SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1996
______TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3553
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Indiana 35-0672570
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(Address of principal executive offices)
(812) 465-5300
(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____.
2
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(in thousands except per share data)
OPERATING REVENUES
Electric $65,803 $66,343 $132,668 $126,658
Gas 17,623 13,518 57,234 37,626
Total operating revenues 83,426 79,861 189,902 164,284
OPERATING EXPENSES
Operation:
Fuel for electric generation 17,885 19,034 36,663 37,992
Purchased electric energy 2,771 4,119 4,031 5,273
Cost of gas sold 11,392 5,756 42,163 23,547
Other 12,569 11,895 25,905 23,418
Total operation 44,617 40,804 108,762 90,230
Maintenance 7,720 8,516 13,908 14,352
Depreciation and amortization 9,708 10,419 19,415 20,660
Federal and state income taxes 4,644 4,300 11,159 6,913
Property and other taxes 3,481 3,231 7,072 6,869
Total operating expenses 70,170 67,270 160,316 139,024
OPERATING INCOME 13,256 12,591 29,586 25,260
Other Income:
Allowance for other funds used
during construction 2 98 2 208
Interest 196 232 307 426
Other, net (82) 575 1,347 2,276
116 905 1,656 2,910
INCOME BEFORE INTEREST CHARGES 13,372 13,496 31,242 28,170
Interest and Other Charges:
Interest on long-term debt 4,648 4,657 9,327 9,311
Amortization of premium, discount
and expense on debt 186 186 354 356
Other interest 337 323 748 725
Allowance for borrowed funds used
during construction (104) (102) (167) (414)
5,067 5,064 10,262 9,978
NET INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 8,305 8,432 20,980 18,192
CUMULATIVE EFFECT AT JANUARY 1, 1995
OF ADOPTING THE UNBILLED REVENUES
METHOD OF ACCOUNTING - NET OF
INCOME TAXES - - - 6,293
NET INCOME 8,305 8,432 20,980 24,485
Preferred dividend 274 274 548 550
EARNINGS APPLICABLE TO COMMON STOCK $ 8,031 $ 8,158 $ 20,432 $ 23,935
AVERAGE COMMON SHARES OUTSTANDING 15,755 15,755 15,755 15,755
EARNINGS PER SHARE OF COMMON STOCK
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $0.51 $0.52 $1.30 $1.12
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE - - - 0.40
TOTAL EARNINGS PER SHARE OF COMMON
STOCK $0.51 $0.52 $1.30 $1.52
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.</FN>
3
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1996 1995
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 20,980 $ 24,485
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 19,415 20,660
Deferred income taxes and investment
tax credits, net 577 3,606
Allowance for other funds used
during construction 2 (208)
Cumulative effect of accounting change - (6,293)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 4,923 (4,457)
Inventories 5,384 3,191
Coal contract settlement 7,792 (11,429)
Accounts payable (16,027) (7,153)
Accrued taxes 2,303 2,356
Refunds from gas suppliers (1,690) (914)
Refunds to customers (4,061) (1,385)
Accrued coal liability - (22,018)
Other assets and liabilities (1,000) 2,777
Net cash provided by operating activities 38,598 3,218
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (14,332) (17,595)
Demand side management program expenditures (1,835) (3,083)
Purchases of investments - (801)
Sales of investments - 1,250
Investments in partnerships - 725
Change in nonutility property 1 (4,258)
Other 51 501
Net cash used in investing activities (16,115) (23,261)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds - (50)
Dividends paid (14,177) (13,861)
Reduction in preferred stock and long-term debt - (91)
Change in environmental improvement funds
held by trustee (104) 6,695
Payments on partnership obligations - (3,256)
Change in notes payable (6,500) 6,215
Contribution of nonregulated subsidiaries
to parent (12,145) -
Other 270 310
Net cash used in financing activities (32,656) (4,038)
NET DECREASE IN CASH AND CASH EQUIVALENTS (10,173) (24,081)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,834 28,060
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ (339) $ 3,979
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
4
SOUTHERN INDIANA GAS AND ELECTRIC
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
(in thousands)
ASSETS
Utility Plant, at original cost:
Electric $1,036,636 $1,030,890
Gas 126,524 125,053
1,163,160 1,155,943
Less - accumulated provision for
depreciation 507,844 490,326
655,316 665,617
Construction work in progress 18,916 13,750
Net utility plant 674,232 679,367
Other Investments and Property:
Investments in leveraged leases - 35,609
Investments in partnerships - 25,308
