UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended June 30, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to
_____________
<TABLE>
<CAPTION>
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
<S> <C> <C>
1-11603 SIGCORP, Inc. 35-1940620
(An Indiana Corporation)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(812) 465-5300
1-3553 Southern Indiana Gas and 35-0672570
Electric Company
(An Indiana Corporation)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(812) 465-5300
</TABLE>
Indicate by check mark whether the Registrants (1) have
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
Registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past
90 days.
Yes X . No ___ .
Indicate the number of shares outstanding of each of the
Registrants' classes of common stock, as of the latest
practicable date:
SIGCORP, Inc.:
Common stock, no par value, 23,630,568 shares
outstanding at June 30, 1998
Southern Indiana Gas and Electric Company:
Common stock, no par value, 15,754,826 shares
outstanding and held by SIGCORP, Inc. at
June 30, 1998
SIGCORP, Inc.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
Page No.
PART I. FINANCIAL INFORMATION:
Item 1: Financial Statements
SIGCORP, Inc.
Consolidated Statements of Income 2
Consolidated Statements of Cash Flows 3
Consolidated Balance Sheets 4-5
Consolidated Statements of Capitalization 6
Consolidated Statements of Retained Earnings 7
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
Statements of Income 8
Statements of Cash Flows 9
Balance Sheets 10-11
Statements of Capitalization 12
Statements of Retained Earnings 13
NOTES TO FINANCIAL STATEMENTS OF SIGCORP, Inc.
AND SOUTHERN INDIANA GAS AND ELECTRIC COMPANY 14-15
Item 2: Management's Discussion and Analysis of Results
of Operations and Financial Condition 16-21
SIGCORP, Inc. AND SOUTHERN INDIANA GAS
AND ELECTRIC COMPANY
Part II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of
Security Holders 22
Item 5: Other information 22
Item 6: Exhibits and Reports on Form 8-K 22
Signatures 23
</TABLE>
<PAGE> 2
<TABLE>
SIGCORP, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(in thousands except per share amounts)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric utility $ 77,526 $62,222 $142,753 $127,099
Gas utility 10,295 13,177 40,213 47,033
Energy services and other 45,484 10,209 91,410 19,048
Total operating revenues 133,305 85,608 274,376 193,180
OPERATING EXPENSES:
Fuel for electric
generation 17,563 15,028 32,470 29,751
Purchased electric energy 5,720 3,111 7,406 5,040
Cost of gas sold 5,384 6,270 25,642 31,271
Cost of energy services
and other 43,809 10,242 89,028 18,589
Other operation expenses 18,765 16,293 34,128 30,728
Maintenance 11,401 7,766 16,866 14,028
Depreciation and
amortization 10,673 10,078 21,374 20,157
Property and other taxes 3,367 3,301 6,959 6,676
Total operating expenses 116,682 72,089 233,873 156,240
OPERATING INCOME 16,623 13,519 40,503 36,940
INTEREST AND OTHER CHARGES:
Interest on long-term debt 4,958 4,515 10,418 9,027
Interest expense on
short-term debt 951 882 1,254 1,581
Amortization of premium, discount
and expense on debt 169 168 337 336
Allowance for funds used
during construction (379) (272) (717) (472)
Preferred dividend
requirements of subsidiary 274 274 548 548
Interest income (2,016) (901) (2,952) (1,597)
Other, net (496) 169 (5,163) (994)
Total interest and
other charges 3,461 4,835 3,725 8,429
INCOME BEFORE INCOME TAXES 13,162 8,684 36,778 28,511
Federal and state income
taxes 4,155 2,421 11,345 9,134
NET INCOME $ 9,007 $ 6,263 $ 25,433 $ 19,377
AVERAGE COMMON SHARES
OUTSTANDING 23,631 23,631 23,631 23,631
BASIC EARNINGS PER SHARE
OF COMMON STOCK $0.38 $0.27 $1.08 $0.82
DILUTED EARNINGS PER
SHARE OF COMMON STOCK $0.38 $0.26 $1.07 $0.82
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 3
<TABLE>
SIGCORP, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1998 1997
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $25,433 $19,377
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,374 20,058
Preferred dividend requirements of subsidiary 548 548
Deferred income taxes and investment
tax credits, net (7,487) (1,279)
Allowance for other funds used
during construction 8 (261)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 5,850 20,877
Inventories (4,702) 2,962
Accounts payable (8,582) (10,051)
Accrued taxes 2,414 (2,900)
Refunds from gas suppliers (364) (351)
Refunds to customers (95) 2,848
Other assets and liabilities 13,584 1,130
Net cash provided by operating activities 47,981 52,958
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (24,170) (19,845)
Demand side management program expenditures (484) (1,270)
Sale of leveraged lease investment 7,249 160
Purchases of investments (1,860) (323)
Sale of investments 80 -
Investments in partnerships 148 648
Change in nonutility property 1,487 (1,891)
Other 2,011 187
Net cash used in investing activities (15,539) (22,334)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (14,845) (15,491)
Change in environmental improvement
funds held by trustee (95) (139)
Payments on partnership obligations (2,139) (2,277)
Change in long-term notes payable (6,863) (12,673)
Other 268 1,216
Net cash used in financing activities (23,674) (29,364)
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,768 1,260
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,827 9,192
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,595 $10,452
<FN>
The accompanying notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 4
<TABLE>
SIGCORP, Inc.
