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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ........ to ........
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
1-8946 CILCORP Inc. 37-1169387
(An Illinois Corporation)
300 Hamilton Blvd, Suite 300
Peoria, Illinois 61602
(309) 675-8810
1-2732 CENTRAL ILLINOIS LIGHT COMPANY 37-0211050
(An Illinois Corporation)
300 Liberty Street
Peoria, Illinois 61602
(309) 675-8810
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class so registered on which registered
CILCORP Inc. Common stock, no par value New York and Chicago
CILCO Preferred Stock, Cumulative
$100 par, 4 1/2% series New York
Securities registered pursuant to Section 12(g) of the Act:
None
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
Registrants were required to file such reports), and (2) have been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
At March 15, 1994, the aggregate market value of the voting stock of CILCORP
Inc. (CILCORP) held by nonaffiliates was approximately $435 million. On that
date, 13,035,756 common shares (no par value) were outstanding.
At March 15, 1994, the aggregate market value of the voting stock of Central
Illinois Light Company (CILCO) held by nonaffiliates was approximately $60
million. The voting stock of CILCO consists of its preferred stock. On that
date, 13,563,871 shares of CILCO's common stock, no par value, were issued and
outstanding and privately held, beneficially and of record, by CILCORP Inc.
DOCUMENTS INCORPORATED BY REFERENCE
CILCORP Inc.'s Proxy Statement dated March 21, 1994, in connection with its
Annual Meeting to be held on April 26, 1994, is incorporated into Part I and
Part III hereof.
Central Illinois Light Company's Proxy Statement dated March 28, 1994, in
connection with its Annual Meeting to be held on April 26, 1994, is
incorporated into Part I and Part III hereof.
CILCORP INC.
and
Central Illinois Light Company
1993 Form 10-K Annual Report
Table of Contents
Page
Glossary 5-7
Part I
Item 1. Business
The Company and its Subsidiaries 8-9
Business of CILCO 9-10
Electric Service 10-11
Gas Service 11-12
Regulation 12-13
Electric Fuel and Purchased Gas
Adjustment Clauses 13
Fuel Supply - Coal 13-14
Natural Gas Supply 14
Financing and Capital Expenditures Programs 14-15
Environmental Matters 15
Industry Segments 15
Franchises 15
Competition 16
Employees 16
Business of ESE 16-18
Customer/Industry Segments 19
Regulation of ESE's Clients 19-21
Regulation of ESE 21
Competition 21
Subcontractors 21-22
Government Contracts 22
Patents and Trademark Protection 22
Potential Liabilities and Insurance 22-23
Employees 23
Other Businesses
CIM/CLM 24
Holding Company 24
CVI 24
Employees 25
Item 2. Properties 25-26
Item 3. Legal Proceedings 26
Item 4. Submission of Matters to a Vote of Security Holders 27
Executive Officers of the Registrant 28-29
Part II
Item 5. Market for the Registrant's Common Equity 30
and Related Stockholder Matters
Item 6. Selected Financial Data 31
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 32-48
Item 8. Index - Financial Statements and Supplementary Data 49
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 101
Part III
Page
Item 10. Directors and Executive Officers of the Registrants 101
Item 11. Executive Compensation 101
Item 12. Security Ownership of Certain Beneficial
Owners and Management 102
Item 13. Certain Relationships and Related Transactions 102
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 103
GLOSSARY OF TERMS
When used herein, the following terms will have the meanings indicated.
AFUDC -- Allowance for Funds Used During Construction
ANR -- ANR Pipeline Company
BTU -- British Thermal Unit. The quantity of heat required to raise
temperature of one pound of water one degree Fahrenheit.
BCF -- Billion cubic feet
Caterpillar -- Caterpillar Inc., CILCO's largest industrial customer
CECO -- CILCO Energy Corporation; a wholly-owned subsidiary of CILCO.
CEDCO -- CILCO Exploration and Development Company; a wholly-owned
subsidiary of CILCO.
CERCLA -- Comprehensive Environmental Response Compensation and Liability Act
CILCO -- Central Illinois Light Company
CIM -- CILCORP Investment Management Inc.
CIPS -- Central Illinois Public Service Company
CLM -- CILCORP Lease Management Inc.
Company -- CILCORP Inc.
Cooling Degree Days -- The measure of the degree of warm weather experienced,
based on the extent to which average of high and low
temperatures for a day falls above 65 degrees
Fahrenheit (annual degree days above historic average
indicate warmer than average temperatures); historic
average provided by U.S. Weather Bureau for 30-year
period.
CVI -- CILCORP Ventures Inc.
DSM -- Demand Side Management. The process of helping customers control
how they use energy resources.
EMF -- Electric and magnetic fields
EPA -- Environmental Protection Agency (Federal)
FAC -- Fuel Adjustment Clause
FASB -- Financial Accounting Standards Board
FERC -- Federal Energy Regulatory Commission
Freeman -- Freeman United Coal Mining Company
Heating Degree Days -- The measure of the degree of cold weather
experienced, based on the extent to which average of
high and low temperatures for a day falls below 65
degrees Fahrenheit (annual degree days above historic
average indicate cooler than average temperatures);
historic average provided by U.S. Weather Bureau for
30-year period.
ICC -- Illinois Commerce Commission
IEPA -- Illinois Environmental Protection Agency
IP -- Illinois Power Company
IPCB -- Illinois Pollution Control Board
KW -- Kilowatt, a thousand watts
KWH -- Kilowatt-hour, one thousand watts used for one hour (unit of work)
LCP -- Least Cost Energy Plan, a long-term resource acquisition strategy that
balances both supply and demand-side resource options to provide the
best value at the least cost to customers.
LDCs -- Local Distribution Companies
MAIN -- Mid-America Interconnected Network. One of nine regions that make up
the National Electric Reliability Council. Its purpose is to
ensure the Midwest region will meet its load responsibility.
MMCF -- One million cubic feet
MCF -- One thousand cubic feet
MW -- Megawatt, a million watts
NGPL -- Natural Gas Pipeline Company of America
NOPR -- Notice of proposed rulemaking issued by the FERC
NPDES -- National Pollutant Discharge Elimination System
PCBs -- Polychlorinated biphenyls
PGA -- Purchased Gas Adjustment
Pan-Alberta -- Pan-Alberta Gas Company
RCRA -- Resource Conservation and Recovery Act. This act deals with solid
waste pollution control.
SFAS -- Statement of Financial Accounting Standards
Therm -- Unit of measurement for natural gas; a therm is equal to one
hundred cubic feet (volume) or 100,000 BTUs (energy).
TSCA -- Toxic Substances Control Act
PART I
Item 1. Business
THE COMPANY AND ITS SUBSIDIARIES
CILCORP Inc. (CILCORP or the Company) was incorporated as a holding company in
the state of Illinois in 1985. The financial condition and operating results
of CILCORP primarily reflect the operations of Central Illinois Light Company
(CILCO), the Company's principal business subsidiary. The Company's other
core business subsidiary is Environmental Science & Engineering, Inc. (ESE).
The Company also has three other first-tier subsidiaries, CILCORP Development
Services Inc., CILCORP Investment Management Inc. (CIM) and CILCORP Ventures
Inc. (CVI), whose operations, combined with those of the holding company
itself, are collectively referred to herein as Other Businesses.
The Company owns 100% of the common stock of CILCO. CILCO is engaged in the
generation, transmission, distribution and sale of electric energy in an area
of approximately 3,700 square miles in central and east-central Illinois, and
the purchase, distribution, transportation and sale of natural gas in an area
of approximately 4,500 square miles in central and east-central Illinois.
ESE, a wholly-owned subsidiary, was formed in February 1990 to conduct the
environmental consulting and analytical services businesses acquired from
Hunter Environmental Services, Inc. (Hunter) during that year. ESE provides
engineering and environmental consulting, analysis, and laboratory services to
a variety of governmental and private customers. ESE has seven wholly-owned
subsidiaries: Keck Instruments, Inc., which manufactures geophysical
instruments used in environmental applications; Chemrox, Inc., which has
reduced its presence in the ethylene oxide and chloroflurocarbon
control-equipment market by maintaining only a minimal staff, primarily to
concentrate on warranty work; ESE Biosciences, Inc. whose on-site biological
treatment of contaminated soil and groundwater is now performed primarily by
ESE; ESE Architectural Services, Inc. which provides architecture and design
services; National Professional Casualty Co., which provides professional
liability insurance to ESE; ESE International Ltd., which provides engineering
and consulting services in foreign countries; and ESE Michigan, Inc. which
formerly conducted business as ESE Environmental Science and Engineering,
Inc., provided the same services as its parent, ESE.
CIM, a wholly-owned subsidiary, manages the Company's investment portfolio.
CIM manages seven leveraged lease investments through three wholly-owned
subsidiaries: CILCORP Lease Management Inc. which was formed in 1985, and CIM
Leasing Inc. and CIM Air Leasing Inc., which were formed in 1993. CIM's other
subsidiary is CIM Energy Investments Inc. which was formed in 1989 to invest
in non-regulated, independent power production facilities (see Other
Businesses).
CVI, a wholly-owned subsidiary, is a venture capital company which pursues
investment opportunities in new ventures and the expansion of existing
ventures in environmental services, biotechnology and health care.
The following table summarizes the relative contribution of each business
group to consolidated assets, revenue and net income for the year ended
December 31, 1993.
(In thousands)
Assets Revenue Net Income (Loss)
CILCO $ 988,325 $453,877 $33,635
ESE 87,437 123,162 (2,266)
Other Businesses 122,678 7,471 2,214
---------- -------- -------
$1,198,440 $584,510 $33,583
========== ======== =======
CILCORP is an intrastate exempt holding company under the Public Utility
Holding Company Act of 1935 (PUHCA). In 1989, the Securities and Exchange
Commission (SEC) issued proposed rules regarding diversification by exempt
intrastate utility holding companies. The proposed rules, which are intended
to take effect three years after adoption in final form, would establish two
safe harbors which specify those circumstances in which the SEC would not find
diversification detrimental to interests protected under the PUHCA. If the
rules are adopted, CILCORP will be required to apply for a formal exemptive
order from the SEC or come within one of the safe harbors by either seeking
passage of Illinois legislation permitting diversification or reducing its
interest in non-utility businesses to less than 10% of consolidated assets.
Although certain members of the U.S. Congress continue to explore this
issue, the SEC has not taken any public action towards adopting final
diversification rules since the proposed rules were issued.
BUSINESS OF CILCO
CILCO was incorporated under the laws of Illinois in 1913. CILCO's principal
business is the generation, transmission, distribution and sale of electric
energy in an area of approximately 3,700 square miles in central and
east-central Illinois, and the purchase, distribution, transportation and sale
of natural gas in an area of approximately 4,500 square miles in central and
east-central Illinois.
In addition to its principal business, CILCO has two wholly-owned
subsidiaries, CILCO Exploration and Development Company (CEDCO) and CILCO
Energy Corporation (CECO). CEDCO was formed to engage in the exploration and
development of gas, oil, coal and other mineral resources. CECO was formed to
research and develop new sources of energy, including the conversion of coal
and other minerals into gas. The operations of these subsidiaries are not
significant.
CILCO is continuing to experience, in varying degrees, the issues common to
the electric and gas utility industries. These include uncertainties as to
the future demand for electricity and natural gas, structural and competitive
changes in the markets for these commodities, the high cost of compliance with
environmental and safety laws and regulations, and uncertainties in regulatory
and political processes. At the same time, CILCO has sought to provide
reliable service at reasonable rates for its customers and a fair return on
its common equity.
ELECTRIC SERVICE
CILCO furnishes electric service to retail customers in 136 Illinois
communities (including Peoria, Pekin, Lincoln and Morton). At December 31,
1993, CILCO had approximately 190,000 retail electric customers.
In 1993, 67% of CILCO's total operating revenue was derived from the sale of
electricity. Approximately 39% of electric revenue resulted from residential
sales, 30% from commercial sales, 28% from industrial sales, 2% from sales for
resale and 1% from other sales. Electric sales, particularly residential and
commercial sales during the summer months, fluctuate based on weather
conditions.
The electric operating revenues of CILCO were derived from the following
sources:
Electric 1993 1992 1991
(In thousands)
Residential $119,709 $108,562 $121,863
Commercial 90,594 86,747 86,205
Industrial 85,384 82,122 86,409
Sales for resale 4,522 8,433 8,446
Street lighting and public
authorities 2,062 2,034 2,120
Other revenue 853 915 1,146
-------- -------- --------
Total electric revenue $303,124 $288,813 $306,189
======== ======== ========
CILCO owns and operates two coal-fired base load generating plants and two
natural gas combustion turbine-generators which are used for peaking service
(see Item 2. Properties-CILCO). CILCO's all-time system peak demand was
1,120 megawatts (MW) on August 16, 1988. The 1993 system peak demand was
1,106 MW on August 26, 1993.
The system peak demand for 1994 is estimated to be 1,110 MW with a reserve
margin of approximately 14.5%. The reserve margin takes into account 70 MW of
firm purchased power from Central Illinois Public Service Company (CIPS) and
70 MW of interruptible industrial load and other related Demand Side
Management (DSM) programs. The system peak demand includes 20 MW of firm
power to be provided to the City of Springfield (City Water, Light and Power
Department). CILCO's reserve margin complies with planning reserve margin
requirements established by the Mid-America Interconnected Network (MAIN), of
which CILCO is a member.
Studies conducted by CILCO indicate that it has sufficient base load
generating capacity and purchased capacity to provide an adequate and reliable
supply of electricity to satisfy base load demand through the end of the
century. To help meet anticipated increases in peak demand and maintain
adequate reserve margins, CILCO entered into a firm, wholesale bulk power
agreement to purchase capacity from CIPS. The agreement, which expires in
1998, was approved by the Illinois Commerce Commission (ICC) in 1990 as part
of CILCO's electric least cost energy plan. In 1992, CILCO filed an updated
electric least cost energy plan with the ICC which anticipates CILCO will
experience shortages of peak generating capacity ranging from 100 MW in 1998
up to 130 MW by 2001. In 1993, the ICC approved another firm, wholesale power
purchase agreement between CIPS and CILCO to meet this shortfall (see CILCO's
Note 7, Item 8. Financial Statements and Supplementary Data).
On December 17, 1993, CILCO filed a petition for the issuance of a certificate
of convenience and necessity to construct a 20 megawatt (MW) cogeneration
plant at the site of Midwest Grain Products Inc. (See Electric Competition
under Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.) As part of that filing, CILCO requested that the ICC
approve an update to its most recently approved least cost energy plan.
CILCO is interconnected with CIPS, Commonwealth Edison Company, Illinois Power
(IP) and the City Water, Light and Power Department to provide for the
interchange of electric energy on an emergency and mutual help basis.
GAS SERVICE
CILCO provides gas service to customers in 128 Illinois communities (including
Peoria, Pekin, Lincoln and Springfield). At December 31, 1993, CILCO had
approximately 196,000 gas customers, including 668 industrial and commercial
gas transportation customers that purchase gas directly from suppliers for
transportation through CILCO's system.
In 1993, 33% of CILCO's total operating revenue was derived from the sale or
transportation of natural gas. Approximately 69% of gas revenue resulted from
residential sales, 21% from commercial sales, 2% from industrial sales, 7%
from transportation and 1% from other sales. Gas sales, particularly
residential and commercial sales during the winter months, fluctuate based on
weather conditions.
The gas operating revenues of CILCO were derived from the following sources:
Gas 1993 1992 1991
(In thousands)
Residential $104,348 $ 99,096 $101,589
Commercial 32,396 30,767 32,056
Industrial 3,013 3,793 2,927
Transportation of Gas 10,134 10,541 11,049
Other revenue 863 729 792
-------- -------- --------
Total gas revenue $150,754 $144,926 $148,413
======== ======== ========
CILCO's all-time maximum daily send-out of 443,167 thousand cubic feet (mcf)
occurred on January 15, 1972. The 1993 peak day send-out of 322,006 mcf
occurred on February 23, 1993. CILCO has been able to meet all of its
existing customer requirements during the 1993-1994 heating season. CILCO
believes that its present and planned supplies of gas will continue to be
sufficient to serve all of its existing customer requirements during the
1994-1995 heating season.
REGULATION
CILCO is a public utility under the laws of the State of Illinois and is
subject to the jurisdiction of the ICC. The ICC has general power of
supervision and regulation with respect to services and facilities, rates and
charges, classification of accounts, valuations of property, determination of
depreciation rates, construction, contracts with any affiliated interest, the
issuance of stock and evidences of indebtedness, and various other matters.
With respect to certain electric matters, CILCO is subject to regulation by
the FERC. CILCO is exempt from the provisions of the Natural Gas Act, but is
affected by orders, rules and regulations issued by the FERC with respect to
certain gas matters.
The Illinois statute governing public utilities requires the ICC to review and
adopt electric least cost energy plans for public utilities. Legislation was
passed in 1993 which eliminated the requirement for least cost plans from gas
utilities. In general, CILCO's plan consists of customer demand forecasts and
the projected resources that CILCO will rely upon to meet that demand. The
planning horizon is 20 years, and the plan is reviewed by the ICC every three
years. CILCO filed its most recent least cost energy plan on July 1, 1992;
the plan was approved by the ICC on June 23, 1993. (CILCO is proposing to
amend this plan as discussed above under "Electric Service"). The ICC may not
issue a certificate of convenience and necessity for any new construction
project unless the ICC has determined that the proposed construction is
consistent with CILCO's most recently approved least cost energy plan, as
updated. The law requires that the plan incorporate economical cogeneration,
renewable resources, and demand-side management (DSM) programs, to the fullest
extent practicable, as resources for meeting the future energy service needs
of CILCO's customers.
CILCO's most recent electric least cost energy plan contains several DSM
programs, including existing residential and commercial heat pump programs and
commercial audit programs. It also includes pilot programs whose objective is
to verify the cost effectiveness of electric DSM in CILCO's service territory
and to develop capability to deliver DSM effectively. Based upon a
preliminary assessment, electric DSM programs are projected to reduce CILCO's
peak demand by 146 MW over the 20 year planning horizon. These projections
may change depending on the results of pilot programs currently in progress or
scheduled to begin in the next few years. Current pilot programs for electric
service include: new interruptible rates, residential air conditioner
cycling, natural gas air conditioning, energy audits, high efficiency air
conditioning, motor efficiency and new construction energy efficiency
incentives. Three additional pilot programs are currently under development:
high efficiency interior lighting, high efficiency refrigeration equipment,
and thermal storage incentives.
In 1993, the total cost of the pilot and full-scale programs mentioned above,
excluding interruptible rates, was approximately $405,000. The ICC has
authorized riders which are specifically designed to recover DSM program
costs. The Illinois Appellate Court for the First District ruled that the ICC
had improperly authorized the recovery of DSM-related costs through a rider.
The Appellate Court decision currently has no direct impact on CILCO because
CILCO has not filed a tariff for recovery of DSM-related costs.
ELECTRIC FUEL AND PURCHASED GAS ADJUSTMENT CLAUSES
CILCO's tariffs provide for adjustments to its electric rates through the fuel
adjustment clause (FAC) to reflect increases or decreases in the cost of fuel
used in its generating stations. The transportation costs of coal are not
included in the FAC. Changes in transportation costs are addressed in general
rate-making proceedings.
CILCO's tariffs also provide for adjustments to its gas rates through the
purchased gas adjustment (PGA) to reflect increases or decreases in the cost
of natural gas purchased for sale to customers.
FUEL SUPPLY - COAL
Substantially all of CILCO's electric generation capacity is coal-fired,
including 100% of its base load capacity. Approximately 2.2 million tons of
coal were burned during 1993. Existing coal contracts with suppliers in
central Illinois, eastern Kentucky and West Virginia are expected to supply
about 73% of the 1994 requirements. Coal will be purchased on the spot market
during the year to meet remaining annual fuel requirements.
During the years 1993, 1992 and 1991, the average cost per ton of coal burned,
including transportation, was $40.30, $40.13 and $42.26, respectively. The
cost of coal burned per million BTU's was $1.75, $1.73 and $1.80, respectively
(see Electric Fuel and Purchased Gas Adjustment Clauses).
CILCO has several contracts for the purchase of low-sulfur coal burned at
E. D. Edwards Station. The contracts are normally 36 months in length. CILCO
negotiated a three-year agreement with a new coal supplier to replace a
contract which expired in 1993.
All low-sulfur coal contracts contain provisions which allow CILCO to
terminate the contracts with no monetary penalties if any new governmental or
environmental regulations are enacted which restrict the burning of these
coals. Furthermore, these contracts contain provisions that permit adjustment
of the annual contract quantity in the event of an economic downturn.
CILCO has a long-term contract with Freeman for the purchase of high-sulfur,
Illinois coal used predominantly at the Duck Creek Station. The contract
gives CILCO the flexibility to purchase between 500,000 and 1,000,000 tons
annually. Under the terms of the contract, CILCO's obligation to purchase
coal could be extended through 2010; however, Freeman has the option of
terminating the contract after 1997. The contract requires CILCO to pay all
variable coal production costs on tons purchased and certain fixed costs not
affected by the volume purchased.
NATURAL GAS SUPPLY
During 1993 CILCO continued to maintain a widely diversified and flexible
natural gas supply portfolio. This portfolio is structured around new firm
and interruptible services provided by five interconnecting interstate
pipeline suppliers in response to FERC Order 636 (see Federal Energy
Regulatory Commission Order 636 under Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations) and direct firm and
interruptible purchases of varying terms from approximately 35 non-interstate
pipeline suppliers. Gas purchased was also injected into and withdrawn from
CILCO's two natural gas storage fields and the storage fields of various
interstate pipeline suppliers via contracted storage services. The supply
portfolio continues to provide reliable supplies at prevailing market prices.
CILCO believes that its present and planned supply of gas will continue to be
sufficient to serve all of its existing firm customer requirements during the
1994-1995 heating season at prevailing market prices.
During 1993, CILCO purchased approximately 32,300,000 mcf of natural gas at a
cost of approximately $85.7 million, or an average cost of $2.66 per mcf. The
average cost per mcf of natural gas purchased was $2.86 in 1992 and $2.50 in
1991.
On March 9, 1994 the ICC issued an order allowing Illinois gas utilities to
recover 100% of pipeline transition costs. CILCO estimates that it could
ultimately be billed up to $3 million, excluding interest, for pipeline
transition costs. While CILCO cannot at this time determine the outcome of an
expected appeal of the March 9, 1994 ICC order regarding transition costs,
management believes that based on existing law and the ICC order, any
transition charges or other billings by the pipelines to CILCO as a result of
Order 636 will be recoverable from customers through CILCO's gas rates.
For a discussion of other gas issues, including pending reviews by state and
federal regulatory authorities of CILCO's gas operations and recordkeeping
practices in the City of Springfield, see the Gas Operations, Gas Rate
Increase Request, Federal Energy Regulatory Commission Order 636, Gas
Take-or-Pay Charges, and Liquefied Natural Gas Settlement sections under
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
FINANCING AND CAPITAL EXPENDITURES PROGRAMS
CILCO's ongoing capital expenditures program is designed to maintain reliable
electric and gas service and to meet the anticipated demands of its customers.
Capital expenditures for 1994 are estimated to be $90 million, including
Allowance for Funds Used During Construction of approximately $288,000 and
pollution control expenditures of $9 million. Expenditures include $62 million
for the electric business, $20 million for the gas business, and $8 million
for general and miscellaneous purposes. Electric expenditures include
$32 million for additions and modifications to generating facilities,
$2 million for transmission projects, and $28 million for distribution system
additions and improvements. Gas expenditures are primarily for necessary
additions, replacements and improvements to existing facilities. Anticipated
gas and electric capital expenditures for 1995-1998 are $286 million.
CILCO expects to finance its 1994 capital expenditures with funds provided by
operating activities and the issuance of approximately $30 million of
additional long-term debt. CILCO had $12.4 million of short-term commercial
paper outstanding at December 31, 1993 and expects to issue short-term
commercial paper throughout 1994. At December 31, 1993, CILCO had bank lines
of credit aggregating $30 million, all of which were unused. CILCO expects
these bank lines will remain unused through 1994 (see Capital Resources and
Liquidity - CILCO under Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations).
ENVIRONMENTAL MATTERS
See Environmental Matters under Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations.
INDUSTRY SEGMENTS/CUSTOMERS
See Consolidated Statements of Segments of Business are under Item 8.
Financial Statements and Supplementary Data.
Caterpillar Inc. (Caterpillar) is CILCO's largest industrial customer.
Aggregate gas and electric revenues from sales to Caterpillar were 9.1%, 9.3%
and 9.8% of CILCO's total operating revenue for 1993, 1992 and 1991,
respectively. On November 3, 1991, Caterpillar employees began a selective
labor strike at one of Caterpillar's facilities in CILCO's service territory
and at additional facilities outside its service territory. Caterpillar
responded to the selective strike by locking out workers at several of its
facilities. In February 1992, Caterpillar ended the selective lockout, but
the employees responded by initiating strikes against these and several other
facilities. In April 1992, the employees agreed to return to work. A new
contract has not yet been negotiated. CILCO's future electric operating
results could be adversely affected if the strike is resumed and lasts for a
prolonged period.
FRANCHISES
CILCO negotiates franchise agreements which authorize it to provide utility
services to the communities in its service area. The franchises are for
various terms, usually 25 to 50 years. Based on past experience, CILCO
anticipates that as franchises expire new franchises will be granted in the
normal course of business.
COMPETITION
CILCO, as a regulated public utility, has an obligation to provide service to
retail customers within its defined service territory; thus, CILCO is not
currently in competition with other public utilities for retail electric or
gas customers in these areas. However, electricity and natural gas compete
with other forms of energy available to customers. For example, within the
City of Springfield, CILCO's natural gas business competes with the City's
municipal electric system to provide customer energy needs.
During 1993, CILCO continued to transport gas purchased by commercial and
industrial customers directly from producers and marketers. In 1993,
approximately $10.1 million of revenue was generated from transportation
services provided to 668 customers. Transportation arrangements have made it
practical for certain industrial customers to continue to use gas instead of
switching to alternate fuels. The amount of gas transported in the future
will depend on a number of factors including regulatory and legislative
action, the relative cost of gas purchased on the spot market compared to the
cost of gas provided by CILCO and the cost of alternate fuels, and the
feasibility of customers bypassing the CILCO system. See Electric Competition
under Item 7. Management's Discussion and Analysis of Financial Condition for
a discussion of competitive trends which may affect CILCO's electric
operations.
EMPLOYEES
The number of full-time and part-time employees at December 31, 1993 was
1,533, excluding CILCO employees assigned to the Other Businesses. Of these,
225 power plant employees were represented by Local 8 of the International
Brotherhood of Firemen and Oilers, and 497 gas and electric department
employees were represented by Local 51 of the International Brotherhood of
Electrical Workers.
BUSINESS OF ESE
ESE is an environmental consulting and engineering firm with additional
capabilities in laboratory analysis and equipment manufacturing. ESE's
services are intended to address the growing concern over the quality of the
environment, the promulgation of numerous complex federal, state, and local
environmental regulations, and enforcement efforts in support of environmental
laws. As such, ESE's business is affected by the existence and enforcement of
various federal and state statutes and regulations dealing with the
environment and the use, control, disposal and clean-up of hazardous wastes
(see Regulation of ESE's Clients herein). ESE provides a full-service
approach to business, industrial and governmental clients, commencing with
problem identification and analysis, continuing through regulatory negotiation
and engineering, and concluding with the preparation and implementation of a
remediation plan or final design and construction.
