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NiSource Second-Quarter Earnings on Track With OutlookContinued progress reported on key growth initiatives
MERRILLVILLE, Ind., Aug. 2 /PRNewswire-FirstCall/ -- NiSource Inc. (NYSE: NI) today announced net operating earnings (non-GAAP) of $27.8 million, or 10 cents per share, for the three months ended June 30, 2007, compared with $38.4 million, or 14 cents per share, for the second quarter of 2006 (all per- share amounts are basic). Operating earnings (non-GAAP) were $142.7 million for the second quarter of 2007, compared to $157.3 million in 2006. For a reconciliation of net operating earnings and operating earnings to GAAP, see Schedules 1 and 2 of this news release. "NiSource's second quarter results are consistent with our earnings outlook for 2007, and continue to reflect solid performance from each of our core business segments," NiSource President and Chief Executive Officer Robert C. Skaggs, Jr. said. In May, NiSource indicated that net operating earnings for 2007 were expected to be approximately $1.35 per share. Overall, net revenues were higher for the second quarter when compared with the prior year, driven primarily by increased electric and gas distribution revenues and improved performance from NiSource's Whiting Clean Energy unit. These improvements were more than offset by increased operating and maintenance expenses when compared to the prior-year period. Earnings also were affected by increased interest expense and lower short-term transportation services and optimization revenues in NiSource's gas transmission and storage business. The increased operating and maintenance costs for the quarter were primarily related to employee and administrative expenses, including payroll, benefits and corporate services, Skaggs noted. "Within corporate services, the cost increases were related to NiSource's business services arrangement with IBM. As we noted earlier this year, NiSource is conducting an assessment of that business services arrangement to determine what adjustments can be made to enable NiSource to achieve its business objectives going forward," Skaggs said. Progress on four-part business plan and 'path forward' initiatives Skaggs said NiSource business units made progress on key elements of the company's four-part business plan. That strategy centers on expansion of and commercial growth in the natural gas pipeline and storage business, regulatory and commercial initiatives at its utilities, financial management, and process and expense management. "NiSource's key business strategies and stream of new projects in the Gas Transmission and Storage segment continued to advance during the quarter," Skaggs said. "Additionally, our planned utility rate cases are moving forward, with regulatory outreach and engagement taking place on several fronts. These activities all require time and effort before generating earnings, but together they are the key to achieving a stable and sustainable 3 to 5 percent annual earnings growth rate by 2010." Among the examples of second-quarter business accomplishments Skaggs cited were: - Hardy Storage Company, LLC, completed its first full quarter of
operations, receiving initial customer injections into its new
underground natural gas storage facility in West Virginia. Hardy is a
joint venture of subsidiaries of Columbia Gas Transmission and Piedmont
Natural Gas. Injections this year will allow the field to deliver up
to 100,000 dekatherms (Dth) of natural gas per day during the 2007
winter heating season. When fully operational in 2009, the field will
have a working storage capacity of 12 billion cubic feet, delivering
more than 176,000 Dth of natural gas per day. NiSource's Columbia Gas
Transmission, the operator of Hardy Storage, is also expanding its
natural gas transmission system to provide the capacity needed to
deliver Hardy Storage supplies to customer markets. This expansion is
targeted to be in service in November 2007.
- In May, NiSource filed with the Federal Energy Regulatory Commission to
construct the $140 million Eastern Market Expansion Project, an
expansion of two Columbia Gas Transmission storage fields and related
pipeline capacity. Slated for completion in 2009, the project's entire
6 billion cubic feet of additional storage capacity and 97,000 Dth per
day of storage and transportation capacity have been subscribed under
15-year contracts.
- In June, construction began on the Millennium Pipeline, a 182-mile-
long, 30-inch-diameter pipeline across New York's Southern Tier and
lower Hudson Valley. When completed in November 2008, the project
will transport up to 525,400 Dth per day of natural gas to markets
along its route, as well as to the New York City markets through its
pipeline interconnections. Millennium is jointly owned by affiliates
of NiSource, KeySpan Corporation, and DTE Energy.
- NiSource concluded a successful open season to gauge customer interest
in an expansion of its Crawford Storage Field in central Ohio by up to
10 to 15 billion cubic feet of working gas and 175,000 to 250,000 Dth
of daily deliverability. NiSource anticipates converting the strong
customer response into binding contractual commitments over the next
several months and placing facilities in service to enable storage
injections beginning in the second quarter of 2009. The final scope of
the project will be determined based on the outcome of the ongoing
customer discussions.
- NiSource's gas utilities also moved forward with key rate and
regulatory activities during the quarter. In May, Northern Indiana
Public Service Company received approval from the Indiana Utility
Regulatory Commission for its Rate Simplification program, which will
simplify residential natural gas rates, mitigate the impact of usage
reductions, and implement an energy conservation program. Columbia Gas
of Kentucky's general rate proceeding also moved forward during the
quarter, with a decision expected by year-end. In Massachusetts,
Pennsylvania and Ohio, NiSource utilities all continued work necessary
to engage stakeholders, regulators and customers in connection with
rate proceedings being planned for various points in the near future.
