11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1993 Commission file number 1-3004 Illinois Power Company Incentive Savings Plan (Full title of the plan) Illinois Power Company 500 South 27th Street Decatur, Illinois 62525 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office.) ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 1993 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Index to Financial Statements and Supplementary Schedules Page Report of Independent Accountants 1 Financial Statements: Statement of Net Assets Available for Plan Benefits as of December 31, 1993 and 1992 2-3 Statement of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 1993 and 1992 4-5 Notes to Financial Statements 6-9 Supplementary Information: Schedule I - Schedule of Assets Held for Investment Schedule II - Schedule of Reportable Transactions NOTE: Schedules not included with this additional financial data have been omitted because they are not applicable. One Boatmaen's Plaza St. Louis, MO 63101 Price Waterhouse REPORT OF INDEPENDENT ACCOUNTANTS June 27, 1994 To the Participants and Administrator of the Illinois Power Company Incentive Savings Plan In our opinion, the accompanying statements of net assets available for plan benefits and the related statements of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for plan benefits of the Illinois Power Company Incentive Savings Plan at December 31, 1993 and 1992 and the changes in its net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by ERISA. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Price Waterhouse Illinois Power Company Incentive Savings Plan STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS As of December 31, 1993 ASSETS: Money Market Fund Guaranteed Investment Fund Equity Income Fund Retirement Growth Fund Balanced Fund Stock Fund Loan Fund 1993 Total Cash and Temporary Cash Investments $0 $50,118 $0 $0 $0 $27,771 $21,293 $99,182 Investments at Fair Value 1,496,393 16,963,410 14,786,455 18,363,867 5,141,146 13,895,518 0 70,646,7 89 Total Investments 1,496,393 17,013,528 14,786,455 18,363,867 5,141,146 13,923,289 21,2 93 70,745,971 Dividends & Interest Receivable 3,953 83,390 33 33 78 141 15 87,643 Employee Contributions Receivable 623 6,234 (61) 4,287 340 (127) 0 11,296 Employer Contributions Total Receivable 0 0 0 0 0 1,038, Liabilities 0 1,213 0 0 0 1 121 0 1,038,121 2,504 0 13,717 Loans Outstanding 0 0 0 0 0 0 3,0 NET ASSETS AVAILABLE FOR 52,950 3,052,950 PLAN BENEFITS Pending Fund-to-Fund $1,496,987 Transfers (3,982) (10,231) $17,091,708 3,896 1,202 (18) 815 8,318 $14,790,323 0 $18,369,389 Other Assets $5,141,546 594 79,393 3,868 5,522 400 $14,949,735 1,038,950 3,061,283 4,190, $3,082,576 010 $74,922,264 Total Assets 1,496,987 17,092,921 14,790,323 18,369,389 5,14 1,546 14,962,239 3,082,576 74,935,981 LIABILITIES: See Accompanying Notes to Investment Purchases Financial Statements Payable 0 0 0 0 0 3,947 0 3 ,947 Other Accrued Expenses 0 1,213 0 0 0 8,557 0 9,770 Transfers (111,435) (131,047) 93,912 132,710 39,295 (15,449) (7,986) 0 Total Assets 1,607,175 16,496,098 9,801,541 12,401,307 4,260,977 13,186,662 2,534,292 60,288,052 LIABILITIES: Accrued Expenses 0 0 0 0 0 7,549 0 7,549 Total Liabilities 0 0 0 0 0 7,549 0 7,549 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN NET ASSETS AVAILABLE FOR PLAN BENEFITS STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS $1,607,175 As of December 31, 1992 $16,496,098 $9,801,541 $12,401,307 $4,260,977 ASSETS: $13,179,113 Money Market Fund $2,534,292 Guaranteed Investment Fund $60,280,503 Equity Income Fund Retirement Growth Fund Balanced Fund Stock Fund Loan Fund 1992 TotalSee Accompanying Notes to Investments at FairFinancial Statements Value $1,714,000 $16,522,448 $9,707,629 $12,268,597 $4,221,682 $11,934,344 $2,50 8,350 $58,877,050 Dividends & Interest Receivable 4,610 102,568 0 0 0 0 33,928 141,106 Employee Contributions Receivable 0 2,129 0 0 0 0 0 2,129 Employer Contributions Receivable 0 0 0 0 0 1,267,767 0 1,267,767 Pending Fund-to-Fund Interest Income 45,736 1,109,665 751 1,124 490 2,627 37 1,160,4 ILLINOIS POWER COMPANY 30 INCENTIVE SAVINGS PLAN Loan Interest 0 0 0 0 0 0 189,52 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS0 189,520 For the year Ended December 31, 1993 Net Change in Fair Money Market Fund Guaranteed Investment Fund Equity Income Fund Retirement Value of Growth Fund Balanced Fund Stock Fund Loan Fund 1993 Total Investments 2,045 (7,382) 1 Sources of Participants' Equity:,777,096 1,330,919 27,379 8 5,591 0 3,215,648 Contributions: 47,781 1,102,283 2,274,996 3,042,033 289,629 562,462 Employee $171,018 $1,750,818 $1,716,594 $2,397,133 $1,073,895 $67,671 $0 $7,177,189,557 7,508,741 129 Application of Employer 0 0 0 0 0 1,662,448 0 1,662,448Participants' Fund-to-Fund Equity: Transfers (260,077) (1,724,784) 1,335,911 798,918 (374,373) (162,150) 386,555 0 Loan Plan-to-Plan Repayments 0 0 0 0 0 0 28,9 Transfers (493) 678 (15,016) (7,679) 419 (59,429) 8,352 (73,168)31 28,931 (89,552) 26,712 3,037,489 3,188,372 699,941 1,508,540 394,907 8,766,409 Distributions to Active Investment Activities: & Terminated Dividend Income 0 0 497,149 1,709,990 261,760 474,244 0 2,943,143 Participants 