Segment Information

12 Months Ended

Sep. 30, 2019

As of September 30, 2019, we manage and review our consolidated operations through the following two 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.

Prior to disposition, the natural gas marketing segment, which was comprised of our natural gas marketing business, was also a reportable segment.

Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers. 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 income 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, 2019
	Distribution		Pipeline and Storage			Eliminations			Consolidated
	(In thousands)
Operating revenues from external parties	$	2,742,824	$	159,024		$	—		$	2,901,848
Intersegment revenues	2,637		408,000			(410,637		)	—
Total operating revenues	2,745,461		567,024			(410,637		)	2,901,848
Purchased gas cost	1,268,591		(360		)	(409,394		)	858,837
Operation and maintenance expense	480,222		151,329			(1,243		)	630,308
Depreciation and amortization expense	283,697		107,759			—			391,456
Taxes, other than income	242,179		33,010			—			275,189
Operating income	470,772		275,286			—			746,058
Other non-operating income	6,241		1,163			—			7,404
Interest charges	60,031		43,122			—			103,153
Income before income taxes	416,982		233,327			—			650,309
Income tax expense	88,168		50,735			—			138,903
Net income	$	328,814	$	182,592		$	—		$	511,406
Capital expenditures	$	1,274,613	$	418,864		$	—		$	1,693,477



	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	461,048			134,995			(1,248		)	594,795
Depreciation and amortization expense	264,930			96,153			—			361,083
Taxes, other than income	231,566			32,320			—			263,886
Operating income	485,667			242,267			—			727,934
Other non-operating expense	(6,649		)	(3,495		)	—			(10,144		)
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	404,995			133,765			—		(44		)	538,716
Depreciation and amortization expense	249,071			70,377			—		—			319,448
Taxes, other than income	211,929			28,478			—		—			240,407
Operating income	513,724			221,904			—		—			735,628
Other non-operating expense	(9,777		)	(1,575		)	—		—			(11,352		)
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

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



	2019		2018		2017
	(In thousands)
Distribution revenues:
Gas sales revenues:
Residential	$	1,733,548	$	1,916,101	$	1,642,918
Commercial	711,284		797,073		708,167
Industrial	118,046		131,267		133,372
Public authority and other	42,613		47,714		45,820
Total gas sales revenues	2,605,491		2,892,155		2,530,277
Transportation revenues	95,629		99,250		86,332
Other gas revenues	41,704		8,999		31,204
Total distribution revenues	2,742,824		3,000,404		2,647,813
Pipeline and storage revenues	159,024		115,142		111,922
Total operating revenues	$	2,901,848	$	3,115,546	$	2,759,735

Balance sheet information at September 30, 2019 and 2018 by segment is presented in the following tables.



	September 30, 2019
	Distribution		Pipeline and Storage		Eliminations			Consolidated
	(In thousands)
Property, plant and equipment, net	$	8,737,590	$	3,050,079	$	—		$	11,787,669
Total assets	$	12,579,741	$	3,279,323	$	(2,491,445	)	$	13,367,619



	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