SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Commission file number 1-3004 Illinois Power Company Incentive Savings Plan (Full title of the plan) Illinova Corporation 500 South 27th Street Decatur, Illinois 62525 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office.) ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION DECEMBER 31, 1998 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Index to Financial Statements and Additional Information Financial Statements: Page Report of Independent Accountants Statements of Net Assets Available for Benefits 2-17 with Fund Information as of December 31, 1998 and 1997 Statements of Changes in Net Assets Available 18-33 for Benefits with Fund Information for the years ended December 31, 1998 and 1997 Notes to Financial Statements 34-42 Additional Information: Schedule I - Schedule of Assets Held for Investment Purposes Schedule II - Schedule of Reportable Transactions Note:Other schedules required by section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Fidelity Illinova Equity Stock Income Fund Fund ASSETS: Cash and Temporary Cash Investments $ 350,597 $ 0 Investments at Fair Value 25,546,700 43,442,523 ----------- ----------- Total Investments 25,897,297 43,442,523 Dividends and Interest Receivable 1,413 0 Employee Contributions Receivable 93,940 73,717 Employer Contributions Receivable 199,698 0 Loan Repayments Receivable 879 15,231 Loans Outstanding 0 0 ----------- ----------- Other Assets 295,930 88,948 ----------- ----------- Total Assets 26,193,227 43,531,471 ----------- ----------- LIABILITIES: Accrued Expenses 57,906 0 ----------- ----------- Total Liabilities 57,906 0 ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $26,135,321 $43,531,471 =========== =========== See Accompanying Notes to Financial Statements 2 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Fidelity Retirement Growth Loan Fund Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 44,622,782 0 ----------- ---------- Total Investments 44,622,782 0 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 77,123 0 Employer Contributions Receivable 0 0 Loan Repayments Receivable 16,685 (57,757) Loans Outstanding 0 4,190,017 ----------- ---------- Other Assets 93,809 4,132,260 ----------- ---------- Total Assets 44,716,590 4,132,260 ----------- ---------- LIABILITIES: Accrued Expenses 0 0 ----------- ---------- Total Liabilities 0 0 ----------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $44,716,590 $4,132,260 =========== ========== See Accompanying Notes to Financial Statements 3 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Fidelity Fidelity Asset Asset Manager Manager Income Growth Fund Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 1,918,843 8,025,684 ---------- ---------- Total Investments 1,918,843 8,025,684 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 5,524 19,439 Employer Contributions Receivable 0 0 Loan Repayments Receivable 452 3,104 Loans Outstanding 0 0 ---------- ---------- Other Assets 5,976 22,543 ---------- ---------- Total Assets 1,924,819 8,048,227 ---------- ---------- LIABILITIES: Accrued Expenses 0 0 ---------- ---------- Total Liabilities 0 0 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $1,924,819 $8,048,227 ========== ========== See Accompanying Notes to Financial Statements 4 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Fidelity Fidelity Asset International Manager Growth and Fund Income Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 10,815,508 3,370,968 ---------- ---------- Total Investments 10,815,508 3,370,968 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 21,171 9,263 Employer Contributions Receivable 0 0 Loan Repayments Receivable 3,784 1,729 Loans Outstanding 0 0 ---------- ---------- Other Assets 24,955 10,992 ---------- ---------- Total Assets 10,840,463 3,381,960 ---------- ---------- LIABILITIES: Accrued Expenses 0 0 ---------- ---------- Total Liabilities 0 0 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $10,840,463 $3,381,960 ========== ========== See Accompanying Notes to Financial Statements 5 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Fidelity Fidelity Managed US Equity Income Index Portfolio Commingled Fund Pool ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 17,502,633 7,493,956 ----------- ---------- Total Investments 17,502,633 7,493,956 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 25,854 23,772 Employer Contributions Receivable 0 0 Loan Repayments Receivable 7,087 3,492 Loans Outstanding 0 0 ----------- ---------- Other Assets 32,941 27,264 ----------- ---------- Total Assets 17,535,574 7,521,220 ----------- ---------- LIABILITIES: Accrued Expenses 0 0 ----------- ---------- Total Liabilities 0 0 ----------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $17,535,574 $7,521,220 =========== ========== See Accompanying Notes to Financial Statements 6 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Founders USAA Growth International Fund Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 4,372,705 696,540 ---------- -------- Total Investments 4,372,705 696,540 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 13,888 3,056 Employer Contributions Receivable 0 0 Loan Repayments Receivable 2,093 432 Loans Outstanding 0 0 ---------- -------- Other Assets 15,981 3,488 ---------- -------- Total Assets 4,388,686 700,028 ---------- -------- LIABILITIES: Accrued Expenses 0 0 ---------- -------- Total Liabilities 0 0 ---------- -------- NET ASSETS AVAILABLE FOR BENEFITS $4,388,686 $700,028 ========== ======== See Accompanying Notes to Financial Statements 7 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Warburg Pincus Fidelity Emerging Brokerage Growth Link ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 1,421,588 