SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1994
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Commission file number 1-3132-2
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INDIANAPOLIS POWER & LIGHT COMPANY
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(Exact name of Registrant as specified in its charter)
Indiana 35-0413620
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
25 Monument Circle, P. O. Box 1595, Indianapolis, Indiana 46206
(Address of principal executive offices) (Zip Code)
317-261-8261
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding At June 30, 1994
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Common (Without Par Value) 17,206,630 Shares
INDIANAPOLIS POWER & LIGHT COMPANY
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INDEX
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Page No.
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PART I. FINANCIAL INFORMATION
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Statements of Income - Three Months Ended and
Six Months Ended June 30, 1994 and 1993 2
Balance Sheets - June 30, 1994 and
December 31, 1993 3
Statements of Cash Flows -
Six Months Ended June 30, 1994 and 1993 4
Notes to Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II. OTHER INFORMATION 9-10
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-1-
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Income
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 153,004 $ 145,638 $ 321,906 $ 303,505
Steam 8,133 7,489 20,409 18,664
--------------- --------------- --------------- ---------------
Total operating revenues 161,137 153,127 342,315 322,169
OPERATING EXPENSES:
Operation:
Fuel 40,736 35,845 85,324 76,392
Other 25,964 25,027 52,594 49,790
Power purchased 4,692 5,209 9,860 8,366
Purchased steam 1,819 2,018 4,019 4,376
Maintenance 20,831 20,810 35,846 34,403
Depreciation and amortization 20,727 19,473 40,948 38,842
Taxes other than income taxes 7,383 7,654 15,370 15,465
Income taxes - net 9,545 9,737 27,394 27,113
--------------- --------------- --------------- ---------------
Total operating expenses 131,697 125,773 271,355 254,747
--------------- --------------- --------------- ---------------
OPERATING INCOME 29,440 27,354 70,960 67,422
--------------- --------------- --------------- ---------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 749 522 1,612 888
Other - net (455) (159) (608) (643)
Income taxes - net 162 230 481 400
--------------- --------------- --------------- ---------------
Total other income and (deductions) - net 456 593 1,485 645
--------------- --------------- --------------- ---------------
INCOME BEFORE INTEREST CHARGES 29,896 27,947 72,445 68,067
--------------- --------------- --------------- ---------------
INTEREST CHARGES:
Interest 11,761 11,271 23,897 22,093
Allowance for borrowed funds used during construction (1,067) (875) (2,217) (1,615)
--------------- --------------- --------------- ---------------
Total interest charges 10,694 10,396 21,680 20,478
--------------- --------------- --------------- ---------------
NET INCOME 19,202 17,551 50,765 47,589
PREFERRED DIVIDEND REQUIREMENTS 796 796 1,591 1,591
--------------- --------------- --------------- ---------------
INCOME APPLICABLE TO COMMON STOCK $ 18,406 $ 16,755 $ 49,174 $ 45,998
=============== =============== =============== ===============
See notes to financial statements.
-2-
</TABLE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
June 30 December 31
1994 1993
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ASSETS
------
<S> <C> <C>
UTILITY PLANT:
Utility plant in service $ 2,383,916 $ 2,300,682
Less accumulated depreciation 890,565 876,054
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Net plant in service 1,493,351 1,424,628
Construction work in progress 129,375 168,480
Property held for future use 15,640 15,763
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Utility plant - net 1,638,366 1,608,871
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OTHER PROPERTY -
At cost, less accumulated depreciation 2,881 1,873
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CURRENT ASSETS:
Cash and cash equivalents 19,575 8,349
Accounts receivable (less allowance for doubtful
accounts 1994, $852 and 1993, $626) 46,016 52,847
Fuel - at average cost 34,153 35,213
Materials and supplies - at average cost 56,216 54,847
Prepayments and other current assets 2,600 3,240
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Total current assets 158,560 154,496
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DEFERRED DEBITS:
Unamortized Petersburg Unit #4 carrying charges 31,537 30,587
Unamortized redemption premiums and expenses on
debt and preferred stock 27,907 25,453
Other regulatory assets 40,882 32,954
Miscellaneous 16,184 16,072
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Total deferred debits 116,510 105,066
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TOTAL $ 1,916,317 $ 1,870,306
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CAPITALIZATION AND LIABILITIES
------------------------------
CAPITALIZATION:
Common shareholder's equity:
Common stock $ 324,537 $ 324,537
Premium on 4% cumulative preferred stock 1,363 1,363
Retained earnings 388,432 379,249
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Total common shareholder's equity 714,332 705,149
Cumulative preferred stock 51,898 51,898
Long-term debt (less current maturities
and sinking fund requirements) 634,107 532,260
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Total capitalization 1,400,337 1,289,307
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CURRENT LIABILITIES:
Notes payable - banks and commercial paper 5,000 90,000
Current maturities and sinking fund requirements 7,850 8,729
Accounts payable 83,877 74,187
Dividends payable 20,813 20,024
Payrolls accrued 6,007 4,505
Taxes accrued 16,778 21,377
Interest accrued 14,953 11,150
Other current liabilities 5,923 5,316
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Total current liabilities 161,201 235,288
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DEFERRED CREDITS:
Accumulated deferred income taxes - net 272,794 270,182
Unamortized investment tax credit 55,396 57,029
Accrued postretirement benefits 25,464 17,668
Miscellaneous 1,125 832
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Total deferred credits 354,779 345,711
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COMMITMENTS AND CONTINGENCIES (NOTE 5)
TOTAL $ 1,916,317 $ 1,870,306
============= =============
See notes to financial statements.
