NiSource reports 2008 earnings
NI) today announced net operating earnings (non-GAAP) of
operating earnings of
consolidated operating earnings (non-GAAP) for the 12 months ended 2008 were
On a GAAP basis, NiSource reported income from continuing operations for
the twelve months ended
compared with
was
Schedules 1 and 2 of this news release contain a reconciliation of net
operating earnings and operating earnings to GAAP.
For the three months ended
share, for the fourth quarter of 2007. On a GAAP basis, income from
continuing operations for the three months ended
million
for the fourth quarter of 2007.
NiSource President and CEO
delivered 2008 earnings within the company’s guidance range of
per share while executing an aggressive array of initiatives designed to
enhance long-term shareholder value.
“Across virtually every key dimension of our business, our teams made
excellent progress in executing on our business strategy in 2008,” Skaggs
said. “In what proved to be an extraordinary year for us and so many
businesses, we were able to hit our key financial and business targets and
continue building a foundation for sustainable investment-driven growth.
These were outstanding achievements, especially in light of current difficult
economic and financial conditions. Having said that, we fully appreciate the
challenges that lie ahead and we are focused on managing them effectively.”
Skaggs also emphasized that NiSource’s management team and Board of
Directors have taken steps to address the ongoing economic downturn and
challenging conditions in the financial markets.
“As described later in this release, the initiatives we are taking are
designed to preserve the core elements of our business strategy while
conserving cash resources and reducing the need to raise capital in the
financial markets,” Skaggs said. “This balanced, measured approach, together
with our proactive strategy for managing the company’s near-term financing
requirements, will allow NiSource to maintain adequate liquidity while
advancing our business and regulatory agenda.”
Skaggs also indicated that NiSource’s net operating earnings (non-GAAP)
for 2009 are expected to fall within a range of
discussed below, major factors affecting the company’s outlook include
increased pension and interest expenses, as well as the impact of the economic
downturn.
In reporting NiSource’s 2008 results, Skaggs highlighted accomplishments
across all aspects of the company’s balanced plan for achieving long-term,
sustainable growth:
Executing on regulatory initiatives and infrastructure programs at
NiSource’s utilities
During 2008, NiSource teams advanced an array of infrastructure
enhancement programs and complementary regulatory and commercial initiatives.
— At NiSource’s Gas Distribution business, Columbia Gas of
reached a unanimous
stakeholders. The rate increase, which became effective
closely linked to the company’s
distribution system replacement program.
— In early
Utilities Commission of
settlement. The unanimous agreement provides for an additional
in annual base revenues, establishes an enhanced rate structure and provides
new demand side management and low income customer support programs.
Notably, the settlement also contains a tracking mechanism that is closely
synchronized with the company’s
enhancement and replacement program. The settlement also provides for COH’s
recovery of costs associated with its three-year,
replacement program.
— Regulatory and commercial initiatives at other NiSource gas
distribution companies included the
case at Columbia Gas of
Columbia Gas of
quarter, as well as Columbia Gas of
Virginia Power Co.’s planned 580-megawatt Bear Garden generating station in
— Northern Indiana Public Service Company (NIPSCO) made a significant
investment in its near-term electric generation needs with the acquisition of
the
in
operator, NIPSCO was successful in crafting an arrangement to dispatch the
(MISO) commencing
NIPSCO’s 455,000 electric customers.
— With
previously announced two-step electric base rate filing – its first in 20
years – to incorporate a more streamlined implementation proposal. Under the
current proposal, NIPSCO is seeking a single rate adjustment of approximately
9.8 percent, or about
placed into effect in late 2009 or early 2010.
— NIPSCO also signed agreements to add wind-generated power to its
portfolio beginning in 2009, continued a multi-year reliability investment
program at its coal-fired generation fleet and accelerated programs to improve
its distribution system reliability and outage response.
— Lastly, in December, NIPSCO filed a proposal with the Indiana Utility
Regulatory Commission (IURC) to expand energy efficiency programs available to
its electric customers. Among other approaches, these programs take the form
of direct load control programs, energy efficiency rebates, and advanced
metering.
“Successfully advancing this array of ground-breaking regulatory and
infrastructure initiatives was a fundamental element of NiSource’s business
strategy for 2008,” Skaggs said. “I am pleased to report that our teams
executed against our aggressive plan quite effectively. Looking to 2009, we
likewise are focused on a very active regulatory agenda, particularly with
respect to the successful resolution of NIPSCO’s rate case, and we understand
the need to continue to execute at a high level.”
Expanding and growing NiSource’s natural gas transmission and storage
business
During 2008, NiSource’s Gas Transmission & Storage (NGT&S) business
continued its strategy of developing a portfolio of growth projects and
maximizing value from its existing asset base.
— The company marked the close of 2008 with the successful launch in
December of the 182-mile Millennium Pipeline, jointly owned by units of
NiSource, National Grid, and DTE Energy. The Millennium pipeline immediately
began playing a key role in meeting the energy needs of
Northeast.
— NGT&S increased overall system throughput and optimized revenues from
existing assets, with increased transportation deliveries on Columbia Gas
Transmission from the first full year of
well as incremental demand revenues from new interconnects along the Columbia
Gulf Transmission and Columbia Gas Transmission pipeline systems. NGT&S also
renewed several key long-term contracts during 2008.
— Construction continued on the Eastern Market Expansion, a project that
will expand Columbia Gas Transmission’s facilities to provide additional
storage and transportation services. The project is expected to add 97,000 Dth
per day of storage and transportation deliverability and is fully subscribed
on a 15-year firm basis. The project is targeted to be in service by spring
2009.
