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, 1998 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, 1998
----- -----------------------------
Common (Without Par Value) 17,206,630 Shares
INDIANAPOLIS POWER & LIGHT COMPANY
----------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Statements of Income -
Three Months Ended March 31, 1998 and 1997 2
Balance Sheets - March 31, 1998 and
December 31, 1997 3
Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 4
Notes to Financial Statements 5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
PART II. OTHER INFORMATION 9-11
- -------- ----------------- ----
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
1998 1997
--------------- ---------------
<S> <C> <C>
OPERATING REVENUES:
Electric $ 178,909 $ 183,666
Steam 11,412 11,633
--------------- ---------------
Total operating revenues 190,321 195,299
--------------- ---------------
OPERATING EXPENSES:
Operation:
Fuel 41,040 41,616
Other 34,921 32,633
Power purchased 1,007 4,159
Purchased steam 1,890 2,219
Maintenance 19,740 15,698
Depreciation and amortization 25,285 25,740
Taxes other than income taxes 8,822 8,873
Income taxes - net 17,474 19,827
--------------- ---------------
Total operating expenses 150,179 150,765
--------------- ---------------
OPERATING INCOME 40,142 44,534
--------------- ---------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 265 1,157
Other - net (540) (412)
Income taxes - net 294 162
--------------- ---------------
Total other income - net 19 907
--------------- ---------------
INCOME BEFORE INTEREST CHARGES 40,161 45,441
--------------- ---------------
INTEREST CHARGES:
Interest 10,160 10,921
Allowance for borrowed funds used during construction (204) (246)
--------------- ---------------
Total interest charges 9,956 10,675
--------------- ---------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (Note 4) 30,205 34,766
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE (Note 4) - 18,347
--------------- ---------------
NET INCOME 30,205 53,113
--------------- ---------------
PREFERRED DIVIDEND REQUIREMENTS 709 795
--------------- ---------------
INCOME APPLICABLE TO COMMON STOCK $ 29,496 $ 52,318
=============== ===============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
March 31 December 31
1998 1997
-------------- --------------
ASSETS
------
<S> <C> <C>
UTILITY PLANT:
Utility plant in service $ 2,810,550 $ 2,800,446
Less accumulated depreciation 1,143,484 1,121,317
-------------- --------------
Utility plant in service - net 1,667,066 1,679,129
Construction work in progress 78,233 77,030
Property held for future use 10,224 10,224
-------------- --------------
Utility plant - net 1,755,523 1,766,383
-------------- --------------
OTHER PROPERTY -
At cost, less accumulated depreciation 5,202 5,171
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 38,638 4,950
Accounts receivable and unbilled revenue (less allowance
for doubtful accounts 1998, $1,080 and 1997, $1,005) 34,081 43,053
Fuel - at average cost 32,927 35,000
Materials and supplies - at average cost 48,331 47,648
Prepayments and other current assets 4,034 8,486
-------------- --------------
Total current assets 158,011 139,137
-------------- --------------
DEFERRED DEBITS:
Regulatory assets 124,634 126,784
Miscellaneous 17,225 12,297
-------------- --------------
Total deferred debits 141,859 139,081
-------------- --------------
TOTAL $ 2,060,595 $ 2,049,772
============== ==============
CAPITALIZATION AND LIABILITIES
------------------------------
CAPITALIZATION:
Common shareholder's equity:
Common stock $ 324,537 $ 324,537
Premium and net gain on preferred stock 2,329 2,329
Retained earnings 472,768 508,626
-------------- --------------
Total common shareholder's equity 799,634 835,492
Cumulative preferred stock (Note 3) 59,135 9,135
Long-term debt (less current maturities
and sinking fund requirements) 627,854 627,840
-------------- --------------
Total capitalization 1,486,623 1,472,467
-------------- --------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper - 23,700
Accounts payable and accrued expenses 51,294 63,970
Dividends payable 27,079 13,290
Taxes accrued 40,989 18,674
Interest accrued 9,588 13,258
Other current liabilities 13,736 12,556
-------------- --------------
Total current liabilities 142,686 145,448
-------------- --------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
Accumulated deferred income taxes - net 326,995 325,386
Unamortized investment tax credit 44,085 44,783
Accrued postretirement benefits 15,544 17,144
Accrued pension benefits 40,287 39,821
Miscellaneous 4,375 4,723
-------------- --------------
Total deferred credits and other long-term liabilities 431,286 431,857
-------------- --------------
COMMITMENTS AND CONTINGENCIES
TOTAL $ 2,060,595 $ 2,049,772
============== ==============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1998 1997
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income $ 30,205 $ 53,113
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 24,940 24,368
Amortization of regulatory assets 2,591 3,913
Deferred income taxes and investment tax credit adjustments - net 58 9,125
