UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended June 30, 2001
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 1-6494
INDIANA GAS COMPANY, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-0793669
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
20 N.W. Fourth Street, Evansville, Indiana 47741
(Address of principal executive offices and Zip Code)
(812) 491-4000
------------------
(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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - Without par value 690.00001 August 10, 2001
- ------------------------------------- --------- ---------------
Class Number of shares Date
2
TABLE OF CONTENTS
Item Page
Number Number
PART I. FINANCIAL INFORMATION
1 Financial Statements (Unaudited)
Indiana Gas Company, Inc.
Condensed Balance Sheets 3-4
Condensed Statements of Operations 5
Condensed Statements of Cash Flows 6
Notes to Condensed Unaudited Financial Statements 7-13
2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 14-20
3 Quantitative and Qualitative Disclosure About
Market Risk 20
PART II. OTHER INFORMATION
1 Legal Proceedings 21
6 Exhibits and Reports on Form 8-K 21
Signatures 22
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
INDIANA GAS COMPANY, INC.
CONDENSED BALANCE SHEETS
(Unaudited-Thousands)
June 30, December 31,
2001 2000
---------- ----------
ASSETS
Utility Plant:
Original cost $1,070,962 $1,056,945
Less accumulated depreciation 450,332 434,845
---------- ----------
Net utility plant 620,630 622,100
---------- ----------
Current Assets:
Cash and cash equivalents 106 300
Accounts receivable, less reserves of $1,158
and $2,063 47,377 81,225
Accounts receivable from affiliated company - 11,774
Accrued unbilled revenues 8,069 69,444
Inventories 92 12,004
Prepaid gas delivery service 31,099 34,849
Recoverable natural gas costs 56,523 38,096
Prepayments and other current assets 30,414 32,012
---------- ----------
Total current assets 173,680 279,704
---------- ----------
Investment in Unconsolidated Affiliate 222,475 220,802
Other Assets:
Regulatory assets 19,491 18,578
Other 6,471 2,488
---------- ----------
Total other assets 25,962 21,066
---------- ----------
TOTAL ASSETS $1,042,747 $1,143,672
========== ==========
The accompanying notes are an integral part of these
condensed financial statements.
4
INDIANA GAS COMPANY, INC.
CONDENSED BALANCE SHEETS
(Unaudited-Thousands)
June 30, December 31,
SHAREHOLDER'S EQUITY AND LIABILITIES 2001 2000
------------------------------------ ---------- ----------
Capitalization:
Common stock and paid-in capital $ 242,995 $ 142,995
Retained earnings 79,441 90,499
---------- ----------
Total common shareholder's equity 322,436 233,494
Long-term debt, net of current maturities 274,169 281,109
---------- ----------
Total capitalization 596,605 514,603
---------- ----------
Commitments and Contingencies (Notes 7, 8, 9 and 10)
Current Liabilities:
Notes payable 153,884 134,724
Note payable to affiliated company 81,650 218,200
Accounts payable 28,470 102,268
Accounts payable to affiliated company 25,469 18,329
Refunds to customers and customer deposits 6,613 3,953
Accrued taxes 13,999 25,054
Accrued interest 5,248 6,555
Deferred income taxes 3,876 4,227
Other current liabilities 13,644 14,504
---------- ----------
Total current liabilities 332,853 527,814
---------- ----------
Deferred Credits and Other Liabilities:
Deferred income taxes 64,515 54,807
Accrued postretirement benefits other
than pensions 31,388 29,938
Unamortized investment tax credit 6,758 7,222
Other 10,628 9,288
---------- ----------
Total deferred credits and other liabilities 113,289 101,255
---------- ----------
TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES $1,042,747 $1,143,672
========== ==========
The accompanying notes are an integral part of these
condensed financial statements.
5
INDIANA GAS COMPANY, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited-Thousands)
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2001 2000 2001 2000
--------- --------- --------- ---------
OPERATING REVENUES $ 91,105 $ 86,303 $ 379,078 $ 257,921
COST OF GAS 51,383 48,886 266,549 147,779
--------- --------- --------- ---------
Total Margin 39,722 37,417 112,529 110,142
--------- --------- --------- ---------
OPERATING EXPENSES:
Operation and maintenance 27,348 22,805 53,961 48,010
Merger and integration costs - 1,846 301 15,294
Restructuring costs 5,356 - 5,356 -
Depreciation and amortization 9,826 9,132 19,622 18,150
Income tax (5,629) (1,160) 903 5,439
Taxes other than income taxes 3,914 3,683 9,683 8,644
--------- --------- --------- ---------
Total operating expenses 40,815 36,306 89,826 95,537
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (1,093) 1,111 22,703 14,605
OTHER INCOME (EXPENSE):
Equity in earnings (losses) of
unconsolidated affiliate (1,212) - 1,673 -
Other - net (32) 318 (920) 688
--------- --------- --------- ---------
Total other income (expense) (1,244) 318 753 688
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INTEREST (2,337) 1,429 23,456 15,293
INTEREST EXPENSE 9,226 4,926 19,892 9,959
--------- --------- --------- ---------
NET INCOME (LOSS) $ (11,563) $ (3,497) $ 3,564 $ 5,334
========= ========= ========= =========
The accompanying notes are an integral part of these condensed financial
statements
6
INDIANA GAS COMPANY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited-Thousands)
Six Months
Ended June 30,
----------------------
2001 2000
--------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES $56,749 $56,442
--------- ---------
CASH FLOWS (REQUIRED FOR) FINANCING ACTIVITIES
Proceeds from issuance of common stock 100,000 -
Retirement of long-term debt and other obligations (6,940) -
Net change in short-term borrowings (117,390) (5,813)
Dividends on common stock (14,969) (13,242)
--------- ---------
Net cash flows (required for) financing activities (39,299) (19,055)
--------- ---------
CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES
Capital expenditures (19,313) (28,943)
Other 1,669 110
--------- ---------
Net cash flows (required for) investing activities (17,644) (28,833)
--------- ---------
Net increase (decrease) in cash (194) 8,554
Cash and cash equivalents at beginning of period 300 353
--------- ---------
Cash and cash equivalents at end of period $ 106 $ 8,907
========= =========
The accompanying notes are an integral part of these
condensed financial statements.
