-----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, FpN2QB9CdCmDYfMz4I1Nqfxz1Ka+xrSEj8a0Ef8SlkHMJ2lhNMMPBRWGkXIjE2Bw KVPsLS601IE4p2jTNW0SmA== 0000092195-96-000010.txt : 19960816 0000092195-96-000010.hdr.sgml : 19960816 ACCESSION NUMBER: 0000092195-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96614477 BUSINESS ADDRESS: STREET 1: 20 NW FOURTH ST CITY: EVANSVILLE STATE: IN ZIP: 47741-0001 BUSINESS PHONE: 8124655300 10-Q 1 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 1-3553 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY (Exact name of registrant as specified in its charter) Indiana 35-0672570 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 20 N. W. Fourth Street Evansville, Indiana 47741-0001 (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____. 2 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 (in thousands except per share data) 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 12,569 11,895 25,905 23,418 Total operation 44,617 40,804 108,762 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 70,170 67,270 160,316 139,024 OPERATING INCOME 13,256 12,591 29,586 25,260 Other Income: Allowance for other funds used during construction 2 98 2 208 Interest 196 232 307 426 Other, net (82) 575 1,347 2,276 116 905 1,656 2,910 INCOME BEFORE INTEREST CHARGES 13,372 13,496 31,242 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 337 323 748 725 Allowance for borrowed funds used during construction (104) (102) (167) (414) 5,067 5,064 10,262 9,978 NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 8,305 8,432 20,980 18,192 CUMULATIVE EFFECT AT JANUARY 1, 1995 OF ADOPTING THE UNBILLED REVENUES METHOD OF ACCOUNTING - NET OF INCOME TAXES - - - 6,293 NET INCOME 8,305 8,432 20,980 24,485 Preferred dividend 274 274 548 550 EARNINGS APPLICABLE TO COMMON STOCK $ 8,031 $ 8,158 $ 20,432 $ 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 $0.51 $0.52 $1.30 $1.12 CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - - 0.40 TOTAL EARNINGS PER SHARE OF COMMON STOCK $0.51 $0.52 $1.30 $1.52 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 1995 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 20,980 $ 24,485 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,415 20,660 Deferred income taxes and investment tax credits, net 577 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) 4,923 (4,457) Inventories 5,384 3,191 Coal contract settlement 7,792 (11,429) Accounts payable (16,027) (7,153) Accrued taxes 2,303 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 (1,000) 2,777 Net cash provided by operating activities 38,598 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 - 1,250 Investments in partnerships - 725 Change in nonutility property 1 (4,258) Other 51 501 Net cash used in investing activities (16,115) (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 - (3,256) Change in notes payable (6,500) 6,215 Contribution of nonregulated subsidiaries to parent (12,145) - Other 270 310 Net cash used in financing activities (32,656) (4,038) NET DECREASE IN CASH AND CASH EQUIVALENTS (10,173) (24,081) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,834 28,060 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ (339) $ 3,979 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
4 SOUTHERN INDIANA GAS AND ELECTRIC CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1996 1995 (in thousands) 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 - 35,609 Investments in partnerships - 25,308 Environmental improvement funds held by Trustee 3,746 3,642 Nonutility property and other 2,199 11,605 5,945 76,164 Current Assets: Cash and cash equivalents (339) 9,834 Temporary investments, at market - 1,148 Receivables, less allowance of $290 and $138, respectively 27,656 35,392 Accrued unbilled revenues 16,528 18,651 Inventories 29,578 34,962 Coal contract settlement 5,136 12,928 Other current assets 16,156 4,795 94,715 117,710 Deferred Charges: Unamortized premium on reacquired debt 5,902 6,142 Postretirement benefits obligation other than pensions 9,720 9,574 Demand side management program 21,879 20,337 Other deferred charges 11,151 14,687 48,652 50,740 $ 823,544 $ 923,981 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1996 1995 (in thousands) SHAREHOLDERS' EQUITY AND LIABILITIES Common Stock $ 78,258 $ 78,258 Retained Earnings 206,002 236,617 Common shareholders' equity 284,260 314,875 Cumulative Nonredeemable Preferred Stock 11,090 11,090 Cumulative Redeemable Preferred Stock 7,500 7,500 Cumulative Special Preferred Stock 924 924 Long-Term Debt, net of current maturities 251,627 257,440 Long-Term Partnership Obligations, net of current maturities - 6,839 Total capitalization, excluding bonds subject to tender (see Consolidated Statements of Capitalization) 555,401 598,668 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 8,000 9,906 Notes payable 24,000 30,500 Partnership obligations - 2,786 Total current maturities of long-term debt, interim financing and long-term partnership obligations 32,000 43,192 Other Current Liabilities: Accounts payable 16,193 37,996 Dividends payable 123 123 Accrued taxes 12,698 8,821 Accrued interest 4,538 4,577 Refunds to customers 3,273 8,896 Other accrued liabilities 24,352 17,689 Total other current liabilities 61,177 78,102 Total current liabilities 124,677 152,794 Deferred Credits and Other: Accumulated deferred income taxes 105,130 132,793 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 4,547 143,466 172,519 $823,544 $923,981 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION
June 30, December 31, 1996 1995 (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 206,002 236,617 284,260 314,875 PREFERRED STOCK Cumulative, $100 par value, authorized 800,000 shares issuable, in series Nonredeemable 4.8% Series, outstanding 85,895 shares, callable at $110 per share 8,590 8,590 4.75% Series, outstanding 25,000 shares, callable at $101 per share 2,500 2,500 11,090 11,090 Redeemable 6.50% Series, outstanding 75,000 shares redeemable at $100 per share December 1, 2002 7,500 7,500 SPECIAL PREFERRED STOCK Cumulative, no par value, authorized 5,000,000 shares, issuable in series: 8-1/2% series, outstanding 9,237 shares, redeemable at $100 per share 924 924 LONG-TERM DEBT, NET OF CURRENT MATURITIES First mortgage bonds 251,410 251,410 Notes payable 1,000 6,836 Unamortized debt premium and discount, net (783) (806) 251,627 257,440 LONG-TERM PARTNERSHIP OBLIGATIONS, NET OF CURRENT MATURITIES - 6,839 CURRENT PORTION OF ADJUSTABLE RATE POLLUTION CONTROL BONDS SUBJECT TO TENDER, DUE: 2015, Series B, presently 4.0% 31,500 31,500 Total capitalization, including bonds subject to tender $586,901 $630,168 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
