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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    
Commission File Number 1-10042
Atmos Energy Corporation
(Exact name of registrant as specified in its charter)
TexasandVirginia75-1743247
(State or other jurisdiction of
incorporation or organization)
(IRS employer
identification no.)
1800 Three Lincoln Centre
5430 LBJ Freeway
DallasTexas75240
(Address of principal executive offices)(Zip code)
(972934-9227
(Registrant’s telephone number, including area code)
Title of each classTrading SymbolName of each exchange on which registered
Common stockNo Par ValueATONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþAccelerated filer¨Non-accelerated filer¨Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes      No  þ
Number of shares outstanding of each of the issuer’s classes of common stock, as of January 29, 2021.
ClassShares Outstanding
Common stockNo Par Value128,160,695



GLOSSARY OF KEY TERMS
 
AECAtmos Energy Corporation
AOCIAccumulated other comprehensive income
ARMAnnual Rate Mechanism
ASCAccounting Standards Codification
BcfBillion cubic feet
DARRDallas Annual Rate Review
FASBFinancial Accounting Standards Board
GAAPGenerally Accepted Accounting Principles
GRIPGas Reliability Infrastructure Program
GSRSGas System Reliability Surcharge
LIBORLondon Interbank Offered Rate
McfThousand cubic feet
MMcfMillion cubic feet
Moody’sMoody’s Investors Services, Inc.
NTSBNational Transportation Safety Board
PPAPension Protection Act of 2006
PRPPipeline Replacement Program
RRCRailroad Commission of Texas
RRMRate Review Mechanism
RSCRate Stabilization Clause
S&PStandard & Poor’s Corporation
SAVESteps to Advance Virginia Energy
SECUnited States Securities and Exchange Commission
SIRSystem Integrity Rider
SRFStable Rate Filing
SSIRSystem Safety and Integrity Rider
TCJATax Cuts and Jobs Act of 2017
WNAWeather Normalization Adjustment

2


PART I. FINANCIAL INFORMATION
Item 1.Financial Statements

ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS 
December 31,
2020
September 30,
2020
 (Unaudited)
 (In thousands, except
share data)
ASSETS
Property, plant and equipment$16,412,507 $15,957,221 
Less accumulated depreciation and amortization2,650,364 2,601,874 
Net property, plant and equipment13,762,143 13,355,347 
Current assets
Cash and cash equivalents457,599 20,808 
Accounts receivable, net (See Note 5)492,526 230,595 
Gas stored underground99,569 111,950 
Other current assets142,594 107,905 
Total current assets1,192,288 471,258 
Goodwill731,257 731,257 
Deferred charges and other assets790,191 801,170 
$16,475,879 $15,359,032 
CAPITALIZATION AND LIABILITIES
Shareholders’ equity
Common stock, no par value (stated at $0.005 per share); 200,000,000 shares authorized; issued and outstanding: December 31, 2020 — 128,152,961 shares; September 30, 2020 — 125,882,477 shares
$641 $629 
Additional paid-in capital4,600,314 4,377,149 
Accumulated other comprehensive income (loss)2,532 (57,589)
Retained earnings2,609,669 2,471,014 
Shareholders’ equity7,213,156 6,791,203 
Long-term debt5,124,862 4,531,779 
Total capitalization12,338,018 11,322,982 
Current liabilities
Accounts payable and accrued liabilities284,995 235,775 
Other current liabilities512,673 546,461 
Current maturities of long-term debt171 165 
Total current liabilities797,839 782,401 
Deferred income taxes1,542,394 1,456,569 
Regulatory excess deferred taxes695,191 697,764 
Regulatory cost of removal obligation456,264 457,188 
Deferred credits and other liabilities646,173 642,128 
$16,475,879 $15,359,032 
See accompanying notes to condensed consolidated financial statements.
3


ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 Three Months Ended December 31
 20202019
(Unaudited)
(In thousands, except per
share data)
Operating revenues
Distribution segment$876,650 $828,504 
Pipeline and storage segment159,713 148,176 
Intersegment eliminations(121,883)(101,117)
Total operating revenues914,480 875,563 
Purchased gas cost
Distribution segment411,072 397,558 
Pipeline and storage segment(1,244)99 
Intersegment eliminations(121,568)(100,789)
Total purchased gas cost288,260 296,868 
Operation and maintenance expense138,643 152,245 
Depreciation and amortization expense115,285 105,062 
Taxes, other than income73,452 68,607 
Operating income298,840 252,781 
Other non-operating income6,072 4,887 
Interest charges22,010 27,229 
Income before income taxes282,902 230,439 
Income tax expense65,224 51,766 
Net income
$217,678 $178,673 
Basic net income per share$1.71 $1.47 
Diluted net income per share$1.71 $1.47 
Cash dividends per share$0.625 $0.575 
Basic weighted average shares outstanding127,034 121,113 
Diluted weighted average shares outstanding127,034 121,359 
Net income$217,678 $178,673 
Other comprehensive income (loss), net of tax
Net unrealized holding losses on available-for-sale securities, net of tax of $(18) and $0
(63)(1)
Cash flow hedges:
Amortization and unrealized gain on interest rate agreements, net of tax of $17,395 and $311
60,184 1,053 
Total other comprehensive income (loss)60,121 1,052 
Total comprehensive income$277,799 $179,725 
See accompanying notes to condensed consolidated financial statements.
4


ATMOS ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Three Months Ended December 31
 20202019
(Unaudited)
(In thousands)
Cash Flows From Operating Activities
Net income$217,678 $178,673 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense115,285 105,062 
Deferred income taxes64,587 46,726 
Other(2,976)(616)
Net assets / liabilities from risk management activities(816)4,143 
Net change in operating assets and liabilities(236,689)(161,543)
Net cash provided by operating activities
157,069 172,445 
Cash Flows From Investing Activities
Capital expenditures(456,809)(529,186)
Debt and equity securities activities, net511 (1,602)
Other, net2,706 2,553 
Net cash used in investing activities
(453,592)(528,235)
Cash Flows From Financing Activities
Net decrease in short-term debt (464,915)
Net proceeds from equity offering216,002 259,005 
Issuance of common stock through stock purchase and employee retirement plans4,007 4,267 
Proceeds from issuance of long-term debt597,390 799,450 
Cash dividends paid(79,023)(69,557)
Debt issuance costs(5,062)(7,738)
Net cash provided by financing activities
733,314 520,512 
Net increase in cash and cash equivalents
436,791 164,722 
Cash and cash equivalents at beginning of period20,808 24,550 
Cash and cash equivalents at end of period$457,599 $189,272 

See accompanying notes to condensed consolidated financial statements.
5


ATMOS ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2020
1.    Nature of Business
Atmos Energy Corporation (“Atmos Energy” or the “Company”) and its subsidiaries are engaged in the regulated natural gas distribution and pipeline and storage businesses. Our distribution business is subject to federal and state regulation and/or regulation by local authorities in each of the states in which our regulated divisions and subsidiaries operate.
Our distribution business delivers 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 at December 31, 2020, covered service areas located in eight states.
Our pipeline and storage business, which is also subject to federal and state regulations, includes the transportation of natural gas to our Texas and Louisiana distribution systems and the management of our underground storage facilities used to support our distribution business in various states.
    
2.    Unaudited Financial Information
These consolidated interim-period financial statements have been prepared in accordance with accounting principles generally accepted in the United States on the same basis, aside from accounting policy changes noted below, 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, 2020. 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, 2020. Because of seasonal and other factors, the results of operations for the three-month period ended December 31, 2020 are not indicative of our results of operations for the full 2021 fiscal year, which ends September 30, 2021.
No events have occurred subsequent to the balance sheet date that would require recognition or disclosure in the unaudited condensed consolidated financial statements.

