SECURlTlES AND EXCHANGE COMMlSSlON
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
March 31, 1995 Commission File Number 1-8644
IPALCO ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Indiana 35-1575582
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
25 Monument Circle
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
Registrants'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, 1995
----- -----------------------------
Common (Without Par Value) 37,814,171 Shares
IPALCO ENTERPRISES, INC. AND SUBSIDIARIES
-----------------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
- -------------------------------
Statements of Consolidated Income -
Three Months Ended March 31, 1995 and 1994 2
Consolidated Balance Sheets - March 31, 1995 and
December 31, 1994 3
Statements of Consolidated Cash Flows -
Three Months Ended March 31, 1995 and 1994 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-7
PART II. OTHER INFORMATION 8-10
- ---------------------------
-1-
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Statements of Consolidated Income
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1995 1994
-------------- --------------
<S> <C> <C>
UTILITY OPERATING REVENUES:
Electric $ 164,347 $ 168,902
Steam 11,171 12,276
-------------- --------------
Total operating revenues 175,518 181,178
-------------- --------------
UTILITY OPERATING EXPENSES:
Operation:
Fuel 43,667 44,588
Other 27,415 26,630
Power purchased 3,879 5,168
Purchased steam 1,984 2,200
Maintenance 14,691 15,015
Depreciation and amortization 21,381 20,221
Taxes other than income taxes 8,635 7,987
Income taxes - net 15,588 17,849
-------------- --------------
Total operating expenses 137,240 139,658
-------------- --------------
UTILITY OPERATING INCOME 38,278 41,520
-------------- --------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 1,051 863
Other - net (1,602) (684)
Income taxes - net 651 668
-------------- --------------
Total other income - net 100 847
-------------- --------------
INCOME BEFORE INTEREST AND OTHER CHARGES 38,378 42,367
-------------- --------------
INTEREST AND OTHER CHARGES:
Interest 12,980 12,357
Allowance for borrowed funds used during construction (1,300) (1,150)
Preferred dividend requirements of subsidiary 795 795
-------------- --------------
Total interest and other charges - net 12,475 12,002
-------------- --------------
NET INCOME $ 25,903 $ 30,365
============== ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 37,814 37,702
============== ==============
EARNINGS PER SHARE OF COMMON STOCK $ 0.69 $ 0.81
============== ==============
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.54 $ 0.53
============== ==============
See notes to consolidated financial statements.
</TABLE>
-2-
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
March 31 December 31
ASSETS 1995 1994
------ ----------------- -----------------
<S> <C> <C>
UTILITY PLANT:
Utility plant in service $ 2,456,732 $ 2,415,531
Less accumulated depreciation 935,177 916,943
----------------- -----------------
Utility plant in service - net 1,521,555 1,498,588
Construction work in progress 193,799 191,010
Property held for future use 22,174 22,174
----------------- -----------------
Utility plant - net 1,737,528 1,711,772
OTHER ASSETS: ----------------- -----------------
Nonutility property - at cost, less accumulated depreciation 87,808 76,671
Other investments 10,880 9,637
----------------- -----------------
Other assets - net 98,688 86,308
----------------- -----------------
CURRENT ASSETS:
Cash and cash equivalents 10,814 8,148
Financial investments - 7,025
Accounts receivable (less allowance for doubtful
accounts - 1995, $1,117 and 1994, $855) 46,685 48,659
Fuel - at average cost 39,487 37,749
Materials and supplies - at average cost 58,177 57,236
Prepayments and other current assets 3,034 9,132
----------------- -----------------
Total current assets 158,197 167,949
----------------- -----------------
DEFERRED DEBITS:
Unamortized Petersburg Unit 4 carrying charges 32,689 32,521
Unamortized redemption premiums and expenses on debt 28,366 27,787
Other regulatory assets 60,951 53,661
Miscellaneous 13,955 11,080
----------------- -----------------
Total deferred debits 135,961 125,049
----------------- -----------------
TOTAL $ 2,130,374 $ 2,091,078
================= =================
CAPITALIZATION AND LIABILITIES
------------------------------
CAPITALIZATION:
Common shareholders' equity:
Common stock $ 382,974 $ 381,228
Premium on 4% cumulative preferred stock 1,363 1,363
Retained earnings 424,838 419,354
----------------- -----------------
Total common shareholders' equity 809,175 801,945
Cumulative preferred stock 51,898 51,898
Long-term debt (less current maturities and
sinking fund requirements) 667,678 665,971
----------------- -----------------
Total capitalization 1,528,751 1,519,814
----------------- -----------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper 35,901 29,753
Current maturities and sinking fund requirements 350 350
Accounts payable and accrued expenses 104,784 102,360
Dividends payable 21,526 21,096
Payrolls accrued 4,160 4,475
Taxes accrued 38,814 18,569
Interest accrued 11,550 14,933
Other current liabilities 10,930 8,823
----------------- -----------------
Total current liabilities 228,015 200,359
----------------- -----------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
Accumulated deferred income taxes - net 287,299 280,684
Unamortized investment tax credit 52,945 53,762
Accrued postretirement benefits 31,611 34,854
Miscellaneous 1,753 1,605
----------------- -----------------
Total deferred credits and other long-term liabilities 373,608 370,905
----------------- -----------------
COMMITMENTS AND CONTINGENCIES (NOTE 6)
TOTAL $ 2,130,374 $ 2,091,078
================= =================
See notes to consolidated financial statements.
