Company Quick10K Filing
Quick10K
Nisource
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$27.51 373 $10,260
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-05 Officers, Exhibits
8-K 2019-05-07 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2019-05-01 Earnings, Exhibits
8-K 2019-04-17 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-03-04 Officers
8-K 2019-02-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-02-20 Earnings, Exhibits
8-K 2018-12-26 Shareholder Rights, Amend Bylaw, Exhibits
8-K 2018-12-12 Officers, Regulation FD, Exhibits
8-K 2018-11-30 Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K 2018-11-28 Enter Agreement, Exhibits
8-K 2018-11-01 Earnings, Exhibits
8-K 2018-11-01 Enter Agreement, Other Events, Exhibits
8-K 2018-10-12 Regulation FD, Exhibits
8-K 2018-09-26 Officers, Regulation FD, Exhibits
8-K 2018-09-05 Officers, Exhibits
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-06-06 Enter Agreement, Off-BS Arrangement, Sale of Shares, Shareholder Rights, Amend Bylaw, Regulation FD, Exhibits
8-K 2018-06-04 Regulation FD, Exhibits
8-K 2018-05-08 Shareholder Vote
8-K 2018-05-02 Sale of Shares
8-K 2018-04-18 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-26 Officers
8-K 2018-01-26 Amend Bylaw, Other Events, Exhibits
CHFC Chemical Financial 3,060
CRUS Cirrus Logic 2,880
ORTX Orchard Therapeutics 1,720
OAS Oasis Petroleum 1,710
MRNS Marinus Pharmaceuticals 242
AXTI AXT 217
SNDE Sundance Energy Australia 189
PBIP Prudential Bancorp 153
AOI Alliance One 0
DBRM Daybreak Oil & Gas 0
NI 2019-03-31
Part I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ni-ex3112019331.htm
EX-31.2 ni-ex3122019331.htm
EX-32.1 ni-ex3212019331.htm
EX-32.2 ni-ex3222019331.htm

Nisource Earnings 2019-03-31

NI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or
¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-16189
NiSource Inc.
(Exact name of registrant as specified in its charter)
Delaware               
 
35-2108964        
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
801 East 86th Avenue
Merrillville, Indiana    
 
46410
(Address of principal executive offices)
 
(Zip Code)
(877) 647-5990
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ    No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)
Yes þ    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ                    Accelerated filer ¨        Emerging growth company ¨
Non-accelerated filer ¨                      Smaller reporting company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨    No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $0.01 Par Value: 373,103,190 shares outstanding at April 24, 2019.



NISOURCE INC.
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTER ENDED MARCH 31, 2019
Table of Contents
 
 
 
 
Page
 
 
 
 
 
 
 
PART I
FINANCIAL INFORMATION
 
 
 
 
 
 
Item 1.
Financial Statements - unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
PART II
OTHER INFORMATION
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.
 
 
 
 

2


DEFINED TERMS

The following is a list of frequently used abbreviations or acronyms that are found in this report:

 
NiSource Subsidiaries, Affiliates and Former Subsidiaries
Columbia of Kentucky
Columbia Gas of Kentucky, Inc.
Columbia of Maryland
Columbia Gas of Maryland, Inc.
Columbia of Massachusetts
Bay State Gas Company
Columbia of Ohio
Columbia Gas of Ohio, Inc.
Columbia of Pennsylvania
Columbia Gas of Pennsylvania, Inc.
Columbia of Virginia
Columbia Gas of Virginia, Inc.
NIPSCO
Northern Indiana Public Service Company LLC
NiSource ("we," "us" or “our”)
NiSource Inc.
 
 
Abbreviations and Other
 
ACE
Affordable Clean Energy
AFUDC
Allowance for funds used during construction
AMRP
Accelerated Main Replacement Program
AOCI
Accumulated Other Comprehensive Income (Loss)
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
ATM
At-the-market
BTA
Build-transfer agreement
CAA
Clean Air Act
CCRs
Coal Combustion Residuals
CEP
Capital Expenditure Program
CERCLA
Comprehensive Environmental Response Compensation and Liability Act (also known as Superfund)
CO2
Carbon Dioxide
CPP
Clean Power Plan
DPU
Department of Public Utilities
EGUs
Electric Utility Generating Units
ELG
Effluent limitations guidelines
EPA
United States Environmental Protection Agency
EPS
Earnings per share
FAC
Fuel adjustment clause
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
FMCA
Federally Mandated Cost Adjustment
GAAP
Generally Accepted Accounting Principles
GCA
Gas cost adjustment
GCR
Gas cost recovery
GHG
Greenhouse gases
GSEP
Gas System Enhancement Program
GWh
Gigawatt hours
IRP
Infrastructure Replacement Program
IT
Information technology
IURC
Indiana Utility Regulatory Commission

