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 March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3553
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
INDIANA 35-0672570
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 N. W. Fourth Street, Evansville, Indiana 47741
(Address of principal executive offices) (Zip Code)
812-465-5300
(Registrant's telephone number, including area code)
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:
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stock - Without par value 15,754,826 April 30, 2000
Class Number of shares Date
</TABLE>
<PAGE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
Page No.
PART I. FINANCIAL INFORMATION:
Item 1: Financial Statements
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
Balance Sheets 3-4
Statements of Income 5
Statements of Cash Flows 6
NOTES TO FINANCIAL STATEMENTS OF
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY 7-11
Item 2: Management's Discussion and Analysis of
Results of Operations and Financial Condition 12-17
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
Part II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of
Security Holders 18
Item 5: Other information 18
Item 6: Exhibits and Reports on Form 8-K 18-20
Signatures 21
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Thousands - Unaudited)
March 31, December 31,
2000 1999 1999
<S> <C> <C> <C>
ASSETS
UTILITY PLANT, at original cost:
Electric $1,142,496 $1,146,127 $1,160,216
Gas 157,258 150,552 156,918
1,299,754 1,296,679 1,317,134
Less accumulated depreciation
and amortization 626,545 604,196 623,611
673,209 692,483 693,523
Construction work in progress 55,909 32,855 45,393
Net utility plant 729,118 725,338 738,916
CURRENT ASSETS
Cash and cash equivalents 2,147 42,713 449
Accounts receivables, less
reserves of $2,262, $2,377 and
$2,138 44,038 34,125 34,738
Accrued unbilled revenues 12,522 14,274 18,736
Inventories 29,388 39,633 39,190
Current regulatory assets 8,142 7,848 7,921
Other current assets 2,240 2,948 2,970
Total Current Assets 98,477 141,541 104,004
OTHER INVESTMENTS AND PROPERTY
Environmental improvement fund
held by trustee 1,010 4,341 996
Notes receivable - - 1,159
Nonutility property and
other, net 2,924 1,577 1,627
Total other investment and
property 3,934 5,918 3,782
OTHER ASSETS
Unamortized premium on
reacquired debt 3,881 4,106 3,937
Demand side management programs 25,187 24,928 25,298
Allowance inventory 2,269 2,269 2,269
Deferred charges 16,649 15,071 16,553
Total other assets 47,986 46,374 48,057
TOTAL $ 879,515 $ 919,171 $ 894,759
<FN>
The accompanying Notes to Financial Statements are an integral
part of these statements.
</FN>
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Thousands - Unaudited)
March 31, December 31,
2000 1999 1999
<S> <C> <C> <C>
SHAREHOLDER'S EQUITY AND LIABILITIES
CAPITALIZATION:
Common Stock $ 78,258 $ 78,258 $ 78,258
Retained Earnings 251,785 246,335 256,312
Contributions (12,132) - -
Total common shareholders' equity 317,911 324,593 334,570
Cumulative Nonredeemable Preferred
Stock of Subsidiary 11,090 11,090 11,090
Cumulative Redeemable Preferred
Stock of Subsidiary 7,500 7,500 7,500
Cumulative Special Preferred Stock
of Subsidiary 575 692 692
Long-Term Debt, net of current
maturities 237,646 169,782 238,282
Total capitalization, excluding
bonds subject to tender 574,722 513,657 592,134
CURRENT LIABILITIES:
Current Portion of Adjustable Rate
Bonds Subject to Tender 53,700 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 10,025 71,686 22,880
Notes payable to Associated
Company 6,443 15,020 -
Total current maturities of
long- term debt and interim
financing 16,468 131,706 22,880
Other Current Liabilities:
Accounts payable 28,325 21,033 28,560
Dividends payable 103 117 117
Accrued taxes 18,369 15,063 8,408
Accrued interest 5,038 6,272 6,012
Refunds to customers 1,863 3,473 5,375
Other accrued liabilities 28,063 23,532 22,706
Total other current liabilities 81,761 69,490 71,178
Total current liabilities 151,929 254,896 147,758
OTHER LIABILITIES:
Accumulated deferred income taxes 120,904 118,352 122,977
Accumulated deferred investment tax
credits, being
amortized over lives of property 17,015 18,444 17,372
Postretirement benefits other than
pensions 12,889 12,162 12,041
Other 2,056 1,660 2,477
Other liabilities 152,864 150,618 154,867
TOTAL $879,515 $919,171 $894,759
<FN>
The accompanying Notes to Financial Statements are an integral part
of these statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
(Thousands - Unaudited)
Three Months Ended Twelve Months Ended
March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $72,990 $70,987 $309,572 $303,625
Cost of fuel and
purchase power 21,678 20,130 94,494 92,261
Electric margin 51,312 50,857 215,078 211,364
Gas 29,227 29,698 67,741 66,581
Cost of gas 19,634 19,505 39,741 38,874
Gas margin 9,593 10,193 28,000 27,707
Total Margin 60,905 61,050 243,078 239,071
OPERATING EXPENSES:
Operations and maintenance 21,238 22,229 94,667 96,410
Merger costs 12,357 - 12,357 -
Depreciation and
amortization 11,490 11,217 45,140 42,985
Federal and state income
taxes 4,237 7,330 23,334 24,725
Property and other taxes 3,233 3,127 12,951 12,221
Total operating expenses 52,555 43,903 188,449 176,341
OPERATING INCOME 8,350 17,147 54,629 62,730
OTHER INCOME -NET 699 391 3,416 607
INCOME BEFORE INTEREST AND
PREFERRED DIVIDEND 9,049 17,538 58,045 63,337
INTEREST EXPENSE 4,783 5,031 19,518 20,325
NET INCOME 4,266 12,507 38,527 43,012
PREFERRED STOCK DIVIDEND 268 270 1,076 1,091
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ 3,998 $12,237 $ 37,451 $ 41,921
<FN>
The accompanying Notes to Financial Statements are an integral part
of these statements.