</TABLE>
-3-
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Statements of Consolidated Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income before preferred dividend requirements
of subsidiary $ 26,698 $ 31,160
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,427 21,335
Income from financial investments - (667)
Deferred income taxes and investment tax
credit adjustments - net 2,433 (1,559)
Allowance for funds used during construction (2,352) (2,013)
Decrease (increase) in certain assets:
Accounts receivable 1,974 (2,767)
Fuel, materials and supplies (2,679) 2,347
Other current assets 6,098 512
Increase (decrease) in certain liabilities:
Accounts payable 2,424 (3,623)
Taxes accrued 20,245 20,741
Other current liabilities (1,012) 629
-------------- --------------
Net cash provided by operating activities 76,256 66,095
-------------- --------------
CASH FLOWS FROM INVESTING:
Withdrawals from financial investments 7,025 -
Construction expenditures - utility (44,387) (27,448)
Construction expenditures - nonutility (11,778) (1,005)
Other (11,968) 1,353
-------------- --------------
Net cash used in investing activities (61,108) (27,100)
-------------- --------------
CASH FLOWS FROM FINANCING:
Issuance of long-term debt 41,700 180,000
Retirement of long-term debt - including premiums paid (40,800) (79,513)
Short-term debt - net 6,148 (88,500)
Dividends paid (21,215) (20,018)
Issuance of common stock related to incentive compensation plans 1,746 936
Other (61) (2,094)
-------------- --------------
Net cash used in financing activities (12,482) (9,189)
-------------- --------------
Net increase in cash and cash equivalents 2,666 29,806
Cash and cash equivalents at beginning of period 8,148 10,713
-------------- --------------
Cash and cash equivalents at end of period $ 10,814 $ 40,519
============== ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 15,194 $ 10,242
============== ==============
Income taxes $ (4,501) $ 821
============== ==============
See notes to consolidated financial statements.
</TABLE>
-4-
IPALCO ENTERPRISES, INC. AND SUBSIDIARIES
-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. IPALCO Enterprises, Inc. (IPALCO) owns all of the outstanding common
stock of its subsidiaries (collectively referred to as Enterprises).
The consolidated financial statements include the accounts of IPALCO,
its utility subsidiary, Indianapolis Power & Light Company (IPL) and
its unregulated subsidiary, Mid-America Capital Resources, Inc. (Mid-
America). Mid-America is the parent company of nonutility energy-
related businesses.
In the opinion of management these statements reflect all adjustments,
consisting of only normal recurring accruals, including elimination of
all significant intercompany balances and transactions, 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
Enterprises' 1994 Annual Report on Form 10-K.
2. COMMON STOCK
Shares Amount
---------- ------------
Balance at December 31, 1994 37,755,966 $381,227,527
Restricted stock issued (January 1995) 58,205 1,746,150
---------- ------------
Balance at March 31, 1995 37,814,171 $382,973,677
========== ============
3. LONG-TERM DEBT
On February 9, 1995, IPL issued First Mortgage Bonds, 6 5/8% Series,
due 2024, in the principal amount of $40 million. The net proceeds
were used to redeem on March 15, 1995, IPL's $40 million First Mortgage
Bonds, 10 5/8% Series, due 2014, at a redemption price of 102%.
Accrued interest was also paid at the time of redemption.
4. RATE MATTERS
In the retail electric rate case now pending before the Indiana Utility
Regulatory Commission (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. IPL filed its case-in-chief on October 11,
1994. Hearings scheduled by the IURC on IPL's request were held from
February 7 through February 22, 1995. A procedural schedule has been
established with the last hearings scheduled to occur in August of
1995.
5. LINES OF CREDIT
On March 10, 1995, Mid-America extended its line of credit with Union
Bank of Switzerland to $30 million, of which $25 million was unused at
March 31, 1995.
