As Filed With The Securities and Exchange Commission On January 30, 2001
Registration No. 333-53930
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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VECTREN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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Indiana 35-2086905
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
20 N.W. Fourth Street
Evansville, Indiana 47741
(812) 491-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
Ronald E. Christian
Senior Vice President, General Counsel
and Secretary
20 N.W. Fourth Street
Evansville, Indiana 47741
(812) 491-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies To:
Catherine L. Bridge Edward F. Petrosky
Barnes & Thornburg Brown & Wood LLP
11 South Meridian Street One World Trade Center
Indianapolis, Indiana 46204 New York, New York 10048
(317) 236-1313 (212) 839-5300
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until this
registration statement shall become effective on such date as the commission,
acting pursuant to said Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated January 30, 2001
PROSPECTUS
5,500,000 Shares
Vectren Corporation
[LOGO]
Common Stock
(and Common Stock Purchase Rights)
-----------
Vectren Corporation is selling 5,500,000 shares of common stock with the
related common stock purchase rights.
The shares trade on the New York Stock Exchange under the symbol "VVC." On
January 26, 2001, the last sale price of the shares as reported on the New York
Stock Exchange was $22.6875 per share.
Investing in the common stock involves risks that are described in the
"Risk Factors" section beginning on page 6 of this prospectus.
-----------
Per Share Total
--------- -----
Public offering price.................................... $ $
Underwriting discount.................................... $ $
Proceeds, before expenses, to Vectren.................... $ $
The underwriters may also purchase up to an additional 825,000 shares from
Vectren at the public offering price, less the underwriting discount, within 30
days from the date of this prospectus to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The shares will be ready for delivery on or about , 2001.
-----------
Merrill Lynch & Co. Credit Suisse First Boston
A.G. Edwards & Sons, Inc.
Edward D. Jones & Co., L.P.
UBS Warburg LLC
-----------
The date of this prospectus is , 2001.
[ORGANIZATION CHART APPEARS HERE]
Transmits Generates Trades and Provides Provides
and and markets utility integrated
distributes markets natural gas products broadband
natural electric and provides and communication
gas and power energy services, services
electricity performance and the
contracting mining and
sale of
coal
Vectren Corporation is an energy and applied technology holding company
headquartered in Evansville, Indiana. Our operations began on March 31, 2000
through the combination of two Indiana-based companies, Indiana Energy, Inc.
and SIGCORP, Inc. On October 31, 2000, we acquired the natural gas distribution
assets of The Dayton Power and Light Company, located in western Ohio.
Vectren's regulated subsidiaries provide gas and/or electricity to
approximately one million customers in adjoining service territories that cover
nearly two-thirds of Indiana and 16 counties in west central Ohio, and generate
and market electric power. Vectren's non-regulated subsidiaries and affiliates
primarily consist of three business units providing services to customers
throughout the region: Energy Services, Utility Services and Communications.
Our strategy is focused on becoming the leading regional provider of energy and
related applied technology solutions to business, residential and municipal
customers.
[MAP APPEARS HERE]
TABLE OF CONTENTS
Page
----
Summary.................................................................... 5
Risk Factors............................................................... 7
Forward-Looking Statements................................................. 9
Business................................................................... 10
Use of Proceeds............................................................ 20
Market Price of Common Stock and Dividends................................. 20
Capitalization............................................................. 21
Selected Historical and Pro Forma Consolidated Financial Data.............. 22
Description of Stock....................................................... 25
Certain United States Tax Considerations for Non-United States Holders..... 27
Underwriting............................................................... 30
Legal Matters.............................................................. 32
Experts.................................................................... 32
Where You Can Find More Information........................................ 33
---------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the underwriters have not,
authorized anyone to provide you with different or additional information. If
anyone provides you with different or additional information, you should not
rely on it. We are not, and the underwriters are not, making an offer to sell
these securities in any jurisdiction where the offer is not permitted. You
should assume that the information contained in this prospectus is accurate
only as of the date on the cover page of this prospectus or, in the case of
information contained in documents incorporated by reference in this
prospectus, as of the date of those documents. Our business, financial
condition, results of operations and prospects may have changed since those
dates.
---------------
Unless otherwise indicated, all information contained in this prospectus
assumes that the underwriters' over-allotment option is not exercised and the
terms "Vectren," "we," "us" and "our" refer to Vectren Corporation and, where
appropriate, our subsidiaries.
---------------
As used in this prospectus, the abbreviation "MMdth" means million
decatherms, "MW" means megawatts, "MWhrs" means megawatt hours, "RGUs" means
revenue generating units and "throughput" means combined gas sales and gas
transportation volumes.
3
[THIS PAGE INTENTIONALLY LEFT BLANK]
SUMMARY
This summary provides an overview of the key aspects of the offering.
This summary is not complete and does not contain all of the information you
should consider before purchasing our common stock. You should read all of the
information contained or incorporated by reference in this prospectus
carefully, including the "Risk Factors" section and the financial statements
and related notes.
Our Company
Vectren Corporation is an energy and applied technology holding company
headquartered in Evansville, Indiana. Our operations began on March 31, 2000
through the combination of two Indiana-based companies, Indiana Energy, Inc.
and SIGCORP, Inc. On October 31, 2000, we acquired the natural gas distribution
assets of The Dayton Power and Light Company, located in western Ohio.
Vectren's regulated subsidiaries provide gas and/or electricity to
approximately one million customers in adjoining service territories that cover
nearly two-thirds of Indiana and 16 counties in west central Ohio, and generate
and market electric power. Vectren's non-regulated subsidiaries and affiliates
primarily consist of three business units providing services to customers
throughout the region: Energy Services, Utility Services and Communications.
Energy Services trades and markets natural gas and provides energy performance
contracting services. Utility Services provides utility products and services,
such as underground construction and facilities locating, meter reading and
materials management, and the mining and sale of coal. Communications provides
integrated broadband communications services, including local and long distance
telephone, internet access and cable television.
We segregate our businesses into regulated and non-regulated entities. At
December 31, 2000, we had $2.9 billion in total assets, with $2.4 billion (83%)
being regulated and $0.5 billion (17%) being non-regulated. Our earnings for
fiscal year 2000 were $72.0 million, or $1.18 per share of common stock.
Excluding merger and integration related charges, our earnings for fiscal year
2000 were $108.8 million, or $1.78 per share of common stock. Excluding merger
and integration related charges, the results reflect a 20% increase over 1999
results of $90.7 million, or $1.48 per share of common stock.
Our Strategy
Our strategy is focused on becoming the leading regional provider of
energy and related applied technology solutions to business, residential and
municipal customers. We believe strong customer relationships are key to our
success, and we will continue to build upon our strong utility foundation to
help make our customers more productive, comfortable and secure. More
specifically,
. We will build upon our strong utility foundation by remaining a low
cost, safe and reliable provider of energy and related products and
services.
. We will continue to build on the loyalty of existing and new customers
by anticipating and meeting their needs with value added products and
services.
. We will grow our core business through the disciplined pursuit of
mergers, acquisitions, alliances, joint ventures and partnerships.
. We will pursue superior returns for our shareholders through our goal
of providing, on average over five years, annual earnings growth per
share of 8% to 10%.
Vectren was incorporated under the laws of Indiana on June 10, 1999. Our
corporate offices are located at 20 N.W. Fourth Street, Evansville, Indiana
47741. Our telephone number is (812) 491-4000.
5
The Offering
Common stock offered by Vectren.... 5,500,000 shares
Shares outstanding after the
offering........................... 66,887,468 shares
Use of proceeds.................... We estimate that our net proceeds from this
offering without exercise of the
underwriters' over-allotment option will be
approximately $120,934,000. We intend to
use the net proceeds to repay a portion of
the commercial paper issued to fund the
acquisition of the natural gas distribution
assets of The Dayton Power and Light
Company, our share of the additional
investment in Reliant Services, LLC for the
purchase price for Miller Pipeline
Corporation, and our additional investments
in Haddington Energy Partners and the
integrated broadband communications joint
venture with Utilicom Networks, LLC.
Risk factors....................... See "Risk Factors" and other information
included or incorporated by reference in
this prospectus for a discussion of factors
you should carefully consider before
deciding to invest in shares of the common
stock.
New York Stock Exchange symbol..... VVC
The number of shares outstanding after the offering is based on our
shares outstanding as of January 11, 2001 and excludes (i) 859,441 shares
reserved for issuance under outstanding options and (ii) 4,000,000 shares that
will be reserved for issuance as shares or as options over a five year period
under our At Risk Compensation Plan, which has been authorized by our board of
directors but not yet presented to our shareholders for their approval. This
number assumes that the underwriters' over-allotment option is not exercised.
If the over-allotment option is exercised in full, we will issue and sell an
additional 825,000 shares.
6
RISK FACTORS
You should carefully consider the risk factors described below, as well
as the other information included or incorporated by reference in this
prospectus, before making an investment in our common stock. The risks and
uncertainties described below are not the only ones facing our company.
Additional risks and uncertainties not presently known or that we currently
believe to be immaterial may also adversely affect us.
Our acquisitions may not perform as expected.
We have achieved growth through mergers and acquisitions and expect that
we will continue to grow, in part, through acquisitions. Although each of the
acquired businesses had a significant operating history at the time we acquired
it, we have a limited history of owning and operating many of these businesses.
There can be no assurances that these businesses will perform as expected, that
the returns from these businesses will support the indebtedness incurred to
acquire them or the capital expenditures needed to maintain or develop them or
that we will realize the synergies associated with our merger and investment
strategies.
We operate in an increasingly competitive industry, which may affect our future
earnings.
The utility industry has been undergoing dramatic structural change for
several years, resulting in increasing competitive pressures faced by electric
and gas utility companies. Increased competition may create greater risks to
the stability of utility earnings generally and may in the future reduce our
earnings from retail electric and gas sales. Currently, several states,
including Ohio, have passed legislation that allows electricity customers to
choose their electricity supplier in a competitive electricity market, and
several other states are considering such legislation. At the present time,
Indiana has not adopted such legislation. Ohio regulation provides for choice
of commodity for all gas customers. We plan to implement this choice for all of
our gas customers in Ohio by 2002. Indiana has not adopted any regulation
requiring gas choice except for large volume customers. We cannot assure that
increased competition or other changes in legislation, regulation or policies
will not have a material adverse effect on our business, prospects, financial
condition or results of operations.
