May 14, 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
March 31, 1997, pursuant to the requirements of Section 13
of the Securities Exchange Act of 1934.
Very truly yours,
/s/Douglas S. Schmidt
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 March 31, 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 22,580,998 April 30, 1997
Class Number of shares Date
TABLE OF CONTENTS
Page
Numbers
Part I - Financial Information
Consolidated Balance Sheets
at March 31, 1997, and 1996
and September 30, 1996
Consolidated Statements of Income
Three Months Ended March 31, 1997 and 1996,
Six Months Ended March 31, 1997 and 1996,
and Twelve Months Ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1997 and 1996,
and Twelve Months Ended March 31, 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 4 - Submission of Matters to a Vote of Security
Holders
Item 6 - Exhibits and Reports on Form 8-K
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands - Unaudited)
March 31 September 30
1997 1996 1996
<S> <C> <C> <C>
UTILITY PLANT:
Original cost $955,223 $896,411 $931,092
Less - Accumulated depreciation and amortization 350,362 334,684 344,268
604,861 561,727 586,824
NONUTILITY PLANT AND OTHER INVESTMENTS - NET 19,980 8,837 10,338
CURRENT ASSETS:
Cash and cash equivalents 18 36,694 20
Accounts receivable, less reserves of
$3,220, $2,990 and $1,853, respectively 45,841 67,940 14,598
Accrued unbilled revenues 25,104 33,300 8,158
Materials and supplies - at average cost 3,820 4,178 4,611
Liquefied petroleum gas - at average cost 860 527 507
Gas in underground storage - at last-in,
first-out cost 467 10,997 39,083
Recoverable gas costs 15,097 - 2,710
Prepayments and other 789 982 46
91,996 154,618 69,733
DEFERRED CHARGES:
Unamortized debt discount and expense 7,271 6,898 7,585
Other 7,674 9,799 7,983
14,945 16,697 15,568
$731,782 $741,879 $682,463
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDERS' EQUITY AND LIABILITIES
(Thousands - Unaudited)
March 31 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,
22,531,102 and 22,474,402 shares, respectively $146,508 $145,231 $143,875
Less unearned compensation - restricted stock grants 2,002 723 525
144,506 144,508 143,350
Retained earnings 181,826 168,646 152,972
Total common shareholders' equity 326,332 313,154 296,322
Long-term debt 142,882 197,118 178,063
469,214 510,272 474,385
CURRENT LIABILITIES:
Maturities and sinking fund requirements
of long-term debt 35,272 267 272
Notes payable 42,300 3,800 28,036
Accounts payable 31,458 68,404 34,192
Refundable gas costs - 3,563 -
Customer deposits and advance payments 5,680 3,638 14,256
Accrued taxes 19,893 25,643 4,206
Accrued interest 2,632 2,910 2,552
Other current liabilities 25,259 27,773 27,356
162,494 135,998 110,870
DEFERRED CREDITS:
Deferred income taxes 67,977 65,787 66,862
Unamortized investment tax credit 10,709 11,639 11,173
Regulatory income tax liability 2,835 3,797 2,835
Other 18,553 14,386 16,338
100,074 95,609 97,208
COMMITMENTS AND CONTINGENCIES (see Notes 7 & 9) - - -
$731,782 $741,879 $682,463
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share data)
(Unaudited)
Three Months Six Months
Ended March 31 Ended March 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
UTILITY OPERATING REVENUES $ 215,695 $ 222,553 $ 388,176 $ 376,862
COST OF GAS 140,345 144,017 250,181 233,214
MARGIN 75,350 78,536 137,995 143,648
UTILITY OPERATING EXPENSES:
Other operation and maintenance 20,378 23,018 39,615 41,708
Depreciation and amortization 8,787 8,230 17,411 16,348
Income taxes 13,994 14,593 23,862 25,998
Taxes other than income taxes 5,038 5,415 9,694 9,660
48,197 51,256 90,582 93,714
UTILITY OPERATING INCOME 27,153 27,280 47,413 49,934
INTEREST 4,449 4,088 8,734 8,080
OTHER (435) (638) (879) (904)
4,014 3,450 7,855 7,176
UTILITY INCOME 23,139 23,830 39,558 42,758
NONUTILITY INCOME 1,210 2,404 2,076 2,569
NET INCOME $ 24,349 $ 26,234 $ 41,634 $ 45,327
AVERAGE COMMON SHARES OUTSTANDING 22,580 22,535 22,579 22,537
EARNINGS PER AVERAGE SHARE OF
COMMON STOCK $ 1.07 $ 1.16 $ 1.84 $ 2.01
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share data)
(Unaudited)
Twelve Months
Ended March 31
1997 1996
<S> <C> <C>
UTILITY OPERATING REVENUES $ 541,908 $ 517,142
COST OF GAS 337,098 306,649
MARGIN 204,810 210,493
UTILITY OPERATING EXPENSES:
Other operation and maintenance 82,043 79,866
Depreciation and amortization 34,295 32,220
Income taxes 21,038 26,010
Taxes other than income taxes 16,402 15,535
153,778 153,631
UTILITY OPERATING INCOME 51,032 56,862
INTEREST 16,561 15,787
OTHER (959) (1,852)
15,602 13,935
UTILITY INCOME 35,430 42,927
NONUTILITY INCOME 3,078 2,406
NET INCOME $ 38,508 $ 45,333
AVERAGE COMMON SHARES OUTSTANDING 22,534 22,549
EARNINGS PER AVERAGE SHARE OF
COMMON STOCK $ 1.71 $ 2.01
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands - Unaudited)
Six Months Twelve Months
Ended March 31 Ended March 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 41,634 $ 45,327 $ 38,508 $ 45,333
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 17,505 16,459 34,487 32,440
Deferred income taxes 1,115 691 1,228 3,081
Investment tax credit (465) (465) (930) (930)
Undistributed earnings of unconsolidated affiliates (3,231) (58) (4,201) (226)
14,924 16,627 30,584 34,365
Changes in assets and liabilities -
Receivables - net (48,189) (81,042) 30,295 (44,056)
Inventories 39,054 48,465 10,555 22,864
Accounts payable, customer deposits,
advance payments and other current liabilities (13,407) 9,210 (37,418) 42,854
Accrued taxes and interest 15,767 18,051 (6,028) 2,099
Refundable/recoverable gas costs (12,387) (1,320) (18,660) (21,921)
Prepayments (743) (854) 209 75
Other - net 2,318 2,109 5,072 5,642
Total adjustments (2,663) 11,246 14,609 41,922
Net cash flows from operations 38,971 56,573 53,117 87,255
CASH FLOWS FROM (REQUIRED FOR) FINANCING
ACTIVITIES:
Repurchase of common stock - (760) (1,356) (760)
Sale of long-term debt 32 21,035 65 41,847
Reduction in long-term debt (213) (213) (19,296) (259)
Net change in short-term borrowings 14,264 (2,225) 38,500 (12,100)
Dividends on common stock (12,780) (12,348) (25,328) (24,470)
Net cash flows from (required for) financing activities 1,303 5,489 (7,415) 4,258
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (36,676) (23,610) (79,447) (52,504)
Net change in nonutility plant and other investments (3,600) (1,778) (2,931) (2,335)
Net cash flows required for investing activities (40,276) (25,388) (82,378) (54,839)
NET INCREASE (DECREASE) IN CASH (2) 36,674 (36,676) 36,674
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 20 36,694 20
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18 $ 36,694 $ 18 $ 36,694
</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
interest in ProLiance Energy, LLC (see Note 9).
