NiSource Reports First Quarter 2014 Earnings

MERRILLVILLE, Ind., May 8, 2014 /PRNewswire/ — NiSource Inc. (NYSE: NI)
today announced net operating earnings from continuing operations (non-GAAP) of
$258.4 million, or $0.82 per share, for the three months ended March 31, 2014,
compared with $215.3 million, or $0.69 per share, for the same period in 2013.
Operating earnings for the first quarter (non-GAAP) were $509.1 million compared
to $427.9 million in the year-ago period.

On a GAAP basis, NiSource reported income from continuing operations of $266.4
million, or $0.85 per share, for the three months ended March 31, 2014, compared
with $216.0 million, or $0.69 per share in the same period in 2013. Operating
income was $533.7 million for the first quarter of 2014, compared with $428.9
million in the year-ago period. Schedules 1 and 2 of this news release contain a
reconciliation of net operating earnings and operating earnings to GAAP.

“Our Team delivered another quarter of solid performance and steady execution on
NiSource’s expansive, infrastructure-focused investment strategy,” President and
Chief Executive Officer Robert C. Skaggs, Jr. said. “Our utilities advanced key
regulatory, legislative and long-term system enhancement programs, while our
pipeline, storage and midstream business originated and executed on a robust
inventory of growth and modernization projects. This continued focus on
execution places us in a solid position to deliver net operating earnings in
line with our guidance range of $1.61 to $1.71 per share for the year
(non-GAAP).”

Columbia Pipeline Group continues execution on a growing number of
infrastructure investments

NiSource’s Columbia Pipeline Group (CPG) continues to make steady progress on
its long-term infrastructure modernization programs, as well as its expanding
inventory of midstream and core growth initiatives tied to the company’s strong
asset position in the Utica and Marcellus Shale production regions. CPG is on
track to invest more than $800 million in 2014. Key year-to-date execution
highlights for CPG include:

— Columbia Gas Transmission (Columbia Transmission) is on track with the
second year of its long-term system modernization program. Under the
program, CPG will invest approximately $300 million annually in
improvements to system reliability, safety and flexibility. A settlement
with the company’s customers addresses the initial five years of an
expected 10-15 year program that exceeds $4 billion in investment.
— NiSource Midstream executed a binding agreement for the approximately
$120 million Washington County Gathering project. The project, anchored
by a long-term agreement with a subsidiary of Range Resources
Corporation, will consist of gathering pipelines and compression
facilities to transport well-head production into a nearby Columbia
Transmission pipeline. Construction is anticipated to begin in late
2014, with an in-service date during the second half of 2015.
— Millennium Pipeline completed a new $40 million compressor facility in
Delaware County, N.Y., which went into service in March. NiSource owns a
47.5 percent interest in Millennium.
— CPG also remains on track with the execution of significant new supply-
and market-driven growth projects, including the previously announced
Warren County, West Side Expansion, Giles County and Line 1570 projects.
These projects, which will provide total additional pipeline capacity of
approximately 900 million cubic feet per day, are scheduled to be in
service by the end of 2014. The approximately $275 million East Side
project remains on budget and on schedule for completion in the third
quarter of 2015.
— CPG continued advanced discussions with customers following the positive
open season results for its Rayne XPress and Leach XPress projects.
Together these projects are expected to provide additional
transportation capacity of about 1.5 billion cubic feet per day,
offering enhanced market access for Marcellus and Utica production via
the Columbia Transmission and Columbia Gulf Transmission systems.
— Most recently, CPG completed a successful non-binding open season for
its WB XPress project, which would involve the transportation of more
than 1 billion cubic feet of Marcellus Shale production. Additional
details on this project will be provided later this year.
“With an expanding mix of new and ongoing projects, as well as the systematic
modernization of our core system, the CPG Team is strengthening the services we
provide to our customers, assuring the continued reliability of our system and
establishing the much-needed infrastructure for the ongoing development of shale
energy supplies,” Skaggs said.

