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Press release from PR Newswire

NiSource Reports 2012 Earnings

Tuesday, February 19, 2013

NiSource Reports 2012 Earnings06:30 EST Tuesday, February 19, 2013- Financial results in line with 2012 earnings guidance - Solid execution of infrastructure-focused capital investment plan - Enhanced $1.8 billion capital program outlined for 2013 - 2013 earnings outlook reflects ongoing infrastructure investment growthMERRILLVILLE, Ind., Feb. 19, 2013 /PRNewswire/ -- NiSource Inc. (NYSE: NI) today announced net operating earnings (non-GAAP) of $427.2 million, or $1.46 per share, for the twelve months ended December 31, 2012, compared to net operating earnings of $368.8 million, or $1.32 per share for 2011. NiSource's consolidated operating earnings (non-GAAP) for the twelve months ended December 31, 2012, were $1,071.4 million compared to $946.3 million in 2011.On a GAAP basis, NiSource reported income from continuing operations for the twelve months ended December 31, 2012, of $410.6 million, or $1.41 per share, compared with $294.8 million, or $1.05 per share in 2011. Operating income was $1,042.7 million for 2012 versus $890.1 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. For the three months ended December 31, 2012, net operating earnings (non-GAAP) were $136.0 million, or $0.44 per share, compared with $89.2 million, or $0.32 per share, for the same period in 2011. On a GAAP basis, income from continuing operations for the three months ended December 31, 2012, was $132.0 million, or $0.42 per share, compared with $15.6 million, or $0.05 per share for the fourth quarter of 2011. "For NiSource, 2012 was a year of continued disciplined execution across all facets of our established infrastructure-investment-driven business strategy," NiSource President and Chief Executive Officer Robert C. Skaggs, Jr. said. "That strategy generated earnings growth in line with our guidance, and produced total shareholder returns that outperformed utility indices for the fourth consecutive year.""Consistent with the plans we shared at NiSource's Investor Day in September, we are pursuing an even more expansive collection of value-adding investment opportunities in 2013, as reflected by our record $1.8 billion capital program. We expect our enhanced infrastructure investment strategy to drive long-term net operating earnings growth (non-GAAP) of approximately 5 to 7 percent per year." Solid progress in 2012 sets stage for continued earnings growthSkaggs highlighted key 2012 business accomplishments and ongoing initiatives to drive continued earnings growth for the company in 2013 and beyond, including: Leveraging the company's strategic position in the evolving shale gas production areas to develop and execute on a number of growth investments. Achieving a landmark agreement with customers to modernize the Columbia Gas Transmission (Columbia) pipeline network. Generating value for customers and other key stakeholders by executing on a robust series of utility modernization and environmental investments, and continuing to develop a variety of new customer programs. Outlining a long-term inventory of more than $25 billion in growth and infrastructure modernization investment opportunities across NiSource's three business units. These opportunities are expected to result in annual capital investments totaling $1.5 billion to $1.8 billion, generating earnings growth of approximately 5 to 7 percent per year, and annual common stock dividend growth of 3 to 5 percent. Demonstrating ongoing financial and operational discipline, with key projects delivered on time and on budget. During the year, NiSource also executed on its approximately $340 million forward sale equity issuance and issued $750 million in debt at historically attractive rates. NiSource closed the year with about $974 million in net available liquidity. Delivering total shareholder returns of 8.5 percent during 2012 ? including a dividend increase of more than 4 percent. Continuing to strengthen its senior management team, with the addition of veteran energy industry executives to lead NiSource's Northern Indiana Public Service Company (NIPSCO) and NiSource Gas Distribution (NGD) business units. In addition, Skaggs noted that in early 2013, NiSource completed the sale of its non-core retail services business to AGL Resources. The proceeds of the transaction will be used to support the company's infrastructure investment plans."At the foundation of these accomplishments are our core financial commitments - stable investment-grade credit ratings, a secure and growing dividend, and long-term, sustainable earnings growth," said Skaggs. "These commitments remain unwavering as we execute on our long-term infrastructure investment growth strategy, delivering value to our customers, shareholders and other key stakeholders."Positive earnings trajectory continues with 2013 guidance of $1.50 to $1.60 per share (non-GAAP)Based on the continued success of NiSource's balanced business strategy, together with a deep inventory of investment opportunities across each of its business units, NiSource expects to deliver 2013 net operating earnings (non-GAAP) within a range of $1.50 to $1.60 per share."With this deep inventory of identified infrastructure investment opportunities and a mature capital investment discipline, NiSource is on a solid trajectory to grow earnings and increase shareholder value for the foreseeable future," Skaggs concluded. "As our established track record of performance shows, our teams have demonstrated the ability to execute our enhanced $1.8 billion capital investment program and deliver on our commitments."