Item 1. Business.

Overview and Strategy

Atmos Energy Corporation, headquartered in Dallas, Texas, and incorporated in Texas and Virginia, is engaged primarily in the regulated natural gas distribution and pipeline businesses as well as other nonregulated natural gas businesses. We deliver natural gas through regulated sales and transportation arrangements to over three million residential, commercial, public authority and industrial customers in eight states located primarily in the South, which makes us one of the country’s largest natural-gas-only distributors based on number of customers. We also operate one of the largest intrastate pipelines in Texas based on miles of pipe.

Our nonregulated businesses provide natural gas management, marketing, transportation and storage services to municipalities, local gas distribution companies, including certain of our natural gas distribution divisions and industrial customers principally in the Midwest and Southeast.

Atmos Energy's vision is to be the safest provider of natural gas services. We intend to achieve this vision by:

•	operating our business exceptionally well

•	investing in our people and infrastructure

•	enhancing our culture.

We believe the successful execution of this strategy has delivered excellent shareholder value. Over the last five years, we have achieved growth by making significant capital investments to fortify and upgrade our distribution and transmission systems and successfully recovering these investments through regulatory mechanisms designed to minimize regulatory lag.

Our core values include focusing on our employees and customers while conducting our business with honesty and integrity. We continue to strengthen our culture through ongoing communications with our employees and enhanced employee training.

Operating Segments

We operate the Company through the following three segments:

•	The regulated distribution segment, which includes our regulated distribution and related sales operations

•	The regulated pipeline segment, which includes the pipeline and storage operations of our Atmos Pipeline — Texas Division and

•	The nonregulated segment, which includes our nonregulated natural gas management, nonregulated natural gas transmission, storage and other services.

These operating segments are described in greater detail below.

Regulated Distribution Segment Overview

Our regulated distribution segment is comprised of our six regulated natural gas distribution divisions. This segment represents approximately 65 percent of our consolidated net income. The following table summarizes key information about these divisions, presented in order of total rate base. We operate in our service areas under terms of non-exclusive franchise agreements granted by the various cities and towns that we serve. At September 30, 2016, we held 1,003 franchises having terms generally ranging from five to 35 years. A significant number of our franchises expire each year, which require renewal prior to the end of their terms. Historically, we have successfully renewed these franchises and believe that we will continue to be able to renew our franchises as they expire.

Division		Service Areas		Communities Served		Customer Meters
Mid-Tex		Texas, including the Dallas/Fort Worth Metroplex		550		1,649,291
Kentucky/Mid-States		Kentucky		230		179,717
		Tennessee				143,942
		Virginia				23,820
Louisiana		Louisiana		280		358,972
West Texas		Amarillo, Lubbock, Midland		80		308,988
Mississippi		Mississippi		110		269,750
Colorado-Kansas		Colorado		170		117,017
		Kansas				134,012

Revenues in this operating segment are established by regulatory authorities in the states in which we operate. These rates are intended to be sufficient to cover the costs of conducting business and to provide a reasonable return on invested capital. In addition, we transport natural gas for others through our distribution system.

Rates established by regulatory authorities often include cost adjustment mechanisms for costs that (i) are subject to significant price fluctuations compared to our other costs, (ii) represent a large component of our cost of service and (iii) are generally outside our control.

Purchased gas cost adjustment mechanisms represent a common form of cost adjustment mechanism. Purchased gas cost adjustment mechanisms provide natural gas distribution companies a method of recovering purchased gas costs on an ongoing basis without filing a rate case because they provide a dollar-for-dollar offset to increases or decreases in natural gas distribution gas costs. Therefore, although substantially all of our distribution operating revenues fluctuate with the cost of gas that we purchase, distribution gross profit (which is defined as operating revenues less purchased gas cost) is generally not affected by fluctuations in the cost of gas.

Additionally, some jurisdictions have performance-based ratemaking adjustments to provide incentives to distribution companies to minimize purchased gas costs through improved storage management and use of financial instruments to lock in gas costs. Under the performance-based ratemaking adjustment, purchased gas costs savings are shared between the utility and its customers.

Our supply of natural gas is provided by a variety of suppliers, including independent producers, marketers and pipeline companies and withdrawals of gas from proprietary and contracted storage assets. Additionally, the natural gas supply for our Mid-Tex Division includes peaking and spot purchase agreements.

