10-Q 1 sig-10q_mar03.txt SOUTHERN INDIANA GAS & ELECTRIC 1ST QTR 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ 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 incorporation (IRS Employer or organization) Identification No.) 20 N.W. 4th Street, Evansville, Indiana, 47708 ------------------------------------------------------- (Address of principal executive offices) (Zip Code) 812-491-4000 ------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No __ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes __ No |X| Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock- Without Par Value 20,785,007 May 1, 2003 ------------------------------- ---------- ----------- Class Number of Shares Date Omission of Information by Certain Wholly Owned Subsidiaries The Registrant is a wholly owned subsidiary of Vectren Utility Holdings, Inc. and meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing with the reduced disclosure format contemplated thereby. Table of Contents Item Page Number Number PART I. FINANCIAL INFORMATION 1 Financial Statements (Unaudited) Southern Indiana Gas and Electric Company Condensed Balance Sheets 1-2 Condensed Statements of Income 3 Condensed Statements of Cash Flows 4 Notes to Unaudited Condensed Financial Statements 5-10 2 Management's Discussion and Analysis of Results of Operations and Financial Condition (A) 11-14 3 Quantitative and Qualitative Disclosures About Market Risk (A) 15 4 Controls and Procedures 15 PART II. OTHER INFORMATION 1 Legal Proceedings 15 6 Exhibits and Reports on Form 8-K 16 Signatures 17 Certifications 18-20 (A) Omitted or amended as the Registrant is a wholly-owned subsidiary of Vectren Utility Holdings, Inc. and meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing with the reduced disclosure format contemplated thereby. Access to Information Vectren Corporation makes available all SEC filings and recent annual reports free of charge, including those of its wholly owned subsidiaries, through its website at www.vectren.com, or by request, directed to Investor Relations at the mailing address, phone number, or email address that follows: Mailing Address: Phone Number: Investor Relations Contact: P.O. Box 209 (812) 491-4000 Steven M. Schein Evansville, Indiana 47702-0209 Vice President, Investor Relations sschein@vectren.com Definitions AFUDC: allowance for funds used MMBTU: millions of British thermal units during construction APB: Accounting Principles Board MW: megawatts EITF: Emerging Issues Task Force MWh / GWh: megawatt hours / millions of megawatt hours (gigawatt hours) FASB: Financial Accounting NOx: nitrogen oxide Standards Board FERC: Federal Energy Regulatory OUCC: Indiana Office of the Utility Commission Consumer Counselor IDEM: Indiana Department of SFAS: Statement of Financial Accounting Environmental Management Standards IURC: Indiana Utility Regulatory USEPA: United States Environmental Commission Protection Agency MCF / BCF: millions / billions Throughput: combined gas sales and gas of cubic feet transportation volumes MDth / MMDth: thousands /millions of dekatherms PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONDENSED BALANCE SHEETS (Unaudited - In thousands) March 31, December 31, 2003 2002 -------------------------------------------------------------------------------- ASSETS Utility Plant Original cost $ 1,554,909 $ 1,526,094 Less: Accumulated depreciation & amortization 739,856 728,768 -------------------------------------------------------------------------------- Net utility plant 815,053 797,326 -------------------------------------------------------------------------------- Current Assets Cash & cash equivalents 5,699 2,145 Accounts receivable-less reserves of $1,882 & $3,662, respectively 55,581 50,454 Receivables from other Vectren companies 11 18,015 Accrued unbilled revenues 23,014 33,027 Inventories 34,401 39,653 Recoverable fuel & natural gas costs 7,118 9,615 Prepayments & other current assets 6,752 5,926 -------------------------------------------------------------------------------- Total current assets 132,576 158,835 -------------------------------------------------------------------------------- Investments in unconsolidated affiliates 150 150 Other investments 9,921 10,019 Non-utility property-net 3,545 3,568 Goodwill-net 5,557 5,557 Regulatory assets 51,330 49,859 Other assets 419 344 -------------------------------------------------------------------------------- TOTAL ASSETS $ 1,018,551 $ 1,025,658 ================================================================================ The accompanying notes are an integral part of these condensed financial statements. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONDENSED BALANCE SHEETS (Unaudited - In thousands) March 31, December 31, 2003 2002 ------------------------------------------------------------------------------- LIABILITIES & SHAREHOLDER'S EQUITY Capitalization Common shareholder's equity Common stock (no par value) $ 103,258 $ 103,258 Retained earnings 272,643 270,181 ------------------------------------------------------------------------------- Total common shareholder's equity 375,901 373,439 ------------------------------------------------------------------------------- Cumulative redeemable preferred stock 228 344 Long-term debt-net of current maturities & debt subject to tender 290,918 264,238 Long-term debt due to VUHI 86,574 86,574 ------------------------------------------------------------------------------- Total capitalization 753,621 724,595 ------------------------------------------------------------------------------- Commitments & Contingencies (Notes 4, 6, & 7) Current Liabilities Accounts payable 16,648 25,215 Accounts payable to affiliated companies 7,747 10,013 Payables to other Vectren companies 3,148 14,677 Accrued liabilities 49,276 31,247 Short-term borrowings 3,274 - Short-term borrowings due to VUHI 29,441 39,419 Long-term debt subject to tender - 26,640 Current maturities of long-term debt 1,000 1,000 ------------------------------------------------------------------------------- Total current liabilities 110,534 148,211 ------------------------------------------------------------------------------- Deferred Income Taxes & Other Liabilities Deferred income taxes 113,762 112,004 Deferred credits & other liabilities 40,634 40,848 ------------------------------------------------------------------------------- Total deferred income taxes & other liabilities 154,396 152,852 ------------------------------------------------------------------------------- TOTAL LIABILITIES & SHAREHOLDER'S EQUITY $ 1,018,551 $ 1,025,658 =============================================================================== The accompanying notes are an integral part of these condensed financial statements. