FORM 10-K

                       SECURlTlES AND EXCHANGE COMMlSSlON
                             WASHINGTON, D. C. 20549

       [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

         For the fiscal year ended
           December 31, 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

         Securities Registered Pursuant to Section 12(b) of the Act:

                                                     Name of Each Exchange
         Title of Each Class                          on Which Registered
         IPALCO Enterprises, Inc.                       New York Stock Exchange
             Common Stock (without par value)           Chicago Stock Exchange
             Common Share Purchase Rights               New York Stock Exchange
                                                        Chicago Stock Exchange

         Securities Registered Pursuant to Section 12(g) of the Act:  None

         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 by check mark if disclosure of delinquent  filers  pursuant to
         Item 405 of  Regulation  S-K is not contained  herein,  and will not be
         contained,  to the best of registrant's  knowledge, in definitive proxy
         or information statements incorporated by reference in Part III of this
         Form 10-K or any amendment to this Form 10-K. ( )

         As of January 31, 2000, the aggregate  market value of the voting stock
         held by non-affiliates of the registrant was:  $1,330,676,506  based on
         the average of the high and low price of the common stock on such date.
         As  of  January  31,  2000,   there  were  85,700,469   shares  of  the
         registrant's common stock (without par value) outstanding.
                      -------------------------------------

         DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the IPALCO Enterprises, Inc. definitive Proxy Statement for
         the Annual  Meeting of  Shareholders  to be held on April 19, 2000, are
         incorporated by reference into Part III of this Report.

                                     PART I
                                     ------

Item 1.       BUSINESS
              --------

ORGANIZATION

       IPALCO   Enterprises,   Inc.  (IPALCO)  is  a  holding  company  and  was
incorporated  under the laws of the state of  Indiana  on  September  14,  1983.
IPALCO has 13 employees and has two (2) subsidiaries: Indianapolis Power & Light
Company (IPL), a regulated  electric and steam service utility,  and Mid-America
Capital  Resources,  Inc.  (Mid-America),  a  holding  company  for  unregulated
businesses.  IPALCO  and  its  subsidiaries  are  collectively  referred  to  as
"Enterprises."

       Enterprises  has two business  segments,  electric and "all other." Steam
operations of IPL and all  subsidiaries  other than IPL are combined in the "all
other" segment (see Note 15 in the Notes to  Consolidated  Financial  Statements
for additional information about segments).

DESCRIPTION OF BUSINESS OF SUBSIDIARIES

                       INDIANAPOLIS POWER & LIGHT COMPANY

GENERAL

       IPL was  incorporated  under the laws of the state of Indiana in 1926 and
is a wholly-owned  subsidiary of IPALCO. IPL is engaged primarily in generating,
transmitting,   distributing   and  selling  electric  energy  in  the  city  of
Indianapolis  and neighboring  cities,  towns,  communities,  and adjacent rural
areas,  all within the state of Indiana,  the most distant  point being about 40
miles from Indianapolis. It also produces,  distributes and sells steam within a
limited  area in such  city.  There  have  been no  significant  changes  in the
services  rendered,  or in the  markets or methods  of  distribution,  since the
beginning  of the fiscal  year.  IPL intends to do business of the same  general
character as that in which it is now engaged.  Indiana law authorizes
electricity  suppliers to have exclusive  retail service areas.

       IPL's business is not dependent on any single  customer or group of a few
customers. IPL's electricity sales for 1995-1999 are depicted on page I-5.

       The electric  utility  business is affected by seasonal  weather patterns
throughout  the year and,  therefore,  the  operating  revenues  and  associated
operating expenses are not generated evenly by month during the year.

       IPL's  generation,  transmission  and distribution  facilities  (electric
system) are described in Item 2, "PROPERTIES." IPL's electric system is directly
interconnected with the electric systems of Indiana Michigan Power Company,  PSI
Energy,  Inc.,  Southern Indiana Gas and Electric  Company,  Wabash Valley Power
Association,  Hoosier  Energy Rural Electric  Cooperative,  Inc. and the Indiana
Municipal Power Agency.

       Also, IPL is a member of the East Central Area Reliability  Group (ECAR),
and is cooperating under an agreement that provides for coordinated  planning of
generation and  transmission  facilities and the operation of such facilities to
promote  reliability  of bulk power supply in the  nine-state  region  served by
ECAR.  Smaller electric utility systems,  independent  power producers and power
marketers participate as associate members.

REGULATION

       IPL is subject to regulation by the Indiana Utility Regulatory Commission
(IURC)  as  to  its  services  and  facilities,   valuation  of  property,   the
construction,   purchase   or   lease   of   electric   generating   facilities,
classification of accounts, rates of depreciation,  rates and charges,  issuance
of securities  (other than  evidences of  indebtedness  payable less than twelve
months  after the date of issue),  the  acquisition  and sale of public  utility
properties or securities  and certain other matters (see Note 10 in the Notes to
Consolidated Financial Statements).

       In addition,  IPL is subject to the  jurisdiction  of the Federal  Energy
Regulatory   Commission  (FERC),  with  respect  to  short-term  borrowings  not
regulated  by the  IURC,  the  sale  and  transmission  of  electric  energy  in
interstate commerce,  the classification of its accounts and the acquisition and
sale of utility  property  in certain  circumstances  as provided by the Federal
Power Act.

       IPL is also subject to federal,  state and local  environmental  laws and
regulations,  particularly as to generating station discharges affecting air and
water quality. The impact of compliance with such regulations on the capital and
operating costs of IPL has been and will continue to be substantial (see Item 7,
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS" under "Competition and Industry Changes").

RETAIL RATEMAKING

       IPL's tariffs for electric and steam service to retail  customers  (basic
rates and charges) are set and approved by the IURC after public hearings.  Such
proceedings,  which have occurred at irregular intervals, involve IPL, the staff
of the IURC, the Office of the Indiana Utility  Consumer  Counselor,  as well as
other  interested  consumer  groups and customers.  In Indiana,  basic rates and
charges are determined after giving consideration,  on a pro-forma basis, to all
allowable  costs for  ratemaking  purposes  including  a fair return on the fair
value of the utility property used and useful in providing service to customers.
Once set, the basic rates and charges  authorized do not assure the  realization
of a fair return on the fair value of  property.  Pursuant to statute,  the IURC
conducts a periodic  review of the basic rates and charges of all  utilities  at
least once every four years. Other numerous factors  including,  but not limited
to,  weather,  inflation,  customer  growth  and  usage,  the  level  of  actual
maintenance and capital expenditures,  fuel costs,  generating unit availability
and  purchased  power  costs and  availability  can affect the return  realized.
During 1998, in an order  resulting from an IPL initiated  proceeding,  the IURC
declined to exercise its jurisdiction in part over IPL customers who voluntarily
select service under IPL's Elect Plan option.  Under two of these  options,  the
customer's  prices are not adjusted for changes in fuel costs or other  factors.
During 1999,  the total revenue from  customers  choosing the Elect Plan options
was $68  million.  The  Elect  Plan  will  expire  in  September  2001  unless a
subsequent plan is approved by the IURC.  Substantially  all other IPL customers
are served  pursuant to retail  tariffs that provide for the monthly  billing or
crediting to customers of increases or  decreases,  respectively,  in the actual
costs of fuel  consumed  from  estimated  fuel costs  embedded in base  tariffs,
subject to certain restrictions on the level of operating income.  Additionally,
most such  retail  tariffs  provide  for  billing of "lost  revenue  margins" on
estimated  kilowatt-hour  (kWh) sales reductions along with current and deferred
costs resulting from IPL's IURC-approved  demand side management programs (DSM).
IPL  maintains  its  books  and  records   consistent  with  generally  accepted
accounting  principles  reflecting  the impact of regulation  (see Note 1 in the
Notes to Consolidated Financial Statements and Item 7, "MANAGEMENT'S  DISCUSSION
AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS" under "Nature of
Operations and Regulatory Matters").

       Future events,  including the advent of retail  competition  within IPL's
service  territory,  could result in the  deregulation of part of IPL's existing
regulated  businesses  (see  "Competition  and  Industry  Changes"  in  Item  7,
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS"). Upon deregulation,  adjustments to IPL's accounting records may be
required to eliminate  the  historical  impact of  regulatory  accounting.  Such
adjustments,  as required by Statement of Financial Accounting Standards No. 101
(SFAS 101),  "Regulated  Enterprises  - Accounting  for the  Discontinuation  of
Application  of FASB  Statement  No. 71," would  eliminate  the  "effects of any
actions of regulators that have been  recognized as assets and  liabilities...."
Required  adjustments  could include expensing of any unamortized net regulatory
assets,  elimination of certain tax liabilities and a write down of any impaired
utility plant balances.  IPL does not expect to be required to adopt SFAS 101 in
the near term.

FUEL

       In  1999,  approximately  99% of  the  total  kWh  produced  by IPL  were
generated from coal. Natural gas, No. 2 fuel oil and purchased steam combined to
provide  the  remaining  kWh  generation.  Natural  gas is used in  IPL's  newer
combustion turbines.  In addition to use in oil-fired generating units, fuel oil
is used for start up and flame stabilization in coal-fired generating units.

       IPL's long-term coal contracts  provide for the major portion of its burn
requirements  through the year 2005. The long-term coal agreements are with four
suppliers  and the  coal is  mined  entirely  in the  state  of  Indiana.  It is
presently  believed  that all coal  used by IPL  will be  mined by  others.  IPL
normally  carries  fuel oil and a 60-day  supply  of coal to  offset  unforeseen
occurrences  such as labor  disputes,  equipment  breakdowns  and power sales to
other  utilities.  IPL increases its stockpile to an  approximate  80-day supply
when strikes are  anticipated in the coal industry.  In preparation for possible
supply problems with Year 2000 issues,  IPL temporarily  increased its stockpile
to an approximate 100-day supply at the end of 1999.

EMPLOYEE RELATIONS

       As of  December  31,  1999,  IPL had  1,936  employees  of whom  971 were
represented  by the  International  Brotherhood of Electrical  Workers,  AFL-CIO
(IBEW) and 307 were represented by the Electric Utility Workers Union (EUWU), an
independent  labor  organization.  In September 1999, the membership of the IBEW
ratified a new labor  agreement  that remains in effect until December 16, 2002.
The agreement provided for general pay adjustments of 4% in December 1999, 2% in
December  2000 and 2% in December  2001,  and changes in pension and health care
coverage.  In February of 1998,  the membership of the EUWU ratified a new labor
agreement that remains in effect until February of 2001. The agreement  provided
for  general  pay  adjustments  of 3% in  both  1998  and  1999,  as  well as an
adjustment of 2% in 2000.  The agreement  also provides for increases in pension
amounts.


                MID-AMERICA CAPITAL RESOURCES, INC. (Mid-America)

GENERAL

     Mid-America,   the  holding  company  for  the  unregulated  activities  of
Enterprises,  has as subsidiaries  Mid-America  Energy  Resources,  Inc. (Energy
Resources),  Indianapolis  Campus Energy,  Inc. (ICE),  Cleveland Thermal Energy
Corporation  (Cleveland  Thermal) and  Cleveland  District  Cooling  Corporation
(Cleveland Cooling).

     Mid-America   has  also  made   investments   in  entities  which  are  not
subsidiaries.  At December 31, 1999, it had an  investment  in Internet  Capital
Group,  Inc.  (Nasdaq:  ICGE).  Mid-America  also had an  investment in EnerTech
Capital  Partners II L.P., a venture  capital fund.  (See Item 7,  "MANAGEMENT'S
DISCUSSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" under
"LIQUIDITY AND CAPITAL RESOURCES" within the subsection "IPALCO.")

       Energy   Resources   operates  a  district  cooling  system  in  downtown
Indianapolis, Indiana.

       ICE owns and operates an energy  system  under  contract to Eli Lilly and
Company (Lilly) to provide cooling capacity to the Lilly Technology  Center,  in
Indianapolis, Indiana.

       Cleveland  Thermal  owns  and  operates  a  district  heating  system  in
Cleveland,  Ohio.  Cleveland Cooling owns and operates a district cooling system
also located in  Cleveland.  Cleveland  Thermal and  Cleveland  Cooling  conduct
business jointly under the name Cleveland Energy Resources.


EMPLOYEES

       As of  December  31,  1999,  Mid-America  and  its  subsidiaries  had  82
employees. There are no labor organizations.
<PAGE>
<TABLE>
<CAPTION>

                                              IPALCO ENTERPRISES, INC.
                                         STATISTICAL INFORMATION - ELECTRIC

The following table of statistical information presents additional data on IPL's
operation.

                                                                Year Ended December 31,
                                  ------------------------------------------------------------------------------------
Operating Revenues (In              1999 (1)         1998 (1)          1997 (1)            1996              1995
Thousands):
                                  ------------     ------------    --------------     -------------     --------------
<S>                               <C>              <C>             <C>                <C>               <C>
  Residential                     $   282,254      $   269,351     $     261,832      $    261,819      $     243,055
  Small industrial and commercial     127,027          122,082           125,131           131,465            130,009
  Large industrial and commercial     328,903          321,103           306,761           298,720            275,803
  Public lighting                      10,386            9,754             9,324             9,043              8,369
  Miscellaneous                        10,600           12,469            12,050             9,264              8,289
                                  ------------     ------------    --------------     -------------     --------------
    Revenues - ultimate consumers     759,170          734,759           715,098           710,311            665,525
  Sales for resale - REMC               1,035              936             1,082             1,141              1,105
  Sales for resale - other             40,132           50,140            21,954            13,312              6,758
                                  ------------     ------------    --------------     -------------     --------------
      Total electric revenues     $   800,337      $   785,835     $     738,134      $    724,764      $     673,388
                                  ============     ============    ==============     =============     ==============

Kilowatt-hour Sales (In
Millions):
  Residential                           4,510            4,359             4,276             4,367              4,277
  Small industrial and commercial       1,928            1,888             1,969             2,117              2,197
  Large industrial and commercial       7,187            7,138             6,857             6,772              6,509
  Public lighting                          73               71                69                71                 73
                                  ------------     ------------    --------------     -------------     --------------
    Sales - ultimate consumers         13,698           13,456            13,171            13,327             13,056
  Sales for resale - REMC                  33               31                29                29                 28
  Sales for resale - other              1,968            2,252             1,111               725                394
                                  ------------     ------------    --------------     -------------     --------------
      Total kilowatt-hours sold        15,699           15,739            14,311            14,081             13,478
                                  ============     ============    ==============     =============     ==============

Customers at End of Year:
  Residential                         385,799          379,943           374,686           370,029            365,163
  Small industrial and commercial      42,610           42,230            41,137            40,393             39,772
  Large industrial and commercial       4,107            4,036             3,960             3,657              3,557
  Public lighting                         509              445               357               313                290
                                  ------------     ------------    --------------     -------------     --------------
    Total ultimate consumers          433,025          426,654           420,140           414,392            408,782
  Sales for resale - REMC                   1                1                 1                 1                  1
                                  ------------     ------------    --------------     -------------     --------------
      Total electric customers        433,026          426,655           420,141           414,393            408,783
                                  ============     ============    ==============     =============     ==============


(1) Includes estimated  electric  operating revenue and kilowatt-hour  sales for
services  delivered  but not billed  during the period (see Notes 1 and 3 in the
Notes to Consolidated Financial Statements).
</TABLE>


Item 2.       PROPERTIES
              ----------

IPL

       IPL's executive offices are in the IPALCO Corporate Center located at One
Monument  Circle,  Indianapolis,  Indiana.  This  facility  also houses  certain
administrative operations of certain other IPALCO subsidiaries.

       IPL also owns two  distribution  service  centers in Indianapolis at 1230
West Morris  Street and 3600 North  Arlington  Avenue.  IPL's  customer  service
center is located at 2102 North Illinois Street in Indianapolis.

       IPL owns and operates three primarily  coal-fired  generating plants that
are used for  electric  generation.  IPL also  operates  one coal and  gas-fired
plant.  For electric  generation,  the total gross nameplate rating is 3,024 MW,
winter  capability  is 3,036 MW and  summer  capability  is 2,956 MW.  For steam
generation, gross capacity is 1,990 Mlbs. (thousands of pounds) per hour.

       Total Electric Stations:

     H.  T.  Pritchard  plant   (Pritchard),   located  25  miles  southwest  of
Indianapolis  (seven units in service - one each in 1949,  1950,  1951, 1956 and
1967 and two in 1953)  with 367 MW  nameplate  rating  and net winter and summer
capabilities of 344 MW and 341 MW, respectively.

     E. W. Stout plant (Stout)  located in the  southwest  part of Marion County
(eleven units in service - one each in 1941,  1947,  1958,  1961, 1967, 1994 and
1995 and four in 1973)  with 921 MW  nameplate  rating and net winter and summer
capabilities of 1,000 MW and 924 MW, respectively.

     Petersburg plant (Petersburg), located in Pike County, Indiana (seven units
in  service - four in 1967 and one each in 1969,  1977 and 1986)  with  1,716 MW
nameplate rating and net winter and summer capabilities of 1,672 MW.

     Combination Electric and Steam Station:

     C.C.Perry  Section K plant (Perry K),  located in  Indianapolis  with 20 MW
nameplate rating (net winter  capability 20 MW, summer 19 MW) for electric and a
gross winter and summer capacity of 1,990 Mlbs. per hour for steam.


       Net  electrical  generation  during 1999,  at the  Petersburg,  Stout and
Pritchard stations accounted for about 69.0%, 23.3% and 7.7%,  respectively,  of
IPL's total net  generation.  Perry K produced all of the steam generated by IPL
for the steam  system.  In addition,  IPL  purchases  steam from an  independent
resource recovery system in Indianapolis.

       Included  in the above  totals are three gas  turbine  units at the Stout
station  added in 1973,  one gas turbine added in 1994 and one gas turbine added
in 1995 with a combined  nameplate rating of 214 MW. Also included is one diesel
unit each at Pritchard  and Stout  stations and three diesel units at Petersburg
station, all added in 1967. Each diesel unit has a nameplate rating of 3 MW.

       During 1998, IPL announced  plans to construct up to 200 megawatts of new
combustion  turbines  (CTs).  The new  turbines  would be used  during  times of
highest or "peak"  electric  demand.  One  turbine is  expected  to be placed in
service by June 2000, and is included in the construction  forecast. IPL filed a
petition with the IURC  recommending that the IURC decline its jurisdiction over
IPL's planned construction and operation of the new CTs and adopt an alternative
procedure for dealing with the sale of power produced by the CTs to IPL's retail
customers.  During 1999, the IURC agreed to decline to exercise its jurisdiction
over the  construction  of the CTs.  The  Commission  also  agreed  to defer any
determinations regarding all ratemaking issues until a later proceeding.