</FN>
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Thousands - Unaudited)
Three Months Ended Twelve Months Ended
March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,266 $ 12,507 $ 38,527 $ 43,012
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Merger Costs 12,357 - 12,357 -
Depreciation and
amortization 11,490 11,217 45,140 42,985
Deferred income taxes
and investment tax
credits, net (2,430) (152) 1,123 2,776
Allowance for other
funds used during
construction - - 296 (4)
Change in assets and
liabilities:
Receivables, net
(including accrued
unbilled revenues) (1,927) 1,050 (8,162) (1,446)
Inventories 9,802 4,757 10,246 (10,740)
Accounts payable (5,621) (7,094) 1,906 6,664
Accrued taxes 9,961 10,291 3,306 (1,784)
Refunds to customers
and from gas suppliers (3,512) 1,317 (1,610) 2,225
Other assets and
liabilities 4,909 9,582 3,314 4,333
Net cash provided by
operating activities 39,295 43,475 106,443 88,021
CASH FLOWS FROM INVESTING
ACTIVITIES
Construction expenditures
(net of allowance for
funds used during
construction) (13,647) (13,990) (60,334) (58,144)
Demand side management
program expenditures (111) (33) (330) (1,063)
Change in nonutility
property (1,297) - (1,347) (25)
Other (177) (153) (1,015) (2,009)
Net cash (used in)
investing activities (15,232) (14,176) (63,026) (61,241)
CASH FLOWS FROM FINANCING
ACTIVITIES
First mortgage bonds - net - - 25,000 (14,000)
Dividends paid (8,793) (8,096) (32,556) (30,861)
Reduction in preferred
stock (117) (116) (116) (232)
Change in environmental
improvement funds held
by trustee (14) (41) 3,331 (202)
Change in notes payable (13,383) 21,017 (79,454) 56,435
Other (58) 138 (187) (382)
Net cash provided by
(used in) financing
activities (22,365) 12,902 (83,982) 10,758
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 1,698 42,201 (40,565) 37,538
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 449 512 42,712 5,175
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 2,147 $ 42,713 $ 2,147 $ 42,713
<FN>
The accompanying Notes to Financial Statements are an integral part
of these statements.
</FN>
</TABLE>
<PAGE> 7
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements
Southern Indiana Gas and Electric Company (SIGECO) is
an operating public utility. SIGECO provides generation,
transmission, distribution and sale of electric power and
the distribution and sale of natural gas in southwestern
Indiana. SIGECO provides electric power in Evansville,
Indiana and 74 other cities, towns, communities and adjacent
rural areas. Wholesale electric power is provided to five
communities. Gas is supplied in Evansville, Indiana and 64
nearby communities and environs.
The interim condensed consolidated financial statements
included in this report have been prepared by SIGECO,
without audit, as provided in the rules and regulations of
the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been omitted as provided in such
rules and regulations. SIGECO believes that the information
in this report reflects all adjustments necessary to fairly
state the results of the interim periods reported, that all
such adjustments are of a normal recurring nature, and the
disclosures are adequate to make the information presented
not misleading. These interim financial statements should
be read in conjunction with the financial statements and
notes thereto included in SIGECO's latest annual report on
Form 10-K.
Because of the seasonal nature of SIGECO's utility
operations, the results shown on a quarterly basis are not
necessarily indicative of annual results.
2. Indiana Energy, Inc. and SIGCORP, Inc. Merger
On June 14, 1999, Indiana Energy, Inc. (Indiana Energy)
and SIGCORP, Inc. (SIGCORP) jointly announced the signing of
a definitive agreement to combine into a new holding company
named Vectren Corporation (Vectren). Indiana Energy was an
investor-owned energy services company that through its
subsidiaries provided gas service to central and southern
Indiana and energy services throughout the Midwest and
elsewhere.
The merger was conditioned, among other things, upon
the approvals of the shareholders of each company and
customary regulatory approvals. On December 17, 1999, the
merger was approved by the shareholders of each company. On
December 20, 1999, the Federal Energy Regulatory Commission
(FERC) issued an order approving the proposed merger. In
approving the merger, the FERC concluded that the merger was
in the public interest and would not adversely affect
competition, rates or regulation. On January 18, 2000, the
Department of Justice informed the Companies that it had
concluded its review of their Hart Scott Rodino notification
filings and would take no further action. On March 8, 2000,
approval was received from the Securities and Exchange
Commission (SEC) under the Public Utility Holding Company
Act to consummate the merger. The merger was therefore
completed on March 31, 2000.
As provided for in the merger agreement, Indiana Energy
shareholders received one share of Vectren common stock for
each share of Indiana Energy held at the March 31, 2000
closing date. SIGCORP shareholders received 1.333 shares of
Vectren common stock for each share of SIGCORP held at the
March 31, 2000 closing date. The transaction was accounted
for as a pooling of interests. The transaction was a tax-
free exchange of shares.
Indiana Gas Company, Inc. and Southern Indiana Gas and
Electric Company are operating as separate subsidiaries of
Vectren.
3. Merger Costs
In connection with the merger, Vectren incurred $27.2
million of merger costs. Management has reflected these
merger costs in the financial statements of the operating
subsidiaries in which the merger savings are expected to be
realized. The companies expect to realize merger savings
from the elimination of duplicate corporate and
administrative programs and greater efficiencies in
operations, business processes and purchasing. Merger costs
expensed by SIGECO at March 31, 2000 totaled $12.4 million.
