Atmos Energy 2014 Annual Report Download - page 19

17
To Our Shareholders
Three years ago, we made a sea change in Atmos Energy’s core growth
strategy, and today it is benefiting our investors, customers and communities.
Our strategy had been to grow through
acquisitions of strategically situated natural gas
distribution assets.
As our founding chairman, Charles K.
Vaughan, noted last year on Atmos Energy’s
30th anniversary, had he and the board of
directors not staked out that strategy—one com-
pletely counterintuitive to the rest of the utility
industry at the time—Atmos Energy would not
have survived. e company was a regional gas
utility in West Texas with little or no customer
growth to sustain it.
By diversifying and growing through 10
major acquisitions over two decades, Charlie
and his successor, Bob Best, built one of the
largest and best-managed natural gas utility sys-
tems in the United States. Atmos Energy not only has remained independent,
but also has prospered beyond all expectations. It has expanded into many
states, and its regulated distribution and pipeline operations have produced
steady growth in earnings and dividends.
Today Atmos Energy has amassed such a sound portfolio of integrated assets
that investing in our own operations yields much better returns than acquir-
ing more distribution assets. Our six regulated distribution divisions and our
Texas regulated intrastate pipeline produce stable and predictable results for
our investors, our customers and the communities we serve. Our nonregulated
business also adds value to our portfolio of assets.
Although we do not rule out acquisitions, we are dedicated to growth for the
foreseeable future from investing principally in our regulated assets.
A CLEAR FOCUS
Even more importantly, our growth strategy is designed to advance our goal
of becoming the nation’s safest natural gas utility.
Fortunately, the states we serve began recognizing the need to modernize
infrastructure before the rest of the nation. Legislatures and regulatory author-
ities in our states have promulgated or approved rate design that encourages
investments to replace or fortify infrastructure and signicantly reduces the lag
time in recovering those investments.
Today we are recovering and earning on approximately 91 percent of our
infrastructure investments within six months aer a test year ends and on 96
percent of our investments within 12 months.
is balanced regulatory treatment resulted in our capital spending in
scal 2014 of $835.3 million. Our projected capital investments in scal 2015
should be between $900 million and $1.0 billion.
is signicant level of capital spending will further our journey toward be-
coming the country’s safest utility and will increase our future shareholder value.
Kim R. Cocklin
President and
Chief Executive Ocer
FISCAL 2014 HIGHLIGHTS
$2.96
earnings per diluted share, a
12% increase over fiscal 2013
$1.48
per share annual dividend
15.5%
total shareholder return
$835.3
million in capital expenditures
$134.0
million annual approved operating
income increase from rate activities
6.2%
reduced weighted average cost
of long-term debt
CREDIT UPGRADES
Standard & Poor’s: A-
Moody’s Investor Service: A2