December 19, 1996
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
Gentlemen:
We are transmitting herewith Indiana Gas Company,
Inc.'s Annual Report on Form 10-K for the year ended
September 30, 1996, pursuant to the requirements of Section
13 of the Securities Exchange Act of 1934.
Very truly yours,
Douglas S. Schmidt
DSS:rs
Enclosure
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
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)
Registrant's telephone number, including area code 317-926-3351
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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) 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
Registrant's classes of common stock, as of the latest
practicable date.
Common Stock-Without par value 9,080,770 November 30, 1996
Class Number of shares Date
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K ( 229.405 of this
chapter) is not contained herein, and will not be contained,
to the best of the 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]
Table of Contents
Page
Part I
Business
Property
Legal Proceedings
Submission of Matters to a Vote of Security Holders
Executive Officers of the Company
Part II
Market for the Registrant's Common Equity and Related
Stockholder Matters
Selected Financial Data
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants
Part III
Directors and Executive Officers of the Registrant
Executive Compensation
Securities Ownership of Certain Beneficial Owners and
Management
Certain Relationships and Related Transactions
Part IV
Exhibits, Financial Statements Schedules, and Reports on
Form 8-K
Part I
Item 1. Business
(a) General Development of the Business.
Indiana Gas Company, Inc. (Indiana Gas or the
company) is an operating public utility engaged in
the business of providing gas utility service in
the state of Indiana. It was incorporated under
the laws of the state of Indiana on July 16, 1945.
All of the outstanding shares of common stock of
the company are owned by Indiana Energy, Inc.
(Indiana Energy), which is a public holding
company.
(c) Narrative Description of the Business.
During fiscal 1996, Indiana Gas supplied gas
to about 465,000 residential, commercial and
industrial customers in 281 communities in 48 of
the 92 counties in the state of Indiana. The
service area has a population of approximately 2
million and contains diversified manufacturing
and agriculture-related enterprises. The
principal industries served include automotive
parts and accessories, feed, flour and grain
processing, metal castings, aluminum products,
gypsum products, electrical equipment, metal
specialties and glass.
The largest communities served include
Muncie, Anderson, Lafayette-West Lafayette,
Bloomington, Terre Haute, Marion, New Albany,
Columbus, Jeffersonville, New Castle and
Richmond. Indiana Gas does not serve in
Indianapolis, although its general office is
located in that city.
For the fiscal year ended September 30,
1996, residential customers provided 60 percent
of revenues, commercial 21 percent and industrial
19 percent. At such date, approximately 99
percent of Indiana Gas' customers used gas for
space heating, and space heating revenues from
these customers for the fiscal year were 81
percent of total operating revenues. Sales of
gas are seasonal and strongly affected by
variations in weather conditions. During the
fiscal year ended September 30, 1996, Indiana Gas
added approximately 10,300 residential and
commercial customers.
Indiana Gas sells gas directly to
residential, commercial and industrial customers
at approved rates. Indiana Gas also transports
gas through its pipelines at approved rates to
commercial and industrial customers which have
purchased gas directly from producers or through
brokers and marketers. The total volumes of gas
provided to both sales and transportation
customers is referred to as throughput.
Gas transported on behalf of end-use
customers in fiscal 1996 represented 27 percent
(34,165 MDth) of throughput compared to 30
percent (33,312 MDth) in 1995 and 26 percent
(30,125 MDth) in 1994. Although revenues are
lower, rates for transportation generally provide
the same margins as would have been earned had
the gas been sold under normal sales tariffs.
Effective April 1, 1996, Indiana Gas
purchases all of its natural gas from ProLiance
Energy, LLC, a gas marketing affiliate of Indiana
Energy (see Item 7, ProLiance Energy, LLC).
Indiana Gas has separate contracts with pipelines
for storage of natural gas.
Prices for gas and related services
purchased are determined primarily by market
conditions and rates established by the Federal
Energy Regulatory Commission. Indiana Gas' rates
and charges, terms of service, accounting
matters, issuance of securities, and other
operational matters are regulated by the Indiana
Utility Regulatory Commission (IURC).
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 IURC. The IURC has applied the statute
authorizing the GCA procedures to reduce rates
when necessary so as to limit net operating
income, after adjusting to normal weather, to the
level authorized in the last general rate order.
The earnings test provides that no refund be paid
to the extent a utility has not earned its
authorized utility operating income over the
previous 60 months (or during the period since
the utility's last rate order, if longer). On
November 9, 1995, the IURC approved a settlement
agreement among Indiana Gas, the Office of the
Utility Consumer Counselor and a group of large-
volume users which provided for authorized
utility operating income (weather normalized) of
$54.2 million for Indiana Gas beginning in fiscal
1996.
Information regarding environmental matters
affecting the company is incorporated herein by
reference to Item 7, Environmental Matters.
Indiana Gas had 1,067 full-time employees and 37
part-time employees as of September 30, 1996.
Item 2. Property
The properties of Indiana Gas are used for
the purchase, production, storage and
distribution of gas and are located primarily
within the state of Indiana. As of September 30,
1996, such properties included approximately
10,300 miles of distribution mains; 480,673
meters; seven reservoirs currently being used for
the underground storage of purchased gas with
approximately 107,074 acres of land held under
storage easements; 9,937,010 Dth of gas in
company-owned underground storage with a daily
deliverability of 144,860 Dth; 12,165,382 Dth of
gas in contract storage with a daily
deliverability of 163,813 Dth; and five liquefied
petroleum (propane) air-gas manufacturing plants
with a total daily capacity of 36,700 Dth of gas.
Indiana Gas' capital expenditures during the
fiscal year ended September 30, 1996, amounted to
$66.4 million.
Item 3. Legal Proceedings
See Item 8, Note 9 for litigation matters
involving insurance carriers pertaining to
Indiana Gas' former manufactured gas plants and
storage facilities.
Item 4. Submission of Matters to a Vote of Security
Holders
No matter was submitted during the fourth
quarter of the fiscal year ended September 30,
1996, to a vote of security holders.
Item 4a. Executive Officers of the Company
As of September 30, 1996, the following
individuals were Executive Officers of the
company:
<TABLE>
Family
Relation- Office or Date Elected
Name Age ship Position Held Or Appointed(1)
<S> <C> <C> <C> <C>
Lawrence A. Ferger 62 None Chairman,
President and
Chief Executive Officer Jan. 26, 1996
President and Chief
Executive Officer July 1, 1987
Paul T. Baker 56 None Senior Vice President
and Chief Operating
Officer Aug. 1, 1991
Niel C. Ellerbrook 47 None Senior Vice President and
Chief Financial Officer July 1, 1987
Anthony E. Ard 55 None Senior Vice President of
Corporate Affairs Jan. 9, 1995
Vice President -
Corporate Affairs Jan. 11, 1993
Vice President and
Secretary Sep. 30, 1988
Timothy M. Hewitt 46 None Vice President of
Operations and Engineering Jan. 9, 1995
Vice President of Sales
and Field Operations Jan. 14, 1991
(1) Each of the officers has served continuously since the dates indicated.
</TABLE>
Part II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
All of the outstanding shares of Indiana Gas'
common stock are owned by Indiana Energy, Inc., and
are not traded.
During fiscal 1996, the company paid aggregate
dividends of $6.3 million, $6.3 million, $6.3
million and $6.5 million in the first, second, third
and fourth quarters, respectively.
During fiscal 1995, the company paid aggregate
dividends of $6.0 million, $6.0 million, $6.0
million and $6.3 million in the first, second, third
and fourth quarters, respectively.
<TABLE>
Item 6. Selected Financial Data
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
(Thousands)
Year Ended September 30 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Operating revenues $530,594 $403,810 $475,297 $499,278 $411,260
Margin 210,463 185,315 194,309 185,725 160,333
Operating expenses 156,910 139,127 146,466 141,452 122,206
Operating income 53,553 46,188 47,843 44,273 38,127
Interest and other - net 14,923 14,079 13,247 15,739 12,384
Net income 38,630 32,109 34,596 28,534 25,743
Dividends on preferred
stock - - - 285 1,710
Earnings available for
common stock $ 38,630 $ 32,109 $ 34,596 $ 28,249 $ 24,033
Ratio of earnings to fixed
charges 4.6 4.1 4.1 3.5 3.5
Common shareholder's equity $281,534 $268,154 $260,295 $249,099 $202,833
Redeemable preferred
shareholder's equity - - - - 20,000
Long-term debt (1) 174,733 173,693 156,851 184,901 149,901
$456,267 $441,847 $417,146 $434,000 $372,734
Total throughput 126,742 109,508 116,285 111,354 101,985
Annual heating degree days
as a percent of normal 108% 87% 102% 99% 90%
Utility customers served -
average 465,166 454,817 443,498 433,000 422,997
Total Assets at Year-End $672,907 $655,933 $649,982 $621,658 $567,779
(1)Includes current maturities; excludes sinking
fund requirements.
</TABLE>
Item 7. Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Earnings
Net income increased to $38.6 million in fiscal 1996 from
$32.1 million in fiscal 1995 primarily as a result of
weather that was 25 percent colder than last year, as well
as the addition of new residential and commercial customers.
This increase was offset somewhat by higher operation and
maintenance expenses.
Net income decreased to $32.1 million in fiscal 1995 from
$34.6 million in fiscal 1994 due to weather that was 15
percent warmer than the prior year. This decrease was
partially offset by lower operation and maintenance
expenses, as well as the addition of new residential and
commercial customers.
Margin (Revenues Less Cost of Gas)
In 1996, margin increased 14 percent ($25.1 million) when
compared to 1995. The increase is primarily attributable to
weather that was 25 percent colder than last year and 8
percent colder than normal. Additional residential and
commercial customers, as well as rate recovery (beginning
May 1995) of postretirement benefit costs recognized in
accordance with Statement of Financial Accounting Standards
No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions (SFAS 106), also contributed to the
increase.
In 1995, margin decreased 5 percent ($9.0 million) when
compared to 1994. The decrease reflected weather that was
15 percent warmer than the prior year and 13 percent warmer
than normal, offset somewhat by the addition of new
residential and commercial customers.
In 1996, total system throughput (combined sales and
transportation) increased 16 percent (17.2 MMDth) when
compared to last year. In 1995, throughput decreased 6
percent (6.8 MMDth) when compared to 1994. 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 dekatherm of gas purchased (average
commodity and demand) was $3.14 in 1996, $2.53 in 1995 and
$2.89 in 1994. The price swings are due primarily to
changing commodity costs associated with the impacts on
customer demand during the very warm winter in 1995 and the
colder winter this fiscal year.
Operating Expenses
Operation and maintenance expenses increased approximately
$8.5 million in 1996 when compared to 1995. The increase is
primarily attributable to higher performance-based
compensation and the recognition (beginning May 1995) of
postretirement benefit costs in accordance with SFAS 106.
In addition, the increased margin resulting from the very
cold weather allowed for the acceleration of certain
projects that will help maintain and strengthen the
distribution system.
Operation and maintenance expenses decreased approximately
$6.4 million in 1995 when compared to 1994. The decrease
was primarily attributable to lower expenses for labor and
related benefits, distribution mains and services,
advertising and outside services. The declining operation
and maintenance expenses reflected management's efforts to
control costs in response to very warm weather.
Depreciation and amortization expense increased in 1996 and
1995 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 increased in 1996, while
decreasing in 1995, due to changes in taxable income.
Taxes other than income taxes increased in 1996 due to
higher property tax expense and higher gross receipts tax
expense resulting from increased revenue. Taxes other than
income taxes decreased in 1995 due to lower gross receipts
tax expense resulting from decreased revenue. Property tax
expense for 1995 remained approximately the same as compared
to 1994.
Interest Expense
Interest expense increased in 1996 due to an increase in
average debt outstanding, slightly offset by a decrease in
interest rates. Interest expense decreased in 1995 due to a
decrease in average debt outstanding, slightly offset by an
increase in interest rates.
Other Operating Matters
Gas Cost Adjustment
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 the cost of gas to
Indiana Gas' customers dollar for dollar.
In addition, the IURC has applied the statute authorizing
the GCA procedures to reduce rates when necessary so as to
limit utility operating income, after adjusting to normal
weather, to the level authorized in the last general rate
order. The earnings test provides that no refund be paid to
the extent a utility has not earned its authorized utility
operating income over the previous 60 months (or during the
period since the utility's last rate order, if longer). On
November 9, 1995, the IURC approved a settlement agreement
among Indiana Gas, the Office of Utility Consumer Counselor
and a group of large-volume users which provided for
authorized utility operating income (weather normalized) of
$54.2 million for Indiana Gas beginning in fiscal 1996.
ProLiance Energy, LLC
On March 15, 1996, IGC Energy, Inc., an indirect wholly
owned subsidiary of Indiana Energy (Indiana Gas' parent),
and Citizens By-Products Coal Company, a wholly owned
subsidiary of Citizens Gas and Coke Utility (Citizens Gas),
formed a jointly and equally owned limited liability company
to provide natural gas supply and related marketing
services. The new entity, ProLiance Energy, LLC
(ProLiance), began providing services to Indiana Gas and
Citizens Gas effective April 1, 1996. ProLiance also
provides products and services to other gas utilities and
customers in Indiana and surrounding states. ProLiance has
assumed the business of Indiana Energy Services, Inc.,
Indiana Energy's gas marketing affiliate, which had provided
similar services to other customers and from January 1,
1996, to March 31, 1996, to Indiana Gas.
The sale of gas and provision of other services to Indiana
Gas by Indiana Energy's marketing affiliates are subject to
regulatory review through the quarterly gas cost adjustment
proceeding currently pending before the IURC.
Two proceedings which may affect the formation, operation or
earnings of ProLiance are currently pending before the IURC.
The first proceeding was initiated by a small group of
Indiana Gas' and Citizens Gas' large-volume customers who
contend that the gas service contracts between ProLiance and
Indiana Gas and Citizens Gas should be disapproved by the
IURC or, alternatively, that the IURC should regulate the
operations of ProLiance. On September 27, 1996, the IURC
issued a partial decision in that proceeding and found that
ProLiance is not subject to regulation as a public utility.
The IURC did confirm that it will continue to monitor gas
costs incurred by Indiana Gas. Hearings on the remaining
issues were concluded on October 9, 1996. A decision from
the IURC is expected during the first half of calendar 1997.
The second proceeding involves the quarterly gas cost
adjustment applications of Indiana Gas and Citizens Gas
wherein these utilities are proposing to recover the costs
they have and will incur under their gas supply and related
agreements with ProLiance. This proceeding will consider
whether the recovery of those costs is consistent with
Indiana law governing gas cost recovery. The hearing on the
second proceeding has not yet been scheduled.
While the outcome of these proceedings cannot be predicted,
management does not expect this matter to have a material
impact on Indiana Gas' financial position or results of
operations.
Indiana Legislative Matters
On April 26, 1995, the Indiana General Assembly enacted
legislation which provides new flexibility to the IURC for
future regulation of Indiana utilities. The new law
recognizes that competition is increasing in the provision
of energy services and that flexibility in the regulation of
energy services providers is essential to the well-being of
the state, its economy and its citizens. Under the law, an
energy utility can present to the IURC a broad range of
proposals from performance-based ratemaking to complete
deregulation of a utility's operations. The law gives the
IURC the authority to adopt alternative regulatory
practices, procedures and mechanisms and establish rates and
charges that are in the public interest, and will enhance or
maintain the value of the energy utility's retail energy
services or property. It also provides authority for the
IURC to establish rates and charges based on market or
average prices that use performance-based rewards or
penalties, or which are designed to promote efficiency in
the rendering of retail energy services.
Environmental Matters
Indiana Gas is currently conducting environmental
investigations and work at certain sites that were the
locations of former manufactured gas plants. It is seeking
to recover the costs of the investigations and work from
insurance carriers, other potentially responsible parties
(PRPs) and customers.
On May 3, 1995, Indiana Gas received an order from the IURC
in which the Commission concluded that the costs incurred by
Indiana Gas to investigate and, if necessary, clean-up
former manufactured gas plant sites are not utility
operating expenses necessary for the provision of service
and, therefore, are not recoverable as operating expenses
from utility customers. This order has been appealed.
On April 14, 1995, Indiana Gas filed suit in the United
States District Court for the Northern District of Indiana,
Fort Wayne Division, against a number of insurance carriers
for payment of claims for investigation and clean-up costs
already incurred, as well as for a determination that the
carriers are obligated to pay these costs in the future. On
October 2, 1996, the Court granted several motions filed by
defendant insurance carriers for summary judgment on a
number of issues relating to the insurers' obligations to
Indiana Gas under insurance policies issued by these
carriers. For example, the Court held that because the
placement of residuals on the ground at the sites was done
intentionally, there was no "fortuitous accident" and
therefore no "occurrence" subject to coverage under the
relevant policies. Since the management of Indiana Gas
believes that a number of the Court's rulings are contrary
to Indiana law, it intends to appeal all adverse rulings to
the United States Court of Appeals for the Seventh Circuit.
However, if these rulings are not reversed on appeal, they
would effectively eliminate coverage under most of the
policies at issue. There can be no assurance as to whether
Indiana Gas will prevail on this appeal. As of September
30, 1996, Indiana Gas has obtained cash settlements from
some insurance carriers in an aggregate amount in excess of
$13.5 million.
The Court's rulings will have no immediate impact on
earnings since Indiana Gas has previously recorded all costs
which it presently expects to incur in connection with
remediation activities. It is possible that future events
may require additional remediation activities which are not
presently foreseen.
For further information regarding the status of
investigation and remediation of the sites, PRPs, recovery
from insurers, litigation, financial reporting and
ratemaking, see Item 8, Note 9.
Postretirement Benefits Other Than Pensions
On May 3, 1995, the IURC issued an order authorizing 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 (SFAS 106). Amounts accrued prior to the
order were deferred as allowed by the IURC. While this
order is consistent with the IURC's rulings for other
utilities within the state of Indiana and with the
ratemaking treatment of the majority of regulatory
jurisdictions outside of Indiana, the Office of Utility
Consumer Counselor is appealing the order. A decision on
the appeal by the Indiana Court of Appeals is expected early
in calendar 1997.
New Accounting Standards
In March 1995, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
No. 121, Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of. This statement
imposes stricter criteria for regulatory assets by requiring
that such assets be probable of future recovery at each
balance sheet date. Indiana Gas will adopt this standard
effective October 1, 1996, and does not expect that the
adoption will have a material impact on its financial
position or results of operations based on the current
regulatory structure in which it operates. This conclusion
may change in the future as competitive factors influence
pricing in the industry.
In October 1995, the FASB issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based
Compensation. Pursuant to this new standard, companies are
encouraged, but not required, to adopt a fair value method
of accounting for employee stock-based transactions.
Indiana Gas does not expect this standard to have a material
impact on its financial position or results of operations.
Liquidity and Capital Resources
New construction, normal system maintenance and
improvements, and information technology investments to
provide service to a growing customer base will continue to
require substantial capital expenditures. Indiana Gas' goal
is to internally fund approximately 75 percent of its
capital expenditure program. 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. Indiana
Gas' ratio of earnings to fixed charges was 4.6 for 1996
(see Exhibit 12).
Total capital required to fund both capital expenditures and
refinancing requirements for 1995 and 1996, along with
estimated amounts for 1997 through 1999, are as follows:
<TABLE>
THOUSANDS 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
Capital expenditures $ 54,900 $ 66,000 $ 70,000 $ 71,000 $ 65,000
Refinancing requirements 3,200 19,000 - 35,000 10,000
$ 58,100 $ 85,000 $ 70,000 $106,000 $ 75,000
</TABLE>
In 1996, 70 percent of Indiana Gas' capital expenditures was
provided by funds generated internally (net income less
dividends plus charges to net income not requiring funds).
In 1995, 77 percent of capital expenditures was provided by
funds generated internally. External funds required for the
1996 construction program were obtained primarily through
short-term borrowings.
Capitalization objectives for Indiana Gas are 55-65 percent
common equity and preferred stock and 35-45 percent long-
term debt. Indiana Gas' common equity component was 62
percent of total capitalization at September 30, 1996.
During December 1995, Indiana Gas issued $20 million in
aggregate principal amount of its Medium-Term Notes, Series
E (Notes) as follows: $5 million of 6.69% Notes due
June 10, 2013; $5 million of 6.69% Notes due December 21,
2015; and $10 million of 6.69% Notes due December 29, 2015.
Indiana Gas plans to issue an additional $15 million of the
Notes by the end of fiscal 1997. On July 15, 1996, Indiana
Gas used the net proceeds from the December issuances to
redeem its remaining first mortgage bonds, $19 million of 9
3/8% Series M First Mortgage Bonds.
Short-term cash working capital is required primarily to
finance customer accounts receivable, unbilled utility
revenues resulting from cycle billing, gas in underground
storage and capital 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. Indiana Gas' commercial
paper is rated P-1 by Moody's and A-1+ by Standard & Poor's.
Recently, bank lines of credit have been the primary source
of short-term financing. 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.
Forward-Looking Information
Certain matters discussed in Management's Discussion and
Analysis are forward-looking. These forward-looking
discussions reflect the company's current best estimates
regarding future operations. Since these are only
estimates, actual results could be materially different.
Several factors, some of which are outside of the company's
control and cannot be accurately and conclusively predicted,
may materially affect estimates of future operations. Such
factors include the effect of weather on gas consumption,
particularly in the residential market, the effect of
general economic conditions on gas consumption, particularly
in industrial and commercial markets, the direction and pace
of change in state and federal regulation on both the gas
and electric industries, and the effects of competition on
markets where prices and providers have been regulated.
Item 8. Financial Statements and Supplementary Data
Management's Responsibility for Financial Statements
The management of the company is responsible for the
preparation of the consolidated financial statements and the
related financial data contained in this report. The
financial statements are prepared in conformity with
generally accepted accounting principles 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 judgements, are the
responsibility of management. Management maintains a system
of internal controls 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 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, with and without management representatives
present, to discuss the scope and results of their audits,
their comments on the adequacy of internal accounting
controls and the quality of financial reporting.
/s/Niel C. Ellerbrook
Niel C. Ellerbrook
Senior Vice President and
Chief Financial Officer
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Indiana Gas
Company, Inc.:
We have audited the accompanying consolidated balance sheets
and schedules of long-term debt of Indiana Gas Company, Inc.
