UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 8-K
 
 
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
August 6, 2014
Date of Report (Date of earliest event reported)
 
 
ATMOS ENERGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
 
 
 
 
TEXAS AND VIRGINIA
 
1-10042
 
75-1743247
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
1800 THREE LINCOLN CENTRE,
 
 
5430 LBJ FREEWAY, DALLAS, TEXAS
 
75240
(Address of Principal Executive Offices)
 
(Zip Code)
(972) 934-9227
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02. Results of Operations and Financial Condition.
On Wednesday, August 6, 2014, Atmos Energy Corporation (the “Company”) issued a news release in which it reported the Company’s financial results for the third quarter of the 2014 fiscal year, which will end September 30, 2014, and stated that certain of its officers would discuss such financial results in a conference call on Thursday, August 7, 2014 at 10:00 a.m. Eastern Time. In the release, the Company also announced that the call would be webcast live and that slides for the webcast would be available on its website for all interested parties.
A copy of the news release is furnished as Exhibit 99.1. The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Item 9.01. Financial Statements and Exhibits.
 
(d)
Exhibits
 
 
 
 
 
 
 
99.1
News Release dated August 6, 2014 (furnished under Item 2.02)




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
ATMOS ENERGY CORPORATION
 
 
 
 
(Registrant)
 
 
 
 
DATE: August 6, 2014
 
 
 
By:
/s/ LOUIS P. GREGORY
 
 
 
 
 
Louis P. Gregory
 
 
 
 
 
Senior Vice President, General Counsel
 
 
 
 
 
and Corporate Secretary




INDEX TO EXHIBITS
 
 
 
 
 
Exhibit Number
  
Description
 
 
99.1
  
News Release dated August 6, 2014 (furnished under Item 2.02)


ATO 2014.08.06 Exhibit 99.1




Exhibit 99.1
 
News Release      
Analysts and Media Contact:
Susan Giles (972) 855-3729


Atmos Energy Corporation Reports Earnings for the Fiscal 2014
Third Quarter and Nine Months; Reaffirms Fiscal 2014 Guidance

DALLAS (August 6, 2014)—Atmos Energy Corporation (NYSE: ATO) today reported consolidated results for its fiscal 2014 third quarter and nine months ended June 30, 2014.

•
Fiscal 2014 third quarter consolidated net income, excluding net unrealized margins, was $46.1 million, or $0.45 per diluted share, compared with consolidated net income, excluding net unrealized margins and a gain on sale, of $39.4 million, or $0.42 per diluted share in the prior-year quarter.

•
Fiscal 2014 third quarter consolidated net income was $45.7 million, or $0.45 per diluted share, after including unrealized net losses of $0.4 million, or $0.00 per diluted share. Net income was $38.8 million, or $0.42 per diluted share in the prior-year quarter, after including unrealized net losses of $5.9 million, or $(0.06) per diluted share and the gain on sale.

•
The prior-year quarter included a net gain on the sale of the Georgia assets of $5.3 million, or $0.06 per diluted share.

•
The company's Board of Directors has declared a quarterly dividend of 37 cents per common share. The indicated annual dividend for fiscal 2014 is $1.48, which represents a 5.7 percent increase over fiscal 2013.

For the nine months ended June 30, 2014, consolidated net income was $266.1 million, or $2.76 per diluted share, compared with net income of $235.7 million, or $2.57 per diluted share for the same period last year. Results from nonregulated operations include unrealized net gains of $7.0 million, or $0.07 per diluted share for the nine months ended June 30, 2014, compared with unrealized net gains of $9.7 million, or $0.11 per diluted share for the prior-year period. For the current nine-month period, regulated operations contributed $238.5 million of net income, or $2.47 per diluted share, and nonregulated operations contributed net income of $27.6 million, or $0.29 per diluted share. The prior-year nine-month period included $12.5 million, or $0.14 per diluted share from discontinued operations.


