AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 26, 2002
REGISTRATION NO. 333-101800
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MIDAMERICAN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
IOWA 42-1425214
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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666 GRAND AVENUE
DES MOINES, IOWA 50309
(515) 242-4300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
PAUL J. LEIGHTON, ESQ.
ASSISTANT GENERAL COUNSEL
MIDAMERICAN ENERGY COMPANY
666 GRAND AVENUE
DES MOINES, IOWA 50309
(515) 242-4300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
JENNIFER A. FREDERICK
LATHAM & WATKINS
885 THIRD AVENUE, SUITE 1000
NEW YORK, NEW YORK 10022
(212) 906-1715
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement as
determined by market conditions.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX: [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED
ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT
OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR
INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX: [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING: [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX AND LIST THE
SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING: [ ]
IF DELIVERY OF A PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX: [ ]
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CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Proposed maximum Proposed maximum Amount of
Title of each class of Amount to be offering price aggregate registration
securities to be registered(1) registered(2) per unit(3) offering price(4)(5) fee(6)
- ---------------------------------------------------------------------------------------------------------------------
Debt securities and preferred stock $600,000,000 -- $600,000,000 $55,200
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(1) Any securities registered under this registration statement may be sold
separately or as units with other securities registered hereunder and may
include hybrid securities including a combination of features of the
securities listed above.
(2) Includes such indeterminate amount of debt securities and shares of
preferred stock as may from time to time be issued at indeterminate prices.
Also includes such additional principal amount of debt securities issued
with an original issue discount such that the aggregate initial public
offering price of all debt securities will not exceed $600,000,000 less the
dollar amount of other securities previously issued.
(3) The proposed maximum offering price per unit may be omitted pursuant to
General Instruction II.D. of Form S-3 under the Securities Act.
(4) Estimated in accordance with Rule 457 under the Securities Act solely for
the purpose of calculating the registration fee.
(5) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or composite currencies.
(6) The registration fee was paid in connection with the initial filing
of this registration statement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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PROSPECTUS
$600,000,000
MIDAMERICAN ENERGY COMPANY
Debt Securities and Preferred Stock
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We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and the applicable prospectus
supplement carefully before you invest.
INVESTING IN THE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus may not be used to sell securities unless accompanied by a
prospectus supplement.
The date of this prospectus is December 26, 2002.
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TABLE OF CONTENTS
PAGE PAGE
---- ----
ABOUT THIS PROSPECTUS ................... 1 RISK FACTORS ............................ 5
WHERE YOU CAN FIND MORE USE OF PROCEEDS ......................... 9
INFORMATION .......................... 1
DESCRIPTION OF DEBT SECURITIES .......... 9
FORWARD-LOOKING STATEMENTS .............. 2
DESCRIPTION OF CAPITAL STOCK ............ 15
MIDAMERICAN ENERGY COMPANY .............. 3
PLAN OF DISTRIBUTION .................... 17
RATIO OF EARNINGS TO FIXED
CHARGES .............................. 3 LEGAL MATTERS ........................... 18
RATIO OF EARNINGS TO FIXED CHARGES EXPERTS ................................. 18
PLUS PREFERRED STOCK DIVIDEND
REQUIREMENTS ......................... 4
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i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission using a "shelf" registration
process. Using this process, we may offer the securities described in this
prospectus, either separately or in units, in one or more offerings with a
total initial offering price of up to $600,000,000. This prospectus provides
you with a general description of the securities we may offer. Each time we
offer securities, we will provide a prospectus supplement to this prospectus.
The prospectus supplement will describe the specific terms of that offering.
The prospectus supplement may also add, update or change the information
contained in this prospectus. Please carefully read this prospectus and the
applicable prospectus supplement, in addition to the information contained in
the documents we refer you to under the heading "Where You Can Find More
Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read and copy any document we
file at the Securities and Exchange Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Securities and Exchange Commission at 1-800-732-0330 for further information on
the public reference rooms. You may also obtain copies of these materials from
the public reference section of the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Our Securities
and Exchange Commission filings are also available to the public from the
Securities and Exchange Commission's web site at http://www.sec.gov.
This prospectus is part of a registration statement we have filed with the
Securities and Exchange Commission relating to the securities described in this
prospectus. As permitted by Securities and Exchange Commission rules, this
prospectus does not contain all of the information set forth in the
registration statement. You should read the registration statement for further
information about us and the securities described in this prospectus. You may
inspect the registration statement and its exhibits without charge at the
office of the Securities and Exchange Commission at 450 Fifth Street, N.W., in
Washington, D.C. 20549, and you may obtain copies from the Securities and
Exchange Commission at prescribed rates. You may also access the registration
statement at the Securities and Exchange Commission's web site described above.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information that we file with them, which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus. The information filed by us with the Securities and Exchange
Commission in the future will automatically update and supersede this
information. We incorporate by reference, among others, the documents listed
below and any filings made by us with the Securities and Exchange Commission
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
after the initial filing of the registration statement that contains this
prospectus and until the time that we sell all the securities described in this
prospectus.
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 2001; and
2. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2002, June 30, 2002 and September 30, 2002.
1
You may request a copy of these filings, at no cost, by writing or calling
us at the following address or telephone number:
Treasurer
MidAmerican Energy Company
666 Grand Avenue
Des Moines, Iowa 50309
(515) 242-4300
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. You should
not assume that the information in this prospectus or any prospectus supplement
is accurate as of any date other than the date on the front of these documents.
FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference statements that do
not directly or exclusively relate to historical facts. Such statements are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. You can typically identify forward-looking
statements by the use of forward-looking words, such as "may," "will," "could,"
"project," "believe," "anticipate," "expect," "estimate," "continue,"
"potential," "plan," "forecast," and similar terms. These statements represent
our intentions, plans, expectations and beliefs and are subject to risks,
uncertainties and other factors. Many of these factors are outside our control
and could cause actual results to differ materially from such forward-looking
statements. These factors include, among others:
o general economic and business conditions in the United States as a
whole and in the midwestern United States, and our service territory
in particular;
o governmental, statutory, regulatory or administrative initiatives
affecting us or the United States electric or gas utility industries;
o weather effects on sales and revenues;
o general industry trends;
o increased competition in the power generation and electric or gas
utility industries;
o fuel and power costs and availability;
o changes in business strategy, development plans or vendor
relationships;
o availability, term and deployment of capital;
o availability of qualified personnel;
o risks relating to nuclear generation;
o financial or regulatory accounting principles or policies imposed by
the Financial Accounting Standards Board, the Securities and Exchange
Commission, the Federal Energy Regulatory Commission and similar
entities with regulatory oversight; and
o other business or investment considerations that may be disclosed from
time to time in our Securities and Exchange Commission filings or in
other publicly disseminated written documents.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The foregoing review of factors should not be construed as
exhaustive.
