10-QPeriod: Q2 FY2002

ATMOS ENERGY CORP Quarterly Report for Q2 Ended Mar 31, 2002

Filed May 15, 2002For Securities:ATO

Summary

Atmos Energy Corporation (ATO) reported a decrease in operating revenues for the three and six months ended March 31, 2002, compared to the prior year, largely due to a significant decrease in the average sales price of natural gas and lower sales volumes attributed to warmer weather. Despite the revenue decline, the company saw an increase in gross profit for both periods, driven by the acquisition of Louisiana Gas Service Company and the inclusion of gas trading margin from its consolidated Woodward Marketing operations. Operating expenses, however, rose due to acquisitions and increased pension costs, while interest expenses also climbed significantly. Consequently, net income experienced a decline for both the three-month and six-month periods. The company's balance sheet shows a reduction in current assets, with cash and cash equivalents significantly lower, while Property, plant and equipment increased. Liabilities also saw shifts, with a substantial decrease in short-term debt and a notable increase in accounts payable and accrued liabilities. Atmos Energy highlighted its ongoing capital expenditure plans and a pending acquisition of Mississippi Valley Gas Company, financed through internal funds and financing activities. The company also noted no material impairment of goodwill during its annual evaluation.

Key Highlights

  • 1Operating revenues decreased significantly for both the three-month and six-month periods ended March 31, 2002, compared to the prior year, primarily due to lower natural gas prices and reduced sales volumes.
  • 2Gross profit increased for both periods, benefiting from the Louisiana Gas Service acquisition and the consolidated operations of Woodward Marketing, which contributed gas trading margin.
  • 3Operating expenses rose due to acquisitions (Louisiana Gas Service, Woodward Marketing) and increased pension costs, alongside higher depreciation and amortization.
  • 4Net income declined for both the three-month and six-month periods, impacted by increased operating expenses and a substantial rise in interest charges.
  • 5Cash and cash equivalents decreased substantially to $3.1 million at March 31, 2002, from $15.3 million at September 30, 2001.
  • 6Short-term debt was significantly reduced, while long-term debt also saw a slight decrease.
  • 7The company is pursuing the acquisition of Mississippi Valley Gas Company, which is pending regulatory approval.

Frequently Asked Questions

Operating revenues decreased due to a 45% decrease in the average sales price of natural gas and an 11% decrease in sales volumes, largely attributable to warmer weather. The decrease in revenues was partially offset by additional sales from the Louisiana Gas Service acquisition.

The acquisition of Louisiana Gas Service contributed to increased gross profit and operating expenses due to the addition of assets and operations. The full consolidation of Woodward Marketing beginning April 1, 2001, contributed to gas trading margin and also increased operating expenses. Overall, these acquisitions provided additional revenues and gross profit but also led to higher operating costs.

The company's liquidity position, as reflected in cash and cash equivalents, has significantly decreased, standing at $3.1 million at March 31, 2002, compared to $15.3 million at September 30, 2001. This reduction is a key indicator for investors to monitor.

Yes, Atmos Energy has entered into an agreement to acquire Mississippi Valley Gas Company for $150 million, subject to regulatory approvals. The company also plans significant capital expenditures for fiscal year 2002, in the range of $125.0 million to $130.0 million, for infrastructure improvements.