1995 Annual Report
IWC RESOURCES CORPORATION

TABLE OF CONTENTS
                                                  Page(s)
Letter to Shareholders                            2-3
The Company's Business                            4
Comparative Highlights                            5
IWC Utilities                                     6-15
IWC Industries                                    16-19
Financial Review                                  21
Consolidated Balance Sheets                       22-23
Consolidated Statements of Shareholders' Equity        24
Consolidated Statements of Earnings               25
Consolidated Statements of Cash Flows             26
Notes to Consolidated Financial Statements             27-38
Independent Auditors' Report                      39
Selected Financial Data                           40
Management's Discussion and Analysis of Financial
  Condition and Results of Operations             41-46
Shareholder Information                           47
Company Officers                                  48
Board of Directors                                49

<PAGE>
OUR MISSION IS CLEAR
IWC Resources Corporation will provide its customers with superior products
and outstanding service, while offering our shareholders the highest
possible current return consistent with a long-term financial view. We will
actively participate in the economic growth and social well-being of the
communities in which we operate, and will create and maintain a healthy,
safe, and challenging work environment for our employees by offering ample
opportunities for personal growth and development.
We will continue to stress comprehensive long-range planning as essential to
meeting the challenges of the future, and will manage and utilize our
corporate resources to encourage community growth and vitality, while
ensuring a quality environment.
In August 1995, IWC Resources Corporation merged with Miller Pipeline
Corporation and reorganized into two divisions. IWC Utilities was
established to manage primarily regulated-utility businesses. IWC Industries
was formed to manage the other utility-related service companies.


SHAREHOLDER LETTER
Dear Shareholder:
IWC Resources Corporation (Company) had its best year ever in 1995. Total
revenues increased from $111,379,000 in 1994 to $147,065,000 in 1995, while
earnings per share increased 11-1/2% from $1.47 to $1.64, respectively.
Many good things happened during the year that positioned the Company for
future growth and success in 1996 and beyond. On August 22, 1995, the Miller
Pipeline Corporation was merged into the Company as a wholly owned
subsidiary. Miller Pipeline is one of the nation's most highly respected
installers of pipelines. While its primary customers are gas companies, it
also provides service for water and wastewater utilities, and is
acknowledged as a leader in infrastructure repair and replacement.
Miller Pipeline's commitment to customer service is extraordinary. Don
Miller, the corporation's founder, built a first-rate business, which the
Company is privileged and honored to include among its family of companies.
Miller enjoyed a very good year financially in 1995 and contributed
substantially to Company profits.
The addition of Miller Pipeline led to an internal reorganization of the
Company's various businesses into two divisions; IWC Utilities and IWC
Industries.
IWC Industries includes Miller Pipeline and SM&P Utility Resources, Inc.
SM&P had spectacular growth in 1995, with a revenue increase of 22%. Profits
did not grow proportionately, but the Company is highly optimistic that SM&P
will contribute to earnings in a substantial way again in 1996. Joe Broyles,
formerly president of the Indianapolis Water Company, serves as president of
IWC Industries.
IWC Utilities includes the Indianapolis Water Company, Harbour Water
Corporation, IWC Services, Inc., Utility Data Corporation, and Waterway
Holdings, Inc. J. A. Rosenfeld, formerly executive vice president and chief
financial officer of the Company, is serving as this division's president.
Each of these individual companies made meaningful contributions to the
Company's record year.
The Indianapolis Water Company (IWC) settled rate cases in April and May
1995 before the Indiana Utility Regulatory Commission. The settlements
contributed to the Company's strong performance. IWC added 91 miles of new
main to its system and increased its customers by 5,773. The company
operated in a highly satisfactory way in 1995 and offered high quality water
service to its customers. It is superbly well-prepared for the future growth
in the area.
Utility Data Corporation continued to provide outstanding customer service
support to a variety of municipal and utility customers. It was engaged in
1995 to provide solid waste billing service for the city of Indianapolis,
and water, sewer, and electric billing services to the city of Bargersville.
IWC Services, Inc., through its majority ownership of the White River
Environmental Partnership, delivered exceptional service to the city of
Indianapolis through operation of the city's two advanced wastewater
treatment plants. This effort is the hallmark of Mayor Steve Goldsmith's
commitment to competition and privatization in local government. Observers
come from all around the world to see this endeavor firsthand. Substantial
savings were produced for the city of Indianapolis, and the partnership is
competing to provide these same services for other municipalities in the
midwest.
Waterway Holdings, Inc., experienced a very positive 1995 and exceeded the
Company's expectations. Ongoing development opportunities appear good in
1996.
In 1995, the Company instituted a new dimension to the Dividend Reinvestment
and Share Purchase Plan. Customers, employees and shareholders are able to
purchase Company stock directly from the Company at a 3% discount with no
brokerage fee involved. As a result of the program, the Company, thus far,
has added approximately 1,944 new shareholders and generated nearly $11
million of new equity capital. The plan has been well-received and the
Company looks forward to its ongoing success.
In addition to the promotions of Messrs. Broyles and Rosenfeld, Murvin S.
Enders was elected vice president of administrative affairs for the holding
Company; Patricia L. Chastain, vice president of community affairs for the
Indianapolis Water Company; and Michael B. Stayton, executive vice president
for SM&P Utility Resources, Inc. Jay Rosenfeld and Susan O. Conner were
added to the board of directors.
I am eager for 1996 to unfold. Each of the businesses appears to be well-
prepared for the year and I am optimistic that you will see good growth. At
the end of 1995 and during the early weeks of 1996, the stock market
recognized the growing value of our Company's stock. Improving our relations
with shareholders and the brokerage community are priorities for 1996. We
have a fascinating story to tell and will work very hard to share the news.
The Company has the strongest possible commitment to high-quality customer
service and to deliver safe, healthy, reliable products and services to our
customers. We take our responsibility seriously and will do everything
possible to fulfill our commitments.
I am very grateful to our shareholders, customers, and an exceptional group
of employees that make our Company what it is today.

Sincerely,
James T. Morris
Chairman
February 1996


THE COMPANY'S BUSINESS
The term "Company" in this report, unless otherwise indicated, refers to the
consolidated operations of IWC Resources Corporation and its subsidiaries.
IWC Resources Corporation is a holding company. The Company owns and
operates seven subsidiaries, including two waterworks systems, which supply
water for residential, commercial, and industrial uses, and fire protection
service in Indianapolis, Indiana, and surrounding areas. The territory
served by the two utilities covers an area of approximately 309 square miles
which includes areas in Marion, Hancock, Hamilton, Hendricks, Boone, and
Morgan counties in central Indiana.
At year's end, the Company's two water utilities -- Indianapolis Water
Company and Harbour Water Corporation -- were providing service to
approximately 235,000 customers. In addition to the two water utilities, the
Company has five other wholly owned subsidiaries: SM&P Utility Resources,
Inc. (SM&P), Miller Pipeline Corporation (MPC), Waterway Holdings, Inc.,
Utility Data Corporation (UDC), and IWC Services, Inc. SM&P performs
underground utility locating and marking services in Indiana and other
states. MPC's primary function is the installation of underground pipelines
for natural gas utilities. In addition, MPC sells products and services
related to infrastructure preservation and replacement. The Company,
principally through Waterway Holdings, Inc., owns real estate that it
expects to sell or develop in the future. UDC provides customer relations,
customer billing, and other data processing services for the Company's two
water utilities and other water and sewer utilities. IWC Services provides
laboratory water testing services, principally for water utilities.
The White River Environmental Partnership (WREP), in which the Company
participates through IWC Services as the majority partner (52%), entered
into a five-year contract, which commenced in January 1994, to operate and
maintain the two advanced wastewater treatment facilities for the city of
Indianapolis. WREP is actively seeking new markets and opportunities for
contract management service pursuant to expanded governmental privatization
efforts.
The Company continues to seek expansion and diversification through the
acquisition of other water utilities and other related businesses. It is
expected, however, that the water utilities will continue as the majority
source of earnings for the Company in the foreseeable future. The utility
subsidiaries of the Company are subject to regulation by the Indiana Utility
Regulatory Commission, which has jurisdiction over rates, standards of
service, accounting procedures, issuance of securities, and related matters.
Utility operations are subject to pollution control and water quality
control regulations, including those issued by the Environmental Protection
Agency, the Indiana Department of Environmental Management, the Indiana
Water Pollution Control Board, and the Indiana Department of Natural
Resources. There are competitors operating near the Company's system, which
include various municipal water utilities as well as privately owned water
utilities, some of which purchase water from the Company.


COMPARATIVE HIGHLIGHTS

                          1995      1994     1993      1992    1991
                           (in thousands, except per share data)

Operating revenues    $  147,065   $111,379  84,242  $63,452 $ 59,930

Operating earnings        35,426     30,919  25,994   24,113   22,304

Income taxes              13,820     12,724   9,328    9,197    7,905

Net earnings applicable 
   to common and common 
   equivalent 
   shareholders          $12,192   $ 10,142 $ 9,376 $  8,113  $7,737*

Average number of common 
   and common equivalent 
   shares outstanding 
   during year             7,438      6,901   6,658    6,379    5,335

Per common and common 
   equivalent shares:
      Net earnings       $  1.64   $   1.47 $  1.41 $   1.27  $ 1.45*

      Dividends declared    1.40       1.40    1.40    1.395     1.38

Book value                 12.81      11.38   11.20    10.49    10.54

Capital additions         27,914     28,256  13,967   15,751   14,416

Total assets             408,879    335,382 312,443  275,112  279,608

*Excludes cumulative effect of an accounting change of $1,280 or $.24 per
common and common equivalent shares


CONNECTING CUSTOMERS
IWC UTILITIES
The establishment of IWC Utilities and IWC Industries in August 1995
provides the Company the opportunity to more effectively manage separate
business sectors. IWC Utilities manages the direct utility-regulated and
other service companies that include Indianapolis Water Company, Harbour
Water Corporation, IWC Services, Inc., Utility Data Corporation, and
Waterway Holdings, Inc. J.A. Rosenfeld, former executive vice president and
chief financial officer of the Company, was promoted to president of IWC
Utilities and Indianapolis Water Company.
Indianapolis Water Company (IWC)
The oldest member in the Company's family of subsidiaries, IWC had the best
year ever in its 115-year history serving customers in the metropolitan
Indianapolis area. The company's performance significantly contributed to
the Company's record year. IWC's service area continues to grow with
expansion of the system in 1995, which included 91 miles of new main
installed and 5,773 new customers connected to increase the customer base to
232,568.
Settlement of rate case issues in April and May 1995, contributed to the
company's strong performance. The company's rate petitions were warranted
due to increased operating and capital costs, and issues related to
postretirement benefits other than pensions.
In March, the IURC granted IWC authority to issue securities consisting of
not more than $18 million of long-term debt and/or preferred equity and at
least $12 million in common equity. In September 1995, IWC issued $18
million of 30-year 5.85% First Mortgage Bonds to secure a like amount of
Economic Development Bonds, issued by the city of Indianapolis. Proceeds
from the issuance of these bonds are being used for the construction,
extension and improvement of facilities, plant, and distribution system and
to reimburse IWC's treasury for previously made plant capital expenditures.
In December 1995, the Company contributed equity capital to IWC in the
amount of $10,505,000.
A new four-year agreement was reached in February 1995, between IWC and
Local 131 of the Service Employees International Union - Firemen and Oilers
Conference, A.F.L.-C.I.O.
Applications for renewal of IWC's permits required under the National
Pollutant Discharge Elimination System (NPDES) for the discharge of water
treatment residuals from IWC's White River and Fall Creek stations are
pending before the Indiana Department of Environmental Management (IDEM). It
is expected that the residuals from these plants will be discharged into the
city of Indianapolis' sewer system. Experimental discharges of IWC's
residuals to the sewer system during the latter half of 1995 and into 1996
allowed IWC and the city of Indianapolis to gain valuable technical
information for the design of retention and release facilities at both
stations, and to evaluate the potential impact at the city's treatment
plant. Completion of testing is scheduled for the end of February 1996, with
a final contract with the city to follow if appropriate. Improvements at the
White River and Fall Creek stations required to discharge the residuals to
the city's sewer system will then be completed in late 1997.
Design of IWC's South Well Field Station, its next major treatment plant,
began in June. Construction of the plant is expected to start in May 1996.
The plant's first phase will be a 12-million-gallon-per-day (mgd)
groundwater treatment plant receiving raw water from nine wells, and a 22-
mgd pumping facility designed to send water to the southeastern and western
parts of IWC's service area. When completed, the South Well Field Station
will be Indiana's largest groundwater treatment plant, with a capacity to
treat 48 mgd and pump 75 mgd.
Construction of the new White River Plant Laboratory was started in 1995.
This expansion will accommodate the additional equipment and personnel to
perform the testing and monitoring required to assure water quality.
Remodeling of office and work space for many IWC employees took place during
the year, with other improvements planned in 1996. The company employed 351
people at year's end.
Harbour Water Corporation (HWC)
HWC serves areas near Morse Reservoir in Hamilton County, one of Indiana's
fastest-growing counties, north of Indianapolis. At the end of 1995, the
corporation served 2,722 customers, representing an 8% increase over 1994.
The nearby town of Westfield purchased 65.8 million gallons of water from
HWC under a long-term water service agreement.