3


DEFINED TERMS

LIBOR
London InterBank Offered Rate
LIFO
Last In, First Out
MGP
Manufactured Gas Plant
MISO
Midcontinent Independent System Operator
MMDth
Million dekatherms
MW
Megawatts
NTSB
National Transportation Safety Board
NYMEX
New York Mercantile Exchange
OPEB
Other Postretirement Benefits
PHMSA
Pipeline and Hazardous Materials Safety Administration
PPA
Purchase power agreement
RCRA
Resource Conservation and Recovery Act
ROU
Right of use
SAVE
Steps to Advance Virginia's Energy Plan
SEC
Securities and Exchange Commission
STRIDE
Strategic Infrastructure Development Enhancement
TCJA
An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as the Tax Cuts and Jobs Act of 2017)
TDSIC
Transmission, Distribution and Storage System Improvement Charge
VSCC
Virginia State Corporation Commission
WCE
Whiting Clean Energy
Note regarding forward-looking statements
This Quarterly Report on Form 10-Q contains “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 (the "Exchange Act"). Investors and prospective investors should understand that many factors govern whether any forward-looking statement contained herein will be or can be realized. Any one of those factors could cause actual results to differ materially from those projected. These forward-looking statements include, but are not limited to, statements concerning NiSource’s plans, strategies, objectives, expected performance, expenditures, recovery of expenditures through rates, stated on either a consolidated or segment basis, and any and all underlying assumptions and other statements that are other than statements of historical fact. All forward-looking statements are based on assumptions that management believes to be reasonable; however, there can be no assurance that actual results will not differ materially.
Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Quarterly Report on Form 10-Q include, among other things, our debt obligations; any changes to the credit rating of our or certain of our subsidiaries; our ability to execute our growth strategy; changes in general economic, capital and commodity market conditions; pension funding obligations; economic regulation and the impact of regulatory rate reviews; our ability to obtain expected financial or regulatory outcomes; our ability to adapt to, and manage costs related to, advances in technology; any changes in our assumptions regarding the financial implications of the Greater Lawrence Incident; potential incidents and other operating risks associated with our business; our ability to obtain sufficient insurance coverage; the outcome of legal and regulatory proceedings, investigations, incidents, claims and litigation; any damage to our reputation, including in connection with the Greater Lawrence Incident; compliance with environmental laws and the costs of associated liabilities; fluctuations in demand from residential and commercial customers; economic conditions of certain industries; the success of NIPSCO's electric generation strategy; the price of energy commodities and related transportation costs; the reliability of customers and suppliers to fulfill their payment and contractual obligations; potential impairments of goodwill or definite-lived intangible assets; changes in taxation and accounting principles; the impact of an aging infrastructure; the impact of climate change; potential cyber-attacks; construction risks and natural gas costs and supply risks; extreme weather conditions; the attraction and retention of a qualified workforce; the ability of our subsidiaries to generate cash; uncertainties related to the expected benefits of the Separation; our ability to manage new initiatives and organizational changes; the performance of third-party suppliers and service providers; and other matters in the “Risk Factors” section of this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, many of which risks are beyond our control. In addition, the relative contributions to profitability by each business segment, and the assumptions underlying the forward-looking statements relating thereto, may change over time.

4


All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to the future results over time or otherwise, except as required by law.

