-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/d6f6TEqLZ0+vV12BNdDoPJJ2qulC+vJnfnvk1UgftIZvzmWYCWLSP7qWLfHG1x cZw875QduQ8jJ+mUOvxhYA== 0000762129-99-000019.txt : 19990813 0000762129-99-000019.hdr.sgml : 19990813 ACCESSION NUMBER: 0000762129-99-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CILCORP INC CENTRAL INDEX KEY: 0000762129 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 371169387 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08946 FILM NUMBER: 99686060 BUSINESS ADDRESS: STREET 1: 300 HAMILTON BLVD STE 300 CITY: PEORIA STATE: IL ZIP: 61602 BUSINESS PHONE: 3096758810 MAIL ADDRESS: STREET 1: 300 LIBERTY STREET STREET 2: STE 300 CITY: PEORIA STATE: IL ZIP: 61602 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL ILLINOIS LIGHT CO CENTRAL INDEX KEY: 0000018651 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 370211050 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02732 FILM NUMBER: 99686061 BUSINESS ADDRESS: STREET 1: 300 LIBERTY ST CITY: PEORIA STATE: IL ZIP: 61602 BUSINESS PHONE: 3096725271 MAIL ADDRESS: STREET 1: 300 LIBERTY STREET CITY: PEORIA STATE: IL ZIP: 61602 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended June 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from ........ to ........ Commission Registrant; State of Incorporation; IRS Employer File Number Address; and Telephone Number Identification No. 1-8946 CILCORP Inc. 37-1169387 (An Illinois Corporation) 300 Hamilton Blvd, Suite 300 Peoria, Illinois 61602 (309) 675-8810 1-2732 CENTRAL ILLINOIS LIGHT COMPANY 37-0211050 (An Illinois Corporation) 300 Liberty Street Peoria, Illinois 61602 (309) 675-8810 Indicate by check mark whether the Registrants (1) have 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 Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: CILCORP Inc. Common stock, no par value, shares outstanding at June 30, 1999 13,610,680 CENTRAL ILLINOIS LIGHT COMPANY Common stock, no par value, shares outstanding and privately held by CILCORP Inc. at June 30, 1999 13,563,871 1 CILCORP INC. AND CENTRAL ILLINOIS LIGHT COMPANY FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999 INDEX PART I. FINANCIAL INFORMATION Page No. Item 1: Financial Statements CILCORP INC. Consolidated Balance Sheets 3-4 Consolidated Statements of Income 5-6 Consolidated Statements of Cash Flows 7-8 CENTRAL ILLINOIS LIGHT COMPANY Consolidated Balance Sheets 9-10 Consolidated Statements of Income 11 Consolidated Statements of Cash Flows 12-13 Statements of Segments of Business 14-17 Notes to Consolidated Financial Statements CILCORP Inc. and Central Illinois Light Company 18-21 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations CILCORP Inc. and Central Illinois Light Company 22-33 PART II. OTHER INFORMATION Item 1: Legal Proceedings 33 Item 4: Submission of Matters to a Vote of Security Holders 33 Item 5: Other Information 33-35 Item 6: Exhibits and Reports on Form 8-K 35 Signatures 2 CILCORP INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
June 30, December 31, 1999 1998 ASSETS (Unaudited) Current assets: Cash and temporary cash investments $ 3,541 $ 1,669 Receivables, less reserves of $1,657 and $3,411 68,405 134,548 Accrued unbilled revenue 27,800 39,339 Fuel, at average cost 9,049 13,431 Materials and supplies, at average cost 16,444 15,435 Gas in underground storage, at average cost 12,478 20,494 Prepayments and other 8,639 7,646 ---------- ---------- Total current assets 146,356 232,562 ---------- ---------- Investments and other property: Investment in leveraged leases 143,297 146,977 Cash surrender value of company-owned life insurance, net of related policy loans of $51,871 and $48,132 2,362 2,655 Other investments 21,698 16,882 ---------- ---------- Total investments and other property 167,357 166,514 ---------- ---------- Property, plant and equipment: Utility plant, at original cost Electric 1,245,551 1,237,885 Gas 420,812 417,585 ---------- ---------- 1,666,363 1,655,470 Less - accumulated provision for depreciation 846,954 812,630 ---------- ---------- 819,409 842,840 Construction work in progress 45,576 30,075 Other, net of depreciation 610 7,755 ---------- ---------- Total property, plant and equipment 865,595 880,670 ---------- ---------- Other assets 23,327 33,194 ---------- ---------- Total assets $1,202,635 $1,312,940 ========== ========== The accompanying Notes to the Consolidated Financial Statements are an integral part of these Balance Sheets.
3 CILCORP INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands)
June 30, December 31, 1999 1998 LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) Current liabilities: Current portion of long-term debt $ 43,000 $ 13,027 Notes payable 73,300 96,200 Accounts payable 52,276 128,845 Accrued taxes 5,031 8,262 Accrued interest 9,386 9,994 FAC/PGA over-recoveries 367 304 Other 4,519 14,316 ---------- ---------- Total current liabilities 187,879 270,948 ---------- ---------- Long-term debt 257,168 288,135 ---------- ---------- Deferred credits and other liabilities: Accumulated deferred income taxes 240,446 239,305 Regulatory liability of regulated subsidiary 41,302 46,346 Deferred investment tax credits 18,654 19,450 Other 58,370 47,098 ---------- ---------- Total deferred credits and other liabilities 358,772 352,199 ---------- ---------- Preferred stock of subsidiary 66,120 66,120 ---------- ---------- Stockholders' equity: Common stock, no par value; authorized 50,000,000 shares - outstanding 13,610,680 shares 192,853 192,853 Retained earnings 140,688 143,530 Accumulated other comprehensive income (845) (845) ---------- ---------- Total stockholders' equity 332,696 335,538 ---------- ---------- Total liabilities and stockholders' equity $1,202,635 $1,312,940 ========== ========== The accompanying Notes to the Consolidated Financial Statements are an integral part of these Balance Sheets.
4 CILCORP INC AND SUBSIDIARIES Consolidated Statements of Income (In thousands)* (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 Revenue: Electric utility $ 88,044 $ 88,304 $169,006 $167,482 Gas utility 25,569 28,310 102,366 98,212 Other businesses 6,654 5,148 17,133 10,382 -------- -------- -------- -------- Total 120,267 121,762 288,505 276,076 -------- -------- -------- -------- Operating expenses: Fuel for generation and purchased power 27,113 29,313 57,183 58,329 Gas purchased for resale 14,234 16,034 65,005 60,025 Other operations and maintenance 43,116 33,311 73,724 62,001 Depreciation and amortization 16,160 15,982 34,481 31,966 Taxes, other than income taxes 9,349 8,517 20,916 19,305 -------- -------- -------- -------- Total 109,972 103,157 251,309 231,626 -------- -------- -------- -------- Fixed charges and other: Interest expense 7,128 7,376 14,340 14,625 Preferred stock dividends of subsidiary 773 797 1,570 1,599 Allowance for funds used during construction (15) (29) (26) (6) Other 259 207 506 412 -------- -------- -------- -------- Total 8,145 8,351 16,390 16,630 -------- -------- -------- -------- Income from continuing oper. before income taxes 2,150 10,254 20,806 27,820 Income taxes 1,066 2,519 7,115 8,769 -------- -------- -------- -------- Net income from continuing operations 1,084 7,735 13,691 19,051 Loss from operations of discontinued business, net of tax of $(266), $(5,512) $(221) and $(7,867) (435) (8,423) (407) (12,045) -------- -------- -------- -------- Net income (loss) $ 649 $ (688) $ 13,284 $ 7,006 ======== ======== ======== ======== 5 Avg. common shares outstanding - basic 13,611 13,611 13,611 13,611 ======== ======== ======== ======== Earnings per common share - basic Continuing operations $ .08 $ .56 $ 1.01 $ 1.40 Discontinued operations (.03) (.62) (.03) (.89) -------- -------- -------- -------- Net income per common share - basic $ .05 $ (.06) $ .98 $ .51 ======== ======== ======== ======== Avg. common shares outstanding - diluted 13,752 13,611 13,752 13,690 ======== ======== ======== ======== Earnings per common share - diluted Continuing operations $ .08 $ .56 $ 1.00 $ 1.39 Discontinued operations (.03) (.62) (.03) (.88) -------- -------- -------- -------- Net income per common share - diluted $ .05 $ (.06) $ .97 $ .51 ======== ======== ======== ======== Dividends per common share $ .615 $ .615 $ 1.23 $ 1.23 ======== ======== ======== ======== *Except per share amounts The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.
