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 March 31, 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 at April 30, 1996
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Common stock, no par value, 25,452,373
shares outstanding and held by
CIPSCO INCORPORATED at April 30, 1996
-1- <PAGE>
CIPSCO INCORPORATED
AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
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 - 13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations for CIPSCO Incorporated and
Central Illinois Public Service Company 14 - 21
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 22
Item 5. Other Information 23 - 30
Item 6. Exhibits and Reports on Form 8-K 31
Signatures 32 - 33
Exhibit Index 34
Exhibit 12 35
-2-<PAGE>
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 March 31, 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.
-3-<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
For the Periods Ended March 31, 1996 and 1995
(in thousands except per share amounts)
(unaudited)
Three Months Ended
March 31,
__________________
1996 1995
________ ________
Operating Revenues:
Electric......................... $171,288 $153,188
Gas.............................. 64,418 55,687
Investment....................... 2,173 1,587
________ ________
Total operating revenues...... 237,879 210,462
________ ________
Operating Expenses:
Fuel for electric generation..... 56,148 50,878
Purchased power.................. 13,121 7,106
Gas costs........................ 41,197 34,131
Other operation.................. 34,635 41,526
Maintenance...................... 11,436 12,205
Depreciation and amortization.... 20,913 20,601
Taxes other than income taxes.... 16,013 15,763
_______ ________
Total operating expenses...... 193,463 182,210
_______ ________
Operating Income................... 44,416 28,252
_______ ________
Interest and Other Charges:
Interest on long-term debt of
subsidiary....................... 8,279 8,138
Other interest charges........... 443 399
Allowance for funds used during
construction..................... (26) (186)
Preferred stock dividends of
subsidiary....................... 939 968
Miscellaneous, net............... 203 (315)
_______ ________
Total interest and other
charges....................... 9,838 9,004
_______ ________
<PAGE>
Income Before Income Taxes......... 34,578 19,248
________ ________
Income Taxes....................... 13,460 6,680
________ ________
Net Income......................... $ 21,118 $ 12,568
======== ========
Average Shares of Common Stock
Outstanding........................ 34,070 34,070
Earnings per Average Share of
Common Stock....................... $ .62 $ .37
The accompanying condensed notes to financial statements are an integral
part of these statements.
-4-<PAGE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
(in thousands)
March 31, December 31,
1996 1995
_____________ ____________
(unaudited)
ASSETS
Utility Plant, at original cost:
Electric.......................... $2,332,505 $2,296,402
Gas............................... 231,879 229,118
__________ __________
2,564,384 2,525,520
Less-Accumulated depreciation..... 1,146,735 1,132,355
__________ __________
1,417,649 1,393,165
Construction work in progress..... 41,937 72,490
__________ __________
1,459,586 1,465,655
__________ __________
Current Assets:
Cash.............................. 2,002 1,088
Temporary investments, at cost
which approximates market......... 5,901 7,147
Accounts receivable, net.......... 73,579 65,267
Accrued unbilled revenues......... 27,225 27,234
Materials and supplies, at average
cost.............................. 41,477 40,246
Fuel for electric generation, at
average cost...................... 29,328 42,634
Gas stored underground, at average
cost.............................. 3,927 9,774
Prepayments....................... 9,062 10,649
Other current assets.............. 8,238 8,197
__________ __________
200,739 212,236
__________ __________
Investments and Other Assets:
Marketable securities............. 47,389 45,967
Leveraged leases and energy
investments....................... 59,824 59,114
Other............................. 45,219 44,939
__________ __________
152,432 150,020
__________ __________
$1,812,757 $1,827,911
========== ==========
<PAGE>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity....... $ 655,706 $ 651,532
Preferred stock of subsidiary..... 80,000 80,000
Long-term debt of subsidiary...... 479,002 478,926
__________ __________
1,214,708 1,210,458
__________ __________
Current Liabilities:
Long-term debt of subsidiary due
within one year................... - -
Short-term borrowings............. 10,995 47,921
Accounts payable.................. 50,233 60,603
Accrued wages..................... 10,691 9,335
Accrued taxes..................... 25,955 11,266
Accrued interest.................. 8,654 9,525
Other............................. 43,769 33,265
__________ __________
150,297 171,915
__________ __________
Deferred Credits:
Accumulated deferred income taxes. 326,372 325,181
Investment tax credits............ 51,397 52,234
Regulatory liabilities, net....... 69,983 68,123
__________ __________
447,752 445,538
__________ __________
$1,812,757 $1,827,911
========== ==========
The accompanying condensed notes to financial statements are an
integral part of these statements.
