UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Transition Period From to
Commission file number 1-3672.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Illinois 37-0211380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
607 East Adams Street, Springfield, Illinois 62739
(Address of principal executive offices and Zip Code)
Registrant's telephone number,
including area code: (217) 523-3600
Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
---------------- --------------
Shares outstanding of each of registrant's classes of common stock as of August
9, 2002: Common Stock, no par value, held by Ameren Corporation (parent company
of Registrant) - 25,452,373
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
INDEX
Page
----
PART I. Financial Information
ITEM 1. Financial Statements (Unaudited)
Balance Sheet at June 30, 2002 and December 31, 2001........ 2
Statement of Income for the three and six months ended
June 30, 2002 and 2001...................................... 3
Statement of Cash Flows for the six months ended
June 30, 2002 and 2001...................................... 4
Statement of Common Stockholder's Equity for the three
and six months ended June 30, 2002 and 2001................. 5
Notes to Financial Statements............................... 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 11
ITEM 3. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 16
PART II. Other Information
ITEM 1. Legal Proceedings........................................... 18
ITEM 4. Submission of Matters to a Vote of Security Holders......... 18
ITEM 5. Other Information........................................... 19
ITEM 6. Exhibits and Reports on Form 8-K............................ 19
SIGNATURE................................................................. 20
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
BALANCE SHEET
(Unaudited, in millions, except per share amounts)
June 30, December 31,
2002 2001
--------- ------------
ASSETS:
Property and plant, at original cost:
Electric $1,242 $1,224
Gas 286 280
------ ------
1,528 1,504
Less accumulated depreciation and amortization 715 693
------ ------
813 811
Construction work in progress 10 11
------ ------
Total property and plant, net 823 822
------ ------
Investments and other assets:
Intercompany notes receivable 373 419
Intercompany tax receivable 170 177
Other assets 15 17
------ ------
Total investments and other assets 558 613
------ ------
Current assets:
Cash and cash equivalents 20 26
Accounts receivable - trade (less allowance for
doubtful accounts of $2 and $1,
respectively) 48 38
Unbilled revenue 67 81
Other accounts and notes receivable 79 61
Intercompany notes receivable 46 43
Intercompany tax receivable 14 18
Materials and supplies, at average cost -
Fossil fuel 23 33
Other 10 9
Other 6 7
------ ------
Total current assets 313 316
------ ------
Regulatory assets 30 32
------ ------
Total Assets $1,724 $1,783
====== ======
CAPITAL AND LIABILITIES:
Capitalization:
Common stock, no par value, 45.0 shares
authorized - 25.5 shares outstanding $ 120 $ 120
Retained earnings 421 444
------ ------
Total common stockholder's equity 541 564
------ ------
Preferred stock not subject to mandatory redemption 80 80
Long-term debt 534 579
------ ------
Total capitalization 1,155 1,223
------ ------
Current liabilities:
Current maturities of long-term debt 73 33
Accounts and wages payable 85 114
Accumulated deferred income taxes 20 20
Taxes accrued 29 23
Other 31 31
------ ------
Total current liabilities 238 221
------ ------
Accumulated deferred income taxes 250 255
Accumulated deferred investment tax credits 11 12
Regulatory liabilities 32 36
Other deferred credits and liabilities 38 36
------ ------
Total Capital and Liabilities $1,724 $1,783
====== ======
See Notes to Financial Statements.
2
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF INCOME
(Unaudited, in millions)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2002 2001 2002 2001
OPERATING REVENUES:
Electric $ 161 $ 163 $ 311 $ 319
Gas 26 6 91 112
----- ----- ------ -----
Total operating revenues 187 169 402 431
OPERATING EXPENSES:
Operations
Fuel and purchased power 101 105 206 213
Gas 12 (1) 56 79
Other 30 28 63 58
----- ----- ------ -----
143 132 325 350
Maintenance 10 6 18 13
Depreciation and amortization 13 12 25 24
Income taxes 4 7 5 12
Other taxes 6 3 15 12
----- ----- ------ -----
Total operating expenses 176 160 388 411
----- ----- ------ -----
OPERATING INCOME 11 9 14 20
OTHER INCOME AND (DEDUCTIONS):
Miscellaneous, net
Miscellaneous income 7 10 17 20
Miscellaneous expense - - (1) -
----- ----- ------ -----
Total other income and (deductions) 7 10 16 20
INTEREST CHARGES 10 9 20 19
----- ----- ------ -----
NET INCOME 8 10 10 21
PREFERRED STOCK DIVIDENDS 1 1 2 2
----- ----- ------ -----
NET INCOME AFTER PREFERRED STOCK DIVIDENDS $ 7 $ 9 $ 8 $ 19
===== ===== ====== =====
See Notes to Financial Statements.
3
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended
June 30,
--------------------------
2002 2001
Cash Flows From Operating:
Net income $ 10 $ 21
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 25 24
Amortization of debt issuance costs and
premium/discounts 1 -
Deferred income taxes, net (9) (9)
Deferred investment tax credits, net (1) (1)
Changes in assets and liabilities:
Receivables, net (14) 19
Materials and supplies 9 (4)
Accounts and wages payable (29) (19)
Taxes accrued 6 3
Assets, other 15 5
Liabilities, other 2 (3)
------ ------
Net cash provided by operating activities 15 36
------ ------
Cash Flows From Investing:
Construction expenditures (26) (22)
Intercompany notes receivable 43 40
------ ------
Net cash provided by investing activities 17 18
------ ------
Cash Flows From Financing:
Dividends on common stock (31) -
Dividends on preferred stock (2) (2)
Redemptions:
Long-term debt (5) (25)
Intercompany notes payable - (172)
Issuances:
Long-term debt - 150
------ ------
Net cash used in financing activities (38) (49)
------ ------
Net change in cash and cash equivalents (6) 5
Cash and cash equivalents at beginning of year 26 30
------ ------
Cash and cash equivalents at end of period $ 20 $ 35
====== ======
Cash paid during the periods:
Interest $ 20 $ 19
Income taxes, net 9 15
See Notes to Financial Statements.
4
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF COMMON STOCKHOLDER'S EQUITY
(Unaudited, in millions)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
Common stock $ 120 $ 120 $ 120 $ 120
Retained earnings
Beginning balance 430 445 444 435
Net income 8 10 10 21
Common stock dividends (16) - (31) -
Preferred stock dividends (1) (1) (2) (2)
------ ------ ------ ------
421 454 421 454
Total common stockholder's equity $ 541 $ 574 $ 541 $ 574
====== ====== ====== ======
See Notes to Financial Statements.
