NiSource Reports Second Quarter 2009 Results
Reaffirms Annual Earnings Outlook
-- Managing Economic Impacts
-- Business Initiatives Advancing
-- Liquidity Position Remains Solid
MERRILLVILLE, Ind., Aug 03, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- NiSource Inc. (NYSE: NI) today announced net operating earnings (non-GAAP) of $6.2 million, or 2 cents per share, for the three months ended June 30, 2009, a decrease from $23.2 million, or 8 cents per share, for the second quarter of 2008. Operating earnings (non-GAAP) were $117 million compared to $119.7 million for the same period in 2008.
On a GAAP basis, NiSource reported a loss from continuing operations for the three months ended June 30, 2009, of $8.7 million, or 3 cents per share, compared with income of $19.7 million, or 7 cents per share, in the same period a year ago. Operating income was $103.9 million for the second quarter of 2009 compared with $114.4 million in the year-ago period.
The company's quarterly results were primarily affected by the previously reported increased pension expense related to the deterioration in global securities markets in 2008, reduced revenues in the company's electric business resulting from the economic recession, and incremental interest expense related to the issuance of long-term debt under the company's liquidity plan. These impacts were partially offset by increased revenues in NiSource's gas transmission & storage and gas distribution businesses, as well as the effects of open market debt repurchases and lower short-term interest rates.
Managing Economic Impacts
NiSource President and Chief Executive Officer Robert C. Skaggs, Jr. noted that NiSource's core businesses have continued to produce solid results, despite an extremely challenging economic environment.
Skaggs indicated that commercial and industrial deliveries in particular have been impacted by the continuing economic recession, especially in the company's northern Indiana markets, where second quarter electric industrial demand was approximately 25 percent below the prior year's level.
"Against a backdrop of extraordinary economic circumstances, NiSource's businesses have taken aggressive steps to mitigate the impact of these near-term economic and financial headwinds while continuing to execute on our long-term financial, regulatory and infrastructure enhancement initiatives that will provide sustainable earnings growth for the future," Skaggs said.
NiSource's quarterly results were impacted by a $24.8 million (or approximately 6 cents per share) increase in pension expense and a $21.3 million (or approximately 5 cents per share) decrease in net revenues from electric operations mainly due to lower industrial and commercial demand. The company successfully mitigated a significant portion of these impacts through increased revenues and aggressive cost management efforts across all its businesses, Skaggs said.
Although not reflected in second quarter results, Skaggs also noted that the company's Columbia Gas of Ohio (COH) unit received authority on July 8 from the Public Utilities Commission of Ohio (PUCO) to defer the difference between actual pension and other postretirement benefits expense and the levels reflected in COH's base rates. The financial impact of the deferral, which is expected to positively impact 2009 operating earnings by approximately $13 million, or about 3 cents per share, will be reflected in the company's results for the third and fourth quarters.
"While the effects of the economic downturn are proving to be deeper and longer than we had hoped, our teams are working day and night to mitigate these impacts and deliver results in line with the earnings outlook we provided earlier this year. Without minimizing the daunting challenges we - and virtually all companies - are facing in managing through these turbulent times, I continue to be encouraged by the fact that our underlying business performance remains strong, our liquidity position is solid, and we are delivering on our commitment to preserve and execute on the core elements of our business strategy."
2009 Guidance Reaffirmed
Skaggs noted that, despite current economic conditions, NiSource's earnings outlook remains consistent with the company's previously announced net operating earnings (non-GAAP) guidance of $1.00 to $1.10 per share for 2009.
"We continue to monitor the economic situation closely and make appropriate, balanced adjustments to our near-term business plans," Skaggs added. "As we indicated earlier this year, our original outlook assumed a gradual economic recovery during the second half of 2009. Obviously, the pace and strength of that recovery remain to be seen. Although we certainly will continue to proactively and aggressively manage the ongoing financial impacts of the downturn, a variety of economic factors - particularly industrial and commercial usage - will remain a key sensitivity for all our businesses going forward."
Liquidity Position Remains Solid
Skaggs noted that NiSource continues to maintain a solid liquidity position, having successfully executed against its previously announced financing and liquidity plan. This plan allowed the company to fully address its 2009 debt refinancing requirements and placed NiSource well on the way toward meeting its 2010 refinancing needs. NiSource estimates that its remaining financing requirements through 2010 will be up to $500 million.
In terms of recent developments, on June 25, Columbia Gas of Virginia received approval from the Virginia State Corporation Commission for the issuance of long-term debt of up to $75 million. Northern Indiana Public Service Co. (NIPSCO) also is in the process of obtaining IURC approval to issue $120 million of debt related to its Sugar Creek generating facility.
During the third quarter of 2009, NiSource also expects to add an accounts receivable securitization facility for Columbia Gas of Pennsylvania and is in the process of executing similar new facilities at COH and NIPSCO. Total capacity of these facilities is expected to be approximately $525 million with opportunities for annual renewal and capacity increases as required.
Business Initiatives Advancing
NiSource's business units continued to advance key growth and infrastructure enhancement programs, synchronized with complementary regulatory and commercial initiatives:
NIPSCO continued making progress on the company's electric base rate case. Testimony by intervening parties was filed during the second quarter, and NIPSCO filed its last round of testimony in late June. A final round of evidentiary hearings began in late July. The case is expected to be resolved, and new electric rates effective during the first quarter of 2010.