Environmental improvement funds held
by Trustee 3,746 3,642
Nonutility property and other 2,199 11,605
5,945 76,164
Current Assets:
Cash and cash equivalents (339) 9,834
Temporary investments, at market - 1,148
Receivables, less allowance of $290
and $138, respectively 27,656 35,392
Accrued unbilled revenues 16,528 18,651
Inventories 29,578 34,962
Coal contract settlement 5,136 12,928
Other current assets 16,156 4,795
94,715 117,710
Deferred Charges:
Unamortized premium on reacquired debt 5,902 6,142
Postretirement benefits obligation
other than pensions 9,720 9,574
Demand side management program 21,879 20,337
Other deferred charges 11,151 14,687
48,652 50,740
$ 823,544 $ 923,981
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
5
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
(in thousands)
SHAREHOLDERS' EQUITY AND LIABILITIES
Common Stock $ 78,258 $ 78,258
Retained Earnings 206,002 236,617
Common shareholders' equity 284,260 314,875
Cumulative Nonredeemable Preferred Stock 11,090 11,090
Cumulative Redeemable Preferred Stock 7,500 7,500
Cumulative Special Preferred Stock 924 924
Long-Term Debt, net of current maturities 251,627 257,440
Long-Term Partnership Obligations,
net of current maturities - 6,839
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 555,401 598,668
Current Liabilities:
Current Portion of Adjustable Rate
Bonds Subject to Tender 31,500 31,500
Current Maturities of Long-Term Debt,
Interim Financing and Long-Term
Partnership Obligations:
Maturing long-term debt 8,000 9,906
Notes payable 24,000 30,500
Partnership obligations - 2,786
Total current maturities of
long-term debt, interim financing
and long-term partnership obligations 32,000 43,192
Other Current Liabilities:
Accounts payable 16,193 37,996
Dividends payable 123 123
Accrued taxes 12,698 8,821
Accrued interest 4,538 4,577
Refunds to customers 3,273 8,896
Other accrued liabilities 24,352 17,689
Total other current liabilities 61,177 78,102
Total current liabilities 124,677 152,794
Deferred Credits and Other:
Accumulated deferred income taxes 105,130 132,793
Accumulated deferred investment tax
credits, being amortized over lives
of property 22,425 23,146
Regulatory income tax liability 2,157 2,977
Postretirement benefits other than pensions 11,144 9,056
Other 2,610 4,547
143,466 172,519
$823,544 $923,981
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements. </FN>
6
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
June 30, December 31,
1996 1995
(in thousands)
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 15,754,826 shares $ 78,258 $ 78,258
Retained Earnings, $2,194,121 restricted as
to payment of cash dividends on common stock 206,002 236,617
284,260 314,875
PREFERRED STOCK
Cumulative, $100 par value, authorized
800,000 shares issuable, in series
Nonredeemable
4.8% Series, outstanding 85,895 shares,
callable at $110 per share 8,590 8,590
4.75% Series, outstanding 25,000 shares,
callable at $101 per share 2,500 2,500
11,090 11,090
Redeemable
6.50% Series, outstanding 75,000 shares
redeemable at $100 per share
December 1, 2002 7,500 7,500
SPECIAL PREFERRED STOCK
Cumulative, no par value, authorized
5,000,000 shares, issuable in series:
8-1/2% series, outstanding 9,237 shares,
redeemable at $100 per share 924 924
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 251,410 251,410
Notes payable 1,000 6,836
Unamortized debt premium and discount, net (783) (806)
251,627 257,440
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES - 6,839
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL
BONDS SUBJECT TO TENDER, DUE:
2015, Series B, presently 4.0% 31,500 31,500
Total capitalization, including bonds
subject to tender $586,901 $630,168
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
7
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
for the six months ended
June 30,
1996 1995
(in thousands)
Balance Beginning of Period $236,617 $218,424
Net Income 20,980 24,485
257,597 241,623
Dividend to Parent of Nonregulated Subsidiaries 37,418 -
Preferred Stock Dividends 548 550
Common Stock Dividends ($0.865 per share in
1996 and $0.845) per share in 1995) 13,629 13,312
51,595 13,862
Balance End of Period (See Consolidated
Statements of Capitalization for restriction) $206,002 $229,047
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
8
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Southern Indiana Gas and Electric Company (SIGECO) is a
wholly-owned utility subsidiary of SIGCORP, Inc. (SIGCORP),
a holding company incorporated under the laws of the state
of Indiana. SIGCORP has five wholly-owned subsidiaries:
SIGECO, a gas and electric utility, and four nonregulated
subsidiaries.