5
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2002
NOTE 1 - Summary of Significant Accounting Policies
Basis of Presentation
Our financial statements reflect all adjustments (which include normal,
recurring adjustments) necessary, in our opinion, for a fair presentation of the
interim results. These statements should be read in conjunction with the
financial statements and the notes thereto included in our 2001 Annual Report on
Form 10-K.
When we refer to AmerenCIPS, our, we or us, we are referring to Central
Illinois Public Service Company. All dollar amounts are in millions, unless
otherwise indicated.
Accounting Changes
In January 2001, we adopted Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities."
The impact of that adoption was immaterial to us.
On January 1, 2002, we adopted SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires business
combinations to be accounted for under the purchase method of accounting, which
requires one party in the transaction to be identified as the acquiring
enterprise and for that party to allocate the purchase price to the assets and
liabilities of the acquired enterprise based on fair market value. SFAS 142
requires goodwill and indefinite-lived intangible assets recorded in the
financial statements to be tested for impairment at least annually, rather than
amortized over a fixed period, with impairment losses recorded in the income
statement. SFAS 141 and SFAS 142 did not have any effect on our financial
position, results of operations or liquidity upon adoption. See Note 6 -
"CILCORP Acquisition."
In July 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations"
was issued. SFAS 143 requires an entity to record a liability and corresponding
asset representing the present value of legal obligations associated with the
retirement of tangible, long-lived assets. SFAS 143 is effective for us on
January 1, 2003. At this time, we are assessing the impact of SFAS 143 on our
financial position, results of operations and liquidity upon adoption.
On January 1, 2002, we adopted SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." SFAS 144 addresses the financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." SFAS 144 retains the guidance related to calculating
and recording impairment losses, but adds guidance on the accounting for
discontinued operations, previously accounted for under Accounting Principles
Board Opinion No. 30. We evaluate long-lived assets for impairment when events
or changes in circumstances indicate that the carrying value of such assets may
not be recoverable. The determination of whether impairment has occurred is
based on an estimate of undiscounted cash flows attributable to the assets, as
compared with the carrying value of the assets. If impairment has occurred, the
amount of the impairment recognized is determined by estimating the fair value
of the assets and recording a provision for loss if the carrying value is
greater than the fair value. SFAS 144 did not have any effect on our financial
position, results of operations or liquidity upon adoption.
Excise Taxes
Excise taxes on our Illinois gas customer bills are imposed on us and are
recorded gross in Operating Revenues and Other Taxes. Excise taxes applicable to
Illinois electric customer bills are imposed on the consumer and are recorded as
tax collections payable. Excise taxes recorded in Operating Revenues and Other
Taxes for the three and six months ended June 30, 2002 were $2 million (2001 -
$2 million) and $7 million (2001 - $7 million), respectively.
6
NOTE 2 - Rate and Regulatory Matters
Illinois
In December 1997, the Electric Service Customer Choice and Rate Relief Law
of 1997 (the Illinois Law) was enacted providing for electric utility
restructuring in Illinois. This legislation introduced competition into the
retail supply of electric energy in Illinois. Illinois residential customers
were offered choice in suppliers on May 1, 2002. Industrial and commercial
customers were previously offered this choice.
The Illinois Law contained a provision freezing retail bundled electric
rates through January 1, 2005. In 2002, legislation was passed and signed into
law that extended the rate freeze period through January 1, 2007. The offering
of choice to our industrial and commercial customers has not had a material
adverse effect on our business and we do not expect the offering of choice to
our residential customers, or the extension of the rate freeze, to have a
material adverse effect on our business.
Federal - Regional Transmission Organizations
In December 1999, the Federal Energy Regulatory Commission (FERC) issued
Order 2000, requiring all utilities, subject to FERC jurisdiction, to state
their intentions for joining a regional transmission organization (RTO). RTOs
are independent organizations that will functionally control the transmission
assets of utilities in order to improve the wholesale power market. Since
January 2001, we along with several other utilities were seeking approval from
the FERC to participate in an RTO known as the Alliance RTO. We had previously
been a member of the Midwest Independent System Operator (MISO) and recorded a
pretax charge to earnings in 2000 of $8 million ($5 million after taxes) for an
exit fee and other costs when we left that organization. We felt the for-profit
Alliance RTO business model was superior to the not-for-profit MISO business
model and provided us with a more equitable return on our transmission assets.
In late 2001, the FERC issued an order that rejected the formation of the
Alliance RTO and ordered the Alliance RTO companies and the MISO to discuss how
the Alliance RTO business model could be accommodated within the MISO. On April
25, 2002, after the Alliance RTO and MISO failed to reach an agreement, and
after a series of filings by the two parties with the FERC, the FERC issued a
declaratory order setting forth the division of responsibilities between the
MISO and National Grid (the managing member of the transmission company formed
by the Alliance companies) and approved the rate design and the revenue
distribution methodology proposed by the Alliance companies. However, the FERC
denied a request by the Alliance companies and National Grid to purchase certain
services from the MISO at incremental cost rather than MISO's full tariff rates.
The FERC also ordered the MISO to return the exit fee paid by AmerenCIPS to
leave the MISO, provided AmerenCIPS returns to the MISO and agrees to pay its
proportional share of the startup and ongoing operational expenses of the MISO.
Moreover, the FERC required the Alliance companies to select the RTO in which
they will participate within thirty days of the order.
Since the April 2002 FERC order, we and Union Electric Company (AmerenUE),
an affiliate, made filings with the FERC indicating that we would return to the
MISO and that membership would be through a new independent transmission
company, GridAmerica LLC, that was agreed to be formed by AmerenCIPS and
AmerenUE, along with subsidiaries of FirstEnergy Corporation and NiSource Inc.
If the FERC approves the definitive agreements establishing GridAmerica,
National Grid will serve as the managing member of GridAmerica and will manage
the transmission assets of the three companies and participate in the MISO on
behalf of GridAmerica. Other Alliance RTO companies announced their intentions
to join the Pennsylvania - Jersey - Maryland (PJM) RTO. On July 25, 2002, the
Ameren companies filed a motion with the FERC requesting that it condition the
approval of the choices of other Illinois utilities to join the PJM RTO on MISO
and PJM entering into an agreement addressing important reliability and
rate-barrier issues. On July 31, 2002, the FERC issued an order accepting the
formation of GridAmerica as an independent transmission company under the MISO
subject to further compliance filings ordered by the FERC. The FERC also issued
an order accepting the elections made by the other Illinois utilities to join
the PJM RTO on the condition PJM and MISO immediately begin a process to address
the reliability and rate-barrier issues raised by us and other market
participants in previous filings.
