
(In thousands) | |||||||||||||||||||
Prices actively quoted | $ | (2,259 | ) | $ | (1,975 | ) | $ | (89 | ) | $ | — | $ | (4,323 | ) | |||||
Prices based on models and other valuation methods | — | — | — | — | — | ||||||||||||||
Total Fair Value | $ | (2,259 | ) | $ | (1,975 | ) | $ | (89 | ) | $ | — | $ | (4,323 | ) |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
METERS IN SERVICE, end of period | |||||||||||||||
Residential | 2,751,599 | 2,792,823 | 2,751,599 | 2,792,823 | |||||||||||
Commercial | 246,286 | 254,603 | 246,286 | 254,603 | |||||||||||
Industrial | 1,502 | 2,168 | 1,502 | 2,168 | |||||||||||
Public authority and other | 9,990 | 10,202 | 9,990 | 10,202 | |||||||||||
Total meters | 3,009,377 | 3,059,796 | 3,009,377 | 3,059,796 | |||||||||||
INVENTORY STORAGE BALANCE — Bcf(1) | 33.7 | 40.3 | 33.7 | 40.3 | |||||||||||
SALES VOLUMES — MMcf(2) | |||||||||||||||
Gas sales volumes | |||||||||||||||
Residential | 22,668 | 14,299 | 143,920 | 126,204 | |||||||||||
Commercial | 15,198 | 13,424 | 76,919 | 70,894 | |||||||||||
Industrial | 3,408 | 3,163 | 12,891 | 12,533 | |||||||||||
Public authority and other | 1,916 | 1,649 | 8,336 | 7,691 | |||||||||||
Total gas sales volumes | 43,190 | 32,535 | 242,066 | 217,322 | |||||||||||
Transportation volumes | 32,458 | 30,928 | 106,405 | 101,773 | |||||||||||
Total throughput | 75,648 | 63,463 | 348,471 | 319,095 | |||||||||||
OPERATING REVENUES (000’s)(2) | |||||||||||||||
Gas sales revenues | |||||||||||||||
Residential | $ | 289,363 | $ | 185,910 | $ | 1,301,264 | $ | 1,191,268 | |||||||
Commercial | 126,925 | 92,017 | 556,194 | 503,737 | |||||||||||
Industrial | 19,303 | 11,975 | 65,059 | 58,997 | |||||||||||
Public authority and other | 12,970 | 7,493 | 51,120 | 46,492 | |||||||||||
Total gas sales revenues | 448,561 | 297,395 | 1,973,637 | 1,800,494 | |||||||||||
Transportation revenues | 14,253 | 12,744 | 47,486 | 42,273 | |||||||||||
Other gas revenues | 4,330 | 5,495 | 17,984 | 20,047 | |||||||||||
Total operating revenues | $ | 467,144 | $ | 315,634 | $ | 2,039,107 | $ | 1,862,814 | |||||||
Average transportation revenue per Mcf(1) | $ | 0.44 | $ | 0.43 | $ | 0.45 | $ | 0.43 | |||||||
Average cost of gas per Mcf sold(1) | $ | 5.27 | $ | 3.73 | $ | 4.86 | $ | 4.70 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Meters in service, end of period | — | 146,484 | — | 146,484 | |||||||||||
Sales volumes — MMcf | |||||||||||||||
Total gas sales volumes | — | 1,570 | 3,611 | 10,365 | |||||||||||
Transportation volumes | — | 1,739 | 1,120 | 6,281 | |||||||||||
Total throughput | — | 3,309 | 4,731 | 16,646 | |||||||||||
Operating revenues (000’s) | $ | — | $ | 18,162 | $ | 37,962 | $ | 103,107 |
Three Months Ended June 30 | Nine Months Ended June 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
CUSTOMERS, end of period | |||||||||||||||
Industrial | 750 | 797 | 750 | 797 | |||||||||||
Municipal | 133 | 141 | 133 | 141 | |||||||||||
Other | 432 | 433 | 432 | 433 | |||||||||||
Total | 1,315 | 1,371 | 1,315 | 1,371 | |||||||||||
NONREGULATED INVENTORY STORAGE | |||||||||||||||
BALANCE — Bcf | 22.2 | 33.3 | 22.2 | 33.3 | |||||||||||
REGULATED TRANSMISSION AND | |||||||||||||||
STORAGE VOLUMES — MMcf(2) | 153,216 | 146,170 | 493,721 | 483,360 | |||||||||||
NONREGULATED DELIVERED GAS SALES | |||||||||||||||
VOLUMES — MMcf(2) | 97,388 | 89,682 | 306,120 | 307,800 | |||||||||||
OPERATING REVENUES (000’s)(2) | |||||||||||||||
Regulated transmission and storage | $ | 74,041 | $ | 67,073 | $ | 196,570 | $ | 181,869 | |||||||
Nonregulated | 421,808 | 256,250 | 1,250,650 | 1,071,189 | |||||||||||
Total operating revenues | $ | 495,849 | $ | 323,323 | $ | 1,447,220 | $ | 1,253,058 |
(1) | Statistics are shown on a consolidated basis. |
(2) | Sales volumes and revenues reflect segment operations, including intercompany sales and transportation amounts. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 6. | Exhibits |
ATMOS ENERGY CORPORATION (Registrant) | |||
By: /s/ BRET J. ECKERT | |||
Bret J. Eckert Senior Vice President and Chief Financial Officer (Duly authorized signatory) |
Exhibit Number | Description | Page Number or Incorporation by Reference to | |
12 | Computation of ratio of earnings to fixed charges | ||
15 | Letter regarding unaudited interim financial information | ||
31 | Rule 13a-14(a)/15d-14(a) Certifications | ||
32 | Section 1350 Certifications* | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | XBRL Taxonomy Extension Labels Linkbase | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
* | These certifications, which were made pursuant to 18 U.S.C. Section 1350 by the Company’s Chief Executive Officer and Chief Financial Officer, furnished as Exhibit 32 to this Quarterly Report on Form 10-Q, will not be deemed to be filed with the Commission or incorporated by reference into any filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates such certifications by reference. |
Three Months Ended June 30 | Nine Months Ended June 30 | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Income from continuing operations before provision for income taxes per statement of income | $ | 53,188 | $ | 44,562 | $ | 356,845 | $ | 312,586 | ||||||||
Add: | ||||||||||||||||
Portion of rents representative of the interest factor | 3,213 | 3,304 | 9,675 | 9,758 | ||||||||||||
Interest on debt & amortization of debt expense | 32,741 | 34,909 | 96,594 | 107,278 | ||||||||||||
Income as adjusted | $ | 89,142 | $ | 82,775 | $ | 463,114 | $ | 429,622 | ||||||||
Fixed charges: | ||||||||||||||||
Interest on debt & amortization of debt expense(1) | $ | 32,741 | $ | 34,909 | $ | 96,594 | $ | 107,278 | ||||||||
Capitalized interest(2) | 450 | 574 | 1,359 | 2,095 | ||||||||||||
Rents | 9,638 | 9,912 | 29,025 | 29,274 | ||||||||||||
Portion of rents representative of the interest factor(3) | 3,213 | 3,304 | 9,675 | 9,758 | ||||||||||||
Fixed charges(1)+(2)+(3) | $ | 36,404 | $ | 38,787 | $ | 107,628 | $ | 119,131 | ||||||||
Ratio of earnings to fixed charges | 2.45 | 2.13 | 4.30 | 3.61 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Atmos Energy Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ KIM R. COCKLIN | ||
Kim R. Cocklin | ||
President and | ||
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Atmos Energy Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing equivalent functions): |
(a) | All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ BRET J. ECKERT | ||
Bret J. Eckert | ||
Senior Vice President and | ||
Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ KIM R. COCKLIN | ||
Kim R. Cocklin | ||
President and Chief | ||
Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ BRET J. ECKERT | ||
Bret J. Eckert | ||
Senior Vice President and | ||
Chief Financial Officer |
Interim Pension and Other Postretirement Benefit Plan Information
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General Discussion of Pension and Other Postretirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interim Pension and Postretirement Benefit Plans | Interim Pension and Other Postretirement Benefit Plan Information The components of our net periodic pension cost for our pension and other postretirement benefit plans for the three and nine months ended June 30, 2013 and 2012 are presented in the following table. Most of these costs are recoverable through our gas distribution rates; however, a portion of these costs is capitalized into our gas distribution rate base. The remaining costs are recorded as a component of operation and maintenance expense. On April 1, 2013, due to the retirement of certain executives, we recognized a curtailment loss of $3.2 million associated with our Supplemental Executive Benefit Plan and revalued the net periodic pension cost for the remainder of fiscal 2013. The revaluation of the net periodic pension cost resulted in an increase in the discount rate, effective April 1, 2013, to 4.21 percent, which will reduce our net periodic pension cost by approximately $0.1 million for the remainder of the fiscal year. All other actuarial assumptions remained the same.
