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NiSource Inc.

Company Summary

Financial Data:

NYSE:NI from Google Finance

Tickers:

NI - New York Stock Exchange

Related Entities

Company Transactions

Date: 3/2/2020
Type: Acquisition

BUYERS:

Eversource Energy

SELLERS:

NiSource Inc.

Columbia Gas of Massachusetts

DETAILS:

COST: 1.1 $B

NOTES:
Eversource Energy announced plans to acquire Columbia Gas of Massachusetts from NiSource, which includes 626,000 customers across the state. The deal has a purchase price of $1.1 billion in cash in exchange for 5,000 miles of pipe, essentially doubling Ever source's natural gas business.

Schedule 1 - Reconciliation of Consolidated Net Income (Loss) Available to Common Shareholders to Net Operating Earnings (Loss) Available to Common Shareholders (Non-GAAP) (unaudited)

			Three Months Ended		Nine Months Ended
			September 30,		September 30,
(in millions, except per share amounts)			2020	2019	2020	2019
GAAP Net Income (Loss) Available to Common Shareholders			$ (186.7)	$ (7.2)	$ (143.4)	$ 481.0
Adjustments to Operating Income:
	Operating Revenues:
		Weather - compared to normal	(5.2)	(3.6)	16.0	(13.0)
	Operating Expenses:
		Greater Lawrence Incident⁽¹⁾	2.3	20.5	15.4	(179.4)
		Loss on classification as held for sale⁽²⁾	35.6	-	400.2	-
		Plant retirement costs⁽³⁾	-	-	4.6	-
		Massachusetts Business separation costs⁽⁴⁾	11.1	-	16.3	-
		Massachusetts Business depreciation and amortization⁽⁵⁾	(15.2)	-	(35.1)	-
		NiSource Next intiative⁽⁶⁾	26.6	-	26.6	-
		Loss (gain) on sale of fixed assets and impairments, net	0.3	(0.2)	(0.4)	(0.1)
Total adjustments to operating income (loss)			55.5	16.7	443.6	(192.5)
	Other Income (Deductions):
		Loss on early extinguishment of long-term debt⁽⁷⁾	243.4	-	243.4	-
	Income Taxes:
		Tax effect of above items⁽⁸⁾	(75.9)	(11.2)	(166.2)	36.6
Total adjustments to net income (loss)			223.0	5.5	520.8	(155.9)
Net Operating Earnings (Loss) Available to Common Shareholders (Non-GAAP)			$ 36.3	$ (1.7)	$ 377.4	$ 325.1
Basic Average Common Shares Outstanding			383.8	374.1	383.5	373.8
GAAP Basic Earnings (Loss) Per Share			$ (0.49)	$ (0.02)	$ (0.37)	$ 1.29
Adjustments to basic earnings (loss) per share			0.58	0.02	1.35	(0.42)
Non-GAAP Basic Net Operating Earnings Per Share			$ 0.09	$ -	$ 0.98	$ 0.87

(1)	Represents costs incurred for estimated third-party claims and related other expenses as a result of the Greater Lawrence Incident, net of insurance recoveries recorded.
(2)	Represents loss recorded as a result of measuring the assets and liabilities of the Massachusetts Business at fair value, less costs to sell. Third quarter increase primarily includes approximately $36 million of capital expenditures that were not recouped through the sale of the Massachusetts Business that occurred on October 9, 2020.
(3)	Represents costs incurred in connection with the planned retirement of the Schahfer Generating Station. Includes costs for write downs of certain capital projects and materials and supplies inventory balances.
(4)	Represents third-party consulting costs incurred for the separation and transition of the Massachusetts Business to Eversource that occurred on October 9, 2020.
(6)	Represents costs incurred in connection with the NiSource Next initiative. Includes costs for severance and third-party consulting.
(7)	Represents non-recurring costs incurred for the early redemption of $1,603.6 million in long-term notes, consisting primarily of early redemption premiums.
(8)	For the three and nine months ended September 30, 2020, represents the tax effect of the adjustments to operating income at statutory tax rates, adjusted for the non-deductible CMA payment in lieu of penalties in 2020. For the three and nine months ended September 30, 2019, represents the tax effect of the adjustments to operating income at the adjusted effective tax rate and adjusted for favorable excess deferred income taxes related to TCJA included in GAAP results.

Schedule 2 - Total Current Estimated Amounts of Costs and Expenses Related to the Greater Lawrence Incident
Cost or Expense		Total Current Estimated Amount⁽¹⁾($ in millions)
Capital Cost⁽²⁾		$258
Incident Related Expenses
	Third-party claims and government fines, penalties and settlements⁽³⁾	$1,036 - $1,050
	Other incident-related costs⁽⁴⁾	$445 - $455
Insurance Recoveries⁽⁵⁾		$800