7
Until the reliability and rate-barrier issues are resolved as ordered by
the FERC, and the tariffs and other material terms of the Ameren companies'
participation in GridAmerica, and GridAmerica's participation in the MISO, are
finalized and approved by the FERC, we are unable to predict whether the Ameren
companies will in fact become a member of GridAmerica or MISO, or the impact
that on-going RTO developments will have on our financial condition, results of
operation or liquidity.
NOTE 3 - Related Party Transactions
We have transactions in the normal course of business with Ameren
Corporation, our parent company, and its other subsidiaries. These transactions
are primarily comprised of power purchases and sales, including power purchases
derived under an electric power supply agreement between us and AmerenEnergy
Marketing Company (Marketing Company), and other services received or rendered.
An electric power supply agreement was entered into between AmerenEnergy
Generating Company (Generating Company) and its non-regulated affiliate,
Marketing Company, both wholly-owned subsidiaries of AmerenEnergy Resources
Company (Resources Company). Subsequently, Marketing Company entered into a
separate power supply agreement with our company to supply us sufficient energy
and capacity to meet our obligations as a public utility through December 31,
2004 (Power Supply Agreement). As a result of the extension through January 1,
2007 of the electric rate freeze related to the Illinois Law, we expect to seek
to renew or extend the Power Supply Agreement through the same period. A renewal
or extension of the Power Supply Agreement will depend on compliance with
regulatory requirements in effect at the time, and we cannot predict whether we
will be successful in securing a renewal or extension of this agreement. A
portion of the capacity and energy supplied by Generating Company to Marketing
Company will be resold to us for resale to our native load customers at rates
specified by the Illinois Commerce Commission (ICC), which approximate the
historical regulatory rates for generation, or to retail customers allowed
choice of an electric supplier under state law at market-based prices. Through
the Power Supply Agreement, we purchased $95 million of power for the three
months ended June 30, 2002 (2001 - $100 million) and $193 million for the six
months ended June 30, 2002 (2001 - $201 million).
Intercompany power purchases under the Power Supply Agreement and from
Electric Energy, Inc., an affiliate, totaled $101 million for the three months
ended June 30, 2002 (2001 - $105 million) and $206 million for the six months
ended June 30, 2002 (2001 - $213 million). Intercompany power sales to Marketing
Company totaled $6 million for the three months ended June 30, 2002 (2001 - $6
million) and $13 million for the six months ended June 30, 2002 (2001 - $12
million).
We have the ability to borrow from Ameren or AmerenUE, through a regulated
money pool agreement. Ameren Services Company, an affiliate, administers the
regulated money pool and tracks internal and external funds separately. Internal
funds are surplus funds contributed to the money pool from participants. The
primary source of external funds for the regulated money pool at June 30, 2002
was AmerenUE's commercial paper program, which was backed by bank credit
agreements totaling $430 million. The total amount available to us at any given
time from the regulated money pool is reduced by the amount of borrowings by our
affiliates but increased to the extent Ameren, AmerenUE or Ameren Services have
surplus funds and the availability of other external borrowing sources. The
availability of funds is also determined by funding requirements and limits
established by the Public Utility Holding Company Act of 1935. AmerenCIPS,
AmerenUE and Ameren Services rely on the regulated money pool to coordinate and
provide for certain short-term cash and working capital requirements. Borrowers
receiving a loan under the regulated money pool agreement must repay the
principal amount of such loan, together with accrued interest. Interest is
calculated at varying rates of interest depending on the composition of internal
and external funds in the regulated money pool. The average interest rate for
the regulated money pool for the three months ended June 30, 2002 was 1.75%
(2001 - 4.38%) and 1.77% (2001 - 4.94%) for the six months ended June 30, 2002.
At June 30, 2002, we had the ability to borrow $830 million, all of which was
unused and available, through the regulated money pool. At June 30, 2002, we had
$58 million in intercompany receivables outstanding (December 31, 2001 - $24
million) through the regulated money pool.
In July 2002, Ameren entered into new credit agreements for $400 million in
revolving credit facilities to be used for general corporate purposes, including
support of commercial paper programs. The $400 million in new facilities
includes a $270 million 364-day revolving credit facility and a $130 million
3-year revolving credit facility. The 3-year facility has a $50 million
sub-limit for the issuance of letters of credit. These new credit facilities
replaced AmerenUE's existing $300 million revolving credit facility that was in
place as of June 30, 2002 with a maturity of August 15, 2002. In July 2002,
AmerenUE also did not renew
8
committed line of credit. As a result of these changes in facilities, at July
31,2002, we had the ability to borrow up to approximately $930 million, all of
which was unused and available, from Ameren and AmerenUE through our regulated
money pool agreement.
Our financial agreements include customary default provisions that could
impact the continued availability of credit or result in the acceleration of
repayment. These events include bankruptcy, defaults in payment of other
indebtedness, certain judgments that are not paid or insured, or failure to meet
or maintain covenants. At June 30, 2002, we were in compliance with these
provisions.
Support services provided by Ameren Services, including wages, employee
benefits and professional services, are based on actual costs incurred. For the
three months ended June 30, 2002, Other Operating Expenses provided by Ameren
Services totaled $15 million (2001 - $15 million). For the six months ended June
30, 2002, Other Operating Expenses provided by Ameren Services totaled $31
million (2001 - $28 million).
We incurred a deferred intercompany tax gain, which resulted in an
additional deferred tax liability when we transferred our electric generating
assets and liabilities at historical net book value to Generating Company in May
2000. An intercompany tax receivable with Generating Company was established for
the deferred tax liability. This asset and liability will be amortized over
twenty years. At June 30, 2002, our deferred tax liability and intercompany tax
receivable was $184 million (December 31, 2001 - $195 million), including the
current portion of $14 million (December 31, 2001 - $18 million).
Our intercompany note receivable from Generating Company was approximately
$419 million (December 31, 2001 - $462 million) including the current portion of
$46 million (December 31, 2001 - $43 million) as of June 30, 2002. Our
intercompany interest income recorded in Miscellaneous Income was approximately
$8 million (2001 - $9 million) for the three months ended June 30, 2002 and
approximately $16 million (2001 - $19 million) for the six months ended June 30,
2002.
As of June 30, 2002, intercompany receivables included in Other Accounts
and Notes Receivable were approximately $70 million (December 31, 2001 - $38
million). As of June 30, 2002, intercompany payables included in Accounts and
Wages Payables totaled approximately $62 million (December 31, 2001 - $87
million).
