-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WEDmuBZI335CpcZEELuMXBAttGKCihXFmVh79TM7zwKh6lqyviZhRh88GD25HVwE iJ0US8cjImnvn+B6ZweZIw== 0001096385-05-000013.txt : 20050128 0001096385-05-000013.hdr.sgml : 20050128 20050128103646 ACCESSION NUMBER: 0001096385-05-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041231 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20050128 DATE AS OF CHANGE: 20050128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VECTREN UTILITY HOLDINGS INC CENTRAL INDEX KEY: 0001129542 STANDARD INDUSTRIAL CLASSIFICATION: GAS & OTHER SERVICES COMBINED [4932] IRS NUMBER: 352104850 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16739 FILM NUMBER: 05556241 BUSINESS ADDRESS: STREET 1: 20 NW 4TH ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124914000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VECTREN CORP CENTRAL INDEX KEY: 0001096385 STANDARD INDUSTRIAL CLASSIFICATION: GAS & OTHER SERVICES COMBINED [4932] IRS NUMBER: 352086905 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15467 FILM NUMBER: 05556240 BUSINESS ADDRESS: STREET 1: 20 NW FOURTH ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124914000 MAIL ADDRESS: STREET 1: 20 NW FOURTH ST CITY: EVANSVILLE STATE: IN ZIP: 47708 8-K 1 vvc_8k-earnings1204.txt VECTREN CORP 8K REPORTING EARNINGS RELEASE SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) January 26, 2005 VECTREN CORPORATION (Exact name of registrant as specified in its charter) Commission Registrant, State of Incorporation, I.R.S Employer File No. Address, and Telephone Number Identification No. ---------- ----------------------------------- ------------------ 1-15467 Vectren Corporation 35-2086905 (An Indiana Corporation) 20 N.W. Fourth Street, Evansville, Indiana 47708 (812) 491-4000 1-16739 Vectren Utility Holdings, Inc. 35-2104850 (An Indiana Corporation) 20 N.W. Fourth Street, Evansville, Indiana 47708 (812) 491-4000 Former name or address, if changed since last report: N/A Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On January 26, 2005, Vectren Corporation (the Company) released financial information to the investment community regarding the Company's results of operations for the three and twelve months ended December 31, 2004. The financial information released is included herein as Exhibit 99-1. This information does not include footnote disclosures and should not be considered complete financial statements. Vectren Corporation is the parent Company of Vectren Utility Holdings, Inc. (VUHI). VUHI serves as the intermediate holding company of the Company's three operating public utilities. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company is hereby furnishing cautionary statements identifying important factors that could cause actual results of the Company and its subsidiaries, including Vectren Utility Holdings, Inc., to differ materially from those projected in forward-looking statements of the Company and its subsidiaries made by, or on behalf of, the Company and its subsidiaries. These cautionary statements are attached as Exhibit 99-2. 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 hereunto duly authorized. VECTREN CORPORATION VECTREN UTILITY HOLDINGS, INC. January 27, 2005 By: ---------------------------------- M. Susan Hardwick Vice President and Controller INDEX TO EXHIBITS The following Exhibits are furnished as part of this Report to the extent described in Item 2.02: Exhibit Number Description - ------- ----------- 99-1 Press Release - Vectren Corporation Reports Fiscal 2004 Results 99-2 Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 EX-99.1 NEWS RELEASE 2 vvc8k_release1204.txt NEWS RELEASE AND FINANCIALS EX 99-1 News Release Vectren Corporation P.O. Box 209 Evansville, IN 47702-0209 FOR IMMEDIATE RELEASE January 26, 2005 Vectren Corporation Reports Fiscal 2004 Results Evansville, Indiana - Vectren Corporation (NYSE:VVC) today reported net income of $109.3 million, or $1.45 per share, for the year ended December 31, 2004, compared to net income of $111.2 million, or $1.58 per share, in 2003. Net income for the fourth quarter ended December 31, 2004, was $41.5 million, or $0.55 per share, compared to net income of $44.1 million, or $0.59 per share, for the same period last year. Company Highlights o Implemented new Vectren South gas rates in July 2004 o Implemented new Vectren North gas rates in December 2004 o Increased earnings contributions from the three primary nonregulated business groups o Increased common stock dividends paid for the 45th consecutive year o Affirmed 2005 earnings guidance The Company estimates that mild weather unfavorably impacted 2004 earnings by $5.0 million after tax, or $0.07 per share compared to 2003. As part of the Company's plan to narrow the