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
July 30, 2003
FOR ADDITIONAL INFORMATION
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MEDIA INVESTORS
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Kris Falzone Dennis Senchak
Director, Corporate Affairs Vice President, Investor Relations
(219) 647-5581 (219) 647-6085
klfalzone@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 EARNINGS
EXPLORATION & PRODUCTION, COGENERATION ASSETS REPORTED AS DISCONTINUED
OPERATIONS
MERRILLVILLE, IND. - Cost containment efforts and lower interest
expense contributed to higher income from continuing operations for
NiSource Inc. (NYSE: NI) during the second quarter of 2003.
NiSource today reported income from continuing operations of $39.3
million, or 15 cents per share (all per share amounts are basic), for
the three months ended June 30, 2003, compared with $20.8 million, or
10 cents per share, for the same period in 2002. During the 2003
period NiSource recognized losses associated with discontinued
operations, resulting in a net loss for the three months ended June 30
of $324.9 million, or a loss of $1.24 per share, versus net income of
$25.0 million, or 12 cents per share, for the comparable 2002 period.
Income from continuing operations for the six months ended June 30,
2003, was $261.6 million, or $1.02 per share, compared with $240.4
million, or $1.17 per share, for the same period in 2002. During the
2003 period NiSource recognized losses associated with discontinued
operations, resulting in a net loss for the six months ended June 30
of $70.0 million, or a loss of 27 cents per share, versus net income
of $267.2 million, or $1.30 per share, for the comparable 2002 period.
NiSource issued a total of 54.5 million shares of common stock in
November 2002 and February 2003. If those additional shares had been
outstanding on Jan. 1, 2002, the per-share results would have been
reduced by 2 cents for the second quarter of 2002, and by 26 cents for
the first six months of 2002.
"The efforts of our management team and all employees to contain costs
largely offset the effect of increased pension and insurance
expenses," said Gary L. Neale, NiSource chairman, president and chief
executive officer.
"Our recent decision to trim our common stock dividend, the sale of
non-core assets, the November 2002 equity offering and ongoing debt
reduction efforts were influential in the rating agencies' removal of
the negative outlook on NiSource's ratings and affirmation of our
investment grade credit ratings. Our actions also will enhance our
cash flow and provide additional funds to reinvest in NiSource's core
businesses for the future," Neale said. "Moving forward, our strategy
is to focus on optimizing the potential of our utility and pipeline
assets to deliver long-term value to shareholders."
FACTORS THAT AFFECTED SECOND-QUARTER 2003 PERFORMANCE
-----------------------------------------------------
* A reduction in employee-related and administrative expenses of
$20.2 million pre-tax, or 5 cents per share after tax, which was
a result of reorganization initiatives during 2002.
* As a result of continued debt reduction efforts and lower short-
term interest rates, interest expense was reduced by $7.3
million, or 2 cents per share after tax, compared to the second
quarter of 2002.
* The overall effects of weather resulted in a negative impact on
operating income of $10.1 million, or 2 cents per share after
tax, compared to the quarter ended June 30, 2002.
* An unfavorable impact to operating income of $10.8 million, or 3
cents per share after tax, for credits issued to Northern Indiana
Public Service Company customers as a result of the 2002 Indiana
Utility Regulatory Commission (IURC) electric rate review
settlement.
* The effects of increased pension expense reduced operating income
by $9.4 million, or 2 cents per share after tax.
* In early July, NiSource announced that it signed agreements to
sell its exploration and production subsidiary, Columbia Energy
Resources, Inc. (CER), and all the steel industry-related,
inside-the-fence assets of its subsidiary Primary Energy, Inc.
NiSource accounted for CER and the Primary Energy subsidiaries as
discontinued operations as of June 30, 2003, and adjusted all
periods presented accordingly. During the second quarter of 2003,
NiSource recognized an after-tax loss of $362.8 million, or a
loss of $1.39 per share, related to the sales.
