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, 1998
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.
___________ ____________________________ _________________
1-3672 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:
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
Common stock, no par value, 25,452,373
shares outstanding and held by
Ameren Corporation at July 31, 1998
Central Illinois Public Service Company
Index
Page No.
Part I Financial Information (Unaudited)
Management's Discussion and Analysis
Balance Sheet
- June 30, 1998 and December 31, 1997
Statement of Income
- Three months, six months and 12 months ended
June 30, 1998 and 1997
Statement of Cash Flows
- Six months ended June 30, 1998 and 1997
Notes to Financial Statements
Part II Other Information
PART I. FINANCIAL INFORMATION (UNAUDITED)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Central Illinois Public Service Company (AmerenCIPS or the Registrant) is a
subsidiary of Ameren Corporation (Ameren), a newly created holding company,
which is registered under the Public Utility Holding Company Act of 1935
(PUHCA). In December 1997, Union Electric Company (AmerenUE) and CIPSCO
Incorporated (CIPSCO) combined to form Ameren, with AmerenUE and CIPSCO's
subsidiaries, the Registrant and CIPSCO Investment Company (CIC), becoming
wholly-owned subsidiaries of Ameren (the Merger).
The following discussion and analysis should be read in conjunction with
the Notes to Financial Statements beginning on page 9, and the Management's
Discussion and Analysis of Financial Condition and Results of Operations
(MD&A), the Audited Financial Statements and the Notes to Financial
Statements appearing in the Registrant's 1997 Annual Report included in its
1997 Form 10-K.
RESULTS OF OPERATIONS
Earnings
Second quarter 1998 earnings of $18 million increased $8 million from
1997's second quarter earnings. Earnings for the six months ended June 30,
1998 increased $5 million from the year-ago period to $30 million.
Earnings for the 12 months ended June 30, 1998 were $40 million, a $28
million decrease from the preceding 12-month period. Excluding the
extraordinary charge recorded in the fourth quarter of 1997 to write off
the generation-related regulatory assets and liabilities of the
Registrant's Illinois retail electric business, earnings for the 12-month
period ended June 30, 1998 were $65 million.
Earnings fluctuated due to many conditions, the primary ones being: weather
variations, sales growth, fluctuating operating costs, the write-off of
generation-related regulatory assets and liabilities, and merger-related
costs. The significant items affecting revenues, costs and earnings during
the three-month, six-month and 12-month periods ended June 30, 1998, and
1997 are detailed below.
Electric Operations
Electric Operating Revenues Variations for periods ended June 30, 1998
from comparable prior-year periods
-------------------------------------------
(Millions of Dollars) Three Months Six Months Twelve Months
------------ ---------- -------------
Effect of abnormal weather $ 11 $ 7 $ 6
Growth and other 11 16 28
Interchange sales 1 (11) (34)
------------ ---------- -------------
$ 23 $ 12 $ -
------------ ---------- -------------
Electric revenues for the three months and six months ended June 30, 1998,
increased $23 million and $12 million, respectively, compared to the year-
ago periods primarily due to warm weather, a strong regional economy and
benefits realized from the elimination of the retail electric fuel
adjustment clause, effective April 1998. Weather-sensitive residential and
commercial sales increased 24 percent and 7 percent, respectively, for the
three months ended June 30, 1998, versus the prior year periods and 11
percent and 7 percent, respectively, for the six months ended June 30,
1998, compared to the year-ago periods. Industrial sales increased 11
percent and 8 percent, respectively, for the three months and six months
ended June 30, 1998, versus the prior year periods. Interchange sales for
the six months ended June 30, 1998, compared to the prior year decreased 14
percent due to decreased sales opportunities.
Electric revenues for the 12 months ended June 30, 1998, remained flat with
the prior 12-month period due to an increase in native sales resulting
primarily from a strong local economy, offset by lower interchange sales due
to decreased sales opportunities.
Fuel and Purchased Power
Variations for periods ended June 30, 1998
from comparable prior-year periods
-------------------------------------------
(Millions of Dollars) Three Months Six Months Twelve Months
------------ ---------- -------------
Fuel:
Variation in generation $ 3 $ (14) $ (14)
Price 4 3 (1)
Generation efficiencies
and other (4) (1) -
Purchased power variation 3 12 (2)
------------ ---------- -------------
$ 6 $ - $ (17)
------------ ---------- -------------
The increase in fuel and purchased power costs for the three months ended
June 30, 1998, versus the comparable prior year quarter was primarily the
result of higher sales volume and higher purchased power prices.
