SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the fiscal year ended December 31, 2003 | ||||
o |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from ____________ to _____________ |
Illinois | 37-0344645 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) | |
500 S. 27th Street | ||
Decatur, Illinois | 62521-2200 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class: | Name of each exchange on which registered: | |
Each of the following securities are listed on the New York Stock Exchange. | ||
Mortgage bonds | ||
6 3/4% Series due 2005 | ||
7 1/2% Series due 2025 |
Page | ||||
PART I | ||||
Definitions | 3 | |||
Item 1. | Business | 3 | ||
Item 2. | Properties | 14 | ||
Item 3. | Legal Proceedings | 14 | ||
Item 4. | Submission of Matters to a Vote of Security Holders | 14 | ||
PART II | ||||
Item 5. | Market for Registrant’s Common Equity and Related Stockholder Matters | 14 | ||
Item 6. | Selected Financial Data | 15 | ||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of | |||
Operations | 16 | |||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 32 | ||
Item 8. | Financial Statements and Supplementary Data | 33 | ||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial | |||
Disclosure | 33 | |||
Item 9A. | Controls and Procedures | 33 | ||
PART III | ||||
Item 10. | Directors and Executive Officers of the Registrant | 33 | ||
Item 11. | Executive Compensation | 36 | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters | 39 | ||
Item 13. | Certain Relationships and Related Transactions | 39 | ||
Item 14. | Principal Accountant Fees and Services | 40 | ||
PART IV | ||||
Item 15. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K | 41 | ||
Signatures | 42 |
2 | ||
PART I
Overview
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Our ability to meet our power and energy needs beyond 2004 is addressed in our pending sale to Ameren. Pursuant to a related agreement, which is conditioned upon the closing of the transaction, we will purchase 2,800 MWs of capacity and up to 11.5 million MWh of energy from a Dynegy affiliate at fixed prices for two years beginning in January 2005. Additionally, we will purchase from that Dynegy affiliate 300 MWs of capacity in 2005 and 150 MWs of capacity in 2006 at a fixed price with an option to purchase energy at market-based prices. Any capacity and energy needs not met by this agreement would be secured from either existing agreements, through a specified purchasing process, or, in limited circumstances, through open market purchases. Please read Note 2 - “Agreed Sale to Ameren” in the accompanying audited financial statements for additional information.
Interconnections
5 | ||
We also have interconnections with Indiana-Michigan Power Company, Commonwealth Edison Company, AmerenCILCO, MidAmerican Energy Corporation, Louisville Gas & Electric, Southern Illinois Power Cooperative, Electric Energy Inc. and the City of Springfield, Illinois.
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Competition
8 | ||
compliance officer for this purpose who will be responsible for standards of conduct compliance. Transmission providers that are members of RTOs or ISOs may seek an exemption from the rule. Several parties have asked the FERC for clarification and rehearing on many issues outlined in FERC Order 2004. We are currently in compliance with FERC Order 2004 as contemplated.
9 | ||
Ø | Departing customers are obligated to pay applicable transition charges based on the utility’s lost revenue from that customer. The transition charges are applicable through 2006. | |
Ø | Until December 31, 2004, utilities are provided the opportunity to lower their financing and capital costs through the issuance of “securitized” bonds, also called transitional funding trust notes. | |
Ø | The ROE of utilities is managed through application of floor and ceiling test rules contained in P.A. 90-561/92-0537 as described in the “Utility Earnings Cap” section above. |
10 | ||
11 | ||
12 | ||
13 | ||
Cumulative Preferred Stock Series | Shares Outstanding | Quarterly Dividend Per Share | Quarterly Dividend Paid | |||||||
4.08% | 225,510 | $ | 0.5100 | $ | 115,010 | |||||
4.20% | 143,760 | $ | 0.5250 | 75,474 | ||||||
4.26% | 104,280 | $ | 0.5325 | 55,529 | ||||||
4.42% | 102,190 | $ | 0.5525 | 56,460 | ||||||
4.70% | 145,170 | $ | 0.5875 | 85,287 | ||||||
7.75% | 191,765 | $ | 0.96875 | 185,772 | ||||||
$ | 573,532 | |||||||||
14 | ||
S E L E C T E D F I N A N C I A L D A T A | ||||||||||||||||
(Millions of dollars) | ||||||||||||||||
2003 | 2002 | 2001(3) | 2000(3) | 1999 | ||||||||||||
Operating revenues | ||||||||||||||||
Electric | $ | 1,101.9 | $ | 1,138.8 | $ | 1,137.1 | $ | 1,189.4 | $ | 1,178.6 | ||||||
Electric interchange(1) | - | 7.1 | 0.7 | 2.7 | 420.2 | |||||||||||
Gas | 465.9 | 372.4 | 476.6 | 393.5 | 304.4 | |||||||||||
Total operating revenues | $ | 1,567.8 | $ | 1,518.3 | $ | 1,614.4 | $ | 1,585.6 | $ | 1,903.2 | ||||||
Earnings before cumulative effect of change in accounting principle | $ | 119.4 | $ | 160.7 | $ | 166.2 | $ | 134.9 | $ | 113.1 | ||||||
Cumulative effect of change in accounting principle, net of tax(2) | $ | (2.4 | ) | - | - | - | - | |||||||||
Net income | $ | 117.0 | $ | 160.7 | $ | 166.2 | $ | 134.9 | $ | 113.1 | ||||||
Effective income tax rate | 38.9 | % | 39.3 | % | 41.4 | % | 38.2 | % | 38.7 | % | ||||||
Net income applicable to common shareholders | $ | 114.7 | $ | 158.4 | $ | 157.9 | $ | 121.0 | $ | 95.6 | ||||||
Cash dividends declared on common stock | - | 0.5 | 100.0 | - | 40.9 | |||||||||||
Total assets(4) | $ | 5,059.2 | $ | 5,050.3 | $ | 4,929.3 | $ | 5,038.9 | $ | 5,363.1 | ||||||
Capitalization | ||||||||||||||||
Common stock equity | $ | 1,484.9 | $ | 1,366.2 | $ | 1,221.9 | $ | 1,156.3 | $ | 1,035.2 | ||||||
Preferred stock | 45.8 | 45.8 | 45.8 | 45.8 | 45.8 | |||||||||||
Mandatorily redeemable preferred stock | - | - | - | 100.0 | 193.4 | |||||||||||
Long-term debt | 1,434.6 | 1,718.8 | 1,605.6 | 1,787.6 | 1,906.4 | |||||||||||
Long-term debt to IPSPT(5) | 345.6 | - | - | - | - | |||||||||||
Total capitalization | $ | 3,310.9 | $ | 3,130.8 | $ | 2,873.3 | $ | 3,089.7 | $ | 3,180.8 | ||||||
Retained earnings | $ | 504.9 | $ | 390.2 | $ | 233.6 | $ | 175.7 | $ | 54.7 | ||||||
Capital expenditures | $ | 125.5 | $ | 144.5 | $ | 148.8 | $ | 157.8 | $ | 197.2 | ||||||
Cash flows from operations | $ | 136.3 | $ | 209.4 | $ | 345.0 | $ | 381.3 | $ | 85.8 | ||||||
Ratio of earnings to fixed charges | 2.18 | 3.30 | 3.25 | 2.53 | 2.16 | |||||||||||
(1) | Interchange sales volumes are not comparable year to year due to the October 1999 transfer of our generation assets. Please read Note 4 - “Related Parties” in the accompanying audited financial statements for more information. | |
(2) | Effective January 1, 2003, we adopted SFAS 143, “Accounting for Asset Retirement Obligations.” In accordance with the provisions of SFAS 143, we recorded our ARO obligations as a cumulative effect adjustment, net of tax. Please read Note 1 - “Summary of Significant Accounting Policies – Accounting Principles Adopted” in the accompanying audited financial statements for more information. |
15 | ||
(3) | The consolidated financial statements for the years ended December 31, 2001 and 2000 were audited by other independent accountants who have ceased operations. Please read “Report of Independent Public Accountants” in the accompanying audited financial statements. | |
(4) | SFAS 143, which we adopted in January 2003, requires that cost of removal, which was previously a component of our reserve for depreciation, be reclassified as a regulatory liability. At December 31, 2003, $72.2 million cost of removal, net of salvage, was reclassified. Total assets for the years 2002, 2001, 2000 and 1999, approximately $68.7 million, $68.2 million, $67.2 million and $65.3 million, respectively, were adjusted to reflect the effect of SFAS 143. For additional information, please read Note 1 – “Summary of Significant Accounting Policies – Cost of Removal, Net.” | |
(5) | Effective December 31, 2003, IPSPT was deconsolidated from our financial statements in conjunction with the adoption of FIN No. 46R. Please read Note 1 - “Summary of Significant Accounting Policies – Accounting Principles Adopted” in the accompanying audited financial statements for more information. |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ø | weather and its effect on demand for our services, particularly with respect to residential electric customers; |
16 | ||
Ø | the number of customers that choose another retail electric provider under the Illinois Customer Choice Law; | |
Ø | our ability to control our capital expenditures, which primarily are limited to maintenance, safety and reliability projects, and new business services and other costs through disciplined management and safe, efficient operations; and | |
Ø | general economic conditions and the resulting effect on demand for our services, particularly with respect to commercial and industrial customers. |
Dynegy and Illinova recently entered into an agreement with Ameren to sell the shares of our common and preferred stock owned by Illinova for $2.3 billion. The transaction is expected to close before the end of 2004, subject to the receipt of required regulatory approvals and other closing conditions. Please read Note 2 – “Agreed Sale to Ameren” in the accompanying audited financial statements for further discussion.