6 CILCORP INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Six Months Ended June 30, 1999 1998 Cash flows from operating activities: Net income before preferred dividends $ 15,261 $ 20,650 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Non-cash lease income and investment income (3,299) (3,415) Cash receipts in excess of debt service on leases 7,326 5,650 Depreciation and amortization 34,481 31,966 Deferred income taxes, investment tax credit and regulatory liability of subsidiary, net (8,748) (4,094) Changes in operating assets and liabilities: Decrease in accounts receivable and accrued unbilled revenue 7,719 21,343 Decrease in inventories 11,374 8,501 Decrease in accounts payable (20,337) (22,702) Increase in accrued taxes 934 2,630 Decrease (increase) in other assets 1,700 (512) Increase (decrease) in other liabilities 8,339 (1,469) -------- -------- Total adjustments 39,489 37,898 -------- -------- Net cash provided by operating activities from continuing operations 54,750 58,548 -------- -------- Net cash provided (used) by operating activities of discontinued operations 8,112 (8,738) -------- -------- Cash flow from operations 62,862 49,810 -------- -------- Cash flows from investing activities: Additions to plant (27,311) (29,871) Proceeds from sale of discontinued operations 17,376 -- Other (4,012) (909) -------- -------- Net cash used by investing activities from continuing operations (13,947) (30,780) -------- -------- Net cash used by investing activities from discontinued operations (4,838) (5,359) -------- -------- Cash flow from investing activities (18,785) (36,139) -------- -------- 7 Cash flow from financing activities: Net (decrease) increase in short-term debt (22,900) 2,350 Net decrease in long-term debt (994) (2,117) Common dividends paid (16,741) (16,742) Preferred dividends paid (1,570) (1,599) -------- -------- Cash flow from financing activities (42,205) (18,108) -------- -------- Net increase (decrease) in cash and temporary cash investments: 1,872 (4,437) Cash and temporary cash investments at beginning of year: 1,669 10,576 -------- -------- Cash and temporary cash investments at June 30 $ 3,541 $ 6,139 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 13,832 $ 13,613 Income taxes $ 10,872 $ 7,068 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
8 CENTRAL ILLINOIS LIGHT COMPANY Consolidated Balance Sheets (In thousands)
June 30, December 31, ASSETS 1999 1998 (Unaudited) Utility plant, at original cost: Electric $1,245,551 $1,237,885 Gas 420,812 417,585 ---------- ---------- 1,666,363 1,655,470 Less - accumulated provision for depreciation 846,954 812,630 ---------- ---------- 819,409 842,840 Construction work in progress 45,576 30,075 Plant acquisition adjustments, net of amortization 72 505 ---------- ---------- Total utility plant 865,057 873,420 ---------- ---------- Other property and investments: Cash surrender value of company-owned life insurance (net of related policy loans of $51,871 and $48,132) 2,362 2,655 Other 1,205 1,176 ---------- ---------- Total other property and investments 3,567 3,831 ---------- ---------- Current assets: Cash and temporary cash investments 3,908 1,362 Receivables, less reserves of $1,464 and $1,106 33,174 35,767 Accrued unbilled revenue 27,536 31,315 Fuel, at average cost 9,049 13,431 Materials and supplies, at average cost 16,098 15,062 Gas in underground storage, at average cost 12,402 20,494 Prepaid taxes 7,256 2,265 Other 8,478 6,626 ---------- ---------- Total current assets 117,901 126,322 ---------- ---------- Deferred debits: Unamortized loss on reacquired debt 3,101 3,261 Unamortized debt expense 1,773 1,852 Prepaid pension cost 417 417 Other 12,151 15,325 ---------- ---------- Total deferred debits 17,442 20,855 ---------- ---------- Total assets $1,003,967 $1,024,428 ========== ========== The accompanying Notes to the Consolidated Financial Statements are an integral part of these Balance Sheets.
9 CENTRAL ILLINOIS LIGHT COMPANY Consolidated Balance Sheets (In thousands)
June 30, December 31, CAPITALIZATION AND LIABILITIES 1999 1998 (Unaudited) Capitalization: Common stockholder's equity: Common stock, no par value; authorized 20,000,000 shares; outstanding 13,563,871 shares $ 185,661 $ 185,661 Retained earnings 133,194 135,315 Accumulated other comprehensive income (845) (845) ---------- ---------- Total common stockholder's equity 318,010 320,131 Preferred stock without mandatory redemption 44,120 44,120 Preferred stock with mandatory redemption 22,000 22,000 Long-term debt 237,909 267,884 ---------- ---------- Total capitalization 622,039 654,135 ---------- ---------- Current liabilities: Current maturities of long-term debt 30,000 -- Notes payable 39,300 40,600 Accounts payable 34,958 53,260 Accrued taxes 8,450 7,303 Accrued interest 8,784 9,394 FAC/PGA over-recoveries 367 304 Level payment plan 47 1,519 Other 4,294 5,261 ---------- ---------- Total current liabilities 126,200 117,641 ---------- ---------- Deferred credits and other liabilities: Accumulated deferred income taxes 139,346 141,746 Regulatory liability 41,302 46,346 Deferred investment tax credit 18,654 19,450 Capital lease obligation 1,449 1,703 Other 54,977 43,407 ---------- ---------- Total deferred credits and other liabilities 255,728 252,652 ---------- ---------- Total capitalization and liabilities $1,003,967 $1,024,428 ========== ========== The accompanying Notes to the Consolidated Financial Statements are an integral part of these Balance Sheets.
10 CENTRAL ILLINOIS LIGHT COMPANY Consolidated Statements of Income (In thousands) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 Operating revenue: Electric $ 88,044 $ 88,304 $169,006 $167,482 Gas 25,569 28,310 102,366 98,212 -------- -------- -------- -------- Total operating revenues 113,613 116,614 271,372 265,694 -------- -------- -------- -------- Operating expenses: Cost of fuel 21,030 21,135 45,261 45,477 Cost of gas 11,131 13,534 55,818 54,156 Purchased power 6,083 8,178 11,922 12,852 Other operations and maintenance 37,898 30,876 65,600 57,693 Depreciation and amortization 15,901 15,754 33,961 31,509 Income taxes 2,464 4,049 9,359 11,826 Other taxes 9,338 8,495 20,899 19,264 -------- -------- -------- -------- Total operating expenses 103,845 102,021 242,820 232,777 -------- -------- -------- -------- Operating income 9,768 14,593 28,552 32,917 -------- -------- -------- -------- Other income and deductions: Cost of equity funds capitalized -- -- -- -- Company-owned life insurance, net (259) (207) (506) (412) Other, net (156) 58 (384) (24) -------- -------- -------- -------- Total other income and (deductions) (415) (149) (890) (436) -------- -------- -------- -------- Income before interest expense 9,353 14,444 27,662 32,481 -------- -------- -------- -------- Interest expenses: Interest on long-term debt 4,809 4,922 9,617 9,882 Cost of borrowed funds capitalized (15) (29) (26) (6) Other 876 622 1,881 1,360 -------- -------- -------- -------- Total interest expense 5,670 5,515 11,472 11,236 -------- -------- -------- -------- Net income before preferred dividends 3,683 8,929 16,190 21,245 -------- -------- -------- -------- Dividends on preferred stock 773 797 1,570 1,599 -------- -------- -------- -------- Net income available for common stock $ 2,910 $ 8,132 $ 14,620 $ 19,646 ======== ======== ======== ======== The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
11 CENTRAL ILLINOIS LIGHT COMPANY Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Six Months Ended June 30, 1999 1998 (In thousands) (Unaudited) Cash flows from operating activities: Net income before preferred dividends $ 16,190 $ 21,244 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 34,394 31,865 Deferred income taxes, investment tax credit and regulatory liability, net (8,240) (4,205) Changes in operating assets and liabilities: Decrease in accounts receivable 2,593 15,612 Decrease in fuel, materials and supplies, and gas in underground storage 11,437 8,495 Decrease in unbilled revenue 3,778 5,993 Decrease in accounts payable (18,302) (10,423) Increase in accrued taxes and interest 537 1,506 Capital lease payments 323 323 Increase in other current assets (6,842) (1,078) Decrease in other current liabilities (2,377) (3,235) Decrease in other non-current assets 4,425 2,265 Increase in other non-current liabilities 11,829 1,356 -------- -------- Net cash provided by operating activities 49,745 69,718 -------- -------- Cash flows from investing activities: Capital expenditures (26,587) (29,865) Cost of equity funds capitalized -- -- Other (678) (2,891) -------- -------- Net cash used in investing activities (27,265) (32,756) -------- -------- Cash flow from financing activities: Common dividends paid (16,741) (21,741) Preferred dividends paid (1,570) (1,599) Payments on capital lease obligation (323) (323) Decrease in short-term borrowing (1,300) (900) Long-term debt retired -- (10,650) -------- -------- Net cash used in financing activities (19,934) (35,213) -------- -------- Net increase in cash and temporary cash investments 2,546 1,749 Cash and temporary cash investments at beginning of year 1,362 698 -------- -------- Cash and temporary cash investments at June 30 $ 3,908 $ 2,447 ======== ======== 12 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of cost of borrowed funds capitalized) $ 12,397 $ 12,203 Income taxes $ 19,308 $ 13,588 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
