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
September 30, 1999 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.)
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 September 30, 1999
----- ---------------------------------
Common (Without Par Value) 85,727,614 Shares
<PAGE>
IPALCO ENTERPRISES, INC. AND SUBSIDIARIES
-----------------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Statements of Consolidated Income - Three Months Ended and
Nine Months Ended September 30, 1999 and 1998 2
Consolidated Balance Sheets - September 30, 1999 and
December 31, 1998 3
Statements of Consolidated Cash Flows -
Nine Months Ended September 30, 1999 and 1998 4
Notes to Consolidated Financial Statements 5-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-17
PART II. OTHER INFORMATION 18-19
- -------- -----------------
<PAGE>
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 Nine Months Ended
September 30 September 30
1999 1998 1999 1998
-------------- -------------- -------------- --------------
UTILITY OPERATING REVENUES:
<S> <C> <C> <C> <C>
Electric $ 221,844 $ 215,246 $ 607,299 $ 592,694
Steam 6,671 6,782 25,057 26,361
-------------- -------------- -------------- --------------
Total operating revenues 228,515 222,028 632,356 619,055
-------------- -------------- -------------- --------------
UTILITY OPERATING EXPENSES:
Operation:
Fuel 43,026 49,645 131,969 133,894
Other 33,728 38,801 97,248 112,147
Power purchased 25,427 2,899 29,455 6,748
Purchased steam 1,218 1,042 4,581 4,158
Maintenance 18,906 15,132 55,733 50,167
Depreciation and amortization 27,008 26,696 80,362 77,359
Taxes other than income taxes 8,660 9,429 26,281 26,887
Income taxes - net 22,128 26,719 65,628 66,690
-------------- -------------- -------------- --------------
Total operating expenses 180,101 170,363 491,257 478,050
-------------- -------------- -------------- --------------
UTILITY OPERATING INCOME 48,414 51,665 141,099 141,005
-------------- -------------- -------------- --------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 270 359 940 884
Other - net 1,253 2,134 589 2,856
Gain on termination of agreement - 12,500 - 12,500
Income taxes - net 1,405 (3,395) 6,053 1,275
-------------- -------------- -------------- --------------
Total other income - net 2,928 11,598 7,582 17,515
-------------- -------------- -------------- --------------
INCOME BEFORE INTEREST AND OTHER CHARGES 51,342 63,263 148,681 158,520
-------------- -------------- -------------- --------------
INTEREST AND OTHER CHARGES:
Interest 15,335 15,390 47,235 48,697
Allowance for borrowed funds used during construction (175) (229) (592) (625)
Preferred stock transactions 803 803 2,410 2,003
-------------- -------------- -------------- --------------
Total interest and other charges - net 15,963 15,964 49,053 50,075
-------------- -------------- -------------- --------------
NET INCOME $ 35,379 $ 47,299 $ 99,628 $ 108,445
============== ============== ============== ==============
BASIC EARNINGS PER SHARE (Note 2) $ 0.41 $ 0.53 $ 1.16 $ 1.21
============== ============== ============== ==============
DILUTED EARNINGS PER SHARE (Note 2) $ 0.41 $ 0.52 $ 1.15 $ 1.19
============== ============== ============== ==============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
September 30 December 31
ASSETS 1999 1998
------
-------------- -------------
UTILITY PLANT:
<S> <C> <C>
Utility plant in service $ 2,910,611 $ 2,859,899
Less accumulated depreciation 1,274,725 1,202,356
-------------- -------------
Utility plant in service - net 1,635,886 1,657,543
Construction work in progress 78,419 80,198
Property held for future use 10,719 10,719
-------------- -------------
Utility plant - net 1,725,024 1,748,460
-------------- -------------
OTHER ASSETS:
Nonutility property - at cost, less accumulated depreciation 69,765 71,834
Available-for-sale securities (Note 6) 45,058 -
Other investments 12,341 12,234
-------------- -------------
Other assets - net 127,164 84,068
-------------- -------------
CURRENT ASSETS:
Cash and cash equivalents 13,402 9,075
Special deposit (Note 3) 23,500 -
Accounts receivable and unbilled revenue
(less allowance for doubtful accounts
1999, $1,553 and 1998, $1,212) 48,035 39,702
Fuel - at average cost 41,612 39,147
Materials and supplies - at average cost 46,048 48,624
Tax refund receivable 650 9,647
Prepayments and other current assets 9,448 4,863
-------------- -------------
Total current assets 182,695 151,058
-------------- -------------
DEFERRED DEBITS:
Regulatory assets 110,045 116,801
Miscellaneous 16,561 18,558
-------------- -------------
Total deferred debits 126,606 135,359
-------------- -------------
TOTAL $ 2,161,489 $ 2,118,945
============== =============
CAPITALIZATION AND LIABILITIES
------------------------------
CAPITALIZATION:
Common shareholders' equity:
Common stock $ 441,267 $ 434,681
Unearned compensation - restricted stock awards (3,369) (5,384)
Premium on 4% cumulative preferred stock 649 649
Retained earnings 673,994 612,941
Accumulated other comprehensive income (Note 6) 26,934 -
Treasury stock, at cost (557,178) (468,696)
-------------- -------------
Total common shareholders' equity 582,297 574,191
Cumulative preferred stock of subsidiary 59,135 59,135
Long-term debt (less current maturities and
sinking fund requirements) 870,036 907,974
-------------- -------------
Total capitalization 1,511,468 1,541,300
-------------- -------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper 6,600 25,200
Current maturities and sinking fund requirements 84,822 1,425
Accounts payable and accrued expenses 56,178 71,835
Dividends payable 13,870 13,392
Taxes accrued 36,771 20,723
Interest accrued 10,445 14,376
Other current liabilities 12,705 13,731
-------------- -------------
Total current liabilities 221,391 160,682
-------------- -------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
Accumulated deferred income taxes - net 339,072 318,327
Unamortized investment tax credit 39,918 41,993
Accrued postretirement benefits 5,842 10,768