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
ASSETS
UTILITY PLANT, at original cost:
Electric $1,101,905 $1,091,349
Gas 143,338 141,646
1,245,243 1,232,995
Less accumulated provision
for depreciation 577,425 557,631
667,818 675,364
Construction work in progress 42,816 32,241
Net utility plant 710,634 707,605
OTHER INVESTMENTS AND PROPERTY:
Investments in leveraged leases 35,715 42,964
Investments in partnerships and
limited liability corporations 18,473 19,076
Environmental improvement funds
held by trustee 4,197 4,102
Notes receivable 17,425 21,404
Nonutility property and other 17,115 14,624
Total other investments and property 92,925 102,170
CURRENT ASSETS:
Cash and cash equivalents 14,595 5,827
Temporary investments, at market 733 749
Receivables, less allowance of $2,430
and $328, respectively 50,603 52,496
Accrued unbilled revenues 18,362 22,320
Inventories 38,157 32,930
Current regulatory assets 9,234 11,749
Other current assets 1,227 3,250
Total current assets 132,911 129,321
OTHER ASSETS:
Unamortized premium on reacquired debt 4,465 4,704
Postretirement benefits other than
pensions 2,124 3,263
Demand side management programs 24,649 24,467
Allowance inventory 2,093 2,093
Deferred charges 17,245 16,273
Total other assets 50,576 50,800
TOTAL $ 987,046 $ 989,896
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
SIGCORP, Inc.
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock $ 78,258 $ 78,258
Retained Earnings 281,970 270,828
Total common shareholders' equity 360,228 349,086
Cumulative Nonredeemable Preferred
Stock of Subsidiary 11,090 11,090
Cumulative Redeemable Preferred Stock
of Subsidiary 7,500 7,500
Cumulative Special Preferred Stock
of Subsidiary 924 924
Long-Term Debt, net of current maturities 252,046 273,707
Long-Term Partnership Obligations,
net of current maturities 1,038 2,424
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 632,826 644,731
CURRENT LIABILITIES:
Current Portion of Adjustable Rate Bonds
Subject to Tender 53,700 31,500
Current Maturities of Long-Term Debt,
Interim Financing and Long-Term
Partnership Obligations:
Maturing long-term debt 12,400 12,695
Notes payable 34,284 41,368
Partnership obligations 1,386 2,139
Total current maturities of
long-term debt, interim financing
and long-term partnership obligations 48,070 56,202
Other Current Liabilities:
Accounts payable 39,159 47,741
Dividends payable 123 123
Accrued taxes 8,282 5,868
Accrued interest 5,360 5,216
Refunds to customers 696 1,155
Other accrued liabilities 24,759 17,866
Total other current liabilities 78,379 77,969
Total current liabilities 180,149 165,671
OTHER LIABILITIES:
Accumulated deferred income taxes 139,454 146,218
Accumulated deferred investment tax
credits, being amortized over
lives of property 19,526 20,249
Postretirement benefits other
than pensions 13,371 11,271
Other 1,720 1,756
Total other liabilities 174,071 179,494
TOTAL $987,046 $989,896
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 6
<TABLE>
SIGCORP, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Unaudited)
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common stock, without par value, authorized
50,000,000 shares, issued 23,630,568 shares $ 78,258 $ 78,258
Retained earnings, $2,194,121 restricted as
to payment of cash dividends on common stock 281,970 270,828
Total common shareholders' equity 360,228 349,086
PREFERRED STOCK OF SUBSIDIARY
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
Total nonredeemable preferred
stock of subsidiary 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 OF SUBSIDIARY
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 216,515 238,420
Notes payable 36,221 36,000
Unamortized debt premium and discount, net (690) (713)
Total long-term debt 252,046 273,707
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES 1,038 2,424
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL
BONDS SUBJECT TO TENDER, DUE
2025, Series A, presently 3.65% 31,500 31,500
2030, Series C, presently 3.70% 22,200 -
53,700 31,500
TOTAL CAPITALIZATION, including bonds
subject to tender $686,526 $676,231
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 7
<TABLE>
SIGCORP, Inc.
<CAPTION>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
Six Months Ended
June 30,
1998 1997
(in thousands)
<S> <C> <C>
Balance Beginning of Period $270,828 $252,626
Net Income 25,433 19,377
296,261 272,003
Common Stock Dividends ($0.605 per share
in 1998 and $0.590 per share in 1997) 14,291 13,989
Balance End of Period (See Consolidated
Statements of Capitalization for
restriction) $281,970 $258,014
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 8
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, INC.
