August 13, 1997
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
Gentlemen:
We are transmitting herewith Indiana Energy, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, pursuant to the requirements of Section 13
of the Securities Exchange Act of 1934.
Very truly yours,
Douglas S. Schmidt
DSS:rs
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-9091
INDIANA ENERGY, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1654378
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1630 North Meridian Street,Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)
317-926-3351
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock - Without par value 22,581,424 July 31, 1997
Class Number of shares Date
TABLE OF CONTENTS
Page
Numbers
Part I - Financial Information
Consolidated Balance Sheets
at June 30, 1997, and 1996
and September 30, 1996
Consolidated Statements of Income
Three Months Ended June 30, 1997 and 1996,
Nine Months Ended June 30, 1997 and 1996,
and Twelve Months Ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows
Nine Months Ended June 30, 1997 and 1996,
and Twelve Months Ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Part II - Other Information
Item 1 - Legal Proceedings
Item 6 - Exhibits and Reports on Form 8-K
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands - Unaudited)
June 30 September 30
1997 1996 1996
<S> <C> <C> <C>
UTILITY PLANT:
Original cost $968,416 $904,479 $931,092
Less - Accumulated depreciation and amortization 357,694 339,651 344,268
610,722 564,828 586,824
NONUTILITY PLANT AND OTHER INVESTMENTS - NET 28,239 10,372 10,338
CURRENT ASSETS:
Cash and cash equivalents 20 36,249 20
Accounts receivable, less reserves of
$2,253, $1,511 and $1,853, respectively 20,657 33,040 14,598
Accrued unbilled revenues 7,994 6,929 8,158
Materials and supplies - at average cost 428 4,187 4,611
Liquefied petroleum gas - at average cost 847 509 507
Gas in underground storage - at last-in,
first-out cost 9,918 20,029 39,083
Recoverable gas costs 967 - 2,710
Prepayments and other 424 508 46
41,255 101,451 69,733
DEFERRED CHARGES:
Unamortized debt discount and expense 7,115 6,824 7,585
Other 5,497 9,386 7,983
12,612 16,210 15,568
$692,828 $692,861 $682,463
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDERS' EQUITY AND LIABILITIES
(Thousands - Unaudited)
June 30 September 30
1997 1996 1996
<S> <C> <C> <C>
CAPITALIZATION:
Common stock (no par value) - authorized 64,000,000
shares - issued and outstanding 22,580,998,
22,474,402, and 22,474,402 shares, respectively $146,508 $143,875 $143,875
Less unearned compensation - restricted stock grants 1,798 624 525
144,710 143,251 143,350
Retained earnings 181,901 165,281 152,972
Total common shareholders' equity 326,611 308,532 296,322
Long-term debt 142,899 178,185 178,063
469,510 486,717 474,385
CURRENT LIABILITIES:
Maturities and sinking fund requirements
of long-term debt 35,272 19,217 272
Notes payable 12,550 3,800 28,036
Accounts payable (See Note 11) 23,327 30,768 34,192
Refundable gas costs - 6,522 -
Customer deposits and advance payments 6,670 3,572 14,256
Accrued taxes 12,319 15,641 4,206
Accrued interest 4,457 5,269 2,552
Other current liabilities 27,558 24,564 27,356
122,153 109,353 110,870
DEFERRED CREDITS:
Deferred income taxes 68,533 66,362 66,862
Unamortized investment tax credit 10,477 11,407 11,173
Regulatory income tax liability 2,835 3,797 2,835
Other 19,320 15,225 16,338
101,165 96,791 97,208
COMMITMENTS AND CONTINGENCIES (See Notes 8 & 10) - - -
$692,828 $692,861 $682,463
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share data)
(Unaudited)
Three Months Nine Months
Ended June 30 Ended June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
UTILITY OPERATING REVENUES $ 83,733 $ 91,211 $ 471,909 $ 468,073
COST OF GAS (See Note 11) 40,084 52,464 290,265 285,678
MARGIN 43,649 38,747 181,644 182,395
UTILITY OPERATING EXPENSES:
Other operation and maintenance 20,755 19,986 60,370 61,694
Depreciation and amortization 8,767 8,391 26,178 24,739
Income taxes 2,499 1,063 26,361 27,061
Taxes other than income taxes 3,829 3,444 13,523 13,104
35,850 32,884 126,432 126,598
UTILITY OPERATING INCOME 7,799 5,863 55,212 55,797
INTEREST 3,906 4,040 12,640 12,120
OTHER (416) (450) (1,295) (1,354)
3,490 3,590 11,345 10,766
UTILITY INCOME 4,309 2,273 43,867 45,031
NONUTILITY INCOME 2,157 529 4,233 3,098
NET INCOME $ 6,466 $ 2,802 $ 48,100 $ 48,129
AVERAGE COMMON SHARES OUTSTANDING 22,581 22,501 22,580 22,525
EARNINGS PER AVERAGE SHARE OF
COMMON STOCK $ 0.29 $ 0.13 $ 2.13 $ 2.14
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share data)
(Unaudited)
Twelve Months
Ended June 30
1997 1996
<S> <C> <C>
UTILITY OPERATING REVENUES $ 534,430 $ 525,272
COST OF GAS (See Note 11) 324,718 315,408
MARGIN 209,712 209,864
UTILITY OPERATING EXPENSES:
Other operation and maintenance 82,812 81,600
Depreciation and amortization 34,671 32,730
Income taxes 22,474 24,695
Taxes other than income taxes 16,787 15,914
156,744 154,939
UTILITY OPERATING INCOME 52,968 54,925
INTEREST 16,427 15,890
OTHER (925) (1,838)
15,502 14,052
UTILITY INCOME 37,466 40,873
NONUTILITY INCOME 4,706 3,038
NET INCOME $ 42,172 $ 43,911
AVERAGE COMMON SHARES OUTSTANDING 22,554 22,534
EARNINGS PER AVERAGE SHARE OF
COMMON STOCK $ 1.87 $ 1.95
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands - Unaudited)
Nine Months Twelve Months
Ended June 30 Ended June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 48,100 $ 48,129 $ 42,172 $ 43,911
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 26,318 24,904 34,858 32,950
Deferred income taxes 1,671 1,266 1,209 3,050
Investment tax credit (697) (697) (930) (930)
Gain on sale of nonutility assets (2,923) - (2,923) -
Undistributed earnings of unconsolidated affiliates (3,860) 79 (4,850) 156
20,509 25,552 27,364 35,226
Changes in assets and liabilities -
Receivables - net (5,895) (19,771) 11,318 (18,038)
Inventories 33,008 39,442 13,532 24,086
Accounts payable, customer deposits,
advance payments and other current liabilities (18,249) (31,701) (1,349) (7,156)
Accrued taxes and interest 10,018 10,408 (4,134) (3,011)
Refundable/recoverable gas costs 1,743 1,639 (7,489) (11,049)
Prepayments (378) (383) 103 70
Other - net 5,796 2,072 8,467 3,837
Total adjustments 46,552 27,258 47,812 23,965
Net cash flow from operations 94,652 75,387 89,984 67,876
CASH FLOWS REQUIRED FOR FINANCING
ACTIVITIES:
Repurchase of common stock - (2,116) - (2,116)
Sale of long-term debt 49 21,052 65 21,864
Reduction in long-term debt (213) (213) (19,296) (213)
Net change in short-term borrowings (15,486) (2,225) 8,750 -
Dividends on common stock (19,171) (18,515) (25,552) (24,689)
Net cash flow required for financing activities (34,821) (2,017) (36,033) (5,154)
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (52,416) (35,732) (83,065) (52,099)
Nonutility investments - net (10,415) (1,409) (10,115) (1,994)
Proceeds from sale of nonutility assets 3,000 - 3,000 -
Net cash flow required for investing activities (59,831) (37,141) (90,180) (54,093)
NET INCREASE (DECREASE) IN CASH - 36,229 (36,229) 8,629
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 20 36,249 27,620
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20 $ 36,249 $ 20 $ 36,249
</TABLE>
Indiana Energy, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements
1. Financial Statements.
The consolidated financial statements include the
accounts of Indiana Energy, Inc. (Indiana Energy) and
its wholly- and majority-owned subsidiaries, after
elimination of intercompany transactions. The
consolidated financial statements separate the regulated
utility operations, principally Indiana Gas Company,
Inc. (Indiana Gas), from nonutility operations. The
nonutility operations include IGC Energy, Inc. (IGC
Energy), Energy Realty, Inc. (Energy Realty) and Indiana
Energy Services, Inc. (IES), indirect wholly-owned
subsidiaries of Indiana Energy, as well as the 50-
percent interests in ProLiance Energy, LLC (see Note 10)
and CIGMA, LLC (see Note 11).
