Welcome to the Atmos Energy's Fiscal 2012 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Susan Giles, VP, Investor Relations for Atmos Energy Corporation. Thank you. You may begin.

Thank you, [Danielle]. Good morning, everyone and thank you all for joining us. This call is open to the general public and media, but designed for financial analysts. It is being webcast live over the Internet. We have placed slides on our website that summarize our financial results. We will refer to just a few of the slides during this live call, but we will be happy to take questions on any of them at the end of our prepared remarks. If you would like to access the webcast and slides, please visit our website at atmosenergy.com and click on the conference call link. Additionally, we plan to file the company's Form 10-Q later this morning. Our speakers today are Kim Cocklin, President and CEO; and Fred Meisenheimer, Senior Vice President and CFO. There are other members of our leadership team here to assist with questions as needed. As we review these financial results and discuss future expectation, please keep in mind that some of our discussion might contain forward-looking statements within the meaning of the Securities Act and the Securities Exchange Act. Please see slide two for more information regarding the assumptions and factors that we consider in making these forward-looking statements and where to go to get more information on our risk factors. Now, I'd like to turn the call over to Kim Cocklin. Kim?

Thank you, Susan, and good morning everyone. We certainly appreciate you joining us and your interest in Atmos Energy. Yesterday, we reported third quarter consolidated net income of $31 million or $0.34 per diluted share compared to a net loss of about $1 million or a negative $0.01 per share one year ago. Our Non-Regulated Operations executed on their strategy and delivered positive results this quarter. I'll remind you that in the first half of our fiscal year our Non-Regulated Group took advantage of falling gas prices by buying and injecting gas into storage. As a result, there were no realized storage withdrawal gains to offset realized losses taken when we settled the financial instruments used to hedge the natural gas purchases. However, that strategy paid off in the fiscal third quarter. Realized asset optimization margin increased $18 million as the financial position settled as anticipated from the trading approach employed earlier this year. For the current nine months, reported net income was $209 million or $2.28 per diluted share, compared to $206 million or $2.26 for the nine months last year. Last week, we also announced the closing of the sale of our distribution asset in Missouri, Illinois, and Iowa to Liberty Energy for approximately $129 million. About 84,000 distribution meters were transferred. We expect to record a net of tax gain on the sale in the fourth quarter of fiscal '12 of approximately $6 million or $0.06 per diluted share subject to final purchase price adjustments. The net proceeds of $129 million have been used to pay down commercial paper. We also announced, yesterday, an agreement to sell our Georgia utility assets to Liberty for approximately $141 million. Included in that transaction are about 64,000 distribution meters and a rate base estimate of some $96 million. We are estimating a $6 million after-tax gain on the sale and expect that transaction to close in fiscal '13. Net proceeds will be redeployed to help finance rate-based investment in our remaining jurisdiction. Our liquidity and financial position remained strong and we benefit from solid investment grade credit ratings. Our debt-capital ratio is 50.7% at June 30, compared with 48.6% one year ago. On July 27, we issued a notice of full redemption of our $250 million, 5-1/8% senior notes which are due January 2013. That redemption will occur on August 28, 2012. We will initially utilize commercial paper to redeem the notes and shortly thereafter enter into a short-term financing facility to repay the commercial paper. We will then issue new unsecured long-term notes probably in January 13 and use those proceeds to repay the borrowings on the short-term facility. Yesterday, our board of directors declared the 115th consecutive quarterly cash dividend. The indicated annual dividend rate for fiscal '12 is $1.38. Fred Meisenheimer, our CFO, will review our financial results in greater detail and we'll come back for some closing comments and open the call up for questions. Fred?

