SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to __________
Commission Registrants; State of Incorporation; IRS Employ
er
File Number Address; and Telephone Number Identification No.
1-11327 Illinova Corporation 37-1319890
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62525
(217) 424-6600
1-3004 Illinois Power Company 37-0344645
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62525
(217) 424-6600
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
registrant was required to file such report), and (2) have
been subject to such filing requirements for the past 90
days.
Illinova Yes X No
Corporation ---- -----
Illinois Power Yes X No
Company ---- -----
Indicate the number of shares outstanding of each of
the issuers' classes of common stock, as of the latest
practicable date:
Illinova Corporation Common stock, no par value, 75,643,937
shares outstanding at April 30, 1995
Illinois Power Company Common stock, no par value,74,296,337
shares outstanding held by Illinova
Corporation at April 30, 1995
ILLINOVA CORPORATION
ILLINOIS POWER COMPANY
This combined Form 10-Q is separately filed by Illinova
Corporation and Illinois Power Company. Prior to the filing
of the combined 10-Q for the quarter ended June 30, 1994,
Illinova was not a reporting company for purposes of the
Securities Exchange Act of 1934, and Illinois Power Company
filed its own separate reports on Form 10-Q. Information
contained herein relating to Illinois Power Company is filed
by Illinova Corporation and separately by Illinois Power
Company on its own behalf. Illinois Power Company makes no
representation as to information relating to Illinova
Corporation or its subsidiaries, except as it may relate to
Illinois Power Company.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995
INDEX
PAGE NO.
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Illinova Corporation
Consolidated Balance Sheets 3 - 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Illinois Power Company
Consolidated Balance Sheets 7 - 8
Consolidated Statements of Income 9
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial Statements of
Illinova Corporation and
Illinois Power Company 11 - 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations for Illinova Corporation
and Illinois Power Company 13 - 16
Part II. OTHER INFORMATION
Item 1: Legal Proceedings 17
Item 6: Exhibits and Reports on Form 8-K 17
Signatures 18 - 19
Exhibit Index 20
PART I. FINANCIAL INFORMATION
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
MARCH 31, DECEMBER 31,
1995 1994
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work
in progress of $225.8 million and
$202.8 million, respectively) $ 6,064.2 $ 6,023.1
Gas (includes construction work
in progress of $13.8 million and
$16.8 million, respectively) 609.1 606.1
---------- ----------
6,673.3 6,629.2
Less-Accumulated depreciation 2,139.2 2,102.7
---------- ----------
4,534.1 4,526.5
Nuclear fuel in process 6.1 6.2
Nuclear fuel under capital lease 114.3 111.5
---------- ----------
Total utility plant 4,654.5 4,644.2
---------- ----------
Investments and Other Assets 38.8 37.4
---------- ----------
Current Assets
Cash and cash equivalents 4.9 50.7
Accounts receivable (less allowance
for doubtful accounts of $3.0 million)
Service 110.9 110.4
Other 33.3 30.5
Accrued unbilled revenue 84.6 78.9
Material and supplies, at average cost 115.8 133.9
Prepayments and other 24.0 35.0
---------- ----------
Total current assets 373.5 439.4
---------- ----------
Deferred Charges
Deferred Clinton costs 110.0 110.8
Recoverable income taxes 147.3 147.3
Other 212.2 197.6
---------- ----------
Total deferred charges 469.5 455.7
---------- ----------
$ 5,536.3 $ 5,576.7
========== ==========
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
MARCH 31, DECEMBER 31,
1995 1994
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 200,000,000 shares authorized;
75,643,937 shares outstanding,
stated at $ 1,424.6 $ 1,424.6
Less - Deferred compensation - ESOP 22.7 23.5
Retained earnings 72.1 58.8
Less - Capital stock expense 9.5 9.7
Preferred and preference stock of subsidiary 318.5 321.7
Mandatorily redeemable preferred stock
of subsidiary 24.0 36.0
Long-term debt of subsidiary 1,947.0 1,946.1
---------- ----------
Total capitalization 3,754.0 3,754.0
---------- ----------
Current Liabilities
Accounts payable 94.4 108.2
Notes payable 183.8 238.8
Long-term debt and lease obligations
maturing within one year 35.8 33.5
Other 157.2 149.9
---------- ----------
