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 JUNE 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 July 31, 1997
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Common stock, no par value, 25,452,373
shares outstanding and held by
CIPSCO INCORPORATED at July 31, 1997
CIPSCO INCORPORATED
AND
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
FORM 10-Q FOR THE QUARTER ENDED JUNE 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 1. Legal Proceedings
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 June 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 June 30, 1997 and 1996
(in thousands except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
____________________ __________________
1997 1996 1997 1996
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Revenues:
Electric . . . . . . . . . . . . $168,153 $169,922 $329,015 $341,210
Gas. . . . . . . . . . . . . . . 24,287 20,941 85,425 85,359
Investment . . . . . . . . . . . 2,478 2,909 5,821 5,082
________ ________ ________ ________
Total operating revenues. . . 194,918 193,772 420,261 431,651
________ ________ ________ ________
Operating Expenses:
Fuel for electric generation . . 52,217 50,567 104,895 106,715
Purchased power. . . . . . . . . 6,616 11,810 11,550 24,931
Gas costs. . . . . . . . . . . . 14,665 11,484 54,994 52,681
Other operation. . . . . . . . . 38,178 34,572 78,082 69,207
Maintenance. . . . . . . . . . . 17,391 19,535 32,262 30,971
Depreciation and amortization. . 23,100 22,217 45,710 43,130
Taxes other than income taxes. . 13,100 13,371 29,168 29,384
________ ________ ________ ________
Total operating expenses. . . 165,267 163,556 356,661 357,019
________ ________ ________ ________
Operating Income . . . . . . . . . 29,651 30,216 63,600 74,632
________ ________ ________ ________
Interest and Other Charges:
Interest on long-term debt of
subsidiary . . . . . . . . . . 8,582 8,281 16,382 16,560
Other interest charges . . . . . 855 484 1,484 927
Allowance for funds used during
construction . . . . . . . . . 167 (150) (326) (175)
Preferred stock dividends of
subsidiary. . . . . . . . . . . 929 925 1,842 1,864
Miscellaneous, net . . . . . . . 180 860 253 1,062
________ ________ ________ ________
Total interest and other charges . 10,713 10,400 19,635 20,238
________ ________ ________ ________
Income Before Income Taxes . . . . 18,938 19,816 43,965 54,394
________ ________ ________ ________
Income Taxes . . . . . . . . . . . 6,689 7,834 16,165 21,294
________ ________ ________ ________
Net Income . . . . . . . . . . . . $ 12,249 $ 11,982 $ 27,800 $ 33,100
======== ======== ======== ========
Average Shares of Common Stock
Outstanding . . . . . . . . . . . 34,070 34,070 34,070 34,070
Earnings per Average Share of
Common Stock . . . . . . . . . . $ .36 $ .35 $ .82 $ .97
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
CIPSCO INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
June 30,1997 and December 31, 1996
(in thousands)
June 30, December 31,
1997 1996
_____________ ____________
(unaudited)
ASSETS
<S> <C> <C>
Utility Plant, at original cost:
Electric................................ $2,286,097 $2,244,571
Gas..................................... 245,808 242,664
__________ __________
2,531,905 2,487,235
Less-Accumulated depreciation........... 1,106,615 1,099,261
__________ __________
1,425,290 1,387,974
Construction work in progress........... 43,692 70,150
__________ __________
1,468,982 1,458,124
__________ __________
Current Assets:
Cash.................................... 4,887 2,287
Temporary investments, at cost which
approximates market.................... 3,124 3,983
Accounts receivable, net................ 67,810 74,693
Accrued unbilled revenues............... 28,860 30,126
Materials and supplies, at average cost. 38,402 38,806
Fuel for electric generation, at
average cost........................... 27,374 21,610
Gas stored underground, at average cost. 8,776 13,361
Prepayments............................. 12,425 14,403
Other current assets.................... 7,976 7,704
__________ __________
199,634 206,973
__________ __________
Regulatory Assets......................... 129,844 64,754
__________ __________
Investments and Other Assets:
Marketable securities................... 54,090 51,293
Leveraged leases and energy investments. 63,708 62,017
Other................................... 28,946 28,495
__________ __________
146,744 141,805
__________ __________
$1,945,204 $1,871,656
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity............. $ 653,735 $ 661,594
Preferred stock of subsidiary........... 80,000 80,000
Long-term debt of subsidiary............ 570,379 421,227
__________ __________
1,304,114 1,162,821
__________ __________
Current Liabilities:
Long-term debt of subsidiary due
within one year........................ - 58,000
Short-term borrowings................... 55,481 57,768
Accounts payable........................ 44,493 62,774
Accrued wages........................... 11,177 10,294
Accrued taxes........................... 14,735 13,692
Accrued interest........................ 9,587 8,432
Other................................... 59,099 49,302
__________ __________
194,572 260,262
__________ __________
Deferred Credits:
Accumulated deferred income taxes....... 340,609 341,373