The interim condensed consolidated financial statements
included in this report have been prepared by Indiana
Energy, without audit, as provided in the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
omitted as provided in such rules and regulations.
Indiana Energy believes that the information in this
report reflects all adjustments necessary to fairly
state the results of the interim periods reported, that
all such adjustments are of a normally recurring nature,
and the disclosures are adequate to make the information
presented not misleading. These interim financial
statements should be read in conjunction with the
financial statements and the notes thereto included in
Indiana Energy's latest annual report on Form 10-K.
Because of the seasonal nature of Indiana Energy's gas
distribution operations, the results shown on a
quarterly basis are not necessarily indicative of annual
results.
2. Cash Flow Information.
For the purposes of the Consolidated Statements of Cash
Flows, Indiana Energy 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>
Nine Months Ended Twelve Months Ended
June 30 June 30
Thousands 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest (net of
amount capitalized) $ 9,913 $ 9,437 $16,291 $14,736
Income taxes $17,701 $20,756 $27,553 $30,636
</TABLE>
3. Revenues.
To more closely match revenues and expenses, revenues
are recorded for all gas delivered to customers but not
billed at the end of the accounting period.
4. Gas in Underground Storage.
Based on the cost of purchased gas during June 1997, the
cost of replacing the current portion of gas in
underground storage exceeded last-in, first-out cost at
June 30, 1997, by approximately $11,565,000.
5. Refundable or Recoverable Gas Costs.
The cost of gas purchased and refunds from suppliers,
which differ from amounts recovered through rates, are
deferred and are being recovered or refunded in
accordance with procedures approved by the Indiana
Utility Regulatory Commission (IURC).
6. Allowance For Funds Used During Construction.
An allowance for funds used during construction (AFUDC),
which represents the cost of borrowed and equity funds
used for construction purposes, is charged to
construction work in progress during the period of
construction and included in "Other" on the Consolidated
Statements of Income. An annual AFUDC rate of 7.5
percent was used for all periods reported.
The table below reflects the total AFUDC capitalized and
the portion of which was computed on borrowed and equity
funds for all periods reported.
<TABLE>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
Thousands 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
AFUDC-Borrowed Funds $129 $60 $437 $215 $505 $276
AFUDC-Equity Funds 106 49 358 176 414 226
Total AFUDC Capitalized $235 $109 $795 $391 $919 $502
</TABLE>
7. Long-Term Debt.
During July 1997, Indiana Gas issued $15 million in
aggregate principal amount of its Medium-Term Notes,
Series E (Notes) as follows: $5.0 million of 6.42% Notes
due July 7, 2027; $3.5 million of 6.68% Notes due July
7, 2027; and $6.5 million of 6.54% Notes due July 9,
2007. The net proceeds from the sale of the Notes will
be used to finance Indiana Gas' continuing construction
program and for other corporate purposes.
8. Environmental Costs.
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 August 12, 1997, Indiana Gas signed an agreement with PSI
Energy, Inc. (PSI) with respect to thirteen of the nineteen
sites where PSI is a potentially responsible party (PRP),
which provides for an equal sharing between Indiana Gas and
PSI of past and future response costs at the thirteen sites.
Further, Indiana Gas and PSI must jointly approve future
management of the sites and the decisions to spend
additional funds. Indiana Gas previously entered into an
agreement with PSI providing for the sharing of costs
related to another site. Indiana Gas expects in the near
future to commence negotiations with PSI and Northern
Indiana Public Service Company (NIPSCO) regarding the other
five sites for which each is considered a PRP. These five
sites are already the subject of an agreement between
Indiana Gas and NIPSCO.
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. On
January 21, 1997, this ruling was affirmed by the
Indiana Court of Appeals. On February 19, 1997, the
company petitioned for transfer to the Indiana Supreme
Court.
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. Based on discussions with
counsel, the management of Indiana Gas believes that a
number of the Court's rulings are contrary to Indiana
law and has appealed 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
June 30, 1997, Indiana Gas has obtained settlements from
some insurance carriers in an aggregate amount in excess
of $14.7 million.
The Court's rulings have had no material impact on
earnings since Indiana Gas has previously recorded all
costs (in aggregate $14.9 million) 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.
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). The Office of Utility Consumer
Counselor appealed the order. On January 21, 1997, the
Indiana Court of Appeals affirmed the IURC decision
authorizing recovery.
10. Nonutility Income.
The components of nonutility income, shown net of tax,
are listed below.
<TABLE>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
Thousands 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Nonutility income (loss):
Gas marketing affiliates,
net of reserve $ 338 $ 84 $2,644 $2,768 $3,141 $2,792
Gain on sale of
nonutility assets 1,792 - 1,792 - 1,792 -
Other - net 27 445 (203) 330 (227) 246
$2,157 $ 529 $4,233 $3,098 $4,706 $3,038
</TABLE>
During June 1997, IGC Energy sold certain nonutility
assets, resulting in an after-tax gain of approximately
$1.8 million.
Nonutility income includes the earnings recognized from
Indiana Energy's gas marketing affiliates. Prior to
April 1, 1996, IES provided natural gas and related
services to other gas utilities and customers in Indiana
and surrounding states, and from January 1, 1996, to
March 31, 1996, to Indiana Gas. ProLiance Energy, LLC
(ProLiance), a nonregulated marketing affiliate, assumed
the business of IES effective April 1, 1996, and is the
supplier of gas and related services to both Indiana Gas
and Citizens Gas and Coke Utility (Citizens Gas). The
company's investment in ProLiance is accounted for using
the equity method. ProLiance's fiscal year ends on
August 31.
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.
As a result of the two on-going proceedings, at June 30,
1997, $4.6 million of Indiana Energy's cumulative share
of its gas marketing affiliates' net income has been
reserved until the outcome of these proceedings can be
determined.
11. Affiliate Transactions.
ProLiance began providing natural gas supply and related
services to Indiana Gas effective April 1, 1996.
Indiana Gas' purchases from ProLiance for resale and for
injections into storage for the three-, nine- and
twelve-month periods ended June 30, 1997, totaled $51.6
million, $252.6 million and $309.7 million,
respectively. Indiana Gas' purchases from ProLiance for
the three months ended June 30, 1996, totaled $60.8
million.
As of June 30, 1997, ProLiance has a standby letter of
credit facility with a bank for letters up to $30
million. This facility is secured by a support
agreement from Indiana Energy and Citizens Gas.
On April 1, 1997, IGC Energy and Citizens By-Products
Coal Company, a wholly owned subsidiary of Citizens
Gas, formed CIGMA, LLC (CIGMA), a jointly and equally
owned limited liability company. CIGMA provides
materials acquisition and related services that are
used by Indiana Gas and Citizens Gas, as well as
similar services for third parties. Indiana Gas'
purchases of these services for the three-month period
ended June 30, 1997, totaled $4.6 million. IGC Energy
made an initial capital contribution of $3.6 million
to CIGMA, and will account for its 50-percent interest
under the equity method.
Amounts owed to affiliates totaled $18.0 million and
$16.7 million at June 30, 1997 and 1996, respectively,
and are included in Accounts Payable on the
Consolidated Balance Sheets.
