Segment Information

We operate the Company through the following three segments:


•	The regulated distribution segment, which includes our regulated natural gas distribution and related sales operations,


•	The regulated pipeline 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.

Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers in differing regulatory environments. Although our regulated distribution segment operations are geographically dispersed, they are reported as a single segment as each regulated distribution division has similar economic characteristics. The accounting policies of the segments are the same as those described in the summary of significant accounting policies found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014. We evaluate performance based on net income or loss of the respective operating units.

Income statements for the three and six month periods ended March 31, 2015 and 2014 by segment are presented in the following tables:



	Three Months Ended March 31, 2015
	Regulated Distribution			Regulated Pipeline			Nonregulated			Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	1,128,473		$	24,477		$	387,118		$	—		$	1,540,068
Intersegment revenues	2,140			67,253			51,204			(120,597		)	—
	1,130,613			91,730			438,322			(120,597		)	1,540,068
Purchased gas cost	724,378			—			415,416			(120,464		)	1,019,330
Gross profit	406,235			91,730			22,906			(133		)	520,738
Operating expenses
Operation and maintenance	103,425			22,842			7,326			(133		)	133,460
Depreciation and amortization	55,153			11,747			1,122			—			68,022
Taxes, other than income	62,939			5,238			869			—			69,046
Total operating expenses	221,517			39,827			9,317			(133		)	270,528
Operating income	184,718			51,903			13,589			—			250,210
Miscellaneous income (expense)	(937		)	(379		)	252			(497		)	(1,561		)
Interest charges	19,313			8,391			240			(497		)	27,447
Income before income taxes	164,468			43,133			13,601			—			221,202
Income tax expense	62,615			15,451			5,452			—			83,518
Net income	$	101,853		$	27,682		$	8,149		$	—		$	137,684
Capital expenditures	$	145,990		$	34,360		$	(19	)	$	—		$	180,331



	Three Months Ended March 31, 2014
	Regulated Distribution		Regulated Pipeline			Nonregulated			Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	1,289,429	$	21,002		$	654,423		$	—		$	1,964,854
Intersegment revenues	1,531		52,613			103,792			(157,936		)	—
	1,290,960		73,615			758,215			(157,936		)	1,964,854
Purchased gas cost	905,772		—			720,626			(157,821		)	1,468,577
Gross profit	385,188		73,615			37,589			(115		)	496,277
Operating expenses
Operation and maintenance	106,776		16,595			1,419			(115		)	124,675
Depreciation and amortization	50,020		10,156			1,131			—			61,307
Taxes, other than income	60,606		(1,232		)	841			—			60,215
Total operating expenses	217,402		25,519			3,391			(115		)	246,197
Operating income	167,786		48,096			34,198			—			250,080
Miscellaneous income (expense)	97		(1,081		)	443			(975		)	(1,516		)
Interest charges	22,828		9,155			593			(975		)	31,601
Income before income taxes	145,055		37,860			34,048			—			216,963
Income tax expense	56,312		13,751			13,533			—			83,596
Net income	$	88,743	$	24,109		$	20,515		$	—		$	133,367
Capital expenditures	$	139,555	$	39,000		$	(113	)	$	—		$	178,442




	Six Months Ended March 31, 2015
	Regulated Distribution			Regulated Pipeline			Nonregulated		Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	1,973,877		$	45,028		$	779,928	$	—		$	2,798,833
Intersegment revenues	3,508			130,269			120,682		(254,459		)	—
	1,977,385			175,297			900,610		(254,459		)	2,798,833
Purchased gas cost	1,247,338			—			861,665		(254,193		)	1,854,810
Gross profit	730,047			175,297			38,945		(266		)	944,023
Operating expenses
Operation and maintenance	190,410			47,457			14,441		(266		)	252,042
Depreciation and amortization	110,239			23,129			2,247		—			135,615
Taxes, other than income	106,583			10,103			1,745		—			118,431
Total operating expenses	407,232			80,689			18,433		(266		)	506,088
Operating income	322,815			94,608			20,512		—			437,935
Miscellaneous income (expense)	(2,266		)	(631		)	552		(923		)	(3,268		)
Interest charges	40,953			16,715			466		(923		)	57,211
Income from before income taxes	279,596			77,262			20,598		—			377,456
Income tax expense	106,356			27,545			8,276		—			142,177
Net income	$	173,240		$	49,717		$	12,322	$	—		$	235,279
Capital expenditures	$	312,237		$	129,114		$	293	$	—		$	441,644