Fuel and purchased power costs for the six months ended June 30, 1998, were
comparable to the prior year as lower generation was offset by increased
power purchases.
The decrease in fuel and purchased power costs for the 12 months ended June
30, 1998, versus the year-ago period was driven mainly by a decrease in
interchange sales, partially offset by an increase in native load sales.
While unprecedented prices for power purchases occurred in the marketplace
during the last week of June 1998, the Registrant was able to effectively
manage its power costs in the face of soaring wholesale electricity prices.
Overall, the abnormally high prices for power purchases in June had little
impact on the Registrant's financial results for the periods presented.
Gas Operations
Gas revenues for the six-month period ended June 30, 1998, decreased $10
million due to milder winter weather and lower gas costs reflected in the
purchased gas adjustment clause. Gas revenues for the 12-month period
ended June 30, 1998, decreased $13 million compared to the same year-ago
period due to a decline in dekatherm sales to ultimate customers and lower
gas costs reflected in the purchased gas adjustment clause.
Gas costs for the six months and 12 months ended June 30, 1998, decreased
$8 million and $9 million, respectively, compared to the year-ago period.
The decreases in gas costs for these periods were primarily due to lower
dekatherm sales volume and lower gas prices.
Other Operating Expenses
Other operating expense variations reflected recurring factors such as
growth, inflation and labor increases.
Other operations expenses increased $3 million, $5 million and $11 million
for the three months, six months and 12 months ended June 30, 1998, compared
to the same year-ago period primarily due to increased labor and information
system-related costs and injuries and damages expense.
Maintenance expenses for the three months, six months and 12 months ended
June 30, 1998, increased $3 million, $2 million and $15 million,
respectively, from the comparable prior year period due to increased
scheduled fossil plant maintenance.
Depreciation and amortization expense for the three-month, six-month and 12-
month periods ended June 30, 1998, decreased $3 million, $5 million and $7
million, respectively, versus the comparable 1997 periods primarily due to
the fourth quarter 1997 write-off of generation related regulatory assets
and liabilities of the Registrant's retail electric business.
In March 1998, Ameren announced plans to reduce its other operating
expenses, including plans to eliminate approximately 400 employee positions
by mid-1999 through a hiring freeze and a targeted voluntary separation
plan (the Plan). In July 1998, Ameren offered separation packages to
employees whose positions are to be eliminated through the Plan. The
Registrant expects that the Plan will result in a charge to earnings in the
third quarter of 1998 once the number of employees that will accept the
terms of the Plan is known. At this time, the Registrant is unable to
estimate the expected charge to earnings resulting from the Plan.
Taxes
Income taxes charged to operating expenses for the three months ended June
30, 1998, increased $5 million versus the year-ago period due primarily to
higher pre-tax income in 1998.
Balance Sheet
Changes in accounts and wages payable, taxes accrued, other accruals and
other current assets result from the timing of various payments to taxing
authorities and suppliers.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $81 million for the six
months ended June 30, 1998, compared to cash used in operating activities
of $2 million during the same 1997 period.
Cash flows used in investing activities totaled $29 million and $51 million
for the six months ended June 30, 1998 and June 30 1997, respectively.
Construction expenditures for the three months ended June 30, 1998 for
constructing new or improving existing facilities and complying with the
Clean Air Act were $30 million. Capital requirements for the remainder of
1998 are expected to be principally for construction expenditures.
Cash flows used in financing activities were $46 million for the three
months ended June 30, 1998, compared to cash provided by financing
activities of $51 million during the same 1997 period. The Registrant had
no principal financing activities for the three months ended June 30, 1998
other than the payment of dividends.
The Registrant plans to continue utilizing short-term debt to support
normal operations and other temporary requirements. The Registrant is
authorized by the Securities and Exchange Commission under PUHCA to have up
to $250 million of short-term unsecured debt instruments outstanding at any
one time. Short-term borrowings consist of bank loans (maturities
generally on an overnight basis) and commercial paper (maturities generally
within 10 to 45 days). At June 30, 1998, the Registrant had committed bank
lines of credit aggregating $80 million (of which $80 million were unused
and $25 million were available at such date) which make available interim
financing at various rates of interest based on LIBOR, the bank certificate
of deposit rate or other options. The lines of credit are renewable
annually at various dates throughout the year. At June 30, 1998, the
Registrant had $55 million of short-term borrowings.