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>
Six Months Ended Twelve Months Ended
March 31 March 31
Thousands 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest (net of
amount capitalized) $ 8,163 $ 7,806 $16,173 $14,802
Income taxes $12,015 $12,312 $30,311 $25,842
</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 March 1997,
the cost of replacing the current portion of gas in
underground storage exceeded last-in, first-out cost at
March 31, 1997, by approximately $12,292,000.
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 Six Months Ended Twelve Months Ended
March 31 March 31 March 31
Thousands 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
AFUDC-Borrowed Funds $151 $ 71 $308 $155 $436 $262
AFUDC-Equity Funds 124 58 252 127 357 215
Total AFUDC Capitalized $275 $129 $560 $282 $793 $477
</TABLE>
7. 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 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
March 31, 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 $14.8 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.
8. 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.
9. Nonutility Income.
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.
Indiana Energy's gas marketing affiliates' contribution
to nonutility income is listed below.
<TABLE>
Three Months Ended Six Months Ended Twelve Months Ended
March 31 March 31 March 31
Thousands 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Nonutility income (loss):
Gas marketing affiliates,
net of reserve $1,398 $2,521 $2,352 $2,684 $2,886 $2,710
Other - net (188) (117) (276) (115) 192 (304)
$1,210 $2,404 $2,076 $2,569 $3,078 $2,406
</TABLE>
Two proceedings which may affect the formation,
operation or earnings of ProLiance are currently pending
before the IURC. The first proceeding was initiated by
a small group of Indiana Gas' and Citizens Gas' large-
volume customers who contend that the gas service
contracts between ProLiance and Indiana Gas and Citizens
Gas should be disapproved by the IURC or, alternatively,
that the IURC should regulate the operations of
ProLiance. On September 27, 1996, the IURC issued a
partial decision in that proceeding and found that
ProLiance is not subject to regulation as a public
utility. The IURC did confirm that it will continue to
monitor gas costs incurred by Indiana Gas. Hearings on
the remaining issues were concluded on October 9, 1996.
A decision from the IURC is expected during the first
half of calendar 1997.
The second proceeding involves the quarterly gas cost
adjustment applications of Indiana Gas and Citizens Gas
wherein these utilities are proposing to recover the
costs they have and will incur under their gas supply
and related agreements with ProLiance. This proceeding
will consider whether the recovery of those costs is
consistent with Indiana law governing gas cost recovery.
The hearing on the second proceeding has not yet been
scheduled.
As a result of the two on-going proceedings, $4.1
million of Indiana Energy's share of its gas marketing
affiliates' net income has been reserved until the
outcome of these proceedings can be determined.
10. Affiliate Transactions.
ProLiance began providing natural gas supply and related
services to Indiana Gas effective April 1, 1996.
Indiana Gas' purchases from ProLiance for the three-,
six- and twelve-month periods ended March 31, 1997,
totalled $97.7 million, $200.8 million and $318.8
million, respectively. Amounts owed by Indiana Gas to
ProLiance were $21.1 million at March 31, 1997, and are
included in Accounts Payable on the Consolidated Balance
Sheet.
As of March 31, 1997, ProLiance has an available letter
of credit with a bank to borrow up to $30 million.
Borrowings are secured by a support agreement signed by
Indiana Energy and Citizens Gas.
11. Reclassifications.
Certain reclassifications have been made to the prior
periods' financial statements to conform to the current
year presentation. These reclassifications have no
impact on 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., Energy Realty, Inc. and Indiana Energy Services,
Inc. (IES), indirect wholly-owned subsidiaries of Indiana
Energy, as well as the 50-percent interest in ProLiance
Energy, LLC (see ProLiance Energy, LLC). Though Indiana
Energy will continue to consider nonutility opportunities
for investment, its principal business is expected to
continue to be gas distribution.
Utility income, net income and earnings per average
share of common stock for the three-, six- and
twelve-month periods ended March 31, 1997, when compared
to the same periods one year ago, are listed below. The
decreases in utility income for the three- and six-month
periods are primarily attributable to significantly warmer
weather than last year, offset somewhat by lower operation
and maintenance expenses, as well as the addition of new
residential and commercial customers. The twelve-month
utility earnings reflect weather 8 percent warmer than
last year, offset somewhat by the addition of new
residential and commercial customers. Higher operation
and maintenance expenses, resulting in part from the
acceleration of several distribution system maintenance
projects into the last half of fiscal year 1996, also
contributed to the decline in utility income for the
twelve-month period. The acceleration of these projects
was made possible by higher earnings attributable to
colder than normal weather during the 1996 heating season.
The differences in net income for all periods additionally
reflect the earnings recognized from Indiana Energy's gas
marketing affiliates.
<TABLE>
Three Months Ended Six Months Ended Twelve Months Ended
March 31 March 31 March 31
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Utility income
(millions of dollars) $23.1 $23.8 $39.6 $42.8 $35.4 $42.9
Net income
(millions of dollars) $24.3 $26.2 $41.6 $45.3 $38.5 $45.3
Earnings per average
share of common stock $1.07 $1.16 $1.84 $2.01 $1.71 $2.01
</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 March 31, 1997, decreased
$3.2 million compared to the same period last year. The
decrease reflects weather 12 percent warmer than the same
period last year and 7 percent warmer than normal, offset
somewhat by the addition of new residential and commercial
customers.
Margin for the six-month period ended March 31, 1997,
decreased $5.7 million compared to the same period last
year. The decrease is primarily attributable to weather
10 percent warmer than the same period last year and 4
percent warmer than normal, offset somewhat by the
addition of new residential and commercial customers.
Margin for the twelve-month period ended March 31,
1997, decreased $5.7 million compared to the same period
last year. The decrease is primarily attributable to
weather that was 8 percent warmer than the same period
last year and 2 percent warmer than normal, offset
somewhat by the addition of new residential and commercial
customers.
