February 10, 1995
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 23212-2413
Gentlemen:
We are transmitting herewith Indiana Gas Company,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994, pursuant to the requirements of Section
13 of the Securities Exchange Act of 1934.
Very truly yours,
/s/ Kathleen S. Morris
Kathleen S. Morris
KSM:rs
Enclosure
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-6494
INDIANA GAS COMPANY, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0793669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1630 North Meridian Street,
Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)
317-926-3351
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock - Without par value 9,080,770 January 31, 1995
Class Number of shares Date
TABLE OF CONTENTS
Page
Numbers
Part I - Financial Information
Consolidated Balance Sheets
at December 31, 1994 and 1993
and September 30, 1994
Consolidated Statements of Income
Three Months Ended December 31, 1994 and 1993,
and Twelve Months Ended December 31, 1994 and 1993
Consolidated Statements of Cash Flows
Three Months Ended December 31, 1994 and 1993,
and Twelve Months Ended December 31, 1994 and 1993
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands - Unaudited)
<CAPTION>
December 31 September 30
1994 1993 1994
<S> <C> <C> <C>
UTILITY PLANT:
Original cost $835,329 $786,380 $824,839
Less - accumulated depreciation
and amortization 297,485 274,366 291,823
537,844 512,014 533,016
NONUTILITY PLANT - NET 391 400 393
CURRENT ASSETS:
Cash and cash equivalents 20 20 20
Accounts receivable, less reserves of
$1,522, $2,467 and $1,238 respectively 31,469 45,836 14,251
Accrued unbilled revenues 26,573 42,768 6,607
Materials and supplies - at average cost 3,878 3,753 3,663
Liquefied petroleum gas - at average cost 947 1,154 940
Gas in underground storage - at last-in,
first-out cost 60,401 53,064 64,753
Recoverable gas costs - 616 -
Prepayments and other 1,402 1,585 244
124,690 148,796 90,478
DEFERRED CHARGES:
Unamortized debt discount and expense 6,835 6,489 6,755
Environmental costs (see Note 9) 12,228 10,408 11,925
Other 14,362 4,562 7,415
33,425 21,459 26,095
$696,350 $682,669 $649,982
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDER'S EQUITY AND LIABILITIES
(Thousands - Unaudited)
<CAPTION>
December 31 September 30
1994 1993 1994
<S> <C> <C> <C>
CAPITALIZATION:
Common stock and paid-in capital $142,995 $142,995 $142,995
Retained earnings 122,079 115,460 117,300
Total common shareholder's equity 265,074 258,455 260,295
Long-term debt 153,815 164,901 156,851
418,889 423,356 417,146
CURRENT LIABILITIES:
Maturities and sinking fund requirements
of long-term debt - 10,000 -
Notes payable 43,550 50,250 30,550
Accounts payable 39,644 50,061 34,808
Refundable gas costs 37,042 - 31,595
Customer deposits and advance payments 21,923 14,146 12,594
Accrued taxes 21,730 35,849 20,291
Accrued interest 4,498 5,123 2,815
Other current liabilities 21,300 15,175 14,055
189,687 180,604 146,708
DEFERRED CREDITS:
Deferred income taxes 60,690 55,542 59,887
Unamortized investment tax credit 12,801 13,731 13,033
Customer advances for construction 1,284 1,021 1,162
Regulatory income tax liability 4,787 4,789 4,787
Other 8,212 3,626 7,259
87,774 78,709 86,128
COMMITMENTS AND CONTINGENCIES
(See Note 9) - - -
$696,350 $682,669 $649,982
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands - Unaudited)
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 113,062 $ 151,892 $ 436,467 $ 495,633
COST OF GAS 62,511 93,246 250,253 305,285
MARGIN 50,551 58,646 186,214 190,348
OPERATING EXPENSES:
Other operation and maintenance 18,168 19,533 80,617 86,524
Depreciation and amortization 7,649 6,912 29,914 27,138
Income taxes 6,511 8,998 16,980 16,865
Taxes other than income taxes 3,630 4,309 15,161 15,075
35,958 39,752 142,672 145,602
OPERATING INCOME 14,593 18,894 43,542 44,746
OTHER INCOME - NET 164 322 2,471 1,090
INCOME BEFORE INTEREST
AND OTHER CHARGES 14,757 19,216 46,013 45,836
INTEREST 3,994 4,240 15,791 16,880
OTHER (16) (180) 3 (432)
3,978 4,060 15,794 16,448
NET INCOME $ 10,779 $ 15,156 $ 30,219 $ 29,388