12. Energy Systems Group, LLC.
On May 23, 1997, IGC Energy, 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. IGC Energy's initial investment in ESG was
recorded at $3.3 million and is payable over the next
five years. The final investment amount may be higher
depending on ESG's financial performance over that five-
year period. IGC Energy's one-third interest in ESG
will be accounted for under the equity method.
13. Reclassifications.
Certain reclassifications have been made to the prior
periods' financial statements to conform to the current
year presentation. These reclassifications have no
impact on net income previously reported.
Indiana Energy, Inc. and Subsidiary Companies
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations
Earnings
The majority of Indiana Energy Inc.'s (Indiana Energy)
consolidated earnings are from the operations of its gas
distribution subsidiary, Indiana Gas Company, Inc.
(Indiana Gas). Nonutility operations include IGC Energy,
Inc. (IGC Energy), Energy Realty, Inc. and Indiana Energy
Services, Inc. (IES), indirect wholly-owned subsidiaries
of Indiana Energy, as well as the 50-percent interests in
ProLiance Energy, LLC (see ProLiance Energy, LLC) and
CIGMA, LLC (see CIGMA, LLC). While Indiana Energy's
principal business is expected to continue to be gas
distribution, the company is actively seeking
opportunities for nonutility investments (see New Growth
Strategy).
Utility income, nonutility income, net income and
earnings per average share of common stock for the three-,
nine- and twelve-month periods ended June 30, 1997, when
compared to the same periods one year ago, are listed
below. The increase in net income for the three-month
period is primarily attributable to cooler weather and a
gain on the sale of certain nonutility assets.
<TABLE>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Utility income (millions of dollars) $ 4.3 $ 2.3 $43.9 $45.0 $37.5 $40.9
Nonutility income (millions
of dollars) $ 2.2 $ .5 $ 4.2 $ 3.1 $ 4.7 $ 3.0
Net income (millions of dollars) $ 6.5 $ 2.8 $48.1 $48.1 $42.2 $43.9
Earnings per average share of
common stock $ .29 $ .13 $2.13 $2.14 $1.87 $1.95
</TABLE>
The following discussion of operating results relates
primarily to the operations of Indiana Gas.
Margin (Revenues Less Cost of Gas)
Margin for the quarter ended June 30, 1997, increased
$4.9 million compared to the same period last year. The
increase reflects cooler weather, as well as the addition
of new residential and commercial customers.
Margin for the nine-month period ended June 30, 1997,
decreased $.8 million compared to the same period last
year. The decrease is primarily attributable to weather 7
percent warmer than the same period last year and 1
percent colder than normal, offset somewhat by the
addition of new residential and commercial customers.
Margin for the twelve-month period ended June 30,
1997, decreased $.2 million compared to the same period
last year. Despite weather 7 percent warmer than the same
period last year and 1 percent colder than normal, margin
remained approximately the same due to additions of new
residential and commercial customers, as well as the
recognition of revenues associated with the recovery of
certain gas costs which had been recognized as expenses in
the prior period.
Total system throughput (combined sales and
transportation) increased 3 percent (.6 MMDth) for the
third quarter of fiscal 1997, when compared to the same
period last year. Throughput decreased 4 percent (4.2
MMDth) for the nine-month period and 4 percent (4.6 MMDth)
for the twelve-month period, when compared to the same
periods one year ago. Indiana Gas' rates for
transportation generally provide the same margins as are
earned on the sale of gas under its sales tariffs.
Approximately one-half of total system throughput
represents gas used for space heating and is affected by
weather.
Total average cost per unit of gas purchased decreased
to $2.88 for the three-month period ended June 30, 1997,
compared to $3.31 for the same period one year ago. For
the nine-month period, cost of gas per unit increased to
$3.71 in the current period compared to $3.18 for the same
period last year. For the twelve-month period, cost of
gas per unit increased to $3.57 in the current period
compared to $3.00 for the same period last year.
Adjustments to Indiana Gas' rates and charges related
to the cost of gas are made through gas cost adjustment
(GCA) procedures established by Indiana law and
administered by the Indiana Utility Regulatory Commission
(IURC). The GCA passes through increases and decreases in
the cost of gas to Indiana Gas' customers dollar for
dollar.
Operating Expenses
Operation and maintenance expenses increased $.8
million for the three-month period ended June 30, 1997,
when compared to the same period one year ago due
primarily to the timing of accruals for performance-based
compensation.
Operation and maintenance expenses decreased $1.3
million for the nine-month period when compared to the
same period last year due in part to lower labor-related
costs.
Operation and maintenance expenses for the twelve-
month period increased $1.2 million when compared to the
same period last year due in part from the acceleration of
several distribution system maintenance projects into the
last portion of fiscal 1996. The acceleration of these
projects was made possible by higher earnings attributable
to colder than normal weather during the 1996 heating
season.
Depreciation and amortization expense increased for
the three-, nine- and twelve-month periods ended June 30,
1997, when compared to the same periods one year ago as
the result of additions to utility plant to serve new
customers and to maintain dependable service to existing
customers.
Federal and state income taxes increased for the three-
month period ended June 30, 1997, while decreasing for the
nine- and twelve-month periods when compared to the same
periods one year ago due to changes in taxable utility
income.
Taxes other than income taxes increased for the three-
, nine- and twelve-month periods ended June 30, 1997, when
compared to the same periods one year ago due primarily to
higher property tax expense as the result of additions to
utility plant.
Interest Expense
Interest expense remained approximately the same for
the three-month period ended June 30, 1997, when compared
to the same period one year ago. Interest expense
increased for the nine- and twelve-month periods due to an
increase in average debt outstanding slightly offset by a
decrease in interest rates.
Nonutility Income
Nonutility income increased for the three-, nine- and
twelve-month periods ended June 30, 1997, when compared to
the same periods one year ago. The increases for all
periods are due primarily to the June 1997 sale of certain
nonutility assets by IGC Energy, which resulted in an
after-tax gain of approximately $1.8 million. The changes
in nonutility income for all periods also reflect the
earnings recognized from Indiana Energy's gas marketing
affiliates. Prior to April 1, 1996, IES provided natural
gas and related services to other gas utilities and
customers in Indiana and surrounding states, and from
January 1, 1996, to March 31, 1996, to Indiana Gas.
ProLiance Energy, LLC assumed the business of IES
effective April 1, 1996, and now is the supplier of gas
and related services to both Indiana Gas and Citizens Gas
and Coke Utility (Citizens Gas) (see ProLiance Energy, LLC
below).
Other Operating Matters
New Growth Strategy
In April 1997, the Board of Directors of Indiana
Energy 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. 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 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.
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.
As a result of the two on-going proceedings, at June
30, 1997, $4.6 million of Indiana Energy's cumulative
share of its gas marketing affiliates' net income has been
reserved until the outcome of these proceedings can be
determined.
CIGMA, LLC
On April 1, 1997, IGC Energy and Citizens By-Products
Coal Company, a wholly owned subsidiary of Citizens Gas,
formed CIGMA, LLC (CIGMA), a jointly and equally owned
limited liability company. CIGMA provides materials
acquisition and related services that are used by 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, 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.
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 August 12, 1997, Indiana Gas signed an agreement with PSI
Energy, Inc. (PSI) with respect to thirteen of the nineteen
sites where PSI is a potentially responsible party (PRP),
which provides for an equal sharing between Indiana Gas and
PSI of past and future response costs at the thirteen sites.
Further, Indiana Gas and PSI must jointly approve future
management of the sites and the decisions to spend
additional funds. Indiana Gas previously entered into an
agreement with PSI providing for the sharing of costs
related to another site. Indiana Gas expects in the near
future to commence negotiations with PSI and Northern
Indiana Public Service Company (NIPSCO) regarding the other
five sites for which each is considered a PRP. These five
sites are already the subject of an agreement between
Indiana Gas and NIPSCO.
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. On January 21, 1997,
this ruling was affirmed by the Indiana Court of Appeals.
