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, 1997
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, 1997
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Common stock, no par value, 25,452,373
shares outstanding and held by
CIPSCO INCORPORATED at October 31, 1997
CIPSCO INCORPORATED
AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997
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, 1996.
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,
1997 and 1996 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.
Note: Information included herein which relates solely to CIPSCO
Incorporated is provided solely by CIPSCO Incorporated and not by
Central Illinois Public Service Company and shall be deemed not
included in the Quarterly Report on Form 10-Q of Central Illinois
Public Service Company.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income
For the Periods Ended September 30, 1997 and 1996
(in thousands except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ __________________
1997 1996 1997 1996
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Revenues:
Electric . . . . . . . . . . . . $210,400 $218,978 $539,415 $560,188
Gas. . . . . . . . . . . . . . . 15,749 15,921 101,174 101,280
Investment . . . . . . . . . . . 3,025 2,382 8,846 7,464
________ ________ ________ ________
Total operating revenues. . . 229,174 237,281 649,435 668,932
________ ________ ________ ________
Operating Expenses:
Fuel for electric generation . . 57,502 58,574 162,397 165,288
Purchased power. . . . . . . . . 4,690 14,803 16,239 39,734
Gas costs. . . . . . . . . . . . 7,947 7,546 62,941 60,227
Other operation. . . . . . . . . 43,131 38,279 121,215 107,487
Maintenance. . . . . . . . . . . 15,796 12,034 48,058 43,005
Depreciation and amortization. . 21,631 21,680 67,341 64,810
Taxes other than income taxes. . 14,665 14,121 43,832 43,505
________ ________ ________ ________
Total operating expenses. . . 165,362 167,037 522,023 524,056
________ ________ ________ ________
Operating Income . . . . . . . . . 63,812 70,244 127,412 144,876
________ ________ ________ ________
Interest and Other Charges:
Interest on long-term debt of
subsidiary . . . . . . . . . . 9,757 8,279 26,139 24,839
Other interest charges . . . . . 837 2,110 2,322 3,037
Allowance for funds used during
construction . . . . . . . . . (539) (271) (865) (446)
Preferred stock dividends of
subsidiary . . . . . . . . . . 940 931 2,782 2,794
Miscellaneous, net . . . . . . . 236 1,811 488 2,874
________ ________ ________ ________
Total interest and other charges . 11,231 12,860 30,866 33,098
________ ________ ________ ________
Income Before Income Taxes . . . . 52,581 57,384 96,546 111,778
________ ________ ________ ________
Income Taxes . . . . . . . . . . . 18,734 21,966 34,898 43,260
________ ________ ________ ________
Net Income . . . . . . . . . . . . $ 33,847 $ 35,418 $ 61,648 $ 68,518
======== ======== ======== ========
Average Shares of Common Stock
Outstanding . . . . . . . . . . . 34,070 34,070 34,070 34,070
Earnings per Average Share of
Common Stock . . . . . . . . . . $ .99 $ 1.04 $ 1.81 $ 2.01
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
September 30,1997 and December 31, 1996
(in thousands)
September 30, December 31,
1997 1996
_____________ ____________
(unaudited)
ASSETS
<S> <C> <C>
Utility Plant, at original cost:
Electric................................ $2,290,092 $2,244,571
Gas..................................... 248,083 242,664
__________ __________
2,538,175 2,487,235
Less-Accumulated depreciation........... 1,116,899 1,099,261
__________ __________
1,421,276 1,387,974
Construction work in progress........... 58,921 70,150
__________ __________
1,480,197 1,458,124
__________ __________
Current Assets:
Cash.................................... 2,833 2,287
Temporary investments, at cost which
approximates market.................... 933 3,983
Accounts receivable, net................ 73,168 74,693
Accrued unbilled revenues............... 23,131 30,126
Materials and supplies, at average cost. 35,785 38,806
Fuel for electric generation, at
average cost........................... 20,215 21,610
Gas stored underground, at average cost. 13,204 13,361
Prepayments............................. 10,888 14,403
Other current assets.................... 8,286 7,704
__________ __________
188,443 206,973
__________ __________
Regulatory Assets......................... 127,837 64,754
__________ __________
Investments and Other Assets:
Marketable securities................... 51,414 51,293
Leveraged leases and energy investments. 64,594 62,017
Other................................... 28,295 28,495
__________ __________
144,303 141,805
__________ __________
$1,940,780 $1,871,656
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity............. $ 669,837 $ 661,594
Preferred stock of subsidiary........... 80,000 80,000
Long-term debt of subsidiary............ 570,433 421,227
__________ __________
1,320,270 1,162,821
__________ __________
Current Liabilities:
Long-term debt of subsidiary due
within one year........................ - 58,000
Short-term borrowings................... 36,358 57,768
Accounts payable........................ 40,240 62,774
Accrued wages........................... 11,110 10,294
Accrued taxes........................... 22,613 13,692
Accrued interest........................ 10,954 8,432
Other................................... 53,835 49,302
__________ __________
175,110 260,262
__________ __________
Deferred Credits:
Accumulated deferred income taxes....... 342,837 341,373
Investment tax credits.................. 46,384 48,885
Regulatory liabilities, net............. 56,179 58,315
__________ __________
445,400 448,573
__________ __________
$1,940,780 $1,871,656
========== ==========
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Periods Ended September 30, 1997 and 1996
(in thousands)
(unaudited)
Nine Months Ended
September 30,
_________________________
1997 1996
__________ __________
<S> <C> <C>
Operating Activities:
Net income............................. $ 61,648 $ 68,518
Adjustments to reconcile net income
to net cash provided (used in):
Depreciation and amortization........ 67,341 64,810
Allowance for equity funds used
during construction (AFUDC)......... (381) (196)
Deferred income taxes, net........... 1,464 5,324
Investment tax credit amortization... (2,501) (2,512)
Coal contract restructuring charge... (71,795) -
Cash flows impacted by changes in
assets and liabilities:
Accounts receivable, net and
accrued unbilled revenues........... 8,520 (9,980)
Fuel for electric generation......... 1,395 8,411
Other inventories.................... 3,178 (4,026)
Prepayments.......................... 3,515 1,357
Other assets......................... (382) (5,370)
Accounts payable and other
liabilities......................... (18,001) (3,606)
Accrued wages, taxes and interest.... 12,259 2,086
Other.................................. (1,598) 65
__________ __________
Net cash provided by (used in)
operating activities................ 64,662 124,881
__________ __________
Investing Activities:
Utility construction expenditures,
excluding AFUDC....................... (78,970) (67,760)
Allowance for borrowed funds used
during construction................... (484) (250)
Changes in temporary investments....... 3,050 (156)
Long-term marketable securities........ (121) (3,285)
Long-term leveraged leases and energy
investments........................... (2,577) (1,997)
__________ __________
Net cash used in investing
activities.......................... (79,102) (73,448)
__________ __________
Financing Activities:
Common stock dividends paid............ (53,830) (52,808)
Proceeds from issuance of long-term
debt of subsidiary.................... 152,000 -
Repayment of long-term debt of
subsidiary............................ (61,000) -
Repayment of short-term borrowings..... (21,410) 6,070
Issuance expense, discount and premium. (774) (12)
__________ __________
Net cash provided by (used in)
financing activities................ 14,986 (46,750)
__________ __________
Net increase (decrease) in cash........ 546 4,683
Cash at beginning of period............ 2,287 1,088
__________ __________
Cash at end of period.................. $ 2,833 $ 5,771