Supply arrangements consist of both base load and swing supply (peaking) quantities and are contracted from our suppliers on a firm basis with various terms at market prices. Base load quantities are those that flow at a constant level throughout the month and swing supply quantities provide the flexibility to change daily quantities to match increases or decreases in requirements related to weather conditions.

Except for local production purchases, we select our natural gas suppliers through a competitive bidding process by periodically requesting proposals from suppliers that have demonstrated that they can provide reliable service. We select these suppliers based on their ability to deliver gas supply to our designated firm pipeline receipt points at the lowest reasonable cost. Major suppliers during fiscal 2016 were Concord Energy LLC, ConocoPhillips Company, Devon Gas Services, L.P., Gulf South Pipeline Company LP, Sequent Energy Management, LP, Targa Gas Marketing LLC, Tenaska Gas Storage, LLC, Texas

Gas Transmission Corporation, Texla Energy Management, Inc. and Atmos Energy Marketing, LLC and Trans Louisiana Gas Pipeline, Inc., which are wholly owned subsidiaries in our nonregulated segment.

The combination of base load, peaking and spot purchase agreements, coupled with the withdrawal of gas held in storage, allows us the flexibility to adjust to changes in weather, which minimizes our need to enter into long-term firm commitments. We estimate our peak-day availability of natural gas supply to be approximately 4.4 Bcf. The peak-day demand for our distribution operations in fiscal 2016 was on January 10, 2016, when sales to customers reached approximately 2.5 Bcf.

Currently, our distribution divisions, except for our Mid-Tex Division, utilize 40 pipeline transportation companies, both interstate and intrastate, to transport our natural gas. The pipeline transportation agreements are firm and many of them have “pipeline no-notice” storage service, which provides for daily balancing between system requirements and nominated flowing supplies. These agreements have been negotiated with the shortest term necessary while still maintaining our right of first refusal. The natural gas supply for our Mid-Tex Division is delivered primarily by our Atmos Pipeline — Texas Division (APT).

To maintain our deliveries to high priority customers, we have the ability, and have exercised our right, to curtail deliveries to certain customers under the terms of interruptible contracts or applicable state regulations or statutes. Our customers’ demand on our system is not necessarily indicative of our ability to meet current or anticipated market demands or immediate delivery requirements because of factors such as the physical limitations of gathering, storage and transmission systems, the duration and severity of cold weather, the availability of gas reserves from our suppliers, the ability to purchase additional supplies on a short-term basis and actions by federal and state regulatory authorities. Curtailment rights provide us the flexibility to meet the human-needs requirements of our customers on a firm basis. Priority allocations imposed by federal and state regulatory agencies, as well as other factors beyond our control, may affect our ability to meet the demands of our customers. We do not anticipate any problems with obtaining additional gas supply as needed for our customers.

Regulated Pipeline Segment Overview

Our regulated pipeline segment consists of the regulated pipeline and storage operations of APT. APT is one of the largest intrastate pipeline operations in Texas with a heavy concentration in the established natural gas-producing areas of central, northern and eastern Texas, extending into or near the major producing areas of the Barnett Shale, the Texas Gulf Coast and the Delaware and Val Verde Basins of West Texas. Through it, APT provides transportation and storage services to our Mid-Tex Division, other third party local distribution companies, industrial and electric generation customers, marketers and producers. As part of its pipeline operations, APT owns and operates five underground storage reservoirs in Texas. This segment represents approximately 30 percent of our consolidated operations.

Gross profit earned from transportation and storage services for APT is subject to traditional ratemaking governed by the RRC. Rates are updated through periodic filings made under Texas’ Gas Reliability Infrastructure Program (GRIP). GRIP allows us to include in our rate base annually approved capital costs incurred in the prior calendar year provided that we file a complete rate case at least once every five years. APT’s existing regulatory mechanisms allow certain transportation and storage services to be provided under market-based rates.

