SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
- -
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
__TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
----
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission Registrant, State of Incorporation; IRS Employer
File Number Address and Telephone Number Identification No.
----------- ---------------------------- ------------------
1-6494 Indiana Gas Company, Inc. 35-0793669
(An Indiana Corporation)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(812) 491-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Registrant Title of each class on which registered
- ---------------------------- --------------------- ----------------------
None None None
Securities registered pursuant to Section 12(g) of the Act:
None
- -------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) have been subject to such filing
requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X.
Indicate the number shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Common Stock- Without Par Value 482.41561 March 21, 2001
- ------------------------------- --------- --------------
Class Number of shares Date
Documents Incorporated by Reference
Information in the company's Current Report on Form 8-K which was filed with the
Securities and Exchange Commission on March 29, 2001, regarding gas cost
adjustment proceedings, is incorporated by reference in this Form 10-K.
Table of Contents
Item Page
Number Number
7 Management's Discussion and Analysis
of Financial Condition and Results of Operations 3
8 Financial Statements and Supplementary Data 10
14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 29
Signatures 32
3
Item 7. Management's Discussion and Analysis of FINANCIAL CONDITION AND Results
of Operations
Results of Operations
Net income was $11.2 million for the year ended December 31, 2000. Net income
before merger and integration costs of $28.2 million ($19.5 million after tax),
including $11.4 million of additional operations and maintenance expenses
related to the shortened useful lives of certain information systems to be
retired in 2001 (see merger and integration costs below), was $30.7 million for
the year ended December 31, 2000, as compared to net income of $29.7 million and
$26.8 million for 1999 and 1998, respectively.
Margin (Operating Revenues Less Cost of Gas)
Gas margin increased $3.1 million to $207.6 million, or 2 percent, compared to
the twelve-month period in 1999. The increase reflects 7 percent (8.1 MMDth)
greater throughput (combined sales and transportation) due to much colder
temperatures during the fourth quarter of 2000 than during the fourth quarter of
1999. Although temperatures were 4 percent warmer than normal, temperatures
during 2000 were 11 percent colder than 1999 temperatures. Additionally, Indiana
Gas increased its customer base by 2 percent during 2000. These favorable
impacts caused residential and commercial sales to rise 7 percent and 10
percent, respectively.
In 1999, utility margin was $204.5 million, as compared to $188.6 million for
the prior year. The 1999 increase is primarily attributable to weather being 8
percent colder than the previous year, and the addition of new residential and
commercial customers.
Total cost of gas sold was $390.5 million in 2000, $226.8 million in 1999 and
$231.9 million in 1998. Total cost of gas sold increased $163.7 million, or 72
percent, for the year ended December 31, 2000 compared to 1999, primarily due to
significantly higher average per unit purchased gas costs. The total average
cost per Dth of gas purchased was $5.77 in 2000, compared to $3.01 in 1999. The
price changes are due primarily to changing commodity costs in the marketplace.
Decreases in the average per unit cost of gas sold in 1999 as compared to 1998
more than offset the impact of the increased throughput, causing an overall
decrease in costs of gas sold in 1999 compared to 1998.
Indiana Gas' rates for transportation generally provide the same margins as are
earned on the sale of gas under its sales tariffs. Approximately one-half of
total system throughput represents gas used for space heating and is affected by
weather.
Operating Expenses
Indiana Gas operation and maintenance expense increased $8.0 million, or 9
percent, for the year ended December 31, 2000, compared to 1999. The increase is
primarily attributable to increased fees from a wholly owned subsidiary of
Vectren to reflect the shortened useful lives of certain information systems in
use by Indiana Gas (see merger and integration costs below).
Operations and maintenance expenses increased $5.9 million, or 7 percent, for
1999 as compared to 1998. This increase is primarily due to expenses associated
with new customer information and work management systems and rental expense
related to buildings previously owned.
Depreciation and amortization increased $2.1 million, or 6 percent, and $1.8
million, or 5 percent, for the years ended December 31, 2000 and 1999,
respectively. The increases reflect depreciation of normal additions of utility
plant.
Federal and state income taxes declined $9.5 million in 2000, compared to 1999
due primarily to $28.9 million lower pre-tax earnings, partially offset by a
higher effective tax rate resulting from the non-deductibility of certain costs.
Federal and state income taxes increased $2.7 million, or 19 percent during 1999
compared to 1998 due primarily to higher pre-tax income in 1999.
5
Taxes other than income taxes for 2000 were comparable to 1999 and increased in
1999 compared to 1998 by approximately $1.8 million due to higher property tax
expense.
Merger and Integration Costs
Merger and integration costs incurred for the year ended December 31, 2000
totaled $16.8 million. 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 will be
substantially completed in 2001. Merger costs are reflected in the financial
statements of the operating subsidiaries in which merger savings are expected to
be realized.
Of the $16.8 million of merger and integration costs incurred in 2000 by Indiana
Gas, accruals were established at March 31, 2000 totaling $11.9 million. Of this
amount, $4.8 million related to employee and executive severance, $5.0 million
related to transaction costs and filing fees, and the remaining $2.1 million
related to employee relocation that occurred coincident with the merger closing.
At December 31, 2000, the accrual remaining for such costs totaled $1.3 million,
all related to severance costs. Of the total $16.8 million, the remaining $4.9
million was expensed throughout the remainder of the year for accounting fees
resulting from merger related filing requirements, consulting fees related to
integration activities such as organization structure, employee travel between
company locations as part of integration activities, internal labor of employees
assigned to integration teams, and investor relations communications activities.
During the merger planning process, approximately 81 positions were identified
for elimination. As of December 31, 2000, approximately 35 positions had been
vacated, with the remaining 46 positions to be eliminated in 2001.
The integration activities experienced by the company included such things as
information system consolidation, process review and definition, organization
design and consolidation, and knowledge sharing.
As a result of merger integration activities, Vectren management has identified
certain information systems, which 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 during 2000, resulting in an
increase in operation and maintenance expense of $11.4 million.
In total, merger and integration costs were $28.2 million, or $19.5 million
after tax, in 2000.
Equity in Earnings of Unconsolidated Investments
As described in Note 2 of the financial statements included in Item 8 Financial
Statements and Supplementary Data, Indiana Gas has a 47 percent undivided
interest in the Ohio operations acquired by Vectren on October 31, 2000. Equity
in earnings of unconsolidated investments represents Indiana Gas' portion of the
Ohio operations' net income since acquisition.
Interest Expense
Interest expense for the twelve month period in 2000 increased $5.4 million, or
32 percent, compared to 1999. The increase was due primarily to increased
working capital requirements resulting from higher natural gas prices, interest
related to financing the acquisition of the Ohio operations, and higher average
interest rates on utility debt and short-term borrowings. Interest expense for
1999 increased $1.2 million, or 7 percent, compared to 1998 due to increased
average debt outstanding during the year and higher interest rates.
6
Rate and Regulatory Matters
Commodity prices for natural gas purchases during the last six months of 2000
unexpectedly increased significantly, primarily due to the expectation of a
colder winter, which led to increased demand and tighter supplies. Indiana Gas
is allowed full recovery of such charges in purchased gas costs from their
retail customers through commission-approved gas cost adjustment mechanisms, and
margin on gas sales should not be impacted. In 2001, Indiana Gas may experience
higher working capital requirements, increased expenses, including unrecoverable
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 regular quarterly
GCA. In early December, the IURC issued an interim order approving the request
by Indiana Gas for a GCA factor for December 2000. On January 4, 2001, the IURC
approved the January and February 2001 GCA as filed. The order also addressed
the claim by the OUCC that a portion of the requested GCA 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 gas procurement practices that it had employed over the
last several years. In response to the claim by the OUCC, the IURC found that
there should be a $3.8 million disallowance related to gas procurement for the
winter season. As a result, Indiana Gas recognized a pre-tax charge of $3.8
million in December 2000. Both Indiana Gas and the OUCC have appealed this
ruling. The Citizens Action Coalition of Indiana, Inc., a not for profit
consumer advocate, has also filed with the IURC a petition to intervene and a
notice of appeal of the order.
In March 2001, Vectren, Indiana Gas and SIGECO reached agreement with the
Indiana Office of Utility Consumer Counselor (OUCC) and The Citizens Action
Coalition of Indiana, Inc. (CAC) regarding the IURC Order.
As part of the agreement, among other things, Indiana Gas agreed to contribute
an additional $1.2 million to the State of Indiana's Low Income Heating
Assistance Program in 2001 and to credit $3.3 million of the $3.8 million
disallowed amount to Indiana Gas customers' April 2001 utility bills in exchange
for both the OUCC and the CAC dropping their appeals of the IURC Order. The
contributions to Indiana's Low Income Heating Assistance Program totaling $1.2
million were made in 2001 and were charged to other-net in 2001. There was no
impact to 2000 results of operations as a result of these contributions.
For further information on the agreement refer to Indiana Gas' Current Report on
Form 8-K dated March 29, 2001.
Environmental Matters
In the past, Indiana Gas and others operated facilities for the manufacture of
gas. Given the availability of natural gas transported by pipelines, these
facilities have not been operated for many years. Under currently applicable
environmental laws and regulations, Indiana Gas and others may now be required
to take remedial action if certain byproducts are found above the regulatory
thresholds at these sites.
Indiana Gas has identified the existence, location and certain general
characteristics of 26 gas manufacturing and storage sites for which it may have
some remedial responsibility. Indiana Gas has completed a remedial
investigation/feasibility study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and IDEM, and a Record of Decision was issued by IDEM
in January 2000. Although Indiana Gas has not begun an RI/FS at additional
sites, Indiana Gas has submitted several of the sites to the IDEM's Voluntary
Remediation Program (VRP) and is currently conducting some level of remedial
activities including groundwater monitoring at certain sites where deemed
appropriate and will continue remedial activities at the sites as appropriate
and necessary.
