SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3553
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Indiana 35-0672570
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(Address of principal executive offices)
(812) 465-5300
(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 the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the
period covered by this report.
Common Stock, without par value - 15,754,826 Shares
Outstanding at March 31, 1995
<PAGE> 2
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
March 31,
1995 1994
(in thousands except per share data)
<S> <C> <C>
OPERATING REVENUES
Electric $60,315 $ 68,642
Gas 24,108 36,081
Total operating revenues 84,423 104,723
OPERATING EXPENSES
Operation:
Fuel for electric generation 18,958 24,672
Purchased electric energy 1,154 1,284
Cost of gas sold 17,791 25,182
Other 11,523 10,613
Total operation 49,426 61,751
Maintenance 5,836 5,249
Depreciation and amortization 10,241 9,435
Federal and state income taxes 2,613 7,277
Property and other taxes 3,638 3,791
Total operating expenses 71,754 87,503
OPERATING INCOME 12,669 17,220
Other Income:
Allowance for other funds used
during construction 110 1,149
Interest 194 187
Other, net 1,701 588
Total operating income 2,005 1,924
INCOME BEFORE INTEREST CHARGES 14,674 19,144
Interest Charges:
Interest on long-term debt 4,654 4,624
Amortization of premium, discount,
and expense on debt 170 176
Other interest 402 240
Allowance for borrowed funds used
during construction (312) (556)
Total 4,914 4,484
NET INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 9,760 14,660
CUMULATIVE EFFECT AT JANUARY 1, 1995
OF ADOPTING THE UNBILLED REVENUES METHOD
OF ACCOUNTING - NET OF INCOME TAXES 6,293 -
NET INCOME 16,053 14,660
Preferred Stock Dividends 276 276
NET INCOME APPLICABLE TO COMMON STOCK $15,777 $ 14,384
AVERAGE COMMON SHARES OUTSTANDING 15,755 15,755
EARNINGS PER SHARE OF COMMON STOCK
NET INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $0.60 $0.91
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 0.40 -
NET INCOME $1.00 $0.91
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.</FN>
</TABLE>
<PAGE> 3
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
1995 1994
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 16,053 $ 14,660
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,241 9,435
Deferred income taxes and investment
tax credits, net 1,799 (43)
Allowance for other funds used
during construction (110) (1,149)
Cumulative effect of accounting change (6,293) -
Change in assets and liabilities:
Receivables, net 4,063 (2,472)
Inventories 3,063 7,025
Coal contract settlement (974) 1,814
Accounts payable (15,590) (7,738)
Accrued taxes 2,943 6,441
Refunds from gas suppliers 3,299 -
Refunds to customers 756 2,067
Accrued coal liability 3,085 3,033
Other 13,787 8,033
Net cash provided by operating activities 35,122 41,106
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (8,331) (17,009)
Demand side management program expenditures (1,670) (1,290)
Purchases of investments (801) (646)
Sales of investments 1,250 1,569
Investments in partnerships (2,743) (2,905)
Change in nonutility property (1,465) (761)
Other 1,043 304
Net cash used in investing activities (12,717) (20,738)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds (50) -
Dividends paid (6,931) (6,755)
Reduction in Preferred Stock (91) -
Change in environmental improvement
funds held by Trustee 5,254 3,634
Change in notes payable (15,927) (4,385)
Other 214 -
Net cash used in financing activities (17,531) (7,506)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 4,874 12,862
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 28,060 14,732
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 32,934 $ 27,594
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.</FN>
</TABLE>
<PAGE> 4
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1995 1994
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant, at original cost:
Electric $1,004,254 $ 907,591
Gas 115,685 114,951
Total utility plant 1,119,939 1,022,542
Less - Accumulated provision
for depreciation 462,665 456,922
Total 657,274 565,620
Construction work in progress 18,995 112,316
Net Utility Plant 676,269 677,936
Other Investments and Property:
Investments in leveraged leases 34,293 34,746
Investments in partnerships 23,100 23,411
Environmental improvement funds
held by Trustee 5,271 10,526
Nonutility property and other 14,248 12,783
Total Investments and Property 76,912 81,466
Current Assets:
Cash and cash equivalents 7,831 6,042
Restricted cash 25,103 22,018
Temporary investments, at market 4,645 5,444
Receivables, less allowance
of $313 and $307, respectively 38,127 25,582