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(in thousands except per share amounts)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric utility $77,526 $62,222 $142,753 $127,099
Gas utility 10,295 13,177 40,213 47,033
Total operating revenues 87,821 75,399 182,966 174,132
OPERATING EXPENSES:
Fuel for electric generation 18,103 15,028 33,897 29,751
Purchased electric energy 5,720 3,110 7,406 5,039
Cost of gas sold 5,384 6,270 25,642 31,272
Other operation expenses 16,287 14,797 30,097 28,046
Maintenance 11,371 7,719 16,780 13,943
Depreciation and amortization 10,632 10,029 21,264 20,058
Federal and state income taxes 4,528 3,819 12,168 11,035
Property and other taxes 3,278 3,166 6,775 6,478
Total operating expenses 75,303 63,938 154,029 145,622
OPERATING INCOME 12,518 11,461 28,937 28,510
OTHER INCOME:
Allowance for funds used
during construction (3) 160 (8) 261
Interest 94 115 161 248
Other, net (106) (23) 1,493 643
Total other income (15) 252 1,646 1,152
INCOME BEFORE INTEREST
AND OTHER CHARGES 12,503 11,713 30,583 29,662
INTEREST AND OTHER CHARGES:
Interest on long-term debt 4,320 4,515 9,126 9,027
Amortization of premium, discount
and expense on debt 169 168 337 336
Other interest 537 251 949 635
Allowance for borrowed funds
used during construction (382) (112) (725) (212)
Total interest and
other charges 4,644 4,822 9,687 9,786
NET INCOME 7,859 6,891 20,896 19,876
Preferred dividend 274 274 548 548
EARNINGS APPLICABLE TO
COMMON STOCK $ 7,585 $ 6,617 $ 20,348 $ 19,328
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 9
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
<CAPTION>
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1998 1997
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $20,896 $19,876
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,264 20,058
Deferred income taxes and investment
tax credits, net (981) (1,478)
Allowance for other funds used
during construction 8 (261)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 7,037 20,237
Inventories (3,832) 2,981
Accounts payable (7,087) (10,062)
Accrued taxes (2,035) (3,169)
Refunds from gas suppliers (297) (351)
Refunds to customers (163) 2,848
Other assets and liabilities 12,038 2,753
Net cash provided by operating activities 46,848 53,432
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (24,170) (19,845)
Demand side management program expenditures (152) (1,270)
Change in nonutility property (10) 1
Other (131) (188)
Net cash used in investing activities (24,463) (21,302)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (14,845) (15,491)
Change in environmental improvement
funds held by trustee (95) (139)
Change in long-term notes payable (8,715) (16,368)
Other 262 263
Net cash used in financing activities (23,393) (31,735)
NET INCREASE IN CASH AND CASH EQUIVALENTS (1,008) 395
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,114 3,127
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 106 $ 3,522
<FN>
The accompanying notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 10
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
<CAPTION>
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
ASSETS
UTILITY PLANT, at original cost:
Electric $1,101,905 $1,091,349
Gas 143,338 141,646
1,245,243 1,232,995
Less accumulated provision for depreciation 577,425 557,631
667,818 675,364
Construction work in progress 42,816 32,241
Net utility plant 710,634 707,605
OTHER INVESTMENTS AND PROPERTY:
Environmental improvement funds
held by trustee 4,197 4,102
Nonutility property and other 1,562 1,552
Total other investments and property 5,759 5,654
CURRENT ASSETS:
Cash and cash equivalents 106 1,114
Receivables, less allowance of $2,386
and $328, respectively 29,127 32,281
Notes Receivable 75 -
Accrued unbilled revenues 18,362 22,320
Inventories 36,336 32,504
Current regulatory assets 9,234 11,749
Other current assets 1,057 1,443
Total current assets 94,297 101,411
OTHER ASSETS:
Unamortized premium on reacquired debt 4,465 4,704
Postretirement benefits other than pensions 2,124 3,263
Demand side management program 24,649 24,467
Allowance inventory 2,093 2,093
Deferred charges 15,827 15,266
Total other assets 49,158 49,793
TOTAL $ 859,848 $ 864,463
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 11
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
<CAPTION>
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock $ 78,258 $ 78,258
Retained Earnings 234,621 228,570
Total common shareholders' equity 312,879 306,828
Cumulative Nonredeemable Preferred
Stock of Subsidiary 11,090 11,090
Cumulative Redeemable Preferred
Stock of Subsidiary 7,500 7,500
Cumulative Special Preferred Stock
of Subsidiary 924 924
Long-Term Debt, net of current maturities 216,825 238,707
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 549,218 565,049
CURRENT LIABILITIES:
Current Portion of Adjustable Rate
Bonds Subject to Tender 53,700 31,500
Current Maturities of Long-Term Debt
and Interim Financing:
Maturing long-term debt 12,400 12,695
Notes payable 21,738 31,643
Notes payable to Associated Company 22,076 20,886
Total current maturities of long-term
debt and interim financing 56,214 65,224
Other Current Liabilities:
Accounts payable 19,979 27,066
Dividends payable 123 123
Accrued taxes 3,890 5,925
Accrued interest 4,930 4,635
Refunds to customers 695 1,155
Other accrued liabilities 22,247 16,018
Total other current liabilities 51,864 54,922
Total current liabilities 161,778 151,646
OTHER LIABILITIES:
Accumulated deferred income taxes 114,235 114,493
