-----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, HpnCmfSzPxWwoOGeiQoEq3MN/sKa7Anpj2eIk7ZBT3mZH4DP4LiMqJHu4dJSONNM UWJmrrEYgY9ISkbTdr5fNQ== 0000092195-97-000019.txt : 19970814 0000092195-97-000019.hdr.sgml : 19970814 ACCESSION NUMBER: 0000092195-97-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN INDIANA GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000092195 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 350672570 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03553 FILM NUMBER: 97658595 BUSINESS ADDRESS: STREET 1: 20 NW FOURTH ST CITY: EVANSVILLE STATE: IN ZIP: 47741-0001 BUSINESS PHONE: 8124655300 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the quarterly period ended June 30, 1997 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; State of Incorporation; IRS Employer File Number Address; and Telephone Number Identification 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 Company 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, 23,630,568 shares outstanding at June 30, 1997 Southern Indiana Gas and Electric Company: Common stock, no par value, 15,754,826 shares outstanding and held by SIGCORP, Inc. at June 30, 1997
SIGCORP, Inc. AND SOUTHERN INDIANA GAS AND ELECTRIC COMPANY FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 TABLE OF CONTENTS Page No. 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 Results of Operations and Financial Condition 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
2 SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF INCOME Three Months Six Months Ended Ended June 30, June 30, 1997 1996 1997 1996 (in thousands except per share data) OPERATING REVENUES: Electric $62,222 $65,803 $127,099 $132,668 Gas 13,177 17,623 47,034 57,234 Total operating revenues 75,399 83,426 174,133 189,902 OPERATING EXPENSES: Fuel for electric generation 15,028 17,885 29,751 36,663 Purchased electric energy 3,111 2,771 5,039 4,031 Cost of gas sold 6,270 11,392 31,272 42,163 Other 14,796 12,594 28,046 25,929 Maintenance 7,719 7,720 13,943 13,908 Depreciation and amortization 10,029 9,708 20,058 19,415 Federal and state income taxes 3,819 4,644 11,035 11,159 Property and other taxes 3,166 3,481 6,478 7,072 Total operating expenses 63,938 70,195 145,622 160,340 OPERATING INCOME 11,461 13,231 28,511 29,562 OTHER INCOME: Allowance for other funds used during construction 160 2 261 (2) Interest 659 427 1,298 728 Other, net (349) 649 511 2,893 Total other income 470 1,078 2,070 3,619 INCOME BEFORE INTEREST AND OTHER CHARGES 11,931 14,309 30,581 33,181 INTEREST AND OTHER CHARGES: Interest on long-term debt 4,515 4,648 9,027 9,327 Amortization of premium, discount, and expense on debt 168 186 336 354 Other interest 823 468 1,505 1,010 Allowance for borrowed funds used during construction (112) (104) (212) (167) Preferred dividend requirements of subsidiary 274 274 548 548 Total interest and other charges 5,668 5,472 11,204 11,072 NET INCOME $ 6,263 $ 8,837 $ 19,377 $ 22,109 AVERAGE COMMON SHARES OUTSTANDING 23,631 23,631 23,631 23,631 EARNINGS PER SHARE OF COMMON STOCK $0.27 $0.37 $0.82 $0.94 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3 SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 1997 1996 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $19,377 $22,109 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,058 19,415 Preferred dividend requirements of subsidiary 548 548 Deferred income taxes and investment tax credits, net (1,279) 650 Allowance for other funds used during construction (261) 2 Change in assets and liabilities: Receivables, net (including accrued unbilled revenues) 20,877 4,171 Inventories 2,962 5,365 Coal contract settlement - 7,792 Accounts payable (10,051) (14,411) Accrued taxes (2,900) 2,281 Refunds from gas suppliers (351) (1,690) Refunds to customers 2,848 (4,061) Other assets and liabilities 1,130 (1,205) Net cash provided by operating activities 52,958 40,966 CASH FLOWS FROM INVESTING ACTIVITIES Construction expenditures (net of allowance for other funds used during construction) (19,845) (14,332) Demand side management program expenditures (1,270) (1,835) Purchases of investments (323) - Sales of investments 160 600 Investments in partnerships 648 545 Change in nonutility property (1,891) (9,816) Other 187 1,168 Net cash used in investing activities (22,334) (23,670) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (15,491) (14,177) Change in environmental improvement funds held by trustee (139) (104) Payments on partnership obligations (2,277) (2,787) Change in notes payable (12,673) (3,318) Other 1,216 264 Net cash used in financing activities (29,364) (20,122) NET DECREASE IN CASH AND CASH EQUIVALENTS 1,260 (2,826) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,192 9,834 CASH AND CASH EQUIVALENTS AT END OF PERIOD $10,452 $ 7,008 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
