-----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, FJ8A5yJ+6+dTtx8GHf6ZCyvNSEledkE/f7cnXxhbUKFkeKOI9HIGl7e2YvVkbAHN gPG1VcZxmP/duBSqmWRHUg== 0000860520-95-000030.txt : 19951119 0000860520-95-000030.hdr.sgml : 19951119 ACCESSION NUMBER: 0000860520-95-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIPSCO INC CENTRAL INDEX KEY: 0000860520 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [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: 95590576 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL ILLINOIS PUBLIC SERVICE CO CENTRAL INDEX KEY: 0000018654 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 370211380 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20455 FILM NUMBER: 95590577 BUSINESS ADDRESS: STREET 1: 607 E ADAMS ST CITY: SPRINGFIELD STATE: IL ZIP: 62739 BUSINESS PHONE: 2175233600 MAIL ADDRESS: STREET 1: CENTRAL ILLINOIS PUBLIC SERVICE CO STREET 2: 607 E ADAMS ST CITY: SPRINGFIELD STATE: IL ZIP: 62739 10-Q 1 UNITED STATES 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 September 30, 1995 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; I.R.S. Employer File Number Address; and Telephone Number Identification No. ___________ _____________________________ __________________ 1-10628 CIPSCO INCORPORATED 37-1260920 (An Illinois Corporation) 607 East Adams Street Springfield, Illinois 62739 217-523-3600 1-3672 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY 37-0211380 (An Illinois Corporation) 607 East Adams Street Springfield, Illinois 62739 217-523-3600 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 issuers' classes of common stock, as of the latest practicable date: CIPSCO INCORPORATED Common stock, no par value, 34,069,542 shares outstanding at October 31, 1995 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY Common stock, no par value, 25,452,373 shares outstanding and held by CIPSCO INCORPORATED at October 31, 1995 -1- CIPSCO INCORPORATED AND CENTRAL ILLINOIS PUBLIC SERVICE COMPANY FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 CONTENTS Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements CIPSCO INCORPORATED Consolidated Statements of Income 4 Consolidated Balance Sheets 5 Consolidated Statements of Cash Flows 6 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY Statements of Income 7 Balance Sheets 8 Statements of Cash Flows 9 CONDENSED NOTES TO FINANCIAL STATEMENTS of CIPSCO Incorporated and Central Illinois Public Service Company 10 - 17 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for CIPSCO Incorporated and Central Illinois Public Service Company 18 - 25 PART II. OTHER INFORMATION Item 1. Legal Proceedings 26 Item 5. Other Information 26 - 34 Item 6. Exhibits and Reports on Form 8-K 35 Signatures 36 - 37 Exhibit Index 38 Exhibit 12 39 -2- The unaudited interim financial statements presented herein include the consolidated statements of CIPSCO Incorporated and Subsidiaries ("Company") as well as separate financial statements for Central Illinois Public Service Company ("CIPS"). The unaudited statements have been prepared by the Company and CIPS, respectively, 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 and CIPS believe the disclosures are adequate to make the information presented not misleading. Both the Company's consolidated financial statements and the CIPS financial statements should be read in conjunction with the financial statements and notes thereto included in the combined Annual Report on Form 10-K of CIPSCO Incorporated and CIPS for the year ended December 31, 1994. In the opinion of the Company and CIPS, their respective interim financial statements filed as part of this Form 10-Q reflect all adjustments necessary to present fairly the results for the respective periods. Due to the effect of weather and other factors which are characteristic of CIPS' utility operations, financial results for the periods ended September 30, 1995 and 1994 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. FINANCIAL INFORMATION Item 1. Financial Statements. CIPSCO INCORPORATED AND SUBSIDIARIES Consolidated Statements of Income For the Periods Ended September 30, 1995 and 1994 (in thousands except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, __________________ __________________ 1995 1994 1995 1994 ________ ________ ________ ________ Operating Revenues: Electric......................... $228,198 $198,767 $544,886 $537,013 Gas.............................. 13,234 15,146 87,523 100,724 Investment....................... 2,431 2,357 5,860 6,660 ________ ________ ________ ________ Total operating revenues...... 243,863 216,270 638,269 644,397 ________ ________ ________ ________ Operating Expenses: Fuel for electric generation..... 53,373 45,493 144,228 149,427 Purchased power.................. 18,981 14,486 45,219 40,587 Gas costs........................ 5,253 7,222 48,322 61,835 Other operation.................. 37,361 36,734 113,897 109,795 Maintenance...................... 16,018 14,375 46,690 45,378 Depreciation and amortization.... 21,005 20,162 62,280 60,610 Taxes other than income taxes.... 14,783 13,794 43,133 42,972 ________ ________ _______ ________ Total operating expenses...... 166,774 152,266 503,769 510,604 ________ ________ _______ ________ Operating Income................... 77,089 64,004 134,500 133,793 ________ ________ _______ ________ Interest and Other Charges: Interest on long-term debt of subsidiary....................... 8,285 8,138 24,583 24,704 Other interest charges........... 214 125 574 122 Allowance for funds used during construction..................... (240) (251) (649) (735) Preferred stock dividends of subsidiary....................... 957 889 2,896 2,568 Miscellaneous, net............... (579) (881) (1,915) (2,673) ________ ________ _______ ________ Total interest and other charges....................... 8,637 8,020 25,489 23,986 ________ ________ _______ ________ Income Before Income Taxes......... 68,452 55,984 109,011 109,807 ________ ________ ________ ________ Income Taxes....................... 26,721 21,728 41,826 42,247 ________ ________ ________ ________ Net Income......................... $ 41,731 $ 34,256 $ 67,185 $ 67,560 ======== ======== ======== ======== Average Shares of Common Stock Outstanding........................ 34,070 34,108 34,070 34,108 Earnings per Average Share of Common Stock....................... $ 1.22 $ 1.00 $ 1.97 $ 1.98 The accompanying condensed notes to financial statements are an integral part of these statements. -4- CIPSCO INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheets September 30, 1995 and December 31, 1994 (in thousands) September 30, December 31, 1995 1994 _____________ ____________ (unaudited) ASSETS Utility Plant, at original cost: Electric.......................... $2,287,538 $2,264,930 Gas............................... 223,660 220,347 __________ __________ 2,511,198 2,485,277 Less-Accumulated depreciation..... 1,115,529 1,077,533 __________ __________ 1,395,669 1,407,744 Construction work in progress..... 51,940 31,816 __________ __________ 1,447,609 1,439,560 __________ __________ Current Assets: Cash.............................. 1,696 1,963 Temporary investments, at cost which approximates market......... 7,489 5,875 Accounts receivable, net.......... 78,261 67,579 Accrued unbilled revenues......... 16,993 30,484 Materials and supplies, at average cost.............................. 39,595 39,817 Fuel for electric generation, at average cost...................... 40,058 30,305 Gas stored underground, at average cost.............................. 11,548 13,167 Prepayments....................... 13,430 10,925 __________ __________ 209,070 200,115 __________ __________ Investments and Other Assets: Investment in marketable securities........................ 46,574 43,929 Investment in leveraged leases.... 51,965 49,933 Other............................. 58,145 43,820 __________ __________ 156,684 137,682 __________ __________ $1,813,363 $1,777,357 ========== ========== CAPITALIZATION AND LIABILITIES Capitalization: Common shareholders' equity....... $ 664,544 $ 649,230 Unrealized investment gains (losses), net................... 366 (1,617) Preferred stock of subsidiary..... 80,000 80,000 Long-term debt of subsidiary...... 478,850 459,619 __________ __________ 1,223,760 1,187,232 __________ __________ Current Liabilities: Long-term debt of subsidiary due within one year................... - 15,000 Short-term borrowings............. - 14,985 Accounts payable.................. 48,955 54,021 Accrued wages..................... 11,260 9,833 Accrued taxes..................... 23,473 12,629 Accrued interest.................. 8,610 9,408 Other............................. 51,210 31,488 __________ __________ 143,508 147,364 __________ __________ Deferred Credits: Accumulated deferred income taxes. 324,041 313,072 Investment tax credits............ 53,074 55,595 Regulatory liabilities, net....... 68,980 74,094 __________ __________ 446,095 442,761 __________ __________ $1,813,363 $1,777,357 ========== ========== The accompanying condensed notes to financial statements are an integral part of these statements. -5- CIPSCO INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Periods Ended September 30, 1995 and 1994 (in thousands) (unaudited) Nine Months Ended September, 30, ______________________ 1995 1994 __________ __________ Operating Activities: Net income.............................. $ 67,185 $ 67,560 Adjustments to reconcile net income to net cash provided: Depreciation and amortization......... 