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.Solid progress across NiSource's pipeline businesses ? growth, modernization, midstream and minerals initiativesNiSource Gas Transmission & Storage (NGT&S) made significant progress during 2012 on its strategies to modernize its core interstate natural gas pipeline system, execute on market- and supply-driven growth projects, and pursue midstream infrastructure and minerals leasing opportunities linked to its strong asset position in the Utica and Marcellus Shale production regions.On January 24, 2013, Columbia received approval from the Federal Energy Regulatory Commission (FERC) of a customer settlement that facilitates a comprehensive, balanced and transparent pipeline infrastructure modernization plan. Widely supported by Columbia's customers, the settlement covers the initial five years of the company's investment plan and contains provisions for potential extension thereafter. Among other components, the settlement identifies individual infrastructure projects and establishes a timely recovery mechanism for the costs associated with the projects. Under the settlement, Columbia will invest approximately $1.5 billion through 2017 on system modernization, in addition to approximately $100 million in annual ongoing maintenance investment. During 2012, NGT&S placed a number of strategic growth projects into service. These and other projects helped contribute more than $20 million in additional demand revenues in 2012. On the midstream and minerals front, NGT&S expects to place its Big Pine Gathering System into service by April 2013. Involving an investment of approximately $160 million and anchored by a long-term gathering agreement with XTO Energy Inc., the project will transport up to 425 million cubic feet per day of Marcellus Shale production. In addition, Pennant Midstream LLC, a joint venture with Hilcorp, continues to make progress with its pipeline and processing facilities and remains on schedule for completion of the project by the end of 2013. It is anticipated that NiSource's share will be approximately $150 million of the total investment in the project's first phase. In a separate agreement with Hilcorp, test wells were drilled in 2012 to support the development of the hydrocarbon potential on more than 100,000 combined acres in the Utica/Point Pleasant Shale formation. Delineation and test wells will continue in 2013, with a full development program to be developed over the course of the year.  NiSource will invest alongside Hilcorp in the development of the acreage, owning both a working and overriding royalty interest.  All of the Hillcorp/NiSource acreage is dedicated to the Pennant Midstream project. In late December 2012, Columbia Gulf Transmission (Columbia Gulf) initiated a non-binding open season for its proposed Cameron Access Project in south Louisiana. With access to various supply basins, the project would improve reliability for shippers by transporting natural gas supplies directly into the Cameron Liquefied Natural Gas (LNG) Terminal. With a projected in-service date of mid-2017, initial capacity and investment will be determined based on the results of the open season. Columbia and Columbia Gulf are moving forward with plans to upgrade and modify facilities to support the West Side Expansion project. This approximately $200 million project will reverse the flow of gas on part of the system to transport approximately 500,000 dekatherms per day of Marcellus production to Gulf Coast markets. Service is scheduled to begin in late 2014. Columbia also is moving ahead with the East Side Expansion project, an approximately $210 million project providing 300,000 dekatherms per day of transportation capacity for Marcellus supplies to northeastern and Mid-Atlantic markets. This project is expected to be placed in service during the third quarter of 2015. NGT&S' capital investment program reached approximately $480 million in 2012. For 2013, its investment level is expected to approach $700 million. "In 2012, the NGT&S team maintained a sharp focus on core growth and modernization projects," Skaggs said. "The team also continued to pursue a number of complementary minerals arrangements and accretive midstream projects. This measured approach is designed to meet the evolving needs of the marketplace, while actively investing in the reliability, integrity and modernization of our infrastructure."NIPSCO progress supports continued long-term investment and growthNIPSCO celebrated its 100-year anniversary in 2012 by delivering strong operational and financial performance and by outlining several near- and long-term growth and modernization investments.The company's electric margins for the year remained strong following implementation of a number of regulatory initiatives. NIPSCO