Greetings, and welcome to the Atmos Energy Fiscal 2013 Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Susan Giles, Vice President, Investor Relations for Atmos Energy Corporation. Thank you, you may begin.

Thank you, Christine, and good morning, everyone. 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 a few of the slides during the call and we'll 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 today. Our speakers this morning are Kim Cocklin, President and CEO; and Bret Eckert, Senior Vice President and CFO. There are other members of our leadership team here as well to assist with questions as needed. As we review these financial results and discuss future expectations, 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 2 for more information regarding the risks and uncertainties we consider in making these forward-looking statements and where to go to get more information on such risks and uncertainties. Now, I'd like to turn the call over to Kim Cocklin. Kim?

Thank you, Susan, very much, 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 $39 million or $0.42 per diluted share compared to $31 million or $0.34 per diluted share one year ago. For the 9 months, reported earnings were $2.57 per share compared with $2.28 last year. As you recall, we've closed the sale of our Georgia distribution assets on April 1 for $153 million. This quarter, we recorded an after-tax gain of $5.3 million on the sale or $0.06 per diluted share. The net proceeds are being reinvested in our regulated capital investment opportunities. This sale, along with the sale of our Missouri, Illinois, and Iowa distribution assets last year, delivers on our commitment to become more geographically efficient and continues our sharp focus on growing our regulated Rate Base by 8% to 8.5% by the end of our fiscal 2016. As a result of our strong financial performance for the first 9 months, we remain on track to achieve our previously announced earnings guidance of between $2.45 and $2.55 per diluted share, excluding the March and the gain on the Georgia sale. Yesterday, our Board of Directors declared our 119th consecutive quarterly cash dividend. The indicated annual dividend rate for fiscal '13 is $1.40 per share. Our commitment to increasing and sustaining shareholder value remains a top priority. For the 12 months ended June 30, we've delivered a total return to shareholders of 22%. Our CFO, Bret Eckert, will review our financial results in greater detail, then we'll return for closing comments and take your questions. Bret?

Thanks, Kim, and good morning, everyone. If you follow me on Slide 3, fiscal third quarter earnings, excluding net unrealized margins and the gain on the sale of Georgia, were approximately $40 million or $0.42 per share, compared with $29 million or $0.32 per share 1 year ago. Now turning to the 9 months period on Slide 4. Earnings, excluding net unrealized margins and the gain on Georgia were $221 million or $2.40 per share in the current year, compared with $202 million or $2.20 per share last year. As Kim mentioned, we completed the sale of our distribution assets in Georgia on April 1, and the gain of $5.3 million or $0.06 is included in the results for the quarter. Rate relief remains a primary driver of our success in the distribution business. Looking now on Slide 5 for the current quarter and 9-month period, distribution gross profit increased by $44 million in the quarter and about $15 million to the 9 months compared to the same period 1 year ago. The increase this quarter is primarily a result of the shift in margins from the rate design changes in Texas we have been discussing this year. As a reminder, the new rate design increased the customer's monthly base charge and decreased the consumption charge. As a result of this change, 84% of our cost of service is recouped through the customer base charge compared to only 41% under the previous rate design as shown on Slide 11, which provides a more stabilized earnings stream to the company. Because of this shift, margin is about $25 million higher than historical results in the fiscal third quarter, and we expect margins from our Texas operations to be approximately $25 million to $30 million higher in the fourth fiscal quarter of…

Excellent report, Bret. Thank you very much. As you can see, we continue to successfully execute our rate and regulatory strategy. Year-to-date, completed rate proceedings, as Bret said, have increased operating income by $98 million. We've also added regulatory expense deferrals of another $24 million, resulting in an increase of about $122 million in annual operating income. We have 6 active cases pending requesting annual increases totaling $36 million, the largest of these is the 2012 Mid-Tex RRM filing of $17 million. A few more cases are scheduled to be filed by the end of our fiscal year, requesting increases of another $10 million. Our portfolio of assets has been refined and streamlined. Completing the sale of Georgia allows us to apply an even stronger focus on this portfolio. We're also constantly striving TO strengthen our regulatory relationships. In particular, our regulators recognized the importance of balancing the needs of our customers and our shareholders. They understand the need for expanded safety and reliability investment, coupled with regulatory mechanisms that financially support that investment. In Texas, there's an increased emphasis on all of these policies. The best evidence of last month's revolution -- resolution endorsed by Mr. Barry Smitherman, the current chair of the NARUC Gas Committee and also the chair of the Texas Railroad Commission, and this resolution, which was adopted, encourages investment in gas utilities, the expedited replacement of distribution mains and service lines, coupled with regulatory mechanisms that financially support that investment by eliminating lag. With an average annual investment in our regulated assets of some $800 million through fiscal 2016, we continue to demonstrate to the regulators and customers our absolute commitment to safety and reliability. Atmos Pipeline Texas continues to perform exceptionally well and is securing long-term gas supply to enhance the reliability of our…

[Operator Instructions] Our first question comes from the line of Ted Durbin of Goldman Sachs.

