UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PERSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission Registrant; IRS Employer
File Number State of Incorporation; Identification
Address; and Telephone Number No.
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 Co. 35-0672570
(An Indiana Corporation)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(812) 465-5300
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,
15,754,826 shares outstanding at
September 30, 1996
Southern Indiana Gas
and Electric Company: Common stock, no par value,
15,754,826 shares
outstanding and held by
SIGCORP, Inc. at September 30, 1996
<PAGE> 1
<TABLE>
SIGCORP, Inc.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
<CAPTION>
TABLE OF CONTENTS
Page No.
<S> <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 14-15
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 16-19
SIGCORP, Inc. AND SOUTHERN INDIANA GAS
AND ELECTRIC COMPANY
Part II. OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security
Holders 20
Item 5: Other information 20
Item 6: Exhibits and Reports on Form 8-K 20
Signatures 21
/TABLE
<PAGE>
<PAGE> 2
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(in thousands except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric $79,889 $83,734 $212,557 $210,392
Gas 11,206 5,693 68,440 43,319
Total operating revenues 91,095 89,427 280,997 253,711
OPERATING EXPENSES
Operation:
Fuel for electric generation 20,852 23,548 57,515 61,539
Purchased electric energy 2,075 2,799 6,107 8,072
Cost of gas sold 4,465 1,219 46,628 24,766
Other 13,894 13,640 39,823 37,057
Total operation 41,286 41,206 150,073 131,434
Maintenance 6,911 7,126 20,819 21,477
Depreciation and amortization 9,709 9,331 29,125 29,990
Federal and state income taxes 9,161 8,648 20,320 15,561
Property and other taxes 3,511 3,405 10,582 10,274
Total operating expenses 70,578 69,716 230,919 208,736
OPERATING INCOME 20,517 19,711 50,078 44,975
Other Income:
Allowance for other funds used
during construction - 137 - 345
Interest 464 403 1,192 828
Other, net 375 1,252 3,267 3,527
Total other income 839 1,792 4,459 4,700
INCOME BEFORE INTEREST AND
OTHER CHARGES 21,356 21,503 54,537 49,675
Interest and Other Charges:
Interest on long-term debt 4,593 4,799 13,920 14,109
Amortization of premium,
discount, and expense on debt 168 168 522 525
Other interest 504 608 1,514 1,334
Allowance for borrowed funds
used during construction (131) (159) (299) (572)
Preferred dividend requirements
of subsidiary 274 274 823 825
5,408 5,690 16,480 16,221
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 15,948 15,813 38,057 33,454
CUMULATIVE EFFECT AT JANUARY 1, 1995
OF ADOPTING THE UNBILLED REVENUES
METHOD OF ACCOUNTING -
NET OF INCOME TAXES - - - 6,293
NET INCOME $15,948 $15,813 $ 38,057 $ 39,747
AVERAGE COMMON SHARES OUTSTANDING 15,755 15,755 15,755 15,755
EARNINGS PER SHARE OF COMMON STOCK
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $1.01 $1.00 $2.42 $2.12
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE - - - 0.40
TOTAL EARNINGS PER SHARE OF
COMMON STOCK $1.01 $1.00 $2.42 $2.52
<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
Nine Months Ended
September 30,
1996 1995
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 38,057 $ 39,747
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 29,125 29,990
Preferred dividend requirements of subsidiary 823 825
Deferred income taxes and investment tax
credits, net 1,178 4,499
Cumulative effect of accounting change - (6,293)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) (2,106) (18,105)
Inventories (2,420) 6,474
Coal contract settlement 12,928 (9,358)
Accounts payable (18,795) (10,948)
Accrued taxes 7,056 5,726
Refunds from gas suppliers (1,603) 2,722
Refunds to customers (3,921) (6,300)
Accrued coal liability - (22,018)
Other assets and liabilities (2,884) 4,922
Net cash provided by operating activities 57,438 21,883
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (23,382) (26,701)
Demand side management program expenditures (2,826) (4,908)
Sales of investments 700 4,107
Change in nonutility property (6,887) (1,036)
Other 2,252 105
Net cash used in investing activities (30,143) (28,433)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds (8,000) (300)
Dividends paid (21,264) (20,793)
Change in environmental improvement funds
held by trustee (153) 6,638
Payments on partnership obligations (2,786) 1,670
Change in notes payable 2,290 (3,256)