4 SIGCORP, Inc.
CONSOLIDATED BALANCE SHEETS June 30, December 31, 1997 1996 (in thousands) ASSETS Utility Plant, at original cost: Electric $1,059,530 $1,047,717 Gas 133,828 131,796 1,193,358 1,179,513 Less - accumulated provision for depreciation 540,266 524,104 653,092 655,409 Construction work in progress 28,402 25,849 Net utility plant 681,494 681,258 Other Investments and Property: Investments in leveraged leases 42,600 42,887 Investments in partnerships 23,238 23,983 Environmental improvement funds held by trustee 3,969 3,830 Nonutility property and other 24,634 22,743 Total other investments and property 94,441 93,443 Current Assets: Cash and cash equivalents 10,452 9,191 Temporary investments, at market 737 565 Receivables, less allowance of $530 and $215, respectively 31,627 36,469 Accrued unbilled revenues 18,709 34,744 Inventories 28,279 31,241 Other current assets 9,400 16,310 Total current assets 99,204 128,520 Deferred Charges: Unamortized premium on reacquired debt 5,423 5,663 Postretirement benefits other than pensions 6,680 7,819 Demand side management program 24,328 23,359 Other deferred charges 13,454 12,591 Total deferred charges 49,885 49,432 TOTAL $ 925,024 $ 952,653 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5 SIGCORP, Inc.
CONSOLIDATED BALANCE SHEETS June 30, December 31, 1997 1996 (in thousands) SHAREHOLDERS' EQUITY AND LIABILITIES CAPITALIZATION: Common Stock $ 78,258 $ 78,258 Retained Earnings 258,014 252,626 Total common shareholders' equity 336,272 330,884 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 238,979 261,629 Long-Term Partnership Obligations, net of current maturities 4,191 4,563 Total capitalization, excluding bonds subject to tender (see Consolidated Statements of Capitalization) 598,956 616,590 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 12,695 659 Notes payable 37,000 38,750 Partnership obligations 371 2,276 Total current maturities of long-term debt, interim financing and long-term partnership obligations 50,066 41,685 Other Current Liabilities: Accounts payable 23,549 33,600 Dividends payable 103 123 Accrued taxes 4,823 7,723 Accrued interest 5,036 4,585 Refunds to customers 5,220 2,722 Other accrued liabilities 16,558 31,138 Total other current liabilities 55,289 79,891 Total current liabilities 136,855 153,076 Deferred Credits and Other: Accumulated deferred income taxes 147,610 147,070 Accumulated deferred investment tax credits, being amortized over lives of property 20,990 21,706 Regulatory income tax liability 511 1,614 Postretirement benefits other than pensions 12,262 10,084 Other 7,840 2,513 Total deferred credits and other 189,213 182,987 TOTAL $925,024 $952,653 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6 SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF CAPITALIZATION June 30, December 31, 1997 1996 (in thousands) COMMON SHAREHOLDERS' EQUITY Common Stock, without par value, authorized 50,000,000 shares, issued 23,630,568 shares $ 78,258 $ 78,258 Retained Earnings, $2,194,121 restricted as to payment of cash dividends on common stock 258,014 252,626 336,272 330,884 PREFERRED STOCK OF SUBSIDIARY Cumulative, $100 par value, authorized 800,000 shares issuable, in series: Nonredeemable 4.8% Series, outstanding 85,895 shares callable at $110 per share 8,590 8,590 4.75% Series, outstanding 25,000 shares callable at $101 per share 2,500 2,500 Total nonredeemable preferred stock of subsidiary 11,090 11,090 Redeemable 6.50% Series, outstanding 75,000 shares redeemable at $100 per share December 1, 2002 7,500 7,500 SPECIAL PREFERRED STOCK OF SUBSIDIARY Cumulative, no par value, authorized 5,000,000 shares, issuable in series: 8-1/2% series, outstanding 9,237 shares redeemable at $100 per share 924 924 LONG-TERM DEBT, NET OF CURRENT MATURITIES First mortgage bonds 238,715 251,115 Notes payable 1,000 11,273 Unamortized debt premium and discount, net (736) (759) Total long-term debt 238,979 261,629 LONG-TERM PARTNERSHIP OBLIGATIONS, NET OF CURRENT MATURITIES 4,191 4,563 CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL BONDS SUBJECT TO TENDER, DUE 2015, Series B, presently 4.05% 31,500 31,500 TOTAL CAPITALIZATION, including bonds subject to tender $630,456 $648,090 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