Accrued pension benefits 38,153 39,953
Miscellaneous 5,645 5,922
-------------- -------------
Total deferred credits and other long-term liabilities 428,630 416,963
-------------- -------------
COMMITMENTS AND CONTINGENCIES
TOTAL $ 2,161,489 $ 2,118,945
============== =============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Statements of Consolidated Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30
1999 1998
-------------- --------------
CASH FLOWS FROM OPERATIONS:
<S> <C> <C>
Net income $ 99,628 $ 108,445
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 83,012 77,907
Amortization of regulatory assets 7,633 8,941
Deferred income taxes and investment tax credit adjustments - net (351) (2,116)
Allowance for funds used during construction (1,532) (1,509)
Change in certain assets and liabilities:
Accounts receivable (8,333) 1,386
Fuel, materials and supplies 111 4,606
Accounts payable and accrued expenses (15,657) (6,998)
Taxes accrued 16,048 11,919
Accrued pension benefits (1,800) 1,521
Other - net (5,403) (4,598)
-------------- --------------
Net cash provided by operating activities 173,356 199,504
-------------- --------------
CASH FLOWS FROM INVESTING:
Construction expenditures - utility (52,888) (55,642)
Construction expenditures - nonutility (306) (1,947)
Other (936) 1,804
-------------- --------------
Net cash used in investing activities (54,130) (55,785)
-------------- --------------
CASH FLOWS FROM FINANCING:
Issuance of long-term debt 140,900 230,000
Retirement of long-term debt (95,485) (376,594)
Special deposit (23,500) -
Short-term debt - net (18,600) (22,950)
Common dividends paid (38,061) (35,869)
Issuance of preferred stock - 50,000
Issuance of common stock related to incentive compensation plans 8,709 12,940
Reacquired common stock (88,482) (618)
Other (380) 92
-------------- --------------
Net cash used in financing activities (114,899) (142,999)
-------------- --------------
Net increase in cash and cash equivalents 4,327 720
Cash and cash equivalents at beginning of period 9,075 17,293
-------------- --------------
Cash and cash equivalents at end of period $ 13,402 $ 18,013
============== ==============
- ----------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 48,882 $ 51,929
============== ==============
Income taxes $ 36,878 $ 48,159
============== ==============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
IPALCO ENTERPRISES, INC. AND SUBSIDIARIES
-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. GENERAL
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.
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, including elimination of
all significant intercompany balances and transactions, which are
necessary to present 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 consolidated financial statements included
in Enterprises' 1998 Annual Report on Form 10-K.
2. CAPITAL STOCK
Common Stock
Shares Amount
------ ------
Balance at December 31, 1998 88,863,026 $434,681,738
Exercise of stock options 455,318 8,709,019
Decrease from compensation plans (61,374) (2,123,347)
------------
Balance at September 30, 1999 $441,267,410
============
Less shares reacquired by Treasury (3,529,356)
----------
Shares issued and outstanding at
September 30, 1999 85,727,614
==========
On February 23, 1999, the IPALCO Board of Directors authorized a
two-for-one stock split of IPALCO's common stock issuable to
shareholders at the close of business on March 5, 1999. All references
to share amounts of common stock and per share information reflect the
stock split.
On March 15, 1999,IPALCO completed its common stock repurchase plan that
began in 1998. IPALCO repurchased, in the open market and in privately
negotiated transactions, 6 million shares or 6.6% of its outstanding
stock for a total cost of $154 million.
The following is a reconciliation of the weighted average common shares
for the basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
For the Period Ended September 30,
----------------------------------
Three Months Ended Nine Months Ended
1999 1998 1999 1998
--------------------- -------------------
(In thousands)
<S> <C> <C> <C> <C>
Weighted average common shares 85,720 89,908 86,219 89,812
Dilutive effect of stock options 648 1,302 776 1,332
------- ------- ------- -------
Weighted average common
and incremental shares 86,368 91,210 86,995 91,144
======= ======= ======= =======
</TABLE>
3. LONG-TERM DEBT
IPALCO's Revolving Credit Facility was issued in April 1997 in the
amount of $401 million. The proceeds were used to purchase, through a
self-tender offer, shares of IPALCO's outstanding common stock. During
1998, IPALCO repaid the Revolver with a commercial paper facility. The
Revolver currently has no outstanding balance but is available for
future borrowings. The balance outstanding was $197 million at December
31, 1998, for the commercial paper facility. Proceeds from the issue of
debt during 1999 were used in IPALCO's most recent common stock
repurchase program completed in March 1999. During the third quarter of
1999, IPALCO decreased the outstanding balance of commercial paper from
$244.0 million at June 30, 1999, to $220.0 million at September 30,
1999.
On May 27, 1999, Energy Resources, a subsidiary of Mid-America,
refinanced its $9.5 million 7.25% note due 2011, and its $9.3 million
variable rate note due 2030, with the proceeds of an $18.8 million
variable rate note. The interest rate on the new debt was 3.95% at
September 30, 1999. The new $18.8 million note has a $9.5 million
maturity on December 1, 2011, and the remainder is due on September 1,
2030.
On September 14, 1999, $23.5 million of unsecured long-term notes
payable were issued by IPL. The proceeds were placed in special deposit
to be used in October 1999 for the refunding of its $23.5 million 7.45%
Series first mortgage bonds due 2019. Interest on the new debt will
accrue at tax-exempt auction rates of which the rate was 3.75% at
September 30, 1999, and its maturity date is August 1, 2030.