- In NiSource's electric business, significant scheduled maintenance work
was completed on NIPSCO's Bailly Generating Station Unit 7. This
included cyclone burner replacement and other work to improve unit
reliability. Construction also progressed during the quarter on
installation of selective catalytic reduction (SCR) equipment on Bailly
Unit 7. This environmental upgrade project will require an additional
planned outage later this year, with in-service for the SCR targeted
for the spring of 2008. The SCR qualifies for recovery under the
NIPSCO environmental tracker.
Among other ongoing business activities, Skaggs noted, was NiSource's analysis of the potential formation of a Master Limited Partnership in connection with a portion of its gas transmission and storage assets and prospective growth projects. "As we have previously indicated, we are accelerating our review of the MLP option," Skaggs said. "While our analysis is ongoing and no definitive conclusions have been reached at this point, such a structure has the potential to provide additional financial flexibility and access to low cost capital, which would complement our GT&S strategy." Consolidated operating earnings and operating earnings for NiSource's business segments for the quarter ended June 30, 2007 are discussed below. Second Quarter 2007 Operating Earnings - Segment Results (non-GAAP) NiSource's consolidated second-quarter 2007 operating earnings (non-GAAP) were $142.7 million, compared to $157.3 million for the same period in 2006. Refer to Schedule 2 for the items included in 2007 and 2006 GAAP operating income but excluded from operating earnings. Operating earnings for NiSource's business segments for the quarter ended June 30, 2007 are discussed below. Gas Distribution Operations reported operating earnings of $8.7 million versus operating earnings of $12.5 million in the second quarter of 2006. The decrease resulted primarily from higher operating expenses, partially offset by increased net revenues. Operating expenses, excluding the impact of trackers, were $11.1 million higher than the prior year, mainly due to higher employee and administrative expenses, outside services, and environmental reserves. Net revenues, excluding the impact of trackers, were $6.8 million higher than the same period in 2006, primarily as the result of regulatory initiatives and other service programs. Gas Transmission and Storage Operations reported operating earnings of $74.4 million versus operating earnings of $80.5 million in the second quarter of 2006. The decrease resulted from lower shorter-term transportation services and optimization revenues and higher operating expenses, partially offset by higher earnings from equity investments. While stabilization in the natural gas market did moderate optimization revenues during the second quarter, demand and commodity revenues were up compared to last year. Equity earnings increased by $3.6 million due to Hardy Storage going in service in April 2007 and higher AFUDC earnings from Millennium Pipeline. Operating expenses increased by $4.7 million for the quarter, mainly due to higher employee and administrative expenses and property insurance premiums. Electric Operations reported operating earnings of $61.8 million versus operating earnings of $67.0 million from the same quarter last year. Increases in net revenues were more than offset by higher operating expenses. Operating expenses increased by $11.8 million due primarily to higher employee and administrative costs. Net revenue increased by $6.6 million as a result of higher wholesale volumes and margins, residential volumes and overall customer growth. Other Operations reported an operating earnings loss of $0.6 million in the second quarter of 2007, compared with an operating earnings loss of $3.1 million in the prior year period. The improvement resulted from higher net revenues from the Whiting Clean Energy facility, partially offset by increased planned turbine maintenance costs at that facility. Other Items Interest expense increased by $4.7 million due to higher short-term interest rates and credit facility fees. Other net was a loss of $0.4 million compared to a loss of $2.7 million last year. The improvement resulted primarily from higher interest income in the current period. Six Month Period 2007 Operating Earnings - Segment Results (non-GAAP) NiSource's consolidated operating earnings (non-GAAP) for the six months ended June 30, 2007 were $575.4 million, compared to $571.8 million for the same period in 2006. Refer to Schedule 2 for the items included in 2007 and 2006 GAAP operating income but excluded from operating earnings. Operating earnings for NiSource's business segments for the six months ended June 30, 2007 are discussed below. Gas Distribution Operations reported operating earnings of $266.9 million compared to $262.6 million reported for the first six months of 2006. Increases in net revenues were partially offset by increased operating expenses. Net revenues, excluding the impact of trackers, were $22.8 million higher due to customer growth, regulatory initiatives and increased commercial sales. Operating expenses, excluding the impact of trackers, were $18.8 million higher than last year primarily due to higher employee and administrative costs, and outside service expenses. Gas Transmission and Storage Operations reported operating earnings of $182.1 million versus operating earnings of $191.9 million in the first six months of 2006. The decrease resulted from higher operating expenses of $14 million mainly due to higher employee and administrative expenses, property insurance premiums, and other maintenance and outside service costs. The higher expenses were partially offset by higher earnings from equity investments. Gas Transmission and Storage net revenues for the first six months were essentially flat when compared with the prior year period. Equity earnings increased by $5.3 million due to Hardy Storage going in service in April 2007 and higher AFUDC earnings from Millennium