NIPSCO advances key environmental, system reliability and modernization
investments

NiSource’s Indiana natural gas and electric business, Northern Indiana Public
Service Co. (NIPSCO), remained on track with a broad agenda of system
modernization, reliability and environmental improvements. Key NIPSCO execution
highlights include:

— Two remaining flue gas desulfurization (FGD) projects at NIPSCO’s
coal-fired electric generating facilities remain on schedule and on
budget. With projected completion dates of year-end 2014 and year-end
2015, the FGD investments are part of more than $850 million in
environmental investments, including water quality and emission-control
projects, recently completed and planned at NIPSCO’s electric generating
facilities.
— NIPSCO also has initiated the first year of investments under the
company’s electric system modernization program, approved in February by
the Indiana Utility Regulatory Commission (IURC). The $1.1 billion,
seven-year program provides for the replacement and upgrade of
underground circuits, transformers and poles, helping increase system
reliability and deliver economic development benefits to the region.
NIPSCO also has filed a complementary seven-year, $700 million natural
gas modernization program, with a decision from the IURC expected as
early as today.
— Progress also continued on two major NIPSCO electric transmission
projects designed to enhance system flexibility and reliability. The
Reynolds-Topeka project, a 100-mile, 345-kilovolt line, remains on
schedule with right-of-way acquisition in process. The
Greentown-Reynolds project, a roughly 70-mile, 765-kilovolt line, is a
joint project with Pioneer Transmission. Public outreach on the
Greentown-Reynolds line continues, with the anticipated route selection,
and subsequent right-of-way acquisition, beginning later this year. The
projects involve an investment of approximately $500 million for NIPSCO
and are anticipated to be in service by the end of 2018.
“With more than $6 billion in investments planned over the next decade, NIPSCO’s
infrastructure investment programs, as well as the company’s continued focus on
customer service and economic development, are on track to provide significant
benefits to customers and communities across our northern Indiana service
territory,” Skaggs said.

Gas distribution system modernization, regulatory and customer programs on track

The NiSource Gas Distribution (NGD) companies continue to execute against a
long-term inventory of more than $10 billion in infrastructure replacement and
enhancement opportunities, paired with the development of complementary customer
programs and regulatory initiatives. Year-to-date NGD execution highlights
include:

— Following a record year of successfully implementing almost $800 million
in gas distribution system replacement and modernization investments,
NiSource’s gas utilities are on track to invest approximately $815
million in system modernization and other capital investments during
2014.
— On April 23, the Public Utilities Commission of Ohio approved Columbia
Gas of Ohio’s (COH) annual infrastructure replacement and demand-side
management rider. The rider provides for recovery of COH’s
well-established pipeline replacement program and customer energy
efficiency program investments.
— On March 21, Columbia Gas of Pennsylvania (CPA) filed a rate case with
the Pennsylvania Public Utility Commission to support continuation of
CPA’s ongoing infrastructure modernization program. If approved as
filed, the case would increase annual revenues by approximately $54
million. A decision is expected later this year.
— On February 28, the Massachusetts Department of Public Utilities issued
an order on the Columbia Gas of Massachusetts base rate case. The order
provides for an annual revenue increase of approximately $19 million,
and supports the company’s current infrastructure modernization and
replacement plans.
“Our gas distribution companies continue to steadily execute on a
well-established agenda of long-term investments in system reliability, while
introducing an array of programs designed to help our customers manage energy
use,” Skaggs said.

Affirming 2014 earnings guidance, capital investments, financial commitments

In addition to affirming NiSource’s full-year earnings outlook of $1.61 to $1.71
per share (non-GAAP), Skaggs noted that the company is on track to execute on a
record capital investment program of approximately $2.2 billion during 2014.

The company also continues to solidify its commitment to stable, investment
grade credit ratings as Moody’s upgraded NiSource’s rating to Baa2 and Standard
& Poor’s reaffirmed NiSource’s BBB- /stable rating during the first quarter.
Fitch Ratings reaffirmed its rating in late 2013.

There will likely be differences between net operating earnings and GAAP
earnings, but due to the unpredictability of weather and other factors, NiSource
is continuing its practice of not providing GAAP earnings guidance.