Significant accounting policies
Except as noted below, related to the change in policies as a result of our adoption of new accounting standards, 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, 2020.
Accounting pronouncements adopted in fiscal 2021
Effective October 1, 2020, we adopted new accounting guidance that requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model. Under this model, we estimate credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument. The new guidance also introduces a new impairment recognition model for available-for-sale debt securities that will require credit losses to be recorded through an allowance account. We adopted the new guidance using a modified retrospective method. The adoption of this standard did not have a material impact on our financial position, results of operations and cash flows and no adjustments were made to October 1, 2020 opening balances as a result of this adoption. As required under the modified retrospective method of adoption, results for the reporting period beginning after October 1, 2020 are presented under Accounting Standards Codification (ASC) 326, while prior period amounts are not adjusted. See Notes 5 and 11 to the unaudited condensed consolidated financial statements for further discussion of implementation of the standard.
Accounting pronouncements that will be effective after fiscal 2021
In March 2020, the Financial Accounting Standards Board (FASB) issued optional guidance which will ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the cessation of the London Interbank Offered Rate (LIBOR). The amendments can be elected immediately, as of March 12, 2020, through December 31, 2022. We are currently evaluating if we will apply the optional guidance as we assess the impact of the cessation of LIBOR on our current contracts and hedging relationships and the potential impact on our financial position, results of operations and cash flows.
6


Regulatory assets and liabilities
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 our regulatory liabilities are recorded as a component of other current liabilities and deferred credits and other liabilities. Deferred gas costs are recorded either in other current assets or liabilities and our regulatory excess deferred taxes and regulatory cost of removal obligation are reported separately.
Significant regulatory assets and liabilities as of December 31, 2020 and September 30, 2020 included the following:
December 31,
2020
September 30,
2020
 (In thousands)
Regulatory assets:
Pension and postretirement benefit costs$146,734 $149,089 
Infrastructure mechanisms(1)
155,526 183,943 
Deferred gas costs11,322 40,593 
Recoverable loss on reacquired debt4,529 4,894 
Deferred pipeline record collection costs30,166 29,839 
Other4,969 6,283 
$353,246 $414,641 
Regulatory liabilities:
Regulatory excess deferred taxes(2)
$713,993 $718,651 
Regulatory cost of removal obligation527,087 531,096 
Deferred gas costs15,196 19,985 
Asset retirement obligation20,348 20,348 
APT annual adjustment mechanism55,313 57,379 
Other19,433 19,554 
$1,351,370 $1,367,013 
 
(1)Infrastructure mechanisms in Texas, Louisiana and Tennessee allow for the deferral of all eligible expenses associated with capital expenditures incurred pursuant to these rules, including the recording of interest on deferred expenses until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.
(2)Includes amount from the remeasurement of the net deferred tax liability included in our rate base as a result of the Tax Cuts and Jobs Act of 2017 (the "TCJA") and a Kansas legislative change enacted in fiscal 2020. Of this amount, $18.8 million as of December 31, 2020 and $20.9 million as of September 30, 2020 is recorded in other current liabilities. These liabilities are currently being returned to customers in most of our jurisdictions on a provisional basis over 15 to 69 years until formal orders establish the final refund periods.

As of December 31, 2020, we received regulatory orders in most states to defer into a regulatory asset all expenses, beyond the normal course of business, related to Coronavirus Disease 2019 (COVID-19 or virus), including bad debt expense. As of December 31, 2020, no amounts have been recorded as regulatory assets or liabilities for expenses related to COVID-19.
3.    Segment Information

 We manage and review our consolidated operations through the following reportable segments:

The distribution segment is primarily comprised of our regulated natural gas distribution and related sales operations in eight states.
The pipeline and storage segment is comprised primarily of the pipeline and storage operations of our Atmos Pipeline-Texas division and our natural gas transmission operations in Louisiana.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
7


Income statements and capital expenditures for the three months ended December 31, 2020 and 2019 by segment are presented in the following tables:
 Three Months Ended December 31, 2020
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Operating revenues from external parties$875,887 $38,593 $— $914,480 
Intersegment revenues763 121,120 (121,883)— 
Total operating revenues876,650 159,713 (121,883)914,480 
Purchased gas cost
411,072 (1,244)(121,568)288,260 
Operation and maintenance expense108,802 30,156 (315)138,643 
Depreciation and amortization expense82,870 32,415  115,285 
Taxes, other than income64,352 9,100  73,452 
Operating income209,554 89,286  298,840 
Other non-operating income835 5,237  6,072 
Interest charges10,712 11,298  22,010 
Income before income taxes
199,677 83,225  282,902 
Income tax expense45,985 19,239  65,224 
Net income$153,692 $63,986 $ $217,678 
Capital expenditures$306,016 $150,793 $ $456,809 