2
MIDAMERICAN ENERGY COMPANY
We are a public utility company headquartered in Des Moines, Iowa and
incorporated in the State of Iowa. We were formed on July 1, 1995 as a result
of the merger of Iowa-Illinois Gas and Electric Company, Midwest Resources Inc.
and Midwest Power Systems Inc. We are an indirect wholly owned subsidiary of
MidAmerican Energy Holdings Company, a privately owned global energy company
with publicly traded fixed income securities.
We are principally engaged in the business of generating, transmitting,
distributing and selling electric energy and in distributing, selling and
transporting natural gas. We distribute electricity at retail in Iowa, Illinois
and South Dakota and distribute natural gas at retail in Iowa, Illinois,
Nebraska and South Dakota. In addition to retail sales, we sell electric energy
and natural gas to other utilities, marketers and municipalities outside of our
delivery system, and transport natural gas through our distribution system for
a number of end-use customers who have independently secured their supply of
natural gas.
Our headquarters and principal executive offices are located at 666 Grand
Avenue, Des Moines, Iowa 50309. Our telephone number is (515) 242-4300.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our fixed
charges for the periods indicated.
TWELVE MONTHS ENDED DECEMBER 31,
------------------------------------------------------ NINE MONTHS ENDED
1997 1998 1999 2000 2001 SEPTEMBER 30, 2002
---------- ---------- ---------- ---------- ---------- ------------------
Ratio of earnings to fixed charges(1) ......... 3.10x 3.07x 3.54x 4.52x 4.43x 5.30x
Ratio of earnings to fixed charges and Cooper
Nuclear Station debt service(2) .............. 3.02x 3.01x 3.46x 4.45x 4.36x 5.29x
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(1) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of net income from continuing operations before interest
charges and preferred dividend requirements, plus income taxes, plus the
estimated interest component of rentals. "Earnings" also include allowances
for borrowed and other funds used during construction. "Fixed charges"
consist of interest charges and the estimated interest component of
rentals.
(2) Ratios of earnings to fixed charges and Cooper Nuclear Station debt service
have been calculated including our portion of the net interest component of
the payments to Nebraska Public Power District under a long-term contract
for one-half of the capacity from the Cooper Nuclear Station.
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RATIO OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS
The following table sets forth the ratio of our earnings to our fixed
charges plus preferred stock dividend requirements for the periods indicated.
TWELVE MONTHS ENDED DECEMBER 31,
------------------------------------------------------ NINE MONTHS ENDED
1997 1998 1999 2000 2001 SEPTEMBER 30, 2002
---------- ---------- ---------- ---------- ---------- ------------------
Ratio of earnings to fixed charges plus preferred
stock dividend requirements(1) .................. 2.80x 2.82x 3.22x 4.09x 4.02x 4.92x
Ratio of earnings to fixed charges and Cooper
Nuclear Station debt service plus preferred stock
dividend requirements(2) ........................ 2.73x 2.77x 3.16x 4.04x 3.97x 4.91x
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(1) For purposes of computing the ratio of earnings to fixed charges plus
preferred stock dividend requirements, "earnings" consist of net income
from continuing operations before interest charges and preferred dividend
requirements, plus income taxes, plus the estimated interest component of
rentals. "Earnings" also include allowances for borrowed and other funds
used during construction. "Fixed charges" consist of interest charges and
the estimated interest component of rentals. "Preferred stock dividend
requirements" represent the amount of pre-tax earnings that is required to
pay the dividends on outstanding preferred stock.
(2) Ratios of earnings to fixed charges and Cooper Nuclear Station debt service
plus preferred stock dividend requirements have been calculated including
our portion of the net interest component of the payments to Nebraska
Public Power District under a long-term contract for one-half of the
capacity from the Cooper Nuclear Station.
4
RISK FACTORS
Before you invest in any of the securities described in this prospectus,
you should be aware of the significant risks described below. You should
carefully consider these risks, together with all of the other information
included in this prospectus, the accompanying prospectus supplement and the
information incorporated by reference, before you decide to purchase our
securities.
WE ARE ACTIVELY DEVELOPING AND CONSTRUCTING NEW FACILITIES, THE COMPLETION
AND EXPECTED COST OF WHICH IS SUBJECT TO SIGNIFICANT RISK.
We are developing and constructing two new electric generating plants in
Iowa, and in the future we expect to pursue the development, construction,
ownership and operation of additional new or expanded facilities, the
completion of any of which is subject to substantial risk and may expose us to
significant costs. We cannot assure you that our development or construction
efforts on any particular project, or our efforts generally, will be
successful. Also, a proposed new or expanded facility may cost more than
planned to complete, and such excess costs, if found to be imprudent, may not
be recoverable in rates. The inability to avoid unsuccessful projects or to
recover any excess costs may materially affect our business, financial
position, results of operations and ability to service the securities.
WE ARE SUBJECT TO OPERATING UNCERTAINTIES WHICH MAY ADVERSELY AFFECT OUR
FINANCIAL POSITION, RESULTS OF OPERATIONS AND ABILITY TO SERVICE THE
SECURITIES.
The operation of a complex electric and gas utility (including generating,
transmission and distribution systems) involves many operating uncertainties
and events beyond our control. Operating risks include the breakdown or failure
of power generation equipment, compressors, pipelines, transmission and
distribution lines or other equipment or processes, fuel interruption,
performance below expected levels of output, capacity or efficiency, operator
error and catastrophic events such as severe storms, fires, earthquakes or
explosions. A casualty occurrence might result in injury or loss of life,
extensive property damage or environmental damage. Our revenues and expenses
may also be adversely affected by general economic, business, regulatory and
weather conditions. The realization of any of these risks could significantly
reduce or eliminate our revenues or significantly increase our expenses,
thereby adversely affecting our financial position, results of operations and
ability to service the securities.
We currently possess property, business interruption, catastrophic and
general liability insurance, but proceeds from such insurance coverage may not
be adequate for all liabilities incurred, lost revenue or increased expenses.
Moreover, such insurance may not be available in the future at commercially
reasonable costs and on commercially reasonable terms. Changes in the insurance
markets subsequent to the September 11, 2001 terrorist attacks have made it
more difficult for us to obtain certain types of coverage. There can be no
assurance that we will be able to obtain the levels or types of insurance we
would otherwise have obtained prior to these market changes or that the
insurance coverage we do obtain will not contain large deductibles or fail to
cover certain hazards or that it will otherwise cover all potential losses.
