NiSource Posts Profit Increase

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Merrillville-based NiSource Inc. (NYSE: NI) is reporting 2013 net income of $532 million, compared to $416 million in 2012. The fourth quarter profit was $151.8 million, compared to $134 million during the same period the previous year. Chief Executive Officer Robert Skaggs says the company outperformed utility indices "by a wide margin." February 18, 2014

News Release

MERRILLVILLE, Ind. - NiSource Inc. (NYSE: NI) today announced net operating earnings from continuing operations (non-GAAP) of $493.9 million, or $1.58 per share, for the twelve months ended December 31, 2013, compared to net operating earnings from continuing operations (non-GAAP) of $425.8 million, or $1.46 per share in 2012. Consolidated operating earnings (non-GAAP) for the twelve months ended December 31, 2013, were $1,146.3 million compared to $1,069.6 million in 2012.

On a GAAP basis, NiSource reported income from continuing operations for the twelve months ended December 31, 2013, of $490.9 million, or $1.57 per share, compared with $408.8 million, or $1.40 per share in 2012. Operating income was $1,143.4 million for the twelve months ended December 31, 2013, compared with $1,040.1 million in 2012. Schedules 1 and 2 of this news release contain a reconciliation of net operating earnings and operating earnings to GAAP.

For the three months ended December 31, 2013, NiSource's net operating earnings (non-GAAP) were $148.7 million, or $0.47 per share, compared with $135.7 million, or $0.44 per share for the same period in 2012. On a GAAP basis, income from continuing operations for the three months ended December 31, 2013, was $153.0 million, or $0.49 per share, compared with $132.1 million, or $0.42 per share for the same period in 2012.

President & Chief Executive Officer Robert C. Skaggs, Jr. noted that NiSource's year-over-year earnings increase is consistent with the company's well-established strategy of generating long-term growth through disciplined infrastructure investments, supported by complementary commercial and regulatory initiatives.

"For NiSource, 2013 brought another year of solid execution, notable achievement and industry-leading growth in shareholder value," Skaggs said. "Our Team executed on a record $2 billion capital program that included key system modernization, growth and environmental investments, at the same time delivering on a wide range of customer service, commercial and regulatory initiatives. These efforts generated results at the upper end of our earnings guidance and produced total shareholder returns that outperformed utility indices by a wide margin for the fifth consecutive year."

Strong foundation in place for continued growth

Skaggs noted that NiSource shareholders benefitted from a total shareholder return of 36 percent during 2013, including an approximately 4 percent increase in the company's common stock dividend.

NiSource also generated value for customers and key stakeholders by successfully executing on its record capital investment program. These investments - part of an inventory of more than $30 billion in identified long-term opportunities across the company - helped support continued system reliability, safety, environmental compliance and access to affordable energy supplies.

Supporting the company's significant capital investment program is the continued execution of a thoughtful and disciplined financing strategy. In addition to issuing $1.25 billion of 30-year debt at attractive rates during 2013, NiSource increased its revolving credit facility by $500 million to $2 billion, and extended its term by an additional 16 months to September 2018. As of the end of 2013, NiSource maintained net available liquidity of approximately $1.6 billion.

2014 earnings guidance of $1.61 to $1.71 per share (non-GAAP), Moody's upgrades credit rating

With continued execution of its business strategy, NiSource expects to deliver 2014 net operating earnings (non-GAAP) within a range of $1.61 to $1.71 per share. There will likely be differences between net operating earnings and GAAP earnings, and due to the unpredictability of weather and other factors, NiSource is continuing its practice of not providing GAAP earnings guidance.

"Our gameplan is finely tuned and the Team has hit the ground running in 2014," Skaggs said. "With about $2 billion in capital investments under way across NiSource for this year, we fully expect to deliver on our core commitments, including consistently generating earnings growth in the 5 to 7 percent range over the long term."

Skaggs reiterated NiSource's commitment to maintaining stable, investment-grade credit ratings, strong financial liquidity and dividend growth in the range of 3 to 5 percent annually.

"These core commitments remain unwavering as we execute on our strategy to deliver consistent and enduring value for our customers, shareholders and other key stakeholders," he said.

Skaggs also noted that on January 31, 2014, Moody's Investors Service upgraded NiSource's credit rating to Baa2 from Baa3. And, in late 2013, Fitch Ratings confirmed their credit rating of BBB-. NiSource's Standard & Poors credit rating is BBB- as well.

Columbia Pipeline Group delivering on modernization, growth and midstream projects

During the fourth quarter of 2013, NiSource's Columbia Pipeline Group (CPG) continued to execute on its landmark Columbia Gas Transmission (Columbia Transmission) system modernization program, as well as a growing inventory of market- and supply-driven gas transmission and midstream projects.

On January 30, 2014, Columbia Transmission received Federal Energy Regulatory Commission approval of its December 2013 filing to recover costs associated with the first year of its comprehensive system modernization program. During 2013, the company completed more than 30 individual projects representing a total investment of about $300 million. The program includes replacement of aging pipeline and compressor facilities, enhancements to system inspection capabilities, and improvements in real-time analytics and control systems - investments that enhanced the company's ability to provide reliable services to its customers throughout the recent record-breaking cold spells across its service territory. Recovery of the 2013 investments began on February 1, 2014. The second year of the program is now underway with another $300 million of modernization investments planned. CPG and its customers have agreed to the initial five years of the comprehensive modernization program, with an opportunity to mutually extend the agreement. The overall program is expected to last 10 years or more and entails an aggregate investment in excess of $4 billion.

CPG also advanced several significant supply- and market-driven growth projects during 2013. These projects - which include the West Side Expansion, East Side Expansion and Warren County Project - represent a total investment of more than $550 million and development of about one billion cubic feet of added system capacity over the next two years. During 2013, the company completed a key component of the West Side Expansion project by reversing flow on a portion of the Columbia Gulf Transmission pipeline system, enabling up to approximately 500 million cubic feet per day of Marcellus Shale production to be transported from CPG's Leach, Ky., interconnect south toward Rayne, La.

Separately, CPG noted that the results of two recently completed non-binding open seasons were very positive. The projects, Leach XPress and Rayne Xpress, would provide Marcellus and Utica Shale production increased access to markets on the Columbia Transmission and Columbia Gulf systems. The company continues to evaluate project details and is in active discussions with prospective shippers. Additional information is expected to be shared in the second quarter of 2014.

NiSource Midstream continued to capitalize on NiSource's strategic p