"Despite the obvious pressures caused by the economic downturn, we continue to see steady progress toward resolution of the NIPSCO rate case," Skaggs said. "Although much work remains ahead of us, I am pleased with our team's efforts to advance the case in a constructive manner."
NiSource's Gas Transmission & Storage (NGT&S) business continued its strong 2009 performance during the second quarter, with increases in Columbia Gas Transmission revenue from storage services, new Appalachian supply interconnects, and incremental revenue from transportation agreements on both Columbia Gulf Transmission and Columbia Gas Transmission.
The NGT&S team also continued developing a stream of new growth projects that capitalize on the company's strong asset base.
-- Work continued on several projects that will provide market access for
an additional 150,000 dekatherms per day (Dth/d) of gas from the
Marcellus Shale production area in southwestern Pennsylvania. Initial
firm transportation services on the projects began in the third quarter
of 2008 with additional increments scheduled to be placed in service
through mid-2010.
-- Storage gas injections began in April for the Ohio Storage Expansion
Project, which will increase NGT&S market-area storage capacity by
6.7 billion cubic feet and enhance delivery from two Ohio storage
fields. In March, the Federal Energy Regulatory Commission (FERC)
issued a certificate authorizing market-based rates for the project -
the first time Columbia Gas Transmission has received such authority in
connection with the expansion of an existing, traditionally cost-based,
storage facility.
-- Following completion of a binding open season in April, NGT&S
executed precedent agreements for 30,000 Dth/d of new capacity into
premium east coast markets resulting from modifications to the Easton
Compressor Station in Northampton County, Pa. The new capacity is
expected to be available late this year.
-- Shippers also executed precedent agreements for a total of approximately
25,500 Dth/d of long-term firm transportation service associated with a
facility expansion at Cobb Compressor Station in Kanawha County, W.Va.
The Cobb Expansion is expected to be in service April 2010.
-- Two additional NGT&S expansion projects have been placed into
service. The Appalachian Expansion Project - providing approximately
100,000 Dth/d of new transportation capacity to three key Appalachian
producers - was in-service ahead of schedule on July 1, and the Eastern
Market Expansion - which provides 97,000 Dth/d of additional storage and
related transportation services under fully subscribed, 15-year firm
contracts - was placed into service April 1.
-- NGT&S also completed the contracting of 95,000 Dth/d of capacity for
firm delivery from Columbia Gulf Transmission to the Florida Gas
Transmission system near Lafayette, La. The new capacity is in addition
to 145,000 Dth/d of capacity already subscribed for delivery to Florida
Gas Transmission.
-- New NGT&S pipeline interconnections placed into service during the
second quarter included: a new 258,000 Dth/d receipt point with the
Rockies Express Pipeline system at Lebanon, Ohio; a new 1,500,000 Dth/d
interconnect with Kinder Morgan Interstate Pipelines in Evangeline, La.;
a 500,000 Dth/d receipt point from MidContinent Express Pipeline in
Madison, La.; a 970,000 Dth/d receipt point with Texas Gas in Humphreys,
Miss.; and expansion of an existing receipt point with Discovery Gas
Transmission in LaFourche, La.
"Although no part of our business is completely immune from the effects of the economic downturn, the continued strong performance in our NGT&S unit has clearly helped mitigate some of the near-term earnings pressures we are seeing in other parts of our business," Skaggs said. "The NGT&S team also is continuing to aggressively address its cost structure and advance new energy infrastructure projects that will be key contributors to NiSource's long-term growth profile."
NiSource's Gas Distribution business also delivered strong results during the quarter, benefiting in part from its ongoing efforts to improve rate design and align its infrastructure replacement and enhancement programs with a number of regulatory initiatives.
-- As discussed in more detail below, Gas Distribution's net revenues
increased for the quarter, driven largely by rate and regulatory
initiatives recently implemented in Ohio and Pennsylvania.
-- On April 16, Bay State Gas Co. filed a petition with the Massachusetts
Department of Public Utilities seeking to increase annual revenues by
$34.6 million, or 6.4 percent. Bay State's request addresses
capital costs associated with system upgrades and maintenance, as well
as cost increases since the company's last base-rate filing was
approved in 2005. Among other things, the filing includes a proposed
infrastructure investment tracker and enhancements to the company's
rate design. Hearings in the case concluded late in July, and new rates
are scheduled to become effective in November of this year.
-- On May 1, Columbia Gas of Kentucky (CKY) filed a request with the
Kentucky Public Service Commission for an overall increase in revenues
of approximately $11.6 million, or 7 percent. The filing proposes
enhancements to rate design, the implementation of an energy efficiency
program, and the establishment of an infrastructure investment tracker.
-- On June 8, Columbia Gas of Virginia filed with the Virginia State
Corporation Commission to implement a Conservation and Ratemaking
Efficiency (CARE) Plan for a three-year period (2010-2012). The plan
pairs incentives for residential and small general services customers to
actively pursue energy conservation measures with a decoupled rate
mechanism.
"These proceedings continue NiSource's collaborative regulatory approach toward engaging stakeholders in addressing issues related to energy conservation, progressive rate design and timely recovery of ongoing infrastructure enhancement investments," Skaggs said. "Building on last year's successes in Ohio and Pennsylvania, our gas distribution team continues to make excellent progress in executing on that strategy."