(an Indiana corporation and wholly owned subsidiary of
Indiana Energy, Inc.) and subsidiary companies as of
September 30, 1996, and 1995, and the related consolidated
statements of income, common shareholder's equity and cash
flows for each of the three years in the period ended
September 30, 1996. These financial statements are the
responsibility of the company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. 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. and subsidiary
companies, as of September 30, 1996, and 1995, and the
results of their operations and their cash flows for each of
the three years in the period ended September 30, 1996, in
conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Indianapolis, Indiana
October 25, 1996
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands)
Year Ended September 30
1996 1995 1994
<S> <C> <C> <C>
OPERATING REVENUES $ 530,594 $ 403,810 $ 475,297
COST OF GAS 320,131 218,495 280,988
MARGIN 210,463 185,315 194,309
OPERATING EXPENSES:
Other operation and maintenance 84,136 75,608 81,982
Depreciation and amortization 33,232 31,265 29,177
Income taxes 23,174 19,216 19,467
Taxes other than income taxes 16,368 13,038 15,840
156,910 139,127 146,466
OPERATING INCOME 53,553 46,188 47,843
OTHER INCOME - NET 888 1,423 2,629
INCOME BEFORE INTEREST AND OTHER 54,441 47,611 50,472
INTEREST AND OTHER CHARGES:
Interest on long-term debt 14,882 13,474 14,798
Interest on notes payable 337 971 493
Allowance for borrowed funds used
during construction (283) (215) (355)
Other interest 688 1,085 746
Other amortization 187 187 194
15,811 15,502 15,876
NET INCOME $ 38,630 $ 32,109 $ 34,596
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
Year Ended September 30
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 38,630 $ 32,109 $ 34,596
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 33,419 31,452 29,371
Deferred income taxes 804 3,994 3,273
Investment tax credit (930) (930) (930)
33,293 34,516 31,714
Changes in assets and liabilities -
Receivables - net (3,818) 3,634 1,537
Inventories 19,966 5,189 (5,093)
Accounts payable, customer deposits, advance
payments and other current liabilities (13,658) 40,686 (7,052)
Accrued taxes and interest (4,020) (12,375) (11,815)
Refundable/recoverable gas costs (7,593) (26,712) 39,048
Other - net 5,780 13,629 5,355
Total adjustments 29,950 58,567 53,694
Net cash flows from operations 68,580 90,676 88,290
CASH FLOWS REQUIRED FOR FINANCING ACTIVITIES:
Sale of long-term debt 20,000 20,000 -
Reduction in long-term debt (18,960) (3,158) (28,050)
Net change in short-term borrowings 22,011 (28,325) 20,298
Dividends (25,250) (24,250) (23,400)
Net cash flows required for financing activities (2,199) (35,733) (31,152)
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (66,381) (54,943) (57,138)
Net cash flows required for investing activities (66,381) (54,943) (57,138)
NET INCREASE (DECREASE) IN CASH - - -
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 20 20
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20 $ 20 $ 20
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands)
September 30
1996 1995
<S> <C> <C>
UTILITY PLANT:
Original cost $931,092 $872,287
Less - accumulated depreciation and amortization 344,268 316,991
586,824 555,296
NONUTILITY PLANT - NET 33 188
CURRENT ASSETS:
Cash and cash equivalents 20 20
Accounts receivable, less reserves of
$1,853 and $1,662 respectively 15,468 13,403
Accrued unbilled revenues 8,158 6,405
Materials and supplies - at average cost 4,611 3,890
Liquefied petroleum gas - at average cost 507 883
Gas in underground storage - at last-in,
first-out cost 39,083 59,394
Recoverable gas costs 2,710 -
Prepayments and other 43 144
70,600 84,139
DEFERRED CHARGES:
Unamortized debt discount and expense 7,477 6,800
Other 7,973 9,510
15,450 16,310
$672,907 $655,933
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDER'S EQUITY AND LIABILITIES
(Thousands)
September 30
1996 1995
<S> <C> <C>
CAPITALIZATION:
Common stock and paid-in capital $142,995 $142,995
Retained earnings 138,539 125,159
Total common shareholder's equity 281,534 268,154
Long-term debt (see schedule) 174,733 173,693
456,267 441,847
CURRENT LIABILITIES:
Notes payable 24,236 2,225
Accounts payable 49,402 59,713
Refundable gas costs - 4,883
Customer deposits and advance payments 14,256 20,870
Accrued taxes 4,206 7,928
Accrued interest 2,505 2,803
Other current liabilities 24,827 21,560
119,432 119,982
DEFERRED CREDITS:
Deferred income taxes 66,862 65,096
Unamortized investment tax credit 11,173 12,103
Regulatory income tax liability 2,835 3,797
Customer advances for construction 1,434 1,297
Other 14,904 11,811
97,208 94,104
COMMITMENTS AND CONTINGENCIES (see Notes 8, 9 and 11) - -
$672,907 $655,933
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
(Thousands except shares)
COMMON STOCK AND
PAID-IN CAPITAL RETAINED
SHARES AMOUNT EARNINGS TOTAL
<S> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1993 9,080,770 $142,995 $ 106,104 $249,099
Net Income 34,596 34,596
Common Stock Dividends
($2.58 per share) (23,400) (23,400)
BALANCE AT SEPTEMBER 30, 1994 9,080,770 142,995 117,300 260,295
Net Income 32,109 32,109
Common Stock Dividends
($2.67 per share) (24,250) (24,250)
BALANCE AT SEPTEMBER 30, 1995 9,080,770 142,995 125,159 268,154
Net Income 38,630 38,630
Common Stock Dividends
($2.78 per share) (25,250) (25,250)
BALANCE AT SEPTEMBER 30, 1996 9,080,770 $142,995 $ 138,539 $281,534
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED SCHEDULES OF LONG-TERM DEBT
(Thousands)
September 30
1996 1995
<S> <C> <C>
LONG-TERM DEBT:
First Mortgage Bonds
9 3/8% Series M, called and due July 15, 1996 $ - $ 18,950
Unsecured Notes Payable
6 5/8% Series D, due December 1, 1997 35,000 35,000
8.90%, due July 15, 1999 10,000 10,000
6.69%, Series E, due June 10, 2013 5,000 -
7.15%, Series E, due March 15, 2015 5,000 5,000
6.69%, Series E, due December 21, 2015 5,000 -
6.69%, Series E, due December 29, 2015 10,000 -
9 3/8%, due January 15, 2021 25,000 25,000
9 1/8% Series A, due February 15, 2021 40,000 40,000
8 1/2% Series B Debentures, due September 15, 2021 24,733 24,743
6.31%, Series E, due June 10, 2025 5,000 5,000
6.53%, Series E, due June 27, 2025 10,000 10,000
174,733 154,743
Less - Maturities and sinking fund requirements - -
$174,733 $173,693
The accompanying notes are an integral part of these statements.
</TABLE>
Notes to Consolidated Financial Statements
Indiana Gas Company, Inc. and Subsidiary Companies
1. Summary of Significant Accounting Practices
A. Consolidation
Indiana Gas Company, Inc. and its subsidiaries (Indiana Gas or
the company) provide natural gas and transportation services to
a diversified base of customers in 281 communities in 48 of
Indiana's 92 counties.
B. Utility Plant and Depreciation
Except as described below, utility plant is stated at the
original 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. When
a depreciable unit of property is retired, the cost is credited
to utility plant and charged to accumulated depreciation
together with the cost of removal, less any salvage. No gain
or loss is recognized upon normal retirement.
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 approximately 4.1 percent for all periods reported.
Cost in excess of underlying book value of acquired gas
distribution companies is reflected as a component of utility
plant and is being amortized primarily over 40 years.
C. Unamortized Debt Discount and Expense
Indiana Gas was authorized as part of an August 17, 1994, order
from the Indiana Utility Regulatory Commission (IURC) to
amortize over a 15-year period the debt discount and expense
related to new 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.
D. Cash Flow Information
For the purposes of the Consolidated 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:
<TABLE>
THOUSANDS 1996 1995 1994
<S> <C> <C> <C>
Interest (net of amount capitalized) $ 15,203 $ 14,042 $ 15,192
Income taxes $ 29,451 $ 26,206 $ 23,880
</TABLE>
E. 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.
F. Gas in Underground Storage
Gas in underground storage as of September 30, 1996, was $39.1
million compared to $59.4 million at September 30, 1995. This
decrease, which had no impact on Indiana Gas' results of
operations, resulted from a reduction in Indiana Gas' contract
storage requirements due to its gas supply arrangements with
ProLiance (see Note 11).
Based on the cost of purchased gas during September 1996, the
cost of replacing the current portion of gas in underground
storage exceeded last-in, first-out cost at September 30, 1996,
by approximately $3,414,000.
G. Refundable or Recoverable Gas Cost
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 IURC.
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 the equity
portion is included in "Other Income-Net" on the Consolidated
Statements of Income. The portion related to borrowed funds is
included in "Interest and Other Charges." An annual AFUDC rate
of 7.5 percent was used for all periods reported.
The table below reflects the total AFUDC capitalized and the
portion of which was computed on borrowed and equity funds for
all periods reported.
THOUSANDS 1996 1995 1994
AFUDC - borrowed funds $ 283 $ 215 $ 355
AFUDC - equity funds 232 176 290
Total AFUDC capitalized $ 515 $ 391 $ 645
I. Reclassifications
Certain reclassifications have been made in the company's
financial statements of prior years to conform to the current
year presentation. These reclassifications have no impact on
previously reported net income.
J. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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.
2. Regulatory Assets and Liabilities
Indiana Gas is subject to the provisions of Statement of
Financial Accounting Standards No. 71, Accounting for the
Effects of Certain Types of Regulation (SFAS 71). Regulatory
assets represent probable future revenue to Indiana Gas
associated with certain 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. Regulatory assets and
liabilities reflected in the Consolidated Balance Sheets as of
September 30 (in thousands) relate to the following:
<TABLE>
REGULATORY ASSETS 1996 1995
<S> <C> <C>
Postretirement benefits other than pensions $ 6,283 $ 7,720
Unamortized debt discount and expense 7,477 6,800
Gas costs due from customers, net 2,710 -
Deferred acquisition costs 719 740
Rate case costs 79 203
$17,268 $ 15,463
REGULATORY LIABILITIES
Gas costs due to customers, net $ - $ 4,883
Amounts due to customers - income taxes, net 2,835 3,797
Pension costs 2,040 1,348
$ 4,875 $ 10,028
</TABLE>
It is Indiana Gas' policy to continually assess the
recoverability of costs recognized as regulatory assets and the
ability to continue to account for its activities in accordance
with SFAS 71, based on the criteria set forth in SFAS 71.
Based on current regulation, Indiana Gas believes that its use
of regulatory 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 would
be required. In addition, Indiana Gas would be required to
determine any impairment to the carrying costs of deregulated
plant and inventory assets.
3. Short-Term Borrowings
Indiana Gas has board of director approval to borrow up to $100
million under bank lines of credit. Indiana Gas has available
committed lines of credit up to $55 million with approximately
$24 million outstanding at September 30, 1996. These lines of
credit are renewable annually and require fees based on the
amounts of the lines. In addition, Indiana Gas has available
uncommitted lines of credit with similar arrangements which
allow it to borrow up to its board-approved amount. Notes
payable to banks bore interest at rates negotiated with the
bank at the time of borrowing.
Bank loans outstanding during the reported periods were as
follows:
<TABLE>
THOUSANDS 1996 1995 1994
<S> <C> <C> <C>
Outstanding at year end $24,236 $ 2,225 $30,550
Weighted average interest rates
at year end 5.4% 6.1% 4.9%
Weighted average interest rates
during the year 5.7% 5.7% 3.3%
Weighted average total outstanding
during the year $ 5,930 $16,578 $14,891
Maximum total outstanding
during the year $28,150 $50,000 $56,500
</TABLE>
4. Long-Term Debt
During December 1995, Indiana Gas issued $20 million in
aggregate principal amount of its Medium-Term Notes, Series E
(Notes) as follows: $5 million of 6.69% Notes due June 10,
2013; $5 million of 6.69% Notes due December 21, 2015; and $10
million of 6.69% Notes due December 29, 2015. On July 15,
1996, Indiana Gas used those net proceeds to redeem its
remaining first mortgage bonds, $19 million of 9 3/8% Series M
First Mortgage Bonds.
Consolidated maturities and sinking fund requirements on long-
term debt subject to mandatory redemption during the five years
following 1996 are none in 1997, $35,000,000 in 1998,
$10,000,000 in 1999 and none in 2000 and 2001.
5. Fair Value of Financial Instruments
The estimated fair values of the company's financial
instruments were as follows:
<TABLE>
September 30, 1996 September 30, 1995
Carrying Fair Carrying Fair
THOUSANDS Amount Value Amount Value
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 20 $ 20 $ 20 $ 20
Notes payable $ 24,236 $ 24,236 $ 2,225 $ 2,225
Long-term debt (includes
amounts due within one year) $174,733 $178,880 $173,693 $183,395
</TABLE>
Certain methods and assumptions must be used to estimate the
fair value of financial instruments. Because of the short
maturity of cash and cash equivalents and notes payable, the
carrying amounts approximate fair values for these financial
instruments. The fair value of the company's long-term debt
was estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the company
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 1C). Accordingly, any reacquisition
would not be expected to have a material effect on the
company's financial position or results of operations.
6. Capital Stock
Indiana Gas has 16 million shares of authorized no par value
common stock.
Indiana Gas also has 4.2 million shares of authorized and
unissued preferred stock.
7. Retirement Plans and Other Postretirement Benefits
Indiana Gas has a defined contribution retirement savings plan
which is qualified under sections 401(a) and 401(k) of the
Internal Revenue Code. Under the terms of the retirement
savings plan, eligible participants may direct a specified
percentage of their compensation to be invested in shares of
Indiana Energy's common stock or various investment funds.
Participants in the retirement savings plan have, subject to
prescribed limitations, matching company contributions made to
the plan on their behalf, plus a year-end lump sum company
contribution. During 1996, 1995 and 1994, Indiana Gas made
contributions of $2,445,000, $2,335,000 and $2,386,000,
respectively.
Indiana Gas also has two non-contributory defined benefit
retirement plans that cover all employees meeting certain
minimum age and service requirements. Benefits are determined
by a formula based on the employee's base earnings, years of
participation in the plan and the employee's age at retirement.
Indiana Gas has an unfunded supplemental retirement plan for
certain management employees. Benefits are determined by a
formula based on 65 percent of the participant's average
monthly earnings, less benefits received under the company's
pension and savings plans and the participant's primary Social
Security benefits.
The Indiana Gas defined benefit retirement plan assets are
under custody of trustees and consist of actively managed stock
and bond portfolios, as well as short-term investments. It is
Indiana Gas' funding policy to maintain the pension plans on an
actuarially sound basis. Under this policy, funding was
$464,000 in 1996, $143,000 in 1995 and $1,110,000 in 1994. As
permitted by the Statement of Financial Accounting Standards
No. 71, Accounting for the Effects of Certain Types of
Regulation, the company recognizes pension expense based on
funding as allowed for ratemaking purposes.
The calculation of pension expense is as follows:
<TABLE>
THOUSANDS 1996 1995 1994
<S> <C> <C> <C>
Pension benefits earned during the period $ 1,174 $ 1,086 $ 1,436
Interest accrued on projected pension
benefit obligation 4,730 4,554 4,752
Actual return on pension plan assets (10,244) (9,632) 9
Net amortization and deferral 3,909 3,880 (6,056)
SFAS 87 pension expense (431) (112) 141
Adjustment to reflect amount included
in rates 725 818 492
Total pension expense $ 294 $ 706 $ 633
</TABLE>
The following table reconciles the plans' SFAS 87 funded status
at September 30 with amounts recorded in the company's
financial statements. Certain assets and obligations of the
plans are deferred and recognized in the financial statements
in subsequent periods.
<TABLE>
THOUSANDS 1996 1995
<S> <C> <C>
Actuarial present value of pension benefits:
Vested benefits $ 54,637 $ 52,734
Nonvested benefits 159 200
Effect of future salary increases 8,167 7,455
Projected pension benefit obligation 62,963 60,389
Plan assets at fair value 75,748 69,423
Plan assets in excess of projected
pension benefit obligation at September 30 12,785 9,034
Unrecognized adjusted prior service costs 1,966 2,051
Unrecognized net assets at date of initial application (1,776) (2,084)
Unrecognized net (gain) loss (9,984) (6,971)
Adjustment required to recognize minimum liability (1,309) (1,275)
Adjustment to reflect amount included in rates (2,040) (1,348)
Prepaid (accrued) pension cost at September 30 $ (358) $ (593)
</TABLE>
The weighted-average discount rate used in determining the
actuarial present value of the SFAS 87 projected benefit
obligation was 8 percent. The expected long-term rate of
return on assets was 9 percent. The average rate of increase
in future compensation levels used ranged from 5 to 5.5
percent. These rates were used for all years reported. The
average future service of plan participants used to compute
amortization of the net assets existing at the date of initial
application of SFAS 87 is approximately 17 years.
In addition to providing pension benefits, Indiana Gas
presently provides postretirement health care and life
insurance benefits to full-time employees who have completed 10
years of service and retire from the company. The plan pays
stated percentages of most reasonable and necessary medical
expenses incurred by retirees, after subtracting payments by
other providers and after a stated deductible has been met. The
plan also contains cost-sharing provisions (added in fiscal
1995) 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).
These postretirement benefits are principally self-insured.
Currently, Indiana Gas does not fund this postretirement plan.
On May 3, 1995, the IURC issued an order authorizing 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 (SFAS 106). Amounts accrued prior to the order
were deferred as allowed by the IURC. During 1996, Indiana Gas
reduced the amount previously deferred. While this order is
consistent with the IURC's rulings for other utilities within
the state of Indiana and with the ratemaking treatment of the
majority of regulatory jurisdictions outside of Indiana, the
Office of Utility Consumer Counselor is appealing the order. A
decision on the appeal by the Indiana Court of Appeals is
expected early in calendar 1997.
Postretirement benefit cost, including in 1996 the impact of
rate recovery and the cost-sharing provisions, consisted of the
following components:
<TABLE>
THOUSANDS 1996 1995 1994
<S> <C> <C> <C>
Service cost - benefits attributed to service
during the period $ 806 $ 1,423 $ 1,490
Interest cost on accumulated postretirement
obligation 3,264 4,186 3,915
Amortization of transition obligation 2,280 2,772 2,772
Amortization of net (gain) loss (351) - -
SFAS 106 postretirement benefit cost 5,999 8,381 8,177
Adjustment to reflect amount included in rates 1,329 (4,543) (5,436)
Postretirement benefit cost $ 7,328 $ 3,838 $ 2,741
</TABLE>
The following table reconciles the plan's funded status to the
accrued postretirement benefit cost as reflected on the balance
sheet as of September 30, 1996, and 1995:
<TABLE>
THOUSANDS 1996 1995
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees and dependents $ 27,903 $ 25,064
Other fully eligible participants 7,194 6,561
Other active participants 9,973 10,627
Total accumulated postretirement benefit obligation 45,070 42,252
Fair value of plan assets - -
Accumulated postretirement benefit obligation
in excess of plan assets (45,070) (42,252)
Unrecognized net (gain) loss (8,599) (10,192)
Unrecognized transition obligation 38,765 41,045
Accrued postretirement benefit
cost at September 30 $(14,904) $(11,399)
</TABLE>
The assumed health care cost trend rate for medical gross
eligible charges used in measuring the accumulated
postretirement benefit obligation as of September 30, 1996, was
8.4 percent for fiscal 1997. This rate is assumed to decrease
gradually through fiscal 2003 to 5.5 percent and remain at that
level thereafter. The assumed CPI rate, relating to the plan's
cost sharing provisions for retirees, was 3.5 percent. A 1-
percent increase in the assumed health care cost trend rates
for each future year produces approximately a $1.4-million
increase in the accumulated postretirement benefit obligation
as of September 30, 1996, and approximately a $155,000 increase
in the annual aggregate of the service and interest cost
components of postretirement benefit cost. The weighted-
average discount rate used in determining the accumulated
postretirement benefit obligation was 8 percent.
8. Commitments
Estimated capital expenditures for 1997 are $70 million. Total
lease expense was $2,863,000 in 1996, $2,811,000 in 1995 and
$2,595,000 in 1994.
Lease commitments are $1,478,000 in 1997, $1,016,000 in 1998,
$534,000 in 1999, $424,000 in 2000, $360,000 in 2001 and
$47,000 in total for all later years. Included in these
amounts is an operating lease between Indiana Gas and Energy
Realty, Inc., an indirect wholly owned subsidiary of Indiana
Energy, with payments of approximately $464,000 annually that
extends through August 1998. There are no leases that extend
beyond 2002. Indiana Gas has storage and supply contracts that
range from one month to seven years.
9. Environmental Costs
In the past, Indiana Gas and others, including 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. Management
believes, and the IURC has found that, those operations were
conducted in accordance with the then-applicable industry
standards. However, under currently applicable environmental
laws and regulations, Indiana Gas, and the others, may now be
required to take remedial action if certain byproducts are
found above a regulatory threshold at these sites.
Indiana Gas has identified the existence, location and certain
general characteristics of 26 gas manufacturing and storage
sites. Removal activities have been conducted at two sites and
a remedial investigation/feasibility study (RI/FS) is nearing
completion at one of the sites under an agreed order between
Indiana Gas and the Indiana Department of Environmental
Management. Indiana Gas and others are 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. Preliminary assessments (PAs) have been completed on all
but one of the sites. Site investigations (SIs) have been
completed at 20 sites and supplemental site investigations
(SSIs) have been conducted at 15 sites. Based upon the site
work completed to date, Indiana Gas believes that a level of
contamination that may require some level of remedial activity
may be present at a number of the 24 sites. Although Indiana
Gas has not begun an RI/FS at additional sites, Indiana Gas is
currently conducting groundwater monitoring at certain sites
where deemed appropriate and will continue its evaluation of
many of the sites.