5


Index
Page


6

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS
NiSource Inc.
Condensed Statements of Consolidated Income (unaudited)
  
Three Months Ended
March 31,
(in millions, except per share amounts)
2019
 
2018
Operating Revenues
 
 
Customer revenues
$
1,834.5

 
$
1,717.2

Other revenues
35.3

 
33.6

Total Operating Revenues
1,869.8

 
1,750.8

Operating Expenses
 
 
 
Cost of sales (excluding depreciation and amortization)
680.3

 
724.4

Operation and maintenance
552.4

 
402.5

Depreciation and amortization
175.1

 
144.7

Loss (Gain) on sale of assets and impairments, net
0.2

 
(0.3
)
Other taxes
87.6

 
78.9

Total Operating Expenses
1,495.6

 
1,350.2

Operating Income
374.2

 
400.6

Other Income (Deductions)
 
 
 
Interest expense, net
(95.6
)
 
(93.1
)
Other, net
(0.7
)
 
31.3

Total Other Deductions, Net
(96.3
)
 
(61.8
)
Income before Income Taxes
277.9


338.8

Income Taxes
59.0

 
62.7

Net Income
218.9

 
276.1

Preferred dividends
(13.8
)
 

Net Income Available to Common Shareholders
205.1

 
276.1

Earnings Per Share
 
 
 
Basic Earnings Per Share
$
0.55


$
0.82

Diluted Earnings Per Share
$
0.55

 
$
0.81

Basic Average Common Shares Outstanding
373.4

 
338.0

Diluted Average Common Shares
374.7

 
339.0


The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

7

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)


NiSource Inc.
Condensed Statements of Consolidated Comprehensive Income (unaudited)

 
Three Months Ended
March 31,
(in millions, net of taxes)
2019
 
2018
Net Income
$
218.9

 
$
276.1

Other comprehensive income (loss):
 
 
 
 Net unrealized gain (loss) on available-for-sale securities(1)
2.8

 
(1.7
)
Net unrealized gain (loss) on cash flow hedges(2)
(19.3
)
 
35.4

Unrecognized pension and OPEB benefit(3)
0.9

 
0.2

Total other comprehensive income (loss)
(15.6
)
 
33.9

Comprehensive Income
$
203.3

 
$
310.0


(1) Net unrealized gain (loss) on available-for-sale securities, net of $0.7 million tax expense and $0.4 million tax benefit in the first quarter of 2019 and 2018, respectively.
(2) Net unrealized gain (loss) on cash flow hedges, net of $6.5 million tax benefit and $11.7 million tax expense in the first quarter of 2019 and 2018, respectively.
(3) Unrecognized pension and OPEB benefit, net of $0.4 million and $0.1 million tax expense in the first quarter of 2019 and 2018, respectively.
The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

8

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in millions)
March 31,
2019
 
December 31,
2018
ASSETS
 
 
 
Property, Plant and Equipment
 
 
 
Utility plant
$
23,079.7

 
$
22,780.8

Accumulated depreciation and amortization
(7,356.9
)
 
(7,257.9
)
Net utility plant
15,722.8

 
15,522.9

Other property, at cost, less accumulated depreciation
18.6

 
19.6

Net Property, Plant and Equipment
15,741.4

 
15,542.5

Investments and Other Assets
 
 
 
Unconsolidated affiliates
2.1

 
2.1

Other investments
208.5

 
204.0

Total Investments and Other Assets
210.6

 
206.1

Current Assets
 
 
 
Cash and cash equivalents
151.0

 
112.8

Restricted cash
9.8

 
8.3

Accounts receivable (less reserve of $31.4 and $21.1, respectively)
1,132.1

 
1,058.5

Gas inventory
75.1

 
286.8

Materials and supplies, at average cost
107.3

 
101.0

Electric production fuel, at average cost
33.3

 
34.7

Exchange gas receivable
72.1

 
88.4

Regulatory assets
190.9

 
235.4

Prepayments and other
144.2

 
129.5

Total Current Assets
1,915.8

 
2,055.4

Other Assets
 
 
 
Regulatory assets
1,979.4

 
2,002.1

Goodwill
1,690.7

 
1,690.7

Intangible assets, net
218.0

 
220.7

Deferred charges and other
134.0

 
86.5

Total Other Assets
4,022.1

 
4,000.0

Total Assets
$
21,889.9

 
$
21,804.0

 
The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.
 