CONNECTING NEIGHBORHOODS
Waterway Holdings, Inc.
Waterway Holdings has contributed to consolidated net earnings in recent
years by carefully managed sales of non-utility land. In each of the last
three years, revenue of approximately $1,500,000 has been achieved.
In 1996, a new 42-lot residential development near Morse Reservoir is
planned, and with some selected sales in the Geist Reservoir area, real
estate revenues are expected to increase.
With minimal overhead and sales staff, Waterway Holdings has managed the
sale and lease of Company real estate and continues to look for other
opportunities for growth consistent with IWC's wellhead and groundwater
protection policies.


CONNECTING SERVICES
Utility Data Corporation (UDC)
Utility Data Corporation provides customer billing, customer relations, and
data processing services for the Company's water utilities, the city of
Indianapolis sewer operations, and similar services for other municipal and
private utilities in Indiana. Additionally, UDC markets a line of personal
computer software for record-keeping systems for the utility industry. At
the end of 1995, over 1,200 programs had been sold.
Several new agreements were reached in 1995. Solid waste billing and
customer relations for the city of Indianapolis commenced in January 1996.
The town of Bargersville, Indiana, accepted a billing system proposal for
approximately 6,000 customers that began in February 1996. The city of
Vincennes, Indiana, awarded its stormwater service project that includes a
stormwater study and implementation of a quarterly stormwater billing system
in 1996.
UDC also provides quarterly billing inserts for customers of Indianapolis
Water Company and Harbour Water Corporation.
Two new personal computer software programs were released during the year 
the manhole inventory management program, and the main/collector sewer
management program. UDC is continuing to develop innovative personal
computer software as part of its agreement with the American Water Works
Association.
UDC employed 60 people at the conclusion of 1995.


CONNECTING RESOURCES
IWC Services, Inc.
IWC Services, Inc. is the majority partner (52%) of the White River
Environmental Partnership (WREP), which completed its second year of
contract operations and management of the city of Indianapolis' two large
advanced wastewater treatment facilities. WREP's contribution to the
Company's operating earnings exceeded one-half million dollars. By all
operational standards, including effluent quality, minority vendor
participation, worker safety, and preventive maintenance, WREP's performance
under the Indianapolis contract has been superb.
WREP is currently competing for two major new opportunities in Indiana and
Ohio. The partnership is responding to numerous inquiries from mayors and
other local officials who face strong pressures to contain costs.
At year's end, WREP had 168 employees operating the Indianapolis advanced
wastewater treatment plants. When WREP took over the plants, the employee
count was 323.


CONNECTING PRODUCTS & SERVICES
IWC INDUSTRIES
Reorganization in August 1995 established IWC Industries to manage the
Company's other utility service businesses. The division was formulated as a
result of the merger of Miller Pipeline Corporation into the Company as a
wholly owned subsidiary. This merger continued the Company's strategy of
diversification into business closely related to utilities. Joseph R.
Broyles, former president of the Indianapolis Water Company, was promoted to
president of IWC Industries. Besides overseeing activities of MPC, IWC
Industries also manages SM&P Utility Resources, Inc.
Miller Pipeline Corporation (MPC)
MPC was founded as a gas line contractor in 1953 and has earned a reputation
for quality work and integrity. The corporation has enjoyed steady growth
over the years, fueled by an innovative workforce committed to complete
customer satisfaction and by ongoing research and development. Although
pipeline construction remains MPC's core business, state-of-the-art
trenchless pipeline rehabilitation technologies are offered to an emerging
marketplace.
Some examples of the technologies offered by MPC aimed at solving pipeline
problems for utility, municipal, and industrial customers are: EXPANDIT -
pipebursting "trenchless" pipe replacement; INSERTEC/PLUS - advanced live
gas insertion for "trenchless" gas main renewal; AMEX 2000 - "Trenchless"
inversion lining for gas mains; AMEX-10/WEKO-SEAL - internal joint sealing
system; VAC-HOE - vacuum excavation equipment and pipeline rehabilitation
techniques; EX METHOD - formed-in-place PVC "trenchless" lining techniques
for wastewater.
MPC has a history of building on its successes through management of its
resources, serving its customers well, and ongoing market evaluation. MPC is
in position to capitalize on the opportunities in the pipeline
rehabilitation market.
Dale R. Miller, MPC's president, will be honored in March 1996 as an
honorary member of the Distribution Contractors Association (DCA). The
organization is recognizing Mr. Miller with its highest honor for ". . .
outstanding contributions and tireless service during the better part of the
past four decades to the association, to the industry, and as a DCA
director, our 20th president and most recently chairman of the DCA Labor
Committee."
The merger of MPC made major contributions to the Company's record revenues
and net earnings in 1995. The corporation employed 544 people at year's end.


CONNECTING BUSINESSES
SM&P Utility Resources, Inc. (SM&P)
Underground facility locating remains the primary focus of the company. SM&P
continues to experience rapid growth. With almost 1,000 employees serving
clients in 11 states, SM&P enjoyed a 22% increase in revenues in 1995.
However, earnings declined in 1995 as SM&P had to absorb pricing concessions
required by several of its major clients, most of whom are in the
telecommunications industry.
The location and marking of underground utilities is a very competitive
business. Management believes, however, that the company provides better
protection from damage than does its competition. As utilities strive to
improve their levels of service, we believe that SM&P's assurance of quality
will be seen as more and more valuable to them.
In an effort to restore its profitability to historical levels, SM&P has
begun partnering with the companies that are the most quality-oriented and
need to eliminate their service outages caused by underground damages. As
the telecommunications industry continues to restructure under enormous
competitive pressures, SM&P is positioning itself to serve the upper
quality-oriented end of the market where it can realize reasonable profit
margins for quality service delivered at a fair price.
SM&P had 928 employees at the end of 1995 compared to 758 at the conclusion
of 1994.


CONNECTING COMMUNITIES
Youth development, education, community involvement, and other civic
responsibilities have always been and remain a major focus of the Company's
mission. One example is the Company's commitment to the United Way Campaign
of Central Indiana. Over the past several years, the Company and its
employees have been the top per-capita contributor to the United Way in the
Indianapolis corporate community. The Company and its generous employees
care a great deal about serving and supporting the communities they serve.


FINANCIAL REVIEW
Consolidated net earnings increased to $12,192,000 for 1995 compared to
$10,142,000 for 1994. Improved operating results in the water utilities
segment, due primarily to three rate increases, and continued
diversification in the utility-related services
segment through the merger of Miller Pipeline Corporation (MPC) in August
1995 helped produce record earnings for 1995. As a result, earnings
available for common and common equivalent shareholders increased to $1.64
for 1995 compared to $1.47 for 1994. During 1995, the average number of
common and common equivalent shares outstanding increased 537,000 shares
over 1994 due to the issuance of common shares in August 1995 for the
acquisition of MPC and the tremendous success associated with the Company's
Dividend Reinvestment and Share Purchase Plan. Cash dividends declared on
common shares outstanding totaled $1.40 per share in 1995 and 1994.
Details and a discussion of financial and operating results follow:
Results of Operations
The Company's operations include two business segments: regulated water
utilities and unregulated utility-related services. The water utilities
segment includes the operations of the Company's two water utility
subsidiaries. The utility-related services segment provides utility line
locating services, installation, repairs and maintenance of underground
pipelines, data processing and billing and payment processing, and other
utility-related services to both unaffiliated utilities and to the Company's
water utilities. SM&P Utility Resources, Inc. (SM&P) acquired in June 1993
and MPC acquired in August 1995 are included in the utility- related
services segment.
Operating Revenues
Total operating revenues were $147,065,000 in 1995 compared to $111,379,000
in 1994. Water utilities segment revenues increased to $80,377,000 in 1995
from $73,524,000 in 1994 primarily due to three rate increases since August
1994. Customer growth also continued in this segment and at the end of 1995,
approximately 235,000 customers were being served compared to approximately
229,000 customers at the end of 1994. Utility-related services segment
revenues increased to $66,688,000 in 1995 compared to $37,855,000 in 1994
mostly due to the merger of MPC.
Operating Expenses
Total operating expenses were $111,639,000 in 1995 compared to $80,460,000
in 1994. Total water utilities segment operating expenses were $49,973,000
in 1995 compared to $47,497,000 in 1994. The $2,476,000 (5.2%) increase in
operating expenses in the water utilities segment is due primarily to
increased production costs, largely labor, power and chemical costs, and
labor related costs, most significantly the cost of postretirement benefits
other than pensions. Depreciation and property taxes also increased due to
additional plant placed in service. Utility-related services segment
operating expenses were $61,666,000 in 1995 compared to $32,963,000 in 1994.
The increase of $10,503,000 (31.9%) (excluding $18,200,000 applicable to
MPC) is due primarily to the expansion of business. SM&P realized a 22%
increase in its operating revenues which required the addition of
approximately 170 employees to its workforce. As a result, labor costs and
related fringe benefits, transportation costs, and cable cuts increased
significantly. During 1996, SM&P is positioning itself to reduce costs and
focus on increased profitability.


