SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K


                 X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001

                                       OR

               _ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from_____________ to_____________

 Commission    Registrant, State of Incorporation;       IRS Employer
 File Number      Address and Telephone Number         Identification No.
 -----------   ----------------------------------      ------------------

   1-6494           Indiana Gas Company, Inc.             35-0793669
                    (An Indiana Corporation)
                     20 N. W. Fourth Street
                   Evansville, Indiana 47708
                        (812) 491-4000

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


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


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) have been subject to such filing
requirements for the past 90 days: Yes X No _

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

Common Stock- Without Par Value       690.00001                March 22, 2002
-------------------------------       ---------                --------------
            Class                  Number of Shares                 Date

As of March 22, 2002, all shares outstanding of the Registrant's classes of
common stock were held by Vectren Corporation through its wholly owned
subsidiary, Vectren Utility Holdings, Inc.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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>

                       Documents Incorporated by Reference
Certain information in Vectren Corporation's definitive Proxy Statement for the
2002 Annual Meeting of Stockholders, which was filed with the Securities and
Exchange Commission on March 15, 2002, is incorporated by reference in Part III
of this Form 10-K.

Information in the Company's Current Report on Form 8-K, which was filed with
the Securities and Exchange Commission on March 26, 2002, regarding replacement
of the Company's independent auditors, is incorporated by reference in Part I
of this filing.

                                Table of Contents
Item                                                                      Page
Number                                                                   Number
                                     Part I

  1   Business .........................................................     1
  2   Properties .......................................................     4
  3   Legal Proceedings.................................................     4
  4   Submission of Matters to Vote of Security Holders.................     4

                                     Part II

  5   Market for the Company's Common Equity
        and Related Stockholder Matters ................................     4
  6   Selected Financial Data...........................................     5
  7   Management's Discussion and Analysis
        of Results of Operations and Financial Condition................     6
  7A  Qualitative and Quantitative Disclosures About Market Risk........    17
  8   Financial Statements and Supplementary Data.......................    18
  9   Change in and Disagreements with Accountants on
        Accounting and Financial Disclosure.............................    61

                                    Part III

 10   Directors and Executive Officers of the Company...................    61
 11   Executive Compensation............................................    62
 12   Security Ownership of Certain Beneficial Owners and Management....    65
 13   Certain Relationships and Related Transactions....................    66

                                     Part IV

 14   Exhibits, Financial Statement Schedules and Reports on Form 8-K...    66
      Signatures........................................................    68

                                   Definitions
As discussed in this Form 10-K, the abbreviations Dth means dekatherms, MDth
means thousands of dekatherms, MMDth means millions of dekatherms, and
throughput means combined gas sales and gas transportation volumes.

<PAGE>


                                     PART I

ITEM 1.  BUSINESS

                           Description of the Business

Indiana Gas Company,  Inc. (the Company or Indiana Gas), an Indiana corporation,
provides natural gas distribution and  transportation  services to a diversified
customer base in 311 communities in 49 of Indiana's 92 counties.  Indiana Gas is
a direct subsidiary of Vectren Utility Holdings,  Inc. (VUHI). VUHI is a direct,
wholly owned subsidiary of Vectren Corporation (Vectren).

Vectren, an Indiana corporation, is an energy and applied technology holding
company headquartered in Evansville, Indiana. Vectren was organized on June 10,
1999 solely for the purpose of effecting the merger of Indiana Energy, Inc.
(Indiana Energy) and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of
Indiana Energy with SIGCORP and into Vectren was consummated with a tax-free
exchange of shares and has been accounted for as a pooling-of-interests in
accordance with Accounting Principles Board (APB) Opinion No. 16 "Business
Combinations."

Vectren's wholly owned subsidiary, VUHI, serves as the intermediate holding
company for its three operating public utilities: Indiana Gas, formerly a wholly
owned subsidiary of Indiana Energy, Inc., Southern Indiana Gas and Electric
Company (SIGECO), formerly a wholly owned subsidiary of SIGCORP, Inc., and the
Ohio operations (defined hereafter). Both Vectren and VUHI are exempt from
registration pursuant to Section 3(a)(1) and 3(c) of the Public Utility Holding
Company Act of 1935.

Investment in the Gas Distribution Assets of The Dayton Power and Light Company

On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company (DP&L) for approximately $465.0 million as a
tenancy in common through two separate wholly owned subsidiaries. Vectren Energy
Delivery of Ohio, Inc. (VEDO) holds a 53% undivided ownership interest in the
assets, and Indiana Gas holds a 47% undivided ownership interest. VEDO is the
operator of the assets, and these assets are referred to as "the Ohio
operations." Indiana Gas' ownership is accounted for on the equity method in
accordance with APB Opinion No. 18, "The Equity Method of Accounting for
Investments in Common Stock." Indiana Gas' initial investment of approximately
$218.1 million was funded with a combination of short-term borrowings from VUHI
and Indiana Gas' commercial paper program. The Ohio operations provide natural
gas distribution and transportation services to Dayton, Ohio, and 87 other
communities in 17 counties in west central Ohio.

Because the Ohio operations are a significant subsidiary as defined by Rule
4-08(g) of Regulation S-X, the financial statements of the Ohio operations are
included in this filing under Part II Item 8 Financial Statements and
Supplementary Data.
                               Recent Development

On March 26, 2002, the Company filed a Current Report on Form 8-K announcing its
decision to replace Arthur Andersen LLP as its independent auditors effective
upon the completion of a transition period which is expected to extend through
the conclusion of their review of the financial results of the Company for the
first quarter of 2002. This Form 8-K is included in this filing as Exhibit 99.5.





<PAGE>

                      Narrative Description of the Business

Overview

For the year ended December 31, 2001, the Company supplied natural gas service
to 530,188 Indiana customers, including 481,868 residential, 47,334 commercial,
and 986 transportation customers. This represents customer base growth of
approximately 1% compared to 2000.

The Company's service area contains diversified manufacturing and
agriculture-related enterprises. The principal industries served include
automotive assembly, parts and accessories, feed, flour and grain processing,
metal castings, aluminum products, gypsum products, electrical equipment, metal
specialties, and glass, steel finishing.

The largest communities served are Muncie, Anderson, Lafayette, West Lafayette,
Bloomington, Terre Haute, Marion, New Albany, Columbus, Jeffersonville, New
Castle, and Richmond.

Revenues

For the year ended December 31, 2001, natural gas revenues were $580.3 million
of which residential customers accounted for 67%, commercial 25%, transportation
7% and miscellaneous 1%, respectively.

The Company receives gas revenues by selling gas directly to residential,
commercial, and industrial customers at approved rates or by transporting gas
through its pipelines at approved rates to commercial and industrial customers
that have purchased gas directly from other producers, brokers, or marketers.
Total volume of gas provided to both sales and transportation customers
(throughput) was 112,299 MDth for the year ended December 31, 2001. Transported
gas represented 46% of total throughput. Rates for transporting gas provide for
the same margins generally earned by selling gas under applicable sales tariffs.

The sale of gas is seasonal and strongly affected by variations in weather
conditions. To mitigate seasonal demand, the Company owns and operates five
underground gas storage fields, three liquefied petroleum air-gas manufacturing
plants and maintains contract storage. Natural gas purchased from suppliers is
injected into storage during periods of light demand which are typically periods
of lower prices. The injected gas is then available to supplement contracted
volumes during periods of peak requirements. Approximately 168,723 Dth of gas
per day can be withdrawn during peak demand periods.

Gas Purchases

In 2001, the Company purchased all of its natural gas and winter delivery
service from ProLiance Energy, LLC (ProLiance). ProLiance is an unconsolidated,
nonregulated, energy marketing affiliate of Vectren and Citizens Gas and Coke
Utility. (See Note 5 in the Company's financial statements included in Part II
Item 8 Financial Statements and Supplementary Data regarding transactions with
ProLiance). The Company purchased 61,914 MDth volumes of gas in 2001 at an
average cost of $5.86 per MDth. The cost of gas purchased for the last five
years is as follows:

                                               Average Cost
                             Year            of Gas Purchased
                             ----            ----------------
                             1997                 $3.61
                             1998                 $3.60
                             1999                 $3.59
                             2000                 $5.77
                             2001                 $5.86


<PAGE>

Regulatory Matters

See Part II Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition regarding the Company's regulated environment.

Environmental Matters

See Part II Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition regarding manufactured gas plants.

Narrative Description of the Ohio operations

Overview
For the year ended December 31, 2001, the Ohio operations supplied natural gas
services to 312,633 Ohio customers, including 286,736 residential, 22,799
commercial, and 3,098 transportation customers.

Revenues
For the year ended December 31, 2001, natural gas revenues were $350.1 million
of which residential customers accounted for 65%, commercial 21%, and
transportation 14%, respectively.

The Ohio operations receives gas revenues by selling gas directly to
residential, commercial, and industrial customers at approved rates or by
transporting gas through its pipelines at approved rates to commercial and
industrial customers that have purchased gas directly from other producers,
brokers, or marketers. Total volume of gas provided to both sales and
transportation customers (throughput) was 55,539 MDth for the year ended
December 31, 2001.

The sale of gas is seasonal and strongly affected by variations in weather
conditions. To mitigate seasonal demand, the Ohio operations owns and operates
three liquefied petroleum air-gas manufacturing plants and maintains contract
storage. Natural gas purchased from suppliers is injected into storage during
periods of light demand which are typically periods of lower prices. The
injected gas is then available to supplement contracted volumes during periods
of peak requirements. Approximately 406,975 Dth of gas per day can be withdrawn
during peak demand periods.

Gas Purchases
In 2001, the Ohio operations purchased all of its natural gas and winter
delivery service from ProLiance. The Ohio operations purchased 37,790 MDth
volumes of gas in 2001 at an average cost of $5.41 per MDth.

                                   Competition

See Part II Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition regarding competition within the public utility industry
for the Company's regulated Indiana operations.

                                    Personnel

As of December 31, 2001, the Company and its subsidiaries had 450 employees.

In August 2001, Vectren signed a new four-year labor agreement, ending in
September 2005 with Local 135 of the Teamsters, Chauffeurs, Warehousemen and
Helpers. The new agreement provides for annual wage increases of 3.25%, a new
401(k) savings plan and improvements in the areas of health insurance and
pension.

The labor agreement between Indiana Gas, Local Union 1393 of the International
Brotherhood of Electrical Workers and Local Unions 7441 and 12213, United
Steelworkers of America, went into effect in November 1998 for a five year term
expiring on December 2003. The agreement contains a 4% wage increase in 1998 and


<PAGE>

3% wage increases each year thereafter during the term of the agreement, in
addition to increased performance incentives, a new sick pay provision and a
simplified pension benefit formula.

ITEM 2.   PROPERTIES

Indiana Gas
Specific to its Indiana operations, the Company owns and operates five gas
storage fields located in Indiana covering 71,484 acres of land with an
estimated ready delivery from storage capability of 8.0 MMDth of gas with daily
delivery capabilities of 134,160 Dth. For its Indiana operations, the Company
also maintains 186,578 Dth of gas in contract storage with a daily
deliverability of 3,563 Dth and three liquefied petroleum (propane) air-gas
manufacturing plants in Indiana with a total daily capacity of 31,000 Dth of
gas.

The Company's gas delivery system includes 11,336 miles of distribution and
transmission mains all of which are in Indiana except for pipeline facilities
extending from points in northern Kentucky to points in southern Indiana so that
gas may be transported to Indiana and sold or transported by Indiana Gas to
ultimate customers in Indiana.

Ohio operations
The Ohio operations operate three liquefied petroleum (propane) air-gas
manufacturing plants located in Ohio with a total daily capacity of 52,187 Dth
and approximately 13.9 MMDth of firm storage service from various pipelines with
daily deliverability of 354,788 Dth of gas.

The Ohio operations' gas delivery system includes 5,132 miles of distribution
and transmission mains all of which are located in Ohio.

ITEM 3.  LEGAL PROCEEDINGS

Indiana Gas is involved in various legal proceedings arising in the normal
course of business. In the opinion of management, with the exception of the
matters described in Note 5 of its financial statements included in Part II Item
8 Financial Statements and Supplementary Data regarding transactions with
ProLiance, there are no legal proceedings pending against the Company that could
be material to its financial position or results of operations.

ITEM 4.  Submission of Matters to Vote of Security Holders

No matters were submitted during the fourth quarter to a vote of security
holders.

                                     PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Price
All of the outstanding shares of the Company's common stock are owned by VUHI at
December 31, 2001. The Company's common stock is not publicly traded.

As of December 31, 2001, there are no outstanding options or warrants to
purchase the Company's common stock or securities convertible into the Company's
common stock. Additionally, the Company has no plans to publicly offer any of
its common equity.

Dividends Paid to Parent

       (In thousands)                  2001              2000
                                   ------------      ------------
            First Quarter             $7,870            $5,700
            Second Quarter             7,099             7,542
            Third Quarter              7,678             6,401
            Fourth Quarter             3,291             6,694


<PAGE>

On January 23, 2002, the board of directors declared a dividend of $6.9 million,
payable on March 1, 2002, to VUHI.

Dividends on shares of common stock are payable at the discretion of the board
of directors out of legally available funds. Future payments of dividends, and
the amounts of these dividends, will depend on the Company's financial
condition, results of operations, capital requirements, and other factors.

ITEM 6.  SELECTED FINANCIAL DATA

The following table presents selected financial information. The information
should be read in conjunction with the Company's financial statements and notes
thereto presented under Part II, Item 8 Financial Statements and Supplementary
Data of this Form 10-K. The financial information as of December 31, 1998-2001
and for each of the five years in the period ended December 31, 2001 are derived
from the Company's audited financial statements. The financial information as of
December 31, 1997 is derived from internal unaudited financial statements.

<TABLE>
<CAPTION>

                                              Year Ended December 31
------------------------------------------------------------------------------------------
(In thousands)                   1997          1998       1999        2000           2001
------------------------------------------------------------------------------------------
<S>                          <C>           <C>        <C>        <C>            <C>
Operating Data:
Operating revenues           $ 528,058     $ 420,459  $ 431,361  $  598,113     $  580,258
Operating income                29,579 (3)    42,001     45,701      31,215 (2)     44,743 (1)
Net income                      13,648 (3)    26,825     29,742      11,209 (2)     11,366 (1)

Balance Sheet Data:
Total assets                   698,889       686,757    739,870   1,140,513      1,074,868
Long-term debt-net of
  current maturities & debt
  subject to tender            165,000       181,964    211,849     281,109        260,972
Long-term debt to VUHI               -             -          -           -        147,270
Common shareholder's equity    246,406       245,880    248,622     233,494        316,540
</TABLE>


(1)  Merger and  integration  related costs incurred for the year ended December
     31, 2001 totaled $0.6 million.  These costs relate primarily to transaction
     costs, severance and other merger and acquisition integration activities.

     As a result of merger  integration  activities,  management retired certain
     information systems in 2001. Accordingly,  the useful lives of these assets
     were shortened to reflect this decision.  These  information  system assets
     are owned by a wholly owned  subsidiary of Vectren,  and the fees allocated
     by the subsidiary for the use of these systems by the Company are reflected
     in other  operating  expenses.  As a result of the shortened  useful lives,
     additional  fees were  incurred by the Company  during  2001,  resulting in
     additional other operating  expense of  approximately  $9.6 million for the
     year ended December 31, 2001.

     In total,  merger and integration related costs incurred for the year ended
     December 31, 2001 were $10.2 million ($6.3 million after tax).

     The Company incurred  restructuring charges of $8.7 million,  ($5.4 million
     after tax)  relating  to employee  severance,  related  benefits  and other
     employee  related  costs,  lease  termination  fees  related  to  duplicate
     facilities, and consulting and other fees.

(2)  Merger and  integration  related costs incurred for the year ended December
     31, 2000 totaled $16.8 million. These costs relate primarily to transaction
     costs, severance and other merger and acquisition integration activities.

     As a result of merger integration activities, management identified certain
     information systems to be retired in 2001. Accordingly, the useful lives of
     these assets were  shortened to reflect this  decision.  These  information
     system assets are owned by a wholly owned  subsidiary  of Vectren,  and the
     fees  allocated  by the  subsidiary  for the use of  these  systems  by the
     Company  are  reflected  in other  operating  expenses.  As a result of the
     shortened useful lives, additional fees were incurred by the Company during
     2000,  resulting in additional  other  operating  expense of  approximately
     $11.4 million for the year ended December 31, 2000.

     In total,  merger and integration related costs incurred for the year ended
     December 31, 2000 were $28.2 million ($19.5 million after tax).

(3)  During 1997, the board of directors of Indiana Gas 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)  which  included  estimated  costs  related to
     involuntary workforce reductions.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto:

                                    Overview

Description of the Business

Indiana Gas Company, Inc. (the Company or Indiana Gas), an Indiana corporation,
provides natural gas distribution and transportation services to a diversified
customer base in 311 communities in 49 of Indiana's 92 counties. Indiana Gas is
a direct subsidiary of Vectren Utility Holdings, Inc. (VUHI). VUHI is a direct,
wholly owned subsidiary of Vectren Corporation (Vectren).

Vectren was organized on June 10, 1999 solely for the purpose of effecting the
merger of Indiana Energy, Inc. (Indiana Energy) and SIGCORP, Inc. (SIGCORP). On
March 31, 2000, the merger of Indiana Energy with SIGCORP and into Vectren was
consummated with a tax-free exchange of shares and has been accounted for as a
pooling-of-interests in accordance with Accounting Principles Board (APB)
Opinion No. 16 "Business Combinations."

Vectren's wholly owned subsidiary, VUHI, serves as the intermediate holding
company for its three operating public utilities: Indiana Gas, formerly a wholly
owned subsidiary of Indiana Energy, Southern Indiana Gas and Electric Company
(SIGECO), formerly a wholly owned subsidiary of SIGCORP, and the Ohio operations
(defined hereafter). Both Vectren and VUHI are exempt from registration pursuant
to Section 3(a)(1) and 3(c) of the Public Utility Holding Company Act of 1935.

Investment in the Gas Distribution Assets of The Dayton Power and Light Company

On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company (DP&L) for approximately $465.0 million as a
tenancy in common through two separate wholly owned subsidiaries. Vectren Energy
Delivery of Ohio, Inc. (VEDO) holds a 53% undivided ownership interest in the
assets, and Indiana Gas holds a 47% undivided ownership interest. VEDO is the
operator of the assets, and these assets are referred to as "the Ohio
operations." Indiana Gas' ownership is accounted for on the equity method in
accordance with APB Opinion No. 18, "The Equity Method of Accounting for
Investments in Common Stock." Its ownership interest is included in investment
in the Ohio operations, and its interest in the results of operations is
included in equity in earnings of the Ohio operations. Indiana Gas' initial
investment of approximately $218.1 million was funded with a combination of
short-term borrowings from VUHI and Indiana Gas' commercial paper program.

                              Results of Operations

                                                     Year Ended December 31,
                                                   ---------------------------
In thousands                                          2001      2000      1999
                                                   -------   -------   -------
Net income, as reported                            $11,366   $11,209   $29,742
   Merger and integration costs-net of tax           6,319    19,496         -
   Restructuring costs-net of tax                    5,381         -         -
                                                   -------   -------   -------
Net income before nonrecurring items               $23,066   $30,705   $29,742
                                                   =======   =======   =======


For 2001 compared to the prior year, net income before the impact of
nonrecurring items decreased $7.6 million due to extraordinarily high gas costs
early in the year that unfavorably impacted margins and operating costs,
including uncollectible accounts expense, interest, and excise taxes. Also,
heating weather was 9% warmer than the prior year.


<PAGE>

For 2000 compared to 1999, net income before the impact of nonrecurring items
increased slightly to $30.7 million primarily due to cooler temperatures, offset
by a disallowance of gas costs by the Indiana Utility Regulatory Commission
(IURC).

Special Charges

Merger & Integration Costs
Merger and integration costs incurred for the years ended December 31, 2001 and
2000 were $0.6 million and $16.8 million, respectively. Vectren expects to
realize net merger savings of nearly $200.0 million over the next ten years from
the elimination of duplicate corporate and administrative programs and greater
efficiencies in operations, business processes and purchasing. Merger and
integration activities resulting from the 2000 merger were completed in 2001.
Merger costs are reflected in the financial statements of Vectren's operating
subsidiaries in which merger savings are expected to be realized.

Since March 31, 2000, $17.4 million has been expensed associated with merger and
integration activities. Accruals were established at March 31, 2000 totaling
$11.9 million. Of this amount, $4.8 million related to employee and executive
severance costs, $5.0 million related to transaction costs and regulatory filing
fees incurred prior to the closing of the merger, and the remaining $2.1 million
related to employee relocations that occurred prior to or coincident with the
merger closing. At December 31, 2001, the remaining accrual related to employee
severance was not significant. The remaining $5.5 million was expensed ($4.9
million in 2000 and $0.6 million in 2001) for accounting fees resulting from
merger related filing requirements, consulting fees related to integration
activities such as organization structure, employee travel between company
locations, internal labor of employees assigned to integration teams, investor
relations communication activities, and certain benefit costs.

During the merger planning process, approximately 81 positions were identified
for elimination. As of December 31, 2001, all such identified positions have
been vacated.

The integration activities experienced by the Company included such things as
information system consolidation, process review and definition, organization
design and consolidation, and knowledge sharing.