4. STOCK-BASED COMPENSATION
A summary of options issued under IPALCO's stock option plans is as
follows:
<TABLE>
<CAPTION>
Weighted Average Range of Option Number of
Price per Share Price per Share Shares
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1998................ $14.80 $8.416 - $21.67 2,618,298
Issued..................................... 23.38 23.38 72,000
Exercised.................................. 14.69 8.416 - 20.345 (455,318)
---------
Outstanding, September 30, 1999............... 15.09 8.416 - 23.38 2,234,980
=========
</TABLE>
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in accounting for the
stock based plan have been applied by IPALCO. No compensation cost has
been recognized for the stock option plans because the option price was
equal to fair value at the grant dates. Had compensation cost for the
plans been determined based on the fair value at the grant dates for
awards under the plans consistent with the method of SFAS No. 123,
"Accounting for Stock-Based Compensation," Enterprises' net income for
the nine months ended September 30, 1999, would have decreased from
$99.6 million ($1.15 per share) to the pro forma amount of $99.4 million
($1.14 per share). Enterprises' net income and earnings per share for
the similar period in 1998 would have decreased from $108.4 million
($1.19 per share) to the pro forma amount of $107.9 million ($1.18 per
share). Enterprises estimated the SFAS No. 123 fair value by utilizing
the binomial options pricing model with the following assumptions:
dividend yields of 2.5% to 6.9%, risk-free rates of 6.4% to 6.9%,
volatility of 12% to 16% and expected lives of 5 years.
IPALCO has a Long-Term Performance and Restricted Stock Incentive Plan.
On January 4, 1999, an additional 15,572 shares were issued to reflect
the addition of new participants. During the first quarter of 1999,
76,946 shares of restricted stock were canceled in order to pay taxes on
behalf of participants or as a result of a participant electing to
receive cash in lieu of stock.
5. SEGMENT REPORTING
Enterprises has two business segments (electric and "all other"). Steam
operations of IPL and all subsidiaries other than IPL were combined in
the "all other" category. Pretax operating income for the electric
segment was $70.0 million and $77.9 million and for the "all other"
segment was $2.3 million, and $3.1 million for the three months ended
September 30, 1999, and 1998, respectively. Pretax operating income for
the electric segment was $203.1 million for both the nine months ended
September 1999 and 1998. For the "all other" segment, pretax operating
income was $8.4 million, and $8.7 million for the nine months ended
September 30, 1999, and 1998, respectively. Steam operations of IPL are
included in the caption UTILITY OPERATING INCOME. All other operating
components of all other subsidiaries other than IPL are included in the
caption "Other-net". The cost of property and plant, excluding
construction in progress and property held for future use, is as follows:
September 30 December 31
1999 1998
- --------------------------------------------------------------------------------
(In Thousands)
Electric .................................. $ 2,800,300 $ 2,752,539
All other.................................. 201,935 198,679
------------ ------------
Subtotal............................ $ 3,002,235 $ 2,951,218
=========== ===========
6. COMPREHENSIVE INCOME
Enterprises has classified its investments in marketable equity
securities as available-for-sale, and any unrealized gains or losses are
recorded as a separate component of shareholders' equity. There were no
unrealized gains on securities prior to the third quarter of 1999. During
the third quarter of 1999, Enterprises recorded directly to shareholders'
equity an unrealized after-tax gain of $26.9 million resulting from its
investment in Internet Capital Group, Inc. (Nasdaq:ICGE), an internet
holding company, which went public in August 1999. The gross unrealized
gain on these available-for-sale securities was $43.9 million and the
related taxes would be $17.0 million. The cost basis and the market value
for the investment were $1.2 million and $45.1 million, respectively, at
September 30, 1999. There have been no proceeds from sales of these
securities and no realized gains during 1999. The balance of other
comprehensive income, net of taxes, at September 30, 1999 was $26.9
million.
7. NEW ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging Activities," was
issued in June 1998 and was to be effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. The effective date for
this standard was delayed one year by SFAS 137. The standard is now
effective for all fiscal quarters of all fiscal years beginning after
June 15, 2000. SFAS 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities. It requires that
an entity recognize all derivatives as either assets or liabilities in
the statement of financial condition and measures those instruments at
fair value. If certain conditions are met, a derivative may be
specifically designated as a fair value hedge, a cash flow hedge, or a
hedge of a foreign currency exposure. The accounting for changes in the
fair value of a derivative (that is, gains and losses) depends on the
intended use of the derivative and the resulting designation. Management
has not yet quantified the effect of the new standard on the
consolidated financial statements.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the Reform Act), IPALCO Enterprises, Inc.
(Enterprises) is hereby filing cautionary statements identifying important
factors that could cause Enterprises' actual results to differ materially from
those projected in forward-looking statements of Enterprises. This Form 10-Q,
and particularly Management's Discussion and Analysis and our discussion of the
Year 2000 issues, contains forward-looking statements. The Reform Act defines
forward-looking statements as statements that express an expectation or belief
and contain a projection, plan or assumption with regard to, among other things,
future revenues, income, earnings per share or capital structure. Such
statements of future events or performance are not guarantees of future
performance and involve estimates, assumptions, and uncertainties and are
qualified in their entirety by reference to, and are accompanied by, the
following important factors that could cause Enterprises' actual results to
differ materially from those contained in forward-looking statements made by or
on behalf of Enterprises. The words "anticipate," "believe," "estimate,"
"expect," "forecast," "project," "objective" and similar expressions are
intended to identify forward-looking statements.