ESE has a wide range of clients in business, industry and government,
including federal agencies, local and state governments, institutional,
commercial and industrial firms, and professional service firms. ESE employs
environmental, chemical, geotechnical, civil, mechanical, electrical,
structural, transportation and process engineers; geologists; hydrogeologists;
chemists; biologists; toxicologists; meteorologists; industrial hygienists;
architects; and surveyors. ESE has a nationwide network of offices with its
corporate office in Peoria, Illinois. Presently, ESE has three major
laboratories located in Englewood, Colorado; Gainesville, Florida; and Peoria,
Illinois. ESE provides services in the following areas:
Air Quality Services: ESE provides ambient air monitoring, source testing,
permitting and licensing emissions inventories; planning and compliance
strategies; dispersion modeling; data management; indoor air quality; and
engineering design/installation.
Analytical Services: ESE provides comprehensive chemical analysis, field
sampling services, and interpretation for environmental, wastewater and air
pollution chemistry, industrial hygiene and treatability studies. Included is
hazardous waste analysis/characterization for inorganics/organics; trace
environmental analysis for toxics in water, sediments, and tissue; acid rain
analysis; analytical methods research and development; priority pollutant
analysis; radiochemical analysis (including radon testing); asbestos
identification and quantification; drinking water characterization; industrial
hygiene analysis; and chemical data information management. Services are
provided to industry, agriculture, commercial firms, consulting engineers and
federal, state and local governmental agencies.
Facilities Engineering and Planning Services: ESE provides services for new
building projects, remodeling or additions, and investigations and evaluations
of building deficiencies. ESE designs heating, ventilating, air conditioning,
plumbing and fire prevention systems for new or existing structures, and
designs electrical systems for industrial operations, municipal facilities,
health care institutions, and commercial buildings. ESE also has experience
designing large industrial parks, major highways, wastewater treatment plants
and certain types of military installations.
Asbestos Management/Industrial Hygiene/Lead-Based Paint Services: ESE
provides on-site consultation and facility surveys to identify potential
asbestos, industrial hygiene, radon and lead-based paint problems. ESE's
industrial hygiene staff collects bulk samples of suspect materials, monitors
buildings for contamination, and also provides construction
management/contract administration services, renovation and restoration
services (post-abatement) and health and safety training courses.
Construction Management: ESE provides turnkey design and construction
services and construction observation services on transportation and site
development projects and infrastructure projects. Actual construction
services are subcontracted.
Environmental Assessment and Toxicology Services: ESE conducts field and
laboratory studies involving chemical migration and transport, aquatic
toxicology and bioassay, ecological and human health risk assessments, site
selection and certification, development of regional impact studies, and
environmental impact statements.
Civil Engineering: ESE performs a variety of civil engineering services
including highway, street and bridge planning and design, hydrological
hydraulic studies and drainage design, structural analysis and design
foundation engineering, computer-aided drafting and design (CADD) services,
and subdivision design and surveying.
Environmental Audit Service: ESE performs operational audits for clients in
industry to verify an operating facility's compliance status with regulatory
requirements, identifies potential liabilities associated with past waste
management practices, and identifies methods for minimizing future waste
generation. ESE also performs transactional audits which focus on the
transfer of potential liabilities in real estate or business transactions.
Environmental Engineering Services: ESE provides environmental engineering
services which include applied research and development, water and waste
characterization, treatability and disposal studies, process and concept
design of treatment and disposal facilities, design of drinking water
treatment and distribution facilities, design of wastewater/industrial waste
treatment and collection facilities, technical and economic feasibility
evaluations, contract operation and maintenance of water and wastewater
treatment facilities, pursuit of permit approval for water and solid
waste-oriented activities and design of solid waste landfills and recycling
facilities.
Hydrogeology: ESE performs subsurface investigations and evaluations for both
geological and engineering studies. Service areas include hydrogeologic
investigations, geophysical studies, soils and materials testing, aquifer
evaluation, well inventories and consumptive use analysis, saltwater intrusion
investigations, leakage-recharge investigations, well field studies,
groundwater pollution investigations, groundwater supply permitting, and
groundwater modeling.
Remediation: ESE develops, designs and implements remediation plans at
contaminated sites. ESE has developed and patented the above-ground fixed-film
bioreactor under the registered trademark PetroClean biomediation system,
which treats contaminated soil and groundwater in place without excavating and
removing affected soil. ESE also provides remediation services for
contaminated soil and groundwater using a variety of other technologies.
Storage Tank Management Service: ESE provides services for managing
environmental issues related to underground and aboveground storage tanks.
Key service areas range from pre-planning to assessment and closure of problem
sites including site assessments, analytical services, remediation and risk
assessment. ESE's tank management programs include tank removal,
retrofitting, replacement, and conversion of underground systems to
aboveground storage.
Surface Water Resources Service: ESE offers characterizations of the
freshwater, estuarine, and oceanic environments; environmental impact
assessments; site selection studies; licensing and permitting studies; field
surveys and monitoring; numerical/physical modeling; technical analyses; and
hydrologic and hydraulic engineering services including stormwater drainage
analysis, floodplain management, and receiving water quality evaluations.
Manufacture of Equipment: Through its wholly-owned subsidiary, Keck
Instruments,Inc., ESE designs, assembles, and markets instrumentation for
measuring, monitoring, detecting, and sampling groundwater as well as
instruments for mineral exploration and detection, analysis, and subsurface
mapping.
CUSTOMERS/INDUSTRY SEGMENTS
ESE sells its products and services to both governmental agencies and public
and private companies. Approximately 29% of ESE's revenue for 1993 was
generated by services performed for federal, state and local governmental
agencies. No single customer accounted for more than 10% of ESE's gross
revenues for the year ended December 31, 1993.
In 1993, approximately 81% of ESE's revenue was generated from environmental
consulting and engineering services, 18% from laboratory services and 1% from
manufactured equipment sales.
REGULATION OF ESE'S CLIENTS
The level and nature of ESE's business activity is largely dependent upon
government statutes and regulations relating to the environment.
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(Superfund or CERCLA): CERCLA is the most significant federal statute
addressing practices involving hazardous substances and imposing liability for
cleaning up contamination in soil and groundwater. This legislation has four
basic provisions: (i) creation of an information gathering and analysis
program which enables federal and state governments to identify abandoned
waste sites and to set priorities for investigation and response; (ii)
granting of federal authority to respond to hazardous waste emergencies and to
clean up hazardous waste sites; (iii) imposition of liability on persons
responsible for disposal of hazardous substances that may be released into the
environment; and (iv) creation of a federally managed trust fund to pay for
the cleanup of waste sites where a "potentially responsible party" cannot be
identified or where a threat to the environment requires immediate response.
In October 1986, the Superfund Amendments and Reauthorization Act (SARA) was
passed as a five-year extension of the Superfund program. Title III of SARA,
also known as the Emergency Planning and Community Right-to-Know Act of 1986,
established a reporting and notification system for companies dealing with
hazardous chemicals. The Superfund program was reauthorized in 1990 and was
extended without change until September 30, 1994. CERCLA is scheduled for
reauthorization in 1994.
Resource Conservation and Recovery Act of 1976 (RCRA): While Superfund seeks
to remedy the damage caused by inactive or abandoned waste sites, RCRA imposes
comprehensive regulation of the management of hazardous waste at active
facilities. RCRA and the regulations thereunder establish a comprehensive
"cradle to grave" regulatory program applicable to hazardous waste and impose
requirements for performance testing and recordkeeping for any person
generating, transporting, treating, storing, or disposing of more than the
specified minimum levels of hazardous waste. In November 1984, RCRA was
amended by the Hazardous and Solid Waste Amendments, which extend RCRA to most
industrial and commercial activities in the nation. In addition, RCRA
requires that underground storage tanks be identified and inspected, and those
found to be leaking must be cleaned up. RCRA's reauthorization by Congress is
anticipated in 1994 or 1995.
National Environmental Policy Act of 1970 (NEPA): NEPA requires an analysis
of the environmental impact of any major federal action, including the
issuance of federal environmental permits for industrial facilities which may
significantly affect the quality of the environment.
Toxic Substances Control Act of 1976 (TSCA): TSCA authorizes the EPA to
gather information relating to the risks posed by chemicals and to regulate
the use and disposal of asbestos and polychlorinated biphenyls.
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA): FIFRA regulates
the use and manufacture of pesticides and related chemicals.
Clean Air Act of 1970 (CAA): Provisions of the CAA, as amended in 1977 and
1990, authorize the EPA to set maximum acceptable contaminant levels in the
ambient air, to control emissions of certain toxic materials, and to ensure
compliance with air quality standards. The Clean Air Act Amendments of 1990
discussed in Environmental Matters under Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations, included herein,
will create additional regulation for air toxic emissions, acid rain and
attainment of air quality standards.
Clean Water Act of 1972, as amended in 1987 (CWA): CWA requires every state
to set water quality standards for each significant body of water within its
boundaries, and to ensure attainment and/or maintenance of those standards.
These standards and limitations are enforced in large part under a nationwide
permit program known as the National Pollutant Discharge Elimination System
(NPDES). Reauthorization of CWA is pending and is likely to be accomplished
in 1994.
Safe Drinking Water Act, as amended in 1986 (SDWA): The SDWA affects numerous
public water supplies. Under this Act, the EPA must establish primary
drinking water standards.
National Pollutant Discharge Elimination System (NPDES) Stormwater Permitting
Regulations of 1990: The intent of this regulation, passed in November 1990,
is to control pollution from stormwater discharges associated with industrial
activity and municipal storm sewer systems.
Occupational Safety and Health Act of 1970 (OSHA): Health and safety at the
workplace are regulated under OSHA. OSHA provides for permissible exposure
levels for certain hazardous substances, including asbestos, and also
establishes an enforcement mechanism for these and other health and safety
standards.
State and Local Regulations: In addition to federal statutes and regulations,
numerous state and local statutes and regulations relating to environmental
risks impose additional environmental standards on ESE's customers.
Some of the activities and risks covered by these statutes and regulations,
and which ESE assists its customers in addressing, include:
- - clean-up and remediation of contaminated soil and groundwater;
- - identification, inspection and clean-up of leaking underground storage
tanks;
- - the use and disposal of asbestos, polychlorinated biphenyls and other toxic
substances;
- - ambient air quality and the control of emissions into the atmosphere;
- - compliance with water quality standards, including those related to
drinking water; and
- - occupational safety and health in the workplace.
REGULATION OF ESE
The environmental statutes and regulations described above primarily affect
ESE's clients, and thus have a significant impact on the volume of ESE's
business activity and specific types of services that ESE provides to its
clients. These environmental statutes and regulations also govern the manner
in which ESE performs services for its clients. ESE must comply with specific
worker protection requirements and other health and safety standards. These
standards include taking steps to limit exposure to asbestos and chemical
substances in the workplace. ESE also must comply with regulations pertaining
to the disposal of certain hazardous chemicals and substances pursuant to
guidelines established under federal and state law. Among those substances
are chemicals used in ESE's laboratory processes as well as materials removed
from the properties and facilities of its clients. Disposal costs for these
materials, and legal compliance costs generally for ESE, have risen steadily
in recent years and are expected to continue to increase.
Management believes that the degree of enforcement of environmental
regulations at the federal, state and local level will continue to affect the
levels of business of ESE and its clients.
COMPETITION
The market for ESE's consulting services is highly competitive, and ESE is
subject to competition with respect to all of the services it provides. ESE
competes primarily on the basis of quality of service, expertise and, to a
lesser extent, price. ESE's competitors range from small local firms to major
national companies. No single entity currently dominates the environmental
consulting and engineering services marketplace.
In February 1990, the Company paid Hunter $2 million for a five-year
non-compete agreement. Under the terms of this agreement, Hunter has agreed
not to compete in the environmental consulting businesses conducted by the
companies acquired by CILCORP. Hunter also agreed not to solicit employees or
customers of the acquired businesses or represent itself as being engaged in
the businesses conducted by these companies.
SUBCONTRACTORS
Because of the nature of the projects in which ESE is involved, ESE often
subcontracts a portion of its projects to other contractors in order to
utilize their expertise, equipment and experience in areas where ESE may lack
the ability to complete the entire project. For example, because ESE does not
perform underground storage tank removal or have the necessary equipment to
perform drilling services in all parts of the country, such work may be
subcontracted to local contractors. In addition, contracts which ESE has with
federal, state and local governmental agencies may require, as a matter of
law, that on a particular job ESE hire a certain percentage of minority-owned
subcontractors.
GOVERNMENT CONTRACTS
Approximately 29% of ESE's revenue for 1993 was generated by services
performed for federal, state and local governmental agencies. Many of ESE's
contracts are cost-plus, based on a combination of labor cost, overhead cost,
and allowable fee. Overhead rates are estimated at the time of contract
negotiations. Following the completion of a contract, actual overhead is
determined and the difference is reimbursed to the government or paid to ESE
within the limits of the contract. Although ESE enjoys a good working
relationship with the governmental agencies for which it performs these
services, these contracts may be subject to renegotiation of profits or
termination at the election of the government agency.
PATENTS AND TRADEMARK PROTECTION
ESE has applied for or been assigned certain patents or patent rights. ESE
believes that its technical expertise, field experience, understanding of
regulatory requirements and implementation of technological advances will
continue to provide opportunities for ideas to develop which may lead to
patents; however, research and development is not currently significant to
ESE's operations.
POTENTIAL LIABILITIES AND INSURANCE
ESE is exposed to risk of financial loss during its normal course of business
in a variety of ways typically associated with an environmental and
engineering consulting business, including: work-related injury or illness of
employees or third parties; damage to property in ESE's control during the
course of a project; damage to ESE's property; repair or rectification costs
resulting from failure to detect, analyze, or measure pollutants, asbestos or
other toxic substances; repair or rectification costs due to faulty design,
workmanship, or liability resulting from ESE's construction or design
activities; failure to perform or delay in project completion; and claims by
third parties for alleged pollution or contamination damage. Also, ESE
assumes contingent liabilities arising out of its need to exercise care in the
selection and supervision of subcontractors on various projects. Since ESE
derives revenues from work involving hazardous materials, toxic wastes and
pollutants, potential losses may surface many years after a project is
completed.
These risks, along with enforcement of environmental regulations and
increasing public awareness regarding environmental issues and
responsibilities, make it mandatory that ESE maintain a sound risk management
and insurance program.
ESE carries professional liability insurance which covers design errors and
omissions resulting from its typical operations. This policy is extended to
include pollution liability losses. Clients may also be named as additional
insured parties for specific projects. The current policy, effective February
23, 1994, has a limit of $8 million, with the first $3 million of coverage
provided by ESE's wholly-owned captive insurance subsidiary, National
Professional Casualty Co. (Captive) with the next $5 million of coverage
provided by a non-affiliated company. The Captive is capitalized by a
combination of an ESE letter of credit and cash. The Captive does not
transfer risk and is not reinsured; CILCORP does not provide credit support to
the Captive. The policies cover activities in which ESE is typically
involved. Accordingly, in the event of a serious spill or loss resulting from
a design error or omission, ESE faces potential liability for the self-insured
retention portion of a claim, as well as any amounts in excess of $8 million.
ESE's professional and pollution liability insurance coverage has a standard
term of one year. The professional liability insurance policies include
standard industry exclusions for: dishonesty, discrimination, warranties and
guarantees, punitive damages, intentional non-compliance with government
regulations or statutes, nuclear energy, war, and bodily injury from the
specification, installation, transportation, storage or disposal of asbestos.
ESE also carries insurance policies covering worker's compensation, general
liability and auto and property damage claims. The worker's compensation
policy provides statutory average limits. It is a loss sensitive program
under which insurance premiums vary according to actual claims paid. General
Liability and auto policies provide full insurance coverage with minor
deductible amounts. Also, performance and payment bonds may be provided for
specific projects if required by clients. To supplement its insurance
policies, ESE attempts to limit and/or transfer its risk contractually.
ESE believes it operates in a safe manner and purchases insurance to protect
against loss and maintain competitiveness in the marketplace; however, its
entire potential liability may not be covered by insurance. Also, the total
cost of a potential claim could exceed ESE's policy limits.
EMPLOYEES
At December 31, 1993, ESE employed 1,273 full-time and part-time employees,
many of whom have advanced degrees in a variety of technical disciplines. ESE
believes its relations with its employees are good. None of its employees is
represented by a labor union.
OTHER BUSINESSES
CIM/CLM
The investment portfolio of CIM at December 31, 1993 and December 31, 1992 is
shown in the following table:
Type of Investment At December 31, 1993 At December 31, 1992
(In thousands)
Equity in leveraged leases $114,803 $ 97,133
Cash and temporary
cash investments 291 20,612
Investment in Energy
Investors Fund 4,116 3,649
Other 48,204 1,761
-------- --------
Total $167,414 $123,155
======== ========
At December 31, 1993, CIM had equity investments in seven leveraged leases
through its wholly-owned subsidiaries, CILCORP Lease Management Inc. (CLM),
CIM Air Leasing Inc. and CIM Leasing Inc. CIM made two new leveraged lease
investments in 1993. The increase during 1993 in equity in leveraged leases
reflects those investments. According to the terms of some of the lease
agreements, under certain circumstances CIM may be obligated to incur
additional non-recourse debt to finance the cost of certain alterations,
additions, or improvements required by the lessee.
CIM, through its wholly-owned subsidiary CIM Energy Investments Inc., has
invested $5 million in the Energy Investors Fund, L.P.(Fund), representing a
3.13% interest in the Fund at December 31, 1993. The Fund invests in
non-regulated, non-utility facilities for the production of electricity or
thermal energy. The equity method of accounting is used for the investment.
HOLDING COMPANY
From December 1993 through March 1994, the Company issued a total of 126,475
shares of common stock through the CILCO Employees' Savings Plan (ESP) and the
CILCORP Automatic Reinvestment and Stock Purchase Plan (DRIP). These shares
were issued at an average price of $37.08 per share for total proceeds of $4.7
million (see Management's Discussion and Analysis of Financial Condition and
Operations - Capital Resources and Liquidity.) In March 1994, the Company
suspended issuing stock through the ESP and DRIP. The Company may resume
issuing new shares to these plans as early as June 1994, depending on market
conditions.
CVI
CVI invested an additional $48,000 in Peoria Medical Research Corporation
doing business as Peoria Medical Research Institute, in 1993. PMRC's
objective is to create a clinical research organization which will be paid by
pharmaceutical firms to administer clinical trials for new products.
EMPLOYEES
At December 31, 1993, there were 38 full-time CILCO employees assigned to
CILCORP, CVI and CIM.
Item 2. Properties
CILCO
CILCO owns and operates two steam-electric generating plants and two
combustion turbine-generators. These facilities had an available summer
capability of 1,136 MW in 1993. In December 1993, CILCO announced it will
acquire a cogeneration plant to be financed and built by CILCORP at the site
of a Midwest Grain Inc. facility (see Capital Resources & Liquidity - CILCO
under Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations).
The major generating facilities of CILCO (representing 97.4% of CILCO's
available summer generating capability projected for 1994), all of which are
fueled with coal, are as follows:
Available Summer
Capability (MW)
Station & Unit Installed Actual 1993
Duck Creek
Unit 1 1976 366
E. D. Edwards
Unit 1 1960 117
Unit 2 1968 262
Unit 3 1972 361
CILCO's transmission system includes approximately 285 circuit miles operating
at 138,000 volts, 48 circuit miles operating at 345,000 volts and 14 principal
substations with an installed capacity of 3,343,200 kilovolt-amperes.
The electric distribution system includes approximately 6,210 miles of
overhead pole and tower lines and 1,912 miles of underground distribution
cables. The distribution system also includes 106 substations with an
installed capacity of 1,996,995 kilovolt-amperes.
The gas system includes approximately 3,406 miles of transmission and
distribution mains.
CILCO has an underground gas storage facility located about ten miles
southwest of Peoria near Glasford, Illinois. The facility has a present
recoverable capacity of approximately 4.5 billion cubic feet (bcf). An
additional storage facility near Lincoln, Illinois, has a present recoverable
capacity of approximately 5.2 bcf.
ESE
ESE owns approximately 55 acres of land in Gainesville, Florida, containing
110,000 square feet of offices, laboratory and other space. In Peoria,
Illinois, ESE owns approximately 27,000 square feet of offices, laboratory and
other space, secured by mortgages of $315,000 and leases approximately 21,000
square feet of additional space for offices. ESE and its subsidiaries lease
additional facilities for offices, laboratories and warehouse space in 32
cities throughout the United States. ESE believes its facilities are suitable
and adequate for its current businesses and does not expect to make any
material acquisitions of real property in the near future. However, in 1994
ESE plans to spend $1.2 million to expand its Gainesville, Florida, laboratory
by approximately 8,000 square feet.
Item 3. Legal Proceedings
Reference is made to Environmental Matters under Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations for
certain pending legal proceedings and/or proceedings known to be contemplated
by governmental authorities. Reference is also made to Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations - Gas
Take-or-Pay Charges and CILCO Gas Operations and CILCORP Note 3 - Federal
Income Tax Audit Settlement included herein. Pursuant to CILCO's By Laws,
CILCO has advanced legal and other expenses actually and reasonably incurred
by employees, and former employees, in connection with the investigation of
CILCO's Springfield gas operations described in Item 7. Management's
Discussion and Anaylsis of Financial Condition and Results of Operations -
CILCO Gas Operations.
CILCO and ESE are subject to certain claims and lawsuits in connection with
work performed in the ordinary course of their businesses. In the opinion of
management, all claims unless otherwise currently pending will not result in a
material adverse effect on the financial position and results of operations of
the Company as a result of one or more of the following reasons:
(i) insurance coverage; (ii) contractual or statutory indemnification, or
(iii) reserves for potential losses.
ESE
ESE leases a building in Shelton, Connecticut, under a lease agreement which
expires February 15, 2000. In January 1991, ESE gave notice of its intent to
exercise an option to purchase the building at fair market value pursuant to a
provision of the lease. Due to a dispute with the lessor regarding the
definition of fair market value, exercise of the option was delayed pending a
declaratory judgment by a federal district court in Connecticut.
On February 25, 1994, the court issued its final order which declared the
purchase option void. ESE filed its notice of appeal on March 2, 1994.
Management cannot predict whether its appeal will be successful.
Future minimum rental payments are reflected in Note 10 to the financial
statements. The building is not currently occupied by ESE or a sublessor, as
ESE's Shelton operations ceased in 1991. If the purchase option is ultimately
voided, ESE will record an after-tax loss of approximately $500,000, which is
equal to the present value of the future rental payments, net of income taxes
and estimated sublease revenues.
Item 4. Submission of Matters to a Vote of Security Holders
CILCORP
There were no matters submitted to a vote of security holders during the
fourth quarter of 1993.
CILCO
There were no matters submitted to a vote of security holders during the
fourth quarter of 1993.
Executive Officers of CILCORP
Age at Positions Held During Initial
Name 3/31/94 Past Five Years Effective Date(2)
R. O. Viets 50 President and Chief
Executive Officer February 1, 1988
J. G. Sahn(1) 47 Vice President, General March 1, 1994
Counsel and Secretary
Vice President
and General Counsel February 1, 1989
R. J. Sprowls 36 Treasurer and
Assistant Secretary October 1, 1990
Treasurer - CILCO February 1, 1988
T. D. Hutchinson 39 Controller February 1, 1988
Notes:
(1) M. J. Murray served as Secretary and Assistant Treasurer from January 22,
1985, until February 28, 1994, when he retired and was replaced as
Secretary by J. G. Sahn.
(2) The term of each executive officer extends to the organization meeting of
CILCORP's Board of Directors following the next annual election of
Directors.
Executive Officers of CILCO
Age as of Positions Held During Initial
Name 3/31/94 Past Five Years(1) Effective Date(2)
R. W. Slone 58 Chairman of the Board,
President and Chief
Executive Officer April 23, 1991
President and Chief
Executive Officer February 1, 1988
T. S. Kurtz 46 Vice President November 1, 1988(3)
T. S. Romanowski 44 Vice President October 1, 1986(3)
W. M. Shay 41 Vice President January 1, 1993(3)
J. F. Vergon 46 Vice President October 1, 1986(3)(4)
W. R. Dodds 39 Treasurer and Manager of
Treasury Department October 1, 1990
Controller and Manager
of Accounting February 1, 1988
R. L. Beetschen 48 Controller and Manager
of Accounting October 1, 1990
Supervisor - General
Accounting May 1, 1988
J. G. Sahn 47 Secretary March 1, 1993
Notes:
(1) The officers listed have been employed by CILCO in executive or
management positions for more than five years except Mr. Shay and
Mr. Sahn. Mr. Shay was Vice President and Chief Financial Officer of
CILCO's parent, CILCORP Inc., from August 15, 1988 through December 31,
1992. Mr. Sahn also serves as Vice President and General Counsel of
CILCORP Inc., a position he has held since February 1, 1989.
(2) The term of each executive officer extends to the organization meeting of
CILCO's Board of Directors following the next annual election of
Directors.
(3) T. S. Kurtz, T. S. Romanowski, W. M. Shay and J. F. Vergon head the
Electric Production Group, the Finance and Administrative Services Group,
the Electric Operations Group, and the Gas Operations Group,
respectively. T. S. Romanowski also serves as CILCO's Principal
Financial Officer. J. F. Vergon also serves as Chairman of the Board,
President and Chief Executive Officer of CILCORP Investment Management
Inc.
(4) J. F. Vergon was Vice President of CILCO from October 1, 1986 through
December 31, 1992. From January 1, 1993 through February 28, 1993,
Mr. Vergon was Vice President and Chief Financial Officer of CILCO's
parent, CILCORP Inc. Effective March 1, 1993, Mr. Vergon became a Vice
President of CILCO.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
CILCORP
The Company's common stock is listed on the New York and Chicago Stock
Exchanges (ticker symbol CER). At December 31, 1993, there were 15,830
holders of record of the Company's common stock. The following table sets
forth, for the periods indicated, the dividends per share of common stock and
the high and low prices of the common stock as reported in New York Stock
Exchange Composite Transactions.
Quarter
1992 First Second Third Fourth
Price Range
High $37 7/8 $38 $40 1/4 $40 5/8
Low $33 5/8 $35 1/4 $37 $38 1/4
------- ------- ------- -------
Dividends Paid $ .615 $ .615 $ .615 $ .615
======= ======= ======= =======
1993
Price Range
High $43 3/8 $43 3/8 $43 3/4 $43
Low $39 $40 3/8 $41 5/8 $35 3/4
------- ------- ------- -------
Dividends Paid $ .615 $ .615 $ .615 $ .615
======= ======= ======= =======
The number of common shareholders of record as of March 15, 1994, was 15,726.
CILCO
CILCO's common stock is not traded on any market. As of March 15, 1994,
13,563,871 shares of CILCO's Common Stock, no par value, were issued, and
outstanding and privately held, beneficially and of record, by CILCORP Inc.
CILCO's requirement for retained earnings before common stock dividends may be
paid as described in Note 4 of CILCO's Notes to Financial Statements contained
in Item 8. Financial Statements and Supplementary Data.
Item 6. Selected Financial Data
CILCORP INC.
