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, 1999
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 Electric Company
35-0672570
(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, 1999
Southern Indiana Gas and
Electric Company: Common stock, no par value,
15,754,826 shares
outstanding and held by
SIGCORP, Inc. at
June 30, 1999
<TABLE>
<CAPTION>
SIGCORP, Inc.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
Page No.
<S><C> <C><C> <C>
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 14-17
Item 2: Management's Discussion and Analysis of Results
of Operations and Financial Condition 18-23
SIGCORP, Inc. AND SOUTHERN INDIANA GAS
AND ELECTRIC COMPANY
Part II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders 24
Item 5: Other information 24
Item 6: Exhibits and Reports on Form 8-K 23
Signatures 25
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
(in thousands except for per share amounts)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric utility $ 73,802 $ 77,526 $144,789 $142,753
Gas utility 10,517 10,295 40,214 40,213
Energy services and other 47,601 45,484 97,078 91,410
Total operating revenues 131,920 133,305 282,081 274,376
OPERATING EXPENSES:
Fuel for electric generation 15,730 17,563 31,358 32,470
Purchased electric energy 7,064 5,720 10,325 7,406
Cost of gas sold 4,867 5,384 24,372 25,642
Cost of energy services
and other 46,564 43,809 95,646 89,028
Other operation expenses 17,211 18,765 34,232 34,128
Maintenance 9,857 11,401 17,173 16,866
Depreciation and amortization 11,327 10,673 22,636 21,374
Property and other taxes 3,143 3,367 6,389 6,959
Total operating expenses 115,763 116,682 242,131 233,873
OPERATING INCOME 16,157 16,623 39,950 40,503
INTEREST AND OTHER CHARGES:
Interest expense on
long-term debt 3,317 4,958 7,602 10,418
Interest expense on
short-term debt 2,441 951 3,848 1,254
Amortization of premium,
discount and expense on debt 97 169 274 337
Allowance for funds used
during construction (297) (379) (605) (717)
Preferred dividend
requirements of subsidiary 269 274 539 548
Interest income (1,206) (2,016) (2,194) (2,952)
Other, net (422) (496) (599) (5,163)
Total interest and
other charges 4,199 3,461 8,865 3,725
INCOME BEFORE INCOME TAXES 11,958 13,162 31,085 36,778
Federal and state
income taxes 3,788 4,155 10,294 11,345
NET INCOME $ 8,170 $ 9,007 $ 20,791 $ 25,433
AVERAGE COMMON SHARES
OUTSTANDING 23,631 23,631 23,631 23,631
BASIC EARNINGS PER SHARE
OF COMMON STOCK $ 0.35 $ 0.38 $ 0.88 $ 1.08
DILUTED EARNINGS PER SHARE
OF COMMON STOCK $ 0.34 $ 0.38 $ 0.88 $ 1.07
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1999 1998
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 20,791 $ 25,433
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,636 21,374
Preferred dividend requirements
of subsidiary 539 548
Deferred income taxes and investment
tax credits, net (188) (7,487)
Allowance for other funds used
during construction 51 8
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 14,633 5,850
Inventories 4,857 (4,702)
Accounts payable (16,365) (8,582)
Accrued taxes (1,476) 2,414
Refunds from gas suppliers (1,107) (364)
Refunds to customers 1,868 (95)
Other assets and liabilities 9,003 13,584
Net cash provided by operating activities 55,242 47,981
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of
allowance for other funds used
during construction) (31,422) (24,170)
Demand side management program expenditures (58) (484)
Investments in leveraged leases 13 7,249
Purchases of investments - (1,860)
Sale of Investments 96 80
Investments in partnerships and other
corporations (1,556) 148
Change in nonutility property (801) 1,487
Other (278) 2,011
Net cash used in investing activities (34,006) (15,539)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds (45,000) -
Dividends paid (16,190) (14,845)
Reduction in preferred stock (116) -
Change in environmental improvement funds
held by trustee (84) (95)
Payments on partnership obligations (1,513) (2,139)
Change in notes payable 44,997 (6,863)
Other 1,165 268
Net cash used in financing activities (16,741) (23,674)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,495 8,768
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,049 5,827
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,544 $ 14,595
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1999 1998
(in thousands)
<S> <C> <C>
ASSETS
UTILITY PLANT, at original cost:
Electric $1,149,334 $1,141,870
Gas 150,551 150,136
1,299,885 1,292,006
Less accumulated provision for depreciation 614,404 593,901
685,481 698,105
Construction work in progress 46,130 24,306
Net utility plant 731,611 722,411
OTHER INVESTMENTS AND PROPERTY:
Investments in leveraged leases 35,990 36,003
Investments in partnerships and
other corporations 33,757 32,389
Environmental improvement funds
held by trustee 4,384 4,300
Notes receivable 20,955 20,372
Nonutility property and other, net 15,119 14,901
Total other investments and property 110,205 107,965
CURRENT ASSETS:
Cash and cash equivalents 9,544 5,049
Temporary investments, at market 600 793
Receivables, less allowance of $2,520 and
$2,204, respectively 58,204 65,829
Accrued unbilled revenues 13,587 20,595
Inventories 40,318 45,351
Current regulatory assets 7,555 9,527
Other current assets 4,432 3,777
Total current assets 134,240 150,921
OTHER ASSETS:
Unamortized premium on reacquired debt 4,050 4,226
Postretirement benefits other than pensions - 985
Demand side management programs 24,995 25,046
Allowance inventory 2,269 2,093
Deferred charges 15,787 15,871
Total other assets 47,101 48,221
TOTAL $1,023,157 $1,029,518
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1999 1998
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock $ 78,258 $ 78,258
Retained Earnings 298,361 292,288
Accumulated Other Comprehensive Income (72) (12)
Total common shareholders' equity 376,547 370,534
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 692 808
Long-Term Debt, net of current maturities 204,883 204,771
Long-Term Partnership Obligations,
net of current maturities 224 781
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 600,936 595,484
CURRENT LIABILITIES:
Current Portion of Adjustable Rate Bonds
Subject to Tender 53,700 53,700
Current Maturities of Long-Term Debt,
Interim Financing and Long-Term
Partnership Obligations:
Maturing long-term debt 19 45,000
Notes payable 114,430 69,508
Partnership obligations 621 1,577
Total current maturities of long-term debt,
interim financing and long-term
partnership obligations 115,070 116,085
Other Current Liabilities:
Accounts payable 37,026 53,391
Dividends payable 117 120
Accrued taxes 3,348 4,863
Accrued interest 4,741 5,140
Refunds to customers 2,917 2,156
Other accrued liabilities 28,053 21,749
Total other current liabilities 76,202 87,419
Total current liabilities 244,972 257,204
OTHER LIABILITIES:
Accumulated deferred income taxes 144,558 144,032
Accumulated deferred investment tax credits,
being amortized over lives of property 18,087 18,802
Postretirement benefits other than pensions 13,006 11,337
Other 1,598 2,659
Total other liabilities 177,249 176,830
TOTAL $1,023,157 $1,029,518
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Unaudited)
June 30, December 31,
1999 1998
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 23,630,568 $ 78,258 $ 78,258
Retained Earnings, $2,174 restricted as
to payment of cash dividends on common stock 298,361 292,288
Accumulated Other Comprehensive Income (72) (12)
Total common shareholders' equity 376,547 370,534
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 6,917 and 8,077 shares,
respectively, redeemable at $100 per share 692 808
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 169,915 169,915
Notes payable 36,084 36,009
Unamortized debt premium and discount, net (1,116) (1,153)
Total long-term debt 204,883 204,771
LONG-TERM PARTNERSHIP OBLIGATIONS, NET OF
CURRENT MATURITIES 224 781
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION
CONTROL BONDS SUBJECT TO TENDER, DUE
2025, Series A, presently 3.00% 31,500 31,500
2030, Series C, presently 3.05% 22,200 22,200
53,700 53,700
TOTAL CAPITALIZATION, including bonds
subject to tender $654,636 $649,184
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
Accumulated
Other
Common Retained Comprehensive
(in thousands) Total Stock Earnings Income
<S> <C> <C> <C> <C>
Balances, December 31, 1997 $349,163 $78,258 $270,828 $ 77
Net Income 50,476 - 50,476 -
Unrealized Gain on Securities
(net of tax) (89) - - (89)
Comprehensive Income 50,387 - - -
Common Stock Dividends
($1.21 per share) (28,587) - (28,587) -
Stock Expense (429) - (429) -
Balances, December 31, 1998 370,534 78,258 292,288 (12)
Net Income 20,791 - 20,791 -
Unrealized (Loss) on Securities
(net of tax) (60) - - (60)
Comprehensive Income 20,731 - - -
Common Stock Dividends
($0.62 per share) (14,640) - (14,640) -
Stock Expense (78) - (78) -
Balances, June 30,1999 $376,547 $78,258 $298,361 $ (72)
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
(in thousands except for per share
amounts)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 73,802 $ 77,526 $144,789 $142,753
Gas 10,516 10,295 40,214 40,213
Total operating revenues 84,318 87,821 185,003 182,966
OPERATING EXPENSES:
Fuel for electric generation 16,880 18,103 33,748 33,897
Purchased electric energy 7,063 5,720 10,325 7,406
Cost of gas sold 4,867 5,384 24,372 25,642
Other operation expenses 14,519 16,287 29,460 30,097
Maintenance 9,838 11,371 17,126 16,780
Depreciation and amortization 11,216 10,632 22,433 21,264
Federal and state income taxes 4,535 4,528 11,865 12,168
Property and other taxes 3,062 3,278 6,189 6,775
Total operating expenses 71,980 75,303 155,518 154,029
OPERATING INCOME 12,338 12,518 29,485 28,937
OTHER INCOME:
Allowance for other funds
used during construction 51 (3) 51 (8)
Interest 69 94 127 161
Other, net 83 (106) 108 1,493
Total interest and other
charges 203 (15) 286 1,646
INCOME BEFORE INTEREST AND
OTHER CHARGES 12,541 12,503 29,771 30,583
INTEREST AND OTHER CHARGES:
Interest on long-term debt 3,324 4,320 7,381 9,126
Amortization of premium,
discount, and expense on debt 97 169 274 337
Other interest 1,480 537 2,277 949
Allowance for borrowed funds
used during construction (246) (382) (554) (725)
Total interest and other
charges 4,655 4,644 9,378 9,687
NET INCOME 7,886 7,859 20,393 20,896
Preferred stock dividend 269 274 539 548
NET INCOME APPLICABLE TO
COMMON STOCK $ 7,617 $ 7,585 $ 19,854 $ 20,348
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1999 1998
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 20,393 $ 20,896
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 22,433 21,264
Deferred income taxes and investment
tax credits, net (307) (981)
Allowance for other funds used
during construction 51 8
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 8,274 7,037
Inventories 5,654 (3,832)
Accounts payable (10,348) (7,087)
Accrued taxes (2,647) (2,035)
Refunds from gas suppliers (1,107) (297)
Refunds to customers 1,868 (163)
Other assets and liabilities 10,092 12,038
Net cash provided by operating activities 54,356 46,848
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (31,422) (24,170)
Demand side management program expenditures (58) (152)
Change in nonutility property - (10)
Other (262) (131)
Net cash used in investing activities (31,742) (24,463)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds (45,000) -
Dividends paid (16,191) (14,845)
Reduction in preferred stock (116) -
Change in environmental improvement
funds held by trustee (84) (95)
Change in notes payable 38,395 (8,715)
Other 213 262
Net cash used in financing activities (22,783) (23,393)
NET DECREASE IN CASH AND CASH EQUIVALENTS (169) (1,008)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 512 1,114
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 343 $ 106
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1999 1998
(in thousands)
<S> <C> <C>
ASSETS
UTILITY PLANT, at original cost:
Electric $1,149,334 $1,141,870
Gas 150,551 150,136
1,299,885 1,292,006
Less accumulated provision for depreciation 614,404 593,901
685,481 698,105
Construction work in progress 46,130 24,306
Net utility plant 731,611 722,411
OTHER INVESTMENTS AND PROPERTY:
Environmental improvement funds
held by trustee 4,384 4,300
Nonutility property and other, net 1,577 1,577
Total other investments and property 5,961 5,877
CURRENT ASSETS:
Cash and cash equivalents 343 512
Receivables, less allowance of $2,460
and $2,156, respectively 27,587 28,854
Accrued unbilled revenues 13,587 20,595
Inventories 38,736 44,566
Current regulatory assets 7,555 9,527
Other current assets 3,056 2,776
Total current assets 90,864 106,830
OTHER ASSETS:
Unamortized premium on reacquired debt 4,050 4,226
Postretirement benefits other than pensions - 985
Demand side management programs 24,995 25,046
Allowance inventory 2,269 2,093
Deferred charges 14,466 14,444
Total other assets 45,780 46,794
TOTAL $ 874,216 $ 881,912
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1999 1998
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock $ 78,258 $ 78,258
Retained Earnings 246,127 241,924
Total common shareholders' equity 324,385 320,182
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 692 808
Long-Term Debt, net of current maturities 169,799 169,762
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 513,466 509,342
CURRENT LIABILITIES:
Current Portion of Adjustable Rate Bonds
Subject to Tender 53,700 53,700
Current Maturities of Long-Term Debt,
Interim Financing and Long-Term
Partnership Obligations:
Maturing long-term debt - 45,000
Notes payable 83,584 50,759
Notes payable to Associated Company 20,500 14,930
Total current maturities of long-term
debt and interim financing 104,084 110,689
Other Current Liabilities:
Accounts payable 17,779 28,127
Dividends payable 117 120
Accrued taxes 2,124 4,772
Accrued interest 4,082 4,676
Refunds to customers 2,916 2,156
Other accrued liabilities 24,688 18,544
Total other current liabilities 51,706 58,395
Total current liabilities 209,490 222,784
OTHER LIABILITIES:
Accumulated deferred income taxes 118,555 118,147
Accumulated deferred investment tax credits,
being amortized over lives of property 18,087 18,801
Postretirement benefits other than pensions 13,006 11,337
Other 1,612 1,501
Other liabilities 151,260 149,786
TOTAL $874,216 $881,912
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF CAPITALIZATION
(Unaudited)
June 30, December 31,
1999 1998
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value, authorized
50,000,000 shares, issued 15,754,826 $ 78,258 $ 78,258
Retained Earnings, $2,174 restricted as
to payment of cash dividends on common stock 246,127 241,924
Total common shareholders' equity 324,385 320,182
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 6,917 and 8,077 shares,
respectively, redeemable at $100 per share 692 808
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 169,915 169,915
Notes payable 1,000 1,000
Unamortized debt premium and discount, net (1,116) (1,153)
Total long-term debt 169,799 169,762
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION
CONTROL BONDS SUBJECT TO TENDER, DUE
2025, Series A, presently 3.00% 31,500 31,500
2030, Series C, presently 3.05% 22,200 22,200
53,700 53,700
TOTAL CAPITALIZATION, including bonds
subject to tender $567,166 $563,042
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF RETAINED EARNINGS
(Unaudited)
Six Months Ended
June 30,
1999 1998
(in thousands)
<S> <C> <C>
Balance Beginning of Period $241,924 $228,570
Net Income 20,394 20,896
262,318 249,466
Preferred Stock Dividends 539 548
Common Stock Dividends 15,652 14,297
16,191 14,845
Balance End of Period (See Consolidated
Statements of Capitalization for restriction) $246,127 $234,621
<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 11 wholly-owned
subsidiaries: Southern Indiana Gas and Electric Company
(SIGECO), a gas and electric utility which accounts for
over 90% of SIGCORP's net income for the six months
ended June 30, 1999, and ten nonregulated subsidiaries.
