| VECTREN CORPORATION | ||||||||
| AND SUBSIDIARY COMPANIES | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Millions, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three Months | Six Months | |||||||
| Ended June 30 | Ended June 30 | |||||||
| 2007 | 2006 | 2007 | 2006 | |||||
| OPERATING REVENUES: | ||||||||
| Gas utility | $ 191.9 | $ 159.1 | $ 776.0 | $ 731.8 | ||||
| Electric utility | 109.9 | 96.0 | 218.0 | 201.2 | ||||
| Nonutility revenues | 119.9 | 62.4 | 261.7 | 159.0 | ||||
| Total operating revenues | 421.7 | 317.5 | 1,255.7 | 1,092.0 | ||||
| OPERATING EXPENSES: | ||||||||
| Cost of gas sold | 114.6 | 88.5 | 539.1 | 517.5 | ||||
| Cost of fuel and purchased power | 38.4 | 30.9 | 79.0 | 69.0 | ||||
| Cost of nonutility revenues | 56.3 | 47.6 | 152.7 | 126.0 | ||||
| Other operating | 111.5 | 68.3 | 218.0 | 141.1 | ||||
| Depreciation and amortization | 46.7 | 41.9 | 92.4 | 83.5 | ||||
| Taxes other than income taxes | 14.5 | 11.8 | 39.2 | 34.9 | ||||
| Total operating expenses | 382.0 | 289.0 | 1,120.4 | 972.0 | ||||
| OPERATING INCOME | 39.7 | 28.5 | 135.3 | 120.0 | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Equity in earnings (losses) of unconsolidated affiliates | 0.5 | (2.2) | 22.7 | 11.5 | ||||
| Other - net | 1.8 | (8.2) | 9.2 | (6.1) | ||||
| Total other income (expense) | 2.3 | (10.4) | 31.9 | 5.4 | ||||
| INTEREST EXPENSE | 23.4 | 21.9 | 48.4 | 45.7 | ||||
| INCOME (LOSS) BEFORE INCOME TAXES | 18.6 | (3.8) | 118.8 | 79.7 | ||||
| INCOME TAXES | 2.6 | (8.1) | 32.7 | 17.8 | ||||
| NET INCOME | $ 16.0 | $ 4.3 | $ 86.1 | $ 61.9 | ||||
| AVERAGE COMMON SHARES OUTSTANDING | 75.9 | 75.7 | 75.9 | 75.7 | ||||
| DILUTED COMMON SHARES OUTSTANDING | 76.7 | 76.0 | 77.0 | 76.1 | ||||
| EARNINGS PER SHARE OF COMMON STOCK | ||||||||
| BASIC | $ 0.21 | $ 0.06 | $ 1.13 | $ 0.82 | ||||
| DILUTED | $ 0.21 | $ 0.06 | $ 1.12 | $ 0.81 | ||||
| VECTREN UTILITY HOLDINGS | ||||||||
| AND SUBSIDIARY COMPANIES | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (Millions) | ||||||||
| (Unaudited) | ||||||||
| Three Months | Six Months | |||||||
| Ended June 30 | Ended June 30 | |||||||
| 2007 | 2006 | 2007 | 2006 | |||||
| OPERATING REVENUES: | ||||||||
| Gas utility | $ 191.9 | $ 159.1 | $ 776.0 | $ 731.8 | ||||
| Electric utility | 109.9 | 96.0 | 218.0 | 201.2 | ||||
| Other | 0.5 | 0.5 | 0.9 | 0.9 | ||||
| Total operating revenues | 302.3 | 255.6 | 994.9 | 933.9 | ||||
| OPERATING EXPENSES: | ||||||||
| Cost of gas sold | 114.6 | 88.5 | 539.1 | 517.5 | ||||
| Cost of fuel and purchased power | 38.4 | 30.9 | 79.0 | 69.0 | ||||
| Other operating | 65.6 | 59.6 | 132.8 | 121.2 | ||||
| Depreciation and amortization | 39.8 | 37.7 | 79.0 | 74.8 | ||||
| Taxes other than income taxes | 14.1 | 11.6 | 38.3 | 34.4 | ||||
| Total operating expenses | 272.5 | 228.3 | 868.2 | 816.9 | ||||
| OPERATING INCOME | 29.8 | 27.3 | 126.7 | 117.0 | ||||
| OTHER INCOME - NET | 2.2 | 1.9 | 4.9 | 2.8 | ||||
| INTEREST EXPENSE | 18.6 | 18.2 | 38.0 | 38.2 | ||||
| INCOME BEFORE INCOME TAXES | 13.4 | 11.0 | 93.6 | 81.6 | ||||
| INCOME TAXES | 5.4 | 3.9 | 34.7 | 31.1 | ||||
| NET INCOME | $ 8.0 | $ 7.1 | $ 58.9 | $ 50.5 | ||||
| VECTREN CORPORATION | ||||||||
| AND SUBSIDIARY COMPANIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Millions - Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash & cash equivalents | $ | 9.3 | $ | 32.8 | ||||
