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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 September 30, 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: 1-15467

VECTREN CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

INDIANA 35-2086905
- --------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)



20 N.W. 4th Street, Evansville, Indiana, 47708
-------------------------------------------------------
(Address of principal executive offices)
(Zip Code)

812-491-4000
-------------------------------------------------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No __

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |X| No __

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 75,617,313 October 31, 2003
------------------------------- ---------------- ----------------
Class Number of Shares Date



Table of Contents

Item Page
Number Number
PART I. FINANCIAL INFORMATION
1 Financial Statements (Unaudited)
Vectren Corporation and Subsidiary Companies
Consolidated Condensed Balance Sheets 1-2
Consolidated Condensed Statements of Income 3
Consolidated Condensed Statements of Cash Flows 4
Notes to Unaudited Consolidated Condensed Financial
Statements 5-19
2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 20-42
3 Quantitative and Qualitative Disclosures About
Market Risk 42
4 Controls and Procedures 43

PART II. OTHER INFORMATION
1 Legal Proceedings 43
6 Exhibits and Reports on Form 8-K 44-45
Signatures 46


Definitions

AFUDC: allowance for funds used MMBTU: millions of British thermal
during construction units
APB: Accounting Principles Board MW: megawatts

EITF: Emerging Issues Task Force MWh / GWh: megawatt hours/millions
of megawatt hours (gigawatt hours)
FASB: Financial Accounting Standards NOx: nitrogen oxide
Board
FERC: Federal Energy Regulatory OUCC: Indiana Office of the Utility
Commission Consumer Counselor
IDEM: Indiana Department of PUCO: Public Utilities Commission
Environmental Management of Ohio
IURC: Indiana Utility Regulatory SFAS: Statement of Financial
Commission Accounting Standards
MCF / BCF: millions / billions of cubic USEPA: United States Environmental
feet Protection Agency
MDth / MMDth: thousands / millions of Throughput: combined gas sales and
dekatherms gas transportation volumes






PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VECTREN CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited - In millions)


- -------------------------------------------------------------------------------
September 30, December 31,
2003 2002
- ----------------------------------------------- ------------- ------------
ASSETS
------
Current Assets
Cash & cash equivalents $ 11.7 $ 25.1
Accounts receivable-less reserves of $5.0 &
$5.5, respectively 88.3 154.4
Accrued unbilled revenues 42.3 116.1
Inventories 61.6 62.8
Recoverable fuel & natural gas costs 31.5 22.1
Prepayments & other current assets 166.5 93.0
- -------------------------------------------------------------------------------
Total current assets 401.9 473.5
- -------------------------------------------------------------------------------

Utility Plant
Original cost 3,178.5 3,037.1
Less: accumulated depreciation & amortization 1,456.8 1,389.0
- -------------------------------------------------------------------------------
Net utility plant 1,721.7 1,648.1
- -------------------------------------------------------------------------------

Investments in Unconsolidated Affiliates 166.3 153.3
Other Investments 117.9 124.3
Non-utility Property-Net 215.2 228.0
Goodwill-Net 202.2 202.2
Regulatory Assets 84.7 75.2
Other Assets 22.1 21.9
- -------------------------------------------------------------------------------
TOTAL ASSETS $ 2,932.0 $ 2,926.5
===============================================================================

The accompanying notes are an integral part of these consolidated condensed
financial statements.





VECTREN CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited - In millions)

- -------------------------------------------------------------------------------
September 30, December 31,
2003 2002
- -------------------------------------------- ------------- ------------

LIABILITIES & SHAREHOLDERS' EQUITY
---------------------------------
Current Liabilities
Accounts payable $ 61.9 $ 101.7
Accounts payable to affiliated companies 49.6 86.4
Accrued liabilities 108.5 119.9
Short-term borrowings 200.8 399.5
Current maturities of long-term debt - 39.8
Long-term debt subject to tender 10.0 26.6
- -------------------------------------------------------------------------------
Total current liabilities 430.8 773.9
- -------------------------------------------------------------------------------

Long-term Debt-Net of Current Maturities &
Debt Subject to Tender 1,091.5 954.2

Deferred Income Taxes & Other Liabilities
Deferred income taxes 215.1 195.5
Deferred credits & other liabilities 140.0 130.8
- -------------------------------------------------------------------------------
Total deferred credits & other liabilities 355.1 326.3
- -------------------------------------------------------------------------------
Minority Interest in Subsidiary 0.3 1.9

Commitments & Contingencies (Notes 9, 10 & 11)

Cumulative, Redeemable Preferred Stock of
a Subsidiary 0.2 0.3

Common Shareholders' Equity
Common stock (no par value) - issued &
outstanding 75.6 and 67.9, respectively 519.6 350.0
Retained earnings 539.8 530.4
Accumulated other comprehensive income (5.3) (10.5)
- -------------------------------------------------------------------------------
Total common shareholders' equity 1,054.1 869.9
- -------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 2,932.0 $ 2,926.5
===============================================================================


The accompanying notes are an integral part of these consolidated condensed
financial statements.






VECTREN CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited - In millions, except per share data)

- --------------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- --------------------
2003 2002 2003 2002
- ---------------------------------------- --------------------- --------------------
As Restated, As Restated,
See Note 3 See Note 3
---------- -----------

OPERATING REVENUES
Gas utility $ 115.7 $ 88.5 $ 790.3 $ 586.7
Electric utility 134.0 189.6 343.6 475.3
Energy services & other 29.1 26.2 90.8 252.8
- -------------------------------------------------------------------------------------
Total operating revenues 278.8 304.3 1,224.7 1,314.8
- -------------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas sold 72.0 45.7 541.4 357.7
Fuel for electric generation 24.9 22.8 66.3 59.7
Purchased electric energy 42.6 93.0 101.8 239.5
Cost of energy services & other 22.0 16.3 66.6 223.1
Other operating 57.2 54.8 179.4 168.4
Depreciation & amortization 32.9 30.4 96.7 88.1
Taxes other than income taxes 9.0 9.8 42.1 38.3
- -------------------------------------------------------------------------------------
Total operating expenses 260.6 272.8 1,094.3 1,174.8
- -------------------------------------------------------------------------------------
OPERATING INCOME 18.2 31.5 130.4 140.0
OTHER INCOME (EXPENSE)
Equity in earnings (losses) of
unconsolidated affiliates (2.3) 1.7 6.4 8.5
Other - net 8.4 3.7 6.2 9.0
- -------------------------------------------------------------------------------------
Total other income (expense) 6.1 5.4 12.6 17.5
- -------------------------------------------------------------------------------------
Interest expense 19.6 19.5 56.7 58.8
- -------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 4.7 17.4 86.3 98.7
- -------------------------------------------------------------------------------------
Income taxes (2.6) 3.6 19.2 27.0
Minority interest in & preferred dividend
requirements of subsidiaries - 0.3 - 0.1
- -------------------------------------------------------------------------------------
NET INCOME $ 7.3 $ 13.5 $ 67.1 $ 71.6
=====================================================================================
COMMON SHARES OUTSTANDING:
BASIC 71.6 67.6 69.0 67.6
DILUTED 71.9 67.8 69.3 67.8

EARNINGS PER SHARE OF COMMON STOCK:
BASIC $ 0.10 $ 0.20 $ 0.97 $ 1.06
DILUTED 0.10 0.20 0.97 1.06

DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $ 0.28 $ 0.27 $ 0.83 $ 0.80



The accompanying notes are an integral part of these consolidated condensed
financial statements.






VECTREN CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited - In millions)



- ----------------------------------------------------------------------------------
Nine Months Ended
September 30,
---------------------
2003 2002
- --------------------------------------------------------- ---------------------
As Restated,
See Note 3
-----------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 67.1 $ 71.6
Adjustments to reconcile net income to cash
from operating activities:
Depreciation & amortization 96.7 88.1
Deferred income taxes & investment tax credits 18.1 3.8
Equity in earnings of unconsolidated affiliates (6.4) (8.5)
Net unrealized (gain) loss on derivative instruments (0.4) 3.1
Pension and postretirement expense 10.5 9.9
Other non-cash charges- net 6.5 5.6
Changes in working capital accounts:
Accounts receivable & accrued unbilled revenue 129.8 94.4
Inventories 1.2 3.3
Recoverable fuel & natural gas costs (9.4) 29.5
Prepayments & other current assets (77.7) (11.3)
Accounts payable, including to affiliated
companies (76.6) (15.3)
Accrued liabilities (18.8) (0.1)
Changes in other noncurrent assets (2.2) (2.2)
Changes in other noncurrent liabilities (2.4) (8.8)
- ----------------------------------------------------------------------------------
Net cash flows from operating activities 136.0 263.1
- ----------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Long-term debt issuance - net of issue
costs & hedging proceeds 202.9 -
Common stock issuance- net of issue costs 163.2 -
Stock option exercises & other stock plans 5.2 1.1
Requirements for:
Retirement of long-term debt, including
premiums paid (121.9) (6.3)
Dividends on common stock (57.7) (53.7)
Redemption of preferred stock of subsidiary (0.1) (0.2)
Other financing activities (1.7) -
Net change in short-term borrowings (198.7) (63.7)
- ----------------------------------------------------------------------------------
Net cash flows from financing activities (8.8) (122.8)
- ----------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from:
Notes receivable & other collections 15.3 3.9
Unconsolidated affiliate distributions 13.5 5.3
Requirements for:
Capital expenditures, excluding AFUDC-equity (150.7) (150.2)
Unconsolidated affiliate investments (12.3) (7.5)
Notes receivable & other investments (6.4) (0.4)
- ----------------------------------------------------------------------------------
Net cash flows from investing activities (140.6) (148.9)
- ----------------------------------------------------------------------------------
Net decrease in cash & cash equivalents (13.4) (8.6)
Cash & cash equivalents at beginning of period 25.1 25.0
- ----------------------------------------------------------------------------------
Cash & cash equivalents at end of period $ 11.7 $ 16.4
==================================================================================


The accompanying notes are an integral part of these consolidated condensed
financial statements.





VECTREN CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

1. Organization and Nature of Operations

Vectren Corporation (the Company or Vectren), an Indiana corporation, is an
energy and applied technology holding company headquartered in Evansville,
Indiana. The Company 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" (APB 16).

The Company's wholly owned subsidiary, Vectren Utility Holdings, Inc. (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, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio
operations. VUHI also has other assets that provide information technology and
other services to the three utilities. 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.

Indiana Gas provides natural gas distribution and transportation services to a
diversified customer base in 49 of Indiana's 92 counties. SIGECO provides
electric generation, transmission, and distribution services to 8 counties in
southwestern Indiana, including counties surrounding Evansville, and
participates in the wholesale power market. SIGECO also provides natural gas
distribution and transportation services to 10 counties in southwestern Indiana,
including counties surrounding Evansville. The Ohio operations, owned as a
tenancy in common by Vectren Energy Delivery of Ohio, Inc.(VEDO), a wholly owned
subsidiary, (53 % ownership) and Indiana Gas (47 % ownership), provide natural
gas distribution and transportation services to 17 counties in west central
Ohio, including counties surrounding Dayton.

The Company is also involved in nonregulated activities in four primary business
areas: Energy Marketing and Services, Coal Mining, Utility Infrastructure
Services, and Broadband. Energy Marketing and Services markets natural gas and
provides energy management services, including energy performance contracting
services. Coal Mining mines and sells coal to the Company's utility operations
and to other parties and generates IRS Code Section 29 investment tax credits
relating to the production of coal-based synthetic fuels. Utility Infrastructure
Services provides underground construction and repair, facilities locating, and
meter reading services. Broadband invests in broadband communication services
such as analog and digital cable television, high-speed Internet and data
services, and advanced local and long distance phone services. In addition, the
nonregulated group has other businesses that provide utility services, municipal
broadband consulting, and retail products and services and that invest in
energy-related opportunities, real estate, and leveraged leases.

2. Basis of Presentation

The interim consolidated 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
note 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 consolidated
condensed financial statements and related notes should be read in conjunction
with the Company's audited annual consolidated financial statements for the year
ended December 31, 2002, filed on Form 10-K/A. 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 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 decreasing net income for
the three months ended September 30, 2002, by $0.5 million after tax, or $0.01
on a basic earnings per share basis, and for the nine months ended September 30,
2002 by $2.3 million after tax, or $0.03 on a basic earnings per share basis.

In the second quarter of 2002, the Company recorded $5.2 million ($3.2 million
after tax) of carrying costs for demand side management (DSM) programs pursuant
to existing IURC orders and based on an improved regulatory environment.
Subsequently, management determined that the accrual of such carrying costs was
more appropriate in periods prior to 2000 when DSM program expenditures were
made. Therefore, such carrying costs originally reflected in 2002 quarterly
results were reversed and reflected in common shareholders' equity as of January
1, 2000. The Company also identified other adjustments for various
reconciliation errors and other errors related primarily to the recording of
estimates. These adjustments were not significant, either individually or in the
aggregate, and decreased previously reported pre-tax and after tax earnings for
the three months ended September 30, 2002, by approximately $0.8 million and
$0.5 million, respectively, and increased previously reported pre-tax and after
tax earnings for the nine months ended September 30, 2002, by approximately $1.8
million and $0.9 million (including a $0.2 million tax adjustment),
respectively.