========== ==========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest, net of amounts capitalized. $ 24,814 $ 26,935
Income taxes......................... $ 24,220 $ 35,685
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Statements of Income
For the Periods Ended September 30, 1997 and 1996
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ __________________
1997 1996 1997 1996
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Revenues:
Electric. . . . . . . . . . . . $210,405 $218,982 $539,432 $560,205
Gas . . . . . . . . . . . . . . 15,750 15,922 101,177 101,283
________ ________ ________ ________
Total operating revenues . . 226,155 234,904 640,609 661,488
________ ________ ________ ________
Operating Expenses:
Fuel for electric generation. . 57,502 58,574 162,397 165,288
Purchased power . . . . . . . . 4,690 14,803 16,239 39,734
Gas costs . . . . . . . . . . . 7,947 7,546 62,941 60,227
Other operation . . . . . . . . 42,792 37,998 120,222 106,540
Maintenance . . . . . . . . . . 15,795 12,033 48,056 43,002
Depreciation and amortization . 21,517 21,593 66,988 64,468
Taxes other than income taxes . 14,647 14,114 43,798 43,485
Income taxes:
Current . . . . . . . . . . . 15,127 19,082 35,694 44,568
Deferred, net . . . . . . . . 4,049 4,716 (389) 968
Deferred investment tax
credits, net . . . . . . . . (834) (837) (2,501) (2,511)
________ ________ ________ ________
Total operating expenses . . 183,232 189,622 553,445 565,769
________ ________ ________ ________
Operating Income. . . . . . . . . 42,923 45,282 87,164 95,719
________ ________ ________ ________
Other Income and Deductions:
Allowance for equity funds
used during construction . . . 237 119 381 196
Nonoperating income taxes . . . (53) 1,581 (392) 1,243
Miscellaneous, net. . . . . . . (70) (1,781) (240) (2,781)
________ ________ ________ ________
Total other income and
deductions. . . . . . . . . 114 (81) (251) (1,342)
________ ________ ________ ________
Income Before Interest Charges. . 43,037 45,201 86,913 94,377
________ ________ ________ ________
Interest Charges:
Interest on long-term debt. . . 9,757 8,279 26,139 24,839
Other interest charges. . . . . 826 2,114 2,306 3,041
Allowance for borrowed funds
used during construction . . . (302) (152) (484) (250)
________ ________ ________ ________
Total interest charges. . . 10,281 10,241 27,961 27,630
________ ________ ________ ________
Net Income. . . . . . . . . . . . 32,756 34,960 58,952 66,747
Preferred Stock Dividends . . . . 940 931 2,782 2,795
________ ________ ________ ________
Earnings for Common Stock . . . . $ 31,816 $ 34,029 $ 56,170 $ 63,952
======== ======== ======== ========
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Balance Sheets
September 30, 1997 and December 31, 1996
(in thousands)
September 30, December 31,
1997 1996
_____________ ____________
(unaudited)
ASSETS
<S> <C> <C>
Utility Plant, at original cost:
Electric................................. $2,290,092 $2,244,571
Gas...................................... 248,083 242,664
__________ __________
2,538,175 2,487,235
Less-Accumulated depreciation............ 1,116,899 1,099,261
__________ __________
1,421,276 1,387,974
Construction work in progress............ 58,921 70,150
__________ __________
1,480,197 1,458,124
__________ __________
Current Assets:
Cash..................................... 2,532 2,261
Accounts receivable, net................. 73,227 74,761
Accrued unbilled revenues................ 23,131 30,126
Materials and supplies, at average cost.. 35,785 38,806
Fuel for electric generation, at
average cost............................ 20,215 21,610
Gas stored underground, at average cost.. 13,204 13,361
Prepayments.............................. 10,788 14,323
Other current assets..................... 8,286 7,704
__________ __________
187,168 202,952
__________ __________
Regulatory Assets.......................... 127,837 64,754
__________ __________
Other Assets............................... 27,167 27,488
__________ __________
$1,822,369 $1,753,318
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholder's equity.............. $ 594,520 $ 581,224
Preferred stock.......................... 80,000 80,000
Long-term debt........................... 570,433 421,228
__________ __________
1,244,953 1,082,452
__________ __________
Current Liabilities:
Long-term debt due within one year....... - 58,000
Short-term borrowings.................... 33,558 57,768
Accounts payable......................... 39,517 62,243
Accrued wages............................ 11,110 10,279
Accrued taxes............................ 23,028 13,943
Accrued interest......................... 10,954 8,432
Other.................................... 53,836 49,301
__________ __________
172,003 259,966
__________ __________
Deferred Credits:
Accumulated deferred income taxes........ 302,850 303,700
Investment tax credits................... 46,384 48,885
Regulatory liabilities, net.............. 56,179 58,315
__________ __________
405,413 410,900
__________ __________
$1,822,369 $1,753,318
========== ==========
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
Central Illinois Public Service Company
Statements of Cash Flows
For the Periods Ended September 30, 1997 and 1996
(in thousands)
(unaudited)
Nine Months Ended
September 30,
_______________________
1997 1996
__________ __________
<S> <C> <C>
Operating Activities:
Net income.............................. $ 58,952 $ 66,747
Adjustments to reconcile net income to
net cash provided (used in):
Depreciation and amortization......... 66,988 64,468
Allowance for equity funds used
during construction (AFUDC).......... (381) (196)
Deferred income taxes, net............ (850) 968
Investment tax credit amortization.... (2,501) (2,512)
Coal contract restructuring charge.... (71,795) -
Cash flows impacted by changes in
assets and liabilities:
Accounts receivable, net and accrued
unbilled revenues.................... 8,529 (9,748)
Fuel for electric generation.......... 1,395 8,411
Other inventories..................... 3,178 (4,026)
Prepayments........................... 3,535 1,070
Other assets.......................... (261) (5,086)
Accounts payable and other
liabilities.......................... (18,191) (4,338)
Accrued wages, taxes and interest..... 12,439 3,542
Other................................... (1,246) 407
_________ _________
Net cash provided by (used in)
operating activities................. 59,791 119,707
_________ _________
Investing Activities:
Construction expenditures, excluding
AFUDC.................................. (78,970) (67,760)
Allowance for borrowed funds used
during construction.................... (484) (250)
_________ _________
Net cash used in investing activities. (79,454) (68,010)
_________ _________
Financing Activities:
Proceeds from issuance of long-term
debt .................................. 152,000 -
Repayment of long-term debt............. (61,000) -
Repayment of short-term borrowings...... (24,210) 6,070
Dividends paid:
Preferred stock....................... (2,782) (2,795)
Common stock.......................... (43,300) (50,250)
Issuance expense, discount and premium.. (774) (12)
_________ _________
Net cash provided by (used in)
financing activities................. 19,934 (46,987)
_________ _________
Net increase (decrease) in cash......... 271 4,710
Cash at beginning of period............. 2,261 1,006
_________ _________
Cash at end of period................... $ 2,532 $ 5,716
========= =========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest, net of amounts capitalized.. $ 24,814 $ 26,935
Income taxes.......................... $ 24,659 $ 38,052
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
CIPSCO INCORPORATED AND SUBSIDIARIES
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(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 sites where it and
certain of its predecessors and other affiliates previously operated
facilities that manufactured gas from coal. This manufacturing produced
various potentially harmful by-products which may remain on some of the
sites. One site was added to the United States Environmental Protection
Agency Superfund list in 1990. A ground water pump-and-treat remediation
program being conducted at the site has received applicable approvals.