Second Quarter 2009 Operating Earnings - Segment Results (non-GAAP)
NiSource's consolidated second-quarter 2009 operating earnings (non-GAAP) were $117.0 million, compared to $119.7 million for the same period in 2008. Refer to Schedule 2 for the items included in 2009 and 2008 GAAP operating income but excluded from operating earnings.
Operating earnings for NiSource's business segments for the quarter ended June 30, 2009, are discussed below. Operating expenses were impacted across NiSource's business segments by an increase in pension expense of $24.8 million which is the result of negative pension plan asset returns during 2008 that are discussed in more detail in NiSource's 2008 SEC Form10-K.
Gas Distribution Operations reported operating earnings of $7.5 million versus an operating earnings loss of $3.9 million in the second quarter of 2008. Net revenues, excluding the impact of regulatory trackers, increased $18.2 million, which was primarily attributable to regulatory and service programs including impacts from rate cases at various utilities, partially offset by decreased customer usage.
Operating expenses, excluding trackers, were $6.8 million higher than the comparable period, reflecting an increase in pension expense of $10.6 million and higher depreciation costs of $5.3 million, partially offset by lower employee and administrative costs, excluding pension.
Gas Transmission and Storage Operations reported operating earnings of $80.9 million versus operating earnings of $75.5 million in the second quarter of 2008. The increase resulted primarily from increased net revenues of $13.1 million, which was primarily attributable to increases in firm capacity reservation fees and shorter term transportation and storage services partially offset by lower commodity margins. The increase in firm capacity reservation fees was the result of higher revenue for storage services, new Appalachian Supply interconnects, and incremental revenue from transportation agreements.
Equity earnings decreased by $4.2 million primarily due to a charge resulting from interest rate hedges related to Millennium Pipeline's (Millennium) decision to delay permanent financing until 2010 instead of in 2009 as was originally projected, partially offset by increased earnings from Millennium.
Operating expenses increased $3.5 million due primarily to higher pension expense.
Electric Operations reported operating earnings of $31.1 million versus operating earnings of $52.1 million from the same quarter last year. Net revenues decreased by $21.3 million primarily as a result of lower industrial and commercial usage due to current economic conditions and lower off-system sales.
Operating expenses decreased by $0.3 million due primarily to a $7.2 million decrease in depreciation and a $5.1 million decrease in other taxes due to lower property taxes, mostly offset by higher pension expense of $10.5 million and higher electric generation and maintenance costs of $5.0 million. The decrease in depreciation expense is due to the impact of an $8.3 million adjustment recorded by NIPSCO during the second quarter of 2008.
Other Operations reported an operating earnings loss of $1.7 million in the second quarter of 2009, compared with an operating earnings loss of $1.4 million in the prior year period. These operating earnings results no longer include earnings associated with unregulated natural gas marketing activities which are now reflected as discontinued operations for all periods presented. Please see the discussion below under "Discontinued Operations" for additional information.
Other Items
Interest expense increased by $17.9 million primarily due to incremental interest expense associated with the issuance of $700 million of long-term debt in May of 2008 and $600 million of long-term debt in March of 2009, partially offset by the open market debt repurchase of $100 million in January 2009, the $250.6 million tender offer debt repurchase in April 2009 and lower short-term interest rates. Other-net was a loss of $0.5 million compared to income of $1.3 million for the second quarter of 2008 as a result of lower interest income.
Six Month Period 2009 Operating Earnings - Segment Results (non-GAAP)
NiSource's consolidated operating earnings (non-GAAP) for the six months ended June 30, 2009, were $486.3 million, compared to $513.1 million for the same period in 2008. Refer to Schedule 2 for the items included in 2009 and 2008 GAAP operating income but excluded from operating earnings.
Operating earnings for NiSource's business segments for the six months ended June 30, 2009 are discussed below. Operating expenses increased across NiSource's business segments mainly due to increased pension expense of $49.2 million which is primarily the result of negative pension plan asset returns during 2008 that are discussed in more detail in NiSource's 2008 SEC Form10-K.
Gas Distribution Operations reported operating earnings of $244.8 million compared to $251.6 million reported for the first six months of 2008. Net revenues, excluding the impact of regulatory trackers, increased $23.8 million, primarily attributable to regulatory and service programs including impacts from rate cases at various utilities, partially offset by decreased customer usage and lower off-system sales revenues.
Operating expenses, excluding trackers, were $30.6 million higher than the comparable period, reflecting increases in pension expense of $20.9 million together with higher depreciation costs, maintenance costs and uncollectible accounts.
Gas Transmission and Storage Operations reported operating earnings of $192.0 million versus operating earnings of $179.9 million in the first six months of 2008. The increase resulted primarily from increased net revenues of $24.1 million, primarily attributable to increases in firm capacity reservation fees, increases in shorter term transportation and storage services and the impact of regulatory trackers. The increase in firm capacity reservation fees was the result of higher Columbia Gas Transmission revenue for storage services, new Appalachian Supply interconnects, and incremental revenue from transportation agreements on both Columbia Gulf Transmission and Columbia Gas Transmission.