17 | ||
Debt Maturities As of December 31, 2003, our debt maturities through December 31, 2006 were as follows (millions of dollars):
2004 | 2005 | 2006 | ||||||||
IPSPT Transitional Funding Trust Notes | ||||||||||
1st quarter(1) | $ | 9.5 | $ | 21.6 | $ | 21.6 | ||||
2nd quarter | 21.6 | 21.6 | 21.6 | |||||||
3rd quarter | 21.6 | 21.6 | 21.6 | |||||||
4th quarter | 21.6 | 21.6 | 21.6 | |||||||
Tilton Lease (2) | ||||||||||
3rd quarter | 81.0 | |||||||||
6 ¾% Mortgage Bonds | ||||||||||
1st quarter | 70.0 | |||||||||
$ | 155.3 | $ | 156.4 | $ | 86.4 | |||||
(1) | Due to the adoption of FIN No. 46R and resulting deconsolidation of IPSPT, certain amounts, included in restricted cash, are netted against the first quarter 2004 maturity, which is included in the current portion of our long-term debt payable to IPSPT on our December 31, 2003 consolidated balance sheet. | |
(2) | Please read “Off-Balance Sheet Financing” below for additional information. |
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12/31/03(1) |
|
| 12/31/02 | ||||
Investment in IPSPT | $ | 4.3 | $ | - | |||
Receivable from IPSPT (noncurrent) | $ | 2.2 | $ | - | |||
Long-term debt to IPSPT (including due within one year)(2) | $ | 419.9 | $ | - |
(1) | Effective December 31, 2003, IPSPT was deconsolidated from our financial statements in conjunction with the adoption of FIN No. 46R. | |
(2) | Due to the adoption of FIN No. 46R and resulting deconsolidation of IPSPT, certain amounts included in restricted cash are netted against the current portion of our long-term debt payable to IPSPT on our December 31, 2003 consolidated balance sheet. |
2003 |
|
| 2002 | ||||
Lease expense | $ | 2.7 | $ | 2.7 | |||
Lease payments (cash flows) | $ | 2.7 | $ | 2.7 |
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Financial Obligations and Commercial Commitments | ||||||||||||||||||||||
Payments Due by Period | ||||||||||||||||||||||
Cash Obligations* | Total |
|
| 2004 |
|
| 2005 |
|
| 2006 |
|
| 2007 |
|
| 2008 |
|
| Thereafter | |||
Long-Term Debt (1) | $ | 1,444.6 | $ | - | $ | 70.0 | $ | - | $ | - | $ | - | $ | 1,374.6 | ||||||||
IPSPT Transitional Funding Trust Notes (2) | 419.9 | 74.3 | 86.4 | 86.4 | 86.4 | 86.4 | - | |||||||||||||||
Capital Lease (3) | 83.1 | 83.1 | - | - | - | - | - | |||||||||||||||
DecommissioningCharges-Clinton (4) | 4.9 | 4.9 | - | - | - | - | - | |||||||||||||||
Decommissioning-DOE (5) | 2.2 | 0.7 | 0.7 | 0.8 | - | - | - | |||||||||||||||
Unconditional Purchase Obligations (6) | 429.2 | 382.5 | 12.9 | 9.8 | 6.1 | 4.6 | 13.3 | |||||||||||||||
Conditional Purchase Obligations (7) | 205.0 | 205.0 | - | - | - | - | - | |||||||||||||||
Pension Funding Obligation(8) | 69.5 | 2.0 | 32.5 | 35.0 | - | - | - | |||||||||||||||
Operating Leases (9)(10) | 9.7 | 1.7 | 1.5 | 1.4 | 1.2 | 1.2 | 2.7 | |||||||||||||||
Total Contractual Cash Obligations | $ | 2,668.1 | $ | 754.2 | $ | 204.0 | $ | 133.4 | $ | 93.7 | $ | 92.2 | $ | 1,390.6 | ||||||||
* | Cash obligations herein are not discounted and do not include related interest or accretion. | |
(1) | Aggregate principal outstanding under our mortgage bonds approximated $1.4 billion at December 31, 2003, bearing interest ranging from 1.55% to 11 1/2% per annum. We have a mortgage bond issue of $70 million maturing in March 2005. | |
(2) | Reflects the balance of $864 million of IPSPT Transitional Funding Trust Notes issued by IPSPT in December 1998 as allowed under the Illinois Electric Utility Transition Funding Law in P.A. 90-561. Per annum interest on these notes averages approximately 5.50%. IPSPT is retiring the principal outstanding under these notes utilizing our quarterly payments of $21.6 million through 2008. Effective December 31, 2003, IPSPT was deconsolidated from our financial statements in conjunction with the adoption of FIN No. 46R. Please read Note 1 – “Summary of Significant Accounting Policies – Accounting Policies Adopted” in the accompanying audited financial statements for additional information. | |
(3) | Reflects our $2.1 million annual lease payment and $81 million purchase obligation related to the capital lease on the Tilton turbines, which will be terminated in 2004. We are subleasing the turbines to our affiliate, DMG, who is responsible for making all such payments on the turbines. | |
(4) | Reflects decommissioning charges associated with our former Clinton facility. See Note 1 – “Summary of Significant Accounting Policies” in the accompanying audited financial statements included herein for additional information. | |
(5) | Reflects decontamination and decommissioning charges associated with our use of a DOE facility that enriched uranium for the Clinton Power Station. We were assessed an amount to be paid over fifteen years that would be used to pay for DOE’s decontamination and decommissioning of its facility. Our final payment is due in 2006. |
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(6) | Reflects an unconditional power purchase obligation between us and DMG, another Dynegy affiliate. The agreement requires us to compensate the affiliate for capacity charges through 2004 at a total contract cost of $310.8 million. We also have contracts on six interstate pipeline companies for firm transportation and storage services for natural gas. These contracts have varying expiration dates ranging from 2004 to 2012, for a total cost of $66.0 million. We also enter into obligations for the reservation of natural gas supply. These obligations generally range in duration from one to twelve months and require us to compensate the provider for capacity charges. The cost of the agreements is $38.7 million. |
(7) | Relates to our expected purchases under the PPA with AmerGen. For additional information, please read Item 1 – “Power Supply” above. | |
(8) | This represents the projected defined benefit funding obligation for our pension plans for salaried and union employees, including $0.5 million, $1.9 million, and $1.9 million in 2004, 2005 and 2006, respectively, relating to our affiliate, DMG. Although we expect to incur significant funding obligations subsequent to 2006, such amounts have not been included in this table because our estimates are imprecise. See Note 12 - “Employee Compensation, Savings and Pension Plans” in the audited financial statements included herein for additional information. | |
(9) | Our primary operating leases reflected above relate to our material distribution facility, Tilton land lease and a lease on 15 line trucks. The material distribution facility is a commercial property lease for our storage warehouse that expires in 2009 and has remaining lease payments of $3.3 million. The lease on 15 line trucks expires in 2009 and has remaining lease payments of $1.3 million. The remaining leases included in this line relate to copiers, fax machines, small equipment and building leases. | |
(10) | The Tilton land lease is subleased to DMG, and we satisfy our contractual obligations under this arrangement with payments made by DMG. Lease payments total $2.4 million for the land lease ending October 2028. |
Ø | $1.8 million in surety bonds expiring during 2004. These bonds are renewed on a rolling twelve-month basis. | |
Ø | According to the PPA with DMG, we are to provide a security guarantee of $50 million upon a credit downgrade event. This guarantee is being fulfilled by a $50 million guarantee from Dynegy on our behalf. | |
Ø | Dynegy is required to provide collateral to guarantee payment of deductibles for insurance claims and has assigned $12 million to us as our share of its total corporate requirement. |
Standard & Poor’s | Moody’s | Fitch | ||||
Senior secured debt | B | B1(1) | B | |||
Senior unsecured debt | * | B2 | CCC+ | |||
Preferred stock | CCC | Caa2 | CC |
(1) | Reflects a February 2004 two-notch ratings upgrade by Moody’s Investors Service, who cited the pending sale to Ameren and indicated that our credit ratings remained under review for further upgrade. B1 is four notches below investment grade. |
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Dividends There are restrictions on our ability to pay cash dividends, including any dividends that we might pay indirectly to Dynegy. Under our Restated Articles of Incorporation, we may pay dividends on our common stock, all of which is owned by Illinova, subject to the preferential rights of the holders of our preferred stock, of which Illinova owns approximately 73%. We also are limited in our ability to pay dividends by the Illinois Public Utilities Act and the Federal Power Act, which require retained earnings equal to or greater than the amount of any proposed dividend. In 2003, we did not pay any dividends on our common stock; however, we paid $0.5 million of dividends on our common stock to Illinova in March of 2002. Additionally, the ICC’s October 23, 2002 order relating to a netting agreement between us and Dynegy prohibits us from declaring and paying any dividends on our common stock until such time as our mortgage bonds are rated investment grade by both Moody’s and Standard & Poor’s and further requires that we first obtain approval for any such payment from the ICC.
Due to our non-investment grade credit ratings and other factors, we do not have access to the commercial paper markets, and our access to the capital markets is limited. These factors, along with the level of our indebtedness and the fact that we do not currently have a revolving credit facility, will have several important effects on our future operations. First, a significant portion of our cash flows will be dedicated to the payment of principal and interest on our outstanding indebtedness, including the increased interest expense associated with our December 2002 $550 million Mortgage bond financing, and will not be available for other purposes. Second, our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes is limited.
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Ø | revenue recognition; | |
Ø | long-lived assets; | |
Ø | note receivable from affiliate; | |
Ø | regulatory asset amortization; | |
Ø | valuation of pension assets and liabilities; and | |
Ø | accounting for income taxes. |
23 | ||
Ø | Reasonably possible – The chance of the future event or events occurring is more than remote but less than likely. | |
Ø | More likely than not - A level of likelihood that is more than 50%. | |
Ø | Probable – Future events are likely to occur. |
24 | ||
PBO** |
|
| 2004 |
| |||
|
| 12/31/2004 |
|
| Expense | ||
2004 estimate* | $ | 853.2 | $ | 25.9 | |||
Impact of changes in rate assumptions: | |||||||
Increase Discount Rate 50 basis points | $ | (54.2 | ) | $ | (5.0 | ) | |
Decrease Discount Rate 50 basis points | $ | 59.8 | $ | 5.4 | |||
Increase Expected Rate of Return 50 basis points | $ | – | $ | (3.0 | ) | ||
Decrease Expected Rate of Return 50 basis points | $ | – | $ | 3.0 |
25 | ||
Year Ended December 31, | ||||||||||
2003 |
|
| 2002 |
|
| 2001 | ||||
(Millions of dollars) | ||||||||||
Electric Operations: | ||||||||||
Revenues | $ | 1,101.9 | $ | 1,145.9 | $ | 1,137.8 | ||||
Electricity Purchased | (681.0 | ) | (677.5 | ) | (661.8 | ) | ||||
Gas Operations: | ||||||||||
Revenues | 465.9 | 372.4 | 476.6 | |||||||
Gas Purchased | (315.5 | ) | (231.7 | ) | (332.8 | ) | ||||
Other Expenses | (325.2 | ) | (348.2 | ) | (344.3 | ) | ||||
General Taxes | (67.5 | ) | (57.6 | ) | (68.4 | ) | ||||
Income Taxes | (12.4 | ) | (39.3 | ) | (40.6 | ) | ||||
Other Income and Deductions – Net | 116.1 | 109.1 | 121.5 | |||||||
Interest Charges | (162.9 | ) | (112.4 | ) | (121.8 | ) | ||||
Cumulative effect of change in accounting principle | (2.4 | ) | - | - | ||||||
Net Income | $ | 117.0 | $ | 160.7 | $ | 166.2 | ||||
Net Non-Cash Items Included in Net Income | 109.5 | 117.5 | 112.4 | |||||||
Operating Cash Flows Before Changes in Working Capital | 226.5 | 278.2 | 278.6 | |||||||
Increase (Decrease) in Working Capital | (90.2 | ) | (68.8 | ) | 66.4 | |||||
Net Cash Provided by Operating Activities | $ | 136.3 | $ | 209.4 | $ | 345.0 | ||||
Net Cash Used in Investing Activities | $ | (125.5 | ) | $ | (141.1 | ) | $ | (146.7 | ) | |
Net Cash Provided by (Used in) Financing Activities | $ | (111.5 | ) | $ | 7.8 | $ | (168.6 | ) | ||
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The following table provides operating statistics regarding our results of operations for 2003, 2002 and 2001, respectively.