 Three Months Ended December 31, 2019
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Operating revenues from external parties$827,840 $47,723 $— $875,563 
Intersegment revenues664 100,453 (101,117)— 
Total operating revenues828,504 148,176 (101,117)875,563 
Purchased gas cost
397,558 99 (100,789)296,868 
Operation and maintenance expense114,352 38,221 (328)152,245 
Depreciation and amortization expense76,074 28,988  105,062 
Taxes, other than income60,243 8,364  68,607 
Operating income180,277 72,504  252,781 
Other non-operating income1,954 2,933  4,887 
Interest charges16,362 10,867  27,229 
Income before income taxes
165,869 64,570  230,439 
Income tax expense36,112 15,654  51,766 
Net income$129,757 $48,916 $ $178,673 
Capital expenditures$404,247 $124,939 $ $529,186 
8


Balance sheet information at December 31, 2020 and September 30, 2020 by segment is presented in the following tables:
 December 31, 2020
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Property, plant and equipment, net$10,235,658 $3,526,485 $ $13,762,143 
Total assets$15,694,179 $3,757,875 $(2,976,175)$16,475,879 
 September 30, 2020
 DistributionPipeline and StorageEliminationsConsolidated
 (In thousands)
Property, plant and equipment, net$9,944,978 $3,410,369 $ $13,355,347 
Total assets$14,578,176 $3,647,907 $(2,867,051)$15,359,032 

4.    Earnings Per Share
We use the two-class method of computing earnings per share because we have participating securities in the form of non-vested restricted stock units with a nonforfeitable right to dividend equivalents, for which vesting is predicated solely on the passage of time. The calculation of earnings per share using the two-class method excludes income attributable to these participating securities from the numerator and excludes the dilutive impact of those shares from the denominator. Basic weighted average shares outstanding is calculated based upon the weighted average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock awards that have not yet been issued as common stock. Additionally, the weighted average shares outstanding for diluted EPS includes the incremental effects of the forward sale agreements, discussed in Note 7 to the unaudited condensed consolidated financial statements, when the impact is dilutive. Basic and diluted earnings per share for the three months ended December 31, 2020 and 2019 are calculated as follows:

 Three Months Ended December 31
 20202019
 (In thousands, except per share amounts)
Basic Earnings Per Share
Net income$217,678 $178,673 
Less: Income allocated to participating securities
151 136 
Income available to common shareholders
$217,527 $178,537 
Basic weighted average shares outstanding
127,034 121,113 
Net income per share — Basic
$1.71 $1.47 
Diluted Earnings Per Share
Income available to common shareholders$217,527 $178,537 
Effect of dilutive shares
  
Income available to common shareholders
$217,527 $178,537 
Basic weighted average shares outstanding
127,034 121,113 
Dilutive shares 246 
Diluted weighted average shares outstanding
127,034 121,359 
Net income per share - Diluted
$1.71 $1.47 