</TABLE>
-3-
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30
1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income $ 50,765 $ 47,589
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 41,761 39,495
Deferred income taxes and investment tax
credit adjustments, net (575) (1,542)
Allowance for funds used during construction (3,829) (2,503)
Decrease (increase) in certain assets:
Accounts receivable 6,831 (8,389)
Fuel, materials and supplies (309) 3,380
Other current assets 640 (1,612)
Increase (decrease) in certain liabilities:
Accounts payable 9,690 592
Taxes accrued (4,599) (3,547)
Other liabilities 6,220 (722)
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Net cash provided by operating activities 106,595 72,741
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CASH FLOWS FROM INVESTING:
Construction expenditures (67,087) (60,349)
Other (428) (5,642)
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Net cash used in investing activities (67,515) (65,991)
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CASH FLOWS FROM FINANCING:
Issuance of long-term debt 180,000 41,850
Retirement of long-term debt - including premiums (79,792) (43,078)
Short-term debt - net (85,000) 31,500
Dividends paid (40,809) (39,245)
Other (2,253) (590)
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Net cash used in financing activities (27,854) (9,563)
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Net increase (decrease) in cash and cash equivalents 11,226 (2,813)
Cash and cash equivalents at beginning of period 8,349 10,581
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Cash and cash equivalents at end of period $ 19,575 $ 7,768
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 18,324 $ 21,629
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Income taxes $ 30,030 $ 32,789
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See notes to financial statements.
-4-
</TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
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NOTES TO FINANCIAL STATEMENTS
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1. Indianapolis Power & Light Company is a subsidiary of IPALCO
Enterprises, Inc.
2. In the opinion of management these statements reflect all
adjustments, consisting of only normal recurring accruals, which
are necessary to a fair statement of the results for the interim
periods covered by such statements. Due to the seasonal nature of
the electric utility business, the annual results are not
generated evenly by quarter during the year. Certain amounts from
prior year financial statements have been reclassified to conform
to the current year presentation. These financial statements and
notes should be read in conjunction with the audited financial
statements included in IPL's 1993 Annual Report on Form 10-K.
3. LONG-TERM DEBT
On February 3, 1994, IPL issued First Mortgage Bonds, 6.05%
Series, due 2004, in the principal amount of $80 million. The net
proceeds were used to redeem on March 1, 1994, IPL's $33.2 million
First Mortgage Bonds, 7.40% Series, due 2002, at a redemption
price of 101.79%, and to redeem on March 15, 1994, IPL's $19.75
million First Mortgage Bonds, 7 1/8% Series, due 1998, at a
redemption price of 101.20% and IPL's $25.2 million First Mortgage
Bonds, 7.65% Series, due 2003, at a redemption price of 102.11%.
Accrued interest was also paid at the time of redemption.
Also, on February 3, 1994, IPL issued First Mortgage Bonds, 7.05%
Series, due 2024, in the principal amount of $100 million. The
net proceeds were used in part to repay outstanding unsecured
promissory notes, and the remaining amount will be used to finance
future construction costs.
4. RATE MATTERS
In the retail electric rate case now pending before the Indiana
Utility Regulatory Commission, a prehearing conference was held on
June 8, 1994, and an order was issued July 20, 1994, establishing
a test year ending June 30, 1994.
5. COMMITMENTS AND CONTINGENCIES (See Item 1. Legal Proceedings of
Part II -- Other Information)
-5-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Overview
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The Board of Directors of Indianapolis Power & Light Company
(IPL) on May 31, 1994, declared a quarterly dividend on common stock
of $20,010,662. The dividend was paid by IPL to IPALCO Enterprises,
Inc. in July, 1994.