3,992,883 -------- ---------- Total Investments 1,421,588 3,992,883 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 5,474 2,471 Employer Contributions Receivable 0 0 Loan Repayments Receivable 921 1,868 Loans Outstanding 0 0 -------- ---------- Other Assets 6,395 4,339 -------- ---------- Total Assets 1,427,983 3,997,222 -------- ---------- LIABILITIES: Accrued Expenses 0 0 -------- ---------- Total Liabilities 0 0 -------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $1,427,983 $3,997,222 ========== ========== See Accompanying Notes to Financial Statements 8 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1998 Total All Funds ASSETS: Cash and Temporary Cash Investments $ 350,597 Investments at Fair Value 173,223,313 ------------ Total Investments 173,573,910 Dividends and Interest Receivable 1,413 Employee Contributions Receivable 374,692 Employer Contributions Receivable 199,698 Loan Repayments Receivable 0 Loans Outstanding 4,190,017 ------------ Other Assets 4,765,820 ------------ Total Assets 178,339,730 ------------ LIABILITIES: Accrued Expenses 57,906 ------------ Total Liabilities 57,906 ------------ NET ASSETS AVAILABLE FOR BENEFITS $178,281,824 ============ See Accompanying Notes to Financial Statements 9 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Fidelity Illinova Equity Stock Income Fund Fund ASSETS: Cash and Temporary Cash Investments $ 298,849 $ 0 Investments at Fair Value 25,968,828 41,911,711 ----------- ----------- Total Investments 26,267,677 41,911,711 Dividends and Interest Receivable 1,278 0 Employee Contributions Receivable 2,051 67,595 Employer Contributions Receivable 811,796 0 Loan Repayments Receivable 591 15,454 Loans Outstanding 0 0 ----------- ----------- Other Assets 815,716 83,049 ----------- ----------- Total Assets 27,083,393 41,994,760 ----------- ----------- LIABILITIES: Accrued Expenses 13,999 0 ----------- ----------- Total Liabilities 13,999 0 ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $27,069,394 $41,994,760 =========== =========== See Accompanying Notes to Financial Statements 10 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Fidelity Retirement Growth Loan Fund Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 33,106,384 0 ----------- ---------- Total Investments 33,106,384 0 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 61,714 0 Employer Contributions Receivable 0 0 Loan Repayments Receivable 13,682 (50,704) Loans Outstanding 0 3,916,574 ----------- ---------- Other Assets 75,396 3,865,870 ----------- ---------- Total Assets 33,181,780 3,865,870 ----------- ---------- LIABILITIES: Accrued Expenses 0 0 ----------- ---------- Total Liabilities 0 0 ----------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $33,181,780 $3,865,870 =========== ========== See Accompanying Notes to Financial Statements 11 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Fidelity Fidelity Asset Asset Manager Manager Income Growth Fund Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 1,181,289 7,373,529 ---------- ---------- Total Investments 1,181,289 7,373,529 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 3,244 16,817 Employer Contributions Receivable 0 0 Loan Repayments Receivable 535 2,828 Loans Outstanding 0 0 ---------- ---------- Other Assets 3,779 19,645 ---------- ---------- Total Assets 1,185,068 7,393,174 ---------- ---------- LIABILITIES: Accrued Expenses 0 0 ---------- ---------- Total Liabilities 0 0 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $1,185,068 $7,393,174 ========== ========== See Accompanying Notes to Financial Statements 12 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Fidelity Fidelity Asset International Manager Growth and Fund Income Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 9,362,941 3,347,530 ---------- ---------- Total Investments 9,362,941 3,347,530 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 17,467 9,260 Employer Contributions Receivable 0 0 Loan Repayments Receivable 3,827 1,897 Loans Outstanding 0 0 ---------- ---------- Other Assets 21,294 11,157 ---------- ---------- Total Assets 9,384,235 3,358,687 ---------- ---------- LIABILITIES: Accrued Expenses 0 0 ---------- ---------- Total Liabilities 0 0 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $9,384,235 $3,358,687 ========== ========== See Accompanying Notes to Financial Statements 13 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Fidelity Fidelity Managed US Equity Income Index Portfolio Commingled Fund Pool ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 15,046,006 2,855,122 ----------- ---------- Total Investments 15,046,006 2,855,122 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 20,818 10,869 Employer Contributions Receivable 0 0 Loan Repayments Receivable 6,516 1,975 Loans Outstanding 0 0 ----------- ---------- Other Assets 27,334 12,844 ----------- ---------- Total Assets 15,073,340 2,867,966 ----------- ---------- LIABILITIES: Accrued Expenses 0 0 ----------- ---------- Total Liabilities 0 0 ----------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $15,073,340 $2,867,966 =========== ========== See Accompanying Notes to Financial Statements 14 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Founders USAA Growth International Fund Fund ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 1,687,490 683,595 ---------- -------- Total Investments 1,687,490 683,595 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 6,023 2,407 Employer Contributions Receivable 0 0 Loan Repayments Receivable 1,171 342 Loans Outstanding 0 0 ---------- -------- Other Assets 7,194 2,749 ---------- -------- Total Assets 1,694,684 686,344 ---------- -------- LIABILITIES: Accrued Expenses 0 0 ---------- -------- Total Liabilities 0 0 ---------- -------- NET ASSETS