In addition, the Company reduced previously reported Energy services and other
revenues and Cost of energy services and other by $12.9 million for the nine
months ended September 30, 2002, reflecting the adoption of EITF Issue No. 99-19
"Reporting Revenue Gross as a Principal versus Net as an Agent."





Following is a summary of the effects of the restatement on previously reported
results of operations for the three months ended September 30, 2002.




In millions
- ------------------------------------------------------------------------------------
OPERATING REVENUES As reported Adjustments As Restated
----------- ----------- -----------

Gas utility $ 88.1 $ 0.4 $ 88.5
Electric utility 190.0 (0.4) 189.6
Energy services & other 26.4 (0.2) 26.2
- ------------------------------------------------------------------------------------
Total operating revenues 304.5 (0.2) 304.3
- ------------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas sold 45.7 - 45.7
Fuel for electric generation 22.9 (0.1) 22.8
Purchased electric energy 92.5 0.5 93.0
Cost of energy services & other 16.4 (0.1) 16.3
Other operating 54.3 0.5 54.8
Depreciation & amortization 30.4 - 30.4
Taxes other than income taxes 9.8 - 9.8
- ------------------------------------------------------------------------------------
Total operating expenses 272.0 0.8 272.8
- ------------------------------------------------------------------------------------
OPERATING INCOME 32.5 (1.0) 31.5
OTHER INCOME
Equity in earnings of unconsolidated
affiliates 1.7 - 1.7
Other - net 3.5 0.2 3.7
- ------------------------------------------------------------------------------------
Total other income 5.2 0.2 5.4
- ------------------------------------------------------------------------------------
Interest expense 19.5 - 19.5
- ------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 18.2 (0.8) 17.4
- ------------------------------------------------------------------------------------
Income taxes 3.9 (0.3) 3.6
Minority interest in and preferred dividends
requirement of subsidiaries 0.3 - 0.3
- ------------------------------------------------------------------------------------
NET INCOME $ 14.0 $ (0.5) 13.5
====================================================================================







Following is a summary of the effects of the restatement on previously reported
results of operations for the nine months ended September 30, 2002.



- ----------------------------------------------------------------------------------
In millions
- ----------------------------------------------------------------------------------
OPERATING REVENUES As reported Adjustments As Restated
----------- ----------- -----------

Gas utility $ 585.0 $ 1.7 $ 586.7
Electric utility 475.7 (0.4) 475.3
Energy services & other 265.9 (13.1) 252.8
- ----------------------------------------------------------------------------------
Total operating revenues 1,326.6 (11.8) 1,314.8
- ----------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas sold 357.6 0.1 357.7
Fuel for electric generation 59.7 - 59.7
Purchased electric energy 239.3 0.2 239.5
Cost of energy services & other 234.9 (11.8) 223.1
Other operating 168.3 0.1 168.4
Depreciation & amortization 88.2 (0.1) 88.1
Taxes other than income taxes 38.3 - 38.3
- ----------------------------------------------------------------------------------
Total operating expenses 1,186.3 (11.5) 1,174.8
- ----------------------------------------------------------------------------------
OPERATING INCOME 140.3 (0.3) 140.0
OTHER INCOME
Equity in earnings of unconsolidated
affiliates 7.8 0.7 8.5
Other - net 12.6 (3.6) 9.0
- ----------------------------------------------------------------------------------
Total other income 20.4 (2.9) 17.5
- ----------------------------------------------------------------------------------
Interest expense 58.6 0.2 58.8
- ----------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 102.1 (3.4) 98.7
- ----------------------------------------------------------------------------------
Income taxes 28.1 (1.1) 27.0
Minority interest in and preferred
dividends requirement of subsidiaries 0.1 - 0.1
- ----------------------------------------------------------------------------------
NET INCOME $ 73.9 $ (2.3) $ 71.6
==================================================================================



4. Stock-Based Compensation

The Company applies APB Opinion 25, "Accounting for Stock Issued to Employees"
(APB25) and related interpretations when measuring compensation expense for its
stock-based compensation plans.

Stock Option Plans
The exercise price of stock options awarded under the Company's stock option
plans is equal to the fair market value of the underlying common stock on the
date of grant. Accordingly, no compensation expense has been recognized for
stock option plans. In January 2003, 384,500 options to purchase shares of
common stock at an exercise price of $23.19 were issued to management. The grant
vests over three years.

Other Plans
In addition to its stock option plans, the Company also maintains restricted
stock and phantom stock plans for executives and non-employee directors. In
January 2003, 93,000 restricted shares with a fair value per share of $23.19
were issued to management. Those shares vest in 2006.

Compensation expense recognized in the consolidated financial statements
associated with these restricted stock and phantom stock plans for the three
months ended September 30, 2003 and 2002, was $1.5 million ($0.9 million after
tax) and income of $0.1 million ($0.1 million after tax), respectively, and for
the nine months ended September 30, 2003 and 2002, was $2.9 million ($1.7
million after tax) and $1.8 million ($1.1 million after tax), respectively. The
amount of expense is consistent with the amount of expense that would have been
recognized if the Company used the fair value based method described in SFAS No.
123 "Accounting for Stock Based Compensation" (SFAS 123), as amended, to value
these awards.

Pro forma Information
Following is the effect on net income and earnings per share as if the fair
value based method described in SFAS 123 had been applied to the Company's
stock-based compensation plans:




- --------------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
In millions, except per share amounts 2003 2002 2003 2002
- ------------------------------------------- ------------------- -------------------

Net Income:
As reported $ 7.3 $ 13.5 $ 67.1 $ 71.6
Add: Stock-based employee compensation
included in reported net income-
net of tax 0.9 (0.1) 1.7 1.1
Deduct: Total stock-based employee
compensation expense determined
under fair value based method
for all awards- net of tax 1.2 0.2 2.7 1.7
- --------------------------------------------------------------------------------------
Pro forma $ 7.0 $ 13.2 $ 66.1 $ 71.0
======================================================================================
Basic Earnings Per Share:
As reported $ 0.10 $ 0.20 $ 0.97 $ 1.06
Pro forma 0.10 0.20 0.96 1.05
Diluted Earnings Per Share:
As reported $ 0.10 $ 0.20 $ 0.97 $ 1.06
Pro forma 0.10 0.20 0.96 1.05



5. Comprehensive Income

Comprehensive income consists of the following:

Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
In millions 2003 2002 2003 2002
- ------------------------------- ------------------- -------------------
Net income $ 7.3 $ 13.5 $ 67.1 $ 71.6
Other comprehensive income
(loss) of unconsolidated
affiliates- net of tax 3.5 (5.0) 5.7 (5.2)
Minimum pension liability
& other - net of tax (0.5) (0.1) (0.1) (0.1)
- ---------------------------------------------------------------------------
Total comprehensive income $ 10.3 $ 8.4 $ 72.7 $ 66.3
===========================================================================

Other comprehensive income arising from unconsolidated affiliates is the
Company's portion of ProLiance Energy, LLC's and Reliant Services, LLC's
accumulated comprehensive income related to the use of cash flow hedges,
including commodity contracts and interest rate swaps, and the Company's portion
of Haddington Energy Partners, LP's accumulated comprehensive income related to
unrealized gains and losses on "available for sale securities."

At December 31, 2002, the Company incurred additional minimum pension
liabilities totaling $30.0 million which is included in deferred credits and
other liabilities. This liability is offset by intangible assets totaling $10.5
million, which is included in other noncurrent assets, and accumulated other
comprehensive income totaling $19.5 million ($11.6 million after tax).
Subsequent to September 30, 2003, the Company's actuary has calculated
preliminary estimates of the Company's minimum pension liability adjustment
expected at December 31, 2003. Based on this calculation, the Company expects an
increase in its minimum pension liability of $9.7 million and corresponding
reduction in equity of $5.8 million after tax.

6. Earnings Per Share

Basic earnings per share is computed by dividing net income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share assumes the conversion of stock options into
common shares and the lifting of restrictions on issued restricted shares using
the treasury stock method to the extent the effect would be dilutive. The
following table sets forth the computation of basic and diluted earnings per
share.




- ---------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(in millions except per share data) 2003 2002 2003 2002
- ---------------------------------------------- ------------------ -----------------

Numerator:
Numerator for basic and diluted EPS -
Net income $ 7.3 $ 13.5 $ 67.1 $ 71.6
=======================================================================================
Denominator:
Denominator for basic EPS - Weighted
average common shares outstanding 71.6 67.6 69.0 67.6
Conversion of stock options and lifting
of restrictions on issued restricted
stock 0.3 0.2 0.3 0.2
- ---------------------------------------------------------------------------------------
Denominator for diluted EPS - Adjusted
weighted average shares outstanding
and assumed conversions outstanding 71.9 67.8 69.3 67.8
=======================================================================================
Basic earnings per share $ 0.10 $ 0.20 $ 0.97 $ 1.06
Diluted earnings per share $ 0.10 $ 0.20 $ 0.97 $ 1.06


For the three months ended September 30, 2003 and 2002, options to purchase an
additional 110,663 and 87,963, respectively, shares of the Company's common
stock were outstanding, but were not included in the computation of diluted
earnings per share because their effect would be antidilutive. Exercise prices
for options excluded from the computation ranged from $23.35 to $25.59 in 2003
and from $24.05 to $25.59 in 2002.

For the nine months ended September 30, 2003 and 2002, options to purchase an
additional 530,663 and 22,274, respectively, shares of the Company's common
stock were outstanding, but were not included in the computation of diluted
earnings per share because their effect would be antidilutive. Exercise prices
for options excluded from the computation ranged from $23.19 to $25.59 in 2003
and from $24.90 to $25.59 in 2002.

7. 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 and Citizens Gas and
also began providing services to SIGECO and Vectren Retail, LLC (the Company's
retail gas marketer) in 2002. ProLiance's primary businesses include gas
marketing, gas portfolio optimization, and other portfolio and energy management
services. ProLiance's primary customers are utilities and other large end use
customers. Vectren's ownership percentage of ProLiance is 61%. Governance and
voting rights remain at 50% for each member. Since governance of ProLiance
remains equal between the members, Vectren continues to account for its
investment in ProLiance using the equity method of accounting.

Purchases from ProLiance for resale and for injections into storage for the
three months ended September 30, 2003 and 2002, totaled $154.1 million and $93.3
million, respectively, and for the nine months ended September 30, 2003 and
2002, totaled $589.0 million and $329.6 million, respectively. Amounts owed to
ProLiance at September 30, 2003 and December 31, 2002, for those purchases were
$49.0 million and $84.6 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.

8. Financing Transactions

Equity Issuance
In March 2003, the Company filed a registration statement with the Securities
and Exchange Commission with respect to a public offering of authorized but
previously unissued shares of common stock. In August 2003, the registration
became effective, and an agreement was reached to sell approximately 7.4 million
shares to a group of underwriters. The net proceeds totaled $163.2 million.

VUHI Debt Issuance
In July 2003, VUHI issued senior unsecured notes with an aggregate principal
amount of $200 million in two $100 million tranches. The first tranche are
10-year notes due August 2013, with an interest rate of 5.25% priced at 99.746%
to yield 5.28% to maturity (2013 Notes). The second tranche are 15-year notes
due August 2018 with an interest rate of 5.75% priced at 99.177% to yield 5.80%
to maturity (2018 Notes).

The notes are jointly and severally guaranteed by the Company's three public
utilities. In addition, they have no sinking fund requirements, and interest
payments are due semi-annually. The notes may be called by the Company, in whole
or in part, at any time for an amount equal to accrued and unpaid interest, plus
the greater of 100% of the principal amount or the sum of the present values of
the remaining scheduled payments of principal and interest, discounted to the
redemption date on a semi-annual basis at the Treasury Rate, as defined in the
indenture, plus 20 basis points for the 2013 Notes and 25 basis points for the
2018 Notes.

Shortly before these issues, the Company entered into several treasury locks
with a total notional amount of $150.0 million. Upon issuance of the debt, the
treasury locks were settled resulting in the receipt of $5.7 million in cash.
The value received is being amortized as a reduction of interest expense over
the life of the issues.

The net proceeds from the sale of the senior notes and settlement of related
hedging arrangements approximated $203 million.

SIGECO and Indiana Gas Debt Call
During 2003, the Company called two first mortgage bonds outstanding at SIGECO
and two senior unsecured notes outstanding at Indiana Gas. The first SIGECO bond
had a principal amount of $45.0 million, an interest rate of 7.60%, was
originally due in 2023, and was redeemed at 103.745% of its stated principal
amount. The second SIGECO bond had a principal amount of $20.0 million, an
interest rate of 7.625%, was originally due in 2025, and was redeemed at
103.763% of the stated principal amount.

The first Indiana Gas note had a remaining principal amount of $21.3 million, an
interest rate of 9.375%, was originally due in 2021, and was redeemed at
105.525% of the stated principal amount. The second Indiana Gas note had a
principal amount of $13.5 million, an interest rate of 6.75%, was originally due
in 2028, and was redeemed at the principal amount.

Pursuant to regulatory authority, the premiums paid to retire the net carrying
value of these notes totaling $3.6 million were deferred as a regulatory asset.