Nonregulated Segment Overview

Our nonregulated operations are conducted through Atmos Energy Holdings, Inc. (AEH), a wholly-owned subsidiary of Atmos Energy Corporation, and typically represent approximately five percent of our consolidated net income. AEH's primary business is to buy, sell and deliver natural gas at competitive prices to approximately 1,000 customers located primarily in the Midwest and Southeast areas of the United States. AEH accomplishes this objective by aggregating and purchasing gas supply, arranging transportation and storage logistics and effectively managing commodity price risk. AEH also earns storage and transportation demand fees primarily from our regulated distribution operations in Louisiana and Kentucky. These demand fees are subject to regulatory oversight and are renewed periodically.

Ratemaking Activity

Overview

The method of determining regulated rates varies among the states in which our regulated businesses operate. The regulatory authorities have the responsibility of ensuring that utilities in their jurisdictions operate in the best interests of customers while providing utility companies the opportunity to earn a reasonable return on their investment. Generally, each regulatory authority reviews rate requests and establishes a rate structure intended to generate revenue sufficient to cover the costs of conducting business and to provide a reasonable return on invested capital.

Our rate strategy focuses on reducing or eliminating regulatory lag, obtaining adequate returns and providing stable, predictable margins, which benefit both our customers and the Company. As a result of our ratemaking efforts in recent years, Atmos Energy has:

•	Formula rate mechanisms in place in four states that provide for an annual rate review and adjustment to rates.

•	Infrastructure programs in place in the majority of our states that provide for an annual rate adjustment to rates for qualifying capital expenditures. Through our annual formula rate mechanisms and infrastructure programs, we have the ability to recover over 90 percent of our capital expenditures within six months.

•	Authorization in tariffs, statute or commission rules that allows us to defer certain elements of our cost of service until they are included in rates, such as depreciation, ad valorem taxes and pension costs.

•	WNA mechanisms in seven states that serve to minimize the effects of weather on approximately 97 percent of our distribution gross margin.

•	The ability to recover the gas cost portion of bad debts in five states.

The following table provides a jurisdictional rate summary for our regulated operations. This information is for regulatory purposes only and may not be representative of our actual financial position.

Division		Jurisdiction		Effective Date of Last Rate/GRIP Action		Rate Base (thousands)(1)		Authorized Rate of Return(1)		Authorized Debt/ Equity Ratio	Authorized Return on Equity(1)
Atmos Pipeline — Texas		Texas		05/01/2011		$807,733		9.36%		50/50	11.80%
Atmos Pipeline — Texas — GRIP		Texas		05/03/2016		722,700(2)		9.36%		N/A	11.80%
Colorado-Kansas		Colorado		01/01/2016		129,094		7.82%		48/52	9.60%
		Colorado SSIR		01/01/2016		9,478		7.82%		48/52	9.60%
		Kansas		03/17/2016		200,564		(4)		(4)	(4)
Kentucky/Mid-States		Kentucky		08/15/2016		335,833		(4)		(4)	(4)
		Tennessee		06/01/2016		274,595		7.72%		47/53	9.80%
		Virginia		04/01/2016		49,132		(4)		(4)	9.00% - 10.00%
Louisiana		Trans La		04/01/2016		138,692		7.79%		46/54	9.80%
		LGS		07/01/2016		350,837		7.73%		46/54	9.80%
Mid-Tex Cities		Texas		06/01/2016		2,130,568(3)		8.43%		45/55	10.50%
Mid-Tex — Dallas		Texas		06/01/2016		2,076,415(3)		8.28%		43/57	10.10%
Mississippi		Mississippi		12/21/2015		357,646		7.94%		47/53	9.88%
		Mississippi - SGR		12/03/2015		3,475		9.37%		47/53	12.00%
West Texas(5)		Texas		03/15/2016		(4)		(4)		(4)	10.50%
		Texas-GRIP		05/03/2016		419,976		8.57%		48/52	10.50%

Division		Jurisdiction		Bad Debt Rider(6)		Formula Rate		Infrastructure Mechanism	Performance Based Rate Program(7)		WNA Period
Atmos Pipeline — Texas		Texas		No		Yes		Yes	N/A		N/A
Colorado-Kansas		Colorado		No		No		Yes	No		N/A
		Kansas		Yes		No		Yes	No		October-May
Kentucky/Mid-States		Kentucky		Yes		No		Yes	Yes		November-April
		Tennessee		Yes		Yes		No	Yes		October-April
		Virginia		Yes		No		Yes	No		January-December
Louisiana		Trans La		No		Yes		Yes	No		December-March
		LGS		No		Yes		Yes	No		December-March
Mid-Tex Cities		Texas		Yes		Yes		Yes	No		November-April
Mid-Tex — Dallas		Texas		Yes		Yes		Yes	No		November-April
Mississippi		Mississippi		No		Yes		Yes	Yes		November-April
West Texas(5)		Texas		Yes		Yes		Yes	No		October-May