Investment tax credits.................. 47,218 48,885
Regulatory liabilities, net............. 58,691 58,315
__________ __________
446,518 448,573
__________ __________
$1,945,204 $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 June 30, 1997 and 1996
(in thousands)
(unaudited)
Six Months Ended
June 30,
_________________________
1997 1996
__________ __________
<S> <C> <C>
Operating Activities:
Net income............................. $ 27,800 $ 33,100
Adjustments to reconcile net income
to net cash provided (used in):
Depreciation and amortization........ 45,710 43,130
Allowance for equity funds used
during construction (AFUDC)......... (144) (77)
Deferred income taxes, net........... (764) 95
Investment tax credit amortization... (1,667) (1,674)
Coal contract restructuring charge... (71,795) -
Cash flows impacted by changes in
assets and liabilities:
Accounts receivable, net and
accrued unbilled revenues........... 8,149 (9,874)
Fuel for electric generation......... (5,764) 8,622
Other inventories.................... 4,989 2,648
Prepayments.......................... 1,978 1,247
Other assets......................... (723) (3,417)
Accounts payable and other
liabilities......................... (8,484) 10,966
Accrued wages, taxes and interest.... 3,081 4,368
Other.................................. 2,697 559
__________ __________
Net cash provided by (used in)
operating activities................ 5,063 89,693
__________ __________
Investing Activities:
Utility construction expenditures,
excluding AFUDC....................... (50,869) (38,208)
Allowance for borrowed funds used
during construction................... (182) (98)
Changes in temporary investments....... 859 (1,640)
Long-term marketable securities........ (2,797) (2,466)
Long-term leveraged leases and energy
investments........................... (1,691) (1,129)
__________ __________
Net cash used in investing
activities.......................... (54,680) (43,541)
__________ __________
Financing Activities:
Common stock dividends paid............ (35,773) (35,092)
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..... (2,287) (9,439)
Issuance expense, discount and premium. (723) (12)
__________ __________
Net cash provided by (used in)
financing activities................ 52,217 (44,543)
__________ __________
Net increase (decrease) in cash........ 2,600 1,609
Cash at beginning of period............ 2,287 1,088
__________ __________
Cash at end of period.................. $ 4,887 $ 2,697
========== ==========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest, net of amounts capitalized. $ 17,184 $ 16,273
Income taxes......................... $ 21,617 $ 22,802
</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 June 30, 1997 and 1996
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
__________________ __________________
1997 1996 1997 1996
________ ________ ________ ________
<S> <C> <C> <C> <C>
Operating Revenues:
Electric . . . . . . . . . . . $168,159 $169,929 $329,027 $341,224
Gas. . . . . . . . . . . . . . 24,288 20,942 85,427 85,361
________ ________ ________ ________
Total operating revenues. . 192,447 190,871 414,454 426,585
________ ________ ________ ________
Operating Expenses:
Fuel for electric generation . 52,217 50,567 104,895 106,715
Purchased power . . . . . . . 6,616 11,810 11,550 24,931
Gas costs . . . . . . . . . . 14,665 11,484 54,994 52,681
Other operation . . . . . . . 37,879 34,250 77,430 68,541
Maintenance . . . . . . . . . 17,391 19,534 32,261 30,969
Depreciation and
amortization . . . . . . . . 22,979 22,090 45,471 42,876
Taxes other than income
taxes . . . . . . . . . . . . 13,089 13,363 29,150 29,371
Income taxes:
Current . . . . . . . . . . 8,047 8,896 20,567 25,486
Deferred, net . . . . . . . (1,315) (966) (4,438) (3,748)
Deferred investment tax
credits, net. . . . . . . . (834) (837) (1,667) (1,674)
________ ________ ________ ________
Total operating expenses. . 170,734 170,191 370,213 376,148
________ ________ ________ ________
Operating Income . . . . . . . . 21,713 20,680 44,241 50,437
________ ________ ________ ________
Other Income and Deductions:
Allowance for equity funds
used during construction. . . (74) 66 144 77
Nonoperating income taxes. . . (139) (40) (339) (338)
Miscellaneous, net . . . . . . (144) (829) (170) (1,000)
________ ________ ________ ________
Total other income and
deductions . . . . . . . . (357) (803) (365) (1,261)
________ ________ ________ ________
Income Before Interest Charges . 21,356 19,877 43,876 49,176
________ ________ ________ ________
Interest Charges:
Interest on long-term debt . . 8,582 8,281 16,382 16,560
Other interest charges . . . . 850 484 1,480 927
Allowance for borrowed funds
used during construction. . . 93 (84) (182) (98)
________ ________ ________ ________
Total interest charges . . 9,525 8,681 17,680 17,389
________ ________ ________ ________
Net Income . . . . . . . . . . . 11,831 11,196 26,196 31,787
Preferred Stock Dividends. . . . 929 925 1,841 1,864
________ ________ ________ ________
Earnings for Common Stock. . . . $ 10,902 $ 10,271 $ 24,355 $ 29,923
======== ======== ======== ========
</TABLE>
The accompanying condensed notes to financial statements are an integral
part of these statements.