13 Statements of Segments of Business CILCORP Inc. and Subsidiaries
Three Months Ended June 30, 1999 CILCO CILCO CILCO Other Discont. Electric Gas Other Businesses Oper. Totals (In thousands) Revenues $88,044 $25,569 $ 881 $ 5,711 $ -- $120,205 Interest income -- -- 35 27 -- 62 ------- ------- ------- ------- ------- -------- Total 88,044 25,569 916 5,738 -- 120,267 ------- ------- ------- ------- ------- -------- Operating expenses 64,159 21,321 1,573 6,759 -- 93,812 Depreciation and amort. 11,354 4,547 216 43 -- 16,160 ------- ------- ------- ------- ------- -------- Total 75,513 25,868 1,789 6,802 -- 109,972 ------- ------- ------- ------- ------- -------- Interest exp. 4,082 1,603 -- 1,443 -- 7,128 Preferred stock div. -- -- 773 -- -- 773 Fixed charges & other exp. (15) -- 259 -- -- 244 ------- ------- ------- ------- ------- -------- Total 4,067 1,603 1,032 1,443 -- 8,145 ------- ------- ------- ------- ------- -------- Income from continuing oper. before income taxes 8,464 (1,902) (1,905) (2,507) -- 2,150 Income taxes 3,167 (703) (717) (681) -- 1,066 ------- ------- ------- ------- ------- -------- Net income from cont. operations 5,297 (1,199) (1,188) (1,826) -- 1,084 ------- ------- ------- ------- ------- -------- Effect of discontinued operations -- -- -- -- (435) (435) ------- ------- ------- ------- ------- -------- Segment net income $ 5,297 $(1,199) $(1,188)$(1,826) $ (435) $ 649 ======= ======= ======= ======= ======= ========
14 Statements of Segments of Business CILCORP Inc. and Subsidiaries
Three Months Ended June 30, 1998 CILCO CILCO CILCO Other Discont. Electric Gas Other Businesses Oper. Totals (In thousands) Revenues $88,304 $28,310 $ 320 $ 4,653 $ -- $121,587 Interest income -- -- 155 20 -- 175 ------- ------- ------- ------- ------- -------- Total 88,304 28,310 475 4,673 -- 121,762 ------- ------- ------- ------- ------- -------- Operating expenses 58,195 24,023 881 4,076 -- 87,175 Depreciation and amort. 11,218 4,536 178 50 -- 15,982 ------- ------- ------- ------- ------- -------- Total 69,413 28,559 1,059 4,126 -- 103,157 ------- ------- ------- ------- ------- -------- Interest exp. 3,964 1,580 -- 1,832 -- 7,376 Preferred stock div. -- -- 797 -- -- 797 Fixed charges & other exp. (29) -- 207 -- -- 178 ------- ------- ------- ------- ------- -------- Total 3,935 1,580 1,004 1,832 -- 8,351 ------- ------- ------- ------- ------- -------- Income from continuing oper. before income taxes 14,956 (1,829) (1,588) (1,285) -- 10,254 Income taxes 4,759 (710) (642) (888) -- 2,519 ------- ------- ------- ------- ------- -------- Net income from cont. operations 10,197 (1,119) (946) (397) -- 7,735 ------- ------- ------- ------- ------- -------- Effect of discontinued operations -- -- -- -- (8,423) (8,423) ------- ------- ------- ------- ------- -------- Segment net income $10,197 $(1,119) $ (946)$ (397) $(8,423) $ (688) ======= ======= ======= ======= ======= ========
15 Statements of Segments of Business CILCORP Inc. and Subsidiaries
Six Months Ended June 30, 1999 CILCO CILCO CILCO Other Discont. Electric Gas Other Businesses Oper. Totals (In thousands) Revenues $169,006 $102,366 $ 1,729 $ 15,235 $ -- $288,336 Interest income -- -- 113 56 -- 169 -------- -------- ------- -------- ------- -------- Total 169,006 102,366 1,842 15,291 -- 288,505 -------- -------- ------- -------- ------- -------- Operating expenses 120,487 79,013 3,161 14,167 -- 216,828 Depreciation and amort. 23,786 10,175 432 88 -- 34,481 -------- -------- ------- -------- ------- -------- Total 144,273 89,188 3,593 14,255 -- 251,309 -------- -------- ------- -------- ------- -------- Interest exp. 8,233 3,265 -- 2,842 -- 14,340 Preferred stock div. -- -- 1,570 -- -- 1,570 Fixed charges & other exp. (26) -- 506 -- -- 480 -------- -------- ------- -------- ------- -------- Total 8,207 3,265 2,076 2,842 -- 16,390 -------- -------- ------- -------- ------- -------- Income from continuing oper. before income taxes 16,526 9,913 (3,827) (1,806) -- 20,806 Income taxes 5,315 4,044 (1,367) (877) -- 7,115 -------- -------- ------- -------- ------- -------- Net income from cont. operations 11,211 5,869 (2,460) (929) -- 13,691 -------- -------- ------- -------- ------- -------- Effect of discontinued operations -- -- -- -- (407) (407) -------- -------- ------- -------- ------- -------- Segment net income $ 11,211 $ 5,869 $(2,460)$ (929) $ (407) $ 13,284 ======== ======== ======= ======== ======= ======== 16
Statements of Segments of Business CILCORP Inc. and Subsidiaries
Six Months Ended June 30, 1998 CILCO CILCO CILCO Other Discont. Electric Gas Other Businesses Oper. Totals (In thousands) Revenues $167,482 $ 98,212 $ 355 $ 9,780 $ -- $275,829 Interest income -- -- 191 56 -- 247 -------- -------- ------- -------- -------- -------- Total 167,482 98,212 546 9,836 -- 276,076 -------- -------- ------- -------- -------- -------- Operating expenses 112,626 76,816 1,553 8,665 -- 199,660 Depreciation and amort. 22,436 9,073 356 101 -- 31,966 -------- -------- ------- -------- -------- -------- Total 135,062 85,889 1,909 8,766 -- 231,626 -------- -------- ------- -------- -------- -------- Interest exp. 8,038 3,204 -- 3,383 -- 14,625 Preferred stock div. -- -- 1,599 -- -- 1,599 Fixed charges & other exp. (6) -- 412 -- -- 406 -------- -------- ------- -------- -------- -------- Total 8,032 3,204 2,011 3,383 -- 16,630 -------- -------- ------- -------- -------- -------- Income from continuing oper. before income taxes 24,388 9,119 (3,374) (2,313) -- 27,820 Income taxes 8,181 3,645 (1,339) (1,718) -- 8,769 -------- -------- ------- -------- -------- -------- Net income from cont. operations 16,207 5,474 (2,035) (595) -- 19,051 -------- -------- ------- -------- -------- -------- Effect of discontinued operations -- -- -- -- (12,045) (12,045) -------- -------- ------- -------- -------- -------- Segment net income $ 16,207 $ 5,474 $(2,035)$ (595) $(12,045) $ 7,006 ======== ======== ======= ======== ======== ========
17 CILCORP INC. AND CENTRAL ILLINOIS LIGHT COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Introduction The consolidated financial statements include the accounts of CILCORP Inc. (CILCORP or the Holding Company), Central Illinois Light Company (CILCO), QST Enterprises Inc. (QST) and its subsidiaries (QST Environmental Inc., QST Energy Inc. (QST Energy) and CILCORP Infraservices Inc.) and CILCORP's other subsidiaries (collectively, the Company) after elimination of significant intercompany transactions. The consolidated financial statements of CILCO include the accounts of CILCO and its subsidiaries, CILCO Exploration and Development Company and CILCO Energy Corporation. CILCORP owns directly or indirectly 100% of the common stock of its first-tier subsidiaries. In the fourth quarter of 1998, the operations of QST and its subsidiaries (excluding ESE Land Corporation and CILCORP Infraservices Inc. - see Management's Discussion and Analysis) were discontinued (see Note 4.) and, therefore, are being reported as discontinued operations in the financial statements. QST completed the sale of subsidiary QST Environmental Inc. in the second quarter of 1999 (see Results of Operations - QST Enterprises Discontinued Operations). Prior year amounts have been reclassified on a basis consistent with the 1999 presentation. The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC). Although CILCORP believes the disclosures are adequate to make the information presented not misleading, these consolidated financial statements should be read along with the Company's 1998 Annual Report on Form 10-K. In the Company's opinion, the consolidated financial statements furnished reflect all normal and recurring adjustments necessary for a fair presentation of the results of operations for the periods presented. Operating results for interim periods are not necessarily indicative of operating results to be expected for the year or of the Company's future financial condition. NOTE 2. Contingencies Gas Manufacturing Plant Sites CILCO continues to investigate and/or monitor four former gas manufacturing plant sites located within CILCO's present gas service territory. The purpose of the investigations is to determine if waste materials, principally coal tar, are present, whether such waste materials constitute an environmental or health risk and if CILCO is responsible for the remediation of any remaining waste materials at those sites. During the six months ended June 30, 1999, CILCO paid approximately $362,000 to outside parties for former gas manufacturing plant site monitoring, remediation and legal fees, and expects to spend approximately $250,000 during the remainder of 1999. A $1.5 million liability and a corresponding regulatory asset are recorded on the Balance Sheets representing the minimum amount of coal tar investigation and remediation costs CILCO expects to incur and recover in the future. Coal tar remediation costs incurred through June 1999 have been deferred on the Balance Sheets, net of amounts recovered from customers. Through June 30, 1999, CILCO has recovered approximately $6.6 million in coal tar remediation costs from its customers through a gas rate rider approved by the Illinois Commerce Commission (ICC). Currently, that rider allows recovery of prudently incurred coal tar remediation costs in the year that the expenditures occur. Under these circumstances, management believes that the cost of coal tar remediation will not have a material adverse effect on CILCO's financial position or results of operations. 