EXHIBIT 99.1
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PRESS RELEASE
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NEWS [NiSource Logo]
801 E. 86th Avenue
Merrillville, IN 46410
FOR IMMEDIATE RELEASE
April 29, 2003
FOR ADDITIONAL INFORMATION
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Media Investors
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Mark Friedlander Dennis Senchak
Corporate Spokesperson Vice President, Investor Relations
(219) 647-6217 (219) 647-6085
mfriedland@nisource.com senchak@nisource.com
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Randy Hulen
Director, Investor Relations
(219) 647-5688
rghulen@nisource.com
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Rae Kozlowski
Manager, Investor Relations
(219) 647-6083
ekozlowski@nisource.com
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NiSource reports higher net income in first quarter 2003 Company
continues focus on debt reduction and strengthening balance sheet
MERRILLVILLE, Ind. - NiSource Inc. (NYSE: NI) today reported income
from continuing operations of $266.1 million for the three months
ended March 31, 2003 vs. $243.8 million for the same period in 2002, a
9.1 percent increase. First quarter 2003 earnings per share from
continuing operations was $1.05 (all share amounts are basic) compared
to $1.19 for the first quarter of 2002. Net income for the first
quarter of 2003 was $254.9 million, or $1.00 per share, vs. $242.2
million, or $1.18 per share, for the comparable 2002 period.
The per share results were diluted by 23 cents with the issuance of
54.5 million shares of common stock, due to the company's successful
equity offering in the fourth quarter of 2002 (41.4 million shares)
and the settlement of forward equity agreements under NiSource's
Premium Income Equity Securities (PIES) in the first quarter of 2003
(13.1 million shares).
"Our continuing actions to streamline our operations, while meeting
customer needs during the cold weather, positively contributed to cash
flow from operations and strengthened our financial position," said
Gary L. Neale, chairman, president and chief executive officer of
NiSource Inc.
"Taking into consideration cost trackers that are directly offset in
revenue, as well as reserve changes, which together increased our 2003
O & M by $22.3 million and decreased our 2002 O & M by $18.8 million,
on a quarter-over-quarter basis, our baseline O & M expenses are
essentially flat," Neale added. "Our streamlining efforts during 2002
largely offset increases in pension and insurance expenses during this
period. Even with the sustained cold weather, our operating companies
continued to meet the strong demand for energy required by our
customers.
"Because of our enhanced liquidity, we no longer required a $500
million, 364-day credit facility. In fact, we reached a milestone on
Feb. 20 when our short-term debt hit zero for the first time since our
acquisition of Columbia Energy Group in November 2000. During the
remainder of 2003, short-term borrowings will be used for working
capital-primarily funding storage and receivables.
"Since December of 2000, we have reduced overall debt by approximately
$2 billion through the sale of non-strategic assets and the issuance
of common stock."
Factors that affected first quarter 2003 performance
* The effects of colder weather resulted in a favorable impact on
pre-tax operating income of $59.7 million, or 15 cents per share
after tax, compared to the first quarter of 2002. The favorable
impact is net of lower interruptible transmission service
revenues and higher costs to meet customer demand during a period
of peak sustained cold weather in the Northeast market areas and
slightly higher uncollectible receivables at the distribution
subsidiaries.
* Operating income in the exploration and production segment
increased $38.5 million vs. the comparable 2002 period,
reflecting a pre-tax gain of $70.8 million from the sale of the
company's interest in a natural gas exploration and production
joint venture in New York state, offset by $26.1 million as a
result of lower average prices related to deliveries of natural
gas production under forward gas sales agreements.
* An after-tax reduction to net income of $8.8 million, or 4 cents
per share, from the cumulative effect of adopting Financial
Accounting Standards Board Statement No. 143 on asset retirement
obligations.
* An unfavorable impact to operating income of $22.9 million, or 6
cents per share after tax, which included a charge of $13.5
million for credits issued to Northern Indiana Public Service
Company customers as a result of the 2002 Indiana Utility
Regulatory Commission electric rate review settlement, and an
increase in pension expense of $9.4 million.