Year Ended December 31, | ||||||||||
2003 |
|
| 2002 |
|
| 2001 | ||||
Electric Operations: | ||||||||||
Electric Sales Revenues (in millions): | ||||||||||
Residential | $ | 410.3 | $ | 435.8 | $ | 431.4 | ||||
Commercial | 337.2 | 338.0 | 332.0 | |||||||
Commercial-distribution | 0.1 | 0.1 | 1.5 | |||||||
Industrial | 272.0 | 281.8 | 288.0 | |||||||
Industrial-distribution | 5.6 | 5.6 | 3.6 | |||||||
Other | 38.8 | 38.3 | 39.3 | |||||||
Interchange | - | 7.1 | .7 | |||||||
Transmission/Wheeling | 37.9 | 39.2 | 41.3 | |||||||
Total Electric Sales Revenues | $ | 1,101.9 | $ | 1,145.9 | $ | 1,137.8 | ||||
Electricity Purchased | $ | 681.0 | $ | 677.5 | $ | 661.8 | ||||
Electric Sales in kWh (in millions): | ||||||||||
Residential | 5,309 | 5,548 | 5,202 | |||||||
Commercial | 4,413 | 4,415 | 4,337 | |||||||
Commercial-distribution | 4 | 2 | 40 | |||||||
Industrial | 6,123 | 6,306 | 6,353 | |||||||
Industrial-distribution | 2,378 | 2,503 | 2,605 | |||||||
Other | 372 | 368 | 371 | |||||||
Sales to ultimate consumers | 18,599 | 19,142 | 18,908 | |||||||
Interchange | 2 | 2 | 2 | |||||||
Total Electricity Delivered | 18,601 | 19,144 | 18,910 | |||||||
Cooling Degree Days | 980 | 1,467 | 1,302 | |||||||
Cooling Degree Days – 10 Year Rolling Average | 1,214 | 1,246 | 1,297 |
Gas Operations: | ||||||||||
Gas Sales Revenues (in millions): | ||||||||||
Residential | $ | 301.2 | $ | 243.4 | $ | 298.0 | ||||
Commercial | 114.7 | 89.0 | 112.4 | |||||||
Industrial | 39.6 | 27.3 | 45.3 | |||||||
Other | 10.4 | 12.7 | 20.9 | |||||||
Total Gas Sales Revenues | $ | 465.9 | $ | 372.4 | $ | 476.6 | ||||
Gas Purchased | $ | 315.5 | $ | 231.7 | $ | 332.8 | ||||
Gas Sales in Therms (in millions): | ||||||||||
Residential | 337 | 323 | 315 | |||||||
Commercial | 145 | 137 | 136 | |||||||
Industrial | 57 | 58 | 70 | |||||||
Sales to ultimate consumers | 539 | 518 | 521 | |||||||
Transportation of Customer-Owned Gas | 226 | 233 | 246 | |||||||
Total gas sold and transported | 765 | 751 | 767 | |||||||
Sales to affiliates | 13 | 22 | 18 | |||||||
Total Gas Delivered | 778 | 773 | 785 | |||||||
Heating Degree Days | 5,256 | 5,118 | 4,749 | |||||||
Heating Degree Days – 10 Year Rolling Average | 4,930 | 5,002 | 5,032 |
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The components of annual changes in electric revenues excluding interchange were:
(Millions of dollars) | 2003 |
|
| 2002 | |||
Price | $ | (7.2 | ) | $ | (22.2 | ) | |
Volume and other | (29.7 | ) | 23.9 | ||||
Electric revenue increase (decrease) | $ | (36.9 | ) | $ | 1.7 | ||
(Millions of dollars) | 2003 |
|
| 2002 | |||
Electricity purchased: | |||||||
Price | $ | 30.4 | $ | (6.2 | ) | ||
Volume | (26.9 | ) | 21.9 | ||||
Electricity cost increase | $ | 3.5 | $ | 15.7 | |||
(Millions of dollars) | 2003 |
|
| 2002 | |||
Price | $ | 77.0 | $ | (97.0 | ) | ||
Volume and other | 18.9 | (0.7 | ) | ||||
Gas revenue increase (decrease) | $ | 95.9 | $ | (97.7 | ) | ||
28 | ||
(Millions of dollars) | 2003 |
|
| 2002 |
| ||
Gas purchased: | |||||||
Price | $ | 87.8 | $ | (68.1 | ) | ||
Volume | (3.7 | ) | 7.6 | ||||
Gas cost recoveries | (0.3 | ) | (40.6 | ) | |||
Gas cost increase (decrease) | $ | 83.8 | $ | (101.1 | ) | ||
(Millions of dollars) | 2003 |
|
| 2002 |
| ||
Other operating expenses | $ | 6.2 | $ | (2.1 | ) | ||
Maintenance | 4.2 | (0.7 | ) | ||||
Retirement and severance expense | 0.7 | (16.0 | ) | ||||
Depreciation and amortization | (2.2 | ) | (0.2 | ) | |||
Amortization of regulatory assets | (31.9 | ) | 22.9 | ||||
Other expenses increase (decrease) | $ | (23.0 | ) | $ | 3.9 | ||
29 | ||
Ø | Issuance of $150 million of 11 1/2% Mortgage bonds; | |
Ø | Receipt of $127.8 million of prepaid interest under our Note Receivable from Affiliate; | |
Ø | Redemption of $190 million of our Mortgage bonds; | |
Ø | Redemption of $100 million of our 1-year term loan; | |
Ø | Redemption of $86.4 million of the IPSPT transitional funding trust notes; and | |
Ø | Payment of $2.3 million in preferred stock dividends. |
During 2002, cash provided by financing activities totaled $7.8 million. The significant items are as follows:
Ø | Issuance of $400 million of our 11 1/2 % Mortgage bonds; | |
Ø | Borrowing of $60 million under our 1-year term loan; | |
Ø | Redemption of $238.2 million in short-term debt; | |
Ø | Redemption of $95.7 million of our Mortgage bonds; | |
Ø | Redemption of $86.4 million of the IPSPT transitional funding trust notes ; and | |
Ø | Payment of $2.3 million in preferred stock dividends. |
During 2001, cash used for financing activities totaled $168.6 million. The following summarizes significant items:
Ø | Issuance of $186.8 million of variable rate Mortgage bonds; | |
Ø | Borrowing of $477.2 million in commercial paper; | |
Ø | Redemption of $186.8 of our variable rate Mortgage bonds; |
30 | ||
Ø | Redemption of $346.8 million in commercial paper; | |
Ø | Redemption of $86.4 million of the IPSPT transitional funding trust notes; | |
Ø | Redemption of $100 million of our Trust Originated Preferred Securities; | |
Ø | Payment of $100 million in common stock dividends; and | |
Ø | Payment of $8.3 million in preferred stock dividends. |
Ø | projected operating or financial results; | |
Ø | the consummation of the agreed sale transaction with Ameren; | |
Ø | expectations regarding capital expenditures, preferred dividends and other matters; | |
Ø | beliefs about the financial impact of deregulation; | |
Ø | assumptions regarding the outcomes of legal and administrative proceedings; | |
Ø | projections as to the carrying value of our Note Receivable from Affiliate; | |
Ø | estimations relating to the potential impact of new accounting standards; | |
Ø | our ability to obtain required funding from Dynegy in the short-term and to consummate one or more liquidity initiatives in the long-term; | |
Ø | intentions with respect to future energy supplies; and | |
Ø | anticipated costs associated with legal and regulatory compliance. |
Ø | the outcome of the agreed sale transaction with Ameren; | |
Ø | our substantial indebtedness and our ability to generate sufficient cash flows either from our operations or other liquidity initiatives to service principal and interest on such indebtedness; | |
Ø | the timing and extent of changes in commodity prices for natural gas and electricity; | |
Ø | the effects of deregulation in Illinois and nationally and the rules and regulations adopted in connection therewith; | |
Ø | competition from alternate retail electric providers; | |
Ø | general economic and capital market conditions, including overall economic growth, demand for power and natural gas, and interest rates; |
31 | ||
Ø | the effects of our relationship with Dynegy Inc., our indirect parent company, including the ultimate impact of the legal and administrative proceedings to which it is currently subject; | |
Ø | Dynegy’s financial condition, including its ability to maintain its credit ratings and to continue to support payment to us of principal and interest on our $2.3 billion intercompany note receivable from Illinova; | |
Ø | the cost of borrowing, access to capital markets and other factors affecting our financing activities; | |
Ø | operational factors affecting the ongoing commercial operations of our transmission, transportation and distribution facilities, including catastrophic weather-related damage, unscheduled repairs or workforce issues; | |