6. 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
Material changes in the consolidated financial condition and results
of operations of IPALCO Enterprises, Inc. (Enterprises), except where
noted, are attributed to the operations of Indianapolis Power & Light
Company (IPL). Consequently, the following discussion is centered on IPL.
LIQUIDITY AND CAPITAL RESOURCES
Overview
- --------
The Board of Directors of Enterprises on February 28, 1995, declared a
quarterly dividend on common stock of 54 cents per share. The dividend was
paid April 15, 1995, to shareholders of record March 24, 1995.
Internally generated cash provided by IPL's operations and the
issuance of long-term debt were used primarily for utility construction
expenditures and the repayment of short-term and long-term debt during the
first three months of 1995.
On February 9, 1995, IPL issued First Mortgage Bonds in the principal
amount of $40 million to replace comparable bonds that were at a higher
rate.
Future Rate Relief
- ------------------
IPL has asked the Indiana Utility Regulatory Commission (IURC) to
approve increases in its electric rates. IPL is requesting approval of an
overall rate increase of about 13.9 percent to generate additional annual
revenues of $87.7 million. Under IPL's proposal, the percent of increase
will vary for different customer classes. Hearings scheduled by the IURC
on IPL's request were held from February 7 through February 22, 1995.
The Office of Utility Consumer Counselor (OUCC) filed its case-in-
chief in the proceeding with the IURC on April 21, 1995, recommending that
IPL's existing electric rates be decreased $33.7 million. IPL believes
that the OUCC's recommendation is based on errors of fact, miscalculations
and misapplications of principles, and, accordingly, believes that its
recommendation is not likely to be accepted. Other intervenors, including
a group of industrial customers, the Citizens Action Coalition, the City of
Indianapolis and the Department of Defense, also filed their case-in-chief
on April 21, 1995. IPL is scheduled to file rebuttal testimony in this
proceeding on May 26, 1995. Public hearings on the OUCC's and other
intervenors' case-in-chief and IPL's rebuttal testimony are scheduled to
commence in July of 1995.
IPL last received an order from the IURC authorizing an increase in
electric basic rates and charges in August, 1986.
New Indiana Regulation
- ----------------------
On April 26, 1995, changes to existing Indiana Utility Regulatory laws
were enacted which increase the period to be used in Indiana's quarterly
earnings test from one year to five years and allow the IURC to consider
alternate forms of regulation. The quarterly earnings test is applicable
to all Indiana electric and gas utilities. The extension of the test
period will allow utilities, which can be significantly affected by weather
conditions, to average high and low periods when computing the quarterly
earnings test.
-6-
RESULTS OF OPERATIONS
Comparison of Quarters Ended March 31, 1995 and March 31, 1994
--------------------------------------------------------------
Earnings per share during the first quarter of 1995 were $.69 or $.12
below the $.81 attained in the comparable 1994 period. The following
discussion highlights the factors contributing to the first quarter
results.
Operations
- ----------
The decrease in electric operating revenues of $4.6 million was
primarily a result of the milder weather during this quarter compared to
the same period one year ago. Contributing to the decreased revenues was a
decrease in retail electric kilowatt-hour (KWH) sales of $4.0 million and a
decrease in sales for resale of $1.5 million, due to decreased energy sales
to neighboring utilities. These decreases were partially offset by
increases in fuel cost adjustment recoveries of $.6 million and
miscellaneous revenues of $.3 million. 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 March 31,
1995 1994 % Change
------- ------- --------
Residential 1,175.9 1,283.6 (8.4)%
Commercial 585.0 639.6 (8.5)
Industrial 1,534.2 1,504.0 2.0
Other 20.5 21.2 (3.3)
------- -------
Total Retail 3,315.6 3,448.4 (3.9)
======= =======
Power purchased decreased $1.3 million primarily due to decreased firm
peaking-energy payments and decreased non-displacement purchases for 1995.
Purchased steam decreased $.2 million due to a decrease in prices and
therms purchased from an independent resource recovery system located
within the City of Indianapolis.
Depreciation expense increased $1.2 million primarily due to an
increase in the utility plant balance.
Income taxes - net decreased $2.3 million primarily due to the
decrease in pretax utility operating income.
As a result of the foregoing, utility operating income decreased 7.8%
over last year, to $38.3 million.
Other Income and Deductions
- ---------------------------
Allowance for equity funds used during construction increased $.2
million due to an increased construction base.
Other - net, which includes the pre-tax operations other than IPL,
decreased $.9 million primarily due to decreased investment income from
financial investments.
Interest and Other Charges
- --------------------------
Allowance for borrowed funds used during construction increased $.2
million due to an increased construction base.