Inventories 43,378 46,441
Coal contract settlement 5,711 7,685
Other current assets 2,694 2,355
Total current assets 127,489 115,567
Deferred Charges:
Unamortized premium on reacquired debt 6,501 6,621
Postretirement benefits other than pensions 9,124 8,011
Demand side management program 13,200 11,530
Other deferred charges 14,808 16,109
Total deferred charges 43,633 42,271
$ 924,303 $ 917,240
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.</FN></TABLE>
<PAGE> 5
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1995 1994
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
Common Stock $102,798 $102,798
Retained Earnings 227,545 218,424
Less-unrealized loss on debt and
equity securities 65 106
330,278 321,116
Less Treasury Stock, at cost 24,540 24,540
Common Shareholders' Equity 305,738 296,576
Cumulative Nonredeemable Preferred Stock 11,090 11,090
Cumulative Redeemable Preferred Stock 7,500 7,500
Cumulative Special Preferred Stock 924 1,015
Long-Term Debt, net of current maturities 266,610 264,110
Long-Term Partnership Obligations,
net of current maturities 7,414 9,507
Total capitalization, excluding
bonds subject to tender (see Consolidated
Statements of Capitalization) 599,276 589,798
Current Liabilities:
Current Portion of Adjustable Rate
Bonds Subject to Tender 31,500 31,500
Current Maturities of Long-Term Debt,
Interim Financing and
Long-Term Partnership Obligations:
Maturing long-term debt 5,146 7,803
Notes payable 6,240 22,060
Partnership obligations 2,786 3,374
Total current maturities of long-
term debt, interim financing and
long-term partnership obligations 14,172 33,237
Other Current Liabilities:
Accounts payable 26,064 35,183
Dividends payable 125 125
Accrued taxes 13,636 6,849
Accrued interest 7,503 4,599
Refunds to customers 17,777 14,844
Accrued coal liability 25,103 22,018
Other accrued liabilities 21,856 16,339
Total other current liabilities 112,064 99,957
Total current liabilities 157,736 164,694
Deferred Credits and Other:
Accumulated deferred income taxes 121,366 120,576
Accumulated deferred investment tax credits,
being amortized over lives of property 24,313 24,702
Regulatory income tax liability 5,451 4,052
Postretirement benefits other than pensions 9,496 8,384
Other 6,665 5,034
Total deferred credits and other 167,291 162,748
$924,303 $917,240
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.</FN>
<PAGE> 6
</TABLE>
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
March 31, December 31,
1995 1994
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 16,865,003 shares $102,798 $102,798
Retained Earnings, $2,209,642 restricted as
to payment of cash dividends on common stock 227,545 218,424
Less-unrealized loss on debt and equity
securities 65 106
330,278 321,116
Less Treasury Stock, at cost, 1,110,177 shares 24,540 24,540
305,738 296,576
PREFERRED STOCK:
Cumulative, $100 par value, authorized 800,000 shares
issuable, in series
Nonredeemable
4.8% Series, outstanding 85,895 shares
callable at $110 per share 8,590 8,590
4.75% Series, outstanding 25,000 shares
callable at $101 per share 2,500 2,500
11,090 11,090
Redeemable
6.50% Series, outstanding 75,000 shares
redeemable at $100 per share
December 1, 2002 7,500 7,500
SPECIAL PREFERRED STOCK
Cumulative, no par value, authorized 5,000,000
shares, issuable in series: 8-1/2% series,
outstanding 9,237shares
redeemable at $100 per share 924 1,015
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 259,660 259,615
Notes payable 7,790 5,345
Unamortized debt premium and discount, net (840) (850)
266,610 264,110
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES 7,414 9,507
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL
BONDS SUBJECT TO TENDER, DUE
2015, Series B, presently 3.5% 31,500 31,500
31,500 31,500
Total capitalization, including bonds
subject to tender $630,776 $621,298
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</FN>
</TABLE>
<PAGE> 7
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<CAPTION>
Three Months Ended
March 31,
1995 1994
(in thousands)
<S> <C> <C>
Balance Beginning of Period $218,424 $204,449
Net Income 16,053 14,660
234,477 219,109
Preferred stock dividends 276 276
Common stock dividends ($0.4225 per share in
1995 and $0.4125 per share in 1994) 6,656 6,478
6,932 6,754
Balance End of Period (See Consolidated
Statements of Capitalization for restriction) $227,545 $212,355
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</FN>
</TABLE>
<PAGE> 8
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
It is suggested that these consolidated financial
statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the
Company's 1994 Annual Report to Shareholders.