These costs relate primarily to transaction costs, severance
and other merger integration activities and the accrual
remaining for such costs at March 31, 2000 is approximately
$5.4 million. The continued merger integration activities,
which will contribute to the merger savings, will be
substantially complete by 2001.
<PAGE> 8
4. Cash Flow Information
For purposes of the Consolidated Statements of Cash
Flows, SIGECO considers cash investments with an original
maturity of three months or less to be cash equivalents.
Cash paid during the periods reported for interest and
income taxes were as follows:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31 March 31
Thousands 2000 1999 2000 1999
<S> <C> <C> <C> <C>
Interest (net of
amount capitalized) $5,184 $2,950 $17,671 $19,746
Income Taxes - - $25,476 $23,044
</TABLE>
5. Long-Term Debt
On March 1, 2000, the fixed rate 7.25% $22,500,000
Pollution Control Series A Bonds, due March 1, 2014, were
converted to a Municipal Auction Rates Series. The interest
rate, currently 4.35%, will be set every 32 days through the
municipal bond auction process.
On March 1, 2000, the interest rate on $31,500,000 of
Adjustable Rate Pollution Control bonds was changed from
3.00% to 4.30% due March 1, 2025. The new interest rate
will be fixed through February 29, 2001. Also on March 1,
2000, the interest rate on $22,200,000 of Adjustable Rate
Pollution Control bonds was changed from 3.05% to 4.45% due
March 1, 2020. The new interest rate will also be fixed
through February 29, 2001. For financial statement
presentation the $53,700,000 of Adjustable Rate Pollution
Control bonds are shown as a current liability.
On April 1, 1999, 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.
6. Revenues
To more closely match revenues and expenses, revenues
are recorded for all electricity and gas delivered to
customers but not billed at the end of the accounting
period.
7. Gas in Underground Storage
Based on the average cost of gas purchased during the
three months ended March 31, 2000, the cost of replacing the
current portion of gas in underground storage exceeded LIFO
cost at March 31, 2000 by approximately $11.0 million.
8. Refundable or Recoverable Gas Costs
The cost of gas purchased and refunds from suppliers,
which differ from amounts recovered through rates, are
deferred and are being recovered or refunded in accordance
with procedures approved by the Indiana Utility Regulatory
Commission (IURC).
9. Refundable or Recoverable Fuel Used in Electric
Production and Purchased Power
The cost of fuel used in the production of electric
power and the cost of purchased power from other sources,
which differ from amounts recovered through rates, are
deferred, and are being recovered or refunded in accordance
with procedures approved by the IURC. In 1999 the Indiana
Utility Regulatory Commission issued a generic order which
established new guidelines for the recovery of purchased
power costs through fuel adjustment clauses. Those
guidelines provide that SIGECO is able to recover through
rates the total cost incurred for purchased power if over a
period of seven days the average cost of purchased power is
below the highest cost of internal generation at SIGECO or
the higher costs can be justified by SIGECO in fuel
adjustment clause filings.
<PAGE> 9
10. Environmental Costs
In October, 1997, the United States Environmental
Protection Agency (USEPA) proposed a rulemaking that would
require uniform NOx emissions reductions of 85 percent by
utilities and other large sources in a 22-state region
spanning areas in the Northeast, Midwest, Great Lakes, Mid-
Atlantic and South. This rule is referred to as the "NOx SIP
call". 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.
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.
In October 27, 1998 USEPA issued a final rule "Finding
of Significant Contribution and Rulemaking for Certain
States in the Ozone Transport Assessment Group Region for
Purposes of Reducing Regional Transport of Ozone," (63 Fed.
Reg. 57355). The final rule requires that 23 states and
jurisdictions must file revised state implementation plans
("SIPs") with EPA by no later than September 30, 1999, which
was essentially unchanged from its October 1997, proposed
rule. 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. 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 $100
million, and related additional operation and maintenance
expenses could be an estimated $8 million to $10 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 appealed both court
rulings. On October 29, 1999, the Court refused to
reconsider its May 14, 1999 ruling.
On March 3, 2000, the D.C. Circuit of Appeals upheld
the USEPA's October 27, 1998 final rule requiring 23 states
and the District of Columbia to file revised SIPs with EPA
by no later than September 30, 1999. Numerous petitioners,
including several states, have filed a petition for
rehearing with the U.S. Court of Appeals for the District of
Columbia in Michigan v. EPA. Petitioners seek rehearing on
two issues: (1) EPA's consideration of the cost-
effectiveness of NOx controls, rather than air quality
effects, as the basis for determining the amount of each
State's emissions that "contribute[s] significantly to non-
attainment" of the ozone National Ambient Air Quality
Standards ("NAAQS") in another State; and (2) EPA's choice
of $2000/ton-removed as the cost-effectiveness cut-off
point.
Approximately 12 months ago, the USEPA initiated an
investigation under Section 114 of the Clean Air Act (the
Act) of SIGECO's coal-fired electric generating units in
commercial operation by 1977 to determine compliance with
environmental permitting requirements related to repairs,
maintenance, modifications and operations changes. The
focus of the investigation was to determine whether new
source performance standards should be applied to the
modifications and whether the best available control
technology was, or should have been, used. Numerous other
electric utilities were, and are currently, being
investigated by the USEPA under an industry-wide review for
similar compliance. SIGECO responded to all of the USEPA's
data requests during the investigation. In July 1999,
SIGECO received a letter from the Office of Enforcement and
Compliance Assurance of the USEPA discussing the industry-
wide investigation, vaguely referring to the investigation
of SIGECO and inviting SIGECO to participate in a discussion
of the issues. No specifics were noted; furthermore, the
letter stated that the communication was not intended to
serve as a notice of violation. Subsequent meetings were
conducted in September and October with the USEPA and
targeted utilities, including SIGECO, regarding potential
remedies to the USEPA's general allegations.
