UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC. 20549

                                    FORM 10-K

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended September 30, 1999

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 1-6494

                            INDIANA GAS COMPANY, INC.
             (Exact name of Registrant as specified in its charter)

            INDIANA                                               35-0793669
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

             1630 North Meridian Street, Indianapolis, Indiana 46202
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code          317-926-3351

Securities registered pursuant to Section 12(b) of the Act:
                                                 Name of each exchange on
       Title of each class                            which registered
             None                                              None

Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)

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

       Indicate  the number of shares  outstanding  of each of the  Registrant's
classes of common stock, as of the latest practicable date.

Common Stock-Without par value            9,080,770         November 30, 1999
------------------------------     ------------------       -----------------
               Class               Number of shares                   Date

       Indicate by check mark if  disclosure of  delinquent  filers  pursuant to
Item 405 of  Regulation  S-K (ss.  229.405  of this  chapter)  is not  contained
herein, and will not be contained, to the best of the Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.[X]

<PAGE>


Table of Contents

                                                                           Page
Part I.....................................................................   3
     Business..............................................................   3
     Property..............................................................   5
     Legal Proceedings.....................................................   5
     Submission of Matters to a Vote of Security Holders...................   5
     Executive Officers of the Company.....................................   5
Part II....................................................................   7
     Market for the Registrant's Common Equity and
          Related Stockholder Matters......................................   7
     Selected Financial Data...............................................   8
     Management's Discussion and Analysis of Results of
          Operations and Financial Condition...............................   9
     Financial Statements and Supplementary Data...........................  19
     Changes in and Disagreements with Accountants.........................  41
Part III...................................................................  41
     Directors and Executive Officers of the Registrant....................  41
     Executive Compensation................................................  41
     Securities Ownership of Certain Beneficial Owners and Management......  41
     Certain Relationships and Related Transactions........................  42
Part IV....................................................................  42
     Exhibits, Financial Statements Schedules, and Reports on Form 8-K.....  42




<PAGE>




Part I


Item 1.       Business

       (a)    General Development of the Business.

              Indiana  Gas  Company,  Inc.  (Indiana  Gas or the  company) is an
              operating  public utility engaged in the business of providing gas
              utility service in the state of Indiana. It was incorporated under
              the laws of the  state of  Indiana  on July 16,  1945.  All of the
              outstanding  shares of common  stock of the  company  are owned by
              Indiana Energy,  Inc. (Indiana Energy),  which is a public holding
              company.

              On June 14,  1999,  Indiana  Energy and  SIGCORP,  Inc.  (SIGCORP)
              jointly announced the signing of a definitive agreement to combine
              into a new holding  company named Vectren  Corporation  (Vectren).
              SIGCORP is an investor-owned energy and telecommunications company
              that through its subsidiaries provides electric and gas service to
              southwest  Indiana and energy and  telecommunication  products and
              services throughout the Midwest and elsewhere.

              Indiana Gas Company,  Inc.  and Southern  Indiana Gas and Electric
              Company,  Inc.,  Indiana Energy's and SIGCORP's  utility companies
              will operate as separate subsidiaries of Vectren.

              The merger is conditioned,  among other things, upon the approvals
              of the  shareholders  of each  company  and  customary  regulatory
              approvals.  On December 17,  1999,  the merger was approved by the
              shareholders  of each company.  On December 20, 1999,  the Federal
              Energy Regulatory  Commission (FERC) issued an order approving the
              proposed merger. In approving the merger,  the FERC concluded that
              the  merger  was in the public  interest  and would not  adversely
              affect competition,  rates or regulation. The companies anticipate
              that the  remaining  regulatory  processes can be completed in the
              first quarter of calendar 2000.

       (c)    Narrative Description of the Business.

              During  fiscal 1999,  Indiana Gas  supplied  gas to about  500,000
              residential,  small commercial and contract (large  commercial and
              industrial)  customers in 284 communities in 48 of the 92 counties
              in the state of Indiana.  The  service  area has a  population  of
              approximately 2 million and contains diversified manufacturing and
              agriculture-related  enterprises.  The principal industries served
              include  automotive parts and  accessories,  feed, flour and grain
              processing,  metal castings,  aluminum products,  gypsum products,
              electrical equipment, metal specialties and glass.

              The  largest   communities   served  include   Muncie,   Anderson,
              Lafayette-West  Lafayette,  Bloomington,  Terre Haute, Marion, New
              Albany, Columbus,  Jeffersonville,  New Castle and Richmond. While
              Indiana  Gas does not  serve in  Indianapolis,  it does  serve the
              counties and communities which border that city.

              For  the  fiscal  year  ended  September  30,  1999,   residential
              customers  provided 66 percent of revenues,  small  commercial  23
              percent  and  contract  11  percent.  Approximately  99 percent of
              Indiana Gas' customers  used gas for space  heating,  and revenues
              from these  customers  for the fiscal year were  approximately  90
              percent of total operating revenues. Sales of gas are seasonal and
              strongly affected by variations in weather  conditions.  Less than
              half of total margin,  however,  is space heating related.  During
              the fiscal  year  ended  September  30,  1999,  Indiana  Gas added
              approximately 11,400 residential and commercial customers.

              Indiana Gas sells gas directly to  residential,  small  commercial
              and  contract  customers  at  approved  rates.  Indiana  Gas  also
              transports gas through its pipelines at approved rates to contract
              customers  which have  purchased  gas directly  from  producers or
              through  brokers and marketers.  The total volumes of gas provided
              to both  sales and  transportation  customers  is  referred  to as
              throughput.

              Gas  transported  on behalf of end-use  customers  in fiscal  1999
              represented 43 percent (51,213 MDth) of throughput  compared to 40
              percent  (45,598  MDth) in 1998 and 34  percent  (41,874  MDth) in
              1997.  Although  revenues  are  lower,  rates  for  transportation
              generally  provide the same  margins as would have been earned had
              the gas been sold under normal sales tariffs.

              Effective April 1, 1996,  Indiana Gas purchases all of its natural
              gas and winter delivery service from ProLiance Energy,  LLC, a gas
              marketing  affiliate  of  Indiana  Energy  (see Item 7,  ProLiance
              Energy,  LLC).  Prices for gas and related  services  purchased by
              Indiana Gas are  determined  primarily  by market  conditions  and
              rates  established  by the Federal Energy  Regulatory  Commission.
              Indiana  Gas'  rates and  charges,  terms of  service,  accounting
              matters,  issuance of  securities,  and certain other  operational
              matters are regulated by the Indiana Utility Regulatory Commission
              (IURC).

              Adjustments to Indiana Gas' rates and charges  related to the cost
              of gas are made  through  gas  cost  adjustment  (GCA)  procedures
              established by Indiana law and  administered by the IURC. The IURC
              has applied the statute  authorizing  the GCA procedures to reduce
              rates when  necessary so as to limit net operating  income,  after
              adjusting to normal weather,  to the level  authorized in the last
              general rate order.  The earnings  test provides that no refund be
              paid to the extent a utility has not earned its authorized utility
              operating income over the previous 60 months (or during the period
              since the utility's last rate order, if longer).

              Information regarding  environmental matters affecting the company
              is  incorporated  herein  by  reference  to Item 7,  Environmental
              Matters.

              Indiana Gas had 736 full-time employees and 25 part-time employees
              as of September 30, 1999.

              During fiscal 1997, the Indiana Gas Board of Directors  authorized
              management to undertake the actions  necessary and  appropriate to
              restructure Indiana Gas' operations.  These actions by Indiana Gas
              were consistent with Indiana Energy,  Inc.'s (Indiana Gas' parent)
              growth strategy that was approved by its board of directors during
              fiscal  1997.   See  Item  7,  Growth   Strategy   and   Corporate
              Restructuring.

Item 2.       Property

              The   properties  of  Indiana  Gas  are  used  for  the  purchase,
              production,  storage  and  distribution  of gas  and  are  located
              primarily  within the state of Indiana.  As of September 30, 1999,
              such  properties  included  10,948  miles of  distribution  mains;
              512,351  meters;  five  reservoirs  currently  being  used for the
              underground  storage of purchased  gas with  approximately  71,484
              acres of land held under storage  easements;  7,310,173 Dth of gas
              in company-owned  underground storage with a daily  deliverability
              of 134,160  Dth;  171,451  Dth of gas in contract  storage  with a
              daily  deliverability  of 3,563 Dth; and four liquefied  petroleum
              (propane) air-gas manufacturing plants with a total daily capacity
              of 32,700 Dth of gas.

              Indiana  Gas'  capital  expenditures  during the fiscal year ended
              September 30, 1999, amounted to $60.2 million.


Item 3.       Legal Proceedings

              See Item 8, Note 11 for  litigation  matters  involving  insurance
              carriers pertaining to Indiana Gas' former manufactured gas plants
              and storage facilities.

              See Item 8, Note 12 for discussion of litigation  matters relating
              to the gas supply and portfolio administration  agreements between
              ProLiance and Indiana Gas and ProLiance and Citizens Gas.


Item 4.       Submission of Matters to a Vote of Security Holders

              No matter was  submitted  during the fourth  quarter of the fiscal
              year ended September 30, 1999, to a vote of security holders.

              On December 17, 1999, the  shareholders  of Indiana  Energy,  Inc.
              approved the merger between Indiana Energy, Inc. and SIGCORP, Inc.



Item 4a.      Executive Officers of the Company

              The Executive Officers of the company are as follows:



<PAGE>
<TABLE>
<CAPTION>



                                Family
                                Relation-          Office or                     Date Elected
        Name          Age         ship            Position Held                 Or Appointed(1)

<S>                    <C>      <C>          <C>                                <C>
Lawrence A. Ferger     65       None         Chairman and Chief                 (Retired May 31, 1999) (2)
                                             Executive Officer                  Oct. 1, 1997
                                             Chairman, President and
                                             Chief Executive Officer            Jan. 26, 1996
                                             President and Chief
                                             Executive Officer                  July 1, 1987

Niel C. Ellerbrook     50       None         President and Chief
                                             Executive Officer                  June 1, 1999
                                             President                          Oct. 1, 1997
                                             Executive Vice President
                                             and Chief Financial
                                             Officer                            Jan . 22, 1997
                                             Senior Vice President and
                                             Chief Financial Officer            July 1, 1987

Paul T. Baker          59       None         Executive Vice
                                             President and Chief
                                             Operating Officer                  Oct. 1, 1997
                                             Senior Vice President
                                             and Chief Operating
                                             Officer                            Aug. 1, 1991

Anthony E. Ard         58       None         Secretary                          Jul. 31, 1998
                                             Senior Vice President of
                                             Corporate Affairs                  Jan. 9, 1995
                                                                                (through
                                                                                Sep. 30, 1997)
                                             Vice President -
                                             Corporate Affairs                  Jan. 11, 1993

Timothy M. Hewitt     49        None         Vice President of
                                             Operations and Engineering         Jan. 9, 1995
                                             Vice President of Sales
                                             and Field Operations               Jan. 14, 1991
</TABLE>



(1)  Each of the  officers  has served  continuously  since the dates  indicated
     unless otherwise noted.

(2)  Continues role as Chairman of the Board of Indiana Gas Company, Inc.


<PAGE>




Part II


Item 5.       Market for the Registrant's  Common Equity and Related Stockholder
              Matters

              All of the  outstanding  shares of Indiana  Gas' common  stock are
owned by Indiana Energy, Inc., and are not traded.

              During  fiscal 1999,  the company paid  dividends of $7.0 million,
$7.0  million,  $7.0  million and $7.3 million in the first,  second,  third and
fourth quarters, respectively.

              During  fiscal 1998,  the company paid  dividends of $6.8 million,
$6.8  million,  $6.8  million and $7.0 million in the first,  second,  third and
fourth quarters, respectively.




<PAGE>




Item 6.       Selected Financial Data

<TABLE>
<CAPTION>

                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES
                                   (Thousands)

Year Ended September 30                                    1999           1998         1997(2)           1996           1995
-----------------------                                 ---------      ---------      ----------      ---------    -----------
<S>                                                      <C>            <C>             <C>            <C>            <C>
Operating revenues                                       $419,061       $465,644        $530,407       $530,594       $403,810
Margin                                                    203,370        194,640         207,885        210,463        185,315
Operating expenses                                        156,820        148,389         178,874        156,910        139,127
Operating income                                           46,550         46,251          29,011         53,553         46,188
Other income - net                                            839            866           1,241            984          1,451
Interest expense                                           16,012         16,234          16,774         15,907         15,530
Net income                                              $  31,377      $  30,883       $  13,478      $  38,630      $  32,109

Ratio of earnings to fixed charges                            4.0            3.9             2.2            4.6            4.1

Common shareholder's equity                              $243,426       $240,349        $268,762       $281,534       $268,154
Long-term debt (1)                                        181,849        191,975         189,733        174,733        173,693
                                                        ---------      ---------       ---------      ---------      ---------
                                                         $425,275       $432,324        $458,495       $456,267       $441,847
                                                         --------       --------        --------       --------       --------

Total Assets at Year-End                                 $682,524       $642,940        $665,719       $672,907       $655,933

Total throughput                                          118,065        114,795         122,846        126,742        109,508

Annual heating degree days
    as a percent of normal                                     87%            86%            100%           108%            87%

Utility customers served -
    Average                                               500,203        488,771         477,235        465,166        454,817
</TABLE>



(1)  Includes current maturities; excludes sinking fund requirements.

(2)  Reflects the recording of pre-tax  restructuring  costs of $39.5 million in
     fiscal 1997 (see Item 8, Note 3).


<PAGE>





Item 7.       Management's  Discussion and Analysis of Results of Operations and
              Financial Condition

              Results of Operations

              Net income for Indiana Gas Company, Inc. and subsidiaries (Indiana
              Gas or the  company)  for the  last  three  fiscal  years  were as
              follows:

                    (Millions)          1999         1998        1997(1)
                    ----------         ------       ------       -------
                    Net Income          $31.4        $30.9         $13.1

              (1) Reflects  restructuring  costs of $24.5 million after-tax (see
              Growth Strategy and Corporate Restructuring).


              Margin (Operating Revenues Less Cost of Gas)

              In 1999,  utility  margin  increased 4 percent ($8.7 million) when
              compared to 1998.  The increase is primarily  attributable  to the
              addition of new  residential and commercial  customers,  the lower
              cost of  unaccounted  for gas and a one-time  sale of native  gas.
              Weather  for the year was 1 percent  colder  than the same  period
              last year and 13 percent warmer than normal.