Ø | the cost and other effects of legal and administrative proceedings, settlements, investigations or claims, including environmental liabilities that may not be covered by indemnity or insurance; and | |
Ø | other regulatory or legislative developments that affect the energy industry in general and our operations in particular. |
33 | ||
Name | Age | Position(s) | Served with the Company Since | |||
Daniel L. Dienstbier | 63 | Chairman of the Board | 2002 | |||
Larry F. Altenbaumer | 55 | President and Director | 1970 | |||
R. Blake Young | 45 | Executive Vice President and Chief Operating Officer | 2004 | |||
Nick J. Caruso | 57 | Executive Vice President and Chief Financial Officer | 2003 | |||
Shawn E. Schukar | 42 | Senior Vice President | 1984 | |||
Peggy E. Carter | 41 | Managing Director, Controller | 1985 | |||
Ronald D. Pate | 49 | Vice President | 1978 | |||
Frank A. Starbody | 45 | Vice President | 1992 | |||
Carol F. Graebner | 50 | Director | 2003 | |||
Bruce A. Williamson | 44 | Director | 2002 |
33 | ||
34 | ||
35 | ||
Long Term | ||||||||||||||||||||||
Annual Compensation | Compensation Awards | |||||||||||||||||||||
Restricted | Securities | |||||||||||||||||||||
Name and |
| Other Annual | Stock | Underlying | All Other | |||||||||||||||||
Principal Position |
| Year | Salary | Bonus(2) | Compensation(3) | Awards(4) | Options(5) | Compensation(6) | ||||||||||||||
Larry F. Altenbaumer | 2003 | $ | 350,000 | $ | 175,000 | $ | --- | $ | --- | --- | $ | 6,000 | ||||||||||
President | 2002 | $ | 288,770 | $ | --- | $ | --- | $ | --- | 90,000 | $ | 5,250 | ||||||||||
2001 | $ | 299,500 | $ | 350,000 | $ | --- | $ | --- | 79,050 | $ | 5,250 | |||||||||||
Shawn E. Schukar | 2003 | (1) | $ | 187,054 | $ | $ 60,000 | $ | --- | $ | 17,499 | 8,376 | $ | 2,784 | |||||||||
Senior Vice President | 2002 | $ | --- | $ | --- | $ | --- | $ | --- | --- | $ | --- | ||||||||||
2001 | $ | --- | $ | --- | $ | --- | $ | --- | --- | $ | --- | |||||||||||
Peggy E. Carter | 2003 | $ | 139,292 | $ | 38,500 | $ | --- | $ | --- | --- | $ | 4,178 | ||||||||||
Managing Director, | 2002 | $ | 123,780 | $ | --- | $ | --- | $ | --- | 12,000 | $ | 3,310 | ||||||||||
Controller | 2001 | $ | 117,706 | $ | 47,500 | $ | --- | $ | --- | 7,918 | $ | 5,250 | ||||||||||
Ronald D. Pate | 2003 | (1) | $ | 135,616 | $ | 60,000 | $ | --- | $ | 17,499 | 8,376 | $ | 3,849 | |||||||||
Vice President | 2002 | $ | --- | $ | --- | $ | --- | $ | --- | --- | $ | --- | ||||||||||
2001 | $ | --- | $ | --- | $ | --- | $ | --- | --- | $ | --- | |||||||||||
Frank A. Starbody | 2003 | (1) | $ | 120,570 | $ | 60,000 | $ | --- | $ | 17,499 | 8,376 | $ | 3,038 | |||||||||
Vice President | 2002 | $ | --- | $ | --- | $ | --- | $ | --- | --- | $ | --- | ||||||||||
2001 | $ | --- | $ | --- | $ | --- | $ | --- | --- | $ | --- |
(1) | Messrs. Pate, Schukar and Starbody became executive officers in August 2003 in connection with an internal reorganization which resulted in each of these officers assuming responsibility for a particular policy-making function. | |
(2) | As applicable, bonus amounts include bonuses earned in 2001 and 2003, which were paid in 2002 and 2004, respectively. No bonuses were earned in 2002. Mr. Altenbaumer’s bonus was paid pursuant to his settlement agreement and release described below under “Employment Contracts and Change-In-Control Arrangements.” | |
(3) | Includes “Perquisites and Other Personal Benefits” if value is greater than the lesser of $50,000 or 10% of the reported salary and bonus. | |
(4) | For 2003, Messrs. Pate, Schukar and Starbody each received 8,376 shares of restricted Dynegy Class A common stock valued at $4.48 per share. Such shares vest three years from the date of grant. During such period, any dividends paid on Dynegy Class A common stock will also be paid with respect to these restricted shares. | |
(5) | Securities underlying options for 2002 and 2003 includes options granted in 2003 and 2004, respectively, for work done in the preceding year. | |
(6) | The amounts included as “All Other Compensation” represent contributions to the Named Executive Officers’ respective savings plan accounts. | |
36 | ||
Name |
|
| Number of Securities Underlying Options Granted(1) |
| % of Total Options Granted to Employees for 2002(1) |
| Exercise Price $/Share |
|
| Expiration Date |
| Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term(2) | |||||||
5% | 10% | ||||||||||||||||||
Larry F. Altenbaumer | --- | --- | --- | --- | --- | --- | |||||||||||||
Shawn E. Schukar | 8,376 | * | $ | 4.48 | 02/10/2014 | $ | 23,599 | $ | 59,804 | ||||||||||
Peggy E. Carter | --- | --- | --- | --- | --- | --- | |||||||||||||
Ronald D. Pate | 8,376 | * | $ | 4.48 | 02/10/2014 | $ | 23,599 | $ | 59,804 | ||||||||||
Frank A. Starbody | 8,376 | * | $ | 4.48 | 02/10/2014 | $ | 23,599 | $ | 59,804 |
* | Less than 1%. | |
(1) | Securities underlying options granted and percent of total options granted to employees in 2003 reflects Dynegy stock options granted to employees of Dynegy and its affiliates, including IP, for 2003 performance in 2004. | |
(2) | The dollar amounts under these columns represent the potential realizable value of each grant of options assuming that the market price of Dynegy common stock appreciates in value from the date of grant at the 5% and 10% annual rates prescribed by the SEC and are not intended to forecast possible future appreciation, if any, of the price of Dynegy common stock. |
Number of Securities Underlying | Value of Unexercised In-the-Money Options at Fiscal Year-End (1) | ||||||||||||
Name | Exercisable |
|
| Unexercisable |
|
| Exercisable |
|
| Unexercisable | |||
Larry F. Altenbaumer | 229,718 | 147,046 | $ | --- | $ | 225,900 | |||||||
Shawn E. Schukar | 14,294 | 16,646 | $ | --- | $ | 30,120 | |||||||
Peggy E. Carter | 13,365 | 15,682 | $ | --- | $ | 30,120 | |||||||
Ronald D. Pate | 9,083 | 14,223 | $ | --- | $ | 25,100 | |||||||
Frank A. Starbody | 5,992 | 8,754 | $ | --- | $ | 15,060 |
(1) | Value based on the closing price of $4.28 on the New York Stock Exchange – Composite Tape for Dynegy Class A common stock on December 31, 2003. |
37 | ||
AnnualAverageEarnings | 15 Yrs. Credited Service | 20 Yrs. Credited Service | 25 Yrs. Credited Service | 30 Yrs. Credited Service | 35 Yrs. Credited Service | ||||||||||||
$ | 125,000 | $ | 37,500 | $ | 50,000 | $ | 62,500 | $ | 75,000 | $ | 75,000 | ||||||
150,000 | 45,000 | 60,000 | 75,000 | 90,000 | 90,000 | ||||||||||||
170,000 | 51,000 | 68,000 | 85,000 | 102,000 | 102,000 | ||||||||||||
200,000 | 60,000 | 80,000 | 100,000 | 120,000 | 120,000 |
Name: | Years of Credited Service: | |
| ||
Larry F. Altenbaumer | 30 | |
Shawn E. Schukar | 18 | |
Peggy E. Carter | 17 | |
Ronald D. Pate | 24 | |
Frank A. Starbody | 10 |
· | $350,000, less certain deductions and withholdings, representing one year of his base salary; | ||
· | $57,885, less certain deductions and withholdings, representing accrued vacation and personal time; and | ||
· | $175,000, less applicable withholdings, representing his annual bonus with respect to his 2003 performance. |
38 | ||
Additionally, Mr. Altenbaumer is entitled, subject to certain conditions, to continuation of his medical benefits for a period of 12 months and the immediate vesting of the 90,000 options granted to him on February 4, 2003.