Equity earnings increased by $0.2 million primarily resulting from increased earnings from Millennium, offset by a charge resulting from interest rate hedges related to Millennium's decision to delay permanent financing until 2010 instead of in 2009 as was originally projected.
Operating expenses increased by $12.2 million due to higher pension expense, regulatory trackers and environmental costs, partially offset by lower maintenance costs, corporate insurance and materials and supplies.
Electric Operations reported operating earnings of $57.2 million for the first six months of 2009, compared with $90.1 million for the prior year period. Lower net revenues and higher operating expenses both contributed to the lower operating earnings. Net revenue decreased by $17.0 million primarily from lower industrial usage due to current economic conditions and lower off-system sales, partially offset by lower non-recoverable purchased power.
Operating expenses increased by $15.9 million due primarily to higher pension expense of $21.0 million and electric generation and maintenance expenses, partially offset by lower environmental and depreciation expenses. The decrease in depreciation expense is due to the impact of an $8.3 million adjustment recorded by NIPSCO during the second quarter of 2008.
Other Operations reported an operating earnings loss of $3.1 million, essentially flat with the first six months of 2008. These operating earnings results no longer include earnings associated with unregulated natural gas marketing activities which are now reflected as discontinued operations for all periods presented. Please see the discussion below under "Discontinued Operations" for additional information.
Other Items
Interest expense increased by $16.6 million primarily due to incremental interest expense associated with the issuance of $700 million of long-term debt in May of 2008 and $600 million of long-term debt in March of 2009, partially offset by the open market debt repurchase of $100 million in January 2009, the $250.6 million tender offer debt repurchase in April 2009 and lower short-term interest rates. Other-net was a loss of $4.7 million compared to a loss of $0.4 million for the second quarter of 2008 as a result of lower interest income.
Income from Continuing Operations (GAAP)
On a GAAP basis, NiSource reported a net loss from continuing operations for the three months ended June 30, 2009, of $8.7 million, or 3 cents per share, compared with net income from continuing operations of $19.7 million, or 7 cents per share, in the same period a year ago. Operating income was $103.9 million for the second quarter of 2009, compared with $114.4 million in the year-ago period.
On a GAAP basis, NiSource reported income from continuing operations for the six months ended June 30, 2009, of $150.6 million, or 55 cents per share, compared with $208.3 million, or 76 cents per share last year. Operating income was $452.1 million for the first six months of 2009 versus $507.9 million in the year-ago period.
Refer to Schedule 1 for a complete list of the items included in 2009 and 2008 GAAP income from Continuing Operations but excluded from net operating earnings.
Discontinued Operations
In the second quarter of 2009, NiSource signed a letter of intent to sell its unregulated natural gas marketing activities. These operations have been removed from NiSource's Other Operations business segment and are now being accounted for as discontinued operations. As such, net income of $13.5 million was classified as net income from discontinued operations for both the three months and six months ended June 30, 2009, and $1.4 million and $2.2 million was reclassified to discontinued operations for the three months and six months ended June 30, 2008, respectively. NiSource also recorded a net loss on sale of discontinued operations of $8.8 million in June 2009, related to the proposed sale of the business.
About NiSource
NiSource Inc. (NYSE: NI), based in Merrillville, Ind., is a Fortune 500 company engaged in natural gas transmission, storage and distribution, as well as electric generation, transmission and distribution. NiSource operating companies deliver energy to 3.8 million customers located within the high-demand energy corridor stretching from the Gulf Coast through the Midwest to New England. Information about NiSource and its subsidiaries is available via the Internet at www.nisource.com. NI-F
Forward-Looking Statements
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements include statements regarding the intent, belief or current expectations of NiSource and its management. Although NiSource believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Readers are cautioned that the forward-looking statements in this presentation are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: weather; fluctuations in supply and demand for energy commodities; growth opportunities for NiSource's businesses; increased competition in deregulated energy markets; the success of regulatory and commercial initiatives; dealings with third parties over whom NiSource has no control; the success of NiSource's restructuring of its outsourcing agreement; actual operating experience of NiSource assets; the regulatory process; regulatory and legislative changes; the impact of potential new environmental laws or regulations; the results of material litigation; changes in pension funding requirements; changes in general economic, capital and commodity market conditions; and counter-party credit risk.
NiSource Inc.