Total system throughput (combined sales and
transportation) decreased 6 percent (3.1 MMDth) for the
second quarter of fiscal 1997, 5 percent (4.9 MMDth) for
the six-month period and 3 percent (3.6 MMDth) for the
twelve-month period ended March 31, 1997, 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 increased
to $3.89 for the three-month period ended March 31, 1997,
compared to $3.56 for the same period one year ago. For
the six-month period, cost of gas per unit increased to
$3.97 in the current period compared to $3.14 for the same
period last year. For the twelve-month period, cost of
gas per unit increased to $3.65 in the current period
compared to $2.83 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 decreased $2.6
million and $2.1 million for the three- and six-month
periods ended March 31, 1997, respectively, when compared
to the same periods one year ago. The decreases are
primarily due to lower labor-related costs, including
performance-based compensation.
Operation and maintenance expenses for the twelve-
month period increased $2.2 million when compared to the
same period last year due in part from the acceleration of
several distribution system maintenance projects into the
last half 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-, six- and twelve-month periods ended March 31,
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 decreased for the three-
, six- and twelve-month periods ended March 31, 1997, when
compared to the same periods one year ago due to lower
taxable utility income.
Taxes other than income taxes remained approximately
the same for the three- and six-month periods ended March
31, 1997, when compared to the same periods one year ago.
Taxes other than income taxes increased for the twelve-
month period due to higher property tax expense and higher
gross receipts tax expense resulting from increased
revenue.
Interest Expense
Interest expense increased for the three-, six- and
twelve-month periods ended March 31, 1997, when compared
to the same periods one year ago due to an increase in
average debt outstanding slightly offset by a decrease in
interest rates.
Nonutility Income
Nonutility income decreased for the three- and six-
month periods ended March 31, 1997, while increasing for
the twelve-month period, when compared to the same periods
one year ago. The changes in nonutility income for all
periods primarily 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 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 (see ProLiance Energy, LLC below).
Other Operating Matters
ProLiance Energy, LLC
Two proceedings which may affect the formation,
operation or earnings of ProLiance are currently pending
before the IURC. The first proceeding was initiated by a
small group of Indiana Gas' and Citizens Gas' large-volume
customers who contend that the gas service contracts
between ProLiance and Indiana Gas and Citizens Gas should
be disapproved by the IURC or, alternatively, that the
IURC should regulate the operations of ProLiance. On
September 27, 1996, the IURC issued a partial decision in
that proceeding and found that ProLiance is not subject to
regulation as a public utility. The IURC did confirm that
it will continue to monitor gas costs incurred by Indiana
Gas. Hearings on the remaining issues were concluded on
October 9, 1996. A decision from the IURC is expected
during the first half of calendar 1997.
The second proceeding involves the quarterly gas cost
adjustment applications of Indiana Gas and Citizens Gas
wherein these utilities are proposing to recover the costs
they have and will incur under their gas supply and
related agreements with ProLiance. This proceeding will
consider whether the recovery of those costs is consistent
with Indiana law governing gas cost recovery. The hearing
on the second proceeding has not yet been scheduled.
As a result of the two on-going proceedings, $4.1
million of Indiana Energy's 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, Inc., an indirect wholly
owned subsidiary of Indiana Energy, and Citizens By-
Products Coal Company, a wholly owned subsidiary of
Citizens Gas and Coke Utility (Citizens Gas), formed
CIGMA, a jointly and equally owned limited liability
company. CIGMA will provide materials acquisition and
related services for Indiana Gas and Citizens Gas, as well
as similar services for third parties.
Environmental Matters
Indiana Gas is currently conducting environmental
investigations and work at certain sites that were the
locations of former manufactured gas plants. It is
seeking to recover the costs of the investigations and
work from insurance carriers, other potentially
responsible parties (PRPs) and customers.
On May 3, 1995, Indiana Gas received an order from the
IURC in which the Commission concluded that the costs
incurred by Indiana Gas to investigate and, if necessary,
clean-up former manufactured gas plant sites are not
utility operating expenses necessary for the provision of
service and, therefore, are not recoverable as operating
expenses from utility customers. 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
March 31, 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 $14.8 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 $68.0 million
of which $36.7 million have been expended during the six-
month period ended March 31, 1997. For the twelve months
ended March 31, 1997, Indiana Gas' capital expenditures
totaled $79.4 million. Of this amount, 56 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
approximately 75 percent of its construction program.
Capitalization objectives for Indiana Gas are 55-65
percent common equity and 35-45 percent long-term debt.
This will help Indiana Gas to maintain its high
creditworthiness. The long-term debt of Indiana Gas is
currently rated Aa3 by Moody's Investors Service and AA- by
Standard & Poor's Corporation.
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
Certain matters discussed in Management's Discussion and
Analysis are forward-looking. These forward-looking
discussions reflect the company's current best estimates
regarding future operations. Since these are only
estimates, actual results could be materially different.
Several factors, some of which are outside of the company's
control and cannot be accurately and conclusively
predicted, may materially affect estimates of future
operations. Such factors include the effect of weather on
gas consumption, particularly in the residential market,
the effect of general economic conditions on gas
consumption, particularly in industrial and commercial
markets, the direction and pace of change in state and
federal regulation on both the gas and electric industries,
and the effects of competition on markets where prices and
providers have been regulated.
Indiana Energy, Inc. and Subsidiary Companies
Part II - Other Information
Item 1. Legal Proceedings
See Note 7 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 4. Submission of Matters to a Vote of Security
Holders
At the annual meeting of shareholders of Indiana
Energy, Inc. on January 22, 1997, (the "Annual
Meeting"), the shareholders elected the following
directors by the vote specified opposite each
director's name:
<TABLE>
Broker
Director Votes For Votes Withheld Abstentions Non-Vote
<S> <C> <C> <C> <C>
Loren K. Evans 18,362,502 243,677 - -
Niel C. Ellerbrook 18,368,794 237,385 - -
Fred A. Poole 18,357,807 248,372 - -
Jean L. Wojtowicz 18,355,443 250,736 - -
</TABLE>
The terms of the other seven board members, Paul T.
Baker, Lawrence A. Ferger, Otto N. Frenzel III, Anton
H. George, Don E. Marsh, Richard P. Rechter and James
C. Shook will expire in January 1998 or January 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3-A Code of By-Laws as Amended and Restated
on April 25, 1997, filed herewith.
27 Financial Data Schedule, filed herewith.
(b) No Current Reports on Form 8-K were filed
during the quarter ended March 31, 1997.
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 May 14, 1997 /s/Niel C. Ellerbrook
Niel C. Ellerbrook
Executive Vice President, Treasurer
and Chief Financial Officer
Dated May 14, 1997 /s/Jerome A. Benkert
Jerome A. Benkert
Controller
CODE OF BY-LAWS
OF
INDIANA ENERGY, INC.