On February 19, 1997, the company petitioned for transfer
to the Indiana Supreme Court.
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. Based on
discussions with counsel, the management of Indiana Gas
believes that a number of the Court's rulings are contrary
to Indiana law and has appealed 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
June 30, 1997, Indiana Gas has obtained settlements from
some insurance carriers in an aggregate amount in excess
of $14.7 million.
The Court's rulings have had no material impact on
earnings since Indiana Gas has previously recorded all
costs (in aggregate $14.9 million) 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.
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).
The Office of Utility Consumer Counselor appealed the
order. On January 21, 1997, the Indiana Court of Appeals
affirmed the IURC decision authorizing recovery.
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. Capital
expenditures for fiscal 1997 are estimated at $69.8 million
of which $52.4 million have been expended during the nine-
month period ended June 30, 1997. For the twelve months
ended June 30, 1997, Indiana Gas' capital expenditures
totaled $83.1 million. Of this amount, 61 percent was
provided by funds generated internally (utility income less
dividends plus charges to utility income not requiring
funds).
Indiana Gas' long-term goal is to fund internally at
least 75 percent of its construction program.
Capitalization objectives for Indiana Gas are 55-65
percent common equity and 35-45 percent long-term debt.
This will help Indiana Gas to maintain its high
creditworthiness. The long-term debt of Indiana Gas is
currently rated Aa3 by Moody's Investors Service and AA- by
Standard & Poor's Corporation.
During July 1997, Indiana Gas issued $15 million in
aggregate principal amount of its Medium-Term Notes, Series
E (Notes) as follows: $5.0 million of 6.42% Notes due July
7, 2027; $3.5 million of 6.68% Notes due July 7, 2027; and
$6.5 million of 6.54% Notes due July 9, 2007. The net
proceeds from the sale of the Notes will be used to finance
Indiana Gas' continuing construction program and for other
corporate purposes.
Indiana Gas plans to finance the redemption of its $35
million of 6 5/8% Series D Notes, due December 1, 1997, and
its near-term working capital requirements by the use of
short-term and long-term debt.
The nature of Indiana Gas' business creates large short-
term cash working capital requirements primarily to finance
customer accounts receivable, unbilled utility revenues
resulting from cycle billing, gas in underground storage
and construction expenditures until permanently financed.
Short-term borrowings tend to be greatest during the
heating season when accounts receivable and unbilled
utility revenues are at their highest. Depending on cost,
commercial paper or bank lines of credit are used as
sources of short-term financing. Indiana Gas' commercial
paper is rated P-1 by Moody's and A-1+ by Standard &
Poor's. Long-term financial strength and flexibility
require maintaining throughput volumes, controlling costs
and, if absolutely necessary, securing timely increases in
rates to recover costs and provide a fair and reasonable
return to shareholders.
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
in Management's Discussion And Analysis Of Results Of
Operations And Financial Condition, including, but not
limited to, Indiana Energy's new earnings growth
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 due to
higher demand, shortages, transportation problems or
other developments; environmental or pipeline
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,
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.
Changes in Federal, state or local legislative
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.
Indiana Energy, Inc. and Subsidiary Companies
Part II - Other Information
Item 1. Legal Proceedings
See Note 8 of the Notes to Consolidated Financial
Statements for litigation matters involving insurance
carriers pertaining to Indiana Gas' former manufactured
gas plants and storage facilities.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10-A Indiana Energy, Inc. Directors Compensation
Deferral Plan, as amended and restated
effective May 1, 1997, filed herewith.
10-B Indiana Energy, Inc. Directors Restricted Stock
Plan, as amended and restated effective
May 1, 1997, filed herewith.
27 Financial Data Schedule, filed herewith.
(b) On July 31, 1997, Indiana Energy and Indiana
Gas filed a Current Report on Form 8-K to provide information
related to Indiana Energy's new growth strategy. Items reported
include:
Item 5. Other Events
Information related to Indiana Energy's new
growth strategy.
On August 11, 1997, Indiana Energy filed a Current Report
on Form 8-K in connection with the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. Items
reported include:
Item 5. Other Events
Filing of cautionary statements for the purpose
of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995.
Item 7. Financial Statements and Exhibits
Exhibit 99 Cautionary Statement for Purpose
of "safe harbor" provisions of the
Private Securities Litigation Reform
Act of 1995.
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 ENERGY, INC.
Registrant
Dated August 13, 1997 /s/Niel C. Ellerbrook
Niel C. Ellerbrook
Executive Vice President, Treasurer
and Chief Financial Officer
Dated August 13, 1997 /s/Jerome A. Benkert
Jerome A. Benkert
Controller
FIRST AMENDMENT AND
COMPLETE RESTATEMENT OF THE
INDIANA ENERGY, INC.
DIRECTORS COMPENSATION
DEFERRAL PLAN
As Amended and Restated Effective May 1, 1997
FIRST AMENDMENT AND
COMPLETE RESTATEMENT OF THE
INDIANA ENERGY, INC.
DIRECTORS COMPENSATION
DEFERRAL PLAN
(AS AMENDED AND RESTATED MAY 1, 1997)
Pursuant to rights reserved under Section 6.02 of the
Indiana Gas Company, Inc. Directors Compensation Deferral Plan
(the "Plan"), Indiana Gas Company, Inc., by action of its Board
of Directors, transfers sponsorship of the Plan to Indiana
Energy, Inc., renames the Plan and amends and completely restates
the Plan, effective as of May 1, 1997, to provide, in its
entirety, as follows:
PREAMBLE
The Indiana Gas Company, Inc. Directors Compensation
Deferral Plan (the "Plan") is an unfunded supplemental retirement
plan for directors of Indiana Gas Company, Inc. and Indiana
Energy, Inc. (individually an "Employer" and collectively the
"Employers"). This Plan is intended to be a continuation of the
director deferred fee plan which was initially effective
February 1, 1981.
ARTICLE I
DEFINITIONS
Section 1.01. Administrator. The term "Administrator"
means the Company which shall have the authority to manage and
control the operation of this Plan.
Section 1.02. Beneficiary. The term "Beneficiary" means
for a Participant the individual or individuals designated by
that Participant in the last Participation Agreement executed by
that Participant to receive benefits in the event of that
Participant's death.
Section 1.03. Company. The term "Company" means Indiana
Energy, Inc., and any successor thereto.
Section 1.04. Compensation. The term "Compensation" means
for each Participant in any Plan Year the total amount of
remuneration for director services as paid to that Participant by
the Employers in that Plan Year; provided, however, that a
Director's Compensation shall not include any fees required to be
paid in restricted shares of Indiana Energy, Inc. common stock
under the Indiana Energy, Inc. Directors Restricted Stock Plan.
Section 1.05. Director. The term "Director" means each non-
employee member of the Board of Directors of an Employer.
Section 1.06. Effective Date. The term "Effective Date"
means January 1, 1995; provided, however, that except as provided
below any deferrals made by Directors before January 1, 1995
shall be governed by the provisions of the Directors deferred fee
plan in effect prior to January 1, 1995; provided, further, that
any Director with a deferred account for the period before
January 1, 1995 shall be permitted to convert the entire account
to Phantom Units under this Plan as of January 1, 1995.
Section 1.07. Employer. The term "Employer" means the
Company, Indiana Gas Company, Inc., any other entity which is
affiliated with the Company (within the meaning of Section 414(b)
of the Internal Revenue Code of 1986, as amended) which (with the
approval of the Company) adopts the Plan and any successor
thereto. The term "Employers" means the Company, Indiana Gas
Company, Inc. and the other participating affiliated entities
collectively.
Section 1.08. Interest Fund Subaccount. The term "Interest
Fund Subaccount" means the bookkeeping account maintained for
each Participant in this Plan which is credited in each Plan
Year with a rate of return as provided in Article III of this
Plan.
Section 1.09. Interest Fund Subaccount Rate. The term
"Interest Fund Subaccount Rate" means the guaranteed rate of
return credited to amounts held in the Interest Fund Subaccounts.