7 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
for the six months ended June 30, 1996 1995 (in thousands) Balance Beginning of Period $236,617 $218,424 Net Income 20,980 24,485 257,597 241,623 Dividend to Parent of Nonregulated Subsidiaries 37,418 - Preferred Stock Dividends 548 550 Common Stock Dividends ($0.865 per share in 1996 and $0.845) per share in 1995) 13,629 13,312 51,595 13,862 Balance End of Period (See Consolidated Statements of Capitalization for restriction) $206,002 $229,047 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
8 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization Southern Indiana Gas and Electric Company (SIGECO) is a wholly-owned utility subsidiary of SIGCORP, Inc. (SIGCORP), a holding company incorporated under the laws of the state of Indiana. SIGCORP has five wholly-owned subsidiaries: 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, 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. 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. On January 1, 1996, SIGECO dividended to SIGCORP the four nonregulated subsidiaries. 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 1995 Annual Report to Shareholders. The consolidated statements are on the basis of interim figures and are subject to audit and adjustments. These financial statements include the accounts of Southern Indiana Gas and Electric Company (SIGECO) and its wholly- owned subsidiary, Lincoln Natural Gas Company, Inc. 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, SIGECO considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. SIGECO, for the six months ended June 30, 1996 and 1995 paid interest (net of amounts capitalized) of $9,943,000 and $9,687,000, respectively, and income taxes of $9,295,000 and $4,714,000, respectively. The following decreases in 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) 9 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. 10 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Effective January 1, 1996, a new holding company, SIGCORP, Inc. (SIGCORP) became the parent of Southern Indiana Gas and Electric Company (SIGECO), a regulated gas and electric utility which accounts for over 90% of SIGCORP's net income, and four of SIGECO's former wholly- owned nonregulated subsidiaries. On January 1, 1996, SIGECO dividended to SIGCORP its four nonregulated subsidiaries. Earnings per share were $0.51 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 $1.30 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. 11
Revenue Increase (Decrease) From Corresponding Period in 1995 Three Months Six Months Ended 6-30-96 Ended 6-30-96 (in thousands) 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)
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:
Revenue Increase (Decrease) From Corresponding Period in 1995 Three Months Six Months Ended 6-30-96 Ended 6-30-96 (in thousands) 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
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 The decline in other income during the three month and six month periods ending June 30, 1996 reflects the absence of the earnings of the four nonregulated subsidiaries which were dividended to SIGCORP on January 1, 1996. 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; these expenses during the second quarter of 1996 were relatively unchanged compared to the same period in 1995. EARNINGS The effects of stronger retail gas and electric sales and higher per unit sales margins resulting from an approved increase in electric base retail rates were more than offset by the absence of the earnings of the four nonregulated subsidiaries, lower margins on gas sales and fewer wholesale electric sales, resulting in a one cent (2%) decline in earnings to $0.51 per share of common stock for the second quarter of 1996 compared to the second quarter of 1995. 13 For the six months ended June 30, 1996, earnings per share of common stock rose 18 cents (16%) 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 and the absence of the earnings of the nonregulated subsidiaries. LIQUIDITY AND CAPITAL RESOURCES SIGECO's demand for capital is primarily related to its construction of utility plant and equipment necessary to meet customers' electric and gas energy needs, as well as environmental compliance requirements, and expenditures for its 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 32% 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 $35.4 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 $21.5 million compared to a year ago reflecting the contribution of the nonregulated subsidiaries to SIGCORP. No financing activity occurred during the 1996 period. At this time, SIGECO estimates that its 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 its resources, and approximately $17 million to develop and implement DSM programs (see "Other Matters"). Although SIGECO 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. 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 15 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY 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. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY (Registrant) S. M. Kerney S. M. Kerney Controller August 14, 1996 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY INDEX Page No. Part I - Financial Information: Consolidated Statements of Income for the Three Months and 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, 1994 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 10-14 Part II - Other Information 15 Signature 16
EX-27 2
UT 1,000 6-MOS DEC-31-1996 JUN-30-1996 PER-BOOK 674,232 5,945 94,715 48,652 0 823,544 78,258 0 206,002 284,260 0 19,514 251,627 0 24,000 0 39,500 0 0 0 204,643 823,544 189,902 11,159 149,157 160,316 29,586 1,656 31,242 10,262 20,980 548 20,432 13,628 9,327 38,598 1.30 1.30
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