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MERRILLVILLE, Ind., Oct 29, 2010 /PRNewswire via COMTEX News Network/ --
NiSource Inc. (NYSE: NI) today announced net operating earnings from continuing operations (non-GAAP) of $10.3 million, or 4 cents per share, for the three months ended September 30, 2010, a decrease from $19.4 million, or 7 cents per share, for the third quarter of 2009. Operating earnings (non-GAAP) were $109.9 million for the recent three months compared to $134.8 million for the same period in 2009.
On a GAAP basis, NiSource reported income from continuing operations for the three months ended September 30, 2010, of $33.4 million, or 12 cents per share, compared with a loss of $13.2 million, or 5 cents per share, in the same period a year ago. Operating income was $123.3 million for the third quarter of 2010 compared with $93.6 million in the year-ago period. Schedules 1 and 2 of this news release contain a reconciliation of net operating earnings and operating earnings from continuing operations to GAAP.
The company's third quarter results benefited from increased electric industrial margins and off-system sales, as well as increased gas distribution revenues due to regulatory and infrastructure programs. These revenue increases were offset by anticipated increases in operating expenses, taxes and depreciation addressed in the segment discussions below.
NiSource President and Chief Executive Officer Robert C. Skaggs, Jr. noted that third quarter operating earnings were expected to be somewhat below 2009 levels due to the items mentioned above. However, he emphasized that the company's overall 2010 financial performance is expected to exceed the net operating earnings outlook of $1.10 to $1.20 per share (non-GAAP) provided earlier in the year.
"Based on NiSource's solid year-to-date results and continued gradual economic recovery in some of our key markets, we are increasing our 2010 net operating earnings outlook to $1.20 to $1.25 per share. In addition, we are reiterating NiSource's commitment to growing earnings annually by 3 to 5 percent on a long term, sustainable basis," Skaggs said.
"NiSource's improved earnings outlook reflects the core strength of our team's 2010 performance and signs of resilience in some of our key markets," Skaggs said. "We are confident we will deliver on this improved outlook as we continue to execute on our balanced strategy to meet the needs of our customers and enhance shareholder value through long-term, infrastructure investment-driven growth."
Building flexibility to fund infrastructure investments
NiSource enhanced its ability to invest in new infrastructure improvements and growth opportunities through the successful execution of a $400 million equity offering of common stock in September. The offering, structured under a 24-month forward sale agreement, was fully subscribed under favorable pricing terms.
"For some time, we have highlighted the deep inventory of attractive infrastructure investment opportunities available to NiSource's three business units - amounting to approximately $1 billion annually - and we've emphasized our focus on building the financial capability to take advantage of those opportunities," Skaggs said.
"We also made clear, that as we managed the funding of these investments, we would do so in a manner consistent with our commitments to create long-term shareholder value, maintain our dividend and preserve our investment grade credit rating," Skaggs continued. "The successful equity offering meets these key criteria and positions the company to sustainably grow long-term earnings at the upper end of our targeted range."
Milestone regulatory advancements in Indiana
NiSource's Indiana team achieved several significant regulatory milestones during the third quarter as part of its commitment to enhance customer service, restore appropriate earnings levels and position the companies for continued growth.
"The third quarter marked several significant milestones in NIPSCO's efforts to enhance customer service, invest in Indiana's critical energy infrastructure and chart a course for long-term growth," Skaggs noted. "Going forward, our Indiana team is committed to working with all stakeholders in a constructive and collaborative fashion to continue addressing the needs of Indiana consumers and investors."
Pipeline growth projects in Marcellus Shale region advance
During the quarter, NiSource's Gas Transmission & Storage Operations (NGT&S) continued to advance strategic infrastructure investments linked to the Marcellus Shale production region in Appalachia.
"The NGT&S team is executing on our strategy to grow the business through thoughtful, customer-driven projects leveraging our geographic presence in the Marcellus Shale region, including pursuing opportunities to transport production gas to processing facilities and market centers," Skaggs said. "At the same time, we're maximizing value from our existing assets by managing long-term contracts, expanding our customer base and maintaining safe and reliable operations."
Continued execution of infrastructure and regulatory programs
NiSource's Gas Distribution Operations (NGD) continues to execute its strategy of combining long-term infrastructure replacement programs with complementary regulatory initiatives.
"Infrastructure and customer programs continue to advance at NGD," Skaggs said. "In addition to enhancing our ability to provide safe, reliable and responsive service to our millions of natural gas customers, these core programs continue to produce predictable, long-term and low-risk earnings growth."
2010 earnings guidance increased
As noted above, NiSource is increasing its full-year guidance to $1.20 to $1.25 per share of net operating earnings (non-GAAP). As outlined in the company's Feb. 1, 2010 earnings release, due to the unpredictability of weather and other factors, NiSource is not providing GAAP earnings guidance.
Third Quarter 2010 Operating Earnings - Segment Results (non-GAAP)
NiSource's consolidated third-quarter 2010 operating earnings (non-GAAP) were $109.9 million, compared to $134.8 million for the same period in 2009. Refer to Schedule 2 for the items included in 2010 and 2009 GAAP operating income but excluded from operating earnings.
Operating earnings for NiSource's business segments for the quarter ended September 30, 2010, are discussed below.
Gas Distribution Operations reported an operating earnings loss for the current quarter of $40.7 million compared to an operating earnings loss of $30.0 million in the third quarter of 2009. Net revenues, excluding the impact of regulatory trackers, increased $8.5 million, primarily attributable to regulatory and service programs. The increase in regulatory and service programs was largely due to Columbia Gas of Ohio's previously announced change from a volumetric to straight fixed-variable rate design. Additionally, Columbia Gas of Ohio implemented new rates under its approved infrastructure replacement program. The increase in revenue was partially offset by a decrease in commercial and residential margins as well as a decrease in off-system sales.
Operating expenses, excluding trackers, were $19.2 million higher than the comparable 2009 period. The increase was primarily attributable to higher employee and administration costs, including the impacts of the previously deferred 2009 pension costs by Columbia Gas of Ohio.