Thanks Kim and good morning everyone. I'll review the more significant items in the quarter and nine months and discuss the outlook for the remainder of our fiscal year. As Kim mentioned, reported consolidated net income was $31 million or $0.34 per diluted share for the quarter, and $209 million or $2.28 per diluted share for the current nine months. If you'll turn to slide three, it compares quarters. And when you exclude the unrealized gains, net income was $29 million or $0.32 this quarter, compared to a loss of about $1 million or $0.01 per share last year. Last year's quarter has a one-time charge of $6 million or $0.06 per share. After eliminating both the one-time item and the unrealized net gains, net income was $0.05 per share last year versus $0.32 per diluted share at this quarter, an increase of $0.27 per share. When comparing the nine-months, slide 10 shows that after eliminating the one-time items last year and the unrealized gains and losses in both years, adjusted earnings per share were $2.20 for both periods. As a reminder, we combined and reported the financial results for Missouri, Illinois and Iowa on the income statement as discontinued operations for the periods presented. Therefore, the corresponding detail by line item will be excluded from our comparative discussions. Let's drill down into our Regulated business. Rate relief remains a primary driver of our success in the regulated operations. Rate increases for distribution at Atmos Pipeline -Texas combined generated almost $14 million of incremental margin quarter-over-quarter and about $48 million for the current nine months compared to the same period last year. Consolidated distribution throughput decreased 5% in the quarter and 9% for the nine months compared to the same periods last year, mainly due to lower consumption primarily from…

Thank you very much, Fred. We certainly had an unprecedented third quarter with sets us up well for delivering our stated earnings objective of $2.30 to $2.40 per diluted share for fiscal '12. Our business performs steadily year-to-date despite a very mild heating season and the economic obstacles that continue to challenge everyone in our nation. In our non-regulated business, the prolonged low gas price environment has entirely suppressed spread values and our asset optimization resource will be a very, very negligible contributor going forward. The non-regulated marketing group will focus on its core business, which is delivered gas sales by increasing annual sales and improving margins particularly to those 1,000 customers who rely on and pay a premium for our bundled energy management services. Throughout the industry a paradigm shift has clearly emerged in the non-regulated gas marketing and trading operations. While we're still trying to determine the new floor for our non-regulated business, we do expect less than 10% of consolidated earnings and revenues to be generated from this unit going forward. In our regulated operations, we continue to execute our rate strategy to reduce lag, improve returns and increase recovery of fixed cost. Fiscal year-to-date, we have received increases to operating income of about $37 million from rate outcomes. In total, we have about $70 million in rate request currently outstanding and pending and anticipate filing a case in Mississippi before the end of our fiscal year in September. Investing in our regulated asset base will provide the avenue for growth in the coming years. At Atmos Pipeline Texas, our intrastate pipeline we're investing significant capital to increase capacity to secure new long-term gas supply on a firm reliable basis, and also to enhance the reliability of our service in certain critical locations along the mid-Tex system…

(Operator Instructions). Our first question comes from Ted Durbin of Goldman Sachs & Company. Please proceed with your question.

Just starting off with the sale, the Georgia sale, I guess, maybe can you back up and talk about what's the end game here in terms of how many jurisdictions you want to be in? What comes into the decision-making process in terms of exiting a certain jurisdiction, is it scale, is it the returns, some of the underlying growth, maybe just walk us through the overall vision here?

I think the overriding driver obviously is first interest or an appetite from a prospective buyer in that marketplace and, more importantly, it has to be focused in a jurisdiction where we really are growth constrained and that was the real -- I mean, now that we have exited Missouri, Illinois and Iowa. And Georgia, we were obviously kind of fenced in by AGL there. We didn't have a lot of growth prospects. Georgia is a very, very good jurisdiction. We had received very favorable regulatory treatment there. We had very good relations and we have good investments, and we were of course completing the replacement of all pipes down there. So long-term, we just looked at it as probably some place that we're going to be constrained going forward, and we felt that we had much better opportunities to take proceeds from an attractive offer and redeploy them into our remaining jurisdictions where we do have an opportunity to expand our footprint very significantly. And we're also getting extremely favorable rate treatment, regulatory treatment with the reduction in lag on particularly on infrastructure investment. So, I think where we're at on the end-game, I mean, I think we're very happy with where we're situated right now.

Next one from me is we're coming up on the time here, I think, you've traditionally have increased the dividend. How are you thinking about the payout ratio? You mentioned in your comments you're reducing some of the non-regulated business impact on the earnings you're getting there as you just said lot more of the automatic trackers, how are you thinking about the dividend and payout?