(1)	Total estimated amount includes costs or expenses from the incident through September 30, 2020 and estimated expected expenses in future periods in the aggregate. Amounts shown are estimates made by management based on currently available information. See the footnotes below for additional information. Actual results may differ materially from these estimates as more information becomes available.
(2)	We have invested approximately $258 million of capital spend for the pipeline replacement. This work was completed in 2019. We maintain property insurance for gas pipelines and other applicable property. Columbia Gas of Massachusetts has filed a proof of loss with its property insurer for the pipeline replacement. In January 2020, we filed a lawsuit against the property insurer, seeking payment of our property claim. We are currently unable to predict the timing or amount of any insurance recovery under the property policy. This pipeline replacement cost is part of the Massachusetts Business that was classified as held for sale at September 30, 2020. The assets and liabilities of the Massachusetts Business have been recorded at fair value, less costs to sell, which resulted in the loss on classification as held for sale that was recorded as of September 30, 2020. The sale of the Massachusetts Business was completed on October 9, 2020.
(3)	Amount includes approximately $1,036 million of expenses recorded since the Greater Lawrence Incident for estimated third-party claims and fines, penalties and settlements associated with government investigations. With regard to third-party claims, these costs include, but are not limited to, personal injury and property damage claims, damage to infrastructure, business interruption claims, and mutual aid payments to other utilities assisting with the restoration effort. These costs do not include costs of certain third-party claims and fines, penalties or settlements with government investigations that we are not able to estimate. The process for estimating costs associated with third-party claims relating to the Greater Lawrence Incident requires management to exercise significant judgment based on a number of assumptions and subjective factors. As more information becomes known, management's estimates and assumptions regarding the financial impact of the Greater Lawrence Incident may change.
(4)	Amount shown includes other incident related expenses of approximately $441 million recorded since the Greater Lawrence Incident. Amount represents certain consulting costs, legal costs, vendor costs, claims center costs, labor and related expenses incurred in connection with the incident, and insurance-related loss surcharges.
(5)	The aggregate amount of third-party liability insurance coverage available for losses arising from the Greater Lawrence Incident is $800 million. We have collected the entire $800 million. Expenses related to the incident have exceeded the total amount of insurance available under our policies.

Title of Security	CUSIP/ISIN Numbers	Initial Principal Amount	Acceptance Priority Level	U.S. Treasury Reference Security	Reference Yield	Fixed Spread	Repurchase Yield	Principal Amount Tendered and Accepted	Total Consideration (per $1,000 principal amount)^(a)

6.25% Notes due 2040	65473QAW3/ US65473QAW33	$250,000,000	1	1.25% U.S. Treasury due 5/15/2050	1.423%	+150 bps	2.923%	$97,398,000	$1,506.63
5.95% Notes due 2041^(b)	65473QAX1/ US65473QAX16	$400,000,000	2	1.25% U.S. Treasury due 5/15/2050	1.423%	+145 bps	2.873%	$52,603,000	$1,470.74
5.80% Notes due 2042^(c)	65473QAZ6/ US65473QAZ63	$250,000,000	3	1.25% U.S. Treasury due 5/15/2050	-%	+150 bps	-%	$-	$-
5.65% Notes due 2045^(c)	65473QBD4/ US65473QBD43	$500,000,000	4	1.25% U.S. Treasury due 5/15/2050	-%	+155 bps	-%	$-	$-
5.25% Notes due 2043^(c)	65473QBB8/ US65473QBB86	$500,000,000	5	1.25% U.S. Treasury due 5/15/2050	-%	+155 bps	-%	$-	$-


(a)	The Total Consideration for the Maximum Tender Offer Notes validly tendered prior to or at the Early Tender Date and not validly withdrawn and accepted for purchase is calculated using the fixed spread shown in the table above and includes an Early Tender Payment (as defined in the Offer to Purchase) of $30 per $1,000 principal amount.
(b)	Any outstanding 5.95% Notes due 2041 validly tendered and not validly withdrawn will be subject to proration as further described in the Offer to Purchase.
(c)	None of the outstanding Notes in this series will be accepted for purchase.

Title of Security	CUSIP/ISIN Numbers	Initial Principal Amount Outstanding	Acceptance Priority Level	Aggregate Principal Amount Tendered as of the Early Tender Date
6.25% Notes due 2040	65473QAW3/ US65473QAW33	$250,000,000	1	$97,398,000
5.95% Notes due 2041	65473QAX1/ US65473QAX16	$400,000,000	2	$223,450,000
5.80% Notes due 2042	65473QAZ6/ US65473QAZ63	$250,000,000	3	$107,351,000
5.65% Notes due 2045	65473QBD4/ US65473QBD43	$500,000,000	4	$155,847,000
5.25% Notes due 2043	65473QBB8/ US65473QBB86	$500,000,000	5	$131,030,000

Title of Security	CUSIP/ISIN Numbers	Initial Principal Amount Outstanding	U.S. Treasury Reference Security	Reference Yield	Fixed Spread	Repurchase Yield	Total Consideration (per $1,000 principal amount)
4.45% Notes due 2021^(a)	65473QAY9/ US65473QAY98	$63,552,000	1.50% U.S. Treasury due 11/30/2021	0.154%	+40 bps	0.554%	$1,049.75
2.650% Notes due 2022^(b)	65473QBH5/ US65473QBH56	$500,000,000	1.375% .U.S. Treasury due 10/15/2022	0.155%	+12.5 bps	0.280%	$1,051.03
3.85% Notes due 2023^(a)	65473QBA0/ US65473QBA04	$250,000,000	1.375% U.S. Treasury due 02/15/2023	0.157%	+35 bps	0.507%	$1,082.58
3.650% Notes due 2023^(b)	65473PAF2/ US65473PAF27	$350,000,000	0.125% .U.S. Treasury due 05/15/2023	0.165%	+15 bps	0.315%	$1,090.88


(a)	The applicable Total Consideration will be calculated to the applicable maturity date of the notes.

(b)	The applicable Total Consideration will be calculated to the applicable par call date of the notes.