Based upon the work performed to date, Indiana Gas has accrued
remediation and related costs for the two sites where remedial
activities are taking place. PA/SI, SSI and groundwater
monitoring costs have been accrued for the remaining sites
where appropriate. Estimated RI/FS costs and the costs of
certain remedial actions that may likely be required have also
been accrued. Costs associated with environmental remedial
activities are accrued 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 an RI/FS
and the development of some sense of the timing for
implementation of the potential remedial alternatives, to the
extent such remediation is required. Accordingly, the total
costs which may be incurred in connection with the remediation
of all sites, to the extent remediation is necessary, cannot be
determined at this time.
Indiana Gas has been pursuing recovery from three separate
sources for the costs it has incurred and expects to incur
relating to the 26 sites. Those sources are insurance
carriers, potentially responsible parties (PRPs) and recovery
through rates from retail gas customers.
On April 14, 1995, Indiana Gas filed suit in the United States
District Court for the Northern District of Indiana, Fort Wayne
Division, against a number of insurance carriers for payment of
claims for investigation and clean-up costs already incurred,
as well as for a determination that the carriers are obligated
to pay these costs in the future. On October 2, 1996, the
Court granted several motions filed by defendant insurance
carriers for summary judgment on a number of issues relating to
the insurers' obligations to Indiana Gas under insurance
policies issued by these carriers. For example, the Court
held that because the placement of residuals on the ground at
the sites was done intentionally, there was no "fortuitous
accident" and therefore no "occurrence" subject to coverage
under the relevant policies. The Court also ruled adversely to
Indiana Gas with respect to, among other issues, applicability
of the pollution exclusion in policies containing this
exclusion, the application of an injury-in-fact trigger under
the policies at issue and the existence of a justiciable
controversy with respect to sites for which no claim has been
asserted against Indiana Gas. Since the management of Indiana
Gas believes that a number of these rulings are contrary to
Indiana law, it intends to appeal all adverse rulings to the
United States Court of Appeals for the Seventh Circuit.
However, if these rulings are not reversed on appeal, they
would effectively eliminate coverage under most of the policies
at issue. There can be no assurance as to whether Indiana Gas
will prevail on this appeal. As of September 30, 1996,
Indiana Gas has obtained cash settlements from some insurance
carriers in an aggregate amount in excess of $13.5 million.
Indiana Gas has also completed the process of identifying PRPs
for each site. PRPs include two financially viable utilities,
PSI Energy, Inc. (PSI) and Northern Indiana Public Service
Company (NIPSCO). PSI has been identified as a PRP at 19 of
the sites. Indiana Gas has been negotiating with PSI to
determine PSI's share of responsibility, although no agreement
has been reached between the parties. With the help of outside
counsel, Indiana Gas has prepared estimates of PSI's and other
PRP's share of environmental liabilities which may exist at
each of the sites based on equitable principles derived from
case law or applied by parties in achieving settlements.
NIPSCO has been identified as an additional PRP at five of
these 19 sites. On September 27, 1995, Indiana Gas reached an
agreement with NIPSCO which provides for coordination of
efforts and sharing of investigation and clean-up costs
incurred and to be incurred at the five sites in which they
both have an interest. The cost sharing estimates of PSI and
other PRPs, and the NIPSCO agreement, have been utilized by
Indiana Gas to record a receivable from PRPs for their share of
the liability for work performed by Indiana Gas to date, as
well as to accrue Indiana Gas' proportionate share of the
estimated cost related to work not yet performed. The
outstanding receivable from PRPs of $1.5 million is reflected
in Accounts Receivable on the Consolidated Balance Sheet at
September 30, 1996.
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 May 3,
1995, the IURC concluded that the costs incurred by Indiana Gas
to investigate and, if necessary, clean-up former manufactured
gas plant sites are not utility operating expenses necessary
for the provision of utility service and, therefore, are not
recoverable as operating expenses from utility customers. The
decision was contrary to rulings in other states where utility
regulatory commissions have issued orders on the subject. The
precedent cited by the IURC was a ruling related to a cancelled
nuclear power plant which, unlike manufactured gas plants,
never provided service to the public. Management believes
applying the nuclear power plant decision to Indiana Gas' case
was an incorrect application of the law and has appealed the
decision to the Indiana Court of Appeals. The Commission did
indicate that during Indiana Gas' next rate case it would be
appropriate to quantify the effect of the investigation and
clean-up activities as part of the business risk to be
considered by the Commission in establishing the allowed
overall rate of return.
As of September 30, 1996, Indiana Gas has recorded in aggregate
$14.5 million, which represents all environmental costs which
it presently expects to incur in connection with remediation
activities. Presently, these environmental costs have had no
material impact on Indiana Gas' earnings.
The impact on Indiana Gas' financial position and results of
operations of complying with federal, state and local
environmental regulations related to former manufactured gas
plant sites is contingent upon several uncertainties. These
include the costs of any compliance activities which may occur
and the timing of the actions taken, the impact of joint and
several liability upon the magnitude of the contingency, the
outcome of proceedings which challenge the IURC ruling on
recovery of costs from customers, as well as the outcome of the
appeal of the summary judgment rulings issued in favor of the
insurers in the insurance litigation described above. Although
Indiana Gas will endeavor to manage the manufactured gas plant
remediation program so that any amounts received will be
sufficient to fund environmental costs, there can be no
assurance that in the future, environmental costs will not
exceed related recoveries.
10. Income Taxes
Indiana Energy, Inc. 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 consolidated income tax expense for
Indiana Gas, including amounts in "Other Income-Net" on the
Statements of Income, were as follows:
<TABLE>
THOUSANDS 1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $19,587 $13,367 $13,333
State 3,107 2,199 2,299
22,694 15,566 15,632
Deferred:
Federal 709 3,652 2,987
State 95 342 286
804 3,994 3,273
Amortization of investment tax credits (930) (930) (930)
Income tax expense $22,568 $18,630 $17,975
</TABLE>
Effective income tax rates were 36.88 percent, 36.72 percent
and 34.22 percent of pretax income for 1996, 1995 and 1994,
respectively. This compares with a combined federal and state
income tax statutory rate of 37.93 percent for all years
reported. Individual components of these rate differences are
not significant except investment tax credit which amounted to
(1.5%) in 1996 and (1.8%) in 1995 and 1994.
As required by the IURC, Indiana Gas uses a normalized method
of accounting for deferred income taxes. Deferred income taxes
reflect the net tax effect of temporary differences between the
carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes. Deferred income taxes are provided for taxes not
currently payable due to, among other things, the use of
various accelerated depreciation methods, shorter depreciable
lives and the deduction of certain construction costs for tax
purposes. Taxes deferred in prior years are being charged and
income credited as these tax effects reverse over the lives of
the related assets. The provisions for the deferred tax
effects relating to the excess of tax-over-book depreciation
amounted to $3,474,000 in 1996, $4,031,000 in 1995 and
$2,852,000 in 1994.
Significant components of Indiana Gas' net deferred tax
liability as of September 30, 1996, and 1995 are as follows:
<TABLE>
THOUSANDS 1996 1995
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation $48,009 $45,902
Property basis differences 17,690 18,560
Acquisition adjustment 6,475 6,664
Other (7,406) (4,791)
Deferred tax assets:
Deferred investment tax credit (4,237) (4,590)
Regulatory income tax liability (1,075) (1,440)
Less deferred income taxes related
to current assets and liabilities 7,406 4,791
Balance as of September 30 $66,862 $65,096
</TABLE>
Investment tax credits have been deferred and are being
credited to income over the life of the property giving rise to
the credit. The Tax Reform Act of 1986 eliminated investment
tax credits for property acquired after January 1, 1986.
11. Affiliate Transactions
Indiana Energy Services, Inc. (IES), an indirect wholly owned
subsidiary of Indiana Energy (Indiana Gas' parent), provided
natural gas and related services to Indiana Gas from January 1,
1996, to March 31, 1996. Indiana Gas' purchases from IES for
the three months ended March 31, 1996, totalled $102.7 million.
On March 15, 1996, IGC Energy, Inc., an indirect wholly owned
subsidiary of Indiana Energy, and Citizens By-Products Coal
Company, a wholly owned subsidiary of Citizens Gas and Coke
Utility, formed a jointly and equally owned limited liability
company to provide natural gas supply and related marketing
services. The new entity, ProLiance Energy, LLC (ProLiance),
assumed the business of IES effective April 1, 1996, and is now
the supplier of gas and related services to Indiana Gas.
Indiana Gas' purchases from ProLiance during 1996 totalled
$117.9 million.
The sale of gas and provision of other services to Indiana Gas
by Indiana Energy's marketing affiliates are subject to
regulatory review through the quarterly gas cost adjustment
proceeding currently pending before the IURC.
Two proceedings which may affect the formation, operation or
earnings of ProLiance are currently pending before the IURC.
The first proceeding was initiated by a small group of Indiana
Gas' and Citizens Gas' large-volume customers who contend that
the gas service contracts between ProLiance and Indiana Gas and
Citizens Gas should be disapproved by the IURC or,
alternatively, that the IURC should regulate the operations of
ProLiance. On September 27, 1996, the IURC issued a partial
decision in that proceeding and found that ProLiance is not
subject to regulation as a public utility. The IURC did
confirm that it will continue to monitor gas costs incurred by
Indiana Gas. Hearings on the remaining issues were concluded
on October 9, 1996. A decision from the IURC is expected
during the first half of calendar 1997.
The second proceeding involves the quarterly gas cost
adjustment applications of Indiana Gas and Citizens Gas wherein
these utilities are proposing to recover the costs they have
and will incur under their gas supply and related agreements
with ProLiance. This proceeding will consider whether the
recovery of those costs is consistent with Indiana law
governing gas cost recovery. The hearing on the second
proceeding has not yet been scheduled.
While the outcome of these proceedings cannot be predicted,
management does not expect this matter to have a material
impact on Indiana Gas' financial position or results of
operations.
Indiana Gas also participates in a centralized cash management
program with its parent, affiliated companies and banks which
permits funding of checks as they are presented.
Amounts due affiliated companies, as well as checks written but
not cashed are reflected in Accounts Payable on the
Consolidated Balance Sheet. Amounts owed to affiliates totaled
$35.5 million and $12.5 million at September 30, 1996 and 1995,
respectively.
12. New Accounting Standards
In March 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and Long-
Lived Assets to be Disposed Of. This statement imposes
stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet
date. Indiana Gas will adopt this standard effective October
1, 1996, and does not expect that the adoption will have a
material impact on its financial position or results of
operations based on the current regulatory structure in which
it operates. This conclusion may change in the future as
competitive factors influence pricing in the industry.
In October 1995, the FASB issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based
Compensation. Pursuant to this new standard, companies are
encouraged, but not required, to adopt a fair value method of
accounting for employee stock-based transactions. Indiana Gas
does not expect this standard to have a material impact on its
financial position or results of operations.
13. Summarized Financial Data (Unaudited)
Summarized quarterly financial data (in thousands of dollars)
for 1996 and 1995 are as follows:
<TABLE>
1996: THREE MONTHS ENDED DEC. 31 MAR. 31 JUNE 30 SEP. 30
<S> <C> <C> <C> <C>
Operating revenues $154,309 $222,553 $ 91,211 $ 62,521
Operating income (loss) 22,654 27,280 5,863 (2,244)
Net income (loss) 18,928 23,830 2,273 (6,401)
1995: THREE MONTHS ENDED DEC. 31 MAR. 31 JUNE 30 SEP. 30
Operating revenues $113,062 $150,468 $ 83,081 $ 57,199
Operating income (loss) 14,593 24,667 7,800 (872)
Net income (loss) 10,779 21,161 4,327 (4,158)
</TABLE>
Note: Because of the seasonal factors that significantly affect
the companies' operations, the results of operations for
interim periods within fiscal years are not comparable.
Item 9. Changes in and Disagreements with Accountants
None.
Part III
Item 10. Directors and Executive Officers of the
Registrant
Except for the list of the executive officers, which
can be found in Part I, Item 4(a) of this report,
the information required to be shown in this part
for Item 10, Directors and Executive Officers of the
Registrant is incorporated by reference here from
the definitive proxy statement of the registrant's
parent company, Indiana Energy, Inc. That statement
was prepared according to Regulations 14A and S-K
and filed electronically with the Securities and
Exchange Commission on December 6, 1996. The
information is included in the report attached as
Exhibit 99.
Item 11. Executive Compensation
The information required to be shown in this part
for Item 11, Executive Compensation, is incorporated
by reference here from the definitive proxy
statement of the registrant's parent company,
Indiana Energy, Inc. That statement was prepared
according to Regulations 14A and S-K and filed
electronically with the Securities and Exchange
Commission on December 6, 1996. The information is
included in the report attached as Exhibit 99.
Contained in the Indiana Energy proxy statement,
Summary Compensation Table, Column C and Column D,
Salary Amounts and Bonus Amounts, are some
compensation dollars which are allocated to
subsidiaries of Indiana Energy other than Indiana
Gas. The named executives received the following
compensation, including Bonus, for the years ended
September 30, 1996, 1995 and 1994, as it relates to
only Indiana Gas.
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Lawrence A. Ferger $512,580 $460,979 $444,898
Paul T. Baker 327,217 298,770 285,360
Niel C. Ellerbrook 238,213 215,314 208,999
Anthony E. Ard 171,448 159,667 159,489
Timothy M. Hewitt 168,065 156,452 151,136
Carl L. Chapman 152,135 145,811 142,736
</TABLE>
Item 12. Securities Ownership of Certain Beneficial
Owners and Management
The information required to be shown in this part
for Item 12, Securities Ownership of Certain
Beneficial Owners and Management, is incorporated by
reference here from the definitive proxy statement
of the registrant's parent company, Indiana Energy,
Inc. That statement was prepared according to
Regulations 14A and S-K and filed electronically
with the Securities and Exchange Commission on
December 6, 1996. The information is included in
the report attached as Exhibit 99.
Item 13. Certain Relationships and Related Transactions
The information required to be shown in this part
for Item 13, Certain Relationships and Related
Transactions is incorporated by reference here from
the definitive proxy statement of the registrant's
parent company, Indiana Energy, Inc. That statement
was prepared according to Regulations 14A and S-K
and filed electronically with the Securities and
Exchange Commission on December 6, 1996. The
information is included in the report attached as
Exhibit 99.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
The following documents are filed as part of this
report:
(a)-1 Financial Statements
Location in 10-K
Report of Independent Public Accountants Item 8
Consolidated Statements of Income - 1996,
1995 and 1994 Item 8
Consolidated Statements of Cash Flows - 1996,
1995 and 1994 Item 8
Consolidated Balance Sheets at September 30,
1996 and 1995 Item 8
Consolidated Statements of Common Shareholder's
Equity - 1996, 1995 and 1994 Item 8
Consolidated Schedules of Long-Term Debt
as of September 30, 1996 and 1995 Item 8
Notes to Financial Statements Item 8
(a)-2 Financial Statement Schedules
Report of Independent Public Accountants on Schedules
Schedule II. Valuation and Qualifying
Accounts - 1996, 1995 and 1994
(a)-3 Exhibits
See Exhibit Index
(b) Reports on Form 8-K
On October 18, 1996, Indiana Gas filed a Current
Report on Form 8-K which disclosed among other matters, the
granting of certain summary judgment motions filed by
defendant insurance carriers in the insurance coverage
litigation pending in federal district court with respect to
environmental costs incurred and expected to be incurred by
Indiana Gas at certain manufactured gas plant and storage
facility sites.
Item 5. Other Events
Updated environmental disclosure.
EXHIBIT INDEX
Exhibit No. Description Reference
3-A Amended and Restated Exhibit 3-A to
Articles of Indiana Gas Company,
Incorporation. Inc.'s 1993 Annual
Report on Form 10-K.
3-B Code of By-Laws, as Filed herewith.
amended.
4-A Indenture dated Exhibit 4(a) to
February 1, 1991, Indiana Gas Company,
between Indiana Gas Inc.'s Current Report
and Continental Bank, on Form 8-K dated
National Association. February 1, 1991, and
filed February 15,
1991; First
Supplemental
Indenture thereto
dated as of February
15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
February 1, 1991, and
filed February 15,
1991); Second
Supplemental
Indenture thereto
dated as of September
15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
September 15, 1991,
and filed September
25, 1991); Third
Supplemental
Indenture thereto
dated as of September
15, 1991
(incorporated by
reference to Exhibit
4(c) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
September 15, 1991
and filed September
25, 1991);
Fourth Supplemental
Indenture thereto
dated as of
December 2, 1992,
(incorporated by
reference
to Exhibit 4(b) to
Indiana
Gas Company, Inc.'s
Current Report on
Form
8-K dated December 1,
1992, and filed
December 8, 1992);
and Officers'
Certificate pursuant
to Section 301 of the
Indenture dated as of
April 5, 1995,
(incorporated by
reference to
Exhibit 4(a) to
Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated and
filed April 5,
1995).
10-A Employment Agreement Exhibit 10-A to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Lawrence A. Ferger
effective January 1,
1990.
10-B Employment Agreement Exhibit 10-C to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Niel C. Ellerbrook,
effective
January 1, 1990.
10-C Employment Agreement Exhibit 10-D to
between Indiana Gas Indiana Energy's 1990
Company, Inc., and Annual Report on Form
Paul T. Baker 10-K.
effective January 1,
1990.
10-D Employment Agreement Exhibit 10-E to
between Indiana Gas Indiana Energy's 1990
Company, Inc., and Annual Report on Form
Anthony E. Ard 10-K.
effective January 1,
1990.
10-E Termination Benefits Exhibit 10-F to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and Lawrence A.
Ferger.
10-F Termination Benefits Exhibit 10-G to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Paul T. Baker.
10-G Termination Benefits Exhibit 10-H to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and Niel C.
Ellerbrook.
10-H Termination Benefits Exhibit 10-I to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Anthony E. Ard.
10-I Termination Benefits Exhibit 10-I to
Agreement, dated July Indiana Energy,
29, 1994, and as Inc.'s 1996 Annual
amended and restated Report on Form 10-K.
March 15, 1996, among
Indiana Energy, Inc.,
Indiana Gas Company,
Inc. and
Carl L. Chapman.
10-J Termination Benefits Exhibit 10-J to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1996 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc., and Timothy M.
Hewitt.
10-K Executive Exhibit 10-K to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
December 1, 1994. Report on Form 10-K.
10-L Directors Exhibit 10-M to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
January 1, 1995. Report on Form 10-K.
10-M Executive Restricted Exhibit A to Indiana
Stock Plan effective Energy's Proxy
October 1, 1987, as Statement filed on
amended. December 4, 1987;
First Amendment to
Indiana Energy, Inc.
Executive Restricted
Stock Plan
(incorporated by
reference to Exhibit
10-A to Indiana
Energy's 1991 Annual
Report on Form 10-K).
10-N Indiana Energy, Inc. Exhibit 10-D to
Annual Management Indiana Energy's 1987
Incentive Plan Annual Report on Form
effective October 1, 10-K.
1987.
10-O Indiana Energy, Inc. Indiana Energy's
Directors' Restricted Definitive Proxy
Stock Plan, as Statement filed on
amended and restated December 6, 1991.
on October 25, 1991.
10-P Formation Agreement Exhibit 10-C to
among Indiana Energy, Indiana Energy's
Inc., Indiana Gas Quarterly Report on
Company, Inc., IGC Form 10-Q for the
Energy, Inc., Indiana quarterly period
Energy Services, ended March 31, 1996.
Inc., Citizens Gas &
Coke Utility,
Citizens Energy
Services Corporation
and ProLiance Energy,
LLC, effective March
15, 1996.
10-Q Gas Sales and Exhibit 10-C to
Portfolio Indiana Gas'
Administration Quarterly Report on
Agreement between Form 10-Q for the
Indiana Gas quarterly period
Company, Inc. and ended March 31, 1996.
ProLiance Energy,
LLC, effective
March 15, 1996,
for services to
begin April 1,
1996.
10-R Amended appendices to Filed herewith.
the Gas Sales and
Portfolio
Administration
Agreement between
Indiana Gas Company,
Inc. and ProLiance
Energy, LLC referred
to above in Exhibit
10-Q, effective
October 1, 1996.
10-S Exhibit 10-S schedules material gas
contracts which are in effect
between Indiana Gas Company, Inc.
and the suppliers listed. The gas
contracts within each type are
substantially identical in all
material respects and at least one
of each type of contract has been or
is filed as indicated. The schedule
details all material aspects in
which a contract may differ from the
contract filed. Indiana Gas has
assigned or released many of these
contracts to its affiliate,
ProLiance Energy, LLC (ProLiance),
pursuant to the Gas Sales and
Portfolio Administration Agreement
between Indiana Gas and ProLiance
referred to above in Exhibits 10-Q
and 10-R.
<TABLE>
Exh Days of Effective Expir.
No. Type of Contract Supplier Contract No. Wthdrwl. MDth/Day Date Date Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/93 Form 10-Q,
File 1-6494:
10-S.1 Firm Transportation Panhandle Eastern P PLT 011715 38,572 5/1/93 3/31/98 Exh. 10-B
10-S.2 Firm Transportation Panhandle Eastern P PLT 011716 51,431 5/1/93 3/31/99 Exh. 10-A
10-S.3 Firm Transportation Panhandle Eastern P PLT 011718 51,431 5/1/93 2/28/97 Exh. 10-C
10-S.4 Firm Transportation Panhandle Eastern P PLT 011721 77,144 5/1/93 3/31/97 Exh. 10-D
10-S.5 Market Area - Panhandle Eastern P PLT 011719 50,000 5/1/93 3/31/97 1993 Form 10-K
Firm Transportation Exhibit 10-I.5,
File 1-6494.
10-S.6 Market Area - Panhandle Eastern P PLT 011720 50,000 5/1/93 3/31/97 See Exhibit 10-P.5.
Firm Transportation
10-S.7 Market Area - Texas Gas T3780 50,000 11/1/93 10/31/98 1993 Form 10-K
Firm Transportation Exhibit 10-I.7,
File 1-6494.
10-S.8 No Notice Service Texas Gas N0420 41,687 11/1/93 10/31/98 1993 Form 10-K,
Exhibit 10-I.8,
File 1-6494.
10-S.9 No Notice Service Texas Gas N0325 56,793 11/1/93 10/31/02 See Exhibit 10-P.8
10-S.10 No Notice Service Texas Gas N0325 56,794 11/1/93 10/31/98 See Exhibit 10-P.8
10-S.11 No Notice Service Texas Gas N0325 56,794 11/1/93 10/31/99 See Exhibit 10-P.8
10-S.12 Firm Storage ANR T,E & S 00087 100 29,000 3/1/73 2/28/98 1991 Form 10-K,
Exh. 10-N, File 1-6494.