CIPS has received cash settlements from certain of its insurance carriers
for, among other things, costs incurred by CIPS in connection with the
manufactured gas plant sites. In addition, in 1993, CIPS collected $2.9
million for such costs under environmental adjustment clause rate riders
(riders) approved by the Illinois Commerce Commission (the "Illinois
commission").
Costs relating to studies and remediation at the 13 sites and associated
legal and litigation expenses are being accrued and deferred rather than
expensed currently. This is being done pending recovery through rates or
from other parties. Through September 30, 1997, $51.8 million had been
deferred representing costs incurred and the estimates for 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 $14.2 million at September 30, 1997.
The Illinois commission has instituted a reconciliation proceeding to
review CIPS' environmental remediation activities in 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.
The Illinois commission also has instituted a reconciliation proceeding to
review CIPS' environmental activities in 1996. Amounts found to have been
incorrectly included under the riders would be subject to refund. On June 30,
1997, CIPS and the Staff of the Illinois Commerce Commission submitted a
stipulation with regard to all matters at issue in the reconciliation
proceeding related to environmental activities in 1993, 1994 and 1995. Under
the stipulation, as of December 31, 1995, the aggregate amount of
(i) revenues received under the riders, insurance proceeds (and related
interest) exceeded (ii) rider-related costs (and related carrying cost) by
approximately $4,111,000. If the stipulation is approved by the Commission,
this amount would be applied to cover a portion of future remediation costs.
Also, if the stipulation is approved, insurance proceeds in the amount of
$3,226,250 (and related interest) would be applied to cover non-rider
related costs incurred by CIPS. During 1997, the accumulated balance of
recoverable environmental remediation cost exceeded the balance of available
insurance proceeds and rider revenue. CIPS, therefore, began to again
collect revenue under the riders on November 1, 1997.
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.
LABOR ISSUES - The International Union of Operating Engineers Local 148 and
the International Brotherhood of Electrical Workers Local 702 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. 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 $17 million.
An administrative law judge of the NLRB has ruled that the lockout was
unlawful. On July 23, 1996, CIPS appealed to the NLRB. Management
believes the lockout was both lawful and reasonable and that the final
resolution of the issues will not have a material adverse effect on
financial position, results of operations or liquidity of the Company or
CIPS. CIPS successfully negotiated renewed contracts with both unions in
1996 which extend through June 30, 1999.
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 MATTERS
___________________________
The operations of CIPS are subject to the regulation of the Illinois
commission and the Federal Energy Regulatory Commission ("FERC").
Accordingly, its accounting policies are subject to the provisions of
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for
Effects of Certain Types of Regulation." Regulatory assets represent
probable future revenue to CIPS associated with certain costs which will be
recovered from customers through the ratemaking process. Regulatory
liabilities represent probable future reductions in revenues associated with
amounts that are to be credited to customers through the ratemaking process.
Regulatory assets and liabilities reflected in the Consolidated Balance
Sheets as of September 30, 1997 and December 31, 1996 relate to the following:
Description September 30, December 31,
1997 1996
_____________ ____________
(in thousands)
Regulatory Assets:
Coal contract restructuring charge $ 65,641 $ -
Undepreciated plant costs 36,703 40,876
Deferred environmental remediation costs 14,163 11,174
Unamortized costs related to reacquired debt 11,316 12,208
Take-or-Pay costs 14 496
________ ________
Total Regulatory Assets $127,837 $ 64,754
======== ========
Regulatory Liabilities:
SFAS 109 - Income Taxes, net $ 54,821 $ 57,957
Clean Air Act allowances, net 1,358 358
________ ________
Total Regulatory Liabilities, Net $ 56,179 $ 58,315
======== ========
SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed Of" amends SFAS No. 71 and imposes a
strict criteria for retention of regulatory assets by requiring that such
assets be probable of recovery through future revenues at each balance
sheet date. The Company continually assesses the recoverability of its
regulatory assets, and if all, or a separable portion of CIPS' operations
becomes no longer subject to the provisions of SFAS No. 71, a write off of
all or a portion of the related regulatory assets and liabilities may be
required. In such case, a determination would also have to be made regarding
the impairment and writedown of certain other assets.
Note 4. COAL CONTRACT RESTRUCTURING
_____________________________________
In 1996 CIPS and a major coal supplier for Newton and Grand Tower power
stations restructured a long-term coal contract. Under the restructuring,
CIPS paid the supplier a $70 million restructuring charge (plus interest
from November 1, 1996) in the first quarter of 1997; is purchasing at
market prices low-sulfur, out-of-state coal through the supplier (in
substitution for the high-sulfur Illinois coal CIPS was obligated to
purchase under the original contract); and obtained options for future
purchases of low-sulfur, out-of-state coal from the supplier in 1997
through 1999 at set negotiated prices.
By switching to low-sulfur coal, CIPS was able to discontinue operating the
Newton Unit 1 scrubber. The benefits of the restructuring include lower
cost coal, avoidance of significant capital expenditures to renovate the
scrubber, and elimination of scrubber operating and maintenance costs
(offset by scrubber costs of removal). The net benefits of the
restructuring are expected to exceed $100 million dollars over the next 10
years.
