SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1996
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 ____
<PAGE> 2
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
March 31,
1996 1995
(in thousands except per share data)
<S> <C> <C>
OPERATING REVENUES
Electric $ 66,865 $60,315
Gas 39,612 24,108
Total operating revenues 106,477 84,423
OPERATING EXPENSES
Operation:
Fuel for electric generation 18,778 18,958
Purchased electric energy 1,261 1,154
Cost of gas sold 30,771 17,791
Other 13,335 11,523
Total operation 64,145 49,426
Maintenance 6,188 5,836
Depreciation and amortization 9,708 10,241
Federal and state income taxes 6,515 2,613
Property and other taxes 3,591 3,638
Total operating expenses 90,147 71,754
OPERATING INCOME 16,330 12,669
Other Income:
Allowance for other funds used
during construction - 110
Interest 111 194
Other, net 1,429 1,701
1,540 2,005
INCOME BEFORE INTEREST AND OTHER CHARGES 17,870 14,674
Interest and Other Charges:
Interest on long-term debt 4,680 4,654
Amortization of premium, discount,
and expense on debt 168 170
Other interest 409 40
Allowance for borrowed funds used
during construction (63) (312)
5,194 4,914
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 12,676 9,760
CUMULATIVE EFFECT AT JANUARY 1, 1995
OF ADOPTING THE UNBILLED
REVENUES METHOD OF ACCOUNTING -
NET OF INCOME TAXES - 6,294
NET INCOME 12,676 16,054
Preferred dividend 274 276
EARNINGS APPLICABLE TO COMMON STOCK 12,402 15,778
AVERAGE COMMON SHARES OUTSTANDING 15,755 15,755
EARNINGS PER SHARE OF COMMON STOCK BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $0.79 $0.60
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - 0.40
TOTAL EARNINGS PER SHARE OF COMMON STOCK $0.79 $1.00
<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,
1996 1995
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 12,676 $ 16,054
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 9,708 10,241
Deferred income taxes and investment
tax credits, net 289 1,799
Allowance for other funds used during
construction - (110)
Cumulative effect of accounting change - (6,294)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 279 4,063
Inventories 7,474 3,063
Coal contract settlement 3,177 (1,974)
Accounts payable (13,793) (15,590)
Accrued taxes 7,814 2,943
Refunds from gas suppliers (1,998) 3,299
Refunds to customers (3,191) 756
Accrued coal liability - 3,085
Other assets and liabilities 5,925 13,787
Net cash provided by operating activities 28,360 35,122
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (5,615) (8,331)
Demand side management program expenditures (769) (1,670)
Purchases of investments - (801)
Sales of investments - 1,250
Investments in partnerships - (62)
Change in nonutility property 2 (1,465)
Other 28 1,043
Net cash used in investing activities (6,354) (10,036)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds - (50)
Dividends paid (7,087) (6,931)
Reduction in preferred stock and
long-term debt - (91)
Change in environmental improvement funds
held by trustee (53) 5,254
Payments on partnership obligations - (2,681)
Change in notes payable (8,000) (15,927)
Contribution of nonregulated subsidiaries
to parent (12,145) -
Other 137 214
Net cash used in financing activities (27,148) (20,212)
NET INCREASE IN CASH AND CASH EQUIVALENTS (5,142) 4,874
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,834 28,060
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,692 $ 32,934
<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,
1996 1995
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant, at original cost:
Electric $1,034,296 $1,030,890
Gas 125,806 125,053
1,160,102 1,155,943
Less - accumulated provision for depreciation 498,971 490,326
661,131 665,617
Construction work in progress 14,113 13,750
Net utility plant 675,244 679,367
Other Investments and Property:
Investments in leveraged leases - 35,609
Investments in partnerships - 25,308
Environmental improvement funds
held by trustee 3,695 3,642
Nonutility property and other 2,199 11,605
5,894 76,164
Current Assets:
Cash and cash equivalents 4,692 9,834
Temporary investments, at market - 1,148
Receivables, less allowance of $198 and
$138, respectively 30,856 35,392
Accrued unbilled revenues 17,971 18,651
Inventories 27,489 34,962
Coal contract settlement 9,751 12,928
Other current assets 8,541 4,795
99,300 117,710
Deferred Charges:
Unamortized premium on reacquired debt 6,022 6,142
Postretirement benefits other than pensions 9,636 9,574
Demand side management program 21,106 20,337
Other deferred charges 14,409 14,687
51,173 50,740
$ 831,611 $ 923,981
<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,
1996 1995
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
Common Stock $ 78,258 $ 78,258
