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, 1996
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 October 31, 1996
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Common stock, no par value, 25,452,373
shares outstanding and held by
CIPSCO INCORPORATED at October 31, 1996
CIPSCO INCORPORATED
AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIPSCO INCORPORATED
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Statements of Income
Balance Sheets
Statements of Cash Flows
CONDENSED NOTES TO FINANCIAL STATEMENTS of
CIPSCO Incorporated and Central Illinois
Public Service Company
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations for CIPSCO Incorporated and
Central Illinois Public Service Company
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
Exhibit 12
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, 1995.
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,
1996 and 1995 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.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
For the Periods Ended September 30, 1996 and 1995
(in thousands except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
_______________________ _______________________
1996 1995 1996 1995
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Revenues:
Electric....................................... $218,978 $228,198 $560,188 $544,886
Gas............................................ 15,921 13,234 101,280 87,523
Investment..................................... 2,382 2,431 7,464 5,860
________ ________ ________ ________
Total operating revenues.................... 237,281 243,863 668,932 638,269
________ ________ ________ ________
Operating Expenses:
Fuel for electric generation................... 58,574 53,373 165,288 144,228
Purchased power................................ 14,803 18,981 39,734 45,219
Gas costs...................................... 7,546 5,253 60,227 48,322
Other operation................................ 38,279 37,361 107,487 113,897
Maintenance.................................... 12,034 16,018 43,005 46,690
Depreciation and amortization.................. 21,680 21,005 64,810 62,280
Taxes other than income taxes.................. 14,121 14,783 43,505 43,133
________ ________ ________ ________
Total operating expenses.................... 167,037 166,774 524,056 503,769
________ ________ ________ ________
Operating Income................................. 70,244 77,089 144,876 134,500
________ ________ ________ ________
Interest and Other Charges:
Interest on long-term debt of subsidiary....... 8,279 8,285 24,839 24,583
Other interest charges......................... 2,110 214 3,037 574
Allowance for funds used during construction... (271) (240) (446) (649)
Preferred stock dividends of subsidiary........ 931 957 2,794 2,896
Miscellaneous, net............................. 1,811 (579) 2,874 (1,915)
________ ________ ________ ________
Total interest and other charges................. 12,860 8,637 33,098 25,489
________ ________ ________ ________
Income Before Income Taxes....................... 57,384 68,452 111,778 109,011
_________ ________ ________ ________
Income Taxes..................................... 21,966 26,721 43,260 41,826
________ ________ ________ ________
Net Income....................................... $ 35,418 $ 41,731 $ 68,518 $ 67,185
======== ======== ======== ========
Average Shares of Common Stock Outstanding....... 34,070 34,070 34,070 34,070
Earnings per Average Share of Common Stock....... $ 1.04 $ 1.22 $ 2.01 $ 1.97
The accompanying condensed notes to financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
September 30,1996 and December 31, 1995
(in thousands)
September 30, December 31,
1996 1995
_____________ ____________
(unaudited)
ASSETS
<S> <C> <C>
Utility Plant, at original cost:
Electric..................................................... $2,355,551 $2,296,402
Gas.......................................................... 236,594 229,118
__________ __________
2,592,145 2,525,520
Less-Accumulated depreciation................................ 1,184,008 1,132,355
__________ __________
1,408,137 1,393,165
Construction work in progress................................ 61,546 72,490
__________ __________
1,469,683 1,465,655
__________ __________
Current Assets:
Cash......................................................... 5,771 1,088
Temporary investments, at cost which approximates market..... 7,303 7,147
Accounts receivable, net..................................... 82,812 65,267
Accrued unbilled revenues.................................... 19,669 27,234
Materials and supplies, at average cost...................... 39,827 40,246
Fuel for electric generation, at average cost................ 34,223 42,634
Gas stored underground, at average cost...................... 14,219 9,774
Prepayments.................................................. 9,292 10,649
Other current assets......................................... 8,195 8,197
__________ __________
221,311 212,236
__________ __________
Investments and Other Assets:
Marketable securities........................................ 49,697 45,967
Leveraged leases and energy investments...................... 61,111 59,114
Other........................................................ 50,311 44,939
__________ __________
161,119 150,020
__________ __________
$1,852,113 $1,827,911
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity.................................. $ 667,790 $ 651,532
Preferred stock of subsidiary................................ 80,000 80,000
Long-term debt of subsidiary................................. 421,152 478,926
__________ __________
1,168,942 1,210,458
__________ __________
Current Liabilities:
Long-term debt of subsidiary due within one year............. 58,000 -
Short-term borrowings........................................ 53,991 47,921
Accounts payable............................................. 42,851 60,603
Accrued wages................................................ 10,727 9,335
Accrued taxes................................................ 12,700 11,266
Accrued interest............................................. 8,785 9,525
Other........................................................ 47,411 33,265
__________ __________
234,465 171,915
__________ __________
Deferred Credits:
Accumulated deferred income taxes............................ 332,042 325,181
Investment tax credits....................................... 49,722 52,234
Regulatory liabilities, net.................................. 66,942 68,123
__________ __________
448,706 445,538
__________ __________
$1,852,113 $1,827,911
========== ==========
The accompanying condensed notes to financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Periods Ended September 30, 1996 and 1995
(in thousands)
(unaudited)
Nine Months Ended
September 30,
_________________________
1996 1995
__________ __________
<S> <C> <C>
Operating Activities:
Net income......................................................... $ 68,518 $ 67,185
Adjustments to reconcile net income to net cash provided:
Depreciation and amortization.................................... 64,810 62,280
Allowance for equity funds used during construction (AFUDC)...... (196) (599)
Deferred income taxes, net....................................... 5,324 9,133
Investment tax credit amortization............................... (2,512) (2,521)
Cash flows impacted by changes in assets and liabilities:
Accounts receivable, net and accrued unbilled revenues........... (9,980) 2,809
Fuel for electric generation..................................... 8,411 (9,753)
Other inventories................................................ (4,026) 1,841
Prepayments...................................................... 1,357 (2,505)
Other assets..................................................... (5,370) (9,715)
Accounts payable and other liabilities........................... (3,606) 14,656
Accrued wages, taxes and interest................................ 2,086 11,473
Other.............................................................. 65 (6,340)
__________ __________
Net cash provided by operating activities........................ 124,881 137,944
__________ __________
Investing Activities:
Utility construction expenditures, excluding AFUDC................. (67,760) (66,243)
Allowance for borrowed funds used during construction.............. (250) (49)
Changes in temporary investments................................... (156) 18
Long-term marketable securities.................................... (3,285) (662)
Long-term leveraged leases and energy investments.................. (1,997) (8,274)
__________ __________
Net cash used in investing activities............................ (73,448) (75,210)
__________ __________
Financing Activities:
Common stock dividends paid........................................ (52,808) (51,786)
Proceeds from issuance of long-term debt of subsidiary............. - 20,000
Repayment of long-term debt of subsidiary.......................... - (16,000)
Proceeds from issuance of (repayment of) short-term borrowings..... 6,070 (14,985)
Issuance expense, discount and premium............................. (12) (230)
__________ __________
Net cash used in financing activities............................ (46,750) (63,001)
__________ __________
Net increase (decrease) in cash.................................... 4,683 (267)
