Atmos Energy 2007 Annual Report Download - page 11

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BRIDGING THE FUTURE
expect continued strong results from our regulated intrastate
pipeline, Atmos Pipeline–Texas, due to the drilling boom in the
Barnett Shale and other gas basins in Texas.
In our nonregulated gas marketing business, we expect
earnings in 2008 to be lower than in 2007. Volatile gas prices after
Hurricanes Katrina and Rita helped our gas marketing operations
maximize margins and increase sales volumes in fiscal 2006 and
into 2007. With natural gas production in the Gulf of Mexico
now back to normal, spreads between what we pay for gas and
what we sell it for are less. Therefore, the margins in our gas
marketing business are likely to return to more historical levels.
Our nonregulated operations are continuing to add major new
customers. Our dedication to serving our customers over the
years is helping us retain a high proportion of them year after
year in a business based on competitive commodity pricing.
In addition, we are offering customers numerous services
for asset optimization using our nonregulated pipeline and
storage operations. In these ways, we provide added value in
our relationships with our nonregulated customers.
For fiscal 2008, we estimate earnings per diluted share will
range from $1.95 to $2.05*. We expect our dividend to continue
increasing annually, with a dividend payout ratio at about 65
percent, which is consistent with our peers in the natural gas
utility industry.
Our capital investments in fiscal 2007 totaled $392 million.
For fiscal 2008, we expect to invest between $445 million and
$465 million. About 70 percent of our invested capital will go for
maintenance projects and the other 30 percent for growth
projects, such as new pipeline expansion, gas gathering systems,
marketing operations or storage facilities.
BRIDGING TO OUR FUTURE
Fiscal 2007 was a pivotal year for Atmos Energy. Not only did
we maintain our pace of earnings growth in the face of some
strong headwinds, but we also adjusted our course toward new
opportunities. We’re now pursuing a number of ventures that
could deliver significant long-term benefits.
Many of these ventures are extensions into closely related
operating areas, such as gas gathering systems, which have
common characteristics with our pipeline operations. These
ventures can take advantage of our existing management and
technical skills and financial strength. In addition, they can
add new services to expand our customer base.
We have strengthened our balance sheet by reducing our
debt-to-capitalization ratio to below 55 percent. This has been
our consistent practice after making acquisitions. Today we are
in an excellent position to acquire properties or invest in
internal projects, regulated and nonregulated.
In only a decade’s time, we have grown to become a $6 billion
company in both revenues and assets. Our board of directors
has carefully guided our growth through the years and has
prepared us for future opportunities. I thank them for their con-
stant support and wise counsel that have brought us to this point.
In November 2007, Richard W. Douglas joined our board
of directors. Mr. Douglas is executive vice president and a
member of the executive committee of The Staubach Company, a
global real estate advisory firm. He brings a wealth of expertise
in commercial real estate, business investments, economic
development and municipal government.
Our future looks bright; however, it rests not on our current
assets or future projects. Our future is in the people who keep
Atmos Energy financially strong and efficient. From our founding
a century ago, we have benefited from the loyalty of our
shareholders and investors. Equally, our employees have exhibited
a deep sense of responsibility to serve the needs of both our
customers and investors. Together, this immutable bond
between capital and labor has created our success and it
provides the bridge to our future.
Robert W. Best
Chairman, President and Chief Executive Officer
November 27, 2007
* Our estimated earnings per share for fiscal 2008 are based on assumptions that
include: less volatility in natural gas prices affecting our natural gas marketing seg-
ment, successful rate cases and collection efforts, normal weather, bad-debt expense
not exceeding $20 million, average annual short-term interest at 6.5%, average cost of
natural gas ranging from $7.95 to $10.00 per thousand cubic feet (Mcf), and no mate-
rial acquisitions.