Other Financing Transactions
In January, 2003, other debt of Indiana Gas totaling $17.5 million and of SIGECO
totaling $1.0 million was retired.

9. Commitments & Contingencies

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 10 regarding
environmental matters.

United States Securities and Exchange Commission (SEC) Informal Inquiry
As more fully described in Note 3 to these consolidated condensed financial
statements and in Note 3 to the 2002 consolidated financial statements filed on
Form 10-K/A, the Company restated its consolidated financial statements for
2000, 2001, and 2002 quarterly results. The Company is cooperating with the SEC
in an informal inquiry with respect to this previously announced restatement,
has met with the staff of the SEC, and has provided information in response to
their requests.

IRS Section 29 Investment Tax Credit Recent Developments
Vectren's Coal Mining operations are comprised of Vectren Fuels, Inc. (Fuels),
which includes its coal mines and related operations and Vectren Synfuels, Inc.
(Synfuels). Synfuels holds one limited partnership unit (an 8.3% interest) in
Pace Carbon Synfuels Investors, LP (Pace Carbon), a Delaware limited partnership
formed to develop, own, and operate four projects to produce and sell coal-based
synthetic fuel utilizing Covol technology. Under Section 29 of the Internal
Revenue Code, manufacturers such as Pace Carbon, receive a tax credit for every
ton of synthetic fuel sold. To qualify for the credits, the synthetic fuel must
meet three primary conditions: 1) there must be a significant chemical change in
the coal feedstock, 2) the product must be sold to an unrelated person, and 3)
the production facility must have been placed in service before July 1, 1998.

In past rulings, the Internal Revenue Service (IRS) has concluded that the
synthetic fuel produced at the Pace Carbon facilities should qualify for Section
29 tax credits. The IRS issued a private letter ruling with respect to the four
projects on November 11, 1997, and subsequently issued an updated private letter
ruling on September 23, 2002.

As a partner in Pace Carbon, Vectren has reflected total tax credits under
Section 29 in its consolidated results through September 30, 2003, of
approximately $35 million. Vectren has been in a position to fully utilize the
credits generated and continues to project full utilization. In addition, Fuels
receives synfuel-related fees from synfuel producers unrelated to Pace Carbon
for a portion of its coal production.

In June 2003, the IRS, in an industry-wide announcement, stated that it would
review the scientific validity of test procedures and results presented as
evidence of significant chemical change. During this review, the IRS suspended
the issuance of new private letter rulings on that subject. In October 2003, the
IRS completed its review and determined that the test procedures and results
used by taxpayers are scientifically valid if the procedures are applied in a
consistent and unbiased manner. Also, the IRS will issue new private letter
rulings based on revised standards. The IRS stated it has continuing concerns
regarding the sampling and data/record retention practices prevalent in the
synthetic fuels industry. The IRS plans to issue guidance extending new
record/data retention requirements to taxpayers already holding private letter
rulings on the issue of significant chemical change.

During June 2001, the IRS began a tax audit of Pace Carbon for the 1998 tax year
and later expanded the audit to include tax years 1999, 2000, and 2001. Based on
conclusions reached in the industry-wide review and recently issued private
letter rulings involving other other synthetic fuel facilities, Vectren believes
chemical change issues from these audits may soon be resolved. However, the IRS
has not directly notified Pace Carbon of any resolution.

Vectren believes that it is justified in its reliance on the private letter
rulings for the Pace Carbon facilities, that the test results that Pace Carbon
presented to the IRS in connection with its private letter rulings are
scientifically valid, and that Pace Carbon has operated its facilities in
compliance with its private letter rulings and Section 29 of the Internal
Revenue Code. However, at this time, Vectren cannot provide any assurance as to
the outcome of these audits concerning the issue of chemical change or any other
issue raised during the audits relative to its investment in Pace Carbon.

Guarantees and Product Warranties
Vectren Corporation issues guarantees to third parties on behalf of its
unconsolidated affiliates. Such guarantees allow those affiliates to execute
transactions on more favorable terms than the affiliate could obtain without
such a guarantee. Guarantees may include posted letters of credit, leasing
guarantees, and performance guarantees. As of September 30, 2003, guarantees
issued and outstanding on behalf of unconsolidated affiliates approximated $6
million. The Company has also issued a guarantee approximating $4 million
related to the residual value of an operating lease that expires in 2006.

Vectren Corporation has accrued no liabilities for these guarantees as they
relate to guarantees issued among related parties or were executed prior to the
adoption of FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others" (FIN 45). As more fully described in Note 12, FIN 45 was adopted
prospectively and specifically excludes from its recognition and measurement
provisions guarantees issued among related parties.

Through September 30, 2003, the Company has not been called upon to satisfy any
obligations pursuant to its guarantees. Liabilities accrued for, and activity
related to, product warranties are not significant.

10. 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.

The IURC has issued orders that approve:
o the Company's project to achieve environmental compliance by investing in
clean coal technology;
o a total capital cost investment for this project up to $244 million
(excluding AFUDC), subject to periodic review of the actual costs incurred;
o a mechanism whereby, prior to an electric base rate case, the Company may
recover through a rider that is updated every six months an 8 percent
return on its capital costs for the project; and
o ongoing recovery of operating costs, including depreciation and purchased
emission allowances through a rider mechanism, related to the clean coal
technology once the facility is in service.

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 is consistent with amounts approved in the IURC's
orders and is expected to be expended during the 2001-2006 period. Through
September 30, 2003, $117.1 million has been expended. After the equipment is
installed and operational, related annual operating expenses, including
depreciation expense, are estimated to be between $24 million and $27 million. A
portion of those expenses began in October 2003 when the Culley SCR became
operational. The 8 percent return on capital investment approximates the return
authorized in the Company's last electric rate case in 1995 and includes a
return on equity.

The Company expects to achieve timely compliance as a result of the project.
Construction of the first SCR at Culley was placed into service in October 2003,
and construction of the Warrick 4 and Brown SCR's 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 was filed in the U.S. District Court for the
Southern District of Indiana. The USEPA alleged 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 alleged that the modifications to the
Culley Generating Station required SIGECO to begin complying with federal new
source performance standards at its Culley Unit 3. The USEPA also issued an
administrative notice of violation to SIGECO making the same allegations, but
alleging that violations began in 1977.

On June 6, 2003, SIGECO, the Department of Justice (DOJ), and the USEPA
announced an agreement that would resolve the lawsuit. The agreement was
embodied in a consent decree filed in U.S. District Court for the Southern
District of Indiana. The mandatory public comment period has expired, and no
comments were received. The Court entered the consent decree on August 13, 2003.

Under the terms of the agreement, the DOJ and USEPA have agreed to drop all
challenges of past maintenance and repair activities at the Culley coal-fired
units. In reaching the agreement, SIGECO did not admit to any allegations
alleged in the government's complaint, and SIGECO continues to believe that it
acted in accordance with applicable regulations and conducted only routine
maintenance on the units. SIGECO has entered into this agreement to further its
continued commitment to improve air quality and avoid the cost and uncertainties
of litigation.

Under the agreement, SIGECO has committed to:
o either repower Culley Unit 1 (50 MW) with natural gas, which would
significantly reduce air emissions from this unit, and equip it with SCR
control technology for further reduction of nitrogen oxides, or cease
operation of the unit by December 2006;
o operate the existing SCR control technology recently installed on Culley
Unit 3 (287 MW) year round at a lower emission rate than that currently
required under the NOx SIP Call, resulting in further nitrogen oxide
reductions;
o enhance the efficiency of the existing scrubber at Culley Units 2 and 3 for
additional removal of sulphur dioxide emissions;
o install a baghouse for further particulate matter reductions at Culley Unit
3 by June 2007;
o conduct a Sulphuric Acid Reduction Demonstration Project as an
environmental mitigation project designed to demonstrate an advance in
pollution control technology for the reduction of sulfate emissions; and
o pay a $600,000 civil penalty.

The Company anticipates that the settlement would result in total capital
expenditures through 2007 in a range between $16 million and $28 million. Other
than the $600,000 civil penalty, which was accrued in the second quarter of
2003, the implementation of the settlement, including these capital expenditures
and related operating expenses, are expected to be recovered through rates.

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 the past, Indiana Gas and others operated facilities for the manufacture of
gas. Given the availability of natural gas transported by pipelines, these
facilities have not been operated for many years. Under currently applicable
environmental laws and regulations, Indiana Gas and others may now be required
to take remedial action if certain byproducts are found above the regulatory
thresholds at these sites.

Indiana Gas has identified the existence, location, and certain general
characteristics of 26 gas manufacturing and storage sites for which it may have
some remedial responsibility. Indiana Gas has completed a remedial
investigation/feasibility study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and the IDEM, and a Record of Decision was issued by
the IDEM in January 2000. Although Indiana Gas has not begun an RI/FS at
additional sites, Indiana Gas has submitted several of the sites to the IDEM's
Voluntary Remediation Program and is currently conducting some level of remedial
activities including groundwater monitoring at certain sites where deemed
appropriate and will continue remedial activities at the sites as appropriate
and necessary.

In conjunction with data compiled by environmental consultants, Indiana Gas has
accrued the estimated costs for further investigation, remediation, groundwater
monitoring, and related costs for the sites. While the total costs that may be
incurred in connection with addressing these sites cannot be determined at this
time, Indiana Gas has recorded costs that it reasonably expects to incur
totaling approximately $20.4 million.

The estimated accrued costs are limited to Indiana Gas' proportionate share of
the remediation efforts. Indiana Gas has arrangements in place for 19 of the 26
sites with other potentially responsible parties (PRP), which serve to limit
Indiana Gas' share of response costs at these 19 sites to between 20% and 50%.

With respect to insurance coverage, Indiana Gas has received and recorded
settlements from all known insurance carriers in an aggregate amount
approximating $20.4 million.

Environmental matters related to manufactured gas plants have had no material
impact on earnings since costs recorded to date approximate PRP and insurance
settlement recoveries. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with activities at these sites, it is
possible that future events may require some level of additional remedial
activities which are not presently foreseen.

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 (VRP). 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 been initiated by the
Company to confirm that the sites continue to pose no such risk.

On October 6, 2003, SIGECO filed applications to enter four of the manufactured
gas plant sites in IDEM's VRP. The remaining site is currently being addressed
in the VRP by another Indiana utility. SIGECO is adding its four sites into the
renewal of the global Voluntary Remediation Agreement that Indiana Gas has in
place with IDEM for its manufactured gas plant sites. At this time the Company
is unable to predict any outcome that may result from these SIGECO manufactured
gas plant sites.

11. Rate and Regulatory Matters

The following is an update on two regulatory matters in Ohio. Each of the
discussed matters is currently pending before the PUCO.

The first matter relates to a pending application made to the PUCO by VEDO,
together with other regulated Ohio gas utilities, for authority to establish a
tariff mechanism to recover expenses related to uncollectible accounts. As
proposed the tariff mechanism would establish an automatic adjustment procedure
to track and recover these costs instead of providing the recovery of the
historic amount in base rates. If the application is approved before the end of
the year, 2003 uncollectible costs in excess of the amount in base rates should
be recovered. While the Company believes there is a sound basis for the PUCO to
grant the application to recover actual expenses relating to uncollectible
accounts, no assurance can be provided with respect to the ultimate outcome of
this proceeding.

The second matter related to the requirement that Ohio gas utilities undergo a
biannual audit of their gas acquisition practices in connection with the gas
cost recovery (GCR) mechanism. In the case of VEDO, the two-year period began in
November 2000, coincident with the Company's acquisition and commencement of
service in Ohio. The audit provides the initial review of the portfolio
administration arrangement between VEDO and ProLiance. The external auditor
retained by the PUCO staff recently submitted an audit report wherein it
recommended a disallowance of approximately $7 million of previously recovered
gas costs. The Company believes a large portion of the third party auditor
recommendations is without merit. There are two elements of the recommendations
relating to the treatment of a pipeline refund and a penalty for which a reserve
of $0.7 million has been established for the Company's estimated share of a
potential disallowance of these costs. For this PUCO audit period, a
disallowance relating to our ProLiance arrangement will be shared by the
Company's joint venture partner. Currently the matter is set for a hearing
before the PUCO in mid November. VEDO has and continues to engage in efforts
with the participants in the proceeding to resolve disputed issues outside of
administrative litigation. If the external auditor recommendations were adopted
by the PUCO, the Company believes that it would not likely have a material
effect on the Company's results or financial condition. However, the Company can
provide no assurance as to the ultimate outcome of this proceeding.

12. 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.

In accordance with regulatory treatment, the Company collects an estimated net
cost of removal of its utility plant in rates through normal depreciation. As of
September 30, 2003 and December 31, 2002, such removal costs approximated $395
million and $385 million, respectively, of accumulated depreciation as presented
in the condensed consolidated 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. The guidance is to be applied
prospectively. The adoption did not have a material effect on the Company's
financial statements.