       IPL's  transmission  system  includes  457 circuit  miles of 345,000 volt
lines,  359  circuit  miles of 138,000  volt lines and 269 miles of 34,500  volt
lines.  Underground  distribution  and service  facilities  include 686 miles of
conduit  and  6,487  wire  miles  of  conductor.   Underground  street  lighting
facilities  include 108 miles of conduit and 760 wire miles of  conductor.  Also
included  in the  system  are 73  bulk  power  substations  and 69  distribution
substations.

       Steam distribution properties include 22 miles of mains with 238 customer
connections.  Other properties  include coal and other minerals,  underlying 798
acres in Sullivan County, Indiana, and coal underlying about 6,215 acres in Pike
and Gibson  Counties,  Indiana.  IPL owns  approximately  4,067  acres in Morgan
County, Indiana and approximately 884 acres in Switzerland County,  Indiana, for
future plant sites.

       All  critical  facilities  owned  by IPL  are  well  maintained,  in good
condition and meet the present needs of IPL.

       The Mortgage  and Deed of Trust of IPL,  together  with the  Supplemental
Indentures thereto (the "Mortgage"),  secure first mortgage bonds issued by IPL.
Pursuant to the terms of the Mortgage,  substantially  all property owned by IPL
is subject to a direct first mortgage lien.

OTHER SUBSIDIARIES

       Energy  Resources owns and operates a district  cooling  facility located
near downtown  Indianapolis,  which  distributes  chilled  water to  subscribers
located  downtown for their air  conditioning  needs. The plant is equipped with
six 5,000 ton  chillers  powered by steam  purchased  from IPL and one 2,250 ton
chiller powered by electricity purchased from IPL.

       Cleveland Thermal owns and operates two steam plants in Cleveland,  Ohio,
with a total of eight boilers  having a gross  capacity of 1,025 Mlbs. per hour.
The  distribution  system  includes  15.5  miles  of mains  with  289  services.
Cleveland  Cooling owns and operates a district  cooling  facility  located near
downtown  Cleveland,  which  distributes  chilled water to  subscribers  located
downtown for their air conditioning  needs. The plant is equipped with two 5,000
ton chillers powered by electricity.

       In 1997,  Enterprises  initiated  a plan to sell during  1998,  Cleveland
District Cooling  Corporation and Cleveland  Thermal  Corporation  (collectively
referred to as CER) and ceased recording depreciation.  During the third quarter
of 1998,  Enterprises determined that it was not probable that CER would be sold
during 1998, and resumed depreciation on these assets.  Enterprises  anticipates
the sale of CER in 2000.

       ICE owns and operates a chilled  water  facility in  Indianapolis,  which
serves  the  chilled  water  requirements  of  Eli  Lilly  and  Company's  Lilly
Technology  Center.  The plant is equipped with three 5,000 ton chillers powered
by electricity purchased from IPL.

       Substantially  all the property of Mid-America  and its  subsidiaries  is
subject to the lien of existing  debt and/or credit  agreements of  Mid-America,
Energy Resources and ICE.

Item 3.       LEGAL PROCEEDINGS
              -----------------

     IPL is a  party  to  State  of  Michigan  et al v.  U.S.  EPA a  proceeding
                          ----------------------------------------
instituted in November,  1998, now pending in the U.S. Court of Appeals for
the  District of Columbia  Circuit.  This is a petition for review of EPA's rule
promulgated  October 27, 1998,  requiring Indiana and 22 other  jurisdictions to
impose more stringent  limitations on emissions of nitrogen oxides (the "NOx SIP
Call").  Petitioners challenging the NOx SIP Call include seven states, about 60
investor-owned electric utility companies, numerous trade associations, serveral
municipal utilities,  co-ops, and labor unions.  Intervenor-respondents  include
several  environmental  interest groups,  Canada, eight states in the Northeast,
and several eastern electric utility companies.

     EPA's NOx SIP Call would require  operators of coal-fired  electric utility
boilers in the affected states to limit NOx emissions to 0.15 pounds per million
BTUs of heat input as a system-wide average. That limit calls for a reduction of
about 85% from 1990 average emissions from coal-fired  electric utility boilers,
and a reduction of about 57% from Enterprises' current emissions.

     It is not possible to predict  whether  EPA's NOx SIP Call will  ultimately
survive judicial review.  Nor is it possible to predict  accurately the costs of
compliance.  Enterprises'  preliminary estimates are that the NOx SIP Call would
necessitate capital expenditures of about $180 million.

Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              ---------------------------------------------------

       None

EXECUTIVE OFFICERS OF THE REGISTRANT AT FEBRUARY 29, 2000.

       Name, age (at December 31, 1999),  and positions and offices held for the
past five years:

                                                    From               To
                                                    ----               --
John R. Hodowal (54)
  Chairman of the Board and
    President of IPALCO                         May, 1989
  Chairman of the Board of IPL                  February, 1990
  Chief Executive Officer of IPL                May, 1989

Ramon L. Humke (67)
  Vice Chairman of IPALCO                       May, 1991
  President and Chief Operating
    Officer of IPL                              February, 1990

John R. Brehm (46)
  Vice President and Treasurer
    of IPALCO                                   May, 1989
  Senior Vice President - Finance of IPL        May, 1998
  Senior Vice President - Finance
    and Information Services of IPL             May, 1991        May, 1998

Stephen M. Powell (49)
  Senior Vice President -
    Energy Supply of IPL                        May, 1998
  Manager of Engineering and
    Production Services of IPL                  June, 1994       May, 1998

N. Stuart Grauel (55)
  Vice President - Public Affairs
    of IPALCO                                   May, 1991

Bryan G. Tabler (56)
  Vice President -
    Secretary and General Counsel of IPALCO     January, 1995
  Senior Vice President -
    Secretary and General Counsel of IPL        January, 1995

Ralph E. Canter (43)
  Senior Vice President -
    Customer Services of IPL                    May, 1998
  Vice President -
    Steam Operations                            May, 1995        May, 1998
  Manager of Steam Operations                   October, 1990    May, 1995

Paul S. Mannweiler (50)
  Senior Vice President -
    External Affairs of IPL                     January, 1997
  Partner, Locke Reynolds Boyd and Weisell      July, 1980       December, 1996

Max Califar (46)
  Vice President - Human
    Resources of IPL                            December, 1992

Michael P. Holstein (42)
  Vice President - Strategic Business
        Initiatives of IPALCO                   May, 1998
  Vice President - Corporate
    Strategy and Marketing                      April, 1996      May, 1998
  Corporate Strategies of IPL                   July, 1995       April, 1996
  Senior Manager, Deloitte & Touche LLP         March, 1994      July, 1995

Michael G. Banta (49)
  Vice President - Financial Strategy           May, 1998
  Vice President and Assistant General
      Counsel of IPL                            July, 1995       May, 1998

Daniel L. Short (42)
  Assistant Treasurer of IPALCO                 January, 2000
  Treasurer of IPL                              January, 2000
  Treasurer of Mid-America Capital Resources    January, 1995

Stephen J. Plunkett (51)
  Controller of IPALCO
    and IPL                                     May, 1991
<PAGE>

                              PART II
                              -------

Item 5. MARKET FOR REGISTRANT'S COMMON  EQUITY AND RELATED STOCKHOLDER MATTERS
        ----------------------------------------------------------------------

        On March  15,  1999,  IPALCO  completed  its most  recent  common  stock
purchase plan initiated in late 1998.  This plan resulted in IPALCO's  purchase,
in the open market and in privately negotiated transactions, of 6 million shares
or 6.6% of its  outstanding  common  stock.  All shares  purchased  remained  in
Treasury stock at December 31, 1999.

       IPALCO's  initial  stock  purchase  plan  resulted  in  the  purchase  of
25,078,856  shares of IPALCO's  common  stock  during  1997,  which  remained in
Treasury stock at December 31, 1999.

       At December 31, 1999, IPALCO had 18,758 holders of common stock of record
(including  shareholders  whose  shares  are  held in  IPALCO  PowerInvest,  the
Dividend  Reinvestment  and Direct Stock  Purchase  Plan of IPALCO  Enterprises,
Inc.).  IPALCO's  common  stock is  principally  traded  on the New  York  Stock
Exchange  and the  Chicago  Stock  Exchange.  The high and low sale  prices  for
IPALCO's  common stock during 1999 and 1998 as reported on the Composite Tape in
The Wall Street Journal were as follows:

                             1999                            1998
                  --------------------------       --------------------------
                     High           Low               High            Low
                  Sale Price     Sale Price        Sale Price      Sale Price
                  ----------     ----------        ----------      ----------
First Quarter     $28 9/16       $21 13/16         $22 5/8         $19 15/16
Second Quarter      24 3/4        21                23 1/16         20 1/8
Third Quarter       22 7/8        18 15/16          23 7/8          20 3/4
Fourth Quarter      21            15  5/8           27 13/16        22 3/4

       The high and low sale prices for IPALCO's  common  stock  reported on the
Composite  Tape in The Wall  Street  Journal  for the  period  January  1, 2000,
through February 25, 2000, were: High - $20 15/16, Low - $15 13/16.

       Quarterly dividends paid on the common stock during 1999 and 1998 were as
follows:

                                         1999           1998
                                         ----           ----
      First Quarter                     $.1375         $.1250
      Second Quarter                     .1500          .1375
      Third Quarter                      .1500          .1375
      Fourth Quarter                     .1500          .1375

       At its  meeting  on  February  29,  2000,  the Board  declared  a regular
quarterly  dividend on common stock of $.1625 per share, payable April 15, 2000,
to shareholders of record on March 31, 2000.

Dividend Restrictions
---------------------

       The  following  restrictions  pertain to IPL but,  to the extent that the
dividends of IPALCO depend upon IPL earnings,  may have an effect on IPALCO.  So
long as any of the several  series of bonds of IPL issued under the Mortgage and
Deed of Trust,  dated as of May 1, 1940, as supplemented and modified,  executed
by IPL to  American  National  Bank and Trust  Company of  Chicago,  as Trustee,
remain  outstanding,  IPL  is  restricted  in the  declaration  and  payment  of
dividends, or other distribution on shares of its capital stock of any class, or
in the  purchase or  redemption  of such  shares,  to the  aggregate  of its net
income, as defined in Section 47 of such Mortgage,  after December 31, 1939. The
amount which these Mortgage  provisions  would have permitted IPL to declare and
pay as dividends at December 31, 1999,  exceeded retained earnings at that date.
Such  restrictions  do not apply to the declaration or payment of dividends upon
any shares of capital  stock of any class to an amount in the  aggregate  not in
excess of $1,107,155, or to the application to the purchase or redemption of any
shares of capital  stock of any class of amounts not to exceed in the  aggregate
the net  proceeds  received  by IPL from the sale of any  shares of its  capital
stock of any class  subsequent  to December 31, 1939.  In addition,  pursuant to
IPL's  Articles of  Incorporation,  no  dividends  may be paid or accrued and no
other  distribution  may be made on IPL's common  stock unless  dividends on all
outstanding  shares of IPL  preferred  stock have been paid or declared  and set
apart for payment.  The management of IPL believes these  restrictions  will not
materially restrict anticipated dividends.
<PAGE>
<TABLE>
Item 6.     SELECTED CONSOLIDATED FINANCIAL DATA
            ------------------------------------
<CAPTION>

(In Thousands Except Per Share Amounts)             1999             1998              1997             1996              1995
---------------------------------------
                                              ---------------  ---------------   ---------------  ---------------   ---------------

<S>                                           <C>              <C>               <C>              <C>               <C>
Total utility operating revenues (1)          $      834,652   $      821,256    $      776,427   $      762,503    $      709,206
Utility operating income                             183,501          179,511           167,315          163,219           147,588
Allowance for funds used during
  construction                                         2,201            2,300             4,407            9,321            11,370
Income before cumulative effect of
  accounting change                                  128,947          130,119            95,699          114,275            98,778
Cumulative effect of accounting change (1)                 -                -            18,347                -                 -
Net income                                           128,947          130,119           114,046          114,275            98,778
Utility plant - net                                1,750,412        1,748,460         1,766,383        1,787,969         1,792,007
Total assets                                       2,315,837        2,118,945         2,155,558        2,182,701         2,230,029
Common shareholders' equity                          677,746          574,191           524,546          857,358           821,635
Cumulative preferred stock of subsidiary              59,135           59,135             9,135           51,898            51,898
Long-term debt (less current
  maturities and sinking
  fund requirements)                                 870,050          907,974         1,032,846          662,591           698,600
Utility construction expenditures                    103,452           79,458            73,130           78,543           166,874
Nonutility construction expenditures                     295              975             1,569            4,187            34,745

BASIC EARNINGS PER SHARE (2) (3)
Income before cumulative effect of
  accounting change                                     1.50             1.45              1.00             1.00               .87
Cumulative effect of accounting change (1)                 -                -               .19                -                 -
Net Income                                              1.50             1.45              1.19             1.00               .87

DILUTED EARNINGS PER SHARE (2) (3)
Income before cumulative effect of
  accounting change                                     1.49             1.43               .99             1.00               .87
Cumulative effect of accounting change (1)                 -                -               .19                -                 -
Net Income                                              1.49             1.43              1.18             1.00               .87

Dividends declared per share of
  common stock  (3)                                      .60              .55               .50              .74               .72


See consolidated financial statements.

(1) In  1997,  IPL  adopted  the  unbilled  revenue  method  of  accounting  for
    electricity and steam delivered during the period.  Revenues are accrued for
    services  provided  but unbilled at the end of each month (see Notes 1 and 3
    in the Notes to Consolidated Financial Statements).
(2) See Note 6 in the Notes to Consolidated Financial Statements.
(3) Per share  amounts have been  adjusted to reflect the  two-for-one common
    stock split issued in March 1999 and three-for-two split in 1996.
</TABLE>


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        ---------------------------------------------------------------
        RESULTS OF OPERATIONS (INCLUDING ITEM 7A)
        -----------------------------------------

       IPALCO Enterprises, Inc. (IPALCO) is a holding company incorporated under
the laws of the state of Indiana.  Indianapolis  Power & Light Company (IPL) and
Mid-America  Capital  Resources,  Inc.  (Mid-America) are subsidiaries of IPALCO
Enterprises, Inc. (collectively referred to as Enterprises).  Mid-America is the
holding  company for the  unregulated  activities of IPALCO.  IPL represents the
regulated  subsidiary.  Enterprises has two business segments (electric and "all
other"). IPL steam and all subsidiaries other than IPL were combined in the "all
other" category (see Note 15 in the Notes to Consolidated Financial Statements).

FORWARD-LOOKING STATEMENTS

       Enterprises  hereby files  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-K,
and particularly Management's Discussion and Analysis,  contains forward-looking
statements.  Forward-looking  statements  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.  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 costs, generating unit availability, purchased power costs
and availability,  regulatory action,  environmental matters,  federal and state
legislation, interest rates, labor strikes, maintenance and capital expenditures
and local economic conditions.  In addition,  IPL's ability to have available an
appropriate  amount of production  capacity in a timely manner can significantly
affect IPL's financial performance.  The timing of deregulation and competition,
product development and technology changes are also important potential factors.
Most of these factors affect  Enterprises  through its wholly owned  subsidiary,
IPL.

       All such factors are difficult to predict, contain uncertainties that may
materially affect actual results and are beyond the control of Enterprises.


LIQUIDITY AND CAPITAL RESOURCES

IPALCO
------

       On February 25, 1997, the Board of Directors (Board) of IPALCO approved a
new financial  strategy  designed to maximize  shareholder value and position it
for an increasingly competitive business environment.  The principal elements of
the strategy include:

      A recapitalization  of IPALCO to employ a higher degree of leverage in the
     capital  structure while the electric  utility  industry is in a transition
     period between regulation and competition.

      A dividend policy guided by, among other factors,  paying out 45% to 50%
      of the prior year's  earnings  (adjusted for one-time events).

      A  target  debt-to-capital  ratio of 45%,  which  IPALCO  believes  can be
      achieved in 2002.

        Consistent   with  the   strategy,   during   1997,   IPALCO   purchased
approximately  25.1  million  shares,  or about 21%, of its  outstanding  common
stock.  Such  purchase  was  accomplished  in a  single  transaction  through  a
self-tender offer (1997 Tender Offer) at a price of $16 per share,  resulting in
a total  transaction value of approximately  $403.1 million.  On March 15, 1999,
IPALCO  completed a second common stock purchase plan (1998 Purchase Plan) which
began in 1998. The 1998 Purchase Plan resulted in the purchase, through the open
market and in privately negotiated transactions,  of 6 million shares or 6.6% of
IPALCO's outstanding common stock for a total cost of $154 million.

       The 1997 Tender Offer was financed with a $401 million  revolving  credit
facility  (revolver)  which was  issued in April  1997.  By July 15,  1998,  the
outstanding balance under the revolver had been reduced to $234 million. At that
time,  IPALCO replaced the revolver with a commercial  paper facility.  The 1998
Purchase  Plan was financed  with the issuance of  additional  commercial  paper
through  the  commercial  paper  facility,  as  well  as with  cash  flows  from
operations.  The net  outstanding  balance of the  commercial  paper facility at
December 31, 1999, was $211.2 million.

       As a result of the common stock and debt  transactions  enumerated above,
Enterprises' debt-to-capital ratio increased from 42.6% at December 31, 1996, to
65.9% at December 31, 1997.  At December 31, 1998,  Enterprises  debt-to-capital
ratio was 59.0% and at December 31, 1999, the  debt-to-capital  ratio was 55.6%.
Enterprises  believes its earnings and cash flow will be  sufficient to allow it
to retain earnings and reduce debt so that the target  debt-to-capital  ratio of
45% can be achieved in 2002.  There can be no  assurance,  however,  that such a
target ratio can be achieved or that economic or industry  factors will not make
achieving  such a ratio  impractical  or  undesirable.  Enterprises  continually
evaluates   additional   purchases  of  outstanding  IPALCO  common  stock,  and
investments in new growth,  as possible  alternatives to its basic plan of using
its cash flow to achieve its target debt-to-capital ratio in 2002. There can be
no assurance as to the timing or outcome of such evaluations.

