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Columbia Gas parent company reports earnings drop for quarter

August 08, 2005|by DANIEL J. SERNOVITZ

NiSource Inc., parent company of Columbia Gas of Maryland and Columbia Gas of Pennsylvania, reported a sharp, $27.6 million drop in second-quarter earnings Thursday, driven down by costs it incurred as part of an outsourcing agreement with IBM.

Despite the depressed income, which fell from $35.5 million in the second quarter of 2004 to $7.9 million this year, company officials said their core assets, including gas distribution companies such as Columbia Gas, reported solid earnings.

"It actually was a pretty good quarter," said NiSource spokeswoman Kris Falzone. "When you take out that we see a solid earnings picture."

NiSource reported $31.2 million in costs tied to the company's outsourcing agreement with IBM. The company assigned $11.2 million of those costs to its Gas Distribution Operations, which includes Columbia Gas. That segment, which also was assessed an impairment charge due to an earnings cap placed on Kokomo Gas and Fuel Co. in Indiana, reported $5.7 million in income for the quarter, down from $15.1 million last year. Factoring out those expenses, Falzone noted that gas distribution revenues were up for the quarter.

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"Because we are a gas company, we are heavily weighted on the first and fourth quarters," she said. "Revenues were up, and the weather in the second quarter was a bit colder than it was in the same quarter a year ago."

Gas distribution revenues increased from $616.4 million in the second quarter of 2004 to $658.3 million. Revenue also was up for the first half of 2005, increasing from $2.3 billion last year to $2.5 billion this year.

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