SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 1-3004
Illinois Power Company
Incentive Savings Plan
(Full title of the plan)
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62525
(Name of issuer of the securities held
pursuant to the plan and the address
of its principal executive office.)
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
FINANCIAL STATEMENTS
AND ADDITIONAL INFORMATION
DECEMBER 31, 1997
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Index to Financial Statements and Additional Information
Financial Statements: Page
Report of Independent Accountants 1
Statements of Net Assets Available for Benefits
with Fund Information as of
December 31, 1997 and 1996 2-14
Statements of Changes in Net Assets Available
for Benefits with Fund Information for the
years ended December 31, 1997 and 1996 15-28
Notes to Financial Statements 29-37
Additional Information:
Schedule I - Schedule of Assets Held for Investment Purposes
Schedule II - Schedule of Reportable Transactions
Note: Other schedules required by section 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA
have been omitted because they are not applicable.
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Fidelity
Illinova Equity
Stock Income
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $298,849 $0
Investments at Fair Value 25,968,828 41,911,711
----------- -----------
Total Investments 26,267,677 41,911,711
Dividends and Interest Receivable 1,278 0
Employee Contributions Receivable 2,051 67,595
Employer Contributions Receivable 811,796 0
Loan Repayments Receivable 591 15,454
Loans Outstanding 0 0
----------- -----------
Other Assets 815,716 83,049
----------- -----------
Total Assets 27,083,393 41,994,760
----------- -----------
LIABILITIES:
Accrued Expenses 13,999 0
----------- -----------
Total Liabilities 13,999 0
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $27,069,394 $41,994,760
=========== ===========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Fidelity
Retirement
Growth Loan
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 33,106,384 0
----------- ----------
Total Investments 33,106,384 0
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 61,714 0
Employer Contributions Receivable 0 0
Loan Repayments Receivable 13,682 (50,704)
Loans Outstanding 0 3,916,574
----------- ----------
Other Assets 75,396 3,865,870
----------- ----------
Total Assets 33,181,780 3,865,870
----------- ----------
LIABILITIES:
Accrued Expenses 0 0
----------- ----------
Total Liabilities 0 0
----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $33,181,780 $3,865,870
=========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Fidelity Fidelity
Asset Asset
Manager Manager
Income Growth
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 1,181,289 7,373,529
---------- ----------
Total Investments 1,181,289 7,373,529
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 3,244 16,817
Employer Contributions Receivable 0 0
Loan Repayments Receivable 535 2,828
Loans Outstanding 0 0
---------- ----------
Other Assets 3,779 19,645
---------- ----------
Total Assets 1,185,068 7,393,174
---------- ----------
LIABILITIES:
Accrued Expenses 0 0
---------- ----------
Total Liabilities 0 0
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $1,185,068 $7,393,174
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Fidelity Fidelity
Asset International
Manager Growth and
Fund Income Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 9,362,941 3,347,530
---------- ----------
Total Investments 9,362,941 3,347,530
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 17,467 9,260
Employer Contributions Receivable 0 0
Loan Repayments Receivable 3,827 1,897
Loans Outstanding 0 0
---------- ----------
Other Assets 21,294 11,157
---------- ----------
Total Assets 9,384,235 3,358,687
---------- ----------
LIABILITIES:
Accrued Expenses 0 0
---------- ----------
Total Liabilities 0 0
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $9,384,235 $3,358,687
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Fidelity
Managed US Equity
Income Index
Portfolio Commingled
Fund Pool
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 15,046,006 2,855,122
----------- ----------
Total Investments 15,046,006 2,855,122
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 20,818 10,869
Employer Contributions Receivable 0 0
Loan Repayments Receivable 6,516 1,975
Loans Outstanding 0 0
----------- ----------
Other Assets 27,334 12,844
----------- ----------
Total Assets 15,073,340 2,867,966
----------- ----------
LIABILITIES:
Accrued Expenses 0 0
----------- ----------
Total Liabilities 0 0
----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $15,073,340 $2,867,966
=========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Founders USAA
Growth International
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 1,687,490 683,595
---------- --------
Total Investments 1,687,490 683,595
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 6,023 2,407
Employer Contributions Receivable 0 0
Loan Repayments Receivable 1,171 342
Loans Outstanding 0 0
---------- --------
Other Assets 7,194 2,749
---------- --------
Total Assets 1,694,684 686,344