also introduced a variety of new customer programs, including an air-conditioning cycling program, a proposed green power rate program, and a program offering customer incentives for those who drive electric vehicles. NIPSCO remains on track with significant environmental investments at its electric generation facilities. The company's more than $500 million flue gas desulfurization (FGD) project at its Schahfer generating station remains on schedule and on budget. The Schahfer FGD units will be placed into service in the fourth quarter of this year and in 2014. At the company's Michigan City generating station, pre-construction engineering and design work has begun for the approximately $250 million investment in FGD equipment. Construction is anticipated to begin during the first quarter of 2013. Over the next decade, NIPSCO expects to invest up to $500 million on two approved electric transmission projects in northern Indiana. Supporting economic development, new jobs and strengthening of the Midwest's electrical infrastructure, the projects are in process and will see additional planning and outreach activities in 2013. NIPSCO's capital investment program in 2013 is expected to reach more than $430 million, primarily focused on environmental investments at its generating stations and maintenance of its existing electric infrastructure. "While we continue to deliver on our core customer, reliability and environmental initiatives in 2013, the NIPSCO team also will continue the development of a long-term modernization program for its electric transmission and distribution infrastructure" said Skaggs. Modernization investments, synced with regulatory and customer initiatives, drive continued growth at NiSource Gas DistributionCombining long-term infrastructure modernization programs with complementary customer programs and regulatory initiatives continues to be the strength and focus at NGD.On February 8, 2013, Columbia Gas of Pennsylvania reached a unanimous settlement in principle with the parties in its base rate case, which resolves all issues in the case. The parties will submit a joint petition for approval to the Pennsylvania Public Utility Commission on or before March 18, 2013. Originally filed on September 28, 2012, the case is tailored after Pennsylvania's recently enacted Act 11, which reflects a fully projected future test year under which the company proposes to recover its infrastructure investments through June 2014. Rates are anticipated to be placed into service in July of this year. Infrastructure modernization projects across much of the NGD territory, coupled with customer programs and regulatory activity, continue to generate value for stakeholders and sustainable earnings growth. NiSource invested nearly $400 million in these infrastructure programs in 2012, part of a more than $10 billion long-term modernization program. Total capital investment at NGD reached nearly $650 million in 2012. A similar level of investment is targeted for 2013, primarily focused on modernization and growth initiatives. "In 2013 NGD's formula will remain the same ? sustained earnings growth through long-term investments in infrastructure modernization supported by regulatory initiatives integrated with customer programs designed to reduce energy consumption and lower overall bills," Skaggs said. Full-Year 2012 Operating Earnings ? Segment Results (non-GAAP)NiSource's consolidated operating earnings (non-GAAP) for the year ended December 31, 2012, were $1,071.4 million, compared to $946.3 million for the same period in 2011. Refer to Schedule 2 for the items included in 2012 and 2011 GAAP operating income but excluded from operating earnings. Operating earnings for NiSource's business segments for the twelve months ended December 31, 2012, are discussed below. Gas Transmission and Storage Operations reported operating earnings of $397.8 million for the twelve months ended December 31, 2012, compared with operating earnings of $360.1 million for the prior year period. Net revenues, excluding the impact of trackers, decreased $53.8 million primarily as a result of the customer settlement at Columbia. This decrease was partially offset by an increase in demand margin revenue as a result of growth projects and the impact of new Columbia Gulf rates.Operating expenses, excluding the impact of trackers, decreased $73.9 million primarily due a decrease in employee and administration costs, primarily pension, lower depreciation and amortization as a result of the Columbia customer settlement, and decreased environmental costs. These decreases were partially offset by increased outside service costs.Equity earnings increased by $17.6 million primarily from increased earnings at Millennium Pipeline driven by increased demand and commodity revenues.Electric Operations reported operating earnings of $237.6 million for the twelve months ended December 31, 2012, compared with operating earnings of $201.9 million for the prior year period. Net revenues, excluding the impact of trackers, increased by $125.1 million primarily due to increased industrial, commercial and residential margins mainly as a result of the implementation of the electric rate case. Additionally, there were lower