9


5.    Revenue and Accounts Receivable
Revenue
Our revenue recognition policy is fully described in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. The following tables disaggregate our revenue from contracts with customers by customer type and segment and provide a reconciliation to total operating revenues, including intersegment revenues, for the three months ended December 31, 2020 and 2019.
Three Months Ended December 31, 2020Three Months Ended December 31, 2019
DistributionPipeline and StorageDistributionPipeline and Storage
(In thousands)
Gas sales revenues:
Residential$591,834 $ $552,076 $ 
Commercial208,947  211,314  
Industrial24,708  24,925  
Public authority and other13,062  13,022  
Total gas sales revenues838,551  801,337  
Transportation revenues27,767 164,761 26,640 152,010 
Miscellaneous revenues2,396 5,148 6,786 5,155 
Revenues from contracts with customers868,714 169,909 834,763 157,165 
Alternative revenue program revenues(1)
7,441 (10,196)(6,751)(8,989)
Other revenues495  492  
Total operating revenues$876,650 $159,713 $828,504 $148,176 
(1)    In our distribution segment, we have weather-normalization adjustment mechanisms that serve to mitigate the effects of weather on our revenue. Additionally, APT has a regulatory mechanism that requires that we share with its tariffed customers 75% of the difference between the total non-tariffed revenues earned during a test period and a revenue benchmark.
Accounts receivable and allowance for uncollectible accounts
Accounts receivable arise from natural gas sales to residential, commercial, industrial, public authority and other customers. Our accounts receivable balance includes unbilled amounts which represent a customer’s consumption of gas from the date of the last cycle billing through the last day of the month. The receivable balances are short term and generally do not extend beyond one month. To minimize credit risk, we assess the credit worthiness of new customers, require deposits where necessary, assess late fees, pursue collection activities and disconnect service for nonpayment. After disconnection, accounts are written off when deemed uncollectible.
As described in Note 2, on October 1, 2020, we adopted new accounting guidance which requires credit losses on our accounts receivable to be measured using an expected credit loss model over the entire contractual term from the date of initial recognition. At each reporting period, we assess the allowance for uncollectible accounts based on historical experience, current conditions and consideration of expected future conditions. Circumstances which could affect our estimates include, but are not limited to, customer credit issues, the level of natural gas prices, customer deposits and general economic conditions.
Due to the COVID-19 pandemic, in March 2020 we temporarily suspended disconnecting customers for nonpayment and stopped charging late fees. We are actively working with our customers experiencing financial hardship through flexible payment options and directing them to aid agencies for financial assistance. Our allowance for uncollectible accounts reflects the expected impact on our customers’ ability to pay when we resume disconnection activity.
10


A rollforward of our allowance for uncollectible accounts for the three months ended December 31, 2020 is presented in the table below. The allowance excludes the gas cost portion of customers’ bills for approximately 78 percent of our customers as we have the ability to collect these gas costs through our gas cost recovery mechanisms in most of our jurisdictions.
 Three Months Ended December 31, 2020
 
Beginning balance, September 30, 2020
$29,949 
Current period provisions6,937 
Write-offs charged against allowance(2,288)
Recoveries of amounts previously written off491 
Ending balance, December 31, 2020
$35,089 

6.    Debt
The nature and terms of our debt instruments and credit facilities are described in detail in Note 7 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. Other than as described below, there were no material changes in the terms of our debt instruments during the three months ended December 31, 2020.
Long-term debt at December 31, 2020 and September 30, 2020 consisted of the following:
December 31, 2020September 30, 2020
 (In thousands)
Unsecured 3.00% Senior Notes, due 2027
$500,000 $500,000 
Unsecured 2.625% Senior Notes, due 2029
300,000 300,000 
Unsecured 1.50% Senior Notes, due 2031
600,000  
Unsecured 5.95% Senior Notes, due 2034
200,000 200,000 
Unsecured 5.50% Senior Notes, due 2041
400,000 400,000 
Unsecured 4.15% Senior Notes, due 2043
500,000 500,000 
Unsecured 4.125% Senior Notes, due 2044
750,000 750,000 
Unsecured 4.30% Senior Notes, due 2048
600,000 600,000 
Unsecured 4.125% Senior Notes, due 2049
450,000 450,000 
Unsecured 3.375% Senior Notes, due 2049
500,000 500,000 
Floating-rate term loan, due 2022
200,000 200,000 
Medium-term note Series A, 1995-1, 6.67%, due 2025
10,000 10,000 
Unsecured 6.75% Debentures, due 2028
150,000 150,000 
Finance lease obligations8,608 8,631 
Total long-term debt5,168,608 4,568,631 
Less:
Original issue discount on unsecured senior notes and debentures3,090 583 
Debt issuance cost40,485 36,104 
Current maturities171 165 
$5,124,862 $4,531,779 
On October 1, 2020, we completed a public offering of $600 million of 1.50% senior notes due 2031. The net proceeds from the offering, after the underwriting discount and offering expenses, of $592.3 million, were used for general corporate purposes, including the repayment of working capital borrowings pursuant to our commercial paper program and the related settlement of our interest rate swaps. The effective interest rate on these notes is 1.71%, after giving effect to the offering costs and settlement of our interest rate swaps.
Short-term debt
We utilize short-term debt to provide cost-effective, short-term financing until it can be replaced with a balance of long-term debt and equity financing that achieves the Company’s desired capital structure with an equity-to-total-capitalization ratio between 50% and 60%, inclusive of long-term and short-term debt. Our short-term borrowing requirements are driven primarily
11