              In 1998,  utility margin  decreased 6 percent ($13.2 million) when
              compared  to 1997.  The  decrease  is  primarily  attributable  to
              weather  14  percent  warmer  than the prior  year and 14  percent
              warmer  than  normal,  offset  somewhat  by  the  addition  of new
              residential and commercial customers.

              In   1999,   total   system   throughput   (combined   sales   and
              transportation)  increased 3 percent (3.3 MMDth) when  compared to
              last year.  In 1998,  throughput  decreased 7 percent  (8.1 MMDth)
              when  compared  to 1997.  Indiana  Gas'  rates for  transportation
              generally  provide  the same  margins as are earned on the sale of
              gas under  its  sales  tariffs.  Approximately  one-half  of total
              system  throughput  represents  gas used for space  heating and is
              affected by weather.

              Total  average  cost  per  dekatherm  of  gas  purchased  (average
              commodity  and demand) was $3.01 in 1999,  $3.65 in 1998 and $3.64
              in 1997. The price changes are due primarily to changing commodity
              costs in the marketplace.

              Operating Expenses

              Operation and maintenance  expenses increased $6.3 million in 1999
              due in part to  administrative  and  service  fees paid to Indiana
              Gas'  affiliate,   IEI  Services,   LLC  (IEI  Services).   Higher
              administrative  service  costs  associated  with the company's new
              customer  information  and  work  management  systems  and  rental
              expense related to buildings  previously owned also contributed to
              the  increase.  These  increases  were  partially  offset  by  the
              adjustment to the company's severance accrual.

              Operation and maintenance  expenses  increased  approximately $4.6
              million  in 1998  when  compared  to  1997.  The  increase  is due
              primarily to administrative  and service fees paid to Indiana Gas'
              affiliate,  IEI Services, LLC (IEI Services) related to assets now
              owned  by IEI  Services.  IEI  Services  began  providing  support
              services to Indiana Gas effective  October 1, 1997 (see  resulting
              lower  depreciation  and  amortization  below).  The  increase was
              offset  somewhat  by  lower  labor  costs  and  related   benefits
              resulting from work force reductions.

              Restructuring  costs of $39.5 million  (pre-tax)  were recorded in
              1997 related to the  implementation of Indiana Energy,  Inc.'s new
              growth   strategy  during  that  year  (see  Growth  Strategy  and
              Corporate Restructuring).

              Depreciation and  amortization  increased in 1999 primarily due to
              additions  to  plant  to  serve  new  customers  and  to  maintain
              dependable  service  to  existing   customers.   Depreciation  and
              amortization  decreased  in 1998 due  primarily to the transfer of
              assets to IEI  Services,  and assets held for disposal  which were
              written  down to estimated  fair values in 1997.  The decrease was
              partially offset by additions to plant.

              Federal and state income taxes remained about the same in 1999 and
              increased in 1998 due primarily to changes in taxable income.

              Taxes other than income taxes  increased in 1999 by  approximately
              $1.0 million due to higher  property  tax  expense,  the result of
              additions  to plant.  Taxes other than income  taxes  decreased in
              1998 due to lower  property tax expense and reduced gross receipts
              tax expense.

              Interest Expense

              In 1999,  interest  expense  was about the same as 1998.  Interest
              expense  decreased  in 1998 due to a decrease in  interest  rates,
              partially offset by an increase in the average outstanding debt.

              Other Operating Matters


              Agreement to Merge with SIGCORP, Inc.

              On June 14,  1999,  Indiana  Energy and  SIGCORP,  Inc.  (SIGCORP)
              jointly announced the signing of a definitive agreement to combine
              into a new holding  company named Vectren  Corporation  (Vectren).
              SIGCORP is an investor-owned energy and telecommunications company
              that through its subsidiaries provides electric and gas service to
              southwest  Indiana and energy and  telecommunication  products and
              services throughout the Midwest and elsewhere.

              Under the agreement,  Indiana Energy shareholders will receive one
              share of Vectren  common  stock for each  share of Indiana  Energy
              held at the closing date. SIGCORP  shareholders will receive 1.333
              shares of Vectren  common  stock for each share of SIGCORP held at
              the closing date. The transaction,  which has been approved by the
              boards of directors of both companies, is intended to be accounted
              for as a pooling of interests. The transaction is also intended to
              be a tax-free exchange of shares.

              Indiana Gas Company,  Inc.  and Southern  Indiana Gas and Electric
              Company,  Inc.,  Indiana Energy's and SIGCORP's utility companies,
              will operate as subsidiaries of Vectren.

              The merger is conditioned,  among other things, upon the approvals
              of the  shareholders  of each  company  and  customary  regulatory
              approvals.  On December 17,  1999,  the merger was approved by the
              shareholders  of each company.  On December 20, 1999,  the Federal
              Energy Regulatory  Commission (FERC) issued an order approving the
              proposed merger. In approving the merger,  the FERC concluded that
              the  merger  was in the public  interest  and would not  adversely
              affect competition,  rates or regulation. The companies anticipate
              that the  remaining  regulatory  processes can be completed in the
              first quarter of calendar 2000.

              Subsequent Acquisition Agreement

              On December 15, 1999, Indiana Energy Inc. announced that the board
              of  directors  had  approved a  definitive  agreement  under which
              Indiana Energy will acquire the natural gas distribution  business
              of Dayton  Power and Light  Co.,  Inc.  This  acquisition,  with a
              purchase  price of $425  million,  is expected to be funded with a
              bank  facility  which will be  replaced  over time with  permanent
              financing.  This  transaction is conditioned  upon the approval of
              several  regulatory  bodies.  Management  hopes  to  complete  the
              transaction by the end of the second quarter of 2000.

              Growth Strategy and Corporate Restructuring

              In April 1997, the Board of Directors of Indiana Energy approved a
              growth strategy designed to support the company's  transition into
              a more  competitive  environment.  As part of the  current  growth
              strategy,  Indiana  Energy  will  endeavor  to  become  a  leading
              regional  provider of energy products and services and to grow its
              consolidated  earnings  per  share  by an  average  of 10  percent
              annually  through 2004. To achieve such earnings  growth,  Indiana
              Energy's   aim  is  to  grow  the   earnings   contribution   from
              non-regulated  operations  to over 35 percent of its total  annual
              earnings  by 2004 and to  aggressively  manage  costs  within  its
              utility  operations  and  non-regulated   administrative  services
              provider.

              During  1997,  the  Indiana  Gas  Board  of  Directors  authorized
              management to undertake the actions  necessary and  appropriate to
              restructure  Indiana  Gas'  operations  and  recognize a resulting
              restructuring  charge of $39.5 million ($24.5  million  after-tax)
              for fiscal 1997 as described below.

              In July 1997,  the company  advised its  employees  of its plan to
              reduce its work force from about 1,025 full-time employees at June
              30, 1997, to  approximately  800 employees by 2002. The reductions
              are  being   implemented   through   involuntary   separation  and
              attrition.  Indiana  Gas  recorded  restructuring  costs  of  $5.4
              million  during the fourth  quarter of fiscal 1997  related to the
              involuntary  terminations  planned  under the  company's  specific
              near-term   employee  reduction  plan,  which  was  scheduled  for
              completion  by  the  end  of  fiscal  1999.  These  costs  include
              separation pay in accordance with Indiana Gas' severance policy of
              $3.9  million,   and  net  curtailment  losses  related  to  these
              employees'  postretirement  and pension  benefits.  As a result of
              initial work force reductions  during September 1997 and primarily
              attrition thereafter,  most of the reductions  contemplated during
              the two year period and  accrued  originally  have been  achieved.
              During the second quarter of fiscal 1999, the company reviewed its
              remaining  accruals for costs associated with the involuntary work
              force reductions.  Taking into  consideration an unexpectedly high
              level of voluntary  terminations,  the company  determined that no
              additional  significant  involuntary  work force  reductions  were
              likely to occur.  Prior to  September  30,  1998,  $2.2 million of
              involuntary  termination  benefits had been paid. As a result, the
              severance  accrual and other  operating  expenses  were reduced by
              $1.7 million during fiscal year 1999.

              Indiana  Gas'  management  also  committed  to  sell,  abandon  or
              otherwise  dispose of certain  assets,  including  buildings,  gas
              storage  fields  and  intangible   plant.   Indiana  Gas  recorded
              restructuring  costs of $34.1 million during the fourth quarter of
              fiscal  1997 to  adjust  the  carrying  value of those  assets  to
              estimated fair value. These assets have been sold or are no longer
              in use.


<PAGE>



              ProLiance Energy, LLC

              ProLiance  Energy,  LLC  (ProLiance),   a  nonregulated  marketing
              affiliate  of Indiana  Energy,  began  providing  natural  gas and
              related  services to Indiana Gas and Citizens Gas and Coke Utility
              (Citizens Gas) effective April 1, 1996.

              The sale of gas and provision of other  services to Indiana Gas by
              ProLiance is subject to  regulatory  review  through the quarterly
              gas cost adjustment proceeding currently pending before the IURC.

              On September 12, 1997, the Indiana Utility  Regulatory  Commission
              (IURC)  issued a decision  finding  the gas  supply and  portfolio
              administration  agreements  between  ProLiance and Indiana Gas and
              ProLiance  and  Citizens  Gas (the gas  supply  agreements)  to be
              consistent with the public interest. The IURC's decision reflected
              the  significant  gas  cost  savings  to  customers   obtained  by
              ProLiance's services and suggested that all material provisions of
              the agreements between ProLiance and the utilities are reasonable.
              Nevertheless,  with  respect  to  the  pricing  of  gas  commodity
              purchased  from  ProLiance and two other pricing  terms,  the IURC
              concluded that additional  review in the gas cost adjustment (GCA)
              process  would be  appropriate  and directed that these matters be
              considered  further in the pending,  consolidated  GCA  proceeding
              involving  Indiana  Gas and  Citizens  Gas.  The  IURC has not yet
              established   a   schedule   for   conducting   these   additional
              proceedings.

              The IURC's  September  12,  1997,  decision  was  appealed  to the
              Indiana  Court of Appeals by certain  Petitioners,  including  the
              Indiana Office of Utility Consumer Counselor,  the Citizens Action
              Coalition of Indiana and a small group of large-volume  customers.
              On October 8, 1998, the Indiana Court of Appeals issued a decision
              which reversed and remanded the case to the IURC with instructions
              that the gas supply  agreements be disapproved.  The basis for the
              decision  was that because the gas supply  agreements  provide for
              index based  pricing of gas  commodity  sold by  ProLiance  to the
              utilities,  the gas supply agreements should have been the subject
              of an application  for approval of an alternative  regulatory plan
              under Indiana statutory law.

              On April 22, 1999,  the Indiana  Supreme  Court granted a petition
              for  transfer of the case and will now  consider the appeal of the
              IURC's  decision  and issue its own  decision on the merits of the
              appeal at a later date.  By granting  transfer,  the Supreme Court
              has vacated the Court of Appeals' decision.

              If the Supreme Court reverses the IURC's  decision , the case will
              be  remanded  to the IURC for further  proceedings  regarding  the
              public interest in the gas supply agreements. If the Supreme Court
              affirms   the   IURC's   decision,   as   described   above,   the
              reasonableness of certain of the gas costs incurred by Indiana Gas
              under the gas supply  agreements  will be further  reviewed by the
              IURC  in  the  consolidated  GCA  proceeding.   The  existence  of
              significant   benefits  to  the  utilities  and  their   customers
              resulting  from  ProLiance's  services has not been  challenged on
              appeal.  Indiana Gas and  Citizens Gas are  continuing  to utilize
              ProLiance for their gas supplies.

              On or  about  August  11,  1998,  Indiana  Gas,  Citizens  Gas and
              ProLiance each received a Civil Investigative  Demand ("CID") from
              the United  States  Department of Justice  requesting  information
              relating to Indiana Gas' and Citizens Gas'  relationship  with and
              the activities of ProLiance.  The Department of Justice issued the
              CID to gather  information  regarding  ProLiance's  formation  and
              operations,  and to  determine  if  trade  or  commerce  has  been
              restrained. Indiana Gas has provided all information requested and
              management  continues  to believe  that  there are no  significant
              issues in this matter.

              While the results of the ProLiance  issues  mentioned above cannot
              be predicted,  management  does not expect these matters to have a
              material  impact on Indiana Gas' financial  position or results of
              operations. However, no assurance can be provided.

              The Year 2000 Issue

              Many existing  computer programs use only two digits to identify a
              year in the date field. These programs were designed and developed
              without  considering  the  impact  of the  upcoming  change in the
              century. If not corrected,  many computer  applications could fail
              or create  erroneous  results by or at the year  2000.  This issue
              relates  not  only to  information  technology  (IT),  but also to
              non-IT  related  equipment  and plant  that may  contain  embedded
              date-sensitive microcontrollers or microchips.

              The  company  has  identified   what  it  believes  are  its  most
              significant  worst  case Year 2000  scenarios  for the  purpose of
              helping it to focus its Year 2000 efforts. These scenarios are the
              interference with the company's ability to (1) receive and deliver
              gas  to  customers,   (2)  monitor  gas  pressure  throughout  the
              company's gas distribution  system,  (3) bill and receive payments
              from  customers,  and (4)  maintain  continuous  operation  of its
              computer  systems.  As discussed  below, the company has taken the
              steps  necessary  to ensure  that these worst case  scenarios  are
              addressed and any impact has been minimized.

              The  company  has  evaluated  the Year  2000  readiness  of all IT
              hardware and software including the mainframe,  network,  servers,
              personal   computers,   system  and   application   software   and
              telecommunications.  Almost  all  hardware  was  found  to  be  in
              compliance  as a result of  projects  conducted  in 1997 and 1998.
              Replacements of major customer  information  and billing  systems,
              which had  already  begun in 1997,  were  placed  into  service in
              January 1999. These new systems, driven by the need for additional
              functionality  and business  flexibility,  are designed to be Year
              2000 compliant and have been tested. Other maintenance and project
              activities conducted in 1998 and 1999 and activities scheduled for
              the  remainder of 1999 have been  initiated to bring the remaining
              software   environment  into  compliance.   The  projects  include
              replacements,  upgrades and rewrites.  The  company's  plan for IT
              items includes the following phases and timeline: (a) Assessment -
              completed  in  1998,  (b)  Strategy  -  completed  in 1998 and (c)
              Design,  Implementation,  Testing and  Validation - in process and
              substantially  completed  as of  September  30,  1999,  and  fully
              completed  by  October  31,  1999.  The  company  has not found it
              necessary  to  postpone  work on any other  critical  IT  projects
              because of efforts to achieve Year 2000 compliance.