— On
granted approval for the construction of the fully subscribed Appalachian
Expansion project, which will add 100,000 Dth per day of transportation
capacity to Columbia Gas Transmission in the fourth quarter of 2009.
— Planning continued for Columbia Transmission’s Ohio Storage Project,
which would expand the company’s
million Dth of capacity and 100,000 Dth per day of deliverability. The
project, which is expected to be in-service in 2009, is pending regulatory
approval by the FERC.
— NGT&S continued building its inventory of near-term expansion projects,
several of which leverage NiSource’s unparalleled pipeline and storage
footprint in the Appalachian Basin’s
“The NGT&S team notched an impressive year, despite confronting a series
of unprecedented challenges, including a late-2007 pipeline rupture in
by a tornado,” Skaggs said. “The response of our team to these challenges was
truly exceptional.”
Skaggs acknowledged that the pace of growth project development has been
affected by the recent economic downturn. “While we are seeing some near-term
softening in the development cycle, our NGT&S team remains active in the
market and is well positioned to originate new projects as market conditions
improve,” Skaggs said.
Strengthening NiSource’s financial foundation
As part of its efforts to strengthen its balance sheet and focus on its
core regulated assets, NiSource took a number of steps in 2008 to divest
certain non-strategic assets and to address remaining legacy issues. These
included:
— The completion of the sale of Northern Utilities and Granite State Gas
Transmission to Unitil Corp. for approximately
capital;
— The sale of the Whiting Clean Energy (WCE) facility to BP Alternative
Energy North America (BPAE) for approximately
capital;
— The disposition of certain non-strategic Columbia Gulf Transmission
assets in the
— The resolution of the Tawney class action litigation, which involved
natural gas royalty claims asserted against Columbia Natural Resources, a
former NiSource subsidiary for which NiSource retained primary financial
responsibility. On
of the case, with NiSource to pay an amount not to exceed
Skaggs also pointed to important steps taken during 2008 to secure
financing and strengthen NiSource’s liquidity position.
— During the second quarter, NiSource successfully issued
senior unsecured debt at favorable rates.
— In
credit facility that extends to
credit facility. That facility helped ensure ample liquidity to accommodate
the company’s seasonal cash flow requirements and to provide near-term funding
flexibility related to the Tawney settlement.
— NiSource also successfully refinanced approximately
NIPSCO Pollution Control Bonds in
accounts receivable facility in
2009 agenda, earnings outlook shaped by global financial environment
Turning to 2009, Skaggs said NiSource will continue to advance its core
business plan while proactively addressing issues created by the global
financial and economic downturn.
“Since the financial crisis began, NiSource’s executive team and Board of
Directors have been closely monitoring developments, assessing potential
impacts on our businesses and developing plans to effectively manage through
this period,” Skaggs said. “A key area of focus relates to continued access
to credit markets, on reasonable terms. We are also concentrating on the
impacts of the economic decline on the industrial and other markets we serve,
and increases in pension expense and funding requirements. Although none of
these issues are insurmountable or unique to NiSource, they certainly
represent a set of challenges that we need to – and will – thoughtfully and
proactively manage.”
Liquidity plan in place
As of
facilities; a five-year,
2011
Approximately
the facilities as of the end of 2008.
Looking forward, Skaggs emphasized that maintaining adequate liquidity is
the key near-term priority for NiSource and indicated that the company has
developed a range of strategies to effectively address its liquidity needs.
The combined effect of these initiatives has been to reduce the company’s
total projected 2009 financing requirements from nearly
approximately
— Reducing planned capital spending for 2009 from in excess of
to $800 million
— Meaningful reductions in working capital requirements for 2009,
expected to generate approximately
— The repurchase of approximately
scheduled to mature in
approximately
— Adoption of an expanded dividend reinvestment plan, which is expected
to reduce cash requirements by
The company’s resulting
includes the refinancing of outstanding debt scheduled to mature in
NiSource plans to meet this requirement through a combination of measures.
First, the company plans to issue unsecured corporate debt up to
million
of banks concerning a two-year term issuance maturing in
initial closing of the facility will occur later this month, with a
subsequent closing to take place in early April under an “accordion”
feature to be included in the arrangement. To date, NiSource has received
bank commitments totaling
facility expected to be up to
working toward issuing up to an aggregate of
unsecured debt at a number of its utilities and at Columbia Gas
Transmission.
“I am confident we will be successful in maintaining an adequate liquidity
position for NiSource going forward,” Skaggs added. “With the aggressive steps
we have already taken and a series of measures in process, we are well on our
way to meeting this year’s financing requirements. At the same time, we are
also actively focused on our 2010 financing requirements and will take
advantage of market conditions to address those needs on an aggressive and
opportunistic basis.”
Skaggs noted that the company has undertaken a number of additional
initiatives to mitigate the effect of the current economic downturn, including
reducing O&M expenses, limiting the hiring and replacement of employees,
freezing base compensation for NiSource senior executives and postponing most
exempt employee pay increases.
“Our portfolio of regulated assets and our balanced business plan are
better suited than many to weather the current economic and financial market
conditions,” Skaggs said. “Having said that, we are by no means immune to
these conditions and we are taking meaningful steps to address their impact on
our company.”
Earnings outlook for 2009
Skaggs noted that the most significant impact on NiSource’s near-term
earnings outlook relates to an increase in pension expense of about
million
global securities markets in 2008. In addition, interest expense is expected
to increase over 2008 levels by approximately
Based on those and other impacts, including various regulatory and
commercial initiatives and the effect of the economic slowdown on customer
demand, Skaggs said NiSource anticipates that its net operating earnings
(non-GAAP) will fall within a range of
GAAP basis, the range for basic earnings per share from continuing operations
for 2009 is likewise
significant uncertainties surrounding the current economic conditions,
NiSource has decided to limit its earnings outlook to 2009 at this time. The
company will consider providing multi-year guidance in the future as
conditions warrant.