1


“While we continue to focus on providing safe and reliable service to our customers, the predictable and stable nature of our regulated operations offers strong earnings growth," said Kim Cocklin, president and chief executive officer of Atmos Energy Corporation. “As we enter the final quarter of our fiscal year, we remain on track to meet our earnings guidance of between $2.80 and $2.90 per diluted share in fiscal 2014,” Cocklin concluded.
Results for the Quarter Ended June 30, 2014
Natural gas distribution gross profit increased $18.2 million to $257.7 million for the fiscal 2014 third quarter, compared with $239.5 million in the prior-year quarter, excluding discontinued operations. Gross profit reflects a net $9.2 million increase in rates, primarily in the Mid-Tex and West Texas Divisions. Additionally, revenue-related taxes increased $6.7 million, primarily due to higher revenues in the Mid-Tex and West Texas Divisions, offset by a corresponding $10.9 million increase in the related tax expense.
Regulated transmission and storage gross profit increased $13.2 million to $87.2 million for the quarter ended June 30, 2014, compared with $74.0 million for the same quarter last year. This increase is primarily the result of a $12.2 million increase in revenues from the Gas Reliability Infrastructure Program (GRIP) filing that became effective in May 2014.
Nonregulated gross profit increased $11.5 million to $14.8 million for the fiscal 2014 third quarter, compared with $3.3 million for the prior-year quarter, as a result of a $2.5 million increase in realized margins, combined with a $9.0 million increase in unrealized margins. Realized margins for gas delivery, storage and transportation services increased $1.8 million quarter over quarter, primarily due to a $0.02/Mcf increase in per-unit margins partially offset by a two percent decrease in consolidated sales volumes.
Consolidated operation and maintenance expense for the quarter ended June 30, 2014, was $125.6 million, compared with $121.3 million for the prior-year period, excluding discontinued operations. The $4.3 million increase resulted primarily from increased levels of pipeline and right-of-way maintenance activities to improve the safety and reliability of the overall system.

Results for the Nine Months Ended June 30, 2014

Natural gas distribution gross profit, excluding discontinued operations, increased $75.9 million to $942.0 million for the nine months ended June 30, 2014, compared with $866.1 million in the prior-year period. Gross profit reflects a net $24.5 million increase in rates, primarily in the Mid-Tex, Kentucky/Mid-States and Louisiana Divisions. Additionally, gross profit increased $12.9 million from colder weather, primarily in the Mid-Tex and West Texas Divisions. Finally, revenue-related taxes increased $24.5 million, primarily due to higher revenues in the Mid-Tex and West Texas Divisions, offset by a corresponding $25.2 million increase in the related tax expense.

Regulated transmission and storage gross profit increased $35.5 million to $232.1 million for the nine months ended June 30, 2014, compared with $196.6 million during the same period last year. This increase is primarily the result of a $26.3 million increase in revenues from the GRIP filings approved in fiscal years 2014 and 2013. Additionally, increased transportation volumes and basis spreads, due to colder weather experienced across Texas, increased gross profit by $4.7 million.

Nonregulated gross profit increased $21.0 million to $71.0 million for the nine months ended June 30, 2014, compared with $50.0 million for the prior-year period, as a result of a $25.3 million increase in realized margins, offset by a $4.4 million decrease in unrealized margins. Realized margins for gas

2


delivery, storage and transportation services increased $1.5 million period over period, primarily due to an 11 percent increase in consolidated sales volumes. Additionally, other realized margins increased $23.8 million from the prior-year period, primarily due to increased margins earned by accelerating physical withdrawals into the fiscal second quarter from future periods to capture gross profit in a volatile natural gas market, caused by strong market demand due to significantly colder weather.

Consolidated operation and maintenance expense, excluding discontinued operations, for the nine months ended June 30, 2014, was $366.0 million, compared with $338.9 million for the prior-year period. The $27.1 million increase resulted primarily from higher employee-related costs and pipeline maintenance activities.