In conjunction with data compiled by expert consultants, Indiana Gas has accrued
the estimated costs for further investigation, remediation, groundwater
monitoring and related costs for the sites. While the total costs that may be
incurred in connection with addressing these sites cannot be determined at this
time, Indiana Gas has accrued costs that it reasonably expects to incur totaling
approximately $20.3 million.
7
The estimated accrued costs are limited to Indiana Gas' proportionate share of
the remediation efforts. Indiana Gas has arrangements in place for 19 of the 26
sites with other potentially responsible parties, which serve to limit Indiana
Gas' share of response costs at these 19 sites to between 20 and 50 percent.
With respect to insurance coverage, as of December 31, 2000, Indiana Gas has
received and recorded settlements from all known insurance carriers in an
aggregate amount approximating its $20.3 million accrual.
Environmental matters related to manufactured gas plants have had no material
impact on earnings since costs recorded to date approximate PRP and insurance
settlement recoveries. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with activities at these sites, it is
possible that future events may require some level of additional remedial
activities which are not presently foreseen.
New Accounting Standard
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), which
requires that every derivative instrument be recorded on the balance sheet as an
asset or liability measured at its fair value and that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.
SFAS 133, as amended, is effective for fiscal years beginning after June 15,
2000 and must be applied to derivative instruments and certain derivative
instruments embedded in hybrid contracts that were issued, acquired or
substantively modified after December 31, 1998. Indiana Gas has completed the
process of identifying all derivative instruments, determining fair market
values of these derivatives, designating and documenting hedge relationships,
and evaluating the effectiveness of those hedge relationships. As a result of
the successful completion of this process, Indiana Gas adopted SFAS 133 as of
January 1, 2001.
SFAS 133 requires that as of the date of initial adoption, the difference
between the fair market value of derivative instruments recorded on the balance
sheet and the previous carrying amount of those derivatives be reported in net
income or other comprehensive income, as appropriate, as the cumulative effect
of a change in accounting principle in accordance with APB 20, "Accounting
Changes."
As of the date of adoption, Indiana Gas was not engaged in any financial
instruments affected by this statement; therefore, there was no impact on
adoption.
Liquidity and Capital Resources
Indiana Gas' capitalization objectives are 40-55 percent permanent
capitalization. This objective may have varied, and will vary, from time to
time, depending on particular business opportunities and seasonal factors that
affect the company's operation. Indiana Gas' common equity component was 45
percent and 54 percent of its total capitalization, including current maturities
of long-term debt, at December 31, 2000 and 1999, respectively.
Short-term cash working capital is required primarily to finance customer
accounts receivable, unbilled utility revenues resulting from cycle billing, gas
in underground storage, prepaid gas delivery services, capital expenditures and
investments until permanently financed. Short-term borrowings tend to be
greatest during the summer when revenues are lowest and gas storage facilities
are being refilled. During 2000, however, short-term borrowings related to
working capital requirements were greatest during the last six months of the
year due to the higher natural gas costs and the investment in the Ohio
operations.
Cash Flow from Operations
Cash from operations decreased during 2000 as compared to 1999 by approximately
$74.3 million. The decrease is primarily attributable to merger and integration
costs causing lower net income, increased recoverable natural gas costs and
increased working capital requirements resulting from higher natural gas costs.
The decrease in 1999 cash flow from operations as compared to 1998 of
approximately $28.9 million is primarily attributable to fluctuations in prepaid
gas delivery services and other changes in working capital accounts.
8
Capital Expenditures and Other Investing Activities
Cash required for investing activities of $275.8 million for the year ended
December 31, 2000 include, among other things, approximately $218 million
required for the investment in the Ohio operations and $62.4 million of capital
expenditures. This is an increase of $213.4 million over prior year due
primarily to the investment in the Ohio operations.
Cash required for investing activities in 1999 increased $16.7 million over 1998
requirements due primarily to additional expenditures for normal replacements
and improvements of gas utility systems. Additionally, capital expenditures for
1998 were offset by the sale of an office building for proceeds of $9.2 million.
New construction and normal system maintenance and improvements needed to
provide service to a growing customer base will continue to require substantial
expenditures. Capital expenditures for the five year period 2001 - 2005 are as
follows:
In millions 2001 2002 2003 2004 2005 Total
------ ------ ------ ------ ------ -------
Capital expenditures $ 47.7 $ 46.6 $ 47.5 $ 47.7 $ 49.0 $ 238.5
Financing Activities
Cash flow from financing activities of $313.7 million for the year ended
December 31, 2000 includes $340.8 million of additional net borrowings offset by
$26.3 million of dividends on shares of common stock. This is an increase of
$287.3 million over prior year due primarily to funding the investment in the
Ohio operations and increased working capital requirements. Indiana Gas'
investment in the Ohio operations of approximately $218 million was funded with
a combination of short-term borrowings from VUHI and Indiana Gas' commercial
paper program. These short-term borrowings will be replaced over time with
permanent financing.
Cash flow from financing activities in 1999 increased $47.3 million compared to
1998. The change is primarily the result of increased short-term borrowings.
In December 2000, Indiana Gas filed a prospectus with the SEC with respect to
the issuance of $70 million in debt securities. On December 28, 2000, $20
million of 15-Year Insured Quarterly (IQ) Notes bearing interest at a rate of
7.15 percent per year and $50 million of 30-Year IQ Notes bearing interest at a
rate of 7.45 percent per year were issued. The 15-Year IQ Notes will mature on
December 15, 2015, and 30-Year IQ Notes will mature on December 16, 2030,
unless, in each case, redeemed prior to that date. Indiana Gas will have the
option to redeem the 15-Year IQ Notes, in whole or in part, from time to time on
or after December 15, 2004. Indiana Gas will have the option to redeem the
30-Year IQ Notes in whole or in part, from time to time on or after December 15,
2005. The net proceeds of the debt issuance were used to repay outstanding
commercial paper.
Provisions under which certain of Indiana Gas' Series E notes were issued
entitle the holders of $25.0 million of these notes to put the debt back to
Indiana Gas at face value at certain specified dates before maturity beginning
in 2000. Long-term debt subject to the put provisions during the five years
following 2000 (in millions) is $0 in 2001, $6.5 in 2002, $0 in 2003, $3.5 in
2004 and $10.0 in 2005. During 2000, put provisions on $5.0 million of the notes
were not exercised.
Indiana Gas' credit rating on outstanding debt at December 31, 2000 was A/A2.
Indiana Gas' commercial paper retains an A-1/P-1 rating.
At December 31, 2000, Indiana Gas had $155 million of short-term borrowing
capacity for use in its operations, of which approximately $20 million was
available.
At December 31, 2000, Indiana Gas is not in compliance with the total
indebtedness to capitalization ratio contained in its back up credit facility
for its commercial paper program. The non-compliance resulted from the
indebtedness incurred to purchase its ownership interest in the Ohio operations.
A waiver on the Indiana Gas facility has been obtained to waive the
non-compliance through and including March 31, 2001. Vectren will make an equity
investment in Indiana Gas to bring Indiana Gas back into compliance. No amount
is outstanding under the back up facility.
9
Maturities and sinking fund requirements on long-term debt subject to mandatory
redemption during the five years following 2000 are (in millions): $0 in 2001,
$0 in 2002, $15.0 in 2003 and $15.0 in 2004, and $0 in 2005.
Forward Looking Information
A "safe harbor" for forward-looking statements is provided by the Private
Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of
1995 was adopted to encourage such forward-looking statements without the threat
of litigation, provided those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying important
factors that could cause the actual results to differ materially from those
projected in the statement. Certain matters described in Management's Discussion
and Analysis of Results of Operations and Financial Condition, including, but
not limited to Vectren's realization of net merger savings and ProLiance, are
forward-looking statements. Such statements are based on management's beliefs,
as well as assumptions made by and information currently available to
management. When used in this filing, the words "believe," "anticipate,"
"endeavor," "estimate," "expect," "objective," "projection," "forecast," "goal,"
and similar expressions are intended to identify forward-looking statements. In
addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements, factors that could cause
Indiana Gas' actual results to differ materially from those contemplated in any
forward-looking statements included, among others, the following:
|X| Factors affecting utility operations such as unusual weather conditions;
catastrophic weather-related damage; unusual maintenance or repairs;
unanticipated changes to gas supply costs, or availability due to higher
demand, shortages, transportation problems or other developments;
environmental or pipeline incidents; transmission or distribution
incidents; unanticipated changes to energy supply costs, or availability
due to demand, shortages, transmission problems or other developments; or
gas pipeline system constraints.
|X| Increased competition in the energy environment including effects of
industry restructuring and unbundling.
|X| Regulatory factors such as unanticipated changes in rate-setting policies
or procedures, recovery of investments and costs made under traditional
regulation, and the frequency and timing of rate increases.
|X| Financial or regulatory accounting principles or policies imposed by the
Financial Accounting Standards Board, the Securities and Exchange
Commission, the Federal Energy Regulatory Commission, state public utility
commissions, state entities which regulate natural gas transmission,
gathering and processing, and similar entities with regulatory oversight.
|X| Economic conditions including inflation rates and monetary fluctuations.
|X| Changing market conditions and a variety of other factors associated with
physical energy and financial trading activities including, but not limited
to, price, basis, credit, liquidity, volatility, capacity, interest rate,
and warranty risks.
|X| Availability or cost of capital, resulting from changes in Indiana Gas
interest rates, and securities ratings or market perceptions of the utility
industry and energy-related industries.
|X| Employee workforce factors including changes in key executives, collective
bargaining agreements with union employees, or work stoppages.
|X| Legal and regulatory delays and other obstacles associated with mergers,
acquisitions, and investments in joint ventures.
|X| Costs and other effects of legal and administrative proceedings,
settlements, investigations, claims, and other matters, including, but not
limited to, those described in Management's Discussion and Analysis of
Results of Operations and Financial Condition.