Retained Earnings 204,788 236,617
Common shareholders' equity 283,046 314,875
Cumulative Nonredeemable Preferred Stock 11,090 11,090
Cumulative Redeemable Preferred Stock 7,500 7,500
Cumulative Special Preferred Stock 924 924
Long-Term Debt, net of current maturities 251,616 257,440
Long-Term Partnership Obligations, net of
current maturities - 6,839
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 554,176 598,668
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 8,000 9,906
Notes payable 22,500 30,500
Partnership obligations - 2,786
Total current maturities of long-term
debt, interim financing and
long-term partnership obligations 30,500 43,192
Other Current Liabilities:
Accounts payable 18,428 37,996
Dividends payable 123 123
Accrued taxes 18,209 8,821
Accrued interest 7,571 4,577
Refunds to customers 3,858 8,896
Other accrued liabilities 23,716 17,689
Total other current liabilities 71,905 78,102
Total current liabilities 133,905 152,794
Deferred Credits and Other:
Accumulated deferred income taxes 104,112 132,793
Accumulated deferred investment tax
credits, being amortized over lives
of property 22,786 23,146
Regulatory income tax liability 2,525 2,977
Postretirement benefits other than pensions 10,076 9,056
Other 4,031 4,547
143,530 172,519
$831,611 $923,981
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>
<PAGE> 6
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
March 31, December 31,
1996 1995
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 15,724,826 shares $ 78,258 $ 78,258
Retained Earnings, $2,194,121 restricted as
to payment of cash dividends on common stock 204,788 236,617
283,046 314,875
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 9,237 shares
redeemable at $100 per share 924 924
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 251,410 251,410
Notes payable 1,000 6,836
Unamortized debt premium and discount, net (794) (806)
251,616 257,440
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES - 6,839
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION
CONTROL BONDS SUBJECT TO TENDER, DUE
2015, Series B, presently 4.0% 31,500 31,500
Total capitalization, including bonds
subject to tender $585,676 $630,168
<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,
1996 1995
(in thousands)
<S> <C> <C>
Balance Beginning of Period $236,617 $218,424
Net Income 12,676 16,054
249,293 234,478
Dividend to Parent of Nonregulated Subsidiaries 37,418 -
Preferred Stock Dividends 274 276
Common Stock Dividends ($0.4325 per share in
1996 and $0.4225 per share in 1995) 6,813 6,656
44,505 6,932
Balance End of Period (See Consolidated
Statements of Capitalization for restriction) $204,788 $227,546
<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. Organization
Southern Indiana Gas and Electric Company (SIGECO) is a
wholly-owned utility subsidiary of SIGCORP, Inc. (SIGCORP),
a holding company incorporated October 19, 1994 under the
laws of the state of Indiana. SIGCORP has five wholly-owned
subsidiaries: SIGECO, a gas and electric utility, and four
nonregulated subsidiaries.
On December 20, 1994, SIGECO's Board of Directors
authorized the steps required for a corporate reorganization
in which a holding company would become the parent of
SIGECO. SIGECO's shareholders approved the reorganization
at SIGECO's March 28, 1995 annual meeting, and approval by
the Federal Energy Regulatory Commission and the Securities
and Exchange Commission was granted November 7, 1995 and
December 14, 1995, respectively.
Effective January 1, 1996, SIGCORP, became the parent
of SIGECO which accounts for over 90% of SIGCORP's net
income, and four of SIGECO's former wholly-owned
nonregulated subsidiaries: Energy Systems Group, Inc.,
Southern Indiana Minerals, Inc., Southern Indiana
Properties, Inc. and ComSource, Inc. All of the shares of
SIGECO's common stock were exchanged on a one-for-one basis
for shares of SIGCORP, while all of SIGECO's debt securities
and all of its outstanding shares of preferred stock remain
securities of SIGECO and are unaffected. On January 1,
1996, SIGECO dividended to SIGCORP the four nonregulated
subsidiaries.
2. General
It is suggested that these consolidated financial
statements be read in conjunction with the consolidated
financial statements and the notes thereto included in
SIGCORP's 1995 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 (SIGECO) and its wholly-
owned subsidiary, Lincoln Natural Gas Company, Inc. and
include all adjustments which are in the opinion of
management, necessary for a fair statement of the financial
position and results of operations. Because of seasonal and
other factors, the earnings for the three months ending
March 31, 1996 should not be taken as an indication for all
or any part of the balance of 1996.
