-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pzvXcXLAX807GyVTlmuGTicbeUODdCs09y/1mONcotW/8eduUf3rOG7r0LgFee6a 2rwZM+sPBdLiHZ4AOID6Eg== 0000860520-94-000006.txt : 19940527 0000860520-94-000006.hdr.sgml : 19940527 ACCESSION NUMBER: 0000860520-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIPSCO INC CENTRAL INDEX KEY: 0000860520 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 371260920 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10628 FILM NUMBER: 94528922 BUSINESS ADDRESS: STREET 1: 607 E ADAMS ST CITY: SPRINGFIELD STATE: IL ZIP: 62739 BUSINESS PHONE: 2175233600 MAIL ADDRESS: STREET 1: 607 E ADAMS STREET CITY: SPRINGFIELD STATE: IL ZIP: 62739 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 March 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to_________ Commission file number 1-10628 CIPSCO Incorporated ________________________________________________ (Exact name of registrant as specified in its charter) Illinois 37-1260920 -------------- ------------------- (State of (IRS Employer Incorporation) Identification No.) 607 EAST ADAMS STREET SPRINGFIELD, ILLINOIS 62739 --------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (217) 523-3600 _________________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ _____ At April 30, 1994, the number of shares of the registrant's common stock outstanding was 34,107,706. CIPSCO INCORPORATED AND SUBSIDIARIES CONTENTS I. Financial Information Page Item 1. Consolidated Financial Statements................... 4-9 Consolidated Statements of Income for the three months ended, March 31, 1994 and 1993....................................... 4-5 Consolidated Balance Sheets as of March 31, 1994 and December 31, 1993................ 6-7 Consolidated Statements of Cash Flows for the three months ended March 31, 1994 and 1993............................................ 8-9 Condensed Notes to Financial Statements............. 10-13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 14-16 II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information.................................. 18 Item 6. Exhibits and Reports on Form 8-K................... 18 Signature...................................................... 19 ____________________________________________________________________________ The unaudited interim financial statements included herein are the consolidated statements of CIPSCO Incorporated and Subsidiaries (Company) and its subsidiaries, Central Illinois Public Service Company and CIPSCO Investment Company. These unaudited statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. In the opinion of the Company, the interim financial statements filed as part of this Form 10-Q reflect all adjustments necessary to present fairly the results for the respective periods. 2 Due to the effect of weather and other factors which are characteristic of Central Illinois Public Service Copmpany's utility operations, financial results for the periods ended March 31, 1994 and 1993 are not necessarily indicative of trends for any twelve-month period. This financial and other information is not given in connection with any sale or offer to buy any security. 3 Part I. Item 1. Consolidated Financial Statements. FINANCIAL INFORMATION CIPSCO Incorporated and Subsidiaries Consolidated Statements of Income For the Periods Ended March 31, 1994 and 1993 (in thousands) (unaudited) Three Months Ended March 31, _____________________ 1994 1993 _________ _________ Operating Revenues: Electric.......................... $159,332 $145,454 Gas............................... 64,094 64,086 Investment........................ 2,196 1,764 ________ ________ Total operating revenues...... 225,622 211,304 ________ ________ Operating Expenses: Fuel for electric generation..... 53,679 45,054 Purchased power.................. 9,949 6,989 Gas purchased.................... 42,602 43,918 Other operation.................. 37,864 32,682 Maintenance...................... 14,595 11,924 Depreciation and amortization.... 20,412 19,516 Taxes other than income taxes.... 16,230 15,602 ________ ________ Total operating expenses..... 195,331 175,685 ________ ________ Operating Income................... 30,291 35,619 ________ ________ 4 Interest and Other Charges: Interest on long-term debt of subsidiary..................... 8,351 8,905 Other interest charges........... (20) 358 Allowance for funds used during construction................... (23) (513) Preferred stock dividends of subsidiary..................... 828 954 Miscellaneous, net............... (1,119) (807) ________ ________ Total interest and other charges.................... 8,017 8,897 ________ ________ Income Before Income Taxes......... 22,274 26,722 ________ ________ Income Taxes....................... 8,515 10,061 ________ ________ Net Income......................... $ 13,759 $ 16,661 ======== ======== Average Shares of Common Stock Outstanding...................... 