ACTS OF SABOTAGE AND TERRORISM AIMED AT OUR FACILITIES COULD ADVERSELY
EFFECT OUR BUSINESS.
Since the September 11, 2001 terrorist attacks, the United States
government has issued warnings that energy assets, specifically our nation's
electric utility infrastructure, may be the future targets of terrorist
organizations. These developments have subjected our operations to increased
risks. Any future acts of sabotage or terrorism aimed at our facilities, or
those of our customers, could have a material adverse effect on our business,
financial condition, results of operations and ability to service the
securities. Any resulting acts of war or the threat of war as a result of such
terrorist attacks could adversely affect the economy and energy consumption.
Instability in the financial markets as a result of terrorism or war could also
materially adversely affect our ability to raise capital.
5
WE ARE SUBJECT TO COMPREHENSIVE ENERGY REGULATION AND CHANGES IN
REGULATION AND RATES MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION,
RESULTS OF OPERATIONS AND ABILITY TO SERVICE THE SECURITIES.
We are subject to comprehensive regulation by various United States
federal, state and local regulatory agencies, all of which significantly
influences our operating environment, our rates, our capital structure, our
costs and our ability to recover our costs from customers. These regulatory
agencies include, among others, the Federal Energy Regulatory Commission, or
the FERC, the Environmental Protection Agency, the Nuclear Regulatory
Commission, the Iowa Utilities Board, or the IUB, the Illinois Commerce
Commission, other state utility boards and numerous local agencies. The FERC
has jurisdiction over, among other things, wholesale rates for electric
transmission service and electric energy sold in interstate commerce. United
States federal, state and local agencies also have jurisdiction over many of
our other activities. The utility commissions in the states where we operate
regulate many aspects of our operations including siting and construction of
facilities, customer service and the rates that we can charge customers.
The structure of federal and state energy regulation is currently
undergoing change and has in the past, and may in the future, be the subject of
various challenges, initiatives and restructuring proposals by policy makers,
utilities and other industry participants. In addition to Congressional
initiatives, many states are implementing or considering regulatory initiatives
designed to increase competition in the domestic power generation industry and
increase access to electric utilities' transmission and distribution systems
for independent power producers and electricity consumers. The implementation
of regulatory changes in response to such challenges, initiatives and
restructuring proposals could result in the imposition of more comprehensive or
stringent requirements on us or other industry participants, which would result
in increased compliance costs and could have a material adverse effect on our
business, financial condition, results of operations and ability to service the
securities.
We are unable to predict the impact on our operating results from the
future regulatory activities of any of these agencies or the Securities and
Exchange Commission under the Public Utility Holding Company Act of 1935, as
amended. Changes in regulations or the imposition of additional regulations
could have a material adverse impact on our results of operations. Recent
developments, events and uncertainties which have impacted or could impact our
businesses are described below.
On July 31, 2002, the FERC issued a notice of proposed rulemaking with
respect to Standard Market Design for the electric industry. The FERC has
characterized the proposal as portending "sweeping changes" to the use and
expansion of the interstate transmission and wholesale bulk power systems in
the United States. The proposal includes numerous proposed changes to the
current regulation of transmission and generation facilities designed "to
promote economic efficiency" and replace the "obsolete patchwork we have
today," according to the FERC Chairman. The final rule, if adopted as currently
proposed, would require all public utilities operating transmission facilities
subject to the FERC jurisdiction to file revised open access transmission
tariffs that would require changes to the basic services these public utilities
currently provide. The proposed rule may impact the pricing of our electricity
and transmission products. The FERC does not envision that a final rule will be
fully implemented until September 30, 2004. We are still evaluating the
proposed rule, and we believe that the final rule could vary considerably from
the initial proposal. Accordingly, we are presently unable to quantify the
likely impact of the proposed rule on us.
The state utility regulatory environment has to date, in general, given us
an exclusive right to serve retail electricity customers within our primary
service territory in Iowa and, in turn, the obligation to provide electric
service to those customers. There can be no assurance that there will not be a
change in legislation or regulation in Iowa or in any of the other states in
which we operate to allow retail competition in our service territory.
We purchase gas supplies from producers and third party marketers. To
ensure system reliability, a geographically diverse supply portfolio with
varying terms and contract conditions is utilized for the gas supplies.
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We have rights to firm pipeline capacity to transport gas to our service
territory through direct interconnects to the pipeline systems of Northern
Natural Gas Company (an affiliate), Natural Gas Pipeline Company of America,
Northern Border Pipeline Company and ANR Pipeline Company. Firm capacity in
excess of our system needs, resulting from differences between the capacity
portfolio and seasonal system demand, can be resold to other companies to
achieve optimum use of the available capacity. Past IUB and South Dakota Public
Utilities Commission rulings have allowed us to retain 30% of Iowa and South
Dakota margins, respectively, earned on the resold capacity, with the remaining
70% being returned to customers through a purchased gas adjustment clause as
described below.
Our cost of gas is recovered from customers through purchased gas
adjustment clauses. In 1995, the IUB gave initial approval of our Incentive Gas
Supply Procurement Program. Under the program, as amended, we are required to
file with the IUB every six months a comparison of our gas procurement costs to
an index-based reference price. If our cost of gas for the period is less or
greater than an established tolerance band around the reference price, then we
share a portion of the savings or costs with our customers. The program has
been extended through October 31, 2002 and an application for a further
extension has been filed with the IUB. A similar program is in effect in South
Dakota. Since the implementation of the program, we have successfully achieved
and shared savings with our natural gas customers.
We utilize leased gas storage to meet peak day requirements and to manage
the daily changes in demand due to changes in weather. The storage gas is
typically replaced during the summer months. In addition, we also utilize three
liquefied natural gas plants and two propane-air plants to meet peak day
demands.
We have strategically built multiple pipeline interconnections into
several of our larger communities. Multiple pipeline interconnects create
competition among pipeline suppliers for transportation capacity to serve those
communities, thus reducing costs. In addition, multiple pipeline interconnects
give us the ability to optimize delivery of the lowest cost supply from the
various pipeline supply basins into these communities and increase delivery
reliability. Benefits to our system customers are shared with all jurisdictions
through a consolidated purchased gas adjustment clause.
WE ARE SUBJECT TO ENVIRONMENTAL, SAFETY AND OTHER LAWS AND REGULATIONS
WHICH MAY ADVERSELY IMPACT US.
We are subject to a number of environmental, safety and other laws and
regulations affecting many aspects of our present and future operations,
including air emissions, water quality, wastewater discharges, solid wastes,
hazardous substances and safety matters. We may incur substantial costs and
liabilities in connection with our operations as a result of these regulations.