Consolidated Net Operating Earnings (Non - GAAP)
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
(in millions, except -------------- --------------
per share amounts) 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
Net Revenues
Gas Distribution $452.0 $930.5 $2,168.4 $3,168.2
Gas
Transportation
and Storage 260.9 236.1 657.5 594.3
Electric 287.0 340.9 592.4 672.0
Other 14.1 53.1 36.4 105.1
------ ---- ---- ---- -----
Gross Revenues 1,014.0 1,560.6 3,454.7 4,539.6
Cost of Sales (excluding
depreciation and
amortization) 338.2 892.0 1,713.1 2,833.8
------------------------- ----- ----- ------- -------
Total Net Revenues 675.8 668.6 1,741.6 1,705.8
------------------ ----- ----- ------- -------
Operating Expenses
Operation and maintenance 314.9 304.1 665.0 621.7
Operation and
maintenance -
trackers 40.5 36.6 147.5 127.2
Depreciation
and
amortization 148.2 147.6 291.9 283.1
Other taxes 41.4 49.0 103.2 106.5
Other taxes - trackers 11.2 13.2 51.5 57.8
----------------------- ---- ---- ---- ----
Total Operating Expenses 556.2 550.5 1,259.1 1,196.3
------------------------ ----- ----- ------- -------
Equity Earnings (Loss) in
Unconsolidated Affiliates (2.6) 1.6 3.8 3.6
-------------------------- ---- --- --- ---
Operating Earnings 117.0 119.7 486.3 513.1
------------------ ----- ----- ----- -----
Other Income (Deductions)
Interest expense, net (105.3) (87.4) (195.8) (179.2)
Other, net (0.5) 1.3 (4.7) (0.4)
----------- ---- --- ---- ----
Total Other Income (Deductions) (105.8) (86.1) (200.5) (179.6)
------------------------------- ------ ----- ------ ------
Operating Earnings
From Continuing
Operations
Before Income Taxes 11.2 33.6 285.8 333.5
Income Taxes 5.0 10.4 109.5 122.0
------------ --- ---- ----- -----
Net Operating Earnings
from Continuing
Operations 6.2 23.2 176.3 211.5
----------------------- --- ---- ----- -----
GAAP Adjustment (14.9) (3.5) (25.7) (3.2)
--------------- ----- ---- ----- ----
GAAP Income (Loss)
from Continuing
Operations $(8.7) $19.7 $150.6 $208.3
================== ===== ===== ====== ======
------ ----- ----- ----- -----
Basic Net Operating Earnings Per
Share from Continuing
Operations $0.02 $0.08 $0.64 $0.77
-------------------------------- ----- ----- ----- -----
GAAP Adjustment (0.05) (0.01) (0.09) (0.01)
--------------- ----- ----- ----- -----
GAAP Basic Earnings (Loss) Per
Share from Continuing
Operations $(0.03) $0.07 $0.55 $0.76
------------------------------ ------ ----- ----- -----
Basic Average Common
Shares Outstanding 274.7 274.0 274.4 273.9
-------------------- ----- ----- ----- -----
NiSource Inc.
Segment Operating Earnings (Non-GAAP)
Three Months Six Months
Gas Distribution Operations Ended June 30, Ended June 30,
-------------- --------------
(in millions) 2009 2008 2009 2008
------------- ---- ---- ---- ----
Net Revenues
Sales Revenues $560.7 $1,031.8 $2,509.5 $3,480.2
Less: Cost of gas sold 275.6 765.3 1,590.4 2,593.9
------------------------ ----- ----- ------- -------
Net Revenues 285.1 266.5 919.1 886.3
------------ ----- ----- ----- -----
Operating Expenses
Operation and maintenance 160.3 156.7 338.0 316.6
Operation and maintenance -
trackers 26.7 24.4 117.7 102.5
Depreciation and amortization 62.9 57.6 123.3 114.3
Other taxes 16.5 18.5 43.8 43.5
Other taxes - trackers 11.2 13.2 51.5 57.8
----------------------- ---- ---- ---- ----
Total Operating Expenses 277.6 270.4 674.3 634.7
------------------------ ----- ----- ----- -----
Operating Earnings (Loss) $7.5 $(3.9) $244.8 $251.6
========================= ==== ===== ====== ======
GAAP Adjustment (3.6) (6.1) 2.3 (6.7)
--------------- ---- ---- --- ----
GAAP Operating Income (Loss) $3.9 $(10.0) $247.1 $244.9
============================ ==== ====== ====== ======
Three Months Six Months
Gas Transmission and Storage
Operations Ended June 30, Ended June 30,
-------------- --------------
(in millions) 2009 2008 2009 2008
------------- ---- ---- ---- ----
Net Revenues
Transportation revenues $159.8 $150.8 $354.3 $335.6
Storage revenues 48.2 44.5 93.4 90.1
Other revenues 1.1 0.7 3.7 1.6
---------------- --- --- --- ---
Net Operating Revenues 209.1 196.0 451.4 427.3
---------------------- ----- ----- ----- -----
Operating Expenses
Operation and maintenance 69.0 67.5 146.2 140.7
Operation and maintenance -
trackers 12.5 10.7 27.6 21.7
Depreciation and amortization 30.2 29.4 59.6 58.7
Other taxes 13.9 14.5 29.8 29.9
------------ ---- ---- ---- ----
Total Operating Expenses 125.6 122.1 263.2 251.0
------------------------ ----- ----- ----- -----
Equity Earnings (Loss) in
Unconsolidated
Affiliates (2.6) 1.6 3.8 3.6
------------------------- ---- --- --- ---
Operating Earnings $80.9 $75.5 $192.0 $179.9
================== ===== ===== ====== ======
GAAP Adjustment (1.3) 2.4 (19.5) 2.8
--------------- ---- --- ----- ---
GAAP Operating Income $79.6 $77.9 $172.5 $182.7
====================== ===== ===== ====== ======
NiSource Inc.