revenue credits in the current period as the implementation of the electric rate case discontinued these credits. Net revenues also increased as a result of the implementation of a Regional Transmission Organization recovery mechanism, the recognition of emission allowances that were deferred in previous periods, and recovered margins related to lost consumption due to NIPSCO's participation in energy savings programs. These increases were partially offset by a decrease in environmental cost recovery due to the plant investment eligible for recovery being reset to zero as a result of the electric rate case.Operating expenses, excluding the impact of trackers, increased by $89.4 million due primarily to increased depreciation costs primarily due to previously deferred depreciation associated with the Sugar Creek facility being recognized as a result of the electric rate case. Additionally, there was an increase in employee and administration costs, primarily due to increased pension costs and increased employee headcount, and higher Midwest Independent Transmission System Operator (MISO) fees as these costs were previously deferred and the electric rate case resulted in the expiration of those deferrals. Operating expenses also increased due to increased electric generation costs and higher property taxes. These increases were partially offset by a decrease in rate case filing expenses related to the electric rate case. Gas Distribution Operations reported operating earnings of $441.2 million for the twelve months ended December 31, 2012, compared with operating earnings of $424.9 million for the prior year period. Net revenues, excluding the impact of trackers, increased by $36.9 million primarily attributable to increases in regulatory and service programs, including the impact of the implementation of new rates under Columbia Gas of Ohio's approved infrastructure replacement program and the impact of the 2011 rate case at Columbia Gas of Pennsylvania.Operating expenses, excluding the impact of trackers, were $20.6 million higher than the comparable period in the prior year primarily due to an increase in depreciation costs as a result of higher capital expenditures, increased outside service costs, and increased materials and supplies costs partially offset by decreased employee and administration costs, primarily pension, and a decrease in uncollectibles.Corporate and Other Operations reported an operating earnings loss of $5.2 million for the twelve months ended December 31, 2012, compared to an operating earnings loss of $40.6 million for the comparable prior period. The reduced loss is primarily attributable to a 2011 reserve on certain assets related to the wind down of the unregulated natural gas marketing business and unrealized gains on increases in cash surrender value of corporate owned life insurance investments. Other ItemsInterest expense increased by $41.5 million due to the issuance of long-term debt in June 2011, April 2012 and June 2012, and the expiration of deferred interest costs related to Sugar Creek as a result of the electric rate case. These increases were partially offset by the repurchase of long-term debt in December 2011, lower short-term borrowings and rates and increased allowance for funds used during construction (AFUDC) balances.Other-net income of $2.4 million was recorded in 2012 compared to a loss of $7.4 million in 2011. The increase in other-net income is primarily attributable to AFUDC earnings at NIPSCO.The effective tax rate of net operating earnings was 34.8 percent compared to 34.4 percent for the same period last year.Fourth Quarter 2012 Operating Earnings ? Segment Results (non-GAAP)NiSource's consolidated operating earnings (non-GAAP) for the quarter ended December 31, 2012, were $312.9 million, compared to $249.3 million in the fourth quarter of 2011. Refer to Schedule 2 for the items included in 2012 and 2011 GAAP operating income but excluded from operating earnings.Operating earnings for NiSource's business segments for the quarter ended December 31, 2012, are discussed below.Gas Transmission and Storage Operations reported operating earnings for the current quarter of $128.8 million compared to $89.0 million in the fourth quarter of 2011. Net revenues, excluding the impact of trackers, decreased by $6.0 million, primarily attributable to the Columbia customer settlement and decreased Midstream revenues. These decreases were partially offset by higher mineral rights royalty revenue, increased demand margin revenue as a result of growth projects and higher revenues from shorter term transportation services.Operating expenses, excluding the impact of trackers, decreased $43.6 million primarily due to a decrease in employee and administration costs, primarily pension, and lower depreciation and amortization as a result of the Columbia customer settlement. Equity earnings increased $2.2 million primarily from increased earnings at Millennium Pipeline due to increased demand and commodity revenues.Electric Operations reported operating earnings for the current quarter of $51.6 million compared to $42.9 million in the fourth quarter of 2011. Net revenues, excluding the impact of trackers, increased by $38.8 million primarily due