ATMOS ENERGY CORPATO
ATMOS ENERGY CORP Fair Value Disclosure
Fair Value Measurements
We report certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We record cash and cash equivalents and restricted cash and cash equivalents, accounts receivable, and accounts payable at carrying value, which substantially approximates fair value due to the short-term nature of these assets and liabilities. For other financial assets and liabilities, we primarily use quoted market prices and other observable market pricing information to minimize the use of unobservable pricing inputs in our measurements when determining fair value. The methods used to determine fair value for our assets and liabilities are fully described in Note 2 to the consolidated financial statements.
Fair value measurements also apply to the valuation of our pension and postretirement plan assets. The fair value of these assets is presented in Note 11 to the consolidated financial statements.
Quantitative Disclosures
Financial Instruments
The classification of our fair value measurements requires judgment regarding the degree to which market data are observable or corroborated by observable market data. The following tables summarize, by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2025 and 2024. As required under authoritative accounting literature, assets and liabilities are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement.
| Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2)(1) | Significant Other Unobservable Inputs (Level 3) | Netting and Cash Collateral | September 30, 2025 | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Financial instruments | $ | — | $ | 9,897 | $ | — | $ | — | $ | 9,897 | |||||||||||||||||||
| Debt and equity securities | |||||||||||||||||||||||||||||
| Registered investment companies | 26,463 | — | — | — | 26,463 | ||||||||||||||||||||||||
| Bond mutual funds | 42,106 | — | — | — | 42,106 | ||||||||||||||||||||||||
Bonds (2) | — | 42,754 | — | — | 42,754 | ||||||||||||||||||||||||
| Money market funds | — | 3,615 | — | — | 3,615 | ||||||||||||||||||||||||
| Total debt and equity securities | 68,569 | 46,369 | — | — | 114,938 | ||||||||||||||||||||||||
| Total assets | $ | 68,569 | $ | 56,266 | $ | — | $ | — | $ | 124,835 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Financial instruments | $ | — | $ | 6,485 | $ | — | $ | — | $ | 6,485 | |||||||||||||||||||
| Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2)(1) | Significant Other Unobservable Inputs (Level 3) | Netting and Cash Collateral | September 30, 2024 | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Financial instruments | $ | — | $ | 96,288 | $ | — | $ | — | $ | 96,288 | |||||||||||||||||||
| Debt and equity securities | |||||||||||||||||||||||||||||
| Registered investment companies | 28,311 | — | — | — | 28,311 | ||||||||||||||||||||||||
| Bond mutual funds | 40,341 | — | — | — | 40,341 | ||||||||||||||||||||||||
Bonds (2) | — | 39,142 | — | — | 39,142 | ||||||||||||||||||||||||
| Money market funds | — | 2,800 | — | — | 2,800 | ||||||||||||||||||||||||
| Total debt and equity securities | 68,652 | 41,942 | — | — | 110,594 | ||||||||||||||||||||||||
| Total assets | $ | 68,652 | $ | 138,230 | $ | — | $ | — | $ | 206,882 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Financial instruments | $ | — | $ | 7,637 | $ | — | $ | — | $ | 7,637 | |||||||||||||||||||
(1)Our Level 2 measurements consist of over-the-counter options and swaps, which are valued using a market-based approach in which observable market prices are adjusted for criteria specific to each instrument, such as the strike price, notional amount, or basis differences, municipal and corporate bonds, which are valued based on the most recent available quoted market prices and money market funds which are valued at cost.
(2)Our investments in bonds are considered available-for-sale debt securities in accordance with current accounting guidance.
Debt and equity securities are comprised of our available-for-sale debt securities and our equity securities. We evaluate the performance of our available-for-sale debt securities on an investment by investment basis for impairment, taking into consideration the investment’s purpose, volatility, current returns, and any intent to sell the security. As of September 30, 2025, no allowance for credit losses was recorded for our available-for-sale debt securities. At September 30, 2025 and 2024, the amortized cost of our available-for-sale debt securities was $42.5 million and $38.9 million. At September 30, 2025 we maintained investments in bonds that have contractual maturity dates ranging from October 2025 through January 2028.
Other Fair Value Measures
In addition to the financial instruments above, we have several financial and nonfinancial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents and restricted cash and cash equivalents, accounts receivable, accounts payable, finance leases, and debt, which are recorded at carrying value. The nonfinancial assets and liabilities include asset retirement obligations and pension and postretirement plan assets. For cash and cash equivalents and restricted cash and cash equivalents, accounts receivable, accounts payable, and finance leases we consider carrying value to materially approximate fair value due to the short-term nature of these assets and liabilities.
Our long-term debt is recorded at carrying value. The fair value of our long-term debt, excluding finance leases, is determined using third party market value quotations, which are considered Level 1 fair value measurements for debt instruments with a recent, observable trade or Level 2 fair value measurements for debt instruments where fair value is determined using the most recent available quoted market price. The following table presents the carrying value and fair value of our long-term debt, excluding finances leases, debt issuance costs and original issue premium or discount, as of September 30, 2025:
| September 30, 2025 | |||||
| (In thousands) | |||||
| Carrying Amount | $ | 8,935,000 | |||
| Fair Value | $ | 8,272,978 | |||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 14, 2025 | Showing above |
| 2023 | Nov 14, 2023 | |
| 2021 | Nov 12, 2021 | |
| 2020 | Nov 13, 2020 | |
| 2019 | Nov 12, 2019 | |
| 2017 | Nov 13, 2017 | |
| 2016 | Nov 14, 2016 | |
| 2015 | Nov 6, 2015 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.