IWC Resources Corporation and Subsidiaries
Consolidated Balance Sheets
December 31, 1995 and 1994
ASSETS
                                                1995      1994
                                                (in thousands)
Current assets:
   Cash and cash equivalents               $  1,771       $  2,889
   Accounts receivable, less allowance
        for doubtful accounts of $327
        and $190                             21,092         10,124
   Materials and supplies, at cost            3,194          2,257
   Other current assets                       4,370          1,099
        Total current assets                 30,427         16,369
Utility plant:
   Utility plant in service                 362,610        343,488
   Less accumulated depreciation             81,594         75,801
        Net plant in service                281,016        267,687
   Construction work in progress              7,855          7,407
        Utility plant, net                  288,871        275,094
Construction funds held by Trustee           14,260             --
Other property, net                          32,909         13,053
Goodwill, net of accumulated amortization    23,776         16,964
Deferred charges and other assets            18,636         13,902

                                           $408,879       $335,382

LIABILITIES AND SHAREHOLDERS' EQUITY
                                               1995           1994
                                                   (in thousands)
Current liabilities:
   Notes payable to banks                  $ 30,589       $ 17,674
   Current portion of long-term debt             --          1,150
   Accounts payable and accrued expenses     20,282         16,551
   Customer deposits                          1,369          1,126
        Total current liabilities            52,240         36,501

Long-term obligations:
   Long-term debt, less current portion     113,375         98,225
   Customer advances for construction        51,606         48,750
   Other liabilities                          9,346          6,079
        Total long-term obligations         174,327        153,054

Deferred income taxes                        37,347         31,003
Contributions in aid of construction         32,932         30,181
Preferred stock of subsidiary and
   redeemable preferred stock                 5,705          5,705
Shareholders' equity (in thousands):
   Common stock, authorized 10,000
        common shares; 8,247 and 6,886
        issued and outstanding in
        1995 and 1994                        86,575         60,540
   Retained earnings                         20,321         18,398
                                            106,896         78,938
   Less unearned compensation                   568             --
        Total shareholders' equity          106,328         78,938
Commitments and contingencies
                                           $408,879       $335,382

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

<TABLE>
IWC Resources Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1995, 1994 and 1993
<CAPTION>
                                                                                Total
                                      Common Stock      Retained    Unearned  Shareholers'
                                   Shares       Amount  Earnings  Compensation  Equity


<S>                               <C>         <C>                 <C>         <C>         
Balance at December 31, 1992      6,407,591   $ 49,728 $17,826    $  (349)    $    67,205
   Net earnings                                          9,376                      9,376
   Dividends - $1.40 per share:                         
    Common stock                                        (9,254)                    (9,254)
    Redeemable preferred stock                             (36)                       (36)   
   Common stock issued:               
    Acquisition of subsidiary       356,991      8,300                              8,300
    Dividend Reinvestment Plan       55,646      1,236                              1,236
    Restricted Stock Plan             1,725         37                (37)
   Compensation expense                                               187             187
Balance at December 31, 1993      6,821,953     59,301  17,912       (199)         77,014
   Net earnings                                         10,142                     10,142
   Dividends - $1.40 per share:
    Common stock                                        (9,620)                    (9,620)
    Redeemable preferred stock                             (36)                       (36)
   Common stock issued:
    Dividend Reinvestment Plan       59,257      1,159                              1,159
    Restricted Stock Plan, net       
      of 16,189 shares
      tendered for tax
      withholding and then 
      retired                         5,061         80                (80)       
   Compensation expense                                               279             279

Balance at December 31, 1994      6,886,271     60,540  18,398                     78,938
   Net earnings                                         12,192                     12,192
   Dividends - $1.40 per share:
    Common stock                                       (10,233)                   (10,233)
    Redeemable preferred stock                             (36)                       (36)
   Common stock issued:
    Acquisition of subsidiary       755,148     14,348                             14,348
    Dividend Reinvestment Plan      576,473     10,809                             10,809         
    Restricted Stock Plan            29,461        878               (878)       
   Compensation expense                                               310             310

Balance at December 31, 1995      8,247,353   $ 86,575 $20,321    $  (568)       $106,328

The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

IWC Resources Corporation and Subsidiaries
Consolidated Statements of Earnings
Years ended December 31, 1995, 1994 and 1993

                                     1995         1994         1993
                                       (in thousands, except per share data)
Operating revenues:
  Water utilities                  $80,377      $73,524      $64,583
  Utility-related services          66,688       37,855       19,659
                                   147,065      111,379       84,242
Operating expenses:
  Operation and administration:
    Water utilities                 37,352       35,573       32,074
    Utility-related services        54,172       28,120       13,037
  Amortization of acquisition
    costs                            1,198        1,126          674
  Depreciation                       9,527        7,820        6,556
  Taxes other than income taxes      9,390        7,821        5,907
    Total operating expenses       111,639       80,460       58,248
    Operating earnings              35,426       30,919       25,994
  Other income (expense):
    Interest expense, net            9,395        7,959        7,295
    Interest income                  (184)        (109)        (208)
                                     9,211        7,850        7,087
Earnings before income taxes              
       and dividends on preferred
        stock of subsidiary         26,215       23,069       18,907
Income taxes                        13,820       12,724        9,328
     Earnings before dividends on  
       preferred stock of
       subsidiary                   12,395       10,345        9,579
Dividends on preferred stock of           
  subsidiary                           203          203          203
    Net earnings                   $12,192      $10,142      $ 9,376
Net earnings per common and common
  equivalent share                 $  1.64      $  1.47      $  1.41
Average number of common and
  common equivalent shares 
  outstanding                        7,438        6,901        6,658

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


IWC Resources Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
                                             1995       1994     1993
                                                  (in thousands)
Cash flows from operating activities:
   Net earnings                             $12,192  $ 10,142  $ 9,376
   Adjustments to reconcile net earnings
        to net cash provided by operating 
        activities:
           Depreciation and amortization     12,903     9,597    7,808
           Deferred income taxes              3,838     2,179    1,241
           Gain on sales of other property   (1,370)     (783)  (1,052)
             Provision for bad debts            437       430      335
             Dividends on preferred stock
             of subsidiary                      203       203      203
             Other, net                         (71)     (776)     137
             Changes in operating assets
               and liabilities:
                  Accounts receivable        (3,135)   (1,039)     353
                  Materials and supplies        382      (535)    (425)
                  Other current assets       (2,528)     (332)   1,741
                  Accounts payable and 
                  accrued expenses             (390)    1,728      511
                  Customer deposits             243        99       83
                       Net cash provided by 
                       operating activities  22,704    20,913   20,311
Cash flows from investing activities:
   Additions to utility plant and other 
   property                                 (27,914)  (28,256) (13,967)
   Proceeds from sales of other property        700       424    1,517
   Customer advances for construction         8,233     9,175    5,748
   Refunds of customer advances for 
   construction                              (2,925)   (2,156)  (2,242)
   Acquisition of Miller Pipeline 
   Corporation, net of cash acquir ed        (5,147)        --       --
   Acquisition of SM&P Utility Resources, 
   Inc., net of cash aquired                      --        -- (12,482)
   Other investing activities, net           (2,234)     (952)    (963)
                       Net cash used by 
                       investing activities (29,287)  (21,765) (22,389)
Cash flows from financing activities:
   Increase (decrease) in notes payable 
   to banks                                   5,515     4,105  (12,775)
   Proceeds from long-term debt              18,076    14,000   11,600
   Payments of long-term debt                (4,203)   (1,277) (12,780)
   Decrease (increase) in construction
     funds held by Trustee                  (14,260)    2,010      (52)
   Cash dividends                           (10,472)   (9,859)  (9,493)
   Proceeds from issuance of common stock    10,809     1,159    1,236
                       Net cash provided
                       by financing 
                       activities             5,465     1,928    3,286
Increase (decrease) in cash and cash 
equivalents                                  (1,118)    1,076    1,208
Cash and cash equivalents at beginning 
of year                                       2,889     1,813      605
Cash and cash equivalents at end of year    $ 1,771  $  2,889  $ 1,813
Supplemental disclosure of cash flow 
information-
   Cash paid for:
        Interest on long-term debt and 
        notes payable to banks, net of 
        capitalized interes                 $ 8,992  $  7,396  $ 7,104
        Income taxes                        $11,969  $ 11,480  $ 7,488

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



IWC Resources Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Years ended December 31, 1995, 1994 and 1993

Nature of Operations
IWC Resources Corporation (Resources) is a holding company which owns and
operates seven subsidiaries. The term Company refers to the consolidated
operations of Resources and its subsidiaries.
The Company's operations include two business segments: regulated water
utilities and unregulated utility-related services.
The water utilities segment include the operations of the two waterworks
subsidiaries which supply water service to approximately 235,000 customers for
residential, commercial, and industrial uses, and fire protection service in
Indianapolis, Indiana, and surrounding areas and serve a territory of
approximately 309 square miles. These subsidiaries are regulated by the Indiana
Utility Regulatory Commission (Commission), and their accounting policies, which
are substantially consistent with generally accepted accounting principles, are
governed by the Commission.
The utility-related services segment include the operations of the remaining
subsidiaries which are involved in utility line locating, installation, repairs
and maintenance of underground pipelines, data processing and other utility-
related services, and real estate sales and development. This segment
predominately serves other utilities, principally the gas and telecommunications
industries, which operate in Indiana and Ohio and other parts of the midwest and
southwest regions of the country.

Use of Estimates
The Company's consolidated financial statements are prepared in conformity with
generally accepted accounting principles which require 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 financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Summary of Significant Accounting Policies

Principles of Consolidation
The Comany's consolidated financial statements include the accounts of Resources
and its subsidiaries.
In November 1993, a subsidiary of the Company became majority partner in White
River Environmental Partnership (Partnership). In December 1993, the Partnership
was awarded a five-year contract by the city of Indianapolis to manage and
operate its two advanced wastewater treatment plants commencing January 30,
1994. The Company's share of Partnership earnings, which are reported on the
equity basis, are not significant to the Company's consolidated earnings and are
included in operating revenues in the utility-related services segment.
All significant intercompany accounts and transactions have been eliminated in
consolidation.

Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
maturities of three months or less to be cash equivalents.
Utility Plant
Utility plant is stated at cost which includes the cost of land, outside
contract work, labor and materials, interest and certain indirect costs
incurred during the construction period. Such indirect costs consist of
administration, general overhead, and other costs applicable to construction
projects.
When utility plant in service is retired, except for land and land rights, the
accumulated cost of the retired property plus cost of removal and less salvage
value is charged against accumulated depreciation. If land or land rights are
sold, the net gain or loss is included in earnings. Property not currently used
in utility operations is included in other property.
Depreciation of utility plant for financial statement purposes is computed at a
composite annual rate of 1.9% as approved by the Commission.
Generally, maintenance and repairs and the cost of replacements of minor
items of property are charged to operation expense accounts as incurred.

Other Property
Other property is stated at cost and is depreciated or amortized using the
straight-line method over the estimated useful lives of the assets. The service
lives for the principal assets, vehicles and operating equipment, range from 
5 to 20 years.

Goodwill
The Company recognizes the excess of cost over fair value of tangible and other
identifiable assets acquired in business acquisitions as goodwill which is
amortized by the straight-line method over 20 or 40 years. The Company
continually evaluates the recoverability of goodwill by comparing its annual
amortization to the acquired company's average pretax earnings before
amortization over a 3-year period and by assessing whether the amortization of
the remaining goodwill balance over its remaining life can be recovered through
expected future results. Amortization expense was $573,000, $511,000 and
$319,000 in 1995, 1994 and 1993, respectively. Accumulated amortization at
December 31,1995 and 1994 was $1,970,000 and $1,397,000, respectively.

Income Taxes
For financial statement purposes, investment tax credits are deferred and
amortized ratably over the lives of the applicable assets as prescribed by the
Commission. For income tax purposes, the credits are deducted in the year in
which the constructed or acquired property was placed in service.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement amounts
for assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates which apply to taxable
income in the years in which those temporary differences are expected to
reverse.The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in the period the change is enacted.

Customer Advances and Contributions in Aid of Construction
In certain cases, customers advance funds for water main extensions. These
advances are included in customer advances for construction and are generally
refundable to the customer over a period of ten years. Advances not refunded
within ten years are permanently transferred to contributions in aid of
construction.

Revenues
Utility revenues are recognized based on water usage at rates approved by the
Commission. Service revenues are recognized as services are provided.
Construction revenues are recognized on the percentage of completion method
whereby revenues are recognized in proportion to costs incurred over the life of
each project. Losses are recognized when known.

Pension Plans and Other Retirement Benefits
The Company has a noncontributory defined benefit pension plan which covers the
majority of its utility employees and certain other employees. Benefits are
based on, among other factors, an employee's services rendered to date and
average monthly earnings for the 36 consecutive calendar months that produce
the highest average.The Company's funding policy is to contribute annually at
least the minimum contribution required to comply with ERISA regulations.
The Company has an unfunded executive supplemental benefit plan which provides
additional retirement benefits to certain officers. Benefits are based on, among
other factors, an employee's age, services rendered to date, and benefits
received from the Company's noncontributory defined benefit pension plan.
The Company also sponsors defined contribution plans covering substantially all
non-bargaining unit employees and an employee stock ownership plan covering
substantially all of its utility employees and certain other employees.
The Company provides postretirement life insurance and healthcare benefits to
certain of its employees. The Company accounts for such benefits by accruing
currently, during the period of employment, the present value of the estimated
cost of such benefits.