<PAGE> 10
On November 3, 1999, the USEPA filed a lawsuit against
SIGECO. The USEPA alleges that, beginning in 1992, SIGECO
violated the Clean Air Act by: (i) making modifications to
its Culley Generating Station in Yankeetown, Indiana without
obtaining required permits; (ii) making major modifications
to the Culley Generating Station without installing the best
available emission control technology; and (iii) failing to
notify the USEPA of the modifications. In addition, the
lawsuit alleges that the modifications to the Culley
Generating Station required SIGECO to begin complying with
federal new source performance standards.
SIGECO believes it performed only maintenance, repair
and replacement activities at the Culley Generating Station,
as allowed under the Clean Air Act. Because proper
maintenance does not require permits, application of the
best available emission control technology, notice to the
USEPA, or compliance with new source performance standards,
SIGECO believes that the lawsuit is without merit, and
intends to defend the lawsuit vigorously.
The lawsuit seeks fines against SIGECO in the amount of
$27,500 per day per violation. The lawsuit does not specify
the number of days or violations the USEPA believes
occurred. The lawsuit also seeks a court order requiring
SIGECO to install the best available emissions technology at
the Culley Generating Station. If the USEPA is successful in
obtaining an order, SIGECO estimates that it would incur
capital costs of approximately $40 million to $50 million
complying with the order. In the event that SIGECO is
required to install system-wide NOx emission control
equipment, the majority of the $40 million to $50 million
for best available emissions technology at Culley Generating
Station would be included in the $100 million expenditure.
The USEPA has also issued an administrative notice of
violation to SIGECO making the same allegations, but
alleging that violations began in 1977.
While it is possible that SIGECO could be subjected to
criminal penalties if the Culley Generating Station
continues to operate without complying with the new source
performance standards and the allegations are determined by
a court to be valid, SIGECO believes such penalties are
unlikely as EPA and the electric utility industry have a
bonafide dispute over the proper interpretation of the Clean
Air Act. Consequently, SIGECO anticipates at this time that
the plant will continue to operate while the matter is being
decided.
11. Segments of Business
SIGECO has two reportable segments. They are electric
and gas utility operations. All other includes corporate
activities not assignable to a segment. SIGECO's reportable
segments are operations that are managed separately and meet
the quantitative thresholds required by SFAS No. 131.
Revenues for each of SIGECO's segments are attributable
principally to customers in the United States.
Certain financial information relating to significant
segments of business is presented below:
<PAGE> 11
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended March 31 Ended March 31
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating revenues:
Electric $ 72,990 $ 70,987 $309,572 $303,625
Gas 29,227 29,698 67,741 66,581
Total 102,217 100,685 377,313 370,206
Interest income:
Electric <F1> 62 53 339 301
Gas <F1> 6 5 34 30
Total 68 58 373 331
Interest expense:
Electric <F1> 4,353 4,578 17,761 18,496
Gas <F1> 430 453 1,757 1,829
Total 4,783 5,031 19,518 20,325
Income taxes:
Electric 3,257 5,696 22,093 22,512
Gas 980 1,634 1,241 2,213
Total 4,237 7,330 23,334 24,725
Net income, after preferred
dividend requirement:
Electric 2,607 9,410 35,017 37,775
Gas 1,391 2,827 2,434 4,146
Total 3,998 12,237 37,451 41,921
Depreciation and
amortization expense:
Electric 10,245 10,059 40,423 38,585
Gas 1,245 1,158 4,717 4,400
Total 11,490 11,217 45,140 42,985
Capital expenditures:
Electric 11,487 11,790 50,481 47,769
Gas 2,160 2,200 9,853 10,375
Total 13,647 13,990 60,334 58,144
Identifiable assets:
Electric <F2> 738,793 772,104 718,287 792,638
Gas <F2> 140,722 147,067 136,816 150,979
Total assets $879,515 $919,171 $855,103 $943,617
<FN>
<F1> SIGECO allocates interest income 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>
12. Reclassifications
Certain reclassifications have been made to prior periods' financial
statements to conform to the current year presentation. These
reclassifications have no impact on net income previously reported.
<PAGE> 12
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Net Income applicable to common shareholders for the three-
and twelve-month periods ended March 31, 2000, when compared
to the same periods one year ago, were as follows:
Periods Ended March 31
(millions) 2000 1999
Three Months $ 3,998 $12,237
Twelve Months $37,451 $41,921
GAS MARGIN (GAS OPERATING REVENUES LESS COST OF GAS)
Gas utility margin for the quarter ended March 31, 2000, was
$9.6 million compared to $10.2 million for the same period
last year. The decrease in margin between periods reflect
fewer weather-sensitive sales due to warmer weather
temperatures in SIGECO's service area. The decrease was
partially offset by the addition of new residential and
commercial customers. Margins were lower than expected due
to weather being 16% and 9% warmer than normal for the
current and year-ago periods.
Gas utility margin for the twelve-month period ended March
31, 2000, was $28.0 million compared to $27.7 million for
the same period last year. The increase is primarily
attributable to the addition of new residential and
commercial customers. Temperatures were 17% warmer than
normal during the current twelve month period and 13% warmer
than normal for the twelve months ending March 31, 1999.
Total system throughput (combined sales and transportation)
decreased 1.8% (.8 MMDth) for the first quarter of 2000 and
increased 4.4% (1.4 MMDth) for the twelve-month period ended
March 31, 2000, compared to the same periods one year ago.