In December 1996, CIPS obtained an order of the Illinois commission
approving the switch to out-of-state coal, recovery of the restructuring
charge plus associated carrying costs through the fuel adjustment clause
(FAC) over six years, and continued recovery in rates of the undepreciated
scrubber investment plus costs of removal. On February 28, 1997, a group
of industrial customers (who also intervened in the proceeding before the
Illinois commission) filed an appeal of the order with the Illinois Third
District Appellate Court. The industrial customers have asked the court to
reverse or remand that part of the order authorizing CIPS to recover the
restructuring charge through the FAC.
On August 11, 1997 the FERC approved the recovery of the restructuring
charge through the wholesale FAC effective May 8, 1997.
The Company believes the Illinois commission order in this matter is lawful
and proper, will vigorously defend its position, and believes that the
order will be upheld. If the industrial customers should prevail, CIPS may
be required to cease FAC recovery of the restructuring charge, and could be
required to refund any portion of the restructuring charge that had been
collected through the FAC. In such an event, CIPS could initiate a rate
filing seeking new base rates designed to recover the restructuring charge.
The Company believes that recovery of the restructuring charge is probable,
and the related regulatory assets recorded in the matter are in compliance
with SFAS No. 71 as amended by SFAS No. 121 (See Note 3 to Condensed Notes
to Financial Statements).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
CIPSCO and Union Electric Company ("UE") entered into a Merger Agreement
dated August 11, 1995. Information concerning the agreement is included in
Part II, Item 5. Other Information of this report. CIPSCO's and Union
Electric Company's proposed merger is awaiting certain regulatory and
governmental approvals. Stockholders at both companies approved the merger
on December 20, 1995. The Missouri Public Service Commission approved the
merger on February 21, 1997. The Illinois Commerce Commission (Illinois
commission) approved the merger in an order (the ICC Order) entered
September 10, 1997. The ICC Order provides that CIPS and UE must file a rate
case or alternative regulatory plan within six months after closing the
merger which will reflect an appropriate sharing of net merger savings
between shareholders and ratepayers. An intervenor in the Illinois commission
proceeding filed an application for rehearing of the ICC Order with the
Illinois Commission which was denied. The intervenor has until mid-November
to appeal the ICC Order to the Illinois Appellate Court. The intervenor also
filed an action against the ICC and others in the Circuit Court, Tenth
Judicial Circuit, Tazewell County, Illinois (Case No. 97-CH-62) related to
the ICC Order. The filing of these pleadings does not affect the finality of
the ICC Order and the ICC Order grants the parties full authority under
Illinois law to consummate the merger. The Federal Energy Regulatory
Commission (FERC) approved the merger on October 15, 1997. The FERC ruled
that the conditions included in the Initial Decision, issued by the
Administrative Law Judge, relating to issues associated with certain power
and transmission service agreements with other utilities are not necessary
and that competition would not be harmed. On October 16, 1997, the U.S.
Nuclear Regulatory Commission issued an order indicating that it had reviewed
and found acceptable UE's request for transfer of the license for Callaway
Plant from present ownership to Ameren Corporation at the time of the merger.
Approval still is needed from the Securities and Exchange Commission under
the Public Utility Holding Company Act of 1935. The merger is expected to be
completed by year-end 1997.
On May 18, 1997, the waiting period established by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, expired without action by
the Federal Trade Commission and the Department of Justice, thus clearing
the merger from federal antitrust review.
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
1997-2001 period will be about $482 million. The projected 5-year amounts
include up to $28 million for environmental compliance, including
compliance with regulations under the Clean Air Act Amendments of 1990.
Capital requirements for the 1997-2001 period are expected to be met
primarily through internally generated funds. See, however, "National Ambient
Air Quality Standards" below. In addition to funds required to refinance
maturing short-term and long-term borrowings, external financing
requirements are expected to total about $175 million for the 1997-2001
period which include amounts for projected construction expenditures and
amounts paid in the coal contract restructuring discussed in Note 4 of
Condensed Notes to Financial Statements herein.
CIPS has remaining authority through December 31, 1998 from the Illinois
commission to incur up to $51 million in long-term debt. At September 30,
1997, remaining authority under registration statements filed with the
Securities and Exchange Commission was $75 million.
Common stock dividends paid for the twelve months ended September 30, 1997,
resulted in a payout ratio of 98% of the Company's earnings to common
shareholders. Common stock dividends paid to the Company's common
shareholders equalled 63% of net cash provided by operating activities for
the same period.
FINANCIAL CONDITION
Financial condition and changes in total Shareholder Equity of the Company
and CIPS for the nine-month periods ended September 30, 1997 and 1996 are
as follows:
Nine Months Ended
September 30,
_________________________
(in thousands)
The Company: 1997 1996
_________ _________
Common Shareholders' Equity
Net income $ 61,648 $ 68,518
Common stock dividends paid (53,830) (52,808)
Other 425 548
________ ________
Change in Shareholders' Equity $ 8,243 $ 16,258
======== ========
Nine Months Ended
September 30,
_________________________
(in thousands)
CIPS: 1997 1996
_________ _________
Common Shareholder's Equity
Earnings for common stock $ 56,170 $ 63,952
Common stock dividends paid (43,300) (50,250)
Other 426 103
________ ________
Change in Shareholder's Equity $ 13,296 $ 13,805
======== ========
OVERVIEW
The Company's earnings per share were $.99 for the third quarter and $1.81
for the nine months ended September 30, 1997, compared to earnings of $1.04
and $2.01 for the same periods in 1996. The decrease in earnings reflects
higher costs in 1997 related to business restructuring, system conversions
and timing of power station maintenance projects.
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, 1997 and 1996 (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 September 30, Ended September 30,
___________________ ___________________
(in thousands)
1997 1996 1997 1996
________ ________ ________ ________
CIPS
Electric operating
margin $140,607 $138,162 $341,981 $336,086
Gas operating margin 7,287 7,857 32,977 35,508
Other deductions and
interest expenses (115,138) (111,059) (316,006) (304,847)
CIPS preferred stock
dividends (940) (931) (2,782) (2,795)
________ ________ ________ ________
Total earnings
for common stock 31,816 34,029 56,170 63,952
________ ________ ________ ________
NON-UTILITY
Investment revenues 2,858 2,350 8,593 7,366
Other deductions
and expenses (827) (961) (3,115) (2,800)
________ ________ ________ ________
Total non-utility
net income 2,031 1,389 5,478 4,566
________ ________ ________ ________
Consolidated net income $ 33,847 $ 35,418 $ 61,648 $ 68,518
======== ======== ======== ========
RESULTS OF OPERATIONS
The results of operations of the Company and CIPS for the three months and
nine months ended September 30, 1997, compared to the same periods in 1996
are presented below.