Selected Financial Data
For the Years Ended December 31 1993 1992 1991 1990 1989
(In thousands except per share amounts)
Revenue $ 584,511 $ 581,225 $ 590,165 $ 542,847 $ 463,062
Net income available
for common stockholders 33,583 32,097 39,656 34,504 48,399
Earnings per share 2.60 2.48 3.14 2.69 3.58
Total assets 1,198,440 1,184,916 1,147,978 1,155,254 1,136,140
Long-term debt 325,711 307,628 324,998 298,217 301,114
Dividends declared per
common share 2.46 2.46 2.46 2.46 2.46
CILCO
For the Years
Ended December 31 1993 1992 1991 1990 1989
(In thousands)
Operating revenues $453,878 $433,739 $454,602 $432,961 $426,302
Net income available
for common stockholders 33,635 31,195 39,790 36,525 39,989
Total assets 988,325 965,691 942,634 928,304 947,465
Long-term debt 278,321 257,361 268,006 268,051 268,095
Ratio of Earnings
to Fixed Charges 3.20 3.12 3.74 3.55 3.71
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
CILCORP AND SUBSIDIARIES
The financial condition and operating results of CILCORP (the Company)
primarily reflect the operations of Central Illinois Light Company (CILCO),
the Company's principal business subsidiary. The Company's other core
business subsidiary is Environmental Science & Engineering, Inc. (ESE). The
Other Businesses segment includes the operations of the holding company
itself (Holding Company), its investment subsidiary, CILCORP Investment
Management Inc. (CIM), and its venture capital subsidiary, CILCORP Ventures
Inc. (CVI).
CILCO is a regulated public utility engaged in the generation, transmission
and distribution of electric energy and the purchase, transportation and
distribution of natural gas in Central Illinois.
ESE is an environmental consulting and engineering firm with additional
capabilities in laboratory analysis and equipment manufacturing. ESE
provides a full-service approach to private, industrial and government
clients, commencing with problem identification and analysis, continuing
through regulatory negotiation and engineering, and concluding with
preparation and implementation of remediation plans.
OVERVIEW
Contributions to the Company's earnings per share for the last three calendar
years are shown below:
1993 1992 1991
CILCO $2.60 $2.41 $3.15
ESE (.17) .15 (.11)
Other Businesses .17 (.08) .10
----- ----- -----
Earnings per share $2.60 $2.48 $3.14
===== ===== =====
CILCO's earnings increased approximately 8% in 1993 due to higher electric
retail sales. Cooling degree days were near normal in 1993 but were 23%
below normal in 1992. The effect of higher gas sales resulting from
increased heating degree days was more than offset by higher operations,
maintenance, and depreciation expense resulting from increased repairs and
replacements to the gas distribution system. As a result, gas operating
income again declined. In January 1994, CILCO filed a request with the
Illinois Commerce Commission (ICC) for an 8.9% increase in gas base rates
(see Gas Rate Increase Request).
ESE's results decreased the Company's earnings by $2.3 million in 1993 compared
to a positive earnings contribution of $1.9 million in 1992. ESE's revenues
declined due to continued economic uncertainty, delays in government
enforcement actions, and a more cautious approach by ESE's customers toward
environmental compliance. During 1993, ESE continued to close and consolidate
offices with low personnel utilization and took steps to control
administrative costs.
Other Businesses' results improved by $2.6 million from 1992. In late 1993,
the Company and the Internal Revenue Service (IRS) settled certain tax issues
related to the Company's leveraged lease portfolio. The settlement resulted in
a $.24 per share increase in the Company's 1993 earnings.
The following table summarizes each business segment's contribution to net
income (see Results of Operations for further discussion).
1993 1992 1991
Electric operating income $49,129 $45,079 $52,647
Gas operating income 11,058 12,521 13,376
------- ------- -------
Total utility operating income 60,187 57,600 66,023
Utility interest expense and other (26,828) (27,014) (27,079)
Environmental and engineering services
net income (loss) (2,266) 1,938 (1,424)
Other Businesses net income (loss) 2,490 (427) 2,964
------- ------- -------
Net Income $33,583 $32,097 $40,484
======= ======= =======
Return on average common equity was 10% in 1993 compared to 9.5% in 1992 and
12.3% in 1991. The ratio of common equity to total capitalization, including
minority interest and short-term debt, remained stable in 1993 at
approximately 45%. The fixed charge coverage ratio also remained stable at
2.4.
Inflation may have a significant impact on the Company's future operations,
its ability to contain costs, and the need to seek timely and adequate
utility rate increases. Over the past five years, the rate of inflation as
measured by the Consumer Price Index has ranged from 2.6% to 5.4% annually.
To help protect CILCO from the effects of inflation, substantially all
electric and gas sales rates include a fuel adjustment clause (FAC) or a
purchased gas adjustment clause (PGA) to provide for the recovery of changes
in electric fuel costs, excluding coal transportation, and changes in the
cost of gas.
CAPITAL RESOURCES AND LIQUIDITY
The Company believes that internal and external sources of capital which are,
or are expected to be, available to the Holding Company and its subsidiaries
will be adequate during the coming year to fund the Company's capital
expenditures program, pay interest and dividends, meet working capital needs
and retire (or refinance) debt as it matures.
THE COMPANY
In December 1993, the Company issued 62,220 shares of common stock through
the CILCO Employees' Savings Plan (ESP) and the CILCORP Automatic
Reinvestment and Stock Purchase Plan (DRIP). These shares were issued at an
average price of $38 per share for total proceeds of $2.4 million.
Previously, the ESP and DRIP plans purchased shares of CILCORP common stock
on the open market. Depending on market conditions, the Company may choose
to issue new shares of common stock through the ESP and DRIP or have the
plans resume purchasing CILCORP stock on the open market. However, the
Company may not change its strategy more frequently than every 90 days. The
Company plans to issue up to $30 million of common stock through these plans
by 1996, depending on market conditions and corporate needs, but is under no
commitment to do so. The proceeds from newly issued stock will be used to
retire CILCORP short-term debt, to meet working capital and capital
expenditure requirements at CILCO, and for other corporate purposes.
During 1993, CILCORP's Board of Directors authorized an increase in the
Holding Company's short-term borrowing limit from $35 million to $40 million.
At December 31, 1993, the Holding Company had $35 million of committed bank
lines and $5 million of discretionary bank lines, of which $18.8 million was
used, compared to $20 million committed and $2 million outstanding at
December 31, 1992.
The Company established a $75 million private medium-term note program in
1991. To date, $26 million has been issued. The Company may issue
additional notes during 1994-1997 to retire short-term debt incurred to
partially fund new investments by CIM, to retire maturing debt of CILCORP
Lease Management Inc. (CLM), a wholly-owned subsidiary of CIM, and to provide
funds for other corporate purposes.
In December 1993, the Holding Company announced that it will initially
finance the $11 million construction cost of a cogeneration facility to be
located at the site of one of CILCO's current industrial customers (see
Electric Competition). Upon receiving ICC approval for the project, CILCO
will acquire the steam boilers and other equipment from the Holding Company
and invest an additional $5.8 million to install a 20 megawatt turbine
generator and related equipment.
In December 1993, the IRS and the Company reached agreement on certain
disputed issues relating to the IRS audit of the Company's 1985 and 1986
income tax returns (see Note 3).
OTHER BUSINESSES
At December 31, 1992, CIM and CLM had cash and temporary cash investments of
$20.6 million. During 1993, CIM invested $13 million in leveraged leases of
passenger railway equipment and an aircraft. The two assets had a total cost
of $67 million. The balance of CIM's investment was financed with
non-recourse debt. During 1993, CLM retired $6 million of debt and paid the
tax liability relating to the gain on the 1992 sale of an office building.
At year-end, CIM and CLM had $300,000 of cash and temporary cash investments.
As part of the 1992 restructuring of the Springerville Unit No. 1 lease, CLM
received approximately 1.2 million shares of Tucson Electric Power Company
(TEP) common stock, and warrants to purchase approximately 895,000 additional
shares. During 1993, CLM sold one million shares at an average price per
share of $3.57, realizing a pre-tax gain of $2 million. CLM plans to sell
the remaining TEP stock during 1994, depending upon market conditions.
In December 1993, CIM acquired the 19% minority interest in CLM.
CILCO
In 1993, CILCO spent $73 million for capital additions and improvements.
These expenditures consisted primarily of replacements and improvements to
the existing electric and gas systems, including $17.5 million to replace
certain portions of the Springfield gas distribution system (see Results of
Operations, CILCO Gas Operations). This project was substantially completed
in September 1993, at an ultimate cost of approximately $24 million. Utility
capital projects were financed during 1993 with funds from operating
activities. CILCO's cash flow from operations in 1993 was $92 million.
During 1993, CILCO issued $108 million of first mortgage pollution control
bonds and medium term notes (see Note 7), $22 million of perpetual preferred
stock and $25 million of flexible auction rate preferred stock (see Note 6).
CILCO retired $96.4 million of first mortgage bonds and $45.5 million of
perpetual preferred stock during 1993. The balance of the financing proceeds
was used to retire short-term debt. Annual interest expense will decrease
$730,000 as a result of the bond refinancings. Also, annual preferred
dividend requirements are expected to decrease by $1.3 million as a result of
refinancing fixed-rate preferred stock with lower fixed-rate preferred stock
and with flexible auction rate preferred stock.
CILCO's short-term debt decreased to $12.4 million at December 31, 1993, from
$24.5 million at December 31, 1992. CILCO expects to issue short-term
commercial paper periodically during 1994, and is currently authorized by its
Board of Directors to issue up to $66 million of short-term debt. At
December 31, 1993, committed bank lines of credit totalled $30 million, all
of which were unused. CILCO expects these bank lines will remain unused
through 1994.
Estimated capital expenditures for 1994 and 1995 are $90 million and
$73 million, respectively. The 1994 estimate includes $34 million for
electric energy supply and transmission projects, $5 million for gas supply
and transmission projects, and $43 million for electric and gas distribution
system improvements. CILCO's expected purchase of the cogeneration plant
being initially financed by the Holding Company is included in 1994 capital
expenditures. CILCO plans to finance its 1994 and 1995 capital requirements
with funds provided by operating activities and the issuance of approximately
$30 million of additional long-term debt during 1994. Anticipated total
capital expenditures for 1996-1998 are $213 million. These expenditures are
expected to be financed primarily with internally-generated funds.
In October 1993, Standard & Poor's (S&P) released revised financial ratio
benchmarks for rating electric utilities' debt which reflect increased
business risk in the industry. As a result, S&P revised CILCO's rating
outlook from "stable" to "negative." A "negative" outlook means a long-term
debt rating may be lowered, but it is not necessarily a precursor of a rating
change. CILCO's current S&P long-term debt rating is AA.
ESE
ESE spent $4.3 million for capital additions and improvements in 1993, and
expects to spend $5.0 million in 1994. ESE's 1993 cash flow from operations
was $11.5 million, which was used to fund capital expenditures and to reduce
debt. A decrease in accounts receivable contributed $4.8 million to 1993
cash flow.
ESE had borrowed $23 million from the Holding Company and $8.1 million from
third parties at December 31, 1992. In May 1993, ESE and the Holding Company
entered into a credit agreement to consolidate ESE's outstanding debt at that
time. The proceeds from this borrowing were used, in part, to retire loans
from the Holding Company under the prior agreement. Under this new
agreement, ESE can draw on a $15 million revolving line of credit which
expires May 2, 1996. At December 31, 1993, ESE had $.9 million outstanding
on this line. ESE also borrowed $20 million from the Holding Company on a
term credit basis with the principal due on May 2, 1998. ESE reduced
borrowings from the Holding Company by $2.1 million during 1993 and retired
$7.6 million of its debt to third parties. ESE had an unused $1 million bank
line of credit at December 31, 1993, to provide for working capital needs and
had a separate $5 million bank line of credit, of which $2.6 million was
used, to collateralize performance bonds issued to companies in connection
with ESE projects. ESE expects to finance its capital expenditures and
working capital needs for 1994 with a combination of funds generated
internally and periodic short-term borrowing from the Holding Company.
GAS RATE INCREASE REQUEST
On January 14, 1994, CILCO filed a request with the ICC to increase gas base
rates to reflect both the current costs of providing gas service and its
additional investment in the gas system, including the replacement of certain
portions of the Springfield gas distribution system (see Capital Resources
and Liquidity-CILCO). The revised rates are designed to increase annual gas
revenues approximately $15 million, or 8.9% based upon an adjusted test year
ended December 31, 1995. The filing requests a 9.4% return on original cost
rate base and a 12% return on common equity. Management cannot predict the
outcome of the filing. A decision from the ICC is not expected until late
1994.
ENVIRONMENTAL MATTERS
CILCO's capital expenditures relating to pollution control facilities are
estimated to be $9 million and $5 million for 1994 and 1995, respectively.
The acid rain provisions of the Clean Air Act Amendments of 1990 (Amendments)
will require additional sulfur dioxide (SO2) and nitrogen oxide (NOx)
emission reductions at CILCO's generating facilities. CILCO's facilities are
exempt in Phase I of the Amendments due to previous emission reductions, but
are subject to Phase II of the Amendments, which require additional emission
reductions by the year 2000.
CILCO's final compliance strategy will depend upon regulations issued under
the Amendments; therefore, CILCO cannot currently determine definitive
compliance costs and schedules. CILCO's present strategy includes use of an
existing SO2 scrubber and limited fuel switching to reduce SO2 emissions, and
combustion control modifications to reduce NOx emissions. CILCO's generating
units will not require additional SO2 scrubbers. CILCO cannot determine the
extent to which greater market demand for low-sulfur compliance coal in
Phase II may increase fuel costs. CILCO spent $3.5 million through 1993 to
install replacement burners on one of its generating units to reduce NOx
emissions. Total costs for boiler retrofits and emissions monitoring
equipment are expected to be $15.8 million through 1995. CILCO will install
additional NOx controls at its generating units as needed to meet the
compliance provisions under Title IV of the Clean Air Act.
Other provisions of the Amendments call for new permitting programs, new
monitoring and enforcement programs, and several power plant emissions
studies which could eventually result in further emission regulation and
additional emission controls for hazardous air pollutants. Also, the Clean
Water Act and the Resource Conservation and Recovery Act, which deal with
water and solid waste pollution control, may be reauthorized during 1994.
CILCO will continue to monitor regulatory actions and develop compliance
strategies to minimize any financial impact. Under current regulatory
policies, CILCO expects to recover compliance costs associated with the
Amendments and other environmental regulations through rates charged to
customers.
In March 1993, the U.S. Environmental Protection Agency (EPA) issued a final
rule which specified the number of acid rain emission allowances allocated to
power plants in Phase II of the Amendments and established various allowance
reserves. Allowances are transferable from one utility to another at market
prices. The number of allowances allocated to CILCO approximates its future
needs, so CILCO expects it will buy or sell minimal amounts of allowances.
Some studies suggest that magnetic fields produced by electric current, known
as "electric and magnetic fields" or EMF, may be associated with illness or
disease. However, research conducted to date has found no conclusive
evidence that EMF has an adverse impact on health. CILCO is participating in
utility industry funded studies on this subject. There also are claims that
EMF may contribute to losses in the market value of property near electric
power lines. CILCO will continue to monitor these issues; their ultimate
impact cannot be predicted at this time.
CILCO continues to investigate former gas manufacturing plant sites to
determine if it is responsible for the remediation of any remaining waste
materials (coal tar) at those sites. The sites of five former gas
manufacturing plants are located within CILCO's present gas service
territory. CILCO previously operated three of the five plants, and of the
three sites, it currently owns two. In cooperation with the Illinois
Environmental Protection Agency (IEPA), CILCO has completed remedial action,
at a cost of $3.3 million, at one of the two owned sites at which it operated
a plant. CILCO developed an investigation plan in 1992 to define the extent
of remediation for the other owned site at which it formerly operated a
plant. That investigation plan has been reviewed and approved by the IEPA,
and CILCO implemented the investigation plan in 1993. A remediation plan for
this site is currently being developed. CILCO has not yet formulated a
remediation plan for the previously owned site where it formerly operated a
gas manufacturing plant. CILCO does not currently own the two sites at which
it did not operate a plant.
Through 1993, CILCO paid approximately $500,000 to outside parties to
investigate and/or test former gas manufacturing plant sites. CILCO expects
to spend approximately $200,000 for site monitoring and feasibility studies
in 1994. Until more detailed site specific testing has been completed, CILCO
cannot determine the ultimate extent or cost of any remediation of the two
remaining sites where it operated plants. CILCO has recorded a $4.4 million
liability and a corresponding regulatory asset on its balance sheet for coal
tar investigation and remediation costs. The $4.4 million represents the
minimum amount of the estimated range of such future costs which CILCO
expects to incur. CILCO has not yet determined the extent, if any, of its
remediation responsibility for the non-owned sites at which it never operated
a gas manufacturing plant.
In August 1991, the ICC approved a rate rider which authorized CILCO to
recover prudently incurred coal tar investigation and remediation costs from
gas customers during the respective years the costs were incurred. The rider
provided that the incurred costs would be subject to a yearly prudence review
and a reconciliation of actual costs with amounts recovered through the
rider. Future recoveries were to be adjusted to reflect prior
under-recoveries or over-recoveries of costs.
In 1992, the ICC issued a generic order which authorized Illinois utilities
to recover prudently incurred expenditures paid to outside parties to
investigate and remediate coal tar sites. Under the generic order, expenses
would be recovered over a five-year period, with no carrying costs allowed on
the unrecovered balance. CILCO was directed by the ICC to make its rider
consistent with the generic order. The 1991 decision relating to CILCO and
the 1992 generic order were appealed to the Illinois Appellate Court by
various parties, including CILCO.
In December 1993, the Illinois Appellate Court affirmed the ICC's generic
order and directed the ICC to make the 1991 CILCO order consistent with the
generic order. Based upon CILCO's interpretation of existing law, it
believes that coal tar expenses prudently incurred and collected prior to the
Appellate Court's decision are not subject to refund. However, if no appeal
is granted from the Appellate Court's decision or if that decision is
affirmed by the Illinois Supreme Court, expenses incurred after the Appellate
Court's decision will be subject to the generic order. CILCO has been
advised that at least one party plans to appeal the generic order to the
Illinois Supreme Court.
Coal tar remediation costs incurred through 1993 have been deferred on the
Balance Sheets, net of amounts recovered from customers. CILCO began
recovering remediation costs under its coal tar rider on October 1, 1991, and
through 1993 has recovered approximately $4 million. CILCO cannot predict
the outcome of any appeal to the Illinois Supreme Court, or whether amounts
previously recovered will be subject to refund, but believes most or all of
its future coal tar remediation costs will continue to be recoverable from
customers. Although the total cost to CILCO of any action with respect to
the unremediated sites and the possibility of recovering that cost from
insurance carriers or any potentially responsible parties cannot now be
determined, management believes that such cost will not have a material
adverse effect on CILCO's financial position or results of operations.
ELECTRIC COMPETITION
The electric utility industry is expected to become more competitive as a
result of the passage in 1992 of the National Energy Policy Act. This Act
encourages competition by allowing both utilities and non-utilities to form
non-regulated generation subsidiaries to supply additional electric demand
without being restricted by the Public Utility Holding Company Act of 1935.
Also, the Federal Energy Regulatory Commission (FERC) may order access to
utility transmission systems by third-party energy producers on a
case-by-case basis and may order electric utilities to enlarge their
transmission systems to transport (wheel) power, subject to certain
conditions. The Act specifically bans federally-mandated wheeling of power
for retail customers, but several state public utility regulatory
commissions, including Illinois, are currently studying retail wheeling.
To prepare for an increasingly competitive environment, CILCO implemented a
new electric tariff in 1993 which permits it to negotiate contractual rates
with individual customers who find it economically feasible and practical to
use cogeneration, independent power production, or other power arrangements
in place of CILCO-supplied energy. CILCO currently has one customer on this
contractual rate.
In December 1993, CILCO and one of its current large industrial customers,
Midwest Grain Products, Inc. (Midwest Grain), announced an agreement to build
a cogeneration plant. The plant, which will be located at a Midwest Grain
facility in CILCO's service territory, will utilize natural gas to provide
steam heat to the facility and electricity for sale to Midwest Grain and
other CILCO customers (see Capital Resources and Liquidity-The Company).
With growing competition in the electric utility industry, CILCO's largest
customers may have increased opportunities to select their electric supplier.
CILCO formed a Corporate Sales Department in 1993 to work with its larger
customers to address their unique electric power requirements and business
needs so that CILCO may remain their supplier of choice. To date, CILCO has
entered into long-term contracts with four of its industrial customers to
provide them with their electric power requirements.
FEDERAL ENERGY REGULATORY COMMISSION ORDER 636
In 1992, the FERC issued Orders 636, 636A, and 636B (collectively Order 636).
The orders have been appealed to the United States Court of Appeals by
various parties. As a result of Order 636 and subsequent regulatory filings
by interstate pipelines, the pipelines will continue to transport gas to
local gas distribution companies such as CILCO, but this service will be
administered independently of the pipelines' sales of gas. Interstate
pipelines serving CILCO have generally ceased sales of gas and have become
transporters only. CILCO currently arranges for the purchase of gas from a
variety of suppliers and has contracted for additional gas storage capacity
to meet customer demands for gas. CILCO believes it is well-positioned to
ensure the continued acquisition of adequate and reliable gas supplies
despite the regulatory changes.
Order 636 also permits pipelines to file new tariffs to provide for the
recovery from their customers, including CILCO, of prudently incurred costs
resulting from the transition to services under Order 636 ("transition
costs"). Thus far, CILCO's pipeline suppliers have filed with the FERC to
directly bill CILCO, subject to refund, for approximately $1.4 million of
transition costs, including interest, as of December 31, 1993. CILCO has
been billed approximately $394,000 through December 31, 1993. These charges
are being recovered from CILCO's customers through its PGA. The PGA allows
CILCO to immediately reflect increases or decreases in the cost of natural
gas in its charges to customers. Approximately $332,000 has been recovered
from customers through December 31, 1993. CILCO has recorded a liability of
approximately $1 million and a corresponding regulatory asset on its balance
sheet, representing the minimum amount of the estimated range of such future
transition costs which CILCO expects to incur. On September 15, 1993, the
ICC ordered an investigation into the appropriate recovery of transition
costs by Illinois gas utilities. CILCO estimates that it could ultimately be
billed up to $3 million, excluding interest, for pipeline transition costs.
While CILCO cannot at this time determine its actual allocation of suppliers'
transition costs or the outcome of the ICC proceeding, management believes
that based on existing law and regulatory practice, any transition charges or
other billings by the pipelines to CILCO as a result of Order 636 should be
recoverable from customers through CILCO's gas rates. Therefore, management
does not expect the orders will materially impact CILCO's financial position
or results of operations.
GAS TAKE-OR-PAY CHARGES
Under FERC Order 500, and subsequent Orders 528 and 528A, interstate gas
pipelines may bill gas distribution utilities for take-or-pay charges,
including interest. In response to the latter two orders, pipelines serving
CILCO filed new tariff allocations, entered into system-wide negotiations and
reached settlements with their customers. Based on these and subsequent
FERC-approved settlements, CILCO estimates it will ultimately be directly
billed a total of approximately $19.6 million of take-or-pay costs, excluding
interest. This number includes $3.2 million of take-or-pay charges for the
Liquefied Natural Gas Settlement (discussed below). Through December 1993,
pipelines have billed CILCO $19.4 million for take-or-pay charges, including
$3.6 million of interest.
In 1988, the ICC issued an order allowing Illinois gas utilities to recover
from customers take-or-pay charges, including interest, billed to utilities
by interstate pipelines. Upon appeal, the Illinois Supreme Court affirmed
that ruling, and a subsequent petition for issuance of a writ of certiorari
to the U.S. Supreme Court was denied. CILCO is currently recovering
take-or-pay charges via a factor incorporated into the PGA, and has thus far
recovered $18.6 million from its customers.
LIQUEFIED NATURAL GAS SETTLEMENT
A joint settlement proposal before the FERC among Trunkline LNG Company
(Trunkline), Panhandle Eastern Pipeline Company (Panhandle), and others,
including CILCO, became effective in September 1992. The settlement allows
Panhandle to recover certain costs related to Trunkline's liquefied natural
gas project and various other matters. As a result of this settlement,
disputed issues were resolved, and CILCO was billed approximately $4.4
million. CILCO began recovering the cost through the PGA beginning in 1993.
Approximately $3.2 million of this billing relates to gas take-or-pay, and is
included in the discussion of gas take-or-pay charges above. Of the
remaining $1.2 million, approximately $330,000 has been billed as of December
31, 1993. Through 1993, CILCO has recovered approximately $270,000 from its
customers. CILCO has recorded a regulatory asset and corresponding liability
of $1 million on the Balance Sheets. This $1 million represents the minimum
amount of the estimated range of such future costs which CILCO expects to
incur.
ACCOUNTING PRONOUNCEMENTS
In 1992, the Financial Accounting Standards Board (FASB) issued Statement
No. 109, "Accounting for Income Taxes" (SFAS 109), and Statement No. 112,
"Employer's Accounting for Postemployment Benefits" (SFAS 112). CILCO
adopted SFAS 109 effective January 1, 1993 (see Note 2). CILCO will adopt
SFAS 112 on January 1, 1994 (see Note 1).
RESULTS OF OPERATIONS
ELECTRIC OPERATIONS
The following table summarizes electric operating revenue and expenses by
component.
Components of Electric Operating Income 1993 1992 1991
(In thousands)
Revenue:
Electric retail $298,602 $280,380 $297,743
Sales for resale 4,522 8,433 8,446
-------- -------- --------
Total revenue 303,124 288,813 306,189
-------- -------- --------
Cost of Sales:
Cost of fuel 92,112 94,133 100,775
Purchased power expense 8,754 4,295 6,368
Revenue taxes 12,378 11,276 10,725
-------- -------- --------
Total cost of sales 113,244 109,704 117,868
-------- -------- --------
Gross margin 189,880 179,109 188,321
-------- -------- --------
Operating Expenses:
Operation expenses 50,689 47,889 46,574
Maintenance expenses 25,598 24,323 25,278
Depreciation and amortization 38,337 37,465 36,266
Income taxes 17,542 15,747 19,175
Other taxes 8,585 8,606 8,381
-------- -------- --------
Total operating expenses 140,751 134,030 135,674
-------- -------- --------
Electric operating income $ 49,129 $ 45,079 $ 52,647
======== ======== ========
Electric gross margin increased 6% in 1993, primarily due to a 7% increase in
retail kilowatt hour sales. The increase in retail sales was partially offset
by a decrease in sales for resale revenue. The ratio of gross margin to
revenue has remained constant at 62%. Residential sales volumes increased
10%, while commercial sales volumes increased 5%. These increases were
primarily due to warmer summer weather. Cooling degree days were 30% higher
in 1993 than in 1992. Industrial sales volumes increased 6% compared to 1992
due to greater demand by several of CILCO's large industrial customers. The
overall level of business activity in CILCO's service territory and weather
conditions are expected to continue to be the primary factors affecting
electric sales in the near term. CILCO's electric sales may also be affected
in the long-term by increased competition in the electric utility industry
(see Electric Competition).
The 1993 increase in purchased power expense was partially offset by a
decrease in cost of fuel. Sales for resale and purchased power vary based on
the energy requirements of neighboring utilities, CILCO's available capacity
for bulk power sales, its need for energy, and the price of power available
for sale or purchase. CILCO expects increased competition to continue in the
bulk power market due to certain provisions of the Energy Policy Act of 1992
(see Electric Competition).
Electric gross margin in 1992 decreased 5% from 1991, primarily due to
decreased sales. Residential sales volumes decreased 10% while commercial
sales volumes remained relatively constant. Industrial sales volumes
decreased 4% in 1992 compared to 1991, primarily due to reduced demand at
several of CILCO's large industrial customers during 1992. Cooling degree
days for 1992 were 40% lower than in 1991, which contributed to the revenue
decreases.