Adjustments to SIGECO's rates and charges related to the
cost of gas are made through gas cost adjustment (GCA)
procedures established by Indiana law and administered by
the IURC. The GCA passes through increases and decreases in
the cost of gas to SIGECO's customers dollar for dollar.
ELECTRIC MARGIN (ELECTRIC OPERATING REVENUES
LESS COST OF FUEL TO GENERATE AND PURCHASED POWER)
Electric utility margin for the quarter ended March 31,
2000, was $51.3 million compared to $50.9 million for the
same period last year. Increased sales of non-firm
wholesale power and sales to industrial customers was the
primary reason for the increase in electric margin. The
warmer weather during the current quarter compared to normal
and the year-ago period contributed to a 9% decrease in
residential sales.
Electric utility margin for the twelve-month period ended
March 31, 2000, was $215.1 million compared to $211.4
million for the same period last year. The $3.7 million
increase in margin reflected a 5% increase in retail and
firm wholesale electric sales, primarily due to stronger
industrial and commercial sales. Summer temperatures were
6% below normal for the current period. The twelve-month
period ended March 31, 1999, had temperatures that were 16%
warmer than normal.
OPERATING EXPENSES
Other operation and maintenance expenses decreased $1.0
million (4%) in the first quarter of 2000 compared to the
same period in 2000. A $1.6 million decrease in electric
and gas operation expenses more than offset a $0.7million
increase in generation plant maintenance expenditures.
During the twelve-month period ended March 31, 2000 SIGECO's
operation and maintenance expenses decreased $1.7 million
(2%) compared to the same period in 1999.
Depreciation and amortization expense during the three-and
twelve-month periods rose $0.3 million and $2.2 million,
respectively, due to SIGECO's continued investment in
depreciable gas and electric utility facilities.
<PAGE> 13
OTHER OPERATING MATTERS
INDIANA ENERGY, INC. AND SIGCORP, INC. MERGER
On June 14, 1999, Indiana Energy and SIGCORP, jointly
announced the signing of a definitive agreement to combine
into a new holding company named Vectren Corporation.
Indiana Energy was an investor-owned energy services company
that through its subsidiaries provided gas service to
central and southern Indiana and energy services throughout
the Midwest and elsewhere.
The merger was conditioned, among other things, upon the
approvals of the shareholders of each company and customary
regulatory approvals. On December 17, 1999, the merger was
approved by the shareholders of each company. On December
20, 1999, the Federal Energy Regulatory Commission (FERC)
issued an order approving the proposed merger. In approving
the merger, the FERC concluded that the merger was in the
public interest and would not adversely affect competition,
rates or regulation. On January 18, 2000, the Department of
Justice informed the Companies that it had concluded its
review of their Hart Scott Rodino notification filings and
would take no further action. On March 8, 2000, approval was
received from the Securities and Exchange Commission (SEC)
under the Public Utility Holding Company Act to consummate
the merger. The merger was therefore completed on March 31,
2000.
As provided for in the merger agreement, Indiana Energy
shareholders received one share of Vectren common stock for
each share of Indiana Energy held at the March 31, 2000
closing date. SIGCORP shareholders received 1.333 shares of
Vectren common stock for each share of SIGCORP held at the
March 31, 2000 closing date. The transaction was accounted
for as a pooling of interests. The transaction was a tax-
free exchange of shares.
Indiana Gas Company, Inc. and Southern Indiana Gas and
Electric Company are operating as separate subsidiaries of
Vectren.
MERGER COSTS
In connection with the merger, Vectren incurred $27.2
million ($19.3 million after tax or $.32 EPS) of merger
costs. Management has reflected these merger costs in the
financial statements of the operating subsidiaries in which
the merger savings are expected to be realized. The
companies expect to realize merger savings from the
elimination of duplicate corporate and administrative
programs and greater efficiencies in operations, business
processes and purchasing. Merger costs expensed by SIGECO
at March 31 totaled $12.4 million ($9.0 million after tax).
These costs relate primarily to transaction costs, severance
and other merger integration activities and the accrual
remaining for such costs at March 31, 2000 is approximately
$5.4 million. The continued merger integration activities,
which will contribute to the merger savings, will be
substantially complete by 2001.
ENVIRONMENTAL MATTERS
In October, 1997, the United States Environmental Protection
Agency (USEPA) proposed a rulemaking that would require
uniform NOx emissions reductions of 85 percent by utilities
and other large sources in a 22-state region spanning areas
in the Northeast, Midwest, Great Lakes, Mid-Atlantic and
South. This rule is referred to as the "NOx SIP call". 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.
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.
In October 27, 1998 USEPA issued a final rule "Finding of
Significant Contribution and Rulemaking for Certain States
in the Ozone Transport Assessment Group Region for Purposes
of Reducing Regional Transport of Ozone," (63 Fed. Reg.
57355). The final rule requires that 23 states and
jurisdictions must file revised state implementation plans
("SIPs") with EPA by no later than September 30, 1999, which
was essentially unchanged from its October 1997, proposed
rule. 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. The USEPA's final ruling is being
litigated in the federal courts by approximately ten
midwestern states, including Indiana.
<PAGE> 14
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 $100 million, and related
additional operation and maintenance expenses could be an
estimated $8 million to $10 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 appealed both court
rulings. On October 29, 1999, the Court refused to
reconsider its May 14, 1999 ruling.
