<PAGE>
FORM 10-Q
SECURlTlES AND EXCHANGE COMMlSSlON
WASHINGTON, D. C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended
March 31, 1996 Commission File Number 1-3132-2
INDIANAPOLIS POWER & LIGHT COMPANY
(Exact name of Registrant as specified in its charter)
Indiana 35-0413620
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Monument Circle
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 317-261-8261
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 the filing requirements for at least the
past 90 days. Yes X No
--------- ---------
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 March 31, 1996
----- -----------------------------
Common (Without Par Value) 17,206,630 Shares
<PAGE>1
INDIANAPOLIS POWER & LIGHT COMPANY
----------------------------------
INDEX
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Page No.
--------
PART I. FINANCIAL INFORMATION
- -------------------------------
Statements of Income -
Three Months Ended March 31, 1996 and 1995 2
Balance Sheets - March 31, 1996 and
December 31, 1995 3
Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 4
Notes to Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II. OTHER INFORMATION 9-11
- ---------------------------
<PAGE>2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Income
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1996 1995
------------- -------------
<S> <C> <C>
OPERATING REVENUES:
Electric $ 183,938 $ 164,347
Steam 12,508 11,171
------------- -------------
Total operating revenues 196,446 175,518
------------- -------------
OPERATING EXPENSES:
Operation:
Fuel 44,423 43,667
Other 32,957 27,415
Power purchased 4,730 3,879
Purchased steam 2,152 1,984
Maintenance 13,814 14,691
Depreciation and amortization 23,706 21,381
Taxes other than income taxes 8,961 8,635
Income taxes - net 20,859 15,588
------------- -------------
Total operating expenses 151,602 137,240
------------- -------------
OPERATING INCOME 44,844 38,278
------------- -------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 1,851 1,051
Other - net (514) (379)
Income taxes - net 186 185
------------- -------------
Total other income - net 1,523 857
------------- -------------
INCOME BEFORE INTEREST CHARGES 46,367 39,135
------------- -------------
INTEREST CHARGES:
Interest 12,212 12,823
Allowance for borrowed funds used during construction (1,725) (1,300)
------------- -------------
Total interest charges 10,487 11,523
------------- -------------
NET INCOME 35,880 27,612
PREFERRED DIVIDEND REQUIREMENTS 795 795
------------- -------------
INCOME APPLICABLE TO COMMON STOCK $ 35,085 $ 26,817
============= =============
See notes to financial statements.
</TABLE>
<PAGE>3
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
March 31 December 31
1996 1995
------------- ---------------
ASSETS
------
<S> <C> <C>
UTILITY PLANT:
Utility plant in service $ 2,521,662 $ 2,517,790
Less accumulated depreciation 1,002,193 984,910
-------------- --------------
Utility plant in service - net 1,519,469 1,532,880
Construction work in progress 266,957 249,249
Property held for future use 9,878 9,878
-------------- --------------
Utility plant - net 1,796,304 1,792,007
-------------- --------------
OTHER PROPERTY -
At cost, less accumulated depreciation 4,434 4,454
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 20,128 9,985
Accounts receivable (less allowance for doubtful
accounts 1996, $815 and 1995, $786) 55,004 57,152
Fuel - at average cost 28,695 29,894
Materials and supplies - at average cost 58,359 56,547
Prepayments and other current assets 3,195 4,095
-------------- --------------
Total current assets 165,381 157,673
-------------- --------------
DEFERRED DEBITS:
Regulatory assets 142,772 142,711
Miscellaneous 12,436 11,971
-------------- --------------
Total deferred debits 155,208 154,682
-------------- --------------
TOTAL $ 2,121,327 $ 2,108,816
============== ==============
<PAGE>3 continued
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 435,259 421,229
-------------- --------------
Total common shareholder's equity 761,159 747,129
Cumulative preferred stock 51,898 51,898
Long-term debt (less current maturities
and sinking fund requirements) 669,008 669,000
-------------- --------------
Total capitalization 1,482,065 1,468,027
-------------- --------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper 50,500 65,022
Current maturities and sinking fund requirements 15,150 15,150
Accounts payable and accrued expenses 61,031 73,053
Dividends payable 21,868 21,263
Taxes accrued 45,684 19,023
Interest accrued 11,748 14,324
Other current liabilities 16,033 16,092
-------------- --------------
Total current liabilities 222,014 223,927
-------------- --------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
Accumulated deferred income taxes - net 296,393 293,748
Unamortized investment tax credit 49,901 50,636
Accrued postretirement benefits 28,407 30,517
Accrued pension benefits 33,151 31,834
Miscellaneous 9,396 10,127
-------------- --------------
Total deferred credits and other long-term liabilities 417,248 416,862
-------------- --------------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
TOTAL $ 2,121,327 $ 2,108,816
============== ==============
See notes to financial statements.