	Six Months Ended March 31, 2014
	Regulated Distribution			Regulated Pipeline			Nonregulated		Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	2,131,861		$	42,172		$	1,034,679	$	—		$	3,208,712
Intersegment revenues	2,964			102,784			159,967		(265,715		)	—
	2,134,825			144,956			1,194,646		(265,715		)	3,208,712
Purchased gas cost	1,450,466			—			1,138,491		(265,479		)	2,323,478
Gross profit	684,359			144,956			56,155		(236		)	885,234
Operating expenses
Operation and maintenance	196,439			33,895			10,334		(236		)	240,432
Depreciation and amortization	99,571			19,942			2,263		—			121,776
Taxes, other than income	97,690			3,431			1,105		—			102,226
Total operating expenses	393,700			57,268			13,702		(236		)	464,434
Operating income	290,659			87,688			42,453		—			420,800
Miscellaneous income (expense)	(374		)	(2,262		)	767		(1,779		)	(3,648		)
Interest charges	46,153			18,112			1,230		(1,779		)	63,716
Income before income taxes	244,132			67,314			41,990		—			353,436
Income tax expense	92,632			23,759			16,662		—			133,053
Net income	$	151,500		$	43,555		$	25,328	$	—		$	220,383
Capital expenditures	$	267,061		$	91,921		$	27	$	—		$	359,009

Balance sheet information at March 31, 2015 and September 30, 2014 by segment is presented in the following tables:



	March 31, 2015
	Regulated Distribution		Regulated Pipeline		Nonregulated			Eliminations			Consolidated
	(In thousands)
ASSETS
Property, plant and equipment, net	$	5,401,722	$	1,567,618	$	56,738		$	—		$	7,026,078
Investment in subsidiaries	983,075		—		(2,096		)	(980,979		)	—
Current assets
Cash and cash equivalents	82,732		—		12,793			—			95,525
Assets from risk management activities	364		—		16,583			—			16,947
Other current assets	514,627		13,710		497,411			(320,583		)	705,165
Intercompany receivables	814,495		—		—			(814,495		)	—
Total current assets	1,412,218		13,710		526,787			(1,135,078		)	817,637
Goodwill	574,816		132,502		34,711			—			742,029
Deferred charges and other assets	320,918		14,592		5,390			—			340,900
	$	8,692,749	$	1,728,422	$	621,530		$	(2,116,057	)	$	8,926,644
CAPITALIZATION AND LIABILITIES
Shareholders’ equity	$	3,139,694	$	532,329	$	450,746		$	(983,075	)	$	3,139,694
Long-term debt	2,455,217		—		—			—			2,455,217
Total capitalization	5,594,911		532,329		450,746			(983,075		)	5,594,911
Current liabilities
Short-term debt	529,586		—		—			(304,600		)	224,986
Liabilities from risk management activities	5,769		—		—			—			5,769
Other current liabilities	649,355		13,129		139,150			(13,887		)	787,747
Intercompany payables	—		783,147		31,348			(814,495		)	—
Total current liabilities	1,184,710		796,276		170,498			(1,132,982		)	1,018,502
Deferred income taxes	948,589		398,589		(8,423		)	—			1,338,755
Noncurrent liabilities from risk management activities	132,305		—		—			—			132,305
Regulatory cost of removal obligation	441,655		—		—			—			441,655
Pension and postretirement liabilities	350,889		—		—			—			350,889
Deferred credits and other liabilities	39,690		1,228		8,709			—			49,627
	$	8,692,749	$	1,728,422	$	621,530		$	(2,116,057	)	$	8,926,644



	September 30, 2014
	Regulated Distribution		Regulated Pipeline		Nonregulated			Eliminations			Consolidated
	(In thousands)
ASSETS
Property, plant and equipment, net	$	5,202,761	$	1,464,572	$	58,573		$	—		$	6,725,906
Investment in subsidiaries	952,171		—		(2,096		)	(950,075		)	—
Current assets
Cash and cash equivalents	33,303		—		8,955			—			42,258
Assets from risk management activities	23,102		—		22,725			—			45,827
Other current assets	490,408		14,009		526,161			(342,823		)	687,755
Intercompany receivables	790,442		—		—			(790,442		)	—
Total current assets	1,337,255		14,009		557,841			(1,133,265		)	775,840
Goodwill	574,816		132,502		34,711			—			742,029
Noncurrent assets from risk management activities	13,038		—		—			—			13,038
Deferred charges and other assets	309,965		21,826		6,100			—			337,891
	$	8,390,006	$	1,632,909	$	655,129		$	(2,083,340	)	$	8,594,704
CAPITALIZATION AND LIABILITIES
Shareholders’ equity	$	3,086,232	$	482,612	$	469,559		$	(952,171	)	$	3,086,232
Long-term debt	2,455,986		—		—			—			2,455,986
Total capitalization	5,542,218		482,612		469,559			(952,171		)	5,542,218
Current liabilities
Short-term debt	522,695		—		—			(326,000		)	196,695
Liabilities from risk management activities	1,730		—		—			—			1,730
Other current liabilities	559,765		24,790		142,397			(14,727		)	712,225
Intercompany payables	—		763,635		26,807			(790,442		)	—
Total current liabilities	1,084,190		788,425		169,204			(1,131,169		)	910,650
Deferred income taxes	913,260		361,688		11,668			—			1,286,616
Noncurrent liabilities from risk management activities	20,126		—		—			—			20,126
Regulatory cost of removal obligation	445,387		—		—			—			445,387
Pension and postretirement liabilities	340,963		—		—			—			340,963
Deferred credits and other liabilities	43,862		184		4,698			—			48,744
	$	8,390,006	$	1,632,909	$	655,129		$	(2,083,340	)	$	8,594,704