Accumulated deferred investment tax credits,
being amortized over lives of property 19,526 20,249
Postretirement benefits other than pensions 13,371 11,271
Other 1,720 1,755
Other liabilities 148,852 147,768
TOTAL $859,848 $864,463
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 12
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
<CAPTION>
STATEMENTS OF CAPITALIZATION
(Unaudited)
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common stock, without par value, authorized
50,000,000 shares, issued 15,754,826 shares $ 78,258 $ 78,258
Retained earnings, $2,194,121 restricted as
to payment of cash dividends on common stock 234,621 228,570
Total common shareholders' equity 312,879 306,828
PREFERRED STOCK OF SUBSIDIARY
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
Total nonredeemable preferred
stock of subsidiary 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 OF SUBSIDIARY
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 216,515 238,420
Notes payable 1,000 1,000
Unamortized debt premium and discount, net (690) (713)
Total long-term debt 216,825 238,707
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL
BONDS SUBJECT TO TENDER, DUE
2025, Series A, presently 3.65% 31,500 31,500
2030, Series C, presently 3.70% 22,200 -
53,700 31,500
TOTAL CAPITALIZATION, including bonds
subject to tender $602,918 $596,549
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 13
<TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
<CAPTION>
STATEMENTS OF RETAINED EARNINGS
(Unaudited)
Six Months Ended
June 30,
1998 1997
(in thousands)
<S> <C> <C>
Balance Beginning of Period $228,570 $213,688
Net Income 20,896 19,877
249,466 233,565
Preferred Stock Dividends 548 548
Common Stock Dividends 14,297 14,942
14,845 15,490
Balance End of Period (See Consolidated
Statements of Capitalization
for restriction) $234,621 $218,075
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 14
SIGCORP, Inc.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
SIGCORP, Inc. (SIGCORP) is a holding company
incorporated October 19, 1994 under the laws of the state
of Indiana. SIGCORP has ten wholly-owned subsidiaries:
Southern Indiana Gas and Electric Company (SIGECO), a gas
and electric utility which accounts for over 80% of
SIGCORP's net income for the six months ended June 30,
1998, and nine 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 and SIGECO's 1997 Annual Report or Form 10-K.
The consolidated statements include the accounts of
SIGCORP, Inc. and its wholly-owned subsidiaries: Southern
Indiana Gas and Electric Company (SIGECO), Southern
Indiana Properties, Inc. (SIPI), Energy Systems Group,
Inc. (ESGI), Southern Indiana Minerals, Inc. (SIMI),
ComSource, Inc. (ComSource), SIGCORP Energy Services,
Inc. (Energy), SIGCORP Capital, Inc. (Capital), SIGCORP
Communications, Inc. (Communications), SIGCORP Fuels,
Inc. (Fuels) and SIGECO Advanced Communications, Inc.
(Advanced Communications) 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 six months ending June 30, 1998 should
not be taken as an indication for all or any part of the
balance of 1998.
3. Cash Flow Information
For the purposes of the Consolidated Balance Sheets
and Consolidated Statements of Cash Flows, SIGCORP and
SIGECO consider all highly liquid debt instruments
purchased with an original maturity of three months or
less to be cash equivalents.
SIGCORP, for the six months ended June 30, 1998 and
1997, paid interest (net of amounts capitalized) of
$10,803,000 and $9,870,000, respectively, and income
taxes of $16,462,000 and $10,148,000, respectively.
Additionally, SIGCORP is involved in several partnerships
which are partially financed by partnership obligations
amounting to $2,424,000 and $4,563,000 at June 30, 1998
and December 31, 1997, respectively.
SIGECO, for the six months ended June 30, 1998 and
1997, paid interest (net of amounts capitalized) of
$9,054,000 and $9,458,000, respectively, and income taxes
of $14,795,000 and $10,145,000, respectively.
4. Long-Term Debt
On March 25, 1998, SIGECO refunded the following four
tax-exempt bond issues:
* 1985 Series B Adjustable Rate Pollution Control
Bonds, $31,500,000, presently at a 4.05% interest rate,
due 2015
* 1973 Series A Fixed Rate Pollution Control Bonds,
$4,640,000, at a 5.6% interest rate, due 2003
* 1978 Series A Fixed Rate Pollution Control Bonds,
$22,000,000, at a 6.05% interest rate, due 2008
* 1983 Series A Adjustable Rate Pollution control
Bonds, $22,200,000, presently at a 4.65% interest rate,
due 2028
The above issues were refunded with the following bond
issues:
* 1998 Series A Adjustable Rate Pollution Control
Bonds, $31,500,000, presently at a 3.65% interest rate,
due 2025
* 1998 Series B Fixed Rate Pollution Control Bonds,
$4,640,000, presently at a 4.4% interest rate, due 2020
* 1998 Series B Fixed Rate Pollution Control Bonds,
$22,000,000, presently at a 4.4% interest rate, due 2030
* 1998 Series C Adjustable Rate Pollution Control
Bonds, $22,200,000, presently at a 3.7% interest rate
due 2030
The interest rates on the 1998 Series A and C
Adjustable Rate Pollution Control Bonds are fixed through
February 28, 1999. The interest rates on the Series B
Fixed Rate Pollution Control Bonds are fixed through
February 28, 2003. The Series A and C Adjustable Rate
Pollution Control Bonds are subject to tender on March 1,
1999 and accordingly, are presented as current
liabilities on the financial statements. The Series B
Fixed Rate Pollution Control Bonds are subject to tender
March 1, 2003.