From time to time, we are subject to material litigation and regulatory
proceedings.
On November 3, 1999, the United States Environmental Protection Agency
("USEPA") filed a lawsuit against Southern Indiana Gas and Electric Company
("SIGECO"), a wholly owned subsidiary of Vectren, alleging violations of the
Clean Air Act at the Culley Generating Station. The lawsuit seeks fines against
SIGECO for as much as $27,500 per day per violation without specifying the
number of days or violations that the USEPA believes occurred. The USEPA also
seeks an order requiring SIGECO to install the best available emission
technology at the Culley Generating Station, the costs of which are estimated
to be $40 million to $50 million. The majority of these costs are included in
the approximately $160 million which SIGECO would be required to expend if the
USEPA's rule requiring certain states, including Indiana, to file revised state
implementation plans to reduce nitrogen oxide ("NOx") emissions is upheld by a
final court order and, as a result, SIGECO is required to install system-wide
NOx emission control. The estimate is based on the level of system-wide
emissions reductions ultimately required and the control technology utilized to
achieve the reductions and is expected to be expended during the 2001-2004
period. Related additional operation and maintenance expenses could be an
estimated $8 to $10 million annually.
The Indiana Utility Regulatory Commission (the "Indiana Commission") has
determined that there should be additional review of certain pricing terms for
the purchase of gas by Indiana Gas Company, Inc., a wholly owned subsidiary of
Vectren ("Indiana Gas"), from ProLiance Energy, LLC ("ProLiance"), our 50%
owned unregulated marketing affiliate, in a pending gas cost adjustment
proceeding before the Indiana Commission involving Indiana Gas and Citizens Gas
& Coke Utility, a public charitable trust that provides gas service to the City
of Indianapolis ("Citizens Gas"). An affiliate of Citizens Gas is our partner
in the ProLiance joint venture. A hearing schedule has not yet been
established. Pending resolution of these issues, Indiana Gas continues to
record gas costs in accordance with the ProLiance contract and Vectren
continues to record its proportional share of ProLiance's earnings.
7
In addition to the matters described above, we may be subject to other
material litigation and regulatory proceedings from time to time. There can be
no assurance that the outcome of these matters will not have a material adverse
effect on our consolidated financial condition or results of operations.
We may not be able to realize our communications strategy.
Since we have a minority interest in our investments in Utilicom
Networks, LLC ("Utilicom"), the nature of our broadband communications
investments and the manner in which we offer such services to customers may
change. Further, we face strong competition in the broadband communications
business. Competitors include regional, national and global companies. Many of
our competitors are well-established and have larger and better developed
networks and systems, greater name recognition, longer operating histories in
certain businesses and significantly greater financial, technical and marketing
resources. As a result, there can be no assurance that we will achieve
penetration rates in Indianapolis, Indiana, Dayton, Ohio or any other future
markets comparable to the rates achieved by SIGECOM, LLC ("SIGECOM") in the
Evansville, Indiana market.
We are experiencing significantly increased gas costs.
Commodity prices for natural gas purchases during the winter months of
calendar year 2001 have unexpectedly increased significantly, primarily due to
the expectation of a colder winter, which has led to increased demand and
tighter supplies. Subject to regulatory approval, Vectren's utility
subsidiaries charge their customers the actual cost they pay for the natural
gas purchased on their customers' behalf. As a result, profit margins on gas
sales should not be impacted. In 2001, Vectren's utility subsidiaries may
experience higher working capital requirements, increased expenses, including
interest costs and uncollectibles, and possibly some level of price sensitive
reduction in volumes sold.
On October 11, 2000, Indiana Gas filed for approval of its quarterly gas
cost adjustment. In early December, the Indiana Commission issued an interim
order approving the request by Indiana Gas for a gas cost adjustment factor for
December 2000. On January 4, 2001, the Indiana Commission approved the January
and February 2001 gas cost adjustment as filed. The order also addressed the
claim by the Office of Utility Consumer Counselor that a portion of the
requested gas cost adjustment be disallowed because Indiana Gas should have
entered into additional commitments for this winter's gas supply in late 1999
and early 2000. In procuring gas supply for this winter, Indiana Gas followed
the practices that it had employed in the past and which were subject to review
by the Indiana Commission. In response to the claim by the Office of Utility
Consumer Counselor, the Indiana Commission found that there should be a one-
time, $3.8 million disallowance related to gas procurement for this winter
season. As a result, Indiana Gas recognized a pre-tax charge of $3.8 million
during fiscal year 2000. Indiana Gas or the Office of Utility Consumer
Counselor could file appeals to the Indiana Commission's order through February
5, 2001. On January 25, 2001, the Citizens Action Coalition of Indiana, Inc., a
not for profit consumer advocate, filed with the Indiana Commission a petition
to intervene and a notice of appeal of the order.
8
FORWARD-LOOKING STATEMENTS
Statements contained or incorporated by reference in this prospectus
regarding future events and developments are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933. Forward-
looking statements are based on management's beliefs as well as assumptions
made by, and information currently available to, management. Because such
statements are based on expectations and not historical facts, actual results
may differ materially from those projected in the particular statements.
Important factors that could cause future results to differ include those
listed under "Risk Factors" and the following:
. Weather conditions;
. The federal and state regulatory environment, including changes in
rate-setting and cost-recovery policies, environmental regulations,
tax or accounting matters and other laws and regulations to which we
are subject;
. The economic climate, including inflation rates and monetary
policies;
. Unusual or unanticipated changes in normal business operations,
including unusual maintenance or repairs;
. Fluctuation in supply, demand, transmission capacity and prices for
energy commodities;
. Customer growth within our service territories and changes in
customers' usage patterns and energy preferences;
. Financial market conditions, including changes in availability of
capital or interest rate fluctuations;
. Our ability to carry out our marketing and sales plans, along with
the ability to realize synergies associated with our merger and
investment strategies; and
. Employee workforce factors, including changes in collective
bargaining unit agreements, strikes or work stoppages.
These and other matters are difficult to predict, and many are beyond our
control, including those we discuss in this prospectus and our filings with the
Securities and Exchange Commission. Accordingly, you should not rely on the
accuracy of predictions contained in forward-looking statements. These
statements speak only as of the date of this prospectus or, in the case of
documents incorporated by reference, as of the date of those documents.
9
BUSINESS
[ORGANIZATION CHART OF VECTREN APPEARS HERE]
Vectren Corporation is an energy and applied technology holding company
headquartered in Evansville, Indiana. Our operations began on March 31, 2000
through the combination of two Indiana-based companies, Indiana Energy, Inc.
("Indiana Energy") and SIGCORP, Inc. ("SIGCORP"). On October 31, 2000, we
acquired the natural gas distribution assets of The Dayton Power and Light
Company ("Dayton Power"), located in western Ohio, which are now operated by
Vectren Energy Delivery of Ohio, Inc. ("Vectren of Ohio"), a wholly-owned
subsidiary. Vectren's regulated subsidiaries provide gas and/or electricity to
approximately one million customers in adjoining service territories that cover
nearly two-thirds of Indiana and 16 counties in west central Ohio, and generate
and market electric power. Vectren's non-regulated subsidiaries and affiliates
primarily consist of three business units providing services to customers
throughout the region: Energy Services, Utility Services and Communications.
Energy Services trades and markets natural gas and provides energy performance
contracting. Utility Services provides utility products and services, such as
underground construction and facilities locating, meter reading and materials
management, and the mining and sale of coal. Communications provides integrated
broadband communications services, including local and long distance telephone,
internet access and cable television.
We segregate our businesses into regulated and non-regulated entities. At
December 31, 2000, we had $2.9 billion in total assets, with $2.4 billion (83%)
being regulated and $0.5 billion (17%) being non-regulated. For the year ended
December 31, 2000, our earnings were $72.0 million, or $1.18 per share of
common stock. Excluding merger and integration related charges, our earnings
for fiscal year 2000 were $108.8 million, or $1.78 per share of common stock,
with $84.0 million (77%) from our regulated entities and $24.8 million (23%)
from our non-regulated entities. Excluding merger and integration related
charges, the results reflect a 20% increase over 1999 results of $90.7 million,
or $1.48 per share of common stock.
Regulated vs. Non-Regulated
Earnings*
Total Assets (12/31/00) Year Ended 12/31/00
[PIE CHART]
Total Assets (12/31/00)
-----------------------
$2.9 billion
Regulated 83%
Non-Regulated 17%
[PIE CHART]
Earnings*
Year Ended 12/31/00
-------------------
$108.8 million
Regulated 77%
Non-Regulated 23%
*Before merger and integration related costs.
Includes results of Vectren of Ohio for two months.
10
Our Strategy
Our strategy is focused on becoming the leading regional provider of
energy and related applied technology solutions to business, residential and
municipal customers. We believe strong customer relationships are key to our
success, and we will continue to build upon our strong utility foundation to
help make our customers more productive, comfortable and secure.
We will build upon our strong utility foundation by remaining a low cost,
safe and reliable provider of energy and related products and services. Our
strong utility foundation is built upon low cost electric generating and energy
distribution assets. We have aligned our business groups and have formed
strategic alliances and partnerships to utilize our core competencies, reduce
costs and better manage our operations.
We will continue to build on the loyalty of existing and new customers by
anticipating and meeting their needs with value added products and services.
Customer-care is a primary focus, and we have implemented a customer care
organization, including marketing and sales and a centralized call center in
Evansville. This helps position us to provide future products and services.