Title of Security	CUSIP/ISIN Numbers	Principal Amount Outstanding	U.S. Treasury Reference Security	Bloomberg Reference Page	Fixed Spread
4.45% Notes due 2021^(a)	65473QAY9/ US65473QAY98	$63,552,000	1.50% U.S. Treasury due 11/30/2021	PX4	+40 bps
2.650% Notes due 2022^(b)	65473QBH5/ US65473QBH56	$500,000,000	1.375% .U.S. Treasury due 10/15/2022	PX5	+12.5 bps
3.85% Notes due 2023^(a)	65473QBA0/ US65473QBA04	$250,000,000	1.375% U.S. Treasury due 02/15/2023	PX5	+35 bps
3.650% Notes due 2023^(b)	65473PAF2/ US65473PAF27	$350,000,000	0.125% .U.S. Treasury due 05/15/2023	PX5	+15 bps

(a) The applicable Total Consideration (as defined below) will be calculated to the applicable maturity date of the Security (as defined below) in accordance with the terms of the Security.
(b) The applicable Total Consideration will be calculated to the applicable par call date of the Security in accordance with the terms of the Security.

Title of Security(1)	CUSIP / ISIN Number	Principal Amount Outstanding	Principal Amount Tendered(2)
6.80% Notes due 2019	65473QAT0 / US65473QAT04	$255,117,000	$70,005,000
5.45% Notes due 2020	65473QAR4 / US65473QAR48	$325,113,000	$106,032,000
6.125% Notes due 2022	65473QAV5 / US65473QAV59	$179,954,000	$32,999,000

Title of Security	CUSIP Number	Aggregate Principal Amount Outstanding	Amended Tender Cap	Reference U.S. Treasury Security	Bloomberg Reference Page	Fixed Spread (basis points)	Reference Yield	Total Consideration ⁽¹⁾⁽²⁾
6.125% Notes due 2022	65473QAV5	$500,000,000	N/A	1.875% UST due 4/30/2022	PX1	55 bps	1.798%	$1,169.25
6.40% Notes due 2018	65473QAS2	$476,027,000	$200,922,000	1% UST due 3/15/2018	PX3	30 bps	1.176%	$1,039.12
6.80% Notes due 2019	65473QAT0	$500,000,000	$244,883,000	1.125% UST due 1/15/2019	PX4	50 bps	1.250%	$1,081.07
5.45% Notes due 2020	65473QAR4	$550,000,000	$224,887,000	1.5% UST due 5/15/2020	PX1	70 bps	1.459%	$1,104.33

Title of Security	CUSIP Number	Aggregate Principal Amount Outstanding	Amended Tender Cap	Principal Amount Tendered	Principal Amount Accepted
6.125% Notes due 2022	65473QAV5	$500,000,000	N/A	$319,308,000	$319,308,000
6.40% Notes due 2018	65473QAS2	$476,027,000	$200,922,000	$200,922,000	$200,922,000
6.80% Notes due 2019	65473QAT0	$500,000,000	$244,883,000	$289,417,000	$244,883,000
5.45% Notes due 2020	65473QAR4	$550,000,000	$224,887,000	$224,887,000	$224,887,000

Title of Security	CUSIP/ISIN Numbers	Principal Amount Outstanding	Acceptance Priority Level(s)	U.S. Treasury Reference Security	Bloomberg Reference Page	Fixed Spread
6.25% Notes due 2040	65473QAW3/ US65473QAW33	$250,000,000	1	1.25% U.S. Treasury due 5/15/2050	PX1	+150 bps
5.95% Notes due 2041	65473QAX1/ US65473QAX16	$400,000,000	2	1.25% U.S. Treasury due 5/15/2050	PX1	+145 bps
5.80% Notes due 2042	65473QAZ6/ US65473QAZ63	$250,000,000	3	1.25% U.S. Treasury due 5/15/2050	PX1	+150 bps
5.65% Notes due 2045	65473QBD4/ US65473QBD43	$500,000,000	4	1.25% U.S. Treasury due 5/15/2050	PX1	+155 bps
5.25% Notes due 2043	65473QBB8/ US65473QBB86	$500,000,000	5	1.25% U.S. Treasury due 5/15/2050	PX1	+155 bps

(a) Holders of any Maximum Tender Offer Notes that are validly tendered after the Early Tender Date (as defined below) but prior to or at the Maximum Tender Expiration Date (as defined below) and that are accepted for purchase will receive the applicable Total Consideration minus an amount in cash equal to $30 per $1,000 principal amount.

Schedule 1 - Reconciliation of Consolidated Net Income (Loss) Available to Common Shareholders to Net
Operating Earnings Available to Common Shareholders (Non-GAAP) (unaudited)