10
|X| Changes in federal, state or local legislature requirements, such as
changes in tax laws or rates, environmental laws and regulations.
Indiana Gas undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions, or other factors affecting such statements.
11
Item 8. Financial Statements and Supplementary Data
INDIANA GAS COMPANY, INC.
BALANCE SHEETS
(Thousands)
December 31,
ASSETS 2000 1999
------ ---- ----
Utility Plant:
Original cost $1,056,945 $1,005,304
Less - accumulated depreciation 434,845 407,887
---------- ----------
Net utility plant 622,100 597,417
---------- ----------
Current Assets:
Cash and cash equivalents 300 353
Accounts receivable, less reserves of $2,063
and $1,739, respectively 81,225 37,058
Accounts receivable from affiliated company 11,774 3,021
Accrued unbilled revenues 69,444 36,634
Inventories 12,004 13,535
Prepaid gas delivery service 34,849 20,937
Recoverable natural gas costs 38,096 -
Prepayments and other current assets 32,012 12,354
---------- ----------
Total current assets 279,704 123,892
---------- ----------
Investment in Unconsolidated Affiliate 220,802 -
---------- ----------
Other Assets:
Regulatory assets 18,578 14,647
Other 2,488 3,914
---------- ----------
Total other assets 21,066 18,561
---------- ----------
TOTAL ASSETS $1,143,672 $ 739,870
========== ==========
The accompanying notes are an integral part of these
financial statements.
12
INDIANA GAS COMPANY, INC.
BALANCE SHEETS
(Thousands)
SHAREHOLDER'S EQUITY AND LIABILITIES December 31,
------------------------------------ ------------
2000 1999
---- ----
Capitalization:
Common stock and paid-in capital $ 142,995 $ 142,995
Retained earnings 90,499 105,627
---------- ----------
Total common shareholder's equity 233,494 248,622
Long-term debt, net of current maturities 281,109 211,849
---------- ----------
Total capitalization 514,603 460,471
---------- ----------
Commitments and Contingencies
Current Liabilities:
Notes payable to affiliated company 218,200 -
Notes payable 134,724 82,172
Interest payable to affiliated company 2,340 -
Accounts payable 102,268 30,745
Accounts payable to affiliated company 18,329 6,366
Refunds to customers and customer deposits 3,953 22,021
Accrued taxes 25,054 16,208
Accrued interest 4,215 5,252
Deferred income taxes 4,227 -
Other current liabilities 14,504 12,697
---------- ----------
Total current liabilities 527,814 175,461
---------- ----------
Deferred Credits and Other Liabilities:
Deferred income taxes 54,807 61,061
Accrued postretirement benefits other
than pensions 29,938 28,474
Unamortized investment tax credit 7,222 8,152
Other 9,288 6,251
---------- ----------
Total deferred credits and other liabilities 101,255 103,938
---------- ----------
TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES $1,143,672 $ 739,870
========== ==========
The accompanying notes are an integral part of these
financial statements.
13
INDIANA GAS COMPANY, INC.
STATEMENTS OF INCOME
(Thousands)
Year Ended
December 31
2000 1999 1998
---- ---- ----
OPERATING REVENUES $ 598,113 $ 431,361 $ 420,459
COST OF GAS 390,474 226,817 231,889
--------- --------- ---------
Total margin 207,639 204,544 188,570
--------- --------- ---------
OPERATING EXPENSES:
Operation and maintenance 99,810 91,829 85,871
Merger and integration costs 16,846 - -
Depreciation and amortization 36,659 34,585 32,758
Income tax expense 7,251 16,734 14,058
Taxes other than income taxes 15,858 15,695 13,882
--------- --------- ---------
Total operating expenses 176,424 158,843 146,569
--------- --------- ---------
OPERATING INCOME 31,215 45,701 42,001
OTHER INCOME:
Equity in earnings of unconsolidated
affiliate, net of $1,465 tax 2,721 - -
Other - net (318) 1,010 626
--------- --------- ---------
Total other income 2,403 1,010 626
--------- --------- ---------
INCOME BEFORE INTEREST 33,618 46,711 42,627
INTEREST EXPENSE 22,409 16,969 15,802
--------- --------- ---------
NET INCOME $ 11,209 $ 29,742 $ 26,825
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
14
INDIANA GAS COMPANY, INC.
STATEMENTS OF CASH FLOWS
(Thousands)
Year Ended
December 31,
2000 1999 1998
----- ---- ----
CASH FLOWS FROM (REQUIRED FOR) OPERATING ACTIVITIES:
Net Income $ 11,209 $ 29,742 $ 26,825
Adjustments to reconcile net income to cash
Provided from operating activities -
Depreciation and amortization 36,659 34,585 32,758
Deferred income taxes and investment tax credits 13,682 (1,412) 262
Undistributed earnings of unconsolidated affiliate (2,721) - -
Loss (gain) on sale or retirement of assets - - (1,219)
Allowance for other funds used during construction (595) (443) (341)
Changes in assets and liabilities -
Receivables - net (including unbilled revenues) (85,730) (4,447) 30,073
Inventories 1,531 5,708 (1,193)
Accounts payable, refunds to customers, customer
deposits, advance payments and other current
liabilities 67,224 (8,646) (24,277)
Accrued taxes and interest (5,560) 6,866 (7,610)
Recoverable/refundable gas costs (38,096) (4,139) 4,010
Prepayments and other current assets (19,658) (3,585) (1,072)
Prepaid gas delivery service (13,912) (20,937) -
Accrued postretirement benefits other
than pensions 1,464 2,590 2,140
Regulatory assets (2,839) (1,308) -
Other - net (596) 1,814 4,916
--------- --------- ---------
Total adjustments (49,147) 6,646 38,447
--------- --------- ---------
Net cash flows from (required for) operating
activities (37,938) 36,388 65,272
--------- --------- ---------
CASH FLOWS (REQUIRED FOR) FROM FINANCING ACTIVITIES:
Retirement of long-term debt (740) (10,115) 60,000
Proceeds from long-term debt 70,000 30,000 (33,036)
Net change in short-term borrowings 270,752 33,497 (20,325)
Dividends on common stock (26,337) (27,000) (27,500)
--------- --------- ---------
Net cash flows (required for) from financing
activities 313,675 26,382 (20,861)
--------- --------- ---------
CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES:
Capital expenditures (62,409) (62,437) (54,979)
Investment in Ohio operations (218,081) - -
Proceeds from sale of assets - - 9,204
Other 4,700 - -
--------- --------- ---------
Net cash flows required for investing activities (275,790) (62,347) (45,775)
--------- --------- ---------
Net increase (decrease) in cash (53) 333 (1,364)
Cash and cash equivalents at beginning of period 353 20 1,384
--------- --------- ---------
Cash and cash equivalents at end of period $ 300 $ 353 $ 20
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
15
INDIANA GAS COMPANY, INC.
STATEMENTS OF RETAINED EARNINGS
(Thousands)
December 31
-----------
2000 1999 1998
-------- -------- --------
Balance Beginning of Period $105,627 $102,885 $103,411
Net Income 11,209 29,742 26,825
-------- -------- --------
116,836 132,627 130,236
Common Stock Dividends 26,337 27,000 27,500
Other - - 149
Balance End of Period $ 90,499 $105,627 $102,885
======== ======== ========
The accompanying notes are an integral part of
these financial statements.
16
Indiana Gas Company, Inc.
Notes to Financial Statements
1. Organization and Nature of Operations
Indiana Gas Company, Inc. (Indiana Gas) provides natural gas and transportation
services to a diversified base of customers in 311 communities in 49 of
Indiana's 92 counties. It was incorporated under the laws of the state of
Indiana on July 16, 1945.
Vectren Corporation (Vectren), Indiana Gas' parent company, was organized on
June 10, 1999 solely for the purpose of effecting the merger of Indiana Energy,
Inc. (Indiana Energy), Indiana Gas' former parent company, and SIGCORP, Inc.
(SIGCORP). On March 31, 2000, the merger of Indiana Energy with SIGCORP and into
Vectren was consummated with a tax-free exchange of shares that has been
accounted for as a pooling-of-interests. The merger did not affect Indiana Gas'
debt securities.
Prior to the merger, all of the outstanding shares of common stock of Indiana
Gas were owned by Indiana Energy. Subsequent to the merger, all outstanding
shares of common stock are owned by Vectren. Vectren is a public utility holding
company.
2. Acquisition of the Gas Distribution Assets of The Dayton Power and Light
Company
On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company (DP&L) for approximately $465 million as a
tenancy in common through two separate wholly owned subsidiaries. Vectren Energy
Delivery of Ohio, Inc. (VEDO) holds a 53 percent undivided ownership interest in
the assets, and Indiana Gas holds a 47 percent undivided ownership interest.
VEDO is the operator of the assets, operations of which are referred to as "the
Ohio operations." Indiana Gas' ownership is accounted for on the equity method
in accordance with Accounting Principles Board (APB) Opinion No. 18. Its
ownership interest is included in investment in unconsolidated affiliate in the
Balance Sheets, and its interest in the results of operations is included in
equity in earnings of unconsolidated affiliate.
Vectren Utility Holdings, Inc. (VUHI) is the intermediate holding company for
Vectren's operating public utilities, including Indiana Gas. VUHI established a
$435 million commercial paper program to fund the majority of the acquisition.
Indiana Gas' investment in the acquisition of approximately $218 million was
funded with a combination of short-term borrowings from VUHI and Indiana Gas'
commercial paper program.
