NiSource Earnings Drop 22%, Short of Estimates
A glance at NiSource's second quarter earnings tells a lot about
why it's looking to Columbia for help. While Columbia won praise
from analysts for beating second quarter earnings expectations with
a 15% jump in net income to $26.1 million, or 32 cents per share,
it's hostile suitor NiSource struggled and fell short of Wall
Street expectations by $0.03/share, reporting a 22% drop in net
income to $22.9 million or $0.18/share, from $29.5, or $0.24/share
NiSource attributed the decline to the "seasonal nature of
earnings" from its recent acquisitions, salt cavern storage
operator TPC Corp. and Bay State Gas, a New England gas
distribution company serving 312,000 customers in Massachusetts,
New Hampshire and Maine. "The acquisitions of Bay State Gas and TPC
provide opportunities for NiSource to expand geographically into
growing gas markets and expand our overall marketing capabilities,
while continuing to enhance shareholder value," said CEO Gary L.
Neale. "Both companies are expected to contribute solid earnings
growth. However, the heating sensitive nature of these gas
businesses will result in some shift of earnings from the second
and third quarter to the first and fourth quarter. As a result,
future first- and fourth-quarter results will be stronger and the
second and third quarter results somewhat weaker when compared to
historical performance of the company."
NiSource turned its focus to its year-to-date performance, in
which basic earnings per share were 80 cents, a 10% increase from
the same period a year ago. Net income for the six-month period was
$99.5 million, an increase of $9.3 million from 2Q98. However, the
1999 and 1998 six-month periods are not directly comparable because
of the acquisitions of Bay State and TPC in early 1999.
NiSource also suffered a minor setback on its federal litigation
against Columbia this week when the U.S. District Court for the
District of Delaware denied its motion for expedited discovery. The
civil suit charges Columbia's board and management with making
"false and misleading" statements that are "intended to unfairly
disparage" any potential merger transaction between the companies.
NiSource claims those statements have deprived CG shareholders of
having a "meaningful opportunity to consider" the tender offer and
seeks a court order allowing it to "depose the investment bankers
who prepared [Columbia's] analysis as well as a number of
individual directors who apparently made statements relying on
these calculations," according to the court. With its motion for
expedited discovery, NiSource was seeking to speed up the process.
The court, however, still has not decided Columbia's motion to
dismiss the complaint.
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