to increased industrial and commercial margins mainly as a result of the implementation of the electric rate case. Net revenues also increased due to lower revenue credits in the current period as the electric rate case discontinued these credits. Additionally, net revenues increased related to the recognition of emission allowances that were deferred in previous periods and recovered margins related to lost consumption due to NIPSCO's participation in energy savings programs. These increases were partially offset by a decrease in environmental cost recovery due to the plant investment eligible for recovery being reset to zero as a result of the electric rate case.Operating expenses increased by $30.1 million, excluding the impact of trackers, primarily attributable to increased depreciation costs primarily due to previously deferred depreciation associated with the Sugar Creek facility being recognized as a result of the electric rate case. Additionally, there was an increase in electric generation costs, increased employee and administration costs, and MISO fees increased as these costs were previously deferred and the electric rate case resulted in the expiration of those deferrals.Gas Distribution Operations reported operating earnings for the current quarter of $133.6 million compared to $141.4 million in the fourth quarter of 2011. Net revenues, excluding the impact of trackers, increased by $3.5 million primarily attributable to the implementation of new rates under Columbia Gas of Ohio's approved infrastructure replacement program.Operating expenses, excluding the impact of trackers, were $11.3 million higher than the comparable 2011 period as a result of an increase in depreciation costs due to an increase in capital expenditures, higher outside service costs, increased environmental costs, and increased materials and supplies costs. These increases were partially offset by decreased employee and administration costs, primarily pension.Corporate and Other Operations reported an operating earnings loss of $1.1 million for the current quarter compared to a loss of $24.0 million in the fourth quarter of 2011. The reduced loss is primarily attributable to a 2011 reserve on certain assets related to the wind down of the unregulated natural gas marketing business.Other ItemsInterest expense increased by $7.0 million for the current quarter due to the issuance of long-term debt in April 2012 and June 2012, and the expiration of deferred interest costs related to Sugar Creek as a result of the electric rate case. These increases were partially offset by the repurchase of long-term debt in December 2011, lower short-term borrowings and rates and increased AFUDC balances.Other-net loss of $3.6 million was recorded for the current quarter in 2012 compared to a loss of $12.8 million in 2011. The decrease in other-net loss is primarily attributable to AFUDC earnings at NIPSCO.The effective tax rate of net operating earnings was 33.8 percent compared to 36.1 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-FForward-Looking StatementsThis 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 EndedDecember 31,Twelve Months Ended December 31,(in millions, except per share amounts)2012201120122011Net RevenuesGas Distribution$582.2$730.9$2,006.3$2,927.6Gas Transportation and Storage418.7361.01,462.41,354.6Electric361.0329.61,497.51,420.2Other37.818.2103.853.9Gross Revenues1,399.71,439.75,070.05,756.3Cost of Sales (excluding depreciation and amortization)426.5543.11,517.72,329.2Total Net Revenues973.2896.63,552.33,427.1Operating ExpensesOperation and maintenance387.4401.91,457.51,472.4Operation and maintenance - trackers64.643.3205.9194.3Depreciation and amortization140.8130.4549.1521.6Depreciation and amortization - trackers3.13.412.814.1Other taxes55.553.9220.9212.4Other taxes - trackers16.920.266.980.6Total Operating Expenses668.3653.12,513.12,495.4Equity Earnings in Unconsolidated Affiliates8.05.832.214.6Operating Earnings312.9249.31,071.4946.3Other Income (Deductions)Interest expense, net(103.9)(96.9)(418.3)(376.8)Other, net(3.6)(12.8)2.4(7.4)Total Other Deductions(107.5)(109.7)(415.9)(384.2)Operating Earnings From Continuing OperationsBefore Income Taxes205.4139.6655.5562.1Income Taxes69.450.4228.3193.3Net Operating Earnings from Continuing Operations136.089.2427.2368.8GAAP Adjustment(4.0)(73.6)(16.6)(74.0)GAAP Income from Continuing Operations$132.0$15.6$410.6$294.8Basic Net Operating Earnings Per Share from Continuing Operations$0.44$0.32$1.46$1.32GAAP Basic Earnings Per Share from Continuing Operations$0.42$0.05$1.41$1.05Basic Average Common Shares Outstanding309.9281.4291.9280.4 NiSource Inc.Segment Operating Earnings (Non-GAAP)(unaudited) Three Months EndedDecember 31, Twelve Months Ended December 31,Gas Distribution Operations(in millions)2012201120122011Net RevenuesSales Revenues$782.7$867.1$2,710.1$3,470.1Less: Cost of gas sold356.2441.71,166.91,910.1Net Revenues426.5425.41,543.21,560.0Operating ExpensesOperation and maintenance180.1175.1681.7680.1Operation and maintenance - trackers24.523.675.7115.7Depreciation and amortization48.742.9189.9171.5Other taxes22.722.287.887.2Other taxes - trackers16.920.266.980.6Total Operating Expenses292.9284.01,102.01,135.1Operating