The following table depicts unaudited summarized financial information as to
assets and liabilities of the Ohio operations as of December 31, 2000 and its
results of operations for the two months then ended.
As of December 31, 2000:
----------------------------------------------------------
Current assets $ 180,109
Noncurrent assets 392,795
Current liabilities 344,675
Noncurrent liabilities 6,254
For the two months ended December 31, 2000:
---------------------------------------------------------
Revenues $ 111,356
Total margin 28,193
Operating income 6,813
Net income 5,790
3. Merger and Integration Costs
Merger and integration costs incurred for the year ended December 31, 2000
totaled $16.8 million. The continued merger and integration activities will be
substantially completed in 2001. Merger costs are reflected in the operating
subsidiaries in which merger savings are expected to be realized.
17
Of the $16.8 million of merger and integration costs incurred in 2000 by Indiana
Gas, accruals were established at March 31, 2000 totaling $11.9 million. Of this
amount, $4.8 million related to employee and executive severance, $5.0 million
related to transaction costs and filing fees, and the remaining $2.1 million
related to employee relocation that occurred coincident with the merger closing.
At December 31, 2000, the accrual remaining for such costs totaled $1.3 million,
all related to severance costs. Of the total $16.8 million, the remaining $4.9
million was expensed throughout the remainder of the year for accounting fees
resulting from merger related filing requirements, consulting fees related to
integration activities such as organization structure, employee travel between
company locations as part of integration activities, internal labor of employees
assigned to integration teams, and investor relations communications activities.
The merger and integration costs expensed during 2000 were all cash costs, for
which cash has been expended as of December 31, 2000 with the exception of the
remaining $1.3 million accrual.
During the merger planning process, approximately 81 positions were identified
for elimination. As of December 31, 2000, approximately 35 positions had been
vacated, with the remaining 46 positions to be eliminated in 2001.
The integration activities experienced by the company included such things as
information system consolidation, process review and definition, organization
design and consolidation, and knowledge sharing.
As a result of merger integration activities, Vectren management has identified
certain information systems which 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 during 2000, resulting in an
increase in operation and maintenance expense of $11.4 million ($7.1 million
after tax).
4. Summary of Significant Accounting Policies
A. Utility Plant and Depreciation
Except as described below, utility plant is stated at historical cost and
includes allocations of payroll-related costs and administrative and general
expenses, as well as an allowance for the cost of funds used during
construction. Indiana Gas follows the practice of charging maintenance and
repairs, including the cost of planned major maintenance projects, to expense as
incurred. When property that represents a retirement unit is replaced or
removed, the cost of such property is credited to utility plant, and such cost,
together with the cost of removal less salvage, is charged to the accumulated
provision for depreciation.
Provisions for depreciation of utility property are determined by applying
straight-line rates to the original cost of the various classifications of
property. The average depreciation rate was 3.9 percent for 2000, 3.5 percent
for 1999, 3.5 percent for 1998.
B. Reclassifications
Certain reclassifications have been made to the prior years' financial
statements to conform to the current year presentation. These reclassifications
have no impact on net income previously reported.
C. Cash Flow Information
For the purposes of the Statements of Cash Flows, the company considers cash
investments with an original maturity of three months or less to be cash
equivalents. Cash paid during the periods reported for interest and income taxes
were as follows:
Thousands 2000 1999 1998
--------- -------- -------- --------
Interest (net of amount capitalized) $ 22,903 $ 16,463 $ 15,356
Income taxes 23,188 21,921 25,717
18
D. Revenues
To more closely match revenues and expenses, Indiana Gas records revenues for
all gas delivered to customers but not billed at the end of the accounting
period.
Excise taxes are embedded in rates charged to customers. Accordingly the company
records excise tax received as a component of operating revenues. Excise taxes
paid are recorded as a component of taxes other than income taxes.
E. Earnings Per Share
Historical earnings per share are not presented as Vectren holds the common
shares of Indiana Gas.
F. Gas in Underground Storage
Gas in underground storage at December 31, 2000, was $10.9 million compared to
$11.6 million at December 31, 1999.
Based on the average cost of gas purchased during December, the cost of
replacing the current portion of gas in underground storage exceeded LIFO cost
at December 31, 2000 and 1999 by approximately $29 million and $12 million,
respectively.
G. Refundable or Recoverable Gas Cost
All metered gas rates contain a gas cost adjustment clause, which allows for
adjustment in charges for changes in the cost of purchased gas. Indiana Gas
records any adjustment clause under-or-overrecovery each month in revenues. A
corresponding asset or liability is recorded until such time as the
under-or-overrecovery is billed or refunded to utility customers. The cost of
gas sold is charged to operating expense as delivered to customers.
H. Allowance For Funds Used During Construction
An allowance for funds used during construction (AFUDC), which represents the
cost of borrowed and equity funds used for construction purposes, is charged to
construction work in progress during the period of construction and included in
other - net on the Statements of Income.
The table below reflects the total AFUDC capitalized and the portion of which
was computed on borrowed and equity funds for all periods reported.
Year Ended
December 31,
-----------------------------------
In thousands 2000 1999 1998
------- ------ -------
AFUDC - borrowed funds $ 487 $362 $303
AFUDC - equity funds 595 443 341
------- ------ -----
Total AFUDC capitalized $ 1,082 $805 $644
======= ===== =====
I. Income Taxes
The liability method of accounting is used for income taxes under which deferred
income taxes are recognized, at currently enacted income tax rates, to reflect
the tax effect of temporary differences between the book and tax bases of assets
and liabilities. Deferred investment tax credits are being amortized over the
life of the related asset.
J. Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
K. Regulatory Assets and Liabilities
Indiana Gas is subject to regulation by the Indiana Utility Regulatory
Commission (IURC). The accounting policies of Indiana Gas give recognition to
the ratemaking and accounting practices of these agencies and to accounting
principles generally accepted in the United States, including the provisions of
Statement of Financial Accounting Standards No. 71 "Accounting for the Effects
19
of Certain Types of Regulation" (SFAS 71). Regulatory assets represent probable
future revenues associated with certain incurred costs, which will be recovered
from customers through the ratemaking process. Regulatory liabilities represent
probable future reductions in revenues associated with amounts that are to be
credited to customers through the ratemaking process.
The following regulatory assets and liabilities are reflected in the financial
statements:
At December 31,
-----------------
In thousands 2000 1999
------- -------
Regulatory Assets:
Unamortized debt discount and expenses $13,855 $11,906
Regulatory income tax asset 4,723 2,741
Other - 1,092
------- -------
Regulatory assets in other assets 18,578 15,739
Recoverable natural gas costs 38,096 -
------- -------
Total regulatory assets $56,674 $15,739
======= =======
Regulatory Liabilities:
Refundable gas costs - $10,204
======= =======
Indiana Gas was authorized as part of an August 17, 1994 financing order from
the IURC to amortize over a 15-year period the debt discount and expense related
to new debt issues and future debt issues and future premiums paid for debt
reacquired in connection with refinancing. Debt discount and expense for issues
in place prior to this order are being amortized over the lives of the related
issues. Premiums paid prior to this order for debt reacquired in connection with
refinancing are being amortized over the life of the refunding issue.
As of December 31, 2000, all of Indiana Gas' $56.7 million of total regulatory
assets are reflected in rates charged to customers, but are not currently
earning a return. These assets will be recovered over varying periods: $38.1
million of gas costs, over 12 months; $4.7 million of regulatory income tax
asset, over approximately 30 years; and $13.8 million of unamortized debt
discount and expense to be recovered as discussed above.
Indiana Gas' policy is to continually assess the recoverability of costs
recognized as regulatory assets and the ability to continue to account for their
activities in accordance with SFAS 71, based on the criteria set forth in SFAS
71. Based on current regulation, Indiana Gas believes such accounting is
appropriate. If all or part of Indiana Gas' operations cease to meet the
criteria of SFAS 71, a write-off of related regulatory assets and liabilities
could be required. In addition, Indiana Gas would be required to determine any
impairment to the carrying costs of deregulated plant and inventory assets.
L. New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), which
requires that every derivative instrument be recorded on the balance sheet as an
asset or liability measured at its fair value and that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.
SFAS 133, as amended, is effective for fiscal years beginning after June 15,
2000, and must be applied to derivative instruments and certain derivative
instruments embedded in hybrid contracts that were issued, acquired or
substantively modified after December 31, 1998. Indiana Gas adopted SFAS 133 as
of January 1, 2001.
SFAS 133 requires that as of the date of initial adoption, the difference
between the fair market value of derivative instruments recorded on the balance
sheet and the previous carrying amount of those derivatives be reported in net
income or other comprehensive income, as appropriate, as the cumulative effect
of a change in accounting principle in accordance with APB 20, "Accounting
Changes."
As of the date of adoption, Indiana Gas was not engaged in any financial
instruments affected by this statement; therefore, there was no impact at
adoption.
20
M. Impairment Review of Long Lived Assets
Long-lived assets are reviewed for impairment in accordance with SFAS No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, as facts and circumstances indicate that the carrying amount may be
impaired. Specifically, the evaluation for impairment involves the comparison of
an asset's carrying value and the estimated undiscounted future cash flows the
asset is expected to generate over its remaining life. If this evaluation were
to conclude that the carrying value of the asset is impaired, an impairment
charge would be recorded as a charge to operations based on the difference
between the asset's carrying amount and its fair value.
5. Capital Stock
Authorized Preferred Stock
Indiana Gas has 4 million shares of authorized and unissued preferred stock.
Indiana Gas does not have stock-based compensation plans separate from Vectren.