SFAS 150
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" (SFAS 150).
SFAS 150 requires issuers to classify as liabilities the following three types
of freestanding financial instruments: mandatorily redeemable financial
instruments; obligations to repurchase the issuer's equity shares by
transferring assets; and certain obligations to issue a variable number of
shares. SFAS 150 is effective immediately for all financial instruments entered
into or modified after May 31, 2003. For all other instruments, SFAS 150 applies
to the Company's third quarter of 2003. The Company has approximately $200,000
of outstanding preferred stock of a subsidiary that is redeemable on terms
outside the Company's control. However, the preferred stock is not redeemable on
a specified or determinable date or upon an event that is certain to occur.
Therefore, SFAS 150's adoption did not affect the Company's results of
operations or financial condition.

FIN 45
In November 2002, the FASB issued 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 fair value of the obligations it has undertaken.
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. The incremental disclosure
requirements are included in these financial statements in Note 9.

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 (VIE) and significantly changes the
consolidation requirements for those entities. FIN 46 is intended to achieve
more consistent application of consolidation policies related to VIE's and, thus
improves comparability between enterprises engaged in similar activities when
those activities are conducted through VIE's. FIN 46 currently applies to VIE's
created after January 31, 2003, and to VIE's in which an enterprise obtains an
interest after that date. For entities created prior to January 31, 2003, FIN 46
is to be adopted on December 31, 2003.

The Company has neither created nor obtained an interest in a VIE since January
31, 2003. Certain other entities that the Company was involved with prior to
that date, including limited partnership investments that operate affordable
housing projects, are still being evaluated to determine if the entity is a VIE
and, if so, if Vectren is the primary beneficiary. If these entities are
determined to be VIE's and Vectren is determined to be the primary beneficiary,
the effect on the Company's financial statements would not be material.

EITF 03-11
The EITF has recently released guidance on when gross or net presentation on the
income statement for derivative instruments not held for trading purposes is
appropriate. The guidance is effective for the Company's fourth quarter, and the
Company is currently determining the impacts, if any, that will result from
implementing that guidance.

13. Segment Reporting

The Company has four operating segments: 1) Gas Utility Services, (2) Electric
Utility Services, (3) Nonregulated Operations, and (4) Corporate and Other. The
Gas Utility Services segment provides natural gas distribution and
transportation services in nearly two-thirds of Indiana and west central Ohio.
The Electric Utility Services segment includes the operations of SIGECO's
electric transmission and distribution services, which provides electricity
primarily to southwestern Indiana, and SIGECO's power generating and power
marketing operations. The Company collectively refers to its gas and electric
utility services segments as its Regulated Operations. Segments within the
Regulated Operations use operating income as a measure of profitability.

The Nonregulated Operations segment is comprised of various subsidiaries and
affiliates offering and investing in energy marketing and services, coal mining,
utility infrastructure services, and broadband communications among other
energy-related opportunities. The Corporate and Other segment, among other
activities, provides general and administrative support and assets, including
computer hardware and software, to the Company's other operating segments. The
Nonregulated Operations and Corporate and Other segments use net income as a
measure of profitability. The Company makes decisions on finance and dividends
at the corporate level.

Following is information regarding the Company's segments' operating data.




Three Months Nine Months
Ended September 30, Ended September 30,
------------------- --------------------
In millions 2003 2002 2003 2002
- ----------------------------------- ------------------- --------------------

Operating Revenues
Gas Utility Services $ 115.7 $ 88.5 $ 790.3 $ 586.7
Electric Utility Services 134.0 189.6 343.6 475.3
- ------------------------------------------------------------------------------------
Total Regulated 249.7 278.1 1,133.9 1,062.0
- ------------------------------------------------------------------------------------
Nonregulated Operations 50.2 44.2 151.1 300.7
Corporate & Other 6.9 4.9 20.6 16.3
Intersegment Eliminations (28.0) (22.9) (80.9) (64.2)
- ------------------------------------------------------------------------------------
Total operating revenues $ 278.8 $ 304.3 $1,224.7 $1,314.8
====================================================================================
Measure of Profitability
Operating Income
Gas Utility Services $ (14.9) $ (11.2) $ 54.6 $ 55.6
Electric Utility Services 32.4 39.8 71.6 74.6
- ------------------------------------------------------------------------------------
Total Regulated operating income 17.5 28.6 126.2 130.2
- ------------------------------------------------------------------------------------
Regulated other income (expense)-net (1.1) 0.7 (2.1) 4.9
Regulated interest expense (15.7) (15.4) (46.6) (47.0)
Regulated income taxes 0.7 (5.1) (30.2) (31.0)
- ------------------------------------------------------------------------------------
Regulated net income 1.4 8.8 47.3 57.1
- ------------------------------------------------------------------------------------
Nonregulated net income 5.7 5.8 17.6 14.6
Corporate & other net income (loss) 0.2 (1.1) 2.2 (0.1)
- ------------------------------------------------------------------------------------
Net income $ 7.3 $ 13.5 $ 67.1 $ 71.6
====================================================================================



Following is the Company's segments' identifiable assets.

September 30, December 31,
In millions 2003 2002
- ------------------------------------ --------------------------------
Identifiable Assets
Gas Utility Services $ 1,486.9 $ 1,570.1
Electric Utility Services 896.5 869.2
- --------------------------------------------------------------------------
Total Regulated 2,383.4 2,439.3
- --------------------------------------------------------------------------
Nonregulated Operations 426.5 419.6
Corporate & Other 376.9 393.3
Intersegment Eliminations (254.8) (325.7)
- --------------------------------------------------------------------------
Total identifiable assets $ 2,932.0 $ 2,926.5
==========================================================================




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

Description of the Business

Vectren Corporation (the Company or Vectren), an Indiana corporation, is an
energy and applied technology holding company headquartered in Evansville,
Indiana. The Company 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" (APB 16).

The Company's wholly owned subsidiary, Vectren Utility Holdings, Inc. (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, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio
operations. VUHI also has other assets that provide information technology and
other services to the three utilities. 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.

Indiana Gas provides natural gas distribution and transportation services to a
diversified customer base in 49 of Indiana's 92 counties. SIGECO provides
electric generation, transmission, and distribution services to 8 counties in
southwestern Indiana, including counties surrounding Evansville, and
participates in the wholesale power market. SIGECO also provides natural gas
distribution and transportation services to 10 counties in southwestern Indiana,
including counties surrounding Evansville. The Ohio operations, owned as a
tenancy in common by Vectren Energy Delivery of Ohio, Inc.(VEDO), a wholly owned
subsidiary, (53 % ownership) and Indiana Gas (47 % ownership), provide natural
gas distribution and transportation services to 17 counties in west central
Ohio, including counties surrounding Dayton.

The Company is also involved in nonregulated activities in four primary business
areas: Energy Marketing and Services, Coal Mining, Utility Infrastructure
Services, and Broadband. Energy Marketing and Services markets natural gas and
provides energy management services, including energy performance contracting
services. Coal Mining mines and sells coal to the Company's utility operations
and to other parties and generates IRS Code Section 29 investment tax credits
relating to the production of coal-based synthetic fuels. Utility Infrastructure
Services provides underground construction and repair, facilities locating, and
meter reading services. Broadband invests in broadband communication services
such as analog and digital cable television, high-speed Internet and data
services, and advanced local and long distance phone services. In addition, the
nonregulated group has other businesses that provide utility services, municipal
broadband consulting, and retail products and services and that invest in
energy-related opportunities, real estate, and leveraged leases.



Consolidated Results of Operations

The following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated 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 decreasing net income for
the three and nine months ended September 30, 2002, by $0.5 million after tax
and $2.3 million after tax, respectively. Note 3 to the consolidated condensed
financial statements includes a summary of the effects of the restatement. The
Company's results of operations give effect to the restatement.



- ----------------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------ ---------------------
In millions, except per share amounts 2003 2002 2003 2002
- -------------------------------------- ------------------------ ---------------------
As Restated As Restated
----------- -----------

Net income $ 7.3 $ 13.5 $ 67.1 $ 71.6
Attributed to:
Utility Group $ 2.4 $ 9.0 $ 51.1 $ 59.7
Nonregulated Group 5.7 5.8 17.6 14.6
Corporate & Other Group (0.8) (1.3) (1.6) (2.7)
- ----------------------------------------------------------------------------------------
Basic earnings per share $ 0.10 $ 0.20 $ 0.97 $ 1.06
Attributed to:
Utility Group $ 0.03 $ 0.13 $ 0.74 $ 0.88
Nonregulated Group 0.08 0.09 0.26 0.22
Corporate & Other Group (0.01) (0.02) (0.03) (0.04)



Net Income

For the three months ended September 30, 2003, net income was $7.3 million, or
$0.10 per share, compared to net income of $13.5 million, or $0.20 per share,
for the same period last year. For the nine months ended September 30, 2003,
reported earnings were $67.1 million, or $0.97 per share, compared to $71.6
million, or $1.06 per share, for the same period in 2002. The 2003 third quarter
and year-to-date results declined $0.10 per share and $0.09 per share,
respectively, reflecting principally a decrease in Utility Group earnings.

Quarter over quarter, Utility Group earnings were primarily affected by a
decrease in electric margin of $7.3 million ($4.3 million after-tax), or $0.06
per share. This was attributable to milder cooling weather, which reduced margin
an estimated $3.6 million pre-tax, or $0.03 per share, the effects of the slowly
recovering economy, and slightly lower wholesale power margins. The remaining
Utility Group decrease for the quarter was due to higher depreciation and the
timing of operating expenses. Year-to-date, the timing of operating expenses and
higher depreciation have been offset somewhat by increased power marketing
margins and favorable weather.

Quarterly and year-to-date, Nonregulated Group earnings remained consistent due
primarily to increased synfuel-related earnings and earnings recorded on the
sale of the Company's investment in Genscape, Inc. (Genscape), a company that
provides real-time power plant and transmission line status information using
wireless technology.

In the first and second quarters of 2003, the Company incurred charges related
to a Utility Group investment in BABB International, Inc. (BABB), an entity that
processes fly ash into building materials and a Nonregulated Group investment in
First Mile Technologies (First Mile), a small broadband entity located in
Indianapolis, Indiana. Total charges affecting year-to-date results, net of the
current quarter gain recognized on the sale of Genscape, were $1.5 million ($0.9
million after tax) or $0.01 per share.

In addition to the above, the Company finalized an equity offering of
approximately 7.4 million shares during the third quarter. The offering netted
proceeds of approximately $163 million and has reduced earnings per share as
compared to the previous year by approximately $0.01 per share for the quarter
and $0.02 year to date.

Dividends

Dividends declared for the three months ended September 30, 2003, were $0.275
per share compared to $0.265 per share for the same period in 2002. Dividends
declared for the nine months ended September 30, 2003, were $0.825 per share
compared to $0.795 per share for the same period in 2002. In October 2003, the
Company's board of directors increased its quarterly dividend to $0.285 per
share from $0.275 per share.

Detailed Discussion of Results of Operations

Following is a more detailed discussion of the results of operations of the
Company's Utility Group and Nonregulated Group. The detailed results of
operations for the Utility Group and Nonregulated Group are presented and
analyzed before the reclassification and elimination of certain intersegment
transactions necessary to consolidate those results into the Company's
Consolidated Condensed Statements of Income. The operations of the Corporate and
Other Group are not significant.



Results of Operations of the Utility Group

The Utility Group is comprised of Vectren Utility Holdings, Inc.'s operations,
which consist of the Company's regulated operations (the Gas Utility Services
and Electric Utility Services operating segments), and components of the
Corporate and Other operating segment. Gas Utility Services provides natural gas
distribution and transportation services in nearly two-thirds of Indiana and
west central Ohio. Electric Utility Services provides electricity primarily to
southwestern Indiana, and includes the Company's power generating and marketing
operations. Corporate and Other Operations provides information technology and
other support services to those utility operations. The results of operations of
the Utility Group before certain intersegment eliminations and reclassifications
for the three and nine months ended September 30, 2003 and 2002, follow.

- -----------------------------------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
In millions, ------------------- --------------------
except per share amounts 2003 2002 2003 2002
- -------------------------------- ------------------- --------------------
OPERATING REVENUES
Gas revenues $ 115.7 $ 88.5 $ 790.3 $ 586.7
Electric revenues 134.0 189.6 343.6 475.3
Other revenues 0.2 - 0.6 0.2
- -----------------------------------------------------------------------------
Total operating revenues 249.9 278.1 1,134.5 1,062.2
- -----------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas 72.0 45.7 541.4 358.3
Fuel for electric generation 24.9 22.8 66.3 59.7
Purchased electric energy 42.6 93.0 101.8 239.5
Other operating 51.4 49.0 161.9 149.1
Depreciation & amortization 30.4 27.8 88.8 80.9
Taxes other than income taxes 9.2 9.5 41.8 37.6
- -----------------------------------------------------------------------------
Total operating expenses 230.5 247.8 1,002.0 925.1
- -----------------------------------------------------------------------------
OPERATING INCOME 19.4 30.3 132.5 137.1
OTHER INCOME (EXPENSE) - NET
Equity in losses of
unconsolidated affiliates (0.1) (0.4) (0.5) (0.9)
Other - net 2.3 0.7 1.0 6.5
- -----------------------------------------------------------------------------
Total other income (expense)
- net 2.2 0.3 0.5 5.6
- -----------------------------------------------------------------------------
Interest expense 17.1 16.9 49.5 51.8
- -----------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 4.5 13.7 83.5 90.9
- -----------------------------------------------------------------------------
Income taxes 2.1 4.7 32.4 31.2
- -----------------------------------------------------------------------------
NET INCOME $ 2.4 $ 9.0 $ 51.1 $ 59.7
=============================================================================

BASIC EARNINGS PER SHARE $ 0.03 $ 0.13 $ 0.74 $ 0.88
=============================================================================

Utility Group earnings for the third quarter 2003 were $2.4 million as compared
to $9.0 million for the same quarter last year, a decrease of $6.6 million. As
noted previously, the primary contributors to the decline are mild electric
cooling weather, a slowly recovering economy, and the timing of certain
operating costs.

