UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 15, 1998
Commission Registrants; State of Incorporation; IRS Employer
File Number Address; and Telephone Company 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
Total number of sequentially numbered pages is 8.
<PAGE>
Item 7. Exhibits
(c) Exhibits
(12) Statements re computation of ratios
(99.1) Press Release, dated July 15, 1998
(99.2) Illinova Consolidated Income Statements
<PAGE>
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.
ILLINOVA CORPORATION
(Registrant)
/s/Leah Manning Stetzner
---------------------------
Leah Manning Stetzner
General Counsel and
Corporate Secretary
on behalf of
Illinova Corporation
Date: July 15, 1998
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)
/s/Leah Manning Stetzner
---------------------------
Leah Manning Stetzner
Vice President, General
Counsel, and Corporate
Secretary on behalf of
Illinois Power Company
Date: July 15, 1998
<PAGE>
Exhibit Index
The following Exhibits are hereby filed as part of this Current Report
on Form 8-K:
Exhibit
Number Description
12 Statements re computation of ratios
99.1 Press Release, dated July 15, 1998
99.2 Illinova Consolidated Income Statements
ILLINOIS POWER COMPANY
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(Thousands of Dollars)
Twelve Twelve
Year to Months Months
Date Ended Ended
March March March**
1998 1998 1998
Earnings Available for Fixed Charges:
Net Income (Loss) $25,490 $(89,636) ($89,636)
Add:
Income Taxes:
Current 10,089 62,475 62,475
Deferred - Net 2,290 21,441 21,441
Allocated income taxes (3,378) (4,633) (4,633)
Investment tax credit - deferred (1,723) (7,278) (7,278)
Income tax effect of disallowed costs - - -
Income tax effect of FAS 71 write-off - (117,998) (117,998)
Interest on long-term debt 26,840 108,108 108,108
Amortization of debt expense and premium-
net, and other interest charges 7,312 25,955 25,955
One-third of all rentals (Estimated to
be representative of the interest
component) 999 4,086 4,086
Interest on in-core fuel 810 3,746 3,746
Disallowed Clinton plant costs - - -
FAS 71 Regulatory Write-Offs - - 313,030
------- -------- -------
Earnings (loss) available for fixed charges $68,729 $6,266 $319,296
======= ======== ========
Fixed charges:
Interest on long-term debt $26,840 $108,108 $108,108
Amortization of debt expense and
premium-net, and other interest charges 8,971 32,988 32,988
One-third of all rentals (Estimated to
be representative of the interest 999 4,086 4,086
component)
------- -------- --------
Total Fixed Charges $36,810 $145,182 $145,182
======= ======== ========
Ratio of earnings to fixed 1.87 0.04 * 2.20
charges
======== ======== ========
* Earnings are inadequate to cover fixed charges. Additional earnings
(thousands) for Twelve Months Ended March 1998 of $138,916 are required
to attain a one-to-one ratio of Earnings to Fixed Charges.
** Supplemental ratio of earnings to fixed charges presented to
exclude write-off related to the discontinued application of
provisions of SFAS 71, "Accounting for the Effects of Certain Types of
Regulation" for the generation segment of the business.
For immediate release: July 15, 1998
For more information: Shirley Swarthout (217) 424-6400
NOTE: Illinova's management is taking advantage of safe harbor disclosure
provisions by issuing this report which contains estimates, projections and
other forward-looking statements that involve risks and uncertainties. Actual
results or outcomes could differ materially from those provided in the
forward-looking statements as a result of such important factors as: the outcome
of state and federal regulatory proceedings affecting the restructuring of the
electric and gas utility industries; the impacts of new laws and regulations
relating to restructuring, environmental, and other matters have on Illinova and
its subsidiaries; the effects of increased competition on the utility
businesses; risks of owning and operating a nuclear facility; changes in prices
and cost of fuel; factors affecting non-utility investments, such as the risk of
doing business in foreign countries; construction and operation risks; and
increases in financing costs. All forward-looking statements are based upon
information presently available, and Illinova assumes no obligation to update
any forward-looking statements.
ILLINOVA POSTS SECOND-QUARTER LOSS; PREDICTS BREAK-EVEN YEAR
DECATUR, Ill. -- Illinova Corp. today announced a loss of $47 million, or
66 cents per share (basic and diluted), for the second quarter 1998. This
compares to earnings of $31 million, or 42 cents per share (basic and diluted),
for the same period a year ago.
After experiencing unprecedented and unexpected prices for power
purchases during the last week of June, Illinova earlier this month said
Illinois Power's projected replacement power costs in 1998 would significantly
exceed previous projections and that Illinova expected modest, if any, earnings
for the year.
"Based on what we now know, we expect 1998 earnings to be at or near
break-even," said Larry F. Altenbaumer, chief financial officer for Illinova and
Illinois Power. "We base these projections on an uncertain and highly volatile
electric power market, which could cause material changes to our outlook as the
year progresses."
The revised earnings projections are based primarily on higher purchase
prices for replacement power and greater than previously projected expenditures
for recovery efforts at Clinton Power Station.
Replacement power costs exceeded expectations by $49 million during the
second quarter, and the company recorded an additional $58 million for higher
replacement power costs expected in July and August.
Clinton Power Station operations and maintenance expenses (O&M) for the
quarter increased by $22 million over the same period in 1997.
Good progress is being made toward restarting the Clinton Power Station
prior to year's end, but increased expenses are needed to support the overall
recovery process. The company now projects that Clinton expenditures for 1998
will total $195 million -- approximately $45 million higher than previously
expected.
