NiSource Inc. reported net income of $160.7 million, or $0.78 per basic share, for the nine months ended Sept. 30 versus net income of $155 million, or $1.27 per basic share for the same period last year. But the two are not comparable, NiSource said, because of its acquisition Nov. 1, 2000 of Columbia Energy Group.

“The acquisition caused a material change in NiSource’s historical earnings pattern due to the seasonal nature of Columbia’s natural gas business, coupled with year-round interest expense related to the acquisition,” the company said in announcing earnings Thursday. “As a result, the bulk of full-year earnings will be concentrated in the first and fourth quarters compared to NiSource’s historical performance. In addition, earnings per share are not comparable because of the issuance of additional NiSource shares in connection with the Columbia acquisition.”

Reflecting the same pattern, NiSource reported a net loss of $20.1 million or 10 cents per share in the third quarter, which was well below analysts’ expectations of $0.03/share. Net income for the third quarter of last year was $52 million or 43 cents per basic share.

The company announced that given year-to-date and third-quarter results and the challenges of an uncertain economy, the company’s full-year earnings guidance is being adjusted down to a range of $1.65-$1.75 per share, excluding one-time and other adjustments for the year. Wall Street expectations range from $1.85 to $2.05/share.

NiSource posted a litany of adverse conditions leading to its poor results in the third quarter, including: depressed power prices due to greater wholesale electric supply and lower demand in the Midwest region and continued customer bad debt expense due to increased gas costs in late 2000.

For year-to-date results, NiSource blamed higher than expected interest costs, 7% warmer than expected weather, higher uncollectible customer accounts due to increased gas costs during the 2000-2001 heating season, incurrence of a first-quarter 2001 one-time charge of $15.5 million or 5 cents per share due to the settlement of litigation related to Market Hub Partners and costs associated with the fiber optic network including impairment of the assets, which resulted in a charge of $18.9 million or 6 cents per share.

CEO Gary L. Neale said the company remains optimistic about its long-term prospects, despite the short-term challenges brought on by an uncertain U.S. economy and transition to a natural gas-focused enterprise.

“As we complete the first anniversary of our acquisition of Columbia, the integration of our combined operations has resulted in savings of more than $100 million, a redefinition of our position and strength in the marketplace and a commitment to demonstrate our ability to effectively manage one of the largest gas distribution and transmission operations in the country,” said Neale. “This focus on our assets, our balance sheet and our management depth will position us for future growth as market conditions and the economy improve.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.