UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 8, 1998
CILCORP Inc.
(Exact name of registrant as specified in its charter)
Illinois 1-8946 37-1169387
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
300 Hamilton Blvd., Suite 300, Peoria, Illinois 61602
(Address of principal executive offices)
Registrant's telephone number, including area code (309) 675-8810
Item 5. Other Events
CILCORP Inc. announced on January 8, 1998, that it would write off
goodwill associated with its environmental services business, resulting
in a $22.6 million after-tax charge.
The net effect of this accounting entry, which has no cash flow effect,
will be to reduce reported net income for the quarter and 12 months
ended December 31, 1997, by approximately $1.66 per share. CILCORP has
been amortizing the goodwill associated with QST Environmental Inc. at
an annual rate of approximately five cents per share. CILCORP expects
to announce consolidated 1997 net income in late January.
In announcing the accounting adjustment, CILCORP President and Chief
Executive Officer Robert O. Viets said, "This decision reflects the
significant downsizing we've carried out at QST Environmental over the
past 18 months to better match resources to market opportunities. The
environmental consulting business has been down for several years.
Consequently, the Company does not expect to achieve an adequate return
on its investment, despite the strong cash flows it has produced.
Additionally, this decision underscores our intent to concentrate on
markets for energy-related products and services. Recent sweeping
revisions to energy regulations in Illinois and elsewhere have created
significant opportunities to which our attention must be channeled."
The decision to write off the excess carrying value of CILCORP's
investment in QST Environmental Inc. [formerly Environmental Science &
Engineering, Inc. (ESE)] follows the November 1997 sale of the assets of
third-tier subsidiary ESE Land Corporation for a $2.7 million after-tax
gain, and the restructuring of QST Environmental's nationwide consulting
offices into an integrated environmental and energy services network.
In addition, QST Environmental has had discussions that could lead to a
sale of its remaining laboratory assets.
CILCORP acquired the bulk of the assets that make up QST Environmental
in February 1990 for $25.7 million in CILCORP convertible preferred
stock, $22 million of assumed debt, and $2 million cash for a non-
compete agreement.
Through the first nine months of 1997, QST Environmental Inc. reported a
loss, attributable to its laboratory operations, of approximately
$800,000, or six cents per share, compared with a loss of approximately
$3.9 million, or 29 cents per share, for the corresponding 1996 period.
On a consolidated basis, CILCORP Inc. earned $28.6 million, or $2.10 per
share, through September 30, 1997, compared with earnings of
$25.4 million, or $1.89 per share, for the first nine months of 1996.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CILCORP Inc.
(Registrant)
Date January 8, 1998 R. O. Viets
R. O. Viets
President and
Chief Executive Officer
Date January 8, 1998 T. D. Hutchinson
T. D. Hutchinson
Controller