			Three Months Ended		Six Months Ended
			June 30,		June 30,
(in millions, except per share amounts)			2020	2019	2020	2019
GAAP Net Income (Loss) Available to Common Shareholders			$ (18.5)	$ 283.1	$ 43.3	$ 488.2
Adjustments to Operating Income:
	Operating Revenues:
		Weather - compared to normal	(5.1)	1.5	21.2	(9.4)
	Operating Expenses:
		Greater Lawrence Incident⁽¹⁾	5.0	(333.5)	13.1	(199.9)
		Loss on classification as held for sale⁽²⁾	84.4	-	364.6	-
		Plant retirement costs⁽³⁾	4.6	-	4.6	-
		Massachusetts Business separation costs⁽⁴⁾	5.2	-	5.2	-
		Massachusetts Business depreciation and amortization⁽⁵⁾	(19.9)	-	(19.9)	-
		Loss (gain) on sale of fixed assets and impairments, net	(0.6)	(0.1)	(0.7)	0.1
Total adjustments to operating income			73.6	(332.1)	388.1	(209.2)
	Income Taxes:
		Tax effect of above items⁽⁶⁾	(4.9)	68.1	(90.3)	47.8
Total adjustments to net income			68.7	(264.0)	297.8	(161.4)
Net Operating Earnings Available to Common Shareholders (Non-GAAP)			$ 50.2	$ 19.1	$ 341.1	$ 326.8
Basic Average Common Shares Outstanding			383.5	373.9	383.3	373.6
GAAP Basic Earnings (Loss) Per Share			$ (0.05)	$ 0.76	$ 0.11	$ 1.31
Adjustments to basic earnings per share			0.18	(0.71)	0.78	(0.44)
Non-GAAP Basic Net Operating Earnings Per Share			$ 0.13	$ 0.05	$ 0.89	$ 0.87

Schedule 2 - Total Current Estimated Amounts of Costs and Expenses Related to the Greater
Lawrence Incident

Cost or Expense		Total Current Estimated Amount⁽¹⁾ ($ in millions)
Capital Cost⁽²⁾		$258
Incident Related Expenses
	Third-party claims and government fines, penalties and settlements⁽³⁾	$1,039 - $1,055
	Other incident-related costs⁽⁴⁾	$445 - $455
Insurance Recoveries⁽⁵⁾		$800

Schedule 1 - Reconciliation of Consolidated Net Income (Loss) Available to Common Shareholders to Net
Operating Earnings (Loss) Available to Common Shareholders (Non-GAAP) (unaudited)

	Three Months Ended		Six Months Ended
	September 30,		September 30,
(in millions, except per share amounts)	2019	2018	2019	2018
GAAP Net Income (Loss) Available to Common Shareholders	$ (7.2)	$ (345.1)	$ 481.0	$ (45.8)
Adjustments to Operating Income:
Operating Revenues:
Weather - compared to normal	(3.6)	(11.4)	(13.0)	(21.9)
Operating Expenses:
Plant retirement costs⁽¹⁾	-	-	-	3.3
Greater Lawrence Incident⁽²⁾	20.5	451.6	(179.4)	451.6
(Gain) Loss on sale of assets and impairments, net	(0.2)	0.7	(0.1)	0.4
Total adjustments to operating income	16.7	440.9	(192.5)	433.4
Other Income (Deductions):
Greater Lawrence Incident - Charitable Contribution⁽²⁾	-	10.3	-	10.3
Interest rate swap settlement gain	-	-	-	(21.2)
Loss on early extinguishment of long-term debt	-	33.0	-	45.5
Income Taxes:
Tax effect of above items⁽³⁾	(11.2)	(103.8)	36.6	(100.8)
Total adjustments to net income (loss)	5.5	380.4	(155.9)	367.2
Net Operating Earnings (Loss) Available to Common Shareholders (Non-GAAP)	$ (1.7)	$ 35.3	$ 325.1	$ 321.4
Basic Average Common Shares Outstanding	374.1	363.9	373.8	352.1
GAAP Basic Earnings (Loss) Per Share	$ (0.02)	$ (0.95)	$ 1.29	$ (0.13)
Adjustments to basic earnings (loss) per share	0.02	1.05	(0.42)	1.04
Non-GAAP Basic Net Operating Earnings Per Share	$ -	$ 0.10	$ 0.87	$ 0.91
⁽¹⁾Represents costs incurred associated with the retirement of Units 7 and 8 at Bailly Generating Station.
⁽²⁾Represents costs incurred for estimated third-party claims and related other expenses as a result of the Greater Lawrence Incident net of insurance recoveries recorded.
⁽³⁾Income tax effect is calculated using an adjusted effective tax rate. The adjusted effective tax rate differs from our GAAP effective tax rate due to adjustments for the impact of certain items which management believes are not indicative of our ongoing business performance. Our GAAP results for the three and nine months ended September 30, 2019 include a favorable adjustment to TCJA-related excess deferred income taxes. This activity was adjusted out of our non-GAAP results.

Schedule 1 - Reconciliation of Consolidated Net Income Available to Common Shareholders to
Net Operating Earnings Available to Common Shareholders (Non-GAAP) (unaudited)

	Three Months Ended
	March 31,
(in millions, except per share amounts)	2019	2018
GAAP Net Income Available to Common Shareholders	$ 205.1	$ 276.1
Adjustments to Operating Income:
Operating Revenues:
Weather - compared to normal	(10.9)	1.4
Operating Expenses:
Greater Lawrence Incident⁽¹⁾	133.6	-
Loss (Gain) on sale of assets and impairments, net	0.2	(0.3)
Total adjustments to operating income	122.9	1.1
Other Income (Deductions):
Interest rate swap settlement gain	-	(21.2)
Income Taxes:
Tax effect of above items	(20.3)	3.7
Total adjustments to net income	102.6	(16.4)
Net Operating Earnings Available to Common Shareholders (Non-GAAP)	$ 307.7	$ 259.7
Basic Average Common Shares Outstanding	373.4	338.0
GAAP Basic Earnings Per Share	$ 0.55	$ 0.82
Adjustments to basic earnings per share	0.27	(0.05)
Non-GAAP Basic Net Operating Earnings Per Share	$ 0.82	$ 0.77
(1) Represents costs incurred for estimated third-party claims and related other expenses as a result of the Greater Lawrence Incident net of insurance recoveries recorded for the three months ended March 31, 2019.

