SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1996
___ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-11603
SIGCORP, Inc.
(Exact name of registrant as specified in its charter)
Indiana
(State or other jurisdiction of incorporation or
organization)
35-1940620
(I.R.S. Employer Identification No.)
20 N. W. Fourth Street
Evansville, Indiana 47741-0001
(Address of principal executive offices)
(812) 465-5300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No ___.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date:
Outstanding as of June 30, 1996
Class - Common Stock, Without Par Value - 15,754,826 Shares
<PAGE> 2
<TABLE>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(in thousands except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric $65,803 $66,343 $132,668 $126,658
Gas 17,623 13,518 57,234 37,626
Total operating revenues 83,426 79,861 189,902 164,284
OPERATING EXPENSES
Operation:
Fuel for electric generation 17,885 19,034 36,663 37,992
Purchased electric energy 2,771 4,119 4,031 5,273
Cost of gas sold 11,392 5,756 42,163 23,547
Other 12,594 11,895 25,929 23,418
Total operation 44,642 40,804 108,786 90,230
Maintenance 7,720 8,516 13,908 14,352
Depreciation and amortization 9,708 10,419 19,415 20,660
Federal and state income taxes 4,644 4,300 11,159 6,913
Property and other taxes 3,481 3,231 7,072 6,869
Total operating expenses 70,195 67,270 160,340 139,024
OPERATING INCOME 13,231 12,591 29,562 25,260
Other Income:
Allowance for other funds
used during construction 2 98 2 208
Interest 427 232 728 426
Other, net 649 575 2,891 2,276
Total operating income 1,078 905 3,619 2,910
INCOME BEFORE INTEREST AND
OTHER CHARGES 14,309 13,496 33,181 28,170
Interest and Other Charges:
Interest on long-term debt 4,648 4,657 9,327 9,311
Amortization of premium,
discount, and expense on debt 186 186 354 356
Other interest 468 323 1,010 725
Allowance for borrowed funds
used during construction (104) (102) (167) (414)
Preferred dividend
requirements of subsidiary 274 274 548 550
5,472 5,338 11,072 10,528
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 8,837 8,158 22,109 17,642
CUMULATIVE EFFECT AT JANUARY 1, 1995
OF ADOPTING THE UNBILLED
REVENUES METHOD OF ACCOUNTING
- NET OF INCOME TAXES - - - 6,293
NET INCOME 8,837 8,158 22,109 23,935
AVERAGE COMMON SHARES OUTSTANDING 15,755 15,755 15,755 15,755
EARNINGS PER SHARE OF COMMON STOCK
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $0.56 $0.52 $1.40 $1.12
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE - - - 0.40
TOTAL EARNINGS PER SHARE
OF COMMON STOCK $0.56 $0.52 $1.40 $1.52
<FN>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
</FN>
</TABLE>
<PAGE> 3
<TABLE>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30,
1996 1995
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 22,109 $ 23,935
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 19,415 20,660
Preferred dividend requirements of subsidiary 548 550
Deferred income taxes and investment tax
credits, net 650 3,606
Allowance for other funds used during
construction 2 (208)
Cumulative effect of accounting change - (6,293)
Change in assets and liabilities:
Receivables, net (including accrued
unbilled revenues) 4,171 (4,457)
Inventories 5,365 3,191
Coal contract settlement 7,792 (11,429)
Accounts payable (14,411) (7,153)
Accrued taxes 2,281 2,356
Refunds from gas suppliers (1,690) (914)
Refunds to customers (4,061) (1,385)
Accrued coal liability - (22,018)
Other assets and liabilities (1,205) 2,777
Net cash provided by operating activities 40,966 3,218
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (net of allowance for
other funds used during construction) (14,332) (17,595)
Demand side management program expenditures (1,835) (3,083)
Purchases of investments - (801)
Sales of investments 600 1,250
Investments in partnerships 545 725
Change in nonutility property (9,816) (4,258)
Other 1,168 501
Net cash used in investing activities (23,670) (23,261)
CASH FLOWS FROM FINANCING ACTIVITIES
First mortgage bonds - (50)
Dividends paid (14,177) (13,861)
Reduction in preferred stock and long-term debt - (91)
Change in environmental improvement funds
held by trustee (104) 6,695
Payments on partnership obligations (2,787) (3,256)
Change in notes payable (3,318) 6,215
Other 264 310
Net cash used in financing activities (20,122) (4,038)
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,826) (24,081)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,834 28,060
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,008 $ 3,979
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>
<PAGE> 4
<TABLE>
SIGCORP, Inc.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
ASSETS
Utility Plant, at original cost:
Electric $1,036,636 $1,030,890
Gas 126,524 125,053
1,163,160 1,155,943
Less - accumulated provision for depreciation 507,844 490,326
655,316 665,617
Construction work in progress 18,916 13,750
Net utility plant 674,232 679,367
Other Investments and Property:
Investments in leveraged leases 34,959 35,609
Investments in partnerships 24,304 25,308
Environmental improvement funds
held by trustee 3,746 3,642
Nonutility property and other 21,421 11,605
84,430 76,164
Current Assets:
Cash and cash equivalents 7,008 9,834
Temporary investments, at market 539 1,148
Receivables, less allowance of $290 and
$138, respectively 33,344 35,392
Accrued unbilled revenues 16,528 18,651
Inventories 29,597 34,962
Coal contract settlement 5,136 12,928
Other current assets 16,946 4,795
109,098 117,710
Deferred Charges:
Unamortized premium on reacquired debt 5,902 6,142
Postretirement benefits other than pensions 9,720 9,574
Demand side management program 21,879 20,337
Other deferred charges 11,460 14,687
48,961 50,740
$ 916,721 $ 923,981
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
SIGCORP, Inc.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
Common Stock $ 78,258 $ 78,258
Retained Earnings 245,099 236,617
Common shareholders' equity 323,357 314,875
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 261,077 257,440
Long-Term Partnership Obligations,
net of current maturities 5,073 6,839
Total capitalization, excluding bonds subject
to tender (see Consolidated Statements
of Capitalization) 609,021 598,668
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 9,165 9,906
Notes payable 24,309 30,500
Partnership obligations 1,765 2,786
Total current maturities of long-term
debt, interim financing and long-term
partnership obligations 35,239 43,192
Other Current Liabilities:
Accounts payable 23,585 37,996
Dividends payable 123 123
Accrued taxes 11,102 8,821
Accrued interest 4,555 4,577
Refunds to customers 3,273 8,896
Other accrued liabilities 25,003 17,689
Total other current liabilities 67,641 78,102
Total current liabilities 134,380 152,794
Deferred Credits and Other:
Accumulated deferred income taxes 134,984 132,793
Accumulated deferred investment tax credits,
being amortized over lives of property 22,425 23,146
Regulatory income tax liability 2,157 2,977
Postretirement benefits other than pensions 11,144 9,056
Other 2,610 4,547
Total deferred credits and other 173,320 172,519
$916,721 $923,981
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>
<PAGE> 6
<TABLE>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
June 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, $2,194,121 restricted as
to payment of cash dividends on common stock 245,099 236,617
323,357 314,875
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 253,410 251,410
Notes payable 8,450 6,836
Unamortized debt premium and discount, net (783) (806)
261,077 257,440
LONG-TERM PARTNERSHIP OBLIGATIONS,
NET OF CURRENT MATURITIES 5,073 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 $640,521 $630,168
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>
<PAGE> 7
<TABLE>
SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<CAPTION>
Six Months Ended
June 30,
1996 1995
(in thousands)
<S> <C> <C>
Balance Beginning of Period $236,617 $218,424
Net Income 22,109 23,935
258,726 242,359
Common Stock Dividends ($0.865 per share in 1996
and $0.845 per share in 1995) 13,627 13,312
Balance End of Period (See Consolidated
Statements of Capitalization for restriction) $245,099 $229,047
<FN>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</FN>
</TABLE>
<PAGE> 8
SIGCORP, Inc.
NOTES TO CONSOLIDATED 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,
SIGCORP, Inc. (SIGCORP), became the parent of SIGECO which
accounts for over 90% of SIGCORP's net income, and four of
SIGECO's former wholly-owned nonregulated subsidiaries:
Energy Systems Group, Inc., Southern Indiana Minerals, Inc.,
Southern Indiana Properties, Inc. and ComSource, Inc.
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. General
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 wholly-owned subsidiaries, Southern
Indiana Gas and Electric Company (SIGECO), Southern Indiana
Properties, Inc. (SIPI), Energy Systems Group, Inc. (ESGI),
Southern Indiana Minerals, Inc. (SIMI), and ComSource, Inc.
(ComSource) and include all adjustments which are in the
opinion of management, necessary for a fair statement of the
financial position and results of operations. Because of
seasonal and other factors, the earnings for the six months
ending June 30, 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 six months ended June 30, 1996 and 1995
paid interest (net of amounts capitalized) of $10,191,000
and $9,687,000, respectively, and income taxes of $6,834,000
and $4,714,000, respectively. Additionally, SIGCORP is
involved in several partnerships which are partially
financed by partnership obligations amounting to $6,838,000
and $9,625,000 at June 30, 1996 and December 31, 1995,
respectively.
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> 10
SIGCORP, Inc.
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 the
nonregulated subsidiaries are included in Other Income in
the consolidated financial statements of SIGCORP.
Earnings per share were $0.56 for the recent three
month period compared to earnings of $0.52 per share for the
second quarter of 1995; earnings per share for the first six
months of 1996 were $1.40 versus earnings of $1.12 per share
before the cumulative effect of an accounting change for the
same period in 1995. Net income for the six month period
ending June 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
Consolidated Financial Statements).