Total current liabilities 471.2 530.4
---------- ----------
Deferred Credits
Accumulated deferred income taxes 995.4 978.6
Accumulated deferred investment tax credits 229.2 230.9
Other 86.5 82.8
---------- ----------
Total deferred credits 1,311.1 1,292.3
---------- ----------
$ 5,536.3 $ 5,576.7
========== ==========
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Consolidated Financial
Statements)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(Unaudited)
(Millions except per share)
Operating Revenues:
Electric $ 288.1 $ 279.5
Electric interchange 22.4 24.6
Gas 115.0 138.8
------------- -----------
Total 425.5 442.9
------------- ------------
Operating Expenses and Taxes:
Fuel for electric plants 64.3 71.0
Power purchased 14.0 10.0
Gas purchased for resale 64.6 97.6
Other operating expenses 64.2 66.1
Maintenance 28.1 20.1
Depreciation & Amortization 45.3 43.4
General taxes 38.2 38.6
Income Taxes 28.5 24.8
------------- ------------
Total 347.2 371.6
------------- ------------
Operating Income 78.3 71.3
------------- ------------
Other Income and Deductions:
Allowance for equity funds
used 0.2 0.9
during construction
Miscellaneous - net (2.4) (4.2)
------------- ------------
Total (2.2) (3.3)
------------- ------------
Income Before Interest Charges 76.1 68.0
------------- ------------
Interest Charges:
Interest on long-term debt 34.5 34.7
Other interest charges 3.9 1.7
Allowance for borrowed funds
used (1.2) (1.6)
during construction
Preferred dividend
requirements 6.5 5.9
of subsidiary ------------- ------------
Total 43.7 40.7
------------- ------------
Net Income $ $
32.4 27.3
============= ============
Earnings per common share $0.43 $0.36
Cash dividends declared per $0.25 -
common share
Cash dividends paid per common $0.25 $0.20
share
Weighted average number of
common shares outstanding during 75,643,937 75,643,937
period
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(See accompanying Notes to Consolidated Financial
Statements)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(Unaudited)
(Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 32.4 $ 27.3
Items not requiring cash, net 58.2 50.9
Changes in assets and liabilities 3.0 53.4
--------- ---------
Net cash provided by operating
activities 93.6 131.6
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (48.2) (37.8)
Other investing activities (2.6) (1.8)
--------- ---------
Net cash used in investing
activities (50.8) (39.6)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on common stock (18.9) (15.1)
Redemptions -
Short-term debt (64.6) (61.7)
Preferred stock of subsidiary (15.2) (12.0)
Issuances -
Short-term debt 9.6 30.0
Long-term debt of subsidiary -- 35.6
Other financing activities 0.5 (6.3)
--------- ---------
Net cash used in financing
activities (88.6) (29.5)
--------- ---------
NET CHANGE IN CASH AND
CASH EQUIVALENTS (45.8) 62.5
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 50.7 9.9
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 4.9 $ 72.4
========= =========
ILLINOIS POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
MARCH 31, DECEMBER 31,
1995 1994
(Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work
in progress of $225.8 million and
$202.8 million, respectively)$ 6,064.2 $ 6,023.1
Gas (includes construction work
in progress of $13.8 million and
$16.8 million, respectively) 609.1 606.1
------------ ------------
6,673.3 6,629.2
Less-Accumulated depreciation 2,139.2 2,102.7
------------ ------------
4,534.1 4,526.5
Nuclear fuel in process 6.1 6.2
Nuclear fuel under capital lease 114.3 111.5
------------ ------------
Total utility plant 4,654.5 4,644.2
------------ ------------
Investments and Other Assets 15.3 15.4
------------ ------------
Current Assets
Cash and cash equivalents 0.3 47.9
Accounts receivable (less allowance
for doubtful accounts of $3.0 million)
Service 110.9 110.4
Other 34.1 52.6
Accrued unbilled revenue 84.6 78.9
Material and supplies,
at average cost 115.8 133.9
Prepayments and other 23.8 34.9
------------ ------------
Total current assets 369.5 458.6
------------ ------------
Deferred Charges
Deferred Clinton costs 110.0 110.8
Recoverable income taxes 147.3 147.3
Other 230.7 219.5
------------ ------------
Total deferred charges 488.0 477.6
------------ ------------
$ 5,527.3 $ 5,595.8
============ ============
ILLINOIS POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
MARCH 31, DECEMBER 31,
1995 1994
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 100,000,000 shares