In particular, the cost of future compliance with federal, state and local
clean air laws, such as those that require certain generators, including some
of our electric generating facilities, to limit nitrogen oxide emissions and
potential other pollutants, may require us to make significant capital
expenditures which may not be recoverable through future rates. In addition,
these costs and liabilities may include those relating to claims for damages to
property and persons resulting from our operations. The implementation of
regulatory changes imposing more comprehensive or stringent requirements on us,
to the extent such changes would result in increased compliance costs or
additional operating restrictions, could have a material adverse effect on our
business, financial condition, results of operations and ability to service the
securities.
In addition, regulatory compliance for existing facilities and the
construction of new facilities is a costly and time-consuming process, and
intricate and rapidly changing environmental regulations may require major
expenditures for permitting and create the risk of expensive delays or material
impairment of value if projects cannot function as planned due to changing
regulatory requirements or local opposition.
In addition to operational standards, environmental laws also impose
obligations to clean up or remediate contaminated properties or to pay for the
cost of such remediation, often upon parties that
7
did not actually cause the contamination. Accordingly, we may become liable,
either contractually or by operation of law, for remediation costs even if the
contaminated property is not presently owned or operated by us, or if the
contamination was caused by third parties during or prior to our ownership or
operation of the property. Given the nature of the past industrial operations
conducted by us and others at our properties, there can be no assurance that
all potential instances of soil or groundwater contamination have been
identified, even for those properties where an environmental site assessment or
other investigation has been conducted. Although we have accrued reserves for
our known remediation liabilities, future events, such as changes in existing
laws or policies or their enforcement, or the discovery of currently unknown
contamination, may give rise to additional remediation liabilities which may be
material.
Any failure to recover increased environmental or safety costs incurred by
us may have a material adverse effect on our business, financial condition,
results of operations and ability to service the securities.
INCREASED COMPETITION RESULTING FROM LEGISLATIVE, REGULATORY AND
RESTRUCTURING EFFORTS COULD HAVE A SIGNIFICANT FINANCIAL IMPACT ON US AND
CONSEQUENTLY DECREASE OUR REVENUE.
The energy market continues to move towards a competitive environment and
is characterized by numerous strong and capable competitors, many of which have
more extensive operating experience and greater financial resources than us.
Retail competition and the unbundling of regulated electric and gas service
could have a significant adverse financial impact on us due to an impairment of
assets, a loss of customers, lower profit margins and/or increased costs of
capital. The total impacts of restructuring may have a significant effect on our
financial position, results of operations and cash flows. We cannot predict when
we will be subject to changes in legislation or regulation, nor can we predict
the impacts of these changes on our financial position, results of operations or
cash flows.
The generation segment of the electric industry has been and will be
significantly impacted by competition. The introduction of competition in the
wholesale market has resulted in a proliferation of power marketers and a
substantial increase in market activity. Many of these marketers have
experienced financial difficulties and the market continues to be volatile.
As retail competition continues to evolve, margins will be pressured by
competition from other utilities, power marketers and self-generation. Many
states and the federal government are implementing or considering regulatory
initiatives that would increase access to electric utilities' transmission and
distribution systems for independent power producers, utilities, power
marketers and electricity customers. Although the recent and anticipated
changes in the United States electric utility industry may create
opportunities, they will also create additional challenges and risks for
utilities. Competition will put pressure on margins for traditional electric
services. Illinois recently enacted a law that provides for full retail
customer choice in 2002. While introduction of retail competition in Iowa is
not presently expected, depending upon the terms of any such legislation, if
introduced it could have a material adverse effect on us. These types of
restructurings and other industry restructuring efforts could materially impact
our results of operations in a manner which is difficult to predict, since such
efforts will depend on the terms and timing of such restructuring.
WE ARE SUBJECT TO MARKET AND CREDIT RISK.
We are exposed to market and credit risks in our operations. Specifically,
such risks include commodity price changes, market supply shortages, interest
rate changes and counterparty default. In Iowa, we do not have an ability to
pass through fuel price increases in our rates (an energy adjustment clause),
so any significant increase in fuel costs or purchased power costs could have a
negative impact on us. To minimize these risks, we require collateral to be
posted if the creditworthiness of counterparties deteriorates below established
levels and enter into financial derivative instrument contracts to hedge
purchase and sale commitments, fuel requirements and inventories of natural
gas, electricity, coal and emission allowances. However, financial derivative
instrument contracts do not eliminate the risk. The impact of these risks could
result in our inability to fulfill contractual obligations, significantly
higher energy or fuel costs relative to corresponding sales contracts or
increased interest expense.
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OUR GENERATING FACILITIES ARE DEPENDENT ON A LIMITED NUMBER OF SUPPLIERS AND
SERVICE PROVIDERS.
Our electric generating facilities are often dependent on a single or
limited number of entities to supply or transport gas, coal or other fuels, to
dispose of wastes or to deliver electricity. The failure of any of these third
parties to fulfill its contractual obligations could increase the costs
incurred by us to provide electric service to our customers.
WE ARE SUBJECT TO THE UNIQUE RISKS ASSOCIATED WITH NUCLEAR GENERATIONS.
The risks of nuclear generation include the following:
(1) the potential harmful effects on the environment and human health
resulting from the operation of nuclear facilities and the storage,
handling and disposal of radioactive materials;
(2) limitations on the amounts and types of insurance commercially
available to cover losses that might arise in connection with nuclear
operations; and
(3) uncertainties with respect to the technological and financial aspects
of decommissioning nuclear plants at the end of their licensed lives.
The Nuclear Regulatory Commission has broad authority under federal law to
impose licensing and safety-related requirements for the operation of nuclear
generating facilities. In the event of non-compliance, the Nuclear Regulatory
Commission has the authority to impose fines or shut down a unit, or both,
depending upon its assessment of the severity of the situation, until
compliance is achieved. Revised safety requirements promulgated by the Nuclear
Regulatory Commission have, in the past, necessitated substantial capital
expenditures at nuclear plants, including those in which we have an ownership
interest, like the Quad Cities Generating Station described in the documents
incorporated by reference in this prospectus, and additional expenditures could
be required in the future. In addition, although we have no reason to
anticipate a serious nuclear incident at the units in which we have an
interest, if an incident did occur, it could have a material but presently
undeterminable adverse effect on our financial position, results of operations
and ability to service the securities.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we
will use the net proceeds from the sale of the securities described in this
prospectus for general corporate purposes, which may include additions to
working capital, reductions of our indebtedness, refinancing of existing
securities and financing of capital expenditures. We may invest funds not
immediately required for such purposes in short-term securities. The amount and
timing of sales of the securities described in this prospectus will depend on
market conditions and the availability to us of other funds.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes the general terms and provisions of the debt
securities that we may offer. When we offer to sell a particular series of debt
securities, we will describe the specific terms of the series in a prospectus
supplement to this prospectus. We will also indicate in the applicable
prospectus supplement whether the general terms and provisions described in
this prospectus apply to a particular series of debt securities. We may also
sell hybrid or novel securities now existing or developed in the future that
combine certain features of debt securities and other securities described in
this prospectus.