Some important factors that could cause Enterprises' actual results or
outcomes to differ materially from those discussed in the forward-looking
statements include, but are not limited to, fluctuations in customer growth and
demand, weather, fuel and purchased power costs and availability, regulatory
action, federal and state legislation, interest rates, labor strikes,
maintenance and capital expenditures and local economic conditions. In addition,
Enterprises' ability to have available an appropriate amount of production
capacity in a timely manner can significantly impact Enterprises' financial
performance. The timing of deregulation and competition, product development and
introductions of technology changes are also important potential factors. Most
of these factors affect Enterprises through its wholly-owned subsidiary,
Indianapolis Power & Light Company (IPL).
All such factors are difficult to predict, contain uncertainties which
may materially affect actual results and are beyond the control of Enterprises.
Enterprises' ability to predict results or effects of issues related to
the Year 2000 is inherently uncertain, and is subject to factors that may cause
actual results to differ materially from those projected. Factors that could
affect the actual results include the possibility that contingency plans or
remediation efforts will not operate as intended; Enterprises' failure to timely
or completely identify all software, hardware or embedded chip devices requiring
remediation; unexpected costs; and the uncertainty associated with the impact of
Year 2000 issues on the utility industry, including other electric utilities
with which Enterprises is interconnected, and on Enterprises' customers, vendors
and others with whom it does business. See "Year 2000" for information about
Enterprises' efforts.
LIQUIDITY AND CAPITAL RESOURCES
Material changes in the consolidated financial condition and results of
operations of Enterprises, except where noted, are attributed to the operations
of IPL. Consequently, the following discussion is centered on IPL.
Overview
- --------
The Board of Directors of Enterprises on July 27, 1999, declared a
quarterly dividend on common stock of 15 cents per share compared to 13.75 cents
per share declared in the third quarter of 1998. The dividend was paid October
15, 1999, to shareholders of record September 17, 1999.
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. Enterprises' construction expenditures (excluding allowance for funds
used during construction) totaled $19.1 million during the quarter ended
September 30, 1999, representing a $4.1 million decrease from the comparable
period in 1998. Internally generated cash provided by operations was used for
construction expenditures during the third quarter of 1999. Enterprises'
construction expenditures (excluding allowance for funds used during
construction) totaled $53.2 million during the nine months ended September 30,
1999, representing a $4.4 million decrease from the comparable period in 1998.
Internally generated cash provided by operations was used for construction
expenditures during the first nine months of 1999.
IPL's construction program includes $28.0 million for construction of a
100-megawatt combustion turbine expected to be in service by June 2000.
Additional information regarding IPL's three-year construction program can be
found in IPALCO's 1998 Form 10-K report. (See "Future Performance" in Item 7 of
Management's Discussion and Analysis of Financial Condition and Results of
Operations in IPALCO's 1998 Form 10-K report for further discussion).
IPALCO's Revolving Credit Facility was issued in April 1997 in the
amount of $401 million. The proceeds were used to purchase, through a
self-tender offer, shares of IPALCO's outstanding common stock. During 1998,
IPALCO repaid the Revolver with a commercial paper facility. The Revolver
currently has no outstanding balance but is available for future borrowings. The
balance outstanding was $197 million at December 31, 1998, for the commercial
paper facility. Proceeds from the issue of debt during 1999 were used in
IPALCO's most recent common stock repurchase program completed in March 1999.
During the third quarter of 1999, IPALCO decreased the outstanding balance of
commercial paper from $244.0 million at June 30, 1999, to $220.0 million at
September 30, 1999.
On May 27, 1999, Energy Resources, a subsidiary of Mid-America,
refinanced its $9.5 million 7.25% note due 2011, and its $9.3 million variable
rate note due 2030, with the proceeds of an $18.8 million variable rate note.
The interest rate on the new debt was 3.95% at September 30, 1999. The new $18.8
million note has a $9.5 million maturity on December 1, 2011, and the remainder
is due on September 1, 2030.
On September 14, 1999, $23.5 million of unsecured long-term notes
payable were issued by IPL. The proceeds were placed in special deposit to be
used in October 1999 for the refunding of its $23.5 million 7.45% Series first
mortgage bonds due 2019. Interest on the new debt will accrue at tax-exempt
auction rates of which the rate was 3.75% at September 30, 1999, and its
maturity date is August 1, 2030.
OTHER
Market Risk Sensitive Instruments and Positions
- -----------------------------------------------
The primary market risk to which Enterprises is exposed is interest
rate risk. Enterprises uses long-term debt as a primary source of capital in its
business. A portion of this debt has an interest component that resets on a
periodic basis to reflect current market conditions. The following table
presents the principal cash repayments and related weighted average interest
rates by maturity date for Enterprises' long-term fixed-rate debt and its other
types of long-term debt at September 30, 1999:
<TABLE>
<CAPTION>
Maturity Schedule
Period Ending September 30
Fair
(Dollars in Millions) 2000 2001 2002 2003 2004 Thereafter Total Value
- ---------------------------------------------------------------------------------------------------------------
Long-term debt
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate $25.2 $3.3 $3.5 $3.8 $84.0 $423.6 $543.4 $540.7
Average rate 7.5% 7.9% 7.9% 7.9% 6.1% 7.0% 6.9%
Variable - - - - - $192.3 $192.3 $192.3
Average rate - - - - - 3.7% 3.7%
Recapitalization debt $59.6 $80.2 $80.2 - - - $220.0 $220.0
Average rate 6.7% 6.7% 6.7% - - - 6.7%
</TABLE>
To manage Enterprises' exposure to fluctuations in interest rates and
to lower funding costs, Enterprises constantly evaluates the use of, and has
entered into, interest rate swaps. Under these swaps, Enterprises or its
subsidiaries agree with counterparties to exchange, at specified intervals, the
difference between fixed-rate and floating-rate interest amounts calculated on
an agreed notional amount. This interest differential paid or received is
recognized in the consolidated statements of income as a component of interest
expense.
