Slide 1: NiSource
NiSource May, 2004
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS "Safe Harbor" Statement This presentation 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
Slide 3: A Super Regional Integrated Gas Company
A SUPER REGIONAL INTEGRATED GAS COMPANY Virginia West Virginia Tennessee Gulf of Mexico Mississippi Louisiana Texas Kentucky Ohio Pennsylvania Maryland New Jersey New York Maine Indiana Mass ..N.H. Strategic Location 30% Population / 40% of U.S. Energy Consumption Third Largest Gas Distribution Comp
Slide 4: NiSource's Challenge in 2003
Actions We Took Exited Remaining Non-Core Unregulated Businesses - $2.3 Billion Since 2000 Reduced Debt and Interest Expense Targeted Payout of 55% Secured New $1.25 Billion Credit Facility Challenges Grow Earnings Strengthen Balance Sheet Adequate Liquidity Credit Ratings NISOURCE'S CHALLENGE IN 20
Slide 5: Building from a Stronger Base
BUILDING FROM A STRONGER BASE Stable Credit Ratings S&P BBB; Moody's Baa3, Fitch BBB Bank Lines Used for Working Capital Focus on Regulated Businesses - Operating as Single Distribution Business Focus on Growing Pipeline and Storage Business Regulated Revenue Expansion Non-Traditional Revenues
Slide 6: Balanced Portfolio
2003 Operating Income BALANCED PORTFOLIO 100% Of Operating Income From Regulated Businesses Gas Distribution Gas Transmission Electric Operations 43 34 23 Gas Transmission 34%. Gas Distribution 43% Electric Operations 23%
Slide 7: Improving Our Productivity
2000 2001 2002 2003 14674 12501 9307 8614 IMPROVING OUR PRODUCTIVITY Staffing at our Businesses
Slide 8: Demonstrating Capital Discipline
DEMONSTRATING CAPITAL DISCIPLINE 1995 1996 1997 1998 1999 0.46 0.53 0.59 0.49 0.62 1999 2000 2001* 2002* 2003* 2004E 613.5 554 531 527.5 569.9 519 Pre-merger Post-merger ($ in millions) Capital Expenditures* Capital Expenditures Post-Merger Do Not Include Capex for Discontinued Operations
Slide 9: While Providing for Growth from Internal Sources
2004E Capital Expenditures $519 Million $113 Million Growth Capex 2004E 73% Gas Distribution 5% Gas Transmission 19% Electric Operations 3% Other WHILE PROVIDING FOR GROWTH FROM INTERNAL SOURCES Gas Distribution Gas Transmission Electric Operations Other 40 27 28 5
Slide 10: Dividend Payout Ratio
DIVIDEND PAYOUT RATIO 1998 1999 2000 2001 2002 2003* 2004E** NISOURCE 0.6 0.791 0.964 1.1 0.65 0.67 0.55 * 2003 Based on EPS from continuing operations ** Target Future Payout at 55% Range
Slide 11: First Quarter Financial Performance
Earnings from Continuing Operations: Income from Continuing Operations Were $216.5 Million or $0.83 Cents Per Share Compared to $222.3 Million or $0.88 Cents Per Share in 2003 Normal Winter Weather - 6% Warmer than Same Quarter in 2003 O&M Costs Held Essentially Flat Compared to 2003 Reduced Interes
Slide 12: Strengthening Our Gas Distribution
STRENGTHENING OUR GAS DISTRIBUTION Industry-Leading Scale Operating as One Distribution Business Diversification of Customers and States Favorable Overall Regulatory Environment Customer Choice Bad Debt Tracker-Ohio Strong Regulatory Relationships Incentive Opportunities Vertical Integration With Tr
Slide 13: Integrating Our Transmission / Storage
INTEGRATING OUR TRANSMISSION / STORAGE Future Corning Chippawa Dawn Proposed Millennium Pipeline Phase One TransCanada Empire Pipeline Ramapo One of the Largest Integrated Systems in U.S. Over 646 Bcf of Storage (Market Area) Majority of Capacity Sold to LDCs Competitive Cost Structure Unique Web-li
Slide 14: Capitalizing on Our Electric Gateway
CAPITALIZING ON OUR ELECTRIC GATEWAY Michigan Market ComEd Hub Cinergy Hub SERC NPCC ECAR MAAC MAIN MAPP SPP NIPSCO Vertically Integrated Utility - Stronger Industrial Business and Growing Customer Base Low-Cost Portfolio of Coal-Fired Generation (3,059 MW) Interconnect With Five Surrounding Control
Slide 15: Positioning NiSource for Solid 2004 Earnings
POSITIONING NISOURCE FOR SOLID 2004 EARNINGS Net Income From Continuing Operations ($ in millions) EPS $1.89 $1.64 Assumes Normal Weather $0.93 $1.65 $1.70 E*
Slide 16: With a Stronger Capital Structure
WITH AN STRONGER CAPITAL STRUCTURE
Slide 17: And a Stronger Balance Sheet
2000 2001 2002 2003 2004 8585 8330 6988 6797 6285 AND A STRONGER BALANCE SHEET TOTAL DEBT IN MILLIONS FIRST QUARTER
Slide 18: With Solid Fundamentals
Stable Base of Regulated Earnings 100% of Operating Income Generated by Low-risk Regulated Businesses Regulated Energy Delivery Service to Nearly 3.7 million Customers Across 9 States Continue Savings Initiatives Centralized Functions Standardizing Operations Improved Liquidity and Credit Profile St
Slide 19: And a Management Team Focused on the Future
Centralize Regulatory Strategy - Focused On Growth Create Regulatory Opportunities within Each State Rate Trackers ... Environmental, Operational, Bad Debt, Bare Steel, Conservation, Pipeline Expansion Grow Non-Traditional Revenues - Retail Products/Services, Commercial & Industrial (C&I) Business S
Slide 20: The NiSource Market
THE NISOURCE MARKET Virginia West Virginia Tennessee Gulf of Mexico Mississippi Louisiana Texas Kentucky Ohio Pennsylvania Maryland New Jersey New York Maine Indiana Mass ..N.H. Strong Assets From the Midwest to New England Low Business Risk Profile - 100% Regulated - 3.7 Million Distribution Custom