EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratios)
Twelve
Months Ended
March 31, Year Ended December 31
2001(1) 2000(1) 1999
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Earnings:
Net income $17,505 $11,209 $29,742
Income taxes 7,185 7,251 16,734
Fixed charges (see below) 27,916 22,740 17,691
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Total adjusted earnings $52,606 $41,200 $64,167
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Fixed charges:
Total interest expense $27,585 $22,409 $16,969
Interest component of rents 331 331 722
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Total fixed charges $27,916 $22,740 $17,691
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Ratio of earnings to fixed
charges 1.9 1.8 3.6
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Year Ended December 31
1998 1997(2) 1996
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Earnings:
Net income $26,825 $13,648 $36,121
Income taxes 14,058 7,813 21,637
Fixed charges (see below) 16,133 17,782 17,154
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Total adjusted earnings $57,016 $39,243 $74,912
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Fixed charges:
Total interest expense $15,802 $17,049 $16,200
Interest component of rents 331 733 954
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Total fixed charges $16,133 $17,782 $17,154
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Ratio of earnings to fixed charges 3.5 2.2 4.4
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(1) Merger and integration related costs incurred for the
twelve months ended March 31, 2001 and for the year
ended December 31, 2000 totaled $3.7 million and $16.8
million, respectively. These costs relate primarily to
transaction costs, severance and other merger and
acquisition integration activities.
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. These information system assets
are owned by a wholly owned subsidiary of Vectren and
the fees allocated by the subsidiary for the use of
these systems by Indiana Gas are reflected in operation
and maintenance expenses in the accompanying financial
statements. As a result of the shortened useful lives,
additional fees were incurred by Indiana Gas. For the
twelve months ended March 31, 2001 and for the year
ended December 31, 2000, these additional fees
increased operation and maintenance $14.6 million and
$11.4 million, respectively.
In total, merger and integration related costs incurred
for the twelve months ended March 31, 2001 and for the
year ended December 31,2000 were $18.5 million ($12.4
million after tax) and $28.2 million ($19.5 million
after tax), respectively. Before merger and
integration charges, Indiana Gas' ratio of earnings to
fixed charges for the twelve months ended March 31,
2001 was 2.3 and for the year ended December 31, 2000
was 2.7.
(2) 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. Indiana Gas' ratio of earnings to fixed
charges for 1997 before restructuring costs was 4.4.