Other 395 373
Net cash used in financing activities (29,518) (15,668)
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,223) (22,218)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,834 28,060
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,611 $ 5,842
<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
September 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant, at original cost:
Electric $1,039,975 $1,030,890
Gas 127,301 125,053
Total utility plant, at original cost 1,167,276 1,155,943
Less - accumulated provision for depreciation 516,735 490,326
650,541 665,617
Construction work in progress 23,151 13,750
Net utility plant 673,692 679,367
Other Investments and Property:
Investments in leveraged leases 35,170 35,609
Investments in partnerships 23,934 25,308
Environmental improvement funds held
by trustee 3,795 3,642
Nonutility property and other 18,492 11,605
Total other investments and property 81,391 76,164
Current Assets:
Cash and cash equivalents 7,611 9,834
Temporary investments, at market 440 1,148
Receivables, less allowance of $289 and $138,
respectively 34,050 35,392
Accrued unbilled revenues 22,099 18,651
Inventories 37,382 34,962
Coal contract settlement - 12,928
Other current assets 19,203 4,795
Total current assets 120,785 117,710
Deferred Charges:
Unamortized premium on reacquired debt 5,783 6,142
Postretirement benefits other than pensions 9,438 9,574
Demand side management program 23,163 20,337
Other deferred charges 12,102 14,687
Total deferred charges 50,486 50,740
$ 926,354 $ 923,981
<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
September 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
Common Stock $ 78,258 $ 78,258
Retained Earnings 254,233 236,617
Common shareholders' equity 332,491 314,875
Cumulative Nonredeemable Preferred Stock
of Subsidiary 11,090 11,090
Cumulative Redeemable Preferred Stock
of Subsidiary 7,500 7,500
Cumulative Special Preferred Stock
of Subsidiary 924 924
Long-Term Debt, net of current maturities 257,694 257,440
Long-Term Partnership Obligations,
net of current maturities 4,580 6,839
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 614,279 598,668
Current Liabilities:
Current Portion of Adjustable Rate Bonds
Subject to Tender 31,500 31,500
Current Maturities of Long-Term Debt,
Interim Financing and Long-Term
Partnership Obligations:
Maturing long-term debt 919 9,906
Notes payable 33,557 30,500
Partnership obligations 2,259 2,786
Total current maturities of long-term debt,
interim financing and long-term
partnership obligations 36,735 43,192
Other Current Liabilities:
Accounts payable 19,201 37,996
Dividends payable 123 123
Accrued taxes 15,877 8,821
Accrued interest 7,527 4,577
Refunds to customers 3,372 8,896
Other accrued liabilities 22,793 17,689
Total other current liabilities 68,893 78,102
Total current liabilities 137,128 152,794
Deferred Credits and Other:
Accumulated deferred income taxes 136,233 132,793
Accumulated deferred investment tax credits,
being amortized over lives of property 22,067 23,146
Regulatory income tax liability 1,794 2,977
Postretirement benefits other than pensions 12,302 9,056
Other 2,551 4,547
Total deferred credits and other 174,947 172,519
$926,354 $923,981
<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
September 30, December 31,
1996 1995
(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, $2,194,121 restricted as to
payment of cash dividends on common stock 254,233 236,617
332,491 314,875
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 11,090 11,090
Redeemable
6.50% Series, outstanding 75,000 shares,
redeemable at $100 per share
December 1, 2002 7,500 7,500
SPECIAL PREFERRED STOCK OF SUBSIDIARY
Cumulative, no par value, authorized 5,000,000
shares, issuable in series: 8-1/2% series,
outstanding 9,237 shares
redeemable at $100 per share 924 924
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 252,410 251,410
Notes payable 6,055 6,836
Unamortized debt premium and discount, net (771) (806)
257,694 257,440
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES 4,580 6,839
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION
CONTROL BONDS SUBJECT TO TENDER, DUE
2015, Series B, presently 4.0% 31,500 31,500
Total capitalization, including bonds
subject to tender $645,779 $630,168
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Nine Months Ended
September 30,
1996 1995
(in thousands)
<S> <C> <C>