focus of its nonregulated businesses, during the first and second quarter of 2004, the Company recorded impairment charges associated with its broadband-related businesses and investments, which totaled $6.0 million after tax, or $0.08 per share. Fiscal year 2004 earnings per share were also reduced $0.10 as the result of an increase in weighted average shares outstanding, resulting primarily from the Company's equity offering in August 2003. Said Niel C. Ellerbrook, Chairman, President and CEO, "Overall, fiscal 2004 was a good year for Vectren. Our net income from operations, excluding the $5.0 million after tax impact of unfavorable weather and the $6.0 million after tax impact relating to broadband charges, grew to $120.3 million, an 8% increase from 2003. We made great strides in implementing our regulatory initiatives during 2004 which will provide the opportunity for significantly improved earnings from regulated operations in 2005. The equity sold in 2003 strengthened our balance sheet and provided the opportunity to increase earnings and returns on the capital invested in our gas utilities. We implemented new base rates in our Indiana gas territories and would expect to implement new rates for our Ohio service area late in the first quarter of 2005. We achieved great results from our three primary nonregulated business groups and continued our plan of narrowing nonregulated operations to those businesses that are integrated with our utilities and provide a more stable platform for future growth." 2005 Earnings Guidance As previously announced, fiscal 2005 earnings are expected to be in the range of $1.70 to $1.90 per share. The targeted range is based on several factors, including normal weather conditions, continued growth from the Company's complementary nonregulated businesses and securing rate relief at Vectren Energy Delivery of Ohio (VEDO). Utility Group Utility Group earnings for the fourth quarter 2004 were $31.2 million, as compared to $34.5 million for the same quarter last year. During the quarter, utility margin growth was largely offset by increased other operating costs resulting from the December 2003 implementation of a bad debt tracker in Ohio which lowered 2003 operating costs, increased depreciation expense related to normal plant additions and increasing NOx expenditures, and a higher annual effective income tax rate. For the year, Utility Group earnings were $83.1 million as compared to $85.6 million in 2003. The 2004 earnings decline is due to the impact of unfavorable weather, estimated at $5 million after tax. Margin growth results from the recovery of NOx related environmental expenditures, gas base rate increases implemented in 2004 and customer usage growth. The primary expense changes were higher depreciation and lower bad debt expense in 2003 when 2003 bad debt expense costs related to our Ohio operations were reversed and deferred in the fourth quarter for later recovery under the uncollectible accounts expense rider. Gas utility margin was $105.9 million for the three months ended December 31, 2004, an increase of $4.9 million compared to 2003. Increased base rates in Vectren's Indiana service territories added margin of approximately $3.7 million and weather 2% cooler than the prior year added an estimated $1.8 million of margin. For the year, gas utility margin was $347.7 million, a decrease of $2.1 million compared to 2003. Heating weather in 2004 was 8% warmer than 2003 and negatively impacted gas utility margin by approximately $9.8 million. Base rate increases implemented in the latter half of 2004 added $4.7 million in margin in 2004. Electric retail and firm wholesale margin was $57.9 million for the three months ended December 31, 2004, an increase of $3.8 million compared to 2003. Margin increased $2.2 million due to an increase in retail electric rates related to the recovery of and return on NOx related expenditures and investments. The remaining increase was attributable to increased load due to customer growth and usage. Electric retail and firm wholesale margin for the year ended December 31, 2004 was $239.5 million, an increase of $24.8 million compared to 2003. Additional NOx recoveries increased margin $14.6 million in 2004. Cooling weather for the year was 12% warmer than last year, increasing margin an estimated $2.0 million. The remaining increase in margin was attributable to increased small customer usage and increased sales to industrial customers. Electric wholesale margin primarily results from asset optimization activities derived from generation capacity in excess of that needed to serve native load and firm wholesale customers. Scheduled outages of owned generation earlier in the year, related to scheduled turbine maintenance and the installation