Utility Group earnings for the nine months ended September 30, 2003, were $51.1
million as compared to $59.7 million for the same period in 2002, a decrease of
$8.6 million. Earnings in 2003 were primarily driven by weather that on the year
was favorably impacted by an estimated $3.6 million after tax compared to last
year and increased wholesale power and other margins, offset by the BABB
investment write-off of $2.3 million after tax and the timing of certain
operating costs.

Significant Fluctuations

Utility Margin

Gas Utility Margin
Gas utility margin by customer type and separated between volumes sold and
transported follows:

- ------------------------------------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
In millions 2003 2002 2003 2002
- -------------------------------- --------------------- --------------------

Residential $ 26.7 $ 26.8 $ 159.2 $ 146.6
Commercial 7.2 7.6 50.3 47.5
Contract 9.7 7.8 33.6 32.2
Other 0.1 0.5 5.8 2.1
- ------------------------------------------------------------------------------
Total gas utility margin $ 43.7 $ 42.7 $ 248.9 $ 228.4
==============================================================================

Volumes in MMDth
- ------------------------------
Sold 7.3 7.2 85.8 74.9
Transported 17.8 19.3 63.6 65.4
- ------------------------------------------------------------------------------
Total throughput 25.1 26.5 149.4 140.3
==============================================================================

Gas margins for the third quarter, a non-heating, base load usage quarter, were
$43.7 million, an increase of 2% compared to the prior year period. While margin
was generally flat and reflects a $0.7 million charge associated with a PUCO GCR
audit proceeding in 2003, residential and commercial usage increased slightly,
offset by declining industrial usage due to the slow economic conditions.

Gas margins year-to-date were $248.9 million, an increase of $20.5 million over
the nine months ended September 30, 2002. It is estimated that weather, 19%
colder than the prior year and 8% colder than normal, contributed $12.6 million
to the increased margin. The remaining $7.9 million increase is primarily
attributable to higher utility receipts and excise taxes on higher gas costs and
volumes sold and recovery of Ohio customer choice implementation costs,
partially offset by the negative effect of high gas prices on customer usage.
The colder weather is the primary reason for the 6% increase in throughput.

Higher gas costs and a slowly recovering economy have impacted customer usage.
The average cost per dekatherm of gas purchased for the three months ended
September 30, 2003, was $6.22 compared to $3.95 in 2002. Year-to-date the cost
of gas purchased in 2003 was $6.44 compared to $4.39 in the prior year.





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 Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
In millions 2003 2002 2003 2002
- --------------------------------- ------------------- -------------------
Retail & firm wholesale $ 63.7 $ 70.0 $ 160.5 $ 169.2
Non-firm wholesale 2.8 3.8 15.0 6.9
- -------------------------------------------------------------------------------
Total electric utility margin $ 66.5 $ 73.8 $ 175.5 $ 176.1
===============================================================================
Non-firm wholesale margin:
Realized margin $ 3.3 $ 4.0 $ 14.6 $ 10.0
Mark-to-market gains (losses) (0.5) (0.2) 0.4 (3.1)


Electric margins were $66.5 million, a decrease of $7.3 million compared to the
third quarter of 2002. The decrease in electric margin was due primarily to the
effect of milder cooling weather which was 7% cooler than normal and 26% cooler
than last year. The estimated quarter over quarter decrease as a result of the
milder weather was approximately $3.6 million. Impacts of the slowly recovering
economy on industrial sales and slightly lower non-firm wholesale power margins
further decreased non-weather related electric margin compared to the prior
year. As a result primarily of mild weather, volumes sold to retail and firm
wholesale customers decreased 8% from 1.87 GWh in 2002 to 1.72 GWh in 2003.

Electric margins were $175.5 million, a decrease of $0.6 million over the nine
months ended September 30, 2002. The decrease was primarily due to lower retail
sales due to milder cooling weather and the current quarter decrease in
industrial sales. As a result primarily of the mild weather which was 18% cooler
than normal and 33% cooler than last year, volumes sold to retail and firm
wholesale customers decreased 5% from 4.76 GWh in 2002 to 4.53 GWh in 2003 with
an estimated margin decrease of $6.5 million. The decrease was partially offset
by increased non-firm wholesale power margins resulting from price volatility.

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. For the three months ended September 30, 2003, volumes
sold into the wholesale market were 1.01 GWh compared to 2.66 GWh in 2002 while
volumes purchased were 1.01 GWh in 2003 compared to 2.65 GWh in 2002. For the
nine months ended September 30, 2003, volumes sold into the wholesale market
were 3.04 GWh compared to 8.30 GWh in 2002 while volumes purchased were 3.49 GWh
in 2003 compared to 8.14 GWh in 2002. A portion of volumes purchased in the
wholesale market is used to serve retail and firm wholesale customers, and in
2003, greater amounts of purchased power have been required for native load due
to scheduled outages, which has reduced capacity available for optimization.
Additionally, both sold and purchased power were lower in 2003 due to a shorter
term focus in hedging and optimization strategies combined with a more selective
approach to counter-party relationships. While volumes both sold and purchased
in the wholesale market have decreased during 2003, which has resulted in
decreased electric revenues and purchased power, margins year-to-date have
increased primarily from price volatility. In the third quarter, margins
decreased because less capacity was available for optimization due to outages
for NOx control equipment installation and the wholesale power market was less
volatile.

Utility Group Operating Expenses

Other Operating
For the three and nine months ended September 30, 2003, other operating expenses
increased $2.4 million and $12.8 million, respectively, compared to the same
periods in the prior year. The increased expenses were principally due to the
timing of routine expenditures between the periods and increased employee
benefit costs. Year-to-date, the timing of maintenance expenditures, Ohio
customer choice program implementation costs that are recovered through margins,
and increased uncollectible accounts expense have also contributed to the
increase. Year-to-date uncollectible accounts expense has increased $1.7 million
compared to the prior year due principally to higher gas costs.

Depreciation & Amortization
For the three and nine months ended September 30, 2003, depreciation and
amortization increased $2.6 million and $7.9 million, respectively, due to
additions to utility plant. Increased depreciation expense reflects a full nine
months of depreciation on the addition of over $100 million of utility plant
placed into service including a new gas-fired peaker unit, expenditures for
implementing a choice program for Ohio gas customers, customer system upgrades,
and other upgrades to existing transmission and distribution facilities.

Taxes Other Than Income Taxes
For the nine months ended September 30, 2003, taxes other than income taxes
increased $4.2 million compared to the prior year. The increase results from
higher utility receipts and excise taxes as a result of higher gas prices and
more volumes sold. The higher utility receipts and excise taxes on gas volumes
sold are recovered dollar-for-dollar through customer billings.

Utility Group Other Income (Expense)-Net

For the three and nine months ended September 30, 2003, other income
(expense)-net increased $1.9 million and decreased $5.1 million, respectively,
compared to the prior year. The year-to-date decrease is primarily the result of
the write-off of the BABB investment totaling $3.9 million. The remaining
decrease results principally from sales of emission allowances and other assets
in the second quarter of 2002 totaling $1.8 million and current year
contributions of $1.2 million made to low income heating assistance programs
pursuant to a settlement previously approved by the IURC regarding transactions
with ProLiance Energy LLC. These decreases were offset somewhat by the current
quarter increase in other income (expense)-net which was principally the result
of fluctuations in investments used to fund deferred compensation plans.

Utility Group Interest Expense

For the three and nine months ended September 30, 2003, interest expense
increased $0.2 million and decreased $2.3 million, respectively, when compared
to the same periods last year. The changes reflect the impact of the permanent
financing completed in the third quarter of 2003 and lower short-term borrowing
rates.

Utility Group Income Tax

For the three months ended September 30, 2003, federal and state income taxes
decreased $2.6 million primarily due to fluctuations in pre-tax income. For the
nine months ended September 30, 2003, income taxes increased $1.2 million when
compared to 2002. The year-to-date change is primarily due to an increased
effective tax rate, offset by less pre-tax income. Year to date, the effective
tax rate increased from 34.3% in 2002 to 38.8% 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.

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.

The IURC has issued orders that approve:
o the Company's project to achieve environmental compliance by investing in
clean coal technology;
o a total capital cost investment for this project up to $244 million
(excluding AFUDC), subject to periodic review of the actual costs incurred;
o a mechanism whereby, prior to an electric base rate case, the Company may
recover through a rider that is updated every six months an 8 percent
return on its capital costs for the project; and
o ongoing recovery of operating costs, including depreciation and purchased
emission allowances through a rider mechanism, related to the clean coal
technology once the facility is placed into service.

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 is consistent with amounts approved in the IURC's
orders and is expected to be expended during the 2001-2006 period. Through
September 30, 2003, $117.1 million has been expended. After the equipment is
installed and operational, related annual operating expenses, including
depreciation expense, are estimated to be between $24 million and $27 million. A
portion of those expenses began in October 2003 when the Culley SCR became
operational. The 8 percent return on capital investment approximates the return
authorized in the Company's last electric rate case in 1995 and includes a
return on equity.

The Company expects to achieve timely compliance as a result of the project.
Construction of the first SCR at Culley was placed into service in October 2003,
and construction of the Warrick 4 and Brown SCR's 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 was filed in the U.S. District Court for the
Southern District of Indiana. The USEPA alleged 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 alleged that the modifications to the
Culley Generating Station required SIGECO to begin complying with federal new
source performance standards at its Culley Unit 3. The USEPA also issued an
administrative notice of violation to SIGECO making the same allegations, but
alleging that violations began in 1977.

On June 6, 2003, SIGECO, the Department of Justice (DOJ), and the USEPA
announced an agreement that would resolve the lawsuit. The agreement was
embodied in a consent decree filed in U.S. District Court for the Southern
District of Indiana. The mandatory public comment period has expired, and no
comments were received. The Court entered the consent decree on August 13, 2003.

Under the terms of the agreement, the DOJ and USEPA have agreed to drop all
challenges of past maintenance and repair activities at the Culley coal-fired
units. In reaching the agreement, SIGECO did not admit to any allegations
alleged in the government's complaint, and SIGECO continues to believe that it
acted in accordance with applicable regulations and conducted only routine
maintenance on the units. SIGECO has entered into this agreement to further its
continued commitment to improve air quality and avoid the cost and uncertainties
of litigation.

Under the agreement, SIGECO has committed to:
o either repower Culley Unit 1 (50 MW) with natural gas, which would
significantly reduce air emissions from this unit, and equip it with SCR
control technology for further reduction of nitrogen oxides, or cease
operation of the unit by December of 2006;
o operate the existing SCR control technology recently installed on Culley
Unit 3 (287 MW) year round at a lower emission rate than that currently
required under the NOx SIP Call, resulting in further nitrogen oxide
reductions;
o enhance the efficiency of the existing scrubber at Culley Units 2 and 3 for
additional removal of sulphur dioxide emissions;
o install a baghouse for further particulate matter reductions at Culley Unit
3 by June of 2007;
o conduct a Sulphuric Acid Reduction Demonstration Project as an
environmental mitigation project designed to demonstrate an advance in
pollution control technology for the reduction of sulfate emissions; and
o pay a $600,000 civil penalty.

The Company anticipates that the settlement would result in total capital
expenditures through 2007 in a range between $16 million and $28 million. Other
than the $600,000 civil penalty, which was accrued in the second quarter of
2003, the implementation of the settlement, including these capital expenditures
and related operating expenses, are expected to be recovered through rates.

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 the past, Indiana Gas and others operated facilities for the manufacture of
gas. Given the availability of natural gas transported by pipelines, these
facilities have not been operated for many years. Under currently applicable
environmental laws and regulations, Indiana Gas and others may now be required
to take remedial action if certain byproducts are found above the regulatory
thresholds at these sites.

Indiana Gas has identified the existence, location, and certain general
characteristics of 26 gas manufacturing and storage sites for which it may have
some remedial responsibility. Indiana Gas has completed a remedial
investigation/feasibility study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and the IDEM, and a Record of Decision was issued by
the IDEM in January 2000. Although Indiana Gas has not begun an RI/FS at
additional sites, Indiana Gas has submitted several of the sites to the IDEM's
Voluntary Remediation Program and is currently conducting some level of remedial
activities including groundwater monitoring at certain sites where deemed
appropriate and will continue remedial activities at the sites as appropriate
and necessary.

In conjunction with data compiled by environmental consultants, Indiana Gas has
accrued the estimated costs for further investigation, remediation, groundwater
monitoring, and related costs for the sites. While the total costs that may be
incurred in connection with addressing these sites cannot be determined at this
time, Indiana Gas has recorded costs that it reasonably expects to incur
totaling approximately $20.4 million.