Reclassifications
Certain amounts for 1994 and 1993 have been reclassified to conform with the
1995 presentation.

Merger of Miller Pipeline Corporation
On August 22, 1995, the Company merged with Miller Pipeline Corporation (MPC).
MPC installs, repairs and maintains underground pipelines used in gas, water and
sewer utility transmission and distribution systems. MPC also repairs and
provides installation services and products for natural gas, water and sewer
utilities. The cost of the transaction was paid by cash of approximately
$5,513,000 and the issuance of 755,148 shares of the Company's common stock. The
excess of the total acquisition cost over an estimate of the fair value of the
net assets acquired of $7,385,000 is being amortized over 40 years.
Following is a summary of the assets acquired and liabilities assumed in the
acquisition of MPC:

                                (in thousands)
Property and equipment            $  14,921
Accounts receivable                   8,158
Materials and supplies                1,319
Other current assets                  1,161
Other noncurrent assets                 822
Short-term notes payable
  to banks                           (7,400)
Accounts payable and
  other accrued expenses             (3,999)
Deferred income taxes                (2,506)
   Net assets acquired            $  12,476

During August 1995, the Company borrowed $5,600,000 in a short-term bank loan
which was used primarily for the acquisition of MPC. Interest on this loan is
based on the LIBOR rate plus .75% (6.418% at December 31, 1995). Interest on
short-term notes payable to banks assumed in the acquisition of MPC is based on
prime less .50% (8.0% at December 31, 1995).
The consolidated financial statements include the results of MPC's operations
beginning August 22, 1995. Unaudited pro forma operating results, assuming the
merger took place at the beginning of each of the years presented, follow:
                                      (in thousands, except
                                         per share data)
                                          1995        1994
Operating revenues:
 Water utilities                    $     80,377  $   73,524
 Utility-related services                 94,867      85,550
  Total operating revenues          $    175,244  $  159,074
Net earnings                        $     12,203  $   12,156
Net earnings per
 common and common
  equivalent share                  $       1.54  $     1.59

Net earnings and net earnings per common and common equivalent share were
$12,192,000 and $1.64, respectively, for the year ended December 31, 1995,
compared to unaudited pro forma net earnings and net earnings per common and
common equivalent share of $12,203,000 and $1.54, respectively, for the same
period. The decrease in unaudited pro forma net earnings per common and common
equivalent share of $.10 is due primarily to the increase in outstanding common
shares issued in the acquisition.

Acquisition of SM&P Utility Resources, Inc.
On June 14, 1993, the Company acquired SM&P Utility Resources, Inc. (formerly
SM&P Conduit Co., Inc.) (SM&P) in a transaction accounted for as a purchase.
SM&P is engaged in the business of providing a single source facility
locating service
for all utilities including: gas, electric, telephone, cable television, water
and sewer. The Company also entered into not to compete agreements with SM&P
shareholders at a cost of $3,000,000. The cost of the acquisition and agreements
not to compete was paid by cash of $12,503,000 and the issuance of 356,991
shares of the Company's common stock and 51,612 shares of the Company's Series B
Redeemable Preferred Stock. Goodwill of $16,379,000 is being amortized over 40
years, and the cost of agreements not to compete is being amortized over their
five-year lives. The consolidated financial statements include the results of
SM&P's operations beginning June 14, 1993.
<PAGE>
A summary of the SM&P assets acquired and liabilities assumed follows:

                                   (in thousands)
Property and equipment               $   5,021
Accounts receivable                      2,968
Other current assets                     1,456
Short-term notes payable                (3,933)
Accounts payable and
  accrued expenses                      (2,524)
Federal income taxes payable              (364)
  Net assets acquired                $   2,624

Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosures about Fair Value of Financial
Instruments." The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required to interpret market
data to develop the estimates of fair value. Accordingly, the estimates herein
are not necessarily indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methods may have a material effect on the estimated fair value
amount.
The carrying amounts of cash equivalents, accounts receivable, construction
funds held by Trustee, and notes payable to banks approximate fair value
because of the short maturity of those instruments.
The fair value of long-term debt at December 31, 1995, is estimated to be
$116,431,000. The fair value was determined by discounting future payments at
current interest rates for similar issues.

Utility Plant in Service
A summary of utility plant in service at December 31 follows:

                               1995      1994
                               (in thousands)
Land and land rights        $  8,869   $  7,009
Structures and improvements   51,279     49,767
Pumping station equipment     15,549     14,746
Purification system           25,820     25,492
Transmission and
   distribution system       250,670    236,541
Other                         10,423      9,933
                            $362,610  $ 343,488

Other Property
A summary of other property at December 31 follows:

                               1995      1994
                               (in thousands)
Land and improvements       $   605    $   26
Buildings and improvements    1,479       281
Real estate held for sale
 or development               6,984     3,985
Utility property held
 for future use               1,395        82
Vehicles and operating
 equipment                   25,491     9,290
Other                         2,809     2,349
                             38,763    16,013
Accumulated depreciation
 and amortization             5,854     2,960
                            $32,909   $13,053

Regulatory Assets
Deferred charges and other assets include certain costs which are capitalized as
regulatory assets and amortized pursuant to utility rate-making proceedings. The
Commission allows recovery of these assets through rates, but not a return on
investment, over periods ranging from 2 years to 30 years. A summary of
regulatory assets at December 31 follows:
                                   1995       1994
                                   (in thousands)
Costs of postretirement
   benefit obligations other
   than pensions                 $3,609    $ 3,722
Income taxes                        902        950
Tank painting costs               2,175        710
Rate proceeding costs               528        668
Debt issuance costs               1,803      1,661
                                 $9,017    $ 7,711

In December 1992, the Commission authorized all Indiana utilities, including the
utility subsidiaries of the Company, to record as a regulatory asset the excess
of accrual basis costs of postretirement life insurance and healthcare benefits
(OPRB) over the cash basis costs which were used to establish current rates. The
Company received approval to recover its OPRB costs on an accrual basis in its
rate case settled August 10, 1994, subject to the Company's proposal and
Commission's acceptance of an appropriate restricted fund. On April 26, 1995,the
Commission approved a grantor trust for these funds, as agreed upon by IWC and
the Utility Consumer Counselor (UCC) representing ratepayers, and a related
annual increase in IWC's water rates of approximately $1,800,000, to cover
current costs and the amortization of the regulatory asset through 2014. The
Grantor Trust provides for the transfer to the Trust monthly and subsequent
investing and disbursing by the Trust of all amounts received by IWC in rates to
cover its OPRB obligations. The Trust Agreement contains certain provisions
which limit investment activities, provide for annual reporting and, in the
event that Trust funds are no longer needed for OPRB purposes, directs payment
of the remaining funds to IWC ratepayers. At December 31, 1995, $928,000 is held
in the Trust and included in deferred charges and other assets.
Income taxes represent the effects of the 1993 increase in the federal corporate
tax rate on the Company's water utilities' net deferred tax liabilities and will
be amortized through 2009.
Tank painting and rate proceeding costs are generally being amortized through
2011 and 1997, respectively, and result from costs required to be deferred for
regulatory purposes.
Debt issuance costs include various costs deferred for regulatory purposes which
are to be amortized over the original lives of applicable debt through 2026.
<PAGE>
Accounts Payable and Accrued Expenses
A summary of accounts payable and accrued expenses at December 31 follows:

                           1995      1994
                           (in thousands)
Accounts payable        $ 4,765    $  3,364
Accrued property taxes    5,570       5,039
Accrued interest on notes
 payable to banks and
 long-term debt           2,082       1,864
Accrued vacations         1,974       1,732
Other accrued expenses    5,891       4,552
                        $20,282    $ 16,551

Notes Payable to Banks and Long-term Debt
At December 31, 1995, the Company had lines of credit with banks aggregating
$43,000,000 which require a compensating cash balance of $100,000. At December
31, 1995, unused lines of credit aggregated $13,659,000. Interest on borrowings
under the lines of credit is variable (an average of 6.58% at December 31,
1995). The Company has a Controlled Disbursement Agreement with a bank which
authorizes the bank to transfer funds daily between the Company's checking and
note payable accounts. Outstanding checks drawn on this checking account are
reported as a component of notes payable to banks. At December 31, 1995 and
1994, such outstanding checks amounted to $1,248,000 and $604,000, respectively.
A summary of First Mortgage Bonds (secured by IWC's utility plant) and other
long-term debt (Senior notes of Resources) outstanding at December 31 follows:

                               1995         1994
                                 (in thousands)
5-7/8%   Series due 1997      $  6,775   $ 6,775
5.20%    Series due 2001        11,600    11,600
8%       Series due 2001         3,000     3,000
6.31%    Senior notes due 2001  14,000    14,000
12-7/8%  Series due 2002            --     4,000
7-7/8%   Series due 2019        40,000    40,000
9.83%    Series due 2019         5,000     5,000
6.10%    Series due 2022         5,000     5,000
8.19%    Series due 2022        10,000    10,000
5.85%    Series due 2025        18,000        --
                               113,375    99,375
Less current portion                --     1,150
                              $113,375   $98,225

Provisions of trust indentures related to the 5-7/8% Series Bonds and the 8%
Series Bonds require annual sinking or improvement fund payments amounting to
1/2% of the maximum aggregate amount outstanding. As permitted, this requirement
has been satisfied by substituting a portion of permanent additions to utility
plant. These bonds are redeemable at the option of the Company at varying 
premium amounts at different periods prior to the respective dates of maturity.
The 5.20% Series Bonds are due and payable in full May 1, 2001. In the event the
bonds lose their tax-exempt status, mandatory redemption of the bonds is
required.
The 6.31% Senior Notes are due and payable in full March 15, 2001. Optional
redemptions by the Company are allowed in whole on or after March 15, 1997, at
the greater of par or the present value of the notes discounted 1/2% over the
applicable Treasury rate.
In January and December 1995, the Company prepaid the remaining principal amount
of the 12-7/8% Series Bonds at a premium of $203,000.
The 7-7/8% Series Bonds include issues of $10,000,000 and $30,000,000, both of
which are due and payable in full March 1, 2019. In the event the bonds lose
their tax exempt status, mandatory redemption of the bonds is required. Optional
redemptions by the Company are allowed on or after March 1, 1998, and are
generally subject to a premium.
The 9.83% Series Bonds are redeemable at the option of the Company, on or after
June 15, 2014, with final redemption by June 15, 2019. Early redemptions are
subject to a premium.
The 6.10% Series Bonds are due and payable in full December 1, 2022. In the
event the bonds lose their tax exempt status, mandatory redemption of the bonds
is required. Optional redemptions by the Company are allowed on or after
December 1, 1999, and are generally subject to a premium.
The 8.19% Series Bonds are due and payable in full December 1, 2022. Optional
redemptions by the Company are allowed at any time at the greater of par or the
present value of the bonds discounted at 1/2% over the applicable Treasury rate.
The 5.85% Series Bonds are due and payable in full September 1, 2025. In the
event the bonds lose their tax exempt status, mandatory redemption of the bonds
is required. Optional redemptions by the Company are allowed on or after
September 1, 2002, and are generally subject to a premium.
Required principal payments on long-term debt for the five years following
December 31, 1995, exclusive of obligations which may be satisfied by permanent
additions to utility plant, amount to $6,775,000 in 1997.
Interest expense is net of an allowance for funds used during construction
(AFUDC) which is an amount capitalized for construction projects as authorized
by the Commission. AFUDC amounts capitalized were $98,000, $212,000 and $160,000
during 1995, 1994 and 1993, respectively. At December 31, 1995, the Company's
AFUDC rate was 9.35% (4.51% debt component and 4.84% equity component).