AS AMENDED AND RESTATED
IN FULL ON JULY 1, 1987
AS FURTHER AMENDED OCTOBER 27, 1989
AS FURTHER AMENDED AUGUST 31, 1990
AS FURTHER AMENDED JULY 26, 1991
AS FURTHER AMENDED SEPTEMBER 24, 1993
AS FURTHER AMENDED FEBRUARY 25, 1994
AS FURTHER AMENDED JULY 28, 1995
AS FURTHER AMENDED APRIL 26, 1996
AS FURTHER AMENDED JULY 26, 1996
AS FURTHER AMENDED APRIL 25, 1997
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office (the
"Principal Office") of INDIANA ENERGY, INC. (the
"Corporation") shall be at the registered office of the
Corporation, or such other place as shall be determined by
resolution of the Board of Directors of the Corporation (the
"Board").
SECTION 2. OTHER OFFICES. The Corporation may have such
other offices at such other places within or without the State
of Indiana as the Board may from time to time designate, or as
the business of the Corporation may require.
ARTICLE II
SEAL
SECTION 1. CORPORATE SEAL. The corporate seal of the
Corporation (the "Seal") shall be circular in form and shall
have inscribed thereon the words "INDIANA ENERGY, INC. -
CORPORATE SEAL - INDIANA." Use of the Seal or an impression
thereof shall not be required, and shall not affect the
validity of any instrument whatsoever.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETING. Every meeting of the
shareholders of the Corporation (the "Shareholders") shall be
held at the Principal Office, unless a different place is
specified in the notice or waiver of notice of such meeting or
by resolution of the Board or the Shareholders, in which event
such meeting may be held at the place so specified, either
within or without the State of Indiana.
SECTION 2. ANNUAL MEETING. The annual meeting of the
shareholders (the "Annual Meeting") shall be held each year at
10:30 o'clock A.M. on the fourth Wednesday in January, or such
other time or date determined by resolution of the Board, for
the purpose of electing directors of the Corporation
("Directors") and for the transaction of such other business
as may legally come before the Annual Meeting. If for any
reason the Annual Meeting shall not be held at the date and
time specified or fixed as herein provided, the business to be
transacted at such Annual Meeting may be transacted at any
special meeting of the Shareholders (a "Special Meeting")
called for that purpose.
SECTION 3. NOTICE OF ANNUAL MEETING. Written or printed
notice of the Annual Meeting, stating the date, time and place
thereof, shall be delivered or mailed by the Secretary or an
Assistant Secretary to each Shareholder of record entitled to
notice of such Meeting, at such address as appears on the
records of the Corporation, at least ten and not more than
sixty days before the date of such Meeting.
SECTION 4. SPECIAL MEETINGS. Special Meetings, for any
purpose or purposes (unless otherwise prescribed by law), may
be called by the Board, the Chief Executive Officer or the
President, and shall be called by the Chief Executive Officer,
the President or any Vice President at (a) the request in
writing of a majority of the Board, or (b) the written demand,
delivered to the Secretary, of Shareholders holding of record
not less than a majority of the voting power of all the shares
of the Corporation ("Shares") issued and outstanding and
entitled by the Amended and Restated Articles of Incorporation
of the Corporation, as the same may, from time to time, be
amended (the "Articles"), to vote on the business proposed to
be transacted thereat; provided however that, for purposes of
calculating such majority, only shares which have been
beneficially owned or held of record by the holders thereof
for at least three (3) years shall be included. All requests
or demands for Special Meetings shall state the purpose or
purposes thereof, and the business transacted at such Meeting
shall be confined to the purposes stated in the call and
matters germane thereto.
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written or
printed notice of all Special Meetings, stating the date,
time, place and purpose or purposes thereof, shall be
delivered or mailed by the Secretary or the Chief Executive
Officer, the President or the Vice President calling the
Meeting to each Shareholder of record entitled to notice of
such Meeting, at such address as appears on the records of the
Corporation, at least ten and not more than sixty days before
the date of such Meeting. Notice of any Special Meeting
called at the written demand of Shareholders shall be
delivered or mailed within sixty days of the Secretary's
receipt of such demand.
SECTION 6. WAIVER OF NOTICE OF MEETINGS. Notice of any
Annual or Special Meeting (a "Meeting") may be waived in
writing by any Shareholder, before or after the date and time
of the Meeting specified in the notice thereof, by a written
waiver delivered to the Corporation for inclusion in the
minutes or filing with the corporate records. A Shareholder's
attendance at any Meeting in person or by proxy shall
constitute a waiver of (a) notice of such Meeting, unless the
Shareholder at the beginning of the Meeting objects to the
holding of or the transaction of business at the Meeting, and
(b) consideration at such Meeting of any business that is not
within the purpose or purposes described in the Meeting
notice, unless the Shareholder objects to considering the
matter when it is presented.
SECTION 7. QUORUM. At any Meeting, the holders of a
majority of the voting power of Shares issued and outstanding
and entitled to vote at such Meeting, represented in person or
by proxy, shall constitute a quorum for the election of
Directors or for the transaction of other business, unless
otherwise provided by law, the Articles or this Code of By-
Laws, as the same may, from time to time, be amended (these
"By-Laws"). If, however, a quorum shall not be present or
represented at any Meeting, the Shareholders entitled to vote
thereat, present in person or represented by proxy, shall have
power to adjourn the Meeting from time to time, without notice
other than announcement at the Meeting of the date, time and
place of the adjourned Meeting, unless the date of the
adjourned Meeting requires that the Board fix a new record
date (the "Record Date") therefor, in which case notice of the
adjourned Meeting shall be given. At such adjourned Meeting,
if a quorum shall be present or represented, any business may
be transacted that might have been transacted at the Meeting
as originally scheduled.
SECTION 8. VOTING. At each Meeting, every Shareholder
entitled to vote shall have one vote for each Share standing
in his name on the books of the Corporation as of the Record
Date fixed by the Board for such Meeting, except as otherwise
provided by law or the Articles, and except that no Share
shall be voted at any Meeting upon which any installment is
due and unpaid. Voting for Directors and, upon the demand of
any Shareholder, voting upon any question properly before a
Meeting, shall be by ballot. A plurality vote shall be
necessary to elect any Director, and on all other matters, the
action or a question shall be approved if the number of votes
cast thereon in favor of the action or question exceeds the
number of votes cast opposing the action or question, except
as otherwise provided by law or the Articles.