authorized; 74,296,337 shares
outstanding, stated at $ 1,424.6 $ 1,424.6
Retained earnings 67.2 51.1
Less - Capital stock expense 9.5 9.7
Less - 1,347,600 shares of common stock in
treasury, at cost 30.5 -
Preferred and preference stock 318.5 321.7
Mandatorily redeemable
preferred stock 24.0 36.0
Long-term debt 1,947.0 1,946.1
------------ ------------
Total capitalization 3,741.3 3,769.8
------------ ------------
Current Liabilities
Accounts payable 94.8 108.7
Notes payable 183.8 238.8
Long-term debt and lease
obligations maturing
within one year 35.8 33.5
Other 157.2 149.9
------------ ------------
Total current liabilities 471.6 530.9
------------ ------------
Deferred Credits
Accumulated deferred income taxes 998.7 981.4
Accumulated deferred investment
tax credits 229.2 230.9
Other 86.5 82.8
------------ ------------
Total deferred credits 1,314.4 1,295.1
------------ ------------
$ 5,527.3 $ 5,595.8
============ ============
ILLINOIS POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Consolidated Financial
Statements)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(Unaudited)
(Millions except per share)
Operating Revenues:
Electric $ 288.1 $279.5
Electric interchange 22.4 24.6
Gas 115.0 138.8
------- -------
Total 425.5 442.9
------ ------
Operating Expenses and Taxes:
Fuel for electric plants 64.3 71.0
Power purchased 14.0 10.0
Gas purchased for resale 64.6 97.6
Other operating expenses 64.2 66.1
Maintenance 28.1 20.1
Depreciation & Amortization 45.3 43.4
General taxes 38.2 38.6
Income Taxes 28.5 24.8
----- -----
Total 347.2 371.6
----- ------
Operating Income 78.3 71.3
---- ------
Other Income and Deductions:
Allowance for equity funds
used 0.2 0.9
during construction
Miscellaneous - net 0.5 (3.0)
----- -----
Total 0.7 (2.1)
----- ------
Income Before Interest 79.0 69.2
Charges ----- -----
Interest Charges and Other:
Interest on long-term debt 34.5 34.7
Other interest charges 3.9 1.7
Allowance for borrowed
funds used (1.2) (1.6)
during construction ----- ------
Total 37.2 34.8
------ -----
Net Income 41.8 34.4
Preferred dividend 6.5 5.9
requirements ------ -----
Net Income applicable to
common stock 35.3 28.5
====== ======
ILLINOIS POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(See accompanying Notes to Consolidated Financial
Statements)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(Unaudited)
(Millions except per share)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $41.8 $34.4
Items not requiring cash, 58.6 50.9
net
Changes in assets and 27.0 52.8
liabilities ------------- ------------
Net cash provided by 127.4 138.1
operating ------------- ------------
activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Construction expenditures (48.2) (37.8)
Other investing activities (1.0) (1.8)
------------- ------------
Net cash used in investing (49.2) (39.6)
activities ------------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Dividends on preferred and (25.7) (21.3)
common stock
Redemptions -
Short-term debt (64.5) (61.7)
Preferred Stock (15.2) (12.0)
Common Stock (30.5) --
Issuances
Short-term debt 9.6 30.0
Preferred stock -- 35.6
Other financing activities 0.5 (6.3)
------------- ------------
Net cash used in financing (125.8) (35.7)
activities ------------- ------------
NET CHANGE IN CASH AND CASH (47.6) 62.8
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT 47.9 9.3
BEGINNING OF YEAR ------------- ------------
CASH AND CASH EQUIVALENTS AT $0.3 $72.1
END OF PERIOD ============= ============
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
Financial Statement note disclosures, normally included
in financial statements prepared in conformity with
generally accepted accounting principles, have been omitted
from this Form 10-Q pursuant to the Rules and Regulations of
the Securities and Exchange Commission. However, in the
opinion of Illinova Corporation (Illinova) and Illinois
Power Company (IP), the disclosures and information
contained in this Form 10-Q are adequate and not misleading.
See Illinova's 1994 Annual Report to Shareholders (included
in the Proxy Statement), IP's 1994 Annual Report to
Shareholders (included in the Information Statement), and
Illinova's and IP's 1994 Form 10-K filings to the Securities
and Exchange Commission, for information relevant to the
consolidated financial statements contained herein,
including information as to certain regulatory and
environmental matters involving IP and as to the significant
accounting policies followed by IP.