        During  1998 and 1999,  Mid-America  invested  $1.2  million in Internet
Capital Group LLC. The limited liability  company,  which is an internet holding
company, merged into Internet Capital Group, Inc. (Nasdaq: ICGE) and went public
on August 5, 1999. At December 31, 1999,  Mid-America  held 1,030,600  shares of
ICGE.  During  February  2000,  Mid-America  sold 1 million shares of ICGE at an
average price per share of $113.17.  The after-tax  proceeds from this sale were
applied primarily to the reduction of IPALCO's outstanding  unsecured debt. Also
during 1999,  Mid-America  made a  commitment  to invest $15 million in EnerTech
Capital  Partners II L.P., a venture  capital fund.  The fund invests in service
and technology  companies  providing  innovative products and services that take
advantage  of   opportunities   created  by   deregulation  of  the  energy  and
telecommunications industries. At December 31, 1999, Mid-America had funded $1.5
million of such commitment and expects to fund the balance during 2000.

       Also  consistent  with its financial  strategy,  simultaneously  with the
announcement  of the 1997 Tender Offer on February 25, 1997,  IPALCO reduced its
quarterly dividend from $.185 per share ($.74 annually) to $.125 per share ($.50
annually).  Since that time,  IPALCO has increased  its quarterly  dividend each
year. On February 29, 2000, the Board increased the quarterly dividend to $.1625
per share ($.65 annually), up from $.15 per share ($.60 annually) during 1999.

       IPALCO believes its financial strategy will enable it to raise sufficient
funds, when necessary,  to replace existing assets and undertake  investments in
new growth while  maintaining a prudent  balance  between debt and equity in the
capital   structure.   IPALCO  believes  its  actions   preserve  the  financial
flexibility necessary to accommodate unexpected future cash needs.

       Sustaining  investment  grade debt  ratings is a key  element  for having
adequate liquidity and financial flexibility.  As of December 31, 1999, IPALCO's
corporate  credit rating was A+ as rated by Standard & Poor's.  IPALCO's  senior
unsecured debt was rated AA- by Duff & Phelps and its commercial paper was rated
P-1 by Moody's, A-1 by Standard & Poor's and D-1+ by Duff & Phelps.

IPL
---

                   Nature of Operations and Regulatory Matters
                   -------------------------------------------
Regulation
----------

       IPL is a regulated public utility and is principally engaged in providing
electric and steam service to the Indianapolis metropolitan area. As a regulated
entity,  IPL is  required  to  use  certain  accounting  methods  prescribed  by
regulatory bodies which may differ from those accounting  methods required to be
used by nonregulated entities (see Note 1 in the Notes to Consolidated Financial
Statements).

       IPALCO and IPL are subject to  extensive  regulation  at both the federal
and state level. For example,  IPALCO is subject to the normal, yet significant,
regulatory  requirements  of the  Securities  and  Exchange  Commission.  IPL is
substantially  affected  by the  regulatory  jurisdiction  of the  Environmental
Protection  Agency and the Federal Energy  Regulatory  Commission at the federal
level and the Indiana  Department of  Environmental  Management  and the Indiana
Utility  Regulatory  Commission  (IURC) at the state  level.  Other  significant
regulatory  agencies affecting the Company include,  but are not limited to, the
U.S.  Department  of  Labor  and the  Indiana  Occupational  Safety  and  Health
Administration.  The regulatory power of the IURC over IPL is both comprehensive
and typical of the economic regulation generally imposed by state public utility
commissions over investor-owned utilities.

       An inherent  business risk facing any regulated public utility is that of
unexpected or adverse  regulatory  action.  Regulatory  discretion is reasonably
broad in Indiana,  as elsewhere.  Therefore,  IPL attempts to work cooperatively
with  regulators  and those who  participate in the  regulatory  process,  while
remaining  vigilant  and  steadfast  in  protecting  IPL's  legal  rights in the
regulatory  process.  IPL takes an active role in addressing  regulatory  policy
issues in the current regulatory  environment,  which is subject to rapid change
in large part because of the trend  toward  restructuring  of the United  States
electric utility industry and increased activity by environmental regulators.

Elect Plan
----------

       In 1998, the IURC approved a plan that allows IPL to offer customers with
less than 2,000  kilowatts  of demand an  opportunity  to choose  from  optional
payment or service plans.  IPL's authority to offer these options will expire on
September 18, 2001, and any contracts  entered into thereunder must terminate on
or before that date unless a subsequent plan is approved by the IURC.

       Under the plan,  eligible IPL customers may enter into written  contracts
       for:

           Fixed Rate - Pay a guaranteed  fixed rate per unit of consumption
           for one or more years.

           Green Power - Purchase  environmentally friendly or "green" power.

       Additionally,  residential  customers  may choose a "Sure  Bill"  option,
paying  the  same  bill  each  month  for 12  months,  regardless  of  how  much
electricity  is used.  Customers not choosing one of these  options  continue to
receive electric service under existing  tariffs.  (See Item 1, BUSINESS,  under
the subheading "Retail Ratemaking.")

Authorized Annual Operating Income
----------------------------------

       During  quarterly  fuel  adjustment   clause   proceedings,   the  annual
jurisdictional operating income of IPL's electric business is subject to review.
IPL's steam business is subject to annual fuel  adjustment  clause  proceedings.
Customer refunds could result if actual annual  jurisdictional  operating income
exceeds levels  authorized by the IURC (see Note 1 in the Notes to  Consolidated
Financial  Statements).  IPL does not anticipate any customer  refunds to result
from such reviews during 2000.


                        Competition and Industry Changes
                        --------------------------------

       In  recent  years,  various  forms  of  proposed   industry-restructuring
legislation  and/or rulemakings have been introduced at the federal level and in
several states.  Generally,  the intent of these  initiatives is to encourage an
increase in competition  within the regulated  electric utility industry.  While
federal  rulemaking to date has addressed  only the electric  wholesale  market,
various state  legislatures  are  considering or have enacted new laws impacting
the retail energy markets within their  respective  states.  A discussion of the
legislative and regulatory initiatives most likely to affect IPL follows:

Wholesale Energy Market
-----------------------

       In April 1996, the Federal  Energy  Regulatory  Commission  (FERC) issued
Orders 888 and 889  concerning  open access  transmission  service for wholesale
sales.  These Orders require all utilities under FERC  jurisdiction  to: 1. file
open,  nondiscriminatory   transmission  access  tariffs  with  FERC;  2.  offer
transmission   to  eligible   customers   comparable  to  service  they  provide
themselves;  and 3. take service under the tariffs for their own wholesale sales
and purchases of electricity.  IPL filed its open access  transmission tariff on
January 6, 2000.  Historically,  FERC has issued an order  making  such  tariffs
effective  as of their date of  filing.  FERC  Order 888 also  provides  for the
recovery of utility  stranded costs that are defined as the  difference  between
revenues  received by utilities under  traditional  ratemaking and  market-based
prices.

       In  December  1999,  FERC  issued  Order  2000,  which  provides  for the
voluntary  formation of regional  transmission  organizations  (RTOs),  entities
created to operate,  plan and control utility  transmission  assets.  Order 2000
also  prescribes  certain   characteristics  and  functions  of  acceptable  RTO
proposals.  The rule requires all public  utilities that own, operate or control
interstate  transmission to individually file in October 2000, either a proposal
to join an RTO or the reasons for not participating in an RTO.

Retail Energy Market
--------------------

       The  legislatures  of several states have enacted,  and many other states
are  considering,  new laws that would allow  various forms of  competition  for
retail sales of electric  energy.  While each state proposal is different,  most
provide for some recovery of a utility's  stranded costs and require an extended
transition  period before  competition is fully effective.  Additionally,  a few
states have  implemented  pilot programs that experiment with allowing some form
of customer choice of electricity suppliers.

       In Indiana,  competition  among electric  energy  providers for sales has
focused  primarily  on the  sale of bulk  power to other  public  and  municipal
utilities.  Indiana law provides  for  electricity  suppliers to have  exclusive
retail service areas.

       In  1995,  the  Indiana   General   Assembly,   anticipating   increasing
competitive  forces in the  regulated  public  utility  industry,  enacted  I.C.
8-1-2.5.  This law enables the IURC to consider  and approve,  on an  individual
utility basis, utility-initiated proposals wherein the IURC declines to exercise
jurisdiction  over the whole or any part of the  utility,  or its retail  energy
service or both. The IPL Elect Plan was approved by the IURC under this law.

       During 1997, the Indiana General Assembly  authorized a legislative study
committee to assess the issue of electric utility competition and restructuring.
A comprehensive restructuring bill was introduced in the Indiana Senate in 1998,
but  failed  to  pass.  Subsequently,  comprehensive  restructuring  bills  were
submitted in both 1999 and 2000,  and also failed to pass. IPL continues to work
cooperatively   with  other  electric  utilities  in  Indiana  regarding  future
legislation. However, the outcome of such efforts is uncertain.

National Ambient Air Quality Standards
--------------------------------------

       On July 16, 1997, the United States Environmental Protection Agency (EPA)
promulgated  final rules tightening the National  Ambient Air Quality  Standards
for ozone and creating new fine  particulate  matter  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.   EPA  has
petitioned the Supreme Court to review the Court of Appeals' decision.

NOx SIP Call
------------

       On October 27, 1998,  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 nitrogen  oxides (NOx) from  fossil-fuel  fired steam
electric generators,  such as those operated by Enterprises.  This rule (the NOx
SIP  Call) was based in part on the new ozone  standards  that were  later  held
unlawful  in the Court of  Appeals'  decision  discussed  above.  In a  separate
decision on May 25, 1999, the Court of Appeals  stayed the compliance  deadlines
in the NOx SIP Call.

       Because  power  plants  emit  nitrogen  oxides,  as well as  certain  air
pollutants that may contribute to formation of fine particulate matter, existing
Enterprises  sources may 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.  Enterprises  is a party to
litigation concerning EPA's 1997 and 1998 final regulations, and that litigation
is still in progress.

       EPA's NOx SIP Call would require operators of coal-fired electric utility
boilers in the affected states to limit NOx emissions to 0.15 pounds per million
BTUs of heat input as a system-wide average. That limit calls for a reduction of
about 85% from 1990 average emissions from coal-fired  electric utility boilers,
and a reduction of about 57% from Enterprises' current emissions.

       It is not possible to predict  whether EPA's NOx SIP Call will ultimately
survive judicial review.  Nor is it possible at this time to predict  accurately
the costs of compliance. Enterprises' preliminary estimates are that the NOx SIP
Call would necessitate capital expenditures of about $180 million.

       The  Indiana   Department  of   Environmental   Management  has  recently
circulated a draft rule  calling for  coal-fired  electric  utilities to meet an
emission  limit  of 0.25  pounds  of NOx per  million  BTUs of heat  input  on a
company-wide basis.  Preliminary estimates are that compliance with such a limit
would call for Enterprises to expend capital of approximately $81 million. It is
not possible to predict whether the draft rule will ever become effective.

       As to  timing,  if  either  of the  requirements  discussed  in  the  two
preceding  paragraphs  became  effective,  they  would  likely do so during  the
2000-2001 period and would probably necessitate deployment of capital during the
period between 2002 and 2005. There can be no certainty about these estimates.

       Enterprises  expects to refine the above estimates as engineering studies
progress and when, as, and if such rules become effective.


           Liquidity, Financing Requirements and Capital Market Access
           -----------------------------------------------------------

       Liquidity  is the  ability  of an  entity  to  meet  its  short-term  and
long-term cash needs.  IPL's  liquidity is a function of its ability to generate
internal  funds,  its  construction  program,  its mortgage  covenants  and loan
agreements and its access to external capital markets.

       Sustaining investment grade debt ratings is also a key element for having
adequate  liquidity and financial  flexibility.  As of December 31, 1999,  IPL's
senior secured debt was rated AA- by Standard & Poor's,  Aa2 by Moody's Investor
Services and AA+ by Duff & Phelps,  and IPL's commercial paper was rated A-1+ by
Standard & Poor's,  P-1 by Moody's Investor  Services and D-1+ by Duff & Phelps.
IPL  expects  to be able to  maintain  investment  grade debt  ratings  into the
foreseeable future.

       During 1999, IPL refinanced its $23.5 million 7.45% Series first mortgage
bonds with the use of proceeds from a $23.5  million  unsecured  note.  The 1999
Series note has an interest  rate based on  tax-exempt  auction  rates and has a
maturity  date of  August  1,  2030  (see  Note 7 in the  Notes to  Consolidated
Financial Statements).

       IPL has no  long-term  debt that  matures  during  2000.  However,  other
existing higher-rate debt may be refinanced depending upon market conditions.

       During the next five  years,  IPL  expects to meet its cash  requirements
without any  additional  permanent  financing.  Cash flows from  operations  and
temporary short-term  borrowings are projected to provide the funds required for
IPL's  construction  program.  See the following  section for  discussion of the
construction program.

                               Future Performance
                               ------------------

       Traditionally,   retail  KWH  sales,   after   adjustments   for  weather
variations,  have  grown  in  reasonable  correlation  with  growth  in  service
territory  economic  activity.  During the past 10 years, IPL's retail KWH sales
have grown at a compound  annual rate of 2.0%,  while the  Indianapolis  economy
grew at an annual rate of 2.5%. The Indianapolis  economy is expected to grow at
an annual rate of 2.7% for 2000 through 2004,  according to the Kelley School of
Business at Indiana University.

       IPL's  wholesale KWH sales  decreased 12% in 1999 from the level achieved
in 1998,  largely as a result of planned and unplanned  generating unit outages.
As IPL's retail  sales grow,  the level of  generating  capacity  available  for
wholesale  sales is more  limited.  The  ability  to sell  power  in the  highly
competitive  wholesale market is also highly dependent on market  conditions and
the level and frequency of unplanned outages. IPL is unable to predict, with any
degree of certainty, the level of wholesale sales that may be achieved in 2000.

       Operating and  maintenance  expenses were $425.0  million in 1999.  These
expenses in 2000 will be influenced by the level of KWH  generation,  generating
unit  availability  and overhaul  costs,  purchased  power  costs,  cost control
programs and  inflation.  IPL depends on purchased  power,  in part, to meet its
retail  obligations.  Purchased power costs are highly volatile and,  therefore,
IPL is unable to predict with any degree of  certainty  the level of those costs
for 2000.

       IPL's  construction  program  for  the  three-year  period  2000-2002  is
estimated to cost $294.0  million  including  AFUDC.  The estimated  cost of the
program  by year (in  millions)  is $106.5 in 2000,  $103.9 in 2001 and $83.6 in
2002. It includes $152.2 million for additions,  improvements  and extensions to
transmission  and  distribution  lines,  substations,  power  factor and voltage
regulating equipment,  distribution transformers and street lighting facilities.
The  construction  program also includes $6.6 million of the remaining costs for
construction of a 100-megawatt  combustion  turbine expected to be in service by
June  2000.  These  projected  amounts  also  include  $20.7  million  of  costs
associated  with new  environmental  standards  proposed  by the EPA  which  are
currently  under appeal in the United States Court of Appeals (see  "Competition
and Industry Changes").

                                      Other
                                      -----

Cumulative Effect of Accounting Change
--------------------------------------

       On December 31, 1997, effective January 1, 1997, IPL adopted the unbilled
revenue  method of  accounting  for all electric and steam sales to more closely
match revenues with expenses.  Under this method,  IPL accrues  revenues for all
electric and steam energy  delivered  to  customers  during the period,  whether
billed or not. Previously,  IPL recognized these revenues only as customers were
billed,  with the service rendered after monthly meter reading dates through the
end of a calendar month recognized as operating revenues in the following month.
The cumulative effect of this change in accounting method as of January 1, 1997,
net of taxes, was a one-time income increase of $18.3 million,  and was reported
as a separate  component of net income for 1997. This accounting change does not
affect  IPL's cash flow or  liquidity  (see Note 3 in the Notes to  Consolidated
Financial Statements).

Preferred Stock, Debt Issuance and Dividend Restrictions
--------------------------------------------------------

       Restrictions  on IPL's  ability to issue  certain  securities or pay cash
dividends  are  contained in its Mortgage and Deed of Trust  (Mortgage)  and its
Amended Articles of Incorporation (Articles). The Articles require that, so long
as any shares of  preferred  stock are  outstanding,  the net income of IPL,  as
specified therein,  be at least one and one-half times the total interest on the
funded debt and the pro forma dividend requirements on the outstanding,  and any
proposed,  preferred stock before any additional  preferred stock is issued. The
Mortgage requires that net earnings as calculated thereunder be two and one-half
times  the  annual  interest   requirements   before  additional  bonds  can  be
authenticated  on the basis of property  additions.  Based on IPL's net earnings
for the 12 months ended December 31, 1999, the ratios under the Articles and the
Mortgage are 5.05 and 12.35, respectively.

       The  following  restrictions  pertain to IPL but,  to the extent that the
dividends of IPALCO depend upon IPL earnings,  may have an effect on IPALCO.  So
long as any of the  several  series of bonds of IPL  issued  under its  Mortgage
remain outstanding,  and subject to certain exceptions, IPL is restricted in the
declaration  and payment of dividends,  or other  distribution  on shares of its
capital stock of any class, or in the purchase or redemption of such shares,  to
the  aggregate  of its net  income,  as defined in Section 47 of such  Mortgage,
after December 31, 1939. The amount which these Mortgage  provisions  would have
permitted  IPL to declare and pay as dividends  at December  31, 1999,  exceeded
retained  earnings at that date.  In addition,  pursuant to IPL's  Articles,  no
dividends may be paid or accrued and no other  distribution may be made on IPL's
common stock unless  dividends on all outstanding  shares of IPL preferred stock
have been paid or declared and set apart for payment.

       IPL believes these  requirements will not restrict any anticipated future
financings or cash dividend payments.  At December 31, 1999, and considering all
existing restrictions,  IPL had the capacity to issue approximately $1.2 billion
of additional long-term debt.


MID-AMERICA
-----------

                              Nature of Operations
                              --------------------

        Mid-America,  the holding  company  for the  unregulated  activities  of
Enterprises,  has as subsidiaries  Mid-America  Energy  Resources,  Inc. (Energy
Resources),  Indianapolis  Campus Energy,  Inc. (ICE),  Cleveland Thermal Energy
Corporation  (Cleveland  Thermal) and  Cleveland  District  Cooling  Corporation
(Cleveland  Cooling).  Energy  Resources  owns and  operates a district  cooling
system in downtown  Indianapolis,  Indiana.  ICE provides  chilled  water to the
Lilly Technology  Center located near downtown  Indianapolis.  Cleveland Thermal
owns and operates a district heating system in Cleveland, Ohio.  Cleveland
Cooling owns and operates a district cooling system in Cleveland.