68,417 518,636 323,518 262,323 109,001 27 3,043 7,945 1,562,883 Administrative & Miscellaneous Expenses 0 14,749 185 0 0 2 7,337 (696) 41,575 68,417 533,385 323,703 262 ,323 109,001 300,380 36,180 ILLINOIS POWER COMPANY 1,633,389 INCENTIVE SAVINGS PLAN Increase in Net Assets Available for Plan STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Benefits (110,188) 595,610 For the Year Ended December 31, 1992 4,988,782 5,968,082 880,569 Money Market Fund Guaranteed Investment Fund Equity Income Fund Retirement 1,770,622 548,284 14,641,7 Growth Fund Balanced Fund Stock Fund Loan Fund 1993 Total 61 Sources of Participants' Equity: Net Assets Available for Plan Benefits, Beginning of Contributions: Year 1,607,175 16,496,098 9 ,801,541 12,401,307 4,260,9 Employee $211,295 $2,176,766 $1,171,467 $1,862,006 $1,126,382 $0 $0 $6,547,916 77 13,179,113 2,534,292 60, Employer 0 0 0 0 0 1,851,645 0 1,851,645 280,503 Fund-to-Fund NET ASSETS AVAILABLE FOR Transfers (307,473) (943,091) 229,071 267,785 449,555 (269,841) 573,994 0 PLAN BENEFITS, END OF Plan-to-Plan YEAR $1,496,987 $17,091,708 Transfers 14,923 39,096 42,200 95,587 25,140 39,700 22,229 278,875 $14,790,323 $18,369,389 $5 (81,255) 1,272,771 1,442,738 2,225,378 1,601,077 1,621,504 596,223 8,678,436 ,141,546 $14,949,735 $3,082 Investment Activities: ,576 $74,922,264 Dividend Income 0 0 330,276 2,218,659 203,003 416,283 0 3,168,221 See Accompanying Notes to Financial Statements Interest 60 18,641 104,331 10,449 46 Income 62,342 1,199,618 0 0 2,515 0 0 0 1,261,960 Increase in Net Assets Loan Available for Plan Interest 0 0 0 0 0 0 188,27 Benefits (45,571) 2,340,514 7 188,277 2,537,284 3,275,665 1,830, Net Change in Fair 710 1,225,191 774,051 11,93 Value of 7,844 Investments 0 0 837,871 (1, Net Assets Available for 071,412) 45,271 (708,265) 0 Plan Benefits, Beginning of (896,535) Year 1,652,746 14,155,584 7 62,342 1,199,618 1,168,147 ,264,257 9,125,642 2,430,26 1,147,247 248,274 (291,982 7 11,953,922 1,760,241 48,3 ) 188,277 3,721,923 42,659 Application of NET ASSETS AVAILABLE FOR Participants' PLAN BENEFITS, END OF Equity: YEAR $1,607,175 $16,496,098 Distributions to Active $9,801,541 $12,401,307 $4, & Terminated 260,977 $13,179,113 $2,534, Participants 26,658 122,080 292 $60,280,503 73,601 96,960 18,641 78,80 3 10,449 427,192 Administrative Fees 0 9,795 0 0 0 25,528 0 35,323 26,658 131,875 73,601 96,9 See Accompanying Notes to Financial Statements deduction up to the legal dollar limit. Participants may also make after-tax contributions in cash or by payroll ILLINOIS POWER COMPANY deduction. Total contributions are limited to the INCENTIVE SAVINGS PLAN applicable percentage limit set by law. A participant may also "roll-over" into the Plan amounts previously invested in another retirement plan. NOTES TO FINANCIAL STATEMENTS There are six investment funds maintained by the NOTE 1 - DESCRIPTION OF PLAN: Trustee, the Money Market Fund, the Guaranteed Investment Fund, the Equity Income Fund, the Retirement Growth Fund, the Balanced Fund, and the Stock Fund. Participants have General: the option of directing their contributions into any or all of the funds in the proportions they choose. They may change their direction otions or transfer amoutns from fund to fund on a monthly basis. options or transfer amounts from fund Plan) is sponsored by Illinois Power Company (the Company).to fund on a monthly basis. The Plan became effective as of June 1, 1984, and is administered by the Company. Assets of the Plan are held The Company contributes a monthly matching contribution and managed by State Street Bank and Trust Company ofto the Plan equal to 25% of the first $160 of the Boston, Massachusetts (the Trustee), as trustee andparticipants' monthly before-tax contributions. All Company custodian. The purpose of the Plan is to enablematching contributions are paid in shares of Illinois Power participants to defer federal income tax on a portion ofCompany common stock and are contained in the Stock Fund. their salaries as allowed by the Internal Revenue Code. TheDividends on stock held in the Stock Fund are reinvested for Plan is subject to and in compliance with the provisions ofthe participants in additional shares of the Company's the Employee Retirement Income Security Act of 1974 (ERISA)common stock. as amended. Participation: All salaried employees of the Company are eligible to participate in the Plan. Participation is voluntary. Upon termination of employment with the Company, active participation ceases. Former employees can choose to liquidate their accounts or to leave them in the Plan. Earnings will continue to accrue on undistributed accounts. All accounts, whether for active or former employees, are fully vested. Plan Amendment: In March, 1993, the Plan was amended to add an Illinois Power Stock Fund to the available investment options. Effective April 1, 1993, participants are able to direct any or all of their contributions to this fund, which invests in Illinois Power Company common stock. Contributions: Participants may make before-tax contributions by payroll The Company has an Incentive Compensation arrangement in which employees can earn cash and Company stock if the Company achieves