The estimated accrued costs are limited to Indiana Gas' proportionate share of
the remediation efforts. Indiana Gas has arrangements in place for 19 of the 26
sites with other potentially responsible parties (PRP), which serve to limit
Indiana Gas' share of response costs at these 19 sites to between 20% and 50%.

With respect to insurance coverage, Indiana Gas has received and recorded
settlements from all known insurance carriers in an aggregate amount
approximating $20.4 million.

Environmental matters related to manufactured gas plants have had no material
impact on earnings since costs recorded to date approximate PRP and insurance
settlement recoveries. While Indiana Gas has recorded all costs which it
presently expects to incur in connection with activities at these sites, it is
possible that future events may require some level of additional remedial
activities which are not presently foreseen.

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 (VRP). 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 been initiated by the
Company to confirm that the sites continue to pose no such risk.

On October 6, 2003, SIGECO filed applications to enter four of the manufactured
gas plant sites in IDEM's VRP. The remaining site is currently being addressed
in the VRP by another Indiana utility. SIGECO is adding its four sites into the
renewal of the global Voluntary Remediation Agreement that Indiana Gas has in
place with IDEM for its manufactured gas plant sites. At this time the Company
is unable to predict any outcome that may result from these SIGECO manufactured
gas plant sites.

Rate and Regulatory Matters

The following is an update on two regulatory matters in Ohio. Each of the
discussed matters is currently pending before the PUCO.

The first matter relates to a pending application made to the PUCO by VEDO,
together with other regulated Ohio gas utilities, for authority to establish a
tariff mechanism to recover expenses related to uncollectible accounts. As
proposed the tariff mechanism would establish an automatic adjustment procedure
to track and recover these costs instead of providing the recovery of the
historic amount in base rates. If the application is approved before the end of
the year, 2003 uncollectible costs in excess of the amount in base rates should
be recovered. While the Company believes there is a sound basis for the PUCO to
grant the application to recover actual expenses relating to uncollectible
accounts, no assurance can be provided with respect to the ultimate outcome of
this proceeding.

The second matter related to the requirement that Ohio gas utilities undergo a
biannual audit of their gas acquisition practices in connection with the gas
cost recovery (GCR) mechanism. In the case of VEDO, the two-year period began in
November 2000, coincident with the Company's acquisition and commencement of
service in Ohio. The audit provides the initial review of the portfolio
administration arrangement between VEDO and ProLiance. The external auditor
retained by the PUCO staff recently submitted an audit report wherein it
recommended a disallowance of approximately $7 million of previously recovered
gas costs. The Company believes a large portion of the third party auditor
recommendations is without merit. There are two elements of the recommendations
relating to the treatment of a pipeline refund and a penalty for which a reserve
of $0.7 million has been established for the Company's estimated share of a
potential disallowance of these costs. For this PUCO audit period, a
disallowance relating to our ProLiance arrangement will be shared by the
Company's joint venture partner. Currently the matter is set for a hearing
before the PUCO in mid November. VEDO has and continues to engage in efforts
with the participants in the proceeding to resolve disputed issues outside of
administrative litigation. If the external auditor recommendations were adopted
by the PUCO, the Company believes that it would not likely have a material
effect on the Company's results or financial condition. However, the Company can
provide no assurance as to the ultimate outcome of this proceeding.




Results of Operations of the Nonregulated Group

The Nonregulated Group is comprised of four primary business areas: Energy
Marketing and Services, Coal Mining, Utility Infrastructure Services, and
Broadband. Energy Marketing and Services markets natural gas and provides energy
management services, including energy performance contracting services. Coal
Mining mines and sells coal to the Company's utility operations and to other
parties and generates IRS Code Section 29 investment tax credits relating to the
production of coal-based synthetic fuels. Utility Infrastructure Services
provides underground construction and repair, facilities locating, and meter
reading services. Broadband invests in broadband communication services such as
analog and digital cable television, high-speed Internet and data services, and
advanced local and long distance phone services. In addition, the Nonregulated
Group has other businesses that provide utility services, municipal broadband
consulting, and retail products and services and that invest in energy-related
opportunities, real estate, and leveraged leases. The results of operations of
the Nonregulated Group before certain intersegment eliminations and
reclassifications for the three and nine months ended September 30, 2003 and
2002, follow:

- -----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
In millions, September 30, September 30,
----------------- ------------------
except per share amounts 2003 2002 2003 2002
- --------------------------------- ----------------- ------------------

Energy services & other revenues $ 50.2 $ 44.2 $ 151.1 $ 300.7

Operating expenses:
Cost of energy services
& other revenues 42.4 33.6 125.3 268.7
Operating expenses 8.8 8.2 27.2 26.6
- -----------------------------------------------------------------------------
Total expenses 51.2 41.8 152.5 295.3
- -----------------------------------------------------------------------------
OPERATING INCOME (LOSS) (1.0) 2.4 (1.4) 5.4

Other income (expense):
Equity in earnings (losses) of
unconsolidated affiliates (2.2) 2.1 6.9 9.4
Other - net 6.9 3.8 6.9 4.3
- -----------------------------------------------------------------------------
Total other income (expense) 4.7 5.9 13.8 13.7
- -----------------------------------------------------------------------------
Interest expense 2.5 2.2 7.3 6.7
- -----------------------------------------------------------------------------
INCOME BEFORE TAXES 1.2 6.1 5.1 12.4
Income taxes (4.5) - (12.6) (2.3)
Minority interest in consolidated
subsidiaries - 0.3 0.1 0.1
- -----------------------------------------------------------------------------
NET INCOME $ 5.7 $ 5.8 $ 17.6 $ 14.6
=============================================================================

BASIC EARNINGS PER SHARE $ 0.08 $ 0.09 $ 0.26 $ 0.22
=============================================================================
NET INCOME ATTRIBUTED TO:
Energy Marketing & Services $ 4.0 $ 2.9 $ 14.5 $ 11.1
Coal Mining 3.0 4.0 10.2 8.9
Utility Infrastructure 0.2 0.1 (1.0) (0.4)
Broadband - 0.1 (1.1) 0.3
Other Businesses (1.5) (1.3) (5.0) (5.3)

Nonregulated earnings for both the three and nine months ended September 30,
2003, were positively impacted by the third quarter sale of the Company's
investment in Genscape and increased synfuel-related fees, somewhat offset by
decreased earnings from coal mining and gas marketing operations. Year-to-date
results also include the loss on disposal of the First Mile investment.

Energy Marketing & Services

Energy Marketing & Services is comprised of the Company's gas marketing and
performance contracting operations and held the Company's investment in
Genscape, which was sold in the third quarter.

Gas marketing operations are performed through the Company's investment in
ProLiance, a nonregulated energy marketing affiliate of Vectren and Citizens Gas
and Coke Utility (Citizens Gas). ProLiance provides natural gas and related
services to Indiana Gas, the Ohio operations, and Citizens Gas and also began
providing services to SIGECO and Vectren Retail, LLC (the Company's retail gas
marketer) in 2002. ProLiance's primary businesses include gas marketing, gas
portfolio optimization, and other portfolio and energy management services.
ProLiance's primary customers are utilities and other large end use customers.

In June 2002, the integration of Vectren's wholly owned gas marketing
subsidiary, SIGCORP Energy Services, LLC (SES), with ProLiance was completed.
SES provided natural gas and related services to SIGECO and others prior to the
integration. In exchange for the contribution of SES' net assets, Vectren's
allocable share of ProLiance's profits and losses increased from 52.5% to 61%,
consistent with Vectren's new ownership percentage. Governance and voting rights
remain at 50% for each member. Since governance of ProLiance remains equal
between the members, Vectren continues to account for its investment in
ProLiance using the equity method of accounting.

Prior to June 1, 2002, SES' operating results were consolidated. Subsequent to
June 1, 2002, SES' operating results, now part of ProLiance, are reflected in
equity in earnings of unconsolidated affiliates. SES' revenues and expenses were
the primary component of nonregulated revenues and cost of revenues. Therefore,
the integration significantly decreased revenues, cost of revenues, and
operating expenses. For the nine months ended September 30, 2003, revenues, cost
of revenues, and operating expenses decreased $186.3 million, $178.7 million,
and $4.1 million, respectively, compared to 2002. The transfer of net assets was
accounted for at book value consistent with joint venture accounting and did not
result in any gain or loss.

For the Company's portion of ProLiance's operations, $1.1 million and $4.2
million, respectively, is included in equity in earnings of unconsolidated
affiliates for the three months ended September 30, 2003 and 2002. For the nine
months ended September 30, 2003 and 2002, such amounts included in equity in
earnings of unconsolidated affiliates are $18.0 million and $15.0 million,
respectively.

For the quarter and year-to-date, gas marketing's contribution decreased $1.9
million and $0.8 million, respectively, compared to the prior year periods
primarily due to nonrecurring charges related to settlement disputes and the
timing of pipeline discounts.

Energy Systems Group, LLC (ESG) provides energy performance contracting and
facility upgrades through its design and installation of energy-efficient
equipment. Prior to April 2003, ESG was a consolidated venture between the
Company and Citizens Gas with the Company owning two-thirds. In April 2003, the
Company purchased the remaining interest in ESG for approximately $4 million.
For the three and nine months ended September 30, 2003, earnings from ESG were
$0.8 million and $1.4 million, respectively, compared to earnings for the
quarter of $0.4 million and $0.1 million for the year-to-date period in 2002.
The $0.4 million increase for the quarter and $1.3 million increase year to date
are due primarily to success in obtaining higher margins and working from a
higher construction backlog at the end of 2002. ESG's results also reflect 100%
Vectren ownership during the quarter versus two-thirds Vectren ownership in
2002. For the quarter, ESG produced operating income of approximately $1.4
million on sales of $14.7 million compared to operating income of $1.1 million
on sales of $13.6 million in the prior year. And for the nine months ended
September 30, 2003, ESG produced operating income of approximately $2.5 million
on sales of $35.9 million compared to operating income of $0.6 million on sales
of $27.0 million in the prior year.

In the third quarter of 2003, the Company sold its investment in Genscape for
$5.3 million in proceeds ($4.1 million in cash and a $1.2 million note) to GFI
Energy Ventures, LLC. Prior to the sale, the Company had reduced its investment
using equity method accounting to reflect restructuring activities coincident to
the sale such that the gain recognized in other-net approximated the total
proceeds received. Net income, including the gain on sale, equity method losses,
and related tax effects generated from the investment in Genscape totaled $2.6
million for both the three and nine months ended September 30, 2003, compared to
a loss of $0.1 million for the quarter and a loss of $0.3 million for the
year-to-date period in 2002.

Coal Mining

The Coal Mining Group mines and sells coal to the Company's utility operations
and to other third parties through its wholly owned subsidiary Vectren Fuels,
Inc. (Fuels). The Coal Mining Group also generates IRS Code Section 29
investment tax credits relating to the production of coal-based synthetic fuels
through its 8.3% ownership interest in Pace Carbon Synfuels, LP (Pace Carbon).
Pace Carbon is a Delaware limited partnership formed to develop, own, and
operate four projects to produce and sell coal-based synthetic fuel (synfuel)
utilizing Covol technology. Vectren accounts for is investment in Pace Carbon
using the equity method. In addition, Fuels receives synfuel-related fees from
synfuel producers unrelated to Pace Carbon for a portion of its coal production.

For the three months ended September 30, 2003, earnings from Fuels were $0.2
million, compared to earnings of $2.6 million in 2002. For the nine months ended
September 30, 2003, earnings from Fuels were $2.6 million, compared to earnings
of $5.4 million in 2002. During both the quarter and year-to-date periods, net
income and operating income decreased as a result of decreased yields due to
poor mining conditions and increased depreciation of mine development costs,
offset by increased synfuel-related fees. For the quarter, Fuels produced
operating income of approximately $0.5 million on sales of $29.4 million
compared to operating income of $3.9 million on sales of $27.9 million in the
prior year. And for the nine months ended September 30, 2003, Fuels produced
operating income of approximately $4.4 million on sales of $86.2 million
compared to operating income of $9.1 million on sales of $79.3 million in the
prior year. Mining conditions are expected to improve in the fourth quarter, and
rate increases for a portion of the sales to SIGECO are expected in 2004.

For the three months ended September 30, 2003 and 2002, the investment in Pace
Carbon resulted in losses reflected in equity in earnings of unconsolidated
affiliates of $2.9 million and $2.1 million, respectively. For the nine months
ended September 30, 2003 and 2002, the investment in Pace Carbon resulted in
losses reflected in equity in earnings of unconsolidated affiliates of $9.3
million and $5.4 million, respectively. Losses have increased as a result of
increased production of synthetic fuels and resulting higher production costs.
The production of synfuel generates IRS Code Section 29 investment tax credits
that are reflected in income taxes. These credits have also increased consistent
with increased synfuel production. Net income, including the equity method
losses, tax benefits, and tax credits, generated from the investment in Pace
Carbon totaled $2.8 million and $1.4 million, respectively, for the three months
ended September 30, 2003 and 2002, and totaled $7.6 million and $3.5 million,
respectively, for the nine months ended September 30, 2003 and 2002.