Balance Beginning of Period $236,617 $218,424
Net Income 38,057 39,747
274,674 258,171
Common Stock Dividends ($1.2975 per share
in 1996 and $1.2675 per share in 1995) 20,441 19,968
Balance End of Period (See Consolidated
Statements of Capitalization for restriction) $254,233 $238,203
<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
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(in thousands except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric $79,889 $83,734 $212,557 $210,392
Gas 11,206 5,693 68,440 43,319
Total operating revenues 91,095 89,427 280,997 253,711
OPERATING EXPENSES
Operation:
Fuel for electric generation 20,852 23,548 57,515 61,539
Purchased electric energy 2,075 2,799 6,107 8,072
Cost of gas sold 4,465 1,219 46,628 24,766
Other 13,894 13,640 39,823 37,057
Total operation 41,286 41,206 150,073 131,434
Maintenance 6,911 7,126 20,819 21,477
Depreciation and amortization 9,709 9,331 29,125 29,990
Federal and state income taxes 9,161 8,648 20,320 15,561
Property and other taxes 3,511 3,405 10,582 10,274
Total operating expenses 70,578 69,716 230,919 208,736
OPERATING INCOME 20,517 19,711 50,078 44,975
Other Income:
Allowance for other funds
used during construction - 37 - 345
Interest 80 403 387 828
Other, net 22 1,252 1,395 3,527
Total operating income 102 1,792 1,782 4,700
INCOME BEFORE INTEREST CHARGES 20,619 21,503 51,860 49,675
Interest and Other Charges:
Interest on long-term debt 4,593 4,799 13,920 14,109
Amortization of premium, discount
and expense on debt 168 168 522 525
Other interest 347 608 1,095 1,334
Allowance for borrowed funds
used during construction (131) (159) (299) (572)
Total interest and other 4,977 5,416 15,238 15,396
NET INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 15,642 16,087 36,622 34,279
CUMULATIVE EFFECT AT JANUARY 1, 1995
OF ADOPTING THE UNBILLED REVENUES
METHOD OF ACCOUNTING -
NET OF INCOME TAXES - - - 6,293
NET INCOME 15,642 16,087 36,622 40,572
Preferred dividend 274 274 823 825
EARNINGS APPLICABLE TO
COMMON STOCK $15,368 $15,813 $ 35,799 $ 39,747
AVERAGE COMMON SHARES OUTSTANDING 15,755 15,755 15,755 15,755
EARNINGS PER SHARE OF COMMON STOCK
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $0.98 $1.00 $2.27 $2.12
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE - - - 0.40
TOTAL EARNINGS PER SHARE OF
COMMON STOCK $0.98 $1.00 $2.27 $2.52
<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
Nine Months Ended
September 30,
1996 1995
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 36,622 $ 40,572
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 29,125 29,990
Deferred income taxes and investment tax
credits, net 905 4,499
Cumulative effect of accounting change - (6,293)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) (2,381) (18,105)
Inventories (2,378) 6,474
Coal contract settlement 12,928 (9,358)
Accounts payable (17,929) (10,948)
Accrued taxes 5,647 5,726
Refunds from gas suppliers (1,603) 2,722
Refunds to customers (3,921) (6,300)
Accrued coal liability - (22,018)
Other assets and liabilities (2,245) 4,922
Net cash provided by operating activities 54,770 21,883
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (23,382) (26,701)
Demand side management program expenditures (2,826) (4,908)
Sales of investments - 4,107
Change in nonutility property 648 (1,036)
Other (69) 105
Net cash used in investing activities (25,629) (28,433)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds (8,000) (300)
Dividends paid (21,264) (20,793)
Reduction in preferred stock and long-term debt - 6,638
Change in notes payable 2,500 1,670
Contribution of nonregulated subsidiaries
to parent (12,145) (3,256)
Other 248 373
Net cash used in financing activities (38,661) (15,668)
NET DECREASE IN CASH AND CASH EQUIVALENTS (9,520) (22,218)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,834 28,060
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 314 $ 5,842
<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
BALANCE SHEETS
September 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant, at original cost:
Electric $1,039,975 $1,030,890
Gas 127,301 125,053
1,167,276 1,155,943
Less - accumulated provision for
depreciation 516,735 490,326
650,541 665,617
Construction work in progress 23,151 13,750
Net utility plant 673,692 679,367
Other Investments and Property:
Investments in leveraged leases - 35,609
Investments in partnerships - 25,308
Environmental improvement funds held
by Trustee 3,795 3,642