On December 20, 1994, SIGECO's Board of Directors
authorized the steps required for a corporate reorganization
in which a holding company would become the parent of
SIGECO. SIGECO's shareholders approved the reorganization
at SIGECO's March 28, 1995 annual meeting, and approval by
the Federal Energy Regulatory Commission and the Securities
and Exchange Commission was granted November 7, 1995 and
December 14, 1995, respectively.
Effective January 1, 1996, SIGCORP, became the parent
of SIGECO which accounts for over 90% of SIGCORP's net
income, and four of SIGECO's former wholly-owned
nonregulated subsidiaries: Energy Systems Group, Inc.,
Southern Indiana Minerals, Inc., Southern Indiana
Properties, Inc. and ComSource, Inc. All of the shares of
SIGECO's common stock were exchanged on a one-for-one basis
for shares of SIGCORP, while all of SIGECO's debt securities
and all of its outstanding shares of preferred stock remain
securities of SIGECO and are unaffected. On January 1,
1996, SIGECO dividended to SIGCORP the four nonregulated
subsidiaries.
2. General
It is suggested that these consolidated financial
statements be read in conjunction with the consolidated
financial statements and the notes thereto included in
SIGCORP's 1995 Annual Report to Shareholders.
The consolidated statements are on the basis of interim
figures and are subject to audit and adjustments. These
financial statements include the accounts of Southern
Indiana Gas and Electric Company (SIGECO) and its wholly-
owned subsidiary, Lincoln Natural Gas Company, Inc. and
include all adjustments which are in the opinion of
management, necessary for a fair statement of the financial
position and results of operations. Because of seasonal and
other factors, the earnings for the six months ending June
30, 1996 should not be taken as an indication of the results
for all or any part of the balance of 1996.
3. Cash Flow Information
For the purposes of the Consolidated Balance Sheets and
Consolidated Statements of Cash Flows, SIGECO considers all
highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
SIGECO, for the six months ended June 30, 1996 and 1995
paid interest (net of amounts capitalized) of $9,943,000 and
$9,687,000, respectively, and income taxes of $9,295,000
and $4,714,000, respectively.
The following decreases in assets and liabilities were
caused by dividending the nonregulated subsidiaries to
SIGCORP and are noncash in nature.
Deferred income taxes (29,783)
Investments in Leveraged Leases (35,609)
Investments in Partnerships (25,307)
Partnership obligations (9,625)
Other, net (3,771)
9
4.Long-Term Debt
On May 1, 1996, the interest rate on $31,500,000 of
Adjustable Rate Pollution control bonds was changed from
4.60% to 4%. The new interest rate, 4%, will be fixed
through April 30, 1997. For financial statement
presentation the $31,500,000 of Adjustable Rate Pollution
Control bonds are shown as a current liability.