specified performance goals. Shares awarded under the Incentive Compensation arrangement are held in the Stock Fund. Dividends earned on these shares are reinvested in Company stock and allocated to participants' accounts in the Stock Fund. Shares previously held in the Tax Reduction Act Stock Ownership Plan (TRASOP), which was eliminated in 1988, are also held in the Stock Fund. ESOP: the form of cash and/or Company common stock. In October 1990, the Board of Directors authorized Loans: amendments to the Incentive Savings Plan to provide for The Plan allows participants to borrow from their before- the implementation of and tax and TRASOP accounts an amount not to exceed 50% of those Employee Stock Ownership account balances. Interest is charged on these loans at a Plan (ESOP) arrangement. rate commensurate with interest rates charged by persons in Under this arrangement, the the business of lending money for similar type loans. The Company, pursuant to period of repayment ranges from 1 to 10 years. Loan authorization granted by the repayments are made by payroll deductions authorized by the ICC, loaned $35 million to participant and by optional cash payments. Interest paid on the Trustee of the ESOP in the loan is credited to the participant's account. The January 1991. The loan Trustee maintains a Loan Fund to hold the balances of proceeds were used to participants' loans. purchase 2,049,975 shares of the Company's common stock on the open market. These shares are held in the ESOP and are allocated to the accounts of eligible participating employees as they are earned through the Match or Incentive Compensation features of the Plan. As of December 31, 1993, 86,154 and 120,485 shares have been allocated to salaried employees for Company Match and Incentive Compensation, respectively. Distributions: Distributions as provided for in the Plan are made to Plan participants or their beneficiaries no later than 120 days following the close of the Plan year in which the terminated participant reaches age 65 unless an earlier distribution is requested. All distributions are made in Plan Termination: It is expected that the Plan will be continued, but the right to amend, modify or terminate the Plan is reserved by the Company provided that such action does not retroactively and adversely affect the rights of any participant or beneficiary under the Plan. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: In accordance with generally accepted accounting principles, Basis of Accounting: these payments are not a liability of the plan at The accompanying Plan December 31, 1993. financial statements are However, the Department of prepared on the accrual Labor requires these basis of accounting. payments to be recorded as a liability on the Form Investments: 5500 - Annual Return/Report of Employee Benefit Plan. Investments are stated at Accordingly, the net assets current value based on the available for benefits as latest quoted market price reflected in the Form 5500 or at fair value as are less than the net determined by the Trustee. assets presented on the Statement of Net Assets Distributions Payable: Available for Plan Benefits. As of December 31, 1993, distributions approved for Income: payment by the Plan are as follows: Interest and dividend income is accrued as earned. Money Market Fund $ 0 Net appreciation (depreciation) of Guaranteed Investment Fund investments is comprised of 51,307 the change in market value compared to the cost of Equity Income Fund investments retained in the 11,515 Incentive Savings Plan, and realized gains or losses on Retirement Growth Fund security transactions which 3,000 represent the difference between proceeds received Balanced Fund and average cost. For the 3,446 purpose of allocation to participants, the Company's Stock Fund common stock is valued by 38,537 the Plan at actual cost; however, current value is used at the time of $107,805 distribution to participants and results in a realized gain or loss as reflected in the Statement of Changes in Net Assets Available for Plan Benefits. Expenses: Certain expenses incurred in the administration of the Plan are paid by the Plan rather than the Company. The expenses paid by the Plan include ESOP record keeping fees, trustee administrative fees, and guaranteed insurance contract fees. All other expenses incurred in the operation of the Plan are paid by the Company. Income Taxes: The Plan obtained its latest determination letter on May 16, 1985, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. NOTE 3 - INVESTMENTS 11,437,157 Phoenix Balanced Fund 265,682 4,221,682 Plan investments are received, invested and held by the4,056,159 Trustee. Individual investments that represent 5% or moreFirst National Bank of Chicago of the Plan's net assets available for benefits include: 8.95% Bank Investment Contract, Maturity 6/30/93 1 6,089,020 December 31,6,089,020 1993 Pacific Mutual Life Insurance Company 7.51% Guaranteed Insurance Contract, Maturity 6/30/94 1 6,142,938 Fair Market 6,142,938 Investment Units ValueNew York Life Insurance Cost Company 5.6% Guaranteed Insurance Contract, Fidelity Equity Income Fund 436,952 $14,786,455 Maturity 6/30/94 1 4,290,490 $11,266,588 