Earnings$133.6$141.4$441.2$424.9GAAP Adjustment(5.6)(48.2)(47.1)(46.0)GAAP Operating Income$128.0$93.2$394.1$378.9 Three Months EndedDecember 31, Twelve Months Ended December 31,Gas Transmission and Storage Operations(in millions)2012201120122011Net RevenuesTransportation revenues$214.9$222.6$721.8$776.7Storage revenues49.648.1196.7196.1Other revenues32.512.683.032.8Total Operating Revenues297.0283.31,001.51,005.6Less: Cost of Sales0.1?1.1?Net Operating Revenues296.9283.31,000.41,005.6Operating ExpensesOperation and maintenance99.7137.1361.8407.7Operation and maintenance - trackers35.916.3114.465.8Depreciation and amortization25.131.999.4130.0Other taxes15.414.859.256.6Total Operating Expenses176.1200.1634.8660.1Equity Earnings in Unconsolidated Affiliates8.05.832.214.6Operating Earnings$128.8$89.0$397.8$360.1GAAP Adjustment0.7(0.1)0.6(0.1)GAAP Operating Income$129.5$88.9$398.4$360.0  NiSource Inc.Segment Operating Earnings (Non-GAAP)(unaudited) Three Months EndedDecember 31, Twelve Months Ended December 31,Electric Operations(in millions)2012201120122011Net RevenuesSales revenues$361.6$330.6$1,499.5$1,422.3Less: Cost of sales113.2121.6495.9545.5Net Revenues248.4209.01,003.6876.8Operating ExpensesOperation and maintenance114.795.6439.2390.9Operation and maintenance - trackers4.23.315.812.8Depreciation and amortization60.449.9236.8200.6Depreciation and amortization - trackers3.13.412.814.1Other taxes14.413.961.456.5Total Operating Expenses196.8166.1766.0674.9Operating Earnings$51.6$42.9$237.6$201.9GAAP Adjustment(1.0)(3.2)13.26.5GAAP Operating Income$50.6$39.7$250.8$208.4 Three Months EndedDecember 31, Twelve Months Ended December 31,Corporate and Other Operations(in millions)2012201120122011Operating Loss$(1.1)$(24.0)$(5.2)$(40.6)GAAP Adjustment(0.5)(15.6)4.6(16.6)GAAP Operating Loss$(1.6)$(39.6)$(0.6)$(57.2) NiSource Inc.Segment Volumes and Statistical Data Three Months EndedDecember 31, Twelve Months Ended December 31,Gas Distribution Operations2012201120122011Sales and Transportation (MMDth)Residential79.972.6226.5254.5Commercial50.146.7156.2168.6Industrial113.6109.5478.2431.8Off System14.810.261.562.4Other0.10.10.30.3Total258.5239.1922.7917.6Weather Adjustment6.518.158.812.7Sales and Transportation Volumes - Excluding Weather265.0257.2981.5930.3Heating Degree Days1,9401,7424,7995,434Normal Heating Degree Days2,0372,0375,6645,633% Warmer than Normal5 %14 %15 %4 %CustomersResidential3,058,8393,039,579Commercial280,842280,521Industrial7,5527,861Other2219Total3,347,2553,327,980 Three Months EndedDecember 31, Twelve Months Ended December 31,Gas Transmission and Storage Operations2012201120122011Throughput (MMDth)Columbia Transmission328.8301.41,107.71,117.5Columbia Gulf213.2270.6894.31,048.0Crossroads Gas Pipeline4.14.015.718.7Intrasegment eliminations(108.0)(124.0)(422.6)(548.5)Total438.1452.01,595.11,635.7 NiSource Inc.Segment Volumes and Statistical Data Three Months EndedDecember 31, Twelve Months Ended December 31,Electric Operations2012201120122011Sales (Gigawatt Hours)Residential763.2765.63,524.33,526.5Commercial907.8931.33,863.13,886.5Industrial2,286.12,247.59,251.09,257.6Wholesale17.8144.4250.8651.6Other34.044.2119.1165.5Total4,008.94,133.017,008.317,487.7Weather Adjustment14.831.1(145.9)(101.1)Sales Volumes - Excluding Weather impacts4,023.74,164.116,862.417,386.6Cooling Degree Days1,054907Normal Cooling Degree Days814808% Warmer than Normal29%12%Electric CustomersResidential401,177400,567Commercial53,96954,029Industrial2,4452,405Wholesale725737Other617Total458,322457,755 NiSource Inc.Schedule 1 ? Reconciliation of Net Operating Earnings to GAAP Three Months EndedDecember 31,Twelve Months Ended December 31,2012201120122011Net Operating Earnings from Continuing Operations (Non-GAAP)$136.0$89.2$427.2$368.8Items excluded from operating earningsNet Revenues:Weather - compared to normal(6.1)(14.4)(36.4)(2.1)Revenue adjustment?(0.6)?(0.6)Unregulated natural gas marketing business(0.7)0.53.74.5Operating Expenses:NOV accrual reversal??3.1?Environmental MGP remediation review?(35.5)?(35.5)Unregulated natural gas marketing business0.5(1.2)(3.1)(5.6)(Gain)/Loss on sale of assets and asset impairments(0.1)(15.9)4.0(16.9)Total items excluded from operating earnings(6.4)(67.1)(28.7)(56.2)Other Deductions:Loss on early extinguishment of debt?(53.9)?(53.9)Investment impairment??(0.7)?Tax effect of above items2.447.412.842.9Other income tax adjustments - Indiana House Bill 1004???(6.8)Total items excluded from net operating earnings(4.0)(73.6)(16.6)(74.0)Reported Income from Continuing Operations - GAAP$132.0$15.6$410.6$294.8Basic Average Common Shares Outstanding309.9281.4291.9280.4Basic Net Operating Earnings Per Share from Continuing Operations$0.44$0.32$1.46$1.32Items excluded from net operating earnings (after-tax)(0.02)(0.27)(0.05)(0.27)GAAP Basic Earnings Per Share from Continuing Operations$0.42$0.05$1.41$1.05  NiSource Inc.Schedule 2 ? Adjustments by Segment from Operating Earnings to GAAPFor Quarter ended December 31, 2012 (in millions)Gas DistributionGas Transmission and StorageElectricCorporate & OtherTotalOperating Earnings (Loss)$133.6$128.8$51.6$(1.1)$312.9Net Revenues:Weather (compared to normal)(5.1)?(1.0)?(6.1)Unregulated natural gas marketing business???