Cash at beginning of period........................................ 1,088 1,963
__________ __________
Cash at end of period.............................................. $ 5,771 $ 1,696
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest, net of amounts capitalized............................. $ 26,935 $ 24,245
Income taxes..................................................... $ 35,685 $ 23,432
The accompanying condensed notes to financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Statements of Income
For the Periods Ended September 30, 1996 and 1995
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ __________________
1996 1995 1996 1995
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Revenues:
Electric....................................... $218,982 $228,213 $560,205 $544,914
Gas............................................ 15,922 13,236 101,283 87,528
________ ________ ________ ________
Total operating revenues.................... 234,904 241,449 661,488 632,442
________ ________ ________ ________
Operating Expenses:
Fuel for electric generation................... 58,574 53,373 165,288 144,228
Purchased power................................ 14,803 18,981 39,734 45,219
Gas costs...................................... 7,546 5,253 60,227 48,322
Other operation................................ 37,998 37,050 106,540 112,897
Maintenance.................................... 12,033 16,017 43,002 46,689
Depreciation and amortization.................. 21,593 20,780 64,468 61,814
Taxes other than income taxes.................. 14,114 14,782 43,485 43,107
Income taxes:
Current...................................... 19,082 21,701 44,568 38,305
Deferred, net................................ 4,716 5,125 968 4,413
Deferred investment tax credits, net......... (837) (840) (2,511) (2,521)
________ ________ ________ ________
Total operating expenses.................... 189,622 192,222 565,769 542,473
________ ________ ________ ________
Operating Income................................. 45,282 49,227 95,719 89,969
________ ________ ________ ________
Other Income and Deductions:
Allowance for equity funds used during
construction................................... 119 222 196 599
Nonoperating income taxes...................... 1,581 (279) 1,243 (1,099)
Miscellaneous, net............................. (1,781) 625 (2,781) 2,325
________ ________ ________ ________
Total other income and deductions........... (81) 568 (1,342) 1,825
________ ________ ________ ________
Income Before Interest Charges................... 45,201 49,795 94,377 91,794
________ ________ ________ ________
Interest Charges:
Interest on long-term debt..................... 8,279 8,285 24,839 24,583
Other interest charges......................... 2,114 203 3,041 540
Allowance for borrowed funds used during
construction................................... (152) (18) (250) (49)
________ ________ ________ ________
Total interest charges..................... 10,241 8,470 27,630 25,074
________ ________ ________ ________
Net Income....................................... 34,960 41,325 66,747 66,720
Preferred Stock Dividends........................ 931 957 2,795 2,896
________ ________ ________ ________
Earnings for Common Stock........................ $ 34,029 $ 40,368 $ 63,952 $ 63,824
======== ======== ======== ========
The accompanying condensed notes to financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Balance Sheets
September 30, 1996 and December 31, 1995
(in thousands)
September 30, December 31,
1996 1995
_____________ ____________
(unaudited)
ASSETS
<S> <C> <C>
Utility Plant, at original cost:
Electric..................................................... $2,355,551 $2,296,402
Gas.......................................................... 236,594 229,118
__________ __________
2,592,145 2,525,520
Less-Accumulated depreciation................................ 1,184,008 1,132,355
__________ __________
1,408,137 1,393,165
Construction work in progress................................ 61,546 72,490
__________ __________
1,469,683 1,465,655
__________ __________
Current Assets:
Cash......................................................... 5,716 1,006
Accounts receivable, net..................................... 82,887 65,574
Accrued unbilled revenues.................................... 19,669 27,234
Materials and supplies, at average cost...................... 39,827 40,246
Fuel for electric generation, at average cost................ 34,223 42,634
Gas stored underground, at average cost...................... 14,219 9,774
Prepayments.................................................. 9,198 10,268
Other current assets......................................... 8,197 8,226
__________ __________
213,936 204,962
__________ __________
Other Assets................................................... 49,303 44,188
__________ __________
$1,732,922 $1,714,805
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholder's equity.................................. $ 584,224 $ 570,419
Preferred stock.............................................. 80,000 80,000
Long-term debt............................................... 421,152 478,926
__________ __________
1,085,376 1,129,345
__________ __________
Current Liabilities:
Long-term debt due within one year........................... 58,000 -
Short-term borrowings........................................ 53,991 47,921
Accounts payable............................................. 42,304 60,791
Accrued wages................................................ 10,727 9,320
Accrued taxes................................................ 14,030 11,155
Accrued interest............................................. 8,785 9,525
Other........................................................ 47,413 33,264
__________ __________
235,250 171,976
__________ __________
Deferred Credits:
Accumulated deferred income taxes............................ 295,632 293,127
Investment tax credits....................................... 49,722 52,234
Regulatory liabilities, net.................................. 66,942 68,123
__________ __________
412,296 413,484
__________ __________
$1,732,922 $1,714,805
========== ==========
The accompanying condensed notes to financial statements are an integral
part of these statements.
</TABLE>
<TABLE>
Central Illinois Public Service Company
Statements of Cash Flows
For the Periods Ended September 30, 1996 and 1995
(in thousands)
(unaudited)
Nine Months Ended
September 30,
_______________________
1996 1995
__________ __________
<S> <C> <C>
Operating Activities:
Net income...................................................... $ 66,747 $ 66,720
Adjustments to reconcile net income to net cash provided:
Depreciation and amortization................................. 64,468 61,814
Allowance for equity funds used during construction (AFUDC)... (196) (599)
Deferred income taxes, net.................................... 968 4,413
Investment tax credit amortization............................ (2,512) (2,521)
Cash flows impacted by changes in assets and liabilities:
Accounts receivable, net and accrued unbilled revenues........ (9,748) 2,387
Fuel for electric generation.................................. 8,411 (9,753)
Other inventories............................................. (4,026) 1,841
Prepayments................................................... 1,070 (2,494)
Other assets.................................................. (5,086) (7,697)
Accounts payable and other liabilities........................ (4,338) 14,229
Accrued wages, taxes and interest............................. 3,542 11,490
Other........................................................... 407 (5,874)
_________ _________
Net cash provided by operating activities..................... 119,707 133,956
_________ _________
Investing Activities:
Construction expenditures, excluding AFUDC...................... (67,760) (66,243)
Allowance for borrowed funds used during construction........... (250) (49)
Changes in temporary investments................................ - (701)
_________ _________
Net cash used in investing activities......................... (68,010) (66,993)
--------- ---------
Financing Activities:
Proceeds from issuance of long-term debt........................ - 20,000
Repayment of long-term debt..................................... - (16,000)
Proceeds from issuance of (repayment of) short-term borrowings.. 6,070 (14,985)
Dividends paid:
Preferred stock............................................... (2,795) (2,896)
Common stock.................................................. (50,250) (52,500)
Issuance expense, discount and premium.......................... (12) (230)
_________ _________
Net cash used in financing activities......................... (46,987) (66,611)
_________ _________
Net increase (decrease) in cash................................. 4,710 352
Cash at beginning of period..................................... 1,006 1,320
_________ _________
Cash at end of period........................................... $ 5,716 $ 1,672
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest, net of amounts capitalized.......................... $ 26,935 $ 24,245
Income taxes.................................................. $ 38,052 $ 27,622
The accompanying condensed notes to financial statements are an integral
part of these statements.
</TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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.
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, 1996 presentation.
Note 2. COMMITMENTS AND CONTINGENCIES
______________________________________
ENVIRONMENTAL REMEDIATION COSTS - CIPS has identified 13 former
manufactured gas plant sites (environmental remediation sites) which
contain potentially harmful materials. In 1990, one site was added to the
United States Environmental Protection Agency (USEPA) Superfund list. CIPS
is implementing an approved long-term remedial plan for the site. Costs
and associated legal expenses related to studies and remediation work have
been incurred at other sites.
Over the past several years, CIPS has received cash settlements from
certain of its insurance carriers arising from litigation instituted by
CIPS (which is now concluded) seeking indemnification for, among other
things, costs incurred by CIPS in connection with the sites. Effective
with April 1993 billings to customers, CIPS began recovery of clean-up
costs associated with the sites through environmental adjustment clause
riders approved by the Illinois Commerce Commission (the "Illinois
commission"). As required by the Illinois commission, the riders provided
for (1) recovery of cleanup costs from ratepayers (with a credit or offset
to the extent such recovered cleanup costs are reimbursed from insurance
carriers or other parties) and (2) a prudence review (including
determination of what constitutes recoverable environmental cleanup costs
and the amount of such expenditures). The Illinois Supreme Court has ruled
that cleanup costs are recoverable in rates and that use of a rider
mechanism to recover such costs is appropriate. Through December 31, 1993,
CIPS collected $2.9 million under the riders. No amounts have been
collected under the riders since January 1994.
The estimated incurred costs relating to studies and remediation at the 13
sites and associated legal expenses are being accrued and deferred pursuant
to the Illinois commission's orders rather than expensed currently, pending
recovery through rates or from other parties. Through September 30, 1996,
$47.9 million had been deferred representing costs incurred and estimates
of costs of completing studies at various sites and estimates of future
remediation costs to be incurred at the Superfund and other sites. The
total of the costs deferred, net of recoveries from insurers and through
the rate riders described above, was $10.4 million at September 30, 1996.
The Illinois commission has initiated reconciliation proceedings to review
CIPS' environmental remediation activities for 1993, 1994 and 1995, and to
determine whether the revenues collected under the riders in 1993 were
consistent with the amount of remediation costs prudently incurred.
Amounts found to have been incorrectly included under the riders would be
subject to refund.
Management believes that any costs incurred in connection with the sites
that are not recovered from others will be recovered through the
environmental rate riders. Accordingly, management believes that costs
incurred in connection with these sites will not have a material adverse
effect on financial position, results of operations, or liquidity of the
Company or CIPS.
FERC ORDERS 888 and 889 - On April 24, 1996, the Federal Energy Regulatory
Commission ("FERC") issued orders 888 and 889 related to its "mega-NOPR"
rulemaking. Citing a goal of enhancing competition in the wholesale market
for generation sales, Order 888 requires each transmission-owning public
utility, such as CIPS, to provide transmission access and service to others
in a manner similar and comparable to that which the utility has by virtue
of transmission ownership. In its Order 888, the FERC adopted a single pro
forma tariff for use by the utility and its transmission customers in
obtaining transmission service. Order 888 also provides for the recovery of
stranded costs at the wholesale level, based on a revenues lost
calculation, which result from the transition to an open access business
environment. On July 9, 1996, CIPS filed open access tariffs under Rule
888 for transmission service. Also, in conjunction with the application at
the FERC regarding the merger of CIPSCO and Union Electric Company ("UE")
(see Part II Item 5. Other Information), CIPS and UE jointly filed single-
system open access tariffs with FERC. Because these tariffs were filed
under provisions of the rulemaking prior to the issuance of Order 888,
these tariffs will be revised by November 15, 1996 to comply with the final
rule in Order 888, but will only become effective upon completion of the
merger.
Order 889 sets forth the standards of conduct and information requirements
that must be put in place and observed by transmission-owning public
utilities doing business under the open access rule. These include the
establishment by each utility of an "open access same-time information
system",or OASIS. This system will provide all information, on a real time
basis, for the utility and its customers to apply for and obtain
transmission service. Using OASIS, the utility must obtain transmission
service for its own use in the same manner its customer will obtain
service, thus assuring mitigation of market power through control of
transmission facilities. CIPS has applied for a waiver from the
requirements of Order 889 pending consummation of the merger.
CLEAN AIR ACT - CIPS' current compliance strategy to meet the requirements
of the Clean Air Act Amendments of 1990 (Amendments) is to rely primarily
on switching to a lower sulfur coal at its generating units rather than
increased scrubbing and use of higher sulfur coal at its Newton Unit 1.
The estimated capital costs of compliance are included in the CIPS five-
year construction forecast. On June 20, 1996 CIPS and Amax Coal Sales
Company, a Cyprus Amax Minerals Company ("Cyprus Amax"), a coal supplier
for CIPS' Newton Power Station Unit 1, executed a letter of intent which
contemplates that the parties will enter into a modification of their
existing contract. Under the contract as it is proposed to be modified (the
"Contract Modification") CIPS (1) would make a $70 million payment, plus
interest from November 1, 1996, to Cyprus Amax not later than February 17,
1997, (2) would be able to purchase at market prices low-sulfur, out-of-state
coal (which may be procured from Cyprus Amax, its affiliates or other
providers) in substitution for the high-sulfur Illinois coal CIPS is currently
obligated to purchase from Cyprus Amax, and (3) would receive options for
future purchases of low-sulfur, out-of-state coal from Cyprus Amax or its
affiliates in 1997, 1998 and 1999 at set negotiated prices. Effectiveness of
the Contract Modification is subject to execution of definitive agreements by
the parties. In addition, CIPS and Cyprus Amax have agreed that for the
remainder of 1996, CIPS will cease taking delivery of high-sulfur coal under
the existing contract and will make certain alternate low-sulfur, out-of-state
coal purchases from Cyprus Amax or its affiliates. By switching to low-sulfur
coal over the term of the Contract Modification and thereafter CIPS will
avoid the need for substantial renovation to the Newton Unit 1 scrubber.
Under the letter of intent, CIPS would not be required to proceed with the
Contract Modification if CIPS determines that the regulatory treatment of the
transaction is unsatisfactory. On July 17, 1996, CIPS filed an Application
(Docket 96- 0345) seeking a review by the Illinois commission of certain
matters related to the Contract Modification, including authorization to
recover the $70 million payment (and associated carrying charges) in rates
over a six-year period, approval of a switch to out-of-state coal from
Illinois coal as required by Illinois statutes, recognition of a regulatory
asset in the amount of $44 million relating to the scrubber and the estimated
cost of removing the scrubber from service, and approval of CIPS' proposed
accounting treatment for the transaction. CIPS cannot predict what action
the Illinois commission will take in this matter. An order is expected in
December 1996.
LABOR ISSUES - 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 the lockout. 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
$15 million. An administrative law judge of the NLRB has ruled that the
lockout was unlawful. On July 23, 1996, the Company appealed to the NLRB.
Management believes the lockout was both lawful and reasonable and that the
final resolution of this matter will not have a material adverse effect on
financial position, results of operations or liquidity of the Company or
CIPS.