7
INDIANA GAS COMPANY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Nature of Operations
Indiana Gas Company, Inc. (Indiana Gas) operates as a separate wholly owned
subsidiary of Vectren Corporation (Vectren) and provides natural gas and
transportation services to a diversified base of customers in 311 communities in
49 of Indiana's 92 counties.
Vectren is an Indiana corporation that was organized on June 10, 1999, solely
for the purpose of effecting the merger of Indiana Energy, Inc. (Indiana Energy)
and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of Indiana Energy
with SIGCORP and into Vectren was consummated with a tax-free exchange of shares
and has been accounted for as a pooling-of-interests. The merger did not affect
Indiana Gas' debt securities.
On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company (DP&L) for approximately $465 million as a
tenancy in common through two separate wholly owned subsidiaries. Vectren Energy
Delivery of Ohio, Inc. (VEDO) holds a 53 percent undivided ownership interest in
the assets, and Indiana Gas holds a 47 percent undivided ownership interest.
VEDO is the operator of the assets, operations of which are referred to as "the
Ohio operations." Indiana Gas' ownership is accounted for on the equity method
in accordance with Accounting Principles Board (APB) Opinion No. 18. Its
ownership interest is included in investment in unconsolidated affiliate in the
Balance Sheets, and its interest in the results of operations is included in
other income (expense), as equity in earnings (losses) of unconsolidated
affiliate in the Condensed Statements of Operations.
Vectren Utility Holdings, Inc. (VUHI) is the intermediate holding company for
Vectren's operating public utilities, including Indiana Gas. VUHI established a
$435 million commercial paper program to fund the majority of the acquisition.
Indiana Gas' investment in the acquisition of approximately $218 million was
funded with a combination of short-term borrowings from VUHI and Indiana Gas'
commercial paper program.
2. Basis of Presentation
The interim condensed financial statements included in this report have been
prepared by Indiana Gas, without audit, as provided in the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
omitted as provided in such rules and regulations. Indiana Gas believes that the
information in this report reflects all adjustments necessary to fairly state
the results of the interim periods reported. These condensed financial
statements and related notes should be read in conjunction with Indiana Gas'
audited annual financial statements for the year ended December 31, 2000 filed
on Form 10-K. Because of the seasonal nature of Indiana Gas' operations, the
results shown on a quarterly basis are not necessarily indicative of annual
results.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the statements
and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Certain reclassifications have been made to prior period condensed financial
statements to conform with the current year classification. These
reclassifications have no impact on previously reported net income.
8
3. Investment in Unconsolidated Affiliate
Unaudited summarized financial information of the Ohio operations as of June 30,
2001 and December 31, 2000 and for the three and six months ended June 30, 2001
is presented below.
In thousands At June 30, 2001 At December 31, 2000
- ------------------------------------------------------------
Current assets $ 90,855 $180,109
Non current assets $394,167 $392,795
Current liabilities $141,124 $344,675
Non current liabilities $ 8,070 $ 6,254
Three Months Ended Six Months Ended
June 30, June 30, 2001
- -------------------------------------------------------------
Revenues $ 51,341 $234,308
Total margin $ 12,453 $ 47,972
Operating income (loss) $ (3,372) $ 2,834
Net income (loss) $ (2,581) $ 3,559
4. Merger and Integration Costs
Merger and integration costs incurred for the three and six months ended June
30, 2001 were zero and $0.3 million, respectively, and for the three and six
months ended June 30, 2000 totaled $1.8 million and $15.3 million, respectively.
The continued merger integration activities will be completed in 2001. Merger
costs are reflected in the financial statements of the operating subsidiaries in
which merger savings are expected to be realized.
Since March 31, 2000, $17.1 million has been expensed associated with merger and
integration activities. Accruals were established at March 31, 2000 totaling
$11.9 million. Of this amount, $4.8 million related to employee and executive
severance costs, $5.0 million related to transaction costs and regulatory filing
fees incurred prior to the closing of the merger, and the remaining $2.1 million
related to employee relocations that occurred prior to or coincident with the
merger closing. At June 30, 2001, the accrual remaining for such costs totaled
$1.0 million, all related to severance costs. Of the $17.1 million expensed, the
remaining $5.2 million was expensed through June 30, 2001 ($4.9 million in 2000
and $0.3 million in 2001) for accounting fees resulting from merger related
filing requirements, consulting fees related to integration activities such as
organization structure, employee travel between company locations as part of
integration activities, internal labor of employees assigned to integration
teams, investor relations communications activities, and certain benefit costs.
The integration activities experienced by the company included such things as
information system consolidation, process review and definition, organization
design and consolidation, and knowledge sharing.
As a result of merger integration activities, Vectren management has identified
certain information systems that are expected to be retired in 2001.
Accordingly, the useful lives of these assets have been shortened to reflect
this decision. These information system assets are owned by a wholly owned
subsidiary of Vectren, and the fees allocated by the subsidiary for the use of
these systems by Indiana Gas are reflected in operation and maintenance expenses
in the accompanying condensed financial statements. As a result of the shortened
useful lives, additional fees were incurred by Indiana Gas resulting in
additional operations and maintenance expense of approximately $2.7 million
($1.7 million after tax) and $5.5 million ($3.4 million after tax) for the three
and six months ended June 30, 2001, respectively, and $3.3 million ($2.1 million
after tax) for both the three and six months ended June 30, 2000.
9
5. Restructuring Costs
In June 2001, the management and board of directors of Indiana Gas' parent
company, Vectren, approved a plan to restructure primarily, its regulated
operations. The restructuring plan will involve the elimination of
administrative and supervisory positions in its utility operations and corporate
office. Restructuring and related charges of $5.4 million were expensed during
the second quarter. These charges were comprised of $3.4 million for severance,
related benefits and other employee related costs, and $2.0 million for lease
termination fees related to duplicate facilities.