AVAILABLE FOR BENEFITS $1,694,684 $686,344 ========== ======== See Accompanying Notes to Financial Statements 15 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Warburg Pincus Fidelity Emerging Brokerage Growth Link ASSETS: Cash and Temporary Cash Investments $ 0 $ 0 Investments at Fair Value 961,687 1,621,382 -------- ---------- Total Investments 961,687 1,621,382 Dividends and Interest Receivable 0 0 Employee Contributions Receivable 3,639 1,469 Employer Contributions Receivable 0 0 Loan Repayments Receivable 757 1,129 Loans Outstanding 0 0 -------- ---------- Other Assets 4,396 2,598 -------- ---------- Total Assets 966,083 1,623,980 -------- ---------- LIABILITIES: Accrued Expenses 0 0 -------- ---------- Total Liabilities 0 0 -------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $966,083 $1,623,980 ======== ========== See Accompanying Notes to Financial Statements 16 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 Total All Funds ASSETS: Cash and Temporary Cash Investments $ 298,849 Investments at Fair Value 145,107,494 ------------ Total Investments 145,406,343 Dividends and Interest Receivable 1,278 Employee Contributions Receivable 223,373 Employer Contributions Receivable 811,796 Loan Repayments Receivable 0 Loans Outstanding 3,916,574 ------------ Other Assets 4,953,021 ------------ Total Assets 150,359,364 ------------ LIABILITIES: Accrued Expenses 13,999 ------------ Total Liabilities 13,999 ------------ NET ASSETS AVAILABLE FOR BENEFITS $150,345,365 ============ See Accompanying Notes to Financial Statements 17 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Illinova Fidelity Stock Equity Income Fund Fund Sources of Participants' Equity: Contributions: Employee $ 96,592 $ 2,416,005 Employer 1,599,690 0 ----------- ----------- 1,696,282 2,416,005 ----------- ----------- Plan-to-Plan Transfers 182,169 385,644 Investment Income: Dividend and Interest Income 1,224,013 2,620,545 Net Change in Fair Value of Investments (1,770,615) 2,698,795 ----------- ----------- (546,602) 5,319,340 ----------- ----------- Application of Participants' Equity: Distributions to Active and Terminated Participants 1,526,481 2,075,436 Administrative and Miscellaneous Expenses 27,086 8,313 ----------- ----------- 1,553,567 2,083,749 ----------- ----------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers (221,718) 6,037,240 Loans to Participants, net 3,349 (83,626) Fund-to-Fund Transfers (715,794) (4,416,903) Net Assets Available for Benefits, Beginning of Year 27,069,394 41,994,760 ----------- ----------- Net Assets Available for Benefits, End of Year $26,135,321 $43,531,471 =========== =========== See Accompanying Notes to Financial Statements 18 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Fidelity Retirement Growth Loan Fund Fund Sources of Participants' Equity: Contributions: Employee $ 2,353,790 $ 0 Employer 0 0 ----------- ---------- 2,353,790 0 ----------- ---------- Plan-to-Plan Transfers 214,106 50,743 Investment Income: Dividend and Interest Income 4,536,780 0 Net Change in Fair Value of Investments 7,365,614 0 ----------- ---------- 11,902,394 0 ----------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 1,762,336 132,341 Administrative and Miscellaneous Expenses 1,259 0 ----------- ---------- 1,763,595 132,341 ----------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 12,706,695 (81,598) Loans to Participants, net (171,523) 347,988 Fund-to-Fund Transfers (1,000,362) 0 Net Assets Available for Benefits, Beginning of Year 33,181,780 3,865,870 ----------- ---------- Net Assets Available for Benefits, End of Year $44,716,590 $4,132,260 =========== ========== See Accompanying Notes to Financial Statements 19 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Fidelity Fidelity Asset Asset Manager Manager Income Fund Growth Fund Sources of Participants' Equity: Contributions: Employee $167,485 $646,313 Employer 0 0 ---------- ---------- 167,485 646,313 ---------- ---------- Plan-to-Plan Transfers 4,414 (13,367) Investment Income: Dividend and Interest Income 150,728 1,140,846 Net Change in Fair Value of Investments 7,534 149,993 ---------- ---------- 158,262 1,290,839 ---------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 82,692 405,276 Administrative and Miscellaneous Expenses 15 11 ---------- ---------- 82,707 405,287 ---------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 247,454 1,518,498 Loans to Participants, net 3,757 (8,174) Fund-to-Fund Transfers 488,540 (855,271) Net Assets Available for Benefits, Beginning of Year 1,185,068 7,393,174 ---------- ---------- Net Assets Available for Benefits, End of Year $1,924,819 $8,048,227 ========== ========== See Accompanying Notes to Financial Statements 20 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Fidelity Fidelity Asset International Manager Growth and Fund Income Fund Sources of Participants' Equity: Contributions: Employee $ 718,061 $ 339,656 Employer 0 0 ---------- ---------- 718,061 339,656 ---------- ---------- Plan-to-Plan Transfers (7,016) (2,962) Investment Income: Dividend and Interest Income 1,956,534 123,629 Net Change in Fair Value of Investments (446,214) 179,095 ---------- ---------- 1,510,320 302,724 ---------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 658,278 136,267 Administrative and Miscellaneous Expenses 89 359 ---------- ---------- 658,367 136,626 ---------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 1,562,998 502,792 Loans to Participants, net (32,784) 2,243 Fund-to-Fund Transfers (73,986) (481,762) Net Assets Available for Benefits, Beginning of Year 9,384,235 3,358,687 ---------- ---------- Net Assets Available for Benefits, End of Year $10,840,463 $3,381,960 ========== ========== See Accompanying Notes to Financial Statements 21 