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands - Unaudited)
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
CASH FLOWS FROM (REQUIRED FOR)
OPERATING ACTIVITES:
Net income $ 10,779 $ 15,156 $ 30,219 $ 29,388
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 7,696 6,963 30,104 27,382
Deferred income taxes 802 643 3,432 3,076
Investment tax credit (232) (232) (930) (929)
8,266 7,374 32,606 29,529
Changes in assets and liabilities -
Receivables - net (37,184) (63,625) 30,562 (11,947)
Inventories 4,130 6,292 (7,255) (6,251)
Accounts payable, customer deposits,
advance payments and other current
liabilities 21,410 10,873 3,485 (2,448)
Accrued taxes and interest 3,122 6,051 (14,744) 9,254
Recoverable/refundable gas costs 5,447 6,837 37,658 (16,361)
Prepayments (1,158) (1,289) 183 134
Other - net (5,912) 2,592 (5,785) (536)
Total adjustments (1,879) (24,895) 76,710 1,374
Net cash flow from (required for)
operations 8,900 (9,739) 106,929 30,762
CASH FLOWS FROM (REQUIRED FOR)
FINANCING ACTIVITIES:
Issuance of common stock - - - 40,000
Reduction in long-term debt (3,036) (10,000) (21,086) (10,000)
Net change in short-term borrowings 13,000 39,998 (6,700) 19,852
Dividends (6,000) (5,800) (23,600) (21,800)
Net cash flow from (required for)
financing activities 3,964 24,198 (51,386) 28,052
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (12,864) (14,459) (55,543) (58,814)
Net cash flow required for investing activities (12,864) (14,459) (55,543) (58,814)
NET INCREASE IN CASH - - - -
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 20 20 20
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20 $ 20 $ 20 $ 20
</TABLE>
Indiana Gas Company, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements
1. Financial Statements.
Indiana Gas Company, Inc. and its subsidiaries, Terre
Haute Gas Corporation (Terre Haute) and Richmond Gas
Corporation (Richmond) which are doing business as
Indiana Gas Company, Inc. (Indiana Gas), provide natural
gas and transportation services to a diversified base of
customers in 281 communities in 48 of Indiana's 92
counties.
The interim condensed consolidated financial statements
included in this report have been prepared by Indiana
Gas, without audit, as provided in the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
omitted as provided in such rules and regulations.
Indiana Gas believes that the information in this report
reflects all adjustments necessary to fairly state the
results of the interim periods reported, that all such
adjustments are of a normally recurring nature, and the
disclosures are adequate to make the information
presented not misleading. These interim financial
statements should be read in conjunction with the
financial statements and the notes thereto included in
Indiana Gas' latest annual report on Form 10-K.
Because of the seasonal nature of Indiana Gas' gas
distribution operations, the results shown on a
quarterly basis are not necessarily indicative of annual
results.
2. Cash Flow Information.
For the purposes of the Consolidated Statements of Cash
Flows, Indiana Gas 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:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
Thousands 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Interest (net of
amount capitalized) $ 2,029 $ 1,820 $15,401 $14,956
Income taxes $ 2,963 $ 580 $26,263 $10,330
</TABLE>
3. 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.
4. Gas in Underground Storage.
Based on the cost of purchased gas during December 1994,
the cost of replacing the current portion of gas in
underground storage exceeded last-in, first-out cost at
December 31, 1994, by approximately $2,140,000.
5. Refundable or Recoverable Gas Costs.
The cost of gas purchased and refunds from suppliers,
which differ from amounts recovered through rates are
deferred and are being recovered or refunded in
accordance with procedures approved by the Indiana
Utility Regulatory Commission (IURC).
6. 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 Income - Net" and
"Other" on the Consolidated Statements of Income. An
annual AFUDC rate of 7.5 percent was used for all
periods reported.