For the three months ended September 30, 2003 and 2002, total synfuel-related
results, which reflect earnings from the investment in Pace Carbon and Fuels'
synfuel-related fees, were $3.6 million and $2.0 million, respectively. For the
nine months ended September 30, 2003 and 2002, synfuel-related results were
$10.2 million and $5.0 million, respectively.

IRS Section 29 Investment Tax Credit Recent Developments

Under Section 29 of the Internal Revenue Code, manufacturers such as Pace
Carbon, receive a tax credit for every ton of synthetic fuel sold. To qualify
for the credits, the synthetic fuel must meet three primary conditions: 1) there
must be a significant chemical change in the coal feedstock, 2) the product must
be sold to an unrelated person, and 3) the production facility must have been
placed in service before July 1, 1998.

In past rulings, the Internal Revenue Service (IRS) has concluded that the
synthetic fuel produced at the Pace Carbon facilities should qualify for Section
29 tax credits. The IRS issued a private letter ruling with respect to the four
projects on November 11, 1997, and subsequently issued an updated private letter
ruling on September 23, 2002.

As a partner in Pace Carbon, Vectren has reflected total tax credits under
Section 29 in its consolidated results through September 30, 2003, of
approximately $35 million. Vectren has been in a position to fully utilize the
credits generated and continues to project full utilization.

In June 2003, the IRS, in an industry-wide announcement, stated that it would
review the scientific validity of test procedures and results presented as
evidence of significant chemical change. During this review, the IRS suspended
the issuance of new private letter rulings on that subject. In October 2003, the
IRS completed its review and determined that the test procedures and results
used by taxpayers are scientifically valid if the procedures are applied in a
consistent and unbiased manner. Also, the IRS will issue new private letter
rulings based on revised standards. The IRS stated it has continuing concerns
regarding the sampling and data/record retention practices prevalent in the
synthetic fuels industry. The IRS plans to issue guidance extending new
record/data retention requirements to taxpayers already holding private letter
rulings on the issue of significant chemical change.

During June 2001, the IRS began a tax audit of Pace Carbon for the 1998 tax year
and later expanded the audit to include tax years 1999, 2000, and 2001. Based on
conclusions reached in the industry-wide review and recently issued private
letter rulings involving other synthetic fuel facilities, Vectren believes
chemical change issues from these audits may soon be resolved. However, the IRS
has not directly notified Pace Carbon of any resolution.

Vectren believes that it is justified in its reliance on the private letter
rulings for the Pace Carbon facilities, that the test results that Pace Carbon
presented to the IRS in connection with its private letter rulings are
scientifically valid, and that Pace Carbon has operated its facilities in
compliance with its private letter rulings and Section 29 of the Internal
Revenue Code. However, at this time, Vectren cannot provide any assurance as to
the outcome of these audits concerning the issue of chemical change or any other
issue raised during the audits relative to its investment in Pace Carbon.

Utility Infrastructure Services

Utility Infrastructure Services provides underground construction and repair of
utility infrastructure services to the Company and to other gas, water,
electric, and telecommunications companies as well as facilities locating and
meter reading services through its investment in Reliant Services, LLC
(Reliant). Reliant is a 50% owned strategic alliance with an affiliate of
Cinergy Corp. and is accounted for using the equity method of accounting.
Reliant's losses have increased in 2003 primarily due to cutbacks of underground
construction and repair projects from gas distribution utility customers, which
began in the later part of 2002. In the current quarter, Reliant returned to
profitability due to an increase in construction and repair projects as
utilities are beginning to return to historical expenditure levels.

Broadband

Broadband invests in broadband communication services such as cable television,
high-speed Internet, and advanced local and long distance phone services. The
Company has an approximate 1% equity interest and a convertible subordinated
debt investment in Utilicom Networks, LLC (Utilicom) that if converted bring the
Company's ownership interest up to 12%. Utilicom is a provider of bundled
communication services focusing on last mile delivery to residential and
commercial customers. The Company also has an 18.9% equity interest in SIGECOM
Holdings, Inc. (Holdings), which was formed by Utilicom to hold interests in
SIGECOM, LLC (SIGECOM). SIGECOM provides broadband services to the greater
Evansville, Indiana area.

The equity investments in Utilicom and Holdings are accounted for using the cost
method of accounting. As a result, for the three and nine months ended September
30, 2003 and 2002, these investments had no significant impact on the Company's
operating results.

Utilicom also plans to provide broadband services to the greater Indianapolis,
Indiana, and Dayton, Ohio, markets. However, the funding of these projects has
been delayed due to the continued difficult environment within the
telecommunication capital markets, which has prevented Utilicom from obtaining
debt financing on terms it considers acceptable. While the existing investors
remain interested in the Indianapolis and Dayton projects, the Company is not
required to make further investments and does not intend to proceed unless
commitments are obtained to fully fund these projects. Franchising agreements
have been extended in both locations.

In addition to its Utilicom-related investment, the Company also had an
investment in First Mile, a small broadband entity located in Indianapolis,
Indiana. During the nine months ended September 30, 2003, the Company disposed
of its First Mile investment at a loss recorded in other-net totaling $2.0
million ($1.2 after tax).

Other Businesses

The Other Businesses Group includes a variety of wholly owned operations and
investments. The significant activities that affected the nonregulated results
of operations during the three and nine months ended September 30, 2003 compared
to 2002 are the wholly owned operations of Vectren Retail, LLC (Vectren Retail)
and Vectren Communication Services, Inc. (VCS), and the Company's investment in
CIGMA, LLC (CIGMA).

Vectren Retail provides natural gas and other related products and services
primarily in Ohio, serving customers opting for choice among energy providers.
Vectren Retail began operations in 2001 and continues to incur startup costs.
During the three and nine months ended September 30, 2003, these start up costs
have increased operating expenses approximately $0.7 million and $2.5 million,
respectively, compared to the same periods in 2002. For the three months ended
September 30, 2003, Vectren Retail incurred an operating loss of approximately
$1.5 million on sales of $4.5 million compared to an operating loss of $0.9
million on sales of $0.8 million in the prior year. For the nine months ended
September 30, 2003, Vectren Retail incurred an operating loss of approximately
$3.0 million on sales of $25.1 million compared to an operating loss of $2.7
million on sales of $2.9 million in the prior year. To date, these operations
have operated at a planned loss, consistent with expectations. The net loss for
the quarter was $1.0 million in 2003 and $0.6 million in 2002. Year to date, the
net loss was $2.0 million in 2003 and $1.7 million in 2002. Losses during
non-heating periods are expected due to the seasonal nature of Vectren Retail's
operations.

VCS is a wholly owned broadband consulting company. For the three and nine
months ended September 30, 2003, operating income contributed by VCS increased
$0.2 million and $1.0 million, respectively, when compared to the prior year.
The increase is primarily due to charges incurred in 2002 related to the
settlement of construction contracts and the reorganization of its operations,
allowing it to focus on consulting services. For the three months ended
September 30, 2003 and 2002, net loss incurred by VCS was $0.4 million and $0.5
million, respectively. For the nine months ended September 30, 2003 and 2002,
net loss incurred by VCS was $1.4 million and $2.2 million, respectively.

In the third quarter 2003, the Company sold its investment in CIGMA, LLC
(CIGMA), a joint venture between the Company and a subsidiary of Citizens Gas.
In that transaction, substantially all of CIGMA's assets were sold to McJunkin
Corporation. CIGMA had been engaged in utility materials management for the
Company's utility subsidiaries, Citizens Gas & Coke Utility, and others. As a
result of the transaction, the Company realized a small after-tax gain, and
year-to-date has received cash distributions from CIGMA of $4.9 million.

United States Securities and Exchange Commission (SEC) Informal Inquiry

As more fully described in Note 3 to these consolidated condensed financial
statements and in Note 3 to the 2002 consolidated financial statements filed on
Form 10-K/A, the Company restated its consolidated financial statements for
2000, 2001, and 2002 quarterly results. The Company is cooperating with the SEC
in an informal inquiry with respect to this previously announced restatement,
has met with the staff of the SEC, and has provided information in response to
their requests.

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.

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. The guidance is to be applied
prospectively. The adoption did not have a material effect on the Company's
financial statements.

SFAS 150

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" (SFAS 150).
SFAS 150 requires issuers to classify as liabilities the following three types
of freestanding financial instruments: mandatorily redeemable financial
instruments; obligations to repurchase the issuer's equity shares by
transferring assets; and certain obligations to issue a variable number of
shares. SFAS 150 is effective immediately for all financial instruments entered
into or modified after May 31, 2003. For all other instruments, SFAS 150 applies
to the Company's third quarter of 2003. The Company has approximately $200,000
of outstanding preferred stock of a subsidiary that is redeemable on terms
outside the Company's control. However, the preferred stock is not redeemable on
a specified or determinable date or upon an event that is certain to occur.
Therefore, SFAS 150's adoption did not affect the Company's results of
operations or financial condition.

FASB Interpretation (FIN) 45

In November 2002, the FASB issued 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 fair value of the obligations it has undertaken.
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. The incremental disclosure
requirements are included in these financial statements in Note 9.

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 (VIE) and significantly changes the
consolidation requirements for those entities. FIN 46 is intended to achieve
more consistent application of consolidation policies related to VIE's and, thus
improves comparability between enterprises engaged in similar activities when
those activities are conducted through VIE's. FIN 46 currently applies to VIE's
created after January 31, 2003, and to VIE's in which an enterprise obtains an
interest after that date. For entities created prior to January 31, 2003, FIN 46
is to be adopted on December 31, 2003.

The Company has neither created nor obtained an interest in a VIE since January
31, 2003. Certain other entities that the Company was involved with prior to
that date, including limited partnership investments that operate affordable
housing projects, are still being evaluated to determine if the entity is a VIE
and, if so, if Vectren is the primary beneficiary. If these entities are
determined to be VIE's and Vectren is determined to be the primary beneficiary,
the effect to the Company's financial statements would not be material.

EITF 03-11

The EITF has recently released guidance on when gross or net presentation on the
income statement for derivative instruments not held for trading purposes is
appropriate. The guidance is effective for the Company's fourth quarter, and the
Company is currently determining the impacts, if any, that will result from
implementing that guidance.




Financial Condition

Within Vectren's consolidated group, VUHI funds short-term and long-term
financing needs of the utility group operations, and Vectren Capital Corp
(Vectren Capital) funds short-term and long-term financing needs of the
nonregulated and corporate operations. Vectren Corporation guarantees Vectren
Capital's debt, but does not guarantee VUHI's debt. Vectren Capital's long-term
and short-term obligations outstanding at September 30, 2003, totaled $113.0
million and $55.3 million, respectively. VUHI's outstanding long-term and
short-term borrowing arrangements are jointly and severally guaranteed by
Indiana Gas, SIGECO, and VEDO. VUHI's long-term and short-term obligations
outstanding at September 30, 2003, totaled $547.5 million and $142.5 million,
respectively. Additionally, prior to VUHI's formation, Indiana Gas and SIGECO
funded their operations separately, and therefore, have long-term debt
outstanding funded solely by their operations.

The Company's common stock dividends are primarily funded by utility operations.
Nonregulated operations have demonstrated sustained profitability, and the
ability to generate cash flows. These cash flows are used to fund a portion of
the Company's dividends, are reinvested in other nonregulated ventures and from
time to time may be reinvested in utility operations or used for corporate
expenses.

VUHI's and Indiana Gas' credit ratings on outstanding senior unsecured debt at
September 30, 2003, are A-/Baa1 as rated by Standard and Poor's Ratings Services
(Standard and Poor's) and Moody's Investors Service (Moody's), respectively.
SIGECO's credit ratings on outstanding senior unsecured debt are BBB+/Baa1.
SIGECO's credit ratings on outstanding secured debt are A-/A3. VUHI's commercial
paper has a credit rating of A-2/P-2. Vectren Capital's senior unsecured debt is
rated BBB+/Baa2. Moody's current outlook is stable while Standard and Poor's
current outlook is negative. The ratings of Moody's and Standard and Poor's are
categorized as investment grade and are unchanged from December 31, 2002. In
July 2003, Standard and Poor's reaffirmed its ratings, and Moody's reaffirmed
its ratings on VUHI's senior unsecured debt. A security rating is not a
recommendation to buy, sell, or hold securities. The rating is subject to
revision or withdrawal at any time, and each rating should be evaluated
independently of any other rating. Standard and Poor's and Moody's lowest level
investment grade rating is BBB- and Baa3, respectively.

The Company's consolidated equity capitalization objective is 45-55% of total
capitalization. This objective may have varied, and will vary, depending on
particular business opportunities, capital spending requirements, and seasonal
factors that affect the Company's operation. The Company's equity component was
49% and 46% of total capitalization, including current maturities of long-term
debt and long-term debt subject to tender, at September 30, 2003, and December
31, 2002, respectively.

The Company expects the majority of its capital expenditures, investments, and
debt security redemptions to be provided by internally generated funds. However,
due to significant capital expenditures for NOx compliance equipment at SIGECO
and to further strengthen the Company's capital structure and the capital
structures of VUHI and its utility subsidiaries, the Company has completed
certain financing transactions as more fully described below.