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Balance Sheets
June 30, 1997 and December 31, 1996
(in thousands)
June 30, December 31,
1997 1996
_____________ ____________
(unaudited)
ASSETS
<S> <C> <C>
Utility Plant, at original cost:
Electric................................. $2,286,097 $2,244,571
Gas...................................... 245,808 242,664
__________ __________
2,531,905 2,487,235
Less-Accumulated depreciation............ 1,106,615 1,099,261
__________ __________
1,425,290 1,387,974
Construction work in progress............ 43,692 70,150
__________ __________
1,468,982 1,458,124
__________ __________
Current Assets:
Cash..................................... 4,600 2,261
Accounts receivable, net................. 67,841 74,761
Accrued unbilled revenues................ 28,860 30,126
Materials and supplies, at average cost.. 38,402 38,806
Fuel for electric generation, at
average cost............................ 27,374 21,610
Gas stored underground, at average cost.. 8,776 13,361
Prepayments.............................. 12,306 14,323
Other current assets..................... 7,976 7,704
__________ __________
196,135 202,952
__________ __________
Regulatory Assets.......................... 129,844 64,754
__________ __________
Other Assets............................... 27,794 27,488
__________ __________
$1,822,755 $1,753,318
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholder's equity.............. $ 570,293 $ 581,224
Preferred stock.......................... 80,000 80,000
Long-term debt........................... 570,379 421,228
__________ __________
1,220,672 1,082,452
__________ __________
Current Liabilities:
Long-term debt due within one year....... - 58,000
Short-term borrowings.................... 55,481 57,768
Accounts payable......................... 43,746 62,243
Accrued wages............................ 11,177 10,279
Accrued taxes............................ 16,459 13,943
Accrued interest......................... 9,587 8,432
Other.................................... 59,098 49,301
__________ __________
195,548 259,966
__________ __________
Deferred Credits:
Accumulated deferred income taxes........ 300,626 303,700
Investment tax credits................... 47,218 48,885
Regulatory liabilities, net.............. 58,691 58,315
__________ __________
406,535 410,900
__________ __________
$1,822,755 $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 June 30, 1997 and 1996
(in thousands)
(unaudited)
Six Months Ended
June 30,
_______________________
1997 1996
__________ __________
<S> <C> <C>
Operating Activities:
Net income.............................. $ 26,196 $ 31,787
Adjustments to reconcile net income to
net cash provided (used in):
Depreciation and amortization......... 45,471 42,876
Allowance for equity funds used
during construction (AFUDC).......... (144) (77)
Deferred income taxes, net............ (3,074) (3,748)
Investment tax credit amortization.... (1,667) (1,674)
Coal contract restructuring charge.... (71,795) -
Cash flows impacted by changes in
assets and liabilities:
Accounts receivable, net and accrued
unbilled revenues.................... 8,186 (9,749)
Fuel for electric generation.......... (5,764) 8,622
Other inventories..................... 4,989 2,648
Prepayments........................... 2,017 1,966
Other assets.......................... (578) (3,132)
Accounts payable and other
liabilities.......................... (8,700) 10,083
Accrued wages, taxes and interest..... 4,569 4,850
Other................................... 2,935 813
_________ _________
Net cash provided by (used in)
operating activities................. 2,641 85,265
_________ _________
Investing Activities:
Construction expenditures, excluding
AFUDC.................................. (50,869) (38,208)
Allowance for borrowed funds used
during construction.................... (182) (98)
_________ _________
Net cash used in investing activities. (51,051) (38,306)
_________ _________
Financing Activities:
Proceeds from issuance of long-term
debt................................... 152,000 -
Repayment of long-term debt............. (61,000) -
Repayment of short-term borrowings...... (2,287) (9,439)
Dividends paid:
Preferred stock....................... (1,841) (1,864)
Common stock.......................... (35,400) (34,000)
Issuance expense, discount and premium.. (723) (12)
_________ _________
Net cash provided by (used in)
financing activities................. 50,749 (45,315)
_________ _________
Net increase (decrease) in cash......... 2,339 1,644
Cash at beginning of period............. 2,261 1,006
_________ _________
Cash at end of period................... $ 4,600 $ 2,650
========= =========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest, net of amounts capitalized.. $ 17,184 $ 16,273
Income taxes.......................... $ 21,100 $ 25,238
</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
JUNE 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. Certain items previously reported for periods prior to
1997 have been reclassified to conform with the current-period
presentation.
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 June 30, 1997, $50.7 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 $13.2 million at June 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.
Amounts found to have been incorrectly included under the riders would be
subject to refund. This proceeding is expected to indicate what incurred
or accrued costs are appropriate to defer for future rider recovery and how
insurance recoveries should be allocated to such environmental costs.
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 $16 million.
An administrative law judge of the NLRB has ruled that the lockout was
unlawful. On July 23, 1996, the Company appealed to the NLRB. Management
believes the lockout was both lawful and reasonable and that the final
resolution of 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 June 30, 1997 relate to the following:
Description Amount
___________ ______
(in thousands)
Regulatory Assets:
Coal contract restructuring charge $ 67,038
Undepreciated plant costs 37,906
Unamortized costs related to reacquired debt 11,613
Deferred environmental remediation costs 13,229
Take-or-Pay costs 58
___________
Regulatory Assets $ 129,844
===========
Regulatory Liabilities:
SFAS 109 - Income Taxes, net $ 56,225
Clean Air Act allowances, net 2,466
___________
Regulatory Liabilities, Net $ 58,691
===========
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
stricter 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 addition, a determination would 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, subject to a 30-day
appeal by intervenors.
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 and is expected to be completed by year-end 1997.
Stockholders at both companies approved the merger on December 20, 1995,
and the Missouri Public Service Commission approved the merger on February
21, 1997. The Illinois Commerce Commission (Illinois commission), the
Federal Energy Regulatory Commission (FERC) and various other federal
agencies are expected to issue decisions on the merger later this year.
On April 30, 1997, the presiding administrative law judge in the FERC case
issued an initial decision finding that, subject to certain conditions, the
merger between CIPSCO and UE is in the public interest and should be
approved. The conditions concern certain power and transmission service
agreements with other utilities. A final order from the FERC is expected
later this year.
On July 25, 1997, a Hearing Examiner for the Illinois commission issued a
second proposed order in connection with the CIPSCO and UE merger proceedings.
In the July 1997 proposed order, the Hearing Examiner affirmed the
recommendations made in the November 1996 proposed order, including that the
merger between CIPSCO and UE be approved. In addition, the July 1997
proposed order addressed market power issues, as well as issues associated
with affiliate transactions. In the July 1997 proposed order, the Hearing
Examiner concluded that the proposed merger does not create any significant
retail market power issues and that CIPSCO's and UE's proposed treatment
of affiliate transactions is reasonable.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, required
review of the proposed merger by the Federal Trade Commission and the
Department of Justice. On May 18, 1997, the waiting period established by the
Act expired without action by either agency 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 "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
the coal contract restructuring payment.