CONTINGENCIES
On March 27, 1998, a jury awarded a total of $3 million to the families of
four children who contracted neuroblastoma (a rare form of cancer)
following the Registrant's 1987 clean-up of a former manufactured gas plant
site in Taylorville, Illinois. The Registrant continues to believe it has
meritorious defenses and has appealed the verdict. The Registrant believes
that the final disposition of this matter will not have a material adverse
effect on its financial position, results of operations or liquidity.
RATE MATTERS
As a result of the Electric Service Customer Choice and Rate Relief Law of
1997 (the Law) providing for electric utility restructuring in Illinois,
the Registrant filed proposals with the Illinois Commerce Commission (ICC)
to eliminate the electric fuel adjustment clause for Illinois retail
customers, thereby including a historical level of fuel costs in base
rates. The ICC approved the Registrant's filing on March 25, 1998.
In June 1998, the Registrant filed a residential rate reduction tariff with
the ICC to comply with the requirements of the Law. Under the provisions
of the Law, a rate decrease of 5 percent will become effective for Illinois
residential electric customers beginning August 1, 1998.
Also in June 1998, the Registrant filed a request with the ICC to increase
rates for natural gas service. The proposed new rates would increase
revenues $15 million. The ICC has until May 1999 to render a decision.
ACCOUNTING MATTERS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities
and requires recognition of all derivatives in the balance sheet be measured
at fair value. SFAS 133 is effective for fiscal years beginning after June
15, 1999. Earlier application is encouraged, but permitted only as of the
beginning of any fiscal quarter that begins after issuance of the standard.
At this time, the Registrant is unable to determine the impact of SFAS 133
on its financial position or results of operations upon adoption.
In February 1998, the Financial Accounting Standards Board issued SFAS 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits."
SFAS 132 revises employers' disclosures about pension and other
postretirement benefit plans. SFAS 132 is effective for fiscal years
beginning after December 31, 1998, although earlier application is
encouraged. SFAS 132 is not expected to have a material impact on the
Registrant's financial position or results of operations upon adoption.
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position
(SOP) 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." SOP 98-1 provides guidance on accounting for
the costs of computer software developed or obtained for internal use.
Under SOP 98-1, certain costs which are currently expensed by the
Registrant may be capitalized and amortized over some future period. SOP
98-1 is effective for fiscal years beginning after December 15, 1998,
although earlier application is encouraged. At this time, the Registrant
is unable to determine the impact of SOP 98-1 on its financial position or
results of operations upon adoption.
SAFE HARBOR STATEMENT
Statements made in this Form 10-Q 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.
Although such forward-looking statements have been made in good faith and
are based on reasonable assumptions, there is no assurance that the
expected results will be achieved. These statements include (without
limitation) statements as to future expectations, beliefs, plans,
strategies, objectives, events, conditions and financial performance. In
connection with the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Registrant is providing this cautionary
statement to identify important factors that could cause actual results to
differ materially from those anticipated. Factors include, but are not
limited to, the effects of regulatory actions; changes in laws and other
governmental actions; competition; future market prices for electricity;
average rates for electricity in the Midwest; business and economic
conditions; weather conditions; fuel prices and availability; generation
plant performance; monetary and fiscal policies; and legal and
administrative proceedings.
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
BALANCE SHEET
UNAUDITED
(Thousands of Dollars, Except Shares)
June 30, December 31,
1998 1997
---------- ------------
<S> <C> <C>
ASSETS
Property and plant, at original cost:
Electric $2,353,317 $2,311,364
Gas 254,913 249,499
---------- ----------
2,608,230 2,560,863
Less accumulated depreciation
and amortization 1,162,536 1,132,591
---------- ----------
1,445,694 1,428,272
Construction work in progress 29,779 59,531
---------- ----------
Total property and plant, net 1,475,473 1,487,803
---------- ----------
Other assets 29,411 30,476
Current assets:
Cash and cash equivalents 11,391 6,040
Accounts receivable - trade
(less allowance for doubtful
accounts of $1,102 and $1,200,
respectively) 60,795 67,495
Unbilled revenue 36,239 31,708
Other accounts and notes receivable 14,315 7,760
Materials and supplies, at average cost -
Fossil fuel 27,555 24,919
Gas stored underground 9,080 14,275
Other 34,952 32,334
Other 8,581 32,637
---------- ----------
Total current assets 202,908 217,168
---------- ----------
Regulatory assets:
Deferred income taxes 26,424 28,052
Other 22,267 25,208
---------- ----------
Total regulatory assets 48,691 53,260