| Accounts receivable - less reserves of $4.8 & | ||||||||
$3.3, respectively | 148.1 | 198.6 | ||||||
| Accrued unbilled revenues | 59.6 | 146.5 | ||||||
| Inventories | 128.0 | 163.5 | ||||||
| Recoverable fuel & natural gas costs | - | 1.8 | ||||||
| Prepayments & other current assets | 101.9 | 172.7 | ||||||
Total current assets | 446.9 | 715.9 | ||||||
| Utility Plant | ||||||||
| Original cost | 3,925.4 | 3,820.2 | ||||||
| Less: accumulated depreciation & amortization | 1,475.8 | 1,434.7 | ||||||
Net utility plant | 2,449.6 | 2,385.5 | ||||||
| Investments in unconsolidated affiliates | 196.6 | 181.0 | ||||||
| Other investments | 72.9 | 74.5 | ||||||
| Nonutility property - net | 305.6 | 294.4 | ||||||
| Goodwill - net | 238.0 | 237.8 | ||||||
| Regulatory assets | 171.8 | 163.5 | ||||||
| Other assets | 39.9 | 39.0 | ||||||
TOTAL ASSETS | $ | 3,921.3 | $ | 4,091.6 | ||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 109.8 | $ | 180.0 | ||||
| Accounts payable to affiliated companies | 53.7 | 89.9 | ||||||
| Refundable fuel & natural gas costs | 40.4 | 35.3 | ||||||
| Accrued liabilities | 166.3 | 147.2 | ||||||
| Short-term borrowings | 329.5 | 464.8 | ||||||
| Current maturities of long-term debt | 24.3 | 24.2 | ||||||
| Long-term debt subject to tender | 20.0 | 20.0 | ||||||
Total current liabilities | 744.0 | 961.4 | ||||||
| Long-term Debt - Net of Current Maturities & | ||||||||
| Debt Subject to Tender | 1,208.3 | 1,208.0 | ||||||
| Deferred Income Taxes & Other Liabilities | ||||||||
| Deferred income taxes | 238.7 | 260.7 | ||||||
| Regulatory liabilities | 302.7 | 291.1 | ||||||
| Deferred credits & other liabilities | 208.2 | 195.8 | ||||||
Total deferred credits & other liabilities | 749.6 | 747.6 | ||||||
| Minority Interest in Subsidiary | 0.4 | 0.4 | ||||||
| Common Shareholders' Equity | ||||||||
| Common stock (no par value) – issued & outstanding | ||||||||
76.5 and 76.1 shares, respectively | 531.6 | 525.5 | ||||||
| Retained earnings | 681.0 | 643.6 | ||||||
| Accumulated other comprehensive income | 6.4 | 5.1 | ||||||
Total common shareholders' equity | 1,219.0 | 1,174.2 | ||||||
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 3,921.3 | $ | 4,091.6 | ||||
| VECTREN CORPORATION | ||||||||
| AND SUBSIDIARY COMPANIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Millions - Unaudited) | ||||||||
| Six months ended June 30, | ||||||||
| 2007 | 2006 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 86.1 | $ | 61.9 | ||||
| Adjustments to reconcile net income to cash from operating activities: | ||||||||
Depreciation & amortization | 92.4 | 83.5 | ||||||
Deferred income taxes & investment tax credits | 1.9 | 0.6 | ||||||
Equity in earnings of unconsolidated affiliates | (22.7 | ) | (11.5 | ) | ||||
Provision for uncollectible accounts | 9.1 | 8.0 | ||||||
Expense portion of pension & postretirement periodic benefit cost | 4.9 | 5.4 | ||||||
Other non-cash charges - net | 5.9 | 12.8 | ||||||
Changes in working capital accounts: | ||||||||
Accounts receivable & accrued unbilled revenue | 128.3 | 268.1 | ||||||
Inventories | 35.5 | 19.0 | ||||||
Recoverable/refundable fuel & natural gas costs | 6.9 | 42.7 | ||||||
Prepayments & other current assets | 26.3 | (1.9 | ) | |||||