              Non-IT systems with embedded  microcontrollers  or microchips have
              been evaluated to determine if they are Year 2000 compliant. These
              systems include buildings,  transportation,  monitoring equipment,
              process  controls,  engineering  and  construction.  The  internal
              assessment  process has been completed,  and few compliance issues
              were found.  Software  upgrades  for  equipment in the gas control
              system were completed in July 1999.

              The  company  has  contacted  its  major  vendors,  suppliers  and
              customers to gather information regarding the status of their Year
              2000 compliance.  Although compliance issues identified from these
              inquiries have been  addressed,  this process may not fully ensure
              these parties' Year 2000 compliance. Disruptions in the operations
              of these parties could have an adverse  financial and  operational
              effect on the company.

              The company has  developed  its  contingency  plan related to Year
              2000 issues.  This plan includes  modifying the company's  already
              existing  plans for business  resumption,  information  technology
              disaster  recovery and gas supply  contingencies,  and  considers,
              among other things,  alternate  recovery  locations,  backup power
              generation, adequate material supplies and personnel requirements.
              The  company's  contingency  plan  was  filed  with  the  IURC  on
              September 30, 1999. This plan will be in place, tested and refined
              as needed by December 31, 1999.

              Total  costs  expected to be incurred by the company to remedy its
              Year 2000 issues were originally estimated at $1.5 million,  which
              included costs to replace certain existing systems sooner than had
              been planned.  At September 30, 1999,  the company  estimates that
              $.1 million remains to be expensed and that total expenditures for
              the  remedy of Year 2000  issues  will  approximate  the  original
              estimate.

              Management believes that Year 2000 issues have been addressed on a
              schedule and in a manner that will prevent such issues from having
              a material impact on the company's  financial  position or results
              of operations. However, while the company has and will continue to
              manage its Year 2000  compliance  plan,  there can be no assurance
              that the company will be successful in identifying  and addressing
              all  material  Year 2000  issues  including  those  related to the
              company's vendors, suppliers and customers.

              Environmental Matters

              Indiana Gas is currently conducting  environmental  investigations
              and  work  at  26  sites  that  were  the   locations   of  former
              manufactured gas plants.  It has been seeking to recover the costs
              of the  investigations  and work from insurance carriers and other
              potentially  responsible  parties (PRPs).  The IURC has determined
              that these costs are not recoverable from utility customers.

              Indiana Gas has completed the process of identifying  PRPs and now
              has PRP  agreements  in place  covering  19 of the 26  sites.  The
              agreements  provide  for  coordination  of efforts  and sharing of
              investigation  and clean-up  costs  incurred and to be incurred at
              the sites.  PSI Energy,  Inc.  is a PRP on all 19 sites.  Northern
              Indiana  Public  Service  Company  is a PRP on 5 of the 19  sites.
              These  agreements  limit  Indiana  Gas'  share of past and  future
              response  costs at these 19 sites to  between  20 and 50  percent.
              Based on the  agreements,  Indiana Gas has  recorded a  receivable
              from  PRPs  for  their  unpaid  share  of the  liability  for work
              performed by Indiana Gas to date, as well as accrued  Indiana Gas'
              proportionate  share of the estimated cost related to work not yet
              performed.

              Indiana  Gas has  filed a  complaint  in  Indiana  state  court to
              continue its pursuit of insurance  coverage  from three  insurance
              carriers, with the trial scheduled for early 2000. As of September
              30,  1999,  Indiana  Gas  has  recorded   settlements  from  other
              insurance  carriers in an aggregate amount of approximately  $15.5
              million.  Subsequent  to  September  30,  1999,  an  agreement  in
              principle has been reached with one of these insurers.

              These  environmental  matters  have  had  no  material  impact  on
              earnings  since  costs  recorded  to  date  approximate  insurance
              settlements  received.  While  Indiana Gas has  recorded all costs
              which it presently expects to incur in connection with remediation
              activities,  it is possible  that future  events may require  some
              level of additional  remedial  activities  which are not presently
              foreseen.

              For further information  regarding the status of investigation and
              remediation of the sites and financial  reporting,  see Note 11 of
              the Notes to Consolidated Financial Statements.

              Gas Cost Adjustment

              Adjustments to Indiana Gas' rates and charges  related to the cost
              of gas are made  through  gas  cost  adjustment  (GCA)  procedures
              established by Indiana law and  administered  by the IURC. The GCA
              passes  through  increases  and  decreases  in the  cost of gas to
              Indiana Gas' customers dollar for dollar.

              In addition,  the IURC has applied the statute authorizing the GCA
              procedures  to reduce rates when  necessary so as to limit utility
              operating income,  after adjusting to normal weather, to the level
              authorized  in the last  general  rate order.  The  earnings  test
              provides  that no refund be paid to the  extent a utility  has not
              earned its authorized  utility  operating income over the previous
              60 months  (or during the  period  since the  utility's  last rate
              order, if longer).

              New Accounting Standards

              In  fiscal  1999,  the  company  adopted  Statement  of  Financial
              Accounting Standards (SFAS) No. 131, Disclosures about Segments of
              an Enterprise and Related Information.  This statement establishes
              standards  for the way that public  companies  report  information
              about  operating  segments  in  annual  financial  statements  and
              requires that those companies  report selected  information  about
              operating  segments in annual and interim financial reports issued
              to shareholders. Indiana Gas has no reportable segments.

              In June 1998,  the FASB issued  Statement of Financial  Accounting
              Standards  No. 133,  Accounting  for  Derivative  Instruments  and
              Hedging  Activities.  The  statement  establishes  accounting  and
              reporting  standards  requiring that every derivative  instrument,
              including  certain  derivative   instruments   embedded  in  other
              contracts,  be recorded in the balance sheet as either an asset or
              liability  measured at its fair value. The statement requires that
              changes in the derivative's fair value be recognized  currently in
              earnings  unless  specific  hedge  accounting  criteria  are  met.
              Special  accounting  for  qualifying  hedges allows a derivative's
              gains and losses to offset  related  results on the hedged item in
              the income  statement,  and requires  that a company must formally
              document,  designate, and assess the effectiveness of transactions
              that receive hedge accounting.  In June 1999, the FASB issued SFAS
              137,  which  defers  the  effective  date of SFAS  133.  ProLiance
              utilizes  derivative  instruments  to  manage  pricing  decisions,
              minimize the risk of price  volatility,  and  minimize  price risk
              exposure in the energy markets. The standard will be effective for
              ProLiance in fiscal 2001.  ProLiance  has not yet  quantified  the
              impact of adopting  this  statement on its  financial  position or
              results of operations.

              Liquidity and Capital Resources

              Indiana Gas'  capitalization  objectives  are 55-65 percent common
              equity  and  preferred  stock and 35-45  percent  long-term  debt.
              Indiana Gas' common  equity  component was 57 percent of its total
              capitalization at September 30, 1999.

              New construction,  normal system maintenance and improvements, and
              information  technology investments needed to provide service to a
              growing  customer  base  will  continue  to  require   substantial
              expenditures.  Total capital required to fund capital expenditures
              and  refinancing  requirements  for  1998  and  1999,  along  with
              estimated amounts for 2000 through 2002, is as follows:

<TABLE>
<CAPTION>


              Thousands                        1998         1999         2000         2001         2002
              ---------                       -----        -----        -----        -----        -----
<S>                                        <C>           <C>          <C>          <C>          <C>
              Capital expenditures         $ 57,000      $60,200      $57,700      $60,050      $60,500
              Refinancing requirements       93,000       10,000            -            -        3,000
                                           --------      -------      -------      -------      -------
                                           $150,000      $70,100      $57,700      $60,050      $63,500
                                           --------      -------      -------      -------      -------
</TABLE>


              Indiana  Gas'  long-term  goal is to  internally  fund at least 75
              percent  of its  capital  expenditure  program.  This  has  helped
              Indiana Gas maintain its high creditworthiness. The long-term debt
              of Indiana Gas is currently rated Aa2 by Moody's Investors Service
              and AA- by Standard & Poor's  Corporation.  In 1999, 59 percent of
              Indiana Gas' capital  expenditures  were funded  internally (i.e.,
              from net  income  less  dividends  plus  charges to net income not
              requiring funds). In 1998, 64 percent of capital expenditures were
              provided by funds  generated  internally.  External funds required
              for the 1999 construction  program were obtained primarily through
              short-term  debt.  Indiana Gas' ratio of earnings to fixed charges
              for 1999 was 4.0 (see Exhibit 12).

             In July 1999, Indiana Gas retired $10 million of 8.90% Notes.

             In July 1999,  Indiana Gas filed a registration  statement with the
             Securities and Exchange  Commission which has become effective with
             respect to $100 million in debt securities.  Indiana Gas expects to
             issue this debt pursuant to a medium-term note program, denominated
             as  Series  G. The net  proceeds  from  the sale of these  new debt
             securities will be used for general corporate  purposes,  including
             repayment  of  long-term   debt  and   financing  of  Indiana  Gas'
             continuing construction program.

              On October 5, 1999,  Indiana Gas issued  $30,000,000  in principal
              amount of Series G Medium  Term Notes  bearing  interest  at 7.08%
              with a maturity date of October 5, 2029.

             Provisions  under which  certain of Indiana Gas' Series E, Series F
             and Series G Medium-Term  Notes were issued  entitle the holders of
             $137  million of these notes to put the debt back to Indiana Gas at
             face value at certain specified dates before maturity  beginning in
             2000.  Long-term debt subject to the put provisions during the four
             years following 1999 totals $20.0 million.

             Short-term  cash working  capital is required  primarily to finance
             customer accounts  receivable,  unbilled utility revenues resulting
             from  cycle  billing,  gas  in  underground  storage,  prepaid  gas
             delivery  service  and  capital   expenditures   until  permanently
             financed.  Short-term  borrowings  tend to be  greatest  during the
             heating  season  when  accounts  receivable  and  unbilled  utility
             revenues are at their  highest.  Indiana Gas'  commercial  paper is
             rated P-1 by Moody's and A-1+ by Standard & Poor's.  Prior to March
             1999,  bank  lines  of  credit  had  been  the  primary  source  of
             short-term   financing.   Effective  in  March  1999,  Indiana  Gas
             implemented a $100 million commercial paper program.

             Forward-Looking Information

             A "safe harbor" for  forward-looking  statements is provided by the
             Private  Securities  Litigation  Reform Act of 1995  (Reform Act of
             1995).  The  Reform  Act of 1995  was  adopted  to  encourage  such
             forward-looking   statements  without  the  threat  of  litigation,
             provided those statements are identified as forward-looking and are
             accompanied  by  meaningful   cautionary   statements   identifying
             important  factors  that could  cause the actual  results to differ
             materially from those  projected in the statement.  Certain matters
             described  in  Management's  Discussion  and Analysis of Results of
             Operations and Financial Condition,  including, but not limited to,
             Indiana Energy's earnings growth strategy,  Indiana Energy's merger
             with SIGCORP and the formation of Vectren,  ProLiance and Year 2000
             issues, are forward-looking  statements.  Such statements are based
             on  management's  beliefs,  as  well  as  assumptions  made  by and
             information  currently  available to management.  When used in this
             filing  the  words  "aim,"  "anticipate,"  "endeavor,"  "estimate,"
             "expect,"  "objective,"   "projection,"   "forecast,"  "goal,"  and
             similar  expressions  are  intended  to  identify   forward-looking
             statements.  In  addition  to any  assumptions  and  other  factors
             referred to specifically  in connection  with such  forward-looking
             statements,  factors  that  could  cause  Indiana  Energy's  actual
             results  to  differ  materially  from  those  contemplated  in  any
             forward-looking statements include, among others, the following:

             Factors  affecting  utility  operations  such  as  unusual  weather
             conditions;    catastrophic    weather-related    damage;   unusual
             maintenance or repairs;  unanticipated changes to gas supply costs,
             or  availability  due to higher demand,  shortages,  transportation
             problems   or  other   developments;   environmental   or  pipeline
             incidents; or gas pipeline system constraints.

             Increased competition in the energy environment,  including effects
             of industry restructuring and unbundling.

             Regulatory  factors such as  unanticipated  changes in rate-setting
             policies  or  procedures;   recovery  of  investments   made  under
             traditional  regulation,  and  the  frequency  and  timing  of rate
             increases.

             Financial or regulatory  accounting  principles or policies imposed
             by the Financial  Accounting  Standards  Board,  the Securities and
             Exchange  Commission,  the Federal  Energy  Regulatory  Commission,
             state public  utility  commissions,  state  entities which regulate
             natural gas  transmission,  gathering and  processing,  and similar
             entities with regulatory oversight.

             Economic   conditions   including   inflation  rates  and  monetary
             fluctuations.

             Changing   market   conditions  and  a  variety  of  other  factors
             associated with physical energy and financial  trading  activities,
             including,  but not limited to, price,  basis,  credit,  liquidity,
             volatility, capacity, interest rate and warranty risks.

             Availability or cost of capital, resulting from changes in: Indiana
             Energy,   interest   rates,   and  securities   ratings  or  market
             perceptions of the utility industry and energy-related industries.

             Employee  workforce  factors,  including changes in key executives,
             collective  bargaining  agreements  with  union  employees  or work
             stoppages.

             Legal and regulatory  delays and other  obstacles  associated  with
             mergers, acquisitions and investments in joint ventures such as the
             ProLiance judicial and administrative proceedings, the formation of
             Vectren,  and the acquisition of the gas  distribution  business of
             Dayton Power & Light Co, Inc.

             Costs and other  effects of legal and  administrative  proceedings,
             settlements,  investigations,  claims and other matters, including,
             but not limited to, those described in the Other Operating  Matters
             section  of  Management's  Discussion  and  Analysis  of Results of
             Operations and Financial Condition.