---------- --------
LIABILITIES:
Accrued Expenses 0 0
---------- --------
Total Liabilities 0 0
---------- --------
NET ASSETS AVAILABLE FOR BENEFITS $1,694,684 $686,344
========== ========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Warburg
Pincus Fidelity
Emerging Brokerage
Growth Link
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 961,687 1,621,382
-------- ----------
Total Investments 961,687 1,621,382
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 3,639 1,469
Employer Contributions Receivable 0 0
Loan Repayments Receivable 757 1,129
Loans Outstanding 0 0
-------- ----------
Other Assets 4,396 2,598
-------- ----------
Total Assets 966,083 1,623,980
-------- ----------
LIABILITIES:
Accrued Expenses 0 0
-------- ----------
Total Liabilities 0 0
-------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $966,083 $1,623,980
======== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1997
Total All Funds
ASSETS:
Cash and Temporary Cash Investments $298,849
Investments at Fair Value 145,107,494
------------
Total Investments 145,406,343
Dividends and Interest Receivable 1,278
Employee Contributions Receivable 223,373
Employer Contributions Receivable 811,796
Loan Repayments Receivable 0
Loans Outstanding 3,916,574
------------
Other Assets 4,953,021
------------
Total Assets 150,359,364
------------
LIABILITIES:
Accrued Expenses 13,999
------------
Total Liabilities 13,999
------------
NET ASSETS AVAILABLE FOR BENEFITS $150,345,365
============
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996
Fidelity
Illinova Equity
Stock Income
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $239,867 $0
Investments at Fair Value 23,995,153 32,696,498
----------- -----------
Total Investments 24,235,020 32,696,498
Dividends and Interest Receivable 954 0
Employee Contributions Receivable 1,768 54,454
Employer Contributions Receivable 1,166,375 0
Loan Repayments Receivable 1,446 12,518
Loans Outstanding 0 0
----------- -----------
Other Assets 1,170,543 66,972
----------- -----------
Total Assets 25,405,563 32,763,470
----------- -----------
LIABILITIES:
Accrued Expenses 1,906 0
----------- -----------
Total Liabilities 1,906 0
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $25,403,657 $32,763,470
=========== ===========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996
Fidelity
Retirement
Growth Loan
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 30,209,967 0
----------- ----------
Total Investments 30,209,967 0
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 61,030 0
Employer Contributions Receivable 0 0
Loan Repayments Receivable 12,184 (41,691)
Loans Outstanding 0 3,959,549
----------- ----------
Other Assets 73,214 3,917,858
----------- ----------
Total Assets 30,283,181 3,917,858
----------- ----------
LIABILITIES:
Accrued Expenses 0 0
----------- ----------
Total Liabilities 0 0
----------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $30,283,181 $3,917,858
=========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996
Fidelity Fidelity
Asset Asset
Manager Manager
Income Growth
Fund Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 1,119,400 5,160,883
---------- ----------
Total Investments 1,119,400 5,160,883
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 2,886 12,849
Employer Contributions Receivable 0 0
Loan Repayments Receivable 308 2,247
Loans Outstanding 0 0
---------- ----------
Other Assets 3,194 15,096
---------- ----------
Total Assets 1,122,594 5,175,979
---------- ----------
LIABILITIES:
Accrued Expenses 0 0
---------- ----------
Total Liabilities 0 0
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $1,122,594 $5,175,979
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996
Fidelity Fidelity
Asset International
Manager Growth and
Fund Income Fund
ASSETS:
Cash and Temporary Cash Investments $0 $0
Investments at Fair Value 8,191,890 3,742,593
---------- ----------
Total Investments 8,191,890 3,742,593
Dividends and Interest Receivable 0 0
Employee Contributions Receivable 16,253 9,682
Employer Contributions Receivable 0 0
Loan Repayments Receivable 3,067 3,310
Loans Outstanding 0 0
---------- ----------
Other Assets 19,320 12,992
---------- ----------
Total Assets 8,211,210 3,755,585
---------- ----------
LIABILITIES:
Accrued Expenses 0 0
---------- ----------
Total Liabilities 0 0
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $8,211,210 $3,755,585
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996
Fidelity
Managed
Income
Portfolio Total All
Fund Funds
ASSETS:
Cash and Temporary Cash Investments $0 $239,867
Investments at Fair Value 15,051,091 120,167,475
----------- ------------
Total Investments 15,051,091 120,407,342
Dividends and Interest Receivable 0 954
Employee Contributions Receivable 19,866 178,788
Employer Contributions Receivable 0 1,166,375
Loan Repayments Receivable 6,611 0
Loans Outstanding 0 3,959,549
----------- ------------
Other Assets 26,477 5,305,666
----------- ------------
Total Assets 15,077,568 125,713,008
----------- ------------
LIABILITIES:
Accrued Expenses 0 1,906
----------- ------------
Total Liabilities 0 1,906
----------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $15,077,568 $125,711,102
