With its exploration and production segment and cogeneration assets reported as discontinued operations, NiSource on Wednesday reported that net income for the second quarter of 2003 resulted in a net loss of $324.9 million, or $1.24 per share, versus net income of $25 million, or 12 cents per share, for the comparable 2002 period.
The company noted that the pending sale of its production unit, Columbia Energy Resources Inc., and all the steel industry-related assets of subsidiary Primary Energy Inc. forced NiSource to recognized an after-tax loss during the quarter of $362.8 million, or $1.39 per share.
For 2Q2003, the Merrillville, IN-based company posted income from continuing operations of $39.3 million, or 15 cents per share, compared with $20.8 million, or 10 cents per share, for the same period in 2002. The company attributed the increase in income from continuing operations to cost containment efforts and lower interest expense.
Despite the fact that the company’s total customer base increased from 3.2 million to 3.3 million, mild weather caused gas sales and transportation figures to slip to 153.9 MDth from 177.8 MDth during the second quarter 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 CEO. “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 added. “Moving forward, our strategy is to focus on optimizing the potential of our utility and pipeline assets to deliver long-term value to shareholders.”
NiSource’s second quarter 2003 operating income was $175.8 million compared with $158.7 million from the same period in 2002. The company’s gas distribution segment posted the largest rise in operating income, increasing $21.9 million from 2Q2002 to notch $56.8 million for the second quarter of 2003. NiSource said 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.
The gas transmission and storage segment also increased its contribution from 2Q2002. The segment reported operating income of $87.3 million, an increase of $10.7 million from the comparable 2002 period, which was attributed 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.
As a result of 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, NiSource’s electric operations segment reported operating income of $64.1 million, a decrease of $16.9 million from the comparable period last year.
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