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| James P. Torgerson President and |
Fellow Shareowners In today’s complex electric utility arena, returning to our roots is the best path to continued growth. This year UIL Holdings took a number of steps designed to shape a promising future for the corporation by building on its strong roots in the electric utility industry. We believe that focusing on our utility business, The United Illuminating Company (UI), is the best way to increase shareowner value and serve our customers and communities. This focus allows us to take full advantage of our core capabilities and seize opportunities that have emerged in today’s utility environment. This strategy originated with UIL’s previous Chief Executive Officer (CEO), Nathaniel D. Woodson. Nat led the corporation through years of sweeping changes in American business, the energy industry and the global economy. In recent years, the company saw the need to revamp the philosophy and direction that UIL had been pursuing aggressively since the late 1990s. Since becoming CEO of UIL Holdings in July 2006, I have worked with our talented leadership team to advance this strategy from concept to reality, to the benefit of our customers, shareowners and employees. We are making excellent progress. As you’ll read in this report, we’ve taken a number of important steps in a variety of areas. All contributed to key goals of: Enhancing our returns by investing in the growth area of electric transmission. Strengthening our core utility business through capital investments in distribution and transmission infrastructure to maintain safe and reliable service.
Here are some highlights of actions taken this year. Redirecting Our Resources We made the decision to focus our energy, attention and resources on UI in the operational areas of distribution and transmission services. Transmission, in particular, will be the major driver of growth for the corporation. Our experience in this field is increasingly valuable in a world eager for better ways to deliver electricity efficiently, reliably and cost-effectively. To improve the financial position of UI and execute our new strategic direction, we divested our non-utility businesses. The sales of our interests in Bridgeport Energy and Cross-Sound Cable were completed in the first quarter of 2006. Xcelecom’s entire systems integration business and a portion of the electrical contracting business were sold in September. The balance of that company was essentially divested by the end of the fourth quarter. This effectively completed the repositioning of our business focus to that of a transmission and distribution utility. The financial community responded favorably to these structural changes within UIL. In July, we split UIL stock five-for-three, making the company more attractive to retail investors seeking a quality growth stock at a reasonable price. This, combined with our realignment to core competencies, contributed to a very strong year for the company. For the year 2006, UIL’s total shareowner return (including dividend reinvestment) was 60.4% to its shareowners, placing the company as the premier financial performer when compared to other electric utilities in the Edison Electric Institute Index. Additionally, I am proud of the fact that we continued our consistent dividend policy for more than twelve years, returning an annual dividend of $1.728 per share. |
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