                       Capital and Financing Requirements
                       ----------------------------------

       Total capital requirements of Mid-America and its subsidiaries, including
funds needed for construction and maturing debt obligations, are estimated to be
$2.1  million,  $3.5 million and $3.7 million  during the next three years.  The
cash  requirements  of  Mid-America  subsidiaries  are  expected to be funded by
Mid-America  from  its  existing  liquid  assets,  future  cash  flows  from its
operations and from temporary short-term borrowings.

        During 1999, Energy Resources 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 which varies with the tax-exempt  weekly rate.
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  (see  Note  7 in  the  Notes  to
Consolidated Financial Statements).

       In 1997,  Enterprises  initiated a plan to sell,  during 1998,  Cleveland
Thermal  and  Cleveland  Cooling  (collectively  referred  to as CER) and ceased
recording depreciation. During the third quarter of 1998, Enterprises determined
that it was not  probable  that  CER  would be sold  during  1998,  and  resumed
depreciation on these assets. Enterprises anticipates the sale of CER in 2000.


IPALCO ENTERPRISES CONSOLIDATED
-------------------------------

                Market Risk Sensitive Instruments and Positions
                -----------------------------------------------

       The  primary  market risk to which  Enterprises  is exposed is related to
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 December 31, 1999:
<TABLE>
<CAPTION>
                                                Maturity Schedule
                                            Period Ending December 31
                                                                                                        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                          $1.7    $3.3     $3.4     $3.8     $84.1    $423.6     $519.9      $505.2
  Average rate                      7.9%    7.9%     7.9%     7.9%     6.1%     7.0%       6.9%
Variable rate                       -       -        -        -        -        $192.3     $192.3      $192.3
  Average rate                      -       -        -        -        -        3.8%       3.8%
Recapitalization debt               $50.8   $80.2    $80.2    -        -        -          $211.2      $211.2
  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  December  31,  1999,  IPALCO  had an  interest  rate  swap  agreement
outstanding with a notional amount of $150 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. The fair value
of IPALCO's swap agreement was $(0.1) million at December 31, 1999.

       At December  31, 1999,  IPL had an interest  rate swap  agreement  with a
notional amount of $40 million, which expires in January 2023. IPL agrees to pay
interest at a fixed rate of 5.21% to a swap counter party and receive a variable
rate based on the tax-exempt weekly rate. The fair value of IPL's swap agreement
was $0.4 million at December 31, 1999.

                                      Other
                                      -----

Year 2000
---------

       Enterprises has not discovered any significant  problems  associated with
its  systems as a result of the year  change  from 1999 to 2000.  It is unlikely
that any such problems will be encountered in the future.  However,  should such
problems  occur,  Enterprises  has established a Year 2000 Committee which would
act to correct any problems as a result of the year changeover. It is not likely
that any such occurrences would have a material effect on the financial position
or results of operations of the Company.

Cash Flows
----------

       Additional information regarding Enterprises'  historical cash flows from
operations,  investing  and  financing  for the past three years,  including the
capital expenditures of IPL and Mid-America,  are disclosed in the Statements of
Consolidated Cash Flows and in the Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS

       The  following   discussion   pertains  to  the  consolidated   financial
statements of IPALCO Enterprises, Inc.

       Diluted  earnings  per share  during 1999 were  $1.49,  or $.06 above the
$1.43 attained in 1998.  Diluted  earnings per share during 1998 were $1.43,  or
$.25 above the $1.18 attained in 1997. The following  discussion  highlights the
factors contributing to these results.

       The weighted average shares used to calculate  diluted earnings per share
for each of the years reported were  substantially  affected by stock purchases.
The first purchase occurred in April 1997 and resulted in the purchase by IPALCO
of  approximately  25.1 million shares  (approximately  21%) of its  outstanding
common stock. On March 15, 1999, IPALCO completed a second common stock purchase
plan.  This plan,  which began in 1998,  resulted in the  purchase,  in the open
market and in privately negotiated transactions,  of 6 million shares or 6.6% of
IPALCO's  outstanding common stock. Of the 6 million shares purchased during the
second plan, 3.5 million shares were purchased during 1999.

Utility Operating Revenues
--------------------------

       Operating  revenues  in 1999  and  1998  increased  from  the  prior year
by  $13.4  million  and  $44.8  million, respectively.  The increases in
revenues resulted from the following:

                                                      Increase (Decrease)
                                                      -------------------
                                               1999 over 1998     1998 over 1997
                                               --------------     --------------
                                                         (In Millions)
Electric:
     Change in retail KWH sales - net of fuel       $ 17.5            $ 14.5
     Change in estimate for unbilled revenue           8.0               -
     Fuel revenue                                     (0.1)              3.5
     Wholesale revenue                                (9.9)             28.0
     DSM tracker revenue                               0.8               1.3
Steam revenue                                         (1.1)             (2.9)
Other revenue                                         (1.8)              0.4
                                                    ------            ------
     Total change in operating revenues             $ 13.4            $ 44.8
                                                    ======            ======

       The  increase in retail KWH sales in 1999  primarily  was due to economic
growth in Indianapolis.  The increase in 1998 also reflected  economic growth in
Indianapolis,  as well as an increase  in cooling  degree days during the summer
partially  offset by a decrease in heating  degree days.  Actual and  percentage
changes in electric  customers and in heating and cooling  degree days for these
periods are as follows:

                                                      Increase (Decrease)
                                                      -------------------
                                             1999 over 1998      1998 over 1997
                                             --------------      --------------

Electric Residential Customers               5,856     1.5%     5,257      1.4%
Commercial & Industrial Customers              451     1.0%     1,169      2.6%

Heating Degree Days                            448    10.1%    (1,261)   (22.2)%
Cooling Degree Days                            (73)   (5.8)%      381     43.8%

       A change in the estimate for unbilled  revenue was made during 1999.  The
changes  in fuel  revenues  in  1999  and  1998  from  the  prior  year  reflect
differences  in fuel  costs  billed to  customers.  Wholesale  sales  were $41.2
million, $51.1 million and $23.1 million for 1999, 1998 and 1997,  respectively.
The  decrease in  wholesale  revenues  in 1999 was a result of both  planned and
unplanned  generating  unit  outages  during  1999.  The  increase in  wholesale
revenues during 1998 reflected  increased wholesale marketing efforts and energy
requirements  of other  utilities.  The decrease in other  revenues  during 1999
reflects decreased service revenues.

Utility Operating Expenses
--------------------------

       Fuel  expense  decreased  in 1999  by $7.2  million  due  primarily  to a
decrease  in deferred  fuel cost and a 0.3%  decrease  in  generation  caused by
unscheduled unit outages.  During 1998, fuel expense  increased by $16.5 million
primarily as a result of increased total KWH sales.

       Other operating expenses decreased $18.3 million in 1999 primarily due to
decreased  administrative  and general  expenses of $10.5  million and increased
sales of emission  allowances of $4.8 million  (reduced  operating  expenses) as
well as other  cost  improvements.  The  decreased  administrative  and  general
expenses  were  primarily  due to  decreased  benefits  expense  as  well as the
non-recurrence of a $2.2 million charge in 1998 for a voluntary early retirement
and separation program. During 1998, other operating expenses increased from the
prior year by $12.3 million. The increase in 1998 was partially due to increased
administrative  and general  expenses of $7.7 million.  This increase was due to
the  voluntary  early  retirement  and  separation  program as well as increased
outside  services and  increased  labor costs.  Electric  distribution  expenses
increased  $1.7 million and  production  expenses  increased $1.5 million during
1998.

       Power purchased increased by $22.6 million during 1999 as a result of the
combination  of higher market prices for  scheduled  summer  peaking power and a
$13.0 million  increase in  replacement  power costs due to the  unusually  high
level of generating  unit outages  during peak  electricity  demand in the third
quarter of 1999.  Power  purchased  decreased  $0.7  million  during 1998 due to
decreased demand charges partially offset by increased purchases of KWH.

       Maintenance  expenses increased by $4.1 million during 1999 and decreased
by $3.2 million during 1998.  These  variances  primarily  reflect the timing of
major generating unit overhauls.

       Taxes other than  income  taxes  decreased  by $0.9  million  during 1999
primarily  due to decreased  employment  taxes.  During  1998,  taxes other than
income  taxes  increased  $2.0  million  from the prior  period due to increased
property taxes, gross income taxes and employment taxes.

       Income  taxes - net  increased  in both  1999 and 1998  from the  prior
years  by $4.3  million  and $6.9  million, respectively.  These changes reflect
increases in pretax operating income.

Other Income And Deductions
---------------------------

       Allowance for equity funds used during construction did not change during
1999 from the prior period.  During 1998, allowance for equity funds used during
construction  decreased $2.1 million. In mid-1997,  the amortization of deferred
carrying charges on a plant asset ended, contributing to this decrease.

       Other - net, which includes the pretax income before interest  charges of
operations  other than IPL,  as well as pre-tax  non-operating  income from IPL,
increased by $6.6 million during 1999 and decreased by $5.1 million during 1998,
as compared to the prior  years.  The  increase in 1999 was due to an  insurance
recovery of $3.2 million and the  non-recurrence  of a $3.0  million  charitable
contribution   in  1998.   The  decrease  in  1998  was  due  primarily  to  the
non-recurring  gain from the sale of a retired  IPL plant site in 1997,  and the
charitable contribution of $3.0 million in 1998.

       During 1998, a gain from the  liquidation and termination of an agreement
to purchase  power was  recognized by IPL in the amount of $12.5 million  before
taxes.

       The provision for impairment of nonutility  property during 1997 reflects
a charge of $32 million to write down the carrying  values of Cleveland  Thermal
and  Cleveland  Cooling  (see  Note 2 in the  Notes  to  Consolidated  Financial
Statements).

Interest and Other Charges
--------------------------

       Interest on long-term debt decreased by $1.9 million during 1999 from the
prior  period.  The  decrease was  primarily  due to a lower  average  amount of
principal  outstanding on the recapitalization  debt facility at IPALCO and from
decreased  interest  expense on floating  rate debt at IPL due to lower  average
interest rates during the year.

       Other interest charges  increased by $0.6 million during 1999 as a result
of increased  short-term debt borrowing at IPL.  Interest expense decreased $0.7
million during 1998 primarily due to decreased  short-term  debt  borrowings and
decreased interest on tax assessments.

       Amortization of redemption  premiums and expenses on debt - net increased
in 1999 and 1998  compared to the previous  periods.  The 1999  increase of $0.5
million was primarily due to costs associated with Energy Resources' replacement
of its $9.5 million 7.25% Series note and its $9.3 million 1995 Series  variable
rate note with the $18.8 million 1999 Series  variable rate note.  The increased
expense  during  1998  was  due to a full  year  of  amortization  of the  costs
associated with debt issued during 1997.

       Preferred stock  transaction costs increased $0.4 million during 1999 and
$1.7 million during 1998 as compared to the prior periods. The increases reflect
the  dividends  of the January 1998 issue of 500,000  shares of 5.65%  preferred
stock and the 1997 retirement of preferred stock.

Cumulative Effect of Accounting Change
--------------------------------------

       A cumulative  effect of accounting change in the amount of $18.3 million,
net of taxes, was recorded during 1997.  Effective  January 1, 1997, IPL adopted
the unbilled  revenue method of accounting for  electricity  and steam delivered
during the period.  Revenues are accrued for  services  provided but unbilled at
the end of each month (see Notes 1 and 3 in the Notes to Consolidated  Financial
Statements).

New Accounting Pronouncement
----------------------------

       The Financial  Accounting  Standards Board issued  Statement of Financial
Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging
Activities,"  in June 1998. SFAS 137 delayed the effective date of this standard
to all fiscal  quarters of all fiscal years  beginning  after June 15, 2000 (see
Note 1 in the Notes to Consolidated Financial Statements).

 Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         --------------------------------------------------------



                          INDEPENDENT AUDITORS' REPORT
                          ============================


To the Shareholders and Board of Directors of IPALCO Enterprises, Inc.:

We  have  audited  the  accompanying   consolidated  balance  sheets  of  IPALCO
Enterprises, Inc. and its subsidiaries as of December 31, 1999 and 1998, and the
related statements of consolidated income,  common shareholders' equity and cash
flows for each of the three years in the period ended  December 31, 1999.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of IPALCO  Enterprises,  Inc. and its
subsidiaries  as of  December  31,  1999  and  1998,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.

As discussed in Note 3 to the consolidated  financial statements,  in 1997 the
Company changed its method of accounting for unbilled revenue.



DELOITTE & TOUCHE LLP

Indianapolis, Indiana
January 20, 2000
<PAGE>
<TABLE>
<CAPTION>

                                IPALCO ENTERPRISES, INC. AND SUBSIDIARIES

                                    Statements of Consolidated Income
                          For the Years Ended December 31, 1999, 1998 and 1997
----------------------------------------------------------------------------------------------------------

                                                                      1999          1998           1997
----------------------------------------------------------------------------------------------------------
                                                                  (In Thousands Except Per Share Amounts)
UTILITY OPERATING REVENUES (Notes 3 and 10):
<S>                                                               <C>           <C>            <C>
  Electric                                                        $  800,337    $   785,835    $  738,134
  Steam                                                               34,315         35,421        38,293
                                                                  -----------   ------------   -----------
    Total operating revenues                                         834,652        821,256       776,427
                                                                  -----------   ------------   -----------

UTILITY OPERATING EXPENSES:
  Operation:
    Fuel                                                             173,872        181,036       164,578
    Other                                                            137,348        155,610       143,311
  Power purchased                                                     29,769          7,170         7,833
  Purchased steam                                                      6,391          5,968         7,075
  Maintenance                                                         77,637         73,501        76,679
  Depreciation and amortization                                      107,469        103,223       103,230
  Taxes other than income taxes                                       34,190         35,047        33,071
  Income taxes - net (Note 9)                                         84,475         80,190        73,335
                                                                  -----------   ------------   -----------
    Total operating expenses                                         651,151        641,745       609,112
                                                                  -----------   ------------   -----------
UTILITY OPERATING INCOME                                             183,501        179,511       167,315
                                                                  -----------   ------------   -----------

OTHER INCOME AND (DEDUCTIONS):
  Allowance for equity funds used during construction                  1,372          1,389         3,462
  Other - net                                                          3,580         (2,995)        2,140
  Gain on termination of agreement (Note 13)                               -         12,500             -
  Provision for impairment of nonutility property (Note 2)                 -              -       (32,000)
  Income taxes - net (Note 9)                                          5,688          5,231        19,004
                                                                  -----------   ------------   -----------
    Total other income and (deductions) - net                         10,640         16,125        (7,394)
                                                                  -----------   ------------   -----------
INCOME BEFORE INTEREST AND OTHER CHARGES                             194,141        195,636       159,921
                                                                  -----------   ------------   -----------

INTEREST AND OTHER CHARGES:
  Interest on long-term debt                                          58,584         60,489        60,385
  Other interest                                                       1,671          1,071         1,799
  Allowance for borrowed funds used during construction                 (829)          (911)         (945)
  Amortization of redemption premiums and expenses on
    debt - net                                                         2,555          2,062         1,903
  Preferred stock transactions                                         3,213          2,806         1,080
                                                                  -----------   ------------   -----------
    Total interest and other charges - net                            65,194         65,517        64,222
                                                                  -----------   ------------   -----------
INCOME BEFORE CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE                                                  128,947        130,119        95,699

CUMULATIVE EFFECT OF ACCOUNTING CHANGE-
  NET OF TAXES (Note 3)                                                    -              -        18,347
                                                                  -----------   ------------   -----------

NET INCOME                                                        $  128,947    $   130,119    $  114,046
                                                                  ===========   ============   ===========

BASIC EARNINGS PER SHARE (Note 6):

INCOME BEFORE CUMULATIVE EFFECT
   OF ACCOUNTING CHANGE                                           $     1.50    $      1.45    $     1.00
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note 3)                            -              -           .19
                                                                  -----------   ------------   -----------

NET INCOME                                                        $     1.50    $      1.45    $     1.19
                                                                  ===========   ============   ===========

DILUTED EARNINGS PER SHARE (Note 6):

INCOME BEFORE CUMULATIVE EFFECT
   OF ACCOUNTING CHANGE                                           $     1.49    $      1.43    $      .99
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note 3)                            -              -           .19
                                                                  -----------   ------------   -----------

NET INCOME                                                        $     1.49    $      1.43    $     1.18
                                                                  ===========   ============   ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                       IPALCO ENTERPRISES, INC. and SUBSIDIARIES

                                              Consolidated Balance Sheets
                                               December 31, 1999 and 1998
-------------------------------------------------------------------------------------------------------------------------

ASSETS                                                                                1999                     1998
-------------------------------------------------------------------------------------------------------------------------
                                                                                              (In Thousands)

UTILITY PLANT:
<S>                                                                             <C>                      <C>
  Utility plant in service (Note 2)                                             $     2,922,338          $     2,859,899
  Less accumulated depreciation                                                       1,299,122                1,202,356
                                                                                ----------------         ----------------
      Utility plant in service - net                                                  1,623,216                1,657,543
  Construction work in progress                                                         116,478                   80,198
  Property held for future use                                                           10,718                   10,719
                                                                                ----------------         ----------------
        Utility plant - net                                                           1,750,412                1,748,460
                                                                                ----------------         ----------------



OTHER ASSETS:
  Nonutility property (Note 2)                                                           84,937                   91,319
  Less accumulated depreciation                                                          15,881                   19,485
                                                                                ----------------         ----------------
      Nonutility property - net                                                          69,056                   71,834
  Available for sale securities (Note 14)                                               175,202                       -
  Other investments                                                                      13,970                   12,234
                                                                                ----------------         ----------------
        Other assets - net                                                              258,228                   84,068
                                                                                ----------------         ----------------

CURRENT ASSETS:
  Cash and cash equivalents                                                              23,935                    9,075
  Accounts receivable and unbilled revenue (less allowance for doubtful
    accounts - 1999, $1,360,000 and 1998, $1,212,000)                                    51,357                   39,702
  Fuel - at average cost                                                                 52,016                   39,147
  Materials and supplies - at average cost                                               48,694                   48,624
  Tax refund receivable                                                                     770                    9,647
  Prepayments and other current assets                                                    9,465                    4,863
                                                                                ----------------         ----------------
        Total current assets                                                            186,237                  151,058
                                                                                ----------------         ----------------


DEFERRED DEBITS:
  Regulatory assets (Note 5)                                                            107,948                  116,801
  Miscellaneous                                                                          13,012                   18,558
                                                                                ----------------         ----------------
        Total deferred debits                                                           120,960                  135,359
                                                                                ----------------         ----------------