=========== ============
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Fidelity
Illinova Equity
Stock Income
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $138,130 $2,330,525
Employer 2,098,559 0
Fund-to-Fund Transfers (508,012) (1,051,248)
Plan-to-Plan Transfers 362,516 173,428
Loan Repayments 24,158 550,338
----------- -----------
2,115,351 2,003,043
----------- -----------
Investment Income:
Dividend and Interest Income 1,167,523 2,301,987
Net Change in Fair Value of
Investments (236,476) 7,457,216
----------- -----------
931,047 9,759,203
----------- -----------
Application of Participants' Equity:
Loans to Participants 14,929 421,790
Distributions to Active and
Terminated Participants 1,337,976 2,104,579
Administrative and Miscellaneous
Expenses 27,756 4,587
----------- -----------
1,380,661 2,530,956
----------- -----------
Increase (Decrease) in Net Assets
Available for Benefits 1,665,737 9,231,290
Net Assets Available for Benefits,
Beginning of Year 25,403,657 32,763,470
----------- -----------
Net Assets Available for Benefits,
End of Year $27,069,394 $41,994,760
=========== ===========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Fidelity
Retirement
Growth Loan
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $2,324,724 $0
Employer 0 0
Fund-to-Fund Transfers (3,876,423) 0
Plan-to-Plan Transfers 329,329 51,768
Loan Repayments 535,953 (1,385,047)
----------- ----------
(686,417) (1,333,279)
----------- ----------
Investment Income:
Dividend and Interest Income 5,719,211 0
Net Change in Fair Value of
Investments (309,142) 0
----------- ----------
5,410,069 0
----------- ----------
Application of Participants' Equity:
Loans to Participants 448,737 (1,419,920)
Distributions to Active and
Terminated Participants 1,375,393 138,629
Administrative and Miscellaneous
Expenses 923 0
----------- ----------
1,825,053 (1,281,291)
----------- ----------
Increase (Decrease) in Net Assets
Available for Benefits 2,898,599 (51,988)
Net Assets Available for Benefits,
Beginning of Year 30,283,181 3,917,858
----------- ----------
Net Assets Available for Benefits,
End of Year $33,181,780 $3,865,870
=========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Fidelity Fidelity
Asset Asset
Manager Manager
Income Growth
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $115,604 $613,537
Employer 0 0
Fund-to-Fund Transfers 15,388 304,151
Plan-to-Plan Transfers 8,077 73,516
Loan Repayments 15,141 85,308
---------- ----------
154,210 1,076,512
---------- ----------
Investment Income:
Dividend and Interest Income 75,317 770,110
Net Change in Fair Value of
Investments 51,147 727,905
---------- ----------
126,464 1,498,015
---------- ----------
Application of Participants' Equity:
Loans to Participants 9,004 77,676
Distributions to Active and
Terminated Participants 209,150 279,652
Administrative and Miscellaneous
Expenses 46 4
---------- ----------
218,200 357,332
---------- ----------
Increase (Decrease) in Net Assets
Available for Benefits 62,474 2,217,195
Net Assets Available for Benefits,
Beginning of Year 1,122,594 5,175,979
---------- ----------
Net Assets Available for Benefits,
End of Year $1,185,068 $7,393,174
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Fidelity Fidelity
Asset International
Manager Growth and
Fund Income Fund
Sources of Participants' Equity:
Contributions:
Employee $606,566 $374,621
Employer 0 0
Fund-to-Fund Transfers (440,383) (802,524)
Plan-to-Plan Transfers 51,709 (3,351)
Loan Repayments 119,390 73,246
---------- ----------
337,282 (358,008)
---------- ----------
Investment Income:
Dividend and Interest Income 819,149 211,670
Net Change in Fair Value of
Investments 931,548 60,787
---------- ----------
1,750,697 272,457
---------- ----------
Application of Participants' Equity:
Loans to Participants 124,568 53,291
Distributions to Active and
Terminated Participants 790,382 257,952
Administrative and Miscellaneous
Expenses 4 104
---------- ----------
914,954 311,347
---------- ----------
Increase (Decrease) in Net Assets
Available for Benefits 1,173,025 (396,898)
Net Assets Available for Benefits,
Beginning of Year 8,211,210 3,755,585
---------- ----------
Net Assets Available for Benefits,
End of Year $9,384,235 $3,358,687
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Fidelity
Managed US Equity
Income Index
Portfolio Commingled
Fund Pool
Sources of Participants' Equity:
Contributions:
Employee $805,198 $210,662
Employer 0 0
Fund-to-Fund Transfers (474,453) 2,424,167
Plan-to-Plan Transfers 79,844 (26,171)
Loan Repayments 237,151 24,376
----------- ----------
647,740 2,633,034
----------- ----------
Investment Income:
Dividend and Interest Income 894,814 0
Net Change in Fair Value of
Investments 0 258,350
----------- ----------
894,814 258,350
----------- ----------
Application of Participants' Equity:
Loans to Participants 230,744 10,784
Distributions to Active and
Terminated Participants 1,310,245 12,634
Administrative and Miscellaneous
Expenses 5,793 0
----------- ----------
1,546,782 23,418
----------- ----------
Increase (Decrease) in Net Assets
Available for Benefits (4,228) 2,867,966
Net Assets Available for Benefits,
Beginning of Year 15,077,568 0
----------- ----------