“Although somewhat obscured by today’s financial and economic conditions
and the headwinds they present for the coming year, 2008 was indeed a very
strong year for NiSource,” Skaggs said. “We executed effectively against an
aggressive, highly visible plan. Going forward, and understanding the
challenges presented by the current economic environment, we believe that our
core business agenda – infrastructure investment synched with appropriate
regulatory and commercial activities – continues to be the appropriate
long-term strategy for NiSource.”
Full Year 2008 Operating Earnings – Segment Results (non-GAAP)
NiSource’s consolidated operating earnings (non-GAAP) for the year ended
to Schedule 2 for the items included in 2008 and 2007 GAAP operating income
but excluded from operating earnings.
Operating earnings for NiSource’s business segments for the twelve months
ended
Gas Distribution Operations reported operating earnings of
compared to
regulatory trackers, increased
regulatory and service programs including impacts from rate cases at various
utilities, partially offset by reduced revenues as a result of a stipulation
entered into among COH and its regulatory stakeholders in late 2007.
Operating expenses, excluding trackers, were
comparable period including increases in employee and administrative costs,
depreciation costs, and other taxes.
Gas Transmission and Storage Operations reported operating earnings of
increase resulted primarily from lower operating expenses. Operating expenses
decreased by
partially offset by higher employee and administrative expenses.
Net revenues were lower by
settlement that reduced net revenues in the fourth quarter of 2008. Excluding
this settlement, the increase in net revenues resulted from increases in firm
capacity reservation fees partly offset by lower revenues from shorter term
transportation and storage services and commodity margins. The increase in
firm capacity reservation fees were 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
Pipeline partially offset by increased interest expense from
Electric Operations reported operating earnings of
2008, compared with
expenses both contributed to the lower operating earnings. Net revenues
decreased by
margins and non-recoverable purchased power and MISO related costs. These
decreases were partially offset by incremental revenues from the new
Creek
settlement relating to power purchased by NIPSCO which reduced operating
earnings by
Operating expenses increased by
administrative costs, electric generation and maintenance expenses, including
expenses associated with the
costs. The higher depreciation costs included an
recorded by NIPSCO during the second quarter of this year.
Other Operations reported operating earnings of
which were flat with prior year’s results. These operating earnings results no
longer include earnings associated with the WCE facility which was sold to
BPAE on
reclassified to discontinued operations for the current and comparable
periods. Other Operations primarily include commercial and industrial gas
marketing activities.
Other Items
Interest expense decreased by
interest rates and credit facility fees and the retirement late in 2007 of
high-cost debt associated with the WCE facility. Other-net was income of
million
related to the sale of accounts receivable. The effective tax rate of net
operating earnings for 2008 is 35.8% compared to last year’s rate of 36.3%.
Fourth Quarter 2008 Operating Earnings – Segment Results (non-GAAP)
NiSource’s consolidated fourth-quarter 2008 operating earnings (non-GAAP)
were
Refer to Schedule 2 for the items included in 2008 and 2007 GAAP operating
income but excluded from operating earnings.
Operating earnings for NiSource’s business segments for the quarter ended
Gas Distribution Operations reported operating earnings of
versus operating earnings of
increase in earnings resulted primarily from increased net revenues which were
trackers. The increase in net revenues was due to regulatory and service
programs including impacts from rate cases at Columbia Gas of
Columbia Gas of
trackers, increased by
expenses and depreciation costs partially offset by lower environmental
expenses and uncollectible accounts.
Gas Transmission and Storage Operations reported operating earnings of
quarter of 2007. The increase was due to the impact of legal reserves which
reduced earnings in the prior period, transportation revenues from contract
buyouts, and an increase in equity earnings partially offset by lower revenues
from shorter term transportation and storage services and higher employee and
administrative expenses.
Electric Operations reported operating earnings of
operating earnings of
expenses decreased by
administrative expenses and electric generation and maintenance expenses
partially offset by higher depreciation costs and expenses associated with the
same quarter last year primarily due to lower non-recoverable purchased power
costs partially offset by lower wholesale and industrial margins.
Other Operations reported operating earnings of
quarter of 2008, compared with operating earnings of
year period due to decreased revenues from commercial and industrial gas
marketing activities.
Other Items
Interest expense decreased by
compared to the same period last year due to lower short-term interest rates.
Other-net was a loss of
year due to lower costs related to the sale of accounts receivable.
Income from Continuing Operations (GAAP)
On a GAAP basis, NiSource reported income from continuing operations for
the twelve months ended
share, compared with
Operating income was
year-ago period.
This year’s results include a
equity interest in JOF Transportation Company, a
deferred taxes as a result of tax legislation enacted in
misclassification of medical claims during 2007.
Last year’s results include a
extinguishment of debt and other items which in total reduced 2007 net
operating earnings by
On a GAAP basis, NiSource reported income from continuing operations for
the three months ended
share, compared with
a year ago. Operating income was
million
total reduced 2007 fourth quarter net operating earnings by
after-tax.
Refer to Schedule 1 for a complete list of the items included in 2008 and
2007 GAAP income from Continuing Operations but excluded from net operating
earnings.
Discontinued Operations
In the first quarter of 2008, NiSource began accounting for the operations
of Northern Utilities, Granite State Gas and Whiting Clean Energy as
discontinued operations. All three businesses were disposed of during 2008.