* For comparison purposes, operating income for the quarter ended
June 30, 2002, was negatively affected by $17.7 million, or 4
cents per share after tax, for expenses associated with the July
1, 2002, sale of a portfolio of EnergyUSA-TPC gas marketing
contracts and the recognition of a reserve related to a long-term
note receivable.
SECOND QUARTER 2003 OPERATING INCOME BY SEGMENT
NiSource's second quarter 2003 operating income was $175.8 million
compared with $158.7 million from the same period in 2002.
GAS DISTRIBUTION operations reported operating income of $56.8
million, an increase of $21.9 million from the same period in 2002.
The increase was mainly attributable to a reduction in employee-
related and administrative expenses as a result of the 2002
reorganization initiatives, partly offset by increased pension costs
and warmer weather during the quarter.
GAS TRANSMISSION AND STORAGE operations reported operating income of
$87.3 million, an increase of $10.7 million from the comparable 2002
period. The increase was mainly attributable to a reduction in
employee-related and administrative expenses and a reversal of a
litigation reserve relating to a lawsuit that was settled in the
second quarter of 2003, slightly offset by lower revenues in the
current period. The 2002 period was unfavorably impacted by the
recognition of a reserve related to a long-term note receivable.
ELECTRIC operations reported operating income of $64.1 million, a
decrease of $16.9 million from the comparable period last year,
primarily resulting from lower revenues due to $10.8 million of
credits issued pertaining to the IURC electric rate review settlement
and cooler weather in the month of June affecting electric sales.
The OTHER segment reported an operating loss of $10.4 million, versus
an operating loss of $38.3 million in 2002. The decrease in the
operating loss was mainly attributable to a reduction in operation and
maintenance expenses as a result of exiting the gas trading business
and lower lease expense as a result of the recharacterization of the
Whiting Clean Energy operating lease to an asset owned in substance.
The 2002 period was negatively impacted by expenses associated with
the July 1, 2002 sale of a portfolio of EnergyUSA-TPC gas marketing
contracts.
CORPORATE operating loss was $22.0 million, versus operating income of
$4.5 million in the 2002 period. The decrease was primarily due to
increased administrative expenses resulting from reduced allocations
to the operating companies and inter-company mark-to-market
transactions.
OTHER ITEMS
Interest expense was $114.9 million for the quarter compared to $122.2
million for the second quarter of last year, a decrease of $7.3
million due to a reduction of short- and long-term debt and lower
short-term interest rates, partially offset by interest expense from
long-term debt associated with Whiting Clean Energy, which was placed
in service during 2002. Income taxes for the second quarter of 2003
were $26.4 million, a $16.3 million increase from 2002, due to higher
pre-tax income in the 2003 period.
SIX-MONTH PERIOD OPERATING INCOME BY SEGMENT
Operating income was $648.2 million for the six months ended June 30,
2003, compared with $640.1 million for the same period in 2002.
GAS DISTRIBUTION operations reported operating income of $371.0
million, an increase of $86.5 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 resulting from a change in
the method of calculation and the effects of weather-driven higher gas
costs on the residential customer base and a reduction in employee-
related and administrative expenses. The 2002 period was positively
impacted by insurance recoveries of environmental expenses.
GAS TRANSMISSION AND STORAGE operations reported operating income of
$198.6 million, a decrease of $4.8 million from the comparable 2002
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, slightly offset by a
reversal of a litigation reserve relating to a lawsuit that was
settled in the second quarter of 2003. The 2002 period was
unfavorably impacted by the recognition of a reserve related to a
long-term note receivable.
ELECTRIC operations reported operating income of $116.7 million, a
decrease of $36.1 million from the comparable period last year,
primarily resulting from lower revenues due to $24.3 million of
credits issued pertaining to the IURC electric rate review settlement,
increased pension expense and cooler weather in the month of June.
The OTHER segment reported an operating loss of $24.3 million, versus
an operating loss of $29.4 million in 2002. The decrease in the
operating loss was mainly attributable to a decrease in operation and
maintenance expenses as a result of exiting the gas trading business.