On June 14, 1999, the announcement was made that
Indiana Energy, Inc. (IEI) and SIGCORP have agreed to be
merged into a new holding company to be named Vectren
Corporation (Vectren). The merger requires shareholder
and regulatory approvals which are expected to be
completed in six to nine months.
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 1998 Annual Report or Form 10-K.
The consolidated statements include the accounts of
SIGCORP, Inc. and eleven of 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), SIGCORP Energy Services, Inc.
(Energy), SIGCORP Capital, Inc. (Capital), SIGCORP
Communications, Inc. (Communications), SIGCORP Fuels,
Inc. (Fuels), SIGECO Advanced Communications, Inc.
(Advanced Communications), SIGCORP Environmental
Services, Inc. (Environmental Services) and SIGCORP
Power Marketing, Inc. (Power), not yet active, 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, 1999 should not be taken as an
indication for all or any part of the balance of 1999.
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, 1999 and
1998, paid interest (net of amounts capitalized) of
$11,295,000 and $10,803,000, respectively, and income
taxes of $13,624,000 and $16,462,000, respectively.
Additionally, SIGCORP is involved in several
partnerships which are partially financed by partnership
obligations amounting to $845,000 and $2,358,000 at June
30, 1999 and December 31, 1998, respectively.
SIGECO, for the six months ended June 30, 1999 and
1998, paid interest (net of amounts capitalized) of
$9,698,000 and $9,054,000, respectively, and $14,766,000
and $14,795,000, respectively.
4.Long-Term Debt
On March 1, 1999, the interest rate on $31,500,000 of
Adjustable Rate Pollution Control bonds was changed from
3.65% to 3.00% due March 1, 2025. The new interest rate
will be fixed through February 29, 2000. Also on March
1, 1999, the interest rate on $22,200,000 of Adjustable
Rate Pollution Control bonds was changed from 3.70% to
3.05% due March 1, 2020. The new interest rate will
also be fixed through February 29, 2000. For financial
statement presentation the $53,700,000 of Adjustable
Rate Pollution Control bonds are shown as a current
liability.
<PAGE> 15
On April 1, SIGECO repaid the $45,000,000 6% Series of
1993 First Mortgage Bonds and a $20,000,000 commercial
loan with short-term borrowings. On July 26,1999,
$80,000,000 of 6.72% Senior Notes due August 1, 2029
were issued to retire $80 million of short-term debt,
including the above amounts.
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, 1999 June 30, 1998
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
(in thousands except for per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $20,791 23,631 $0.88 $25,433 23,631 $1.08
Effect of dilutive
securities 114 103
Diluted EPS $20,791 23,745 $0.88 $25,433 23,734 $1.07
</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. Segments of Business
SIGCORP and SIGECO adopted SFAS No. 131 ''Disclosures
about Segments of an Enterprise and Related
Information'' in 1998. SFAS No. 131 establishes
standards for reporting information about operating
segments in financial statements and disclosures about
products and services and geographic areas. Operating
segments are defined as components of an enterprise for
which separate financial information is available and is
evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in
assessing performance.
SIGCORP has four reportable segments. They are
SIGECO's electric and gas utility operations, Energy
Services gas marketing services and SIPI's investment
operations. All other subsidiary operations and
corporate activities are included in other. SIGCORP's
reportable segments are operations that are managed
separately and meet the quantitative thresholds required
by SFAS No. 131. Revenues for each of SIGCORP's
segments are attributable principally to customers in
the United States.
<PAGE> 16
Certain financial information relating to significant
segments of business is presented below:
<TABLE>
<CAPTION>
Six Months Ended June 30 (in thousands) 1999 1998
<S> <C> <C>
Operating revenues:
Electric $ 144,789 $ 142,753
Gas 40,214 40,213
Gas marketing 93,599 86,165
Investment operations 514 474
All other 12,902 11,958
Total 292,018 281,563
Interest income:
Electric <F1> 116 147
Gas <F1> 11 14
Gas marketing 34 44
Investment operations 1,229 2,067
All other 2,817 2,455
Total 4,207 4,727
Interest expense:
Electric <F1> 8,788 9,167
Gas <F1> 869 907
Gas marketing 66 84
Investment operations 1,386 1,383
All other 2,353 1,906
Total 13,462 13,447
Income taxes:
Electric 10,258 10,908
Gas 1,607 1,260
Gas marketing 37 101
Investment operations (1,348) (881)
All other (260) (43)
Total 10,294 11,345
Net income:
Electric 16,840 17,836
Gas 3,014 2,512
Gas marketing 62 177
Investment operations 1,317 4,787
All other (442) 121
Total 20,791 25,433
Depreciation and amortization expense:
Electric 20,119 19,103
Gas 2,315 2,162
Gas marketing 32 12
Investment operations 69 50
All other 101 47
Total 22,636 21,374
Capital expenditures:
Electric 26,152 20,759
Gas 5,217 3,404
Gas marketing 12 31
Investment operations - -
All other 358 1,953
Total 31,739 26,147
Identifiable assets:
Electric <F2> 734,341 721,852
Gas <F2> 139,875 137,496
Gas marketing 23,356 19,443
Investment operations 89,314 90,508
All other 479,548 426,564
Total assets $1,466,434 $1,395,863
<FN>
<F1> SIGECO allocates interest revenue and expense
based on the net plant ratio which is 91%
electric and 9% gas.
<F2> Utility plant less accumulated provision for
depreciation, inventories, receivables (less
allowance), regulatory assets and other
identifiable assets.
</FN>
</TABLE>
<PAGE> 17
The following is a reconciliation to the consolidated
financial statements of SIGCORP:
<TABLE>
<CAPTION>
Six Months Ended June 30 (in thousands) 1999 1998
<S> <C> <C>
Operating revenues:
Total revenues for segments $ 292,018 $ 281,563
Elimination of intersegment revenues (9,937) (7,187)
Total consolidated revenues 282,081 274,376
Interest income:
Total interest income for segments 4,207 4,727
Elimination of intersegment interest (2,013) (1,775)
Total consolidated interest income 2,194 2,952
Interest expense:
Total interest expense for segments 13,462 13,447
Elimination of intersegment interest (2,013) (1,775)
Total consolidated interest expense 11,449 11,672
Identifiable assets:
Total assets for segments 1,466,434 1,395,863
Elimination of intersegment assets (443,277) (366,345)
Total consolidated assets $1,023,157 $1,029,518
</TABLE>
<TABLE>
<CAPTION>
Southern Indiana Gas and Electric Company
Six Months Ended June 30 (in thousands) 1999 1998
<S> <C> <C>
Operating revenues:
Electric $144,789 $142,753
Gas 40,214 40,213
Total 185,003 182,966
Interest income:
Electric <F1> 116 147
Gas <F1> 11 14
Total 127 161
Interest expense:
Electric <F1> 8,788 9,168
Gas <F1> 869 907
Total 9,657 10,075
Identifiable assets:
Electric <F2>
Gas <F2> 139,875 137,576
Total assets $874,216 $859,848
<FN>
<F1> SIGECO allocates interest revenue and expense
based on the net plant ratio which is 91%
electric and 9% gas.
<F2> Utility plant less accumulated provision for
depreciation, inventories, receivables (less
allowance), regulatory assets and other
identifiable assets.
</FN>
</TABLE>
<PAGE> 18
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 ten 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 terms ''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, impacts of Year 2000 issues, industry
restructuring, availability and cost of capital, and other
similar factors.
RESULTS OF OPERATIONS
Basic earnings were $.35 and $.88 per share for the three-
month and six-month periods ending June 30, 1999 compared
to basic earnings of $.38 and $1.08 per share,
respectively, for the second quarter and first six months
of 1998. The factors affecting earnings follow:
<TABLE>
<CAPTION>
Qtr 6 Mos
<S> <C> <C>
Period ended June 30, 1998 $.38 $1.08
Weather (.04) -
Electric sales to other utilities and
power marketers (.08) (.06)
Utility O&M expense .09<F1> .01<F1>
Utility depreciation expense (.01) (.03)
Nonregulated gas energy services and
nonutility operations (.03) (.18)
Other .04 .06
Period ended June 30, 1999 $.35 $.88
<FN>
<F1> Reflects $.05 per share provision for uncollectible Federal Energy
revenues in June 1998
<FN>
</TABLE>
REVENUES Second quarter electric utility revenue declined
$3.7 million, or 5%, due to 43% fewer power sales to other
utilities and power marketers and lower unit prices for
those sales, reflecting milder weather than a year ago when
temperatures, 23 percent warmer than normal, and a June
heat wave greatly increased demand for energy and
substantially widened wholesale unit margins in a tight
supply market. Despite a 5% decline in weather-sensitive
residential sales, total retail and firm wholesale electric
sales increased 2% during the second quarter of 1999
compared to the same period a year ago, reflecting the
continued strength of the local economy. Commercial and
industrial electric sales rose 2% and 5%, respectively,
while 29% warmer temperatures in April (in terms of heating
degree days) and 31% cooler temperatures (in terms of
cooling degree days) during the remainder of the quarter
caused the decrease in residential sales. Excluding one-
time charges to other operation expenses in June 1998 for
anticipated
<PAGE> 19
uncollectible revenues from a defaulting power marketer,
second quarter earnings from sales to other utilities and
power marketers decreased $0.08 per share compared to the
same period a year ago.
Despite the warmer April weather, gas sales were relatively
unchanged during the period, but total sales and
transported volumes increased 13% during the current
quarter reflecting the area's growth in commercial and
industrial activity.
The greater activity of SIGCORP's natural gas marketing
subsidiary, SIGCORP Energy Services (Energy), whose
revenues were up $3.3 million, was the primary reason for a
$2.1 million increase in energy services and other
nonregulated revenues during the quarter ending June 30,
1999.