We will grow our core business through the disciplined pursuit of
mergers, acquisitions, alliances, joint ventures and partnerships. Most
recently, we successfully completed the merger of Indiana Energy and SIGCORP to
form Vectren, acquired the natural gas distribution assets of Dayton Power and
acquired, through a joint venture, Miller Pipeline Corporation ("Miller
Pipeline"). We will opportunistically pursue other businesses where we have
developed expertise. We will also look to divest certain businesses judged to
be non-core to Vectren's customer relationship focused strategy.
We will pursue superior returns for our shareholders. It is our goal to
produce, on average over five years, annual earnings growth per share of 8% to
10%. Our goal is to grow regulated earnings on average up to 4%. Furthermore,
our goal is for non-regulated operations, which contribute approximately 23% of
consolidated earnings before merger and integration related costs, to
contribute as much as 35% in five years. We plan to continue to grow our cash
dividend and maintain investment grade credit ratings for our debt.
Our Competitive Strengths
We believe we have developed competitive strengths that will enable us to
successfully execute our strategy. These strengths include:
. Customer focus
. Superior service
. Experienced management team
. Solid, cost conscious utility foundation
. Low cost provider of electric generation
. Successful non-regulated growth strategy
. Market leading supplier of gas to industrial customers and municipal
utilities
. Disciplined approach to growth through business combinations
. Outstanding dividend growth record
11
Regulated Business Segment Review
Gas vs. Electric
Year Ended 12/31/00
Gas-Revenues* Electric-Revenues
Regulated Earnings*
[PIE CHART]
Electric-Revenues
- -----------------
$336.4 million
Wholesale 23%
Other 2%
Industrial 25%
Residential 28%
Commercial 22%
[PIE CHART]
Gas-Revenues*
- -------------
$818.8 million
Industrial 10%
Residential 59%
Commercial 21%
Other 10%
*Includes Vectren of Ohio for two months.
[PIE CHART]
Regulated Earnings*
- -------------------
$84.0 million
Electric 56%
Gas 44%
*Before merger and integration related costs.
Energy Delivery
With the addition of the Vectren of Ohio operations, which were acquired
on October 31, 2000, our Energy Delivery group provides natural gas and
electric service to approximately one million customers in Indiana and west
central Ohio. Through Energy Delivery, we strive to remain a safe, reliable,
low cost provider of energy to our customers helping to make them more
productive, comfortable and secure.
Energy Delivery is made up of three utility companies. SIGECO currently
markets and delivers electricity and natural gas to approximately 150,000
customers in southwestern Indiana. Indiana Gas provides natural gas
distribution to approximately 510,000 customers in central Indiana. Vectren of
Ohio provides natural gas distribution to approximately 310,000 customers in
west central Ohio. Indiana Gas, SIGECO and Vectren of Ohio are wholly owned
subsidiaries of Vectren.
Gas Throughput and Customers
[BAR CHART]
Throughput MMdth Heating Degree Days __% of Normal
1998 139 79
1999 151 87
2000 Throughput 181 96
includes
Vectren of
Ohio for
two months
[BAR CHART]
Customers (000's)
1998 610
1999 622
2000* 946
*Includes Vectren of Ohio
Gas volumes steadily increased in recent years as measured by throughput.
Throughput in 2000 was 181 MMdth compared to 151 MMdth in 1999 and 139 MMdth in
1998. Year end customer counts were approximately 946,000 in 2000, 622,000 in
1999 and 610,000 in 1998. Growth in gas throughput was impacted by weather,
favorable economic conditions and customer growth, and the inclusion of the
operations of Vectren of Ohio for two months in 2000.
12
Electric Sales and Customers
[BAR CHART]
Electric Sales Mwhrs (000's) Cooling Degree Days __% of Normal
1998 6,900 118
1999 7,000 94
2000 7,500 93
[BAR CHART]
Customers (000's)
1998 124
1999 127
2000 132
Electric sales totaled approximately 7,525,000 MWhrs in 2000, 6,941,000
MWhrs in 1999 and 6,859,000 MWhrs in 1998. Year end electric customer counts
were approximately 132,000 in 2000, 127,000 in 1999 and 124,000 in 1998.
Electric sales grew despite milder than normal weather, as measured in terms of
cooling degree days. These results reflect customer growth and our successful
efforts to market our low cost excess generating capacity to wholesale
customers.
Energy Delivery Strategic Objectives
. Be a top quartile performer in the industry in terms of customer
service, safety, operating costs and prices
. Enhance customer relationships to serve as a foundation for providing
additional products and services
. Continually improve through process revisions and development of new
technology
Power Supply
Our Power Supply group operates and maintains Vectren's six coal fired
electric power plants and five peaking units in southwest Indiana, contracts
for purchased power and sells power in the wholesale market. We presently own
1,256 MWs of installed operating generating capacity. Coal-fired generating
units provide 1,041 MWs of capacity, and gas or oil-fired turbines used for
peaking or emergency conditions provide 215 MWs. We have 50 MWs available under
firm contracts and 120 MWs available under interruptible contracts. We also
have 80 MWs of new peaking capacity under development, which will be available
for our summer peak in 2002 and will be fueled by natural gas.
Firm Capacity (1,306 MWs) Source of Supply in 2000 (MWhrs)
[PIE CHART]
Firm Capacity (1,306 MWs)
Purchased Power 4%
Oil & Gas 16%
Coal 80%
[PIE CHART]
Source of Supply in 2000 (MWhrs)
Purchased Power 12%
Oil & Gas 1%
Coal 87%
13
In addition, our Power Supply group has interconnections with Louisville
Gas and Electric Company, Cinergy Services, Inc., Indianapolis Power & Light
Company, Hoosier Energy Rural Electric Cooperative, Inc., Big Rivers Electric
Corporation, Wabash Valley Power Association and the City of Jasper, providing
an ability to simultaneously interchange approximately 750 MWs.
We believe that a distinct competitive advantage of our Power Supply
group is the low cost generation of electric power made possible through low
production costs. Our power production costs, which include coal costs, in 1999
were approximately 1.75 cents per kilowatt hour, placing us among the lowest
cost providers in the nation, as demonstrated by the following graph:
Electric Cost of Production in 1999(1)
[Logo Graph]
[BAR GRAPH]
Cents Per KW/h
SIECO ECAR Average(2) National Average
1.75 1.93 1.86
- --------
(1) Electric Cost of Production is defined as total fuel cost and non-fuel
operation and maintenance cost.
(2) ECAR means East Central Area Reliability Coordination Agreement.
Source: Resource Data International Inc.
This advantage allows us to make sales into the public power markets.
While we must first serve our Energy Delivery group, excess power has been
available for sale to other buyers during non-peak load periods. Low production
costs enable us to sell a greater volume of power at favorable market prices.
Power Supply Strategic Objectives
. Maximize return on generation assets
. Maintain position as a low cost, reliable producer of electric power
. Operate in a manner that reflects Vectren's commitment to
environmental stewardship
14
Non-Regulated Business Segment Review
Non-Regulated Earnings Contribution
Year Ended 12/31/00
$108.8 million*
[PIE CHART]
Non-Regulated
$24.8 million
Energy Services 7%
Utility Services 2%
Communications 4%
Corporate and Other 10%
Regulated 77%
*Before merger and integration related costs.
Includes results of Vectren of Ohio for two months.
Energy Services
Our Energy Services group relies heavily upon a customer focused, value
added strategy. The group provides gas marketing and fuel supply management to
over 600 customers in twelve states across the Midwest, as well as market
intelligence through disciplined trading. In addition to being a leading
provider of these services to municipal utilities, we serve large end users and
other utilities. This group is also the gas supplier for our Energy Delivery
group. At December 31, 2000, Energy Services had 624 customers, up from 377 in
1998. Volume has grown about 34% with customer growth as volumes traded
increased to 327 MMdth in 2000, up from 244 MMdth in 1998.
Energy Services Growth
[BAR CHART]
Customers Throughput Volume in MMdth
--------- --------------------------
1998 1999 2000 1998 1999 2000
---- ---- ---- ---- ---- ----
377 472 624 244 287 327
Energy Services includes two gas marketing companies. ProLiance is 50%
owned by Vectren and 50% owned by an affiliate of Citizens Gas. SIGCORP Energy
Services, Inc. is a wholly owned subsidiary of Vectren. In addition, Energy
Services Group, LLC provides energy performance contracting and facility
upgrades through its design and installation of energy-efficient equipment.
Energy Systems Group, LLC is a venture between Vectren and Citizens Gas, with
Vectren owning 67%. We expect Energy Services to continue its growth and
increase its relative earnings contribution to Vectren.
15
Energy Services Strategic Objectives
. Deploy a customer relationship strategy
. Continue to build natural gas marketed volumes
. Develop a platform to sell power to end users and municipal customers
Utility Services
Our Utility Services group is a low cost provider of outsourcing services
for electric, gas, water and telecommunication utilities, including Vectren's
Energy Delivery businesses. Those outsourced services include underground
construction and facilities locating, meter reading, warehousing and
distribution of materials and third party collections. In addition, the group
provides Vectren's Power Supply group with a dependable, low cost source of
coal from its own mines in southwest Indiana. It also markets coal to other
utilities and wholesale customers.
This group includes the following entities: Reliant Services, LLC
("Reliant"), an equally owned strategic alliance with Cinergy Corp.; CIGMA,
LLC, an equally owned strategic alliance with an affiliate of Citizens Gas; IEI
Financial Services, LLC, a wholly owned subsidiary of Vectren; and Vectren
Fuels, Inc., a wholly owned subsidiary of Vectren. We expect Utility Services
to grow steadily and its earnings to improve over the next few years.
Utility Services Strategic Objectives
. Continue to optimize core competencies and expand service offerings
to other utilities
. Provide improved service and reduced costs to utility affiliates
Communications
Our Communications group provides services to approximately 21,800
residential and commercial customers in the greater Evansville area in southern
Indiana through an 880-mile fiber network. This network has been active since
mid-2000. The present customer base has yielded approximately 57,600 RGUs,
indicating multiple lines and/or services being utilized by the same customer.