-5-<PAGE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Periods Ended March 31, 1996 and 1995
(in thousands)
(unaudited)
Three Months Ended
March 31,
______________________
1996 1995
__________ __________
Operating Activities:
Net income.............................. $ 21,118 $ 12,568
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization......... 20,913 20,601
Allowance for equity funds used during
construction (AFUDC).................. (11) (171)
Deferred income taxes, net............ 561 (1,376)
Investment tax credit amortization.... (837) (840)
Cash flows impacted by changes in assets
and liabilities:
Accounts receivable, net and accrued
unbilled revenues..................... (8,303) 23,448
Fuel for electric generation.......... 13,306 (3,880)
Other inventories..................... 4,616 4,578
Prepayments........................... 1,587 (1,321)
Other assets.......................... (321) (925)
Accounts payable and other............ 134 3,966
Accrued wages, taxes and interest..... 15,174 10,094
Other................................... 2,491 (1,105)
_________ _________
Net cash provided by operating
activities............................ 70,428 65,637
_________ _________
Investing Activities:
Utility construction expenditures,
excluding AFUDC......................... (14,754) (14,648)
Allowance for borrowed funds used
during construction..................... (15) (14)
Changes in temporary investments........ 1,246 (15,849)
Long-term marketable securities......... (977) (3,160)
Long-term leveraged leases and energy
investments............................. (710) (1,014)
_________ _________
Net cash used in investing activities. (15,210) (34,685)
_________ _________
<PAGE>
Financing Activities:
Common stock dividends paid............. (17,375) (17,035)
Proceeds from issuance of (repayment of)
short-term borrowings................... (36,926) (14,985)
Issuance expense, discount and premium.. (3) (14)
_________ _________
Net cash used in financing activities. (54,304) (32,034)
_________ _________
Net increase (decrease) in cash......... 914 (1,082)
Cash at beginning of period............. 1,088 1,963
_________ _________
Cash at end of period................... $ 2,002 $ 881
========= =========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest, net of amounts capitalized.. $ 9,122 $ 8,681
Income taxes.......................... $ 325 $ 2,700
The accompanying condensed notes to financial statements are an
integral part of these statements.
-6-<PAGE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Statements of Income
For the Periods Ended March 31, 1996 and 1995
(in thousands)
(unaudited)
Three Months Ended
March 31,
__________________
1996 1995
________ ________
Operating Revenues:
Electric......................... $171,295 $153,195
Gas.............................. 64,419 55,688
________ ________
Total operating revenues...... 235,714 208,883
________ ________
Operating Expenses:
Fuel for electric generation..... 56,148 50,878
Purchased power.................. 13,121 7,106
Gas costs........................ 41,197 34,131
Other operation.................. 34,291 41,138
Maintenance...................... 11,435 12,204
Depreciation and amortization.... 20,785 20,481
Taxes other than income taxes.... 16,008 15,751
Income taxes:
Current........................ 16,590 9,507
Deferred, net.................. (2,782) (2,342)
Deferred investment tax
credits, net................... (837) (840)
________ ________
Total operating expenses...... 205,956 188,014
________ ________
Operating Income................... 29,758 20,869
________ ________
Other Income and Deductions:
Allowance for equity funds used
during construction.............. 11 171
Nonoperating income taxes........ (298) (267)
Miscellaneous, net............... (172) 515
________ ________
Total other income and
deductions.................... (459) 419
________ ________
Income Before Interest Charges..... 29,299 21,288
________ ________
<PAGE>
Interest Charges:
Interest on long-term debt....... 8,279 8,138
Other interest charges........... 443 393
Allowance for borrowed funds used
during construction.............. (14) (14)
________ ________
Total interest charges....... 8,708 8,517
________ ________
Net Income......................... 20,591 12,771
Preferred Stock Dividends.......... 938 968
________ ________
Earnings for Common Stock.......... $ 19,653 $ 11,803
======== ========
The accompanying condensed notes to financial statements are an integral
part of these statements.
-7-<PAGE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Balance Sheets
March 31, 1996 and December 31, 1995
(in thousands)
March 31, December 31,
1996 1995
_____________ ____________
(unaudited)
ASSETS
Utility Plant, at original cost:
Electric......................... $2,332,505 $2,296,402
Gas.............................. 231,879 229,118
__________ __________
2,564,384 2,525,520
Less-Accumulated depreciation.... 1,146,735 1,132,355
__________ __________
1,417,649 1,393,165
Construction work in progress.... 41,937 72,490
__________ __________
1,459,586 1,465,655
__________ __________
Current Assets:
Cash............................. 1,971 1,006
Accounts receivable, net......... 73,736 65,574
Accrued unbilled revenues........ 27,225 27,234
Materials and supplies, at average
cost............................. 41,477 40,246
Fuel for electric generation, at
average cost..................... 29,328 42,634
Gas stored underground, at average
cost............................. 3,927 9,774
Prepayments...................... 9,016 10,268
Other current assets............. 8,240 8,226
__________ __________
194,920 204,962
__________ __________
Other Assets....................... 44,125 44,188
__________ __________
$1,698,631 $1,714,805
========== ==========
<PAGE>
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholder's equity...... $ 573,558 $ 570,419
Preferred stock.................. 80,000 80,000
Long-term debt................... 479,001 478,926
__________ __________
1,132,559 1,129,345
__________ __________
Current Liabilities:
Long-term debt due within one
year............................. - -
Short-term borrowings............ 10,995 47,921
Accounts payable................. 49,569 60,791
Accrued wages.................... 10,691 9,320
Accrued taxes.................... 30,038 11,155
Accrued interest................. 8,654 9,525
Other............................ 43,770 33,264
__________ __________
153,717 171,976
__________ __________
Deferred Credits:
Accumulated deferred income
taxes............................ 290,975 293,127
Investment tax credits........... 51,397 52,234
Regulatory liabilities, net...... 69,983 68,123
__________ __________
412,355 413,484
__________ __________
$1,698,631 $1,714,805
========== ==========
The accompanying condensed notes to financial statements are an
integral part of these statements.