      TOTAL                                                                     $     2,315,837          $     2,118,945
                                                                                ================         ================

See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------

CAPITALIZATION AND LIABILITIES                                                      1999                   1998
--------------------------------------------------------------------------------------------------------------------
                                                                                          (In Thousands)

CAPITALIZATION:
<S>                                                                           <C>                    <C>
  Common shareholders' equity (Note 6):
    Common stock, no par, authorized - 290,000,000 shares,
      116,806,470 issued and 85,727,614 outstanding in 1999,
      116,412,526 issued and 88,863,026 outstanding in 1998                   $      439,066         $      435,300
    Unearned compensation - restricted stock                                          (1,979)                (6,003)
    Premium on 4% cumulative preferred stock                                             649                    649
    Retained earnings                                                                690,455                612,941
    Accumulated other comprehensive income (Note 14)                                 106,733                     -
    Treasury stock, at cost                                                         (557,178)              (468,696)
                                                                              ---------------        ---------------
      Total common shareholders' equity                                              677,746                574,191
  Cumulative preferred stock of subsidiary (Note 6)                                   59,135                 59,135
  Long-term debt (Notes 2 and 7)                                                     870,050                907,974
                                                                              ---------------        ---------------
        Total capitalization                                                       1,606,931              1,541,300
                                                                              ---------------        ---------------



CURRENT LIABILITIES:
  Notes payable - banks and commercial paper (Note 8)                                 57,578                 25,200
  Current maturities and sinking fund requirements (Note 7)                           52,477                  1,425
  Accounts payable and accrued expenses                                               56,798                 71,835
  Dividends payable                                                                   13,859                 13,392
  Taxes accrued                                                                       22,237                 20,723
  Interest accrued                                                                    13,767                 14,376
  Other current liabilities                                                           13,356                 13,731
                                                                              ---------------        ---------------
        Total current liabilities                                                    230,072                160,682
                                                                              ---------------        ---------------



DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
  Deferred income taxes - net (Note 9)                                               400,588                318,327
  Unamortized investment tax credit                                                   39,226                 41,993
  Accrued postretirement benefits (Note 11)                                            4,338                 10,768
  Accrued pension benefits (Note 11)                                                  29,018                 39,953
  Miscellaneous                                                                        5,664                  5,922
                                                                              ---------------        ---------------
        Total deferred credits and other long-term liabilities                       478,834                416,963
                                                                              ---------------        ---------------

COMMITMENTS AND CONTINGENCIES (Note 12)

        TOTAL                                                                 $    2,315,837         $    2,118,945
                                                                              ===============        ===============

See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                 IPALCO ENTERPRISES, INC. and SUBSIDIARIES

                                   Statements of Consolidated Cash Flows
                           For the Years Ended December 31, 1999, 1998 and 1997
----------------------------------------------------------------------------------------------------------------------------------

                                                                                    1999               1998              1997
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                   (In Thousands)
CASH FLOWS FROM OPERATIONS:
<S>                                                                          <C>                <C>                <C>
  Net income                                                                 $       128,947    $       130,119    $      114,046
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                                                    110,297            102,977           103,841
    Amortization of regulatory assets                                                 14,470             14,246            16,210
    Deferred income taxes and investment tax credit adjustments - net                  9,622             (2,056)            3,533
    Allowance for funds used during construction                                      (2,201)            (2,300)           (4,407)
    Cumulative effect of accounting change - before taxes (Note 3)                         -                  -           (29,915)
    Provision for impairment of nonutility property (Note 2)                               -                  -            32,000
    Change in certain assets and liabilities:
      Accounts receivable - excluding cumulative effect
        of accounting change                                                         (11,655)             7,331            (6,019)
      Fuel, materials and supplies                                                   (12,939)            (4,098)             (321)
      Accounts payable and accrued expenses                                          (15,037)             5,730             3,883
      Taxes accrued                                                                    1,514             (1,403)           (1,033)
      Accrued pension benefits                                                       (10,935)               132             2,538
      Other - net                                                                      1,705            (15,271)           (4,729)
                                                                             ----------------   ----------------   ---------------
Net cash provided by operating activities                                            213,788            235,407           229,627
                                                                             ----------------   ----------------   ---------------

CASH FLOWS FROM INVESTING:
  Construction expenditures - utility                                               (103,452)           (79,458)          (73,130)
  Construction expenditures - nonutility                                                (295)              (975)           (1,569)
  Other                                                                               (8,594)             1,193            (7,371)
                                                                             ----------------   ----------------   ---------------
Net cash used in investing activities                                               (112,341)           (79,240)          (82,070)
                                                                             ----------------   ----------------   ---------------

CASH FLOWS FROM FINANCING:
  Issuance of long-term debt                                                         140,900            271,500           451,300
  Issuance of preferred stock (Note 6)                                                     -             50,000                 -
  Retirement of long-term debt                                                      (127,830)          (398,094)          (89,250)
  Reacquired common stock (Note 6)                                                   (88,482)           (65,595)         (403,101)
  Preferred stock redemptions (Note 6)                                                     -                  -           (41,814)
  Short-term debt - net                                                               32,378             (8,500)          (12,300)
  Common dividends paid                                                              (50,920)           (48,235)          (57,653)
  Issuance of common stock related to incentive compensation plans                     9,014             30,488             4,089
  Other                                                                               (1,647)             4,051              (852)
                                                                             ----------------   ----------------   ---------------
Net cash used in financing activities                                                (86,587)          (164,385)         (149,581)
                                                                             ----------------   ----------------   ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  14,860             (8,218)           (2,024)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                         9,075             17,293            19,317
                                                                             ----------------   ----------------   ---------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                     $        23,935    $         9,075    $       17,293
                                                                             ================   ================   ===============

----------------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
  Cash paid during the year for:
    Interest (net of amount capitalized)                                     $        60,454    $        62,381    $       59,761
                                                                             ================   ================   ===============
    Income taxes                                                             $        66,577    $        82,067    $       63,915
                                                                             ================   ================   ===============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                        IPALCO ENTERPRISES, INC. and SUBSIDIARIES

                 Statements of Consolidated Common Shareholders' Equity
                  For the Years Ended December 31, 1999, 1998 and 1997
------------------------------------------------------------------------------------------------------------------------
(In Thousands Except Per Share Amounts)                             1999                1998               1997
------------------------------------------------------------------------------------------------------------------------
Common Stock
<S>                                                              <C>                <C>                 <C>
   Balance at beginning of the year                              $   435,300        $    395,851        $   389,966
   Exercise of stock options                                           9,014              29,869              4,089
   Restricted stock issues / adjustments                              (3,205)             11,605              1,796
   Restricted stock repurchased                                       (2,043)             (2,025)                 -
------------------------------------------------------------------------------------------------------------------------
Balance at end of the year                                           439,066             435,300            395,851
------------------------------------------------------------------------------------------------------------------------

Unearned Compensation
   Balance at beginning of the year                                   (6,003)             (1,583)              (368)
   Amortization of restricted stock                                      819               7,185                581
   Restricted stock issues / adjustments                               3,205             (11,605)            (1,796)
------------------------------------------------------------------------------------------------------------------------
Balance at end of the year                                            (1,979)             (6,003)            (1,583)
------------------------------------------------------------------------------------------------------------------------

Premium on 4% Cumulative Preferred Stock
   Balance at beginning of the year                                      649                 649              1,363
   Reacquired and retired preferred stock                                  -                   -               (714)
------------------------------------------------------------------------------------------------------------------------
Balance at end of the year                                               649                 649                649
------------------------------------------------------------------------------------------------------------------------

Retained Earnings
   Balance at beginning of the year                                  612,941             532,730            466,397
   Net income                                                        128,947             130,119            114,046
   Cash dividends declared (1999 - $.60 per share;
      1998 - $.55 per share; 1997 - $.50 per share)                  (51,433)            (49,418)           (47,713)
   Subsidiary capital stock expense                                        -                (490)                 -
------------------------------------------------------------------------------------------------------------------------
Balance at end of the year                                           690,455             612,941            532,730
------------------------------------------------------------------------------------------------------------------------

Other Comprehensive Income Other comprehensive income, net of tax:
      Unrealized gains on securities (Note 14)                       106,733
------------------------------------------------------------------------------------------------------------------------
Balance at end of the year                                           106,733
------------------------------------------------------------------------------------------------------------------------

Treasury Stock
   Balance at beginning of the year                                 (468,696)           (403,101)
   Reacquired common stock (1999-3,529,356 shares;
      1998-2,470,644 shares; 1997-25,078,856 shares)                 (88,482)            (65,595)          (403,101)
------------------------------------------------------------------------------------------------------------------------
Balance at end of the year                                          (557,178)           (468,696)          (403,101)
------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity at end of the year                    $   677,746         $   574,191        $   524,546
========================================================================================================================

See notes to consolidated financial statements.
</TABLE>


                    IPALCO ENTERPRISES, INC. and SUBSIDIARIES
                    =========================================

                   Notes to Consolidated Financial Statements
              For the Years Ended December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation:  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 regulated utility  subsidiary,  Indianapolis  Power & Light Company
(IPL),  and its unregulated  subsidiary,  Mid-America  Capital  Resources,  Inc.
(Mid-America).  Mid-America conducts its businesses through various wholly owned
subsidiaries,  including Mid-America Energy Resources,  Inc. (Energy Resources),
Indianapolis  Campus Energy,  Inc. (ICE),  Cleveland Thermal Energy  Corporation
(Cleveland  Thermal)  and  Cleveland  District  Cooling  Corporation  (Cleveland
Cooling).   All   significant   intercompany   items  have  been  eliminated  in
consolidation.

       The operating  components of all subsidiaries other than IPL are included
under the  captions  OTHER  INCOME AND  (DEDUCTIONS),  "Other-net"  and  "Income
taxes-net" and INTEREST AND OTHER CHARGES,  "Interest on long-term debt," "Other
Interest" and "Amortization of redemption  premiums and expenses on debt-net" in
the Statements of Consolidated Income.

       Nature of Operations:  IPL is engaged  principally in providing  electric
and steam service to the Indianapolis  metropolitan area.  Mid-America  operates
energy-related businesses in Indianapolis, Indiana and Cleveland, Ohio.

       Concentrations  of  Risk:  Substantially  all  of  Enterprises'  business
activity is with customers  located within the  Indianapolis  area. In addition,
approximately 63% of Enterprises' employees are covered by collective bargaining
agreements.

       Regulation:  The  retail  utility  operations  of IPL are  subject to the
jurisdiction  of  the  Indiana  Utility  Regulatory   Commission  (IURC).  IPL's
wholesale  power  transactions  are subject to the  jurisdiction  of the Federal
Energy  Regulatory  Commission.  These agencies  regulate IPL's utility business
operations,  tariffs,  accounting,  depreciation allowances,  services, security
issues  and the  sale and  acquisition  of  utility  properties.  The  financial
statements  of IPL  are  based  on  generally  accepted  accounting  principles,
including the provisions of Statement of Financial  Accounting Standards No. 71,
"Accounting  for the  Effects  of  Certain  Types of  Regulation,"  which  gives
recognition to the ratemaking and accounting practices of these agencies.

       Revenues:  Effective  January 1, 1997,  IPL adopted the unbilled  revenue
method of accounting for electricity and steam delivered  during the period (see
Note 3).  Revenues are accrued for services  provided but unbilled at the end of
each month.

       A fuel adjustment  charge  provision,  which is established  after public
hearing,  is  applicable  to most of the rate  schedules  of IPL and permits the
billing or crediting of estimated fuel costs above or below the levels  included
in such rate  schedules.  Actual fuel costs in excess of or under estimated fuel
costs billed are deferred or accrued, respectively.

        On August  18,  1999,  the IURC  issued  an order  that  allows  for the
recovery of purchased  power costs based on a benchmark.  This benchmark will be
determined by the calculation of a utility's highest on-system fuel cost. If the
cost per Mwh of power  purchases  is not greater  than the  benchmark,  then the
purchased  power costs should be  considered  net energy costs that are presumed
fuel costs  included in  purchased  power.  If the average cost per Mwh of power
purchases is greater than the  benchmark,  then the costs are  recoverable  only
through  demonstration of the reasonableness of those purchases to the IURC. The
Indiana  Office of Utility  Consumer  Counselor  has appealed that order and the
eventual outcome of this matter is unknown at this time.

       Authorized  Annual  Operating  Income:   Indiana  law  requires  electric
utilities  under the  jurisdiction  of the IURC to meet  operating  expense  and
income  requirements  as a condition  for approval of requested  changes in fuel
adjustment charges. Additionally,  customer refunds may result if the utilities'
rolling 12-month  operating income,  determined at quarterly  measurement dates,
exceeds the utilities'  authorized  annual operating income and cannot be offset
by  applicable   cumulative  net  operating  income  deficiencies.   In  such  a
circumstance,  the required customer refund for the quarterly measurement period
is calculated to be one-fourth of the excess annual  operating income grossed up
for federal and state taxes as required under I. C. 8-1-2-42.5.

       Effective July 1, 1996, IPL's authorized annual  jurisdictional  electric
net operating income, for purposes of quarterly  operating income tests, is $163
million,  as established in an IURC order dated August 24, 1995. This level will
be maintained until changed by an IURC order.  During 1999, the Commission found
that IPL's rolling annual  jurisdictional  retail electric  operating income was
less  than the  authorized  annual  operating  income  at each of the  quarterly
measurement dates (January, April, July and October). At October 31, 1999, IPL's
most recent  quarterly  measurement  date,  IPL had a cumulative  net  operating
deficiency of $128.8 million,  of which $10.6 million expires at varying amounts
during  the period  ending  September  1,  2000.  The  operating  deficiency  is
calculated  by summing the 20 most recent  quarterly  measurement  period annual
results  or from the date of the last rate  order,  whichever  is  longer.  As a
consequence,  IPL  could,  for a period of time,  earn  above  $163  million  of
electric  jurisdictional  retail net operating  income without being required to
make a customer refund.

       Through  the date of IPL's  next  general  electric  rate  order,  IPL is
required  to file  upward and  downward  adjustments  in fuel cost  credits  and
charges on a quarterly basis, based on changes in the cost of fuel, irrespective
of its level of earnings.

       Pursuant  to an order of the  IURC,  IPL's  authorized  annual  steam net
operating  income is $6.2  million,  plus any  cumulative  annual  underearnings
occurring during the five-year period  subsequent to the  implementation  of the
new rate  tariffs.  During 1999,  IPL's annual  jurisdictional  steam  operating
income was less than the authorized  annual  operating income at the January 31,
1999 measurement date.

       Allowance  For Funds Used During  Construction:  In  accordance  with the
prescribed uniform system of accounts,  IPL capitalizes an allowance for the net
cost of funds (interest on borrowed funds and a reasonable rate on equity funds)
used  for  construction  purposes  during  the  period  of  construction  with a
corresponding  credit to income. IPL capitalized  amounts using pretax composite
rates of 9.4%, 9.7% and 9.1% during 1999, 1998 and 1997, respectively.

       Utility Plant and Depreciation:  Utility plant is stated at original cost
as defined for regulatory  purposes.  The cost of additions to utility plant and
replacements of retirement units of property, as distinct from renewals of minor
items that are charged to maintenance,  are charged to plant accounts.  Units of
property  replaced or abandoned  in the ordinary  course of business are retired
from the plant accounts at cost; such amounts plus removal costs,  less salvage,
are  charged  to  accumulated  depreciation.  Depreciation  is  computed  by the
straight-line method based on functional rates approved by the IURC and averaged
3.5% during 1999, 1998 and 1997.

       Nonutility  property is recorded at cost, and  depreciation is calculated
using the  straight-line  method over the estimated service lives of the related
property (see Note 2). Nonutility  depreciation  expense was $3.3 million,  $2.7
million and $4.4 million for 1999, 1998 and 1997, respectively.

       Sale of Accounts  Receivable:  IPL has sold, on a revolving basis, an
undivided  percentage  interest in $50 million of its accounts receivable.

       Regulatory  Assets:  Regulatory assets represent deferred costs that have
been  included as  allowable  costs for  ratemaking  purposes.  IPL has recorded
regulatory assets relating to certain costs as authorized by the IURC.  Specific
regulatory  assets  are  disclosed  in Note  5. As of  December  31,  1999,  all
nontax-related regulatory assets have been included as allowable costs in orders
of the IURC (see Note 10). IPL is amortizing such  regulatory  assets to expense
over periods authorized by these orders. Tax-related regulatory assets represent
the net  income  tax costs to be  considered  in future  regulatory  proceedings
generally as the tax-related amounts are paid.

       In accordance  with  regulatory  treatment,  IPL deferred as a regulatory
asset  certain post  in-service  date  carrying  charges and certain other costs
related  to its  investment  in  Petersburg  Unit 4. As  authorized  in the 1995
Electric Rate Settlement,  IPL, effective  September 1, 1995, is amortizing this
deferral to expense over a life that generally  approximates  the useful life of
the related facility.  Also in accordance with regulatory treatment,  IPL defers
as  regulatory  assets  non-sinking  fund debt and  preferred  stock  redemption
premiums and expenses,  and  amortizes  such costs over the life of the original
debt or, in the case of preferred stock redemption premiums, over 20 years.

       Derivatives:  Enterprises  has only limited  involvement  with derivative
financial  instruments and does not use them for trading  purposes.  Enterprises
entered into interest  rate swap  agreements as a means of managing the interest
rate exposure on certain of its debt  facilities.  These interest rate swaps are
accounted for under the accrual method.  Under this method,  the differential to
be paid or received on the interest rate swap  agreement is recognized  over the
life of the agreement in interest  expense.  Changes in market value of interest
swaps  accounted  for  under  the  accrual  method  are  not  reflected  in  the
accompanying financial statements.

       Income Taxes:  Deferred taxes are provided for all significant  temporary
differences  between  book and taxable  income.  The effects of income taxes are
measured based on enacted laws and rates.  Such  differences  include the use of
accelerated depreciation methods for tax purposes, the use of different book and
tax  depreciable  lives,  rates and  in-service  dates and the  accelerated  tax
amortization  of  pollution   control   facilities.   Deferred  tax  assets  and
liabilities are recognized for the expected future tax  consequences of existing
differences  between the financial  reporting and tax reporting  basis of assets
and  liabilities.  IPL has  recorded as  regulatory  assets and net deferred tax
liabilities,  income  taxes  payable  and  includable  in  allowable  costs  for
ratemaking purposes in future years. Investment tax credits that reduced federal
income taxes in the years they arose have been deferred and are being  amortized
to income over the useful lives of the properties in accordance  with regulatory
treatment.