Gas Transmission and Storage Operations reported operating earnings for the current quarter of $76.4 million compared to operating earnings of $100.2 million in the third quarter of 2009. Net revenues, excluding the impact of trackers, decreased by $7.8 million, driven by decreases in revenues from shorter term transportation and storage services and mineral rights lease revenues. These decreases were partially offset by higher demand and commodity margin revenues.
Operating expenses, excluding the impact of trackers, increased $13.6 million compared to the third quarter of 2009. This increase was the result of an increase in maintenance and other outside service costs and employee and administration expenses, including pension costs.
Equity earnings decreased by $2.4 million primarily due to lower earnings at Millennium Pipeline, primarily because of higher interest expense.
Electric Operations reported operating earnings of $80.0 million versus operating earnings of $69.6 million from the same quarter last year. Net revenues, excluding trackers, increased by $17.4 million primarily as a result of increased industrial margins and higher off-system sales.
Operating expenses, excluding the impact of trackers, increased by $7.0 million due primarily to increased employee and administration costs, higher electric generation costs and higher taxes (property and other).
Corporate and Other Operations reported an operating earnings loss of $5.8 million for the current quarter compared to a loss of $5.0 million in the third quarter of 2009.
In the first quarter of 2010, the company eliminated the "Other" segment. NiSource's decision to wind down the unregulated natural gas marketing activities will impact the results from Other Operations. Results previously recorded as "Other" are now included within "Corporate and Other Operations."
Other Items
Interest expense decreased by $7.4 million primarily due to the December 2009 term loan repayment, the maturity of the company's November 2009 floating rate note, and lower short-term interest rates. The benefits were partially offset by incremental interest expense associated with the issuance of December 2009 long-term debt and the effect of the adoption of new accounting requirements related to the company's accounts receivable facilities.
Other-net was essentially flat for the third quarter of 2010 compared to the third quarter of 2009.
The effective tax rate of net operating earnings was 28.5 percent compared to 39.8 percent for the same period last year. During the third quarter of 2010, a rate settlement was approved that reduced income tax expense for accelerated tax deductions on property differences.
Nine-Month Period 2010 Operating Earnings - Segment Results (non-GAAP)
NiSource's consolidated operating earnings (non-GAAP) for the nine months ended September 30, 2010, were $669.0 million, compared to $621.6 million for the same period in 2009. Refer to Schedule 2 for the items included in 2010 and 2009 GAAP operating income but excluded from operating earnings.
Operating earnings for NiSource's business segments for the nine months ended September 30, 2010 are discussed below.
Gas Distribution Operations reported operating earnings of $229.9 million compared to $214.8 million reported for the nine months ended September 30, 2009. Net revenues, excluding the impact of regulatory trackers, increased $28.0 million, primarily attributable to regulatory and service programs and off-system sales. The increase to regulatory and service programs is primarily a result of recent rate case outcomes as well as Columbia Gas of Ohio's implementation of new rates under its approved infrastructure replacement program. These increased revenues were partially offset by a decrease in commercial and residential margins as well as decreased forfeited discounts and late payments.
Operating expenses, excluding trackers, were $12.9 million higher than the comparable period, as a result of an increase in employee and administration expenses and depreciation costs. These increases were partially offset by a decrease in uncollectible expense.
Gas Transmission and Storage Operations reported operating earnings of $277.2 million versus operating earnings of $292.2 million as of September 30, 2009. Net revenues, excluding trackers, increased $14.1 million primarily attributable to increases in demand margin revenues, recognition of revenue related to a previously deferred gain for native gas contributed to Hardy Storage Company (Hardy Storage) from Columbia Gas Transmission following Hardy Storage securing permanent financing, and fees received from a contract buyout. Additionally, net revenue increased due to an increase in mineral rights royalty revenue. The increase in net revenues was partially offset by decreases in revenues from shorter term transportation and storage services as well as mineral rights lease revenue.
Operating expenses, excluding the impact of trackers, increased by $30.8 million, primarily due to increased maintenance and outside service costs, higher employee and administration expenses, and increased depreciation costs. These increases were partially offset by decreases in legal and bad debt reserves.
Equity earnings increased by $1.7 million primarily due to lower interest charges at Millennium Pipeline.
Electric Operations reported operating earnings of $174.5 million for the nine months ended September 30, 2010, compared with operating earnings of $126.8 million for the prior year period. Net revenues increased by $59.9 million primarily from increased industrial and residential margins, higher off-system sales, and returns associated with environmental investments. These increases were partially offset by a increase in revenue credits.
Operating expenses, excluding the impact of trackers, increased by $12.2 million due primarily to property taxes and environmental costs. Additionally, the increase is due to higher depreciation costs. These increases were partially offset by a decrease in uncollectible accounts.
Corporate and Other Operations reported an operating earnings loss of $12.6 million for the nine month period ended September 30, 2010, compared to an operating earnings loss of $12.2 million for the nine month period ended September 30, 2009.
Other Items
Interest expense decreased by $5.9 million primarily due to the December 2009 term loan repayment, the maturity of the company's November 2009 floating rate note, and lower short-term interest rates. The benefits were partially offset by incremental interest expense associated with the issuance of December 2009 long-term debt and the effect of the adoption of new accounting requirements related to the company's accounts receivable facilities.
Other-net increased $9.6 million for the period ended September 30, 2010, compared to the period ended September 30, 2009 primarily due to favorable AFUDC rates and a reclassification of interest expense related to the adoption of new accounting requirements noted above.
The effective tax rate of net operating earnings was 35.6 percent compared to 38.5 percent for the same period last year. During the third-quarter of 2010, a rate settlement was approved that reduced income tax expense for accelerated tax deductions on property differences.