34,108 34,108 Earnings Per Average Share of Common Stock..................... $ .40 $ .49 The accompanying condensed notes to financial statements are an integral part of these statements. 5 CIPSCO Incorporated and Subsidiaries Consolidated Balance Sheets March 31, 1994 and December 31, 1993 (in thousands) March 31, December 31, 1994 1993 ___________ ____________ (unaudited) ASSETS Utility Plant, at original cost: Electric............................. $2,188,477 $2,172,259 Gas.................................. 209,773 208,208 __________ __________ 2,398,250 2,380,467 Less-Accumulated depreciation........ 1,036,570 1,020,097 __________ __________ 1,361,680 1,360,370 Construction work in progress........ 52,301 61,104 __________ __________ 1,413,981 1,421,474 __________ __________ Current Assets: Cash................................. 678 4,630 Temporary investments, at cost which approximates market.................. 36,999 5,527 Accounts receivable, net............. 71,713 61,445 Accrued unbilled revenues............ 27,053 38,774 Materials and supplies, at average cost................................. 42,282 40,824 Fuel for electric generation, at average cost......................... 21,488 26,046 Gas stored underground, at average cost................................. 6,328 14,335 Prepayments.......................... 9,897 10,142 __________ __________ 216,438 201,723 __________ __________ Investments and Other Assets: Investment in marketable securities.. 43,667 42,703 Investment in leveraged leases....... 43,201 42,216 Other................................ 45,891 49,634 __________ __________ 132,759 134,553 __________ __________ $1,763,178 $1,757,750 ========== ========== 6 CAPITALIZATION AND LIABILITIES Capitalization: Common shareholders' equity.......... $ 631,224 $ 634,252 Unrealized investment gains, net..... 257 - Preferred stock of subsidiary........ 80,000 80,000 Long-term debt of subsidiary......... 474,393 474,323 __________ __________ 1,185,874 1,188,575 __________ __________ Current Liabilities: Long-term debt of subsidiary due within one year.................... 20,000 20,000 Accounts payable..................... 50,780 56,039 Accrued wages........................ 12,425 12,775 Accrued taxes........................ 19,201 12,973 Accrued interest..................... 8,810 9,204 Other................................ 40,504 34,902 __________ __________ 151,720 145,893 __________ __________ Deferred Credits: Accumulated deferred income taxes.... 298,256 294,732 Investment tax credits............... 58,120 58,962 Regulatory liabilities, net.......... 69,208 69,588 __________ __________ 425,584 423,282 __________ __________ $1,763,178 $1,757,750 ========== ========== The accompanying condensed notes to financial statements are an integral part of these statements. 7 CIPSCO Incorporated and Subsidiaries Consolidated Statements of Cash Flows For the Periods Ended March 31, 1994 and 1993 (in thousands) (unaudited) Three Months Ended March 31, ______________________ 1994 1993 __________ __________ Operating Activities: Net income.............................. $ 13,759 $ 16,661 Adjustments to reconcile net income to net cash provided: Depreciation and amortization......... 20,412 19,516 Allowance for equity funds used during construction (AFUDC).................. (16) (331) Deferred income taxes, net............ 3,330 4,192 Investment tax credit amortization.... (842) (842) Cash flows impacted by changes in assets and liabilities: Accounts receivable, net and accrued unbilled revenues..................... 1,453 (10,766) Fuel for electric generation.......... 4,558 10,084 Other inventories..................... 6,549 6,140 Prepayments........................... 245 3,597 Other assets.......................... 3,743 1,718 Accounts payable and other............ 343 (5,517) Accrued wages, taxes and interest..... 5,484 9,286 Other................................... (434) 975 _________ _________ Net cash provided by operating activities............................ 58,584 54,713 _________ _________ Investing Activities: Utility construction expenditures, excluding AFUDC....................... (12,677) (16,689) Allowance for borrowed funds used during construction.......................... (7) (181) Change in temporary investments......... (31,472) (1,922) Long-term investment in marketable securities............................ (707) (655) Long-term investment in leveraged leases................................ (985) (978) _________ _________ Net cash used in investing activities. (45,848) (20,425) _________ _________ 8 Financing Activities: Common stock dividends paid............. (16,713) (16,372) Proceeds from issuance of long-term debt of subsidiary......................... - 35,000 Repayment of long-term debt of subsidiary............................ - (35,000) Repayment of short-term borrowings........ - (16,793) Issuance expense, discount and premium.. 