Segment Information

As of September 30, 2018, we manage and review our consolidated operations through the following three reportable segments:


•	The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states.


•	The pipeline and storage segment is comprised primarily of the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.


•	The natural gas marketing segment is comprised of our discontinued natural gas marketing business.

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 distribution segment operations are geographically dispersed, they are aggregated and reported as a single segment as each natural gas distribution division has similar economic characteristics. In addition, because the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana have similar economic characteristics, they have been aggregated and reported as a single segment.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate performance based on net income or loss of the respective operating units. We allocate interest and pension expense to the pipeline and storage segment; however, there is no debt or pension liability recorded on the pipeline and storage segment balance sheet. All material intercompany transactions have been eliminated; however, we have not eliminated intercompany profits when such amounts are probable of recovery under the affiliates’ rate regulation process. Income taxes are allocated to each segment as if each segment’s taxes were calculated on a separate return basis.

Income statements and capital expenditures by segment are shown in the following tables.



	Year Ended September 30, 2018
	Distribution			Pipeline and Storage			Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	3,000,404		$	115,142		$	—		$	3,115,546
Intersegment revenues	2,643			392,571			(395,214		)	—
Total operating revenues	3,003,047			507,713			(395,214		)	3,115,546
Purchased gas cost	1,559,836			1,978			(393,966		)	1,167,848
Operation and maintenance expense	465,848			134,995			(1,248		)	599,595
Depreciation and amortization expense	264,930			96,153			—			361,083
Taxes, other than income	231,566			32,320			—			263,886
Operating income	480,867			242,267			—			723,134
Miscellaneous expense	(1,849		)	(3,495		)	—			(5,344		)
Interest charges	65,850			40,796			—			106,646
Income before income taxes	413,168			197,976			—			611,144
Income tax (benefit) expense	(29,798		)	37,878			—			8,080
Net income	$	442,966		$	160,098		$	—		$	603,064
Capital expenditures	$	1,025,800		$	441,791		$	—		$	1,467,591



	Year Ended September 30, 2017
	Distribution			Pipeline and Storage			Natural Gas Marketing		Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	2,647,813		$	111,922		$	—	$	—		$	2,759,735
Intersegment revenues	1,362			345,108			—		(346,470		)	—
Total operating revenues	2,649,175			457,030			—		(346,470		)	2,759,735
Purchased gas cost	1,269,456			2,506			—		(346,426		)	925,536
Operation and maintenance expense	413,077			133,765			—		(44		)	546,798
Depreciation and amortization expense	249,071			70,377			—		—			319,448
Taxes, other than income	211,929			28,478			—		—			240,407
Operating income	505,642			221,904			—		—			727,546
Miscellaneous expense	(1,695		)	(1,575		)	—		—			(3,270		)
Interest charges	79,789			40,393			—		—			120,182
Income from continuing operations before income taxes	424,158			179,936			—		—			604,094
Income tax expense	155,789			65,594			—		—			221,383
Income from continuing operations	268,369			114,342			—		—			382,711
Income from discontinued operations, net of tax	—			—			10,994		—			10,994
Gain on sale of discontinued operations, net of tax	—			—			2,716		—			2,716
Net income	$	268,369		$	114,342		$	13,710	$	—		$	396,421
Capital expenditures	$	849,950		$	287,139		$	—	$	—		$	1,137,089



	Year Ended September 30, 2016
	Distribution		Pipeline and Storage			Natural Gas Marketing		Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	2,338,404	$	116,244		$	—	$	—		$	2,454,648
Intersegment revenues	1,374		310,952			—		(312,326		)	—
Total operating revenues	2,339,778		427,196			—		(312,326		)	2,454,648
Purchased gas cost	1,058,576		(58		)	—		(312,326		)	746,192
Operation and maintenance expense	407,982		130,610			—		—			538,592
Depreciation and amortization expense	234,109		56,682			—		—			290,791
Taxes, other than income	197,227		24,616			—		—			221,843
Operating income	441,884		215,346			—		—			657,230
Miscellaneous income (expense)	1,171		(1,405		)	—		—			(234		)
Interest charges	78,238		36,574			—		—			114,812
Income from continuing operations before income taxes	364,817		177,367			—		—			542,184
Income tax expense	130,987		65,655			—		—			196,642
Income from continuing operations	233,830		111,712			—		—			345,542
Income from discontinued operations, net of tax	—		—			4,562		—			4,562
Net income	$	233,830	$	111,712		$	4,562	$	—		$	350,104
Capital expenditures	$	740,246	$	346,383		$	321	$	—		$	1,086,950

The following table summarizes our revenues from external parties by products and services for the fiscal year ended September 30.



	2018		2017		2016
	(In thousands)
Distribution revenues:
Gas sales revenues:
Residential	$	1,916,101	$	1,642,918	$	1,477,049
Commercial	797,073		708,167		619,979
Industrial	131,267		133,372		98,439
Public authority and other	47,714		45,820		41,307
Total gas sales revenues	2,892,155		2,530,277		2,236,774
Transportation revenues	99,250		86,332		76,690
Other gas revenues	8,999		31,204		24,940
Total distribution revenues	3,000,404		2,647,813		2,338,404
Pipeline and storage revenues	115,142		111,922		116,244
Total operating revenues	$	3,115,546	$	2,759,735	$	2,454,648

Balance sheet information at September 30, 2018 and 2017 by segment is presented in the following tables.



	September 30, 2018
	Distribution		Pipeline and Storage		Eliminations			Consolidated
	(In thousands)
Property, plant and equipment, net	$	7,644,693	$	2,726,454	$	—		$	10,371,147
Total assets	$	11,109,128	$	2,963,480	$	(2,198,171	)	$	11,874,437



	September 30, 2017
	Distribution		Pipeline and Storage		Eliminations			Consolidated
	(In thousands)
Property, plant and equipment, net	$	6,849,517	$	2,409,665	$	—		$	9,259,182
Total assets	$	10,050,164	$	2,621,601	$	(1,922,169	)	$	10,749,596