Item 2.02. Results of Operations and Financial Condition
On February 19, 2014 Vectren Corporation (the Company) released financial
information to the investment community regarding the Company's results of
operations for the three and twelve months ended December 31, 2013 and 2012. A
copy of the press release is furnished as Exhibit 99.1 and the supporting
information and schedules are furnished as Exhibit 99.2 to this Current Report
on Form 8-K.
Vectren Corporation is the parent company of Vectren Utility Holdings, Inc.
(Utility Holdings) and Vectren Enterprises, Inc. (Enterprises). Utility
Holdings is the intermediate holding company of the Company's three operating
public utilities, and Enterprises is the holding company for the Company's
In this press release, the per share earnings contributions of the Utility
Group, Nonutility Group excluding ProLiance in 2013, and Corporate and Other are
presented and are non-GAAP measures. Such per share amounts are based on the
earnings contribution of each group included in Vectren's consolidated results
divided by Vectren's basic average shares outstanding during the period. The
earnings per share of the groups do not represent a direct legal interest in the
assets and liabilities allocated to the groups, but rather represent a direct
equity interest in Vectren Corporation's assets and liabilities as a
whole. These non-GAAP measures are used by management to evaluate the
performance of individual businesses. In addition, other items giving rise to
period over period variances, such as weather, may be presented on an after tax
and per share basis. These amounts are calculated at a statutory tax rate
divided by Vectren's basic average shares outstanding during the period.
Accordingly, management believes these measures are useful to investors in
understanding each business' contribution to consolidated earnings per share and
in analyzing consolidated period to period changes and the potential for
earnings per share contributions in future periods. Reconciliations of the
non-GAAP measures to their most closely related GAAP measure of consolidated
earnings per share are included throughout this press release.
The press release also contains non-GAAP financial measures that exclude the
results related to the Company's investment in ProLiance in 2013. Management
uses consolidated net income, consolidated earnings per share, and Nonutility
Group net income, excluding ProLiance results, to evaluate its results.
Management believes analyzing underlying and ongoing business trends is aided by
the removal of the ProLiance results and the rationale for using such non-GAAP
measures is that, through the disposition by ProLiance of certain ProLiance
Energy assets, the Company has now exited the gas marketing business.
A material limitation associated with the use of these measures is that the
measures that exclude ProLiance results do not include all costs recognized in
accordance with GAAP. Management compensates for this limitation by prominently
displaying a reconciliation of these non-GAAP performance measures to their
closest GAAP performance measures. This display also provides financial
statement users the option of analyzing results as management does or by
analyzing GAAP results.
The following table reconciles consolidated net income, consolidated basic EPS,
and Nonutility Group net income to those results excluding ProLiance results.