10-S.13 Firm Storage ANR T,E & S 05787 100 100,806 4/1/92 3/31/97 1992 Form 10-K,
Exh. 10-R, File 1-6494.
10-S.14 Firm Storage-Related ANR T,E & S 05788 100,000 4/1/92 3/31/97 1992 Form 10-K,
Transportation Exh. 10-S, File 1-6494.
10-S.15 Firm Natural Gas Tenneco NGFSA 9609 20,000 11/1/95 3/31/98 1995 Form 10-K, Exh.
Supply Gas Marketing 10-P.20, File 1-6494.
10-S.16 Firm Natural Gas Tenneco NGFSA 9619 16,000 11/1/95 3/31/98 1995 Form 10-K, Exh.
Supply Gas Marketing 10-P.21, File 1-6494.
10-S.17 Firm Natural Gas Tenneco NGFSA9620 40,000 12/1/95 2/28/98 1995 Form 10-K, Exh.
Supply Gas Marketing 10-P.22, File 1-6494.
12 Computation of Ratio of Earnings
to Fixed Charges Filed herewith.
21 Subsidiaries of Indiana Gas
Company, Inc. Filed herewith.
23 Consent of Independent Public
Accountants Filed herewith.
27 Financial Data Schedule Filed herewith.
99 Indiana Energy, Inc.'s (parent
company) Definitive Proxy
Statement for Annual Meeting
of Shareholders to be held on
January 22, 1997. Filed herewith.
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Indiana Gas Company, Inc.:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements included
in Item 8, in this Form 10-K, and have issued our report thereon
dated October 25, 1996. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedules listed in Item 14(a)-2 are the responsibility of the
company's management and are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, fairly state 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
October 25, 1996
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1996
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1995 Expenses Other Were Created Changes 1996
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 1,662 $ 3,803 $ 0 $ 3,612 $ 0 $ 1,853
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1995
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1994 Expenses Other Were Created Changes 1995
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 1,238 $ 3,690 $ 0 $ 3,266 $ 0 $ 1,662
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1994
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1993 Expenses Other Were Created Changes 1994
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 2,055 $ 3,850 $ 0 $ 4,667 $ 0 $ 1,238
</TABLE>
SIGNATURES
Pursuant to the requirements of the 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 December 19, 1996 /s/Lawrence A. Ferger
Lawrence A. Ferger,
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Signature Title Date
/s/Lawrence A. Ferger Chairman, President and December 19, 1996
Lawrence A. Ferger Chief Executive Officer
/s/Niel C. Ellerbrook Senior Vice President December 19, 1996
Niel C. Ellerbrook Chief Financial Officer
and Director
/s/Jerome A. Benkert Vice President and Controller December 19, 1996
Jerome A. Benkert
/s/Paul T. Baker Senior Vice President December 19, 1996
Paul T. Baker Chief Operating Officer and
Director
/s/Gerald L. Bepko Director December 19, 1996
Gerald L. Bepko
/s/Loren K. Evans Director December 19, 1996
Loren K. Evans
/s/Otto N. Frenzel III Director December 19, 1996
Otto N. Frenzel III
/s/Anton H. George Director December 19, 1996
Anton H. George
Director December 19, 1996
Don E. Marsh
/s/Fred A. Poole Director December 19, 1996
Fred A. Poole
/s/Richard P. Rechter Director December 19, 1996
Richard P. Rechter
Director December 19, 1996
James C. Shook
/s/Jean L. Wojtowicz Director December 19, 1996
Jean L. Wojtowicz
CODE OF BY-LAWS
OF
INDIANA GAS COMPANY, INC.
AS AMENDED AND RESTATED
IN FULL ON JULY 1, 1987
AS FURTHER AMENDED OCTOBER 27, 1989
AS FURTHER AMENDED AUGUST 31, 1990
AS FURTHER AMENDED JULY 26, 1991
AS FURTHER AMENDED SEPTEMBER 24, 1993
AS FURTHER AMENDED FEBRUARY 25, 1994
AS FURTHER AMENDED JULY 28, 1995
AS FURTHER AMENDED APRIL 26, 1996
AS FURTHER AMENDED JULY 26, 1996
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office
(the "Principal Office") of INDIANA GAS COMPANY, INC. (the
"Corporation") shall be at the registered office of the
Corporation, or such other place as shall be determined by
resolution of the Board of Directors of the Corporation
(the "Board").
SECTION 2. OTHER OFFICES. The Corporation may have
such other offices at such other places within or without
the State of Indiana as the Board may from time to time
designate, or as the business of the Corporation may
require.
ARTICLE II
SEAL
SECTION 1. CORPORATE SEAL. The corporate seal of
the Corporation (the "Seal") shall be circular in form and
shall have inscribed thereon the words "INDIANA GAS
COMPANY, INC. -- CORPORATE SEAL -- INDIANA." Use of the
Seal or an impression thereof shall not be required, and
shall not affect the validity of any instrument
whatsoever.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETING. Every meeting of the
shareholders of the Corporation (the "Shareholders") shall
be held at the Principal Office, unless a different place
is specified in the notice or waiver of notice of such
meeting or by resolution of the Board or the Shareholders,
in which event such meeting may be held at the place so
specified, either within or without the State of Indiana.
SECTION 2. ANNUAL MEETING. The annual meeting of
the Shareholders (the "Annual Meeting") shall be held each
year at 9:00 o'clock A.M. on the fourth Wednesday in
January, or such other time or date determined by
resolution of the Board, for the purpose of electing
directors of the Corporation ("Directors") and for the
transaction of such other business as may legally come
before the Annual Meeting. If for any reason the Annual
Meeting shall not be held at the date and time specified
or fixed as herein provided, the business to be transacted
at such Annual Meeting may be transacted at any special
meeting of the Shareholders (a "Special Meeting") called
for that purpose.
SECTION 3. NOTICE OF ANNUAL MEETING. Written or
printed notice of the Annual Meeting, stating the date,
time and place thereof, shall be delivered or mailed by
the Secretary or an Assistant Secretary to each
Shareholder of record entitled to notice of such Meeting,
at such address as appears on the records of the
Corporation, at least ten and not more than sixty days
before the date of such Meeting.
SECTION 4. SPECIAL MEETINGS. Special Meetings, for
any purpose or purposes (unless otherwise prescribed by
law), may be called by the Board or the President, and
shall be called by the President or any Vice President at
(a) the request in writing of a majority of the Board, or
(b) the written demand, delivered to the Secretary, of
Shareholders holding of record not less than a majority of
the voting power of all the shares of the Corporation
("Shares") issued and outstanding and entitled by the
Amended and Restated Articles of Incorporation of the
Corporation, as the same may, from time to time, be
amended (the "Articles"), to vote on the business proposed
to be transacted thereat; provided however that, for
purposes of calculating such majority, only shares which
have been beneficially owned or held of record by the
holders thereof for at least three (3) years shall be
included. All requests or demands for Special Meetings
shall state the purpose or purposes thereof, and the
business transacted at such Meeting shall be confined to
the purposes stated in the call and matters germane
thereto.
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written or
printed notice of all Special Meetings, stating the date,
time, place and purpose or purposes thereof, shall be
delivered or mailed by the Secretary or the President or
the Vice President calling the Meeting to each Shareholder
of record entitled to notice of such Meeting, at such
address as appears on the records of the Corporation, at
least ten and not more than sixty days before the date of
such Meeting. Notice of any Special Meeting called at the
written demand of Shareholders shall be delivered or
mailed within sixty days of the Secretary's receipt of
such demand.
SECTION 6. WAIVER OF NOTICE OF MEETINGS. Notice of
any Annual or Special Meeting (a "Meeting") may be waived
in writing by any Shareholder, before or after the date
and time of the Meeting specified in the notice thereof,
by a written waiver delivered to the Corporation for
inclusion in the minutes or filing with the corporate
records. A Shareholder's attendance at any Meeting in
person or by proxy shall constitute a waiver of (a) notice
of such Meeting, unless the Shareholder at the beginning
of the Meeting objects to the holding of or the
transaction of business at the Meeting, and (b)
consideration at such Meeting of any business that is not
within the purpose or purposes described in the Meeting
notice, unless the Shareholder objects to considering the
matter when it is presented.
SECTION 7. QUORUM. At any Meeting, the holders of a
majority of the voting power of Shares issued and
outstanding and entitled to vote at such Meeting,
represented in person or by proxy, shall constitute a
quorum for the election of Directors or for the
transaction of other business, unless otherwise provided
by law, the Articles or this Code of By-Laws, as the same
may, from time to time, be amended (these "By-Laws"). If,
however, a quorum shall not be present or represented at
any Meeting, the Shareholders entitled to vote thereat,
present in person or represented by proxy, shall have
power to adjourn the Meeting from time to time, without
notice other than announcement at the Meeting of the date,
time and place of the adjourned Meeting, unless the date
of the adjourned Meeting requires that the Board fix a new
record date (the "Record Date") therefor, in which case
notice of the adjourned Meeting shall be given. At such
adjourned Meeting, if a quorum shall be present or
represented, any business may be transacted that might
have been transacted at the Meeting as originally
scheduled.
SECTION 8. VOTING. At each Meeting, every
Shareholder entitled to vote shall have one vote for each
Share standing in his name on the books of the Corporation
as of the Record Date fixed by the Board for such Meeting,
except as otherwise provided by law or the Articles, and
except that no Share shall be voted at any Meeting upon
which any installment is due and unpaid. Voting for
Directors and, upon the demand of any Shareholder, voting
upon any question properly before a Meeting, shall be by
ballot. A plurality vote shall be necessary to elect any
Director, and on all other matters, the action or a
question shall be approved if the number of votes cast
thereon in favor of the action or question exceeds the
number of votes cast opposing the action or question,
except as otherwise provided by law or the Articles.
SECTION 9. SHAREHOLDER LIST. The Secretary shall
prepare before each Meeting a complete list of the
Shareholders entitled to notice of such Meeting, arranged
in alphabetical order by class of Shares (and each series
within a class), and showing the address of, and the
number of Shares entitled to vote held by, each
Shareholder (the "Shareholder List"). Beginning five
business days before the Meeting and continuing throughout
the Meeting, the Shareholder List shall be on file at the
Principal Office or at a place identified in the Meeting
notice in the city where the Meeting will be held, and
shall be available for inspection by any Shareholder
entitled to vote at the Meeting. On written demand, made
in good faith and for a proper purpose and describing with
reasonable particularity the Shareholder's purpose, and if
the Shareholder List is directly connected with the
Shareholder's purpose, a Shareholder (or such
Shareholder's agent or attorney authorized in writing)
shall be entitled to inspect and to copy the Shareholder
List, during regular business hours and at the
Shareholder's expense, during the period the Shareholder
List is available for inspection. The original stock
register or transfer book (the "Stock Book"), or a
duplicate thereof kept in the State of Indiana, shall be
the only evidence as to who are the Shareholders entitled
to examine the Shareholder List, or to notice of or to
vote at any Meeting.
SECTION 10. PROXIES. A Shareholder may vote either
in person or by proxy executed in writing by the
Shareholder or a duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from the date of
its execution, unless a longer time is expressly provided
therein.
SECTION 11. NOTICE OF SHAREHOLDER BUSINESS. At any
meeting of the shareholders, only such business may be
conducted as shall have been properly brought before the
meeting, and as shall have been determined to be lawful
and appropriate for consideration by shareholders at the
meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting
given in accordance with Section 3 or 5 of this Article
III, (b) otherwise properly brought before the meeting by
or at the direction of the board of directors or the chief
executive officer, or (c) otherwise properly brought
before the meeting by a shareholder. For business to be
properly brought before a meeting by a shareholder
pursuant to clause (c) above, the shareholder must have
given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a shareholder's notice
must be delivered to, or mailed and received at, the
principal office of the Corporation, not less than fifty
days nor more than ninety days prior to the meeting;
provided, however, that in the event that less than sixty
days' notice of the date of the meeting is given to
shareholders, notice by the shareholder to be timely must
be so received not later than the close of business on the
tenth day following the day on which such notice of the
date of the meeting was given. A shareholder's notice to
the secretary shall set forth as to each matter the
shareholder proposes to bring before the meeting (a) a
brief description of the business desired to be brought
before the meeting, (b) the name and address, as they
appear on the Corporation's stock records, of the
shareholder proposing such business, (c) the class and
number of shares of the Corporation which are beneficially
owned by the shareholder, and (d) any interest of the
shareholder in such business. Notwithstanding anything in
these by-laws to the contrary, no business shall be
conducted at a meeting except in accordance with the
procedures set forth in this Section 11. The person
presiding at the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
by-laws, or that business was not lawful or appropriate
for consideration by shareholders at the meeting, and if
he should so determine, he shall so declare to the meeting
and any such business shall not be transacted.
SECTION 12. NOTICE OF SHAREHOLDER NOMINEES.
Nominations of persons for election to the Board of
Directors of the Corporation may be made at any meeting of
shareholders by or at the direction of the Board of
Directors or by any shareholder of the Corporation
entitled to vote for the election of directors at the
meeting. Shareholder nominations shall be made pursuant
to timely notice given in writing to the Secretary of the
Corporation in accordance with Section 11 of this Article
III. Such shareholder's notice shall set forth, in
addition to the information required by Section 11, as to
each person whom the shareholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of such person,
(ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person,
(iv) any other information relating to such person that is
required to be disclosed in solicitation of proxies for
election of directors, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including, without
limitation, such person's written consent to being named
in the proxy statement as a nominee and to serving as a
director, if elected), and (v) the qualifications of the
nominee to serve as a director of the Corporation. No
shareholder nomination shall be effective unless made in
accordance with the procedures set forth in this Section
12. The person presiding at the meeting shall, if the
facts warrant, determine and declare to the meeting that a
shareholder nomination was not made in accordance with the
by-laws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall
be disregarded.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. NUMBER. The business and affairs of the
Corporation shall be managed by a Board of twelve (12)
Directors, divided into three classes as provided in the
Articles. The Board may elect or appoint, from among its
members, a Chairman of the Board (the "Chairman"), who
need not be an Officer or employee of the Corporation.
The Chairman shall preside at all Shareholders Meetings
and Board Meetings and shall have such other powers and
perform such other duties as are incident to such position
and as may be assigned by the Board.
SECTION 2. VACANCIES AND REMOVAL. Any vacancy
occurring in the Board shall be filled as provided in the
Articles. Shareholders shall be notified of any increase
in the number of Directors and the name, principal
occupation and other pertinent information about any
Director elected by the Board to fill any vacancy. Any
Director, or the entire Board, may be removed from office
only as provided in the Articles.
SECTION 3. POWERS AND DUTIES. In addition to the
powers and duties expressly conferred upon it by law, the
Articles or these By-Laws, the Board may exercise all such
powers of the Corporation and do all such lawful acts and
things as are not inconsistent with the law, the Articles
or these By-Laws.
SECTION 4. ANNUAL BOARD MEETING. Unless otherwise
determined by the Board, the Board shall meet each year
immediately after the Annual Meeting, at the place where
such Meeting has been held, for the purpose of
organization, election of Officers of the Corporation (the
"Officers") and consideration of any other business that
may properly be brought before such annual meeting of the
Board (the "Annual Board Meeting"). No notice shall be
necessary for the holding of the Annual Board Meeting. If
the Annual Board Meeting is not held as above provided,
the election of Officers may be held at any subsequent
duly constituted meeting of the Board (a "Board Meeting").
SECTION 5. REGULAR BOARD MEETINGS. Regular meetings
of the Board ("Regular Board Meetings") may be held at
stated times or from time to time, and at such place,
either within or without the State of Indiana, as the
Board may determine, without call and without notice.
SECTION 6. SPECIAL BOARD MEETINGS. Special meetings
of the Board ("Special Board Meetings") may be called at
any time or from time to time, and shall be called on the
written request of at least two Directors, by the Chairman
or the President, by causing the Secretary or any
Assistant Secretary to give to each Director, either
personally or by mail, telephone, telegraph, teletype or
other form of wire or wireless communication at least two
days' notice of the date, time and place of such Meeting.
Special Board Meetings shall be held at the Principal
Office or at such other place, within or without the State
of Indiana, as shall be specified in the respective
notices or waivers of notice thereof.
SECTION 7. WAIVER OF NOTICE AND ASSENT. A Director
may waive notice of any Board Meeting before or after the
date and time of the Board Meeting stated in the notice by
a written waiver signed by the Director and filed with the
minutes or corporate records. A Director's attendance at
or participation in a Board Meeting shall constitute a
waiver of notice of such Meeting and assent to any
corporate action taken at such Meeting, unless (a) the
Director at the beginning of such Meeting (or promptly
upon his arrival) objects to holding of or transacting
business at the Meeting and does not thereafter vote for
or assent to action taken at the Meeting; (b) the
Director's dissent or abstention from the action taken is
entered in the minutes of such Meeting; or (c) the
Director delivers written notice of his dissent or
abstention to the presiding Director at such Meeting
before its adjournment, or to the Secretary immediately
after its adjournment. The right of dissent or abstention
is not available to a Director who votes in favor of the
action taken.
SECTION 8. QUORUM. At all Board Meetings, a
majority of the number of Directors designated for the
full Board (the "Full Board") shall be necessary to
constitute a quorum for the transaction of any business,
except (a) that for the purpose of filling of vacancies a
majority of Directors then in office shall constitute a
quorum, and (b) that a lesser number may adjourn the
Meeting from time to time until a quorum is present. The
act of a majority of the Board present at a Meeting at
which a quorum is present shall be the act of the Board,
unless the act of a greater number is required by law, the
Articles or these By-Laws.
SECTION 9. AUDIT AND OTHER COMMITTEES OF THE BOARD.
The Board shall, by resolution adopted by a majority of
the Full Board, designate an Audit Committee comprised of
two or more Directors, which shall have such authority and
exercise such duties as shall be provided by resolution of
the Board. The Board may, by resolution adopted by such
majority, also designate other regular or special
committees of the Board ("Committees"), in each case
comprised of two or more Directors and to have such powers
and exercise such duties as shall be provided by
resolution of the Board.
SECTION 10. RESIGNATIONS. Any Director may resign
at any time by giving written notice to the Board, the
Chairman, the President or the Secretary. Any such
resignation shall take effect when delivered unless the
notice specifies a later effective date. Unless otherwise
specified in the notice, the acceptance of such
resignation shall not be necessary to make it effective.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The Officers shall be the
President, one or more Vice Presidents, the Secretary and
the Treasurer, and may include one or more Assistant
Secretaries, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers. Any two
or more offices may be held by the same person. The Board
may from time to time elect or appoint such other Officers
as it shall deem necessary, who shall exercise such powers
and perform such duties as may be prescribed from time to
time by these By-Laws or, in the absence of a provision in
these By-Laws in respect thereto, as may be prescribed
from time to time by the Board.
SECTION 2. ELECTION OF OFFICERS. The Officers shall
be elected by the Board at the Annual Board Meeting and
shall hold office for one year or until their respective
successors shall have been duly elected and shall have
qualified; provided, however, that the Board may at any
time elect one or more persons to new or different offices
and/or change the title, designation and duties and
responsibilities of any of the Officers consistent with
the law, the Articles and these By-Laws.
SECTION 3. VACANCIES; REMOVAL. Any vacancy among
the Officers may be filled for the unexpired term by the
Board. Any Officer may be removed at any time by the
affirmative vote of a majority of the Full Board.
SECTION 4. DELEGATION OF DUTIES. In the case of the
absence, disability, death, resignation or removal from
office of any Officer, or for any other reason that the
Board shall deem sufficient, the Board may delegate, for
the time being, any or all of the powers or duties of such
Officer to any other Officer or to any Director.
SECTION 5. PRESIDENT. The President shall be a
Director and, subject to the control of the Board, shall
have general charge of and supervision and authority over
the business and affairs of the Corporation, and shall
have such other powers and perform such other duties as
are incident to this office and as may be assigned to him
by the Board. In the case of the absence or disability of
the Chairman or if no Chairman shall be elected or
appointed by the Board, the President shall preside at all
Shareholders' Meetings and Board Meetings.
SECTION 6. VICE PRESIDENTS. Each of the Vice
Presidents shall have such powers and perform such duties
as may be prescribed for him by the Board or delegated to
him by the President. In the case of the absence,
disability, death, resignation or removal from office of
the President, the powers and duties of the President
shall, for the time being, devolve upon and be exercised
by the Executive Vice President, if there be one, and if
not, then by such one of the Vice Presidents as the Board
or the President may designate, or, if there be but one
Vice President, then upon such Vice President; and he
shall thereupon, during such period, exercise and perform
all of the powers and duties of the President, except as
may be otherwise provided by the Board.
SECTION 7. SECRETARY. The Secretary shall have the
custody and care of the Seal, records, minutes and the
Stock Book of the Corporation; shall attend all
Shareholders' Meetings and Board Meetings, and duly record
and keep the minutes of their proceedings in a book or
books to be kept for that purpose; shall give or cause to
be given notice of all Shareholders' Meetings and Board
Meetings when such notice shall be required; shall file
and take charge of all papers and documents belonging to
the Corporation; and shall have such other powers and
perform such other duties as are incident to the office of
secretary of a business corporation, subject at all times
to the direction and control of the Board and the
President.
SECTION 8. ASSISTANT SECRETARIES. Each of the
Assistant Secretaries shall assist the Secretary in his
duties and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Secretary, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Secretaries as the Board, the President or the Secretary
may designate, or, if there be but one Assistant
Secretary, then upon such Assistant Secretary; and he
shall thereupon, during such period, exercise and perform
all of the powers and duties of the Secretary, except as
may be otherwise provided by the Board.