7 SIGCORP, Inc.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Six Months Ended June 30, 1997 1996 (in thousands) Balance Beginning of Period $252,626 $236,617 Net Income 19,377 22,109 272,003 258,726 Common Stock Dividends ($0.590 per share in 1997 and $0.576 per share in 1996) 13,989 13,627 BALANCE END OF PERIOD (See Consolidated Statements of Capitalization for restriction) $258,014 $245,099 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
8 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 (in thousands except per share amounts) OPERATING REVENUES: Electric $62,222 $65,803 $127,099 $132,668 Gas 13,177 17,623 47,033 57,234 Total operating revenues 75,399 83,426 174,133 189,902 OPERATING EXPENSES: Fuel for electric generation 15,028 17,885 29,751 36,663 Purchased electric energy 3,110 2,771 5,039 4,031 Cost of gas sold 6,270 11,392 31,272 42,163 Other operation expenses 14,797 12,569 28,046 25,905 Maintenance 7,719 7,720 13,943 13,908 Depreciation and amortization 10,029 9,708 20,058 19,415 Federal and state income taxes 3,819 4,644 11,035 11,159 Property and other taxes 3,166 3,481 6,478 7,072 Total operating expenses 63,938 70,170 145,622 160,316 OPERATING INCOME 11,461 13,256 28,511 29,586 OTHER INCOME: Allowance for other funds used during construction 160 2 261 (2) Interest 115 196 248 307 Other, net (23) (82) 643 1,351 Total other income 252 116 1,152 1,656 INCOME BEFORE INTEREST AND OTHER CHARGES 11,713 13,372 29,663 31,242 INTEREST AND OTHER CHARGES Interest on long-term debt 4,515 4,648 9,027 9,327 Amortization of premium, discount, and expense on debt 168 186 336 354 Other interest 251 337 635 748 Allowance for borrowed funds used during construction (112) (104) (212) (167) Total interest and other charges 4,822 5,067 9,786 10,262 NET INCOME 6,891 8,305 19,877 20,980 Preferred dividend 274 274 548 548 EARNINGS APPLICABLE TO COMMON STOCK $ 6,617 $ 8,031 $ 19,329 $ 20,432 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
9 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 1997 1996 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $19,877 $20,980 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,058 19,415 Deferred income taxes and investment tax credits, net (1,478) 577 Allowance for other funds used during construction (261) 2 Change in assets and liabilities: Receivables, net (including accrued unbilled revenues) 20,237 4,923 Inventories 2,981 5,384 Coal contract settlement - 7,792 Accounts payable (10,062) (16,027) Accrued taxes (3,169) 2,303 Refunds from gas suppliers (351) (1,690) Refunds to customers 2,848 (4,061) Other assets and liabilities 2,752 (1,000) Net cash provided by operating activities 53,432 38,598 CASH FLOWS FROM INVESTING ACTIVITIES Construction expenditures (net of allowance for other funds used during construction) (19,845) (14,332) Demand side management program expenditures (1,270) (1,835) Change in nonutility property 1 1 Other (188) 51 Net cash used in investing activities (21,302) (16,115) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (15,491) (14,177) Change in environmental improvement funds held by trustee (139) (104) Change in notes payable (16,368) (6,500) Contribution of nonregulated subsidiaries to parent - (12,145) Other 263 270 Net cash used in financing activities (31,735) (32,656) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 395 (10,173) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,127 9,834 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,522 $ (339) The accompanying notes to Consolidated Financial Statements are an integral part of these statements.