For the six-month period ending June 30, 1999, electric
revenues were $2.0 million (1.4%) greater than the same
period a year ago due primarily to stronger system sales
and a more favorable sales mix during the first quarter.
Total electric sales were up 3% for the six-month period,
reflecting a 4% increase in system sales; sales to other
utilities and power marketers were comparable to the same
period in 1998. Gas revenues for the current six-month
period equaled gas revenues from a year ago; although gas
sales were up 11% during the recent six-month period,
chiefly due to colder temperatures during the first quarter
of 1999, lower unit costs of purchased natural gas
recovered through revenues decreased related gas revenues.
Revenues from SIGCORP's natural gas marketing subsidiary,
SIGCORP Energy Services (Energy), rose $7.4 million during
the six months ending June 30, 1999 from continued growth
in sales and services throughout the period and accounted
for the $5.7 million increase in energy services and other
nonregulated revenues during the current period. Fewer
coal sales by SIGCORP's Fuels subsidiary during the six-
month period ending June 30, 1999 to customers other than
SIGECO was the primary reason for a $1.7 million reduction
in revenues from nonregulated operations other than Energy.
OPERATING EXPENSES In total, costs for fuel for electric
generation and purchased electric energy during the second
quarter of 1999 declined slightly ($.5 million) on sales
volumes comparable to the same period in 1998, and
increased $1.8 million (5%) during the recent six-month
period due to a 3% increase in total electric sales and
higher prices for wholesale market power purchased for
resale during the first three months of 1999. Despite
increased gas sales, cost of gas sold decreased 10% and 5%,
respectively, during the current three- and six-month
periods due to a 17% and a 14% decline, respectively, in
the average per unit costs of gas sold during those
periods. The cost of energy services and other revenues,
which was chiefly the cost of natural gas purchased for
resale by Energy, increased $2.7 million and $6.6 million,
respectively, during the second quarter and first six
months of 1999 compared to the same periods in 1998 due
primarily to Energy's increased sales. Other operation
expenses were down $1.6 million (8%) in the second quarter
reflecting a $1.8 million decrease in utility operation
expenses and a $.2 million increase in operation expenses
at SIGCORP's newer nonregulated subsidiaries. The decrease
in other operation expenses at SIGECO reflects the $2.0
million provision in June 1998 for uncollectible revenues
from a wholesale power marketer. SIGCORP's maintenance
expense decreased $1.5 million during the current three-
month period compared to the second quarter in 1998 when
maintenance expenditures at SIGECO's generating plants and
other facilities were greater than anticipated.
Maintenance expense for the first six months of 1999 was up
2% over the same period in 1998 due to greater scheduled
maintenance expenditures by SIGECO during the first quarter
of 1999.
INTEREST AND OTHER CHARGES Total interest and other
charges increased $.8 million in the second quarter of 1999
due to an equal decline in interest income on investments
by SIGCORP's Southern Indiana Properties, Inc. (SIPI)
subsidiary. During the six months ending June 30, 1999,
total interest and other charges rose $5.1 million due to a
substantial decrease in other nonutility income during the
first quarter of 1999 compared to the same period in 1998,
which included a $2.9 million after-tax gain on the
liquidation of SIPI's equity position in a
<PAGE> 20
leveraged lease and a $1.4 million decrease in sales to
another utility of a portion of SIGECO's emission
allowances under a five year agreement beginning in 1995.
Total interest expense was comparable to the same period a
year ago. A $1.6 million decrease in interest on long-term
debt during the current quarter and a $2.8 million decline
in this expense for the first six months of 1999 reflected
lower average interest rates resulting from SIGECO's 1998
refunding of $80.3 million of tax-exempt bond issues with
an equal amount of tax-exempt bonds, and a reduction of
long-term debt due to the 1998 refunding of $14 million of
first mortgage bonds and the April 1999 refunding of $45
million of first mortgage bonds, with short-term debt (see
''Financing Activities''). The resultant increase in
SIGECO's short-term debt is reflected in increases in
short-term interest expense during the reporting periods.
EARNINGS For the second quarter of 1999, nonutility
earnings declined $.03 per share, primarily due to lower
earnings at SIPI; utility earnings were unchanged. During
the second quarter of 1999, utility earnings were favorably
impacted by SIGECO's substantially lower non-fuel operation
and maintenance expenses and the growth-related increases
in electric sales, all of which were fully offset by fewer
sales to other utilities and power marketers and related
lower unit prices, fewer sales to residential electric
customers and higher depreciation expense. Absent the $2.9
million ($.12 per share) after-tax gain realized at SIPI
during the first quarter of 1998, basic earnings for the
six-month period would have been $.08 per share below the
same period 1998 earnings.
PENDING MERGER On June 14, 1999, SIGCORP announced an
agreement to merge with Indiana Energy, Inc. (IEI) in an
all-stock pooling transaction through which a new holding
company, Vectren Corporation, would be formed. In a tax-
free exchange, SIGCORP shareholders would receive one and
one-third shares of Vectren stock for each share of SIGCORP
stock, while IEI shares would be exchanged on a one-for-one
basis. The merger would create a company with more than
650,000 customers providing gas and/or electric service in
adjoining service areas covering nearly two-thirds of
Indiana and assets of approximately $1.8 billion.
Completion of the merger is expected in six to nine months.
Management expects to generate $200 million in cost
savings/avoidance over a ten-year period, net of the one-
time merger transaction costs estimated to total $40
million.
ENVIRONMENTAL MATTERS (Refer to ''Environmental Matters''
in Management's Discussion and Analysis of Results of
Operations and Financial Condition in SIGCORP's 1998 Form
10-K for further discussion of environmental matters.) In
July 1997, the United States Environmental Protection
Agency (USEPA) issued its final rule which revised the
national ambient air quality standard for ozone by setting
a lower concentration limit and changing measurement
methods. It is anticipated that the number of ozone
nonattainment counties in the United States will increase
significantly. The USEPA has encouraged states to target
utility coal-fired boilers for the majority of the
reductions required, especially NOx emissions.
Northeastern states have claimed that ozone transport from
midwestern states (including Indiana) is the primary reason
for their ozone concentration problems. Although this
premise is challenged by others based on various air
quality modeling studies, including studies commissioned by
the USEPA, the USEPA intends to incorporate a regional
control strategy to reduce ozone transport. In October
1997, the USEPA provided each state a proposed budget of
allowed NOx emissions, a key ingredient of ozone, which
requires a significant reduction of such emissions. Under
that budget, utilities may be required to reduce NOx
emissions to a rate of 0.15 lb/mmBtu from levels already
imposed by Phase I and Phase II of the Clean Air Act
Amendments of 1990. Midwestern states (the alliance) 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.
<PAGE> 21
In July 1998, Indiana submitted its proposed plan to the
USEPA in response to the USEPA's proposed 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 issued its final ruling on September 24, 1998,
which was essentially unchanged from its July 1997 proposed
rule, after considering all filed comments. The USEPA's
final ruling is being litigated in the federal courts by
approximately ten midwestern states, including Indiana.
The proposed NOx emissions budget for Indiana stipulated in
the USEPA's final ruling requires a 36% reduction in total
NOx emissions from Indiana. The ruling could require
SIGECO to lower its system-wide emissions by approximately
70%. Depending on the level of system-wide emissions
reductions ultimately required, and the control technology
utilized to achieve the reductions, the estimated
construction costs of the control equipment could reach $90
million, and related additional operation and maintenance
expenses could be an estimated $10 million to $15 million,
annually. Under the USEPA implementation schedule, the
emissions reductions and required control equipment must be
implemented and in place by May 15, 2003.
During the second quarter of 1999, the USEPA lost two
federal court challenges to key air-pollution control
requirements. In the first ruling by the U.S. Circuit
Court of Appeals for the District of Columbia on May 14,
1999, the Court struck down the USEPA's attempt to tighten
the one-hour ozone standard to an eight-hour standard and
the attempt to tighten the standard for particulate
emissions, finding the actions unconstitutional. In the
second ruling by the same Court on May 25, 1999, the Court
placed an indefinite stay on the USEPA's attempts to reduce
the allowed NOx emissions rate from levels required by the
Clean Air Act Amendments of 1990. The USEPA has filed
appeals on both court rulings.
YEAR 2000 READINESS SIGCORP, primarily SIGECO, uses
various software, systems and technology that may be
affected by the date change in the Year 2000. A Year 2000
team was established in early 1997 to identify and address
Year 2000-readiness issues. A high-level assessment of the
mission-critical systems and items of all SIGCORP
subsidiaries was completed in early 1997. In 1998, this
process became more formalized with the establishment of
SIGCORP's Year 2000 Task Force. SIGECO has completed a
detailed inventory of all systems and devices, including
imbedded technology in the operational areas, determined to
be date-sensitive. All systems and devices in the
inventory have been rated on criticality and likelihood of
failure and prioritized for testing. Due to functional
obsolescence, under its general business plan SIGECO has
recently replaced, or is currently replacing, all of its
known major noncompliant mission-critical information and
control systems with systems incorporating Year 2000-ready
technology. As of June 30, 1999, SIGECO has tested all of
its mission-critical systems and devices and remediated
those systems and devices found not ready for 2000, thus
meeting the North American Electric Reliability Council
(NERC)-imposed deadline to ensure Y2K readiness of SIGECO's
operations.
SIGECO's noncompliant critical information systems, the
customer billing and financials/supply chain systems,
developed in the late 1960's, are being replaced to address
functional obsolescence. The two projects, initiated in
1996 and 1997, respectively, are expected to be completed
by 2000. Of the two noncompliant critical information
systems being replaced, the customer billing system carries
the most risk since it has experienced project delays. Due
to the risk of not completing this project by 2000, SIGECO
modified its existing customer billing system to be Year
2000-ready, testing of which is substantially completed.
The first and largest phase of the financials/supply chain
systems project was successfully implemented September 1,
1998 and the smaller, final phase of the financials/supply
chain systems project, the payroll/HR information system
was successfully implemented in July 1999.
<PAGE> 22
At SIGECO's base-load generating stations, all noncompliant
critical control and data systems have been replaced or
were scheduled to be replaced in 1999 due to functional
obsolescence. The 1999 projects were completed by June 30,
1999.
Based on the findings of SIGECO's detailed inventory and
related testing completed to date, it is anticipated that
there will be a low number of smaller noncritical systems
and items requiring Year 2000-readiness upgrades or
replacement, most of which have been completed.
SIGCORP's contingency planning has been completed, and
SIGECO's detailed contingency plan was filed with the
Indiana Utility Regulatory Commission on June 30, 1999.
The planning encompasses external dependencies such as
critical suppliers, interconnected electricity and natural
gas transmission systems and major customers, as well as
SIGECO's electric generation facilities and other gas and
electric operations areas. SIGCORP does not yet know
whether the critical systems of its suppliers and major
customers will be Year 2000-ready, however it believes that
noncompliance of such systems would not have a material
adverse effect on its financial position or results of
operations.
SIGCORP estimates the remaining amounts required to be
expensed for Year 2000-readiness modifications and
replacements to total less than $250,000. SIGECO expects
to complete the replacement of all noncompliant mission-
critical information and control systems before 2000,
except its existing billing system which will have been
remediated and will be used until the new system is
completed.
<TABLE>
<CAPTION>
Estimated
Incurred throughRemaining 1999
June 1999 Expenditures
<S> <C> <C>
Capital expenditure requirement
for replacement of critical:
information and generating station
control systems not in compliance
but replaced due to functional
obsolescence $24,700,000 $2,500,000
Expense of Year 2000-readiness
modifications to existing
critical systems or replacements
treated as expense $ 1,500,000 $ 250,000
</TABLE>
MARKET RISK SIGCORP is exposed to market risk due to
changes in interest rates and changes in the market price
for electricity and natural gas resulting from changes in
supply and demand. Exposure for interest rate changes
relates to its long-term debt and preferred equity and
partnership obligations. Exposure to electricity market
price risk relates to forward contracts to effectively
manage the supply of, and demand for, the electric
generation capability of SIGECO's generating plants related
to its wholesale power marketing activities. Exposure to
natural gas price risk relates to forward contracts taken
by Energy to manage its exposure to commodity price risks
in providing natural gas supplies to its customers. SIGECO
is not currently exposed to market risk for purchases of
electric power and natural gas for its retail customers due
to current Indiana regulations which allow for full cost
recovery of such purchases through SIGECO's fuel and
natural gas cost adjustment mechanisms. SIGECO and Energy
do not utilize financial instruments for trading or
speculative purposes. As of June 30, 1999, management
believes exposure from these positions did not change
materially from December 31, 1998, and was not material.