OPERATING REVENUES
Despite stronger sales to retail electric customers and
higher per unit sales margins resulting from an approved
adjustment to base retail electric rates, electric revenues
declined $.5 million (1%) during the second quarter of 1996
compared to the same period in 1995, primarily due to fewer
sales to wholesale customers and lower per unit fuel costs
reflected in revenues. Retail electric sales rose 9% on
stronger sales to all customer classes, while wholesale
sales, which typically have lower per unit margins than
retail sales, declined substantially due to lower sales to
Alcoa Generating Corporation (AGC) than during the second
quarter of 1995 when a major maintenance outage occurred on
one of AGC's generating units. Electric revenues increased
$.9 million during the current quarter due to the third step
of SIGECO's electric rate increase effective June 27, 1995,
which raised retail rates approximately 2.05% overall. The
recovery of lower per unit fuel costs which resulted in a
$1.5 million decline in electric revenues, and changes in
rates to wholesale customers and sales mix, more than offset
these increases in electric revenues. Changes in the cost
of fuel are passed on to customers through commission
approved fuel cost adjustments.
During the six month period ending June 30, 1996,
electric revenues were up $6 million (5%) compared to the
first two quarters of 1995, chiefly due to increased sales
to retail electric customers and to higher base retail
rates. Retail sales rose 8% reflecting colder winter
temperatures during the first four months of 1996 than a
year ago, and continued commercial and industrial growth in
SIGECO's service territory. Wholesale sales for the six
month period in 1996 were lower due to fewer sales to AGC
during the second quarter. A 7% decrease in per unit fuel
and purchased power costs recovered from customers resulted
in a $2.3 million decrease in electric revenues.
The changes in electric revenue are shown at the top of
page 11.
<PAGE> 11
<TABLE>
<CAPTION>
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months Six Months
Ended 6-30-96 Ended 6-30-96
(in thousands)
<S> <C> <C>
Change in sales volume $ 1,700 $ 5,300
Effect of rate adjustments in sales
to retail customers 900 2,300
Fuel and purchased power recovery (1,500) (2,300)
Other (1,640) 710
$ (540) $ 6,010
Increase in retail sales (MWh) 88,977 172,047
(Decrease) in wholesale sales (MWh) (161,015) (146,341)
</TABLE>
Increased sales to all customer classes was the primary
reason for the $4.1 million (30%) increase in gas revenues
during the three months ended June 30, 1996. Residential
and commercial sales were greater due to much colder than
normal April temperatures, and sales to industrial customers
increased as certain gas transportation customers elected to
purchase gas from SIGECO rather than from other sources.
Average unit costs of gas sold, which are recovered from
customers through commission approved gas cost adjustments,
were comparable to those during the same period in 1995.
The change in sales mix partially offset these revenue
increases.
A 35% increase in gas sales and the recovery of higher
unit costs of gas delivered to customers were the reasons
for a $19.6 million (52%) increase in gas revenue during the
first half 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 25% and 27%, respectively. Additionally,
industrial sales were significantly greater due to certain
transportation customers purchasing their gas supplies from
SIGECO during both quarters in 1996. Average unit costs of
gas sold recovered from customers during the recent six
month period were 35% greater than those during the same
period in 1995. The colder winter temperatures nationwide
tightened spot market supplies, causing upward pressure on
market prices during the first three months of 1996.
The changes in gas revenues are shown below:
<TABLE>
<CAPTION>
Revenue Increase (Decrease) From
Corresponding Period in 1995
Three Months Six Months
Ended 6-30-96 Ended 6-30-96
(in thousands)
<S> <C> <C>
Change in sales volume $4,600 $11,800
Cost of gas recovery 400 8,200
Other (895) (393)
$4,105 $19,607
Increase in total throughput (MDth) 914 2,213
</TABLE>
<PAGE> 12
OPERATING EXPENSES
Lower per unit fuel costs and fewer sales to wholesale
customers resulted in a $2.5 million decrease in the cost of
fuel for electric generation and purchased electric energy
during the three month and six month periods ending June 30,
1996 compared to the same periods in 1995. Cost of gas sold
rose $5.6 million during the current quarter due to the
large increase in unit deliveries; the substantial increase
in spot market prices during the first quarter of 1996 and
much greater deliveries caused an $18.6 million increase in
the cost of gas sold during the first half of 1996. During
the three month and six month periods ending June 30, 1996,
increases in other operation expenses reflected greater
employee benefit costs and other administrative and general
expenses and the February 1, 1995 commercial operation of
SIGECO's $103 million investment to comply with the Clean
Air Act Amendments of 1990, primarily its sulfur dioxide
scrubber. (See "Clean Air Act" in Item 7, Management's
Discussion and Analysis of Results of Operations and
Financial Condition in 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 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.)