As a result of merger integration activities, management retired certain
information systems in 2001. Accordingly, the useful lives of these assets were
shortened to reflect this decision. These information system assets are owned by
a wholly owned subsidiary of Vectren, and the fees allocated by the subsidiary
for the use of these systems by the Company's subsidiaries are reflected in
other operating expenses. As a result of the shortened useful lives, additional
fees were incurred by the Company, resulting in additional other operating
expense of $9.6 million for the year ended December 31, 2001 and $11.4 million
for the year ended December 31, 2000.

In total, for the year ended December 31, 2001, merger and integration costs
totaled $10.2 million ($6.3 million after tax) compared to $28.2 million ($19.5
million after tax) for the same period in 2000.

Restructuring Costs
As part of continued cost saving efforts, in June 2001, Vectren's management and
the board of directors approved a plan to restructure, primarily, its regulated
operations. The restructuring plan included the elimination of certain
administrative and supervisory positions in its utility operations and corporate
office. Charges of $5.4 million were expensed in June 2001 as a direct result of
the restructuring plan. Additional charges of $3.3 million were incurred during
the remainder of 2001 primarily for consulting fees, employee relocation, and
duplicate facilities costs. In total, the Company has incurred restructuring
charges of $8.7 million ($5.4 million after tax). These charges were comprised
of $3.2 million for employee severance, related benefits and other employee
related costs, $4.0 million for lease termination fees related to duplicate
facilities and other facility costs, and $1.5 million for consulting and other
fees incurred through December 31, 2001. The restructuring program was completed
during 2001, except for the departure of certain employees impacted by the
restructuring and the final settlement of the lease obligation.

The $3.2 million expensed for employee severance and related costs is associated
with approximately 45 employees. Employee separation benefits include severance,
healthcare, and outplacement services. As of December 31, 2001, approximately 38


<PAGE>

employees have exited the business. The restructuring program was completed
during 2001, except for the departure of the remaining employees impacted by the
restructuring and the final settlement of the lease obligation.

New Accounting Principle

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS 133,
which requires that every derivative instrument be recorded on the balance sheet
as an asset or liability measured at its market value and that changes in the
derivative's market value be recognized currently in earnings unless specific
hedge accounting criteria are met.

SFAS 133, as amended, requires that as of the date of initial adoption, the
difference between the market value of derivative instruments recorded on the
balance sheet and the previous carrying amount of those derivatives be reported
in net income or other comprehensive income, as appropriate, as the cumulative
effect of change in accounting principle in accordance with APB Opinion No.
20, "Accounting Changes."

As of the date of adoption and through December 31, 2001, the Company was not
engaged in any derivative or hedging activity as defined by SFAS 133, as
amended; therefore, there was no impact at adoption or for the year ended
December 31, 2001.

Gas Utility Margin (Operating Revenues Less Utility Cost of Gas)

Gas utility margin for the year ended December 31, 2001 of $206.6 million
decreased $1.0 million, compared to 2000. The decrease is due to a 12% decrease
in throughput resulting primarily from weather that was 9% warmer than the prior
year and the unfavorable impact on margin resulting from extraordinarily high
gas costs early in 2001, coupled with the effects of a weakening economy. In
addition, the 2000 margin was reduced by $3.8 million due to the IURC's
disallowance of gas costs. These decreases were offset somewhat by customer
growth of approximately 1% compared to 2000. The Company's total throughput was
112,299 MDth in 2001, 126,960 MDth in 2000, and 118,861 MDth in 1999.

Gas utility margin for the year ended December 31, 2000, of $207.6 million
increased $3.1 million compared to 1999. Gas operations reflect 7% greater
throughput due to much colder temperatures during the fourth quarter of 2000
than in the fourth quarter of 1999 and a 2% growth in customers. Residential and
commercial sales rose 7% and 10%, respectively, during 2000. Temperatures were
11% colder in 2000 compared to 1999 and approached normal for the year. These
favorable impacts were partially offset by a $3.8 million disallowance of
recoverable gas costs by the IURC, charged against gas revenues in December
2000.

Cost of gas sold was $373.6 million in 2001, $390.5 million in 2000, and $226.8
million in 1999. Cost of gas sold decreased $16.9 million, or 4% in 2001 and
increased $163.7 million, or 72%, in 2000. The changes are primarily due to
fluctuations in average per unit purchased gas costs and the volume of
dekatherms sold. The total average cost per dekatherm of gas purchased by
Indiana Gas was $5.86 in 2001, $5.77 in 2000, and $3.59 in 1999. The price
changes are due primarily to changing commodity costs in the marketplace.

Operating Expenses (excluding Cost of Gas Sold)

Other Operating
Other operating expenses for the year ended December 31, 2001 decreased $4.6
million or 5% compared to 2000. The 2001 decrease results, primarily, from
reduced charges for those assets which had their useful lives shortened as part
of the merger and merger synergies in the current year, offset by increased
uncollectible accounts expense resulting from increased gas costs.

Other operating expenses for the year ended December 31, 2000 increased $8.0
million or 9% compared to 1999. The increase is primarily due to increased
charges for use of corporate assets, including those assets which had useful
lives shortened as a result of the merger.


<PAGE>

Depreciation & Amortization
Depreciation and amortization increased $1.4 million, or 4%, and $2.1 million,
or 6%, in 2001 and in 2000, respectively. The increases are due to depreciation
of normal utility plant additions.

Income Tax
Federal and state income taxes decreased $3.7 million and $9.5 million in 2001
and in 2000, respectively. The 2001 and 2000 decreases are due to lower pre-tax
earnings. The effective tax rate decreased from 46% in 2000 to 29% in 2001. This
decrease in the effective tax rate is due to the nondeductibility of certain
merger and integration costs.

Equity in Earnings of the Ohio Operations

As described in Note 1 to the financial statements included in Part II Item 8
Financial Statements and Supplementary Data, Indiana Gas has a 47% undivided
interest in the Ohio operations acquired by Vectren on October 31, 2000. Equity
in earnings of the Ohio operations represents Indiana Gas' portion of the Ohio
operations' net income since acquisition. The financing costs associated with
VEDO's 53% ownership interest are not included in the Ohio operations' earnings.

Interest Expense

Interest expense increased $13.6 million and $5.4 million, respectively, during
the years ended December 31, 2001 and 2000. The increases are due primarily to
interest related to the financing of its investment in the Ohio operations and
increased working capital requirements resulting from higher natural gas prices.

                                   Competition

The utility industry has been undergoing dramatic structural change for several
years, resulting in increasing competitive pressures faced by gas utility
companies. Increased competition may create greater risks to the stability of
utility earnings generally and may in the future reduce earnings from retail gas
sales. Ohio regulation provides for choice of commodity for all gas customers.
The Company plans to implement this choice for its gas customers in Ohio in
2002. Indiana has not adopted any regulation requiring gas choice; however, the
Company has approved tariffs permitting large volume customers choice among
commodity suppliers.

                              Environmental Matters

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

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

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


<PAGE>

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

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

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

                           Rate and Regulatory Matters

Gas operations with regard to retail rates and charges, terms of service,
accounting matters, issuance of securities, and certain other operational
matters specific to its Indiana customers are regulated by the Indiana Utility
Regulatory Commission (IURC).

Gas Costs Proceedings

Adjustments to rates and charges related to the cost of gas charged to Indiana
customers are made through gas cost adjustment (GCA) procedures established by
Indiana law and administered by the IURC. GCA procedures involve scheduled
quarterly filings and IURC hearings to establish the amount of price adjustments
for a designated future quarter. The procedures also provide for inclusion in
later quarters any variances between estimated and actual costs of gas sold in a
given quarter. This reconciliation process with regard to changes in the cost of
gas sold closely matches revenues to expenses.

The IURC has also applied the statute authorizing GCA procedures to reduce rates
when necessary to limit net operating income to a level authorized in its last
general rate order through the application of an earnings test. Recovery of gas
costs is not allowed to the extent that net operating income for the longer of
(1) a 60-month period, including the twelve-month period provided in the gas
cost adjustment filing, or (2) the date of the last order establishing base
rates and charges exceeds the total net operating income authorized by the IURC.
For the recent past, the earnings test has not affected the Company's ability to
recover gas costs, and the Company does not anticipate the earnings test will
restrict the recovery of gas costs in the near future.

Rate structures for gas delivery operations do not include weather
normalization-type clauses that authorize the utility to recover gross margin on
sales established in its last general rate case, regardless of actual weather
patterns.

Commodity prices for natural gas purchases were significantly higher during the
2000 - 2001 heating season, primarily due to colder temperatures, increased
demand and tighter supplies. Subject to compliance with applicable state laws,
the Company's utility subsidiaries are allowed full recovery of such changes in
purchased gas costs from their retail customers through these
commission-approved gas cost adjustment mechanisms, and margin on gas sales
should not be impacted. However, in 2001, the Company's utility subsidiaries
experienced higher working capital requirements, increased expenses including
unrecoverable interest costs, uncollectible accounts expense, and unaccounted
for gas and some level of price sensitive reduction in volumes sold.

In March 2001, the Company reached agreement with the Indiana Office of Utility
Consumer Counselor (OUCC) and the Citizens Action Coalition of Indiana, Inc.
(CAC) regarding the matters raised by an IURC Order that disallowed $3.8 million
of the Company's gas procurement costs for the 2000 - 2001 heating season which
was recognized during the year ended December 31, 2000. As part of the
agreement, the Company agreed to contribute an additional $1.7 million, of which
$1.0 million was contributed to the Company's service territory, to assist
qualified low income gas customers, and the Company agreed to credit $3.3
million of the $3.8 million disallowed amount to its customers' April 2001
utility bills in exchange for both the OUCC and the CAC dropping their appeals


<PAGE>

of the IURC Order. In April 2001, the IURC issued an order approving the
settlement. Substantially all of the financial assistance for low income gas
customers has been distributed in 2001.

ProLiance Energy, LLC

ProLiance Energy, LLC (ProLiance), a nonregulated, energy marketing affiliate of
Vectren, began providing natural gas and related services to Indiana Gas,
Citizens Gas and Coke Utility (Citizens Gas) and others in April 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 (GCA) process
administered by the IURC. On September 12, 1997, the IURC issued a decision
finding the gas supply and portfolio administration agreements between ProLiance
and Indiana Gas and ProLiance and Citizens Gas to be consistent with the public
interest and that ProLiance is not subject to regulation by the IURC as a public
utility. The IURC's decision reflected the significant gas cost savings to
customers obtained through 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, the price paid by ProLiance to the utilities for the prospect of
using pipeline entitlements if and when they are not required to serve the
utilities' firm customers, and the pricing of fees paid by the utilities to
ProLiance for portfolio administration services, the IURC concluded that
additional review in the 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 recently commenced processing the GCA proceeding regarding the
three pricing issues. The IURC has indicated that it will also consider the
prospective relationship of ProLiance with the utilities in this proceeding.
Discovery is ongoing, and an evidentiary hearing is scheduled for May 2002.
Until the IURC resolves these outstanding issues, the Company will continue to
reserve a portion of its share of ProLiance earnings.

Indiana Gas continues to record gas costs in accordance with the terms of the
ProLiance contract.

In August 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' relationships
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 had been restrained. In October 2001, the
Antitrust Division of the Department of Justice informed the Company that it
closed the investigation without further action.

                         Significant Accounting Policies

As described in Note 2 to the financial statements, significant accounting
policies include the following:

Use of Estimates

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

Utility Plant & Depreciation

Utility plant is stated at historical cost, including an allowance for the cost
of funds used during construction (AFUDC). Depreciation of utility property is
provided using the straight-line method over the estimated service lives of the
depreciable assets. AFUDC represents the cost of borrowed and equity funds used
for construction purposes and is charged to construction work in progress during
the construction period and is included in other - net in the Consolidated
Statements of Income. Maintenance and repairs, including the cost of removal of
minor items of property and planned major maintenance projects, are charged to


<PAGE>

expense as incurred. When property that represents a retirement unit is replaced
or removed, the cost of such property is credited to utility plant, and such
cost, together with the cost of removal less salvage, is charged to accumulated
depreciation.

Impairment Review of Long-Lived Assets

Long-lived assets are reviewed for impairment in accordance with SFAS No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" as facts and circumstances indicate that the carrying amount may be
impaired. Specifically, the evaluation for impairment involves the comparison of
an asset's carrying value to the estimated future cash flows the asset is
expected to generate over its remaining life. If this evaluation were to
conclude that the carrying value of the asset is impaired, an impairment charge
would be recorded as a charge to operations based on the difference between the
asset's carrying amount and its fair value. The same policy is currently
utilized for goodwill.

Regulation
Retail public utility operations affecting Indiana customers are subject to
regulation by the Indiana Utility Regulatory Commission (IURC).

SFAS 71
The Company's accounting policies give recognition to the rate-making and
accounting practices of this agency and to accounting principles generally
accepted in the United States, including the provisions of SFAS No. 71
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71).
Regulatory assets represent probable future revenues associated with certain
incurred costs, which will be recovered from customers through the rate-making
process. Regulatory liabilities represent probable future reductions in revenues
associated with amounts that are to be credited to customers through the
rate-making process.

The Company continually assesses 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, the Company believes such accounting is appropriate. If all
or part of the Company's operations cease to meet the criteria of SFAS 71, a
write-off of related regulatory assets and liabilities could be required. In
addition, the Company would be required to determine any impairment to the
carrying costs of deregulated plant and inventory assets.

The Company records any under-or-over-recovery resulting from gas and fuel
adjustment clauses each month in revenues. A corresponding asset or liability is
recorded until the under-or-over-recovery is billed or refunded to utility
customers. The cost of gas sold is charged to operating expense as delivered to
customers.

Revenues

Revenues are recorded as products and services are delivered to customers. To
more closely match revenues and expenses, the Company records revenues for all
gas delivered to customers but not billed at the end of the accounting period.

       Impact of Recently Issued Accounting Guidance on Future Operations

SFAS 141 & 142

The FASB issued two new statements of financial accounting standards in July
2001: SFAS No. 141, "Business Combinations" (SFAS 141), and SFAS No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142). These interrelated standards
change the accounting for business combinations and goodwill in two significant
ways:

SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is prohibited. This change does not affect the
pooling-of-interest transaction forming Vectren.


<PAGE>

SFAS 142 changes the accounting for goodwill from an amortization approach to an
impairment-only approach. Thus, amortization of goodwill that is not included as
an allowable cost for rate-making purposes will cease upon adoption of the
statement. This includes goodwill recorded in past business combinations.
Goodwill is to be tested for impairment at a reporting unit level at least
annually.

SFAS 142 also requires the initial impairment review of all goodwill and other
intangible assets within six months of the adoption date, which is January 1,
2002 for the Company. The impairment review consists of a comparison of the fair
value of a reporting unit to its carrying amount. If the fair value of a
reporting unit is less than its carrying amount, an impairment loss would be
recognized. Results of the initial impairment review are to be treated as a
change in accounting principle in accordance with APB Opinion No. 20 "Accounting
Changes." An impairment loss recognized as a result of an impairment test
occurring after the initial impairment review is to be reported as a part of
operations.

SFAS 142 also changes certain aspects of accounting for intangible assets;
however, the Company does not have any significant intangible assets.

The adoption of SFAS 141 will not materially impact operations. As required by
SFAS 142, amortization of goodwill relating to the Company's ownership interest
in the Ohio operations, which is included in the equity in earnings of the Ohio
operations, will cease on January 1, 2002. Initial impairment reviews to be
performed within six months of adoption of SFAS 142 are not expected to have a
significant impact on operations.

SFAS 143

In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143). SFAS 143 requires entities to record the fair value of
a liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS 143 is effective for fiscal years
beginning after June 15, 2002, with earlier application encouraged. The Company
is currently evaluating the impact that SFAS 143 will have on its operations.

SFAS 144

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 develops one accounting
model for all impaired long-lived assets and long-lived assets to be disposed
of. SFAS 144 replaces the existing authoritative guidance in FASB Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" and certain aspects of APB Opinion No. 30, "Reporting
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business."

This new accounting model retains the framework of SFAS 121 and requires that
those impaired long-lived assets and long-lived assets to be disposed of be
measured at the lower of carrying amount or fair value (less cost to sell for
assets to be disposed of), whether reported in continuing operations or in
discontinued operations. Therefore, discontinued operations will no longer be
measured at net realizable value or include amounts for operating losses that
have not yet occurred.

SFAS 144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing operations of the
entity in a disposal transaction.

SFAS 144 is effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Company is evaluating the impact SFAS 144
will have on its operations.


<PAGE>

                               Financial Condition

The Company's equity capitalization objective is 40-55% of total capitalization.
This objective may have varied, and will vary, depending on particular business
opportunities and seasonal factors that affect the Company's operation. The
Company's equity component was 43% and 45% of total capitalization, including
current maturities of long-term debt and long-term debt subject to tender for
December 31, 2001 and 2000, respectively.

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 services, capital expenditures, and
investments until permanently financed. Working capital requirements have been
significantly higher throughout 2001 due to the extraordinarily high natural gas
costs early in 2001 and the investment in the Ohio operations, initially funded
with $218.1 million of short-term borrowings from VUHI and the Company's
commercial paper programs. These short-term borrowings were replaced with
long-term debt to VUHI of $147.3 million and the issuance of $100.0 million of
common stock.

The Company expects the majority of its capital expenditures and debt security
redemptions to be provided by internally generated funds; however, additional
financing may be required due to the possible early redemption of debt.

The Company's credit ratings on outstanding senior unsecured debt at December
31, 2001 are A-/A2.

Cash Flow From Operations

Cash flow from operations increased during the year ended December 31, 2001
compared to 2000 by $94.5 million due primarily to favorable changes in working
capital accounts due to the return of lower gas prices.

Cash flow from operations decreased during 2000 as compared to 1999 by
approximately $74.3 million. The decrease is primarily attributable to merger
and integration costs causing lower net income, increased recoverable fuel and
natural gas costs, and increased working capital requirements resulting from
higher natural gas costs.

Financing Activities

Sources & Uses of Liquidity
The Company's $155.0 million commercial paper program expired in 2001 and was
not required and, therefore, not renewed.

As of December 31, 2001, the Company has no short-term borrowing arrangements
with third parties and relies entirely on the short-term borrowing arrangements
of VUHI for short-term working capital needs. Borrowings outstanding at December
31, 2001 were $134.3 million. The intercompany credit line totals $325.0
million, but is limited to VUHI's available capacity ($76.7 million at December
31, 2001) and is subject to the same terms and conditions as VUHI's commercial
paper program.

During the five-year period 2002-2006, maturities and sinking fund requirements
on long-term debt subject to mandatory redemption are (in millions) $1.3 in
2002, $16.3 in 2003, $16.3 in 2004, $1.3 in 2005, and $1.3 in 2006. Also during
the five-year period 2002-2006, exercisable put provisions on long-term debt are
(in millions) $11.5 in 2002, $0 in 2003, $3.5 in 2004, $10.0 in 2005, and $0 in
2006.

Vectren's three operating utility companies, SIGECO, VEDO, and Indiana Gas are
guarantors of VUHI's $350.0 million commercial paper program, of which
approximately $273.3 million is outstanding at December 31, 2001 and VUHI's
$350.0 million unsecured senior notes outstanding at December 31, 2001. VUHI has
no significant independent assets or operations other than the assets and
operations of these operating utility companies. These guarantees are full and
unconditional and joint and several. Under the terms of VUHI's commercial paper
program, it must maintain a rating of better than BB+/Ba1.


<PAGE>

Financing Cash Flow. Cash flow required for financing activities of $4.7 million
for the year ended December 31, 2001 includes $78.7 million of reductions in net
borrowings, and $25.9 million in common stock dividends, offset by the issuance
of common stock to VUHI, generating proceeds of $100.0 million. Net borrowings
include $147.3 million of proceeds from long-term debt issuances payable to VUHI
which replaced the short-term borrowings used to finance the investment in the
Ohio operations.

Cash flow provided by financing activities of $313.7 million for the year ended
December 31, 2000 includes $340.8 million of additional net borrowings offset by
$26.3 million of dividends on shares of common stock. This is an increase of
$287.3 million over the prior year due primarily to funding the investment in
the Ohio operations and increased working capital requirements.

Financing the Ohio operations investment. On October 31, 2000, the investment in
the Ohio operations was completed for approximately $218.1 million. The initial
investment was funded with a combination of short-term borrowings from VUHI and
Indiana Gas' commercial paper program. During 2001, the Company has refinanced
these interim borrowing arrangements with permanent financing in the form of new
equity and intercompany long-term debt.

In June 2001, the Company issued common stock to VUHI. The proceeds from the
issuance of common stock totaled $100.0 million. In December 2001, the Company
issued $147.3 million of long-term debt to VUHI. Of this amount, $48.4 million
bears interest at 7.25% and $98.9 million bears interest at 6.69%. VUHI
generated the proceeds through the issuance of the $350.0 million unsecured
senior notes subject to the guarantees by Indiana Gas, SIGECO, and VEDO
discussed above.

