01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. 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 approximately 3.8 million customers in a corridor running from the Gulf Coast through the Midwest to New England.
In 2010 it reported gross revenues of $6,422.0 milliona, net revenues of $3,447.9 million, operating income of $921.3 million, and net income of $292.0 million, or $1.04 per diluted share, compared with $217.7 million in 2009. Income from continuing operations was $294.6 million, or $1.06 per basic share, up from $230.5 million, though results were reduced by a $96.7 million loss on early extinguishment of debt tied to the tender offer for 10.75% notes due 2016. The company states that virtually 100% of its operating income comes from rate-regulated businesses, and it is pursuing a four-part growth platform centered on rate cases and expansion of its gas transmission and storage business in the Marcellus Shale region.
The balance sheet carries total indebtedness of $7,352.8 millionb at December 31, 2010, with a debt-to-capitalization ratio of 59.9% against covenant maximums of 70% and 75%. Operating cash flow fell to $725.4 million from $1,666.2 million, largely due to working capital changes, and capital expenditures were $803.8 million. The company projects a 2011 capital program of $1,100.0 million, funded through operating cash flow, equity and short-term debt.
Credit ratings remain investment grade (BBB- at S&P and Fitch, Baa3 at Moody's), with all outlooks stable, though a downgrade below investment grade would raise borrowing costs and collateral requirements. Key legal and environmental items include the Tawney royalty litigation, for which NiSource's share of the settlement liability is up to $338.8 millionc with $330.5 million contributed as of December 31, 2010, and an EPA consent decree covering Northern Indiana's coal plants, which estimates NSR-related capital improvements of $550.0 to $650.0 million through 2018. The company also reports a $1,100.0 million 2011 capital plan and pending rate proceedings in Indiana, Pennsylvania and at Columbia Gulf.
02—Key points
Key Highlights
- Net income of $292.0 million ($1.04 diluted EPS) in 2010, up from $217.7 million ($0.79) in 2009; income from continuing operations was $294.6 million.
- Gross revenues of $6,422.0 million and net revenues of $3,447.9 million, with net revenues up $115.3 million, led by Electric Operations net revenues increase of $121.5 million.
- Operating income of $921.3 million; the company states virtually 100% of operating income is generated by rate-regulated businesses.
- Total consolidated indebtedness of $7,352.8 million; debt-to-capitalization ratio of 59.9% versus covenant maximums of 70% and 75%.
- $96.7 million loss on early extinguishment of long-term debt from the December 2010 tender offer for $273.1 million of 10.75% notes due 2016.
- Operating cash flow decreased to $725.4 million from $1,666.2 million; 2011 capital program projected at $1,100.0 million, versus $911.6 million in 2010.
- Tawney litigation settlement: NiSource's share of liability is up to $338.8 million, with $330.5 million contributed as of December 31, 2010; EPA consent decree estimates NSR capital costs of $550.0 to $650.0 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, NiSource kept $0.04.
- Revenue$6.37B100.0%
- Cost of revenue−$2.96B46.5%
- Gross profit$3.41B53.5%
- Operating costs−$2.52B39.5%
- Operating income$891.8M14.0%
- Interest, other & tax−$609.2M9.6%
- Net income$282.6M4.4%
Where FY2010 revenue went
$6.37B- Cost of revenue: $2.96B, 47% of revenue
- Operating costs: $2.52B, 39% of revenue
- Net income: $282.6M, 4.4% of revenue
- Interest, other & tax: $609.2M, 9.6% of revenue
Kept 4.4% as net incomeNet income $282.6M · 4.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $6.37B$6.65B | −4.2% |
| Cost of Revenue | $2.96B$3.32B | −10.7% |
| Gross Profit | $3.41B$3.33B | +2.2% |
| Operating Expenses | $2.53B$2.55B | −0.7% |
| Operating Income | $891.80M$800.00M | +11.5% |
| Interest Expense | $392.30M$399.30M | −1.8% |
| Net Income | $282.60M$217.00M | +30.2% |
| EPS (Basic) | $1.02$0.79 | +29.1% |
| EPS (Diluted) | $1.01$0.78 | +29.5% |
| Shares Outstanding (Basic) | 277.80M275.10M | +1.0% |
| Shares Outstanding (Diluted) | 280.10M275.80M | +1.6% |
05—Questions
Frequently Asked Questions
How much did NiSource earn in 2010 and how did that compare with 2009?
NiSource reported 2010 net income of $292.0 million, or $1.04 per diluted share, compared with $217.7 million, or $0.79 per diluted share, in 2009. Income from continuing operations was $294.6 million, or $1.06 per basic share, versus $230.5 million, or $0.84 per basic share, in 2009.
What drove the increase in net revenues in 2010?
Total net revenues were $3,447.9 million, up $115.3 million. Electric Operations net revenues rose $121.5 million, driven by higher industrial usage and margins of $45.1 million, warmer weather of approximately $35 million, and a $17.1 million increase in environmental trackers. Gas Transmission and Storage net revenues rose $18.5 million, while Gas Distribution net revenues fell $6.9 million.
How much debt does NiSource carry and is it within covenant limits?
Total consolidated indebtedness was $7,352.8 million at December 31, 2010. The debt-to-capitalization ratio was 59.9%, below the 70% maximum under the five-year revolving credit facility and the 75% maximum under the 2005 private placement note purchase agreement. The filing notes that a significant charge from goodwill impairment could affect the capitalization covenant.
What could affect NiSource's credit ratings and what would the impact be?
All ratings remain investment grade: BBB- from Fitch and S&P and Baa3 from Moody's, with stable outlooks. A downgrade below investment grade would result in ratings below investment grade, could increase the cost of new debt, and could require additional collateral; agreements with ratings triggers would require approximately $18.1 million of additional collateral in a downgrade below trigger levels.
What major growth and regulatory items are pending?
NiSource plans a 2011 capital program of $1,100.0 million. Northern Indiana filed a new electric base rate request for $75.7 million in additional gross revenue, with an order anticipated by the end of 2011. Columbia of Pennsylvania filed a rate case seeking about $37.8 million, and Columbia Gulf filed for a rate increase of about $50 million. Gas Transmission and Storage is expanding capacity to serve Marcellus Shale production.
06—Continue