On March 3, 2000, the D.C. Circuit of Appeals upheld the
USEPA's October 27, 1998 final rule requiring 23 states and
the District of Columbia to file revised SIPs with EPA by no
later than September 30, 1999. Numerous petitioners,
including several states, have filed a petition for
rehearing with the U.S. Court of Appeals for the District of
Columbia in Michigan v. EPA. Petitioners seek rehearing on
two issues: (1) EPA's consideration of the cost-
effectiveness of NOx controls, rather than air quality
effects, as the basis for determining the amount of each
State's emissions that "contribute[s] significantly to non-
attainment" of the ozone National Ambient Air Quality
Standards ("NAAQS") in another State; and (2) EPA's choice
of $2000/ton-removed as the cost-effectiveness cut-off
point.
Approximately 12 months ago, the USEPA initiated an
investigation under Section 114 of the Clean Air Act (the
Act) of SIGECO's coal-fired electric generating units in
commercial operation by 1977 to determine compliance with
environmental permitting requirements related to repairs,
maintenance, modifications and operations changes. The
focus of the investigation was to determine whether new
source performance standards should be applied to the
modifications and whether the best available control
technology was, or should have been, used. Numerous other
electric utilities were, and are currently, being
investigated by the USEPA under an industry-wide review for
similar compliance. SIGECO responded to all of the USEPA's
data requests during the investigation. In July 1999,
SIGECO received a letter from the Office of Enforcement and
Compliance Assurance of the USEPA discussing the industry-
wide investigation, vaguely referring to the investigation
of SIGECO and inviting SIGECO to participate in a discussion
of the issues. No specifics were noted; furthermore, the
letter stated that the communication was not intended to
serve as a notice of violation. Subsequent meetings were
conducted in September and October with the USEPA and
targeted utilities, including SIGECO, regarding potential
remedies to the USEPA's general allegations.
On November 3, 1999, the USEPA filed a lawsuit against
SIGECO. The USEPA alleges that, beginning in 1992, SIGECO
violated the Clean Air Act by: (i) making modifications to
its Culley Generating Station in Yankeetown, Indiana without
obtaining required permits; (ii) making major modifications
to the Culley Generating Station without installing the best
available emission control technology; and (iii) failing to
notify the USEPA of the modifications. In addition, the
lawsuit alleges that the modifications to the Culley
Generating Station required SIGECO to begin complying with
federal new source performance standards.
SIGECO believes it performed only maintenance, repair and
replacement activities at the Culley Generating Station, as
allowed under the Clean Air Act. Because proper maintenance
does not require permits, application of the best available
emission control technology, notice to the USEPA, or
compliance with new source performance standards, SIGECO
believes that the lawsuit is without merit, and intends to
defend the lawsuit vigorously.
The lawsuit seeks fines against SIGECO in the amount of
$27,500 per day per violation. The lawsuit does not specify
the number of days or violations the USEPA believes
occurred. The lawsuit also seeks a court order requiring
SIGECO to install the best available emissions technology at
the Culley Generating Station. If the USEPA is successful in
obtaining an order, SIGECO estimates that it would incur
capital costs of approximately $40 million to $50 million
complying with the order. In the event that SIGECO is
required to install system wide NOx emission control
equipment, the majority of the $40 million to $50 million
for best available emissions technology at Culley Generating
Station would be included in the $100 million expenditure.
The USEPA has also issued an administrative notice of
violation to SIGECO making the same allegations, but
alleging that violations began in 1977.
<PAGE> 15
While it is possible that SIGECO could be subjected to
criminal penalties if the Culley Generating Station
continues to operate without complying with the new source
performance standards and the allegations are determined by
a court to be valid, SIGECO believes such penalties are
unlikely as EPA and the electric utility industry have a
bonafide dispute over the proper interpretation of the Clean
Air Act. Consequently, SIGECO anticipates at this time that
the plant will continue to operate while the matter is being
decided.
YEAR 2000 READINESS
SIGECO uses various software, systems and technology that
could have been affected by the date change in 2000. All
identification, testing and replacement or remediation of
such software, systems and technology at SIGECO was
completed by December 31, 1999. No significant
noncompliance issues have been encountered in 2000 and
SIGECO anticipates that no such issues will be encountered.
SIGECO estimates the expense of Year 2000-readiness
modifications to existing systems or replacements treated
as expense incurred totaled approximately $1.7 million.
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
MARKET RISK
SIGECO 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. SIGECO is not currently exposed to market risk
for purchases of fuel for electric generation 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. Recently the Indiana Utility
Regulatory Commission issued a generic order which
established new guidelines for the recovery of purchased
power costs through fuel adjustment clauses which could
expose SIGECO to market risk. SIGECO does not utilize
financial instruments for trading or speculative purposes.
As of March 31, 2000, management believes exposure from
these positions did not change materially from December 31,
1999, and was not material.
SIGECO is also exposed to counterparty credit risk when a
customer or supplier defaults upon a contract to pay or
deliver product. To mitigate this risk, it has established
procedures to determine and monitor the creditworthiness of
counterparties.
CAPITAL REQUIREMENTS
SIGECO's demand for capital is primarily related to
construction of utility plant and equipment necessary to
meet customers' electric and gas energy needs and
environmental compliance requirements. Construction
expenditures (excluding allowance for other funds used
during construction) incurred during the three months ending
March 31, 2000 totaled $13.6 million and were fully funded
with internally generated cash. Cash provided from
operations decreased $4.2 million during the current three-
month period compared to the same period in 1999. Cash
required for investing increased $1.1 million and financing
activities increased $35.3 million for the three months
ended March 31, 2000 compared to the same period a year ago.
SIGECO estimates construction expenditures for the five-year
period 2000-2004 will total approximately $357 million,
including allowance for funds used during construction.
Included in this projection is approximately $97 million
estimated to comply with new USEPA air quality standards and
$32 million for the construction of a gas-fired electric
peaking unit in 2001.