Preferred Stock of Subsidiary
The preferred stock of subsidiary represents 45,049 shares of Indianapolis Water
Company cumulative preferred stock of $100 par value per share. The preferred
stock is redeemable at the option of the subsidiary upon proper notice at prices
ranging from $100 to $105 per share plus accrued dividends (an aggregate
redemption value of $4,658,000).
Dividends on the preferred stock are payable at rates ranging from 4% to 5% per
annum.

Redeemable Preferred Stock
At December 31, 1995, 60,000 special shares of Series B Convertible Redeemable
Preferred Stock, no par value, have been authorized, of which 51,612 shares have
been issued and are outstanding. The preferred stock was issued in connection
with the acquisition of SM&P and is convertible by the holder at any time, in
whole, into shares of common stock at a conversion rate of one common share for
each share of preferred stock. Mandatory redemption of the preferred stock is
required on July 14, 1998, at $23.25 per share plus accrued dividends (an
aggregate redemption value of $1,200,000). Holders of the preferred stock are
entitled to the same voting and dividend rights as common shareholders and such
shares are considered common share equivalents in the calculation of earnings
per share.

Common Stock
The Company's authorized capital stock consists of 10,000,000 common shares and
2,000,000 special shares with no par value. No special shares have been issued
other than the 60,000 shares designated as Series B Convertible Redeemable
Preferred Stock.
The Company has a Dividend Reinvestment and Share Purchase Plan which allows
common shareholders the option of receiving their dividends in cash or common
stock and permits optional cash purchases of shares at current market values.
Effective March 10, 1995, the plan was amended to allow certain employees and
utility customers of the Company or its subsidiaries to purchase common shares.
Purchases are allowed with a minimum investment of $10 by employees and $100 by
customers up to a total of $100,000 annually. A total of 1,500,000
authorized but unissued common shares have been registered for purchase under
the plan. The price of common shares purchased with reinvested dividends or
optional cash payments is 97% of the average of the means between the high and
low sale prices of the common shares as determined for the five consecutive
trading days ending on the day of purchase. Shareholders who do not choose to
participate in the plan continue to receive their dividends in cash. At
December 31, 1995, 900,676 shares of common stock were reserved for issuance
under the plan. The Company has a Restricted Stock Plan under which 200,000
common shares have been reserved and may be awarded to officers and key
employees. Restricted stock plan participants are entitled to cash dividends and
voting rights on their awarded shares. Restrictions generally limit the sale,
transfer, or pledge of
shares during a three-year measurement period following the issuance of such
shares. The initial three-year measurement period concluded December 31, 1994.
The number of shares awarded under the plan are subject to adjustment at the end
of the measurement period as determined by the provisions of the plan. The
adjustment at the end of the initial three-year measurement period was an
incremental award of 21,250 shares, of which 16,189 shares were tendered to the
Company to satisfy tax withholding requirements, and retired.
Participants may vest in certain restricted shares upon death, disability or
retirement as described in the plan. In the event of a change in control of the
Company, all restrictions expire and participants may receive additional shares
as determined by provisions of the plan.
In January 1995, the Company commenced its second three-year measurement period
and awarded 29,461 restricted shares.
Unearned compensation recorded as of the effective dates of the awards is
amortized to expense during the three-year measurement period. At December 31,
1995, 121,073 shares were reserved for future awards.
In January 1988, the Company's board of directors adopted a Shareholder Rights
Plan pursuant to which a dividend distribution of one preferred share purchase
right for each outstanding share of common stock was made to shareholders of
record on February 18, 1988. Under the plan, each right will initially entitle
shareholders to purchase one one-hundredth of a share of a new series of
preferred stock of the Company at an exercise price of $45. The rights become
exercisable when a person or group acquires 20% or more of the Company's common
stock or commences a tender offer for 30% or more of the Company's common stock.
Upon the happenings of certain events, each right not owned by a 20% shareholder
or shareholder group will entitle its holder to purchase, at the right's then
current exercise price, shares of the Company's common stock having a value of
twice that price. The rights expire in February 1998.


Taxes
Components of taxes other than income taxes follow:
                  1995      1994      1993
                        (in thousands)
Property taxes $ 5,333   $ 4,879   $ 4,092
Other            4,057     2,942     1,815
               $ 9,390   $ 7,821   $ 5,907

Refundable federal income taxes of $1,191,000 is included in other current
assets and currently payable federal income taxes of $256,000 is included in
accounts payable and accrued expenses at December 31, 1995 and 1994,
respectively.
Components of income taxes follow:
              1995      1994    1993
                   (in thousands)
Federal:
  Currently
   payable   $ 7,514  $8,122   $5,864
  Deferred     3,411   1,971    1,119
              10,925  10,093    6,983
State:       
  Currently
   payable     2,468   2,423    2,223
  Deferred       427     208      122
               2,895   2,631    2,345
             $13,820 $12,724   $9,328

The differences between actual income taxes and expected federal income taxes
using statutory rates follow:
                      1995    1994      1993
                          (in thousands)
Expected federal
  income taxes      $ 7,531 $ 6,810    $6,617
Taxes on advances
  collected from
  developers          4,698   3,611        --
Taxable
  customer
  advances
  for construction      137     454     1,309
State income
  taxes, net of
  federal income
  tax benefit         1,284   1,251     1,524
Other, net              170     598      (122)
                    $13,820 $12,724    $9,328

The tax effects of significant temporary differences represented by deferred tax
assets and deferred tax liabilities at December 31 follow:
                                1995        1994
                                 (in thousands)
Deferred tax assets:
  Customer advances
   for construction            $  972    $ 1,854
  Accrued pension costs           984        694
  Accrued vacations               655        617
  OPRB's                          587        119
  Other                           861      1,005
    Total deferred
      tax assets                4,059      4,289
Deferred tax liabilities:
  Utility plant, principally
   due to differences in
   depreciation and
   capitalized costs           34,857     29,324
  Unamortized investment tax
   credits                      4,801      4,913
  Debt redemption
   premiums                       572        508
  Other property bases            428        105
  Equity in earnings
   of investee                    390        181
  Other                           358        261
   Total deferred
      tax liabilities          41,406     35,292
   Net deferred
      tax liabilities        $ 37,347    $31,003

Customer advances for construction received after 1986 are includible in taxable
income when received and are deductible if subsequently refunded to customers.
Prior to 1994, such advances were excluded from financial statement income.
Effective September 8, 1993, the Commission granted IWC permission to surcharge
developers for income taxes on advances and reduce its water rates by a
corresponding amount. In 1994, IWC began collecting surcharges on advances from
developers. Income tax surcharges collected from developers amounted to
$4,698,000 in 1995 and $3,611,000 in 1994 and are reported as a component of
water utilities operating revenues and income taxes and, accordingly, have no
effect on net earnings.

Pension Plans and Other Retirement Benefits
The Company has two defined benefit pension plans: (1) a noncontributory plan
which covers the majority of its utility employees and certain other employees,
and (2) an executive supplemental plan which provides additional retirement
benefits to certain officers.
The following tables set forth the plans' funded status and accrued pension cost
amounts recognized in the Company's consolidated financial statements at
December 31:
                                                                      
                                   Majority Plan        Supplemental Plan
                                 1995       1994      1995       1994
                                  (in thousands)          (in thousands)
Accumulated benefit obligation $ 9,084    $ 5,856   $ 2,782    $ 1,798
Vested benefit obligation      $ 8,174    $ 5,165   $ 2,647    $ 1,726
Projected benefit obligation   $15,192    $11,918   $ 3,468    $ 2,362
Plan assets at fair value, 
  primarily listed stocks and 
  bank fixed income funds       13,471     10,834        --         --
Projected benefit obligation
  in excess of plan assets       1,721      1,084     3,468      2,362
Unrecognized net asset
  (obligation) at transition       789        917       (44)       (55)
Unrecognized prior service
   costs                          (386)      (417)     (587)      (306)
Unrecognized loss               (1,558)    (1,444)     (815)      (315)
Additional minimum liability                            760        112
Accrued pension cost           $   566    $   140   $ 2,782    $ 1,798

The weighted-average discount rate and rate of increase in future compensation
levels used in determining the projected benefit obligation were 7-1/4% and 4%,
respectively, for 1995, 8-1/2% and 5%, respectively, for 1994, and 7-1/4% and 4-
1/2%, respectively, for 1993. The expected long-term rate of return on assets
was 8% for 1995, 1994 and 1993.
Net periodic pension costs for the years ended December 31 include the following
components:
                                    Majority Plan         Supplemental Plan
                             1995     1994    1993    1995    1994  1993
                                   (in thousands)              (in thousands)
Service cost - benefits
  earned during year       $   758  $    903  $  769  $174  $ 150   $ 86
Interest cost on
  projected
  benefit obligation         1,042     1,006     902   231    167    149
Return on plan assets       (2,641)      387    (562)                    
Net amortization
  and deferrals              1,657    (1,345)   (393)   82     67     45
Net periodic
  pension cost             $   816  $    951  $  716  $487  $ 384   $280

Contributions to the Company's defined contribution plans and its employee stock
ownership plan amounted to $724,000 and $249,000 in 1995, $489,000 and $292,000
in 1994, and $352,000 and $274,000 in 1993, respectively.
The Company also participates in several industry-wide, multi-employer pension
plans for certain of its union employees at MPC. These plans provide for monthly
benefits based on length of service. Specified amounts per compensated hour for
each employee are contributed to the trustees of these plans. Contributions by
the Company to these plans amounted to $623,000 in 1995. The relative
position of each employer participating in these plans with respect to the
actuarial present value of accumulated plan benefits and net assets available
for benefits is not available.
The Company provides OPRBs to certain employees. The following tables set forth
the accumulated postretirement benefit obligation and net periodic
postretirementbenefit cost amounts recognized in the Company's consolidated
financial statements at December 31:
                             1995      1994
                           (in thousands)
Accumulated postretirement
 benefit obligation:
   Active employees       $ 11,158   $ 10,710
   Retired employees         8,330      6,495
                            19,488     17,205
Unrecognized transition
 obligation                (14,042)   (14,868)
Unrecognized gain              259      1,449
Accrued postretirement
 benefit cost             $  5,705   $  3,786

The weighted-average discount rate used to measure the accumulated
postretirement benefit obligation was 7-1/4% and 8-1/2% for the years ended
December 31, 1995 and 1994, respectively. The Company used premium growth rates
to compute assumed healthcare cost trend rates. In 1995, these rates ranged from
9-2/5% in 1996 to 6.0% in 2004 and thereafter and in 1994 these rates ranged
from 11-1/5% in 1995 to 5-1/4% in 2001 and thereafter. Had these healthcare cost
trend rates been higher by 1%, the net periodic postretirement benefit cost
would have been higher by $313,000 in 1995 and the accumulated postretirement
benefit obligation would have been higher by $2,238,000 in 1995.
Net periodic postretirement benefit costs for the years ended December 31
include the following components:
               
                              1995        1994      1993
                                     (in thousands)
Service cost-benefits
earned during year         $  521       $  555     $   462
Interest cost on accumulated
 postretirement benefit
 obligation                 1,439        1,271       1,322
Amortization of transition
 obligation                   826          826         826
Net periodic postretirement
 benefit cost              $2,786       $2,652     $ 2,610