of environmental compliance equipment, reduced the availability of excess capacity during the year. Net electric wholesale margin increased $1.9 million for the three months ended December 31, 2004, compared to 2003, but decreased $3.3 million for the year ended December 31, 2004, compared to 2003. Other operating expenses increased approximately $4.5 million quarter over quarter, primarily attributable to the implementation of the Ohio uncollectible accounts expense rider in 2003 which resulted in the reversal of 2003 bad debt expense. The fourth quarter 2003 includes the impact of the reversal of 2003 expense necessary to reflect the deferral of $4.0 million relating to the Ohio order allowing the company to defer for future recovery its actual bad debt expense in excess of the amount provided in base rates. Other operating expenses increased $8.4 million for the year ended December 31, 2004 as compared to 2003. The major factors creating the increase were the 2003 deferral of $4.0 million bad debt expenses, NOx related operating expenses of $2.6 million recovered in rates and planned turbine maintenance of $1.9 million. Depreciation expense for the three and twelve months ended December 31, 2004 increased $4.2 million and $9.9 million respectively, as compared to 2003. NOx related depreciation increased $1.3 million and $4.8 million respectively, with the remaining increase due primarily to normal additions to utility plant. Taxes other than income taxes increased $1.0 million and $1.6 million for the three and twelve months ended December 31, 2004 as compared to 2003, primarily as a result of increased collections of utility receipts and excise tax due to higher revenues. Total other income (expense)-net decreased $2.3 million and increased $1.1 million for the three and twelve months ended December 31, 2004, respectively, as compared to 2003. Lower amounts of AFUDC were recorded in 2004 affecting the quarter and annual results as NOx expenditures were placed in service. Fiscal year 2003 includes operating losses and the write-off of the investment in BABB International, totaling $4.2 million. Interest expense increased $0.6 million and $1.3 million for the three and twelve months ended December 31, 2004 as compared to 2003. The increase reflects the permanent financing of short term borrowings with higher coupon long-term debt and higher interest rates associated with variable rate debt. Income taxes for 2004 were relatively consistent with 2003, reflecting slightly lower earnings offset by a higher effective tax rate. Vectren Energy Delivery - Indiana South and North Base Rate Settlements On June 30, 2004, the IURC approved a $5.7 million base rate increase for Vectren Energy Delivery Indiana - South's (Vectren South) gas distribution business and on November 30, 2004, approved a $24.0 million base rate increase for Vectren Energy Delivery Indiana - North's (Vectren North) gas distribution business. Each order establishes a new rate design that provides for a larger fixed monthly service charge, which is intended to somewhat mitigate earnings volatility related to weather. The base rate change in Vectren South's service territory was implemented on July 1, 2004, resulting in additional 2004 revenues of $2.5 million. The base rate change in Vectren North's service territory was implemented on December 1, 2004, resulting in additional 2004 revenues of $2.2 million. Both cases will contribute a full year of increase in 2005. The orders also permit Vectren South and Vectren North to track and recover the on-going compliance costs under the federal Pipeline Safety Improvement Act of 2002. The trackers provide for the recovery of incremental non-capital dollars, capped at $750,000 the first year and $500,000 thereafter for Vectren South and $2.5 million per year for Vectren North. Any costs incurred in excess of these annual caps will be deferred for future recovery. Vectren Energy Delivery of Ohio Pending Base Rate Filing In 2004 the Company initiated the process of seeking authority to adjust base rates and charges for Vectren Energy Delivery of Ohio's (VEDO) gas distribution business covering west central Ohio. VEDO's request to increase base rates up to $25 million is subject to review and approval by the Public Utilities Commission of Ohio (PUCO). The filing also includes a proposed conservation tariff, which, if approved, will enable the Company to proactively support conservation and promote home weatherization and the reduction of energy consumption. Activities related to the case are ongoing and a public hearing is scheduled to commence on February 1, 2005. Based upon the PUCO's actions in other proceedings, the Company would expect a Commission order in this case late in the first quarter