The debt capitalization ratio at June 30, 2014 was 44.1 percent, compared with 52.2 percent at September 30, 2013 and 50.1 percent at June 30, 2013. At June 30, 2014, there was no short-term debt outstanding, compared with $368.0 million at September 30, 2013 and $142.0 million at June 30, 2013.
For the nine months ended June 30, 2014, the company generated operating cash flow of $630.2 million, a $120.6 million increase compared with the nine months ended June 30, 2013. The increase primarily reflects higher operating results from colder weather and rate increases combined with the timing of customer collections and vendor payments.
Capital expenditures decreased to $552.6 million for the nine months ended June 30, 2014, compared with $582.5 million in the prior-year period. The $29.9 million decrease is largely due to a $51.5 million decrease in spending in the regulated transmission and storage segment primarily associated with the completion of the Line WX expansion project, partially offset by a $22.0 million increase in spending in the natural gas distribution segment due to increased spending under infrastructure replacement programs.
Outlook
The leadership of Atmos Energy remains focused on enhancing system safety and reliability through infrastructure investment, while delivering shareholder value and consistent earnings growth. Atmos Energy continues to expect fiscal 2014 earnings to be in the range of $2.80 to $2.90 per diluted share, excluding unrealized margins. Total capital expenditures for fiscal 2014 are expected to continue to range between $830 million and $850 million.
Conference Call to be Webcast August 7, 2014
Atmos Energy will host a conference call with financial analysts to discuss the financial results for the fiscal 2014 third quarter and first nine months on Thursday, August 7, 2014, at 10:00 a.m. Eastern. The telephone number is 877-485-3107 and the international telephone number is 201-689-8427. The conference call will be webcast live on the Atmos Energy website at www.atmosenergy.com. A playback of the call will be available on the website later that day. Kim Cocklin, president and chief executive officer and Bret Eckert, senior vice president and chief financial officer will participate in the conference call.
                                
This news release should be read in conjunction with the attached unaudited financial information.



3


Forward-Looking Statements
The matters discussed in this news release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this news release or in any of the company’s other documents or oral presentations, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “objective,” “plan,” “projection,” “seek,” “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this news release, including the risks and uncertainties relating to regulatory trends and decisions, the company’s ability to continue to access the capital markets and the other factors discussed in the company’s reports filed with the Securities and Exchange Commission. These factors include the risks and uncertainties discussed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, and the company's Quarterly Report on Form 10-Q for the three and nine months ended June 30, 2014. Although the company believes these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. The company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
About Atmos Energy
Atmos Energy Corporation, headquartered in Dallas, is one of the country’s largest natural-gas-only distributors, serving over three million natural gas distribution customers in over 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy also manages company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipeline systems in Texas and provides natural gas marketing and procurement services to industrial, commercial and municipal customers primarily in the Midwest and Southeast. For more information, visit www.atmosenergy.com.

4


Atmos Energy Corporation
Financial Highlights (Unaudited)
 
Consolidated Statements of Income
 
Three Months Ended 
 June 30
(000s except per share)
 
2014
 
2013
Gross Profit:
 
 
 
 
Natural gas distribution segment
 
$
257,665

 
$
239,495

Regulated transmission and storage segment
 
87,189

 
74,041

Nonregulated segment
 
14,813

 
3,260

Intersegment eliminations
 
(134
)
 
(299
)
Gross profit
 
359,533

 
316,497

Operation and maintenance expense
 
125,559

 
121,258

Depreciation and amortization
 
63,955

 
58,129

Taxes, other than income
 
63,414

 
50,714

Total operating expenses
 
252,928

 
230,101

Operating income
 
106,605

 
86,396

Miscellaneous expense
 
(374
)
 
(467
)
Interest charges
 
31,840

 
32,741

Income from continuing operations before income taxes
 
74,391

 
53,188

Income tax expense
 
28,670

 
19,714

Income from continuing operations
 
45,721

 
33,474

Gain on sale of discontinued operations, net of tax
 
—

 
5,294

Net income
 
$
45,721

 
$
38,768

Basic earnings per share
 
 
 