FINANCING ACTIVITIES
There were no financing activities for the first quarter of
2000.
Over the five-year period, SIGECO expects the majority of
the construction requirements to be provided by internally
generated funds. External financing requirements of $50-70
million will be provided by medium-term debt and are
anticipated to retire a similar amount of short-term debt.
<PAGE> 17
FORWARD-LOOKING INFORMATION
A "safe harbor" for forwarding-looking statements is
provided by the Private Securities Litigation Reform Act of
1995 (Reform Act of 1995). The Reform Act of 1995 was
adopted to encourage such forward-looking statements without
the threat of litigation, provided those statements are
identified as forward-looking and are accompanied by
meaningful cautionary statements identifying important
factors that could cause the actual results to differ
materially from those projected in the statements. Such
statements are based on management's beliefs, as well as
assumptions made by and information currently available to
management. When used in this filing, the words "believe,"
"anticipate," "endeavor," "estimate," "expect," "objective,"
"projection," "forecast," "goal," and similar expressions
are intended to identify forward-looking statements. In
addition to any assumptions and other factors referred to
specifically in connection with such forward-looking
statements, factors that could cause Vectren Corporation and
its subsidiaries' actual results to differ materially from
those contemplated in any forward-looking statements
included, among others, the following:
* Factors affecting utility operations such as
unusual weather conditions; catastrophic weather
related damage; unusual maintenance or repairs;
unanticipated changes to fossil fuel costs;
unanticipated changes to gas supply costs, or
availability due to higher demand, shortages,
transportation problems or other developments;
environmental or pipeline incidents; transmission or
distribution incidents; unanticipated changes to
electric energy supply costs, or availability due to
demand, shortages, transmission problems or other
developments; or electric transmission or gas pipeline
system constraints.
* Increased competition in the energy environment
including effects of industry restructuring and
unbundling.
* Regulatory factors such as unanticipated changes in
rate-setting policies or procedures, recovery of
investments and costs made under traditional
regulation, and the frequency and timing of rate
increases.
* Financial or regulatory accounting principles or
policies imposed by the Financial Accounting Standards
Board, the Securities and Exchange Commission
(Commission), the Federal Energy Regulatory
Commission, state public utility commissions, state
entities which regulate natural gas transmission,
gathering and processing, and similar entities with
regulatory oversight.
* Economic conditions including inflation rates and
monetary fluctuations.
* Changing market conditions and a variety of other
factors associated with physical energy and financial
trading activities including, but not limited to,
price, basis, credit, liquidity, volatility, capacity,
interest rate, and warranty risks.
* Availability or cost of capital, resulting from
changes in Vectren Corporation and its subsidiaries,
interest rates, and securities ratings or market
perceptions of the utility industry and energy-related
industries.
* Employee workforce factors including changes in key
executives, collective bargaining agreements with
union employees, or work stoppages.
* Legal and regulatory delays and other obstacles
associated with mergers, acquisitions, and investments
in joint ventures.
* Costs and other effects of legal and administrative
proceedings, settlements, investigations, claims, and
other matters, including, but not limited to, those
described in the Other Operating Matters section of
Management's Discussion and Analysis of Results of
Operations and Financial Condition.
* Changes in federal, state or local legislature
requirements, such as changes in tax laws or rates,
environmental laws and regulations.
Vectren Corporation and its subsidiaries undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of changes in actual
results, changes in assumptions, other factors affecting
such statements.
<PAGE> 18
PART TWO - OTHER INFORMATION
Item 1. Litigation
On November 3, 1999, the USEPA filed a lawsuit
against SIGECO. The USEPA alleges that,
beginning in 1992, SIGECO violated the Clean
Air Act by: (i) making modifications to its
Culley Generating Station in Yankeetown,
Indiana without obtaining required permits;
(ii) making major modifications to the Culley
Generating Station without installing the best
available emission control technology; and
(iii) failing to notify the USEPA of the
modifications. In addition, the lawsuit
alleges that the modifications to the Culley
Generating Station required SIGECO to begin
complying with federal new source performance
standards.
SIGECO believes it performed only proper
maintenance at the Culley Generating Station.
Because proper maintenance does not require
permits, application of the best available
emission control technology, notice to the
USEPA, or compliance with new source
performance standards, SIGECO believes that the
lawsuit is without merit, and intends to defend
the lawsuit vigorously.
The lawsuit seeks fines against SIGECO in the
amount of $27,500 per day per violation. The
lawsuit does not specify the number of days or
violations the USEPA believes occurred. The
lawsuit also seeks a court order requiring
SIGECO to install the best available emissions
technology at the Culley Generating Station.
If the USEPA is successful in obtaining an
order, SIGECO estimates that it would incur
capital costs of approximately $40 million to
$50 million to comply with the order.
The USEPA has also issued an administrative
notice of violation to SIGECO making the same
allegations, but alleging that violations began
in 1977.
Under applicable rules, SIGECO could be
subjected to criminal penalties if the Culley
Generating Station continues to operate without
complying with the new source performance
standards and the allegations are determined by
a court to be valid. SIGECO anticipates at
this time that the plant will continue to
operate while the matter is being decided.
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
SIGECO's debt and preferred equity expose
SIGECO to market risk as it relates to
fluctuations in market interest rates. The
total exposure does not expose SIGECO to risk
of material earnings or cash flow loss due to
changes in market interest rates. At March 31,
2000, less than 15% of SIGECO's total
capitalization was subject to fluctuations in
market interest rates and other seasonal
factors. At March 31, 2000, SIGECO was not
engaged in other contracts that would cause
exposure to market risk of material earnings or
cash flow loss due to changes in market
commodity prices, foreign currency exchange
rates, or interest rates.