First Quarter 2014 Operating Earnings – Segment Results (non-GAAP)

NiSource’s consolidated operating earnings (non-GAAP) for the three months ended
March 31, 2014, were $509.1 million, compared to $427.9 million for the same
period in 2013. Refer to Schedule 2 for the items included in 2014 and 2013 GAAP
operating income but excluded from operating earnings.

Operating earnings for NiSource’s business segments for the three months ended
March 31, 2014, are discussed below.

Columbia Pipeline Group Operations reported operating earnings of $158.9 million
for the three months ended March 31, 2014, compared with operating earnings of
$133.3 million for the prior year period. Net revenues, excluding the impact of
trackers, increased by $19.7 million primarily due to higher demand and
commodity margin revenue as a result of growth projects and increased mineral
rights royalty revenue.

Operating expenses, excluding the impact of trackers, decreased by $3.2 million
primarily due to gains on conveyance of mineral interests, which was partially
offset by an increase in employee and administrative costs, higher depreciation,
and increased property taxes.

Equity earnings increased by $2.7 million primarily from increased earnings at
Millennium Pipeline.

Electric Operations reported operating earnings of $74.2 million for the three
months ended March 31, 2014, compared with operating earnings of $64.9 million
for the prior year period. Net revenues, excluding the impact of trackers,
increased by $18.0 million primarily due to an increase in off-system sales,
higher environmental investment cost recovery and increased industrial margins.
These increases were partially offset by a decrease in transmission upgrade
revenue and lower residential and commercial margins.

Operating expenses, excluding the impact of trackers, increased by $8.7 million
due primarily to increased employee and administrative costs.

Gas Distribution Operations reported operating earnings of $280.1 million for
the three months ended March 31, 2014, compared with operating earnings of
$233.3 million for the prior year period. Net revenues, excluding the impact of
trackers, increased by $54.1 million primarily attributable to increases in
regulatory and service programs, including the impact of the rate settlement at
Columbia Gas of Pennsylvania and the implementation of new rates under Columbia
Gas of Ohio’s approved infrastructure replacement program, higher residential
and commercial usage, and an increase in off-system sales.

Operating expenses, excluding the impact of trackers, increased by $7.3 million
due primarily to increased employee and administrative costs, higher
depreciation due to an increase in capital expenditures and increased other
taxes. These increases were partially offset by a decrease in outside service
costs.

Corporate and Other Operations reported an operating earnings loss of $4.1
million for the three months ended March 31, 2014, compared to an operating
earnings loss of $3.6 million for the comparable prior period.

Other Items

Interest expense increased by $10.5 million due to issuances of long-term debt
in April and October 2013. These increases were partially offset by the maturity
of long-term debt in March 2013.

Other, net reflected income of $4.5 million compared to income of $4.1 million
in 2013.

The effective tax rate of net operating earnings was 36.1 percent compared to
35.4 percent for the same period last year.

About NiSource

NiSource Inc. (NYSE: NI), based in Merrillville, Ind., is a Fortune 500 company
engaged in natural gas transmission, storage and distribution, as well as
electric generation, transmission and distribution. NiSource operating companies
deliver energy to 3.8 million customers located within the high-demand energy
corridor stretching from the Gulf Coast through the Midwest to New England.
Information about NiSource and its subsidiaries is available via the Internet at
www.nisource.com. NI-F

Forward-Looking Statements

This news release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Those statements include statements
regarding the intent, belief or current expectations of NiSource and its
management. Although NiSource believes that its expectations are based on
reasonable assumptions, it can give no assurance that its goals will be
achieved. Readers are cautioned that the forward-looking statements in this
presentation are not guarantees of future performance and involve a number of
risks and uncertainties, and that actual results could differ materially from
those indicated by such forward-looking statements. Important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements include, but are not limited to, the following:
weather; fluctuations in supply and demand for energy commodities; growth
opportunities for NiSource’s businesses; increased competition in deregulated
energy markets; the success of regulatory and commercial initiatives; dealings
with third parties over whom NiSource has no control; actual operating
experience of NiSource’s assets; the regulatory process; regulatory and
legislative changes; the impact of potential new environmental laws or
regulations; the results of material litigation; changes in pension funding
requirements; changes in general economic, capital and commodity market
conditions; and counterparty credit risk and the matters set forth in the “Risk
Factors” Section in NiSource’s most recent Form 10-K and subsequent reports on
Form 10-Q, many of which are risks beyond the control of NiSource. In addition,
the relative contributions to profitability by each segment, and the assumptions
underlying the forward-looking statements relating thereto, may change over
time. NiSource expressly disclaims a duty to update any of the forward-looking
statements contained in this release.

