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 16, 1999
Commission Registrants; State of Incorporation; IRS Employer
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
Total number of sequentially numbered pages is 7.
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Item 5. Other Events
Certain information contained in this report is forward-looking
information based on current expectations and plans that involve risks and
uncertainties. Forward-looking information includes, among other things,
statements concerning estimates and projections of earnings. Although Illinova
believes that this forward-looking information is accurate, its businesses are
dependent on various regulatory issues, general economic conditions and future
trends, and these factors can cause actual results to differ materially from the
forward-looking information that has been provided. The reader is cautioned not
to put undue reliance on this forward-looking information, which is not a
guarantee of future performance and is subject to a number of uncertainties and
other factors, many of which are outside the control of Illinova.
The following factors, in addition to those discussed in the company's
Annual Report on Form 10-K for the year ended Dec. 31, 1998, and subsequent
securities filings, could cause results to differ materially from management
expectations as suggested by such forward-looking information: the impact of
recent and future federal and state regulatory changes; the effects of increased
competition; the impact of fluctuations in commodity prices and customer demand;
the impacts of new environmental laws and regulations; factors affecting
non-utility investments, such as the risk of doing business in foreign
countries; construction and operation risks; and increases in financing costs.
ILLINOVA REPORTS SECOND-QUARTER EARNINGS
On July 14, 1999, Illinova Corporation announced second-quarter 1999
earnings of $8.7 million, or 12 cents per common share (basic and diluted). This
compares to a loss of $47 million, or 66 cents per common share, for the same
period last year.
Year-to-date earnings are $26.4 million, or 38 cents per common share,
compared to a loss of $24 million, or 34 cents per common share, for the same
period in 1998.
Based on financial results for the first half of 1999, and excluding
the impacts of merger-related expenses, Illinova remains on target to meet its
earlier projection of $1.50 per share earnings for the year.
Major factors affecting the current quarter's results were the 15
percent residential electric rate reduction which began Aug. 1, 1998, and the
revised management services agreement for Clinton Power Station under which PECO
Energy assumed the plant's direct operating and capital expenses starting April
1, 1999. The rate decrease reduced revenues by $14.9 million, or 12 cents per
share, while the restructured agreement for Clinton trimmed IP's expenses by
$16.9 million, or 14 cents per share, from second quarter 1998.
Second-quarter 1999 expenses also include $7.3 million related to
Illinova's recently announced merger with Dynegy; $5 million related to
amortization of the regulatory asset created as part of the 1998
quasi-reorganization; and $6.4 million in interest due to changes in net present
value of decommissioning assets and liabilities, an expense that will be
2
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reversed if the sale of Clinton Power Station to AmerGen is completed by year's
end. Without these three expense items, earnings for the quarter would have been
$19.9 million, or approximately 27 cents per share.
Last year's second-quarter loss of 66 cents per share was primarily due to
$107 million in higher replacement power costs following last June's
unprecedented spike in market prices for electricity. Without the $107 million
in higher replacement power costs, second-quarter 1998 earnings would have been
24 cents per share.
Illinova Corporation [NYSE:ILN], headquartered in Decatur, Ill., is an
energy services holding company with $6.8 billion in assets and annual revenues
of $2.4 billion. Its subsidiaries include Illinois Power, an electric and
natural gas utility that serves approximately 650,000 customers over a
15,000-square-mile area of Illinois; Illinova Generating, which invests in,
develops and operates independent power projects worldwide; and Illinova Energy
Partners, which markets energy and energy-related services in the United States
and Canada.
3
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Item 7. Financial Statements
(A) Financial Statements
(99.1) Illinova Consolidated Income Statements
4
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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)
By /s/ Leah Manning Stetzner
----------------------------
Leah Manning Stetzner
General Counsel and
Corporate Secretary
on behalf of
Illinova Corporation
Date: July 16, 1999
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/ Leah Manning Stetzner
----------------------------