The rate shall change each January 1 and shall be equal to the
mean between the high and low of the "aa" rated Public Utility
Preferred and Common Stock Yield Averages for the past twelve
(12) months as reported in Moody's Bond Survey in its first
published issue in the November preceding the January 1 on which
the rate is to come into effect.
Section 1.10. Participant. The term "Participant" means
any individual who fulfills the eligibility requirements
contained in Article II of this Plan.
Section 1.11. Participation Account. The term
"Participation Account" means the bookkeeping account maintained
by the Company for each Participant reflecting amounts deferred
under this Plan (as adjusted from time to time) and which is
equal to the sum of the Participant's Interest Fund Subaccounts
and Phantom Unit Subaccounts.
Section 1.12. Participation Agreement. The term
"Participation Agreement" means the agreement executed by a
Director each Plan Year signifying his desire to become (or to
continue to be) a Participant in this Plan and signifying the
amount of his Compensation which is to be deferred during the
subsequent Plan Year pursuant to the terms of this Plan.
Section 1.13. Phantom Unit Subaccount. The term "Phantom
Unit Subaccount" means the bookkeeping account maintained by the
Company for each Participant in this Plan for each Plan Year
during which the Participant has a deferred election in effect
which is credited with Phantom Units.
Section 1.14. Phantom Units. The term "Phantom Units"
means the phantom units allocated to a bookkeeping account under
this Plan with a per unit value equal to the value of Indiana
Energy, Inc. common stock (as determined in the manner provided
in Article III).
Section 1.15. Plan. The term "Plan" means the plan
embodied by this instrument as now in effect or hereafter
amended.
Section 1.16. Plan Year. The term "Plan Year" means the
calendar year.
ARTICLE II
PARTICIPATION IN THE PLAN
Section 2.01. Eligibility. As of the Effective Date, all
Directors of the Employers shall be eligible to become
Participants in this Plan.
Section 2.02. Deferral Amounts.
(a) Amount of Deferral. The amount of Compensation to
be deferred in a Plan Year shall be designated by each
Participant in the Participation Agreement executed by that
Participant for that Plan Year prior to the beginning of that
Plan Year.
(b) Special Rules for New Directors. For the Plan
Year during which a person first becomes eligible to become a
Participant, the Participant shall be provided by the Company the
opportunity to make a special election for such Plan Year with
respect to the Compensation paid in such Plan Year after the date
on which he becomes an eligible Participant.
(c) Timing of Deferral. The following rules govern the
timing of the deferral of Compensation under this Plan:
(i) Compensation deferred by Participants
shall be effected pro-rata from each payday in the Plan
Year.
(ii) For purposes of the allocations
described in Article III, the amount of any
Compensation deferred hereunder shall not be credited
to a Participant's Participation Account until the last
day of the calendar month during which, but for the
deferral, the deferred Compensation would have been
paid.
(d) Modification of Deferral Amount. A Participant
may modify the amount of his Compensation to be deferred in a
Plan Year under this Plan by written notice to the Secretary of
the Company which is received by the Secretary of the Company
prior to the beginning of that Plan Year.
(e) Discontinuation of Participation. A Participant
may discontinue his participation in this Plan by written notice
to the Secretary of the Company which is received prior to the
beginning of the Plan Year in which the discontinuation is to be
effective or by failing to execute a Participation Agreement for
that Plan Year. Any amounts previously deferred shall be paid in
accordance with the provisions of this Plan and elections made by
the Participant in his Participation Agreements.
(f) Manner of Payout of a Participant's Participation
Account. The manner in which a Participant's Participation
Account attributable to deferrals in a Plan Year is to be
distributed to that Participant under the provisions of this Plan
shall be designated by that Participant in the Participation
Agreement executed by that Participant for that Plan Year.
ARTICLE III
ACCOUNTS
Section 3.01. Purpose of Participation and Guaranteed
Accounts. The Company shall cause a Participation Account to be
established in the name of each Participant. The Company shall
cause a separate sub-account of a Participant's Participation
Account for each Plan Year during which Participant defers
Compensation (the Plan Year Subaccount). Each Plan Year
Subaccount shall be further allocated, as directed by the
Participant, between the Interest Fund Subaccount and Phantom
Stock Subaccount. The purpose of establishing such Participation
Accounts and Subaccounts is solely to provide a mechanism for
determining the Participants' benefits under this Plan. It is
the intent of the Employers that the Participants shall have no
title to or beneficial ownership in any cash or investments which
the Employers may set aside and allocate to these Accounts.
Section 3.02. Investment of Deferrals. The Company shall
cause a separate Plan Year Subaccount established for each
Participant who is deferring any Compensation in such Plan Year.
The amount of the deferral shall be allocated between the
Interest Fund Subaccount and the Phantom Stock Subaccount in
accordance with the investment directions provided by the
Participant in his Participation Agreement for such Plan Year. A
Participant may allocate deferrals between the Interest Fund
Subaccount and Phantom Stock Subaccount in twenty-five percent
(25%) increments. As of each January 1, a Participant shall be
permitted by written instructions to the Secretary of the Company
to change the investment directions of any deferrals for one (1)
or more of the previous Plan Year Subaccounts. In such
direction, the Participant needs to designate the Plan Year
Subaccounts for which the revised election or elections apply.
Changes shall be permitted in twenty-five percent (25%)
increments.
Section 3.03. Description of Interest Fund and Phantom
Stock Subaccounts.
(a) Interest Fund Subaccounts. Any monies credited
to a Participant's Interest Fund Subaccount shall be credited
with simple interest monthly at the Interest Fund Subaccount Rate
in effect for such month based on the amounts held in such
Subaccount as of the last day of the preceding calendar month.
(b) Phantom Stock Subaccount. As of the last day
of any calendar month during which amounts are credited to a
Participant's Phantom Stock Subaccount, the Company shall cause a
number of Phantom Stock Units to be credited to the Phantom Stock
Subaccount equal to a number determined by dividing the total
amount of the allocation for such month by the average of the
daily averages of the high and low sales price of shares of
Indiana Energy, Inc. common stock for each of the trading days in
such month (as reported in The Wall Street Journal). Any time
that there is a dividend paid on shares of Indiana Energy, Inc.
common stock, the Company shall cause each Participant's Phantom
Stock Subaccount to be credited with an amount equal to the
aggregate dividend which would have been payable to such
Subaccount during such month if such Subaccount was invested in
shares of Indiana Energy, Inc. common stock rather than Phantom
Shares (without regard to whether the Phantom Shares were
allocated to such Subaccount on the record date for such
dividend). Any dividend equivalent credits for a calendar month
shall be converted to Phantom Units, along with any additional
deferrals allocated in such month, in the manner described above.
(c) Special Adjustments. In the event of any change
in the outstanding common stock of Indiana Energy, Inc. by reason
of a stock dividend, stock split, recapitalization, merger,
consolidation, combination, stock rights plan or exchange of
shares or other similar corporate change, the aggregate number of
Phantom Units allocable to a Participant's Phantom Unit
Subaccount shall be appropriately adjusted by the Chief Executive
Officer of the Company, whose determination shall be conclusive,
consistent with the corporate transaction.
Section 3.04. Allocation and Distributions.
(a) Distributions. Distributions under Article IV for
each Plan Year Subaccount shall be charged proportionately
against the Participant's Interest Fund Subaccount and Phantom
Stock Subaccount based on the balances credited to such
Subaccounts as of the last day of the immediately preceding
month.
(b) Conversion of Phantom Units. For purposes of
effecting distributions from the Phantom Stock Subaccount, the
Phantom Stock Units to be distributed shall be deemed to have a
per unit value equal to the average of the daily averages of the
high and low sales price of Indiana Energy, Inc. common stock for
each of the trading days in the calendar month immediately
preceding the month the distribution is to be effected.
ARTICLE IV
BENEFITS
Section 4.01. Death Benefits. If a Participant dies prior
to the commencement of his benefits under this Article IV, the
Beneficiary of that Participant, as determined pursuant to the
last Participation Agreement executed by that Participant, shall
receive the balance contained in his Participation Account.