The consolidated statements are on the basis of interim
figures and are subject to audit and adjustments. These
financial statements include the accounts of Southern
Indiana Gas and Electric Company and its wholly-owned
subsidiaries, Southern Indiana Properties, Inc., Lincoln
Natural Gas Company, Inc., Energy Systems Group, Inc.
(Energy) and Southern Indiana Minerals, Inc. (SIMI), and
include all adjustments which are in the opinion of
management, necessary for a fair statement of the financial
position and results of operations. Energy and SIMI were
incorporated during the second quarter of 1994. Because of
seasonal and other factors, the earnings for the three
months ending March 31, 1995 should not be taken as an
indication for all or any part of the balance of 1995.
2. UTILITY PLANT
Utility plant is stated at the historical original cost
of construction. Such cost includes payroll-related costs
such as taxes, pensions and other fringe benefits, general
and administrative costs, and an allowance for the cost of
funds used during construction (AFUDC), which represents the
estimated debt and equity cost of funds capitalized as a
cost of construction. While capitalized AFUDC does not
represent a current source of cash, it does represent a
basis for future cash revenues through depreciation and
return allowances. The weighted average AFUDC rates (before
income taxes) used by the Company for the three months
ending March 31, 1995 and 1994 were 7.8% and 9.6%,
respectively.
3. CASH FLOW INFORMATION
For the purposes of the Consolidated Balance Sheets and
Consolidated Statements of Cash Flows, the Company considers
all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash
equivalents.
The Company, for the three months ended March 31, 1995
and 1994 paid interest (net of amounts capitalized) of
$1,842,000 and $1,406,000, respectively, and income taxes of
$289,000 and $2,693,000, respectively. Additionally the
Company is involved in several partnerships which are
partially financed by partnership obligations amounting to
$10,200,000 and $12,881,000 at March 31, 1995 and December
31, 1994, respectively.
4. LONG-TERM DEBT
On May 1, 1995, the interest rate on $31,500,000 of
Adjustable Rate Pollution control bonds was changed from
3.50% to 4.60%. The new interest rate, 4.60% will be fixed
through April 30, 1996. For financial statement
presentation the $31,500,000 of Adjustable Rate Pollution
Control bonds are shown as a current liability.
On July 1, 1994, the interest rate on $9,975,000 of
Adjustable Rate Pollution Control Bonds was changed from
5.75% to 4.60%. The new interest rate, 4.60%, will be fixed
through June 30, 1997.
5. ACQUISITION OF LINCOLN
On June 30, 1994, the Company completed its acquisition
of Lincoln Natural Gas Company, Inc. (Lincoln), a small gas
distribution company with approximately 1,300 customers
contiguous to the eastern boundary of the Company's gas
service territory. The Company issued 49,399 of common
stock for all the common stock of Lincoln. This transaction
was accounted for as a pooling of interests; therefore,
prior financial statements have been restated to reflect
this merger.
<PAGE> 9
Revenues and net income included in the Company's
Consolidated Statements of Income are as follows:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1995 1994
(in thousands)
<S> <C> <C>
Operating revenues:
Sigeco $84,057 $104,293
Lincoln 366 430
Total operating revenues $84,423 $104,723
Net income:
Sigeco $16,039 $ 14,672
Lincoln 14 (12)
Total net income $16,053 $ 14,660
</TABLE>
6. OPERATING REVENUES - ACCOUNTING CHANGE
The Company previously recognized electric and gas
revenues when customers were billed on a cycle billing
basis. The utility service rendered after monthly meter
reading dates through the end of a calendar month (unbilled
revenues) became a part of operating revenues in the
following month. To more closely match revenues with
expenses, effective January 1, 1995, the Company changed its
method of accounting to accrue the amount of revenue for
sales unbilled at the end of each month. The cumulative
effect of the change on prior years, net of income taxes, is
included in net income for 1995. The effect of the change
for the quarter was to increase net income $3.2 million
($.20 per share), of which a decrease of $3.1 million ($.20
per share) is reflected in operations, and an increase of
$6.3 million ($.40 per share), the cumulative effect of the
change as of January 1, 1995 is reported as a separate
component of net income. Summarized below is the proforma
effect of this change, as if the change had been effective
during the following periods:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1995 1994
<S> <C> <C>
As Reported
Operating Revenues
Electric $60,315 $68,642
Gas 24,108 36,081
Total 84,423 104,723
Operating Income 12,669 17,220
Net Income 16,053 14,660
Earnings Per Share of
Common Stock $1.00 $0.91
Proforma
Operating Revenues
Electric $60,315 $65,834
Gas 24,108 32,865
Total 84,423 98,699
Operating Income 12,669 13,481
Net Income 9,760 10,921
Earnings Per Share of
Common Stock $0.60 $0.68
</TABLE>
<PAGE> 10
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING REVENUES
Electric revenue was $8.3 million (12%) lower during the
first quarter compared to the same period in 1994, primarily
due to decreased nonsystem electric sales. Winter
temperatures in the Company's service territory, when
measured in heating degree days, were 15% warmer than the
same period the prior year and 14% below normal. Nonsystem
sales, which typically have much lower per unit sales
margins than system sales, were down 51% compared to the
first quarter of 1994 when the Company sold a substantial
amount of power to one nonassociated utility. Total system
sales were relatively unchanged although residential and
commercial sales declined 5% and 1%, respectively; a rise in
industrial sales offset the decreases.
