Vectren 2012 Annual Report Download - page 85

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83
combined entities for comparative purposes only, and it may not be indicative of what actual results would have been if the
acquisition had taken place on the proforma date, or of future results.
Concurrent with the purchase agreement, the Company executed a lease arrangement at fair value for the Minnesota Limited
corporate headquarters, which is owned by a member of the Minnesota Limited management team and certain family
members. The lease obligates the Company to pay approximately $83,333 per month for 10 years along with certain executory
costs for taxes and other operating expenses. Pursuant to FASB guidance, the Company accounts for the obligation as an
operating lease, expensing the lease payments and executory costs as incurred.
6. Sale of Retail Gas Marketing Operations
On December 31, 2011, the Company sold its retail gas marketing operations performed through Vectren Source receiving cash
proceeds of approximately $84.3 million, excluding minor working capital adjustments. The sale, net of transaction costs,
resulted in a pretax gain of approximately $25.4 million, which is included in Other operating expenses in the Consolidated
Statements of Income. VEDO continues doing business with the third party purchaser of Vectren Source. This third party
continues to sell natural gas directly to customers in VEDO’s service territory, and VEDO purchases receivables and natural gas
from the third party. Vectren Source was a component of the Energy Marketing operating segment.
7. Investment in ProLiance Holdings, LLC
ProLiance Holdings, LLC (ProLiance), a nonutility energy marketing affiliate of Vectren and Citizens Energy Group (Citizens),
provides services to a broad range of municipalities, utilities, industrial operations, schools, and healthcare institutions located
throughout the Midwest and Southeast United States. ProLiance’s customers include Vectren’s Indiana utilities and former
nonutility gas supply operations as well as Citizens’ utilities. ProLiance’s primary businesses include gas marketing, gas
portfolio optimization, and other portfolio and energy management services. Consistent with its ownership percentage, Vectren
is allocated 61 percent of ProLiance’s profits and losses; however, governance and voting rights remain at 50 percent for each
member; and therefore, the Company accounts for its investment in ProLiance using the equity method of accounting. The
Company, including its former retail gas supply operations, contracted for a substantial portion of its natural gas purchases
through ProLiance in 2012, 2011, and 2010.
Summarized Financial Information
Year Ended December 31,
(In millions) 2012 2011 2010
Summarized Statement of Income information:
Revenues $ 1,001.3 $ 1,410.5 $ 1,497.0
Operating loss (34.8) (44.5) (3.1)
ProLiance's losses (38.3) (47.3) (3.7)
As of December 31,
(In millions) 2012 2011
Summarized balance sheet information:
Current assets $ 279.7 $ 381.9
Noncurrent assets 55.6 56.1
Current liabilities 215.1 298.5
Noncurrent liabilities 0.3 0.7
Members' equity 124.3 161.5
Accumulated other comprehensive loss (7.5) (26.0)
Noncontrolling interest 3.1 3.3
Vectren records its 61 percent share of ProLiance’s results in Equity in (losses) of unconsolidated affiliates. Interest expense
and income taxes associated with the investment are recorded separately within the statements of income in those line items.
As of December 31, 2012 and 2011, the Company’s investment balance is $73.9 million and $85.4 million, respectively. The