The assumptions used to develop our net periodic pension cost for the three and nine months ended June 30, 2013 and 2012 are as follows:
The discount rate used to compute the present value of a plan’s liabilities generally is based on rates of high-grade corporate bonds with maturities similar to the average period over which the benefits will be paid. Generally, our funding policy has been to contribute annually an amount in accordance with the requirements of the Employee Retirement Income Security Act of 1974. In accordance with the Pension Protection Act of 2006 (PPA), we determined the funded status of our plans as of January 1, 2013. During the first nine months of fiscal 2013, we contributed $21.0 million to our defined benefit plans and we anticipate contributing approximately $12 million during the remainder of the fiscal year. We contributed $19.5 million to our other post-retirement benefit plans during the nine months ended June 30, 2013. We expect to contribute a total of approximately $5 million to $10 million to these plans during the remainder of the fiscal year. |
Unaudited Financial Information
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Financial Information | Unaudited Financial Information These consolidated interim-period financial statements have been prepared in accordance with accounting principles generally accepted in the United States on the same basis as those used for the Company’s audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. In the opinion of management, all material adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been made to the unaudited consolidated interim-period financial statements. These consolidated interim-period financial statements are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated financial statements of Atmos Energy Corporation included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. Because of seasonal and other factors, the results of operations for the nine-month period ended June 30, 2013 are not indicative of our results of operations for the full 2013 fiscal year, which ends September 30, 2013. We have evaluated subsequent events from the June 30, 2013 balance sheet date through the date these financial statements were filed with the Securities and Exchange Commission (SEC). Except as noted in Note 10, no events have occurred subsequent to the balance sheet date that would require recognition or disclosure in the condensed consolidated financial statements. Significant accounting policies Our accounting policies are described in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. During the second quarter of fiscal 2013, we completed our annual goodwill impairment assessment. Based on the assessment performed, we determined that our goodwill was not impaired. Due to the April 1, 2013 sale of our Georgia distribution operations, at June 30, 2013, the financial results for this service area are shown in discontinued operations. Accordingly, certain prior-year amounts have been reclassified to conform with the current-year presentation. During the nine months ended June 30, 2013, two new accounting standards were announced that will become applicable to the Company in future periods. The first standard clarifies the enhanced disclosure of offsetting arrangements for financial instruments that will become effective for us for annual and interim periods beginning on October 1, 2013. The adoption of this standard should not have an impact on our financial position, results of operations or cash flows. The second standard, which became effective during our second fiscal quarter, requires the presentation of amounts reclassified out of accumulated other comprehensive income by component as well as significant amounts reclassified out of accumulated other comprehensive income by the respective line item in the statement of net income. We have presented the disclosures relating to reclassifications out of accumulated other comprehensive income in Note 4. The adoption of this standard did not have an impact on our financial position, results of operations or cash flows. There were no other significant changes to our accounting policies during the nine months ended June 30, 2013. Regulatory assets and liabilities Accounting principles generally accepted in the United States require cost-based, rate-regulated entities that meet certain criteria to reflect the authorized recovery of costs due to regulatory decisions in their financial statements. As a result, certain costs are permitted to be capitalized rather than expensed because they can be recovered through rates. We record certain costs as regulatory assets when future recovery through customer rates is considered probable. Regulatory liabilities are recorded when it is probable that revenues will be reduced for amounts that will be credited to customers through the ratemaking process. Substantially all of our regulatory assets are recorded as a component of deferred charges and other assets and substantially all of our regulatory liabilities are recorded as a component of deferred credits and other liabilities. Deferred gas costs are recorded either in other current assets or liabilities and the regulatory cost of removal obligation is reported separately. Significant regulatory assets and liabilities as of June 30, 2013 and September 30, 2012 included the following:
The amounts above do not include regulatory assets and liabilities related to our Georgia operations, which were classified as assets held for sale at September 30, 2012 as discussed in Note 6. As of June 30, 2013 we did not have any assets or liabilities classified as held for sale due to the sale of substantially all of our Georgia assets on April 1, 2013. Currently authorized rates do not include a return on certain of our merger and integration costs; however, we recover the amortization of these costs. Merger and integration costs, net, are generally amortized on a straight-line basis over estimated useful lives ranging up to 20 years. |
Accumulated Other Comprehensive Income (Table)
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Jun. 30, 2013
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides the components of our accumulated other comprehensive income (loss) balances, net of the related tax effects allocated to each component of other comprehensive income.
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Reclassification out of Accumulated Other Comprehensive Income | The following tables detail reclassifications out of AOCI for the three and nine months ended June 30, 2013. Amounts in parentheses below indicate decreases to net income in the statement of income.