Penetration of our existing energy customer base in Evansville with
communications services has been in excess of one-third. The Evansville system
is operated in a joint venture with Utilicom. Utilicom is a provider of bundled
communications services that focuses on last mile delivery to residential and
commercial customers in second and third tier markets.
[BAR CHART]
Communications Customers
Total Passing Customers Served RGU's
1999 41,900 8,500 15,400
2000 83,400 21,800 57,600
16
Our Communications strategy is to be the first mover to connect customers
in the second and third tier markets in Indiana and west central Ohio. We
intend to execute our strategy by investing in broadband cable overbuilds and
by optimizing the existing relationships between our other business groups and
their customers.
In addition to the operating Evansville network, we have invested $8.1
million in Utilicom and have also committed to invest up to $100 million in
Utilicom in the form of convertible subordinated debt, subject to obtaining all
required financing. Vectren's commitment will support Utilicom's plan to raise
$600 million of additional capital to fund ventures in Indianapolis, Indiana
and Dayton, Ohio. Utilicom has also obtained $220 million of capital
commitments from Blackstone Capital Partners III, First Union Capital Partners,
and JP Morgan Capital. These commitments are also subject to the achievement of
the funding of the entire $600 million of additional capital. In the near
future, we expect growth in customers and RGUs to continue, but we do not
expect a significant near term earnings impact to Vectren overall from either
the Indianapolis or Dayton venture. Communications reported positive income in
2000 due to a one-time gain.
Communications Strategic Objectives
. Generate positive EBITDA from the Evansville investment in 2001
. Begin construction of broadband strategy in Indianapolis and Dayton
Corporate and Other
In addition to the non-regulated business groups previously discussed,
our Corporate and Other group invests in and realizes tax credits from:
. a portfolio of energy development projects in gas storage, gathering
and processing, and fuel cells and other distributed generation
projects;
. real estate, including structured finance and leveraged leases, as
well as low income housing projects;
. projects to develop coal based synthetic fuels; and
. corporate information technology, including billing and financial
reporting systems.
Major investments include Haddington Energy Partners, L.P. ("Haddington
Energy"), Southern Indiana Properties, Inc., Pace Carbon Synfuels Investors,
L.P., Energy Realty, Inc. and Vectren Resources LLC. Due to the investment
nature of this group, contributions to future earnings may exhibit some
volatility.
17
Recent Developments
Acquisition of the Gas Utility Assets of The Dayton Power and Light Company
Vectren purchased the natural gas distribution assets of Dayton Power for
a purchase price of approximately $465 million on October 31, 2000. The
acquisition added approximately 305,000 gas utility customers in 16 counties in
western Ohio. Vectren acquired the gas utility assets as a tenancy in common
through two separate subsidiaries. Indiana Gas acquired a 47% undivided
ownership interest in the assets and Vectren of Ohio acquired the remaining 53%
undivided ownership interest. Vectren of Ohio is the operator of all of the
assets. Because Ohio law requires domestic incorporation of any entity
providing utility services in Ohio, Indiana Gas has incorporated under Ohio, as
well as Indiana, law.
Vectren Utility Holdings, Inc. ("Utility Holdings") is the intermediate
holding company for Vectren's utility interests. As part of the acquisition
financing, Utility Holdings borrowed approximately $435 million under its
commercial paper program. From the proceeds of this financing, Indiana Gas
borrowed $189 million, and Vectren of Ohio borrowed $246 million from Utility
Holdings. Indiana Gas also borrowed $29 million under its commercial paper
program. Indiana Gas and Vectren of Ohio each applied these proceeds to pay its
respective share of the purchase price for the gas utility assets of Dayton
Power. On December 28, 2000, Utility Holdings issued $150 million in floating
rate notes due December 27, 2001 and applied the net proceeds to reduce the
balance outstanding under its commercial paper program. These notes bear
interest at a per annum rate equal to the three month U.S. dollar LIBOR rate
plus .75%. Concurrently with completion of this financing, a floating rate to
fixed rate swap was executed which in effect resulted in a fixed rate of 6.64%
on this debt. We anticipate that the related commercial paper and short-term
financings will be replaced over time with permanent, long term financing.
Additional Investment in Utilicom
On December 21, 2000, Vectren invested $8.1 million in Utilicom. Vectren
has also committed to invest up to $100 million in Utilicom in the form of
convertible subordinated debt, subject to obtaining all required financing.
Vectren is a current partner in Utilicom's initial operation in Evansville,
Indiana, operating under the brand name of SIGECOM, a TOTALink affiliate.
Utilicom, operating under the brand name TOTALink, is a provider of bundled
communications services, focusing on last mile delivery to residential and
commercial customers in second and third tier markets. It builds, owns and
operates high capacity broadband networks and delivers cable TV, high speed
internet service and telephone service to customers in partnership with
affiliates of local electric and gas utilities.
Vectren's commitment will support the plan of Utilicom to raise $600
million of additional capital to fund ventures in Indianapolis, Indiana and
Dayton, Ohio, where Utilicom has recently received authorization to build and
operate networks, and to recapitalize the SIGECOM venture. Utilicom has also
obtained $220 million of capital commitments from Blackstone Capital Partners
III, First Union Capital Partners, and JP Morgan Capital. These commitments are
also subject to the funding of the entire $600 million of additional capital.
A launch date of late 2001 is expected for both the Indianapolis and
Dayton projects. The Indianapolis venture, TOTALink of Indiana, LLC, will
consist of approximately 3,400 miles of broadband network passing 350,000 homes
and businesses. The Dayton venture, TOTALink of Ohio LLC, will consist of
approximately 1,100 miles of broadband network passing 120,000 homes and
businesses.
18
Vectren has a 14% equity interest in SIGECOM following the
recapitalization of Utilicom in January 2000. Upon completion of all new
funding and later conversion of convertible debt, Vectren would have up to a
31% ownership in both the Indianapolis and Dayton ventures and would own
approximately 8% of Utilicom. With the $8.1 million investment, Vectren has now
invested $25 million in Utilicom as convertible subordinated debt and $8
million as equity in SIGECOM Holdings, Inc. Vectren does not expect the
Indianapolis and Dayton investments to have any significant financial impact on
earnings in 2001 or 2002. Construction in Indianapolis and Dayton will be
funded over the next five years.
Acquisition of Miller Pipeline Corporation
On December 13, 2000, Reliant, a joint venture equally owned by
subsidiaries of Cinergy Corp. and Vectren, purchased the stock of Indianapolis-
based Miller Pipeline from NiSource Inc. for approximately $68.3 million.
Miller Pipeline is one of the nation's premier natural gas distribution
contractors with nearly 50 years of experience in the construction industry.
The acquisition will expand our utility services business by adding underground
pipeline construction, replacement and repair to our current services of
underground facility locating, contract meter reading and installation of
telecommunications and electric facilities.
19
USE OF PROCEEDS
We estimate that we will receive net proceeds from this offering without
exercise of the underwriters' over-allotment option of approximately $121
million ($139 million if the underwriters' over-allotment option is exercised
in full), after deducting the underwriting discount and commissions and
estimated offering expenses payable by us. We intend to use the net proceeds to
repay a portion of the commercial paper of Utility Holdings outstanding as of
December 31, 2000, which has a weighted average interest rate of 6.7% per annum
as of January 25, 2001 and has maturities ranging from 1 day to 55 days. We
issued the commercial paper and other short term debt to fund the acquisition
of the natural gas distribution assets of Dayton Power, our share of the
additional investment in Reliant for the purchase price for Miller Pipeline and
our additional investments in Haddington Energy and the integrated broadband
communications joint venture with Utilicom.
MARKET PRICE OF COMMON STOCK AND DIVIDENDS
Our shares of common stock are traded on the New York Stock Exchange
under the symbol "VVC." The high and low sales prices for our common stock as
reported on the New York Stock Exchange composite transactions reporting system
and dividends paid are shown in the following table for the periods indicated.
Price Range
Quarterly Cash -----------------
Dividends High Low
-------------- -------- --------
2000:
Second Quarter.............................. $0.2425 $21.3125 $15.7500
Third Quarter............................... 0.2425 20.3750 17.5625
Fourth Quarter.............................. 0.2550 26.5000 20.0000
2001:
First Quarter (through January 26).......... (1) $24.4375 $21.6875
- --------
(1) On January 24, 2001, our board of directors declared a dividend of $0.255
per share, payable on March 1, 2001, to common shareholders of record on
February 15, 2001.
The last reported sale price of our common stock on the New York Stock
Exchange on January 26, 2001 was $22.6875 per share, and, as of January 12,
2001, there were 14,904 shareholders of record of our common stock.
Dividends on our shares of common stock are payable at the discretion of
our board of directors out of legally available funds. Future payments of
dividends, and the amounts of these dividends, will depend on our financial
condition, results of operations, capital requirements and other factors.
The mortgage indenture and the terms of preferred stock of SIGECO
contained in its articles of incorporation could limit the ability of SIGECO to
pay dividends to Vectren. Under the applicable provisions, SIGECO may pay
dividends on common stock from accumulated surplus earned subsequent to 1947 to
the extent this surplus exceeds two times the annual dividend requirements on
preferred stock. The amount restricted against cash dividends on common stock
at December 31, 2000 under the restriction based on annual dividend
requirements was $1,925,951, leaving $251,630,083 unrestricted for the payment
of dividends.
20
CAPITALIZATION
The following table sets forth our capitalization as of December 31,
2000:
. on an actual basis; and
. on an adjusted basis, which gives effect to the sale of 5,500,000
shares in this offering at an assumed public offering price of
$23.00, after deducting the estimated underwriting discount and
commissions and estimated offering expenses payable by us, and
application of the estimated net proceeds of $120,934,000 to repay
outstanding commercial paper, as if the issuance occurred on December
31, 2000.
You should read this table in conjunction with the consolidated financial
statements and related notes included or incorporated by reference in this
prospectus.