Income from Continuing Operations (GAAP)
As noted above, on a GAAP basis, NiSource reported net income from continuing operations for the three months ended September 30, 2010, of $33.4 million, or 12 cents per share, compared with a net loss from continuing operations of $13.2 million, or 5 cents per share, in the same period a year ago. Operating income was $123.3 million for the third quarter of 2010, compared with $93.6 million in the year-ago period.
On a GAAP basis, NiSource reported net income from continuing operations for the nine months ended September 30, 2010, of $258.8 million, or 93 cents per share, compared with $142.0 million, or 52 cents per share last year. Operating income was $665.9 million for the nine months ended September 30, 2010, versus $553.5 million in the year-ago period.
Refer to Schedule 1 for a complete list of the items included in 2010 and 2009 GAAP income from Continuing Operations but excluded from net operating earnings.
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 news release 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; actual operating experience of NiSource's 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, and the matters set forth in the "Risk Factors" sections in NiSource's 2009 Form 10-K and 2010 Forms 10-Q, many of which risks are beyond the control of NiSource. NiSource expressly disclaims a duty to update any of the forward-looking statements contained in this release.
NiSource Inc.
Consolidated Net Operating Earnings (Non-GAAP)
(unaudited)
Three Months Nine Months
Ended Ended
September September
30, 30,
---------- ----------
(in millions, except per
share amounts) 2010 2009 2010 2009
------------------------ ---- ---- ---- ----
Net Revenues
Gas Distribution $317.5 $296.7 $2,129.5 $2,455.0
Gas Transportation and
Storage 270.7 242.4 905.5 898.7
Electric 398.5 342.2 1,056.1 934.6
Other 17.8 20.3 59.5 45.0
----- ---- ---- ---- ----
Gross Revenues 1,004.5 901.6 4,150.6 4,333.3
Cost of Sales (excluding
depreciation and
amortization) 296.1 219.2 1,626.9 1,909.8
------------------------ ----- ----- ------- -------
Total Net Revenues 708.4 682.4 2,523.7 2,423.5
------------------ ----- ----- ------- -------
Operating Expenses
Operation and maintenance 354.4 323.7 1,023.1 987.8
Operation and maintenance
-trackers 32.9 27.5 177.1 175.0
Depreciation and
amortization 149.4 146.3 445.3 434.3
Depreciation and
amortization -trackers 3.8 2.4 9.3 6.2
Other taxes 52.4 46.3 158.5 149.5
Other taxes - trackers 9.1 7.3 52.7 58.8
---------------------- --- --- ---- ----
Total Operating Expenses 602.0 553.5 1,866.0 1,811.6
------------------------ ----- ----- ------- -------
Equity Earnings in
Unconsolidated
Affiliates 3.5 5.9 11.3 9.7
------------------ --- --- ---- ---
Operating Earnings 109.9 134.8 669.0 621.6
------------------ ----- ----- ----- -----
Other Income (Deductions)
Interest expense, net (97.6) (105.0) (294.8) (300.7)
Other, net 2.1 2.4 7.3 (2.3)
---------- --- --- --- ----
Total Other (Deductions) (95.5) (102.6) (287.5) (303.0)
------------------------ ----- ------ ------ ------
Operating Earnings From
Continuing Operations
Before Income Taxes 14.4 32.2 381.5 318.6
Income Taxes 4.1 12.8 135.8 122.6
------------ --- ---- ----- -----
Net Operating Earnings
from Continuing
Operations 10.3 19.4 245.7 196.0
---------------------- ---- ---- ----- -----
GAAP Adjustment 23.1 (32.6) 13.1 (54.0)
--------------- ---- ----- ---- -----
GAAP Income (Loss) from
Continuing Operations $33.4 $(13.2) $258.8 $142.0
======================= ===== ====== ====== ======
Basic Net Operating
Earnings Per Share from
Continuing Operations 0.04 0.07 0.89 0.71
------------------------ ---- ---- ---- ----
GAAP Basic Earnings
(Loss) Per Share from
Continuing Operations 0.12 (0.05) 0.93 0.52
---------------------- ---- ----- ---- ----
Basic Average Common
Shares Outstanding 278.1 275.4 277.5 274.8
-------------------- ----- ----- ----- -----
NiSource Inc.
Segment Operating Earnings (Non-GAAP)
Three Months Nine Months
Ended
September Ended
Gas Distribution Operations 30, September 30,
---------- -------------
(in millions) 2010 2009 2010 2009
--------------------------- ---- ---- ---- ----
Net Revenues
Sales Revenues $431.3 $386.5 $2,553.8 $2,896.0
Less: Cost of gas sold 188.3 154.5 1,385.8 1,744.9
---------------------- ----- ----- ------- -------
Net Revenues 243.0 232.0 1,168.0 1,151.1
------------ ----- ----- ------- -------
Operating Expenses
Operation and maintenance 176.3 159.9 506.9 497.8
Operation and maintenance -
trackers 14.1 13.2 126.1 131.0
Depreciation and
amortization 63.9 62.9 189.8 186.2
Other taxes 20.4 18.6 62.6 62.4
Other taxes - trackers 9.0 7.4 52.7 58.9
---------------------- --- --- ---- ----
Total Operating Expenses 283.7 262.0 938.1 936.3
------------------------ ----- ----- ----- -----
Operating (Loss) Earnings $(40.7) $(30.0) $229.9 $214.8
========================= ====== ====== ====== ======
GAAP Adjustment (1.8) (3.9) (18.8) (1.6)
--------------- ---- ---- ----- ----
GAAP Operating (Loss)
Income $(42.5) $(33.9) $211.1 $213.2
===================== ====== ====== ====== ======
Three Months Nine Months
Ended
Gas Transmission and September Ended
Storage Operations 30, September 30,
---------- --------------
(in millions) 2010 2009 2010 2009
------------- ---- ---- ---- ----
Net Revenues
Transportation revenues $163.7 $163.0 $522.6 $517.3
Storage revenues 49.9 49.0 149.0 142.4
Other revenues 3.9 9.7 19.8 13.4
-------------- --- --- ---- ----
Net Operating Revenues 217.5 221.7 691.4 673.1
---------------------- ----- ----- ----- -----
Operating Expenses
Operation and maintenance 82.6 71.8 242.5 218.0
Operation and maintenance -
trackers 16.1 12.5 44.3 40.1
Depreciation and
amortization 31.8 30.5 94.9 90.1
Other taxes 14.0 12.5 43.8 42.3
----------- ---- ---- ---- ----
Total Operating Expenses 144.5 127.3 425.5 390.5
------------------------ ----- ----- ----- -----
Equity Earnings in
Unconsolidated Affiliates 3.4 5.8 11.3 9.6
-------------------------- --- --- ---- ---
Operating Earnings $76.4 $100.2 $277.2 $292.2
================== ===== ====== ====== ======
GAAP Adjustment (0.2) (0.3) (0.2) (19.8)
--------------- ---- ---- ---- -----
GAAP Operating Income $76.2 $99.9 $277.0 $272.4
===================== ===== ===== ====== ======
NiSource Inc.