NiSource Inc.

Consolidated Net Operating Earnings (Non-GAAP)

(unaudited)

Three Months Ended

March, 31
———

(in millions, except per share
amounts) 2014 2013
—————————— —- —-

Net Revenues

Gas Distribution $1,193.3 $891.5

Gas Transportation and Storage 578.5 468.5

Electric 445.3 377.1

Other 77.0 44.2
—– —- —-

Gross Revenues 2,294.1 1,781.3

Cost of Sales (excluding depreciation
and amortization) 1,061.3 675.9
————————————- ——- —–

Total Net Revenues 1,232.8 1,105.4
—————— ——- ——-

Operating Expenses

Operation and maintenance 376.9 363.3

Operation and maintenance – trackers 124.3 91.1

Depreciation and amortization 148.7 140.0

Depreciation and amortization –
trackers – 3.5

Gain on sale of assets (17.5) –

Other taxes 70.6 62.2

Other taxes – trackers 30.5 24.5
———————- —- —-

Total Operating Expenses 733.5 684.6
———————— —– —–

Equity Earnings in Unconsolidated
Affiliates 9.8 7.1
——————————— — —

Operating Earnings 509.1 427.9
—————— —– —–

Other Income (Deductions)

Interest expense, net (109.1) (98.6)

Other, net 4.5 4.1
———- — —

Total Other Deductions (104.6) (94.5)
———————- —— —–

Operating Earnings From Continuing
Operations

Before Income Taxes 404.5 333.4

Income Taxes 146.1 118.1
———— —– —–

Net Operating Earnings from
Continuing Operations 258.4 215.3
————————— —– —–

GAAP Adjustment 8.0 0.7
————— — —

GAAP Income from Continuing
Operations $266.4 $216.0
=========================== ====== ======

Basic Net Operating Earnings Per
Share from Continuing Operations $0.82 $0.69
——————————— —– —–

GAAP Basic Earnings Per Share from
Continuing Operations $0.85 $0.69
———————————- —– —–

Basic Average Common Shares
Outstanding 314.2 311.1
=========================== ===== =====

NiSource Inc.

Segment Operating Earnings (Non-GAAP)

(unaudited)

Three Months Ended

Gas Distribution Operations March 31,
———

(in millions) 2014 2013
———— —- —-

Net Revenues

Sales revenues $1,543.9 $1,144.3

Less: Cost of gas sold 923.0 593.8

Net Revenues 620.9 550.5
———— —– —–

Operating Expenses

Operation and maintenance 181.4 181.3

Operation and maintenance – trackers 47.4 37.1

Depreciation and amortization 52.2 48.5

Other taxes 29.3 25.8

Other taxes – trackers 30.5 24.5
———————- —- —-

Total Operating Expenses 340.8 317.2
———————— —– —–

Operating Earnings 280.1 233.3
================== ===== =====

GAAP Adjustment 21.7 0.8
————— —- —

GAAP Operating Income $301.8 $234.1
===================== ====== ======

Three Months Ended

Columbia Pipeline Group Operations March 31,
———

(in millions) 2014 2013
———— —- —-

Net Revenues

Transportation revenues $222.3 $210.9

Storage revenues 50.0 50.5

Other revenues 73.3 40.0
————– —- —-

Total Operating Revenues 345.6 301.4

Less: Cost of Sales 0.1 0.1

Net Revenues 345.5 301.3
———— —– —–

Operating Expenses

Operation and maintenance 94.7 86.1

Operation and maintenance – trackers 71.0 46.5

Depreciation and amortization 29.7 25.7

Gain on sale of assets (17.5) –

Other taxes 18.5 16.8

Total Operating Expenses 196.4 175.1
———————— —– —–

Equity Earnings in Unconsolidated
Affiliates 9.8 7.1
——————————— — —

Operating Earnings 158.9 133.3
================== ===== =====

GAAP Adjustment – 0.2
————— —

GAAP Operating Income $158.9 $133.5
===================== ====== ======

NiSource Inc.