CIPS has remaining authority through December 31, 1998 from the Illinois
commission to incur up to $51 million in long-term debt. At June 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 June 30, 1997,
resulted in a payout ratio of 95% of the Company's earnings to common
shareholders. Common stock dividends paid to the Company's common
shareholders equalled 81% 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 six-month periods ended June 30, 1997 and 1996 are as
follows:
Six Months Ended
June 30,
_________________________
(in thousands)
The Company: 1997 1996
_________ _________
Common Shareholders' Equity
Net income $ 27,800 $ 33,100
Common stock dividends paid (35,773) (35,092)
Other 114 407
________ ________
Change in Shareholders' Equity $ (7,859) $ (1,585)
======== ========
Six Months Ended
June 30,
_________________________
(in thousands)
CIPS: 1997 1996
_________ _________
Common Shareholder's Equity
Earnings for common stock $ 24,355 $ 29,923
Common stock dividends paid (35,400) (34,000)
Other 114 (38)
________ ________
Change in Shareholder's Equity $(10,931) $ (4,115)
======== ========
OVERVIEW
The Company's earnings per share were $.36 for the quarter ended June 30,
1997, compared to $.35 per share earned during the same period in 1996.
The nearly flat earnings reflect a slight increase in sales margins offset
by an increase in unusual costs for corporate restructuring and the proposed
merger. The Company's earnings per share were $.82 for the six months ended
June 30, 1997, compared to $.97 per share earned during the same period in
1996. The decrease primarily reflects higher expenses in 1997 due to
costs related to business restructuring, system conversions and two planned
maintenance outages at power stations.
The following table summarizes the components of consolidated net income
and CIPS earnings for common stock for the three months and six month
periods ended June 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.
Second Quarter Six Months
Ended June 30, Ended June 30,
___________________ ___________________
(in thousands)
1997 1996 1997 1996
________ ________ ________ ________
CIPS
Electric operating
margin $103,946 $101,948 $201,373 $197,924
Gas operating margin 8,320 7,952 25,689 27,651
Other deductions and
interest expenses (100,435) (98,704) (200,865) (193,788)
CIPS preferred stock
dividends (929) (925) (1,842) (1,864)
________ ________ ________ ________
Total earnings
for common stock 10,902 10,271 24,355 29,923
________ ________ ________ ________
NON-UTILITY
Investment revenues 2,441 2,875 5,735 5,015
Other deductions
and expenses (1,092) (1,164) (2,290) (1,838)
________ ________ ________ ________
Total non-utility
net income 1,349 1,711 3,445 3,177
________ ________ ________ ________
Consolidated net income $ 12,249 $ 11,982 $ 27,800 $ 33,100
======== ======== ======== ========
RESULTS OF OPERATIONS
The results of operations of the Company and CIPS for the three months and
six months ended June 30, 1997, compared to the same periods in 1996 are
presented below.
The Company
Net Income
(in thousands) Earnings Per Share
_______________________ _______________________
Three Months Six Months Three Months Six Months
____________ __________ ____________ __________
1997 $12,249 $27,800 $ .36 $ .82
1996 11,982 33,100 .35 .97
_______ _______ _____ _____
Increase (Decrease) $ 267 $(5,300) $ .01 $(.15)
Percent Increase (Decrease) 2 % (16)% 3 % (15)%
CIPS
Earnings for Common Stock
(in thousands)
__________________________
Three Months Six Months
____________ __________
1997 $10,902 $24,355
1996 10,271 29,923
_______ _______
Increase (Decrease) $ 631 $(5,568)
======= =======
Percent Increase (Decrease) 6 % (19)%
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 1% in the second quarter of 1997 compared to the
second quarter of 1996 reflecting a 1% decline in KWH sales due principally to
milder weather conditions in 1997. Cooling degree days in the second quarter
of 1997 were 25% lower than in 1996. Power supply agreement revenues for the
second quarter of 1997 improved 17% over the second quarter 1996 due to
increased sales of energy resulting from pricing adjustments to two
agreements. Economy and emergency interchange sales declined in the second
quarter of 1997 over the same period in 1996 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.
Electric revenues decreased 4% in the first six months of 1997 compared to
the same period of 1996 reflecting lower KWH sales due principally to
weather conditions in 1997. KWH sales to residential and industrial
customers decreased 4% and 6%, respectively, due to the weather while
commercial electric sales had 1% growth. Public authorities and other
revenues are higher in the first six months of 1997 compared to the
same period of 1996 due to transmission service revenues, which are
included in this category in 1997. Power supply agreement revenues for the
six months ended June 30, 1997, were 14% above those of the same period in
1996 due to increased energy sales related to these agreements. Economy and
emergency interchange sales declined in the first six months of 1997 over
the same period in 1996 due to accounting for certain interchange
transactions as transmission service, as discussed above. Sales to
cooperatives and municipals decreased in the six months ended June 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)
______________________________ _____________________________
Second Quarter Six Months
______________________________ _____________________________
Revenue Rev % KWH KWH % Revenue Rev % KWH KWH %
________ _____ ________ _____ _______ _____ ________ _____
Residential $ (1,255) (2)% (32,214) (5)% $ (4,201) (4)% (73,889) (5)%
Commercial 1,271 3 1,731 - 458 1 3,849 -
Industrial (1,727) (6) (36,588) (6) (3,179) (6) (48,772) (4)
Public
Authorities
and Other 1,527 32 (225) (1) 2,807 29 5,264 6
________ ________ ________ _______
Total Retail $ (184) - % (67,296) (3)% $ (4,115) (2)% (113,547) (3) %
Power Supply
Agreements $ 2,862 17 % 165,787 51 % $ 4,688 14 % 277,851 40 %
Interchange
Sales
(economy/
emergency) (3,492) (21) (121,001) (15) (11,496) (32) (479,556)(28)
Cooperatives and
Municipals (955) (18) (15,314) (12) (1,272) (11) (20,728) (8)
________ ________ ________ _______
Total Sales
for Resale $ (1,585) (4)% 29,472 2 % $ (8,082) (10)% (222,434) (8) %
________ ________ ________ _______
Total $ (1,769) (1)% (37,824) (1)% $(12,197) (4)% (335,981) (5)%
======== ======== ======== =======
Gas revenues increased 16% in the second quarter of 1997 compared to the
same period in 1996 due principally to therm sales to others for resale.
