Exhibit 99.6
Annual Report on Form 10-K
A. Item 10 Directors Biographical Information
Class I Directors - Present Terms Expire at 1998 Annual Meeting
ALFRED D. CORDES, 66, was elected to Interstate Power Company's Board
of Directors on January 1, 1992. He was elected Vice President
District Administration and Public Affairs on May 1, 1990 and retired
from that position on July 1, 1995. He has also served as District
Manager and Executive Assistant prior to being appointed Vice
President - District Administration on January 1, 1986. Mr. Cordes
is a member of the Executive Committee.
JOYCE L. HANES, 65, is a Director and Chairman of the Board of
Midwest Wholesale Inc., Mason City, Iowa. Mrs. Hanes has been a
Director of Midwest Wholesale Inc. since 1970. She was re-elected
Chairman of the Board of that Company in December 1997 having served
as Chairman from 1986 to 1988. She is a member of the Board of
Directors of the Iowa Student Loan Liquidity Corporation. She was
elected a Director of Interstate Power Company on January 1, 1982.
Mrs. Hanes is Chairman of the Audit Committee, and a member of the
Compensation Committee and the Executive Committee.
Class II Directors - Present Terms Expire at 1999* Annual Meeting
JAMES E. BYRNS, 71, is Chairman and Chief Executive Officer of Custom
Pak, Inc. of Clinton, Iowa, a firm of which he was co-founder in
1974. Mr. Byrns was elected to this position on August 15, 1989. He
had been President of that Company since 1980 having served as
Executive Vice President from 1974. He was elected to Interstate
Power Company's Board of Directors on January 31, 1984. Mr. Byrns is
Chairman of the Nominating Committee and is a member of the Audit
Committee and the Compensation Committee.
*In October of 1996 Mr. Byrns reached age 70, the mandatory
retirement age for Directors, the Board of Directors adopted in July
of 1996 and May of 1997 resolutions authorizing the continued service
of Mr. Byrns as a Class II Director from October, 1996 until the 1998
Annual Meeting of Stockholders or the effective date of the merger
with WPL Holdings, Inc, IES Industries Inc. and IPC, whichever came
first.
GERALD L. KOPISCHKE, 66, was elected to Interstate Power Company's
Board of Directors effective July 10, 1992. Mr. Kopischke was
elected Vice President - Electric Operations on September 1, 1980 and
retired from that position on January 1, 1996. He had served as
Director of Electrical Engineering prior to being appointed as Vice
President. Mr. Kopischke is a member of the Nominating Committee.
Class III Directors - Present Terms Expire at 2000 Annual Meeting
ALAN B. ARENDS, 64, is Chairman of the Board of Alliance Benefit
Group Financial Services, Corp. (formerly Arends Associates, Inc.,)
of Albert Lea, Minnesota, an employee benefits company which he
founded in 1983. Mr. Arends has also taught at both the high school
and college levels. He was elected to the Board of Directors of the
Company on August 15, 1993. Mr. Arends is Chairman of the
Compensation Committee and a member of the Audit Committee.
MICHAEL R. CHASE, 59, was elected to Interstate Power Company's Board
of Directors in January of 1996. He was elected President effective
October 1, 1996. He was elected Chief Executive Officer on January 1,
1997. He had served as Vice President, Power Production beginning in
1991 and then Executive Vice President starting in July 1995. Mr.
Chase is a member of the Nominating Committee.
WAYNE H STOPPELMOOR, 64, is Chairman of the Board of Directors of
Interstate Power Company. He was elected to the IPC Board in July
1986. He was elected president and Chief Executive Officer effective
January 1, 1987 and was elected Chairman on May 1, 1990. He resigned
from the position of President effective October 1, 1996 but
continued as Chief Executive Officer until he retired as an officer
on January 1, 1997. Mr. Stoppelmoor has served as Vice president of
Administration beginning in 1978 and then Executive Vice President
starting in May 1985. Mr. Stoppelmoor is Chairman of the Executive
Committee.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's directors, its executive officers, and certain other
officers are required to report their ownership of the Company's common
stock and Preferred Stock and any changes in that ownership to the
Securities and Exchange Commission and the New York Stock Exchange. All
required filings in 1997 were properly made in a timely fashion. In making
this statement, the Company has relied on the representations of the
persons involved and on copies of their reports filed with the Securities
and Exchange Commission.
B. Item 11
Compensation of Directors
During the period of January 1, 1997, to March 31, 1997 all directors
who were not employees of the Company were paid $11,000 per year plus $650
for each directors' meeting in which they participated. Also $650 was
paid each non-employee director for each committee meeting held on a day
separate from a scheduled Board meeting while $325 was paid for each
committee meeting which they attended that was held the same day but not
in conjunction with a Board meeting. Effective April 1, 1997, the annual
retainer for non-employee directors was increased to $12,000 per year.
The fees for any Regular or Special Meeting of the Board as well as
committee meeting held on non-board meeting days were increased to $700.