In the opinion of Illinova, the accompanying unaudited
consolidated financial statements for Illinova reflect all
adjustments necessary to present fairly the Consolidated
Balance Sheets as of March 31, 1995 and December 31, 1994,
the Consolidated Statements of Income for the three months
ended March 31, 1995 and 1994, and the Consolidated
Statements of Cash Flows for the three months ended March
31, 1995 and 1994. In addition, it is Illinova's and IP's
opinion that the accompanying unaudited consolidated
financial statements for IP reflect all adjustments
necessary to present fairly the Consolidated Balance Sheets
as of March 31, 1995 and December 31, 1994, the Consolidated
Statements of Income for the three months ended March 31,
1995 and 1994, and the Consolidated Statements of Cash Flows
for the three months ended March 31, 1995 and 1994. Due to
seasonal and other factors which are characteristic of
electric and gas utility operations, interim period results
are not necessarily indicative of results to be expected for
the year.
ACCOUNTING MATTERS
CONSOLIDATION
The consolidated financial statements of Illinova
include the accounts of Illinova, IP, Illinova Generating
Company and Illinova Power Marketing, Inc. All significant
intercompany balances and transactions have been eliminated
from the consolidated financial statements. All non-utility
operating transactions are included in the section titled
Other Income and Deductions, "Miscellaneous-net" in
Illinova's Consolidated Statements of Income and IP's
Consolidated Statements of Income. Prior year amounts have
been restated on a basis consistent with the March 31, 1995
presentation.
IP's consolidated financial position and results of
operation are currently the principal factors affecting
Illinova's consolidated financial position and results of
operations.
REGULATORY AND LEGAL MATTERS
MANUFACTURED GAS PLANT SITES
IP is currently recovering Manufactured Gas Plant (MGP)
site cleanup costs from its customers through a tariff rider
approved by the ICC in April 1993. In February 1994, an
intervening consumer group appealed the September 1992 ICC
order and an affirming December 1993 Appellate Court
decision to the Illinois Supreme Court, arguing that
utilities should not be permitted to recover MGP cleanup
costs from customers or should not be permitted to recover
such costs through riders. IP and other utilities also
appealed to the Illinois Supreme Court challenging ICC's
disallowance of carrying costs on the unrecovered balance of
cleanup costs. The Illinois Supreme Court agreed to hear
both appeals, and briefing and oral arguments were held in
September 1994.
On April 20, 1995, the Illinois Supreme Court issued
its ruling, upholding the ICC authorization of cost recovery
through tariff riders, and reversing the ICC's disallowance
of carrying costs. If petitions for rehearing are not
filed, or are filed and not granted, the Court will issue a
mandate that the ICC reissue an order providing for full
recovery of prudently incurred MGP site cleanup costs,
including carrying costs.
TREASURY STOCK
On March 31, 1995, IP repurchased 1,347,600 shares of
its common stock from Illinova. Under Illinois law, such
shares may be held as treasury stock and treated as
authorized but unissued, or may be canceled by resolution of
the Board of Directors. The shares IP repurchased are held
as treasury stock and are deducted from common equity at the
cost of the shares.
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Notes to the Consolidated
Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations
presented in Illinova's 1994 Annual Report to Shareholders
(included in the Proxy Statement), IP's 1994 Annual Report
to Shareholders (included in the Information Statement), and
Illinova's and IP's Form 10-K for the year ended December
31, 1994.
Illinova Subsidiaries
IP, the primary business and subsidiary of Illinova, is
engaged in the generation, transmission, distribution and
sale of electric energy and the distribution, transportation
and sale of natural gas in the State of Illinois.
Illinova Generating Company (IG) is Illinova's wholly
owned independent power subsidiary which invests in energy
supply projects throughout the world. IG's strategy is to
invest in and develop "greenfield" power plants, acquire
existing generation facilities and provide power plant O&M
services. Illinova has invested $28 million in IG as of
March 31, 1995.
Illinova Power Marketing, Inc. (IPM) is a wholly owned
subsidiary of Illinova formed in July 1994. IPM plans to
become active in the business of brokering and marketing
electric power and gas to various customers outside of IP's
present service area.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL RESOURCES AND REQUIREMENTS
Cash flow from operations during the first three months
of 1995 provided sufficient working capital to meet ongoing
operating requirements, to service existing common and IP
preferred stock dividends and debt requirements and a
portion of construction requirements. Additionally,
Illinova expects current revenues will enable it to meet
future operating requirements and continue to service its
existing debt, IP preferred and Illinova common stock
dividends, IP sinking fund requirements and nearly all of
its anticipated construction requirements. On March 31,
1995, IP repurchased 1,347,600 shares of its common stock
from Illinova to provide Illinova cash for operations, in
accordance with authority granted by the ICC.