Net Assets Available for Benefits,
End of Year $15,073,340 $2,867,966
=========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Founders USAA
Growth International
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $209,244 $72,604
Employer 0 0
Fund-to-Fund Transfers 1,416,164 602,620
Plan-to-Plan Transfers 3,189 1,035
Loan Repayments 11,480 6,372
---------- --------
1,640,077 682,631
---------- --------
Investment Income:
Dividend and Interest Income 225,803 52,823
Net Change in Fair Value of
Investments (144,840) (42,418)
---------- --------
80,963 10,405
---------- --------
Application of Participants' Equity:
Loans to Participants 14,053 6,692
Distributions to Active and
Terminated Participants 12,303 0
Administrative and Miscellaneous
Expenses 0 0
---------- --------
26,356 6,692
---------- --------
Increase (Decrease) in Net Assets
Available for Benefits 1,694,684 686,344
Net Assets Available for Benefits,
Beginning of Year 0 0
---------- --------
Net Assets Available for Benefits,
End of Year $1,694,684 $686,344
========== ========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Warburg
Pincus Fidelity
Emerging Brokerage
Growth Link
Sources of Participants' Equity:
Contributions:
Employee $123,549 $26,967
Employer 0 0
Fund-to-Fund Transfers 752,293 1,638,260
Plan-to-Plan Transfers 1,376 0
Loan Repayments 9,950 21,491
-------- ----------
887,168 1,686,718
-------- ----------
Investment Income:
Dividend and Interest Income 56,840 0
Net Change in Fair Value of
Investments 29,727 0
-------- ----------
86,567 0
-------- ----------
Application of Participants' Equity:
Loans to Participants 7,652 0
Distributions to Active and
Terminated Participants 0 0
Administrative and Miscellaneous
Expenses 0 62,738
-------- ----------
7,652 62,738
-------- ----------
Increase (Decrease) in Net Assets
Available for Benefits 966,083 1,623,980
Net Assets Available for Benefits,
Beginning of Year 0 0
-------- ----------
Net Assets Available for Benefits,
End of Year $966,083 $1,623,980
======== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1997
Total All
Funds
Sources of Participants' Equity:
Contributions:
Employee $7,951,931
Employer 2,098,559
Fund-to-Fund Transfers 0
Plan-to-Plan Transfers 1,106,265
Loan Repayments 329,307
------------
11,486,062
------------
Investment Income:
Dividend and Interest Income 12,295,247
Net Change in Fair Value of
Investments 8,783,804
------------
21,079,051
------------
Application of Participants' Equity:
Loans to Participants 0
Distributions to Active and
Terminated Participants 7,828,895
Administrative and Miscellaneous
Expenses 101,955
------------
7,930,850
------------
Increase (Decrease) in Net Assets
Available for Benefits 24,634,263
Net Assets Available for Benefits,
Beginning of Year 125,711,102
------------
Net Assets Available for Benefits,
End of Year $150,345,365
============
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996
Guaranteed Illinova
Investment Stock
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $0 $113,909
Employer 0 2,427,868
Fund-to-Fund Transfers (4,053,196) (1,117,223)
Plan-to-Plan Transfers 8,632 240,896
Loan Repayments 0 20,276
---------- -----------
(4,044,564) 1,685,726
---------- -----------
Investment Income:
Dividend and Interest Income 93,555 985,562
Net Change in Fair Value of
Investments 0 (2,123,802)
---------- -----------
93,555 (1,138,240)
---------- -----------
Application of Participants' Equity:
Loans to Participants 34,415 46,161
Distributions to Active and
Terminated Participants 349,894 2,329,230
Administrative and Miscellaneous
Expenses 0 23,361
---------- -----------
384,309 2,398,752
---------- -----------
Increase (Decrease) in Net Assets
Available for Benefits (4,335,318) (1,851,266)
Net Assets Available for Benefits,
Beginning of Year 4,335,318 27,254,923
---------- -----------
Net Assets Available for Benefits,
End of Year $0 $25,403,657
========== ===========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996
Fidelity Fidelity
Equity Retirement
Income Growth
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $2,088,452 $2,701,215
Employer 0 0
Fund-to-Fund Transfers 2,267,800 (2,163,022)
Plan-to-Plan Transfers 196,007 132,054
Loan Repayments 492,947 538,025
----------- -----------
5,045,206 1,208,272
----------- -----------
Investment Income:
Dividend and Interest Income 2,018,141 3,751,565
Net Change in Fair Value of
Investments 3,507,230 (1,328,460)
----------- -----------
5,525,371 2,423,105
----------- -----------
Application of Participants' Equity:
Loans to Participants 575,901 654,656
Distributions to Active and
Terminated Participants 2,478,672 2,324,197
Administrative and Miscellaneous
Expenses 3,417 1,113
----------- -----------
3,057,990 2,979,966
----------- -----------
Increase (Decrease) in Net Assets
Available for Benefits 7,512,587 651,411
Net Assets Available for Benefits,
Beginning of Year 25,250,883 29,631,770
----------- -----------
Net Assets Available for Benefits,
End of Year $32,763,470 $30,283,181
=========== ===========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996
Fidelity
Asset
Manager
Loan Income
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $0 $109,994
Employer 0 0
