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Divestitures and Acquisitions | 6 Months Ended
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Mar. 31, 2018
Divestitures and Acquisitions [Abstract] |
Divestitures and Acquisitions [Text Block] | Discontinued Operations On October 29, 2016, we entered into a Membership Interest Purchase Agreement (the Agreement) with CenterPoint Energy Services, Inc., a subsidiary of CenterPoint Energy, Inc. (CES) to sell all of the equity interests of Atmos Energy Marketing, LLC (AEM). The transaction closed on January 3, 2017, with an effective date of January 1, 2017. CES paid a cash purchase price of $38.3 million plus working capital of $109.0 million for total cash consideration of $147.3 million. Of this amount, $7.0 million was placed into escrow and was to be paid to the Company within 24 months of the closing date, net of any indemnification claims agreed upon between the two companies. In January 2018, $3.0 million of this escrowed amount was released and received by the Company. We recognized a net gain of $0.03 per diluted share on the sale in the second quarter of fiscal 2017 and completed the working capital true–up during the third quarter of fiscal 2017. The operating results of our natural gas marketing reportable segment have been reported on the condensed consolidated statement of income as income from discontinued operations, net of income tax, for the six months ended March 31, 2017. Accordingly, expenses related to allocable general corporate overhead and interest expense are not included in these results. The tables below set forth selected financial information related to discontinued operations. Operating expenses include operation and maintenance expense, provision for doubtful accounts, depreciation and amortization expense and taxes, other than income. At March 31, 2018 and September 30, 2017 we did not have any assets or liabilities held for sale. As AEM was sold effective January 1, 2017, no operating results are reported on the condensed consolidated statement of income as discontinued operations for the three months ended March 31, 2017. During the three months ended March 31, 2017, we recorded a gain on sale from discontinued operations for $2.7 million, net of tax of $10.2 million. The following table presents statement of income data related to discontinued operations:
| Six Months Ended March 31, 2017
| (In thousands)
Operating revenues | $ | 303,474 |
Purchased gas cost | 277,554 |
Operating expenses | 7,874 |
Operating income | 18,046 |
Other nonoperating expense | (211 | )
Income from discontinued operations before income taxes | 17,835 |
Income tax expense | 6,841 |
Income from discontinued operations | 10,994 |
Gain on sale from discontinued operations, net of tax ($10,215) | 2,716 |
Net income from discontinued operations | $ | 13,710 |
The following table presents statement of cash flow data related to discontinued operations:
| Six Months Ended March 31, 2017
| (In thousands)
Depreciation and amortization expense | $ | 185 |
Capital expenditures | $ | — |
Non-cash loss in commodity contract cash flow hedges | $ | (8,165 | )
Natural Gas Marketing Commodity Risk Management Activities Our discontinued natural gas marketing segment was exposed to risks associated with changes in the market price of natural gas through the purchase, sale and delivery of natural gas to its customers at competitive prices. Through December 31, 2016, we managed our exposure to such risks through a combination of physical storage and financial instruments, including futures, over-the-counter and exchange-traded options and swap contracts with counterparties. Effective January 1, 2017, as a result of the sale of AEM, these activities were discontinued. Due to the sale of AEM, we determined that the cash flows associated with our natural gas marketing commodity cash flow hedges were no longer probable of occurring; therefore, we discontinued hedge accounting as of December 31, 2016. As a result, we reclassified the gain in accumulated other comprehensive income associated with the commodity contracts into earnings as a reduction of purchased gas cost and recognized a pre-tax gain of $10.6 million, which is included in income from discontinued operations on the condensed consolidated statement of income for the six months ended March 31, 2017. The Company's other risk management activities are discussed in Note 10. Impact of Financial Instruments on the Income Statement Hedge ineffectiveness for our natural gas marketing segment was recorded as a component of purchased gas cost, which is included in discontinued operations on the condensed consolidated statements of income, and primarily results from differences in the location and timing of the derivative instrument and the hedged item. For the six months ended March 31, 2017, we recognized a gain arising from fair value and cash flow hedge ineffectiveness of $3.4 million. Additional information regarding ineffectiveness recognized in the income statement is included in the tables below. Fair Value Hedges The impact of our natural gas marketing segment commodity contracts designated as fair value hedges and the related hedged item on the results of discontinued operations on our condensed consolidated income statement for the six months ended March 31, 2017 is presented below.
| Six Months Ended March 31, 2017
| (In thousands)
Commodity contracts | $ | (9,567 | )
Fair value adjustment for natural gas inventory designated as the hedged item | 12,858 |
Total decrease in purchased gas cost reflected in income from discontinued operations | $ | 3,291 |
The decrease in purchased gas cost reflected in income from discontinued operations is comprised of the following: |
Basis ineffectiveness | $ | (597 | )
Timing ineffectiveness | 3,888 |
| $ | 3,291 |
Basis ineffectiveness arises from natural gas market price differences between the locations of the hedged inventory and the delivery location specified in the hedge instruments. Timing ineffectiveness arises due to changes in the difference between the spot price and the futures price, as well as the difference between the timing of the settlement of the futures and the valuation of the underlying physical commodity. Cash Flow Hedges The impact of our natural gas marketing segment cash flow hedges on our condensed consolidated income statements for the six months ended March 31, 2017 is presented below:
| Six Months Ended March 31, 2017
| (In thousands)
Loss reclassified from AOCI for effective portion of natural gas marketing commodity contracts | $ | (2,612 | )
Gain arising from ineffective portion of natural gas marketing commodity contracts | 111 |
Gain on discontinuance of cash flow hedging of natural gas marketing commodity contracts reclassified from AOCI | 10,579 |
Total impact on purchased gas cost reflected in income from discontinued operations | $ | 8,078 |
Financial Instruments Not Designated as Hedges The impact of the natural gas marketing segment's financial instruments that had not been designated as hedges on our condensed consolidated income statements for the six months ended March 31, 2017 was a decrease in purchased gas cost of $6.8 million, which is included in discontinued operations on the condensed consolidated statements of income.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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