Other Financing Transaction. In December 2000, $20.0 million of 15-Year Insured
Quarterly (IQ) Notes at an interest rate of 7.15% and $50.0 million of 30-Year
IQ Notes at an interest rate of 7.45% were issued. Indiana Gas may call the
15-Year IQ Notes, in whole or in part, from time to time on or after December
15, 2004 and has the option to redeem the 30-Year IQ Notes in whole or in part,
from time to time on or after December 15, 2005. The IQ notes have no sinking
fund requirements. The net proceeds totaling $67.9 million were used to repay
outstanding commercial paper utilized for general corporate purposes.

Capital Expenditures and Other Investment Activities

Cash required for investing activities of $51.9 million for the year ended
December 31, 2001 includes a decrease in requirements for capital expenditures
of $10.5 million due to less additions to utility plant. Investing activities
for the years ended December 31, 2000 and 1999 were $275.8 million and $62.4
million, respectively. The $287.3 million increase occurring in 2000 is
principally the result of the $218.1 million investment in the Ohio operations
and additional capital expenditures.

Planned Capital Expenditures & Investments
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. Capital expenditures for the five
year period 2002 - 2006 (in millions) are estimated as follows: $41.4 in 2002,
$48.1 in 2003, $46.0 in 2004, $47.8 in 2005, and $48.1 in 2006, respectively.

                           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 Vectren's realization of net merger savings, are forward-looking
statements. Such statements are based on management's beliefs, as well as

<PAGE>

assumptions made by and information currently available to management. When used
in this filing, the words "believe," "anticipate," "endeavor," "estimate,"
"expect," "objective," "projection," "forecast," "goal," and similar expressions
are intended to identify forward-looking statements. In addition to any
assumptions and other factors referred to specifically in connection with such
forward-looking statements, factors that could cause the Company's actual
results to differ materially from those contemplated in any forward-looking
statements included, among others, the following:

     |X|  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; transmission or
          distribution incidents; or availability due to demand, shortages,
          transmission problems or other developments; or gas pipeline system
          constraints.

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

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

     |X|  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.

     |X|  Economic conditions including the effects of an economic downturn,
          inflation rates, and monetary fluctuations.

     |X|  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.

     |X|  Availability or cost of capital, resulting from changes in the
          Company, including its security ratings, changes in interest rates,
          and/or changes in market perceptions of the utility industry and other
          energy-related industries.

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

     |X|  Legal and regulatory delays and other obstacles associated with
          mergers, acquisitions, and investments in joint ventures.

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

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

The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions, or other factors affecting such statements.


<PAGE>


ITEM 7A.   QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks associated with commodity prices,
interest rates, and counter-party credit. These financial exposures are
monitored and managed by the Company as an integral part of its overall risk
management program.

Interest Rate Risk. The Company is exposed to interest rate risk associated with
its adjustable rate borrowing arrangements. Its risk management program seeks to
reduce the potentially adverse effects that market volatility may have on
operations.

Under normal circumstances, the Company tries to limit the amount of adjustable
rate borrowing arrangements exposed to short-term interest rate volatility to a
maximum of 25% of total debt. However, there are times when this targeted level
of interest rate exposure may be exceeded. At December 31, 2001, such
obligations represented 24% of the Company's total debt portfolio.

Market risk is estimated as the potential impact resulting from fluctuations in
interest rates on adjustable rate borrowing arrangements exposed to short-term
interest rate volatility including bank notes, lines of credit, commercial
paper, and certain adjustable rate long-term debt instruments. At December 31,
2001 and 2000, the combined borrowings under these facilities totaled $147.0
million and $352.9 million, respectively. Based upon average borrowing rates
under these facilities during the years ended December 31, 2001 and 2000, an
increase of 100 basis points (1%) in the rates would have increased interest
expense by $2.7 million and $1.4 million, respectively.

Commodity Price Risk. The Company's operations have limited exposure to
commodity price risk for purchases and sales of natural gas for its retail
customers due to current Indiana regulations, which subject to compliance with
applicable state regulations, allow for recovery of such purchases through
natural gas cost adjustment mechanisms.

The Company does not engage in wholesale marketing activities that may expose it
to commodity price risk associated with fluctuating natural gas commodity
prices.

Other Risks. The Company's customer receivables from gas sales and gas
transportation services are primarily derived from a diversified base of
residential, commercial, and industrial customers located in Indiana. The
Company manages credit risk associated with its receivables by continually
reviewing creditworthiness and requests cash deposits or refunds cash deposits
based on that review.



<PAGE>


ITEM 8.  Financial Statements and Supplementary Data



                                Table of Contents
                                                                         Page
                                                                        Number
Financial Information of Indiana Gas Company, Inc.
   1   Management's Responsibility for Financial Statements ....          19
   2   Report of Independent Public Accountants ................          20
   3   Audited Financial Statements.............................          21
   4   Notes to Audited Financial Statements....................          26

Financial Statement Schedule of Indiana Gas Company, Inc. (a)
   5   Schedule II-Valuation and Qualifying Accounts for the
       years ended December 31, 2001, 2000, and 1999............          44

Financial Information of the Ohio operations
   1   Management's Responsibility for Financial Statements ....          45
   2   Report of Independent Public Accountants ................          46
   3   Financial Statements.....................................          47
   4   Notes to Financial Statements............................          51

Financial Statement Schedule of the Ohio operations (a)
   5   Schedule II-Valuation and Qualifying Accounts for the
       years ended December 31, 2001 and 2000...................          60



(a) All other schedules are omitted as the required information is inapplicable
or the information is presented in the Financial Statements or related notes.



<PAGE>


              MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of Indiana Gas Company, Inc. (Indiana Gas) is responsible for the
preparation of the financial statements and the related financial data contained
in this report. The financial statements are prepared in conformity with
accounting principles generally accepted in the United States 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 judgments, are the responsibilities of management. Management
maintains a system of internal control 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 of Vectren Corporation (Vectren), the parent company of
Indiana Gas, 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 Vectren'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 control and the
quality of financial reporting.


/S/ Niel C. Ellerbrook
Niel C. Ellerbrook
Chairman & Chief Executive Officer
January 24, 2002.

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying balance sheets of Indiana Gas Company, Inc. (an
Indiana corporation) as of December 31, 2001 and 2000, and the related
statements of income, common shareholder's equity and cash flows for each of the
three years in the period ended December 31, 2001. These financial statements
and the schedule referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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. as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states 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,
January 24, 2002.




<PAGE>


                            INDIANA GAS COMPANY, INC.
                                 BALANCE SHEETS
                                 (In thousands)



                                                              At December 31,
                                                         -----------------------
                                                             2001         2000
                                                         -----------------------
            ASSETS

Utility Plant
   Original cost                                         $1,094,349   $1,056,945
   Less:  Accumulated depreciation & amortization           458,310      434,845
                                                         ----------   ----------
        Net utility plant                                   636,039      622,100
                                                         ----------   ----------
Current Assets
    Cash & cash equivalents                                     294          300
    Accounts receivable, less reserves of $987 &
        $2,063, respectively                                 49,788       81,225
    Receivables from other Vectren companies                  2,252       11,774
    Accrued unbilled revenues                                38,557       69,444
    Inventories                                              15,341       12,004
    Recoverable natural gas costs                            34,497       38,096
    Prepayments & other current assets                       48,067       62,131
                                                         ----------   ----------
        Total current assets                                188,796      274,974
                                                         ----------   ----------
Investment in the Ohio operations                           223,624      220,802
Other investments                                             1,734        1,355
Non-utility property-net                                        303        2,023
Regulatory assets                                            14,720       15,419
Other assets                                                  9,652        3,840
                                                         ----------   ----------
TOTAL ASSETS                                             $1,074,868   $1,140,513
                                                         ==========   ==========



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


<PAGE>


                            INDIANA GAS COMPANY, INC.
                                 BALANCE SHEETS
                                 (In thousands)

                                                            At December 31,
                                                      --------------------------
                                                            2001           2000
                                                      -----------    -----------
          LIABILITIES & SHAREHOLDER'S EQUITY

Capitalization
   Common shareholder's equity
      Common stock (no par value)                     $   242,995    $   142,995
      Retained earnings                                    75,927         90,499
      Accumulated other comprehensive income               (2,382)             -
                                                      -----------    -----------
        Total common shareholder's equity                 316,540        233,494
                                                      -----------    -----------
   Long-term debt-net of current maturities
       & debt subject to tender                           260,972        281,109
   Long-term debt to VUHI                                 147,270              -
                                                      -----------    -----------
        Total capitalization                              724,782        514,603
                                                      -----------    -----------
Commitments & Contingencies (Notes 4, 9-11)

Current Liabilities
   Accounts payable                                        25,642          4,453
   Accounts payable to affiliated companies                21,337         97,815
   Payables to other Vectren companies                      9,755         20,669
   Accrued liabilities                                     42,757         46,884
   Short-term borrowings                                        -        134,724
   Short-term borrowings to VUHI                          134,298        218,200
   Long-term debt subject to tender                        11,500              -
   Current maturities of long-term debt                     1,250              -
                                                      -----------    -----------
      Total current liabilities                           246,539        522,745
                                                      -----------    -----------
Deferred Credits & Other Liabilities
   Deferred income taxes                                   50,970         51,647
   Deferred credits & other liabilities                    52,577         51,518
                                                      -----------    -----------
      Total deferred credits & other liabilities          103,547        103,165
                                                      -----------    -----------

TOTAL LIABILITIES & SHAREHOLDER'S EQUITY              $ 1,074,868    $ 1,140,513
                                                      ===========    ===========

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

<PAGE>


                            INDIANA GAS COMPANY, INC.
                              STATEMENTS OF INCOME
                                 (In thousands)

                                                   Year Ended December 31,
                                           -------------------------------------
                                               2001          2000          1999
                                           ---------     ---------     ---------

OPERATING REVENUES                         $ 580,258     $ 598,113     $ 431,361
COST OF GAS                                  373,610       390,474       226,817
                                           ---------     ---------     ---------
GAS OPERATING MARGIN                         206,648       207,639       204,544
                                           ---------     ---------     ---------
OPERATING EXPENSES
   Other operating                            95,250        99,810        91,829
   Merger & integration costs                    576        16,846             -
   Restructuring costs                         8,668             -             -
   Depreciation & amortization                38,053        36,659        34,585
   Income taxes                                3,556         7,251        16,734
   Taxes other than income taxes              15,802        15,858        15,695
                                           ---------     ---------     ---------
     Total operating expenses                161,905       176,424       158,843
                                           ---------     ---------     ---------

OPERATING INCOME                              44,743        31,215        45,701

OTHER INCOME
   Equity in earnings of the Ohio
       operations-net of tax                   2,822         2,721             -
   Other - net                                  (190)         (318)        1,065
                                           ---------     ---------     ---------
     Total other income                        2,632         2,403         1,065
                                           ---------     ---------     ---------
Interest expense                              36,009        22,409        17,024
                                           ---------     ---------     ---------
NET INCOME                                 $  11,366     $  11,209     $  29,742
                                           =========     =========     =========


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

<PAGE>

<TABLE>
<CAPTION>
                            INDIANA GAS COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)

                                                           Year Ended December 31,
                                                       ------------------------------
                                                           2001       2000      1999
                                                       ---------  ---------  --------
CASH FLOWS FROM (REQUIRED FOR) OPERATING ACTIVITIES
<S>                                                    <C>        <C>        <C>
   Net income                                          $  11,366  $  11,209  $ 29,742
   Adjustments to reconcile net income to cash
        from operating activities:
      Depreciation & amortization                         38,053     36,659    34,585
      Deferred income taxes & investment tax credits       8,404        531    (1,412)
      Equity in earnings of the Ohio operations           (2,822)    (2,721)        -
      Other non-cash charges- net                         14,485     11,018     8,351

      Changes in assets & liabilities:
         Accounts receivable, including to Vectren
             companies & accrued unbilled revenue         64,176    (91,135)  (10,287)
         Inventories                                      (3,337)     1,531     5,507
         Recoverable fuel & natural gas costs              3,599    (48,300)   (4,139)
         Prepayments & other current assets               14,064    (28,840)  (22,363)
         Regulatory assets                                (7,854)   (11,647)      747
         Accounts payable, including to Vectren
             companies & affiliated companies            (66,203)    85,826     4,564
         Accrued liabilities                              (8,505)    (4,379)   (9,909)
         Other noncurrent assets & liabilities            (8,826)     2,310     1,002
                                                       ---------  ---------  --------
         Total adjustments                                45,234    (49,147)    6,646
                                                       ---------  ---------  --------
         Net cash flows from (required for)
             operating activities                         56,600    (37,938)   36,388
                                                       ---------  ---------  --------
CASH FLOWS (REQUIRED FOR) FROM FINANCING
ACTIVITIES
   Proceeds from:
      Long-term debt to VUHI                             147,270          -         -
      Issuance of common stock                           100,000          -         -
      Long-term debt                                           -     70,000    30,000
   Requirements for:
      Dividends on common stock                          (25,938)   (26,337)  (27,000)
      Retirement of long-term debt                        (7,387)      (740)  (10,115)
   Net change in short-term borrowings,
          including to VUHI                             (218,626)   270,752    33,497
                                                       ---------  ---------  --------
         Net cash flows (required for) from
            financing activities                          (4,681)   313,675    26,382
                                                       ---------  ---------  --------
CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES
   Capital expenditures                                  (51,925)   (62,409)  (62,437)
   Investment in the Ohio operations                           -   (218,081)        -
   Other investments                                           -      4,700         -
                                                       ---------  ---------  --------
         Net cash flows (required for) investing
             activities                                  (51,925)  (275,790)  (62,437)
                                                       ---------  ---------  --------
Net (decrease) increase in cash & cash
   equivalents                                                (6)       (53)      333

Cash & cash equivalents at beginning of period               300        353        20
                                                       ---------  ---------  --------
Cash & cash equivalents at end of period               $     294  $     300  $    353
                                                       =========  =========  ========
</TABLE>

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

<PAGE>

<TABLE>
<CAPTION>
                            INDIANA GAS COMPANY, INC.
                    STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
                                 (In thousands)

                                                                Accumulated
                                                                   Other
                                            Common    Retained Comprehensive
                                             Stock    Earnings     Loss         Total
                                           --------   -------- -------------   --------
<S>                                        <C>        <C>          <C>         <C>
Balance at December 31, 1998               $142,995   $102,885     $     -     $245,880

Net income & comprehensive income                       29,742                   29,742
Common stock dividends                                 (27,000)                 (27,000)
                                           --------   --------     -------     --------

Balance at December 31, 1999                142,995    105,627           -      248,622

Net income & comprehensive income                       11,209                   11,209
Common stock dividends                                 (26,337)                 (26,337)
                                           --------   --------     -------     --------

Balance at December 31, 2000                142,995     90,499           -      233,494

Comprehensive income:
Net income                                              11,366                   11,366
Minimum pension liability adjustments-
     net of tax                                                     (2,382)      (2,382)
                                           --------   --------     -------     --------
Total comprehensive income                                                        8,984
                                           --------   --------     -------     --------
Common stock:
     Issuance                               100,000                             100,000
     Dividends                                         (25,938)                 (25,938)
                                           --------   --------     -------     --------
Balance at December 31, 2001               $242,995   $ 75,927     $(2,382)    $316,540
                                           ========   ========     =======     ========
</TABLE>


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


<PAGE>


                            INDIANA GAS COMPANY, INC.

                        NOTES TO THE FINANCIAL STATEMENTS

1.   Organization and Nature of Operations

Overview
 Indiana Gas Company, Inc. (the Company or Indiana Gas), an Indiana
corporation, provides natural gas distribution and transportation services to a
diversified customer base in 311 communities in 49 of Indiana's 92 counties.
Indiana Gas is a direct subsidiary of Vectren Utility Holdings, Inc. (VUHI).
VUHI is a direct, wholly owned subsidiary of Vectren Corporation (Vectren).

Vectren was organized on June 10, 1999 solely for the purpose of effecting the
merger of Indiana Energy, Inc. (Indiana Energy) and SIGCORP, Inc. (SIGCORP). On
March 31, 2000, the merger of Indiana Energy with SIGCORP and into Vectren was
consummated with a tax-free exchange of shares and has been accounted for as a
pooling-of-interests in accordance with Accounting Principles Board (APB)
Opinion No. 16 "Business Combinations."

Vectren's wholly owned subsidiary, VUHI, serves as the intermediate holding
company for its three operating public utilities: Indiana Gas, formerly a wholly
owned subsidiary of Indiana Energy, Inc., Southern Indiana Gas and Electric
Company (SIGECO), formerly a wholly owned subsidiary of SIGCORP, Inc., and the
Ohio operations (defined hereafter). Both Vectren and VUHI are exempt from
registration pursuant to Section 3(a)(1) and 3(c) of the Public Utility Holding
Company Act of 1935.

Investment in the Gas Distribution Assets of The Dayton Power and Light Company
On October 31, 2000, Vectren acquired the natural gas distribution assets of The
Dayton Power and Light Company (DP&L) for approximately $465.0 million as a
tenancy in common through two separate wholly owned subsidiaries. Vectren Energy
Delivery of Ohio, Inc. (VEDO) holds a 53% undivided ownership interest in the
assets, and Indiana Gas holds a 47% undivided ownership interest. VEDO is the
operator of the assets, and these assets are referred to as "the Ohio
operations." Indiana Gas' ownership is accounted for on the equity method in
accordance with APB Opinion No. 18, "The Equity Method of Accounting for
Investments in Common Stock." Its ownership interest is included in investment
in the Ohio operations, and its interest in the results of operations is
included in equity in earnings of the Ohio operations. Indiana Gas' initial
investment of approximately $218.1 million was funded with a combination of
short-term borrowings from VUHI and Indiana Gas' commercial paper program.

Because the Ohio operations are a significant subsidiary as defined by Rule
4-08(g) of Regulation S-X, the financial statements of the Ohio operations are
included in this filing under Part II Item 8 Financial Statements and
Supplementary Data.

2.   Summary of Significant Accounting Policies

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

<PAGE>

B.   Cash & Cash Equivalents
All highly liquid investments with an original maturity of three months or less
at the date of purchase are considered cash equivalents. Cash paid during the
periods reported for interest and income taxes is as follows:

                                                Year Ended December 31,
                                         -------------------------------------
 In thousands                               2001          2000           1999
                                         --------      --------       --------
Cash paid during the year for:
  Interest (net of amount capitalized)   $ 34,011      $ 22,903       $ 16,463
  Income taxes                                  -        23,188         21,921
                                         --------      --------       --------


C.   Inventories
Inventories consist of the following:

                                          At December 31,
                                    --------------------------
In thousands                           2001              2000
                                    --------          --------
Gas in storage-at LIFO cost         $ 13,895          $ 10,926
Other                                    846               836
Materials & supplies                     600               242
                                    --------          --------
       Total inventories            $ 15,341          $ 12,004
                                    ========          ========


Based on the average cost of gas purchased during December, the cost of
replacing the current portion of gas in storage carried at LIFO cost exceeded
LIFO cost at December 31, 2001 and 2000 by approximately $2.0 million and $29.0
million, respectively. All other inventories are carried at average cost.

D.   Utility Plant & Depreciation
Utility plant is stated at historical cost, including an allowance for the cost
of funds used during construction (AFUDC). Depreciation of utility plant is
provided using the straight-line method over the estimated service lives of the
depreciable assets. The average depreciation rate is 3.8% in 2001 and 3.9% in
2000.

AFUDC represents the cost of borrowed and equity funds used for construction
purposes and is charged to construction work in progress during the construction
period and is included in other - net in the Statements of Income. The total
AFUDC capitalized into utility plant and the portion of which was computed on
borrowed and equity funds for all periods reported is as follows:

                                             Year Ended December 31,
                                     --------------------------------------
 In thousands                         2001             2000            1999
                                     -----          -------           -----
AFUDC - equity funds                 $ 545            $ 595           $ 443
AFUDC - borrowed funds                 444              487             362
                                     -----          -------           -----
      Total AFUDC capitalized        $ 989          $ 1,082           $ 805
                                     =====          =======           =====


Maintenance and repairs, including the cost of removal of minor items of
property and planned major maintenance projects, are charged to expense as
incurred. When property that represents a retirement unit is replaced or
removed, the cost of such property is credited to utility plant, and such cost,
together with the cost of removal less salvage, is charged to accumulated
depreciation.


<PAGE>

E.   Impairment Review of Long-Lived Assets
Long-lived assets are reviewed for impairment in accordance with Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" as facts and
circumstances indicate that the carrying amount may be impaired. Specifically,
the evaluation for impairment involves the comparison of an asset's carrying
value to the estimated future cash flows the asset is expected to generate over
its remaining life. If this evaluation were to conclude that the carrying value
of the asset is impaired, an impairment charge would be recorded as a charge to
operations based on the difference between the asset's carrying amount and its
fair value. (See Note 14 for further information on the adoption of SFAS 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets.")

F.   Regulation
Retail public utility operations affecting Indiana customers are subject to
regulation by the Indiana Utility Regulatory Commission (IURC).

SFAS 71
The Company's accounting policies give recognition to the rate-making and
accounting practices of this agency and to accounting principles generally
accepted in the United States, including the provisions of SFAS No. 71
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71).
Regulatory assets represent probable future revenues associated with certain
incurred costs, which will be recovered from customers through the rate-making
process. Regulatory liabilities represent probable future reductions in revenues
associated with amounts that are to be credited to customers through the
rate-making process.

