10-QPeriod: Q1 FY2002

ATMOS ENERGY CORP Quarterly Report for Q1 Ended Dec 31, 2001

Filed February 14, 2002For Securities:ATO

Summary

Atmos Energy Corp. (ATO) reported its quarterly financial results for the period ending December 31, 2001. The company experienced a significant decrease in operating revenues, primarily driven by a 23% drop in the average sales price of natural gas and a 22% decrease in sales volumes due to warmer-than-normal weather. Despite the revenue decline, gross profit remained relatively stable, largely due to the pass-through of lower gas costs to customers and contributions from the recent acquisition of Louisiana Gas Service operations. However, operating income saw a decrease due to higher operating expenses, including those associated with the acquisition, and increased interest expenses stemming from a recent debt offering. Net income for the quarter declined year-over-year, reflecting these combined factors.

Key Highlights

  • 1Operating revenues decreased by 39% to $271.3 million, primarily due to lower gas prices and reduced sales volumes from warmer weather.
  • 2Gross profit remained largely stable at $109.4 million, as lower gas costs were passed on to customers, and offset by acquisition contributions.
  • 3Operating income declined by 11% to $43.4 million, impacted by increased operating expenses and interest charges.
  • 4Net income decreased by $2.4 million to $20.6 million compared to the prior year's quarter, influenced by lower operating income and higher interest expense.
  • 5The company completed the acquisition of Louisiana Gas Service operations in July 2001, contributing to increased operating expenses and assets.
  • 6Significant capital expenditures of $28.0 million were made during the quarter, with further investments planned for fiscal 2002.
  • 7The company has a pending acquisition of Mississippi Valley Gas Company, expected to close in fiscal 2002, pending regulatory approvals.

Frequently Asked Questions

The decrease in operating revenues was primarily driven by a 23% decrease in the average sales price of natural gas and a 22% decrease in sales volumes. Warmer-than-normal weather, with temperatures 11% warmer than the 30-year normal and 29% warmer than the prior year's quarter, significantly impacted sales volumes.

The acquisition of Louisiana Gas Service operations in July 2001 contributed to increased operating revenues and gross profit, but also led to higher operating expenses, including operation and maintenance costs, and depreciation and amortization. These increased expenses partially offset the benefits of the acquisition, impacting overall operating income.

Atmos Energy Corp. believes that internally generated funds, its credit facilities, and access to capital markets will provide sufficient liquidity for fiscal 2002. The company also has a shelf registration statement for up to $600 million in new common stock and/or debt, which will offer financing flexibility. Capital expenditures are planned, and the company is pursuing the acquisition of Mississippi Valley Gas Company.

The company employs hedging strategies through its utility and non-regulated segments. For the utility segment, approximately 64% of anticipated flowing gas requirements for the 2001-2002 heating season were covered through storage and futures/forward contracts. The non-regulated segment uses various financial instruments, including futures, options, and swap contracts, which are marked-to-market to manage risk.