A change in accounting method adopted by the Company
January 1, 1995 to record revenues for gas and electric
energy delivered to customers, but unbilled at the end of
each month, effected a $2.7 million reduction in electric
revenues for the three month period ending March 31, 1995.
(Refer to the following "Change In Accounting Method" and
to Note 6 of the Notes to Consolidated Financial Statements
for further discussion of this accounting change and the
$6.3 million positive adjustment to net income for the
cumulative effect of the change as of January 1, 1995.)
In addition to the impact of fewer billed sales and the
change in accounting method, recovery of lower average fuel
and purchased power costs during the current quarter caused
related revenues to decline $2.5 million. Changes in the
cost of fuel for electric generation and purchased power are
passed on to customers through commission approved fuel cost
adjustments.
Other changes in electric revenues included the impact
of the second step, approximately 2.3% overall, of the
Company's electric rate increase effective June 29, 1994.
The changes in electric revenue are shown below:
<TABLE>
<CAPTION>
Revenue Increase (Decrease)
From Corresponding
Period in 1994
Three Months
Ended 3-31-95
(in thousands)
<S> <C>
Change in sales volume (including a $2,700
reduction due to change in accounting method) $(6,600)
Fuel and purchased power recovery (2,500)
Other 773
$(8,327)
(Decrease) in system sales (MWh) (23,897)
(Decrease) in nonsystem sales (MWh) (228,651)
</TABLE>
<PAGE> 11
A 24 % decline in average unit costs of gas sold, which is
passed on to customers through commission approved gas cost
adjustments, was the major reason for a $12 million (33%)
decrease in gas revenues during the current quarter. The
considerably milder winter temperatures nationwide created
excess spot market gas supplies, causing downward pressure
on market prices.
The warmer weather resulted in lower residential and
commercial sales; billed sales to these customers were down
12% and 10%, respectively. Additionally, industrial gas
sales decreased 9% due to fewer requirements of those
customers.
The Company's adoption of the unbilled revenues method
of accounting effective January 1, 1995 resulted in a $2.3
million reduction in gas revenues. (Refer to the following
"Changes In Accounting Method" and to Note 6 of the Notes to
Consolidated Financial Statements for further discussion of
this accounting change and the $6.3 million positive
adjustment to net income for the cumulative effect of the
change as of January 1, 1995.)
Although the Company's base retail gas rates have
increased overall about 4% since August 1994 when the second
step of its two-step retail rate increase became effective,
the impact of the adjustment during the first quarter of
1995 was offset by changes in sales mix and other factors.
The changes in gas revenues are shown below:
<TABLE>
<CAPTION>
Revenue Increase (Decrease)
From Corresponding
Period in 1994
Three Months
Ended 3-31-95
(in thousands)
<S> <C>
Cost of gas recovery $ (6,300)
Change in sales volume (including a $2,300
reduction due to change in accounting method) (5,600)
Other (73)
$(11,973)
(Decrease) in total throughput (MDth) (979)
</TABLE>
OPERATING EXPENSES
Fuel for electric generation decreased $5.7 million
(23%) during the current quarter due to a 14% decrease in
generation resulting from the reduction in nonsystem sales
activity and due to the lower per unit fuel costs.
Similarly, cost of gas sold declined $7.4 million (29%)
during the first three months of 1995 due to the decline in
spot market prices and fewer unit deliveries.