of 2005. Nonregulated Group (all amounts following in this section are after tax) Nonregulated Group earnings for the fourth quarter 2004 were $10.6 million, as compared to $10.0 million for the same period last year. Earnings in the fourth quarter of 2003 reflect after tax gains of $1.2 million from the sale of a wholly owned debt collection subsidiary. The 2004 earnings increase reflects improved results from the Company's primary nonregulated business groups, Energy Marketing and Services, Coal Mining, and Utility Infrastructure Services, which contributed $10.8 million in 2004, compared to $9.3 million in 2003. Nonregulated earnings for the year ended December 31, 2004, were $27.8 million compared to $27.6 million in 2003. The Company's three primary nonregulated business groups contributed $32.3 million in 2004, an increase of $4.9 million over 2003. Energy Marketing and Services Energy Marketing and Services is comprised of the Company's gas marketing operations, performance contracting operations and retail gas supply operations. Net income generated by Energy Marketing and Services for the three months ended December 31, 2004, was $8.9 million compared to $5.9 million in 2003. Gas marketing operations, performed through ProLiance, contributed quarterly earnings of $6.6 million in 2004 compared to $4.7 million in 2003. For the quarter, Vectren Source's retail gas operations earned $0.5 million compared to break even results in 2003. Net income generated by Energy Marketing and Services for the year ended December 31, 2004, was $18.0 million compared to $15.3 million in 2003. ProLiance provided the primary earnings contribution, totaling $16.8 million in 2004, as compared to $15.4 million in 2003. ProLiance has achieved record earnings for each of the last four years. The 2004 quarterly and annual increases are primarily related to increased asset optimization from storage activities as a result of significant price volatility. Energy Systems Group's operations contributed earnings of $2.8 million in 2004; nearly matching last years record contribution of $3.0 million. The contribution from Vectren Source's operations was right at plan, a $0.4 million loss in 2004; an improvement of $1.5 million compared to 2003. Vectren Source's improvement in quarter and annual earnings is attributable to its expanded customer base of over 100,000 customers opting for choice among energy providers in Ohio, Indiana and Georgia. As previously disclosed in the company's publicly filed reports, there is currently a lawsuit pending in the United States District Court for the Northern District of Alabama filed by the City of Huntsville, Alabama (Huntsville Utilities) against ProLiance. During the fourth quarter of 2004, a jury trial was set and the trial began earlier this week. A decision is expected in February 2005. Huntsville Utilities asserts claims based on breach of contract and/or pricing advice, fraud, conversion and other theories including RICO. Huntsville Utilities originally asserted its compensatory damages to be approximately $10 million with certain claims, which if successful, would triple that amount. In the opening argument for the trial, counsel for Huntsville Utilities claimed compensatory damages in excess of $20 million as well as enhanced damages under RICO and punitive damages. In 2003, due to uncertainties surrounding collection, ProLiance established reserves for amounts due from Huntsville Utilities for services provided by ProLiance but no reserves have been established regarding the lawsuit. Both parties have denied the charges contained in the respective claims and it is not possible to predict or determine the outcome of this litigation. While ProLiance believes that it has meritorious defenses to the claims being asserted by Huntsville, an unfavorable outcome could possibly be material to Vectren's earnings. Coal Mining The Coal Mining Group mines and sells coal to the Company's utility operations and to other third parties through its wholly owned subsidiary Vectren Fuels, Inc. (Fuels). The Coal Mining Group also generates IRS Code Section 29 tax credits resulting from the production of coal-based synthetic fuels through its 8.3% ownership interest in Pace Carbon Synfuels, LP (Pace Carbon). In addition, Fuels receives synfuel-related fees from synfuel producers unrelated to Pace Carbon for a portion of its coal production. Coal Mining net income for the three months ended December 31, 2004, was $1.4 million compared to $3.3 million in 2003. Mining operations decreased earnings $1.1 million during the quarter compared to last year due to weather, unfavorable mining conditions and increased costs in commodities such as steel, explosives and diesel fuel. Synfuel-related results for the