SECTION 9. SHAREHOLDER LIST. The Secretary shall
prepare before each Meeting a complete list of the
Shareholders entitled to notice of such Meeting, arranged in
alphabetical order by class of Shares (and each series within
a class), and showing the address of, and the number of Shares
entitled to vote held by, each Shareholder (the "Shareholder
List"). Beginning five business days before the Meeting and
continuing throughout the Meeting, the Shareholder List shall
be on file at the Principal Office or at a place identified in
the Meeting notice in the city where the Meeting will be held,
and shall be available for inspection by any Shareholder
entitled to vote at the Meeting. On written demand, made in
good faith and for a proper purpose and describing with
reasonable particularity the Shareholder's purpose, and if the
Shareholder List is directly connected with the Shareholder's
purpose, a Shareholder (or such Shareholder's agent or
attorney authorized in writing) shall be entitled to inspect
and to copy the Shareholder List, during regular business
hours and at the Shareholder's expense, during the period the
Shareholder List is available for inspection. The original
stock register or transfer book (the "Stock Book"), or a
duplicate thereof kept in the State of Indiana, shall be the
only evidence as to who are the Shareholders entitled to
examine the Shareholder List, or to notice of or to vote at
any Meeting.
SECTION 10. PROXIES. A Shareholder may vote either in
person or by proxy executed in writing by the Shareholder or a
duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from the date of its execution, unless a
longer time is expressly provided therein.
SECTION 11. NOTICE OF SHAREHOLDER BUSINESS. At any
meeting of the shareholders, only such business may be
conducted as shall have been properly brought before the
meeting, and as shall have been determined to be lawful and
appropriate for consideration by shareholders at the meeting.
To be properly brought before a meeting, business must be (a)
specified in the notice of meeting given in accordance with
Section 3 or 5 of this Article III, (b) otherwise properly
brought before the meeting by or at the direction of the board
of directors or the chief executive officer, or (c) otherwise
properly brought before the meeting by a shareholder. For
business to be properly brought before a meeting by a
shareholder pursuant to clause (c) above, the shareholder must
have given timely notice thereof in writing to the secretary
of the Corporation. To be timely, a shareholder's notice must
be delivered to, or mailed and received at, the principal
office of the Corporation, not less than fifty days nor more
than ninety days prior to the meeting; provided, however, that
in the event that less than sixty days' notice of the date of
the meeting is given to shareholders, notice by the
shareholder to be timely must be so received not later than
the close of business on the tenth day following the day on
which such notice of the date of the meeting was given. A
shareholder's notice to the secretary shall set forth as to
each matter the shareholder proposes to bring before the
meeting (a) a brief description of the business desired to be
brought before the meeting, (b) the name and address, as they
appear on the Corporation's stock records, of the shareholder
proposing such business, (c) the class and number of shares of
the Corporation which are beneficially owned by the
shareholder, and (d) any interest of the shareholder in such
business. Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at a meeting except
in accordance with the procedures set forth in this Section
11. The person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that business
was not properly brought before the meeting in accordance with
the by-laws, or that business was not lawful or appropriate
for consideration by shareholders at the meeting, and if he
should so determine, he shall so declare to the meeting and
any such business shall not be transacted.
SECTION 12. NOTICE OF SHAREHOLDER NOMINEES. Nominations
of persons for election to the Board of Directors of the
Corporation may be made at any meeting of shareholders by or
at the direction of the Board of Directors or by any
shareholder of the Corporation entitled to vote for the
election of directors at the meeting. Shareholder nominations
shall be made pursuant to timely notice given in writing to
the Secretary of the Corporation in accordance with Section 11
of this Article III. Such shareholder's notice shall set
forth, in addition to the information required by Section 11,
as to each person whom the shareholder proposes to nominate
for election or re-election as a director, (i) the name, age,
business address and residence address of such person, (ii)
the principal occupation or employment of such person, (iii)
the class and number of shares of the Corporation which are
beneficially owned by such person, (iv) any other information
relating to such person that is required to be disclosed in
solicitation of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended
(including, without limitation, such person's written consent
to being named in the proxy statement as a nominee and to
serving as a director, if elected), and (v) the qualifications
of the nominee to serve as a director of the Corporation. No
shareholder nomination shall be effective unless made in
accordance with the procedures set forth in this Section 12.
The person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that a
shareholder nomination was not made in accordance with the by-
laws, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. NUMBER. The business and affairs of the
Corporation shall be managed by a Board of twelve (12)
Directors, divided into three classes as provided in the
Articles. The Board may elect or appoint, from among its
members, a Chairman of the Board (the "Chairman"), who need
not be an Officer or employee of the Corporation. The
Chairman shall preside at all Shareholders Meetings and Board
Meetings and shall have such other powers and perform such
other duties as are incident to such position and as may be
assigned by the Board.
SECTION 2. VACANCIES AND REMOVAL. Any vacancy occurring
in the Board shall be filled as provided in the Articles.
Shareholders shall be notified of any increase in the number
of Directors and the name, principal occupation and other
pertinent information about any Director elected by the Board
to fill any vacancy. Any Director, or the entire Board, may
be removed from office only as provided in the Articles.
SECTION 3. POWERS AND DUTIES. In addition to the powers
and duties expressly conferred upon it by law, the Articles or
these By-Laws, the Board may exercise all such powers of the
Corporation and do all such lawful acts and things as are not
inconsistent with the law, the Articles or these By-Laws.
SECTION 4. ANNUAL BOARD MEETING. Unless otherwise
determined by the Board, the Board shall meet each year
immediately after the Annual Meeting, at the place where such
Meeting has been held, for the purpose of organization,
election of Officers of the Corporation (the "Officers") and
consideration of any other business that may properly be
brought before such annual meeting of the Board (the "Annual
Board Meeting"). No notice shall be necessary for the holding
of the Annual Board Meeting. If the Annual Board Meeting is
not held as above provided, the election of Officers may be
held at any subsequent duly constituted meeting of the Board
(a "Board Meeting").
SECTION 5. REGULAR BOARD MEETINGS. Regular meetings of
the Board ("Regular Board Meetings") may be held at stated
times or from time to time, and at such place, either within
or without the State of Indiana, as the Board may determine,
without call and without notice.
SECTION 6. SPECIAL BOARD MEETINGS. Special meetings of
the Board ("Special Board Meetings") may be called at any time
or from time to time, and shall be called on the written
request of at least two Directors, by the Chairman, the Chief
Executive Officer or the President, by causing the Secretary
or any Assistant Secretary to give to each Director, either
personally or by mail, telephone, telegraph, teletype or other
form of wire or wireless communication at least two days'
notice of the date, time and place of such Meeting. Special
Board Meetings shall be held at the Principal Office or at
such other place, within or without the State of Indiana, as
shall be specified in the respective notices or waivers of
notice thereof.