Nonutility property and other 1,552 11,605
Total other investments and property 5,347 76,164
Current Assets:
Cash and cash equivalents 314 9,834
Temporary investments, at market - 1,148
Receivables, less allowance of $289
and $138, respectively 29,389 35,392
Accrued unbilled revenues 22,099 18,651
Inventories 37,340 34,962
Coal contract settlement - 12,928
Other current assets 18,419 4,795
Total Other assets 107,561 117,710
Deferred Charges:
Unamortized premium on reacquired debt 5,783 6,142
Postretirement benefits obligation
other than pensions 9,438 9,574
Demand side management program 23,163 20,337
Other deferred charges 11,604 14,687
Total deferred charges 49,988 50,740
$ 836,588 $ 923,981
<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
September 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
Common Stock $ 78,258 $ 78,258
Retained Earnings 214,557 236,617
Common shareholders' equity 292,815 314,875
Cumulative Nonredeemable Preferred Stock 11,090 11,090
Cumulative Redeemable Preferred Stock 7,500 7,500
Cumulative Special Preferred Stock 924 924
Long-Term Debt, net of current maturities 251,639 257,440
Long-Term Partnership Obligations,
net of current maturities - 6,839
Total capitalization, excluding bonds
subject to tender (see Consolidated
Statements of Capitalization) 563,968 598,668
Current Liabilities:
Current Portion of Adjustable Rate
Bonds Subject to Tender 31,500 31,500
Current Maturities of Long-Term Debt,
Interim Financing and Long-Term
Partnership Obligations:
Maturing long-term debt - 9,906
Notes payable 33,000 30,500
Partnership obligations - 2,786
Total current maturities of
long-term debt, interim financing
and long-term partnership
obligations 33,000 43,192
Other Current Liabilities:
Accounts payable 14,291 37,996
Dividends payable 123 123
Accrued taxes 16,042 8,821
Accrued interest 7,510 4,577
Refunds to customers 3,372 8,896
Other accrued liabilities 21,890 17,689
Total other current liabilities 63,228 78,102
Total current liabilities 127,728 152,794
Deferred Credits and Other:
Accumulated deferred income taxes 106,179 132,793
Accumulated deferred investment tax
credits, being amortized over lives
of property 22,067 23,146
Regulatory income tax liability 1,794 2,977
Postretirement benefits other
than pensions 12,302 9,056
Other 2,550 4,547
Total deferred credits and other 144,892 172,519
$836,588 $923,981
<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
September 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
Common Stock, without par value,
authorized 50,000,000 shares,
issued 15,754,826 shares $ 78,258 $ 78,258
Retained Earnings, $2,194,12 restricted
as to payment of cash dividends on
common stock 214,557 236,617
292,815 314,875
PREFERRED STOCK
Cumulative, $100 par value, authorized
800,000 shares issuable, in series
Nonredeemable
4.8% Series, outstanding 85,895 shares,
callable at $110 per share 8,590 8,590
4.75% Series, outstanding 25,000 shares,
callable at $101 per share 2,500 2,500
Total nonredeemable 11,090 11,090
Redeemable
6.50% Series, outstanding 75,000 shares,
redeemable at $100 per share
December 1, 2002 7,500 7,500
SPECIAL PREFERRED STOCK
Cumulative, no par value, authorized
5,000,000 shares, issuable in series:
8-1/2% series, outstanding 9,237 shares,
redeemable at $100 per share 924 924
LONG-TERM DEBT, NET OF CURRENT MATURITIES
First mortgage bonds 251,410 251,410
Notes payable 1,000 6,836
Unamortized debt premium and
discount, net (771) (806)
251,639 257,440
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES - 6,839
CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL
BONDS SUBJECT TO TENDER, DUE:
2015, Series B, presently 4.0% 31,500 31,500
Total capitalization, including
bonds subject to tender $595,468 $630,168
<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
Nine Months Ended
September 30,
1996 1995
(in thousands)
<S> <C> <C>
Balance Beginning of Period $236,617 $218,424
Net Income 36,622 40,572
273,239 258,996
Dividend Nonregulated Subsidiaries
to Parent 37,418 -
Preferred Stock Dividends 823 825
Common Stock Dividends ($1.2975 per
share in 1996 and $1.2675 per
share in 1995) 20,441 19,968
58,682 20,793
Balance End of Period (See Consolidated
Statements of Capitalization for
restriction) $214,557 $238,203
<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 FINANCIAL STATEMENTS
1. Organization
SIGCORP, Inc. (SIGCORP) is a holding company
incorporated under the laws of the state of Indiana.