(0.7)(0.7)Total Impact - Net Revenues(5.1)?(1.0)(0.7)(6.8)Operating Expenses:Unregulated natural gas marketing business???0.50.5(Gain)/Loss on sale of assets and asset impairments(0.5)0.7?(0.3)(0.1)Total Impact - Operating Expenses(0.5)0.7?0.20.4Total Impact - Operating (Loss) Income$(5.6)$0.7$(1.0)$(0.5)$(6.4)Operating Income (Loss) - GAAP$128.0$129.5$50.6$(1.6)$306.52011 (in millions)Gas DistributionGas Transmission and StorageElectricCorporate & OtherTotalOperating Earnings (Loss)$141.4$89.0$42.9$(24.0)$249.3Net Revenues:Weather (compared to normal)(12.1)?(2.3)?(14.4)Revenue adjustment??(0.6)?(0.6)Unregulated natural gas marketing business???0.50.5Total Impact - Net Revenues(12.1)?(2.9)0.5(14.5)Operating Expenses:Environmental MGP remediation review(35.5)???(35.5)Unregulated natural gas marketing business???(1.2)(1.2)Gain on sale of assets (0.6)(0.1)(0.3)(14.9)(15.9)Total Impact - Operating Expenses(36.1)(0.1)(0.3)(16.1)(52.6)Total Impact - Operating Loss$(48.2)$(0.1)$(3.2)$(15.6)$(67.1)Operating Income (Loss)- GAAP$93.2$88.9$39.7$(39.6)$182.2  NiSource Inc.Schedule 2 ? Adjustments by Segment from Operating Earnings to GAAPFor Twelve Months ended December 31, 2012 (in millions)Gas DistributionGas Transmission and StorageElectricCorporate & OtherTotalOperating Earnings (Loss)$441.2$397.8$237.6$(5.2)$1,071.4Net Revenues:Weather (compared to normal)(46.6)?10.2?(36.4)Unregulated natural gas marketing business???3.73.7Total Impact - Net Revenues(46.6)?10.23.7(32.7)Operating Expenses:NOV accrual reserve??3.1?3.1Unregulated natural gas marketing business???(3.1)(3.1)(Gain)/Loss on sale of assets and asset impairments(0.5)0.6(0.1)4.04.0Total Impact - Operating Expenses(0.5)0.63.00.94.0Total Impact - Operating (Loss) Income$(47.1)$0.6$13.2$4.6$(28.7)Operating Income (Loss) - GAAP$394.1$398.4$250.8$(0.6)$1,042.72011 (in millions)Gas DistributionGas Transmission and StorageElectricCorporate & OtherTotalOperating Earnings (Loss)$424.9$360.1$201.9$(40.6)$946.3Net Revenues:Weather (compared to normal)(9.7)?7.6?(2.1)Revenue adjustment??(0.6)?(0.6)Unregulated natural gas marketing business???4.54.5Total Impact - Net Revenues(9.7)?7.04.51.8Operating Expenses:Environmental MGP remediation review(35.5)???(35.5)Unregulated natural gas marketing business???(5.6)(5.6)Gain on sale of assets (0.8)(0.1)(0.5)(15.5)(16.9)Total Impact - Operating Expenses(36.3)(0.1)(0.5)(21.1)(58.0)Total Impact - Operating (Loss) Income$(46.0)$(0.1)$6.5$(16.6)$(56.2)Operating Income (Loss)- GAAP$378.9$360.0$208.4$(57.2)$890.1 NiSource Inc.Consolidated Income Statements (GAAP)(unaudited) Three Months EndedDecember 31,Twelve Months Ended December 31,(in millions, except per share amounts)2012201120122011Net RevenuesGas Distribution$577.2$718.8$1,959.8$2,917.9Gas Transportation and Storage418.7361.01,462.41,354.6Electric360.0327.31,507.71,427.7Other54.472.0131.3274.5Gross Revenues1,410.31,479.15,061.25,974.7Cost of Sales (excluding depreciation and amortization)443.8597.01,541.52,545.8Total Net Revenues966.5882.13,519.73,428.9Operating ExpensesOperation and maintenance451.5481.61,662.81,706.4Depreciation and amortization143.9133.8561.9535.7Impairment and (gain)/loss on sale of assets, net?15.7(3.8)16.8Other taxes72.674.6288.3294.5Total Operating Expenses668.0705.72,509.22,553.4Equity Earnings in Unconsolidated Affiliates8.05.832.214.6Operating Income306.5182.21,042.7890.1Other Income (Deductions)Interest expense, net(103.9)(96.9)(418.3)(376.8)Other, net(3.6)(12.8)1.7(7.4)Loss on early extinguishment of long-term debt?(53.9)?(53.9)Total Other Deductions(107.5)(163.6)(416.6)(438.1)Income from Continuing Operations before Income Taxes199.018.6626.1452.0Income Taxes67.03.1215.5157.2Income from Continuing Operations132.015.5410.6294.8Income (Loss) from Discontinued Operations - net of taxes2.0(0.9)5.54.3Net Income$134.0$14.6$416.1$299.1Basic Earnings Per ShareContinuing operations$0.42$0.05$1.41$1.05Discontinued operations0.01?0.020.01Basic Earnings Per Share$0.43$0.05$1.43$1.06Diluted Earnings Per ShareContinuing operations$0.42$0.04$1.37$1.02Discontinued operations0.01?0.020.01Diluted Earnings Per Share$0.43$0.04$1.39$1.03Dividends Declared Per Common Share$0.24$0.23$0.94$0.92Basic Average Common Shares Outstanding309.9281.4291.9280.4Diluted Average Common Shares311.3291.1300.4288.5 NiSource Inc.Consolidated Balance Sheets (GAAP)(unaudited) (in millions)December 31, 2012December 31, 2011ASSETSProperty, Plant and EquipmentUtility Plant$21,642.3$20,299.7Accumulated depreciation and amortization(8,986.4)(8,651.9)Net utility plant12,655.911,647.8Other property, at cost, less accumulated depreciation260.0131.4Net Property, Plant and Equipment12,915.911,779.2Investments and Other AssetsAssets of discontinued operations and assets held for sale?0.2Unconsolidated affiliates243.3204.7Other investments194.4150.9Total Investments and Other Assets437.7355.8Current AssetsCash and cash equivalents36.311.5Restricted cash46.8160.6Accounts receivable (less reserve of $24.0 and $30.5, respectively)907.3850.6Income tax receivable130.90.9Gas inventory326.6427.6Underrecovered gas and fuel costs45.020.7Materials and supplies, at average cost97.486.6Electric production fuel, at average cost71.750.9Price risk management assets92.2137.2Exchange gas