The Company continually assesses 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, the Company believes such accounting is appropriate. If all
or part of the Company's operations cease to meet the criteria of SFAS 71, a
write-off of related regulatory assets and liabilities could be required. In
addition, the Company would be required to determine any impairment to the
carrying costs of deregulated plant and inventory assets. Regulatory assets
consist of the following:

                                             At December 31,
                                           ------------------
 In thousands                                 2001       2000
                                           --------   --------
Unamortized debt discount & expenses       $ 13,208   $ 13,855
Other                                         1,512      1,564
                                           --------   --------
     Total regulatory assets               $ 14,720   $ 15,419
                                           ========   ========


Indiana Gas was authorized as part of an August 17, 1994 financing order from
the IURC to amortize over a 15-year period the debt discount and expense related
to new debt issues and future 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.

As of December 31, 2001, all regulatory assets are reflected in rates charged to
customers. For both December 31, 2001 and 2000, the weighted average recovery
period of regulatory assets included in rates is 23.0 years.

The Company records any under-or-over-recovery resulting from gas cost
adjustment clauses each month in revenues. A corresponding asset or liability is
recorded until the under-or-over-recovery is billed or refunded to utility
customers. The cost of gas sold is charged to operating expense as delivered to
customers.
<PAGE>

G.   Comprehensive Income
Comprehensive income is a measure of all changes in equity that result from the
transactions or other economic events during the period from non-shareholder
transactions. This information is reported in the Statements of Common
Shareholder's Equity. The transaction resulting in other comprehensive income
relates to a minimum pension liability adjustment which is a loss of $3.8
million ($2.4 million after tax).

H.   Revenues
Revenues are recorded as products and services are delivered to customers. To
more closely match revenues and expenses, the Company records revenues for all
gas delivered to customers but not billed at the end of the accounting period.

I.   Excise Taxes
Excise taxes are included in rates charged to customers. Accordingly, the
Company records excise tax received as a component of operating revenues. Excise
taxes paid are recorded as a component of taxes other than income taxes.

J.   Earnings Per Share
Earnings per share are not presented as the Company's common stock is wholly
owned by Vectren Utility Holdings, Inc.

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

3.   Special Charges

Merger & Integration Costs
Merger and integration costs incurred for the years ended December 31, 2001 and
2000 were $0.6 million and $16.8 million, respectively. Merger and integration
activities resulting from the 2000 merger were completed in 2001. Merger costs
are reflected in the financial statements of Vectren's operating subsidiaries in
which merger savings are expected to be realized.

Since March 31, 2000, $17.4 million has been expensed associated with merger and
integration activities. Accruals were established at March 31, 2000 totaling
$11.9 million. Of this amount, $4.8 million related to employee and executive
severance costs, $5.0 million related to transaction costs and regulatory filing
fees incurred prior to the closing of the merger, and the remaining $2.1 million
related to employee relocations that occurred prior to or coincident with the
merger closing. At December 31, 2001, the remaining accrual related to employee
severance was not significant. The remaining $5.5 million was expensed ($4.9
million in 2000 and $0.6 million in 2001) for accounting fees resulting from
merger related filing requirements, consulting fees related to integration
activities such as organization structure, employee travel between company
locations, internal labor of employees assigned to integration teams, investor
relations communication activities, and certain benefit costs.

During the merger planning process, approximately 81 positions were identified
for elimination. As of December 31, 2001, all such identified positions have
been vacated.

The integration activities experienced by the Company included such things as
information system consolidation, process review and definition, organization
design and consolidation, and knowledge sharing.


<PAGE>

As a result of merger integration activities, management retired certain
information systems in 2001. Accordingly, the useful lives of these assets were
shortened to reflect this decision. These information system assets are owned by
a wholly owned subsidiary of Vectren, and the fees allocated by the subsidiary
for the use of these systems by the Company's subsidiaries are reflected in
other operating expenses. As a result of the shortened useful lives, additional
fees were incurred by the Company, resulting in additional other operating
expense of $9.6 million ($6.0 million after tax) for the year ended December 31,
2001 and $11.4 million ($7.1 million after tax) for the year ended December 31,
2000.

Restructuring & Related Charges
As part of continued cost saving efforts, in June 2001, Vectren's management and
the board of directors approved a plan to restructure, primarily, its regulated
operations. The restructuring plan included the elimination of certain
administrative and supervisory positions in its utility operations and corporate
office. Charges of $5.4 million were expensed in June 2001 as a direct result of
the restructuring plan. Additional charges of $3.3 million were incurred during
the remainder of 2001 primarily for consulting fees, employee relocation, and
duplicate facilities costs. In total, the Company has incurred restructuring
charges of $8.7 million. These charges were comprised of $3.2 million for
employee severance, related benefits and other employee related costs, $4.0
million for lease termination fees related to duplicate facilities and other
facility costs, and $1.5 million for consulting and other fees incurred through
December 31, 2001. Components of restructuring expense incurred through December
31, 2001 are as follows:

                               Accrual for     Incurred Expenses
                                Expected     ----------------------      Total
In thousands                  Cash Payments  Paid in Cash  Non-Cash     Expense
                              -------------  ------------  --------     -------
Severance & related costs       $   960        $ 2,196      $    -      $ 3,156
Lease termination fees            3,000              -       1,040        4,040
Consulting fees & other               -          1,472           -        1,472
                                -------        -------      ------      -------
             Total              $ 3,960        $ 3,668      $1,040      $ 8,668
                                =======        =======      ======      =======


The $3.2 million expensed for employee severance and related costs is associated
with approximately 45 employees. Employee separation benefits include severance,
healthcare, and outplacement services. As of December 31, 2001, approximately 38
employees have exited the business. The restructuring program was completed
during 2001, except for the departure of the remaining employees impacted by the
restructuring and the final settlement of the lease obligation.

Components of the accrual for expected cash payments, which is included in
accrued liabilities, as of December 31, 2001 is as follows:

                                Accrual at                      Accrual at
                                 June 30,   Cash                December 31,
 In thousands                      2001    Payments  Additions      2001
                                ---------  --------  ---------  -----------
Severance and related costs      $ 2,620   $ 1,923    $  263       $  960
Lease termination fees             2,000         -     1,000        3,000
                                 -------   -------    ------       ------
      Total                      $ 4,620   $ 1,923    $1,263       $3,960
                                 =======   =======    ======       ======


<PAGE>

4.   Transactions with Other Vectren Companies

Support Services & Purchases
Vectren and certain subsidiaries of Vectren have provided corporate, general and
administrative services to the Company including legal, finance, tax, risk
management and human resources. The costs have been allocated to the Company
using various allocators, primarily number of employees, number of customers
and/or revenues. Allocations are based on cost. Management believes that the
allocation methodology is reasonable and approximates the costs that would have
been incurred had the Company secured those services on a stand-alone basis. For
the year ended December 31, 2001, 2000, and 1999, amounts billed by other wholly
owned subsidiaries of Vectren to the Company were $63.4 million, $33.3 million,
and $31.4 million, respectively. Certain costs allocated in 2001 were previously
incurred by the Company directly.

Amounts owed to other Vectren companies totaled $9.8 million and $20.7 million
at December 31, 2001 and 2000, respectively. Amounts due from other Vectren
companies totaled $2.3 million and $11.8 million at December 31, 2001 and 2000,
respectively.

Cash Management & Borrowing Arrangements
The Company participates in a centralized cash management program with Vectren,
other wholly owned subsidiaries, and banks which permits funding of checks as
they are presented.

See Note 6 regarding long-term and short-term intercompany borrowing
arrangements.

Guarantees of Parent Company Debt
Vectren's three operating utility companies, SIGECO, VEDO, and Indiana Gas are
guarantors of VUHI's $350.0 million commercial paper program, of which
approximately $273.3 million is outstanding at December 31, 2001 and VUHI's
$350.0 million unsecured senior notes outstanding at December 31, 2001. VUHI has
no significant independent assets or operations other than the assets and
operations of these operating utility companies. These guarantees are full and
unconditional and joint and several.

Stock Based Incentive Plans
The Company does not have stock-based compensation plans separate from Vectren.
The Company's employees participate in Vectren's stock-based compensation plans
that provide for awards of restricted stock and stock options to purchase
Vectren common stock at prices equal to the fair value of the underlying shares
at the date of grant. Consistent with Vectren, the Company accounts for
participation in these plans in accordance with APB Opinion No. 25, "Accounting
for Stock Issued to Employees" and related interpretations in measuring
compensation costs for its stock options. Had compensation cost for stock
options been determined consistent with SFAS No. 123, "Accounting for
Stock-based Compensation," a fair value based model, net income would not have
been materially different than reported net income.

Resulting from the merger of Indiana Energy and SIGCORP into Vectren, the
Company incurred approximately $1.0 million in compensation expense related to
the issuance of approximately 48,000 shares of restricted stock to individuals
employed by Indiana Energy at the merger date.

5.   Transactions with Vectren Affiliates

ProLiance Energy, LLC
ProLiance Energy, LLC (ProLiance), a nonregulated, energy marketing affiliate of
Vectren, began providing natural gas and related services to Indiana Gas,
Citizens Gas and Coke Utility (Citizens Gas) and others in April 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 (GCA) process


<PAGE>

administered by the IURC. On September 12, 1997, the IURC issued a decision
finding the gas supply and portfolio administration agreements between ProLiance
and Indiana Gas and ProLiance and Citizens Gas to be consistent with the public
interest and that ProLiance is not subject to regulation by the IURC as a public
utility. The IURC's decision reflected the significant gas cost savings to
customers obtained through 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, the price paid by ProLiance to the utilities for the prospect of
using pipeline entitlements if and when they are not required to serve the
utilities' firm customers, and the pricing of fees paid by the utilities to
ProLiance for portfolio administration services, the IURC concluded that
additional review in the 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 recently commenced processing the GCA proceeding regarding the
three pricing issues. The IURC has indicated that it will also consider the
prospective relationship of ProLiance with the utilities in this proceeding.
Discovery is ongoing, and an evidentiary hearing is scheduled for May 2002.
Indiana Gas continues to record gas costs in accordance with the terms of the
ProLiance contract

In August 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' relationships
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 had been restrained. In October 2001, the
Antitrust Division of the Department of Justice informed the Company that it
closed the investigation without further action.

Purchases from ProLiance for resale and for injections into storage for the
years ended December 31, 2001, 2000, and 1999 totaled $369.5 million, $401.4
million, and $240.7 million, respectively. Amounts charged by ProLiance are
market based as evidenced by a competitive bidding process for capacity and
storage services and commodity indexes.

Other Affiliate Transactions
Vectren has ownership interests in other companies that provide materials
management, underground construction and repair, facilities locating, and meter
reading to the Company. Fees for these services and construction-related
expenditures totaled $21.1 million, $6.6 million, and $5.9 million,
respectively, for the years ended December 31, 2001, 2000, and 1999. Amounts
charged by these affiliates are market based.

Payables to Affiliates
Amounts owed to unconsolidated affiliates of Vectren approximated $21.3 million
and $97.8 million at December 31, 2001 and 2000, respectively, and are included
in accounts payable to affiliated companies in the Balance Sheets.



<PAGE>

6.   Borrowing Arrangements

Long-Term Debt
Senior unsecured obligations outstanding and classified as long-term are as
follows.

                                                           At December 31,
                                                        -----------------------
 In thousands                                              2001           2000
                                                        --------       --------
   Fixed Rate Senior Unsecured Notes Payable to VUHI:
      2011, 6.625%                                      $ 98,920       $      -
      2031, 7.25%                                         48,350              -
                                                        --------       --------
      Total long-term debt to VUHI                      $147,270       $      -
                                                        ========       ========
   Fixed Rate Senior Unsecured Notes Payable to
          Third Parties:
      2003, Series F, 5.75%                             $ 15,000       $ 15,000
      2004, Series F, 6.36%                               15,000         15,000
      2007, Series E, 6.54%                                6,500          6,500
      2013, Series E, 6.69%                                5,000          5,000
      2015, Series E, 7.15%                                5,000          5,000
      2015, Insured Quarterly, 7.15%                      20,000         20,000
      2015, Series E, 6.69%                                5,000          5,000
      2015, Series E, 6.69%                               10,000         10,000
      2021, Private Placement, 9.375%,
        $1,250 due annually in 2002                       25,000         25,000
      2021, Series A, 9.125%                                   -          7,000
      2025, Series E, 6.31%                                5,000          5,000
      2025, Series E, 6.53%                               10,000         10,000
      2027, Series E, 6.42%                                5,000          5,000
      2027, Series E, 6.68%                                3,500          3,500
      2027, Series F, 6.34%                               20,000         20,000
      2028, Series F, 6.75%                               13,722         14,109
      2028, Series F, 6.36%                               10,000         10,000
      2028, Series F, 6.55%                               20,000         20,000
      2029, Series G, 7.08%                               30,000         30,000
      2030, Insured Quarterly, 7.45%                      50,000         50,000
                                                        --------       --------
Total long-term debt outstanding                         273,722        281,109
Less: Debt subject to tender                              11,500              -
      Current maturities                                   1,250              -
                                                        --------       --------
      Total long-term debt-net                          $260,972       $281,109
                                                        ========       ========

Issuances Payable to VUHI
At December 31, 2001, the Company has $147.3 million of long-term debt
outstanding with VUHI. Of this amount, $48.4 million has terms that are
identical to the terms of notes issued by VUHI in October 2001 (October Notes)
and $98.9 million has terms identical to the notes issued by VUHI in December
2001 (December Notes), both through public offerings. The October Notes have an
aggregate principal amount of $100.0 million and an interest rate of 7.25%. The
December Notes have an aggregate principal amount of $250.0 million and an
interest rate of 6.625%, priced at 99.302% to yield 6.69% to maturity.


<PAGE>

The issues have no sinking fund requirements, and interest payments are due
quarterly for the October Notes and semi-annually for the December Notes. The
October Notes are due October 2031, but may be called by VUHI, in whole or in
part, at any time after October 2006 at 100% of the principal amount plus any
accrued interest thereon. The December Notes are due December 2011, but may be
called by VUHI, in whole or in part, at any time for an amount equal to accrued
and unpaid interest, plus the greater of 100% of the principal amount of the
notes to be redeemed or the sum of the present values of the remaining scheduled
payments of principal and interest, discounted to the redemption date on a
semi-annual basis at the Treasury Rate, as defined in VUHI's indenture, plus 25
basis points.

Issuances Payable to Third Parties
In December 2000, $20.0 million of 15-Year Insured Quarterly (IQ) Notes at an
interest rate of 7.15% and $50.0 million of 30-Year IQ Notes at an interest rate
of 7.45% were issued. Indiana Gas may call the 15-Year IQ Notes, in whole or in
part, from time to time on or after December 15, 2004 and has the option to
redeem the 30-Year IQ Notes in whole or in part, from time to time on or after
December 15, 2005. The IQ notes have no sinking fund requirements. The net
proceeds totaling $67.9 million were used to repay outstanding commercial paper
utilized for general corporate purposes.

Long-Term Debt Sinking Fund Requirements & Maturities
Maturities and sinking fund requirements on long-term debt subject to mandatory
redemption during the five years following 2001 (in millions) are $1.3 in 2002,
$16.3 in 2003, $16.3 in 2004, $1.3 in 2005, and $1.3 in 2006.

Long-Term Debt Put & Call Provisions
Certain long-term debt issues contain put and call provisions that can be
exercised on various dates before maturity. These provisions allow holders to
put debt back to the Company at face value or the Company to call debt at face
value or at a premium. Long-term debt subject to tender during the years
following 2001 (in millions) is $11.5 in 2002, $0 in 2003, $3.5 in 2004, $10.0
in 2005, $0 in 2006 and $60.0 thereafter.

Short-Term Borrowings
Indiana Gas' $155.0 million commercial paper program expired in 2001 and was not
required and, therefore, not renewed. As of December 31, 2001, the Company has
no short-term borrowing arrangements with third parties and relies entirely on
the short-term borrowing arrangements of VUHI for short-term working capital
needs. Borrowings outstanding at December 31, 2001 were $134.3 million. The
intercompany credit line totals $325.0 million, but is limited to VUHI's
available capacity ($76.7 million at December 31, 2001) and is subject to the
same terms and conditions as VUHI's commercial paper program. Short-term
borrowings bear interest at VUHI's weighted average daily cost of short-term
funds. See the table below for interest rates and outstanding balances.

                                                     Year ended December 31,
                                                  -----------------------------
                                                      2001      2000      1999
                                                  ---------  --------  --------
Weighted average total outstanding during
  the year to third parties (in thousands)        $ 112,182  $ 99,257  $ 38,068
Weighted average total outstanding during
  the year payable to VUHI (in thousands)         $ 159,632  $ 36,367       N/A
Weighted average interest rates during the year:
       Bank loans                                      N/A      7.10%       N/A
       Commercial paper                               4.65%     6.10%     5.50%
       VUHI                                           5.24%     6.62%       N/A



<PAGE>

Covenants
Borrowing arrangements contain customary default provisions, restrictions on
liens, sale leaseback transactions, mergers or consolidations, and sales of
assets; and restrictions on leverage and interest coverage, among other
restrictions. As of December 31, 2001, the Company was in compliance with all
financial covenants.

7.   Income Taxes

Vectren 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 income tax expense and utilization of investment tax
credits are as follows:

                                            Year Ended December 31,
                                        -------------------------------
 In thousands                              2001      2000         1999
                                        -------    -------      -------
Current:
       Federal                          $(4,826)   $ 6,863      $15,600
       State                                (22)      (143)       2,546
                                        -------    -------      -------
Total current taxes                      (4,848)     6,720       18,146
                                        -------    -------      -------
Deferred:
       Federal                            8,671        309         (484)
       State                                660      1,152            2
                                        -------    -------      -------
Total deferred taxes                      9,331      1,461         (482)
                                        -------    -------      -------
Amortization of investment tax credits     (927)      (930)        (930)
                                        -------    -------      -------
       Total income tax expense         $ 3,556    $ 7,251      $16,734
                                        =======    =======      =======


A reconciliation of the Federal statutory rate to the effective income tax rate
is as follows:

                                                    Year Ended December 31,
                                                ------------------------------
                                                2001       2000         1999
                                                ------     ------       ------
Statutory rate                                  35.0 %     35.0 %       35.0 %
State and local taxes, net of Federal benefit    3.4        4.2          3.6
Nondeductible merger costs                         -       11.4            -
Amortization of investment tax credit           (7.7)      (5.9)        (2.0)
All other-net                                   (1.3)       1.4         (0.6)
                                                ------     ------       ------
       Effective tax rate                       29.4 %     46.1 %       36.0 %
                                                ======     ======       ======




The liability method of accounting is used for income taxes under which deferred
income taxes are recognized to reflect the tax effect of temporary differences
between the book and tax bases of assets and liabilities at currently enacted
income tax rates. Significant components of the net deferred tax liability as of
December 31, 2001 and 2000 are as follows:

<PAGE>

                                                           At December 31,
                                                     -------------------------
 In thousands                                           2001            2000
                                                     --------         --------
Deferred tax liabilities:
  Depreciation & cost recovery timing differences    $ 65,170         $ 65,641
  Deferred fuel costs, net                             14,749           12,127
  Regulatory assets recoverable through
      future rates                                      8,832            9,137
Deferred tax assets:
  Regulatory liabilities to be settled
      through future rates                             (8,817)          (4,414)
  LIFO inventory                                       (2,020)          (7,900)
  Tax credit carryforward                                   -          (13,151)
Other - net                                           (14,215)          (5,566)
                                                     --------         --------
      Net deferred tax liability                     $ 63,699         $ 55,874
                                                     ========         ========


The Company has no tax credit carryforwards at December 31, 2001. At December
31, 2000, the Company has Alternative Minimum Tax Credit carryforwards of
approximately $13.2 million, which were utilized in 2001.

8.   Retirement Plans & Other Postretirement Benefits

Effective July 1, 2000, the SIGCORP and Indiana Energy defined benefit pension
plans, retirement savings plans, and postretirement health care plans and life
insurance plans for employees not covered by a collective bargaining unit were
merged. The merged plans became Vectren plans, and as a result, the respective
plan assets and plan obligations were transferred to Vectren through cash
receipt for assets and cash payment for obligations. The transfers resulted in
no gain or loss.

Indiana Gas continues to maintain defined benefit pension and other
postretirement benefit plans which cover eligible full-time hourly and salaried
employees covered by collective bargaining arrangements. Because employees of
other Vectren companies also participate in the plans, a portion of the benefit
cost and net amount recognized is allocated to those companies. The plans are
primarily non-contributory. The non-pension plans include plans for health care
and life insurance through a combination of self-insured and fully insured
plans.