NOTE 4 - Miscellaneous, net
Miscellaneous, net for the three and six months ended June 30, 2002 and
2001 consisted of the following:
- --------------------------------------------------------------------------------
Three Months Six Months
2002 2001 2002 2001
- --------------------------------------------------------------------------------
Miscellaneous income:
Interest and dividend income $ 7 $ 9 $ 16 $ 19
Equity in earnings of subsidiary - 1 - 1
Other - - 1 -
- --------------------------------------------------------------------------------
Total miscellaneous income $ 7 $ 10 $ 17 $ 20
- --------------------------------------------------------------------------------
Miscellaneous expense:
Other $ - $ - $ (1) $ -
- --------------------------------------------------------------------------------
Total miscellaneous expense $ - $ - $ (1) $ -
- --------------------------------------------------------------------------------
9
NOTE 5 - Segment Information
Segment information for the three and six months ended June 30, 2002 and
2001 was as follows:
- ----------------------------------------------------------------------
Electric Gas Total
- ----------------------------------------------------------------------
Three months ended June 30, 2002:
- ----------------------------------------------------------------------
Revenues $ 161 $ 26 $ 187
Operating income 11 - 11
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Three months ended June 30, 2001:
- ----------------------------------------------------------------------
Revenues $ 163 $ 6 $ 169
Operating income 11 (2) 9
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Six months ended June 30, 2002:
- ----------------------------------------------------------------------
Revenues $ 311 $ 91 $ 402
Operating income 10 4 14
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Six months ended June 30, 2001:
- ----------------------------------------------------------------------
Revenues $ 319 $ 112 $ 431
Operating income 14 6 20
- ----------------------------------------------------------------------
Ameren Services, who provides shared support services to us, Ameren and
other Ameren subsidiaries, allocates administrative support services to each
segment based on various factors, such as headcount, number of customers, and
total assets.
NOTE 6 - CILCORP Acquisition
On April 28, 2002, Ameren entered into an agreement with The AES
Corporation to purchase all of the outstanding stock of CILCORP Inc. CILCORP is
the parent company of Peoria-based Central Illinois Light Company, which
operates as CILCO. Ameren also agreed to acquire AES Medina Valley (No. 4),
L.L.C. which indirectly owns a 40 megawatt, gas-fired electric generation plant.
The total purchase price is approximately $1.4 billion, subject to adjustment
for changes in CILCORP's working capital, and includes the assumption of CILCORP
and AES Medina Valley debt at closing, estimated at approximately $900 million,
with the balance of the purchase price in cash. Ameren expects to finance a
significant portion of the cash component of the purchase price through the
issuance of new common equity.
The purchase will include CILCORP's regulated natural gas and electric
businesses in Illinois serving approximately 205,000 and 200,000 customers,
respectively, of which 150,000 are combination electric and gas customers.
CILCO's service territory is contiguous to our service territory. In addition,
the purchase includes approximately 1,200 megawatts of largely coal-fired
generating capacity, most of which is expected to be non-regulated by closing.
Upon completion of the acquisition, expected by March 2003, CILCO will
become an Ameren subsidiary, but will remain a separate utility company,
operating as AmerenCILCO. The transaction is subject to the approval of the ICC,
the Securities and Exchange Commission (SEC), the FERC, the expiration of the
waiting period under the Hart-Scott-Rodino Act, the Federal Communications
Commission and other customary closing conditions.
For the period ended December 31, 2001, CILCORP had revenues of $815
million, operating income of $126 million, and net income from continuing
operations of $28 million, and as of December 31, 2001 had total assets of $1.8
billion.
10
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
OVERVIEW
Central Illinois Public Service Company operates as AmerenCIPS and is a
wholly-owned subsidiary of Ameren Corporation. Our principal business is the
regulated transmission and distribution of electricity and the distribution of
natural gas to residential, commercial, industrial, and wholesale users in
Illinois. Ameren is a holding company registered under the Public Utility
Holding Company Act of 1935 (PUHCA). Ameren's principal business is the
generation, transmission and distribution of electricity, and the distribution
of natural gas to residential, commercial, industrial and wholesale users in the
central United States. In addition to us, Ameren's principal subsidiaries and
our affiliates are as follows:
o Union Electric Company, which operates a regulated electric generation,
transmission and distribution business, and a regulated natural gas
distribution business in Missouri and Illinois as AmerenUE.
o AmerenEnergy Resources Company (Resources Company), which consists of
non-regulated operations. Subsidiaries include AmerenEnergy Generating
Company (Generating Company) that operates Ameren's non-regulated electric
generation in Missouri and Illinois, AmerenEnergy Marketing Company
(Marketing Company), which markets power for periods over one year, and
AmerenEnergy Fuels and Services Company, which procures fuel and manages
the related risks for Ameren-affiliated companies. Generating Company
supplies electric power to Marketing Company which, in turn, supplies us
with power under a power supply agreement (Power Supply Agreement).
o AmerenEnergy, Inc. which serves as a power marketing and risk management
agent for Ameren- affiliated companies for transactions of primarily less
than one year.
o Electric Energy, Inc. (EEI), which owns and/or operates electric generation
and transmission facilities in Illinois. On April 30, 2002, we transferred
our 20% common stock interest in EEI to Ameren in the form of a dividend of
common stock in EEI. The value of our investment in EEI was $1.8 million.
Subsequently, Ameren contributed such stock to Resources Company.
o Ameren Services Company, which provides shared support services to Ameren
and its subsidiaries, including us. Charges are based upon the actual costs
incurred by Ameren Services, as required by PUHCA.
You should read the following discussion and analysis in conjunction with:
o The financial statements and related notes included in this Quarterly
Report on Form 10-Q.
o The audited financial statements and related notes that are included in our
Annual Report on Form 10-K for the period ended December 31, 2001.
o Management's Discussion and Analysis of Financial Condition and Results of
Operations that is included in our Annual Report on Form 10-K for the
period ended December 31, 2001.
When we refer to AmerenCIPS, our, we or us, we are referring to Central
Illinois Public Service Company. All dollar amounts are in millions, unless
otherwise indicated.
Our results of operations and financial position are impacted by many
factors, including both controllable and uncontrollable factors. Weather,
economic conditions, and the actions of key customers or competitors can
significantly impact the demand for our services. Our results are also impacted
by seasonal fluctuations caused by winter heating, and summer cooling, demand.
