Item 1. Business
(a) General Development of the Business.
Indiana Gas Company, Inc. (company) is an operating public utility engaged in the business of providing gas utility service in the state of Indiana. It was incorporated under the laws of the state of Indiana on July 16, 1945. All of the outstanding shares of common stock of the company are owned by Indiana Energy, Inc. (Indiana Energy), which is a public holding company.
All of the outstanding capital stock of Terre Haute Gas Corporation (Terre Haute) and Richmond Gas Corporation (Richmond) was acquired by Indiana Energy on July 31, 1990. Both companies were operating public utilities engaged in the business of providing gas distribution services in Indiana. On January 21, 1991, the company acquired from Indiana Energy all the outstanding capital stock of Terre Haute and Richmond. While these companies technically exist as separate corporate entities, their business operations have been combined with Indiana Gas' operations and the companies do business under the name of Indiana Gas.
(c) Narrative Description of the Business.
At September 30, 1994, Indiana Gas supplied gas to about 442,000 customers in 281 communities in 48 of the 92 counties in the state of Indiana. The service area has a population of approximately 2 million and contains diversified manufacturing and agriculture-related enterprises. The principal industries served include automotive parts and accessories, feed, flour and grain processing, metal castings, aluminum products, gypsum products, electrical equipment, metal specialties and glass.
The largest communities served include Muncie, Anderson, Lafayette-West Lafayette, Bloomington, Terre Haute, Marion, New Albany, Columbus, Jeffersonville, New Castle and Richmond. Indiana Gas does not serve in Indianapolis, although its general office is located in that city.
For the fiscal year ended September 30, 1994, residential customers provided 59 percent of revenues, commercial 25 percent and industrial 16 percent. At such date, approximately 98 percent of Indiana Gas' customers used gas for space heating, and space heating revenues from these customers for the fiscal year were 79 percent of total operating revenues. Sales of gas are seasonal and strongly affected by variations in weather conditions. During the fiscal year ended September 30, 1994, Indiana Gas added approximately 10,400 residential and commercial customers.
Indiana Gas sells gas directly to residential, commercial and industrial customers at approved rates. Indiana Gas also transports gas through its pipelines at approved rates to commercial and industrial customers which have purchased gas directly from producers or through brokers and marketers. The total volumes of gas provided to both sales and transportation customers is referred to as throughput.
Gas transported on behalf of end-use customers in fiscal 1994 represented 26 percent (30,125 MDth) of throughput compared to 11 percent (12,307 MDth) in 1993 and 13 percent (13,438 MDth) in 1992. Although revenues are lower, rates for transportation generally provide the same margins as would have been earned had the gas been sold under normal sales tariffs.
As a result of a series of FERC orders, including Order No. 636, Indiana Gas now purchases all of its natural gas from producers, brokers and marketers on both short-term and medium-term contracts. Indiana Gas also has contracts with pipelines for storage and transportation of natural gas.
Rates for gas services purchased from interstate pipeline suppliers are governed by tariffs which are subject to adjustment and approval by the Federal Energy Regulatory Commission (FERC) in accordance with the Natural Gas Act. Prices for gas purchased from gas producers and marketers are determined by market conditions. Indiana Gas' rates and charges, terms of service, accounting matters, issuance of securities, and other operational matters are regulated by the Indiana Utility Regulatory Commission (IURC).
Adjustments to Indiana Gas' rates and charges related to the cost of gas are made through gas cost adjustment (GCA) procedures established by Indiana law and administered by the IURC. The IURC has applied the statute authorizing the GCA procedures to reduce rates when necessary so as to limit net operating income, after adjusting to normal weather, to the level provided in the last general rate order. On October 26, 1994, the IURC approved a stipulation and settlement agreement which provided, among other things, an increase in Indiana Gas' authorized utility operating income from $47.1 million to $51.1 million beginning in fiscal 1995. (See Item 7, 1995 Settlement Agreement.)
Information regarding environmental matters affecting the company is incorporated herein by reference to Item 7, Environmental Matters.
Indiana Gas had 1,129 full-time employees and 25 part-time employees as of September 30, 1994.
Item 2.
Item 2. Property
The properties of Indiana Gas are used for the purchase, production, storage and distribution of gas and are located primarily within the state of Indiana. As of September 30, 1994, such properties included approximately 9,798 miles of distribution mains; 458,576 meters; seven reservoirs currently being used for the underground storage of purchased gas with approximately 108,354 acres of land held under storage easements; 10,671,831 Dth of gas in company-owned underground storage with a daily deliverability of 138,860 Dth; 20,617,050 Dth of gas in contract storage with a daily deliverability of 234,618 Dth; and five liquefied petroleum (propane) air-gas manufacturing plants with a total daily capacity of 36,700 Dth of gas.
Indiana Gas' capital expenditures during the fiscal year ended September 30, 1994, amounted to $57.1 million.
Item 3.
Item 3. Legal Proceedings
None
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of the fiscal year ended September 30, 1994, to a vote of security holders.
Item 4a. Executive Officers of the Company
As of September 30, 1994, the following individuals were Executive Officers of the company:
Part II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
All of the outstanding shares of Indiana Gas' common stock are owned by Indiana Energy, Inc., and are not traded.
During fiscal 1994, the company paid aggregate dividends of $5.8 million, $5.8 million, $5.8 million and $6.0 million in the first, second, third and fourth quarters, respectively.
During fiscal 1993, the company paid aggregate dividends of $5.1 million, $5.1 million, $5.1 million and $5.8 million in the first, second, third and fourth quarters, respectively. (See Item 8, Note 5.)
Item 6.
Item 6. Selected Financial Data
Item 7.
Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition
Results of Operations
Earnings Earnings available for common stock increased to $34.6 million in 1994 from $28.2 million in 1993. The increase reflects weather that was 4 percent colder than last year, additional residential and commercial customers and a decrease in operation and maintenance expenses. Earnings available for common stock increased to $28.2 million in 1993 from $24.0 million in 1992. This increase was due to implementation of the October 1992 general rate increase and weather that was 9 percent colder than the previous year, partially offset by increased operation and maintenance expenses.
Margins (Revenues Less Cost of Gas) In 1994, margins increased 5 percent ($8.6 million) when compared to 1993. The increase reflects weather that was 4 percent colder than last year and 2 percent colder than normal, as well as additional residential and commercial customers.
In 1993, margins increased 16 percent ($25.4 million) when compared to 1992. The increase reflects a general rate increase implemented in October 1992, volume increases driven by additional customers and weather 9 percent colder than the previous year but 1 percent warmer than normal.