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Fidelity Fidelity Managed Income US Equity Index Portfolio Fund Commingled Pool Sources of Participants' Equity: Contributions: Employee $ 1,137,273 $ 694,958 Employer 0 0 ----------- ---------- 1,137,273 694,958 ----------- ---------- Plan-to-Plan Transfers 51,030 142,180 Investment Income: Dividend and Interest Income 943,409 25,899 Net Change in Fair Value of Investments 0 1,359,719 ----------- ---------- 943,409 1,385,618 ----------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 909,554 97,264 Administrative and Miscellaneous Expenses 7,139 0 ----------- ---------- 916,693 97,264 ----------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 1,215,019 2,125,492 Loans to Participants, net (70,630) (7,515) Fund-to-Fund Transfers 1,317,845 2,535,277 Net Assets Available for Benefits, Beginning of Year 15,073,340 2,867,966 ----------- ---------- Net Assets Available for Benefits, End of Year $17,535,574 $7,521,220 =========== ========== See Accompanying Notes to Financial Statements 22 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Founders USAA Growth International Fund Fund Sources of Participants' Equity: Contributions: Employee $ 451,359 $202,522 Employer 0 0 ---------- -------- 451,359 202,522 ---------- -------- Plan-to-Plan Transfers 3,600 (1,617) Investment Income: Dividend and Interest Income 237,578 32,242 Net Change in Fair Value of Investments 438,316 (1,507) ---------- -------- 675,894 30,735 ---------- -------- Application of Participants' Equity: Distributions to Active and Terminated Participants 66,827 62,713 Administrative and Miscellaneous Expenses 0 0 ---------- -------- 66,827 62,713 ---------- -------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 1,064,026 168,927 Loans to Participants, net 11,185 (31,967) Fund-to-Fund Transfers 1,618,791 (123,276) Net Assets Available for Benefits, Beginning of Year 1,694,684 686,344 ---------- -------- Net Assets Available for Benefits, End of Year $4,388,686 $700,028 ========== ======== See Accompanying Notes to Financial Statements 23 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Warburg Pincus Fidelity Emerging Brokerage Growth Link Sources of Participants' Equity: Contributions: Employee $254,892 $ 55,473 Employer 0 0 -------- ---------- 254,892 55,473 -------- ---------- Plan-to-Plan Transfers 7,415 58,387 Investment Income: Dividend and Interest Income 5,145 736,932 Net Change in Fair Value of Investments 70,895 0 -------- ---------- 76,040 736,932 -------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 21,382 16,510 Administrative and Miscellaneous Expenses 0 60,613 -------- ---------- 21,382 77,123 -------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 316,965 773,669 Loans to Participants, net 4,657 32,950 Fund-to-Fund Transfers 140,278 1,566,623 Net Assets Available for Benefits, Beginning of Year 966,083 1,623,980 -------- ---------- Net Assets Available for Benefits, End of Year $1,427,983 $3,997,222 ========= ========== See Accompanying Notes to Financial Statements 24 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1998 Total All Funds Sources of Participants' Equity: Contributions: Employee $9,534,379 Employer 1,599,690 ------------ 11,134,069 ------------ Plan-to-Plan Transfers 1,074,726 Investment Income: Dividend and Interest Income 13,734,280 Net Change in Fair Value of Investments 10,051,625 ------------ 23,785,905 ------------ Application of Participants' Equity: Distributions to Active and Terminated Participants 7,953,357 Administrative and Miscellaneous Expenses 104,884 ------------ 8,058,241 ------------ Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 27,936,459 Loans to Participants, net 0 Fund-to-Fund Transfers 0 Net Assets Available for Benefits, Beginning of Year 150,345,365 ------------ Net Assets Available for Benefits, End of Year $178,281,824 ============ See Accompanying Notes to Financial Statements 25 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Fidelity Illinova Equuity Stock Income Fund Fund Sources of Participants' Equity: Contributions: Employee $ 138,130 $ 2,330,525 Employer 2,098,559 0 ----------- ----------- 2,236,689 2,330,525 ----------- ----------- Plan-to-Plan Transfers 362,516 173,428 Investment Income: Dividend and Interest Income 1,171,761 2,414,347 Net Change in Fair Value of Investments (236,476) 7,457,216 ----------- ----------- 935,285 9,871,563 ----------- ----------- Application of Participants' Equity: Distributions to Active and Terminated Participants 1,337,976 2,104,579 Administrative and Miscellaneous Expenses 27,756 4,587 ----------- ----------- 1,365,732 2,109,166 ----------- ----------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 2,168,758 10,266,350 Loans to Participants, net 4,991 16,188 Fund-to-Fund Transfers (508,012) (1,051,248) Net Assets Available for Benefits, Beginning of Year 25,403,657 32,763,470 ----------- ----------- Net Assets Available for Benefits, End of Year $27,069,394 $41,994,760 =========== =========== See Accompanying Notes to Financial Statements 26 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Fidelity Retirement Growth Loan Fund Fund Sources of Participants' Equity: Contributions: Employee $ 2,324,724 $ 0 Employer 0 0 ----------- ---------- 2,324,724 0 ----------- ---------- Plan-to-Plan Transfers 329,329 51,768 Investment Income: Dividend and Interest Income 5,818,457 0 Net Change in Fair Value of Investments (309,142) 0 ----------- ---------- 5,509,315 0 ----------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 1,375,393 138,629 Administrative and Miscellaneous Expenses 923 0 ----------- ---------- 1,376,316 138,629 ----------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 6,787,052 (86,861) Loans to Participants, net (12,030) 34,873 