Well, the dividend policy hasn't changed. I mean, we still think our highest and best use for capital and the most value of the shareholder is investing in the rate base in Texas, Louisiana, Mississippi, Colorado, Kansas, Kentucky, Tennessee, Virginia where we are situated right now and because of that rate treatment we are getting very favorable treatment and good returns. So we think -- the dividend policy we obviously have increased our dividend every year for the last 28 years or whatever and we are added to the S&P 1500 dividend Aristocrat, identified as one of those for increasing it every year for 20 years. We don't want -- we don’t want to break that track record for sure.

And then, the last one for me is just kind of update you can give us on the mid-Tex filing here. Are you getting any closer to any kind of settlement? How are the negotiations going? Are we still thinking this is going to be a fully litigated case, and kind of update on timing of decision?

We do assume that it'd probably be a fully litigated case. I mean, the parties that -- I mean, there is good relations going on but I think both sides have reached a position where there is quite a gap between the expectations on both sides and is situation in front of the commission right now. We do expect an outcome and a decision in the November, December timeframe of -- that will be in the fiscal '13 period as we continue to talk about.

Now, our next question comes from Andrew Bischof of Morningstar.

Looking at your Atmos Energy Holdings, you've been very successful there in your optimization strategy. Am I correct in assuming or understanding that there is a minimum amount of additional benefit in the future quarters from that?

Yes.

And then looking at your --

In the fourth quarter, we will realize about $18 million that will come in as realized. And then after that point in time we have about $22 million of economic value at June 30, $18 million of which roughly will be recognized in the fourth quarter. So, that leaves very little for the following year at this point in time.

And looking to the sale of the Georgia distribution assets, in terms of O&M, can you kind of break that out for us?

O&M? What kind of breakdown are you wanting on O&M there?

Just how much is related to that business and when you'll expect that transaction to close?

We expect it to close in fiscal 2013. The direct operating O&M on Georgia runs in the neighborhood of $16 million to $17 million.

Your next question comes from Faisel Khan of Citigroup. Please proceed with your question. Amit Marwaha - Citigroup It's actually Amit filling in for Faisel.

Amit, you got to be happy about geographic efficiency then.

Yeah, a good deal, good deal. Good quarter guys. Most of my questions have been asked. I just wanted to ask a couple of follow-up questions. Are you guys seeing any pressures on the ROEs at this point across any of your jurisdictions given where rates are?

No, none whatsoever. We -- obviously there's a -- the outstanding mark in fact is with the cases there. But we think that the elections that occurred in the -- the folks that were elected to the Labor Commission continue to believe that the road to a healthy economy is through energy and Texas leads the way on that road. And they are very, very balanced in their approach between the utility and the consumer.

Second question, just wondering the last couple of quarters been seen industrial volumes coming off. I'm wondering if you guys have any color around what's driving that? Is it the weather or what's exactly causing those volumes to kind of shed each quarter over the last couple of quarters?

I think more of that has been weather related here recently and the economy still is not picking up dramatically. But I think the warm weather has impacted it more than anything else somewhat offset by the volumes we've been delivering to the power generation too, Amit, but that's really not a big driver in the overall scheme of our revenue structure.

(Operator Instructions) Now, our next question comes from Jeff Healy of AIG. Please proceed with your question.

I had a question on the takeout of the '13, I guess, you guys have done a bridge from the September to January. Any particular reason why you guys would do that as opposed to just hit the long-term market in September?

It will reduce our interest cost both this year and next year. We see some benefits in doing that.

Fred, particularly I just want to say kind of on behalf of all the bondholders and sure other folks (inaudible), but you guys have a great reputation for disclosure and really making things easy for us on the bondholder side. I want to express our appreciation. Thanks for a job, great job well done.

Well, good. We appreciate your interest and hope that we can continue to provide useful information to you.

Thank you. There are no further questions in the queue at this time. I'd like to turn the floor back over to Ms. Giles.

Thank you, Danielle. And as a reminder, a recording of the call is available for replay on our website through November 7th. And if you have any additional questions, please call me. We appreciate your interest in Atmos Energy and thank you for joining us today. Good bye.