SECTION 9. TREASURER. The Treasurer shall have
control over all records of the Corporation pertaining to
moneys and securities belonging to the Corporation; shall
have charge of, and be responsible for, the collection,
receipt, custody and disbursements of funds of the
Corporation; shall have the custody of all securities
belonging to the Corporation; shall keep full and accurate
accounts of receipts and disbursements in books belonging
to the Corporation; and shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper
receipts or making proper vouchers for such disbursements
and preserving the same at all times during his term of
office. When necessary or proper, he shall endorse on
behalf of the Corporation all checks, notes or other
obligations payable to the Corporation or coming into his
possession for or on behalf of the Corporation, and shall
deposit the funds arising therefrom, together with all
other funds and valuable effects of the Corporation coming
into his possession, in the name and the credit of the
Corporation in such depositories as the Board from time to
time shall direct, or in the absence of such action by the
Board, as may be determined by the President or any Vice
President. If the Board has not elected a Controller or
an Assistant Controller, or in the absence or disability
of the Controller and each Assistant Controller or if, for
any reason, a vacancy shall occur in such offices, then
during such period the Treasurer shall have, exercise and
perform all of the powers and duties of the Controller.
The Treasurer shall also have such other powers and
perform such other duties as are incident to the office of
treasurer of a business corporation, subject at all times
to the direction and control of the Board and the
President.
If required by the Board, the Treasurer shall give
the Corporation a bond, in such an amount and with such
surety or sureties as may be ordered by the Board, for the
faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of
whatever kind in his possession or under his control
belonging to the Corporation.
SECTION 10. ASSISTANT TREASURERS. Each of the
Assistant Treasurers shall assist the Treasurer in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Treasurer, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Treasurers as the Board, the President or the Treasurer
may designate, or, if there be but one Assistant
Treasurer, then upon such Assistant Treasurer; and he
shall thereupon, during such period, exercise and perform
all the powers and duties of the Treasurer except as may
be otherwise provided by the Board. If required by the
Board, each Assistant Treasurer shall likewise give the
Corporation a bond, in such amount and with such surety or
sureties as may be ordered by the Board, for the same
purposes as the bond that may be required to be given by
the Treasurer.
SECTION 11. CONTROLLER. The Controller shall have
direct control over all accounting records of the
Corporation pertaining to moneys, properties, materials
and supplies, including the bookkeeping and accounting
departments; shall have direct supervision over the
accounting records in all other departments pertaining to
moneys, properties, materials and supplies; shall render
to the President and the Board, at Regular Board Meetings
or whenever the same shall be required, an account of all
his transactions as Controller and of the financial
condition of the Corporation; and shall have such other
powers and perform such other duties as are incident to
the office of controller of a business corporation,
subject at all times to the direction and control of the
Board and the President.
SECTION 12. ASSISTANT CONTROLLERS. Each of the
Assistant Controllers shall assist the Controller in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Controller, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Controllers as the Board, the President or the Controller
may designate, or, if there be but one Assistant
Controller, then upon such Assistant Controller; and he
shall thereupon, during such period, exercise and perform
all the powers and duties of the Controller, except as may
be otherwise provided by the Board.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. CERTIFICATES. Certificates for Shares
("Certificates") shall be in such form, consistent with
law and the Articles, as shall be approved by the Board.
Certificates for each class, or series within a class, of
Shares, shall be numbered consecutively as issued. Each
Certificate shall state the name of the Corporation and
that it is organized under the laws of the State of
Indiana; the name of the registered holder; the number and
class and the designation of the series, if any, of the
Shares represented thereby; and a summary of the
designations, relative rights, preferences and limitations
applicable to such class and, if applicable, the
variations in rights, preferences and limitations
determined for each series and the authority of the Board
to determine such variations for future series; provided,
however, that such summary may be omitted if the
Certificate states conspicuously on its front or back that
the Corporation will furnish the Shareholder such
information upon written request and without charge. Each
Certificate shall be signed (either manually or in
facsimile) by (i) the President or a Vice President and
(ii) the Secretary or an Assistant Secretary, or by any
two or more Officers that may be designated by the Board,
and may have affixed thereto the Seal, which may be a
facsimile, engraved or printed.
SECTION 2. RECORD OF CERTIFICATES. Shares shall be
entered in the Stock Book as they are issued, and shall be
transferable on the Stock Book by the holder thereof in
person, or by his attorney duly authorized thereto in
writing, upon the surrender of the outstanding Certificate
therefor properly endorsed.
SECTION 3. LOST OR DESTROYED CERTIFICATES. Any
person claiming a Certificate to be lost or destroyed
shall make affidavit or affirmation of that fact and, if
the Board or the President shall so require, shall give
the Corporation and/or the transfer agents and registrars,
if they shall so require, a bond of indemnity, in form and
with one or more sureties satisfactory to the Board or the
President and/or the transfer agents and registrars, in
such amount as the Board or the President may direct
and/or the transfer agents and registrars may require,
whereupon a new Certificate may be issued of the same
tenor and for the same number of Shares as the one alleged
to be lost or destroyed.
SECTION 4. SHAREHOLDER ADDRESSES. Every Shareholder
shall furnish the Secretary with an address to which
notices of Meetings and all other notices may be served
upon him or mailed to him, and in default thereof notices
may be addressed to him at his last known address or at
the Principal Office.
ARTICLE VII
CORPORATE BOOKS AND RECORDS
SECTION 1. PLACES OF KEEPING. Except as otherwise
provided by law, the Articles or these By-Laws, the books
and records of the Corporation (including the "Corporate
Records," as defined in the Articles) may be kept at such
place or places, within or without the State of Indiana,
as the Board may from time to time by resolution determine
or, in the absence of such determination by the Board, as
shall be determined by the President.
SECTION 2. STOCK BOOK. The Corporation shall keep
at the Principal Office the original Stock Book or a
duplicate thereof, or, in case the Corporation employs a
stock registrar or transfer agent within or without the
State of Indiana, another record of the Shareholders in a
form that permits preparation of a list of the names and
addresses of all the Shareholders, in alphabetical order
by class of Shares, stating the number and class of Shares
held by each Shareholder (the "Record of Shareholders").
SECTION 3. INSPECTION OF CORPORATE RECORDS. Any
Shareholder (or the Shareholder's agent or attorney
authorized in writing) shall be entitled to inspect and
copy at his expense, after giving the Corporation at least
five business days written notice of his demand to do so,
the following Corporate Records: (1) the Articles; (2)
these By-Laws; (3) minutes of all Shareholders' Meetings
and records of all actions taken by the Shareholders
without a meeting (collectively, "Shareholders Minutes")
for the prior three years; (4) all written communications
by the Corporation to the Shareholders including the
financial statements furnished by the Corporation to the
Shareholders for the prior three years; (5) a list of the
names and business addresses of the current Directors and
the current Officers; and (6) the most recent Annual
Report of the Corporation as filed with the Secretary of
State of Indiana. Any Shareholder (or the Shareholder's
agent or attorney authorized in writing) shall also be
entitled to inspect and copy at his expense, after giving
the Corporation at least five business days written notice
of his demand to do so, the following Corporate Records,
if his demand is made in good faith and for a proper
purpose and describes with reasonable particularity his
purpose and the records he desires to inspect, and the
records are directly connected with his purpose: (1) to
the extent not subject to inspection under the previous
sentence, Shareholders Minutes, excerpts from minutes of
Board Meetings and of Committee meetings, and records of
any actions taken by the Board or any Committee without a
meeting; (2) appropriate accounting records of the
Corporation; and (3) the Record of Shareholders.
SECTION 4. RECORD DATE. The Board may, in its
discretion, fix in advance a Record Date not more than
seventy days before the date (a) of any Shareholders'
Meeting, (b) for the payment of any dividend or the making
of any other distribution, (c) for the allotment of
rights, or (d) when any change or conversion or exchange
of Shares shall go into effect. If the Board fixes a
Record Date, then only Shareholders who are Shareholders
of record on such Record Date shall be entitled (a) to
notice of and/or to vote at any such Meeting, (b) to
receive any such dividend or other distribution, (c) to
receive any such allotment of rights, or (d) to exercise
the rights in respect of any such change, conversion or
exchange of Shares, as the case may be, notwithstanding
any transfer of Shares on the Stock Book after such Record
Date.
SECTION 5. TRANSFER AGENTS; REGISTRARS. The Board
may appoint one or more transfer agents and registrars for
its Shares and may require all Certificates to bear the
signature either of a transfer agent or of a registrar, or
both.
ARTICLE VIII
CHECKS, DRAFTS, DEEDS AND SHARES OF STOCK
SECTION 1. CHECKS, DRAFTS, NOTES, ETC. All checks,
drafts, notes or orders for the payment of money of the
Corporation shall, unless otherwise directed by the Board
or otherwise required by law, be signed by one or more
Officers as authorized in writing by the President. In
addition, the President may authorize any one or more
employees of the Corporation ("Employees") to sign checks,
drafts and orders for the payment of money not to exceed
specific maximum amounts as designated in writing by the
President for any one check, draft or order. When so
authorized by the President, the signature of any such
Officer or Employee may be a facsimile signature.
SECTION 2. DEEDS, NOTES, BONDS, MORTGAGES,
CONTRACTS, ETC. All deeds, notes, bonds and mortgages
made by the Corporation, and all other written contracts
and agreements, other than those executed in the ordinary
course of corporate business, to which the Corporation
shall be a party, shall be executed in its name by the
President, a Vice President or any other Officer so
authorized by the Board and, when necessary or required,
the Secretary or an Assistant Secretary shall attest the
execution thereof. All written contracts and agreements
into which the Corporation enters in the ordinary course
of corporate business shall be executed by any Officer or
by any other Employee designated by the President or a
Vice President to execute such contracts and agreements.
SECTION 3. SALE OR TRANSFER OF STOCK. Subject
always to the further orders and directions of the Board,
any share of stock issued by any corporation and owned by
the Corporation (including reacquired Shares of the
Corporation) may, for sale or transfer, be endorsed in the
name of the Corporation by the President or a Vice
President, and said endorsement shall be duly attested by
the Secretary or an Assistant Secretary either with or
without affixing thereto the Seal.
SECTION 4. VOTING OF STOCK OF OTHER CORPORATIONS.
Subject always to the further orders and directions of the
Board, any share of stock issued by any other corporation
and owned or controlled by the Corporation (an "Investment
Share") may be voted at any shareholders' meeting of such
other corporation by the President or by a Vice President.
Whenever, in the judgment of the President, it is
desirable for the Corporation to execute a proxy or give a
shareholder's consent in respect of any Investment Share,
such proxy or consent shall be executed in the name of the
Corporation, by the President or a Vice President, and,
when necessary or required, shall be attested by the
Secretary or an Assistant Secretary either with or without
affixing thereto the Seal. Any person or persons
designated in the manner above stated as the proxy or
proxies of the Corporation shall have full right, power
and authority to vote an Investment Share the same as such
Investment Share might be voted by the Corporation.
ARTICLE IX
FISCAL YEAR
SECTION 1. FISCAL YEAR. The Corporation's fiscal
year shall begin on October 1 of each year and end on
September 30 of the following year.
ARTICLE X
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be
altered, amended or repealed, in whole or in part, and new
By-Laws may be adopted, at any Board Meeting by the
affirmative vote of a majority of the Full Board.
Appendix B
Gas Sales And Portfolio Administration Agreement
Original Page No. 1
October 1, 1996
APPENDIX B - Buyer's Maximum Quantities
Maximum Daily Quantities (in Dth)
Central/
Month North/East Terre Haute South Greensburg
October 251,000 112,000 37,600 5,060
November 362,000 181,000 45,300 5,570
December 500,000 230,000 69,100 8,000
January 507,000 231,000 70,600 8,310
February 465,000 230,000 62,400 7,360
March 401,000 192,000 51,000 5,980
April 252,000 120,000 31,500 3,560
May 208,000 99,000 20,000 2,640
June 152,000 74,000 15,200 2,620
July 94,000 42,000 5,200 1,570
August 120,000 56,000 9,600 1,990
September 185,000 91,000 20,600 3,250
Maximum Seasonal Quantities (in Dth)
Central/
Month North/East Terre Haute South Greensburg
Summer 1996 11,202,130 5,850,260 1,676,840 267,145
Winter 1996-97 38,579,050 21,473,920 5,513,670 697,710
Appendix B
Gas Sales And Portfolio Administration Agreement
Original Page No. 2
October 1, 1996
APPENDIX B - Buyer's Maximum Quantities
Amendment
Seller and Buyer agree that this Appendix B may be
amended as provided in this Agreement, which amendment
ultimately will be memorialized in a revised Appendix B.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Timothy M. Hewitt
Carl L. Chapman Timothy M. Hewitt
Its: President Its: Vice President
Appendix C
Gas Sales And Portfolio Administration Agreement
Original Page No. 1
October 1, 1996
Appendix C - Portfolio Information
I. Contracts and Contract Rates
The applicable demand costs shall be determined based
upon the rates and charges specified in each Transporter's
Tariff, including any applicable direct bills, surcharges,
or as other costs specified by the sheets identified below,
or other applicable sheets, as all of those sheets may be in
effect from time to time, and costs arising under applicable
agreements, for the applicable term of these agreements,
including the agreements identified below, as well as this
Agreement. While Seller and Buyer agree that the identified
tariff sheets and agreements are intended to be a complete
listing of the applicable tariff sheets and applicable
agreements, they further agree that the omission of the
reference of one or more sheets or agreements from that list
will not affect Buyer's obligation to Seller for rates,
charges and costs incurred thereunder. Seller shall provide
to Buyer all Transporter refunds for the applicable terms
which are received by Seller relative to Contracts or
Contract Rates referenced below or relative to any
agreements referencing the contracts below.
Contract No. Contract Rate
11713 Sheet No. 11
11714 Sheet No. 5
11715 Sheet No. 5
11716 Sheet No. 5
11718 Sheet No. 5
11719 Tariff Letter
11720 Tariff Letter
11721 Sheet No. 5
12044 Sheet No. 11
12045 Sheet No. 5
X-22 Sheet No. 13
Sheet No. 14
Sheet No. 15
Sheet No. 16
03950 Sheet No. 5
Sheet No. 17
Sheet No. 17A
Sheet No. 18
Appendix C
Gas Sales And Portfolio Administration Agreement
Original Page No. 2
October 1, 1996
Appendix C - Portfolio Information
Contract No. Contract Rate
19100 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
19110 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
20250 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
20300 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
32300 Sheet No. 10
33050 Sheet No. 10
70300 Sheet No. 68G
N0325 Sheet No. 10
T3780 Sheet No. 11
N0420 Sheet No. 10
T3739 Sheet No. 11
T9998 Sheet No. 11
800171 Sheet No. 35
830034 Sheet No. 30
400109 Sheet No. 43
WSS Appendix I
PSS Appendix I
Appendix C
Gas Sales And Portfolio Administration Agreement
Original Page No. 3
October 1, 1996
Appendix C - Portfolio Information
II. Transportation Credit
1. Seller shall provide to Buyer, as a credit against the
Contract Rates, a Transportation Credit ("TC") for the sale
from the Buyer to Seller of projected available annual
portfolio entitlements.
2. The Transportation Credit shall be calculated from time
to time to reflect changes in projected available annual
entitlements, based on the following formula:
TC = Base TC x Projected Available Annual Entitlements
----------------------------------------
Base Available Annual Entitlements
Where: a. Base TC = $1,864,000
b. Base Available Annual Entitlements = 35,913,000 Dth
c. Projected Available Annual Entitlements =
Total Entitlements - Normal Demand
(i) Total Entitlements are the sum of the
quantities of longhaul pipeline transportation
entitlements reserved by Buyer.
(ii) Normal Demand is the projected normal
weather quantity of Buyer's firm longhaul
pipeline deliveries for firm customers.
3. The TC shall be divided among months based upon the projected
available monthly entitlements.
Amendment
Seller and Buyer agree that this Appendix C may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix C.
PROLIANCE ENERGY LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Timothy M. Hewitt
Carl L. Chapman Timothy M. Hewitt
Its: President Its: Vice President
Appendix D
Gas Sales And Portfolio Administration Agreement
First Revised Page No. 1
October 1, 1996
APPENDIX D - Supplier Reservation Costs
Supplier Reservation Costs
October 1, 1996 through October 31, 1997
I. Reserved Commodity Quantities
a. Monthly Baseload Reserved Quantity (dth)
System
Central/
Month North/East Terre Haute Greensburg South
October, 1996 88,000 33,000 2,500 7,000
November, 1996 75,000 33,000 2,000 9,000
December, 1996 105,000 40,000 2,000 11,000
January, 1997 105,000 60,000 3,000 14,000
February, 1997 105,000 60,000 2,500 14,000
March, 1997 65,000 40,000 2,000 10,000
April, 1997 105,000 45,000 2,500 7,000
May, 1997 88,000 33,000 2,500 7,000
June, 1997 88,000 33,000 2,500 7,000
July, 1997 88,000 33,000 2,500 7,000
August, 1997 88,000 33,000 2,500 7,000
September, 1997 88,000 33,000 2,500 7,000
October, 1997 88,000 33,000 2,500 7,000
Appendix D
Gas Sales And Portfolio Administration Agreement
First Revised Page No. 2
October 1, 1996
APPENDIX D - Supplier Reservation Costs
b. Daily Swing Reserved Quantity (dth)
System
Central/
Month North/East Terre Haute Greensburg South
October, 1996 135,578 12,000 1,100 12,000
November, 1996 148,578 83,000 4,616 31,000
December, 1996 118,578 92,000 4,616 34,327
January, 1997 118,578 72,000 3,616 31,327
February, 1997 118,578 72,000 4,116 31,327
March, 1997 158,578 79,000 4,616 35,327
April, 1997 118,578 0 1,150 14,066
May, 1997 135,578 12,000 1,150 14,066
June, 1997 95,000 12,000 400 13,000
July, 1997 45,000 15,000 500 7,000
August, 1997 75,000 12,000 500 8,000
September, 1997 135,578 12,000 500 12,000
October, 1997 135,578 12,000 1,100 12,000
II. Applicable Reservation Rates (dth/day)
System Winter Months (Nov.-Mar.) Summer Months (Apr.-Oct.)
Monthly Daily Monthly Daily
Index Index Index Index
Reserved Reserved Reserved Reserved
Quantity Quantity Quantity Quantity
North/East $0.0281 $0.0171 $0.0092 $0.0164
Central/Terre $0.0180 $0.0345 $0.0154 $0.0221
Haute
Greensburg $0.0111 $0.0197 $0.0111 $0.0167
South $0.0180 $0.0345 $0.0154 $0.0221
Appendix D
Gas Sales And Portfolio Administration Agreement
First Revised Page No. 3
October 1, 1996
APPENDIX D - Supplier Reservation Costs
Assignment/Agency Administration of Supply Agreements
Buyer and Seller agree that quantities reserved under
supply reservation contracts entered into by Buyer prior to
April 1, 1996, and for which Seller has accepted assignment
or agency administration duties, shall be included in the
Reserved Commodity Quantities with Applicable Reservation
Rates as set forth in the original supply reservation
contracts.
Amendment
Seller and Buyer agree that this Appendix D may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix D.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Timothy M. Hewitt
Carl L. Chapman Timothy M. Hewitt
Its: President Its: Vice President
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 1
October 1, 1996
Appendix E- Commodity Purchases
This Appendix E addresses the gas supply and other
variable costs applicable to Nominated Daily Quantities and
Balancing Quantities as identified below.
For Monthly Baseload Purchases:
Buyer shall pay to Seller each Contract Month an amount
determined by multiplying the monthly baseload quantities of
Gas scheduled for Buyer's purchase under this Agreement
during the Contract Month, by a price per MMBtu determined
using the first monthly index from Inside FERC's GAS MARKET
REPORT, in the table "PRICES OF SPOT GAS DELIVERED TO
INTERSTATE PIPELINES" for the applicable zone, specified
below, for the applicable month, plus all other applicable
variable costs as identified below shall apply.
For Daily Swing Purchases:
Buyer shall pay to Seller each Contract Month an amount
determined by summing all applicable "Daily Amounts" for the
Contract Month. A "Daily Amount" shall be calculated for
each day during the Contract Month for which daily swing
quantities of Gas have been confirmed for purchase. The
"Daily Amounts" shall be determined by multiplying (a) the
confirmed swing quantities of gas scheduled for the
particular day of the Contract Month, by (b) a price per
MMBtu determined using the Daily Midpoint Price reported in
Gas Daily, in the table "DAILY PRICE SURVEY", for the
applicable zone, specified below, for purchases for the
applicable day. In addition all other applicable variable
costs as identified below shall apply.
For Other Purchases:
For any purchases not covered by a specified pricing
method, pricing shall be as negotiated and mutually agreed
to in writing by the Parties.
For Summer Storage Refill:
For summer refill of leased storage, Buyer shall pay to
Seller an amount based on averaging the seven summer monthly
indices for the applicable supply area, and based upon
presuming storage refill quantities to be equally split
between the summer months. For summer refill of company
storage, the parties will agree on the extent to which an
index average method will be used, after consideration of
the operational scheduling needs of company storage. In
addition, all other applicable variable costs as identified
below shall apply.
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 2
October 1, 1996
Appendix E- Commodity Purchases
For Storage Withdrawals:
For quantities of storage withdrawals for which Buyer
has previously paid for commodity, applicable storage
withdrawal variable costs as identified below shall apply.
For Applicable Indices:
System Applicable Monthly Indices
North/East PEPL - Texas, Oklahoma
ANR - Louisiana
Central/Terre Haute Texas Gas - Zone 1
Texas Gas - Zone SL
South Texas Gas - Zone 1
Texas Gas - Zone SL
Greensburg TETCO - East Louisiana
TETCO - West Louisiana
TETCO - East Texas
TETCO - South Texas
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 3
October 1, 1996
APPENDIX E- Commodity Purchases
(Continued)
System Applicable Daily Indices
North/East PEPL - Oklahoma
ANR - Louisiana - Onshore South
Central/Terre Haute Texas Gas SL - Louisiana - Onshore South
Texas Gas (entire Z1) - East Texas - North La. Area
South Texas Gas SL - Louisiana - Onshore South
Texas Gas (entire Z1) - East Texas - North La. Area
Greensburg/Westport TETCO (ELA) - Louisiana - Onshore South
TETCO (WLA) - Louisiana - Onshore South
TETCO (ETX) - East Texas - North La. Area
TETCO (STX) - South - Corpus Christi
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 4
October 1, 1996
APPENDIX E- Commodity Purchases - Other Variable Costs
The other variable costs applicable to Nominated Daily
Quantities and Balancing Quantities shall be determined
based upon the rates and charges applicable under each
transporter's tariff, including the sheets identified below,
as well as other applicable sheets, as all of those sheets
may be in effect from time to time, and costs arising under
applicable agreements, including the agreements identified
below, as well as this Agreement.