(1)	The rate base, authorized rate of return and authorized return on equity presented in this table are those from the most recent regulatory filing for each jurisdiction. These rate bases, rates of return and returns on equity are not necessarily indicative of current or future rate bases, rates of return or returns on equity.

(2)	This APT rate base represents the incremental rate base approved through annual GRIP filings since APT's last rate case in 2011.

(3)	The Mid-Tex Rate Base amounts for the Mid-Tex Cities and Dallas areas represent “system-wide”, or 100 percent, of the Mid-Tex Division’s rate base.

(4)	A rate base, rate of return, return on equity or debt/equity ratio was not included in the respective state commission’s final decision.

(5)	On April 1, 2014, a rate case settlement approved by the West Texas Cities reestablished an annual rate mechanism for all West Texas Division cities except Amarillo, Channing, Dalhart and Lubbock.

(6)	The bad debt rider allows us to recover from ratepayers the gas cost portion of uncollectible accounts.

(7)	The performance-based rate program provides incentives to distribution companies to minimize purchased gas costs by allowing the companies and its customers to share the purchased gas costs savings.

Although substantial progress has been made in recent years by improving rate design and recovery of investment across Atmos Energy’s operating areas, we will continue to seek improvements in rate design to address cost variations and pursue tariffs that reduce regulatory lag associated with investments. Further, potential changes in federal energy policy, federal safety regulations and adverse economic conditions will necessitate continued vigilance by the Company and our regulators in meeting the challenges presented by these external factors.

Recent Ratemaking Activity

Substantially all of our regulated revenues in the fiscal years ended September 30, 2016, 2015 and 2014 were derived from sales at rates set by or subject to approval by local or state authorities. Net operating income increases resulting from ratemaking activity totaling $122.5 million, $114.5 million and $93.3 million, became effective in fiscal 2016, 2015 and 2014, as summarized below:

		Annual Increase to Operating Income For the Fiscal Year Ended September 30
Rate Action		2016				2015				2014
		(In thousands)
Annual formula rate mechanisms		$	114,974			$	113,706			$	71,749
Rate case filings		7,716				711				21,819
Other ratemaking activity		(183		)		78				(226		)
		$	122,507			$	114,495			$	93,342

Additionally, the following ratemaking efforts were initiated during fiscal 2016 but had not been completed as of September 30, 2016:

Division	Rate Action	Jurisdiction	Operating Income Requested
			(In thousands)
Kentucky/Mid-States	SAVE(1)	Virginia	$	(181	)
	PRP(1)	Kentucky	4,938
	ARM(2) True-Up	Tennessee	5,514
Mississippi	SIR(1)	Mississippi	3,334
	SGR(3)	Mississippi	1,292
			$	14,897

(1)	The Steps to Advance Virginia Energy (SAVE) Plan, the Pipeline Replacement Program (PRP) and the System Integrity Rider (SIR) surcharges relate to long-term programs to replace aging infrastructure.

(2)	The Annual Rate Mechanism (ARM) is a formula rate mechanism that refreshes the Company's rates on an annual basis.

(3)	The Mississippi Supplemental Growth Rider (SGR) permits the Company to pursue up to $5.0 million of eligible industrial growth projects beyond the division's normal main extension policies.

Our recent ratemaking activity is discussed in greater detail below.

Annual Formula Rate Mechanisms

As an instrument to reduce regulatory lag, formula rate mechanisms allow us to refresh our rates on an annual basis without filing a formal rate case. However, these filings still involve discovery by the appropriate regulatory authorities prior to the final determination of rates under these mechanisms. We currently have formula rate mechanisms in our Louisiana, Mississippi and Tennessee operations and in substantially all of our Texas divisions. Additionally, we have specific infrastructure programs in substantially all of our distribution divisions and our Atmos Pipeline - Texas Division with tariffs in place to permit the investment associated with these programs to have their surcharge rate adjusted annually to recover approved capital costs incurred in a prior test-year period. The following table summarizes our annual formula rate mechanisms by state.