· | the amount he would be eligible to receive under the Dynegy Inc. Executive Severance Plan then in effect; and | ||
· | 150% of his base salary and target bonus under the Dynegy Inc. Incentive Compensation Plan. |
39 | ||
40 | ||
1. | Financial Statements - Our consolidated financial statements are incorporated under Item 8 of this Form 10-K. | ||
2. | Financial Statement Schedules | ||
All Financial Statement Schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | |||
3. | Exhibits | ||
The exhibits filed with this Form 10-K are listed in the Exhibit Index located elsewhere herein. All management contracts and compensatory plans or arrangements set forth in such list are marked with a ~. |
Current Report on Form 8-K dated October 31, 2003. Items 5 and 7 were reported and no financial statements were filed. | |||
Current Report on Form 8-K dated November 22, 2003. Items 5 and 7 were reported and no financial statements were filed. | |||
Current Report on Form 8-K dated December 5, 2003. Items 5 and 7 were reported and no financial statements were filed. |
41 | ||
Illinois Power Company | ||
| | |
Date: March 12, 2004 | By: | /s/ Larry F. Altenbaumer |
Larry F. Altenbaumer | ||
President | ||
/s/ Larry F. Altenbaumer | President and Director | March 12, 2004 | ||
Larry F. Altenbaumer | ||||
(Principal Executive Officer) | ||||
/s/ Nick J. Caruso | Executive Vice President and | March 12, 2004 | ||
Chief Financial Officer | ||||
Nick J. Caruso | ||||
(Principal Financial Officer) | ||||
/s/ Peggy E. Carter | Managing Director, Controller | March 12, 2004 | ||
Peggy E. Carter | ||||
(Principal Accounting Officer) | ||||
/s/ Daniel L. Dienstbier | Director | March 12, 2004 | ||
Daniel L. Dienstbier | ||||
/s/ Carol F. Graebner | Director | March 12, 2004 | ||
Carol F. Graebner | ||||
/s/ Bruce A. Williamson | Director | March 12, 2004 | ||
Bruce A. Williamson |
42 | ||
* | Incorporated herein by reference. | |
** | Pursuant to Securities and Exchange Commission Release No. 33-8238, this certification will be treated as “accompanying” this report and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. | |
~ | Management contract and compensatory plans or arrangements. | |
† | Filed herewith. |
Consolidated Financial Statements | PAGE | |
Report of Independent Auditors | F-2 | |
Report of Independent Public Accountants | F-3 | |
Consolidated Balance Sheets as of December 31, 2003 and 2002 | F-4 | |
Consolidated Statements of Income and Comprehensive Income for the years ended | ||
December 31, 2003, 2002 and 2001 | F-5 | |
Consolidated Statements of Cash Flows for the years ended | ||
December 31, 2003, 2002 and 2001 | F-6 | |
Consolidated Statements of Retained Earnings for the years ended | ||
December 31, 2003, 2002 and 2001 | F-7 | |
Notes to Consolidated Financial Statements | F-8 | |
F-1 | ||
F-2 | ||
ARTHUR ANDERSEN LLP |
F-3 | ||
Illinois Power Company | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Millions of dollars) | |||||||
December 31, | 2003 |
|
| 2002 | |||
ASSETS | |||||||
Utility Plant | |||||||
Electric (includes construction work in progress of $86.2 million and $98.3 million, respectively) | $ | 2,499.0 | $ | 2,409.6 | |||
Gas (includes construction work in progress of $13.5 million and $18.4 million, respectively) | 783.4 | 770.6 | |||||
3,282.4 | 3,180.2 | ||||||
Less -- accumulated depreciation | 1,199.4 | 1,150.2 | |||||
2,083.0 | 2,030.0 | ||||||
Investments and Other Assets | 7.3 | 8.9 | |||||
Current Assets | |||||||
Cash and cash equivalents | 16.7 | 117.4 | |||||
Restricted cash | - | 16.6 | |||||
Accounts receivable (less allowance of $5.5 million and $5.5 million, respectively) | |||||||
Service | 83.8 | 80.4 | |||||
Other | 32.2 | 23.4 | |||||
Accounts receivable, affiliates | 74.7 | 22.1 | |||||
Accrued unbilled revenue | 81.6 | 77.8 | |||||
Inventories at average cost | |||||||
Gas in underground storage | 55.0 | 33.1 | |||||
Operating materials | 11.5 | 10.6 | |||||
Prepayments and other | 50.7 | 19.7 | |||||
406.2 | 401.1 | ||||||
Note Receivable from Affiliate | 2,271.4 | 2,271.4 | |||||
Deferred Debits | |||||||
Transition period cost recovery | 116.2 | 154.9 | |||||
Investment in IPSPT | 4.3 | - | |||||
Receivable from IPSPT | 2.2 | - | |||||
Other | 168.6 | 184.0 | |||||
291.3 | 338.9 | ||||||
$ | 5,059.2 | $ | 5,050.3 | ||||
CAPITAL and LIABILITIES | |||||||
Capitalization | |||||||
Common stock -- No par value, 100,000,000 shares authorized; 75,643,937 shares issued, stated at | $ | 1,274.1 | $ | 1,274.1 | |||
Additional paid-in capital | 9.1 | 8.9 | |||||
Retained earnings - accumulated since 1/1/99 | 504.9 | 390.2 | |||||
Accumulated other comprehensive income (loss), net of tax | (9.6 | ) | (13.4 | ) | |||
Less -- Capital stock expense | 7.2 | 7.2 | |||||
Less -- 12,751,724 shares of common stock in treasury, at cost | 286.4 | 286.4 | |||||
Total common stock equity | 1,484.9 | 1,366.2 | |||||
Preferred stock | 45.8 | 45.8 | |||||
Long-term debt | 1,434.6 | 1,718.8 | |||||
Long-term debt to IPSPT | 345.6 | - | |||||
Total capitalization | 3,310.9 | 3,130.8 | |||||
Current Liabilities | |||||||
Accounts payable | 37.3 | 66.1 | |||||
Accounts payable, affiliates | 14.2 | 18.3 | |||||
Notes payable | - | 100.0 | |||||
Long-term debt maturing within one year | 70.7 | 276.4 | |||||
Long-term debt maturing within one year to IPSPT | 74.3 | - | |||||
Taxes accrued | 50.1 | 48.5 | |||||
Interest accrued | 10.1 | 15.4 | |||||
Other | 95.0 | 80.1 | |||||
351.7 | 604.8 | ||||||
Deferred Credits | |||||||
Accumulated deferred income taxes | 1,011.0 | 1,038.2 | |||||
Accumulated deferred investment tax credits | 19.8 | 21.2 | |||||
Other | 365.8 | 255.3 | |||||
Commitments and Contingencies (Note 5) | |||||||
1,396.6 | 1,314.7 | ||||||
$ | 5,059.2 | $ | 5,050.3 | ||||
See notes to consolidated financial statements, which are an integral part of these statements. |
F-4 | ||
Illinois Power Company | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||
(Millions of dollars) | ||||||||||
For the Years Ended December 31, | 2003 |
|
| 2002 |
|
| 2001 | |||
Operating Revenues | ||||||||||
Electric | $ | 1,101.9 | $ | 1,138.8 | $ | 1,137.1 | ||||
Electric interchange | - | 7.1 | 0.7 | |||||||
Gas | 465.9 | 372.4 | 476.6 | |||||||
Total | 1,567.8 | 1,518.3 | 1,614.4 | |||||||
Operating Expenses and Taxes | ||||||||||
Power purchased | 681.0 | 677.5 | 661.8 | |||||||
Gas purchased | 315.5 | 231.7 | 332.8 | |||||||
Other operating expenses | 146.4 | 140.2 | 142.3 | |||||||
Retirement and severance expense | - | (0.7 | ) | 15.3 | ||||||
Maintenance | 58.1 | 53.9 | 54.6 | |||||||
Depreciation and amortization | 78.5 | 80.7 | 80.9 | |||||||
Amortization of regulatory assets | 42.2 | 74.1 | 51.2 | |||||||
General taxes | 67.5 | 57.6 | 68.4 | |||||||
Income taxes | 12.4 | 39.3 | 40.6 | |||||||
Total | 1,401.6 | 1,354.3 | 1,447.9 | |||||||
Operating income | 166.2 | 164.0 | 166.5 | |||||||
Other Income and Deductions - Net | ||||||||||
Interest income from affiliates | 170.4 | 170.4 | 171.0 | |||||||
Miscellaneous - net | (54.3 | ) | (61.3 | ) | (49.5 | ) | ||||
Total | 116.1 | 109.1 | 121.5 | |||||||
Income before interest charges | 282.3 | 273.1 | 288.0 | |||||||
Interest Charges | ||||||||||
Interest expense | 163.8 | 112.9 | 123.5 | |||||||
Allowance for borrowed funds used during construction | (0.9 | ) | (0.5 | ) | (1.7 | ) | ||||
Total | 162.9 | 112.4 | 121.8 | |||||||
Earnings before cumulative effect of change in accounting principle | 119.4 | 160.7 | 166.2 | |||||||
Cumulative effect of change in accounting principle, net of tax | (2.4 | ) | - | - | ||||||
Net income | 117.0 | 160.7 | 166.2 | |||||||
Less -- Preferred dividend requirements | 2.3 | 2.3 | 8.3 | |||||||
Net income applicable to common shareholder | $ | 114.7 | $ | 158.4 | $ | 157.9 | ||||
Net income | $ | 117.0 | $ | 160.7 | $ | 166.2 | ||||
Other comprehensive income (loss), net of tax | 3.8 | (13.4 | ) | - | ||||||
Comprehensive income | $ | 120.8 | $ | 147.3 | $ | 166.2 | ||||
F-5 | ||
Illinois Power Company | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(Millions of dollars) | ||||||||||
For the Years Ended December 31, | 2003 |
|
| 2002 |
|
| 2001 | |||
Cash Flows from Operating Activities | ||||||||||
Net income | $ | 117.0 | $ | 160.7 | $ | 166.2 | ||||
Items not affecting cash flows from operating activities -- | ||||||||||
Depreciation and amortization | 130.9 | 161.8 | 138.0 | |||||||
Deferred income taxes | (23.8 | ) | (44.3 | ) | (25.6 | ) | ||||
Cumulative effect of change in accounting principle | 2.4 | - | - | |||||||
Changes in assets and liabilities resulting from operating activities -- | ||||||||||
Accounts receivable | 5.9 | (22.0 | ) | 116.8 | ||||||