The table below reflects the total interest capitalized
and the portion of which was computed on borrowed funds
and equity funds for all periods reported.
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
Thousands 1994 1993 1994 1993
<S> <C> <C> <C> <C>
AFUDC-Borrowed Funds $ 63 $ 231 $ 187 $ 676
AFUDC-Equity Funds 51 189 152 553
Total AFUDC Capitalized $ 114 $ 420 $ 339 $1,229
</TABLE>
7. Long-Term Debt.
On October 28, 1994, $3 million of the outstanding 9
3/8% Series M, First Mortgage Bonds were retired.
8. Cash Management/Accounts Payable.
Indiana Gas participates in a centralized cash
management program with its parent, affiliated companies
and banks which permits funding of checks as they are
presented. Amounts borrowed from affiliated companies
as well as checks written but not cashed are reflected
in accounts payable.
9. Contingencies.
A. Environmental Costs
In the past, Indiana Gas and others, including its
predecessors, former affiliates and/or previous
landowners, operated facilities for the
manufacturing of gas and storage of manufactured
gas. These facilities are no longer in operation
and have not been operated for many years. In the
manufacture and storage of such gas, various
byproducts were produced, some of which may still
be present at the sites where these manufactured
gas plants and storage facilities were located.
While management believes those operations were
conducted in accordance with the then-applicable
industry standards, under currently applicable
environmental laws and regulations, Indiana Gas,
and the others, may now be required to take
remedial action if certain materials are found at
these sites.
Indiana Gas has identified the existence, location
and certain general characteristics of 26 gas
manufacturing and storage sites. Indiana Gas
conducted remediation at two sites and is nearing
completion of the remedial
investigation/feasibility study (RI/FS) at one of
the sites under an agreed order between Indiana Gas
and the Indiana Department of Environmental
Management.
Indiana Gas is assessing, on a site-by-site basis,
whether any of the remaining 24 sites require
remediation, to what extent it is required and the
estimated cost of such action. Indiana Gas has
completed preliminary assessments (PAs) on the
majority of these sites and has completed site
investigations (SIs) at 15 of these sites. Based
upon the site work completed to date, Indiana Gas
believes that some level of contamination may be
present at a number of the remaining sites. Indiana
Gas has not begun an RI/FS at any of the remaining
sites but anticipates beginning more in the near
future and completing the remaining SIs.
Based upon the work performed to date, Indiana Gas
has accrued remediation and related costs for the
two sites where remediation has taken place.
Indiana Gas has accrued the PA/SI and groundwater
monitoring costs for the remaining 24 sites.
Indiana Gas has further accrued estimated RI/FS
costs and the costs of certain remedial actions at
a number of the remaining sites where, based upon
available information, these actions likely will be
required. The total costs which may be incurred in
connection with the remediation of all sites cannot
be determined at this time.
Indiana Gas has nearly completed the process of
identifying all potentially responsible parties
(PRPs) for each site. Indiana Gas, with the help of
outside counsel, has prepared estimates for its
share of environmental liabilities which may exist
at each of the sites. Indiana Gas has accrued only
its proportionate share of the estimated costs, as
described above, based on equitable principles
derived from case law or applied by parties in
achieving settlements.
Indiana Gas accrues for costs associated with
environmental remediation obligations when such
costs are probable and reasonably estimable.
Indiana Gas does not believe it can provide an
estimate of the reasonably possible total
remediation costs for any site prior to completion
of the RI/FS and the development of some sense of
the timing for implementation of the resulting
potential remedial alternatives.
Indiana Gas has notified insurance carriers of
potential claims where policies may provide
coverage for these environmental costs. Indiana Gas
has not recorded any receivables related to
probable recovery from insurance carriers at this
time.
In January 1992, Indiana Gas filed a petition with
the IURC seeking regulatory authority for, among
other matters, recovery through rates of all costs
Indiana Gas incurs in complying with federal, state
and local environmental regulations in connection
with past gas manufacturing activities. On February
26, 1992, Indiana Gas received authority from the
IURC to employ deferred accounting for these costs.