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Commitments and Contingencies
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Litigation and Environmental Matters With respect to the specific litigation and environmental-related matters or claims that were disclosed in Note 13 to the financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012, except as noted below, there were no material changes in the status of such litigation and environmental-related matters or claims during the nine months ended June 30, 2013. Kentucky Litigation Since September 2009, Atmos Energy and two subsidiaries of AEH, Atmos Energy Marketing, LLC (AEM) and Atmos Gathering Company, LLC (AGC) (collectively, the Atmos Entities), have been involved in a lawsuit filed in the Circuit Court of Edmonson County, Kentucky related to our Park City Gathering Project. The dispute which gave rise to the litigation involves the amount of royalties due from a third party producer to landowners (who own the mineral rights) for natural gas produced from the landowners’ properties. The third party producer was operating pursuant to leases between the landowners and certain investors/working interest owners. The third party producer filed a petition in bankruptcy, which was subsequently dismissed due to the lack of meaningful assets to reorganize or liquidate. Although certain Atmos Energy companies entered into contracts with the third party producer to gather, treat and ultimately sell natural gas produced from the landowners’ properties, no Atmos Energy company had a contractual relationship with the landowners or the investors/working interest owners. After the lawsuit was filed, the landowners were successful in terminating for non-payment of royalties the leases related to the production of natural gas from their properties. Subsequent to termination, the investors/working interest owners under such leases filed additional claims against us for the termination of the leases. During the trial, the landowners and the investors/working interest owners requested an award of compensatory damages plus punitive damages against us. On December 17, 2010, the jury returned a verdict in favor of the landowners and investor/working interest owners and awarded compensatory damages of $3.8 million and punitive damages of $27.5 million payable by Atmos Energy and the two AEH subsidiaries. A hearing was held on February 28, 2011 to hear a number of motions, including a motion to dismiss the jury verdict and a motion for a new trial. The motions to dismiss the jury verdict and for a new trial were denied. However, the total punitive damages award was reduced from $27.5 million to $24.7 million. On October 17, 2011, we filed our brief of appellants with the Kentucky Court of Appeals, appealing the verdict of the trial court. The appellees in this case subsequently filed their appellees’ brief with the Court of Appeals on January 16, 2012, with our reply brief being filed with the Court of Appeals on March 19, 2012. Oral arguments were held in the case on August 27, 2012. In an opinion handed down on January 25, 2013, the Court of Appeals overturned the $28.5 million jury verdict returned against the Atmos Entities. In a unanimous decision by a three-judge panel, the Court of Appeals reversed the claims asserted by the landowners and investors/working interest owners. The Court of Appeals concluded that all of such claims that the Atmos Entities appealed should have been dismissed by the trial court as a matter of law. The Court of Appeals let stand the jury verdict on one claim that Atmos Energy and our subsidiaries chose not to appeal, which was a trespass claim. The jury had awarded a total of $10,000 in compensatory damages to one landowner on that claim. The Court of Appeals vacated all of the other damages awarded by the jury and remanded the case to the trial court for a new trial, solely on the issue of whether punitive damages should be awarded to that landowner and, if so, in what amount. The investors/working interest owners, on February 25, 2013, and the landowners, on March 19, 2013, each filed with the Supreme Court of Kentucky, separate motions for discretionary review of the opinion of the Court of Appeals. We filed a response to the motion filed by the investors/working owners on March 27, 2013 and to the landowners’ motion on April 17, 2013. The decision of the Court of Appeals will not become final until the appellate process is completed. We had previously accrued what we believed to be an adequate amount for the anticipated resolution of this matter and we will continue to maintain this amount in legal reserves until the appellate process in this case has been completed. We continue to believe that the final outcome will not have a material adverse effect on our financial condition, results of operations or cash flows. In addition, in a related matter, on July 12, 2011, the Atmos Entities filed a lawsuit in the United States District Court, Western District of Kentucky, Atmos Energy Corporation et al.vs. Resource Energy Technologies, LLC and Robert Thorpe and John F. Charles, against the third party producer and its affiliates to recover all costs, including attorneys’ fees, incurred by the Atmos Entities, which are associated with the defense and appeal of the case discussed above as well as for all damages awarded to the plaintiffs in such case against the Atmos Entities. The total amount of damages being claimed in the lawsuit is “open-ended” since the appellate process and related costs are ongoing. This lawsuit is based upon the indemnification provisions agreed to by the third party producer in favor of Atmos Gathering that are contained in an agreement entered into between Atmos Gathering and the third party producer in May 2009. The defendants filed a motion to dismiss the case on August 25, 2011, with Atmos Energy filing a brief in response to such motion on September 19, 2011. On March 27, 2012 the court denied the motion to dismiss. Since that time, we have continued to be engaged in discovery activities in this case. Tennessee Business License Tax Atmos Energy, through its affiliate, AEM, has been involved in a dispute with the Tennessee Department of Revenue (TDOR) regarding sales business tax audits over a period of several years. AEM has challenged the assessment of the business tax. With respect to certain issues, AEM and the TDOR filed competing Partial Motions for Summary Judgment with the Chancery Court. On August 2, 2013, the Chancery Court granted the TDOR's Partial Motion for Summary Judgment and denied AEM's Partial Motion for Summary Judgment. The Company anticipates a decision by the Chancery Court on the remaining issues in fiscal 2014. AEM has been assessed $6.1 million in business taxes and $3.7 million in penalties and interest for the period from December 2002 through March 31, 2012. We believe the final outcome will not have a material adverse effect on our financial condition, results of operations or cash flows. We are a party to other litigation and environmental-related matters or claims that have arisen in the ordinary course of our business. While the results of such litigation and response actions to such environmental-related matters or claims cannot be predicted with certainty, we continue to believe the final outcome of such litigation and matters or claims will not have a material adverse effect on our financial condition, results of operations or cash flows. Purchase Commitments AEH has commitments to purchase physical quantities of natural gas under contracts indexed to the forward NYMEX strip or fixed price contracts. At June 30, 2013, AEH was committed to purchase 84.9 Bcf within one year, 45.1 Bcf within one to three years and 21.7 Bcf after three years under indexed contracts. AEH is committed to purchase 7.1 Bcf within one year and 0.3 Bcf within one to three years under fixed price contracts with prices ranging from $3.40 to $6.36 per Mcf. Purchases under these contracts totaled $340.9 million and $176.6 million for the three months ended June 30, 2013 and 2012 and $958.2 million and $753.0 million for the nine months ended June 30, 2013 and 2012. Our natural gas distribution divisions, except for our Mid-Tex Division, maintain supply contracts with several vendors that generally cover a period of up to one year. Commitments for estimated base gas volumes are established under these contracts on a monthly basis at contractually negotiated prices. Commitments for incremental daily purchases are made as necessary during the month in accordance with the terms of the individual contract. Our Mid-Tex Division maintains long-term supply contracts to ensure a reliable source of gas for our customers in its service area which obligate it to purchase specified volumes at market and fixed prices. The estimated commitments under these contracts as of June 30, 2013 are as follows (in thousands):
Our nonregulated segment maintains long-term contracts related to storage and transportation. The estimated contractual demand fees for contracted storage and transportation under these contracts are detailed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. There were no material changes to the estimated storage and transportation fees for the nine months ended June 30, 2013. Regulatory Matters In July 2010, the Dodd-Frank Act was enacted, representing an extensive overhaul of the framework for regulation of U.S. financial markets. The Dodd-Frank Act calls for various regulatory agencies, including the SEC and the Commodities Futures Trading Commission (CFTC) to establish rules and regulations for implementation of many of the provisions of the Dodd-Frank Act. The costs of participating in financial markets for hedging certain risks inherent in our business have been increased as a result of the new legislation and related rules and regulations. We also are subject to additional recordkeeping and reporting obligations with regard to certain of our swap transactions. Although the CFTC and SEC have issued a number of required rules and regulations, we expect additional rules and regulations to be adopted, which should provide further clarity regarding the extent of the impact of this legislation on us. As of June 30, 2013, rate cases were in progress in our Colorado and Kentucky service areas, an annual rate filing mechanism was in progress in Louisiana and an infrastructure program filing was in progress in Virginia. These regulatory proceedings are discussed in further detail below in Management’s Discussion and Analysis — Recent Ratemaking Developments. |
Debt (Table)
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Debt | Long-term debt at June 30, 2013 and September 30, 2012 consisted of the following:
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Discontinued Operations (Table)
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Jun. 30, 2013
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued operations income statement detail table | The tables below set forth selected financial and operational information related to net assets and operating results related to discontinued operations. Additionally, assets and liabilities related to our Georgia operations are classified as “held for sale” in other current assets and liabilities in our condensed consolidated balance sheets at September 30, 2012. Prior period revenues and expenses associated with these assets have been reclassified into discontinued operations. This reclassification had no impact on previously reported net income. The following table presents statement of income data related to discontinued operations.
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Assets held for sale table | The following table presents balance sheet data related to assets held for sale. At September 30, 2012 assets held for sale include assets and liabilities associated with our Georgia operations. At June 30, 2013 we did not have any assets or liabilities held for sale.