Total system throughput (combined sales and transportation) increased 4 percent (4.9 MMDth) in 1994 compared to 1993 and increased 9 percent (9.4 MMDth) in 1993 compared to 1992. Indiana Gas' rates for transportation generally provide the same margins as are earned on the sale of gas under its sales tariffs. Approximately one-half of total system throughput represents gas used for space heating and is affected by weather.
Total average cost per dekatherm of gas purchased (average commodity and demand) remained about the same for 1994 as compared to 1993. Increased fixed costs per dekatherm associated with pipeline rate cases and the restructuring prescribed by Federal Energy Regulatory Commission (FERC) Order No. 636 were offset by lower commodity costs (see Federal Energy Regulatory Commission Matters).
Total average cost per dekatherm of gas purchased increased to $2.90 in 1993 from $2.65 in 1992. The increase can be attributed to higher commodity costs in 1993 than in the previous year, slightly offset by increased purchases from producers and marketers.
Operating Expenses Operation and maintenance expenses decreased approximately $2.3 million in 1994 when compared to 1993. The decrease is primarily attributable to labor and related costs which are lower than the levels in 1993 when additional operation and maintenance projects were in progress.
Operation and maintenance expenses increased approximately $13.4 million in 1993 compared to 1992. During 1992 and 1991, Indiana Gas intensified cost containment programs and also postponed a number of non- critical operating and maintenance projects in an effort to partially offset the impact of very warm weather during those years. With the colder weather of 1993 and the general rate increase came the necessary financial resources to significantly increase the expenditures on operations and maintenance, including those projects previously deferred. Increased throughput volumes and revenues, better financial results and higher levels of operation and maintenance activity resulted in cost increases for labor and related benefits, including performance-based compensation, services, materials and supplies, advertising, collection costs and bad debt expenses.
Depreciation and amortization expense increased in 1994 and 1993 as the result of additions to utility plant to serve new customers and to maintain dependable service to existing customers.
Federal and state income taxes increased in 1994 and 1993 due to higher taxable income and an increase in the federal tax rate resulting from the Omnibus Budget Reconciliation Act of 1993 (see Income Taxes).
Taxes other than income taxes increased in 1994 and 1993 as the result of increased property tax expense, due to higher property tax rates and higher assessed values, and as the result of higher gross receipts tax expenses.
Interest Expense Interest expense decreased in 1994 due to slightly lower interest rates. Interest expense increased in 1993 as the result of increases in average debt outstanding slightly offset by decreases in interest rates.
Other Operating Matters
Gas Cost Adjustment Adjustments to Indiana Gas' rates and charges related to the cost of gas are made through gas cost adjustment (GCA) procedures established by Indiana law and administered by the Indiana Utility Regulatory Commission (IURC). The GCA passes through increases and decreases in cost of gas to Indiana Gas' customers dollar for dollar.
In addition, the IURC has applied the statute authorizing the GCA procedures to reduce rates when necessary so as to limit utility operating income, after adjusting to normal weather, to the level provided in the last general rate order.
1995 Settlement Agreement During 1994, Indiana Gas, the Office of Utility Consumer Counselor (OUCC) and a group of large-volume users entered a series of negotiations designed to increase Indiana Gas' opportunity to earn on its recent capital investments while avoiding the necessity of a general rate filing. As a result of these negotiations, the IURC approved on October 26, 1994, a stipulation and settlement agreement which provided, among other things, for the following: (1) an increase in Indiana Gas' authorized utility operating income from $47.1 million to $51.1 million beginning in fiscal 1995; (2) with certain specified exceptions, Indiana Gas may not file a petition to increase its base rates until September 1, 1995; and (3) an agreement to a number of operational and other service enhancements for large- volume customers.
Furthermore, as part of the agreement, the OUCC agreed to perform another investigation during fiscal year 1995 to consider an additional increase to Indiana Gas' authorized utility operating income.
Environmental Matters In the past, Indiana Gas and others, including its predecessors, former affiliates and/or previous landowners, operated facilities for the manufacturing of gas and storage of manufactured gas. These facilities are no longer in operation and have not been operated for many years. In the manufacture and storage of such gas, various byproducts were produced, some of which may still be present at the sites where these manufactured gas plants and storage facilities were located. While management believes those operations were conducted in accordance with the then-applicable industry standards, under currently applicable environmental laws and regulations, Indiana Gas, and the others, may now be required to take remedial action if certain materials are found at these sites.
Indiana Gas has identified the existence, location and certain general characteristics of 26 gas manufacturing and storage sites. Various stages of investigation and remediation activities are under way at these sites. Indiana Gas has deferred all environmental costs previously paid or accrued. These costs are approximately $12 million (including assessment, remediation and related costs) as of September 30, 1994.
The impact of complying with federal, state and local environmental regulations related to former manufactured gas plant sites on Indiana Gas' financial position and results of operations is contingent upon several uncertainties. These include the cost of compliance, the impact of joint and several liability upon the magnitude of the contingency, the ratemaking treatment authorized for these items by the IURC, as well as the recovery of environmental and related costs from insurance carriers.
Indiana Gas believes it will be successful in recovering the costs which it has incurred and may incur through rates, from other potentially responsible parties and from insurance carriers. However, there can be no assurance as to the amount or timing of any such recoveries.
For further information regarding the status of investigation and remediation of the sites, financial reporting, ratemaking and other potentially responsible parties, see Item 8, Note 10.
Federal Energy Regulatory Commission Matters In accordance with FERC Order No. 636, Indiana Gas' pipeline service providers have made a number of filings to restructure services. On May 1, 1993, Panhandle Eastern Pipe Line Company implemented a restructured services tariff. Texas Eastern Transmission Corporation's restructured tariff was implemented June 1, 1993. Indiana Gas' remaining pipeline service providers implemented restructured services on November 1, 1993. Indiana Gas' pipeline service providers have begun to seek from customers, including Indiana Gas, recovery of certain costs related to the transition to restructured services. Those costs will include certain gas supply realignment costs and are not currently expected to exceed $10 million.
In a recent order involving another gas utility in Indiana, the IURC determined that FERC Order No. 636 transition costs are recoverable as gas costs through the quarterly GCA process. Given this determination, Indiana Gas expects that transition costs it is assessed by its pipeline suppliers will be recovered through the quarterly GCA process.
Indiana Gas continues to monitor developments concerning these and other pipeline issues, to participate in related negotiations and to represent its interest in pipeline matters before FERC.
