How did NiSource perform financially in 2004 compared with 2003?

Net income rose to $436.3 million, or $1.65 per basic share, from $85.2 million, or $0.33 per share, in 2003. Income from continuing operations was $430.2 million, or $1.63 per share, compared with $425.7 million, or $1.64 per share, in 2003. The 2003 result included losses from discontinued operations, including the sale of Columbia Energy Resources.

What does management expect for 2005 earnings?

Management stated that earnings per share from continuing operations could be $0.10 to $0.15 lower than 2004 results. The expected decline reflects operational and financial initiatives, regulatory proceedings and pipeline re-contracting that took place in 2004.

How is NiSource reducing its debt and interest costs?

During 2004, total long and short-term borrowings decreased $353.8 million, and interest expense, net, was $60.8 million lower than in 2003 due to lower long-term rates from 2003 and 2004 refinancing. The company expects to replace $900 million of notes due in November 2005 with a new debt issue and entered into forward swaps to manage rising-rate risk on that refinancing.

What are the main legal and regulatory risks disclosed?

The filing discloses a Virginia Natural Gas complaint at FERC, now on appeal at the D.C. Circuit, and a Stand Energy complaint in West Virginia seeking damages. It also discloses a West Virginia royalty class action against Columbia Natural Resources, in which NiSource Inc. and Columbia Energy Group were added as defendants, with trial scheduled for early in the third quarter of 2005. An EPA Notice of Violation alleges Clean Air Act violations at three Northern Indiana generating stations, and the company is in discussions with the EPA about resolving it.

What is the company's dividend policy after the 2003 change?

Beginning with the November 2003 dividend, NiSource reduced its annual common dividend to $0.92 per share from $1.16 per share to support debt reduction, cash flow and reinvestment in core businesses. The company paid $0.92 per share for 2004, and the Board declared a quarterly dividend of $0.23 per share in January 2005. The Board stated its intention to continue quarterly cash dividends, though the timing and amount will depend on subsidiary earnings, financial condition and other factors.

NI 10-K FY2004 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 9, 2005. Cited figures are marked; the original filing is the authoritative source.

NiSource Inc. is an energy holding company whose subsidiaries provide natural gas, electricity and other products and services to over 3.7 million customers in a corridor running from the Gulf Coast through the Midwest to New England.

The company states that it generates virtually 100% of its operating income from rate-regulated businesses. For 2004, gross revenues were $6,666.2 million^a, net revenues were $3,055.7 million, operating income was $1,072.0 million, and net income was $436.3 million, or $1.65 per basic share, compared with $85.2 million, or $0.33 per share, in 2003. Income from continuing operations was $430.2 million, or $1.63 per share, versus $425.7 million, or $1.64 per share, in 2003.

Management highlighted regulatory initiatives in Ohio and Indiana, tighter control of operation and maintenance costs, and lower interest expense, which fell $60.8 million^b year over year. Total long and short-term borrowings decreased $353.8 million during 2004. Management said 2005 earnings per share from continuing operations could be $0.10 to $0.15 lower than 2004, reflecting the expiration of pipeline firm contracts on October 31, 2004 and other factors.

The company also projected a 2005 capital program of $623.6 million^c, $100.2 million above 2004, funded primarily from operations. The quarterly dividend was reduced to $0.23 per share, and $0.92 per share was paid for 2004.

The filing also discloses several pending matters, including a Federal Energy Regulatory Commission complaint by Virginia Natural Gas, a West Virginia royalty class action with trial scheduled for early in the third quarter of 2005, and an Environmental Protection Agency Notice of Violation issued to Northern Indiana Public Service Company. Management stated its internal control over financial reporting was effective as of December 31, 2004.

02—Key points

Key Highlights

Net income of $436.3 million, or $1.65 basic EPS, in 2004, up from $85.2 million, or $0.33 per share, in 2003
Gross revenues of $6,666.2 million and operating income of $1,072.0 million in 2004
Interest expense, net, decreased $60.8 million in 2004 on lower long-term rates and refinancing; total debt fell $354 million from December 31, 2003
2005 EPS from continuing operations could be $0.10 to $0.15 lower than 2004, due to operational and financial initiatives and pipeline re-contracting
Projected 2005 capital program of $623.6 million, $100.2 million higher than 2004, funded primarily with cash from operations
Quarterly common dividend of $0.23 per share declared January 6, 2005; $0.92 per share paid for 2004 after the November 2003 reduction
Pending litigation includes a FERC complaint by Virginia Natural Gas, a West Virginia royalty class action with trial expected in Q3 2005, and an EPA Notice of Violation to Northern Indiana

03—Questions

Frequently Asked Questions

How did NiSource perform financially in 2004 compared with 2003?
Net income rose to $436.3 million, or $1.65 per basic share, from $85.2 million, or $0.33 per share, in 2003. Income from continuing operations was $430.2 million, or $1.63 per share, compared with $425.7 million, or $1.64 per share, in 2003. The 2003 result included losses from discontinued operations, including the sale of Columbia Energy Resources.
What does management expect for 2005 earnings?
Management stated that earnings per share from continuing operations could be $0.10 to $0.15 lower than 2004 results. The expected decline reflects operational and financial initiatives, regulatory proceedings and pipeline re-contracting that took place in 2004.
How is NiSource reducing its debt and interest costs?
During 2004, total long and short-term borrowings decreased $353.8 million, and interest expense, net, was $60.8 million lower than in 2003 due to lower long-term rates from 2003 and 2004 refinancing. The company expects to replace $900 million of notes due in November 2005 with a new debt issue and entered into forward swaps to manage rising-rate risk on that refinancing.
What are the main legal and regulatory risks disclosed?
The filing discloses a Virginia Natural Gas complaint at FERC, now on appeal at the D.C. Circuit, and a Stand Energy complaint in West Virginia seeking damages. It also discloses a West Virginia royalty class action against Columbia Natural Resources, in which NiSource Inc. and Columbia Energy Group were added as defendants, with trial scheduled for early in the third quarter of 2005. An EPA Notice of Violation alleges Clean Air Act violations at three Northern Indiana generating stations, and the company is in discussions with the EPA about resolving it.
What is the company's dividend policy after the 2003 change?
Beginning with the November 2003 dividend, NiSource reduced its annual common dividend to $0.92 per share from $1.16 per share to support debt reduction, cash flow and reinvestment in core businesses. The company paid $0.92 per share for 2004, and the Board declared a quarterly dividend of $0.23 per share in January 2005. The Board stated its intention to continue quarterly cash dividends, though the timing and amount will depend on subsidiary earnings, financial condition and other factors.

04—Continue

← View all 10-K filings