62,280 60,610 Allowance for equity funds used during construction (AFUDC).................. (599) (503) Deferred income taxes, net............ 9,133 8,583 Investment tax credit amortization.... (2,521) (2,525) Cash flows impacted by changes in assets and liabilities: Accounts receivable, net and accrued unbilled revenues..................... 2,809 4,416 Fuel for electric generation.......... (9,753) (6,201) Other inventories..................... 1,841 (956) Prepayments........................... (2,505) 2,528 Other assets.......................... (14,325) 6,472 Accounts payable and other............ 14,656 1,738 Accrued wages, taxes and interest..... 11,473 5,216 Other................................... (6,340) (1,996) _________ _________ Net cash provided by operating activities............................ 133,334 144,942 _________ _________ Investing Activities: Utility construction expenditures, excluding AFUDC......................... (66,243) (64,184) Allowance for borrowed funds used during construction..................... (49) (231) Change in temporary investments......... (1,614) (1,354) Long-term investment in marketable securities.............................. (662) (5,136) Long-term investment in leveraged leases.................................. (2,032) (6,625) _________ _________ Net cash used in investing activities. (70,600) (77,530) _________ _________ Financing Activities: Common stock dividends paid............. (51,786) (50,820) Proceeds from issuance of long-term debt of subsidiary...................... 20,000 - Repayment of long-term debt of subsidiary.............................. (16,000) (20,000) Repayment of short-term borrowings...... (14,985) 850 Issuance expense, discount and premium.. (230) 11 _________ _________ Net cash used in financing activities. (63,001) (69,959) _________ _________ Net decrease in cash.................... (267) (2,547) Cash at beginning of period............. 1,963 4,630 _________ _________ Cash at end of period................... $ 1,696 $ 2,083 ========= ========= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest, net of amounts capitalized.. $ 24,245 $ 23,881 Income taxes.......................... $ 23,432 $ 25,923 The accompanying condensed notes to financial statements are an integral part of these statements. -6- CENTRAL ILLINOIS PUBLIC SERVICE COMPANY Statements of Income For the Periods Ended September 30, 1995 and 1994 (in thousands) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, __________________ __________________ 1995 1994 1995 1994 ________ ________ ________ ________ Operating Revenues: Electric......................... $228,213 $198,775 $544,914 $537,036 Gas.............................. 13,236 15,147 87,528 100,728 ________ ________ ________ ________ Total operating revenues...... 241,449 213,922 632,442 637,764 ________ ________ ________ ________ Operating Expenses: Fuel for electric generation..... 53,373 45,493 144,228 149,427 Purchased power.................. 18,981 14,486 45,219 40,587 Gas costs........................ 5,253 7,222 48,322 61,835 Other operation.................. 37,050 36,377 112,897 108,759 Maintenance...................... 16,017 14,374 46,689 45,375 Depreciation and amortization.... 20,780 20,041 61,814 60,227 Taxes other than income taxes.... 14,782 13,790 43,107 42,946 Income taxes: Current........................ 21,701 16,660 38,305 36,596 Deferred, net.................. 5,125 5,325 4,413 6,588 Deferred investment tax credits, net................... (840) (842) (2,521) (2,525) ________ ________ ________ ________ Total operating expenses...... 192,222 172,926 542,473 549,815 ________ ________ ________ ________ Operating Income................... 49,227 40,996 89,969 87,949 ________ ________ ________ ________ Other Income and Deductions: Allowance for equity funds used during construction.............. 222 172 599 503 Nonoperating income taxes........ (279) (117) (1,099) (604) Miscellaneous, net............... 625 1,021 2,325 3,171 ________ ________ ________ ________ Total other income and deductions.................... 568 1,076 1,825 3,070 ________ ________ ________ ________ Income Before Interest Charges..... 49,795 42,072 91,794 91,019 ________ ________ ________ ________ Interest Charges: Interest on long-term debt....... 8,285 8,138 24,583 24,704 Other interest charges........... 203 111 540 114 Allowance for borrowed funds used during construction.............. (18) (79) (49) (231) ________ ________ ________ ________ Total interest charges....... 8,470 8,170 25,074 24,587 ________ ________ ________ ________ Net Income......................... 41,325 33,902 66,720 66,432 Preferred Stock Dividends.......... 957 889 2,896 2,568 ________ ________ ________ ________ Earnings for Common Stock.......... $ 40,368 $ 33,013 $ 63,824 $ 63,864 ======== ======== ======== ======== The accompanying condensed notes to financial statements are an integral part of these statements. -7- CENTRAL ILLINOIS PUBLIC SERVICE COMPANY Balance Sheets September 30, 1995 and December 31, 1994 (in thousands) September 30, December 31, 1995 1994 _____________ ____________ (unaudited) ASSETS Utility Plant, at original cost: Electric......................... $2,287,538 $2,264,930 Gas.............................. 223,660 220,347 __________ __________ 2,511,198 2,485,277 Less-Accumulated depreciation.... 1,115,529 1,077,533 __________ __________ 1,395,669 1,407,744 Construction work in progress.... 51,940 31,816 __________ __________ 1,447,609 1,439,560 __________ __________ Current Assets: Cash............................. 1,672 1,320 Temporary investments, at cost which approximates market........ 4,924 2,593 Accounts receivable, net......... 78,790 67,686 Accrued unbilled revenues........ 16,993 30,484 Materials and supplies, at average cost............................. 39,595 39,817 Fuel for electric generation, at average cost..................... 40,058 30,305 Gas stored underground, at average cost............................. 11,548 13,167 Prepayments...................... 13,333 10,839 __________ __________ 206,913 196,211 __________ __________ Other Assets....................... 48,946 42,879 __________ __________ $1,703,468 $1,678,650 ========== ========== CAPITALIZATION AND LIABILITIES Capitalization: Common shareholder's equity...... $ 585,983 $ 574,745 Preferred stock.................. 80,000 80,000 Long-term debt................... 478,851 459,619 __________ __________ 1,144,834 1,114,364 __________ __________ Current Liabilities: Long-term debt due within one year............................. - 15,000 Short-term borrowings............ - 14,985 Accounts payable................. 48,407 53,900 Accrued wages.................... 11,260 9,833 Accrued taxes.................... 23,824 12,963 Accrued interest................. 8,610 9,408 Other............................ 51,210 31,488 __________ __________ 143,311 147,577 __________ __________ Deferred Credits: Accumulated deferred income taxes............................ 293,269 287,020 Investment tax credits........... 53,074 55,595 Regulatory liabilities, net...... 68,980 74,094 __________ __________ 415,323 416,709 __________ __________ $1,703,468 $1,678,650 ========== ========== The accompanying condensed notes to financial statements are an integral part of these statements. -8- Central Illinois Public Service Company Statements of Cash Flows For the Periods Ended September 30, 1995 and 1994 (in thousands) (unaudited) Nine Months Ended September 30, ______________________ 1995 1994 __________ __________ Operating Activities: Net income.............................. $ 66,720 $ 66,432 Adjustments to reconcile net income to net cash provided: Depreciation and amortization......... 61,814 60,227 Allowance for equity funds used during construction (AFUDC).................. (599) (503) Deferred income taxes, net............ 4,413 5,046 Investment tax credit amortization.... (2,521) (2,525) Cash flows impacted by changes in assets and liabilities: Accounts receivable, net and accrued unbilled revenues..................... 2,387 4,458 Fuel for electric generation.......... (9,753) (6,201) Other inventories..................... 1,841 (956) Prepayments........................... (2,494) 2,352 Other assets.......................... (6,067) 6,682 Accounts payable and other............ 14,229 1,773 Accrued wages, taxes and interest..... 11,490 4,832 Other................................... (5,874) (1,612) _________ _________ Net cash provided by operating activities............................ 135,586 140,005 _________ _________ Investing Activities: Construction expenditures, excluding AFUDC................................... (66,243) (64,184) Allowance for borrowed funds used during construction............................ (49) (231) Changes in temporary investments........ (2,331) (4,147) _________ _________ Net cash used in investing activities. (68,623) (68,562) _________ _________ Financing Activities: Proceeds from issuance of long-term debt.................................... 20,000 - Repayment of long-term debt............. (16,000) (20,000) Repayment of short-term borrowings...... (14,985) - Dividends paid: Preferred stock....................... (2,896) (2,568) Common stock.......................... (52,500) (51,400) Issuance expense, discount and premium.. (230) 11 _________ _________ Net cash used in financing activities. (66,611) (73,957) _________ _________ Net increase (decrease) in cash......... 352 (2,514) Cash at beginning of period............. 