For the twelve months ended
of
operations. All results of operations for these businesses are classified as
net income from discontinued operations. In addition, NiSource recorded an
accrual related to the Tawney lawsuit in
during the fourth quarter of 2008.
About NiSource
NiSource Inc. (NYSE: NI), based in
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
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. Investors and prospective
investors should understand that many factors govern whether any
forward-looking statement contained herein will be or can be realized. Any
one of those factors could cause actual results to differ materially from
those projected. These forward-looking statements include, but are not
limited to, statements concerning NiSource’s plans, objectives, expected
performance, expenditures and recovery of expenditures through rates, stated
on either a consolidated or segment basis, and any and all underlying
assumptions and other statements that are other than statements of historical
fact. From time to time, NiSource may publish or otherwise make available
forward-looking statements of this nature. All such subsequent
forward-looking statements, whether written or oral and whether made by or on
behalf of NiSource, are also expressly qualified by these cautionary
statements. All forward-looking statements are based on assumptions that
management believes to be reasonable; however, there can be no assurance that
actual results will not differ materially. Realization of NiSource’s
objectives and expected performance is subject to a wide range of risks and
can be adversely affected by, among other things, 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 restructured
outsourcing agreement, actual operating experience of NiSource’s assets, the
regulatory process, regulatory and legislative changes, changes in general
economic, capital and commodity market conditions, and counterparty credit
risk, many of which risks are beyond the control of NiSource. In addition,
the relative contributions to profitability by each segment, and the
assumptions underlying the forward-looking statements relating thereto, may
change over time. NiSource expressly disclaims a duty to update any of the
forward-looking statements contained in this report.
NiSource Inc.
Consolidated Net Operating Earnings (Non - GAAP)
(unaudited)
Three Months Twelve Months
Ended December 31, Ended December 31,
(in millions, except per share 2008 2007 2008 2007
amounts)
Net Revenues
Gas Distribution $1,460.6 $1,307.4 $5,163.2 $4,347.6
Gas Transportation and Storage 322.3 323.9 1,132.4 1,102.8
Electric 305.1 330.1 1,362.3 1,380.5
Other 283.6 285.7 1,213.5 1,080.2
Gross Revenues 2,371.6 2,247.1 8,871.4 7,911.1
Cost of Sales (excluding
depreciation and amortization) 1,469.4 1,359.3 5,631.6 4,687.8
Total Net Revenues 902.2 887.8 3,239.8 3,223.3
Operating Expenses
Operation and maintenance 325.3 348.5 1,271.9 1,237.4
Operation and maintenance -
trackers 59.7 48.4 188.0 177.1
Depreciation and amortization 142.9 135.0 567.2 540.2
Other taxes 49.4 51.1 205.0 202.4
Other taxes - trackers 33.0 27.9 102.5 95.9
Total Operating Expenses 610.3 610.9 2,334.6 2,253.0
Equity Earnings in Unconsolidated
Affiliates 5.3 1.6 12.3 9.4
Operating Earnings 297.2 278.5 917.5 979.7
Other Income (Deductions)
Interest expense, net (101.4) (103.7) (375.3) (402.3)
Other, net (3.0) (4.6) 0.9 (6.4)
Total Other Income (Deductions) (104.4) (108.3) (374.4) (408.7)
Operating Earnings From Continuing
Operations
Before Income Taxes 192.8 170.2 543.1 571.0
Income Taxes 66.8 59.2 194.6 207.5
Net Operating Earnings from
Continuing Operations 126.0 111.0 348.5 363.5
GAAP Adjustment 1.0 (51.5) 21.3 (60.6)
GAAP Income from Continuing
Operations $127.0 $59.5 $369.8 $302.9
Basic Net Operating Earnings Per
Share from Continuing Operations 0.46 0.41 1.27 1.33
GAAP Basic Earnings Per Share from
Continuing Operations 0.46 0.21 1.35 1.10
Basic Average Common Shares
Outstanding (millions) 274.0 273.9 274.0 273.8
NiSource Inc.
Segment Operating Earnings (Non-GAAP)
Three Months Twelve Months
Gas Distribution Operations Ended December 31, Ended December 31,
(in millions) 2008 2007 2008 2007
Net Revenues
Sales Revenues $1,625.8 $1,454.8 $5,725.6 $4,880.9
Less: Cost of gas sold 1,166.8 1,022.7 4,196.1 3,390.2
Net Revenues 459.0 432.1 1,529.5 1,490.7
Operating Expenses
Operation and maintenance 169.3 166.6 656.3 620.8
Operation and maintenance -
trackers 44.6 36.7 135.8 129.3
Depreciation and amortization 57.5 56.0 228.7 224.2
Other taxes 20.8 20.1 79.3 75.3
Other taxes - trackers 33.0 27.9 102.5 95.9
Total Operating Expenses 325.2 307.3 1,202.6 1,145.5
Operating Earnings $133.8 $124.8 $326.9 $345.2
GAAP Adjustment 12.7 (26.2) 8.0 (20.2)
GAAP Operating Income $146.5 $98.6 $334.9 $325.0
Gas Transmission and Storage Three Months Twelve Months
Operations Ended December 31, Ended December 31,
(in millions) 2008 2007 2008 2007
Net Revenues
Transportation revenues $191.0 $203.5 $682.4 $683.9
Storage revenues 44.2 44.6 178.9 179.4
Other revenues 1.4 1.2 3.9 4.4
Total Operating Revenues 236.6 249.3 865.2 867.7
Less: Cost of gas sold (0.1) 0.3 (0.1) 0.3
Net Revenues 236.7 249.0 865.3 867.4
Operating Expenses
Operation and maintenance 68.2 83.2 280.3 291.3
Operation and maintenance -
trackers 13.8 10.7 46.5 42.1
Depreciation and amortization 29.8 28.9 117.6 116.3
Other taxes 13.7 13.4 56.5 55.3
Total Operating Expenses 125.5 136.2 500.9 505.0
Equity Earnings in
Unconsolidated Affiliates 5.3 1.6 12.3 9.4
Operating Earnings $116.5 $114.4 $376.7 $371.8
GAAP Adjustment (11.8) (1.8) (7.0) (9.8)
GAAP Operating Income $104.7 $112.6 $369.7 $362.0
NiSource Inc.