SECTION 7. WAIVER OF NOTICE AND ASSENT. A Director may
waive notice of any Board Meeting before or after the date and
time of the Board Meeting stated in the notice by a written
waiver signed by the Director and filed with the minutes or
corporate records. A Director's attendance at or
participation in a Board Meeting shall constitute a waiver of
notice of such Meeting and assent to any corporate action
taken at such Meeting, unless (a) the Director at the
beginning of such Meeting (or promptly upon his arrival)
objects to holding of or transacting business at the Meeting
and does not thereafter vote for or assent to action taken at
the Meeting; (b) the Director's dissent or abstention from the
action taken is entered in the minutes of such Meeting; or (c)
the Director delivers written notice of his dissent or
abstention to the presiding Director at such Meeting before
its adjournment, or to the Secretary immediately after its
adjournment. The right of dissent or abstention is not
available to a Director who votes in favor of the action
taken.
SECTION 8. QUORUM. At all Board Meetings, a majority of
the number of Directors designated for the full Board (the
"Full Board") shall be necessary to constitute a quorum for
the transaction of any business, except (a) that for the
purpose of filling of vacancies a majority of Directors then
in office shall constitute a quorum, and (b) that a lesser
number may adjourn the Meeting from time to time until a
quorum is present. The act of a majority of the Board present
at a Meeting at which a quorum is present shall be the act of
the Board, unless the act of a greater number is required by
law, the Articles or these By-Laws.
SECTION 9. AUDIT AND OTHER COMMITTEES OF THE BOARD. The
Board shall, by resolution adopted by a majority of the Full
Board, designate an Audit Committee comprised of two or more
Directors, which shall have such authority and exercise such
duties as shall be provided by resolution of the Board. The
Board may, by resolution adopted by such majority, also
designate other regular or special committees of the Board
("Committees"), in each case comprised of two or more
Directors and to have such powers and exercise such duties as
shall be provided by resolution of the Board.
SECTION 10. RESIGNATIONS. Any Director may resign at
any time by giving written notice to the Board, the Chairman,
the Chief Executive Officer, the President or the Secretary.
Any such resignation shall take effect when delivered unless
the notice specifies a later effective date. Unless otherwise
specified in the notice, the acceptance of such resignation
shall not be necessary to make it effective.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The Officers shall be the Chief
Executive Officer, the President, one or more Vice Presidents,
the Secretary and the Treasurer, and may include one or more
Assistant Secretaries, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers. Any two or
more offices may be held by the same person. The Board may
from time to time elect or appoint such other Officers as it
shall deem necessary, who shall exercise such powers and
perform such duties as may be prescribed from time to time by
these By-Laws or, in the absence of a provision in these By-
Laws in respect thereto, as may be prescribed from time to
time by the Board.
SECTION 2. ELECTION OF OFFICERS. The Officers shall be
elected by the Board at the Annual Board Meeting and shall
hold office for one year or until their respective successors
shall have been duly elected and shall have qualified;
provided, however, that the Board may at any time elect one or
more persons to new or different offices and/or change the
title, designation and duties and responsibilities of any of
the Officers consistent with the law, the Articles and these
By-Laws.
SECTION 3. VACANCIES; REMOVAL. Any vacancy among the
Officers may be filled for the unexpired term by the Board.
Any Officer may be removed at any time by the affirmative vote
of a majority of the Full Board.
SECTION 4. DELEGATION OF DUTIES. In the case of the
absence, disability, death, resignation or removal from office
of any Officer, or for any other reason that the Board shall
deem sufficient, the Board may delegate, for the time being,
any or all of the powers or duties of such Officer to any
other Officer or to any Director.
SECTION 5. CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer shall be a Director and, subject to the control of the
Board, shall have general charge of, and supervision and
authority over, the business and affairs of the Corporation.
If the Chief Executive Officer is not also the Chairman, in
the case of the absence or disability of the Chairman or if no
Chairman shall be elected or appointed by the Board, the Chief
Executive Officer shall preside at all Shareholders' Meetings
and Board Meetings.
SECTION 6. PRESIDENT. The President shall be a
Director, and, subject to the supervision of the Board,
itself, and the Chief Executive Officer, shall have general
charge of, and supervision and authority over, the operations
of the Corporation, and shall have such other powers and
perform such other duties as are incident to this office and
as may be assigned to him by the Board or the Chief Executive
Officer. In the case of the absence, disability, death,
resignation, or removal from office of the Chief Executive
Officer or the vacancy of that office, the powers and duties
of the Chief Executive Officer shall, for the time being,
devolve upon and be exercised by the President, and he shall
thereupon, during such period, exercise and perform all of the
powers and duties of the Chief Executive Officer, except as
may otherwise be provided by the Board.
SECTION 7. VICE PRESIDENTS. Each of the Vice Presidents
shall have such powers and perform such duties as may be
prescribed for him by the Board or delegated to him by the
Chief Executive Officer or the President. In the case of the
absence, disability, death, resignation or removal from office
of the President, the powers and duties of the President
shall, for the time being, devolve upon and be exercised by
the Executive Vice President, if there be one, and if not,
then by such one of the Vice Presidents as the Board, the
Chief Executive Officer or the President may designate, or, if
there be but one Vice President, then upon such Vice
President; and he shall thereupon, during such period,
exercise and perform all of the powers and duties of the
President, except as may be otherwise provided by the Board.
SECTION 8. SECRETARY. The Secretary shall have the
custody and care of the Seal, records, minutes and the Stock
Book of the Corporation; shall attend all Shareholders'
Meetings and Board Meetings, and duly record and keep the
minutes of their proceedings in a book or books to be kept for
that purpose; shall give or cause to be given notice of all
Shareholders' Meetings and Board Meetings when such notice
shall be required; shall file and take charge of all papers
and documents belonging to the Corporation; and shall have
such other powers and perform such other duties as are
incident to the office of secretary of a business corporation,
subject at all times to the direction and control of the
Board, the Chief Executive Officer and the President.
SECTION 9. ASSISTANT SECRETARIES. Each of the Assistant
Secretaries shall assist the Secretary in his duties and shall
have such other powers and perform such other duties as may be
prescribed for him by the Board or delegated to him by the
Chief Executive Officer or the President. In case of the
absence, disability, death, resignation or removal from office
of the Secretary, his powers and duties shall, for the time
being, devolve upon such one of the Assistant Secretaries as
the Board, the Chief Executive Officer, the President or the
Secretary may designate, or, if there be but one Assistant
Secretary, then upon such Assistant Secretary; and he shall
thereupon, during such period, exercise and perform all of the
powers and duties of the Secretary, except as may be otherwise
provided by the Board.