9

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Consolidated Balance Sheets (unaudited) (continued)
(in millions, except share amounts)
March 31,
2019
 
December 31,
2018
CAPITALIZATION AND LIABILITIES
 
 
 
Capitalization
 
 
 
Stockholders’ Equity
 
 
 
Common stock - $0.01 par value, 400,000,000 shares authorized; 373,002,671 and 372,363,656 shares outstanding, respectively
$
3.8

 
$
3.8

Preferred stock - $0.01 par value, 20,000,000 shares authorized; 440,000 shares outstanding
880.0

 
880.0

Treasury stock
(99.9
)
 
(99.9
)
Additional paid-in capital
6,406.5

 
6,403.5

Retained deficit
(1,358.0
)
 
(1,399.3
)
Accumulated other comprehensive loss
(52.8
)
 
(37.2
)
Total Stockholders’ Equity
5,779.6

 
5,750.9

Long-term debt, excluding amounts due within one year
7,110.1

 
7,105.4

Total Capitalization
12,889.7


12,856.3

Current Liabilities
 
 
 
Current portion of long-term debt
51.4

 
50.0

Short-term borrowings
2,080.0

 
1,977.2

Accounts payable
675.2

 
883.8

Dividends payable - common stock
74.6

 

Dividends payable - preferred stock
19.4

 

Customer deposits and credits
152.6

 
238.9

Taxes accrued
232.8

 
222.7

Interest accrued
93.7

 
90.7

Exchange gas payable
15.5

 
85.5

Regulatory liabilities
152.1

 
140.9

Legal and environmental
18.9

 
18.9

Accrued compensation and employee benefits
111.0

 
149.7

Claims accrued
258.5

 
114.7

Other accruals
79.5

 
63.8

Total Current Liabilities
4,015.2

 
4,036.8

Other Liabilities
 
 
 
Risk management liabilities
55.8

 
46.7

Deferred income taxes
1,391.6

 
1,330.5

Deferred investment tax credits
10.8

 
11.2

Accrued insurance liabilities
84.5

 
84.4

Accrued liability for postretirement and postemployment benefits
377.3

 
389.1

Regulatory liabilities
2,488.3

 
2,519.1

Asset retirement obligations
358.4

 
352.0

Other noncurrent liabilities
218.3

 
177.9

Total Other Liabilities
4,985.0

 
4,910.9

Commitments and Contingencies (Refer to Note 17, "Other Commitments and Contingencies")

 

Total Capitalization and Liabilities
$
21,889.9

 
$
21,804.0

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

10

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Statements of Consolidated Cash Flows (unaudited)

Three Months Ended March 31, (in millions)
2019
 
2018
Operating Activities
 
 
 
Net Income
$
218.9

 
$
276.1

Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
 
 
 
Depreciation and amortization
175.1

 
144.7

Deferred income taxes and investment tax credits
51.6

 
56.8

Other adjustments
6.5

 
(15.6
)
Changes in Assets and Liabilities:
 
 
 
Components of working capital
(27.2
)
 
(178.4
)
Regulatory assets/liabilities
0.4

 
117.1

Deferred charges and other noncurrent assets
(58.3
)
 
1.9

Other noncurrent liabilities
32.1

 
(14.4
)
Net Cash Flows from Operating Activities
399.1

 
388.2

Investing Activities
 
 
 
Capital expenditures
(353.7
)
 
(370.0
)
Cost of removal
(25.3
)
 
(19.0
)
Other investing activities
3.6

 
(9.9
)
Net Cash Flows used for Investing Activities
(375.4
)
 
(398.9
)
Financing Activities
 
 
 
Repayments of long-term debt and capital lease obligations
(2.3
)
 
(279.0
)
Premiums and other debt related costs
(4.0
)
 

Repayment of short-term debt (maturity > 90 days)
(350.0
)
 

Change in short-term borrowings, net (maturity ≤ 90 days)
452.8

 
361.6

Issuance of common stock
3.1

 
3.7

Acquisition of treasury stock

 
(3.6
)
Dividends paid - common stock
(74.5
)
 
(65.7
)
Dividends paid - preferred stock
(9.1
)
 

Net Cash Flows from Financing Activities
16.0

 
17.0

Change in cash, cash equivalents and restricted cash
39.7

 
6.3

Cash, cash equivalents and restricted cash at beginning of period
121.1

 
38.4

Cash, Cash Equivalents and Restricted Cash at End of Period
$
160.8

 
$
44.7


Supplemental Disclosures of Cash Flow Information
Three Months Ended March 31, (in millions)
2019
 
2018
Non-cash transactions:
 
 
 
Capital expenditures included in current liabilities
$
123.7

 
$
145.4

Dividends declared but not paid
94.0

 
65.8

Reclassification of other property to regulatory assets

 
142.3



The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

11

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Statements of Consolidated Equity (unaudited)
(in millions)
Common
Stock
 