Accrued unbilled revenue | (3.8 | ) | 0.5 | 38.4 | ||||||
Inventories | (22.8 | ) | 1.5 | 5.2 | ||||||
Prepayments | (28.2 | ) | 0.1 | 4.1 | ||||||
Accounts payable | (32.9 | ) | (1.2 | ) | (65.5 | ) | ||||
Other deferred credits | (29.0 | ) | (38.7 | ) | (42.3 | ) | ||||
Interest accrued and other, net | 20.6 | (9.0 | ) | 9.7 | ||||||
Net cash provided by operating activities | 136.3 | 209.4 | 345.0 | |||||||
Cash Flows from Investing Activities | ||||||||||
Capital expenditures | (125.5 | ) | (144.5 | ) | (148.8 | ) | ||||
Other investing activities | - | 3.4 | 2.1 | |||||||
Net cash used in investing activities | (125.5 | ) | (141.1 | ) | (146.7 | ) | ||||
Cash Flows from Financing Activities | ||||||||||
Dividends on common stock and preferred stock | (2.3 | ) | (2.8 | ) | (108.3 | ) | ||||
Prepaid Interest on Affiliate Note Receivable | 127.8 | - | - | |||||||
Redemptions -- | ||||||||||
Short-term debt | (100.0 | ) | (238.2 | ) | (346.8 | ) | ||||
Long-term debt | (276.4 | ) | (182.1 | ) | (273.2 | ) | ||||
Preferred stock | - | - | (100.0 | ) | ||||||
Issuances -- | ||||||||||
Short-term debt | - | 60.0 | 477.2 | |||||||
Long-term debt | 150.0 | 400.0 | 186.8 | |||||||
Decrease (increase) in restricted cash | (2.4 | ) | (5.3 | ) | 1.2 | |||||
Other financing activities | (8.2 | ) | (23.8 | ) | (5.5 | ) | ||||
Net cash provided by (used in) financing activities | (111.5 | ) | 7.8 | (168.6 | ) | |||||
Net change in cash and cash equivalents | (100.7 | ) | 76.1 | 29.7 | ||||||
Cash and cash equivalents at beginning of year | 117.4 | 41.3 | 11.6 | |||||||
Cash and cash equivalents at end of year | $ | 16.7 | $ | 117.4 | $ | 41.3 | ||||
See notes to consolidated financial statements, which are an integral part of these statements. |
F-6 | ||
Illinois Power Company | ||||||||||
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS | ||||||||||
(Millionsof dollars) | ||||||||||
For the Years Ended December 31, | 2003 |
|
| 2002 |
|
| 2001 | |||
Balance at beginning of year | $ | 390.2 | $ | 233.6 | $ | 175.7 | ||||
Net income | 117.0 | 160.7 | 166.2 | |||||||
507.2 | 394.3 | 341.9 | ||||||||
Less-- | ||||||||||
Dividends- | ||||||||||
Preferred stock | 2.3 | 2.3 | 8.3 | |||||||
Common stock | - | 0.5 | 100.0 | |||||||
Preferred stock tender charges | - | 1.3 | - | |||||||
2.3 | 4.1 | 108.3 | ||||||||
Balance at end of year | $ | 504.9 | $ | 390.2 | $ | 233.6 | ||||
F-7 | ||
F-8 | ||
Ø | Reasonably possible – The chance of the future event or events occurring is more than remote but less than likely. | |
Ø | More likely than not – A level of likelihood that is more than 50%. | |
Ø | Probable – Future events are likely to occur. |
F-9 | ||
Regulatory assets and liabilities (Millions of dollars) | 2003 |
|
| 2002 | |||
Regulatory assets | |||||||
Transition period cost recovery | $ | 116.2 | $ | 154.9 | |||
Unamortized losses on reacquired debt | 47.2 | 53.6 | |||||
Manufactured-gas plant site cleanup costs | 38.9 | 39.7 | |||||
Clinton decommissioning cost recovery | 4.5 | 8.0 | |||||
Total regulatory assets | $ | 206.8 | $ | 256.2 | |||
Regulatory liabilities | |||||||
Cost of removal, net | $ | 72.2 | $ | 68.7 | |||
Deferred taxes - SFAS 109 | 56.6 | 49.3 | |||||
Total regulatory liabilities | $ | 128.8 | $ | 118.0 | |||
F-10 | ||
Decommissioning costs (Millions of dollars) | 2003 |
|
| 2002 | |||
Accrual balance, beginning of period | $ | 9.9 | $ | 14.9 | |||
Cash payments | (5.0 | ) | (5.0 | ) | |||
Accrual balance, end of period | $ | 4.9 | $ | 9.9 | |||
Power purchase agreement costs (Millions of dollars) | 2003 |
|
| 2002 | |||
Accrual balance, beginning of period | $ | 59.9 | $ | 87.5 | |||
Amortization | (30.5 | ) | (27.6 | ) | |||
Accrual balance, end of period | $ | 29.4 | $ | 59.9 | |||
F-11 | ||
F-12 | ||
(Millions of dollars) | ||||||||||
Years Ended December 31, | 2003 |
|
| 2002 |
|
| 2001 | |||
Income taxes | $ | 94.3 | $ | 151.1 | $ | 116.4 | ||||
Interest | $ | 152.9 | $ | 106.3 | $ | 121.1 |
2003 |
|
| 2002 |
|
| 2001 | ||||
Reported net income | $ | 117.0 | $ | 160.7 | $ | 166.2 | ||||
Less: pro forma expense, net-of-tax | 4.1 | 4.6 | 3.9 | |||||||
Pro forma net income | $ | 112.9 | $ | 156.1 | $ | 162.3 | ||||
F-13 | ||
F-14 | ||
For the Years Ended December 31, | 2002 |
|
| 2001 | |||
Reported net income | $ | 160.7 | $ | 166.2 | |||
Pro forma adjustments to reflect retroactive adoption of SFAS No. 143 | (0.7 | ) | (0.7 | ) | |||
Pro forma net income | $ | 160.0 | $ | 165.5 | |||
For the Years Ended December 31, | 2002 |
|
| 2001 | |||
Balance, beginning of year | $ | 5.2 | $ | 4.6 | |||
Accretion expense | 0.6 | 0.6 | |||||
Balance, end of year | $ | 5.8 | $ | 5.2 | |||
F-15 | ||
F-16 | ||
2003 |
|
| 2002 | ||||
Balance, beginning of period | $ | .6 | $ | 5.4 | |||
Severance: | |||||||
Adjustments | - | (1.2 | ) | ||||
Cash payments | (.6 | ) | (3.6 | ) | |||
Balance, end of period | $ | - | $ | .6 | |||
F-17 | ||
F-18 | ||
12/31/03(1) | 12/31/02 | ||||||
Investment in IPSPT | $ | 4.3 | $ | - | |||
Receivable from IPSPT (noncurrent) | $ | 2.2 | $ | - | |||
Long-term debt to IPSPT (including due within one year)(2) | $ | 419.9 | $ | - |
(1) | Effective December 31, 2003, IPSPT was deconsolidated from our financial statements in conjunction with the adoption of FIN No. 46R. |
(2) | Due to the adoption of FIN No. 46R and resulting deconsolidation of IPSPT, certain amounts, including restricted cash, are netted against the current portion of our long-term debt payable to IPSPT on our December 31, 2003 consolidated balance sheet. |
F-19 | ||
F-20 | ||
F-21 | ||
F-22 | ||
F-23 | ||
F-24 | ||
(Millions of dollars, except rates) | 2003 | 2002 | |||||
Short-term borrowings at December 31, | $ | - | $ | 100.0 | |||
Weighted average interest rate at December 31, | 0.0 | % | 2.7 | % | |||
Maximum amount outstanding at any month end | $ | 100.0 | $ | 300.0 | |||
Average daily borrowings outstanding during the year | $ | 33.2 | $ | 276.8 | |||
Weighted average interest rate during the year | 2.6 | % | 2.8 | % |
F-25 | ||
Note 8 - Income Taxes | |||||||
Deferred tax assets and liabilities were comprised of the following: | |||||||
(Millions of dollars) | |||||||
Balances as of December 31, | 2003 |
|
| 2002 | |||
Deferred tax assets | |||||||
Current - | |||||||
Miscellaneous book/tax recognition differences | $ | 22.1 | $ | 20.4 | |||
Noncurrent - | |||||||
Depreciation and other property related | 47.9 | 45.7 | |||||
Unamortized investment tax credit | 11.1 | 11.8 | |||||
Miscellaneous book/tax recognition differences | 40.0 | 45.6 | |||||
Minimum pension funding liability | 6.3 | 8.8 | |||||
105.3 | 111.9 | ||||||
Total deferred tax assets | $ | 127.4 | $ | 132.3 | |||
Deferred tax liabilities | |||||||
Current - | |||||||
Miscellaneous book/tax recognition differences | $ | 4.5 | $ | 3.2 | |||
Noncurrent - | |||||||
Depreciation and other property related | 1,044.1 | 1,059.2 | |||||
Miscellaneous book/tax recognition differences | 72.2 | 90.9 | |||||
1,116.3 | 1,150.1 | ||||||
Total deferred tax liabilities | $ | 1,120.8 | $ | 1,153.3 | |||
F-26 | ||
Income taxes included in net income in the Consolidated Statements of Income and Comprehensive Income consist of the following components: | |||||||||||||
(Millionsof dollars) | |||||||||||||
Years Ended December 31, | 2003 |
|
| 2002 |
|
| 2001 | ||||||
Current taxes - | |||||||||||||
Included in operating | |||||||||||||
expenses and taxes | $ | (0.6 | ) | $ | 15.5 | $ | 15.9 | ||||||
Included in other income | |||||||||||||
and deductions | 101.4 | 124.0 | 129.8 | ||||||||||
Total current taxes | 100.8 | 139.5 | 145.7 | ||||||||||
Deferred taxes - | |||||||||||||
Included in operating | |||||||||||||
expenses and taxes | |||||||||||||
Property related differences | 25.7 | 20.3 | 7.8 | ||||||||||
Alternative minimum tax | - | 15.8 | 35.1 | ||||||||||
Gain/loss on reacquired debt | (1.9 | ) | (0.7 | ) | 3.5 | ||||||||
Clinton power purchase agreement costs | 12.1 | 11.0 | 12.1 | ||||||||||
Transition period cost recovery | (15.3 | ) | (28.0 | ) | (18.8 | ) | |||||||
Uniform gas adjustment clause | 1.6 | 1.5 | (14.6 | ) | |||||||||
Miscellaneous book/tax recognition differences | (9.1 | ) | (1.1 | ) | 0.5 | ||||||||
Pension expense/funding | 1.3 | 6.4 | - | ||||||||||
Included in other income | |||||||||||||
and deductions - net | |||||||||||||
Property related differences | (40.5 | ) | (58.2 | ) | (57.3 | ) | |||||||
Miscellaneous book/tax recognition differences | 2.7 | (0.9 | ) | 4.1 | |||||||||
Included in cumulative effect of change in | |||||||||||||
accounting principle | |||||||||||||
Asset retirement obligation | (1.6 | ) | - | - | |||||||||