Maintenance expenditures during both reporting periods
declined compared to the same periods 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 both periods in
1996 partially offset the impact of the decline in storm
repairs. Production maintenance expenditures were
relatively unchanged during both reporting periods from a
year ago. The impact of lower depreciation rates placed in
effect in June 1995 more than offset higher depreciation
expense related to the February 1995 commercial operation of
the new scrubber, resulting in a 6% decline in total
depreciation expense during the first six months of 1996.
Federal and state income taxes were $4.2 million greater
during the first six 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 six month period
reflects stronger results from SIGCORP's nonutility
investments during the first quarter of 1996 and increased
interest income; other income during the second quarter of
1996 increased slightly compared to the same period a year
ago.
Interest and other charges were higher during the six
month period ended June 30, 1996 due to lower capitalized
interest resulting from completion of the scrubber and
increased interest expense on short-term debt; these
expenses during the second quarter of 1996 were relatively
unchanged compared to the same period in 1995.
EARNINGS
Earnings per share of common stock for the second
quarter of 1996 increased four cents (8%) over earnings of
$.52 cents per share during the second quarter of 1995
primarily due to stronger retail gas and electric sales and
higher per unit sales margins resulting from an approved
increase in electric base retail rates, which were partially
offset by lower margins on gas sales and fewer wholesale
electric sales.
<PAGE> 13
For the six months ended June 30, 1996, earnings per
share of common stock rose 28 cents (25%) over earnings of
$1.12 per share before the 40 cent per share adjustment for
the cumulative effect of the accounting change during the
first six 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 increase in
base electric 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 six months ended June 30, 1996 totaled $9.8 million and
$16.2 million, respectively. Construction and demand side
management program expenditures incurred during the second
quarter of 1996 were 57% funded with internally generated
cash; such expenditures incurred during the six months ended
June 30, 1996 were fully funded with internally generated
cash. Cash provided from operations increased $37.7 million
during the current six 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 $16.5 million compared to a
year ago. No 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 (see
"Other Matters"). 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
On July 3, 1996, the Indiana Utility Regulatory
Commission issued its order concerning the settlement
agreement entered into between SIGECO and the Indiana
Utility Consumer Counselor's Office to settle SIGECO's
pending request for an increase in base retail natural gas
rates, to adjust the level of future demand side management
(DSM) expenditures, and to address other related matters.
The order granted approximately 86% of SIGECO's originally
requested gas rate increase, representing an estimated $4.8
million increase in annual revenues. Additionally, the
order granted significant reductions in previously ordered
DSM expenditures during the 1997-2012 period, from a total
of approximately $138 million to approximately $39 million.
Although SIGECO is already recognized as one of the most
competitive electric utilities in the nation, the reductions
were requested by SIGECO to enable it to be even more cost
competitive in the future with very low stranded investment
exposure.
<PAGE>
<PAGE> 14
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> 15
SIGCORP, Inc.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
SIGCORP, Inc
(Registrant)
A. E. Geobel
A. E. Goebel
Secretary and Treasurer
August 14, 1996
<PAGE>
<TABLE>
SIGCORP Inc.
INDEX
<CAPTION>
Page No.
<S> <C>
Part I - Financial Information:
Consolidated Statements of Income for the Six Months
ended June 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 1996 and 1995 3
Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995 4-5
Consolidated Statements of Capitalization at June 30,
1996 and December 31, 1995 6
Consolidated Statements of Retained Earnings for the
Six Months ended June 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8-9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-13
Part II - Other Information 14
Signature 15
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 674,232
<OTHER-PROPERTY-AND-INVEST> 84,430
<TOTAL-CURRENT-ASSETS> 109,098
<TOTAL-DEFERRED-CHARGES> 48,961
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 916,721
<COMMON> 78,258
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 245,099
<TOTAL-COMMON-STOCKHOLDERS-EQ> 323,357
0
19,514
<LONG-TERM-DEBT-NET> 266,150
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 24,309
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 42,430
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 240,961
<TOT-CAPITALIZATION-AND-LIAB> 916,721
<GROSS-OPERATING-REVENUE> 189,902
<INCOME-TAX-EXPENSE> 11,159
<OTHER-OPERATING-EXPENSES> 149,181
<TOTAL-OPERATING-EXPENSES> 160,340
<OPERATING-INCOME-LOSS> 29,562
<OTHER-INCOME-NET> 3,619
<INCOME-BEFORE-INTEREST-EXPEN> 33,181
<TOTAL-INTEREST-EXPENSE> 11,072
<NET-INCOME> 22,109
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 13,628
<TOTAL-INTEREST-ON-BONDS> 9,327
<CASH-FLOW-OPERATIONS> 40,966
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.40
</TABLE>