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONDENSED STATEMENTS OF INCOME (Unaudited - In thousands) Three Months Ended March 31, ------------------------------------------------------------------------------ 2003 2002 ------------------------------------------------------------------------------ As Restated, See Note 3 ----------- OPERATING REVENUES Electric revenues $ 119,376 $ 126,801 Gas revenues 51,866 29,606 ------------------------------------------------------------------------------ Total operating revenues 171,242 156,407 ------------------------------------------------------------------------------ COST OF OPERATING REVENUES Fuel for electric generation 20,769 17,791 Purchased electric energy 40,398 59,749 Cost of gas sold 41,750 17,660 ------------------------------------------------------------------------------ Total cost of operating revenues 102,917 95,200 ------------------------------------------------------------------------------ TOTAL OPERATING MARGIN 68,325 61,207 OPERATING EXPENSES Other operating 25,957 24,560 Depreciation & amortization 11,576 10,983 Income taxes 9,622 6,507 Taxes other than income taxes 3,287 3,418 ------------------------------------------------------------------------------ Total operating expenses 50,442 45,468 ------------------------------------------------------------------------------ OPERATING INCOME 17,883 15,739 Other income - net 1,634 1,459 Interest expense 6,127 5,756 ------------------------------------------------------------------------------ NET INCOME 13,390 11,442 Preferred stock dividends 9 7 ------------------------------------------------------------------------------ NET INCOME APPLICABLE TO COMMON SHAREHOLDER $ 13,381 $ 11,435 ============================================================================== The accompanying notes are an integral part of these condensed financial statements. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited - In thousands) Three Months Ended March 31, ------------------------------------------------------------------------------- 2003 2002 ------------------------------------------------------------------------------- As Restated, See Note 3 ------------------------------------------------------------------------------- NET CASH FLOWS FROM OPERATING ACTIVITIES $ 50,198 $ 34,738 ------------------------------------------------------------------------------- CASH FLOWS (REQUIRED FOR) FINANCING ACTIVITIES Requirements for: Dividends on common stock (10,919) (10,310) Redemption of preferred stock (116) (116) Dividends on preferred stock (9) (7) Net change in short-term borrowings, including due to VUHI (6,704) (9,728) ------------------------------------------------------------------------------- Net cash flows (required for) financing activities (17,748) (20,161) ------------------------------------------------------------------------------- CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES Capital expenditures (28,896) (14,295) ------------------------------------------------------------------------------- Net cash flows (required for) investing activities (28,896) (14,295) ------------------------------------------------------------------------------- Net increase in cash & cash equivalents 3,554 282 Cash & cash equivalents at beginning of period 2,145 1,556 ------------------------------------------------------------------------------- Cash & cash equivalents at end of period $ 5,699 $ 1,838 =============================================================================== The accompanying notes are an integral part of these condensed financial statements. VECTREN UTILITY HOLDINGS, INC. AND SUBSIDIARY COMPANIES NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. Organization and Nature of Operations Southern Indiana Gas and Electric Company (the Company or SIGECO), an Indiana corporation, provides electric generation, transmission, and distribution services to 8 counties in southwestern Indiana, including counties surrounding Evansville, and participates in the wholesale power market. The Company also provides natural gas distribution and transportation services to 10 counties in southwestern Indiana, including counties surrounding Evansville. SIGECO is a direct subsidiary of Vectren Utility Holdings, Inc. (VUHI). VUHI is a direct, wholly owned subsidiary of Vectren Corporation (Vectren). Vectren was organized on June 10, 1999 solely for the purpose of effecting the merger of Indiana Energy, Inc. (Indiana Energy) and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of Indiana Energy with SIGCORP and into Vectren was consummated with a tax-free exchange of shares and has been accounted for as a pooling-of-interests in accordance with APB Opinion No. 16 "Business Combinations." Vectren's wholly owned subsidiary, VUHI, serves as the intermediate holding company for its three operating public utilities: Indiana Gas Company, Inc. (Indiana Gas), formerly a wholly owned subsidiary of Indiana Energy, SIGECO, formerly a wholly owned subsidiary of SIGCORP, and the Ohio operations, a utility jointly owned by Indiana Gas and Vectren Energy Delivery of Ohio, Inc. (VEDO). Both Vectren and VUHI are exempt from registration pursuant to Section 3(a)(1) and 3(c) of the Public Utility Holding Company Act of 1935. 