Atmos Energy 1997 Annual Report Download - page 36

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ATMOS ENERGY CORPORATION
FOUR Income taxes
The components of income tax expense for 1997, 1996 and 1995 are as follows:
(In thousands) 1997 1996 1995
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Current...................................................................................... $ 8,917 $16,156 $12,319
Deferred ................................................................................... 5,807 7,585 4,652
Investment tax credits.............................................................. (426) (425) (427)
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$14,298 $23,316 $16,544
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Included in the provision for income taxes are state income taxes of $2,000,000,
$2,801,000, and $1,552,000 for 1997, 1996, and 1995, respectively.
Deferred income taxes reflect the tax effect of differences between the basis of assets and
liabilities for book and tax purposes. The tax effect of temporary differences that give rise
to significant components of the deferred tax liabilities and deferred tax assets at
September 30, 1997 and 1996 are presented below:
(In thousands) 1997 1996
________________________________________ ___________________________________________
Deferred tax assets
Costs expensed for book purposes and
capitalized for tax purposes........................................................... $ 641 $ 1,087
Accruals not currently deductible for tax purposes .......................... 12,398 3,460
Customer advances ............................................................................ 3,160 2,629
Nonqualified benefit plans ................................................................. 9,118 8,238
Postretirement benefits...................................................................... 5,757 3,819
Unamortized investment tax credit.................................................... 1,723 1,593
Regulatory liabilities ........................................................................... 3,117 3,035
Other, net............................................................................................ 3,758 1,776
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Total deferred tax assets................................................................ 39,672 25,637
Deferred tax liabilities
Difference in net book value and net
tax value of assets .......................................................................... (102,038) (87,604)
Pension funding .................................................................................. (4,190) (4,734)
Gas cost adjustment........................................................................... (6,568) (655)
Regulatory assets................................................................................ (8,673) (1,529)
Other, net............................................................................................ (6,031) (3,188)
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Total deferred tax liabilities............................................................ (127,500) (97,710)
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Net deferred tax liabilities...................................................................... $ (87,828) $(72,073)
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SFAS No. 109 deferred accounts for rate regulated
entities (included in other deferred credits) .................................. $ 15,072 $ (3,904)
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Reconciliations of the provisions for income taxes computed at the statutory rate to the
reported provisions for income taxes for 1997, 1996 and 1995 are set forth below:
(In thousands) Liability Method
1997 1996 1995
_____________________________________ _____________________________________ _____________________________________
Tax at statutory rate of 35% ..................................................... $13,348 $ 22,564 $15,873
Common stock dividends deductible for tax reporting........... (706) (684) (619)
State taxes................................................................................. 1,300 2,000 951
Other, net .................................................................................. 356 (564) 339
_____________________________________ _____________________________________ _____________________________________
Provision for income taxes........................................................ $14,298 $23,316 $16,544
_____________________________________ _____________________________________ _____________________________________
_____________________________________ _____________________________________ _____________________________________
FIVE Contingencies
Litigation On March 15, 1991, suit was filed in the 15th Judicial District Court of
Lafayette Parish, Louisiana, by the “Lafayette Daily Advertiser” and others against the
Trans Louisiana Gas Company (“Trans La Division”), Trans Louisiana Industrial Gas
Company, Inc. (“TLIG”), a wholly owned subsidiary of the Company, and Louisiana
Intrastate Gas Corporation and certain of its affiliates (“LIG”). LIG is the Company’s pri-
mary supplier of natural gas in Louisiana and is not otherwise affiliated with the
Company.
The plaintiffs purported to represent a class consisting of all residential and commercial
gas customers in the Trans La Division’s service area. Among other things, the lawsuit
alleged that the defendants violated antitrust laws of the state of Louisiana by manipu-
lating the cost-of-gas component of the Trans La Division’s gas rate to the purported
customer class, thereby causing such purported class members to pay a higher rate. The
plaintiffs made no specific allegation of an amount of damages.
On July 14, 1995, the Louisiana Commission entered an order approving a settlement
with the Company and TLIG in connection with its investigation of the costs included in
the Trans La Division’s purchased gas adjustment component in its rates. The order exon-
erated the Company of any wrongdoing with respect to the manipulation of the cost of
gas component of its gas rate to residential and commercial customers. In the settlement,
the Company agreed to refund approximately $541,000 plus interest to the Trans La
Division’s customers over a two-year period due to certain issues related to the calcula-
tion of the weighted average cost of gas. The refund totaling approximately $1,016,000,
which includes interest calculated through October 1, 1995, began in September 1995
and was credited to customer bills along with interest that accrued after October 1, 1995.
The Company completed the refunds, refunding $533,000 under the settlement for the
twelve months ended September 30, 1997. Most of the issues that generated the refunds
arose before Trans Louisiana Gas Company was acquired by the Company in 1986.
On April 18, 1997, the Louisiana Commission entered its Order approving a settlement
between LIG and the Louisiana Commission pursuant to which LIG will make a payment
of $10,275,000 to the Trans La Division for the benefit of its ratepayers. This settlement
resolves all remaining issues in the Louisiana proceeding discussed above. Pursuant to the
Order, the Trans La Division has been ordered to flow through a total of $9,725,000 of