With nearly all of our revenues subject to regulation by various state and
federal agencies, decisions by regulators can have a material impact on the
price we charge for our services. We principally utilize electric power and
natural gas in our operations. The prices for these commodities can fluctuate
significantly due to the world economic and political environment, weather and
many other factors. We do not have a purchased power recovery mechanism in
Illinois, but do have a gas cost recovery mechanism. We employ various risk
management strategies in order to try to reduce our exposure to commodity risks
and other risks inherent in our business. The reliability of our transmission
and distribution systems, and the level of operating and administrative costs
and capital investment are key factors that we seek to control in order to
optimize our results of operations, cash flows and financial position.
11
RESULTS OF OPERATIONS
Summary
Our net income decreased to $8 million in the second quarter of 2002 from
$10 million in the second quarter of 2001. Our net income decreased to $10
million for the first six months ended June 30, 2002 from $21 million in the
same period of 2001. The decrease in both periods was primarily due to the
extremely mild weather in our service territory in the first six months of the
year (second quarter - $6 million, year-to-date - $1 million). In addition, net
income was reduced due to increased benefit costs and tree-trimming costs that
resulted in higher operating and maintenance expenses (second quarter - $4
million, year-to-date - $6 million).
Recent Developments
CILCORP Acquisition
On April 28, 2002, Ameren entered into an agreement with The AES
Corporation to purchase all of the outstanding stock of CILCORP Inc. CILCORP is
the parent company of Peoria-based Central Illinois Light Company, which
operates as CILCO. Ameren also agreed to acquire AES Medina Valley (No. 4),
L.L.C. which indirectly owns a 40 megawatt, gas-fired electric generation plant.
The total purchase price is approximately $1.4 billion, subject to adjustment
for changes in CILCORP's working capital, and includes the assumption of CILCORP
and AES Medina Valley debt at closing, estimated at approximately $900 million,
with the balance of the purchase price in cash. Ameren expects to finance a
significant portion of the cash component of the purchase price through the
issuance of new common equity.
The purchase will include CILCORP's regulated natural gas and electric
businesses in Illinois serving approximately 205,000 and 200,000 customers,
respectively, of which 150,000 are combination electric and gas customers.
CILCO's service territory is contiguous to our service territory. In addition,
the purchase includes approximately 1,200 megawatts of largely coal-fired
generating capacity, most of which is expected to be non-regulated by closing.
Upon completion of the acquisition, expected by March 2003, CILCO will
become an Ameren subsidiary, but will remain a separate utility company,
operating as AmerenCILCO. The transaction is subject to the approval of the
Illinois Commerce Commission, the Securities and Exchange Commission (SEC), the
Federal Energy Regulatory Commission (FERC), the expiration of the waiting
period under the Hart-Scott-Rodino Act, the Federal Communications Commission
and other customary closing conditions.
For the period ended December 31, 2001, CILCORP had revenues of $815
million, operating income of $126 million, and net income from continuing
operations of $28 million, and as of December 31, 2001 had total assets of $1.8
billion.
In April 2002, as a result of AmerenUE's then pending electric earnings
complaint case, the CILCORP transaction and related assumption of debt, credit
rating agencies placed Ameren Corporation's debt under review for possible
downgrade or negative credit watch. Standard & Poor's placed the ratings of our
debt and AmerenUE's debt on negative credit watch and placed the ratings of
Generating Company's debt on positive credit watch. However, Standard & Poor's
stated they expect the corporate credit ratings of Ameren and its subsidiaries
to be in the "A" rating category following completion of the acquisition.
Moody's Investor Service stated they envisioned a one notch downgrade of
Ameren's issuer, senior unsecured debt and commercial paper ratings. Ameren's
corporate credit rating is A+ at Standard & Poor's and its issuer rating is A2
at Moody's, while AmerenCIPS' corporate credit rating is A+ at Standard & Poor's
and our issuer rating is A2 at Moody's. In July, AmerenUE settled its electric
earnings complaint case. The rating agencies have not changed the assignment of
negative watch, review for possible downgrade or negative outlook to any of the
ratings nor have the ratings themselves changed. Any adverse change in Ameren's
or our ratings may indirectly reduce our access to capital and/or increase the
costs of borrowings resulting in a negative impact on earnings.
12
Electric Operations
The following table represents the favorable (unfavorable) variations for
the three and six months ended June 30, 2002 from the comparable periods in
2001.
- --------------------------------------------------------------------------------
Three Months Six Months
- --------------------------------------------------------------------------------
Operating Revenues:
Effect of abnormal weather (estimate) $ 5 $ 1
Growth and other (estimate) (6) (6)
Wholesale sales - (1)
Interchange sales (1) (2)
- --------------------------------------------------------------------------------
$(2) $(8)
Purchased Power: $ 4 $ 7
- --------------------------------------------------------------------------------
$ 4 $ 7
- --------------------------------------------------------------------------------
Change in electric margin $ 2 $(1)
- --------------------------------------------------------------------------------
Electric margins increased $2 million for the three months ended June 30,
2002, while margins decreased $1 million for the six months ended June 30, 2002
compared to the year-ago periods. As a result of more favorable weather in the
second quarter, weather-sensitive residential sales increased 13% in the second
quarter and 1% in the first six months of 2002 as compared to 2001. Offsetting
the favorable weather was lower industrial sales that declined 11% in the second
quarter and 7% in the first half of 2002 as compared to 2001, due to the impact
of the soft economy. Interchange and wholesale revenues declined in the first
six months of 2002 due to decreases in both interchange and wholesale sales.
Purchased power costs decreased primarily due to lower energy prices and reduced
native load demand for the first six months of 2002.
The above interchange revenues and purchased power amounts include
transactions with our affiliates. See Note 3 - "Related Party Transactions" to
our financial statements.
Gas Operations
Due to favorable weather conditions in the second quarter of 2002, our gas
margins increased $7 million compared to the prior year period with increases in
gas revenues of $20 million and increases in gas costs of $13 million. Our gas
revenues and operating expenses increased primarily due to increases in retail
sales including weather-sensitive residential sales and as a result of
adjustments made in 2001 relating to the purchased gas adjustment clause
pursuant to which we recover gas costs from our customers. Our gas margin
increased $2 million for the six months ended June 30, 2002 as compared to the
prior year period due to a $21 million decrease in gas revenues partially offset
by a $23 million decrease in gas costs. For the first six months of 2002, warmer
winter weather reduced gas revenues, offsetting the benefit of favorable weather
conditions in the second quarter. The decrease in gas costs for the first six
months of 2002 was due to lower natural gas prices and lower purchase volume due
to the mild winter weather.