2. Basis of Presentation The interim condensed financial statements included in this report have been prepared by the Company, without audit, as provided in the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted as provided in such rules and regulations. The Company believes that the information in this report reflects all adjustments necessary to fairly state the results of the interim periods reported. These condensed financial statements and related notes should be read in conjunction with the Company's audited annual financial statements for the year ended December 31, 2002, filed on Form 10-K. Because of the seasonal nature of the Company's utility operations, the results shown on a quarterly basis are not necessarily indicative of annual results. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 3. Restatement of Previously Reported Information Subsequent to the issuance of the 2002 quarterly financial statements, management determined that previously issued financial statements should be restated. As a result, the Company has restated its financial statements for the three months ended March 31, 2002 for various reconciliation errors and other errors related primarily to the recording of estimates. These errors were not significant, either individually or in the aggregate, and increased previously reported earnings by approximately $0.3 million after tax. Following is a summary of the effects of the restatement on previously reported results of operations for the three months ended March 31, 2002. As Reported Adjustments As Restated -------------------------------------------------------------------------------- OPERATING REVENUES Electric revenues $ 126,801 $ - $ 126,801 Gas revenues 29,606 - 29,606 ------------------------------------------------------------------------------- Total operating revenues 156,407 - 156,407 ------------------------------------------------------------------------------- COST OF OPERATING REVENUES Fuel for electric generation 17,791 - 17,791 Purchased electric energy 59,823 (74) 59,749 Cost of gas sold 17,544 116 17,660 ------------------------------------------------------------------------------- Total cost of operating revenues 95,158 42 95,200 ------------------------------------------------------------------------------- TOTAL OPERATING MARGIN 61,249 (42) 61,207 OPERATING EXPENSES Other operating 24,693 (133) 24,560 Depreciation & amortization 10,983 - 10,983 Income taxes 6,325 182 6,507 Taxes other than income taxes 3,418 - 3,418 ------------------------------------------------------------------------------- Total operating expenses 45,419 49 45,468 ------------------------------------------------------------------------------- OPERATING INCOME 15,830 (91) 15,739 Other income - net 1,070 389 1,459 Interest expense 5,756 - 5,756 ------------------------------------------------------------------------------- NET INCOME 11,144 298 11,442 Preferred stock dividends 7 - 7 ------------------------------------------------------------------------------- NET INCOME APPLICABLE TO COMMON SHAREHOLDER $ 11,137 $ 298 $ 11,435 =============================================================================== 4. Transactions with Other Vectren Companies Support Services and Purchases Vectren and certain subsidiaries of Vectren provided corporate and general and administrative services to the Company including legal, finance, tax, risk management, human resources, which includes charges for restricted stock compensation and for pension and other postretirement benefits not directly charged to subsidiaries. These costs have been allocated using various allocators, primarily number of employees, number of customers and/or revenues. Allocations are based on cost. SIGECO received corporate allocations totaling $11.2 million and $12.6 million for the three months ended March 31, 2003 and 2002, respectively. Vectren Fuels, Inc., a wholly owned subsidiary of Vectren, owns and operates coal mines from which SIGECO purchases fuel used for electric generation. Amounts paid for such purchases for the three months ended March 31, 2003 and 2002, totaled $19.2 million and $13.2 million, respectively. Guarantees of Parent Company Debt Vectren's three operating utility companies, VEDO, Indiana Gas, and SIGECO are guarantors of VUHI's $475.0 million in short-term credit facilities, of which approximately $312.6 million is outstanding at March 31, 2003 and VUHI's $350.0 million unsecured senior notes outstanding at March 31, 2003. The guarantees are full and unconditional and joint and several, and VUHI has no subsidiaries other than the subsidiary guarantors. Stock-Based Incentive Plans SIGECO does not have stock-based compensation plans separate from Vectren. An insignificant number of SIGECO's employees participate in Vectren's stock-based compensation plans. 5. Transactions with ProLiance Energy, LLC ProLiance Energy, LLC (ProLiance), a nonregulated energy marketing affiliate of Vectren and Citizens Gas and Coke Utility (Citizens Gas), provides natural gas and related services to Indiana Gas, the Ohio operations, Citizens Gas and others. ProLiance also began providing service to SIGECO and Vectren Retail, LLC (Vectren's retail gas marketer) in 2002. ProLiance's primary businesses include gas marketing, gas portfolio optimization, and other portfolio and energy management services. Purchases from ProLiance for resale and for injections into storage for the three months ended March 31, 2003 and 2002 totaled $29.9 million and zero, respectively. Amounts owed to ProLiance at March 31, 2003 and December 31, 2002 for those purchases were $7.7 million and $10.0 million, respectively, and are included in accounts payable to affiliated companies. Amounts charged by ProLiance for gas supply services are established by supply agreements with each utility. 