* For comparison purposes, first quarter 2002 results were
favorably impacted by $42.7 million, or 13 cents per share after
tax, from the sales of assets, mainly NiSource's utility line-
locating business, insurance recoveries of environmental expenses
and the reversal of reserves.
About NiSource
NiSource Inc. is a Fortune 500 holding company with headquarters in
Merrillville, Ind., whose core operating companies engage in natural
gas production, transmission, storage and distribution, as well as
electric generation, transmission and distribution. NiSource operating
companies deliver energy to more than 3.7 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 at www.nisource.com.
Forward-looking statements
This news release contains forward-looking statements within the
meaning of federal securities laws. These forward-looking statements
are subject to various risks and uncertainties. The factors that
could cause actual results to differ materially from the projections,
forecasts, estimates and expectations discussed herein include, among
other things, increased competition in deregulated energy markets,
weather, fluctuations in supply and demand for energy commodities,
successful consummation of proposed acquisitions and dispositions,
growth opportunities for NiSource's regulated and non-regulated
businesses, dealings with third parties over whom NiSource has no
control, actual operating experience of acquired assets, NiSource's
ability to integrate acquired operations into its operations, the
regulatory process, regulatory and legislative changes, changes in
general economic, capital and commodity market conditions, and
counter-party credit risk, many of which are beyond the control of
NiSource. These and other risk factors are detailed from time-to-time
in the company's SEC reports. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date of this news release. The company does not undertake
any obligation to publicly release any revision to these forward-
looking statements to reflect events or circumstances after the date
of this news release.
# # #
NISOURCE INC.
Income Statement Data
Three Months Ended March 31, (IN MILLIONS, except per share amounts) 2003 2002
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NET REVENUES
Gas Distribution $1,760.7 $1,078.9
Gas Transmission and Storage 341.9 323.8
Electric 264.3 234.4
Exploration and Production 35.6 51.5
Other 176.8 119.3
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Gross Revenues 2,579.3 1,807.9
Cost of Sales 1,493.3 769.2
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Total Net Revenues 1,086.0 1,038.7
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OPERATING EXPENSES
Operation and maintenance 345.5 304.4
Depreciation, depletion and amortization 146.3 144.4
(Gain) on sale or impairment of assets (67.7) (23.4)
Other taxes 111.5 92.1
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Total Operating Expenses 535.6 517.5
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OPERATING INCOME 550.4 521.2
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OTHER INCOME (DEDUCTIONS)
Interest expense, net (126.0) (128.0)
Minority interests (2.6) (5.1)
Dividend requirements on preferred stock of subsidiaries (1.1) (1.9)
Other, net 2.4 2.5
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Total Other Income (Deductions) (127.3) (132.5)
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 423.1 388.7
INCOME TAXES 157.0 144.9
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INCOME FROM CONTINUING OPERATIONS 266.1 243.8
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(Loss) from Discontinued Operations - net of taxes (2.4) (1.6)
Change in Accounting - net of taxes (8.8) -
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NET INCOME $ 254.9 $ 242.2
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BASIC EARNINGS PER SHARE ($)
Continuing operations 1.05 1.19
Discontinued operations (0.01) (0.01)
Change in accounting (0.04) -
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BASIC EARNINGS PER SHARE 1.00 1.18
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DILUTED EARNINGS PER SHARE ($)
Continuing operations 1.04 1.17
Discontinued operations (0.01) (0.01)
Change in accounting (0.04) -
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DILUTED EARNINGS PER SHARE 0.99 1.16
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BASIC AVERAGE COMMON SHARES OUTSTANDING (MILLIONS) 253.8 205.5
DILUTED AVERAGE COMMON SHARES (MILLIONS) 256.3 208.2
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FIRST QUARTER 2003 OPERATING INCOME BY SEGMENT
NiSource's first quarter 2003 operating income was $550.4 million
compared with $521.2 million from the same period in 2002.
GAS DISTRIBUTION operations reported operating income of $314.2
million, an increase of $64.6 million from the same period in 2002.
The increase was mainly attributable to increased sales and deliveries
of natural gas due to colder weather during the first quarter of 2003
net of increased uncollectible receivables from the effects of
weather-driven higher gas costs on the residential customer base, and
increased pension expense. The 2002 period was positively impacted by
insurance recoveries of environmental expenses.