Fund-to-Fund Transfers (3,876,423) 0 Net Assets Available for Benefits, Beginning of Year 30,283,181 3,917,858 ----------- ---------- Net Assets Available for Benefits, End of Year $33,181,780 $3,865,870 =========== ========== See Accompanying Notes to Financial Statements 27 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Fidelity Fidelity Asset Manager Asset Manager Income Fund Growth Fund Sources of Participants' Equity: Contributions: Employee $ 115,604 $ 613,537 Employer 0 0 ---------- ---------- 115,604 613,537 ---------- ---------- Plan-to-Plan Transfers 8,077 73,516 Investment Income: Dividend and Interest Income 78,070 785,862 Net Change in Fair Value of Investments 51,147 727,905 ---------- ---------- 129,217 1,513,767 ---------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 209,150 279,652 Administrative and Miscellaneous Expenses 46 4 ---------- ---------- 209,196 279,656 ---------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 43,702 1,921,164 Loans to Participants, net 3,384 (8,120) Fund-to-Fund Transfers 15,388 304,151 Net Assets Available for Benefits, Beginning of Year 1,122,594 5,175,979 ---------- ---------- Net Assets Available for Benefits, End of Year $1,185,068 $7,393,174 ========== ========== See Accompanying Notes to Financial Statements 28 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Fidelity Fidelity Asset International Manager Growth and Fund Income Fund Sources of Participants' Equity: Contributions: Employee $606,566 $374,621 Employer 0 0 ---------- ---------- 606,566 374,621 ---------- ---------- Plan-to-Plan Transfers 51,709 (3,351) Investment Income: Dividend and Interest Income 843,549 225,250 Net Change in Fair Value of Investments 931,548 60,787 ---------- ---------- 1,775,097 286,037 ---------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 790,382 257,952 Administrative and Miscellaneous Expenses 4 104 ---------- ---------- 790,386 258,056 ---------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 1,642,986 399,251 Loans to Participants, net (29,578) 6,375 Fund-to-Fund Transfers (440,383) (802,524) Net Assets Available for Benefits, Beginning of Year 8,211,210 3,755,585 ---------- ---------- Net Assets Available for Benefits, End of Year $9,384,235 $3,358,687 ========== ========== See Accompanying Notes to Financial Statements 29 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Fidelity Fidelity US Managed Income Equity Index Portfolio Fund Commingled Pool Sources of Participants' Equity: Contributions: Employee $805,198 $210,662 Employer 0 0 ----------- ---------- 805,198 210,662 ----------- ---------- Plan-to-Plan Transfers 79,844 (26,171) Investment Income: Dividend and Interest Income 936,837 4,704 Net Change in Fair Value of Investments 0 258,350 ----------- ---------- 936,837 263,054 ----------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 1,310,245 12,634 Administrative and Miscellaneous Expenses 5,793 0 ----------- ---------- 1,316,038 12,634 ----------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 505,841 434,911 Loans to Participants, net (35,616) 8,888 Fund-to-Fund Transfers (474,453) 2,424,167 Net Assets Available for Benefits, Beginning of Year 15,077,568 0 ----------- ---------- Net Assets Available for Benefits, End of Year $15,073,340 $2,867,966 =========== ========== See Accompanying Notes to Financial Statements 30 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Founders USAA Growth International Fund Fund Sources of Participants' Equity: Contributions: Employee $209,244 $72,604 Employer 0 0 ---------- -------- 209,244 72,604 ---------- -------- Plan-to-Plan Transfers 3,189 1,035 Investment Income: Dividend and Interest Income 228,086 54,230 Net Change in Fair Value of Investments (144,840) (42,418) ---------- -------- 83,246 11,812 ---------- -------- Application of Participants' Equity: Distributions to Active and Terminated Participants 12,303 0 Administrative and Miscellaneous Expenses 0 0 ---------- -------- 12,303 0 ---------- -------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 283,376 85,451 Loans to Participants, net (4,856) (1,727) Fund-to-Fund Transfers 1,416,164 602,620 Net Assets Available for Benefits, Beginning of Year 0 0 ---------- -------- Net Assets Available for Benefits, End of Year $1,694,684 $686,344 ========== ======== See Accompanying Notes to Financial Statements 31 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Warburg Pincus Fidelity Emerging Brokerage Growth Link Sources of Participants' Equity: Contributions: Employee $123,549 $ 26,967 Employer 0 0 -------- ---------- 123,549 26,967 -------- ---------- Plan-to-Plan Transfers 1,376 0 Investment Income: Dividend and Interest Income 58,962 4,439 Net Change in Fair Value of Investments 29,727 0 -------- ---------- 88,689 4,439 -------- ---------- Application of Participants' Equity: Distributions to Active and Terminated Participants 0 0 Administrative and Miscellaneous Expenses 0 62,738 -------- ---------- 0 62,738 -------- ---------- Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 213,614 (31,332) Loans to Participants, net 176 17,052 Fund-to-Fund Transfers 752,293 1,638,260 Net Assets Available for Benefits, Beginning of Year 0 0 -------- ---------- Net Assets Available for Benefits, End of Year $966,083 $1,623,980 ======== ========== See Accompanying Notes to Financial Statements 32 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1997 Total All Funds Sources of Participants' Equity: Contributions: Employee $7,951,931 Employer 2,098,559 ------------ 10,050,490 ------------ Plan-to-Plan Transfers 1,106,265 Investment Income: Dividend and Interest Income 12,624,554 Net Change in Fair Value of Investments 8,783,804 ------------ 21,408,358 ------------ Application of Participants' Equity: Distributions