Fund-to-Fund Transfers 0 147,286
Plan-to-Plan Transfers 34,288 1,766
Loan Repayments 1,326,383) 11,577
---------- ----------
1,292,095) 270,623
---------- ----------
Investment Income:
Dividend and Interest Income 0 71,593
Net Change in Fair Value of
Investments 0 74
---------- ----------
0 71,667
---------- ----------
Application of Participants' Equity:
Loans to Participants 1,776,177) 9,476
Distributions to Active and
Terminated Participants 218,372 126,138
Administrative and Miscellaneous
Expenses 0 0
---------- ----------
1,557,805) 135,614
---------- ----------
Increase (Decrease) in Net Assets
Available for Benefits 265,710 206,676
Net Assets Available for Benefits,
Beginning of Year 3,652,148 915,918
---------- ----------
Net Assets Available for Benefits,
End of Year $3,917,858 $1,122,594
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996
Fidelity
Asset Fidelity
Manager Asset
Growth t Manager
Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $514,729 $684,488
Employer 0 0
Fund-to-Fund Transfers 412,675 (498,277)
Plan-to-Plan Transfers 45,836 50,856
Loan Repayments 90,739 135,366
---------- ----------
1,063,979 372,433
---------- ----------
Investment Income:
Dividend and Interest Income 427,136 645,695
Net Change in Fair Value of
Investments 259,672 315,713
---------- ----------
686,808 961,408
---------- ----------
Application of Participants' Equity:
Loans to Participants 56,573 129,270
Distributions to Active and
Terminated Participants 143,232 683,807
Administrative and Miscellaneous
Expenses 0 46
---------- ----------
199,805 813,123
---------- ----------
Increase (Decrease) in Net Assets
Available for Benefits 1,550,982 520,718
Net Assets Available for Benefits,
Beginning of Year 3,624,997 7,690,492
---------- ----------
Net Assets Available for Benefits,
End of Year $5,175,979 $8,211,210
========== ==========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996
Fidelity
Fidelity Managed
International Income
Growth and Portfolio
Income Fund Fund
Sources of Participants' Equity:
Contributions:
Employee $408,751 $752,112
Employer 0 0
Fund-to-Fund Transfers 240,279 4,763,678
Plan-to-Plan Transfers 59,534 69,627
Loan Repayments 107,694 241,553
---------- -----------
816,258 5,826,970
---------- -----------
Investment Income:
Dividend and Interest Income 120,391 752,344
Net Change in Fair Value of
Investments 288,207 0
---------- -----------
408,598 752,344
---------- -----------
Application of Participants' Equity:
Loans to Participants 48,042 221,683
Distributions to Active and
Terminated Participants 236,330 2,781,257
Administrative and Miscellaneous
Expenses 139 5,436
---------- -----------
284,511 3,008,376
---------- -----------
Increase (Decrease) in Net Assets
Available for Benefits 940,345 3,570,938
Net Assets Available for Benefits,
Beginning of Year 2,815,240 11,506,630
---------- -----------
Net Assets Available for Benefits,
End of Year $3,755,585 $15,077,568
========== ===========
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the Year Ended December 31, 1996
Total All
Funds
Sources of Participants' Equity:
Contributions:
Employee $7,373,650
Employer 2,427,868
Fund-to-Fund Transfers 0
Plan-to-Plan Transfers 839,496
Loan Repayments 311,794
------------
10,952,808
------------
Investment Income:
Dividend and Interest Income 8,865,982
Net Change in Fair Value of
Investments 918,634
------------
9,784,616
------------
Application of Participants' Equity:
Loans to Participants 0
Distributions to Active and
Terminated Participants 11,671,129
Administrative and Miscellaneous
Expenses 33,512
------------
11,704,641
------------
Increase (Decrease) in Net Assets
Available for Benefits 9,032,783
Net Assets Available for Benefits,
Beginning of Year 116,678,319
------------
Net Assets Available for Benefits,
End of Year $125,711,102
============
See Accompanying Notes to Financial Statements
<PAGE>
ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF PLAN:
General:
The Illinois Power Company Incentive Savings Plan (the Plan) is sponsored
and administered by Illinois Power Company (the Company). The Plan became
effective as of June 1, 1984. Assets of the Plan are held and managed by a
Trustee. Effective July 1, 1995, Fidelity Management Trust Company of Boston,
Massachusetts became trustee and custodian. The purpose of the Plan is to enable
participants to invest a portion of their salaries in tax-deferred savings
pursuant to section 401(k) of the Internal Revenue Code (IRC). The Plan is
subject to and in compliance with the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) as amended.
Participation:
All salaried employees of the Company are eligible to participate in the
Plan. In addition, all employees of Illinois Power Company's parent company,
Illinova Corporation (Illinova), are eligible to participate, as are employees
of Illinova's other subsidiary companies. Participation is voluntary. Active
participation ceases upon termination of employment with the Company. Former
employees can choose to liquidate their accounts or to leave them in the Plan.
Earnings will continue to accrue on undistributed accounts. All accounts,
whether for active or former employees, are fully vested.