Allowance for funds used during construction (469) (1,403)
Cumulative effect of accounting change - before taxes (Note 4) - (29,915)
Change in certain assets and liabilities:
Accounts receivable 8,972 7,095
Fuel, materials and supplies 1,390 6,575
Accounts payable (12,676) (9,901)
Taxes accrued 22,315 28,389
Accrued pension benefits 466 830
Other - net 2,771 (1,407)
-------------- --------------
Net cash provided by operating activities 80,563 90,782
-------------- --------------
CASH FLOWS FROM INVESTING:
Construction expenditures (13,297) (13,390)
Other (4,998) (1,087)
-------------- --------------
Net cash used in investing activities (18,295) (14,477)
-------------- --------------
CASH FLOWS FROM FINANCING:
Short-term debt - net (23,700) (34,000)
Issuance of preferred stock (Note 3) 50,000 -
Dividends paid (54,880) (21,898)
Other - 36
-------------- --------------
Net cash used in financing activities (28,580) (55,862)
-------------- --------------
Net increase in cash and cash equivalents 33,688 20,443
Cash and cash equivalents at beginning of period 4,950 8,840
-------------- --------------
Cash and cash equivalents at end of period $ 38,638 $ 29,283
============== ==============
- ----------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest (net of amount capitalized) $ 13,345 $ 13,988
============== ==============
Income taxes $ (2,374) $ (2,607)
============== ==============
See notes to financial statements.
</TABLE>
<PAGE>
INDIANAPOLIS POWER & LIGHT COMPANY
----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. COMPANY
Indianapolis Power & Light Company is a subsidiary of IPALCO
Enterprises, Inc.
2. GENERAL
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make certain
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. The reported amounts of revenues and
expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results
may differ from those estimates.
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. Certain
amounts have been restated due to the change to the unbilled revenue
method of accounting (see note 4). These financial statements and notes
should be read in conjunction with the audited financial statements
included in IPL's 1997 Annual Report on Form 10-K.
3. PREFERRED STOCK
On January 13, 1998, Indianapolis Power & Light Company issued $50
million of cumulative preferred stock with a rate of 5.65%. 500,000
shares were issued at $100 par value each. The stock will be redeemable
at par value, subject to certain restrictions, in whole or in part, at
any time on or after January 1, 2008, at the option of IPL.
4. CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Effective January 1, 1997, IPL adopted the unbilled revenue method of
accounting for all electric and steam sales to more closely match
revenues with expenses. Under this method, IPL accrues revenues for all
electric and steam energy delivered to customers during the period,
whether billed or not. Previously IPL recognized these revenues only as
customers were billed, with the service rendered after monthly meter
reading dates through the end of a calendar month recognized as revenues
in the following month. The cumulative effect of accounting change, net
of taxes, was a one-time increase of $18.3 million, reported as a
separate component of net income in the restated first quarter earnings
of 1997. The change had the effect of decreasing income before
cumulative effect of accounting change in the first quarter of 1997 by
$3.1 million. The results of 1997 were restated for the accounting
change.
5. COMPREHENSIVE INCOME
On January 1, 1998, IPL adopted SFAS No. 130, "Comprehensive Income,"
which requires that changes in the amounts of certain items, including
foreign currency translation adjustments and gains and losses on certain
securities be shown in the financial statements. It has been determined
that IPL has no amounts which require classification under comprehensive
income.
<PAGE>
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)
declared dividends on common stock of $25 million, $16 million and $12 million
on January 27, 1998, February 24, 1998 and March 31, 1998, respectively. The
dividends were paid by IPL to IPALCO Enterprises, Inc. on February 1, 1998,
March 1, 1998 and April 1, 1998, respectively.
IPL's capital requirements are primarily related to construction
expenditures needed to meet customers' needs for electricity and steam, for
environmental compliance and for the implementation of an integrated information
system. Construction expenditures (excluding allowance for funds used during
construction) totaled $13.3 million during the first quarter ended March, 1998,
representing a $0.1 million decrease from the comparable period in 1997.
Internally generated cash provided by IPL's operations was used for construction
expenditures during the first quarter of 1998.
The three-year construction program has not changed from that
previously reported in IPL's 1997 Form 10-K report. (See "Future Performance" in
Item 7 of Management's Discussion and Analysis of Financial Condition and
Results of Operations in IPL's 1997 Form 10-K report for further discussion).
