EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
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(In Thousands, Except Ratios)
Year Ended December 31
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Earnings: 2000(1) 1999 1998 1997(2) 1996
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Net income $11,209 $29,742 $26,825 $13,648 $36,121
Income taxes 7,251 16,734 14,058 7,813 21,637
Fixed charges (see below) 22,740 17,691 16,133 17,782 17,154
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Total adjusted earnings $41,200 $64,167 $57,016 $39,243 $74,912
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Fixed charges:
Total interest expense $22,409 $16,969 $15,802 $17,049 $16,200
Interest component of rents 331 722 331 733 954
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Total fixed charges $22,740 $17,691 $16,133 $17,782 $17,154
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Ratio of earnings to fixed charges 1.8 3.6 3.5 2.2 4.4
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(1) Merger and integration related costs incurred for the year ended December
31,2000 totaled $16.8 million. 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
during 2000, resulting in an increase in operation and maintenance expense
of $11.4 million.
In total, merger and integration related costs incurred for the year ended
December 31,2000 were $28.2 million ($19.5 million after tax). Indiana Gas'
ratio of earnings to fixed charges for 2000 before merger and integration
charges 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.