		Annual Formula Rate Mechanisms
State		Infrastructure Programs		Formula Rate Mechanisms
Colorado		System Safety and Integrity Rider (SSIR)		—
Kansas		Gas System Reliability Surcharge (GSRS)		—
Kentucky		Pipeline Replacement Program (PRP)		—
Louisiana		(1)		Rate Stabilization Clause (RSC)
Mississippi		System Integrity Rider (SIR)		Stable Rate Filing (SRF), Supplemental Growth Filing (SGR)
Tennessee		—		Annual Rate Mechanism (ARM)
Texas		Gas Reliability Infrastructure Program (GRIP), (1)		Dallas Annual Rate Review (DARR), Rate Review Mechanism (RRM)
Virginia		Steps to Advance Virginia Energy (SAVE)		—

(1)	Infrastructure mechanisms in Texas and Louisiana allow for the deferral of all expenses associated with capital expenditures incurred pursuant to these rules, which primarily consists of interest, depreciation and other taxes (Texas only), until the next rate proceeding (rate case or annual rate filing), at which time investment and costs would be recoverable through base rates.

The following table summarizes our annual formula rate mechanisms with effective dates during the fiscal years ended September 30, 2016, 2015 and 2014:

Division		Jurisdiction		Test Year Ended		Increase (Decrease) in Annual Operating Income				Effective Date
						(In thousands)
2016 Filings:
Louisiana		LGS(1)		12/2015		$	8,686			07/01/2016
Kentucky/Mid-States		Tennessee		05/2017		4,888				06/01/2016
Mid-Tex		Mid-Tex Cities RRM		12/2015		25,816				06/01/2016
Mid-Tex		Mid-Tex DARR		09/2015		5,429				06/01/2016
Mid-Tex		Mid-Tex Environs		12/2015		1,325				05/03/2016
Atmos Pipeline — Texas		Texas		12/2015		40,658				05/03/2016
West Texas		West Texas Environs		12/2015		646				05/03/2016
West Texas		West Texas ALDC		12/2015		3,484				04/26/2016
Louisiana		Trans La(1)		09/2015		6,216				04/01/2016
Colorado-Kansas		Colorado		12/2016		764				01/01/2016
Mississippi		Mississippi-SRF(2)		10/2016		9,192				01/01/2016
Mississippi		Mississippi-SGR		10/2016		250				12/01/2015
Kentucky/Mid-States		Kentucky-PRP		09/2016		3,786				10/01/2015
Kentucky/Mid-States		Virginia-SAVE		09/2016		118				10/01/2015
West Texas		West Texas Cities		09/2015		3,716				10/01/2015
Total 2016 Filings						$	114,974
2015 Filings:
Louisiana		LGS		12/2014		$	1,321			07/01/2015
West Texas		Environs		12/2014		697				06/12/2015
Mid-Tex		Environs		12/2014		1,158				06/01/2015
Mid-Tex		Mid-Tex Cities		12/2014		16,801				06/01/2015
Mid-Tex		Dallas		09/2014		4,420				06/01/2015
West Texas		Cities		12/2014		4,593				05/01/2015
Atmos Pipeline — Texas		Texas		12/2014		37,248				04/08/2015
Louisiana		Trans La		09/2014		(286		)		04/01/2015
West Texas		West Texas Cities		09/2014		4,300				03/15/2015
Colorado-Kansas		Kansas		09/2014		301				02/01/2015
Mississippi		Mississippi-SRF		10/2015		4,441				02/01/2015
Mississippi		Mississippi-SGR		10/2015		782				11/01/2014
Kentucky/Mid-States		Kentucky		09/2015		4,382				10/10/2014
Kentucky/Mid-States		Virginia		09/2015		133				10/01/2014
Mid-Tex		Mid-Tex Cities		12/2013		33,415				06/01/2014
Total 2015 Filings						$	113,706
2014 Filings:
Louisiana		LGS		12/2013		$	1,383			07/01/2014
West Texas		West Texas		12/2013		858				06/17/2014
Mid-Tex		City of Dallas		09/2013		5,638				06/01/2014
Mid-Tex		Environs		12/2013		881				05/22/2014
Atmos Pipeline — Texas		Texas		12/2013		45,589				05/06/2014
Louisiana		Trans La		09/2013		550				04/01/2014
Colorado-Kansas		Kansas		09/2013		882				02/01/2014
Mid-Tex		Mid-Tex Cities		12/2012		12,497				11/01/2013
Kentucky/Mid-States		Kentucky		09/2014		2,493				10/01/2013