             Changes in federal, state or local legislative  requirements,  such
             as   changes  in  tax  laws  or  rates,   environmental   laws  and
             regulations.

             The  inability  of the  company  and  its  vendors,  suppliers  and
             customers to achieve Year 2000 readiness.

             Indiana Energy, Inc. and its subsidiaries  undertakes no obligation
             to  publicly  update  or  revise  any  forward-looking  statements,
             whether  as a result of  changes  in  actual  results,  changes  in
             assumptions, or other factors affecting such statements.


Item 7A.     Quantitative and Qualitative Disclosures about Market Risk

             Indiana Gas' (the company's) debt portfolio  contains a substantial
             amount of fixed-rate long-term debt and, therefore, does not expose
             the company to the risk of material  earnings or cash flow loss due
             to changes in market  interest  rates.  At September 30, 1999,  the
             company  was not  engaged  in other  contracts  which  would  cause
             exposure to the risk of material  earnings or cash flow loss due to
             changes  in market  commodity  prices,  foreign  currency  exchange
             rates, or interest rates.

<PAGE>






Item 8.   Financial Statements and Supplementary Data

             Management's Responsibility for Financial Statements

             The management of the company is responsible for the preparation of
             the  consolidated  financial  statements and the related  financial
             data  contained  in  this  report.  The  financial  statements  are
             prepared  in  conformity   with   generally   accepted   accounting
             principles and follow accounting policies and principles applicable
             to regulated public utilities.

             The integrity and objectivity of the data in this report, including
             required  estimates  and  judgements,  are  the  responsibility  of
             management.  Management maintains a system of internal controls and
             utilizes  an  internal  auditing  program  to  provide   reasonable
             assurance of compliance  with company  policies and  procedures and
             the safeguard of assets.

             The  board  of  directors  pursues  its  responsibility  for  these
             financial  statements  through  its audit  committee,  which  meets
             periodically  with  management,   the  internal  auditors  and  the
             independent  auditors,  to  assure  that each is  carrying  out its
             responsibilities.  Both the internal  auditors and the  independent
             auditors meet with the Audit  Committee of the  company's  board of
             directors, with and without management  representatives present, to
             discuss the scope and results of their  audits,  their  comments on
             the  adequacy of internal  accounting  controls  and the quality of
             financial reporting.


             /s/ Niel C. Ellerbrook
             Niel C. Ellerbrook
             President




<PAGE>




             Report of Independent Public Accountants

             To the  Shareholders and Board of Directors of Indiana Gas Company,
             Inc.:

             We have audited the  accompanying  consolidated  balance sheets and
             schedules  of  long-term  debt of Indiana  Gas  Company,  Inc.  (an
             Indiana  corporation and wholly owned subsidiary of Indiana Energy,
             Inc.) and subsidiary  companies as of September 30, 1999, and 1998,
             and  the  related   consolidated   statements  of  income,   common
             shareholder's  equity and cash flows for each of the three years in
             the period ended September 30, 1999. These financial statements are
             the responsibility of the company's management.  Our responsibility
             is to express an opinion on these financial statements based on our
             audits.

             We  conducted  our audits in  accordance  with  generally  accepted
             auditing  standards.  Those  standards  require  that we  plan  and
             perform the audit to obtain reasonable  assurance about whether the
             financial  statements are free of material  misstatement.  An audit
             includes  examining,  on a  test  basis,  evidence  supporting  the
             amounts and disclosures in the financial statements.  An audit also
             includes  assessing the accounting  principles used and significant
             estimates  made by  management,  as well as evaluating  the overall
             financial  statement  presentation.  We  believe  that  our  audits
             provide a reasonable basis for our opinion.

             In our opinion,  the financial statements referred to above present
             fairly, in all material respects, the financial position of Indiana
             Gas Company,  Inc. and  subsidiary  companies,  as of September 30,
             1999, and 1998, and the results of their  operations and their cash
             flows for each of the three years in the period ended September 30,
             1999, in conformity with generally accepted accounting principles.


             /s/ Arthur Andersen LLP
             Arthur Andersen LLP
             Indianapolis, Indiana
             October 29, 1999


<PAGE>

                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Thousands)


                                                Year Ended September 30
                                            1999         1998         1997


OPERATING REVENUES                        $419,061     $465,644     $530,407
COST OF GAS (See Note 1)                   215,691      271,004      322,522
                                          --------     --------     --------
MARGIN                                     203,370      194,640      207,885
                                          --------     --------     --------

OPERATING EXPENSES
     Operation and maintenance              90,411       84,168       79,567
     Restructuring costs (See Note 3)           --           --       39,531
     Depreciation and amortization          34,026       32,353       35,054
     Income taxes                           16,967       17,449        7,852
     Taxes other than income taxes          15,416       14,419       16,870
                                          --------     --------     --------
                                           156,820      148,389      178,874
                                          --------     --------     --------

OPERATING INCOME                            46,550       46,251       29,011

OTHER INCOME - NET                             839          866        1,241
                                          --------     --------     --------

INCOME BEFORE INTEREST EXPENSE              47,389       47,117       30,252

INTEREST EXPENSE                            16,012       16,234       16,774
                                          --------     --------     --------

NET INCOME                                $ 31,377     $ 30,883     $ 13,478
                                          ========     ========     ========


        The accompanying notes are an integral part of these statements.


<PAGE>


                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Thousands)

<TABLE>
<CAPTION>
                                                                            Years Ended September 30
                                                                      ------------------------------------
                                                                        1999          1998          1997
                                                                      --------      --------      --------

<S>                                                                   <C>           <C>           <C>
CASH FLOWS FROM OPERATIONS                                            $ 31,377      $ 30,883      $ 13,478
                                                                      --------      --------      --------
    Net Income

    Adjustments to reconcile net income to cash
       provided from operating activities -
          Non cash restructuring costs                                      --            --        32,838
          Depreciation and amortization                                 34,114        32,540        35,241
          Deferred income taxes                                           (480)        1,591       (12,618)
          Investment tax credit                                           (930)         (930)         (930)
          Gain on sale of assets                                            --        (1,219)           --
                                                                      --------      --------      --------
                                                                        32,704        31,982        54,531

       Changes in assets and liabilities
          Receivables - net                                             (2,240)       11,552       (10,524)
          Inventories                                                    9,899          (272)       24,026
          Accounts payable, customer deposits
                 advance payments, current liabilities                   8,267       (30,439)       (4,519)
          Accrued taxes and interest                                     7,447        (5,042)        4,528
          Recoverable / refundable gas costs                               462        16,573        (3,133)
          Prepaid gas delivery service                                 (25,810)           --            --
          Accrued postretirement benefits other than pension             2,699         2,131         8,134
          Other - net                                                   (1,850)        2,760           900
                                                                      --------      --------      --------

          Total adjustments                                             31,578        29,245        73,943
                                                                      --------      --------      --------

          Net cash flows from operations                                62,955        60,128        87,421
                                                                      --------      --------      --------

CASH FLOWS FROM (REQUIRED FOR) FINANCING OPERATIONS
       Sale of long term debt                                               --        95,000        15,000
       Reduction in long term debt                                     (10,126)      (92,758)           --
       Net change in short term borrowings                              34,916        13,705        (4,236)
       Dividends on common stock                                       (28,300)      (27,250)      (26,250)
                                                                      --------      --------      --------

          Net cash flows from (required for) financing operations       (3,510)      (11,303)      (15,486)
                                                                      --------      --------      --------

CASH FLOWS FROM (REQUIRED FOR) INVESTING ACTIVITIES
       Capital expenditures                                            (60,173)      (57,335)      (71,907)
       Proceeds from sale of assets                                         --         9,204            --
                                                                      --------      --------      --------

          Net cash flows from (required for) investing activities      (60,173)      (48,131)      (71,907)
                                                                      --------      --------      --------

NET INCREASE (DECREASE) IN CASH                                           (728)          694            28

CASH AND CASH EQUIVALENTS AT BEGINNING OF
       PERIOD                                                              742            48            20
                                                                      --------      --------      --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $     14      $    742      $     48
                                                                      --------      --------      --------

</TABLE>

     The accompanying notes are an integral part of these statements.

<PAGE>


                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES

                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                   (Thousands)

<TABLE>
<CAPTION>


                                                             Years Ended September 30
                                                             ------------------------
                                                                1999         1998
                                                              --------     --------
UTILITY PLANT
<S>                                                           <C>          <C>
  Original Cost                                               $990,780     $937,977
  Less - accumulated depreciation and amortization             398,912      370,872
                                                              --------     --------
                                                               591,868      567,105
                                                              --------     --------

CURRENT ASSETS
  Cash and cash equivalents                                         14          742
  Accounts receivable less reserves of $733 and
      $900, respectively                                        17,716       22,358
  Accrued unbilled revenue                                       8,136        6,453
  Liquefied petroleum gas at average cost                          810          883
  Gas in underground storage - at last in, first out cost        9,501       19,373
  Prepaid gas delivery services                                 25,810           --
  Prepayments and other                                         11,815        8,333
                                                              --------     --------
                                                                73,802       58,142
                                                              --------     --------

DEFERRED CHARGES AND OTHER ASSETS
  Unamortized debt discount and expense                         11,954       12,874
  Regulatory income tax asset                                    2,741        1,778
  Other                                                          2,159        3,041
                                                              --------     --------
                                                                16,854       17,693
                                                              --------     --------

                                                              $682,524     $642,940
                                                              ========     ========
</TABLE>





        The accompanying notes are an integral part of these statements.

<PAGE>


                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES

                           CONSOLIDATED BALANCE SHEETS
                      SHAREHOLDER'S EQUITY AND LIABILITIES
                                   (Thousands)

<TABLE>
<CAPTION>
                                                                 Year Ended September 30
                                                                    1999         1998
                                                                  --------     --------
CAPITALIZATION
<S>                                                               <C>          <C>
   Common stock and paid-in capital                               $142,995     $142,995
   Retained earnings                                               100,431       97,354
                                                                  --------     --------
        Total common shareholder's equity                          243,426      240,349
   Long term debt                                                  181,849      181,975
                                                                  --------     --------
                                                                   425,275      422,324
                                                                  --------     --------

CURRENT LIABILITIES
   Maturities and sinking fund requirements of long term debt           --       10,000
   Commercial paper / Notes payable                                 68,621       33,705
   Accounts Payable                                                 33,081       24,060
   Refundable gas costs                                             11,192       10,730
   Customer deposits and advance payments                           14,713       19,229
   Accrued taxes                                                    12,471        4,469
   Accrued interest                                                  1,173        1,728
   Other current liabilities                                        13,398       14,835
                                                                  --------     --------
                                                                   154,649      118,756
                                                                  --------     --------

DEFERRED CREDITS AND OTHER LIABILITIES
   Deferred income taxes                                            60,931       60,448
   Accrued postretirement benefits other than pensions              27,868       25,169
   Unamortized investment tax credits                                8,383        9,313
   Other                                                             5,418        6,930
                                                                  --------     --------
                                                                   102,600      101,860
                                                                  --------     --------

                                                                  $682,524     $642,940
                                                                  ========     ========
</TABLE>


     The accompanying notes are an integral part of these statements.

<PAGE>

                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES

             CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
                                   (Thousands)

<TABLE>
<CAPTION>


                                                             COMMON STOCK AND
                                                             PAID-IN CAPITAL                           RETAINED
                                                             SHARES                AMOUNT              EARNINGS      TOTAL
                                                             ---------------------------------------------------------------------
<S>                                                            <C>               <C>                <C>              <C>
Balance at September 30, 1996                                  9,080,770         $    142,995       $    138,539     $    281,534

Net income                                                                                                13,478           13,478

Common stock dividends ($2.89 per share)                                                                (26,250)         (26,250)
                                                             ---------------------------------------------------------------------

Balance at September 30, 1997                                  9,080,770              142,995            125,767          268,762

Net income                                                                                                30,883           30,883

Common stock dividends ($3.00 per share)                                                                (27,250)         (27,250)

Noncash dividend                                                                                        (32,046)         (32,046)
                                                             ---------------------------------------------------------------------

Balance at September 30, 1998                                  9,080,770              142,995             97,354          240,349

Net income                                                                                                31,377           31,377

Common stock dividends ($3.12 per share)                                                                (28,300)         (28,300)
                                                             ---------------------------------------------------------------------

Balance at September 30, 1999                                  9,080,770         $    142,995       $    100,431     $    243,426

</TABLE>

        The accompanying notes are an integral part of these statements.

<PAGE>


               INDIANA GAS COMPANY, INC. AND SUBSIDIARY COMPANIES
                    CONSOLIDATED STATEMENTS OF LONG-TERM DEBT
                                 (In Thousands)


                                                       September 30
                                                    1999         1998
                                                  --------    ---------
Unsecured Notes Payable - Utility

          8.90%    due    July15,1999                    -       10,000
6.69%, Series E    due    June 10, 2013              5,000        5,000
7.15%, Series E    due    March 15, 2015             5,000        5,000
6.69%, Series E    due    December 21, 2015          5,000        5,000
6.69%, Series E    due    December 29, 2015         10,000       10,000
9 3/8%             due    January 15, 2021          25,000       25,000
9 1/8%, Series A   due    February 15, 2021          7,000        7,000
6.31%, Series E    due    June 10, 2025              5,000        5,000
6.53%, Series E    due    June 27, 2025             10,000       10,000
6.42%, Series E    due    July 7, 2027               5,000        5,000
6.68%, Series E    due    July 7, 2027               3,500        3,500
6.54%  Series E    due    July 9, 2007               6,500        6,500
6.36% Series F     due    December 6, 2004          15,000       15,000
6.34% Series F     due    December 10, 2027         20,000       20,000
5.75% Series F     due    January 15, 2003          15,000       15,000
6.75% Series F     due    March 15, 2028            14,849       14,975
6.36% Series F     due    May 1, 2028               10,000       10,000
6.55% Series F     due    June 30, 2028             20,000       20,000
                                                  --------    ---------
                                                  $181,849    $ 191,975

The accompanying notes are an integral part of these statements.

<PAGE>


             Notes to Consolidated Financial Statements

             1.  Summary of Significant Accounting Practices

             A.  Consolidation

             Indiana Gas Company,  Inc. and its subsidiaries (Indiana Gas or the
             company)  provide  natural  gas and  transportation  services  to a
             diversified base of customers in 284 communities in 48 of Indiana's
             92 counties.