Segment Operating Earnings (Non-GAAP) (continued)
Three Months Twelve Months
Ended December 31, Ended December 31,
Electric Operations 2008 2007 2008 2007
(in millions)
Net Revenues
Sales Revenues $306.7 $330.7 $1,368.0 $1,384.3
Less: Cost of sales 107.3 132.1 556.8 551.5
Net Revenues 199.4 198.6 811.2 832.8
Operating Expenses
Operation and maintenance 85.8 88.7 319.0 291.4
Operation and maintenance -
trackers 1.3 1.0 5.7 5.7
Depreciation and amortization 52.1 48.1 209.6 191.9
Other taxes 12.3 14.8 56.7 60.7
Total Operating Expenses 151.5 152.6 591.0 549.7
Operating Earnings $47.9 $46.0 $220.2 $283.1
GAAP Adjustment 0.8 (7.7) (1.0) (21.6)
GAAP Operating Income $48.7 $38.3 $219.2 $261.5
Three Months Twelve Months
Other Operations Ended December 31, Ended December 31,
2008 2007 2008 2007
(in millions)
Net Revenues
Products and services revenue $271.7 $275.0 $1,173.9 $1,050.3
Less: Cost of products sold 265.3 267.3 1,144.3 1,020.9
Net Revenues 6.4 7.7 29.6 29.4
Operating Expenses
Operation and maintenance 3.8 3.8 19.9 20.4
Depreciation and amortization 0.6 0.7 2.6 2.7
Other taxes 1.2 1.2 5.3 4.5
Total Operating Expenses 5.6 5.7 27.8 27.6
Operating Earnings $0.8 $2.0 $1.8 $1.8
GAAP Adjustment (0.1) (0.1) 0.4 (1.1)
GAAP Operating Income $0.7 $1.9 $2.2 $0.7
Three Months Twelve Months
Corporate Ended December 31, Ended December 31,
(in millions) 2008 2007 2008 2007
Operating Loss $(1.8) $(8.7) $(8.1) $(22.2)
GAAP Adjustment (0.1) (10.0) (0.2) (10.3)
GAAP Operating Loss $(1.9) $(18.7) $(8.3) $(32.5)
NiSource Inc.
Segment Volumes and Statistical Data
Three Months Twelve Months
Ended December 31, Ended December 31,
Gas Distribution Operations 2008 2007 2008 2007
Sales and Transportation (MMDth)
Residential 91.6 82.5 278.0 272.0
Commercial 53.0 47.4 174.2 169.4
Industrial 88.4 100.2 373.2 376.4
Off System 19.8 22.7 96.8 88.1
Other 0.2 0.8 1.0 1.4
Total 253.0 253.6 923.2 907.3
Weather Adjustment (9.8) 7.7 (7.6) 2.5
Sales and Transportation Volumes -
Excluding Weather 243.2 261.3 915.6 909.8
Heating Degree Days 1,923 1,653 5,071 4,811
Normal Heating Degree Days 1,776 1,776 4,976 4,948
% Colder (Warmer) than Normal 8% (7%) 2% (3%)
Customers
Residential 3,037,504 3,041,634
Commercial 280,195 279,468
Industrial 8,003 8,061
Other 76 71
Total 3,325,778 3,329,234
Three Months Twelve Months
Gas Transmission and Storage Ended December 31, Ended December 31,
Operations 2008 2007 2008 2007
Throughput (MMDth)
Columbia Transmission
Market Area 325.7 287.9 1,096.4 1,030.0
Columbia Gulf
Mainline 173.0 161.5 655.3 651.3
Short-haul 58.1 69.8 270.9 229.4
Columbia Pipeline Deep Water - 0.5 0.9 2.6
Crossroads Gas Pipeline 8.8 9.3 36.3 36.9
Intrasegment eliminations (140.0) (139.8) (538.0) (559.7)
Total 425.6 389.2 1,521.8 1,390.5
NiSource Inc.
Segment Volumes and Statistical Data (continued)
Three Months Twelve Months
Electric Operations Ended December 31, Ended December 31,
2008 2007 2008 2007
Sales (Gigawatt Hours)
Residential 813.3 775.4 3,345.9 3,543.6
Commercial 936.1 732.0 3,915.8 3,775.0
Industrial 2,011.4 2,360.5 9,305.4 9,443.7
Wholesale 186.4 126.9 737.2 909.1
Other 36.1 38.3 138.2 141.7
Total 3,983.3 4,033.1 17,442.5 17,813.1
Weather Adjustment (16.1) (43.9) 81.8 (111.2)
Sales Volumes - Excluding Weather
impacts 3,967.2 3,989.2 17,524.3 17,701.9
Cooling Degree Days 705 919
Normal Cooling Degree Days 808 812
% Warmer (Colder) than Normal (13%) 13%
Electric Customers
Residential 400,640 400,991
Commercial 53,438 52,815
Industrial 2,484 2,509
Wholesale 9 6
Other 754 755
Total 457,325 457,076
NiSource Inc.