10 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS June 30, December 31, 1997 1996 (in thousands) ASSETS Utility plant, at original cost: Electric $1,059,530 $1,047,717 Gas 133,828 131,796 1,193,358 1,179,513 Less accumulated provision for depreciation 540,266 524,104 653,092 655,409 Construction work in progress 28,402 25,849 Net utility plant 681,494 681,258 Other Investments and Property: Environmental improvement funds held by trustee 3,969 3,830 Nonutility property and other 1,553 1,552 Total other investments and property 5,522 5,382 Current Assets: Cash and cash equivalents 3,522 3,127 Receivables, less allowance of $530 and $215, respectively 26,667 32,491 Accrued unbilled revenues 18,709 34,744 Inventories 28,209 31,190 Other current assets 7,865 15,304 Total current assets 84,972 116,856 Deferred Charges: Unamortized premium on reacquired debt 5,423 5,663 Postretirement benefits other than pensions 6,680 7,818 Demand side management program 24,328 23,359 Other deferred charges 12,516 11,989 Total deferred charges 48,947 48,829 TOTAL $ 820,935 $ 852,325 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
11 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS June 30, December 31, 1997 1996 (in thousands) SHAREHOLDERS' EQUITY AND LIABILITIES CAPITALIZATION: Common Stock $ 78,258 $ 78,258 Retained Earnings 218,075 213,688 Total common shareholders' equity 296,333 291,946 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 238,979 251,355 Total capitalization, excluding bonds subject to tender (see Consolidated Statements of Capitalization) 554,826 562,815 Current Liabilities: Current Portion of Adjustable Rate Bonds Subject to Tender 31,500 31,500 Current Maturities of Long-Term Debt, Interim Financing: Maturing long-term debt 12,695 295 Notes payable 2,000 32,400 Notes payable to associated company 14,032 - Total current maturities of long-term debt and interim financing 28,727 32,695 Other Current Liabilities: Accounts payable 17,276 27,338 Dividends payable 103 123 Accrued taxes 5,544 8,713 Accrued interest 4,565 4,572 Refunds to customers 5,220 2,722 Other accrued liabilities 14,858 29,650 Total other current liabilities 47,566 73,118 Total current liabilities 107,793 137,313 Deferred Credits and Other: Accumulated deferred income taxes 116,713 116,373 Accumulated deferred investment tax credits, being amortized over lives of property 20,990 21,706 Regulatory income tax liability 511 1,613 Postretirement benefits other than pensions 12,262 10,084 Other 7,840 2,421 Total deferred credits and other 158,316 152,197 TOTAL $820,935 $852,325 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
12 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION June 30, December 31, 1997 1996 (in thousands) 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 218,075 213,688 Total common shareholders' equity 296,333 291,946 PREFERRED STOCK OF SUBSIDIARY Cumulative, $100 par value, authorized 800,000 shares issuable, in series: Nonredeemable 4.8% Series, outstanding 85,895 shares, callable at $110 per share 8,590 8,590 4.75% Series, outstanding 25,000 shares, callable at $101 per share 2,500 2,500 Total nonredeemable preferred stock of subsidiary 11,090 11,090 Redeemable 6.50% Series, outstanding 75,000 shares redeemable at $100 per share December 1, 2002 7,500 7,500 SPECIAL PREFERRED STOCK OF SUBSIDIARY Cumulative, no par value, authorized 5,000,000 shares, issuable in series: 8-1/2% series, outstanding 9,237 shares, redeemable at $100 per share 924 924 LONG-TERM DEBT, NET OF CURRENT MATURITIES First mortgage bonds 238,715 251,114 Notes payable 1,000 1,000 Unamortized debt premium and discount, net (736) (759) Total long-term debt 238,979 251,355 CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL BONDS SUBJECT TO TENDER, DUE 2015, Series B, presently 4.05% 31,500 31,500 TOTAL CAPITALIZATION, including bonds subject to tender $586,326 $594,315 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