3. Cash Flow Information
For the purposes of the Consolidated Balance Sheets and
Consolidated Statements of Cash Flows, SIGECO considers all
highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
SIGECO, for the three months ended March 31, 1996 and
1995 paid interest (net of amounts capitalized) of
$2,030,000 and $1,842,000, respectively, and income taxes of
$729,000 and $289,000, respectively.
The following changes in assets and liabilities were
caused by dividending the nonregulated subsidiaries to
SIGCORP and are noncash in nature.
Deferred income taxes (29,783)
Investments in Leveraged Leases 35,609
Investments in Partnerships 25,307
Partnership obligations (9,625)
Other, net 3,771
<PAGE> 9
4.Long-Term Debt
On May 1, 1996, the interest rate on $31,500,000 of
Adjustable Rate Pollution control bonds was changed from
4.60% to 4.0%. The new interest rate, 4.0% will be fixed
through April 30, 1997. For financial statement
presentation the $31,500,000 of Adjustable Rate Pollution
Control bonds are shown as a current liability.
5.Operating Revenues - Accounting Change
SIGECO 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, SIGECO 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 as of January 1, 1995, net of income taxes, was $6.3
million ($.40 per share), and was included in net income for
the first quarter of 1995.
<PAGE> 10
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Effective January 1, 1996, a new holding company,
SIGCORP, Inc. (SIGCORP) became the parent of Southern
Indiana Gas and Electric Company (SIGECO), a regulated gas
and electric utility which accounts for over 90% of
SIGCORP's net income, and four of SIGECO's former wholly-
owned nonregulated subsidiaries (see "Holding Company"). On
January 1, 1996, SIGECO dividended to SIGCORP its four
nonregulated subsidiaries.
Earnings per share were $0.79 for the recent three-month
period, compared to earnings of $0.60 per share before the
cumulative effect of an accounting change for the first
quarter of 1995. Net income for the three-month period
ending March 31, 1995 included a one-time favorable
adjustment, net of tax, of $6.3 million, or $.40 per share
in recognition of the impact of SIGECO's change to the
unbilled revenue method of accounting (see "Change in
Accounting Method").
OPERATING REVENUES
Electric revenues were up $6.5 million (11%) during the
first quarter of 1996 compared to the same period in 1995,
primarily due to increased sales to electric customers and
to higher base retail rates. Although total system sales
rose 6%, residential sales were 18% higher compared to the
first quarter of 1995 reflecting temperatures which, when
measured by heating degree days, were 23% colder than a year
ago. Nonsystem sales, which typically have lower per unit
margins than system sales, were up 15% due to SIGECO's
continued aggressive marketing of electric power to
nonassociated utilities. Electric revenues increased $1.4
million during the current quarter due to the third step of
SIGECO's electric rate increase effective June 27, 1995,
which raised retail rates approximately 2.05% overall.
Other factors contributing to higher electric revenue for
the period included the more favorable sales mix and higher
average rates charged on sales to nonassociated utilities.
The recovery of lower per unit fuel costs partially offset
these increases in electric revenue. Changes in the cost of
fuel are passed on to customers through commission approved
fuel cost adjustments.
The changes in electric revenue are shown below:
<TABLE>
<CAPTION>
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months
Ended 3-31-96
(in thousands)
<S> <C>
Change in sales volume $ 4,000
Effect of rate adjustments in sales to
retail customers 1,400
Fuel and purchased power recovery (800)
Other 1,950
$ 6,550
Increase in system sales (MWh) 65,073
Increase in nonsystem sales (MWh) 32,673
</TABLE>
<PAGE> 11
A 27% increase in gas sales and the recovery of higher
unit costs of gas delivered to customers were the chief
reasons for a $15.5 million increase in gas revenue during
the current quarter. The colder winter weather was the
primary cause of higher sales to residential and commercial
customers, up 18% and 24%, respectively. Additionally,
industrial sales were up significantly as certain
transportation customers elected to purchase gas from SIGECO
rather than from other sources. Average unit costs of gas
sold, which are recovered from customers through commission
approved gas cost adjustments, were 37% greater than those
during the same period in 1995. The colder winter
temperatures nationwide tightened spot market gas supplies,
causing upward pressure on market prices during the first
three months of 1996.