Electric operation and maintenance expenses increased 6% in 1993 and increased
slightly in 1992. The 1993 increase was primarily due to greater power plant
maintenance costs and the cancellation of a combustion turbine which CILCO had
planned to construct to meet electric peak demand in the late 1990's.
Instead, CILCO's increased energy needs will be met through firm power
purchases and by the Midwest Grain cogeneration facility (see Electric
Competition). Operation and maintenance expenses were also affected by
general inflationary trends. A decrease in medical expenses partially offset
this trend.
On December 31, 1993, CILCO changed the discount rate assumption used to
calculate pension and postretirement medical benefit obligations from 8% to 7%
(see Note 1). This change will increase benefit costs for electric operations
employees by approximately $640,000 in 1994 and $550,000 in 1995.
The increases in depreciation and amortization expense in 1993 and 1992
reflect additions and replacements of utility plant at costs in excess of the
original cost of the property retired.
The changes in income taxes in 1993 and 1992 were primarily the result of
changes in pre-tax income. Higher federal corporate income tax rates also
contributed to the 1993 increase (see Note 2).
GAS OPERATIONS
The following table summarizes gas operating revenue and expenses by
component.
Components of Gas Operating Income 1993 1992 1991
(In thousands)
Revenue:
Sale of gas $140,620 $134,385 $137,364
Transportation services 10,134 10,541 11,049
-------- -------- --------
Total revenue 150,754 144,926 148,413
-------- -------- --------
Cost of Sales:
Cost of gas 79,022 77,123 81,138
Revenue taxes 7,039 6,547 6,902
-------- -------- --------
Total cost of sales 86,061 83,670 88,040
-------- -------- --------
Gross margin 64,693 61,256 60,373
-------- -------- --------
Operating Expenses:
Operation expenses 26,436 23,803 23,858
Maintenance expenses 5,050 4,238 2,931
Depreciation and amortization 14,686 13,930 13,279
Income taxes 4,684 4,082 4,468
Other taxes 2,779 2,682 2,461
-------- -------- --------
Total operating expenses 53,635 48,735 46,997
-------- -------- --------
Gas operating income $ 11,058 $ 12,521 $ 13,376
======== ======== ========
Gas gross margin increased 6% in 1993, primarily due to an 8% increase in
retail sales volumes. Residential and commercial sales volumes increased 10%
and 9%, respectively, primarily due to colder weather during the heating
season. Heating degree days were 11% higher in 1993 than in 1992.
Gas gross margin for 1992 increased 1% from 1991 while total retail sales
volumes decreased 2%. Residential and commercial sales volumes each decreased
3% primarily due to a milder heating season. Heating degree days in 1992 were
2% lower than the previous year. While total gas revenues decreased 2% in
1992 from 1991 levels, cost of sales decreased 5%, primarily due to a 5%
decrease in the cost of gas. This decrease was a result of lower sales and
lower take-or-pay charges, partially offset by higher natural gas prices.
Revenue from gas transportation services decreased 4% in 1993 and 5% in 1992,
while the volume of gas transported decreased 11% in 1993 and increased 12% in
1992. Revenues declined primarily due to decreased purchases of gas by
industrial transportation customers from suppliers other than CILCO. The
changes in 1993 and 1992 revenue were not proportional to the changes in
volume because certain large volume transportation customers can negotiate
lower unit charges for service. There were 668 transportation customers in
1993 compared to 635 customers in 1992 and 617 in 1991. Transportation
arrangements have made it practical for certain industrial customers to
continue to use gas instead of switching to alternate fuels.
Weather conditions, the ability of large customers to purchase gas on the open
market at competitive rates, the continuing trend toward more efficient gas
appliances, and overall economic conditions in CILCO's service area will
affect future gas sales.
On January 14, 1994, CILCO filed a request with the ICC to increase its gas
base rates (see Gas Rate Increase Request).
After a significant number of leaks were detected in the Springfield gas
distribution system in mid-1992, CILCO began a detailed examination of its
Springfield gas distribution system and related operating practices and
procedures. The objective of this examination was to detect and repair gas
main leaks and to identify and correct any operating deficiencies. This
project was substantially completed on September 30, 1993 (see Capital
Resources and Liquidity-CILCO).
In September 1992, the ICC staff began an informal review of CILCO's
Springfield gas operations and recordkeeping practices. Subsequently, at the
request of the ICC, the U.S. Department of Transportation and the U.S.
Department of Justice began conducting investigations, which management
believes to be focused principally on CILCO's Springfield gas operations.
These reviews could potentially lead to criminal charges, regulatory actions
(see Gas Rate Increase Request), as well as certain sanctions and civil
penalties. Management cannot currently determine the outcome of these reviews
or their regulatory effect, but does not believe they will have a material
adverse impact on CILCO's financial position or results of operations.
Gas operation and maintenance expenses increased 12% in 1993 and 5% in 1992.
These increases were primarily due to increased repairs to the Springfield gas
distribution system, partially offset by lower injury and damage claims
expenses. Operation and maintenance expenses are also affected by general
inflationary trends.
The December 31, 1993, change in the discount rate assumption used to
calculate pension and postretirement medical benefit obligations (see Note
1) will increase benefit costs for gas operations employees by approximately
$330,000 in 1994 and $280,000 in 1995.
The increases in depreciation and amortization expenses in 1993 and 1992
reflect additions and replacements of utility plant at costs in excess of the
original cost of the property retired.
The changes in income taxes in 1993 and 1992 were primarily the result of
changes in taxable income. Higher federal corporate income tax rates (see
Note 2) also contributed to the 1993 increase.
OTHER INCOME AND DEDUCTIONS
Utility other income and deductions changed slightly from 1992 to 1993.
Interest expense decreased due to lower interest rates on bonds refinanced in
1993 (see Capital Resources and Liquidity-CILCO).
Interest expense increased during 1992 due to interest on overcollection of
take-or-pay charges and settlement of utility-related tax issues arising from
an IRS audit, partially offset by lower interest expense on bonds refinanced
during 1992.
ESE
The following table summarizes environmental and engineering services revenue
and expenses.
Components of ESE Net Income 1993 1992 1991
(In thousands)
Environmental and engineering services revenue $123,162 $137,858 $127,627
Direct non-labor costs 43,627 52,531 46,330
-------- -------- --------
Net revenue 79,535 85,327 81,297
-------- -------- --------
Expenses:
Direct salaries and other costs 40,180 41,667 40,246
General & administrative 34,418 32,737 34,930
Depreciation and amortization 6,064 5,472 5,031
-------- -------- --------
Operating expenses 80,662 79,876 80,207
-------- -------- --------
Interest 1,719 2,167 2,955
-------- -------- --------
Income before income taxes (2,846) 3,284 (1,865)
Income taxes (580) 1,346 (441)
-------- -------- --------
ESE net income (loss) $ (2,266) $ 1,938 $ (1,424)
======== ======== ========
Revenues decreased by 11% in 1993 following revenue increases of 8% in 1992
and 35% in 1991. ESE experienced difficulty in obtaining new contracts to
replace completed projects due to continued economic uncertainty, delays in
government enforcement actions, and a more cautious approach by ESE's
customers toward environmental compliance. In late 1992, ESE was awarded a
contract by the U.S. Environmental Protection Agency (USEPA) to determine the
effectiveness of new air quality regulations. This five-year contract has a
total value of $81 million, assuming annual contract renewals and
authorization of task by the USEPA. ESE currently estimates total revenues
for this project to be $50 million. Due to delays in task approvals, this
project provided only $5 million of revenue in 1993. ESE closed two offices
and one laboratory during 1993 in response to market factors. The closed
facilities contributed $11 million in revenue in 1992 and less than $.5
million in 1993.
Direct non-labor costs as a percentage of gross revenue fluctuate primarily
due to subcontractor usage. Direct non-labor costs decreased by 17% due to
decreased business activity and the completion of a large turnkey project in
1992. This turnkey project constituted 24% of the direct non-labor costs for
1992 and less than 1% of the direct non-labor costs for 1993.
Direct and indirect salary expense decreased by 4% in 1993 primarily as a
result of a reduction in work force associated with the overall decline in
business volume. Because the consulting business is labor intensive, ESE can
adjust staffing levels to appropriately recognize changing business
conditions. The increase of 4% in 1992 resulted from wage increases.
General and administrative expenses increased by 5% in 1993 due to general
inflation and higher employee medical benefit costs. Additionally, a more
competitive marketplace has led to increased overhead costs as utilization
of staff on projects declined, and bid and proposal costs increased. The 6%
decrease in general and administrative costs in 1992 resulted from the
closing of certain offices and reduced insurance costs resulting from the
establishment of a wholly-owned subsidiary to provide professional liability
insurance.
Depreciation expense increased each year as a result of additions to fixed
assets. Amortization expense relates to a non-compete agreement, which is
being amortized over its five-year duration, and to the Cost in Excess of Net
Assets of the Acquired Company, which is being amortized over forty years.
Interest expense decreased because of lower interest rates and lower average
debt balances during 1993 and 1992. The reduction in income taxes results
primarily from the decrease in ESE's pre-tax income.
ESE's future business activity will continue to be affected by the level of
demand for consulting services and by the enforcement of various federal and
state statutes and regulations dealing with the environment and the use,
control, disposal and clean-up of hazardous wastes. The market for ESE's
services is competitive; however, no single entity currently dominates the
environmental and engineering consulting services marketplace.
OTHER BUSINESSES
The following table summarizes Other Businesses' revenue and expenses. Other
Businesses' results include income earned and expenses incurred at the
Holding Company, CIM, CVI, and non-operating interest income of CILCO.
Components of Other Businesses
Net Income 1993 1992 1991
(In thousands)
Revenue:
Leveraged lease revenue $ 4,280 $ 5,903 $ 5,713
Other revenue 3,191 3,725 2,223
------- ------- -------
Total revenue 7,471 9,628 7,936
------- ------- -------
Pre-tax gain on sale of subsidiary - - 11,575
------- ------- -------
Expenses:
Operating expenses 2,637 3,814 4,702
Depreciation and amortization 177 148 86
Interest expense 3,190 3,253 2,734
Income and other taxes (1,283) 2,392 8,417
Minority interest 260 448 608
------- ------- -------
Total expenses 4,981 10,055 16,547
------- ------- -------
Other Businesses net income (loss) $ 2,490 $ (427) $ 2,964
======= ======= =======
The increase in Other Businesses' net income resulted primarily from the
December 1993 settlement of the Company's dispute with the IRS concerning
certain leveraged lease tax issues, including the proper depreciable life of
the Springerville Unit No. 1 generating station (see Note 3). As a result of
the settlement, income tax expense was reduced by $3.1 million in 1993 to
reverse tax expense which had been recorded in prior years to reflect the
potential unfavorable outcome of the dispute.
During 1993, the Company adjusted leveraged lease revenues and related income
taxes to reflect higher corporate income tax rates enacted during the year.
Statement of Financial Accounting Standards No. 13, "Accounting for Leases,"
requires that the amount and timing of leveraged lease income be adjusted
when tax rates change. The Company will recognize less income over the life
of its existing lease portfolio due to the tax rate change; therefore, the
Company recorded a one-time charge of $1.1 million against 1993 lease
portfolio net income.
Leveraged lease revenue in 1992 included a $1.5 million one-time adjustment
related to the December 1992 restructuring of the Springerville Unit No. 1
lease. This adjustment offset revenue declines from other leases during
1992. Generally accepted accounting principles pertaining to leveraged
leases cause revenues to decline as the lease portfolio matures. A slight
decline in 1993 revenues from the Company's maturing leveraged leases was
partially offset by revenues from two new leveraged lease investments made in
late 1993 (see Capital Resources and Liquidity-Other Businesses). During
1994, the Company expects leveraged lease revenues to increase by $2.6
million as a result of the two new leases.
Other revenues in 1993 reflect a $2 million gain from the sale of one million
shares of TEP stock. Other revenues in 1992 included the fair market value
of approximately 1.2 million shares of TEP stock the Company received in
December 1992 as part of the Springerville Unit No. 1 lease restructuring.
Other revenues also included a 1992 gain from the sale of an office building
from the Company's lease portfolio. Interest income on temporary cash
investments, which is included in other revenues, declined due to lower
interest rates and investment balances.
Operating expenses declined due to fewer employees assigned to the Holding
Company, greater utilization of Holding Company staff by operating
subsidiaries, and lower legal and professional services expenses.
In late 1993, CIM purchased the 19% minority interest in CLM (see Capital
Resources and Liquidity-Other Businesses). Since the purchase occurred prior
to the Company's settlement of the leveraged lease tax issues with the IRS,
there was no minority interest in the resulting reduction in income tax
expense.
In 1991, CIM sold CLM Inc.-IX, a subsidiary which owned three leveraged lease
investments. Income and other taxes for 1991 included income taxes from the
sale of this subsidiary, which were partially offset by a capital loss
carryforward from 1987. Income tax expense in 1991 and 1992 also included a
reserve for potential income taxes and interest in the event the Company's
position regarding the depreciable life of Springerville Unit No. 1 was not
upheld.
ITEM 8.: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements:
Page
CILCORP Inc.
Management's Report to the Stockholders of CILCORP Inc. 50
Report of Independent Public Accountants 51
Consolidated Statements of Income 52-53
Consolidated Balance Sheets 54-55
Consolidated Statements of Cash Flows 56-57
Consolidated Statements of Common Stockholders' Equity 58
Statements of Segments of Business 59-61
Notes to Consolidated Financial Statements 62-77
CILCO
Management's Report 78
Report of Independent Public Accountants 79
Consolidated Statements of Income 80
Consolidated Balance Sheets 81-82
Consolidated Statements of Cash Flows 83-84
Consolidated Statements of Retained Earnings 85
Statements of Segments of Business 86-87
Notes to Consolidated Financial Statements 88-100
Management's Report
To the Stockholders of CILCORP Inc.:
Management has prepared the accompanying financial statements and notes for
CILCORP Inc. and its consolidated subsidiaries in accordance with generally
accepted accounting principles. Estimates and judgments used in developing
these statements are the responsibility of management. Financial data
presented throughout this report is consistent with these statements.
CILCORP Inc. maintains a system of internal accounting controls which
management believes is adequate to provide reasonable assurance as to the
integrity of accounting records and the protection of assets. Such controls
include established policies and procedures, a program of internal audit, and
the careful selection and training of qualified personnel.
The financial statements have been audited by CILCORP's independent public
accountants, Arthur Andersen & Co., whose appointment was ratified by
stockholders. Their audit was conducted in accordance with generally
accepted auditing standards and included an assessment of selected internal
accounting controls only to determine the scope of their audit procedures.
The report of the auditors is contained in this annual report.
The Audit Committee of the Board of Directors, consisting solely of outside
directors, meets periodically with the independent public accountants,
internal auditors and management to review accounting, auditing, internal
accounting control, and financial reporting matters. The auditors have
direct access to the Audit Committee.
R. O. Viets
R. O. Viets
President and Chief Executive Officer
T. D. Hutchinson
T. D. Hutchinson
Controller
Report of Independent Public Accountants
To the Stockholders of CILCORP Inc.:
We have audited the accompanying consolidated balance sheets of CILCORP Inc.
(an Illinois corporation) and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of income, cash flows, stockholders'
equity and segments of business for each of the three years in the period
ended December 31, 1993. These financial statements and the schedules
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CILCORP Inc. and its
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles.
As explained in Note 2, effective January 1, 1993, the Company changed its
method of accounting for income taxes. As explained in Note 1, effective
January 1, 1991, the Company changed its method of accounting for
postemployment health care benefits.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedules
listed in Item 14(a)2 are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not a required part of the
basic financial statements. These financial statement schedules have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
Arthur Andersen & Co.
Chicago, Illinois
February 4, 1994
Consolidated Statements of Income
CILCORP Inc. and Subsidiaries
For the Years Ended December 31 1993 1992 1991
(In thousands except per share amounts)
Revenue:
Electric $303,124 $288,813 $306,189
Gas 150,754 144,926 148,413
Environmental and Engineering Services 123,162 137,858 127,627
Other Businesses 7,471 9,628 7,936
-------- -------- --------
Total 584,511 581,225 590,165
-------- -------- --------
Operating Expenses:
Fuel for Generation and Purchased Power 100,866 98,428 107,143
Gas Purchased for Resale 79,022 77,123 81,138
Other Operations and Maintenance 225,135 227,111 221,381
Depreciation and Amortization 59,975 57,727 55,374
State and Local Revenue Taxes 19,466 17,874 17,664
Other Taxes 16,412 16,156 15,453
-------- -------- --------
Total 500,876 494,419 498,153
-------- -------- --------
Fixed Charges and Other:
Interest Expense 27,363 29,205 28,661
Preferred Stock Dividends of Subsidiary 4,043 4,441 4,441
Allowance for Funds Used During Construction (199) (337) (450)
Gain on Sale of Subsidiary - - (11,575)
Other 516 142 167
-------- -------- --------
Total 31,723 33,451 21,244
-------- -------- --------
Income Before Income Taxes 51,912 53,355 70,768
Income Taxes 18,069 20,810 29,676
-------- -------- --------
Net Income Including Minority Interest 33,843 32,545 41,092
Minority Interest 260 448 608
-------- -------- --------
Net Income 33,583 32,097 40,484
Convertible Preferred Stock Dividends - - 828
-------- -------- --------
Net Income Available for Common Stockholders $ 33,583 $ 32,097 $ 39,656
======== ======== ========
Average Common Shares Outstanding 12,914 12,924 12,640
Net Income Per Common Share $ 2.60 $ 2.48 $ 3.14
======== ======== ========
Dividends Per Common Share $ 2.46 $ 2.46 $ 2.46
======== ======== ========
The accompanying Notes to Financial Statements are an integral part of these statements.
Consolidated Balance Sheets
CILCORP Inc. and Subsidiaries
Assets (As of December 31) 1993 1992
(In thousands)
Current Assets:
Cash and Temporary Cash Investments $ 1,440 $ 24,401
Receivables, Less Reserves of $2,255 and $1,943 58,350 66,937
Accrued Unbilled Revenue 38,179 39,068
Fuel, at Average Cost 8,323 9,158
Materials and Supplies, at Average Cost 16,674 17,957
Gas in Underground Storage, at Average Cost 24,548 16,821
Prepayments and Other 9,441 5,431
---------- ----------
Total Current Assets 156,955 179,773
---------- ----------
Investments and Other Property:
Investment in Leveraged Leases 114,803 97,133
Investment in Marketable Securities and Other 7,453 16,266
---------- ----------
Total Investments and Other Property 122,256 113,399
---------- ----------
Property, Plant and Equipment:
Utility Plant, at Original Cost
Electric 1,068,818 1,042,844
Gas 348,541 327,642
---------- ----------
1,417,359 1,370,486
Less - Accumulated Provision for Depreciation 618,912 592,603
---------- ----------
798,447 777,883
Construction Work in Progress 31,896 25,477
Plant Acquisition Adjustments, being Amortized
to 1999 4,068 4,780
Other, Net of Depreciation 24,173 23,556
---------- ----------
Total Property, Plant and Equipment 858,584 831,696
---------- ----------
Other Assets:
Prepaid Pension Expense 13,953 13,720
Cost in Excess of Net Assets of Acquired Businesses,
Net of Accumulated Amortization of $3,479
and $2,179 25,251 26,551
Other 21,441 19,777
---------- ----------
Total Other Assets 60,645 60,048
---------- ----------
Total Assets $1,198,440 $1,184,916
========== ==========
The accompanying Notes to Financial Statements are an integral part of these balance
sheets.
Consolidated Balance Sheets
CILCORP Inc. and Subsidiaries
Liabilities and Stockholders' Equity (As of December 31) 1993 1992
Current Liabilities:
Current Portion of Long-Term Debt $ 193 $ 17,502
Notes Payable 31,200 29,251
Accounts Payable 47,668 39,601
Accrued Taxes 5,666 7,834
Accrued Interest 9,632 8,710
Purchased Gas Adjustment Over-Recoveries 3,268 10,600
Other 12,080 14,438
---------- ----------
Total Current Liabilities 109,707 127,936
---------- ----------
Long-Term Debt 325,711 307,628
---------- ----------
Deferred Credits and Other Liabilities:
Deferred Income Taxes 229,897 291,326
Net Regulatory Liability of Regulated Subsidiary 69,477 -
Deferred Investment Tax Credit 27,871 29,565
Customers' Advances for Construction and Other 27,781 23,410
---------- ----------
Total Deferred Credits 355,026 344,301
---------- ----------
Minority Interest in Consolidated Subsidiaries - 1,156
---------- ----------
Preferred Stock of Subsidiary 66,120 64,620
---------- ----------
Stockholders' Equity: (See Statements on page 58)
Common Stock, no par value; Authorized
50,000,000 shares - Outstanding 12,971,501 and
12,909,281 shares 165,662 163,297
Retained Earnings 176,214 175,978
----------- ----------
Total Stockholders' Equity 341,876 339,275
---------- ----------
Total Liabilities and Stockholders' Equity $1,198,440 $1,184,916
========== ==========
The accompanying Notes to Financial Statements are an integral part of these balance
sheets.
Consolidated Statements of Cash Flows
CILCORP Inc. and Subsidiaries
For the Years Ended December 31 1993 1992 1991
(In thousands)
Cash Flows from Operating Activities:
Net Income Before Preferred Dividends $37,626 $ 36,538 $44,925
------- -------- -------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Non-Cash Lease & Investment Income (4,280) (7,616) (5,757)
Depreciation and Amortization 59,975 57,727 55,374
Deferred Income Taxes, Investment Tax Credit,
and Regulatory Liability of
Subsidiary, Net 6,354 (1,464) 4,388
Gain on Sale of Subsidiary - - (11,575)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable and
Accrued Unbilled Revenue 9,476 (5,005) (781)
(Increase) Decrease in Inventories (5,609) (2,591) 3,765
Increase (Decrease) in Accounts Payable 8,067 5,394 (412)
Changes in Other Assets and Liabilities, Net (19,209) 15,466 10,933
------- -------- --------
Total Adjustments 54,774 61,911 55,935
------- -------- --------
Net Cash Provided by Operating Activities 92,400 98,449 100,860
------- -------- --------
Cash Flows from Investing Activities:
Additions to Plant (76,933) (69,111) (63,746)
Purchase of Long-Term Investments and
Leveraged Lease Property (13,595) (803) (1,750)
Proceeds from Sale of Subsidiary,
Net of Transaction Costs - - 22,383
Proceeds from Sale of Long-Term Investments
and Leveraged Lease Property 3,787 11,378 5,336
Purchase of Minority Interest in
Consolidated Subsidiary (1,425) - -
Other 7,438 (5,673) (10,385)
------- ------- --------
Net Cash Used in Investing Activities (80,728) (64,209) (48,162)
------- -------- --------
Cash Flows from Financing Activities:
Net Increase (Decrease) in Short-Term Debt 1,949 17,721 (27,212)
Proceeds from Issuance of Long-Term Debt 107,269 133,334 27,017
Repayment of Long-Term Debt (108,781) (140,318) (4,514)
Proceeds from Issuance of Preferred Stock
by Wholly-owned Subsidiary 46,006 - -
Retirement of Preferred Stock by
Wholly-owned Subsidiary (46,051) - -
Common Dividends Paid (31,757) (31,788) (31,056)
Preferred and Convertible Preferred Dividends
Paid (4,043) (4,441) (5,429)
Common Stock Issued 2,365 - -
Preferred and Common Stock Issuance Costs (1,590) - -
Common Stock Repurchased - (1,732) (7,236)
Convertible Preferred Stock Repurchased - - (1,700)
------- ------- --------
Net Cash Used in Financing Activities (34,633) (27,224) (50,130)
------- -------- --------
Net Increase (Decrease) in Cash and Temporary
Cash Investments (22,961) 7,016 2,568
Cash and Temporary Cash Investments at Beginning of Year $24,401 $ 17,385 $ 14,817
------- -------- --------
Cash and Temporary Cash Investments at End of Year $ 1,440 $ 24,401 $ 17,385
======= ======== ========
The accompanying Notes to Financial Statements are an integral part of these statements.
Consolidated Statements of Stockholders' Equity
CILCORP Inc. and Subsidiaries
Common Stock Retained
Shares Amount Earnings Total
(In thousands except share amounts)
Balance at December 31, 1990 12,630,768 $153,286 $167,142 $320,428
Repurchase of Common Stock (223,300) (7,236) (7,236)
Common Stock Issued 551,656 18,979 18,979
Cash Dividend Declared on Common Stock
($2.46 per share) (31,056) (31,056)
Cash Dividend Declared on Convertible
Preferred Stock ($2.46 per equivalent
common share) (828) (828)
Stock Issuance Costs (73) (73)
Net Income 40,484 40,484
---------- -------- -------- --------
Balance at December 31, 1991 12,959,124 $165,029 $175,669 $340,698
Repurchase of Common Stock (49,843) (1,732) (1,732)
Cash Dividend Declared on Common
Stock ($2.46 per share) (31,788) (31,788)
Net Income 32,097 32,097
---------- -------- -------- --------
Balance at December 31, 1992 12,909,281 $163,297 $175,978 $339,275
Common Stock Issued 62,220 2,365 2,365
Cash Dividend Declared on Common
Stock ($2.46 per share) (31,757) (31,757)
Preferred and Common Stock Issuance Costs (1,590) (1,590)
Net Income 33,583 33,583
---------- -------- -------- --------
Balance at December 31, 1993 12,971,501 $165,662 $176,214 $341,876
========== ======== ======== ========
The accompanying Notes to Financial Statements are an integral part of these statements.
Statements of Segments of Business
CILCORP Inc. and Subsidiaries
Operating Information For the Years Ended December 31
1993 1992 1991
(In thousands)
Utility Segment:
Electric Operations
Revenue $303,124 $288,813 $306,189
Expenses 253,995 243,734 253,542
-------- -------- --------
Operating Income 49,129 45,079 52,647
Income Taxes 17,542 15,747 19,175
-------- -------- --------
Operating Income Before Income Taxes $ 66,671 $ 60,826 $ 71,822
======== ======== ========
Depreciation and Amortization $ 38,337 $ 37,465 $ 36,266
Capital Expenditures $ 41,880 $ 41,821 $ 42,246
Gas Operations
Revenue $150,754 $144,926 $148,413
Expenses 139,696 132,405 135,037
-------- -------- --------
Operating Income 11,058 12,521 13,376
Income Taxes 4,684 4,082 4,468
-------- -------- --------
Operating Income Before Income Taxes $ 15,742 $ 16,603 $ 17,844
======== ======== ========
Depreciation and Amortization $ 14,686 $ 13,930 $ 13,279
Capital Expenditures $ 30,677 $ 20,001 $ 14,545
Major Customer For the Years Ended December 31
1993 1992 1991
Caterpillar Inc.
Electric Revenue $39,831 13.1% $38,428 13.3% $42,474 13.9%
Gas Revenue 1,581 1.0 1,847 1.3 2,181 1.5
------- ----- ------- ----- ------- -----
Total $41,412 9.1% $40,275 9.3% $44,655 9.8%
======= ===== ======= ===== ======= =====
Utility Identifiable Assets As of December 31 1993 1992 1991
Electric $684,618 $684,968 $671,643
Gas 259,462 226,579 220,242
Other Utility Assets* 44,245 47,578 41,722
-------- -------- --------
Total Utility Assets $988,325 $959,125 $933,607
======== ======== ========
*Other investments, miscellaneous accounts receivable, prepaid assets, deferred
pension costs, and unamortized debt, discount, and expense
The accompanying Notes to Financial Statements are an integral part of these
statements.