quarter, which include earnings from Pace Carbon and synfuel processing fees earned by Fuels, decreased $0.8 million. This decrease reflects lower production of synthetic fuel produced by Pace Carbon due to feed stock problems at one of their four plants. The underperforming plant was relocated and recently begun production. Coal Mining net income for the year ended December 31, 2004, was $12.5 million, as compared to $13.0 million in 2003. Mining operations increased earnings in 2004 by $0.7 million compared to last year due primarily to improved production and market pricing which were partially offset by weather and increased commodity costs. Virtually all of 2005 sales are under contract at price levels above those seen in 2004. Synfuel-related results in 2004 were $12.1 million compared to $13.3 million in 2003. The 2004 decrease reflects Pace Carbon's lower production of synthetic fuel compared to 2003 due to the feed stock problems discussed above. Utility Infrastructure Services Utility Infrastructure Services provides underground construction and repair to gas, water, electric and telecommunications companies primarily through its investment in Reliant Services, LLC (Reliant) and Reliant's 100% ownership in Miller Pipeline. Reliant is a 50% owned strategic alliance and is accounted for using the equity method of accounting. Infrastructure Services' earnings increased by $0.4 million, totaling $0.5 million for the three months ended December 31, 2004. The improvement in annual earnings of $2.7 million over 2003 was primarily driven by better pricing and increases in utility and municipal waste water construction and repair spending during 2004. These changes, along with productivity improvements, resulted in record annual earnings of $1.8 million. Broadband and Other Businesses Broadband invests in communication services, such as cable television, high-speed internet, and advanced local and long distance phone services. The Other Businesses Group includes a variety of operations and investments. For the three months ended December 31, 2004, earnings from Broadband and Other Businesses decreased by $0.9 million due to the sale of a wholly owned debt collection subsidiary in the fourth quarter of 2003. The sale resulted in an after tax gain of approximately $1.2 million. For the year ended December 31, 2004, Broadband and the Other Businesses Groups reported $4.5 million in losses, as compared to earnings of $0.2 million in 2003. During 2004, the Company continued to evaluate strategic alternatives for its broadband investments and concluded that it is unlikely that it would make additional investments. As a result, in the first quarter of 2004, the Company recorded impairment charges for its investment in SIGECOM and its franchises in the Indianapolis and Dayton markets totaling $3.6 million after-tax. The Company also ceased operations of Vectren Communications Services, Inc. (VCS), a municipal broadband consulting business, during the second quarter of 2004. This decision resulted in losses of $2.4 million after tax due primarily to inventory write downs, cessation charges, and other costs. Total losses by VCS in 2004 were $2.6 million, as compared to losses of $1.8 million in 2003. The year ended December 31, 2003 also includes a $1.2 million after tax loss resulting from the sale of a small broadband operation in Indianapolis. The Other Businesses Group's 2003 results include $3.8 million in after tax gains from the sale of debt collection and supply chain management subsidiaries and the sale of an investment in a company that provides real-time power plant and transmission line status information. During 2004, Haddington Energy Partnerships sold their investments in SAGO Energy, LP (SAGO) for cash. The Company recognized its portion of the gain, totaling $5.3 million after tax. These earnings were partially offset by Haddington's write-down of Nations Energy Holdings, of which Vectren's portion was $3.5 million after tax. In total, earnings from Haddington for the year ended December 31, 2004, were $2.0 million compared to a loss of $0.6 million in 2003. Corporate Contributions to various community and civic organizations and corporate and other expenses in 2004 were $1.6 million after tax. Financial As a result of the long-term debt and equity financings completed in 2003, total long-term debt to permanent capitalization was 48% at December 31, 2004. Vectren remains committed to improving its balance sheet and maintaining strong investment grade ratings. Vectren's utility debt is currently rated A- and Baa1 by Standard & Poor's and Moody's, respectively. Dividends Vectren's Board of Directors authorized a $0.295 dividend payable March 1, 2005, to shareholders of record at the close of business