Schedule 1 - Reconciliation of Net Operating Earnings to GAAP
Three Months Twelve Months
Ended December 31, Ended December 31,
(in millions, except per share 2008 2007 2008 2007
amounts)
Net Operating Earnings from
Continuing Operations $126.0 $111.0 $348.5 $363.5
Items excluded from operating
earnings:
Net Revenues:
Weather - compared to normal 13.9 (6.9) 2.8 6.5
Purchased power settlement (17.3)
Unbilled revenue and other
changes (25.5) (25.5)
Operating Expenses:
Transition charges (IBM Agreement) (2.1) (10.6) (7.7) (14.2)
Medical expense adjustment out of
period 12.7
Gain/loss on sale of assets and
asset impairments (10.3) (2.8) (7.6) (12.5)
Total items excluded from
operating earnings 1.5 (45.8) 0.2 (63.0)
Other income - Gain on sale of JOF 16.7
Interest Expense - Reserve for
Interest Rate Swaps 0.7 (4.8)
Income Taxes - Massachusetts Tax
Law Change 1.4 14.9
Loss on early extinguishment of
debt (40.6) (40.6)
Tax effect of above items and other
income tax adjustments (2.6) 34.9 (5.7) 43.0
Total items excluded from net
operating earnings 1.0 (51.5) 21.3 (60.6)
Reported Income from Continuing
Operations - GAAP $127.0 $59.5 $369.8 $302.9
Basic Average Common Shares
Outstanding (millions) 274.0 273.9 274.0 273.8
Basic Net Operating Earnings Per
Share from Continuing Operations ($) 0.46 0.41 1.27 1.33
Items excluded from net operating
earnings (after-tax) - (0.20) 0.08 (0.23)
GAAP Basic Earnings Per Share from
Continuing Operations 0.46 0.21 1.35 1.10
NiSource Inc.
Schedule 2 - Quarterly Adjustments by Segment from Operating Earnings to
GAAP For Quarter ended December 31,
2008 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric Other Corporate Total
Operating Earnings
(Loss) 133.8 116.5 47.9 0.8 (1.8) $297.2
Net Revenues:
Weather (compared
to normal) 12.8 1.1 $13.9
Total Impact - Net
Revenues 12.8 - 1.1 - - 13.9
Operating Expenses:
Transition charges
(IBM Agreement) (1.3) (0.4) (0.4) (2.1)
Gain/loss on sale of
assets and asset
impairments 1.2 (11.4) 0.1 (0.1) (0.1) (10.3)
Total Impact -
Operating Expenses (0.1) (11.8) (0.3) (0.1) (0.1) (12.4)
Total Impact -
Operating Income
(Loss) 12.7 (11.8) 0.8 (0.1) (0.1) 1.5
Operating Income
(Loss) - GAAP $146.5 $104.7 $48.7 $0.7 $(1.9) $298.7
2007 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric Other Corporate Total
Operating Earnings
(Loss) 124.8 114.4 46.0 2.0 (8.7) $278.5
Net Revenues:
Weather (compared to
normal) (9.9) 3.0 $(6.9)
Unbilled revenue
and other changes (14.6) (10.9) (25.5)
Total Impact - Net
Revenues (24.5) - (7.9) - - (32.4)
Operating Expenses:
Transition charges
(IBM Agreement) (0.2) (0.3) (0.3) (9.8) (10.6)
Gain/loss on sale of
assets and asset
impairments (1.5) (1.5) 0.5 (0.1) (0.2) (2.8)
Total Impact -
Operating Expenses (1.7) (1.8) 0.2 (0.1) (10.0) (13.4)
Total Impact -
Operating Income
(Loss) (26.2) (1.8) (7.7) (0.1) (10.0) (45.8)
Operating Income
(Loss) - GAAP $98.6 $112.6 $38.3 $1.9 $(18.7) $232.7
NiSource Inc.
Schedule 2 - Year to Date Adjustments by Segment from Operating Earnings
to GAAP For Twelve Months ended December 31,
2008 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric Other Corporate Total
Operating Earnings
(Loss) 326.9 376.7 220.2 1.8 (8.1) $917.5
Net Revenues:
Weather (compared to
normal) 8.1 (5.3) $2.8
Total Impact - Net
Revenues 8.1 - (5.3) - - 2.8
Operating Expenses:
Transition charges
(IBM Agreement) (4.7) (1.5) (1.2) (0.1) (0.2) (7.7)
Medical Expense
adjustment - out of
period 4.4 2.5 5.5 0.1 0.2 12.7
Gain/loss on sale of
assets and asset
impairments 0.2 (8.0) 0.4 (0.2) (7.6)
Total Impact -
Operating Expenses (0.1) (7.0) 4.3 0.4 (0.2) (2.6)
Total Impact -
Operating Income
(Loss) 8.0 (7.0) (1.0) 0.4 (0.2) 0.2
Operating Income
(Loss) - GAAP $334.9 $369.7 $219.2 $2.2 $(8.3) $917.7
2007 (in millions)
Gas
Gas Transmission
Distribution and Storage Electric Other Corporate Total
Operating Earnings
(Loss) 345.2 371.8 283.1 1.8 (22.2) $979.7
Net Revenues:
Weather (compared to
normal) (0.5) 7.0 $6.5
Purchased power
settlement (17.3) (17.3)
Unbilled revenue
and other changes (14.6) (10.9) (25.5)
Total Impact - Net
Revenues (15.1) - (21.2) - - (36.3)
Operating Expenses:
Transition charges
(IBM Agreement) (2.2) (1.2) (0.8) (0.1) (9.9) (14.2)
Gain/loss on sale of
assets and asset
impairments (2.9) (8.6) 0.4 (1.0) (0.4) (12.5)
Total Impact -
Operating Expenses (5.1) (9.8) (0.4) (1.1) (10.3) (26.7)
Total Impact -
Operating Income
(Loss) (20.2) (9.8) (21.6) (1.1) (10.3) (63.0)
Operating Income
(Loss) - GAAP $325.0 $362.0 $261.5 $0.7 $(32.5) $916.7
NiSource Inc.