Postretirement Benefits Other Than Pensions Effective October 1, 1993, Indiana Gas adopted Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions (SFAS 106). SFAS 106 requires accounting for the costs of postretirement health care and life insurance benefits on the accrual basis. This means the costs of benefits paid in the future are recognized during the years that an employee provides service to Indiana Gas rather than the "pay-as-you-go" (cash) basis (see Item 8, Note 7).
In January 1992, Indiana Gas filed a petition with the IURC seeking regulatory authority for, among other matters, rate recovery of implementation of SFAS 106. Through a generic order issued on December 30, 1992, Indiana Gas received authority from the IURC to employ deferred accounting for these costs. This authorization will extend until the IURC rules upon Indiana Gas' pending request to adopt SFAS 106 for ratemaking purposes. Indiana Gas' order is not expected until later in calendar 1994, however, recent orders for other public utilities regulated by the IURC have authorized SFAS 106 to be adopted for ratemaking purposes.
Postemployment Benefits In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits (SFAS 112). The statement will be adopted by Indiana Gas effective October 1, 1994. SFAS 112 requires employers to adopt accrual accounting for workers' compensation, disability, severance pay and other benefits provided to former or inactive employees after employment but before retirement. Adoption of the statement will not materially affect Indiana Gas' financial position or results of operations.
Income Taxes A federal corporate tax rate of 35 percent, resulting from the Omnibus Budget Reconciliation Act of 1993, was in effect for all of the company's fiscal year of 1994 as compared to a weighted average federal corporate tax rate of 34.75 percent in 1993. The federal corporate tax rate in effect for fiscal 1992 was 34 percent.
Effective October 1, 1993, Indiana Gas adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). Indiana Gas previously used the deferred method of accounting for income taxes as prescribed by Accounting Principles Bulletin Opinion No. 11. SFAS 109 requires the use of the liability method, which effectively results in a reduction in previously provided deferred income taxes to reflect the current statutory corporate tax rate.
Due to the effects of regulation, Indiana Gas is not permitted to recognize the effect of a tax rate change as income but is required to reduce tariff rates to return the "excess" deferred income taxes to ratepayers over the remaining life of the properties that give rise to the taxes. Therefore, the cumulative effect of a change in accounting principle upon the initial application of SFAS 109 resulted in no impact on earnings.
Liquidity and Capital Resources
New construction to provide service to a growing customer base and normal system maintenance and improvements will continue to require substantial capital expenditures. Indiana Gas' goal is to internally fund approximately 75 percent of its capital expenditure program. This will help Indiana Gas to maintain its high creditworthiness. The long-term debt of Indiana Gas is currently rated Aa3 by Moody's Investors Service and AA- by Standard & Poor's Corporation and Duff & Phelps.
Total capital required to fund both capital expenditures and refinancing requirements for 1993 and 1994, along with estimated amounts for 1995 through 1997, are as follows:
Thousands 1993 1994 1995 1996 1997 Capital expenditures $57,000 $57,100 $54,700 $56,600 $61,600 Refinancing requirements 20,000 28,100 200 200 200 $77,000 $85,200 $54,900 $56,800 $61,800
In 1994, 75 percent of Indiana Gas' capital expenditures was provided by funds generated internally (net income less dividends plus charges to net income not requiring funds). In 1993, 62 percent of capital expenditures was provided by funds generated internally. This percentage was lower than the target as a result of completing significant upgrades to the gas distribution system to allow for greater operating flexibility in the FERC Order 636 environment.
Capitalization objectives for Indiana Gas are 55-65 percent common equity and preferred stock and 35-45 percent long-term debt. Indiana Gas' common equity component was 62 percent of total capitalization at September 30, 1994.
In 1994, externally funded capital expenditures and the redemptions discussed below were financed primarily through short-term debt and changes in working capital. No significant permanent financing was done during the year.
On October 15, 1993, $10 million of 9.30% medium-term notes were redeemed.
On September 15, 1994, $10 million of 6.80% Notes, Series C, were redeemed.
During September 1994, $8.05 million of the outstanding 9 3/8% Series M, First Mortgage Bonds were retired.
Indiana Gas received an order on August 17, 1994, from the IURC for authorization to issue up to $125 million in the aggregate in the form of debt securities and common stock or a combination thereof. Indiana Gas intends to implement a medium-term note program during fiscal 1995.
The nature of Indiana Gas' business creates large short- term cash working capital requirements primarily to finance customer accounts receivable, unbilled utility revenues resulting from cycle billing, gas in underground storage and capital expenditures until permanently financed. Short-term borrowings tend to be greatest during the heating season when accounts receivable and unbilled utility revenues are at their highest. Depending on cost, commercial paper or bank lines of credit are used as sources of short-term financing. Indiana Gas' commercial paper is rated P-1 by Moody's and A-1+ by Standard & Poor's. Long-term financial strength and flexibility require maintaining throughput volumes, controlling costs and, if absolutely necessary, securing timely increases in rates to recover costs and provide a fair and reasonable return to shareholders.
Item 8.
Item 8. Financial Statements and Supplementary Data
Management's Responsibility for Financial Statements
The management of the company is responsible for the preparation of the consolidated financial statements and the related financial data contained in this report. The financial statements are prepared in conformity with generally accepted accounting principles and follow accounting policies and principles applicable to regulated public utilities.
The integrity and objectivity of the data in this report, including required estimates and judgements, are the responsibility of management. Management maintains a system of internal controls and utilizes an internal auditing program to provide reasonable assurance of compliance with company policies and procedures and the safeguard of assets.
The board of directors pursues its responsibility for these financial statements through its audit committee, which meets periodically with management, the internal auditors and the independent auditors, to assure that each is carrying out its responsibilities. Both the internal auditors and the independent auditors meet with the audit committee, with and without management representatives present, to discuss the scope and results of their audits, their comments on the adequacy of internal accounting controls and the quality of financial reporting.
/s/Niel C. Ellerbrook Niel C. Ellerbrook Senior Vice President and Chief Financial Officer
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Indiana Gas Company, Inc.:
We have audited the accompanying consolidated balance sheets and schedules of long-term debt of Indiana Gas Company, Inc. (an Indiana corporation and wholly-owned subsidiary of Indiana Energy, Inc.) and subsidiary companies as of September 30, 1994 and 1993, and the related consolidated statements of income, common shareholder's equity and cash flows for each of the three years in the period ended September 30, 1994. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Indiana Gas Company, Inc. and subsidiary companies, as of September 30, 1994, and 1993, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1994, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP Arthur Andersen LLP
Indianapolis, Indiana October 28, 1994
Notes to Consolidated Financial Statements Indiana Gas Company, Inc. and Subsidiary Companies
1. Summary of Significant Accounting Practices
A. Consolidation Indiana Gas Company, Inc. (Indiana Gas) and its subsidiaries, Terre Haute Gas Corporation (Terre Haute) and Richmond Gas Corporation (Richmond) which are doing business as Indiana Gas Company, Inc. (company), provide natural gas and transportation services to a diversified base of customers in 281 communities in 48 of Indiana's 92 counties.