</TABLE>
<PAGE>4
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1996 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income $ 35,880 $ 27,612
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 26,576 21,659
Deferred income taxes and investment tax credit adjustments - net (728) 2,342
Allowance for funds used during construction (3,576) (2,352)
Premiums on redemptions of debt - (800)
Change in certain assets and liabilities:
Accounts receivable 2,148 1,442
Fuel, materials and supplies (613) (2,882)
Accounts payable (12,022) (4,161)
Taxes accrued 26,661 20,095
Accrued pension benefits 1,317 1,576
Other - net (3,541) 1,745
-------------- --------------
Net cash provided by operating activities 72,102 66,276
-------------- --------------
CASH FLOWS FROM INVESTING:
Construction expenditures (22,996) (44,387)
Other (3,086) (6,979)
-------------- --------------
Net cash used in investing activities (26,082) (51,366)
-------------- --------------
CASH FLOWS FROM FINANCING:
Issuance of long-term debt - 40,000
Retirement of long-term debt - (40,000)
Short-term debt - net (14,522) 4,301
Dividends paid (21,244) (20,806)
Other (111) (61)
-------------- --------------
Net cash used in financing activities (35,877) (16,566)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 10,143 (1,656)
Cash and cash equivalents at beginning of period 9,985 7,835
-------------- --------------
Cash and cash equivalents at end of period $ 20,128 $ 6,179
============== ==============
<PAGE>4 continued
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 12,883 $ 15,271
============== ==============
Income taxes $ 1,625 $ (4,558)
============== ==============
See notes to financial statements.
</TABLE>
<PAGE>5
INDIANAPOLIS POWER & LIGHT COMPANY
----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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 1995 Annual Report on
Form 10-K.
3. LONG-TERM DEBT
On April 1, 1996, IPL retired First Mortgage Bonds, 5 1/8% Series, due
April 1, 1996, in the principal amount of $15.0 million.
4. COMMITMENTS AND CONTINGENCIES (See Item 1. Legal Proceedings of Part II
-- Other Information)
<PAGE>6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Overview
- --------
The Board of Directors of Indianapolis Power & Light Company (IPL) on
February 27, 1996, declared a quarterly dividend on common stock of
$21,052,910. The dividend was paid by IPL to IPALCO Enterprises, Inc. in
April, 1996.
IPL's capital requirements are primarily related to construction
expenditures needed to meet customers' needs for electricity and steam, as
well as expenditures for compliance with the federal Clean Air Act.
Construction expenditures (excluding allowance for funds used during
construction) totaled $23.0 million during the first quarter ended March
31, 1996, representing a $21.4 million decrease from the comparable period
in 1995. This decrease is mostly related to reduced construction spending
in the first quarter of 1996 compared to 1995 for the scrubbers at IPL's
Petersburg Generating Station as the construction project nears its
completion in mid-1996. Internally generated cash provided by IPL's
operations were used for construction expenditures during the first quarter
of 1996. As a result of IPL's new basic electric rates and charges and
reduced capital spending, IPL anticipates continued improving liquidity.
The five-year construction program has not changed from that
previously reported in IPL's 1995 Form 10-K report. (See "Cost of
Construction Program" in Item 7 of Management's Discussion and Analysis of
Financial Condition and Results of Operations in IPL's 1995 Form 10-K
report for further discussion).
On April 1, 1996, IPL retired First Mortgage Bonds, 5 1/8% Series, due
April 1, 1996, in the principal amount of $15.0 million.
RESULTS OF OPERATIONS
Comparison of Quarters Ended March 31, 1996 and March 31, 1995
--------------------------------------------------------------
Income applicable to common stock increased $8.3 million during the
first quarter of 1996 from the comparable 1995 period. The following
discussion highlights the factors contributing to this increase.