In January 1998, SIGECO borrowed $20 million under a
floating rate long term bank note, due April 1, 1999, and
refunded an equal amount of short-term bank notes. The
interest rate, presently 6.3% will be reset every 90 days
based upon the 90-day LIBOR plus 62.5 basis points.
5. Earnings Per Share
The following table illustrates the basic and
diluted earnings per share calculations:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
Per Per
Net Share Net Share
Income Shares Amount Income Shares Amount
(in thousands except for per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $25,433 23,631 $1.08 $19,377 23,631 $0.82
Effect of dilutive
securities 103 48
Diluted EPS $25,433 23,734 $1.07 $19,377 23,679 $0.82
</TABLE>
Basic earnings per common share were computed by
dividing net income by the weighted average number of
shares of common stock outstanding during the year.
Diluted earnings per common share were determined using
the treasury stock method for dilutive stock options.
6. Comprehensive Income
Effective January 1, 1998, SIGCORP adopted Statement
of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", which requires expanded
disclosures regarding financial results.
The following table is presented to comply with this
new standard:
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998 June 30, 1997
(in thousands)
<S> <C> <C>
Net Income $25,433 $19,377
Unrealized gains or losses on
marketable securities - -
Comprehensive income $25,433 $19,377
</TABLE>
<PAGE> 16
SIGCORP, Inc.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The consolidated financial statements of SIGCORP, Inc.
(SIGCORP), an investor-owned holding company, include
SIGCORP's principal subsidiary, Southern Indiana Gas and
Electric Company (SIGECO), a regulated gas and electric
utility, and nine nonregulated subsidiaries. The
following discussion and analysis includes those factors
which have, or may, materially affect the results of
operations and financial condition of SIGCORP and its
subsidiaries.
This discussion includes forward looking statements based
on information currently available to management. Such
statements are subject to certain risks and
uncertainties. These statements typically contain, but
are not limited to the term "anticipate", "expect",
"potential", "estimate" and similar words, and actual
results may differ materially due to the speed and nature
of increased competition and deregulation in the electric
and gas utility industry, economic or weather conditions
affecting future sales and margins, changes in markets
for energy services, changing energy market prices,
legislative and regulatory changes including revised
environmental requirements, availability and cost of
capital, and other similar factors.
RESULTS OF OPERATIONS
Basic earnings per share were $.38 and $1.08,
respectively, for the three month and six month periods
ending June 30, 1998 compared to basic earnings of $.27
and $.82 per share, respectively, for the second quarter
and first six months of 1997. The factors effecting the
increases in earnings follow:
<TABLE>
<CAPTION>
Qtr 6 Mos
<S> <C> <C>
Period ended June 30, 1997 $.27 $.82
Weather .11 .07
Electric sales to other utilities
and power marketers .07 .10
Utility O&M expense <F1> (.13) (.13)
Nonregulated gas energy services
and nonutility operations .07 .21
Other (.01) .01
Period ended June 30, 1998 $.38 $1.08
<FN>
<F1> Includes $.05 per share provision for uncollectible
Federal Energy revenues
</FN>
</TABLE>
REVENUES Second quarter electric revenues rose $15.3
million, or 25%, due primarily to an increase in electric
sales, a more favorable electric sales mix and higher
unit prices for power sales to other utilities and power
marketers. Much warmer temperatures, registering 23%
warmer than normal and 92% warmer than a year ago (in
terms of cooling degree days), were the primary reason
for a 29% rise in residential electric sales during the
second quarter. Combined with a 15% increase in sales to
other utilities and power marketers and greater sales to
commercial and industrial customers, up 10% and 5%
respectively, total electric sales rose 11% compared to a
year ago. The warmer weather also drove wholesale market
power prices substantially higher, increasing average
wholesale unit sales margins 78%. SIGECO aggressively
markets electric power to other utilities and many power
marketers in the evolving deregulated wholesale power
market. These sales have contributed significantly to
SIGCORP's earnings. One of the power marketers, Federal
Energy Sales, apparently defaulted on its obligations to
utilities and other power marketers during the highly
<PAGE> 17
volatile and unusual conditions which occurred in the
Midwest during the week of June 22, 1998. As a result of
the apparent defaults by Federal Energy, SIGCORP provided
a reserve of approximately $2.0 million, or $0.05 per
share, to reflect the probability that SIGCORP will not
collect the revenues owed it by Federal Energy. The
provision represents SIGCORP's maximum exposure to
Federal Energy and is reflected in second quarter other
operation expenses.
Fewer sales to all customer classes was the chief cause
of a $2.9 million (22%) decrease in gas revenues during
the quarter ended June 30, 1998. The much warmer
temperatures in SIGECO's service area caused weather-
sensitive residential gas sales to decrease 37%. Sales
to commercial and industrial customers declined 52% in
total due to the effect of the weather on commercial
sales and to fewer sales to SIGECO transportation
customers compared to the second quarter of 1997. A 22%
increase in transported gas volumes resulted in a decline
of only 3% in total gas throughput (sales and
transportation), reflecting greater usage by SIGECO's
commercial and industrial customers during the current
period. The impact of the decline in sales was partially
offset by higher unit costs for purchased natural gas
reflected in revenues through commission approved gas
cost adjustments.