Leah Manning Stetzner
Vice President, General
Counsel and Corporate
Secretary on behalf of
Illinois Power Company
Date: July 16, 1999
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Exhibit Index
The following Exhibits are hereby filed as part of this Current Report on Form
8-K:
Exhibit
Number Description
99.1 Illinova Consolidated Income Statements
6
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<TABLE>
<CAPTION>
Condensed Consolidated Statements of Income
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------------- ---------------------------- ---------------------------
% Change % Change % Change
Fav/ Fav/ Fav/
1999 1998 (Unfav) 1999 1998 (Unfav) 1999 1998 (Unfav)
----- ----- ------- ----- ----- ------- ----- ----- ------
(Millions) (Millions) (Millions)
Operating Revenues
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electric $276.7 $304.5 (9)% $ 531.9 $ 581.1 (8)% $1,175.0 $1,241.6 (5)%
Electric interchange 56.2 112.7 (50) 150.2 209.0 (28) 498.4 304.5 64
Gas 45.2 49.8 (9) 168.3 166.4 1 289.7 296.2 (2)
Diversified enterprises 101.2 80.3 26 177.3 166.2 7 372.5 676.6 (45)
------ ----- ------- ------- -------- --------
Total 479.3 547.3 (12) 1,027.7 1,122.7 (8) 2,335.6 2,518.9 (7)
------ ----- ------- ------- -------- --------
Operating Expenses
Fuel for electric plants 60.0 53.9 (11) 111.4 109.6 (2) 252.0 244.5 (3)
Power purchased 46.7 229.4 80 98.4 326.5 70 507.1 463.0 (10)
Gas purchased for resale 17.0 22.4 24 89.5 88.4 (1) 150.7 173.6 13
Diversified enterprises 114.5 85.0 (35) 196.0 179.7 (9) 408.3 712.8 43
Other operating and maintenance 107.1 122.9 13 258.8 231.7 (12) 565.0 460.7 (23)
Depreciation and amortization 44.9 50.5 11 89.4 101.2 12 191.8 201.7 5
Amortization of regulatory asset 6.2 - (100) 7.7 - (100) 7.7 - (100)
General taxes 22.9 34.3 33 52.8 73.0 28 103.0 135.1 24
Clinton plant impairment loss - - - - - - 2,341.2 - (100)
------ ----- ------- ------- -------- --------
Total 419.3 598.4 30 904.0 1,110.1 19 4,526.8 2,391.4 (89)
------ ----- ------- ------- -------- --------
Operating Income (Loss) 60.0 (51.1) - 123.7 12.6 - (2,191.2) 127.5 -
------ ----- ------- ------- -------- --------
Other Income
Miscellaneous - net 6.3 2.8 125 17.2 1.3 - 19.0 2.6 -
Equity earnings in affiliates 2.9 3.4 (15) 3.4 8.9 (62) 17.0 20.0 (15)
------ ----- ------- ------- -------- --------
Total 9.2 6.2 48 20.6 10.2 102 36.0 22.6 59
------ ----- ------- ------- -------- --------
Income (Loss) Before Interest Charges
and Income Taxes 69.2 (44.9) - 144.3 22.8 - (2,155.2) 150.1 -
------ ----- ------- ------- -------- --------
Interest Charges
Interest expense 46.8 35.9 (30) 89.9 72.5 (24) 163.4 142.5 (15)
Allowance for borrowed funds
used during construction (2.0) (1.2) 67 (3.2) (2.3) 39 (4.1) (4.6) (11)
Preferred dividend requirements
of subsidiary 4.7 5.0 6 9.7 9.9 2 19.6 20.5 4
------ ----- ------- ------- -------- --------
Total 49.5 39.7 (25) 96.4 80.1 (20) 178.9 158.4 (13)
------ ------- ------- ------- -------- --------
Income (Loss) Before Income Taxes 19.7 (84.6) 123 47.9 (57.3) 184 (2,334.1) (8.3) -
------ ----- ------- ------- -------- --------
Income Taxes
Income tax - impairment loss - - - - - - (853.6) - 100
ITC - Clinton impairment - - - - - - (160.4) - 100
Other income taxes 10.7 (37.6) (128) 22.0 (33.3) (166) 13.0 (13.3) (198)
------ ----- ------- ------- -------- --------
Total 10.7 (37.6) (128) 22.0 (33.3) (166) (1,001.0) (13.3) -
------ ----- ------- ------- -------- --------
Net Income (Loss) Before
Extraordinary Item 9.0 (47.0) 119 25.9 (24.0) - (1,333.1) 5.0 -
Extraordinary Item Net of Income Tax
Benefit of $118.0 Million - - - - - - - (195.0) (100)
------ ----- ------- ------- -------- --------
Net Income (Loss) 9.0 (47.0) 119 25.9 (24.0) - (1,333.1) (190.0) -
Carrying amount over (under)
consideration paid for redeemed
preferred stock of subsidiary (0.3) - (100) 0.5 - 100 0.5 0.2 150
------ ----- ------- ------- -------- --------
Net Income (Loss) Applicable
to Common Stock $ 8.7 $(47.0) 119 $ 26.4 $ (24.0) - $(1,332.6) $ (189.8) -
====== ===== ======= ======= ======== ========
Weighted average common shares 69.9 71.7 69.9 71.7 70.8 72.0
Earnings (loss) per common share before
extraordinary item (basic
and diluted) $0.12 ($0.66) $0.38 ($0.34) ($18.82) $0.07
Extraordinary item per common share
(basic and diluted) - - - - - ($2.71)
Earnings (loss) per common share
(basic and diluted) $0.12 ($0.66) $0.38 ($0.34) ($18.82) ($2.64)
Cash dividends declared
per common share $0.31 $0.31 $0.62 $0.62 $1.24 $1.24
Cash dividends paid
per common share $0.31 $0.31 $0.62 $0.62 $1.24 $1.24
</TABLE>
These 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 unaudited statements should be read in conjunction with
Illinova's and Illinois Power Company's 1999 Quarterly Reports on Form 10-Q and
Form 8-K filings to the Securities and Exchange Commission, Illinova's 1998
Annual Report to Shareholders (included in the Proxy Statement) and Illinova and
Illinois Power Company's 1998 Form 10-K filings to the Securities and Exchange
Commission.