18 CILCO's Union Contracts The International Brotherhood of Electrical Workers Local 51 (IBEW) ratified its current agreement on October 10, 1997. The current contract expires on July 1, 2000. The IBEW represents approximately 389 CILCO gas and electric department employees. The National Conference of Firemen and Oilers Local 8 (NCF&O), ratified its current agreement on October 23, 1998. The current contract expires on July 1, 2001. The NCF&O represents approximately 159 CILCO power plant employees. NOTE 3. Commitments In August 1990, CILCO entered into a firm, wholesale power purchase agreement with Central Illinois Public Service Company, now AmerenCIPS (CIPS). This agreement provided for a minimum contract delivery rate from CIPS of 90 MW until the contract expired in May 1998. In March 1995, CILCO and CIPS amended a limited-term power agreement reached in November 1992. This agreement provided for CILCO to purchase 150 MW of CIPS' capacity from June 1998 through May 2002, and 50 MW from June 2002 through May 2009. In May 1999, a settlement was reached between CILCO and CIPS regarding disputed issues pertaining to these capacity and energy agreements. The settlement amends the previous agreements to provide for 100 MW of capacity and firm energy for the months of June through September for the years 2000 through 2003 and additionally provide for 100 MW of firm energy for the month of January in each of those years. There are no commitments to purchase capacity or energy beyond those dates. The agreements provide specific prices for on-peak and off-peak energy, which eliminates the ambiguity that arose under the old agreements due to the use of pricing queues. Under the settlement, CILCO will have no capacity payment obligations to CIPS for February through December 1999, resulting in 1999 capacity reservation savings of approximately $6 million. The settlement also obligates both parties to withdraw from regulatory action pertaining to related contract issues. CIPS and CILCO are currently preparing the settlement document filing for approval by the FERC. NOTE 4. QST Enterprises Discontinued Operations Due to uncertainties related to energy deregulation across the country, the illiquidity of certain energy markets and the Company's pending acquisition by AES, the Company intends to focus on the opportunities in the Illinois energy market resulting from the deregulation of electricity under the Electric Service Customer Choice and Rate Relief Law of 1997 (see Management's Discussion and Analysis - Illinois Electric Deregulation). As a result, the Company decided in the fourth quarter of 1998 to sell its 100% ownership interest in QST Environmental Inc. (QST Environmental), a first-tier subsidiary of QST Enterprises Inc. providing environmental consulting and engineering services. On May 7, 1999, QST Enterprises Inc. signed a definitive agreement for the sale of QST Environmental to MACTEC, Inc., a privately-held company which provides environmental management services, for approximately $18 million in cash, which was received by QST Enterprises Inc. on June 24, 1999, the effective date of the sale. In August 1998, QST Enterprises Inc. sold its wholly- owned fiber optic-based telecommunications subsidiary, QST Communications, for $20 million cash and stock options then valued at $5.5 million. After incurring material losses in the wholesale electricity market in June 1998 and subsequent losses in its energy operations outside of Illinois, QST Energy transferred its Pennsylvania retail customers to other marketers, ceased its Houston- based energy trading operations, and has terminated its obligations to provide electricity to its non-Illinois customers. Accordingly, the operations of QST Enterprises Inc. and its subsidiaries are shown as discontinued operations in the statements of income. The Company's investment in QST Enterprises Inc. (excluding CILCORP Infraservices Inc.), as of June 30, 1999, on the accompanying consolidated balance sheet, consists primarily of $1.7 million in working capital, $.2 million in fixed assets 19 and $11.2 million of investments and other assets. Working capital consists mainly of $1.7 million in receivables (see QST Enterprises Discontinued Operations) offset by $16.6 million in outstanding debt to the Holding Company. Investments and other assets consists primarily of a $5.5 million investment in ESE Land Corporation (ESE Land) and $5.5 million of stock options obtained in the sale of QST Communications. The investment in ESE Land consists of residual interests in three limited liability corporations obtained as part of the sale of ESE Land assets in fourth quarter 1997. QST Environmental's residual investment in ESE Land was transferred to QST Enterprises Inc. prior to the sale of QST Environmental. Prior year financial statements have been reclassified to conform to the current year presentation. NOTE 5. Financial Instruments and Price Risk Management CILCORP utilizes commodity futures contracts, options and swaps in the normal course of its natural gas and electric business activities. Gains and losses arising from derivative financial instrument transactions which hedge the impact of fluctuations in energy prices are recognized in income concurrent with the related purchases and sales of the commodity. If a derivative financial instrument contract is terminated because it is probable that a transaction or forecasted transaction will not occur, any gain or loss as of such date is immediately recognized. If a derivative financial instrument contract is terminated early for other economic reasons, any gain or loss as of the termination date is deferred and recorded concurrently with the related purchase and sale of natural gas. CILCORP is subject to commodity price risk for deregulated sales to the extent that energy is sold under firm price commitments. Due to market conditions, at times CILCORP may have unmatched commitments to purchase and sell energy on a price and quantity basis. Physical and derivative financial instruments give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular commitment. Market risks are actively monitored to ensure compliance with the Company's risk management policies, including limits to the Company's total net exposure at any time. The net gain reflected in operating results from derivative financial instruments was approximately $415,000 for the second quarter 1999. As of June 30, 1999, CILCORP had fixed-price derivative financial instruments representing hedges of natural gas purchases of .5 Bcf and natural gas sales of 1.6 Bcf for commitments through September 2000. The net deferred gain and carrying amount on these fixed-price derivatives at June 30, 1999, was approximately $571,600. At June 30, 1999, CILCORP had open positions in derivative financial instruments used to hedge basis of 1.4 Bcf for commitments through March 2000. The net deferred gain on these basis derivatives at June 30, 1999, was approximately $30,500. As of June 30, 1999, CILCORP had fixed-price derivative financial instruments representing hedges of electricity purchases of 49,312 MWh and electricity sales of 3,680 MWh for commitments through June 2000. The net deferred loss and carrying amount on these fixed-price derivatives at June 30, 1999, was approximately $132,400. NOTE 6. New Accounting Pronouncements In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). The 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 position and measure those instruments at fair value. As issued, SFAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the FASB issued Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" (SFAS 137). SFAS 137 amends SFAS 133 to require implementation of SFAS 133 for all fiscal quarters of fiscal years beginning after June 15, 2000. 20 The Company has not yet adopted SFAS 133 and has not yet determined its effect on the Company's financial position, results of operations or cash flows. NOTE 7. Earnings Per Share The following data show the amounts used in computing earnings per share and the effect on income and the weighted average number of shares of dilutive potential common stock. The shares calculated for dilutive potential result from Award Agreements entered into pursuant to the CILCORP Shareholder Return Incentive Compensation Plan.