1,320 4,038 _________ _________ Cash at end of period................... $ 1,672 $ 1,524 ========= ========= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest, net of amounts capitalized.. $ 24,245 $ 23,871 Income taxes.......................... $ 27,622 $ 29,218 The accompanying condensed notes to financial statements are an integral part of these statements. -9- CIPSCO INCORPORATED AND SUBSIDIARIES CENTRAL ILLINOIS PUBLIC SERVICE COMPANY CONDENSED NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (unaudited) Note 1. GENERAL ________________ The consolidated financial statements presented herein include the accounts of CIPSCO INCORPORATED (CIPSCO), CENTRAL ILLINOIS PUBLIC SERVICE COMPANY (CIPS), and CIPSCO INVESTMENT COMPANY AND SUBSIDIARIES (CIC). CIPSCO and Subsidiaries are referred to as the "Company." CIPSCO has two first-tier subsidiaries: CIC, an investment subsidiary, and CIPS, an electric and gas public utility. Prior year amounts have been reclassified on a basis consistent with the September 30, 1995 presentation. The financial statements of CIPS, a subsidiary of CIPSCO, include only the accounts of CIPS. Prior year amounts have been reclassified on a basis consistent with the September 30, 1995 presentation. Note 2. COMMITMENTS AND CONTINGENCIES ______________________________________ ENVIRONMENTAL REMEDIATION COSTS - CIPS 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 required court approval 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. On May 10, 1995, the Illinois -10- Supreme Court denied CIPS' petition for leave to appeal its decision upholding an Illinois Appellate Court reversal of a circuit court verdict in favor of CIPS. Lawsuits against all insurance carriers have either been settled or dismissed. The estimated incurred costs relating 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, or from other parties. At September 30, 1995, $41.5 million has been deferred representing costs incurred and estimates for costs of completing studies at various sites and an estimate of remediation costs at the Superfund site. The total of the costs deferred, net of recoveries from insurers and through rate riders described below, was $4.1 million at September 30, 1995. In 1992, the Illinois Commerce Commission (the "Illinois commission") issued an Order (the "Generic Order") in its consolidated generic proceeding 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 authorizes utilities, including CIPS, to propose a mechanism to recover cleanup costs which is consistent with the provisions of the Generic 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 matter was appealed to the Illinois Supreme Court which, on April 20, 1995, issued an opinion which held that (i) clean-up costs are recoverable in rates; and (ii) use of a rider mechanism for recovery of such costs is appropriate. The Court also held that the evidence in the generic proceeding did not support the Illinois commission's decision to deny recovery of carrying costs associated with the unrecovered balance of clean-up costs. Accordingly, the Supreme Court reversed the Generic Order of the Illinois commission with regard to the recovery of carrying costs and remanded the case to the Illinois commission for further proceedings consistent with the Court's opinion. The Illinois commission has instituted such proceedings and all parties have agreed to a joint order which provides for the continued accrual of carrying charges associated with the unrecovered balance of clean-up costs as of the date of the Supreme Court order (April 20, 1995). A proposed order to that effect is under review by the Illinois commission. -11- 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 $2.9 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 revenues collected under the riders in 1993 are consistent with the amount of remediation costs prudently incurred. The total costs to be incurred for the cleanup of these sites or the possible recovery from 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, results of operations or liquidity of the Company or CIPS. FERC ORDER 636 - During 1992, the Federal Energy Regulatory Commission ("FERC") issued Order No. 636. This and successor orders have resulted in substantial restructuring of the service obligations of interstate pipeline suppliers. Order 636 provided mechanisms for pipelines to recover transition costs associated with the restructuring. CIPS has paid substantially all direct transition costs associated with the pipeline restructuring and is currently recovering all transition costs in its rates. Any future transition costs identified and billed from pipeline suppliers are expected to be recoverable from customers of CIPS. FERC PROPOSES RULEMAKING TO CREATE OPEN ACCESS TRANSMISSION SERVICE - In March 1995, the FERC issued a notice of proposed rulemaking (NOPR) through which the FERC intends to require all utilities subject to its jurisdiction to provide electric transmission service on a non-discriminatory basis to all interested parties. Under the NOPR as currently proposed the "open access" tariffs which are likely to be required are tariffs designed to provide transmission access to other utility systems on a basis comparable to the way a utility utilizes its own electric system. The proposed rules are designed to increase competition in bulk power markets. CIPS cannot predict when FERC -12- will take final action on the NOPR or whether it will be adopted in its present form. CIPS does not anticipate that operating revenues or expenses will change materially as a result of the NOPR. Accordingly, management believes that the NOPR will not have a material adverse effect on financial position, results of operations or liquidity of the Company or CIPS. CLEAN AIR ACT - CIPS' current compliance strategy to meet Phase I and II of the sulfur dioxide emission reduction requirements of the Clean Air Act Amendments of 1990 (Amendments) is to switch to a lower sulfur coal at some of its units along with increased scrubbing with its existing scrubber at Newton Unit 1. The currently estimated capital costs of compliance based on the current strategy are included in the five-year construction forecast. The forecast has an estimate of $40 million for environmental compliance including compliance with regulations under the Clean Air Act. However, the five-year construction costs may increase if studies being undertaken by CIPS indicate that renovations to the Newton Unit 1 scrubber are required to allow existing or additional levels of scrubbing or if such studies indicate that CIPS should change its compliance strategy to place more reliance on fuel switching. 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 1995, CIPS can terminate the contract under certain conditions, and CIPS would be required to pay approximately $41 million (plus an inflation adjustment) in termination charges. During 1995, and each subsequent year, 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 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 have both filed unfair labor practice charges with the National Labor Relations Board (NLRB) relating to the legality of the lockout by CIPS of both unions during 1993. The Peoria Regional Office of the NLRB has issued complaints against CIPS concerning its lockout of both unions. 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 dollars. A hearing, before an administrative law judge of the NLRB, was completed on April 25, 1995. 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, results of operations or liquidity of the Company or CIPS. -13- OTHER ISSUES - CIPS 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 torts 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 not have a material adverse effect on financial position, results of operations or liquidity of the Company or CIPS. Note 3. REGULATORY ASSETS AND LIABILITIES __________________________________________ Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for Effects of Certain Types of Regulation," applies to regulated entities whose rates are designed to recover the cost of providing service to customers through the ratemaking process. SFAS No. 71 allows certain costs that would normally be reflected in net income to be deferred on the balance sheet as regulatory assets. These costs are then amortized as the related amounts are reflected in rates. Under current accounting pronouncements, if a loss becomes probable, any unamortized balance, net of tax, would reduce net income. (See Note 4.) The Company continually reviews regulatory assets and liabilities. As shown below, the Company is in a net regulatory liability position at September 30, 1995, and currently believes that there would be no material adverse impact on results of operations, financial position or liquidity if the Company or CIPS were to discontinue application of SFAS No. 71. -14- The components of regulatory assets and liabilities at September 30, 1995 are: Description Amount ___________ ______ (in thousands) Regulatory Assets: Deferred environmental remediation costs $ 4,096 Other deferrals - primarily FERC 636 and Take-or-Pay costs 1,851 Unamortized costs relating to reacquired debt 13,694 ________ Total Regulatory Assets - in Other assets on balance