-7-
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- --------------------------
On August 18, 1993, the Indiana Utility Regulatory Commission ("IURC")
entered an order in Cause No. 39437, approving the Environmental Compliance
Plan of Indianapolis Power & Light Company ("IPL") to comply with the Clean
Air Act Amendments of 1990. The estimated cost of IPL's Environmental
Compliance Plan is approximately $250 million before including allowance
for funds used during construction. A primary part of IPL's Plan,
scrubbing IPL's Petersburg 1 and 2 coal-fired plants by 1996 to enable IPL
to continue to burn high sulfur coal, was opposed by the Office of Utility
Consumer Counselor ("OUCC"), the Citizens Action Coalition ("CAC"), and the
Industrial Intervenors Group ("IIG"). OUCC, CAC and IIG have appealed the
IURC's order to the Indiana Court of Appeals. The Attorney General on
behalf of the State of Indiana has filed an Amicus Brief in support of IPL.
The matter is fully briefed and is awaiting decision by the Court of
Appeals.
On April 8, 1994, IPL filed a petition with the IURC, Cause No.
39938, for authority to increase its rates and charges for electric
service, to continue the capitalization of allowance for funds used during
construction and to defer depreciation expense on IPL's Stout Combustion
Turbine Unit No. 5, to add to the fair value of IPL's utility property
environmental compliance capital projects and qualified pollution control
property under construction and for revised depreciation rates. IPL
prefiled its evidence on October 11, 1994, and hearings on IPL's case-in-
chief were held from February 7 through February 22, 1995. A procedural
schedule has been established with the last hearings scheduled to occur in
August of 1995. A hearing for the public pursuant to Indiana Statute will
be held between April 21, 1995 and July 10, 1995 on a date later determined
by the IURC.
On March 16, 1993, Smith Cogeneration of Indiana, Inc., and
its affiliated ("Smith") filed a petition with the IURC requesting that IPL
be ordered to enter into a power sales agreement to purchase power from
Smith's proposed 240 megawatt plant. On September 24, 1993, IPL filed a
motion for summary adjudication of Smith's petition. Thereafter, on
September 7, 1994, the IURC entered an Order dismissing Smith's petition.
No action has been taken in this matter since the entry of the Order and
IPL believes this matter is concluded.
In June, 1993, IPL received a Notice of Violation from the Indianapolis
Air Pollution Control Section ("IAPCS") regarding fugitive dust emissions at
its Perry K Generating Station. IPL met with IAPCS to discuss four alleged
violations over a span of 15 months. Each violation was subject to a fine
of up to $2,500. IPL agreed to a settlement in the amount of $3,500 for
all alleged violations, and the settlement was finalized on August 31,
1994, and this matter is concluded.
-8-
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.
3.1* Articles of Incorporation of IPALCO Enterprises, Inc., as amended.
(Form 10-K for year ended 12-31-90.)
3.2* Bylaws of IPALCO Enterprises, Inc. dated April 26, 1994. (Form 10-Q
for quarter ended 6-30-94.)
4.1* IPALCO Enterprises, Inc. Automatic Dividend Reinvestment and Stock
Purchase Plan. (Exhibit 4.1 to the Form 10-K for the year ended
12-31-94.)
4.2* IPALCO Enterprises, Inc. Shareholder Rights Plan - Rights Agreement.
(Exhibit 4.2 to the Form 10-K for the year ended 12-31-94.)
10.1 Mid-America Capital Resources, Inc. Long-Term Incentive Plan
(Effective January 1, 1995.)
11.1 Computation of Per Share Earnings
27.1 Financial Data Schedule
b) Reports on Form 8-K.
None.
-9-
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.
IPALCO ENTERPRISES, INC.
--------------------------------
(Registrant)
Date: May 15, 1995 /s/ John R. Brehm
------------ --------------------------------
John R. Brehm
Vice President and Treasurer
Date: May 15, 1995 /s/ Stephen J. Plunkett
------------ --------------------------------
Stephen J. Plunkett
Controller
-10-
EXHIBIT 10.1
MID-AMERICA CAPITAL RESOURCES, INC.
LONG-TERM INCENTIVE PLAN
(Effective January 1, 1995)
<PAGE>
MID-AMERICA CAPITAL RESOURCES, INC.
LONG-TERM INCENTIVE PLAN
(Effective January 1, 1995)
SECTION 1
PURPOSE
The purpose of the Plan (as such term is described
below) is to provide an incentive to selected key
executives of the Company (as such term is described
below), by providing an opportunity to earn long-term
incentive compensation, based upon the attainment of
Company performance goals, so that they shall have an
increased incentive to work toward the attainment of the
long term growth and profit objectives of the Company and
its affiliated companies. Specifically, the Plan is
designed to:
A. Link, directly and indirectly, executive and
shareholder interests.