RESULTS OF OPERATIONS
Comparison of Quarters Ended March 31, 1998 and March 31, 1997
--------------------------------------------------------------
Income applicable to common stock decreased during the first quarter of
1998 compared to the first quarter of 1997 by $22.8 million. Income applicable
to common stock for the first quarter of 1997 included a one-time positive
after-tax increase of $18.3 million. See "Cumulative Effect of Accounting
Change" below. The following discussion highlights additional factors
contributing to the decrease.
Operating Revenues
- ------------------
Operating revenues during the first quarter of 1998 decreased $5.0
million from the comparable 1997 period. The decrease in revenues resulted from
the following:
Increase (Decrease)
-------------------
from Comparable Period
----------------------
Three Months Ended March 31
---------------------------
(Millions of Dollars)
Electric:
Change in retail KWH sales - net of fuel (6.6)
Fuel revenue 0.9
Wholesale revenue 0.7
DSM tracker revenue 0.4
Steam revenue (0.2)
Other revenue (0.2)
---------
Total change in operating revenues $ (5.0)
=========
The first quarter decrease in retail KWH sales compared to the same
period in 1997 was due to milder weather. Heating degree days decreased 17%
during the first quarter compared to the same period in 1997. The changes in
fuel revenues in 1998 from the prior year reflect changes in total fuel costs
billed to customers. The increased wholesale sales during the first quarter of
1998, as compared to the same period in 1997, reflect increased wholesale
marketing efforts and energy requirements of other utilities.
Operating Expenses
- ------------------
Other increased by $2.3 million in the first quarter compared to the
same period in 1997. This increase was due primarily to increased electric
distribution expense of $0.9 million, increased administrative and general
expenses of $0.6 million and increased amortization of demand-side management
costs.
Power purchased decreased by $3.2 million in the first quarter compared
to the same period in 1997 primarily due to decreased demand charges.
Maintenance expenses increased $4.0 million in the first quarter of
1998 compared to the same period in 1997. The increase reflects the timing of
costs associated with the overhaul of unit 6 at the Pritchard plant of $2.2
million, as well as increased boiler and electric plant maintenance at the
Petersburg plant of $1.9 million. Due to the mild weather, overhaul maintenance
was advanced to the first quarter in 1998, compared to the more conventional
timing of performing overhaul maintenance in the second quarter.
Income taxes - net, decreased $2.4 million in the first quarter of 1998
compared to the same period in 1997 due to a decrease in pretax operating
income.
As a result of the foregoing, utility operating income decreased 9.9%
from the comparable 1997 period, to $40.1 million.
Other Income and Deductions
- ---------------------------
Allowance for equity funds used during construction decreased by $0.9
million in the first quarter of 1998 compared to the same period last year. In
August 1997, the amortization of deferred carrying charges on a plant asset
ended resulting in this decrease.
Interest Charges
- ----------------
Interest expense decreased $0.8 million in the first quarter of 1998
compared to the same period in 1997. This decrease was primarily due to
decreased interest on tax assessments as well as decreased short-term
borrowings. Also, long-term interest decreased as a result of the retirement of
$11.3 million of first mortgage debt in May 1997.
Cumulative Effect of Accounting Change
- --------------------------------------
A cumulative effect of accounting change in the amount of $18.3 million,
net of taxes, was effectively recorded during the first quarter of 1997.
Effective January 1, 1997, IPL adopted the unbilled revenues method of
accounting for electricity and steam delivered during the period. Revenues are
accrued for services provided but unbilled at the end of each month.
<PAGE>
PART II - OTHER INFORMATION
---------------------------
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. 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-K for the year ended 12-31-97.)
3.2 Bylaws of Indianapolis Power & Light Company, as amended.
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.)
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.)
Item 6. Exhibits and Reports on Form 8-K - continued
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
12-31-96.)
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
IPL filed a Form 8-K on January 9, 1998, reporting under Item
5, Other Events, to announce the execution of a Terms
Agreement with SBC Warburg Dillon Read, Inc. and Merrill Lynch
and Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated
for the sale of 500,000 shares of 5.65% cumulative preferred
stock, par value $100 per share, of IPL.
<PAGE>
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, 1998 /s/ John R. Brehm
------------ ------------------------
John R. Brehm
Senior Vice President
Finance and Information
Services
Date: May 14, 1998 /s/ Stephen J. Plunkett
------------ ------------------------
Stephen J. Plunkett
Controller
EXHIBIT 3.2
BY-LAWS
OF
INDIANAPOLIS POWER & LIGHT COMPANY
______________________________
As Amended and Restated in
Full on May 27, 1969, and
Further Amended on
January 26, 1971
January 30, 1973,
January 28, 1975,
April 27, 1976,
March 31, 1981,
May 30, 1989,
November 13, 1989,
August 27, 1991,
February 25, 1997,
November 25, 1997, and
April 28, 1998
__________________________
BY-LAWS
OF
INDIANAPOLIS POWER & LIGHT COMPANY
______________________________
As Amended and Restated in
Full on May 27, 1969, and
Further Amended on
January 26, 1971
January 30, 1973,
January 28, 1975,
April 27, 1976,
March 31, 1981,
May 30, 1989,
November 13, 1989,
August 27, 1991,
February 25, 1997,
November 25, 1997, and
April 28, 1998
__________________________
ARTICLE I.