Internally generated cash provided by IPL's operations and the
issuance of long-term debt were used primarily for construction
expenditures and the repayment of short-term and long-term debt during
the first six months of 1994.
On February 3, 1994, IPL issued First Mortgage Bonds, 6.05%
Series, due 2004, in the principal amount of $80 million. The net
proceeds were used to redeem on March 1, 1994, IPL's $33.2 million
First Mortgage Bonds, 7.40% Series, due 2002, at a redemption price of
101.79%, and to redeem on March 15, 1994, IPL's $19.75 million First
Mortgage Bonds, 7 1/8% Series, due 1998, at a redemption price of
101.20% and IPL's $25.2 million First Mortgage Bonds, 7.65% Series,
due 2003, at a redemption price of 102.11%. Accrued interest was also
paid at the time of redemption.
Also, on February 3, 1994, IPL issued First Mortgage Bonds, 7.05%
Series, due 2024, in the principal amount of $100 million. The net
proceeds were used in part to repay outstanding unsecured promissory
notes, and the remaining amount will be used to finance future
construction costs.
Future Rate Relief
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IPL filed a petition with the Indiana Utility Regulatory
Commission on April 8, 1994, seeking approval to increase IPL's
electric rates. The specific amount of the requested rate increase
will not be determined until "test year" data is prepared. It is
estimated, however, that the overall request will probably range from
12 to 16 percent. Hearings in this proceeding are scheduled to
commence the first week of February 1995. IPL last received an order
from the IURC authorizing an increase in electric basic rates and
charges in August, 1986. A number of expenditures and investments are
now needed to supply electricity to the growing Central Indiana
economy and to meet an increasing number of federal and state laws and
regulations. Among these are: two new peaking combustion turbines, a
power purchase agreement with Indiana Michigan Power Company (IMP),
new demand side management programs, and new sulfur dioxide emission
control equipment. A complete description of these projects is
included in the Management's Discussion and Analysis of IPL's 1993
Annual Report on Form 10-K.
RESULTS OF OPERATIONS
Comparison of Quarters Ended June 30, 1994 and June 30, 1993
------------------------------------------------------------
Income applicable to common stock increased $1.7 million during
the second quarter of 1994 from the comparable 1993 period. The
following discussion highlights the factors contributing to this
result.
-6-
Operations
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The increase in electric operating revenues of $7.4 million was
primarily a result of the warmer weather during this quarter compared
to the same period one year ago. Contributing to the higher revenues
was an increase in retail electric kilowatthour (KWH) sales of
$4.6 million, and higher fuel cost adjustment recoveries of $2.4
million. Sales for resale also increased $.4 million, due to
increased energy sales to neighboring utilities. The following table
is a summary of KWH sales to each customer class:
Retail KWH Sales By Customer Class
In Millions of KWHs
Three Months Ended June 30,
1994 1993 % Change
------ ------ --------
Residential 844.3 789.2 7.0%
Commercial 491.0 491.7 (0.1)
Industrial 1,543.2 1,523.4 1.3
Other 17.4 15.5 12.3
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Total Retail 2,895.9 2,819.8 2.7
======= =======
Fuel costs increased $4.9 million due to increased prices of $1.9
million and an increase in fuel consumption of $1.7 million -- as a
result of the warmer weather -- as well as increased deferred fuel
costs of $1.3 million. Power purchased decreased $.5 million due to
decreased energy purchases for 1994. Purchased steam decreased $.2
million due to a decreased need for purchases from an independent
resource recovery system located within the city of Indianapolis.
As a result of the foregoing, utility operating income increased
7.6% over last year, to $29.4 million.
Other Income and Deductions
- ---------------------------
Allowance for equity funds used during construction increased $.2
million due to an increased construction base.
Other - net decreased $.3 million as a result of an increase in
net expenses.
Interest and Other Charges
- --------------------------
Allowance for borrowed funds used during construction increased
$.2 million due to an increased construction base.
Comparison of Six Months Ended June 30, 1994 and June 30, 1993
--------------------------------------------------------------
Income applicable to common stock increased $3.2 million during
the first six months of 1994 from the comparable 1993 period. The
following discussion highlights the factors contributing to this
result.
-7-
Operations
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The increase in electric operating revenues of $18.4 million was
the result of a combination of colder weather during the first quarter
of 1994 and warmer weather during the second quarter of 1994 compared
to the same period one year ago. Contributing to the higher revenues
was an increase in retail electric kilowatthour (KWH) sales of $13.7
million, and higher fuel cost adjustment recoveries of $2.1 million.