The detailed disclosures of benefit components that follow are based on
actuarial valuations performed as of December 31, 2001, and 2000 and for each of
the three years in the period ended December 31, 2001, using a measurement date
as of September 30. Net periodic benefit cost consists of the following
components:


<PAGE>

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                     ----------------------------------------------------
                                              Benefits                 Other Benefits
                                     -------------------------  -------------------------
 In thousands                          2001     2000     1999     2001     2000     1999
                                     -------  -------  -------  -------  -------  -------
<S>                                  <C>      <C>      <C>      <C>      <C>      <C>
Service cost                         $ 1,287  $   671  $ 1,617  $   499  $   786  $   882
Interest cost                          2,976    2,373    4,887    3,791    3,989    3,136
Expected return on plan assets        (4,099)  (3,671)  (7,310)       -        -        -
Amortization of prior service cost       223       24        -        -        -        -
Amortization of transitional
   obligation (asset)                   (384)    (384)    (316)   1,828    2,444    1,955
Amortization of actuarial gain           (75)     (96)     108        -     (659)    (132)
Settlement, curtailment, & other
  charges (credits)                        -        -        -     (487)       -        -
                                     -------  -------  -------  -------  -------  -------
Net plan periodic benefit cost           (72)  (1,083)  (1,014)   5,631    6,560    5,841
Less: Allocations to other Vectren
        companies                        (21)       -        -    1,202      188      199
                                     -------  -------  -------  -------  -------  -------
    Net Indiana Gas periodic
        benefit cost                 $   (51) $(1,083) $(1,014) $ 4,429  $ 6,372  $ 5,642
                                     =======  =======  =======  =======  =======  =======
</TABLE>

A reconciliation of the plan's benefit obligations, fair value of plan assets,
funded status and amounts recognized in the Balance Sheets follows:


<TABLE>
<CAPTION>
                                          Pension Benefits          Other Benefits
                                       ----------------------    ----------------------
 In thousands                              2001         2000         2001         2000
                                       ---------    ---------    ---------    ---------
<S>                                    <C>          <C>          <C>          <C>
Benefit Obligation:
Benefit obligation at beginning
   of year                             $  36,120    $  69,281    $  51,697    $  43,371
Service cost - benefits earned
   during the year                         1,287          671          499          786
Interest cost on projected benefit
   obligation                              2,976        2,373        3,791        3,989
Plan amendments                            3,973            -            -            -
Transfers                                      -      (37,078)           -            -
Benefits paid                             (2,750)      (2,925)        (869)      (4,314)
Actuarial loss                             2,239        3,798       (1,324)       7,865
                                       ---------    ---------    ---------    ---------
   Benefit obligation at end of year   $  43,845    $  36,120    $  53,794    $  51,697
                                       =========    =========    =========    =========
Fair Value of Plan Assets:
Plan assets at fair value at
   beginning of year                   $  49,054    $ 101,211          $ -          $ -
Actual return on plan assets              (3,903)       5,653            -            -
Employer contributions                         -            -          869        4,314
Transfers                                      -      (54,885)           -            -
Benefits paid                             (2,750)      (2,925)        (869)      (4,314)
                                       ---------    ---------    ---------    ---------
    Fair value of plan assets at
      end of year                      $  42,401    $  49,054    $       -    $       -
                                       =========    =========    =========    =========

Funded Status:                         $  (1,444)   $  12,934    $ (53,794)   $ (51,697)
Unrecognized transitional
   obligation (asset)                       (287)        (671)      23,103       24,931
Unrecognized service cost                  2,409          255            -            -
Unrecognized net (gain) loss              (4,125)      (7,788)      (5,092)      (4,254)
                                       ---------    ---------    ---------    ---------
Net amount recognized for plans            4,803        4,730      (35,783)     (31,020)
Less:  Allocations to other
       Vectren companies                       -            -       (6,546)      (1,083)
                                       ---------    ---------    ---------    ---------
      Net amount recognized for
        Indiana Gas                    $   4,803    $   4,730    $ (29,237)   $ (29,937)
                                       =========    =========    =========    =========
</TABLE>


<PAGE>

As of December 31, 2001 the Company incurred an additional minimum pension
liability of approximately $6.2 million which is included in deferred credits
and other liabilities. This liability is offset by an intangible asset of
approximately $2.4 million, which is included in other noncurrent assets and a
pre-tax charge to accumulated comprehensive income approximating $3.8 million.
At both December 31, 2001 and 2000 the net amount recognized for pensions is
included in other noncurrent assets and for postretirement obligations is
included in deferred credits and other liabilities.

At December 31, 2001, the pension plan had an accumulated benefit obligation in
excess of plan assets. The accumulated benefit obligation for the Company's plan
was $43.8 million. At December 31, 2000, the pension plan had plan assets in
excess of its accumulated benefit obligation.

Weighted-average assumptions used to develop annual costs and the benefit
obligation for these plans are as follows:

                                   Pension Benefits   Other Benefits
                                   ----------------   --------------
                                    2001      2000     2001    2000
                                    ----      ----    -----    ----
Discount rate                       7.25%     7.75%    7.25%   7.75%
Expected return on plan assets      9.00%     8.50%     N/A     N/A
Rate of compensation increase       4.75%     5.25%     N/A     N/A
CPI rate                             N/A       N/A    12.00%   7.00%
                                    ----      ----    -----    ----


As of December 31, 2001, the health care cost trend is 12.0% declining to 5.0%
in 2006 and remaining level thereafter. Future changes in health care costs,
work force demographics, interest rates, or plan changes could be significantly
affect the estimated cost of these future benefits.

A 1.0% change in the assumed health care cost trend for the postretirement
health care plan would have the following effects as of and for the year ended
December 31, 2001:


In thousands                                       1% Increase      1% Decrease
-------------------------------------------------------------------------------
Effect on the aggregate of the service & interest
  cost components                                     $ 70            $ (61)
Effect on the postretirement benefit obligation        942             (825)
-------------------------------------------------------------------------------

9.   Commitments & Contingencies

Legal Proceedings
The Company is party to various legal proceedings arising in the normal course
of business. In the opinion of management, there are no legal proceedings
pending against the Company that are likely to have a material adverse effect on
its financial position or results of operations. See Note 5 regarding ProLiance
Energy, LLC.

10.  Environmental Matters

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


<PAGE>

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

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

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

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

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

11.  Rate & Regulatory Matters

Gas Costs Proceedings
Commodity prices for natural gas purchases were significantly higher during the
2000 - 2001 heating season, primarily due to colder temperatures, increased
demand and tighter supplies. Subject to compliance with applicable state laws,
Vectren's utility subsidiaries are allowed full recovery of such changes in
purchased gas costs from their retail customers through commission-approved gas
cost adjustment mechanisms.

In March 2001, the Company reached agreement with the Indiana Office of Utility
Consumer Counselor (OUCC) and the Citizens Action Coalition of Indiana, Inc.
(CAC) regarding the matters raised by an IURC Order that disallowed $3.8 million
of the Company's gas procurement costs for the 2000 - 2001 heating season which
was recognized during the year ended December 31, 2000. As part of the
agreement, the Company agreed to contribute an additional $1.7 million, of which
$1.0 million was contributed to the Company's service territory, to assist
qualified low income gas customers, and the Company agreed to credit $3.3
million of the $3.8 million disallowed amount to its customers' April 2001
utility bills in exchange for both the OUCC and the CAC dropping their appeals
of the IURC Order. In April 2001, the IURC issued an order approving the
settlement. Substantially all of the financial assistance for low income gas
customers has been distributed in 2001.

<PAGE>

12.  Risk Management, Derivatives & Other Financial Instruments

Risk Management
The Company is exposed to market risks associated with commodity prices,
interest rates, and counter-party credit. These financial exposures are
monitored and managed by the Company as an integral part of its overall risk
management program.

Interest Rate Risk. The Company is exposed to interest rate risk associated with
its adjustable rate borrowing arrangements. Its risk management program seeks to
reduce the potentially adverse effects that market volatility may have on
operations.

Under normal circumstances, the Company tries to limit the amount of adjustable
rate borrowing arrangements exposed to short-term interest rate volatility to a
maximum of 25% of total debt. However, there are times when this targeted level
of interest rate exposure may be exceeded.

Commodity Price Risk. The Company's operations have limited exposure to
commodity price risk for purchases and sales of natural gas for its retail
customers due to current Indiana regulations, which subject to compliance with
applicable state regulations, allow for recovery of such purchases through
natural gas cost adjustment mechanisms.

The Company does not engage in wholesale marketing activities that may expose it
to commodity price risk associated with fluctuating natural gas commodity
prices.

Other Risks. The Company's customer receivables from gas sales and gas
transportation services are primarily derived from a diversified base of
residential, commercial, and industrial customers located in Indiana. The
Company manages credit risk associated with its receivables by continually
reviewing creditworthiness and requests cash deposits or refunds cash deposits
based on that review.

Impact of New Accounting Principle
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133),
which requires that every derivative instrument be recorded on the balance sheet
as an asset or liability measured at its market value and that changes in the
derivative's market value be recognized currently in earnings unless specific
hedge accounting criteria are met.

SFAS 133, as amended, requires that as of the date of initial adoption, the
difference between the market value of derivative instruments recorded on the
balance sheet and the previous carrying amount of those derivatives be reported
in net income or other comprehensive income, as appropriate, as the cumulative
effect of a change in accounting principle in accordance with APB Opinion No.
20, "Accounting Changes."

As of the date of adoption and through December 31, 2001, the Company was not
engaged in any derivative or hedging activity as defined by SFAS 133, as
amended; therefore, there was no impact at adoption or for the year ended
December 31, 2001.

Fair Value of Other Financial Instruments
The carrying values and estimated fair values of the Company's other financial
instruments are as follows:


<PAGE>

                                              At December 31,
                               ----------------------------------------------
                                       2001                     2000
                               ---------------------    ---------------------
                               Carrying    Est. Fair    Carrying    Est. Fair
 In thousands                   Amount       Value       Amount       Value
                               --------    ---------    --------    --------
   Long-term debt              $273,722    $ 272,848    $281,109    $275,053
   Long-term debt to VUHI       147,270      147,270           -           -
   Short-term borrowings              -            -     134,724     134,724
   Short-term debt to VUHI      134,298      134,298     218,200     218,200
                               --------    ---------    --------    --------

Certain methods and assumptions must be used to estimate the fair value of
financial instruments. The fair value of the Company's other financial
instruments was estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for instruments
with similar characteristics. Because of the maturity dates and variable
interest rates of short-term borrowings, its carrying amount approximates its
fair value.

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. Accordingly, any reacquisition would not be
expected to have a material effect on the Company's financial position or
results of operations.

13.  Additional Operational & Balance Sheet Information

Other - net in the Statements of Income consists of the following:

                              Year ended December 31,
                           -----------------------------
 In thousands                2001       2000       1999
                           -------    -------    -------
AFUDC                      $   989    $ 1,082    $   805
Other income                   169      1,232        375
Other expense               (1,348)    (2,632)      (115)
                           -------    -------    -------
  Total other - net        $  (190)   $  (318)   $ 1,065
                           =======    =======    =======


Other current assets in the Balance Sheets consists of the following:

                                                   At December 31,
                                                  -----------------
 In thousands                                        2001      2000
                                                  -------   -------
Prepaid gas delivery service                      $33,987   $34,849
Other prepayments & current assets                 14,080    27,282
                                                  -------   -------
   Total prepayments & other current assets        $48,067   $62,131
                                                  =======   =======




<PAGE>

Accrued liabilities in the Balance Sheets consists of the following:

                                            At December 31,
                                           -----------------
 In thousands                                 2001      2000
                                           -------   -------
Deferred income taxes                      $12,729   $ 4,227
Accrued taxes                               10,707    25,054
Refunds to customers & customer deposits     6,618     3,953
Accrued interest                             4,710     4,215
Other                                        7,993     9,435
                                           -------   -------
    Total accrued liabilities              $42,757   $46,884
                                           =======   =======


14.  Impact of Recently Issued Accounting Guidance

SFAS 141 & 142

The FASB issued two new statements of financial accounting standards in July
2001: SFAS No. 141, "Business Combinations" (SFAS 141), and SFAS No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142). These interrelated standards
change the accounting for business combinations and goodwill in two significant
ways:

SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is prohibited. This change does not affect the
pooling-of-interest transaction forming Vectren.

SFAS 142 changes the accounting for goodwill from an amortization approach to an
impairment-only approach. Thus, amortization of goodwill that is not included as
an allowable cost for rate-making purposes will cease upon adoption of the
statement. This includes goodwill recorded in past business combinations.
Goodwill is to be tested for impairment at a reporting unit level at least
annually.

SFAS 142 also requires the initial impairment review of all goodwill and other
intangible assets within six months of the adoption date, which is January 1,
2002 for the Company. The impairment review consists of a comparison of the fair
value of a reporting unit to its carrying amount. If the fair value of a
reporting unit is less than its carrying amount, an impairment loss would be
recognized. Results of the initial impairment review are to be treated as a
change in accounting principle in accordance with APB Opinion No. 20 "Accounting
Changes." An impairment loss recognized as a result of an impairment test
occurring after the initial impairment review is to be reported as a part of
operations.

SFAS 142 also changes certain aspects of accounting for intangible assets;
however, the Company does not have any significant intangible assets.

The adoption of SFAS 141 will not materially impact operations. As required by
SFAS 142, amortization of goodwill relating to the Company's ownership interest
in the Ohio operations, which is included in the equity in earnings of the Ohio
operations, will cease on January 1, 2002. Initial impairment reviews to be
performed within six months of adoption of SFAS 142 are not expected to have a
significant impact on operations.


SFAS 143

In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143). SFAS 143 requires entities to record the fair value of
a liability for an asset retirement obligation in the period in which it is


<PAGE>

incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS 143 is effective for fiscal years
beginning after June 15, 2002, with earlier application encouraged. The Company
is currently evaluating the impact that SFAS 143 will have on its operations.

SFAS 144

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 develops one accounting
model for all impaired long-lived assets and long-lived assets to be disposed
of. SFAS 144 replaces the existing authoritative guidance in FASB Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" and certain aspects of APB Opinion No. 30, "Reporting
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business."

This new accounting model retains the framework of SFAS 121 and requires that
those impaired long-lived assets and long-lived assets to be disposed of be
measured at the lower of carrying amount or fair value (less cost to sell for
assets to be disposed of), whether reported in continuing operations or in
discontinued operations. Therefore, discontinued operations will no longer be
measured at net realizable value or include amounts for operating losses that
have not yet occurred.

SFAS 144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing operations of the
entity in a disposal transaction.

SFAS 144 is effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Company is evaluating the impact SFAS 144
will have on its operations.

15.  Quarterly Financial Data (Unaudited)

Summarized quarterly financial data for 2001 and 2000 are as follows:

In thousands                         Q1         Q2          Q3          Q4
                               --------   --------    --------    --------
2001
     Operating revenues        $287,973   $ 91,105    $ 58,122    $143,058
     Operating income (loss)     23,796     (1,093)       (959)     22,999
     Net income (loss)           15,127    (11,563)    (10,346)     18,148
                               --------   --------    --------    --------

2000
     Operating revenues        $171,618   $ 86,303    $ 75,417    $264,775
     Operating income (loss)     13,494      1,111      (1,848)     18,458
     Net income (loss)            8,831     (3,497)     (6,720)     12,595
                               --------   --------    --------    --------


1.   Information in any one quarterly period is not indicative of annual results
     due to the seasonal variations common to the Company's utility operations.

2.   Q2 of 2001 includes restructuring charges as described in Note 3.

3.   2001 & 2000 include merger and integration charges as described in Note 3.



<PAGE>

<TABLE>
<CAPTION>
                                                                     SCHEDULE II

                            Indiana Gas Company, Inc.
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


Column A                                   Column B         Column C          Column D    Column E
----------                                -----------   ------------------  -----------   ---------
                                                            Additions
                                                        ------------------
                                           Balance at   Charged   Charged    Deductions   Balance at
                                           Beginning       to     to Other      from        End of
Description                                 Of Year     Expenses  Accounts  Reserves, Net    Year
                                           ----------   --------  --------  ------------- ----------
(In thousands)

VALUATION & QUALIFYING ACCOUNTS:
<S>                                        <C>          <C>         <C>        <C>          <C>
Year 2001 - Accumulated provision for
            uncollectible accounts         $ 2,063      $ 7,670     $ -        $ 8,746      $   987

Year 2000 - Accumulated provision for
            uncollectible accounts         $ 1,739      $ 5,405     $ -        $ 5,081      $ 2,063

Year 1999 - Accumulated provision for
            uncollectible accounts         $ 1,749      $ 2,819     $ -        $ 2,829      $ 1,739

OTHER RESERVES:

Year 2001 - Reserve for merger &
            integration charges            $ 1,293      $     -     $ -        $ 1,093      $   200

Year 2000 - Reserve for merger &
            integration charges            $     -      $11,900     $ -        $10,607      $ 1,293

Year 2001 - Reserve for restructuring
            costs                          $     -      $ 5,883     $ -        $ 1,923      $ 3,960

Year 2001 - Reserve for injuries
            and damages                    $   800      $ 2,638     $ -        $ 2,260      $ 1,178

Year 2000 - Reserve for injuries
            and damages                    $   500      $   500     $ -        $   200      $   800

Year 1999 - Reserve for injuries
            and damages                    $   500      $     -     $ -        $     -      $   500
</TABLE>



<PAGE>


              MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of the Ohio operations is responsible for the preparation of the
financial statements and the related financial data contained in this report.
The financial statements are prepared in conformity with accounting principles
generally accepted in the United States 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 judgments, are the responsibility of management. Management
maintains a system of internal control 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 of Vectren Corporation (Vectren), the parent company of
the Ohio operations, 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 Vectren'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 control and
the quality of financial reporting.


/S/ Niel C. Ellerbrook
Niel C. Ellerbrook
Chairman & Chief Executive Officer
January 24, 2002.

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholder and Board of Directors of
Vectren Energy Delivery of Ohio, Inc. and Indiana Gas Company, Inc.:


We have audited the accompanying balance sheet of the Ohio operations as of
December 31, 2001, and the related statements of income and retained earnings
and cash flows for the year then ended. These financial statements and the
schedule referred to below are the responsibility of the Ohio operations'
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 audit provides 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 the Ohio operations as of
December 31, 2001, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states 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,
January 24, 2002.


<PAGE>


                               THE OHIO OPERATIONS
                                 BALANCE SHEETS
                                 (In thousands)

                                                  At December 31,
                                                -------------------
                                                  2001        2000
                                                --------  ---------
             ASSETS                             Audited   Unaudited
             ------                             --------   --------
Utility Plant
     Original cost                              $350,802   $336,402
     Less accumulated depreciation               159,575    147,689
                                                --------   --------
        Net utility plant                        191,227    188,713
                                                --------   --------
Current Assets
     Cash & cash equivalents                       6,420        101
     Accounts receivable-less reserves of
         $1,414 & $900                            34,222     42,521
     Receivables from other Vectren companies      3,172          -
     Accrued unbilled revenues                    22,690     49,507
     Inventories                                   2,495     50,234
     Recoverable natural gas costs                19,853     29,285
     Prepayments & other current assets           54,674     10,774
                                                --------   --------
        Total current assets                     143,526    182,422
                                                --------   --------
Other investments                                    206          -
Non-utility property-net                           1,605      1,605
Goodwill-net                                     193,078    197,977
Other assets                                       3,161      2,187
                                                --------   --------
TOTAL ASSETS                                    $532,803   $572,904
                                                ========   ========


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


<PAGE>



                               THE OHIO OPERATIONS
                                 BALANCE SHEETS
                                 (In thousands)



                                                        At December 31,
                                                    ----------------------
                                                       2001          2000
                                                    ---------    ---------
         LIABILITIES & SHAREHOLDERS' EQUITY          Audited     Unaudited
          ----------------------------------        ---------    ---------
Capitalization and Owners' Equity
   Owners' net investment in Natural Gas
       distribution assets                          $ 469,800    $ 469,800
   Retained earnings                                   11,795        5,790
   Advances to VEDO                                   (18,386)           -
                                                    ---------    ---------
       Total capitalization and owners' equity        463,209      475,590
                                                    ---------    ---------
Commitments & Contingencies (Notes 4 & 7)

Current Liabilities
   Accounts payable                                    22,189       27,201
   Accounts payable to affiliated companies            16,070       49,591
   Payables to other Vectren companies                    249        3,388
   Accrued liabilities                                 22,396       16,643
                                                    ---------    ---------
       Total current liabilities                       60,904       96,823
                                                    ---------    ---------
Deferred Credits & Other Liabilities
   Deferred income taxes                                8,034          491
   Other liabilities                                      656            -
                                                    ---------    ---------
       Total deferred credits & other liabilities       8,690          491
                                                    ---------    ---------

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY            $ 532,803    $ 572,904
                                                    =========    =========

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

<PAGE>


                               THE OHIO OPERATIONS
                   STATEMENTS OF INCOME AND RETAINED EARNINGS
                                 (In thousands)



                                                  November 1, 2000
                                    Year Ended   (Inception) through
                                    December 31,     December 31,
                                    ------------  -----------------
                                        2001              2000
                                     ---------       ---------
                                      Audited         Unaudited
                                     ---------        ---------
OPERATING REVENUES                   $ 350,144        $ 111,356
COST OF GAS                            261,785           83,163
                                     ---------        ---------
GAS OPERATING MARGIN                    88,359           28,193
                                     ---------        ---------
OPERATING EXPENSES
   Other operating                      38,410            6,969
   Merger & integration costs            1,631            1,794
   Restructuring costs                     517                -
   Depreciation & amortization          15,526            2,557
   Income tax expense                    2,501            3,822
   Taxes other than income taxes        22,432            7,121
                                     ---------        ---------
       Total operating expenses         81,017           22,263
                                     ---------        ---------
OPERATING INCOME                         7,342           5,930

Other-net                               (1,232)             (61)
Interest expense                           105               79
                                     ---------        ---------
NET INCOME                           $   6,005        $   5,790
                                     =========        =========
RETAINED EARNINGS
   BEGINNING OF PERIOD                   5,790                -
                                     ---------        ---------
   END OF PERIOD                     $  11,795        $   5,790
                                     =========        =========


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

<PAGE>

<TABLE>
<CAPTION>
                               THE OHIO OPERATIONS
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

                                                                    November 1, 2000
                                                     Year Ended    (Inception) through
                                                     December 31,      December 31,
                                                     ------------  -------------------
                                                        2001               2000
                                                      --------          ----------
                                                       Audited           Unaudited
                                                      --------          ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                   <C>               <C>
    Net income                                        $  6,005          $  5,790
    Adjustments to reconcile net income to cash
        provided from operating activities -
      Depreciation & amortization                       15,526             2,557
      Deferred income taxes                              7,913               491
      Other non-cash charges-net                         6,295             1,123
        Changes in assets and liabilities -
        Accounts receivable, including to Vectren
          companies & accrued unbilled revenue          26,974           (81,517)
        Inventories                                     47,739             3,965
        Recoverable natural gas costs                    9,432           (21,129)
        Prepayments & other current assets             (43,900)           (2,295)
        Accounts payable, including to Vectren
          companies & affiliated companies             (41,672)           80,180
        Accrued liabilities                              5,383             8,762
        Other noncurrent assets & liabilities             (318)            2,956
                                                      --------          --------
        Total adjustments                               33,372            (4,907)
                                                      --------          --------
          Net cash flows from operating activities      39,377               883
                                                      --------          --------
CASH FLOWS (REQUIRED FOR) FINANCING ACTIVITIES
    Advances to VEDO                                   (18,386)                -
                                                      --------          --------
          Net cash flows (required for)
             financing activities                      (18,386)                -
                                                      --------          --------
CASH FLOWS (REQUIRED FOR) INVESTING ACTIVITIES
    Capital expenditures                               (14,466)             (782)
    Other investments                                     (206)                -
                                                      --------          --------
          Net cash flows (required for)
              investing activities                     (14,672)             (782)
                                                      --------          --------
Net increase in cash & cash equivalents                  6,319               101
Cash & cash equivalents at beginning of period             101                 -
                                                      --------          --------
Cash & cash equivalents at end of period              $  6,420          $    101
                                                      ========          ========
</TABLE>

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

<PAGE>



                               THE OHIO OPERATIONS
                        NOTES TO THE FINANCIAL STATEMENTS


1.   Organization and Nature of Operations

The Ohio operations provide natural gas distribution and transportation services
to Dayton, Ohio, and 87 other communities in 17 counties in west central Ohio.
The Ohio operations were acquired from the Dayton Power and Light Company by
Vectren Corporation (Vectren) on October 31, 2000 for approximately $465.0
million. The acquisition was accounted for as a purchase transaction in
accordance with Accounting Principles Board (APB) Opinion No. 16 "Business
Combinations" (APB 16) and accordingly, the results of operations of the
acquired assets are included in the accompanying financial statements since the
date of acquisition.