Schedule 1 - Reconciliation of Consolidated Net Income (Loss) Available to Common
Shareholders to Net Operating Earnings Available to Common Shareholders (Non-GAAP)
(unaudited)

			Three Months Ended		Twelve Months Ended
			December 31,		December 31,
(in millions, except per share amounts)			2018	2017	2018	2017
GAAP Net Income (Loss) Available to Common Shareholders			$ (19.8)	$ (52.4)	$ (65.6)	$ 128.5
Adjustments to Operating Income (Loss):
	Operating Revenues:
		Weather - compared to normal	(10.6)	(6.9)	(32.5)	30.2
		Greater Lawrence Incident⁽¹⁾	3.9	-	3.9	-
	Operating Expenses:
		Plant retirement costs⁽²⁾	-	-	3.3	1.5
		IT service provider transition costs⁽³⁾	-	8.3	-	21.6
		Greater Lawrence Incident⁽⁴⁾	379.0	-	830.6	-
		Loss on sale of assets and impairments, net	0.8	0.1	1.2	-
Total adjustments to operating income (loss)			373.1	1.5	806.5	53.3
	Other Income (Deductions):
		Greater Lawrence Incident - Charitable contribution⁽⁴⁾	10.4	-	20.7	-
		Interest rate swap settlement gain	(25.0)	-	(46.2)	-
		Loss on early extinguishment of long-term debt	-	-	45.5	111.5
	Income Taxes:
		Tax effect of above items	(79.8)	0.1	(180.6)	(56.9)
		Income taxes - discrete items⁽⁵⁾	(117.0)	161.1	(117.0)	161.1
Total adjustments to net income (loss)			161.7	162.7	528.9	269.0
Net Operating Earnings Available to Common Shareholders (Non-GAAP)			$ 141.9	$ 110.3	$ 463.3	$ 397.5
Basic Average Common Shares Outstanding			369.4	337.5	356.5	329.4
GAAP Basic Earnings (Loss) Per Share			$ (0.05)	$ (0.16)	$ (0.18)	$ 0.39
Adjustments to basic earnings (loss) per share			0.43	0.49	1.48	0.82
Non-GAAP Basic Net Operating Earnings Per Share			$ 0.38	$ 0.33	$ 1.30	$ 1.21
(1) Represents revenues not billed to impacted customers as a result of the Greater Lawrence Incident.
(2) Represents costs incurred associated with the planned retirement of Units 7 and 8 at Bailly Generating Station.
(3) Represents contract termination costs and external legal and consulting costs associated with termination of the IBM IT services agreement and the transition to a new multi-vendor strategy for IT service delivery.
(4) Represents costs incurred for estimated third-party claims and related other expenses as a result of the Greater Lawrence Incident net of insurance recoveries recorded to date.
(5) 2017 activity represents the impact of adopting the provisions of the Tax Cuts and Jobs Act of 2017. 2018 activity represents adjustments to the impact of the Tax Cuts and Jobs Act of 2017 due to regulatory actions in 2018.

Schedule 1 - Reconciliation of Consolidated Net Income Available to Common Shareholders to
Net Operating Earnings Available to Common Shareholders (Non-GAAP) (unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2018		2017		2018		2017
GAAP Net Income (Loss) Available to Common Shareholders	$	23.2	$	(44.4)	$	299.3	$	166.9
Adjustments to Operating Income:
Operating Revenues:
Weather - compared to normal	(11.9)		4.9		(10.5)		33.9
Operating Expenses:
Plant retirement costs⁽¹⁾	3.3		—		3.3		1.5
IT service provider transition costs⁽²⁾	—		5.1		—		5.1
Gain on sale of assets and impairments, net	—		(0.1)		(0.3)		(0.1)
Total adjustments to operating income	(8.6)		9.9		(7.5)		40.4
Other Income (Deductions):
Interest rate swap settlement gain	—		—		(21.2)		—
Loss on early extinguishment of long-term debt	12.5		111.5		12.5		111.5
Income Taxes:
Tax effect of above items	(0.7)		(43.7)		3.0		(54.9)
Total adjustments to net income	3.2		77.7		(13.2)		97.0
Net Operating Earnings Available to Common Shareholders (Non-GAAP)	$	26.4	$	33.3	$	286.1	$	263.9
Basic Average Common Shares Outstanding	354.2		325.1		346.2		324.4
GAAP Basic Earnings (Loss) Per Share	$	0.07	$	(0.14)	$	0.86	$	0.51
Adjustments to basic earnings per share	—		0.24		(0.03)		0.30
Non-GAAP Basic Net Operating Earnings Per Share	$	0.07	$	0.10	$	0.83	$	0.81

(1) Represents costs incurred associated with the planned retirement of Units 7 and 8 at Bailly Generating Station.
(2) Represents external legal and consulting costs associated with termination of the IBM IT services agreement and the transition to a new multi-vendor strategy for IT service delivery.