Offices
SECTION 1. Principal Office. The principal office of the
Company shall be in the City of Indianapolis, County of Marion, State of
Indiana.
SECTION 2. Other Offices. The Company may also have an office
in the City of Chicago, Illinois, and in the City of New York, New York,
and also offices at such other places as the Board of Directors may from
time to time appoint or the business of the Company may require.
ARTICLE II.
Shareholders Meetings
SECTION 1. Place of Meeting. Meetings of the shareholders of
the Company shall be held at such place within or without the State of
Indiana as may be specified from time to time in the respective notices,
waivers of notice thereof, or by resolution of the Board of Directors or
the shareholders.
SECTION 2. Annual Meeting. The annual meeting of shareholders
shall be held on the third Wednesday of April of each year at the hour of
10 o'clock A.M., unless such day shall be a legal holiday, in which event
the meeting shall be held on the next succeeding business day at the same
hour, or unless the Board of Directors shall by resolution set another
date for such meeting within ninety days of the third Wednesday of April,
in which event the meeting shall be held on the date and at the time
specified in such resolution.
(As Amended February 25, 1997)
SECTION 3. Special Meetings. Special meetings of the
shareholders for any purpose or purposes may be called by the President,
by the Board of Directors, or by shareholders holding not less than
one-fourth of all the shares outstanding and entitled by the Amended
Articles of Incorporation to vote on the business proposed to be
transacted thereat. Business transacted at any such meeting shall be
confined to the objects stated in the call and matters germane thereto.
SECTION 4. Notice of Meetings; Waiver. Written or printed
notice, stating the place, day and hour of the annual and/or special
meetings of the shareholders, and in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered
or mailed by the Secretary, or by the officer or persons calling the
meeting, to each shareholder of record entitled by the Amended Articles
of Incorporation and by law to vote at such meeting, at such address as
appears upon the records of the Company, at least ten (10) days before
the date of the meeting.
Notice of any shareholders meeting may be waived in writing by
any shareholder, if the waiver sets forth in reasonable detail the
purpose or purposes for which the meeting is called and the time and
place thereof. Attendance at any meeting, in person or by proxy, shall
constitute a waiver of notice of such meeting.
SECTION 5. Quorum. The holders of a majority of the shares
issued and outstanding and then entitled to vote, present in person or
represented by proxy, shall be requisite and sufficient to constitute a
quorum at all meetings of the shareholders for the transaction of
business, except as otherwise provided by law, by the Amended Articles of
Incorporation, or by these By-Laws. If, however, such majority shall not
be present or represented at any meeting of the shareholders, the
shareholders present in person or by proxy shall have power to adjourn
the meeting from time to time without notice, other than announcement at
the meeting, until a quorum shall attend, when any business may be
transacted which might have been transacted at the meeting as originally
called.
SECTION 6. Voting. At each meeting of the shareholders, every
shareholder entitled to vote may vote in person or by proxy appointed by
an instrument in writing subscribed by such shareholder or by his duly
authorized attorney and delivered to the Secretary of the meeting. Each
shareholder shall have one vote for each share of common stock and two
votes for each share of preferred stock registered in his name at the
time of the closing of the transfer books or taking of the record for
said meeting. The vote for directors, and, upon the demand of any
shareholder, the vote upon any question before the meeting, shall be by
ballot. All elections shall be had by plurality vote and all other
questions shall be decided by a majority vote, except as otherwise
provided by law, by the Amended Articles of Incorporation, or by these
By-Laws.
ARTICLE III.
Directors
SECTION 1. Number and Term. The number of directors of this
Company shall be fourteen (14). Such directors shall be elected for a term
of one year each and until their successors are duly elected and
qualified.
(As Amended April 28, 1998)
SECTION 2. Powers and Duties. In addition to the powers and
duties expressly conferred upon it either by law, by the Amended Articles
of Incorporation, or by these By-Laws, the Board of Directors may
exercise all such powers of the Company as are conferred upon the Company
by law and by the Amended Articles of Incorporation, and do all such
lawful acts and things as are not inconsistent with the law or the
Amended Articles of Incorporation.