       Cash  and Cash  Equivalents:  Enterprises  considers  all  highly  liquid
investments  purchased  with  original  maturities of 90 days or less to be cash
equivalents.

       Investments:  Securities that  Enterprises  does not intend to hold until
maturity are  classified  as  available-for-sale,  and any  unrealized  gains or
losses are recorded as a separate component of stockholders' equity.

       Employee Benefit Plans: Substantially all employees of IPALCO and IPL are
covered by a defined  benefit  pension plan,  defined  contribution  plans and a
group benefits plan.

       The defined benefit pension plan is noncontributory and is funded through
two trusts.  Additionally,  a select group of management employees of IPALCO and
IPL are covered under a funded supplemental retirement plan. Collectively, these
two plans are referred to as "the Plans."  Benefits are based on each individual
employee's years of service and compensation.  Enterprises' funding policy is to
contribute  annually not less than the minimum  required by applicable  law, nor
more than the  maximum  amount  that can be  deducted  for  federal  income  tax
purposes.

       A defined  contribution plan is sponsored by IPL as the Employees' Thrift
Plan of  Indianapolis  Power & Light Company  (Thrift Plan).  Employees elect to
make contributions to the Thrift Plan based on a percentage of their annual base
compensation.  Each employee's contribution is matched in amounts up to, but not
exceeding, 4% of the employee's annual base compensation. Employer contributions
to the Thrift Plan were $3.5  million,  $3.5  million and $3.3  million in 1999,
1998 and 1997, respectively.

       The group  benefits plan is sponsored by IPL and provides  certain health
care and life  insurance  benefits to active  employees and employees who retire
from active  service on or after  attaining age 55 and have rendered at least 10
years of service. The postretirement benefit obligations of this plan are funded
through a Voluntary Employee Beneficiary  Association (VEBA) Trust. IPL's policy
is to fund the annual actuarially determined postretirement benefit cost.

       A  defined   contribution   plan  is  sponsored  by  Enterprises  as  the
Mid-America Energy Resources Employee  Retirement Plan.  Employees elect to make
contributions  to  this  plan  based  on  a  percentage  of  their  annual  base
compensation.  Each employee's contribution is matched in amounts up to, but not
exceeding, 6% of the employee's annual base compensation.

       New Accounting Pronouncement: Statement of Financial Accounting Standards
No.  133  (SFAS  133),   "Accounting  for  Derivative  Instruments  and  Hedging
Activities,"  was issued in June 1998.  SFAS 137 delayed the  effective  date of
this standard to all fiscal quarters of all years beginning after June 15, 2000.
This statement  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 measure 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.

       Use of Management  Estimates:  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.  During 1999, IPL changed its estimate for unbilled
revenue which resulted in a $8.0 million increase to unbilled revenue.

       Earnings per Share:  All  references  to earnings per share in the Notes
to the Consolidated Financial Statements represent diluted earnings per share.

       Reclassifications:  Certain amounts from prior years' consolidated
financial  statements have been reclassified to conform to the current year
presentation.


2.  PLANT IN SERVICE AND OTHER PROPERTY

       Utility Plant in Service
       ------------------------

     The original cost of utility plant in service at December 31, segregated by
functional classifications, follows:

                                            1999                       1998
----------------------------------------------------------------------------
                                                       (In Thousands)

Production...............................      $1,735,026            $1,716,786
Transmission.............................         239,976               238,453
Distribution.............................         802,543               761,296
General  ................................         144,793               143,364
                                               ----------            ----------
   Total utility plant in service........      $2,922,338            $2,859,899
                                               ==========            ==========

       Substantially  all of  IPL's  property  is  subject  to the  lien  of the
indentures securing IPL's First Mortgage Bonds.

       In 1997, IPL retired and sold its C.C. Perry W plant site, including land
and  improvements,  to the state of Indiana White River State Park Commission at
an approximate  pretax net gain of $5.7 million included under the caption OTHER
INCOME AND (DEDUCTIONS), "Other - net."

       Nonutility Property
       -------------------

       The original cost of nonutility property at December 31 follows:

                                                1999                  1998
----------------------------------------------------------------------------
                                                       (In Thousands)

District Cooling.......................       $  76,821              $ 80,777
District Heating.......................           5,470                 7,672
General  ..............................           2,646                 2,870
                                               --------              --------
         Total nonutility property.....        $ 84,937              $ 91,319
                                               ========              ========

       Substantially all the District Cooling and Heating property is subject to
the lien of existing debt and/or credit agreements.

       In  1997,  Enterprises  initiated  a  plan  to  sell,  during  1998,  two
subsidiaries   of   Mid-America,   Cleveland   Thermal  and  Cleveland   Cooling
(collectively  referred to as CER) and ceased recording  depreciation.  Based on
fair market value estimates, Enterprises recorded a charge of $32 million during
1997 to write down the carrying  amounts of these  businesses to estimated  fair
value less cost to sell.  The charge was included in  Enterprises'  OTHER INCOME
AND  (DEDUCTIONS),  for the year ended  December 31, 1997.  During 1998,  it was
determined  that it was not probable that CER would be sold during 1998.  Due to
the delay,  depreciation  was resumed on the CER assets during  September  1998.
Enterprises  continues to have the ability to remove the assets from  operations
and anticipates the sale of CER in 2000.  Excluding the charge  described above,
these  businesses  contributed a net loss of $.6 million,  $1.5 million and $2.5
million in 1999, 1998 and 1997, respectively.

3.  CUMULATIVE EFFECT OF ACCOUNTING CHANGE

       In December  1997, IPL changed its method of accounting  (retroactive  to
January 1,  1997) to record  revenues  of all  electricity  and steam  delivered
during the period.  Prior to 1997, IPL  recognized  revenues on a cycle basis as
meters were read. The new accounting method more accurately  reports revenues in
the period in which  electricity and steam is used by customers.  The cumulative
effect of the change in accounting at January 1, 1997, was $18.3 million (net of
income taxes of $11.2 million and other taxes of $.4 million) or $.19 per share.
The change had the effect of decreasing 1997 income before the cumulative effect
of the accounting change by $1.9 million (net of taxes) or $.02 per share.

4.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

       The estimated fair value of financial  instruments has been determined by
Enterprises  using  available  market  information  and  appropriate   valuation
methodologies. However, considerable judgment is required in interpreting market
data  to  develop  the  estimates  of fair  value.  Accordingly,  the  estimates
presented herein are not necessarily  indicative of the amounts that Enterprises
could  realize  in a  current  market  exchange.  The  use of  different  market
assumptions and/or estimation  methodologies may have an effect on the estimated
fair value amounts.

       Cash  and  Cash  Equivalents  and  Notes  Payable:  The  carrying  amount
approximates fair value due to the short maturity of these instruments.


       Long-Term   Debt,   Including   Current   Maturities   and  Sinking  Fund
Requirements:  Interest rates that are currently  available to  Enterprises  for
issuance  of debt  with  similar  terms  and  remaining  maturities  are used to
estimate fair value. The variable rate debt has been included at the face amount
for both  carrying  amount and fair value.  The fair values of the interest rate
swap agreements of Enterprises  have been estimated to be $.3 million and $(9.7)
million at December 31, 1999 and 1998,  respectively.  These  amounts  represent
what Enterprises would either pay or receive to enter into equivalent agreements
with a swap  counterparty.  The  fair  value of the  debt  outstanding  has been
determined  on the basis of the  specific  securities  issued  and  outstanding.
Accordingly,  the purpose of this  disclosure is not to approximate the value on
the basis of how the debt might be  refinanced.  At December 31, 1999, and 1998,
the  consolidated  carrying  amount of Enterprises'  long-term  debt,  including
current maturities and sinking fund requirements, and the approximate fair value
are as follows:

                                                     1999               1998
    ------------------------------------------------------------------------
                                                          (In Thousands)

      Carrying amount                              $922,527          $909,399
      Approximate fair value                        908,744           952,121


5.  REGULATORY ASSETS

       The amounts of regulatory assets at December 31 are as follows:

                                                          1999            1998
------------------------------------------------------------------------------
                                                            (In Thousands)

Related to deferred taxes (Note 1)                     $  49,398      $  46,823
Postretirement benefit costs in excess
   of cash payments and amounts capitalized (Note 11)      4,288         10,720
Unamortized reacquisition premium on debt (Note 1)        21,687         22,301
Unamortized Petersburg Unit 4 carrying charges
     and certain other costs (Note 1)                     28,119         29,174
Demand side management costs (Note 10)                     4,456          7,783
                                                       ---------      ---------
Total regulatory assets                                $ 107,948      $ 116,801
                                                       =========      =========

6.  CAPITAL STOCK

       Stock   Repurchases:   In  1997,   IPALCO  conducted  a  "Dutch  Auction"
self-tender  offer and  purchased  25,078,856  shares of common stock at a total
cost of $403.1  million.  During  1998 and 1999,  IPALCO  repurchased  6 million
shares at a cost of $154 million.

       Stock  Split:  On  February  23,  1999,  the  IPALCO  Board of  Directors
authorized a two-for-one split of IPALCO's common stock, payable to stockholders
of record on March 5, 1999. All  outstanding  share,  per share and stock option
data in all periods have been restated to reflect the split.

       Common Stock:  IPALCO has a Rights Agreement,  amended and restated as of
April 28,  1998,  that is  designed  to protect  IPALCO's  shareholders  against
unsolicited  attempts  to acquire  control of IPALCO  that do not offer what the
Board  believes  is a fair and  adequate  price to all  shareholders.  The Board
declared a dividend of one Right for each share of common stock to  shareholders
of record on July 11, 1990.  The Rights will expire at the time of redemption or
exchange,  or on April 28, 2008,  whichever occurs  earliest.  At this time, the
Rights  are  attached  to and trade with the  common  stock.  The Rights are not
taxable to shareholders or to IPALCO,  and they do not affect reported  earnings
per share.  Under the Rights  Agreement,  IPALCO has authorized and reserved 120
million shares for issuance.

       The following is a  reconciliation  of the weighted average common shares
for the basic and diluted earnings per share computations:

                                         For the Year Ended December 31,
                                         -------------------------------
                                     1999             1998           1997
                                     ----             ----           ----
                                                (In Thousands)

Weighted average common shares       86,096          89,979          95,884
Dilutive effect of stock options        695           1,298             571
                                     ------          ------          ------
Weighted average common
   and incremental shares            86,791          91,277          96,455
                                     ======          ======          ======

       IPALCO  PowerInvest,  IPALCO's  Dividend  Reinvestment  and Direct  Stock
Purchase Plan,  allows  participants  to purchase  shares of common stock and to
reinvest  dividends.  The plan provides that such shares may be purchased on the
open  market  or  directly  from  IPALCO  at the  option  of  IPALCO.  IPALCO is
authorized to issue  approximately 1.4 million  additional shares as of December
31,  1999,  pursuant to this plan.  All  purchases in 1999 were made on the open
market.

       Under the Thrift Plan,  shares may be purchased either on the open market
or, if available,  as original  issue shares  directly  from IPALCO.  There were
approximately 3.2 million additional shares available for issue under the Thrift
Plan as of  December  31,  1999.  All  purchases  in 1999  were made on the open
market.

       IPALCO is  authorized to issue 55,964  additional  shares of common stock
pursuant to the Energy Resources 401(k) plan. All purchases in 1999 were made on
the open market.

       IPALCO has an existing  stock  option plan (1990 Plan) for key  employees
under which  options to acquire  shares of common  stock may be  granted.  Three
million shares of common stock were authorized for issuance under the 1990 Plan,
although no shares are  available  for future  grants.  The  maximum  period for
exercising an option may not exceed 10 years and one day after grant or 10 years
for incentive stock options.

       The 1991  Directors'  Stock  Option  Plan  (1991  Plan)  provides  to the
non-employee  Directors  of IPALCO  options to acquire  shares of common  stock.
These  options  are  exercisable  for  the  period  beginning  on the  six-month
anniversary of, and ending on the 10-year  anniversary of, the grant date. Under
the 1991 Plan,  750,000 shares of common stock were  authorized for issuance and
108,000 are available for future grants.

       The IPALCO  Enterprises,  Inc.  1997 Stock  Option  Plan (1997  Plan) for
officers and other key employees  authorizes four million shares of common stock
for  issuance.  As of December 31, 1999,  1,570,500  shares were  available  for
future  grants.  The maximum  period for  exercising an option may not exceed 10
years and one day after the grant  provided,  however,  that the incentive stock
options shall have terms not in excess of 10 years.

       A summary of options issued under all 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, January 1, 1997..................      $12.06               $8.416 - $12.686            2,047,140
Granted.......................................       15.69                         15.688            2,265,000
Granted.......................................       15.25                         15.25                84,000
Exercised.....................................       12.03               8.416 -   15.688             (305,464)
                                                                                                    ----------
Otstanding, December 31, 1997                        14.14               8.416 -   15.688            4,090,676
Granted.......................................       21.03                         21.03               150,000
Granted.......................................       20.35                         20.345               30,000
Granted.......................................       21.67                         21.67                72,000
Exercised.....................................       14.16               8.416 -   15.688           (1,724,378)
                                                                                                    ----------
Outstanding, December 31, 1998................       14.80               8.416 -    21.67            2,618,298
Granted.......................................       19.23               16.63 -    23.38              187,000
Exercised.....................................       14.69               8.416 -    20.345            (455,318)
                                                                                                    ----------
Outstanding, December 31, 1999................       15.17               8.416 -    23.38            2,349,980
                                                                                                    ==========
</TABLE>


       The number of shares  exercisable  at December  31,  1999,  1998 and 1997
were: 2,309,980, 2,558,298, and 4,090,676, respectively, with a weighted average
exercise price of $15.06, $14.65 and $14.14, respectively.  The weighted average
remaining contractual life of the options outstanding at December 31, 1999, 1998
and 1997 was 6.5 years, 7.0 years and 7.7 years, respectively.

       The 1999  Stock  Incentive  Plan  (1999  Plan) is for key  employees  and
consultants  under which  options and  restricted  stock  awards may be granted.
Under the 1999 Plan 1.5 million  shares were  authorized  for issuance,  and all
shares are  available  for future  grants as of December 31,  1999.  The maximum
period for exercising an option may not exceed fifteen years.

       IPALCO has a Long-Term  Performance  and Restricted  Stock Incentive Plan
(1995 Plan).  Pursuant to the 1995 Plan,  1.2 million  shares of common stock of
IPALCO have been  authorized  and reserved for issuance,  and initial  awards of
174,608 shares of restricted  common stock were made to participating  employees
on January 1, 1995. On January 1, 1997 and 1996, an additional  3,256 and 14,638
shares,  respectively,  were issued to reflect the addition of new participants.
Under the 1995 Plan,  shares of  restricted  common  stock with value equal to a
stated  percentage of  participants'  base salary are  initially  awarded at the
beginning of a three-year  performance period,  subject to adjustment to reflect
the  participants'   actual  base  salary.  The  shares  remain  restricted  and
nontransferable  throughout  each  three-year  performance  period,  vesting  in
one-third  increments  in  each  of the  three  years  following  the end of the
performance  period.  The first performance  period was from January 1, 1995, to
December 31, 1997.  At the end of a  performance  period,  awards are subject to
adjustment to reflect Enterprises'  performance compared to peer companies under
two   performance   criteria,   cost-effective   service  and  total  return  to
shareholders.  Depending on Enterprises' performance under these criteria, final
awards may range from 200% of the initial awards to zero. On January 5, 1998, an
additional  18,864  shares  were  issued to reflect  participants'  actual  base
salaries.  On January 15, 1998, the final performance  evaluation was performed,
resulting  in final awards of 200% of the initial  awards with  one-third of the
total vesting (147,480 shares).  Participants may choose from one of four payout
options for vested shares,  including partial cash payout. Of the vested shares,
67,438 were paid out in the form of stock.  During 1998,  an  additional  24,218
shares vested. An additional  one-third of the awards vested (115,104 shares) on
January 1, 1999, of which 38,158 shares were paid out in the form of stock.  The
final  one-third of the amounts vested  (115,096  shares) on January 1, 2000, of
which 64,584 shares have been paid out in the form of stock.

       On  January  27,  1998,  the Board of  Directors  amended  the  Long-Term
Performance  and Restricted  Stock  Incentive Plan (1998 Plan).  Pursuant to the
1998 Plan, an additional  1.8 million shares of common stock of IPALCO have been
authorized and reserved for issuance,  for a total of 3 million shares.  Initial
awards of 225,382 shares of restricted  common stock were made to  participating
employees on January 27, 1998.  During 1998,  19,826 shares of restricted  stock
were  canceled.  On January 4, 1999, an additional  15,572 shares were issued to
reflect the  addition of new  participants.  On January 3, 2000,  an  additional
2,933 shares were issued to reflect the addition of new participants. Awards are
made on established  targets for the  participants to reflect the  participants'
actual base salary. The shares remain restricted and nontransferable  throughout
each three-year  performance period,  vesting in one-third increments in each of
the three years  following the end of the  performance  period.  At the end of a
performance  period,  awards are subject to adjustment  to reflect  Enterprises'
performance compared to companies in the S&P 500 Index with regard to cumulative
total return to shareholders during the three-year performance period. Depending
on  Enterprises'  performance,  final  awards may range from 400% of the initial
awards to zero.

       APB Opinion  No. 25,  "Accounting  for Stock  Issued to  Employees,"  and
related  interpretations  in  accounting  for the  stock-based  plans  have been
applied by Enterprises.  No compensation  cost has been recognized for the 1990,
1991,  1997 and 1999 option  plans  because the stock option  exercise  price is
equal to the fair value of the underlying common stock at the date of grant. Had
compensation cost been determined based on the fair value at the grant dates for
awards under the plans  consistent with the method of SFAS 123,  "Accounting for
Stock-Based  Compensation,"  Enterprises' net income for the year ended December
31, 1999,  would have decreased from $128.9 million ($1.49 per share) to the pro
forma amount of $128.4  million ($1.48 per share).  Enterprises'  net income for
the year ended  December  31, 1998,  would have  decreased  from $130.1  million
($1.43 per share) to the pro forma amount of $129.6  million  ($1.42 per share).
Enterprises'  net income and earnings  per share for the similar  period in 1997
would have  decreased  from  $114.0  million  ($1.18 per share) to the pro forma
amount of $110.4 million ($1.15 per share).  Enterprises  estimated the SFAS 123
fair values by utilizing the binomial  options  pricing model with the following
assumptions:  dividend yields of 2.5% to 6.9%,  risk-free rates of 6.3% to 6.9%,
volatility of 12% to 19% and expected lives of five years.