The changes in gas revenues are shown below:
<TABLE>
<CAPTION>
Revenue Increase From
Corresponding Period in 1995
Three Months
Ended 3-31-96
(in thousands)
<S> <C>
Change in sales volume $ 8,500
Cost of gas recovery 6,300
Other 700
$15,500
Increase in total throughput (MDth) 1,299
</TABLE>
OPERATING EXPENSES
Due to lower unit costs, the cost of fuel for electric
generation and purchased electric energy was relatively
unchanged during the current quarter despite a 7% increase
in units delivered to customers. The significant increase
in spot market prices and in deliveries to customers caused
a $13 million (73%) increase in cost of gas sold during the
first three months of 1996. During the current three month
period, increases in other operation expenses reflected
greater employee benefit costs and other administrative and
general expenses and the February 1, 1995 commercial
operation of SIGECO'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,
Management's Discussion and Analysis of Results of
Operations and Financial Condition in SIGECO's 1995 Form 10-
K report for further discussion.) In June 1995, SIGECO
began expensing costs which had previously been deferred for
postretirement benefits other than pensions (health care and
life insurance) attributed to electric utility operations.
SIGECO received approval from the Indiana Utility Regulatory
Commission to recover such costs in retail electric rates.
(See item (1)(j), "Postretirement Benefits Other Than
Pensions" of Notes To Consolidated Financial Statements in
SIGECO's 1995 Form 10-K report for further discussion.)
Increased tree trimming and line clearance activity was
the primary reason for a 6% increase in total maintenance
expenses during the current period; production maintenance
expenditures were unchanged from a year ago. The impact of
lower depreciation rates placed in effect in June 1995 more
than offset higher depreciation expense related to the
February 1995 commercial operation of the new scrubber,
resulting in a 5% decline in total depreciation expense
during the first quarter of 1996. Federal and state income
taxes were $3.9 million greater during the first quarter of
1996 compared to the same period in 1995 due to the higher
1996 pretax operating income and to a $1.2 million decrease
in income taxes resulting from the settlement of SIGECO's
IRS audit during the first quarter of 1995.
<PAGE> 12
OTHER INCOME AND INTEREST CHARGES
The decline in other income during the current period
reflects the absence of the earnings of the four
nonregulated subsidiaries which were dividended to SIGCORP
on January 1, 1996. The 1996 and 1995 periods included
January sales to another utility of SIGECO's allotment of
"bonus" sulfur dioxide emission allowances (also called
"extension allowances") granted by the Environmental
Protection Agency. SIGECO has an agreement with the utility
to sell to it essentially all of SIGECO's allotment of
"bonus" allowances for the five year period beginning 1995.
Interest and other charges were slightly higher during
the current period due to lower capitalized interest
resulting from completion of the scrubber.
CHANGE IN ACCOUNTING METHOD
Effective January 1, 1995, SIGECO 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,
SIGECO recognized electric and gas revenues when customers
were billed on a cycle billing basis, and 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 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.
HOLDING COMPANY
On December 20, 1994, SIGECO's Board of Directors
authorized the steps required for a corporate reorganization
in which a holding company would become the parent of
SIGECO. SIGECO's shareholders approved the reorganization
at SIGECO's March 28, 1995 annual meeting, and approval by
the Federal Energy Regulatory Commission and the Securities
and Exchange Commission was granted November 7, 1995 and
December 14, 1995, respectively.
Effective January 1, 1996, the new holding company,
SIGCORP, became the parent of SIGECO and four of SIGECO's
former wholly-owned nonregulated subsidiaries: Energy
Systems Group, Inc., Southern Indiana Minerals, Inc.,
Southern Indiana Properties, Inc. and ComSource, Inc. All
of the shares of SIGECO's common stock were exchanged on a
one-for one basis for shares of SIGCORP, while all of
SIGECO's debt securities and all of its outstanding shares
of preferred stock remain securities of SIGECO and are
unaffected.
The reorganization is in response to the changes
created in the electric industry by the Energy Policy Act of
1992 and the need to respond quickly to the more competitive
business environment. The new structure will buffer SIGECO
and its customers from the effects of pursuing nonregulated
opportunities while allowing SIGCORP to engage in closely
related, but historically nonregulated, businesses.
EARNINGS
Earnings per share of common stock for the first quarter
of 1996 increased 19 cents (32%) over earnings of 60 cents
per share before the 40 cent per share adjustment for the
cumulative effect of the accounting change during the first
quarter of 1995. The increase in earnings before the
adjustment for the accounting change was primarily due to
greater weather-sensitive gas and electric sales, stronger
sales to nonsystem electric customers, and higher per unit
sales margins resulting from an approved increase in
electric base retail rates and a more favorable sales mix,
which were partially offset by the higher operating expenses
and the absence of the earnings of the four nonregulated
subsidiaries.