Pipeline. Electric Operations reported operating earnings of $135.1 million for the first six months of 2007, compared with $138.0 million for the prior year period. Net revenues increased by $13.5 million due to increased residential volumes, increased wholesale margins and customer growth, partially offset by decreased industrial volumes and the timing of revenue credits. The increases in net revenues were more than offset by higher operating expenses, which increased by $16.4 million due primarily to higher employee and administrative costs, and electric generation and maintenance expenses. Other Operations reported an operating earnings loss of $3.8 million in the first six months of 2007, versus an operating earnings loss of $14.8 million in the first six months of 2006. The $11 million decrease in the operating earnings loss primarily resulted from lower losses at the Whiting Clean Energy facility. As previously announced, NiSource unit Whiting Clean Energy (WCE) and BP signed a definitive agreement at the end of 2006 redefining the terms under which WCE provides steam to BP for its oil refining process. Other Items Interest expense increased by $8.0 million due to higher short-term interest rates and credit facility fees. Other net was a loss of $3.2 million compared to a loss of $6.1 million last year. The improvement resulted primarily from higher interest income in the current six-month period. The effective tax rate of net operating earnings for 2007 is 37.2%. Last year's effective tax rate of 35.5% was favorably impacted by state deferred income tax adjustments recorded during the first quarter of 2006. Income from Continuing Operations (GAAP) On a GAAP basis, NiSource reported income from continuing operations for the three months ended June 30, 2007, of $28.2 million, or 11 cents per share, compared with $22.1 million, or 8 cents per share, in the same period a year ago. Operating income was $143.3 million for the second quarter of 2007, compared with $132.7 million in the year-ago period. In addition to the business results already discussed, the increase in earnings was primarily due to favorable weather in NiSource's gas distribution and electric markets during the quarter compared to 2006. On a GAAP basis, NiSource reported income from continuing operations for the six months ended June 30, 2007, of $237.3 million, or 87 cents per share, compared with $195.1 million, or 71 cents per share, in the same period a year ago. Operating income was $577.9 million for the first six months of 2007 versus $500.3 million in the year-ago period. Similar to the quarter ended June 30, 2007, the increase in earnings for the first half of 2007 was due to increased gas distribution and electric revenues, primarily due to favorable weather. Definition of non-GAAP measures NiSource focuses on net operating earnings and operating earnings, which are both non-GAAP measures, because management believes these measures better represent the fundamental earnings strength and performance of the company. NiSource uses these measures internally for budgeting, for reporting to the board of directors, and for purposes of determining the payout under NiSource's annual incentive compensation plan for its employees. Net operating earnings are a non-GAAP financial measure that NiSource defines as income from continuing operations determined in accordance with Generally Accepted Accounting Principles (GAAP) adjusted for certain items. Operating earnings are operating income determined in accordance with GAAP adjusted for certain items. Adjustments reflected in these measures are primarily weather, restructuring and transition costs related to the outsourcing contract with IBM, gains and losses on the sale of assets, certain reserve adjustments and other items. See Schedule 1 and Schedule 2 of this news release for the reconciliations of net operating earnings and operating earnings, respectively, to GAAP. 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 http://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 effectiveness of NiSource's outsourcing initiative; actual operating experience of NiSource assets; the regulatory process; regulatory and legislative changes; changes in general economic, capital and commodity market conditions; and counter-party credit risk. NiSource Inc.
Consolidated Net Operating Earnings (Non - GAAP)
Three Months Six Months
Ended June 30, Ended June 30,
(in millions, except per share
amounts) 2007 2006 2007 2006
Net Revenues
Gas Distribution $765.6 $624.1 $2,660.1 $2,661.8
Gas Transportation and Storage 226.2 220.5 574.0 541.1
Electric 330.0 301.9 655.9 607.6
Other 246.2 183.8 566.9 531.8
Gross Revenues 1,568.0 1,330.3 4,456.9 4,342.3
Cost of Sales (excluding
depreciation and amortization) 885.1 670.4 2,716.3 2,662.1
Total Net Revenues 682.9 659.9 1,740.6 1,680.2
Operating Expenses
Operation and maintenance 302.6 274.1 599.5 558.5
Operation and maintenance -
trackers 38.1 29.9 127.1 111.3
Depreciation and amortization 138.2 138.0 277.2 274.8
Other taxes 50.0 48.3 106.8 105.5
Other taxes - trackers 15.0 12.4 59.8 58.2
Total Operating Expenses 543.9 502.7 1,170.4 1,108.3
Equity Earnings (Loss) in
Unconsolidated Affiliates 3.7 0.1 5.2 (0.1)
Operating Earnings 142.7 157.3 575.4 571.8
Other Income (Deductions)
Interest expense, net (98.1) (93.4) (196.7) (188.7)
Dividend requirements on preferred
stock of subsidiaries - - - (1.1)
Other, net (0.4) (2.7) (3.2) (6.1)
Total Other Income (Deductions) (98.5) (96.1) (199.9) (195.9)
Operating Earnings From Continuing
Operations Before Income Taxes 44.2 61.2 375.5 375.9
Income Taxes 16.4 22.8 139.7 133.6
Net Operating Earnings from
Continuing Operations 27.8 38.4 235.8 242.3
GAAP Adjustment 0.4 (16.3) 1.5 (47.2)
GAAP Income from Continuing
Operations $28.2 $22.1 $237.3 $195.1
Basic Net Operating Earnings Per
Share from Continuing Operations 0.10 0.14 0.86 0.89
GAAP Basic Earnings Per Share from
Continuing Operations 0.11 0.08 0.87 0.71
Basic Average Common Shares
Outstanding (millions) 273.8 272.4 273.7 272.4
NiSource Inc.