For the years ended December 31, 1995, 1994, and 1993, the excess of net
periodic postretirement benefit cost over the amount capitalized amounted to
$1,954,000, $177,000 and $135,000, respectively.
Segment Information
The Company's operations include two business segments: regulated water
utilities and unregulated utility-related services. The water utilities segment
includes
the operations of the Company's two water utility subsidiaries. The utility-
related services segment provides utility line locating services, installation,
repairs and maintenance of underground pipelines,data processing and billing and
payment processing, and other utility-related services to both unaffiliated
utilities and to the Company's water utilities, and holds real estate for sale
or development.
Intersegment activity primarily represents certain operating cost allocations
between affiliates.
Identifiable assets are those assets used exclusively in the operations of each
business segment. Corporate assets are principally comprised of cash,
miscellaneous receivables, and certain other property.
The following table shows operating revenues, operating earnings and other
summary financial information by segment as of and for the year ended December
31, 1995, 1994 and 1993.
                                      Utility-
                             Water     Related
                           Utilities  Services  Corporation  Consolidated
 1995                                    (in thousands)
Operating revenues:
  Unaffiliated             $80,377   $ 66,688   $     --       $147,065
  Affiliated                    87      4,249     (4,336)           
   Total                    80,464     70,937     (4,336)       147,065
Operating earnings          30,404      5,022          --        35,426
Depreciation                 6,439      3,088          --         9,527
Identifiable assets        330,058     74,162       4,659       408,879
Capital expenditures,
  excluding merger of MPC   20,941      6,894          79        27,914

                                      Utility-
                            Water      Related
                          Utilities   Services  Corporation  Consolidated
 1994                               (in thousands)
Operating revenues:
  Unaffiliated             $73,524   $  37,855   $     --      $111,379
  Affiliated                    87       4,147     (4,234)          --
   Total                    73,611      42,002     (4,234)      111,379
Operating earnings          26,027       4,892         --        30,919
Depreciation                 6,017       1,803         --         7,820
Identifiable assets        297,354      37,212      1,104       335,382
Capital expenditures        23,462       4,774         20        28,256

                                      Utility-
                             Water     Related
                           Utilities  Services  Corporation  Consolidated
 1993                               (in thousands)
Operating revenues:
  Unaffiliated             $64,583   $  19,659    $    --      $ 84,242
  Affiliated                   242       4,025     (4,267)          --
   Total                    64,825      23,684     (4,267)       84,242
Operating earnings          21,645       4,349         --        25,994
Depreciation                 5,757         799         --         6,556
Identifiable assets        280,823      29,739      1,881       312,443
Capital expenditures,
  excluding acquisition
  of SM&P                   13,049         778        140        13,967


Commitments and Contingencies
Pursuant to the 1986 Amendments of the Safe Drinking Water Act, the United
States Environmental Protection Agency (EPA) continues to propose new drinking
water standards and requirements which, if promulgated, could be costly and
require substantial changes in current operations of the Company. The outcome
of EPA's proposals are uncertain at this time. Additionally, the Indiana Depart-
ment of Environmental Management issues permits for discharges from the
Company's
treatment stations, the terms and limitations of which can, and may well be,
onerous. As a result, compliance with such permits may be expensive.
On May 10, 1995, the Commission approved a Settlement Agreement entered into by
the UCC, four intervening customers and IWC, which provided for an annual
increase in IWC's rates of $2,547,000, or approximately 4%. The parties further
agreed not to seek an adjustment in IWC's basic rates and charges prior to April
1, 1997, subject to IWC's interim right to request approval of new rates to
cover operating expenses connected with implementing measures which might be
required in connection with new National Pollutant Discharge Elimination System
permits which IWC anticipates receiving for wastewater discharges at its Fall
Creek and White River Stations (NPDES permits). The parties also agreed that
prior to April 1, 1997, IWC may request that the Commission approve, in a
separate proceeding, the continuation of the allowance for funds used during
construction (debt component only), and the deferral of depreciation, on any
capital expenditures made in connection with new NPDES permits at the Fall Creek
and White River Stations or IWC's anticipated new South Well Field Station until
a rate base determination has been made with respect to these items in IWC's
next rate case.
On March 22, 1995, the Commission granted IWC authority to issue, on or before
December 31, 1996, an aggregate of $30,000,000 in securities, to consist of not
more than $18,000,000 in the form of long-term debt and/or preferred equity,and,
assuming favorable market conditions, up to $12,000,000 in common equity. IWC
issued $18,000,000 of long-term debt in September 1995, in the form of First
Mortgage Bonds, 5.85% Series due 2025. Proceeds from the issuance of these
securities may be used for the construction, extension and improvement of IWC's
facilities, plant and distribution system, reimbursement of IWC's treasury for
plant capital expenditures previously made, and the discharge or refunding of
short-term debt and higher cost long-term debt. In December 1995, Resources made
an equity capital contribution to IWC of $10,505,000. The amount invested by
Resources was derived from proceeds of the sale of common shares of the Company
through its Dividend Reinvestment and Share Purchase Plan.
The Company has agreements with five key executives which provide that in the
event of change of control of the Company, each executive vests in a three-year
employment contract at his then existing level of compensation. In the case of
three of these key executives, in the event of change of control of the Company,
a supplemental pension applies pursuant to their contracts that provides the
difference between their benefits under the regular benefit plans and that which
would be available upon attaining age 65.


Quarterly Financial Data (Unaudited)
                                                 Quarters
                                First      Second         Third    Fourth

                                 (in thousands, except per share data)
 1995
Operating revenues (a)        $ 24,455    $33,002      $ 43,831   $45,777
Operating earnings (a)           3,798      9,473        13,632     8,523
Net earnings                       282      3,255         5,517     3,138
Net earnings per common and 
   common equivalent share         .04        .46           .73       .41

 1994
Operating revenues (a)        $ 21,514     29,056        32,632    28,177
Operating earnings (a)           3,118      8,599        11,386     7,816
Net earnings                       423      3,227         4,238     2,254
Net earnings per common and 
   common equivalent share         .06        .47           .61       .33

(a) Certain reclassifications have been made to originally reported amounts to
conform with classifications adopted for December 31, 1995. These
reclassifications did not have a material effect on the quarterly results as
originally reported.


INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
IWC Resources Corporation:
We have audited the accompanying consolidated balance sheets of IWC Resources
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of shareholders' equity, earnings, and cash flows for
each of the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IWC Resources
Corporation and subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
Indianapolis, Indiana
January 25, 1996


Selected Financial Data
The selected consolidated financial data presented below has been derived from
and should be read in conjunction with the Company's Consolidated Financial
Statements and related Notes thereto included elsewhere in this report.
Summary of Operations Data:
                                  Year Ended December 31,
                          1995      1994      1993       1992    1991
                              (in thousands, except per share data)
Operating revenues       $147,065  $111,379 $ 84,242  $ 63,452  $ 59,930
Operating earnings         35,426    30,919   25,994    24,113    22,304
Cumulative effect of 
  accounting change           --         --       --        --     1,280
   
Net earnings             $ 12,192  $ 10,142 $  9,376  $  8,113  $  9,017
Per common
  and common equivalent 
  share:
   Earnings before 
     cumulative effect
     of accounting change    1.64      1.47     1.41      1.27      1.45
   Cumulative effect of 
     accounting change        --         --       --         --      .24
       Net earnings      $   1.64  $   1.47  $  1.41   $  1.27   $  1.69
Cash dividends per 
  common share           $   1.40  $   1.40  $  1.40   $ 1.395   $  1.38
Average number of common
  and common equivalent
  shares outstanding        7,438     6,901    6,658     6,379     5,335

Summary of Balance Sheet Data:
                                    December 31,
                           1995      1994      1993       1992      1991
                                             (in thousands)
Utility plant, net     $  288,871 $ 275,094  260,663   $253,786  $243,573
Total assets              408,879   335,382  312,443    275,112   279,608
Capitalization:
  Long-term debt
   (excluding current 
   portion)            $  113,375 $  98,225 $ 85,375   $ 86,275  $ 72,675
  Preferred stock of 
   subsidiary and
   redeemable preferred 
   stock                    5,705     5,705    5,705      4,505     4,505
  Common shareholders' 
   equity                 106,328    78,938   77,014     67,205    66,695
   Total capitalization $ 225,408 $ 182,868 $168,094   $157,985  $143,875