Fees for committee meetings held on a Board meeting day but not
consecutive of that meeting were increased to $350. The meeting and
committee fees were for non-employee directors only.
Director Emeritus Program-The Company has adopted a Director Emeritus
Program, for present non-employee directors, that will be available during
the transition to a new Interstate Energy Corporation board of directors.
A director emeritus is appointed by the Board of Directors of the Company
and is entitled to serve as such until age 70, but no longer than two
years. Directors emeriti are entitled to receive the annual retainer fee
paid to the Company's or successor Company's regular directors. Directors
emeriti will participate in various board activities but are not voting
members.
All directors who were not employees received reimbursement of out-
of-pocket expenses incurred in connection with directors' or committee
meetings. Each director was included in the Company's group life
insurance program.
Compensation Committee Interlocks and Insider Participation
The Board of Directors accepted the recommendations of the
Compensation Committee for the 1997 salaries at the December 19, 1996
Board Meeting. There were no interlocking and insider positions required
to be disclosed.
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth the total
compensation paid by the Company for all services rendered during 1997,
1996, and 1995 to the Chief Executive Officer and the four other most
highly compensated executive officers (the "named executive officers").
SUMMARY COMPENSATION TABLE
(Dollars)
Annual Compensation
Other
Name and Annual All Other
Principal Position Year Salary($) Bonus($) Compensation ($) Compensation($) 1
Michael R. Chase 1997 225,000 6,750 0 1,600
President and CEO 1996 171,250 0 0 250
1995 138,000 0 0 250
Dale R. Sharp 1997 137,000 4,110 0 1,406
Vice President, 1996 120,000 0 0 250
Engineering - IPC 1995 50,000 0 0
250
Donald E. Hamill 1997 136,000 4,080 0 1,399
Vice President, Budgets 1996 129,000 0 0 250
& Regulatory Affairs - IPC 1995 123,000 0 0 250
William C. Troy 1997 136,000 4,080 0 1,399
Controller - IPC 1996 129,000 0 0 250
1995 123,000 0 0 250
Joseph C. McGowan 1997 127,000 3,810 0 926
Secretary & Treasurer - 1996 120,000 0 0 250
IPC 1995 114,000 0 0 250
____________________
1 All other compensation consists of Company matching contribution to 401(k) plan.
Other Compensation
No officer individually or officers as a group received "Other Annual
Compensation" of $50,000 or 10% of the salary and bonus reported in the
Summary Compensation Table.
Stock Option and Stock Appreciation Right Plans
No director or Officer of the Company held any options to purchase
securities from the Company or its subsidiary during the year 1997.
Agreements with Executives
The Company has entered into Severance Agreements with each of eight
senior executives of the Company (including Messrs. Chase, Hamill,
McGowan, Sharp and Troy) which generally provide for certain benefits in
the event the executive is terminated or resigns under certain
circumstances following a change in control of the Company. The Mergers
will constitute a change in control of the Company for purposes of these
agreements.
Retirement and Employee Benefit Plans
The Company's Pension Plan covers substantially all employees
including officers. Pension Plan benefits depend upon credited service,
age at retirement and compensation. At an assumed retirement age of 65,
the normal retirement benefit for Pension Plan Participants is based on a
formula that applies a factor of 1.17% to the participant's average annual
compensation for the three highest consecutive years plus a factor of .35%
to the participant's average compensation in excess of Social Security
Covered Compensation multiplied by the number of accredited service years
(maximum 35). Optional benefit forms are also available.
The following table displays the maximum annual retirement benefits
payable under the straight life annuity form of pension at the normal
retirement age of 65 for specified remunerations and years of service
under the Pension Plan provisions in effect January 1, 1998.
Estimated Annual Benefits For Years of Service
Listed
Average Annual Compensation
For 3 Highest Paid 20 Years 25 Years 30 Years 35 Years
Consecutive Years
$100,000 $28,221 $35,276 $42,331 $49,387
125,000 $35,821 $44,776 $53,732 $62,686
150,000 $43,421 $54,276 $65,132 $75,987
*175,000 $46,461 $58,076 $69,692 $81,307
*200,000 or greater $46,461 $58,076 $69,692 $81,307
_____________________
*compensation used for benefits is limited to $160,000
For purposes of determining Pension Plan benefits, compensation for
each of the individuals listed in the Summary Compensation Table is the
same as the amounts set forth in that table. The estimated full years of
credited service for benefits at retirement under the Pension Plan for
those executive officers listed in the Summary Compensation Table are:
Michael R. Chase, 35 years; Dale R. Sharp, 35 years; Donald E. Hamill, 35
years; William C. Troy, 23 years; and Joseph C. McGowan, 35 years.
In addition to the Pension Plan, the Supplemental Retirement Plan
(SRP) amended in 1997 provides a supplemental retirement benefit for all
officers of the Company. Benefits begin at the normal retirement date (age
65) or a participant electing early retirement may begin receiving reduced
benefits as early as age 55. For those officers retiring on or after
January 1, 1994, the SRP (1) provides a retirement benefit per month equal
to seventy-five percent of the individual's highest average monthly salary
for any consecutive 12-month period of employment by Interstate prior to
retirement, less the individual's qualified defined benefit retirement
plan benefit and less the individual's social security benefit, and (2)
provides a survivor benefit. The SRP may be funded in part from the
general assets of the Company in addition to the purchase of cost recovery
life insurance policies by the Company.