GAS TRANSMISSION AND STORAGE operations reported operating income of
$111.3 million, a decrease of $15.5 million from the year-ago period,
reflecting lower interruptible transmission service revenues and
higher costs to meet customer demand during a period of sustained cold
weather in the Northeast market areas.
ELECTRIC operations reported operating income of $52.6 million, a
decrease of $19.2 million from the comparable period last year,
primarily resulting from lower revenues due to credits issued
pertaining to the IURC electric rate review settlement and increased
pension expense.
EXPLORATION AND PRODUCTION operations reported operating income of
$71.2 million, an increase of $38.5 million from the first quarter
2002. The increase resulted mainly from the gain on the sale of
NiSource's interest in a natural gas exploration and production joint
venture in New York state. The gain was partly offset by lower average
prices related to deliveries of natural gas production under forward
sales agreements and decreased production.
The OTHER segment reported an operating loss of $7.0 million, vs.
operating income of $16.0 million in 2002. The 2003 period was
affected by lower margins on the power trading and gas marketing
portfolios, and increased depreciation expense primarily related to a
cogeneration facility placed in service during 2002. The 2002 period
was favorably impacted by a gain on the sale of gas marketing
contracts and the reversal of related reserves. The 2003 results
reflect trading activities on a net revenue basis. The 2002 results
have been adjusted to conform to the 2003 presentation.
OTHER ITEMS
Interest expense was $126.0 million for the quarter compared to $128.0
million for the first quarter of last year, a decrease of $2.0 million
due to a reduction of short- and long-term debt partially offset by
interest expense from long-term debt associated with a cogeneration
facility placed in service during 2002. Income taxes for the first
quarter of 2003 were $157.0 million, a $12.1 million increase from
2002, due to higher pre-tax income in the current period.
NISOURCE INC.
Summary of Financial and Operating Data
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Three Months
GAS DISTRIBUTION OPERATIONS Ended March 31,
(IN MILLIONS) 2003 2002
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NET REVENUES
Sales Revenues $ 1,776.4 $ 1,069.7
Less: Cost of gas sold 1,344.0 721.0
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Net Sales Revenues 432.4 348.7
Transportation Revenues 183.2 152.1
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Net Revenues 615.6 500.8
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OPERATING EXPENSES
Operation and maintenance 183.8 141.0
Depreciation and amortization 47.6 54.7
Other taxes 70.0 55.5
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Total Operating Expenses 301.4 251.2
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Operating Income $ 314.2 $ 249.6
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REVENUES ($ IN MILLIONS)
Residential 1,176.6 682.4
Commercial 417.7 226.8
Industrial 73.4 29.5
Transportation 183.2 152.1
Off system sales 43.2 63.7
Other 65.5 67.3
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Total 1,959.6 1,221.8
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SALES AND TRANSPORTATION (MDth)
Residential sales 121.3 97.0
Commercial sales 45.9 33.1
Industrial sales 8.2 5.7
Transportation 182.3 163.8
Off system sales 2.7 27.1
Other 0.2 0.1
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Total 360.6 326.8
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HEATING DEGREE DAYS 2,885 2,271
NORMAL HEATING DEGREE DAYS 2,635 2,743
% COLDER (WARMER) THAN NORMAL 9% (17%)
CUSTOMERS
Residential 2,359,175 2,323,484
Commercial 219,215 213,003
Industrial 6,047 6,183
Transportation 703,686 713,800
Other 67 68
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Total 3,288,190 3,256,538
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
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Three Months
TRANSMISSION AND STORAGE OPERATIONS Ended March 31,
(IN MILLIONS) 2003 2002
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OPERATING REVENUES
Transportation revenues $ 187.0 $ 210.9
Storage revenues 44.7 45.3
Other revenues 4.3 2.7
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Total Operating Revenues 236.0 258.9
Less: Cost of gas sold 4.4 11.7
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Net Revenues 231.6 247.2
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OPERATING EXPENSES
Operation and maintenance 77.9 79.3
Depreciation and amortization 27.9 27.4
(Gain) on sale or impairment of assets (0.3)
Other taxes 14.5 14.0
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Total Operating Expenses 120.3 120.4
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Operating Income $ 111.3 $ 126.8