Segment Operating Earnings (Non-GAAP)
Three Months Six Months
Gas Distribution Operations Ended June 30, Ended June 30,
(in millions) 2007 2006 2007 2006
Net Revenues
Sales Revenues $874.7 $712.7 $2,985.0 $2,935.0
Less: Cost of gas sold 597.0 452.2 2,088.7 2,076.4
Net Revenues 277.7 260.5 896.3 858.6
Operating Expenses
Operation and maintenance 151.7 140.8 310.0 291.6
Operation and maintenance - trackers 26.9 19.6 103.8 90.8
Depreciation and amortization 58.2 58.3 116.6 115.6
Other taxes 17.2 16.9 39.2 39.8
Other taxes - trackers 15.0 12.4 59.8 58.2
Total Operating Expenses 269.0 248.0 629.4 596.0
Operating Earnings $8.7 $12.5 $266.9 $262.6
GAAP Adjustment 4.6 (18.5) 7.8 (62.6)
GAAP Operating Income (Loss) $13.3 $(6.0) $274.7 $200.0
Gas Transmission and Storage Three Months Six Months
Operations Ended June 30, Ended June 30,
(in millions) 2007 2006 2007 2006
Net Revenues
Transportation revenues $144.9 $152.8 $327.8 $337.0
Storage revenues 44.5 43.8 90.4 88.2
Other revenues 1.3 2.4 2.3 5.6
Total Revenues 190.7 199.0 420.5 430.8
Less: Cost of gas sold 0.6 3.9 0.1 9.3
Net Revenues 190.1 195.1 420.4 421.5
Operating Expenses
Operation and maintenance 66.3 63.9 136.2 125.6
Operation and maintenance - trackers 9.5 8.8 19.6 18.3
Depreciation and amortization 29.4 28.6 58.4 57.3
Other taxes 14.2 13.4 29.3 28.3
Total Operating Expenses 119.4 114.7 243.5 229.5
Equity Earnings (Loss) in
Unconsolidated Affiliates 3.7 0.1 5.2 (0.1)
Operating Earnings $74.4 $80.5 $182.1 $191.9
GAAP Adjustment (6.8) (1.5) (7.5) (2.6)
GAAP Operating Income $67.6 $79.0 $174.6 $189.3
NiSource Inc.
Segment Operating Earnings (Non-GAAP) (continued)
Three Months Six Months
Electric Operations Ended June 30, Ended June 30,
(in millions) 2007 2006 2007 2006
Net Revenues
Sales revenues $331.2 $306.1 $658.3 $614.9
Less: Cost of sales 129.8 111.3 258.5 228.6
Net Revenues 201.4 194.8 399.8 386.3
Operating Expenses
Operation and maintenance 75.9 64.4 135.4 123.2
Operation and maintenance -
trackers 1.7 1.5 3.7 2.2
Depreciation and amortization 46.6 46.9 94.6 93.0
Other taxes 15.4 15.0 31.0 29.9
Total Operating Expenses 139.6 127.8 264.7 248.3
Operating Earnings $61.8 $67.0 $135.1 $138.0
GAAP Adjustment 3.0 (3.7) 2.7 (6.6)
GAAP Operating Income $64.8 $63.3 $137.8 $131.4
Three Months Six Months
Other Operations Ended June 30, Ended June 30,
(in millions) 2007 2006 2007 2006
Net Revenues
Products and services revenue $238.1 $175.4 $551.7 $517.8
Less: Cost of products purchased 223.8 164.9 525.5 501.7
Net Revenues 14.3 10.5 26.2 16.1
Operating Expenses
Operation and maintenance 10.9 9.4 21.4 21.8
Depreciation and amortization 2.6 2.8 5.2 5.6
Other taxes 1.4 1.4 3.4 3.5
Total Operating Expenses 14.9 13.6 30.0 30.9
Operating Earnings (Loss) $(0.6) $(3.1) $(3.8) $(14.8)
GAAP Adjustment (0.1) (0.4) (0.2) 1.2
GAAP Operating Income (Loss) $(0.7) $(3.5) $(4.0) $(13.6)
Three Months Six Months
Corporate Ended June 30, Ended June 30,
(in millions) 2007 2006 2007 2006
Operating Earnings (Loss) $(1.6) $0.4 $(4.9) $(5.9)
GAAP Adjustment (0.1) (0.5) (0.3) (0.9)
GAAP Operating Income (Loss) $(1.7) $(0.1) $(5.2) $(6.8)
NiSource Inc.