4,290,490 Fidelity Retirement Growth Fund 1,012,341 18,363,867Illinois Power Company Common 16,365,695 Stock 538,405 11,934,344 Phoenix Balanced Fund 320,720 5,141,14611,752,675 4,996,121 Pacific Mutual Life Insurance CompanyNOTE 4 - TRANSACTIONS WITH 7.51% Guaranteed Insurance PARTIES-IN-INTEREST Contract, Maturity 6/30/94 1 5,526,382 5,526,382 At December 31, 1993, the New York Life Insurance Plan held 628,046 shares of Company 5.6% Guaranteed the Company's common stock Insurance Contract, with a cost and market Maturity 6/30/94 1 5,004,506value of $13,002,010 and 5,004,506 $13,895,518, respectively. Pacific Mutual Life Insurance CompanyDuring the year ended 4.85% Guaranteed Insurance Contract,December 31, 1993, the Plan Maturity 6/30/96 1 6,432,522purchased 125,754 shares in 6,432,522 77 transactions at a cost Illinois Power Company Common of $5,278,327 and also sold Stock 628,046 13,895,51855,343 shares in 78 13,002,010 transactions, the proceeds of which totaled $1,395,741. Net gains December 31,realized on the sales 1992 amounted to $33,078. The transactions are allowable Fair Market party-in-interest Investment Units Valuetransactions under Section Cost 408(e) of the ERISA regulations. Fidelity Equity Income Fund 334,630 $9,707,629 $7,745,591 During the year ended Fidelity Retirement Growth Fund 746,265 12,268,597December 31, 1993, the Plan invested in short-term investment funds at State Street Bank and Trust Company. Transactions with the State Street Short-term Investment Fund included 335 purchases and 258 sales which totaled $7,890,299 and $8,008,724, respectively. These transactions are allowable party-in-interest transactions under Section 408(b)(8) of the ERISA regulations. SCHEDULE I ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN EIN--37-0344645 PN--005 Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT December 31, 1993 (a) (b) Identity of (c) Description (d) Cost (e) Current issuer, of investment value borrower, including lessor, or maturity date, similar party rate of interest, collateral, par or maturity value. Fidelity Equity Income oriented $11,266,588 $14,786,455 Income Fund equity mutual fund Fidelity Growth oriented 16,365,695 18,363,867 Retirement mutual fund Growth Fund Phoenix Balanced mutual 4,996,121 5,141,146 Balanced Series fund Pacific Mutual 4.85% 6,432,522 6,432,522 Life Insurance Guaranteed Company Insurance Contract, maturing 6/30/96 Pacific Mutual 7.51% 5,526,382 5,526,382 Life Insurance Guaranteed Company Insurance Contract, maturing 6/30/94 New York Life 5.6% Guaranteed 5,004,506 5,004,506 Insurance Insurance Company Contract, maturing 6/30/94 Participant Rate of --- 3,052,950 Loans interest was 7% * Illinois Power Common stock 13,002,010 13,895,518 Company * State Street Money market 1,595,575 1,595,575 Short-term fund Investment Fund * Identified as being a party-in-interest to the Plan. SCHEDULE II ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN EIN--37-0344645 PN--005 Item 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Transactions Involving an Amount in Excess of 5% of the Current Value of Plan Assets (Reportable Transactions) For the Year Ended December 31, 1993 (a) (b) (c) (d) (e) (f) (g) Cost (h) (i) Net Identity Descripti Purchase Selling Lease Expense of asset Current gain or of party on of price price rental incurred value of loss involved asset with asset on transacti transacti on on date Pacific Guarantee $15,978,3 $15,537,3 N/A N/A $15,537,3 N/A $0 Mutual d 59 97 97 Insurance Insurance Company, Contracts New York Life Insurance Company, First National Bank of Chicago Fidelity Equity 4,202,144 896,314 N/A N/A 681,147 N/A 215,167 Investment Income s Mutual Fund Fidelity Retiremen 6,106,173 1,339,363 N/A N/A 1,177,635 N/A 161,728 Investment t Growth s Mutual Fund Phoenix Balanced 1,765,226 874,622 N/A N/A 825,265 N/A 49,357 Investment Mutual s Fund Illinois Common 5,278,327 1,395,741 N/A 1,959 1,360,704 N/A 33,078 Power Stock Company State Money 7,890,299 8,008,724 N/A N/A 8,008,724 N/A 0 Street Market Bank & Fund Trust Company
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Illinois Power Company has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Illinois Power Company Incentive Savings Plan By /s/ Larry S. Brodsky Larry S. Brodsky Vice-President Date: June 29, 1994 EXHIBIT INDEX Exhibits Filed Herewith Exhibit No. Description 1 Consent of Independent Accountants EXHIBIT 1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-60278), as amended, of Illinova Corporation of our report on the Illinois Power Company Incentive Savings Plan for the year ended December 31, 1993, dated June 27, 1994 which is incorporated by reference in this Form 11-K. /s/PRICE WATERHOUSE One Boatmen's Plaza St. Louis, Missouri June 27, 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1993 Commission file number 1-3004 Illinois Power Company Incentive Savings Plan for Employees Covered Under a Collective Bargaining Agreement (Full title of the plan) Illinois Power Company 500 South 27th Street Decatur, Illinois 62525 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office.) ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 1993 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT Index to Financial Statements and Supplementary Schedules Page Report of Independent Accountants 1 Financial Statements: Statement of Net Assets Available for Plan Benefits as of December 31, 1993 and 1992 2-3 Statement of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 1993 and 1992 4-5 Notes to Financial Statements 6-9 Supplementary Information: Schedule I - Schedule of Assets Held for Investment Schedule II - Schedule of Reportable Transactions NOTE: Schedules not included with this additional financial data have been omitted because they are not applicabl e . One Boatmen's Plaza St. Louis, MO 63101 Price Waterhouse REPORT OF INDEPENDENT ACCOUNTANTS June 27, 1994 To the Participants and Administrator of the Illinois Power Company Incentive Savings Plan for Employees Covered Under a Collective Bargaining Agreement In our opinion, the accompanying statements of net assets available for plan benefits and the related statements of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for plan benefits of the Illinois Power Company Incentive Savings Plan for Employees Covered Under a Collective Bargaining Agreement at December 31, 1993 and 1992 and the changes in its net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in Schedules I and II is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by ERISA. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Price Waterhouse ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS As of December 31, 1993 Money Guarantee Equity Retireme Balanced Stock Loan 1993 Market d Income nt Fund Fund Fund Total Fund Investmen Fund Growth ASSETS: t Fund Fund Cash and $0 $25,668 $0 $0 $0 $31,819 $3,813 $61,300 Temporary Cash Investments Investments at 1,493,4 11,148,24 6,724,45 10,064,0 1,714,52 14,175,0 0 45,319,7 Fair Value 05 4 3 78 7 45 52 Total 1,493,4 11,173,91 6,724,45 10,064,0 1,714,52 14,206,8 3,813 45,381,0 Investments 05 2 3 78 7 64 52 Dividends & 3,975 54,184 10 16 3 121 4 58,313 Interest Receivable Employee 314 2,987 (2,075) (2,832) 853 59 0 (694) Contributions Receivable Employer 0 0 0 0 0 1,070,71 0 1,070,71 Contributions 1 1 Receivable Loans 0 0 0 0 0 0 1,246, 1,246,40 Outstanding 402 2 Pending Fund-to- (2,853) (12,406) (7,102) (944) (3,602) (1,623) 28,530 0 Fund Transfers Other 1,436 44,765 (9,167) (3,760) (2,746) 1,069,26 1,274, 2,374,73 Assets 8 936 2 1,494,8 11,218,67 6,715,28 10,060,3 1,711,78 15,276,1 1,278, 47,755,7 Total Assets 41 7 6 18 1 32 749 84 LIABILITIES: Investment 0 0 0 0 0 785 0 785 Purchases Payable Other Accrued 0 911 0 0 0 10,486 0 11,397 Expenses 0 911 0 0 0 11,271 0 12,182 Total Liabilities NET ASSETS $1,494, $11,217,7 $6,715,2 $10,060, $1,711,7 $15,264, $1,278 $47,743, AVAILABLE FOR 841 66 86 318 81 861 ,749 602 PLAN BENEFITS
See Accompanying Notes to Financial Statements ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS As of December 31, 1992 Money Guarante Equity Retireme Balanced Stock Fund Loan 1992 Total Market ed Income nt Fund Fund ASSETS: Fund Investme Fund Growth nt Fund Fund Investments $1,425,0 $9,641,1 $4,098,2 $6,682,0 $1,158,7 $12,964,65 $936,14 $36,906,02 at Fair 00 03 72 79 72 3 2 1 Value Dividends & 3,897 58,995 0 0 0 0 11,350 74,242 Interest Receivable Employee 0 361 0 240 0 0 0 601 Contribution s Receivable Employer 0 0 0 0 0 1,264,102 0 1,264,102 Contribution s Receivable Pending Fund- 28,529 (32,073) 51,851 38,707 9,809 (101,420) 4,597 0 to-Fund Transfers Total 1,457,42 9,668,38 4,150,12 6,721,02 1,168,58 14,127,335 952,089 38,244,966 Assets 6 6 3 6 1 LIABILITIES: Accrued 0 0 0 0 0 7,721 0 7,721 Expenses Total 0 0 0 0 0 7,721 0 7,721 Liabilities $1,457,4 $9,668,3 $4,150,1 $6,721,0 $1,168,5 $14,119,61 $952,08 $38,237,24 NET ASSETS 26 86 23 26 81 4 9 5 AVAILABLE FOR PLAN BENEFITS
See Accompanying Notes to Financial Statements ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS For the Year Ended December 31, 1993 Money Guarante Equity Retirement Balance Stock Loan Fund 1993 Market ed Income Growth d Fund Fund Total Fund Investme Fund Fund nt Fund Sources of Participants' Equity: Contributions : $286,85 $1,654,4 $1,163,077 $1,691,427 $531,57 $52,480 $0 $5,379,8 Employee 7 12 4 27 0 0 0 0 0 1,788,2 0 1,788,23 Employer 39 9 Fund- (271,88 (313,118 550,530 183,437 (57,598 (411,94 320,582 0 to-Fund 7) ) ) 6) Transfers Plan- 493 (678) 15,016 7,679 (419) 59,429 (8,352) 73,168 to-Plan Transfers 15,463 1,340,61 1,728,623 1,882,543 473,557 1,488,2 312,230 7,241,23 6 02 4 Investment Activities: 0 0 217,789 937,939 85,188 499,344 0 1,740,26 Dividend 0 Income 43,571 678,544 474 895 260 2,112 12 725,868 Interest Income Loan 0 0 0 0 0 0 41,603 41,603 Interest Net (1,713) 34 774,481 726,277 1,232 95,256 0 1,595,56 Change in 7 Fair Value of Investments 41,858 678,578 992,744 1,665,111 86,680 596,712 41,615 4,103,29 8 Application of Participants' Equity: Loan 0 0 0 0 0 0 40,404 40,404 Repayments 19,906 459,245 156,204 208,362 17,037 909,428 0 1,770,18 Distributions 2 to Active & Terminated Participants 0 10,569 0 0 0 30,239 (13,219) 27,589 Administrativ e & Miscellaneous Expenses 19,906 469,814 156,204 208,362 17,037 939,667 27,185 1,838,17 5 Increase in 37,415 1,549,38 2,565,163 3,339,292 543,200 1,145,2 326,660 9,506,35 Net Assets 0 47 7 Available for Plan Benefits Net Assets 1,457,4 9,668,38 4,150,123 6,721,026 1,168,5 14,119, 952,089 38,237,2 Available for 26 6 81 614 45 Plan Benefits, Beginning of Year NET ASSETS $1,494, $11,217, $6,715,286 $10,060,31 $1,711, $15,264 $1,278,74 $47,743, AVAILABLE FOR 841 766 8 781 ,861 9 602 PLAN BENEFITS, END OF YEAR