Subject to the provisions of law, the Amended Articles of
Incorporation, and the resolutions of the Board of Directors creating the
several series of the Company's outstanding Cumulative Preferred Stock,
the Board of Directors shall have absolute discretion in the declaration
of dividends and in changing the date for the declaration and payment of
dividends.
SECTION 3. Annual and Regular Meetings; Notice. The annual
meeting of the Board of Directors shall be held on the last Tuesday of
the month in which the annual meeting of shareholders is held, and other
regular meetings of the Board of Directors shall be held on the last
Tuesday of each month. If the day fixed pursuant to this Section for the
annual or any regular meeting shall be a legal holiday, then such annual
or regular meeting shall be held on the next succeeding business day.
The annual meeting and all regular meetings of the Board shall
be held at 1:30 P.M. at the principal office of the Company, unless
notice of a different time and/or place is given with respect to any such
meeting at least seven days prior thereto by mail or three days prior
thereto by telegraph. No notice of the annual or any regular meeting of
the Board shall be required unless such meeting is to be held at a time
and/or place other than the principal office of the Company.
(As Amended January 26, 1971)
SECTION 4. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors, the
President, or any two directors on two days' notice by mail or one day's
notice by telephone or telegraph to each director, which notice shall
state the time, place and purpose of the holding of such meetings. Any
special meeting of the Board of Directors may be held either within or
without the State of Indiana.
SECTION 5. Quorum. At all meetings of the Board of Directors a
majority of the directors shall be necessary and sufficient to constitute
a quorum for the transaction of business, and the act of a majority of
the directors present at any meeting at which there is a quorum shall be
the act of the Board of Directors, except as otherwise may be provided
specifically by statute, by the Amended Articles of Incorporation, or by
these By-Laws. If at any meeting of the Board of Directors there shall be
less than a quorum present, a majority of those directors present may
adjourn the meeting to another day and thereupon the Secretary shall
mail, telephone, or telegraph to each director, notice of the time and
place of the holding of such adjourned meeting. At any such adjourned
meeting at which there is a quorum present, any business may be
transacted which might have been transacted at the meeting as originally
scheduled or called.
SECTION 6. Resignations. Any director of the Company may resign
at any time by giving written notice to the Board of Directors or to the
President or to the Secretary of the Company. Any such resignation shall
take effect at time specified therein, or if the time is not specified,
upon receipt thereof. Unless otherwise specified in the notice, the
acceptance of such resignation shall not be necessary to make it
effective.
SECTION 7. Vacancies. Except as otherwise provided in the
Amended Articles of Incorporation, any vacancy occurring in the Board of
Directors caused by resignation, death or other incapacity, or increase
in the number of directors may be filled by a majority vote of the
remaining members of the Board, until the next annual or special meeting
of the shareholders or, at the discretion of the Board of Directors, such
vacancy may be filled by vote of the shareholders at a special meeting
called for the purpose. Shareholders shall be notified of any increase in
the number of directors and the name, address, principal occupation and
other pertinent information about any director elected by the Board of
Directors to fill any vacancy. Such notice shall be given in the next
mailing sent to shareholders following any such increase or election, or
both, as the case may be.
ARTICLE IV.
Committees Of The Board Of Directors
SECTION 1. Executive Committee.
Number and Powers. The Board of Directors shall create an
Executive Committee consisting of the Chairman of the Board of Directors
and the President, as ex officio members, and two or more directors who
shall be elected by the Board of Directors from time to time to hold
office until the next annual meeting of the Board of Directors and until
their respective successors are duly elected and qualified. The Board of
Directors shall designate the Chairman of such committee.
The Executive Committee shall have and exercise (except as the
Board of Directors shall direct and except when the Board of Directors
shall be in session) such powers and rights of the full Board of
Directors in the management of the business and affairs of the Company as
may be lawful, and it shall have power to authorize the seal of the
Company to be affixed to all papers which may require it.
Meetings and Notice. Meetings of the Executive Committee may be
held either at the office of the Company in the City of Indianapolis,
Indiana, or at such other places as the Executive Committee or Chairman
thereof shall from time to time designate. Such meetings may be called by
or at the request of the Chairman or any member of the Executive
Committee by giving at least twenty-four (24) hours' previous notice to
each member of the Executive Committee. Such notice may be given
personally or by telephone or telegraph.
Quorum. A majority of the Executive Committee shall constitute
a quorum for the transaction of business, and the affirmative vote of
such majority shall be necessary to the determination of any question.
Compensation. The members of the Executive Committee, other
than ex officio members, shall be entitled to receive such compensation
as may be determined from time to time by the Board of Directors.