-8-<PAGE>
Central Illinois Public Service Company
Statements of Cash Flows
For the Periods Ended March 31, 1996 and 1995
(in thousands)
(unaudited)
Three Months Ended
March 31,
______________________
1996 1995
__________ __________
Operating Activities:
Net income.............................. $ 20,591 $ 12,771
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization......... 20,785 20,481
Allowance for equity funds used during
construction (AFUDC).................. (11) (171)
Deferred income taxes, net............ (2,782) (2,342)
Investment tax credit amortization.... (837) (840)
Cash flows impacted by changes in assets
and liabilities:
Accounts receivable, net and accrued
unbilled revenues..................... (8,153) 23,432
Fuel for electric generation.......... 13,306 (3,880)
Other inventories..................... 4,616 4,578
Prepayments........................... 1,252 (1,357)
Other assets.......................... 49 (953)
Accounts payable and other
liabilities........................... (716) 3,819
Accrued wages, taxes and interest..... 19,383 11,063
Other................................... 2,631 (943)
_________ _________
Net cash provided by operating
activities............................ 70,114 65,658
_________ _________
Investing Activities:
Construction expenditures, excluding
AFUDC................................... (14,754) (14,648)
Allowance for borrowed funds used during
construction............................ (14) (14)
Changes in temporary investments........ - (18,132)
_________ _________
Net cash used in investing activities. (14,768) (32,794)
_________ _________
<PAGE>
Financing Activities:
Repayment of short-term borrowings...... (36,926) (14,985)
Dividends paid:
Preferred stock....................... (952) (1,009)
Common stock.......................... (16,500) (17,500)
Issuance expense, discount and premium.. (3) (14)
_________ _________
Net cash used in financing activities. (54,381) (33,508)
_________ _________
Net increase (decrease) in cash......... 965 (644)
Cash at beginning of period............. 1,006 1,320
_________ _________
Cash at end of period................... $ 1,971 $ 676
========= =========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest, net of amounts capitalized.. $ 9,122 $ 8,681
Income taxes.......................... $ 204 $ 2,608
The accompanying condensed notes to financial statements are an
integral part of these statements.
-9-<PAGE>
CIPSCO INCORPORATED AND SUBSIDIARIES
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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.
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.
As required by the Illinois Commerce Commission, the riders
provided for (1) recovery of cleanup costs and a return to
ratepayers of any reimbursement of cleanup costs received from
insurance carriers or other parties and (2) a prudence review of
cleanup 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 since January 1994.
-10-<PAGE>
The estimated incurred costs relating to studies and remediation
at the 13 sites and associated legal expenses are being accrued
and deferred rather than expensed currently, pending recovery
through rates or from other parties. Through March 31, 1996,
$42.6 million had been deferred representing costs incurred and
estimates of costs of completing studies at various sites and an
estimate 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 $5.2 million at March 31, 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 designed to eliminate market power
held by public utilities through the ownership of transmission
systems. Citing a goal of enhancing competition in the wholesale
market for generation sales, FERC has issued a policy which
requires transmission owning public utilities, 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. The rule applies to public utilities
owning, controlling or operating transmission facilities. 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. In conjunction with the application
at the FERC regarding the merger of CIPSCO and Union Electric
Company ("UE") (see Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations), CIPS and UE
have filed open access tariffs in compliance with FERC policy.
Because these tariffs were filed under provisions of the
rulemaking prior to the issuance of Order 888, these tariffs will
be revised to comply with the final rule in Order 888. The
compliance tariffs for CIPS and UE will only become effective
upon completion of the merger. In the meantime, both utilities
will be required to establish individual tariffs for transmission
service within sixty days of the time the final rule appears in
the Federal Register.
Also issued April 24, 1996, Order 889 sets forth the standards of
conduct and information requirements that must be put in place
-11-<PAGE>
and observed by transmission owners 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 the 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 is
evaluating the requirements of Order 889.
CLEAN AIR ACT - CIPS' current compliance strategy to meet Phases
I and II 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 estimated capital costs of compliance based on the
current strategy are included in the five-year construction
forecast. The forecast has an estimate of $76 million for
environmental compliance including compliance with regulations
under the Clean Air Act. However, capital costs and certain
expenses, as well as financing needs, may increase if fuel
strategy studies being undertaken by CIPS indicate that CIPS
should change its compliance strategy to place more reliance on
fuel switching.
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 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. 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.
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
-12-<PAGE>
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 March 31, 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 March 31,
1996 are:
Description Amount
___________ ______
(in thousands)
Regulatory Assets:
Deferred environmental remediation costs $ 5,203
Take-or-Pay costs 982
Unamortized costs relating to reacquired
debt 13,100
________
Total Regulatory Assets - in
Other Assets on Balance Sheet $ 19,285
========
Regulatory Liabilities:
Clean Air Act allowances, net $ 3,128
SFAS 109 - Income Taxes, net 66,855
________
Total Regulatory Liabilities, Net $ 69,983
========
Regulatory Liabilities Net of Regulatory Assets $ 50,698
========
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.
-13-<PAGE>
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, which was later approved by the
shareholders of both companies in December 1995. The merged
entity is expected to realize approximately $644 million in net
savings over 10 years from combining certain operations of the
two companies and is expected to adopt Union Electric's dividend
payment level. However, the merger is conditioned upon, among
other things, receipt of certain regulatory and governmental
approvals. The merger is expected to be consummated in early
1997. See Part II, Item 5. Other Information for certain pro
forma financial information concerning the merger.
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. In addition
to funds for construction, projected capital requirements for the
1996-2000 period include $133 million for scheduled debt
retirements. Capital requirements for the 1996-2000 period are
expected to be met primarily through internally generated funds.
External financing to fund scheduled debt retirements will be
required. In addition, up to $100 million of external financing
is expected to be required to fund the construction program.