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Debt - Debt Instruments Additional Information (Details) (USD $)
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3 Months Ended | |
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Jun. 30, 2013
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Sep. 30, 2012
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Long Term Debt Other Disclosures [Abstract] | ||
Authorized Commercial Paper | $ 750,000,000 | |
Commercial Paper | 142,000,000 | 310,900,000 |
Debt and Equity Securities Authorized for Issuance | 1,750,000,000 | |
Debt And Equity Securities Available For Issuance | 1,750,000,000 | |
Regulated Operations Line of Credit Facilities, Covenant Terms | We are required by the financial covenants in each of these facilities to maintain, at the end of each fiscal quarter, a ratio of total debt to total capitalization of no greater than 70 percent. | |
Ratio of Total Debt to Total Capital | 52.00% | |
Debt Instrument Covenant Description | In addition to these financial covenants, our credit facilities and public indentures contain usual and customary covenants for our business, including covenants substantially limiting liens, substantial asset sales and mergers. Additionally, our public debt indentures relating to our senior notes and debentures, as well as our revolving credit agreements, each contain a default provision that is triggered if outstanding indebtedness arising out of any other credit agreements in amounts ranging from in excess of $15 million to in excess of $100 million becomes due by acceleration or is not paid at maturity. | |
Debt Instrument Covenant Compliance | We were in compliance with all of our debt covenants as of June 30, 2013. | |
First Facility Regulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 950,000,000 | 750,000,000 |
Line of Credit Facility, Maximum Borrowing Capacity with Accordion Feature | 1,200,000,000 | |
Second Facility Regulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 25,000,000 | |
Third Facility Regulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 14,000,000 | |
Line of Credit Facility, Current Available Borrowing Capacity | 8,200,000 | |
Intercompany Facility Regulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 500,000,000 | |
Line Of Credit Facility Description | which bears interest at the lower of (i) the Eurodollar rate under the five-year revolving credit facility or (ii) the lowest rate outstanding under the commercial paper program | |
Committed Facility Nonregulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 25,000,000 | 200,000,000 |
Line of Credit Facility, Maximum Borrowing Capacity with Accordion Feature | 500,000,000 | |
Uncommitted Facility Nonregulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 25,000,000 | |
Intercompany Facility Nonregulated Operations [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | 500,000,000 | |
Line Of Credit Facility Description | This facility bears interest at a rate equal to the greater of (i) the one-month LIBOR rate plus 3.00 percent or (ii) the rate for AEM’s borrowings under its committed credit facility plus 0.75 percent. | |
Nonregulated Facilities [Member]
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Line Of Credit Facility [Line Items] | ||
Line of Credit Facility, Current Available Borrowing Capacity | 38,600,000 | |
Regulated Facilities [Member]
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Line Of Credit Facility [Line Items] | ||
Line Of Credit Facility Maximum Borrowing Capacity | $ 989,000,000 |
Financial Instruments Descriptions (Details) (USD $)
In Millions, unless otherwise specified |
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Sep. 30, 2012
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General Discussion Of Derivative Instruments And Hedging Activities [Abstract] | |||||
Minimum Hedge Percentage Of Anticipated Heating Season Gas | 25.00% | ||||
Maximum Hedge Percentage Of Anticipated Heating Season Gas | 50.00% | ||||
Hedge Percentage Of Actual Heating Season Gas | 33.00% | ||||
Hedge Volume Of Actual Heating Season Gas | 22,800 | ||||
Minimum Length Of Time Hedged In Cash Flow Hedge | 0 years 1 month 0 days | ||||
Maximum Length Of Time Hedged In Cash Flow Hedge | 4 years 10 months 0 days | ||||
Derivative, Collateral, Right to Reclaim Cash | $ 14.3 | $ 14.3 | $ 23.7 | ||
Gain Loss On Hedge Ineffectiveness | (0.4) | 19.0 | 17.3 | 21.2 | |
Regulated Segments Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate | 37.00% | ||||
Nonregulated Segment Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate | 39.00% | ||||
Gain Loss On Derivative Instruments Not Designated Hedges Net Pretax | (8.4) | 11.2 | (1.7) | (3.8) | |
Natural Gas Inventory [Abstract] | |||||
Inventory write-down to lower of cost or market | 1.7 | ||||
Interest Rate Hedges, Senior Notes 2013 Issuance [Member]
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Derivative [Line Items] | |||||
Notional Amount of Interest Rate Cash Flow Hedge Derivatives | 350 | 350 | |||
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss) | 66.6 | 66.6 | |||
Interest Rate Hedges, Senior Notes 2015 Issuance [Member]
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Derivative [Line Items] | |||||
Notional Amount of Interest Rate Cash Flow Hedge Derivatives | 500 | 500 | |||
Interest Rate Hedges, Short-term Note 2012 Issuance [Member]
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Derivative [Line Items] | |||||
Notional Amount of Interest Rate Cash Flow Hedge Derivatives | 260 | 260 | |||
Interest Rate Hedges, Senior Notes 2017 Issuance [Member]
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Derivative [Line Items] | |||||
Notional Amount of Interest Rate Cash Flow Hedge Derivatives | $ 250 | $ 250 |
Accumulated Other Comprehensive Income Affected Line Item in the Statement of Income (Details) (USD $)
In Thousands, unless otherwise specified |
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Operation and maintenance | $ 121,258 | $ 106,045 | $ 338,871 | $ 329,989 |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | 53,188 | 44,562 | 356,845 | 312,586 |
Income Tax Expense (Benefit) | (19,714) | (16,548) | (133,683) | (120,104) |
Income (loss) from continuing operations | 33,474 | 28,014 | 223,162 | 192,482 |
Interest charges | 32,741 | 34,909 | 96,594 | 107,278 |
Purchased gas cost | 541,438 | 283,243 | 2,089,476 | 1,811,567 |
Reclassification out of Accumulated Other Comprehensive Income [Member]
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Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income (loss) from continuing operations | (669) | (6,154) | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Unrealized Investment Gain (Loss) [Member]
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Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Operation and maintenance | (531) | 2,158 | ||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | (531) | 2,158 | ||
Income Tax Expense (Benefit) | 193 | (788) | ||
Income (loss) from continuing operations | (338) | 1,370 | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Interest Rate Hedges [Member] [Member]
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Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest charges | (1,057) | (2,432) | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Commodity Contracts Cash Flow Hedges [Member] [Member]
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||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Purchased gas cost | 558 | (9,803) | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
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||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | (499) | (12,235) | ||
Income Tax Expense (Benefit) | 168 | 4,711 | ||
Income (loss) from continuing operations | $ (331) | $ (7,524) |
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Loss Contingency Information About Litigation Matters Abstract | ||||