13 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Six Months Ended June 30, 1997 1996 (in thousands) Balance Beginning of Period $213,688 $236,617 Net Income 19,877 20,980 233,565 257,597 Dividend to Parent of Nonregulated Subsidiaries - 37,418 Preferred Stock Dividends 548 548 Common Stock Dividends 14,942 13,629 15,490 51,595 BALANCE END OF PERIOD (See Consolidated Statements of Capitalization for restriction) $218,075 $206,002 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
14 SIGCORP, Inc. AND SOUTHERN INDIANA GAS AND ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization SIGCORP, Inc. (SIGCORP) is a holding company incorporated October 19, 1994 under the laws of the state of Indiana. SIGCORP has nine wholly-owned subsidiaries: Southern Indiana Gas and Electric Company (SIGECO), a gas and electric utility, and eight nonregulated subsidiaries. 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 all 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 remained securities of SIGECO and are unaffected. 2. General It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in SIGCORP's 1996 Annual Report to Shareholders. The consolidated 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), ComSource, Inc. (ComSource), SIGCORP Energy Services, Inc. (Energy) and SIGCORP Capital, Inc. (Capital) 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, 1997 should not be taken as an indication for all or any part of the balance of 1997. 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, 1997 and 1996 paid interest (net of amounts capitalized) of $9,870,000 and $10,191,000, respectively, and income taxes of $10,148,000 and $6,834,000, respectively. Additionally, SIGCORP is involved in several partnerships which are partially financed by partnership obligations amounting to $4,562,000 and $6,839,000 at June 30, 1997 and December 31, 1996, respectively. SIGECO, for the six months ended June 30, 1997 and 1996 paid interest (net of amounts capitalized of $9,458,000 and $9,943,000, respectively, and income taxes of $10,145,000 and $9,295,000, respectively. The following decreases for 1996 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) 15 4. Long-Term Debt On May 1, 1997 the interest rate on $31,500,000 of Adjustable Rate Pollution Control bonds was changed from 4.0% to 4.05%. The new interest rate, 4.05% will be fixed through April 30, 1998. For financial statement presentation the $31,500,000 of Adjustable Rate Pollution Control bonds are shown as a current liability. 5. Common Stock On January 21, 1997, the Board of Directors of SIGCORP approved a split of SIGCORP's issued shares of common stock without par value on a three-for-two basis. The stock split, effective March 27, 1997, increased SIGCORP's outstanding shares from 15,754,826 to 23,630,568. Average common shares outstanding, earnings per share of common stock and dividends paid per share for all periods presented reflect the stock split. 16 SIGCORP, Inc. AND SOUTHERN INDIANA GAS AND ELECTRIC COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The holding company, SIGCORP, Inc. (SIGCORP) is 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 eight 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 $.27 for the recent three month period compared to earnings of $.37 per share for the second quarter of 1996. For the six month period ending June 30, 1997, earnings per share were $.82 versus $.94 per share for the same period in 1996. Per share earnings for all periods reflect SIGCORP's three-for-two split on shares of its outstanding common stock effective March 27, 1997. (See Note 5 of the Notes to Consolidated Financial Statements for further discussion.) Operating Revenues Electric revenues were $3.6 million (5%) lower during the second quarter of 1997 compared to the same period a year ago due primarily to lower per unit fuel costs reflected in revenues and a less favorable sales mix. Changes in the cost of fuel are passed on to customers through commission approved fuel cost adjustments. A substantial increase in wholesale sales led to a 6% increase in total electric sales over sales during the three month period ended June 30, 1996, while sales to residential and commercial customers declined 17% and 4%, respectively, due to much cooler than normal weather. During the current quarter, cooling degree days in SIGECO's