The Company
Net Income
(in thousands) Earnings Per Share
_______________________ _______________________
Three Months Nine Months Three Months Nine Months
____________ ___________ ____________ ___________
1997 $33,847 $61,648 $ .99 $1.81
1996 35,418 68,518 1.04 2.01
_______ _______ _____ _____
Increase (Decrease) $(1,571) $(6,870) $(.05) $(.20)
======= ======= ===== =====
Percent Increase (Decrease) (4)% (10)% (5)% (10)%
CIPS
Earnings for Common Stock
(in thousands)
__________________________
Three Months Nine Months
____________ ___________
1997 $31,816 $56,170
1996 34,029 63,952
_______ _______
Increase (Decrease) $(2,213) $(7,782)
======= =======
Percent Increase (Decrease) (7)% (12)%
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 1997 compared to the
third quarter of 1996 reflecting a decrease in economy and emergency
interchange revenues and KWH sales. Economy and emergency interchange
revenues and KWH sales declined in 1997 due to accounting for certain
interchange transactions as transmission service, in compliance with FERC
Order No. 888 on open transmission access, rather than as purchase and
resale transactions as was done in 1996 prior to FERC Order No. 888 being
effective. Retail KWH sales increased 3%, due to a 7% increase in cooling
degree days in the third quarter of 1997. Power supply agreement revenues
for the third quarter of 1997 were essentially unchanged with those of the
third quarter 1996, however KWH sales increased 42% due to increased sales of
energy resulting from pricing adjustments to two agreements.
Electric revenues decreased 4% in the first nine months of 1997 compared to
the same period of 1996 reflecting fewer KWH sales due to milder weather
conditions in 1997 and a decline in economy and emergency interchange sales
over the same period in 1996 due to accounting for certain interchange
transactions as transmission service, as discussed above. KWH sales to
retail customers declined 1% due primarily to the milder temperatures in
1997. Power supply agreement revenues for the nine months ended September
30, 1997, are 9% above those of the same period in 1996 due to increased
energy sales related to these agreements. Sales to cooperatives and
municipals declined in the nine months ended September 30, 1997 compared to
the same period in 1996 due primarily to unfavorable weather conditions in
1997.
The changes in electric revenue and KWH sales are shown below:
CHANGES IN ELECTRIC REVENUE AND
KILOWATTHOUR SALES
INCREASE (DECREASE) FROM PRIOR YEAR
(in thousands)
______________________________ _______________________________
Third Quarter Nine Months
______________________________ _______________________________
Revenue Rev % KWH KWH % Revenue Rev % KWH KWH %
________ _____ _________ _____ _________ _____ _________ _____
Residential $ 1,935 3 % 24,538 3 % $ (2,266) (1)% (49,351) (2)%
Commercial 2,204 4 32,905 5 2,662 2 36,754 2
Industrial (933) (3) 17,249 3 (4,113) (5) (31,523) (2)
Public
Authorities (103) (4) (1,481) (3) 259 3 3,784 3
Miscellaneous 406 15 - - 595 8 - -
________ _______ ________ _________
Total Retail $ 3,509 2 % 73,211 3 % $ (2,863) (1)% (40,336) (1)%
Power Supply
Agreements $ 3 - % 169,139 42 % $ 4,689 9 % 446,990 41 %
Interchange
Sales
(economy/
emergency) (12,903)(49) (533,239)(45) (24,399)(39) (1,012,795) -
Transmission
Service 1,209 - - - 3,466 - - -
Cooperatives and
Municipals (396) (6) (13,306)(10) (1,666) (9) (34,035) (8)
________ _______ ________ _________
Total Sales
for Resale $(12,087)(23)% (377,406)(22)% $(17,910)(13)% (599,840) (14)%
________ _______ ________ _________
Total $ (8,578) (4)% (304,195) (8)% $(20,773) (4)% (640,176) (6)%
======== ======== ======== ========
Gas revenues decreased 1% in the third quarter of 1997 compared to the same
period in 1996 due principally to a decline in residential and commercial
sales. Residential and commercial gas revenues declined 11% and 33%,
respectively, for the third quarter of 1997 and 6% and 12% in the first nine
months of 1997 over the same periods in 1996 due principally to milder
weather in 1997. Industrial revenues increased 26% and 12%, respectively,
in the third quarter and the first nine months of 1997, and gas
transportation revenues declined 19% in the third quarter of 1997 and 18%
for the first nine months of 1997 reflecting an increase in industrial
customers buying from the CIPS system rather than buying off system and
paying CIPS to transport customer owned gas. In addition to traditional
sales to end users, CIPS sells gas to others for resale. Sales for resale
in 1997 continued to offset the above mentioned declines, whereas such sales
were minimal in 1996.
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
% %
________ _____ ______ ______ _______ _____ _______ _____
Residential $ (978) (11)% (230) (2)% $ (4,243) (6)% (13,743) (12)%
Commercial (1,056) (33) (1,264) (30) (2,643) (12) (6,675) (17)
Industrial 494 26 3,350 80 956 12 4,791 22
Sales for
Resale 1,643 - 7,408 - 6,716 - 29,857 -
Transportation (275) (19) (413) (2) (928) (18) (4,626) (5)
Miscellaneous - - - - 36 11 - -
________ ______ ________ ______
Total $ (172) (1)% 8,851 20 % $ (106) - % 9,604 4 %
======== ====== ======== ======
Investment revenues increased 27% in the third quarter of 1997 and 19% for
the first nine months of 1997 compared to the same periods in 1996 due
principally to market gains in 1997.
OPERATING EXPENSES
__________________
Fuel for electric generation declined 2% in the third quarter and first
nine months of 1997 compared with the same periods in 1996 due to a decline
in average cost of coal consumed.
Purchased power costs declined 68% for the third quarter of 1997 compared
with the same period in 1996 reflecting decreases in purchases made for
resale to interchange economy and emergency customers. Beginning in 1997,
certain interchange sales which were previously recorded as purchased power
sold for resale are now accounted for as transmission service revenue in
accordance with FERC Order No. 888 involving open access to transmission
lines. Therefore, purchased power and interchange economy and emergency
sales both declined in the third quarter 1997 compared to the third quarter
1996. Purchased power costs declined 59% for the nine months ended
September 30, 1997 compared to the same period ended September 30, 1996 for
the same reasons as in the third quarter as discussed above.
Gas costs increased 5% for the third quarter and for the nine
months ended September 30, 1997 when compared to the same periods in 1996
due principally to increased therms purchased for resale to wholesale
customers.
Other operation expenses increased 13% in the third quarter and
in the first nine months of 1997 compared to the same periods in 1996 due
primarily to increases in business restructuring costs, system conversion
costs, and outside consulting expenses.
Maintenance expenses increased 31% for the third quarter of 1997 compared
to the same period of 1996 because more maintenance was scheduled at the
power stations. Maintenance expenses increased 12% for the first nine
months of 1997 over the same period in 1996 due to two scheduled power
plant maintenance projects in 1997 and only one scheduled in 1996.