Description of Pending Litigation | Since September 2009, Atmos Energy and two subsidiaries of AEH, Atmos Energy Marketing, LLC (AEM) and Atmos Gathering Company, LLC (AGC) (collectively, the Atmos Entities), have been involved in a lawsuit filed in the Circuit Court of Edmonson County, Kentucky related to our Park City Gathering Project. The dispute which gave rise to the litigation involves the amount of royalties due from a third party producer to landowners (who own the mineral rights) for natural gas produced from the landowners’ properties. The third party producer was operating pursuant to leases between the landowners and certain investors/working interest owners. The third party producer filed a petition in bankruptcy, which was subsequently dismissed due to the lack of meaningful assets to reorganize or liquidate.Although certain Atmos Energy companies entered into contracts with the third party producer to gather, treat and ultimately sell natural gas produced from the landowners’ properties, no Atmos Energy company had a contractual relationship with the landowners or the investors/working interest owners. After the lawsuit was filed, the landowners were successful in terminating for non-payment of royalties the leases related to the production of natural gas from their properties. Subsequent to termination, the investors/working interest owners under such leases filed additional claims against us for the termination of the leases.During the trial, the landowners and the investors/working interest owners requested an award of compensatory damages plus punitive damages against us. On December 17, 2010, the jury returned a verdict in favor of the landowners and investor/working interest owners and awarded compensatory damages of $3.8 million and punitive damages of $27.5 million payable by Atmos Energy and the two AEH subsidiaries.A hearing was held on February 28, 2011 to hear a number of motions, including a motion to dismiss the jury verdict and a motion for a new trial. The motions to dismiss the jury verdict and for a new trial were denied. However, the total punitive damages award was reduced from $27.5 million to $24.7 million. On October 17, 2011, we filed our brief of appellants with the Kentucky Court of Appeals, appealing the verdict of the trial court. The appellees in this case subsequently filed their appellees’ brief with the Court of Appeals on January 16, 2012, with our reply brief being filed with the Court of Appeals on March 19, 2012. Oral arguments were held in the case on August 27, 2012.In an opinion handed down on January 25, 2013, the Court of Appeals overturned the $28.5 million jury verdict returned against the Atmos Entities. In a unanimous decision by a three-judge panel, the Court of Appeals reversed the claims asserted by the landowners and investors/working interest owners. The Court of Appeals concluded that all of such claims that the Atmos Entities appealed should have been dismissed by the trial court as a matter of law. The Court of Appeals let stand the jury verdict on one claim that Atmos Energy and our subsidiaries chose not to appeal, which was a trespass claim. The jury had awarded a total of $10,000 in compensatory damages to one landowner on that claim. The Court of Appeals vacated all of the other damages awarded by the jury and remanded the case to the trial court for a new trial, solely on the issue of whether punitive damages should be awarded to that landowner and, if so, in what amount.The investors/working interest owners, on February 25, 2013, and the landowners, on March 19, 2013, each filed with the Supreme Court of Kentucky, separate motions for discretionary review of the opinion of the Court of Appeals. We filed a response to the motion filed by the investors/working owners on March 27, 2013 and to the landowners’ motion on April 17, 2013. The decision of the Court of Appeals will not become final until the appellate process is completed. We had previously accrued what we believed to be an adequate amount for the anticipated resolution of this matter and we will continue to maintain this amount in legal reserves until the appellate process in this case has been completed. We continue to believe that the final outcome will not have a material adverse effect on our financial condition, results of operations or cash flows.In addition, in a related matter, on July 12, 2011, the Atmos Entities filed a lawsuit in the United States District Court, Western District of Kentucky, Atmos Energy Corporation et al.vs. Resource Energy Technologies, LLC and Robert Thorpe and John F. Charles, against the third party producer and its affiliates to recover all costs, including attorneys’ fees, incurred by the Atmos Entities, which are associated with the defense and appeal of the case discussed above as well as for all damages awarded to the plaintiffs in such case against the Atmos Entities. The total amount of damages being claimed in the lawsuit is “open-ended” since the appellate process and related costs are ongoing. This lawsuit is based upon the indemnification provisions agreed to by the third party producer in favor of Atmos Gathering that are contained in an agreement entered into between Atmos Gathering and the third party producer in May 2009. The defendants filed a motion to dismiss the case on August 25, 2011, with Atmos Energy filing a brief in response to such motion on September 19, 2011. On March 27, 2012 the court denied the motion to dismiss. Since that time, we have continued to be engaged in discovery activities in this case. | |||
Long Term Commitment Purchases [Abstract] | ||||
Significant Purchase Commitment Amount Description | $ 340.9 | $ 176.6 | $ 958.2 | $ 753.0 |
Other Matters [Abstract] | ||||
Description of Loss Contingency | Atmos Energy, through its affiliate, AEM, has been involved in a dispute with the Tennessee Department of Revenue (TDOR) regarding sales business tax audits over a period of several years. AEM has challenged the assessment of the business tax. With respect to certain issues, AEM and the TDOR filed competing Partial Motions for Summary Judgment with the Chancery Court. On August 2, 2013, the Chancery Court granted the TDOR's Partial Motion for Summary Judgment and denied AEM's Partial Motion for Summary Judgment. The Company anticipates a decision by the Chancery Court on the remaining issues in fiscal 2014. AEM has been assessed $6.1 million in business taxes and $3.7 million in penalties and interest for the period from December 2002 through March 31, 2012. We believe the final outcome will not have a material adverse effect on our financial condition, results of operations or cash flows. | |||
Inventories Under Indexed Contracts [Member]
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Long Term Purchase Commitment [Line Items] | ||||
Long Term Purchase Commitment Minimum Quantity Required Within One Year | 84,900 | 84,900 | ||
Long Term Purchase Commitment Minimum Quantity Required One To Three Years | 45,100 | 45,100 | ||
Long Term Purchase Commitment Minimum Quantity Required After Three Years | 21,700 | 21,700 | ||
Inventories Under Fixed Price Contracts [Member]
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Long Term Purchase Commitment [Line Items] | ||||
Long Term Purchase Commitment Minimum Quantity Required Within One Year | 7,100 | 7,100 | ||
Long Term Purchase Commitment Minimum Quantity Required One To Three Years | 300 | 300 | ||
Purchase Commitment Amount Minimum | 3.4 | 3.4 | ||
Purchase Commitment Amount Maximum | 6.36 | 6.36 |
Segment Information (Table)
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Income statements for the three and nine month periods ended June 30, 2013 and 2012 by segment are presented in the following tables:
Balance sheet information at June 30, 2013 and September 30, 2012 by segment is presented in the following tables.
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Discontinued Operations (Details) (USD $)
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0 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Apr. 02, 2013
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Sep. 30, 2012
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Discontinued Operations and Disposal Groups [Abstract] | ||||||
Discontinued Operation, Cash Price Received from Disposal of Discontinued Operation | $ 153,000,000 | |||||
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract] | ||||||
Operating revenues | 0 | 18,162,000 | 37,962,000 | 103,107,000 | ||
Purchased gas cost | 0 | 6,803,000 | 21,464,000 | 57,936,000 | ||
Gross profit | 0 | 11,359,000 | 16,498,000 | 45,171,000 | ||
Operating expenses | 0 | 6,522,000 | 5,858,000 | 20,069,000 | ||
Operating income | 0 | 4,837,000 | 10,640,000 | 25,102,000 | ||
Miscellaneous income (expense) | 0 | 73,000 | 548,000 | 505,000 | ||
Income from discontinued operations before income taxes | 0 | 4,910,000 | 11,188,000 | 25,607,000 | ||
Income tax expense | 0 | 1,792,000 | 3,986,000 | 9,339,000 | ||
Income (loss) from discontinued operations | 0 | 3,118,000 | 7,202,000 | 16,268,000 | ||
Gain (loss) on sale of discontinued operations, net of tax | 5,294,000 | 5,294,000 | 0 | 5,294,000 | 0 | |
Net income (loss) from discontinued operations | 5,294,000 | 3,118,000 | 12,496,000 | 16,268,000 | ||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | ||||||
Net plant, property & equipment | 142,865,000 | |||||
Gas stored underground | 4,688,000 | |||||
Other current assets | 6,931,000 | |||||
Deferred charges and other assets | 87,000 | |||||
Assets held for sale | 154,571,000 | |||||
Accounts payable | 2,114,000 | |||||
Other current liabilities | 3,776,000 | |||||
Regulatory cost of removal | 3,257,000 | |||||
Deferred credits and other liabilities | 2,426,000 | |||||
Liabilities held for sale | $ 11,573,000 |
Fair Value Measurements (Table)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements table | The following tables summarize, by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013 and September 30, 2012. Assets and liabilities are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement.