Sources & Uses of Liquidity

Operating Cash Flow

The Company's primary and historical source of liquidity to fund working capital
requirements has been cash generated from operations, which for the nine months
ended September 30, 2003 and 2002, was $136.0 million and $263.1 million,
respectively. The decrease of $127.1 million is primarily the result of
favorable changes in working capital accounts occurring in 2002 due to a return
to lower gas prices in that year and higher gas prices in the current year,
offset by increased earnings before non-cash charges in 2003.

Financing Cash Flow

Although working capital requirements are generally funded by cash flow from
operations, the Company uses short-term borrowings to supplement working capital
needs when accounts receivable balances are at their highest and gas storage is
refilled. Additionally, short-term borrowings are required for capital projects
and investments until they are permanently financed.

Cash flow required for financing activities of $8.8 million for the nine months
ended September 30, 2003, includes the effects of the permanent financing
executed during the third quarter in which approximately $366 million in equity,
debt, and hedging net proceeds were received and used to retire higher coupon
long-term debt and other short term borrowings. In 2002, higher operating cash
flow was used to repay short-term borrowings. Common stock dividends have
increased in 2003 compared to 2002.

Financing Transactions

Equity Issuance
In March 2003, the Company filed a registration statement with the Securities
and Exchange Commission with respect to a public offering of authorized but
previously unissued shares of common stock. In August 2003, the registration
became effective, and an agreement was reached to sell approximately 7.4 million
shares to a group of underwriters. The net proceeds totaled $163.2 million and
were utilized entirely by VUHI and VUHI's subsidiaries to repay short-term
borrowings and to retire long-term debt with higher interest rates.

VUHI Debt Issuance
In July 2003, VUHI issued senior unsecured notes with an aggregate principal
amount of $200 million in two $100 million tranches. The first tranche are
10-year notes due August 2013, with an interest rate of 5.25% priced at 99.746%
to yield 5.28% to maturity (2013 Notes). The second tranche are 15-year notes
due August 2018 with an interest rate of 5.75% priced at 99.177% to yield 5.80%
to maturity (2018 Notes).

The notes are jointly and severally guaranteed by the Company's three public
utilities. In addition, they have no sinking fund requirements, and interest
payments are due semi-annually. The notes may be called by the Company, in whole
or in part, at any time for an amount equal to accrued and unpaid interest, plus
the greater of 100% of the principal amount or the sum of the present values of
the remaining scheduled payments of principal and interest, discounted to the
redemption date on a semi-annual basis at the Treasury Rate, as defined in the
indenture, plus 20 basis points for the 2013 Notes and 25 basis points for the
2018 Notes.

Shortly before these issues, the Company entered into several treasury locks
with a total notional amount of $150.0 million. Upon issuance of the debt, the
treasury locks were settled resulting in the receipt of $5.7 million in cash.
The value received is being amortized as a reduction of interest expense over
the life of the issues.

The net proceeds from the sale of the senior notes and settlement of related
hedging arrangements approximated $203 million and was used to repay short-term
borrowing and to retire long-term debt with higher interest rates.

SIGECO and Indiana Gas Debt Call
During 2003, the Company called two first mortgage bonds outstanding at SIGECO
and two senior unsecured notes outstanding at Indiana Gas. The first SIGECO bond
had a principal amount of $45.0 million, an interest rate of 7.60%, was
originally due in 2023, and was redeemed at 103.745% of its stated principal
amount. The second SIGECO bond had a principal amount of $20.0 million, an
interest rate of 7.625%, was originally due in 2025, and was redeemed at
103.763% of the stated principal amount.

The first Indiana Gas note had a remaining principal amount of $21.3 million, an
interest rate of 9.375%, was originally due in 2021, and was redeemed at
105.525% of the stated principal amount. The second Indiana Gas note had a
principal amount of $13.5 million, an interest rate of 6.75%, was originally due
in 2028, and was redeemed at the principal amount.

Pursuant to regulatory authority, the premiums paid to retire these notes
totaling $3.6 million were deferred as a regulatory asset.

Other Financing Transactions
In January, 2003, other debt of Indiana Gas totaling $17.5 million and of SIGECO
totaling $1.0 million was retired.

At December 31, 2002, the Company had $26.6 million of adjustable rate senior
unsecured bonds which could, at the election of the bondholder, be tendered to
the Company when interest rates are reset. Such bonds were classified as
long-term debt subject to tender. During the second quarter, the Company
re-marketed those bonds on a long-term basis and has therefore reclassified them
as long-term debt at September 30, 2003.

Investing Cash Flow

Cash required for investing activities of $140.6 million for the nine months
ended September 30, 2003, includes $150.7 million of requirements for capital
expenditures. Investing activities for 2002 were $148.9 million. The decrease
occurring in 2003 principally results from collections of notes receivable and
distributions by unconsolidated affiliates offset by slightly higher capital
expenditures.

Available Sources of Liquidity

At September 30, 2003, the Company has $531 million of short-term borrowing
capacity, including $351 million for the Utility Group and $180 million for the
wholly owned Nonregulated Group and corporate operations, of which approximately
$208 million is available for the Utility Group operations and approximately
$125 million is available for the wholly owned Nonregulated Group and corporate
operations. Effective January 1, 2003, the Company transferred assets which
primarily supported the Utility Group's operations to VUHI which made available
approximately $90 million of additional nonregulated and corporate capacity.

Beginning in 2003, the Company began issuing new shares to satisfy dividend
reinvestment plan requirements. During the nine months ended September 30, 2003,
new issues from stock plans added additional liquidity of approximately of $4
million, compared to 2002.

Potential Uses of Liquidity

Planned Capital Expenditures & Investments

Investments in nonregulated unconsolidated affiliates and total company capital
expenditures for the remainder of 2003 and for the year ended December 31, 2004
are estimated to be approximately $85 million and $280 million, respectively.

Ratings Triggers

At September 30, 2003, $113.0 million of Vectren Capital's senior unsecured
notes were subject to cross-default and ratings trigger provisions that would
provide that the full balance outstanding is subject to prepayment if the
ratings of Indiana Gas' or SIGECO's most senior securities declined to BBB/Baa2.
In addition, accrued interest and a make whole amount based on the discounted
value of the remaining payments due on the notes would also become payable. The
credit rating of Indiana Gas' senior unsecured debt and SIGECO's secured debt
remain one level and two levels, respectively, above the ratings trigger.

Other Guarantees and Letters of Credit

In the normal course of business, Vectren Corporation issues guarantees to third
parties on behalf of its consolidated subsidiaries and unconsolidated
affiliates. Such guarantees allow those subsidiaries and affiliates to execute
transactions on more favorable terms than the subsidiary or affiliate could
obtain without such a guarantee. Guarantees may include posted letters of
credit, leasing guarantees, and performance guarantees. As of September 30,
2003, guarantees issued and outstanding on behalf of unconsolidated affiliates
approximated $6 million. In addition, the Company has also issued a guarantee
approximating $4 million related to the residual value of an operating lease
that expires in 2006. Through September 30, 2003, the Company has not been
called upon to satisfy any obligations pursuant to its guarantees.

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 The performance of projects undertaken by the Company's nonregulated
businesses and the success of efforts to invest in and develop new
opportunities, including but not limited to, the realization of Section 29
income tax credits and the Company's coal mining, gas marketing, and
broadband strategies.

o Direct or indirect effects on our business, financial condition or
liquidity resulting from a change in our credit rating, changes in interest
rates, and/or changes in market perceptions of the utility industry and
other energy-related industries.

o Employee or contractor 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

The Company is exposed to various business risks associated with commodity
prices, interest rates, and counter-party credit. These financial exposures are
monitored and managed by the Company as an integral part of its overall risk
management program. The Company's risk management program includes, among other
things, the use of derivatives to mitigate risk.

The Company also executes derivative contracts in the normal course of
operations while buying and selling commodities and other fungible goods to be
used in operations and while optimizing generation assets. The Company does not
execute derivative contracts it designates as trading.

These risks are not significantly different from the information set forth in
Item 7A Quantitative and Qualitative Disclosures About Market Risk included in
the Vectren 2002 Form 10-K/A and is therefore not presented herein.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, 2003, 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 at providing
reasonable assurance that 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) is brought to their attention on a timely basis.

Disclosure controls and procedures, as defined by the Exchange Act in Rules
13a-15(e) and 15d-15(e), 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 Over Financial Reporting

During the quarter ended September 30, 2003, there have been no significant
changes to the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

Internal control over financial reporting is defined by the SEC in Final Rule:
Management's Reports on Internal Control Over Financial Reporting and
Certification of Disclosure in Exchange Act Periodic Reports. The final rule
defines internal control over financial reporting as a process designed by, or
under the supervision of, the registrant's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
registrant's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that: (1) Pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of the registrant; (2) Provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the registrant are being made only in accordance with
authorizations of management and directors of the registrant; and (3) Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the registrant's assets that could have a
material effect on the financial statements.

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 10 of its unaudited
consolidated 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

Certifications
31.1 Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002-
Chief Executive Officer

31.2 Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002-
Chief Financial Officer

32 Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002

Other Exhibits
3.1 Amended and Restated Code of By-Laws of Vectren Corporation as of October
29, 2003.

(b) Reports On Form 8-K During The Last Calendar Quarter
On July 11, 2003, Vectren Corporation filed a Current Report on Form 8-K with
respect to adjusting 2003 earnings guidance and to address recent announcements
related to the production of synthetic fuel. Portions of this information were
furnished to the SEC
Item 5. Other Events and Regulation FD Disclosure
Item 7. Exhibits
99.1 - Press Release - Vectren Corporation adjusts 2003 earnings
guidance and addresses recent announcements related to the
production of synthetic fuel
99.2 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995
Item 9. Regulation FD Disclosure and Item 12. Results of Operations
and Financial Condition

On July 22, 2003, Vectren Corporation filed a Current Report on Form 8-K with
respect to the release of financial information to the investment community
regarding the Company's results of operations, for the three, six, and twelve
month periods ended June 30, 2003. The financial information was released to the
public through this filing.
Item 5. Other Events and Regulation FD Disclosure
Item 7. Exhibits
99.1 - Vectren Corporation Consolidated Statement of Income for
the three and six months ended June 30, 2003 and 2002
99.2 - Vectren Utility Holdings, Inc. Consolidated Statement of
Income for the three and six months ended June 30, 2003
and 2002
99.3 - Vectren Corporation Operating Highlights
99.4 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995

On July 23, 2003, Vectren Corporation furnished information to the SEC on a
Current Report on Form 8-K with respect to the release of financial information
to the investment community regarding the Company's results of operations, for
the three, six, and twelve month periods ended June 30, 2003. The financial
information was released to the public through this filing.
Item 7. Exhibits

99.1 - Press Release - Vectren Corporation Reports 2nd Quarter
2003 Results

99.2 - Press Release - Vectren Corporation Declares Regular
Quarterly Dividend

99.3 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995 Item 9. Regulation FD Disclosure and Item 12.
Results of Operations and Financial Condition

On July 25, 2003, Vectren Corporation furnished information to the SEC on a
Current Report on Form 8-K to announce the pricing of $200 million in senior
unsecured notes in two tranches of $100 million each through its wholly-owned
subsidiary, Vectren Utility Holdings, Inc.
Item 7. Exhibits
99.1 - Press Release- Vectren Corporation Sells $200 Million in
Debt
99.2 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995
Item 9. Regulation FD Disclosure and Item 12. Results of Operations
and Financial Condition

On August 1, 2003, Vectren Corporation furnished information to the SEC on a
Current Report on Form 8-K to announce it plans to issue 6.5 million new shares
of the Company's common stock. Also attached is income statement, cash flow
statement, and balance sheet data as of and for the six months ended June 30,
2003 and 2002.
Item 7. Exhibits
99.1 - Press Release- Vectren Corporation Announces Equity
Offering of 6.5 Million Shares 99.2 - Selected Financial
Data
99.3 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995
Item 9. Regulation FD Disclosure

On August 4, 2003, Vectren Corporation filed a Current Report on Form 8-K with
respect to updates on various matters incident to the Company's equity offering.
Item 5. Other Events and Regulation FD Disclosure
Item 7. Exhibits
99.1 - Selected Financial Data
99.2 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995

On August 11, 2003, Vectren Corporation filed a Current Report on Form 8-K with
respect to certain underwriting agreements related to an equity offering.
Item 5. Other Events
Item 7. Exhibits
Exhibit 1 - Underwriting Agreement dated as of August 7, 2003
Exhibit 5 - Opinion of Barnes & Thornburg

On August 18, 2003, Vectren Corporation filed a Current Report on Form 8-K with
respect to updates on various regulatory matters in Ohio.
Item 5. Other Events and Regulation FD Disclosure
Item 7. Exhibits
99.1 - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995

On August 29, 2003, Vectren Corporation filed a Current Report on Form 8-K to
announce that $163.2 million of net proceeds had been generated from the sale of
7,441,400 shares of common stock.
Item 5. Other Events and Regulation FD Disclosure
Item 7. Exhibits
99.1 - Press Release- Vectren Corporation Completes Equity
Offering
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.


VECTREN CORPORATION
-------------------
Registrant




November 12, 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)