See Accompanying Notes to Financial Statements ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS For the Year Ended December 31, 1992 Money Guarante Equity Retireme Balance Stock Loan 1993 Market ed Income nt d Fund Fund Fund Total Fund Investme Fund Growth nt Fund Fund Sources of Participants' Equity: Contributions: Employee $307,333 $1,867,0 $707,86 $1,295,5 $441,23 $0 $0 $4,619,0 91 4 70 9 97 Employer 0 0 0 0 0 1,888,85 0 1,888,85 7 7 Fund-to- 59,188 (311,094 264,868 187,842 (50,575 (461,563 311,334 0 Fund Transfers ) ) ) Plan-to- (14,923) (39,096) (42,200 (95,587) (25,140 (39,700) (22,229 (278,875 Plan Transfers ) ) ) ) 351,598 1,516,90 930,532 1,387,82 365,524 1,387,59 289,105 6,229,07 1 5 4 9 Investment Activities: Dividend 0 0 134,202 1,212,02 54,669 463,581 0 1,864,47 Income 1 3 Interest 45,775 684,902 0 0 0 0 0 730,677 Income Loan 0 0 0 0 0 0 61,662 61,662 Interest Net Change 0 0 357,307 (551,826 15,361 (743,098 0 (922,256 in Fair Value of ) ) ) Investments 45,775 684,902 491,509 660,195 70,030 (279,517 61,662 1,734,55 ) 6 Application of Participants' Equity: Distributions 14,180 260,114 47,864 54,740 424 328,073 3,394 708,789 to Active & Terminated Participants 0 6,285 0 0 0 27,364 0 33,649 Administrative Fees 14,180 266,399 47,864 54,740 424 355,437 3,394 742,438 Increase in Net 383,193 1,935,40 1,374,1 1,993,28 435,130 752,640 347,373 7,221,19 Assets Available 4 77 0 7 for Plan Benefits Net Assets 1,074,23 7,732,98 2,775,9 4,727,74 733,451 13,366,9 604,716 31,016,0 Available for 3 2 46 6 74 48 Plan Benefits, Beginning of Year NET ASSETS $1,457,4 $9,668,3 $4,150, $6,721,0 $1,168, $14,119, $952,08 $38,237, AVAILABLE FOR 26 86 123 26 581 614 9 245 PLAN BENEFITS, END OF YEAR
See Accompanying Notes to Financial Statements ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT NOTES TO FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF PLAN: General: The Illinois Power Company Incentive Savings Plan for Employees Covered Under a Collective Bargaining Agreement (the Plan) is sponsored by Illinois Power Company (the Company). The Plan became effective as of January 1, 1987, and is administered by the Company. Assets of the Plan are held and managed by State Street Bank and Trust Company of Boston, Massachusetts (the Trustee), as trustee and custodian. The purpose of the Plan is to enable participants to defer federal income tax on a portion of their salaries as allowed by the Internal Revenue Code. The Plan is subject to and in compliance with the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) as amended. Participation: All employees of the Company who are covered under a collective bargaining agreement are eligible to participate in the Plan. Participation is voluntary. Upon termination of employment with the company, active participation ceases. Former employees can choose to liquidate their accounts or to leave them in the Plan. Earnings will continue to accrue on undistributed accounts. All accounts, whether for active or former employees, are fully vested. Plan Amendment: In March, 1993, the Plan was amended to add an Illinois Power Stock Fund to the available investment options. Effective April 1, 1993, participants are able to direct any or all of their contributions to this fund, which invests in Illinois Power Company common stock. Contributions: Participants may make before-tax contributions by payroll deduction up to the legal dollar limit. Participants may also make after-tax contributions in cash or by payroll deduction. Total contributions are limited to the applicable percentage limit set by law. A participant may also "roll-over" into the Plan amounts previously invested in another retirement plan. There are six investment funds maintained by the Trustee, the Money Market Fund, the Guaranteed Investment fund, the Equity Income Fund, the Retirement Growth Fund, the Balanced Fund, and the Stock Fund. Participants have the option of directing their contributions into any or all of the funds in the proportions they choose. They may change their direction options or transfer amounts from fund to fund on a monthly basis. The Company contributes a monthly matching contribution to the Plan equal to 25% of the first $160 of the participants' monthly before-tax contributions. All Company matching contributions are paid in shares of Illinois Power Company common stock and are contained in the Stock Fund. Dividends on stock held in the Stock Fund are reinvested for the participants in additional shares of the Company's common stock. The Company has an Incentive Compensation arrangement in which employees can earn cash and Company stock if the Company achieves specified performance goals. Shares awarded under the Incentive Compensation arrangement are held in the Stock Fund. Dividends earned on these shares are reinvested in Company stock and allocated to participants' accounts in the Stock Fund. Shares previously