B. Utility Plant and Depreciation Except as described below, utility plant is stated at the original cost and includes allocations of payroll- related costs and administrative and general expenses, as well as an allowance for the cost of funds used during construction. When a depreciable unit of property is retired, the cost is credited to utility plant and charged to accumulated depreciation together with the cost of removal, less any salvage. No gain or loss is recognized upon normal retirement.
Provisions for depreciation of utility property are determined by applying straight-line rates to the original cost of the various classifications of property. The average depreciation rate was approximately 4.1 percent for 1994, 1993 and 1992.
Cost in excess of underlying book value of acquired gas distribution companies is reflected as a component of utility plant and is being amortized primarily over 40 years.
C. Unamortized Debt Discount and Expense As part of an August 17, 1994, order from the Indiana Utility Regulatory Commission (IURC), Indiana Gas received authority to amortize over a 15-year period the debt discount and expense related to new debt issues and future premiums paid for debt reacquired in connection with refinancing. Debt discount and expense for issues in place prior to this order are being amortized over the lives of the related issues. Premiums paid prior to this order for debt reacquired in connection with refinancing are being amortized over the life of the refunding issue. Gains or losses realized from reacquisition of debt for sinking fund purposes are included in "Other Income - Net" on the Consolidated Statements of Income.
D. Cash Flow Information For the purposes of the Consolidated Statements of Cash Flows, the company considers cash investments with an original maturity of three months or less to be cash equivalents. Cash paid during the periods reported for interest and income taxes were as follows:
Thousands 1994 1993 1992 Interest (net of amount capitalized) $15,192 $13,994 $13,637 Income taxes $23,880 $11,739 $ 7,317
E. Revenues To more closely match revenues and expenses, Indiana Gas records revenues for all gas delivered to customers but not billed at the end of the accounting period.
F. Gas in Underground Storage Based on the cost of purchased gas during September 1994, the cost of replacing the current portion of gas in underground storage was less than last-in, first-out cost at September 30, 1994, by approximately $7,164,000.
G. Refundable or Recoverable Gas Cost The cost of gas purchased and refunds from suppliers, which differ from amounts recovered through rates, are deferred and are being recovered or refunded in accordance with procedures approved by the IURC.
H. Allowance For Funds Used During Construction An allowance for funds used during construction (AFUDC), which represents the cost of borrowed and equity funds used for construction purposes, is charged to construction work in progress during the period of construction and the equity portion is included in "Other Income - Net" on the Consolidated Statements of Income. The portion related to borrowed funds is included in "Interest and Other Charges". An annual AFUDC rate of 7.5 percent was used in 1994 and 1993, however, in 1992 the rate was 10 percent due primarily to higher interest rates.
The table below reflects the total AFUDC capitalized and the portion of which was computed on borrowed and equity funds for all periods reported.
Thousands 1994 1993 1992 AFUDC - borrowed funds $ 355 $ 579 $ 481 AFUDC - equity funds 290 486 617 Total AFUDC capitalized $ 645 $ 1,065 $1,098
I. Capital Expenditures Indiana Gas' utility capital expenditure requirements for 1994 were $57.1 million and are estimated to be about $54.7 million for 1995. Capital expenditure programs are funded by internally generated funds, short-term borrowings and permanent financing.
J. Reclassifications Certain reclassifications have been made in the company's financial statements of prior years to conform to the current year presentation. These reclassifications have no impact on previously reported net income.
2. Fair Value of Financial Instruments
The estimated fair values of Indiana Gas' financial instruments were as follows:
September 30, 1994 September 30, 1993 Carrying Fair Carrying Fair Thousands Amount Value Amount Value Cash and cash equivalents $ 20 $ 20 $ 20 $ 20 Notes payable $ 30,550 $ 30,550 $ 10,252 $ 10,252 Long-term debt (includes amounts due within one year) $156,851 $160,612 $184,901 $212,500
Certain methods and assumptions must be used to estimate the fair value of financial instruments. Because of the short maturity of cash and cash equivalents and notes payable, the carrying amounts approximate fair values for these financial instruments. The fair value of the company's long- term debt was estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for debt of the same remaining maturities.
Under current regulatory treatment, call premiums on reacquisition of long-term debt are generally recovered in customer rates over the life of the refunding issue or over a 15-year period (see Note 1C). Accordingly, any reacquisition would not be expected to have a material effect on the company's financial position or results of operations.
3. Short-Term Borrowings
Indiana Gas has board of director approval to borrow up to $100 million under bank lines of credit. Indiana Gas has available committed lines of credit up to $60 million with approximately $31 million outstanding at September 30, 1994. These lines of credit are renewable annually and require fees based on the amounts of the lines. In addition, Indiana Gas has available uncommitted lines of credit with similar arrangements which allow it to borrow up to its board approved amount. Notes payable to banks bore interest at rates negotiated with the bank at the time of borrowing.
Bank loans outstanding during the reported periods were as follows:
4. Long-Term Debt
During the year the following activity took place with respect to long-term debt.
On October 15, 1993, $10 million of 9.30% medium-term notes were redeemed.
On September 15, 1994, $10 million of 6.80% Notes, Series C, were redeemed.
During September 1994, $8.05 million of the outstanding 9 3/8% Series M, First Mortgage Bonds were retired. A premium of $641,000 was paid for this retirement and will be amortized over a 15-year period.
Consolidated maturities and sinking fund requirements on long-term debt subject to mandatory redemption during the five years following 1994 are none for 1995 and 1996, $1,100,000 in 1997, $36,100,000 in 1998 and $11,100,000 in 1999.
5. Common Stock
Indiana Gas has authorized 16 million shares of no par value common stock.
Dividends on the common stock of Indiana Gas are payable out of the unreserved and unrestricted retained earnings of Indiana Gas. There are certain provisions in the Indiana Gas Indenture, under which the first mortgage bonds of Indiana Gas have been created and issued, restricting the payment of dividends on the Indiana Gas common stock. Such restrictions could affect Indiana Gas' ability to pay dividends on its common stock. None of the retained earnings of Indiana Gas are presently subject to any such restrictions.