Residential and commercial gas revenues declined 1% and 7%, respectively,
for the second quarter of 1997 and 6% and 8% in the first six months of 1997
over the same periods in 1996 due to milder weather. Industrial revenues
increased 12% and 8%, respectively, in the second quarter and the first six
months of 1997, primarily attributable to higher purchased gas costs which
flow through to revenues through the Purchased Gas Adjustment clause (PGA).
Gas transportation revenues declined 11% in the second quarter of 1997 and
17% for the first six months of 1997 reflecting an increase in 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)
_____________________________ ______________________________
Second Quarter Six Months
_____________________________ ______________________________
Revenue Rev % Therms Therms Revenue Rev % Therms Therms
% %
________ _____ ______ ______ _______ _____ ______ ______
Residential $ (127) (1)% (1,067) (5)% $ (3,265) (6)% (13,513) (13)%
Commercial (282) (7) (636) (10) (1,587) (8) (5,411) (15)
Industrial 259 12 1,803 32 461 8 1,443 8
Sales for
Resale 3,662 100 18,212 100 5,073 100 22,449 100
Transportation (160) (11) (3,182) (11) (653) (17) (4,213) 6
Miscellaneous (6) (5) - - 37 13 - -
________ ______ ________ ______
Total $ 3,346 16 % 15,130 25 % $ 66 - % 754 - %
======== ====== ======== ======
Investment revenues decreased 15% in the second quarter of 1997 compared to
the second quarter of 1996 due to a stronger market performance of
marketable security investments in the second quarter 1996. Investment
revenues increased 15% for the first six months of 1997 compared to the same
period in 1996 due to an adjustment to reflect a change in accounting to
market valuation made in first quarter 1996 as well as strong market gains
in the first quarter of 1997.
OPERATING EXPENSES
__________________
Fuel for electric generation increased 3% in the second quarter of 1997
compared to the same period in 1996. The increase results from an eight
percent increase in generation. Fuel for electric generation decreased 2%
for the first six months of 1997 compared to the same period in 1996 due to
a six percent decline in generation.
Purchased power costs declined 44% for the second 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 second quarter 1997 compared to the second
quarter 1996. Purchased power costs declined 54% for the first six months
of 1997 compared to the same period in 1996 due to the same reasons
discussed above.
Gas costs increased 28% for the second quarter of 1997 and 4% for the
six months ended June 1997 when compared to the same periods in 1996 due
principally to increased therms purchased for resale to wholesale customers.
Other operation expenses increased 10% in the second quarter of 1997 and
13% in the first six months of 1997 compared to the same periods in 1996
due primarily to increases in business restructuring costs, system
conversion costs, outside consulting expenses, and employee welfare
expenses.
Maintenance expenses decreased 11% for the second quarter of 1997 compared
to the same period of 1996 because of less scheduled maintenance at the power
stations. Maintenance expenses increased 4% for the first six 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 increased 4% in the second quarter of
1997 and 6% for the first six months of 1997 when compared to the same
periods in 1996 due to normal plant additions.
Interest and other charges increased 3% in the second quarter of 1997
compared to the second quarter of 1996 primarily due to an increase in
long-term debt outstanding. Interest and other charges decreased 3% for the
first six months of 1997 compared to the same period in 1996 due to higher
allowances for funds used during construction due to higher construction
activity and lower merger transaction costs.
BALANCE SHEET
_____________
Significant changes in the balance sheet accounts at June 30, 1997 compared
to balances at December 31, 1996 are:
Gas stored underground, at average cost, decreased 34% during the six
months due to normal winter heating season withdrawal of stored gas prior
to the summer replenishment of the underground storage.
Regulatory assets increased 101% primarily due to the coal contract
restructuring charge attributable to the coal contract restructuring
completed in the first quarter of 1997. See Note 4 of Condensed Notes to
Financial Statements.
LABOR NEGOTIATIONS
__________________
CIPS is negotiating with three separate employee groups consisting of (i)
four clerical employees at its Newton power station, (ii) six clerical
employees at its Coffeen power station and (iii) 16 production and
technical employees at a Springfield, Illinois operations facility. These
groups have been certified by the NLRB to be represented by labor
organizations. While these groups will be represented by union locals
which currently represent other CIPS employees, existing labor contracts do
not cover these three groups. As of the date of this Quarterly Report on
Form 10-Q (August 14, 1997) the status of negotiations with respect to the
three employee bargaining groups is as follows: (i) Newton Power Station
employees are expected to vote within the next few days on the Company's
final offer, (ii) Coffeen Power Station employees have ratified a final
agreement with the Company, and (iii) Springfield production and technical
employees have reached a tentative agreement with the Company. Although CIPS
expects to reach a final agreement with all three bargaining units, until
such agreements are reached, a strike, work stoppage, work slowdown, or
similar action involving such employees, and other collective bargaining
unit employees, could occur. CIPS believes that the continuation of any
one or more of such events for a limited period would not have a material
adverse effect on financial position, results of operations or liquidity of
the Company or CIPS.
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. The various groups stopped these discussions in mid-May, 1997
without reaching consensus on many of the major issues concerning
deregulation. A legislative proposal which was not adopted proposed a
phase-in of customer choice as well as immediate rate reductions for all the
State's investor owned utilities. CIPS will continue to take an active part
in the deregulation discussions and negotiations, but cannot predict the final
form of any deregulation legislation or when such legislation might be
effective.
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 2005. 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
costs to meet future compliance obligations for its coal-fired boilers.
ACCOUNTING MATTERS
__________________
In February 1997, the Financial Accounting Standards Board issued SFAS No.