6. Legal Proceedings Legal Proceedings The Company is party to various legal proceedings arising in the normal course of business. In the opinion of management, there are no legal proceedings pending against the Company that are likely to have a material adverse effect on its financial position or results of operations. See Note 7 regarding environmental matters. 7. Environmental Matters Clean Air Act NOx SIP Call Matter The Clean Air Act (the Act) requires each state to adopt a State Implementation Plan (SIP) to attain and maintain National Ambient Air Quality Standards (NAAQS) for a number of pollutants, including ozone. If the USEPA finds a state's SIP inadequate to achieve the NAAQS, the USEPA can call upon the state to revise its SIP (a SIP Call). In October 1998, the USEPA issued a final rule "Finding of Significant Contribution and Rulemaking for Certain States in the Ozone Transport Assessment Group Region for Purposes of Reducing Regional Transport of Ozone," (63 Fed. Reg. 57355). This ruling found that the SIP's of certain states, including Indiana, were substantially inadequate since they allowed for nitrogen oxide (NOx) emissions in amounts that contributed to non-attainment with the ozone NAAQS in downwind states. The USEPA required each state to revise its SIP to provide for further NOx emission reductions. The NOx emissions budget, as stipulated in the USEPA's final ruling, requires a 31% reduction in total NOx emissions from Indiana. In June 2001, the Indiana Air Pollution Control Board adopted final rules to achieve the NOx emission reductions required by the NOx SIP Call. Indiana's SIP requires the Company to lower its system-wide NOx emissions to .14 lbs./MMBTU by May 31, 2004 (the compliance date). This is a 65% reduction from emission levels existing in 1999 and 1998. The Company has initiated steps toward compliance with the revised regulations. These steps include installing Selective Catalytic Reduction (SCR) systems at Culley Generating Station Unit 3 (Culley), Warrick Generating Station Unit 4, and A.B. Brown Generating Station Units 1 and 2. SCR systems reduce flue gas NOx emissions to atmospheric nitrogen and water using ammonia in a chemical reaction. This technology is known to be the most effective method of reducing NOx emissions where high removal efficiencies are required. On August 28, 2001, the IURC issued an order that (1) approved the Company's proposed project to achieve environmental compliance by investing in clean coal technology, (2) approved the Company's initial cost estimate of $198 million for the construction, subject to periodic review of the actual costs incurred, and (3) approved a mechanism whereby, prior to an electric base rate case, the Company may recover through a rider that is updated every six months a return on its capital costs for the project, at its overall cost of capital, including a return on equity. The first rider adjustment for ongoing cost recovery was approved by the IURC on February 6, 2002. Based on the level of system-wide emissions reductions required and the control technology utilized to achieve the reductions, the current estimated clean coal technology construction cost ranges from $240 million to $250 million and is expected to be expended during the 2001-2006 period. Through March 31, 2003, $80.8 million has been expended. On June 5, 2002, the Company filed a new proceeding to update the NOx project cost and to obtain approval of a second rider authorizing ongoing recovery of depreciation and operating costs related to the clean coal technology. After the equipment is installed and operational, related annual operating expenses, including depreciation expense, are estimated to be between $24 million and $27 million. Such expenses would commence in 2004 when the technology becomes operational. On January 3, 2003, the IURC approved a settlement that authorizes total capital cost investment for this project up to $244 million (excluding AFUDC) and recovery on those capital costs, as well as the recovery of future operating costs, including depreciation and purchased emission allowances, through a rider mechanism. The settlement establishes a fixed return of 8 percent on the capital investment, which approximates the return authorized in the Company's last electric rate case in 1995. The Company expects to achieve timely compliance as a result of the project. Construction of the first SCR at Culley was completed on schedule, and construction of the Warrick 4 and Brown SCRs is proceeding on schedule. Installation of SCR technology as planned is expected to reduce the Company's overall NOx emissions to levels compliant with Indiana's NOx emissions budget allotted by the USEPA. Therefore, the Company has recorded no accrual for potential penalties that may result from noncompliance. Culley Generating Station Litigation In the late 1990's, the USEPA initiated an investigation under Section 114 of the Act of SIGECO's coal-fired electric generating units in commercial operation by 1977 to determine compliance with environmental permitting requirements related to repairs, maintenance, modifications, and operations changes. The focus of the investigation was to determine whether new source review permitting requirements were triggered by such plant modifications, and whether the best available control technology was, or should have been used. Numerous electric utilities were, and are currently, being investigated by the USEPA under an industry-wide review for compliance. In July 1999, SIGECO received a letter from the Office of Enforcement and Compliance Assurance of the USEPA discussing the industry-wide investigation, vaguely referring to an investigation of SIGECO and inviting SIGECO