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
SIGECO'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 expenditures for
its 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,
1996 totaled $6.4 million and were fully funded with
internally generated cash. Cash provided from operations
declined $6.8 million during the current three month period
compared to the first quarter of 1995; and, cash used in
investing and financing activities during 1996 increased
$3.3 million due to the contribution of the nonregulated
subsidiaries to SIGCORP. No financing activity occurred
during the 1996 period. SIGECO anticipates continued
financial stability during the remainder of 1996 and is
presently faced with no liquidity problems.
At this time, SIGECO estimates that its construction
expenditures for the five year period 1996-2000 will total
approximately $260 million, including approximately $25
million for the design and implementation of several
comprehensive information systems which are necessary to
better provide expanding customer service needs and to
better manage SIGECO's resources, and approximately $17
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,
Management's Discussion and Analysis of Results of
Operations and Financial Condition in SIGECO's 1995 Form 10-
K report for further discussion). Although SIGECO expects
the majority of the construction requirements and an
estimated $83 million in debt security and other long-term
obligation redemptions to be provided by internally
generated funds, an additional $60-70 million of external
financing is anticipated to meet such requirements.
OTHER MATTERS
On September 7, 1995, SIGECO petitioned the Indiana
Utility Regulatory Commission to adjust existing gas rates
and charges to reflect the cost of gas service currently
being provided by SIGECO. Negotiations with the
participating parties are continuing and an order by the
Indiana Commission approving new gas rates and charges is
expected during the third quarter of 1996.
<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. (CDT) on April 23, 1996, with the following
actions taken:
(b) The following two individuals were re-elected as
directors of SIGECO for three year terms:
Robert L. Koch, II and Jerry A. Lamb.
The approval of merger of SIGECO's wholly-owned gas
utility subsidiary, Lincoln Natural Gas Company, Inc. into
SIGECO.
The appointment of Arthur Andersen LLP as independent
auditors of SIGECO for 1996 was ratified.
(c) The following table shows the voting results as to
each matter considered by the shareholders:
<TABLE>
<CAPTION>
Item 1: Vote for Election of Directors
Total Votes Cast: 15,825,531
<S> <C> <C>
Nominee Votes For Votes Withheld
Robert L. Koch, II 15,825,187 344
Jerry A. Lamb 15,825,187 344
</TABLE>
Item 2: Approval of merger of wholly-owned gas utility
subsidiary into SIGECO
Total Votes Cast: 15,813,919
<TABLE>
<CAPTION>
<S> <C> <C>
For Against Abstain
15,813,169 544 206
</TABLE>
Item 3: Ratification of Appointment of Auditors
Total Votes Cast: 15,825,531
<TABLE>
<CAPTION>
<S> <C> <C>
For Against Abstain
15,824,127 315 1,089
</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. M. Kerney
S. M. Kerney
Controller
May 15, 1996
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
INDEX
Page No.
<S> <C>
Part I - Financial Information:
Consolidated Statements of Income for the Three
Months ended March 31, 1996 and 1995 2
Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1996 and 1995 3
Consolidated Balance Sheets at March 31, 1996 and
December 31, 1995 4-5
Consolidated Statements of Capitalization at March 31,
1996 and December 31, 1995 6
Consolidated Statements of Retained Earnings for the
Three Months ended March 31, 1996 and 1995 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
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 675,244
<OTHER-PROPERTY-AND-INVEST> 5,894
<TOTAL-CURRENT-ASSETS> 99,300
<TOTAL-DEFERRED-CHARGES> 51,173
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 831,611
<COMMON> 78,258
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 204,788
<TOTAL-COMMON-STOCKHOLDERS-EQ> 283,046
0
19,514
<LONG-TERM-DEBT-NET> 251,616
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 22,500
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 39,500
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 215,435
<TOT-CAPITALIZATION-AND-LIAB> 831,611
<GROSS-OPERATING-REVENUE> 106,477
<INCOME-TAX-EXPENSE> 6,515
<OTHER-OPERATING-EXPENSES> 83,632
<TOTAL-OPERATING-EXPENSES> 90,147
<OPERATING-INCOME-LOSS> 16,330
<OTHER-INCOME-NET> 1,540
<INCOME-BEFORE-INTEREST-EXPEN> 17,870
<TOTAL-INTEREST-EXPENSE> 5,194
<NET-INCOME> 12,676
274
<EARNINGS-AVAILABLE-FOR-COMM> 12,402
<COMMON-STOCK-DIVIDENDS> 6,814
<TOTAL-INTEREST-ON-BONDS> 4,680
<CASH-FLOW-OPERATIONS> 28,360
<EPS-PRIMARY> 0.79
<EPS-DILUTED> 0.79
</TABLE>