Segment Operating Earnings (Non-GAAP)
Three Months Six Months
Electric Operations Ended June 30, Ended June 30,
-------------- --------------
(in millions) 2009 2008 2009 2008
------------- ---- ---- ---- ----
Net Revenues
Sales revenues $288.5 $342.3 $595.5 $674.6
Less: Cost of sales 107.4 139.9 227.4 289.5
- ------------------- ----- ----- ----- -----
Net Revenues 181.1 202.4 368.1 385.1
------------ ----- ----- ----- -----
Operating Expenses
Operation and maintenance 88.4 76.2 182.1 157.4
Operation and maintenance - trackers 1.3 1.5 2.2 3.0
Depreciation and amortization 51.2 58.4 101.6 105.8
Other taxes 9.1 14.2 25.0 28.8
------------ --- ---- ---- ----
Total Operating Expenses 150.0 150.3 310.9 295.0
------------------------ ----- ----- ----- -----
Operating Earnings $31.1 $52.1 $57.2 $90.1
================== ===== ===== ===== =====
GAAP Adjustment (8.1) (1.4) (16.9) (1.0)
--------------- ---- ---- ----- ----
GAAP Operating Income $23.0 $50.7 $40.3 $89.1
====================== ===== ===== ===== =====
Three Months Six Months
Other Operations Ended June 30, Ended June 30,
-------------- --------------
(in millions) 2009 2008 2009 2008
------------- ---- ---- ---- ----
Net Revenues
Products and services revenue $2.2 $33.4 $4.8 $61.2
Less: Cost of products purchased - 30.9 - 56.0
---------------------------------- --- ---- --- ----
Net Revenues 2.2 2.5 4.8 5.2
------------ --- --- --- ---
Operating Expenses
Operation and maintenance 2.8 3.2 6.1 6.9
Depreciation and amortization 0.9 0.5 1.4 1.1
Other taxes 0.2 0.2 0.4 0.4
------------ --- --- --- ---
Total Operating Expenses 3.9 3.9 7.9 8.4
------------------------ --- --- --- ---
Operating Earnings (Loss) $(1.7) $(1.4) $(3.1) $(3.2)
========================= ===== ===== ===== =====
GAAP Adjustment - (0.1) - (0.1)
--------------- --- ---- --- ----
GAAP Operating Earnings (Loss) $(1.7) $(1.5) $(3.1) $(3.3)
============================== ===== ===== ===== =====
Three Months Six Months
Corporate Ended June 30, Ended June 30,
-------------- --------------
(in millions) 2009 2008 2009 2008
------------- ---- ---- ---- ----
Operating Earnings (Loss) $(0.8) $(2.6) $(4.6) $(5.3)
========================= ===== ===== ===== =====
GAAP Adjustment (0.1) (0.1) (0.1) (0.2)
--------------- ---- ---- ---- ----
GAAP Operating Earnings (Loss) $(0.9) $(2.7) $(4.7) $(5.5)
============================== ===== ===== ===== =====
NiSource Inc.
Segment Volumes and Statistical Data
Three Months Six Months
Gas Distribution Operations Ended June 30, Ended June 30,
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Sales and Transportation (MMDth)
Residential 32.6 33.7 165.2 171.1
Commercial 23.4 26.5 101.4 104.5
Industrial 74.0 89.3 170.6 192.5
Off System 13.9 23.0 30.1 60.4
Other 0.2 0.2 0.5 0.7
------- --- --- --- ---
Total 144.1 172.7 467.8 529.2
----- ----- ----- ----- -----
Weather Adjustment 2.6 1.8 (1.0) 1.4
----------- --- --- ---- ---
Sales and Transportation
Volumes -Excluding Weather 146.7 174.5 466.8 530.6
============================ ===== ===== ===== =====
Heating Degree Days 443 448 3,126 3,124
Normal Heating Degree Days 472 472 3,105 3,133
% Colder (Warmer) than Normal (6%) (5%) 1% 0%
Customers
Residential 2,987,144 2,990,223
Commercial 274,871 275,937
Industrial 7,861 8,019
Other 80 72
------ -- --
Total 3,269,956 3,274,251
----- --------- ---------
Three Months Six Months
Gas Transmission and Storage Ended June 30, Ended June 30,
Operations -------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Throughput (MMDth)
Columbia Transmission 170.1 166.9 578.5 553.2
Columbia Gulf 244.7 236.5 507.8 471.2
Columbia Pipeline Deep Water - 0.7 - 0.9
Crossroads Gas Pipeline 8.8 9.0 17.4 19.1
Intrasegment eliminations (156.4) (137.4) (326.8) (269.3)
------------------------- ------ ------ ------ ------
Total 267.2 275.7 776.9 775.1
----- ----- ----- ----- -----
NiSource Inc.
Segment Volumes and Statistical Data (continued)
Three Months Six Months
Electric Operations Ended June 30, Ended June 30,
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Sales (Gigawatt Hours)
Residential 758.8 745.8 1,601.6 1,552.6
Commercial 934.5 952.4 1,903.1 1,896.5
Industrial 1,789.9 2,376.2 3,778.9 4,890.2
Wholesale 118.7 185.3 176.3 329.9
Other 43.9 29.8 79.1 64.6
------ ---- ---- ---- ----
Total 3,645.8 4,289.5 7,539.0 8,733.8
----- ------- ------- ------- -------
Weather Adjustment 26.5 17.6 20.4 8.1
----------- ---- ---- ---- ---
Sales Volumes - Excluding
Weather impacts 3,672.3 4,307.1 7,559.4 8,741.9
============= ======= ======= ======= =======
Cooling Degree Days 197 201 197 201
Normal Cooling Degree Days 230 230 230 230
% Warmer (Colder) than Normal (14%) (13%) (14%) (13%)
Electric Customers
Residential 398,097 399,276
Commercial 53,386 53,095
Industrial 2,452 2,498
Wholesale 11 6
Other 752 754
- ------ --- ---
Total 454,698 455,629
----- ------- -------
NiSource Inc.