Depreciation and amortization expense was essentially unchanged in the
third quarter of 1997. Depreciation and amortization expensed increased 4%
for the first nine months of 1997 when compared to the same periods in 1996
due to normal plant additions.
Interest and other charges declined 13% in the third quarter and 7% for the
first nine months of 1997 compared to the same periods in 1996 due
principally to fewer merger transaction costs in 1997.
BALANCE SHEET
_____________
Significant changes in the balance sheet accounts at September 30, 1997
compared to balances at December 31, 1996 are:
Cash and Temporary Investments declined 40% as cash was needed for
investing and financing activities.
Prepayments declined 24% due to insurance and federal income taxes
incurred.
Regulatory assets increased 97% primarily due to the coal contract
restructuring charge which is reflected as a regulatory asset in connection
with the coal contract restructuring completed in the first quarter of
1997. See Note 4 of Condensed Notes to Financial Statements.
LABOR NEGOTIATIONS
__________________
CIPS has negotiated and reached labor agreements with three separate
employee groups consisting of (i) four clerical employees at its Newton
power station (contract extends through June 30, 1999), (ii) six clerical
employees at its Coffeen power station (contract extends through February 28,
2001) and (iii) 16 production and technical employees at a Springfield,
Illinois operations facility (contract extends through June 30, 1999).
LEGISLATIVE MATTERS
___________________
As reported in Management's Discussion and Analysis of Financial Condition
and Results of Operations in the 1996 Form 10-K of the Company and CIPS
under the caption "Regulation and Competition," various groups have made
proposals for utility deregulation legislation in Illinois. During 1997,
negotiations had been underway with state legislators, various interest
groups and utilities, including CIPS, for the purpose of developing a
comprehensive deregulation bill that would have general support. A revised
legislative proposal passed in the Illinois Senate on October 30, 1997 and a
vote in the House of Representatives is expected by mid-November 1997. Upon
approval by the House of Representatives, the Governor's approval
would be required. The Senate bill includes a 5% residential rate decrease
effective August 1, 1998 for those utilities (including CIPS) with a
residential rate lower than the Midwest group utility average, with potential
additional rate decreases in 2000 and 2002 (capped at 5% each) to the extent
that rates exceed the Midwest utility average at that time. In addition,
retail choice will be offered to customers (non-residential customers will
have this option in 1999 and 2000; residential customers will have this
option in 2002). The potential negative consequences of utility deregulation
include the impairment and write-down of certain assets, including regulatory
assets, lower revenues and reduced profit margins. Although the Company is
unable to predict the overall impact of utility deregulation on future
financial position, results of operations, or liquidity of the Company,
management believes this legislation would provide needed flexibility for
the Company to competitively enter the unregulated environment by reducing
regulatory oversight and by providing the opportunity to recover transition
costs, among other provisions.
NATIONAL AMBIENT AIR QUALITY STANDARDS
______________________________________
The U.S. Environmental Protection Agency issued final rules on July 18,
1997 revising the National Ambient Air Quality Standards for ozone and
particulate matter. The revised standards would require significant
reductions in sulfur dioxide and nitrogen oxide emissions from coal-fired
boilers beginning in 2004. Because of the magnitude of these additional
reductions (50 percent beyond that already required by the Phase II acid
rain control provisions of the 1990 Clean Air Act Amendments which become
effective January 1, 2000), CIPS could be required to incur substantial
capital costs to meet future compliance obligations for its coal-fired
boilers and could have significantly higher operating and maintenance
expenditures associated with compliance. The amount of necessary capital
expenditures or increases in operating and maintenance expense cannot be
determined at this time, but could have a significant impact on construction
expenditures, financing requirements and operating results.
FORWARD LOOKING STATEMENTS
__________________________
This report includes forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements made
herein which are not based on historical facts are forward looking and,
accordingly, involve risks and uncertainties that could cause actual
results to differ materially from those discussed. Such forward looking
statements include those under Management's Discussion and Analysis
relating to (i) the timing of regulatory approvals and consummation of the
merger with UE, (ii) amounts of future construction expenditures, sources
of funds to meet capital requirements and financing requirements, (iii) the
expected outcome of negotiations with collective bargaining units regarding
new labor contracts, (iv) anticipated deregulation legislation, and (v) the
impact of future compliance with National Ambient Air Quality Standards.
Such statements are based on management's belief, judgment and analysis as
well as assumptions made by and information available to management at the
date hereof. In addition to assumptions and cautionary factors referred to
specifically in this report in connection with such forward looking
statements, factors that could cause actual results to differ materially
from those contemplated by the forward looking statements include (i) the
speed and the nature of increased competition and deregulation in the
electric and gas utility industry, (ii) economic or weather conditions
affecting future sales and margins, (iii) changing energy prices, (iv)
availability and cost of capital, (v) unanticipated or adverse decisions in
regulatory proceedings or litigation, (vi) changes in laws and other
governmental actions, and (vii) other matters detailed in Exhibit 99.03,
cautionary statements, to the 1996 Annual Report on Form 10-K of the
Company and CIPS, incorporated herein by reference.
PART II. OTHER INFORMATION
Item 5. Other Information.