Sales for resale also increased $2.6 million, due to increased energy
sales to neighboring utilities. The following table is a summary of
KWH sales to each customer class:
Retail KWH Sales By Customer Class
In Millions of KWHs
Six Months Ended June 30,
1994 1993 % Change
------ ------ --------
Residential 2,127.9 1,959.5 8.6%
Commercial 1,130.6 1,089.0 3.8
Industrial 3,047.2 2,966.2 2.7
Other 38.6 36.2 6.6
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Total Retail 6,344.3 6,050.9 4.8
======= =======
Fuel costs increased $8.9 million due to an increase in fuel
consumption of $4.7 million as well as increased prices of $2.7
million and increased deferred fuel costs of $1.5 million. Other
operating expenses increased $2.8 million primarily due to increased
administrative and general expenses of $1.4 million, increased
miscellaneous steam power station expenses at Petersburg Plant of $.7
million, increased electric and steam distribution expenses of $.4
million, and increased other production expenses of $.3 million.
Power purchased increased $1.5 million due to increased capacity
payments to IMP of $1.8 million, partially offset by $.3 million due
to decreased purchases of short-term energy from other utilities.
Purchased steam decreased $.4 million due to a decreased need for
purchases from an independent resource recovery system located within
the city of Indianapolis.
As a result of the foregoing, utility operating income increased
5.2% over last year, to $71.0 million.
Other Income and Deductions
- ---------------------------
Allowance for equity funds used during construction increased $.7
million due to an increased construction base.
Interest and Other Charges
- --------------------------
Interest expense increased $1.8 million primarily due to the
issuance of $180 million long-term debt on February 3, 1994. The
increase in interest expense for year-to-date 1994 was partially
offset by decreased expense as a result of refinancing certain first
mortgage bonds during 1994 and 1993 with more favorable terms.
Allowance for borrowed funds used during construction increased
$.6 million due to an increased construction base.
-8-
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
- --------------------------
There were no further changes to the Legal Proceedings as set forth in
IPL's Annual Report on Form 10-K and in IPL's Form 10-Q for the quarter
ended March 31, 1994, except as follows:
With respect to the appeal of the Indiana Utility Regulatory Commission's
(IURC) order approving IPL's Environmental Compliance Plan now pending in
the Indiana Court of Appeals, on June 17, 1994, the Office of Utility
Consumer Counselor (OUCC), the Citizens Action Coalition and the Industrial
Intervenors Group filed their respective appellant briefs. IPL was granted
an extension to September 6, 1994 to file its appellee's brief.
In the retail electric rate case now pending before the IURC, a prehearing
conference was held on June 8, 1994, and an order was issued July 20, 1994,
establishing a test year ending June 30, 1994. The order further
established the following procedural schedule: October 11, 1994, IPL
prefiles its case-in-chief; February 7, 1995, hearings commence on IPL's
case-in-chief; April 21, 1995, the OUCC and intervenors prefile their
respective cases-in-chief; May 26, 1995, IPL prefiles its Supplemental
testimony and rebuttal case; June 16, 1995, OUCC and intervenors file
cross answering and surrebuttal testimony; July 10, 1995, hearings commence
on OUCC and intervenors cases-in-chief and all Supplemental and rebuttal
testimony. A hearing for the public pursuant to Indiana Statute will be
held between April 21, 1995 and July 10, 1995 on a date later to be
determined by the IURC.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
a) The IPL Annual Meeting of Shareholders was held April 20, 1994.
b) At such meeting each of the following named directors received
17,206,630 votes for election which is equal to the total number
of shares of Common Stock of IPL outstanding on the record date
for such meeting, all of which are owned by IPALCO, its parent
(no common shareholder votes were withheld and no votes were
cast by shareholders of IPL's Cumulative Preferred Stock):
Joseph D. Barnette, Jr. Ramon L. Humke
Robert A. Borns Sam H. Jones
Mitchell E. Daniels Andre B. Lacy
Rexford C. Early L. Ben Lytle
Otto N. Frenzel III Michael S. Maurer
Max L. Gibson Thomas M. Miller
Edwin J. Goss Sallie W. Rowland
Earl B. Herr, Jr. Thomas H. Sams
John R. Hodowal
Item 6. Exhibits and Reports on Form 8-K
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None
-9-
Signatures
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Pursuant to the requirements 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.
INDIANAPOLIS POWER & LIGHT COMPANY
------------------------------------
(Registrant)
Date: August 12, 1994 /s/ John R. Brehm
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John R. Brehm
Senior Vice President
Finance and Information Services
Date: August 12, 1994 /s/ Stephen J. Plunkett
------------------ -----------------------------
Stephen J. Plunkett
Controller
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