North/East
PEPL
Contract No. Contract Rate
11713 Sheet No. 11
11714 Sheet No. 5
11715 Sheet No. 5
11716 Sheet No. 5
11717 Sheet No. 5
11719 Tariff Letter
11720 Tariff Letter
11721 Sheet No. 5
12044 Sheet No. 11
12045 Sheet No. 5
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 5
October 1, 1996
APPENDIX E - Commodity Purchases - Other Variable Costs
North/East
ANR
Contract No. Contract Rate
X-22 Sheet No. 13
Sheet No. 14
Sheet No. 15
Sheet No. 16
Sheet No. 19
03950 Sheet No. 5
Sheet No. 17
Sheet No. 17A
Sheet No. 19
19100 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
19110 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
20250 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
20300 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 6
October 1, 1996
APPENDIX E - Commodity Purchases - Other Variable Costs
North/East (Cont'd)
ANR
Contract No. Contract Rate
32300 Sheet No. 10
Sheet No. 19
33050 Sheet No. 10
Sheet No. 19
70300 Sheet No. 68G
Sheet No. 68H
Central/Terre Haute System
Texas Gas Z-3
Contract No. Contract Rate
N0325 Sheet No. 10
Sheet No. 14
T3780 Sheet No. 11A
Sheet No. 14
T9998 Sheet No. 11A
Sheet No. 14
South System
Texas Gas Z-4
Contract No. Contract Rate
N0420 Sheet No. 10
T3739 Sheet No. 11A
Appendix E
Gas Sales And Portfolio Administration Agreement
Original Page No. 7
October 1, 1996
APPENDIX E - Commodity Purchases - Other Variable Costs
Greensburg System
Texas Eastern
Contract No. Contract Rate
800171 Sheet No. 36
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
830034 Sheet No. 31
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
400109 Sheet No. 43
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
While Seller and Buyer agree that the identified tariff
sheets and agreements are intended to be a complete listing
of the applicable tariff sheets and applicable agreements,
they further agree that the omission of the reference of one
or more sheets or agreements from that list will not affect
Buyer's obligation to Seller for rates, charges and costs
incurred thereunder.
Amendment
Seller and Buyer agree that this Appendix E may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix E.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Timothy M. Hewitt
Carl L. Chapman Timothy M. Hewitt
Its: President Its: Vice President
Appendix G
Gas Sales And Portfolio Administration Agreement
Original Page No. 1
October 1, 1996
G- Notices
Invoice Information:
Buyer: Seller:
Indiana Gas Company, Inc. J. Groth
Corporate Accounting ProLiance Energy, LLC
Attn.: Judy Shular 135 North Pennsylvania Street
1630 North Meridian Street Suite 800
Indianapolis, IN 46202 Indianapolis, IN 46204-2482
(317) 321-0461 (317) 231-6808
Payments:
Buyer: Seller:
National City Bank Key Bank
For the Account of: For the Account of:
Indiana Gas Company, Inc. ProLiance Energy, LLC
ABA #041001039
ACCT #6001805116
Supply Plans/Operational/Force Majeure:
Buyer: Seller:
Supply Plans Supply Plans
Chris Kershner Brian Azman
(317) 321-0583 (317) 231-6830
Operational Operational
Randy Gary Stephen Miner
(317) 321-0507 (317) 231-6828
Force Majeure Force Majeure
Randy Gary (317) 321-0507 Brian Azman - (317) 231-6830
Frank Lindsey (317) 321-0334 Stephen Miner - (317) 231-6828
Gas Controller on Duty (317) 321-0535 John Talley - (317) 231-6806
Indiana Gas Company, Inc. ProLiance Energy, LLC
1630 North Meridian Street 135 North Pennsylvania Street
Indianapolis, IN 46202 Suite 800
(317) 321-0787 (Telecopy) Indianapolis, Indiana 46204-2482
(317) 231-6901 (Telecopy)
All Other Notices:
Buyer: Seller:
Gas Control Department ProLiance Energy , LLC
Attn.: Randy Gary Attn: John R. Talley
1630 North Meridian Street 135 North Pennsylvania Street
Indianapolis, IN 46202 Suite 800
Indianapolis, Indiana 46204-2482
Appendix G
Gas Sales And Portfolio Administration Agreement
Original Page No. 2
October 1, 1996
APPENDIX G- Notices
(Continued)
Amendment
Seller and Buyer agree that this Appendix G may be
amended from time to time as provided in this Agreement,
which amendment ultimately will be memorialized in a revised
Appendix G.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Timothy M. Hewitt
Carl L. Chapman Timothy M. Hewitt
Its: President Its: Vice President
<TABLE>
EXHIBIT 12
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratios)
Fiscal Year Ended September 30
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Earnings:
Net income $38,630 $32,109 $34,596 $28,534 $25,743
Income taxes 22,568 18,630 17,977 16,030 12,800
Fixed charges (see below) 16,844 16,395 16,986 17,556 15,642
Total adjusted earnings $78,042 $67,134 $69,559 $62,120 $54,185
Fixed charges:
Total interest expense $15,907 $15,530 $16,037 $16,640 $14,556
Interest component of rents 937 865 949 916 1,086
Total fixed charges $16,844 $16,395 $16,986 $17,556 $15,642
Ratio of earnings to fixed charges 4.6 4.1 4.1 3.5 3.5
</TABLE>
EXHIBIT 21
State of Incorporation
Subsidiaries of Indiana Gas Company, Inc. (Parent) -
Richmond Gas Corporation,
d/b/a Indiana Gas Company, Inc. Indiana
Terre Haute Gas Corporation,
d/b/a Indiana Gas Company, Inc. Indiana
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation of our reports included in this Form
10-K into Indiana Gas Company, Inc.'s previously filed
Registration Statement File No. 33-54820.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Indianapolis, Indiana
December 19, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana Gas
Company, Inc.'s consolidated financial statements as of September 30, 1996, and
for the fiscal year then ended and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 586,824
<OTHER-PROPERTY-AND-INVEST> 33
<TOTAL-CURRENT-ASSETS> 70,600
<TOTAL-DEFERRED-CHARGES> 15,450
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 672,907
<COMMON> 142,995
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 138,539
<TOTAL-COMMON-STOCKHOLDERS-EQ> 281,534
0
0
<LONG-TERM-DEBT-NET> 174,733
<SHORT-TERM-NOTES> 24,236
<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> 192,404
<TOT-CAPITALIZATION-AND-LIAB> 672,907
<GROSS-OPERATING-REVENUE> 530,594
<INCOME-TAX-EXPENSE> 23,174
<OTHER-OPERATING-EXPENSES> 453,867
<TOTAL-OPERATING-EXPENSES> 477,041
<OPERATING-INCOME-LOSS> 53,553
<OTHER-INCOME-NET> 984
<INCOME-BEFORE-INTEREST-EXPEN> 54,537
<TOTAL-INTEREST-EXPENSE> 15,907
<NET-INCOME> 38,630
0
<EARNINGS-AVAILABLE-FOR-COMM> 38,630
<COMMON-STOCK-DIVIDENDS> 25,250
<TOTAL-INTEREST-ON-BONDS> 14,882
<CASH-FLOW-OPERATIONS> 68,580
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
December 6, 1996
Office of Applications and Report Services
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
We are transmitting herewith Indiana Energy, Inc.'s
1996 Proxy Statement.
The $125.00 filing fee was transmitted via FEDWIRE on
December 5, 1996.
Sincerely,
/s/Ronald E. Christian
Ronald E. Christian
REC:rs
IEI
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1997
TO THE SHAREHOLDERS OF INDIANA ENERGY, INC.
The annual meeting of shareholders of Indiana Energy, Inc.
("Company") will be held at the principal office of the Company,
1630 North Meridian Street, Indianapolis, Indiana 46202 on
Wednesday, January 22, 1997, at 10:30 a.m. (Eastern Standard
Time), for the following purposes:
1. To elect four directors of the Company to serve for a
term of three years or until their successors are duly elected
and qualified; and
2. To transact such other business as may properly come
before the meeting, or any adjournment of the meeting.
As allowed by the code of by-laws, the board of directors
has fixed the close of business on November 18, 1996, as the
record date for determining the shareholders entitled to notice
of and to vote at the meeting and at any adjournment of the
meeting.
It is important that your stock be represented at this
meeting to assure a quorum. Whether or not you now expect to be
present at the meeting, please fill in, date and sign the
enclosed proxy and return it promptly to the Company in the
accompanying addressed envelope. No stamp is required if mailed
in the United States. You have the unconditional right to revoke
your proxy at any time before the authority granted by it is
exercised.
By order of the board of directors.
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Indianapolis, Indiana Secretary
December 6, 1996
CONTENTS
PURPOSES OF MEETING
VOTING SECURITIES
ELECTION OF DIRECTORS
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
1. THE AUDIT COMMITTEE.
2. THE COMPENSATION COMMITTEE.
3. THE NOMINATING COMMITTEE.
4. THE PUBLIC AND ENVIRONMENTAL AFFAIRS COMMITTEE.
DIRECTORS' COMPENSATION
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE REPORT
A. EXECUTIVE COMPENSATION POLICY.
B. COMPONENTS OF EXECUTIVE COMPENSATION.
C. CHIEF EXECUTIVE OFFICER COMPENSATION.
D. COMPENSATION CONSULTANT, TERMINATION BENEFIT AGREEMENTS AND
DEDUCTIBILITY OF EXECUTIVE COMPENSATION.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPENSATION
SUMMARY COMPENSATION TABLE
CORPORATE PERFORMANCE
TOTAL RETURN TO SHAREHOLDERS
RETURN ON EQUITY
RETIREMENT SAVINGS PLAN
RETIREMENT PLANS
EMPLOYMENT AND TERMINATION BENEFIT AGREEMENTS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
COST AND METHOD OF SOLICITATION
ANNUAL REPORT
REVOCATION RIGHTS
SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
(317) 926-3351
PROXY STATEMENT
The following information is furnished in connection with
the solicitation of the enclosed proxy by and on behalf of the
board of directors of the Company. The proxy will be used at
the annual meeting of shareholders to be held at the principal
office of the Company, 1630 North Meridian Street,
Indianapolis, Indiana, on Wednesday, January 22, 1997, at 10:30
A.M. (Eastern Standard Time), and at any adjournment of the
meeting for the matters to be acted upon under its authority.
The proxy and this proxy statement were first mailed to the
shareholders on or about December 6, 1996.
PURPOSES OF MEETING
As of this date, the only known business to be presented
at the 1997 annual meeting of shareholders is the election of
four directors of the Company to serve for a term of three
years or until their successors are duly elected and qualified.
However, the enclosed proxy authorizes the proxy holders to
vote on all other matters that may properly come before the
meeting, and it is the intention of the proxy holders to take
any such action utilizing their best judgment.
VOTING SECURITIES
The Company has one class of capital stock outstanding,
consisting as of September 30, 1996, of 22,474,402 shares of
common stock without par value. The holders of the
outstanding shares of common stock are entitled to one vote
for each share held of record on each matter presented to a
vote of the shareholders at the meeting. Only shareholders of
record at the close of business on November 18, 1996, will be
entitled to vote at the meeting or at any adjournment of the
meeting.
In connection with the Company's acquisition of Richmond
Gas Corporation ("Richmond") and Terre Haute Gas Corporation
("Terre Haute"), shares of common stock of the Company were
issued to certain members of the Anton Hulman, Jr. family,
certain corporations controlled by them, certain trusts
established for their benefit and certain other persons with
personal or business relationships with the family
(collectively, the "Hulman Interests"). At September 30, 1996,
the Hulman Interests beneficially owned an aggregate of
2,749,968 shares of the Company which comprised 12.24 percent
of the outstanding common stock of the Company. At September
30, 1996, the following beneficial owners held more than 5
percent of the outstanding common stock of the Company, the
only class of voting securities outstanding:
<TABLE>
Name and Number of
Address of Shares Nature of Percent
Title of Beneficial Beneficially Beneficial of
Class Owner Owned Ownership Class
<S> <C> <C> <C> <C>
Common Hulman & 1,622,435 Voting & 7.22%
Company Investment
900 Wabash
Avenue
Terre Haute,
Indiana 47807
</TABLE>
As a result of the attribution to certain persons of shares
held by Hulman & Company, the following persons are deemed to
be beneficial owners of more than 5 percent of the outstanding
common stock of the Company:
<TABLE>
Number of
Shares
Title of Name of Beneficially Percent of
Class Beneficial Owner Owned Class
<S> <C> <C> <C>
Common Mary F. Hulman 1,966,920 8.75%
Common Mari H. George 2,055,631 9.15%
Common Anton H. George 1,849,202 8.23%
Common Katherine M. 1,629,084 7.25%
George
Common Laura L. George 1,849,202 8.23%
Common Nancy L. George 1,629,888 7.25%
Common M. Josephine 1,627,383 7.24%
George
</TABLE>
The number of shares held beneficially by Mary F. Hulman, Mari
H. George, Anton H. George, Katherine M. George, Nancy L.
George and M. Josephine George each includes 1,622,435 shares
held by Hulman & Company as to which each, as a director of
Hulman & Company, may be deemed to share voting power and
investment power. The number of shares held beneficially by
Mary F. Hulman, Mari H. George and Anton H. George each
includes 217,398 shares held by Rose-Hulman Institute of
Technology ("Rose-Hulman") as to which Mary F. Hulman and Anton
H. George, as members of the Investment Management Committee of
the Board of Managers of Rose-Hulman, and as to which Mari H.
George, as a member of the Board of Managers, may be deemed to
share voting power and investment power, and as to which each
disclaims beneficial ownership. Laura L. George is the wife of
Anton H. George, and the shares listed for her are those
beneficially owned by Mr. George. Laura L. George disclaims
beneficial ownership of all such shares. The information
furnished here regarding beneficial ownership is derived from
the Schedule 13D, as amended most recently on June 29, 1994,
filed by the Hulman Interests with the Securities and Exchange
Commission, and Forms 3, 4 and 5 filed through September 30,
1996. The filing of the Schedule 13D by the Hulman Interests
did not affirm the existence of a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934 or the
regulations promulgated under it.
ELECTION OF DIRECTORS
In connection with the Company's acquisition of Richmond
and Terre Haute, the Company entered into a standstill
agreement with the Hulman Interests. Under this agreement, the
Company agreed to cause one designee of the Hulman Interests to
be elected to the board of directors of the Company and, until
the termination of the standstill agreement (which is dependent
upon the occurrence of certain events specified in the
agreement), to include a designee of the Hulman Interests in
the slate of nominees recommended by the board at the annual
meeting of shareholders at which the term of the original
designee expires. At a regular meeting held on August 31,
1990, the board of directors of the Company elected Anton H.
George to the board and he currently serves as a member of the
board.
The board of directors of the Company consists of twelve
directors divided into three classes as follows: Niel C.
Ellerbrook, Loren K. Evans, Fred A. Poole and Jean L.
Wojtowicz, who are nominees for election with terms expiring in
2000; Gerald L. Bepko, Lawrence A. Ferger, Anton H. George, and
James C. Shook, whose terms expire in 1999; and Paul T. Baker,
Otto N. Frenzel III, Don E. Marsh and Richard P. Rechter, whose
terms expire in 1998. Indiana Energy, Inc. is a holding
company, and each of its directors also serves as a director of
Indiana Gas Company, Inc. ("Indiana Gas"), its principal
subsidiary.
At each annual meeting of shareholders, directors are
elected to succeed those whose terms then expire for a term of
three years or until their successors are duly elected and
qualified. Accordingly, four directors are to be elected by a
plurality of votes cast at the annual meeting of shareholders
to be held on January 22, 1997.
The board of directors intends that the enclosed proxy
will be voted by the proxy holders in favor of the election of
the nominees named below for the office of director of the
Company to hold office for a term of three years or until their
respective successors are duly elected and qualified. Each of
such nominees is now serving as a director of the Company and
has signified the willingness to serve if elected. Directors
are elected by a plurality of the votes cast. Plurality means
that the individuals who receive the largest number of votes
cast are elected up to the maximum number of directors to be
chosen at the meeting. Abstentions, broker non-votes, and
instructions on the accompanying proxy card to withhold
authority to vote for one or more of the nominees might result
in some nominees receiving fewer votes. However, the number of
votes otherwise received by the nominee will not be reduced by
such action. If, however, any situation should arise under
which any nominee should be unable to serve, the authority
granted in the enclosed proxy may be exercised by the proxy
holders for the purpose of voting for a substitute nominee.
Certain information concerning the nominees and the other
directors of the Company is set forth below and under the
caption "Meetings and Committees of the Board of Directors."
Unless otherwise indicated, each nominee and director has sole
investment and voting power with respect to the shares of
common stock of the Company shown as beneficially owned by that
person.
<TABLE>
Has Been a
Director of
Name and Principal Occupation During Indiana Gas or
Business the Past 5 Years and Other the
Location Age Information (1) Company Since
<S> <C> <C> <C>
Nominees For Election Whose Terms Will Expire in 2000
NIEL C. 47 Vice President and Treasurer 1991
ELLERBROOK and Chief Financial Officer
Indianapolis, of the Company since 1986;
Indiana Senior Vice President and
Chief Financial Officer of
Indiana Gas since 1987. He
is also a Director of Fifth
Third Bank of Central
Indiana.
LOREN K. EVANS 68 Retired. Before 1993, Vice 1988
Columbus, Chairman since 1991 and
Indiana Director of Arvin
Industries, Inc. (an Indiana
company serving global
markets in more than 100
countries); President and
Chief Operating Officer from
1987. He was also a Director
of Irwin Financial
Corporation, Columbus,
Indiana until April, 1994.
FRED A. POOLE 54 General Manager of the 1996
Indianapolis, Indianapolis Maintenance
Indiana Operations of United
Airlines since October 1994,
and prior to that held
numerous positions with
United Airlines over the
past 22 years. He is also a
director of National City
Bank, Indiana.
JEAN L. 39 President since 1983 and 1996
WOJTOWICZ founder of Cambridge Capital
Indianapolis, Management Corporation (a
Indiana consulting and venture
capital firm). She is also
a Director of Circle
Ventures, Inc. and Seaboard
North American Holdings,
Inc.
Directors Continuing in Office Whose Terms Will Expire in 1999
GERALD L. BEPKO 56 Vice President for Long- 1990
Indianapolis, Range Planning, Indiana
Indiana University and Chancellor of
Indiana University-Purdue
University at Indianapolis
since 1986. He is also a
Director of First Indiana,
Inc. and USA Group, Inc.
LAWRENCE A. 62 Chairman, President and 1984
FERGER Chief Executive Officer of
Indianapolis, the Company and Indiana Gas
Indiana since January 1996 and
President and Chief
Executive Officer since
1987. He is also a Director
of National City Bank,
Indiana.
ANTON H. GEORGE 37 President since December 1990
Indianapolis, 1989 and a Director of
Indiana Indianapolis Motor Speedway
Corporation (auto racing);
President since January,
1994, and prior to that time
Executive Vice President
since June 1989, and a
Director of Hulman & Company
(manufacturer and
distributor of baking
powder). He is also a
Director of First Financial
Corporation.
JAMES C. SHOOK 65 President, The Shook Agency, 1983
Lafayette, Inc. (residential,
Indiana commercial and industrial
real estate brokerage). He
is also a Director of NBD
Bank, N.A., Lafayette Life
Insurance Company (a mutual
company) and Crossman
Communities, Inc.
Directors Continuing In Office Whose Terms Will Expire In 1998
PAUL T. BAKER 56 Senior Vice President and 1991
Indianapolis, Chief Operating Officer of
Indiana Indiana Gas; prior to 1991,
Senior Vice President of Gas
Supply & Customer Services.
OTTO N. FRENZEL 66 Chairman, Executive 1967
III Committee, National City
Indianapolis, Bank, Indiana, since 1996.
Indiana Prior to that time, Chairman
of the Board of National
City Bank, Indiana. He is
also a Director of National
City Corporation, American
United Life Insurance
Company, Baldwin & Lyons,
Inc. (insurance brokerage
firm), Indianapolis Power
and Light Company and IPALCO
Enterprises, Inc., IWC
Resources Corporation and
Indianapolis Water Company.
DON E. MARSH 58 Chairman, President and 1986
Indianapolis, Chief Executive Officer and
Indiana Director of Marsh
Supermarkets, Inc. He is
also a Director of National
City Bank, Indiana and Nash-
Finch Company.
RICHARD P. 57 Chairman of the Board of 1984
RECHTER Rogers Group, Inc.,
Bloomington, President and Chief
Indiana Executive Officer and
Director of Rogers
Management, Inc., and
President and Chief
Executive Officer and
Director, Mid-South Stone,
Inc. He is also a Director
of Monroe County Bank and
Monroe Bancorp.
</TABLE>
Other executive officers of the Company are Anthony E. Ard, age
55, and Timothy M. Hewitt, age 46. In 1995, Mr. Ard was made
Senior Vice President of Corporate Affairs for Indiana Gas.
Prior to 1995 and since 1993, he was Vice President of
Corporate Affairs for Indiana Gas. Prior to 1993, and since
1988, Mr. Ard was Vice President and Secretary for Indiana Gas
and Secretary for the Company. In 1995, Mr. Hewitt was made
Vice President of Operations and Engineering for Indiana Gas.
Prior to 1995 and since 1989, Mr. Hewitt was Vice President of
Sales and Field Operations for Indiana Gas. Prior to 1989 and
since 1987, Mr. Hewitt was Vice President of Sales for Indiana
Gas. Mr. Carl L. Chapman was regarded as an executive officer
of the Company until August 31, 1996. He served from 1995
until March 15, 1996 as Indiana Gas' Senior Vice President of
Corporate Development. Prior to 1995, and since 1987, he was
Vice President of Planning for Indiana Gas. Presently, he is
the President of ProLiance Energy, LLC, a gas supply and energy
marketing company that is partially owned by IGC Energy, Inc.,
an indirect, wholly owned subsidiary of the Company. He
remains as the Assistant Treasurer for the Company, a position
he has held since 1986.
(1) Includes, but is not limited to, directorships in
corporations with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or which are
subject to the requirements of Section 15(d) of that Act or in
a company registered as an investment company under the
Investment Company Act of 1940.