to participate in a discussion of the issues. No specifics were noted; furthermore, the letter stated that the communication was not intended to serve as a notice of violation. Subsequent meetings were conducted in September and October 1999 with the USEPA and targeted utilities, including SIGECO, regarding potential remedies to the USEPA's general allegations. On November 3, 1999, the USEPA filed a lawsuit against seven utilities, including SIGECO. SIGECO's suit is pending in the U.S. District Court for the Southern District of Indiana. The USEPA alleges that, beginning in 1992, SIGECO violated the Act by (1) making modifications to its Culley Generating Station in Yankeetown, Indiana without obtaining required permits (2) making major modifications to the Culley Generating Station without installing the best available emission control technology and (3) failing to notify the USEPA of the modifications. In addition, the lawsuit alleges that the modifications to the Culley Generating Station required SIGECO to begin complying with federal new source performance standards at its Culley Unit 3. SIGECO believes it performed only maintenance, repair, and replacement activities at the Culley Generating Station, as allowed under the Act. Because proper maintenance does not require permits, application of the best available control technology, notice to the USEPA, or compliance with new source performance standards, SIGECO believes that the lawsuit is without merit, and intends to vigorously defend itself. Since the filing of this lawsuit, the USEPA has voluntarily dismissed a majority of the claims brought in its original complaint. In its original complaint, USEPA alleged significant emissions increases of three pollutants for each of four maintenance projects. Currently, USEPA is alleging only significant emission increases of a single pollutant at three of the four maintenance projects cited in the original complaint. The lawsuit seeks fines against SIGECO in the amount of $27,500 per day per violation. However, on July 29, 2002, the Court ruled that USEPA could not seek civil penalties for two of the three remaining projects at issue in the litigation, significantly reducing potential civil penalty exposure. The lawsuit also seeks a court order requiring SIGECO to install the best available emissions technology at the Culley Generating Station. If the USEPA were successful in obtaining an order, SIGECO estimates that in response it could incur capital costs of approximately $20 million to $40 million to comply with the order. Trial is currently set to begin July 14, 2003. The USEPA has also issued an administrative notice of violation to SIGECO making the same allegations, but alleging that violations began in 1977. While it is possible that SIGECO could be subjected to criminal penalties if the Culley Generating Station continues to operate without complying with the permitting requirements of new source review and the allegations are determined by a court to be valid, SIGECO believes such penalties are unlikely as the USEPA and the electric utility industry have a bonafide dispute over the proper interpretation of the Act. Accordingly, the Company has recorded no accrual and the plant continues to operate while the matter is being decided. Information Request On January 23, 2001, SIGECO received an information request from the USEPA under Section 114 of the Act for historical operational information on the Warrick and A.B. Brown generating stations. SIGECO has provided all information requested, and no further action has occurred. Manufactured Gas Plants In October 2002, the Company received a formal information request letter from the IDEM regarding five manufactured gas plants owned and/or operated by SIGECO and not currently enrolled in the IDEM's Voluntary Remediation Program. In response SIGECO submitted to the IDEM the results of preliminary site investigations conducted in the mid-1990's. These site investigations confirmed that based upon the conditions known at the time, the sites posed no risk to human health or the environment. Follow up reviews have recently been initiated by the Company to confirm that the sites continue to pose no such risk. 8. Impact of Recently Issued Accounting Guidance SFAS 143 In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" (SFAS 143). SFAS 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The Company adopted this statement on January 1, 2003. The adoption was not material to the Company's results of operations or financial condition. The Company records a net cost of removal to its utility plant through normal depreciation rates. As of March 31, 2003 and December 31, 2002 such removal costs approximated $125 million of accumulated depreciation as presented in the condensed balance sheets based upon the Company's latest depreciation studies. SFAS 149 In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and clarifies the accounting guidance on (1) derivative instruments, including certain derivative instruments embedded in other contracts, and (2) hedging activities that fall within the scope of FASB Statement No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities. SFAS 149 amends SFAS 133 to reflect decisions that were made (1) as part of the process undertaken by the Derivatives Implementation Group (DIG), which necessitated amending SFAS 133; (2) in connection with other projects dealing with financial instruments; and (3) regarding implementation issues related to the application of the definition of a derivative. SFAS 149 also amends certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. Although management is still evaluating the impact of SFAS 149 on its financial position and results of operations, the adoption is not expected to have a material effect. FASB Interpretation (FIN) 45 In November 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 clarifies