Vectren acquired the Ohio operations as a tenancy in common through two separate
wholly owned subsidiaries. Vectren Energy Delivery of Ohio, Inc., an Ohio
corporation, (VEDO) holds a 53% undivided ownership interest in the Ohio
operations, and Indiana Gas Company, Inc., an Indiana Corporation, holds a 47%
undivided ownership interest. Transaction costs associated with Vectren's
acquisition totaling $5.8 million were paid by VEDO, and VEDO is the operator of
the Ohio operations.

The purchase price was allocated to the assets and liabilities acquired based on
the fair value of those assets and liabilities as of the acquisition date.
Because of the regulatory environment in which the Ohio operations operate, the
book value of rate-regulated assets and liabilities is generally considered to
be fair value. The fair value of assets contributed approximated $278.1 million,
and the fair value of liabilities contributed approximated $7.9 million.
Goodwill, in the amount of $198.0 million, has been recognized for the excess
amount of the purchase price paid, including transaction costs, over the fair
value of the net assets acquired and has been pushed down to these financial
statements. Prior to the adoption of Statement of Financial Accounting Standards
(SFAS) No.142 "Goodwill and Intangible Assets" on January 1, 2002, this goodwill
was amortized on a straight-line basis over 40 years. (See Note 11 for further
information on the adoption of this standard.)

Vectren, an Indiana corporation, is an energy and applied technology holding
company headquartered in Evansville, Indiana. Vectren was organized on June 10,
1999 solely for the purpose of effecting the merger of Indiana Energy, Inc.
(Indiana Energy) and SIGCORP, Inc. (SIGCORP). On March 31, 2000, the merger of
Indiana Energy with SIGCORP and into Vectren was consummated with a tax-free
exchange of shares and has been accounted for as a pooling-of-interests in
accordance with APB 16.

Vectren's wholly owned subsidiary, Vectren Utility Holdings, Inc. (VUHI), serves
as the intermediate holding company for its three operating public utilities:
Indiana Gas Company, Inc. (Indiana Gas), formerly a wholly owned subsidiary of
Indiana Energy, Southern Indiana Gas and Electric Company (SIGECO), formerly a
wholly owned subsidiary of SIGCORP, and the Ohio operations. Both Vectren and
VUHI are exempt from registration pursuant to Section 3(a)(1) and 3(c) of the
Public Utility Holding Company Act of 1935.

2.   Basis of Presentation

The financial statements as of December 31, 2000 and for the period November 1,
2000 (Inception) through December 31, 2000 included in this report have been
prepared by management, without audit, as provided in the rules and regulations
of the Securities and Exchange Commission. Management of the Ohio operations
believes that the information in this report reflects all adjustments necessary
to fairly state the results of the period reported.

The financing required to purchase the Ohio operations is not reflected in these
financial statements. Had the financing arrangements used by Indiana Gas and
VEDO to facilitate the acquisition been pushed down to the Ohio operations, the
following operating results would have occurred:


<PAGE>

                                                  November 1, 2000
                                    Year Ended  (Inception) through
                                   December 31,     December 31,
                                   ------------ -------------------
                                        2001            2000
                                     --------       ---------
                                      Audited       Unaudited
                                     --------       ---------

OPERATING MARGIN                     $ 88,359        $ 28,193

OPERATING EXPENSES
     Operating expenses other
        than income taxes              78,516          18,441
     Income taxes                      (4,850)          1,870
                                     --------        --------
        Total operating expenses       73,666          20,311
                                     --------        --------
OPERATING INCOME                       14,693           7,882

Other-net                              (1,232)            (61)
Interest expense                       19,854           5,322
                                     --------        --------
NET INCOME (LOSS)                    $ (6,393)       $  2,499
                                     ========        ========


3.   Summary of Significant Accounting Policies

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

B.   Cash and Cash Equivalents
All highly liquid investments with an original maturity of three months or less
at the date of purchase are considered cash equivalents. Cash paid during the
periods reported for interest, income taxes, and contributed assets and
liabilities is as follows:
                                                 November 1, 2000
                                   Year Ended   (Inception) through
                                  December 31,      December 31,
                                      2001             2000
                                  ------------  ------------------
In thousands                         Audited        Unaudited
                                     -------        ---------
  Cash paid during the year for
    Interest (net of amount
      capitalized)                     $66            $   74
    Income taxes                         -             2,331
                                     ------         ---------

<PAGE>

C.   Inventories
Inventories are valued using the average cost method and consist of the
following:

                                                         At December 31,
                                                    -------------------------
In thousands                                          2001            2000
                                                    --------       ----------
                                                     Audited       Unaudited
                                                    --------       ----------
Gas in storage                                        $ 769         $ 49,423
Other                                                 1,726              811
                                                    --------       ----------
       Total inventories                            $ 2,495         $ 50,234
                                                    ========       ==========


D.   Utility Plant and Depreciation
Utility plant is stated at historical cost, including an allowance for the cost
of funds used during construction (AFUDC). Depreciation of utility property is
provided using the straight-line method over the estimated service lives of the
depreciable assets. The original cost of utility plant, together with
depreciation rates expressed as a percentage of original cost, as of and for
year ended December 31, 2001 and as of and for the period from November 1, 2000
(Inception) through December 31, 2000 is as follows:

<TABLE>
<CAPTION>

                                           2001                         2000
                                ----------------------------  ----------------------------
                                          Audited                     Unaudited
                                ----------------------------  ----------------------------
                                               Depreciation                  Depreciation
                                                Rates as a                    Rates as a
                                                Percent of                    Percent of
In thousands                    Original Cost  Original Cost  Original Cost  Original Cost
                                -------------  -------------  -------------  -------------
<S>                               <C>             <C>          <C>               <C>
Gas utility plant                 $ 336,710       3.1%         $ 335,007         3.1%
Construction work in progress        14,092         -              1,395           -
                                -------------  -------------  -------------  -------------
       Total original cost        $ 350,802                    $ 336,402
                                =============  =============  =============  =============
</TABLE>


AFUDC represents the cost of borrowed and equity funds used for construction
purposes and is charged to construction work in progress during the construction
period and included in other - net in the Statements of Income. The total AFUDC
capitalized into utility plant and the portion of which was computed on borrowed
and equity funds for all periods reported was not significant.

Maintenance and repairs, including the cost of removal of minor items of
property and planned major maintenance projects, are charged to expense as
incurred. When property that represents a retirement unit is replaced or
removed, the cost of such property is credited to utility plant, and such cost,
together with the cost of removal less salvage, is charged to accumulated
depreciation.

E.   Impairment Review of Long-Lived Assets
Long-lived assets are reviewed for impairment in accordance with SFAS No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" as facts and circumstances indicate that the carrying amount may be
impaired. Specifically, the evaluation for impairment involves the comparison of
an asset's carrying value to the estimated future cash flows the asset is
expected to generate over its remaining life. If this evaluation were to
conclude that the carrying value of the asset is impaired, an impairment charge
would be recorded as a charge to operations based on the difference between the
asset's carrying amount and its fair value. (See Note 10 for further information
on the adoption of SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets.") The same policy is currently utilized for goodwill.

<PAGE>

F.   Regulation
Retail public utility operations affecting Ohio customers are subject to
regulation by the Public Utilities Commission of Ohio (PUCO).

Refundable or Recoverable Gas Costs
All metered gas rates contain a gas cost adjustment clause that allows the Ohio
operations to charge for changes in the cost of purchased gas. The Ohio
operations record any under-or-over-recovery resulting from gas adjustment
clauses each month in revenues. A corresponding asset or liability is recorded
until the under-or-over-recovery is billed or refunded to utility customers. The
cost of gas sold is charged to operating expense as delivered to customers.

SFAS 71
The Ohio operations' accounting policies give recognition to the rate-making and
accounting practices of this agency and to accounting principles generally
accepted in the United States, including the provisions of SFAS No. 71
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71).
Regulatory assets represent probable future revenues associated with certain
incurred costs, which will be recovered from customers through the rate-making
process. Regulatory liabilities represent probable future reductions in revenues
associated with amounts that are to be credited to customers through the
rate-making process.

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

G.   Revenues
Revenues are recorded as products and services are delivered to customers. To
more closely match revenues and expenses, the Ohio operations records revenues
for all gas delivered to customers but not billed at the end of the accounting
period. Also included in revenues are amounts charged to customers through a
surcharge for recovery of arrearages from certain eligible low-income
households.

H.   Excise Taxes
Excise taxes are included in rates charged to customers. Accordingly, the Ohio
operations records excise tax received as a component of operating revenues.
Excise taxes paid are recorded as a component of taxes other than income taxes.

I.   Earnings Per Share
Earnings per share are not presented as the Ohio operations are wholly owned by
Vectren Utility Holdings, Inc.

4.   Special Charges

Merger and Integration Costs
Merger and integration costs incurred for the years ended December 31, 2001 and
2000 approximated $1.6 million and $1.8 million (unaudited), respectively.
Merger and integration activities, resulting from the 2000 purchase, were
completed in 2001. These costs relate to employee relocation, accounting fees,
consulting fees related to integration activities such as organization
structure, employee travel between company locations, internal labor of
employees assigned to integration teams, investor relations communication
activities, and certain benefit costs.

Restructuring and Related Charges
As part of continued cost saving efforts, in June 2001, Vectren's management and
board of directors approved a plan to restructure, primarily, its regulated
operations. The restructuring plan included the elimination of certain
administrative and supervisory positions in its utility operations and corporate
office. Charges of approximately $0.5 million were expensed in June 2001 as a
direct result of the restructuring plan, primarily for employee severance and


<PAGE>

employee relocation and consulting fees incurred as of that date. The expense is
associated with approximately 10 employees. Employee separation benefits include
severance, healthcare and outplacement services. The remaining accrual for
employee separation payments as of December 31, 2001 approximated $0.2 million.
Other than structured payments per the terms of severance agreements, the
restructuring program with respect to the Ohio operations was completed during
2001.

5.   Transactions With Other Vectren Companies

Support Services
Vectren and certain subsidiaries of Vectren have provided certain corporate
general and administrative services to the Ohio operations including legal,
finance, tax, risk management, information technology and human resources. The
costs have been allocated to the Ohio operations using various allocators,
primarily number of employees, number of customers and/or revenues. Allocations
are based on cost. Management believes that the allocation methodology is
reasonable and approximates the costs that would have been incurred had the Ohio
operations secured those services on a stand-alone basis. The Ohio operations
received corporate allocations approximating $10.0 million and $2.7 million
(unaudited) for the year ended December 31, 2001 and for the period November 1,
2000 (Inception) through December 31, 2000, respectively.

Amounts owed to wholly owned subsidiaries of Vectren approximated $0.2 million
and $3.1 million (unaudited) at December 31, 2001 and 2000, respectively, and
are included in payables to Vectren companies. Amounts due from wholly owned
subsidiaries of Vectren approximated $3.2 million at December 31, 2001, and are
included in receivables from other Vectren companies.

Cash Management and Borrowing Arrangements
The Ohio operations participate in a centralized cash management program with
Vectren, other wholly owned subsidiaries, and banks which permits funding of
checks as they are presented.

VEDO has no significant independent assets or operations apart from its 53%
ownership interest in the Ohio operations, and VEDO is able to meet interest
payments or any other obligation only through dividends received from (or loans
or advances made by) the Ohio operations. At December 31, 2001, the Ohio
operations have advanced approximately $18.4 million to VEDO to pay debt and
interest on intercompany borrowings it owes to VUHI. These advances are recorded
as a reduction of capitalization and owner's equity.

6.   Transactions with Vectren Affiliates

Vectren has an ownership interest in ProLiance Energy, LLC (ProLiance), a
nonregulated, energy marketing affiliate. ProLiance provides natural gas supply
and related services to the Ohio operations. Purchases from ProLiance for resale
and for injections into storage for sales to VEDO on behalf of the Ohio
operations, for the year ended December 31, 2001 and for the period November 1,
2000 (Inception) through December 31, 2000 approximated $241.1 million and $77.5
million (unaudited), respectively. Amounts charged by ProLiance are market based
as evidenced by a competitive bidding process for capacity and storage services
and commodity indexes.

Vectren has ownership interests in other companies that provide materials
management, underground construction and repair, facilities locating, and meter
reading to the Ohio operations. Fees of these services and construction-related
expenditures to VEDO on behalf of the Ohio operations, for the year ended
December 31, 2001 and for the period November 1, 2000 (Inception) through
December 31, 2000 approximated $6.0 million and $0.4 million (unaudited),
respectively. Amounts charged by these affiliates are market based.

Amounts owed to unconsolidated affiliates of Vectren approximated $16.1 million
and $49.6 million (unaudited) at December 31, 2001 and 2000, respectively, and
are included in accounts payable to affiliated companies.


<PAGE>

7.   Income Taxes

As a result of an order from the PUCO, VEDO files a federal income tax return
(as part of Vectren's consolidated income tax return) which reports all the Ohio
property and all Ohio business activity for Federal income tax purposes. The
components of income tax expense, excluding benefits arising from VEDO's
financing costs, are as follows:

                                                               November 1, 2000
                                                Year Ended   (Inception) through
                                                December 31,      December 31,
                                                    2001             2000
                                                -----------  -------------------
In thousands                                       Audited         Unaudited
                                                   -------         ---------
Federal:
   Current                                         $(5,412)         $ 3,331
   Deferred                                          7,913              491
                                                   -------          -------
     Total income tax expense                      $ 2,501          $ 3,822
                                                   =======          =======


A reconciliation of the statutory rate to the effective income tax rate is as
follows:

                                                     November 1, 2000
                                    Year Ended     (Inception) through
                                    December 31,        December 31,
                                       2001                 2000
                                    -----------     -------------------
                                     Audited             Unaudited
                                    --------             ----------
Statutory rate                        35.0 %               35.0 %
Other- net                            (5.6)                 4.8
                                    --------             ----------
     Effective tax rate               29.4 %               39.8 %
                                    ========             ==========


The liability method of accounting is used for income taxes under which deferred
income taxes are recognized to reflect the tax effect of temporary differences
between the book and tax bases of assets and liabilities at currently enacted
income tax rates. Significant components of the net deferred tax liability as of
December 31, 2001 and 2000 are as follows:

                                                   At December 31,
                                             ----------------------------
In thousands                                   2001                2000
                                             --------           ---------
                                              Audited           Unaudited
                                             --------           ---------
Deferred tax liabilities:
     Depreciation & cost recovery
        timing differences                    $6,059              $    -
     Deferred fuel costs                         370                   -
     Other                                     1,975                 491
                                              ------              ------
         Deferred tax liability               $8,404              $  491
                                              ======              ======

<PAGE>


8.   Legal Proceedings

VEDO and Indiana Gas are involved in various legal proceedings arising in the
Ohio operations' normal course of business. In the opinion of management, there
are no pending legal proceedings that are likely to have a material adverse
effect on its financial position or results of operations of the Ohio
operations.

9.   Risk Management and New Accounting Principle

Risk Management
VEDO's exposure to commodity price risk for purchases and sales of natural gas
for the Ohio operations' retail customers is limited due to current Ohio
regulations which, subject to compliance with applicable state regulations,
allow for recovery of such purchases through natural gas cost recovery
mechanisms. The Ohio operations does not engage in wholesale gas marketing
activities that may expose the Ohio operations to market risk associated with
fluctuating natural gas commodity prices.

Impact of New Accounting Principle
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133),
which requires that every derivative instrument be recorded on the balance sheet
as an asset or liability measured at its market value and that changes in the
derivative's market value be recognized currently in earnings unless specific
hedge accounting criteria are met.

SFAS 133, as amended, is effective for fiscal years beginning after June 15,
2000 and must be applied to derivative instruments and certain derivative
instruments embedded in hybrid contracts that were issued, acquired or
substantively modified after December 31, 1998. The Ohio operations adopted SFAS
133 as of January 1, 2001.

SFAS 133 requires that as of the date of initial adoption, the difference
between the market value of derivative instruments recorded on the balance sheet
and the previous carrying amount of those derivatives be reported in net income
or other comprehensive income, as appropriate, as the cumulative effect of a
change in accounting principle in accordance with APB Opinion No. 20,
"Accounting Changes."

As of the date of adoption and through December 31, 2001, the Ohio operations
was not engaged in any derivative or hedging activity as defined by SFAS 133, as
amended; therefore, there was no impact at adoption or for the year ended
December 31, 2001.

10.  Additional Balance Sheet Information

Accrued liabilities consists of the following:

                                                  At December 31,
                                             --------------------------
In thousands                                   2001              2000
                                             --------         ---------
                                              Audited         Unaudited
                                             --------         ---------
Accrued taxes                                $ 12,298           $ 8,361
Refunds to customers & customer deposits        8,577             7,847
Deferred income taxes                             370                 -
Other                                           1,151               435
                                             --------          --------
       Total accrued liabilities             $ 22,396          $ 16,643
                                             ========          ========

<PAGE>


Other current assets consists of the following:

                                                       At December 31,
                                                  --------------------------
In thousands                                         2001             2000
                                                  --------         ---------
                                                   Audited         Unaudited
                                                  --------         ---------
Prepaid gas delivery service                      $ 33,674          $      -
Other prepayments & current assets                  21,000            10,774
                                                  --------          --------
   Total prepayments & other current assets       $ 54,674          $ 10,774
                                                  ========          ========


11.  Impact of Recently Issued Accounting Guidance

SFAS 141 & 142
The FASB issued two new statements of financial accounting standards in July
2001: SFAS No. 141, "Business Combinations" (SFAS 141), and SFAS No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142). These interrelated standards
change the accounting for business combinations and goodwill in two significant
ways:

SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is prohibited. This change does not affect the
pooling-of-interest transaction forming Vectren.

SFAS 142 changes the accounting for goodwill from an amortization approach to an
impairment-only approach. Thus, amortization of goodwill that is not included as
an allowable cost for rate-making purposes will cease upon adoption of the
statement. This includes goodwill recorded in past business combinations, such
as the acquisition of the Ohio operations. Goodwill is to be tested for
impairment at a reporting unit level at least annually.

SFAS 142 also requires the initial impairment review of all goodwill and other
intangible assets within six months of the adoption date, which is January 1,
2002 for the Ohio operations. The impairment review consists of a comparison of
the fair value of a reporting unit to its carrying amount. If the fair value of
a reporting unit is less than its carrying amount, an impairment loss would be
recognized. Results of the initial impairment review are to be treated as a
change in accounting principle in accordance with APB Opinion No. 20 "Accounting
Changes." An impairment loss recognized as a result of an impairment test
occurring after the initial impairment review is to be reported as a part of
operations.