At September 30, 1999, IPALCO had an interest rate swap agreement
outstanding with a notional amount of $175 million, of which the notional amount
decreases $25 million each quarter. Enterprises has agreed to pay a fixed rate
of 6.3575% and receive a floating rate based on applicable LIBOR.
At September 30, 1999, IPL had an interest rate swap agreement with a
notional amount of $40 million, which expires in January 2023. IPL pays interest
at a fixed rate of 5.21% to a swap counter party and receives a variable rate
based on the tax-exempt weekly rate.
New Environmental Standards
- ---------------------------
On July 16, 1997, the United States Environmental Protection Agency
(EPA) promulgated final regulations which amended the National Ambient Air
Quality Standards by introducing standards for fine particulate matter and
creating new ozone standards. On October 29, 1999, after conducting a rehearing
of its initial decision of May 14, 1999, the United States Court of Appeals for
the District of Columbia Circuit determined that the new ozone standards were
not issued lawfully, but left open the question of future remedy. The Court also
determined that the standards for fine particulate matter were legally deficient
in certain respects.
Prior to the Court of Appeals' decision, on October 27, 1998, the EPA
issued a final rule calling for Indiana, along, with 22 other jurisdictions in
the eastern third of the United States, to impose more stringent limits on
emission of nitrogen oxides from fossil-fuel fired steam electric generators,
such as those operated by Enterprises. This final rule was based, in part, on
the new ozone standards that were the subject of the Court of Appeals' decisions
on May 14, 1999 and October 29, 1999. In a separate decision on May 25,1999, the
Court of Appeals issued a stay of a portion of EPA's 1998 final rule.
Because power plants emit nitrogen oxides, as well as certain, air
pollutants that could contribute to the formation of fine particulate matter,
there is a possibility that existing Enterprises sources will be required to be
retrofitted with additional air pollution controls in the future, either as a
result of EPA's 1997 and 1998 regulations or due to future regulatory actions.
Litigation concerning EPA's 1997 and 1998 final regulations is ongoing in the
United States Court of Appeals. EPA continues to seek rulings from the Court
that the 1997 and 1998 final regulations are lawfully and fully effective. Due
to these uncertainties, it is not presently possible to predict the effects of
these regulations on Enterprises.
Year 2000
- ---------
Enterprises is potentially subject to operational problems associated
with the inability of various computer hardware, software and devices containing
embedded chips to properly process the year change from 1999 to 2000. Such
problems could conceivably affect Enterprises' ability to deliver electricity,
steam or chilled water to its customers, as well as Enterprises' internal
operations such as billing or payroll functions. Further, Year 2000 problems
experienced by other entities, over which Enterprises has no control, such as
certain suppliers or other electric utilities with which Enterprises is
interconnected, could adversely affect Enterprises' operations.
In 1997, Enterprises established a Year 2000 Committee. Enterprises
currently manages the Year 2000 project through three employee committees, the
Compliance Testing Committee and the Contingency Planning Committee, each headed
by corporate officers, and the Tactical Support Committee. Each of those
committees reports to a Year 2000 Steering Committee composed of officers. The
Year 2000 Steering Committee reports to the Office of the Chairman, who reports
to the Board of Directors. Enterprises has a formal Year 2000 Plan approved by
the Board of Directors.
The Indiana Utility Regulatory Commission has ordered all Indiana
public utilities, including Enterprises, to "use their best efforts to identify
their mission critical operations and conduct an inventory of all electronic
devices that may be affected by date processing logic, assess the status of
these devices, take steps to correct problems in the devices and test the
devices to determine compliance" in order to be "Year 2000 ready."
The Compliance Testing Committee has essentially completed its
activities of inventorying, reviewing, analyzing, correcting and testing
computer-related systems and embedded chip devices. The Contingency Planning
Committee has assessed various operating scenarios associated with potential
Year 2000 problems and formulated plans by which to operate Enterprises in the
event of such problems. Both the Compliance Testing Committee and the
Contingency Planning Committee concentrated first on systems critical to the
continuity of Enterprises' business and then on non-critical systems.
Enterprises is participating in an Electric Power Research Institute
program on the Year 2000 issue, as well as the North American Electric
Reliability Council (NERC) system readiness assessments.
Enterprises' Year 2000 Plan includes attention to its generating
facilities, energy management systems, telecommunications systems, substation
control and protection systems, transmission and distribution systems, business
information systems, financial systems and business partners. It includes
assessing Year 2000 risks to computer hardware, software and embedded systems;
identifying options and solutions; evaluating solutions; repairing, upgrading
and replacing systems; testing systems; and contingency planning.
State of Readiness
Enterprises' subsidiary, IPL, has reported to NERC that it believes its
mission-critical systems used to produce and deliver electricity are ready for
date changes associated with the Year 2000. The NERC definition of "Y2K Ready"
is that a system or application has been determined to be suitable for continued
use into the Year 2000.
A. Identification and Assessment
The Compliance Testing Committee reviewed the enterprise-wide use of
information technology and assessed potential Year 2000 problems. That effort
involved making an inventory of applications and systems and evaluating
exposures associated with, for example, vendor-provided software and hardware,
Enterprises-developed software, and various devices containing embedded chips.
The Committee has also been in contact with vendors to determine product
compliance and vendors' timeframes for compliance. Computer systems reviewed
include hardware, machine microcode and firmware, operating systems, generic
applications software, billing software, communications software and financial
software.