25 (1,458) _________ _________ Net cash used in financing activities. (16,688) (34,623) _________ _________ Net decrease in cash.................... (3,952) (335) Cash at beginning of period............. 4,630 1,534 _________ _________ Cash at end of period................... $ 678 $ 1,199 ========= ========= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest, net of amounts capitalized.. $ 8,195 $ 5,091 Income taxes.......................... 3,475 2,250 The accompanying condensed notes to financial statements are an integral part of these statements. 9 CIPSCO Incorporated and Subsidiaries CONDENSED NOTES TO FINANCIAL STATEMENTS MARCH 31, 1994 (unaudited) COMMITMENTS AND CONTINGENCIES. ENVIRONMENTAL REMEDIATION COSTS - CIPS (Central Illinois Public Service Company) and certain of its predecessors and other affiliates operated facilities in the past for manufacturing gas from coal. In connection with manufacturing gas, various by- products were produced, some of which remain on sites where the facilities were located. CIPS has identified 13 of these former manufactured gas plant sites (environmental remediation sites) which contain potentially harmful materials. Under directives from the Illinois Environmental Protection Agency (IEPA), CIPS has incurred costs and associated legal expenses related to the investigation and remediation of the sites. One site was added to the United States Environmental Protection Agency (USEPA) Superfund list on August 30, 1990. On September 30, 1992 the IEPA, in consultation with the USEPA, decided that the long-term remedial plan for this site should consist of a ground water pump-and-treat program. The IEPA and CIPS entered into an agreement, which received approval by the court on March 14, 1994, for CIPS to carry out the remedial action with the IEPA providing oversight. It is not known at this time what specific remedial action will be required at the other 12 sites. In 1987, CIPS filed a lawsuit against a number of insurance carriers seeking full indemnification for all costs in connection with certain environmental sites. CIPS has now settled the lawsuit with most of the insurance carriers. The estimated incurred costs related to studies and remediation at these 13 sites and associated legal expenses are being accrued and deferred rather than expensed currently, pending recovery through rates, from insurance carriers or from other parties. The total amount deferred represents costs incurred and estimates for costs of completing studies at various sites and an estimate of remediation costs at the Superfund site. At March 31, 1994 the amounts recovered have exceeded the aggregate amount deferred. In 1992, the Illinois Commerce Commission (the "Illinois commission") issued an Order (the "Generic Order") in its consolidated generic proceeding initiated on March 6, 1991, regarding appropriate ratemaking treatment of cleanup costs incurred by Illinois utilities with respect to environmental remediation sites. The Generic Order indicates that allowed cleanup costs may include prudently incurred costs of investigation, assessment and cleanup of environmental remediation sites, as well as litigation costs including those involved in insurance recovery claims. The Generic Order 10 authorizes utilities, including CIPS, to propose a mechanism to recover cleanup costs which is consistent with the provisions of the order. Such a mechanism must, among other things, provide for (1) recovery of cleanup costs over a five-year period, excluding carrying costs associated with the unrecovered balance of cleanup costs from the time that the recovery mechanism becomes effective; (2) a return to ratepayers over a five-year amortization period of any reimbursement of cleanup costs received from insurance carriers or other parties; and (3) a prudence review of each utility's expenditures. The Generic Order was upheld on appeal by the Third District Illinois Appellate Court. That decision held that a rate rider mechanism is an appropriate means for utilities to recover cleanup costs. The case has been appealed to the Illinois Supreme Court by an intervenor that maintains that no recovery of cleanup costs should be allowed and that, if allowed, a rate rider mechanism is not the proper means of providing recovery. CIPS cannot predict what action the Illinois Supreme Court will take in this matter. On March 26, 1993 the Illinois commission approved CIPS' proposed environmental cost-recovery rate riders, effective with April 1993 billings to customers. Known as the electric environmental adjustment clause and the gas environmental adjustment clause, the riders are designed to enable CIPS to recover from its customers costs associated with cleanup of the environmental remediation sites, along with associated legal expenses, over a five year period on terms consistent with the Generic Order. The environmental adjustment clause riders provide for an annual review of amounts recovered through