to Active and Terminated Participants 7,828,895 Administrative and Miscellaneous Expenses 101,955 ------------ 7,930,850 ------------ Increase (Decrease) in Net Assets Available for Benefits prior to interfund transfers 24,634,263 Loans to Participants, net 0 Fund-to-Fund Transfers 0 Net Assets Available for Benefits, Beginning of Year 125,711,102 ------------ Net Assets Available for Benefits, End of Year $150,345,365 ============ See Accompanying Notes to Financial Statements 33 ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF PLAN: General: The Illinois Power Company Incentive Savings Plan (the Plan) is sponsored and administered by Illinois Power Company (the Company). The Plan became effective as of June 1, 1984. Assets of the Plan are held and managed by a Trustee. Effective July 1, 1995, Fidelity Management Trust Company of Boston, Massachusetts became trustee and custodian. The purpose of the Plan is to enable participants to invest a portion of their salaries in tax-deferred savings pursuant to section 401(k) of the Internal Revenue Code (IRC). The Plan is subject to and in compliance with the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) as amended. Participation: All salaried employees of the Company are eligible to participate in the Plan. In addition, all employees of Illinois Power Company's parent company, Illinova Corporation (Illinova), are eligible to participate, as are employees of Illinova's other subsidiary companies. Participation is voluntary. Active participation ceases upon termination of employment with the Company. Former employees can choose to liquidate their accounts or to leave them in the Plan. Earnings will continue to accrue on undistributed accounts. All accounts, whether for active or former employees, are fully vested. Plan Changes and Amendments: Effective April 1, 1997, new contributions and balances transferred from other options could be invested in five new alternatives. The one new Fidelity fund was the Fidelity U.S. Equity Index Commingled Pool. Three mutual funds managed by other firms include the Founders Growth Fund, USAA International Fund, and the Warburg Pincus Emerging Growth Fund. In addition, participants are able to buy individual stocks and make other investment choices. Additional fees apply for this service which is called Fidelity Brokerage Link. Fidelity Management Trust Company will continue to handle transactions and serve employees accounts, regardless of which funds the participant invests in. 34 New contributions could also be made, or balances transferred to, the Stock Fund, the Fidelity Equity Income Fund, the Fidelity Retirement Growth Fund, the Fidelity Asset Manager Income Fund, the Fidelity Asset Manager Growth Fund, the Fidelity Asset Manager Fund, the Fidelity International Growth and Income Fund, or the Fidelity Managed Income Portfolio Fund, which were not affected by the changes. Effective June 1997, the Plan was amended to reflect the change to daily valuation and elections through telephonic delivery; permit participants to request a loan from amounts that have been rolled over to the Plan; increase the maximum Company Incentive Contribution; clarify that if a participant's additions exceeds the limits of section 415 of the IRC, correction will first be made by distributing the participant's after-tax and 401(k) contributions; and clarify that a participant must be an active employee on the last day of the plan year to receive a Company Incentive Contribution for that plan year. Contributions: Participants may make before-tax contribution by payroll deduction up to the legal dollar limit. Participants may also make after-tax contributions in cash or by payroll deduction. Total contributions are limited to the applicable percentage limit set by law. A participant may also "roll-over" into the Plan amounts previously invested in another retirement plan. Participants have the option of investing their contributions into any or all of the investment funds in the proportions they choose. They may change their investment options or transfer amounts from fund to fund at any time. Amounts are transferred to or from the Illinois Power Company Incentive Savings Plan as participants shift out of or into positions covered by a collective bargaining agreement. These transfers are shown in the Statement of Changes in Net Assets Available for Benefits with Fund Information as Plan-to-Plan Transfers. The Company contributes a monthly matching contribution to the Plan equal to 50% of the first $80 of the participants' monthly before-tax contributions and 25% of the balance of deferrals per month, up to 6% of the employee's base earnings for the month. All Company matching contributions are paid in units of Illinova common stock and are contained in the Stock Fund. Dividends on stock held in the Stock Fund are also invested in the Stock Fund. The Company has an Incentive Compensation arrangement in which all participants employed by the company on the last day of the Plan year are eligible to earn Illinova stock if specified performance goals are met. Units 35 awarded under the Incentive Compensation arrangement are held in the Stock Fund. Dividends earned on these units are also invested in the Stock Fund. Shares previously held in the Tax Reduction Act Stock Ownership Plan (TRASOP), which was eliminated in 1988, are also held in the Stock Fund. ESOP: In October 1990, the Board of Directors authorized amendments to the Incentive Savings Plan to provide for the implementation of an Employee Stock Ownership Plan (ESOP) arrangement. Under this arrangement, the Company, pursuant to authorization granted by the Illinois Commerce Commission (ICC), loaned $35 million to the Trustee of the ESOP in January 1991. The loan proceeds