The Compliance Testing Committee has assessed computer systems and
embedded chip devices related to Enterprises':
Electricity generating stations and plants producing steam
and/or chilled water;
Energy management systems;
Substation controls, system protection, and transmission
and distribution systems;
Telecommunications systems; and
Business information systems.
The identification, inventory and assessment phases for critical
systems are now complete. The Compliance Testing Committee continues to be
vigilant for issues that may come to light and is also working on non-critical
systems.
B. Remediation and Testing
The Compliance Testing Committee has modified or replaced legacy
systems which may not be Year 2000 compliant. Enterprises has replaced most of
its key financial software applications. Although that project was not
specifically initiated as a Year 2000 effort, it coincidentally replaced
non-compliant software.
The Compliance Testing Committee also established and operated
appropriate testing environments to determine, to the extent possible, the Year
2000 compliance of existing systems and/or devices and the compliance of
replacement or upgraded systems and devices. Enterprises employed a variety of
the following techniques: component tests, simulations, outside testing, vendor
verifications or upgrades or change-outs. Some devices or systems, such as
satellite communication links, are not susceptible to testing, in which cases
Enterprises must rely on the service providers' verifications.
Enterprises has inquired of its suppliers and vendors of software,
computer-related equipment, devices and services about Year 2000 compliance.
Some provided the requested information and/or assurances and some did not.
Enterprises' operations could be adversely affected by Year
2000-related failures of other companies, such as telecommunication providers,
that supply Enterprises with mission-critical services. Similarly, Year 2000
failures of other utilities with which Enterprises is interconnected could
adversely affect Enterprises' ability to deliver services to its customers.
With the exception of one accounting sub-system, testing of which
Enterprises expects to complete by mid-November 1999, Enterprises has completed
the remediation and testing phases for all critical systems. Enterprises is
operating its major electricity generating units with clocks set in year 2000.
Enterprises also participated in two national NERC drills, testing utilities'
ability to operate facilities without normal communication services and
simulating some events that could occur upon the date roll-over. No problems
were encountered.
Costs to Address Enterprises' Year 2000 Issues
Not including the cost of replacing Enterprises' business software, a
project not initiated specifically for Year 2000 reasons but which provided Year
2000 benefits through replacing non-compliant software, Enterprises currently
estimates that its costs of the phases of identification, assessment,
remediation and testing may be approximately $4.7 million which Enterprises
believes is not material to its results of operations, liquidity and financial
condition. Of that figure, Enterprises has currently expended approximately $3.5
million. A substantial proportion of the costs of remediation are associated
with functional areas of Enterprises other than Information Services.
Enterprises currently estimates that its cost of contingency planning efforts
may be approximately $2.1 million.
Risks of Enterprises' Year 2000 Issues
In light of the numerous computer-related systems and embedded chip
devices present in business and production equipment used by a utility, and the
interdependent nature of control systems, a large number of conceivable Year
2000 failure scenarios exist, potentially involving Enterprises' internal
functions (such as billing), as well as its chilled water, steam and electricity
generation and distribution functions. Consequences could conceivably range from
essentially no operational problems to a massive disruption of chilled water,
steam and electric service lasting for a significant period of time. Enterprises
believes the probability of outages caused by Year 2000 problems is small.
Further, since Enterprises does not stand alone but is electrically
interconnected with other utilities across a substantial portion of the nation,
even if Enterprises experiences no significant Year 2000 problems associated
with its own equipment, its ability to deliver electricity could be adversely
affected by Year 2000 failures experienced by other interconnected utilities.
The probability of such failures is believed to be small. Enterprises currently
expects to experience at least some, hopefully minor, problems associated with
Year 2000. Some conceivable, though unlikely, Year 2000 failure scenarios could
be material to Enterprises' results of operations.
There are both external and internal risks associated with Year 2000
that could affect Enterprises' chilled water, steam and electricity generation,
transmission and distribution operations. Potential internal risk factors
include, but are not limited to, increased risk of generator trips, inability to
start or restart generators, increased risk of transmission facility trips, loss
of energy management systems, loss of Company-owned voice/data communications,
system protection (relay) failures resulting in cascading outages or facility
damage, failure of load-shedding controls to operate properly, failure of load
management systems to operate properly, loss of or incorrect critical operating
data, failure of environmental control systems, loss of distribution systems or
failure of voltage control devices to operate properly. Occurrences of those
internal problems, alone or in combination, could result in varying effects on
Enterprises' operations. Concerns over these occurrences are minimal based on
testing results that indicate no Year 2000-related problems with key generation
and transmission control systems. Enterprises' generating units' control systems
have been tested for critical dates and are already operating in the year 2000.
External risk factors include, but are not limited to, loss of customer
load, uncharacteristic load patterns, loss of leased communication facilities,
failure of delivery systems to maintain supplies of fuel and severe or cold
weather. Occurrences of a variety of those events, alone or in combination,
could result in varying effects on Enterprises.
In view of the unprecedented nature of the Year 2000 phenomenon, it is
not clear whether insurance policy language in policies insuring Enterprises
will be interpreted to cover or bar claims, if any, arising out of Year 2000
events.
In light of the many adverse conditions that could conceivably happen to
Enterprises associated with Year 2000, along with the speculation that many of
them may not happen, it is extremely difficult to hypothesize a most reasonably
likely worst case Year 2000 scenario with any degree of certainty. With that in
mind, Enterprises believes the most reasonably likely worst case scenario would
be an isolated partial reduction in generating unit capacity due to minor
systems failures with no interruption of power to Enterprises' customers.