Six Months Ended June 30, 1999 1998 (In thousands) Income available to common shareholders $13,284 $ 7,006 Weighted average number of common shares used in Basic Earnings Per Share 13,611 13,611 Weighted number of dilutive potential common shares used in Diluted Earnings Per Share 141 79
The Company adopted Statement of Financial Accounting Standards No. 128, Earnings Per Share, for the year ended December 31, 1997. 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In 1998 and prior years, the financial condition and operating results of CILCORP Inc. and its subsidiaries (the Company) primarily reflected the operations of Central Illinois Light Company (CILCO), QST Enterprises Inc. (QST), and their subsidiaries. On November 23, 1998, the Company announced that The AES Corporation (AES) had offered to buy 100% of the Company's outstanding common stock for $65 per share, subject to CILCORP shareholder approval and various regulatory approvals. The Federal Trade Commission granted approval of CILCORP's merger with AES under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 on February 22, 1999. On March 10, 1999, the Illinois Commerce Commission issued its approval. The merger was approved by CILCORP shareholders at a special meeting on May 20, 1999. The FERC issued an order to CILCORP approving the transaction on June 16, 1999. The SEC staff is currently reviewing AES's application for an exemption under Section 3(a)(5) of the Public Utility Holding Company Act. The Company anticipates that this transaction will close in the third quarter of 1999. As a result of the pending acquisition and after reviewing its business plans, the Company decided in late 1998 to sell its 100% ownership interest in QST Environmental Inc. (QST Environmental), a first-tier subsidiary of QST that provides environmental consulting and engineering services. On May 7, 1999, QST agreed to sell all the outstanding common stock of QST Environmental to MACTEC, Inc. for approximately $18 million in cash. The sale was effective on June 24, 1999. QST had sold another of its subsidiaries, QST Communications Inc., in August 1998. In June 1998, QST Energy Inc. (QST Energy), another first-tier subsidiary of QST, incurred a material loss related to wholesale electricity contracts, triggered by an unprecedented increase in short-term wholesale electricity prices. QST Energy closed its electric and gas non-retail positions and, in the fourth quarter of 1998, closed its Houston energy trading office and transferred its Pennsylvania retail electric and gas customers to other marketers. QST Energy has since discontinued providing electricity to its remaining non-Illinois commercial customers. Due to uncertainties related to electric deregulation across the country, the illiquidity of certain energy markets, and the Company's pending acquisition by AES, the Company intends to focus on the opportunities in the Illinois energy market resulting from the deregulation of electricity under the Electric Service Customer Choice and Rate Relief Law of 1997 (see Item 5: Other Information - Illinois Electric Deregulation). This law will enable CILCO, the Company's regulated public utility that generates and distributes electricity and purchases, transports and distributes natural gas, to serve Illinois electric customers outside its traditional Central Illinois service territory. As a result of these events, the Company is reporting the results of QST Enterprises and its subsidiaries (excluding ESE Land Corporation and CILCORP Infraservices Inc.) as discontinued operations (see Note 4). The Other Businesses segment includes the operations of the holding company itself (Holding Company), its investment subsidiary, CILCORP Investment Management Inc. (CIM), CILCORP Ventures Inc. (CVI) and CILCORP Infraservices Inc. which provides utility infrastructure operation and maintenance services. Forward-Looking Information Forward-looking information is included in Part I. Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II. Item 5: Other Information. Such information generally relates to future expected or anticipated events or trends and identified contingencies and uncertainties. Certain material contingencies are also described in Note 2 to the Consolidated Financial Statements. 22 Some important factors could cause actual results or outcomes to differ materially from those expressed or implied in MD&A. The business and profitability of CILCORP and its subsidiaries are influenced by economic and geographic factors, including ongoing changes in environmental laws and weather conditions; the extent and pace of development of competition for retail and wholesale energy customers; changes in technology; third party compliance with Year 2000 requirements; the inability to identify and remediate or replace embedded computer chips in affected equipment; pricing and transportation of commodities; market supply and demand for energy and energy derivative financial instruments; inflation; capital market conditions; environmental protection and compliance costs and regulatory actions regarding the proposed merger with AES. Prevailing governmental policies, statutory changes, and regulatory actions with respect to rates, industry structure and recovery of various costs incurred by CILCO in the course of its business and increasing wholesale and retail competition in the electric and gas business affect its earnings. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and, to a significant degree, are beyond the control of CILCORP and its subsidiaries. CILCORP and its subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of changes in actual results, assumptions or other factors. Capital Resources & Liquidity The Company believes that internal and external sources of capital which are, or are expected to be, available to the Holding Company and its subsidiaries will be adequate to fund its capital expenditures, pay its financial obligations, meet working capital needs and retire or refinance debt as it matures. The Agreement and Plan of Merger (The Agreement) between the Company and The AES Corporation provides for the ongoing payment of common dividends, not to exceed the average for the four quarterly dividend payments prior to the effective date of The Agreement, pending the merger. CILCORP Short-term borrowing capability is available to the Company for additional cash requirements. CILCORP's Board of Directors has authorized it to borrow up to $60 million on a short-term basis. On June 30, 1999, CILCORP had committed bank lines of credit of $60 million, of which $34 million was used. The Company had $30.5 million of medium-term notes outstanding at June 30, 1999. The Company may issue an additional $27 million under its existing $75 million medium-term note program in order to retire maturing debt and to provide funds for other corporate purposes. CILCO Capital expenditures totaled $26.6 million for the six months ended June 30, 1999. Capital expenditures are anticipated to be approximately $29.9 million for the remainder of 1999 and are currently estimated to be $45 million in 2000. Included in 1999 and 2000 capital expenditures are $11.8 million and $3 million, respectively, for information technology projects. CILCO retired $10.65 million of medium-term notes in June 1998. CILCO does not plan to issue long-term debt during the remainder of 1999. CILCO intends to finance its 1999 and 2000 capital expenditures with funds provided by operations. As of June 30, 1999, CILCO had committed bank lines of credit aggregating $45 million, all of which were unused. CILCO uses these lines of credit to support issuance of short-term commercial paper. CILCO had $39.3 million of commercial paper outstanding at June 30, 1999, and expects to issue commercial paper periodically throughout the remainder of 1999. 23 QST Working capital balances at QST (excluding QST Environmental) increased by $4.1 million during the second quarter of 1999, primarily due to an increase in receivables from the Holding Company and due to cash received in escrow from the sale of QST Environmental. QST expects to finance working capital needs with funds provided by the Holding Company as QST's operations are discontinued. At June 30, 1999, QST (excluding QST Environmental) had outstanding debt to the Holding Company of $16.6 million. QST Environmental spent $.3 million for capital additions and improvements during the second quarter of 1999. In conjunction with the sale of QST Environmental to MACTEC, Inc. (see QST Enterprises Discontinued Operations), QST Environmental's line of credit with CILCORP was terminated on May 28, 1999. CIM At June 30, 1999, CIM had $33 million of outstanding debt owing to CILCORP. During 1997 and prior years, CIM committed to invest $16.6 million in affordable housing tax credit funds. Through June 30, 1999, approximately $14.9 million of these commitments had been funded. CIM expects to contribute approximately $.8 million in cash for these investments during the remainder of 1999, and lesser amounts each year thereafter through 2006. These investments will be funded through borrowings from CILCORP. CIM expects to finance any other new investments and working capital needs during the remainder of 1999 with a combination of funds generated internally and funds provided by CILCORP. CVI At June 30, 1999, CVI had outstanding debt of $.1 million, borrowed from CILCORP. CVI expects to finance its activities and working capital needs during the remainder of 1999 with a combination of funds generated internally and with funds provided by CILCORP. Year 2000 The Company is continuing its progress toward making its computer systems and operations ready for the year 2000. CILCO began evaluating its information technology systems in 1996. Systems were reviewed and a schedule was developed for the analysis of all computer application code and for the replacement or modification of those systems that were identified as obsolete and/or having potential Year 2000 (Y2K) issues. Replacement of several major computer systems with Y2K issues began in 1997. A Y2K team was established in March 1998, consisting of personnel from each operating division of CILCO. In conjunction with the formation of the Y2K team, an outside firm specializing in Y2K projects was retained to assist CILCO with its overall Y2K project plans. CILCO has also worked with an independent audit team to evaluate the status of the Y2K project. The project was divided into three phases, as follows: Phase I tasks included an inventory of all present systems for embedded chips having potential Y2K issues, contacting all manufacturers of embedded chip devices for the Y2K status of these devices, identifying and surveying all critical suppliers, and conducting an inventory of all information technology hardware and software for analysis of Y2K problems. Phase I was completed in August 1998. Phase II is currently in progress. This phase includes Y2K compliance testing of all suspect embedded chip devices identified in Phase I in the power plants, service centers, and business offices. In addition, two separate groups of outside consultants evaluated all mainframe application code to identify specific instances of date problems in each application program for systems that are not being replaced. Phase II has been completed except for the testing of approximately 5% of non-critical embedded chip devices associated with power plant operations. This testing will occur during the first part of the third quarter of 1999. 