             B.  Utility Plant and Depreciation

             Except as described below,  utility plant is stated at the original
             cost  and  includes   allocations  of  payroll-related   costs  and
             administrative  and general  expenses,  as well as an allowance for
             the cost of funds used during construction.  Upon normal retirement
             of a depreciable unit of property,  the cost is credited to utility
             plant and charged to  accumulated  depreciation  together  with the
             cost of removal,  less any salvage.  No gain or loss is  recognized
             upon normal retirement.

             Provisions for  depreciation of utility  property are determined by
             applying  straight-line  rates to the original  cost of the various
             classifications of property.  The average depreciation rate was 4.3
             percent for 1999, 3.9 percent for 1998, and 4.1 percent for 1997.

             Cost  in  excess  of   underlying   book  value  of  acquired   gas
             distribution companies is reflected as a component of utility plant
             and is being amortized primarily over 40 years.

             C.  Unamortized Debt Discount and Expense

             Indiana Gas was  authorized  as part of an August 17,  1994,  order
             from the Indiana Utility  Regulatory  Commission (IURC) to amortize
             over a 15-year period the debt discount and expense  related to new
             debt  issues  and  future  premiums  paid  for debt  reacquired  in
             connection with  refinancing.  Debt discount and expense for issues
             in place prior to this order are being  amortized over the lives of
             the  related  issues.  Premiums  paid  prior to this order for debt
             reacquired in connection with  refinancing are being amortized over
             the life of the refunding issue.

             D.  Cash Flow Information

             For the purposes of the Consolidated  Statements of Cash Flows, the
             company  considers cash  investments  with an original  maturity of
             three months or less to be cash  equivalents.  Cash paid during the
             periods reported for interest and income taxes were as follows:

<TABLE>
<CAPTION>
             Thousands                                              1999           1998            1997
             ---------                                             -----          -----           -----
<S>                                                             <C>            <C>             <C>
             Interest (net of amount capitalized)               $ 14,518       $ 15,341        $ 15,129
             Income taxes                                       $ 16,104       $ 20,391        $ 19,142
</TABLE>


             E.  Revenues

             To more closely match  revenues and  expenses,  Indiana Gas records
             revenues for all gas  delivered to customers  but not billed at the
             end of the accounting period.

             F.  Gas in Underground Storage

             Gas in underground  storage at September 30, 1999, was $9.5 million
             compared to $19.4 million at September  30, 1998.  This decrease is
             the result of the  replacement  of contract  storage with increased
             delivery services.

             Based on the average cost of purchased gas during  September  1999,
             the cost of  replacing  the current  portion of gas in  underground
             storage exceeded last-in,  first-out cost at September 30, 1999, by
             approximately $4.5 million.

             G.  Refundable or Recoverable Gas Cost

             The cost of gas purchased and refunds from suppliers,  which differ
             from amounts  recovered  through rates,  are deferred and are being
             recovered or refunded in accordance with procedures approved by the
             IURC.

             H.  Allowance For Funds Used During Construction

             An  allowance  for funds used during  construction  (AFUDC),  which
             represents   the  cost  of  borrowed  and  equity  funds  used  for
             construction  purposes, is charged to construction work in progress
             during the period of construction  and included in "Other - net" on
             the Consolidated  Statements of Income. An annual AFUDC rate of 6.0
             percent  was used for 1999 and 1998,  while an  annual  rate of 7.5
             percent was used for 1997.

             The table  below  reflects  the  total  AFUDC  capitalized  and the
             portion of which was  computed on borrowed and equity funds for all
             periods reported.

             Thousands                     1999          1998         1997
             ---------                    -----         -----        -----
             AFUDC - borrowed funds       $ 307         $ 448      $   596
             AFUDC - equity funds           376           371          487
                                           ----          ----       ------
             Total AFUDC capitalized      $ 683         $ 819       $1,083
                                          -----         -----       ------

             I.  Use of Estimates

             The   preparation  of  financial   statements  in  conformity  with
             generally accepted  accounting  principles  requires  management to
             make estimates and assumptions  that affect the reported amounts of
             assets and  liabilities  and  disclosure of  contingent  assets and
             liabilities  at  the  date  of the  financial  statements  and  the
             reported  amounts of revenues  and  expenses  during the  reporting
             period. Actual results could differ from those estimates.

             J.  Regulatory Assets and Liabilities

             Indiana Gas is subject to the  provisions of Statement of Financial
             Accounting  Standards No. 71, Accounting for the Effects of Certain
             Types of Regulation (SFAS 71). Regulatory assets represent probable
             future revenue to Indiana Gas  associated  with certain costs which
             will be recovered  from customers  through the ratemaking  process.
             Regulatory  liabilities  represent  probable  future  reductions in
             revenues  associated  with  amounts  that  are  to be  credited  to
             customers  through the ratemaking  process.  Regulatory  assets and
             liabilities  reflected  in the  Consolidated  Balance  Sheet  as of
             September 30 (in thousands) relate to the following:

<TABLE>
<CAPTION>
             Regulatory Assets                                    1999        1998
             -----------------                                   -----       -----
<S>                                                              <C>      <C>
             Postretirement benefits other than pensions         $ 891    $  2,688
             Unamortized debt discount and expense              10,639      11,388
             Amounts due from customers - income taxes, net      2,741       1,778
             Deferred acquisition costs                            655         677
                                                                  ----        ----
                                                               $14,926     $16,531
                                                               -------     -------

             Regulatory Liabilities
             Refundable Gas Costs                              $11,192     $10,730
                                                               -------     -------
</TABLE>

             Of the above September 30, 1999 balances, $3.4 million is earning a
             return,  which is comprised of Amounts due from  customers - income
             taxes, net and Deferred acquisition costs.

             The remaining net assets of $0.3 million, while consisting of items
             included  in rates but not  earning a return,  are being  recovered
             over varying periods.  Postretirement  benefits other than pensions
             will be fully recovered over less than one year.  Unamortized  debt
             discount  and expense  will be  recovered  as discussed in Note 1C.
             Refundable gas costs will be refunded as discussed in Note 1G.

             It is Indiana Gas' policy to continually  assess the recoverability
             of  costs  recognized  as  regulatory  assets  and the  ability  to
             continue to account for its activities in accordance  with SFAS 71,
             based  on the  criteria  set  forth in SFAS  71.  Based on  current
             regulation, Indiana Gas believes such accounting is appropriate. If
             all or part of Indiana Gas'  operations  cease to meet the criteria
             of  SFAS  71,  a  write-off  of  related   regulatory   assets  and
             liabilities  would be required.  In addition,  Indiana Gas would be
             required to  determine  any  impairment  to the  carrying  costs of
             deregulated plant and inventory assets.

             K.  Reclassifications

             Certain reclassifications have been made in the company's financial
             statements   of  prior  years  to  conform  to  the  current   year
             presentation.  These reclassifications have no impact on previously
             reported net income.

             2. Agreement to Merge with SIGCORP, Inc.

             On June 14,  1999,  Indiana  Energy  and  SIGCORP,  Inc.  (SIGCORP)
             jointly announced the signing of a definitive  agreement to combine
             into a new holding  company  named Vectren  Corporation  (Vectren).
             SIGCORP is an investor-owned energy and telecommunications  company
             that through its subsidiaries  provides electric and gas service to
             southwest  Indiana and energy and  telecommunication  products  and
             services throughout the Midwest and elsewhere.

             Under the agreement,  Indiana Energy  shareholders will receive one
             share of Vectren common stock for each share of Indiana Energy held
             at the closing date. SIGCORP shareholders will receive 1.333 shares
             of  Vectren  common  stock for each  share of  SIGCORP  held at the
             closing  date.  The  transaction,  which has been  approved  by the
             boards of directors of both companies,  is intended to be accounted
             for as a pooling of interests.  The transaction is also intended to
             be a tax-free exchange of shares.

             Indiana Gas Company,  Inc.  and  Southern  Indiana Gas and Electric
             Company,  Indiana Energy's and SIGCORP's  utility  companies,  will
             operate as subsidiaries of Vectren.

             The merger is conditioned,  among other things,  upon the approvals
             of the  shareholders  of  each  company  and  customary  regulatory
             approvals.  The companies  anticipate that the regulatory processes
             can be completed in the first quarter of calendar 2000. Transaction
             and related  costs  incurred  through  September 30, 1999 were $2.7
             million and have been deferred.


             3. Corporate Restructuring

             In April 1997, the Board of Directors of Indiana Energy  approved a
             growth strategy designed to support the company's transition into a
             more competitive environment.

             During  1997,  the  Indiana  Gas  Board  of  Directors   authorized
             management to undertake the actions  necessary and  appropriate  to
             restructure  Indiana  Gas'  operations  and  recognize  a resulting
             restructuring charge of $39.5 million ($24.5 million after-tax) for
             fiscal 1997 as described below.

             In July 1997,  the  company  advised its  employees  of its plan to
             reduce its work force from about 1,025 full-time  employees at June
             30, 1997, to  approximately  800 employees by 2002.  The reductions
             are being implemented through involuntary separation and attrition.
             Indiana Gas recorded restructuring costs of $5.4 million during the
             fourth   quarter  of  fiscal  1997   related  to  the   involuntary
             terminations   planned  under  the  company's   specific  near-term
             employee  reduction plan, which was scheduled for completion by the
             end  of  fiscal  1999.  These  costs  include   separation  pay  in
             accordance with Indiana Gas' severance policy of $3.9 million,  and
             net curtailment  losses related to these employees'  postretirement
             and pension benefits.  As a result of initial work force reductions
             during September 1997 and primarily attrition  thereafter,  most of
             the reductions  contemplated during the two year period and accrued
             originally have been achieved.  During the second quarter of fiscal
             1999,  the  company  reviewed  its  remaining  accruals  for  costs
             associated with the involuntary work force reductions.  Taking into
             consideration an unexpectedly high level of voluntary terminations,
             the company determined that no additional  significant  involuntary
             work force reductions were likely to occur.  Prior to September 30,
             1998,  $2.2 million of  involuntary  termination  benefits had been
             paid.  As a result,  the  severance  accrual  and  other  operating
             expenses were reduced by $1.7 million during fiscal year 1999.

             Indiana  Gas'  management  also  committed  to  sell,   abandon  or
             otherwise  dispose  of certain  assets,  including  buildings,  gas
             storage   fields  and  intangible   plant.   Indiana  Gas  recorded
             restructuring  costs of $34.1 million  during the fourth quarter of
             fiscal  1997 to  adjust  the  carrying  value  of those  assets  to
             estimated fair value.  These assets have been sold or are no longer
             in use.

             4.  Short-Term Borrowings

             Effective  in March 1999,  Indiana Gas  implemented  a $100 million
             commercial  paper program.  Indiana Gas' commercial paper is priced
             to  the  public  at a  rate  determined  by  current  money  market
             conditions.  At September  30, 1999  Indiana Gas had  approximately
             $68.6 million outstanding.

             In addition to Indiana Gas' $100 million committed facility for its
             commercial  paper  program,  Indiana Gas and Capital Corp.  have an
             aggregate  $20  million  line of credit.  At  September  30,  1999,
             Indiana  Gas  had  no  outstanding  bank  loans.  These  lines  are
             renewable  annually.  Indiana Gas and Capital Corp.  compensate the
             participating  banks with arrangements that vary from no commitment
             fees to a combination  of fees that are mutually  agreeable.  Notes
             payable to banks bore interest at rates  negotiated  with the banks
             at the time of  borrowing.  Indiana  Gas'  Board of  Directors  has
             authorized short-term borrowings of up to $150 million.

             Commercial  paper and bank loans  outstanding  during the  reported
             periods were as follows:
<TABLE>
<CAPTION>


             Thousands                                                          1999(1)          1998(2)         1997(2)
             ---------                                                         --------         --------        --------
<S>                                                                            <C>              <C>             <C>
             Outstanding at year end                                           $ 68,621         $ 33,705        $ 20,000
             Weighted average interest rates at year end                           5.4%             5.6%            5.7%
             Weighted average interest rates during the year                       5.3%             5.7%            5.5%
             Weighted average total outstanding during the year                $ 32,239         $ 32,293        $ 28,959
             Maximum total outstanding during the year                         $ 68,621         $ 90,900        $ 89,725
</TABLE>


             (1)  Commercial paper
             (2)  Bank loans

             5.  Long-Term Debt

             In July 1999, Indiana Gas retired $10 million of 8.90% Notes.

             In July 1999,  Indiana Gas filed a registration  statement with the
             Securities and Exchange  Commission with respect to $100 million in
             debt securities. Indiana Gas expects to issue this debt pursuant to
             a medium  term  note  program,  denominated  as  Series  G. The net
             proceeds  from the sale of these new debt  securities  will be used
             for general corporate  purposes,  including  repayment of long term
             debt and financing of Indiana Gas' continuing construction program.

             On October 5, 1999,  Indiana  Gas issued $30  million in  principal
             amount of Series G Medium  Term Notes  bearing  interest at the per
             annum rate of 7.08% with a maturity date of October 5, 2029.

             Consolidated  maturities and sinking fund requirements on long-term
             debt  subject  to  mandatory   redemption  during  the  five  years
             following 1999 are (in millions) $3.25 in 2002,  $18.25 in 2003 and
             $3.25 in 2004.

             Provisions  under which  certain of Indiana Gas' Series E, Series F
             and Series G Medium Term Notes were  issued  entitle the holders of
             $137  million of these notes to put the debt back to Indiana Gas at
             face value at certain specified dates before maturity  beginning in
             2000.  Long-term  debt (in millions)  subject to the put provisions
             during the five years following 1999 totals $5.0 in 2000,  $11.5 in
             2002 and $3.5 in 2004.