        Compensation expense of $1.2 million and $2.0 million for 1999 and 1998,
respectively, as measured by the market value of the common stock at the balance
sheet date,  has been  recognized in accordance  with the vesting period for the
1998 Plan.  Compensation  expense of $3.1  million and $3.4 million for 1998 and
1997, respectively, was recognized in accordance with the vesting period for the
1995 Plan.

       Restrictions on the payment of cash dividends or other  distributions  of
IPL common stock held by IPALCO and on the purchase or redemption of such shares
by IPL are contained in the indentures  securing IPL's First Mortgage  Bonds. In
addition, pursuant to IPL's Articles of Incorporation,  no dividends may be paid
or accrued and no other  distribution  may be made on IPL's  common stock unless
dividends on all  outstanding  shares of IPL's preferred stock have been paid or
declared and set apart for payment.  All of IPL's retained  earnings at December
31, 1999, were free of such restrictions. There are no other restrictions on the
retained earnings of IPALCO.

       Cumulative  Preferred Stock of Subsidiary:  Preferred stock  shareholders
are entitled to two votes per share for IPL matters,  and if four full quarterly
dividends are in default on all shares of the preferred stock then  outstanding,
they are entitled to elect the smallest  number of IPL Directors to constitute a
majority.  Preferred stock is redeemable  solely at the option of IPL and can be
redeemed in whole or in part at any time at specific call prices.

       On January 13,  1998,  IPL issued the 5.65%  Preferred  Series,  which is
redeemable at par value, subject to certain  restrictions,  in whole or in part,
at any time on or after January 1, 2008, at the option of IPL.

At December 31, preferred stock consisted of the following:

                                      December 31, 1999
                                      -----------------
                                   Shares         Call           December 31
                                 Outstanding      Price        1999        1998
                                 -----------   ----------   --------     ------
                                                                (In Thousands)
Cumulative $100 Par Value,
  authorized 2,000,000 shares

     4% Series.................      47,611     $118.00       $4,761     $4,761
     4.2% Series...............      19,331      103.00        1,933      1,933
     4.6% Series...............       2,481      103.00          248        248
     4.8% Series...............      21,930      101.00        2,193      2,193
     5.65% Series..............     500,000           -       50,000     50,000
                                    -------                  -------    -------
Total cumulative preferred stock    591,353                  $59,135    $59,135
                                    =======                  =======    =======

        During 1999, 1998 and 1997, preferred stock dividends were $3.2 million,
$3.1 million and $2.8 million, respectively.
<PAGE>
7.  LONG-TERM DEBT
<TABLE>
<CAPTION>

       Long-term debt consists of the following:
                                                                                               December 31,
                                                                                               ------------
                                                                                           1999           1998
                                                                                           ----           ----
           Series                  Due                                                        (In Thousands)
           ------                  ---
     IPL First Mortgage Bonds:
<S>                        <C>                                                            <C>             <C>
         6.05%             February 2004............................................      $  80,000       $  80,000
         8%                October 2006.............................................         58,800          58,800
         7 3/8%            August 2007..............................................         80,000          80,000
         6.10% *           January 2016.............................................         41,850          41,850
         5.40% *           August 2017..............................................         24,650          24,650
         7.45%             August 2019..............................................              -          23,500
         5.50% *           October 2023.............................................         30,000          30,000
         7.05%             February 2024............................................        100,000         100,000
         6 5/8% *          December 2024............................................         40,000          40,000
     Unamortized discount - net.....................................................           (849)           (907)
                                                                                          ---------       ---------
         Total first mortgage bonds.................................................        454,451         477,893

     IPL Variable Series Notes
         1991*             August 2021..............................................         40,000          40,000
         1994A*            December 2024............................................         20,000          20,000
         1995B*            January 2023 ............................................         40,000          40,000
         1995C*            December 2029 ...........................................         30,000          30,000
         1996*             November 2029 ...........................................         20,000          20,000
         1999              August 2030 .............................................         23,500               -
                                                                                          ---------       ---------
     Total long-term debt - IPL.....................................................        627,951         627,893
                                                                                          ---------       ---------

     Long-Term Debt - Other:
         Energy Resources - 7.25% note, due December 2011...........................              -           9,500
         Energy Resources - 1995 Series variable note, due September 2030...........              -           9,300
         Energy Resources - 1999 Series variable note, due September 2030...........         18,800               -
         ICE - 7.59% note, due February 2016 .......................................         16,000          16,000
         IPALCO Enterprises, Inc. commercial paper..................................        211,195         197,000
         Energy Resources - 8.03% notes payable, due June 2012 .....................         48,281          49,406
         SHAPE -7.50% notes payable, due October 2000 ..............................            300             300
     Current maturities.............................................................        (52,477)         (1,425)
                                                                                          ---------       ---------
         Total long-term debt - other...............................................        242,099         280,081
                                                                                          ---------       ---------

         Total long-term debt.......................................................      $ 870,050       $ 907,974
                                                                                          =========       =========
</TABLE>

* Notes are issued to the city of Petersburg, Indiana, by IPL to secure the loan
of proceeds from various tax-exempt instruments issued by the city.

       IPL  redeemed the $23.5  million,  7.45% Series bond in October 1999 with
the proceeds from the $23.5 million  variable rate note issued  September  1999.
Energy  Resources  refinanced  its $9.5  million  7.25% Series note and its $9.3
million 1995 Series  variable  rate note with the  proceeds of an $18.8  million
variable rate note issued May 1999.

       The IPL Series 1991 note  provides for an interest  rate that varies with
the tax-exempt commercial paper rate. The IPL 1994A, 1995B, 1995C and 1996 notes
provide  for an  interest  rate that varies  with the  tax-exempt  weekly  rate.
Additionally,  these notes can be converted into  long-term  fixed interest rate
instruments  by the  issuance  of an IPL  First  Mortgage  Bond.  The  notes are
classified  as  long-term  liabilities  because  IPL  maintains  a $150  million
long-term  credit facility  supporting  these  agreements,  which were unused at
December 31, 1999.  The IPL Series 1999 note  provides for an interest rate that
varies based on tax-exempt  auction  rates.  IPL, at its option,  can change the
interest  rate mode for all of the  variable  series  notes to be based on other
short-term rates.

       Energy Resources' 1999 variable long-term note due 2030 was issued to the
Indiana Development Finance Authority and has an interest rate which varies with
the tax-exempt  weekly rate.  Energy  Resources,  at its option,  can change the
interest rate mode for this note to be based on other short-term rates. The note
is classified as a long-term  liability  because  Energy  Resources  maintains a
long-term credit facility supporting this agreement.

       IPALCO's Revolving Credit Facility (Revolver) 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.
According to the credit  agreement,  IPALCO  could  borrow up to $160.4  million
until March 31, 2001. The final step down provides for the available  borrowings
to decrease to $80.2 million on March 31, 2001, and remain available until March
31, 2002.

       The year-end interest rates for the variable rate notes are as follows:

                                        Interest Rate at
                                           December 31,
                                     1999            1998
-----------------------------------------------------------

Series 1991                          3.14%           3.48%
Series 1994A                         3.38%           3.56%
Series 1995B                         5.21%           5.21%
Series 1995C                         3.41%           3.54%
Series 1996                          3.41%           3.54%
Series 1999                          3.74%             -
Energy Resources
  Series 1995 note                     -             3.65%
Energy Resources
  Series 1999 note                   3.75%             -
IPALCO commercial paper              6.65%           6.65%

       In  conjunction  with the issuance of the 1995B note, IPL entered into an
interest  rate swap  agreement.  Pursuant  to the swap  agreement,  IPL will pay
interest  at a fixed  rate of 5.21% to a swap  counterparty  and will  receive a
variable  rate of interest in return,  which is identical  to the variable  rate
payment made on the 1995B note. The result is to  effectively  establish a fixed
rate of interest on the 1995B note of 5.21%. The interest rate swap agreement is
accounted for on a settlement  basis. IPL is exposed to credit loss in the event
of  nonperformance  by the counterparty for the net interest  differential  when
floating rates exceed the fixed maximum rate.  However,  IPL does not anticipate
nonperformance by the counterparty.

       In conjunction with the issuance of the Revolver,  IPALCO entered into an
interest  rate swap  agreement  which fixed the interest rate on $300 million of
the Revolver. Pursuant to the swap agreement which matures April 1, 2001, IPALCO
will pay  interest  at a fixed rate of 6.3575% to a swap  counterparty  and will
receive a variable rate of interest in return based on one month LIBOR.  Per the
swap  agreement,  in July 1998, the amount covered by the swap began  decreasing
$25 million each quarter.  The notional amount of the swap at December 31, 1999,
was $150  million.  This  interest  rate swap  agreement is  accounted  for on a
settlement basis. This interest rate swap is designated as a hedge of the IPALCO
commercial  paper facility and other variable rate debt  instruments.  IPALCO is
exposed to credit loss in the event of  nonperformance  by the  counterparty for
the net interest differential when floating rates exceed the fixed maximum rate.
However, IPALCO does not anticipate nonperformance by the counterparty.

       Maturities  on long-term  debt for the five years  subsequent to December
31, 1999, are as follows:

                            Maturities
                            ----------
            Year                                Amount
            ----                                ------
                                            (In Thousands)

            2000...........................      $52,477
            2001...........................       83,477
            2002...........................       83,650
            2003...........................        3,761
            2004...........................       84,092

8.  LINES OF CREDIT

       IPL has  committed  lines of credit  with  banks of $55  million  used to
provide  loans for  interim  financing.  These  lines  require  the  payment  of
commitment fees. At December 31, 1999, $9 million was  outstanding,  $40 million
was used to support  commercial paper and $6 million was unused.  These lines of
credit,  based on  separate  agreements,  have  expiration  dates  ranging  from
February 2000 to April 2000.

       IPALCO has a $60 million  line of credit that  requires  the payment of a
fee. At December 31, 1999, there was no outstanding balance.

       Mid-America has a $30 million line of credit that requires the payment of
a commitment fee. At December 31, 1999, $8.5 million was outstanding,  and $18.8
million was  committed as liquidity for the Energy  Resources  variable note and
$2.7 million was unused.

       The  weighted  average  interest  rate on notes  payable and  commercial
paper  outstanding  was 6.21% and 6.09% at December 31, 1999 and 1998,
respectively.

9.  INCOME TAXES
<TABLE>
<CAPTION>

       Federal and state income taxes charged to income are as follows:
                                                                         1999           1998           1997
-----------------------------------------------------------------------------------------------------------
                                                                                   (In Thousands)
Utility Operating Expenses:
  Current income taxes:
<S>                                                                     <C>            <C>            <C>
    Federal.....................................................         $68,093        $72,094        $64,553
    State.......................................................           9,208         10,585          9,474
                                                                        --------       --------       --------
      Total current taxes.......................................          77,301         82,679         74,027

    Deferred federal income taxes...............................           8,117           (414)         1,444
    Deferred state income taxes.................................           1,824            715            803
                                                                        --------       --------       --------
      Total deferred  income taxes..............................           9,941            301          2,247
                                                                        --------       --------       --------

    Net amortization of investment credit.......................          (2,767)        (2,790)        (2,939)
                                                                        --------       --------       --------
      Total charge to utility operating expenses................          84,475         80,190         73,335
    Net credit to other income and deductions...................          (5,688)        (5,231)       (19,004)
                                                                        --------       --------       --------
                                                                          78,787         74,959         54,331
    Cumulative effect of change in accounting principle.........               -             -          11,209
                                                                        --------       --------       --------
      Total federal and state income tax provisions.............         $78,787        $74,959        $65,540
                                                                        ========       ========       ========
</TABLE>

       The provision for federal  income taxes  (including  net  investment  tax
credit  adjustments)  is less than the amount computed by applying the statutory
tax  rate to  pretax  income.  The  reasons  for  the  difference,  stated  as a
percentage of pretax income, are as follows:
                                                   1999       1998        1997
------------------------------------------------------------------------------
Federal statutory tax rate......................   35.0%      35.0%      35.0%
Effect of state income taxes....................   (1.7)      (1.8)      (2.1)
Amortization of investment tax credits..........   (1.3)      (1.3)      (1.6)
Preferred dividends of subsidiary...............    0.5        0.5        0.2
Other - net.....................................   (0.1)      (1.5)      (1.2)
                                                  -----      -----      -----
  Effective tax rate............................   32.4%      30.9%      30.3%
                                                   ====       ====       ====

       The significant items comprising  Enterprises' net deferred tax liability
recognized in the consolidated balance sheets as of December 31, 1999, and 1998,
are as follows:
                                                       1999             1998
-------------------------------------------------------------------------------
                                                             (In Thousands)
Deferred tax liabilities:
     Relating to utility property...................   $422,907       $412,922
     Unrealized gain on investment security.........     67,297             -
     Other..........................................     19,264         16,542
                                                      ---------      ---------
         Total deferred tax liabilities.............    509,468        429,464
                                                      ---------      ---------
Deferred tax assets:
     Relating to utility property...................     48,417         44,444
     Investment tax credit..........................     23,856         25,547
     Employee benefit plans.........................     22,463         24,767
     Other..........................................     12,836         16,271
                                                      ---------      ---------
         Total deferred tax assets..................    107,572        111,029
                                                      ---------      ---------
Net deferred tax liability..........................    401,896        318,435
       Current deferred tax liability...............      1,308            108
                                                      ---------      ---------
Deferred income taxes - net.........................   $400,588       $318,327
                                                      =========      =========

10.  RATE MATTERS

       Demand Side Management (DSM) Program:  In compliance with certain orders,
IPL is  deferring  certain  approved  DSM costs  and  carrying  charges.  In the
Settlement Agreement approved by the IURC on August 24, 1995, IPL was authorized
to amortize $5.3 million of such costs deferred  prior to February 1995,  over a
four-year period beginning  September 1, 1995. On July 30, 1997, IPL received an
IURC order  approving a  settlement  agreement  authorizing  IPL to recognize in
rates the existing  regulatory  asset  (consisting  of DSM costs  deferred after
January 31, 1995),  along with carrying charges,  and also to approve changes to
IPL's DSM programs.  On August 18, 1999, IPL received an IURC order  approving a
settlement  agreement  authorizing  IPL to extend its low income  single  family
residential DSM program through July 30, 2000.

       Elect  Plan:  During  1998,  the IURC  approved  a plan that  allows  IPL
customers  with less than 2,000  kilowatts of demand,  an  opportunity to choose
optional  service or payment plans.  This includes a green power option, a fixed
rate per unit of  consumption  option and a fixed  bill  option.  Customers  not
choosing  one of these  options  continue  to  receive  electric  service  under
existing tariffs.
<PAGE>

11.  PENSIONS AND OTHER POSTRETIREMENT BENEFITS
<TABLE>
<CAPTION>

                                                           Pension Benefits                  Other Benefits
                                                        ----------------------          -----------------------
(In Thousands)                                           1999           1998               1999          1998
                                                        --------      --------           ---------      --------
Change in benefit obligation
<S>                                                     <C>           <C>                <C>           <C>
Benefit obligation at beginning of year                 $276,638      $254,540           $149,761      $136,705
Service cost                                               5,845         5,535              3,761         3,557
Interest cost                                             18,899        18,021             10,025         9,972
Actuarial (gain) loss                                    (11,765)       12,740            (17,717)        5,204
Amendments                                                   764        (1,408)                 -             -
Benefits paid                                            (13,774)      (12,790)            (5,831)       (5,677)
                                                        ---------     --------           --------      --------
Benefit obligation at end of year                        276,607       276,638            139,999       149,761
                                                        ---------     --------           --------      --------

Change in plan assets
Fair value of plan assets
   at beginning of year                                  290,770       262,126             83,846        68,688
Actual return on plan assets                              30,417        37,179             14,288         1,743
Employer contribution                                      3,324         4,254             18,274        19,092
Benefits paid                                            (13,774)      (12,789)            (5,831)       (5,677)
                                                        ---------     --------           --------      --------
Fair value of plan assets at end of year                 310,737       290,770            110,577        83,846
                                                        ---------     --------           --------      --------

Funded status                                             34,130        14,132            (29,422)      (65,915)

Unrecognized net gain                                    (70,048)      (55,065)           (54,476)      (30,532)
Unrecognized prior service cost                           15,241        15,871                  -             -
Unrecognized net transition (asset) obligation            (8,341)       (9,755)             79,560       85,679
Adjustment to recognize minimum liability                     -         (5,136)                 -             -
                                                        ---------     --------           --------      --------
Accrued benefit cost                                    $(29,018)     $(39,953)          $ (4,338)     $(10,768)
                                                        =========     ========           ========      ========

Weighted-average assumptions as of
   December 31
Discount rate                                              7.50%         7.00%              7.50%         7.00%

</TABLE>

       The defined benefit  pension plan had expected  returns on plan assets of
9.0%, 8.0% and 8.0% for 1999, 1998 and 1997,  respectively.  The defined benefit
plan assumed  compensation  increases  to be 5.10% during 1998 and 1997.  During
1999,  the defined  benefit plan began using  salary  bands to determine  future
benefit  costs  rather than rate of  compensation  increases.  The  supplemental
retirement pension plan used an expected return on plan assets of 8.0% for 1999,
1998 and 1997. The supplemental plan assumed  compensation  increases to be 6.0%
for 1999, 1998 and 1997.

       Other  benefits used expected  rates of return on plan assets of 8.0% for
1999, 1998 and 1997. For measurement purposes, a 6.6% annual rate of increase in
the per capita cost of covered  health care  benefits was assumed for 2000.  The
year in which the ultimate  health care cost trend rate of 4.5% will be achieved
is assumed to be 2003.
<TABLE>
<CAPTION>
                                                        Pension Benefits                          Other Benefits
                                                 ---------------------------------        --------------------------------
(In Thousands)                                      1999        1998         1997            1999        1998        1997
                                                    ----        ----         ----            ----        ----        ----
Components of net periodic benefit cost
<S>                                                <C>        <C>          <C>             <C>         <C>         <C>
Service cost                                       $ 8,451    $  10,617    $  6,584        $  3,761    $  3,557    $  4,021
Interest cost                                       18,899       18,021      16,873          10,025       9,972      11,135
Expected return on plan assets                     (25,417)     (20,426)    (18,344)         (6,505)     (5,278)     (3,780)
Amortization of transition (asset) obligation       (1,414)      (1,414)     (1,414)          6,120       6,120       6,120
Amortization of prior service cost                   1,394        1,124       1,159               -           -           -
Recognized actuarial gain                           (2,051)      (1,545)       (910)         (1,556)     (1,656)       (551)
                                                  --------     --------    --------        --------    --------    --------
Net periodic benefit cost                            (138)        6,377       3,948          11,845      12,715      16,945
  Less: amounts capitalized                           (48)          339         621           1,895       1,924       2,930
                                                  --------     --------    --------        --------    --------    --------
Amount charged to expense                         $   (90)     $  6,038    $  3,327        $  9,950    $ 10,791    $ 14,015
                                                  ========     ========    ========        ========    ========    ========
</TABLE>

       Assumed  health  care cost trend rates have a  significant  effect on the
amounts  reported for the health care plans.  A one  percentage-point  change in
assumed health care cost trend rates would have the following effects:

                                         One Percentage-    One Percentage-
(In Thousands)                            Point Increase     Point Decrease
                                          --------------     --------------
Effect on total of service and
  interest cost components                $  1,622             $ (1,622)
Effect on postretirement
  benefit obligation                        15,475              (15,475)

      Also, during 1999, 1998 and 1997, IPL expensed  postretirement  regulatory
asset  amortization  of $6.4 million each year. The final period of amortization
is August 2000.