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Schedule of Available-for-sale Securities Reconciliation [Table Text Block] | Available-for-sale securities are comprised of the following:
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Other fair value measurements table | The following table presents the carrying value and fair value of our debt as of June 30, 2013:
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 38,768 | $ 31,132 | $ 235,658 | $ 208,750 |
Other comprehensive income (loss), net of tax | ||||
Net unrealized holding gains (losses) on available-for-sale securities, net of tax | (348) | (888) | (921) | 2,059 |
Amortization and unrealized gains (losses) on interest rate agreements, net of tax | 31,079 | (31,328) | 66,852 | (17,019) |
Net unrealized gains (losses) on commodity cash flow hedges, net of tax | (3,508) | 17,830 | 4,965 | (4,060) |
Total other comprehensive income | 27,223 | (14,386) | 70,896 | (19,020) |
Total comprehensive income | $ 65,991 | $ 16,746 | $ 306,554 | $ 189,730 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Cash Flows From Operating Activities | ||
Net income (loss) | $ 235,658 | $ 208,750 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on sale of discontinued operations | (8,203) | 0 |
Depreciation and amortization: | ||
Charged to depreciation and amortization | 176,737 | 183,884 |
Charged to other accounts | 446 | 310 |
Other | ||
Deferred income taxes | 130,365 | 120,713 |
Other | 14,460 | 22,386 |
Net Assets Liabilities From Risk Management Activities | (6,386) | 12,759 |
Net change in operating assets and liabilities | (33,502) | (29,996) |
Net cash provided by operating activities | 509,575 | 518,806 |
Cash Flows From Investing Activities | ||
Capital expenditures | (582,473) | (497,374) |
Proceeds from sale of discontinued operations | 153,023 | 0 |
Other, net | (3,139) | (4,247) |
Net cash used in investing activities | (432,589) | (501,621) |
Cash Flows From Financing Activities | ||
Net decrease in short-term debt | (435,084) | (6,688) |
Net proceeds from issuance of long-term debt | 493,793 | 0 |
Settlement of Treasury lock agreement | (66,626) | 0 |
Repayment of long-term debt | (131) | (2,369) |
Cash dividends paid | (96,060) | (94,338) |
Repurchase of common stock | 0 | (12,535) |
Repurchase of equity awards | (5,146) | (5,219) |
Issuance of common stock | 8 | 251 |
Net cash used in fnancing activities | (109,246) | (120,898) |
Net decrease in cash and cash equivalents | (32,260) | (103,713) |
Cash and cash equivalents at beginning of period | 64,239 | 131,419 |
Cash and cash equivalents at end of period | $ 31,979 | $ 27,706 |
Financial Instruments
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments We use financial instruments to mitigate commodity price risk and interest rate risk. The objectives and strategies for using financial instruments have been tailored to our regulated and nonregulated businesses. The accounting for these financial instruments is fully described in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. During the nine months ended June 30, 2013 there were no changes in our objectives, strategies and accounting for these financial instruments. Currently, we utilize financial instruments in our natural gas distribution and nonregulated segments. We currently do not manage commodity price risk with financial instruments in our regulated transmission and storage segment. Our financial instruments do not contain any credit-risk-related or other contingent features that could cause payments to be accelerated when our financial instruments are in net liability positions. Regulated Commodity Risk Management Activities Although our purchased gas cost adjustment mechanisms essentially insulate our natural gas distribution segment from commodity price risk, our customers are exposed to the effects of volatile natural gas prices. We manage this exposure through a combination of physical storage, fixed-price forward contracts and financial instruments, primarily over-the-counter swap and option contracts, in an effort to minimize the impact of natural gas price volatility on our customers during the winter heating season. Our natural gas distribution gas supply department is responsible for executing this segment’s commodity risk management activities in conformity with regulatory requirements. In jurisdictions where we are permitted to mitigate commodity price risk through financial instruments, the relevant regulatory authorities may establish the level of heating season gas purchases that can be hedged. Historically, if the regulatory authority does not establish this level, we seek to hedge between 25 and 50 percent of anticipated heating season gas purchases using financial instruments. For the 2012-2013 heating season (generally October through March), in the jurisdictions where we are permitted to utilize financial instruments, we hedged approximately 33 percent, or 22.8 Bcf of the winter flowing gas requirements. We have not designated these financial instruments as hedges for accounting purposes. The costs associated with and the gains and losses arising from the use of financial instruments to mitigate commodity price risk are included in our purchased gas cost adjustment mechanisms in accordance with regulatory requirements. Therefore, changes in the fair value of these financial instruments are initially recorded as a component of deferred gas costs and recognized in the consolidated statement of income as a component of purchased gas cost when the related costs are recovered through our rates and recognized in revenue in accordance with applicable authoritative accounting guidance. Accordingly, there is no earnings impact on our natural gas distribution segment as a result of the use of financial instruments. Nonregulated Commodity Risk Management Activities Our nonregulated operations aggregate and purchase gas supply, arrange transportation and/or storage logistics and ultimately deliver gas to our customers at competitive prices. To provide these services, we utilize proprietary and customer-owned transportation and storage assets to provide the various services our customers request. In an effort to offset the demand fees paid to contract for storage capacity and to maximize the value of this capacity, AEH sells financial instruments to earn a gross profit margin through the arbitrage of pricing differences in various locations and by recognizing pricing differences that occur over time. As a result of these activities, our nonregulated segment is exposed to risks associated with changes in the market price of natural gas. We manage our exposure to such risks through a combination of physical storage and financial instruments, including futures, over-the-counter and exchange traded options and swap contracts with counterparties. Future contracts provide the right, but not the obligation, to buy or sell the commodity at a fixed price. Option contracts provide the right, but not the requirement, to buy or sell the commodity at a fixed price. Swap contracts require receipt of payment for the commodity based on the difference between a fixed price and the market price on the settlement date. We use financial instruments, designated as cash flow hedges of anticipated purchases and sales at index prices, to mitigate the commodity price risk in our nonregulated operations associated with deliveries under fixed-priced forward contracts to deliver gas to customers. These financial instruments have maturity dates ranging from one to 58 months. We use financial instruments, designated as fair value hedges, to hedge our natural gas inventory used in asset optimization activities in our nonregulated segment. Our nonregulated operations also use storage swaps and futures to capture additional storage arbitrage opportunities that arise subsequent to the execution of the original fair value hedge associated with our physical natural gas inventory, basis swaps to insulate and protect the economic value of our fixed price and storage books and various over-the-counter and exchange-traded options. These financial instruments have not been designated as hedges for accounting purposes. Interest Rate Risk