SFAS 142 also changes certain aspects of accounting for intangible assets;
however, the Ohio operations do not have any significant intangible assets.

The adoption of SFAS 141 will not materially impact operations. As required by
SFAS 142, amortization of goodwill relating to the Ohio operations, which
approximates $5.0 million per year, will cease on January 1, 2002. Initial
impairment reviews to be performed within six months of adoption of SFAS 142 are
not expected to have a significant impact on operations.

SFAS 143
In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143). SFAS 143 requires entities to record the fair value of
a liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS 143 is effective for fiscal years
beginning after June 15, 2002, with earlier application encouraged. The Ohio
operations are currently evaluating the impact that SFAS 143 will have on its
operations.


<PAGE>

SFAS 144
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 develops one accounting
model for all impaired long-lived assets and long-lived assets to be disposed
of. SFAS 144 replaces the existing authoritative guidance in FASB Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" and certain aspects of APB Opinion No. 30, "Reporting
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business."

This new accounting model retains the framework of SFAS 121 and requires that
those impaired long-lived assets and long-lived assets to be disposed of be
measured at the lower of carrying amount or fair value (less cost to sell for
assets to be disposed of), whether reported in continuing operations or in
discontinued operations. Therefore, discontinued operations will no longer be
measured at net realizable value or include amounts for operating losses that
have not yet occurred.

SFAS 144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing operations of the
entity in a disposal transaction.

SFAS 144 is effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Ohio operations are evaluating the impact
SFAS 144 will have on its operations.

12.  Quarterly Financial Data (Unaudited)

Summarized quarterly financial data for 2001 and 2000 is as follows:


In thousands                      Q1         Q2         Q3         Q4
                               --------   --------   --------   --------
2001
     Operating revenues        $182,967   $ 51,341   $ 28,423   $ 87,413
     Operating income (loss)      6,501     (3,248)    (3,590)     7,679
     Net income (loss)            6,140     (2,581)    (5,182)     7,628
                               --------   --------   --------   --------

2000
     Operating revenues            N/A        N/A        N/A    $111,356
     Operating income              N/A        N/A        N/A       5,840
     Net income                    N/A        N/A        N/A       5,790
                               --------   --------   --------   --------


1.   Information in any one quarterly period is not indicative of annual results
     due to the seasonal variations common to natural gas delivery operations.
2.   Q2 of 2001 includes restructuring charges as described in Note 4.
3.   2001 & 2000 include merger and integration charges as described in Note 4.


<PAGE>

<TABLE>
<CAPTION>

                                                                 SCHEDULE II

                               THE OHIO OPERATIONS
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


                   Column A                Column B        Column C        Column D     Column E
                   --------                --------        --------       ----------    --------
                                                           Additions
                                                      -----------------
                                            Balance   Charged   Charged   Deductions     Balance
                                           Beginning     to     to Other     from        End of
                  Description              of Period  Expenses  Accounts  Reserves, Net  Period
                  -----------              ---------  --------  --------  -------------  ------
                                                                  (In thousands)
VALUATION AND QUALIFYING
      ACCOUNTS:

(Audited)
<S>                                         <C>       <C>         <C>      <C>          <C>
   Year 2001- Accumulated provision
        for uncollectible accounts          $ 900     $ 4,970     $ -      $ 4,456      $ 1,414

(Unaudited)
   Period 2000 - Accumulated provision
         for uncollectible accounts         $   -     $ 1,123     $ -      $   223      $   900

OTHER RESERVES:

(Audited)
   Year 2001 - Reserve for restructuring    $   -     $   165     $ -      $     -      $   165

(Audited)
   Year 2001 - Reserve for merger           $ 456     $     -     $ -      $   216      $   240
        and integration charges
(Unaudited)
   Period 2000 - Reserve for merger
        and integration charges             $   -     $   500     $ -      $    44      $   456

</TABLE>


<PAGE>




ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
     DISCLOSURE

None
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Certain information required to be shown for Item 10, Directors and Executive
Officers of the Registrant, is incorporated by reference, with the exception of
the Compensation Committee Report and Performance Graph, from the Proxy
Statement of the registrant's parent company, Vectren Corporation. That report
was prepared and filed electronically with the Securities and Exchange
Commission on March 15, 2002, and is attached to this filing as Exhibit 99.1.

Niel C. Ellerbrook, age 53, has been a director of the Company and Indiana
Energy or Vectren since 1991. Mr. Ellerbrook is Chairman of the Board and Chief
Executive Officer of the Company, having served in that capacity since June
2001. Mr. Ellerbrook is also Chairman of the Board and Chief Executive Officer
of Vectren, having served in that capacity since March 2000. Mr. Ellerbrook
served as President and Chief Executive Officer of Indiana Energy from June 1999
to March 2000. Mr. Ellerbrook served as President and Chief Operating Officer of
Indiana Energy from October 1997 to March 2000. From January through October
1997, Mr. Ellerbrook served as Executive Vice President, Treasurer, and Chief
Financial Officer of Indiana Energy; and from 1986 to January 1997 as Vice
President, Treasurer, and Chief Financial Officer of Indiana Energy. Mr.
Ellerbrook is a director of Vectren Utility Holdings, Inc. and Southern Indiana
Gas and Electric Co. He is also a director of Fifth Third Bank, Indiana, and
Deaconess Hospital of Evansville, Indiana.

Andrew E. Goebel, age 54, has been a director of the Company since March 2000.
Mr. Goebel has also been a director of SIGCORP or Vectren since 1997. Mr. Goebel
is President of the Company, having served in that capacity since June 2001. Mr.
Goebel is also President and Chief Operating Officer of Vectren, having served
in these capacities since March 2000. Mr. Goebel was President and Chief
Operating Officer of SIGCORP from April 1999 to March 2000. From September 1997
through April 1999, Mr. Goebel served as Executive Vice President of SIGCORP;
and from 1996 to September 1997, he served as Secretary and Treasurer of
SIGCORP. Mr. Goebel is a director of Vectren Utility Holdings, Inc. and Southern
Indiana Gas and Electric Co. Mr. Goebel is also a director of Old National
Bancorp and Old National Bank.

Jerome A. Benkert, Jr., age 43, has served as Executive Vice President and Chief
Financial Officer of the Company and Vectren since March 2000 and as Treasurer
of the Company and Vectren since October 2001. He was Executive Vice President
and Chief Operating Officer of Indiana Energy's administrative services company
from October 1997 to March 2000. Mr. Benkert has served as Controller and Vice
President of Indiana Gas. Mr. Benkert is a director of Vectren Utility Holdings,
Inc. and Southern Indiana Gas and Electric Co.

Ronald E. Christian, age 43, has served as Senior Vice President, General
Counsel, and Secretary of the Company and Vectren since March 2000. Mr.
Christian served as Vice President and General Counsel of Indiana Energy from
July 1999 to March 2000. From June 1998 to July 1999, Mr. Christian was the Vice
President, General Counsel and Secretary of Michigan Consolidated Gas Company in
Detroit, Michigan. He served as the General Counsel and Secretary of Indiana
Energy, Indiana Gas and Indiana Energy Investments, Inc. from 1993 to June 1998.
Mr. Christian is a director of Vectren Utility Holdings, Inc. and Southern
Indiana Gas and Electric Co.

<PAGE>

William S. Doty, age 51, has served as Senior Vice President-Energy Delivery of
the Company since April 2001. Mr. Doty served as Senior Vice President of
Customer Relationship Management from January 2001 to April 2001. From January
1999 to January 2001, Mr. Doty was Vice President of Energy Delivery for
Southern Indiana Gas and Electric Company and previous to January 1999, he was
Director of Gas Operations Mr. Doty is a director of Vectren Utility Holdings,
Inc. and Southern Indiana Gas and Electric Co.

Richard G. Lynch, age 50, has served as Senior Vice President-Human Resources
and Administration of the Company and Vectren since March 2000. Mr. Lynch was
Vice President of Human Resources for SIGCORP from March 1999 to March 2000.
Prior to joining the Company, Mr. Lynch was the Director of Human Resources for
the Mead Johnson Division of Bristol Myers-Squibb in Evansville, Indiana.

ITEM 11.  EXECUTIVE COMPENSATION

Certain information required to be shown for Item 11, Executive Compensation, is
incorporated by reference, with the exception of the Compensation Committee
Report and Performance Graph, from the Proxy Statement of the registrant's
parent company, Vectren Corporation. That report was prepared and filed
electronically with the Securities and Exchange Commission on March 15, 2002,
and is attached to this filing as Exhibit 99.1.

The compensation of Niel C. Ellerbrook, Andrew E. Goebel, Jerome A Benkert, Jr.,
and Ronald E. Christian is included in Exhibit 99.1 attached to this filing. In
addition to these named executive officers, the compensation of William S. Doty
and Timothy M. Hewitt is presented below. Mr. Hewitt served a President of
Indiana Gas until his retirement in June 2001. The compensation presented below
and the compensation included in Exhibit 99.1 represents each executive's
Vectren-wide compensation, not just the portion allocated to Indiana Gas. The
tables include a Summary Compensation Table (Table I), a Summary of Option
Grants in Last Fiscal year (Table II), a table showing Aggregate Option
Exercises in Last Fiscal Year and Fiscal Year End Option Values (Table III) and
a table showing the Long-Term Incentive Plan Awards in Last Fiscal Year (Table
IV).

<TABLE>
<CAPTION>

                                     TABLE I
                           SUMMARY COMPENSATION TABLE
       (a)                (b)     (c)        (d)        (e)     (g)        (h)       (i)
                                -----------------------------------------------------------
                                    Annual Compensation      Long-term Compensation Payouts
                                                      Other    Options              Other
                                                      Compen-    (#       LTIP     Compen-
Name and Principal                          Bonus     sation   shares)   Payouts   sation
Position at VUHI          Year  Salary ($) ($) (1)    ($) (2)    (3)     ($) (4)   ($) (5)
----------------          ----  ---------  -------    -------  -------   -------   -------
<S>                       <C>    <C>        <C>        <C>      <C>                 <C>
William S. Doty           2001   174,608    10,500     5,709    22,000         -    12,836
Senior Vice President -   2000   141,464    96,125     1,413         -         -    18,079
 Energy Delivery          1999   117,528    15,900         -     5,224         -    10,700

Timothy M. Hewitt         2001   118,127         -     7,791         -         -   348,038
President (Retired        2000   180,322   114,874     6,760         -   166,483    82,268
 June 2001)               1999   154,846    56,297     8,269         -    78,662    22,295
</TABLE>

Earnings are shown on a calendar year basis.

(1)   The amounts shown in this column for 2001 are payments under the Company's
      At-Risk Compensation Plan, which is discussed in Part B, relating to
      "Annual Incentive Compensation," and Part C of the Compensation Committee
      Report in Exhibit 99.1. The amounts shown in this column for 2000 include
      payments under Vectren's Executive Annual Incentive Plan, Indiana Energy's
      Annual Management Incentive Plan (for Mr. Hewitt), and the SIGCORP
      Corporate Performance Plan (for Mr. Doty). The amount paid to Mr. Doty in
      1999 is attributable to SIGCORP's performance in the previous year. For
      Mr. Hewitt, bonus payments shown in 1999 are attributable to Indiana
      Energy's performance for the 1999 fiscal year.

      The amounts shown for 2001 are attributable to the Company's At-Risk
      Compensation Plan for the performance period of January 1 to December 31,
      2001.


<PAGE>

      Included in year 2000 of the table are payments attributable to the
      Company's Executive Annual Incentive Plan for the performance period of
      April 1 to December 1, 2000 (Mr. Doty, $64,000; Mr. Hewitt, $92,000). As
      of the time of the preparation of Vectren's proxy statement for last
      year's meeting, these payments were not yet calculable and were not
      determined by the Compensation Committee until after the finalization and
      mailing of the proxy statement.

      At the close of the merger of Indiana Energy and SIGCORP into the Company
      on March 31, 2000, the existing annual incentive programs of the two
      companies were terminated and a "stub year" payout was made based on the
      portion of the performance cycle that had passed. For Indiana Energy, a
      prorated payout for six months, October 1, 1999 to March 31, 2000 was
      made. For Mr. Hewitt ($22,874), these bonus payments are included in year
      2000 in the table. For the SIGCORP Performance Plan, a prorated payout for
      three months, January 1, 2000 to March 31, 2000 was made. For Mr. Doty,
      this stub year bonus was $6,250. Also included in 2000 for Mr. Doty,
      ($25,875) is the payment attributable to SIGCORP's performance for the
      period January 1 to December 31, 1999.

(2)   The amounts shown in this column are dividends paid on restricted shares
      issued under the Vectren Corporation Executive Restricted Stock Plan
      (formerly the Indiana Energy Executive Restricted Stock Plan), which was
      adopted by the Company on March 31, 2000. No restricted shares were issued
      to executives in 2001. Mr. Doty did not participate in the Stock Plan
      prior to March 31, 2000.

(3)   For 1999, the options shown in this column were restated to reflect the
      conversion ratio of 1.333 described above in Section titled "Voting
      Securities." The options shown for year 2001 were issued under Vectren's
      At-Risk Compensation Plan. For further information, see the discussion
      above in Part B relating to "Long-term Incentive Compensation," and Part C
      of the Compensation Committee Report in Exhibit 99.1.

(4)   The amounts shown in this column represent the value of shares issued
      under the Vectren Corporation Restricted Stock Plan and for which
      restrictions were lifted in each year. At the time of the merger, Indiana
      Energy executives had restricted stock performance grants relating to open
      performance measurement periods. (Under normal circumstances, at the close
      of each performance cycle, Indiana Energy's Total Shareholder Return would
      have been compared to a peer group and the number of restricted shares
      granted would have been adjusted in accordance with the plan.) The Board
      concluded that it would be difficult, if not inappropriate, to use
      Vectren's performance to make adjustments to the prior grants. Based upon
      the frequency of past performance grants, the Board awarded 75 percent of
      the present value of the potential performance grants. The value of these
      grants is included in the 2000 row. Grants related to this closing cycle
      are: Mr. Hewitt - 2,086 shares, $41,397. The balance of the value in the
      2000 row reflects stock from other grant cycles for which restrictions
      were lifted in 2000 coincident with the consummation of the merger.

(5) The amount shown in this column represents several compensation elements.

     a)   Change-in-Control Walk-Away Provisions -- Several Indiana Energy
          officers had change-in-control agreements at the time of the merger.
          These agreements contained "walk-away" provisions that would have
          allowed officers to exercise their agreements anytime within a
          thirteen-month period following the close of the Vectren merger. The
          Board felt it was important to maintain the continuity of the officer
          group through the merger process and asked that all change-in-control


<PAGE>

          agreements be terminated at the close of the merger and new agreements
          be put in place. Recognizing the value of the walk-away provision, the
          Board felt that officers should be compensated for losing the right to
          exercise the provision. A settlement equal to 25 percent of the
          officers' annual base salary was made. Of the five officers discussed
          in this section, three received these settlements: Mr. Hewitt --
          $46,250. These amounts were paid in 2000.

     b)   Retirement Agreement -- This column contains payments made to Mr.
          Hewitt under the terms of a retirement agreement in which Vectren
          agreed to make the following severance payments to him: 2001 --
          $333,350; 2002 -- $901,180.

     c)   For Mr. Hewitt, the balance of this column reflects Company
          contributions to the retirement savings plan (2001 -- $8,544, 2000 --
          $9,857, 1999 -- $10,716) the dollar value of insurance premiums paid
          by, or on behalf of, Vectren and its subsidiaries with respect to
          split-dollar life insurance for the benefit of executive officers
          (2001 -- $5,634, 2000 -- $7,681, 1999 -- $7,674), credits for flexible
          spending accounts, wellness, and perfect attendance (2000 -- $150,
          1999 -- $486), deferred compensation contributions to restore employer
          contributions to the Company Retirement Savings Plan (2000 -- $563),
          and reimbursement for taxable expenses (2001 -- $510, 2000 -- $17,767,
          1999 -- $3,419).

     d)   For Mr. Doty, this column also contains income related to
          reimbursement for club dues and other executive benefits (2001 --
          $5,680, 2000 -- $2,520, 1999 -- $1,050), imputed earnings from
          automobile usage (2000 -- $1,167, 1999 -- $4,850), company
          contributions to the retirement savings plan (2001 -- $5,100 2000 --
          $5,100, 1999 -- $4,800), deferred compensation contributions to
          restore contributions to the company Retirement Savings Plan (2001 --
          $2,056, 2000 -- $900). At the close of the merger, officers coming
          from SIGCORP were no longer furnished with company automobiles
          (Indiana Energy executives were not furnished with company
          automobiles). As a result of the termination of this perquisite,
          officers with company cars were given a one-time automobile buyout of
          $8,392 in 2000.

<TABLE>
<CAPTION>
                                    TABLE II
                        OPTION GRANTS IN LAST FISCAL YEAR

                 Number of     % of Total
                   Shares        Options        Exercise
                 Underlying     Granted to      or Base
                Options/SARs   Employees in      Price                         Grant Date
       Name       Granted      Fiscal Year   (Per Share)($)  Expiration Date  Present Value
  ------------    -------      ------------  --------------  ---------------  -------------
                  (#) (1)                                                        ($) (2)
<S>              <C>    <C>        <C>           <C>             <C> <C>         <C>
  W.S. Doty      22,000/0          2.8           22.54           5/1/2011        121,440
  T.M. Hewitt         0/0           0              0                N/A             0
</TABLE>

(1)       In 2001 a total of 783,999 options were awarded to all plan
          participants under the Vectren Corporation At-Risk Compensation Plan.
          Stock options are exercisable in whole or in part from the date of the
          grant for a period of ten years. This grant has a vesting schedule
          pursuant to which 20 percent vests each year for the first five years.

(2)       The assumptions used for the Model are as follows: Volatility -- 25.79
          percent based on monthly stock prices for the period of March 1, 1998
          to February 28, 2001; Risk-free rate of return -- 5.75 percent;
          Dividend Yield -- 4.30 percent over the period of March 1, 1998 to
          February 28, 2001; and, a ten-year exercise term. Discount of .9159
          applied to reflect 5-year graduated vesting schedule. (Per binomial
          model as certified by an independent consultant.)

<TABLE>
<CAPTION>
                                    TABLE III
                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES
                           FROM 1/1/2001 TO 12/31/2001

                              Underlying
                              Unexercised   Number of Securities      Value of Unexercised
             Shares Acquired     Value     Underlying Unexercised         In-the-Money
 Name         On Exercise(#)  Realized($)  Options at Year-End(#)    Options as of 12/31/01($)
 ----        --------------   -----------  ----------------------    -------------------------
                                         Exercisable  Unexercisable  Exercisable  Unexercisable
<S>               <C>            <C>       <C>            <C>          <C>           <C>
 W.S. Doty        1,000          8,044     23,488         22,000       130,797       31,680
 T.M. Hewitt        0              0          0              0             0            0
</TABLE>


<PAGE>


                                    TABLE IV

               LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

                                               Estimated Future Payouts
                                           Under Non-Stock Price-Based Plans
     (a)            (b)            (c)          (d)        (e)        (f)
                                Performance
                 Number of        or Other
                  Shares;      Periods Until  Threshold   Target     Maximum
                  Units or       Maturation   Number of   Number    Number of
                Other Rights(1)  or Payout     Shares    of Shares   Shares
                --------------  -----------   ---------  ---------  ---------
  W.S. Doty          0              0            0          0           0
  T.M. Hewitt        0              0            0          0           0

(1)  No restricted shares were awarded to Executives during fiscal year 2001
     under the Vectren Corporation Restricted Stock Plan or the Vectren's
     At-Risk Compensation Plan.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security ownership of certain beneficial owners

As of December 31, 2001, the following stockholder was known to the management
to be the beneficial owner of more than five percent of the outstanding shares
of any class of voting securities as set forth below.

                 Name and Address of       Amount and Nature of
Title of Class   Beneficial Ownership        Beneficial Owner   Percent of Class
--------------   --------------------       ------------------- ----------------
Common        Vectren Utility Holdings, Inc   690.00001 Shares    100 percent
              20 N.W. Fourth Street           Registered Owner
              Evansville, IN 47708

Security ownership of management

The following table sets forth the beneficial ownership, as of December 31,
2001, of Vectren common stock, by each director and executive officer named in
Item 11 Executive Compensation. Also shown is the total ownership for such
persons as a group. Except as otherwise indicated, each individual has sole
voting and investment power with respect to the shares listed below.

                                  Shares Owned
Name of Beneficial Owner          Beneficially (1)
------------------------          ----------------
Niel C. Ellerbrook                       118,038  (2) (3) (4) (5)
Andrew E. Goebel                         188,518  (2) (3) (4) (5)
Jerome A. Benkert, Jr.                    25,787  (2) (4) (5)
Ronald E. Christian                       26,687  (2) (4) (5)
William S. Doty                           34,431  (2) (3) (4) (5)
Timothy M. Hewitt                          1,644  (2) (4)


All Directors and Executive Officers as a Group (6 Persons):  395,105 (1)

(1)  No individual director, executive officer, or directors and executive
     officers as a group owned beneficially as of December 31, 2001, more than 1
     percent of Vectren common stock.