receivable51.564.9Assets of discontinued operations and assets held for sale26.726.1Regulatory assets162.8169.7Prepayments and other357.2261.8Total Current Assets2,352.42,269.1Other AssetsPrice risk management assets56.0188.7Regulatory assets2,024.41,978.2Goodwill3,677.33,677.3Intangible assets286.6297.6Postretirement and postemployment benefits assets?31.5Deferred charges and other94.4130.9Total Other Assets6,138.76,304.2Total Assets$21,844.7$20,708.3 NiSource Inc.Consolidated Balance Sheets (GAAP) (continued)(unaudited) (in millions, except share amounts)December 31, 2012December 31, 2011CAPITALIZATION AND LIABILITIESCapitalizationCommon Stockholders' EquityCommon stock - $0.01 par value, 400,000,000 shares authorized; 310,280,867 and 281,853,571 shares issued and outstanding, respectively$3.1$2.8Additional paid-in capital4,597.64,167.7Retained earnings1,059.6917.0Accumulated other comprehensive loss(65.5)(59.7)Treasury stock(40.5)(30.5)Total Common Stockholders' Equity5,554.34,997.3Long-term debt, excluding amounts due within one year6,819.16,267.1Total Capitalization12,373.411,264.4Current LiabilitiesCurrent portion of long-term debt507.2327.3Short-term borrowings776.91,359.4Accounts payable538.9434.8Customer deposits and credits269.6313.6Taxes accrued235.5220.9Interest accrued133.7111.9Overrecovered gas and fuel costs22.148.9Price risk management liabilities95.2167.8Exchange gas payable146.2168.2Deferred revenue42.89.7Regulatory liabilities171.6112.0Accrued liability for postretirement and postemployment benefits6.126.6Liabilities of discontinued operations and liabilities held for sale3.90.4Legal and environmental reserves42.243.9Other accruals309.7301.0Total Current Liabilities3,301.63,646.4Other Liabilities and Deferred CreditsPrice risk management liabilities20.3138.9Deferred income taxes2,953.32,541.9Deferred investment tax credits24.829.0Deferred credits84.178.9Accrued liability for postretirement and postemployment benefits1,107.3953.8Regulatory liabilities and other removal costs1,593.31,663.9Asset retirement obligations160.4146.4Other noncurrent liabilities226.2244.7Total Other Liabilities and Deferred Credits6,169.75,797.5Commitments and Contingencies ??Total Capitalization and Liabilities$21,844.7$20,708.3  NiSource Inc.Statements of Consolidated Cash Flows (GAAP)(unaudited) Year Ended December 31, (in millions)20122011Operating ActivitiesNet Income$416.1$299.1Adjustments to Reconcile Net Income to Net Cash from Continuing Operations:Loss on early extinguishment of debt?53.9Depreciation and amortization561.9535.7Net changes in price risk management assets and liabilities(18.5)38.1Deferred income taxes and investment tax credits304.6178.4Deferred revenue(8.3)2.2Stock compensation expense and 401(k) profit sharing contribution45.039.2(Gain) Loss on sale of assets(4.1)0.1Loss on impairment of assets0.316.7Income from unconsolidated affiliates(30.9)(13.7)Gain on disposition of discontinued operations - net of taxes??Income from discontinued operations - net of taxes(5.5)(4.3)Amortization of discount/premium on debt9.78.9AFUDC equity(10.6)(2.4)Distribution Received from Equity Earnings34.918.8Changes in Assets and Liabilities:Accounts receivable(51.3)219.6Income tax receivable(130.0)98.1Inventories62.4(141.7)Accounts payable57.3(154.8)Customer deposits and credits(44.0)(4.5)Taxes accrued9.92.3Interest accrued21.8(2.5)(Under) Over recovered gas and fuel costs(51.1)127.5Exchange gas receivable/payable(8.6)(100.1)Other accruals(26.2)33.2Prepayments and other current assets(4.5)(10.2)Regulatory assets/liabilities(51.7)(322.9)Postretirement and postemployment benefits123.0(92.7)Deferred credits4.9(2.3)Deferred charges and other noncurrent assets71.96.9Other noncurrent liabilities(14.1)82.0Net Operating Activities from Continuing Operations1,264.3908.6Net Operating Activities provided by (used for) Discontinued Operations11.2(38.4)Net Cash Flows from Operating Activities1,275.5870.2Investing ActivitiesCapital expenditures(1,498.8)(1,122.7)Insurance recoveries6.5?Proceeds from disposition of assets25.69.4Restricted cash deposits (withdrawals)114.242.3Contributions to equity investees(20.4)(6.4)Distributions from equity investees??Other investing activities(49.0)(69.4)Net Investing Activities used for Continuing Operations(1,421.9)(1,146.8)Net Investing Activities used for Discontinued Operations(3.3)(2.5)Net Cash Flows used for Investing Activities(1,425.2)(1,149.3)Financing ActivitiesIssuance of long-term debt991.4890.0Retirement of long-term debt(331.6)(286.9)Premium and other debt related costs(3.4)(62.1)Change in short-term debt, net(582.2)(23.1)Issuance of common stock383.524.4Acquisition of treasury stock(10.0)(3.1)Dividends paid - common stock(273.2)(257.8)Net Cash Flows from Financing Activities174.5281.4Change in cash and cash equivalents from continuing operations16.943.2Change in cash and cash equivalents from discontinued operations7.9(40.9)Cash and cash equivalents at beginning of period11.59.2Cash and Cash Equivalents at End of Period$36.3$11.5  SOURCE NiSource Inc.For further information: Media, Mike Banas, Communications Manager, +1-219-647-5581, mbanas@nisource.com, Investors, Randy Hulen Managing Director, Investor Relations, +1-219-647-5688, rghulen@nisource.com