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THROUGHPUT (MDth)
Columbia Transmission
Market Area 434.8 377.0
Columbia Gulf
Mainline 180.0 138.4
Short-haul 29.3 40.4
Columbia Pipeline Deep Water 1.5 0.2
Crossroads Gas Pipeline 7.7 8.1
Granite State Pipeline 14.4 11.7
Intrasegment eliminations (168.5) (123.3)
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Total 499.2 452.5
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
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Three Months
ELECTRIC OPERATIONS Ended March 31,
(IN MILLIONS) 2003 2002
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NET REVENUES
Sales revenues $ 262.8 $ 261.9
Less: Cost of sales 93.3 81.2
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Net Revenues 169.5 180.7
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OPERATING EXPENSES
Operation and maintenance 57.5 53.4
Depreciation and amortization 43.7 42.2
Other taxes 15.7 13.3
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Total Operating Expenses 116.9 108.9
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Operating Income $ 52.6 $ 71.8
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REVENUES ($ IN MILLIONS)
Residential 72.2 68.9
CommerciaL 66.7 69.0
Industrial 97.9 91.0
Wholesale 19.6 19.2
Other 6.4 13.8
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Total 262.8 261.9
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SALES (GIGAWATT HOURS)
Residential 789.6 702.4
Commercial 851.5 831.7
Industrial 2,273.5 2,025.8
Wholesale 541.9 762.3
Other 33.7 31.4
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Total 4,490.2 4,353.6
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ELECTRIC CUSTOMERS
Residential 384,991 381,737
Commercial 48,423 47,486
Industrial 2,570 2,622
Wholesale 26 30
Other 798 801
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Total 436,808 432,676
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
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Three Months
EXPLORATION AND PRODUCTION Ended March 31,
(IN MILLIONS) 2003 2002
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OPERATING REVENUES
Gas revenues $ 36.9 $ 66.5
Gathering revenues 3.4 2.4
Other revenues 1.7 4.4
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Total Operating Revenues 42.0 73.3
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Operating Expenses
Operation and maintenance 17.7 21.6
Depreciation and depletion 18.4 15.6
(Gain) on sale or impairment of assets (70.8) -
Other taxes 5.5 3.4
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Total Operating Expenses (29.2) 40.6
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Operating Income $ 71.2 $ 32.7
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GAS PRODUCTION STATISTICS
AVERAGE SALES PRICE ($ PER MCF)
U.S. 2.99 5.02
Canada - 2.67
PRODUCTION (BCF)
U.S. 12.3 13.2
Canada - -
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Total 12.3 13.2
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OIL AND LIQUIDS PRODUCTION STATISTICS
AVERAGE SALES PRICE ($ PER BBL)
U.S. 27.94 12.90
Canada - 21.08
PRODUCTION (000 BBLS)
U.S. 54.6 51.6
Canada - 4.5
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Total 54.6 56.1
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
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Three Months
OTHER (INCLUDES ASSETS HELD FOR SALE) Ended March 31,
(IN MILLIONS) 2003 2002
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NET REVENUES
Products and services revenue $ 161.2 $ 39.3
Less: Cost of products purchased 137.9 9.5
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Net Revenues 23.3 29.8
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OPERATING EXPENSES
Operation and maintenance 20.2 13.9
Depreciation and amortization 6.2 1.8
Loss (gain) on sale or impairment of assets 1.1 (3.5)
Other taxes 2.8 1.6
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Total Operating Expenses 30.3 13.8
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Operating Income (Loss) $ (7.0) $ 16.0
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CAPITALIZATION March 31, December 31,
($ in millions) 2003 2002
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TOTAL COMMON STOCK EQUITY $ 4,634.5 $4,174.9
Company-obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely Company debentures 345.0
Preferred Stock 84.9 84.9
Long-Term Debt 5,294.3 5,018.0
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TOTAL CAPITALIZATION $10,013.7 $ 9,622.8
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Current Maturities of Long-Term Debt 1,214.9 1,232.6
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Short-Term Debt 161.3 913.1
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Shares Outstanding (thousands) 262,163 248,860
Book Value of Common Shares 17.68 16.78
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