Management Activities We have periodically managed interest rate risk by entering into financial instruments to fix the Treasury yield component of the interest cost associated with anticipated financings. Prior to fiscal 2012, we used only Treasury locks to mitigate interest rate risk; however, beginning in the fourth quarter of fiscal 2012 we started utilizing interest rate swaps and forward starting interest rate swaps to manage this risk. In August 2011, we entered into three Treasury lock agreements to fix the Treasury yield component of the interest cost associated with $350 million out of a total $500 million of senior notes that were issued on January 11, 2013. This offering is discussed in Note 7. We designated these Treasury locks as cash flow hedges. The Treasury locks were settled on January 8, 2013 with a payment of $66.6 million to the counterparties due to a decrease in the 30-year Treasury rates between inception of the Treasury locks and settlement. Because the Treasury locks were effective, the $66.6 million unrealized loss was recorded as a component of accumulated other comprehensive income and is being recognized as a component of interest expense over the 30-year life of the senior notes. In the fourth quarter of fiscal 2012, we entered into an interest rate swap to fix the LIBOR component of our $260 million short-term financing facility that terminated on December 27, 2012. We recorded an immaterial loss upon settlement of the swap, which was recorded as a component of interest expense as we did not designate the interest rate swap as a hedge. In October 2012, we entered into forward starting interest rate swaps to fix the Treasury yield component associated with the anticipated issuance of $500 million and $250 million unsecured senior notes in fiscal 2015 and fiscal 2017, which we designated as cash flow hedges at the time the agreements were executed. Accordingly, unrealized gains and losses associated with the forward starting interest rate swaps are being recorded as a component of accumulated other comprehensive income (loss). When the forward starting interest rate swaps settle, the realized gain or loss will be recorded as a component of accumulated other comprehensive income (loss) and recognized as a component of interest expense over the life of the related financing arrangement. Hedge ineffectiveness to the extent incurred is reported as a component of interest expense. In prior years, we entered into Treasury lock agreements to fix the Treasury yield component of the interest cost of financing various issuances of long-term debt and senior notes. The gains and losses realized upon settlement of these Treasury locks were recorded as a component of accumulated other comprehensive income (loss) when they were settled and are being recognized as a component of interest expense over the life of the associated notes from the date of settlement. As of June 30, 2013, the remaining amortization periods for the settled Treasury locks extend through fiscal 2043. Quantitative Disclosures Related to Financial Instruments The following tables present detailed information concerning the impact of financial instruments on our condensed consolidated balance sheet and income statements. As of June 30, 2013, our financial instruments were comprised of both long and short commodity positions. A long position is a contract to purchase the commodity, while a short position is a contract to sell the commodity. As of June 30, 2013, we had net long/(short) commodity contracts outstanding in the following quantities:
Financial Instruments on the Balance Sheet The following tables present the fair value and balance sheet classification of our financial instruments by operating segment as of June 30, 2013 and September 30, 2012. As required by authoritative accounting literature, the fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements. Further, the amounts below do not include $14.3 million and $23.7 million of cash held on deposit in margin accounts as of June 30, 2013 and September 30, 2012 to collateralize certain financial instruments. Therefore, these gross balances are not indicative of either our actual credit exposure or net economic exposure. Additionally, the amounts below will not be equal to the amounts presented on our condensed consolidated balance sheet, nor will they be equal to the fair value information presented for our financial instruments in Note 5.
Impact of Financial Instruments on the Income Statement Hedge ineffectiveness for our nonregulated segment is recorded as a component of unrealized gross profit and primarily results from differences in the location and timing of the derivative instrument and the hedged item. Hedge ineffectiveness could materially affect our results of operations for the reported period. For the three months ended June 30, 2013 and 2012 we recognized a gain (loss) arising from fair value and cash flow hedge ineffectiveness of $(0.4) million and $19.0 million. For the nine months ended June 30, 2013 and 2012 we recognized gains arising from fair value and cash flow hedge ineffectiveness of $17.3 million and $21.2 million. Additional information regarding ineffectiveness recognized in the income statement is included in the tables below. Fair Value Hedges The impact of our nonregulated commodity contracts designated as fair value hedges and the related hedged item on our condensed consolidated income statement for the three and nine months ended June 30, 2013 and 2012 is presented below.
Basis ineffectiveness arises from natural gas market price differences between the locations of the hedged inventory and the delivery location specified in the hedge instruments. Timing ineffectiveness arises due to changes in the difference between the spot price and the futures price, as well as the difference between the timing of the settlement of the futures and the valuation of the underlying physical commodity. As the commodity contract nears the settlement date, spot-to-forward price differences should converge, which should reduce or eliminate the impact of this ineffectiveness on purchased gas cost. To the extent that the Company’s natural gas inventory does not qualify as a hedged item in a fair-value hedge, or has not been designated as such, the natural gas inventory is valued at the lower of cost or market. We did not record a writedown for nonqualifying natural gas inventory for the nine months ended June 30, 2013. During the nine months ended June 30, 2012, we recorded a $1.7 million charge to write down nonqualifying natural gas inventory to market. Cash Flow Hedges The impact of cash flow hedges on our condensed consolidated income statements for the three and nine months ended June 30, 2013 and 2012 is presented below. Note that this presentation does not reflect the financial impact arising from the hedged physical transaction. Therefore, this presentation is not indicative of the economic gross profit we realized when the underlying physical and financial transactions were settled.
The following table summarizes the gains and losses arising from hedging transactions that were recognized as a component of other comprehensive income (loss), net of taxes, for the three and nine months ended June 30, 2013 and 2012. The amounts included in the table below exclude gains and losses arising from ineffectiveness because those amounts are immediately recognized in the income statement as incurred.
Deferred gains (losses) recorded in accumulated other comprehensive income (AOCI) associated with our interest rate agreements are recognized in earnings as they are amortized over the terms of the underlying debt instruments, while deferred losses associated with commodity contracts are recognized in earnings upon settlement. The following amounts, net of deferred taxes, represent the expected recognition in earnings of the deferred gains (losses) recorded in AOCI associated with our financial instruments, based upon the fair values of these financial instruments as of June 30, 2013. However, the table below does not include the expected recognition in earnings of our outstanding interest rate agreements as those instruments have not yet settled.