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 with respect to such an asset 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, 1996, 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.
The components of regulatory assets and liabilities at September 30, 1996
are:
Description Amount
___________ ______
(in thousands)
Regulatory Assets:
Deferred environmental remediation costs $ 10,411
Take-or-Pay costs 731
Unamortized costs related to reacquired debt 12,505
________
Total Regulatory Assets - in
Other Assets on Balance Sheet $ 23,647
========
Regulatory Liabilities:
Clean Air Act allowances, net $ 1,365
SFAS 109 - Income Taxes, net 65,577
________
Total Regulatory Liabilities, Net $ 66,942
========
Regulatory Liabilities Net of Regulatory Assets $ 43,295
========
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," effective January 1, 1996, established accounting standards
for the impairment of long-lived assets. SFAS No. 121 also required that
regulatory assets which are no longer probable of recovery through future
revenue to be charged to earnings. The adoption of SFAS No. 121 has had no
impact and is not expected to have an impact on the financial position,
results of operations or liquidity of the Company or CIPS.
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 (the "Merger Agreement"). The Merger Agreement was
approved by shareholders of both parties in December 1995. Consummation of
the merger contemplated by the Merger Agreement is conditioned on, among
other things, receipt of regulatory and governmental approvals, including
approval of the Illinois commission, the Missouri Public Service
Commission (MPSC), FERC, the Nuclear Regulatory Commission and the Securities
and Exchange Commission under the Public Utility Holding Company Act of 1935.
The Company cannot predict when all necessary approvals will be obtained but
expects the merger to be consummated by the end of 1997. On July 12, 1996, a
joint agreement was filed with the MPSC that recommends approval of the merger.
Union Electric Company, the MPSC staff, the office of Public Counsel, several
customer groups and others signed the agreement. On September 25, 1996,
the MPSC ordered that additional information be filed in November 1996 in
connection with the merger proceeding. The MPSC is expected to issue a
decision on the merger in early 1997. On November 7, 1996, a Hearing
Examiner for the Illinois commission issued a proposed order recommending
that the merger be approved subject to certain conditions, including (i) that
each of CIPS and Union Electric be required to file a rate case or alternative
regulation plan within one year following the closing of the merger, (ii) that
the ratemaking treatment of merger costs and savings be determined in the rate
case or alternative regulation proceeding and (iii) that the proposed transfer
to CIPS of Union Electric's existing Illinois electric and gas distribution
business and facilities be denied, but that the joint dispatch agreement be
approved. CIPSCO cannot predict what action the Illinois commission will take
in the matter; however, an order from the Illinois commission is expected by
the end of 1996. On October 16, 1996, the FERC set the merger for hearing,
ordering the administrative law judge to issue an initial order no later than
April 30, 1997. The FERC is expected to issue a decision on the merger by the
end of 1997. Certain pro forma financial information is included in Part II,
Item 5. Other Information 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
1996-2000 period will be about $510 million. Projected external financing
requirements for the 1996-2000 period are expected to be $258 million which
includes $133 million for scheduled debt retirements and up to $125 million
(less than $100 million in 1996) to fund the construction program and
certain other capital requirements, including the $70 million payment
related to the proposed coal contract modification with Cyprus Amax
discussed in Note 2 to the Notes to Condensed Financial Statements of this
report under "Clean Air Act." Remaining capital requirements for the 1996-
2000 period are expected to be met through internally generated funds. The
estimated construction expenditures and other capital requirements as well
as anticipated financing plans take into account the current strategy for
compliance with the Clean Air Act, as amended, and the proposed coal
contract modification described in Note 2 of Condensed Notes to Financial
Statements.
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 $29 million of first mortgage bonds, medium-term notes
and/or preferred stock and has received approval from the Illinois
commission to issue, through December 31, 1998, up to $200 million of long-
term indebtedness outstanding at any time.
For the first nine months of 1996, CIPS' total capital requirements were
provided from internal sources.
Common stock dividends paid for the twelve months ended September 30, 1996,
resulted in a payout ratio of 96% of the Company's earnings to common
shareholders. Common stock dividends paid to the Company's common
shareholders equalled 52% of net cash provided by operating activities for
the same period.
In connection with consummation of the merger contemplated by the Merger
Agreement, it is expected that the Company will incur $10.3 million of
transaction costs. Through September 30, 1996, these transaction costs
totalled $6.7 million. The Company expects that these costs (which are not
tax deductible) will approximate $2 million or 5 cents per share in 1996
and $3.8 million or 11 cents per share in 1997.
FINANCIAL CONDITION
Financial condition and changes in total Shareholder Equity of the Company
and CIPS for the nine-month periods ended September 30, 1996 and 1995 are
as follows:
Nine Months Ended
September 30,
_________________________
(in thousands)
The Company: 1996 1995
_________ _________
Common Shareholders' Equity
Net income $ 68,518 $ 67,185
Common stock dividends paid (52,808) (51,786)
Other 548 (85)
________ ________
Change in Shareholders' Equity $ 16,258 $ 15,314
======== ========
Nine Months Ended
September 30,
_________________________
(in thousands)
CIPS: 1996 1995
_________ _________
Common Shareholder's Equity
Earnings for common stock $ 63,952 $ 63,824
Common stock dividends paid (50,250) (52,500)
Other 103 (86)
________ ________
Change in Shareholder's Equity $ 13,805 $ 11,238
======== ========
OVERVIEW
The Company's earnings per share were $1.04 for the quarter ended September
30, 1996, compared to $1.22 per share earned during the same period in
1995. The decrease primarily reflects lower kilowatthour sales to
residential and commercial customers due to milder weather in the 1996
period. The Company's earnings per share were $2.01 for the nine months
ended September 30, 1996, compared to $1.97 per share earned during the
same period in 1995. The increase reflects modestly higher sales to CIPS
customers, market gains in non-utility investments and lower other
operation and maintenance expenses in 1996. The 1995 expenses for the nine
months include $.10 per share for the voluntary workforce reduction program
recorded in February 1995.
The following table summarizes the components of consolidated net income
and CIPS earnings for common stock for the three months and nine month
periods ended September 30, 1996 and 1995 (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,
__________________ ___________________
1996 1995 1996 1995
________ ________ ________ ________
CIPS
Electric operating
margin $138,162 $147,944 $336,086 $336,393
Gas operating margin 7,857 7,471 35,508 34,089
Other deductions and
interest expenses (111,059) (114,090) (304,847) (303,762)
CIPS preferred stock
dividends (931) (957) (2,795) (2,896)
________ ________ ________ ________
Total earnings
for common stock 34,029 40,368 63,952 63,824
________ ________ ________ ________
NON-UTILITY
Investment revenues 2,350 2,381 7,366 5,440
Other deductions
and expenses (961) (1,018) (2,800) (2,079)
________ ________ ________ ________
Total non-utility
net income 1,389 1,363 4,566 3,361
________ ________ ________ ________
Consolidated net income $ 35,418 $ 41,731 $ 68,518 $ 67,185
======== ======== ======== ========
RESULTS OF OPERATIONS
The results of operations of the Company and CIPS for the three months and
nine months ended September 30, 1996, compared to the same periods in 1995
are presented below.