129, "Disclosure of Information about Capital Structure" (FAS 129). This
statement establishes standards for disclosing information about an entity's
capital structure. In June 1997, the Financial Accounting Standards Board
issued SFAS No. 130, "Reporting Comprehensive Income" (FAS 130) and SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
(FAS 131). FAS 130 establishes standards for reporting and display of
comprehensive income. FAS 131 establishes standards for reporting
information about operating segments in annual financial statements and
interim reports to shareholders. FAS 129 is effective for financial
statements issued for periods ending after December 15, 1997. FAS 130 and
FAS 131 are effective for fiscal years beginning after December 15, 1997.
FAS 129, FAS 130 and FAS 131 are not expected to have a material effect on the
Company's financial position or results of operations upon adoption.
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 1. Legal Proceedings.
Reference is made to Item 1. Legal Proceedings in Part II on page
22 of the CIPSCO and CIPS combined Form 10-Q Quarterly Report for
the quarter ended March 31, 1997 concerning the declaratory
judgment action filed in the United States District Court for the
Central District of Illinois against Atlas Minerals. On May 27,
1997, the Court granted summary judgment in favor of CIPS on the
Atlas Minerals claims finding that CIPS is not required to purchase
more coal under the expired contract and is not responsible for
damages to Atlas Minerals. The court found that CIPS was not
entitled to any damages against Atlas Minerals. Atlas Minerals has
appealed this ruling to the Seventh Circuit Court of Appeals. A
final resolution of this appeal is expected in the first half of 1998.
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 June 30, 1997 gives effect to the
Merger as if it had occurred at June 30, 1997. The unaudited pro
forma combined condensed statements of income for the six-month
periods ended June 30, 1997 and 1996, and the twelve-month period
ended June 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 six-month
periods ended June 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 JUNE 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 $ 8,746,956 $ 2,286,097 $ 377,544 $11,410,597
Gas 190,738 245,808 - 436,546
Other 35,975 - - 35,975
___________ ___________ ___________ ___________
8,973,669 2,531,905 377,544 11,883,118
Less accumulated
depreciation and
amortization 3,776,716 1,106,615 276,843 5,160,174
___________ ___________ ___________ ___________
5,196,953 1,425,290 100,701 6,722,944
Construction work
in progress:
Nuclear fuel in
process 106,651 - - 106,651
Other 100,022 43,692 2,536 146,250
___________ ___________ ___________ ___________
Total property
and plant, net 5,403,626 1,468,982 103,237 6,975,845
Regulatory assets:
Deferred income taxes
(Note 5) 665,397 39,994 - 705,391
Other 171,387 129,844 - 301,231
___________ ___________ ___________ ___________
Total regulatory
assets 836,784 169,838 - 1,006,622
Other assets:
Unamortized debt expense 10,256 3,469 558 14,283
Nuclear decommissioning
trust fund 112,578 - - 112,578
Investments in
nonregulated activities - 117,798 - 117,798
Other 25,930 25,477 (4,333) 47,074
___________ ___________ ___________ ___________
Total other assets 148,764 146,744 (3,775) 291,733
Current assets:
Cash and temporary
investments 12,960 8,011 21,078 42,049
Accounts receivable, net 181,070 67,810 22,144 271,024
Unbilled revenue 102,894 28,860 - 131,754
Materials and supplies,
at average cost -
Fossil fuel 51,737 36,150 6,213 94,100
Other 94,584 38,402 4,409 137,395
Other 44,113 20,401 3,468 67,982
___________ ___________ ___________ ___________
Total current
assets 487,358 199,634 57,312 744,304
___________ ___________ ___________ ___________
Total Assets $ 6,876,532 $ 1,985,198 $ 156,774 $ 9,018,504
=========== =========== =========== ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders'
equity (Note 2) 1,810,557 296,923 866,059 2,973,539
___________ ___________ ___________ ___________
Total common
stockholders'
equity 2,321,176 653,735 - 2,974,911
Preferred stock of
subsidiary 155,197 80,000 - 235,197
Long-term debt 1,943,186 570,379 115,556 2,629,121
___________ ___________ ___________ ___________
Total
capitalization 4,419,559 1,304,114 115,556 5,839,229
Minority interest in
consolidated subsidiary - - 3,534 3,534
Accumulated deferred
income taxes 1,310,922 340,609 (6,565) 1,644,966
Accumulated deferred
investment tax credits 157,257 47,218 - 204,475
Regulatory liability 193,227 98,685 - 291,912
Accumulated provision for
nuclear decommissioning 115,924 - - 115,924
Other deferred credits
and liabilities 159,759 - 3,681 163,440
Current liabilities:
Current maturity of
long-term debt 32,734 - 14,444 47,178
Short-term debt 68,000 55,481 - 123,481
Accounts payable 79,237 44,493 22,794 146,524
Wages payable 34,494 11,177 - 45,671
Taxes accrued 160,418 14,735 - 175,153
Interest accrued 44,808 9,587 399 54,794
Other 100,193 59,099 2,931 162,223
___________ ___________ ___________ ___________
Total current
liabilities 519,884 194,572 40,568 755,024
___________ ___________ ___________ ___________
Total Capital and
Liabilities $ 6,876,532 $ 1,985,198 $ 156,774 $ 9,018,504
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<TABLE>
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 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 $ 978,461 $ 329,015 $ 96,361 $ 1,403,837
Gas 58,469 85,425 - 143,894
Other 282 5,821 481 6,584
____________ ___________ __________ ____________
Total operating
revenues 1,037,212 420,261 96,842 1,554,315
OPERATING EXPENSES:
Operations
Fuel and purchased
power 230,520 116,445 55,432 402,397
Gas Costs 36,962 54,994 - 91,956
Other 194,443 78,082 9,323 281,848
____________ ___________ __________ ____________
461,925 249,521 64,755 776,201