on February 15, 2005. In October 2004, Vectren's Board of Directors approved a 3.5% increase in the quarterly dividend rate to $0.295 per share, a new indicated annual dividend rate of $1.18 per share. Vectren and predecessor companies have now increased the dividend for 45 consecutive years. Please SEE ATTACHED unaudited schedules for additional financial information Live Webcast on January 27, 2005 Vectren management will discuss fiscal year 2004 earnings results and provide an outlook for 2005 during a conference call for analysts scheduled at 2:30 p.m. EST (1:30 CST), Thursday, January 27, 2005. You are invited to listen to the live, audio only Webcast of the conference call as well as view the accompanying slide presentation by choosing "Earnings Release and Webcast" on Vectren's website, www.Vectren.com. Approximately two hours after the completion of the Webcast, interested parties may also view the slide presentation and listen to the Webcast replay at Vectren's website. About Vectren Vectren Corporation is an energy and applied technology holding company headquartered in Evansville, Indiana. Vectren's energy delivery subsidiaries provide gas and/or electricity to over one million customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio. Vectren's non-regulated subsidiaries and affiliates currently offer energy-related products and services to customers throughout the midwest and southeast. These include gas marketing and related services; coal production and sales; utility infrastructure services; and broadband communication services. To learn more about Vectren, visit www.vectren.com. Safe Harbor for Forward Looking Statements This document contains forward-looking statements, which are based on management's beliefs and assumptions that derive from information currently known by management. Vectren wishes to caution readers that actual results could differ materially from those contained in this document. Additional detailed information concerning a number of factors that could cause actual results to differ materially from the information that is provided to you is readily available in our report Form 10-K on Form 10-K filed with the Securities and Exchange Commission on February 26, 2004. Investor Contact Steven M. Schein, (812) 491-4209, sschein@vectren.com ------------------- Media Contact Jeffrey W. Whiteside, (812) 491-4205, jwhiteside@vectren.com ----------------------
VECTREN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (Thousands, except per share amounts) (Unaudited) Three Months Twelve Months Ended December 31 Ended December 31 --------------------- ----------------------- 2004 2003 2004 2003 --------------------- ----------------------- OPERATING REVENUE: Gas utility $ 354,569 $ 323,584 $1,126,205 $1,112,313 Electric utility 91,082 81,498 371,279 335,694 Energy services and other 67,689 48,874 192,294 139,703 --------- --------- ---------- ---------- Total operating revenues 513,340 453,956 1,689,778 1,587,710 --------- --------- ---------- ---------- OPERATING EXPENSES: Cost of gas sold 248,662 222,595 778,475 762,464 Fuel for electric generation 23,723 20,223 96,132 86,477 Purchased electric energy 4,077 3,686 20,655 16,172 Cost of energy services and other 53,309 37,176 143,450 103,737 Other operating 61,038 54,334 248,811 233,729 Depreciation and amortization 36,521 31,914 140,138 128,656 Taxes other than income taxes 16,205 14,949 59,464 57,004 --------- --------- ---------- ---------- Total operating expenses 443,535 384,877 1,487,125 1,388,239 --------- --------- ---------- ---------- OPERATING INCOME 69,805 69,079 202,653 199,471 OTHER INCOME: Equity in earnings of unconsolidated affiliates 9,477 5,719 22,989 12,169 Other - net 2,386 6,769 1,405 12,943 --------- --------- ---------- ---------- Total other income 11,863 12,488 24,394 25,112 --------- --------- ---------- ---------- INTEREST EXPENSE 20,170 18,892 77,682 75,586 --------- --------- ---------- ---------- INCOME BEFORE INCOME TAXES 61,498 62,675 149,365 148,997 INCOME TAXES 19,997 18,511 39,972 37,669 MINORITY INTEREST IN SUBSIDIARY 9 12 62 66 PREFERRED DIVIDEND REQUIREMENT OF SUBSIDIARY 2 5 13 23 --------- --------- ---------- ---------- NET INCOME $ 41,490 $ 44,147 $ 109,318 $ 111,239 ========= ========= ========== ========== AVERAGE COMMON SHARES OUTSTANDING 75,626 75,344 75,568 70,623 DILUTED COMMON SHARES OUTSTANDING 76,005 75,578 75,917 70,820 EARNINGS PER SHARE OF COMMON STOCK BASIC: EARNINGS PER SHARE OF COMMON STOCK $ 0.55 $ 0.59 $ 1.45 $ 1.58 ========= ========= ========== ========== DILUTED: EARNINGS PER SHARE OF COMMON STOCK $ 0.55 $ 0.58 $ 1.44 $ 1.57 ========= ========= ========== ==========