(2)  Does not include derivative securities held under Vectren's Non-Qualified
     Deferred Compensation Plan. These derivative securities are in the form of
     phantom stock units which are valued as if they were Vectren common stock,
     but will be distributed in cash (not Vectren common stock) when paid. The
     amounts shown for the following individuals include the following amounts
     of phantom units:



<PAGE>


          Name of Individuals or Identity of Group      Phantom Stock Units
          ----------------------------------------      -------------------
          Niel C. Ellerbrook                                   50,854
          Andrew E. Goebel                                     10,019
          Jerome A. Benkert, Jr.                               15,525
          Ronald E. Christian                                  25,987
          William S. Doty                                         457
          Timothy M. Hewitt                                       112

          All Directors and Executive Officers as a
          Group (6 Persons)                                   102,954

(3)  Includes shares held by spouse or jointly with spouse.

(4)  Includes shares granted to executives under the Company's Executive
     Restricted Stock Plan, which are subject to certain transferability
     restrictions and forfeiture provisions.

(5)  Includes shares which the named individual has the right to acquire as of
     December 31, 2001, or within sixty (60) days thereafter, under the Vectren
     Stock Option Plan (formerly the SIGCORP, Inc. Stock Option Plan) or
     Vectren's At-Risk Compensation Plan.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Refer to Notes 4 and 5 of Indiana Gas' financial statements included in Part II
Item 8 Financial Statements and Supplementary Data for transactions with Vectren
and Vectren affiliates.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      List Of Documents Filed As Part Of This Report

          (1)  Financial Statements
               |X|  The financial statements and related notes of Indiana Gas
                    Company, Inc., together with the report of Arthur Andersen
                    LLP, appear in Part II Item 8 Financial Statements and
                    Supplementary Data of this Form 10-K.
               |X|  The financial statements and related notes of the Ohio
                    operations, together with the report of Arthur Andersen LLP,
                    appear in Part II Item 8 Financial Statements and
                    Supplementary Data of this Form 10-K.

          (2)  Financial Statement Schedules

               |X|  The financial statement schedule of Indiana Gas Company,
                    Inc., appears in Part II Item 8 Financial Statements and
                    Supplementary Data of this Form 10-K.
               |X|  The financial statement schedule of the Ohio operations,
                    appears in Part II Item 8 Financial Statements and
                    Supplementary Data of this Form 10-K.

          (3)  List of Exhibits

                  The Company has incorporated by reference herein certain
                  exhibits as specified below pursuant to Rule 12b-32 under the
                  Exchange Act.

                  Exhibits for the Company are listed in the Index to Exhibits
                  beginning on page 69.

                  Exhibits for the Company  attached to this filing are listed
                  on page 74.




<PAGE>


 (b) Reports On Form 8-K During The Last Calendar Quarter

On October 19, 2001, the Company filed a Current Report on Form 8-K with respect
to an Underwriting Agreement, Indenture and First Supplemental Indenture that
were issued by the Company's parent corporation, Vectren Utility Holdings, Inc.
         Item 5.  Other Events
         Item 7.  Exhibits
               1.0  -Press Release - Underwriting Agreement, dated October 12,
                    2001, between Vectren Utility Holdings, Inc., Indiana Gas
                    Company, Inc., Southern Indiana Gas and Electric Company,
                    Vectren Energy Delivery of Ohio, Inc. and Merrill Lynch,
                    Pierce, Fenner & Smith Incorporated.
               4.1  -Indenture, dated October 19, 2001, between Vectren Utility
                    Holdings, Inc., Indiana Gas Company, Inc., Southern Indiana
                    Gas and Electric Company, Vectren Energy Delivery of Ohio,
                    Inc. and U.S. Bank Trust National Association.
               4.2  -First Supplemental Indenture, dated October 19, 2001,
                    between Vectren Utility Holdings, Inc., Indiana Gas Company,
                    Inc., Southern Indiana Gas and Electric Company, Vectren
                    Energy Delivery of Ohio, Inc. and U.S. Bank Trust National
                    Association.

On October 24, 2001, Vectren Corporation filed a Current Report on Form 8-K with
respect to the release of financial information to the investment community
regarding the Company's results of operations, financial position and cash flows
for the three, nine, and twelve month periods ended September 30, 2001. The
financial information was released to the public through this filing.
         Item 5.  Other Events
         Item 7.  Exhibits
                    99.1 - Press Release - Third Quarter 2001 Vectren
                         Corporation Earnings
                    99.2 - Cautionary Statement for Purposes of the "Safe
                         Harbor" Provisions of the Private Securities Litigation
                         Reform Act of 1995





<PAGE>



                                   SIGNATURES

Pursuant to the requirements of 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 March 28, 2002                    /S/ Niel C. Ellerbrook
                                        -----------------------------------
                                        Niel C. Ellerbrook, Chairman and
                                        Chief Executive Officer, Director

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

     Signature                        Title                          Date

 /S/ Niel C. Ellerbrook       Chairman & Chief Executive        March 28, 2002
--------------------------    Officer, Director (Principal      ---------------
   Niel C. Ellerbrook         Executive Officer)


 /S/ Jerome A. Benkert, Jr.   Executive Vice President,         March 28, 2002
---------------------------   Chief Financial Officer, &        ---------------
   Jerome A. Benkert, Jr.     Treasurer, Director (Principal
                              Financial Officer)


 /S/ M. Susan Hardwick        Vice President & Controller       March 28, 2002
---------------------------   (Principal Accounting Officer)    ---------------
   M. Susan Hardwick


 /S/ Andrew E. Goebel         Director                          March 28, 2002
---------------------------                                     ---------------
   Andrew E. Goebel


 /S/ Ronald E. Christian     Director                           March 28, 2002
--------------------------                                      ---------------
  Ronald E. Christian





<PAGE>



                                INDEX TO EXHIBITS

2.  Plan Of Acquisition, Reorganization, Arrangement, Liquidation Or Succession

2.1  Asset Purchase Agreement dated December 14,1999 between Indiana Energy,
     Inc. and The Dayton Power and Light Company and Number-3CHK with a
     commitment letter for a 364-Day Credit Facility dated December 16,1999.
     (Filed and designated in Current Report on Form 8-K dated December 28,
     1999, File No. 1-9091, as Exhibit 2 and 99.1.)

3. Articles Of Incorporation And By-Laws

3.1  Amended and Restated Articles of Incorporation of Indiana Gas Company, Inc.
     (Filed and designated in Current Report on Form 10-K filed April 2, 2001,
     File No. 1-6494, as Exhibit 3.1.)

3.2  Code of By-Laws of Indiana Gas Company, Inc. (Filed and designated in
     Current Report on Form 10-K, filed April 2, 2001, File No. 1-6494, as
     Exhibit 3.2.)

4.   Instruments Defining The Rights Of Security Holders, Including Indentures

4.1  Indenture dated February 1, 1991, between Indiana Gas and U.S. Bank Trust
     National Association (formerly know as First Trust National Association,
     which was formerly know as Bank of America Illinois, which was formerly
     know as Continental Bank, National Association. Inc.'s. (Filed and
     designated in Current Report on Form 8-K filed February 15, 1991, File No.
     1-6494.); First Supplemental Indenture thereto dated as of February 15,
     1991. (Filed and designated in Current Report on Form 8-K filed February
     15, 1991, File No. 1-6494, as Exhibit 4(b).); Second Supplemental Indenture
     thereto dated as of September 15, 1991, (Filed and designated in Current
     Report on Form 8-K filed September 25, 1991, File No. 1-6494, as Exhibit
     4(b).); Third supplemental Indenture thereto dated as of September 15, 1991
     (Filed and designated in Current Report on Form 8-K filed September 25,
     1991, File No. 1-6494, as Exhibit 4(c).); Fourth Supplemental Indenture
     thereto dated as of December 2, 1992, (Filed and designated in Current
     Report on Form 8-K filed December 8, 1992, File No. 1-6494, as Exhibit
     4(b).); Fifth Supplemental Indenture thereto dated as of December 28, 2000,
     (Filed and designated in Current Report on Form 8-K filed December 27,
     2000, File No. 1-6494, as Exhibit 4.)

4.2  $350.0 million Credit Agreement arranged by Banc One Capital Markets, Inc.
     dated as of June 28, 2001 among Vectren Utility Holdings, Inc., as
     borrower; Indiana Gas Company, Inc. as guarantor; Southern Indiana Gas and
     Electric Company, as guarantor; Vectren Energy Delivery of Ohio, Inc., as
     guarantor; and Lenders: Banc One, NA, as Agent; Firstar Bank, N.A., as
     Co-Syndication Agent; ABN AMRO Bank, N.V., as Co-Syndication Agent; The
     Bank of New York, as Co-Documentation Agent; The Industrial Bank of Japan,
     Limited, as Co-Documentation Agent; the Fuji Bank, Limited, as
     Co-Documentation Agent; and National City Bank of Indiana, as Co-Agent.
     (Filed and designated on Form 10-K for the year ended December 31, 2001,
     File No. 1-16739, as Exhibit 4.8.)

4.3  Indenture dated October 19, 2001, between Vectren Utility Holdings, Inc.,
     Indiana Gas Company, Inc., Southern Indiana Gas and Electric Company,
     Vectren Energy Delivery of Ohio, Inc., and U.S. Bank Trust National
     Association. (Filed and designated in Form 8-K, dated October 19, 2001,
     File No. 1-16739, as Exhibit 4.1); First Supplemental Indenture, dated
     October 19, 2001, between Vectren Utility Holdings, Inc., Indiana Gas
     Company, Inc., Southern Indiana Gas and Electric Company, Vectren Energy
     Delivery of Ohio, Inc., and U.S. Bank Trust National Association. (Filed
     and designated in Form 8-K, dated October 19, 2001, File No. 1-16739, as
     Exhibit 4.2); Second Supplemental Indenture, between Vectren Utility
     Holdings, Inc., Indiana Gas Company, Inc., Southern Indiana Gas and
     Electric Company, Vectren Energy Delivery of Ohio, Inc., and U.S. Bank
     Trust National Association. (Filed and designated in Form 8-K, dated
     November 29, 2001, File No. 1-16739, as Exhibit 4.1).

<PAGE>

4.4  Promissory Note for Long-Term Loans dated October 19, 2001, between Indiana
     Gas Company, Inc. and Vectren Utility Holdings, Inc. (Filed herewith.)

4.5  Promissory Note for Long-Term Loans dated November 30, 2001, between
     Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc. (Filed
     herewith.)

9. Voting Trust Agreement

Not applicable.

10. Material Contracts

10.1 Vectren Corporation Retirement Savings Plan. (Filed and designated in Form
     10-Q for the quarterly period ended September 30, 2000, File No. 1-15467,
     as Exhibit 99.1.)

10.2 Vectren Corporation Combined Non-Bargaining Retirement Plan. (Filed and
     designated in Form 10-Q for the quarterly period ended September 30, 2000,
     File No. 1-15467, as Exhibit 99.2.)

10.3 Indiana Energy, Inc. Unfunded Supplemental Retirement Plan for a Select
     Group of Management Employees as amended and restated effective December 1,
     1998. (Filed and designated in Form 10-Q for the quarterly period ended
     December 31, 1998, File No. 1-9091, as Exhibit 10-G.)

10.4 Indiana Energy, Inc. Nonqualified Deferred Compensation Plan effective
     January 1, 1999. (Filed and designated in Form 10-Q for the quarterly
     period ended December 31, 1998, File No. 1-9091, as Exhibit 10-H.)

10.5 Formation Agreement among Indiana Energy, Inc., Indiana Gas Company, Inc.,
     IGC Energy, Inc., Indiana Energy Services, Inc., Citizens Gas & Coke
     Utility, Citizens Energy Services Corporation and ProLiance Energy, LLC,
     effective March 15, 1996. (Filed and designated in Form 10-Q for the
     quarterly period ended March 31, 1996, File No. 1-9091, as Exhibit 10-C.)

10.6 Gas Sales and Portfolio Administration Agreement between Indiana Gas
     Company, Inc. and ProLiance Energy, LLC, effective March 15, 1996, for
     services to begin April 1, 1996. (Filed and designated in Form 10-Q for the
     quarterly period ended March 31, 1996, File No. 1-6494, as Exhibit 10-C.)

10.7 Amended appendices to the Gas Sales and Portfolio Administration Agreement
     between Indiana Gas Company, Inc. and ProLiance Energy, LLC effective
     November 1, 1998. (Filed and designated in Form 10-Q for the quarterly
     period ended March 31, 1999, File No. 1-6494, as Exhibit 10-A.)

10.8 Amended appendices to the Gas Sales and Portfolio Administration Agreement
     between Indiana Gas Company, Inc. and ProLiance Energy, LLC effective
     November 1, 1999. (Filed and designated in Form 10-K for the fiscal year
     ended September 30, 1999, File No. 1-6494, as Exhibit 10-V.)

10.9 Gas Sales and Portfolio Administration Agreement between Vectren Energy
     Delivery of Ohio and ProLiance Energy, LLC, effective October 31, 2000, for
     services to begin November 1, 2000. (Filed and designated in Form 10-K for
     the year ended December 31, 2001, File No. 1-15467, as Exhibit 10.24.)

10.10 Indiana Energy, Inc. Executive Restricted Stock Plan as amended and
     restated effective October 1, 1998. (Filed and designated in Form 10-K for
     the fiscal year ended September 30, 1998, File No. 1-9091, as Exhibit
     10-O.)

10.11 Amendment to Indiana Energy, Inc. Executive Restricted Stock Plan
     effective December 1, 1998. (Filed and designated in Form 10-Q for the
     quarterly period ended December 31, 1998, File No. 1-9091, as Exhibit
     10-I.)


<PAGE>

10.12 Indiana Energy, Inc. Director's Restricted Stock Plan as amended and
     restated effective May 1, 1997. (Filed and designated in Form 10-Q for the
     quarterly period ended June 30, 1997, File No. 1-9091, as Exhibit 10-B.)

10.13 First Amendment to Indiana Energy, Inc. Directors' Restricted Stock Plan,
     effective December 1, 1998. (Filed and designated in Form 10-Q for the
     quarterly period ended December 31, 1998, File No. 1-9091, as Exhibit
     10-J.)

10.14 Second Amendment to Indiana Energy, Inc. Directors Restricted Stock Plan,
     renamed the Vectren Corporation Directors Restricted Stock Plan effective
     October 1, 2000. (Filed and designated in Form 10-K for the year ended
     December 31, 2000, File No. 1-15467, as Exhibit 10-34.)

10.15 Third Amendment to Indiana Energy, Inc. Directors Restricted Stock Plan,
     renamed the Vectren Corporation Directors Restricted Stock Plan effective
     March 28, 2001. (Filed and designated in Form 10-K for the year ended
     December 31, 2000, File No. 1-15467, as Exhibit 10-35.)

10.16 Vectren Corporation At Risk Compensation Plan effective May 1, 2001.
     (Filed and designated in Vectren Corporation's Proxy Statement dated March
     16, 2001, File No. 1-15467, as Appendix B.)

10.17 Vectren Corporation Non-Qualified Deferred Compensation Plan, as amended
     and restated effective January 1, 2001. (Filed and designated in Form 10-K
     for the year ended December 31, 2001, File No. 1-15467, as Exhibit 10.32.)

10.18 Vectren Corporation Employment Agreement between Vectren Corporation and
     Niel C. Ellerbrook dated as of March 31, 2000. (Filed and designated in
     Form 10-Q for the quarterly period ended June 30, 2000, File No. 1-15467,
     as Exhibit 99.1.)

10.19 Vectren Corporation Employment Agreement between Vectren Corporation and
     Andrew E. Goebel dated as of March 31, 2000(Filed and designated in Form
     10-Q for the quarterly period ended June 30, 2000, File No. 1-15467, as
     Exhibit 99.2.)

10.20 Vectren Corporation Employment Agreement between Vectren Corporation and
     Jerome A. Benkert, Jr. dated as of March 31, 2000. (Filed and designated in
     Form 10-Q for the quarterly period ended June 30, 2000, File No. 1-15467,
     as Exhibit 99.3.)

10.21 Vectren Corporation Employment Agreement between Vectren Corporation and
     Ronald E. Christian dated as of March 31, 2000. (Filed and designated in
     Form 10-Q for the quarterly period ended June 30, 2000, File No. 1-15467,
     as Exhibit 99.5.)

10.22 Vectren Corporation Employment Agreement between Vectren Corporation and
     Timothy M. Hewitt dated as of March 31, 2000. (Filed and designated in Form
     10-Q for the quarterly period ended June 30, 2000, File No. 1-15467, as
     Exhibit 99.6.)

10.23 Vectren Corporation Retirement Agreement between Vectren Corporation and
     Timothy M. Hewitt dated as of May 31, 2001. (Filed and designated in Form
     10-K for the year ended December 31, 2001, File No. 1-15467, as Exhibit
     10.39.)

10.24 Vectren Corporation Employment Agreement between Vectren Corporation and
     J. Gordon Hurst dated as of March 31, 2000. (Filed and designated in Form
     10-Q for the quarterly period ended June 30, 2000, File No. 1-15467, as
     Exhibit 99.7.)


<PAGE>

10.25 Vectren Corporation Retirement Agreement between Vectren Corporation and
     J. Gordon Hurst dated as of May 31, 2001. (Filed and designated in Form
     10-K for the year ended December 31, 2001, File No. 1-15467, as Exhibit
     10.41.)

10.26 Vectren Corporation Employment Agreement between Vectren Corporation and
     Richard G. Lynch dated as of March 31, 2000. (Filed and designated in Form
     10-Q for the quarterly period ended June 30, 2000, File No. 1-15467, as
     Exhibit 99.8.)

10.28 Vectren Corporation Employment Agreement between Vectren Corporation and
     William S. Doty dated as of April 30, 2001. (Filed and designated in Form
     10-K for the year ended December 31, 2001, File No. 1-15467, as Exhibit
     10.43.)

10.29 Vectren Corporation Retirement Agreement between Vectren Corporation and
     Tom J. Zabor dated as of May 31, 2001. (Filed and designated in Form 10-K
     for the year ended December 31, 2001, File No. 1-15467, as Exhibit 10.44.)

11. Statement Re Computation Of Per Share Earnings

Not applicable.

12. Statements Re Computation Of Ratios

Not applicable.

13. Annual Report To Security Holders, Form 10-Q Or Quarterly Report To Security
Holders

Not applicable.

16. Letter Re Change In Certifying Accountant

Not applicable.

18. Letter Re Change In Accounting Principles

Not applicable.

21. Subsidiary Of The Company

The list of the Company's significant subsidiary is attached hereto as Exhibit
21.1.

22. Published Report Regarding Matters Submitted To Vote Of Security Holders

Not applicable.

23. Consents Of Experts And Counsel

Not applicable.

24. Power Of Attorney

Not applicable.


<PAGE>

99. Additional Exhibits

99.1 Vectren Corporation Proxy Statement Pursuant to Section 14(a) of the
     Securities Exchange Act of 1934, but not including the Compensation
     Committee Report and Performance Graph. (Filed herewith.)

99.2 Agreement and Plan of Merger dated as of June 11,1999 among Indiana Energy,
     Inc., SIGCORP, Inc. and Vectren Corporation (the "Merger Agreement ").
     (Filed and designated in Form S-4 to (No. 333-90763) filed on November 12,
     1999, File No. 1-15467, as Exhibit 2.)

99.3 Amendment No.1 to the Merger Agreement dated December 14,1999 (Filed and
     designated in Current Report on Form 8-K filed December 16, 1999, File No.
     1-09091, as Exhibit 2.)

99.4 Amended and Restated Articles of Incorporation of Vectren Corporation
     effective March 31,2000. (Filed and designated in Current Report on Form
     8-K filed April 14, 2000, File No. 1-15467, as Exhibit 4.1.)

99.5 Current Report on Form 8-K, regarding replacement of Indiana Gas'
     independent auditors, dated March 22, 2002 (Filed herewith.)

99.6 Letter regarding audit quality representation of Arthur Andersen LLP for
     Indiana Gas (Filed herewith.)

99.7 Letter regarding audit quality representation of Arthur Andersen LLP for
     the Ohio operations (Filed herewith.)




<PAGE>


                            Indiana Gas Company, Inc.
                                 2001 Form 10-K
                                Attached Exhibits

The following Exhibits are attached hereto. See page 69 of this Annual Report on
Form 10-K for a complete list of exhibits.

Exhibit
Number         Document
 4.4      Promissory Note for Long-Term Loans dated October 19, 2001, between
          Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc.

 4.5      Promissory Note for Long-Term Loans dated November 30, 2001, between
          Indiana Gas Company, Inc. and Vectren Utility Holdings, Inc.

21.1      Subsidiary of the Company

99.1      Vectren Proxy Statement Pursuant to Section 14(a) of the Securities
          Exchange Act of 1934, but not including the Compensation Committee
          Report and Performance Graph.

99.5      Current Report on Form 8-K, regarding the replacement of the Company's
          independent auditors, dated March 22, 2002.

99.6      Letter regarding audit quality representation of Arthur Andersen LLP
          for Indiana Gas

99.7      Letter regarding audit quality representation of Arthur Andersen LLP
          for the Ohio operations