Schedule 1 - Reconciliation of Consolidated Net Income to Net Operating Earnings (Non-GAAP)
(unaudited)

			Three Months Ended
			March 31,
(in millions, except per share amounts)			2018	2017
GAAP Net Income			$ 276.1	$ 211.3
Adjustments to Operating Income:
	Operating Revenues:
		Weather - compared to normal	1.4	29.0
	Operating Expenses:
		Plant retirement costs⁽¹⁾	-	1.5
		Gain on sale of assets	(0.3)	-
Total adjustments to operating income			1.1	30.5
	Other Income (Deductions):
		Interest rate swap settlement gain	(21.2)	-
	Income Taxes:
		Tax effect of above items	3.7	(11.2)
Total adjustments to net income			(16.4)	19.3
Net Operating Earnings (Non-GAAP)			$ 259.7	$ 230.6
Basic Average Common Shares Outstanding			338.0	323.7
GAAP Basic Earnings Per Share			$ 0.82	$ 0.65
Adjustments to basic earnings per share			(0.05)	0.06
Non-GAAP Basic Net Operating Earnings Per Share			$ 0.77	$ 0.71
(1) Represents costs incurred associated with the planned retirement of Units 7 and 8 at Bailly Generating Station.

Schedule 1 - Reconciliation of Consolidated Net Operating Earnings (Non-GAAP) to
Income from Continuing Operations (unaudited)

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(in millions, except per share amounts)	2017	2016	2017	2016
Net Operating Earnings (Non-GAAP)	$ 23.3	$ 19.3	$ 287.2	$ 243.6
Items Excluded from Operating Earnings:
Net Revenues:
Weather - compared to normal	(3.2)	7.4	(37.1)	(5.2)
Operating Expenses:
Plant retirement costs⁽¹⁾	-	-	(1.5)	-
IT service provider transition costs⁽²⁾	(8.2)	-	(13.3)	-
Transaction costs⁽³⁾	-	(0.5)	-	(2.2)
Gain on sale of assets and impairments, net	-	0.1	0.1	0.4
Total items excluded from operating earnings	(11.4)	7.0	(51.8)	(7.0)
Other Income (Deductions):
Loss on early extinguishment of long-term debt	-	-	(111.5)	-
Income Taxes:
Tax effect of above items	2.1	(2.6)	57.1	2.7
Total items excluded from net operating earnings	(9.3)	4.4	(106.2)	(4.3)
GAAP Income from Continuing Operations	$ 14.0	$ 23.7	$ 181.0	$ 239.3
Basic Average Common Shares Outstanding	331.1	322.3	326.7	321.4
Non-GAAP Basic Net Operating Earnings Per Share	$ 0.07	$ 0.06	$ 0.88	$ 0.76
Items excluded from net operating earnings (after-tax)	(0.03)	0.01	(0.33)	(0.02)
GAAP Basic Earnings Per Share From Continuing Operations	$ 0.04	$ 0.07	$ 0.55	$ 0.74

(1) Represents employee severance costs incurred associated with the planned retirement of Units 7 and 8 at Bailly Generating Station.
(2) Represents contract termination costs and external legal and consulting costs associated with termination of the IBM IT services agreement and the transition to a new multi-vendor strategy for IT service delivery.
(3) Represents costs incurred associated with the separation of Columbia Pipeline Group, Inc.

NiSource Inc.

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Schedule 1 - Reconciliation of Consolidated Net Operating Earnings (Non-GAAP) to
Net Income (unaudited)

	Three Months Ended March 31,
	Three Months Ended March 31,
(in millions, except per share amounts)	2017		2016
Net Operating Earnings (Non-GAAP)	$	230.6	$	197.7
Items Excluded from Operating Earnings:
Net Revenues:
Weather - compared to normal	(29.0)		(17.2)
Operating Expenses:
Plant retirement costs⁽¹⁾	(1.5)		—
Transaction costs⁽²⁾	—		(0.8)
Gain on sale of assets and impairments, net	—		0.1
Total items excluded from operating earnings	(30.5)		(17.9)
Income Taxes:
Tax effect of above items	11.2		6.8
Total items excluded from net operating earnings	(19.3)		(11.1)
GAAP Net Income	$	211.3	$	186.6
Basic Average Common Shares Outstanding	323.7		320.3
Non-GAAP Basic Net Operating Earnings Per Share	$	0.71	$	0.62
Items excluded from net operating earnings (after-tax)	(0.06)		(0.04)
GAAP Basic Earnings Per Share	$	0.65	$	0.58
⁽¹⁾Represents employee severance costs incurred associated with the planned retirement of Units 7 and 8 at Bailly Generating Station.
⁽²⁾Represents costs incurred associated with the Separation of CPG.

Schedule 2 - Reconciliation of Operating Earnings (Non-GAAP) to
Operating Income (unaudited)

	Three Months Ended March 31,

(in millions)	2017		2016
Operating Earnings (Non-GAAP)	$	447.0	$	399.3
Items Excluded from Operating Earnings:
Net Revenues:
Weather - compared to normal	(29.0)		(17.2)
Operating Expenses:
Plant retirement costs⁽¹⁾	(1.5)		—
Transaction costs⁽²⁾	—		(0.8)
Gain on sale of assets and impairments, net	—		0.1
Total items excluded from operating earnings	(30.5)		(17.9)
GAAP Operating Income	$	416.5	$	381.4
⁽¹⁾Represents employee severance costs incurred associated with the planned retirement of Units 7 and 8 at Bailly Generating Station.
⁽²⁾Represents costs incurred associated with the Separation of CPG.