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, 1997 gives effect to the
Merger as if it had occurred at September 30, 1997. The unaudited
pro forma combined condensed statements of income for the nine-
month periods ended September 30, 1997 and 1996, and the twelve-
month period ended September 30, 1997 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, 1997 and 1996 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, 1997
(Thousands of Dollars)
As Reported (Note 1) Pro Forma
________________________ Adjustments Pro Forma
UE CIPSCO (Notes 2, 8) Combined
___________ ___________ ____________ ___________
<S> <C> <C> <C> <C>
ASSETS
Property and plant
Electric $ 8,818,445 $ 2,290,092 $ 379,353 $11,487,890
Gas 194,454 248,083 - 442,537
Other 35,960 - - 35,960
___________ ___________ ____________ ___________
9,048,859 2,538,175 379,353 11,966,387
Less accumulated
depreciation
and amortization 3,829,996 1,116,899 281,375 5,228,270
___________ ___________ ____________ ___________
5,218,863 1,421,276 97,978 6,738,117
Construction work
in progress:
Nuclear fuel in
process 108,882 - - 108,882
Other 68,232 58,921 1,708 128,861
___________ ___________ ____________ ___________
Total property
and plant, net 5,395,977 1,480,197 99,686 6,975,860
Regulatory assets:
Deferred income taxes
(Note 5) 656,248 39,534 - 695,782
Other 167,896 127,874 - 295,770
___________ ___________ ____________ ___________
Total regulatory
assets 824,144 167,408 - 991,552
Other assets:
Nuclear decommissioning
trust fund 119,333 - - 119,333
Unamortized debt expense 10,066 3,637 542 14,245
Investments in
nonregulated activities - 116,008 - 116,008
Other 26,937 24,658 (4,533) 47,062
___________ ___________ ____________ ___________
Total other assets 156,336 144,303 (3,991) 296,648
Current assets:
Cash and temporary
investments 27,657 3,766 27,602 59,025
Accounts receivable, net 242,756 49,731 19,741 312,228
Unbilled revenue 61,011 23,131 - 84,142
Materials and supplies,
at average cost -
Fossil fuel 52,741 33,419 6,214 92,374
Other 97,346 35,785 4,477 137,608
Other 50,491 42,611 3,303 96,405
___________ ___________ ____________ ___________
Total current
assets 532,002 188,443 61,337 781,782
___________ ___________ ____________ ___________
Total Assets $ 6,908,459 $ 1,980,351 $ 157,032 $ 9,045,842
=========== =========== ============ ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders'
equity (Note 2) 1,927,283 313,025 866,059 3,106,367
___________ ___________ ____________ ___________
Total common
stockholders'
equity 2,437,902 669,837 - 3,107,739
Preferred stock of
subsidiary 155,197 80,000 - 235,197
Long-term debt 1,806,752 570,433 115,556 2,492,741
___________ ___________ ____________ ___________
Total
capitalization 4,399,851 1,320,270 115,556 5,835,677
Minority interest in
consolidated subsidiary - - 3,534 3,534
Accumulated deferred
income taxes 1,298,879 342,837 (6,427) 1,635,289
Accumulated deferred
investment tax credits 155,715 46,384 - 202,099
Regulatory liability 189,862 95,750 - 285,612
Accumulated provision for
nuclear decommissioning 124,351 - - 124,351
Other deferred credits
and liabilities 178,419 41,026 3,681 223,126
Current liabilities:
Current maturity of
long-term debt 28,749 - 14,444 43,193
Short-term debt 7,000 36,358 - 43,358
Accounts payable 74,814 40,240 20,698 135,752
Wages payable 37,386 11,110 - 48,496
Taxes accrued 262,369 22,613 - 284,982
Interest accrued 55,296 10,954 2,830 69,080
Other 95,768 12,809 2,716 111,293
___________ ___________ ____________ ___________
Total current
liabilities 561,382 134,084 40,688 736,154
___________ ___________ ____________ ___________
Total Capital and
Liabilities $ 6,908,459 $ 1,980,351 $ 157,032 $ 9,045,842
=========== =========== ============ ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<TABLE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(Thousands of Dollars Except Shares and Per Share Amounts)
UE CIPSCO Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,3,9) (Notes 1,3) (Notes 2,8) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 1,744,488 $ 539,415 $ 137,789 $ 2,421,692
Gas 66,725 101,174 - 167,899
Other 353 8,846 572 9,771
____________ ___________ __________ ____________
Total operating
revenues 1,811,566 649,435 138,361 2,599,362
OPERATING EXPENSES:
Operations
Fuel and purchased
power 382,272 178,636 77,389 638,297
Gas Costs 43,968 62,941 - 106,909
Other 299,278 121,215 13,574 434,067
____________ ___________ __________ ____________
725,518 362,792 90,963 1,179,273
Maintenance 158,877 48,058 12,860 219,795
Depreciation and
amortization 185,151 67,341 11,116 263,608
Income taxes (Note 6) 187,023 34,898 5,814 227,735
Other taxes 166,680 43,832 1,393 211,905
____________ ___________ __________ ____________
Total operating
expenses 1,423,249 556,921 122,146 2,102,316
OPERATING INCOME 388,317 92,514 16,215 497,046
OTHER INCOME AND
DEDUCTIONS:
Allowance for equity
funds used during
construction 3,014 381 - 3,395
Minority interest in
consolidated
subsidiary - - (3,772) (3,772)
Miscellaneous, net (5,950) (488) (4,931) (11,369)
____________ ___________ __________ ____________
Total other
income and
deductions,
net (2,936) (107) (8,703) (11,746)
INCOME BEFORE INTEREST
CHARGES AND PREFERRED
DIVIDENDS 385,381 92,407 7,512 485,300
INTEREST CHARGES AND
PREFERRED DIVIDENDS:
Interest 105,289 28,461 7,512 141,262
Allowance for
borrowed funds
used during
construction (4,959) (484) - (5,443)
Preferred dividends
of subsidiaries
(Note 7) 6,613 2,782 - 9,395
____________ ___________ __________ ____________
Net interest
charges and
preferred
dividends 106,943 30,759 7,512 145,214
NET INCOME $ 278,438 $ 61,648 $ - $ 340,086
============ =========== ========== ============
EARNINGS PER SHARE
OF COMMON STOCK
(BASED ON AVERAGE
SHARES OUTSTANDING) $2.73 $1.81 $2.48
===== ===== =====
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.
<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 1,3,9) (Notes 1,3) (Notes 2,8) 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 6) 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 7) 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
============ =========== ========== ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<TABLE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1997
(Thousands of Dollars Except Shares and Per Share Amounts)
UE CIPSCO Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,3,9) (Notes 1,3) (Notes 2,8) Combined
_____________ _____________ ____________ ____________
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 2,189,241 $ 710,040 $ 183,193 $ 3,082,474
Gas 97,512 155,242 - 252,754
Other 498 11,935 707 13,140
____________ _____________ ____________ ____________
Total operating
revenues 2,287,251 877,217 183,900 3,348,368
OPERATING EXPENSES:
Operations
Fuel and purchased
power 508,066 247,829 101,876 857,771
Gas costs 66,061 98,942 - 165,003
Other 398,670 160,314 18,557 577,541
____________ _____________ ____________ ____________
972,797 507,085 120,433 1,600,315
Maintenance 222,521 66,514 16,813 305,848
Depreciation and
amortization 246,348 89,928 15,440 351,716
Income taxes (Note 6) 194,846 41,195 7,919 243,960
Other taxes 213,483 58,145 1,668 273,296
____________ _____________ ____________ ____________
Total operating
expenses 1,849,995 762,867 162,273 2,775,135
OPERATING INCOME 437,256 114,350 21,627 573,233
OTHER INCOME AND
DEDUCTIONS:
Allowance for equity
funds used during
construction 4,546 563 - 5,109
Minority interest
in consolidated
subsidiary - - (4,887) (4,887)
Miscellaneous, net (9,882) (399) (6,815) (17,096)
____________ _____________ ____________ ____________
Total other
income and
deductions,
net (5,336) 164 (11,702) (16,874)
INCOME BEFORE INTEREST
CHARGES AND PREFERRED
DIVIDENDS 431,920 114,514 9,925 556,359
INTEREST CHARGES AND
PREFERRED DIVIDENDS:
Interest 137,345 38,336 9,925 185,606
Allowance for
borrowed funds
used during
construction (6,298) (717) - (7,015)
Preferred dividends
of subsidiaries
(Note 7) 9,925 3,708 - 13,633
____________ _____________ ____________ ____________
Net interest
charges and
preferred
dividends 140,972 41,327 9,925 192,224
NET INCOME $ 290,948 $ 73,187 $ - $ 364,135
============ ============= ============ ============
EARNINGS PER SHARE
OF COMMON STOCK
(BASED ON AVERAGE
SHARES OUTSTANDING) $2.85 $2.15 $2.65
===== ===== =====
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.