Financial Instruments Not Designated as Hedges The impact of financial instruments that have not been designated as hedges on our condensed consolidated income statements for the three months ended June 30, 2013 and 2012 was an increase (decrease) in gross profit of $(8.4) million and $11.2 million. For the nine months ended June 30, 2013 and 2012 gross profit decreased $1.7 million and $3.8 million. Note that this presentation does not reflect the expected gains or losses arising from the underlying physical transactions associated with these financial instruments. Therefore, this presentation is not indicative of the economic gross profit we realized when the underlying physical and financial transactions were settled. As discussed above, financial instruments used in our natural gas distribution segment are not designated as hedges. However, there is no earnings impact on our natural gas distribution segment as a result of the use of these financial instruments because the gains and losses arising from the use of these financial instruments are recognized in the consolidated statement of income as a component of purchased gas cost when the related costs are recovered through our rates and recognized in revenue. Accordingly, the impact of these financial instruments is excluded from this presentation. |
Nature of Business
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9 Months Ended | ||||||||||||
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Nature of Business | 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. For the fiscal year ended September 30, 2012, our regulated businesses generated over 95 percent of our consolidated net income. Through our natural gas distribution business, we deliver natural gas through sales and transportation arrangements to approximately three million residential, commercial, public authority and industrial customers through our six regulated natural gas distribution divisions, which at June 30, 2013, covered service areas located in eight states. In addition, we transport natural gas for others through our distribution system. On April 1, 2013, we completed the divestiture of our natural gas distribution operations in Georgia, representing approximately 64,000 customers. Our regulated businesses also include our regulated pipeline and storage operations, which include the transportation of natural gas to our distribution system and the management of our underground storage facilities. Our regulated businesses are subject to federal and state regulation and/or regulation by local authorities in each of the states in which our natural gas distribution divisions operate. Our nonregulated businesses operate primarily in the Midwest and Southeast through various wholly-owned subsidiaries of Atmos Energy Holdings, Inc., (AEH). AEH is wholly owned by the Company and based in Houston, Texas. Through AEH, we provide natural gas management and transportation services to municipalities, natural gas distribution companies, including certain divisions of Atmos Energy and third parties. We operate the Company through the following three segments:
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Fair Value Measurements (Details) (USD $)
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Jun. 30, 2013
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Sep. 30, 2012
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | $ 99,478,000 | $ 27,138,000 |
Hedged portion of gas stored underground | 76,706,000 | 67,192,000 |
Total available for sale securities | 71,646,000 | 64,398,000 |
Total assets | 247,830,000 | 158,728,000 |
Total liabilities | 3,161,000 | 94,846,000 |
Fair Value [Abstract] | ||
Cash Collateral Right To Reclaim Cash | 14,300,000 | 23,700,000 |
Cash Held In Margin Accounts Offset Current Risk Management Liabilities | 2,500,000 | 5,900,000 |
Cash Held In Margin Accounts Classified Current Risk Management Asset | 11,800,000 | 17,800,000 |
Debt Instrument Carrying Amount | 2,460,000,000 | 1,960,131,000 |
Debt Instrument Fair Value | 2,707,340,000 | |
Money Market Funds [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 5,122,000 | 1,634,000 |
Equity Securities [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 39,051,000 | 40,212,000 |
Debt Securities [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 27,473,000 | 22,552,000 |
Natural Gas Distribution Segment [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 87,482,000 | 9,365,000 |
Total liabilities | 1,094,000 | 85,625,000 |
Nonregulated Segment [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 11,996,000 | 17,773,000 |
Total liabilities | 2,067,000 | 9,221,000 |
Fair Value Inputs Level 1 [Member]
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||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 1,196,000 | 714,000 |
Hedged portion of gas stored underground | 76,706,000 | 67,192,000 |
Total available for sale securities | 39,051,000 | 40,212,000 |
Total assets | 116,953,000 | 108,118,000 |
Total liabilities | 179,000 | 4,563,000 |
Fair Value Inputs Level 1 [Member] | Money Market Funds [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Fair Value Inputs Level 1 [Member] | Equity Securities [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 39,051,000 | 40,212,000 |
Fair Value Inputs Level 1 [Member] | Debt Securities [Member]
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Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Fair Value Inputs Level 1 [Member] | Natural Gas Distribution Segment [Member]
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||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value Inputs Level 1 [Member] | Nonregulated Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 1,196,000 | 714,000 |
Total liabilities | 179,000 | 4,563,000 |
Fair Value Inputs Level 2 [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 217,560,000 | 189,200,000 |
Hedged portion of gas stored underground | 0 | 0 |
Total available for sale securities | 32,595,000 | 24,186,000 |
Total assets | 250,155,000 | 213,386,000 |
Total liabilities | 136,512,000 | 276,734,000 |
Fair Value Inputs Level 2 [Member] | Money Market Funds [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 5,122,000 | 1,634,000 |
Fair Value Inputs Level 2 [Member] | Equity Securities [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Fair Value Inputs Level 2 [Member] | Debt Securities [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 27,473,000 | 22,552,000 |
Fair Value Inputs Level 2 [Member] | Natural Gas Distribution Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 87,482,000 | 9,365,000 |
Total liabilities | 1,094,000 | 85,625,000 |
Fair Value Inputs Level 2 [Member] | Nonregulated Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 130,078,000 | 179,835,000 |
Total liabilities | 135,418,000 | 191,109,000 |
Fair Value Inputs Level 3 [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 0 | 0 |
Hedged portion of gas stored underground | 0 | 0 |
Total available for sale securities | 0 | 0 |
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value Inputs Level 3 [Member] | Money Market Funds [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Fair Value Inputs Level 3 [Member] | Equity Securities [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Fair Value Inputs Level 3 [Member] | Debt Securities [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Fair Value Inputs Level 3 [Member] | Natural Gas Distribution Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value Inputs Level 3 [Member] | Nonregulated Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Netting And Collateral [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | (119,278,000) | (162,776,000) |
Hedged portion of gas stored underground | 0 | 0 |
Total available for sale securities | 0 | 0 |
Total assets | (119,278,000) | (162,776,000) |
Total liabilities | (133,530,000) | (186,451,000) |
Netting And Collateral [Member] | Money Market Funds [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Netting And Collateral [Member] | Equity Securities [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Netting And Collateral [Member] | Debt Securities [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total available for sale securities | 0 | 0 |
Netting And Collateral [Member] | Natural Gas Distribution Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Netting And Collateral [Member] | Nonregulated Segment [Member]
|
||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total financial instruments | (119,278,000) | (162,776,000) |
Total liabilities | $ (133,530,000) | $ (186,451,000) |
Earnings Per Share (Table)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share table | Basic and diluted earnings per share for the three and nine months ended June 30, 2013 and 2012 are calculated as follows:
|
Nature of Business (Details)
|
9 Months Ended |
---|---|
Jun. 30, 2013
segment
customers
regulated_gas_distributions_divisions
state
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of Customers, Natural Gas Distribution | 3,000,000 |
Number of Divisions, Natural Gas Distribution | 6 |
Number of States in which Entity Operates | 8 |
Number of Customers, discontinued operations | 64,000 |
Number of operating segments | 3 |
Financial Instruments Fair Value Hedges and Cash Flow Hedges (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Effect of Fair Value Hedges on Results of Operations [Abstract] | ||||
Commodity contracts | $ (14,453) | $ 14,942 | $ (3,921) | $ (38,211) |
Fair value adjustment for natural gas inventory designated as the hedged item | 15,143 | (34,296) | (13,261) | 16,039 |
Total (increase) decrease to purchased gas cost | (690) | 19,354 | 17,182 | 22,172 |
Basis ineffectiveness | (2,361) | 2,077 | (1,143) | 2,179 |
Timing ineffectiveness | 1,671 | 17,277 | 18,325 | 19,993 |
Cash Flow Hedge [Line Items] | ||||
Gain (loss) reclassified from AOCI into purchased gas cost for effective portion of commodity contracts | 558 | (19,534) | (9,802) | (52,358) |
Gain (loss) arising from ineffective portion of commodity contracts | 260 | (328) | 158 | (996) |
Total impact on purchased gas cost | 818 | (19,862) | (9,644) | (53,354) |
Net loss on settled Treasury Lock agreements reclassified from AOCI into interest expense | 1,057 | 502 | 2,432 | 1,506 |
Total Impact from Cash Flow Hedges | (239) | (20,364) | (12,076) | (54,860) |
Natural Gas Distribution Segment [Member]
|
||||
Cash Flow Hedge [Line Items] | ||||
Gain (loss) reclassified from AOCI into purchased gas cost for effective portion of commodity contracts | 0 | 0 | 0 | 0 |
Gain (loss) arising from ineffective portion of commodity contracts | 0 | 0 | 0 | 0 |
Total impact on purchased gas cost | 0 | 0 | 0 | 0 |
Net loss on settled Treasury Lock agreements reclassified from AOCI into interest expense | 1,057 | 502 | 2,432 | 1,506 |
Total Impact from Cash Flow Hedges | (1,057) | (502) | (2,432) | (1,506) |
Nonregulated Segment [Member]
|
||||
Cash Flow Hedge [Line Items] | ||||
Gain (loss) reclassified from AOCI into purchased gas cost for effective portion of commodity contracts | 558 | (19,534) | (9,802) | (52,358) |
Gain (loss) arising from ineffective portion of commodity contracts | 260 | (328) | 158 | (996) |
Total impact on purchased gas cost | 818 | (19,862) | (9,644) | (53,354) |
Net loss on settled Treasury Lock agreements reclassified from AOCI into interest expense | 0 | 0 | 0 | 0 |
Total Impact from Cash Flow Hedges | $ 818 | $ (19,862) | $ (9,644) | $ (53,354) |