Operating Revenues
- ------------------
Operating revenues during the first quarter of 1996 increased $20.9
million from the comparable 1995 period. The increase in revenues resulted
from the following:
<PAGE>7
Increase (Decrease)
from Comparable Period
----------------------
Three Months Ended
------------------
(Millions of Dollars)
Increase in base electric rates $ 10.3
Additional Kilowatt-hour (KWH) sales - net of fuel 10.0
Fuel revenues (2.2)
Steam revenues 1.3
Sales for resale 1.2
Other revenues 0.3
------
Total change in operating revenues $ 20.9
======
The increase in base rate electric revenues is the result of new
tariffs, effective September 1, 1995, designed to produce $35-million
additional annual revenues. The increase in retail KWH sales during the
first quarter of 1996, as compared to the same period in 1995, reflects
customer growth and increased sales resulting primarily from colder weather
in the first quarter of 1996. Heating degree days in the Indianapolis area
increased 15 percent for the first quarter, over the same period in 1995.
The changes in fuel revenues in 1996 from the prior year reflect changes in
total fuel costs billed customers. The increased wholesale sales during
the first quarter of 1996, as compared to the same quarter in 1995, reflect
energy requirements of other utilities.
Operating Expenses
- ------------------
Other operating expenses in the first quarter of 1996 increased from
the same period a year ago by $5.5 million. The increase was primarily due
to expensing $3.9 million of postretirement benefit expenses which
commenced coincident with the electric rate case settlement, an increase in
miscellaneous steam power operating expenses at the Petersburg plant of
$0.7 million, an increase in customer service and informational and sales
expenses of $0.6 million and an increase in overhead lines expenses of $0.5
million, partially offset by a decrease in other electric distribution
expenses of $0.2 million.
Power purchased increased $0.9 million during the first quarter of
1996 from the comparable period in 1995 primarily due to increased
purchases of firm-peaking energy.
Purchased steam increased $0.2 million in the first quarter of 1996
from the same quarter last year due to an increase in therms purchased from
an independent resource recovery system located within the city of
Indianapolis.
Maintenance expenses in the first quarter of 1996 decreased from the
comparable period in 1995 by $0.9 million. The decrease reflects decreased
unit overhaul expenses of $1.3 million and decreased transmission expense
of $0.2 million, partially offset by increased general plant expenses of
$0.4 million and increased other miscellaneous maintenance expenses of $0.2
million.
Depreciation and amortization expense increased $2.3 million in the
first quarter of 1996 over the same period in 1995. This increase resulted
from the amortization of property-related regulatory deferrals effective
with the September 1, 1995, electric rate increase and increases in the
depreciable utility plant balances.
Income taxes - net increased $5.3 million during the first quarter of
1996 over the comparable quarter last year primarily due to the increase in
pretax utility operating income.
<PAGE>8
As a result of the foregoing, utility operating income increased 17.2%
from last year, to $44.8 million.
Other Income and Deductions
- ---------------------------
Allowance for equity funds used during construction increased $0.8
million during the first quarter of 1996 from the same period in 1995
primarily due to carrying charges on regulatory assets resulting from the
electric rate case settlement.
Other - net decreased $0.1 million during the first quarter of 1996
over last year, primarily due to a decrease in investment income.
Interest Charges
- ----------------
Interest expense decreased $0.6 million in the first quarter of 1996
from the same period last year. The decrease was primarily the result of
refinancing certain first mortgage bonds during 1995 with more favorable
terms, partially offset by an increase in short-term debt borrowings.
Allowance for borrowed funds used during construction increased during
the first quarter of 1996 from the comparable period in 1995 by $0.4
million due to an increased construction base, partially offset by
decreased carrying charges on regulatory assets.
<PAGE>9
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- --------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits. Copies of documents listed below which are identified
with an asterisk (*) are incorporated herein by reference and
made a part hereof. The management contracts or compensatory plans
are marked with a double asterisk (**) after the description of the
contract or plan.
3.1* Articles of Incorporation of Indianapolis Power & Light Company, as
amended. (Form 10-Q for quarter ended 3-31-91.)
3.2* Bylaws of Indianapolis Power & Light Company dated January 25, 1994.
(Form 10-Q for quarter ended 3-31-94.)
4.1* Mortgage and Deed of Trust, dated as of May 1, 1940, between
Indianapolis Power & Light Company and American National Bank and
Trust Company of Chicago, Trustee, as supplemented and modified by 42
Supplemental Indentures.