The greater activity of SIGCORP's natural gas marketing
subsidiary, SIGCORP Energy Services, whose revenues were
up $33 million, was the primary reason for a $35.3
million increase in energy services and other
nonregulated revenues during the quarter ending June 30,
1998.
For the six month period ending June 30, 1998, electric
revenues were $15.7 (12%) million greater than the same
period a year ago due primarily to the much stronger
system sales and more favorable sales mix during the
second quarter, and to greater sales and higher unit
prices for power to other utilities and power marketers
throughout the first six months of 1998 which represented
$6.5 million of the total revenue increase. Total
electric sales were up 9% for the six month period,
reflecting a 7% increase in system sales and a 25%
increase in sales to other utilities and power marketers.
Gas revenues declined $6.8 million (15%) for the current
six month period compared to a year ago, due primarily to
22% fewer gas sales resulting from much warmer
temperatures throughout the period and fewer sales to
commercial and industrial transportation customers.
Revenues from SIGCORP's natural gas marketing subsidiary,
SIGCORP Energy Services (Energy), rose $69.4 million
during the six months ending June 30, 1998 from continued
growth in sales and services throughout the period and
accounted for the majority of the $72.4 million increase
in energy services and other nonregulated revenues during
the current period.
OPERATING EXPENSES Costs for fuel for electric
generation and purchased electric energy rose a total of
$5.1 million during the second quarter and first six
months of 1998 due to the increased electric sales and
higher prices for wholesale market power purchased for
resale. The decline in cost of gas sold, down $.9
million and $5.6 million, respectively, during the
current three month and six month periods, reflects the
decrease in gas sales during the same periods, the impact
of which was partially offset by higher unit costs for
purchased natural gas during the second quarter of 1998.
The cost of energy services and other revenues, which was
chiefly the cost of natural gas purchased for resale by
Energy, increased $33.6 million during the second quarter
and $70.4 million during the first six months of 1998
compared to the same periods in 1997. Increased other
operation expenses, up $2.5 million in the second quarter
and $3.4 million in the first six months, reflected the
second quarter $2.0 million Federal Energy Sales
provision for potentially uncollectible revenues and
higher operation expenses at SIGCORP's newer nonregulated
subsidiaries. SIGCORP's maintenance expense was up $3.6
million (47%) during the second quarter of 1998 due
primarily to increased maintenance expenditures at
SIGECO's generating plants and its transmission and
distribution system. Maintenance expense for the six
month period in 1998 was up $2.8 million.
<PAGE> 18
INTEREST AND OTHER CHARGES Total interest and other
charges declined $1.4 million during the three months
ending June 30, 1998, compared to the second quarter of
1997, due to greater other nonutility income, which
included the second quarter operation of the company's
new SIGCORP Fuels, Inc. subsidiary and improved results
of other nonutility subsidiaries. During the first six
months of 1998, total interest and other charges declined
$4.7 million due to substantially greater other
nonutility income during the first quarter of 1998, which
included a $2.9 million after-tax gain on the sale of
Southern Indiana Properties' ownership interest in a
paper mill, the first quarter operation of SIGCORP Fuels
and improved results of other nonutility subsidiaries.
Increases in total interest expense reflected increased
financial investment activities by Southern Indiana
Properties, Inc. and the related costs.
EARNINGS Earnings per share for the second quarter of
1998 rose $.11 (41%) compared to the same period in 1997
due to the increased electric sales, improved results of
nonregulated operations and much higher average per unit
margins on sales to other utilities and power marketers,
all of which were partially offset by SIGECO's higher
nonfuel operation and maintenance expenses. For the six
months ended June 30, 1998, earnings per share increased
$.26 (32%) due to the stronger utility operating results
during the second quarter and to greater nonutility
income during the first and second quarters of 1998.
SIGECO ADVANCED COMMUNICATIONS, INC. On May 7, 1998,
SIGCORP formed SIGECO Advanced Communications, Inc.
(Advanced Communications), a wholly-owned nonregulated
subsidiary which holds SIGCORP's investment in SIGECOM,
LLC and Utilicom Networks, Inc. (Utilicom). SIGECOM,
LLC, also formed on May 7, 1998, is a joint venture
between Advanced Communications and Utilicom
to provide and market enhanced communication
services over a high capacity fiber optic network in a
multi-state area encompassing SIGECO's service territory.
Advanced Communications and Utilicom are each required to
make equity contributions of $10 million to SIGECOM
during the 24-month period subsequent to the formation
date as required by the construction and operating needs
of SIGECOM. In addition to these required equity
contributions, SIGCORP contributed its wholly-owned
subsidiary, ComSource, Inc. to SIGECOM July 1, 1998.
Initially, Advanced Communications will have a preferred
interest in SIGECOM, which is convertible to a 49% common
interest, and Utilicom will have a 100% common interest.
Advanced Communication's preferred interest has a 100%
liquidation preference. Advanced Communications has also
acquired a 4.7% interest in Utilicom.