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) Exhibits
2A Agreement and Plan of Merger dated as of June
14, 1999, by and among Indiana Energy, Inc.
SIGCORP, Inc. and the formation of Vectren
Corporation (incorporated by reference to
Exhibit 2 to Indiana Energy's Current Report
on Form 8-K dated June 14, 1999 and filed on
June 15, 1999).
2B Amendment No.1, dated December 14, 1999
to Agreement and Plan of Merger (set
forth in 2A, above) (incorporated by
reference to Exhibit 2 of Indiana
Energy's Current Report on Form 8-K dated
December 16, 1999 and filed on December
16, 1999).
2C Asset Purchase Agreement dated December
14, 1999 between Indiana Energy, Inc. and
Dayton Power and Light Co., Inc. and
Number-3CHK with a commitment letter for
364 -Day Credit Facility dated December
16, 1999 (incorporated by reference to
Exhibit 2 and 99.1 of Indiana Energy's
Current Report on Form 8-K dated December
14, 1999 and filed on December 28, 1999).
12 Computation of Ratio of Earnings to Fixed
Charges, filed herewith.
27 Financial Data Schedule, filed herewith.
(b) Reports on Form 8-K
On February 29, 2000 SIGECO filed a Current
Report on Form 8-K that contained audited
financial statements for the fiscal year ended
December 31, 1999. The audited financial
statements were filed under Form 8-K in order
for SIGECO to complete financing activities
prior to the filing of Form 10-K.
Item 7. Exhibits
Financial Statements and Exhibits
On April 14, 2000 SIGECO filed a Current
Report on Form 8-K with respect to the change
in control of SIGECO as a result of the merger
of Indiana Energy, Inc. and SIGCORP, Inc into
Vectren Corporation.
Item 1. Changes in Control of Registrant
On April 17, 2000 SIGECO filed an Amended
Current Report on Form 8-K changing the
signature of the report to M. Susan Hardwick,
Vice President and Controller.
Item 1. Changes in Control of Registrant
On April 27, 2000 SIGECO filed a Current
Report on Form 8-K with respect to the release
by Vectren Corporation of summary financial
information to the investment community
regarding Vectren Corporation's consolidated
results of operation, financial position and
cash flows for the three- and twelve-month
ended periods of March 31, 2000. Items
reported include:
Item 5. Other Events
Item 7. Exhibits
99-1 Press Release
99-2 Analyst Report - First Quarter 2000
99-3 Cautionary Statement for Purposes of
the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
On April 27, 2000 SIGECO filed a Current
Report on Form 8-K with respect to an analyst
teleconference call held on April 27, 2000.
Item 5. Other Events
Item 7. Exhibits
99 Analyst script teleconference call dated
April 27, 2000
<PAGE> 21
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.
SOUTHERN INDIANA GAS AND ELECRIC COMPANY
/s/ M. Susan Hardwick
--------------------
M. Susan Hardwick
Vice President and Controller
Date May 15, 2000
____________
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Southern
Indiana Gas and Electric Financial statements as of March 31, 2000 by reference
to such financial statements.
</LEGEND>
<CIK> 0000092195
<NAME> SOUTHERN INDIANA GAS AND ELECTRIC CO
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 729,118
<OTHER-PROPERTY-AND-INVEST> 3,934
<TOTAL-CURRENT-ASSETS> 98,477
<TOTAL-DEFERRED-CHARGES> 16,649
<OTHER-ASSETS> 47,986
<TOTAL-ASSETS> 879,515
<COMMON> 78,258
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 251,785
<TOTAL-COMMON-STOCKHOLDERS-EQ> 317,911
11,090
8,075
<LONG-TERM-DEBT-NET> 237,646
<SHORT-TERM-NOTES> 16,468
<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> (12,132)
<TOT-CAPITALIZATION-AND-LIAB> 879,515
<GROSS-OPERATING-REVENUE> 102,217
<INCOME-TAX-EXPENSE> 4,237
<OTHER-OPERATING-EXPENSES> 48,318
<TOTAL-OPERATING-EXPENSES> 52,555
<OPERATING-INCOME-LOSS> 8,350
<OTHER-INCOME-NET> 699
<INCOME-BEFORE-INTEREST-EXPEN> 9,049
<TOTAL-INTEREST-EXPENSE> 4,783
<NET-INCOME> 4,266
268
<EARNINGS-AVAILABLE-FOR-COMM> 3,998
<COMMON-STOCK-DIVIDENDS> 8,525
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 39,295
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 12
<TABLE>
<CAPTION>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Fiscal Year Ended December 31
Twelve
Months
Ended
3/31/00 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net income
(Note 1) $38,527 $46,768 $43,542 $45,363 $42,841 $39,624
Income taxes 23,334 26,427 25,035 27,259 24,035 16,232
AFUDC
borrowed (2,652) (2,507) (1,465) (797) (445) (621)
Fixed charges 19,683 20,371 21,166 20,916 21,910 21,942
Total adjusted
earnings $78,892 $91,059 $88,278 $92,741 $88,341 $77,177
Fixed Charges:
Total interest
expense 19,078 19,766 20,680 20,460 21,472 21,377
Interest
component of
rents (Note 2) 605 605 486 456 438 565
Total fixed
charges 19,683 20,371 21,166 20,916 21,910 21,942
Ratio of earnings
to fixed
charges (Note 3) 4.0 4.5 4.2 4.4 4.0 3.5
<FN>
Notes:
(1) Net income is before preferred dividend requirements.
(2) One-third of rentals represents a reasonable
approximation of the interest factor.
(3) The ratios above do not reflect the fixed charge
component in SIGECO's power contract with OVEC.
</FN>
</TABLE>
