EXHIBIT 2
SUMMARY UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
The following Summary Unaudited Pro Forma Consolidated Balance Sheet and
Summary Unaudited Pro Forma Statement of Consolidated Income have been
prepared based on the Company's consolidated balance sheet as of December 31,
1996 and the related statement of consolidated income for the year then
ended. The pro forma adjustments assume the issuance of $410 million of
additional long-term debt by IPALCO Enterprises, Inc. (the "Holding
Company"), the acquisition by the Holding Company of 12,000,000 shares of
Common Stock at $34.00 per share, the payment of related debt issuance and
stock reacquisition costs and first year's interest and debt amortization
expense.
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEETS AS OF DECEMBER 31, 1996
(In thousands except ratios and per share amounts)
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
Assets:
- ------
Utility Plant-Net $1,787,969 $1,787,969
Other Assets-Net 113,661 113,661
Current Assets:
Cash and Cash Equivalents 19,317 $410,000 (1a)
(408,000)(2b)
(2,000)(3c) 19,317
Other Current Assets 104,382 104,382
Deferred Debits 157,740 1,000 (3b) 158,740
---------- -------- -----------
Total Assets $2,183,069 $1,000 $2,184,069
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Capitalization and Liabilities:
- ------------------------------
Capitalization:
Common Stock $389,966 $0 $389,966
Premium on 4% Preferred Stock 1,363 1,363
Retained Earnings 466,397 466,397
Treasury Stock ($1,000) (3a)
(408,000) (2a) (409,000)
----------- --------- ---------
Total Common Shareholders' Equity 857,726 (409,000) 448,726
Preferred Stock 51,898 51,898
Long-Term Debt 662,591 328,000 (1b) 990,591
----------- -------- ---------
Total Capitalization 1,572,215 (81,000) 1,491,215
----------- -------- ---------
Current Liabilities:
Notes Payable 46,000 46,000
Current Maturities 11,250 82,000 (1c) 93,250
Other 135,466 135,466
----------- ------- ---------
Total Current Liabilities 192,716 82,000 274,716
Deferred Credits and Other 418,138 418,138
----------- ------- ----------
Total Capitalization and Liabilities $2,183,069 $1,000 $2,184,069
=========== ======= ==========
Capitalization Ratios:(10)
Common Shareholders' Equity 54.17% 28.32%
Preferred Stock 3.28% 3.28%
Long-Term Debt 42.55% 68.40%
------- -------
Total Capitalization 100.00% 100.00%
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SUMMARY UNAUDITED PRO FORMA
STATEMENT OF CONSOLIDATED INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(In thousands except ratios and per share amounts)
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
Utility Operating Revenues $762,503 $762,503
-------- --------
Utility Operating Expenses 599,284 599,284
-------- -------
Utility Operating Income 163,219 163,219
-------- -------
Other Income and (Deductions):
IPALCO Enterprises, Inc. ("Holding Company") (1,551) $10,263 (4)
126 (5b) 8,838
Other 3,107 3,107
-------- ------- -------
Total Other Income and Deductions 1,556 10,389 11,945
-------- ------- --------
Interest and Other Charges:
Interest on Long-Term Debt 45,110 27,060 (6) 72,170
Other 2,208 333 (5a) 2,541
Preferred Dividend Requirement of IPL 3,182 3,182
-------- ------- --------
Total Interest and Other Charges-Net 50,500 27,393 77,893
-------- ------- --------
Net Income $114,275 ($17,004) $97,271
======== ======= ========
Weighted Average Common Shares Outstanding 56,924 (12,000)(7) 44,924
Earnings Per Common Share (12) $2.01 $2.17
Common Shares Outstanding 57,035 (12,000)(7) 45,035
Dividends Declared Per Share $1.48 $1.00 (8)
Book Value Per Share (14) $15.04 $9.96
Ratio of Earnings to Fixed Charges (13) 4.58x 2.98x
Interest and Dividend Coverage (11) 1.15 1.34
NOTES TO SUMMARY UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS AND
STATEMENT OF CONSOLIDATED INCOME:
(1) Represents the (1a) proceeds of $410 million from the issuance of a
$410 million five-year bank debt facility by the Holding Company at
an assumed annual interest rate of 6.6%. The pro forma assumes (1b)
$328 million classified as long-term and (1c) current maturities of
long-term debt of $82 million.
(2) Represents the Holding Company (2a) reacquisition of 12,000,000
Shares of IPALCO Enterprises, Inc. common stock (Treasury Stock)
assumed at the maximum price of $34.00 per share for (2b) cash.
There can be no assurance that the Holding Company will repurchase
12,000,000 Shares or that the Shares will be repurchased at a
price of $34.00.
(3) Represents the payment by the Holding Company of (3a) treasury stock
acquisition costs and (3b) debt issuance expense for (3c) cash.
(4) Represents the tax benefit of the additional pro forma interest
expense calculated using IPALCO's effective income tax rate of
37.925%.
(5) Represents (5a) one year amortization of the pro forma debt issuance
expense and (5b) the related tax benefit.
(6) Represents the pro forma additional interest expense for a full year
at the Holding Company calculated at an assumed 6.6% annual fixed
rate on the bank loan proceeds of $410 million.
(7) Represents the pro forma reduction in weighted average common shares
outstanding for the year 1996 and in common shares outstanding at
December 31, 1996.
(8) Reflects the pro forma annualized dividend authorized by the IPALCO
Enterprises, Inc. Board of Directors on February 25, 1997.
(9) All ratios and per share amounts listed in the "Pro Forma" column
have been adjusted to reflect the transactions reflected in the "Pro
Forma Adjustments" column.
(10) Capitalization ratios have been calculated including the current
maturities of long-term debt.
(11) Interest and dividend coverage ratios were calculated by dividing the
sum of net income, debt interest, preferred dividends of subsidiary
less AFUDC (allowance for funds used during construction) by the sum
of debt interest, preferred dividends of subsidiary and common
dividends declared.
(12) All earnings per share data are based on the weighted average shares
outstanding during the applicable periods. The potential dilution
from the exercise of common stock options is not material.
(13) The ratios of earnings to fixed charges were calculated by dividing
the sum of pre-tax income and fixed charges by fixed charges. Fixed
charges include all interest expense (before allowance for borrowed
funds used during construction), one-third of rent expense (which
approximates the interest component of such expense) and amortization
of debt expense.
(14) Book value per share is calculated as the total shareholders' equity
divided by the number of shares outstanding at the end of the period.