sheet $ 19,641 ======== Regulatory Liabilities: Clean Air Act credits, net $ 1,430 SFAS 109 - Income Taxes, net 67,550 ________ Total Regulatory Liabilities, Net $ 68,980 ======== Regulatory Liabilities Net of Regulatory Assets $ 49,339 ======== -15- Note 4. SFAS NO. 121 _____________________ Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which was issued in March 1995 and will be effective on January 1, 1996, establishes accounting standards for the impairment of long-lived assets. SFAS No. 121 also requires that regulatory assets which are no longer probable of recovery through future revenue to be charged to earnings. SFAS No. 121 is not expected to have an impact on the financial position, results of operations or liquidity of the Company or CIPS upon adoption. Note 5. VOLUNTARY SEPARATION PROGRAM _____________________________________ Early in 1995, the Company offered a voluntary separation program to most of its salaried employees, which was accepted by 151 employees in February 1995. The Company recorded a $6.3 million one-time charge in the first quarter of 1995 based on estimates of the cost of separation benefits provided under the program. The detailed costs of the program consisted of separation payments of $5.5 million, educational benefits of $.4 million, and medical benefits of $.4 million. The separation payments were dependent upon ending salary and number of years employed, and ranged from 6 months to a maximum of 12 months pay per individual. The one-time charge reduced first quarter 1995 earnings by 11 cents per share. The Company estimates that the payback period (time frame over which resulting benefits will be derived through reduced operating expenses resulting from the program) will be approximately two years. Note 6. MERGER AGREEMENT _________________________ On August 11, 1995, CIPSCO entered into an Agreement and Plan of Merger (the "Merger Agreement") with Union Electric Company, a Missouri corporation ("UE"), Arch Holding Corp., a newly formed Missouri corporation (which was recently renamed as Ameren Corporation) 50% owned by CIPSCO and 50% owned by UE ("Ameren"), and Arch Merger Inc., a newly formed Missouri corporation and wholly owned subsidiary of Ameren ("Merger Sub"), pursuant to which, among other things, Merger Sub will be merged with and into UE and CIPSCO will be merged with and into Ameren (the "Mergers"), with the result that UE and Central Illinois Public Service Company, an Illinois corporation and the wholly owned operating subsidiary of CIPSCO, as well as other direct subsidiaries of CIPSCO, will continue as wholly owned operating subsidiaries of Ameren. As a result of the Mergers, each outstanding share of UE's common stock, par value $5.00 per share ("UE Common Stock"), (other than shares with respect to which dissenters' rights are perfected under applicable state laws) will be converted into the right to receive one share of common -16- stock of Ameren, par value $0.01 per share ("Ameren Common Stock"), each outstanding share of UE's preferred stock, without par value, (other than shares with respect to which dissenters' rights are perfected under applicable state laws), will remain outstanding and unchanged and each outstanding share of CIPSCO's common stock, without par value ("CIPSCO Common Stock") (including shares with respect to which dissenters' rights are perfected under applicable state laws) will be converted into the right to receive 1.03 shares of Ameren Common Stock (or cash in lieu of fractional shares otherwise deliverable in respect thereof). The business combination is intended to be tax-free for income tax purposes and to be accounted for as a "pooling of interests." Simultaneous with their execution and delivery of the Merger Agreement, UE and CIPSCO entered into stock option agreements (the "Stock Option Agreements"), pursuant to one of which UE granted CIPSCO the right, upon the terms and subject to the conditions set forth therein, to purchase up to 6,983,233 shares of Common Stock at a price of $35.94 per share, and pursuant to the other of which CIPSCO granted UE the right, upon the terms and subject to the conditions set forth therein, to purchase up to 6,779,838 shares of CIPSCO Common Stock at a price of $37.02 per share. After the Mergers, Ameren will become a registered public utility holding company under the Public Utility Holding Company Act of 1935, as amended. The Mergers are conditioned upon, among other things, approval by holders of two-thirds of the Common Stock and of the preferred stock, without par value, of UE voting together as a single class, by holders of two-thirds of the CIPSCO Common Stock, and upon receipt of certain regulatory and governmental approvals. The Merger Agreement and certain related matters will be submitted to shareholders of UE and CIPSCO for approval at meetings expected to be held later this year. Also, in November 1995, UE filed an application for approval of the merger with the Missouri Public Service Commission and CIPSCO and UE filed a joint application for approval of the merger with the Illinois Commerce Commission. Shortly thereafter, UE and CIPSCO will file a joint application for approval of the merger with the Federal Energy Regulatory Commission. In those applications, UE and CIPSCO seek recovery of merger transaction costs and a sharing of net merger savings between ratepayers and shareholders. The merger is expected to be consummated by the end of 1996. -17- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company and Union Electric Company entered into a Merger Agreement dated August 11, 1995. Information concerning the agreement is included in Note 6 to the Condensed Notes to Financial Statements of this report. The following discussion and analysis of financial condition and results of operations is for CIPSCO Incorporated and Subsidiaries ("Company") unless otherwise stated. THE OUTLOOK CIPS currently estimates that its total construction expenditures for the 1995-1999 period will be about $449 million, including about $7 million of allowance for funds used during construction. In addition to funds for construction, projected capital requirements for the remainder of 1995 and for the 1996-1999 period include $108 million for scheduled debt retirements. Capital requirements for the 1995-1999 period are expected to be met primarily through internally generated funds. External financing to fund scheduled debt retirements may be required. Included in the five-year construction forecast is an estimate of $40 million for environmental compliance, including compliance with regulations under the Clean Air Act Amendments of 1990. CIPS is evaluating alternatives for reducing fuel costs and other expenses while maintaining environmental compliance. Maintaining the current compliance strategy, or adoption of certain alternatives in fuel and/or environmental strategies, could result in substantial increases in capital expenditures in the 1995-1999 period from the amounts shown above. Additional external financing could be required. On June 9, 1995 CIPS issued $20 million First Mortgage Bonds, Medium-Term Note Series 1995-1, 6.49%, due June 1, 2005. The proceeds of this issue together with other funds were used for general corporate purposes, including replacement of funds used to pay at maturity the CIPS $10,000,000 First Mortgage Bonds, Series I, 4-1/2%, due May 1, 1993 and $20,000,000 First Mortgage Bonds, Series J, 4-1/2%, due May 1, 1994. CIPS has an effective shelf registration statement on file with the Securities and Exchange Commission which permits the issuance of an aggregate of up to $30 million of first mortgage bonds, medium-term notes and/or preferred stock. Other financing under the shelf will be for general corporate purposes including replacing funds used to pay the $15,000,000 First Mortgage Bonds, Series K, 4-5/8%, due June 1, 1995. -18- For the first nine months of 1995, 97% of CIPS' total capital requirements were provided from internal sources. Common stock dividends paid for the twelve months ended September 30, 1995, resulted in a payout ratio of 82% of the Company's earnings to common shareholders. Common stock dividends paid to the Company's common shareholders in relation to net cash provided by operating activities for the same period were 41%. In connection with consummation of the Mergers contemplated by the Merger Agreement described in Note 6 to the Condensed Notes to Financial Statements, it is expected that the Company will incur $9.3 million of transaction costs. Through September 30, 1995 these transaction costs were not material. The Company expects that these transaction costs for 1995 will approximate $4.6 million (14 cents per share) and will be reflected in operating results for the fourth quarter. FINANCIAL CONDITION Financial condition and changes in total Shareholder Equity of the Company and CIPS for the nine-month periods ended September 30, 1995 and 1994 are as follows: Nine Months Ended September 30, ________________________ (in thousands) The Company: 1995 1994 _________ _________ Common Shareholders' Equity Net income $ 67,185 $ 67,560 Common stock dividends paid (51,786) (50,820) Other (85) (54) ________ ________ Change in Shareholders' Equity $ 15,314 $ 16,686 ======== ======== Nine Months Ended September 30, ________________________ (in thousands) CIPS: 1995 1994 _________ _________ Common Shareholder's Equity Earnings for common stock $ 63,824 $ 63,864 Common stock dividends paid (52,500) (51,400) Other (86) (53) ________ ________ Change in Shareholder's Equity $ 11,238 $ 12,411 ======== ======== OVERVIEW The Company's earnings per share were $1.22 for the quarter ended September 30, 1995, compared to $1.00 per share earned during the -19- same period in 1994. The increase primarily reflects higher electric sales due to hotter-than-normal temperatures in the third quarter this year compared to cooler-than-normal conditions a year ago. The Company's earnings per share were $1.97 for the nine months ended September 30, 1995, compared to $1.98 per share earned during the same period in 1994. The decrease is a result of lower revenues from wholesale power supply agreements due to expiration at year-end 1994 of a portion of a power supply agreement with a wholesale electric customer, and the one-time cost of the voluntary separation program effected in the first quarter of 1995 (see Note 5), both nearly offset by the increase in electric sales during the third quarter of 1995 previously mentioned. The following table summarizes the components of consolidated net income and CIPS earnings for common stock for both the three- and nine-month periods ended September 30, 1995 and 1994 (see Results of Operations for further discussion). In this table, electric operating margin equals electric operating revenues less revenue taxes, fuel for electric generation and purchased power. Gas operating margin equals gas operating revenues less revenue taxes and gas costs. Third Quarter Nine Months Ended Ended September 30, September 30, ___________________ __________________ 1995 1994 1995 1994 ________ ________ ________ ________ CIPS Electric operating margin $147,944 $131,649 $336,393 $328,457 Gas operating margin 7,471 7,341 34,089 33,085 Other deductions and interest expenses (114,090) (105,088) (303,762) (295,110) CIPS preferred stock dividends (957) (889) (2,896) (2,568) ________ ________ ________ ________ Total earnings for common stock 40,368 33,013 63,824 63,864 ________ ________ ________ ________ NON-UTILITY Investment revenues 2,381 2,213 5,440 6,151 Other deductions and expenses (1,018) (970) (2,079) (2,455) ________ ________ ________ ________ Total non-utility net income 1,363 1,243 3,361 3,696 ________ ________ ________ ________ Consolidated net income $ 41,731 $ 34,256 $ 67,185 $ 67,560 ======== ======== ======== ======== -20- RESULTS OF OPERATIONS The results of operations of the Company and CIPS for the three- and nine-month periods ended September 30, 1995, compared to the same periods in 1994 are presented below. The Company Net Income (in thousands) Earnings Per Share ________________________ ________________________ Three Months Nine Months Three Months Nine Months ____________ ___________ ____________ ___________ 1995 $41,731 $67,185 $1.22 $1.97 1994 34,256 67,560 1.00 1.98 _______ _______ _____ _____ Increase (Decrease) $ 7,475 $ (375) $ .22 $(.01) ======= ======= ===== ===== Percent Increase (Decrease) 22 % (1)% 22 % (1)% CIPS Earnings for Common Stock (in thousands) __________________________________ Three Months Nine Months ____________ ___________ 1995 $40,368 $63,824 1994 33,013 63,864 _______ _______ Increase (Decrease) $ 7,355 $ (40) ======= ======= Percent Increase 22 % 0 % OPERATING REVENUES The changes in electric and gas revenues described below are for the Company. The only differences between changes in electric and gas operating revenues for the Company and for CIPS are intercompany revenues that are eliminated in the consolidated financial statements. These intercompany amounts are immaterial. -21- Electric revenues increased 15% in the third quarter of 1995 compared to the third quarter of 1994 reflecting higher KWH sales due principally to hotter weather in 1995. KWH sales to residential and commercial customers increased 21% and 9%, respectively, due to the hotter weather while industrial electric sales, which are less weather sensitive, declined 3%. The decline in industrial sales was primarily attributable to two industrial customers which ceased operations in 1995. Public authorities and other revenues increased 59% in the third quarter of 1995 compared to the same period in 1994 due to inclusion in this category, in 1995, of gains on disposition of clean air emission credits which are included in revenues, but returned to customers through the fuel adjustment clause. Power supply agreement revenues for the third quarter of 1995 were 6% below those of the third quarter 1994 due to expiration at year-end 1994 of a portion of a power supply contract with a wholesale electric customer. Economy and emergency interchange sales and sales to cooperatives and municipals increased in the third quarter of 1995 compared to the same quarter in 1994 due primarily to the hotter weather in 1995. Electric revenues and KWH sales increased 1% for the first nine months of 1995 compared to the same period in 1994 principally due to the warmer temperatures in the summer months of 1995. Electric revenues to residential and commercial customers increased 9% and 2%, respectively, for the first nine months of 1995 compared to 1994 due to increased sales caused by the hotter summer in 1995. Industrial revenues declined 2% due to a 1% decline in industrial electric sales, which are less weather sensitive. The decline in industrial sales was primarily attributable to two industrial customers which ceased operations in 1995. Public authorities and other revenues increased 44% in the first nine months of 1995 compared to the same period of 1994 due to inclusion in this category, in 1995, of gains on disposition of clean air emission credits which are included in revenues, but returned to customers through the fuel adjustment clause. Power supply agreement revenues for the first nine months of 1995 are 12% below those of the first nine months of 1994 due to expiration at year-end 1994 of a portion of a power supply contract with a wholesale electric customer. Economy and emergency interchange revenues declined 9% in the first nine months of 1995 compared to the same period in 1994 due to lower margins on the opportunity sales to other utilities. -22- The changes in electric revenue and KWH sales are shown below: CHANGES IN ELECTRIC REVENUE AND KILOWATTHOUR SALES INCREASE (DECREASE) FROM PRIOR YEAR (in thousands) ____________________________________________________________________ Third Quarter Nine Months _________________________________ _________________________________ Revenue Rev % KWH KWH % Revenue Rev % KWH KWH % ________ _____ _________ _____ ________ _____ _________ _____ Residential $ 16,574 25 % 157,028 21 % $14,624 9 % 118,009 6 % Commercial 5,954 12 58,331 9 2,558 2 27,584 1 Industrial 144 0 (20,634) (3) (1,702) (2) (22,006) (1) Public Authorities and Other 2,116 59 1,205 3 4,584 44 5,881 5 ________ _______ ________ ________ Total Retail $ 24,788 16 % 195,930 9 % $20,064 5 % 129,468 2 % Power Supply Agreements $ (1,166) (6)% 64,923 16 % $(7,209) (12)% (43,061) (4)% Interchange Sales (economy/emergency) 4,784 26 109,002 11 (5,082) (9) (1,235) - Cooperatives and Municipals 1,025 18 16,579 13 100 1 8,757 2 ________ _______ ________ ________ Total Sales for Resale $ 4,643 10 % 190,504 12 % $(12,191) (9)% (35,539) (1)% ________ _______ ________ ________ Total $ 29,431 15 % 386,434 11 % $ 7,873 1 % 93,929 1 % ======== ======= ======== ========
Gas revenues decreased 13% in the third quarter of 1995 compared to the same period in 1994 even though gas sales increased 24%. The revenue decline was principally due to lower purchased gas costs in 1995 which flow through to revenues through the Purchased Gas Adjustment clause (PGA). The commercial and industrial gas revenue decline of 14% and 33%, respectively, in the third quarter of 1995 over the same period in 1994 is due to both the decline in purchased gas costs discussed above, and to more customers transporting their own gas in 1995. Gas transportation revenues declined 6% in the third quarter of 1995 even though therms transported increased 47% over the same quarter in 1994. The increase in transported therms and reduced revenue in 1995 was caused by a change in the method of billing one large customer where revenues were reduced with corresponding reductions in the amount charged to gas costs. Gas revenues decreased 13% in the first nine months of 1995 compared to the same period in 1994 due to milder weather in 1995 and lower purchased gas costs which flow through to revenues through the PGA. Residential gas revenues declined 9% in the first nine months of 1995 compared to 1994 due to milder weather in 1995. The commercial and industrial gas revenue decline of 14% and 39%, respectively, in the first nine months of 1995 over the same period in 1994 is due to both the decline in purchased gas costs discussed above, and to more customers transporting their own gas in 1995. Gas transportation revenues declined 7% in the first nine months of 1995 even though therms transported -23- increased 16% over the same period in 1994. The increase in transported therms and reduced revenue in 1995 was caused by a change in the method of billing one large customer where revenues were reduced with corresponding reductions in the amount charged to gas costs. The changes in gas revenues and therm sales are shown below. CHANGES IN GAS REVENUE AND THERM SALES INCREASE (DECREASE) FROM PRIOR YEAR (in thousands) ____________________________________________________________________ Third Quarter Nine Months _________________________________ _________________________________ Therms Therms Revenue Rev % Therms % Revenue Rev % Therms % ________ _____ _________ ______ ________ _____ _________ ______ Residential $ (587) (7)% 246 3 % $(5,891) (9)% (7,856) (8)% Commercial (419) (14) (120) (3) (2,981) (14) (3,890) (10) Industrial (803) (33) (970) (14) (3,873) (39) (8,300) (30) Transportation (108) (6) 11,451 47 (379) (7) 14,029 16 Miscellaneous 5 15 - - (77) (20) - - ________ ______ ________ ________ Total $ (1,912) (13)% 10,607 24 % $(13,201) (13)% (6,017) (2)% ======== ====== ======== ========