Accounts payable, including to affiliated companies | (103.2 | ) | (183.6 | ) | ||||
Accrued liabilities | (0.4 | ) | (32.2 | ) | ||||
Unconsolidated affiliate dividends | 17.7 | 32.1 | ||||||
Changes in noncurrent assets | (9.5 | ) | (17.8 | ) | ||||
Changes in noncurrent liabilities | (11.0 | ) | (11.2 | ) | ||||
Net cash flows from operating activities | 268.2 | 275.9 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from: | ||||||||
Long-term debt | 0.1 | - | ||||||
Stock option exercises | 5.2 | 0.1 | ||||||
| Requirements for: | ||||||||
Dividends on common stock | (47.8 | ) | (46.2 | ) | ||||
Other financing activities | (0.1 | ) | - | |||||
| Net change in short-term borrowings | (135.3 | ) | (124.4 | ) | ||||
Net cash flows from financing activities | (177.9 | ) | (170.5 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from: | ||||||||
Unconsolidated affiliate distributions | 11.6 | 0.3 | ||||||
Other collections | 37.2 | 2.8 | ||||||
| Requirements for: | ||||||||
Capital expenditures, excluding AFUDC equity | (155.2 | ) | (107.6 | ) | ||||
Unconsolidated affiliate investments | (7.4 | ) | (14.2 | ) | ||||
Other investments | - | (0.4 | ) | |||||
Net cash flows from investing activities | (113.8 | ) | (119.1 | ) | ||||
| Net decrease in cash & cash equivalents | (23.5 | ) | (13.7 | ) | ||||
| Cash & cash equivalents at beginning of period | 32.8 | 20.4 | ||||||
| Cash & cash equivalents at end of period | $ | 9.3 | $ | 6.7 | ||||
| VECTREN CORPORATION | ||||||||||||||||
| AND SUBSIDIARY COMPANIES | ||||||||||||||||
| HIGHLIGHTS | ||||||||||||||||
| (millions, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended June 30 | Ended June 30 | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| REPORTED EARNINGS: | ||||||||||||||||
| Utility Group | $ | 8.0 | $ | 7.1 | $ | 58.9 | $ | 50.5 | ||||||||
| Nonutility Group | ||||||||||||||||
| Energy Marketing and Services | 1.9 | 0.3 | 17.6 | 13.2 | ||||||||||||
| Coal Mining | 0.7 | 0.9 | 2.3 | 2.7 | ||||||||||||
| Energy Infrastructure Services | 4.0 | 0.8 | 2.0 | (0.4 | ) | |||||||||||
| Other Businesses | (0.2 | ) | 0.2 | 0.1 | 0.2 | |||||||||||
| Total Nonutility Operations | 6.4 | 2.2 | 22.0 | 15.7 | ||||||||||||
| Corporate and Other | 0.2 | - | 0.4 | - | ||||||||||||
| Sub-Total Operations | 14.6 | 9.3 | 81.3 | 66.2 | ||||||||||||
| Synfuel-related | 1.4 | (5.0 | ) | 4.8 | (4.3 | ) | ||||||||||
| Vectren Consolidated | $ | 16.0 | $ | 4.3 | $ | 86.1 | $ | 61.9 | ||||||||
| VECTREN CORPORATION | ||||||||||||||||
| AND SUBSIDIARY COMPANIES | ||||||||||||||||
| SELECTED GAS DISTRIBUTION | ||||||||||||||||
| OPERATING STATISTICS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended June 30 | Ended June 30 | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| GAS OPERATING REVENUES (Millions): | ||||||||||||||||
| Residential | $ | 124.2 | $ | 101.9 | $ | 524.0 | $ | 486.5 | ||||||||
| Commercial | 50.2 | 40.8 | 209.8 | 202.9 | ||||||||||||
| Industrial | 14.1 | 12.6 | 35.4 | 34.7 | ||||||||||||
| Miscellaneous Revenue | 3.4 | 3.8 | 6.8 | 7.7 | ||||||||||||
| $ | 191.9 | $ | 159.1 | $ | 776.0 | $ | 731.8 | |||||||||
| GAS MARGIN (Millions): | ||||||||||||||||
| Residential | $ | 49.5 | $ | 44.4 | $ | 154.6 | $ | 137.3 | ||||||||
| Commercial | 14.1 | 12.6 | 49.3 | 44.4 | ||||||||||||