B. Attract and retain individuals of
outstanding ability.
C. Encourage key Company employees to render
superior performance.
SECTION 2
DEFINITIONS
The terms defined in this Section 2 shall, for
purposes of this Plan, have the meanings herein specified,
unless the context expressly or by necessary implication
otherwise requires:
A. Administrative Guidelines: The guidelines
established to administer this Plan as now in effect
or as modified from time to time by the Committee.
B. Board of Directors: The Board of Directors
of IPALCO.
C. Bonus Pool: The amount available for
allocation and distribution under Section 5.
D. Capital Intensive Business. Each of the
Companies or a division of a Company which is
designated by the Committee as capital intensive for
purposes of determining the award of a Participant.
E. Cause: The term Cause means fraud,
dishonesty, theft of corporate assets or other gross
misconduct by a Participant.
F. Committee: The Compensation Committee of
the Board of Directors.
G. Company or Companies: Mid-America and its
subsidiaries, or successors.
H. Company Value: The value of the Company
determined under Section 5 which is taken into account
in determining the Bonus Pool available for allocation
and distribution.
I. Current Interest Rate: The Fiscal Year
interest rate designated by the Committee to apply to
payments which are deferred by the Committee in
accordance with Section 7.B. The Current Interest
Rate for each Fiscal Year until changed by the
Committee, shall mean the rate in effect on the
December 31 immediately preceding each Fiscal Year
that is equal to Indianapolis Power & Light Company's
cost of capital determined by the Indiana Utility
Regulatory Commission in Indianapolis Power & Light
Company's last general retail electric rate order.
J. Earnings: The aggregate net earnings of the
Non-Capital Intensive Business of the Company (as
determined by the Committee) for the relevant
measuring period.
K. Fiscal Year: The calendar year.
L. Good Reason: The term "Good Reason" means,
without the Participant's written consent, (i) a
demotion in the Participant's status, position or
responsibilities which, in the judgment of the
Committee, does not represent a promotion from his
status, position or responsibilities as in effect
immediately prior to change in status, position or
responsibilities; (ii) the assignment to the
Participant of any duties or responsibilities which,
in the reasonable judgment of the Committee, are
inconsistent with such status, position or
responsibilities; or any removal of the Participant
from or failure to reappoint or reelect him to any of
such positions, except in connection with the
termination of his employment for total and permanent
disability, death or Cause or by him other than for
Good Reason; or (iii) the relocation of the principal
executive offices of IPALCO to a location outside the
Indianapolis, Indiana metropolitan area, but only if
IPALCO or the Company require him to be based at any
place other than the location at which he performed
his duties immediately prior to the relocation of
IPALCO.
M. IPALCO: IPALCO Enterprises, Inc. or its
successor.
N. Market Value: The fair market value of the
Capital Intensive Business on January 1, 2000 as
determined by an independent valuation firm selected
by the Committee.
O. Mid-America: Mid-America Capital Resources,
Inc. or its successors.
P. Non-Capital Intensive Business: Each of the
Companies or a division of a Company which is
designated by the Committee as non-capital intensive
for purposes of determining the award of a
participant.
Q. Participant: The employees of IPALCO and
the Company designated by the Committee to receive an
award under the Plan. The employees eligible for
designation include officers of IPALCO or the Company
and other employees of IPALCO and the Company who the
Committee expect to contribute materially to the
strategic growth of the Company.
R. Performance Incentive Award: The incentive
award amount for a Participant determined in
accordance with Section 5 hereof.
S. Performance Period: The period from January
1, 1995 through December 31, 1999 for which
performance of the Company under this Plan shall be
measured.
T. Plan: This Mid-America Capital Resources,
inc. Long-Term Incentive Plan, as now in effect and as
amended from time to time.
U. Shares: The eight (8) Shares available for
grant under Section 4 by the Committee. The Committee
shall be permitted to grant fractional Shares under
the Plan. Furthermore, to the extent Shares
previously awarded are forfeited, in whole or in part,
in accordance with the provisions of the Plan, the
Committee may, but is not required to, reallocate the
forfeited Shares (or fractions thereof) to other
Participants.
V. Sustainable Earnings: The portion of the
Earnings that the Committee, in its sole discretion,
determines are sustainable by the Non-Capital
Intensive Business for a period after the date of
determination. Generally, while subject to final
determination by the Committee, Earnings that are
expected to continue for at least three (3) years
shall generally be deemed sustainable.
W. Threshold Value: An increase in value of
the Company that must be exceeded before a Performance
Incentive Award shall be payable. The Threshold Value
shall be equal to $33,833,333.