Plan Changes and Amendments:
As of June 30, 1994, the administrator started phasing out the Guaranteed
Investment Contract (GIC) option. No funds were contributed or transferred to
the GIC after that date. Funds in the guaranteed investment contract were
eligible to remain there until June 30, 1996, at which time the contract matured
and the remaining funds were transferred to the Managed Income Portfolio.
<PAGE>
Effective April 1, 1997, new contributions and balances transferred from
other options could be invested in five new alternatives. The one new Fidelity
fund was the Fidelity U.S. Equity Index Commingled Pool. Three mutual funds
managed by other firms include the Founders Growth Fund, USAA International
Fund, and the Warburg Pincus Emerging Growth Fund. In addition, participants are
able to buy individual stocks and make other investment choices. Additional fees
apply for this service which is called Fidelity Brokerage Link. Fidelity
Management Trust Company will continue to handle transactions and serve
employees accounts, regardless of which funds the participant invests in.
New contributions could also be made, or balances transferred to, the
Stock Fund, the Fidelity Equity Income Fund, the Fidelity Retirement Growth
Fund, the Fidelity Asset Manager Income Fund, the Fidelity Asset Manager Growth
Fund, the Fidelity Asset Manager Fund, the Fidelity International Growth and
Income Fund, or the Fidelity Managed Income Portfolio Fund, which were not
affected by the changes.
Effective June 1997, the Plan was amended to reflect the change to daily
valuation and elections through telephonic delivery; permit participants to
request a loan from amounts that have been rolled over to the Plan; increase the
maximum Company Incentive Contribution; clarify that if a participant's
additions exceeds the limits of section 415 of the IRC, correction will first be
made by distributing the participant's after-tax and 401(k) contributions; and
clarify that a participant must be an active employee on the last day of the
plan year to receive a Company Incentive Contribution for that plan year.
Contributions:
Participants may make before-tax contribution by payroll deduction up to
the legal dollar limit. Participants may also make after-tax contributions in
cash or by payroll deduction. Total contributions are limited to the applicable
percentage limit set by law. A participant may also "roll-over" into the Plan
amounts previously invested in another retirement plan.
Participants have the option of investing their contributions into any or
all of the investment funds in the proportions they choose. They may change
their investment options or transfer amounts from fund to fund at any time.
Amounts are transferred between plans as participants change jobs. These
transfers are shown in the Statement of Changes in Net Assets Available for
Benefits with Fund Information as Plan-to-Plan Transfers.
<PAGE>
The Company contributes a monthly matching contribution to the Plan equal
to 50% of the first $80 of the participants' monthly before-tax contributions
and 25% of the balance of deferrals per month, up to 6% of the employee's base
earnings for the month. All Company matching contributions are paid in units of
Illinova common stock and are contained in the Stock Fund. Dividends on stock
held in the Stock Fund are also invested in the Stock Fund.
The Company has an Incentive Compensation arrangement in which all
employees can earn Illinova stock if specified performance goals are met. Units
awarded under the Incentive Compensation arrangement are held in the Stock Fund.
Dividends earned on these units are also invested in the Stock Fund.
Shares previously held in the Tax Reduction Act Stock Ownership Plan
(TRASOP), which was eliminated in 1988, are also held in the Stock Fund.
ESOP:
In October 1990, the Board of Directors authorized amendments to the
Incentive Savings Plan to provide for the implementation of an Employee Stock
Ownership Plan (ESOP) arrangement. Under this arrangement, the Company, pursuant
to authorization granted by the Illinois Commerce Commission (ICC), loaned $35
million to the Trustee of the ESOP in January 1991. The loan proceeds were used
to purchase 2,031,445 shares of the Company's common stock on the open market.
These shares are held in a suspense account under the Plans and are being
distributed to the accounts of participating employees as the loan is repaid by
the Trustee with funds contributed by Illinois Power, together with dividends on
the shares acquired with the loan proceeds. The shares are allocated to the
accounts of eligible participating employees as they are earned through the
Match or Incentive Compensation features of the Plan.
As of December 31, 1997, 294,476 and 339,205 shares have been allocated
to salaried employees for Company Match and Incentive Compensation,
respectively.
Distributions:
Distributions as provided for in the Plan are made to retired Plan
participants or their beneficiaries. Distributions must begin by April 1st of
the calendar year following the later of the calendar year in which the employee
reaches age 70 1/2 or the calendar year in which the employee retires. All
distributions are made in the form of cash and/or Illinova common stock.
<PAGE>
Forfeitures:
Each participant is responsible for supplying the Company with a current
address. If the address of the participant (or the participant's beneficiary in
the event of participant's death) is not known to the Company within four years
(three years in the event of participant's death) of the date on which
distribution may first be made, the adjusted balance in the participant's
account shall be deemed a forfeiture and shall be used to reduce matching
contributions and company incentive contributions. In the event that the
participant or beneficiary makes a valid claim for the forfeited amount, the
benefits shall be reinstated.