Segment Volumes and Statistical Data
Three Months Six Months
Gas Distribution Operations Ended June 30, Ended June 30,
2007 2006 2007 2006
Sales and Transportation (MMDth)
Residential 39.8 30.3 175.3 146.9
Commercial 30.8 25.3 108.7 94.3
Industrial 83.0 83.3 189.5 181.4
Off System 22.5 19.1 41.1 29.9
Other 0.2 0.2 0.5 0.5
Total 176.3 158.2 515.1 453.0
Weather Adjustment (3.5) 11.0 (5.9) 37.7
Sales and Transportation Volumes -
Excluding Weather 172.8 169.2 509.2 490.7
Heating Degree Days 501 410 3,124 2,683
Normal Heating Degree Days 475 482 3,111 3,107
% Colder (Warmer) than Normal 5% (15%) 0% (14%)
Customers
Residential 3,038,316 3,019,568
Commercial 289,157 285,138
Industrial 8,153 8,262
Other 73 72
Total 3,335,699 3,313,040
Gas Transmission and Storage Three Months Six Months
Operations Ended June 30, Ended June 30,
2007 2006 2007 2006
Throughput (MMDth)
Columbia Transmission
Market Area 186.8 170.0 572.0 498.5
Columbia Gulf
Mainline 178.8 128.0 325.9 289.6
Short-haul 50.7 30.8 91.2 47.4
Columbia Pipeline Deep Water 0.7 2.2 1.5 5.1
Crossroads Gas Pipeline 9.2 9.0 19.4 20.0
Granite State Pipeline 4.8 4.5 16.4 16.1
Intrasegment eliminations (161.8) (122.4) (290.0) (278.7)
Total 269.2 222.1 736.4 598.0
NiSource Inc.
Segment Volumes and Statistical Data (continued)
Three Months Six Months
Electric Operations Ended June 30, Ended June 30,
2007 2006 2007 2006
Sales (Gigawatt Hours)
Residential 793.8 722.0 1,639.0 1,483.1
Commercial 1,005.7 949.5 1,933.7 1,843.5
Industrial 2,331.6 2,383.5 4,673.4 4,820.9
Wholesale 207.8 195.9 345.1 348.0
Other 32.3 11.8 59.0 40.4
Total 4,371.2 4,262.7 8,650.2 8,535.9
Weather Adjustment (55.9) 47.6 (55.5) 76.5
Sales Volumes - Excluding Weather
impacts 4,315.3 4,310.3 8,594.7 8,612.4
Cooling Degree Days 313 190 313 190
Normal Cooling Degree Days 232 227 232 227
% Warmer (Colder) than Normal 35% (16%) 35% (16%)
Electric Customers
Residential 398,073 395,005
Commercial 52,299 51,522
Industrial 2,516 2,505
Wholesale 4 11
Other 757 762
Total 453,649 449,805
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) 2007 2006 2007 2006
Net Operating Earnings from
Continuing Operations $27.8 $38.4 $235.8 $242.3
Items excluded from operating
earnings:
Net Revenues:
Weather - compared to normal 9.1 (18.8) 13.9 (58.3)
Operating Expenses:
Restructuring, transition and
consulting cost (outsourcing
initiative) (2.2) (2.9) (2.2) (9.4)
Asset impairment (6.6) (2.1) (9.8) (4.6)
Gain (Loss) on sales of assets 0.3 (0.8) 0.6 0.8
Total items excluded from
operating earnings 0.6 (24.6) 2.5 (71.5)
Loss on early extinguishment of
long-term debt - 0.7 - 0.7
Loss on early redemption of
preferred stock - - - 1.1
Tax effect of above items and other
income tax adjustments (0.2) 7.6 (1.0) 22.5
Reported Income from Continuing
Operations - GAAP $28.2 $22.1 $237.3 $195.1
Basic Average Common Shares
Outstanding (millions) 273.8 272.4 273.7 272.4
Basic Net Operating Earnings Per
Share from Continuing Operations ($) 0.10 0.14 0.86 0.89
Items excluded from net operating