Total deferred taxes | (25.0 | ) | (33.9 | ) | (27.6 | ) | |||||||
Deferred investment tax credit - net | |||||||||||||
Included in operating expenses and taxes | (1.4 | ) | (1.4 | ) | (0.9 | ) | |||||||
Total income taxes | $ | 74.4 | $ | 104.2 | $ | 117.2 | |||||||
Note: For the years ended December 31, 2003, 2002 and 2001, income tax expenses in the amount of $63.6 million, $64.9 million and $76.6 million, respectively, are reported in Miscellaneous-Net, and for the year ended December 31, 2003, $(1.6) million is reported in Cumulative Effect of Change in Accounting Principle in the accompanying Consolidated Statements of Income and Comprehensive Income. Other tax expenses for the years ended December 31, 2003, 2002 and 2001 are reported as separate components on the accompanying Consolidated Statements of Income and Comprehensive Income. |
F-27 | ||
The reconciliations of income tax expense to amounts computed by applying the statutory tax rate to reported pretax income from continuing operations for the period are as follows: | ||||||||||
(Millions of dollars) | ||||||||||
Years Ended December 31, | 2003 |
|
| 2002 |
|
| 2001 | |||
Income tax expense at the | ||||||||||
federal statutory tax rate | $ | 67.0 | $ | 92.7 | $ | 99.2 | ||||
Increases / (decreases) in taxes | ||||||||||
resulting from - | ||||||||||
State taxes, net of federal effect | 9.1 | 12.3 | 13.2 | |||||||
Investment tax credit amortization | (1.4 | ) | (1.4 | ) | (0.9 | ) | ||||
Depreciation not normalized | 3.9 | 3.4 | 4.4 | |||||||
Interest expense on preferred securities | - | - | (2.4 | ) | ||||||
Other - net | (4.2 | ) | (2.8 | ) | 3.7 | |||||
Total income taxes from continuing operations | $ | 74.4 | $ | 104.2 | $ | 117.2 | ||||
F-28 | ||
Note 9 - Long-Term Debt | ||||||||||||||||
(Millions of dollars) | ||||||||||||||||
December 31, | 2003 |
| 2002 | |||||||||||||
Carrying |
|
| Fair |
|
| Carrying |
|
| Fair |
| ||||||
|
|
|
| Value |
|
| Value |
|
| Value |
|
| Value | |||
Mortgage bonds-- | ||||||||||||||||
6.0% series due 2003 | $ | - | $ | - | $ | 90.0 | $ | 86.7 | ||||||||
6 1/2% series due 2003 | - | - | 100.0 | 96.7 | ||||||||||||
6 3/4% series due 2005 | 70.0 | 71.6 | 70.0 | 66.4 | ||||||||||||
7.5% series due 2009 | 250.0 | 275.8 | 250.0 | 215.0 | ||||||||||||
5.70% series due 2024 (Pollution Control Series U) | 35.6 | 36.0 | 35.6 | 36.2 | ||||||||||||
7.40% series due 2024 (Pollution Control Series V) | 84.1 | 93.5 | 84.1 | 88.4 | ||||||||||||
7 1/2% series due 2025 | 65.6 | 67.4 | 65.6 | 51.7 | ||||||||||||
5.40% series due 2028 (Pollution Control Series S) | 18.7 | 18.4 | 18.7 | 18.7 | ||||||||||||
5.40% series due 2028 (Pollution Control Series T) | 33.8 | 33.3 | 33.8 | 33.8 | ||||||||||||
11 1/2% series due 2010 | 550.0 | 660.0 | 400.0 | 388.0 | ||||||||||||
Adjustable rate series due 2032 | ||||||||||||||||
(Pollution Control Series P, Q, and R) | 150.0 | 150.0 | 150.0 | 150.0 | ||||||||||||
Adjustable rate series due 2028 (Series W) | 111.8 | 111.8 | 111.8 | 111.8 | ||||||||||||
Adjustable rate series due 2017 (Series X) | 75.0 | 75.0 | 75.0 | 75.0 | ||||||||||||
Total mortgage bonds | 1,444.6 | 1,592.8 | 1,484.6 | 1,418.4 | ||||||||||||
IPSPT Transitional Funding Trust Notes-- | ||||||||||||||||
5.34% due 2003 | - | - | 29.4 | 29.6 | ||||||||||||
5.38% due 2005 | - | - | 175.0 | 178.4 | ||||||||||||
5.54% due 2007 | - | - | 175.0 | 181.6 | ||||||||||||
5.65% due 2008 | - | - | 139.0 | 152.8 | ||||||||||||
Total transitional funding trust notes | - | - | 518.4 | 542.4 | ||||||||||||
Obligations for Tilton Capital Lease | 70.7 | 70.7 | - | - | ||||||||||||
1,515.3 | $ | 1,663.5 | 2,003.0 | $ | 1,960.8 | |||||||||||
Adjustment to fair value | 8.1 | 8.7 | ||||||||||||||
Unamortized discount on debt | (18.1 | ) | (16.5 | ) | ||||||||||||
1,505.3 | 1,995.2 | |||||||||||||||
Long-term debt and capital leases maturing within one year | (70.7 | ) | (276.4 | ) | ||||||||||||
Total long-term debt | $ | 1,434.6 | $ | 1,718.8 | ||||||||||||
Long-term debt payable to IPSPT | ||||||||||||||||
5.38% due 2005 | $ | 105.9 | $ | 109.4 | $ | - | $ | - | ||||||||
5.54% due 2007 | 175.0 | 182.6 | - | - | ||||||||||||
5.65% due 2008 | 139.0 | 148.5 | - | - | ||||||||||||
Total long-term debt payable to IPSPT | 419.9 | $ | 440.5 | - | $ | - | ||||||||||
Long-term debt payable to IPSPT maturing within one year | (74.3 | ) | - | |||||||||||||
Total long-term debt payable to IPSPT | $ | 345.6 | $ | - | ||||||||||||
F-29 | ||
F-30 | ||
F-31 | ||
Note 10 - Preferred Stock | |||||||||||||||||||
(Millions of dollars) | |||||||||||||||||||
December 31, | 2003 |
|
| 2002 | |||||||||||||||
Serial Preferred Stock, cumulative, $50 par value --Authorized 5,000,000 shares; 912,675 shares outstanding atDecember 31, 2003 and 2002, respectively. | |||||||||||||||||||
2003 | 2002 | Redemption | |||||||||||||||||
Series | Shares | Shares | Prices | ||||||||||||||||
4.08 | % | 225,510 | 225,510 | $ | 51.50 | $ | 11.3 | $ | 11.3 | ||||||||||
4.26 | % | 104,280 | 104,280 | 51.50 | 5.2 | 5.2 | |||||||||||||
4.70 | % | 145,170 | 145,170 | 51.50 | 7.2 | 7.2 | |||||||||||||
4.42 | % | 102,190 | 102,190 | 51.50 | 5.1 | 5.1 | |||||||||||||
4.20 | % | 143,760 | 143,760 | 52.00 | 7.2 | 7.2 | |||||||||||||
7.75 | % | 191,765 | 191,765 | 50.00 | 9.6 | 9.6 | |||||||||||||
Net premium on preferred stock | 0.2 | 0.2 | |||||||||||||||||
Total Preferred Stock, $50 par value | 45.8 | 45.8 | |||||||||||||||||
Serial Preferred Stock, cumulative, without par value-- | |||||||||||||||||||
Authorized 5,000,000 shares; none outstanding | - | - | |||||||||||||||||
Preference Stock, cumulative, without par value -- | |||||||||||||||||||
Authorized 5,000,000 shares; none outstanding | - | - | |||||||||||||||||
Total Serial Preferred Stock and Preference Stock | $ | 45.8 | $ | 45.8 | |||||||||||||||
F-32 | ||
F-33 | ||
For the Year Ended December 31, | |||||||||||||||||||
2003 | 2002 | 2001 | |||||||||||||||||
Number of | Weighted Avg. |
| Number of |
| Weighted Avg. |
| Number of |
| Weighted Avg. |
| |||||||||
|
| Shares |
| Option Price |
| Shares |
| Option Price |
| Shares |
| Option Price | |||||||
Outstanding at beginning of period | 1,606,086 | $ | 29.94 | 1,716,790 | $ | 29.92 | 1,429,951 | $ | 28.00 | ||||||||||
Granted | 335,500 | 1.77 | - | N/A | 559,421 | $ | 33.52 | ||||||||||||
Exercised | - | N/A | (16,497 | ) | $ | 23.38 | (195,733 | ) | $ | 25.54 | |||||||||
Canceled, forfeited or expired | (201,994 | ) | $ | 29.22 | (94,207 | ) | $ | 30.66 | (76,849 | ) | $ | 31.58 | |||||||
Outstanding at end of period | 1,739,592 | $ | 24.59 | 1,606,086 | $ | 29.94 | 1,716,790 | $ | 29.92 | ||||||||||
Exercisable at end of period | 1,291,010 | $ | 29.76 | 1,504,157 | $ | 27.66 | 860,715 | $ | 29.06 | ||||||||||
Weighted average fair value of options | |||||||||||||||||||
granted at market | $ | 1.54 | $ | N/A | $ | 19.10 | |||||||||||||
Weighted average fair value of options | |||||||||||||||||||
granted below market | N/A | N/A | N/A | ||||||||||||||||
F-34 | ||
Options Outstanding | Options Exercisable | ||||||
Number of Shares Outstanding at | Weighted Average | Weighted | Number of Shares | Weighted | |||
Range of Exercise Prices | December 31, 2003 | Remaining Contractual Life (Years) | Average Exercise Price | Exercisable at December 31, 2003 | Average Exercise Price | ||
$1.77 - $23.38 | 540,949 | 8.4 | $10.62 | 422,877 | $23.63 | ||
$23.85 - $26.13 | 381,409 | 6.9 | $24.13 | 100,400 | $24.91 | ||
$29.09 - $31.13 | 629,500 | 4.9 | $30.41 | 609,500 | $30.45 | ||
$35.28 - $56.98 | 187,734 | 7.0 | $46.30 | 158,233 | $46.53 | ||
1,739,592 | 1,291,010 | ||||||
2003 |
|
| 2002 |
|
| 2001 | ||||
Expected life of options | 10 years | N/A | 10 years | |||||||
Risk-free interest rates | 3.92 | % | N/A | 4.82 | % | |||||
Expected volatility of stock | 90 | % | N/A | 46 | % | |||||
Expected dividend yield | N/A | N/A | 1.0 | % |
F-35 | ||
(Millions of dollars) | |||||||||||||
Pension Benefits |
| Other Benefits | |||||||||||
2003 |
|
| 2002 |
|
| 2003 |
|
| 2002 | ||||
Change in benefit obligation | |||||||||||||
Projected benefit obligation at beginning of year | $ | 573.5 | $ | 489.6 | $ | 150.6 | $ | 133.7 | |||||
Service cost | 13.4 | 10.6 | 3.8 | 3.0 | |||||||||
Interest cost | 36.1 | 35.6 | 10.4 | 9.6 | |||||||||
Participant contributions | - | - | 1.3 | 1.1 | |||||||||
Plan amendments | 1.3 | - | - | - | |||||||||
Actuarial (gain)/loss | 38.0 | 69.5 | 32.8 | 11.3 | |||||||||
Special termination benefits | - | - | - | - | |||||||||
Benefits paid | (33.3 | ) | (31.8 | ) | (9.1 | ) | (8.1 | ) | |||||
Projected benefit obligation at end of year | $ | 629.0 | $ | 573.5 | $ | 189.8 | $ | 150.6 | |||||
Change in plan assets | |||||||||||||