(Refer to ''Market Risk'' in Management's Discussion and
Analysis of Results of Operations and Financial Condition
in SIGCORP's 1998 Form 10-K for further discussion of
market risk.)
SIGECO and Energy are also exposed to counterparty credit
risk when a customer or supplier defaults upon a contract
to pay or deliver product. To mitigate this risk, they
have established procedures to determine and monitor the
creditworthiness of counterparties.
<PAGE> 23
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 and environmental compliance requirements.
Additionally, SIGCORP may periodically make capital
investments in nonregulated operations. Construction
expenditures (excluding allowance for other funds used
during construction) incurred during the six months ending
June 30, 1999 totaled $31.4 million and were 88% funded
with internally generated cash. Cash provided from
operations increased $7.3 million during the current six-
month period compared to the same period in 1998. Cash
required for investing and financing activities increased
$11.5 million for the six months ended June 30, 1999
compared to the same period a year ago.
SIGCORP estimates that SIGECO's construction expenditures
for the five-year period 1999-2003 will total approximately
$280 million, including approximately $10 million to
complete several comprehensive information systems which
are necessary to fulfill expanding customer service needs
and to better manage SIGECO's resources, but exclude
construction expenditures that may be required to comply
with new USEPA air quality standards discussed in
AEnvironmental Matters@ which could range from estimates of
$10 million to $90 million. Additionally, SIGCORP expects
to invest approximately $75 million during the five-year
period to implement its recently announced Income / Growth
strategy which, among other initiatives, incorporates the
expansion of SIGCORP's energy services businesses through
the acquisition of electrical contracting and HVAC
companies in an eight-state region to provide industrial,
commercial and institutional customers total energy
solutions.
FINANCING ACTIVITIES The only financing activity during
the second quarter of 1999 was a $44.9 million increase in
short-term notes payable representing the April 1, 1999
refunding of $45 million of SIGECO's first mortgage bonds
with short-term debt. On July 26, 1999, $80 million in
short-term borrowings, including the above amount, were
refunded with the issue of $80 million of 6.72% Senior
Notes due August 1, 2029.
Over the five-year period, SIGCORP expects the majority of
the construction requirements, the capital contributions to
its nonregulated subsidiaries and an estimated $47 million
in debt security redemptions to be provided by internally
generated funds. External financing requirements of $95-
110 million are anticipated of which $60-70 million will be
used primarily to redeem long-term debt and $35-40 million
will be required for acquisitions of nonregulated
businesses. These estimates do not reflect construction
expenditures that may be required to comply with new USEPA
air quality standards.
<PAGE> 24
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
(a) 3) Exhibits:
SIGCORP and SIGECO
EX-4(a) Supplemental Indenture dated July
1, 1999 to the Mortgage and Deed of Trust between
Southern Indiana Gas and Electric Company and Bankers
Trust Company, as Trustee, for the First Mortgage Bonds,
6.72% Senior Note Series of 1999 due August 1, 2029.
EX-4(b) First Supplemental Indenture dated
July 1, 1999 between Southern Indiana Gas and Electric
Company and Bankers Trust Company, as Trustee, for the
6.72% Senior Notes due August 1, 2029.
(b) Reports on Form 8-K
The Agreement and Plan of Merger between
Indiana Energy, Inc., SIGCORP, Inc. and Vectren Corporation
dated June 11, 1999 was filed with the SEC on June 15,
1999.
<PAGE> 25
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 16, 199 9
SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY
s/ S. M. Kerney
S. M. Kerney
Controller
Date August 16, 1999
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000092195
<NAME> SOUTHERN INDIANA GAS AND ELECTRIC CO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 731,611
<OTHER-PROPERTY-AND-INVEST> 5,961
<TOTAL-CURRENT-ASSETS> 90,864
<TOTAL-DEFERRED-CHARGES> 45,780
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 874,216
<COMMON> 78,258
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 246,127
<TOTAL-COMMON-STOCKHOLDERS-EQ> 324,385
0
19,282
<LONG-TERM-DEBT-NET> 169,799
<SHORT-TERM-NOTES> 104,084
<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> 202,966
<TOT-CAPITALIZATION-AND-LIAB> 874,216
<GROSS-OPERATING-REVENUE> 185,003
<INCOME-TAX-EXPENSE> 11,865
<OTHER-OPERATING-EXPENSES> 143,653
<TOTAL-OPERATING-EXPENSES> 155,518
<OPERATING-INCOME-LOSS> 29,485
<OTHER-INCOME-NET> 286
<INCOME-BEFORE-INTEREST-EXPEN> 29,771
<TOTAL-INTEREST-EXPENSE> 9,378
<NET-INCOME> 20,393
539
<EARNINGS-AVAILABLE-FOR-COMM> 19,854
<COMMON-STOCK-DIVIDENDS> 16,191
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</TABLE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
WITH
BANKERS TRUST COMPANY,
as Trustee
SUPPLEMENTAL INDENTURE
Providing among other things for
FIRST MORTGAGE BONDS
6.72% Senior Note Series of 1999 due 2029
Dated as of July 1, 1999
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of July 1, 1999, between
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, a corporation
organized and existing under the laws of the State of
Indiana (hereinafter called the "Company"), party of the
first part, and BANKERS TRUST COMPANY, a corporation
organized and existing under the laws of the State of New
York, as Trustee under the Mortgage hereinafter referred
to, party of the second part.
WHEREAS, the Company heretofore executed and
delivered to Bankers Trust Company, as Trustee (hereinafter
called the "Trustee"), a certain Indenture of Mortgage and
Deed of Trust dated as of April 1, 1932, to secure an issue
of bonds of the Company, issued and to be issued in series,
from time to time, in the manner and subject to the
conditions set forth in the said Indenture, and the said
Indenture has been amended and supplemented by Supplemental
Indentures dated as of August 31, 1936, October 1, 1937,
March 22, 1939, July 1, 1948, June 1, 1949, October 1,
1949, January 1, 1951, April 1, 1954, March 1, 1957,
October 1, 1965, September 1, 1966, August 1, 1968, May 1,
1970, August 1, 1971, April 1, 1972, October 1, 1973, April
1, 1975, January 15, 1977, April 1, 1978, June 4, 1981,
January 20, 1983, November 1, 1983, March 1, 1984, June 1,
1984, November 1, 1984, July 1, 1985, November 1, 1985,
June 1, 1986, November 15, 1986, January 15, 1987, December
15, 1987, December 13, 1990, April 1, 1993, May 1, 1993 and
June 1, 1993, which Indenture as so amended and
supplemented is hereinafter referred to as the "Mortgage"
and as further supplemented by this Supplemental Indenture
is hereinafter referred to as the "Indenture"; and
WHEREAS, the Mortgage provides that the Company
and the Trustee may, from time to time, enter into such
indentures supplemental to the Mortgage as shall be deemed
by them necessary or desirable, to establish the terms and
provisions of any series of bonds to be issued under said
Mortgage and to add to the covenants and agreements of the
Company for the protection of the holders of bonds and of
the mortgaged and pledged property; and
WHEREAS, the Company and the Trustee deem it
necessary or desirable to enter into this Supplemental
Indenture for such purposes; and
WHEREAS, the Company by appropriate corporate
action in conformity with the terms of the Indenture has
duly determined to create a series of bonds to be issued
under the Indenture to be designated as "First Mortgage
Bonds, 6.72% Senior Note Series of 1999 due 2029"
(hereinafter sometimes referred to as "bonds of the Thirty-
Eighth Series"), the bonds of which series are to bear
interest at the rate per annum set forth in the title
thereof; and
WHEREAS, the definitive registered (without
coupons) bonds of the Thirty-Eighth Series and the
Trustee's certificate of authentication to be borne by such
bonds are to be substantially in the following forms,
respectively:
[FORM OF FULLY REGISTERED BOND OF THE THIRTY-EIGHTH SERIES]
[FORM OF FACE OF BOND]
TRANSFER RESTRICTED. EXCEPT AS PROVIDED BELOW, THIS BOND
IS NOT TRANSFERABLE.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
FIRST MORTGAGE BOND, 6.72% SENIOR NOTE SERIES OF 1999
DUE 2029
No. _______ $ 80,000,000
Southern Indiana Gas and Electric Company, a
corporation of the State of Indiana (hereinafter called the
"Company"), for value received, hereby promises to pay to
BANKERS TRUST COMPANY, as Trustee (hereinafter called the
"Senior Note Trustee") under and Indenture (For Senior
Notes) dated as of July 1, 1999, between the Company and
the Senior Note Trustee, as supplemented by the First
Supplemental Indenture dates as of July 1, 1999
(hereinafter called, together with such First Supplemental
Indenture, the "Senior Note Indenture"), or registered
assigns Eighty Million Dollars, on August 1, 2029 at the
office or agency of the Company in the Borough of
Manhattan, The City of New York, New York, in any coin or
currency of the United States of America which at the time
of payment is legal tender for the payment of public and
private debts, and to pay to the registered owner hereof
interest thereon from the interest payment date (February 1
or August 1) next preceding the date of this bond unless
the date hereof is prior to February 1, 2000, in which case
from July 26, 1999 (or, if this bond is dated between the
record date for any interest payment date and such interest
payment date, then from such interest payment date), at the
rate of six and seventy-two one-hundredths per cent (6.72%)
per annum in like coin or currency, payable at said office
or agency on February 1 and August 1 in each year,
commencing February 1, 2000, until the Company's obligation
with respect to the payment of such principal shall have
been discharged. The interest so payable on any February 1
or August 1 will, subject to certain exceptions provided in
the Mortgage hereinafter mentioned, be paid to the person
in whose name this bond is registered at the close of
business on the record date, which shall be the January 15
or July 15, as the case may be, next preceding such
interest payment date, or, if such January 15 or July 15
shall be a legal holiday or a day on which banking
institutions in the Borough of Manhattan, The City of New
York, New York, are authorized or obligated by law to
close, the next preceding day which shall not be a legal
holiday or a day on which such institutions are so
authorized or obligated to close.
The provisions of this bond are continued on the reverse
hereof and such continued provisions shall for all purposes
have the same effect as though fully set forth at this
place.
This bond shall not become obligatory until Bankers Trust
Company, the Trustee under the Mortgage, or its successor
thereunder, shall have signed the form of certificate
endorsed hereon.
IN WITNESS WHEREOF, Southern Indiana Gas and Electric
Company has caused this bond to be signed in its name by
its President or a Vice President, by his signature or a
facsimile thereof, and a facsimile of its corporate seal to
be imprinted hereon, attested by its Secretary or an
Assistant Secretary, by his signature or a facsimile
thereof.
Dated:
SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY
By:__________________________
Name:
Title: President and
Chief Executive
Officer
Attest:
_______________________________
Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
This bond is one of the bonds of the series designated
therein, described in the within-mentioned Mortgage.
BANKERS TRUST COMPANY,
as Trustee,
By:____________________
Name:
Title:
[FORM OF REVERSE OF BOND]
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
FIRST MORTGAGE BOND, 6.72% SENIOR NOTE SERIES OF 1999
DUE 2029
This bond is one of an issue of First Mortgage
Bonds of the Company, issuable in series, and is one of the
series designated in the title hereof, all issued and to be
issued under and equally secured (except as to any sinking
fund established in accordance with the provisions of the
Mortgage hereinafter mentioned for the bonds of any
particular series) by an Indenture of Mortgage and Deed of
Trust, dated as of April 1, 1932, executed by the Company
to Bankers Trust Company, as Trustee, as amended and
supplemented by indentures supplemental thereto, to which
Indenture as so amended and supplemented (herein referred
to as the Mortgage) reference is made for a description of
the property mortgaged and pledged, the nature and extent
of the security, the rights of the holders of the bonds in
respect thereof and the terms and conditions upon which the
bonds are secured.
The principal hereof may be declared or may
become due on the conditions, with the effect, in the
manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as provided in the
Mortgage.
The bonds of the Thirty-Eighth Series are not
transferable except (i) as required to effect an assignment
to a successor trustee under the Senior Note Indenture, or
as otherwise provided in Sections 407 and 409 of the Senior
Note Indenture, or (ii) in compliance with a final order of
a court of competent jurisdiction in connection with any
bankruptcy or reorganization proceeding of the Company.
The Company's obligation to make payments with
respect to the principal of, and/or premium, if any, and/or
interest on, the bonds of the Thirty-Eighth Series shall be
fully or partially satisfied and discharged to the extent
that, at the time any such payment shall be due, the
corresponding amount then due of principal of, and/or
premium, if any, and/or interest on, the senior notes (the
"Senior Notes") issued pursuant to the Senior Note
Indenture (the "Senior Notes") shall have been fully or
partially paid (other than by the application of the
proceeds of a payment in respect of the bonds of the
Thirty-Eighth Series), as the case may be, or there shall
have been deposited with the Senior Note Trustee pursuant
to the Senior Note Indenture trust funds sufficient under
such indenture to fully or partially pay, as the case may
be, the corresponding amount then due of principal of,
and/or or premium, if any, and/or interest on, the Senior
Notes (other than by the application of the proceeds of a
payment in respect of the bonds of the Thirty-Eighth
Series).