Schedule 1 - Reconciliation of Net Operating Earnings to GAAP
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
(in millions, except per share amounts) 2009 2008 2009 2008
--------------------------------------- ---- ---- ---- ----
Net Operating Earnings from Continuing
Operations (Non-GAAP) $6.2 $23.2 $176.3 $211.5
-------------------------------------- ---- ----- ------ ------
Items excluded from operating earnings:
Net Revenues:
Weather - compared to normal (4.8) (3.4) 2.1 (3.6)
Revenue adjustment - - (9.0) -
Operating Expenses:
Restructuring - - (19.8) -
Transition charges (IBM Agreement) (1.9) (2.7) (3.1) (3.9)
Legal reserve (6.4) - (6.4) -
Gain/Loss on sale of assets and
asset impairments - 0.8 2.0 2.3
---------------------------------- --- --- --- ---
Total items excluded from
operating earnings (13.1) (5.3) (34.2) (5.2)
---------------------------- ----- ---- ----- ----
Gain on early extinguishment of debt (0.7) - 2.5 -
------------------------------------- ---- --- --- ---
Tax effect of above items and other
income tax
adjustments (1.1) 1.8 6.0 2.0
-------------------------------- ----- ---- ----- ----
Total items excluded from net
operating earnings (14.9) (3.5) (25.7) (3.2)
-------------------------------- ----- ---- ----- ----
-------------------------------------- ----- ----- ------ ------
Reported Income (Loss) from Continuing
Operations - GAAP $(8.7) $19.7 $150.6 $208.3
====================================== ===== ===== ====== ======
--------------------------------------- ----- ----- ----- -----
Basic Average Common Shares Outstanding 274.7 274.0 274.4 273.9
---------------------------------------- ----- ----- ----- -----
Basic Net Operating Earnings Per Share
from Continuing Operations $0.02 $0.08 $0.64 $0.77
-------------------------------------- ----- ----- ----- -----
Items excluded from net operating
earnings (after-tax) (0.05) (0.01) (0.09) (0.01)
--------------------------------- ----- ----- ----- -----
GAAP Basic Earnings (Loss) Per Share
from Continuing Operations $(0.03) $0.07 $0.55 $0.76
------------------------------------ ------ ----- ----- -----
NiSource Inc.
Schedule 2 -- Adjustments by Segment from Operating Earnings to GAAP
For Quarter ended June 30,
2009 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric
------------- --------------- --------
Operating Earnings (Loss) 7.5 80.9 31.1
Net Revenues:
Weather (compared to normal) (3.2) - (1.6)
---- - ----
Total Impact - Net Revenues (3.2) - (1.6)
Operating Expenses
Transition charges (IBM Agreement) (0.4) (1.3) (0.1)
Legal reserve - - (6.4)
--- --- ----
Total Impact - Operating Expenses (0.4) (1.3) (6.5)
----- ----- -----
Total Impact - Operating
Income (Loss) $(3.6) $(1.3) $(8.1)
----- ----- -----
Operating Income (Loss) - GAAP $3.9 $79.6 $23.0
---- ----- -----
2008 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric
------------- --------------- --------
Operating Earnings (Loss) (3.9) 75.5 52.1
Net Revenues:
Weather (compared to
normal) (2.4) - (1.0)
---- - ----
Total Impact - Net Revenues (2.4) - (1.0)
Operating Expenses
Transition charges (IBM
Agreement) (1.6) (0.5) (0.4)
Gain/Loss on sale of assets
and asset impairments (2.1) 2.9 -
---- --- -
Total Impact - O & M Expenses (3.7) 2.4 (0.4)
----- ---- -----
Total Impact - Operating
Income (Loss) $(6.1) $2.4 $(1.4)
----- ---- -----
Operating Income (Loss) - GAAP $(10.0) $77.9 $50.7
------ ----- -----
2009 (in millions)
Other Corporate Total
---- --------- -----
Operating Earnings (Loss) (1.7) (0.8) $117.0
Net Revenues:
Weather (compared to normal) - - $(4.8)
--- --- -----
Total Impact - Net Revenues - - (4.8)
Operating Expenses
Transition charges (IBM
Agreement) - (0.1) (1.9)
Legal reserve - - (6.4)
--- --- ----
Total Impact - Operating
Expenses - (0.1) (8.3)
--- ----- ------
Total Impact - Operating
Income (Loss) $- $(0.1) $(13.1)
--- ----- ------
Operating Income (Loss) - GAAP $(1.7) $(0.9) $103.9
----- ----- ------
2008 (in millions)
Other Corporate Total
----- --------- -----
Operating Earnings (Loss) (1.4) (2.6) $119.7
Net Revenues:
Weather (compared to normal) - - $(3.4)
--- --- -----
Total Impact - Net Revenues - - (3.4)
Operating Expenses
Transition charges (IBM
Agreement) (0.1) (0.1) (2.7)
Gain/Loss on sale of assets
and asset impairments - - 0.8
--- --- ---
Total Impact - O & M Expenses (0.1) (0.1) (1.9)
----- ----- -----
Total Impact - Operating
Income (Loss) $(0.1) $(0.1) $(5.3)
----- ----- -----
Operating Income
(Loss) - GAAP $(1.5) $(2.7) $114.4
----- ----- ------
NiSource Inc.