Other Operating Expenses
Other operations related to operating expenses increased $2 million in the
second quarter and $5 million in the first half of 2002 compared to the same
year-ago periods, primarily due to increases in employee benefits costs related
to the investment performance of pension plan assets and increasing healthcare
costs.
Ameren Services provided services to us, including wages, employee benefits
and professional services, that were included in Other Operating Expenses. See
Note 3 - "Related Party Transactions" to our financial statements.
Maintenance expenses increased $4 million in the second quarter and $5
million in the first half of 2002 compared to same the year-ago periods,
primarily due to higher tree-trimming expenses, which were accelerated, in part,
to take advantage of the mild weather at the beginning of the year and increased
expenses due to storm repairs in the second quarter.
Income tax expense decreased $3 million in the second quarter of 2002 and
$7 million in the first half of 2002 compared to the same year-ago periods,
primarily due to lower pre-tax income.
13
Other tax expense increased $3 million in both the second quarter and the
first half of 2002 compared to the same year-ago periods, primarily due
adjustments related to property tax rates in the prior year.
Other Income and Deductions
Other income and deductions decreased $3 million in the second quarter of
2002 and $4 million in the first half of 2002, compared to the same year-ago
periods, primarily due to less intercompany interest received on the Generating
Company subordinated promissory note as a result of a lower amount outstanding
and lower earnings from EEI due to the transfer of our 20% common stock interest
in EEI to Resources Company on April 30, 2002. See Note 4 - "Miscellaneous, net"
to our financial statements.
LIQUIDITY AND CAPITAL RESOURCES
Operating
Our cash flows provided by operating activities decreased $21 million to
$15 million for the six months ended June 30, 2002 compared to the year-ago
period. Cash flows from operating activities decreased primarily due to a
decrease in net income, an increase in intercompany money pool receivables, and
reduced payables as a result of lower amounts of power purchased from Marketing
Company.
Our tariff-based gross margins continue to be our principal source of cash
from operating activities. Our diversified retail customer mix of residential,
commercial and industrial classes and a commodity mix of gas and electric
service provide a reasonably predictable source of cash flows. We plan to
utilize short-term debt to support normal operations and other temporary capital
requirements. We are authorized by the SEC under PUHCA to have up to $250
million of short-term unsecured debt instruments outstanding at any one time.
Short-term borrowings consist of commercial paper with maturities generally
within 1 to 45 days.
At June 30, 2002, we had committed bank lines of credit aggregating $25
million, all of which were unused and available at such date. These lines make
available interim financing at various rates of interest based on LIBOR, the
bank certificate of deposit rate or other options. The lines of credit are
renewable annually at various dates throughout the year. We expect to replace
these lines of credit prior to their maturity. At June 30, 2002, we had the
ability to borrow up to approximately $830 million from Ameren or AmerenUE
through a regulated money pool agreement. For the six months ended June 30,
2002, we had no outstanding short-term borrowings. See Note 3 - "Related Party
Transactions" to our financial statements.
In July 2002, Ameren entered into new credit agreements for $400 million in
revolving credit facilities to be used for general corporate purposes, including
support of commercial paper programs. The $400 million in new facilities
includes a $270 million 364-day revolving credit facility and a $130 million
3-year revolving credit facility. The 3-year facility has a $50 million
sub-limit for the issuance of letters of credit. These new credit facilities
replaced AmerenUE's existing $300 million revolving credit facility that was in
place as of June 30, 2002 with a maturity of August 15, 2002. In July 2002,
AmerenUE also did not renew a $25 million committed line of credit. As a result
of these changes in facilities, at July 31,2002, we had the ability to borrow up
to approximately $930 million, all of which was unused and available, from
Ameren and AmerenUE through our regulated money pool agreement.
Our financial agreements include customary default provisions that could
impact the continued availability of credit or result in the acceleration of
repayment. These events include bankruptcy, defaults in payment of other
indebtedness, certain judgments that are not paid or insured, or failure to meet
or maintain covenants. At June 30, 2002, we were in compliance with these
provisions.
Investing
Our net cash provided by investing activities was $17 million in the first
six months of 2002 (2001 - $18 million) representing an increase in construction
expenditures from various distribution line upgrades, partially offset by
increased receipts on our intercompany note receivable from Generating Company.
Capital expenditures are expected to approximate $59 million in 2002.
14
Financing
Our net cash flows used in financing activities totaled $38 million in the
first six months of 2002 compared to $49 million in the year-ago period. Our
principal financing activities for the first six months of 2002 included the
payment of dividends and the redemption of long-term debt. Our principal
financing activities for the first six months of 2001 included the repayment of
intercompany money pool borrowings and the issuance of long-term debt.
In the ordinary course of business, we evaluate several strategies to
enhance our financial position, earnings, and liquidity. These strategies may
include potential acquisitions, divestitures, opportunities to reduce costs or
increase revenues, and other strategic initiatives in order to increase
shareholder value. We are unable to predict which, if any, of these initiatives
will be executed, as well as, the impact these initiatives may have on our
future financial position, results of operations or liquidity.
Electric Industry Restructuring
Illinois
See Note 2 - "Rate and Regulatory Matters" to our financial statements.
Federal - Regional Transmission Organizations
See Note 2 - "Rate and Regulatory Matters" to our financial statements.
ACCOUNTING MATTERS
Critical Accounting Policies
Preparation of the financial statements and related disclosures in
compliance with generally accepted accounting principles requires the
application of appropriate technical accounting rules and guidance, as well as
the use of estimates. Our application of these policies involves judgments
regarding many factors, which, in and of themselves, could materially impact the
financial statements and disclosures. A future change in the assumptions or
judgments applied in determining the following matters, among others, could have
a material impact on future financial results. In the table below, we have
outlined those accounting policies that we believe are most difficult,
subjective or complex:
Accounting Policy Uncertainties Affecting Application
- ----------------- -----------------------------------
Regulatory Mechanisms & Cost Recovery
We defer costs as regulatory assests in o Regulatory environment, external regulatory
accordance with SFAS 71 and make investments decisions and requirements
that we assume we will be able to collect in o Anticipated future regulatory decisions and
future rates their impact
o Impact of deregulation and competition on
ratemaking process and ability to recover costs
Basis for Judgment
We determine that costs are recoverable based on previous rulings by state
regulatory authorities in jurisdictions where we operate, or other factors
that lead us to believe that cost recovery is probable.
15
Environmental Costs
We accrue for all known environmental o Extent of contamination
contamination, where remediation can be o Responsible party determination
reasonably estimated, but some of our o Approved methods for cleanup
operations have existed for over 100 years o Present and future legislation and governmental
and previous contamination may be unknown to regulations and standards
us. o Results of ongoing research and development
regarding environmental impacts
Basis for Judgment
We determine the proper amounts to accrue for environmental contamination
based on internal and third party estimates of clean-up costs in the
context of current remediation regulation standards and available
technology.