Indiana Gas' employees, officers and directors participate in Vectren's
stock-based compensation plans that provide for awards of restricted stock and
stock options to purchase Vectren common stock at prices equal to the fair value
of the underlying shares at the date of grant. Consistent with Vectren, Indiana
Gas accounts for participation in these plans in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related interpretations in measuring compensation costs for its stock options
and discloses pro forma net income as if compensation costs had been determined
consistent with the SFAS No. 123, "Accounting for Stock-based Compensation."
Had compensation cost for stock options been determined consistent with SFAS No.
123 "Accounting for Stock-based Compensation," net income would not have been
materially different than reported net income.
6. Long-Term Debt
Notes payable outstanding and classified as long-term are as follows:
At December 31 2000 1999
- ----------------------------------------- -------- --------
Notes Payable due:
2003, Series F, 5.75% $ 15,000 $ 15,000
2004, Series F, 6.36% 15,000 15,000
2007, Series E, 6.54% 6,500 6,500
2013, Series E, 6.69% 5,000 5,000
2015, Series E, 7.15% 5,000 5,000
2015, Insured Quarterly Notes, 7.15% 20,000 -
2015, Series E, 6.69% 5,000 5,000
2015, Series E, 6.69% 10,000 10,000
2021, Private Placement, 9.375% 25,000 25,000
2021, Series A, 9.125% 7,000 7,000
2025, Series E, 6.31% 5,000 5,000
2025, Series E, 6.53% 10,000 10,000
2027, Series E, 6.42% 5,000 5,000
2027, Series E, 6.68% 3,500 3,500
2027, Series F, 6.34% 20,000 20,000
2028, Series F, 6.75% 14,109 14,849
2028, Series F, 6.36% 10,000 10,000
2028, Series F, 6.55% 20,000 20,000
2029, Series G, 7.08% 30,000 30,000
2030, Insured Quarterly Notes, 7.45% 50,000 -
-------- --------
Total long-term debt outstanding $281,109 $211,849
======== ========
21
Consolidated maturities and sinking fund requirements on long-term debt subject
to mandatory redemption during the five years following 2000 are (in millions):
$0 in 2001, $0 in 2002, $15.0 in 2003 and $15.0 in 2004 and $0 in 2005.
On October 5, 1999, Indiana Gas issued $30 million in principal amount of Series
G Medium-term Notes and on December 28, 2000 filed a prospectus with the
Securities and Exchange Commission with respect to the issuance of $70 million
in debt securities. Indiana Gas will have the option to redeem the notes prior
to their maturity dates. The 15-Year IQ Notes may be redeemed, in whole or in
part, from time to time on or after December 15, 2004. Indiana Gas will have the
option to redeem the 30-Year IQ Notes in whole or in part, from time to time on
or after December 15, 2005. The net proceeds of the $70 million debt issuance
were used to repay outstanding commercial paper utilized for general corporate
purposes.
Provisions under which certain of Indiana Gas' Series E notes were issued
entitle the holders of $25.0 million of these notes to put the debt back to
Indiana Gas at face value at certain specified dates before maturity beginning
in 2000. Long-term debt subject to the put provisions during the five years
following 2000 (in millions) is $0 in 2001, $6.5 in 2002, $0 in 2003, $3.5 in
2004 and $10.0 in 2005. During 2000, put provisions on $5.0 million of the notes
were not exercised.
7. Short-Term Borrowings
At December 31, 2000, Indiana Gas has approximately $155 million of short-term
borrowing capacity, of which approximately $20 million is available for
operations. See the table below for outstanding balances and interest rates.
At December 31 (in thousands) 2000 1999
- ------------------------------------------ ---------- ---------
Commercial paper outstanding $ 134,724 $ 82,172
Weighted average interest rates at year
end on commercial paper 6.6% 6.3%
Weighted average interest rates during the
year:
Bank loans 7.1% -
Commercial paper 6.1% 5.5%
Weighted average total outstanding during
the year $ 99,257 $ 38,068
At December 31, 2000, Indiana Gas was not in compliance with the total
indebtedness to capitalization ratio contained in its back up credit facility
for its commercial paper program. The non-compliance resulted from the
indebtedness incurred to purchase its ownership interest in the Ohio operations.
A waiver has been obtained from the banks on the Indiana Gas facility to waive
the non-compliance through and including March 31, 2001. Vectren will provide an
equity investment in Indiana Gas to bring Indiana Gas back into compliance. No
amount is outstanding under the back up credit facility.
See Note 14 Affiliate Transactions for further information on short-term
borrowings due to an affiliated company.
22
8. Income Taxes
Vectren and subsidiary companies file a consolidated federal income tax return.
Indiana Gas' current and deferred tax expense is computed on a separate company
basis. The components of income tax expense for Indiana Gas were as follows:
Year Ended December 31 (in thousands) 2000 1999 1998
-------- -------- --------
Current:
Federal $ (6,288) $ 15,600 $ 11,828
State (143) 2,546 1,968
-------- -------- --------
Total current taxes (6,431) 18,146 13,796
-------- -------- --------
Deferred:
Federal 13,460 (484) 1,067
State 1,152 2 125
-------- -------- --------
Total deferred taxes 14,612 (482) 1,192
-------- -------- --------
Amortization of investment tax credits (930) (930) (930)
Income tax expense $ 7,251 $ 16,734 $ 14,058
======== ======== ========
A reconciliation of the statutory rate to the effective income tax rate is as
follows:
Year Ended December 31 2000 1999 1998
------ ------ ------
Statutory federal and state rate 37.9% 37.9% 37.9%
Nondeductible merger costs 11.1 - -
Amortization of investment tax credit (5.3) (2.0) (2.3)
All other, net (2.4) 0.1 (1.2)
------ ------ ------
Effective tax rate 41.3% 36.0% 34.4%
====== ====== ======
Significant components of Indiana Gas' net deferred tax liability as of December
31, 2000 and 1999 are as follows:
At December 31 (in thousands) 2000 1999
-------- --------
Deferred tax liabilities:
Depreciation and cost recovery timing differences $ 72,038 $ 65,493
Deferred fuel costs, net 12,127 -
Regulatory assets recoverable through future rates 3,890 4,391
Deferred tax assets:
LIFO inventory (7,900) -
Regulatory liabilities to be settled through future rates (14,639) (8,823)
Other (6,482) -
-------- --------
Net deferred tax liability $ 59,034 $ 61,061
======== ========
9. Retirement Plans and Other Postretirement Benefits
Prior to July 1, 2000, SIGECO and Indiana Energy had separate retirement and
other postretirement benefit plans. Effective July 1, 2000, the SIGECO and
Indiana Energy pension plans and retirement savings plans for employees not
covered by a collective bargaining unit were merged. The pension plans and
retirement savings plans described above became Vectren plans. As a result, the
respective plan assets and plan obligations were transferred to Vectren.
Indiana Gas has defined benefit pension and other postretirement benefit plans
which cover eligible full-time regular employees. All of the plans are
non-contributory with the exception of the health care plan which contains
cost-sharing provisions whereby employees retiring after January 1, 1996, are
required to make contributions to the plan when increases in Indiana Gas' health
care costs exceed the general rate of inflation, as measured by the Consumer
Price Index (CPI). The non-pension plans include plans for health care and life
insurance through a combination of self-insured and fully insured plans.
23
The IURC has authorized Indiana Gas to recover the costs related to
postretirement benefits other than pensions under the accrual method of
accounting consistent with Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. Amounts
accrued prior to that authorization were deferred as allowed by the IURC and
amortized over a 60-month period.
The detailed disclosures of benefit components that follow are based on
actuarial valuations performed for the years ended December 31, 2000, 1999 and
1998 using a measurement date as of September 30, 2000. In management's opinion,
disclosures from revised actuarial valuations would not differ materially from
those presented below.
Net periodic benefit cost consisted
of the following components: Pension Benefits Other Benefits
---------------- --------------
Year Ended December 31 (in thousands) 2000 1999 1998 2000 1999 1998
------- ------- ------- ------- ------- -------
Service cost $ 671 $ 1,617 $ 1,133 $ 639 $ 738 $ 608
Interest cost 2,373 4,887 4,504 3,946 3,098 3,075
Expected return on plan assets (3,671) (7,310) (6,393) - - -
Amortization of prior service cost 24 - - - - -
Amortization of transitional obligation
(asset) (384) (316) (316) 2,444 1,955 1,955
Recognized actuarial gain (96) 108 (19) (657) (149) 1,354
------- ------- ------- ------- ------- -------
Net periodic benefit cost $(1,083) $(1,014) $(1,091) $ 6,372 $ 5,642 $ 6,992
======= ======= ======= ======= ======= =======
A reconciliation of the plan's benefit obligations, fair value of plan assets,
funded status and amounts recognized in the Balance Sheets follows:
Benefit obligation: Pension Benefits Other Benefits
-------------------- --------------------
At December 31 (in thousands) 2000 1999 2000 1999
-------- -------- -------- --------
Benefit obligation at beginning of year $ 69,281 $ 76,708 $ 43,020 $ 47,501
Service cost - benefits earned during the year 671 1,617 639 738
Interest cost on projected benefit obligation 2,373 4,887 3,946 3,098
Transfers (37,078) - - -
Benefits paid (2,925) (4,715) (4,303) (2,944)
Actuarial (gain) loss 3,798 (9,216) 6,334 (5,373)
-------- -------- -------- --------
Benefit obligation at end of year $ 36,120 $ 69,281 $ 49,636 $ 43,020
======== ======== ======== ========
Fair value of Plan Assets Pension Benefits Other Benefits
---------------------- -------------------
At December 31 (in thousands) 2000 1999 2000 1999
--------- --------- -------- --------
Plan assets at fair value at beginning of year $ 101,211 $ 97,628 $ - $ -
Actual return on plan assets 5,653 8,179 - -
Transfers (54,885) - - -
Employer contributions - 119 4,303 2,944
Benefits paid (2,925) (4,715) (4,303) (2,944)
--------- --------- -------- -------
Fair value of plan assets at end of year $ 49,054 $ 101,211 $ - $ -
========= ========= ======== =======
Funded Status Pension Benefits Other Benefits
-------------------- --------------------
At December 31 (in thousands) 2000 1999 2000 1999
-------- -------- -------- --------
Funded status $ 12,934 $ 31,930 $(49,636) $(43,020)
Unrecognized transitional obligation (asset) (671) (882) 24,931 27,375
Unrecognized service cost 255 374 - -
Unrecognized net (gain) loss and other (7,788) (25,965) (5,232) (12,224)
-------- -------- -------- --------
Net amount recognized $ 4,730 $ 5,457 $(29,937) $(27,869)
======== ======== ======== ========
24
Weighted-average assumptions used in the accounting for these plans were as
follows:
Pension Benefits Other Benefits
------------------ ------------------
Year Ended December 31, 2000 1999 2000 1999
------- ------- ------- -------
Discount rate 7.75% 7.50% 7.75% 7.50%
Expected return on plan assets 8.50% 9.00% N/A N/A
Rate of compensation increase 5.00% 5.00% N/A N/A
CPI rate N/A N/A 7.00% 3.50%
As of December 31, 2000, the health care cost trend is 7 percent declining to 5
percent in 2004 and remaining level thereafter. The accrued health care cost
trend rate for 2001 is 7 percent. The estimated cost of these future benefits
could be significantly affected by future changes in health care costs, work
force demographics, interest rates or plan changes.