VECTREN UTILITY HOLDINGS AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (Thousands, except per share amounts) (Unaudited) Three Months Twelve Months Ended December 31 Ended December 31 --------------------- ----------------------- 2004 2003 2004 2003 --------------------- ----------------------- OPERATING REVENUE: Gas utility $ 354,569 $ 323,584 $1,126,205 $1,112,313 Electric utility 91,082 81,498 371,279 335,694 Other 40 199 562 793 --------- --------- ---------- ---------- Total operating revenues 445,691 405,281 1,498,046 1,448,800 --------- --------- ---------- ---------- OPERATING EXPENSES: Cost of gas sold 248,662 222,595 778,475 762,464 Fuel for electric generation 23,723 20,223 96,132 86,477 Purchased electric energy 4,077 3,686 20,655 16,172 Other operating 52,687 48,235 218,503 210,098 Depreciation and amortization 33,308 29,149 127,819 117,948 Taxes other than income taxes 15,842 14,844 58,243 56,626 --------- --------- ---------- ---------- Total operating expenses 378,299 338,732 1,299,827 1,249,785 --------- --------- ---------- ---------- OPERATING INCOME 67,392 66,549 198,219 199,015 OTHER INCOME (EXPENSE): Equity in earnings (losses) of unconsolidated affiliates - (20) 204 (473) Other - net 1,443 3,806 5,166 4,762 --------- --------- ---------- ---------- Total other income (expense) 1,443 3,786 5,370 4,289 --------- --------- ---------- ---------- INTEREST EXPENSE 17,235 16,676 67,408 66,135 --------- --------- ---------- ---------- INCOME BEFORE INCOME TAXES 51,600 53,659 136,181 137,169 INCOME TAXES 20,354 19,154 53,035 51,582 PREFERRED DIVIDEND REQUIREMENT OF SUBSIDIARY 2 5 13 23 --------- --------- ---------- ---------- NET INCOME $ 31,244 $ 34,500 $ 83,133 $ 85,564 ========= ========= ========== ==========
VECTREN CORPORATION 3 Months 12 Months HIGHLIGHTS Ended December 31 Ended December 31 (millions, except per share amounts) ---------------------------------------------- (Unaudited) 2004 2003 2004 2003 - --------------------------------------------------------------------------------------- Reported Earnings: Utility Group $ 31.2 $ 34.5 $ 83.1 $ 85.6 Non-regulated Group Energy Marketing and Services 8.9 5.9 18.0 15.3 Mining (1.2) (0.1) 0.4 (0.3) Synfuels related 2.6 3.4 12.1 13.3 ------ ------ ------ ------ Total Coal Mining 1.4 3.3 12.5 13.0 Utility Infrastructure Services 0.5 0.1 1.8 (0.9) Broadband 0.1 0.1 (3.2) (1.1) Other Businesses (0.3) 0.6 (1.3) 1.3 ------ ------ ------ ------ Total Non-regulated Group 10.6 10.0 27.8 27.6 Corporate and Other (0.3) (0.4) (1.6) (2.0) ------ ------ ------ ------ Vectren Consolidated $ 41.5 $ 44.1 $109.3 $111.2 ====== ====== ====== ====== Vectren Selected Highlights 12 months 12 months Ended Ended December 31 December 31 2004 2003 ----------- ----------- Dividends Paid (per common share, 12 months) $ 1.15 $ 1.11 Annualized Dividend $ 1.18 $ 1.14 Dividend Yield (at close) 4.4% 4.6% Dividend Payout Ratio 79.3% 70.3% Dividend to Book Value 8.2% 8.0% Return on Average Shareholders' Equity 10.1% 11.5% Book Value Per Share $ 14.43 $ 14.17 Market to Book Value (at close) 186% 174% Common Stock Prices (VVC - NYSE) High $ 27.09 $ 26.13 Low $ 22.86 $ 19.70 Close $ 26.80 $ 24.65 Price/Earnings Ratio (trailing) 18.5 15.6 Ratio of Total Debt to Total Capitalization 57% 56% Percent Internally Generated Funds - Utility Group 65% 66% Ratio of Earnings to Fixed Charges - SEC Method Consolidated 2.9 3.0 Utility Group 3.0 3.1
VECTREN CORPORATION SELECTED GAS DISTRIBUTION 3 Months 12 Months OPERATING STATISTICS Ended December 31 Ended December 31 --------------------- ----------------------- (Unaudited) 2004 2003 2004 2003 - ----------------------------------- --------- --------- ---------- ---------- GAS OPERATING REVENUES (Thousands): Residential $ 240,185 $ 218,724 $ 744,540 $ 741,211 Commercial 86,633 78,267 282,492 275,821 Contract 24,658 23,455 86,765 86,356 Miscellaneous Revenue 3,093 3,138 12,408 8,925 --------- --------- ---------- ---------- $ 354,569 $ 323,584 $1,126,205 $1,112,313 ========= ========= ========== ========== GAS MARGIN (Thousands): Residential $ 69,802 $ 66,014 $ 224,101 $ 227,078 Commercial 19,732 18,959 64,254 65,231 Contract 14,912 13,593 53,461 51,493 Miscellaneous 1,461 2,423 5,914 6,047 --------- --------- ---------- ---------- $ 105,907 $ 100,989 $ 347,730 $ 349,849 ========= ========= ========== ========== GAS SOLD & TRANSPORTED (MDth): Residential 25,036 25,690 79,011 84,113 Commercial 9,494 9,735 31,655 33,760 Contract 24,391 24,531 89,677 91,471 --------- --------- ---------- ---------- 58,921 59,956 200,343 209,344 ========= ========= ========== ========== YEAR END GAS CUSTOMERS Residential 898,862 887,891 Commercial 81,087 80,292 Contract 4,042 4,047 ---------- ---------- 983,991 972,230 ========== ========== WEATHER AS A PERCENT OF NORMAL: Heating Degree Days 91% 89% 92% 100%