| Industrial | 10.0 | 9.8 | 25.7 | 24.7 | ||||||||||||
| Miscellaneous | 3.7 | 3.8 | 7.3 | 7.9 | ||||||||||||
| $ | 77.3 | $ | 70.6 | $ | 236.9 | $ | 214.3 | |||||||||
| GAS SOLD & TRANSPORTED (MMDth): | ||||||||||||||||
| Residential | 9.5 | 7.7 | 47.9 | 39.4 | ||||||||||||
| Commercial | 4.4 | 3.7 | 20.8 | 17.3 | ||||||||||||
| Industrial | 18.1 | 18.0 | 44.5 | 43.5 | ||||||||||||
| 32.0 | 29.4 | 113.2 | 100.2 | |||||||||||||
| AVERAGE GAS CUSTOMERS | ||||||||||||||||
| Residential | 898,664 | 890,674 | 905,259 | 898,361 | ||||||||||||
| Commercial | 83,673 | 83,179 | 84,249 | 83,823 | ||||||||||||
| Industrial | 1,646 | 1,643 | 1,639 | 1,650 | ||||||||||||
| 983,983 | 975,496 | 991,147 | 983,834 | |||||||||||||
| YTD WEATHER AS A PERCENT OF NORMAL: | ||||||||||||||||
| Heating Degree Days (Ohio) | 90 | % | 90 | % | 97 | % | 87 | % | ||||||||
| VECTREN CORPORATION | ||||||||||||||||
| AND SUBSIDIARY COMPANIES | ||||||||||||||||
| SELECTED ELECTRIC | ||||||||||||||||
| OPERATING STATISTICS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended June 30 | Ended June 30 | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| ELECTRIC OPERATING REVENUES (Millions): | ||||||||||||||||
| Residential | $ | 33.3 | $ | 27.9 | $ | 67.0 | $ | 58.1 | ||||||||
| Commercial | 26.5 | 22.6 | 49.7 | 44.5 | ||||||||||||
| Industrial | 33.8 | 30.5 | 65.9 | 60.8 | ||||||||||||
| Municipals | 6.6 | 6.6 | 11.8 | 12.2 | ||||||||||||
| Miscellaneous Revenue | 1.7 | 3.0 | 4.7 | 5.9 | ||||||||||||
| Total Retail | 101.9 | 90.6 | 199.1 | 181.5 | ||||||||||||
| Net Wholesale Revenues | 8.0 | 5.4 | 18.9 | 19.7 | ||||||||||||
| $ | 109.9 | $ | 96.0 | $ | 218.0 | $ | 201.2 | |||||||||
| ELECTRIC MARGIN (Millions): | ||||||||||||||||
| Residential | $ | 25.3 | $ | 21.9 | $ | 49.4 | $ | 44.4 | ||||||||
| Commercial | 18.3 | 16.5 | 34.0 | 31.9 | ||||||||||||
| Industrial | 18.3 | 17.9 | 34.8 | 34.5 | ||||||||||||
| Municipals | 3.5 | 3.9 | 5.7 | 6.6 | ||||||||||||
| Miscellaneous | 1.7 | 2.9 | 4.6 | 5.7 | ||||||||||||
| Total Retail | 67.1 | 63.1 | 128.5 | 123.1 | ||||||||||||
| Net Wholesale Margin | 4.4 | 2.0 | 10.5 | 9.1 | ||||||||||||
| $ | 71.5 | $ | 65.1 | $ | 139.0 | $ | 132.2 | |||||||||
| ELECTRICITY SOLD (GWh): | ||||||||||||||||
| Residential | 352.0 | 317.3 | 742.6 | 672.7 | ||||||||||||
| Commercial | 353.4 | 331.1 | 660.7 | 632.7 | ||||||||||||
| Industrial | 676.7 | 671.3 | 1,303.7 | 1,309.2 | ||||||||||||
| Municipals | 152.0 | 156.9 | 282.0 | 302.2 | ||||||||||||
| Miscellaneous Sales | 4.3 | 4.4 | 9.4 | 9.6 | ||||||||||||
| Total Retail | 1,538.4 | 1,481.0 | 2,998.4 | 2,926.4 | ||||||||||||
| Wholesale | 187.1 | 189.7 | 447.6 | 652.3 | ||||||||||||
| 1,725.5 | 1,670.7 | 3,446.0 | 3,578.7 | |||||||||||||
| AVERAGE ELECTRIC CUSTOMERS | ||||||||||||||||
| Residential | 121,981 | 120,869 | 122,022 | 120,893 | ||||||||||||
| Commercial | 18,903 | 18,796 | 18,901 | 18,764 | ||||||||||||
| Industrial | 109 | 107 | 109 | 107 | ||||||||||||
| All Others | 44 | 49 | 45 | 50 | ||||||||||||
| 141,037 | 139,821 | 141,077 | 139,814 | |||||||||||||
| YTD WEATHER AS A PERCENT OF NORMAL: | ||||||||||||||||
| Cooling Degree Days (Indiana) | 121 | % | 94 | % | 126 | % | 94 | % | ||||||||
| Heating Degree Days (Indiana) | 99 | % | 74 | % | 91 | % | 83 | % | ||||||||