Preferred Stock(1)
 
Treasury
Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Balance as of January 1, 2019
$
3.8

 
$
880.0

 
$
(99.9
)
 
$
6,403.5

 
$
(1,399.3
)
 
$
(37.2
)
 
$
5,750.9

Comprehensive Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income

 

 

 

 
218.9

 

 
218.9

Other comprehensive loss, net of tax

 

 

 

 

 
(15.6
)
 
(15.6
)
Dividends:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock ($0.40 per share)

 

 

 

 
(149.1
)
 

 
(149.1
)
Preferred stock (See Note 5)

 

 

 

 
(28.5
)
 

 
(28.5
)
Stock issuances:
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock purchase plan

 

 

 
1.3

 

 

 
1.3

Long-term incentive plan

 

 

 
(2.7
)
 

 

 
(2.7
)
401(k) and profit sharing

 

 

 
4.4

 

 

 
4.4

Balance as of March 31, 2019
$
3.8

 
$
880.0

 
$
(99.9
)
 
$
6,406.5

 
$
(1,358.0
)
 
$
(52.8
)
 
$
5,779.6


(1)Series A and Series B shares have an aggregate liquidation preference of $400M and $500M, respectively. See Note 5, "Equity" for additional information.
(in millions)
Common
Stock
 
Treasury
Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Balance as of January 1, 2018
$
3.4

 
$
(95.9
)
 
$
5,529.1

 
$
(1,073.1
)
 
$
(43.4
)
 
$
4,320.1

Comprehensive Income:
 
 
 
 
 
 
 
 
 
 
 
Net Income

 

 

 
276.1

 

 
276.1

Other comprehensive income, net of tax

 

 

 

 
33.9

 
33.9

Common stock dividends ($0.39 per share)

 

 

 
(131.7
)
 

 
(131.7
)
Treasury stock acquired

 
(3.6
)
 

 

 

 
(3.6
)
Cumulative effect of change in accounting principle

 

 

 
9.5

 
(9.5
)
 

Stock issuances:
 
 
 
 
 
 
 
 
 
 
 
Employee stock purchase plan

 

 
1.2

 

 

 
1.2

Long-term incentive plan

 

 
4.0

 

 

 
4.0

401(k) and profit sharing

 

 
6.2

 

 

 
6.2

Balance as of March 31, 2018
$
3.4

 
$
(99.5
)
 
$
5,540.5

 
$
(919.2
)
 
$
(19.0
)
 
$
4,506.2


12

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)

NiSource Inc.
Condensed Statements of Consolidated Equity (unaudited) (continued)
 
Preferred
 
Common
Shares (in thousands)
Shares
 
Shares
 
Treasury
 
Outstanding
Balance as of January 1, 2019
420

 
376,326

 
(3,963
)
 
372,363

Issued:
 
 
 
 
 
 
 
Preferred stock
20

 
 
 
 
 
 
Employee stock purchase plan

 
50

 

 
50

Long-term incentive plan

 
426

 

 
426

401(k) and profit sharing

 
164

 

 
164

Balance as of March 31, 2019
440

 
376,966

 
(3,963
)
 
373,003

 
Common
Shares (in thousands)
Shares
 
Treasury
 
Outstanding
Balance as of January 1, 2018
340,813

 
(3,797
)
 
337,016

Treasury Stock acquired
 
 
(149
)
 
(149
)
Issued:
 
 
 
 
 
Employee stock purchase plan
47

 

 
47

Long-term incentive plan
420

 

 
420

401(k) and profit sharing
264

 

 
264

Balance as of March 31, 2018
341,544

 
(3,946
)
 
337,598

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

13

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

 
1.    Basis of Accounting Presentation
Our accompanying Condensed Consolidated Financial Statements (unaudited) reflect all normal recurring adjustments that are necessary, in the opinion of management, to present fairly the results of operations in accordance with GAAP in the United States of America. The accompanying financial statements contain our accounts and that of our majority-owned or controlled subsidiaries.
The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Income for interim periods may not be indicative of results for the calendar year due to weather variations and other factors.
The Condensed Consolidated Financial Statements (unaudited) have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made in this Quarterly Report on Form 10-Q are adequate to make the information herein not misleading.
2.    Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

We are currently evaluating the impact of certain ASUs on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited), which are described below:
Standard
Description
Effective Date
Effect on the financial statements or other significant matters
ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
The pronouncement clarifies and improves certain areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement. Topics 1, 2, and 5 of this update amends ASU 2016-13 as it relates to accrued interest, transfers between investment classifications, expected recoveries and reinsurance recoverables. Topic 3 improves guidance related to fair value hedges. Topic 4 of this update relates to codification improvements to ASU 2016-01.
Annual period ending after December 15, 2019, including interim periods therein. Early adoption is permitted.