Unbilled Revenue
At the end of each period, we estimate, based o Projecting customer energy usage
on expected usage, the amount of revenue to o Estimating impacts of weather and other
record for services that have been provided usage-affecting factors for the unbilled period
to customers, but not billed. This period
can be up to one month.
Basis for Judgment
We determine the proper amount of unbilled revenue to accrue each period
based on the volume of energy delivered as valued by a model of billing
cycles and historical usage rates and growth by customer class for our
service area, as adjusted for the modeled impact of seasonal and weather
variations based on historical results.
Benefit Plan Accounting
Based on actuarial calculations, we accrue o Future rate of return on pension and other plan
costs of providing future employee benefits assets
in accordance with SFAS 87, 106, and 112. o Interest rates used in valuing benefit
See Note 10 to our financial statements for obligations
the year ended December 31, 2001. o Healthcare costs trend rates
Basis for Judgment
We utilize a third party consultant to assist us in evaluating and
recording the proper amount for future employee benefits. Our ultimate
selection of the discount rate, healthcare trend rate and expected rate of
return on pension assets is based on our review of available current,
historical and projected rates, as applicable.
Impact of Future Accounting Pronouncements
See Note 1 - "Summary of Significant Accounting Policies" to our financial
statements.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in value of a physical asset or
a financial instrument, derivative or non-derivative, caused by fluctuations in
market variables (e.g., interest rates, etc.). The following discussion of
Ameren's, including our company's, risk management activities includes
"forward-looking" statements that involve risks and uncertainties. Actual
results could differ materially from those projected in the "forward-looking"
statements. Ameren manages market risks in accordance with established policies,
which may include entering into various derivative transactions. In the normal
course of business, Ameren and our company also face risks that are either
non-financial or non-quantifiable. Such risks principally include business,
legal, and operational risk and are not represented in the following analysis.
16
Ameren's risk management objective is to optimize its physical generating
assets within prudent risk parameters. Risk management policies are set by a
Risk Management Steering Committee, which is comprised of senior-level Ameren
officers.
Interest Rate Risk
We are exposed to market risk through changes in interest rates associated
with the issuance of both long-term and short-term variable-rate debt and
fixed-rate debt, commercial paper and auction-rate long-term debt and preferred
stock. We manage our interest rate exposure by controlling the amount of these
instruments we hold within our total capitalization portfolio and by monitoring
the effects of market changes in interest rates.
Utilizing our debt outstanding at June 30, 2002, if interest rates
increased by 1%, our annual interest expense would increase by $0.3 million and
net income would decrease by $0.3 million. The model does not consider the
effects of the reduced level of potential overall economic activity that would
exist in such an environment. In the event of a significant change in interest
rates, management would likely take actions to further mitigate our exposure to
this market risk. However, due to the uncertainty of the specific actions that
would be taken and their possible effects, the sensitivity analysis assumes no
change in our financial structure.
Safe Harbor Statement
Statements made in this report which are not based on historical facts, are
"forward-looking" and, accordingly, involve risks and uncertainties that could
cause actual results to differ materially from those discussed. Although such
"forward-looking" statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions and
financial performance. In connection with the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we are providing this
cautionary statement to identify important factors that could cause actual
results to differ materially from those anticipated. The following factors, in
addition to those discussed elsewhere in this report and in the Annual Report on
Form 10-K for the year ended December 31, 2001, and in subsequent securities
filings, could cause results to differ materially from management expectations
as suggested by such "forward-looking" statements:
o the effects of the AmerenUE excess earnings complaint case and other
regulatory actions, including changes in regulatory policy;
o changes in laws and other governmental actions, including monetary and
fiscal policies;
o the impact on us of current regulations related to the opportunity for
customers to choose alternative energy suppliers in Illinois;
o the effects of increased competition in the future due to, among other
things, deregulation of certain aspects of our business at both the state
and federal levels;
o the effects of participation in a FERC approved Regional Transmission
Organization (RTO), including activities associated with the Midwest
Independent System Operator;
o availability and future market prices for purchased power, electricity and
natural gas, including the use of financial and derivative instruments and
volatility of changes in market prices;
o average rates for electricity in the Midwest;
o business and economic conditions;
o the impact of the adoption of new accounting standards;
o interest rates and the availability of capital;
o actions of rating agencies and the effects of such actions;
o weather conditions;
o the impact of current environmental regulations on utilities and the
expectation that more stringent requirements will be introduced over time,
which could potentially have a negative financial effect;
o future wages and employee benefits costs;
o disruptions of the capital markets or other events making AmerenCIPS'
access to necessary capital more difficult or costly;
o cost and availability of transmission capacity required to satisfy our
energy sales; and
o legal and administrative proceedings.
17
PART II. - OTHER INFORMATION
ITEM 1. Legal Proceedings.
On July 30, 2002, the Illinois Attorney General's Office advised us that it
would be commencing an enforcement action concerning an inactive waste disposal
site near Coffeen, Illinois, which is the location of a disposal facility
permitted by the Illinois Environmental Protection Agency to receive fly ash
from the Coffeen power plant. The Illinois Attorney General also notified the
disposal facility's current and former owners as to the proposed enforcement
action. The Attorney General advised that it may initiate an action under CERCLA
to recover past costs incurred at the site ($322,000) and to obtain a
declaratory judgment as to liability for future costs. Neither AmerenEnergy
Generating Company (Generating Company), the current owner of the Coffeen power
plant, nor us, the prior owner of the Coffeen power plant, owned or operated the
disposal facility. We believe that this matter will not have a material adverse
effect on our financial position, results of operations or liquidity.
Reference is made to Item 1. Business - Rates and Regulation -
Environmental Matters in Part I of our Form 10-K for the year-ended December 31,
2001 for a discussion of the lawsuit filed in the Circuit Court of Christian
County, Illinois by Steven and Tina Brannan against our parent, Ameren
Corporation, Generating Company and us. This lawsuit alleged that we and others
were negligent in the manner in which our manufactured gas plant site in
Taylorville, Illinois, was remediated, therefore wrongfully causing the death of
the Brannan's minor son. On July 3, 2002, a settlement agreement was entered
into with the Brannans which fully released our parent, affiliate and us from
all liabilities claimed in the lawsuit in consideration for payment of an
amount, the disclosure of which is restricted by a confidentiality agreement.