the riders. Amounts found to have been incorrectly included would be subject to refund. Through December 31, 1993, CIPS had collected $2.6 million from its customers pursuant to the riders. Pursuant to monthly filings made by CIPS under the riders, no additional amounts have been collected from customers under the riders since January 1994. On April 6, 1994, the Illinois commission initiated a reconciliation proceeding to review CIPS environmental remediation activities and determine whether the level of revenues collected by the riders is consistent with the amount of remediation costs prudently incurred. Total cost to be incurred for the cleanup of these sites or the possible recovery from insurance carriers and other parties cannot be estimated. Management believes that any costs incurred in connection with the sites that are not recovered from insurance carriers or other parties will be recovered through utility rates. Accordingly, management believes that costs incurred in connection with these sites will not have a material adverse effect on the financial position or results of operations of CIPS. FERC ORDER 636 - During 1992, the Federal Energy Regulatory Commission ("FERC") issued a series of orders that require substantial restructuring of the service obligations of interstate pipeline suppliers. These orders (together called Order 636) required mandatory unbundling of existing pipeline gas sales services. Mandatory unbundling requires pipelines to sell separately the various components previously included with gas sales services (i.e., storage, transport, capacity sales, etc.). 11 Order 636 provides a mechanism for pipelines to recover four categories of transition costs associated with restructuring their gas sales services. Based on currently available information contained in the various interstate pipeline Order 636 compliance filings, CIPS estimates that the total amount of transition costs to be incurred by CIPS is approximately $10 million of which $3 million has been paid. At March 31, 1994, CIPS had recorded a liability and a related deferred gas cost for that portion of the transition costs that will be billed to CIPS regardless of future pipeline services. The Illinois commission issued an order in March 1994 permitting retail gas distribution companies, including CIPS, full recovery through rates of Order 636 transition costs. On May 4, 1994, the Illinois commission granted rehearing of the order. CIPS believes that the rehearing will be limited to a determination of the proper allocation of transition costs among customer classes. CIPS cannot predict whether the Illinois commission's final order in this matter will be appealed. CLEAN AIR ACT - CIPS' compliance strategy to meet the sulfur dioxide emission reduction requirements of the Clean Air Act Amendments of 1990 (Amendments) includes complying with Phase I of the Amendments by switching to a lower sulfur coal at some of its units. Phase II compliance will be accomplished by additional fuel switching at various units and by increased scrubbing with its existing scrubber at Newton Unit 1. Phase I and Phase II emission provisions of the Amendments become effective in 1995 and 2000, respectively. CIPS estimates that total capital costs, primarily for modifications to boilers, precipitators, coal handling facilities, and continuous monitoring equipment for implementation of this compliance strategy, will be less than $50 million in total including amounts spent to date. Operating costs are not expected to change materially. Compliance costs could result in electric base rate increases of approximately one to two percent by the year 2000. In 1991, in accordance with the plan to switch some units to lower sulfur coal, CIPS signed a long-term coal contract with an existing supplier for lower sulfur Illinois coal. Due to the magnitude of the supplier's capital investment, the contract includes a graduated termination charge. In 1994, CIPS can terminate the contract under certain conditions, and CIPS would be required to pay up to $41 million (plus an inflation adjustment) in termination charges. Each year subsequent to 1994 the termination charge is reduced according to a formula using tons of coal purchased. The termination charge would not be effective if CIPS terminated the contract due to the failure of the coal to meet quality specifications provided for in the contract. LABOR DISPUTES - The International Union of Operating Engineers Local 148 and the International Brotherhood of Electrical Workers Local 702 each filed unfair labor practice charges in 1993 with the National Labor Relations Board (NLRB) relating to the 12 legality of the lockout by CIPS of both unions during 1993. The Peoria Regional Office of the NLRB has issued a complaint against CIPS concerning its lockout of IBEW-702 represented employees. However, the Peoria Regional Office did not find merit to a similar charge filed by IUOE 148 