Included in the five-year construction forecast is an estimate of
$76 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. Depending
on the alternative selected, construction expenditures could
increase the five-year forecast by as much as $50 million over
the 1996-2000 period. In addition, adoption of certain
alternatives in fuel and/or environmental strategies, could
result in substantial increases in other capital requirements in
the 1996-2000 period from the amounts shown above. These
potential additional capital requirements would also need to be
financed with external sources of funds.
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. For the first
three months of 1996, 99% of CIPS' total capital requirements
were provided from internal sources.
-14-<PAGE>
Common stock dividends paid for the twelve months ended March 31,
1996, resulted in a payout ratio of 86% 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 45%.
In connection with consummation of the Merger contemplated by the
Merger Agreement as previously described, it is expected that the
Company will incur $9.4 million of transaction costs. Through
March 31, 1996, these transaction costs (not tax deductible)
were $5.4 million (of which $4.7 million was expensed in 1995).
The Company expects that total costs for 1996 will approximate
$4.7 million (not tax deductible) or 14 cents per share.
FINANCIAL CONDITION
Financial condition and changes in total Shareholder Equity of
the Company and CIPS for the three-month periods ended March 31,
1996 and 1995 are as follows:
Three Months Ended
March 31,
________________________
(in thousands)
The Company: 1996 1995
_________ _________
Common Shareholders' Equity
Net income $ 21,118 $ 12,568
Common stock dividends paid (17,375) (17,035)
Other 431 898
________ ________
Change in Shareholders' Equity $ 4,174 $ (3,569)
======== ========
Three Months Ended
March 31,
________________________
(in thousands)
CIPS: 1996 1995
_________ _________
Common Shareholder's Equity
Earnings for common stock $ 19,653 $ 11,803
Common stock dividends paid (16,500) (17,500)
Other (14) (42)
________ ________
Change in Shareholder's Equity $ 3,139 $ (5,739)
======== ========
-15-<PAGE>
OVERVIEW
The Company's earnings per share were $.62 for the quarter ended
March 31, 1996, compared to $.37 per share earned during the
same period in 1995. The increase primarily reflects higher
electric sales and gas sales due to colder-than-normal
temperatures in the first quarter this year compared to warmer-
than-normal conditions a year ago.
The following table summarizes the components of consolidated net
income and CIPS earnings for common stock for the three months
ended March 31, 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.
First Quarter
Ended March 31,
__________________
(in thousands)
1996 1995
________ ________
CIPS
Electric operating
margin $ 95,974 $ 89,213
Gas operating margin 19,699 18,112
Other deductions and
interest expenses (95,082) (94,554)
CIPS preferred stock
dividends (938) (968)
________ ________
Total earnings
for common stock 19,653 11,803
________ ________
NON-UTILITY
Investment revenues 2,141 1,384
Other deductions
and expenses (676) (619)
________ ________
Total non-utility
net income 1,465 765
________ ________
Consolidated net
income $ 21,118 $ 12,568
======== ========
-16-<PAGE>
RESULTS OF OPERATIONS
The results of operations of the Company and CIPS for the three
months ended March 31, 1996, compared to the same period in 1995
are presented below.
The Company
Net Income Earnings
(in thousands) Per Share
____________ ____________
Three Months Three Months
____________ ____________
1996 $21,118 $ .62
1995 12,568 .37
_______ _____
Increase $ 8,550 $ .25
======= =====
Percent
Increase 68% 68%
CIPS
Earnings for Common Stock
(in thousands)
____________
Three Months
____________
1996 $19,653
1995 11,803
_______
Increase $ 7,850
=======
Percent
Increase 67%
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.
-17-<PAGE>
Electric revenues increased 12% in the first quarter of 1996
compared to the first quarter of 1995 reflecting higher KWH sales
due principally to colder weather in 1996. KWH sales to
residential and commercial customers increased 8% and 6%,
respectively, due to the colder weather while industrial electric
sales, which are less weather sensitive, remained about the same.
Sales to public authorities contained an adjustment in 1996 to
correct unbilled KWH sales and revenues. Without the adjustment,
sales and revenues were closely comparable between the first
quarter of 1996 and the same period in 1995. Power supply
agreement revenues for the first quarter of 1996 were 2% higher
than those of the first quarter of 1995 due to increased capacity
and transportation revenues related to these agreements. Economy
and emergency interchange revenues increased 136% in the first
quarter 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 first quarter of
1996 compared to the same quarter in 1995 due primarily to colder
weather in 1996.
-18-<PAGE>
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)
_________________________________
First Quarter
_________________________________
Revenue Rev % KWH KWH %
________ _____ _________ _____
Residential $ 3,301 6 % 63,135 8 %
Commercial 2,691 7 37,415 6
Industrial 208 1 2,712 -
Public Authorities
and Other (132) (3) (4,771) (11)
________ _______
Total Retail $ 6,068 5 % 98,491 5 %
Power Supply
Agreements $ 394 2 % (5,574) (1)%
Interchange Sales
(economy/emergency) 11,082 136 437,085 87
Cooperatives and
Municipals 563 11 10,250 8
________ _______
Total Sales for
Resale $ 12,039 39 % 441,761 44 %
________ _______
Total $ 18,107 12 % 540,252 18 %
======== =======
Gas revenues increased 16% in the first quarter of 1996 compared
to the same period in 1995 due to colder weather in 1996 and
higher purchased gas costs which flow through to revenues through
the Purchased Gas Adjustment clause (PGA). Residential gas
revenues improved 14% in the first three months of 1996 compared
to 1995 due to colder weather in 1996. The commercial and
industrial gas revenue improved 17% and 44%, respectively, in the
first three months of 1996 over the same period in 1995 due to
both the increase in purchased gas costs discussed above, and to
customers buying more gas from CIPS in 1996 rather than
transporting their own gas. Gas transportation revenues improved
3% in the first three months of 1996 even though therms
transported declined 2% over the same period in 1995. The
increased gas transportation revenue in 1996 is caused by
penalties charged to interruptible gas customers for excess usage
during a period of curtailment of gas.