Upon payment of the principal of, and premium if
any, and interest due on the Senior Notes, whether at
maturity or prior to maturity by acceleration, redemption,
repayment at the option of a registered holder of Senior
Notes or otherwise, or upon provision for the payment
thereof having been made in accordance with the Senior Note
Indenture (other than by the application of the proceeds of
a payment in respect of the bonds of the Thirty-Eighth
Series), the bonds of the Thirty-Eighth Series in a
principal amount equal to the principal amount of Senior
Notes so paid or for which such provision for payment has
been made shall be deemed fully paid, satisfied and
discharged and the obligations of the Company thereunder
shall be terminated and such bonds of the Thirty-Eighth
Series shall be surrendered to and canceled by the
Trustees. From and after the Release Date (as defined in
the Senior Note Indenture), the bonds of the Thirty-Eighth
Series shall be deemed fully paid, satisfied and discharged
and the obligation of the Company thereunder shall be
terminated. On the Release Date, the bonds of the Thirty-
Eighth Series shall be surrendered to and canceled by the
Trustees.
The Company may redeem the bonds of the Thirty-
Eighth Series, in whole or in part, at any time, upon
notice as provided in the Mortgage (not less than 30 nor
more than 60 days prior to a date fixed for redemption (the
"Redemption Date")) at a redemption price equal to the
greater of (1) 100% of principal or (2) the sum of the
remaining scheduled payments of principal and interest on
the bonds of the Thirty-Eighth Series, discounted to the
Redemption Date on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury
Yield plus ten basis points (.10%), plus in each case
accrued interest to the Redemption Date (the "Redemption
Price"), such Redemption Price to be set forth in an
Officer's Certificate delivered to the Trustee on or before
the Redemption Date and upon which the Trustee may
conclusively rely.
The following terms shall have the following
meanings:
"Treasury Yield" means, with respect to any
Redemption Date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such Redemption Date.
"Comparable Treasury Issue" means the United
States Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the
remaining term of the bonds of the Thirty-Eighth Series
that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable
maturity to the remaining term of the bonds of the Thirty-
Eighth Series.
"Independent Investment Banker" means Goldman,
Sachs & Co. or, if such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent
investment banking institution of national standing
selected by the Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect
to any Redemption Date, the Reference Treasury Dealer
Quotation for such Redemption Date.
"Reference Treasury Dealer Quotation" means, with
respect to the Reference Treasury Dealer and any Redemption
Date, the average of the bid and asked prices for the
Comparable Treasury Issue (expressed as a percentage of its
principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such Redemption Date. The Company
shall furnish the Trustee a notice in writing at least five
business days and not more than ten business days prior to
such Redemption Date of (a) the name of the Reference
Treasury Dealer, (b) the Redemption Date, and (c) the third
business day preceding the Redemption Date.
"Reference Treasury Dealer" means Goldman, Sachs
& Co. and its successors; provided, however, that if
Goldman, Sachs & Co. shall cease to be a primary U.S.
Government Securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
The Company shall deliver to the Trustee the
Officer's Certificate referred to above setting forth the
Company's calculation of the Redemption Price applicable to
any such redemption promptly after the calculation thereof
but, in any event, prior to the Redemption Date of any such
bonds of the Thirty-Eighth Series. Except with respect to
the obligations of the Trustee expressly set forth in the
foregoing definition of "Reference Treasury Dealer
Quotation," the Trustee shall be under no duty to inquire
into, may presume the correctness of, and shall be fully
protected in acting upon the Company's calculation of any
Redemption Price of the bonds of the Thirty-Eighth Series.
If the registered holder of Senior Notes elects to
have any portion of such Senior Notes repaid on August 3,
2009 pursuant to the terms of such Senior Notes, an equal
principal amount of the bonds of the Thirty-Eighth Series
shall be repaid by the Company to the holder thereof on
such date at 95.5% of such principal amount, together with
accrued interest to August 3, 2009.
Failure by the Company to repay the bonds of the
Thirty-Eighth Series when required as described in the
preceding paragraph will result in an Event of Default
under the Mortgage.
The bonds of this series are issuable as
registered bonds without coupons in denominations of $1,000
and authorized multiples thereof. In the manner and upon
payment of the charges prescribed in the Mortgage,
registered bonds without coupons of this series may be
exchanged for a like aggregate principal amount of
registered bonds without coupons of other authorized
denominations of the same series, upon presentation and
surrender thereof, for cancellation, to the Trustee at its
principal corporate trust office in the Borough of
Manhattan, The City of New York, New York.
No recourse shall be had for the payment of the
principal of, premium, if any, or interest on this bond
against any incorporator or any past, present or future
subscriber to the capital stock, stockholder, office or
director of the Company or of any predecessor or successor
corporation, either directly or through the Company or any
predecessor or successor corporation, under any rule of
law, statute or constitution or by the enforcement of any
assessment or otherwise, all such liability of
incorporators, subscribers, stockholders, officers and
directors being released by the holder or owner hereof by
the acceptance of this bond and being likewise waived and
released by the terms of the Mortgage.
Pursuant to the Mortgage, the holder or owner of
this bond by his acceptance hereof is deemed to have agreed
to amendments to the Mortgage which will eventually permit
certain amendments to the Mortgage with the consent of the
holders of 66% of the principal amount of the outstanding
bonds of all series issued under the Mortgage, which
redefine, effective at such time as all bonds of each
series of bonds issued under the Mortgage prior to January
1, 1977 are no longer outstanding, the amounts required to
be spent by the Company under the Mortgage for the repair,
maintenance, renewal and replacement of its property and
which authorize the Company, effective at such time as all
bonds of each series issued under the Mortgage on or prior
to May 31, 1986 are no longer outstanding, to designate
bonds of any series as the bonds to be redeemed pursuant to
Section 36B of the Mortgage and to do so at any time that
cash for such purpose is on deposit with Trustee pursuant
to the provisions of that Section.
[END OF FORM OF BOND]
and
WHEREAS, all things necessary to make the bonds of the
Thirty-Eighth Series, when authenticated by the Trustee and
issued as in the Indenture provided, the valid, binding and
legal obligations of the Company, entitled in all respects
to the security of the Indenture, have been done and
performed, and the creation, execution and delivery of this
Supplemental Indenture has in all respects been duly
authorized; and
WHEREAS, the Company and the Trustee deem it
advisable to enter into this Supplemental Indenture for the
purposes above stated and for the purpose of describing the
bonds of the Thirty-Eighth Series, and of providing the
terms and conditions of redemption thereof;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE
WITNESSETH: That Southern Indiana Gas and Electric
Company, in consideration of the premises and of one dollar
to it duly paid by the Trustee at or before the ensealing
and delivery of these presents, the receipt whereof is
hereby acknowledged, and of the purchase and acceptance of
the bonds issued or to be issued hereunder by the holders
or registered owners thereof, and in order to secure the
payment of the principal, premium, if any, and interest of
all bonds at any time issued and outstanding under the
Indenture, according to their tenor and effect, and the
performance of all of the provisions hereof and of said
bonds, hath granted, bargained, sold, released, conveyed,
assigned, transferred, pledged, set over and confirmed and
by these presents doth grant, bargain, sell, release,
convey, assign, transfer, pledge, set over and confirm unto
Bankers Trust Company, as Trustee, and to its successor or
successors in said trust, and to its and their assigns
forever, all the properties of the Company located in the
State of Indiana described in Schedule A (which is
identified by the signature of an officer of each party
hereto at the end thereof) hereto annexed and hereby made a
part hereof and does hereby confirm that the Company will
not cause or consent to a partition, either voluntary or
through legal proceedings, of property, whether herein
described or heretofore or hereafter acquired, in which its
ownership shall be as a tenant in common, except as
permitted by and in conformity with the provisions of the
Indenture and particularly of Article X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any party
thereof, with the reversion and reversions, remainder and
remainders and (subject to the provisions of Article X of
the Indenture), the tolls, rents, revenues, issues,
earnings, income, product and profits thereof, and all the
estate, right title interest and claim whatsoever, at law
as well as in equity, which the Company now has or may
hereafter acquire in and to the aforesaid property and
franchises and every part and parcel thereof.
TO HAVE AND TO HOLD all such properties, real,
personal and mixed, mortgaged, pledged or conveyed by the
Company as aforesaid, or intended so to be, unto the
Trustee and its successors and assigns forever.
IN TRUST, NEVERTHELESS, upon the terms and trusts
of the Indenture, for those who shall hold the bonds and
coupons issued and to be issued thereunder, or any of them,
without preference, priority or distinction as to lien of
any of said bonds and coupons over any others thereof by
reason of priority in the time of the issue or negotiation
thereof, or otherwise howsoever, subject, however, to the
provisions in reference to extended, transferred or pledged
coupons and claims for interest set forth in the Indenture
(and subject to any sinking funds that may be created for
the benefit of any particular series).
PROVIDED, HOWEVER, and these presents are upon
the condition that, if the Company, its successors or
assigns, shall pay or cause to be paid, the principal of,
premium, if any, and interest on said bonds, at the times
and in the manner stipulated therein and herein, and shall
keep, perform and observe all and singular the covenants
and promises in said bonds and in the Indenture expressed
to be kept, performed and observed by or on the part of the
Company, then this Supplemental Indenture and the estate
and rights hereby granted shall cease, determine and be
void, otherwise to be and remain in full force and effect.
IT IS HEREBY COVENANTED, DECLARED AND AGREED, by
the Company, that all such bonds and coupons are to be
issued, authenticated and delivered, and that all property
subject or to become subject hereto is to be held, subject
to the further covenants, conditions, uses and trusts in
the Indenture set forth, and the Company, for itself and
its successors and assigns, does hereby covenant and agree
to and with the Trustee and its successor or successors in
such trust, for the benefit of those who shall hold said
bonds and interest coupons, or any of them, as follows:
SECTION 1. Bonds of the Thirty-Eighth Series
shall mature on the date set forth in the form of bond
relating thereto hereinbefore set forth, shall bear
interest at the rate per annum set forth in the title
thereof, payable semi-annually, on February 1 and August 1
in each year, and all bonds of said series shall be
designated as hereinbefore in the fourth Whereas clause set
forth. Principal of, premium, if any, and interest on said
bonds shall be payable in any coin or currency of the
United States of America which at the time of payment is
legal tender for the payment of public and private debts,
at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York. Definitive
bonds of said series may be issued, originally or
otherwise, only as registered bonds without coupons; and
they and the Trustee's certificate of authentication shall
be substantially in the forms hereinbefore recited,
respectively. Definitive registered bonds of the Thirty-
Eighth Series may be issued in the denomination of $1,000
and in such other denominations (in multiples of $1,000) as
the Board of Directors of the Company shall approve, and
execution and delivery to the Trustee for authentication
shall be conclusive evidence of such approval. In the
manner and upon payment of the charges prescribed in the
Indenture, registered bonds without coupons of said series
may be exchanged for a like aggregate principal amount of
registered bonds without coupons of other authorized
denominations of the same series, upon presentation and
surrender thereof for cancellation to the Trustee at its
principal corporate trust office in the Borough of
Manhattan, The City of New York, New York. However,
notwithstanding the provisions of Section 12 of the
Indenture, no charge shall be made upon any transfer or
exchange of bonds of said series other than for any tax or
taxes or other governmental charge required to be paid by
the Company. The form of the temporary bonds of said
series shall be in substantially the form of the form of
registered bond hereinbefore recited with such appropriate
changes therein as are required on account of the temporary
nature thereof. Said temporary bonds of said series shall
be in registered form without coupons and shall be
exchangeable for definitive bonds of said series when
prepared.
The person in whose name any registered (without
coupons) bond of the Thirty-Eighth Series is registered at
the close of business on any record date (as hereinbelow
defined) with respect to any interest payment date shall be
entitled to receive the interest payable on such interest
payment date notwithstanding the cancellation of such
registered bond upon any transfer or exchange thereof
subsequent to the record date and prior to such interest
payment date, except if and to the extent the Company shall
default in the payment of the interest due on such interest
payment date, in which case such defaulted interest shall
be paid to the person in whose name such bond is registered
either at the close of business on the day preceding the
date of payment of such defaulted interest or on a
subsequent record date for such payment if one shall have
been established as hereinafter provided. A subsequent
record date may be established by or on behalf of the
Company by notice mailed to the holders of bonds not less
than ten days preceding such record date, which record date
shall be not more than thirty days prior to the subsequent
interest payment date. The term "record date" as used in
this Section with respect to any regular interest payment
date shall mean the January 15 or July 15, as the case may
be, next preceding such interest payment date, or, if such
January 15 or July 15 shall be a legal holiday or a day on
which banking institutions in the Borough of Manhattan, The
City of New York, New York, are authorized or obligated by
law to close, the next preceding day which shall not be a
legal holiday or day on which such institutions are so
authorized or obligated to close.