Segment Operating Earnings (Non-GAAP)

(unaudited)

Three Months Ended

Electric
Operations March 31,
———

(in millions) 2014 2013
———— —- —-

Net Revenues

Sales revenues $445.7 $377.4

Less: Cost of
sales 180.4 125.0

Net Revenues 265.3 252.4
———— —– —–

Operating
Expenses

Operation and
maintenance 106.6 100.4

Operation and
maintenance –
trackers 5.9 7.5

Depreciation and
amortization 60.4 59.7

Depreciation and
amortization –
trackers – 3.5

Other taxes 18.2 16.4

Total Operating
Expenses 191.1 187.5
————— —– —–

Operating
Earnings 74.2 64.9
========= ==== ====

GAAP Adjustment 4.7 0.3
————— — —

GAAP Operating
Income $78.9 $65.2
============== ===== =====

Three Months Ended

Corporate and
Other Operations March 31,
———

(in millions) 2014 2013
———— —- —-

Operating
Earnings (Loss) $(4.1) $(3.6)
================ ===== =====

GAAP Adjustment (1.8) (0.3)
————— —- —-

GAAP Operating
Income (Loss) $(5.9) $(3.9)
============== ===== =====

NiSource Inc.

Segment Volumes and Statistical Data

Three Months Ended

March 31,
———

Gas Distribution
Operations 2014 2013
—————- —- —-

Sales and
Transportation
(MMDth)

Residential 156.5 132.0

Commercial 90.1 75.3

Industrial 136.8 133.3

Off System 14.3 21.7

Other 0.2 0.2
—– — —

Total 397.9 362.5
—– —– —–

Weather
Adjustment (36.1) (1.0)
———– —– —-

Sales and
Transportation
Volumes –
Excluding
Weather 361.8 361.5
=============== ===== =====

Heating Degree
Days 3,437 2,919

Normal Heating
Degree Days 2,892 2,892

% Colder than
Normal 19% 1%

Customers

Residential 3,094,353 3,072,919

Commercial 283,000 281,933

Industrial 7,570 7,553

Other 20 23
—– — —

Total 3,384,943 3,362,428
—– ——— ———

Three Months Ended

March 31,
———

Columbia
Pipeline Group
Operations 2014 2013
————— —- —-

Throughput
(MMDth)

Columbia
Transmission 459.5 435.8

Columbia Gulf 184.9 190.2

Crossroads
Pipeline 5.7 5.0

Intrasegment
eliminations (61.6) (93.9)
————- —– —–

Total 588.5 537.1
—– —– —–

NiSource Inc

Segment Volumes and Statistical Data

Three Months Ended

March 31,
———

Electric Operations 2014 2013
——————- —- —-

Sales (Gigawatt
Hours)

Residential 896.2 864.1

Commercial 935.5 921.2

Industrial 2,607.1 2,319.6

Wholesale 311.8 61.3

Other 33.4 33.2
—– —- —-

Total 4,784.0 4,199.4
—– ——- ——-

Weather Adjustment (70.0) (3.4)
—————— —– —-

Sales Volumes –
Excluding Weather
impacts 4,714.0 4,196.0
================== ======= =======

Electric Customers

Residential 402,676 401,559

Commercial 54,378 54,084

Industrial 2,370 2,373

Wholesale 724 725

Other 5 6
—– — —

Total 460,153 458,747
—– ——- ——-

NiSource Inc.