---------- ----------
Total Assets $1,756,483 $1,788,707
========== ==========
CAPITAL AND LIABILITIES
Capitalization:
Common stock, no par value,
authorized 45,000,000 shares -
outstanding 25,452,373 shares $120,033 $121,282
Retained earnings 446,554 451,477
---------- ----------
Total common stockholders'
equity 566,587 572,759
Preferred stock not subject to
mandatory redemption 80,000 80,000
Long-term debt 512,581 558,474
---------- ----------
Total capitalization 1,159,168 1,211,233
---------- ----------
Current liabilities:
Current maturity of long-term debt 55,000 9,000
Short-term debt 55,100 64,966
Accounts and wages payable 60,028 89,362
Accumulated deferred income taxes 20,738 20,285
Taxes accrued 23,951 15,869
Other 32,355 21,937
---------- ----------
Total current liabilities 247,172 221,419
---------- ----------
Accumulated deferred income taxes 236,129 237,629
Accumulated deferred investment
tax credits 37,320 40,369
Regulatory liability 42,404 48,587
Other deferred credits and liabilities 34,290 29,470
---------- ----------
Total Capital and Liabilities $1,756,483 $1,788,707
========== ==========
</TABLE>
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF INCOME
UNAUDITED
(Thousands of Dollars)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------ ---------------- -------------------
1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $189,173 $166,643 $338,444 $326,196 $712,765 $713,120
Gas 25,656 24,288 75,900 85,427 142,031 155,418
-------- -------- -------- -------- -------- --------
Total operating
revenues 214,829 190,931 414,344 411,623 854,796 868,538
OPERATING EXPENSES:
Operations
Fuel and
purchased power 65,096 58,832 116,178 116,445 241,989 259,014
Gas 14,630 14,664 46,855 54,994 89,087 98,541
Other 40,857 37,879 82,151 77,430 164,922 154,221
-------- -------- -------- -------- -------- --------
120,583 111,375 245,184 248,869 495,998 511,776
Maintenance 20,086 17,391 33,921 32,261 77,312 62,750
Depreciation and
amortization 18,612 21,464 37,434 42,640 77,483 84,016
Income taxes 11,281 5,899 15,629 14,462 34,828 32,784
Other taxes 15,838 13,089 32,015 29,150 60,760 66,878
-------- -------- -------- -------- -------- --------
Total operating
expenses 186,400 169,218 364,183 367,382 746,381 758,204
OPERATING INCOME 28,429 21,713 50,161 44,241 108,415 110,334
OTHER INCOME AND
DEDUCTIONS:
Allowance for
equity funds
used during
construction 3 (73) 49 144 688 445
Miscellaneous, net (65) (284) 289 (509) (3,002) (1,416)
-------- -------- -------- -------- -------- --------
Total other
income and
deductions (62) (357) 338 (365) (2,314) (971)
INCOME BEFORE
INTEREST CHARGES 28,367 21,356 50,499 43,876 106,101 109,363
INTEREST CHARGES:
Interest 9,271 9,433 19,703 17,862 38,632 38,129
Allowance for
borrowed funds
used during
construction (253) 93 (671) (182) (1,275) (567)
-------- -------- -------- -------- -------- --------
Net interest
charges 9,018 9,526 19,032 17,680 37,357 37,562
INCOME BEFORE
EXTRAORDINARY
CHARGE 19,349 11,830 31,467 26,196 68,744 71,801
-------- -------- -------- -------- -------- --------
EXTRAORDINARY CHARGE
(NET OF INCOME TAXES) - - - - (24,853) -
-------- -------- -------- -------- -------- --------
NET INCOME 19,349 11,830 31,467 26,196 43,891 71,801
PREFERRED STOCK
DIVIDENDS 881 928 1,865 1,841 3,739 3,698
-------- -------- -------- -------- -------- --------
INCOME AFTER
PREFERRED STOCK
DIVIDENDS $18,468 $10,902 $29,602 $24,355 $40,152 $68,103
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF CASH FLOWS
UNAUDITED
(Thousands of Dollars)
Six Months Ended
June 30,
---------------------
1998 1997
------- -------
<S> <C> <C>
Cash Flows From Operating:
Net income $31,467 $26,196
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 37,434 42,640
Allowance for funds used
during construction (720) (326)
Deferred income taxes, net (6,943) (3,074)
Deferred investment tax credits, net (3,049) (1,667)
Changes in assets and liabilities:
Receivables, net (4,386) 8,186
Materials and supplies (59) (775)
Regulatory assets - other 2,941 (65,090)
Accounts and wages payable (29,334) (17,599)
Taxes accrued 8,082 2,516
Other, net 45,620 10,729
-------- --------
Net cash provided by operating activities 81,053 1,736
Cash Flows From Investing:
Construction expenditures (30,166) (51,195)
Allowance for funds used
during construction 720 326
-------- --------
Net cash used in investing activities (29,446) (50,869)
Cash Flows From Financing:
Dividends on common stock (34,310) (35,400)
Dividends on preferred stock (2,080) (1,841)
Redemptions -
Short-term debt (9,866) (2,287)
Long-term debt (10,000) (61,000)
Issuances -
Long-term debt 10,000 152,000
-------- --------
Net cash provided by (used in)
financing activities (46,256) 51,472
Net increase in cash and cash
equivalents 5,351 2,339
Cash and cash equivalents at
beginning of year 6,040 2,261
-------- --------
Cash and cash equivalents at
end of period 11,391 4,600
======== ========
Cash paid during the periods:
Interest (net of amount capitalized) $19,530 $17,184
Income taxes, net $18,426 $21,100
</TABLE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 3O, 1998
Note 1 - Effective December 31, 1997, following the receipt of all
required state and federal regulatory approvals, Union Electric Company
(AmerenUE) and CIPSCO Incorporated (CIPSCO) combined to form Ameren
Corporation (Ameren) (the Merger).