Enterprises does not believe that the worst case scenario will occur and, should
it occur, Enterprises believes that the consequences of that scenario, with
regard to either costs of repair or lost revenues, are not likely to have a
material effect on Enterprises' results of operations, liquidity and financial
condition.
Enterprises' Contingency Plans
The Contingency Planning Committee has reviewed hypothetical scenarios
involving various Year 2000 system or device failures and prepared plans by
which to operate Enterprises in the event those failures occur. Enterprises'
contingency planning involves the phases of plan development, testing, execution
and recovery after Year 2000 events. As with compliance testing, contingency
planning touches essentially every area of Enterprises' operations, as well as
interactions with interconnected utilities, customers, critical vendors and
emergency and other governmental authorities.
The planning phase involved activities to identify and evaluate
potential impacts on business operations, life, property, and the environment;
develop emergency plans including establishing procedures for mitigation of
failures and evaluate contingency planning being done on systems that interface
with Enterprises' systems; identify dates of action for various contingencies;
establish responsibility and authority for various response efforts; and
establish and perform a training program with respect to responding to
contingencies, including practicing and testing the contingency plans and
coordinating the efforts with governmental functions.
Contingency planning includes consideration of potential interruptions
in the supply chain or transportation of critical fuel, water, chemicals,
material supplies etc., and acquisition of appropriate extra supplies, as well
as potential failures of or other problems associated with the interconnected
electricity grid. Enterprises' existing disaster recovery plans have formed
bases for some Year 2000 contingency plans.
In the testing phase, various drills have been and will be conducted to
test the plans' effectiveness. Modifications have been made where testing
indicated a need. In the execution phase, Enterprises will operate its
contingency plans in response to events actually occurring.
After Year 2000 events, if any, Enterprises will execute its post-event
contingency plans as required. It will test its system functions, review the
results, restore and restart systems, and notify appropriate authorities of the
resolution of problems.
<PAGE>
RESULTS OF OPERATIONS
Comparison of Third Quarter and Nine Months Ended September 30, 1999
--------------------------------------------------------------------
with Third Quarter and Nine Months Ended September 30, 1998
-----------------------------------------------------------
Diluted earnings per share during the third quarter of 1999 was $.41,
or $.11 below the $.52 attained in the comparable 1998 period. Weighted average,
diluted shares for the 1999 third quarter were 86.4 million compared to 91.2
million for the same period in 1998 due to IPALCO's repurchase of 6 million
common shares between December 1998 and March 1999. Diluted earnings per share
during the first nine months of 1999 was $1.15, or $.04 below the $1.19 attained
in the comparable 1998 period. Weighted average, diluted shares for the nine
months ended September 30, 1999, were 87.0 million compared to 91.1 million for
the same period in 1998. The following discussion highlights the factors
contributing to the third quarter and nine months ended results.
Operating Revenues
- ------------------
Operating revenues increased $6.5 million during the third quarter
ended September 1999 compared to the similar period last year. Operating
revenues for the nine months ended September 1999 increased $13.3 million from
the comparable 1998 period. These results were due to the following:
Increase (Decrease) from Comparable 1998 Period
-----------------------------------------------
September 30, 1999
------------------
Three Months Ended Nine Months Ended
------------------ -----------------
(Millions of Dollars)
Electric:
Change in retail KWH sales - net of fuel $ 10.3 $ 18.7
Fuel revenue 2.2 3.9
Wholesale revenue (6.5) (6.7)
DSM Tracker revenue 0.3 0.4
Steam revenue (0.1) (1.3)
Other revenue 0.3 (1.7)
------- -------
Total change in operating revenues $ 6.5 $ 13.3
======= =======
The third quarter and nine months increase in retail KWH sales compared
to the similar periods in 1998 resulted from a $9.9 million change in the
estimate for unbilled revenue as well as from economic growth in Indianapolis.
The third quarter of 1999 saw milder temperatures compared to last year. As a
result, cooling degree days decreased 4%. The nine month ended increase in
retail KWH sales compared to the same period in 1998 reflects colder weather
during the first quarter of 1999 partially offset by milder weather during the
summer. As a result, heating degree days were up 16% while cooling degree days
were down 5% during the nine months ended September 30, 1999, compared to the
same period in 1998. The changes in fuel revenues in 1999 from the prior year
reflect changes in total fuel costs billed to customers. Wholesale revenue
decreased during the third quarter and nine months ended of 1999 due to an
unusually high level of generating unit outages during peak demand conditions.
Operating Expenses
- ------------------
Fuel costs decreased by $6.6 million and $1.9 million in the third
quarter and nine months ended September 1999, respectively, compared to the
similar periods last year. The third quarter decrease was primarily due to an
unusually high level of generating unit outages during the third quarter of
1999. The nine months ended decrease was primarily due to decreased average fuel
costs partially offset by increased total KWH sales.
Other operating expenses decreased $5.1 million and $14.9 million in
the third quarter and nine months ended September 1999, respectively, compared
to the similar periods in 1998. The third quarter decrease was primarily due to
decreased administrative and general expense of $4.4 million relating to
decreased benefits expense, and decreased distribution expense of $1.0 million.
The nine months ended decrease was due to decreased administrative and general
expense of $6.2 million, increased sales of emission allowances of $4.7 million
(reduces operating expenses), decreased customer service and information expense
of $2.1 million and decreased distribution expense of $1.4 million.
Power purchased increased $22.5 million and $22.7 million during the
third quarter and nine months ended September 30, 1999, compared to the similar
periods last year. These increases were due to the unusually high level of
generating unit outages during peak demand conditions ($13.4 million) and higher
market prices for scheduled summer peaking power ($9.1 million).