Segment Operating Earnings (Non-GAAP)
Three Months Nine Months
Ended
September Ended
Electric Operations 30, September 30,
---------- -------------
(in millions) 2010 2009 2010 2009
------------------- ---- ---- ---- ----
Net Revenues
Sales revenues $389.8 $344.1 $1,051.4 $939.6
Less: Cost of sales 142.5 116.4 389.9 343.8
------------------- ----- ----- ----- -----
Net Revenues 247.3 227.7 661.5 595.8
------------ ----- ----- ----- -----
Operating Expenses
Operation and maintenance 95.2 91.4 276.6 273.5
Operation and maintenance -
trackers 2.7 1.7 6.7 3.9
Depreciation and
amortization 50.0 49.5 149.7 147.3
Depreciation and
amortization -trackers 3.7 2.5 9.3 6.3
Other taxes 15.7 13.0 44.7 38.0
----------- ---- ---- ---- ----
Total Operating Expenses 167.3 158.1 487.0 469.0
------------------------ ----- ----- ----- -----
Operating Earnings $80.0 $69.6 $174.5 $126.8
================== ===== ===== ====== ======
GAAP Adjustment 15.9 (26.1) 16.1 (43.0)
--------------- ---- ----- ---- -----
GAAP Operating Income $95.9 $43.5 $190.6 $83.8
===================== ===== ===== ====== =====
Three Months Nine Months
Ended
Corporate and Other September Ended
Operations 30, September 30,
---------- -------------
(in millions) 2010 2009 2010 2009
------------- ---- ---- ---- ----
Operating Loss $(5.8) $(5.0) $(12.6) $(12.2)
==================== ===== ===== ====== ======
GAAP Adjustment (0.5) (10.9) (0.2) (3.7)
--------------- ---- ----- ---- ----
GAAP Operating Loss $(6.3) $(15.9) $(12.8) $(15.9)
=================== ===== ====== ====== ======
NiSource Inc.
Segment Volumes and Statistical Data
Three Months Nine Months
Ended September Ended September
Gas Distribution Operations 30, 30,
---------------- ----------------
2010 2009 2010 2009
---- ---- ---- ----
Sales and Transportation
(MMDth)
Residential 15.0 16.5 170.2 181.7
Commercial 19.1 16.9 115.1 118.3
Industrial 98.3 75.6 284.3 246.2
Off System 13.7 14.6 56.8 44.7
Other 0.1 0.1 0.8 0.6
----- --- --- --- ---
Total 146.2 123.7 627.2 591.5
----- ----- ----- ----- -----
Weather Adjustment 1.1 1.3 14.6 0.3
------------------ --- --- ---- ---
Sales and Transportation
Volumes -Excluding Weather 147.3 125.0 641.8 591.8
=========================== ===== ===== ===== =====
Heating Degree Days 72 69 3,370 3,593
Normal Heating Degree Days 88 88 3,596 3,596
% Colder (Warmer) than Normal (18%) (22%) (6%) (0%)
Customers
Residential 2,980,557 2,972,887
Commercial 273,371 273,515
Industrial 7,686 7,822
Other 81 80
----- --- ---
Total 3,261,695 3,254,304
----- --------- ---------
Three Months Nine Months
Gas Transmission and Storage Ended September Ended September
Operations 30, 30,
---------------- ----------------
2010 2009 2010 2009
---- ---- ---- ----
Throughput (MMDth)
Columbia Transmission 191.1 158.4 750.1 736.9
Columbia Gulf 225.0 195.2 625.0 708.4
Crossroads Gas Pipeline 6.5 8.6 20.2 26.0
Intrasegment eliminations (141.6) (114.8) (423.2) (443.6)
------------------------- ------ ------ ------ ------
Total 281.0 247.4 972.1 1,027.7
----- ----- ----- ----- -------
NiSource Inc.
Segment Volumes and Statistical Data
Three Months Nine Months
Ended September Ended September
Electric Operations 30, 30,
---------------- ----------------
2010 2009 2010 2009
---- ---- ---- ----
Sales (Gigawatt Hours)
Residential 1,175.7 843.9 2,833.2 2,445.5
Commercial 1,103.8 1,004.5 2,991.1 2,907.6
Industrial 2,180.0 1,944.5 6,321.8 5,723.4
Wholesale 330.0 208.9 635.7 385.2
Other 47.0 33.3 128.2 112.4
----- ---- ---- ----- -----
Total 4,836.5 4,035.1 12,910.0 11,574.1
----- ------- ------- -------- --------
Weather Adjustment (470.0) 326.0 (501.7) 346.5
------------------ ------ ----- ------ -----
Sales Volumes -Excluding
Weather impacts 4,366.5 4,361.1 12,408.3 11,920.6
======================== ======= ======= ======== ========
Cooling Degree Days 700 318 977 515
Normal Cooling Degree Days 578 578 808 808
% Warmer (Colder) than Normal 21% (45%) 21% (36%)
Electric Customers
Residential 399,556 398,408
Commercial 53,696 53,396
Industrial 2,435 2,444
Wholesale 15 13
Other 741 751
----- --- ---
Total 456,443 455,012
----- ------- -------
NiSource Inc.
