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 three-month period ended December 31, 2012 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 December 31, 2012 balance sheet date through the date these financial statements were filed with the Securities and Exchange Commission (SEC). Except as discussed in Note 3, Note 6 and Note 9, no events have occurred subsequent to the balance sheet date that would require recognition or disclosure in the condensed consolidated financial statements.

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.

Due to the pending sale of our distribution operations in our Georgia service area, 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.

Due to accounting guidance that became effective for us on October 1, 2012, we have begun presenting the components of other comprehensive income and total comprehensive income in a separate condensed consolidated statement of comprehensive income immediately following the condensed consolidated statement of income. During the three months ended December 31, 2012, there were no other significant changes to our accounting policies.

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 December 31, 2012 and September 30, 2012 included the following:

		December 31,		September 30,
		2012		2012
			(In thousands)
Regulatory assets:
	Pension and postretirement benefit costs⁽¹⁾	$	295,277	$	296,160
	Merger and integration costs, net		5,628		5,754
	Deferred gas costs		28,351		31,359
	Regulatory cost of removal asset		10,401		10,500
	Rate case costs		5,726		4,661
	Deferred franchise fees		819		2,714
	Texas Rule 8.209⁽²⁾		9,734		5,370
	APT annual adjustment mechanism		3,973		4,539
	Other		6,973		7,262
		$	366,882	$	368,319

Regulatory liabilities:
	Deferred gas costs	$	8,290	$	23,072
	Regulatory cost of removal obligation		450,968		459,688
	Other		5,534		5,637
		$	464,792	$	488,397

The amounts above do not include regulatory assets and liabilities related to our Georgia service area, which are classified as assets held for sale as discussed in Note 5.

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 loss, net of tax, as of December 31, 2012 and September 30, 2012 consisted of the following unrealized gains (losses):

			December 31,		September 30,
			2012		2012
			(In thousands)

Accumulated other comprehensive loss:
	Unrealized holding gains on available-for-sale securities	$	5,288	$	5,661
	Interest rate agreements		(32,009)		(44,273)
	Commodity cash flow hedges		(9,360)		(8,995)
		$	(36,081)	$	(47,607)