earnings (after-tax) 0.01 (0.06) 0.01 (0.18)
GAAP Basic Earnings Per Share from
Continuing Operations 0.11 0.08 0.87 0.71
NiSource Inc. Schedule 2 - Quarterly Adjustments by Segment from Operating Earnings to GAAP For Quarter ended June 30, 2007
2007 (in millions)
Gas
Transmis-
Gas sion
Distri- and Elec- Corpo-
bution Storage tric Other rate Total
Operating Earnings (Loss) $8.7 $74.4 $61.8 $(0.6) $(1.6) $142.7
Net Revenues:
Weather (compared to normal) 5.8 - 3.3 - - 9.1
Operating Expenses:
Restructuring, transition and
consulting charges
(outsourcing initiative) (1.3) (0.4) (0.3) (0.1) (0.1) (2.2)
Asset Impairment - (6.6) - - - (6.6)
Gain on Sale of Assets 0.1 0.2 - - - 0.3
Total Impact - Operating
Expenses (1.2) (6.8) (0.3) (0.1) (0.1) (8.5)
Total Impact - Operating Income
(Loss) 4.6 (6.8) 3.0 (0.1) (0.1) 0.6
Operating Income (Loss) - GAAP $13.3 $67.6 $64.8 $(0.7) $(1.7) $143.3
2006 (in millions)
Gas
Transmis-
Gas sion
Distri- and Elec- Corpo-
bution Storage tric Other rate Total
Operating Earnings (Loss) $12.5 $80.5 $67.0 $(3.1) $0.4 $157.3
Net Revenues:
Weather (compared to normal) (15.6) - (3.2) - - (18.8)
Operating Expenses:
Restructuring and transition
costs (outsourcing initiative) (1.9) (0.5) (0.3) (0.1) (0.1) (2.9)
Asset Impairment (1.0) (0.5) (0.2) - (0.4) (2.1)
Loss on Sale of Assets - (0.5) - (0.3) - (0.8)
Total Impact - Operating
Expenses (2.9) (1.5) (0.5) (0.4) (0.5) (5.8)
Total Impact - Operating Income
(Loss) (18.5) (1.5) (3.7) (0.4) (0.5) (24.6)
Operating Income (Loss) - GAAP $(6.0) $79.0 $63.3 $(3.5) $(0.1) $132.7
NiSource Inc. Schedule 2 - Year-to-Date Segment Adjustments from Operating Earnings to GAAP For 6 months ended June 30, 2007
2007 (in millions)
Gas
Transmis-
Gas sion
Distri- and Elec- Corpo-
bution Storage tric Other rate Total
Operating Earnings (Loss) $266.9 $182.1 $135.1 $(3.8) $(4.9) $575.4
Net Revenues:
Weather (compared to normal) 10.6 - 3.3 - - 13.9
Operating Expenses:
Restructuring, transition
and consulting charges
(outsourcing initiative) (1.3) (0.4) (0.3) (0.1) (0.1) (2.2)
Asset Impairment (1.9) (7.3) (0.3) (0.1) (0.2) (9.8)
Gain on Sale of Assets 0.4 0.2 - - - 0.6
Total Impact - Operating
Expenses (2.8) (7.5) (0.6) (0.2) (0.3) (11.4)
Total Impact - Operating
Income (Loss) 7.8 (7.5) 2.7 (0.2) (0.3) 2.5
Operating Income (Loss) -
GAAP $274.7 $174.6 $137.8 $(4.0) $(5.2) $577.9
2006 (in millions)
Gas
Transmis-
Gas sion
Distri- and Elec- Corpo-
bution Storage tric Other rate Total
Operating Earnings (Loss) $262.6 $191.9 $138.0 $(14.8) $(5.9) $571.8
Net Revenues:
Weather (compared to
normal) (53.2) - (5.1) - - (58.3)
Operating Expenses:
Restructuring and
transition costs
(outsourcing initiative) (6.8) (1.0) (1.1) (0.1) (0.4) (9.4)
Asset Impairment (2.6) (1.1) (0.4) - (0.5) (4.6)
Gain (Loss) on Sale of
Assets - (0.5) - 1.3 - 0.8
Total Impact - Operating
Expenses (9.4) (2.6) (1.5) 1.2 (0.9) (13.2)
Total Impact - Operating
Income (Loss) (62.6) (2.6) (6.6) 1.2 (0.9) (71.5)
Operating Income (Loss) -
GAAP $200.0 $189.3 $131.4 $(13.6) $(6.8) $500.3
NiSource Inc.