SECTION 10. TREASURER. The Treasurer shall have control
over all records of the Corporation pertaining to moneys and
securities belonging to the Corporation; shall have charge of,
and be responsible for, the collection, receipt, custody and
disbursements of funds of the Corporation; shall have the
custody of all securities belonging to the Corporation; shall
keep full and accurate accounts of receipts and disbursements
in books belonging to the Corporation; and shall disburse the
funds of the Corporation as may be ordered by the Board,
taking proper receipts or making proper vouchers for such
disbursements and preserving the same at all times during his
term of office. When necessary or proper, he shall endorse on
behalf of the Corporation all checks, notes or other
obligations payable to the Corporation or coming into his
possession for or on behalf of the Corporation, and shall
deposit the funds arising therefrom, together with all other
funds and valuable effects of the Corporation coming into his
possession, in the name and the credit of the Corporation in
such depositories as the Board from time to time shall direct,
or in the absence of such action by the Board, as may be
determined by the Chief Executive Officer, the President or
any Vice President. If the Board has not elected a Controller
or an Assistant Controller, or in the absence or disability of
the Controller and each Assistant Controller or if, for any
reason, a vacancy shall occur in such offices, then during
such period the Treasurer shall have, exercise and perform all
of the powers and duties of the Controller. The Treasurer
shall also have such other powers and perform such other
duties as are incident to the office of treasurer of a
business corporation, subject at all times to the direction
and control of the Board, the Chief Executive Officer and the
President.
If required by the Board, the Treasurer shall give the
Corporation a bond, in such an amount and with such surety or
sureties as may be ordered by the Board, for the faithful
performance of the duties of his office and for the
restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in
his possession or under his control belonging to the
Corporation.
SECTION 11. ASSISTANT TREASURERS. Each of the Assistant
Treasurers shall assist the Treasurer in his duties, and shall
have such other powers and perform such other duties as may be
prescribed for him by the Board or delegated to him by the
Chief Executive Officer or the President. In case of the
absence, disability, death, resignation or removal from office
of the Treasurer, his powers and duties shall, for the time
being, devolve upon such one of the Assistant Treasurers as
the Board, the Chief Executive Officer, the President or the
Treasurer may designate, or, if there be but one Assistant
Treasurer, then upon such Assistant Treasurer; and he shall
thereupon, during such period, exercise and perform all the
powers and duties of the Treasurer except as may be otherwise
provided by the Board. If required by the Board, each
Assistant Treasurer shall likewise give the Corporation a
bond, in such amount and with such surety or sureties as may
be ordered by the Board, for the same purposes as the bond
that may be required to be given by the Treasurer.
SECTION 12. CONTROLLER. The Controller shall have
direct control over all accounting records of the Corporation
pertaining to moneys, properties, materials and supplies,
including the bookkeeping and accounting departments; shall
have direct supervision over the accounting records in all
other departments pertaining to moneys, properties, materials
and supplies; shall render to the Chief Executive Officer, the
President and the Board, at Regular Board Meetings or whenever
the same shall be required, an account of all his transactions
as Controller and of the financial condition of the
Corporation; and shall have such other powers and perform such
other duties as are incident to the office of controller of a
business corporation, subject at all times to the direction
and control of the Board, the Chief Executive Officer and the
President.
SECTION 13. ASSISTANT CONTROLLERS. Each of the
Assistant Controllers shall assist the Controller in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the Chief Executive Officer or the
President. In case of the absence, disability, death,
resignation or removal from office of the Controller, his
powers and duties shall, for the time being, devolve upon such
one of the Assistant Controllers as the Board, the Chief
Executive Officer, the President or the Controller may
designate, or, if there be but one Assistant Controller, then
upon such Assistant Controller; and he shall thereupon, during
such period, exercise and perform all the powers and duties of
the Controller, except as may be otherwise provided by the
Board.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. CERTIFICATES. Certificates for Shares
("Certificates") shall be in such form, consistent with law
and the Articles, as shall be approved by the Board.
Certificates for each class, or series within a class, of
Shares, shall be numbered consecutively as issued. Each
Certificate shall state the name of the Corporation and that
it is organized under the laws of the State of Indiana; the
name of the registered holder; the number and class and the
designation of the series, if any, of the Shares represented
thereby; and a summary of the designations, relative rights,
preferences and limitations applicable to such class and, if
applicable, the variations in rights, preferences and
limitations determined for each series and the authority of
the Board to determine such variations for future series;
provided, however, that such summary may be omitted if the
Certificate states conspicuously on its front or back that the
Corporation will furnish the Shareholder such information upon
written request and without charge. Each Certificate shall be
signed (either manually or in facsimile) by (i) the Chief
Executive Officer, the President or a Vice President and (ii)
the Secretary or an Assistant Secretary, or by any two or more
Officers that may be designated by the Board, and may have
affixed thereto the Seal, which may be a facsimile, engraved
or printed.
SECTION 2. RECORD OF CERTIFICATES. Shares shall be
entered in the Stock Book as they are issued, and shall be
transferable on the Stock Book by the holder thereof in
person, or by his attorney duly authorized thereto in writing,
upon the surrender of the outstanding Certificate therefor
properly endorsed.
SECTION 3. LOST OR DESTROYED CERTIFICATES. Any person
claiming a Certificate to be lost or destroyed shall make
affidavit or affirmation of that fact and, if the Board, the
Chief Executive Officer or the President shall so require,
shall give the Corporation and/or the transfer agents and
registrars, if they shall so require, a bond of indemnity, in
form and with one or more sureties satisfactory to the Board,
the Chief Executive Officer or the President and/or the
transfer agents and registrars, in such amount as the Board,
the Chief Executive Officer or the President may direct and/or
the transfer agents and registrars may require, whereupon a
new Certificate may be issued of the same tenor and for the
same number of Shares as the one alleged to be lost or
destroyed.
SECTION 4. SHAREHOLDER ADDRESSES. Every Shareholder
shall furnish the Secretary with an address to which notices
of Meetings and all other notices may be served upon him or
mailed to him, and in default thereof notices may be addressed
to him at his last known address or at the Principal Office.
ARTICLE VII
CORPORATE BOOKS AND RECORDS
SECTION 1. PLACES OF KEEPING. Except as otherwise
provided by law, the Articles or these By-Laws, the books and
records of the Corporation (including the "Corporate Records,"
as defined in the Articles) may be kept at such place or
places, within or without the State of Indiana, as the Board
may from time to time by resolution determine or, in the
absence of such determination by the Board, as shall be
determined by the Chief Executive Officer or the President.
SECTION 2. STOCK BOOK. The Corporation shall keep at
the Principal Office the original Stock Book or a duplicate
thereof, or, in case the Corporation employs a stock registrar
or transfer agent within or without the State of Indiana,
another record of the Shareholders in a form that permits
preparation of a list of the names and addresses of all the
Shareholders, in alphabetical order by class of Shares,
stating the number and class of Shares held by each
Shareholder (the "Record of Shareholders").