<PAGE>




             6.  Fair Value of Financial Instruments

             The estimated  fair values of the company's  financial  instruments
             were as follows:

<TABLE>
<CAPTION>


                                                         September 30, 1999              September 30, 1998
                                                         -------------------            -------------------
                                                     Carrying           Fair         Carrying        Fair
             Thousands                                 Amount          Value           Amount        Value
             ---------                                 ------         -------         -------       ------
<S>                                                  <C>             <C>            <C>            <C>
             Cash and cash equivalents               $     14        $     14       $     742      $     742
             Notes payable                          $  68,621       $  68,621       $  33,705      $  33,705
             Long-term debt (includes
               amounts due within one year)          $181,849        $174,358        $191,975       $208,870
</TABLE>


             Certain methods and  assumptions  must be used to estimate the fair
             value of financial  instruments.  Because of the short  maturity of
             cash and cash  equivalents and notes payable,  the carrying amounts
             approximate fair values for these financial  instruments.  The fair
             value of the company's  long-term  debt was estimated  based on the
             quoted  market  prices  for the same or  similar  issues  or on the
             current rates offered to the company for debt of the same remaining
             maturities.

             Under current regulatory treatment,  call premiums on reacquisition
             of long-term  debt are generally  recovered in customer  rates over
             the life of the refunding  issue or over a 15-year period (see Note
             1C). Accordingly, any reacquisition would not be expected to have a
             material effect on the company's  financial  position or results of
             operations.

             7.  Capital Stock

             Indiana Gas has 16 million shares of authorized no par value common
             stock.

             Indiana  Gas  has 4  million  shares  of  authorized  and  unissued
             preferred stock.

             8.  Retirement Plans and Other Postretirement Benefits

             Indiana Energy, Inc. and subsidiaries have multiple defined benefit
             pension and other  postretirement  benefit  plans.  The  nonpension
             plans include plans for health care and life insurance.  All of the
             plans are  non-contributory  with the  exception of the health care
             plan  which  contains  cost-sharing  provisions  whereby  employees
             retiring after January 1, 1996, are required to make  contributions
             to the plan when  increases  in the  companies'  health  care costs
             exceed the general rate of  inflation,  as measured by the Consumer
             Price Index (CPI). Indiana Gas is a participating  company in those
             plans and all amounts disclosed below relate solely to Indiana Gas.

             The IURC has authorized Indiana Gas to recover the costs related to
             postretirement  benefits  other  than  pensions  under the  accrual
             method  of  accounting   consistent  with  Statement  of  Financial
             Accounting   Standards   No.   106,   Employers'   Accounting   for
             Postretirement Benefits Other Than Pensions.  Amounts accrued prior
             to that  authorization were deferred as allowed by the IURC and are
             currently being amortized.

             Net periodic  benefit  cost,  excluding the 1997  curtailment  loss
             related to the postretirement health care and life insurance plans,
             consisted of the following components:
<TABLE>
<CAPTION>

                                                                         Pension Benefits                         Other Benefits
             Thousands                                       1999          1998        1997        1999        1998         1997
             ---------                                      ------        ------      ------      ------      ------       -----
<S>                                                       <C>           <C>          <C>          <C>        <C>          <C>
             Service cost                                 $ 1,617       $ 1,133      $1,268       $ 738      $   608      $   770
             Interest cost                                  4,887         4,504       4,847       3,098        3,075        3,311
             Expected return
               on plan assets                              (7,310)       (6,393)     (6,606)          -            -            -
             Amortization of
               transition
               obligation (asset)                            (316)         (316)       (309)      1,955        1,955        2,280
             Amortization of
               loss (gain)
               and other                                      108           (19)        884        (149)       1,354        1,397
                                                             ----        ------        ----       -----       ------       ------
             Net periodic
               benefit cost                               $(1,014)      $(1,091)    $    84      $5,642       $6,992       $7,758
                                                          -------       -------     -------      ------       ------       ------
</TABLE>


             A reconciliation of the plans' benefit  obligations,  fair value of
             plan assets,  funded status and amounts recognized in the company's
             statement of financial position follows:
<TABLE>
<CAPTION>


                                                                   Pension Benefits                         Other Benefits
             Thousands                                       1999              1998                  1999             1998
             ---------                                      ------            ------                ------           -----
<S>                                                       <C>               <C>                   <C>             <C>
             Benefit obligation at
               beginning of year                          $76,708           $65,977               $47,501         $ 42,883
             Service cost                                   1,617             1,133                   738              608
             Interest cost                                  4,887             4,504                 3,098            3,075
             Actuarial loss
               (gain) and other                            (9,216)            9,553                (5,373)           3,998
             Benefits paid                                 (4,715)           (4,460)               (2,944)          (3,064)
                                                          -------           -------               -------          -------
             Benefit obligation at
               the end of the year                         69,281            76,707                43,020           47,500
                                                          -------           -------               -------          -------

             Fair value of plan assets
               at beginning of year                        97,628            87,801                     -                -
             Actual return on plan assets                   8,179            14,194                     -                -
             Employer contributions                           119                93                 2,944            3,064
             Benefits paid                                 (4,715)           (4,460)               (2,944)          (3,064)
                                                          -------           -------               -------          -------
             Fair value of plan assets
               at end of year                             101,211            97,628                     -                -
                                                          -------           -------                    --               --

             Funded status                                 31,930            20,921               (43,020)         (47,500)
             Unrecognized prior service cost                  374             3,602                     -                -
             Unrecognized net obligation
               (assets) from transition                      (882)           (1,198)               27,375           29,330
             Unrecognized net (gain)
               loss and other                             (25,965)          (19,371)              (12,224)          (6,999)
                                                         --------          --------               -------          -------
             Prepaid (accrued) benefit cost
               at end of year                             $ 5,457          $  3,954              $(27,869)        $(25,169)
                                                          -------          --------              --------         --------
</TABLE>


             The aggregate  benefit  obligation and aggregate fair value of plan
             assets for pension plans with benefit obligations in excess of plan
             assets  were,  in  thousands,  $5,518  and $0,  respectively  as of
             September 30, 1999, and $5,503 and $0, respectively as of September
             30, 1998.

             Weighted-average assumptions used in the accounting for these plans
             were as follows:

<TABLE>
<CAPTION>
                                                    Pension Benefits                      Other Benefits
             Thousands                      1999                1998                 1999                1998
             ---------                     ------              ------               ------              -----
<S>                                         <C>                 <C>                  <C>                 <C>
             Discount rate                  7.50%               6.75%                7.50%               6.75%
             Expected return
                on plan assets              9.00%               9.00%                  n/a                 n/a
             Rate of compensation
                increase                    5.00%          5% to 5.5%                  n/a                 n/a
             CPI rate                         n/a                 n/a                3.50%               3.50%
</TABLE>


             The assumed  health care cost trend rate for medical gross eligible
             charges used in measuring the postretirement benefit obligation for
             the health care plan as of September 30, 1999,  was 6.5 percent for
             fiscal  2000.  This rate is assumed to decrease  gradually  through
             fiscal 2004 to 5.0 percent and remain at that level thereafter.

             A 1 percent  change in the assumed health care cost trend rates for
             the  company's  postretirement  health  care  plan  would  have the
             following effects:

<TABLE>
<CAPTION>
             Thousands                                     1% Increase          1% Decrease
             ---------                                     -----------          -----------
<S>                                                           <C>                   <C>
             Effect on the aggregate of the service
                and interest cost components                  $     70              $  (63)

             Effect on the postretirement
                benefit obligation                               $ 775               $(701)
</TABLE>


             The  company  also   participates  in  Indiana   Energy's   defined
             contribution  retirement  savings  plan  which is  qualified  under
             sections  401(a) and 401(k) of the Internal  Revenue  Code.  During
             1999, 1998 and 1997, the company made  contributions,  in millions,
             to this plan of $1.2, $1.8 and $2.4, respectively.

             9.  Commitments

             Estimated  capital  expenditures  for 2000 are $58  million.  Lease
             commitments,  in millions,  are $1.9 in 2000, $1.1 in 2001, $1.1 in
             2002,  $1.1 in 2003,  $1.0 in 2004 and $3.7 in total  for all later
             years. There are no leases that extend beyond 2036. Indiana Gas has
             storage and supply contracts that extend up to 6 years. Total lease
             expense was $2.2 in 1999, $1.0 in 1998 and $2.2 in 1997.


<PAGE>

             10.  Income Taxes

             Indiana Energy,  Inc. and subsidiary  companies file a consolidated
             federal  income tax return.  Indiana  Gas' current and deferred tax
             expense is computed on a separate  company basis. The components of
             consolidated  income tax expense for Indiana Gas, including amounts
             in "Other Income - Net" on the  Consolidated  Statements of Income,
             were as follows:

<TABLE>
<CAPTION>
             Thousands                                              1999             1998           1997
             ---------                                              -----            -----          -----
             Current:
<S>                                                                <C>              <C>            <C>
                Federal                                            $15,721          $14,585        $17,817
                State                                                2,656            2,203          2,878
                                                                    ------            -----         ------
                                                                    18,377           16,788         20,695
                                                                   -------          -------        -------
             Deferred:
                Federal                                               (477)           1,435        (11,678)
                State                                                   (3)             156           (940)
                                                                       ---             ----      ---------
                                                                      (480)           1,591        (12,618)
                                                                   -------           ------        -------
             Amortization of investment tax credits                   (930)            (930)          (930)
                                                                   -------          -------        -------
             Consolidated income tax expense                       $16,967          $17,449        $ 7,147
                                                                   -------          -------        -------
</TABLE>


             The recording of  restructuring  costs of $39.5 million in 1997 had
             the  effect  of   decreasing   deferred   income  tax   expense  by
             approximately $15.0 million.

             Effective  income tax rates were 35.08  percent,  36.18 percent and
             34.65   percent  of  pretax   income  for  1999,   1998  and  1997,
             respectively.  This  compares  with a  combined  federal  and state
             income tax statutory rate of 37.93 percent for all years  reported.
             Individual   components   of  these  rate   differences   were  not
             significant  except  investment tax credit which amounted to (1.9%)
             in 1999, (1.9%) in 1998 and (4.5%) in 1997.

             As required by the IURC,  Indiana Gas uses a  normalized  method of
             accounting for deferred income taxes. Deferred income taxes reflect
             the net tax effect of  temporary  differences  between the carrying
             amounts of assets and liabilities for financial  reporting purposes
             and the amounts used for income tax purposes. Deferred income taxes
             are  provided for taxes not  currently  payable due to, among other
             things,  the  use  of  various  accelerated  depreciation  methods,
             shorter depreciable lives and the deduction of certain construction
             costs for tax  purposes.  Taxes  deferred  in prior years are being
             charged and income  credited as these tax effects  reverse over the
             lives of the related assets.

             Significant  components  of Indiana Gas' net deferred tax liability
             as of September 30, 1999, and 1998, are as follows:

<TABLE>
<CAPTION>
             Thousands                                                 1999             1998
             ---------                                                -----            -----
<S>                                                               <C>              <C>
             Deferred tax liabilities:
                Accelerated depreciation                          $ 51,988         $ 50,775
                Property basis differences                           6,713            6,435
                Acquisition adjustment                               5,908            6,097
                Other                                               (3,285)          (6,792)
             Deferred tax assets:
                Deferred investment tax credit                      (3,180)          (3,533)
                Regulatory income tax asset
                    (liability)                                      1,039              674
             Less deferred income taxes related
                to current assets and liabilities                    1,748            6,792
                                                                    ------           ------
             Balance as of September 30                           $ 60,931         $ 60,448
                                                                  --------         --------
</TABLE>


             Investment tax credits have been deferred and are being credited to
             income over the life of the property giving rise to the credit. The
             Tax  Reform  Act of 1986  eliminated  investment  tax  credits  for
             property acquired after January 1, 1986.

             11.  Environmental Costs

             In the past,  Indiana Gas and others,  including former affiliates,
             and/or   previous   landowners,   operated   facilities   for   the
             manufacturing  of  gas  and  storage  of  manufactured  gas.  These
             facilities  are no longer in operation  and have not been  operated
             for many years. Under currently  applicable  environmental laws and
             regulations,  Indiana Gas,  and the others,  may now be required to
             take  remedial  action if  certain  byproducts  are  found  above a
             regulatory threshold at these sites.

             Indiana Gas has  identified  the  existence,  location  and certain
             general  characteristics of 26 gas manufacturing and storage sites.
             Based upon the site work  completed  to date,  Indiana Gas believes
             that a level  of  contamination  that  may  require  some  level of
             remedial activity may be present at a number of the sites.  Removal
             activities  have been  conducted  at  several  sites and a remedial
             investigation/feasibility  study (RI/FS) has been  completed at one
             of the sites  under an agreed  order  between  Indiana  Gas and the
             Indiana  Department  of  Environmental  Management  (IDEM),  with a
             Record of Decision  (ROD)  expected to be issued by IDEM by the end
             of calendar year 1999.  Although Indiana Gas has not begun an RI/FS
             at additional sites, Indiana Gas has submitted several of the sites
             to IDEM's  Voluntary  Remediation  Program  (VRP) and is  currently
             conducting some level of remedial activities including  groundwater
             monitoring  at certain  sites  where  deemed  appropriate  and will
             continue  remedial  activities  at the  sites  as  appropriate  and
             necessary.

             Based upon the work  performed  to date,  Indiana  Gas has  accrued
             investigation,  remediation,  groundwater  monitoring  and  related
             costs for the sites.  Estimated costs of certain  remedial  actions
             that  may  likely  be  required  have  also  been  accrued.   Costs
             associated with environmental  remedial activities are accrued when
             such costs are probable and reasonably estimable.  Indiana Gas does
             not believe it can provide an estimate of the  reasonably  possible
             total  remediation  costs for any site  prior to  completion  of an
             RI/FS  and  the  development  of  some  sense  of  the  timing  for
             implementation  of the site specific remedial  alternative,  to the
             extent such remediation is required.  Accordingly,  the total costs
             which may be incurred in  connection  with the  remediation  of all
             sites, to the extent remediation is necessary, cannot be determined
             at this time.

             Indiana Gas has been  seeking to recover the costs it has  incurred
             and  expects  to  incur  relating  to the 26 sites  from  insurance
             carriers and other potentially responsible parties (PRPs). The IURC
             has determined  that these costs are not  recoverable  from utility
             customers.

             Indiana Gas has completed the process of  identifying  PRPs and now
             has PRP  agreements  in  place  covering  19 of the 26  sites.  The
             agreements  provide  for  coordination  of efforts  and  sharing of
             investigation and clean-up costs incurred and to be incurred at the
             sites. PSI Energy, Inc. is a PRP on all 19 sites.  Northern Indiana
             Public  Service  Company  is a PRP  on 5 of  the  19  sites.  These
             agreements  limit  Indiana  Gas' share of past and future  response
             costs at these 19 sites to between 20 and 50 percent.  Based on the
             agreements,  Indiana Gas has  recorded a  receivable  from PRPs for
             their unpaid share of the liability  for work  performed by Indiana
             Gas to date, as well as accrued Indiana Gas' proportionate share of
             the estimated cost related to work not yet performed.