the requirements for a guarantor's accounting for and disclosure of certain guarantees issued and outstanding and that a guarantor is required to recognize, at the inception of a guarantee, a liability for the obligations it has undertaken. The objective of the initial measurement of that liability is the fair value of the guarantee at its inception. The initial recognition and measurement provisions are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. Since that date, the adoption has not had a material effect on the Company's results of operations or financial condition. FIN 46 In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable Interest Entities" (FIN 46). FIN 46 addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation requirements for those entities. FIN 46 is intended to achieve more consistent application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. FIN 46 applies to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. FIN 46 applies to the Company's third quarter of 2003 for variable interest entities in which the Company holds a variable interest acquired before February 1, 2003. Although management is still evaluating the impact of FIN 46 on its financial position and results of operations, the adoption is not expected to have a material effect. 9. Segment Reporting The Company has two operating segments: (1) Gas Utility Services and (2) Electric Utility Services. The Gas Utility Services segment includes the operations of the Company's natural gas distribution business and provides natural gas distribution and transportation services in southwest Indiana. The Electric Utility Services segment includes the operations of the Company's power generating and marketing operations, and electric transmission and distribution services, which provides electricity to primarily southwestern Indiana. Following is detailed information about the Company's operating segments. The Company uses pre-tax operating income as the measure of profitability for its segments. Three Months Ended March 31, ------------------------------ In thousands 2003 2002 ------------------------------------------------------------------------ Operating Revenues Electric Utility Services $ 119,376 $ 126,801 Gas Utility Services 51,866 29,606 ------------------------------------------------------------------------ Total Operating Revenues $ 171,242 $ 156,407 ======================================================================== Pre-Tax Operating Income Electric Utility Services $ 23,897 $ 16,401 Gas Utility Services 3,608 5,845 ------------------------------------------------------------------------ Total Pre-Tax Operating Income $ 27,505 $ 22,246 ======================================================================== March 31, December 31, In thousands 2003 2002 ------------------------------------------------------------------------ Total Assets Electric Utility Services $ 878,463 $ 856,516 Gas Utility Services 140,088 169,142 ------------------------------------------------------------------------ Total Assets $1,018,551 $1,025,658 ======================================================================== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Pursuant to General Instructions H(2)(a) of Form 10-Q, the following analysis of the results of operations is presented in lieu of Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations The following discussion and analysis should be read in conjunction with the unaudited financial statements and notes thereto. Subsequent to the issuance of the Company's 2002 quarterly financial statements, the Company's management determined that previously issued financial statements should be restated. The restatement had the effect of increasing net income for the three months ended March 31, 2002 by $0.3 million after tax. Note 3 to the condensed financial statements includes a summary of the effects of the restatement. The Company's results of operations give effect to the restatement. Net Income Applicable to Common Shareholder Net income applicable to common shareholder was $13.4 million for the three months ended March 31, 2003 compared to $11.4 million for the same period in 2002. The increase in net income results primarily from the effects of colder weather and increased margins in wholesale operations. These increases were offset somewhat by the effect of higher gas costs that increased operating expenses, such as uncollectible accounts expense. Margin Electric Utility Margin Electric utility margin by customer type and non-firm wholesale margin separated between realized margin and mark-to-market gains and losses follows: Three Months Ended March 31, ---------------------------------------------------------------- In millions 2003 2002 ---------------------------------------------------------------- Retail & firm wholesale $ 50.1 $ 48.2 Non-firm wholesale 8.1 1.1 ---------------------------------------------------------------- Total electric margin $ 58.2 $ 49.3 ================================================================ Non-firm wholesale margin: Realized margin $ 7.2 $ 4.0 Mark-to-market gains (losses) 0.9 (2.9) Electric utility margin for the three months ended March 31, 2002 increased $8.9 million, or 18%, compared to 2002 primarily due to the effect of price volatility in the wholesale power market. Periodically, generation capacity is in excess of that needed to serve retail and firm wholesale customers. The Company markets this unutilized capacity to optimize the return on its owned generation assets. The contracts entered into are primarily short-term purchase and sale transactions that expose the Company to limited market risk. In 2003, volumes sold into the wholesale market were 1.45 GWh compared to 2.47 GWh in 2002. Volumes purchased from the wholesale market, some of which were utilized to serve retail and firm wholesale customers, were 1.26 GWh in 2003 