Income Statement (GAAP)
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
(in millions, except per
share amounts) 2007 2006 2007 2006
Net Revenues
Gas Distribution $771.4 $605.3 $2,670.7 $2,603.5
Gas Transportation and
Storage 226.2 220.5 574.0 541.1
Electric 333.3 301.9 659.2 607.6
Other 246.2 183.8 566.9 531.8
Gross Revenues 1,577.1 1,311.5 4,470.8 4,284.0
Cost of Sales
(excluding
depreciation and
amortization) 885.1 670.4 2,716.3 2,662.1
Total Net Revenues 692.0 641.1 1,754.5 1,621.9
Operating Expenses
Operation and
maintenance 342.9 306.9 728.8 679.2
Depreciation and
amortization 138.2 138.0 277.2 274.8
Impairment and gain on
sale of assets 6.3 2.9 9.2 3.8
Other taxes 65.0 60.7 166.6 163.7
Total Operating Expenses 552.4 508.5 1,181.8 1,121.5
Equity Earnings (Loss)
in Unconsolidated
Affiliates 3.7 0.1 5.2 (0.1)
Operating Income 143.3 132.7 577.9 500.3
Other Income
(Deductions)
Interest expense, net (98.1) (93.4) (196.7) (188.7)
Dividend requirement on
preferred stock of
subsidiaries - - - (1.1)
Other, net (0.4) (2.7) (3.2) (6.1)
Loss on early
extinguishment of
long-term debt - (0.7) - (0.7)
Total Other Income
(Deductions) (98.5) (96.8) (199.9) (196.6)
Income From Continuing
Operations Before
Income Taxes
and Cumulative Effect
of Change in
Accounting Principle 44.8 35.9 378.0 303.7
Income Taxes 16.6 13.8 140.7 108.6
Income From Continuing
Operations Before
Cumulative Effect
of Change in Accounting
Principle 28.2 22.1 237.3 195.1
Income (Loss) from
Discontinued Operations
- net of taxes (0.7) (1.4) 0.3 (1.9)
Gain (Loss) on
Disposition of
Discontinued Operations
- net of taxes (0.8) 0.3 5.8 0.3
Income Before Change in
Accounting Principle 26.7 21.0 243.4 193.5
Cumulative Effect of
Change in Accounting
Principle - net of
taxes - - - 0.4
Net Income $26.7 $21.0 $243.4 $193.9
Basic Earnings Per Share ($)
Continuing operations $0.11 $0.08 $0.87 $0.71
Discontinued operations (0.01) - 0.02 -
Basic Earnings Per Share $0.10 $0.08 $0.89 $0.71
Diluted Earnings Per
Share ($)
Continuing operations $0.11 $0.08 $0.87 $0.71
Discontinued operations (0.01) - 0.02 -
Diluted Earnings Per
Share $0.10 $0.08 $0.89 $0.71
Dividends Declared Per
Common Share ($) $0.23 $0.23 $0.69 $0.69
Basic Average Common
Shares Outstanding
(millions) 273.8 272.4 273.7 272.4
Diluted Average Common
Shares (millions) 274.9 273.2 274.8 273.1
NiSource Inc.
Consolidated Balance Sheets
(unaudited)
June 30, December 31,
(in millions) 2007 2006
ASSETS
Property, Plant and Equipment
Utility Plant $17,462.9 $17,194.9
Accumulated depreciation and
amortization (8,000.0) (7,850.0)
Net utility plant 9,462.9 9,344.9
Other property, at cost, less
accumulated depreciation 342.0 349.6
Net Property, Plant and Equipment 9,804.9 9,694.5
Investments and Other Assets
Assets of discontinued operations
and assets held for sale 45.2 43.0
Unconsolidated affiliates 94.5 59.6
Other investments 106.7 116.1
Total Investments and Other Assets 246.4 218.7
Current Assets
Cash and cash equivalents 23.0 33.1
Restricted cash 66.9 142.5
Accounts receivable (less reserve of
$58.6 and $42.1, respectively) 681.9 866.3
Gas inventory 283.8 550.5
Underrecovered gas and fuel costs 134.1 163.2
Materials and supplies, at average
cost 87.6 89.0
Electric production fuel, at average
cost 57.3 63.9
Price risk management assets 136.1 237.7
Exchange gas receivable 385.2 252.3
Regulatory assets 232.0 272.7
Prepayments and other 61.7 111.7
Total Current Assets 2,149.6 2,782.9
Other Assets
Price risk management assets 21.5 49.9
Regulatory assets 1,012.4 1,127.3
Goodwill 3,677.3 3,677.3
Intangible assets 428.9 435.7
Deferred charges and other 163.6 170.2
Total Other Assets 5,303.7 5,460.4
Total Assets $17,504.6 $18,156.5
NiSource Inc.