The $3.4 million accrued for restructuring costs for employee separation is
associated with approximately 45 employees. Employee separation benefits include
severance, healthcare and outplacement services. Employees are expected to begin
exiting the business beginning August 2001.
As of June 30, 2001, there have been no charges against the accrual, which is
included in other current liabilities. The restructuring program will be
substantially completed by December 31, 2001.
6. Short - Term Borrowings and Capitalization
At March 31, 2001, Indiana Gas was not in compliance with the total indebtedness
to capitalization ratio contained in its back up credit facility for its
commercial paper program. The non-compliance resulted from the indebtedness
incurred to purchase its ownership interest in the Ohio operations and working
capital requirements associated with higher gas costs. A waiver on the Indiana
Gas facility was obtained to waive the non-compliance through and including
March 31, 2001 which effectively waived the non-compliance up to June 30, 2001,
the date of the next quarterly test of the financial covenants. During the
quarter ended June 30, 2001, Vectren made a $100 million equity investment in
Indiana Gas upon its issuance of 207.5844 shares of common stock. In addition,
Indiana Gas was granted a modification to the credit agreement by the syndicate
banks raising the total indebtedness to capitalization ratio. As a result of
these events, Indiana Gas is in compliance with its debt covenants at June 30,
2001. No amount is outstanding under the back up facility.
7. Contingencies
Indiana Gas is party to various legal proceedings arising in the normal course
of business. In the opinion of management, with the exception of the litigation
matter related to ProLiance Energy Services, LLC (See Note 10), there are no
legal proceedings pending against Indiana Gas that are likely to have a material
adverse effect on its financial position or results of operations.
8. Environmental Matters
In the past, Indiana Gas and others operated facilities for the manufacture of
gas. Given the availability of natural gas transported by pipelines, these
facilities have not been operated for many years. Under currently applicable
environmental laws and regulations, Indiana Gas, and others, may now be required
to take remedial action if certain byproducts are found above the regulatory
thresholds at these sites.
Indiana Gas has identified the existence, location and certain general
characteristics of 26 gas manufacturing and storage sites for which it may have
some remedial responsibility. Indiana Gas has completed a remedial
investigation/feasibility study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and the Indiana Department of Environmental Management
(IDEM), and a Record of Decision was issued by the IDEM in January 2000.
Although Indiana Gas has not begun an RI/FS at additional sites, Indiana Gas has
submitted several of the sites to the IDEM's Voluntary Remediation Program and
is currently conducting some level of remedial activities including groundwater
monitoring at certain sites where deemed appropriate and will continue remedial
activities at the sites as appropriate and necessary.
10
In conjunction with data compiled by expert consultants, Indiana Gas has accrued
the estimated costs for further investigation, remediation, groundwater
monitoring and related costs for the sites. While the total costs that may be
incurred in connection with addressing these sites cannot be determined at this
time, Indiana Gas has accrued costs that it reasonably expects to incur totaling
approximately $20.3 million.
The estimated accrued costs are limited to Indiana Gas' proportionate share of
the remediation efforts. Indiana Gas has arrangements in place for 19 of the 26
sites with other potentially responsible parties (PRP), which serve to limit
Indiana Gas' share of response costs at these 19 sites to between 20 and 50
percent.
With respect to insurance coverage, as of June 30, 2001, Indiana Gas has
received and recorded settlements from all known insurance carriers in an
aggregate amount approximating its $20.3 million accrual.
Environmental matters related to manufactured gas plants have had no material
impact on earnings since costs recorded to date approximate PRP and insurance
settlement recoveries. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with activities at these sites, it is
possible that future events may require some level of additional remedial
activities which are not presently foreseen.
9. Rate and Regulatory Matters
Commodity prices for natural gas purchases have increased significantly,
primarily due to a colder winter, increased demand and tighter supplies. Subject
to compliance with applicable state laws, Indiana Gas is allowed full recovery
of such changes in purchased gas costs for its retail customers through
commission-approved gas cost adjustment (GCA) mechanisms.
On October 11, 2000, Indiana Gas filed for approval of its regular quarterly
GCA. In early December, the Indiana Utility Regulatory Commission (IURC) issued
an interim order approving the request by Indiana Gas for a GCA factor for
December 2000. On January 4, 2001, the IURC approved the January and February
2001 GCA as filed. The order also addressed the claim by the Indiana Office of
Utility Consumer Counselor (OUCC) that a portion of the requested GCA be
disallowed because Indiana Gas should have entered into additional commitments
for the winter's gas supply in late 1999 and early 2000. In procuring gas supply
for winter, Indiana Gas followed the gas procurement practices that it had
employed over the last several years. In response to the claim by the OUCC, the
IURC found that there should be a $3.8 million disallowance related to gas
procurement for the winter season. As a result, Indiana Gas recognized a pre-tax
charge of $3.8 million in December 2000. Both Indiana Gas and the OUCC appealed
the ruling. The Citizens Action Coalition of Indiana, Inc. (CAC), a not for
profit consumer advocate, also filed with the IURC a petition to intervene and a
notice of appeal of the order.
In March 2001, Indiana Gas reached agreement with the OUCC and CAC regarding the
IURC Order. As part of the agreement, among other things, Indiana Gas agreed to
contribute an additional $1.2 million to the State of Indiana's Low Income
Heating Assistance Program in 2001, and to credit $3.3 million of the $3.8
million disallowed amount to Indiana Gas customers' April 2001 utility bills in
exchange for both the OUCC and the CAC dropping their appeals of the IURC Order.
In April 2001, the IURC issued an order approving the settlement. The
contributions to Indiana's Low Income Heating Assistance Program totaling $1.2
million were made in 2001 and were charged to other-net. There was no
impact to 2000 operations as a result of this contribution.