As of December 31, 2000
-----------------------------
(In thousands)
Actual As Adjusted(1)
---------- --------------
Short-term debt
Current maturities of long term debt........... $ 249 $ 249
Other short term borrowings.................... 813,608 692,674
---------- ----------
Total short term debt........................ $ 813,857 $ 692,923
========== ==========
Long-term debt and other obligations............. $ 631,954 $ 631,954
---------- ----------
Shareholders' equity:
Preferred stock of subsidiary.................. $ 16,965 $ 16,965
Common stock (no par value) 480,000 shares
authorized;
61,387 shares issued and outstanding.......... 217,720 338,654
Retained earnings.............................. 506,462 506,462
Accumulated other comprehensive income......... 7,502 7,502
---------- ----------
Total shareholders' equity................... $ 748,649 $ 869,583
---------- ----------
Total capitalization............................. $1,380,603 $1,501,537
========== ==========
- --------
(1) The "As Adjusted" column does not include up to 825,000 shares of our
common stock issuable upon the exercise of the underwriters' over-allotment
option.
21
SELECTED HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL DATA
Selected Historical Financial Information
The following table presents selected consolidated financial information.
The information should be read in conjunction with the consolidated financial
statements of Vectren incorporated by reference in this prospectus. The
financial information as of December 31, 1998 and 1999 and for the years ended
December 31, 1997, 1998 and 1999 are derived from our audited consolidated
financial statements, which were audited by Arthur Andersen, LLP. The financial
information as of December 31, 1995, 1996, 1997 and 2000 and for the years
ended December 31, 1995, 1996 and 2000 are derived from our internal unaudited
consolidated financial statements. This information has been restated to
reflect the pooling of interests transaction pursuant to which each of Indiana
Energy and SIGCORP merged into Vectren.
Year Ended December 31
------------------------------------------------------------
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- ---------- ----------
(in thousands, except per share data)
Operating Data
Operating revenue....... $805,828 $965,335 $972,081 $997,706 $1,068,417 $1,648,690
Operating income........ $126,650 $160,146 $124,556(1) $148,537 $ 160,772 $ 130,921(2)
Net income.............. $ 85,994 $ 83,657 $ 67,714(1) $ 86,600 $ 90,748 $ 72,040(2)
Average common shares
outstanding............ 61,567 61,522 61,611 61,578 61,306 61,297
Basic earnings per share
on common stock........ $ 1.40 $ 1.36 $ 1.10(1) $ 1.41 $ 1.48 $ 1.18(2)
Diluted earnings per
share on common stock.. $ 1.40 $ 1.36 $ 1.10 $ 1.41 $ 1.48 $ 1.17(2)
Dividends per share on
common stock........... $ 0.83 $ 0.85 $ 0.88 $ 0.90 $ 0.94 $ 0.98
- --------
(1) During 1997, the Indiana Gas Board of Directors authorized management to
undertake the actions necessary and appropriate to restructure Indiana Gas'
operations and recognize a resulting restructuring charge of $39.5 million
($24.5 million after tax) which included estimated costs related to
involuntary workforce reductions.
(2) Merger and integration related costs incurred for the year ended December
31, 2000 totaled $41.1 million. These costs relate primarily to transaction
costs, severance and other merger and acquisition integration activities.
Vectren expects to realize net merger savings of nearly $200 million over
the next ten years from the elimination of duplicate corporate and
administrative programs and greater efficiencies in operations, business
processes and purchasing. The continued merger integration activities,
which will contribute to the merger savings, will be substantially complete
during 2001.
As a result of merger integration activities, 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, resulting in an increase in depreciation expense of
approximately $11.4 million for the year ended December 31, 2000.
In total, merger and integration related costs incurred for the year ended
December 31, 2000 were $52.5 million ($36.8 million after tax).
22
As of December 31
-----------------------------------------------------------------
1995 1996 1997 1998 1999 2000(1)
---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
Balance Sheet Data
Total assets............ $1,673,310 $1,719,547 $1,758,634 $1,798,840 $1,980,467 $2,909,187
Redeemable preferred
stock.................. $ 8,424 $ 8,424 $ 8,424 $ 8,308 $ 8,192 $ 8,076
Long-term obligations... $ 460,379 $ 409,058 $ 475,490 $ 388,938 $ 486,726 $ 631,954
Common stock equity..... $ 607,967 $ 639,067 $ 653,666 $ 677,914 $ 709,757 $ 731,684
- --------
(1) Vectren and Indiana Gas are not currently in compliance with the total
indebtedness to capitalization ratios contained in the back up credit
facilities for the commercial paper programs of Utility Holdings and
Indiana Gas. The maximum amount available under the Utility Holdings
facility is $435 million, and the maximum amount available under the
Indiana Gas facility is $155 million. The Utility Holdings facility
requires that the ratio be no greater than 0.65 to 1 and the Indiana Gas
facility requires that the ratio be no greater than 0.60 to 1. At December
31, 2000, the ratio for the Company was 0.658 to 1 and the ratio for
Indiana Gas was 0.73 to 1. The Company's non-compliance arises primarily
from abnormally high natural gas prices in recent months and the resulting
working capital requirements. We are in the process of obtaining consents
from the banks on the Utility Holdings facility to waive the non-compliance
and increase the ratio from 0.65 to 1 to 0.67 to 1 until March 29, 2001.
The application of the proceeds of this offering to repay short-term debt
should allow the Company to satisfy the 0.65 to 1 ratio beginning March 30,
2001. The Indiana Gas non-compliance resulted from the indebtedness
incurred to purchase its ownership interest in the natural gas distribution
assets of Dayton Power. Upon receiving approval from the Indiana
Commission, which is expected in the second quarter of this year, the
Company plans to convert a portion of the outstanding indebtedness of
Indiana Gas to equity thereby infusing $125 million in capital into Indiana
Gas, which is anticipated to cause the ratio to decline to approximately
0.57 to 1. The banks on the Indiana Gas facility have agreed to waive the
non-compliance through and including March 31, 2001. There are no amounts
outstanding under either facility.
23
Selected Pro Forma Condensed Financial Information
The accompanying pro forma financial information presents the condensed
unaudited pro forma balance sheet of Vectren as of September 30, 2000 and the
unaudited pro forma statement of income for the nine months ended September 30,
2000 and for the year ended December 31, 1999.
On October 31, 2000, Vectren completed its acquisition of the natural gas
distribution assets of Dayton Power for approximately $465 million pursuant to
an Asset Purchase Agreement dated December 14, 1999. Vectren acquired the gas
utility assets as a tenancy in common through two separate wholly-owned
subsidiaries. Operations will be conducted under the name of Vectren of Ohio.
Under the acquisition structure Indiana Gas, one of Vectren's operating public
utilities, holds a 47% undivided ownership interest and Vectren of Ohio has a
53% undivided ownership interest.
The unaudited condensed pro forma balance sheet information as of
September 30, 2000 is presented as if the acquisition had occurred on September
30, 2000. The unaudited condensed pro forma income statement information for
the nine month period ended September 30, 2000 and for the year ended
December 31, 1999 are presented as if the acquisition had occurred at January
1, 1999. The following as adjusted pro forma information reflects the effects
of the Dayton Power acquisition, as well as the issuance by Indiana Gas on
December 28, 2000 of $70,000,000 in insured quarterly notes, the issuance by
Vectren Capital on December 21, 2000 of $78,000,000 in senior notes, and the
common stock offering and use of related net proceeds of $120,934,000 to repay
outstanding commercial paper. Pro forma net income and earnings per share is
presented as if these events had occurred as of January 1, 1999. Pro forma
short-term debt, long-term debt and common stock equity are presented as if
these events occurred as of September 30, 2000.
Preparation of the pro forma financial information was based on
assumptions deemed appropriate by us. The pro forma information is unaudited
and is not necessarily indicative of the results which actually would have
occurred if the transaction had been consummated at the beginning of the period
presented, nor does it purport to represent the future financial position and
results of operations for future periods. The pro forma information should be
read in conjunction with the audited consolidated financial statements of
Vectren filed on Form 8-K for the year ended December 31, 1999, the unaudited
financial statements of Vectren filed on Form 10-Q for the quarter ended
September 30, 2000, and the audited financial statements of The Dayton Power
and Light Company Natural Gas Distribution Business and pro forma financial
statements of Vectren filed on Form 8-K on January 16, 2001.
Pro Forma As Adjusted
Pro Forma As Adjusted Nine Months Nine Months
Year Ended Year Ended Ended Ended
December 31, December 31, September 30, September 30,
1999 1999 2000 2000
------------ ------------ ------------- -------------
(in thousands, except per share data)
Income Statement
Information, For Period
Ended
Operating revenue..... $1,287,283 $1,287,283 $1,108,471 $1,108,471
Operating income...... 182,979 182,979 96,880 96,880
Net income............ 87,402 92,552 45,007 48,870
Basic earnings per
share on common
stock................ $ 1.43 $ 1.39 $ .73 $ 73
Diluted earnings per
share on common
stock................ $ 1.42 $ 1.38 $ .73 $ .73
Balance Sheet
Information, At Period
End
Cash and cash
equivalents.......... $ 17,353 $ 17,353
Total assets.......... 2,544,830 2,544,830
Short term debt....... 828,484 561,610
Long term debt........ 484,074 632,074
Preferred stock....... 16,965 16,965
Common stock equity... 709,702 830,636
24
DESCRIPTION OF STOCK
General
The total amount of authorized capital stock of Vectren is 480,000,000
shares of common stock and 20,000,000 shares of preferred stock. As of January
11, 2001, 61,387,468 shares of common stock and no shares of preferred stock
were issued and outstanding. The following summary highlights the material
provisions of our Articles of Incorporation, our bylaws and the Indiana
Business Corporation Law ("IBCL") relating to our capital stock.
Board of Directors
Our Articles and bylaws contain provisions that are intended to enhance
the likelihood of continuity and stability in the composition of our board of
directors and which may have the effect of delaying, deferring, or preventing a
future takeover or change in control of Vectren unless the takeover or change
in control is approved by the board. The Articles provide for a minimum of one
and a maximum of 16 members of the board, the actual number to be specified by
the bylaws, which currently set the number of directors at 16. The Articles
also provide that the bylaws may provide for classes of directors, and in
accordance therewith, there are currently three classes of directors on the
board. Notice of nominations of persons to the board may be made by our
shareholders and must be sent to us not less than 90 nor more than 120 days
before the meeting at which directors will be elected.