6. Cumulative Preferred Stock
On December 1, 1992, Indiana Gas redeemed all 200,000 shares of its issued and outstanding 8.55% Cumulative Preferred Stock at $104.66 per share with accrued dividends. The redemption premium of $932,000 was charged to retained earnings. Indiana Gas has authorized and unissued shares of preferred stock of 4.2 million.
7. Retirement Plans and Other Postretirement Benefits
Effective October 1, 1994, Indiana Gas merged its retirement savings plan for bargaining employees into its retirement savings plan for non-bargaining employees. The primary objective for this action is to reduce the level of resources required to administer two plans. The combined retirement savings plan is a defined contribution plan which is qualified under sections 401(a) and 401(k) of the Internal Revenue Code. Under the terms of the retirement savings plan, eligible participants may direct a specified percentage of their compensation to be invested in shares of Indiana Energy's common stock, a fixed income fund, an equity fund or a balanced fund. Participants in the retirement savings plan have, subject to prescribed limitations, matching company contributions made to the plan on their behalf, plus a year-end lump sum company contribution. During 1994, 1993 and 1992, Indiana Gas made contributions of $2,386,000, $2,270,000 and $2,072,000, respectively.
Indiana Gas also has two non-contributory defined benefit retirement plans that cover all employees meeting certain minimum age and service requirements. Benefits are determined by a formula based on the employee's base earnings (highest five consecutive years out of the last 10 consecutive years prior to actual retirement date), years of participation in the plan and the employee's age at retirement.
Indiana Gas has an unfunded supplemental retirement plan for certain management employees. Benefits are determined by a formula based on 65 percent of the participant's average monthly earnings, less benefits received under the company's pension and savings plans and the participant's primary Social Security benefits.
The Indiana Gas defined benefit retirement plan assets are under custody of trustees and consist of actively managed stock and bond portfolios, as well as short-term investments. It is Indiana Gas' funding policy to maintain the pension plans on an actuarially sound basis. Under this policy, funding was $1,110,000 in 1994, $1,223,000 in 1993, and $1,666,000 in 1992. As permitted by the Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation, the company recognizes pension expense based on funding as allowed for ratemaking purposes.
The calculation of pension expense follows:
Prior to fiscal 1994, Indiana Gas recognized postretirement benefit costs on the pay-as-you-go (cash) basis. Postretirement benefit costs recognized for fiscal years 1993 and 1992 were approximately $2,855,000 and $2,653,000, respectively.
The following table reconciles the plan's funded status to the accrued postretirement benefit cost as reflected on the balance sheet as of September 30, 1994:
Thousands 1994 Accumulated postretirement benefit obligation: Retirees and dependents $28,328 Other fully eligible participants 7,323 Other active participants 18,113 Total accumulated postretirement benefit obligation 53,764 Fair value of plan assets - Accumulated postretirement benefit obligation in excess of plan assets (53,764) Unrecognized net gain (4,340) Unrecognized transition obligation 52,668 Accrued postretirement benefit cost at September 30 $(5,436)
The assumed health care cost trend rate for medical gross eligible charges used in measuring the accumulated postretirement benefit obligation as of September 30, 1994, was 10.2 percent for fiscal 1995. This rate is assumed to decrease gradually through fiscal 2003 to 5.5 percent and remain at that level thereafter. A 1 percent increase in the assumed health cost trend rates for each future year produces approximately a $6.4 million increase in the accumulated postretirement benefit obligation as of September 30, 1994, and approximately an $884,000 increase in the annual aggregate of the service and interest cost components of net postretirement benefit cost. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 8 percent.
In January 1992, Indiana Gas filed a petition with the IURC seeking regulatory authority for, among other matters, rate recovery of implementation of SFAS 106 relating to postretirement benefits other than pensions. Through a generic order issued on December 30, 1992, Indiana Gas received authority from the IURC to employ deferred accounting for these costs. This authorization will extend until the IURC rules upon Indiana Gas' pending request to adopt SFAS 106 for ratemaking purposes. Indiana Gas' order is not expected until later in calendar 1994, however, recent orders for other public utilities regulated by the IURC have authorized SFAS 106 to be adopted for ratemaking purposes.
8. Postemployment Benefits
In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits (SFAS 112). The statement will be adopted by Indiana Gas effective October 1, 1994. SFAS 112 requires employers to adopt accrual accounting for workers' compensation, disability, severance pay and other benefits provided to former or inactive employees after employment but before retirement. Adoption of the statement will not materially affect Indiana Gas' financial position or results of operations.
9. Commitments
Estimated capital expenditures for 1995 are $54.7 million. Total lease expense was $2,595,000 in 1994, $2,846,000 in 1993 and $2,748,000 in 1992.
Lease commitments are $2,497,000 in 1995, $1,797,000 in 1996, $1,220,000 in 1997, $1,166,000 in 1998, $515,000 in 1999 and $1,005,000 in total for all later years. Included in these amounts is an operating lease between Indiana Gas and Energy Realty with payments of approximately $464,000 annually that extends through August 1998. There are no leases that extend beyond 2002. Indiana Gas has storage and supply contracts that range from one month to eight years.
10. Contingencies
A. Environmental Costs In the past, Indiana Gas and others, including its predecessors, former affiliates and/or previous landowners, operated facilities for the manufacturing of gas and storage of manufactured gas. These facilities are no longer in operation and have not been operated for many years. In the manufacture and storage of such gas, various byproducts were produced, some of which may still be present at the sites where these manufactured gas plants and storage facilities were located. While management believes those operations were conducted in accordance with the then-applicable industry standards, under currently applicable environmental laws and regulations, Indiana Gas, and the others, may now be required to take remedial action if certain materials are found at these sites.
Indiana Gas has identified the existence, location and certain general characteristics of 26 gas manufacturing and storage sites. Indiana Gas conducted remediation at two sites and is nearing completion of the remedial investigation/feasibility study (RI/FS) at one of the sites under an agreed order between Indiana Gas and the Indiana Department of Environmental Management.
Indiana Gas is assessing, on a site-by-site basis, whether any of the remaining 24 sites require remediation, to what extent it is required and the estimated cost of such action. Indiana Gas has completed preliminary assessments (PAs) on the majority of these sites and has completed site investigations (SIs) at 15 of these sites. Based upon the site work completed to date, Indiana Gas believes that some level of contamination may be present at a number of the remaining sites. Indiana Gas has not begun an RI/FS at any of the remaining sites but anticipates beginning more in the near future and completing the remaining SIs.