SIGCORP has five wholly-owned subsidiaries: Southern
Indiana Gas and Electric Company (SIGECO), a gas and
electric utility, and four nonregulated subsidiaries.
On December 20, 1994, SIGECO's Board of Directors
authorized the steps required for a corporate reorganization
in which a holding company would become the parent of
SIGECO. SIGECO's shareholders approved the reorganization
at SIGECO's March 28, 1995 annual meeting, and approval by
the Federal Energy Regulatory Commission and the Securities
and Exchange Commission was granted November 7, 1995 and
December 14, 1995, respectively.
Effective January 1, 1996, the new holding company
became the parent of SIGECO which accounts for over 90% of
SIGCORP's net income, and four of SIGECO's former wholly-
owned nonregulated subsidiaries: Energy Systems Group, Inc.
(ESGI), Southern Indiana Minerals, Inc. (SIMI), Southern
Indiana Properties, Inc. (SIPI) and ComSource, Inc.
(ComSource). Because of the significance of SIGECO, the
operating results of the nonregulated subsidiaries are
included in Other Income in the consolidated financial
statements of SIGCORP. All of the shares of SIGECO's common
stock were exchanged on a one-for-one basis for shares of
SIGCORP, while all of SIGECO's debt securities and all of
its outstanding shares of preferred stock remain securities
of SIGECO and are unaffected.
2. Presentation of Financial Statements
It is suggested that these consolidated unaudited
financial statements be read in conjunction with the
consolidated financial statements and the notes thereto
included in SIGCORP's 1995 Annual Report to Shareholders.
These financial statements include the accounts of
SIGCORP, Inc. and its subsidiaries, as well as separate
financial statements for SIGECO 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 nine months ending September 30, 1996
should not be taken as an indication of the results for all
or any part of the balance of 1996.
3. Cash Flow Information
For the purposes of the Consolidated Balance Sheets and
Consolidated Statements of Cash Flows, SIGCORP considers all
highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
SIGCORP, for the nine months ended September 30, 1996
and 1995 paid interest (net of amounts capitalized) of
$12,185,000 and $11,767,000, respectively, and income taxes
of $8,736,000 and $6,840,000, respectively. Additionally,
SIGCORP is involved in several partnerships which are
partially financed by partnership obligations amounting to
$6,839,000 and $9,625,000 at September 30, 1996 and
December 31, 1995, respectively.
SIGECO, for the nine months ended September 30, 1996 and
1995 paid interest (net of amounts capitalized) of $
11,783,000 and $11,255,000, respectively, and income taxes
of $12,021,000 and $6,822,000, respectively.
<PAGE> 15
The following decreases in SIGECO's assets and
liabilities were caused by dividending the nonregulated
subsidiaries to SIGCORP and are noncash in nature.
Deferred income taxes (29,783)
Investments in Leveraged Leases (35,609)
Investments in Partnerships (25,307)
Partnership obligations (9,625)
Other, net (3,771)
4.Long-Term Debt
On May 1, 1996, the interest rate on $31,500,000 of
Adjustable Rate Pollution control bonds was changed from
4.60% to 4%. The new interest rate, 4%, will be fixed
through April 30, 1997. For financial statement
presentation the $31,500,000 of Adjustable Rate Pollution
Control bonds are shown as a current liability.
5.Operating Revenues - Accounting Change
SIGECO previously recognized electric and gas revenues
when customers were billed on a cycle billing basis. The
utility service rendered after monthly meter reading dates
through the end of a calendar month (unbilled revenues)
became a part of operating revenues in the following month.
To more closely match revenues with expenses, effective
January 1, 1995, SIGECO changed its method of accounting to
accrue the amount of revenue for sales unbilled at the end
of each month. The cumulative effect of the change on prior
years as of January 1, 1995, net of income taxes, was $6.3
million ($.40 per share), and was included in net income for
the first quarter of 1995.
<PAGE> 16
SIGCORP, Inc.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Effective January 1, 1996, a new holding company,
SIGCORP, Inc. (SIGCORP) became the parent of Southern
Indiana Gas and Electric Company (SIGECO), a regulated gas
and electric utility which accounts for over 90% of
SIGCORP's net income, and four of SIGECO's former wholly-
owned nonregulated subsidiaries. Because of the
significance of SIGECO, the operating results of SIGCORP's
nonregulated subsidiaries are included in Other Income in
the consolidated financial statements of SIGCORP.