were used to purchase 2,031,445 shares of the Company's common stock on the open market. These shares are held in a suspense account under the Plans and are being distributed to the accounts of participating employees as the loan is repaid by the Trustee with funds contributed by Illinois Power, together with dividends on the shares acquired with the loan proceeds. The shares are allocated to the accounts of eligible participating employees as they are earned through the Match or Incentive Compensation features of the Plan. As of December 31, 1998, 350,841 and 339,205 shares have been allocated to salaried employees for Matching Contribution and Company Incentive Contributions. Distributions: Distributions as provided for in the Plan are made to retired Plan participants or their beneficiaries. Distributions must begin by April 1st of the calendar year following the later of the calendar year in which the employee reaches age 70 1/2 or the calendar year in which the employee retires. All distributions are made in the form of cash and/or Illinova common stock. Forfeitures: Each participant is responsible for supplying the Company with a current address. If the address of the participant (or the participant's beneficiary in the event of participant's death) is not known to the Company within four years (three years in the event of participant's death) of the date on which distribution may first be made, the adjusted balance in the participant's account shall be deemed a forfeiture and shall be used to reduce matching contributions and company incentive contributions. In the event that the 36 participant or beneficiary makes a valid claim for the forfeited amount, the benefits shall be reinstated. Loans: The Plan allows participants to borrow from their before-tax and TRASOP accounts an amount not to exceed the lesser of $50,000 reduced by the excess of the highest outstanding balance of loans during the one-year period before the date the loan is made over the outstanding balance of loans on the date the loan is made or 50% of the vested account balance. Interest is charged on these loans at a rate commensurate with interest rates charged by persons in the business of lending money for similar type loans. For 1998, the interest rate ranged from 8.75% to 9.50%, however for 1997 the rate was 9.50%. All loans made will mature and be payable in full no earlier than one year and no later than five years from the date of the loan. An exception exists when the loan is used by the participant to acquire his or her principal residence. In this case, the loan will mature and be payable in full no earlier than one year and no later than ten years from the date of the loan. Loan repayments are made by payroll deductions authorized by the participant and by optional cash payments. Interest paid on the loan is credited to the participant's account. The Trustee maintains a Loan Fund to hold the balances of participants' loans. Plan Termination: It is expected that the Plan will be continued, but the right to amend, modify or terminate the Plan is reserved by the Company provided that such action does not retroactively and adversely affect the rights of any participant or beneficiary under the Plan. 37 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting: The accompanying Plan financial statements are prepared on the accrual basis of accounting. Investments: The guaranteed investment fund is valued at contract value as reported to the Plan by the Trustee. Participant notes receivable included in the loan fund are valued at cost, which approximates fair value. Other investments are stated at current value based on the latest quoted market price. Income: Interest and dividend income is accrued as earned. Net appreciation (depreciation) of investments is comprised of realized and unrealized gains and losses. Realized gains or losses represent the difference between proceeds received upon sale and the average cost of the investment. Unrealized gain or loss is the difference between market value and cost of investments retained in the Plan (at financial statement date). For the purpose of allocation to participants, the Illinova common stock is valued by the Plan at market value on the date of allocation and current value is used at the time of distribution to participants resulting in a realized gain or loss as reflected in the Statement of Changes in Net Assets Available for Benefits with Fund Information. Expenses: Certain expenses incurred in the administration of the Plan are paid by the Plan rather than the Company. The expenses paid by the Plan include ESOP record keeping fees and trustee administrative fees. All other expenses incurred in the operation of the Plan are paid by the Company. Income Taxes: The Internal Revenue Service has determined and informed the Company by a letter dated January 8, 1996, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The plan has been amended since receiving the determination letter. However, the Plan Administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. 38 Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Reclassifications: Certain reclassifications have been made to the 1997 financial statements to conform with the 1998 presentation. 