Common Stock
Dividends and Rights upon Liquidation
The holders of outstanding Vectren common stock are entitled to receive
dividends out of assets legally available at the time and in the amounts as the
board of directors may from time to time determine. Our common stock is not
convertible or exchangeable into other securities, and the holders of common
stock have no preemptive or subscription rights to purchase any of our
securities. Upon liquidation, dissolution or winding up of Vectren, the holders
of our common stock are entitled to receive pro rata the assets of Vectren
which are legally available for distribution, after payment of all debts and
other liabilities and subject to the prior rights of any holders of preferred
stock then outstanding.
Voting Rights
Each outstanding Vectren common share is entitled to one vote on all
matters submitted to a vote of our shareholders. Except as otherwise required
by law or our Articles, the holders of Vectren common stock vote together on
all matters submitted to a vote of the shareholders, including the election of
directors. The bylaws provide that the representation, in person or proxy, of a
majority of the stock outstanding and entitled to vote at a meeting of
shareholders constitutes a quorum for conducting business. The Articles provide
that the following actions may be taken only with the affirmative vote of
holders of 80% of the combined voting power of the outstanding Vectren stock
entitled to vote:
. removal for cause of a director;
. amendment or repeal of the provision regarding director removal for
cause; and
. certain business combinations unless the business combination is
approved by a majority of continuing directors or the business
combination satisfies a fair price test.
A "continuing director" means any member of the board who is unaffiliated with
the other party to a business combination which is the beneficial owner of more
than 10% of the voting power of Vectren stock and who was a member of the board
prior to the time that such other party to a business combination became the
25
beneficial owner of more than 10% of the voting power of Vectren stock, and any
successor of a continuing director who is unaffiliated with the other party to
a business combination and is recommended to succeed a continuing director by a
majority of continuing directors then on the board.
Advance Notice of Shareholder Business; Special Meetings of Shareholders
Notice of any business proposed by a Vectren shareholder to be conducted
at any meeting of shareholders must be sent to us not less than 90 nor more
than 120 days before the meeting at which the business is conducted. The board
or our Chief Executive Officer may call special meetings of our shareholders.
Our shareholders have no right to call a special meeting of the shareholders or
to amend the bylaws.
Our shares of common stock are traded on the New York Stock Exchange
under the symbol "VVC." The transfer agent and registrar for Vectren's common
stock is EquiServe Trust Company N.A.
Preferred Stock
The board may, without further action by our shareholders, from time to
time, direct the issuance of preferred stock in series and may, at the time of
issuance, determine the rights, preferences and limitations of each series.
Satisfaction of any dividend preferences of outstanding preferred stock would
reduce the amount of funds available for the payment of dividends on our common
stock. Holders of preferred stock may be entitled to receive a preference
payment in the event of any liquidation, dissolution or winding-up of Vectren
before any payment is made to the holders of our common stock. The issuance of
preferred stock may render more difficult or tend to discourage a merger,
tender offer or proxy contest, the assumption of control by a holder of a large
block of our securities or the removal of incumbent management. The board,
without shareholder approval, may issue preferred stock with voting and
conversion and/or exchange rights, which could adversely affect the holders of
our common stock. There are no shares of preferred stock outstanding.
Shareholder Rights Agreement
The board has adopted a Shareholder Rights Agreement which is generally
designed to deter coercive takeover tactics and to encourage all persons
interested in potentially acquiring control of Vectren to treat each
shareholder on a fair and equal basis. Under the Shareholder Rights Agreement,
the board has declared a dividend distribution of one right for each
outstanding Vectren common share. A right will attach to each common share
Vectren issues. Each right entitles the holder to purchase from Vectren one
share of common stock at a price of $65.00 per share (subject to adjustment to
prevent dilution). Initially, the rights will not be exercisable. The rights
become exercisable 10 days following a public announcement that a person or
group of affiliated or associated persons (a "Vectren Acquiring Person") has
acquired beneficial ownership of 15% or more of the outstanding Vectren common
stock (or a 10% acquiror who is determined by the Vectren board to be an
adverse person), or 10 days following the announcement of an intention to make
a tender offer or exchange offer the consummation of which would result in any
person or group becoming a Vectren Acquiring Person. The Vectren Shareholder
Rights Agreement expires October 25, 2009.
Indiana Statutes
The IBCL limits some transactions between an Indiana company and any
person who acquires 10% or more of the company's common stock (an "interested
shareholder"). During the five-year period after the acquisition, an interested
shareholder cannot enter into a business combination with the company unless,
before the interested shareholder acquired the common stock, the board of
directors of the company approved the acquisition of common stock or approved
the business combination. After the five-year period, an interested shareholder
can enter into only the following three types of business combinations with the
company: (i) a business combination approved by the board of directors of the
company before the interested shareholder acquired the common stock; (ii) a
business combination approved by holders of a majority of the common
26
stock not owned by the interested shareholder; and (iii) a business combination
in which the shareholders receive a price for their common stock at least equal
to a formula price based on the highest price per common share paid by the
interested shareholder.
In addition, a person who makes a tender offer for, or otherwise acquires
shares giving that person more than 20%, 33 1/3%, and 50% of the outstanding
voting securities of an Indiana corporation that is subject to the "Control
Share Acquisitions Statute" of the IBCL may lose the right to vote the shares
which take the acquiror over these respective levels of ownership. Before an
acquiror may vote the shares that take the acquiror over these ownership
thresholds, the acquiror must obtain the approval of a majority of the shares
of each class or series of shares entitled to vote separately on the proposal,
excluding shares held by officers of the corporation, by employees of the
corporation who are directors thereof and by the acquiror. The Control Share
Acquisitions Statute also authorizes a corporation to redeem the shares held by
a person that exceed the ownership thresholds in the statute, provided that the
corporation's articles or bylaws authorized such a redemption prior to the date
the person acquires such shares. Our articles and bylaws do not include a
provision authorizing such a redemption. An Indiana corporation otherwise
subject to the Control Share Acquisitions Statute may elect not to be covered
by the statute by so providing in its articles of incorporation or bylaws.
Because we have not made such an election in our articles or bylaws,
acquisitions of our shares remain subject to the statute.
CERTAIN UNITED STATES TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of the common stock by
holders who are not U.S. persons (non-United States holders) and who acquire
and own the common stock as capital assets within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended (Code). For this purpose, a
"non-United States holder" is any holder that is not a "U.S. person" (as
defined below). For purposes of this discussion, the term "U.S. person" means
(i) a citizen or resident of the United States, (ii) a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision of the United
States, (iii) an estate whose income is includible in gross income for U.S.
federal income tax purposes regardless of its source, or (iv) a trust whose
administration is subject to the primary supervision of a U.S. court and which
has one or more U.S. persons who have the authority to control all substantial
decisions of the trust. This discussion does not address all aspects of U.S.
federal income and estate taxation that may be relevant in light of any non-
United States holder's particular facts and circumstances (such as being a U.S.
expatriate) and does not address any tax consequences arising under the laws of
any state, local or non-U.S. taxing jurisdiction. Furthermore, the following
discussion is based on current provisions of the Code and administrative and
judicial interpretations, all as in effect on the date of this prospectus
supplement, and all of which are subject to change, possibly with retroactive
effect. Prospective non-U.S. investors are urged to consult their tax advisors
regarding the U.S. federal, state, local and non-U.S. income, estate, and other
tax consequences of owning and disposing of the common stock.
Dividends
If we pay a dividend, the amount payable to a non-United States holder of
common stock whose income with respect to its investment in a common stock is
not effectively connected with the conduct of a U.S. trade or business
generally will be subject to U.S. withholding tax either at a rate of 30% of
the gross amount of the dividend or such lower rate as may be specified by an
applicable tax treaty. A non-United States holder who is an individual or
corporation (or an entity treated as a corporation for federal income tax
purposes) holding common stock on its own behalf will be required to submit to
the last Withholding Agent, as defined below, an Internal Revenue Service
("IRS") Form W-8BEN or other permitted documentation certifying its entitlement
to treaty relief from withholding. A "Withholding Agent" is the United States
payor
27
(or a Non-United States payor who is a qualified intermediary, U.S. branch of
foreign person, or withholding foreign partnership) in the chain of payment
prior to payment to a Non-U.S. Holder, which itself is not a Withholding Agent.
Non-United States holders should consult their tax advisors on submission of
such documentation.
Dividends received by a non-United States holder that are effectively
connected with a U.S. trade or business conducted by such non-United States
holder are exempt from withhold-ing tax provided the non-United States holder
filed IRS Form W-8ECI. However, such effectively connected dividends, net of
certain deductions and credits, are taxed at the same graduated rates
applicable to U.S. persons.
In addition to the graduated tax described above, dividends received by a
corporate non-United States holder that are effectively connected with a U.S.
trade or business of the corporate non-United States holder may also be subject
to a branch profits tax at a rate of 30% or such lower rate as may be specified
by an applicable tax treaty.
Gain on Disposition of Common Stock
A non-United States holder generally will not be subject to U.S. federal
income tax on any gain realized upon the sale or other disposition of common
stock unless: (i) such gain is effectively connected with a U.S. trade or
business of the non-United States holder, (ii) the non-United States holder is
an individual who holds common stock as a capital asset and who is present in
the United States for a period or periods aggregating 183 days or more during
the calendar year in which such sale or disposition occurs and certain other
conditions are met, or (iii) we are or have been a "United States real property
holding corporation" for federal income tax purposes at any time within the
shorter of the five-year period preceding such disposition or such holder's
holding period. Although we believe we are not and are unlikely to become a
United States real property holding corpora-tion, we may be one, or we may
become one, because of our ownership of substantial real estate assets in the
United States. If we were to be treated as a United States real property
holding company, a non-United States holder who holds, directly or indirectly,
more than 5% of our common stock will be subject to U.S. federal income
taxation on any gain realized from the sale or exchange of such stock, unless
an exemption is provided under an applicable treaty.