Consolidated operating revenues and operating expenses of
SIGCORP consist entirely of the operating revenues and
operating expenses of SIGECO; material changes in the
consolidated financial condition and operating results of
SIGCORP are due primarily to the operations of SIGECO. The
following discussion and analysis of results of operations
and financial condition is for SIGCORP unless otherwise
stated.
Earnings per share were $1.01 for the recent three
month period compared to earnings of $1.00 per share for the
third quarter of 1995; earnings per share for the first nine
months of 1996 were $2.42 versus earnings of $2.12 per share
before the cumulative effect of an accounting change for the
same period in 1995. Net income for the nine month period
ending September 30, 1995 included a one-time favorable
adjustment, net of tax, of $6.3 million or $.40 per share in
recognition of the impact of SIGECO's change to the unbilled
revenue method of accounting (see Note 5 of Notes To
Financial Statements).
OPERATING REVENUES
Electric revenues were $3.8 million (5%) lower during
the third quarter of 1996 compared to the same period a year
ago due primarily to a less favorable retail sales mix,
fewer wholesale sales and lower per unit fuel costs
reflected in revenues. Although retail sales overall were
down less than 1% due to greater industrial and commercial
sales related to continued increased economic activity in
SIGECO's service territory, much milder summer temperatures
resulted in a 9% decrease in sales to residential and
commercial customers. Cooling degree days in SIGECO's
service territory, a measure of relative temperatures, were
down 39% from the third quarter of 1995, and 18% below the
30-year average for the same period. Wholesale sales, which
typically have lower per unit margins than retail sales,
declined 19% during the current quarter due to lower sales
to Alcoa Generating Corporation (AGC) than during the third
quarter of 1995 when a major maintenance outage continued on
one of AGC's generating units. The recovery of lower per
unit fuel costs which resulted in a $.5 million decline in
electric revenues and changes in rates to wholesale
customers contributed to the decrease in electric revenues.
Changes in the cost of fuel are passed on to customers
through commission approved fuel cost adjustments.
During the nine month period ending September 30, 1996,
electric revenues were up $2.2 million (1%) compared to the
first three quarters of 1995, chiefly due to increased sales
to retail electric customers and to higher base retail
rates. Retail sales rose 5% reflecting colder winter
temperatures during the first four months of 1996 than
during the comparable period in 1995 and continued
commercial and industrial growth in SIGECO's service
territory. Wholesale sales for the nine month period in
1996 were lower due to fewer sales to AGC during the second
and third quarters. Electric revenues increased $2.3
million during the current nine month period due to the
third step of SIGECO's electric rate increase effective June
27, 1995, which raised retail rates approximately 2.05%
overall. A 5% decrease in per unit fuel and purchased power
costs recovered from customers resulted in a $2.9 million
decrease in electric revenues.
The changes in electric revenue are shown at the top of
page 17:
<PAGE> 17
<TABLE>
<CAPTION>
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months Nine Months
Ended 9-30-96 Ended 9-30-96
(in thousands)
<S> <C> <C>
Change in sales volume $ (3,000) $ 3,500
Effect of rate adjustments in sales to
retail customers - 2,300
Fuel and purchased power recovery (500) (2,900)
Other (345) (735)
$ (3,845) $ 2,165
(Decrease)increase in retail sales (MWh) (10,512) 152,629
(Decrease) in wholesale sales (MWh) (72,937) (210,372)
</TABLE>
Increased sales to all customer classes and the
recovery of higher per unit gas costs were the primary
reasons for the $5.5 million (97%) increase in gas revenues
during the three months ended September 30, 1996. The
greater gas sales reflected the continued economic growth in
SIGECO's service territory. Average unit costs of gas sold,
which are recovered from customers through commission
approved gas cost adjustments, were higher than those during
the same period in 1995 due to continued higher spot market
prices during the 1996 period. Additionally, SIGECO's
recently approved adjustment to base retail natural gas
rates, effective July 15, 1996, contributed to the revenue
increase. The approved gas rate adjustment is about 8%
overall. A change in sales mix and other factors partially
offset these revenue increases.