This authorization will extend until the IURC rules
upon Indiana Gas' pending request to establish and
implement an ongoing ratemaking mechanism that will
be designed and intended to provide for the
recovery of these costs. Indiana Gas has deferred
all environmental costs previously paid or accrued.
These costs are approximately $12.2 million
(including assessment, remediation and related
costs) as of December 31, 1994.
The impact of complying with federal, state and
local environmental regulations related to former
manufactured gas plant sites on Indiana Gas'
financial position and results of operations is
contingent upon several uncertainties. These
include the cost of compliance, the impact of joint
and several liability upon the magnitude of the
contingency, the ratemaking treatment authorized
for these items by the IURC, as well as the
recovery of environmental and related costs from
insurance carriers.
Indiana Gas believes it will be successful in
recovering the costs which it has incurred and may
incur through rates, from other potentially
responsible parties and from insurance carriers.
However, there can be no assurance as to the amount
or timing of any such recoveries.
B. Order No. 636 Transition Costs
In accordance with Federal Energy Regulatory
Commission (FERC) Order No. 636, Indiana Gas'
pipeline service providers have made a number of
filings to restructure services. Indiana Gas'
pipeline service providers are seeking from
customers, including Indiana Gas, recovery of
certain costs related to the transition to
restructured services.
In February 1994, Indiana Gas included certain
transition costs in a routine quarterly gas cost
adjustment (GCA) filing with the IURC. As part of
that proceeding, Indiana Gas was given authority to
pass the Account 191 component of such costs
through to ratepayers and to employ deferred
accounting for all other components of transition
costs pending the IURC's consideration of Indiana
Gas' request for authority to recover those costs.
As of December 31, 1994, Indiana Gas has estimated
and deferred approximately $6.2 million of the
other components of transition costs.
In a recent order involving another gas utility in
Indiana, the IURC determined that FERC Order No.
636 transition costs are recoverable as gas costs
through the quarterly GCA process. Given this
determination, Indiana Gas expects that transition
costs it is assessed by its pipeline suppliers will
be recovered through the quarterly GCA process.
10. Postretirement Benefits Other Than Pensions.
Effective October 1, 1993, Indiana Gas adopted
Statement of Financial Accounting Standards No.
106, Employers' Accounting for Postretirement
Benefits Other Than Pensions (SFAS 106). SFAS 106
requires accounting for the costs of postretirement
health care and life insurance benefits on the
accrual basis. This means the costs of benefits
paid in the future are recognized during the years
that an employee provides service to Indiana Gas
rather than the "pay-as-you-go" (cash) basis.
In January 1992, Indiana Gas filed a petition with
the IURC seeking regulatory authority for, among
other matters, rate recovery of implementation of
SFAS 106. Through a generic order issued on
December 30, 1992, Indiana Gas received authority
from the IURC to employ deferred accounting for
these costs. This authorization will extend until
the IURC rules upon Indiana Gas' pending request to
adopt SFAS 106 for ratemaking purposes. Recent
orders for other public utilities regulated by the
IURC have authorized SFAS 106 to be adopted for
ratemaking purposes. Indiana Gas has deferred
approximately $7.1 million of SFAS 106 costs as of
December 31, 1994.
11. Reclassifications.
Certain reclassifications have been made to the prior
periods' financial statements to conform to the current
year presentation. These reclassifications have no
impact on margin or net income previously reported.
Indiana Gas Company, Inc. and Subsidiary Companies
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations
Earnings
Net income for the three- and twelve-month periods
ended December 31, 1994, when compared to the same periods
one year ago are listed below.
<TABLE>
<CAPTION>
Periods Ended December 31
(Millions) 1994 1993
<S> <C> <C>
Three Months $10.8 $15.2
Twelve Months $30.2 $29.4
</TABLE>
The following discussion highlights the factors
contributing to these results.
Margin (Revenues Less Cost of Gas)
Margin for the quarter ended December 31, 1994,
decreased $8.1 million compared to the same period last
year. The decrease was primarily due to weather 26
percent warmer than the same period last year and 25
percent warmer than normal, resulting in a decrease in
space heating sales during the period.