CORPORATE operating loss was $13.8 million, versus operating income of
$28.8 million in the 2002 period. The decrease was primarily due to
increased administrative expenses resulting from reduced allocations
to the operating companies and inter-company mark-to-market
transactions. The 2002 period was favorably impacted by the gain on
the sale of NiSource's SM&P utility line-locating business in 2002.
OTHER ITEMS
Interest expense was $237.9 million for the first six months of 2003
compared to $249.3 million for the first six months of last year, a
decrease of $11.4 million due to a reduction of short- and long-term
debt and lower short-term interest rates, partially offset by interest
expense from long-term debt associated with Whiting Clean Energy,
which was placed in service during 2002. Income taxes for the first
six months of 2003 were $153.9 million, a $14.2 million increase from
2002, due to higher pre-tax income in the 2003 period.
ABOUT NISOURCE
NiSource Inc. (NYSE: NI) is a Fortune 500 holding company with
headquarters in Merrillville, Ind., whose core operating companies
engage in natural gas transmission, storage and distribution, as well
as electric generation, transmission and distribution. NiSource
operating companies deliver energy to 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 via the Internet 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 dispositions, growth opportunities
for NiSource's 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 Six Months
Ended June 30, Ended June 30,
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(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2003 2002 2003 2002
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<s> <c> <c> <c> <c>
NET REVENUES
Gas distribution $ 559.3 $ 459.0 $2,320.0 $1,537.9
Gas transmission and storage 221.0 218.0 563.2 541.9
Electric 262.1 252.9 526.4 487.3
Other 100.8 24.4 256.2 107.9
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Gross Revenues 1,143.2 954.3 3,665.8 2,675.0
Cost of sales 501.4 307.9 1,994.3 1,077.1
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Total Net Revenues 641.8 646.4 1,671.5 1,597.9
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OPERATING EXPENSES
Operation and maintenance 275.4 317.9 601.9 594.9
Depreciation, amortization and depletion 124.9 112.9 249.5 241.2
Loss (gain) on sale or impairment of assets 0.2 (0.1) 1.3 (23.5)
Other taxes 65.5 57.0 170.6 145.2
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Total Operating Expenses 466.0 487.7 1,023.3 957.8
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OPERATING INCOME 175.8 158.7 648.2 640.1
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OTHER INCOME (DEDUCTIONS)
Interest expense, net (114.9) (122.2) (237.9) (249.3)
Minority interests - (5.1) (2.5) (10.2)
Preferred stock dividends of subsidiaries (1.1) (1.9) (2.3) (3.7)
Other, net 5.9 1.4 10.0 3.2
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Total Other Income (Deductions) (110.1) (127.8) (232.7) (260.0)
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INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 65.7 30.9 415.5 380.1
INCOME TAXES 26.4 10.1 153.9 139.7
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INCOME FROM CONTINUING OPERATIONS 39.3 20.8 261.6 240.4
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Income (Loss) from Discontinued Operations -
net of taxes (1.4) (3.3) (13.5) 19.3
Gain (Loss) on Disposition of Discontinued
Operations - net of taxes (362.8) 7.5 (318.0) 7.5
Change in Accounting - net of tax - - (0.1) -
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NET INCOME (LOSS) $ (324.9) $25.0 $ (70.0) $ 267.2
==============================================================================================================
BASIC EARNINGS (LOSS) PER SHARE ($)
Continuing operations 0.15 0.10 1.02 1.17
Discontinued operations (1.39) 0.02 (1.29) 0.13
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BASIC EARNINGS (LOSS) PER SHARE (1.24) 0.12 (0.27) 1.30
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DILUTED EARNINGS (LOSS) PER SHARE ($)
Continuing operations 0.15 0.10 1.01 1.15
Discontinued operations (1.38) 0.02 (1.28) 0.13
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DILUTED EARNINGS (LOSS) PER SHARE (1.23) 0.12 (0.27) 1.28
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BASIC AVERAGE COMMON SHARES
OUTSTANDING (MILLIONS) 261.3 205.6 257.6 205.6
DILUTED AVERAGE COMMON SHARES (MILLIONS) 263.1 208.2 259.5 208.0
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NISOURCE INC.