Schedule 1 – Reconciliation of Net Operating Earnings to GAAP

Three Months Ended

March 31,
———

(in millions, except per share amounts) 2014 2013
————————————– —- —-

Net Operating Earnings from Continuing Operations (Non-GAAP) $258.4 $215.3
———————————————————– —— ——

Items excluded from operating earnings

Net Revenues:

Weather – compared to normal 26.4 1.1

Operating Expenses:

Loss on sale of assets and asset impairments (1.8) (0.1)
——————————————– —- —-

Total items excluded from operating earnings 24.6 1.0
——————————————– —- —

Tax effect of above items (9.6) (0.3)
————————- —- —-

Income taxes – Indiana rate change (7.0) –
———————————- —- —

Total items excluded from net operating earnings 8.0 0.7

Reported Income from Continuing Operations – GAAP $266.4 $216.0
================================================= ====== ======

Basic Average Common Shares Outstanding 314.2 311.1
======================================= ===== =====

Basic Net Operating Earnings Per Share from Continuing Operations $0.82 $0.69
—————————————————————– —– —–

Items excluded from net operating earnings (after-tax) 0.03 –
—————————————————– —- —

GAAP Basic Earnings Per Share from Continuing Operations $0.85 $0.69
——————————————————– —– —–

NiSource Inc.

Schedule 2 – Adjustments by Segment from Operating Earnings to GAAP

For the Quarter ended March 31,

Columbia
Pipeline
Group
—–

Gas Corporate & Other
Distribution
————

2014(in millions) Electric Total
—————- ——– —–

Operating Earnings (Loss) $280.1 $158.9 $74.2 $(4.1) $509.1

Net Revenues:

Weather – compared to normal 21.7 – 4.7 – 26.4
—————————- —- — — — —-

Total Impact – Net Revenues 21.7 – 4.7 – 26.4

Operating Expenses:

Loss on sale of assets and asset impairments – – – (1.8) (1.8)

Total Impact – Operating Expenses – – – (1.8) (1.8)
——————————— — — — —- —-

Total Impact – Operating Income (Loss) 21.7 – 4.7 (1.8) 24.6
————————————- —- — — —- —-

Operating Income (Loss) – GAAP 301.8 158.9 78.9 (5.9) 533.7
—————————— —– —– —- —- —–

Columbia
Pipeline
Group
—–

Gas Corporate & Other
Distribution
————

2013(in millions) Electric Total
—————- ——– —–

Operating Earnings (Loss) $233.3 $133.3 $64.9 $(3.6) $427.9

Net Revenues:

Weather – compared to normal 0.8 – 0.3 – 1.1
—————————- — — — — —

Total Impact – Net Revenues 0.8 – 0.3 – 1.1

Operating Expenses:

Gain (Loss) on sale of assets and asset impairments – 0.2 – (0.3) (0.1)

Total Impact – Operating Expenses – 0.2 – (0.3) (0.1)
———————————

Total Impact – Operating Income (Loss) 0.8 0.2 0.3 (0.3) 1.0
————————————- — — — —- —

Operating Income (Loss) – GAAP 234.1 133.5 65.2 (3.9) 428.9
—————————— —– —– —- —- —–

NiSource Inc.

Consolidated Income Statements (GAAP)

(unaudited)

Three Months Ended

March 31,
———

(in millions, except per share
amounts) 2014 2013
—————————— —- —-

Net Revenues

Gas Distribution $1,215.0 $892.2

Gas Transportation and Storage 578.5 468.5

Electric 450.0 377.3

Other 77.0 44.2
—– —- —-

Gross Revenues 2,320.5 1,782.2

Cost of Sales (excluding depreciation
and amortization) 1,061.3 676.0
————————————- ——- —–

Total Net Revenues 1,259.2 1,106.2
—————— ——- ——-

Operating Expenses

Operation and maintenance 501.2 454.3

Depreciation and amortization 148.7 143.6

Gain on sale of assets, net (15.7) (0.2)

Other taxes 101.1 86.7

Total Operating Expenses 735.3 684.4
———————— —– —–

Equity Earnings in Unconsolidated
Affiliates 9.8 7.1
——————————— — —

Operating Income 533.7 428.9
—————- —– —–

Other Income (Deductions)

Interest expense, net (109.1) (98.6)