             Indiana  Gas has  filed a  complaint  in  Indiana  state  court  to
             continue its pursuit of  insurance  coverage  from three  insurance
             carriers,  with the trial scheduled for early 2000. As of September
             30, 1999, Indiana Gas has recorded settlements from other insurance
             carriers in an aggregate  amount of  approximately  $15.5  million.
             Subsequent  to September  30, 1999,  an agreement in principle  has
             been reached with one of these insurers.

             These environmental matters have had no material impact on earnings
             since costs  recorded  to date  approximate  insurance  settlements
             received.  While  Indiana  Gas has  recorded  all  costs  which  it
             presently   expects  to  incur  in  connection   with   remediation
             activities,  it is  possible  that future  events may require  some
             level of  additional  remedial  activities  which are not presently
             foreseen.

             12.  Affiliate Transactions

             ProLiance  Energy,  LLC  (ProLiance),   a  non-regulated  marketing
             affiliate of Indiana Energy, began providing natural gas supply and
             related  services to Indiana Gas effective  April 1, 1996.  Indiana
             Gas' purchases  from  ProLiance for resale and for injections  into
             storage for 1999,  1998 and 1997  totaled  $231.9  million,  $269.2
             million and $306.1 million, respectively.

             The sale of gas and  provision of other  services to Indiana Gas by
             Indiana  Energy's  marketing  affiliates  are subject to regulatory
             review  through  the  quarterly  gas  cost  adjustment   proceeding
             currently pending before the IURC.

             On September 12, 1997, the Indiana  Utility  Regulatory  Commission
             (IURC)  issued a decision  finding  the gas  supply  and  portfolio
             administration  agreements  between  ProLiance  and Indiana Gas and
             ProLiance  and  Citizens  Gas (the  gas  supply  agreements)  to be
             consistent with the public interest.  The IURC's decision reflected
             the  significant   gas  cost  savings  to  customers   obtained  by
             ProLiance's  services and suggested that all material provisions of
             the agreements  between ProLiance and the utilities are reasonable.
             Nevertheless,   with  respect  to  the  pricing  of  gas  commodity
             purchased  from  ProLiance  and two other pricing  terms,  the IURC
             concluded that additional findings in the gas cost adjustment (GCA)
             process  would be  appropriate  and directed  that these matters be
             considered  further in the  pending,  consolidated  GCA  proceeding
             involving  Indiana  Gas and  Citizens  Gas.  The  IURC  has not yet
             established a schedule for conducting these additional proceedings.

             The IURC's September 12, 1997, decision was appealed to the Indiana
             Court of Appeals  by  certain  Petitioners  including  the  Indiana
             Office of Utility Consumer Counselor, the Citizens Action Coalition
             of Indiana and a small group of large-volume  customers. On October
             8,  1998,  the  Indiana  Court of Appeals  issued a decision  which
             reversed and remanded the case to the IURC with  instructions  that
             the  gas  supply  agreements  be  disapproved.  The  basis  for the
             decision  was that  because the gas supply  agreements  provide for
             index  based  pricing of gas  commodity  sold by  ProLiance  to the
             utilities,  the gas supply  agreements should have been the subject
             of an application  for approval of an alternative  regulatory  plan
             under Indiana statutory law.

             On April 22, 1999, the Indiana Supreme Court granted a petition for
             transfer of the case and will now consider the appeal of the IURC's
             decision  and issue its own decision on the merits of the appeal at
             a later date. By granting  transfer,  the Supreme Court has vacated
             the Court of Appeals' decision.

             If the Supreme Court  reverses the IURC's  decision , the case will
             be  remanded  to the IURC for  further  proceedings  regarding  the
             public interest in the gas supply agreements.  If the Supreme Court
             affirms the IURC's decision,  the  reasonableness of certain of the
             gas costs  incurred by Indiana Gas under the gas supply  agreements
             will  be  further  reviewed  by the  IURC in the  consolidated  GCA
             proceeding.  The existence of significant benefits to the utilities
             and their  customers  resulting from  ProLiance's  services has not
             been  challenged  on appeal.  Indiana Gas is  continuing to utilize
             ProLiance for its gas supply.

             On or  about  August  11,  1998,  Indiana  Gas,  Citizens  Gas  and
             ProLiance each received a Civil  Investigative  Demand ("CID") from
             the United  States  Department  of Justice  requesting  information
             relating to Indiana Gas' and Citizens  Gas'  relationship  with and
             the  activities of ProLiance.  The Department of Justice issued the
             CID to  gather  information  regarding  ProLiance's  formation  and
             operations,  and  to  determine  if  trade  or  commerce  has  been
             restrained. Indiana Gas and ProLiance have provided all information
             requested  and  management  continues  to believe that there are no
             significant issues in this matter.

             While the results of the ProLiance issues mentioned above cannot be
             predicted,  management  does not  expect  these  matters  to have a
             material  impact on Indiana Gas'  financial  position or results of
             operations. However, no assurance can be provided.

             CIGMA,  LLC,  owned  jointly and equally by IGC  Energy,  Inc.,  an
             indirect wholly owned  subsidiary of Indiana  Energy,  and Citizens
             By-Products  Coal  Company,  a wholly owned  subsidiary of Citizens
             Gas, provides  materials  acquisition and related services that are
             used by Indiana  Gas.  Indiana  Gas'  purchases  of these  services
             during  1999 and 1998  totaled  $16.9  million  and $15.6  million,
             respectively.

             IEI Services, a wholly owned subsidiary of Indiana Energy, provides
             information technology,  financial,  human resources,  building and
             fleet  services.  Amounts billed by IEI Services to Indiana Gas for
             1999 and 1998 were $30.4 million and $26.7 million, respectively.

             Indiana Gas also  participates  in a  centralized  cash  management
             program  with its  parent,  affiliated  companies  and banks  which
             permits funding of checks as they are presented.

             Amounts owed to affiliates  totaled $20.0 million and $15.0 million
             at September 30, 1999 and 1998,  respectively,  and are included in
             Accounts Payable on the Consolidated Balance Sheets.

             Amounts due from  affiliates  totaled $1.0 million and $5.4 million
             at September 30, 1999 and 1998,  respectively,  and are included in
             Accounts Receivable on the Consolidated Balance Sheets.

             13.  New Accounting Standards

             For  fiscal  1999,  the  company  adopted  Statement  of  Financial
             Accounting  Standards (SFAS) No. 131, Disclosures about Segments of
             an Enterprise and Related Information.  This statement  establishes
             standards  for the way that  public  companies  report  information
             about  operating  segments  in  annual  financial   statements  and
             requires that those  companies  report selected  information  about
             operating  segments in annual and interim  financial reports issued
             to shareholders. Indiana Gas has no reportable segments.

             In June  1998,  the  FASB  issued  SFAS  No.  133,  Accounting  for
             Derivative  Instruments  and  Hedging  Activities.   The  statement
             establishes accounting and reporting standards requiring that every
             derivative  instrument,  including certain  derivative  instruments
             embedded in other  contracts,  be recorded in the balance  sheet as
             either  an asset or  liability  measured  at its  fair  value.  The
             statement  requires that changes in the derivative's  fair value be
             recognized  currently in earnings unless specific hedge  accounting
             criteria are met. Special accounting for qualifying hedges allows a
             derivative's  gains and  losses to offset  related  results  on the
             hedged item in the income  statement,  and requires  that a company
             must formally document,  designate, and assess the effectiveness of
             transactions that receive hedge accounting.  In June 1999, the FASB
             issued  SFAS 137,  which  defers  the  effective  date of SFAS 133.
             ProLiance  utilizes   derivative   instruments  to  manage  pricing
             decisions,  minimize  the risk of price  volatility,  and  minimize
             price  risk  exposure  in  the  energy  markets.  SFAS  133  is now
             effective  for  ProLiance  in fiscal  2001.  ProLiance  has not yet
             quantified  the impact of adopting this  statement on its financial
             position or results of operations.


<PAGE>

             14.  Summarized Financial Data (Unaudited)

             Summarized  quarterly  financial data (in thousands of dollars) for
             1999 and 1998 are as follows:

<TABLE>
<CAPTION>
             1999: THREE MONTHS ENDED      DEC. 31        MAR. 31        JUNE 30       SEP. 30
             ------------------------      -------        -------        -------       -------
<S>                                       <C>            <C>             <C>           <C>
             Operating revenues           $124,947       $161,484        $72,131       $60,499
             Operating income (loss)        16,577         27,876          4,183        (2,086)
             Net income (loss)              12,531         23,998            639        (5,791)

             1998: THREE MONTHS ENDED      DEC. 31        MAR. 31        JUNE 30       SEP. 30
             ------------------------      -------        -------        -------       -------
             Operating revenues           $170,132       $163,131     $70,560          $61,821
             Operating income (loss)        20,828         23,427          3,929        (1,933)
             Net income (loss)              16,589         19,258            321        (5,285)
</TABLE>


             Note: Because of the seasonal factors that significantly affect the
             companies'  operations,  the  results  of  operations  for  interim
             periods within fiscal years are not comparable.




<PAGE>




Item 9.       Changes in and Disagreements with Accountants

              None.


Part III

Item 10.      Directors and Executive Officers of the Registrant

              Except for the list of the executive officers, which can be found
              in Part I, Item 4(a) of this report, the information required to
              be shown in this part for Item 10, Directors and Executive
              Officers of the Registrant is incorporated by reference here from
              the Form 10-K of the registrant's parent company, Indiana Energy,
              Inc. for the fiscal year ended September 30, 1999 (the 1999 10-K).
              That statement was prepared and filed electronically with the
              Securities and Exchange Commission on December 29, 1999. The
              information is included in Item 10 of the 1999 10-K and attached
              as Exhibit 99.


Item 11.      Executive Compensation

              The  information  required  to be shown in this  part for Item 11,
              Executive Compensation, is incorporated by reference here from the
              Form  10-K  report of the  registrant's  parent  company,  Indiana
              Energy,  Inc.  That report was prepared  and filed  electronically
              with the Securities and Exchange  Commission on December 29, 1999.
              The  information  is  included  in Item 11 of the  1999  10-K  and
              attached as Exhibit 99.


              Contained in the Indiana  Energy Form 10-K,  Summary  Compensation
              Table,  Column C and Column D, Salary  Amounts and Bonus  Amounts,
              are some compensation  dollars which are allocated to subsidiaries
              of Indiana  Energy other than  Indiana  Gas. The named  executives
              received the  following  compensation,  including  Bonus,  for the
              years ended  September  30, 1999,  1998 and 1997, as it relates to
              only Indiana Gas.

                                          1999           1998           1997
                                        --------       --------       --------
              Lawrence A. Ferger        $550,990       $588,101       $575,144
              Paul T. Baker              389,240        383,881        362,671
              Niel C. Ellerbrook         353,783        277,569        291,194
              Anthony E. Ard             204,418        196,858        207,087
              Timothy M. Hewitt          207,007        196,947        187,487


Item 12.      Securities Ownership of Certain Beneficial Owners and Management

              The  information  required  to be shown in this  part for Item 12,
              Securities  Ownership of Certain Beneficial Owners and Management,
              is  incorporated  by  reference  here  from the  1999  10-K of the
              registrant's  parent company,  Indiana Energy, Inc. That statement
              was  prepared and filed  electronically  with the  Securities  and
              Exchange  Commission  on December 29,  1999.  The  information  is
              included in Item 12 of the 1999 10-K and attached as Exhibit 99.


Item 13.      Certain Relationships and Related Transactions

              The  information  required  to be shown in this  part for Item 13,
              Certain  Relationships and Related Transactions is incorporated by
              reference  here from the 1999 10-K of Indiana  Energy,  Inc.  That
              statement   was  prepared  and  filed   electronically   with  the
              Securities  and Exchange  Commission  on December  29,  1999.  The
              information  is included in Item 13 of the 1999 10-K and  attached
              as Exhibit 99.



Part IV

Item 14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K

              The following documents are filed as part of this report:

     (a)-1    Financial Statements

                                                                Location in 10-K

              Report of Independent Public Accountants              Item 8

              Consolidated Statements of Income - 1999,
              1998 and 1997                                         Item 8

              Consolidated Statements of Cash Flows - 1999,
              1998 and 1997                                         Item 8

              Consolidated Balance Sheets at September 30,
              1999 and 1998                                         Item 8

              Consolidated Statements of Common Shareholder's
              Equity - 1999, 1998 and 1997                          Item 8

              Consolidated Schedules of Long-Term Debt
              as of September 30, 1999 and 1998                     Item 8

              Notes to Financial Statements                         Item 8


     (a)-2    Financial Statement Schedules

              Report of Independent Public Accountants on Schedules

              Schedule II.      Valuation and Qualifying
                                Accounts - 1999, 1998 and 1997

     (a)-3    Exhibits

              See Exhibit Index

     (b)      Reports on Form 8-K

              On July 30, 1999,  Indiana Gas filed a Current  Report on Form 8-K
              with  respect  to the  release by Indiana  Energy,  Inc.  (Indiana
              Energy)  of  unaudited  summary   financial   information  to  the
              investment  community  regarding  Indiana  Energy's   consolidated
              results of operations,  financial  position and cash flows for the
              three-,  nine- and twelve-month periods ended June 30, 1999. Items
              reported include:

                                      Item 5.   Other Events

                                      Item 7.   Exhibits

                                             99      Financial Analyst Report -
                                                     Third Quarter 1999


              On August 17, 1999, Indiana Gas filed a Current Report on Form 8-K
              with  respect to the  filing of an  Officers'  Certificate,  dated
              August 13, 1999, distribution Agreement dated August 13, 1999, and
              unqualified legal opinion,  dated August 13, 1999, with respect to
              the Indiana Gas Company,  Inc.  Medium-Term Note Program effective
              July 28, 1999. Items reported include:

                                      Item 5.   Other Events

                                      Item 7.   Exhibits

                                             1    Distribution Agreement, dated
                                                  August 13, 1999, between
                                                  Indiana Gas Company, Inc. and
                                                  Merrill Lynch & Co., Merrill
                                                  Lynch, Pierce, Febber & Smith
                                                  Incorporated.

