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
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(Exact name of registrant as specified in its charter)
INDIANA 35-0672570
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(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
20 N.W. 4th Street, Evansville, Indiana, 47708
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(Address of principal executive offices)
(Zip Code)
812-491-4000
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(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
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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
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ASSETS
Utility Plant
Original cost $ 1,554,909 $ 1,526,094
Less: Accumulated depreciation & amortization 739,856 728,768
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Net utility plant 815,053 797,326
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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
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Total current assets 132,576 158,835
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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
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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
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LIABILITIES & SHAREHOLDER'S EQUITY
Capitalization
Common shareholder's equity
Common stock (no par value) $ 103,258 $ 103,258
Retained earnings 272,643 270,181
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Total common shareholder's equity 375,901 373,439
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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
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Total capitalization 753,621 724,595
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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
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Total current liabilities 110,534 148,211
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Deferred Income Taxes & Other Liabilities
Deferred income taxes 113,762 112,004
Deferred credits & other liabilities 40,634 40,848
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Total deferred income taxes & other
liabilities 154,396 152,852
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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,
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2003 2002
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As Restated,
See Note 3
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OPERATING REVENUES
Electric revenues $ 119,376 $ 126,801
Gas revenues 51,866 29,606
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Total operating revenues 171,242 156,407
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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
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Total cost of operating revenues 102,917 95,200
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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
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Total operating expenses 50,442 45,468
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OPERATING INCOME 17,883 15,739
Other income - net 1,634 1,459
Interest expense 6,127 5,756
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NET INCOME 13,390 11,442
Preferred stock dividends 9 7
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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,
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2003 2002
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As Restated,
See Note 3
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NET CASH FLOWS FROM OPERATING ACTIVITIES $ 50,198 $ 34,738
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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)
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Net cash flows (required for)
financing activities (17,748) (20,161)
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CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES
Capital expenditures (28,896) (14,295)
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Net cash flows (required for) investing
activities (28,896) (14,295)
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Net increase in cash & cash equivalents 3,554 282
Cash & cash equivalents at beginning of period 2,145 1,556
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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
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OPERATING REVENUES
Electric revenues $ 126,801 $ - $ 126,801
Gas revenues 29,606 - 29,606
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Total operating revenues 156,407 - 156,407
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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
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Total cost of operating revenues 95,158 42 95,200
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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
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Total operating expenses 45,419 49 45,468
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OPERATING INCOME 15,830 (91) 15,739
Other income - net 1,070 389 1,459
Interest expense 5,756 - 5,756
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NET INCOME 11,144 298 11,442
Preferred stock dividends 7 - 7
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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)