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NiSource Inc Reports Operating Results (10-Q)

May 02, 2009 | About:

NiSource Inc (NYSE:NI) filed Quarterly Report for the period ended 2009-03-31.

NiSource Inc. formerly NIPSCO Industries Inc. is an energyand utility-based holding company headquartered in Merrillville Indiana that provides natural gas electricity and water to the public for residential commercial and industrial uses. NiSource operating companies deliver energy to millions of customers located within the high-demand energy corridor stretching from the Gulf Coast through the Midwest to New England. NiSource Inc has a market cap of $3.08 billion; its shares were traded at around $11.24 with a P/E ratio of 8.8 and P/S ratio of 0.3. The dividend yield of NiSource Inc stocks is 8.2%.

Highlight of Business Operations:

Net revenues of $5.7 million for the first quarter of 2009 decreased by $1.5 million from the first quarter of 2008 as a result of lower commercial and industrial gas marketing revenues.

Other Operations reported an operating loss of $1.4 million for the first quarter of 2009, versus an operating loss of $0.5 million for the comparable 2008 period. The decrease in operating income resulted primarily from lower net revenues described above. Operating expenses decreased $0.6 million primarily due to lower employee and administrative expense.

sold CNR in 2003, NiSource remains obligated to manage this litigation and for the majority of any damages ultimately awarded to the plaintiffs. On January 27, 2007, the jury hearing the case returned a verdict against all defendants in the amount of $404.3 million; this is comprised of $134.3 million in compensatory damages and $270 million in punitive damages. In January 2008, the Defendants filed their petition for appeal, and on March 24, 2008, the Defendants filed their amended petition for appeal with the West Virginia Supreme Court of Appeals. On May 22, 2008, the West Virginia Supreme Court of Appeals refused the defendants petition for appeal. On August 22, 2008, Defendants filed their petitions to the United States Supreme Court for writ of certiorari. The Plaintiffs filed their response on September 22, 2008. On September 19, 2008, the West Virginia Supreme Court issued an order extending the stay of the judgment until proceedings before the United States Supreme Court are fully concluded. Given the West Virginia Courts refusal of the appeal, NiSource adjusted its reserve in the second quarter of 2008 to reflect the portion of the trial court judgment for which NiSource would be responsible, inclusive of interest. This amount was included in Legal and environmental reserves, on the Consolidated Balance Sheet as of December 31, 2008. On October 24, 2008, the West Virginia Circuit Court for Roane County, West Virginia, preliminarily approved a settlement agreement with a total settlement amount of $380 million. The settlement received final approval by the Court on November 22, 2008. NiSources share of the settlement liability is up to $338.8 million. NiSource has complied with its obligations under the settlement agreement to fund $85.5 million in the qualified settlement fund by January 13, 2009. Additionally, NiSource provided a letter of credit on January 13, 2009 in the amount of $254 million and thereby complied with its obligation to secure the unpaid portion of the settlement. The trial court entered its order discharging the judgment on January 20, 2009. The Court is supervising the administration of the settlement proceeds. NiSource will be required to make additional payments, pursuant to the settlement, upon notice from the Class Administrator.

On February 21, 2007, PADEP provided representatives of Columbia Transmission with a proposed Consent Order and Agreement covering an unmanned equipment storage site located in rural southwest Pennsylvania. The site in question is also subject to the EPAs AOC (Refer to Note 16-C, Environmental Matters, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the AOC). PADEPs proposed order alleges that Columbia Transmission has violated the states Clean Streams Act and Solid Waste Management Act by discharging petroleum products onto the property and into the waters of the state. In addition to requiring remediation and monitoring activities at the site, the state has proposed penalties for these violations. The site was remediated via an EPA approved Remedial Action Work Plan in the summer of 2008. The PADEP had provided written notification that it would not attempt to stop the EPA approved work and would seek the aforementioned Order after the remedy is completed. On January 6, 2009, PADEP provided Columbia Transmission with a Consent Assessment of Civil Penalty seeking a civil penalty of $700 thousand for alleged violations of the Clean Streams Law. On April 23, 2009, PADEP sent Columbia Transmission an NOV. This NOV alleged the same violations as the January 6, 2009 Consent Assessment of Civil Penalty, but it also included violations of the Clean Streams Law that had allegedly been observed during a February 16, 2009 site inspection. The NOV increased the amount of PADEPs settlement demand to $1 million. Columbia intends to seek clarification from PADEP regarding the proposed penalty.

Read the The complete ReportNI is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, Brian Rogers of T Rowe Price Equity Income Fund, Dodge & Cox.

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