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NiSource Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed March 1, 2007
Period End
December 31, 2006
Security
NI
In the record · 2016–202610-K1210-Q338-K177

NI filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 177 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Sep ’17Sep ’17
  2. Leadership change8-K · Oct ’19Oct ’19
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 1, 2007. Cited figures are marked; the original filing is the authoritative source.

NiSource Inc. (filed as NiSource Inc.) reported 2006 income from continuing operations before cumulative effect of $313.5 milliona, or $1.15 per basic share, up from $284.1 million, or $1.05 per basic share in 2005.

Net income was $282.2 millionb, or $1.04 per basic share, compared with $306.5 million in 2005. Gross revenues were $7.49 billion and net revenues were $3.12 billion, a $22.0 million decrease from 2005. Operating income fell to $880.0 million from $952.6 million.

Management attributed the decline mainly to unfavorable weather (approximately 12% warmer than normal in gas markets) and decreased residential gas usage, partly offset by higher shorter-term transportation and storage sales and improved Electric Operations results. Other Operations posted a larger operating loss of $40.2 millionc, driven largely by the Whiting Clean Energy facility. The balance sheet carries total indebtedness of $6,432.5 million at December 31, 2006, and a $404.3 million jury verdict in the Tawney royalty class action (January 27, 2007) that the company intends to contest, with a reserve increased but no reserve for the $270 million punitive portion.

Net cash from operating activities was $1,156.2 milliond, and 2007 capital expenditures are projected at $801.1 million, to be funded through operations and new long-term debt. The company stated it had decided not to issue new long-term debt until its strategic and financial review, which it expected to communicate in early 2007, was completed. The quarterly common dividend was $0.23 per share, and common dividends totaled $0.92 per share in 2006.

NiSource described its strategy as focused on rate-regulated, asset-based businesses generating virtually 100% of operating income from regulated operations. Its IBM outsourcing agreement targets upwards of $530 million in gross savings, although the company reported implementation delays and is reassessing the initiative.

02—Key points

Key Highlights

  1. Net income of $282.2 million ($1.04 per basic share) in 2006, down from $306.5 million in 2005; income from continuing operations rose to $313.5 million ($1.15 per basic share) from $284.1 million.
  2. Total gross revenues of $7.49 billion and net revenues of $3.12 billion; operating income declined to $880.0 million from $952.6 million.
  3. Warmer weather (about 12% warmer than normal in gas markets) and lower residential usage reduced Gas Distribution net revenues by about $89 million and $22 million, respectively.
  4. Whiting Clean Energy after-tax loss of approximately $40.9 million in 2006; BP holds an option to buy the facility for $100 million, which management considers unlikely to be exercised.
  5. Jury verdict of $404.3 million against defendants in the Tawney royalty class action (January 27, 2007); no reserve recorded for the $270 million punitive damages portion.
  6. Total indebtedness of $6,432.5 million at year-end 2006; the company has not issued new long-term debt pending completion of its strategic and financial review.
  7. Projected 2007 capital expenditures and other investing activities of $801.1 million, versus $648.4 million in 2006.

03—Questions

Frequently Asked Questions

  1. How did NiSource perform financially in 2006?

    Net income was $282.2 million, or $1.04 per basic share, versus $306.5 million in 2005. Income from continuing operations improved to $313.5 million ($1.15 per basic share) from $284.1 million, largely because 2005 included a $108.6 million loss on early debt extinguishment and $82.8 million of IBM-related restructuring charges. Operating income, however, declined to $880.0 million from $952.6 million.

  2. What is the status of the Whiting Clean Energy facility?

    Whiting Clean Energy, located at BP's Whiting, Indiana refinery, operated at a loss, with an after-tax loss of approximately $40.9 million in 2006 versus $21.5 million in 2005. Amendment IV with BP provides for planned termination of the steam agreement at the end of 2009, with a $17.0 million contract termination accrual, and gives BP a 180-day option to buy the facility for $100 million. The carrying amount is approximately $275 million, and management expects its results to improve beginning in 2007.

  3. What major legal exposure does NiSource face?

    In the Tawney class action in West Virginia, a jury returned a verdict of $404.3 million on January 27, 2007, comprising $134.3 million in compensatory damages and $270 million in punitive damages. Defendants have challenged the award, with a hearing expected in March 2007, and intend to appeal unless the trial court substantially revises it. NiSource increased its reserve based on the verdict but did not reserve for the punitive portion.

  4. What is NiSource's financing and capital outlook?

    Total consolidated indebtedness was $6,432.5 million at December 31, 2006, and short-term borrowings were $1,193.0 million. NiSource redeemed $434.4 million of long-term debt in 2006 and decided not to issue new long-term debt until its strategic and financial review is completed. Capital spending is projected at $801.1 million for 2007, to be funded through operating cash flow and new long-term debt.

04—Continue

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