Based upon the work performed to date, Indiana Gas has accrued remediation and related costs for the two sites where remediation has taken place. Indiana Gas has accrued the PA/SI and groundwater monitoring costs for the remaining 24 sites. Indiana Gas has further accrued estimated RI/FS costs and the costs of certain remedial actions at a number of the remaining sites where, based upon available information, these actions likely will be required. The total costs which may be incurred in connection with the remediation of all sites cannot be determined at this time.
Indiana Gas has nearly completed the process of identifying all potentially responsible parties (PRPs) for each site. Indiana Gas, with the help of outside counsel, has prepared estimates for its share of environmental liabilities which may exist at each of the sites. Indiana Gas has accrued only its proportionate share of the estimated costs, as described above, based on equitable principles derived from case law or applied by parties in achieving settlements.
Indiana Gas accrues for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable. Indiana Gas does not believe it can provide an estimate of the reasonably possible total remediation costs for any site prior to completion of the RI/FS and the development of some sense of the timing for implementation of the resulting potential remedial alternatives.
Indiana Gas has notified insurance carriers of potential claims where policies may provide coverage for these environmental costs. Indiana Gas has not recorded any receivables related to probable recovery from insurance carriers at this time.
In January 1992, Indiana Gas filed a petition with the IURC seeking regulatory authority for, among other matters, recovery through rates of all costs Indiana Gas incurs in complying with federal, state and local environmental regulations in connection with past gas manufacturing activities. On February 26, 1992, Indiana Gas received authority from the IURC to employ deferred accounting for these costs. This authorization will extend until the IURC rules upon Indiana Gas' pending request to establish and implement an ongoing ratemaking mechanism that will be designed and intended to provide for the recovery of these costs. An order is not expected until later in calendar 1994. Indiana Gas has deferred all environmental costs previously paid or accrued. These costs are approximately $12 million (including assessment, remediation and related costs) as of September 30, 1994.
The impact of complying with federal, state and local environmental regulations related to former manufactured gas plant sites on Indiana Gas' financial position and results of operations is contingent upon several uncertainties. These include the cost of compliance, the impact of joint and several liability upon the magnitude of the contingency, the ratemaking treatment authorized for these items by the IURC, as well as the recovery of environmental and related costs from insurance carriers.
Indiana Gas believes it will be successful in recovering the costs which it has incurred and may incur through rates, from other potentially responsible parties and from insurance carriers. However, there can be no assurance as to the amount or timing of any such recoveries.
B. Order No. 636 Transition Costs In accordance with Federal Energy Regulatory Commission (FERC) Order No. 636, Indiana Gas' pipeline service providers have made a number of filings to restructure services.
Indiana Gas' pipeline service providers have begun to seek from customers, including Indiana Gas, recovery of certain costs related to the transition to restructured services. Those costs will include certain gas supply realignment costs and are not currently expected to exceed $10 million.
In a recent order involving another gas utility in Indiana, the IURC determined that FERC Order No. 636 transition costs are recoverable as gas costs through the quarterly GCA process. Given this determination, Indiana Gas expects that transition costs it is assessed by its pipeline suppliers will be recovered through the quarterly GCA process.
11. Income Taxes
Indiana Energy, Inc. and subsidiary companies file a consolidated federal income tax return. Indiana Gas' current and deferred tax expense is computed on a separate company basis. The components of consolidated income tax expense for Indiana Gas, including amounts in "Other Income - Net" on the Consolidated Statements of Income, were as follows:
Thousands 1994 1993 1992 Current: Federal $13,333 $12,088 $ 9,885 State 2,299 2,018 1,773 15,632 14,106 11,658 Deferred: Federal 2,987 2,667 1,870 State 286 264 203 3,273 2,931 2,073 Amortization of Investment Tax Credits (930) (1,007) (929) Consolidated Income Tax Expense $17,975 $16,030 $12,802
Effective income tax rates were 34.22 percent, 35.97 percent and 33.21 percent of pretax income for 1994, 1993 and 1992, respectively. This compares with a combined federal and state income tax statutory rate of 37.93 percent for 1994, 37.69 percent for 1993 and 36.97 percent for 1992. Individual components of these rate differences are not significant except investment tax credit which amounted to (1.8%), (2.3%) and (2.4%) in 1994, 1993, and 1992, respectively.
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes are provided for taxes not currently payable due to, among other things, the use of various accelerated depreciation methods, shorter depreciable lives and the deduction of certain construction costs for tax purposes. Taxes deferred in prior years are being charged and income credited as these tax effects reverse. The provisions for the deferred tax effects relating to the excess of tax-over-book depreciation amounted to $2,852,000 in 1994, $2,073,000 in 1993 and $1,504,000 in 1992.
Effective October 1, 1993, Indiana Gas adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). Indiana Gas previously used the deferred method of accounting for income taxes as prescribed by Accounting Principles Bulletin Opinion No. 11. SFAS 109 requires the use of the liability method, which effectively results in a reduction in previously provided deferred income taxes to reflect the current statutory corporate tax rate.
Due to the effects of regulation, Indiana Gas is not permitted to recognize the effect of a tax rate change as income but is required to reduce tariff rates to return the "excess" deferred income taxes to ratepayers over the remaining life of the properties that give rise to the taxes. Therefore, the cumulative effect of a change in accounting principle upon the initial application of SFAS 109 resulted in no impact on earnings. Under SFAS 109, Indiana Gas has recorded a net regulatory liability for approximately $4.8 million on its balance sheet as of September 30, 1994, related to deferred taxes.
Significant components of Indiana Gas' net deferred tax liability as of September 30, 1994, are as follows:
Thousands 1994 Deferred tax liabilities: Accelerated depreciation $41,652 Property basis differences 18,140 Acquisition adjustment 6,853 Other 2,654 Deferred tax assets: Deferred investment tax credit (4,943) Regulatory income tax liability (1,815) Less deferred income taxes related to current assets and liabilities (2,654) Balance at September 30 $59,887
Investment tax credits have been deferred and are being credited to income over the life of the property giving rise to the credit. The Tax Reform Act of 1986 eliminated investment tax credits for property acquired after January 1, 1986.
12. Summarized Financial Data (Unaudited)
Summarized quarterly financial data (in thousands of dollars) for 1994 and 1993 are as follows:
Item 9.
Item 9. Changes in and Disagreements with Accountants
None.