39 NOTE 3 - INVESTMENTS Plan investments are received, invested and held by the Trustee. Individual investments that represent 5% or more of the Plan's net assets available for benefits include: December 31, 1998 Investments at Fair Value as Determined by Quoted Market Price Units Value Cost Illinova Common Stock 1,021,868 $25,546,700 $21,420,783 Fidelity Equity Income Fund 782,044 $43,442,523 $29,612,286 Fidelity Retirement Growth Fund 2,175,660 $44,622,782 $39,077,299 Fidelity Asset Manager Fund 621,938 $10,815,508 $10,111,240 Fidelity Managed Income Portfolio Fund 17,502,633 $17,502,633 $17,502,633 December 31, 1997 Investments at Fair Value as Determined by Quoted Market Price Units Value Cost Illinova Common Stock 964,040 $25,968,828 $20,374,849 Fidelity Equity Income Fund 799,689 $41,911,711 $28,462,446 Fidelity Retirement Growth Fund 1,964,771 $33,106,384 $34,459,220 Fidelity Asset Manager Fund 510,242 $ 9,362,941 $ 7,937,016 Fidelity Managed Income Portfolio Fund 15,046,006 $15,046,006 $15,046,006 40 NOTE 4 - TRANSACTIONS WITH PARTIES-IN-INTEREST Fidelity Management Trust Company, the Trustee for the Plan, purchased shares of Illinova Common Stock at a cost of $3,773,625 in 268 transactions and sold shares, the proceeds of which totaled $3,535,604, in 238 transactions. The net gain on these sales was $916,076. The transactions are allowable party-in-interest transactions under Section 408(3) of ERISA and the regulations thereunder. The majority of the assets of the Plan are invested in Fidelity Investments mutual funds. The Plan also invests in a short-term money market fund, the Fidelity Investments Cash Portfolio. The transactions with these Fidelity funds are allowable party-in-interest transactions under Section 408(b)(8) of ERISA and the regulations thereunder. The number of purchase transactions with each fund and the dollar amount of purchases for each fund as of December 31, 1998 are listed below: Purchase Purchase Fund Transactions Amount Fidelity Equity Income Fund 230 $ 8,007,695 Fidelity Retirement Growth Fund 229 $10,361,828 Fidelity Asset Manager Income Fund 123 $ 1,447,349 Fidelity Asset Manager Growth Fund 169 $ 2,273,648 Fidelity Asset Manager Fund 172 $ 3,565,259 Fidelity International Growth and Income Fund 145 $ 716,172 Fidelity Managed Income Portfolio Fund 184 $ 8,792,668 Fidelity US Equity Index Commingled Pool 188 $ 5,309,214 Founders Growth Fund 163 $ 3,069,832 USAA International Fund 112 $ 584,698 Warburg Pincus Emerging Growth 147 $ 996,298 Fidelity Brokerage Link 80 $ 2,406,796 Cash Portfolio 134 $ 4,063,789 41 The number of sales transactions with each fund, the dollar amount of sales, and the gain on these sales for each fund as of December 31, 1998 are shown below: Sales Trans- Sales Fund actions Amount Gain Fidelity Equity Income Fund 204 $9,175,677 $2,317,821 Fidelity Retirement Growth Fund 201 $6,211,043 $467,294 Fidelity Asset Manager Income Fund 58 $717,330 $ 15,196 Fidelity Asset Manager Growth Fund 120 $1,771,486 $267,679 Fidelity Asset Manager Fund 128 $1,666,478 $275,443 Fidelity International Growth and Income Fund 104 $871,829 $ 68,018 Fidelity Managed Income Portfolio Fund 187 $6,336,041 0 Fidelity US Equity Index Commingled Pool 90 $2,030,099 $161,427 Founders Growth Fund 75 $882,933 $ (13,110) USAA International Fund 52 $570,246 $(9,526) Warburg Pincus Emerging Growth 68 $607,291 $ 23,688 Fidelity Brokerage Link 252 $ 35,295 0 Cash Portfolio 198 $4,012,042 0 42 NOTE 5 - SUBSEQUENT EVENT Illinova has announced an intention to merge with Dynegy. Status of the plan following the merger has not been determined. 43 Line 27a Schedule I Illinois Power Company Incentive Savings Plan Schedule of Assets Held for Investment Purposes December 31, 1998 Identity of Issue/ Current Description of Investment Cost Value *Illinova Common Stock $21,420,783 $25,546,700 *Fidelity Equity Income Fund 29,612,286 43,442,523 *Fidelity Retirement Growth Fund 39,077,290 44,622,782 *Fidelity Asset Manager Income Fund 1,854,894 1,918,843 *Fidelity Asset Manager Growth Fund 7,028,069 8,025,684 *Fidelity Asset Manager Fund 10,111,240 10,815,508 *Fidelity International Growth and Income Fund 3,025,196 3,370,968 *Fidelity Managed Income Portfolio Fund 17,502,633 17,502,633 *Fidelity US Equity Index Commingled Pool 6,059,024 7,493,956 *Founders Growth Fund 4,073,841 4,372,705 *USAA International Fund 743,050 696,540 *Warburg Pincus Emerging Growth 1,363,254 1,421,588 *Fidelity Brokerage Link 3,992,883 3,992,883 *Participant Loans** 4,190,017 4,190,017 --------- --------- $150,054,460 $177,413,330 ============ ============ *A party-in-interest to the Plan **Interest rates on loans range from 7% to 11% Line 27d Schedule II Illinois Power Company Incentive Savings Plan Schedule of Reportable Transactions * for the Year Ended December 31, 1998 Expense Current Identity of Incurred Value of Party Involved/ Purchase Selling Lease with Cost of Asset on Description of Asset Price Price Rental Trans Asset Trans Dt Net Gain - -------------------- ----------- ---------- ------ -------- ----------- ---------- ----------- Fidelity Equity Income Fund $ 8,007,695 $9,175,677 N/A N/A $6,857,856 $9,175,677 $2,317,821 Fidelity Retirement Growth Fund $10,361,828 $6,211,043 N/A N/A $5,743,749 $6,211,043 $467,294 Fidelity Managed Income Portfolio Fund $ 8,792,668 $6,336,041 N/A N/A $6,336,041 $6,336,041 0 * Transactions or series of transactions in excess of 5% of the current value of the Plan's assets as of December 31, 1997 as defined in Section 2520.103-6 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Illinois Power Company has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Illinois Power Company Incentive Savings Plan by/s/Kim B. Leftwith Kim B. Leftwich Vice-President Date: June 28, 1999 EXHIBIT INDEX Exhibits Filed Herewith Exhibit No. Description - -------------------------------------------------------------------------------- 1 Consent of Independent Accountants Exhibit 1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-60278) of Illinova Corporation of our report dated June 18, 1999 relating to the financial statements of Illinois Power Company Incentive Savings Plan for the year ended December 31, 1998, which appears in this Form 11-K. by /s/ PricewaterhouseCoopers LLP St. Louis, Missouri June 28, 1999