-19-<PAGE>
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)
_________________________________
First Quarter
_________________________________
Therms
Revenue Rev % Therms %
________ _____ _________ ______
Residential $ 5,310 14 % 12,567 18 %
Commercial 2,179 17 5,060 21
Industrial 1,186 44 4,581 60
Transportation 64 3 (748) (2)
Miscellaneous (8) (5) - -
________ ______
Total $ 8,731 16 % 21,460 15 %
======== ======
OPERATIONS
__________
Fuel for electric generation increased 10% in the first quarter
of 1996 compared to the first quarter of 1995. The increase
corresponds to a 12% increase in generation due to higher sales
levels in the first quarter of 1996.
Purchased power costs increased 85% for the first quarter ended
March 31, 1996 compared with the same period in 1995 reflecting
increases in marketable purchases made for resale to interchange
economy and emergency customers.
Gas costs increased 21% for the first quarter of 1996 when
compared to the same period in 1995 due to increased gas
requirements for the CIPS system and because of a 23% higher
average cost per therm for purchased gas.
Other operation expenses declined 17% in the first quarter of
1996 compared to 1995 primarily due to a $6.3 million charge in
February 1995 relating to the cost of a workforce reduction
program.
Maintenance expenses declined 6% in the first quarter of 1996
compared to the same period of 1995 due primarily to the
scheduled timing of maintenance projects between periods.
Depreciation and amortization expense increased 2% in the first
quarter of 1996 when compared to 1995 due to normal plant
additions.
Taxes other than income taxes increased 2% in the first quarter
of 1996 when compared to 1995 due to higher revenue taxes from
increased sales. These revenue taxes are collected from
customers in gas and electric revenues.
-20-<PAGE>
Significant changes in the balance sheet accounts at March 31,
1996 compared to balances at December 31, 1995 are:
Fuel for electric generation, at average cost, decreased 31% for
the first three months of 1996 due to increased generation usage
and less purchases of compliance coal at one station.
Gas stored underground, at average cost, decreased 60% during the
quarter due to high demands on the system and utilization of the
stored gas to meet the customer demands.
Short-term borrowings declined 77% in the first three months of
1996 reflecting a greater amount of cash provided from
operations.
Accrued taxes increased 130% reflecting the liability due on
federal and state income taxes due to higher pretax income for
the quarter ended March 31, 1996.
Other liabilities increased 32% for the first three months of
1996 due primarily to overrecovered PGA revenues to be refunded
to customers and postretirement medical costs accrued monthly
during the quarter but not funded until year-end.
-21-<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meetings of Shareholders of CIPS and CIPSCO
Incorporated were held on April 24, 1996.
(b) All nominees who were proposed as directors by the Board of
Directors were elected and there were no other nominees
proposed. The results of the votes cast for directors of
CIPS and CIPSCO Incorporated are as follows:
CIPS
____
Without
Directors With Authority Authority(1)
_________ ______________ _________
William J. Alley 26,052,519 6,879
Clifford L. Greenwalt 26,046,905 6,879
John L. Heath 26,052,529 6,879
Robert W. Jackson 26,052,537 6,879
Gordon R. Lohman 26,052,443 6,879
Richard A. Lumpkin 26,052,534 6,879
Hanne M. Merriman 26,052,422 6,879
Thomas L. Shade 26,052,524 6,879
James W. Wogsland 26,052,531 6,879
CIPSCO Incorporated
___________________
Without
Directors With Authority Authority (1)
_________ ______________ _________
William J. Alley 29,294,965 780,933
Clifford L. Greenwalt 29,159,473 780,933
John L. Heath 29,354,810 780,933
Robert W. Jackson 29,202,803 780,933
Gordon R. Lohman 29,275,563 780,933
Richard A. Lumpkin 29,297,479 780,933
Hanne M. Merriman 29,292,847 780,933
Thomas L. Shade 29,288,380 780,933
James W. Wogsland 29,114,327 780,933
(1) Calculated on the basis of cumulative voting.
(c) Appointment of independent public accountants was approved
by the following vote:
Shares Shares
Shares For Against Abstaining
__________ _______ __________
29,283,750 329,501 421,784
-22-<PAGE>
Item 5. Other Information
(1) On April 24, 1996, the FERC issued a notice of proposed
rulemaking (NOPR) in Docket No. RM96-11-000 through
which the FERC questions, and seeks public comment on,
whether there are disadvantages and the potential for
inequity in offering transmission service on separate
network and point-to-point bases and whether
comparability of transmission service can better be
accomplished by requiring that all transmission service
be rendered and priced on equal terms. The NOPR asks
specifically whether the FERC should adopt a capacity
reservation tariff (CRT) to replace the tariff adopted
in Order 888. (See Note 2 to Condensed Notes to
Financial Statements.) The CRT would be based on the
common and point-to-point service provisions of the
tariff form included in Order 888 and would allow all
transmission customers, including the transmission
provider, to have the same degree of flexibility in
reserving and using transmission service.
(2) See pages 24-30 for the Item 5. Other Information
portion of this Form 10-Q which relates to pro forma
financial information related to the merger of CIPSCO
and UE.