Part III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Except for the list of the executive officers, which can be found in Part I, Item 4(a) of this report, the information required to be shown in this part for Item 10, Directors and Executive Officers of the Registrant is incorporated by reference here from the definitive proxy statement of the registrant's parent company, Indiana Energy, Inc. That statement was prepared according to Regulations 14A and S-K and filed electronically with the Securities and Exchange Commission on December 2, 1994. The information is included in the report attached as Exhibit 99.
Item 11.
Item 11. Executive Compensation
The information required to be shown in this part for Item 11, Executive Compensation, is incorporated by reference here from the definitive proxy statement of the registrant's parent company, Indiana Energy, Inc. That statement was prepared according to Regulations 14A and S-K and filed electronically with the Securities and Exchange Commission on December 2, 1994. The information is included in the report attached as Exhibit 99.
Contained in the Indiana Energy proxy statement, Summary Compensation Table, Column C and Column D, Salary Amounts and Bonus Amounts, are some compensation dollars which are allocated to subsidiaries of Indiana Energy other than Indiana Gas. The named executives received the following compensation, including Bonus, for the years ended September 30, 1994, 1993 and 1992, as it relates to only Indiana Gas.
1994 1993 1992 Lawrence A. Ferger $444,898 $411,455 $397,719 Paul T. Baker 285,360 247,197 231,926 Niel C. Ellerbrook 208,999 194,791 190,871 Anthony E. Ard 159,489 145,238 134,480 Carl L. Chapman 142,736 126,979 116,251
Item 12.
Item 12. Securities Ownership of Certain Beneficial Owners and Management
The information required to be shown in this part for Item 12, Securities Ownership of Certain Beneficial Owners and Management, is incorporated by reference here from the definitive proxy statement of the registrant's parent company, Indiana Energy, Inc. That statement was prepared according to Regulations 14A and S-K and filed electronically with the Securities and Exchange Commission on December 2, 1994. The information is included in the report attached as Exhibit 99.
Item 13.
Item 13. Certain Relationships and Related Transactions
The information required to be shown in this part for Item 13, Certain Relationships and Related Transactions is incorporated by reference here from the definitive proxy statement of the registrant's parent company, Indiana Energy, Inc. That statement was prepared according to Regulations 14A and S-K and filed electronically with the Securities and Exchange Commission on December 2, 1994. The information is included in the report attached as Exhibit 99.
Part IV Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following documents are filed as part of this report:
(a)-1 Financial Statements Location in 10-K
Report of Independent Public Accountants Item 8
Consolidated Statements of Income - 1994, 1993 and 1992 Item 8
Consolidated Statements of Cash Flows - 1994, 1993 and 1992 Item 8
Consolidated Balance Sheets at September 30, 1994 and 1993 Item 8
Consolidated Statements of Common Shareholder's Equity - 1994, 1993 and 1992 Item 8
Consolidated Schedules of Long-Term Debt as of September 30, 1994 and 1993 Item 8
Notes to Financial Statements Item 8
(a)-2 Financial Statement Schedules
Report of Independent Public Accountants on Schedules
Schedule V. Property, Plant and Equipment - 1994, 1993 and 1992
Schedule VI. Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment - 1994, 1993, 1992
Schedule VIII.Valuation and Qualifying Accounts - 1994, 1993 and 1992
Schedule X. Supplementary Income Statement Information - 1994, 1993 and 1992
Other schedules are omitted as not applicable or the required information is shown in the consolidated financial statements or notes to consolidated financial statements.
(a)-3 Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None filed during the fourth quarter of fiscal 1994.
EXHIBIT INDEX
Exhibit No. Description Reference
2-A Acquisition Agreement Exhibit 10-N of dated October 26, Indiana Gas Company, 1990, between Indiana Inc.'s 1990 Annual Gas and Indiana Report on Form 10-K. Energy, Inc.
3-A Amended and Restated Exhibit 3-A to Articles of Indiana Gas Company, Incorporation. Inc.'s 1993 Annual Report on Form 10-K.
3-B Code of By-Laws, as Filed herewith. amended.
4-A Indenture dated as of Indiana Gas Company, September 1, 1950, Inc.'s Registration between Indiana Gas No. 2-77620 (pages 6- and Merchants 8 of the Prospectus National Bank & Trust on Form S-16 Company of contained therein), Indianapolis (now to Registration No. 2- National City Bank, 40825 (Exhibit Nos. 2- Indiana), as trustee A through 2-H), to ("Trustee"), and Registration No. 2- twelve supplemental 52734 (Exhibit No. 2- indentures thereto. C), to Registration No. 2-68469 (Exhibit No. 2-J), to Registration No. 2- 77620 (Exhibit No. 4- 0), to Registration No. 33-1262 (Exhibit No. 4K), to the 1985 Annual Report on Form 10-K (Exhibit 4) and to the 1986 Annual Report on Form 10-K (Exhibit No. 4-D).
4-B Indenture dated Exhibit 4(a) to February 1, 1991, Indiana Gas Company, between Indiana Gas Inc.'s Current Report and Continental Bank, on Form 8-K dated National Association. February 1, 1991, and filed February 15, 1991; First Supplemental Indenture thereto dated as of February 15, 1991, (incorporated by reference to Exhibit 4(b) to Indiana Gas Company, Inc.'s Current Report on Form 8-K dated February 1, 1991, and filed February 15, 1991); Second Supplemental Indenture thereto dated as of September 15, 1991, (incorporated by reference to Exhibit 4(b) to Indiana Gas Company, Inc.'s Current Report on Form 8-K dated September 15, 1991, and filed September 25, 1991); Third Supplemental Indenture thereto dated as of September 15, 1991 (incorporated by reference to Exhibit 4(c) to Indiana Gas Company, Inc.'s Current Report on Form 8-K dated September 15, 1991 and filed September 25, 1991); and Fourth Supplemental Indenture thereto dated as of December 2, 1992, (incorporated by reference to Exhibit 4(b) to Indiana Gas Company, Inc.'s Current Report on Form 8-K dated December 1, 1992, and filed December 8, 1992).
10-A Employment Agreement Exhibit 10-A to among Indiana Energy, Indiana Energy's 1990 Inc., Indiana Gas Annual Report on Form Company, Inc., and 10-K. Lawrence A. Ferger effective January 1, 1990.
10-B Employment Agreement Exhibit 10-C to among Indiana Energy, Indiana Energy's 1990 Inc., Indiana Gas Annual Report on Form Company, Inc., and 10-K. Niel C. Ellerbrook, effective January 1, 1990.