Consolidated Income Statement (GAAP)
(unaudited)
Three Months Twelve
Ended December 31, Ended December 31,
(in millions, except per 2008 2007 2008 2007
share amounts)
Net Revenues
Gas Distribution $1,473.4 $1,282.9 $5,171.3 $4,332.5
Gas Transportation and
Storage 322.3 323.9 1,132.4 1,102.8
Electric 306.2 322.2 1,357.0 1,359.3
Other 283.6 285.7 1,213.5 1,080.2
Gross Revenues 2,385.5 2,214.7 8,874.2 7,874.8
Cost of Sales (excluding
depreciation and
amortization) 1,469.4 1,359.3 5,631.6 4,687.8
Total Net Revenues 916.1 855.4 3,242.6 3,187.0
Operating Expenses
Operation and maintenance 387.0 409.3 1,454.9 1,430.4
Depreciation and
amortization 142.9 135.0 567.2 540.2
Impairment and gain/loss
on sale of assets 10.4 1.0 7.6 10.8
Other taxes 82.4 79.0 307.5 298.3
Total Operating Expenses 622.7 624.3 2,337.2 2,279.7
Equity Earnings in
Unconsolidated Affiliates 5.3 1.6 12.3 9.4
Operating Income 298.7 232.7 917.7 916.7
Other Income (Deductions)
Interest expense, net (100.7) (103.7) (380.1) (402.3)
Other, net (3.0) (4.6) 17.6 (6.4)
Loss on early extinguishment
of long-term debt - (40.6) - (40.6)
Total Other Income
(Deductions) (103.7) (148.9) (362.5) (449.3)
Income From Continuing
Operations Before Income
Taxes 195.0 83.8 555.2 467.4
Income Taxes 68.0 24.3 185.4 164.5
Income From Continuing
Operations 127.0 59.5 369.8 302.9
Income (Loss) from
Discontinued Operations -
net of taxes 50.6 6.1 (170.9) 10.2
Gain (Loss) on Disposition
of Discontinued Operations
- net of taxes (15.6) 1.4 (119.9) 8.3
Net Income $162.0 $67.0 $79.0 $321.4
Basic Earnings (Loss) Per
Share ($)
Continuing operations $0.46 $0.21 $1.35 $1.10
Discontinued operations $0.13 0.03 (1.06) 0.07
Basic Earnings Per Share $0.59 $0.24 $0.29 $1.17
Diluted Earnings (Loss) Per
Share ($)
Continuing operations $0.46 $0.21 $1.34 $1.10
Discontinued operations 0.13 0.03 (1.05) 0.07
Diluted Earnings Per Share $0.59 $0.24 $0.29 $1.17
Dividends Declared Per
Common Share ($) $0.23 $0.23 $0.92 $0.92
Basic Average Common Shares
Outstanding (millions) 274.0 273.9 274.0 273.8
Diluted Average Common
Shares (millions) 275.5 274.7 275.4 274.7
NiSource Inc.
Consolidated Balance Sheets
(unaudited)
December 31, December 31,
(in millions) 2008 2007
ASSETS
Property, Plant and Equipment
Utility Plant $18,356.8 $17,295.6
Accumulated depreciation and
amortization (8,080.8) (7,787.0)
Net utility plant 10,276.0 9,508.6
Other property, at cost, less
accumulated depreciation 112.1 67.0
Net Property, Plant and Equipment 10,388.1 9,575.6
Investments and Other Assets
Assets of discontinued operations
and assets held for sale 45.8 593.5
Unconsolidated affiliates 86.8 72.7
Other investments 117.9 117.2
Total Investments and Other Assets 250.5 783.4
Current Assets
Cash and cash equivalents 20.6 34.6
Restricted cash 286.6 57.7
Accounts receivable (less reserve of
$45.3 and $37.0, respectively) 1,142.5 900.3
Gas inventory 511.8 452.2
Underrecovered gas and fuel costs 180.2 158.3
Materials and supplies, at average
cost 95.1 78.1
Electric production fuel, at average
cost 63.8 58.1
Price risk management assets 150.4 102.2
Exchange gas receivable 393.8 210.5
Regulatory assets 314.9 215.4
Assets of discontinued operations
and assets held for sale 2.0 85.9
Prepayments and other 249.1 107.1
Total Current Assets 3,410.8 2,460.4
Other Assets
Price risk management assets 200.7 25.2
Regulatory assets 1,640.4 867.5
Goodwill 3,677.3 3,677.3
Intangible assets 330.6 341.6
Postretirement and postemployment
benefits assets 10.3 157.8
Deferred charges and other 123.5 121.5
Total Other Assets 5,982.8 5,190.9
Total Assets $20,032.2 $18,010.3
NiSource Inc.