5.Operating Revenues - Accounting Change
SIGECO previously recognized electric and gas revenues
when customers were billed on a cycle billing basis. The
utility service rendered after monthly meter reading dates
through the end of a calendar month (unbilled revenues)
became a part of operating revenues in the following month.
To more closely match revenues with expenses, effective
January 1, 1995, SIGECO changed its method of accounting to
accrue the amount of revenue for sales unbilled at the end
of each month. The cumulative effect of the change on prior
years as of January 1, 1995, net of income taxes, was $6.3
million ($.40 per share), and was included in net income for
the first quarter of 1995.
10
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Effective January 1, 1996, a new holding company,
SIGCORP, Inc. (SIGCORP) became the parent of Southern
Indiana Gas and Electric Company (SIGECO), a regulated gas
and electric utility which accounts for over 90% of
SIGCORP's net income, and four of SIGECO's former wholly-
owned nonregulated subsidiaries. On January 1, 1996, SIGECO
dividended to SIGCORP its four nonregulated subsidiaries.
Earnings per share were $0.51 for the recent three
month period compared to earnings of $0.52 per share for the
second quarter of 1995; earnings per share for the first six
months of 1996 were $1.30 versus earnings of $1.12 per share
before the cumulative effect of an accounting change for the
same period in 1995. Net income for the six month period
ending June 30, 1995 included a one-time favorable
adjustment, net of tax, of $6.3 million or $.40 per share in
recognition of the impact of SIGECO's change to the unbilled
revenue method of accounting (see Note 5 of Notes To
Consolidated Financial Statements).
OPERATING REVENUES
Despite stronger sales to retail electric customers and
higher per unit sales margins resulting from an approved
adjustment to base retail electric rates, electric revenues
declined $.5 million (1%) during the second quarter of 1996
compared to the same period in 1995, primarily due to fewer
sales to wholesale customers and lower per unit fuel costs
reflected in revenues. Retail electric sales rose 9% on
stronger sales to all customer classes, while wholesale
sales, which typically have lower per unit margins than
retail sales, declined substantially due to lower sales to
Alcoa Generating Corporation (AGC) than during the second
quarter of 1995 when a major maintenance outage occurred on
one of AGC's generating units. Electric revenues increased
$.9 million during the current quarter due to the third step
of SIGECO's electric rate increase effective June 27, 1995,
which raised retail rates approximately 2.05% overall. The
recovery of lower per unit fuel costs which resulted in a
$1.5 million decline in electric revenues, and changes in
rates to wholesale customers and sales mix, more than offset
these increases in electric revenues. Changes in the cost
of fuel are passed on to customers through commission
approved fuel cost adjustments.
During the six month period ending June 30, 1996,
electric revenues were up $6 million (5%) compared to the
first two quarters of 1995, chiefly due to increased sales
to retail electric customers and to higher base retail
rates. Retail sales rose 8% reflecting colder winter
temperatures during the first four months of 1996 than a
year ago, and continued commercial and industrial growth in
SIGECO's service territory. Wholesale sales for the six
month period in 1996 were lower due to fewer sales to AGC
during the second quarter. A 7% decrease in per unit fuel
and purchased power costs recovered from customers resulted
in a $2.3 million decrease in electric revenues.
The changes in electric revenue are shown at the top of
page 11.
11
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months Six Months
Ended 6-30-96 Ended 6-30-96
(in thousands)
Change in sales volume $ 1,700 $ 5,300
Effect of rate adjustments in sales
to retail customers 900 2,300
Fuel and purchased power recovery (1,500) (2,300)
Other (1,640) 710
$ (540) $ 6,010
Increase in retail sales (MWh) 88,977 172,047
(Decrease) in wholesale sales (MWh) (161,015) (146,341)
Increased sales to all customer classes was the primary
reason for the $4.1 million (30%) increase in gas revenues
during the three months ended June 30, 1996. Residential
and commercial sales were greater due to much colder than
normal April temperatures, and sales to industrial customers
increased as certain gas transportation customers elected to
purchase gas from SIGECO rather than from other sources.