-23-<PAGE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
OF CIPSCO AND UNION ELECTRIC
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 is expected
to be consummated in early 1997. 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 March 31, 1996 gives effect to the Merger as if it had
occurred at March 31, 1996. The unaudited pro forma combined
condensed statements of income for the three-month periods ended
March 31, 1996 and 1995, and the twelve-month period ended March
31, 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 three-month
periods ended March 31, 1996 and 1995 are not necessarily
indicative of trends for any twelve-month period.
-24-<PAGE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET
AT MARCH 31, 1996
(Thousands of Dollars)
<TABLE>
As Reported (Note 1) Pro Forma
_______________________ Adjustments Pro Forma
UE CIPSCO (Notes 2, 9) Combined
ASSETS __________ __________ __________ ___________
<S> <C> <C> <C> <C>
Property and plant
Electric $8,558,166 $2,332,505 $ 374,762 $11,265,433
Gas 176,784 231,879 - 408,663
Other 35,097 - - 35,097
__________ __________ __________ ___________
8,770,047 2,564,384 374,762 11,709,193
Less accumulated depreciation and amortization 3,559,955 1,146,735 255,439 4,962,129
__________ __________ __________ ___________
5,210,092 1,417,649 119,323 6,747,064
Construction work in progress:
Nuclear fuel in process 142,325 - - 142,325
Other 115,464 41,937 1,633 159,034
__________ __________ __________ ___________
Total property and plant, net 5,467,881 1,459,586 120,956 7,048,423
Regulatory asset - deferred income taxes (Note 6) 706,371 44,236 - 750,607
Other assets:
Unamortized debt expense 43,260 16,123 640 60,023
Nuclear decommissioning trust fund 78,032 - - 78,032
Investments in nonregulated activities - 107,213 - 107,213
Other 25,912 29,096 (1,528) 53,480
__________ __________ __________ ___________
Total other assets 147,204 152,432 (888) 298,748
Current assets:
Cash and temporary investments 12,217 7,903 133 20,253
Accounts receivable, net 173,762 73,579 22,015 269,356
Unbilled revenue 69,307 27,225 - 96,532
Materials and supplies, at average cost -
Fossil fuel 36,468 33,255 7,637 77,360
Other 95,537 41,477 4,993 142,007
Other 36,234 17,300 3,700 57,234
__________ __________ __________ ___________
Total current assets 423,525 200,739 38,478 662,742
__________ __________ __________ ___________
Total Assets $6,744,981 $1,856,993 $ 158,546 $ 8,760,520
========== ========== ========== ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders' equity (Note 2) 1,781,578 298,894 866,059 2,946,531
__________ __________ __________ ___________
Total common stockholders' equity 2,292,197 655,706 - 2,947,903
Preferred stock of subsidiary 219,147 80,000 - 299,147
Long-term debt 1,771,139 479,002 130,000 2,380,141
__________ __________ __________ ___________
Total capitalization 4,282,483 1,214,708 130,000 5,627,191
Minority interest in consolidated subsidiary - - 3,534 3,534
Accumulated deferred income taxes 1,327,759 326,372 (7,059) 1,647,072
Accumulated deferred investment tax credits 164,977 51,397 - 216,374
Regulatory liability 213,331 114,219 - 327,550
Accumulated provision for nuclear decommissioning 79,705 - - 79,705
Other deferred credits and liabilities 151,730 - 6,506 158,236
Current liabilities:
Current maturity of long-term debt 102,289 - - 102,289
Short-term debt 36,500 10,995 2,000 49,495
Accounts payable 85,314 50,233 18,029 153,576
Wages payable 32,000 10,691 - 42,691
Taxes accrued 132,253 25,955 - 158,208
Interest accrued 54,459 8,654 2,886 65,999
Other 82,181 43,769 2,650 128,600
__________ __________ __________ ___________
Total current liabilities 524,996 150,297 25,565 700,858
__________ __________ __________ ___________
Total Capital and Liabilities $6,744,981 $1,856,993 $ 158,546 $ 8,760,520
========== ========== ========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
-25-<PAGE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
(Thousands of Dollars Except Shares and Per Share Amounts)
<TABLE>
UE CIPSCO Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,4,10) (Notes 1,4) (Notes 2,9) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 414,686 $ 171,288 $ 48,136 $ 634,110
Gas 44,548 64,418 - 108,966
Other 157 2,173 104 2,434
____________ ___________ __________ ____________
Total operating revenues 459,391 237,879 48,240 745,510
OPERATING EXPENSES:
Operations
Fuel and purchased power 88,085 69,269 28,037 185,391
Gas Costs 24,325 41,197 - 65,522
Other 89,804 34,635 4,431 128,870
____________ ___________ __________ ____________
202,214 145,101 32,468 379,783
Maintenance 48,634 11,436 3,815 63,885
Depreciation and amortization 59,585 20,913 3,776 84,274
Income taxes (Note 7) 28,221 13,460 1,946 43,627
Other taxes 50,983 16,013 552 67,548
____________ ___________ __________ ____________
Total operating expenses 389,637 206,923 42,557 639,117
OPERATING INCOME 69,754 30,956 5,683 106,393
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 1,702 11 - 1,713
Minority interest in consolidated subsidiary - - (1,192) (1,192)
Miscellaneous, net 895 (203) (1,851) (1,159)
____________ ___________ __________ ____________
Total other income and deductions, net 2,597 (192) (3,043) (638)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 72,351 30,764 2,640 105,755
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 33,858 8,722 2,640 45,220
Allowance for borrowed funds used during
construction (1,647) (15) - (1,662)
Preferred dividends of subsidiaries (Note 8) 3,312 939 - 4,251
____________ ___________ __________ ____________
Net interest charges and preferred dividends 35,523 9,646 2,640 47,809