OPERATIONS __________ Fuel for electric generation increased 17% in the third quarter of 1995 compared to the third quarter of 1994. The increase corresponds to the higher retail sales levels in the third quarter of 1995. Fuel for electric generation decreased 3% in the first nine months of 1995 compared to 1994 because less generation was required for fewer sales due to the milder weather in the first half of 1995. Purchased power increased 31% for the third quarter and 11% for the nine months ended September 30, 1995 compared with the same periods in 1994 reflecting an increase in marketable purchases made for resale to interchange economy and emergency customers. Gas costs declined 27% for the third quarter and 22% for the first nine months of 1995 compared to the same periods in 1994 due to declines in gas requirements for the CIPS system and because of a substantially lower average cost per therm. Other operation expenses increased 2% in the third quarter of 1995 compared to 1994 primarily due to general escalation in operating expenses. Other operation expenses increased 4% in the first nine months of 1995 compared to the same period in 1994 primarily due to a $6.3 million charge relating to the voluntary separation program offered to most salaried employees in February 1995. This charge was partially offset by reduced operating expenses in the remainder of the nine-month period. -24- Maintenance expenses increased 11% in the third quarter and 3% for the first nine months of 1995 compared to the same periods of 1994 due primarily to the scheduled timing of maintenance projects between periods. Depreciation and amortization expense increased 4% in the third quarter and 3% for the first nine months of 1995 compared to 1994 due to normal plant additions. Significant changes in the balance sheet accounts at September 30, 1995 compared to balances at December 31, 1994 are: Fuel for electric generation, at average cost, increased 32% for the first nine months of 1995 due primarily to the additional purchase of coal to cover anticipated contract shortages which did not occur. Other assets increased 33% for the first nine months of 1995 due primarily to an increase in non-utility energy related investments, the deferral of expenses relating to business systems development costs, and environmental remediation costs. Other liabilities increased 63% for the first nine months of 1995 due primarily to postretirement medical costs accrued monthly during 1995 but not funded until year-end. -25- PART II. OTHER INFORMATION Item 1. Legal Proceedings (1) Reference is made to the fifth paragraph under Item 3. Legal Proceedings in Part I on page 25 in the CIPSCO and CIPS combined 1994 Annual Report on Form 10-K (the "1994 Form 10-K") and to paragraph (2) under Item 1. Legal Proceedings in Part II on page 21 of the CIPSCO and CIPS combined Form 10-Q Quarterly Report for the quarter ended June 30, 1995 for information regarding May, et al v. Central Illinois Public Service Company and Hanson Engineers, Inc. On October 5, 1995, the court granted the plaintiffs' petition for voluntary dismissal of the lawsuit. It is management's expectation that the plaintiffs will file a new complaint, possibly before year-end 1995. A defendant in the case, Hanson Engineers, Inc., has been dismissed from the lawsuit. CIPS will continue to vigorously defend the action and believes it has meritorious defenses. Management believes that final disposition of this matter will not have a material adverse effect on financial position, results of operations or liquidity of the Company or CIPS. Item 5. Other Information (1) Reference is made to Item 1. Business - Competition -- Electric Business on page 9 in the 1994 Form 10-K for a discussion of the manner in which the competitive process appears to be evolving in the electric utility industry. At a recent meeting of the Technical Advisory Group of the Joint Committee on Electric Utility Reform, the management of CIPS discussed a CIPS proposal on competition and restructuring of the electric utility industry. CIPS' proposal centers around a two-step process. The first step would involve a three-year initial phase in which, beginning January 1, 1999, new retail electric customers with load of 5,000 kilowatts or greater, or customers with incremental additions to retail load of 5,000 kilowatts or greater, would be allowed direct access to Illinois public utilities, municipal power systems or electric cooperatives, other than their own local utility company, on a reciprocal basis. The second step of the proposal would allow, beginning January 1, 2002, any existing retail customer with electric load of 5,000 kilowatts or greater to have direct access to such suppliers on the same basis. (2) Two Illinois electric utilities recently filed with the Illinois commission proposed "open access" programs which would establish a pilot program under which -26- customers within the authorized service area of each such utility would have the opportunity to obtain electric power from a supplier other than such utility. CIPS is monitoring the Illinois commission proceedings in which these proposals are being considered. (3) Reference is made to paragraph (6) under Item 5. Other Information in Part II on page 21 of the CIPSCO and CIPS combined Form 10-Q Quarterly Report for the quarter ended March 31, 1995 for information regarding the docket opened by the Illinois commission for purposes of revising the current purchased gas adjustment (PGA) clause mechanism. On October 3, 1995, the Illinois commission issued a final order in this matter. The order denies the proposal made by the Citizens Utility Board to remove pipeline demand charges and supplier demand charges from the PGA and instead recover them through base rates. The order does not allow sharing of "off-system" revenues between the utility and its customers as had been proposed by CIPS and other gas utilities. The order requires such revenues to be flowed back to customers through the PGA. Management believes that implementation of the revised PGA mechanism will not have a material adverse effect on financial position, results of operations or liquidity of the Company or CIPS. (4) MERGER AGREEMENT WITH UNION ELECTRIC COMPANY As reported in its Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, CIPSCO, on August 11, 1995, entered into an Agreement and Plan of Merger (the "Merger Agreement") with Union Electric Company. Further information concerning the Merger Agreement and proposed merger transaction is included in Note 6 to the Condensed Notes to Financial Statements in Part I of this report. Details of the proposed transaction will be included in the Joint Proxy Statement/ Prospectus which will be sent to the shareholders of both parties in connection with shareholder voting on the merger. UNAUDITED PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information combines the historical balance sheets and statements of income of CIPSCO and Union Electric, including their respective subsidiaries, after giving effect to the Mergers. The unaudited pro forma combined condensed balance sheet at September 30, 1995 gives effect to the Mergers as if they had occurred at September 30, 1995. The unaudited pro forma combined condensed statements of income for the nine-month periods ended September 30, 1995 and 1994, and the twelve-month period ended September 30, 1995 give effect to the Mergers as if -27- they had occurred at the beginning of the periods presented. These statements are prepared on the basis of accounting for the Mergers as a pooling of interests and are based on the assumptions set forth in the notes thereto. In addition, the pro forma financial information does not give effect to the expected synergies of the transaction. The following pro forma financial information has been prepared from, and should be read in conjunction with, the historical financial statements and related notes thereto of CIPSCO and Union Electric. The following information is not necessarily indicative of the financial position or operating results that would have occurred had the Mergers been consummated on the date, or at the beginning of the periods, for which the Mergers are being given effect nor is it necessarily indicative of future operating results or financial position. In addition, due to the effect of weather on sales and other factors which are characteristic of public utility operations, financial results for the nine- month periods ended September 30, 1995 and 1994 are not necessarily indicative of trends for any twelve-month period. -28- AMEREN CORP. UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AT SEPTEMBER 30, 1995 (Thousands of Dollars) As Reported (Note 1) Pro Forma _______________________ Adjustments Pro Forma UE CIPSCO (Notes 2, 9) Combined ASSETS ___________ __________ ____________ ___________ Property and plant Electric $8,441,276 $2,287,538 $ 374,294 $11,103,108 Gas 169,820 223,660 - 393,480 Other 35,007 - - 35,007 __________ __________ __________ ___________ 8,646,103 2,511,198 374,294 11,531,595 Less accumulated depreciation and amortization 3,454,662 1,115,529 246,430 4,816,621 __________ __________ __________ ___________ 5,191,441 1,395,669 127,864 6,714,974 Construction work in progress: Nuclear fuel in process 109,353 - - 109,353 Other 100,187 51,940 1,389 153,516 __________ __________ __________ ___________ Total property and plant, net 5,400,981 1,447,609 129,253 6,977,843 Regulatory asset - deferred income taxes (Note 6) 726,788 45,589 - 772,377 Other assets: Unamortized debt expense 45,733 16,813 673 63,219 Nuclear decommissioning trust fund 69,124 - - 69,124 Investments in nonregulated activities - 98,539 - 98,539 Other 22,635 41,332 (2,014) 61,953 __________ __________ __________ ___________ Total other assets 137,492 156,684 (1,341) 292,835 Current assets: Cash and temporary investments 75,025 9,185 327 84,537 Accounts receivable, net 270,534 78,261 21,665 370,460 Unbilled revenue 58,983 16,993 - 75,976 Materials and supplies, at average cost - Fossil fuel 55,434 39,595 6,890 101,919 Other 95,038 51,606 5,600 152,244 Other 34,031 13,430 3,527 50,988 __________ __________ __________ ___________ Total current assets 589,045 209,070 38,009 836,124 __________ __________ __________ ___________ Total Assets $6,854,306 $1,858,952 $ 165,921 $ 8,879,179 ========== ========== ========== =========== CAPITAL AND LIABILITIES Capitalization: Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372 Other stockholders' equity (Note 2) 1,848,477 308,098 866,059 3,022,634 __________ __________ __________ ___________ Total common stockholders' equity 2,359,096 664,910 - 3,024,006 Preferred stock of subsidiary 219,147 80,000 - 299,147 Long-term debt 1,764,343 478,850 130,000 2,373,193 __________ __________ __________ ___________ Total capitalization 4,342,586 1,223,760 130,000 5,696,346 Minority interest in consolidated subsidiary - - 3,534 3,534 Accumulated deferred income taxes 1,348,881 324,041 (5,842) 1,667,080 Accumulated deferred investment tax credits 168,068 53,074 - 221,142 Regulatory liability 219,525 114,569 - 334,094 Accumulated provision for nuclear decommissioning 70,797 - - 70,797 Other deferred credits and liabilities 160,417 - 5,613 166,030 Current liabilities: Current maturity of long-term debt 69,295 - - 69,295 Short-term debt - - 6,800 6,800 Accounts payable 107,436 48,955 20,101 176,492 Wages payable 33,982 11,260 - 45,242 Taxes accrued 209,132 23,473 86 232,691 Interest accrued 57,372 8,610 2,885 68,867 Other 66,815 51,210 2,744 120,769 __________ __________ __________ ___________ Total current liabilities 544,032 143,508 32,616 720,156 __________ __________ __________ ___________ Total Capital and Liabilities $6,854,306 $1,858,952 $ 165,921 $ 8,879,179 ========== ========== ========== ===========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. -29- AMEREN CORP. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 1995 (Thousands of Dollars Except Shares and Per Share Amounts) UE CIPSCO Pro Forma (As Reported) (As Reported) Adjustments Pro Forma (Notes 1,4,10) (Notes 1,3) (Notes 2,9) Combined _____________ _____________ ____________ ____________ OPERATING REVENUES: Electric $ 1,613,570 $ 544,886 $ 138,378 $ 2,296,834 Gas 60,480 87,523 - 148,003 Other 318 5,860 244 6,422 ____________ ___________ __________ ____________ Total operating revenues 1,674,368 638,269 138,622 2,451,259 OPERATING EXPENSES: Operations Fuel and purchased power 280,690 189,447 74,097 544,234 Gas Costs 35,051 48,322 - 83,373 Other 277,491 113,897 14,452 405,840 ____________ ___________ __________ ____________ 593,232 351,666 88,549 1,033,447 Maintenance 163,342 46,690 14,038 224,070 Depreciation and amortization 174,369 62,280 11,866 248,515 Income taxes (Note 7) 188,492 41,826 6,208 236,526 Other taxes 166,944 43,133 1,496 211,573 ____________ ___________ __________ ____________ Total operating expenses 1,286,379 545,595 122,157 1,954,131 OPERATING INCOME 387,989 92,674 16,465 497,128 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 4,758 600 - 5,358 Minority interest in consolidated subsidiary - - (3,396) (3,396) Miscellaneous, net (8,772) 1,915 (5,153) (12,010) ____________ ___________ __________ ____________ Total other income and deductions, net (4,014) 2,515 (8,549) (10,048) INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS 383,975 95,189 7,916 487,080 INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest 101,770 25,157 7,916 134,843 Allowance for borrowed funds used during construction (4,661) (49) - (4,710) Preferred dividends of subsidiaries (Note 8) 9,938 2,896 - 12,834 ____________ ___________ __________ ____________ Net interest charges and preferred dividends 107,047 28,004 7,916 142,967 NET INCOME $ 276,928 $ 67,185 $ - $ 344,113 ============ =========== ========== ============ EARNINGS PER SHARE OF COMMON STOCK (BASED ON AVERAGE SHARES OUTSTANDING) $2.71 $1.97 $2.51 ===== ===== ===== AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462 ============ =========== ========== ============
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. -30- AMEREN CORP. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 1994 (Thousands of Dollars Except Shares and Per Share Amounts) UE CIPSCO Pro Forma (As Reported) (As Reported) Adjustments Pro Forma (Note 1) (Note 1) (Notes 2,9) Combined _____________ _____________ ____________ ____________ OPERATING REVENUES: Electric $ 1,586,088 $ 537,013 $ 181,129 $ 2,304,230 Gas 62,653 100,724 - 163,377 Other 343 6,660 108 7,111 ____________ ___________ __________ ____________ Total operating revenues 1,649,084 644,397 181,237 2,474,718 OPERATING EXPENSES: Operations Fuel and purchased power 256,906 190,014 117,952 564,872 Gas Costs 45,928 61,835 - 107,763 Other 280,216 109,795 14,380 404,391 ____________ ___________ __________ ____________ 583,050 361,644 132,332 1,077,026 Maintenance 140,105 45,378 13,465 198,948 Depreciation and amortization 168,135 60,610 9,035 237,780 Income taxes (Note 7) 194,065 42,247 7,787 244,099 Other taxes 165,299 42,972 1,480 209,751 ____________ ___________ __________ ____________ Total operating expenses 1,250,654 552,851 164,099 1,967,604 OPERATING INCOME 398,430 91,546 17,138 507,114 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 4,340 504 - 4,844 Minority interest in consolidated subsidiary - - (4,110) (4,110) Miscellaneous, net 3,259 2,673 (6,193) (261) ____________ ___________ __________ ____________ Total other income and deductions, net 7,599 3,177 (10,303) 473 INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS 406,029 94,723 6,835 507,587 INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest 107,774 24,826 6,835 139,435 Allowance for borrowed funds used during construction (3,838) (231) - (4,069) Preferred dividends of subsidiaries (Note 8) 9,939 2,568 - 12,507 ____________ ___________ __________ ____________ Net interest charges and preferred dividends 113,875 27,163 6,835 147,873 NET INCOME $ 292,154 $ 67,560 $ - $ 359,714 ============ =========== ========== ============ EARNINGS PER SHARE OF COMMON STOCK (BASED ON AVERAGE SHARES OUTSTANDING) $2.86 $1.98 $2.62 ===== ===== ===== AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,107,706 1,023,231 137,254,771 ============ =========== ========== ============
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. -31- AMEREN CORP. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME TWELVE MONTHS ENDED SEPTEMBER 30, 1995 (Thousands of Dollars Except Shares and Per Share Amounts) UE CIPSCO Pro Forma (As Reported) (As Reported) Adjustments Pro Forma (Notes 1,4,10) (Notes 1,3) (Notes 2,9) Combined _____________ _____________ ____________ ____________ OPERATING REVENUES: Electric $ 1,997,016 $ 705,300 $ 202,438 $ 2,904,754 Gas 83,936 125,218 - 209,154 Other 448 7,969 317 8,734 ____________ ___________ __________ ____________ Total operating revenues 2,081,400 838,487 202,755 3,122,642 OPERATING EXPENSES: Operations Fuel and purchased power 353,345 251,300 113,763 718,408 Gas Costs 49,218 71,530 - 120,748 Other 372,846 144,170 20,024 537,040 ____________ ___________ __________ ____________ 775,409 467,000 133,787 1,376,196 Maintenance 220,997 66,488 19,649 307,134 Depreciation and amortization 232,279 82,769 16,607 331,655 Income taxes (Note 7) 200,848 48,661 8,160 257,669 Other taxes 212,122 56,178 1,945 270,245 ____________ ___________ __________ ____________ Total operating expenses 1,641,655 721,096 180,148 2,542,899 OPERATING INCOME 439,745 117,391 22,607 579,743 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 6,186 726 - 6,912 Minority interest in consolidated subsidiary - - (4,840) (4,840) Miscellaneous, net (11,629) 2,744 (7,257) (16,142) ____________ ___________ __________ ____________ Total other income and deductions, net (5,443) 3,470 (12,097) (14,070) INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS 434,302 120,861 10,510 565,673 INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest 135,108 33,551 10,510 179,169 Allowance for borrowed funds used during construction (6,336) (107) - (6,443) Preferred dividends of subsidiaries (Note 8) 13,250 3,838 - 17,088 ____________ ___________ __________ ____________ Net interest charges and preferred dividends 142,022 37,282 10,510 189,814 NET INCOME $ 292,280 $ 83,579 $ - $ 375,859 ============ =========== ========== ============ EARNINGS PER SHARE OF COMMON STOCK (BASED ON AVERAGE SHARES OUTSTANDING) $2.86 $2.45 $2.74 ===== ===== ===== AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,078,037 1,022,341 137,224,212 ============ =========== ========== ============