We are currently evaluating the impact of codification improvements under Topics 1, 2, and 5 of this pronouncement, if any, on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited). Topics 3 and 4 of this ASU are not material to us. We expect to adopt this ASU on its effective date.


ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans
The pronouncement modifies the disclosure requirements for defined benefit pension or other postretirement benefit plans. The guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. The modifications affect annual period disclosures and must be applied on a retrospective basis to all periods presented.
Annual periods ending after December 15, 2020. Early adoption is permitted.
We are currently evaluating the effects of this pronouncement on our Notes to Condensed Consolidated Financial Statements (unaudited). We expect to adopt this ASU on its effective date.



14

Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Standard
Description
Effective Date
Effect on the financial statements or other significant matters
ASU 2016-13,  Financial Instruments-Credit Losses (Topic 326)
The pronouncement changes the impairment model for most financial assets, replacing the current "incurred loss" model. ASU 2016-13 will require the use of an "expected loss" model for instruments measured at amortized cost. It will also require entities to record allowances for available-for-sale securities rather than impair the carrying amount of the securities. Subsequent improvements to the estimated credit losses of available-for-sale securities will be recognized immediately in earnings instead of over time as they are under historic guidance.
Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for annual or interim periods beginning after December 15, 2018.
We maintain investments in U.S. Treasury, corporate and mortgage-backed debt securities, which are pledged as collateral for trust accounts related to our wholly-owned insurance company. These debt securities are classified as available for sale. We also have recorded balances for trade receivables that fall within the scope of the standard. We are currently evaluating the impact of adoption, if any, on our Condensed Consolidated Financial Statements (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited). We expect to adopt this ASU on its effective date.

Recently Adopted Accounting Pronouncements
Standard
Adoption
ASU 2019-01, Leases (Topic 842): Codification Improvements
See Note 16, "Leases," for our discussion of the effects of implementing these standards.
ASU 2018-11, Leases (Topic 842): Targeted Improvements
ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842
ASU 2016-02, Leases (Topic 842)


3.    Revenue Recognition
Revenue Disaggregation and Reconciliation. We disaggregate revenue from contracts with customers based upon reportable segment as well as by customer class. As our revenues are primarily earned over a period of time, and we do not earn a material amount of revenues at a point in time, revenues are not disaggregated as such below. The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. The Electric Operations segment provides electric service in 20 counties in the northern part of Indiana.
The tables below reconcile revenue disaggregation by customer class to segment revenue as well as to revenues reflected on the Condensed Statements of Consolidated Income (unaudited) for the three months ended March 31, 2019 and March 31, 2018:

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Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Three Months Ended March 31, 2019 (in millions)
Gas Distribution Operations
 
Electric Operations
 
Corporate and Other
 
Total
Customer Revenues(1)
 
 
 
 
 
 
 
Residential
$
975.3

 
$
118.8

 
$

 
$
1,094.1

Commercial
330.5

 
119.3

 

 
449.8

Industrial
82.9

 
163.3

 

 
246.2

Off-system
20.1

 

 

 
20.1

Miscellaneous
17.2

 
6.9

 
0.2

 
24.3

Total Customer Revenues
$
1,426.0

 
$
408.3

 
$
0.2

 
$
1,834.5

Other Revenues
12.8

 
22.5

 

 
35.3

Total Operating Revenues
$
1,438.8

 
$
430.8

 
$
0.2

 
$
1,869.8

(1) Customer revenue amounts exclude intersegment revenues. See Note 20, "Business Segment Information," for discussion of intersegment revenues.
Three Months Ended March 31, 2018 (in millions)
Gas Distribution Operations
 
Electric Operations
 
Corporate and Other
 
Total
Customer Revenues(1)
 