Except as provided in this Section, every
registered bond without coupons of the Thirty-Eighth Series
shall be dated and shall bear interest as provided in
Section 10 of the Indenture; provided, however, that so
long as there is no existing default in the payment of
interest on the bonds, the holder of any bond authenticated
by the Trustee between the record date for any interest
payment date and such interest payment date shall not be
entitled to the payment of the interest due on such
interest payment date and shall have no claim against the
Company with respect thereto; and provided, further, that,
if and to the extent the Company shall default in the
payment of the interest due on such interest payment date,
then any such bond shall bear interest from the February 1
or August 1, as the case may be, next preceding the date of
such bond, to which interest has been paid or, if the
Company shall be in default with respect to the interest
due on February 1, 2000, then from July 26, 1999.
The Company may redeem the bonds of the Thirty-
Eighth Series, in whole or in part, at any time, upon
notice as provided in the Indenture (not less than 30 nor
more than 60 days prior to a date fixed for redemption (the
"Redemption Date")) at a redemption price equal to the
greater of (1) 100% of principal or (2) the sum of the
remaining scheduled payments of principal and interest on
the bonds of the Thirty-Eighth Series, discounted to the
Redemption Date on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury
Yield plus ten basis points (.10%), plus in each case
accrued interest to the Redemption Date (the "Redemption
Price"), such Redemption Price to be set forth in an
Officer's Certificate delivered to the Trustee on or before
the Redemption Date and upon which the Trustee may
conclusively rely.
The following terms shall have the following
meanings:
"Treasury Yield" means, with respect to any
Redemption Date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such Redemption Date.
"Comparable Treasury Issue" means the United
States Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the
remaining term of the bonds of the Thirty-Eighth Series
that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable
maturity to the remaining term of the bonds of the Thirty-
Eighth Series.
"Independent Investment Banker" means Goldman,
Sachs & Co. or, if such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent
investment banking institution of national standing
selected by the Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect
to any Redemption Date, the Reference Treasury Dealer
Quotation for such Redemption Date.
"Reference Treasury Dealer Quotation" means, with
respect to the Reference Treasury Dealer and any Redemption
Date, the average of the bid and asked prices for the
Comparable Treasury Issue (expressed as a percentage of its
principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such Redemption Date. The Company
shall furnish the Trustee a notice in writing at least five
business days and not more than ten business days prior to
such Redemption Date of (a) the name of the Reference
Treasury Dealer, (b) the Redemption Date, and (c) the third
business day preceding the Redemption Date.
"Reference Treasury Dealer" means Goldman, Sachs
& Co. and its successors; provided, however, that if
Goldman, Sachs & Co. shall cease to be a primary U.S.
Government Securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
The Company shall deliver to the Trustee the
Officer's Certificate referred to above setting forth the
Company's calculation of the Redemption Price applicable to
any such redemption promptly after the calculation thereof
but, in any event, prior to the Redemption Date of any such
bonds of the Thirty-Eighth Series. Except with respect to
the obligations of the Trustee expressly set forth in the
foregoing definition of "Reference Treasury Dealer
Quotation," the Trustee shall be under no duty to inquire
into, may presume the correctness of, and shall be fully
protected in acting upon the Company's calculation of any
Redemption Price of the bonds of the Thirty-Eighth Series.
The bonds of the Thirty-Eighth Series may be
repaid on August 3, 2009, at the option of the registered
holders of the bonds of the Thirty-Eighth Series, at 95.5%
of their principal amount, together with accrued interest
to August 3, 2009. In order for a holder to
exercise this option, the Company must receive at its
office or agency in New York, New York, during the period
beginning on June 3, 2009 and ending at 5:00 p.m. (New York
City time) on July 3, 2009 (or, if July 3, 2009 is not a
Business Day, the next succeeding Business Day), the bonds
of the Thirty-Eighth Series with the form titled "Option to
Elect Repayment on August 3, 2009" on the reverse of the
bonds of the Thirty-Eighth Series duly completed. Any such
notice received by the Company during the period beginning
on June 3, 2009 and ending at 5:00 p.m. (New York City
time) on July 3, 2009 shall be irrevocable. The repayment
option may be exercised by the holder of a bonds of the
Thirty-Eighth Series for less than the entire principal
amount of the bonds of the Thirty-Eighth Series held by
such holder, so long as the principal amount that is to be
repaid is equal to $1,000 or an integral multiple of
$1,000. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of
any bonds of the Thirty-Eighth Series for repayment will be
determined by the Company, whose determination will be
final and binding.
Failure by the Company to repay the bonds of the
Thirty-Eighth Series when required as described in the
preceding paragraph will result in an Event of Default
under the Indenture.
As long as the bonds of the Thirty-Eighth Series are
represented by a Global Security, the Depositary's nominee
will be the registered holder of the bonds of the Thirty-
Eighth Series and therefore it will be the only entity that
can exercise the right to repayment.
SECTION 2. The Company's obligation to make
payments with respect to the principal of, and/or premium,
if any, and/or interest on, the bonds of the Thirty-Eighth
Series shall be fully or partially satisfied and discharged
to the extent that, at the time any such payment shall be
due, the corresponding amount then due of principal of,
and/or premium, if any, and/or interest then due on, the
senior notes (the "Senior Notes") issued pursuant to the
Indenture (For Senior Notes) dated as of July 1, 1999,
between the Company and Bankers Trust Company, the Senior
Note Trustee (the "Senior Note Indenture") shall have been
fully or partially paid (other than by the application of
the proceeds of a payment in respect of such bonds of the
Thirty-Eighth Series), as the case may be, or there shall
have been deposited with the Senior Note Trustee pursuant
to the Senior Note Indenture trust funds sufficient under
such indenture to fully or partially pay, as the case may
be, the corresponding amount then due of principal of,
and/or premium, if any, and/or interest on, the Senior
Notes (other than by the application of the proceeds of a
payment in respect of such bonds of the Thirty-Eighth
Series).
Upon payment of the principal of, and premium if
any, and interest due on the Senior Notes, whether at
maturity or prior to maturity by acceleration, redemption,
repayment at the option of a registered holder of Senior
Notes or otherwise, or upon provision for the payment
thereof having been made in accordance with the Senior Note
Indenture (other than by the application of the proceeds of
a payment in respect of such bonds of the Thirty-Eighth
Series), bonds of the Thirty-Eighth Series in a principal
amount equal to the principal amount of Senior Notes so
paid or for which such provision for payment has been made
shall be deemed fully paid, satisfied and discharged and
the obligations of the Company thereunder shall be
terminated and such bonds of the Thirty-Eighth Series shall
be surrendered to and cancelled by the Trustee. From and
after the Release Date (as defined in the Senior Note
Indenture), the bonds of the Thirty-Eighth Series shall be
deemed fully paid, satisfied and discharged and the
obligation of the Company thereunder shall be terminated.
On the Release Date, the bonds of the Thirty-Eighth Series
shall be surrendered to and cancelled by the Trustee.
If the registered holder of Senior Notes elects
to have any portion of such Senior Notes repaid on August
3, 2009 pursuant to the terms of such Senior Notes, an
equal principal amount of the bonds of the Thirty-Eighth
Series shall be repaid by the Company to the holder thereof
on such date at 95.5% of such principal amount, together
with accrued interest to August 3, 2009.
SECTION 3. The Company covenants that the
provisions of Section 36A of the Indenture and of Section
1.02 of the Supplemental Indenture dated as of July 1,
1948, which are to remain in effect so long as any bonds of
the series referred to in said Section shall be outstanding
under the Indenture, shall remain in full force and effect
so long as any bonds of the Thirty-Eighth Series shall be
outstanding under the Indenture.
SECTION 4. Except as herein otherwise expressly
provided, no duties, responsibilities or liabilities are
assumed, or shall be construed to be assumed, by the
Trustee by reason of this Supplemental Indenture, other
than as set forth in the Mortgage. The Trustee shall not
be responsible for the recitals herein or in the bonds
(except the Trustee's certificate of authentication), all
of which are made by the Company solely. Without limiting
the generality of the foregoing, the Trustee shall have no
responsibility for, and shall incur no liability with
respect to, the form or substance of the Certificates or
the form or substance of any agreement under which any
banking or other financial institution receives the Deposit
or makes the Payments nor shall the Trustee have any
responsibility, or incur any liability, with respect to the
performance of such banking or other financial institution
under any such agreement.
SECTION 5. As supplemented and amended by this
Supplemental Indenture, the Mortgage is in all respects
ratified and confirmed, and the Mortgage and this
Supplemental Indenture shall be read, taken and construed
as one and the same instrument.
SECTION 6. This Supplemental Indenture may be
executed in several counterparts and all such counterparts
executed and delivered, each as an original, shall
constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY, party of the first part hereto, and
BANKERS TRUST COMPANY, party of the second part hereto,
have caused these presents to be executed in their
respective names by their respective Chairmen of the Board
or Presidents or one of their Vice Presidents or Assistant
Vice Presidents and their respective seals to be hereunto
affixed and attested by their respective Secretaries or one
of their Assistant Secretaries, all as of the day and year
first above written.
(SEAL) SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY,
By:/s/ Timothy L. Burke
Name: Timothy L. Burke
Title: Secretary/Treasurer
Attest:
/s/ Linda K. Tiemann_________
Name: Linda K. Tiemann
Title: Assistant Secretary
(SEAL) BANKERS TRUST COMPANY,
By:/s/ Vincent Chorney
Name: Vincent Chorney
Title: Assistant Vice
President
Attest:
/s/ Marc Parilla__________
Name: Marc Parilla
Title: Assistant Vice President
STATE OF INDIANA )
) ss.:
COUNTY OF VANDERBURGH )
On this 26 day of July, 1999, before me, the
undersigned, a notary public in and for the county and
state aforesaid, personally came Timothy L. Burke, to me
known, who being by me duly sworn, did depose and say that
he resides at 3277 Brookfield Drive, Newburgh, Indiana;
that he is Secretary/Treasurer of SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY, one of the corporations described in and
which executed the foregoing instrument; that he knows the
seal of the said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation and
that he signed his name thereto by like order; and the said
Linda K. Tiemann, Assistant Secretary acknowledged the
execution of the foregoing instrument on behalf of the said
corporation as the voluntary act and deed of the said
corporation for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand
and seal the day and year first above written.
(SEAL) /s/ Donna S. Welden__________
Notary Public
My Commission Expires November 29, 2000
My County of Residence is Vanderburgh
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 26 day of July, 1999, before me, the undersigned,
a notary public in and for the county and state aforesaid,
personally came Vincent Chorney, to me known, who being by
me duly sworn, did depose and say that he resides at 215 W.
75 Street, New York, NY; that he is an Assistant Vice
President of BANKERS TRUST COMPANY, one of the corporations
described in and which executed the foregoing instrument;
that he knows the seal of the said corporation; that the
seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors
of said corporation and that he signed his name thereto by
like order; and the said Assistant Vice President
acknowledged the execution of the foregoing instrument on
behalf of the said corporation as the voluntary act and
deed of the said corporation for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand
and seal the day and year first above written.
(SEAL) /s/ Boris Treyger
Notary Public
My Commission Expires November 9, 2000
My County of Residence is Kings County
<PAGE>A-1
SCHEDULE A
Detailed Description of Additional Properties
The following list outlines equipment and properties
pledged as collateral and placed in service between 1993
and 1996:
* Culley Generating Station Units 2 & 3 Scrubber
Project;
* Brown Unit 1 Turbine Blades
* Broadway Gas Turbine Overhaul
* Z-98 Transmission Line Phase 3 Construction
* GE Plastics Substation Purchase (Transmission)
* Point Substation Addition (Transmission)
* System Power Control Center Upgrades
* Deaconess Hospital Substation Upgrades (Distribution)
* Toyota Substation (Distribution)
* Kasson - Copperline Gas Main Installations
* CNG Fueling Station
* Wagner Operation Center Phase 5 Construction and
Improvements
Signed for identification
/s/ Timothy L. Burke
Name: Timothy L. Burke
Title: Secretary/Treasurer
SOUTHERN INDIANA GAS AND ELECTRIC
COMPANY
/s/ Marc J. Parilla
Name: Marc J. Parilla
Title: Assistant Vice President
BANKERS TRUST COMPANY
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
TO
BANKERS TRUST COMPANY,
Trustee
------
First Supplemental Indenture
Dated as of July 1, 1999
to
Indenture
(For Senior Notes)
Dated as of July 1, 1999
____________________________
6.72% Senior Notes due August 1, 2029
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of July 1,
1999, between SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, a
corporation duly organized and existing under the laws of
the State of Indiana (herein called the "Company"), having
its principal office at 20 N.W. Fourth Street, Evansville,
Indiana 47741-0001, and BANKERS TRUST COMPANY, a banking
corporation of the State of New York, having its principal
office at 4 Albany Street, 4th Floor, New York, New York
10006, as Trustee (herein called the "Trustee") under the
Indenture (For Senior Notes) dated as of July 1, 1999
between the Company and the Trustee (the "Indenture").