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. -32- AMEREN CORP. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS 1. Reclassifications have been made to certain "as reported" account balances reflected in CIPSCO's and Union Electric's financial statements to conform to this reporting presentation (See Notes 6, 7 and 8). All other financial statement presentation and accounting policy differences are immaterial and have not been adjusted in the pro forma combined condensed financial statements. 2. The pro forma combined condensed financial statements reflect the conversion of each share of Union Electric Common Stock ($5 par value) outstanding into one share of Ameren Common Stock ($.01 par value) and the conversion of each share of CIPSCO Common Stock (no par value) outstanding into 1.03 shares of Ameren Common Stock, as provided in the Merger Agreement. The pro forma combined condensed financial statements are presented as if the companies were combined during all periods included therein. 3. Net income for the nine months and twelve months ended September 30, 1995 includes a pre-tax charge of $6.3 million for CIPSCO's voluntary separation program. 4. The allocation between Union Electric and CIPSCO and their customers of the estimated cost savings resulting from the Mergers, net of the costs incurred to achieve such savings, will be subject to regulatory review and approval. Transaction costs are currently estimated to be approximately $22 million (including fees for financial advisors, attorneys, accountants, consultants, filings and printing). None of these estimated cost savings or the costs to achieve such savings have been reflected in the pro forma combined condensed financial statements. However, net income for the nine months and twelve months ended September 30, 1995 includes a charge with a $9 million impact on net income for merger transaction costs. 5. Intercompany transactions (including purchased and exchanged power transactions) between Union Electric and CIPSCO during the periods presented were not material and, accordingly, no pro forma adjustments were made to eliminate such transactions. 6. CIPSCO's regulatory asset related to deferred income taxes was reclassified from the regulatory liability account balance to conform to this reporting presentation. 7. CIPSCO's income taxes are reflected as operating expenses to conform to this reporting presentation. 8. Currently, the Union Electric Preferred Stock is not issued by a subsidiary; subsequent to the Merger, the Union Electric Preferred Stock will be issued by a subsidiary of Ameren. As a result, Union Electric's preferred dividend requirements have been reclassified to conform to this reporting presentation. -33- 9. Pro forma adjustments have been made to consolidate the financial results of Electric Energy, Inc. (EEI), which will, in substance, be a 60% owned subsidiary of Ameren subsequent to the Merger. Prior to the Merger, Union Electric and CIPSCO held 40% and 20% ownership interests, respectively, in EEI and accounted for these investments under the equity method of accounting. All intercompany transactions between Union Electric, CIPSCO and EEI have been eliminated. 10. Net income for the nine and twelve months ended September 30, 1995 includes a one-time credit to Missouri electric customers which reduced revenues and pre-tax income of Union Electric by $30 million. -34- Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: Exhibit 12 Computation of Ratio of Earnings to Fixed Charges and Computation of Ratio of Earnings to Fixed Charges plus Preferred Stock Dividend Requirements Before Income Taxes for CIPS. Exhibit 27.1 Financial Data Schedule for CIPSCO (required for electronic filing only in accordance with Item 601(c)(1) of Regulation S-K). Exhibit 27.2 Financial Data Schedule for CIPS (required for electronic filing only in accordance with Item 601(c)(1) of Regulation S-K). (B) Reports on Form 8-K: None -35- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, CIPSCO Incorporated, has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CIPSCO Incorporated Date: November 13, 1995 /s/ L. E. Marlett L. E. Marlett Controller (Chief Accounting Officer) -36- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Central Illinois Public Service Company, has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Central Illinois Public Service Company Date: November 13, 1995 /s/ L. E. Marlett L. E. Marlett Controller (Principal Accounting Officer) -37- CIPSCO INCORPORATED AND CENTRAL ILLINOIS PUBLIC SERVICE COMPANY EXHIBIT INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 Exhibit No. Description ___________ ___________ Exhibit 12 Computation of Ratio of Earnings to Fixed Charges and Computation of Ratio of Earnings to Fixed Charges plus Preferred Stock Dividend Requirements Before Income Taxes for CIPS. Exhibit 27.1 Financial Data Schedule for CIPSCO Exhibit 27.2 Financial Data Schedule for CIPS -38- EX-12 2 Exhibit 12 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS BEFORE INCOME TAXES (in thousands) 12 Months Ended _______________________________________________________________ December 31, September 30, ________________________________________________ 1995 1994 1993 1992 1991 1990 _____________ ________ ________ ________ ________ ________ Net income. . . . . . . . . . . . . . . . . . . $ 78,363 $ 81,913 $ 84,011 $ 72,601 $ 75,683 $ 71,562 Add--Federal and state income taxes: Current . . . . . . . . . . . . . . . . . . . 39,806 38,097 50,441 6,110 36,316 39,380 Deferred (net). . . . . . . . . . . . . . . . 11,016 13,190 1,674 33,998 7,573 (2,964) Investment tax credit amortization. . . . . . (3,362) (3,367) (3,366) (3,336) (3,464) (3,306) Income tax applicable to nonoperating activities. . . . . . . . . . . . . . . . . 1,098 603 631 2,989 2,413 2,986 _______ _______ _______ _______ _______ _______ 48,558 48,523 49,380 39,761 42,838 36,096 _______ _______ _______ _______ _______ _______ Net income before income taxes. . . . . . . . . 126,921 130,436 133,391 112,362 118,521 107,658 _______ _______ _______ _______ _______ _______ Add--Fixed charges Interest on long-term debt. . . . . . . . . . 31,034 31,164 32,823 35,534 36,652 36,589 Interest on provision for revenue refunds . . - - - (803) 4,261 3,396 Other interest. . . . . . . . . . . . . . . . 785 358 479 392 1,231 1,070 Amortization of net debt premium and discount. . . . . . . . . . . . . . . . . . 1,686 1,678 1,598 863 338 326 _______ _______ _______ _______ _______ ________ 33,505 33,200 34,900 35,986 42,482 41,381 _______ _______ _______ _______ _______ ________ Earnings as defined . . . . . . . . . . . . . . $160,426 $163,636 $168,291 $148,348 $161,003 $149,039 ======= ======= ======= ======= ======= ======== Ratio of earnings to fixed charges. . . . . . . 4.79 4.93 4.82 4.12 3.79 3.60 Earnings required for preferred dividends: Preferred stock dividends . . . . . . . . . . $ 3,838 $ 3,510 $ 3,718 $ 4,549 $ 5,396 $ 5,617 Adjustment to pre-tax basis*. . . . . . . . . 2,378 2,079 2,185 2,491 3,054 2,833 _______ _______ _______ _______ ________ _______ $ 6,216 $ 5,589 $ 5,903 $ 7,040 $ 8,450 $ 8,450 _______ _______ _______ _______ ________ _______ Fixed charges plus preferred stock dividend requirements . . . . . . . . . . . . $ 39,721 $ 38,789 $ 40,803 $ 43,026 $ 50,932 $49,831 ======= ======= ======= ======= ======== ======= Ratio of earnings to fixed charges plus preferred stock dividend requirements . . . . 4.04 4.22 4.12 3.45 3.16 2.99 * An additional charge equivalent to earnings required to adjust dividends on preferred stock to a pre-tax basis (See below.) { Net income before income taxes } { ______________________________ -100% } X preferred dividends = earnings required for preferred dividends { Net income }
-39- EX-27.1 3
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF INCOME, STATEMENT OF CASH FLOWS, BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000860520 CIPSCO Inc. 1,000 9-MOS DEC-31-1994 JAN-01-1995 SEP-30-1995 PER-BOOK 1,447,609 98,539 209,070 0 58,145 1,813,363 356,812 0 307,732 664,910 0 80,000 478,850 0 0 0 0 0 0 0 589,603 1,813,363 638,269 41,826 503,769 545,595 92,674 1,915 94,589 24,508 70,081 2,896 67,185 51,786 0 133,334 1.97 1.97 INFORMATION NOT NORMALLY DISCLOSED IN FINANCIAL STATEMENTS AND NOTES. INCLUDES INCOME TAX EXPENSE. NET INCOME BEFORE PREFERRED STOCK DIVIDEND OF SUBSIDIARY
EX-27.2 4
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF INCOME, STATEMENT OF CASH FLOWS, BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018654 CIPS 1,000 9-MOS DEC-31-1994 JAN-01-1995 SEP-30-1995 PER-BOOK 1,447,609 0 206,913 0 48,946 1,703,468 121,283 0 464,700 585,983 0 80,000 478,851 0 0 0 0 0 0 0 558,634 1,703,468 632,442 41,296 502,276 542,473 89,969 2,924 91,794 25,074 66,720 2,896 63,824 52,500 0 135,586 0 0 INFORMATION NOT NORMALLY DISCLOSED IN FINANCIAL STATEMENTS AND NOTES. INCLUDES INCOME TAX EXPENSE. NET INCOME BEFORE PREFERRED STOCK DIVIDEND OF SUBSIDIARY
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