SECTION 3
ADMINISTRATION
The Plan shall be administered by the Committee. The
decision of a majority of the members of the Committee
shall constitute the decision of the Committee, and the
Committee may act either at a meeting at which a majority
of its members are present or by a written consent signed
by all of its members. The Committee may appoint
individuals to act on its behalf in the administration of
the Plan; provided, however, that except as otherwise
provided by the Plan, the Committee shall have the sole,
final and conclusive authority to administer, construe and
interpret the Plan. The decisions to be made by the
Committee include, but are not limited to, the following:
(i) The Companies or divisions of the Companies
which are designated as a Capital Intensive Business
or a Non-Capital Intensive Business.
(ii) The employees of IPALCO and the Company who
are granted Shares under this Plan and the number of
Shares (or fractional Shares) to be granted to each
such Participant.
(iii) The determination of Earnings and
Sustainable Earnings of the Non-Capital Intensive
Business.
(iv) The selection of an independent valuation
firm to determine the Market Value of the Capital
Intensive Business.
(v) The timing of payment of the Performance
Incentive Awards.
SECTION 4
PARTICIPATION
A. At any time before or during the Performance
Period, the Committee may award Shares or fractional Shares
to IPALCO's or the Company's key employees who, in the
opinion of the Committee, are in a position to make a
significant contribution to the long-term success of the
Company. However, under no circumstances shall the
aggregate number of Shares awarded exceed eight (8).
B. During the Performance Period, the Committee, in
its sole discretion, may:
(i) discontinue the participation of a
Participant; or
(ii) increase or decrease the number of Shares or
fractional Shares awarded to a Participant.
If a Participant's participation is discontinued, his Share
award shall be automatically reduced to an amount equal to
the product of:
(iii) the number of Shares credited to the
Participant immediately before the discontinuation and
(iv) a fraction, the numerator of which is equal
to the number of full calendar months in the
Performance Period during which he was an active
Participant in this Plan and the denominator or which
is sixty (60).
Furthermore, except as provided in Section 6 and even if
the Participant's participation is discontinued, a
Participant's Share award may not be decreased after
January 1, 1997 to an amount less than an amount equal to
the product of:
(v) the number of Shares credited to the
Participant immediately before the decrease and
(vi) a fraction, the numerator of which is equal
to the number of full calendar months in the
Performance Period during which he was a Participant
and the denominator of which is sixty (60).
C. At the end of the Performance Period, the
Committee may, but is not required to, allocate any Shares
not awarded as of December 31, 1999 (including any
previously forfeited Shares) among the Participants in any
manner it determines appropriate.
SECTION 5
CALCULATION OF PERFORMANCE INCENTIVE AWARDS
A. A Performance Incentive Award shall be payable
only if Company Value at the end of the Performance Period
(as determined under subsection (i) below) exceeds
Threshold Value. If Company Value exceeds Threshold Value,
the Performance Incentive Award payable to a Participant
shall be equal to the product of the Bonus Pool (as
determined under subsection (i) below) and the
Participant's fractional interest in the Bonus Pool (as
determined under subsection (ii) below).
(i) The Performance Incentive Award Bonus Pool
shall be determined as follows:
a. First, Company Value shall be
determined by adding:
1. the increase in value of the
Capital Intensive Business (as determined
under paragraph B of this Section), plus
2. the increase in value of the
Non-Capital Intensive Business (as
determined under paragraph C of this
Section), plus
3. the value added by sale of
product lines or businesses (as determined
under paragraph D of this Section).
b. Second, the Performance Incentive
Award Bonus Pool shall be determined by adding:
1. The product of (A) the amount
(not in excess of $101,500,000) by which
Company Value exceeds Threshold Value,
times (B) 20%, plus
2. The product of (A) the amount, if
any, by which Company Value exceeds
$135,333,333, times (B) 15%.
(ii) A Participant's fractional interest in the
Bonus Pool shall be equal to a fraction, the numerator
of which is the number of Shares held by the
Participant on December 31, 1999 and the denominator
of which is eight (8).
B. The increase in value of the Capital Intensive
Business shall be equal to the amount, if any, by which the
Market Value of the Capital Intensive Business at December
31, 1999, increased by dividends paid by Mid-America to
IPALCO and the other shareholders of Mid-America, if any,
during the Performance Period and reduced by capital
contributions made by IPALCO and the other shareholders of
Mid-America, if any, to Mid-America during the Performance
Period, exceeds the Market Value of the Capital Intensive
Business as of January 1, 1995. To the extent that there
is a sale of product lines or business which results in
value added under paragraph D below, the Committee shall
adjust the amount determined under this paragraph if
necessary to preclude such sale proceeds from being counted
twice in determining the incentive compensation payable
under this Plan.