Maintenance 110,920 32,262 8,725 151,907
Depreciation and
amortization 122,664 45,710 7,419 175,793
Income taxes (Note 6) 69,628 16,165 4,136 89,929
Other taxes 102,404 29,168 960 132,532
____________ ___________ __________ ____________
Total operating
expenses 867,541 372,826 85,995 1,326,362
OPERATING INCOME 169,671 47,435 10,847 227,953
OTHER INCOME AND
DEDUCTIONS:
Allowance for equity
funds used during
construction 1,830 144 - 1,974
Minority interest in
consolidated
subsidiary - - (2,553) (2,553)
Miscellaneous, net (2,841) (253) (3,372) (6,466)
____________ ___________ __________ ____________
Total other
income and
deductions,
net (1,011) (109) (5,925) (7,045)
INCOME BEFORE INTEREST
CHARGES AND PREFERRED
DIVIDENDS 168,660 47,326 4,922 220,908
INTEREST CHARGES AND
PREFERRED DIVIDENDS:
Interest 70,633 17,866 4,922 93,421
Allowance for
borrowed funds
used during
construction (3,245) (182) - (3,427)
Preferred dividends
of subsidiaries
(Note 7) 4,409 1,842 - 6,251
____________ ___________ __________ ____________
Net interest
charges and
preferred
dividends 71,797 19,526 4,922 96,245
NET INCOME $ 96,863 $ 27,800 $ - $ 124,663
============ =========== ========== ============
EARNINGS PER SHARE
OF COMMON STOCK
(BASED ON AVERAGE
SHARES OUTSTANDING) $ .95 $ .82 $ .91
===== ===== =====
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
SIX MONTHS ENDED JUNE 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 $ 982,277 $ 341,210 $ 91,574 $ 1,415,061
Gas 58,478 85,359 - 143,837
Other 259 5,082 789 6,130
____________ _____________ ____________ ____________
Total operating
revenues 1,041,014 431,651 92,363 1,565,028
OPERATING EXPENSES:
Operations
Fuel and purchased
power 249,021 131,646 49,735 430,402
Gas costs 34,571 52,681 - 87,252
Other 186,203 69,207 9,396 264,806
____________ _____________ ____________ ____________
469,795 253,534 59,131 782,460
Maintenance 110,462 30,971 9,232 150,665
Depreciation and
amortization 119,285 43,130 7,601 170,016
Income taxes (Note 6) 72,865 21,294 4,048 98,207
Other taxes 103,207 29,384 1,028 133,619
____________ _____________ ____________ ____________
Total operating
expenses 875,614 378,313 81,040 1,334,967
OPERATING INCOME 165,400 53,338 11,323 230,061
OTHER INCOME AND
DEDUCTIONS:
Allowance for equity
funds used during
construction 3,823 77 - 3,900
Minority interest
in consolidated
subsidiary - - (2,482) (2,482)
Miscellaneous, net (1,586) (1,062) (3,719) (6,367)
____________ ______________ ___________ ____________
Total other
income and
deductions,
net 2,237 (985) (6,201) (4,949)
INCOME BEFORE INTEREST
CHARGES AND PREFERRED
DIVIDENDS 167,637 52,353 5,122 225,112
INTEREST CHARGES AND
PREFERRED DIVIDENDS:
Interest 67,528 17,487 5,122 90,137
Allowance for
borrowed funds
used during
construction (3,978) (98) - (4,076)
Preferred dividends
of subsidiaries
(Note 7) 6,625 1,864 - 8,489
____________ _____________ ____________ ____________
Net interest
charges and
preferred
dividends 70,175 19,253 5,122 94,550
NET INCOME $ 97,462 $ 33,100 $ - $ 130,562
============ ============= ============ ============
EARNINGS PER SHARE
OF COMMON STOCK
(BASED ON AVERAGE
SHARES OUTSTANDING) $ .95 $ .97 $ .95
===== ===== =====
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 JUNE 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 $ 2,157,000 $ 718,617 $ 180,312 $ 3,055,929
Gas 99,055 155,414 - 254,469
Other 508 11,294 797 12,599
_____________ _____________ ____________ ____________
Total operating
revenues 2,256,563 885,325 181,109 3,322,997
OPERATING EXPENSES:
Operations
Fuel and purchased
power 494,331 259,014 98,943 852,288
Gas costs 66,938 98,541 - 165,479
Other 387,346 155,463 18,230 561,039
____________ _____________ ____________ ____________
948,615 513,018 117,173 1,578,806
Maintenance 224,090 62,752 16,603 303,445
Depreciation and
amortization 244,677 89,977 15,482 350,136
Income taxes (Note 6) 194,132 44,428 8,322 246,882
Other taxes 212,463 57,601 1,711 271,775
____________ _____________ ____________ ____________
Total operating
expenses 1,823,977 767,776 159,291 2,751,044
OPERATING INCOME 432,586 117,549 21,818 571,953
OTHER INCOME AND
DEDUCTIONS:
Allowance for equity
funds used during
construction 4,499 445 - 4,944
Minority interest
in consolidated
subsidiary - - (4,946) (4,946)
Miscellaneous, net (5,549) (1,974) (7,065) (14,588)
____________ _____________ ____________ ____________
Total other
income and
deductions,
net (1,050) (1,529) (12,011) (14,590)
INCOME BEFORE INTEREST
CHARGES AND PREFERRED
DIVIDENDS 431,536 116,020 9,807 557,363
INTEREST CHARGES AND
PREFERRED DIVIDENDS:
Interest 135,749 38,131 9,807 183,687
Allowance for
borrowed funds
used during
construction (6,274) (567) - (6,841)
Preferred dividends
of subsidiaries
(Note 7) 11,033 3,699 - 14,732
____________ _____________ ____________ ____________
Net interest
charges and
preferred
dividends 140,508 41,263 9,807 191,578
NET INCOME $ 291,028 $ 74,757 $ - $ 365,785
============ ============= ============ ============
EARNINGS PER SHARE
OF COMMON STOCK
(BASED ON AVERAGE
SHARES OUTSTANDING) $2.85 $2.19 $2.67
===== ===== =====
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 six
months and twelve months ended June 30, 1997 included merger-related costs
of $5 million and $9 million, net of income taxes, for Union Electric,
and $1 million and $3 million, net of income taxes, for CIPSCO,
respectively. Net income for the six months ended June 30, 1996 included
merger-related costs of $4 million, net of income taxes, for Union
Electric, and $2 million, net of income taxes, for 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 six and twelve months ended June 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 six months ended June 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:
Registrant CIPS
Date of Report Item Reported
June 6, 1997 Item 7. Financial Statements, Pro
Forma Financial Information and
Exhibits.