Higher other operation expenses and depreciation expense
reflected the February 1, 1995 commercial operation of the
Company's $103 million investment to comply with the Clean
Air Act Amendments of 1990, primarily its sulfur dioxide
scrubber. (See "Clean Air Act" in Item 7 of Management's
Discussion and Analysis of Results of Operations and
Financial Condition in the Company's 1994 Form 10-K report
for further discussion.) Other operation expenses also
reflected increased employee benefit costs and increases in
various other operating expenses.
<PAGE> 12
Federal and state income taxes on operations were down
$4.6 million chiefly due to a $9.2 million decline in pre-
tax operating income and to a $1.2 million reduction in
income taxes resulting from settlement of the Company's most
recent IRS audit.
OTHER INCOME
Other income was relatively unchanged during the
reporting period despite much lower allowance for equity
funds used during construction, the result of the completed
construction of the Company's new sulfur dioxide scrubber
and other equipment required to comply with the Clean Air
Act Amendments of 1990 (previously discussed). Other income
during the first quarter included the sale to another
utility of the Company's 1995 allotment of "bonus" sulfur
dioxide emission allowances (also called "extension
allowances") granted by the Environmental Protection Agency.
The Company has an agreement with the utility to sell to it
essentially all of the Company's allotment of "bonus"
allowances for the five year period beginning 1995.
CHANGE IN ACCOUNTING METHOD
Effective January 1, 1995, the Company adopted the
unbilled revenue method of accounting to accrue the amount
of revenue for sales delivered but unbilled at the end of
each month to more closely match revenues with expenses.
Previously, the Company recognized electric and gas revenues
when customers were billed on a cycle billing basis. The
utility service rendered after monthly meter reading dates
through the end of a calendar month became part of operating
revenues in the following month. The unbilled revenue
method of accounting is a utility industry norm; few
utilities remain on the cycle billing method.
The adoption of this new method of accounting in the
first quarter of 1995 reduced electric and gas operating
revenues of $2.7 million and $2.3 million, respectively.
Net of income taxes, these reductions represent a $3.1
million (20 cents per common share) decrease in net income.
The cumulative effect of this change in accounting method as
of January 1, 1995, net of income taxes, was $6.3 million
(40 cents per common share) and is reported as a separate
component of net income for 1995. The net effect of the
change for the quarter was a $3.2 million (20 cents per
common share) increase in net income. (See Note 6 of Notes
to Consolidated Financial Statements for further discussion
of this accounting change and the impact of the change on
prior periods on a proforma basis.)
EARNINGS
Earnings per share of common stock for the first quarter
rose nine cents (10%) compared to the same period in 1994.
The increase resulted from the 20 cents per share net
increase due to the change to the unbilled revenue method of
accounting, the sale of "bonus" emission allowances and the
reduction in income taxes, all of which were partially
offset by the impact of lower gas and electric sales and
higher operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's demand for capital is primarily related to
its construction of utility plant and equipment necessary to
meet customers' electric and gas energy needs, as well as
environmental compliance requirements, and to expenditures
for the Company's demand side management (DSM)
programs. Construction expenditures (excluding allowance
for other funds used during construction) and demand side
management program expenditures incurred during the quarter
ended March 31, 1995 totaled $10 million, representing an
$8.3 million decrease from the same period in 1994 when the
Company's new "scrubber" was under construction. These
expenditures were fully funded during the current period
with internally generated cash. The Company anticipates
continued financial stability during the remainder of 1995
and is presently faced with no liquidity problems.
<PAGE> 13
The Company estimates that construction expenditures for
the five year period 1995-1999 will total approximately $230
million, including approximately $47 million to develop and
implement DSM programs; however, anticipated changes in the
electric industry and other factors may require changes to
the level of future DSM expenditures. (See "Demand Side
Management" in Item 7 of Management's Discussion and
Analysis of Results of Operations and Financial Condition in
the Company's 1994 Form 10-K report for further discussion).
Although the Company expects the majority of the
construction requirements and an estimated $90 million in
debt security and other long-term obligation redemptions to
be provided by internally generated funds, an additional
$55-70 million of external financing is anticipated to meet
such requirements.
OTHER MATTERS
All hearings have been completed on the Company's third
and final step of a requested adjustment in base electric
rates, primarily to recover the construction and operating
costs of its Clean Air Act Compliance project. A decision
is anticipated by mid-year.