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 5, 6 and 7). 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. 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, 1997 included merger-related
costs of $9 million and $12 million, net of income taxes, for Union
Electric, and $1 million, net of income taxes, for each of the periods for
CIPSCO, respectively. Net income for the nine months ended September 30,
1996 included merger-related costs of $5 million, net of income taxes,
each, for Union Electric and CIPSCO.
4. 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.
5. CIPSCO's regulatory asset related to deferred income taxes was
reclassified from the regulatory liability account balance to conform to
this reporting presentation.
6. CIPSCO's income taxes are reflected as operating expenses to conform
to this reporting presentation.
7. 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.
8. Pro forma adjustments were 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 were eliminated.
9. Net income for the nine and twelve months ended September 30, 1997,
included credits for Missouri electric customers which reduced revenues and
pre-tax income of Union Electric by $20 million and $21 million,
respectively. Net income for the nine months ended September 30, 1996,
included a credit to Missouri electric customers which reduced revenues and
pre-tax income of Union Electric by $46 million.
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.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant, CIPSCO Incorporated, has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CIPSCO Incorporated
Date: November 13, 1997 /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 13, 1997 /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, 1997
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
Exhibit 12
<TABLE>
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, ________________________________________________
1997 1996 1995 1994 1993 1992
__________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net income.... $ 69,598 $ 77,393 $ 70,631 $ 81,913 $ 84,011 $ 72,601
Add--Federal and
state income
taxes:
Current.... 44,973 53,847 41,276 38,097 50,441 6,110
Deferred
(net)..... (4,162) (2,805) 5,627 13,190 1,674 33,998
Investment
tax credit
amortization.. (3,338) (3,349) (3,361) (3,367) (3,366) (3,336)
Income tax
applicable to
nonoperating
activities..... 1,228 (407) 941 603 631 2,989
_______ _______ _______ _______ _______ _______
38,701 47,286 44,483 48,523 49,380 39,761
_______ _______ _______ _______ _______ _______
Net income
before income
taxes............ 108,299 124,679 115,114 130,436 133,391 112,362
_______ _______ _______ _______ _______ _______
Add--Fixed charges
Interest on
long-term
debt.......... 32,678 31,409 31,168 31,164 32,823 35,534
Interest on
provision for
revenue
refunds....... - - - - - (803)
Other
interest..... 3,901 4,636 853 358 479 392
Amortization of
net debt premium
and discount... 1,740 1,709 1,703 1,678 1,598 863
_______ _______ _______ _______ _______ _______
38,319 37,754 33,724 33,200 34,900 35,986
_______ _______ _______ _______ _______ _______
Earnings as
defined.......... $146,618 $162,433 $148,838 $163,636 $168,291 $148,348
======= ======= ======= ======= ======= =======
Ratio of
earnings to
fixed charges.... 3.83 4.30 4.41 4.93 4.82 4.12
Earnings required
for preferred
dividends:
Preferred
stock
dividends..... $ 3,708 $ 3,721 $ 3,850 $ 3,510 $ 3,718 $ 4,549
Adjustment
to pre-tax
basis*........ 2,062 2,273 2,425 2,079 2,185 2,491
_______ _______ _______ _______ _______ _______
$ 5,770 $ 5,994 $ 6,275 $ 5,589 $ 5,903 $ 7,040
_______ _______ _______ _______ _______ _______
Fixed charges
plus preferred
stock dividend
requirements..... $ 44,089 $ 43,748 $ 39,999 $ 38,789 $ 40,803 $ 43,026
======= ======= ======= ======= ======= =======
Ratio of earnings
to fixed charges
plus preferred
stock dividend
requirements..... 3.33 3.71 3.72 4.22 4.12 3.45
</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 -
<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-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,480,197
<OTHER-PROPERTY-AND-INVEST> 116,008
<TOTAL-CURRENT-ASSETS> 188,443
<TOTAL-DEFERRED-CHARGES> 127,837
<OTHER-ASSETS> 28,295
<TOTAL-ASSETS> 1,940,780
<COMMON> 356,812
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 313,025
<TOTAL-COMMON-STOCKHOLDERS-EQ> 669,837
0
80,000
<LONG-TERM-DEBT-NET> 570,433
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 36,358
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 584,152
<TOT-CAPITALIZATION-AND-LIAB> 1,940,780
<GROSS-OPERATING-REVENUE> 649,435
<INCOME-TAX-EXPENSE> 34,898
<OTHER-OPERATING-EXPENSES> 522,023
<TOTAL-OPERATING-EXPENSES> 556,921<F1>
<OPERATING-INCOME-LOSS> 92,514<F1>
<OTHER-INCOME-NET> (488)
<INCOME-BEFORE-INTEREST-EXPEN> 92,026
<TOTAL-INTEREST-EXPENSE> 27,596
<NET-INCOME> 64,430<F2>
2,782
<EARNINGS-AVAILABLE-FOR-COMM> 61,648
<COMMON-STOCK-DIVIDENDS> 53,830
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 64,662
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.81
<FN>
<F1> INCLUDES INCOME TAX EXPENSE.
<F2> 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,480,197
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 187,168
<TOTAL-DEFERRED-CHARGES> 127,837
<OTHER-ASSETS> 27,167
<TOTAL-ASSETS> 1,822,369
<COMMON> 121,283
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 473,237
<TOTAL-COMMON-STOCKHOLDERS-EQ> 594,520
0
80,000
<LONG-TERM-DEBT-NET> 570,433
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 33,558
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 543,858
<TOT-CAPITALIZATION-AND-LIAB> 1,822,369
<GROSS-OPERATING-REVENUE> 640,609
<INCOME-TAX-EXPENSE> 32,804
<OTHER-OPERATING-EXPENSES> 520,641
<TOTAL-OPERATING-EXPENSES> 553,445<F1>
<OPERATING-INCOME-LOSS> 87,164
<OTHER-INCOME-NET> (251)
<INCOME-BEFORE-INTEREST-EXPEN> 86,913
<TOTAL-INTEREST-EXPENSE> 27,961
<NET-INCOME> 58,952
2,782
<EARNINGS-AVAILABLE-FOR-COMM> 56,170
<COMMON-STOCK-DIVIDENDS> 43,300
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 59,791
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1> INCLUDES INCOME TAX EXPENSE.
<F2> INFORMATION NOT NORMALLY DISCLOSED IN FINANCIAL STATEMENTS AND NOTES.
</TABLE>