and it was dismissed. The IUOE 148 has appealed the dismissal within the NLRB. Both unions seek, among other things, back pay and other benefits for the period of the lockout. CIPS estimates the amount of back pay and other benefits for both unions to be less than $12 million. Management believes the lockout was both lawful and reasonable and that the final resolution of the disputes will not have a material adverse effect on financial position or results of operations. OTHER ISSUES - The Company is involved in other legal and administrative proceedings before various courts and agencies with respect to rates, taxes, gas and electric fuel cost reconciliations, service area disputes, environmental and other matters. Although unable to predict the outcome of these matters, management believes that appropriate liabilities have been established and that final disposition of these actions will have no material adverse effect on the results of operations or the financial position of the Company. CHANGE IN ACCOUNTING PRINCIPLE - On January 1, 1994, CIPSCO adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS No. 115). Under the statement, the Company's investments in debt and marketable securities are reported at fair value with unrealized gains and losses reported as a net amount in a separate component of shareholders' equity until realized. The adoption of SFAS No. 115 did not have a material effect on financial position or results of operation. 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations THE OUTLOOK CIPS currently estimates that its total construction expenditures for the 1994-1998 period will be about $431 million, including about $4 million of allowance for funds used during construction. In addition to funds for construction, projected capital requirements for the 1994-1998 period include $93 million for scheduled debt retirements. Capital requirements for the 1994- 1998 period are expected to be provided primarily through internally generated funds. External financing to fund scheduled debt retirements may be required. FINANCIAL CONDITION Financial condition and total capitalization for the three-month periods ended March 31, 1994 and 1993 have changed as follows: Three Months Ended March 31, ________________________ (in thousands) 1994 1993 _________ _________ Common Shareholders' Equity Net income $ 13,759 $ 16,661 Common stock dividends paid (16,713) (16,372) Other 183 1 ________ ________ (2,771) 290 ________ ________ Long-Term Debt Proceeds from issuance on January 1, 1993 of $35,000,000 of Pollution Control Loan Obligations, Series A, 6.375%, due 2028. - 35,000 Repayment effective April 1, 1993 of two series of Pollution Control Loan Obligations, $17,500,000 Series B, 6.80%, due 2005; and $17,500,000 Series B, 6.875%, due 2009. - (35,000) Change in unamortized debt discount and premium 70 (241) ________ ________ Increase (Decrease) in total capitalization $(2,701) $ 49 ======== ======== 14 RESULTS OF OPERATIONS (THREE-MONTH PERIODS ENDED MARCH 31, 1994 AND 1993) Net Income Earnings (in thousands) Per Share ______________ _________ Three Months Ended March 31: 1994 $ 13,759 $ .40 1993 16,661 .49 ________ _____ Decrease $ 2,902 $ .09 ======== ===== Percent Decrease 17 % 18 % Electric Revenues: Electric revenues of CIPS were up 10% compared to the first quarter of 1993. Kilowatthour sales increased 16% principally due to increases in economy and emergency interchange sales to other utility systems. A comparison follows: Revenues (In 000's) KWH Sales (In 000's) ____________________________ ____________________________ First Quarter Inc. First Quarter Inc. 1994 1993 (Dec.) 1994 1993 (Dec.) ________ ________ ______ _________ _________ ______ Residential $ 50,888 $ 50,788 - % 761,471 761,504 - % Commercial 36,352 36,578 (1) 617,428 627,993 (2) Industrial 26,726 25,345 5 647,246 604,133 7 Public Auth. and Other 3,477 3,651 (5) 40,828 46,505 (12) _______ _______ _________ _________ Total Retail 117,443 116,362 1 2,066,973 2,040,135 1 _______ _______ _________ _________ Interchange Sales (firm) 18,873 15,829 19 351,657 254,519 38 Interchange Sales (economy /emergency) 17,482 8,298 111 854,793 520,473 64 Cooperatives, Muni's. & Other 5,534 4,965 11 129,649 124,189 4 _______ _______ _________ _________ Total Wholesale 41,889 29,092 44 1,336,099 899,181 49 _______ _______ _________ _________ Total $159,332 $145,454 10 % 3,403,072 2,939,316 16 % ======= ======= ========= ========= Fuel for Electric Generation: Fuel expense for electric generation increased 19% because KWH generation increased 19% in 1994 over 1993. 