Capitalized terms used but not defined herein shall have
the meanings given them in the Indenture.
RECITALS OF THE COMPANY
A. The Company has executed and delivered the
Indenture to the Trustee to provide for the issuance from
time to time of its Senior Notes (the "Notes"), said Notes
to be issued in one or more series as in the Indenture
provided.
B. Pursuant to the terms of the Indenture, the
Company desires to establish a new series of its Notes to
be known as its 6.72% Senior Notes due 2029 (herein called
the "Senior Notes Due 2029"), the form and substance of
such Senior Notes Due 2029 and the terms, provisions, and
conditions thereof to be set forth as provided in the
Indenture and this First Supplemental Indenture.
C. All things necessary to make this First
Supplemental Indenture a valid agreement of the Company,
and to make the Senior Notes Due 2029, when executed by the
Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises and the
purchase of the Senior Notes Due 2029 by the Holders
thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Senior
Notes Due 2029 and the terms, provisions, and conditions
thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Senior Notes
Due 2029, as follows:
ARTICLE I
GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES DUE 2029
Section 101 There is hereby established a series of
Notes designated the "6.72% Senior Notes due 2029," limited
in the aggregate principal amount of EIGHTY MILLION AND
NO/100 DOLLARS ($80,000,000). Such series of Notes shall
be initially authenticated and delivered from time to time
upon delivery to the Trustee of the documents required by
Section 303 of the Indenture including, among other things,
a Company Order for the authentication and delivery of the
Senior Notes Due 2029.
Section 102 The Senior Notes Due 2029 shall be
issued in certificated form, except that the Senior Notes
Due 2029 shall be issued initially as a Global Note to and
registered in the name of a nominee of The Depository Trust
Company, as Depositary therefor. Any Senior Notes Due 2029
to be issued or transferred to, or to be held by such
nominee (or any successor thereof) for such purpose shall
bear the depositary legend in substantially the form set
forth at the top of the form of Senior Notes Due 2029 in
Article II hereof, unless otherwise agreed by the Company,
such agreement to be confirmed in writing to the Trustee.
Such Global Note may be exchanged in whole or in part for
Senior Notes Due 2029 registered, and any transfer of such
Global Note in whole or in part may be registered, in the
name or names of Persons other than such Depositary or a
nominee thereof as to which the Company shall agree, such
agreement to be confirmed in writing to the Trustee.
Principal of, and premium, if any, and interest on the
Senior Notes Due 2029 will be payable, the transfer of
Senior Notes Due 2029 will be registrable and Senior Notes
Due 2029 will be exchangeable for Senior Notes Due 2029
bearing identical terms and provisions, at the office or
agency of the Company in the Borough of Manhattan, The City
and State of New York; provided, however, that payment of
interest may be made at the option of the Company by check
mailed to the registered Holders thereof at such address as
shall appear in the Note Register. The Senior Notes Due
2029 shall have the terms set forth in the form of the
Senior Notes Due 2029 set forth in Article II hereof.
Section 103 The Company may redeem the Senior Notes
Due 2029, in whole or in part, at any time, upon notice as
provided in the Indenture (not less than 30 nor more than
60 days prior to a date fixed for redemption (the
"Redemption Date")) at a redemption price equal to the
greater of (1) 100% of principal or (2) the sum of the
remaining scheduled payments of principal and interest on
the Senior Notes Due 2029, discounted to the Redemption
Date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Yield
plus ten basis points (.10%), plus in each case accrued
interest to the Redemption Date (the "Redemption Price"),
such Redemption Price to be set forth in an Officer's
Certificate delivered to the Trustee on or before the
Redemption Date and upon which the Trustee may conclusively
rely.
For purposes of this Section 103, the following terms
shall have the following meanings:
"Treasury Yield" means, with respect to any Redemption
Date, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such Redemption Date.
"Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment
Banker as having a maturity comparable to the remaining
term of the Senior Notes Due 2029 that would be utilized,
at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of
the Senior Notes Due 2029.
"Independent Investment Banker" means Goldman, Sachs &
Co. or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment
banking institution of national standing selected by the
Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any
Redemption Date, the Reference Treasury Dealer Quotation
for such Redemption Date.
"Reference Treasury Dealer Quotation" means, with
respect to the Reference Treasury Dealer and any Redemption
Date, the average of the bid and asked prices for the
Comparable Treasury Issue (expressed as a percentage of its
principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such Redemption Date. The Company
shall furnish the Trustee a notice in writing at least five
business days and not more than ten business days prior to
such Redemption Date of (a) the name of the Reference
Treasury Dealer, (b) the Redemption Date, and (c) the third
business day preceding the Redemption Date.
"Reference Treasury Dealer" means Goldman, Sachs & Co.
and its successors; provided, however, that if Goldman,
Sachs & Co. shall cease to be a primary U.S. Government
Securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
The Company shall deliver to the Trustee the Officer's
Certificate referred to above in this Section 103 setting
forth the Company's calculation of the Redemption Price
applicable to any such redemption promptly after the
calculation thereof but, in any event, prior to the
Redemption Date of any such Senior Notes Due 2029. Except
with respect to the obligations of the Trustee expressly
set forth in the foregoing definition of "Reference
Treasury Dealer Quotation," the Trustee shall be under no
duty to inquire into, may presume the correctness of, and
shall be fully protected in acting upon the Company's
calculation of any Redemption Price of the Senior Notes Due
2029.
Section 104 The Senior Notes Due 2029 may be repaid
on August 3, 2009, at the option of the registered holders
of the Senior Notes Due 2029, at 95.5% of their principal
amount, together with accrued interest to August 3, 2009.
In order for a holder to exercise this option, the Company
must receive at its office or agency in New York, New York,
during the period beginning on June 3, 2009 and ending at
5:00 p.m. (New York City time) on July 3, 2009 (or, if July
3, 2009 is not a Business Day, the next succeeding Business
Day), the Senior Note Due 2029 with the form titled "Option
to Elect Repayment on August 3, 2009" on the reverse of the
Senior Note Due 2029 duly completed. Any such notice
received by the Company during the period beginning on June
3, 2009 and ending at 5:00 p.m. (New York City time) on
July 3, 2009 shall be irrevocable. The repayment option
may be exercised by the holder of a Senior Note Due 2029
for less than the entire principal amount of the Senior
Notes Due 2029 held by such holder, so long as the
principal amount that is to be repaid is equal to $1,000 or
an integral multiple of $1,000. All questions as to the
validity, form, eligibility (including time of receipt) and
acceptance of any Senior Note Due 2029 for repayment will
be determined by the Company, whose determination will be
final and binding.
Failure by the Company to repay the Senior Notes Due
2029 when required as described in the preceding paragraph
will result in an Event of Default under the Indenture.
As long as the Senior Notes Due 2029 are represented
by a Global Security, the Depositary's nominee will be the
registered holder of the Senior Notes Due 2029 and
therefore it will be the only entity that can exercise the
right to repayment.
Section 105 The Company has issued pursuant to
a Supplemental Indenture dated as of July 1, 1999 to the
First Mortgage, and hereby delivers to the Trustee for the
benefit of the Holders of all Notes from time to time
Outstanding under the Indenture, a series of Senior Note
First Mortgage Bonds designated the "First Mortgage Bonds,
6.72% Senior Note Series Due 2029." The Senior Note First
Mortgage Bonds have the same rate or rates of interest (or
interest calculated in the same manner) (including interest
payable following a default on the Senior Notes Due 2029),
interest payment dates, maturity and redemption provisions,
and have been issued in the same aggregate principal
amount, as the Senior Notes Due 2029.
Section 106 When the obligation of the Company
to make payments with respect to the principal of, and
premium, if any, and interest on all or any part of the
Senior Note First Mortgage Bonds shall be satisfied or
deemed satisfied pursuant to Section 403, Section 801 or
Section 802 of the Indenture or pursuant to Section 103 of
this First Supplemental Indenture, the Trustee shall, upon
written request of the Company and the receipt of the
certificate of the Expert described in Section 404(b) of
the Indenture (if such certificate is then required by
Section 404(b) of the Indenture), deliver to the Company
without charge therefor all of the Senior Note First
Mortgage Bonds so satisfied or deemed satisfied, together
with such appropriate instruments of transfer or release as
may be reasonably requested by the Company. All Senior
Note First Mortgage Bonds delivered to the Company in
accordance with this Section 106 shall be delivered by the
Company to the Mortgage Trustee for cancellation.
Section 107 The Senior Notes Due 2029 shall be
defeasible pursuant to Section 801 of the Indenture.
ARTICLE II
FORM OF
6.72% SENIOR NOTES DUE 2029
Section 201 The Senior Notes Due 2029 and the
Trustee's certificate of authentication to be endorsed are
to be substantially in the following forms:
[Form of Face of Note]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO SOUTHERN INDIANA GAS AND ELECTRIC
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
6.72% Senior Notes due 2029
No. ____ $__________
CUSIP No. 843163AX4
Southern Indiana Gas and Electric, a corporation duly
organized and existing under the laws of the State of
Indiana (herein called the "Company", which term includes
any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
___________, or registered assigns, the principal sum of
__________ Dollars ($_________) on August 1, 2029, and to
pay interest thereon from July 26, 1999 or from the most
recent Interest Payment Date with respect to which interest
has been paid or duly provided for, semi-annually on
February 1 and August 1 in each year (each an "Interest
Payment Date"), commencing February 1, 2000, at the rate of
6.72% per annum, until the principal hereof is paid or made
available for payment, provided that any principal and
premium, and any such installment of interest, which is
overdue shall bear interest at the rate of 6.72% per annum
(to the extent that the payment of such interest shall be
legally enforceable); from the dates such amounts are due
until they are paid or made available for payment, and such
interest shall be payable on demand. The interest so
payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Note (or one or
more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest,
which shall be the January 15 or July 15 (whether or not a
Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close
of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Notes of this series
not less than 10 days prior to such Special Record Date, or
be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities
exchange on which the Notes of this series may be listed,
and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.
Payment of the principal of (and premium if any) and
such interest on this Note will be made at the office or
agency of the Company maintained for that purpose in The
City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender
for payment of public and private debts; provided, however,
that at the option of the Company payment of such interest
may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Note
Register.
The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day
months. Interest will accrue from each prior Interest
Payment Date to, but not including, the relevant payment
date. In the event that any date on which interest is
payable on the Notes of this series is not a Business Day
at any Place of Payment, then payment of interest or
principal and premium, if any, need not be made at such
Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment
Date or Redemption Date, or at the Stated Maturity, and, if
such payment is made or duly provided for on such Business
Day, no interest shall accrue on the amount so payable for
the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be, to
such Business Day. A "Business Day" means when used with
respect to a Place of Payment or any other particular
location specified in the Indenture, means any day, other
than a Saturday or Sunday, which is not a day on which
banking institutions or trust companies in such Place of
Payment or other location are generally authorized or
required by law, regulation or executive order to remain
closed.
Reference is hereby made to the further provisions of
this Note set forth below, which further provisions shall
for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to below by manual
signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
By:________________________
Attest:
________________________
[Form of Reverse of Note]
This Note is one of a duly authorized issue of
securities of the Company (herein called the "Notes"),
issued and to be issued in one or more series under an
Indenture (For Senior Notes), dated as of July 1, 1999
(herein called the "Indenture", which term shall have the
meaning assigned to it in such instrument), between the
Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor
trustee under the Indenture), and reference is hereby made
to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and
of the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the
series designated on the face hereof, limited in aggregate
principal amount to $80,000,000.
Prior to the Release Date (as hereinafter defined),
this Note will be secured by first mortgage bonds (the
"Senior Note First Mortgage Bonds") delivered by the
Company to the Trustee for the benefit of all Holders of
Notes from time to time Outstanding, issued under the
Indenture, dated as of April 1, 1932, between the Company
and Bankers Trust Company, as trustee, as supplemented and
amended from time to time (the "First Mortgage").