GENERAL
We may issue senior debt securities or subordinated debt securities. The
senior debt securities will be our direct secured or unsecured obligations and
the subordinated debt securities will be our direct unsecured obligations. Each
of the senior debt securities and the subordinated debt securities will be
issued under an indenture to be entered into between us and a trustee named in
the applicable prospectus supplement. The following summary of the indentures
is not a complete description of all of the provisions of the indentures. We
have filed (or will file prior to issuance of the applicable debt securities)
forms of the indentures as exhibits to the registration statement of which this
prospectus is
9
a part. Except to the extent set forth in a prospectus supplement for a
particular issue of debt securities, the indentures for the debt securities, as
amended or supplemented from time to time, will be substantially similar to the
indentures filed as exhibits to the registration statement and described below.
A prospectus supplement relating to a series of debt securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
o the title of the series of debt securities;
o whether the series of debt securities are senior debt securities or
subordinated debt securities;
o the aggregate principal amount (or any limit on the aggregate
principal amount) of the series of debt securities and, if any debt
securities of a series are to be issued at a discount from their face
amount, the method of computing the accretion of such discount;
o if other than the entire principal amount thereof, the portion of the
principal amount of the debt securities payable upon declaration of
acceleration of the maturity thereof;
o the interest rate or method for calculation of the interest rate;
o the date from which interest will accrue;
o the record dates for principal and interest payable on debt
securities;
o the dates when, places where and manner in which principal and
interest will be payable;
o the securities registrar if other than the trustee;
o the terms of any mandatory redemption (including any sinking fund
requirement) or any redemption at our option;
o the terms of any repurchase or remarketing rights of third parties;
o the terms of any redemption at the option of holders of the debt
securities;
o the denominations in which the debt securities are issuable;
o whether the debt securities will be issued in registered or bearer
form and the terms of any such forms of debt securities;
o whether the debt securities will be represented by a global security
and the terms of any such global security;
o the currency or currencies (including any composite currency) in which
principal or interest or both may be paid;
o if payments of principal or interest may be made in a currency other
than that in which the debt securities are denominated, the method for
determining such payments;
o provisions for electronic issuance of debt securities or issuance of
debt securities in certificated form;
o any events of default, covenants and/or defined terms in addition to
or in lieu of those set forth in the applicable indenture;
o whether and upon what terms debt securities may be defeased;
o whether the debt securities will have guaranties;
o any special tax implications of the debt securities; and
o any other terms in addition to or different from those contained in
the applicable indenture.
The debt securities will bear no interest or interest at a fixed or a
floating rate. Debt securities bearing no interest or interest at a rate that
at the time of issuance is below the prevailing market rate may be sold or
deemed to be sold at a discount below their stated principal amount. With
respect to any debt securities as to which we have the right to defer interest,
the holders of such debt securities
10
may be allocated interest income for federal and state income tax purposes
without receiving equivalent, or any, interest payments. Any material federal
income tax consequences applicable to any such discounted debt securities or to
debt securities issued at par that are treated as having been issued at a
discount for federal income tax purposes will be described in the applicable
prospectus supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be subordinate and junior in right
of payment to our senior debt, including the senior debt securities described
in this prospectus. Unless otherwise specified in the applicable prospectus
supplement, no payments on the subordinated debt securities may be made if (1)
any senior debt is not paid when due or (2) the maturity of any senior debt has
been accelerated because of a default. Upon any distribution of our assets to
creditors upon a bankruptcy, insolvency, liquidation, reorganization or similar
event with respect to us, all amounts due on our senior debt must be paid
before any payments are made on the subordinated debt securities.
Subject to the payment in full of all senior debt, the rights of the
holders of subordinated debt securities will be subrogated to the rights of the
holders of our senior debt to receive payments or distributions applicable
thereto until all amounts owing on the subordinated debt securities are paid in
full.
The subordinated indenture will not limit the amount of senior debt that
we can incur.
GLOBAL SECURITIES
BOOK-ENTRY SYSTEM
The debt securities will be issued under a book-entry system in the form
of one or more global securities. Each global security will be deposited with,
or on behalf of, a depositary, which will be The Depository Trust Company, New
York, New York. The global securities will be registered in the name of the
depositary or its nominee.
The debt securities will not be issued in certificated form and, except
under the limited circumstances described below, owners of beneficial interests
in the global securities will not be entitled to physical delivery of the debt
securities in certificated form. The global securities may not be transferred
except as a whole by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the
depositary or by the depositary or any nominee to a successor of the depositary
or a nominee of such successor.
The depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The depositary holds securities that its direct participants deposit with
the depositary. The depositary also facilitates the settlement among direct
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
direct participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations, including Euroclear Bank as operator of The Euroclear
System and Clearstream Banking societe anonyme. The depositary is owned by a
number of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and NASD, Inc. Access to the depositary system is
also available to indirect participants such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly. The
rules applicable to the depositary and its direct and indirect participants are
on file with the Securities and Exchange Commission.
Purchases of the debt securities under the depositary system must be made
by or through direct participants, which will receive a credit for the debt
securities on the depositary's records. The
11
ownership interest of each actual purchaser and beneficial owner of each debt
security is in turn to be recorded on the direct and indirect participants'
records. Beneficial owners will not receive written confirmation from the
depositary of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect participant through
which the beneficial owner entered into the transaction. Transfers of ownership
interests in the debt securities are to be accomplished by entries made on the
books of direct and indirect participants acting on behalf of beneficial
owners. Beneficial owners will not receive certificates representing their
ownership interests in debt securities, except in the event that use of the
book-entry system for the debt securities is discontinued.
To facilitate subsequent transfers, all debt securities deposited by
direct participants with the depositary will be registered in the name of the
depositary's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of the depositary. The deposit of
debt securities with the depositary and their registration in the name of Cede
& Co. or such other nominee effect no change in beneficial ownership. The
depositary has no knowledge of the actual beneficial owners of the debt
securities; the depositary's records reflect only the identity of the direct
participants to whose accounts such debt securities are credited, which may or
may not be the beneficial owners. The direct and indirect participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the depositary to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the depositary nor Cede & Co. (nor such other nominee of the
depositary) will consent or vote with respect to the debt securities. Under its
usual procedures, the depositary mails an omnibus proxy to us as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
debt securities are credited on the record date (identified in a listing
attached to the omnibus proxy).