Minutes. Minutes of the meetings of the Executive Committee
shall be kept and read at the next meeting of the Board of Directors.
Vacancies. Vacancies occurring in the Executive Committee shall
be filled by the Board of Directors at any meeting of said Board.
(As Amended April 27, 1976)
SECTION 2. Audit Committee.
The Board of Directors, by a majority vote of the whole Board
of Directors, may designate three (3) or more members of such Board who
shall not be officers of the Company to constitute an Audit Committee.
Such Committee shall have and exercise such authority as shall be
specified in the resolution of the Board of Directors appointing such
Committee. The Chairman of such Audit Committee shall be designated by
the Board of Directors.
(As Amended August 27, 1991)
ARTICLE V.
Officers of the Company
SECTION 1. Officers. The officers of the Company shall be a
Chairman of the Board of Directors, a President, one or more Vice
Presidents, a Secretary, a Treasurer, a Controller, and, if the Board of
Directors desires, one or more Assistant Vice Presidents, Assistant
Secretaries, Assistant Treasurers and Assistant Controllers, who shall be
elected by the Board of Directors at its annual meeting. Any two or more
of such offices may be held by the same person, except that the duties of
the President and Secretary, shall not be performed by the same person.
In the election of Vice Presidents, the Board of Directors may give each
vice presidency such special designation as it may deem appropriate. The
Chairman of the Board of Directors and the President shall be chosen from
among the directors.
The Board of Directors may appoint such other officers and
agents as it shall deem necessary, who shall have such authority and
perform such duties as from time to time shall be prescribed by the Board
of Directors.
(As Amended January 26, 1971)
SECTION 2. Salaries. The salaries of all officers of the
Company shall be fixed by the Board of Directors. No officer shall be
prevented from receiving such salary by reason of the fact he is also a
director of the Company.
SECTION 3. Term; Removal. The officers of the Company shall
hold office for one year and until their successors are chosen and
qualified; provided, however, that any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote
of a majority of the full Board of Directors.
SECTION 4. Resignations. Any officer of the Company may resign
at any time by giving written notice to the Board of Directors, to the
President, or to the Secretary of the Company. Any such resignation shall
take effect at time specified therein, or if the time be not specified,
upon receipt thereof. Unless otherwise specified in the notice, the
acceptance of such resignation shall not be necessary to make it
effective.
SECTION 5. Vacancies. If the office of the Chairman of the
Board of Directors, the President, any Vice President, the Secretary, the
Treasurer, the Controller, any Assistant Vice President, Assistant
Secretary, Assistant Treasurer, or Assistant Controller, or other officer
or agent, is vacant or becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office or the creation of a
new office, the Board of Directors shall elect a person to such office
who shall hold office for the unexpired term in respect of which such
vacancy occurred; provided that, in its discretion, the Board of
Directors, by vote of a majority of the whole Board, may leave unfilled
for such period as it deems appropriate any office, except the offices of
President, Controller, Treasurer and Secretary.
(As Amended January 30, 1973)
SECTION 6. Duties of Officers May Be Delegated. In case of the
absence of any officer of the Company, or for any other reason that the
Board of Directors may deem sufficient, the Board may delegate the power
or duties of such officer to any other officer, or to any director for
the time being.
SECTION 7. Chairman of the Board of Directors. The Chairman of
the Board of Directors shall be the chief executive officer of the
Company. Subject to the control of the Board of Directors, he shall have
general charge of, and supervision and authority over the business and
affairs of the Company. He shall preside at all meetings of the
shareholders and directors of the Company. He shall have such other
duties as may be assigned to him by the Board of Directors.
(As Amended November 13, 1989 to be Effective February 1, 1990)
SECTION 8. President. The President shall be the chief
operating officer of the Company. Subject to the supervision of the
Chairman of the Board of Directors and the Board of Directors, itself, he
shall have general charge of, and supervision and authority over, the
operations of the Company. In the absence of the Chairman of the Board of
Directors, he shall preside at all meetings of the shareholders and
directors. He shall perform such other duties as are incident to his
office or as may be assigned to him by the Board of Directors or the
Chairman of the Board of Directors.
(As Amended January 28, 1975)
SECTION 9. Vice Presidents. Subject to the control of the Board
of Directors, the Chairman of the Board of Directors and the President,
the Vice Presidents and the Assistant Vice Presidents shall have such
power, and perform such duties, as the Board of Directors, the Chairman
of the Board of Directors, or the President, from time to time shall
assign to them, and, in the case of Assistant Vice Presidents, such
powers and duties as may be assigned to them by the respective Vice
Presidents whom they assist.