Schedule 1 - Reconciliation of Consolidated Net Operating Earnings (Non-GAAP) to
Income from Continuing Operations (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2016		2015		2016		2015
Net Operating Earnings (Non-GAAP)	$	19.3	$	18.5	$	243.6	$	199.2
Items Excluded from Operating Earnings:
Net Revenues:
Weather - compared to normal	7.4		(3.9)		(5.2)		11.5
Operating Expenses:
Environmental costs	—		—		—		(10.0)
Transaction costs	(0.5)		(1.1)		(2.2)		(3.1)
Gain (loss) on sale of assets and impairments, net	0.1		(1.1)		0.4		(1.2)
Total items excluded from operating earnings	7.0		(6.1)		(7.0)		(2.8)
Other Income (Deductions):
Loss on early extinguishment of long-term debt	—		—		—		(97.2)
Income Taxes:
Income taxes - discrete items	—		—		—		(3.3)
Tax effect of above items	(2.6)		2.4		2.7		38.3
Total items excluded from net operating earnings	4.4		(3.7)		(4.3)		(65.0)
GAAP Income from Continuing Operations	$	23.7	$	14.8	$	239.3	$	134.2
Basic Average Common Shares Outstanding	322.3		318.1		321.4		317.4
Basic Net Operating Earnings Per Share	$	0.06	$	0.06	$	0.76	$	0.63
Items excluded from net operating earnings (after-tax)	0.01		(0.01)		(0.02)		(0.21)
GAAP Basic Earnings Per Share from Continuing Operations	$	0.07	$	0.05	$	0.74	$	0.42

Schedule 1 - Reconciliation of Consolidated Net Operating Earnings (Non-GAAP) to
Income from Continuing Operations (unaudited)


		Three Months Ended June 30,		Six Months Ended June 30,
(in millions, except per share amounts)		2016	2015	2016	2015
Net Operating Earnings (Non-GAAP)		$ 26.3	$ 1.4	$ 217.1	$ 180.7
Items Excluded from Operating Earnings:
Net Revenues:
	Weather - compared to normal	4.6	(6.8)	(12.6)	15.4
Operating Expenses:
	Environmental costs	—	(10.0)	—	(10.0)
	Transaction costs	(0.9)	(1.7)	(1.7)	(2.0)
	Gain (loss) on sale of assets and impairments, net	0.2	0.2	0.3	(0.1)
Total items excluded from operating earnings		3.9	(18.3)	(14.0)	3.3
Other Income (Deductions):
	Loss on early extinguishment of long-term debt	—	(97.2)	—	(97.2)
Income Taxes:
	Income taxes - discrete items	—	(3.3)	—	(3.3)
	Tax effect of above items	(1.5)	44.3	5.3	35.9
Total items excluded from net operating earnings		2.4	(74.5)	(8.7)	(61.3)
GAAP Income from Continuing Operations		$ 28.7	$ (73.1)	$ 208.4	$ 119.4
Basic Average Common Shares Outstanding		321.7	317.5	321.0	317.0
Basic Net Operating Earnings Per Share		$ 0.08	$ —	$ 0.68	$ 0.57
Items excluded from net operating earnings (after-tax)		0.01	(0.23)	(0.03)	(0.19)
GAAP Basic Earnings Per Share from Continuing Operations		$ 0.09	$ (0.23)	$ 0.65	$ 0.38

NiSource Inc.
Consolidated Net Operating Earnings (Non-GAAP)
(unaudited)



	Three Months Ended
	March 31,
(in millions, except per share amounts)	2016	2015
Net Revenues
Gas Distribution	$ 753.1	$ 1,061.3
Gas Transportation	301.7	369.2
Electric	394.1	391.9
Other	4.9	7.6
Gross Revenues	1,453.8	1,830.0
Cost of Sales (excluding depreciation and amortization)	496.5	848.2
Total Net Revenues	957.3	981.8
Operating Expenses
Operation and maintenance	305.2	303.4
Operation and maintenance - trackers	48.7	105.4
Depreciation and amortization	127.5	123.9
Depreciation and amortization - trackers	5.3	1.1
Other taxes	48.2	53.2
Other taxes - trackers	23.1	30.1
Total Operating Expenses	558.0	617.1
Operating Earnings	399.3	364.7
Other Income (Deductions)
Interest expense, net	(90.5)	(92.8)
Other, net	0.7	3.5
Total Other Deductions	(89.8)	(89.3)
Operating Earnings From Continuing Operations
Before Income Taxes	309.5	275.4
Income Taxes	118.7	96.1
Net Operating Earnings from Continuing Operations	190.8	179.3
GAAP Adjustment	(11.1)	13.2
GAAP Income from Continuing Operations	$ 179.7	$ 192.5
Basic Net Operating Earnings Per Share from Continuing Operations	$ 0.60	$ 0.57
GAAP Basic Earnings Per Share from Continuing Operations	$ 0.56	$ 0.61
Basic Average Common Shares Outstanding	320.3	316.6

NiSource Inc.
Segment Operating Earnings (Non-GAAP)
(unaudited)




	Three Months Ended
Gas Distribution Operations	March 31,
(in millions)	2016	2015
Net Revenues
Sales revenues	$ 1,059.3	$ 1,436.9
Less: Cost of gas sold	377.4	722.6
Net Revenues	681.9	714.3
Operating Expenses
Operation and maintenance	200.1	193.4
Operation and maintenance - trackers	38.3	98.4
Depreciation and amortization	61.2	56.1
Other taxes	29.0	30.5
Other taxes - trackers	23.1	30.1
Total Operating Expenses	351.7	408.5
Operating Earnings	$ 330.2	$ 305.8
GAAP Adjustment	(15.3)	19.4
GAAP Operating Income	$ 314.9	$ 325.2