Loans:
The Plan allows participants to borrow from their before-tax and TRASOP
accounts an amount not to exceed the lesser of $50,000 reduced by the excess of
the highest outstanding balance of loans during the one-year period before the
date the loan is made over the outstanding balance of loans on the date the loan
is made or 50% of the vested account balance. Interest is charged on these loans
at a rate commensurate with interest rates charged by persons in the business of
lending money for similar type loans. For 1997 and 1996, the interest rate was
9.50% and 9.25%, respectively.
All loans made will mature and be payable in full no earlier than one
year and no later than five years from the date of the loan. An exception exists
when the loan is used by the participant to acquire his or her principal
residence. In this case, the loan will mature and be payable in full no earlier
than one year and no later than ten years from the date of the loan. Loan
repayments are made by payroll deductions authorized by the participant and by
optional cash payments. Interest paid on the loan is credited to the
participant's account. The Trustee maintains a Loan Fund to hold the balances of
participants' loans.
Plan Termination:
It is expected that the Plan will be continued, but the right to amend,
modify or terminate the Plan is reserved by the Company provided that such
action does not retroactively and adversely affect the rights of any participant
or beneficiary under the Plan.
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting:
The accompanying Plan financial statements are prepared on the accrual
basis of accounting.
Investments:
The guaranteed investment fund is valued at contract value as reported to
the Plan by the Trustee. Participant notes receivable included in the loan fund
are valued at cost, which approximates fair value. Other investments are stated
at current value based on the latest quoted market price.
Income:
Interest and dividend income is accrued as earned.
Net appreciation (depreciation) of investments is comprised of realized
and unrealized gains and losses. Realized gains or losses represent the
difference between proceeds received upon sale and the average cost of the
investment. Unrealized gain or loss is the difference between market value and
cost of investments retained in the Plan (at financial statement date). For the
purpose of allocation to participants, the Illinova common stock is valued by
the Plan at actual cost; however, current value is used at the time of
distribution to participants and results in a realized gain or loss as reflected
in the Statement of Changes in Net Assets Available for Benefits with Fund
Information.
Expenses:
Certain expenses incurred in the administration of the Plan are paid by
the Plan rather than the Company. The expenses paid by the Plan include ESOP
record keeping fees and trustee administrative fees. All other expenses incurred
in the operation of the Plan are paid by the Company.
Income Taxes:
The Internal Revenue Service has determined and informed the Company by a
letter dated January 8, 1996, that the Plan and related trust are designed in
accordance with applicable sections of the IRC. The plan has been amended since
receiving the determination letter. However, the Plan Administrator and the
Plan's tax counsel believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
<PAGE>
NOTE 3 - INVESTMENTS
Plan investments are received, invested and held by the Trustee. Individual
investments that represent 5% or more of the Plan's net assets available for
benefits include:
December 31, 1997
Investments at Fair Value as Determined by
Quoted Market Price
Units Value Cost
Illinova Common Stock 964,040 $25,968,828 $20,374,849
Fidelity Equity Income
Fund 799,689 $41,911,711 $28,462,446
Fidelity Retirement
Growth Fund 1,964,771 $33,106,384 $34,459,220
Fidelity Asset Manager
Fund 510,242 $ 9,362,941 $ 7,937,016
Fidelity Managed Income
Portfolio Fund 15,046,006 $15,046,006 $15,046,006
December 31, 1996
Investments at Fair
Value as Determined by
Quoted Market Price
Units Value Cost
Illinova Common Stock 872,551 $23,995,153 $19,065,430
Fidelity Equity Income
Fund 763,402 $32,696,498 $25,136,636
Fidelity Retirement
Growth Fund 1,747,251 $30,209,967 $30,809,480
Fidelity Asset Manager
Fund 497,383 $ 8,191,890 $ 7,457,184
Fidelity Managed Income
Portfolio Fund 15,051,091 $15,051,091 $15,051,091
<PAGE>
NOTE 4 - TRANSACTIONS WITH PARTIES-IN-INTEREST
Fidelity Management Trust Company, the Trustee for the Plan, purchased
shares of Illinova Common Stock at a cost of $4,067,761 in 304 transactions and
sold shares, the proceeds of which totaled $2,969,549, in 300 transactions. The
net gain on these sales was $266,448. The transactions are allowable
party-in-interest transactions under Section 408(3) of ERISA and the regulations
thereunder.
