Variable Interest Entity

3 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Atmos Energy Kansas Securitization I, LLC (AEK), a special-purpose entity wholly owned by Atmos Energy, was formed for the purpose of issuing securitized bonds to recover extraordinary costs incurred during Winter Storm Uri. In June 2023, AEK completed a public offering of $95 million of Securitized Utility Tariff Bonds. AEK's assets cannot be used to settle Atmos Energy's obligations, and the holders of the Securitized Utility Tariff Bonds have no recourse against Atmos Energy.

AEK is considered to be a variable interest entity. As a result, AEK is included in the condensed consolidated financial statements of Atmos Energy.

The following table summarizes the impact of AEK on our condensed consolidated balance sheets, for the periods indicated:


	December 31, 2023		September 30, 2023
	(In thousands)
Restricted cash and cash equivalents	$	7,130	$	3,844
Other current assets	$	23	$	11
Securitized intangible asset, net	$	90,036	$	92,202
Accrued interest	$	2,598	$	1,374
Current maturities of securitized long-term debt	$	9,922	$	9,922
Securitized long-term debt	$	85,078	$	85,078

The following table summarizes the impact of AEK on our condensed consolidated statement of comprehensive income, for the period indicated:


	Three Months Ended December 31, 2023
	(In thousands)
Operating revenues	$	3,333
Amortization expense	(2,166)
Interest expense, net	(1,167)
Income before income taxes	$	—

The securitized long-term debt is recorded at carrying value. The fair value of the securitized long-term debt is determined using third party market value quotations, which are considered Level 2 fair value measurements for debt instruments where fair value is determined using the most recent available quoted market price. The carrying value and fair value of the securitized long-term debt as of December 31, 2023 is $95.0 million and $96.2 million.