	Three Months Ended
Electric Operations	March 31,
(in millions)	2016	2015
Net Revenues
Sales revenues	$ 394.2	$ 393.0
Less: Cost of sales	119.1	125.7
Net Revenues	275.1	267.3
Operating Expenses
Operation and maintenance	109.5	113.2
Operation and maintenance - trackers	10.4	7.0
Depreciation and amortization	61.7	61.1
Depreciation and amortization - trackers	5.3	1.1
Other taxes	16.0	17.7
Total operating Expenses	202.9	200.1
Operating Earnings	$ 72.2	$ 67.2
GAAP Adjustment	(1.9)	2.8
GAAP Operating Income	$ 70.3	$ 70.0


	Three Months Ended
Corporate and Other Operations	March 31,
(in millions)	2016	2015
Operating Earnings (Loss)	$ (3.1)	$ (8.3)
GAAP Adjustment	(0.7)	(0.6)
GAAP Operating Income (Loss)	$ (3.8)	$ (8.9)

NiSource Inc.
Segment Volumes and Statistical Data




	Three Months Ended
	March 31,
Gas Distribution Operations	2016	2015
Sales and Transportation (MMDth)
Residential	120.8	153.1
Commercial	71.6	88.7
Industrial	140.2	146.8
Off System	12.1	13.5
Other	(0.1)	—
Total	344.6	402.1
Weather Adjustment	20.8	(35.5)
Sales and Transportation Volumes - Excluding Weather	365.4	366.6
Heating Degree Days	2,612	3,404
Normal Heating Degree Days	2,924	2,892
% Colder (Warmer) than Normal	(11)%	18%
Customers
Residential	3,128,567	3,111,880
Commercial	285,214	284,081
Industrial	7,569	7,641
Other	13	15
Total	3,421,363	3,403,617



	Three Months Ended
	March 31,
Electric Operations	2016	2015
Sales (Gigawatt Hours)
Residential	803.6	865.8
Commercial	911.9	940.0
Industrial	2,420.7	2,425.4
Wholesale	—	116.9
Other	34.5	34.6
Total	4,170.7	4,382.7
Weather Adjustment	28.6	(42.2)
Sales Volumes - Excluding Weather	4,199.3	4,340.5

Electric Customers
Residential	405,235	403,409
Commercial	55,170	54,695
Industrial	2,341	2,354
Wholesale	742	747
Other	—	5
Total	463,488	461,210

NiSource Inc.
Schedule 1 - Reconciliation of Net Operating Earnings to GAAP




	Three Months Ended
	March 31,
(in millions, except per share amounts)	2016	2015
Net Operating Earnings from Continuing Operations	$ 190.8	$ 179.3
Items excluded from operating earnings
Net Revenues:
Weather - compared to normal	(17.2)	22.2
Operating Expenses:
Transaction Costs	(0.8)	(0.3)
Gain (loss) on sale of assets and impairments, net	0.1	(0.3)
Total items excluded from operating earnings	(17.9)	21.6
Other Deductions:
Tax effect of above items	6.8	(8.4)
Total items excluded from net operating earnings	(11.1)	13.2
GAAP Income from Continuing Operations	$ 179.7	$ 192.5
Basic Average Common Shares Outstanding	320.3	316.6
Basic Net Operating Earnings Per Share from Continuing Operations	$ 0.60	$ 0.57
Items excluded from net operating earnings (after-tax)	(0.04)	0.04
GAAP Basic Earnings Per Share from Continuing Operations	$ 0.56	$ 0.61

NiSource Inc.
Schedule 2 - Adjustments by Segment from Operating Earnings to GAAP
For the Quarter ended March 31,





	Gas Distribution		Corporate & Other
*2016(in millions)***	Gas Distribution	Electric	Corporate & Other	Total
Operating Earnings (Loss)	$ 330.2	$ 72.2	$ (3.1)	$ 399.3
Net Revenues:
Weather - compared to normal	(15.3)	(1.9)	—	(17.2)
*Total Impact - Net Revenues*	(15.3)	(1.9)	—	(17.2)
Operating Expenses:
Transaction costs	—	—	(0.8)	(0.8)
Gain on sale of assets and impairments, net	—	—	0.1	0.1
*Total Impact - Operating Expenses*	—	—	(0.7)	(0.7)
*Total Impact - Operating Loss*	$ (15.3)	$ (1.9)	$ (0.7)	$ (17.9)
Operating Income (Loss) - GAAP	$ 314.9	$ 70.3	$ (3.8)	$ 381.4




	Gas Distribution		Corporate & Other
*2015(in millions)***	Gas Distribution	Electric	Corporate & Other	Total
Operating Earnings (Loss)	$ 305.8	$ 67.2	$ (8.3)	$ 364.7
Net Revenues:
Weather - compared to normal	19.4	2.8	—	22.2
*Total Impact - Net Revenues*	19.4	2.8	—	22.2
Operating Expenses:
Transaction costs	—	—	(0.3)	(0.3)
Loss on sale of assets	—	—	(0.3)	(0.3)
*Total Impact - Operating Expenses*	—	—	(0.6)	(0.6)
*Total Impact - Operating Income (Loss)*	$ 19.4	$ 2.8	$ (0.6)	$ 21.6
Operating Income (Loss) - GAAP	$ 325.2	$ 70.0	$ (8.9)	$ 386.3