Schedule 1 - Reconciliation of Net Operating Earnings to GAAP
Three Months Nine Months
Ended
September Ended
30, September 30,
---------- -------------
(in millions, except per
share amounts) 2010 2009 2010 2009
------------------------ ---- ---- ---- ----
Net Operating Earnings
from Continuing
Operations (Non-GAAP) $10.3 $19.4 $245.7 $196.0
---------------------- ----- ----- ------ ------
Items excluded from
operating earnings:
Net Revenues:
Weather -compared to
normal 8.8 (24.6) (1.3) (22.5)
Revenue adjustment - - (5.7) (9.0)
Unregulated natural gas
marketing business 0.9 (0.8) 5.8 13.2
Operating Expenses:
Restructuring 0.2 (4.8) (0.7) (24.6)
Transition charges (IBM
Agreement) - (0.3) - (3.4)
Environmental reserve
adjustment 6.0 - 6.0 -
Unregulated natural gas
marketing business (1.3) (2.4) (5.9) (8.3)
Legal reserve - (0.6) - (7.0)
Gain/Loss on sale of
assets and asset
impairments (1.2) (7.7) (1.3) (6.5)
-------------------- ---- ---- ---- ----
Total items excluded from
operating earnings 13.4 (41.2) (3.1) (68.1)
------------------------- ---- ----- ---- -----
Gain on early
extinguishment of debt - - - 2.5
----------------------- --- --- --- ---
Tax effect of above items (5.5) 16.4 1.0 19.4
------------------------- ---- ---- --- ----
Other income tax
adjustments
----------------
Income Taxes -Tax Method
change - (7.8) - (7.8)
Income Taxes - Rate
settlement flow-through 15.2 - 15.2 -
------------------------ ---- --- ---- ---
Total other income tax
adjustments 15.2 (7.8) 15.2 (7.8)
---------------------- ---- ---- ---- ----
Total items excluded from
net operating earnings 23.1 (32.6) 13.1 (54.0)
------------------------- ---- ----- ---- -----
Reported Income (Loss)
from Continuing
Operations -GAAP $33.4 $(13.2) $258.8 $142.0
====================== ===== ====== ====== ======
Basic Average Common
Shares Outstanding 278.1 275.4 277.5 274.8
-------------------- ----- ----- ----- -----
Basic Net Operating
Earnings Per Share from
Continuing Operations 0.04 0.07 0.89 0.71
------------------------ ---- ---- ---- ----
Items excluded from net
operating earnings
(after-tax) 0.08 (0.12) 0.04 (0.19)
----------------------- ---- ----- ---- -----
GAAP Basic Earnings
(Loss) Per Share from
Continuing Operations 0.12 (0.05) 0.93 0.52
---------------------- ---- ----- ---- ----
NiSource Inc.
Schedule 2 - Adjustments by Segment from Operating Earnings to GAAP
For Quarter ended September 30,
2010 (in millions)
------------------
Gas
Distribution Gas Electric
Transmission
and
------------- Storage --------
-------------
Operating Earnings (Loss) $(40.7) $76.4 $80.0
Net Revenues:
Weather (compared to normal) (1.1) - 9.9
Unregulated natural gas marketing
business - - -
--- --- ---
Total Impact - Net Revenues (1.1) - 9.9
Operating Expenses
Restructuring 0.1 - 0.1
Environmental Reserve - - 6.0
Gain/Loss on sale of assets and
asset impairments (0.8) (0.2) (0.1)
Unregulated natural gas marketing
business - - -
--- --- ---
Total Impact - Operating Expenses (0.7) (0.2) 6.0
Total Impact -Operating Income
(Loss) $(1.8) $(0.2) $15.9
----- ----- -----
Operating Income (Loss) - GAAP $(42.5) $76.2 $95.9
------ ----- -----
2010 (in millions)
------------------
Corporate
&
Other Total
---------- -----
Operating Earnings (Loss) $(5.8) $109.9
Net Revenues:
Weather (compared to normal) - 8.8
Unregulated natural gas marketing
business 0.9 0.9
--- ---
Total Impact - Net Revenues 0.9 9.7
Operating Expenses
Restructuring - 0.2
Environmental Reserve - 6.0
Gain/Loss on sale of assets and
asset impairments (0.1) (1.2)
Unregulated natural gas marketing
business (1.3) (1.3)
---- ----
Total Impact - Operating Expenses (1.4) 3.7
Total Impact -Operating Income
(Loss) $(0.5) $13.4
----- -----
Operating Income (Loss) - GAAP $(6.3) $123.3
----- ------
2009 (in millions)
------------------
Gas
Distribution Gas Electric
Transmission
and
------------- Storage --------
-------------
Operating Earnings (Loss) $(30.0) $100.2 $69.6
Net Revenues:
Weather (compared to normal) (2.3) - (22.3)
Unregulated natural gas marketing
business - - -
--- --- ---
Total Impact - Net Revenues (2.3) - (22.3)
Operating Expenses
Restructuring (1.4) (0.2) (3.2)
Transition Charges (IBM
Agreement) (0.2) (0.1) -
Unregulated natural gas marketing
business - - -
Legal reserve - - (0.6)
Gain/Loss on sale of assets and
asset impairments - - -
--- --- ---
Total Impact - Operating Expenses (1.6) (0.3) (3.8)
Total Impact - Operating Loss $(3.9) $(0.3) $(26.1)
----- ----- ------
Operating Income (Loss) - GAAP $(33.9) $99.9 $43.5
2009 (in millions)
------------------
Corporate Total
--------- -----
Operating Earnings (Loss) $(5.0) $134.8
Net Revenues:
Weather (compared to normal) - (24.6)
Unregulated natural gas marketing
business (0.8) (0.8)
---- ----
Total Impact - Net Revenues (0.8) (25.4)
Operating Expenses
Restructuring - (4.8)
Transition Charges (IBM
Agreement) - (0.3)
Unregulated natural gas marketing
business (2.4) (2.4)
Legal reserve - (0.6)
Gain/Loss on sale of assets and
asset impairments (7.7) (7.7)
---- ----
Total Impact - Operating Expenses (10.1) (15.8)
Total Impact - Operating Loss $(10.9) $(41.2)
------ ------
Operating Income (Loss) - GAAP $(15.9) $93.6
NiSource Inc.