ENVIRONMENTAL MATTERS. In July 1997, the United States
Environmental Protection Agency (USEPA) issued its rule
which revised the national ambient air quality standard
for ozone by setting a lower concentration limit and
changing measurement methods. In October 1997, the USEPA
provided each state a proposed budget of allowed nitrogen
oxide (NOX) emissions, a key ingredient of ozone, which
requires a significant reduction of such emissions. An
alliance of electric utilities, including SIGECO, from
the Midwestern states have been working together to
determine the most appropriate compliance strategy as an
alternative to the USEPA proposal. The alliance
submitted its proposal, which calls for a smaller phased
in reduction of NOX levels, to the USEPA and the Indiana
Department of Environmental Management in June 1998.
In July 1998, Indiana submitted its proposed plan to the
USEPA in response to the USEPA's new NOX rule and the
emissions budget proposed for Indiana. The Indiana plan,
which calls for a reduction of NOX emissions to a rate of
0.25 lb/mmBtu by 2003, is less stringent than the USEPA
proposal but more stringent than the alliance proposal.
The USEPA is expected to issue its final ruling during
the third quarter of 1998 after considering all filed
comments; however, the USEPA's final ruling is expected
to be litigated in the federal courts. Depending on the
<PAGE> 19
level of system-wide emissions reductions ultimately
required, and the control technology utilized to achieve
the reductions, control equipment expenditures ranging
from estimates of $10 million to $90 million could be
required. Under the current USEPA implementation
schedule, the emissions reductions and required control
equipment must be implemented and in place by 2004.
(Refer to "Environmental Matters" in Management's
Discussion and Analysis of Results of Operations and
Financial Condition in SIGCORP's 1997 Form 10-K for
further discussion.)
YEAR 2000 COMPLIANCE ISSUES AND RELATED COSTS. SIGCORP
is using one of the standard planning processes to
evaluate the IT systems and imbedded technology of non-IT
equipment of its subsidiaries for year 2000 compliance
and to address the resulting issues. A year 2000 team
was established in 1997 to administer this process, led
by an internal year 2000 project manager. (Recently,
this process has been formalized with the establishment
of SIGCORP's Year 2000 Compliance Task Force.) A high-
level assessment of the mission-critical systems and
items of all SIGCORP subsidiaries was completed at the
beginning of 1997. SIGECO is the only subsidiary with
noncompliant critical systems and items. SIGECO's
noncompliant information systems are being replaced by
two major information systems projects initiated in 1996
and 1997 to address functional obsolescence and are
expected to be completed by mid-1999. Of the two
noncompliant critical information systems being replaced,
the customer billing and financials/supply chain systems,
the customer billing system carries the most risk since
it has experienced project delays and problems with the
supplying vendor. Due to the risk of not completing this
project by 2000, SIGECO initiated its contingency plan in
the second quarter of 1998 to modify its existing
customer billing system to be year 2000 compliant. The
upgrade is expected to be completed in the first quarter
of 1999 at a cost of less than $400,000. In a worst-case
scenario, in which the new system would not be completed
by 2000 and the existing system could not be upgraded in
time, SIGECO would outsource the preparation of its
customer bills. Although the financials/supply chain
systems project is expected to be completed on schedule
by mid-1999, SIGECO will monitor the status of this
project and if necessary, modify the singular
noncompliant component of its existing financials system
during 1999 for use in 2000. The primary control systems
for all units at SIGECO's oldest active generating
station, Culley Station, are not compliant and are
scheduled to be modified in early 1999 at an estimated
cost of $250,000. Primary control systems at SIGECO's
two other stations are either already compliant or will
be modified in 1999 without major upgrades. SIGECO's
electric SCADA/EMS system is not compliant and is in the
process of being upgraded at a cost of approximately
$150,000, with completion in late 1998.
SIGCORP has completed its high level assessment and
approximately 80% of its detailed assessment of all non-
mission critical systems and items for noncompliance,
which includes imbedded technology in the operational
areas of SIGECO. This detailed assessment will be
completed in late 1998. Based on the findings of the
detailed assessment completed to date, it is anticipated
that there will be a low number of smaller noncritical
systems and items also requiring compliance upgrades or
replacement at a projected total cost of $500,000, to be
performed in 1999.
SIGCORP does not yet know whether the critical systems of
its suppliers and major customers will be year 2000
compliant, however it believes that noncompliance of such
systems would not have a material adverse effect on its
financial position or results of operation.
SIGCORP does not expect the amounts required to be
expensed during 1998 and 1999 for the above year 2000
compliance modifications and replacements, estimated to
total $1.5 million to $2 million, to have a material
effect on its financial position or results of
operations. SIGECO expects to complete the replacement
of both mission-critical noncompliant information systems
before 2000; if, however, the new customer billing system
is not implemented before 2000, its existing billing
system will have been modified for compliance and will be
used until the new system is completed.