 
Income per share from continuing operations
 
$
0.45

 
$
0.37

Income per share from discontinued operations
 
—

 
0.06

Net income per share – basic
 
$
0.45

 
$
0.43

Diluted earnings per share
 
 
 
 
Income per share from continuing operations
 
$
0.45

 
$
0.36

Income per share from discontinued operations
 
—

 
0.06

Net income per share – diluted
 
$
0.45

 
$
0.42

Cash dividends per share
 
$
0.37

 
$
0.35

Weighted average shares outstanding:
 
 
 
 
Basic
 
100,267

 
90,603

Diluted
 
101,150

 
91,550

 
 
 
Three Months Ended 
 June 30
Summary Net Income (Loss) by Segment (000s)
 
2014
 
2013
Natural gas distribution – continuing operations
 
$
18,529

 
$
15,817

Natural gas distribution – discontinued operations
 
—

 
5,649

Regulated transmission and storage
 
24,938

 
23,097

Nonregulated – continuing operations
 
2,660

 
475

Nonregulated – discontinued operations
 
—

 
(355
)
Unrealized margins, net of tax
 
(406
)
 
(5,915
)
Consolidated net income
 
$
45,721

 
$
38,768





5


Atmos Energy Corporation
Financial Highlights, continued (Unaudited)

Consolidated Statements of Income
 
Nine Months Ended 
 June 30
(000s except per share)
 
2014
 
2013
Gross Profit:
 
 
 
 
Natural gas distribution segment
 
$
942,024

 
$
866,132

Regulated transmission and storage segment
 
232,145

 
196,570

Nonregulated segment
 
70,968

 
50,026

Intersegment eliminations
 
(370
)
 
(1,118
)
Gross profit
 
1,244,767

 
1,111,610

Operation and maintenance expense
 
365,991

 
338,871

Depreciation and amortization
 
185,731

 
174,888

Taxes, other than income
 
165,640

 
146,355

Total operating expenses
 
717,362

 
660,114

Operating income
 
527,405

 
451,496

Miscellaneous income (expense)
 
(4,022
)
 
1,943

Interest charges
 
95,556

 
96,594

Income from continuing operations before income taxes
 
427,827

 
356,845

Income tax expense
 
161,723

 
133,683

Income from continuing operations
 
266,104

 
223,162

Income from discontinued operations, net of tax
 
—

 
7,202

Gain on sale of discontinued operations, net of tax
 
—

 
5,294

Net income
 
$
266,104

 
$
235,658

Basic earnings per share
 
 
 
 
Income per share from continuing operations
 
$
2.78

 
$
2.46

Income per share from discontinued operations
 
—

 
0.14

Net income per share – basic
 
$
2.78

 
$
2.60

Diluted earnings per share
 
 
 
 
Income per share from continuing operations
 
$
2.76

 
$
2.43

Income per share from discontinued operations
 
—

 
0.14

Net income per share – diluted
 
$
2.76

 
$
2.57

Cash dividends per share
 
$
1.11

 
$
1.05

Weighted average shares outstanding:
 
 
 
 
Basic
 
95,455

 
90,497

Diluted
 
96,339

 
91,445



 
 
Nine Months Ended 
 June 30
Summary Net Income (Loss) by Segment (000s)
 
2014
 
2013
Natural gas distribution – continuing operations
 
$
170,029

 
$
155,100

Natural gas distribution – discontinued operations
 
—

 
12,851

Regulated transmission and storage
 
68,493

 
55,732

Nonregulated – continuing operations
 
20,543

 
2,617

Nonregulated – discontinued operations
 
—

 
(355
)
Unrealized margins, net of tax
 
7,039

 
9,713

Consolidated net income
 
$
266,104

 
$
235,658



6


Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Consolidated Balance Sheets
 
June 30,
 
September 30,
(000s)
 