Average unit costs of gas sold, which are recovered from
customers through commission approved gas cost adjustments,
were comparable to those during the same period in 1995.
The change in sales mix partially offset these revenue
increases.
A 35% increase in gas sales and the recovery of higher
unit costs of gas delivered to customers were the reasons
for a $19.6 million (52%) increase in gas revenue during the
first half of 1996 versus the same period in 1995. Colder
winter weather during the first four months of 1996 was the
primary cause of higher sales to residential and commercial
customers, up 25% and 27%, respectively. Additionally,
industrial sales were significantly greater due to certain
transportation customers purchasing their gas supplies from
SIGECO during both quarters in 1996. Average unit costs of
gas sold recovered from customers during the recent six
month period were 35% greater than those during the same
period in 1995. The colder winter temperatures nationwide
tightened spot market supplies, causing upward pressure on
market prices during the first three months of 1996.
The changes in gas revenues are shown below:
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months Six Months
Ended 6-30-96 Ended 6-30-96
(in thousands)
Change in sales volume $4,600 $11,800
Cost of gas recovery 400 8,200
Other (895) (393)
$4,105 $19,607
Increase in total throughput (MDth) 914 2,213
12
OPERATING EXPENSES
Lower per unit fuel costs and fewer sales to wholesale
customers resulted in a $2.5 million decrease in the cost of
fuel for electric generation and purchased electric energy
during the three month and six month periods ending June 30,
1996 compared to the same periods in 1995. Cost of gas sold
rose $5.6 million during the current quarter due to the
large increase in unit deliveries; the substantial increase
in spot market prices during the first quarter of 1996 and
much greater deliveries caused an $18.6 million increase in
the cost of gas sold during the first half of 1996. During
the three month and six month periods ending June 30, 1996,
increases in other operation expenses reflected greater
employee benefit costs and other administrative and general
expenses and the February 1, 1995 commercial operation of
SIGECO's $103 million investment to comply with the Clean
Air Act Amendments of 1990, primarily its sulfur dioxide
scrubber. (See "Clean Air Act" in Item 7, Management's
Discussion and Analysis of Results of Operations and
Financial Condition in SIGCORP's 1995 Form 10-K report for
further discussion.) In June 1995, SIGECO began expensing
costs which had previously been deferred for postretirement
benefits other than pensions (health care and life
insurance) attributed to electric utility operations.
SIGECO received approval from the Indiana Utility Regulatory
Commission to recover such costs in retail electric rates.
(See item (1)(j), "Postretirement Benefits Other Than
Pensions" of Notes To Consolidated Financial Statements in
SIGCORP's 1995 Form 10-K report for further discussion.)
Maintenance expenditures during both reporting periods
declined compared to the same periods in 1995 when a
devastating storm struck SIGECO's electric service area on
June 8, requiring $2 million in maintenance repairs and $1.5
million in capital replacements. Higher tree trimming and
line clearance activity and increased routine transmission
and distribution maintenance repairs during both periods in
1996 partially offset the impact of the decline in storm
repairs. Production maintenance expenditures were
relatively unchanged during both reporting periods from a
year ago. The impact of lower depreciation rates placed in
effect in June 1995 more than offset higher depreciation
expense related to the February 1995 commercial operation of
the new scrubber, resulting in a 6% decline in total
depreciation expense during the first six months of 1996.
Federal and state income taxes were $4.2 million greater
during the first six months of 1996 compared to the same
period in 1995 due to the higher 1996 pretax operating
income and to a $1.2 million decrease in income taxes
resulting from the settlement of SIGECO's IRS audit during
the first quarter of 1995.
OTHER INCOME AND INTEREST CHARGES
The decline in other income during the three month and
six month periods ending June 30, 1996 reflects the absence
of the earnings of the four nonregulated subsidiaries which
were dividended to SIGCORP on January 1, 1996.