Payments under this Section 4.01 shall be paid in a single lump
sum cash payment no later than the last day of the third (3rd)
calendar month following the date of the Participant's death.
Section 4.02. Other Distributions. A Participant's Plan
Year Subaccounts shall be paid to him on the date and in the
manner designated by that Participant in his Participation
Agreements; provided, however, that under no circumstances shall
payment commencement be deferred more than sixty (60) calendar
days after the date on which the Participant ceases to be a
director. If any or all of the benefits of a Participant are
being paid in installments and that Participant dies prior to
receiving the final installments due hereunder, the remaining
amounts in his Participation Account shall be paid to that
Participant's Beneficiary, as determined pursuant to the last
Participation Agreement executed by that Participant, in a single
lump sum cash payment.
ARTICLE V
ADMINISTRATION
Section 5.01. Delegation of Responsibility. The Company
may delegate duties involved in the administration of this Plan
to such person or persons whose services are deemed by it to be
necessary or convenient.
Section 5.02. Payment of Benefits. The amounts allocated
to a Participant's Participation Account and payable as benefits
under this Plan shall be paid solely from the general assets of
the Employers. The payment of benefit obligation shall be
allocated between the Employers based on the portion of the
Compensation which would have been paid by each Employer but for
the deferral. No Participant shall have any interest in any
specific assets of an Employer under the terms of this Plan.
This Plan shall not be considered to create an escrow account,
trust fund or other funding arrangement of any kind or a
fiduciary relationship between any Participant and the Employers.
An Employer's obligation under this Plan is purely contractual
and shall not be funded or secured in any way.
ARTICLE VI
AMENDMENT OR TERMINATION OF PLAN
Section 6.01. Termination. The Company may at any time
terminate this Plan. As of the first Plan Year beginning after
the date on which this Plan is terminated, no additional amounts
shall be deferred from any Participant's Compensation. The
Company shall direct the Employers to pay to each such
Participant the balance contained in his Participation Account at
such time and in the manner designated by that Participant in the
Participation Agreements executed by that Participant.
Section 6.02. Amendment. The Company may amend the
provisions of this Plan at any time; provided, however, that no
amendment shall adversely affect the rights of Participants or
their Beneficiaries with respect to the balances contained in
their Participation Accounts immediately prior to the amendment.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Successors. This Plan shall be binding upon
the successors of the Employers.
Section 7.02. Choice of Law. This Plan shall be construed
and interpreted pursuant to, and in accordance with, the laws of
the State of Indiana.
Section 7.03. No Employment Contract. This Plan shall not
be construed as affecting in any manner the rights or obligations
of the Employers or of any Participant to continue or to
terminate director status at any time.
Section 7.04. Non-Alienation. No Participant or his
Beneficiary shall have any right to anticipate, pledge, alienate
or assign any of his rights under this Plan, and any effort to do
so shall be null and void. The benefits payable under this Plan
shall be exempt from the claims of creditors or other claimants
and from all orders, decrees, levies and executions and any other
legal process to the fullest extent that may be permitted by law.
Section 7.05. Gender and Number. Words in one (1) gender
shall be construed to include the other genders where
appropriate; words in the singular or plural shall be construed
as being in the plural or singular where appropriate.
Section 7.06. Disclaimer. The Employers make no
representations or assurances and assume no responsibility as to
the performance by any parties, solvency, compliance with state
and federal securities regulation or state and federal tax
consequences of this Plan or participation therein. It shall be
the responsibility of the respective Participants to determine
such issues or any other pertinent issues to their own
satisfaction.
Section 7.07. Designation of Beneficiaries. Each
Participant shall designate in his Participation Agreement his
Beneficiary and his contingent Beneficiary to whom death benefits
due hereunder at the date of his death shall be paid; provided,
however, that the Beneficiary and Contingent Beneficiary
designated by a Participant in the last Participation Agreement
executed by that Participant shall supersede all other
Beneficiary or Contingent Beneficiary designations made by that
Participant in any earlier Director's Participation Agreement
executed by that Participant. If any Participant fails to
designate a Beneficiary or if the designated Beneficiary
predeceases any Participant, death benefits due hereunder at that
Participant's death shall be paid to his contingent Beneficiary
or, if none, to the deceased Participant's surviving spouse, if
any, and if none to the deceased Participant's estate.
This First Amendment and Complete Restatement of the Plan
has been executed on this day of , 199___, and
shall be effective as of May 1, 1997.
INDIANA GAS COMPANY, INC.
By:
Its: Chairman of the Board
INDIANA ENERGY,INC.
By:
Its: Chairman of the Board
SECOND AMENDMENT TO AND COMPLETE RESTATEMENT OF
THE INDIANA ENERGY, INC.
DIRECTORS RESTRICTED STOCK PLAN
(EFFECTIVE MAY 1, 1997)
Pursuant to rights reserved under Section 17 of the Indiana
Energy, Inc. Directors' Restricted Stock Plan (the "Plan"), the
Board of Directors of Indiana Energy, Inc. hereby amends and
completely restates the Plan, effective May 1, 1997, to provide,
in its entirety, as follows:
Section 1. Establishment. Indiana Energy, Inc. and Indiana
Gas Company, Inc. established this restricted stock plan for
their respective outside directors, as described herein, which
shall be known as the Indiana Energy, Inc. Directors' Restricted
Stock Plan.
Section 2. Definitions. Whenever used herein, the
following terms shall have the meanings set forth below:
(a) "Attendance Fees" mean any remuneration paid to a
Director from the Participating Companies for attending
Board meetings and meetings of the Board committees.
(b) "Board" means the Board of Directors of Energy, Indiana
Gas or any other Participating Company, whichever is
applicable.
(c) "Change in Control" means:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of either (a) the
then outstanding shares of common stock of Energy
(the "Outstanding Energy Common Stock") or (b) the
combined voting power of the then outstanding
voting securities of Energy entitled to vote
generally in the election of directors (the
"Outstanding Energy Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change in Control: (i) any
acquisition directly from Energy (excluding an
acquisition by virtue of the exercise of a
conversion privilege), (ii) any acquisition by
Energy, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by Energy, Indiana Gas Company, Inc. or
any corporation controlled by Energy or (iv) any
acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in clauses
(a), (b) and (c) of subsection (3) of this Section
2 are satisfied;
(2) Individuals who, as of April 25, 1997, constitute
the Board of Directors of Energy (the "Incumbent
Energy Board") cease for any reason to constitute
at least a majority of the Board of Directors of
Energy (the "Energy Board"); provided, however,
that any individual becoming a director subsequent
to the date hereof whose election, or nomination
for election by Energy's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Energy
Board shall be considered as though such
individual were a member of the Incumbent Energy
Board, but excluding, for this purpose, any such
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by
or on behalf of a Person other than the Energy
Board; or
(3) Approval by the shareholders of Energy of a
reorganization, merger or consolidation, in each
case, unless, following such reorganization,
merger or consolidation, (a) more than sixty
percent (60%) of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such reorganization,
merger or consolidation and the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially
all of the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Energy Common Stock and Outstanding
Energy Voting Securities immediately prior to such
reorganization, merger or consolidation in
substantially the same proportions as their
ownership, immediately prior to such
reorganization, merger or consolidation, of the
Outstanding Energy Stock and Outstanding Energy
Voting Securities, as the case may be, (b) no
Person (excluding Energy, any employee benefit
plan or related trust of Energy, Indiana Gas
Company, Inc. or such corporation resulting from
such reorganization, merger or consolidation and
any Person beneficially owning, immediately prior
to such reorganization, merger or consolidation,
directly or indirectly, twenty percent (20%) or
more of the Outstanding Energy Common Stock or
Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such reorganization,
merger or consolidation or the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors and (c) at least a majority
of the members of the board of directors of the
corporation resulting from such reorganization,
merger or consolidation were members of the
Incumbent Energy Board at the time of the
execution of the initial agreement providing for
such reorganization, merger or consolidation;
(4) Approval by the shareholders of Energy of (a) a
complete liquidation or dissolution of Energy or
(b) the sale or other disposition of all or
substantially all of the assets of Energy, other
than to a corporation, with respect to which
following such sale or other disposition (i) more
than sixty percent (60%) of, respectively, the
then outstanding shares of common stock of such
corporation and the combined voting power of the
then outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially
all of the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Energy Common Stock and Outstanding
Energy Voting Securities immediately prior to such
sale or other disposition in substantially the
same proportion as their ownership, immediately
prior to such sale or other disposition, of the
Outstanding Energy Common Stock and Outstanding
Energy Voting Securities, as the case may be, (ii)
no Person (excluding Energy and any employee
benefit plan or related trust of Energy, Indiana
Gas Company, Inc. or such corporation and any
Person beneficially owning, immediately prior to
such sale or other disposition, directly or
indirectly, twenty percent (20%) or more of the
Outstanding Energy Common Stock or Outstanding
Energy Voting Securities, as the case may be)
beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then
outstanding shares of common stock of such
corporation and the combined voting power of the
then outstanding voting securities of such
corporation entitled to vote generally in the
election of directors and (iii) at least a
majority of the members of the board of directors
of such corporation were members of the Incumbent
Energy Board at the time of the execution of the
initial agreement or action of the Energy Board
providing for such sale or other disposition of
assets of Energy; or
(5) The closing, as defined in the documents relating
to, or as evidenced by a certificate of any state
or federal governmental authority in connection
with, a transaction approval of which by the
shareholders of Energy would constitute a Change
in Control under subsection (3) or (4) of this
Section 2(c).