held in the Tax Reduction Act Stock Ownership Plan (TRASOP), which was eliminated in 1988, are also held in the Stock Fund. ESOP: In October 1990, the Board of Directors authorized amendments to the Plan to provide for the implementation of an Employee Stock Ownership Plan (ESOP) arrangement. Under this arrangement, the Company, pursuant to authorization granted by the ICC, loaned $35 million to the Trustee of the ESOP in January 1991. The loan proceeds were used to purchase 2,049,975 shares of the Company's common stock on the open market. These shares are held in the ESOP and are allocated to the accounts of eligible participating employees as they are earned through the Match or Incentive Compensation features of the Plan. As of December 31, 1993, 93,763 and 122,513 shares have been allocated to bargaining unit employees for Company Match and Incentive Compensation, respectively. Distributions: Distributions as provided for in the Plan are made to Plan participants or their beneficiaries no later than 120 days following the close of the Plan year in which the terminated participant reaches age 65 unless an earlier distribution is requested. All distributions are made in the form of cash and/or Company common stock. Loans: The Plan allows participants to borrow from their before-tax and TRASOP accounts an amount not to exceed 50% of those account balances. Interest is charged on these loans at a rate commensurate with interest rates charged by persons in the business of lending money for similar type loans. The period of repayment ranges from 1 to 10 years. Loan repayments are made by payroll deductions authorized by the participant and by optional cash payments. Interest paid on the loan is credited to the participant's account. The Trustee maintains a Loan Fund to hold the balances of participants' loans. Plan Termination: It is expected that the Plan will be continued, but the right to amend, modify or terminate the Plan is reserved by the Company provided that such action does not retroactively and adversely affect the rights of any participant or beneficiary under the Plan. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting: The accompanying Plan financial statements are prepared on the accrual basis of accounting. Investments: Investments are stated at current value based on the latest quoted market price or at fair value as determined by the Trustee. Distributions Payable: As of December 31, 1993, distributions approved for payment by the Plan are as follows: Money Market Fund $ 0 Guaranteed Investment Fund 21,124 Equity Income Fund 45,402 Retirement Growth Fund 37,851 Balanced Fund 0 Stock Fund 36,283 $140,660 In accordance with generally accepted accounting principles, these payments are not a liability of the plan at December 31, 1993. However, the Department of Labor requires these payments to be recorded as a liability on the Form 5500 - Annual Return/Report of Employee Benefit Plan. Accordingly, the net assets available for benefits as reflected in the Form 5500 are less than the net assets presented on the Statement of Net Assets Available for Plan Benefits. Income: Interest and dividend income is accrued as earned. Net appreciation (depreciation) of investments is comprised of the change in market value compared to the cost of investments retained in the Plan, and realized gains or losses on security transactions which represent the difference between proceeds received and average cost. For the purpose of allocation to participants, the Company's common stock is valued by the Plan at actual cost; however, current value is used at the time of distribution to participants and results in a realized gain or loss as reflected in the Statement of Changes in Net Assets Available for Plan Benefits. Expenses: Certain expenses incurred in the administration of the Plan are paid by the Plan rather than the Company. The expenses paid by the Plan include ESOP record keeping fees, trustee administrative fees, and guaranteed insurance contract fees. All other expenses incurred in the operation of the Plan are paid by the Company. Income Taxes: The Plan obtained its latest determination letter on June 23, 1987, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. NOTE 3 - INVESTMENTS Plan investments are received, invested and held by the Trustee. Individual investments that represent 5% or more of the Plan's net assets available for benefits include: December 31, 1993 Fair Market Investment Units Value Cost Fidelity Equity Income Fund 198,713 $6,724,453 $5,347,095 Fidelity Retirement Growth Fund 554,800 10,064,078 9,076,894 New York Life Insurance Company 5.6% Guaranteed Insurance Contract, Maturity 6/30/94 1 3,759,712 3,759,712 Pacific Mutual Life Insurance Company 7.51% Guaranteed Insurance Contract, Maturity 6/30/94 1 3,127,689 3,127,689 Pacific Mutual Life Insurance Company 4.85% Guaranteed Insurance Contract, Maturity 6/30/96 1 4,260,843 4,260,843 Illinois Power Company Common Stock 640,680 14,175,045 13,314,730 December 31, 1992 Fair Market Investment Units Value Cost Fidelity Equity Income Fund 141,271 $4,098,272 $3,368,492 Fidelity Retirement Growth Fund 406,452 6,682,079 6,317,747 New York Life Insurance Company 