NET INCOME $ 36,828 $ 21,118 $ - $ 57,946
============ =========== ========== ============
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $0.36 $0.62 $0.42
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462
============ =========== ========== ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
-26-<PAGE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995
(Thousands of Dollars Except Shares and Per Share Amounts)
<TABLE>
UE CIPSCO Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Note 1) (Notes 1,3) (Notes 2,9) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 408,748 $ 153,188 $ 46,053 $ 607,989
Gas 38,212 55,687 - 93,899
Other 155 1,587 53 1,795
____________ ___________ __________ ____________
Total operating revenues 447,115 210,462 46,106 703,683
OPERATING EXPENSES:
Operations
Fuel and purchased power 88,899 57,984 25,975 172,858
Gas Costs 19,286 34,131 - 53,417
Other 90,099 41,526 4,561 136,186
____________ ___________ __________ ____________
198,284 133,641 30,536 362,461
Maintenance 50,168 12,205 4,023 66,396
Depreciation and amortization 57,600 20,601 3,792 81,993
Income taxes (Note 7) 23,860 6,680 1,828 32,368
Other taxes 49,897 15,763 547 66,207
____________ ___________ __________ ____________
Total operating expenses 379,809 188,890 40,726 609,425
OPERATING INCOME 67,306 21,572 5,380 94,258
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 1,892 171 - 2,063
Minority interest in consolidated subsidiary - - (1,128) (1,128)
Miscellaneous, net 646 315 (1,682) (721)
____________ ___________ __________ ____________
Total other income and deductions, net 2,538 486 (2,810) 214
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 69,844 22,058 2,570 94,472
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 33,435 8,537 2,570 44,542
Allowance for borrowed funds used during
construction (1,815) (15) - (1,830)
Preferred dividends of subsidiaries (Note 8) 3,313 968 - 4,281
____________ ___________ __________ ____________
Net interest charges and preferred dividends 34,933 9,490 2,570 46,993
NET INCOME $ 34,911 $ 12,568 $ - $ 47,479
============ =========== ========== ============
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $0.34 $0.37 $0.35
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462
============ =========== ========== ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
-27-<PAGE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
TWELVE MONTHS ENDED MARCH 31, 1996
(Thousands of Dollars Except Shares and Per Share Amounts)
<TABLE>
UE CIPSCO Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,4,10) (Notes 1,3,4) (Notes 2,9) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 2,020,391 $ 721,583 $ 184,846 $ 2,926,820
Gas 94,149 138,337 - 232,486
Other 443 9,759 412 10,614
____________ ___________ __________ ____________
Total operating revenues 2,114,983 869,679 185,258 3,169,920
OPERATING EXPENSES:
Operations
Fuel and purchased power 364,345 259,511 99,791 723,647
Gas Costs 56,290 81,120 - 137,410
Other 367,575 148,477 19,018 535,070
____________ ___________ __________ ____________
788,210 489,108 118,809 1,396,127
Maintenance 220,075 67,227 17,733 305,035
Depreciation and amortization 235,221 83,575 15,730 334,526
Income taxes (Note 7) 213,902 52,551 7,976 274,429
Other taxes 213,231 56,863 1,917 272,011
____________ ___________ __________ ____________
Total operating expenses 1,670,639 749,324 162,165 2,582,128
OPERATING INCOME 444,344 120,355 23,093 587,792
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 6,637 729 - 7,366
Minority interest in consolidated subsidiary - - (4,625) (4,625)
Miscellaneous, net (5,733) (2,816) (8,081) (16,630)
____________ ___________ __________ ____________
Total other income and deductions, net 904 (2,087) (12,706) (13,889)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 445,248 118,268 10,387 573,903
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 135,163 33,954 10,387 179,504
Allowance for borrowed funds used during
construction (5,938) (73) - (6,011)
Preferred dividends of subsidiaries (Note 8) 13,249 3,821 - 17,070
____________ ___________ __________ ____________
Net interest charges and preferred dividends 142,474 37,702 10,387 190,563
NET INCOME $ 302,774 $ 80,566 $ - $ 383,340
============ =========== ========== ============
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.96 $2.36 $2.79
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462
============ =========== ========== ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed
Financial Statements.
-28-<PAGE>
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 three months ended March 31, 1995 includes
CIPSCO's pre-tax charges of $5.8 million for a voluntary separation
program. Net income for the twelve months ended March 31, 1996
includes CIPSCO's pre-tax write-off of $5.7 million of system
development expenses.
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. 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 three months ended March 31, 1996 includes merger transaction
charges of $.9 million, net of income taxes, for Union Electric
and $.7 million, net of income taxes, for CIPSCO. Net income for
the twelve months ended March 31, 1996 includes merger transaction
costs of $9.9 million, net of income taxes, for Union Electric and
$5.4 million, net of income taxes, for CIPSCO.
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.
-29-<PAGE>
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 three and twelve months ended March 31, 1996
includes credits for Missouri electric customers which reduced
revenues and pre-tax income of Union Electric by $13.5 million and
$43.5 million, respectively.
