NiSource Inc. is reporting a net income of $148.4 million or 46 cents per basic share in the first quarter of 2009, compared to $99.3 million or 36 cents per basic share in the year-ago period.

The single biggest impact on the company’s bottom line in the first quarter, according to a statement released today: an increased pension expense of $25 million or 6 cents per share “related to the deterioration in the global securities markets in 2008.”

Income from continuing operations in the first quarter was $159.3 million or 58 cents per share, compared to $189.5 million or 69 cents per share in the year-ago period. The company did report a loss of $200,000 on the disposition of discontinued operations in the first quarter, compared to a loss of $96.2 million on the disposition of discontinued operations in the year-ago period.

Operating income was $348.3 million in the first quarter, compared to $394.9 million in the year-ago period. The first-quarter 2009 result included a $19.8 million charge related to the restructuring of gas transmission and storage operations.

The dividend declared per common share in the first quarter was 46 cents, the same as in the year-ago period.

“Despite challenging economic conditions, NiSource produced another solid quarter of core earnings, while continuing to execute key financial, regulatory, and infrastructure enhancement initiatives,” NiSource President and CEO Robert Skaggs Jr. said.

The company noted that it continues to implement its previously announced financing and liquidity plan:

*In April the company’s finance subsidiary, NiSource Finance Corporation (NFC), closed on a $385 million senior unsecured loan “under attractive terms with a syndicate of lenders.”

*In March NFC issued $600 million of senior unsecured notes, the proceeds of which NiSource will use “to complete the refinancing of outstanding debts scheduled to mature in November 2009 and for general corporate purposes.”

*Also in April NFC announced the results of a tender offer for up to $300 million aggregate principal amount of its outstanding notes due in 2010. The transaction is expected to reduce the company’s interest expense through November 2010 by around $30 million.

*NIPSCO has petitioned the Indiana Utility Regulatory Commission for permission to issue $120 million of long-term debt to finance the acquisition last year of the Sugar Creek electric generating facility.

“NiSource’s overall liquidity strategy, including our recent financial and optimization initiatives, not only fully addresses the company’s 2009 debt refinancing requirements but also places us well on our way toward meeting our remaining 2010 refinancing needs of approximately $600 million,” Skaggs said. “In light of the steps we have taken and are continuing to take, I am confident NiSource will maintain a solid liquidity position going forward.”

*Gas distribution reported an operating income of $243.2 million in the first quarter, compared to $255 million in the year-ago period.

*Gas transmission and storage reported an operating income of $92.9 million in the first quarter, compared to $104.8 million in the year-ago period.

*Electric reported an operating income of $17.3 million in the first quarter, compared to $38.4 million in the year-ago period. The company attributed the decrease to higher operating expenses, which increased by $16.2 million due to high employee and administrative costs, electric generation and maintenance expenses including those associated with Sugar Creek, and storm damage repairs.

*Other operations reported an operating loss of $1.4 million in the first quarter, compared to an operating loss of $500,000 in the year-ago period.

*Corporate reported an operating loss of $3.7 million in the first quarter, compared to an operating loss of $2.8 million in the year-ago period.

NiSource said that a final round of evidentiary hearings is scheduled for this summer in its rate case, and that a new schedule of electric rates should be effective by late 2009 or during the first quarter of 2010.

Posted 5/1/2009