A 1 percent change in the assumed health care cost trend for postretirement
health care plan would have the following effects:
In thousands 1% Increase 1% Decrease
------------- -----------
Effect on the aggregate of the service
and interest cost components $ 34 $ (31)
Effect on the postretirement benefit
Obligation 738 (648)
10. Fair Value of Financial Instruments
The estimated fair values of the company's financial instruments were as
follows:
December 31, 2000 December 31, 1999
----------------- -----------------
Carrying Fair Carrying Fair
In thousands Amount Value Amount Value
- ------------ ------ ------ ------- -------
Notes payable $134,724 $134,724 $ 82,172 $ 82,172
Notes payable to affiliated
Company 218,200 218,200 - -
Long-term debt (includes
amounts due within one year) 281,109 309,401 211,849 188,976
Certain methods and assumptions must be used to estimate the fair value of
financial instruments. Because of the short maturity of notes payable and notes
payable to affiliated company, the carrying amounts approximate fair values for
these financial instruments. The fair value of Indiana Gas' long-term debt was
estimated based on the quoted market prices for the same or similar issues or on
the current rates offered for debt of the same remaining maturities.
Under current regulatory treatment, call premiums on reacquisition of long-term
debt are generally recovered in customer rates over the life of the refunding
issue or over a 15-year period (see Note 4J ). Accordingly, any reacquisition
would not be expected to have a material effect on Indiana Gas' financial
position or results of operations.
The market price used to value these transactions reflects management's best
estimate of market prices considering various factors, including published
prices for certain delivery locations, time value and volatility factors
underlying the commitments.
11. Commitments
Lease commitments, in millions, are $1.0 in 2001, $1.5 in 2002, $1.6 in 2003,
$1.7 in 2004, $1.8 in 2005 and $7.6 in total for all later years. There are no
leases that extend beyond 2036. Indiana Gas has storage and supply contracts
25
that extend up to 6 years. Total lease expense, in millions, was approximately
$1.0 in 2000, $2.0 in 1999 and $1.0 in 1998.
Indiana Gas is party to various legal proceedings arising in the normal course
of business. In the opinion of management, with the exception of matters
described in Note 14 regarding transactions with ProLiance Energy, LLC, there
are no legal proceedings pending against the company that are likely to be
material on the company's financial position or results of operations.
12. Environmental Matters
In the past, Indiana Gas and others operated facilities for the manufacture of
gas. Given the availability of natural gas transported by pipelines, these
facilities have not been operated for many years. Under currently applicable
environmental laws and regulations, Indiana Gas and others may now be required
to take remedial action if certain byproducts are found above the regulatory
thresholds at these sites.
Indiana Gas has identified the existence, location and certain general
characteristics of 26 gas manufacturing and storage sites for which it may have
some remedial responsibility. Indiana Gas has completed a remedial
investigation/feasibility study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and IDEM, and a Record of Decision was issued by IDEM
in January 2000. Although Indiana Gas has not begun an RI/FS at additional
sites, Indiana Gas has submitted several of the sites to the IDEM's Voluntary
Remediation Program (VRP) and is currently conducting some level of remedial
activities including groundwater monitoring at certain sites where deemed
appropriate and will continue remedial activities at the sites as appropriate
and necessary.
In conjunction with data compiled by expert consultants, Indiana Gas has accrued
the estimated costs for further investigation, remediation, groundwater
monitoring and related costs for the sites. While the total costs that may be
incurred in connection with addressing these sites cannot be determined at this
time, Indiana Gas has accrued costs that it reasonably expects to incur totaling
approximately $20.3 million.
The estimated accrued costs are limited to Indiana Gas' proportionate share of
the remediation efforts. Indiana Gas has arrangements in place for 19 of the 26
sites with other potentially responsible parties, which serve to limit Indiana
Gas' share of response costs at these 19 sites to between 20 and 50 percent.
With respect to insurance coverage, as of December 31, 2000, Indiana Gas has
received and recorded settlements from all known insurance carriers in an
aggregate amount of approximately $20.3 million.
Environmental matters related to manufactured gas plants have had no material
impact on earnings since costs recorded to date approximate PRP and insurance
settlement recoveries. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with activities at these sites, it is
possible that future events may require some level of additional remedial
activities which are not presently foreseen.
13. Rate and Regulatory Matters
Commodity prices for natural gas purchases during the last six months of 2000
increased, primarily due to the expectation of a colder winter, which led to
increased demand and tighter supplies. Indiana Gas is typically allowed full
recovery of such charges in purchased gas costs from its retail customers
through a commission-approved gas cost adjustment. On October 11, 2000, Indiana
Gas filed for approval of its quarterly gas cost adjustment (GCA). In early
December, the IURC issued an interim order approving the request by Indiana Gas
for a GCA factor for December 2000. On January 4, 2001, the IURC approved the
January and February 2001 GCA as filed. The order also addressed the claim by
the OUCC that a portion of the requested GCA 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 gas procurement practices that it had employed over the last
several years. In response to the claim by the OUCC, the IURC found that there
should be a $3.8 million disallowance related to gas procurement for the winter
season. As a result, Indiana Gas recognized a pre-tax charge of $3.8 million in
December 2000. Both Indiana Gas and the OUCC have appealed this ruling. The
Citizens Action Coalition of Indiana, Inc. (CAC), a not for profit consumer
advocate, also has filed with the IURC a petition to intervene and a notice of
appeal of the order.
26
14. Affiliate Transactions
Vectren and certain subsidiaries of Vectren have provided certain corporate
general and administrative services to Indiana Gas including legal, finance,
tax, risk management and employee benefits. The costs have been allocated to
Indiana Gas using various allocators, primarily number of employees, number of
customers and/or revenues. Allocations are based on cost. Management believes
that the allocation methodology is reasonable and approximates the costs that
would have been incurred had Indiana Gas secured those services on a stand alone
basis. Indiana Gas received corporate allocations totaling $33.3 million, $31.4
million, and $25.9 million for the years ended December 31, 2000, 1999, and
1998, respectively.
Resulting from the merger of Indiana Energy and SIGCORP into Vectren, year 2000
allocations include approximately $1.0 million of compensation expense related
to the issuance of approximately 48,000 shares of restricted stock to
individuals employed by Indiana Energy at the merger date.
ProLiance Energy LLC, a 50 percent owned, non-regulated, energy marketing
affiliate of Vectren, provides natural gas supply and related services to
Indiana Gas. Indiana Gas' purchases from ProLiance for resale and for injections
into storage for the years ended December 31, 2000, 1999 and 1998, totaled
$401.4 million, $240.7 million and $232.2 million, respectively. Amounts charged
by ProLiance are market based.
ProLiance began providing natural gas and related services to Indiana Gas,
Citizens Gas and Coke Utility (Citizens Gas) and others effective April 1, 1996.
The sale of gas and provision of other services to Indiana Gas by ProLiance is
subject to regulatory review through the quarterly gas cost adjustment (GCA)
process administered by the IURC.
On September 12, 1997, the IURC issued a decision finding the gas supply and
portfolio administration agreements between ProLiance and Indiana Gas and
ProLiance and Citizens Gas to be consistent with the public interest. The IURC's
decision reflected the significant gas cost savings to customers obtained
through ProLiance's services and suggested that all material provisions of the
agreements between ProLiance and the utilities are reasonable. Nevertheless,
with respect to the pricing of gas commodity purchased from ProLiance and two
other pricing terms, the IURC concluded that additional review in the GCA
process would be appropriate and directed that these matters be considered
further in the pending, consolidated GCA proceeding involving Indiana Gas and
Citizens Gas. The IURC has not yet established a schedule for conducting these
additional proceedings. Through a series of appeals, the order was finally
considered by the Indiana Supreme Court.
On September 22, 2000, the Indiana Supreme Court issued a decision affirming the
IURC's decision on ProLiance in all respects.
In August 1998, Indiana Gas, Citizens Gas and ProLiance each received a Civil
Investigative Demand (CID) from the United States Department of Justice
requesting information relating to Indiana Gas' and Citizens Gas' relationship
with and the activities of ProLiance. The Department of Justice issued the CID
to gather information regarding ProLiance's formation and operations, and to
determine if trade or commerce has been restrained. Indiana Gas has provided all
information requested and management continues to believe that there are no
significant issues in this matter. Indiana Gas continues to record gas costs in
accordance with the terms of the ProLiance contract.