service area were 40% lower than the second quarter of 1996 and 36% below normal. Industrial sales rose 6% on increased manufacturing activity. Wholesale electric sales, which typically have lower per unit margins than retail sales, increased 33% during the current quarter due to a substantial increase in sales to other utilities and power marketers reflecting SIGECO's competitive rates and continuing efforts to aggressively sell its electric energy in new markets. Higher per unit wholesale sales margins partially offset the decrease in revenues related to lower unit fuel costs and changes in the retail sales mix. For the six month period ending June 30, 1997, electric revenues declined $5.6 million (4%) due to lower unit fuel costs reflected in revenues during the first and second quarters and a 9% decline in residential sales due to significantly fewer sales during the second quarter of 1997. Other retail sales were relatively unchanged for the six month period compared to the same period in 1996. A 30% increase in wholesale electric sales resulting from greater sales to other utilities and power marketers throughout the current six month period resulted in 5% increase in total electric sales. The increased sales to wholesale customers and higher per unit margins on those sales partially offset the decrease in revenues related to the lower fuel costs and less favorable fuel mix. 17 The changes in electric revenue are shown below:
Revenue Increase (Decrease) From Corresponding Period in 1996 Three Months Six Months Ended 6-30-97 Ended 6-30-97 (in thousands) Fuel and purchased power recovery $ (2,800) $ 6,700) Change in sales volume 700 1,200 Other (sales mix, etc.) (1,481) (69) $ (3,581) $ (5,569) (Decrease) in retail sales (Mwh) (25,041) (44,073) Increase in wholesale sales (Mwh) 116,830 200,436
Recovery in revenues of substantially lower per unit gas costs and fewer sales to industrial customers were the chief causes of a $4.4 million (25%) decrease in gas revenues during the quarter ended June 30, 1997. Changes in the cost of natural gas are passed on to customers through commission approved gas cost adjustments. Sales to industrial customers were 68% lower when fewer SIGECO transportation customers purchased their gas supplies from SIGECO than during the second quarter of 1996. An increase in base retail gas rates effective July 1996 and increased gas transportation revenues, due to more of these customers purchasing their own gas, partially offset the decline in revenues related to fewer sales and recovery of lower gas costs. During the six month period ending June 30, 1997, gas revenues were $10.2 million (18%) lower versus the same period in 1996 primarily due to fewer gas sales to all customer classes and to the recovery of lower per unit gas costs during the second quarter of 1997. Milder winter temperatures during the first quarter of 1997 led to declines in sales to residential and commercial customers of 14.2% and 19.2%, respectively, during the six months. Sales to industrial customers decreased 67% and commercial sales were also affected when fewer SIGECO transportation customers purchased their gas supplies from SIGECO than during the first six months of 1996. Conversely, increases in base retail gas rates effective July 1996 contributed approximately $5.0 million to 1997 revenues. The change in sales mix and increased gas transportation revenues also partially offset the decline in revenues related to fewer sales and lower gas costs. The changes in gas revenues are shown below:
Revenue Increase (Decrease) From Corresponding Period in 1996 Three Months Six Months Ended 6-30-97 Ended 6-30-97 (in thousands) Change in sales volume $(3,200) $(14,500) Cost of gas recovery (4,600) (4,200) Effect of rate adjustments in sales to retail customers 1,800 5,000 Change in sales mix 500 2,200 Other 1,054 1,300 $(4,446) $(10,200) Increase (decrease) in total sales and transportation throughput (Mdth) 317 (1,549)