Principal (and premium, if any) and interest payments on the debt
securities and any redemption payments will be made to Cede & Co. (or such
other nominee as may be requested by an authorized representative of the
depositary). The depositary's practice is to credit direct participants'
accounts upon the depositary's receipt of funds and corresponding detail
information from us or our agent on the payable date in accordance with the
direct participants' respective holdings shown on the depositary's records.
Payments by participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participant and not of the depositary, the
trustee, or us or our agent, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal (and
premium, if any), interest and any redemption proceeds to Cede & Co. (or such
other nominee as may be requested by an authorized representative of the
depositary) is our responsibility, disbursements of such payments to direct
participants is the responsibility of the depositary, and disbursement of such
payments to the beneficial owners is the responsibility of direct and indirect
participants.
The depositary may discontinue providing its services as securities
depositary with respect to the debt securities at any time by giving reasonable
notice to us. Under such circumstances, in the event that a successor
securities depositary is not obtained, certificated debt securities are
required to be printed and delivered. We may decide to discontinue use of the
system of book-entry transfers through the depositary (or a successor
securities depositary). In that event, certificated debt securities will be
printed and delivered.
The information in this section concerning the depositary and the
depositary's book-entry system has been obtained from sources that we believe
to be reliable, but we take no responsibility for the accuracy thereof.
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EXCHANGE OF GLOBAL SECURITIES FOR CERTIFICATED SECURITIES
Except as otherwise may be set forth in the applicable prospectus
supplement, the global securities may be exchanged for debt securities in
certificated form only in the following circumstances:
(1) if the depositary notifies us that it is unwilling or unable to
continue as depositary for the global securities, or if the depositary
is no longer registered as a clearing agency under the Securities
Exchange Act, and we do not appoint a replacement depositary within 90
days;
(2) an event of default under the applicable indenture occurs; or
(3) if we determine that an issue of debt securities will no longer be
represented by global securities.
If any global securities are exchangeable for certificated securities as
described above, we will execute, and the trustee will authenticate upon our
order, certificated securities of like tenor and terms in certificated form in
an aggregate principal amount equal to the principal amount of such global
securities. These certificated securities will be delivered to persons
specified by the depositary in exchange for the beneficial interests in the
global securities being exchanged.
REDEMPTION AND REPAYMENT
The applicable prospectus supplement will specify the following:
o if the debt securities are subject to any sinking fund and the terms
of any such sinking fund;
o if we may elect to redeem the debt securities prior to maturity and
the terms of any such optional redemption;
o if we will be required to redeem the securities prior to maturity upon
the occurrence of certain events and the terms of any such mandatory
redemption; or
o if the holders of the debt securities will have the right to repayment
of the debt securities prior to maturity and the terms of any such
optional repayment.
If we elect or are required to redeem debt securities, a redemption notice
will be sent to each holder of debt securities to be redeemed at least 30 but
not more than 60 days prior to the redemption date. The redemption notice will
include the following: (1) the redemption date, the places of redemption and
the redemption price; (2) a statement that payment of the redemption price will
be made on surrender of the debt securities at the places of redemption; (3) a
statement that accrued interest to the redemption date will be paid as
specified in the notice and that after the redemption date interest will cease
to accrue; (4) if less than all of the debt securities of a series are to be
redeemed, the particular debt securities or portions thereof to be redeemed;
(5) if any debt securities are to be redeemed in part only, the portion of the
debt securities to be redeemed and a statement that, upon surrender of the debt
securities for redemption, new debt securities having the same terms will be
issued in an amount equal to the unredeemed portion; and (6) if applicable, a
statement that redemption is subject to the receipt by the trustee prior to the
redemption date of sufficient funds to make such redemption.
If notice of redemption is given as specified above, the debt securities
called for redemption will become due and payable on the date and at the places
stated in the notice at the applicable redemption price, together with accrued
interest to the redemption date. After the redemption date, the debt securities
subject to redemption will cease to bear interest and will not be entitled to
the benefits of the applicable indenture, other than the right to receive
payment of the redemption price together with accrued interest to the
redemption date.
If debt securities are repayable at the option of the holders prior to
maturity, a holder that elects to have its debt securities repaid will be
required to deliver such debt securities (or a guarantee of delivery from an
eligible institution) to the trustee at least 30 but not more than 45 days
prior to the repayment date. For debt securities represented by global
securities held by the depositary, the
13
repayment option may be exercised by a direct participant in the depositary on
behalf of the beneficial owner by sending written notice to the trustee
(specifying certain information regarding the debt securities to be repaid) at
least 30 but not more than 60 days prior to the repayment date.
COVENANTS
In addition to other covenants, if any, as may be described in the
applicable prospectus supplement and except as may otherwise be set forth in
the applicable prospectus supplement, the indentures will contain the following
covenants:
o a covenant which requires us to maintain an office for payment and
registration of transfer or exchange of the debt securities in
New York, New York;
o a covenant which requires us to notify the trustee in writing of any
event of default under an indenture within five days after we become
aware of such event of default;
o a covenant which requires us to maintain our corporate existence,
rights and franchises, unless the maintenance of such rights and
franchises is no longer desirable in the conduct of our business; and
o a covenant which prohibits us from consolidating with or merging with
or into any other person or conveying, transferring or leasing our
properties substantially as an entirety to any other person, unless
the surviving company or transferee, as applicable, is a U.S. company
and assumes all of our obligations under the indenture.
EVENTS OF DEFAULT
Except as described in the applicable prospectus supplement, the following
events will constitute events of default under the applicable indenture:
o we fail to pay interest on the debt securities and such failure
continues for 30 days;
o we fail to pay principal of the debt securities when due;
o we breach any other covenant or representation in the indenture and
such breach continues for 60 days (such period to be extended to up to
90 days if we are diligently pursuing a cure) after we receive a
notice of default with respect thereto;
o we default in the payment of any indebtedness other than the debt
securities in excess of $75,000,000, or we breach any other provision
of such indebtedness and such breach results in an acceleration of
such indebtedness, and in each case such indebtedness is not
discharged or such acceleration is not rescinded, as applicable,
within 90 days after we receive a notice of default with respect
thereto;
o a final non-appealable judgment for the payment of money in excess of
$75,000,000 is entered against us and is not discharged or satisfied
within 90 days after we receive a notice of default with respect
thereto;
o a decree or order is entered against us in an involuntary bankruptcy
proceeding and is not vacated in 90 days, or a similar involuntary
event relating to our bankruptcy or insolvency occurs and continues
for 90 days; and
o we commence a voluntary bankruptcy case or take similar voluntary
actions relating to our bankruptcy or insolvency.