10-C Employment Agreement Exhibit 10-D to between Indiana Gas Indiana Energy's 1990 Company, Inc., and Annual Report on Form Paul T. Baker 10-K. effective January 1, 1990.
10-D Employment Agreement Exhibit 10-E to between Indiana Gas Indiana Energy's 1990 Company, Inc., and Annual Report on Form Anthony E. Ard 10-K. effective January 1, 1990.
10-E Employment Agreement Exhibit 10-F to among Indiana Energy, Indiana Energy's 1990 Inc., Indiana Gas Annual Report on Form Company, Inc., and 10-K. Carl L. Chapman effective January 1, 1990.
10-F Termination Benefits Exhibit 10-F to Agreement, dated July Indiana Energy, 29, 1994, among Inc.'s 1994 Annual Indiana Energy, Inc., Report on Form 10-K. Indiana Gas Company, Inc. and Lawrence A. Ferger.
10-G Termination Benefits Exhibit 10-G to Agreement, dated July Indiana Energy, 29, 1994, among Inc.'s 1994 Annual Indiana Energy, Inc., Report on Form 10-K. Indiana Gas Company, Inc. and Paul T. Baker.
10-H Termination Benefits Exhibit 10-H to Agreement, dated July Indiana Energy, 29, 1994, among Inc.'s 1994 Annual Indiana Energy, Inc., Report on Form 10-K. Indiana Gas Company, Inc. and Niel C. Ellerbrook.
10-I Termination Benefits Exhibit 10-I to Agreement, dated July Indiana Energy, 29, 1994, among Inc.'s 1994 Annual Indiana Energy, Inc., Report on Form 10-K. Indiana Gas Company, Inc. and Anthony E. Ard.
10-J Termination Benefits Exhibit 10-J to Agreement, dated July Indiana Energy, 29, 1994, among Inc.'s 1994 Annual Indiana Energy, Inc., Report on Form 10-K. Indiana Gas Company, Inc. and Carl L. Chapman.
10-K Executive Exhibit 10-K to Compensation Deferral Indiana Energy, Plan effective Inc.'s 1994 Annual December 1, 1994. Report on Form 10-K.
10-L Directors Exhibit 10-L to Compensation Deferral Indiana Energy, Plan effective Inc.'s 1994 Annual February 1, 1981. Report on Form 10-K.
10-M Directors Exhibit 10-M to Compensation Deferral Indiana Energy, Plan effective Inc.'s 1994 Annual January 1, 1995. Report on Form 10-K.
10-N Executive Restricted Exhibit A to Indiana Stock Plan effective Energy's Proxy October 1, 1987, as Statement filed on amended. December 4, 1987; First Amendment to Indiana Energy, Inc. Executive Restricted Stock Plan (incorporated by reference to Exhibit 10-A to Indiana Energy's 1991 Annual Report on Form 10-K).
10-O Indiana Energy, Inc. Exhibit 10-D to Annual Management Indiana Energy's 1987 Incentive Plan Annual Report on Form effective October 1, 10-K. 1987.
10-P Indiana Energy, Inc. Indiana Energy's Directors' Restricted Definitive Proxy Stock Plan, as Statement filed on amended and restated December 6, 1991. on October 25, 1991.
10-Q Exhibit 10-Q schedules all material gas contracts which are in effect between Indiana Gas Company, Inc. and the suppliers listed. The gas contracts within each type are substantially identical in all material respects and at least one of each type of contract has been or is filed as indicated. The schedule details all material aspects in which a contract may differ from the contract filed.
23 Consent of Independent Public Accountants Filed herewith.
27 Financial Data Schedule Filed herewith.
99 Indiana Energy, Inc.'s (parent company) Definitive Proxy Statement for Annual Meeting of Shareholders to be held on January 9, 1995. Filed herewith.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Indiana Gas Company, Inc.:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Item 8, in this Form 10-K, and have issued our report thereon dated October 28, 1994. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Item 14(a)-2 are the responsibility of the company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/Arthur Andersen LLP ARTHUR ANDERSEN LLP
Indianapolis, Indiana October 28, 1994
SCHEDULE X
Supplemental Income Statement Information Years Ended September 30, 1994, 1993 and 1992
In addition to the amounts included in other operation and maintenance and the depreciation amounts shown in the consolidated statements of income in Item 8 of this report Form 10-K, certain maintenance and depreciation is charged to various clearing accounts. The amounts so charged were not significant.
During the years presented, there were no royalties or advertising costs of significant amount.
Maintenance amounts included in the caption "Other operation and maintenance" and gross income taxes shown under the caption "Taxes other than income taxes" in the consolidated statements of income are set forth below. Other taxes charged to income, other than payroll and income taxes, were not significant.
Years Ended September 30 Thousands 1994 1993 1992 Maintenance $ 9,501 $14,197 $10,205 Indiana gross income taxes $ 6,267 $ 5,760 $ 4,947
EXHIBIT 21
State of Incorporation
Subsidiaries of Indiana Gas Company, Inc. (Parent) - Richmond Gas Corporation Indiana Terre Haute Gas Corporation Indiana
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K into Indiana Gas Company, Inc.'s previously filed Registration Statement File No. 33-54820.
/s/Arthur Andersen LLP ARTHUR ANDERSEN LLP
Indianapolis, Indiana December 22, 1994
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) 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.
INDIANA GAS COMPANY, INC.
Dated December 22, 1994 /s/Lawrence A. Ferger Lawrence A. Ferger, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/Lawrence A. Ferger President, Chief Executive December 22, 1994 Lawrence A. Ferger Officer and Director
/s/Niel C. Ellerbrook Senior Vice President December 22, 1994 Niel C. Ellerbrook Chief Financial Officer and Director
/s/Jerome A. Benkert Controller December 22, 1994 Jerome A. Benkert
/s/Duane M. Amundson Chairman of the Board of December 22, 1994 Duane M. Amundson Directors
/s/Paul T. Baker Senior Vice President December 22, 1994 Paul T. Baker Chief Operating Officer and Director
/s/Gerald L. Bepko Director December 22, 1994 Gerald L. Bepko
/s/Howard J. Cofield Director December 22, 1994 Howard J. Cofield
/s/Loren K. Evans Director December 22, 1994 Loren K. Evans
/s/Otto N. Frenzel III Director December 22, 1994 Otto N. Frenzel III
/s/Anton H. George Director December 22, 1994 Anton H. George
/s/Don E. Marsh Director December 22, 1994 Don E. Marsh
/s/Richard P. Rechter Director December 22, 1994 Richard P. Rechter
/s/James C. Shook Director December 22, 1994 James C. Shook