10. Affiliate Transactions
Vectren and certain subsidiaries of Vectren have provided certain corporate
general and administrative services to Indiana Gas including legal, finance,
tax, risk management and employee benefits. The costs have been allocated to
Indiana Gas using various allocators, primarily number of employees, number of
customers and/or revenues. Allocations are based on cost. Management believes
that the allocation methodology is reasonable and approximates the costs that
would have been incurred had Indiana Gas secured those services on a stand alone
11
basis. Indiana Gas received corporate allocations totaling $17.2 million and
$12.9 million for the three months ended June 30, 2001 and 2000, respectively.
For the six months ended June 30, 2001 and 2000, amounts billed were $36.6
million and $15.7, respectively.
Indiana Gas also participates in a centralized cash management program with its
parent, affiliated companies and banks which permits funding of checks as they
are presented.
ProLiance Energy, LLC. (ProLiance), a 50% owned, non-regulated, energy marketing
affiliate of Vectren, provides natural gas supply and related services to
Indiana Gas. Purchases from ProLiance for resale and for injections into storage
for the three months ended June 30, 2001 and 2000 totaled $84.9 million and
$70.3 million, respectively; and for the six months ended June 30, 2001 and 2000
totaled $251.1 million and $136.3 million, respectively. Amounts charged by
ProLiance Energy, LLC are market based.
ProLiance began providing natural gas and related services to Indiana Gas,
Citizens Gas and Coke Utility (Citizens Gas) and others effective April 1, 1996.
The sale of gas and provision of other services to Indiana Gas by ProLiance is
subject to regulatory review through the quarterly GCA process administered by
the IURC.
On September 12, 1997, the IURC issued a decision finding the gas supply and
portfolio administration agreements between ProLiance and Indiana Gas and
ProLiance and Citizens Gas to be consistent with the public interest and that
ProLiance is not subject to regulation by the IURC as a public utility. The
IURC's decision reflected the significant gas cost savings to customers obtained
through ProLiance's services and suggested that all material provisions of the
agreements between ProLiance and the utilities are reasonable. Nevertheless,
with respect to the pricing of gas commodity purchased from ProLiance, the
pricing of fees paid by ProLiance to the utilities for the prospect of using
pipeline entitlements if and when they are not required to serve the utilities'
firm customers, and the pricing of fees paid by the utilities to ProLiance for
portfolio administration services, the IURC concluded that additional review in
the GCA process would be appropriate and directed that these matters be
considered further in the pending, consolidated GCA proceeding involving Indiana
Gas and Citizens Gas.
As a result of an appeal of the IURC's order, on September 22, 2000, the Indiana
Supreme Court issued a decision affirming the IURC's decision with respect to
Indian Gas' and Citizens Gas' agreements with ProLiance in all respects.
The IURC has recently commenced the processing of the further GCA proceeding
regarding the three pricing issues by conducting a prehearing conference.
Discovery is ongoing in this proceeding at the current time.
In August 1998, Indiana Gas, Citizens Gas and ProLiance each received a Civil
Investigative Demand (CID) from the United States Department of Justice
requesting information relating to Indiana Gas' and Citizens Gas' relationship
with and the activities of ProLiance. The Department of Justice issued the CID
to gather information regarding ProLiance's formation and operations, and to
determine if trade or commerce has been restrained. Indiana Gas has provided all
information requested and management believes there are no significant issues in
this matter.
Indiana Gas continues to record gas costs in accordance with the terms of the
ProLiance contract.
CIGMA, LLC (CIGMA), owned jointly and equally by a wholly owned subsidiary of
Vectren and a third party, provides materials acquisition and related services
that are used by Indiana Gas. Purchases of these services for the three months
ended June 30, 2001 and 2000 totaled $0.8 million and $0.7 million,
respectively, and for the six months ended June 30 2001 and 2000 totaled $1.5
million and $1.4 million respectively. Amounts charged by CIGMA, LLC are market
based.
Amounts owed to wholly owned subsidiaries of Vectren totaled $107.1 million and
$236.5 million at June 30, 2001 and December 31, 2000, respectively, and are
included in payable to affiliated company in the Balance Sheets. Amounts due
12
from wholly owned subsidiaries of Vectren $11.8 million at December 31, 2000,
and are included in accounts receivable from affiliated company in the Balance
Sheets.
Amounts owed to unconsolidated affiliates of Vectren totaled $22.5 million and
$97.8 million at June 30, 2001 and December 31, 2000, respectively, and are
included in accounts payable in the Balance Sheets.
11. Risk Management and New Accounting Principle
Risk Management
Indiana Gas is exposed to market risks associated with interest rates and
limited exposures from commodity prices. These financial exposures are monitored
and managed by the company as an integral part of its overall risk management
program.
Interest Rate Risk. The company is exposed to interest rate risk associated with
its short-term borrowings and adjustable rate long-term debt. The company's risk
management program seeks to reduce the potentially adverse effects that market
volatility may have on operations.
Under normal circumstances, the company tries to limit the amount of short-term
debt and adjustable rate long-term debt outstanding to a maximum of 25% of total
debt. However, there are times when this targeted level of interest rate
exposure may be exceeded.
Commodity Price Risk. Indiana Gas' operations have limited exposure to commodity
price risk for purchases and sales of natural gas for its retail customers due
to current Indiana regulations which, subject to compliance with applicable
state regulations, allow for recovery of such purchases through natural gas cost
adjustment mechanisms. (See Note 9 Rate and Regulatory Matters)
The company does not engage in wholesale gas marketing activities that may
expose the company to market risk associated with fluctuating natural gas
commodity prices. Indiana Gas uses a third party administrator, which bears
these market risks.
Impact of New Accounting Principle
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), which
requires that every derivative instrument be recorded on the balance sheet as an
asset or liability measured at its market value and that changes in the
derivative's market value be recognized currently in earnings unless specific
hedge accounting criteria are met.
SFAS 133, as amended, is effective for fiscal years beginning after June 15,
2000 and must be applied to derivative instruments and certain derivative
instruments embedded in hybrid contracts that were issued, acquired or
substantively modified after December 31, 1998. Indiana Gas adopted SFAS 133 as
of January 1, 2001.