Kentucky/Mid-States		Virginia		09/2014		210				10/01/2013
Mid-Tex		Environs		12/2012		768				10/01/2013
Total 2014 Filings						$	71,749

(1)	On April 1 and July 1, 2016, RSC rates, subject to refund, were implemented in our two Louisiana jurisdictions.

(2)	The commission issued a final order approving a $9.2 million increase in annual operating income on December 21, 2015 with an effective date of January 1, 2016.

Rate Case Filings

A rate case is a formal request from Atmos Energy to a regulatory authority to increase rates that are charged to customers. Rate cases may also be initiated when the regulatory authorities request us to justify our rates. This process is referred to as a “show cause” action. Adequate rates are intended to provide for recovery of the Company’s costs as well as a fair rate of return to our shareholders and ensure that we continue to safely deliver reliable, reasonably priced natural gas service to our customers. The following table summarizes our recent rate cases:

Division		State		Increase in Annual Operating Income				Effective Date
				(In thousands)
2016 Rate Case Filings:
Kentucky/Mid-States		Kentucky		$	2,723			08/15/2016
Kentucky/Mid-States		Virginia(1)		537				04/01/2016
Colorado-Kansas		Kansas		2,372				03/17/2016
Colorado-Kansas		Colorado		2,084				01/01/2016
Total 2016 Rate Case Filings				$	7,716
2015 Rate Case Filings:
Kentucky/Mid-States		Tennessee		$	711			06/01/2015
Total 2015 Rate Case Filings				$	711
2014 Rate Case Filings:
Kentucky/Mid-States		Virginia		$	976			09/09/2014
Colorado-Kansas		Kansas		2,571				09/04/2014
Colorado-Kansas		Colorado		2,400				08/26/2014
Kentucky/Mid-States		Kentucky		5,823				04/22/2014
West Texas		Texas		8,440				04/01/2014
Colorado-Kansas		Colorado		1,609				03/01/2014
Total 2014 Rate Case Filings				$	21,819

(1)	On April 1, 2016, interim rates, subject to refund, were implemented in Virginia.

Other Ratemaking Activity

The following table summarizes other ratemaking activity during the fiscal years ended September 30, 2016, 2015 and 2014:

Division		Jurisdiction		Rate Activity		Increase in Annual Operating Income				Effective Date
						(In thousands)
2016 Other Rate Activity:
Colorado-Kansas		Kansas		Ad-Valorem(1)		$	(183	)		02/01/2016
Total 2016 Other Rate Activity						$	(183	)
2015 Other Rate Activity:
Colorado-Kansas		Kansas		Ad Valorem(1)		$	78			02/01/2015
Total 2015 Other Rate Activity						$	78
2014 Other Rate Activity:
Colorado-Kansas		Kansas		Ad Valorem(1)		$	(226	)		02/01/2014
Total 2014 Other Rate Activity						$	(226	)

(1)	The Ad Valorem filing relates to property taxes that are either over or uncollected compared to the amount included in our Kansas service area’s base rates.

Other Regulation

Each of our regulated distribution divisions and our regulated pipeline division is regulated by various state or local public utility authorities. We are also subject to regulation by the United States Department of Transportation with respect to safety requirements in the operation and maintenance of our transmission and distribution facilities. In addition, our regulated operations are also subject to various state and federal laws regulating environmental matters. From time to time we receive inquiries regarding various environmental matters. We believe that our properties and operations substantially comply with, and are operated in substantial conformity with, applicable safety and environmental statutes and regulations. There are no administrative or judicial proceedings arising under environmental quality statutes pending or known to be contemplated by governmental agencies which would have a material adverse effect on us or our operations. Our environmental claims have arisen primarily from former manufactured gas plant sites.