Note 2 - Financial statement note disclosures, normally included in
financial statements prepared in conformity with generally accepted
accounting principles, have been omitted in this Form 10-Q pursuant to the
Rules and Regulations of the Securities and Exchange Commission. However,
in the opinion of the Registrant, the disclosures contained in this Form 10-Q
are adequate to make the information presented not misleading. See Notes
to Financial Statements included in the 1997 Form 10-K for information
relevant to the financial statements contained in this Form 10-Q, including
information as to the significant accounting policies of the Registrant.
Note 3 - In the opinion of the Registrant the interim financial statements
filed as part of this Form 10-Q reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the periods presented. The Registrant's financial statements were
prepared to permit the information required in the Financial Data Schedule
(FDS), Exhibit 27, to be directly extracted from the filed statements. The
FDS amounts correspond to or are calculable from the amounts reported in
the financial statements or notes thereto.
Note 4 - Due to the effect of weather on sales and other factors which are
characteristic of public utility operations, financial results for the
periods ended June 30, 1998 and 1997 are not necessarily indicative of
trends for any three-month, six-month or 12-month period.
Note 5 - On March 27, 1998, a jury awarded a total of $3 million to the
families of four children who contracted neuroblastoma (a rare form of
cancer) following the Registrant's 1987 clean-up of a former manufactured
gas plant site in Taylorville, Illinois. The Registrant continues to
believe it has meritorious defenses and has appealed the verdict. The
Registrant believes that the final disposition of this matter will not have
a material adverse effect on its financial position, results of operations
or liquidity.
Note 6 - Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income" became effective on January 1, 1998. SFAS
130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in
the financial statements with the same prominence as other financial
statement components. Adoption of SFAS 130 did not have a material effect
on the financial position, results of operations, liquidity or presentation
of financial information of the Registrant.
Note 7 - Certain reclassifications were made to prior-year financial
statements to conform with current-period presentation.
PART II. OTHER INFORMATION
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.
Exhibit 27 Financial Data Schedule (required for
electronic filing only in accordance
with Item 601(c)(1) of Regulation S-K).
(B) Reports on Form 8-K (and Form 8-K/A):
Form 8-K
--------
June 12, 1998 Item 4. Changes in Registrant's
Certifying Accountants.
Appointment of Price Waterhouse LLP as
auditors for CIPS for the year 1998
and disclosure that no adverse
opinions were rendered nor were there
any disagreements for either of the
last two fiscal years with the former
certifying accountants, Arthur
Andersen LLP.
Item 7. Financial Statements, ProForma
Financial Information and Exhibits.
Letter by Arthur Andersen LLP
indicating agreement with Item 4.
Form 8-K/A
----------
June 23, 1998 Item 4. Changes in Registrant's
Certifying Accountants.
Further discloses that no adverse
opinions or disagreements existed with
Arthur Andersen LLP, the former
certifying accountants, through the
date of their dismissal.
Item 7. Financial Statements, ProForma
Financial Information and Exhibits.
Letter by Arthur Andersen LLP
indicating agreement with Item 4.