SFAS 133 requires that as of the date of initial adoption, the difference
between the market value of derivative instruments recorded on the balance sheet
and the previous carrying amount of those derivatives be reported in net income
or other comprehensive income, as appropriate, as the cumulative effect of a
change in accounting principle in accordance with APB 20, "Accounting Changes."
As of the date of adoption and through June 30, 2001, Indiana Gas was not
engaged in any derivative or hedging activity as defined by SFAS 133, as
amended; therefore, there was no impact at adoption or for the three and six
months ended June 30, 2001.
13
12. Impact of Recently Issued Accounting Guidance
The FASB issued two new statements of financial accounting standards in July
2001: SFAS No. 141, "Business Combinations" (SFAS 141), and SFAS No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142). These interrelated standards
change the accounting for business combinations and goodwill in two significant
ways:
SFAS 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is prohibited. This change does not affect
the pooling-of-interest transaction forming Vectren, Indiana Gas'
parent.
SFAS 142 changes the accounting for goodwill from an amortization
approach to an impairment-only approach. Thus, amortization of
goodwill, including goodwill recorded in past business combinations
will cease upon adoption of the statement. Goodwill is to be tested for
impairment at a reporting unit level at least annually.
SFAS 142 also requires the initial impairment review of all goodwill and other
intangible assets within six months of the adoption date, which is January 1,
2002 for Indiana Gas. The impairment review consists of a comparison of the fair
value of a reporting unit to its carrying amount. If the fair value of a
reporting unit is less than its carrying amount, an impairment loss would be
recognized. Results of the initial impairment review are to be treated as a
change in accounting principle in accordance with APB Opinion No. 20 "Accounting
Changes." An impairment loss recognized as a result of an impairment test
occurring after the initial impairment review is to be reported as a part of
operations. Indiana Gas has no significant components of goodwill.
SFAS 142 also changes certain aspects of accounting for intangible assets;
however, Indiana Gas does not have any significant intangible assets.
The adoption of SFAS 141 and SFAS 142 are not expected to materially impact
operations.
Also in July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" (SFAS 143). SFAS 143 requires entities to record the
fair value of a liability for an asset retirement obligation in the period in
which it is incurred. When the liability is initially recorded, the entity
capitalizes a cost by increasing the carrying amount of the related long-lived
asset. Over time, the liability is accreted to its present value, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS 143 is effective
for fiscal years beginning after June 15, 2002, with earlier application
encouraged. Indiana Gas is currently evaluating the impact that SFAS 143 will
have on its operations.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
INDIANA GAS COMPANY, INC.
Description of the Business
Indiana Gas Company, Inc. (Indiana Gas) operates as a separate wholly owned
subsidiary of Vectren Corporation (Vectren) and provides natural gas and
transportation services to a diversified base of customers in 311 communities in
49 of Indiana's 92 counties.
Vectren is an Indiana corporation that was organized on June 10, 1999, solely
for the purpose of effecting the merger of Indiana Energy, Inc. (Indiana Energy)
and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of Indiana Energy
with SIGCORP and into Vectren was consummated with a tax-free exchange of shares
and has been accounted for as a pooling of interests. The merger did not affect
Indiana Gas' debt securities.
On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company (DP&L) for approximately $465 million as a
tenancy in common through two separate wholly owned subsidiaries. Vectren Energy
Delivery of Ohio, Inc. (VEDO) holds a 53 percent undivided ownership interest in
the assets, and Indiana Gas holds a 47 percent undivided ownership interest.
VEDO is the operator of the assets, operations of which are referred to as "the
Ohio operations." Indiana Gas' ownership is accounted for on the equity method
in accordance with Accounting Principles Board (APB) Opinion No. 18. Its
ownership interest is included in investment in unconsolidated affiliate in the
Balance Sheets, and its interest in the results of operations is included in
equity in earnings (losses) of unconsolidated affiliate in the Condensed
Statements of Operations.
Vectren Utility Holdings, Inc. (VUHI) is the intermediate holding company for
Vectren's operating public utilities, including Indiana Gas. VUHI established a
$435 million commercial paper program to fund the majority of the acquisition.
Indiana Gas' investment in the acquisition of approximately $218 million was
funded with a combination of short-term borrowings from VUHI and Indiana Gas'
commercial paper program.
Results of Operations
Net Income (Loss)
For the three months ended June 30, 2001, the company incurred a net loss of
$11.6 million. Before nonrecurring charges such as merger and integration and
restructuring costs, the net loss was $6.6 million, compared to the net loss
before merger and integration costs for the second quarter of 2000 of $0.4
million.
For the six months ended June 30, 2001, net income was $3.6 million. Before
nonrecurring charges such as merger and integration and restructuring costs, net
income was $10.5 million, compared to net income before merger and integration
costs for the six months ended June 30, 2000 of $18.6 million.
See discussion of merger and integration costs and restructuring costs that
follow.
Merger and Integration Costs
Merger and integration costs incurred for the three and six months ended June
30, 2001 were zero and $0.3 million, respectively, and for the three and six
months ended June 30, 2000 totaled $1.8 million and $15.3 million, respectively.
Vectren expects to realize net merger savings of nearly $200 million over the
next ten years from the elimination of duplicate corporate and administrative
15
programs and greater efficiencies in operations, business processes and
purchasing. The continued merger integration activities, which will contribute
to the merger savings, will be completed in 2001. Merger costs are reflected in
the financial statements of Vectren's operating subsidiaries in which merger
savings are expected to be realized.
Since March 31, 2000, $17.1 million has been expensed associated with merger and
integration activities. Accruals were established at March 31, 2000 totaling
$11.9 million. Of this amount, $4.8 million related to employee and executive
severance costs, $5.0 million related to transaction costs and regulatory filing
fees incurred prior to the closing of the merger, and the remaining $2.1 million
related to employee relocations that occurred prior to or coincident with the
merger closing. At June 30, 2001, the accrual remaining for such costs totaled
$1.0 million, all related to severance costs. Of the $17.1 million expensed, the
remaining $5.2 million was expensed through June 30, 2001 ($4.9 million in 2000
and $0.3 in 2001) for accounting fees resulting from merger related filing
requirements, consulting fees related to integration activities such as
organization structure, employee travel between company locations as part of
integration activities, internal labor of employees assigned to integration
teams, investor relations communications activities, and certain benefit costs.