IP's capital requirements for construction were
approximately $48 million and $38 million during the three
months ended March 31, 1995 and 1994, respectively.
During the second quarter of 1995 IP plans to review
and increase its lines of credit represented by bank
commitments from $250 million to $350 million. Also during
the second quarter of 1995 Illinova plans to increase its
lines of credit represented by bank commitments from $43
million to $53 million. Illinois Power Company mortgage
bonds are currently rated Baa2 by Moody's and BBB by
Standard & Poor's. IP's preferred stock is currently rated
baa3 by Moody's and BBB- by Standard & Poor's. Both
Illinova and IP have adequate short- and intermediate-term
bank borrowing capacity.
IP has current ICC authorization to issue $212 million
of debt securities and $100 million of preferred stock. In
February 1995, IP redeemed $12 million of 8.0% mandatorily
redeemable serial preferred stock. On May 1, 1995, IP
redeemed the remaining $24 million of the 8.0% mandatorily
redeemable serial preferred stock. The remaining proceeds
from the October 1994 issuance of the monthly income
preferred securities (MIPS) of Illinois Power Capital, L.P.,
in which IP serves as the general partner, were used for
these transactions.
REGULATORY MATTERS
OPEN ACCESS AND WHEELING
On March 29, 1995, the Federal Energy Regulatory
Commission (FERC) issued a Notice of Proposed Rulemaking
(NOPR) designed to encourage a more fully competitive
wholesale electric market through mandated open access to
public utility transmission facilities, at rates to be
determined, at the outset, by FERC. Under the Commission's
proposal, all transmission-owning public utilities would be
required to file non-discriminatory open access transmission
tariffs, available to all wholesale sellers and buyers of
electric energy; the utilities would be required to take
service under the tariffs for their own wholesale sales and
purchases of electric energy; and the utilities would be
allowed the opportunity under certain circumstances to
recover wholesale stranded costs.
On March 20, 1995, IP filed three transmission service
tariffs that offer eligible transmission customers the same
or comparable transmission service on terms comparable to
the service IP provides to itself. The Commission has
recommended that all transmission service tariffs filed
prior to March 29, 1995 be accepted and set for hearing
provided that the proposed tariffs meet the Commission's
pricing policies including those set forth in the NOPR. IP
believes its tariffs filed on March 20 incorporate all the
key elements identified by the Commission for comparable
transmission service.
ENVIRONMENTAL MATTERS
GAS MANUFACTURING SITES
See "Manufactured Gas Plant Sites" under "Regulatory
and Legal Matters" of the Notes to Consolidated Financial
Statements on page 12.
ACCOUNTING MATTERS
FAS 121
In March 1995, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," (FAS 121).
FAS 121 requires that an entity review long-lived assets for
impairment whenever events indicate that the carrying amount
of an asset may not be recoverable. If the undiscounted
future cash flows expected from the use of an asset are less
than the carrying amount of the asset, an impairment loss
must be recognized. FAS 121 prohibits restoration of
previously recognized impairment losses.
The FASB determined that for regulated enterprises
applying FASB Statement No. 71, "Accounting for the Effects
of Certain Types of Regulation," (FAS 71) the general
impairment standard established by FAS 121 would not apply
to the regulatory assets that meet the criteria of paragraph
9 of FAS 71. Accordingly, FAS 121 requires the recognition
of regulatory asset impairment if the capitalized incurred
cost no longer meets the criteria of paragraph 9 of FAS 71.
In addition, FAS 121 allows the recording of a regulatory
asset if a regulator's actions allow recovery through rates
of costs previously excluded from allowable costs.
FAS 121 is effective for financial statements for
fiscal years beginning after December 15, 1995. This
standard is not currently expected to materially impact the
consolidated financial position or results of operations of
Illinova or IP.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Electric Operations - The current quarter increase of
$8.6 million in electric revenues is primarily due to
increased sales to the industrial and commercial sectors.
An improving national as well as regional economy led to the
sales gains among these customer segments. Total kilowatt-
hour sales (excluding interchange and sales to
municipalities) increased 1.5% or 66 million kwh from the
first quarter 1994. Interchange revenues decreased $2.2
million due to decreased sales opportunities.