CIGMA, LLC, owned jointly and equally by a wholly owned subsidiary of Vectren
and Citizens By-Products Coal Company, a wholly owned subsidiary of Citizens
Gas, provides materials acquisition and related services that are used by
Indiana Gas and others. Indiana Gas' purchases of these services during the
years ended December 31, 2000, 1999 and 1998 totaled $17.2 million, $17.3
million and $15.9 million, respectively. Amounts charged by CIGMA, LLC are
market based.
Reliant Services, LLC, owned jointly and equally by a wholly owned subsidiary
of Vectren and Cinergy Corp., provides utility locating, meter reading and
construction services to Indiana Gas and others. Amounts paid by Indiana Gas for
purchases of these services totaled $3.7 million and $2.9 million for years
ended December 31, 2000 and 1999, respectively. Purchases in 1998 were not
significant. Amounts charged by Reliant Services, LLC are market based.
27
Amounts owed to affiliates totaled $238.8 million and $6.4 million at December
31, 2000 and1999, respectively. The increase in amounts owed to affiliates
results from Indiana Gas borrowing approximately $218 million from VUHI for
Indiana Gas' investment in the Ohio operations. Short-term borrowings from VUHI
bear interest at 6.99 percent at December 31, 2000.
Amounts due from affiliates totaled $11.8 million and $3.0 million at December
31, 2000 and 1999, respectively.
15. Other - Net
For the years ended December 31, 2000, 1999 and 1998, other-net consists of the
following:
(In thousands) 2000 1999 1998
------- ------- -------
AFUDC $ 1,082 $ 805 $ 644
Other income 1,232 375 461
Other expense (2,632) (170) (479)
------- ------- -------
Other-net $ (318) $ 1,010 $ 626
======= ======= =======
16. Quarterly Financial Data (Unaudited) (1)
Summarized quarterly financial data for 2000 and 1999 are as follows:
2000
- ---------
In thousands Q1 Q2 Q3 Q4
-------- -------- -------- --------
Operating revenues $171,618 $ 86,303 $ 75,417 $264,775
Operating income (loss) (2) 13,494 1,111 (1,848) 18,458
Net income (loss) (2) 8,831 (3,497) (6,720) 11,704
1999
------------
In thousands Q1 Q2 Q3 Q4
-------- -------- -------- --------
Operating revenues $161,484 $ 72,131 $ 60,499 $137,247
Operating income (loss) 27,876 4,183 (2,086) 15,728
Net income (loss) 23,998 639 (5,791) 10,896
(1) Information in any one quarterly period is not indicative of annual results
due to seasonal variations common to the utility industry.
(2) Includes merger and integration charges. See Note 3.
28
Management's Responsibility for Financial Statements
The management of Indiana Gas Company, Inc. (Indiana Gas) is responsible for the
preparation of the financial statements and the related financial data contained
in this report. The financial statements are prepared in conformity with
accounting principles generally accepted in the United States and follow
accounting policies and principles applicable to regulated public utilities.
The integrity and objectivity of the data in this report, including required
estimates and judgments, is the responsibility of management. Management
maintains a system of internal control and utilizes an internal auditing program
to provide reasonable assurance of compliance with company policies and
procedures and the safeguard of assets.
The board of directors of Indiana Gas' parent company, Vectren Corporation,
pursues its responsibility for these financial statements through its audit
committee, which meets periodically with management, the internal auditors and
the independent auditors, to assure that each is carrying out its
responsibilities. Both the internal auditors and the independent auditors meet
with the audit committee of Vectren's board of directors, with and without
management representatives present, to discuss the scope and results of their
audits, their comments on the adequacy of internal accounting control and the
quality of financial reporting.
/s/ Timothy M. Hewitt
Timothy M. Hewitt
President
January 24, 2001.
29
Report of Independent Public Accountants
To the Shareholder and Board of Directors of Indiana Gas Company, Inc.:
We have audited the accompanying balance sheets of Indiana Gas Company, Inc. (an
Indiana corporation) as of December 31, 2000 and 1999, and the related
statements of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 2000. These financial statements and the
schedule referred to below are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements and
the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Indiana Gas Company, Inc. as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed under Item 14(a) (2)
is presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Indianapolis, Indiana,
January 24, 2001.
30
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Financial statements filed as part of this Form 10-K are included under Part II,
Item 8.
(a)(2) Financial Statement Schedules:
PAGES IN FORM 10-K/A
--------------------
Report of Independent Accountants 28
For the years ended December 31, 2000, 1999
and 1998: Schedule
II -- Valuation and Qualifying Accounts 30
All other schedules are omitted as the required information is inapplicable or
the information is presented in the Financial Statements or related notes.
31
SCHEDULE II
Indiana Gas Company, Inc.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Column A Column B Column C Column D Column E
- -------- -------- -------------------- -------- --------
Additions
Balance Charged Charged Deductions Balance
Beginning to to Other from End of
Description of Year Expenses Accounts Reserves, Net Year
- ----------- ------- -------- -------- --------- ------
(in thousands)
VALUATION AND QUALIFYING
ACCOUNTS:
Year 2000 - Accumulated $ 1,739 $ 5,405 $ - $ 5,081 $ 2,063
Provision for uncollectible
Accounts
Year 1999 - Accumulated
Provision for uncollectible
Accounts $ 1,749 $ 2,819 $ - $ 2,829 $ 1,739
Year 1998 - Accumulated
Provision for uncollectible
Accounts $ 2,104 $ 3,408 $ - $ 3,763 $ 1,749
OTHER RESERVES:
Year 2000 - Reserve for $ - $11,900 $ - $10,607 $ 1,293
Merger and integration costs
Year 2000 - Reserve for $ 500 $ 500 $ - $ 200 $ 800
Injuries and damages
Year 1999 - Reserve for
Injuries and damages $ 500 $ - $ - $ - $ 500
Year 1998 - Reserve for
Injuries and damages $ - $ 500 $ - $ - $ 500
32
(a)(3) EXHIBITS
Exhibits for the company are listed in the Index to Exhibits beginning on page
33.
(b) REPORTS ON FORM 8-K
On October 31, 2000, Indiana Gas filed a Current Report on Form 8-K with respect
to Vectren Corporation's completion of the approximate $465 million acquisition
of the natural gas distribution assets from The Dayton Power and Light Company,
a wholly owned subsidiary of DPL, Inc. Indiana Gas holds a 47 percent interest
in the acquired assets. Items reported include:
Item 5. Other Events
Item 7. Exhibits
99-1 Press Release - Vectren Corporation Completes Acquisition of
DPL's Natural Gas Distribution Business
99-2 Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of
1995
On December 15, 2000, Indiana Gas filed a Current Report on Form 8-K with
respect to providing an update on potential impact of Increased Gas Costs and
Gas Cost Adjustment Proceedings. Items reported include:
Item 5. Other Events
On December 27, 2000, Indiana Gas filed a Current Report on Form 8-K with
respect to the issuance of an aggregate principal amount of $70 million Insured
Quarterly Notes.
Item 5. Other Events
Item 7. Exhibits.
Exhibit 1 - Purchase Agreement, dated December 21, 2000, between
Indiana Gas Company, Inc. and Edward D. Jones & Co., L.P.
Exhibit 4 - Form of Fifth Supplemental Indenture to the Indenture
dated as of February 1, 1991, between Indiana Gas Company, Inc.
and U.S. Bank Trust National Association with respect to the
issuance of the 15-Year IQ Notes and the 30-Year IQ Notes.
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
INDIANA GAS COMPANY, INC.
Dated August 27, 2001
/S/ Niel C. Ellerbrook
---------------------------
Niel C. Ellerbrook, Chairman
and Chief Executive Officer
34
INDEX TO EXHIBITS
EX - 2.1 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. (Filed and designated in Current Report on Form 8-K dated
December 28, 1999, File No. 1-9091, as Exhibit 2 and 99.1.)
EX - 3.1 Amended and Restated Articles of Incorporation. (Filed and designated
in Form 10-K for the year ended December 31, 2000, File No. 1-15467,
as Exhibit 3.1.)
EX - 3.2 Amended and Restated Code of By-Laws. (Filed and designated in Form
10-K for the year ended December 31, 2000, File No. 1-15467, as
Exhibit 3.2.)
EX - 4.1 Indenture dated February 1, 1991, between Indiana Gas and Continental
Bank, National Association. Inc.'s. (Filed and designated in Current
Report on Form 8-K filed February 15, 1991, File No. 1-6494.); First
Supplemental Indenture thereto dated as of February 15, 1991. (Filed
and designated in Current Report on Form 8-K filed February 15, 1991,
File No 1-6494, as Exhibit 4(b).); Second Supplemental Indenture
thereto dated as of September 15, 1991, (Filed and designated in
Current Report on Form 8-K filed September 25, 1991, File No 1-6494,
as Exhibit 4(b).); Third supplemental Indenture thereto dated as of
September 15, 1991 (Filed and designated in Current Report on Form 8-K
filed September 25, 1991, File No 1-6494, as Exhibit 4(c).); Fourth
Supplemental Indenture thereto dated as of December 2, 1992, (Filed
and designated in Current Report on Form 8-K filed December 8, 1992,
File No 1-6494, as Exhibit 4(b).); Fifth Supplemental Indenture
thereto dated as of December 28, 2000, (Filed and designated in
Current Report on Form 8-K filed December 27, 2000, File No 1-6494, as
Exhibit 4.)