The integration activities experienced by the company included such things as
information system consolidation, process review and definition, organization
design and consolidation, and knowledge sharing.
As a result of merger integration activities, Vectren management has identified
certain information systems that are expected to be retired in 2001.
Accordingly, the useful lives of these assets have been shortened to reflect
this decision. These information system assets are owned by a wholly owned
subsidiary of Vectren, and the fees allocated by the subsidiary for the use of
these systems by Indiana Gas are reflected in operation and maintenance expenses
in the accompanying condensed financial statements. As a result of the shortened
useful lives, additional fees were incurred by Indiana Gas resulting in
additional operations and maintenance expense of approximately $2.7 million and
$5.5 million for the three and six months ended June 30, 2001, respectively, and
$3.3 million for both the three and six months ended June 30, 2000.
In total, for the three months ended June 30, 2001, merger and integration costs
totaled $2.7 million ($1.7 million after tax), compared to $5.1 million ($3.1
million after tax) for the same period in 2000.
In total, for the six months ended June 30, 2001, merger and integration costs
totaled $5.8 million ($3.6 million after tax), compared to $18.6 million ($13.3
million after tax) for the same period in 2000.
Restructuring Costs
In June 2001, the management and board of directors of Indiana Gas' parent
company, Vectren, approved a plan to restructure primarily, its regulated
operations. The restructuring plan will involve the elimination of
administrative and supervisory positions in its utility operations and corporate
office. Restructuring and related charges of $5.4 million ($3.3 million after
tax) were expensed during the second quarter. These charges were comprised of
$3.4 million for severance, related benefits and other employee related costs,
and $2.0 million for lease termination fees related to duplicate facilities.
The $3.4 million accrued for restructuring costs for employee separation is
associated with approximately 45 employees. Employee separation benefits include
severance, healthcare and outplacement services. Employees are expected to begin
exiting the business beginning August 2001.
As of June 30, 2001, there have been no charges against the accrual, which is
included in other current liabilities. The restructuring program will be
substantially completed by December 31, 2001.
16
Utility Margin (Operating Revenues Less Cost of Gas)
Gas Utility Margin
Gas Utility margin for the three months ended June 30, 2001 of $39.7 million
increased $2.3 million, or 6%, compared to 2000. The increase results from
customer growth offset by weather 24% warmer than the prior year and reduced
consumption resulting from increased gas costs.
Total cost of gas sold was $51.4 million for the three months ended June 30,
2001 and $48.9 million in 2000. This increase of $2.5 million, or 5%, is
primarily due to higher average per unit purchased gas costs, offset by less
throughput. The total average cost per dekatherm of gas purchased by Indiana Gas
for the three months ended June 30, 2001 was $6.37 compared to $4.41 for the
same period in 2000.
Gas Utility margin for the six months ended June 30, 2001 of $112.5 million
increased $2.4 million, or 2%, compared to 2000. The increase is due to a 4%
increase in throughput to residential and commercial customers resulting
primarily from temperatures 8% colder than the previous year and a 2% increase
in the combined residential and commercial customer bases. These favorable
impacts on gas margin were partially offset by unfavorable changes in
unaccounted for gas and reduced per customer consumption due to much higher gas
costs.
Total cost of gas sold was $266.5 million for the six months ended June 30, 2001
and $147.8 million in 2000. This increase of $118.7 million, or 80%, is
primarily due to significantly higher average per unit purchased gas costs. The
total average cost per dekatherm of gas purchased by Indiana Gas for the six
months ended June 30, 2001 was $7.13 compared to $4.10 for the same period in
2000.
Commodity prices for natural gas purchases have increased significantly,
primarily due to a colder winter, increased demand and tighter supplies. Subject
to compliance with applicable state laws, Indiana Gas is allowed full recovery
of such charges in purchased gas costs from its retail customers through
commission-approved gas cost adjustment mechanisms, and margin on gas sales
should not be impacted. However, in 2001 Indiana Gas has experienced and may
continue to experience higher working capital requirements, increased expenses,
including unrecoverable interest costs, uncollectibles and unaccounted for gas,
and some level of price sensitive reduction in volumes sold. (See Note 9 of the
Condensed Financial Statements.)
Operating Expenses
Operations and Maintenance
Operations and maintenance expenses increased $4.5 million, or 20%, for the
three months ended June 30, 2001 compared to the prior year primarily due to
increased bad debt expense and increased general and administrative and meter
reading expenses, offset by less merger-related costs. (See merger and
integration costs below.)
Operations and maintenance expenses increased $6.0 million, or 13%, for the six
months ended June 30, 2001 compared to the prior year due to increased
merger-related fees allocated from a wholly owned subsidiary of Vectren to
reflect the shortened useful lives of certain information systems in use by
Indiana Gas (see merger and integration costs below), and increased bad debt
expense.
Depreciation and Amortization
Depreciation and amortization increased $0.7 million and $1.5 million for the
three and six months ended June 30, 2001, respectively, compared to the prior
year due primarily to depreciation of additions to utility plant.
Income Tax Expense
Federal and state income taxes decreased $4.5 million for both the three and six
months ended June 30, 2001, compared to prior year periods. The decreases result
from less pre tax earnings in the three month period and a lower effective rate
for the six month period. The effective tax rate in 2000 was significantly
higher as a result of the non-deductibility of certain merger and integration
costs.
17
Taxes Other Than Income Taxes
Taxes other than income taxes increased $0.2 million and $1.0 million for the
three and six month periods ended June 30, 2001, respectively, compared to the
prior year due to higher gross receipts taxes.