Summary of Financial and Operating Data
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Three Months Six Months
GAS DISTRIBUTION OPERATIONS Ended June 30, Ended June 30,
(IN MILLIONS) 2003 2002 2003 2002
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<s> <c> <c> <c> <c>
NET REVENUES
Sales revenues $ 576.4 $ 465.5 $ 2,352.8 $ 1,535.2
Less: Cost of gas sold 385.3 291.7 1,729.3 1,012.7
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Net Sales Revenues 191.1 173.8 623.5 522.5
Transportation revenues 82.4 79.6 265.6 231.7
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Net Revenues 273.5 253.4 889.1 754.2
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OPERATING EXPENSES
Operation and maintenance 135.4 154.3 319.2 295.3
Depreciation and amortization 47.9 39.2 95.5 93.9
Other taxes 33.4 25.0 103.4 80.5
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Total Operating Expenses 216.7 218.5 518.1 469.7
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OPERATING INCOME $ 56.8 $ 34.9 $ 371.0 $ 284.5
==============================================================================================================
REVENUES ($ IN MILLIONS)
Residential 378.5 276.0 1,555.1 958.4
Commercial 135.0 83.6 552.7 310.4
Industrial 37.1 22.8 110.5 52.3
Transportation 82.4 79.6 265.6 231.7
Off-system sales 17.4 43.0 60.6 106.7
Other 8.4 40.1 73.9 107.4
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Total 658.8 545.1 2,618.4 1,766.9
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SALES AND TRANSPORTATION (MDth)
Residential sales 29.5 32.8 150.8 129.8
Commercial sales 12.1 16.4 58.0 49.5
Industrial sales 3.9 2.3 12.1 8.0
Transportation 103.8 116.6 286.1 280.4
Off-system sales 2.6 9.7 5.3 36.8
Other 2.0 - 2.2 0.1
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Total 153.9 177.8 514.5 504.6
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HEATING DEGREE DAYS 486 523 3,371 2,794
NORMAL HEATING DEGREE DAYS 485 513 3,120 3,256
% COLDER (WARMER) THAN NORMAL 0% 2% 8% (14%)
CUSTOMERS
Residential 2,303,356 2,327,941
Commercial 213,982 212,258
Industrial 5,999 6,200
Transportation 744,324 676,038
Other 65 63
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Total 3,267,726 3,222,500
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
Three Months Six Months
TRANSMISSION AND STORAGE OPERATIONS Ended June 30, Ended June 30,
(IN MILLIONS) 2003 2002 2003 2002
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<s> <c> <c> <c> <c>
OPERATING REVENUES
Transportation revenues $ 148.0 $ 164.2 $ 335.0 $ 375.1
Storage revenues 44.6 44.5 89.3 89.8
Other revenues 2.7 3.3 7.0 6.0
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Total Operating Revenues 195.3 212.0 431.3 470.9
Less: Cost of gas sold 2.7 15.0 7.1 26.7
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Net Revenues 192.6 197.0 424.2 444.2
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OPERATING EXPENSES
Operation and maintenance 63.3 79.0 141.2 158.3
Depreciation and amortization 27.7 27.3 55.6 54.7
Loss (gain) on sale or impairment of assets 0.2 (0.1) 0.2 (0.4)
Other taxes 14.1 14.2 28.6 28.2
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Total Operating Expenses 105.3 120.4 225.6 240.8
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Operating Income $ 87.3 $ 76.6 $ 198.6 $ 203.4
==============================================================================================================
Throughput (MDth)
Columbia Transmission
Market Area 171.5 187.0 606.3 564.0
Columbia Gulf
Mainline 173.7 179.0 353.7 317.4
Short-haul 29.3 34.4 58.6 74.8
Columbia Pipeline Deep Water 1.9 - 3.4 0.2
Crossroads Gas Pipeline 8.4 6.5 16.1 14.6
Granite State Pipeline 6.6 8.4 21.0 20.1
Intrasegment eliminations (168.1) (162.6) (336.6) (285.9)
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Total 223.3 252.7 722.5 705.2
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
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Three Months Six Months