EX - 4.2 Credit Agreement dated as of March 8, 1999 among Indiana Gas Company,
Inc., the Lenders, ABN AMRO Bank N.V., as Syndication Agent, National
City Bank of Indiana, as Documentation Agent, and Bank One, Indiana,
N.A., as Administrative Agent. (Filed and designated in Current Report
on Form 8-K dated January 26, 2001, File No 1-15467, as Exhibit 4.2.)
EX - 4.3 First Amendment dated as of March 7, 2000 to the Credit Agreement
dated as of March 8, 1999 among Indiana Gas Company, Inc., certain
lenders, ABN AMRO BANK N.V., as Syndication Agent, National City Bank
of Indiana, as Documentation Agent, and Bank One, Indiana, N.A., as
Administrative Agent. (Filed and designated in Current Report on Form
8-K dated January 26, 2001, File No 1-15467, as Exhibit 4.3.)
EX - 4.4 Second Amendment dated as of October 31, 2000 to the Credit Agreement
dated as of March 8, 1999 among Indiana Gas Company, Inc., certain
lenders, ABN AMRO BANK N.V., as Syndication Agent, National City Bank
of Indiana, as Documentation Agent, and Bank One, Indiana, N.A., as
Administrative Agent. (Filed and designated in Current Report on Form
8-K dated January 26, 2001, File No 1-15467, as Exhibit 4.4.)
EX - 4.5 Exhibit 4.5 Bank One letter dated as of January 29, 2001 waiving the
covenant compliance under Section 6.13 of the Indiana Gas Company,
Inc. Credit Agreement dated as of March 8, 1999. (Filed and designated
in Current Report on Form 8-K dated January 26, 2001, File No 1-15467,
as Exhibit 4.5.)
EX - 10.1 Vectren Corporation Retirement Savings Plan. (Filed and designated in
Form 10-Q for the quarterly period ended September 30, 2000, File
1-15467, as Exhibit 99.1.)
35
EX - 10.2 Vectren Corporation Combined Non-Bargaining Retirement Plan.
(Filed and designated in Form 10-Q for the quarterly period ended
September 30, 2000, File 1-15467, as Exhibit 99.2.)
EX - 10.3 Indiana Energy, Inc. Unfunded Supplemental Retirement Plan for a
Select Group of Management Employees as amended and restated
effective December 1, 1998. (Filed and designated in Form 10-Q
for the quarterly period ended December 31, 1998, File 1-9091, as
Exhibit 10-G.)
EX - 10.4 Indiana Energy, Inc. Nonqualified Deferred Compensation Plan
effective January 1, 1999. (Filed and designated in Form 10-Q for
the quarterly period ended December 31, 1998, File 1-9091, as
Exhibit 10-H.)
EX - 10.5 Amendment to Indiana Energy, Inc. Executive Restricted Stock Plan
effective December 1, 1998. (Filed and designated in Form 10-Q
for the quarterly period ended December 31, 1998, File 1-9091, as
Exhibit 10-I.)
EX - 10.6 Indiana Energy, Inc. Annual Management Incentive Plan effective
October 1, 1987. (Filed and designated in Form 10-K for the
fiscal year ended September 30, 1987, File 1-9091, as Exhibit
10-D.)
EX - 10.7 First Amendment to the Indiana Energy, Inc. Annual Management
Incentive Plan effective October 1, 1997. (Filed and designated
in Form 10-K for the fiscal year ended September 30, 1998, File
1-9091, as Exhibit 10-Q.)
EX - 10.8 Amendment to Indiana Energy, Inc. Directors' Restricted Stock
Plan, effective December 1, 1998. (Filed and designated in Form
10-Q for the quarterly period ended December 31, 1998, File
1-9091, as Exhibit 10-J.)
EX - 10.9 Formation Agreement among Indiana Energy, Inc., Indiana Gas
Company, Inc., IGC Energy, Inc., Indiana Energy Services, Inc.,
Citizens Gas & Coke Utility, Citizens Energy Services Corporation
and ProLiance Energy, LLC, effective March 15, 1996. (Filed and
designated in Form 10-Q for the quarterly period ended March 31,
1996, File 1-9091, as Exhibit 10-C.)
EX - 10.10 Gas Sales and Portfolio Administration Agreement between Indiana
Gas Company, Inc. and ProLiance Energy, LLC, effective March 15,
1996, for services to begin April 1, 1996. (Filed and designated
in Form 10-Q for the quarterly period ended March 31, 1996, File
1-6494, as Exhibit 10-C.)
EX - 10.11 Amended appendices to the Gas Sales and Portfolio Administration
Agreement between Indiana Gas Company, Inc. and ProLiance Energy,
LLC effective November 1, 1998. (Filed and designated in Form
10-Q for the quarterly period ended March 31, 1999, File 1-6494,
as Exhibit 10-A.)
EX - 10.12 Amended appendices to the Gas Sales and Portfolio Administration
Agreement between Indiana Gas Company, Inc. and ProLiance Energy,
LLC effective November 1, 1999. (Filed and designated in Form
10-K for the fiscal year ended September 30, 1999, File 1-6494,
as Exhibit 10-V.)
EX - 10.13 Indiana Energy, Inc. Executive Restricted Stock Plan as amended
and restated effective October 1, 1998. (Filed and designated in
Form 10-K for the fiscal year ended September 30, 1998, File
1-9091, as Exhibit 10-O.)
EX - 10.14 Indiana Energy, Inc. Director's Restricted Stock Plan as amended
and restated effective May 1, 1997. (Filed and designated in Form
10-Q for the quarterly period ended June 30, 1997, File 1-9091,
as Exhibit 10-B.)
36
EX - 10.15 Second Amendment to Indiana Energy, Inc. Directors Restricted
Stock Plan, renamed the Vectren Corporation Directors Restricted
Stock Plan effective October 1, 2000. (Filed and designated in
Form 10-K for the year ended December 31, 2000, File No. 1-15467,
as Exhibit 10.34.)
EX - 10.16 Third Amendment to Indiana Energy, Inc. Directors Restricted
Stock Plan, renamed the Vectren Corporation Directors Restricted
Stock Plan effective March 28, 2000. (Filed and designated in
Form 10-K for the year ended December 31, 2000, File No. 1-15467,
as Exhibit 10.35.)
EX - 10.17 Vectren Corporation Employment Agreement between Vectren
Corporation and Niel C. Ellerbrook dated as of March 31, 2000.
(Filed and designated in Form 10-Q for the quarterly period ended
June 30, 2000, File 1-15467, as Exhibit 99.1.)
EX - 10.18 Vectren Corporation Employment Agreement between Vectren
Corporation and Andrew E. Goebel dated as of March 31, 2000(Filed
and designated in Form 10-Q for the quarterly period ended June
30, 2000, File 1-15467, as Exhibit 99.2.)
EX - 10.19 Vectren Corporation Employment Agreement between Vectren
Corporation and Jerome A. Benkert dated as of March 31, 2000.
(Filed and designated in Form 10-Q for the quarterly period ended
June 30, 2000, File 1-15467, as Exhibit 99.3.)
EX - 10.20 Vectren Corporation Employment Agreement between Vectren
Corporation and Ronald E. Christian dated as of March 31, 2000.
(Filed and designated in Form 10-Q for the quarterly period ended
June 30, 2000, File 1-15467, as Exhibit 99.5.)
EX - 10.21 Vectren Corporation Employment Agreement between Vectren
Corporation and Timothy M. Hewitt dated as of March 31, 2000.
(Filed and designated in Form 10-Q for the quarterly period ended
June 30, 2000, File 1-15467, as Exhibit 99.6.)
EX - 10.22 Vectren Corporation Employment Agreement between Vectren
Corporation and J. Gordon Hurst dated as of March 31, 2000.
(Filed and designated in Form 10-Q for the quarterly period ended
June 30, 2000, File 1-15467, as Exhibit 99.7.)
EX - 10.23 Vectren Corporation Employment Agreement between Vectren
Corporation and Richard G. Lynch dated as of March 31, 2000.
(Filed and designated in Form 10-Q for the quarterly period ended
June 30, 2000, File 1-15467, as Exhibit 99.8.)
EX - 12 Computation of Ratio of Earnings to Fixed Charges (Filed
herewith)
EX - 99.1 Vectren Corporation Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934, but not including the
Compensation Committee Report and Performance Graph. (Filed and
designated in Form 10-K for the year ended December 31, 2000,
File 1-15467, as Exhibit 99.1.)
EX - 99.2 Indiana Gas Press Release regarding gas cost adjustment
proceedings filed in Current Report on 8-K on March 29, 2001.
(Filed herewith.)
EX - 99.3 Agreement and Plan of Merger dated as of June 11,1999 among
Indiana Energy, Inc., SIGCORP, Inc. and Vectren Corporation (the
"Merger Agreement "). (Filed and designated in Form S-4 to (No.
333-90763) filed on November 12, 1999, File 1-15467, as Exhibit
2.)
37
EX - 99.4 Amendment No.1 to the Merger Agreement dated December 14,1999
(Filed and designated in Current Report on Form 8-K filed
December 16, 1999, File 1-09091, as Exhibit 2.)
EX - 99.5 Amended and Restated Articles of Incorporation of Vectren
Corporation effective March 31,2000. (Filed and designated in
Current Report on Form 8-K filed April 14, 2000, File No.
1-15467, as Exhibit 4.1.)
EX - 99.6 Code of By-Laws of Vectren Corporation. (Filed and designated in
Form S-3 (No. 333-5390), filed January 19, 2001, File No.
1-15467, as Exhibit 4.2.)
EX - 99.7 Shareholders Rights Agreement dated as of October 21, 1999
between Vectren Corporation and Equiserve Trust Company, N.A., as
Rights Agent. (Filed and designated in Form S-4 (No. 333-90763),
filed November 12. 1999, File No 1-15467, as Exhibit 4.)