Upon the occurrence of an event of default under an indenture, the holders
of at least a majority in aggregate principal amount of the applicable debt
securities may declare such debt securities to be immediately due and payable.
Holders of a majority in principal amount of such debt securities may rescind
the acceleration so long as the conditions set forth in the applicable
indenture have been satisfied.
14
Prior to acceleration, holders of a majority in aggregate principal amount
of an issuance of debt securities may waive an event of default, other than (1)
an event of default related to non-payment of principal or interest and (2) an
event of default related to a covenant or other provision of the indenture that
cannot be modified without the consent of each holder of debt securities
affected thereby.
MODIFICATIONS TO THE INDENTURE
Except as otherwise set forth in the applicable prospectus supplement,
each indenture will contain provisions which allow us and the trustee to amend
the indenture without the consent of any holder of debt securities for the
following purposes:
o to cure ambiguities or to cure, correct or supplement any defective or
inconsistent provisions;
o to add additional covenants, events of default or collateral, or to
surrender a right or power conferred upon us in the indenture;
o to establish the form of additional debt securities in accordance with
the terms of the indenture;
o to evidence the succession of another company to us and the assumption
by the successor of our obligations under the indenture;
o to grant to or confer upon the trustee for the benefit of the holders
any additional rights, remedies, powers or authority;
o to permit the trustee to comply with any duties imposed upon it by
law;
o to specify further the duties and responsibilities of, and to define
further the relationships among, the trustee and any authenticating
agent or paying agent for the debt securities; and
o to change or eliminate any of the provisions of the indenture, so long
as the change or elimination becomes effective only when there are no
debt securities outstanding that were created prior to the execution
of the supplemental indenture or other document evidencing such change
or elimination.
Except as set forth in the applicable prospectus supplement, each
indenture will contain provisions which allow us and the trustee to amend the
indenture for any other purpose with the consent of holders of a majority in
principal amount of the applicable issue of debt securities, other than
amendments which (1) extend the stated maturity of the debt securities, (2)
reduce the principal amount of the debt securities, (3) reduce the interest
rate for the debt securities, (4) extend the dates for scheduled payments of
principal and interest, (5) impair the right of a holder of debt securities to
institute suit for the payment of its debt securities, or (6) reduce the
percentage of holders of debt securities required to consent to amendments or
waive defaults under the indenture. The items described in (1) through (5)
above will require the consent of all holders affected by the change. The item
described in (6) above will require the consent of all holders.
GOVERNING LAW
The senior indenture and the subordinated indenture will be governed by
the laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK
We have the authority under our articles of incorporation to issue
350,000,000 shares of common stock, no par value, and 100,000,000 shares of
preferred stock, no par value. As of November 30, 2002, 70,980,203 shares of
our common stock were outstanding, all of which are owned by MHC Inc. The
common stock is not listed on any exchange. All outstanding shares of common
stock are fully paid and non-assessable.
15
Also as of November 30, 2002, the following shares of our preferred stock
were outstanding: 49,451 shares of the $3.30 series; 38,305 shares of the $3.75
series; 32,630 shares of the $3.90 series; 47,362 shares of the $4.20 series;
49,945 shares of the $4.35 series; 50,000 shares of the $4.40 series; and
49,898 shares of the $4.80 series. All outstanding shares of preferred stock
are fully paid and non-assessable. The terms of these preferred securities are
described in an amendment to our articles of incorporation which is
incorporated herein by reference.
COMMON STOCK
The shares of our authorized common stock are identical in all respects
and have equal rights and privileges. Each holder of our common stock is
entitled to one vote in the election of directors and other matters. Common
shareholders may receive dividends when declared by our board of directors.
Dividends may be paid in cash, stock or another form. In certain cases, common
shareholders may not receive dividends until we have satisfied our obligations
to any preferred shareholders. If we liquidate, dissolve or wind-up our
business, either voluntarily or not, common shareholders will share equally in
the assets remaining after we pay our creditors and preferred shareholders.
PREFERRED STOCK
We may issue, from time to time, shares of one or more series or classes
of our preferred stock with such preferences and designations as our board of
directors may determine. The following summary description sets forth some of
the general terms of the preferred stock. We will describe the specific terms
of any series of preferred stock that we issue in a prospectus supplement. To
the extent the description contained in the prospectus supplement differs from
this summary description, you should rely on the information in the prospectus
supplement. You should also read our articles of incorporation and bylaws
before purchasing the preferred stock.
Our board of directors is authorized to determine for each series of
preferred stock, and the applicable prospectus supplement will set forth with
respect to any such series:
o the designation of such series and the number of shares that
constitute such series;
o the dividend rate (or the method of calculation thereof), if any, on
the shares of such series and the priority as to payment of dividends
with respect to other classes or series of our capital stock;
o the dividend periods (or the method of calculating the dividend
periods);
o the voting rights of the shares, if any;
o the liquidation preference and the priority as to payment of such
liquidation preference with respect to the classes or series of
preferred stock and any other rights of the shares of such series if
we liquidate, dissolve or wind-up our affairs;
o whether and on what terms we can redeem or repurchase the shares of
preferred stock;
o whether the preferred stock of such series will have the benefit of a
sinking fund; and
o any other material terms.
The shares of a series of preferred stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable prospectus supplement, our
articles of incorporation or the applicable certificate of designation or as
otherwise required by law.
Except as set forth in the applicable prospectus supplement, no series of
preferred stock will be redeemable or receive the benefit of a sinking fund. If
we voluntarily or involuntarily liquidate, dissolve or wind up our affairs, the
holders of each series of preferred stock will be entitled to receive the
liquidation preference per share specified in the prospectus supplement plus
any accrued and unpaid dividends. Holders of preferred stock will be entitled
to receive these amounts before any
16
distribution is made to the holders of common stock, but only after the
liquidation preference has been fully paid on any shares of senior ranking
preferred stock, if any. Neither the par value nor the liquidation preference
is indicative of the price at which the preferred stock will actually trade on
or after the date of issuance.
We will designate the transfer agent for each series of preferred stock in
the applicable prospectus supplement.
PLAN OF DISTRIBUTION
We may offer and sell or exchange the securities described in this
prospectus:
o through agents,
o through one or more underwriters,
o through one or more dealers,
o directly to one or more purchasers (through a specific bidding or
auction process or otherwise), or
o through a combination of any such methods of sale.
The distribution of the securities described in this prospectus may be
effected from time to time in one or more transactions either:
o at a fixed price or prices, which may be changed,
o at market prices prevailing at the time of sale,
o at prices relating to such prevailing market prices,
o at negotiated prices, or
o at a fixed exchange ratio in return for other of our securities.