A 36% increase in gas sales and the recovery of higher
unit costs of gas delivered to customers were the primary
reasons for a $25.1 million (58%) increase in gas revenue
during the first nine months of 1996 versus the same period
in 1995. Colder winter weather during the first four months
of 1996 was the primary cause of higher sales to residential
and commercial customers, up 27% and 28%, respectively.
Additionally, industrial sales were significantly greater,
chiefly due to certain transportation customers purchasing
their gas supplies from SIGECO during the first half of
1996. Average unit costs of gas sold recovered from
customers during the recent nine month period were 39%
greater than those during the same period in 1995, adding
$9.5 million to gas revenues. The colder winter
temperatures nationwide tightened spot market supplies,
causing upward pressure on market prices during 1996.
The changes in gas revenues are shown below:
<TABLE>
<CAPTION>
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months Nine Months
Ended 9-30-96 Ended 9-30-96
(in thousands)
<S> <C> <C>
Change in sales volume $4,100 $15,600
Cost of gas recovery 1,600 9,500
Effect of rate adjustments in sales
to retail customers 800 800
Other (987) (779)
$5,513 $25,121
Increase in total throughput (MDth) 539 2,753
</TABLE>
<PAGE> 18
OPERATING EXPENSES
Lower per unit fuel costs and fewer sales to wholesale
customers resulted in $3.4 million and $6 million decreases
in the cost of fuel for electric generation and purchased
electric energy during the three month and nine month
periods ending September 30, 1996, respectively, compared to
the same periods in 1995. Cost of gas sold rose $3.2
million during the current quarter due to the increase in
unit deliveries and higher per unit prices; the substantial
increase in spot market prices during the first quarter of
1996 and much greater deliveries were the chief reasons for
a $21.9 million increase in the cost of gas sold during the
first three quarters of 1996. Other operation expenses
during the current quarter were comparable to the same
period in 1995; however, greater SIGECO employee benefit
costs and the February 1, 1995 commercial operation of
SIGECO's $103 million investment to comply with the Clean
Air Act Amendments of 1990, primarily its sulfur dioxide
scrubber, caused other operation expenses during the nine
months ending September 30, 1996 to increase $2.8 million
(7%). (See "Clean Air Act" in Item 7, Management's
Discussion and Analysis of Results of Operations and
Financial Condition in SIGCORP's 1995 Form 10-K report for
further discussion.) In June 1995, SIGECO began expensing
costs which had previously been deferred for postretirement
benefits other than pensions (health care and life
insurance) attributed to electric utility operations.
SIGECO received approval from the Indiana Utility Regulatory
Commission (IURC) to recover such costs in retail electric
rates. (See item (1)(j), "Postretirement Benefits Other
Than Pensions" of Notes To Consolidated Financial Statements
in SIGCORP's 1995 Form 10-K report for further discussion.)
In July 1996, SIGECO began expensing similar deferred
postretirement benefit costs attributed to gas utility
operations after receiving approval from the IURC to recover
such costs in retail gas rates.
Maintenance expenditures during the nine month period
in 1996 declined compared to the same period in 1995 when a
devastating storm struck SIGECO's electric service area on
June 8, requiring $2 million in maintenance repairs and $1.5
million in capital replacements. Higher tree trimming and
line clearance activity and increased routine transmission
and distribution maintenance repairs during the 1996 period
partially offset the impact of the decline in storm repairs.
Total maintenance expenditures were relatively unchanged
during the third quarter of 1996 when lower 1996 production
maintenance expenditures were substantially offset by
increased transmission and distribution maintenance
expenditures. The impact of lower depreciation rates placed
in effect in June 1995 more than offset higher depreciation
expense related to the February 1995 commercial operation of
the new scrubber, resulting in a 3% decline in total
depreciation expense during the first nine months of 1996.
The 4% increase in depreciation during the third quarter of
1996 fully reflects the impact of the new scrubber
investment. Federal and state income taxes were $4.8
million greater during the first nine months of 1996
compared to the same period in 1995 due to the higher 1996
pretax operating income and to a $1.2 million decrease in
income taxes resulting from the settlement of SIGECO's IRS
audit during the first quarter of 1995.