The Company
Net Income
(in thousands) Earnings Per Share
________________________ ________________________
Three Months Nine Months Three Months Nine Months
____________ ___________ ____________ ___________
1996 $35,418 $68,518 $1.04 $2.01
1995 41,731 67,185 1.22 1.97
_______ _______ _____ _____
Increase (Decrease) $(6,313) $ 1,333 $(.18) $ .04
Percent
Increase (Decrease) (15)% 2% (15)% 2%
CIPS
Earnings for Common Stock
(in thousands)
___________________________
Three Months Nine Months
____________ ___________
1996 $34,029 $63,952
1995 40,368 63,824
_______ _______
Increase (Decrease) $(6,339) $ 128
======= =======
Percent
Increase (Decrease) (16)% - %
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.
Electric revenues declined 4% in the third quarter of 1996 compared to the
third quarter of 1995 reflecting a decline in retail KWH sales due
principally to milder weather conditions in 1996. KWH sales to residential
and commercial customers decreased 13% and 4%, respectively, due to fewer
cooling degree days in the third quarter of 1996. Industrial electric
sales were slightly higher in the third quarter of 1996 compared to the
same quarter in 1995. Power supply agreement revenues for the third quarter
of 1996 were 1% below those of the third quarter of 1995 due to a decline
in transportation revenues related to these agreements. Economy and
emergency interchange sales increased 7% in the third quarter of 1996 over
the same period in 1995 due to more favorable market conditions in the
interchange marketplace. Sales to cooperatives and municipals declined in the
third quarter of 1996 compared to the same quarter in 1995 due primarily to
milder weather in 1996. One cooperative, Soyland Power Cooperative, with
whom CIPS has a power supply agreement for up to 102 megawatts through 1999,
is experiencing financial difficulties. These sales are recorded under Power
Supply Agreements. As of September 30, 1996, Soyland was current in the
payment of all of its obligations to CIPS.
Electric revenues increased 3% in the first nine months of 1996 compared to
the same period of 1995 reflecting higher KWH sales due principally to
weather conditions in 1996. KWH sales to retail customers increased 1%,
while wholesale sales were up 2%. Power supply agreement revenues for the
nine months ended September 30, 1996, were 3% above those of the same
period in 1995 due to increased transportation revenues related to these
agreements. Economy and emergency interchange sales increased 6% in the
first nine months of 1996 over the same period in 1995 due to favorable
market conditions in the interchange marketplace. Sales to cooperatives
and municipals increased in the nine months ended September 30, 1996
compared to the same period in 1995 due primarily to favorable weather
conditions in 1996.
<TABLE>
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 %
________ _____ _________ _____ _______ _____ _______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ (9,511) (11)% (113,858) (13)% $ (2,257) (1)% 2,543 - %
Commercial (1,112) (2) (26,395) (4) 3,458 3 40,885 2
Industrial (824) (2) 2,375 - 1,045 1 24,269 1
Public Authorities
and Other (280) (5) 776 2 43 - (2,956) (2)
________ _______ ________ _______
Total Retail $(11,727) (7)% (137,102) (6)% $ 2,289 1 % 64,741 1 %
Power Supply
Agreements $ (109) (1)% (78,877) (16)% $ 1,354 3 % (65,671) (6)%
Interchange Sales
(economy/emergency) 2,881 12 80,939 7 10,913 21 157,581 6
Cooperatives and
Municipals (265) (4) (8,866) (6) 746 4 7,714 2
________ _______ ________ _______
Total Sales for
Resale $ 2,507 5% (6,804) - % $ 13,013 11 % 99,624 2 %
________ _______ ________ _______
Total $ (9,220) (4)% (143,906) (4) % $ 15,302 3 % 164,365 2 %
======== ======== ======== =======
</TABLE>
Gas revenues increased 20% in the third quarter and 16% in the first nine
months of 1996 compared to the same periods in 1995. This was primarily
due to higher purchased gas costs which flow through to revenues through
the Purchased Gas Adjustment Clause (PGA). In addition, colder weather in
1996 caused therm sales to increase in the weather sensitive classes where
residential gas revenues improved 24% for the third quarter and 15% for the
first nine months of 1996 compared to 1995 due to colder weather in 1996
and higher gas costs. The commercial and industrial gas revenue improved
28% and 16%, respectively, in the third quarter and 19% and 32% in the
first nine months of 1996 over the same periods in 1995 due to both the
increase in gas costs and to more customers buying from CIPS in 1996 rather
than transporting their own gas. Gas transportation revenues declined 6%
in the third quarter and 2% in the first nine months of 1996 reflecting the
increase in customers buying gas from the CIPS system.
<TABLE>
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
_______________________________________ _____________________________________
Revenue Rev % Therms Therms Revenue Rev % Therms Therms
% %
________ _____ ______ ______ ________ _____ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 1,816 24 % 761 8 % $ 8,385 15 % 15,245 16 %
Commercial 701 28 239 6 3,536 19 6,191 19
Industrial 266 16 (1,789) (30) 1,908 32 2,992 16
Transportation (100) (6) (10,018) (28) (101) (2) (11,237) (11)
Miscellaneous 4 11 - - 29 10 - -
________ ______ ________ ______
Total $ 2,687 20 % (10,807) (20)% $ 13,757 16 % 13,191 5 %
======== ====== ======== ======
</TABLE>
OPERATIONS
__________
Fuel for electric generation increased 10% in the third quarter and 15% in
the first nine months of 1996 compared to the same periods in 1995. The
increases correspond to increases in KWH generation of 6% and 12%
respectively.
Purchased power costs declined 22% for the third quarter and 12% for the
first nine months ended September 30, 1996 compared with the same periods
in 1995 reflecting reduced purchases for native load and decreases in
market purchases made for resale to interchange economy and emergency
customers.
Gas costs increased 44% for the third quarter and 25% for the first nine
months of 1996 when compared to the same periods in 1995 due to increased
gas requirements for the CIPS system and because of a higher average cost
per therm for purchased gas.
Other operation expenses increased 2% in the third quarter of 1996 compared
to the same period in 1995 due to increases in customer accounting and
collection expenses between periods. Other operation expenses declined 6%
in the first nine months of 1996 compared to 1995 primarily due to a $5.8
million charge in February 1995 relating to the cost of a workforce
reduction program.
Maintenance expenses declined 25% for the third quarter of 1996 and 8% for
the first nine months of 1996 compared to the same periods of 1995 due
primarily to the scheduled timing of power plant maintenance projects
between periods.
Depreciation and amortization expense increased 3% in the third quarter and
4% for the first nine months of 1996 when compared to 1995 due to normal
plant additions.
Taxes other than income taxes declined 4% in the third quarter and
increased 1% in the first nine months of 1996 when compared to 1995 due to
changes in revenue taxes which fluctuate according to sales. These revenue
taxes are collected from customers in gas and electric revenues.
Other interest charges in the third quarter and the first nine months of
1996 includes an interest payment of $1.6 million in settlement of prior
years income tax liability. Also contributing to the increase in other
interest for 1996 compared to the same periods in 1995 is interest on short-
term borrowings.
Miscellaneous, net is less favorable in both the third quarter and first
nine months of 1996 compared to the same periods in 1995 due to merger-
related expenses.