Other Income (Expense)
Equity in Earnings (Losses) of Unconsolidated Affiliate
Indiana Gas has a 47% undivided interest in the Ohio operations acquired by
Vectren on October 31, 2000. Equity in earnings (losses) of unconsolidated
affiliate represents Indiana Gas' portion of the Ohio operations' net income
(loss).
Other - Net
Other - net decreased $0.4 million and $1.6 million for the three and six
months ended June 30, 2001, compared to 2000. The decrease in the three month
period results from less allowance for funds used during construction (AFUDC) in
2001 and the decrease in the six month period is attributable to less AFUDC and
increased charitable contributions to Low Income Heating Assistance Programs.
(See Note 9 of the Condensed Financial Statements).
Interest Expense
Interest expense increased by $4.3 million, or 88%, and $9.9 million, or 99%
for the three and six months ended June 30, 2001, respectively, when compared to
the prior year. The increases were due primarily to interest related to the
financing of the acquisition of the Ohio operations and increased working
capital requirements resulting from higher natural gas prices.
New Accounting Principle
See Note 11 of the Condensed Financial Statements regarding the adoption of SFAS
133, as amended.
Financial Condition
Liquidity and Capital Resources
Indiana Gas' equity capitalization objective is 40-55% of total capitalization.
This objective may have varied, and will vary, from time to time, depending on
particular business opportunities and seasonal factors that affect the company's
operation. Indiana Gas' common equity component was 54% and 45% of total
capitalization, including current maturities of long-term debt, at June 30, 2001
and December 31, 2000, respectively.
Short-term cash working capital is required primarily to finance customer
accounts receivable, unbilled utility revenues resulting from cycle billing, gas
in underground storage, prepaid gas delivery services, capital expenditures and
investments until permanently financed. Short-term borrowings tend to be
greatest during the summer when revenues are lowest and gas storage facilities
are being refilled. However, working capital requirements have been
significantly higher throughout 2001 due to the higher natural gas costs and the
company's investment in the Ohio operations initially financed with short term
borrowings.
Cash Flow from Operations
Indiana Gas' primary source of liquidity to fund working capital requirements
has been cash generated from operations, which totaled approximately $56.7
million and $56.4 million for the six months ended June 30, 2001 and 2000,
respectively.
Cash flow from operations increased during the six months ended June 30, 2001
compared to 2000 by $0.3 million due primarily to increased net income offset by
unfavorable changes in working capital.
18
Indiana Gas expects the majority of its capital expenditures and debt security
redemptions to be provided by internally generated funds.
Financing Activities
Cash flow required for financing activities of $39.3 million for the six months
ended June 30, 2001 includes issuance of 207.5844 shares of common stock to
Vectren, generating proceeds of $100.0 million, offset by $124.3 million of
reductions in net borrowings and $15.0 million common stock dividends paid to
Vectren. This is an increase in cash required for financing activities when
compared to the six months ended June 30, 2000 of $19.1 million. The increase in
requirements results from the use of internally generated funds to pay down
short-term borrowings.
At March 31, 2001, Indiana Gas was not in compliance with the total indebtedness
to capitalization ratio contained in its back up credit facility for its
commercial paper program. The non-compliance resulted from the indebtedness
incurred to purchase its ownership interest in the Ohio operations and working
capital requirements associated with higher gas costs. A waiver on the Indiana
Gas facility was obtained to waive the non-compliance through and including
March 31, 2001 which effectively waived the non-compliance up to June 30, 2001,
the date of the next quarterly test of the financial covenants. During the
second quarter of 2001, Vectren made an equity investment in Indiana Gas (as
described above). In addition, Indiana Gas was granted a modification to the
credit agreement by the syndicate banks raising the total indebtedness to
capitalization ratio. As a result of these events, Indiana Gas is in compliance
with its debt covenants at June 30, 2001. No amount is outstanding under the
back up facility.
At June 30, 2001, Indiana Gas has approximately $155 million of short-term
borrowing capacity with third parties for use in its operations, of which
approximately $1.1 million is available. On October 31, 2000, Indiana Gas'
investment in the Ohio operations of approximately $218 million was funded with
a combination of short-term borrowings from Vectren Utility Holdings, Inc. and
Indiana Gas' commercial paper program. At June 30, 2001, approximately $81.7
million was outstanding. These short-term borrowings will be replaced over time
with permanent financing.
Indiana Gas' credit rating on outstanding debt at June 30, 2001 was A/A2.
Indiana Gas' commercial paper retains an A-1/P-1 rating.
Capital Expenditures and Other Investment Activities
Cash required for investing activities of $17.6 million for the six months ended
June 30, 2001 includes $19.3 million of capital expenditures. Investing
activities for the six months ended June 30, 2000 were $28.8 million. The
decrease in cash requirements for investing is due to less additions to utility
plant in 2001.
New construction, normal system maintenance and improvements, and technology
investments needed to provide service to a growing customer base will continue
to require substantial expenditures. Capital expenditures for the remainder of
2001 are estimated at $28.4 million.
Environmental and Regulatory Matters
See Notes 8, 9, and 10 of the Condensed Financial Statements regarding matters
affecting operations including manufactured gas plants (Note 8), gas cost
adjustment proceedings (Note 9), and transactions with ProLiance Energy, LLC
(Note 10).
Impact of Recently Issued Accounting Guidance
See Note 12 of the Condensed Financial Statements regarding recently issued
accounting standards.