On April 10, 1995 the Company executed a contract buyout
settlement with the Ziegler Coal Company for the Company's
remaining long-term coal contract which originally ran
through 1998. Under the settlement, the Company will pay
Ziegler $45.5 million during the second quarter of 1995, of
which approximately $29 million will have been escrowed by
July 15, 1995, the revised contract termination date. The
remaining $16.5 million will be recovered form utility
customers during the balance of 1995 and 1996. The Company
anticipates a $58 million net savings in fuel expense as a
result of the buyout. Due to the regulatory treatment of
the buyout payment and the resulting fuel expense savings,
the contract settlement will have no impact on financial
results.
<PAGE> 14
PART TWO - OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held at 3:00
P.M. (CST) on March 28, 1995, with the following
actions taken:
(b) The following three individuals were re-elected as
directors of the Company for three year terms:
Donald A. Rausch, Richard W. Shymanski and Norman
P. Wagner.
The adoption of an Agreement and Plan of Exchange
for corporate reorganization and formation of
holding company was approved.
The appointment of Arthur Andersen LLP as
independent auditors of the Company for 1995 was
ratified.
(c) The following table shows the voting results as to
each matter considered by the shareholders:
ITEM 1: VOTE FOR ELECTION OF DIRECTORS
Total Votes Cast: 13,946,606
<TABLE>
<CAPTION>
Nominee Votes For Votes
Withheld
<S> <C> <C>
Donald A. Rausch 13,781,943 164,663
Richard W. Shymanski 13,802,607 143,999
Norman P. Wagner 13,770,754 175,852
</TABLE>
ITEM 2: APPROVE CORPORATE REORGANIZATION AND FORMATION OF A
HOLDING COMPANY
Total Votes Cast: 12,823,893
<TABLE>
<CAPTION>
<S> <C> <C>
For Against Abstain
12,405,632 156,553 261,708
</TABLE>
ITEM 3: RATIFICATION OF APPOINTMENT OF AUDITORS
Total votes Cast: 13,945,395
<TABLE>
<CAPTION>
For Against Abstain
<S> >c> <C>
13,763,118 35,664 146,613
</TABLE>
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
<PAGE> 15
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
SIGNATURE
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.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(Registrant)
s/s S. M. KERNEY
S. M. Kerney
Controller
May 15, 1995
<TABLE>
SOU THERN INDIANA GAS AND ELECTRIC COMPANY
IND EX
<CAPTION>
Page No.
<S> <C>
Part I - Financial Information:
Consolidated Statements of Income for the Three Months
ended March 31, 1995 and 1994 2
Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1995 and 1994 3
Consolidated Balance Sheets at March 31, 1995 and
December 31, 1994 4-5
Consolidated Statements of Capitalization at March 31,
1995 and December 31, 1994 6
Consolidated Statements of Retained Earnings for the
Three Months ended March 31, 1995 and 1994 7
Notes to Consolidated Financial Statements 8-9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-13
Part II - Other Information 14
Signature 15
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
Operating Revenues - Accounting Change
The Company changed its method of accounting to accrue the amount of revenue for
sales unbilled at the end of each month. The cumulative effect of the change on
prior years, net of income taxes, $6,293, is included in net income for 1995.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 676,269
<OTHER-PROPERTY-AND-INVEST> 76,912
<TOTAL-CURRENT-ASSETS> 127,489
<TOTAL-DEFERRED-CHARGES> 43,633
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 924,303
<COMMON> 78,193
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 227,545
<TOTAL-COMMON-STOCKHOLDERS-EQ> 305,738
0
19,514
<LONG-TERM-DEBT-NET> 274,024
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 6,240
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 39,432
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 279,355
<TOT-CAPITALIZATION-AND-LIAB> 924,303
<GROSS-OPERATING-REVENUE> 84,423
<INCOME-TAX-EXPENSE> 6,251
<OTHER-OPERATING-EXPENSES> 65,503
<TOTAL-OPERATING-EXPENSES> 71,754
<OPERATING-INCOME-LOSS> 12,669
<OTHER-INCOME-NET> 2,005
<INCOME-BEFORE-INTEREST-EXPEN> 14,674
<TOTAL-INTEREST-EXPENSE> 4,914
<NET-INCOME> 16,053
276
<EARNINGS-AVAILABLE-FOR-COMM> 15,777
<COMMON-STOCK-DIVIDENDS> 6,656
<TOTAL-INTEREST-ON-BONDS> 4,654
<CASH-FLOW-OPERATIONS> 32,934
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