Maybe I can start with a little bit more of a near-term look here on 2014. I'm sure you're working through the budget as we're coming close to the end of this fiscal year. The -- but just in terms of the 2014, kind of how the budget's looking there in terms of the CapEx but also the amount of rate activity, are we sort of still looking at $800 million of CapEx for '14? And then looking for $90 million to $110 million of rate activity next year as well or just kind of how that's shaping up right now?

Well, we know that we're going to invest the $800 million or thereabouts on the capital side of the business. What about the rate outcomes? I don't -- we haven't looked at the rate outcomes, but we're going to -- I mean the growth is going to continue to be at the 8%, 8.5% for rate base by '16. I mean, all of the assumptions haven't changed that we've talked about through the '16 period. You'll see a little bit more clarity and granularity around that when we come back in November for sure, when we push guidance out for '14 and announce capital budgets and everything. But everything seems -- everything's on track. If nothing that's changed -- if anything, we're having much more faith and confidence on our ability to deliver and sustain the commitments that we made, Ted.

Understood. I guess, is it fair to say that as you're growing rate base, your rate request number should go higher over time just off of a larger base? Is that fair, or do you think that $90 million to $110 million is kind of what you need to sort of get closer to your allotted ROE?

I think you're going to see a balance, Ted. As you continue to make those investments, there's going to be a consistency there at a certain level when you're investing $800 million a year.

Okay, that's great. And then if I can just ask about the pipeline itself, and realizing that there's obviously support from some of the regulators on the investments. But you do have some of the projects, your major projects, you mentioned Line X is rolling off here at the end of December. Do you have some other larger-scaled projects in the hopper that we should think about again for '14? Or is it going to be more of the smaller type of projects and smaller spending in the pipeline business?

Well, we don't have any that we're going to announce. I think for what -- for your purposes, I mean, we've committed to growing rate base at the number we talked about, which translates to earnings growth of 6% to 8%. So whatever numbers you're assuming around rate -- annual rate outcomes or annual revenues from rate outcomes, and we're going to have the investment and the projects to support that level of growth.

Got it. And then last one for me is just on the dividend here and realizing you are spending a lot of capital, but how you're thinking about the dividend going into the next year, and the payout ratio versus sort of obtaining some cash to reinvest in the business?

We understand where we are relative to our peers and, obviously, there's a significant appetite for capital right now, the highest and best use. And we think for the return to the shareholder is on the capital side of the business, but we're also mindful. And that discussion occurs every year. And again, we'll have more to say about that when we come back in November when we talk about the indicated dividend yield for 2014. But it's another front burner issue.

Our next question comes from the line of Andy Bischof with Morningstar.

I guess, maybe I'm misreading this, but can you provide a little bit more clarity on the remaining filed increases for the remainder of the year, and kind of the materiality of those increases? I mean, historically, you have current $98 million increases.

You are talking about the $36 million that are pending, $36 million that's pending?

Yes. Are any of those effective in the -- fiscal period?

No, nothing will be effective in this fiscal period. I think there's a slide on the details of that though. No, all of those would be dropping in next year, '14 so you get a partial year effect in '14. You'd see a full effect in '15. And 2 -- the biggest 2 pieces are the Kentucky rate case and the Mid-Tex RRM.

Yes, but the Mid-Tex was $17 million? The Kentucky is like 7 -- about $13 million.

[Operator Instructions] Our next question comes from the line of Spencer Joyce with Hilliard Lyons.

Just a couple of quick ones here for you. With the Georgia asset sale now complete and behind us, are you all pretty comfortable with the current footprint? Can we think of the acquisition and/or divestiture sort of phase 1 of the refocus as mostly complete here?

It's all complete. Yes, we're who we are and we love who we are. We love ourselves right now.

Fair enough, fair enough.

No, nothing else planned.

Okay. Second other little item. I just wanted to touch on the O&M stuff. You mentioned line relocate expenses being ramped up or maybe accelerated a little bit, as well as some compensation expense, which makes sense given the good year we're having here. Can we read through maybe the accelerated line relocate stuff into next year? Or do you expect to wrap up most of the extra expense here in fiscal '13?

I think you're going to see -- there's a lot of construction going on in our service areas. And so the extent that, that continues to be driven we'll have those expenses. We are, with the warmer weather, getting ahead of some of that, that we can here in our third and fourth fiscal quarter. But that's a little bit more driven by development in the service areas we serve.

Look, I mean, also I think it points out the fact that we're remaining to serve jurisdictions that have pretty healthy economies because your line locates is a definite indicator of economic activity, construction investment that's going on. So it's really a very, very positive sign for our jurisdictions in the economies, the health of the economies where our customers are situated, Spencer.

Ms. Giles, it appears we have no further questions at this time. I would now like to turn the floor back over to you for further comments.

Thank you and I just want to remind everyone that a recording of this call is available for replay on our website through November 6. We appreciate your interest in Atmos Energy, and thank you for joining us this morning. Goodbye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.