24 Phase III is also in progress and includes the upgrade/replacement and re-testing of embedded chip devices found not to be Y2K compliant during Phase II. This phase includes completion of mainframe computer operating software upgrades to current Y2K compliant versions and defining Y2K contingency plans for each business unit. Computer application code that was determined to have Y2K date related problems during Phase II will be corrected. Testing of all applications which have undergone Y2K upgrades/modifications, testing of operating system software, and development and testing of contingency plans through simulation or actual tests, where practical, will complete Phase III, which is expected to be completed by October 1999. Systems identified as critical to the continued provision of utility services will be of particular focus during the testing portion of Phase III. These critical systems are generating station equipment, electric transmission and distribution control systems, gas delivery control systems, and telecommunications systems. An estimated $2 million (historical and future costs) will be spent for embedded chip analysis, vendor management, application code scanning, remediation, testing and contingency planning at CILCO. Approximately $30.7 million will have been spent prior to the year 2000 for system replacements or hardware upgrades initiated for business purposes other than solely for Y2K compliance. CILCO is working both internally and with utility industry groups, including the Mid-America Interconnected Network (MAIN) and the North American Electric Reliability Council (NERC), to identify and plan for all identified risks associated with the Y2K issue. While these groups are modeling potential worst case scenarios, the probability of extreme disruptions due to Y2K issues is considered extremely low. CILCO's Y2K team has identified the most likely worst case scenario to be an interruption in service by a critical supplier. Consequently, alternate sources for supplies have been identified and the need for CILCO to stock additional inventories of critical items is being evaluated. CILCO is also following the contingency planning process recognized by MAIN and NERC. Accordingly, CILCO has established a Y2K contingency planning team that has received training in contingency planning techniques and goals. The team is collecting data and contingency planning began in March 1999. Within this structure, CILCO submitted its final contingency plans to MAIN, which will forward them to NERC. This contingency planning process is expected to continue through the fourth quarter 1999, and will include CILCO's participation in the NERC industry-wide drills during the fall of 1999. The Company currently believes it will be able to adequately address Y2K issues, as discussed above, through a combination of modifications of certain existing programs and systems, the replacement of others with new software that is Y2K compliant, and the development of contingency plans. If such modifications and conversions are not made, however, or are not made in a timely manner, the Y2K issue could have a material impact on the Company's operations. In addition, management cannot predict the nature or impact on operations of third-party noncompliance with Y2K requirements beyond the assurances given during critical vendor assessments. Price Risk Management The majority of CILCORP's energy sales at the end of the second quarter 1999 were to CILCO retail customers in Illinois under tariffs regulated by the ICC. Although the Illinois retail electric market is becoming deregulated (see Illinois Electric Deregulation), prudently incurred costs of fuel used to generate electricity, purchased power costs and gas purchased for resale may be recovered from retail customers that purchase energy through regulated tariffs. Thus, there is very limited commodity price risk associated with CILCO's traditional regulated sales. However, as more customers in Illinois purchase energy on a competitive basis pursuant to the current Illinois deregulation timetable, CILCO's exposure to commodity price risk will increase. At June 30, 1999, QST's non- Illinois electric 25 operations and gas trading activities have been accounted for as discontinued operations (see Note 4). The market risk inherent in the activities of CILCORP (exclusive of regulated Illinois tariff customers) is the potential loss arising from adverse changes in natural gas and electric commodity prices relative to the physical and financial positions that the Company maintains. The prices of natural gas and electricity are subject to fluctuations resulting from changes in supply and demand. At June 30, 1999, CILCORP engaged in deregulated electric retail and natural gas sales in Illinois, including wholesale power purchases and sales to utilize its electric generating capability. These deregulated activities had net open market price risk positions of approximately 4,000 MWh of electricity and .2 Bcf of natural gas. A market price sensitivity of 10% applied to these positions is not material to the Company. At June 30, 1999, QST's discontinued operations had a net open market price risk in electricity of approximately 2,000 MWh. A market price sensitivity of 10% applied to these positions held by QST is not material to the Company. Actual results may differ materially. See Note 5 for a discussion of CILCORP's use of financial derivatives for hedging purposes. Due to the high correlation between the changes in the value of the financial instruments owned by CILCORP to the change in price of the underlying commodity, the net effect on CILCORP's net income resulting from the change in value of these financial instruments is not expected to be material. 26 Results of Operations CILCO Electric Operations The following table summarizes the components of CILCO electric operating income for the three months and six months ended June 30, 1999 and 1998.
Three Months Ended Six Months Ended June 30, June 30, Components of Electric Oper. Inc. 1999 1998 1999 1998 (In thousands) (Unaudited) Revenue: Electric retail $ 84,089 $ 83,375 $160,785 $156,732 Sales for resale 3,955 4,929 8,221 10,750 -------- -------- -------- -------- Total revenue 88,044 88,304 169,006 167,482 -------- -------- -------- -------- Cost of sales: Cost of fuel 21,030 21,135 45,261 45,477 Purchased power 6,083 8,178 11,922 12,852 Revenue taxes 4,228 4,061 8,871 8,378 -------- -------- -------- -------- Total cost of sales 31,341 33,374 66,054 66,707 -------- -------- -------- -------- Gross margin 56,703 54,930 102,952 100,775 -------- -------- -------- -------- Operating expenses Other operations and maintenance 30,070 22,713 49,320 41,612 Depreciation and amortization 11,354 11,218 23,786 22,436 Other taxes 2,748 2,108 5,113 4,307 -------- -------- -------- -------- Total operating expenses 44,172 36,039 78,219 68,355 -------- -------- -------- -------- Total 12,531 18,891 24,733 32,420 -------- -------- -------- -------- Fixed charges and other Cost of equity funds capitalized -- -- -- -- Interest on long-term debt 3,453 3,519 6,886 7,066 Cost of borrowed funds capitalized (15) (29) (26) (6) Other interest 629 445 1,347 972 -------- -------- -------- -------- Total 4,067 3,935 8,207 8,032 Income before income taxes 8,464 14,956 16,526 24,388 Income taxes 3,167 4,759 5,315 8,181 -------- -------- -------- -------- Electric income $ 5,297 $ 10,197 $ 11,211 $ 16,207 ======== ======== ======== ========
Electric gross margin increased 3% for the quarter and 2% for the six months ended June 30, 1999, compared to the same periods in 1998. Retail kilowatt hour (KWh) sales increased 3% for the quarter and 6% for the six months ended June 30, 1999, compared to the same periods in 1998. Residential sales remained relatively constant for the quarter and increased 5% for the six months ended June 30, 1999 compared to the same periods in 1998. Commercial sales increased 5% for the quarter and 6% for the six months ended June 30, 1999, compared to the same periods in 1998. Cooling degree days were 10% lower for the quarter and 13% lower for the six months ended June 30, 1999, compared to the same periods in 1998. Although total cooling degree days were lower for 1999, the majority of the 27 difference occurred in May, which traditionally has lower weather- related electric sales. Therefore, despite May 1998 being 40% warmer than May 1999 and 31% warmer than normal, this variance had only a minor impact on sales. Industrial sales increased 3% for the quarter and 7% for the six months ended June 30, 1999. Industrial sales were favorably impacted by customers returning to retail supply due to the completion of CILCO's Power Quest industrial program in April 1998. Sales for resale decreased 20% for the quarter and 24% for the six months ended June 30, 1999, compared to the same periods in 1998, due to decreased sales volumes resulting from lower available capacity. Sales for resale vary based on the energy requirements of native load customers, neighboring utilities and power marketers, CILCO's available capacity for bulk power sales and the price of power available for sale. In the future, CILCO expects increased activity in the sales for resale and purchased power markets. The overall level of business activity in CILCO's service territory and weather conditions are expected to continue to be the primary factors affecting electric sales in the near term. CILCO's electric sales will also be affected in the long term by deregulation and increased competition in the electric utility industry. The cost of fuel remained relatively constant for the quarter and six months ended June 30, 1999, compared to the same periods in 1998. Purchased power decreased 26% for the quarter and 7% for the six months ended June 30, 1999, compared to the same periods in 1998. Purchased power expense varies based on CILCO's need for energy and the price of power available for purchase. CILCO makes use of purchased power when it is economical to do so and when required during maintenance outages at CILCO plants. The costs of purchased power for retail customers are passed through to those customers via the fuel adjustment clause (FAC). Electric operations and maintenance expense increased 32% for the quarter and 19% for the six months ended June 30, 1999, compared to the same periods in 1998. The increase was mainly due to a $10.1 million charge to pension and benefits expense as a result of a Voluntary Early Retirement Program offered to employees in CILCO's electric power generation area (see Part II. Item 5: Other Information, Voluntary Early Retirement Program). This increase was partially offset by lower electric distribution overhead line maintenance due to a severe storm in June 1998. The change in income taxes in 1999 was primarily due to lower pre-tax income as a result of pension and benefit expenses relating to the Early Retirement offer. Fixed charges and other expenses increased 3% for the quarter and 2% for the six months ended June 30, 1999, compared to the same periods in 1998. 28 CILCO Gas Operations The following table summarizes the components of CILCO gas operating income for the three months and six months ended June 30, 1999 and 1998.