Environmental and Engineering Services Segment
For the Years Ended December 31 1993 1992 1991
(In thousands)
Revenue $123,162 $137,858 $127,627
Operating Expenses 124,289 132,407 126,537
-------- -------- --------
Operating Income (Loss) Before
Income Taxes $ (1,127) $ 5,451 $ 1,090
======== ======== ========
Depreciation and Amortization $ 6,064 $ 5,472 $ 5,031
Capital Expenditures $ 4,300 $ 6,804 $ 5,973
Environmental and Engineering Services
Identifiable Assets As of December 31 1993 1992 1991
Property, Plant and Equipment $23,116 $22,347 $19,475
Cost in Excess of Net Assets of Acquired
Businesses, net of amortization 25,251 26,551 27,270
Other Assets* 39,070 47,380 46,705
------- ------- -------
Total Environmental and
Engineering Services Assets $87,437 $96,278 $93,450
======= ======= =======
*Accounts receivable, unbilled revenues,
non-compete agreement, and other current
assets
Other Businesses Segment
For the Years Ended December 31 1993 1992 1991
Revenue $ 7,471 $ 9,628 $ 7,936
Gain on Sale of Subsidiary - - 11,575
Expenses 6,264 7,663 8,130
-------- ------- -------
Income Before Income Taxes $ 1,207 $ 1,965 $11,381
======== ======= =======
Other Businesses Identifiable
Assets As of December 31 1993 1992 1991
Leveraged Leases $114,803 $ 97,133 $101,586
Cash and Temporary Cash Investments 1,564 21,879 12,828
Other Assets 6,311 10,501 6,507
-------- -------- --------
Total Other Businesses Assets $122,678 $129,513 $120,921
======== ======== ========
The accompanying Notes to Financial Statements are an integral part of these
statements.
CILCORP INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of CILCORP Inc.
(CILCORP or Company), Central Illinois Light Company (CILCO), Environmental
Science & Engineering, Inc. (ESE) and CILCORP's other subsidiaries after
elimination of significant intercompany transactions. Prior year amounts
have been reclassified on a basis consistent with the 1993 presentation.
REGULATION
CILCO is a public utility subject to regulation by the Illinois Commerce
Commission (ICC) and the Federal Energy Regulatory Commission (FERC) with
respect to accounting matters, and maintains its accounts in accordance with
the Uniform System of Accounts prescribed by these agencies.
UTILITY OPERATING REVENUES, FUEL COSTS, AND COST OF GAS
Electric and gas revenues include service provided but unbilled at year end.
Substantially all electric rates and gas system sales rates of CILCO include
a fuel adjustment clause and a purchased gas adjustment clause, respectively.
These clauses provide for the recovery of changes in electric fuel costs,
excluding coal transportation, and changes in the cost of gas on a current
basis in billings to customers. CILCO adjusts the cost of fuel and cost of
gas to recognize over or under recoveries of allowable costs. The cumulative
effects are deferred in the Balance Sheet as a current asset or current
liability and adjusted by refunds or collections through future billings to
customers.
CONCENTRATION OF CREDIT RISK
CILCO, as a public utility, must provide service to customers within its
defined service territory and may not discontinue service to residential
customers when certain weather conditions exist. CILCO continually reviews
customers' creditworthiness and requests deposits or refunds deposits
based on that review. At December 31, 1993, CILCO had net receivables of
$34.2 million, of which approximately $4.9 million was due from its major
industrial customers.
See Note 5 for a discussion of receivables related to CILCORP's leveraged
lease portfolio.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of Cash and Temporary Cash Investments, Investment in
Marketable Securities and Other, Preferred Stock with Mandatory Redemption,
and Notes Payable approximates fair value, with the exception of the
Company's investment in Tucson Electric Power Company (TEP) stock and
warrants, which had a value at December 31, 1993 approximately $1.6 million
greater than its $266,000 carrying amount. At December 31, 1992, the
carrying amount of this investment was $1.6 million and its fair market value
was $2.9 million. The estimated fair value of the Company's Long-Term
Borrowings was $358 million at December 31, 1993, and $343 million at
December 31, 1992, based on current market interest rates for other companies
with comparable credit ratings, capital structures, and size.
ENVIRONMENTAL AND ENGINEERING SERVICES REVENUES
ESE performs professional environmental and engineering consulting services
under time and material, cost-plus, and fixed-price contracts. Consulting
services revenues include amounts for services provided but unbilled at year
end.
Revenues from time and material and cost-plus contracts are recognized as
costs are incurred. Revenues from fixed-price contracts are recognized under
the percentage-of-completion method.
DEPRECIATION AND MAINTENANCE
Provisions for depreciation of property for financial reporting purposes are
based on straight-line composite rates. The annual provisions for utility
plant depreciation, expressed as a percentage of average depreciable
property, were as follows:
1993 1992 1991
Electric 3.8% 3.8% 3.8%
Gas 4.6% 4.6% 4.6%
Maintenance and repair costs are charged directly to expense. Renewals of
units of property are charged to the utility plant account, and the original
cost of depreciable property replaced or retired, together with the removal
cost less salvage, is charged to the accumulated provision for depreciation.
Non-utility property is depreciated over estimated lives ranging from 5 to 30
years.
COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES
Cost in excess of net assets of acquired businesses is being amortized using
the straight-line method over forty years.
INCOME TAXES
The Company follows a policy of comprehensive interperiod income tax
allocation. Investment tax credits have been deferred and are amortized over
the estimated useful lives of the related property. CILCORP and its
subsidiaries file a consolidated federal income tax return. Income taxes
are allocated to the individual companies based on their respective taxable
income or loss.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
Consolidated Statements of Cash Flows.
Cash paid for interest and income taxes was as follows:
1993 1992 1991
(In thousands)
Interest $24,514 $27,425 $27,276
Income Taxes 14,760 16,207 23,822
During 1991, $18,979,000 of CILCORP convertible preferred stock was converted
to CILCORP common stock.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS AND HEALTH CARE
In November 1992, the Financial Accounting Standards Board (FASB) issued
Statement No. 112, "Employer's Accounting for Postemployment Benefits"
(SFAS 112). The Company will adopt SFAS 112 on January 1, 1994. This
accounting standard requires the accrual of a liability for certain benefits
other than pensions or health care provided to former or inactive employees.
The Company will record a pre-tax expense of approximately $1.1 million upon
adoption of SFAS 112 to establish the liability for these benefits.
PENSION BENEFITS
Substantially all of CILCO's full-time employees, including those assigned to
the Holding Company, are covered by trusteed, non-contributory defined benefit
pension plans. Benefits under these plans reflect the employee's years of
service, age at retirement, and maximum total compensation for any consecutive
sixty-month period prior to retirement.
Pension costs for the past three years were charged as follows:
1993 1992 1991
(In thousands)
Operating expenses $1,841 $1,995 $2,249
Utility plant and other 925 721 1,308
------ ------ ------
Total pension costs $2,766 $2,716 $3,557
====== ====== ======
Provisions for pension expense are determined under the rules prescribed by
Statement of Financial Accounting Standards No. 87, including the use of the
projected unit credit actuarial cost method.
Information on the plans' funded status, on an aggregate basis follows:
1993 1992
(In thousands)
Components of Net Periodic Pension Cost
Cost of pension benefits earned by employees $ 4,401 $ 4,405
Interest cost on projected benefit obligation 13,611 13,035
Actual return on plan assets (22,053) (12,216)
Net amortization and deferral 6,807 (2,508)
-------- ---------
Net pension costs $ 2,766 $ 2,716
======== =========
Actuarial present value of accumulated
benefit obligation
Vested benefits - employees' rights to receive
benefits no longer contingent upon continued
employment $157,570 $132,927
Non-vested benefits - employees' rights to receive
benefits contingent upon continued employment 7,793 6,628
-------- --------
Total benefit obligation $165,363 $139,555
======== ========
Funded Status of Plans: Pension Assets
and Obligations
Pension assets at fair market value $200,337 $183,838
Projected benefit obligation at present value (209,416) (174,332)
Unrecognized transition asset (8,765) (9,688)
Unrecognized prior service cost 11,687 12,772
Unrecognized net loss 20,110 1,130
-------- --------
Prepaid pension costs recorded on Balance Sheet $ 13,953 $ 13,720
======== ========
Rates used for calculations:
Discount rate 7.00% 8.00%
Expected rate of salary increase 5.00% 5.00%
Expected long-term rate of return 8.50% 8.50%
POSTEMPLOYMENT HEALTH CARE BENEFITS
Substantially all of CILCO's full-time employees, including those assigned to
the Holding Company, are currently covered by a trusteed, non-contributory
defined benefit postemployment health care plan. The plan pays stated
percentages of most necessary medical expenses incurred by retirees, after
subtracting payments by Medicare or other providers and after a stated
deductible has been met. Participants become eligible for the benefits if
they retire from CILCO after reaching age 55 with 10 or more years of
service.
ESE does not provide health care benefits to retired employees.
On January 1, 1991, CILCO adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" (SFAS 106), which requires that the expected cost of
postemployment health care benefits be charged to expense during the years in
which employees render service. CILCO has elected to amortize the unfunded
obligation at January 1, 1991, over a period of 18.6 years, which represents
the average remaining service period.
Postemployment health care benefit costs were charged as follows:
1993 1992 1991
(In thousands)
Operating expenses $5,767 $6,127 $5,770
Utility plant and other 2,060 2,098 2,374
------ ------ ------
Total postemployment
health care benefit costs $7,827 $8,225 $8,144
====== ====== ======
Information on the plans' funded status, on an aggregate basis follows:
1993 1992
(In thousands)
Accumulated postemployment health care
benefit obligation:
Retirees $44,340 $36,240
Other fully eligible participants 12,409 10,135
Other active participants 19,823 16,208
------- -------
Total accumulated postemployment
health care benefit obligation $76,572 $62,583
Less:
Unrecognized actuarial loss 13,093 3,137
Unrecognized transition obligation 44,588 47,447
Plan assets at fair value 18,748 11,855
------- ------
Accrued postemployment health
care benefit cost liability $ 143 $ 144
======= =======
The components of net postemployment health care
benefit costs are:
Service cost - benefits
attributed to service during
the period $ 1,194 $ 1,096
Actual return on plan assets (1,732) (1,120)
Interest cost on accumulated
postemployment health care
benefit obligation 4,873 4,639
Amortization of transition
obligation over 18.6 years 2,858 2,858
Other net amortization and deferral 634 752
------- -------
Net postemployment health care
benefit costs $ 7,827 $ 8,225
======= =======
For measurement purposes, a health care cost trend rate of 9% annually was
assumed for 1994; the rate was assumed to decrease to 8% for 1995, then
decrease gradually to 6% by 2020 and remain at that level thereafter.
Increasing the assumed health care cost trend rate by 1% in each year would
increase the accumulated postemployment benefit obligation at
December 31, 1993, by $5.2 million and the aggregate of the service and
interest cost components of net postemployment health care cost for 1993 by
$376,000. The discount rate used in determining the accumulated
postemployment benefit obligation at December 31, 1993, was 7% and at
December 31, 1992, was 8%. The weighted average expected return on assets
net of taxes was 8.1%, where taxes are assumed to decrease return by 0.4%.
COMPANY-OWNED LIFE INSURANCE POLICIES
The following amounts related to company-owned life insurance contracts,
issued by one major insurance company, are included in Investments and
Other Property.
1993 1992
(In thousands)
Cash surrender value of contracts $26,186 $22,423
Borrowings against contracts 24,923 13,361
------- -------
Net investment $ 1,263 $ 9,062
======= =======
Interest expense related to borrowings against company-owned life insurance,
included in "Other" on the Consolidated Statements of Income, was $1.4
million, $930,000 and $870,000 for 1993, 1992 and 1991.
NOTE 2: INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109), on January 1, 1993, and accounted
for its initial application as a cumulative change in accounting principle.
SFAS 109 requires the use of the liability method to account for income
taxes. Under the liability method, deferred income taxes are recognized at
currently enacted income tax rates to reflect the tax effect of temporary
differences between the financial reporting basis and the tax basis of assets
and liabilities. Temporary differences occur because the income tax law
either requires or permits certain items to be reported on the Company's
income tax return in a different year than they are reported in the financial
statements. Adoption of SFAS 109 did not have a material impact on the
Company's financial position, results of operations or cash flows; however,
the adoption of SFAS 109 required reclassification of accumulated deferred
income taxes on the balance sheet. CILCO established a regulatory liability
to account for the net effect of expected future regulatory actions related
to unamortized investment tax credits, income tax liability initially
recorded at tax rates in excess of current rates, the equity component of
Allowance for Funds Used During Construction, and other items for which
deferred taxes had not previously been provided.
The temporary differences related to the consolidated net deferred income tax
liability at December 31, 1993, and January 1, 1993, were as follows:
December 31, 1993 January 1, 1993
Deferred Tax Liabilities: (In thousands)
Property, including allowance for
funds used during construction $216,897 $216,190
Leveraged leases 80,129 74,850
Other 14,427 10,586
Deferred Tax Assets:
Other (12,079) (8,585)
Net Regulatory Liabilities of
Regulated Subsidiary (69,477) (74,321)
-------- --------
Net deferred income tax liability $229,897 $218,720
======== ========
Of the $11,177,000 increase in the consolidated net deferred income tax
liability from January 1, 1993 to December 31, 1993, $6,309,000 is due to
current year deferred federal and state income tax expense. The remaining
increase is primarily the result of a decrease in the net regulatory
liability.
Income Tax expenses were as follows:
Years Ended December 31, 1993 1992 1991
(In thousands)
Current income taxes
Federal $10,102 $22,153 $20,917
State 3,352 4,077 4,399
------- ------- -------
Total current 13,454 26,230 25,316
------- ------- -------
Deferred income taxes, net
Property-related deferred
income taxes (2,316) 249 1,289
Leveraged leases 5,257 (1,742) 7,359
Unbilled revenue 758 - (2,464)
Gas take-or-pay settlements 1,413 (1,679) (1,318)
Coal tar remediation costs 120 (952) 894
Other 1,077 398 294
------- ------- -------
Total deferred income taxes,
net 6,309 (3,726) 6,054
------- ------- -------
Investment tax credit amortization (1,694) (1,694) (1,694)
------- ------- -------
Total income tax provisions $18,069 $20,810 $29,676
======= ======= =======
Total deferred income taxes, net, include deferred state income taxes of
$1,827,000, $236,000 and $2,148,000, for 1993, 1992 and 1991.
The following table represents a reconciliation of the effective tax rate
with the statutory federal income tax rate.
1993 1992 1991
Statutory federal income tax rate 35.0% 34.0% 34.0%
---- ---- ----
Equity component of AFUDC
not subject to taxation - (.1) (.2)
Depreciation differences for
which deferred taxes
have not been provided 1.0 .8 .8
Amortization of investment
tax credit (3.3) (3.2) (2.4)
State income taxes 7.1 5.4 6.3
Excess of book over tax basis of
assets, net of capital
loss carryforward .5 .5 2.5
Preferred dividends of subsidiary
and other permanent differences 2.5 2.8 2.2
Dividends received deduction (.1) - (.1)
Leveraged lease adjustment (5.3) 3.2 -
Other differences (2.6) (4.4) (1.2)
---- ---- ----
Total (0.2) 5.0 7.9
---- ---- ----
Effective income tax rate 34.8% 39.0% 41.9%
==== ==== ====
NOTE 3: FEDERAL INCOME TAX AUDIT SETTLEMENT
In December 1990, the Internal Revenue Service (IRS) completed a review of
the Company's 1985 and 1986 consolidated federal income tax returns. The IRS
proposed to disallow depreciation deductions claimed in 1985 and 1986 for
assets purchased and leased to four lessees during those years by CLM or
CLM's wholly-owned subsidiaries (collectively CLM). The IRS asserted that
these transactions were financing arrangements and that CLM did not own the
properties for federal income tax purposes. Alternatively, the IRS contended
that one of the properties, the Springerville Unit No. 1 generating
station, should be depreciated over 15 years rather than 5 years. The
potential tax deficiency from the depreciable life issue was $9.4 million,
plus interest, for 1985-1993.
In January 1991, the Company protested the proposed adjustments to the
Appeals Division of the IRS, and in December 1993, the Company and the IRS
entered into a closing agreement settling the disputed issues. The IRS
recognized the Company as owner of the properties and allowed it to
depreciate a significant portion of the Springerville Unit No. 1 generating
station over five years. To reflect the settlement, the Company reduced its
1993 income tax expense by $3.1 million to reverse income tax expense which
it had recorded in prior years to reflect the potential unfavorable
resolution of this dispute.
NOTE 4: SHORT-TERM DEBT
Short-term debt at December 31, 1993, consisted of $18.8 million of Holding
Company bank borrowings and $12.4 million of CILCO commercial paper.
Short-term debt at December 31, 1992, included $24.5 million of commercial
paper and $4.8 million of other notes payable.
CILCO had arrangements for bank lines of credit totalling $30 million at
December 31, 1993, all of which were unused. These lines of credit consisted
of $6.65 million maintained by compensating balances and $23.35 million
maintained by commitment fees ranging from 1/16 to 3/16 of 1% per annum in
lieu of balances. The compensating bank balance arrangements provide that
CILCO maintain bank deposits to average annually 3% to 5% of the line, such
balances being available to CILCO for operating purposes and as compensation
to the bank for other bank services. These bank lines of credit also support
CILCO's issuance of commercial paper.
At December 31, 1993, ESE had a $1 million bank line of credit to provide for
working capital needs. In addition, ESE had a $5 million bank line of
credit, of which $2.6 million was used at year-end, to collateralize
performance bonds issued by insurance companies.
NOTE 5: LEVERAGED LEASE INVESTMENTS
The Company, through subsidiaries of CIM is a lessor in seven leveraged lease
arrangements under which mining equipment, electric production facilities,
warehouses, office buildings, passenger railway equipment and an aircraft are
leased to third parties. The economic lives and lease terms vary with the
leases. CIM's share of total equipment and facilities cost was approximately
$305 million and $239 million at December 31, 1993 and 1992.
During 1993, CIM invested $13 million, net of non-recourse debt, in leveraged
leases of passenger railway equipment and an aircraft (see Capital Resources
and Liquidity-Other Businesses).
The cost of the equipment and facilities owned by CIM is partially financed
by non-recourse debt provided by lenders, who have been granted as their
sole remedy in the event of a lessee default an assignment of rents due under
the leases and a security interest in the leased property. Such
debt amounted to $229 million at December 31, 1993, and $180 million at
December 31, 1992. Leveraged lease residual value assumptions, which are
conservative in relation to independently appraised residual values, are
tested on a periodic basis.
The Company's net investment in leveraged leases at December 31, 1993 and 1992
is shown below:
1993 1992
(In thousands)
Minimum lease payments receivable $122,869 $107,379
Estimated residual value 94,368 84,369
Less: Unearned income 102,434 94,615
-------- --------
Investment in lease financing
receivables 114,803 97,133
Less: Deferred taxes arising from
leveraged leases 80,129 74,850
-------- --------
Net investment in leveraged leases $ 34,674 $ 22,283
======== ========
The table above includes CLM's approximately 7% investment in the Springerville
Unit No. 1 electric generating station, which is leased pursuant to TEP's
comprehensive financial restructuring plan that was consummated in December
1992.
NOTE 6: PREFERRED STOCK
PREFERRED STOCK OF SUBSIDIARY
At December 31 1993 1992
(In thousands)
Preferred stock, cumulative
$100 par value, authorized 1,500,000 shares
Without Mandatory Redemption
4.50% series - 111,264 shares $11,126 $11,126
4.64% series - 79,940 shares 7,994 7,994
7.56% series - 170,000 shares - 17,000
7.72% series - 135,000 shares - 13,500
8.28% series - 150,000 shares - 15,000
Class A, no par value, authorized 3,500,000 shares
Flexible Auction Rate - 250,000 shares (a) 25,000 -
With Mandatory Redemption
5.85% series - 220,000 shares 22,000 -
------- -------
Total preferred stock $66,120 $64,620
======= =======
(a) Dividend rate at December 31, 1993 was 2.62%.
All classes of preferred stock are entitled to receive cumulative dividends and
rank equally as to dividends and assets, according to their respective terms.
The total annual dividend requirement for preferred stock outstanding at
December 31, 1993, is $2.8 million, assuming a continuation of the auction
dividend rate at December 31, 1993, for the flexible auction rate series.
PREFERRED STOCK WITHOUT MANDATORY REDEMPTION
The call provisions of preferred stock redeemable at CILCO's option outstanding
at December 31, 1993, are as follows:
Series Callable Price Per Share (plus accrued dividends)
4.50% $110
4.64% $102
Flexible auction rate $100
PREFERRED STOCK WITH MANDATORY REDEMPTION
CILCO's 5.85% Class A preferred stock may be redeemed in 2003 at $100 per
share. A mandatory redemption fund must be established on July 1, 2003. The
fund will provide for the redemption of 11,000 shares for $1.1 million on July 1
of each year through July 1, 2007. On July 1, 2008, the remaining 165,000
shares will be retired for $16.5 million.
PREFERENCE STOCK OF SUBSIDIARY, CUMULATIVE
No Par Value, Authorized 2,000,000 shares, of which none have been issued.
PREFERRED STOCK OF HOLDING COMPANY
No Par Value, Authorized 4,000,000 shares, of which none were outstanding
at December 31, 1993 and 1992.
NOTE 7: LONG-TERM DEBT
AT DECEMBER 31 1993 1992
(In thousands)
CILCO First Mortgage Bonds
5 1/8% series due 1996 $ 16,000 $ 16,000
5 1/2% series due 1997 20,000 20,000
7 7/8% series due 2001 - 30,000
7 5/8% series due 2002 - 25,000
7 1/2% series due 2007 50,000 50,000
8 1/5% series due 2022 65,000 65,000
Medium-Term Notes
5.7% series due 1998 10,650 -
6.4% series due 2000 30,000 -
6.82% series due 2003 25,350 -
7.8% series due 2023 10,000 -
Pollution Control Series A,
$20,000,000 6.2%
due 2004, with a sinking
fund commencing in 1995 - 20,000
Pollution Control Series B, 6 1/8% due
2008, with a sinking fund commencing
in 2000 - 12,000
Pollution Control Refunding Series F, 6.5% due 2010 5,000 5,000
Pollution Control Refunding Series G, 6.2% due 2012 1,000 1,000
Pollution Control Refunding Series E, 6.5% due 2018 14,200 14,200
Pollution Control Refunding Series H, 5.9% due 2023 32,000 -
-------- --------
279,200 258,200
Unamortized premium and discount on long-term
debt, net (879) (839)
-------- --------
Total CILCO $278,321 $257,361
======== ========
CILCORP LEASE MANAGEMENT INC.
Unsecured financial institution
borrowings; interest rates of
8.30% to 9.55%; maturities by year
are as follows:
1995 18,000 18,000
1997 3,000 3,000
------ ------
Total CLM 21,000 21,000
====== ======
CILCORP Inc.
Unsecured medium-term notes; varying
in term from 2 years to 8 years;
interest rates ranging from 8.25% to
9.10%. 26,000 26,000
Other 390 3,267
-------- --------
Total long-term debt $325,711 $307,628
======== ========
The first mortgage bonds of CILCO are secured by a lien on substantially all
of its property and franchises. Unamortized borrowing expense, premium and
discount on outstanding long-term debt are being amortized over the lives of
the respective issues.
Total consolidated maturities of long-term debt for 1995-1998 are $21
million, $19 million, $23 million, and $22 million, respectively.
The 1994 maturities of long-term borrowings have been classified as current
liabilities.
NOTE 8: COMMITMENTS & CONTINGENCIES
CILCO's capital expenditures for 1994 are estimated to be $90 million, in
connection with which CILCO has normal and customary purchase commitments at
December 31, 1993.
CILCO's policy is to act as a self-insurer for certain insurable risks
resulting from employee health and life insurance programs.
ESE's capital expenditures for 1994 are estimated to be $5 million, in
connection with which ESE has normal and customary purchase commitments at
December 31, 1993.
ESE's policy is to act as a self-insurer for certain insurable risks
resulting from employee health programs and professional liability claims.
In August 1990, CILCO entered into a firm, wholesale bulk power purchase
agreement with CIPS. This agreement, which expires in 1998, provides for an
initial purchase of 30 MW of capacity, increasing to 90 MW in 1997. CILCO
can increase purchases to a maximum of 100 MW during the contract period,
provided CIPS then has the additional capacity available. In November 1992,
CILCO entered into a limited-term power agreement to purchase 100 MW of CIPS'
capacity from June 1998 through May 2002. At CILCO's request, purchases may
be increased to a maximum of 150 MW during the contract period, provided CIPS
has the additional capacity available.
Reference is made to Management's Discussion and Analysis of Financial
Condition and Results of Operations, Environmental Matters (regarding former
gas manufacturing sites) for a discussion of that item and Gas Operations,
for a discussion of contingencies related to CILCO's Springfield gas system.
NOTE 9: RATE MATTERS
Reference is made to Management's Discussion and Analysis of Financial
Condition and Results of Operations, Gas Rate Increase Request, Environmental
Matters, Electric Competition, Gas Take-or-Pay, and Liquefied Natural Gas
Settlement for a discussion of gas and electric rate matters.
NOTE 10: LEASES
The Company and its subsidiaries lease certain equipment, buildings, and
other facilities under capital and operating leases. Several of the
operating leases provide that the Company pay taxes, maintenance and other
occupancy costs applicable to these premises.
Minimum future rental payments under non-cancelable capital and operating
leases having remaining terms in excess of one year as of December 31, 1993,
are $35.3 million in total. Payments due during the years ending December
31, 1994, through December 31, 1998, are $8.5 million; $5.7 million; $5.0
million; $4.3 million; and $3.5 million, respectively.
NOTE 11: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
The following quarterly operating results are unaudited, but, in the opinion
of management, include all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of CILCORP Inc.'s operating
results for the periods indicated. The results of operations for each of
the fiscal quarters are not necessarily comparable to, or indicative of,
the results of an entire year due to the seasonal nature of the Company's
business and other factors. The sums of earnings per average common share
for the four quarters of 1992 do not equal the totals for the year because
the average number of shares outstanding changed.
For the Three Months Ended March 31 June 30 September 30 December 31
(In thousands except per share amounts)
1993
Revenue $164,923 $125,695 $141,740 $152,153
Income before income taxes 15,401 6,965 21,270 8,276
Net income 9,334 4,008 12,645 7,596
Earnings per average
common share $.72 $.31 $.98 $.59
1992
Revenue $159,741 $126,657 $137,004 $157,823
Income before income taxes 12,043 10,335 19,433 11,544
Net income 7,617 6,569 12,587 5,324
Earnings per average
common share $.59 $.51 $.98 $.41
MANAGEMENT'S REPORT
The accompanying financial statements and notes for CILCO and its consolidated
subsidiaries have been prepared by management in accordance with generally
accepted accounting principles. Estimates and judgments used in developing
these statements are the responsibility of management. Financial data
presented throughout this report is consistent with these statements.
CILCO maintains a system of internal accounting controls which management
believes is adequate to provide reasonable assurance as to the integrity of
accounting records and the protection of assets. Such controls include
established policies and procedures, a program of internal audit, and the
careful selection and training of qualified personnel.
The financial statements have been audited by CILCO's independent accountants,
Arthur Andersen & Co. Their audit was conducted in accordance with generally
accepted auditing standards and included an assessment of selected internal
accounting controls only to determine the scope of their audit procedures.
The report of the auditors is contained in this Form 10-K annual report.
The Audit Committee of the CILCORP Inc. Board of Directors, consisting solely
of outside directors, meets periodically with the independent public
accountants, internal auditors and management to review accounting, auditing,
internal accounting control, and financial reporting matters. The auditors
have direct access to the Audit Committee.