Consolidated Balance Sheets (continued)
(unaudited)
December 31, December 31,
(in millions, except share amounts) 2008 2007
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stockholders' Equity
Common stock - $0.01 par value,
400,000,000 shares authorized;
274,261,799 and 274,176,752 shares
issued and outstanding, respectively $2.7 $2.7
Additional paid-in capital 4,020.3 4,011.0
Retained earnings 901.1 1,074.5
Accumulated other comprehensive
income (loss) (172.0) 11.7
Treasury stock (23.3) (23.3)
Total Common Stockholders' Equity 4,728.8 5,076.6
Long-term debt, excluding amounts due
within one year 5,943.9 5,594.4
Total Capitalization 10,672.7 10,671.0
Current Liabilities
Current portion of long-term debt 469.3 33.9
Short-term borrowings 1,163.5 1,061.0
Accounts payable 693.3 713.0
Customer deposits 127.3 112.8
Taxes accrued 206.5 188.4
Interest accrued 120.1 99.3
Overrecovered gas and fuel costs 35.9 10.4
Price risk management liabilities 286.5 79.9
Exchange gas payable 555.5 441.6
Deferred revenue 14.7 38.7
Regulatory liabilities 40.4 87.8
Accrued liability for postretirement
and postemployment benefits 6.4 4.8
Liabilities of discontinued
operations and liabilities held for sale 1.5 20.6
Legal and environmental reserves 375.1 112.3
Other accruals 487.4 393.6
Total Current Liabilities 4,583.4 3,398.1
Other Liabilities and Deferred Credits
Price risk management liabilities 188.5 1.7
Deferred income taxes 1,549.8 1,466.2
Deferred investment tax credits 46.1 53.4
Deferred credits 76.7 81.3
Deferred revenue 6.2 0.2
Accrued liability for postretirement
and postemployment benefits 1,238.5 547.8
Liabilities of discontinued
operations and liabilities held for sale 4.4 141.3
Regulatory liabilities and other
removal costs 1,386.1 1,337.7
Asset retirement obligations 126.0 128.2
Other noncurrent liabilities 153.8 183.4
Total Other Liabilities and Deferred
Credits 4,776.1 3,941.2
Commitments and Contingencies - -
Total Capitalization and Liabilities $20,032.2 $18,010.3
NiSource Inc.
Statements of Consolidated Cash Flow
(unaudited)
Twelve Months Ended December 31, (in millions) 2008 2007
Operating Activities
Net income $79.0 $321.4
Adjustments to reconcile net income to net
cash from continuing operations:
Loss on early extinguishment of long-term debt - 40.6
Depreciation and amortization 567.2 540.2
Net changes in price risk management assets
and liabilities 25.7 0.8
Deferred income taxes and investment tax credits 132.1 5.4
Deferred revenue (24.0) (38.8)
Stock compensation expense 9.5 4.4
Loss (gain) on sale of assets 4.3 (0.3)
Loss on impairment of assets 3.4 11.1
Income from unconsolidated affiliates (25.3) (14.1)
Loss (gain) on disposition of discontinued
operations 119.9 (8.3)
Loss (income) from discontinued operations 170.9 (10.2)
Amortization of discount/premium on debt 7.7 7.3
AFUDC Equity (5.4) (3.6)
Changes in assets and liabilities:
Accounts receivable (206.4) 17.9
Inventories (82.4) 98.1
Accounts payable (27.4) (60.2)
Customer deposits 14.5 5.8
Taxes accrued (84.0) (11.3)
Interest accrued 20.8 (2.6)
(Under) Overrecovered gas and fuel costs 3.6 (118.1)
Exchange gas receivable/payable (77.7) 31.2
Other accruals 45.7 (14.6)
Prepayments and other current assets (27.6) 5.9
Regulatory assets/liabilities (117.8) 60.2
Postretirement and postemployment benefits 7.1 (97.7)
Deferred credits 36.3 (0.7)
Deferred charges and other noncurrent assets 38.7 (22.3)
Other noncurrent liabilities (42.4) (8.5)
Net Operating Activities from
Continuing Operations 566.0 739.0
Net Operating Activities from or (used for)
Discontinued Operations (2.2) 18.2
Net Cash Flows from Operating Activities 563.8 757.2
Investing Activities
Capital expenditures (969.9) (786.4)
Sugar Creek purchase (329.7) -
Insurance recoveries 50.3 17.4
Proceeds from disposition of assets 47.8 4.2
Restricted cash (228.8) 80.6
Other investing activities (59.4) 19.6
Net Investing Activities used for Continuing
Operations (1,489.7) (664.6)
Net Investing Activities from or (used for)
Discontinued Operations 396.9 (16.8)
Net Cash Flows used for Investing Activities (1,092.8) (681.4)
Financing Activities
Issuance of long-term debt 959.3 803.6
Retirement of long-term debt (40.6) (457.9)
Repurchase of long-term debt (254.0) -
Premiums and other costs to retire debt - (40.6)
Change in short-term debt 102.5 (132.0)
Issuance of common stock 1.3 8.2
Acquisition of treasury stock - (2.1)
Dividends paid - common stock (252.4) (252.1)
Net Cash Flows from (used for) Financing Activities 516.1 (72.9)
(Decrease) increase in cash and cash equivalents
from continuing operations (407.6) 2.9
Cash inflows from or (contributions to)
discontinued operations 393.6 (1.1)
Cash and cash equivalents at beginning of year 34.6 32.8
Cash and cash equivalents at end of period $20.6 $34.6
Supplemental Disclosures of Cash Flow
Information
Cash paid for interest $375.8 $414.6
Interest capitalized 23.5 17.0
Cash paid for income taxes 60.6 185.2
SOURCE NiSource Inc.