by construction work in progress and the seasonal nature of the natural gas business. Changes in the price of natural gas and the amount of natural gas we need to supply our customers’ needs could significantly affect our borrowing requirements.
Our short-term borrowing requirements are satisfied through a combination of a $1.5 billion commercial paper program and four committed revolving credit facilities with third-party lenders that provide approximately $2.2 billion of total working capital funding.
The primary source of our funding is our commercial paper program, which is supported by a five-year unsecured $1.5 billion credit facility that expires on September 25, 2023. The facility bears interest at a base rate or at a LIBOR-based rate for the applicable interest period, plus a margin ranging from zero percent to 1.25 percent, based on the Company’s credit ratings. Additionally, the facility contains a $250 million accordion feature, which provides the opportunity to increase the total committed loan to $1.75 billion. At December 31, 2020 and September 30, 2020, there were no amounts outstanding under our commercial paper program.
We have a $600 million 364-day unsecured revolving credit facility, which expires April 22, 2021 and is used to provide additional working capital funding. The facility bears interest at a base rate or at a LIBOR-based rate for the applicable interest period, plus a margin ranging from zero percent to 1.25 percent, based on the Company's credit ratings. At December 31, 2020, there were no borrowings outstanding under this facility.
Additionally, we have a $50 million 364-day unsecured facility, which expires on March 31, 2021 and is used to provide working capital funding. There were no borrowings outstanding under this facility as of December 31, 2020.
Finally, we have a $50 million 364-day unsecured revolving credit facility, which expires April 29, 2021 and is used to issue letters of credit and to provide working capital funding. At December 31, 2020, there were no borrowings outstanding under this facility; however, outstanding letters of credit reduced the total amount available to us to $44.4 million.
Debt covenants
The availability of funds under these credit facilities is subject to conditions specified in the respective credit agreements, all of which we currently satisfy. These conditions include our compliance with financial covenants and the continued accuracy of representations and warranties contained in these agreements. We are required by the financial covenants in each of these facilities to maintain, at the end of each fiscal quarter, a ratio of total-debt-to-total-capitalization of no greater than 70 percent. At December 31, 2020, our total-debt-to-total-capitalization ratio, as defined in the agreements, was 43 percent. In addition, both the interest margin and the fee that we pay on unused amounts under certain of these facilities are subject to adjustment depending upon our credit ratings.
These credit facilities and our public indentures contain usual and customary covenants for our business, including covenants substantially limiting liens, substantial asset sales and mergers. Additionally, our public debt indentures relating to our senior notes and debentures, as well as certain of our revolving credit agreements, each contain a default provision that is triggered if outstanding indebtedness arising out of any other credit agreements in amounts ranging from in excess of $15 million to in excess of $100 million becomes due by acceleration or if not paid at maturity. We were in compliance with all of our debt covenants as of December 31, 2020. If we were unable to comply with our debt covenants, we would likely be required to repay our outstanding balances on demand, provide additional collateral or take other corrective actions.

12


7.    Shareholders' Equity

The following tables present a reconciliation of changes in stockholders' equity for the three months ended December 31, 2020 and 2019.
 Common stockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive Income
(Loss)
Retained
Earnings
Total
Number of
Shares
Stated
Value
 (In thousands, except share and per share data)
Balance, September 30, 2020
125,882,477 $629 $4,377,149 $(57,589)$2,471,014 $6,791,203 
Net income— — — — 217,678 217,678 
Other comprehensive income— — — 60,121 — 60,121 
Cash dividends ($0.625 per share)
— — — — (79,023)(79,023)
Common stock issued:
Public and other stock offerings2,126,118 11 219,998 — — 220,009 
Stock-based compensation plans144,366 1 3,167 — — 3,168 
Balance, December 31, 2020
128,152,961 $641 $4,600,314 $2,532 $2,609,669 $7,213,156 