18 Operating Expenses Due to lower per unit fuel costs, total costs for fuel for electric generation and purchased electric energy decreased $2.5 million (12%) and $5.9 million (15%), respectively, during the three month and six month periods ending June 30, 1997, despite increased electric sales in both periods. The decline in unit fuel costs reflect the completion of SIGECO's reformation of its long-term coal contracts in late 1996. Cost of gas sold declined $5.1 million (45%) and $10.9 million (26%) during the second quarter and first six months of 1997, respectively, reflecting substantially lower average unit costs of gas delivered during the second quarter, and fewer sales in both the second quarter and six month periods. Other operation and maintenance expenses rose $2.2 million for both reporting periods in 1997 due primarily to increased generation of electricity, higher employee benefit and customer assistance program costs, and expenses related to efforts to prepare for competition in the industry. Other Income and Interest Charges Other income during the three month period ending June 30, 1997 declined primarily due to lower earnings from one of SIGCORP's eight nonutility subsidiaries, Energy Systems Group, Inc. (ESGI), resulting from an absence of new performance contracts. The $1.5 million decrease in other income for the current six month period reflects the lower earnings of ESGI during the second quarter and a first quarter $1 million decrease in sales to another utility of SIGECO's 1997 allotment of "bonus" sulfur dioxide emission allowances (also called "extension allowances"). The decrease in allowances sales was anticipated under an agreement with the utility to sell to it essentially all of SIGECO's allotment of "bonus" allowances for the five year period beginning 1995. Interest and other charges were relatively unchanged during both reporting periods in 1997 compared to the same periods in 1996. Earnings Earnings per share for the second quarter of 1997 declined $.10 (27%) compared to the same period in 1996 due to fewer electric sales to weather sensitive customers, higher nonfuel operating expenses and lower nonutility income. Increased sales of electricity to wholesale customers, higher per unit gas margins resulting primarily from SIGECO's adjustment to base retail gas rates, and greater gas transportation revenues partially offset the unfavorable impacts on earnings. The $.12 (13%) per share decrease in earnings during the first six months of 1997 was substantially due to the decline in earnings during the second quarter of 1997 and to milder winter temperatures during the first quarter of 1997 unfavorably impacting gas sales. 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 DSM program expenditures incurred during the quarter and six months ended June 30, 1997 totaled $11.6 million and $21.1 million, respectively, and were fully funded with internally generated cash. Cash provided from operations increased $12.0 million during the current six month period compared to the same period in 1996. Cash used in investing and financing activities during 1997 increased $7.9 million compared to a year ago. No long-term financing activity occurred during the 1997 period. At this time, SIGCORP estimates that SIGECO's construction expenditures for the five year period 1997-2001 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 $9 million to develop and implement DSM programs. SIGCORP expects the majority of the construction requirements and an 19 estimated $70 million in debt security and other long-term obligation redemptions to be provided by internally generated funds. External financing requirements of $60-70 million are anticipated and will be used primarily to redeem long-term debt. 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 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: August 13, 1997 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY /s/ S. M. Kerney S. M. Kerney Controller Date: August 13, 1997 EX-27 2
UT 0000092195 SOUTHERN INDIANA GAS & ELECTRIC CO 1,000 6-MOS DEC-31-1997 JUN-30-1997 PER-BOOK 681,494 5,522 84,972 48,947 0 820,935 78,258 0 218,075 296,333 0 19,514 238,979 0 16,032 0 44,195 0 0 0 205,882 820,935 174,133 11,035 134,587 145,622 28,511 1,152 29,663 9,786 19,877 548 19,329 7,471 9,027 53,432 0 0
-----END PRIVACY-ENHANCED MESSAGE-----