-30-<PAGE>
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
-31-<PAGE>
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: May 10, 1996 /s/ L. E. Marlett
L. E. Marlett
Controller
(Chief Accounting Officer)
-32-<PAGE>
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: May 10, 1996 /s/ L. E. Marlett
L. E. Marlett
Controller
(Principal Accounting Officer)
-33-<PAGE>
CIPSCO INCORPORATED AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
EXHIBIT INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
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
-34-
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)
<TABLE>
12 Months Ended
___________________________________________________________________
December 31,
March 31, ______________________________________________________
1996 1995 1994 1993 1992 1991
___________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net Income. . . . . . . . . . . . . . . . . . . $ 78,452 $ 70,631 $ 81,913 $ 84,011 $ 72,601 $ 75,683
Add--Federal and state income taxes:
Current . . . . . . . . . . . . . . . . . . . 48,359 41,276 38,097 50,441 6,110 36,316
Deferred (net). . . . . . . . . . . . . . . . 5,187 5,627 13,190 1,674 33,998 7,573
Investment tax credit amortization. . . . . . (3,358) (3,361) (3,367) (3,366) (3,336) (3,464)
Income tax applicable to nonoperating
activities. . . . . . . . . . . . . . . . . 972 941 603 631 2,989 2,413
_______ _______ _______ _______ _______ _______
51,160 44,483 48,523 49,380 39,761 42,838
_______ _______ _______ _______ _______ _______
Net income before income taxes. . . . . . . . . 129,612 115,114 130,436 133,391 112,362 118,521
_______ _______ _______ _______ _______ _______
Add--Fixed charges
Interest on long-term debt. . . . . . . . . . 31,302 31,168 31,164 32,823 35,534 36,652
Interest on provision for revenue refunds . . - - - - (803) 4,261
Other interest. . . . . . . . . . . . . . . . 902 853 358 479 392 1,231
Amortization of net debt premium and
discount. . . . . . . . . . . . . . . . . . 1,710 1,703 1,678 1,598 863 338
_______ _______ _______ _______ _______ ________
33,914 33,724 33,200 34,900 35,986 42,482
_______ _______ _______ _______ _______ ________
Earnings as defined . . . . . . . . . . . . . . $163,526 $148,838 $163,636 $168,291 $148,348 $161,003
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges. . . . . . . 4.82 4.41 4.93 4.82 4.12 3.79
Earnings required for preferred dividends:
Preferred stock dividends . . . . . . . . . . $ 3,821 $ 3,850 $ 3,510 $ 3,718 $ 4,549 $ 5,396
Adjustment to pre-tax basis*. . . . . . . . . 2,492 2,425 2,079 2,185 2,491 3,054
_______ _______ _______ _______ _______ _______
$ 6,313 $ 6,275 $ 5,589 $ 5,903 $ 7,040 $ 8,450
_______ _______ _______ _______ _______ _______
Fixed charges plus preferred stock
dividend requirements . . . . . . . . . . . . $ 40,227 $ 39,999 $ 38,789 $ 40,803 $ 43,026 $ 50,932
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges plus
preferred stock dividend requirements . . . . 4.07 3.72 4.22 4.12 3.45 3.16
</TABLE>
* 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
{ Net income } required for preferred dividends
-35-<PAGE>
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,459,586
<OTHER-PROPERTY-AND-INVEST> 107,213
<TOTAL-CURRENT-ASSETS> 200,739
<TOTAL-DEFERRED-CHARGES> 0<F1>
<OTHER-ASSETS> 45,219
<TOTAL-ASSETS> 1,812,757
<COMMON> 356,812
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 298,894
<TOTAL-COMMON-STOCKHOLDERS-EQ> 655,706
0
80,000
<LONG-TERM-DEBT-NET> 479,002
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 10,995
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 598,049
<TOT-CAPITALIZATION-AND-LIAB> 1,812,757
<GROSS-OPERATING-REVENUE> 237,879
<INCOME-TAX-EXPENSE> 13,460
<OTHER-OPERATING-EXPENSES> 193,463
<TOTAL-OPERATING-EXPENSES> 206,923<F2>
<OPERATING-INCOME-LOSS> 30,956<F2>
<OTHER-INCOME-NET> (203)
<INCOME-BEFORE-INTEREST-EXPEN> 31,159
<TOTAL-INTEREST-EXPENSE> 8,696
<NET-INCOME> 22,057<F3>
939
<EARNINGS-AVAILABLE-FOR-COMM> 21,118
<COMMON-STOCK-DIVIDENDS> 17,375
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 70,428
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<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> 0000018654
<NAME> CIPS
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,459,586
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 194,920
<TOTAL-DEFERRED-CHARGES> 0<F1>
<OTHER-ASSETS> 44,125
<TOTAL-ASSETS> 1,698,631
<COMMON> 121,282
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 452,276
<TOTAL-COMMON-STOCKHOLDERS-EQ> 573,558
0
80,000
<LONG-TERM-DEBT-NET> 479,001
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 10,995
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 566,072
<TOT-CAPITALIZATION-AND-LIAB> 1,698,631
<GROSS-OPERATING-REVENUE> 235,714
<INCOME-TAX-EXPENSE> 13,269
<OTHER-OPERATING-EXPENSES> 192,985
<TOTAL-OPERATING-EXPENSES> 205,956<F2>
<OPERATING-INCOME-LOSS> 29,758
<OTHER-INCOME-NET> (161)
<INCOME-BEFORE-INTEREST-EXPEN> 29,299
<TOTAL-INTEREST-EXPENSE> 8,708
<NET-INCOME> 20,591
938
<EARNINGS-AVAILABLE-FOR-COMM> 19,653
<COMMON-STOCK-DIVIDENDS> 16,500
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 70,114
<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>