The following table displays the maximum annual supplemental
retirement benefits payable under the straight life annuity form of
pension at the normal retirement age of 65 for specified remunerations for
the year of retirement under the SRP provisions in effect at January 1,
1998.
Estimated Annual SRP Benefits For Years of Service Listed
Final Annual Salary 20 Years 25 Years 30 Years 35 Years
$125,000 $41,825 $32,870 $23,914 $14,960
150,000 $52,975 $42,120 $31,264 $20,409
175,000 $68,685 $57,070 $45,454 $33,839
200,000 $87,435 $75,820 $64,204 $52,589
225,000 $106,185 $94,570 $82,954 $71,339
250,000 $124,935 $113,320 $101,704 $90,089
The Company has an Amended Deferred Compensation Plan available to
officers and nonemployee directors and provides for deferral of salaries
and fees with accrued interest.
In 1988, the Company adopted a 401(k) Plan in which all Employees of
the Company are eligible to participate, subject to meeting Plan
eligibility requirements. Under the provisions of this Plan, any eligible
employee may elect to direct up to 15% of his or her compensation, as
defined in the Plan, with a maximum contribution of $9,500 for the year
1997. Any amount so deferred by the employee is exempt from current
federal income tax. Directors who are not employees are not eligible to
participate in the Plan. To encourage participation in this Plan, the
Company contributes to the account of participating employees 25 cents for
each one dollar contributed by the employee, on contributions that do not
exceed 4% of compensation. Upon retirement from the Company, employees may
receive distributions from their account held by the Plan Trustee.
C. Item 12
PRINCIPAL HOLDERS OF VOTING SECURITIES
Security Ownership of Certain Beneficial Owners
The Company represents that as of December 31, 1997, to the best of its
knowledge only the following persons or groups owned of record or
beneficially more than 5% of the outstanding voting securities of the
Company:
Amount and Nature
of
Name of Beneficial % of
Beneficial Owner Title of Class Ownership (1) Ownership (1)
WPLH IPC Common Stock 1,903,293 16.6%
IES IPC Common Stock 1,903,293 16.6%
(1) By reason of the Stock Option Agreements, each of WPLH and IES may
be deemed to have sole voting and dispositive power with respect to the
shares listed above which are subjected to their respective Options from
IPC and, accordingly, each of WPLH and IES may be deemed to beneficially
own all of such shares (assuming exercise of its Option and the
nontriggering of the other party's right to exercise its Option for IPC
Common Stock). However, each of WPLH and IES expressly disclaim any
beneficial ownership of such shares because the Options are exercisable
only in certain circumstances.
Security Ownership of Management
The directors and officers of the Company owned of record and
beneficially on December 31, 1997, an aggregate of 36,115 shares of Common
Stock of the Company, representing less than 1% of the shares outstanding.
The Company represents that as of December 31, 1997, to the best of its
knowledge beneficial ownership of shares of each class of equity
securities of the Company by all directors and nominees individually, the
CEO and certain named executive officers individually, and the directors
and officers of the Company as a group is as follows:
Amount and Nature
of Beneficial % of
Name of Nominee Title of Class(1) Ownership(2)(3) Ownership
Alan B. Arends Common Stock 986 *
James E. Byrns Common Stock 2,949 *
Michael R. Chase Common Stock 5,894 *
Alfred D. Cordes Common Stock 1,508(4) *
Donald E. Hamill Common Stock 2,800(4) *
Joyce L. Hanes Common Stock 1,676 *
Gerald L. Kopischke Common Stock 4,676(4) *
Joseph C. McGowan Common Stock 2,640(4) *
Dale R. Sharp Common Stock 2,686(4) *
Wayne H. Stoppelmoor Common Stock 5,373(4) *
William C. Troy Common Stock 409(4) *
Officers and Directors as a
group - 14 in group Common Stock 36,115(4) *
* - less than 1%
1) In addition to Common Stock, the Company also has, as equity
securities, outstanding shares of Preferred Stock.
(2) Information with respect to beneficial ownership based upon
information furnished by each officer or director and contained in
filings made with the Securities and Exchange Commission.
(3) Includes shares in which said director or officer may have an
indirect beneficial ownership by reason of the ownership of such
shares by their spouses, dependent children or trusts.
(4) Includes 2,087 shares for Mr. Stoppelmoor, 1,693 shares for Mr.
Kopischke, 2,096 shares for Mr. Hamill, 197 shares for Mr. Cordes,
1,086 shares for Mr. Sharp, 304 shares for Mr. Troy, 2500 shares
for Mr. McGowan and an aggregate of 13,508 shares for officers and
directors. These shares are in the Company's 401(k) Plan as of
December 31, 1997.