R. W. Slone
R. W. Slone
Chairman of the Board, President
and Chief Executive Officer
T. S. Romanowski
T. S. Romanowski
Vice President and Chief Financial
Officer
R. L. Beetschen
R. L. Beetschen
Controller and Manager of
Accounting
February 4, 1994
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Central Illinois Light Company:
We have audited the accompanying consolidated balance sheets of Central
Illinois Light Company (an Illinois corporation) and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of income,
cash flows, segments of business, and retained earnings for each of the three
years in the period ended December 31, 1993. These financial statements and
the schedules referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Central Illinois Light
Company and subsidiaries as of December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1993 in conformity with generally accepted
accounting principles.
As explained in Note 2 effective January 1, 1993, the Company changed its
method of accounting for income taxes. As explained in Note 1, effective
January 1, 1991, the Company changed its method of accounting for
postemployment health care benefits.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedules
listed in Item 14(a)2 are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not a required part of the
basic financial statements. These financial statement schedules have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
February 4, 1994
CENTRAL ILLINOIS LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31 1993 1992 1991
(In thousands)
OPERATING REVENUES
Electric $303,124 $288,813 $306,189
Gas 150,754 144,926 148,413
-------- -------- --------
TOTAL OPERATING REVENUES 453,878 433,739 454,602
-------- -------- --------
OPERATING EXPENSES
Cost of Fuel 92,112 94,133 100,775
Cost of Gas 79,022 77,123 81,138
Purchased Power 8,754 4,295 6,368
Other Operation Expenses 77,125 71,692 70,432
Maintenance 30,648 28,561 28,209
Depreciation and Amortization 53,023 51,395 49,545
Income Taxes 22,226 19,829 23,643
State and Local Taxes on Revenue 19,417 17,823 17,628
Other Taxes 11,364 11,288 10,841
-------- -------- --------
TOTAL OPERATING EXPENSES 393,691 376,139 388,579
-------- -------- --------
OPERATING INCOME 60,187 57,600 66,023
-------- -------- --------
OTHER INCOME AND DEDUCTIONS
Cost of Equity Funds Capitalized (23) 122 303
CILCO-owned Life Insurance, Net (516) (142) (167)
Other, Net 262 1,626 897
-------- -------- --------
TOTAL OTHER INCOME AND DEDUCTIONS (277) 1,606 1,033
-------- -------- --------
INCOME BEFORE INTEREST EXPENSE 59,910 59,206 67,056
-------- -------- --------
INTEREST EXPENSE
Interest on Long-term Debt 19,753 20,747 21,285
Cost of Borrowed Funds Capitalized (222) (215) (147)
Other 2,701 3,038 1,687
-------- -------- --------
TOTAL INTEREST EXPENSE 22,232 23,570 22,825
-------- -------- --------
NET INCOME 37,678 35,636 44,231
-------- -------- --------
DIVIDENDS ON PREFERRED STOCK 4,043 4,441 4,441
-------- -------- --------
NET INCOME AVAILABLE FOR COMMON STOCK $ 33,635 $ 31,195 $ 39,790
======== ======== ========
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these statements.
CENTRAL ILLINOIS LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31 1993 1992
(In thousands)
UTILITY PLANT
At Original Cost
Electric $1,068,818 $1,042,844
Gas 348,541 327,642
---------- ----------
1,417,359 1,370,486
Less - Accumulated Provision for Depreciation 618,912 592,603
---------- ----------
798,447 777,883
Construction Work in Progress 31,896 25,477
Plant Acquisition Adjustments, Net of Amortization 4,068 4,780
---------- ----------
TOTAL UTILITY PLANT 834,411 808,140
OTHER PROPERTY AND INVESTMENTS
Cash surrender value of CILCO-owned life
insurance (net of related policy loans of
$24,923 in 1993 and $13,361 in 1992) 1,263 9,062
Other 1,056 1,165
---------- ----------
TOTAL OTHER PROPERTY AND INVESTMENTS 2,319 10,227
---------- ----------
CURRENT ASSETS
Cash and Temporary Cash Investments 594 1,776
Receivables, Less Reserves of $585 and $799 34,197 35,710
Accrued Unbilled Revenue 25,111 24,791
Fuel, at Average Cost 8,323 9,158
Materials and Supplies, at Average Cost 16,674 17,957
Gas in Underground Storage, at Average Cost 24,548 16,821
Prepaid Taxes 856 6,566
Other 6,945 2,675
---------- ----------
TOTAL CURRENT ASSETS 117,248 115,454
---------- ----------
DEFERRED DEBITS
Unamortized Loss on Reacquired Debt 6,950 5,606
Unamortized Debt Expense 2,185 1,769
Prepaid Pension Cost 13,953 13,720
Other 11,259 10,775
---------- ----------
TOTAL DEFERRED DEBITS 34,347 31,870
---------- ----------
TOTAL ASSETS $ 988,325 $ 965,691
========== ==========
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these balance sheets.
CENTRAL ILLINOIS LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
December 31 1993 1992
(In thousands)
CAPITALIZATION
Common Shareholder's Equity
Common Stock, no par value; Authorized 20,000,000
shares; Outstanding 13,563,871 $185,661 $185,661
Retained Earnings 108,645 92,433
-------- --------
Total Common Shareholder's Equity 294,306 278,094
Preferred Stock Without Mandatory Redemption 44,120 64,620
Preferred Stock With Mandatory Redemption 22,000 -
Long-term Debt 278,321 257,361
-------- --------
TOTAL CAPITALIZATION 638,747 600,075
-------- --------
CURRENT LIABILITIES
Current Maturities of Long-term Debt - 9,375
Notes Payable 12,400 24,500
Accounts Payable 40,971 34,873
Accrued Taxes 6,083 3,454
Accrued Interest 8,616 7,941
PGA Over-Recoveries 3,268 10,600
Level Payment Plan 2,944 2,615
Other 5,106 5,097
-------- --------
TOTAL CURRENT LIABILITIES 79,388 98,455
-------- --------
DEFERRED LIABILITIES AND CREDITS
Accumulated Deferred Income Taxes 144,969 214,264
Net Regulatory Liability 69,477 -
Investment Tax Credits 27,871 29,565
Capital Lease Obligation 2,954 -
Other 24,919 23,332
-------- --------
TOTAL DEFERRED LIABILITIES AND CREDITS 270,190 267,161
-------- --------
TOTAL CAPITALIZATION AND LIABILITIES $988,325 $965,691
======== ========
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these balance sheets.
CENTRAL ILLINOIS LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31 1993 1992 1991
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including preferred dividends $ 37,678 $ 35,636 $ 44,231
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 53,734 52,108 50,257
Deferred taxes, investment tax credits
and regulatory tax liability, net (1,512) (4,157) (1,364)
Decrease (increase) in accounts receivable 1,513 (232) (3,860)
(Increase) decrease in fuel, materials and
supplies, and gas in underground storage (5,609) (2,591) 3,765
(Increase) decrease in unbilled revenue (320) (2,336) 4,069
Decrease (increase) in prepaid taxes 5,710 2,461 (7,311)
Increase in accounts payable 6,098 5,716 873
Increase (decrease) in accrued taxes
and interest 3,304 476 (90)
Decrease in other assets and liabilities,
net (8,771) 7,599 6,595
-------- --------- --------
Net cash provided by operating activities 91,825 94,680 97,165
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (72,580) (61,701) (56,488)
Cost of equity funds capitalized 23 (122) (303)
Other 2,581 (5,113) (9,053)
-------- --------- --------
Net cash used in investing activities (69,976) (66,936) (65,844)
-------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common dividends paid (15,878) (31,787) (45,969)
Preferred dividends paid (4,043) (4,441) (4,441)
Long-term debt issued 107,269 133,001 -
Preferred stock issued 46,006 - -
Long-term debt retired (97,756) (140,318) -
Preferred stock retired (46,051) - -
Payments on capital lease obligation (478) - (64)
(Decrease) increase in short-term borrowing (12,100) 13,000 11,500
-------- --------- --------
Net cash used in financing activities (23,031) (30,545) (38,974)
-------- --------- --------
Net (decrease) in cash and temporary cash
investments (1,182) (2,801) (7,653)
Cash and temporary cash investments at
beginning of year 1,776 4,577 12,230
-------- --------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT DECEMBER 31 $ 594 $ 1,776 $ 4,577
======== ========= ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of cost of borrowed
funds capitalized) $ 20,271 $ 20,690 $ 22,541
Income taxes 13,198 23,838 31,471
The accompanying Notes to the Consolidated Financial Statements are an integral part of
these statements.
CENTRAL ILLINOIS LIGHT COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31 1993 1992 1991
(In thousands)
BALANCE BEGINNING OF YEAR $ 92,433 $ 93,025 $ 99,204
ADD
Net Income 37,678 35,636 44,231
-------- -------- --------
Total 130,111 128,661 143,435
======== ======== ========
DEDUCT
Cash Dividends Declared
Preferred Stock
$100 Par Value
4 1/2% Series (annual rate $4.50
per share) 501 501 501
4.64% Series (annual rate $4.64
per share) 371 371 371
5.85% Series (annual rate $5.85
per share) 725 - -
7.56% Series (annual rate $7.56
per share) 668 1,285 1,285
7.72% Series (annual rate $7.72
per share) 686 1,042 1,042
8.28% Series (annual rate $8.28
per share) 817 1,242 1,242
Flexible Auction Rate Series (rate at
December 31, 1993 was 2.62%) 275 - -
Common Stock, No Par Value 15,878 31,787 45,969
-------- -------- --------
Total Dividends Declared 19,921 36,228 50,410
Capital Stock Expense 720 - -
Excess of stated value over purchase
price of 135,000 shares 7.72% Series
preferred stock and 150,000 shares
8.28% Series preferred stock retired
in 1993 825 - -
-------- -------- --------
21,466 36,228 50,410
-------- -------- --------
BALANCE END OF YEAR $108,645 $ 92,433 $ 93,025
======== ======== ========
The accompanying Notes to the Consolidated Financial Statements are an
integral part of these statements.
CENTRAL ILLINOIS LIGHT COMPANY
CONSOLIDATED STATEMENTS OF SEGMENTS OF BUSINESS
OPERATING INFORMATION
For the Years Ended December 31 1993 1992 1991
(In thousands)
ELECTRIC OPERATIONS:
Revenue $303,124 $288,813 $306,189
Expenses 253,995 243,734 253,542
-------- -------- --------
Operating Income 49,129 45,079 52,647
Income Taxes 17,542 15,747 19,175
-------- -------- --------
Operating Income Before Income Taxes $ 66,671 $ 60,826 $ 71,822
======== ======== ========
Depreciation and Amortization $ 38,337 $ 37,465 $ 36,266
Capital Expenditures $ 41,880 $ 41,821 $ 42,246
GAS OPERATIONS:
Revenue $150,754 $144,926 $148,413
Expenses 139,696 132,405 135,037
-------- -------- --------
Operating Income 11,058 12,521 13,376
Income Taxes 4,684 4,082 4,468
-------- -------- --------
Operating Income Before Income Taxes $ 15,742 $ 16,603 $ 17,844
======== ======== ========
Depreciation and Amortization $ 14,686 $ 13,930 $ 13,279
Capital Expenditures $ 30,677 $ 20,001 $ 14,545
MAJOR CUSTOMER
For the Years Ended December 31 1993 1992 1991
(In thousands)
Caterpillar Inc.
Electric Revenue $39,831 13.1% $38,428 13.3% $42,474 13.9%
Gas Revenue 1,581 1.0 1,847 1.3 2,181 1.5
------- ---- ------- ---- ------- ----
Total $41,412 9.1% $40,275 9.3% $44,655 9.8%
======= ==== ======= ==== ======= ====
IDENTIFIABLE ASSETS
As of December 31 1993 1992 1991
(In thousands)
Electric $684,618 $684,968 $671,643
Gas 259,462 226,579 220,242
Other Utility Assets (1) 44,245 54,144 50,749
-------- -------- --------
Total Utility Assets $988,325 $965,691 $942,634
======== ======== ========
(1) Other investments, miscellaneous accounts receivable, prepaid assets,
deferred pension costs, and unamortized debt, discount and expenses.
The accompanying Notes to the Consolidated Financial Statements are an integral
part of these statements.
CENTRAL ILLINOIS LIGHT COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of CILCO include the accounts of CILCO
and its subsidiaries, CILCO Exploration and Development Corporation and CILCO
Energy Corporation. CILCO is a subsidiary of CILCORP Inc. In accordance with
FERC Order 529, sales of electricity for resale, which had been previously
recorded as an offset to purchased power expense, have been reclassified to
electric revenues. Prior year amounts have been reclassified on a basis
consistent with the 1993 presentation.
REGULATION
CILCO is subject to regulation by the ICC and the FERC with respect to
accounting matters and maintains its accounts in accordance with the Uniform
System of Accounts prescribed by these agencies.
OPERATING REVENUES, FUEL COSTS, AND COST OF GAS
Electric and gas revenues include service provided but unbilled at year end.
Substantially all electric rates and gas system sales rates include a fuel
adjustment clause and a purchased gas adjustment clause, respectively. These
clauses provide for the recovery of changes in electric fuel costs, excluding
coal transportation, and in the cost of gas on a current basis in billings to
customers. CILCO adjusts the cost of fuel and cost of gas to recognize over
or under recoveries of allowable costs. The cumulative effects are deferred
in the Balance Sheet as a current asset or current liability and adjusted by
refunds or collections through future billings to customers.
CONCENTRATIONS OF CREDIT RISK
CILCO, as a public utility, is required to provide service to customers within
its defined service territory and is precluded from discontinuing service to
residential customers when certain weather conditions exist. CILCO
continually reviews customers' credit worthiness and requests deposits or
refunds deposits based on that review.
At December 31, 1993 CILCO had net receivables of $34.2 million, of which
approximately $4.9 million was due from its major industrial customers.
TRANSACTIONS WITH AFFILIATES
CILCO, which is a subsidiary of CILCORP, incurs certain corporate expenses
such as legal, shareholder and accounting fees on behalf of CILCORP and its
other subsidiaries. These expenses are billed monthly to CILCORP and its
other subsidiaries based on specific identification of costs except for
shareholder-related costs which are based on the relative equity percentages
of CILCORP and its subsidiary corporations. A return on CILCO assets used by
CILCORP and its other subsidiaries is also calculated and billed monthly.
Total billings to CILCORP and its other subsidiaries amounted to $2.3 million,
$3.3 million and $4 million, in 1993, 1992 and 1991, respectively.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
The allowance, representing the cost of equity and borrowed funds used to
finance construction, is capitalized as a component of the cost of utility
plant. The amount of the allowance varies depending on the rate used and the
size and length of the construction program. The Uniform System of Accounts
defines AFUDC, a non-cash item, as the net cost for the period of construction
of borrowed funds used for construction purposes and a reasonable rate upon
other funds when so used. On the income statement, the cost of borrowed funds
capitalized is reported as a reduction of total interest expense and the cost
of equity funds capitalized is reported as other income. In accordance with
the FERC formula, the composite AFUDC rates used in 1993, 1992 and 1991 were
3.5%, 5.7% and 10.6%, respectively.
DEPRECIATION AND MAINTENANCE
Provisions for depreciation for financial reporting purposes are based on
straight-line composite rates. The annual provisions expressed as a
percentage of average depreciable property were as follows:
1993 1992 1991
Electric 3.8% 3.8% 3.8%
Gas 4.6% 4.6% 4.6%
Maintenance and repair costs are charged directly to expense. Renewals of
units of property are charged to the utility plant account, and the original
cost of depreciable property replaced or retired, together with the removal
cost less salvage, is charged to the accumulated provision for depreciation.
INCOME TAXES
CILCO follows a policy of comprehensive interperiod income tax allocation.
Investment tax credits (except for amounts applicable to the Employee Stock
Ownership Plan) have been deferred and are amortized over the estimated useful
lives of the related property. CILCORP and its subsidiaries file a
consolidated federal income tax return. Income taxes are allocated to the
individual companies, including CILCO, based on their respective taxable
income or loss.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CILCO considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents for purposes of the
Consolidated Statements of Cash Flows.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS AND HEALTH CARE
In November 1992, the Financial Accounting Standards Board (FASB) issued
Statement No. 112, "Employer's Accounting for Postemployment Benefits"
(SFAS 112). CILCO will adopt SFAS 112 on January 1, 1994. This standard
requires accrual of benefits other than pensions or health care provided to
former or inactive employees. The cumulative effect to CILCO of initially
applying SFAS 112 will be a pre-tax charge of approximately $1 million in
January 1994, a portion of which will be capitalized.
PENSION BENEFITS
Substantially all of CILCO's full-time employees, including those assigned to
the Holding Company, are covered by trusteed, non-contributory defined benefit
pension plans. Benefits under these plans reflect the employee's years of
service, age at retirement and maximum total compensation for any consecutive
sixty-month period prior to retirement.
Pension costs for the past three years were charged as follows:
1993 1992 1991
(In thousands)
Operating expenses $1,841 $1,995 $2,249
Utility plant and other 925 721 1,308
------ ------ ------
Net pension costs $2,766 $2,716 $3,557
====== ====== ======
Provisions for pension costs were determined under the rules prescribed by
Statement of Financial Accounting Standards No. 87, including the use of the
projected unit credit actuarial cost method.
Information on the plans' funded status, on an aggregate basis, at
December 31, 1993 and 1992 follows:
1993 1992
(In thousands)
Components of Net Periodic Pension Cost:
Cost of pension benefits earned by employees $ 4,401 $ 4,405
Interest cost on projected benefit obligation 13,611 13,035
Actual return on plan assets (22,053) (12,216)
Net amortization and deferral 6,807 (2,508)
--------- ---------
Net pension costs $ 2,766 $ 2,716
========= =========
Actuarial present value of accumulated benefit
obligation:
Vested benefits - employees' rights to receive
benefits no longer contingent upon continued
employment $ 157,570 $ 132,927
Non-vested benefits - employees' rights to
receive benefits contingent upon continued
employment 7,793 6,628
--------- ---------
Total benefit obligation $ 165,363 $ 139,555
========= =========
Funded Status of Plans: Pension Assets and
Obligations
Pension assets at fair market value $ 200,337 $ 183,838
Projected benefit obligation at present value (209,416) (174,332)
Unrecognized transition asset (8,765) (9,688)
Unrecognized prior service cost 11,687 12,772
Unrecognized net loss 20,110 1,130
--------- ---------
Prepaid pension costs recorded on Balance Sheet $ 13,953 $ 13,720
========= =========
Rates used for calculations:
Discount rate 7.00% 8.00%
Expected rate of salary increase 5.00% 5.00%
Expected long-term rate of return 8.50% 8.50%
POSTEMPLOYMENT HEALTH CARE BENEFITS
Substantially all of CILCO's full-time employees, including those assigned to
the Holding Company, are currently covered by a trusteed, non-contributory
defined benefit postemployment health care plan. The plan pays stated
percentages of most necessary medical expenses incurred by retirees, after
subtracting payments by Medicare or other providers and after a stated
deductible has been met. Participants become eligible for the benefits if
they retire from CILCO after reaching age 55 with 10 or more years of service.
On January 1, 1991, CILCO adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). This standard requires that the expected cost of
postemployment health care benefits be charged to expense during the years in
which employees render service. CILCO has elected to amortize the unfunded
obligation at January 1, 1991, over a period of 18.6 years, which represents
the average remaining service period.
Postemployment health care benefit costs were charged as follows:
1993 1992 1991
(In thousands)
Operating expenses $5,767 $6,127 $5,770
Utility plant and other 2,060 2,098 2,374
------ ------ ------
Net postemployment health care benefit costs $7,827 $8,225 $8,144
====== ====== ======
Information on the plans' funded status, on an aggregate basis at
December 31, 1993 and 1992, follows:
1993 1992
(In thousands)
Accumulated postemployment health care benefit
obligation:
Retirees $44,340 $36,240
Other fully eligible participants 12,409 10,135
Other active participants 19,823 16,208
------- -------
Total accumulated postemployment health care benefit
obligation $76,572 $62,583
Less:
Unrecognized actuarial loss 13,093 3,137
Unrecognized transition obligation 44,588 47,447
Plan assets at fair value 18,748 11,855
------- -------
Accrued postemployment health care benefit cost
liability $ 143 $ 144
======= =======
The components of net postemployment health care
benefit costs are:
Service cost - benefits attributed to
service during the period $ 1,194 $ 1,096
Actual return on plan assets (1,732) (1,120)
Interest cost on accumulated postemployment
health care benefit obligation 4,873 4,639
Amortization of transition obligation over
18.6 years 2,858 2,858
Other net amortization and deferral 634 752
------- -------
Net postemployment health care benefit costs $ 7,827 $ 8,225
======= =======
For measurement purposes, a health care cost trend rate of 9% annually was
assumed for 1994; the rate was assumed to decrease to 8% for 1995, then
decrease gradually to 6% by 2020 and remain at that level thereafter.
Increasing the assumed health care cost trend rate by 1% in each year would
increase the accumulated postemployment benefit obligation at December 31,
1993, by $5.2 million and the aggregate of the service and interest cost
components of net postemployment health care cost for 1993 by $376,000. The
discount rate used in determining the accumulated postemployment benefit
obligation at December 31, 1993 was 7% and at December 31, 1992 was 8%. The
weighted average expected return on assets net of taxes was 8.1% where taxes
are assumed to decrease return by 0.4%.
CILCO-OWNED LIFE INSURANCE POLICIES
The following amounts related to CILCO-owned life insurance contracts, with
one major insurance company, are recorded on the consolidated balance sheets:
1993 1992
(In thousands)
Cash surrender value of contracts $26,186 $22,423
Borrowings against contracts 24,923 13,361
------- -------
Net $ 1,263 $ 9,062
======= =======
Interest expense for CILCO-owned life insurance borrowings included in
CILCO-owned Life Insurance, Net in the Consolidated Statements of Income was
$1.4 million, $930,000 and $870,000 for 1993, 1992 and 1991, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of Cash and Temporary Cash Investments, Other Investments,
and Notes Payable approximates fair value. At December 31, 1993 and 1992,
CILCO had $278.3 million and $266.7 million, respectively, in long-term debt,
including current maturities, consisting of first mortgage bonds, pollution
control bonds, and medium-term notes, recorded on the Balance Sheet. The
estimated fair value of these financial instruments at December 31, 1993 and
1992 is $305.2 million and $267.3 million, respectively, based on current
market interest rates for other companies with comparable credit ratings,
capital structures, and size.
NOTE 2: INCOME TAX EXPENSE
CILCO adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109), on January 1, 1993, and accounted for its
initial application as a cumulative change in accounting principle. SFAS 109
requires the use of the liability method to account for income taxes. Under
the liability method, deferred income taxes are recognized at currently
enacted income tax rates to reflect the tax effect of temporary differences
between the financial reporting basis and the tax basis of assets and
liabilities. Temporary differences occur because the income tax law either
requires or permits certain items to be reported on CILCO's income tax return
in a different year than they are reported in the financial statements.
Adoption of SFAS 109 did not have a material impact on CILCO's financial
position, results of operations or cash flows; however, the adoption of SFAS
109 required reclassification of accumulated deferred income taxes on the
balance sheet. CILCO established a regulatory liability to account for the
net effect of expected future regulatory actions related to unamortized
investment tax credits, income tax liability initially recorded at tax rates
in excess of current rates, the equity component of Allowance for Funds Used
During Construction, and other items for which deferred taxes had not
previously been provided.
The temporary differences related to CILCO's net deferred income tax liability
at December 31, 1993, and January 1, 1993, were as follows:
December 31, 1993 January 1, 1993
(In thousands)
Deferred Tax Liabilities:
Property, including allowance for
funds used during construction $213,056 $212,891
Other 11,835 8,302
Deferred Tax Assets:
Other (10,446) (6,931)
Net Regulatory Liabilities (69,477) (74,321)
-------- --------
Net deferred income tax liability $144,968 $139,941
======== ========
Of the $5,027,000 increase in the net deferred income tax liability from
January 1, 1993 to December 31, 1993, $182,000 is due to current year deferred
federal and state income tax expense. The remaining increase is primarily the
result of a decrease in the net regulatory liability.
Income taxes were as follows:
For the Years Ended December 31 1993 1992 1991
(In thousands)
Current operating income taxes
Federal $18,510 $19,254 $20,008
State 4,860 4,363 4,679
------- ------- -------
Total operating current taxes 23,370 23,617 24,687
------- ------- -------
Deferred operating income taxes, net
Depreciation and amortization (1,786) (1,243) (962)
Repair allowance 168 (431) (46)
Borrowed component of AFUDC 76 (70) (70)
Capitalized overhead costs (888) (867) (732)
Removal costs 2,471 2,238 1,366
Call premiums 2,623 - -
Gas take-or-pay settlements 1,413 (1,679) (1,318)
Gas Storage Field (2,856) 12 378
Postemployment health care costs - - 593
Coal tar remediation costs 120 (952) 894
Other (791) 898 547
------- ------- -------
Total operating deferred taxes 550 (2,094) 650
------- ------- -------
Investment tax credits
utilized, net of amortization (1,694) (1,694) (1,694)
------- ------- -------
Total operating income taxes 22,226 19,829 23,643
------- ------- -------
Income taxes included in other
income and expense, net (1,859) (2,106) (1,314)
------- ------- -------
Total income taxes $20,367 $17,723 $22,329
======= ======= =======
Total deferred income taxes, net, include deferred state income taxes of
$332,000, $435,000 and $775,000 for 1993, 1992 and 1991, respectively.
1993 1992 1991
Effective income tax rate 37.7% 36.2% 35.9%
---- ---- ----
Equity component of AFUDC not
subject to taxation - .1 .2
Depreciation differences for
which deferred taxes
have not been provided (1.0) (.9) (.9)
Amortization of investment
tax credit 3.1 3.5 2.7
CILCO-owned life insurance .6 .5 .4
State income taxes (6.2) (6.3) (5.7)
Other differences .8 .9 1.4
---- ---- ----
Total (2.7) (2.2) (1.9)
---- ---- ----
Statutory federal income tax rate 35.0% 34.0% 34.0%
==== ==== ====
NOTE 3: SHORT-TERM FINANCING ARRANGEMENTS
CILCO had arrangements for bank lines of credit totaling $30 million at
December 31, 1993, all of which were unused. These lines of credit consisted
of $6.65 million maintained by compensating balances and $23.35 million
maintained by commitment fees ranging from 1/16 to 3/16 of 1% per annum in
lieu of balances. The compensating bank balance arrangements provide that
CILCO maintain bank deposits to average annually from 3% to 5% of the line,
such balances being available to CILCO for operating purposes and as
compensation to the bank for other bank services. These bank lines of credit
are also used to support CILCO's issuance of commercial paper. Short-term
borrowings consisted of commercial paper totaling $12.4 million at
December 31, 1993.
NOTE 4: RETAINED EARNINGS
CILCO's Articles of Incorporation provide that no dividends shall be paid on
the common stock if, at the time of declaration, the balance of retained
earnings does not equal at least two times the annual dividend requirement on
all outstanding shares of preferred stock. The amount of retained earnings so
required at December 31, 1993 was $5.6 million.