Exhibits D in File No. 2-4396; B-1 in File No. 2-6210; 7-C File
No. 2-7944; 7-D in File No. 2-72944; 7-E in File No. 2-8106; 7-F in
File No. 2-8749; 7-G in File No. 2-8749; 4-Q in File No. 2-10052; 2-I
in File No. 2-12488; 2-J in File No. 2-13903; 2-K in File No. 2-22553;
2-L in File No. 2-24581; 2-M in File No. 2-26156; 4-D in File No. 2-
26884; 2-D in File No. 2-38332; Exhibit A to Form 8-K for October
1970; Exhibit 2-F in File No. 2-47162; 2-F in File No. 2-50260; 2-G in
File No. 2-50260; 2-F in File No. 2-53541; 2E in File No. 2-55154; 2E
in File No. 2-60819; 2F in File No. 2-60819; 2-G in File No. 2-60819;
Exhibit A to Form 10-Q for the quarter ended 9-30-78 File No. 1-3132;
13-4 in File No. 2-73213; Exhibit 4 in File No. 2-93092. Twenty-
eighth, Twenty-ninth and Thirtieth Supplemental Indentures. (Form 10-K
dated for the year ended December 31, 1985.)
4.2* Thirty-First Supplemental Indenture dated as of October 1, 1986.
(Form 10-K for year ended 12-31-86.)
4.3* Thirty-Second Supplemental Indenture dated as of June 1, 1989. (Form
10-K for year ended 12-31-89.)
4.4* Thirty-Third Supplemental Indenture dated as of August 1, 1989. (Form
10-K for year ended 12-31-89.)
4.5* Thirty-Fourth Supplemental Indenture dated as of October 15, 1991.
(Form 10-K for year ended 12-31-91.)
4.6* Thirty-Fifth Supplemental Indenture dated as of August 1, 1992. (Form
10-K for year ended 12-31-92.)
4.7* Thirty-Sixth Supplemental Indenture dated as of April 1, 1993. (Form
10-Q for quarter ended 9-30-93.)
<PAGE>10
4.8* Thirty-Seventh Supplemental Indenture dated as of October 1, 1993.
(Form 10-Q for quarter ended 9-30-93.)
4.9* Thirty-Eighth Supplemental Indenture dated as of October 1, 1993.
(Form 10-Q for quarter ended 9-30-93.)
4.10* Thirty-Ninth Supplemental Indenture dated as of February 1, 1994.
(Form 8-K, dated 1-25-94.)
4.11* Fortieth Supplemental Indenture dated as of February 1, 1994.
(Form 8-K, dated 1-25-94.)
4.12* Forty-First Supplemental Indenture dated as of January 15, 1995.
(Exhibit 4.12 to the Form 10-K dated 12-31-94.)
4.13* Forty-Second Supplemental Indenture dated as of October 1, 1995.
(Exhibit 4.12 to the Form 10-K dated 12-31-95.)
21.1* Subsidiaries of the Registrant. (Exhibit 21.1 to the Form 10-K
dated 12-31-95.)
27.1 Financial Data Schedule
b) Reports on Form 8-K.
None.
<PAGE>11
Signatures
----------
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: May 14, 1996 /s/ John R. Brehm
-------------------- -----------------------------
John R. Brehm
Senior Vice President
Finance and Information Services
Date: May 14, 1996 /s/ Stephen J. Plunkett
-------------------- -----------------------------
Stephen J. Plunkett
Controller
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000050217
<NAME> INDIANAPOLIS POWER & LIGHT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,796,304
<OTHER-PROPERTY-AND-INVEST> 4,434
<TOTAL-CURRENT-ASSETS> 165,381
<TOTAL-DEFERRED-CHARGES> 155,208
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,121,327
<COMMON> 324,537
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 435,259
<TOTAL-COMMON-STOCKHOLDERS-EQ> 761,159
0
51,898
<LONG-TERM-DEBT-NET> 669,008
<SHORT-TERM-NOTES> 50,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 15,150
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 573,612
<TOT-CAPITALIZATION-AND-LIAB> 2,121,327
<GROSS-OPERATING-REVENUE> 196,446
<INCOME-TAX-EXPENSE> 20,859
<OTHER-OPERATING-EXPENSES> 130,743
<TOTAL-OPERATING-EXPENSES> 151,602
<OPERATING-INCOME-LOSS> 44,844
<OTHER-INCOME-NET> 1,523
<INCOME-BEFORE-INTEREST-EXPEN> 46,367
<TOTAL-INTEREST-EXPENSE> 10,487
<NET-INCOME> 35,880
795
<EARNINGS-AVAILABLE-FOR-COMM> 35,085
<COMMON-STOCK-DIVIDENDS> 20,449
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 72,102
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