Margin for the twelve-month period ended December 31,
1994, decreased $4.1 million compared to the same period
last year. The decrease for the twelve-month period
reflects weather 8 percent warmer than the same period
last year and 7 percent warmer than normal, offset
somewhat by additional residential and commercial
customers.
Total system throughput (combined sales and
transportation) decreased 14 percent (5.1 MMDth) for the
first quarter of fiscal 1995 when compared to the same
period one year ago. This was due primarily to decreases
in residential and commercial space heating sales caused
by warmer weather.
Throughput decreased 2 percent (1.8 MMDth) for the
twelve-month period ended December 31, 1994, when compared
to the same period last year. This is due primarily to
decreases in residential and commercial space heating
sales caused by warmer weather, offset by an increase in
throughput for industrial customers and an increase in
residential and commercial customers.
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.
Total average cost per unit of gas purchased decreased
to $2.68 for the three-month period ended December 31,
1994, compared to $3.05 for the same period one year ago.
For the twelve-month period, cost of gas per unit
decreased to $2.78 in the current period compared to $2.90
for the same period last year.
Adjustments to Indiana Gas' rates and charges related
to the cost of gas are made through gas cost adjustment
(GCA) procedures established by Indiana law and
administered by the Indiana Utility Regulatory Commission
(IURC). The GCA passes through increases and decreases in
cost of gas to Indiana Gas' customers dollar for dollar.
Operating Expenses
Operation and maintenance expenses decreased
approximately $1.4 million for the three-month period
ended December 31, 1994, when compared to the same period
one year ago. The decrease is attributable to lower labor-
related costs, including health care and pension costs,
and other general expenses.
Operation and maintenance expenses for the twelve-
month period decreased approximately $5.9 million compared
to the same period last year. The decrease is primarily
due to labor and related costs which are lower than the
levels last year when additional operation and maintenance
projects were in progress.
Depreciation and amortization expense increased for
the three- and twelve-month periods ended December 31,
1994, when compared to the same periods one year ago as
the result of additions to utility plant to serve new
customers and to maintain dependable service to existing
customers.
Federal and state income taxes decreased for the
three-month period ended December 31, 1994, when compared
to the same period one year ago due to lower taxable
income. Federal and state income taxes remained
approximately the same for the twelve-month period when
compared to the same period last year.
Taxes other than income taxes decreased for the three-
month period ended December 31, 1994, when compared to the
same period one year ago due to lower gross receipts tax
expenses. Taxes other than income taxes remained
approximately the same for the twelve-month period when
compared to the same period last year.
Interest Expense
Interest expense decreased for the three- and twelve-
month periods ended December 31, 1994, when compared to
the same periods one year ago due to a decrease in average
debt outstanding slightly offset by an increase in
interest rates.
Other Operating Matters
1995 Settlement Agreement
During 1994, Indiana Gas, the Office of Utility
Consumer Counselor (OUCC) and a group of large-volume
users entered a series of negotiations designed to
increase Indiana Gas' opportunity to earn on its recent
capital investments while avoiding the necessity of a
general rate filing. As a result of these negotiations,
the IURC approved on October 26, 1994, a stipulation
and settlement agreement which provided, among other
things, for the following: (1) an increase in Indiana
Gas' authorized utility operating income from $47.1
million to $51.1 million beginning in fiscal 1995; (2)
with certain specified exceptions, Indiana Gas may not
file a petition to increase its base rates until
September 1, 1995; and (3) an agreement to a number of
operational and other service enhancements for large-
volume customers.
Furthermore, as part of the agreement, the OUCC agreed
to perform another investigation during fiscal year
1995 to consider an additional increase to Indiana Gas'
authorized utility operating income.
Environmental Matters
Indiana Gas is currently conducting environmental
investigations and work at certain sites that were the
location of former manufactured gas plants. For further
information regarding the status of investigation and
remediation of the sites, financial reporting, ratemaking
and other potentially responsible parties, see Note 9.
Federal Energy Regulatory Commission Matters
In accordance with Federal Energy Regulatory
Commission (FERC) Order No. 636, Indiana Gas' pipeline
service providers have made a number of filings to
restructure services. Indiana Gas' pipeline service
providers are seeking from customers, including Indiana
Gas, recovery of certain costs related to the
transition to restructured services. For further
information regarding the financial reporting and
ratemaking, see Note 9.