Interest and other charges were higher during the six
month period ended June 30, 1996 due to lower capitalized
interest resulting from completion of the scrubber; these
expenses during the second quarter of 1996 were relatively
unchanged compared to the same period in 1995.
EARNINGS
The effects of stronger retail gas and electric sales
and higher per unit sales margins resulting from an approved
increase in electric base retail rates were more than offset
by the absence of the earnings of the four nonregulated
subsidiaries, lower margins on gas sales and fewer wholesale
electric sales, resulting in a one cent (2%) decline in
earnings to $0.51 per share of common stock for the second
quarter of 1996 compared to the second quarter of 1995.
13
For the six months ended June 30, 1996, earnings per
share of common stock rose 18 cents (16%) over earnings of
$1.12 per share before the 40 cent per share adjustment for
the cumulative effect of the accounting change during the
first six months of 1995. The increase in earnings before
the adjustment for the accounting change was primarily due
to greater weather-sensitive gas and electric sales and
higher per unit sales margins resulting from the increase in
base electric retail rates, which were partially offset by
the higher operating expenses and the absence of the
earnings of the nonregulated subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
SIGECO's demand for capital is primarily related to its
construction of utility plant and equipment necessary to
meet customers' electric and gas energy needs, as well as
environmental compliance requirements, and expenditures for
its demand side management (DSM) programs. Construction
expenditures (excluding allowance for other funds used
during construction) and demand side management program
expenditures incurred during the quarter and six months
ended June 30, 1996 totaled $9.8 million and $16.2 million,
respectively. Construction and demand side management
program expenditures incurred during the second quarter of
1996 were 32% funded with internally generated cash; such
expenditures incurred during the six months ended June 30,
1996 were fully funded with internally generated cash. Cash
provided from operations increased $35.4 million during the
current six month period compared to the same period in 1995
when SIGECO executed a contract buyout settlement agreement
with its remaining long-term contract coal supplier. Cash
used in investing and financing activities during 1996
increased $21.5 million compared to a year ago reflecting
the contribution of the nonregulated subsidiaries to
SIGCORP. No financing activity occurred during the 1996
period.
At this time, SIGECO estimates that its construction
expenditures for the five year period 1996-2000 will total
approximately $260 million, including approximately $25
million for the design and implementation of several
comprehensive information systems which are necessary to
better provide expanding customer service needs and to
better manage its resources, and approximately $17 million
to develop and implement DSM programs (see "Other Matters").
Although SIGECO expects the majority of the construction
requirements and an estimated $83 million in debt security
and other long-term obligation redemptions to be provided by
internally generated funds, an additional $60-70 million of
external financing is anticipated to meet such requirements.
OTHER MATTERS
On July 3, 1996, the Indiana Utility Regulatory
Commission issued its order concerning the settlement
agreement entered into between SIGECO and the Indiana
Utility Consumer Counselor's Office to settle SIGECO's
pending request for an increase in base retail natural gas
rates, to adjust the level of future demand side management
(DSM) expenditures, and to address other related matters.
The order granted approximately 86% of SIGECO's originally
requested gas rate increase, representing an estimated $4.8
million increase in annual revenues. Additionally, the
order granted significant reductions in previously ordered
DSM expenditures during the 1997-2012 period, from a total
of approximately $138 million to approximately $39 million.
Although SIGECO is already recognized as one of the most
competitive electric utilities in the nation, the reductions
were requested by SIGECO to enable it to be even more cost
competitive in the future with very low stranded investment
exposure.
14
PART TWO - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
15
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
SIGNATURE
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.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(Registrant)
S. M. Kerney
S. M. Kerney
Controller
August 14, 1996
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
INDEX
Page No.
Part I - Financial Information:
Consolidated Statements of Income for the Three Months and
Six Months ended June 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 1996 and 1995 3
Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995 4-5
Consolidated Statements of Capitalization at June 30,
1996 and December 31, 1994 6
Consolidated Statements of Retained Earnings for the
Six Months ended June 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8-9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-14
Part II - Other Information 15
Signature 16