(d) "Compensation Committee" means the Compensation
Committee of the Board of Energy.
(e) "Director" means each and every member of the Board of
a Participating Company.
(f) "Disability" means a physical or mental condition
which, in the opinion of a physician acceptable to
Energy, precludes a Director from continuing to serve
as a Director.
(g) "Effective Date" means January 13, 1992.
(h) "Eligible Director" means each Director of a
Participating Company who is not also an employee of
any Participating Company. No member of the Board who
is also an employee of a Participating Company shall be
eligible to participate in this Plan.
(i) "Energy" means Indiana Energy, Inc., an Indiana
corporation, and any successor thereof.
(j) "Grantee" means each Eligible Director.
(k) "Participating Company" means each entity affiliated
with Energy (within the meaning of Section 414(b) of
the Internal Revenue Code of 1986, as amended) which
(with the consent of Energy's Board) adopts the Plan,
and any successors thereto.
(l) "Period of Restriction" means the period during which
the transfer of restricted Shares granted under the
Plan is restricted pursuant to Section 11 hereof.
(m) "Plan" means the Indiana Energy, Inc. Directors
Restricted Stock Plan as described herein or as from
time to time hereinafter amended.
(n) "Shares" means the common stock, without par value, of
Energy.
(o) "Term of Office" means the period that a Director is
elected to serve on the Board of Energy; provided,
however, that (i) as to any Term of Office which began
before the Effective Date but ends after the Effective
Date, Term of Office shall mean the number of years
(rounded to the nearest whole year) remaining in such
Term of Office after the Effective Date and (ii) as to
any Director who is required to retire in accordance
with the policy of Energy (the "Retirement Policy")
before the expiration of the period that such Director
is elected to serve on the Board of Energy, "Term of
Office" shall mean the period (rounded to the nearest
twelfth of a year) during which such Director is
eligible to serve on the Board of Energy in accordance
with the Retirement Policy.
(p) "1934 Act" means the Securities Exchange Act of 1934,
as amended.
Section 3. Purpose. The purpose of the Plan is to enable
the Participating Companies to retain and motivate their outside
Directors who provide valuable service to them and to provide
them with a means of acquiring or increasing a proprietary
interest in Energy so that they shall have an increased incentive
to work toward the attainment of the long term growth and profit
objectives of Energy and the other Participating Companies.
Section 4. Shareholder Approval. The Plan shall be
conditioned upon the approval of the Plan by the holders of a
majority of the Shares present, or represented, and entitled to
vote at Energy's 1992 annual shareholders' meeting.
Section 5. Eligibility. Each Eligible Director shall
receive restricted Share grants under the Plan; provided,
however, that no grant of restricted Shares shall be made to an
Eligible Director until such Director consents in writing to
abide by the restrictions imposed on the Shares granted to him or
her.
Section 6. Administration. The Plan shall be administered
by the Compensation Committee. The decision of a majority of the
members of the Compensation Committee shall constitute the
decision of the Compensation Committee, and the Compensation
Committee may act either at a meeting, including a telephonic
meeting, at which a majority of its members are present or by a
written consent signed by all of its members. The Compensation
Committee may appoint individuals to act on its behalf in the
administration of the Plan; provided, however, that except as
otherwise provided by the Plan, the Compensation Committee shall
have the sole, final and conclusive authority to administer,
construe and interpret the Plan. Notwithstanding anything
contained in this Section to the contrary, no member of the
Compensation Committee may vote or act with respect to any
administrative decision or interpretation which directly or
indirectly affects his, but not all Grantees', interests under
the Plan.
Section 7. Number of Shares Subject to the Plan. The total
number of Shares that may be granted under the Plan may not
exceed fifty thousand (50,000) Shares, subject to adjustment as
provided in Section 9 hereof. Those Shares may consist, in whole
or in part, of authorized but unissued Shares or Shares
reacquired by Energy, including Shares purchased in the open
market, not reserved for any other purpose.
Section 8. Unused Shares. In the event any Shares subject
to grants made under the Plan are forfeited pursuant to
Section 15 hereof, such forfeited Shares shall again become
available for issuance under the Plan.
Section 9. Adjustments in Capitalization. In the event of
any change in the outstanding Shares by reason of a stock
dividend, stock split, recapitalization, merger, consolidation,
combination, stock rights plan or exchange of shares or other
similar corporate change, the aggregate number of Shares issuable
under the Plan shall be appropriately adjusted by the members of
the Board of Energy who are not eligible to participate in the
Plan, whose determination shall be conclusive. In such event,
the members of the Board of Energy who are not eligible to
participate in the Plan shall also have discretion to make
appropriate adjustments in the number and type of Shares subject
to restricted Share grants then outstanding under the Plan
pursuant to the terms of such grants or otherwise.
Section 10. Grant of Restricted Shares. An Eligible
Director shall be entitled to a grant of Shares for any Term of
Office ending after the Effective Date. As soon as practicable
after the beginning of each Term of Office, the Secretary of
Energy shall issue to each Grantee a number of restricted Shares
determined by dividing:
(a) an amount equal to the product of:
(i) three (3) or, if the Grantee's Term of
Office for which the grant relates is for a period
of less than three (3) years, the number of years,
with fractional years computed to the nearest
twelfth (12th), in such Term of Office; and
(ii) one-third (1/3) of the Grantee's annual
rate of remuneration (exclusive of any Attendance
Fees) from the Participating Companies in effect
on such date;
by
(b) the average of the daily averages of the high and low
sales price of the Shares for the five (5) consecutive
trading days immediately preceding the first day of
such Term of Office (as reported in The Wall Street
Journal),
rounding up or down any fractional Share to the nearest whole
Share.