                                             4    Officers' Certificate, dated
                                                  August 13, 1999, with respect
                                                  to establishment of the
                                                  Medium-Term Notes, Series G
                                                  (including form of Fixed Rate
                                                  Note and Floating Rate Note).

                                             5    Unqualified Legal Opinion,
                                                  dated August 13, 1999, with
                                                  respect to the Medium-Term
                                                  Notes, Series G.


              On October 29,  1999,  Indiana Gas filed a Current  Report on Form
              8-K with respect to the release by Indiana Energy,  Inc.  (Indiana
              Energy)  of  summary  financial   information  to  the  investment
              community  regarding  Indiana  Energy's  consolidated  results  of
              operations, financial position and cash flows for the twelve-month
              periods ended September 30, 1999. Items reported include:

                                      Item 5.   Other Events

                                      Item 7.   Exhibits

                                             99      Financial Analyst Report -
                                                     Fourth Quarter 1999



<PAGE>
                                   SIGNATURES

Pursuant  to the  requirements  of the  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                              INDIANA GAS COMPANY, INC.



Dated December 29, 1999                       /s/ Niel C. Ellerbrook
                                              ---------------------------------
                                              Niel C. Ellerbrook, President and
                                              Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

      Signature                       Title                          Date


/s/ Lawrence A. Ferger      Chairman and Director            December 29, 1999
-------------------------
Lawrence A. Ferger



/s/ Niel C. Ellerbrook      President, Chief Executive
-------------------------   Officer and Director             December 29, 1999
Niel C. Ellerbrook




/s/ Paul T. Baker           Executive Vice President,        December 29, 1999
-------------------------   Chief Operating Officer and
Paul T. Baker               Director


/s/ Jerome A. Benkert       Vice President and Controller    December 29, 1999
-------------------------
Jerome A. Benkert






<PAGE>


/s/ William G. Mays         Director                         December 29, 1999
-------------------------
William G. Mays



/s/ J. Timothy McGinley     Director                         December 29, 1999
-------------------------
J. Timothy McGinley



/s/ John E. Worthen         Director                         December 29, 1999
-------------------------
John E. Worthen
<PAGE>

<TABLE>
<CAPTION>

                                  EXHIBIT INDEX

Exhibit No.                         Description                                  Reference

<S>                            <C>                                        <C>
2-A                            Agreement and Plan of Merger               Exhibit 2 to Indiana Energy's
                               dated as of June 11, 1999,                 Current Report on Form 8-K
                               among Indiana Energy, Inc.,                dated as of June 11, 1999, and
                               SIGCORP, Inc. and Vectren                  filed as of June 15, 1999.
                               Corporation.

2-B                            Amendment No.1, dated December             Exhibit 2 to Indiana Energy's
                               14, 1999 to Agreement and Plan             Current Report on Form 8-K
                               of Merger (Set forth in 2-A,               dated as of December 16, 1999,
                               above)                                     and filed as of December 16,
                                                                          1999.

2-C                            Asset Purchase Agreement dated             Exhibit 2 and 99.1 to Indiana
                               December 14, 1999 between                  Energy, Inc. Current Report on
                               Indiana Energy, Inc., Dayton               Form 8-K dated as of December
                               Power and Light Co., Inc. and              14, 1999 and filed as of
                               Number -3CHK with commitment               December 28, 1999.
                               letter for 364-Day Credit
                               Facility dated December 16, 1999

3-A                            Amended and Restated Articles of           Exhibit 3-A to Indiana Gas' Quarterly
                               Incorporation.                             Report on Form 10-Q for the quarterly
                                                                          period ended March 31, 1997.

3-B                            Amended and Restated Code of By-Laws.      Exhibit 3-B to Indiana Gas' Quarterly
                                                                          Report on Form 10-Q for the quarterly
                                                                          period ended March 31, 1997.

4-A                            Indenture dated February 1, 1991,          Exhibit 4(a) to Indiana Gas Company,
                               between Indiana Gas and Continental        Inc.'s Current Report on Form 8-K dated
                               Bank, National Association.                February 1, 1991, and filed February
                                                                          15, 1991; First Supplemental
                                                                          Indenture thereto dated
                                                                          as  of February 15, 1991,
                                                                          (incorporated by reference
                                                                          to Exhibit 4(b) to Indiana
                                                                          Gas Company, Inc.'s Current
                                                                          Report on Form 8-K dated
                                                                          February 1, 1991, and
                                                                          filed February 15, 1991);
                                                                          Second Supplemental Indenture
                                                                          thereto dated as  of September 15, 1991,
                                                                          (incorporated by reference
                                                                          to Exhibit 4(b) to Indiana
                                                                          Gas Company, Inc.'s Current
                                                                          Report on Form 8-K dated
                                                                          September 15, 1991,
                                                                          and filed September 25,
                                                                          1991); Third Supplemental
                                                                          Indenture thereto dated
                                                                          as  of September 15,
                                                                          1991 (incorporated
                                                                          by reference to Exhibit 4(c)
                                                                          to Indiana Gas Company, Inc.'s
                                                                          Current Report on Form 8-K
                                                                          dated September 15, 1991
                                                                          and filed September 25, 1991);

                                                                          Fourth Supplemental Indenture thereto
                                                                          dated as of December 2, 1992,
                                                                          (incorporated by reference to Exhibit
                                                                          4(b) to Indiana Gas Company, Inc.'s
                                                                          Current Report on Form 8-K dated December
                                                                          1, 1992, and filed December 8, 1992);
                                                                          Officers' Certificate pursuant to Section
                                                                          301 of the Indenture dated as of April 5,
                                                                          1995, (incorporated by reference to
                                                                          Exhibit 4(a) to Indiana Gas Company,
                                                                          Inc.'s Current Report on Form 8-K dated
                                                                          and filed April 5, 1995); and Officers'
                                                                          Certificate pursuant to Section 301 of
                                                                          the Indenture dated as of November 19,
                                                                          1997 (incorporated by reference to
                                                                          Exhibit 4 to Indiana Gas Company, Inc.'s
                                                                          Report on Form 8-K dated November 19,
                                                                          1997 and filed December 5, 1997);
                                                                          Officer's Certificate pursuant to Section
                                                                          301 of the Indenture dated as of August
                                                                          13, 1999 (incorporated by reference to
                                                                          Exhibit 4 to Indiana Gas Company Inc.,'s
                                                                          Current Report on Form 8-K dated August
                                                                          13, 1999, and filed August 17, 1999).


</TABLE>
<PAGE>
<TABLE>
<CAPTION>

<S>                            <C>                                        <C>
10-A                           Employment Agreement between Indiana       Exhibit 10-A to Indiana Energy,
                               Energy, Inc. and Lawrence A. Ferger        Inc.'s Quarterly Report on Form 10-Q
                               effective January 1, 1999.                 for the quarterly period ended
                                                                          December 31, 1998.

10-B                           Employment Agreement between Indiana       Exhibit 10-B to Indiana Energy,
                               Energy, Inc. and Niel C. Ellerbrook        Inc.'s Quarterly Report on Form 10-Q
                               effective January 1, 1999.                 for the quarterly period ended
                                                                          December 31, 1998.

10-C                           Employment Agreement between Indiana       Exhibit 10-C to Indiana Energy,
                               Energy, Inc. and Paul T. Baker             Inc.'s Quarterly Report on Form 10-Q
                               effective January 1, 1999.                 for the quarterly period ended
                                                                          December 31, 1998.

10-D                           Employment Agreement between Indiana       Exhibit 10-D to Indiana Energy,
                               Energy, Inc. and Anthony E. Ard            Inc.'s Quarterly Report on Form 10-Q
                               effective January 1, 1999.                 for the quarterly period ended
                                                                          December 31, 1998.

10-E                           Employment Agreement between Indiana       Exhibit 10-E to Indiana Gas Company,
                               Energy, Inc. and Timothy M. Hewitt,        Inc.'s Quarterly Report on Form 10-Q
                               effective January 1, 1999.                 for the quarterly period ended
                                                                          December 31, 1998.

10-F                           Indiana Energy, Inc. Unfunded              Exhibit 10-G to Indiana Energy, Inc.'s
                               Supplemental Retirement Plan for a         Quarterly Report on Form 10-Q for the
                               Select Group of Management Employees       quarterly period ended December 31,
                               as amended and restated effective          1998.
                               December 1, 1998.

10-G                           Indiana Energy, Inc. Nonqualified          Exhibit 10-H to Indiana Energy, Inc.'s
                               Deferred Compensation Plan effective       Quarterly Report on Form 10-Q for the
                               January 1, 1999.                           quarterly period ended December 31,
                                                                          1998.

10-H                           Amendment to Indiana Energy, Inc.          Exhibit 10-I to Indiana Energy, Inc.'s
                               Executive Restricted Stock Plan            Quarterly Report on Form 10-Q for the
                               effective December 1, 1998.                quarterly period ended December 31,
                                                                          1998.

10-I                           Indiana Energy, Inc. Annual                Exhibit 10-D to Indiana Energy's
                               Management Incentive Plan effective        1987 Annual Report on Form 10-K.
                               October 1, 1987.

10-J                           First Amendment to the Indiana             Exhibit 10-Q to Indiana Energy's 1998
                               Energy, Inc. Annual Management             Annual Report on Form 10-K.
                               Incentive   Plan effective                 (set forth in 10-I above)
                               October 1, 1997.

10-K                           Amendment to Indiana Energy, Inc.          Exhibit 10-J to Indiana Energy, Inc.'s
                               Directors' Restricted Stock Plan,          Quarterly Report on Form 10-Q for the
                               effective December 1, 1998.                quarterly period ended December 31, 1998.

10-L                           Formation Agreement among Indiana          Exhibit 10-C to Indiana Energy's
                               Energy, Inc., Indiana Gas Company,         Quarterly Report on Form 10-Q for the
                               Inc., IGC Energy, Inc., Indiana            quarterly period ended March 31, 1996.
                               Energy Services, Inc., Citizens Gas
                               & Coke Utility, Citizens Energy
                               Services Corporation and ProLiance
                               Energy, LLC, effective March 15, 1996.

10-M                           Gas Sales and Portfolio                    Exhibit 10-C to Indiana Gas' Quarterly
                               Administration Agreement                   Report on Form 10-Q for the quarterly
                               between Indiana Gas Company,               period ended March 31, 1996.
                               Inc. and ProLiance Energy, LLC,
                               effective March 15, 1996, for
                               services to begin April 1, 1996.

10-N                           Amended appendices to the Gas Sales        Exhibit 10-A to Indiana Gas' Quarterly
                               and Portfolio Administration               Report on Form 10-Q for the quarterly
                               Agreement between Indiana Gas              period ended March 31, 1999.
                               Company, Inc. and ProLiance Energy,
                               LLC effective November 1, 1998.

10-O                           Amended appendices to the Gas Sales        Filed herewith.
                               and Portfolio Administration
                               Agreement between Indiana Gas
                               Company, Inc. and ProLiance Energy,
                               LLC effective November 1, 1999.

10-P                           Indian Energy, Inc. Executive              Exhibit 10-O to Indiana Energy,
                               Restricted Stock Plan as amended and       Inc.'s 1998 Annual report on
                               restated effective October 1, 1998         Form 10-K.

10-Q                           Indian Energy, Inc. Director's             Exhibit 10-B to Indiana Energy,
                               Restricted Stock Plan as amended and       Inc.'s Quarterly Report on Form
                               restated effective May 1, 1997             10-Q for the quarterly period
                                                                          ended June 30, 1997.

12                            Computation of Ratio of Earnings
                              to Fixed Charges                            Filed herewith.

21                            Subsidiaries of Indiana Gas
                              Company, Inc.                               Filed herewith.

23                            Consent of Independent Public Accountants.  Filed herewith.

27                            Financial Data Schedule                     Filed herewith.

99                            Exhibits

                              99.1 Indiana Energy, Inc. Form 10-K         Filed Herewith
                                   for the fiscal year ended
                                   September 30, 1999, Item 10

                              99.2 Indiana Energy, Inc. Form 10-K         Filed Herewith
                                   for the fiscal year ended
                                   September 30, 1999, Item 11

                              99.3 Indiana Energy, Inc. Form 10-K         Filed Herewith
                                   for the fiscal year ended
                                   September 30, 1999, Item 12

                              99.4 Indiana Energy, Inc. Form 10-K         Filed Herewith
                                   for the fiscal year ended
                                   September 30, 1999, Item 13


</TABLE>


<PAGE>

                            INDIANA GAS COMPANY, INC.
                            AND SUBSIDIARY COMPANIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                            YEARS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>


                             Col. A         Col B.    Col C.              Col. D               Col. E       Col. F       Col. G
                                                                         Additions           Deductions

                                                                                            For Purposes
                                                                Charged to                   For Which
                                                    Beginning   Costs and                     Reserves      Other        Ending
                           Description       Year    Balance     Expenses          Other    Were Created   Changes       Balance
                           ------------------------------------------------------------------------------------------------------
RESERVE DEDUCTED FROM APPLICABLE ASSET
<S>                                         <C>       <C>          <C>              <C>       <C>            <C>          <C>
       Reserve for uncollectible accounts   1997      $1,853       2,655              -       2,724            -          $1,784
                                            1998      $1,784       3,470              -       4,354            -          $  900
                                            1999        $900       2,580              -       2,747            -          $  733
</TABLE>



<PAGE>



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES

To Indiana Gas Company, Inc.:

         We  have  audited  in  accordance  with  generally   accepted  auditing
standards,  the consolidated  financial  statements  included in Item 8, in this
Form 10-K,  and have issued our report thereon dated October 29, 1999. Our audit
was made for the  purpose of forming an opinion on those  statements  taken as a
whole.  The  schedules  listed in Item  14(a)-2  are the  responsibility  of the
company's  management  and are  presented  for  purposes of  complying  with the
Securities  and  Exchange  Commission's  rules  and  are not  part of the  basic
financial  statements.  These  schedules  have been  subjected  to the  auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth  therein in  relation  to the basic  financial  statements  taken as a
whole.


/s/ Arthur Andersen LLP
Arthur Andersen LLP

Indianapolis, Indiana
October 29, 1999