<PAGE> 20
Incurred Estimated
through to
June 30, 1998 complete
Capital expenditure requirement for
replacement of information systems not in
compliance but already scheduled for
replacement due to functional obsolescence. $7,400,000 $2,400,000
Expense of compliance modifications to
existing systems or replacement of minor
items treated as expense $ 200,000 $1,800,000
NEW ACCOUNTING STANDARD In June 1998, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 (FAS 133), Accounting for
Derivative Instruments and Hedging Activities. FAS 133
establishes accounting and reporting standards requiring
that every derivative instrument (including certain
derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or
liability measured at its fair value. FAS 133 requires
that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting
criteria are met.
FAS 133 is effective for fiscal years beginning after
June 15, 1999. SIGCORP will adopt the new standard
effective January 1, 2000. FAS 133 must be applied to
(a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were
issued, acquired, or substantively modified after
December 31, 1997. SIGCORP has not yet quantified the
impacts of adopting FAS 133 on its financial statements
and has not determined the method of its adoption of FAS
133. However, FAS 133 could increase volatility in
earnings and other comprehensive income.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL REQUIREMENTS SIGCORP's demand for capital is
primarily related to SIGECO's construction of utility
plant and equipment necessary to meet customers' electric
and gas energy needs, as well as environmental compliance
requirements, and expenditures for SIGECO's demand side
management (DSM) programs. Additionally, SIGCORP may
periodically make capital investments in nonregulated
operations such as SIGECOM. Construction expenditures
(excluding allowance for other funds used during
construction) and DSM program expenditures incurred
during the quarter and six months ending June 30, 1998
totaled $13.3 million and $24.7 million, respectively,
and were 96% and fully funded with internally generated
cash during the respective periods. Cash provided from
operations decreased $2.1 million and $5.0 million during
the current three month and six month periods,
respectively, compared to the same periods in 1997. Cash
used in investing and financing activities during 1998
increased $2.9 million during the second quarter, but
decreased $12.5 million for the six month period,
compared to a year ago.
SIGCORP estimates that SIGECO's construction expenditures
for the five year period 1998-2002 will total
approximately $315 million, including approximately $15
million to complete several comprehensive information
systems which are necessary to fulfill expanding customer
service needs and to better manage SIGECO's resources,
and approximately $5 million to develop and implement DSM
programs, but exclude construction expenditures that may
be required to comply with new USEPA air quality
standards discussed in "Environmental Matters" in
Management's Discussion and Analysis of Results of
Operations and Financial Condition in SIGCORP's 1997 Form
10-K which could range from estimates of $10 million to
<PAGE> 21
$90 million. Additionally, SIGCORP will contribute a
minimum of $10 million to Advanced Communications for the
joint venture SIGECOM during the five year period, as
previously discussed.
FINANCING ACTIVITIES No financing activity occurred
during the second quarter of 1998. Financing activity
during the first quarter of 1998 included a $20 million
increase in long-term notes payable to refund $20 million
of SIGECO's short-term notes payable. Additionally,
SIGECO refunded $80.3 million of tax-exempt bond issues
with an equal amount of tax-exempt bonds (see Note 4 of
the Notes to Consolidated Financial Statements in this
filing) which will reduce total interest expense on a
present value basis by $8.5 million over the remaining
lives of the original bond issues.
Over the five year period, SIGCORP expects the majority
of the construction requirements, the contributions to
SIGECOM, and an estimated $66 million in debt security
redemptions to be provided by internally generated funds.
External financing requirements of $60-70 million are
anticipated and will be used primarily to redeem long-
term debt. These estimates do not reflect construction
expenditures that may be required to comply with new
USEPA air quality standards.
<PAGE> 22
PART TWO - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
<PAGE> 23
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.
SIGCORP, Inc
(Registrant)
/s/ T. L. Burke
T. L. Burke
Secretary and Treasurer
Date: August 14, 1998
SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY
/s/ S. M. Kerney
S. M. Kerney
Controller
Date: August 14, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000092195
<NAME> SOUTHERN INDIANA GAS & ELECTRIC CO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 710,634
<OTHER-PROPERTY-AND-INVEST> 5,759
<TOTAL-CURRENT-ASSETS> 93,731
<TOTAL-DEFERRED-CHARGES> 49,224
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 859,348
<COMMON> 78,258
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 234,621
<TOTAL-COMMON-STOCKHOLDERS-EQ> 312,879
0
19,514
<LONG-TERM-DEBT-NET> 216,825
<SHORT-TERM-NOTES> 43,814
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 53,700
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 212,616
<TOT-CAPITALIZATION-AND-LIAB> 859,348
<GROSS-OPERATING-REVENUE> 182,966
<INCOME-TAX-EXPENSE> 12,168
<OTHER-OPERATING-EXPENSES> 141,861
<TOTAL-OPERATING-EXPENSES> 154,029
<OPERATING-INCOME-LOSS> 28,937
<OTHER-INCOME-NET> 1,646
<INCOME-BEFORE-INTEREST-EXPEN> 30,583
<TOTAL-INTEREST-EXPENSE> 9,687
<NET-INCOME> 20,896
548
<EARNINGS-AVAILABLE-FOR-COMM> 20,348
<COMMON-STOCK-DIVIDENDS> 14,297
<TOTAL-INTEREST-ON-BONDS> 9,126
<CASH-FLOW-OPERATIONS> 46,848
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