Management's Discussion and Analysis of Financial Condition and Results of
Operations
General
The most significant changes in the consolidated financial condition and results
of operations of IWC Resources Corporation and subsidiaries (Company) are
attributable to the combined operations of its two segments: (1) water utilities
and (2) utility-related services. These segments are discussed more fully in
Notes to Consolidated Financial Statements, Segment Information.
Beginning in 1993, the Company has grouped its operations according to major
segments. The Company acquired SM&P Utility Resources, Inc. (formerly SM&P
Conduit Co., Inc.) (SM&P) in June 1993, and Miller Pipeline Corporation (MPC) in
August 1995. As a result of these acquisitions, many of the differences between
results of operations in the utility-related services segment for 1995, 1994 and
1993 are due primarily to the operations of MPC and/or SM&P, which are included
in this segment.
1995 Compared to 1994
Operating earnings in the water utilities segment increased to $30,404,000
(37.8% of revenues) in 1995 from $26,027,000 (35.4% of revenues) in 1994.
Improvement in operating earnings in this segment is primarily due to the net
effects of three
increases in water rates approved by the Indiana Utility Regulatory Commission
effective August 10, 1994, April 26, 1995, and May 10, 1995, and an increase of
$1,087,000 in income taxes collected from developers, offset by a moderate
increase in total operating expenses. Operating earnings in the utility-related
services segment increased $130,000 in 1995 as compared to 1994; however, the
operating margin decreased to 7.5% in 1995 as compared to 12.9% in 1994. The
reduction in the operating margin is primarily due to increased labor and other
operating costs incurred related to the expansion of business contracts at SM&P.
Management is aware of the circumstances which caused this decrease and is
taking steps to improve the operating margin in this segment during 1996 by
introducing procedures to position itself to serve the upper quality-oriented
end of its market and commence partnering efforts with companies in this market
to eliminate service outages caused by underground damage.
Total operating revenues increased $35,686,000 (32.0%). Operating revenues
applicable to the water utilities segment increased $5,766,000, excluding an
increase of $1,087,000 in income taxes collected from developers, representing
an 8.2% increase over 1994, and is primarily due to the three rate increases and
a moderate increase in total water consumption. Water consumption is affected by
the frequency and pattern of rainfall, temperatures, the level of economic
activity, and conservation efforts.
The increase in utility-related services segment operating revenues of
$28,833,000 (76.2%) is primarily due to $21,200,000 in operating revenues at MPC
and the continued expansion of business contracts at SM&P.
Total operation and administration and maintenance expenses increased
$27,831,000 (43.7%) of which $26,052,000 is applicable to the utility-related
services segment. The increase in water utilities segment expenses of $1,779,000
which is discussed below represents a 5.0% increase over 1994 and is primarily
due to the effects of inflation on the Company's costs and other factors.
Labor expenses increased $80,000 (.6%) mainly due to the net effects of a
reduction in maintenance repairs experienced resulting from milder weather in
1995 as compared to the extremely cold weather in January and February of 1994,
an increase in capitalized labor due to increased construction and other
factors, offset by a general wage increase,effective January 1, 1995.Power costs
increased $229,000 (8.2%) primarily due to increased power rates. Chemical costs
increased $322,000 (26.7%) primarily due to increased usage and higher chemical
costs. The cost of outside services increased $284,000 (4.7%) chiefly due to an
increase in consulting and other services. Insurance expense decreased $114,000
(2.7%) primarily due to an insurance rebate received in June 1995. Regulatory
expenses increased $200,000 (104.1%) primarily due to increased rate case
expenses. Costs of the Company's pension and other benefit plans increased
$756,000 (31.7%) primarily due to the amortization of cost of postretirement
benefits other than pensions commencing May 1995 resulting from the settlement
of IWC's rate case on April 26, 1995.
Operation and administration expenses applicable to the utility-related services
segment, excluding $16,668,000 in expenses applicable to the operations of MPC,
increased $9,384,000 (33.4%). Labor expense increased $3,986,000 (21.5%)
primarily due to the addition of employees resulting from the expansion of SM&P.
Materials expense increased $511,000 (25.8%) primarily due to the expansion of
business of SM&P.Transportation costs increased $1,259,000 (69.0%) primarily due
to the increase in the number of vehicles, leasing costs and associated
maintenance costs. Insurance expense increased $644,000 (24.4%) primarily due to
higher healthcare premiums resulting from increased numbers of employees and
increases in general liability and worker's compensation insurance premiums.
Other fringe benefit costs, including pension related benefits, increased
$1,121,000 (66.3%) primarily due to the cost of increased benefits to an
increasing employee base. Cable cut costs increased $640,000 (55.3%) primarily
due to the expansion of business and the increased costs associated with cable
cuts.
Amortization of acquisition costs increased $72,000 (6.4%) primarily due to the
acquisition of MPC. Depreciation increased $1,707,000 (21.8%) of which
$1,285,000 is applicable to the utility- related services segment. The increase
in water utilities segment and utility-related services segment depreciation is
primarily due to additional utility plant and other property placed in service
including other property added through the acquisition of MPC.
Taxes other than income taxes increased $1,569,000 (20.1%) of which $1,294,000
is applicable to the utility-related services segment which results primarily
from payroll related taxes. The remaining increase of $275,000 applicable to the
water utilities segment is primarily due to an increase in property taxes
resulting from additional plant in service.
The increase in interest expense, net, of $1,436,000 (18.0%) is largely due to
the effect of higher average debt outstanding.
Income taxes increased $1,096,000 (8.6%) primarily due to an increase of
$1,087,000 in income taxes collected from developers.
1994 Compared to 1993
Operating earnings in the water utilities segment was $26,027,000 (35.4% of
revenues) in 1994 compared to $21,645,000 (33.5% of revenues) in 1993.
Improvement in operating earnings in this segment is due primarily to the
inclusion in revenues of $3,611,000 in income taxes collected from developers in
1994. Operating earnings in the utility-related services segment was $4,892,000
(12.9% of revenues) in 1994 compared to $4,349,000 (22.1% of revenues) in 1993.
The reduction in the operating margin is primarily due to additional expenses
incurred to expand SM&P's business in 1994, and 12 months of amortization of
acquisition costs applicable to SM&P compared to 6 months of amortization in
1993.
Operating revenues increased $27,137,000 (32.2%) of which $18,196,000 is
applicable to the utility-related services segment. The increase in water
utilities segment revenues of $5,330,000, excluding $3,611,000 in income taxes
collected from developers, represents an 8.2% increase over 1993, and is
primarily due to an 8.8% increase in total water consumption, reflecting more
normal weather conditions experienced during summer 1994 as compared to
conditions experienced during summer 1993.
Operation and administration expenses increased $18,582,000 (41.2%) of which
$15,083,000 is applicable to the utility-related services segment. The increase
in water utilities segment expenses of $3,499,000 which is discussed below
represents a 10.9% increase over 1993 and is primarily due to the effects of
inflation on the Company's costs and other factors. Labor expenses increased
$435,000 (3.3%) mainly due to a general wage increase, effective January 1,
1994. Power costs increased $181,000 (7.0%) primarily due to increased pumpage.
Chemical costs increased $454,000 (60.1%) primarily due to increased usage and
higher chemical costs. Materials and transportation costs increased $477,000
(22.6%) largely due to an increase in maintenance activities. The cost of
outside services increased $279,000 (4.8%) chiefly due to an increase in
consulting and other services. Insurance expense increased $1,009,000 (30.8%)
reflecting higher health and general liability insurance premium costs and
nonrecurring credits recognized in 1993. Regulatory expenses decreased $97,000
(33.5%) primarily due to decreased rate case expenses. Costs of the Company's
pension and other benefit plans increased $841,000 (54.5%) primarily due to
the higher costs of benefits provided.
Depreciation increased $1,264,000 (19.3%) of which $1,004,000 is applicable to
the utility- related services segment. The increase in water utilities segment
depreciation of $260,000 represents a 4.5% increase over 1993, and is primarily
due to additional plant placed in service.
Taxes other than income taxes increased $1,914,000 (32.4%) of which
$1,114,000 is applicable to the utility-related services segment. The
remaining increase of $800,000 applicable to the water utilities segment is
primarily due to an increase in property taxes resulting from additional plant
in service. The increase in interest expense, net, of $664,000 (9.1%) is largely
due to the combined effects of higher average debt outstanding and higher
interest rates. The increase in amortization of acquisition costs of $452,000
(67.1%) is primarily due to the acquisition of SM&P in 1993.
Income taxes increased $3,396,000 (36.4%) primarily due to $3,611,000 in income
taxes collected from developers.
Liquidity and Capital Resources
At the present time, the Company's business activities are conducted through its
regulated water utilities and unregulated utility-related businesses. The
Company acquired SM&P in June 1993 and MPC in August 1995 which diversified the
Company's operations. The Company may, in the future, become involved in other
water utilities and utility-related activities through the acquisition or
formation of additional subsidiaries. The source of capital to finance these
subsidiaries will be determined at the time they are established or acquired.
However, the Company does not intend to enter into any business that would
impair the Company's primary commitment to maintain and develop its water
utilities to meet the current and future needs of its customers.
Cash Flows from Operating Activities
Cash flows from operating activities result primarily from net earnings adjusted
for non-cash items such as depreciation and deferred taxes and changes in
operating assets and liabilities. The seasonal nature of the Company's business
typically results in higher operating revenues in the second and third quarters
of the year than in the first and fourth quarters. Fluctuations in accounts
payable and accrued expenses result primarily from property taxes and timing of
payments, whereas federal income taxes vary with pretax earnings.
Cash Flows from Investing Activities
Cash flows from investing activities fluctuate primarily as a result of
additions to utility plant and other property and the level of customer advances
for construction, net of refunds. In August 1995, the Company used the proceeds
from additional short-term borrowings of $5,600,000 to acquire the net assets of
MPC.During 1995 and 1994, the Company added $42,835,000 (including $14,921,000
from the acquisition of MPC) and $28,256,000, respectively, to utility plant and
other property. The Company continues to experience significant growth in its
distribution system. Approximately 85 miles of new mains were placed in service
in 1995 compared with approximately 113 miles during 1994. The Company received
$8,233,000 in new customer advances for construction of new mains in 1995 and
$9,175,000 in 1994. Such advances are subject to refund over a ten-year period
based on the addition of new customers to the constructed mains. The Company
refunded approximately $2,900,000 during 1995 and $2,200,000 during 1994.
Cash Flows from Financing Activities
Cash flows from financing activities consist primarily of the Company's
borrowings, dividend payments and sales of common stock. The Company utilizes
borrowings against its lines of credit with local banks for its short-term cash
needs.
In January 1994, the Company prepaid $1,200,000 in principal amount of its 12-
7/8% Series Bonds at a premium of $77,000. In February 1995, the Company prepaid
an additional $1,150,000 in principal amount of these bonds at a premium of
$65,000 and in December 1995, the Company prepaid the remaining $2,850,000
principal balance of these bonds at a premium of $138,000. Funds used to prepay
these amounts were derived from proceeds of the sale of common shares through
the Company's Dividend Reinvestment and Share Purchase Plan.
During March 1994, the Company issued $14,000,000 of 6.31% Senior Notes due
March 15, 2001. Proceeds from these notes were used to repay $13,700,000 in
short-term notes with banks incurred for the acquisition of SM&P.
In March 1995, the Commission granted IWC authority to issue, on or before
December 31, 1996, an aggregate of $30,000,000 in securities, to consist of not
more than $18,000,000 in the form of long-term debt and/or preferred equity, and
assuming favorable market conditions, at least $12,000,000 in common equity. In
September 1995, IWC issued $18,000,000 of 5.85% Series First Mortgage Bonds to
secure a like amount of Economic Development Bonds issued by the City of
Indianapolis bonds due September 1, 2025. Proceeds from this issue were
deposited with a trustee and will be used for the construction, extension and
improvement of IWC's facilities, plant and distribution system and reimbursement
of IWC's treasury for plant capital expenditures previously made. In December
1995, Resources made an equity capital contribution to IWC of $10,505,000.
The amount invested by Resources was derived from proceeds of the sale of
common shares of the Company through its Dividend Reinvestment and Share
Purchase Plan. The Company's goal is to reduce the percentage of net earnings
applicable to common and common equivalent shareholders declared payable in
cash dividends to a level which allows the Company greater flexibility in
operating its businesses.
Approximately 84%, 95%, and 99% of net earnings applicable to common and common
equivalent shareholders were declared payable in cash dividends during 1995,
1994, and 1993, respectively. The reduction in the payout percentage in 1995 is
due primarily to improved net earnings resulting from diversification of the
Company's businesses and improved operating results in the water utilities
segment. Cash dividends declared payable to common and common equivalent
shareholders, as a percentage of net cash provided by operating activities,
decreased to 45.2% during 1995, compared to 46.2% and 45.7% in 1994 and 1993,
respectively. Long-term debt, as a percentage of total capital and long-term
debt, decreased to 51.6% at December 31, 1995, compared to 55.4% at December 31,
1994. The decrease in the "debt ratio" was primarily due to the net effects of
the issuance of new long-term debt of $18,000,000, the payment of long-term debt
of $2,850,000, issuance of common stock through the Company's dividend
reinvestment plan of $10,809,000, the issuance of common stock for the
acquisition of MPC of $14,348,000, and an increase in retained earnings of
$1,923,000.
At December 31, 1995, the Company had lines of credit with banks aggregating
$43,000,000 which require a compensating cash balance of $100,000. At December
31, 1995, unused lines of credit aggregated $13,659,000. Interest on borrowings
under the lines of credit is variable (an average of 6.58% at December 31,
1995).
Capital Expenditures
Capital expenditures for 1996 are budgeted at approximately $48,000,000 and are
expected to be financed primarily from internally generated cash, customer
advances for construction, short-term bank borrowings, and long-term financing.
Capital expenditures for the five-year period 1996 through 2000 are budgeted at
approximately $150,000,000 with the major portion for new mains and distribution
and plant facilities and other operating equipment. The Company anticipates that
it will be necessary during the five-year period 1996 through 2000 to secure
additional outside financing from both short-and long-term debt and equity
capital, to finance planned capital expenditures and long-term debt maturities.
Projected capital expenditures do not include any construction projects that IWC
could be required to undertake to comply with legislative or regulatory
environmental or water quality requirements that may be imposed in the future.If
IWC is required to adopt new methods of water treatment, the costs involved may
be substantial. Capital costs are presently estimated at $27,000,000 for
ozonation and $105,000,000 for granular activated carbon (GAC). Additionally,IWC
is subject to regulatory requirements regarding discharges from its treatment
plants. The Company estimates that the cost to comply with possible changes to
existing regulatory requirements for discharges approximate $2,000,000 in
increased annual operating costs. Such costs and expenses should be recoverable
through water rates, but only after appropriate regulatory action.
Environmental Matters
The Company's utility operations are subject to pollution control and water
quality control regulations, including those issued by the Environmental
Protection Agency (EPA), the Indiana Department of Environmental Management
(IDEM), the Indiana Water Pollution Control Board and the Indiana Department of
Natural Resources. Under the Federal Clean Water Act and Indiana's regulations,
the Company must obtain National Pollutant Discharge Elimination System (NPDES)
permits for discharges from its White River, White River North, Fall Creek,
Thomas W. Moses, and the Geist treatment stations. The Company's current NPDES
permits were to have expired on June 30, 1989, for White River and Fall Creek
stations, December 31, 1990, for Thomas W. Moses, April 30, 1994, for Geist
treatment station and January 31, 1996, for White River North Station.
Applications for renewal of the permits have been filed with, but not finalized
by, IDEM. (These permits continue in effect pending review of the applications.)
Under the federal Safe Drinking Water Act (SDWA), the Company is subject to
regulation by EPA of the quality of water it sells and treatment techniques it
uses to make the water potable. EPA promulgates nationally applicable maximum
containment levels (MCLs) for contaminants found in drinking water. Management
believes that the Company is currently in compliance with all MCLs promulgatedto
date. EPA has continuing authority, however, to issue additional regulations
under the SDWA, and Congress amended the SDWA in July 1986 to require EPA,
within a three-year period, to promulgate MCLs for over 80 chemicals not then
regulated.EPA has been unable to meet the three-year deadline, but has
promulgated MCLs for many of these chemicals and has proposed additional MCLs.
Management of the Company believes that it will be able to comply with the
promulgated MCLs and those now proposed without any change in treatment
technique, but anticipates that in the future, because of EPA regulations, the
Company may have to change its method of treating drinking water to include
ozonation and/or GAC. In either case, the capital costs could be significant
(currently estimated at $27,000,000 for ozonation and $105,000,000 for GAC), as
would be the Company's increase in annual operating costs (currently
estimated at $1,400,000 for ozonation and $5,600,000 for GAC). Actual costs
could exceed these estimates. The Company would expect to recover such costs
through its water rates; however, such recovery may not necessarily be timely.
Under a 1991 law enacted by the Indiana Legislature, a water utility, including
the utility subsidiaries of the Company, may petition the Indiana Utility
Regulatory Commission (Commission) for prior approval of its plans and estimated
expenditures required to comply with provisions of, and regulations under, the
Federal Clean Water Act and SDWA. Upon obtaining such approval, the utility may
include, to the extent of its estimated costs as approved by the Commission,
such costs in its rate base for ratemaking purposes and recover its costs of
developing and implementing the approved plans if statutory standards are met.
The capital costs for such new systems, equipment or facilities or modifications
of existing facilities may be included in the utility's rate base upon
completion of construction of the project or any part thereof. While use of this
statute is voluntary on the part of a utility, if utilized it should allow
utilities a greater degree of confidence in recovering major costs incurred to
comply with environmentally related laws on a timely basis.
Rate Case
On May 10, 1995, the Commision approved a Settlement Agreement entered into by
the UCC, four intervening customers and IWC, which provided for an annual
increase in IWC's rates of $2,547,000, or approximately 4%. The parties further
agreed not to seek an adjustment in IWC's basic rates and charges prior to April
1, 1997, subject to IWC's interim right to request approval of new rates to
cover operating expenses connected with implementing measures which might be
required in connection with new National Pollutant Discharge Elimination System
permits which IWC anticipates receiving for wastewater discharges at its Fall
Creek and White River Stations (NPDES permits). The parties also agreed that
prior to April 1, 1997, IWC may request that the Commission approve, in a
separate proceeding, the continuation of the allowance for funds used during
construction (debt component only), and the deferral of depreciation, on any
capital expenditures made in connection with new NPDES permits at the Fall Creek
and White River Stations or IWC's anticipated new South Well Field Station until
a rate base determination has been made with respect to these items in IWC's
next rate case.
Securities
On March 22, 1995, the Commission granted IWC authority to issue, on or before
December 31, 1996, an aggregate of $30,000,000 in securities, to consist of not
more than $18,000,000 in the form of long-term debt and/or preferred equity,
and,assuming favorable market conditions, up to $12,000,000 in common equity.
IWC issued $18,000,000 of long-term debt in September 1995, in the form of First
Mortgage Bonds, 5.85% Series due 2025. Proceeds from the issuance of these
securities may be used for the construction, extension and improvement of IWC's
facilities, plant and distribution system, reimbursement of IWC's treasury for
plant capital expenditures previously made, and the discharge or refunding of
short-term debt and higher cost long-term debt. In December 1995, Resources made
an equity capital contribution to IWC of $10,505,000. The amount invested by
Resources was derived from proceeds of the sale of common shares of the Company
through its Dividend Reinvestment and Share Purchase Plan.
Trends, Inflation and Changing Prices
Under normal conditions and particularly during periods of inflation, water
utility revenues from increased water consumption will not keep pace with the
increase in operating costs. Therefore, periodic water rate and service charge
adjustments are necessary, with the frequency of such increases being partially
determined by the amount of inflation.
Results for any interim period are not indicative of results to be expected for
the year. Typically, the seasonal nature of the Company's business results in a
higher proportion of operating revenues being realized in the second and third
quarters of the year than the first and fourth quarters of the year.