Other, net 4.5 4.1
———- — —

Total Other Deductions (104.6) (94.5)
———————- —— —–

Income from Continuing Operations
before Income Taxes 429.1 334.4

Income Taxes 162.7 118.4
———— —– —–

Income from Continuing Operations 266.4 216.0

(Loss) Income from Discontinued
Operations -net of taxes (0.2) 8.1

Gain on Disposition of Discontinued
Operations -net of taxes – 36.4
———————————–

Net Income $266.2 $260.5
———- —— ——

Basic Earnings Per Share

Continuing operations $0.85 $0.69

Discontinued operations – 0.15
———————– —-

Basic Earnings Per Share $0.85 $0.84
———————— —– —–

Diluted Earnings Per Share

Continuing operations $0.85 $0.69

Discontinued operations – 0.14
———————– —-

Diluted Earnings Per Share $0.85 $0.83
————————– —– —–

Dividends Declared Per Common Share $0.50 $0.48
———————————– —– —–

Basic Average Common Shares
Outstanding 314.2 311.1

Diluted Average Common Shares 315.1 312.1
—————————– —– —–

NiSource Inc.

Consolidated Balance Sheets (GAAP)

(unaudited)

March 31, December 31,

(in millions) 2014 2013
———— —- —-

ASSETS

Property, Plant and Equipment

Utility plant $23,695.7 $23,303.7

Accumulated depreciation and
amortization (9,358.6) (9,256.5)
—————————- ——– ——–

Net utility plant 14,337.1 14,047.2
—————– ——– ——–

Other property, at cost, less
accumulated depreciation 320.6 317.9

Net Property, Plant and
Equipment 14,657.7 14,365.1
———————– ——– ——–

Investments and Other Assets

Unconsolidated affiliates 407.1 373.7

Other investments 203.1 204.0
—————– —– —–

Total Investments and Other
Assets 610.2 577.7
————————— —– —–

Current Assets

Cash and cash equivalents 38.0 26.8

Restricted cash 10.9 8.0

Accounts receivable (less
reserve of $34.6 and $23.5,
respectively) 1,271.2 1,005.8

Income tax receivable 4.1 5.1

Gas inventory 97.9 354.6

Underrecovered gas and fuel
costs 114.3 46.4

Material and supplies, at
average cost 104.8 101.2

Electric production fuel, at
average cost 22.9 44.6

Price risk management assets 14.4 22.7

Exchange gas receivable 161.4 70.6

Regulatory assets 159.1 142.8

Prepayments and other 321.1 330.6

Total Current Assets 2,320.1 2,159.2
——————– ——- ——-

Other Assets

Regulatory assets 1,494.9 1,522.2

Goodwill 3,666.2 3,666.2

Intangible assets 272.9 275.7

Deferred charges and other 85.3 87.8
————————– —- —-

Total Other Assets 5,519.3 5,551.9
—————— ——- ——-

Total Assets 23,107.3 22,653.9
============ ======== ========

NiSource Inc.

Consolidated Balance Sheets (GAAP) (continued)

(unaudited)

March 31, December 31,

(in millions, except share amounts) 2014 2013
———————————- —- —-

CAPITALIZATION AND LIABILITIES

Capitalization

Common Stockholders’ Equity

Common stock – $0.01 par value, 400,000,000 shares authorized; 314,800,122 and $3.2 $3.2
313,675,911 shares outstanding, respectively

Additional paid-in capital 4,715.6 4,690.1

Retained earnings 1,394.4 1,285.5

Accumulated other comprehensive loss (42.5) (43.6)

Treasury stock (58.6) (48.6)
————– —– —–

Total Common Stockholders’ Equity 6,012.1 5,886.6

Long-term debt, excluding amounts due within one year 7,638.5 7,593.2

Total Capitalization 13,650.6 13,479.8
——————– ——– ——–

Current Liabilities

Current portion of long-term debt 530.5 542.1

Short-term borrowings 812.5 698.7

Accounts payable 714.4 619.0

Dividends payable 78.7 –

Customer deposits and credits 239.4 262.6

Taxes accrued 278.6 254.8

Interest accrued 75.3 136.4

Overrecovered gas and fuel costs 25.8 32.2

Exchange gas payable 143.1 186.4

Deferred revenue 7.9 18.5

Regulatory liabilities 79.1 60.2

Accrued liability for postretirement and postemployment benefits 6.2 6.2

Legal and environmental 25.5 32.3

Other accruals 323.8 329.0

Total Current Liabilities 3,340.8 3,178.4
————————- ——- ——-

Other Liabilities and Deferred Credits

Deferred income taxes 3,392.3 3,277.8

Deferred investment tax credits 20.0 20.9

Deferred credits 100.2 91.9

Noncurrent deferred revenue 21.8 17.1

Accrued liability for postretirement and postemployment benefits 508.1 527.5

Regulatory liabilities 1,677.6 1,669.8

Asset retirement obligations 176.5 174.4

Other noncurrent liabilities 219.4 216.3
—————————- —– —–

Total Other Liabilities and Deferred Credits 6,115.9 5,995.7
——————————————– ——- ——-