The majority of the assets of the Plan are invested in Fidelity Investments
mutual funds. The Plan also invests in a short-term money market fund, the
Fidelity Investments Cash Portfolio. The transactions with these Fidelity funds
are allowable party-in-interest transactions under Section 408(b)(8) of ERISA
and the regulations thereunder. The number of purchase transactions with each
fund and the dollar amount of purchases for each fund as of December 31, 1997
are listed below:
Purchase Purchase
Fund Transactions Amount
Fidelity Equity Income Fund 229 $ 8,550,554
Fidelity Retirement Growth Fund 222 $10,012,632
Fidelity Asset Manager Income Fund 108 $ 525,176
Fidelity Asset Manager Growth Fund 174 $ 2,668,826
Fidelity Asset Manager Fund 179 $ 1,890,879
Fidelity International Growth and
Income Fund 160 $ 1,134,925
Fidelity Managed Income Portfolio
Fund 176 $ 6,418,982
Fidelity US Equity Index
Commingled Pool 131 $ 3,124,601
Founders Growth Fund 123 $ 2,089,787
USAA International Fund 87 $ 947,444
Warburg Pincus Emerging Growth 92 $ 1,116,291
Fidelity Brokerage Link 66 $ 1,684,120
Cash Portfolio 139 $ 3,845,829
<PAGE>
The number of sales transactions with each fund, the dollar amount of
sales, and the gain on these sales for each fund as of December 31, 1997 are
shown below:
Sales
Trans- Sales
Fund actions Amount Gain
Fidelity Equity Income Fund 202 $6,792,558 $1,567,814
Fidelity Retirement Growth
Fund 207 $6,807,073 $ 444,181
Fidelity Asset Manager Income
Fund 53 $ 514,433 $ 19,515
Fidelity Asset Manager Growth
Fund 111 $1,184,084 $ 147,533
Fidelity Asset Manager Fund 144 $1,651,376 $ 240,329
Fidelity International Growth
and Income Fund 118 $1,590,774 $ 171,227
Fidelity Managed Income
Portfolio Fund 191 $6,424,067 0
Fidelity US Equity Index
Commingled Pool 38 $ 527,829 $ 21,709
Founders Growth Fund 30 $ 257,458 $ 7,722
USAA International Fund 18 $ 221,431 $ 12,115
Warburg Pincus Emerging
Growth 20 $ 184,332 $ 18,600
Fidelity Brokerage Link 176 $ 62,738 0
Cash Portfolio 229 $3,786,847 0
<PAGE>
Line 27a Schedule I
Illinois Power Company
Incentive Savings Plan
Schedule of Assets Held for Investment Purposes
December 31, 1997
Identity of Issue/ Current
Description of Investment Cost Value
*Illinova Common Stock $20,374,849 $25,968,828
*Fidelity Equity Income Fund 28,462,446 41,911,711
*Fidelity Retirement Growth Fund 34,459,220 33,106,384
*Fidelity Asset Manager Income Fund 1,109,679 1,181,289
*Fidelity Asset Manager Growth Fund 6,258,228 7,373,529
*Fidelity Asset Manager Fund 7,937,016 9,362,941
*Fidelity International Growth and
Income Fund
3,112,834 3,347,530
*Fidelity Managed Income Portfolio
Fund
15,046,006 15,046,006
*Fidelity US Equity Index
Commingled Pool
2,618,481 2,855,122
*Founders Growth Fund 1,840,052 1,687,490
*USAA International Fund 738,127 683,595
*Warburg Pincus Emerging Growth 950,560 961,687
*Fidelity Brokerage Link 1,696,088 1,621,382
**Participant Loans 3,916,574 3,916,574
--------- ---------
$128,520,160 $149,024,068
============ ============
*A party-in-interest to the Plan
**Interest rates on loans range
from 7% to 11%
<PAGE>
<TABLE>
Line 27d Schedule II
Illinois Power Company
Incentive Savings Plan
Schedule of Reportable Transactions *
for the Year Ended December 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Expense Current
Identity of Incurred Value of
Party Involved/ Purchase Selling Lease with Cost of Asset on
Description of Asset Price Price Rental Trans Asset Trans Dt Net Gain
Illinova Common Stock $ 4,067,761 $2,969,549 N/A N/A $2,703,101 $2,969,549 $ 266,448
Fidelity Equity
Income Fund
$ 8,550,554 $6,792,558 N/A N/A $5,224,744 $6,792,558 $1,567,814
Fidelity Retirement
Growth Fund
$10,012,632 $6,807,073 N/A N/A $6,362,892 $6,807,073 $ 444,181
Fidelity Managed
Income Portfolio Fund
$ 6,418,982 $6,424,067 N/A N/A $6,424,067 $6,424,067 0
</TABLE>
* Transactions or series of transactions in excess of 5% of the current value of
the Plan's assets as of December 31, 1996 as defined in Section 2520.103-6 of
the Department of Labor Rules and Regulations for Reporting and Disclosure under
ERISA.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Illinois Power Company has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
Illinois Power Company
Incentive Savings Plan
by \S\ Kim B. Leftwich
Kim B. Leftwich
Vice-President
Date: June 17, 1998
<PAGE>
EXHIBIT INDEX
Exhibits Filed Herewith
Exhibit No. Description
1 Consent of Independent Accountants
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-60278 of Illinova Corporation of our report on the
Illinois Power Company Incentive Savings Plan for the year ended December 31,
1997, dated June 12, 1998, which is incorporated by reference in this Form 11-K.
by /s/ Price Waterhouse LLP
St. Louis, Missouri
June 12, 1998
<PAGE>