Postretirement Benefits Other Than Pensions
Effective October 1, 1993, Indiana Gas adopted
Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other
Than Pensions (SFAS 106). SFAS 106 requires accounting
for the costs of postretirement health care and life
insurance benefits on the accrual basis. This means the
costs of benefits paid in the future are recognized
during the years that an employee provides service to
Indiana Gas rather than the "pay-as-you-go" (cash)
basis. For further information regarding the financial
reporting and ratemaking, see Note 10.
Liquidity and Capital Resources
New construction to provide service to a growing
customer base and normal system maintenance and
improvements will continue to require substantial capital
expenditures. For the twelve months ended December 31,
1994, Indiana Gas' capital expenditures totaled $55.5
million. Of this amount, 71 percent was provided by funds
generated internally (net income less dividends plus
charges to net income not requiring funds). Capital
expenditures for fiscal 1995 are estimated at $54.7 million
of which $12.9 million have been expended during the
three-month period ended December 31, 1994.
Indiana Gas' goal is to fund internally approximately
75 percent of its construction program. Capitalization
objectives for Indiana Gas are 55-65 percent common equity
and 35-45 percent long-term debt. This will help Indiana
Gas to maintain its high creditworthiness. The long-term
debt of Indiana Gas is currently rated Aa3 by Moody's
Investors Service and AA- by Standard & Poor's Corporation
and Duff & Phelps.
On October 28, 1994, $3 million of the outstanding 9
3/8% Series M, First Mortgage Bonds were retired.
The nature of Indiana Gas' business creates large short-
term cash working capital requirements primarily to finance
customer accounts receivable, unbilled utility revenues
resulting from cycle billing, gas in underground storage
and construction expenditures until permanently financed.
Short-term borrowings tend to be greatest during the
heating season when accounts receivable and unbilled
utility revenues are at their highest. Depending on cost,
commercial paper or bank lines of credit are used as
sources of short-term financing. Indiana Gas' commercial
paper is rated P-1 by Moody's and A-1+ by Standard &
Poor's. Long-term financial strength and flexibility
require maintaining throughput volumes, controlling costs
and, if absolutely necessary, securing timely increases in
rates to recover costs and provide a fair and reasonable
return to shareholders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule Filed herewith.
(b) No Current Reports on Form 8-K were filed during the quarter
ended December 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
INDIANA GAS COMPANY, INC.
Registrant
Dated February 10, 1995 /s/Niel C. Ellerbrook
Niel C. Ellerbrook
Senior Vice President
and Chief Financial Officer
Dated February 10, 1995 /s/Jerome A. Benkert
Jerome A. Benkert
Controller
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana Gas
Company, Inc.'s consolidated financial statements as of December 31, 1994, and
for the three months then ended and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 537,844
<OTHER-PROPERTY-AND-INVEST> 391
<TOTAL-CURRENT-ASSETS> 124,690
<TOTAL-DEFERRED-CHARGES> 33,425
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 696,350
<COMMON> 142,995
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 122,079
<TOTAL-COMMON-STOCKHOLDERS-EQ> 265,074
0
0
<LONG-TERM-DEBT-NET> 153,815
<SHORT-TERM-NOTES> 43,550
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 233,911
<TOT-CAPITALIZATION-AND-LIAB> 696,350
<GROSS-OPERATING-REVENUE> 113,062
<INCOME-TAX-EXPENSE> 6,511
<OTHER-OPERATING-EXPENSES> 91,958
<TOTAL-OPERATING-EXPENSES> 98,469
<OPERATING-INCOME-LOSS> 14,593
<OTHER-INCOME-NET> 180
<INCOME-BEFORE-INTEREST-EXPEN> 14,773
<TOTAL-INTEREST-EXPENSE> 3,994
<NET-INCOME> 10,779
0
<EARNINGS-AVAILABLE-FOR-COMM> 10,779
<COMMON-STOCK-DIVIDENDS> 6,000
<TOTAL-INTEREST-ON-BONDS> 3,300
<CASH-FLOW-OPERATIONS> 8,900
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