 Common stockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive Income
(Loss)
Retained
Earnings
Total
Number of
Shares
Stated
Value
 (In thousands, except share and per share data)
Balance, September 30, 2019
119,338,925 $597 $3,712,194 $(114,583)$2,152,015 $5,750,223 
Net income— — — — 178,673 178,673 
Other comprehensive income— — — 1,052 — 1,052 
Cash dividends ($0.575 per share)
— — — — (69,557)(69,557)
Common stock issued:
Public and other stock offerings2,758,929 13 263,259 — — 263,272 
Stock-based compensation plans164,549 1 4,111 — — 4,112 
Balance, December 31, 2019
122,262,403 $611 $3,979,564 $(113,531)$2,261,131 $6,127,775 
Shelf Registration, At-the-Market Equity Sales Program and Equity Issuances
On February 11, 2020, we filed a shelf registration statement with the Securities and Exchange Commission (SEC) that allows us to issue up to $4.0 billion in common stock and/or debt securities, which expires February 11, 2023. At December 31, 2020, approximately $2.4 billion of securities remained available for issuance under the shelf registration statement.
During the three months ended December 31, 2020, we executed forward sales under our ATM equity sales program with various forward sellers who borrowed and sold 1,201,674 shares of our common stock at an aggregate price of $121.8 million. During the three months ended December 31, 2020, we also settled forward sale agreements with respect to 2,085,492 shares that had been borrowed and sold by various forward sellers during fiscal 2019 under the ATM program for net proceeds of $216.0 million. As of December 31, 2020, approximately $430 million of equity remains available for issuance under the ATM program. Additionally, we had $246.8 million in available proceeds from outstanding forward sale agreements, as detailed below.
MaturityShares AvailableNet Proceeds Available
(In thousands)
Forward Price
June 30, 20211,060,660 $107,255 $101.12 
September 30, 20211,391,517 139,579 $100.31 
Total2,452,177 $246,834 $100.66 
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Accumulated Other Comprehensive Income (Loss)
We record deferred gains (losses) in AOCI related to available-for-sale debt securities and interest rate agreement cash flow hedges. Deferred gains (losses) for our available-for-sale debt securities are recognized in earnings upon settlement, while deferred gains (losses) related to our interest rate agreement cash flow hedges are recognized in earnings as they are amortized. The following tables provide the components of our accumulated other comprehensive income (loss) balances, net of the related tax effects allocated to each component of other comprehensive income (loss).
Available-
for-Sale
Securities
Interest Rate
Agreement
Cash Flow
Hedges
Total
 (In thousands)
September 30, 2020$238 $(57,827)$(57,589)
Other comprehensive income (loss) before reclassifications(63)59,042 58,979 
Amounts reclassified from accumulated other comprehensive income 1,142 1,142 
Net current-period other comprehensive income (loss)(63)60,184 60,121 
December 31, 2020$175 $2,357 $2,532 
 
Available-
for-Sale
Securities
Interest Rate
Agreement
Cash Flow
Hedges
Total
 (In thousands)
September 30, 2019$132 $(114,715)$(114,583)
Other comprehensive loss before reclassifications(1) (1)
Amounts reclassified from accumulated other comprehensive income 1,053 1,053 
Net current-period other comprehensive income (loss)(1)1,053 1,052 
December 31, 2019$131 $(113,662)$(113,531)

8.     Interim Pension and Other Postretirement Benefit Plan Information
The components of our net periodic pension cost for our pension and other postretirement benefit plans for the three months ended December 31, 2020 and 2019 are presented in the following tables. Most of these costs are recoverable through our tariff rates. A portion of these costs is capitalized into our rate base or deferred as a regulatory asset or liability. The remaining costs are recorded as a component of operation and maintenance expense or other non-operating expense.
 Three Months Ended December 31
 Pension BenefitsOther Benefits
 2020201920202019
 (In thousands)
Components of net periodic pension cost:
Service cost$4,612 $4,653 $4,306 $3,366 
Interest cost(1)
5,028 5,843 2,660 2,653 
Expected return on assets(1)
(6,978)(7,079)(2,614)(2,625)
Amortization of prior service cost (credit)(1)
(58)(58)43 43 
Amortization of actuarial (gain) loss(1)
3,172 (1,271) (334)
Net periodic pension cost$5,776 $2,088 $4,395 $3,103 
(1)    The components of net periodic cost other than the service cost component are included in the line item other non-operating expense in the condensed consolidated statements of comprehensive income or are capitalized on the condensed consolidated balance sheets as a regulatory asset or liability, as described in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
For the three months ended December 31, 2020 we contributed $4.1 million to our postretirement medical plans. We anticipate contributing a total of between $15 million and $25 million to our postretirement plans during fiscal 2021.