Significant changes in the balance sheet accounts at September 30, 1996
compared to balances at December 31, 1995 are:
Gas stored underground, at average cost, increased 45% during the first
nine months due to normal summer replenishment of stored gas prior to the
winter heating season.
Accounts payable declined 29% during the nine months principally due to
lower payable balances in purchased gas, fuel and purchased power.
Other current liabilities increased 43% for the first nine months of 1996
due primarily to postretirement medical costs accrued monthly but not
funded until year-end.
PART II. OTHER INFORMATION
Item 5. Other Information
(1) Reference is made to the third full paragraph under Item 1.
Business - Competition -- Electric Business on page 11 in the
1995 Form 10-K and to paragraph (2) under Item 5. Other
Information in Part II on page 21 of the Second Quarter 1996 Form
10-Q for information regarding proposed "open access" programs
filed with the Illinois commission by two neighboring electric
utilities and the approval sought by CIPS. On March 18, 1996,
CIPS filed a petition with the Illinois commission seeking
authorization to participate in the approved experimental "open
access" programs as a potential supplier. CIPS received approval
from the Illinois commission on August 7, 1996.
(2) Reference is made to the last paragraph under Item 1. Business -
Employees on page 23 in the 1995 Form 10-K and to paragraph (3)
under Item 5. Other Information in Part II on page 21 of the
Second Quarter 1996 Form 10-Q for information regarding the
workforce of CIPS, contracts with those employees represented by
labor unions and labor negotiations. Management completed
negotiations with IBEW-702, the labor union which represents
approximately 900 employees, resulting in a new three-year
contract ratified by union members to be effective through June
30, 1999.
(3) AMEREN CORPORATION -- Unaudited Pro Forma Combined Condensed
Financial Information of CIPSCO and Union Electric Company.
On August 11, 1995, CIPSCO and Union Electric Company ("UE")
entered into an Agreement and Plan of Merger, which was
subsequently approved by the shareholders of both parties. The
merger ("Merger") is further conditioned on, among other things,
receipt of regulatory and governmental approvals, and will result
in a newly formed holding company, Ameren Corporation. 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
Merger. The unaudited pro forma combined condensed balance sheet at
September 30, 1996 gives effect to the Merger as if it had
occurred at September 30, 1996. The unaudited pro forma combined
condensed statements of income for the nine-month periods ended
September 30, 1996 and 1995, and the twelve-month period ended
September 30, 1996 give effect to the Merger as if it had
occurred at the beginning of the periods presented. These
statements are prepared on the basis of accounting for the Merger
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 Merger been consummated on the date,
or at the beginning of the periods, for which the Merger is 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, 1996 and 1995 are not necessarily
indicative of trends for any twelve-month period.
Also see Part I, Item 2., Management's Discussion and Analysis of
Financial Condition and Results of Operations.
<TABLE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET
AT SEPTEMBER 30, 1996
(Thousands of Dollars)
As Reported (Note 1) Pro Forma
___________________________ Adjustments Pro Forma
UE CIPSCO (Notes 2, 9) Combined
___________ __________ ____________ ___________
<S> <C> <C> <C> <C>
ASSETS
Property and plant
Electric $ 8,580,945 $ 2,355,551 $ 374,452 $11,310,948
Gas 181,899 236,594 - 418,493
Other 35,959 - - 35,959
___________ ___________ ___________ ___________
8,798,803 2,592,145 374,452 11,765,400
Less accumulated depreciation and amortization 3,633,370 1,184,008 265,107 5,082,485
___________ ___________ ___________ ___________
5,165,433 1,408,137 109,345 6,682,915
Construction work in progress:
Nuclear fuel in process 115,960 - - 115,960
Other 64,990 61,546 3,922 130,458
___________ ___________ ___________ ___________
Total property and plant, net 5,346,383 1,469,683 113,267 6,929,333
Regulatory assets:
Deferred income taxes (Note 6) 696,852 42,479 - 739,331
Other 181,855 12,505 - 194,360
___________ ___________ ___________ ___________
Total regulatory assets 878,707 54,984 - 933,691
Other assets:
Unamortized debt expense 10,721 2,925 608 14,254
Nuclear decommissioning trust fund 85,629 - - 85,629
Investments in nonregulated activities - 110,808 - 110,808
Other 28,272 34,881 (3,284) 59,869
___________ ___________ ___________ ___________
Total other assets 124,622 148,614 (2,676) 270,560
Current assets:
Cash and temporary investments 19,427 13,074 9,886 42,387
Accounts receivable, net 248,862 54,274 16,816 319,952
Unbilled revenue 57,595 19,669 - 77,264
Materials and supplies, at average cost -
Fossil fuel 67,205 48,442 9,087 124,734
Other 99,305 39,827 4,540 143,672
Other 39,312 46,025 3,243 88,580
___________ ___________ ___________ ___________
Total current assets 531,706 221,311 43,572 796,589
___________ ___________ ___________ ___________
Total Assets $ 6,881,418 $ 1,894,592 $ 154,163 $ 8,930,173
=========== =========== =========== ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders' equity (Note 2) 1,896,212 310,978 866,059 3,073,249
___________ ___________ ___________ ___________
Total common stockholders' equity 2,406,831 667,790 - 3,074,621
Preferred stock of subsidiary 219,121 80,000 - 299,121
Long-term debt 1,727,945 421,152 130,000 2,279,097
___________ ___________ ___________ ___________
Total capitalization 4,353,897 1,168,942 130,000 5,652,839
Minority interest in consolidated subsidiary - - 3,534 3,534
Accumulated deferred income taxes 1,322,536 332,042 (6,810) 1,647,768
Accumulated deferred investment tax credits 161,886 49,722 - 211,608
Regulatory liability 206,991 109,421 - 316,412
Accumulated provision for nuclear decommissioning 87,302 - - 87,302
Other deferred credits and liabilities 152,517 33,210 4,753 190,480
Current liabilities:
Current maturity of long-term debt 76,490 58,000 - 134,490
Short-term debt - 53,991 - 53,991
Accounts payable 73,082 42,851 16,951 132,884
Wages payable 36,908 10,727 - 47,635
Taxes accrued 238,882 12,700 8 251,590
Interest accrued 53,154 8,785 2,864 64,803
Other 117,773 14,201 2,863 134,837
___________ ___________ ___________ ___________
Total current liabilities 596,289 201,255 22,686 820,230
___________ ___________ ___________ ___________
Total Capital and Liabilities $ 6,881,418 $ 1,894,592 $ 154,163 $ 8,930,173
=========== =========== =========== ===========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
</TABLE>
<TABLE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
(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 1,4,7) (Notes 2,9) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 1,716,061 $ 560,188 $ 130,034 $ 2,406,283
Gas 68,277 101,280 - 169,557
Other 341 7,464 971 8,776
____________ ___________ __________ ____________
Total operating revenues 1,784,679 668,932 131,005 2,584,616
OPERATING EXPENSES:
Operations
Fuel and purchased power 387,038 205,023 68,671 660,732
Gas Costs 42,455 60,227 - 102,682
Other 279,714 107,486 13,322 400,522
____________ ___________ __________ ____________
709,207 372,736 81,993 1,163,936
Maintenance 159,988 43,005 13,157 216,150
Depreciation and amortization 180,101 64,810 11,341 256,252
Income taxes (Note 7) 189,546 43,260 6,128 238,934
Other taxes 166,463 43,505 1,503 211,471
____________ ___________ __________ ____________
Total operating expenses 1,405,305 567,316 114,122 2,086,743
OPERATING INCOME 379,374 101,616 16,883 497,873
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 4,960 196 - 5,156
Minority interest in consolidated
subsidiary - - (3,760) (3,760)
Miscellaneous, net (361) (2,874) (5,528) (8,763)
____________ ___________ __________ ____________
Total other income and deductions,
net 4,599 (2,678) (9,288) (7,367)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 383,973 98,938 7,595 490,506
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 100,589 27,876 7,595 136,060
Allowance for borrowed funds used during
construction (5,669) (250) - (5,919)
Preferred dividends of subsidiaries
(Note 8) 9,936 2,794 - 12,730
____________ ___________ __________ ____________
Net interest charges and preferred
dividends 104,856 30,420 7,595 142,871
NET INCOME $ 279,117 $ 68,518 $ - $ 347,635
============ =========== ========== ============
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.73 $2.01 $2.53
===== ===== =====
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.