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of
common stock of the Company beneficially owned by the
directors, the chief executive officer, the five named
executive officers during the past fiscal year, and all
directors and executive officers as a group, as of
September 30, 1996:
<TABLE>
Name of Individuals or Identity Shares Owned
of Group Beneficially (1)
<S> <C>
ANTHONY E. ARD
Indianapolis, Indiana 15,454 (2)
PAUL T. BAKER
Indianapolis, Indiana 22,009 (2)
GERALD L. BEPKO
Indianapolis, Indiana 2,557 (3)(7)
CARL L. CHAPMAN
Indianapolis, Indiana 11,659 (2)(4)
NIEL C. ELLERBROOK
Indianapolis, Indiana 20,766 (2)
LOREN K. EVANS
Columbus, Indiana 4,001 (3)(7)
LAWRENCE A. FERGER
Indianapolis, Indiana 56,475 (2)(5)
OTTO N. FRENZEL III
Indianapolis, Indiana 18,139 (7)(8)
ANTON H. GEORGE
Indianapolis, Indiana 1,849,202 (1)(7)
TIMOTHY M. HEWITT
Indianapolis, Indiana 8,419 (2)(3)(4)
DON E. MARSH
Indianapolis, Indiana 5,176 (7)
FRED A. POOLE
Indianapolis, Indiana 288 (7)
RICHARD P. RECHTER
Bloomington, Indiana 7,257 (3)(7)
JAMES C. SHOOK
Lafayette, Indiana 42,416 (6)(7)
JEAN L. WOJTOWICZ
Indianapolis, Indiana 288 (7)
All directors and executive
officers as a group (15 persons) 2,064,106 (1)
</TABLE>
(1) Except for Anton H. George, no director or executive
officer owned beneficially as of September 30, 1996, more than
.30 percent of common stock of the Company. Excluding Anton H.
George, all directors and executive officers owned beneficially
an aggregate of 214,904 shares or .96 percent of common stock
of the Company outstanding as of that date. The beneficial
ownership by Anton H. George of 1,849,202 shares or 8.23
percent of common stock of the Company is discussed above in
"Voting Securities."
(2) Includes shares awarded to Messrs. Ard, Baker, Chapman,
Ellerbrook, Ferger and Hewitt under the Company's executive
restricted stock plan which are subject to certain
transferability restrictions and forfeiture provisions.
(3) Some or all of the shares owned by Messrs. Bepko, Evans,
Hewitt and Rechter are owned jointly with their wives.
(4) Carl L. Chapman ceased being considered a named executive
officer after August 31, 1996. Effective September 1, 1996,
Timothy M. Hewitt was considered a named executive officer.
(5) Includes 3,981 shares held by Mr. Ferger's wife, and he
disclaims beneficial interest therein.
(6) Includes 1,500 shares held by Mr. Shook's wife, and he
disclaims beneficial interest therein.
(7) Includes shares granted under the Company's directors
restricted stock plan, some of which shares are subject to
certain transferability restrictions and forfeiture provisions.
(8) Includes 3,774 shares held in a trust, of which Mr.
Frenzel is a co-trustee, and he disclaims beneficial interest
therein.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 29, 1995, IGC Energy, Inc. ("Energy"), an
indirect, wholly owned subsidiary of the Company, entered into
a subscription agreement to purchase an interest in a limited
partnership known as the Cambridge Ventures, L.P. (Partnership)
("CVLP"). CVLP is licensed by the United States Small Business
Administration as a small business investment company. As
such, CVLP operates as a venture fund and invests in equities,
debt securities with equity participation and secured short and
long-term loans; CVLP also participates in other funds. Energy
has invested a total of $275,000 in CVLP, which represents, in
the opinion of the board of directors, a fair and reasonable
investment for Energy. Energy holds ten (10) partnership units
out of the one hundred and ninety five and one half units
(195.5) that have been sold to date in CVLP. On January 26,
1996, Jean L. Wojtowicz was elected to the board of directors
of the Company and Indiana Gas. Ms. Wojtowicz is the President
and a Director of Cambridge Capital Management Corp., which
owns fifty percent (50%) of Cambridge Ventures, Inc., the
general partner in CVLP.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has the following standing committees of the
board of directors:
1. The Audit Committee.
The members of this committee are Loren K. Evans, chair,
Gerald L. Bepko, Anton H. George, Fred A. Poole and Jean L.
Wojtowicz. The committee makes recommendations to the board as
to the selection and retention of the independent accountants,
reviews the scope, conduct and results of audits performed, and
makes inquiry as to the differences of views, if any, between
such independent accountants and officers and employees of the
Company and subsidiaries with respect to the financial
statements and records and accounting policies, principles,
methods and systems. It further determines that services
performed by the independent accountants in addition to the
annual audit examination do not impair such accountants'
independence in performing the audit examination. Finally, the
committee reviews the policies and guidelines of the Company
and subsidiaries designed to ensure the proper use and
accounting for corporate assets, and the activities of the
Internal Audit department of Indiana Gas. There were two
meetings of the committee during the past fiscal year.
2. The Compensation Committee.
The members of this committee are Otto N. Frenzel III,
chair, Don E. Marsh and Richard P. Rechter. None of the
members is an officer or employee of the Company. The
committee has the responsibility of formulating recommendations
to the board as to the compensation to be paid the officers of
the Company and its subsidiaries. It also administers the
Company's annual management incentive plan, the executive
restricted stock plan, and the directors restricted stock plan.
There were two meetings of the committee during the past fiscal
year.
3. The Nominating Committee.
The members of this committee are Lawrence A. Ferger,
chair, Don E. Marsh and James C. Shook. The duties and powers
of the committee are to search for, evaluate and make
recommendations to the board of directors as to nominees to be
submitted annually to the shareholders for election to the
board as well as to fill vacancies occurring from time to time
on the board. In that connection, the committee is authorized
to act on behalf of the Company and the board in receiving,
giving consideration to and making recommendations to the board
respecting communications submitted to the Company from
shareholders relating to nominees for directors. Such
communications must be in writing and with respect to the next
annual election must be received by the Company, addressed to
the secretary, no later than August 7, 1997. There was one
meeting of the committee during the past fiscal year.
If a shareholder entitled to vote for the election of
directors at a shareholders' meeting desires to nominate a
person for election to the board of directors of the Company,
pursuant to the Company's Code of By-Laws, any such nominations
must be made pursuant to notice delivered to, or mailed and
received at, the principal office of the Company, not less than
50 days nor more than 90 days prior to the meeting. However,
in the event that less than 60 days notice of the meeting is
given, the shareholder's notice must be received not later than
the tenth day following the date of notice of the meeting.
Such shareholder's notice must set forth, in addition to the
name and address of the shareholder submitting the nomination,
as to each person whom the shareholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the
class and number of shares of the Company which are
beneficially owned by such person, (iv) any other information
relating to such person that is required to be disclosed in
solicitation of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended
(including, without limitation, such person's written consent
to be named in the proxy statement as a nominee and to serving
as a director, if elected), and (v) the qualifications of the
nominee to serve as a director of the Company.
4. The Public and Environmental Affairs Committee.
The members of this committee are Richard P. Rechter,
chair, Gerald L. Bepko and James C. Shook. The duties and
powers of the committee are to review current policies,
programs, procedures and processes of the Company and its
subsidiaries affected by public policy and affecting the
environment. It also reviews reports from Company management
on public policy and environmental matters and monitors
compliance with, and trends and emerging policy developments
in, business and environmental regulation. In addition, the
committee reports to the Board on public policy and
environmental issues affecting the Company and its
subsidiaries. There were two meetings of the committee during
the past fiscal year.
The board of directors of the Company had five meetings
during the last fiscal year. Gerald L. Bepko and Fred A. Poole
attended fewer than 75 percent of the aggregate of board
meetings and meetings of committees of the board of which they
are members. No other incumbent director attended fewer than
75 percent of the aggregate of board meetings and meetings of
committees of the board of which they are members.
DIRECTORS' COMPENSATION
Non-employee directors of the Company and of Indiana Gas
receive combined fees totaling $21,000 per year for service on
the boards of both companies. The fees are paid under the
directors' restricted stock plan approved by the shareholders
at their January 13, 1992, meeting. Under the plan, $7,000 of
the combined directors' fees paid by the Company and Indiana
Gas to non-employee directors is paid in restricted shares of
the Company. The restricted shares are issued to each non-
employee director at the beginning of their three-year term,
and the number of restricted shares is determined by dividing
$21,000 ($7,000 for each year) by the per share market price of
the Company's stock during the period specified in the plan.
Directors may elect to receive the remaining $14,000 in
unrestricted shares or in cash. To receive the restricted
shares, a director must consent to the restrictions in writing.
To elect to receive unrestricted shares instead of cash, a
director must provide an irrevocable written election to the
secretary of the Company before the July 1 immediately
preceding the calendar year for which the election relates.
Restricted shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution until the first
to occur of: (1) the expiration of the director's term of
office for which the grant relates; (2) the grantee's death or
disability; (3) the termination of the grantee's status as a
director pursuant to the mandatory retirement policy for
directors; (4) the involuntary termination of the grantee's
status as a director; (5) approval by a majority of the other
directors of the grantee's voluntary termination of his/her
status as a director because of the relocation of his/her
principal place of residence outside of Indiana; or (6) a
change in control of the Company. In no event, however, are the
restricted shares transferable and free of restrictions before
the expiration of a six-month period beginning the first day of
the director's term of office or, if later, the date of
issuance of the shares.
All restricted shares bear a legend citing the
restrictions contained in the plan. When the restrictions
lapse, the grantee is entitled to have the legend removed from
any shares or certificates. Restrictions are lifted
automatically upon the expiration of the period to which the
restrictions apply. If a director voluntarily terminates
his/her status as such before the expiration of the period of
restriction, any shares still subject to restriction are
immediately forfeited.
The Company has reserved 71,172 shares for grant under the
plan. As of September 30, 1996, 50,149 shares remain in
reserve. Those shares may consist of authorized but unissued
shares or shares reacquired by the Company including shares
purchased in the open market. If any shares subject to the
grants are forfeited, the forfeited shares become available for
reissuance under the plan.
The board may amend, modify, alter or terminate the plan
at any time. The plan may not, however, be amended more
frequently than once every six months. Amendments,
modifications or alterations which would (1) increase the
number of shares reserved for issuance under the plan, (2)
materially modify the class of individuals to whom grants of
shares may be made, (3) change the manner in which shares are
granted, or (4) materially increase the benefits accruing to
grantees under the plan, must be approved by the Company's
shareholders.
Non-employee directors also receive a fee of $500 for each
meeting of the board of directors of the Company attended and
$500 for each meeting of the board of directors of Indiana Gas
attended. Each non-employee member of a committee of the board
is paid a fee of $1,000 for each meeting of the committee
attended, and each non-employee chair of a committee is paid an
additional fee of $1,000 for each meeting attended.
There are two unfunded plans under which non-employee
directors may defer all or any part of fees received in cash
until the occurrence of certain conditions specified in each of
the plans. Under the first plan, which has been in place since
fiscal year 1995, amounts deferred are considered for
accounting purposes to be invested in Company common stock.
These amounts are tracked as phantom units of Company common
stock and the value of amounts deferred change with the receipt
of dividends, as well as with fluctuations in the price of
Company stock. Under the second plan, which became effective
during fiscal year 1996, amounts deferred earn a return equal
to the mean between the high and low of the Corporate Bond
Yield averages, Average Public Utility (aa rated), for the past
twelve (12) months reported in Moody's Bond Survey in its
published issue in the November preceding the January 1, on
which the rate is to come into effect. The rate changes each
January 1.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE REPORT
The Compensation committee is responsible for reviewing
and approving all elements of the total compensation program
for officers of the Company and its affiliates and serves as
the administrator of the Company's Annual Management Incentive
Compensation Plan ("Incentive Plan") and the Executive
Restricted Stock Plan ("Stock Plan"). The committee is also
responsible for monitoring the Company's executive compensation
programs to ensure that they are aligned with the Company's
business strategies and financial goals.
A. Executive Compensation Policy.
The Company's total compensation program for officers
includes base salaries, annual incentive payments, and
restricted stock grants. The committee's primary objective is
to achieve above-average performance by providing the
opportunity to earn above-average total compensation (base
salary, at-risk annual and long-term incentives) for above-
average performance. Each element of total compensation is
designed to work in concert. The total program is designed to
attract, motivate, reward and retain the broad-based management
talent required to serve customer, employee, and shareholder
interests. The Company believes that the program also motivates
the Company's officers to acquire and retain appropriate levels
of stock ownership and is competitive with programs offered by
the companies that comprise the peer group ("Peer Group")
included in the performance graph on page 19. It is the
opinion of the committee that the total compensation earned by
Company officers in fiscal year 1996 achieves these objectives
and is fair and reasonable. Each aspect of the total
compensation program is discussed in greater detail below.
B. Components of Executive Compensation.
Annual Compensation. The annual compensation program
consists of two components, base salary and an at-risk
incentive payment. Individual salaries are set within ranges
based on comparisons to actual pay for comparable positions
within the Peer Group, and industry in general. In determining
actual salaries within these ranges, the committee takes into
consideration individual performance, experience, potential,
and changes in executive responsibilities. Establishing
industry based salary ranges provides an objective standard by
which to judge the reasonableness of the Company's salaries,
maintains the Company's ability to compete for and retain
qualified executives, and ensures that internal
responsibilities are properly rewarded.
All of the Company's officers, but particularly the five
highest paid officers, have a significant portion of their
total compensation at risk. Participation in the Incentive
Plan, which includes the chief executive officer, is extended
to those positions that play key roles in achieving annual
financial and operating objectives. Annual incentive
opportunities are also based on periodic reviews of prevailing
Peer Group practices for comparable positions. The potential
incentive award is determined annually by non-employee
directors and is based upon a percentage of each participant's
base salary. Incentive opportunities for executive officers,
excluding the chief executive officer, ranged from 40 to 50
percent of salary.
Prior to the start of the fiscal year the committee
recommends to the board, and the board (excluding Company and
Indiana Gas employees) determines, minimum, target, and maximum
corporate performance levels. The performance that is measured
is the Company's financial performance, as determined by the
Company's consolidated return on equity, relative to the
average return on equity of companies in the Peer Group.
Target performance levels are set in excess of Peer Group
performance in order to ensure the linkage between financial
performance and executive rewards. Depending upon the
Company's financial performance, the size of this component can
range from zero to the maximum level established for each
participant in the Incentive Plan. In determining the cash
payment that was received by executive officers for the past
fiscal year, the Company's consolidated return on equity
exceeded the target performance level and was at the maximum
performance level as determined by the board. Incentive
payouts correspondingly were at the maximum amounts.
The second and smaller performance component is based upon
each executive's achievement of individual goals, which are
consistent with the Company's overall objectives and which are
established prior to the beginning of the fiscal year.
Individual performance is monitored and evaluated subjectively
throughout the fiscal year. Overall performance is measured
after the end of the fiscal year by the chief executive
officer. Among the executive officers, no person has more than
one-fourth of their total potential incentive under the
Incentive Plan dependent upon the attainment of individual
objectives.
Long-Term Incentive. The purpose of the Stock Plan is to
retain and motivate the Company's principal officers and to
increase their incentive to work toward the attainment of the
Company's long-term growth and profit objectives by providing
them with a means of acquiring or increasing a proprietary
interest. Under the Stock Plan, the committee recommends to
the board, and the board (excluding Company and Indiana Gas
employees) determines, the executive officers, as well as other
principal officers, to whom grants will be made and the
percentage of each officer's base salary to be used for
determining the number of shares to be granted. Among the
executive officers, excluding the chief executive officer, the
percentages of each officer's base salary range from fifteen
percent to thirty percent. Like the potential cash payment
that may be received under the Incentive Plan, this component
of total compensation is also performance driven and totally at-
risk.
The Stock Plan provides for a grant to eligible officers
at the outset of each measuring period and also provides for
grants of shares to be made to newly eligible principal
officers during a measuring period. The measuring periods are
consecutively running three-year periods. Shares were
allocated under the stock plan effective October 1, 1987, for
the "First Measuring Period," October 1, 1990, for the "Second
Measuring Period," and October 1, 1993, for the "Third
Measuring Period."
To be eligible for a grant, a principal must consent in
writing to observe the restrictions imposed on the shares. The
shares may not be sold, transferred, pledged, or assigned until
such restrictions are lifted. The restrictions are lifted in
33 1/3 percent increments on the fourth, fifth, and sixth
anniversaries of the calendar day immediately preceding the
first calendar day of the measuring period.
The granting of additional shares, if any, and the
application of forfeiture provisions, depends upon two primary
criteria: (i) certain measurements of the total return to the
Company's shareholders in comparison to the total return of
shareholders of the companies in the Peer Group; and (ii) the
continued employment of the officer during the period of
restriction.
For each three-year measuring period under the Stock Plan,
depending upon the total return provided to the Company's
shareholders relative to the total return provided by each of
the companies in the Peer Group, there are three possible
outcomes. If the Company's total return places it in the
bottom quartile, all of the shares are forfeited. If the
Company's total return places it in the second or third
quartiles, the original grant is vested, subject to continuing
employment by the officers during the remaining period of
restriction. If the Company's total return places it in the
top quartile, the original grant is doubled and vested, subject
to continuing employment by the officers during the remaining
period of restriction.
For the First Measuring Period ended September 30, 1990,
the Second Measuring Period ended September 30, 1993, and the
Third Measuring Period ended September 30, 1996, the number of
shares originally granted were doubled under the Stock Plan
because the Company's total return to shareholders placed it in
the top quartile compared to the total return performance of
the Peer Group companies. Among all of the companies in the
Peer Group, the Company was the sole Peer Group member to
perform in the top quartile for all three measuring periods.
It is the opinion of the committee that the Stock Plan
meets its objective of providing executive officers, as well as
other principal officers, with the appropriate long-term
interest in maximizing shareholder value. A participant's
increased level of equity in the Company is contingent upon the
additional enhancement of shareholder value relative to the
performance of companies in the Peer Group. In addition, the
vesting restrictions provide an incentive for all plan
participants to remain with the Company.
C. Chief Executive Officer Compensation.
The compensation of Lawrence A. Ferger, Chairman,
President and Chief Executive Officer, consists of the same
components as for other executive officers, namely base salary,
an at-risk payment under the Incentive Plan, and an at-risk
grant of restricted stock under the Stock Plan.
In establishing Mr. Ferger's total compensation for fiscal
year 1996, the committee considered the total compensation of
other chief executive officers in the Peer Group, the financial
and business performance of the Company, and a subjective
evaluation of the leadership role provided by Mr. Ferger.
Mr. Ferger's payment received under the Incentive Plan
during fiscal year 1996 was based entirely upon the financial
performance of the Company as measured by its consolidated
return on equity relative to the average return on equity of
companies in the Peer Group. This method of measurement
ensures the linkage of this aspect of Mr. Ferger's compensation
to Company performance. Under the Incentive Plan, the maximum
award Mr. Ferger was eligible to receive was an amount equal to
sixty percent of his base salary. As discussed above with
respect to other executive officers, during the past fiscal
year the Company's consolidated return on equity exceeded the
target performance level and was at the maximum performance
level as determined by the board. The incentive payout
correspondingly was at the maximum level.
Mr. Ferger's receipt of restricted shares under the Stock
Plan is likewise directly linked to the Company's performance.
Whether stock is received and, if so, in what amount, will
depend upon the measurement of the total return provided to the
Company's shareholders in comparison to the total return
provided to the shareholders of companies in the Peer Group.
As discussed above with respect to the other executive
officers, fiscal year 1996 was the third year of the third
three year measuring period under the Stock Plan. Based upon
the Company's total return performance as measured at the
conclusion of the Third Measuring Period ended September 30,
1996, that stock was doubled in amount and vested, subject to
Mr. Ferger's continued employment during the remaining period
of restriction.
For the same reasons expressed above with respect to the
conclusion regarding the appropriateness of the total
compensation provided other executive officers, it is the
opinion of the committee that Mr. Ferger's total compensation
is reasonable and appropriate.
D. Compensation Consultant, Termination Benefit
Agreements And Deductibility Of Executive Compensation.
To assist the committee, the services of an independent
compensation consultant are utilized. The consultant assists
by evaluating the total compensation system relative to the
compensation systems employed by companies in the Peer Group.
The consultant also provides an additional measure of assurance
that the system is a reasonable and appropriate means to
achieve the Company's objectives.
As described on page 22 under the heading "EMPLOYMENT AND
TERMINATION BENEFIT AGREEMENTS," the Company and Indiana Gas
have entered into such agreements with each of the executive
officers. Neither form of agreement affects in any manner the
recommendations of the Committee and the determinations by the
board (excluding Company and Indiana Gas employees) with
respect to the total compensation provided the executive
officers.
In 1993, Congress enacted Section 162(m) of the Internal
Revenue Code that disallows corporate deductibility for
"compensation" paid in excess of $1 million to the individual
executives named in the Summary Compensation Table, unless the
compensation is payable solely on account of achievement of an
objective performance goal. The committee does not anticipate
that the compensation paid to executive officers in the form of
base salaries and incentive compensation will exceed $1 million
in the near future. However, as part of its ongoing
responsibilities with respect to executive compensation, the
committee will monitor this issue to determine what actions, if
any, should be taken as a result of the limitation on
deductibility.
Otto N. Frenzel III, Chair
Don E. Marsh
Richard P. Rechter
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lawrence A. Ferger is a director of National City Bank,
Indiana. Otto N. Frenzel III, chair of the Company's
compensation committee, is chairman of the Executive Committee
of National City Bank, Indiana. During the past fiscal year,
Indiana Gas had a bank line of credit agreement with National
City Bank, Indiana for borrowing by Indiana Gas not to exceed
$25,000,000 at any one time. At September 30, 1996, there was
$5,000,000 outstanding under such line. The interest on
borrowing under such line of credit has been at a rate not to
exceed the prime lending rate at such bank which in the opinion
of the board of directors is fair. Similar bank lines of
credit agreements have been in effect between Indiana Gas and
the bank in the normal course of business for many years.