Backup Withholding and Information Reporting
Generally, we must report to the IRS the amount of dividends paid, the
name and address of the recipient, and the amount, if any, of tax withheld. A
similar report is sent to the holder. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.
Backup withholding (which is generally imposed at a rate of 31% on
certain payments to persons who fail to furnish certain information to the
payer) will generally not apply to dividends to which the 30% gross withholding
tax would otherwise apply, absent certification for entitlement to a reduced
withholding rate (unless the payer has knowledge that the payee is a U.S.
person). Dividends paid to a non-United States holder at an address within the
United States may be subject to backup withholding at a rate of 31% if the non-
United States holder fails to establish that it is entitled to an exemption or
to provide a correct taxpayer identification number and other information to
the payer.
Generally, the payment of the proceeds of the disposition of common stock
to or through the U.S. office of a broker is subject to information reporting
and backup withholding at a rate of 31% unless the holder certifies its non-
U.S. status on IRS Form W-8BEN or similar form or otherwise establishes an
exemption. A U.S. holder that certifies its U.S. status by providing a valid
IRS Form W-9 will not be subject to backup withholding.
28
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
Estate Tax
Individual non-United States holders who own common stock at the time of
their deaths or made certain lifetime transfers of interests in common stock
will be required to include the value of such common stock in their gross
estates for U.S. federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL FEDERAL INCOME AND
ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER DISPOSITION OF COMMON
STOCK BY NON-UNITED STATES HOLDERS. ACCORDINGLY, INVESTORS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE INCOME TAX CONSEQUENCES OF THE
OWNER-SHIP AND DISPOSITION OF COMMON STOCK, INCLUDING THE APPLICATION AND
EFFECT OF THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX-ING JURISDICTION.
29
UNDERWRITING
We intend to offer the shares of common stock through the underwriters
named below, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is
acting as representative. Subject to the terms and conditions described in a
purchase agreement among us and the underwriters, we have agreed to sell to the
underwriters, and the underwriters severally have agreed to purchase from us,
the number of shares listed opposite their names below.
Number
Underwriter of Shares
----------- ---------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................
Credit Suisse First Boston Corporation...........................
A.G. Edwards & Sons, Inc.........................................
Edward D. Jones & Co., L.P.......................................
UBS Warburg LLC..................................................
-------
Total.......................................................
=======
The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of these shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the underwriters may be required to make in respect of those liabilities.
Certain of the underwriters will be facilitating Internet distribution
for this offering to some Internet subscription customers. These underwriters
may allocate a limited number of shares for sale to their respective online
brokerage customers. An electronic prospectus is available on the Web sites
maintained by these underwriters. Other than the prospectus in electronic
format, the information on these Web sites relating to this offering is not a
part of this prospectus.
The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreement, such as the receipt by the underwriters of
officer's certificates and legal opinions. The underwriters reserve the right
to withdraw, cancel or modify offers to the public and to reject orders in
whole or in part.
Commissions and Discounts
The representative has advised us that the underwriters propose initially
to offer the shares to the public at the initial public offering price on the
cover page of this prospectus and to dealers at that price less a concession
not in excess of $ per share. The underwriters may allow, and the dealers
may reallow, a discount not in excess of $ per share to other dealers. After
the initial public offering, the public offering price, concession and discount
may be changed.
30
The following table shows the public offering price, underwriting
discount and proceeds before expenses to us. The information assumes either no
exercise or full exercise by the underwriters of their over-allotment option.
Per Share Without Option With Option
--------- -------------- -----------
Public offering price............. $ $ $
Underwriting discount............. $ $ $
Proceeds, before expenses, to
Vectren.......................... $ $ $
The expenses of the offering, not including the underwriting discount,
are estimated at $425,000 and are payable by us.
Over-allotment Option
We have granted an option to the underwriters to purchase up to 825,000
additional shares at the public offering price less the underwriting discount.
The underwriters may exercise this option for 30 days from the date of this
prospectus solely to cover any over-allotments. If the underwriters exercise
this option, each will be obligated, subject to conditions contained in the
purchase agreement, to purchase a number of additional shares proportionate to
that underwriter's initial amount reflected in the above table.
No Sale of Similar Securities
We, our directors, our executive officers and certain of our stockholders
have agreed, with exceptions, including the grant of options or shares of
common stock pursuant to the At Risk Compensation Plan, not to sell or
transfer any common stock for 90 days after the date of this prospectus
without first obtaining the written consent of the representative.
Specifically, we and these other individuals have agreed not to directly or
indirectly
. offer, pledge, sell or contract to sell any common stock,
. sell any option or contract to purchase any common stock,
. purchase any option or contract to sell any common stock,
. grant any option, right or warrant for the sale of any common stock,
. lend or otherwise dispose of or transfer any common stock,
. request or demand that we file a registration statement related to the
common stock, or
. enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of any common stock,
whether any such swap or transaction is to be settled by delivery of
shares or other securities, in cash or otherwise.
This lockup provision applies to common stock and to securities
convertible into or exchangeable or exercisable for or repayable with common
stock. It also applies to common stock owned now or acquired later by the
person executing the agreement or for which the person executing the agreement
later acquires the power of disposition.
New York Stock Exchange Listing
Our shares of common stock are traded on the New York Stock Exchange
under the symbol "VVC."
31
Price Stabilization and Short Position
Until the distribution of the shares offered hereby is completed, SEC
rules may limit the underwriters and selling group members from bidding for or
purchasing our common stock. However, the representative may engage in
transactions that stabilize the price of our common stock, such as bids or
purchases that peg, fix or maintain that price.
If the underwriters create a short position in the common stock in
connection with the offering, i.e., if they sell more shares than are listed on
the cover page of this prospectus, the representative may reduce that short
position by purchasing shares in the open market. The representative may also
elect to reduce any short position by exercising all or part of the over-
allotment option described above. Purchases of the common stock to stabilize
its price or to reduce a short position may cause the price of the common stock
to be higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the representative
will engage in these transactions or that these transactions, once commenced,
will not be discontinued without notice.
Other Relationships
Some of the underwriters and their affiliates have engaged in, and may in
the future engage in, investment banking and other commercial dealings in the
ordinary course of business with us and our affiliates. They have received
customary fees and commissions for these previous transactions.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Barnes & Thornburg, Indianapolis, Indiana. Certain legal matters
will be passed upon for the underwriters by Brown & Wood llp, New York, New
York.
EXPERTS
The audited consolidated financial statements of Vectren as of December
31, 1999 and 1998 and for each of the years in the three year period ended
December 31, 1999 incorporated by reference in this prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
The audited financial statements of Dayton Power's natural gas retail
distribution business as of December 31, 1999 and for the year then ended
incorporated in this prospectus by reference to Vectren Corporation's Current
Report on Form 8-K dated January 16, 2001 have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
32
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. Our filings are available on the SEC's web
site at http://www.sec.gov. You may also read and copy this information at the
following locations of the SEC:
Public Reference 7 World Trade Citicorp Center
Room Center 500 West Madison
450 Fifth Street, Suite 1300 Street
N.W. New York, New York Suite 1400
Washington, D.C. 10048 Chicago,
20549 Illinois 60661
You can obtain copies of this information by mail from the Public Reference
Room of the SEC, 450 Fifth Street, N.W., Room 10024, Washington D.C. 20549, at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at (800) SEC-0330. Our filings are also
available at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
Our common stock is listed on the New York Stock Exchange and you can
inspect reports, proxy statements and other information about us at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York
10005.
We have filed with the SEC a registration statement on Form S-3 that
registers the securities we are offering. The registration statement, including
the attached exhibits and schedules, contains additional relevant information
about us and the securities offered. The rules and regulations of the SEC allow
us to omit certain information included in the registration statement from this
prospectus.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information that
is contained or otherwise incorporated by reference in this prospectus.
This prospectus includes by reference the documents listed below that we
have previously filed with the SEC and that are not included in or delivered
with this document and any future filings we make with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 (i) between
the date of this preliminary prospectus and prior to the effectiveness of the
registration statement that registers the securities we are offering and (ii)
until the termination of the offering being made by this prospectus. Our
Commission File No. is 1-15467.
. Annual Report on Form 10-K for the year ended December 31, 1999;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
. Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;
. Quarterly Report on Form 10-Q for the quarter ended September 30,
2000;
. Amendment to Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000;
. Current Report on Form 8-K filed on March 24, 2000;
. Current Report on Form 8-K filed on April 14, 2000;
. Current Reports on Form 8-K filed on April 27, 2000 (two filings);
. Current Report on Form 8-K filed on May 31, 2000;
33
. Current Report on Form 8-K filed on July 11, 2000;
. Current Report on Form 8-K filed on July 28, 2000;
. Current Report on Form 8-K filed on November 15, 2000;
. Current Report on Form 8-K filed on December 15, 2000;
. Current Report on Form 8-K filed on December 22, 2000;
. Current Report on Form 8-K filed on December 27, 2000;
. Current Reports on Form 8-K filed on January 5, 2001 (two filings);
. Current Report on Form 8-K filed on January 16, 2001;
. Current Report on Form 8-K filed on January 25, 2001;
. Current Report on Form 8-K filed on January 30, 2001;
. The description of our common stock contained in our registration
statement on Form 8-A filed on November 16, 1999; and
. The description of our common stock purchase rights contained in our
registration statement on Form 8-A filed on November 16, 1999.
You can obtain any of the documents incorporated by reference in this
document from us without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit to
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
Investor Relations
Vectren Corporation
20 N.W. Fourth Street
Evansville, Indiana 47741
(812) 491-4000
34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5,500,000 Shares
Vectren Corporation
[LOGO OF VECTREN]
Common Stock
(and Common Stock Purchase Rights)
--------------
PROSPECTUS
--------------
Merrill Lynch & Co.