 
 
 
 
 
 
Residential
$
893.6

 
$
114.5

 
$

 
$
1,008.1

Commercial
308.3

 
116.9

 

 
425.2

Industrial
74.6

 
162.5

 

 
237.1

Off-system
22.3

 

 

 
22.3

Miscellaneous
16.8

 
7.5

 
0.2

 
24.5

Total Customer Revenues
$
1,315.6

 
$
401.4

 
$
0.2

 
$
1,717.2

Other Revenues
11.7

 
21.9

 

 
33.6

Total Operating Revenues
$
1,327.3

 
$
423.3

 
$
0.2

 
$
1,750.8

(1) Customer revenue amounts exclude intersegment revenues. See Note 20, "Business Segment Information," for discussion of intersegment revenues.
 
 
 
 
 
 
 
 

Customer Accounts Receivable. Accounts receivable on our Condensed Consolidated Balance Sheets (unaudited) includes both billed and unbilled amounts, as well as certain amounts that are not related to customer revenues. Unbilled amounts of accounts receivable relate to a portion of a customer’s consumption of gas or electricity from the date of the last cycle billing through the last day of the month (balance sheet date). Factors taken into consideration when estimating unbilled revenue include historical usage, customer rates and weather. The opening and closing balances of customer receivables for the three months ended March 31, 2019 are presented in the table below. We had no significant contract assets or liabilities during the period. Additionally, we have not incurred any significant costs to obtain or fulfill contracts.
(in millions)
Customer Accounts Receivable, Billed (less reserve)
 
Customer Accounts Receivable, Unbilled (less reserve)
Balance as of December 31, 2018
$
540.5

 
$
349.1

Balance as of March 31, 2019
692.2

 
284.6

Increase (Decrease)
$
151.7

 
$
(64.5
)

Utility revenues are billed to customers monthly on a cycle basis. We generally expect that substantially all customer accounts receivable will be collected within the month following customer billing, as this revenue consists primarily of monthly, tariff-based billings for service and usage. We maintain common utility credit risk mitigation practices, including requiring deposits and actively pursuing collection of past due amounts. In addition, our regulated operations utilize certain regulatory mechanisms that facilitate recovery of bad debt costs within tariff-based rates, which provides further evidence of collectibility. It is probable that substantially all of the consideration to which we are entitled from customers will be collected upon satisfaction of performance obligations.

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Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

4.    Earnings Per Share
Basic EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. The weighted-average shares outstanding for diluted EPS includes the incremental effects of the various long-term incentive compensation plans and forward agreements when the impact would be dilutive (See Note 5 "Equity"). The computation of diluted average common shares is as follows:
 
Three Months Ended
 
March 31,
(in thousands)
2019
 
2018
Denominator
 
 
 
Basic average common shares outstanding
373,356

 
338,012

Dilutive potential common shares:
 
 
 
Shares contingently issuable under employee stock plans
1,062

 
715

Shares restricted under employee stock plans
133

 
264

Forward Agreements
105

 

Diluted Average Common Shares
374,656

 
338,991



5.    Equity
ATM Program and Forward Sale Agreement. On November 1, 2018, we entered into five separate equity distribution agreements, pursuant to which we may sell, from time to time, up to an aggregate value of $500.0 million of our common stock. The program expires on December 31, 2020.
On December 6, 2018, under the ATM program, we executed a forward agreement, which allows us to issue a fixed number of shares at a price to be settled in the future. From December 6, 2018 to December 10, 2018, 4,708,098 shares were borrowed from third parties and sold by the dealer at a weighted average price of $26.55 per share. We may settle this agreement in shares, cash, or net shares by December 6, 2019. Had we settled all the shares under the forward agreement at March 31, 2019, we would have received approximately $124.3 million, based on a net price of $26.40 per share.
As of March 31, 2019, the ATM program (including impacts of the forward sale agreement discussed above) had $309.4 million of equity available for issuance. We did not have any activity under the ATM program for the three months ended March 31, 2019.
Preferred Stock. As of March 31, 2019 we had 20,000,000 shares of preferred stock authorized for issuance, of which 440,000 shares of preferred stock were outstanding. The following table displays preferred dividends declared for the period by outstanding series of shares:
 
 
 