Moreover, as of September 30, 1996, Energy Realty, Inc., an
indirect subsidiary of the Company, had two loans outstanding
in an aggregate amount of approximately $5.6 million from
National City Bank, Indiana at variable rates of interest tied
to commercially-recognized benchmarks, which in the opinion of
the board of directors are fair. Finally, on July 31, 1995,
Energy Realty, Inc. and National City Bank, Indiana each
invested $806,250 in the Lebanon Housing Partnership, L.P. As
a result of these investments, each company owns 37.125% of the
partnership.
None of the Company's executive officers is a member of
the Compensation Committee.
COMPENSATION
The following tabulation shows for the fiscal years ended
September 30, 1994, 1995 and 1996, the compensation paid by the
Company and its subsidiaries to each of the six most highly
compensated executive officers of the Company (considering for
this purpose Mr. Ard, Mr. Baker and Mr. Hewitt, executive
officers of Indiana Gas, to be executive officers of the
Company) in all capacities in which they served. During most of
fiscal year 1996 (through August 31, 1996), Mr. Chapman was one
of the five most highly compensated executive officers of the
Company. Effective March 15, 1996, Mr. Chapman resigned as
Senior Vice President of Corporate Development of Indiana Gas
to become President of ProLiance Energy LLC, a company
partially owned by IGC Energy, Inc., an indirect, wholly-owned
subsidiary of the Company. Mr. Chapman became a full-time
employee of ProLiance effective September 1, 1996. Mr. Chapman
remains the Assistant Treasurer of the Company. As a result of
Mr. Chapman's change in status, effective September 1, 1996,
Mr. Hewitt is now considered as one of the five most highly
compensated executive officers of the Company.
<TABLE>
Summary Compensation Table
(a) (b) (c) (d) (e) (h) (i)
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Compensa- All Other
Annual Compensation tion Payouts Compensation
Other Annual
Name and Compensation LTIP Payouts
Principal Year Salary Bonus (1) (2) (3) (4)
Position in
Group
Lawrence A. 1994 $ 321,769 $ 147,129 $ 43,780 $ 182,313 $17,028
Ferger, 1995 347,615 139,439 35,665 198,336 15,790
Chairman, 1996 370,922 173,808 26,817 223,592 15,980
President and
Chief
Executive
Officer
Paul T. Baker, 1994 222,308 74,552 12,647 48,257 13,939
Sr. V.P. and 1995 236,077 75,093 10,541 52,506 13,050
Chief 1996 249,308 89,709 8,240 59,183 13,137
Operating
Officer,
Indiana Gas
Niel C. 1994 165,769 58,605 17,635 75,207 11,708
Ellerbrook, 1995 175,885 56,179 14,271 81,829 11,700
V.P. and 1996 186,846 67,617 10,604 92,235 11,985
Treasurer and
Chief
Financial
Officer
Anthony E. 1994 125,977 33,962 9,906 44,301 9,419
Ard, 1995 133,962 32,755 7,905 48,202 10,926
Sr. V.P. of 1996 142,019 38,104 5,727 54,332 12,067
Corp. Affairs,
Indiana Gas
Timothy M. 1994 120,785 30,351 7,683 35,477 12,067
Hewitt, V.P. 1995 124,577 31,875 6,071 38,601 13,251
of Operations 1996 131,385 36,680 4,317 43,509 10,721
and
Engineering,
Indiana Gas
Carl. L. 1994 117,489 31,197 9,837 35,994 9,470
Chapman, 1995 125,096 29,765 8,281 39,163 9,614
Assistant 1996 125,596 36,139 6,580 44,143 9,857
Treasurer, and
formerly Sr.
V.P. of Corp.
Development,
Indiana Gas
</TABLE>
(1) The amounts shown in this column are payments under the
annual Incentive Plan, which was discussed above in Parts B and
C of the Compensation Committee Report relating to "Annual
Compensation". Amounts paid in any fiscal year are
attributable to the Company's performance in the prior fiscal
year. Payments earned in fiscal year 1996 have not been
determined and approved for distribution by the Company's
Compensation committee. The Company's performance over the
last five years is depicted on page 20.
(2) The amounts shown in this column are dividends paid on
restricted shares issued under the Stock Plan, which was
discussed above in Parts B and C of the Compensation Committee
Report relating to "Long-Term Incentive Compensation".
(3) The amounts shown in this column represent the value of
shares issued under the Stock Plan and for which restrictions
were lifted in each of those fiscal years. For instance, the
amounts shown for fiscal year 1996 represent the value of one-
third of the Second Measuring Period shares issued under the
Stock Plan and for which restrictions were lifted as of
September 30, 1996. After the lifting of those restrictions,
the executive officers, as a group, held 34,901 restricted
shares, with an aggregate market value of those shares as of
that date of $850,712. Those shares continue to be subject to
restrictions imposed by the Stock Plan, and they represent all
of the initial grant of the Third Measuring Period shares. The
number and value of restricted shares held by each executive
officer on September 30, 1996 was as follows: Lawrence A.
Ferger-14,986 shares, $365,284; Paul T. Baker-4,995 shares,
$121,753; Niel C. Ellerbrook-5,769 shares, $140,619; Anthony E.
Ard-2,930 shares, $71,419; Timothy M. Hewitt-2,104 shares,
$51,285; and Carl L. Chapman-4,117 shares, $100,352.
(4) The amounts shown in this column are Company contributions
to the Retirement Savings Plan and the dollar value of
insurance premiums paid by, or on behalf of, Indiana Gas with
respect to term life insurance for the benefit of executive
officers.
During fiscal year 1996, there were no awards under the
Stock Plan, which is considered to be a long-term incentive
plan. Accordingly, in this Proxy Statement there is no table
reflecting the Long-Term Annual Incentive Plan Award in Last
Fiscal Year.
CORPORATE PERFORMANCE
The following Total Return to Shareholders graph compares
the performance of the Company with that of the S&P 500
Composite, the S&P Utilities Index and a group of peer gas
distribution companies, with the return weighted based on
market capitalization. The Return on Equity graph compares the
performance of the Company with the same Peer Group. For
fiscal year 1996, companies in the Peer Group are as follows:
AGL Resources; Atmos Energy Corp.; Bay State Gas Co.; Brooklyn
Union Gas; Cascade Natural Gas Corp.; Connecticut Natural Gas
Corp.; Energen Corp.; Laclede Gas Co.; MCN Corp.; National Fuel
Gas Co.; New Jersey Resources Corp.; NICOR, Inc.; Northwest
Natural Gas Co.; NUI Corp.; Pacific Enterprises; Pennsylvania
Enterprises, Inc.; Peoples Energy Corp.; Piedmont Natural Gas
Co., Inc.; Public Service Co. of North Carolina, Inc.; South
Jersey Industries, Inc.; Southeastern Michigan Gas Enterprises,
Inc.; Southern Union Co.; Southwest Gas Corp.; Southwestern
Energy Co.; UGI Corp.; United Cities Gas Co.; Washington Energy
Co.; Washington Gas Light Co.; and WICOR, Inc. The companies
to be included in the Peer Group were determined by one of the
Company's investment bankers and approved by the Compensation
committee of the Company.
From year to year, the Company's investment bankers review
the composition of the Peer Group to ensure comparability among
the member companies. If in their judgment a company is
determined not to be comparable, it will be removed from the
Peer Group, and, if possible, replaced with a comparable
company. Companies can also be removed if they are acquired or
merged out of existence. For instance, in 1996, based upon an
assessment of the comparability of the existing peer group, the
Company's investment bankers changed the Peer Group used for
fiscal year 1995 (the "1995 Peer Group") by adding United
Cities Gas Co. In addition, the investment bankers replaced
CMS Energy Corp.'s common stock with CMS Energy Corp.'s "G"
stock issued in July of 1995 related to its gas division.
Since no beginning stock price was available for that stock, it
has not been included in the Peer Group. The 1995 Peer Group,
as revised for these changes, was used during fiscal year 1996
(the "1996 Peer Group"). The following graphs reflect
comparisons of total return for the 1996 Peer Group, the 1995
Peer Group, the S&P 500 and the S&P Utilities.
Total Return to Shareholders (1) (2)
<TABLE>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
IEI 0.00% 15.92% 44.66% 29.09% 48.46% 75.07%
1996 PEERS 0.00% 9.02% 45.23% 30.45% 47.49% 85.57%
1995 PEERS 0.00% 6.66% 45.42% 29.70% 48.35% 85.14%
S&P 500 0.00% 11.05% 25.49% 30.11% 68.82% 103.14%
S&P UTILITIES 0.00% 14.37% 42.31% 23.67% 57.78% 68.55%
</TABLE>
(1) The total return on investment (change in the year end
stock price plus reinvested dividends) for each of the periods
for the Company, the respective peer groups, the S&P 500
Composite and the S&P Utilities Index is based on the stock
price or composite index at the end of fiscal 1991.
(2) As discussed in the Compensation Committee Report above,
the Stock Plan also measures the Company's total return to
shareholders. However, the Stock Plan methodology requires a
determination of the total return to shareholders of the
Company and the Peer Group companies by comparing a 12 month
average trading price at the end of the measuring period with a
twelve month average price preceding the measuring period.
Unlike the Stock Plan methodology, the methodology used in
preparing the above performance graph requires a measurement of
the total return to shareholders of the Company and of the Peer
Group companies at specific points in time--activity as of
September 30, 1991 compared with activity as of September 30,
1992, 1993, 1994, 1995 and 1996. Moreover, the Stock Plan also
uses a three-year measurement period versus the five-year
measurement period used in the above performance graph.
Finally, the Stock Plan's measurement of Peer Group companies'
performance is not weighted by the companies' relative market
capitalization, while the above performance graph does use such
weighting. Because of the differences in these two
methodologies, the measurements produced by the Stock Plan and
the above performance graph will vary.
Return on Equity (1) (2) (3)
<TABLE>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
IEI 11.32% 11.46% 14.68% 13.00% 11.94%
PEER GROUP 9.79% 9.45% 10.34% 11.40% 9.15%
</TABLE>
(1) Under the annual Incentive Plan, payments are awarded on
the basis of the Company's average return on equity compared to
that of the peer group in any fiscal year and are paid in the
first quarter of the succeeding fiscal year. Accordingly,
payments paid to executive officers in the first quarter of
fiscal year 1996 were based on the Company's comparative return
on equity during the fiscal year 1995, and so on, back to 1988,
the first year in which payments were made.
(2) For purposes of the annual Incentive Plan, average return
on equity for both the Company and the peer group has been
computed using the simple average of beginning and ending
common equity as of September 30.
(3) The peer group return on equity by fiscal year reflects
the peer group for each of those years as determined by the
Company's investment bankers and approved by the Compensation
committee. See the discussion above under "Corporate
Performance".
RETIREMENT SAVINGS PLAN
As of October 1, 1994, Indiana Gas merged its Retirement
Savings Plan for bargaining employees ("Bargaining Savings
Plan") into its Retirement Savings Plan for non-bargaining
employees ("Savings Plan"). The primary objective for this
action was to reduce the level of resources required to
administer two plans. In general, the Savings Plan permits
participants to elect to have not more than 15 percent of their
qualified compensation (subject to certain maximums imposed on
highly compensated employees by the Internal Revenue Code)
invested on a tax-deferred basis in shares of the Company's
common stock or various investment funds. Non-bargaining
participants in the Savings Plan have matching company
contributions made to the plan on their behalf equal to 100
percent of their contributions not in excess of 3 percent of
their individual redirected compensation, and 50 percent of
their contributions in excess of 3 percent but not in excess of
8 percent of their individual redirected compensation. Also, a
2.5-percent lump sum company contribution is made to the
Savings Plan for all eligible non-bargaining employees at the
end of each year.
The Summary Compensation Table shows the value of Indiana
Gas contributions made to the plan for executive officers in
the column marked "All Other Compensation."
RETIREMENT PLANS
Indiana Gas has two defined benefit pension plans covering
full-time employees of the Company and certain of its
subsidiaries who meet certain age and service requirements. One
such plan covers salaried employees, including executive
officers, and provides fixed benefits at normal retirement age
based upon compensation and length of service, the costs of
which are fully paid by the employer and are computed on an
actuarial basis. The pension plan also provides for benefits
upon death, disability and early retirement under conditions
specified therein. The remuneration covered by this plan
includes all compensation for regular work periods (excluding
overtime, bonuses and other forms of additional compensation).
Effective July 1, 1991, the retirement plans maintained by
Terre Haute and Richmond were merged into, and became part of,
the Indiana Gas defined benefit pension plans.
Indiana Gas has a supplemental pension plan covering the
principal officers of Indiana Gas and Carl L. Chapman,
president of ProLiance. The supplemental pension plan provides
fixed benefits at normal retirement age based upon compensation
and is computed on an actuarial basis. The supplemental
pension plan also provides for benefits upon death, disability
and early retirement under conditions specified therein,
including service requirements. This supplemental pension plan
also provides a reduced benefit to a participant who
voluntarily terminates his employment with Indiana Gas before
normal retirement age (65) but following a change in control of
the Company. The remuneration covered by the supplemental
pension plan includes all compensation for regular work periods
(including incentive payments and other forms of additional
compensation).
Upon retirement at or after age 65, any participant in the
supplemental pension plan will, in general, be entitled to an
annual pension for life which, when added to primary Social
Security benefits, benefits paid under the Indiana Gas defined
benefit pension plan described above and benefits under the
Retirement Savings Plan attributable to Indiana Gas
contributions, will equal approximately 65 percent of the
participant's average annual compensation during the 60
consecutive calendar months immediately preceding the
participant's retirement date. The amounts paid under the
supplemental pension plan are unfunded and are paid from the
general assets of Indiana Gas.
The following table illustrates the estimated normal
annual retirement benefits payable to a covered participant
retiring at age 65 under the supplemental pension plan and
under the Indiana Gas defined benefit plan based on the
specified remuneration and under the Retirement Savings Plan
attributable to Indiana Gas contributions. The compensation
included in the Summary Compensation Table under salary and
payments under the annual Incentive Plan qualifies as
remuneration for purposes of these plans. The amounts shown do
not reflect reductions, which would result from joint and
survivor elections.
Pension Table
15 or More Years of Service (1)
Remuneration Amount of Benefits
Level (2)
$125,000 $ 81,250
150,000 97,500
175,000 113,750
200,000 130,000
225,000 146,250
250,000 162,500
300,000 195,000
350,000 227,500
400,000 260,000
450,000 292,500
500,000 325,000
(1) The compensation covered by the plans includes the salary
and incentive payments shown on the Summary Compensation Table.
Years of service are not used in calculating the benefit amount
under the Supplemental Executive Retirement Plan. The amounts
shown above are offset by Social Security and benefits under
the Retirement Savings Plan attributable to Indiana Gas
contributions.
(2) Although the benefit attributable to the Savings Plan will
be paid in a single lump sum payment, it has been converted to
an annual benefit for purposes of this table. The estimated
aggregate annual pension plan benefit may be greater than the
amounts in the table to the extent that the Savings Plan
benefit, after conversion to an annual benefit and when added
to the annual benefit under the applicable Indiana Gas defined
benefit plan, exceeds the amount specified in the table. Since
the Savings Plan has only been in effect for a few years, it is
unlikely in the near future that the aggregated Savings Plan
benefit and defined benefit plan benefits will exceed the
amount specified in the table.
EMPLOYMENT AND TERMINATION BENEFIT AGREEMENTS
The Company and Indiana Gas, with approval of their boards
of directors, have entered into employment agreements with five
out of the six executive officers listed in the Summary
Compensation Table. Carl L. Chapman formerly had such an
agreement; however, it was terminated March 15, 1996 when Mr.
Chapman became the President of ProLiance. Each agreement
continues unless notice of termination is given by either
party, in which event the agreement will terminate three years
from the date of the notice. The period between notice and
termination is defined as an "employment period" under each
agreement. Each officer is entitled to compensation consisting
of the annual aggregate base salary or salaries, and such
additional compensation as the board determines throughout the
employment period. Each agreement is also subject to
termination in the event of disability, death, or voluntary
retirement by the individual or his termination for cause.
The Company and Indiana Gas, with approval of their boards
of directors, have entered into termination benefit agreements
with each of the executive officers listed in the Summary
Compensation Table. With the exception of Mr. Hewitt, the
agreements provide that if there is an acquisition of control
of the Company (as defined in the agreements), the Company and
Indiana Gas are obligated to pay the termination benefits under
the following conditions:
bullet Within three years the Company terminates the employment
of the executive for any reason (other than cause, death,
the executive's attainment of age 65, or the executive's
total and permanent disability); or
bullet Within three years the executive voluntarily terminates
his employment for good reason (i.e., certain material
changes in the terms of the executive's employment); or
bullet The executive voluntarily terminates his employment
without reason during the 30-day period immediately
following the first anniversary of the acquisition of
control.
The termination benefits payment is the executive's average
annual compensation for the most recent five calendar years
multiplied by 299.99%. The initial term of the agreements
expires on October 1, 1999 and shall be automatically extended
for one year periods unless the Company notifies the executive
prior to October 1 of each succeeding year that the Agreement
will terminate at the end of the five year period that begins
with October 1 following the date of such written notice. The
agreement with Mr. Hewitt is comparable to the agreements just
described, except that the provisions of Mr. Hewitt's
agreement, including the termination benefits payment, are
predicated upon the use of one year rather than three years.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
Arthur Andersen, L.L.P., Indianapolis, has been selected
by the board of directors as the independent public accountants
of the Company and its subsidiaries for fiscal year 1997. The
selection was made upon the recommendation of the Audit
committee of the board of directors. See "Meetings and
Committees of the Board of Directors." Arthur Andersen, L.L.P.
has served as auditors for the Company since 1986 and for
Indiana Gas since its organization in 1945. A representative
of that firm will be present at the annual meeting, will have
the opportunity to make a statement and will be available to
respond to questions.
COST AND METHOD OF SOLICITATION
The cost of preparing, assembling, printing and mailing
this proxy statement, the enclosed proxy and any other material
which may be furnished to shareholders in connection with the
solicitation of proxies for the meeting will be borne by the
Company. The Company has retained Corporate Investor
Communications, Inc. to assist in soliciting proxies from
shareholders, including brokers' accounts, at an estimated fee
of $5,000 plus reasonable out-of-pocket expenses. In addition,
some of the officers and regular employees of the Company, who
will receive no compensation therefor in addition to their
regular salaries, may solicit proxies by telephone, telegraph
or personal visits, and it is estimated that the cost of such
additional solicitation, if any, will not exceed $500, and will
be borne by the Company. The Company expects to reimburse
banks, brokerage houses and other custodians of stock for their
reasonable charges and expenses in forwarding proxy material to
beneficial owners.
ANNUAL REPORT
A copy of the Company's annual report, including
consolidated financial statements for the fiscal year ended
September 30, 1996, was mailed to shareholders on or about
December 6, 1996.
REVOCATION RIGHTS
A shareholder executing and delivering the enclosed proxy
may revoke it by written notice delivered to the secretary of
the Company, or in person at the annual meeting, at any time
before the authority granted by it is exercised.
SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Under Rule 14a-8 under the Securities Exchange Act of
1934, shareholders of the Company may present proper proposals
for inclusion in the Company's proxy statement and for
consideration at the 1998 annual meeting of its shareholders by
submitting their proposals to the Company in a timely manner.
In order to be so included for the 1998 annual meeting,
shareholder proposals must be received at the Company's
principal office, 1630 North Meridian Street, Indianapolis,
Indiana 46202-1496, Attention: Corporate Secretary, no later
than August 7, 1997, and must otherwise comply with the
requirements of Rule 14a-8.
If a shareholder desires to bring business before the
meeting which is not the subject of a proposal timely submitted
for inclusion in the proxy statement, the shareholder must
follow procedures outlined in the Company's Code Of By-Laws. A
copy of these procedures is available upon request from the
Corporate Secretary at the address referenced above. One of
the procedural requirements in the Company's Code of By-Laws is
timely notice in writing of the business the shareholder
proposes to bring before the meeting. To be timely a
shareholder's notice must be delivered to, or mailed and
received at, the principal office of the Company not less than
50 days nor more than 90 days prior to the meeting, provided,
however, that if less than 60 days' notice of the meeting date
is given, notice by the shareholder must be so received by the
Company not later than the tenth day following the day on which
the notice is given.
By order of the board of directors.
Indianapolis, Indiana
December 6, 1996
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Secretary
Please fill in, date and sign the enclosed proxy and
return it in the accompanying addressed envelope. No further
postage is required if mailed in the United States. If you
attend the annual meeting and wish to vote your shares in
person, you may do so. Your cooperation in giving this matter
your prompt attention will be appreciated.
[SIDE 1]
INDIANA ENERGY, INC. PROXY/VOTING INSTRUCTION CARD
COMMON STOCK
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting on January 22, 1997. ANTHONY E. ARD, RONALD E. CHRISTIAN
and TIMOTHY M. HEWITT and each of them, are hereby appointed proxies of
the undersigned, with power of substitution, to vote all of the shares
of Common Stock of INDIANA ENERGY, INC., owned by the undersigned, at
the Annual Meeting of Shareholders to be held on January 22, 1997, and
at any adjournments thereof, on the matters and in the manner specified
on the reverse side of this proxy.
Receipt of Notice of Annual Meeting of Shareholders, dated December 6,
1996, and Proxy Statement attached thereto is hereby acknowledged.
This proxy will be voted as directed. If no direction is given, this
proxy will be voted FOR the proposal.
Election of Directors (three-year term):
Nominees: Niel C. Ellerbrook, Loren K. Evans, Fred A. Poole and Jean
L. Wojtowicz.
You are encouraged to specify your choices by marking the appropriate
box on the reverse side.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE.
[SIDE 2]
x
Please mark your votes as in this example.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction
is made, this proxy will be voted FOR the proposal.
The Board of Directors recommends a vote FOR the Election of
Directors.
FOR WITHHELD authority for all Nominees
1. Election of To withhold authority to vote
Directors. ____ ______ for any specific nominee(s), mark
the "WITHHELD" box and write the
name of each nominee for whom
you are withholding authority to vote
on the line provided below.
_________________________________
2. In their discretion, the proxies are authorized to vote upon such
business as may properly come before the meeting.
Please sign exactly as your name(s)
appears hereon. All joint tenants
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. If
a corporation, sign the full corporate
name by an authorized officer.
If a partnership, sign in partnership
name by authorized person.
_______________________________________
_______________________________________
Signature(s) Date