compared to 2.34 GWh in 2002. While volumes both sold and purchased in the wholesale market have decreased during 2003, margins increased $7.0 million compared to 2002 a result of increased capacity and price volatility. The effect of colder weather on electric heating sales was the primary factor for the $1.9 million increase in electric margin from retail and firm wholesale customers. As result of the colder weather, volumes sold to retail and firm wholesale customers increased 2% from 1.40 GWh in 2002 to 1.42 GWh in 2003. Gas Utility Margin Gas utility margin for the three months ended March 31, 2003, decreased $1.8 million, or 15%, compared to 2002. The decrease is primarily due to changes in unbilled revenue, the recording of unaccounted for gas, and reduced consumption per degree day per customer, all of which decreased margin by approximately $2.8 million. Management estimates that weather 20% colder than the prior year and 8% colder than normal increased margin by approximately $1.0 million. The total average cost per dekatherm of gas purchased for the three months ended March 31, 2003, was $6.06 compared to $4.62 for the same period in 2002. Operating Expenses Other Operating Other operating expenses increased $1.4 million for the three months ended March 31, 2003 compared to the prior year. The increase results principally from increased uncollectible accounts expense and timing of maintenance expenditures. Uncollectible accounts expense increased by $0.3 million due primarily to higher gas costs. Depreciation & Amortization Depreciation and amortization increased $0.6 million for the three months ended March 31, 2003 compared to the prior year. The increase results from depreciation of additions to utility plant. Income Tax Federal and state income taxes increased $3.1 million for the three months ended March 31, 2003, when compared to the prior year. The increase results principally from higher pre-tax earnings. The effective tax rate increased from 36.3% in 2002 to 41.8% in 2003 principally due to an increase in the Indiana state income tax rate from 4.5 % to 8.5% that was effective January 1, 2003. Interest Expense Interest expense increased $0.4 million for the three months ended March 31, 2003, when compared to the prior year. The increase results from increased debt outstanding which is due primarily to increased working capital requirements resulting from the higher gas prices and NOx expenditures. Impact of Recently Issued Accounting Guidance SFAS 143 In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" (SFAS 143). SFAS 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The Company adopted this statement on January 1, 2003. The adoption was not material to the Company's results of operations or financial condition. The Company records a net cost of removal to its utility plant through normal depreciation rates. As of March 31, 2003 and December 31, 2002 such removal costs approximated $125 million of accumulated depreciation as presented in the condensed balance sheets based upon the Company's latest depreciation studies. SFAS 149 In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and clarifies the accounting guidance on (1) derivative instruments, including certain derivative instruments embedded in other contracts, and (2) hedging activities that fall within the scope of FASB Statement No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities. SFAS 149 amends SFAS 133 to reflect decisions that were made (1) as part of the process undertaken by the Derivatives Implementation Group (DIG), which necessitated amending SFAS 133; (2) in connection with other projects dealing with financial instruments; and (3) regarding implementation issues related to the application of the definition of a derivative. SFAS 149 also amends certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. Although management is still evaluating the impact of SFAS 149 on its financial position and results of operations, the adoption is not expected to have a material effect. FASB Interpretation (FIN) 45 In November 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 clarifies the requirements for a guarantor's accounting for and disclosure of certain guarantees issued and outstanding and that a guarantor is required to recognize, at the inception of a guarantee, a liability for the obligations it has undertaken. The objective of the initial measurement of that liability is the fair value of the guarantee at its inception. The initial recognition and measurement provisions are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. Since that date, the adoption has not had a material effect on the Company's results of operations or financial condition. FIN 46 In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable Interest Entities" (FIN 46). FIN 46 addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation requirements for those entities. FIN 46 is intended to achieve more consistent application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. FIN 46 applies to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. FIN 46 applies to the Company's third quarter of 2003 for variable interest entities in which the Company holds a variable interest acquired before February 1, 2003. Although management is still evaluating the impact of FIN 46 on its financial position and results of operations, the adoption is not expected to have a material effect. Forward-Looking Information 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. Certain matters described in Management's Discussion and Analysis of Results of Operations and Financial Condition are forward-looking statements. Such statements are based on management's beliefs, as well as assumptions made by and information currently available to management. When used in this filing, 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 the Company's actual results to differ materially from those contemplated in any forward-looking statements include, 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 Direct or indirect effects on our business, financial condition or liquidity resulting from a change in credit ratings, changes in interest rates, and/or changes in market perceptions of the utility industry and other energy-related industries. o Employee 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 Management's Discussion and Analysis of Results of Operations and Financial Condition. o Changes in federal, state or local legislature requirements, such as changes in tax laws or rates, environmental laws and regulations. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changes in actual results, changes in assumptions, or other factors affecting such statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Pursuant to General Instructions H(2)(c) of Form 10-Q, the following is intentionally omitted. ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Within 90 days prior to the filing of the report, the Company carried out an evaluation under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of the effectiveness and the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company required to be disclosed by the Company in its filings under the Securities Exchange Act of 1934 (Exchange Act). Disclosure controls and procedures, as defined by the Exchange Act in Rules 13a-14(c) and 15d-14(c), are controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. "Disclosure controls and procedures" include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its Exchange Act reports is accumulated and communicated to the Company's management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Since the evaluation of disclosure controls and procedures, there have been no significant changes to the Company's internal controls and procedures or significant changes in other factors that could significantly affect the Company's internal controls and procedures. Internal control, as defined in American Institute of Certified Public Accountants Codification of Statements on Auditing Standards (AU ss.319), is a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: (a) reliability of financial reporting, (b) effectiveness and efficiency of operations and (c) compliance with applicable laws and regulations. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is party to various legal proceedings arising in the normal course of business. In the opinion of management, there are no legal proceedings pending against the Company that are likely to have a material adverse effect on its financial position or results of operations. See Note 7 of its unaudited condensed financial statements included in Part 1 Item 1 Financial Statements regarding the Clean Air Act and related legal proceedings. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports On Form 8-K During The Last Calendar Quarter On January 31, 2003, The Company filed a Current Report on Form 8-K with respect to the release of Vectren Corporation's preliminary financial information to the investment community regarding the Company's results of operations, for the three and twelve month periods ended December 31, 2002. Item 5. Other Events Item 7. Exhibits 99.1 - Press Release - Vectren Reports Preliminary 2002 Results 99.2 - 2002 Selected Financial Data and Effects of Restatement 99.3 - Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 On March 14, 2003, The Company filed a Current Report on Form 8-K with respect to the release of Vectren Corporation's financial information to the investment community regarding the Company's results of operations, financial position and cash flows for the three and twelve month periods ended December 31, 2002. Item 9. Regulation FD Disclosure Item 7. Exhibits 99.1 - Press Release - Vectren Reports Final 2002 Earnings 99.2 - Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 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. SOUTHERN INDIANA GAS AND ELECTRIC COMPANY -------------------------- Registrant May 15, 2003 /s/Jerome A. Benkert, Jr. -------------------------- Jerome A. Benkert, Jr. Executive Vice President & Chief Financial Officer (Principal Financial Officer) /s/M. Susan Hardwick --------------------------- M. Susan Hardwick Vice President & Controller (Principal Accounting Officer) CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CHIEF EXECUTIVE OFFICER CERTIFICATION I, Niel C. Ellerbrook, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Southern Indiana Gas & Electric Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Niel C. Ellerbrook ----------------------------- Niel C. Ellerbrook Chairman & Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CHIEF FINANCIAL OFFICER CERTIFICATION I, Jerome A. Benkert, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Southern Indiana Gas & Electric Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Jerome A. Benkert, Jr. ----------------------------- Jerome A. Benkert, Jr. Executive Vice President & Chief Financial Officer CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION By signing below, each of the undersigned officers hereby certifies pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her knowledge, (i) this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Southern Indiana Gas & Electric Company. Signed this 15th day of May, 2003. /s/ Jerome A. Benkert, Jr. /s/ Niel C. Ellerbrook ----------------------------------- ------------------------------------ (Signature of Authorized Officer) (Signature of Authorized Officer) Jerome A. Benkert, Jr. Niel C. Ellerbrook ----------------------------------- ------------------------------------ (Typed Name) (Typed Name) Executive Vice President & Chief Financial Officer Chairman & Chief Executive Officer ---------------------------------- ------------------------------------ (Title) (Title)