Schedule 2 -- Adjustments by Segment from Operating Earnings to GAAP
For Six Months ended June 30,
2009 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric
------------- ---------------- --------
Operating Earnings (Loss) 244.8 192.0 57.2
Net Revenues:
Weather (compared to normal) 3.3 - (1.2)
Revenue sales adjustment - - (9.0)
--- --- ----
Total Impact - Net Revenues 3.3 - (10.2)
Operating Expenses
Transition charges (IBM
Agreement) (1.0) (1.7) (0.3)
Restructuring - (19.8) -
Legal reserve - - (6.4)
Gain/Loss on sale of assets
and asset impairments - 2.0 -
--- --- ---
Total Impact - Operating
Expenses (1.0) (19.5) (6.7)
---- ------ ------
Total Impact - Operating
Income (Loss) $2.3 $(19.5) $(16.9)
---- ------ ------
Operating Income (Loss) -
GAAP $247.1 $172.5 $40.3
------ ------ -----
2008 (in millions)
------------------ ------------------ --------
Gas
Gas Transmission
Distribution and Storage Electric
------------- ---------------- --------
Operating Earnings (Loss) 251.6 179.9 90.1
Net Revenues:
Weather (compared to normal) (3.3) - (0.3)
---- --- ----
Total Impact - Net Revenues (3.3) - (0.3)
Operating Expenses
Transition charges (IBM
Agreement) (2.4) (0.7) (0.6)
Gain/Loss on sale of assets
and asset impairments (1.0) 3.5 (0.1)
---- --- ----
Total Impact - O & M
Expenses (3.4) 2.8 (0.7)
----- ---- -----
Total Impact - Operating
Income (Loss) $(6.7) $2.8 $(1.0)
----- ---- -----
Operating Income (Loss) -
GAAP $244.9 $182.7 $89.1
------ ------ -----
2009 (in millions)
Other Corporate Total
----- --------- -----
Operating Earnings (Loss) (3.1) (4.6) $486.3
Net Revenues:
Weather (compared to normal) - - $2.1
Revenue sales adjustment - - (9.0)
--- --- ----
Total Impact - Net Revenues - - (6.9)
Operating Expenses
Transition charges (IBM
Agreement) - (0.1) (3.1)
Restructuring - - (19.8)
Legal reserve - - (6.4)
Gain/Loss on sale of assets
and asset impairments - - 2.0
--- --- ---
Total Impact - Operating
Expenses - (0.1) (27.3)
--- ----- ------
Total Impact - Operating
Income (Loss) $- $(0.1) $(34.2)
--- ----- ------
Operating Income (Loss) - GAAP $(3.1) $(4.7) $452.1
--- ----- ------
2008 (in millions)
Other Corporate Total
----- --------- -----
Operating Earnings (Loss) (3.2) (5.3) $513.1
Net Revenues:
Weather (compared to normal) - - $(3.6)
--- --- -----
Total Impact - Net Revenues - - (3.6)
Operating Expenses
Transition charges (IBM
Agreement) (0.1) (0.1) (3.9)
Gain/Loss on sale of assets
and asset impairments - (0.1) 2.3
----- ----- -----
Total Impact - O & M Expenses (0.1) (0.2) (1.6)
----- ----- -----
Total Impact - Operating
Income (Loss) $(0.1) $(0.2) $(5.2)
----- ----- -----
Operating Income (Loss) - GAAP $(3.3) $(5.5) $507.9
----- ----- ------
NiSource Inc.
Consolidated Income Statements (GAAP)
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
(in millions, except per share -------------- --------------
amounts) 2009 2008 2009 2008
------------------------------ ---- ---- ---- ----
Net Revenues
Gas Distribution $448.8 $928.1 $2,171.7 $3,164.9
Gas Transportation and Storage 260.9 236.1 657.5 594.3
Electric 285.4 339.9 582.2 671.7
Other 14.1 53.1 36.4 105.1
------ ---- ---- ---- -----
Gross Revenues 1,009.2 1,557.2 3,447.8 4,536.0
Cost of Sales (excluding
depreciation and amortization) 338.2 892.0 1,713.1 2,833.8
-------------------------------- ----- ----- ------- -------
Total Net Revenues 671.0 665.2 1,734.7 1,702.2
------------------ ----- ----- ------- -------
Operating Expenses
Operation and maintenance 363.7 343.5 841.8 752.9
Depreciation and amortization 148.2 147.6 291.9 283.1
Impairment and (gain)/loss on
sale of assets, net - (0.9) (2.0) (2.4)
Other taxes 52.6 62.2 154.7 164.3
------------ ---- ---- ----- -----
Total Operating Expenses 564.5 552.4 1,286.4 1,197.9
------------------------ ----- ----- ------- -------
Equity Earnings (Loss) in
Unconsolidated Affiliates (2.6) 1.6 3.8 3.6
-------------------------- ---- --- --- ---
Operating Income 103.9 114.4 452.1 5
$USD 329.00
$USD 329.00
$USD 329.00