C. The increase in value of the Non-Capital
Intensive Business shall be equal to the simple average of
(i) and (ii) below:
(i) The Sustainable Earnings of the Non-Capital
Intensive Business for the 1999 Fiscal Year times
twelve (12).
(ii) The average annual Earnings of the
Non-Capital Intensive Business for each of the five
(5) Fiscal Years in the Performance Period times
twelve (12);
To the extent that there is a sale of product lines or
business which results in value added under paragraph D
below, the Committee shall adjust the amount determined
under this paragraph if necessary to preclude such sale
proceeds from being counted twice in determining the
incentive compensation payable under this Plan.
D. The value added by a sale of product lines or
business shall be equal to the net proceeds of each and
every product lines or business of the Company sold during
the Performance Period. For purposes of this paragraph,
the net proceeds of any product line or business sold shall
be equal to the amount by which the proceeds of any sale
exceed the January 1, 1995 book value of such business or
product line (disregarding any depreciation), plus any
dividends paid to IPALCO and the other shareholders of the
entity, if any, attributable to such sold product line or
business during the Performance Period and less any capital
contributions made with respect to such sold product line
or business by IPALCO and the other shareholders of the
entity, if any, during the Performance Period. The
determination of net proceeds shall be made by the
Committee, in its sole discretion.
E. Notwithstanding anything contained in Section 3
or in this Section 5 to the contrary, the Committee has the
authority to reduce, in part or in whole, the amount of the
Performance Incentive Award payable to any Participant who
is also a participant in the IPALCO Enterprises, Inc.
Long-Term Performance and Restricted Stock Incentive Plan.
SECTION 6
EMPLOYMENT TERMINATIONS
A. Except as provided in paragraphs B, C, and D of
this Section, the Shares held by a Participant whose
employment with the Company and IPALCO is terminated before
January 1, 1997 or whose employment with the Company and
IPALCO is terminated after January 1, 1997 but before
January 1, 2000 and is a termination by IPALCO or the
Company for Cause or a voluntary termination by the
Participant without Good Reason shall be forfeited, and the
Shares allocated to such terminated Participant shall be
available, at the complete discretion of the Committee, to
be reallocated to other current or new Participants.
B. If a Participant's employment is involuntarily
terminated by the Company and IPALCO without Cause or
voluntarily terminated by the Participant for Good Reason
after January 1, 1997 and before January 1, 2000, the
Shares (including any fractional Shares) held by the
Participant immediately prior to his employment termination
and after adjusted as provided below shall be fully vested
and non-forfeitable. Notwithstanding the prior sentence,
the Shares held by a Participant whose employment is
terminated, may, at the complete discretion of the
Committee, be reduced to an amount no less than the amount
equal to the product of the Shares (or fractional Shares)
held by the Participant before the employment termination
(without regard to any decrease in the Share award on or
after January 1, 1997 in accordance with Section 4.B.) and
a fraction, the numerator of which is equal to the number
of full calendar months in the Performance Period during
which he was an active Participant before his employment
termination and the denominator of which is equal to sixty
(60). Payment of the Performance Incentive Period to any
terminated Participant shall be made in accordance with
Section 7.
C. If a Participant's employment is terminated
involuntarily before January 1, 1997 following the sale of
the business or product lines for which he performed the
greatest percentage of his employment services and he does
not begin employment with the purchaser within three (3)
months from the closing date of the purchase, the vesting
provisions of paragraph B of this Section shall apply
without regard to the January 1, 1997 employment
requirement.
D. If a Participant's employment is terminated
before January 1, 2000 by reason of his retirement on or
after age sixty-five (65), disability (as such term is
defined in the Employees' Retirement Plan of Indianapolis
Power & Light Company) or death, the vesting provisions of
paragraph B of this Section shall apply without regard to
the January 1, 1997 employment requirement. In the case of
a Participant's death, payment shall be made to his
designated beneficiary or, if there is no designated
beneficiary, to his estate.
SECTION 7
PAYMENT
A. Except as provided in paragraph B of this Section
7, Mid-America shall pay in cash to each Participant an
amount equal to his Performance Incentive Award as soon as
practicable after the conclusion of the Performance Period
and after the amount of the Performance Incentive Award is
determined.