Shareholder Information

Annual Meeting
The annual meeting of shareholders will be held at University Place Conference
Center and Hotel, Room 132, 850 West Michigan Street, Indianapolis, Indiana, at
11:00 a.m. (EST) on Thursday, April 18, 1996. Notice of the meeting, a proxy
statement and a form of proxy were mailed on or about March 14, 1996, to all
shareholders of record February 29, 1996.
Form 10-K and Financial Information
A copy of the Company's annual report on Form 10-K (including financial
statements, but without exhibits) filed with the Securities and Exchange
Commission is available without charge upon request.Requests should be addressed
to the Shareholder Relations Department, IWC Resources Corporation, P. O. Box
1220, Indianapolis, Indiana 46206.
Dividend Reinvestment and Share Purchase Plan
The Dividend Reinvestment and Share Purchase Plan (the "Plan") provides a
convenient way to purchase common shares of the Corporation's stock and without
payment of any brokerage or other fees. The "Plan" provides for a 3% discount
from the current average market price on reinvested dividends and optional cash
purchases. Holders of record of common shares, any series of the Corporation's
special shares,certain employees and utility customers of the Corporation or its
subsidiaries are eligible to participate. Participants in the plan can
automatically reinvest cash dividends on all shares registered in their names;
reinvest cash dividends on less than all shares and continue to receive cash
dividends on the remaining shares in their names; invest by making optional cash
purchases of common shares in any amount in excess of $100 ($10 in the case of
employees). Brokers, nominees, and investment companies are not eligible to
elect these options.
A prospectus describing the "Plan" is available upon request by writing or
calling the Shareholder Relations Department, (317) 263-6407.
Shareholder Inquiries
Shareholders with questions concerning their accounts, dividend checks, or stock
certificates should contact the Company's stock transfer and dividend disbursing
agent as follows:
FIFTH THIRD BANK
CORPORATE TRUST SERVICES MD-1090F5
38 Fountain Square Plaza
Cincinnati, OH 45263
(800) 837-2755 or (513) 579-5320
Stock Statistics
The common stock of the Company is traded over-the-counter under the NASDAQ
National Market System symbol of IWCR.
The following table sets forth, on a per-share basis, the high and low sale
prices of the Company's common stock and dividends paid per share during the
last two years.
Common Stock
                                         Dividends
                                         Declared
                    High       Low       Per Share(cent)
 1995
Fourth Quarter    $ 20 1/2  $ 18 3/4        35
Third Quarter       19 3/4    18 3/4        35
Second Quarter      20 1/4    18            35
First Quarter       20 3/4    18 1/4        35
 1994
Fourth Quarter      21 1/2    18 1/2        35
Third Quarter       20 1/2    17 3/4        35
Second Quarter      22 1/4    21            35
First Quarter       23        20 3/4        35

Distribution of Shareholders
December 31, 1995, of Record

                       Other
                      States            
                   & Foreign            
           Indiana Countries       Total
Holders      4,780     1,928       6,708
               71%       29%
Shares   3,210,766 5,036,587   8,247,353
               61%       39%


IWC Resources Corporation Officers

James T. Morris
Chairman of the Board,
Chief Executive Officer and President

Joseph R. Broyles
President - IWC Industries

J. A. Rosenfeld
President - IWC Utilities

Kenneth N. Giffin
Senior Vice President - Governmental Relations and Real Estate

John M. Davis
Vice President, General Counsel and Secretary

Alan R. Kimbell
Vice President - Marketing

James W. Shaffer
Vice President - Corporate Affairs

Murvin S. Enders
Vice President - Administrative Affairs

James P. Lathrop
Assistant Treasurer and Chief Accounting Officer

Peggy J. Stinson
Assistant Secretary


Indianapolis Water Company Officers

James T. Morris
Chairman of the Board and Chief Executive Officer

J. A. Rosenfeld
President and Chief Operating Officer

Paul J. Doane
Executive Vice President

Kenneth N. Giffin
Senior Vice President - Governmental Relations

John M. Davis
Vice President, General Counsel and Secretary

Robert F. Miller
Vice President - Engineering

David S. Probst
Vice President - Business Development

Tim K. Bumgardner
Vice President - Operations

Patricia L. Chastain
Vice President - Community Affairs

James W. Shaffer
Vice President - Corporate Affairs

Martha L. Wharton
Vice President - Customer Service

L. M. Williams
Vice President - Human Resources

James P. Lathrop
Assistant Treasurer and Chief Accounting Officer

Peggy J. Stinson
Assistant Secretary


Miller Pipeline Corporation Officers

Don W. Miller
Chairman of the Board

Dale R. Miller
President and Chief Operating Officer

David D. Waters
Senior Vice President

E. Paul Miller
Vice President

Henry Topf, Jr.
Vice President

Douglas S. Banning, Jr.
Secretary/Treasurer

Michael Kempf
Assistant Secretary


SM&P Utility Resources, Inc. Officers

James T. Morris
Chairman of the Board

Daniel S. Baker
President

Michael B. Stayton
Executive Vice President

J. A. Rosenfeld
Executive Vice President and Treasurer


John M. Davis
Corporate Secretary


Utility Data Corporation Officers

James T. Morris
Chairman of the Board and President

James D. Kiefner
Executive Vice President

J.A. Rosenfeld
Vice President and Treasurer

Martha L. Wharton
Vice President - Customer Service

Arthur K. Smith
Vice President - Data Services

John M. Davis
Corporate Secretary

James P. Lathrop
Assistant Secretary and Assistant Treasurer


IWC Resources Corporation Board of Directors

Joseph D. Barnette, Jr.
Chairman and Chief Executive Officer
Bank One, Indianapolis, NA

Robert A. Borns
Chairman of the Board
Borns Management
Indianapolis

Joseph R. Broyles*
President
IWC Industries

Susan O. Conner
Sr. Vice President, Public Affairs
USA Group, Inc.
Indianapolis

Murvin S. Enders (Ret. 1/19/96)
President
Team Enders, Inc.
Indianapolis (Not pictured)

Otto N. Frenzel III*
Chairman of the Executive Committee
National City Bank, Indiana
Indianapolis

J. B. King
Vice President and General Counsel
Guidant Corporation
Indianapolis

Robert B. McConnell*
Chairman of the Executive Committee
IWC Resources Corporation and Indianapolis Water Company

J. George Mikelsons
Chairman of the Board and Chief Executive Officer
Amtran, Inc.
Indianapolis

Thomas M. Miller*
Associate
Schenkel, McVey & Associates
(Retired Chairman, NBD Indiana)
Indianapolis

James T. Morris*
Chairman of the Board and Chief Executive Officer
IWC Resources Corporation and Indianapolis Water Company

Jack E. Reich*
Chairman of the Board Emeritus
American United Life Insurance Company
Indianapolis (Not pictured)

J. A. Rosenfeld
President
IWC Utilities

Fred E. Schlegel
Partner
Baker & Daniels, Attorneys
Indianapolis

Milton O. Thompson (Appointed 1/19/96)
President
Grand Slam Companies
Indianapolis

*Member of Executive Committee


Resources Corporation
1220 Waterway Boulevard
P.O. Box 1220
Indianapolis, Indiana 46206
(317) 639-1501

IWC Resources Corporation used recycled paper for its annual report.