NOTE 5: PREFERRED STOCK
December 31 1993 1992
(In thousands)
PREFERRED STOCK, CUMULATIVE
$100 Par Value, Authorized 1,500,000 Shares
Without Mandatory Redemption
4.50% Series - 111,264 Shares $11,126 $11,126
4.64% Series - 79,940 Shares 7,994 7,994
7.56% Series - 170,000 Shares - 17,000
7.72% Series - 135,000 Shares - 13,500
8.28% Series - 150,000 Shares - 15,000
Class A, No Par Value, Authorized
3,500,000 Shares
Flexible Auction Rate - 250,000 Shares(a) 25,000 -
With Mandatory Redemption
5.85% Series - 220,000 Shares 22,000 -
------- -------
Total Preferred Stock $66,120 $64,620
======= =======
(a) Dividend rate at December 31, 1993 was 2.62%.
All classes of preferred stock are entitled to receive cumulative dividends
and rank equally as to dividends and assets, according to their respective
terms.
The total annual dividend requirement for preferred stock outstanding at
December 31, 1993 is $2.8 million, assuming the auction dividend rate at
December 31, 1993 for the flexible auction rate series.
Preferred Stock Without Mandatory Redemption
The call provisions of preferred stock redeemable at CILCO's option
outstanding at December 31, 1993 are as follows:
Series Callable Price Per Share (plus accrued dividends)
4.50% $110
4.64% $102
Flexible Auction Rate $100
Preferred Stock With Mandatory Redemption
CILCO's 5.85% Class A preferred stock may be redeemed in 2003 at $100 per
share. A mandatory redemption fund must be established on July 1, 2003. The
fund will provide for the redemption of 11,000 shares for $1.1 million on July
1 of each year through July 1, 2007. On July 1, 2008, the remaining 165,000
shares will be retired for $16.5 million.
NOTE 6: LONG-TERM DEBT
December 31 1993 1992
(In thousands)
LONG-TERM DEBT (excluding current maturities)
First Mortgage Bonds
5 1/8% Series Due 1996 $ 16,000 $ 16,000
5 1/2% Series Due 1997 20,000 20,000
7 7/8% Series Due 2001 - 30,000
7 5/8% Series Due 2002 - 25,000
7 1/2% Series Due 2007 50,000 50,000
8 1/5% Series Due 2022 65,000 65,000
Medium-Term Notes
5.7% Series Due 1998 10,650 -
6.4% Series Due 2000 30,000 -
6.82% Series Due 2003 25,350 -
7.8% Series Due 2023 10,000 -
Pollution Control Series A,
$20,000,000 6.2% Due 2004,
with a sinking fund commencing
in 1995 - 20,000
Pollution Control Series B, 6 1/8% Due
2008, with a sinking fund commencing
in 2000 - 12,000
Pollution Control Refunding Series F,
6 1/2% Due 2010 5,000 5,000
Pollution Control Refunding Series G,
6.2% Due 2012 1,000 1,000
Pollution Control Refunding Series E,
6 1/2% Due 2018 14,200 14,200
Pollution Control Refunding Series H,
5.9% Due 2023 32,000 -
-------- --------
Total First Mortgage Bonds 279,200 258,200
Unamortized Premium and Discount on Long-
Term Debt, Net (879) (839)
-------- --------
TOTAL LONG-TERM DEBT $278,321 $257,361
======== ========
CILCO's first mortgage bonds are secured by a lien on substantially all
property and franchises. Unamortized borrowing expense, call premiums,
premium and discount on outstanding long-term debt are being amortized over
the lives of the respective issues.
Scheduled maturities of long-term debt for the five-year period ending
December 31, 1998 are $16 million due in 1996, $20 million due in 1997 and
$10.65 million due in 1998.
NOTE 7: COMMITMENTS & CONTINGENCIES
CILCO's capital expenditures for utility plant for 1994 are estimated to be
$90 million, in connection with which CILCO has normal and customary purchase
commitments at December 31, 1993.
It is the policy of CILCO to act as a self-insurer for certain insurable risks
resulting from employee health and life insurance programs.
In August 1990, CILCO entered into a firm, wholesale bulk power purchase
agreement with Central Illinois Public Service Company (CIPS). This
agreement, which expires in 1998, provides for an initial purchase of 30
megawatts (MW) of capacity, increasing to 90 MW in 1997. CILCO can increase
purchases to a maximum of 100 MW during the contract period, provided CIPS
then has the additional capacity available. In November 1992, CILCO entered
into a limited-term power agreement to purchase 100 MW of CIPS' capacity from
June 1998 through May 2002. At CILCO's request, purchases may be increased to
a maximum of 150 MW during the contract period, provided CIPS has the
additional capacity available.
Reference is made to the following sections in Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operation for a discussion
of additional commitments and contingencies: Environmental Matters (regarding
former gas manufacturing sites) and Gas Operations for a discussion regarding
contingencies related to CILCO's Springfield gas system.
NOTE 8: RATE MATTERS
Reference is made to Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations, Gas Rate Increase Request, Environmental
Matters, Electric Competition, and Gas Take-or-Pay Charges for a discussion of
gas and electric rate matters.
NOTE 9: LEASES
CILCO leases certain equipment, buildings, and other facilities under capital
and operating leases. Minimum future rental payments under non-cancelable
capital and operating leases having remaining terms in excess of one year as
of December 31, 1993, are $24 million in total. Payments due during the years
ending December 31, 1994 through December 31, 1998, are $5.2 million;
$3.1 million; $2.9 million; $2.9 million; and $2.9 million, respectively.
NOTE 10: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
The following quarterly consolidated operating results are unaudited, but, in
the opinion of management, include all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of CILCO's operating
results for the periods indicated (see Note 1). The results of operations for
each of the fiscal quarters are not necessarily comparable or necessarily
indicative of the results of an entire year due to, among other factors, the
seasonal nature of CILCO's business.
For the Three Months Ended March 31 June 30 September 30 December 31
(In thousands)
1993
Operating revenue $133,234 $94,184 $109,800 $116,660
Operating income 16,978 11,358 19,855 11,996
Net income 11,303 5,862 14,052 6,461
1992
Operating revenue $122,523 $91,578 $100,212 $119,426
Operating income 16,332 11,701 18,012 11,555
Net income 9,922 7,053 12,512 6,149
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
CILCORP
Not applicable.
CILCO
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
CILCORP
The information required by Item 10 relating to directors is set forth in the
Company's definitive proxy statement for its 1994 Annual Meeting of
Stockholders filed with the Commission pursuant to Regulation 14A. Such
information is incorporated herein by reference to the material appearing
under the caption "Election of Directors" on pages 3 through 11 of such proxy
statement. Information required by Item 10 relating to executive officers of
the Company is set forth under a separate caption in Part I hereof.
CILCO
The information required by Item 10 relating to directors is set forth in
CILCO's definitive proxy statement for its 1994 Annual Meeting of Stockholders
filed with the Commission pursuant to Regulation 14A. Such information is
incorporated herein by reference to the material appearing under the caption
"Election of Directors" on pages 2 through 7 of such proxy statement.
Information required by Item 10 relating to executive officers of CILCO is set
forth under a separate caption in Part I hereof.
Item 11. Executive Compensation
CILCORP
The Company has filed with the Commission a definitive proxy statement
pursuant to Regulation 14A. The information required by Item 11 is
incorporated herein by reference to the material appearing under the caption
"Executive Compensation" on pages 13 through 19 of such proxy statement.
CILCO
CILCO has filed with the Commission a definitive proxy statement pursuant to
Regulation 14A. The information required by Item 11 is incorporated herein by
reference to the material appearing under the caption "Executive Compensation"
on pages 8 through 13 of such proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
CILCORP
The Company has filed with the Commission a definitive proxy statement
pursuant to Regulation 14A. The information required by Item 12 is
incorporated herein by reference to the material appearing under the caption
"Voting Securities and Principal Holders" on pages 2 through 4 of such proxy
statement.
CILCO
CILCO has filed with the Commission a definitive proxy statement pursuant to
Regulation 14A. The information required by Item 12 is incorporated herein by
reference to the material appearing under the caption "Voting Securities and
Principal Holders" on pages 1 and 2 of such proxy statement.
Item 13. Certain Relationships and Related Transactions
CILCORP
CILCORP Inc. (CILCORP or Company), a holding company, is the parent of its
subsidiaries Central Illinois Light Company (CILCO), CILCORP Development
Services Inc., CILCORP Investment Management Inc., CILCORP Ventures Inc., and
Environmental Science & Engineering, Inc. (ESE). In the course of business,
the Company carries on certain relations with affiliated companies such as
shared facilities, utilization of employees and other business transactions.
Central Illinois Light Company is reimbursed at cost by the Company and the
other subsidiaries for any services it provides.
ESE and the Holding Company entered into an agreement to consolidate ESE's
outstanding debt. Under this agreement, ESE can draw on a $15 million
revolving line of credit which expires May 2, 1996. ESE also borrowed $20
million from the Holding Company on a term credit basis with the principal due
May 2, 1998.
Additionally, at December 31, 1993, ESE had borrowed $20.9 million from
CILCORP.
At December 31, 1993, CILCORP guaranteed $21 million of outstanding debt of
CILCORP Lease Management Inc. CILCORP receives a fee for the guarantee.
CIM has guaranteed the performance of CIM Leasing Inc. and CIM Air Leasing
Inc. with respect to certain obligations arising from the leveraged lease
investments held by these subsidiaries.
CILCO
Certain members of the Board of Directors of CILCORP Inc. are also members of
the Board of Directors of CILCO and the secretary of CILCO is also a Vice
President of CILCORP Inc.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
CILCORP
Page No.
Form 10-K
(a) 1. Financial Statements
The following are included herein:
Management's Report 50
Report of Independent Public Accountants 51
Consolidated Statements of Income for the three years
ended December 31, 1993 52-53
Consolidated Balance Sheets as of December 31, 1993 and
December 31, 1992 54-55
Consolidated Statements of Cash Flows for the three
years ended December 31, 1993 56-57
Consolidated Statements of Common Stockholders' Equity
for the three years ended December 31, 1993 58
Consolidated Statements of Segments of Business for
the three years ended December 31, 1993 59-61
Notes to the Consolidated Financial Statements 62-77
(a) 2. Financial Statement Schedules
The following schedules are included herein.
Schedule V - Property, Plant and Equipment for the
three years ended December 31, 1993 109-114
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant
and Equipment for the three years
ended December 31, 1993 115-120
Schedule VIII - Valuation and Qualifying Accounts
and Reserves 121
Schedule IX - Short-term Borrowings for the three
years ended December 31, 1993 122
Schedule XIII -Investment in Leveraged Leases at
December 31, 1993 123
Other schedules are omitted because of the absence of conditions under which
they are required or because the required information is given in the
financial statements or notes thereto.
(a) 3. Exhibits
*(3) Articles of Incorporation (Designated in Form 10-K for the year ended
December 31, 1991, File No. 1-8946, as Exhibit (3)).
*(3)a By-laws as amended December 4, 1990 (Designated in Form 10-K for the
year ended December 31, 1990, File No. 1-8946, as Exhibit (3)a).
*(4) Indenture of Mortgage and Deed of Trust between Illinois Power
*** Company and Bankers Trust Company, as Trustee, dated as of April 1,
1933, Supplemental Indenture between the same parties dated as of
June 30, 1933, Supplemental Indenture between the Company and Bankers
Trust Company, as Trustee, dated as of July 1, 1933 and Supplemental
Indenture between the same parties dated as of January 1, 1935,
securing First Mortgage Bonds, and indentures supplemental to the
foregoing through January 1, 1993. (Designated in Registration No.
2-1937 as Exhibit B-1, in Registration No. 2-2093 as Exhibit B-1(a),
in Form 8-K for April 1940, File No. 1-2732-2, as Exhibit A, in Form
8-K for December 1949, File No. 1-2732-2, as Exhibit A, in Form 8-K
for December 1951, File No. 1-2732, as Exhibit A, in Form 8-K for
July 1957, File No. 1-2732, as Exhibit A, in Form 8-K for July 1958,
File No. 1-2732, as Exhibit A, in Form 8-K for March 1960, File No.
1-2732, as Exhibit A, in Form 8-K for September 1961, File No.
1-2732, as Exhibit B, in Form 8-K for March 1963, File No. 1-2732, as
Exhibit A, in Form 8-K for February 1966, File No. 1-2732, as Exhibit
A, in Form 8-K for March 1967, File No. 1-2732, as Exhibit A, in Form
8-K for August 1970, File No. 1-2732, as Exhibit A, in Form 8-K for
September 1971, File No. 1-2732, as Exhibit A, in Form 8-K for
September 1972, File No. 1-2732, as Exhibit A, in Form 8-K for April
1974, File No. 1-2732, as Exhibit 2(b), in Form 8-K for June 1974,
File No. 1-2732, as Exhibit A, in Form 8-K for March 1975, File No.
1-2732, as Exhibit A, in Form 8-K for May 1976, File No. 1-2732, as
Exhibit A, in Form 10-Q for the quarter ended June 30, 1978, File No.
1-2732, as Exhibit 2, in Form 10-K for the year ended December 31,
1982, File No. 1-2732, as Exhibit (4)(b), in Form 8-K dated January
30, 1992, File No. 1-2732, as Exhibit (4) and in Form 8-K dated
January 29, 1993, File No. 1-2732, as Exhibit (4).)
*(4)a Supplemental Indenture dated August 1, 1993.
(10) CILCO Executive Deferral Plan as amended through February 22, 1994.
*(10)a Executive Deferral Plan II (Designated in Form 10-K for the
year ended December 31, 1989, File No. 1-8946, as Exhibit (10)b).
*(10)b Economic Value Added Incentive Compensation Plan (Designated in Form
10-K for the year ended December 31, 1989, File No. 1-8946, as
Exhibit (10)c).
*(10)c CILCO Compensation Protection Plan (Designated in Form 10-K for the
year ended December 31, 1990, File No. 1-8946, as Exhibit (10)d).
*(10)d CILCO Benefit Replacement Plan (Designated in Form 10-K for the year
ended December 31, 1991, File No. 1-8946, as Exhibit (10)e).
*(10)e Deferred Compensation Stock Plan (Designated in Form 10-K for the
year ended December 31, 1991, File No. 1-8946, as Exhibit (10)f).
*(10)f Shareholder Return Incentive Compensation Plan (included as part of
Company's definitive proxy in 1993 Anuual Meeting of Stockholders,
filed with the Commission on March 26,1993.)
(12) Computation of Ratio of Earnings to Fixed Charges
*(13) Annual Report to Security Holders
(24) Consent of Arthur Andersen & Co.
(25) Power of Attorney
**(b) Reports on Form 8-K
A Form 8-K was filed on December 17, 1993, to disclose an agreement
between CILCO and one of its largest customers to develop a
cogeneration plant.
A Form 8-K was filed on December 31, 1993, to disclose CILCORP Inc.,
through its wholly-owned subsidiary, CILCORP Investment Management
Inc., (CIM), acquired a 40% partnership interest in a McDonnell
Douglas MD-11F cargo plane through a leveraged lease transaction.
The plane will be leased to a U. S. corporation which will use it in
its fleet operations.
A Form 8-K was filed on January 14, 1994, to disclose CILCO's filing
with the Illinois Commerce Commission (ICC) to increase gas base
rates.
*These exhibits have been previously filed with the Securities and Exchange
Commission (SEC) as exhibits to registration statements or to other filings
of CILCO with the SEC and are incorporated herein as exhibits by reference.
The file number and exhibit number of each such exhibit (where applicable)
are stated in the description of such exhibit.
***Pursuant to Paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K, the
Company has not filed as an exhibit to this Form 10-K any instrument with
respect to long-term debt as the total amount of securities authorized
thereunder does not exceed 10 percent of the total assets of the Company
and its subsidiaries on a consolidated basis, but hereby agrees to furnish
to the SEC on request any such instruments.
CILCO
Page No.
Form 10-K
(a) 1. Financial Statements
The following are included herein:
Management's Report 78
Report of Independent Public Accountants 79
Consolidated Statements of Income for the three years
ended December 31, 1993 80
Consolidated Balance Sheets as of December 31, 1993 and
December 31, 1992 81-82
Consolidated Statements of Cash Flows for the three
years ended December 31, 1993 83-84
Consolidated Statements of Retained Earnings for the
three years ended December 31, 1993 85
Consolidated Statements of Segments of Business for
the three years ended December 31, 1993 86-87
Notes to the Consolidated Financial Statements 88-100
(a) 2. Financial Statement Schedules
The following schedules are included herein:
Schedule II - Amounts Receivable from Related Parties
and Underwriters, Promoters and
Employees Other Than Related Parties 124
Schedule V - Property, Plant and Equipment for the
three years ended December 31, 1993 125-130
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and
Equipment for the three years ended
December 31, 1993 131-136
Schedule VIII - Valuation and Qualifying Accounts and
Reserves for the three years ended
December 31, 1993 137
Schedule IX - Short-Term Borrowings for the
three years ended December 31, 1993 138
Other schedules are omitted because of the absence of conditions under which
they are required or because the required information is given in the
financial statements or notes thereto.
(a) 3. Exhibits
*(3) Articles of Incorporation. (Designated in Form 10-K for the fiscal
year ended December 31, 1980, File No. 1-2732, as Exhibit 3).
*(3)a Bylaws. (Designated in Form 10-K for the year ended December 31,
1990, File No. 1-2732, as Exhibit (3) a).
*(4) Indenture of Mortgage and Deed of Trust between Illinois Power
Company and Bankers Trust Company, as Trustee, dated as of April 1,
1933, Supplemental Indenture between the same parties dated as of
June 30, 1933, Supplemental Indenture between the Company and
Bankers Trust Company, as Trustee, dated as of July 1, 1933 and
Supplemental Indenture between the same parties dated as of January
1, 1935, securing First Mortgage Bonds, and indentures supplemental
to the foregoing through January 1, 1993. (Designated in
Registration No. 2-1937 as Exhibit B-1, in Registration No. 2-2093
as Exhibit B-1(a), in Form 8-K for April 1940, File No. 1-2732-2, as
Exhibit A, in Form 8-K for December 1949, File No. 1-2732-2, as
Exhibit A, in Form 8-K for December 1951, File No. 1-2732, as
Exhibit A, in Form 8-K for July 1957, File No. 1-2732, as Exhibit A,
in Form 8-K for July 1958, File No. 1-2732, as Exhibit A, in Form
8-K for March 1960, File No. 1-2732, as Exhibit A, in Form 8-K for
September 1961, File No. 1-2732, as Exhibit B, in Form 8-K for March
1963, File No. 1-2732, as Exhibit A, in Form 8-K for February 1966,
File No. 1-2732, as Exhibit A, in Form 8-K for March 1967, File No.
1-2732, as Exhibit A, in Form 8-K for August 1970, File No. 1-2732,
as Exhibit A, in Form 8-K for September 1971, File No. 1-2732, as
Exhibit A, in Form 8-K for September 1972, File No. 1-2732, as
Exhibit A, in Form 8-K for April 1974, File No. 1-2732, as Exhibit
2(b), in Form 8-K for June 1974, File No. 1-2732, as Exhibit A, in
Form 8-K for March 1975, File No. 1-2732, as Exhibit A, in Form 8-K
for May 1976, File No. 1-2732, as Exhibit A, in Form 10-Q for the
quarter ended June 30, 1978, File No. 1-2732, as Exhibit 2, in Form
10-K for the year ended December 31, 1982, File No. 1-2732, as
Exhibit (4)(b), in Form 8-K dated January 30, 1992, File No. 1-2732,
as Exhibit (4) and in Form 8-K dated January 29, 1993, File No.
1-2732, as Exhibit (4).)
*(4)a Supplemental Indenture dated August 1, 1993.
(10) Executive Deferral Plan as amended February 2, 1994. (Designated in
Form 10-K for the year ended December 31, 1993, File No. 1-8946, as
Exhibit (10).)
*(10)a Executive Deferral Plan II. (Designated in Form 10-K for the year
ended December 31, 1989, File No. 1-2732, as Exhibit (10)b.)
*(10)b Compensation Protection Plan. (Designated in Form 10-K for the year
ended December 31, 1990, File No. 1-2732, as Exhibit (10)c.)
*(10)c Deferred Compensation Stock Plan. (Designated in Form 10-K for the
year ended December 31, 1990, File No. 1-2732, as Exhibit (10)d.)
*(10)d Economic Value Added Incentive Compensation Plan. (Designated in
Form 10-K for the year ended December 31, 1990, File No. 1-2732, as
Exhibit (10)e.)
*(10)e Benefit Replacement Plan. (Designated in Form 10-K for the year
ended December 31, 1991, File No. 1-2732, as Exhibit (10)f.)
*(10)f Shareholder Return Incentive Compensation Plan
(12) Computation of Ratio of Earnings to Fixed Charges
(25) Power of Attorney
(b) Reports on Form 8-K
A Form 8-K was filed on December 17, 1993 to disclose an agreement
between CILCO and one of its largest customers to develop a
cogeneration plant.
A Form 8-K was filed on January 14, 1994 to disclose CILCO's filing
with the Illinois Commerce Commission (ICC) to increase gas base
rates.
*These exhibits have been previously filed with the Securities and Exchange
Commission (SEC) as exhibits to registration statements or to other filings
of CILCO with the SEC and are incorporated herein as exhibits by reference.
The file number and exhibit number of each such exhibit (where applicable)
are stated in the description of such exhibit.
Schedule V
Page 1 of 6
CILCORP INC. AND SUBSIDIARY COMPANIES
Property, Plant and Equipment at Original Cost
Year Ended December 31, 1993
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning of Additions Other End of
Period at Changes Period
Classification January 1, 1993 Cost Retirements Add (Deduct) December 31, 1993
(Thousands of dollars)
Electric Utility Plant:
In Service -
Intangible $ 633 $ - $ - $ - $ 633
Steam production 459,695 4,338 4,084 - 459,949
Other production 5,995 53 - - 6,048
Transmission 86,475 545 366 - 86,654
Distribution 446,660 27,834 4,564 12 469,942
General 23,888 1,795 1,755 (14) 23,914
Held for future use 443 - - - 443
Construction work in progress 19,046 6,572 - - 25,618
Plant acquisition adjustment 12,462 - - - 12,462
---------- ------- ------- ------ ----------
1,055,297 41,137 10,769 (2) 1,085,663
---------- ------- ------- ------ ----------
Gas Utility Plant:
In Service -
Intangible 30 - - - 30
Storage 37,913 571 134 - 38,350
Transmission 48,798 1,207 194 (38) 49,773
Distribution 216,917 27,440 9,810 38 234,585
General 11,280 1,089 723 - 11,646
Construction work in progress 4,165 (126) - - 4,039
Plant acquisition adjustment 6,206 - - - 6,206
---------- ------- ------- ------ ----------
325,309 30,181 10,861 - 344,629
---------- ------- ------- ------ ----------
Schedule V
Page 2 of 6
Common Utility Plant:
In Service 31,759 1,265 869 3,237 35,392
Construction work in progress 2,266 (27) - - 2,239
---------- ------- ------- ------- ----------
34,025 1,238 869 3,237 37,631
---------- ------- ------- ------- ----------
Other: 27,573 5,704 636 - 32,641
---------- ------- ------- ------- ----------
Total: $1,442,204 $78,260 $23,135 $ 3,235 $1,500,564
========== ======= ======= ======= ==========
Schedule V
Page 3 of 6
CILCORP INC. AND SUBSIDIARY COMPANIES
Property, Plant and Equipment at Original Cost
Year Ended December 31, 1992
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning of Additions Other End of
Period at Changes Period
Classification January 1, 1992 Cost Retirements Add (Deduct) December 31, 1992
(Thousands of dollars)
Electric Utility Plant:
In Service -
Intangible $ 633 $ - $ - $ - $ 633
Steam production 456,138 7,781 4,391 167 459,695
Other production 6,332 - 331 (6) 5,995
Transmission 87,322 73 73 (847) 86,475
Distribution 422,054 27,796 4,076 886 446,660
General 23,232 2,497 1,847 6 23,888
Held for future use 443 - - - 443
Construction work in progress 16,523 2,523 - - 19,046
Plant acquisition adjustment 12,462 - - - 12,462
---------- ------- ------- ----- ----------
1,025,139 40,670 10,718 206 1,055,297
---------- ------- ------- ----- ----------
Gas Utility Plant:
In Service -
Intangible 30 - - - 30
Storage 37,929 304 319 (1) 37,913
Transmission 48,453 363 16 (2) 48,798
Distribution 203,900 15,265 2,250 2 216,917
General 11,197 798 716 1 11,280
Construction work in progress 1,662 2,503 - - 4,165
Plant acquisition adjustment 6,206 - - - 6,206
---------- ------- ------- ----- ----------
309,377 19,233 3,301 - 325,309
---------- ------- ------- ----- ----------
Schedule V
Page 4 of 6
Common Utility Plant:
In Service 31,303 868 412 - 31,759
Construction work in progress 1,214 1,052 - - 2,266
---------- ------- ------- ----- ----------
32,517 1,920 412 - 34,025
---------- ------- ------- ----- ----------
Other 32,885 7,260 447 (12,125) 27,573
---------- ------- ------- ------- ----------
Total $1,399,918 $69,083 $14,878 $(11,919) $1,442,204
========== ======= ======= ======= ==========
Schedule V
Page 5 of 6
CILCORP INC. AND SUBSIDIARY COMPANIES
Property, Plant and Equipment at Original Cost
Year Ended December 31, 1991
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning of Additions Other End of
Period at Changes Period
Classification January 1, 1991 Cost Retirements Add (Deduct) December 31, 1991
(Thousands of dollars)
Electric Utility Plant:
In Service -
Intangible $ 633 $ - $ - $ - $ 633
Steam production 450,177 8,065 1,907 (197) 456,138
Other production 6,299 33 - - 6,332
Transmission 84,759 2,750 120 (67) 87,322
Distribution 401,069 24,152 3,371 204 422,054
General 22,551 1,985 1,311 7 23,232
Held for future use 424 - 47 66 443
Construction work in progress 12,746 3,777 - - 16,523
Plant acquisition adjustment 12,462 - - - 12,462
---------- ------- ------- ----- ----------
991,120 40,762 6,756 13 1,025,139
---------- ------- ------- ----- ----------
Gas Utility Plant:
In Service -
Intangible 30 - - - 30
Storage 37,505 845 419 (2) 37,929
Transmission 47,666 847 68 8 48,453
Distribution 192,762 12,622 1,466 (18) 203,900
General 10,942 938 698 15 11,197
Construction work in progress 3,358 (1,696) - - 1,662
Plant acquisition adjustment 6,206 - - - 6,206
---------- ------- ------- ----- ----------
298,469 13,556 2,651 3 309,377
---------- ------- ------- ----- ----------
Schedule V
Page 6 of 6
Common Utility Plant:
In Service 32,660 1,307 2,583 (81) 31,303
Construction work in progress 48 1,166 - - 1,214
---------- ------- ------- ----- ----------
32,708 2,473 2,583 (81) 32,517
---------- ------- ------- ------- ----------
Other: 26,347 6,538 - - 32,885
---------- ------- ------- ----- ----------
Total $1,348,644 $63,329 $11,990 $ (65) $1,399,918
========== ======= ======= ===== ==========
Schedule VI
Page 1 of 6
CILCORP INC. AND SUBSIDIARY COMPANIES
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
Year Ended December 31, 1993
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance at
Beginning Charged Charged Deductions Changes End of
of Period to to Other Retirements Cost of Add Period
Description January 1, 1993 Income Accounts(1) at Cost Removal (Deduct) December 31, 1993
(Thousands of dollars)
Accumulated provision for
depreciation and amortization
of plant and equipment:
Electric
Production $203,569 $15,896 $ 17 $ 4,084 $2,649 $ - $212,749
Transmission 43,054 2,350 - 366 (25) - 45,063
Distribution 182,890 18,590 504 4,564 1,282 - 196,138
General 10,751 507 1,397 1,755 558 - 10,342
-------- ------- ------ ------- ------- --- --------
440,264 37,343 1,918 10,769 4,464 - 464,292
-------- ------- ------ ------- ------- --- --------
Gas
Intangible 17 - - - - - 17
Storage 16,940 1,400 - 135 13 - 18,192
Transmission 24,180 1,213 34 194 20 - 25,213
Distribution 98,026 11,236 10 9,810 2,389 - 97,073
General 4,833 173 719 723 - - 5,002
-------- ------- ------ ------- ------ --- --------
143,996 14,022 763 10,862 2,422 - 145,497
-------- ------- ------ ------- ------ --- --------
Common 8,343 1,657 - 869 8 - 9,123
-------- ------- ------ ------- ------ --- --------
Other 4,017 5,057 - 606 - - 8,468
-------- ------- ------ ------- ------ --- --------
Total $596,620 $58,079 $2,681 $23,106 $6,894 - $627,380
======== ======= ====== ======= ====== === ========
Schedule VI
Page 2 of 6
Accumulated provision for
amortization of acquisition
adjustments:
Electric $ 9,180 $ 498 $ - $ - $ - $ - $ 9,678
Gas 4,708 214 - - - - 4,922
-------- ------- ------ ------- ------ --- --------
Total $ 13,888 $ 712 $ - $ - $ - $ - $ 14,600
======== ======= ====== ======= ====== === ========
(1) Includes charges to clearing accounts of $1.8 million, charges to administrative and general expense of
$9,000, charges to affiliates of $16,000, salvage on retirements of $1 million, and a plant adjustment
of $(13,000).