Fair value of plan assets, beginning of year | $ | 476.7 | $ | 557.4 | $ | 67.0 | $ | 79.4 | |||||
Actual return/(loss) on plan assets | 98.7 | (48.9 | ) | 14.2 | (11.0 | ) | |||||||
Employer contributions | - | - | 5.8 | 5.6 | |||||||||
Participant contributions | - | - | 1.3 | 1.1 | |||||||||
Benefits paid | (33.3 | ) | (31.8 | ) | (9.1 | ) | (8.1 | ) | |||||
Fair value of plan assets, end of year | $ | 542.1 | $ | 476.7 | $ | 79.2 | $ | 67.0 | |||||
Reconciliation of funded status | |||||||||||||
Funded status | |||||||||||||
Unrecognized actuarial (gain)/loss | $ | (86.9 | ) | $ | (96.8 | ) | $ | (110.6 | ) | $ | (83.6 | ) | |
Unrecognized prior service cost | 104.0 | 114.3 | 91.9 | 72.0 | |||||||||
Unrecognized transition obligation/(asset) | 6.4 | 6.6 | - | - | |||||||||
Net amount recognized | (4.4 | ) | (5.9 | ) | 17.1 | 19.3 | |||||||
$ | 19.1 | $ | 18.2 | $ | (1.6 | ) | $ | 7.7 | |||||
Amounts recognized in the Consolidated Balance Sheets consist of: | |||||||||||||
Prepaid benefit cost | $ | 38.5 | $ | 37.6 | $ | - | $ | 7.7 | |||||
Accrued benefit liability | (37.7 | ) | (44.5 | ) | (1.6 | ) | - | ||||||
Intangible asset | 2.4 | 3.0 | - | - | |||||||||
Accumulated other comprehensive income (pretax) | 15.9 | 22.1 | - | - | |||||||||
Net amount recognized | $ | 19.1 | $ | 18.2 | $ | (1.6 | ) | $ | 7.7 | ||||
F-36 | ||
(Millions of dollars) | |||||||
2003 |
|
| 2002 | ||||
Accumulated benefit obligation | $ | 280.5 | $ | 263.3 | |||
Projected benefit obligation | 321.7 | 299.9 | |||||
Fair value of plan assets | 244.3 | 218.8 | |||||
(Millions of dollars) | ||||||||||
2003 |
|
| 2002 |
|
| 2001 | ||||
Change in minimum liability include in other comprehensive income (net | ||||||||||
of taxes of $(2.5) million in 2003 and $8.8 million in 2002) | $ | (3.7 | ) | $ | 13.3 | $ | - |
(Millions of dollars) | |||||||||||||||||||
Pension Benefits |
| Other Benefits |
| ||||||||||||||||
|
| 2003 |
|
| 2002 |
|
| 2001 |
|
| 2003 |
|
| 2002 |
|
| 2001 | ||
Components of net periodic benefit cost | |||||||||||||||||||
Service cost | $ | 13.4 | $ | 10.6 | $ | 9.8 | $ | 3.8 | $ | 3.0 | $ | 2.4 | |||||||
Interest cost | 36.1 | 35.6 | 33.7 | 10.4 | 9.6 | 8.4 | |||||||||||||
Expected return on plan assets | (50.4 | ) | (56.6 | ) | (53.8 | ) | (5.9 | ) | (7.1 | ) | (7.8 | ) | |||||||
Amortization of prior service cost | 1.5 | 1.4 | 1.4 | - | - | - | |||||||||||||
Amortization of transition liability/(asset) | (1.5 | ) | (3.4 | ) | (4.2 | ) | 2.1 | 2.1 | 2.1 | ||||||||||
Recognize net actuarial (gain)/loss | - | (4.4 | ) | (6.7 | ) | 4.6 | 2.0 | - | |||||||||||
Net periodic benefit cost/(income) | $ | (0.9 | ) | $ | (16.8 | ) | $ | (19.8 | ) | $ | 15.0 | $ | 9.6 | $ | 5.1 | ||||
Additional cost due to SFAS 88 | - | - | 8.7 | - | - | - | |||||||||||||
Total net periodic benefit cost/(income) | $ | (0.9 | ) | $ | (16.8 | ) | $ | (11.1 | ) | $ | 15.0 | $ | 9.6 | $ | 5.1 | ||||
Pension Benefits December 31, | Other Benefits | ||||||||||||
2003 |
|
| 2002 |
|
| 2003 |
|
| 2002 | ||||
Discount rate | 6.00 | % | 6.50 | % | 6.00 | % | 6.50 | % | |||||
Rate of compensation increase | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % |
F- 37 | ||
Pension Benefits | Other Benefits | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
2003 |
|
| 2002 |
|
| 2001 |
|
| 2003 |
|
| 2002 |
|
| 2001 | ||||
Discount Rate | 6.50 | % | 7.50 | % | 8.00 | % | 6.00 | % | 7.50 | % | 8.00 | % | |||||||
Expected return on plan assets | 9.00 | % | 9.50 | % | 9.50 | % | 9.00 | % | 9.50 | % | 9.50 | % | |||||||
Rate of compensation increase | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % |
December 31. | |||||||
2003 |
|
| 2002 | ||||
Health care case trend rated assumed for next year | 10.00 | % | 9.30 | % | |||
Ultimate trend rate | 5.50 | % | 5.50 | % | |||
Year that the rate reaches the ultimate trend rate | 2009 | 2009 |
(Millions of dollars) | |||||||
Increase |
|
| Decrease | ||||
Aggregate impact on service cost and interest cost | $ | 2.5 | $ | (2.1 | ) | ||
Impact on accumulated post-retirement benefit obligation | $ | 24.2 | $ | (20.5 | ) |
F-38 | ||
December 31. | ||
2003 | 2002 | |
Equity securities | 64% | 59% |
Debt securities | 28% | 30% |
Real estate | 5% | 6% |
Other | 3% | 4% |
Cash | -% | 1% |
Total | 100% | 100% |
December 31. | ||
2003 | 2002 | |
Equity securities | 75% | 74% |
Debt securities | 25% | 26% |
Total | 100% | 100% |
F-39 | ||
2003 |
| 2002 | |||||||||||
(Millions of dollars) | Carrying Value |
|
| Fair Value |
|
| Carrying Value |
|
| Fair Value |
| ||
Cash and cash equivalents | $ | 16.7 | $ | 16.7 | $ | 117.4 | $ | 117.4 | |||||
Note receivable from affiliate | 2,271.4 | 2,271.4 | 2,271.4 | 989.1 | |||||||||
Preferred stock | 45.8 | 43.7 | 45.8 | 17.6 | |||||||||
Long-term debt (including current maturities) | 1,505.3 | 1,663.5 | 1,995.2 | 1,960.8 | |||||||||
Long-term debt to IPSPT (including current | |||||||||||||
maturities) | 419.9 | 440.5 | --- | --- | |||||||||
Notes payable | --- | --- | 100.0 | 100.0 | |||||||||
| ||
F-40 | ||
Note 15 - Quarterly Consolidated Financial Information And Common Stock Data (Unaudited) | |||||||||||||
(Millions of dollars) | |||||||||||||
First Quarter |
|
| Second Quarter |
|
| Third Quarter |
|
| Fourth Quarter |
| |||
|
| 2003 |
|
| 2003 |
|
| 2003 |
|
| 2003 | ||
Operating revenues | $ | 461.7 | $ | 327.0 | $ | 401.7 | $ | 377.4 | |||||
Operating income | 50.8 | 32.5 | 47.1 | 35.8 | |||||||||
Net income before cumulative effect of change in accounting principle | 34.4 | 18.1 | 39.6 | 27.3 | |||||||||
Net income | 32.0 | 18.1 | 39.6 | 27.3 | |||||||||
Net income applicable to common shareholder | 31.5 | 17.5 | 39.0 | 26.7 | |||||||||
First Quarter |
|
| Second Quarter |
|
| Third Quarter |
|
| Fourth Quarter |
| |||
|
| 2002 |
|
| 2002 |
|
| 2002 |
|
| 2002 | ||
Operating revenues | $ | 393.2 | $ | 343.9 | $ | 406.0 | $ | 375.2 | |||||
Operating income | 35.5 | 45.1 | 57.7 | 25.7 | |||||||||
Net income | 34.5 | 46.2 | 56.9 | 23.1 | |||||||||
Net income applicable to common shareholder | 33.9 | 45.6 | 56.3 | 22.6 | |||||||||
F-41 | ||
AFUDC | Allowance for Funds Used During Construction |
AEP | American Electric Power |
Alliance RTO | Alliance Regional Transmission Organization |
Ameren | Ameren Corporation |
AmerenCILCO | Ameren – Central Illinois Light Company |
AmerenCIPS | Ameren – Central Illinois Public Service Company |
AmerenUE | Ameren – Union Electric Company |
AmerGen | AmerGen Energy Company |
APB | Accounting Principles Board |
ARO | Asset Retirement Obligation |
Bcf | Billion cubic feet |
Clinton | Clinton Power Station |
ComED | Commonwealth Edison Company |
Dayton P&L | Dayton Power & Light |
DMG | Dynegy Midwest Generation, Inc. |
DOE | United States Department of Energy |
DOT | U.S. Department of Transportation |
Dynegy | Dynegy Inc. |
EITF | Emerging Issues Task Force of the Financial Accounting Standards Board |
EMF | Electric and Magnetic Fields |
ERISA | The Employee Retirement Income Security Act of 1974, as amended |
EPA | Environmental Protection Agency |
Exchange Act | Securities Exchange Act of 1934, as amended |
Exelon | Exelon Corporation |
FASB | Financial Accounting Standards Board |
FERC | Federal Energy Regulatory Commission |
FIN | FASB Interpretation Number |
GAAP | Generally Accepted Accounting Principles |
HLPSA | Hazardous Liquid Pipeline Safety Act |
ICC | Illinois Commerce Commission |
Illinova | Illinova Corporation |
IPSPT | Illinois Power Special Purpose Trust |
ISO | Independent System Operator |
ITC | Investment Tax Credit |
kW | Kilowatts |
kWh | Kilowatt-Hour |
LLC | Illinois Power Securitization Limited Liability Company |
MGP | Manufactured-Gas Plant |
MISO | Midwest Independent Transmission System Operator, Inc. |
MMBtu | Millions of British thermal units |
MW | Megawatts |
National Grid | National Grid, USA |
NGPSA | Natural Gas Pipeline Safety Act |
NOV | Notice of Violation issued by the EPA |
OASIS | Open Access Same-time Information System |
OSHA | Occupational Safety and Health Act |
P.A. 90-561 | Electric Service Customer Choice and Rate Relief Law of 1997 |
P.A. 92-0537 | Extension of Retail Electric Rate Freeze |
PJM | PJM Interconnection LLC |
PPA | Power Purchase Agreement |
PUHCA | Public Utility Holding Company Act of 1935 |
F-42 | ||
RCRA | Resource Conservation and Recovery Act |
ROE | Return on Equity |
RTO | Regional Transmission Organization |
SEC | United States Securities and Exchange Commission |
SFAS | Statement of Financial Accounting Standards |
Trans-Elect | Trans-Elect, Inc. |
TSCA | Toxic Substances Control Act |
TVA | Tennessee Valley Authority |
UGAC | Uniform Gas Adjustment Clause |
VIE | Variable Interest Entity |
F-43 | ||