July 31, 1997
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
Gentlemen:
We are transmitting herewith Indiana Gas Company, Inc.'s
Current Report on Form 8-K.
Very truly yours,
/s/ Douglas S. Schmidt
Douglas S. Schmidt
DSS:tmw
Enclosure
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31, 1997
INDIANA GAS COMPANY, INC.
(Exact name of registrant as specified in its charter)
INDIANA 1-6494 35-0793669
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification
Number)
1630 North Meridian Street, Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 926-3351
Item 5. Other Events
The purpose of this 8-K is to provide
information related to the new growth strategy
of Indiana Energy, Inc., the parent of Indiana
Gas Company, Inc. (Indiana Gas), as discussed
below:
New Growth Strategy
In April 1997, the Board of Directors of Indiana
Energy, Inc. (Indiana Energy or the company)
approved a new growth strategy designed to
support the company's transition into a more
competitive environment. As part of this new
growth strategy, Indiana Energy will endeavor to
become a leading regional provider of energy
products and services and to grow its
consolidated earnings per share by at least 10
percent annually over the next five years. To
achieve such earnings growth, Indiana Energy's
aim is to grow the earnings contribution from
nonutility operations to at least 20 percent of
its total annual earnings within the next five
years (see ProLiance Energy, LLC, CIGMA, LLC and
Energy Systems Group, LLC), and to aggressively
manage costs within its utility operations.
As part of the company's cost control efforts,
in July 1997, Indiana Gas advised its employees
of a planned reduction of its work force to be
implemented in the near future through an
involuntary separation program and attrition.
Currently, staffing levels are expected to be
reduced from about 1,025 full-time employees to
approximately 800 employees within five years.
The details of this staffing reduction plan have
not yet been finalized.
Since the company is in the early stages of
implementation, an estimate of the costs related
to the planned work force reductions and any
other costs that may be incurred in connection
with the company's new growth strategy cannot be
made at this time.
ProLiance Energy, LLC
ProLiance Energy, LLC (ProLiance) is a limited
liability company owned jointly and equally by IGC
Energy, Inc., an indirect and wholly owned
subsidiary of Indiana Energy, and Citizens By-
Products Coal Company, a wholly owned subsidiary of
Citizens Gas and Coke Utility (Citizens Gas).
ProLiance is the supplier of gas and related
services to both Indiana Gas and Citizens Gas, as
well as a provider of similar services to other gas
utilities and customers in Indiana and surrounding
states.
ProLiance recently announced plans to add power
marketing to its services offered beginning in late
fiscal 1997. Power marketing involves buying
electricity on the wholesale market and then
reselling it to other marketers, utilities and
other customers.
The sale of gas and provision of other services to
Indiana Gas by ProLiance is subject to regulatory
review through the quarterly gas cost adjustment
proceeding currently pending before the Indiana
Utility Regulatory Commission (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. The company is
currently awaiting a decision from the IURC.
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.
CIGMA, LLC
On April 1, 1997, IGC Energy, Inc. and Citizens By-
Products Coal Company formed CIGMA, LLC (CIGMA), a
jointly and equally owned limited liability
company. CIGMA provides materials acquisition and
related services for Indiana Gas and Citizens Gas,
as well as similar services for third parties.
CIGMA is expected to generate cost savings for the
utilities by enabling more efficient purchasing,
warehousing and distribution of materials and
equipment.
Energy Systems Group, LLC
On May 23, 1997, IGC Energy, Inc., Citizens By-
Products Coal Company and Energy Systems Group,
Inc. (ESGI) formed Energy Systems Group, LLC (ESG),
an equally owned limited liability company. ESG
will provide a package of products, services and
skills to help energy users achieve enhanced energy
and operational performance. The packages will
provide for improvements to be paid for by the
customers from savings generated within their
existing operating budgets. ESG will assume the
responsibilities of ESGI, an energy related
performance contracting firm and wholly owned
subsidiary of SIGCORP, Inc.
Forward-Looking Information
Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995.
A "safe harbor" for forward-looking statements
is provided by the Private Securities Litigation
Reform Act of 1995 (Reform Act of 1995). The
Reform Act of 1995 was adopted to encourage such
forward-looking statements without the threat of
litigation, provided those statements are
identified as forward-looking and are
accompanied by meaningful cautionary statements
identifying important factors that could cause
the actual results to differ materially from
those projected in the statement. Certain
matters described above, including, but not
limited to, Indiana Energy's new earnings grow
strategy, are forward-looking statements. Such
statements are based on management's beliefs, as
well as assumptions made by and information
currently available to management. When used in
this filing the words "aim," "anticipate,"
"endeavor," "estimate," "expect," "objective,"
"projection," "forecast," "goal," and similar
expressions are intended to identify forward-
looking statements. In addition to any
assumptions and other factors referred to
specifically in connection with such forward-
looking statements, factors that could cause
Indiana Energy's actual results to differ
materially from those contemplated in any
forward-looking statements include, among
others, the following:
Factors affecting utility operations such as
unusual weather conditions; catastrophic weather-
related damage; unusual maintenance or repairs;
unanticipated changes to gas supply costs, or
availability constraints due to higher demand,
shortages, transportation problems or other
developments; environmental incidents; or gas
pipeline system constraints.
Increased competition in the energy environment,
including effects of: industry restructuring
and unbundling.
Regulatory factors such as unanticipated changes
in rate-setting policies or procedures; recovery
of investments made under traditional
regulation, and the frequency and timing of rate
increases.
Financial or regulatory accounting principles or
policies imposed by the Financial Accounting
Standards Board, the Securities and Exchange
Commission, the Federal Energy Regulatory
Commission, state public utility commissions,
state entities which regulate natural gas
transmission, gathering and processing, and
similar entities with regulatory oversight.
Economic conditions including inflation rates
and monetary fluctuations.
Changing market conditions and a variety of
other factors associated with physical energy
and financial trading activities, including, but
not limited to, price, basis, credit, liquidity,
volatility, capacity, currency exchange,
interest rate, and warranty risks.
Availability or cost of capital, resulting from
changes in: Indiana Energy, interest rates, and
securities ratings or market perceptions of the
utility industry and energy-related industries.
Employee workforce factors, including changes in
key executives, collective bargaining agreements
with union employees, or work stoppages.
Legal and regulatory delays and other obstacles
associated with mergers, acquisitions, and
investments in joint ventures.
Costs and other effects of legal and
administrative proceedings, settlements,
investigations, claims, and other matters,
including, but not limited to, those described
in the Other Operating Matters section of
Management's Discussion And Analysis Of Results
Of Operations And Financial Condition in Indiana
Energy's Report on Form 10-Q for the quarter-
ended March 31, 1997.
Changes in Federal, state or local legislature
requirements, such as changes in tax laws or
rates, environmental laws and regulations.
Indiana Energy undertakes no obligation to
publicly update or revise any forward-looking
statements, whether as a result of changes in
actual results, changes in assumptions, or other
factors affecting such statements.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
INDIANA GAS COMPANY, INC.
Registrant
Dated July 31, 1997 /s/Niel C. Ellerbrook
Niel C. Ellerbrook
Executive Vice President
and Chief Financial Officer
Dated July 31, 1997 /s/Jerome A. Benkert
Jerome A. Benkert
Vice President and Controller