Altenbaumer said the added costs for replacement power and Clinton
restart costs should impact only 1998's financial results and, because Clinton
is expected to be back in operation by year's end, should have little effect on
1999.
- 30 -
Please see the attached Illinova Corp. Consolidated Statements of Income.
<TABLE>
Illinova
Condensed Consolidated Statements of Income
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------------ ----------------------------- ------------------------------
% Change % Change % Change
Fav/ Fav/ Fav/
1998 1997 (Unfav) 1998 1997 (Unfav) 1998 1997 (Unfav)
(Millions) (Millions) (Millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues
Electric $ 304.5 $301.7 1% $581.1 $583.9 - % $1,241.6 $1,225.5 1%
Electric interchange 112.7 53.5 111 209.0 80.1 161 304.5 152.2 100
Gas 49.8 60.1 (17) 166.4 224.1 (26) 296.2 386.7 (23)
Diversified enterprises 80.3 127.6 (37) 166.2 225.2 (26) 676.6 268.7 152
------- ------ ------- ------- ------- -------
Total 547.3 542.9 1 1,122.7 1,113.3 1 2,518.9 2,033.1 24
------- ------ ------- ------- ------- -------
Operating Expenses
Fuel for electric plants 53.9 52.2 (3) 109.6 97.5 (12) 244.5 219.5 (11)
Power purchased 229.4 45.6 - 326.5 81.4 - 463.0 123.5 -
Gas purchased for resale 22.4 22.8 2 88.4 122.5 28 173.6 219.3 21
Diversified enterprises 85.0 150.8 44 179.7 259.2 31 712.8 315.9 (126)
Other operating and maintenance 122.9 94.1 (31) 231.7 173.2 (34) 460.7 359.0 (28)
Depreciation and amortization 50.5 49.3 (2) 101.2 98.3 (3) 201.7 191.9 (5)
General taxes 34.3 33.0 (4) 73.0 71.7 (2) 135.1 133.6 (1)
------- ------ ------- ------- ------- -------
Total 598.4 447.8 (34) 1,110.1 903.8 (23) 2,391.4 1,562.7 (53)
------- ------ ------- ------- ------- -------
Operating Income (Loss) (51.1) 95.1 (154) 12.6 209.5 (94) 127.5 470.4 (73)
------- ------ ------- ------- ------- -------
Other Income and Deductions
Miscellaneous - net 2.8 1.4 100 1.3 2.2 (41) 2.6 4.5 (42)
Equity earnings in affiliates 3.4 2.4 42 8.9 6.4 39 20.0 7.7 160
------- ------ ------- ------- ------- -------
Total 6.2 3.8 63 10.2 8.6 19 22.6 12.2 85
------- ------ ------- ------- ------- -------
Income (Loss) Before Interest Charges
and Income Taxes (44.9) 98.9 (145) 22.8 218.1 (90) 150.1 482.6 (69)
------- ------ ------- ------- ------- -------
Interest Charges
Interest expense 35.9 36.0 - 72.5 74.2 2 142.5 145.3 2
Allowance for borrowed funds
used during construction (1.2) (1.3) (8) (2.3) (2.7) (15) (4.6) (5.6) (18)
Preferred dividend requirements
of subsidiary 5.0 5.4 7 9.9 10.9 9 20.5 21.9 6
------- ------ ------- ------- ------- -------
Total 39.7 40.1 1 80.1 82.4 3 158.4 161.6 2
------- ------ ------- ------- ------- -------
Income (Loss) Before Income Taxes (84.6) 58.8 (244) (57.3) 135.7 (142) (8.3) 321.0 (103)
------- ------ ------- ------- ------- -------
Income Taxes (37.6) 27.4 237 (33.3) 60.3 155 (13.3) 134.6 110
------- ------ ------- -------- ------- -------
Net Income(Loss) Before Extraordinary Item (47.0) 31.4 (250) (24.0) 75.4 (132) 5.0 186.4 (97)
Extraordinary Item Net of Income Tax
Benefit of $118.0 Million - - - - - - (195.0) - -
------- ------ ------- ------- ------- -------
Net Income (Loss) (47.0) 31.4 - (24.0) 75.4 - (190.0) 186.4 -
Carrying amount over (under)
consideration paid for redeemed
preferred stock of subsidiary - - - - - - 0.2 (0.2) -
------- ------ ------- ------- ------- -------
Net Income (Loss) Applicable
to Common Stock $ (47.0) $ 31.4 - (24.0) $ 75.4 - $(189.8) $ 186.2 -
======= ====== ======= ======= ======= =======
Weighted average common shares 71.7 75.6 71.7 75.7 72.0 75.7
Earnings (loss) per common share before
extraordinary item (basic and diluted) ($0.66) $0.42 ($0.34) $1.00 $0.07 $2.46
Extraordinary item per common
share (basic and diluted) - - - - ($2.71) -
Earnings (loss) per common
share (basic and diluted) ($0.66) $0.42 ($0.34) $1.00 ($2.64) $2.46
Cash dividends declared
per common share $0.31 $0.31 $0.62 $0.62 $1.24 $1.21
Cash dividends paid
per common share $0.31 $0.31 $0.62 $0.62 $1.24 $1.18
</TABLE>
These unaudited statements are submitted as a matter of general information and
are not intended to induce, or to be used in connection with, any sale or
purchase of securities. These statements should be read in conjunction with
Illinova's and Illinois Power Company's 1998 Quarterly Reports on Form 10-Q and
Form 8-K filings to the Securities and Exchange Commission, Illinova's 1997
Annual Report to Shareholders (included in the Proxy Statement) and Illinova's
and Illinois Power Company's 1997 Form 10-K filings to the Securities and
Exchange Commission.