The settlement will not have a material adverse effect on our financial
position, results of operations or liquidity.
Reference is made to Item 3. Legal Proceedings in Part I of our Form 10-K
for the year-ended December 31, 2001 and to Item 1. Legal Proceedings in Part II
of our Form 10-Q for the quarterly period ended March 31, 2002 for a discussion
of a number of lawsuits that name our affiliate, Union Electric Company
operating as AmerenUE, our parent, Ameren Corporation, and us (which we refer to
as the Ameren companies), along with numerous other parties, as defendants that
have been filed by plaintiffs claiming varying degrees of injury from asbestos
exposure. Since the filing of our Form 10-Q for the quarterly period ended March
31, 2002, thirty-four additional lawsuits have been filed against the Ameren
companies. These lawsuits, like the previous cases, were mostly filed in the
Circuit Court of Madison County, Illinois, involve a large number of total
defendants and seek unspecified damages in excess of $50,000, which, if proved,
typically would be shared among the named defendants. Also since our first
quarter Form 10-Q filing, a settlement has been reached in one lawsuit for a
monetary amount not material to the Ameren companies and in one case, the Ameren
companies have been voluntarily dismissed.
To date, a total of seventy-six asbestos-related lawsuits have been filed
against the Ameren companies, of which sixty-two are pending, ten have been
settled and four have been dismissed. We believe that the final disposition of
these proceedings will not have a material adverse effect on our financial
position, results of operations or liquidity.
ITEM 4. Submission of Matters To a Vote of Security Holders.
At the annual meeting of our stockholders held on April 23, 2002, the
following matter was presented to the meeting for a vote and the results of such
voting are as follows:
Election of Directors.
Non-Voted
Name For Withheld Brokers
---- --- -------- ---------
Paul A. Agathen 26,066,742 55,722 0
Warner L. Baxter 26,066,742 55,722 0
Charles W. Mueller 26,066,742 55,722 0
Gary L. Rainwater 26,066,727 55,737 0
Thomas R. Voss 26,066,742 55,722 0
18
ITEM 5. Other Information.
Any stockholder proposal intended for inclusion in the proxy material for
our 2003 annual meeting of stockholders must be received by us by November 30,
2002.
In addition, under our By-Laws, stockholders who intend to submit a
proposal in person at an annual meeting, or who intend to nominate a director at
a meeting, must provide advance written notice along with other prescribed
information. In general, such notice must be received by our Secretary not later
than 60 nor earlier than 90 days prior to the first anniversary of the preceding
year's annual meeting. For our 2003 annual meeting of stockholders, written
notice of any in-person stockholder proposal or director nomination must be
received not later than February 22, 2003 or earlier than January 23, 2003.
The Audit Committee of the Board of Directors of Ameren has approved our
independent accountants, PriceWaterhouseCoopers, to perform the following audit
and non-audit services:
o Audits required by the federal, state or local government rules
o Audits of employee pension and benefits plans
o Income tax accounting and consulting projects
o Comfort letters and consents required to complete SEC filings and issue
securities
o Consultation on responses to accounting inquiries by regulatory or other
bodies
o Audit of AmerenEnergy earnings before interest and taxes statement
o Review of stock transfer agent and registrar internal controls
o Review of risk management internal controls
o Consultation on the accounting for corporate events and transactions
o Assistance with preparation of testimony for regulatory filings
ITEM 6. Exhibits and Reports on Form 8-K.
(a)(i) Exhibits
99.1 - Certificate of Chief Executive Officer required by Section
906 of the Sarbanes-Oxley Act of 2002 (not filed as part of
this Report on Form 10-Q).
99.2 - Certificate of Chief Financial Officer required by Section
906 of the Sarbanes-Oxley Act of 2002 (not filed as part of
this Report on Form 10-Q).
(a)(ii) Exhibits Incorporated by Reference.
10.1 - Memorandum of Understanding dated May 24, 2002 between
Ameren Services Company, as agent for AmerenUE and
AmerenCIPS, and the Midwest Independent Transmission System
Operator, Inc. (MISO) (June 30, 2002 Ameren Corporation Form
10-Q, Exhibit 10.1).
10.2 - Participation Agreement dated as of July 3, 2002 by and
among MISO, Ameren Services Company as agent for AmerenUE
and AmerenCIPS, FirstEnergy Corporation on behalf of
American Transmission Systems, Incorporated, Northern
Indiana Public Service Company and National Grid (June 30,
2002 Ameren Corporation Form 10-Q, Exhibit 10.2).
(b) Reports on Form 8-K. AmerenCIPS filed a report on Form 8-K dated
May 28, 2002 relating to the decision of AmerenCIPS and AmerenUE
to rejoin the MISO.
Note: Reports of Ameren Corporation on Forms 8-K, 10-Q and 10-K are on
file with the SEC under File Number 1-14756.
Reports of Union Electric Company on Forms 8-K, 10-Q and 10-K are
on file with the SEC under File Number 1-2967.
Reports of Ameren Energy Generating Company on Forms 8-K, 10-Q
and 10-K are on file with the SEC under the File Number
333-56594.
19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL ILLINOIS PUBLIC
SERVICE COMPANY
(Registrant)
By /s/ Martin J. Lyons
---------------------------------------
Martin J. Lyons
Controller
(Principal Accounting Officer)
Date: August 14, 2002
20
Exhibit 99.1
CERTIFICATE
furnished under
Section 906 of the Sarbanes-Oxley Act of 2002.
I, Gary L. Rainwater, chief executive officer of Central Illinois Public
Service Company, hereby certify that to the best of my knowledge, the
accompanying Report of Central Illinois Public Service Company on Form 10-Q for
the quarter ended June 30, 2002 fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and that information
contained in such Report fairly presents, in all material respects, the
financial condition and results of operations of Central Illinois Public Service
Company.
/s/ Gary L. Rainwater
------------------------------------
Gary L. Rainwater
Chief Executive Officer
Date: August 14, 2002
Exhibit 99.2
CERTIFICATE
furnished under
Section 906 of the Sarbanes-Oxley Act of 2002.
I, Warner L. Baxter, chief financial officer of Central Illinois Public
Service Company, hereby certify that to the best of my knowledge, the
accompanying Report of Central Illinois Public Service Company on Form 10-Q for
the quarter ended June 30, 2002 fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and that information
contained in such Report fairly presents, in all material respects, the
financial condition and results of operations of Central Illinois Public Service
Company.
/s/ Warner L. Baxter
------------------------------------
Warner L. Baxter
Chief Financial Officer
Date: August 14, 2002