UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 3, 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 8.
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Item 5. Other Events
- --------------------------------------------------------------------------------
Illinova Corp. announced on February 26, 1999 a loss of $1.383 billion, or
$19.30 per share (basic and diluted), for 1998. This compares to a loss of $90.4
million, or $1.22 per share, for the previous year.
In February 2000, Illinova and Illinois Power Company restated its
financial statements for the year ended December 31, 1998 to reflect a revision
to the initial estimate of the "Transition period cost recovery" regulatory
asset established in December 1998 coincident with the impairment of the Clinton
Power Station. The effect of this revision was to decrease the amount of the
regulatory asset at December 31, 1998, and correspondingly increase the related
impairment charge by $325.7 million ($196.5 million net of tax). The net effect
of this revision was to increase the previously reported net loss by $196.5
million, or $2.74 per common share (basic and diluted). As a result of the
quasi-reorganization described below, there was no effect of this revision on
"Retained earnings." However, "Total common stock equity" was reduced by $196.5
million.
1998's loss reflects the impact of a significant Clinton Power Station
(Clinton) related write-off due to the company's decision to exit the nuclear
power business as announced on Dec. 9, 1998. This decision requires that the
company remove Clinton from its balance sheet, producing a write-down of
approximately $1.53 billion.
In conjunction with this write-down, the company implemented an accounting
restructuring (called a "quasi-reorganization"). This restructuring allows the
company to revalue its other assets to their fair market value.
The Clinton write-off accounted for $1.53 billion -- $21.26 per share of
the overall loss. Excluding the Clinton write-off, the loss would have been
$55.9 million, or 78 cents per share.
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Losses for the fourth quarter were 82 cents per share, excluding the
Clinton write-off, compared to a loss of 46 cents per share for the fourth
quarter of 1997, excluding the extraordinary write-off.
Although the impact of the accounting restructuring on 1998's earnings
results was extreme, actual operating results before the restructuring were
among the worst in the company's history.
Expenses for ongoing efforts to prepare Clinton for a return to
operation and costs associated with power purchases necessitated by the Clinton
outage overwhelmed good operating performance in most of the company's business
segments.
Earnings were reduced from normal levels by an estimated 99 cents per share
due to the level of operation and maintenance expenses required to support
efforts for the restart of Clinton; and $1.74 per share due to incremental costs
for replacement power during Clinton's continued outage.
In addition to the Clinton-related issues, other factors also impacted
1998's earnings results.
The most significant earnings impact was the 15 percent residential rate
reduction that became effective Aug. 1. This produced a 29 cents per share
reduction in earnings compared to 1997.
In addition, warmer temperatures in the summer and winter led to an 8 cents
per share earnings increase due to improved electric margins offset by a 7 cents
per share decrease in gas margins.
Earnings in 1998 also were reduced 31 cents per share from 1997's levels
due to higher non-nuclear operation and maintenance expenses related, in part,
to increased maintenance for the company's distribution system, higher fossil
plant expenses and increased marketing expenses.
The after-tax write-off for Clinton and related costs are approximately
$1.8 billion. Illinois Power also is establishing a regulatory asset of
approximately $276 million, net of taxes.
The difference between the write-off and the regulatory asset,
approximately $1.53 billion, is recorded as a charge to 1998 earnings.
As part of the accounting restructuring, Illinois Power's 1998 year-end
balance sheet reflects a new valuation of about $2.9 billion for its
fossil-fueled generating system, a write-up of approximately $1.33 billion, net
of taxes.
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This valuation is based on current assumptions about future energy prices,
plant operations, environmental costs and electric generating capacity
throughout the Midwest region.
Accounting rules require that the write-down flow through the income
statement, while the revaluation of other assets to their fair market value be
handled through balance sheet adjustments, thus producing the extremely negative
earnings result.
The net effect, however, is no change in the company's equity value, no
reduction in its cash flows and no negative impacts on Illinova's overall
financial health.
Illinova Corp., headquartered in Decatur, Ill., is an energy services
company with annual revenues of $2.5 billion. Its subsidiaries include Illinois
Power, an electric and natural gas utility; 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.
Please see the attached Illinova Consolidated Statements of Income.