Three Months Ended Six Months Ended June 30, June 30, Components of Gas Oper. Income 1999 1998 1999 1998 (In thousands) (Unaudited) Revenue: Sale of gas $ 24,400 $ 26,812 $ 99,831 $ 95,092 Transportation services 1,169 1,498 2,535 3,120 -------- -------- -------- -------- Total revenue 25,569 28,310 102,366 98,212 -------- -------- -------- -------- Cost of sales: Cost of gas 11,131 13,534 55,818 54,156 Revenue taxes 1,577 1,600 5,328 5,092 -------- -------- -------- -------- Total cost of sales 12,708 15,134 61,146 59,248 -------- -------- -------- -------- Gross margin 12,861 13,176 41,220 38,964 -------- -------- -------- -------- Operating expenses Other operations and maintenance 7,828 8,163 16,280 16,081 Depreciation and amortization 4,547 4,536 10,175 9,073 Other taxes 785 726 1,587 1,487 -------- -------- -------- -------- Total operating expenses 13,160 13,425 28,042 26,641 -------- -------- -------- -------- Total (299) (249) 13,178 12,323 -------- -------- -------- -------- Fixed charges and other Cost of equity funds capitalized -- -- -- -- Interest on long-term debt 1,356 1,403 2,731 2,816 Cost of borrowed funds capitalized -- -- -- -- Other interest expense 247 177 534 388 -------- -------- -------- -------- Total 1,603 1,580 3,265 3,204 -------- -------- -------- -------- Income before income taxes (1,902) (1,829) 9,913 9,119 Income taxes (703) (710) 4,044 3,645 -------- -------- -------- -------- Gas income $ (1,199)$ (1,119) $ 5,869 $ 5,474 ======== ======== ======== ========
Gas gross margin decreased 2% for the quarter and increased 6% for the six months ended June 30, 1999, compared to the same periods in 1998. Residential and commercial sales volumes decreased 13% and 18% for the quarter, respectively, and increased 12% and 5%, respectively, for the six months ended June 30, 1999. Heating degree days were 7% lower for the quarter and 10% higher for the six months ended June 30, 1999, compared to the same periods in 1998. The overall level of business activity in CILCO's service territory and weather conditions are expected to continue to be the primary factors affecting gas sales in the near term. CILCO's gas sales may also be affected by further deregulation at the retail level in the natural gas industry. Revenue from gas transportation services decreased 22% and 19% for the quarter and six months ended June 30, 1999, respectively, while gas transportation sales 29 volumes decreased 14% for the quarter and 6% for the six months ended June 30, 1999, compared to the same periods in 1998. The cost of gas decreased 18% for the quarter ended June 30, 1999, compared to the same period in 1998, primarily due to decreased gas sales and lower natural gas prices. The cost of gas increased 3% for the six months ended June 30, 1999, due to increased gas sales during the first quarter offset partially by lower natural gas prices. These costs are passed through to customers via the PGA. Gas operations and maintenance expense decreased 4% for the quarter and remained relatively constant for the six months ended June 30, 1999, compared to the same periods in 1998. The decrease for the three months ended June 30, 1999, was primarily due to decreased medical expenses. The changes in income and other taxes were due to changes in pre-tax operating income. Fixed charges and other expenses remained relatively constant for the quarter and increased 2% for the six months ended June 30, 1999, compared to the same periods in 1998. CILCO Other The following table summarizes other income and deductions for the three months and six months ended June 30, 1999 and 1998.
Components of CILCO Other Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 (In thousands) (Unaudited) Revenue $ 881 $ 320 $ 1,729 $ 355 Interest income 35 155 113 191 Amortization (216) (178) (432) (356) Operating expenses (1,572) (879) (3,159) (1,549) Other taxes (1) (2) (2) (4) Preferred stock dividends (773) (797) (1,570) (1,599) Other (259) (207) (506) (412) ------- ------- ------- ------- Loss before income taxes (1,905) (1,588) (3,827) (3,374) Income tax benefit (717) (642) (1,367) (1,339) ------- ------- ------- ------- CILCO Other net loss $(1,188)$ (946) $(2,460) $(2,035) ======= ======= ======= =======
Other revenues and the related operating expenses increased for the quarter and six months ended June 30, 1999, due to increased nonregulated electricity sales in Illinois outside of CILCO's service territory. These sales of electricity are to eligible customers of other utilities' pilot programs formerly served by CILCO affiliate QST. Expenses also increased due to start-up costs of other non- regulated service programs such as outdoor lighting, energy consulting, and performance audits. 30 Other Businesses Operations The following table summarizes the components of Other Businesses net loss for the three months and six months ended June 30, 1999 and 1998.
Components of Other Businesses Three Months Ended Six Months Ended Net Loss June 30, June 30, 1999 1998 1999 1998 (In thousands) (Unaudited) Revenue: Leveraged lease revenue $ 1,677 $ 1,839 $ 3,634 $ 3,672 Other revenue 4,061 2,834 11,657 6,164 ------- ------- ------- ------- Total revenue 5,738 4,673 15,291 9,836 ------- ------- ------- ------- Expenses: Gas purchased for resale 3,103 2,500 9,187 5,869 Operating expenses 3,646 1,556 4,965 2,759 Depreciation and amortization 43 50 88 101 Interest expense 1,443 1,832 2,842 3,383 Other taxes 10 20 15 37 ------- ------- ------- ------- Total expenses 8,245 5,958 17,097 12,149 ------- ------- ------- ------- Loss before income taxes (2,507) (1,285) (1,806) (2,313) ------- ------- ------- ------- Income tax benefit (681) (888) (877) (1,718) ------- ------- ------- ------- Other Businesses net loss $(1,826)$ (397) $ (929) $ (595) ======= ======= ======= =======
Revenues increased 23% for the three months and 55% for the six months ended June 30, 1999, primarily due to increased CVI gas marketing revenue and revenue from CILCORP Infraservices Inc. Expenses increased 38% for the three months and 41% for the six months ended June 30, 1999, compared to the corresponding periods in 1998, primarily due to $1.8 million of merger transaction expenses and $.5 million of incentive compensation expense at the Holding Company and increased gas expense at CVI related to the gas retail marketing program, while interest expense decreased due to lower average debt balances. Income and other taxes increased for the six months ended June 30, 1999, compared to the corresponding period in 1998, primarily due to an increase in pre-tax income. For the three months ended June 30, 1999, the income tax benefit decreased despite increased losses, reflecting the non-deductible nature of merger transaction expenses. 31 QST Enterprises Discontinued Operations The results of QST Enterprises Inc. and its past and present subsidiaries - QST Communications, QST Environmental and QST Energy - are reported in 1999 and prior periods as discontinued operations (see Note 4). The table below shows the components of the discontinued operations. Income (loss) from operations of discontinued businesses, net of tax:
Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 (In thousands) (Unaudited) QST Communications, net of tax of $(113)and $(287) $ -- $ (171) $ -- $ (437) QST Enterprises (excluding QST Environmental and QST Communications), net of tax of $(5,556)and $(7,499) -- (8,451) -- (11,406) QST Environmental, net of tax of $(266), $157, $(221) and $(81) (435) 199 (407) (202) ------- ------- ------- -------- $ (435) $(8,423) $ (407) $(12,045) ======= ======= ======= ========
In August 1998, QST Enterprises Inc. sold its wholly-owned fiber optic-based telecommunications subsidiary, QST Communications, to McLeod USA for $20 million cash and McLeod stock options then valued at $5.5 million, resulting in an after-tax gain of approximately $8.3 million. Operating losses incurred by QST Communications for the three months and six months ended June 30, 1998, are shown in the preceding table. During the fourth quarter of 1998, QST Enterprises Inc. (QST) and QST Energy ceased operations, except for fulfillment of contractual commitments for 1999 and beyond, and recorded loss provisions for the discontinued energy operations. Financial results for the second quarter of 1999 were reflected in the discontinued operations reserve which was accrued at the end of 1998, resulting in no net income or loss for the quarter. In February 1999, QST Energy notified two of its California commercial customers that they were in default of their contracts with QST Energy as a result of not paying QST Energy for energy delivered. QST Energy filed two suits in the U.S. District Court, Central District of Illinois, seeking payment. In March, the customers filed a suit in California Superior Court, Alameda County, California, alleging that QST Energy was in breach of the contract. This suit was subsequently removed to U.S. District Court, Northern District of California. QST Energy has moved to dismiss this suit filed in California as duplicative of the suits pending in Illinois, and the customers similarly filed motions to dismiss the suits pending in Illinois. QST Energy cannot predict the ultimate outcome of this matter, but intends to vigorously pursue its claims to collect all amounts due from the customers. The accounts receivable reflected in CILCORP's consolidated balance sheet at June 30, 1999, for these two customers, totaled $17.1 million. Under the terms of the contract, QST Energy has terminated delivery of electricity to the two customers. In June 1999, QST Energy agreed to pay $3 million to the two remaining California commercial customers to discontinue electricity service. These payments, as well as losses on energy sales during the first six months of 1999 (primarily electricity to the California commercial customers) were included in QST's estimate for loss related to discontinued operations recorded in December 1998. 