B. Notwithstanding anything contained in paragraph
A of this Section to the contrary, the Committee, in its
sole discretion, may (but is not required to) defer the
payment of all or a portion of the Performance Incentive
Award but only to the extent necessary to preserve the
federal income tax deductibility of the cash payment of the
Performance Incentive Award by Mid-America; provided,
however, that to the extent the Company defers payment
until 2001 or later, the amount of any deferred payment
shall begin to accrue interest at the Current Interest Rate
beginning on July 1, 2000. Payments may not be deferred
beyond the first calendar year or years in which the
payment would be deductible by the Company for federal
income tax purposes.
SECTION 8
NO EMPLOYMENT CONTRACT
The Plan is not and is not intended to be an
employment contract with respect to any of the
Participants, and IPALCO's and the Company's rights to
continue or to terminate the employment relationship of any
Participant shall not be affected by the Plan.
SECTION 9
AMENDMENT AND TERMINATION
The Board of Directors of Mid-America may at any time
amend, modify, alter, or terminate the Plan; provided,
however, that any amendment, modification, alteration or
termination to the Plan which increases the number of
Shares available for grant under this Plan or modifies the
vesting provisions set forth in Section 6 shall not be
given effect unless the majority of the Participants
adversely affected by the change consent to the amendment,
modification, alteration or termination.
SECTION 10
INDEMNIFICATION
Each person who is or shall have been a member of the
Board of Directors of IPALCO or Mid-America or the
Committee shall be indemnified and held harmless by
Mid-America against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by
him in connection with or resulting from any claim, action,
suit, or proceeding to which he may be a party or in which
he may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all
amounts paid by him in settlement thereof with
Mid-America's approval, or paid by him in satisfaction of
a judgment in any such action, suit or proceeding against
him, provided he shall give Mid-America an opportunity, at
its own expense, to handle and defend the same before he
undertakes to handle and defend it on his behalf. The
foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such
persons may be entitled under the Mid-America Articles of
Incorporation or Code of By-Laws, as a matter of law, or
otherwise, or any power that Mid-America may have to
indemnify them or hold them harmless.
SECTION 11
GOVERNING LAW
The Plan, and all grants and other documents delivered
hereunder, shall be construed in accordance with and
governed by the laws of Indiana.
SECTION 12
EXPENSES OF PLAN
The expenses of administering the Plan shall be borne
by the Company.
SECTION 13
SUCCESSORS
The Plan shall be binding upon the successors and
assigns of IPALCO and the Company.
SECTION 14
TAX WITHHOLDING
Mid-America shall have the right to withhold from the
Participant or other person receiving payment of a
Performance Award the amount of any federal, state or local
taxes which Mid-America is required to withhold with
respect to such Performance Incentive Awards.
SECTION 15
EFFECTIVE DATE
This Plan shall be effective January 1, 1995.
<TABLE>
IPALCO ENTERPRISES, INC.
Exhibit 11.1 - Computation of Per Share Earnings
For the Quarter Ended March 31, 1995
<CAPTION>
QUARTER ENDED MARCH 31, 1995: Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Weighted Average Number of Shares
Average Common Shares Outstanding at 3/31/95 37,814,171 37,814,171
Anti-Dilutive Effect for Stock Options at 3/31/95 (43,071) (42,508)
---------- ----------
Weighted Average Shares at 3/31/95 37,771,100 37,771,663
========== ==========
Net Income To Be Used To Compute Fully
Diluted Earnings Per Average Common Share (Dollars in thousands)
Net Income $25,903 $25,903
========== ==========
Earnings Per Average Common Share $0.69 (a) $0.69 (a)
========== ==========
Note:
(a) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although not required
by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000728391
<NAME> IPALCO ENTERPRISES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,737,528
<OTHER-PROPERTY-AND-INVEST> 98,688
<TOTAL-CURRENT-ASSETS> 158,197
<TOTAL-DEFERRED-CHARGES> 135,961
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,130,374
<COMMON> 382,974
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 424,838
<TOTAL-COMMON-STOCKHOLDERS-EQ> 809,175
0
51,898
<LONG-TERM-DEBT-NET> 667,678
<SHORT-TERM-NOTES> 35,901
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 350
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 565,372
<TOT-CAPITALIZATION-AND-LIAB> 2,130,374
<GROSS-OPERATING-REVENUE> 175,518
<INCOME-TAX-EXPENSE> 15,588
<OTHER-OPERATING-EXPENSES> 121,652
<TOTAL-OPERATING-EXPENSES> 137,240
<OPERATING-INCOME-LOSS> 38,278
<OTHER-INCOME-NET> 100
<INCOME-BEFORE-INTEREST-EXPEN> 38,378
<TOTAL-INTEREST-EXPENSE> 12,475
<NET-INCOME> 25,903
795
<EARNINGS-AVAILABLE-FOR-COMM> 25,903
<COMMON-STOCK-DIVIDENDS> 20,420
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 76,256
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