Maintenance expense increased $3.8 million and $5.6 million during the
third quarter and nine months ended September 30, 1999, compared to the similar
periods last year. The increase in expense was due to unplanned maintenance for
unit outages. Also contributing to the nine months ended increase was the
overhaul of unit 1 at the Petersburg plant during early 1999.
As a result of the foregoing, utility operating income decreased 6.3%
during the third quarter of 1999 from the comparable 1998 period, to $48.4
million. Utility operating income during the nine months ended September 1999
increased .1% from the comparable 1998 period, to $141.1 million.
Other Income and Deductions
- ---------------------------
Other - net, which includes the pretax operating and investment income
from operations other than IPL, as well as non-operating income from IPL,
decreased $.9 million and $2.3 million, during the third quarter and nine months
ended periods, respectively. The third quarter decrease resulted from increased
net losses from operations other than IPL. The nine months ended decrease was
due primarily to increased civic expenditures.
During the third quarter of 1998, a gain from the termination of an
agreement to purchase power was recognized by IPL in the amount of $12.5
million.
Interest and Other Charges
- --------------------------
Interest expense decreased $1.5 million for the nine months ended
September 30, 1999, compared to the similar period last year primarily as a
result of the reduction of the principal amount on the recapitalization debt
facility of IPALCO.
New Accounting Pronouncement
- ----------------------------
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities," that Enterprises will be required to adopt in 2001 (see
Note 7 in the Notes to Consolidated Financial Statements for further
discussion).
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- ------- -----------------
None
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits. Copies of documents listed below which are
identified with an asterisk (*) are incorporated herein
by reference and made a part hereof.
3.1* Articles of Incorporation of IPALCO Enterprises, Inc., as amended.
(Exhibit 3.1 to the Form 10-Q dated 6-30-97.)
3.2* Bylaws of IPALCO Enterprises, Inc, as amended. (Exhibit 3.2 to the
Form 10-Q dated 3-31-99.)
4.1* IPALCO Enterprises, Inc. IPALCO PowerInvest Dividend Reinvestment and
Direct Stock Purchase Plan. (Exhibit 4.1 to the Form 10-Q dated
9-30-96.)
4.2* IPALCO Enterprises, Inc. and First Chicago Trust Company of New York
(Rights Agreement as amended and restated).(Exhibit B to the Form 8-K
dated 4-28-98.)
11.1 Computation of Per Share Earnings.
21.1* Subsidiaries of the Registrant. (Exhibit 21.1 to the Form 10-K dated
12-31-97.)
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
None
<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.
IPALCO ENTERPRISES, INC.
-----------------------------
(Registrant)
Date: November 12, 1999 /s/ John R. Brehm
--------------------- -----------------------------
John R. Brehm
Vice President and Treasurer
Date: November 12, 1999 /s/ Stephen J. Plunkett
--------------------- -----------------------------
Stephen J. Plunkett
Controller
<TABLE>
IPALCO ENTERPRISES, INC.
Exhibit 11.1 - Computation of Per Share Earnings
For the Quarter Ended September 30, 1999
<CAPTION>
QUARTER ENDED SEPTEMBER 30, 1999:
Basic Diluted
-------------- -------------
Weighted average number of shares
<S> <C> <C>
Average common shares outstanding at September 30, 1999 85,720,314 85,720,314
Dilutive effect for stock options at September 30, 1999 - 647,524
-------------- -------------
Adjusted weighted average shares at September 30, 1999 85,720,314 86,367,838
============== =============
Net income to be used to compute
diluted earnings per share (Dollars in
thousands)
Net income $35,379 $35,379
============== =============
Earnings Per Share $0.41 $0.41
============== =============
For the Nine Months Ended September 30, 1999
NINE MONTHS ENDED SEPTEMBER 30, 1999:
Basic Diluted
-------------- -------------
Weighted average number of shares
Average common shares outstanding at September 30, 1999 86,218,762 86,218,762
Dilutive effect for stock options at September 30, 1999 - 775,940
-------------- -------------
Adjusted weighted average shares at September 30, 1999 86,218,762 86,994,702
============== =============
Net income to be used to compute
diluted earnings per share (Dollars in
thousands)
Net income $99,628 $99,628
============== =============
Earnings Per Share $1.16 $1.15
============== =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000728391
<NAME> IPALCO ENTERPRISES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,725,024
<OTHER-PROPERTY-AND-INVEST> 127,164
<TOTAL-CURRENT-ASSETS> 182,695
<TOTAL-DEFERRED-CHARGES> 126,606
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,161,489
<COMMON> 441,267
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 673,994
<TOTAL-COMMON-STOCKHOLDERS-EQ> 582,297
0
59,135
<LONG-TERM-DEBT-NET> 870,036
<SHORT-TERM-NOTES> 6,600
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 84,822
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 558,599
<TOT-CAPITALIZATION-AND-LIAB> 2,161,489
<GROSS-OPERATING-REVENUE> 632,356
<INCOME-TAX-EXPENSE> 65,628
<OTHER-OPERATING-EXPENSES> 425,629
<TOTAL-OPERATING-EXPENSES> 491,257
<OPERATING-INCOME-LOSS> 141,099
<OTHER-INCOME-NET> 7,582
<INCOME-BEFORE-INTEREST-EXPEN> 148,681
<TOTAL-INTEREST-EXPENSE> 49,053
<NET-INCOME> 99,628
2,410
<EARNINGS-AVAILABLE-FOR-COMM> 99,628
<COMMON-STOCK-DIVIDENDS> 38,061
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 173,356
<EPS-BASIC> 1.16
<EPS-DILUTED> 1.15
</TABLE>