SECTION 3. INSPECTION OF CORPORATE RECORDS. Any
Shareholder (or the Shareholder's agent or attorney authorized
in writing) shall be entitled to inspect and copy at his
expense, after giving the Corporation at least five business
days written notice of his demand to do so, the following
Corporate Records: (1) the Articles; (2) these By-Laws; (3)
minutes of all Shareholders' Meetings and records of all
actions taken by the Shareholders without a meeting
(collectively, "Shareholders Minutes") for the prior three
years; (4) all written communications by the Corporation to
the Shareholders including the financial statements furnished
by the Corporation to the Shareholders for the prior three
years; (5) a list of the names and business addresses of the
current Directors and the current Officers; and (6) the most
recent Annual Report of the Corporation as filed with the
Secretary of State of Indiana. Any Shareholder (or the
Shareholder's agent or attorney authorized in writing) shall
also be entitled to inspect and copy at his expense, after
giving the Corporation at least five business days written
notice of his demand to do so, the following Corporate
Records, if his demand is made in good faith and for a proper
purpose and describes with reasonable particularity his
purpose and the records he desires to inspect, and the records
are directly connected with his purpose: (1) to the extent
not subject to inspection under the previous sentence,
Shareholders Minutes, excerpts from minutes of Board Meetings
and of Committee meetings, and records of any actions taken by
the Board or any Committee without a meeting; (2) appropriate
accounting records of the Corporation; and (3) the Record of
Shareholders.
SECTION 4. RECORD DATE. The Board may, in its
discretion, fix in advance a Record Date not more than seventy
days before the date (a) of any Shareholders' Meeting, (b) for
the payment of any dividend or the making of any other
distribution, (c) for the allotment of rights, or (d) when any
change or conversion or exchange of Shares shall go into
effect. If the Board fixes a Record Date, then only
Shareholders who are Shareholders of record on such Record
Date shall be entitled (a) to notice of and/or to vote at any
such Meeting, (b) to receive any such dividend or other
distribution, (c) to receive any such allotment of rights, or
(d) to exercise the rights in respect of any such change,
conversion or exchange of Shares, as the case may be,
notwithstanding any transfer of Shares on the Stock Book after
such Record Date.
SECTION 5. TRANSFER AGENTS; REGISTRARS. The Board may
appoint one or more transfer agents and registrars for its
Shares and may require all Certificates to bear the signature
either of a transfer agent or of a registrar, or both.
ARTICLE VIII
CHECKS, DRAFTS, DEEDS AND SHARES OF STOCK
SECTION 1. CHECKS, DRAFTS, NOTES, ETC. All checks,
drafts, notes or orders for the payment of money of the
Corporation shall, unless otherwise directed by the Board or
otherwise required by law, be signed by one or more Officers
as authorized in writing by the Chief Executive Officer or the
President. In addition, the Chief Executive Officer or the
President may authorize any one or more employees of the
Corporation ("Employees") to sign checks, drafts and orders
for the payment of money not to exceed specific maximum
amounts as designated in writing by the Chief Executive
Officer or the President for any one check, draft or order.
When so authorized by the Chief Executive Officer or the
President, the signature of any such Officer or Employee may
be a facsimile signature.
SECTION 2. DEEDS, NOTES, BONDS, MORTGAGES, CONTRACTS,
ETC. All deeds, notes, bonds and mortgages made by the
Corporation, and all other written contracts and agreements,
other than those executed in the ordinary course of corporate
business, to which the Corporation shall be a party, shall be
executed in its name by the Chief Executive Officer, the
President, a Vice President or any other Officer so authorized
by the Board and, when necessary or required, the Secretary or
an Assistant Secretary shall attest the execution thereof.
All written contracts and agreements into which the
Corporation enters in the ordinary course of corporate
business shall be executed by any Officer or by any other
Employee designated by the Chief Executive Officer, the
President or a Vice President to execute such contracts and
agreements.
SECTION 3. SALE OR TRANSFER OF STOCK. Subject always to
the further orders and directions of the Board, any share of
stock issued by any corporation and owned by the Corporation
(including reacquired Shares of the Corporation) may, for sale
or transfer, be endorsed in the name of the Corporation by the
Chief Executive Officer, the President or a Vice President,
and said endorsement shall be duly attested by the Secretary
or an Assistant Secretary either with or without affixing
thereto the Seal.
SECTION 4. VOTING OF STOCK OF OTHER CORPORATIONS.
Subject always to the further orders and directions of the
Board, any share of stock issued by any other corporation and
owned or controlled by the Corporation (an "Investment Share")
may be voted at any shareholders' meeting of such other
corporation by the Chief Executive Officer, the President or a
Vice President. Whenever, in the judgment of the Chief
Executive Officer or the President, it is desirable for the
Corporation to execute a proxy or give a shareholder's consent
in respect of any Investment Share, such proxy or consent
shall be executed in the name of the Corporation, by the Chief
Executive Officer, the President or a Vice President, and,
when necessary or required, shall be attested by the Secretary
or an Assistant Secretary either with or without affixing
thereto the Seal. Any person or persons designated in the
manner above stated as the proxy or proxies of the Corporation
shall have full right, power and authority to vote an
Investment Share the same as such Investment Share might be
voted by the Corporation.
ARTICLE IX
FISCAL YEAR
SECTION 1. FISCAL YEAR. The Corporation's fiscal year
shall begin on October 1 of each year and end on September 30
of the following year.
ARTICLE X
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered,
amended or repealed, in whole or in part, and new By-Laws may
be adopted, at any Board Meeting by the affirmative vote of a
majority of the Full Board.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana
Energy, Inc.'s consolidated financial statements as of March 31, 1997, and for
the six months then ended and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 604,861
<OTHER-PROPERTY-AND-INVEST> 19,980
<TOTAL-CURRENT-ASSETS> 91,996
<TOTAL-DEFERRED-CHARGES> 14,945
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 731,782
<COMMON> 144,506
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 181,826
<TOTAL-COMMON-STOCKHOLDERS-EQ> 326,332
0
0
<LONG-TERM-DEBT-NET> 142,882
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<LONG-TERM-DEBT-CURRENT-PORT> 35,272
0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 184,996
<TOT-CAPITALIZATION-AND-LIAB> 731,782
<GROSS-OPERATING-REVENUE> 388,176
<INCOME-TAX-EXPENSE> 23,862
<OTHER-OPERATING-EXPENSES> 316,901
<TOTAL-OPERATING-EXPENSES> 340,763
<OPERATING-INCOME-LOSS> 47,413
<OTHER-INCOME-NET> 2,955
<INCOME-BEFORE-INTEREST-EXPEN> 50,368
<TOTAL-INTEREST-EXPENSE> 8,734
<NET-INCOME> 41,634
0
<EARNINGS-AVAILABLE-FOR-COMM> 41,634
<COMMON-STOCK-DIVIDENDS> 12,780
<TOTAL-INTEREST-ON-BONDS> 6,985
<CASH-FLOW-OPERATIONS> 38,971
<EPS-PRIMARY> 1.84
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</TABLE>