32 QST's losses for the second quarter of 1998 were primarily due to wholesale gas trading losses incurred when an unprecedented, sudden increase in electricity prices occurred during the week of June 22, 1998. On May 7, 1999, QST signed a definitive agreement to sell all the outstanding common stock of QST Environmental to MACTEC, Inc. for approximately $18 million in cash. The cash was received by QST on June 24, 1999, the effective date of the sale. ESE Land and its subsidiaries were not included in this sale and therefore, QST Environmental's investment in ESE Land was transferred to QST Enterprises Inc. prior to the sale. No after-tax gain or loss was realized from the sale. QST Environmental's operating results through May 30, 1999, are shown in the preceding table. PART II. OTHER INFORMATION Item 1: Legal Proceedings Reference is made to "Environmental Matters" under "Item 1. Business" in the Company's 1998 Annual Report on Form 10-K (the "1998 Form 10- K") and to "Note 2. Contingencies" and "QST Enterprises Discontinued Operations", herein, for certain pending legal proceedings and proceedings known to be contemplated by governmental authorities. The Company and its subsidiaries are subject to certain claims and lawsuits in connection with work performed in the ordinary course of their businesses. Except as otherwise referred to above, in the opinion of management, all such claims currently pending either will not result in a material adverse effect on the financial position and results of operations of the Company or are adequately covered by: (i) insurance; (ii) contractual or statutory indemnification; and/or (iii) reserves for potential losses. Item 4: Submission of Matters to a Vote of Security Holders Shareholders cast the following votes at a Special Meeting of CILCORP Inc. Shareholders held on May 20, 1999, for the purpose of approving an Agreement and Plan of Merger among CILCORP Inc., The AES Corporation and Midwest Energy, Inc., a wholly-owned subsidiary of AES which has been specially created for the merger transaction. Votes for Votes Against Abstain 10,387,193 620,974 163,006 Shareholders cast the following votes at the Company's Annual Meeting of Shareholders held June 24, 1999: Votes Votes for Withheld Elected to the Board of Directors: J. R. Brazil 10,725,720 303,210 J. D. Caulder 10,775,060 253,870 M. M. Yeomans 10,822,632 206,298 Item 5: Other Information Illinois Electric Deregulation In December 1997, the Electric Service Customer Choice and Rate Relief Law of 1997 (Customer Choice Law) became effective. The Customer Choice Law began a nine-year transition process to a fully competitive market for electricity in Illinois, with all customers being able to choose their electricity supplier by May 1, 2002. Transition charges designed to help utilities recover the cost of past investments 33 made under a regulated system may be collected through 2006 (2008 upon the ICC's finding that a utility's financial condition is impaired). The Customer Choice Law also requires residential base rate reductions which vary by utility. CILCO began its reduction in residential base rates with an initial 2% decrease beginning August 1998. Also, CILCO's return on common equity will, in general, be capped (the Equity Cap) at an index (a 12-month average yield for 30- year U.S. Treasury bonds plus 8% for calendar years 1998 and 1999, and a 12-month average yield for U.S. Treasury bonds plus 9% for calendar years 2000 through 2004) plus 1.5 percentage points. If CILCO's two-year average return on common equity exceeds the two-year average of the Equity Cap, fifty percent of the earnings in excess of the average Equity Cap must be refunded to customers in the following year. (Refer to the caption "Competition" in Management's Discussion and Analysis of Financial Condition and Results of Operations in CILCORP's 1998 Annual Report to Shareholders.) On June 30, 1999, Senate Bill 24 (a clarification and technical correction of the Customer Choice Law) was signed into law. This bill allows certain utilities, including CILCO, to increase the Equity Cap by an additional 2% over the Equity Cap provided under the Customer Choice Law, for the period 2000 through 2004. The increase in the Equity Cap is allowed in exchange for these utilities offering choice of electricity suppliers to certain non-residential customers earlier than previously allowed under the Customer Choice Law and for waiving the right to seek a two-year extension on the collection of transition charges. Power Quest Retail Competition Pilot Programs In 1996, to lead the movement toward increased customer choice, CILCO began Power Quest, which consisted of two electric pilot retail competition programs and a natural gas pilot retail competition program. The programs offered greater choice to customers and provided the opportunity for CILCO and certain of its electric and natural gas customers to participate in a competitive business environment. The pilot program for CILCO's industrial electric customers ended as scheduled on April 30, 1998. The program allowed CILCO's eight largest industrial customers (those with peak loads of 10 megawatts or more) to secure all or part of their electric power requirements from suppliers other than CILCO. However, program participants' total purchases from other suppliers were limited to 50 megawatts (10% of CILCO's industrial load) or less at all times. Participating customers began receiving electricity under this Power Quest pilot in May 1996. Seven of the eligible customers elected to participate in this pilot program. Caterpillar Inc., with three eligible accounts, elected to form a strategic alliance with CILCORP and receive value-added energy and environmental products and services rather than taking its entire Power Quest allocation from suppliers other than CILCO. Based on Power Quest participation levels by eligible industrial customers, CILCORP experienced a reduction of $2.1 million in pre-tax income for the first six months of 1998 (including electric margin lost by CILCO, CVI costs associated with the Caterpillar alliance, and QST margin on sales to Power Quest industrial customers). Costs associated with the Caterpillar alliance are included in Other Businesses Operations for the three months and six months ended June 30, 1998. Six of the Power Quest industrial program participants have signed contracts for electric service with CILCO which extend 18 months or more beyond October 1, 1999, the date on which they would have become eligible to select alternative suppliers under the Customer Choice Law. CILCO is exploring electric service contract terms with the remaining initially eligible customers and with other key industrial and commercial customers. In the other Power Quest electric program, CILCO designated six areas within its service territory as Open Access Sites for up to five years. Based upon participation levels by eligible commercial and residential customers, CILCORP experienced a reduction of approximately $386,000 in pre-tax income for the first six months of 1999. In December 1998, CILCO received approval from the Illinois 34 Commerce Commission (ICC) to eliminate this program, and did so, effective May 1, 1999. While CILCO has not filed with the ICC to terminate the gas residential pilot program, its affiliate, QST Energy, withdrew from participation in the program in August 1998. Gas customers that had been served by QST have returned to CILCO or other affiliates. Participation in the gas pilot program by marketers other than QST was minimal. This program did not have a material impact on CILCORP's financial position or results of operations for 1998 or the first six months of 1999. Voluntary Early Retirement Programs In April 1999, CILCO offered Voluntary Early Retirement Programs to employees in its electric power generation area, including employees represented by the NCF&O. A total of 86 of the 117 eligible employees accepted the offer to retire under the programs, effective as early as June 1, 1999. These programs resulted in an after-tax charge to earnings of approximately $6.1 million. In June 1999, the Company offered a similar Voluntary Early Retirement Program to the management and office and technical employees not previously included in the program offered in April. A total of 155 employees are eligible to retire, and may elect, After August 2, 1999, to accept the offer, and may retire as early as October 1, 1999. The Company expects to incur an additional after-tax charge to earnings of up to $17 million during the third quarter related to these programs. System Peak Demand A new all-time system peak demand of 1,235 MW was set on July 21, 1999. The previous system peak demand was 1,195 MW on June 26, 1998. Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits 27 - Financial data schedules (b) Reports on Form 8-K None 35 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the regis trant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CILCORP Inc. (Registrant) Date August 12, 1999 R. O. Viets R. O. Viets President and Chief Executive Officer Date August 12, 1999 T. D. Hutchinson T. D. Hutchinson Controller 36 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the regis trant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTRAL ILLINOIS LIGHT COMPANY (Registrant) Date August 12, 1999 R. J. Sprowls R. J. Sprowls Vice President and Chief Financial Officer Date August 12, 1999 T. D. Hutchinson T. D. Hutchinson Controller and Manager of Accounting 37 EX-27 2
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF INCOME, STATEMENT OF CASH FLOWS AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000762129 CILCORP INC. 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 PER-BOOK 865,057 167,895 146,356 23,327 0 1,202,635 192,853 0 139,843 332,696 22,000 44,120 257,168 34,000 0 39,300 43,000 0 1,449 499 428,403 1,202,635 312,748 6,894 275,939 282,833 29,915 (506) 29,409 14,555 14,854 1,570 13,284 16,741 10,931 62,862 .98 .97
EX-27 3
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF INCOME, STATEMENT OF CASH FLOWS AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018651 CENTRAL ILLINOIS LIGHT COMPANY 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 PER-BOOK 865,057 3,567 117,901 17,442 0 1,003,967 185,661 0 132,349 318,010 22,000 44,120 237,909 0 0 39,300 30,000 0 1,449 499 310,680 1,003,967 271,372 9,359 233,461 242,820 28,552 (890) 27,662 11,472 16,190 1,570 14,620 16,741 9,617 49,745 0 0
-----END PRIVACY-ENHANCED MESSAGE-----