Schedule 2 - Adjustments by Segment from Operating Earnings to GAAP
For Nine Months ended September 30,
2010 (in millions)
------------------
Gas
Gas Transmission
and
Distribution Storage Electric
------------ -------- --------
Operating Earnings (Loss) $229.9 $277.2 $174.5
Net Revenues:
Weather (compared to normal) (12.0) - 10.7
Revenue sales adjustment (5.7) - -
Unregulated natural gas marketing
business - - -
--- --- ---
Total Impact - Net Revenues (17.7) - 10.7
Operating Expenses
Restructuring (0.2) - (0.5)
Environmental Reserve - - 6.0
Unregulated natural gas marketing
business - - -
(Loss) on sale of assets and asset
impairments (0.9) (0.2) (0.1)
---- ---- ----
Total Impact - Operating Expenses (1.1) (0.2) 5.4
Total Impact -Operating Income
(Loss) $(18.8) $(0.2) $16.1
------ ----- -----
Operating Income (Loss) - GAAP $211.1 $277.0 $190.6
------ ------ ------
2010 (in millions)
------------------
Corporate
and
Other Total
------ -----
Operating Earnings (Loss) $(12.6) $669.0
Net Revenues:
Weather (compared to normal) - (1.3)
Revenue sales adjustment - (5.7)
Unregulated natural gas marketing
business 5.8 5.8
--- ---
Total Impact - Net Revenues 5.8 (1.2)
Operating Expenses
Restructuring - (0.7)
Environmental Reserve - 6.0
Unregulated natural gas marketing
business (5.9) (5.9)
(Loss) on sale of assets and asset
impairments (0.1) (1.3)
---- ----
Total Impact - Operating Expenses (6.0) (1.9)
Total Impact -Operating Income
(Loss) $(0.2) $(3.1)
----- -----
Operating Income (Loss) - GAAP $(12.8) $665.9
------ ------
2009 (in millions)
------------------
Gas
Gas Transmission
and
Distribution Storage Electric
------------ -------- --------
Operating Earnings (Loss) $214.8 $292.2 $126.8
Net Revenues:
Weather (compared to normal) 1.0 - (23.5)
Revenue adjustment - - (9.0)
Unregulated natural gas marketing
business - - -
--- --- ---
Total Impact - Net Revenues 1.0 - (32.5)
Operating Expenses
Restructuring (1.4) (20.0) (3.2)
Transition charges (IBM Agreement) (1.2) (1.8) (0.3)
Unregulated natural gas marketing
business - - -
Legal reserve - - (7.0)
Gain/(Loss) on sale of assets and
asset impairments - 2.0 -
--- --- ---
Total Impact - Operating Expenses (2.6) (19.8) (10.5)
Total Impact - Operating Loss $(1.6) $(19.8) $(43.0)
----- ------ ------
Operating Income (Loss) - GAAP $213.2 $272.4 $83.8
2009 (in millions)
------------------
Corporate Total
--------- -----
Operating Earnings (Loss) $(12.2) $621.6
Net Revenues:
Weather (compared to normal) - (22.5)
Revenue adjustment - (9.0)
Unregulated natural gas marketing
business 13.2 13.2
---- ----
Total Impact - Net Revenues 13.2 (18.3)
Operating Expenses
Restructuring - (24.6)
Transition charges (IBM Agreement) (0.1) (3.4)
Unregulated natural gas marketing
business (8.3) (8.3)
Legal reserve - (7.0)
Gain/(Loss) on sale of assets and
asset impairments (8.5) (6.5)
---- ----
Total Impact - Operating Expenses (16.9) (49.8)
Total Impact - Operating Loss $(3.7) $(68.1)
----- ------
Operating Income (Loss) - GAAP $(15.9) $553.5
NiSource Inc.