Reference is made to the First Mortgage for a description
of property mortgaged and pledged, the nature and extent of
the security, the rights of the holders of the first
mortgage bonds under the First Mortgage and of the Mortgage
Trustee in respect thereof, the duties and immunities of
the Mortgage Trustee and the terms and conditions upon
which the Senior Note First Mortgage Bonds are secured and
the circumstances under which additional first mortgage
bonds may be issued.
FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS,
OTHER THAN FIRST MORTGAGE BONDS WHICH DO NOT IN AGGREGATE
PRINCIPAL AMOUNT EXCEED THE GREATER OF FIVE PERCENT (5%) OF
THE COMPANY'S NET TANGIBLE ASSETS OR FIVE PERCENT (5%) OF
THE COMPANY'S CAPITALIZATION, HAVE BEEN RETIRED THROUGH
REPAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE FIRST
MORTGAGE BONDS THE PAYMENT FOR WHICH HAS BEEN PROVIDED FOR
IN ACCORDANCE WITH THE FIRST MORTGAGE) AT, BEFORE OR AFTER
THE MATURITY THEREOF, PROVIDED THAT NO DEFAULT OR EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING (THE "RELEASE
DATE"), THE SENIOR NOTE FIRST MORTGAGE BONDS SHALL CEASE TO
SECURE THE NOTES IN ANY MANNER.
The Company may redeem the Senior Notes Due 2029, in
whole or in part, at any time, upon notice as provided in
the Indenture (not less than 30 nor more than 60 days prior
to a date fixed for redemption (the "Redemption Date")) at
a redemption price equal to the greater of (1) 100% of
principal or (2) the sum of the remaining scheduled
payments of principal and interest on the Senior Notes Due
2029, discounted to the Redemption Date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Yield plus ten basis points (.10%),
plus in each case accrued interest to the Redemption Date
(the "Redemption Price"), such Redemption Price to be set
forth in an Officer's Certificate delivered to the Trustee
on or before the Redemption Date and upon which the Trustee
may conclusively rely.
The following terms shall have the following meanings:
"Treasury Yield" means, with respect to any Redemption
Date, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such Redemption Date.
"Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment
Banker as having a maturity comparable to the remaining
term of the Senior Notes Due 2029 that would be utilized,
at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of
the Senior Notes Due 2029.
"Independent Investment Banker" means Goldman, Sachs &
Co. or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment
banking institution of national standing selected by the
Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any
Redemption Date, the Reference Treasury Dealer Quotation
for such Redemption Date.
"Reference Treasury Dealer Quotation" means, with
respect to the Reference Treasury Dealer and any Redemption
Date, the average of the bid and asked prices for the
Comparable Treasury Issue (expressed as a percentage of its
principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such Redemption Date. The Company
shall furnish the Trustee a notice in writing at least five
business days and not more than ten business days prior to
such Redemption Date of (a) the name of the Reference
Treasury Dealer, (b) the Redemption Date, and (c) the third
business day preceding the Redemption Date.
"Reference Treasury Dealer" means Goldman, Sachs & Co.
and its successors; provided, however, that if Goldman,
Sachs & Co. shall cease to be a primary U.S. Government
Securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
The Company shall deliver to the Trustee the Officer's
Certificate referred to above setting forth the Company's
calculation of the Redemption Price applicable to any such
redemption promptly after the calculation thereof but, in
any event, prior to the Redemption Date of any such Senior
Notes Due 2029. Except with respect to the obligations of
the Trustee expressly set forth in the foregoing definition
of "Reference Treasury Dealer Quotation," the Trustee shall
be under no duty to inquire into, may presume the
correctness of, and shall be fully protected in acting upon
the Company's calculation of any Redemption Price of the
Senior Notes Due 2029.
This Senior Note Due 2029 may be repaid on August 3,
2009, at the option of the registered holder hereof, at
95.5% of its principal amount, together with accrued
interest to August 3, 2009. In order for the holder to
exercise this option, the Company must receive at its
office or agency in New York, New York, during the period
beginning on June 3, 2009 and ending at 5:00 p.m. (New York
City time) on July 3, 2009 (or, if July 3, 2009 is not a
Business Day, the next succeeding Business Day), this
Senior Note Due 2029 with the form titled "Option to Elect
Repayment on August 3, 2009" on the reverse hereof duly
completed. Any such notice received by the Company during
the period beginning on June 3, 2009 and ending at 5:00
p.m. (New York City time) on July 3, 2009 (or, if July 3,
2009 is not a Business Day, the next succeeding Business
Day) shall be irrevocable. No transfer or exchange of this
Senior Note Due 2029 (or, in the event that this Senior
Note Due 2029 is to be repaid in part, such portion of this
Senior Note Due 2029 to be repaid) will be permitted after
such notice is received by the Company. The repayment
option may be exercised by the holder hereof for less than
the entire principal amount of the Senior Notes Due 2029
held by such holder, so long as the principal amount that
is to be repaid is equal to $1,000 or an integral multiple
of $1,000. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of
any Senior Note Due 2029 for repayment will be determined
by the Company, whose determination will be final and
binding.
Failure by the Company to repay the Senior Notes Due
2029 when required as described in the preceding paragraph
will result in an Event of Default under the Indenture.
As long as the Senior Notes Due 2029 are represented
by a Global Security, the Depositary's nominee will be the
registered holder of the Senior Notes Due 2029 and
therefore it will be the only entity that can exercise the
right to repayment.
If notice has been given as provided in the Indenture
and funds for the redemption of any Notes (or any portion
thereof) called for redemption shall have been made
available on the redemption date referred to in such
notice, such Notes (or any portion thereof) will cease to
bear interest on the date fixed for such redemption
specified in such notice and the only right of the Holders
of such Notes will be to receive payment of the Redemption
Price.
Notice of any optional redemption of Notes of this
series (or any portion thereof) will be given to Holders at
their addresses, as shown in the Note Register for such
Notes, not more than 60 nor less than 30 days prior to the
date fixed for redemption. The notice of redemption will
specify, among other items, the method of calculation of
the Redemption Price and the principal amount of the Notes
held by such Holder to be redeemed. If less than all of
the Notes are to be redeemed at the option of the Company,
the Trustee shall select, in such manner as it shall deem
fair and appropriate, the portion of such Note to be
redeemed in whole or in part.
The Notes of this series will not be subject to any
sinking fund.
In the event of redemption of this Note in part only,
a new Note or Notes of this series and of like tenor for
the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at
any time of the entire indebtedness of this Note upon
compliance with certain conditions set forth in the
Indenture.
If an Event of Default with respect to Notes of this
series shall occur and be continuing, the principal of the
Notes may be declared due and payable in the manner and
with the effect provided in the Indenture and, upon such
declaration, the Trustee shall demand the acceleration of
the payment of principal of the Senior Note First Mortgage
Bonds as provided in the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the
modification of the rights and obligations of the Company
and the rights of the Holders of the Notes to be affected
under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of specified
percentages of the Notes Outstanding. The Indenture also
contains provisions permitting the Holders of specified
percentages in principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all Notes, to
waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or
in exchange therefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the
Indenture, the Holder of this Note shall not have the right
to institute any proceeding with respect to the Indenture
or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing
Event of Default with respect to the Notes of this series,
the Holders of not less than a majority in aggregate
principal amount of the Notes of all series at the time
Outstanding in respect of which an Event of Default shall
have occurred and be continuing shall have made written
request to the Trustee to institute proceedings in respect
of such Event of Default as Trustee and offered the Trustee
reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount
of Notes of all series at the time Outstanding in respect
of which an Event of Default shall have occurred and be
continuing a direction inconsistent with such request, and
shall have failed to institute any such proceeding for 60
days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Note for the enforcement
of any payment of principal hereof or any premium or
interest hereon on or after the respective due dates
expressed herein.
No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and
unconditional, to pay the principal of and any premium and
interest on this Note at the times, place and rate, and in
the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is
registrable in the Note Register, upon surrender of this
Note for registration of transfer at the office or agency
of the Company in any place where the principal of and any
premium and interest on this Note are payable, duly
endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or
more new Notes of this series and of like tenor, of
authorized denominations and for the same aggregate
principal amount, will be issued to the designated
transferee or transferees.
The Notes of this series are issuable only in
registered form without coupons in denominations of $1,000
and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set
forth, Notes of this series are exchangeable for a like
aggregate principal amount of Notes of this series and of
like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name
this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither
the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
All terms used in this Note that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
[Form of Option to Elect Repayment]
OPTION TO ELECT REPAYMENT ON AUGUST 3, 2009
The undersigned hereby irrevocably request(s) and
instruct(s) the Corporation to repay this Note (or portion
hereof specified below) pursuant to its terms at a price
equal to 95.5% of the principal amount to be repaid,
together with unpaid interest accrued hereon to August 3,
2009, to the undersigned, at:
___________________________________________________________
__________________________________________________________
__________________________________________________________
(Please print or typewrite name and address of the
undersigned)
For this Note to be repaid, the Trustee must receive
at its Corporate Trust Office in The City of New York,
State of New York, currently located at 4 Albany Street, 4th
Floor, New York, New York 10006, during the period
beginning on June 3, 2009 and ending at 5:00 p.m. (New York
City time) on July 3, 2009 (or if July 3, 2009 is not a
Business Day, the next succeeding Business Day), this Note
with this "Option to Elect Repayment on August 3, 2009"
form duly completed.
If less than the entire principal amount of this Note
is to be repaid, specify the portion thereof (which shall
be in increments of $1,000) which the holder elects to have
repaid and specify the denomination or denominations of the
Notes to be issued to the holder for the portion of this
Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion
not being repaid).
Principal Amount
to be Repaid: $_______________
Date:__________ ______________________________________
Notice: The signature(s) on this
Option to Elect Repayment on
August 3, 2009 must correspond
with the name(s) as written upon the
face of this Note in every particular,
without alteration or enlargement or
any change whatsoever.
[Form of Trustee's Certificate of Authentication]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated
therein referred to in the within-mentioned Indenture.
Dated: ___________________
BANKERS TRUST COMPANY,
as Trustee
By:___________________
Authorized Signatory
ARTICLE III
ORIGINAL ISSUE OF SENIOR NOTES DUE 2029
Section 301 Senior Notes Due 2029 in the
aggregate principal amount of $80,000,000, may, upon
execution of this First Supplemental Indenture, be executed
by the Company by an Authorized Officer and delivered to
the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Notes upon receipt
of and in accordance with a Company Order therefor without
any further action by the Company.
ARTICLE IV
PAYING AGENT AND REGISTRAR
Section 401 Bankers Trust Company will be the
Paying Agent and Note Registrar for the Senior Notes Due
2029.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 501 Except as otherwise expressly
provided in this First Supplemental Indenture or in the
form of Senior Notes Due 2029 or otherwise clearly required
by the context hereof or thereof, all terms used herein or
in said form of Senior Notes Due 2029 that are defined in
the Indenture shall have the several meanings respectively
assigned to them thereby.
Section 502 The Indenture, as supplemented by
this First Supplemental Indenture, is in all respects
ratified and confirmed, and this First Supplemental
Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
Section 503 The Trustee hereby accepts the
trusts herein declared, provided, created, supplemented, or
amended and agrees to perform the same upon the terms and
conditions herein and in the Indenture set forth and upon
the following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency
of this First Supplemental Indenture or for or in respect
of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every
term and condition contained in Article Seven of the
Indenture shall apply to and form part of this First
Supplemental Indenture with the same force and effect as if
the same were herein set forth in full with such omissions,
variations, and insertions, if any, as may be appropriate
to make the same conform to the provisions of this First
Supplemental Indenture.
__________________________________
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to
be an original, but all such counterparts shall together
constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this First Supplemental Indenture to be duly executed, and
their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
SOUTHERN INDIANA GAS AND ELECTRIC
COMPANY
By:/s/ Timothy L. Burke
[SEAL] Name: Timothy L. Burke
Title: Secretary / Treasurer
ATTEST:
/s/ Linda K. Tiemann
Name: Linda K. Tiemann
Title: Assistant Secretary
(Trustee's Signature Page Follows)
<PAGE>
Trustee's Signature Page
First Supplemental Indenture, dated as of July 1, 1999, to
Indenture (For Senior Notes), dated as of July 1, 1999
BANKERS TRUST COMPANY, as Trustee
By: /s/ Vincent Chorney
[SEAL] Name: Vincent Chorney
Title: Assistant Vice President
ATTEST:
/s/ Marc Parilla
Name: Marc Parilla
Title: Assistant Vice President