Credit Suisse First Boston
A.G. Edwards & Sons, Inc.
Edward D. Jones & Co., L.P.
UBS Warburg LLC
, 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The aggregate estimated expenses, other than underwriting discounts and
commissions, in connection with the offering pursuant to this registration
statement are currently anticipated to be as follows:
Registration Fee................................................ $ 36,813
New York Stock Exchange Filing Fee.............................. 21,875
NASD Filing Fee................................................. 15,225
Printing and Engraving Expenses*................................ 125,000
Legal Fees and Expenses*........................................ 100,000
Accounting Fees and Expenses*................................... 100,000
Miscellaneous*.................................................. 26,087
--------
Total*...................................................... $425,000
========
- --------
*Estimated.
Item 15. Indemnification of Directors and Officers.
The Vectren Articles and the Vectren bylaws provide that Vectren will
indemnify any individual who is or was a director or officer of Vectren, or is
or was serving at the request of Vectren as a director, officer, partner or
trustee of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise whether or not for profit,
against liability and expenses, including attorneys fees, incurred by him in
any action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, and whether formal or informal, in which he is made or
threatened to be made a party by reason of being or having been in any such
capacity, or arising out of his status as such, except (i) in the case of any
action, suit, or proceeding terminated by judgment, order, or conviction, in
relation to matters as to which he is adjudged to have breached or failed to
perform the duties of his office and the breach or failure to perform
constituted willful misconduct or recklessness; and (ii) in any other
situation, in relation to matters as to which it is found by a majority of a
committee composed of all directors not involved in the matter in controversy
(whether or not a quorum) that the person breached or failed to perform the
duties of his office and the breach or failure to perform constituted willful
misconduct or recklessness. Vectren may pay for or reimburse reasonable
expenses incurred by a director or officer in defending any action, suit, or
proceeding in advance of the final disposition thereof upon receipt of (i) a
written affirmation of the director's or officer's good faith belief that such
director or officer has met the standard of conduct prescribed by Indiana law;
and (ii) an undertaking of the director or officer to repay the amount paid by
Vectren if it is ultimately determined that the director or officer is not
entitled to indemnification by Vectren.
The Vectren Articles and the Vectren bylaws provide that the indemnification
rights described above are in addition to any other indemnification rights a
person may have by law. The employment agreements with its executive officers
will require Vectren to indemnify the executive officers in accordance with its
indemnification policies for its senior executives, subject to applicable law.
Section 23-1-37 et seq. of the IBCL provides for "mandatory
indemnification," unless limited by the articles, by a corporation against
reasonable expenses incurred by a director who is wholly successful, on the
merits or otherwise, in the defense of any proceeding to which the director was
a party by reason of the director being or having been a director of the
corporation. Section 23-1-37-10 of the IBCL states that a corporation may, in
advance of the final disposition of a proceeding, reimburse reasonable expenses
incurred by a director who is a party to a proceeding if the director furnishes
the corporation with a written affirmation of the director's good faith belief
that the director acted in good faith and reasonably believed the actions were
in the best interest of the corporation (or if the actions are not in an
official capacity, the actions were not opposed to the best interests of the
corporation) if the proceeding is a civil proceeding. If the proceeding is
criminal, the
II-1
director must furnish a written affirmation that the director had reasonable
cause to believe he or she was acting lawfully or the director or officer had
no reason to believe the action was unlawful. The director must undertake to
repay the advance if it is ultimately determined that such director did not
meet the standard of conduct required by the IBCL. In addition, those making
the decision to reimburse the director must determine that the facts then known
would not preclude indemnification under the IBCL.
The IBCL permits a corporation to grant indemnification rights in addition
to those provided by statute, limited only by the fiduciary duties of the
directors approving the indemnification and public policies of the State of
Indiana.
Item 16. Exhibits.
Number Description
------ -----------
1.1 Form of Purchase Agreement
2.1 Agreement and Plan of Merger dated as of June 11, 1999
among Indiana Energy, Inc., SIGCORP, Inc. and Vectren
Corporation (the "Merger Agreement") (Incorporated by
reference to Exhibit 2 to Registrant's Form S-4
(Registration No. 333-90763) filed on November 12, 1999)
2.2 Amendment No. 1 to the Merger Agreement dated December 14,
1999 (Incorporated by reference to Exhibit 2 to Indiana
Energy, Inc.'s (Commission File No. 1-09091) Current
Report on Form 8-K filed on December 16, 1999)
2.3 Asset Purchase Agreement dated December 14, 1999 between
Indiana Energy, Inc. and The Dayton Power and Light
Company and Number-3CHK with a commitment letter for a
364-Day Credit Facility dated December 16, 1999
(Incorporated by reference to Exhibit 2 and 99.1 of
Indiana Energy, Inc.'s Current Report on Form 8-K dated
December 28, 1999.)
4.1 Amended and Restated Articles of Incorporation of Vectren
Corporation effective March 31, 2000 (Incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K
of Registrant filed on April 14, 2000)
*4.2 Code of By-Laws of Vectren Corporation
4.3 Shareholders Rights Agreement dated as of October 21, 1999
between Vectren Corporation and Equiserve Trust Company,
N.A., as Rights Agent (Incorporated by reference to
Exhibit 4 to Registrant's Form S-4 (Registration No. 333-
90763) filed on November 12, 1999)
*5.1 Opinion of Barnes and Thornburg
23.1 Consent of Arthur Andersen LLP
23.2 Consent of PricewaterhouseCoopers LLP
*23.3 Consent of Barnes and Thornburg (included in Exhibit 5.1)
*24.1 Power of Attorney
- --------
*Previously filed with the Form S-3 to which this Amendment No. 1 relates on
January 19, 2001.
Item 17. Undertakings.
The undersigned hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities, other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding, is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by itself is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(3) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(4) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Evansville, State of Indiana, on
January 30, 2001.
Vectren Corporation
/s/ Ronald E. Christian
By: _________________________________
Ronald E. Christian, Senior Vice
President, Secretary and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to this registration statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
(1) Principal Executive Officer
/s/ Niel C. Ellerbrook Chairman and Chief Executive January 30, 2001
____________________________________ Officer
Niel C. Ellerbrook
(2) Principal Financial Officer
/s/ Jerome A. Benkert Executive Vice President and January 30, 2001
____________________________________ Chief Financial Officer
Jerome A. Benkert
(3) Principal Accounting Officer
/s/ M. Susan Hardwick Vice President and January 30, 2001
____________________________________ Controller
M. Susan Hardwick
(4) A Majority of the Board of Directors
/s/ Ronald E. Christian* Director
____________________________________
John M. Dunn
/s/ Ronald E. Christian* Director
____________________________________
Niel C. Ellerbrook
/s/ Ronald E. Christian* Director January 30, 2001
____________________________________
John D. Englebrecht
/s/ Ronald E. Christian* Director
____________________________________
Lawrence A. Ferger
/s/ Ronald E. Christian* Director
____________________________________
Anton H. George
II-4
Signature Title Date
--------- ----- ----
/s/ Ronald E. Christian* Director
____________________________________
Andrew E. Goebel
/s/ Ronald E. Christian* Director
____________________________________
Robert L. Koch II
/s/ Ronald E. Christian* Director
____________________________________
William G. Mays
/s/ Ronald E. Christian* Director
____________________________________
J. Timothy McGinley
/s/ Ronald E. Christian* Director
____________________________________
Donald A. Rausch
/s/ Ronald E. Christian* Director January 30, 2001
____________________________________
Richard P. Rechter
/s/ Ronald E. Christian* Director
____________________________________
Ronald G. Reherman
/s/ Ronald E. Christian* Director
____________________________________
James C. Shook
/s/ Ronald E. Christian* Director
____________________________________
Richard W. Shymanski
/s/ Ronald E. Christian* Director
____________________________________
James S. Vinson
/s/ Ronald E. Christian* Director
____________________________________
Jean L. Wojtowicz
*The undersigned, Ronald E. Christian, executes this Amendment No. 1 as
attorney-in-fact of the persons designated above.
/s/ Ronald E. Christian
____________________________________
Ronald E. Christian
II-5
EXHIBIT INDEX
Number Description
------ -----------
1.1 Form of Purchase Agreement
2.1 Agreement and Plan of Merger dated as of June 11, 1999
among Indiana Energy, Inc., SIGCORP, Inc. and Vectren
Corporation (the "Merger Agreement") (Incorporated by
reference to Exhibit 2 to Registrant's Form S-4
(Registration No. 333-90763) filed on November 12, 1999)
2.2 Amendment No. 1 to the Merger Agreement dated December 14,
1999 (Incorporated by reference to Exhibit 2 to Indiana
Energy, Inc.'s (Commission File No. 1-09091) Current Report
on Form 8-K filed on December 16, 1999)
2.3 Asset Purchase Agreement dated December 14, 1999 between
Indiana Energy, Inc. and The Dayton Power and Light Company
and Number -3CHK with a commitment letter for a 364-Day
Credit Facility dated December 16, 1999 (Incorporated by
reference to Exhibit 2 and 99.1 of Indiana Energy, Inc.'s
Current Report on Form 8-K dated December 28, 1999.)
4.1 Amended and Restated Articles of Incorporation of Vectren
Corporation effective March 31, 2000 (Incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-K
of Registrant filed on April 14, 2000)
*4.2 Code of By-Laws of Vectren Corporation
4.3 Shareholders Rights Agreement dated as of October 21, 1999
between Vectren Corporation and Equiserve Trust Company,
N.A., as Rights Agent (Incorporated by reference to Exhibit
4 to Registrant's Form S-4 (Registration No. 333-90763)
filed on November 12, 1999)
*5.1 Opinion of Barnes and Thornburg
23.1 Consent of Arthur Andersen LLP
23.2 Consent of PricewaterhouseCoopers LLP
*23.3 Consent of Barnes and Thornburg (included in Exhibit 5.1)
*24.1 Power of Attorney
- --------
*Previously filed with the Form S-3 to which this Amendment No. 1 relates on
January 19, 2001.