OTHER INCOME AND INTEREST CHARGES
Other income during the current three month period
reflects lower total earnings from SIGCORP's four nonutility
subsidiaries due to startup costs of the newer subsidiaries,
ComSource, Inc. and Southern Indiana Minerals, Inc., and due
to decreased miscellaneous other income of SIGECO; other
income during the first nine months of 1996 declined
slightly due to decreased miscellaneous other income of
SIGECO and lower allowance for other funds used during
construction resulting from the completion of the scrubber.
Interest and other charges were relatively unchanged
during the three month and nine month periods ended
September 30, 1996 compared to the same periods in 1995.
EARNINGS
The slight increase in earnings per share of common
stock for the third quarter of 1996 of one cent (1%) over
earnings of $1.00 per share during the third quarter of 1995
was primarily due to stronger retail gas sales and higher
per unit sales margins resulting from an approved increase
<PAGE> 19
in base retail gas rates, which were partially offset by
fewer residential, commercial and wholesale electric sales
and higher operating expenses.
For the nine months ended September 30, 1996, earnings
per share of common stock rose 30 cents (14%) over earnings
of $2.12 per share before the 40 cent per share adjustment
for the cumulative effect of the accounting change during
the first nine months of 1995. The increase in earnings
before the adjustment for the accounting change was
primarily due to greater weather-sensitive gas and electric
sales and higher per unit sales margins resulting from the
increases in base electric and gas retail rates, which were
partially offset by the higher operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
SIGCORP's demand for capital is primarily related to
SIGECO's construction of utility plant and equipment
necessary to meet customers' electric and gas energy needs,
as well as environmental compliance requirements, and
expenditures for SIGECO's demand side management (DSM)
programs. Construction expenditures (excluding allowance
for other funds used during construction) and demand side
management program expenditures incurred during the quarter
and nine months ended September 30, 1996 totaled $10 million
and $26.2 million, respectively. Construction and demand
side management program expenditures incurred during the
third quarter of 1996 were 93% funded with internally
generated cash. Such expenditures incurred during the nine
months ended September 30, 1996 were fully funded with
internally generated cash. Cash provided from operations
increased $35.6 million during the current nine month period
compared to the same period in 1995 when SIGECO executed a
contract buyout settlement agreement with its remaining
long-term contract coal supplier. Cash used in investing
and financing activities during 1996 increased $15.6 million
compared to a year ago. No long-term financing activity
occurred during the 1996 period.
At this time, SIGCORP estimates that SIGECO's
construction expenditures for the five year period 1996-2000
will total approximately $260 million, including
approximately $25 million for the design and implementation
of several comprehensive information systems which are
necessary to better provide expanding customer service needs
and to better manage SIGECO's resources, and approximately
$17 million to develop and implement DSM programs. Although
SIGCORP expects the majority of the construction
requirements and an estimated $83 million in debt security
and other long-term obligation redemptions to be provided by
internally generated funds, an additional $60-70 million of
external financing is anticipated to meet such requirements.
OTHER MATTERS
In October 1996, the SIGCORP board of directors approved
the formation of two new nonregulated subsidiaries, SIGCORP
Energy Marketing, Inc. and SIGCORP Capital, Inc. SIGCORP
Energy Marketing, Inc. will market natural gas. SIGCORP
Capital, Inc. will provide financing services for SIGCORP's
nonregulated subsidiaries.
<PAGE> 20
PART TWO - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
<PAGE> 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.
SIGCORP, Inc
(Registrant)
/s/ A. E. Goebel
A. E. Goebel
Secretary and Treasurer
Date: November 14, 1996
SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY
/s/ S. M. Kerney
S. M. Kerney
Controller
Date: November 14, 1996
<TABLE> <S> <C>
<ARTICLE> UT
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 673,692
<OTHER-PROPERTY-AND-INVEST> 81,391
<TOTAL-CURRENT-ASSETS> 120,785
<TOTAL-DEFERRED-CHARGES> 50,486
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 926,354
<COMMON> 78,258
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 254,233
<TOTAL-COMMON-STOCKHOLDERS-EQ> 332,491
0
19,514
<LONG-TERM-DEBT-NET> 262,274
<SHORT-TERM-NOTES> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 243,840
<TOT-CAPITALIZATION-AND-LIAB> 926,354
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<OTHER-OPERATING-EXPENSES> 210,599
<TOTAL-OPERATING-EXPENSES> 230,919
<OPERATING-INCOME-LOSS> 50,078
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<INCOME-BEFORE-INTEREST-EXPEN> 54,537
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