(As Amended January 28, 1975)
SECTION 10. Secretary and Assistant Secretaries. The Secretary
shall attend all meetings of the shareholders and Board of Directors, and
shall record all votes and other proceedings in a book to be kept for
that purpose. He shall give, or cause to be given, all required notices
of meetings of the shareholders and Board of Directors. He shall have
custody of the seal of the Company and of its records, and shall perform
such other duties as usually appertain to the office of Secretary and as
may be prescribed by the Board of Directors, the Chairman of the Board of
Directors or the President.
The Assistant Secretaries shall perform such duties as shall be
delegated to them by the Board of Directors, the Chairman of the Board of
Directors, the President or the Secretary.
(As Amended January 28, 1975)
SECTION 11. Treasurer and Assistant Treasurers. The Treasurer
shall have custody of the corporate funds and securities, and shall keep
full and accurate accounts of receipts and disbursements in books of the
Company to be kept for that purpose. He shall deposit all moneys and
other valuable effects in the name and to the credit of the Company in
such depositaries as may be designated by authority of the Board of
Directors, and shall disburse the funds of the Company as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements.
He shall render to the Board of Directors, whenever it may so require, an
account of all his transactions as Treasurer and of the financial
condition of the Company. He shall have such other powers and duties as
may be assigned to him by the Board of Directors, the Chairman of the
Board of Directors or the President.
The Assistant Treasurers shall perform such duties as shall be
delegated to them by the Board of Directors, the Chairman of the Board of
Directors, the President or the Treasurer.
(As Amended January 28, 1975)
SECTION 12. Controller and Assistant Controllers. The
Controller shall be the chief accounting officer of the Company. He shall
keep or cause to be kept all books of account and accounting records of
the Company, and shall render appropriate financial statements to the
Board of Directors and to the shareholders. He shall perform such other
duties as usually appertain to the office of Controller and as may be
prescribed by the Board of Directors, the Chairman of the Board of
Directors or the President.
The Assistant Controllers shall perform such duties as shall be
delegated to them by the Board of Directors, the Chairman of the Board of
Directors, the President or the Controller.
(As Amended January 28, 1975)
SECTION 13. General Counsel and Assistant General Counsel. The
General Counsel, who shall be an attorney licensed to practice law in the
State of Indiana, shall be the chief legal officer of the Company. He, or
one or more other attorneys designated by him, shall represent the
Company in proceedings before state and federal courts and administrative
agencies and shall provide advice and render opinions to directors,
officers and other management personnel of the Company with respect to
any legal matter in which the Company is or may become involved. He shall
perform such other duties as usually appertain to the office of General
Counsel and as may be prescribed by the Board of Directors, the Chairman
of the Board of Directors or the President.
The Assistant General Counsel shall perform such duties as may
be delegated to him by the Board of Directors, the Chairman of the Board
of Directors, the President or the General Counsel.
(As Amended May 30, 1989 to be Effective May 1, 1989)
ARTICLE VI.
Shares
SECTION 1. Certificates. The certificates for shares in the
Company shall be consecutively numbered in the order of their issue, and
each certificate shall state the name of the registered holder, the
number of shares represented thereby, the par value of each share or a
statement that such shares have no par value, whether such shares have
been fully paid up and are non-assessable, the kind and class of shares
represented thereby, and a statement or summary of the relative rights,
interests, preferences and restrictions of all classes of such shares;
provided, that if the Board of Directors so authorizes, such statement or
summary may be omitted from the certificate if it shall be set forth upon
the face or back of the certificate that such statement, in full, will be
furnished by the Company to any shareholder upon written request and
without charge.
Certificates for shares shall be in such form, consistent with
the Amended Articles of Incorporation, as the Board of Directors shall
approve. Such certificates shall be signed by the President, or a Vice
President, and the Secretary, or an Assistant Secretary, and shall be
sealed with the corporate seal, which seal may be an original impression
or a facsimile thereof. Where any certificate is countersigned by the
written signature of a registrar, the signature of the transfer agent,
and the President, Vice President, Secretary or Assistant Secretary of the
Company may be facsimiles.
(As Amended November 25, 1997)
SECTION 2. Record of Shareholders. The Company shall keep at
its principal office a complete and accurate list of the shareholders of
each class of shares issued and outstanding setting forth the names and
addresses of the shareholders of each class and the number of shares held
by each such shareholder.
The Company shall be entitled to treat the holder of record of
any share or shares as the owner in fact thereof and accordingly shall
not be bound to recognize any equitable or other claim to or interest in
such shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise expressly provided
by the laws of Indiana.