Schedule VI
Page 3 of 6
CILCORP INC. AND SUBSIDIARY COMPANIES
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
Year Ended December 31, 1992
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance at
Beginning Charged Charged Deductions Changes End of
of Period to to Other Retirements Cost of Add Period
Description January 1, 1992 Income Accounts(1) at Cost Removal (Deduct) December 31, 1992
(Thousands of dollars)
Accumulated provision for
depreciation and amortization
of plant and equipment:
Electric
Production $195,935 $15,852 $ 14 $ 4,723 $3,509 $ - $203,569
Transmission 40,627 2,374 159 74 32 - 43,054
Distribution 170,222 17,632 457 4,076 1,345 - 182,890
General 10,637 577 1,469 1,846 86 - 10,751
-------- ------- ------ ------- ------- -------- --------
417,421 36,435 2,099 10,719 4,972 - 440,264
-------- ------- ------ ------- ------- -------- --------
Gas
Intangible 17 - - - - - 17
Storage 15,883 1,394 - 318 19 - 16,940
Transmission 23,018 1,196 4 16 22 - 24,180
Distribution 91,183 10,475 5 2,251 1,386 - 98,026
General 4,622 178 752 716 3 - 4,833
-------- ------- ------ ------- ------ -------- --------
134,723 13,243 761 3,301 1,430 - 143,996
-------- ------- ------ ------- ------ -------- --------
Common Utility 7,075 1,717 31 380 100 - 8,343
-------- ------- ------ ------- ------ -------- --------
Other 12,316 4,423 - 597 - (12,125) 4,017
-------- ------- ------ ------- ------ -------- --------
Total $571,535 $55,818 $2,891 $14,997 $6,502 $(12,125) $596,620
======== ======= ====== ======= ====== ======== ========
Schedule VI
Page 4 of 6
Accumulated provision for
amortization of acquisition
adjustments:
Electric $ 8,682 $ 498 $ - $ - $ - $- $ 9,180
Gas 4,494 214 - - - - 4,708
-------- ------- ------ ------- ------ --- --------
Total $ 13,176 $ 712 $ - $ - $ - $- $ 13,888
======== ======= ====== ======= ====== === ========
(1) Includes charges to clearing accounts of $1.8 million, charges to administrative and general expense of
$8,000, charges to affiliates of $11,000, salvage on retirements of $1 million, and a plant adjustment
of $42,000.
Schedule VI
Page 5 of 6
CILCORP INC. AND SUBSIDIARY COMPANIES
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
Year Ended December 31, 1991
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance at
Beginning Charged Charged Deductions Changes End of
of Period to to Other Retirements Cost of Add Period
Description January 1, 1991 Income Accounts(1) at Cost Removal (Deduct) December 31, 1991
(Thousands of dollars)
Accumulated provision for
depreciation and amortization
of plant and equipment:
Electric
Production $184,379 $15,684 $ 51 $ 1,907 $2,272 $ - $195,935
Transmission 38,478 2,332 - 119 64 - 40,627
Distribution 157,485 16,687 576 3,330 1,196 - 170,222
General 9,959 634 1,356 1,309 - (3) 10,637
-------- ------- ------ ------- ------ --- --------
390,301 35,337 1,983 6,665 3,532 (3) 417,421
-------- ------- ------ ------- ------ --- --------
Gas
Intangible 16 1 - - - - 17
Storage 14,945 1,382 - 419 25 - 15,883
Transmission 21,939 1,182 - 68 35 - 23,018
Distribution 84,025 9,918 6 1,466 1,300 - 91,183
General 4,443 205 672 698 - - 4,622
-------- ------- ------ ------- ------ --- --------
125,368 12,688 678 2,651 1,360 - 134,723
-------- ------- ------ ------- ------ --- --------
Common 8,060 1,592 7 2,585 2 3 7,075
-------- ------- ------ ------- ------ --- --------
Other 8,802 3,514 - - - - 12,316
-------- ------- ------ ------- ------ --- --------
Total $532,531 $53,131 $2,668 $11,901 $4,894 $ - $571,535
======== ======= ====== ======= ====== === ========
Schedule VI
Page 6 of 6
Accumulated provision for
amortization of acquisition
adjustments:
Electric $ 8,183 $ 499 $ - $ - $ - $ - $ 8,682
Gas 4,280 214 - - - - 4,494
-------- ------- ------ ------- ------ --- --------
Total $ 12,463 $ 713 $ - $ - $ - $ - $ 13,176
======== ======= ====== ======= ====== === ========
(1) Includes charges to clearing accounts of $1.8 million, charges to administrative and general expense of
$8,000, charges to affiliates of $9,000 and salvage on retirements of $833,000.
Schedule VIII
CILCORP INC. AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
and Reserves for the Three Years
Ended December 31, 1993
(Thousands of dollars)
Column A Column B Column C
Balance at Balance at
Beginning of End of
Description Period Period
Allowance deducted from
asset to which it applies:
Allowance for uncollectible
accounts receivable:
Year ended December 31, 1993 - $1,943 $2,255
Year ended December 31, 1992 - $1,934 $1,943
Year ended December 31, 1991 - $2,090 $1,934
Other reserves:
Reserve for injuries and damages:
Year ended December 31, 1993 - $1,869 $2,321
Year ended December 31, 1992 - $1,284 $1,869
Year ended December 31, 1991 - 1,036 1,284
Schedule IX
CILCORP INC. AND SUBSIDIARY COMPANIES
Short-Term Borrowings for the Three
Years Ended December 31, 1993
(Thousands of dollars)
Column A Column B Column C Column D Column E Column F
Weighted Weighted
average Maximum Average average
Category of interest amount amount interest
aggregate Balance rate at outstanding outstanding rate
short-term at end end of during the during the during the
borrowings of period period period period period
1993
Commercial Paper $12,400 3.4% $28,000 $18,785 3.2%
Notes payable to
banks $18,800 3.6% $18,800 $ 6,484 4.1%
1992
Commercial paper $24,500 3.6% $24,500 $ 5,933(c) 3.0%(b)
Notes payable other $ 0 N/A $ 30 $ 7(a) 11.8%(b)
Notes payable to
banks $ 4,751 5.1% $ 5,800 $ 3,713(a) 5.0%(b)
1991
Commercial paper $11,500 4.7% $11,500 $ 415(c) 4.7%(b)
Notes payable other $ 30 11.8% $ 396 $ 322(a) 11.9%(b)
Notes payable to
banks $ 0 N/A $38,450 $16,288(a) 7.6%(b)
(a) The average borrowings were determined based on the amounts outstanding at each
month-end.
(b) The weighted average interest rate during the year was computed by dividing actual
interest expense by average short-term borrowings.
(c) The average borrowings were based on the outstanding daily balance.
Schedule XIII
CILCORP INC. AND SUBSIDIARY COMPANIES
Investment in Leveraged Leases
Year Ended December 31, 1993
(Thousands of dollars)
Cost Amount
Leveraged leases of each carried on
lease(A) Balance Sheet(B)
Office buildings $ 8,004 $ 43,794
Warehouses 26,872 19,244
Mining equipment 10,244 15,737
Generating station 14,957 22,313
Passenger railway equipment 3,805 4,003
Cargo aircraft 9,583 9,712
-------- --------
Totals $73,465 $114,803
======== ========
(A) This value is the original cost of the leveraged lease net of
nonrecourse debt.
(B) The amount carried on the balance sheet includes current rents
receivable and estimated residual value, net of unearned and
deferred income and nonrecourse debt.
Schedule II
CENTRAL ILLINOIS LIGHT COMPANY
Amounts Receivable from Related Parties and Underwriters,
Promoters and Employees Other Than Related Parties
Column A Column B Column C Column D Column E
Balance at Balance at
Year Ended Beginning of End of
December 31 Name of Debtor Period Additions Deductions Period
(In thousands)
1993 CILCORP Inc. $338 $1,612 $1,602 $348
1992 CILCORP Inc. 734 2,724 3,120 338
1991 CILCORP Inc. 629 3,793 3,688 734
Schedule V
Page 1 of 6
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Property, Plant and Equipment at Original Cost
Year Ended December 31, 1993
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning of Additions Other End of
Period at Changes Period
Classification January 1, 1993 Cost Retirements Add (Deduct) December 31, 1993
(Thousands of dollars)
Electric Utility Plant:
In Service -
Intangible $ 633 $ - $ - $ - $ 633
Steam production 459,695 4,338 4,084 - 459,949
Other production 5,995 53 - - 6,048
Transmission 86,475 545 366 - 86,654
Distribution 446,660 27,834 4,564 12 469,942
General 23,888 1,795 1,755 (14) 23,914
Held for future use 443 - - - 443
Construction work in progress 19,046 6,572 - - 25,618
Plant acquisition adjustment 12,462 - - - 12,462
---------- ------- ------- ------ ----------
1,055,297 41,137 10,769 (2) 1,085,663
---------- ------- ------- ------ ----------
Gas Utility Plant:
In Service -
Intangible 30 - - - 30
Storage 37,913 571 134 - 38,350
Transmission 48,798 1,207 194 (38) 49,773
Distribution 216,917 27,440 9,810 38 234,585
General 11,280 1,089 723 - 11,646
Construction work in progress 4,165 (126) - - 4,039
Plant acquisition adjustment 6,206 - - - 6,206
---------- ------- ------- ------ ----------
325,309 30,181 10,861 - 344,629
---------- ------- ------- ------ ----------
Schedule V
Page 2 of 6
Common Utility Plant:
In Service 31,759 1,265 869 3,237 35,392
Construction work in progress 2,266 (27) - - 2,239
---------- ------- ------- ------ ----------
34,025 1,238 869 3,237 37,631
---------- ------- ------- ------ ----------
Total $1,414,631 $72,556 $22,499 $3,235 $1,467,923
========== ======= ======= ====== ==========
Schedule V
Page 3 of 6
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Property, Plant and Equipment at Original Cost
Year Ended December 31, 1992
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning of Additions Other End of
Period at Changes Period
Classification January 1, 1992 Cost Retirements Add (Deduct) December 31, 1992
(Thousands of dollars)
Electric Utility Plant:
In Service -
Intangible $ 633 $ - $ - $ - $ 633
Steam production 456,138 7,781 4,391 167 459,695
Other production 6,332 - 331 (6) 5,995
Transmission 87,322 73 73 (847) 86,475
Distribution 422,054 27,796 4,076 886 446,660
General 23,232 2,497 1,847 6 23,888
Held for future use 443 - - - 443
Construction work in progress 16,523 2,523 - - 19,046
Plant acquisition adjustment 12,462 - - - 12,462
---------- ------- ------- ----- ----------
1,025,139 40,670 10,718 206 1,055,297
---------- ------- ------- ----- ----------
Gas Utility Plant:
In Service -
Intangible 30 - - - 30
Storage 37,929 304 319 (1) 37,913
Transmission 48,453 363 16 (2) 48,798
Distribution 203,900 15,265 2,250 2 216,917
General 11,197 798 716 1 11,280
Construction work in progress 1,662 2,503 - - 4,165
Plant acquisition adjustment 6,206 - - - 6,206
---------- ------- ------- ----- ----------
309,377 19,233 3,301 - 325,309
---------- ------- ------- ----- ----------
Schedule V
Page 4 of 6
Common Utility Plant:
In Service 31,303 868 412 - 31,759
Construction work in progress 1,214 1,052 - - 2,266
---------- ------- ------- ----- ----------
32,517 1,920 412 - 34,025
---------- ------- ------- ----- ----------
Total $1,367,033 $61,823 $14,431 $ 206 $1,414,631
========== ======= ======= ===== ==========
Schedule V
Page 5 of 6
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Property, Plant and Equipment at Original Cost
Year Ended December 31, 1991
Column A Column B Column C Column D Column E Column F
Balance at Balance at
Beginning of Additions Other End of
Period at Changes Period
Classification January 1, 1991 Cost Retirements Add (Deduct) December 31, 1991
(Thousands of dollars)
Electric Utility Plant:
In Service -
Intangible $ 633 $ - $ - $ - $ 633
Steam production 450,177 8,065 1,907 (197) 456,138
Other production 6,299 33 - - 6,332
Transmission 84,759 2,750 120 (67) 87,322
Distribution 401,069 24,152 3,371 204 422,054
General 22,551 1,985 1,311 7 23,232
Held for future use 424 - 47 66 443
Construction work in progress 12,746 3,777 - - 16,523
Plant acquisition adjustment 12,462 - - - 12,462
---------- ------- ------- ----- ----------
991,120 40,762 6,756 13 1,025,139
---------- ------- ------- ----- ----------
Gas Utility Plant:
In Service -
Intangible 30 - - - 30
Storage 37,505 845 419 (2) 37,929
Transmission 47,666 847 68 8 48,453
Distribution 192,762 12,622 1,466 (18) 203,900
General 10,942 938 698 15 11,197
Construction work in progress 3,358 (1,696) - - 1,662
Plant acquisition adjustment 6,206 - - - 6,206
---------- ------- ------- ----- ----------
298,469 13,556 2,651 3 309,377
---------- ------- ------- ----- ----------
Schedule V
Page 6 of 6
Common Utility Plant:
In Service 32,660 1,307 2,583 (81) 31,303
Construction work in progress 48 1,166 - - 1,214
---------- ------- ------- ----- ----------
32,708 2,473 2,583 (81) 32,517
---------- ------- ------- ----- ----------
Total $1,322,297 $56,791 $11,990 $ (65) $1,367,033
========== ======= ======= ===== ==========
Schedule VI
Page 1 of 6
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
Year Ended December 31, 1993
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance at
Beginning Charged Charged Deductions Changes End of
of Period to to Other Retirements Cost of Add Period
Description January 1, 1993 Income Accounts(1) at Cost Removal (Deduct) December 31, 1993
(Thousands of dollars)
Accumulated provision for
depreciation and amortization
of plant and equipment:
Electric
Production $203,569 $15,896 $ 17 $ 4,084 $2,649 $ - $212,749
Transmission 43,054 2,350 - 366 (25) - 45,063
Distribution 182,890 18,590 504 4,564 1,282 - 196,138
General 10,751 507 1,397 1,755 558 - 10,342
-------- ------- ------ ------- ------- --- --------
440,264 37,343 1,918 10,769 4,464 - 464,292
-------- ------- ------ ------- ------- --- --------
Gas
Intangible 17 - - - - - 17
Storage 16,940 1,400 - 135 13 - 18,192
Transmission 24,180 1,213 34 194 20 - 25,213
Distribution 98,026 11,236 10 9,810 2,389 - 97,073
General 4,833 173 719 723 - - 5,002
-------- ------- ------ ------- ------ --- --------
143,996 14,022 763 10,862 2,422 - 145,497
-------- ------- ------ ------- ------ --- --------
Common 8,343 1,657 - 869 8 - 9,123
-------- ------- ------ ------- ------ --- --------
Total $592,603 $53,022 $2,681 $22,500 $6,894 $ - $618,912
======== ======= ====== ======= ====== === ========
Schedule VI
Page 2 of 6
Accumulated provision for
amortization of acquisition
adjustments:
Electric $ 9,180 $ 498 $ - $ - $ - $ - $ 9,678
Gas 4,708 214 - - - - 4,922
-------- ------- ------ ------- ------ --- --------
Total $ 13,888 $ 712 $ - $ - $ - $ - $ 14,600
======== ======= ====== ======= ====== === ========
(1) Includes charges to clearing accounts of $1.8 million, charges to administrative and general expense of
$9,000, charges to affiliates of $16,000, salvage on retirements of $1 million, and a plant adjustment
of $(13,000).
Schedule VI
Page 3 of 6
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
Year Ended December 31, 1992
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance at
Beginning Charged Charged Deductions Changes End of
of Period to to Other Retirements Cost of Add Period
Description January 1, 1992 Income Accounts(1) at Cost Removal (Deduct) December 31, 1992
(Thousands of dollars)
Accumulated provision for
depreciation and amortization
of plant and equipment:
Electric
Production $195,935 $15,852 $ 14 $ 4,723 $3,509 $- $203,569
Transmission 40,627 2,374 159 74 32 - 43,054
Distribution 170,222 17,632 457 4,076 1,345 - 182,890
General 10,637 577 1,469 1,846 86 - 10,751
-------- ------- ------ ------- ------- --- --------
417,421 36,435 2,099 10,719 4,972 - 440,264
-------- ------- ------ ------- ------- --- --------
Gas
Intangible 17 - - - - - 17
Storage 15,883 1,394 - 318 19 - 16,940
Transmission 23,018 1,196 4 16 22 - 24,180
Distribution 91,183 10,475 5 2,251 1,386 - 98,026
General 4,622 178 752 716 3 - 4,833
-------- ------- ------ ------- ------ --- --------
134,723 13,243 761 3,301 1,430 - 143,996
-------- ------- ------ ------- ------ --- --------
Common 7,075 1,717 31 380 100 - 8,343
-------- ------- ------ ------- ------ --- --------
Total $559,219 $51,395 $2,891 $14,400 $6,502 $- $592,603
======== ======= ====== ======= ====== === ========
Schedule VI
Page 4 of 6
Accumulated provision for
amortization of acquisition
adjustments:
Electric $ 8,682 $ 498 $ - $ - $ - $- $ 9,180
Gas 4,494 214 - - - - 4,708
-------- ------- ------ ------- ------ --- --------
Total $ 13,176 $ 712 $ - $ - $ - $- $ 13,888
======== ======= ====== ======= ====== === ========
(1) Includes charges to clearing accounts of $1.8 million, charges to administrative and general expense of
$8,000, charges to affiliates of $11,000, salvage on retirements of $1 million, and a plant adjustment
of $42,000.
Schedule VI
Page 5 of 6
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment
Year Ended December 31, 1991
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance at
Beginning Charged Charged Deductions Changes End of
of Period to to Other Retirements Cost of Add Period
Description January 1, 1991 Income Accounts(1) at Cost Removal (Deduct) December 31, 1991
(Thousands of dollars)
Accumulated provision for
depreciation and amortization
of plant and equipment:
Electric
Production $184,379 $15,684 $ 51 $ 1,907 $2,272 $ - $195,935
Transmission 38,478 2,332 - 119 64 - 40,627
Distribution 157,485 16,687 576 3,330 1,196 - 170,222
General 9,959 634 1,356 1,309 - (3) 10,637
-------- ------- ------ ------- ------ --- --------
390,301 35,337 1,983 6,665 3,532 (3) 417,421
-------- ------- ------ ------- ------ --- --------
Gas
Intangible 16 1 - - - - 17
Storage 14,945 1,382 - 419 25 - 15,883
Transmission 21,939 1,182 - 68 35 - 23,018
Distribution 84,025 9,918 6 1,466 1,300 - 91,183
General 4,443 205 672 698 - - 4,622
-------- ------- ------ ------- ------ --- --------
125,368 12,688 678 2,651 1,360 - 134,723
-------- ------- ------ ------- ------ --- --------
Common 8,060 1,592 7 2,585 2 3 7,075
-------- ------- ------ ------- ------ --- --------
Total $523,729 $49,617 $2,668 $11,901 $4,894 $ - $559,219
======== ======= ====== ======= ====== === ========
Schedule VI
Page 6 of 6
Accumulated provision for
amortization of acquisition
adjustments:
Electric $ 8,183 $ 499 $ - $ - $ - $ - $ 8,682
Gas 4,280 214 - - - - 4,494
-------- ------- ------ ------- ------ --- --------
Total $ 12,463 $ 713 $ - $ - $ - $ - $ 13,176
======== ======= ====== ======= ====== === ========
(1) Includes charges to clearing accounts of $1.8 million, charges to administrative and general expense of
$8,000, charges to affiliates of $9,000 and salvage on retirements of $833,000.
Schedule VIII
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
and Reserves for the Three Years
Ended December 31, 1993
Column A Column B Column C
Balance at Balance at
Beginning of End of
Description Period Period
(Thousands of dollars)
Reserves deducted from asset to
which it applies:
Reserve for doubtful accounts -
Year ended December 31, 1993 $ 799 $ 585
Year ended December 31, 1992 928 799
Year ended December 31, 1991 809 928
Other reserves:
Reserve for injuries and damages -
Year ended December 31, 1993 $1,869 $2,321
Year ended December 31, 1992 1,284 1,869
Year ended December 31, 1991 1,036 1,284
Schedule IX
CENTRAL ILLINOIS LIGHT COMPANY AND SUBSIDIARY COMPANIES
Short-Term Borrowings for the Three Years
Ended December 31, 1993
Column A Column B Column C Column D Column E Column F
Weighted
average Maximum Average Weighted
Category of interest amount amount average
aggregate Balance rate at outstanding outstanding interest rate
short-term at end end of during the during the during the
borrowings of period period period period (1) period
(Thousands of Dollars)
1993
Commercial Paper $12,400 3.4% $28,000 $18,758 3.2%
1992
Commercial Paper $24,500 3.6% $24,500 $ 5,933 3.0%
1991
Commercial Paper $11,500 4.7% $11,500 $ 415 4.7%
(1) Based on the outstanding daily balance.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CILCORP INC.
March 15, 1994 By R. O. Viets
R. O. Viets
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
(i) and (ii) Principal executive officer, director and principal financial
officer:
R. O. Viets
R. O. Viets President, Chief March 15, 1994
Executive Officer
and Director
(iii) Controller
T. D. Hutchinson
T. D. Hutchinson Controller March 15, 1994
(iv) A majority of the Directors
(including the director named above):
M. Alexis* Director March 15, 1994
J. R. Brazil* Director March 15, 1994
D. E. Connor* Director March 15, 1994
R. V. O'Keefe* Director March 15, 1994
H. S. Peacock* Director March 15, 1994
R. W. Slone* Director March 15, 1994
K. E. Smith* Director March 15, 1994
R. N. Ullman* Director March 15, 1994
J. M. Unland* Director March 15, 1994
M. M. Yeomans* Director March 15, 1994
R. O. Viets
R. O. Viets Director March 15, 1994
*By R. O. Viets
R. O. Viets
Attorney-in-fact
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CENTRAL ILLINOIS LIGHT COMPANY
March 15, 1994 By R. W. Slone
R. W. Slone
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
(i) Principal executive officer and director:
R. W. Slone
R. W. Slone Chairman of the Board, March 15, 1994
President, Chief
Executive Officer
and Director
(ii) Principal financial officer:
T. S. Romanowski
T. S. Romanowski Vice President March 15, 1994
(iii) Controller
R. L. Beetschen
R. L. Beetschen Controller and March 15, 1994
Manager of Accounting
(iv) A majority of the Directors
(including the director named above):
M. Alexis* Director March 15, 1994
J. R. Brazil* Director March 15, 1994
W. Bunn III* Director March 15, 1994
D. E. Connor* Director March 15, 1994
H. S. Peacock* Director March 15, 1994
W. M. Shay* Director March 15, 1994
K. E. Smith* Director March 15, 1994
R. N. Ullman* Director March 15, 1994
J. M. Unland* Director March 15, 1994
J. F. Vergon* Director March 15, 1994
M. M. Yeomans* Director March 15, 1994
R. W. Slone
R. W. Slone Director March 15, 1994
*By R. W. Slone
R. W. Slone
Attorney-in-fact
EXHIBIT (12)
CILCORP INC. AND SUBSIDIARIES
Computation of Ratio of Earnings
to Fixed Charges
Twelve Months Ended
1993 1992 1991 1990 1989
(Thousands of Dollars)
Earnings, as defined:
Net Income $33,583 $32,097 $ 39,656 $34,504 $ 48,399
Income Taxes 18,069 20,810 29,676 24,344 27,824
Interest 27,363 29,205 28,661 27,934 28,007
Preferred Dividends 4,043 4,441 4,441 4,441 4,441
Convertible Preferred Dividends - - 828 1,839 -
------- ------- -------- ------- --------
Total earnings, as defined $83,058 $86,553 $103,262 $93,062 $108,671
======= ======= ======== ======= ========
Fixed charges, as defined:
Interest Expense 25,929 28,275 27,791 27,066 27,209
Interest Expense on COLI 1,434 930 870 868 798
Tax Effected Preferred Dividends 6,701 7,249 8,601 10,251 7,219
------- ------- ------- ------- -------
Total Fixed Charges, as defined $34,064 $36,454 $37,262 $38,185 $35,226
======= ======= ======= ======= =======
Ratio of earnings to fixed charges 2.4 2.4 2.8 2.4 3.1
==== ==== ==== ==== ====
EXHIBIT (12)
CENTRAL ILLINOIS LIGHT COMPANY
Computation of Ratio of Earnings
to Fixed Charges
Twelve Months Ended
1993 1992 1991 1990 1989
(Thousands of Dollars)
Earnings, as defined:
Net Income $37,678 $35,636 $44,231 $40,966 $44,430
Income Taxes 20,368 17,723 22,329 20,500 22,179
Fixed Charges, as below 26,335 25,130 24,295 24,095 24,540
------- ------- ------- ------- -------
Total earnings, as defined $84,381 $78,489 $90,855 $85,561 $91,149
======= ======= ======= ======= =======
Fixed charges, as defined:
Interest on COLI 1,434 930 870 868 798
Interest on Short-Term Debt 592 180 0 0 0
Interest on Long-Term Debt 19,753 20,747 21,285 21,399 21,968
Amortization of Debt Discount
& Expense, Premium and
Reacquired Loss 624 410 96 97 107
Miscellaneous Interest Expense 1,485 2,448 1,591 1,320 1,205
Interest Portion of Rentals 2,447 415 453 411 462
------- ------- ------- ------- -------
Total Fixed Charges, as defined $26,335 $25,130 $24,295 $24,095 $24,540
======= ======= ======= ======= =======
Ratio of earnings to fixed charges 3.20 3.12 3.74 3.55 3.71
==== ==== ==== ==== ====
Exhibit 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports, dated February 4, 1994, included herein in this
Form 10-K, into CILCORP Inc.'s previously filed Registration Statements
File No. 33-45318, 33-51315 and 33-51241.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
March 11, 1994