Consolidated Income Statement (GAAP)
(unaudited)
Three Months
Ended
September 30,
-------------
(in millions, except per share amounts) 2010 2009
--------------------------------------- ---- ----
Net Revenues
Gas Distribution $327.0 $294.4
Gas Transportation and Storage 270.7 242.3
Electric 397.7 320.0
Other 142.7 118.2
----- ----- -----
Gross Revenues 1,138.1 974.9
Cost of Sales (excluding depreciation and
amortization) 420.0 317.9
----------------------------------------- ----- -----
Total Net Revenues 718.1 657.0
------------------ ----- -----
Operating Expenses
Operation and maintenance 382.1 358.6
Depreciation and amortization 153.1 148.8
Impairment and loss on sale of assets, net 1.1 7.6
Other taxes 62.0 54.2
----------- ---- ----
Total Operating Expenses 598.3 569.2
------------------------ ----- -----
Equity Earnings in Unconsolidated Affiliates 3.5 5.8
-------------------------------------------- --- ---
Operating Income 123.3 93.6
---------------- ----- ----
Other Income (Deductions)
Interest expense, net (97.6) (105.0)
Other, net 2.1 2.4
Gain on early extinguishment of long-term
debt - -
----------------------------------------- --- ---
Total Other Deductions (95.5) (102.6)
---------------------- ----- ------
Income/(Loss) from Continuing Operations
before Income Taxes 27.8 (9.0)
Income Tax (Benefit) Expense (5.6) 4.2
---------------------------- ---- ---
Income/(Loss) from Continuing Operations 33.4 (13.2)
---------------------------------------- ---- -----
Income/(Loss) from Discontinued Operations -
net of taxes (0.2) 0.2
Gain (Loss) on Disposition of Discontinued
Operations -net of taxes - (2.4)
--- ----
Net Income (Loss) $33.2 $(15.4)
================= ===== ======
Basic Earnings (Loss) Per Share
Continuing operations $0.12 $(0.05)
Discontinued operations - -
----------------------- --- ---
Basic Earnings (Loss) Per Share $0.12 $(0.05)
=============================== ===== ======
Diluted Earnings (Loss) Per Share
Continuing operations $0.12 $(0.05)
Discontinued operations - -
----------------------- --- ---
Diluted Earnings (Loss) Per Share $0.12 $(0.05)
================================= ===== ======
Dividends Declared Per Common Share $0.23 $0.23
----------------------------------- ----- -----
Basic Average Common Shares Outstanding 278.1 275.4
Diluted Average Common Shares 279.9 275.4
----------------------------- ----- -----
Nine Months
Ended
September 30,
-------------
(in millions, except per share amounts) 2010 2009
--------------------------------------- ---- ----
Net Revenues
Gas Distribution $2,122.4 $2,456.0
Gas Transportation and Storage 905.5 898.7
Electric 1,056.1 902.2
Other 583.9 708.6
----- ----- -----
Gross Revenues 4,667.9 4,965.5
Cost of Sales (excluding depreciation and
amortization) 2,145.4 2,560.2
----------------------------------------- ------- -------
Total Net Revenues 2,522.5 2,405.3
------------------ ------- -------
Operating Expenses
Operation and maintenance 1,198.8 1,203.4
Depreciation and amortization 454.5 440.7
Impairment and loss on sale of assets, net 1.2 6.4
Other taxes 213.4 210.9
----------- ----- -----
Total Operating Expenses 1,867.9 1,861.4
------------------------ ------- -------
Equity Earnings in Unconsolidated Affiliates 11.3 9.6
-------------------------------------------- ---- ---
Operating Income 665.9 553.5
---------------- ----- -----
Other Income (Deductions)
Interest expense, net (294.8) (300.7)
Other, net 7.3 (2.3)
Gain on early extinguishment of long-term
debt - 2.5
----------------------------------------- --- ---
Total Other Deductions (287.5) (300.5)
---------------------- ------ ------
Income/(Loss) from Continuing Operations
before Income Taxes 378.4 253.0
Income Tax (Benefit) Expense 119.6 111.0
---------------------------- ----- -----
Income/(Loss) from Continuing Operations 258.8 142.0
---------------------------------------- ----- -----
Income/(Loss) from Discontinued Operations -
net of taxes (0.3) (11.2)
Gain (Loss) on Disposition of Discontinued
Operations -net of taxes 0.1 (2.6)
--- ----
Net Income (Loss) $258.6 $128.2
================= ====== ======
Basic Earnings (Loss) Per Share
Continuing operations $0.93 $0.52
Discontinued operations - (0.05)
----------------------- --- -----
Basic Earnings (Loss) Per Share $0.93 $0.47
=============================== ===== =====
Diluted Earnings (Loss) Per Share
Continuing operations $0.93 $0.51
Discontinued operations - (0.04)
----------------------- --- -----
Diluted Earnings (Loss) Per Share $0.93 $0.47
================================= ===== =====
Dividends Declared Per Common Share $0.92 $0.92
----------------------------------- ----- -----
Basic Average Common Shares Outstanding 277.5 274.8
Diluted Average Common Shares 278.9 277.3
----------------------------- ----- -----
NiSource Inc.
Consolidated Balance Sheets (GAAP)
(unaudited)
September December
30, 31,
(in millions) 2010 2009
------------- ---- ----
ASSETS
Property, Plant and Equipment
Utility Plant $19,274.3 $19,041.1
Accumulated depreciation and amortization (8,445.0) (8,387.1)
-------- --------
Net utility plant 10,829.3 10,654.0
----------------- -------- --------
Other property, at cost, less accumulated
depreciation 92.2 34.0
----------------------------------------- ---- ----
Net Property, Plant and Equipment 10,921.5 10,688.0
--------------------------------- -------- --------
Investments and Other Assets
Assets of discontinued operations and
assets held for sale 8.2 14.6
Unconsolidated affiliates 201.8 165.8
Other investments 144.5 129.2
----------------- ----- -----
Total Investments and Other Assets 354.5 309.6
---------------------------------- ----- -----
Current Assets
Cash and cash equivalents 10.9 16.4
Restricted cash 276.5 174.7
Accounts receivable (less reserve of $41.3
and $39.6, respectively) 517.8 808.6
Income tax receivable 97.6 24.9
Gas inventory 438.8 384.8
Underrecovered gas and fuel costs 136.1 40.2
Materials and supplies, at average cost 94.6 102.3
Electric production fuel, at average cost 37.1 59.9
Price risk management assets 215.6 173.3
Exchange gas receivable 73.2 72.5
Regulatory assets 194.3 238.3
Assets of discontinued operations and
assets held for sale - 1.4
Prepayments and other 103.0 126.3
--------------------- ----- -----
Total Current Assets 2,195.5 2,223.6
-------------------- ------- -------
Other Assets
Price risk management assets 280.2 237.6
Regulatory assets 1,641.0 1,644.1
Goodwill 3,677.3 3,677.3
Intangible assets 311.4 319.6
Postretirement and postemployment benefits
assets 20.2 19.8
Deferred charges and other 123.8 152.1
-------------------------- ----- -----
Total Other Assets 6,053.9 6,050.5
------------------ ------- -------
Total Assets $19,525.4 $19,271.7
============ ========= =========
NiSource Inc.