ELECTRIC OPERATIONS Ended June 30, Ended June 30,
(IN MILLIONS) 2003 2002 2003 2002
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<s> <c> <c> <c> <c>
NET REVENUES
Sales revenues $ 259.4 $ 284.5 $ 522.2 $ 546.4
Less: Cost of sales 83.7 89.1 177.0 170.3
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Net Revenues 175.7 195.4 345.2 376.1
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OPERATING EXPENSES
Operation and maintenance 52.9 57.3 110.4 110.7
Depreciation and amortization 43.6 42.4 87.3 84.6
Other taxes 15.1 14.7 30.8 28.0
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Total Operating Expenses 111.6 114.4 228.5 223.3
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OPERATING INCOME $ 64.1 $ 81.0 $ 116.7 $ 152.8
==============================================================================================================
REVENUES ($ IN MILLIONS)
Residential 62.4 69.9 134.6 138.8
Commercial 69.7 76.3 136.4 145.3
Industrial 93.4 100.5 191.3 191.5
Wholesale 25.8 22.9 45.4 42.1
Other 8.1 14.9 14.5 28.7
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Total 259.4 284.5 522.2 546.4
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SALES (GIGAWATT HOURS)
Residential 639.1 699.2 1,428.7 1,401.6
Commercial 859.2 891.2 1,710.7 1,722.9
Industrial 2,205.4 2,196.9 4,478.9 4,222.7
Wholesale 751.5 784.4 1,293.4 1,546.7
Other 27.5 29.2 61.2 60.6
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Total 4,482.7 4,600.9 8,972.9 8,954.5
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COOLING DEGREE DAYS 113 263 113 263
NORMAL COOLING DEGREE DAYS 224 219 224 219
% WARMER (COOLER) THAN NORMAL (50%) 20% (50%) 20%
ELECTRIC CUSTOMERS
Residential 384,750 381,904
Commercial 48,694 47,790
Industrial 2,560 2,615
Wholesale 28 27
Other 796 801
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Total 436,828 433,137
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NISOURCE INC.
Summary of Financial and Operating Data (continued)
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Three Months Six Months
OTHER (INCLUDES ASSETS HELD FOR SALE) Ended June 30, Ended June 30,
(IN MILLIONS) 2003 2002 2003 2002
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<s> <c> <c> <c> <c>
NET REVENUES
Products and services revenue $ 92.7 $ 1.6 $ 237.1 $ 41.3
Less: Cost of products purchased 86.8 8.6 224.7 35.8
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Net Revenues 5.9 (7.0) 12.4 5.5
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OPERATING EXPENSES
Operation and maintenance 12.1 29.0 26.6 33.7
Depreciation and amortization 3.3 1.0 6.2 2.4
Loss (gain) on sale or impairment of assets - - 1.1 (3.5)
Other taxes 0.9 1.3 2.8 2.3
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Total Operating Expenses 16.3 31.3 36.7 34.9
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OPERATING LOSS $ (10.4) $ (38.3) $ (24.3) $ (29.4)
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Three Months Six Months
CORPORATE Ended June 30, Ended June 30,
($ in millions) 2003 2002 2003 2002
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OPERATING INCOME (LOSS) (22.0) 4.5 (13.8) 28.8
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CAPITALIZATION June 30, December 31,
($ in millions) 2003 2002
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<s> <c> <c>
TOTAL COMMON STOCK EQUITY $ 4,257.3 $ 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 5,041.7 4,849.5
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TOTAL CAPITALIZATION $9,383.9 $ 9,454.3
===============================================================================================================
Current Maturities of Long-Term Debt 926.8 1,224.9
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Short-Term Debt 859.4 913.1
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Shares Outstanding (thousands) 262,391 248,860
Book Value of Common Shares 16.23 16.78
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