Section 11. Restrictions on Transferability. Until the
lifting of the restrictions on the Shares granted under Section
10 hereof, no Shares granted under Section 10 of the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent
and distribution. The Period of Restriction with respect to any
Share granted under Section 10 shall expire upon the first to
occur of the following:
(a) the expiration of the Term of Office for which the
grant relates without effect to any extension of such
Term of Office because of the failure to elect a
successor Director,
(b) the Grantee's death or Disability,
(c) the involuntary termination of the Grantee's status as
a Director of the Participating Companies by the
Participating Companies,
(d) conditioned upon the approval of the majority of
the Directors other than the affected Grantee, the
Grantee's voluntary termination of his status as a
Director of Energy before the expiration of the Term of
Office for which the grant relates because of health
problems or, in the case of a Grantee whose principal
place of residence at the beginning of his Term of
Office is Indiana, because of the relocation of his
principal place of residence outside of Indiana and
such voluntary termination is not approved by the
majority of the Directors of Energy other than the
affected Grantee; or
(e) a Change in Control of Energy;
provided, however, that under no circumstances shall the Shares
be transferable and free of restriction before the expiration of
a six (6) month period beginning on the first day of the Term of
Office or, if later, their date of issuance.
Section 12. Certificate Legend. Each certificate
representing restricted Shares granted pursuant to Section 10 of
this Plan shall bear the following legend:
"The sale or other transfer of the shares represented
by this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on
transfer set forth in the Indiana Energy, Inc. Directors
Restricted Stock Plan and rules of administration adopted
pursuant to such Plan. A copy of the Directors Restricted
Stock Plan and the rules of such Plan may be obtained from
the Secretary of Indiana Energy, Inc."
Once the restricted Shares are released from the restrictions set
forth in Section 11 hereof, the Grantee shall be entitled to have
the legend required by this Section 12 removed from such Share
certificate(s).
Section 13. Voting Rights. During the Period of
Restriction, Grantees holding restricted Shares granted hereunder
may exercise full voting rights with respect to those Shares.
Section 14. Dividends and Other Distributions. During the
Period of Restriction, Grantees holding restricted Shares granted
under Section 10 shall be entitled to receive all dividends and
other distributions paid with respect to those Shares while they
are so held. If any such dividends or distributions are paid in
Shares, such Shares shall be subject to the same restrictions on
transferability as the restricted Shares with respect to which
they were paid.
Section 15. Lifting of Restrictions and Forfeiture of
Shares. The restricted Share grants under Section 10 of the Plan
shall be lifted automatically upon the expiration of the Period
of Restriction. If a Grantee voluntarily terminates his status
as a Director of Energy before the expiration of the Period of
Restriction of any grant and except as otherwise provided by
Section 11(d), any Shares still held by the Grantee subject to
restriction shall be immediately forfeited.
Section 16. Elective Purchases of Shares. Eligible
Directors shall also be permitted to receive the portion of their
calendar year remuneration not already granted in restricted
Shares as provided in Section 10 (exclusive of Attendance Fees)
in Shares rather than cash in accordance with the following
provisions:
(a) Election to Participate. Any Eligible Director may
elect to receive the remaining portion of his calendar
year remuneration not already granted in restricted
Shares as provided in Section 10 (exclusive of
Attendance Fees) from the Participating Companies in
Shares rather than cash by tendering an irrevocable
written election to the Secretary of Energy before the
beginning of the calendar year for which the election
relates; provided, however, that with respect to the
Eligible Director's initial term of office, the
Director shall be provided a reasonable time period by
the Compensation Committee after his or her election to
the Board to make the elective purchase of shares under
this Section 16 for the remainder of the calendar year
during which his or her Term of Office commences. To
the extent the Term of Office of an Eligible Director
who elects to receive the remaining portion of his
annual remuneration in Shares expires in January of the
calendar year for which the election relates and such
Eligible Director is not re-elected to a new Term of
Office as a Director of a Participating Company, such
Director's election shall be null and void. An
Eligible Director who does not elect for his annual
remuneration to be paid in Shares shall receive his
remuneration in cash at such times that such
remuneration is otherwise due.
(b) Issuance of Shares. If an Eligible Director elects
under this Section to receive the portion of his annual
remuneration available to him in cash in Shares, such
Shares shall be issued to him by the Secretary of
Energy as soon as practicable after the election as an
Eligible Director. The number of Shares to be issued
under this Section to an electing Eligible Director
shall be determined by dividing:
(i) the Eligible Director's annual
remuneration (exclusive of the portion of his
annual remuneration payable in restricted Shares
under Section 10 and exclusive of Attendance Fees)
from the Participating Companies in effect
immediately following the annual shareholders'
meeting of Energy for such calendar year (or, in
the case of the Eligible Director's initial term
of office, the remuneration that (but for the
election under this Section) would have been
payable to the Director in the calendar year
during which his initial term of office
commences), by
(ii) the average of the daily averages of the
high and low sales price of the Shares for the
five (5) consecutive trading days immediately
preceding Energy's shareholder meeting for such
calendar year (or, in the case of the Eligible
Director's initial term of office, the five (5)
consecutive trading days immediately preceding the
commencement of his term of office), as reported
in The Wall Street Journal, rounding up or down
any fractional Share to the nearest whole Share.
Any fractional Shares shall be paid to the Director in
cash.
(c) No Restrictions. Any Shares issued under this Section
16 shall be free of any restrictions under this Plan
except for restrictions applicable under the 1934 Act.
Section 17. Amendment and Termination. The Board of Energy
may amend, modify, alter, or terminate the Plan; provided,
however, that without the approval of the Energy shareholders:
(a) the number of Shares which may be reserved for issuance
under the Plan may not be increased except as provided
in Section 9 hereof;
(b) the class of individuals to whom grants may be granted
under the Plan shall not be modified materially;
(c) the manner in which Shares are granted shall not be
modified materially; and
(d) the benefits accruing to Grantees under the Plan shall
not be increased materially.
Section 18. Indemnification. Each person who is or shall
have been a member of the Board or the Compensation Committee
shall be indemnified and held harmless by Energy against and from
any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all
amounts paid by him in settlement thereof with Energy's approval,
or paid by him in satisfaction of a judgment in any such action,
suit or proceeding against him, provided he shall give Energy an
opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his behalf. The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be
entitled under the Energy Articles of Incorporation or Code of
By-Laws, as a matter of law, or otherwise, or any power that
Energy may have to indemnify them or hold them harmless.
Section 19. Governing Law. The Plan, and all grants and
other documents delivered hereunder, shall be construed in
accordance with and governed by the laws of Indiana.
Section 20. Expenses of Plan. The expenses of
administering the Plan shall be borne by Energy.
Section 21. Successors. The Plan shall be binding upon the
successors and assigns of the Participating Employers.
This Second Amendment to and Complete Restatement of the
Indiana Energy, Inc. Directors' Restricted Stock Plan was
approved by the Board of Directors of Indiana Energy, Inc. on
April 25, 1997.
INDIANA ENERGY, INC.
By
Its: Chairman of the Board
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana
Energy, Inc.'s consolidated financial statements as of June 30, 1997, and for
the nine months then ended and is qualified in tis entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 610,722
<OTHER-PROPERTY-AND-INVEST> 28,239
<TOTAL-CURRENT-ASSETS> 41,255
<TOTAL-DEFERRED-CHARGES> 12,612
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 692,828
<COMMON> 144,710
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 181,901
<TOTAL-COMMON-STOCKHOLDERS-EQ> 326,611
0
0
<LONG-TERM-DEBT-NET> 142,899
<SHORT-TERM-NOTES> 12,550
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 35,272
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 175,496
<TOT-CAPITALIZATION-AND-LIAB> 692,828
<GROSS-OPERATING-REVENUE> 471,909
<INCOME-TAX-EXPENSE> 26,361
<OTHER-OPERATING-EXPENSES> 390,336
<TOTAL-OPERATING-EXPENSES> 416,697
<OPERATING-INCOME-LOSS> 55,212
<OTHER-INCOME-NET> 5,528
<INCOME-BEFORE-INTEREST-EXPEN> 60,740
<TOTAL-INTEREST-EXPENSE> 12,640
<NET-INCOME> 48,100
0
<EARNINGS-AVAILABLE-FOR-COMM> 48,100
<COMMON-STOCK-DIVIDENDS> 19,171
<TOTAL-INTEREST-ON-BONDS> 10,477
<CASH-FLOW-OPERATIONS> 94,652
<EPS-PRIMARY> 2.13
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</TABLE>