</TABLE>
<TABLE>
AMEREN CORPORATION
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
(Note 1) (Notes 1,3,7) (Notes 2,9) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 1,718,620 $ 544,886 $ 115,808 $ 2,379,314
Gas 60,480 87,523 - 148,003
Other 318 5,860 244 6,422
____________ ___________ __________ ____________
Total operating revenues 1,779,418 638,269 116,052 2,533,739
OPERATING EXPENSES:
Operations
Fuel and purchased power 385,740 189,447 51,527 626,714
Gas costs 35,051 48,322 - 83,373
Other 277,491 113,897 14,452 405,840
____________ ___________ __________ ____________
698,282 351,666 65,979 1,115,927
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 1,391,429 545,595 99,587 2,036,611
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.
</TABLE>
<TABLE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
(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 1,3,4,7) (Notes 2,9) Combined
_____________ _______________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 2,151,551 $ 718,785 $ 170,168 $ 3,040,504
Gas 95,610 143,363 - 238,973
Other 464 10,777 1,081 12,322
____________ ___________ ____________ ____________
Total operating revenues 2,247,625 872,925 171,249 3,291,799
OPERATING EXPENSES:
Operations
Fuel and purchased power 506,113 263,801 88,054 857,968
Gas costs 58,655 85,959 - 144,614
Other 370,093 148,958 18,018 537,069
____________ ___________ ____________ ____________
934,861 498,718 106,072 1,539,651
Maintenance 218,255 64,311 17,060 299,626
Depreciation and amortization 238,969 85,792 15,222 339,983
Income taxes (Note 7) 210,595 47,206 7,778 265,579
Other taxes 211,664 56,985 1,918 270,567
____________ ___________ ____________ ____________
Total operating expenses 1,814,344 753,012 148,050 2,715,406
OPERATING INCOME 433,281 119,913 23,199 576,393
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 7,028 486 - 7,514
Minority interest in consolidated
subsidiary - - (4,921) (4,921)
Miscellaneous, net 2,430 (7,088) (8,283) (12,941)
____________ ___________ ____________ ____________
Total other income and deductions,
net 9,458 (6,602) (13,204) (10,348)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 442,739 113,311 9,995 566,045
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 133,559 36,489 9,995 180,043
Allowance for borrowed funds used during
construction (7,114) (274) - (7,388)
Preferred dividends of subsidiaries
(Note 8) 13,249 3,748 - 16,997
____________ ___________ ___________ ____________
Net interest charges and preferred
dividends 139,694 39,963 9,995 189,652
NET INCOME $ 303,045 $ 73,348 $ - $ 376,393
============ =========== =========== ============
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.97 $2.15 $2.74
===== ===== =====
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.
</TABLE>
AMEREN CORPORATION
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 twelve months ended September 30, 1996
includes CIPSCO's pre-tax write-off of $5.7 million of system development
expenses. Net income for the nine months ended September 30, 1995
includes CIPSCO's pre-tax charges of $5.8 million for a voluntary
separation program.
4. The allocation between Union Electric and CIPSCO and their customers
of the estimated cost savings resulting from the Merger, net of the costs
incurred to achieve such savings, will be subject to regulatory review and
approval. Merger-related costs (which include transaction costs and costs
to achieve such savings) are currently estimated to be approximately
$73 million (including costs for financial advisors, attorneys, accountants,
consultants, filings, printing, system integration, relocation, etc.).
None of these estimated cost 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, 1996 included merger-related
costs of $5.3 million, net of income taxes, for Union Electric and $4.5
million and $9.3 million, net of income taxes, for CIPSCO, respectively.
Net income for the nine months ended September 30, 1995 included
merger-related costs of $9.0 million, net of income taxes, for Union
Electric.
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.
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. Union Electric and
CIPSCO hold 40% and 20% ownership interests, respectively, in EEI and
account 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 months ended September 30, 1995 includes a
credit to Missouri electric customers which reduced revenues and pre-tax
income of Union Electric by $30 million. Net income for the nine and
twelve months ended September 30, 1996 includes credits for Missouri
electric customers which reduced revenues and pre-tax income of Union
Electric by $45 million.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
Exhibit 10 Amendment No. 2 to Form of Excess
Benefit Plan (Filed electronically)
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.
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 14, 1996 /s/ F. J. Kinsinger
_______________________________________
F. J. Kinsinger
Controller
(Chief Accounting Officer)
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 14, 1996 /s/ F. J. Kinsinger
_______________________________________
F. J. Kinsinger
Controller
(Principal Accounting Officer)
CIPSCO INCORPORATED AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
EXHIBIT INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
Exhibit No. Description
___________ ___________
Exhibit 10 Amendment No. 2 to Form of Excess Benefit Plan
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
<TABLE>
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, ____________________________________________________________
1996 1995 1994 1993 1992 1991
_____________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net income..................................... $ 70,658 $ 70,631 $ 81,913 $ 84,011 $ 72,601 $ 75,683
Add--Federal and state income taxes:
Current....................................... 47,539 41,276 38,097 50,441 6,110 36,316
Deferred (net)............................... 2,181 5,627 13,190 1,674 33,998 7,573
Investment tax credit amortization.......... (3,352) (3,361) (3,367) (3,366) (3,336) (3,464)
Income tax applicable to nonoperating
activities................................ (1,401) 941 603 631 2,989 2,413
_______ _______ ________ ________ ________ ________
44,967 44,483 48,523 49,380 39,761 42,838
_______ _______ ________ ________ ________ ________
Net income before income taxes.............. 115,625 115,114 130,436 133,391 112,362 118,521
_______ _______ ________ ________ ________ ________
Add--Fixed charges
Interest on long-term debt................. 31,409 31,168 31,164 32,823 35,534 36,652
Interest on provision for revenue refunds.. - - - - (803) 4,261
Other interest............................... 3,354 853 358 479 392 1,231
Amortization of net debt premium and
discount.................................. 1,718 1,703 1,678 1,598 863 338
_______ _______ ________ ________ ________ ________
36,481 33,724 33,200 34,900 35,986 42,482
_______ _______ ________ ________ ________ ________
Earnings as defined.......................... $152,106 $148,838 $163,636 $168,291 $148,348 $161,003
======= ======= ======== ======== ======== ========
Ratio of earnings to fixed charges.......... 4.17 4.41 4.93 4.82 4.12 3.79
Earnings required for preferred dividends:
Preferred stock dividends..................... $ 3,748 $ 3,850 $ 3,510 $ 3,718 $ 4,549 $ 5,396
Adjustment to pre-tax basis*............... 2,385 2,425 2,079 2,185 2,491 3,054
_______ _______ ________ ________ ________ ________
$ 6,133 $ 6,275 $ 5,589 $ 5,903 $ 7,040 $ 8,450
_______ _______ ________ ________ ________ ________
Fixed charges plus preferred stock
dividend requirements........................ $ 42,614 $ 39,999 $ 38,789 $ 40,803 $ 43,026 $ 50,932
======= ======= ======== ======== ======== ========
Ratio of earnings to fixed charges plus
preferred stock dividend requirements...... 3.57 3.72 4.22 4.12 3.45 3.16
* 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 }
</TABLE>
- 34 -
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
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.