2014
 
2013
Net property, plant and equipment
 
$
6,461,450

 
$
6,030,655

Cash and cash equivalents
 
51,421

 
66,199

Accounts receivable, net
 
388,874

 
301,992

Gas stored underground
 
207,458

 
244,741

Other current assets
 
126,890

 
64,201

Total current assets
 
774,643

 
677,133

Goodwill
 
741,363

 
741,363

Deferred charges and other assets
 
379,733

 
485,117

 
 
$
8,357,189

 
$
7,934,268

Shareholders’ equity
 
$
3,116,685

 
$
2,580,409

Long-term debt
 
1,955,907

 
2,455,671

Total capitalization
 
5,072,592

 
5,036,080

Accounts payable and accrued liabilities
 
312,671

 
241,611

Other current liabilities
 
343,026

 
368,891

Short-term debt
 
—

 
367,984

Current maturities of long-term debt
 
500,000

 
—

Total current liabilities
 
1,155,697

 
978,486

Deferred income taxes
 
1,341,294

 
1,164,053

Deferred credits and other liabilities
 
787,606

 
755,649

 
 
$
8,357,189

 
$
7,934,268



7


Atmos Energy Corporation
Financial Highlights, continued (Unaudited)
 
Condensed Consolidated Statements of Cash Flows
 
Nine Months Ended 
 June 30
(000s)
 
2014
 
2013
Cash flows from operating activities
 
 
 
 
Net income
 
$
266,104

 
$
235,658

Gain on sale of discontinued operations
 
—

 
(8,203
)
Depreciation and amortization
 
185,731

 
176,737

Deferred income taxes
 
150,457

 
130,365

Other
 
22,256

 
14,906

Changes in assets and liabilities
 
5,662

 
(39,888
)
Net cash provided by operating activities
 
630,210

 
509,575

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(552,600
)
 
(582,473
)
Proceeds from the sale of discontinued operations
 
—

 
153,023

Other, net
 
(620
)
 
(3,139
)
Net cash used in investing activities
 
(553,220
)
 
(432,589
)
Cash flows from financing activities
 
 
 
 
Net decrease in short-term debt
 
(366,602
)
 
(435,084
)
Net proceeds from issuance of long-term debt
 
—

 
493,793

Settlement of Treasury lock agreements
 
—

 
(66,626
)
Repayment of long-term debt
 
—

 
(131
)
Cash dividends paid
 
(108,806
)
 
(96,060
)
Repurchase of equity awards
 
(8,717
)
 
(5,146
)
Net proceeds from equity offering
 
390,205

 
—

Issuance of common stock
 
2,152

 
8

Net cash used in financing activities
 
(91,768
)
 
(109,246
)
Net decrease in cash and cash equivalents
 
(14,778
)
 
(32,260
)
Cash and cash equivalents at beginning of period
 
66,199

 
64,239

Cash and cash equivalents at end of period
 
$
51,421

 
$
31,979

 
 
 
Three Months Ended 
 June 30
 
Nine Months Ended 
 June 30
Statistics, including discontinued operations
 
2014
 
2013
 
2014
 
2013
Consolidated natural gas distribution throughput (MMcf as metered)
 
72,338

 
72,369

 
394,310

 
345,405

Consolidated regulated transmission and storage transportation volumes (MMcf)
 
127,979

 
121,194

 
362,583

 
335,036

Consolidated nonregulated delivered gas sales volumes (MMcf)
 
82,074

 
83,341

 
294,678

 
265,791

Natural gas distribution meters in service
 
3,007,511

 
3,009,377

 
3,007,511

 
3,009,377

Natural gas distribution average cost of gas
 
$
6.61

 
$
5.27

 
$
5.92

 
$
4.86

Nonregulated net physical position (Bcf)
 
6.6

 
19.2

 
6.6

 
19.2


###

8