Consolidated Balance Sheets (continued)
(unaudited)
June 30, December 31,
(in millions, except share amounts) 2007 2006
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stockholders' Equity
Common stock - $0.01 par value,
400,000,000 shares authorized;
274,149,933 and 273,654,180 shares
issued and outstanding, respectively $2.7 $2.7
Additional paid-in capital 4,007.6 3,998.3
Retained earnings 1,059.6 1,012.9
Accumulated other comprehensive
income 27.9 20.9
Treasury stock (23.3) (21.2)
Total Common Stockholders' Equity 5,074.5 5,013.6
Long-term debt, excluding amounts due
within one year 5,124.3 5,146.2
Total Capitalization 10,198.8 10,159.8
Current Liabilities
Current portion of long-term debt 56.7 93.3
Short-term borrowings 1,021.5 1,193.0
Accounts payable 546.3 713.1
Dividends declared 63.1 -
Customer deposits 108.4 108.4
Taxes accrued 241.3 196.0
Interest accrued 84.5 107.1
Overrecovered gas and fuel costs 48.1 126.7
Price risk management liabilities 75.3 259.4
Exchange gas payable 500.5 396.6
Deferred revenue 48.7 55.9
Regulatory liabilities 41.5 40.7
Accrued liability for postretirement
and postemployment benefits 4.7 4.7
Other accruals 405.9 526.3
Total Current Liabilities 3,246.5 3,821.2
Other Liabilities and Deferred Credits
Price risk management liabilities 45.0 38.2
Deferred income taxes 1,537.6 1,553.7
Deferred investment tax credits 57.5 61.5
Deferred credits 117.8 119.3
Deferred revenue 6.6 21.9
Accrued liability for postretirement
and postemployment benefits 649.6 799.5
Liabilities of discontinued
operations and liabilities held for
sale 9.9 11.9
Regulatory liabilities and other
removal costs 1,313.5 1,253.8
Asset retirement obligations 135.1 131.6
Other noncurrent liabilities 186.7 184.1
Total Other Liabilities and Deferred
Credits 4,059.3 4,175.5
Commitments and Contingencies - -
Total Capitalization and Liabilities $17,504.6 $18,156.5
NiSource Inc.
Other Information
(unaudited)
June 30, December 31,
(in millions, except share amounts) 2007 2006
Total Common Stockholders' Equity $5,074.5 $5,013.6
Shares Outstanding (thousands) 274,150 273,654
Book Value of Common Shares $18.51 $18.32
NiSource Inc.
Statements of Consolidated Cash Flow
(unaudited)
Six Months Ended June 30, (in millions)
2007 2006
Operating Activities
Net income $243.4 $193.9
Adjustments to reconcile net income
to net cash from continuing
operations:
Loss on early redemption of
preferred stock - 0.7
Depreciation and amortization 277.2 274.8
Net changes in price risk
management assets and liabilities (1.5) 16.7
Deferred income taxes and
investment tax credits (14.1) (108.3)
Deferred revenue (22.4) (32.5)
Stock compensation expense 1.3 3.1
Gain on sale of assets (0.5) (0.9)
Loss on impairment of assets 9.7 4.7
Cumulative effect of change in
accounting principle, net of taxes - (0.4)
Income from unconsolidated
affiliates (7.7) (2.3)
Gain on disposition of discontinued
operations - net of taxes (5.8) (0.3)
Loss (Income) from discontinued
operations - net of taxes (0.3) 1.9
Amortization of discount/premium on
debt 3.6 3.9
AFUDC Equity (1.9) -
Changes in assets and liabilities:
Accounts receivable 168.2 793.8
Inventories 286.4 259.6
Accounts payable (146.1) (547.2)
Customer deposits - 2.5
Taxes accrued 34.2 13.4
Interest accrued (17.4) 3.9
(Under) Overrecovered gas and fuel
costs (49.5) 458.1
Exchange gas receivable/payable (43.5) (172.8)
Other accruals (141.2) (155.5)
Prepayments and other current
assets 50.0 37.5
Regulatory assets/liabilities 16.6 (25.5)
Postretirement and postemployment
benefits (51.7) 1.1
Deferred credits (3.6) (7.7)
Deferred charges and other
noncurrent assets 5.1 (8.4)
Other noncurrent liabilities (1.1) 16.5
Net Operating Activities from
Continuing Operations 587.4 1,024.3
Net Operating Activities from
Discontinued Operations 0.5 0.7
Net Cash Flows from Operating
Activities 587.9 1,025.0
Investing Activities
Capital expenditures (331.7) (271.8)
Proceeds from disposition of assets 2.3 7.6
Restricted cash 75.6 (43.5)
Other investing activities (9.0) 3.0
Net Cash Flows used for Investing
Activities (262.8) (304.7)
Financing Activities
Issuance of long-term debt 2.3 -
Retirement of long-term debt (45.6) (42.5)
Change in short-term debt (171.5) (478.0)
Retirement of preferred stock - (81.1)
Issuance of common stock 7.7 2.1
Acquisition of treasury stock (2.1) (5.9)
Dividends paid - common stock (126.0) (126.4)
Net Cash Flows used for Financing
Activities (335.2) (731.8)
Decrease in cash and cash equivalents (10.1) (11.5)
Cash and cash equivalents at
beginning of year 33.1 69.4
Cash and cash equivalents at end of
period $23.0 $57.9
Supplemental Disclosures of Cash Flow
Information
Cash paid for interest $218.3 $185.1
Interest capitalized 7.8 4.2
Cash paid for income taxes 86.8 166.0
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