</LEGEND>
<S> <C>
<CIK> 0000018654
<NAME> CIPS
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,469,683
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 213,936
<TOTAL-DEFERRED-CHARGES> 0<F1>
<OTHER-ASSETS> 49,303
<TOTAL-ASSETS> 1,732,922
<COMMON> 121,282
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 462,942
<TOTAL-COMMON-STOCKHOLDERS-EQ> 584,224
0
80,000
<LONG-TERM-DEBT-NET> 421,152
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 53,991
<LONG-TERM-DEBT-CURRENT-PORT> 58,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 535,555
<TOT-CAPITALIZATION-AND-LIAB> 1,732,922
<GROSS-OPERATING-REVENUE> 661,488
<INCOME-TAX-EXPENSE> 41,782
<OTHER-OPERATING-EXPENSES> 522,744
<TOTAL-OPERATING-EXPENSES> 565,769<F2>
<OPERATING-INCOME-LOSS> 95,719
<OTHER-INCOME-NET> (1,538)
<INCOME-BEFORE-INTEREST-EXPEN> 94,377
<TOTAL-INTEREST-EXPENSE> 27,630
<NET-INCOME> 66,747
2,795
<EARNINGS-AVAILABLE-FOR-COMM> 63,952
<COMMON-STOCK-DIVIDENDS> 50,250
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 119,707
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1> INFORMATION NOT NORMALLY DISCLOSED IN FINANCIAL STATEMENTS AND NOTES.
<F2> INCLUDES INCOME TAX EXPENSE.
<F3> NET INCOME BEFORE PREFERRED STOCK DIVIDEND OF SUBSIDIARY
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
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.
</LEGEND>
<S> <C>
<CIK> 0000860520
<NAME> CIPSCO Inc.
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,469,683
<OTHER-PROPERTY-AND-INVEST> 110,808
<TOTAL-CURRENT-ASSETS> 221,311
<TOTAL-DEFERRED-CHARGES> 0<F1>
<OTHER-ASSETS> 50,311
<TOTAL-ASSETS> 1,852,113
<COMMON> 356,812
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 310,978
<TOTAL-COMMON-STOCKHOLDERS-EQ> 667,790
0
80,000
<LONG-TERM-DEBT-NET> 421,152
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 53,991
<LONG-TERM-DEBT-CURRENT-PORT> 58,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 571,180
<TOT-CAPITALIZATION-AND-LIAB> 1,852,113
<GROSS-OPERATING-REVENUE> 668,932
<INCOME-TAX-EXPENSE> 43,260
<OTHER-OPERATING-EXPENSES> 524,056
<TOTAL-OPERATING-EXPENSES> 567,316<F2>
<OPERATING-INCOME-LOSS> 101,616<F2>
<OTHER-INCOME-NET> (2,874)
<INCOME-BEFORE-INTEREST-EXPEN> 98,742
<TOTAL-INTEREST-EXPENSE> 27,430
<NET-INCOME> 71,312<F3>
2,794
<EARNINGS-AVAILABLE-FOR-COMM> 68,518
<COMMON-STOCK-DIVIDENDS> 52,808
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 124,881
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 2.01
<FN>
<F1> INFORMATION NOT NORMALLY DISCLOSED IN FINANCIAL STATEMENTS AND NOTES.
<F2> INCLUDES INCOME TAX EXPENSE.
<F3> NET INCOME BEFORE PREFERRED STOCK DIVIDEND OF SUBSIDIARY
</TABLE>
Exhibit 10
Amendment No. 2
to
Central Illinois Public Service Company
Excess Benefit Plan
(As Amended And Restated Effective As of April 1, 1995)
The Central Illinois Public Service Company Excess Benefit Plan
(As Amended And Restated Effective As of April 1, 1995), as heretofore
amended (the "Plan"), is hereby further amended, effective as of July 1,
1996, in the following respects:
1. By deleting the last sentence of the second paragraph of the
introduction to the Plan and inserting in lieu thereof the following:
"The purpose of the Excess Benefit Plan is (i) to restore benefit
payments which would be paid under the Basic Plan except for
limitations imposed by Sections 401(a)(17) and 415 of the Code
and (ii) to provide certain additional payments to which eligible
participants are entitled by reason of a Management Continuity
Agreement with an Employer."
2. By deleting Article I of the Plan and inserting in lieu
thereof the following:
"Article I
Restored Benefits
Subject to the provisions of Article II hereof, a participant in the
Basic Plan who (i) is entitled to a reduced benefit under the Basic Plan on
account of either or both of the limitations of Section 401(a)(17) or
Section 415 of the Code and/or (ii) would be entitled to an additional
benefit under the Basic Plan by reason of additional service credits
granted pursuant to the last sentence of Section 5(a)(ii) of a "Management
Continuity Agreement" with an Employer, shall be entitled to a monthly
benefit under the Excess Benefit Plan in the amount of the excess, if any,
of (a) over (b), where:
(a) equals the amount of monthly benefit which would have been
paid to such participant under the Basic Plan if benefit
payments under the Basic Plan were made without regard to
the limitations imposed by Sections 401(a)(17) and 415 of
the Code and were determined by including as Credited
Service under the Basic Plan the additional service credits,
if any, granted to or in respect of such participant by
reason of the operation the aforesaid provision of the
Management Continuity Agreement, and
(b) equals the amount of monthly benefit which is paid to such
participant under the Basic Plan."
3. By deleting the parenthetical phrase in Article II.B.1. of
the Plan and inserting in lieu thereof the following:
"(other than those contained in the Basic Plan relating to the
limitations of Sections 401(a)(17) and 415 of the Code or as
otherwise provided in the Excess Benefit Plan)".
IN WITNESS WHEREOF, Central Illinois Public Service Company has
executed this instrument this 1st day of October, 1996, effective as of
July 1, 1996.
Central Illinois Public Service Company
By /s/ W. A. Koertner
____________________________________
Vice President
Corporate Seal
Attest:
/s/ Mary Ellen Brown
_______________________
Assistant Secretary