Quarter Ended March 31, 2019
March 31, 2019
 
December 31, 2018

(in millions except shares and per share amounts)
Liquidation Preference Per Share
Shares
Dividends Declared Per Share
Outstanding
5.650% Series A
$
1,000.00

400,000

$
28.25

$
393.9

 
$
393.9

6.500% Series B
$
25,000.00

20,000

$
862.15

$
486.1

 
$
486.1


 
 
 
 
In addition, 20,000 shares of Series B–1 Preferred Stock, par value $0.01
per share, were issued as a distribution with respect to the Series B Preferred Stock in order to enhance the voting rights of the Series B Preferred Stock to comply with the New York Stock Exchange’s minimum voting rights policy. Holders of Series B–1 Preferred Stock are not entitled to receive dividend payments and have no conversion rights. The Series B–1 Preferred Stock is paired with the Series B Preferred Stock and may not be transferred, redeemed or repurchased except in connection with the simultaneous transfer, redemption or repurchase of the underlying Series B Preferred Stock.

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Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

6.    Gas in Storage
We use both the LIFO inventory methodology and the weighted-average cost methodology to value natural gas in storage. Gas Distribution Operations prices natural gas storage injections at the average of the costs of natural gas supply purchased during the year. For interim periods, the difference between current projected replacement cost and the LIFO cost for quantities of gas temporarily withdrawn from storage is recorded as a temporary LIFO liquidation credit or debit within the Condensed Consolidated Balance Sheets (unaudited). Due to seasonality requirements, we expect interim variances in LIFO layers to be replenished by year end. We had a temporary LIFO liquidation debit of $21.5 million and zero as of March 31, 2019 and December 31, 2018, respectively, for certain gas distribution companies recorded within “Prepayments and other,” on the Condensed Consolidated Balance Sheets (unaudited).
7.    Regulatory Matters
Cost Recovery and Trackers
Comparability of our line item operating results is impacted by regulatory trackers that allow for the recovery in rates of certain costs such as those described below. Increases in the expenses that are the subject of trackers generally result in a corresponding increase in operating revenues and therefore have essentially no impact on total operating income results.
Certain costs of our operating companies are significant, recurring in nature and generally outside the control of the operating companies. Some states allow the recovery of such costs through cost tracking mechanisms. Such tracking mechanisms allow for abbreviated regulatory proceedings in order for the operating companies to implement charges and recover appropriate costs. Tracking mechanisms allow for more timely recovery of such costs as compared with more traditional cost recovery mechanisms. Examples of such mechanisms include GCR adjustment mechanisms, tax riders, bad debt recovery mechanisms, electric energy efficiency programs, MISO non-fuel costs and revenues, resource capacity charges, federally-mandated costs and environmental-related costs.
A portion of the Gas Distribution revenue is related to the recovery of gas costs, the review and recovery of which occurs through standard regulatory proceedings. All states in our operating area require periodic review of actual gas procurement activity to determine prudence and to permit the recovery of prudently incurred costs related to the supply of gas for customers. Our distribution companies have historically been found prudent in the procurement of gas supplies to serve customers.
A portion of the Electric Operations revenue is related to the recovery of fuel costs to generate power and the fuel costs related to purchased power. These costs are recovered through a FAC, a quarterly regulatory proceeding in Indiana.
Infrastructure Replacement and Federally-Mandated Compliance Programs
Certain of our operating companies have completed rate proceedings involving infrastructure replacement or enhancement or are embarking upon regulatory initiatives to replace significant portions of their operating systems that are nearing the end of their useful lives. Each operating company's approach to cost recovery may be unique, given the different laws, regulations and precedent that exist in each jurisdiction.

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Table of Contents
ITEM 1. FINANCIAL STATEMENTS (continued)
NiSource Inc.
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The following table describes regulatory programs to recover infrastructure replacement and other federally-mandated compliance investments currently in rates and those pending commission approval:
(in millions)
 
 
 
 
 
Company
Program
Incremental Revenue
Incremental Capital Investment
Investment Period
Filed
Status
Rates
Effective
Columbia of Ohio
IRP - 2018(1)
$
(1.6
)
$
207.3

1/17-12/17
February 27, 2018
Approved
April 25, 2018
May 2018
Columbia of Ohio
IRP - 2019(1)
18.2

199.6

1/18-12/18
February 28, 2019
Approved
April 24, 2019
May 2019
Columbia of Ohio