19
Forward-Looking Information
A "safe harbor" for forwarding-looking statements is provided by the Private
Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of
1995 was adopted to encourage such forward-looking statements without the threat
of litigation, provided those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying important
factors that could cause the actual results to differ materially from those
projected in the statement. Certain matters described in Management's Discussion
and Analysis of Results of Operations and Financial Condition, including, but
not limited to Vectren's realization of net merger savings and ProLiance, are
forward-looking statements. Such statements are based on management's beliefs,
as well as assumptions made by and information currently available to
management. When used in this filing, the words "believe," "anticipate,"
"endeavor," "estimate," "expect," "objective," "projection," "forecast," "goal,"
and similar expressions are intended to identify forward-looking statements. In
addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements, factors that could cause
Vectren and its subsidiaries' actual results to differ materially from those
contemplated in any forward-looking statements included, among others, the
following:
|X| Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; unusual maintenance
or repairs; unanticipated changes to gas supply costs, or availability
due to higher demand, shortages, transportation problems or other
developments; environmental or pipeline incidents; transmission or
distribution incidents; or availability due to demand, shortages,
transmission problems or other developments; or gas pipeline system
constraints.
|X| Increased competition in the energy environment including effects of
industry restructuring and unbundling.
|X| Regulatory factors such as unanticipated changes in rate-setting
policies or procedures, recovery of investments and costs made under
traditional regulation, and the frequency and timing of rate
increases.
|X| Financial or regulatory accounting principles or policies imposed by
the Financial Accounting Standards Board, the Securities and Exchange
Commission, the Federal Energy Regulatory Commission, state public
utility commissions, state entities which regulate natural gas
transmission, gathering and processing, and similar entities with
regulatory oversight.
|X| Economic conditions including inflation rates and monetary
fluctuations.
|X| Changing market conditions and a variety of other factors associated
with physical energy and financial trading activities including, but
not limited to, price, basis, credit, liquidity, volatility, capacity,
interest rate, and warranty risks.
|X| Availability or cost of capital, resulting from changes in Vectren
Corporation and its subsidiaries, interest rates, and securities
ratings or market perceptions of the utility industry and
energy-related industries.
|X| Employee workforce factors including changes in key executives,
collective bargaining agreements with union employees, or work
stoppages.
|X| Legal and regulatory delays and other obstacles associated with
mergers, acquisitions, and investments in joint ventures.
|X| Costs and other effects of legal and administrative proceedings,
settlements, investigations, claims, and other matters, including, but
not limited to, those described in Management's Discussion and
Analysis of Results of Operations and Financial Condition.
20
|X| Changes in federal, state or local legislature requirements, such as
changes in tax laws or rates, environmental laws and regulations.
Indiana Gas undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions, or other factors affecting such statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management
Indiana Gas is exposed to market risks associated with interest rates and
limited exposures from commodity prices. These financial exposures are monitored
and managed by the company as an integral part of its overall risk management
program.
Commodity Price Risk. Indiana Gas' operations have limited exposure to commodity
price risk for purchases and sales of natural gas for its retail customers due
to current Indiana regulations which, subject to compliance with applicable
state regulations, allow for recovery of such purchases through natural gas cost
adjustment mechanisms. (See Note 9 Rate and Regulatory Matters)
The company does not engage in wholesale gas marketing activities that may
expose the company to market risk associated with fluctuating natural gas
commodity prices. Indiana Gas uses a third party administrator which bears these
market risks.
Interest Rate Risk. The company is exposed to interest rate risk associated with
its short-term borrowings. The company's risk management program seeks to reduce
the potentially adverse effects that market volatility may have on operations.
Under normal circumstances, the company tries to limit the amount of short-term
debt and adjustable rate long-term debt outstanding to a maximum of 25% of total
debt. However, there are times when this targeted level of interest rate
exposure may be exceeded.
At June 30, 2001, Indiana Gas' short-term debt represented 46% of the company's
total debt portfolio, due primarily to financing Indiana Gas' ownership interest
in the Ohio operations initially with short-term debt and the increased working
capital requirements resulting from higher purchased gas costs. The short-term
debt utilized for the Ohio operations acquisition is being replaced over time
with permanent financing.
Market risk is estimated as the potential impact resulting from fluctuations in
interest rates on short-term borrowings, including bank notes, lines of credit,
commercial paper and notes payable to an affiliated company. At June 30, 2001
and December 31, 2000, the combined borrowings under these facilities totaled
$235.5 million and $352.9 million, respectively. Based upon average borrowing
rates under these facilities during the three months ended June 30, 2001 and
2000, an increase of 100 basis points (1%) in the rates would have increased
interest expense by $0.8 million and $0.2 million. For the six months ended June
30, 2001 and 2000, an increase of 100 basis points in the rates would have
increased interest expense by $1.7 million and $0.6 million, respectively.
21
INDIANA GAS COMPANY, INC.
PART II . OTHER ITEMS
ITEM 1. LEGAL PROCEEDINGS
Indiana Gas is party to various legal proceedings arising in the normal course
of business. In the opinion of management, with the exception litigation matter
related to ProLiance (See Note 10), there are no legal proceedings pending
against Indiana Gas that are likely to have a material adverse effect on the
financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
EX - 12 Computation of Ratio of Earnings to Fixed Charges
Reports on Form 8-K
On April 2, 2001 Indiana Gas filed a Current Report on Form 8-K with respect to
the creation of a common name for Vectren Corporation's (Vectren) regulated
distribution businesses in the State of Indiana. Indiana Gas Company, Inc.
(Indiana Gas) and Southern Indiana Gas and Electric Company (SIGECO) will begin
doing business as Vectren Energy Delivery of Indiana effective April 1, 2001.
Vectren's power generation and wholesale power marketing functions will transact
business under the name Vectren Power Supply.
Item 5. Other Matters
Item 7. Exhibits
99.1 - Press release, dated March 30, 2001
99.2 - Forward Looking Statements
On April 26, 2001, Indiana Gas filed a Current Report on Form 8-K with respect
to the release of financial information to the investment community regarding
the company's results of operations, financial position and cash flows for the
three and twelve month periods ended March 31, 2001. The financial information
was released to the public through this filing.
Item 5. Other Events
Item 7. Exhibits
99.1 - Press Release - First Quarter 2001 Vectren Earnings
99.2 - Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDIANA GAS COMPANY, INC.
Registrant
August 14, 2001 /s/Jerome A. Benkert, Jr.
-------------------------
Jerome A. Benkert, Jr.
Executive Vice President and
Chief Financial Officer
/s/M. Susan Hardwick
------------------------
M. Susan Hardwick
Vice President and Controller