5.6% Guaranteed Insurance Contract, Maturity 6/30/94 1 2,927,372 2,927,372 First National Bank of Chicago 8.95% Bank Investment Contract, Maturity 6/30/93 1 3,301,555 3,301,555 Pacific Mutual Life Insurance Company 7.51% Guaranteed Insurance Contract, Maturity 6/30/94 1 3,412,176 3,412,176 Illinois Power Company Common Stock 585,973 12,964,653 12,830,840 NOTE 4 - TRANSACTIONS WITH PARTIES-IN-INTEREST At December 31, 1993, the Plan held 640,680 shares of the Company's common stock with a cost and market value of $13,314,730 and $14,175,045, respectively. During the year ended December 31, 1993, the Plan purchased 122,502 shares in 84 transactions at a cost of $5,242,054 and also sold 86,158 shares in 92 transactions, the proceeds of which totaled $2,129,289. Net gains realized on the sales amounted to $77,628. The transactions are allowable party-in-interest transactions under Section 408(e) of the ERISA regulations. During the year ended December 31, 1993, the Plan invested in short-term investment funds at State Street Bank and Trust Company. Transactions with the State Street Short- term Investment Fund included 341 purchases and 250 sales which totaled $5,184,189 and $5,054,488, respectively. These transactions are allowable party-in-interest transactions under Section 408(b)(8) of the ERISA regulations. Schedule I ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT EIN--37-0344645 PN--006 Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT For the Year Ended December 31, 1993 (a) (b) Identity (c) Description (d) Cost (e) of issuer, of investment Current borrower, including value lessor, or maturity date, similar party rate of interest, collateral, par or maturity value. Fidelity Income oriented $ $ Equity Income equity mutual 5,347,095 6,724,45 Fund fund 3 Fidelity Growth oriented Retirement mutual fund 9,076,894 10,064,0 Growth Fund 78 Phoenix Balanced mutual Balanced fund 1,687,068 1,714,52 Series 7 Pacific 4.85% Guaranteed Mutual Life Insurance 4,260,843 4,260,84 Insurance Contract, 3 Company maturing 6/30/96 Pacific 7.51% Guaranteed Mutual Life Insurance 3,127,689 3,127,68 Insurance Contract, 9 Company maturing 6/30/94 New York Life 5.6% Guaranteed Insurance Insurance 3,759,712 3,759,71 Company Contract, 2 maturing 6/30/94 Participant Rate of Interest --- Loans was 7% 1,246,40 2 * Illinois Common Stock Power Company 13,314,730 14,175,0 45 * State Street Money market Short-term fund 1,554,706 1,554,70 Investment 5 Fund * Identified as being a party-in-interest to the Plan SCHEDULE II ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT EIN--37-0344645 PN--006 Item 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Transactions Involving an Amount in Excess of 5% of the Current Value of Plan Assets (Reportable Transactions) For the Year Ended December 31, 1993 (a) Identity of (b) (c) (d) (e) (f) (g) Cost (h) (i) Net party involved Description Purchase Selling Lease Expense of asset Current gain or of asset price price rental incurre value loss d with of transac asset tion on transac tion date Pacific Mutual Guaranteed $10,606,4 $9,099,3 N/A N/A $9,099,32 N/A $0 Insurance Company, Insurance 61 21 1 New York Life Contracts Insurance Company, First National Bank of Chicago Fidelity Investments Equity 2,419,515 561,160 N/A N/A 440,913 N/A 120,247 Income Mutual Fund Fidelity Investments Retirement 3,604,779 952,745 N/A N/A 845,632 N/A 107,113 Growth Mutual Fund Phoenix Investments Balanced 830,825 277,305 N/A N/A 264,815 N/A 12,490 Mutual Fund Illinois Power Common 5,242,054 2,129,28 N/A 2,866 2,048,795 N/A 77,628 Company Stock 9 State Street Bank & Money 5,184,189 5,054,48 N/A N/A 5,054,488 N/A 0 Trust Company Market Fund 8
SCHEDULE III ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT EIN--37-0344645 PN--006 SCHEDULE OF TRANSACTIONS WITH PARTIES-IN-INTEREST For the Year Ended December 31, 1993 Identity of issuer Relationshi Descripti Purchase Selling Cost of Net Gain p to Plan on of price price Asset or (loss) transacti on ons transacti ons Illinois Power Plan Illinois $5,242,0 $2,129,2 $2,069, $59,653 Company Sponsor Power 54 89 636 Company common stock, no par value (Transact ions are the aggregate of 77 purchases and 78 sales.) State Street Bank Trustee State 5,184,18 5,054,4 0 and Trust Company Street 9 88 - Bank Short- term Investmen t Fund (Transact ions are the aggregate of 335 purchases and 258 sales.)
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Illinois Power Company has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Illinois Power Company Incentive Savings Plan for Employees Covered Under a Collective Bargaining Agreement By /s/ Larry S. Brodsky Larry S. Brodsky Vice-President Date: June 29, 1994 EXHIBIT INDEX Exhibits Filed Herewith Exhibit No. Description 1 Consent of Independent Accountants EXHIBIT 1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-60278), as amended, of Illinova Corporation of our report on the Illinois Power Company Incentive Savings Plan for Employees Covered Under a Collective Bargaining Agreement for the year ended December 31, 1993, dated June 27, 1994 which is incorporated by reference in this Form 11-K. /s/PRICE WATERHOUSE One Boatmen's Plaza St. Louis, Missouri June 27, 1994