The Federal Energy Regulatory Commission (FERC) allows, pursuant to Section 311 of the Natural Gas Policy Act, gas transportation services through our Atmos Pipeline—Texas assets “on behalf of” interstate pipelines or local distribution companies served by interstate pipelines, without subjecting these assets to the jurisdiction of the FERC. Additionally, the FERC has regulatory authority over the sale of natural gas in the wholesale gas market and the use and release of interstate pipeline and storage capacity. The FERC also has authority to detect and prevent market manipulation and to enforce compliance with FERC’s other rules, policies and orders by companies engaged in the sale, purchase, transportation or storage of natural gas in interstate commerce. We have taken what we believe are the necessary and appropriate steps to comply with these regulations.

In July 2010, the Dodd-Frank Act was enacted, representing an extensive overhaul of the framework for regulation of U.S. financial markets. The Dodd-Frank Act required various regulatory agencies, including the SEC and the Commodities Futures Trading Commission, to establish regulations for implementation of many of the provisions of the Dodd-Frank Act. A number of those regulations have been adopted; we have enacted new procedures and modified existing business practices and contractual arrangements to comply with such regulations. We expect additional regulations to be issued, which should provide additional clarity regarding the extent of the impact of this legislation on us. The costs of participating in financial markets for hedging certain risks inherent in our business may be further increased when these expected additional regulations are adopted. We also anticipate that the Commodities Futures Trading Commission will issue additional regulations related to reporting and disclosure obligations.

Competition

Although our regulated distribution operations are not currently in significant direct competition with any other distributors of natural gas to residential and commercial customers within our service areas, we do compete with other natural gas suppliers and suppliers of alternative fuels for sales to industrial customers. We compete in all aspects of our business with alternative energy sources, including, in particular, electricity. Electric utilities offer electricity as a rival energy source and compete for the space heating, water heating and cooking markets. Promotional incentives, improved equipment efficiencies and promotional rates all contribute to the acceptability of electrical equipment. The principal means to compete against

alternative fuels is lower prices, and natural gas historically has maintained its price advantage in the residential, commercial and industrial markets.

Our regulated pipeline operations historically faced competition from other existing intrastate pipelines seeking to provide or arrange transportation, storage and other services for customers. In the last few years, several new pipelines have been completed, which has increased the level of competition in this segment of our business.

Within our nonregulated operations, AEM competes with other natural gas marketers to provide natural gas management and other related services primarily to smaller customers requiring higher levels of balancing, scheduling and other related management services. AEM has experienced increased competition in recent years primarily from investment banks and major integrated oil and natural gas companies who offer lower cost, basic services. The increased competition has reduced margins most notably on its high-volume accounts.

Employees

At September 30, 2016, we had 4,747 employees, consisting of 4,639 employees in our regulated operations and 108 employees in our nonregulated operations.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports, and amendments to those reports, and other forms that we file with or furnish to the Securities and Exchange Commission (SEC) are available free of charge at our website, www.atmosenergy.com, under “Publications and Filings” under the “Investors” tab, as soon as reasonably practicable, after we electronically file these reports with, or furnish these reports to, the SEC. We will also provide copies of these reports free of charge upon request to Shareholder Relations at the address and telephone number appearing below:

Shareholder Relations

Atmos Energy Corporation

P.O. Box 650205

Dallas, Texas 75265-0205

972-855-3729

Corporate Governance

In accordance with and pursuant to relevant related rules and regulations of the SEC as well as corporate governance-related listing standards of the New York Stock Exchange (NYSE), the Board of Directors of the Company has established and periodically updated our Corporate Governance Guidelines and Code of Conduct, which is applicable to all directors, officers and employees of the Company. In addition, in accordance with and pursuant to such NYSE listing standards, our Chief Executive Officer during fiscal 2016, Kim R. Cocklin, certified to the New York Stock Exchange that he was not aware of any violations by the Company of NYSE corporate governance listing standards. The Board of Directors also annually reviews and updates, if necessary, the charters for each of its Audit, Human Resources and Nominating and Corporate Governance Committees. All of the foregoing documents are posted on the Corporate Governance page of our website. We will also provide copies of all corporate governance documents free of charge upon request to Shareholder Relations at the address listed above.