Contains certain exhibits filed in
connection with the Registration
Statements of CIPS (Registration Nos.
33-56063 and 333-18473) which became
effective November 21, 1994 and March
14, 1997, respectively.
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: August 14, 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: August 14, 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 JUNE 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,
June 30, ________________________________________________
1997 1996 1995 1994 1993 1992
________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net income.... $ 71,802 $ 77,393 $ 70,631 $ 81,913 $ 84,011 $ 72,601
Add--Federal and
state income
taxes:
Current...... 48,928 53,847 41,276 38,097 50,441 6,110
Deferred
(net)....... (3,495) (2,805) 5,627 13,190 1,674 33,998
Investment
tax credit
amortization. (3,342) (3,349) (3,361) (3,367) (3,366) (3,336)
Income tax
applicable to
nonoperating
activities.. (406) (407) 941 603 631 2,989
________ ________ ________ ________ ________ ________
41,685 47,286 44,483 48,523 49,380 39,761
________ ________ ________ ________ ________ ________
Net income
before income
taxes......... 113,487 124,679 115,114 130,436 133,391 112,362
________ ________ ________ ________ ________ ________
Add--Fixed charges
Interest on
long-term
debt........ 31,160 31,409 31,168 31,164 32,823 35,534
Interest on
provision for
revenue
refunds..... - - - - - (803)
Other
interest.... 5,189 4,636 853 358 479 392
Amortization of
net debt premium
and discount. 1,780 1,709 1,703 1,678 1,598 863
________ ________ ________ ________ ________ ________
38,129 37,754 33,724 33,200 34,900 35,986
________ ________ ________ ________ ________ ________
Earnings as
defined........ $151,616 $162,433 $148,838 $163,636 $168,291 $148,348
======== ======== ======== ======== ======== ========
Ratio of
earnings to
fixed charges.. 3.98 4.30 4.41 4.93 4.82 4.12
Earnings required
for preferred
dividends:
Preferred
stock
dividends... $ 3,699 $ 3,721 $ 3,850 $ 3,510 $ 3,718 $ 4,549
Adjustment
to pre-tax
basis*...... 2,147 2,273 2,425 2,079 2,185 2,491
________ ________ ________ ________ ________ ________
$ 5,846 $ 5,994 $ 6,275 $ 5,589 $ 5,903 $ 7,040
________ ________ ________ ________ ________ ________
Fixed charges
plus preferred
stock dividend
requirements... $ 43,975 $ 43,748 $ 39,999 $ 38,789 $ 40,803 $ 43,026
======== ======== ======== ======== ======== ========
Ratio of earnings
to fixed charges
plus preferred
stock dividend
requirements... 3.45 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
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,468,982
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 196,135
<TOTAL-DEFERRED-CHARGES> 129,844
<OTHER-ASSETS> 27,794
<TOTAL-ASSETS> 1,822,755
<COMMON> 121,283
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 449,010
<TOTAL-COMMON-STOCKHOLDERS-EQ> 570,293
0
80,000
<LONG-TERM-DEBT-NET> 570,379
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 55,481
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 546,602
<TOT-CAPITALIZATION-AND-LIAB> 1,822,755
<GROSS-OPERATING-REVENUE> 414,454
<INCOME-TAX-EXPENSE> 14,462
<OTHER-OPERATING-EXPENSES> 355,751
<TOTAL-OPERATING-EXPENSES> 370,213<F1>
<OPERATING-INCOME-LOSS> 44,241
<OTHER-INCOME-NET> (365)
<INCOME-BEFORE-INTEREST-EXPEN> 43,876
<TOTAL-INTEREST-EXPENSE> 17,680
<NET-INCOME> 26,196
1,841
<EARNINGS-AVAILABLE-FOR-COMM> 24,355
<COMMON-STOCK-DIVIDENDS> 35,400
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 302
<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>
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,468,982
<OTHER-PROPERTY-AND-INVEST> 117,798
<TOTAL-CURRENT-ASSETS> 199,634
<TOTAL-DEFERRED-CHARGES> 129,844
<OTHER-ASSETS> 28,946
<TOTAL-ASSETS> 1,945,204
<COMMON> 356,812
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 296,923
<TOTAL-COMMON-STOCKHOLDERS-EQ> 653,735
0
80,000
<LONG-TERM-DEBT-NET> 570,379
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 55,481
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 585,609
<TOT-CAPITALIZATION-AND-LIAB> 1,945,204
<GROSS-OPERATING-REVENUE> 420,261
<INCOME-TAX-EXPENSE> 16,165
<OTHER-OPERATING-EXPENSES> 356,661
<TOTAL-OPERATING-EXPENSES> 372,826<F1>
<OPERATING-INCOME-LOSS> 47,435<F1>
<OTHER-INCOME-NET> (253)
<INCOME-BEFORE-INTEREST-EXPEN> 47,182
<TOTAL-INTEREST-EXPENSE> 17,540
<NET-INCOME> 29,642<F2>
1,841
<EARNINGS-AVAILABLE-FOR-COMM> 27,800
<COMMON-STOCK-DIVIDENDS> 35,773
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 5,063
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
<FN>
<F1> INCLUDES INCOME TAX EXPENSE.
<F2> NET INCOME BEFORE PREFERRED STOCK DIVIDEND OF SUBSIDIARY
</TABLE>