SECTION 3. Transfers of Shares. The transfer of shares may be
made on the books of the Company only by the holder thereof or his duly
authorized attorney and upon surrender of the certificate representing
the same, properly endorsed and/or assigned; title to certificates and to
the shares represented thereby can be transferred only as provided by the
laws of the State of Indiana.
SECTION 4. Transfer Books; Record Date. The books for the
transfer of the shares of the Company may be closed for such period, in
anticipation of shareholders meetings, the payment of dividends or the
allotment of rights, as the Board of Directors from time to time may
determine. In lieu of providing for the closing of the transfer books,
the Board of Directors may, in its discretion, fix a date not exceeding
fifty (50) days (and in the case of a shareholders meeting, not less than
ten (10) days) prior to the date fixed for any such meeting, payment, or
allotment as a record date for such purpose.
SECTION 5. Transfer Agents and Registrars. The Board of
Directors may appoint one or more transfer agents and registrars or
appoint qualified agents to perform both the functions of transfer agent
and registrar. The Board of Directors shall require all certificates for
shares to bear the written signature of the registrar and may require
such certificates to bear also the written signature of the transfer
agent.
(As Amended March 31, 1981)
SECTION 6. Lost or Destroyed Certificates. Any person claiming
a certificate for shares to be lost or destroyed shall make an affidavit
or affirmation of that fact and shall give the Company and/or the
transfer agents and/or the registrars, if they shall so require, a bond
of indemnity, in form and with one or more sureties satisfactory to the
officers of the Company, and/or the transfer agents, and/or the
registrars, whereupon a new certificate may be issued of the same tenor
and for the same number of shares as the one alleged to be lost or
destroyed; or in lieu of the foregoing procedure, such person may proceed
in accordance with the laws of the State of Indiana.
ARTICLE VII.
Checks, Notes, Contracts, Etc.
SECTION 1. Checks; Notes. All checks, notes, drafts,
acceptances, or other demands or orders for the payment of money of the
Company shall be signed by such officer or officers, or person or
persons, as the Board of Directors may from time to time designate. When
so authorized by the Board of Directors, the signatures of such officers
on any bonds, notes, debentures, or other evidences of indebtedness may
be facsimiles and such facsimiles on such instruments shall be deemed the
equivalent of and constitute the written signatures of such officers for
all purposes including, but not limited to, the full satisfaction of any
signature requirements of the laws of the State of Indiana on the
negotiable bonds, notes, debentures, and other evidences of indebtedness
of the Company.
SECTION 2. Contracts Requiring Seal. All contracts, deeds,
mortgages, leases or instruments that require the seal of the Company
shall be signed by the President, or a Vice President, and by the
Secretary, or an Assistant Secretary, or by such officer or officers, or
person or persons, as the Board of Directors may by resolution prescribe,
except as provided in Section 1 of this Article VII. Such seal may be an
original impression or an engraved or imprinted facsimile thereof.
ARTICLE VIII.
Seal
The corporate seal shall have inscribed thereon the name of the
Company and the word "SEAL".
ARTICLE IX.
Fiscal Year
The fiscal year shall be the calendar year.
ARTICLE X.
Miscellaneous Provisions
SECTION 1. Inspection of Books. The Board of Directors shall
determine from time to time whether, and, if allowed, when and under what
conditions and regulations, the accounts and books of the Company (except
such as may by statute be specifically open to inspection), or any of
them, shall be open to the inspection of the shareholders, and the
shareholders' rights in this respect are and shall be restricted and
limited accordingly.
SECTION 2. Notices. Whenever under the provisions of these
By-Laws notice is required to be given to any director, officer, or
shareholder, it may be given by depositing the same in the post office or
a letter box, in a postpaid sealed wrapper, addressed to such director,
officer, or shareholder at such address as appears on the books of the
Company, or in default of other address, to such director, officer or
shareholder at the General Post Office in the City of Indianapolis,
Indiana, and such notice shall be deemed to be given at the time of such
mailing.
SECTION 3. Waiver. Any director, officer or shareholder may
waive any notice required to be given under these By-Laws either before,
at, or after any meeting, and such waiver shall be equally as effective
as the due service of notice.
ARTICLE XI.
Amendments and Repeal
SECTION 1. Amendments. These By-Laws may be altered, amended or
repealed, and new By-Laws may be made at any annual, regular, or special
meeting of the Board of Directors by the affirmative vote of a number of
directors equal to a majority of the number who would constitute the full
Board of Directors at the time of such action.
SECTION 2. Repeal. All By-Laws of the Company, and amendments
thereto, heretofore made and adopted by the shareholders and/or directors
of the Company are hereby expressly repealed.
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