VECTREN CORPORATION SELECTED ELECTRIC 3 Months 12 Months OPERATING STATISTICS Ended December 31 Ended December 31 ----------------------- ----------------------- (Unaudited) 2004 2003 2004 2003 - ---------------------------------- ---------- ---------- ---------- ---------- ELECTRIC OPERATING REVENUES (Thousands): Residential $ 26,507 $ 22,884 $ 119,753 $ 105,381 Commercial 22,875 21,259 92,867 82,268 Industrial 26,672 24,417 107,568 92,746 Municipals 5,204 5,493 23,561 21,534 Miscellaneous Revenue 1,275 2,463 3,694 7,185 ---------- ---------- ---------- ---------- Total Retail 82,533 76,516 347,443 309,114 Net Wholesale Revenues 8,549 4,982 23,836 26,580 ---------- ---------- ---------- ---------- $ 91,082 $ 81,498 $ 371,279 $ 335,694 ========== ========== ========== ========== ELECTRIC MARGIN (Thousands): Residential $ 20,992 $ 17,899 $ 93,459 $ 81,950 Commercial 16,694 15,460 66,257 59,110 Industrial 15,940 15,094 62,398 53,533 Municipals 3,089 3,289 13,861 13,115 Miscellaneous 1,234 2,398 3,563 7,060 ---------- ---------- ---------- ---------- Total Retail 57,949 54,140 239,538 214,768 ---------- ---------- ---------- ---------- Net Wholesale Margin 5,333 3,449 14,954 18,277 ---------- ---------- ---------- ---------- $ 63,282 $ 57,589 $ 254,492 $ 233,045 ========== ========== ========== ========== ELECTRICITY SOLD (MWh): Residential 317,513 297,497 1,501,707 1,441,706 Commercial 353,772 346,036 1,501,513 1,422,127 Industrial 612,497 564,979 2,543,534 2,416,885 Municipals 139,164 151,362 625,925 600,924 Miscellaneous Sales 3,964 4,319 13,481 17,210 ---------- ---------- ---------- ---------- Total Retail 1,426,910 1,364,193 6,186,160 5,898,852 Wholesale 1,189,760 1,265,952 3,526,005 4,305,190 ---------- ---------- ---------- ---------- 2,616,670 2,630,145 9,712,165 10,204,042 ========== ========== ========== ========== YEAR END ELECTRIC CUSTOMERS Residential 118,998 117,868 Commercial 17,096 17,054 Industrial 152 155 All Others 21 21 ---------- ---------- 136,267 135,098 ========== ========== WEATHER AS A PERCENT OF NORMAL: Heating Degree Days 91% 89% 92% 100% Cooling Degree Days 69% 52% 90% 80%
EX-99.2 SAFE HARBOR 3 vvc_8kex99-2safeharbor.txt SAFE HARBOR STATEMENT EX 99-2 Cautionary Statement for Purposes of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. A "safe harbor" for forward-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 statement. Forward-looking statements have been and will be made in written documents and oral presentations of Vectren Corporation and its subsidiaries. Such statements are based on management's beliefs, as well as assumptions made by and information currently available to management. When used in Vectren Corporation and its subsidiaries' documents or oral presentations, 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: o 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. o Increased competition in the energy environment including effects of industry restructuring and unbundling. o 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. o Financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board; the Securities and Exchange Commission; the Federal Energy Regulatory Commission; state public utility commissions; state entities which regulate electric and natural gas transmission and distribution, natural gas gathering and processing, electric power supply; and similar entities with regulatory oversight. o Economic conditions including the effects of an economic downturn, inflation rates, and monetary fluctuations. o 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. o The performance of projects undertaken by the Company's nonregulated businesses and the success of efforts to invest in and develop new opportunities, including but not limited to, the realization of Section 29 income tax credits and the Company's coal mining, gas marketing, and broadband strategies. o Direct or indirect effects on our business, financial condition or liquidity resulting from a change in our credit rating, changes in interest rates, and/or changes in market perceptions of the utility industry and other energy-related industries. o Discovery of material weakness in internal controls. o Employee or contractor workforce factors including changes in key executives, collective bargaining agreements with union employees, or work stoppages. o Legal and regulatory delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures. o Costs and other effects of legal and administrative proceedings, settlements, investigations, claims, and other matters, including, but not limited to, those described in periodic filings made with Commission by Vectren Corporation and its subsidiaries, including Vectren Utility Holdings, Inc. o 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. -----END PRIVACY-ENHANCED MESSAGE-----