Segment Information | Segment Information Atmos Energy Corporation and its subsidiaries are engaged primarily in the regulated natural gas distribution and pipeline business as well as other nonregulated businesses. We distribute natural gas through sales and transportation arrangements to over three million residential, commercial, public authority and industrial customers through our six regulated distribution divisions, which cover service areas located in eight states. In addition, we transport natural gas for others through our distribution system. Through our nonregulated business, we provide natural gas management and transportation services to municipalities, regulated distribution companies, including certain divisions of Atmos Energy and third parties. We operate the Company through the following three segments: • The regulated distribution segment , includes our regulated distribution and related sales operations. • The regulated pipeline segment , includes the regulated pipeline and storage operations of our Atmos Pipeline — Texas Division. • The nonregulated segment , is comprised of our nonregulated natural gas management, nonregulated natural gas transmission, storage and other services. Our determination of reportable segments considers the strategic operating units under which we manage sales of various products and services to customers in differing regulatory environments. Although our regulated distribution segment operations are geographically dispersed, they are reported as a single segment as each regulated distribution division has similar economic characteristics. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate performance based on net income or loss of the respective operating units. Interest expense is allocated pro rata to each segment based upon our net investment in each segment. Income taxes are allocated to each segment as if each segment’s taxes were calculated on a separate return basis. Summarized income statements and capital expenditures by segment are shown in the following tables. Year Ended September 30, 2015 Regulated Distribution Regulated Pipeline Nonregulated Eliminations Consolidated (In thousands) Operating revenues from external parties $ 2,757,585 $ 97,662 $ 1,286,889 $ — $ 4,142,136 Intersegment revenues 6,250 272,450 185,320 (464,020 ) — 2,763,835 370,112 1,472,209 (464,020 ) 4,142,136 Purchased gas cost 1,526,258 — 1,399,349 (463,488 ) 2,462,119 Gross profit 1,237,577 370,112 72,860 (532 ) 1,680,017 Operating expenses Operation and maintenance 388,486 118,866 35,048 (532 ) 541,868 Depreciation and amortization 223,048 47,236 4,512 — 274,796 Taxes, other than income 205,894 22,743 3,321 — 231,958 Total operating expenses 817,428 188,845 42,881 (532 ) 1,048,622 Operating income 420,149 181,267 29,979 — 631,395 Miscellaneous expense (377 ) (1,243 ) (760 ) (2,009 ) (4,389 ) Interest charges 84,132 33,151 967 (2,009 ) 116,241 Income before income taxes 335,640 146,873 28,252 — 510,765 Income tax expense 130,827 52,211 12,652 — 195,690 Net income $ 204,813 $ 94,662 $ 15,600 $ — $ 315,075 Capital expenditures $ 680,961 $ 292,728 $ 1,443 $ — $ 975,132 Year Ended September 30, 2014 Regulated Distribution Regulated Pipeline Nonregulated Eliminations Consolidated (In thousands) Operating revenues from external parties $ 3,056,212 $ 92,166 $ 1,792,538 $ — $ 4,940,916 Intersegment revenues 5,334 226,293 274,754 (506,381 ) — 3,061,546 318,459 2,067,292 (506,381 ) 4,940,916 Purchased gas cost 1,885,031 — 1,979,337 (505,878 ) 3,358,490 Gross profit 1,176,515 318,459 87,955 (503 ) 1,582,426 Operating expenses Operation and maintenance 387,228 91,466 26,963 (503 ) 505,154 Depreciation and amortization 208,376 41,031 4,580 — 253,987 Taxes, other than income 196,343 13,143 2,450 — 211,936 Total operating expenses 791,947 145,640 33,993 (503 ) 971,077 Operating income 384,568 172,819 53,962 — 611,349 Miscellaneous income (expense) (381 ) (3,181 ) 2,216 (3,889 ) (5,235 ) Interest charges 94,918 36,280 1,986 (3,889 ) 129,295 Income before income taxes 289,269 133,358 54,192 — 476,819 Income tax expense 117,684 47,167 22,151 — 187,002 Net income $ 171,585 $ 86,191 $ 32,041 $ — $ 289,817 Capital expenditures $ 584,065 $ 249,347 $ 1,839 $ — $ 835,251 Year Ended September 30, 2013 Regulated Distribution Regulated Pipeline Nonregulated Eliminations Consolidated (In thousands) Operating revenues from external parties $ 2,394,418 $ 89,011 $ 1,392,031 $ — $ 3,875,460 Intersegment revenues 5,075 179,889 195,883 (380,847 ) — 2,399,493 268,900 1,587,914 (380,847 ) 3,875,460 Purchased gas cost 1,318,257 — 1,524,583 (379,430 ) 2,463,410 Gross profit 1,081,236 268,900 63,331 (1,417 ) 1,412,050 Operating expenses Operation and maintenance 375,188 76,686 37,569 (1,423 ) 488,020 Depreciation and amortization 195,581 35,302 4,196 — 235,079 Taxes, other than income 167,374 17,059 2,639 — 187,072 Total operating expenses 738,143 129,047 44,404 (1,423 ) 910,171 Operating income 343,093 139,853 18,927 6 501,879 Miscellaneous income (expense) 2,535 (2,285 ) 2,316 (2,763 ) (197 ) Interest charges 98,296 30,678 2,168 (2,757 ) 128,385 Income from continuing operations before income taxes 247,332 106,890 19,075 — 373,297 Income tax expense 96,476 38,630 7,493 — 142,599 Income from continuing operations 150,856 68,260 11,582 — 230,698 Income from discontinued operations, net of tax 7,202 — — — 7,202 Gain (loss) on sale of discontinued operations, net of tax 5,649 — (355 ) — 5,294 Net income $ 163,707 $ 68,260 $ 11,227 $ — $ 243,194 Capital expenditures $ 528,599 $ 313,230 $ 3,204 $ — $ 845,033 The following table summarizes our revenues by products and services for the fiscal year ended September 30. 2015 2014 2013 (In thousands) Regulated distribution revenues: Gas sales revenues: Residential $ 1,761,689 $ 1,933,099 $ 1,512,495 Commercial 772,187 876,042 661,930 Industrial 74,981 90,536 81,155 Public authority and other 53,401 64,779 60,557 Total gas sales revenues 2,662,258 2,964,456 2,316,137 Transportation revenues 67,475 64,049 55,938 Other gas revenues 27,852 27,707 22,343 Total regulated distribution revenues 2,757,585 3,056,212 2,394,418 Regulated pipeline revenues 97,662 92,166 89,011 Nonregulated revenues 1,286,889 1,792,538 1,392,031 Total operating revenues $ 4,142,136 $ 4,940,916 $ 3,875,460 Balance sheet information at September 30, 2015 and 2014 by segment is presented in the following tables. September 30, 2015 Regulated Distribution Regulated Pipeline Nonregulated Eliminations Consolidated (In thousands) ASSETS Property, plant and equipment, net $ 5,670,306 $ 1,706,449 $ 53,825 $ — $ 7,430,580 Investment in subsidiaries 1,038,670 — (2,096 ) (1,036,574 ) — Current assets Cash and cash equivalents 23,863 — 4,790 — 28,653 Assets from risk management activities 378 — 8,854 — 9,232 Other current assets 426,270 24,628 480,503 (338,301 ) 593,100 Intercompany receivables 887,713 — — (887,713 ) — Total current assets 1,338,224 24,628 494,147 (1,226,014 ) 630,985 Goodwill 575,449 132,542 34,711 — 742,702 Noncurrent assets from risk management activities 368 — — — 368 Deferred charges and other assets 265,693 17,288 5,329 — 288,310 $ 8,888,710 $ 1,880,907 $ 585,916 $ (2,262,588 ) $ 9,092,945 CAPITALIZATION AND LIABILITIES Shareholders’ equity $ 3,194,797 $ 577,275 $ 461,395 $ (1,038,670 ) $ 3,194,797 Long-term debt 2,455,388 — — — 2,455,388 Total capitalization 5,650,185 577,275 461,395 (1,038,670 ) 5,650,185 Current liabilities Short-term debt 782,927 — — (325,000 ) 457,927 Liabilities from risk management activities 9,568 — — — 9,568 Other current liabilities 569,273 29,780 99,480 (11,205 ) 687,328 Intercompany payables — 867,409 20,304 (887,713 ) — Total current liabilities 1,361,768 897,189 119,784 (1,223,918 ) 1,154,823 Deferred income taxes 1,008,091 406,254 (3,030 ) — 1,411,315 Noncurrent liabilities from risk management activities 110,539 — — — 110,539 Regulatory cost of removal obligation 427,553 — — — 427,553 Pension and postretirement liabilities 287,373 — — — 287,373 Deferred credits and other liabilities 43,201 189 7,767 — 51,157 $ 8,888,710 $ 1,880,907 $ 585,916 $ (2,262,588 ) $ 9,092,945 September 30, 2014 Regulated Distribution Regulated Pipeline Nonregulated Eliminations Consolidated (In thousands) ASSETS Property, plant and equipment, net $ 5,202,761 $ 1,464,572 $ 58,573 $ — $ 6,725,906 Investment in subsidiaries 952,171 — (2,096 ) (950,075 ) — Current assets Cash and cash equivalents 33,303 — 8,955 — 42,258 Assets from risk management activities 23,102 — 22,725 — 45,827 Other current assets 490,408 14,009 526,161 (342,823 ) 687,755 Intercompany receivables 790,442 — — (790,442 ) — Total current assets 1,337,255 14,009 557,841 (1,133,265 ) 775,840 Goodwill 574,816 132,502 34,711 — 742,029 Noncurrent assets from risk management activities 13,038 — — — 13,038 Deferred charges and other assets 309,965 21,826 6,100 — 337,891 $ 8,390,006 $ 1,632,909 $ 655,129 $ (2,083,340 ) $ 8,594,704 CAPITALIZATION AND LIABILITIES Shareholders’ equity $ 3,086,232 $ 482,612 $ 469,559 $ (952,171 ) $ 3,086,232 Long-term debt 2,455,986 — — — 2,455,986 Total capitalization 5,542,218 482,612 469,559 (952,171 ) 5,542,218 Current liabilities Short-term debt 522,695 — — (326,000 ) 196,695 Liabilities from risk management activities 1,730 — — — 1,730 Other current liabilities 559,765 24,790 142,397 (14,727 ) 712,225 Intercompany payables — 763,635 26,807 (790,442 ) — Total current liabilities 1,084,190 788,425 169,204 (1,131,169 ) 910,650 Deferred income taxes 913,260 361,688 11,668 — 1,286,616 Noncurrent liabilities from risk management activities 20,126 — — — 20,126 Regulatory cost of removal obligation 445,387 — — — 445,387 Pension and postretirement liabilities 340,963 — — — 340,963 Deferred credits and other liabilities 43,862 184 4,698 — 48,744 $ 8,390,006 $ 1,632,909 $ 655,129 $ (2,083,340 ) $ 8,594,704 |