12.  COMMITMENTS AND CONTINGENCIES

        In 2000,  Enterprises  anticipates the cost of its construction programs
to be approximately $107 million.

       Enterprises  is involved in  litigation  arising in the normal  course of
business.  While  the  results  of such  litigation  cannot  be  predicted  with
certainty,  management,  based upon advice of counsel,  believes  that the final
outcome will not have a material  adverse effect on the  consolidated  financial
statements.

       With respect to environmental issues, Enterprises has ongoing discussions
with various regulatory authorities and continues to believe that Enterprises is
in compliance with its various permits.


13.  GAIN ON TERMINATION OF AGREEMENT

       During  September  1998,  a pretax gain of $12.5  million  ($7.8  million
after-tax)  resulted from the  liquidation  and  termination  of an agreement to
purchase up to 150 megawatts of power during the summer months  through the year
2000.

14.  COMPREHENSIVE INCOME

       Enterprises has classified its investment 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  1999.  During  1999,  Enterprises  recorded  directly  to
shareholders'  equity an unrealized  after-tax gain of $106.7 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 $174.0  million and the related taxes
would be $67.3  million.  The cost basis and the market value for the investment
were $1.2  million  and $175.2  million,  respectively,  at  December  31,  1999
(1,030,600  shares).  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 December 31, 1999 was $106.7 million.

15.  SEGMENT INFORMATION

       Operating  segments are  components of an enterprise  for which  separate
financial  information  is  available  and is  evaluated  regularly by the chief
operating  decision maker in deciding how to allocate resources and in assessing
performance.  Enterprises'  reportable  business  segments are electric and "all
other." Steam operations of IPL and all subsidiaries other than IPL are combined
in the "all other" category.  The accounting policies of the identified segments
are consistent  with those  policies and procedures  described in the summary of
significant  accounting  policies (see Note 1). Intersegment sales are generally
based on prices that reflect the current market conditions. The following tables
provide information about Enterprises' business segments:
<TABLE>
<CAPTION>

                                          1999                         1998                           1997
                              Electric  All Other  Total    Electric  All Other  Total    Electric  All Other  Total
                              --------  ---------  -----    --------  ---------  -----    --------  ---------  -----
                                                                   (In Millions)

<S>                             <C>      <C>       <C>        <C>      <C>       <C>         <C>       <C>      <C>
Operating Revenues              $800     $ 69      $869       $786     $ 69      $855        $738      $ 71     $809
Depreciation and
   Amortization                  104        7       111        100        6       106         100         8      108
Pre-tax Operating Income         263       10       273        255        7       262         233         7      240
Income Taxes                      83        3        86         79        4        83          71       (10)      61
Property - net
  of Depreciation              1,674      145     1,819      1,671      149     1,820       1,693       146    1,839
Capital Expenditures             103        2       105         74        8        82          71         4       75
</TABLE>

         Included within Depreciation and Amortization for the All Other segment
is IPL steam  depreciation  of $3 million for each of the years  1999,  1998 and
1997.  Included within Pre-tax Operating Income for the All Other segment is IPL
steam  pre-tax  operating  income of $5  million,  $5 million and $8 million for
1999,  1998 and 1997,  respectively.  Included  within  Income Taxes for the All
Other segment is IPL steam income taxes of $1 million, $1 million and $2 million
for  1999,  1998 and  1997,  respectively.  Included  within  Property  - net of
Depreciation  for the All Other  segment is IPL steam plant of $76 million,  $77
million and $73 million for 1999, 1998 and 1997,  respectively.  Included within
Capital Expenditures for the All Other segment is IPL steam plant of $2 million,
$7 million and $2 million for 1999, 1998 and 1997, respectively.
<PAGE>
16.  QUARTERLY RESULTS (UNAUDITED)

       Operating  results for the years ended  December 31, 1999,  and 1998,  by
quarter, are as follows (in thousands except per share amounts):
<TABLE>
<CAPTION>

                                                                             1999
                                               ------------------------------------------------------------------
                                                March 31            June 30      September 30        December 31
                                                --------            -------      ------------        -----------

<S>                                              <C>              <C>                <C>             <C>
Utility operating revenues.................      $ 200,831        $ 203,010          $228,515        $ 202,296
Utility operating income...................      $  43,251        $  49,434          $ 48,414        $  42,402
Net income.................................      $  29,597        $  34,652          $ 35,379        $  29,319

Weighted average shares....................         87,218           85,718            85,720           85,728
Basic earnings per share...................      $     .34        $     .40          $    .41        $     .34
Weighted average diluted shares............         88,115           86,502            86,368           86,179
Diluted earnings per share.................      $     .34        $     .40          $    .41        $     .34

                                                                             1998
                                               ------------------------------------------------------------------
                                                March 31            June 30      September 30        December 31
                                                --------            -------      ------------        -----------

Utility operating revenues.................      $ 190,321        $ 206,706          $222,028        $ 202,201
Utility operating income...................      $  40,142        $  49,198          $ 51,665        $  38,506
Net income.................................      $  25,337        $  35,809          $ 47,299        $  21,674

Weighted average shares....................         89,678           89,848            89,908           90,482
Basic earnings per share...................      $     .28        $     .40          $    .53        $     .24
Weighted average diluted shares............         91,022           91,198            91,210           91,678
Diluted earnings per share.................      $     .28        $     .39          $    .52        $     .24

</TABLE>


       The quarterly figures reflect seasonal and  weather-related  fluctuations
that are normal to IPL's operations.

       Earnings  per share are computed  independently  for each of the quarters
presented.  Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.


Item 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              ---------------------------------------------------------------
               FINANCIAL DISCLOSURE
               --------------------

              None.

                                    PART III
                                    --------



Item 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
              --------------------------------------------------

                  Information  relating to the directors of the registrant,  set
                  forth in the Proxy Statement of IPALCO Enterprises, Inc. dated
                  March 20, 2000,  (the  registrant's  Proxy  Statement),  under
                  "Proposal  1-Election  of  Five  Directors"  at  pages  4-6 is
                  incorporated herein by reference.  Information relating to the
                  registrant's  executive  officers  is set forth at pages I-9 -
                  I-10  of this  Form  10-K  under  "Executive  Officers  of the
                  Registrant at February 29, 2000."

                  Information  relating to Section  16(a)  Beneficial  Ownership
                  Reporting  Compliance,  set  forth in the  registrant's  Proxy
                  Statement at page 3 is incorporated herein by reference.

Item 11.      EXECUTIVE COMPENSATION
              ----------------------

                  Information relating to executive  compensation,  set forth in
                  the  registrant's  Proxy  Statement  under   "Compensation  of
                  Executive Officers" at page 13, "Compensation of Directors" at
                  page  8,  "Compensation   Committee   Interlocks  and  Insider
                  Participation"  at page 8,  "Pensions  Plans" at page 18,  and
                  "Employment Contracts and Termination of Employment and Change
                  in Control Arrangements" at page 19, is incorporated herein by
                  reference.

Item 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              --------------------------------------------------------------

                  Information  relating to ownership of the registrant's  common
                  stock by persons known by the  registrant to be the beneficial
                  owners  of more  than 5% of the  outstanding  shares of common
                  stock and by management,  set forth in the registrant's  Proxy
                  Statement under "Voting  Securities and Beneficial  Owners" at
                  pages 23 is incorporated herein by reference.

Item 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
              ----------------------------------------------

                  Information  relating  to certain  relationships  and  related
                  transactions,  set forth in the  registrant's  Proxy Statement
                  under  "Certain   Business   Relationships"   at  page  8,  is
                  incorporated herein by reference.

                                                         PART IV

Item 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
              ---------------------------------------------------------------

                   (a)   The  Consolidated  Financial  Statements  under  this
                         Item 14 (a) 1 filed in this Form 10-K are those of
                         IPALCO Enterprises, Inc. and subsidiaries.

                         1.  Consolidated Financial Statements
                             ---------------------------------

                             Included in Part II of this report:

                                Independent Auditors' Report

                                Statements of Consolidated Income for the
                                  Years Ended December 31, 1999, 1998 and 1997

                                Consolidated Balance Sheets, December 31, 1999
                                  and 1998

                                Statements of Consolidated Cash Flows
                                  for the Years Ended December 31, 1999,
                                  1998 and 1997

                                Statements of Consolidated Common
                                  Shareholders' Equity for the Years Ended
                                  December 31, 1999, 1998 and 1997

                                Notes to Consolidated Financial Statements

                         2.  Exhibits
                             --------

                                   The Exhibit  Index  beginning on page IV-5 of
                            this Annual  Report on Form 10-K lists the  exhibits
                            that are filed as part of this report.

                         3.   Financial Statement Schedules

                                 None

                   (b)   Reports on Form 8-K

                         None

<TABLE>
<CAPTION>

                                            IPALCO ENTERPRISES, INC.                      EXHIBIT 11.1

                                       Computation of Per Share Earnings

                              For the Years Ended December 31, 1999, 1998 and 1997
                                             (Dollars in Thousands)

YEAR ENDED DECEMBER 31, 1999:
                                                                                 Basic               Diluted
                                                                             ---------------      ---------------
Weighted average number of shares
<S>                                                                          <C>                  <C>
        Average common shares outstanding at December 31, 1999                   86,095,975           86,095,975
        Dilutive effect for stock options at December 31, 1999                           -               694,878
                                                                             ---------------      ---------------
        Adjusted weighted average shares at December 31, 1999                    86,095,975           86,790,853
                                                                             ===============      ===============

Net income                                                                         $128,947             $128,947
                                                                             ===============      ===============

Earnings per share                                                                    $1.50                $1.49
                                                                             ===============      ===============

YEAR ENDED DECEMBER 31, 1998:
                                                                                 Basic               Diluted
                                                                             ---------------      ---------------
Weighted average number of shares
        Average common shares outstanding at December 31, 1998                   89,979,192           89,979,192
        Dilutive effect for stock options at December 31, 1998                           -             1,297,978
                                                                             ---------------      ---------------
        Adjusted weighted average shares at December 31, 1998                    89,979,192           91,277,170
                                                                             ===============      ===============

Net income                                                                         $130,119             $130,119
                                                                             ===============      ===============

Earnings per share                                                                    $1.45                $1.43
                                                                             ===============      ===============


YEAR ENDED DECEMBER 31, 1997:
                                                                                 Basic               Diluted
                                                                             ---------------      ---------------
Weighted average number of shares
        Average common shares outstanding at December 31, 1997                   95,883,514           95,883,514
        Dilutive effect for stock options at December 31, 1997                           -               571,166
                                                                             ---------------      ---------------
        Adjusted weighted average shares at December 31, 1997                    95,883,514           96,454,680
                                                                             ===============      ===============

Net income to be used to compute earnings per share
       Income before cumulative effect of accounting change                         $95,699              $95,699
       Cumulative effect of accounting change                                        18,347               18,347
                                                                             ---------------      ---------------
       Net income                                                                  $114,046             $114,046
                                                                             ===============      ===============

Income before cumulative effect of accounting change                                  $1.00                $0.99
Cumulative effect of accounting change                                                  .19                  .19
                                                                             ---------------      ---------------
Earnings per share                                                                    $1.19                $1.18
                                                                             ===============      ===============

</TABLE>





                                   SIGNATURES

       Pursuant  to the  requirements  of Section 13 or 15(d) 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.



                                                   By  /s/  John R. Hodowal
                                                   ------------------------
                                                    (John R. Hodowal, Chairman
                                                     of the Board and President)

Date:  February 29, 2000
       -----------------


       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

   Signature                                Title                   Date
   ---------                                -----                   ----

 (i) Principal Executive Officer:


  /s/ John R. Hodowal              Chairman of the Board     February 29, 2000
 ------------------------------       and President
   (John R. Hodowal)


 (ii) Principal Financial Officer:


  /s/ John R. Brehm                Vice President and        February 29, 2000
 ------------------------------        Treasurer
   (John R. Brehm)


 (iii) Principal Accounting Officer:


  /s/ Stephen J. Plunkett          Controller                February 29, 2000
 ------------------------------
   (Stephen J. Plunkett)


 (iv) A majority of the Board of Directors of IPALCO Enterprises, Inc.:

 /s/ Joseph D. Barnett, Jr.                  Director         February 29, 2000
----------------------------
 (Joseph D. Barnett, Jr.)


 /s/ Daniel R. Coats                         Director         February 29, 2000
-----------------------------
 (Daniel R. Coats)


 /s/ Mitchell E. Daniels, Jr.                Director         February 29, 2000
--------------------------------------
 (Mitchell E. Daniels, Jr.)


 /s/ Rexford C. Early                        Director         February 29, 2000
--------------------------------
 (Rexford C. Early)


 /s/ Otto N. Frenzel III                     Director         February 29, 2000
-------------------------------
 (Otto N. Frenzel III)


 /s/ Max L. Gibson                           Director         February 29, 2000
--------------------------------
 (Max L. Gibson)


 /s/ John R. Hodowal                         Director         February 29, 2000
-------------------------------
 (John R. Hodowal)


 /s/ Ramon L. Humke                          Director         February 29, 2000
----------------------------
 (Ramon L. Humke)


 /s/ Andre B. Lacy                           Director         February 29, 2000
-------------------------------
 (Andre B. Lacy)


 /s/ L. Ben Lytle                            Director         February 29, 2000
----------------------------------
 (L. Ben Lytle)


 /s/ Michael S. Maurer                       Director         February 29, 2000
---------------------------------------
 (Michael S. Maurer)


 /s/ Sallie W. Rowland                       Director         February 29, 2000
-----------------------------
 (Sallie W. Rowland)


 /s/ Thomas H. Sams                          Director         February 29, 2000
----------------------------
 (Thomas H. Sams)

                                  EXHIBIT INDEX
                                  -------------

       Copies of documents  listed below which are  identified  with an asterisk
(*) are incorporated  herein by reference and made a part hereof. The management
contracts or compensatory plans are marked with a double asterisk (**) after the
description of the contract or plan.

  Exhibit
    No.                    Description
    ---                    -----------

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. (Exhibit 3.2 to the Form 10Q dated
         3-31-99.)

4.1*     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  Agent) - Rights  Agreement, as amended and restated.
        (Exhibit B to the Form 8-K dated 4-29-98.)

10.1*    IPALCO  Enterprises,  Inc. and Indianapolis  Power & Light Company
         Unfunded Deferred  Compensation Plan for Officers and  Directors as
         amended and  restated  January 1, 1999. (Exhibit 10.1 to the Form 10-K
         dated 12-31-98.)  **

10.2*    Directors' and Officers'  Liability  Insurance Policy No. DO392B1A97
         effective June 1, 1998 to June 1, 1999.  (Exhibit 10.1 to the Form
         10-Q dated 6-30-99.)  **

10.3*    IPALCO  Enterprises,  Inc.  Benefit  Protection  Fund and Trust
         Agreement  effective  November 1, 1988. (Form 10-K for year ended
         12-31-88.)  **

10.4*    Exhibit A to IPALCO  Enterprises,  Inc.  Benefit  Protection  Fund and
         Trust Agreement dated January 1, 1998.  (Exhibit 10.5 to the Form 10-K
         dated 12-31-97.)  **

10.5*    IPALCO  Enterprises,  Inc. Annual Incentive Plan and  Administrative
         Guidelines  effective  January 1, 1990.  (Form 10-K for year ended
         12-31-89.)  **

10.6*    IPALCO  Enterprises,  Inc.  Long-Term  Performance and Restricted
         Stock Incentive Plan (as amended and restated effective
         January 1, 1998).  (Exhibit 10.1 to the Form 10-Q dated 3-31-98.)  **

10.7*    IPALCO Enterprises, Inc. 1990 Stock Option Plan.  (Exhibit 10.8 to the
         Form 10-K dated 12-31-94.)  **

10.8*    IPALCO  Enterprises,  Inc.  1991  Directors'  Stock Option Plan.
         (Exhibit  10.9 to the Form 10-K dated 12-31-94.)  **

10.9*    IPALCO Enterprises, Inc. 1997 Stock Option Plan. (Exhibit 10.1 to the
         Form 10-Q dated 6-30-97.)**

10.10    IPALCO Enterprises, Inc. 1999 Stock Incentive Plan. **

10.11    Form of Termination  Benefits  Agreement  together  with  schedule  of
         parties  to, and dates of, the Termination Benefits Agreements.  **

10.12    Termination  Benefits Agreement between IPALCO Enterprises,  Inc.,
         Indianapolis Power & Light Company and Ramon L. Humke.  **

10.13*   Employment  Agreement  between  IPALCO  Enterprises,  Inc.  and John R.
         Hodowal  dated July 29,  1986. (Exhibit 10.11 to the Form 10-K dated
         12-31-94.)  **

10.14    Employment Agreement between IPALCO Enterprises, Inc. and Ramon L.
         Humke dated    12-31-99.   **

10.15*   Voluntary  Employee  Beneficiary  Association  (VEBA) Trust Agreement.
        (Exhibit 10.12 to the Form 10-K  dated 12-31-94.)  **

10.16    First Amendment to Voluntary Employee Beneficiary Association (VEBA)
         Trust Agreement as amended and effective 11-30-99. **

11.1     Computation of Per Share Earnings.

20.1*    Form 10-K of Indianapolis  Power & Light Company for the year ended
         December 31, 1999, and all exhibits thereto.  (SEC File No. 1-3132-2.)

21.1     Subsidiaries of the Registrant.

23.1     Independent Auditors' Consent.

27.1     Financial Data Schedule.