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
(Registrant)
Date: August 13, 1998 /s/ W. A. Koertner
______________________________________
W. A. Koertner
Vice President - Finance, Administration
and Marketing (Principal Financial Officer)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
EXHIBIT INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
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
Exhibit 27 Financial Data Schedule
<TABLE>
Exhibit 12
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS BEFORE INCOME TAXES
(in thousands of dollars, except ratios)
12 Months
Year Ended December 31, Ended
_______________________________________________ June 30,
1993 1994 1995 1996 1997 1998
________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net income........ $ 84,011 $ 81,913 $ 70,631 $ 77,393 $ 38,620 $ 43,891
Add - Extraordinary
items net of tax.. - - - - 24,853 24,853
-------- -------- -------- -------- -------- -------
Net income from
continuing
operations........ $ 84,011 $ 81,913 $ 70,631 $ 77,393 $ 63,473 $ 68,744
Add--Federal and
state income taxes:
Current......... 50,441 38,097 41,276 53,847 38,660 42,309
Deferred (net). 1,674 13,190 5,627 (2,805) (1,665) (4,146)
Deferred
investment tax
credits, net.... (3,366) (3,367) (3,361) (3,349) (3,334) (3,335)
Income tax
applicable to
nonoperating
income.......... 631 603 941 (407) 261 (394)
-------- -------- -------- -------- -------- --------
49,380 48,523 44,483 47,286 33,922 34,434
-------- -------- -------- -------- -------- --------
Net income
before income
taxes.............. 133,391 130,436 115,114 124,679 97,395 103,178
-------- -------- -------- -------- -------- --------
Add--fixed charges:
Interest on
long-term debt... 32,823 31,164 31,168 31,409 32,271 35,407
Other interest.... 479 358 853 4,636 2,875 1,948
Amortization of
net debt premium,
discount, expenses
and losses ..... 1,598 1,678 1,703 1,709 1,643 1,277
-------- -------- -------- -------- -------- --------
34,900 33,200 33,724 37,754 36,789 38,632
-------- -------- -------- -------- -------- --------
Earnings as
defined............$168,291 $163,636 $148,838 $162,433 $134,184 $141,810
======== ======== ======== ======== ======== ========
Ratio of earnings
to fixed charges.. 4.82 4.92 4.41 4.30 3.64 3.67
Earnings required
for preferred
dividends:
Preferred stock
dividends........ 3,718 3,510 3,850 3,721 3,715 3,739
Adjustment to
pre-tax basis*.. 2,185 2,079 2,425 2,273 1,985 1,873
-------- -------- -------- -------- -------- --------
5,903 5,589 6,275 5,994 5,700 5,612
-------- -------- -------- -------- -------- --------
Fixed charges
plus preferred
stock dividend
requirements.......$ 40,803 $ 38,789 $ 39,999 $ 43,748 $ 42,489 $ 44,244
======== ======== ======== ======== ======== ========
Ratio of earnings
to fixed charges
plus preferred
stock dividend
requirements....... 4.12 4.21 3.72 3.71 3.15 3.20
==== ==== ==== ==== ==== ====
* 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>
<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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,475,473
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 202,908
<TOTAL-DEFERRED-CHARGES> 29,411
<OTHER-ASSETS> 48,691
<TOTAL-ASSETS> 1,756,483
<COMMON> 120,033
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 446,554
<TOTAL-COMMON-STOCKHOLDERS-EQ> 566,587
0
80,000
<LONG-TERM-DEBT-NET> 512,581
<SHORT-TERM-NOTES> 55,100
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 55,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 487,215
<TOT-CAPITALIZATION-AND-LIAB> 1,756,483
<GROSS-OPERATING-REVENUE> 414,344
<INCOME-TAX-EXPENSE> 15,629
<OTHER-OPERATING-EXPENSES> 348,554
<TOTAL-OPERATING-EXPENSES> 364,183
<OPERATING-INCOME-LOSS> 50,161
<OTHER-INCOME-NET> 338
<INCOME-BEFORE-INTEREST-EXPEN> 50,499
<TOTAL-INTEREST-EXPENSE> 19,032
<NET-INCOME> 31,467
1,865
<EARNINGS-AVAILABLE-FOR-COMM> 29,602
<COMMON-STOCK-DIVIDENDS> 34,310
<TOTAL-INTEREST-ON-BONDS> 0<F1>
<CASH-FLOW-OPERATIONS> 81,053
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1> REQUIRED ON FISCAL YEAR-END ONLY.
<F2> INFORMATION NOT NORMALLY DISCLOSED IN FINANCIAL STATEMENTS AND NOTES.
</TABLE>