The current quarter cost of fuel for electric plants
decreased $6.7 million and electric generation decreased
8.1%. The decrease in fuel cost was attributable to
decreased generation primarily at Clinton and the impact of
the Uniform Fuel Adjustment Clause. The equivalent
availability of Clinton was 66.2% and 99.7% for the three
months ended March 31, 1995 and 1994, respectively. The
lower equivalent availability for Clinton in 1995 was due to
a scheduled maintenance and refueling outage that began
March 12. Clinton returned to service on April 29, after a
station record 49-day refueling. The equivalent
availability for IP's coal-fired plants was 76.3% and 71%
for the three months ended March 31, 1995 and 1994,
respectively. Power purchased and interchanged for the
current quarter increased $4.0 million due to increased
purchases at lower-than-expected prices.
Gas Operations - Gas revenues decreased $23.8 million
in the first quarter of 1995 due to warmer weather and the
effects of the Uniform Gas Adjustment Clause, partially
offset by the ICC's April 1994 order granting IP its first
natural gas base rate increase in 10 years. The increase
helped boost gas margins in the first quarter compared to a
year ago when the new rates were not in effect. Therm sales
decreased 11.3% (34.6 million therms) offset by an increase
in therms transported for a combined decrease in gas
consumption of 8.0% (30 million therms). Residential sales
decreased 10.4% (21 million therms), commercial sales and
transport decreased 10.1% (8 million therms) and industrial
sales and transport decreased 1.6% (1 million therms).
The cost of gas purchased for resale decreased $33.0
million in the first quarter as a result of the effects of
the Uniform Gas Adjustment Clause and the lower cost of gas.
Gas bypass (connection by the natural gas customer
directly to a pipeline, "bypassing" IP's sales and
transportation service) continues to be actively considered
or utilized by several of IP's large customers. IP is
aggressively competing with the bypass options available to
these customers in an attempt to minimize the potential loss
in earnings.
Operation and Maintenance Expense - The current quarter
increase of $6.1 million dollars is due primarily to
expenses from the 1995 Clinton refueling outage. Without
the refueling charges, operation and maintenance expenses
for the first quarter of 1995 would have been approximately
$4 million less than the same period in 1994.
Other Interest Charges - The current quarter increase
of $2.2 million in other interest charges is due to
increased short-term borrowing at higher rates.
Earnings per Common Share - The earnings per common
share for Illinova during the first quarter of 1995 and 1994
resulted from the interaction of all other factors discussed
herein.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
See "Notes to Consolidated Financial Statements" in
Part I for a discussion of certain legal proceedings related
to manufactured gas plant sites.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibits filed with this 10-Q are listed
on the Exhibit Index.
(b) Reports on Form 8-K since December 31, 1994:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
ILLINOIS POWER COMPANY
(Registrant)
By /s/Larry F. Altenbaumer
---------------------------
Larry F. Altenbaumer,
Senior Vice President
and
Chief Financial Officer
on behalf of
Illinois Power Company
Date: May 11, 1995
EXHIBIT INDEX
PAGE NO. WITHIN
SEQUENTIAL
NUMBERING
EXHIBIT DESCRIPTION SYSTEM
27 Financial Data Schedule UT
(filed herewith)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet, income statements and cash flow statement of Illinois Power Company and
is qualified in its entirety by reference to the balance sheet, income statement
and cash flow statement of Illinois Power Company.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4655
<OTHER-PROPERTY-AND-INVEST> 15
<TOTAL-CURRENT-ASSETS> 369
<TOTAL-DEFERRED-CHARGES> 488
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5527
<COMMON> 1385
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 67
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1452
24
319
<LONG-TERM-DEBT-NET> 1868
<SHORT-TERM-NOTES> 74
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 110
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 79
<LEASES-CURRENT> 36
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1565
<TOT-CAPITALIZATION-AND-LIAB> 5527
<GROSS-OPERATING-REVENUE> 425
<INCOME-TAX-EXPENSE> 28
<OTHER-OPERATING-EXPENSES> 319
<TOTAL-OPERATING-EXPENSES> 347
<OPERATING-INCOME-LOSS> 78
<OTHER-INCOME-NET> 1
<INCOME-BEFORE-INTEREST-EXPEN> 79
<TOTAL-INTEREST-EXPENSE> 37
<NET-INCOME> 42
7
<EARNINGS-AVAILABLE-FOR-COMM> 35
<COMMON-STOCK-DIVIDENDS> 19
<TOTAL-INTEREST-ON-BONDS> 35
<CASH-FLOW-OPERATIONS> 127
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