15 Purchased Power: This expense increased 42% due to increased KWHs purchased for resale to other utility systems on the interchange market. Gas Revenues and Gas Purchased: In the first quarter of 1994, gas revenues (excluding transportation revenues) increased 2% as a result of increased sales to industrial customers. The increased revenues and sales were partially offset by a decrease in therms transported. Revenues (In 000's) Therm Sales (In 000's) ____________________________ ____________________________ First Quarter Inc. First Quarter Inc. 1994 1993 (Dec.) 1994 1993 (Dec.) ________ ________ ______ _________ _________ ______ Residential $ 41,985 $ 43,670 (4)% 76,556 78,418 (2)% Commercial 14,692 14,952 (2) 27,077 26,731 1 Industrial 4,769 2,023 136 13,069 6,958 88 Miscellaneous 231 19 1,060 - - - _______ _______ _______ _______ Subtotal 61,677 60,664 2 116,702 112,107 4 Transported 2,417 3,422 (29) 39,738 40,664 (2) _______ _______ _______ _______ Total $ 64,094 $ 64,086 - % 156,440 152,771 2 % ======= ======= ======= ======= The utility transported approximately 40 million therms of customer-owned gas in the first quarter of 1994 and 41 million therms in the first quarter of 1993. Transportation revenues were higher in 1993 because of the greater volume transported at a higher average rate. Other Operation: Other operation expense increased 16% primarily due to nonrecurring expenses related to the settlement of labor disputes. Maintenance: Maintenance expense increased 22% due to the timing of power station maintenance, for which similar projects did not occur in the first quarter of 1993. Depreciation and amortization: Depreciation and amortization increased due to normal plant additions. Taxes Other than Income Taxes: Utility revenue taxes increased because of increased revenue. Interest Charges and Preferred Dividends: Interest charges and preferred dividends decreased 7% in 1994 due to refinancings made in 1993 which lowered interest and dividend rates. 16 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Shareholders of CIPSCO Incorporated was held on April 27, 1994. (b) All nominees who were proposed as directors by the Board of Directors were elected and there were no other nominees proposed. (c) Three shareholder proposals, which had been included in the CIPSCO Incorporated Proxy Statement, were submitted for a vote at the shareholder meeting. The Shareholder Proposals recommended that the Board of Directors take certain actions as described below: (1) Shareholder Proposal No. 1 - "Institute a salary and compensation ceiling such that as to future employment contracts, no senior executive or director of the Company receive combined salary and other compensation which is more than two times the salary provided to the President of the United States." (2) Shareholder Proposal No. 2 - "Take the necessary steps to insure that any increase in salary and/or compensation in future employment contracts for senior executives and directors be no greater percentage-wise than the increase in dividends paid to the Stockholders." (3) Shareholder Proposal No. 3 - "In the future refrain from entering into agreements providing executive compensation contingent on a change in control of the Company unless such agreements or arrangements are specifically submitted to the shareholders for approval." The results of the voting on each matter submitted are as follows: Election of Directors Directors With Authority Without Authority William J. Alley 28,269,972 579,376 Clifford L. Greenwalt 28,117,617 579,376 John L. Heath 28,657,656 579,376 Robert W. Jackson 28,186,464 579,376 Gordon R. Lohman 28,263,534 579,376 Hanne M. Merriman 28,275,291 579,376 Donald G. Raymer 28,249,810 579,376 Thomas L. Shade 28,311,149 579,376 James W. Wogsland 28,109,302 579,376 17 Appointment of Auditors For Against Abstain 28,031,811 475,979 342,958 Shareholder Proposal No. 1 For Against Abstain Broker Non-Vote 3,220,907 21,591,180 734,603 3,304,058 Shareholder Proposal No. 2 For Against Abstain Broker Non-Vote 3,152,328 21,655,035 739,746 3,303,639 Shareholder Proposal No. 3 For Against Abstain Broker Non-Vote 6,086,665 18,238,004 1,221,941 3,304,138 Item 5. Other Information On March 23, 1994, final court approval was granted to the settlement agreement between CIPS and International Brotherhood of Electrical Workers Local 702 ("IBEW 702") dismissing a lawsuit previously filed by IBEW 702 concerning the labor dispute. Currently, dry fly ash material produced by the coal-fired generating units at the Coffeen Power Station is hauled by truck to an off-site disposal area under terms of an agreement between CIPS and the owner of the disposal site. The Illinois Environmental Protection Agency (the "Agency") has notified the owner that some remediation of the site may be required. An engineering study of the area is in progress. The final resolution of this matter is not expected to be material to the results of operations or the financial position of the Company. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: None. (B) Reports on Form 8-K: None. 18 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CIPSCO Incorporated Date: May 13, 1994 /s/ J. C. Fiaush J. C. Fiaush Controller (Chief Accounting Officer) 19 -----END PRIVACY-ENHANCED MESSAGE-----