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Item 7. Financial Statements
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(A) Financial Statements
(99.1) Illinova Consolidated Income Statements
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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/ Larry F. Altenbaumer
---------------------------
Larry F. Altenbaumer
President on behalf of
Illinova Corporation
Date: February 28, 2000
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
President on behalf of
Illinois Power Company
Date: February 28, 2000
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Exhibit Index
The following Exhibits are hereby filed as part of this Current Report on Form
8-K/A:
Exhibit
Number Description
99.1 Illinova Consolidated Income Statements
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ILLINOVA
Condensed Consolidated Statements of Income
Three Months Ended * Twelve Months Ended
December 31, December 31,
As % Change As % Change
Restated Fay/ Restated Fay/
1998 1997** (Unfav) 1998 1997** (Unfav)
(Millions) (Millions)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Electric $251.1 $266.5 (6) % $1,224.2 $1,244.4 (2) %
Electric interchange 63.1 34.2 85 557.2 175.6 -
Gas 83.2 88.0 (5) 287.8 353.9 (19)
Diversified enterprises 87.2 165.7 (47) 361.4 735.6 (51)
--------- ------- -------- -------
Total 484.6 554.4 (13) 2,430.6 2,509.5 (3)
--------- ------- -------- -------
Operating Expenses
Fuel for electric plants 67.2 68.5 2 250.2 232.4 (8)
Power purchased 91.0 62.3 (46) 735.2 217.9 -
Gas purchased for resale 45.9 67.1 32 149.6 207.7 28
Diversified enterprises 96.8 179.7 46 392.0 792.3 51
Other operating and maintenance 173.2 127.7 (36) 537.9 402.2 (34)
Depreciation and amortization 51.4 50.4 (2) 203.6 198.8 (2)
General Taxes 22.9 28.0 18 123.2 133.8 8
Clinton plant impairment loss 2,666.9 - (100) 2,666.9 - (100)
--------- ------- -------- -------
Total 3,215.3 583.7 - 5,058.6 2,185.1 (132)
--------- ------- -------- -------
Operating Income (Loss) (2,730.7) (29.3) - (2,628.0) 324.4 -
--------- ------- -------- -------
Other Income
Miscellaneous - net 0.3 0.2 50 3.1 3.5 (11)
Equity earnings in affiliates 10.8 6.4 69 22.5 17.5 29
--------- ------- -------- -------
Total 11.1 6.6 68 25.6 21.0 22
--------- ------- -------- -------
Income (Loss) Before Interest Charges and Income Taxes (2,719.6) (22.7) - (2,602.4) 345.4 -
--------- ------- -------- -------
Interest Charges
Interest expense 36.7 35.5 (3) 146.0 144.2 (1)
Allowance for borrowed funds
used during construction 0.6 (1.6) (138) (3.2) (5.0) (36)
Preferred dividend requirements
of subsidiary 4.9 5.1 4 19.8 21.5 8
--------- ------- -------- -------
Total 42.2 39.0 (8) 162.6 160.7 (1)
--------- ------- -------- -------
Income (Loss) Before Income Taxes (2,761.8) (61.7) - (2,765.0) 184.7 -
--------- ------- -------- -------
Income Taxes
Income tax - impairment loss (982.8) - 100 (982.8) - 100
ITC - Clinton impairment (160.4) - 100 (160.4) - 100
Other income taxes (36.5) (27.4) 33 (42.3) 80.3 153
--------- ------- -------- -------
Total (1,179.7) (27.4) - (1,185.5) 80.3 -
--------- ------- -------- -------
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Net Income (Loss) Before Extraordinary Item (1,582.1) (34.3) - (1,579.5) 104.4 -
Extraordinary Item Net of Income Tax Benefit
of $118.0 Million - (195.0) - - (195.0) -
--------- ------- -------- -------
Net Income (Loss) (1,582.1) (229.3) - (1,579.5) (90.6) -
Carrying amount over (under)
consideration paid for redeemed
preferred stock of subsidiary - (0.9) - - 0.2 -
--------- ------- -------- -------
Net Income (Loss) Applicable to Common Stock ($1,582.1) ($230.2) - ($1,579.5) ($90.4) -
========= ======= ========= ======
Weighted average common shares 71.5 71.7 71.7 74.0
Earnings (loss) per common share before
extraordinary item (basic and diluted) ($22.13) ($0.49) ($22.04) $1.41
Extraordinary item per common share (basic and diluted) - ($2.72) - ($2.63)
Earnings (loss) per common share (basic and diluted) ($22.13) ($3.21) ($22.04) ($1.22)
Cash dividends declared
per common share $0.31 $0.31 $1.24 $1.24
Cash dividends paid
per common share $0.31 $0.31 $1.24 $1.24
* Unaudited
** Restated to conform to new financial format
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 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, and Illinova and Illinois
Power Company's 1998 Form 10-K/A filings to the Securities and Exchange
Commission.
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