Commitments and Contingencies – –
—————————– — —

Total Capitalization and Liabilities 23,107.3 22,653.9
==================================== ======== ========

NiSource Inc.

Statements of Consolidated Cash Flows (GAAP)

(unaudited)

Three Months Ended March 31, (in millions) 2014 2013
—————————————– —- —-

Operating Activities

Net Income $266.2 $260.5

Adjustments to Reconcile Net Income to Net Cash from Continuing Operations:

Depreciation and amortization 148.7 143.6

Net changes in price risk management assets and liabilities 0.8 0.5

Deferred income taxes and investment tax credits 148.9 117.1

Deferred revenue 1.8 (0.4)

Stock compensation expense and 401(k) profit sharing contribution 13.9 10.6

Gain on sale of assets (15.7) (0.2)

Income from unconsolidated affiliates (9.6) (7.3)

Gain on disposition of discontinued operations – net of tax – (36.4)

Loss (Income) from discontinued operations – net of tax 0.2 (8.1)

Amortization of debt related costs 2.4 2.3

AFUDC equity (4.0) (3.5)

Distributions of earnings received from equity investees 7.6 7.0

Change in Assets and Liabilities:

Accounts receivable (265.1) (161.4)

Income tax receivable 0.9 50.4

Inventories 274.0 254.7

Accounts payable 126.5 25.4

Customer deposits and credits (23.1) (102.0)

Taxes accrued 19.3 28.1

Interest accrued (61.1) (65.5)

(Under)Overrecovered gas and fuel costs (74.2) 69.3

Exchange gas receivable/payable (134.2) (89.8)

Other accruals (30.1) (26.6)

Prepayments and other current assets 4.5 (5.8)

Regulatory assets/liabilities 2.9 5.8

Postretirement and postemployment benefits (19.3) (36.8)

Deferred credits 8.4 7.7

Deferred charges and other noncurrent assets (0.2) (0.4)

Other noncurrent liabilities 4.0 (2.0)
—————————- — —-

Net Operating Activities from Continuing Operations 394.4 436.8

Net Operating Activities (used for) from Discontinued Operations (0.4) 12.3
—————————————————————- —- —-

Net Cash Flows from Operating Activities 394.0 449.1
—————————————- —– —–

Investing Activities

Capital expenditures (386.3) (369.3)

Proceeds from disposition of assets 5.3 0.5

Restricted cash (deposits) withdrawals (2.9) 23.6

Contributions to equity investees (31.0) (17.1)

Other investing activities 7.0 (5.3)
————————– — —-

Net Investing Activities used for Continuing Operations (407.9) (367.6)

Net Investing Activities from Discontinued Operations – 121.5
—————————————————–

Net Cash Flows used for Investing Activities (407.9) (246.1)
——————————————– —— ——

Financing Activities

Repayments of long-term debt and capital lease obligations (9.1) (427.1)

Change in short-term borrowings, net 113.8 354.3

Issuance of common stock 8.9 17.2

Acquisition of treasury stock (10.0) (7.6)

Dividends paid – common stock (78.5) (74.7)
—————————– —– —–

Net Cash Flow from (used for) Financing Activities 25.1 (137.9)
————————————————– —- ——

Change in cash and cash equivalents from (used for) continuing operations 11.6 (68.7)

Cash contributions (to) from discontinued operations (0.4) 133.8

Cash and cash equivalents at beginning of period 26.8 36.3
———————————————— —- —-

Cash and Cash Equivalents at End of Period $38.0 $101.4
========================================== ===== ======

SOURCE NiSource Inc.

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