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9.    Commitments and Contingencies
Litigation and Environmental Matters
In the normal course of business, we are subject to various legal and regulatory proceedings. For such matters, we record liabilities when they are considered probable and estimable, based on currently available facts, our historical experience and our estimates of the ultimate outcome or resolution of the liability in the future. While the outcome of these proceedings is uncertain and a loss in excess of the amount we have accrued is possible though not reasonably estimable, it is the opinion of management that any amounts exceeding the accruals will not have a material adverse impact on our financial position, results of operations or cash flows.
We maintain liability insurance for various risks associated with the operation of our natural gas pipelines and facilities, including for property damage and bodily injury. These liability insurance policies generally require us to be responsible for the first $1.0 million (self-insured retention) of each incident.
The National Transportation Safety Board (NTSB) held a public meeting on January 12, 2021 to determine the probable cause of the incident that occurred at a Dallas, Texas residence on February 23, 2018 that resulted in one fatality and injuries to four other residents. At the meeting, the Board deliberated and voted on proposed findings of fact, a probable cause statement, and safety recommendations. At the conclusion of the Board meeting, the NTSB issued an abstract to its website (www.ntsb.gov) that included an Executive Summary, Findings, Probable Cause, and Recommendations. The NTSB noted in the Abstract that the NTSB staff is currently making final revisions to the report and that the final report and safety recommendations letters would be later distributed to recommendation recipients, including Atmos Energy.
We are a party to various other litigation and environmental-related matters or claims that have arisen in the ordinary course of our business. While the results of such litigation and response actions to such environmental-related matters or claims cannot be predicted with certainty, we continue to believe the final outcome of such litigation and matters or claims will not have a material adverse effect on our financial condition, results of operations or cash flows.
Purchase Commitments
Our distribution divisions maintain supply contracts with several vendors that generally cover a period of up to one year. Commitments for estimated base gas volumes are established under these contracts on a monthly basis at contractually negotiated prices. Commitments for incremental daily purchases are made as necessary during the month in accordance with the terms of the individual contract.
Our Mid-Tex Division also maintains a limited number of long-term supply contracts to ensure a reliable source of gas for our customers in its service area, which obligate it to purchase specified volumes at prices indexed to natural gas hubs. These purchase commitment contracts are detailed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. There were no material changes to the purchase commitments for the three months ended December 31, 2020.
Rate Regulatory Proceedings
As of December 31, 2020, routine rate regulatory proceedings were in progress in Colorado, Kansas and West Texas, which are discussed in further detail below in Management’s Discussion and Analysis — Recent Ratemaking Developments. Except for these proceedings, there were no material changes to rate regulatory proceedings for the three months ended December 31, 2020.

10.    Financial Instruments
We currently use financial instruments to mitigate commodity price risk and interest rate risk. The objectives and strategies for using financial instruments and the related accounting for these financial instruments are fully described in Notes 2 and 14 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. During the three months ended December 31, 2020, there were no material changes in our objectives, strategies and accounting for using financial instruments. Our financial instruments do not contain any credit-risk-related or other contingent features that could cause payments to be accelerated when our financial instruments are in net liability positions. The following summarizes those objectives and strategies.
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Commodity Risk Management Activities
Our purchased gas cost adjustment mechanisms essentially insulate our distribution segment from commodity price risk; however, our customers are exposed to the effects of volatile natural gas prices. We manage this exposure through a combination of physical storage, fixed-price forward contracts and financial instruments, primarily over-the-counter swap and option contracts, in an effort to minimize the impact of natural gas price volatility on our customers during the winter heating season.
We typically seek to hedge between 25 and 50 percent of anticipated heating season gas purchases using financial instruments. For the 2020-2021 heating season (generally October through March), in the jurisdictions where we are permitted to utilize financial instruments, we anticipate hedging approximately 39 percent, or 15.8 Bcf of the winter flowing gas requirements. We have not designated these financial instruments as hedges for accounting purposes.