Consolidated Balance Sheets (continued) (GAAP)
(unaudited)
September December
30, 31,
(in millions, except share amounts) 2010 2009
----------------------------------- ---- ----
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stockholders' Equity
Common stock -$0.01 par value, 400,000,000
shares authorized; 278,305,866 and 276,638,021
shares issued and outstanding, respectively $2.8 $2.8
Additional paid-in capital 4,091.4 4,057.6
Retained earnings 868.5 865.5
Accumulated other comprehensive loss (57.4) (45.9)
Treasury stock (27.4) (25.9)
-------------- ----- -----
Total Common Stockholders' Equity 4,877.9 4,854.1
Long-term debt, excluding amounts due within
one year 5,964.3 5,969.1
------- -------
Total Capitalization 10,842.2 10,823.2
-------------------- -------- --------
Current Liabilities
Current portion of long-term debt 726.9 719.7
Short-term borrowings 724.6 103.0
Accounts payable 242.9 502.3
Dividends payable 64.2 0.2
Customer deposits and credits 290.5 301.2
Taxes accrued 168.4 212.9
Interest accrued 85.6 125.4
Overrecovered gas and fuel costs 26.3 220.4
Price risk management liabilities 256.5 190.1
Exchange gas payable 211.0 222.2
Deferred revenue 4.5 27.3
Regulatory liabilities 98.7 43.8
Accrued liability for postretirement and
postemployment benefits 7.6 23.6
Liabilities of discontinued operations and
liabilities held for sale - 0.6
Temporary LIFO liquidation credit 0.1 -
Legal and environmental reserves 73.2 146.1
Other accruals 270.2 310.8
-------------- ----- -----
Total Current Liabilities 3,251.2 3,149.6
------------------------- ------- -------
Other Liabilities and Deferred Credits
Price risk management liabilities 218.7 170.2
Deferred income taxes 2,207.7 2,018.2
Deferred investment tax credits 35.1 39.6
Deferred credits 76.7 72.4
Deferred revenue 0.2 8.5
Accrued liability for postretirement and
postemployment benefits 1,029.5 1,134.2
Liabilities of discontinued operations and
liabilities held for sale - 6.2
Regulatory liabilities and other removal costs 1,562.3 1,558.8
Asset retirement obligations 134.3 138.2
Other noncurrent liabilities 167.5 152.6
---------------------------- ----- -----
Total Other Liabilities and Deferred Credits 5,432.0 5,298.9
-------------------------------------------- ------- -------
Total Capitalization and Liabilities $19,525.4 $19,271.7
==================================== ========= =========
NiSource Inc.
Statements of Consolidated Cash Flows
(unaudited)
Nine Months Ended September 30, (in millions) 2010 2009
---------------------------------------------- ---- ----
Operating Activities
Net Income $258.6 $128.2
Adjustments to Reconcile Net Income to Net Cash
from Continuing Operations:
Gain on early extinguishment of debt - (2.5)
Depreciation and amortization 454.5 440.7
Net changes in price risk management assets and
liabilities (4.2) (11.3)
Deferred income taxes and investment tax credits 130.6 354.8
Deferred revenue (22.7) (1.3)
Stock compensation expense and 401(k) profit
sharing contribution 23.2 8.3
Gain on sale of assets (0.1) (2.0)
Loss on impairment of assets 1.1 7.6
Income from unconsolidated affiliates (11.1) (9.2)
(Gain) loss on disposition of discontinued
operations -net of taxes (0.1) 2.6
Loss from discontinued operations -net of taxes 0.3 11.2
Amortization of discount/premium on debt 8.1 9.9
AFUDC equity (4.9) (0.6)
Distributions of Earnings Received from Equity
Investee 7.9 -
Changes in Assets and Liabilities:
Accounts receivable 299.2 598.0
Income tax receivable 24.9 (295.7)
Inventories (32.8) (22.9)
Accounts payable (266.8) (447.4)
Customer deposits and credits (10.7) (30.8)
Taxes accrued (96.1) 50.4
Interest accrued (40.0) (32.6)
(Under) overrecovered gas and fuel costs (289.9) 589.4
Exchange gas receivable/payable (12.9) (14.0)
Other accruals (22.7) (77.8)
Prepayments and other current assets 32.4 34.5
Regulatory assets/liabilities 103.9 70.1
Postretirement and postemployment benefits (142.3) (60.9)
Deferred credits (0.2) (5.4)
Deferred charges and other non current assets 9.9 (1.6)
Other non current liabilities (9.7) 16.3
----------------------------- ---- ----
Net Operating Activities from Continuing Operations 387.4 1,306.0
Net Operating Activities used for Discontinued
Operations (54.9) (185.1)
---------------------------------------------- ----- ------
Net Cash Flows from Operating Activities 332.5 1,120.9
---------------------------------------- ----- -------
Investing Activities
Capital expenditures (553.7) (586.0)
Insurance recoveries 3.5 61.4
Proceeds from disposition of assets 0.3 2.4
Restricted cash (deposits) withdrawals (101.8) 69.4
Contributions to equity investees (87.7) (26.5)
Distributions from equity investees 23.8 -
Other investing activities (45.9) (31.2)
-------------------------- ----- -----
Net Investing Activities used for Continuing
Operations (761.5) (510.5)
Net Investing Activities from Discontinued
Operations 0.4 7.6
------------------------------------------ --- ---
Net Cash Flow used for Investing Activities (761.1) (502.9)
------------------------------------------- ------ ------
Financing Activities
Issuance of long-term debt - 965.1
Retirement of long-term debt (16.3) (365.9)
Change in short-term borrowings, net 621.6 (963.4)
Issuance of common stock 10.6 0.6
Acquisition of treasury stock (1.4) (0.9)
Dividends paid - common stock (191.4) (189.6)
----------------------------- ------ ------
Net Cash Flow from (used for) Financing Activities 423.1 (554.1)
-------------------------------------------------- ----- ------
Change in cash and cash equivalents from continuing
operations 49.0 241.4
Cash contributions to discontinued operations (54.5) (177.5)
Cash and cash equivalents at beginning of period 16.4 20.6
---- ----
Cash and Cash Equivalents at End of Period $10.9 $84.5
========================================== ===== =====
SOURCE NiSource Inc.
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