Offers to purchase or exchange the securities may be solicited by agents
designated by us from time to time. Any such agent will be named, and any
commissions payable by us to such agent will be set forth, in the applicable
prospectus supplement. Unless otherwise indicated in the applicable prospectus
supplement, any such agent will be acting on a best efforts basis for the
period of its appointment. Any such agent may be deemed to be an underwriter,
as that term is defined in the Securities Act, of the securities so offered and
sold.
If an underwriter or underwriters are utilized in the sale of the
securities, we will execute an underwriting agreement with such underwriter or
underwriters at the time an agreement for such sale is reached. The names of
the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transactions, including compensation of the
underwriters and dealers, which may be in the form of discounts, concessions or
commissions, if any, will be set forth in the applicable prospectus supplement,
which will be used by the underwriters to make resales of the securities.
If a dealer is utilized in the sale of the securities, we or an
underwriter will sell such securities to the dealer as principal. The dealer
may then resell such securities to the public at varying prices to be
determined by such dealer at the time of resale. The name of the dealer and the
terms of the transactions will be set forth in the applicable prospectus
supplement relating thereto.
Offers to purchase or exchange the securities may be solicited directly by
us and sales or exchanges thereof may be made by us directly to institutional
investors or others. The terms of any such sales, including the terms of any
bidding or auction process, if utilized, will be described in the applicable
prospectus supplement relating thereto.
We may enter into agreements with agents, underwriters and dealers under
which we agree to indemnify them against certain liabilities, including
liabilities under the Securities Act, or to contribute
17
to payments they may be required to make in respect thereof. The terms and
conditions of such indemnification or contribution will be described in the
applicable prospectus supplement. Certain of the agents, underwriters or
dealers, or their affiliates, may be customers of, engage in transactions with
or perform services for us in the ordinary course of business.
LEGAL MATTERS
The validity of the debt securities described in this prospectus has been
passed upon for us by Latham & Watkins, 885 Third Avenue, Suite 1000, New York,
New York 10022. The validity of the preferred stock described in this
prospectus has been passed upon for us by Paul J. Leighton, Esq., our Assistant
General Counsel.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form
10-K for the year ended December 31, 2001 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated in this prospectus by reference, and has been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
With respect to the unaudited interim financial information for the
periods ended March 31, 2002 and 2001, June 30, 2002 and 2001, and September
30, 2002 and 2001, which are incorporated in this prospectus by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their reports included in our Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2002, June 30, 2002, and September 30, 2002, and incorporated
by reference in this prospectus, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial information because
those reports are not "reports" or a "part" of the registration statement in
which this prospectus is included prepared or certified by an accountant within
the meaning of Sections 7 and 11 of the Securities Act.
18
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by
MidAmerican Energy Company in connection with the issuance and distribution of
the securities being registered. All amounts are estimates other than the
Securities and Exchange Commission registration fee.
AMOUNT TO BE PAID
------------------
Registration fee ...................... $ 55,200
Printing expenses ..................... 150,000
Legal fees and expenses ............... 200,000
Accounting fees and expenses .......... 25,000
Rating agency fees .................... 100,000
Trustee fees and expenses ............. 10,000
Miscellaneous expenses ................ 50,000
--------
Total ................................ $590,200
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 490.850-490.855 and 490.857 of the Iowa Business Corporation Act
permit corporations organized thereunder to indemnify directors, officers,
employees and agents against liability under certain circumstances. The
Restated Articles of Incorporation, as amended, and the Restated Bylaws, as
amended, of MidAmerican Energy Company provide for indemnification of
directors, officers and employees to the full extent provided by the Iowa
Business Corporation Act. The Articles of Incorporation and the Bylaws state
that the indemnification provided therein shall not be deemed exclusive.
MidAmerican Energy Company may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of MidAmerican
Energy Company or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not
MidAmerican Energy Company would have the power to indemnify such person
against such expense, liability or loss under the Iowa Business Corporation
Act. Pursuant to Section 490.857 of the Iowa Business Corporation Act, the
Articles of Incorporation and the Bylaws, MidAmerican Energy Company, through
MidAmerican Energy Holdings Company, maintains directors' and officers'
liability insurance coverage. MidAmerican Energy Company has also entered into
indemnification agreements with certain directors and officers, and expects to
enter into similar agreements with future directors and officers, to further
assure such persons indemnification as permitted by Iowa law.
As permitted by Section 490.832 of the Iowa Business Corporation Act, the
Articles of Incorporation of MidAmerican Energy Company provide that no
director shall be personally liable to MidAmerican Energy Company or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (1) for any breach of the directors' duty of loyalty to
MidAmerican Energy Company or its shareholders, (2) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 490.833 of the Iowa Business Corporation Act (relating
to certain unlawful distributions to shareholders) or (4) for any transaction
from which the director derived an improper personal benefit.
The form of distribution agreement filed as Exhibit 1.1 hereto and the
form of underwriting agreement filed as Exhibit 1.2 hereto include provisions
requiring the underwriters, dealers or agents, as applicable, to indemnify
directors, officers and certain controlling persons of MidAmerican Energy
Company in certain circumstances.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- ----------------------
1.1 Form of Distribution Agreement
1.2* Form of Underwriting Agreement
4.1 Form of Indenture (Senior Debt Securities)
4.2 Form of Indenture (Subordinated Debt Securities)
5.1 Opinion of Latham & Watkins regarding the validity of the debt securities
5.2 Opinion of Paul J. Leighton, Esq. regarding the validity of the preferred stock
12.1 Computation of Ratios of Earnings to Fixed Charges and computation of Ratios of
Earnings to Fixed Charges plus Preferred Stock Dividend Requirements
15.1 Awareness Letter of Deloitte & Touche LLP
23.1 Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1)
23.2 Consent of Paul J. Leighton, Esq. (included in his opinion filed as Exhibit 5.2)
23.3 Consent of Deloitte & Touche LLP
24.1 Power of Attorney
25.1* Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
1939 (Senior Debt Securities)
25.2* Statement of Eligilibity and Qualification (Form T-1) under the Trust Indenture Act of
1939 (Subordinated Debt Securities)
- ----------
* To be filed as an exhibit to an amendment hereto or as an exhibit to a
document to be incorporated by reference herein.
(b) Financial Data Schedules
Schedule II -- Valuation and Qualifying Accounts (Filed as Schedule II to
MidAmerican Energy Company's Annual Report on Form 10-K for the
year ended December 31, 2000, as amended, Registration No.
1-11505)
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts of events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the
changes in volume and price present no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
II-2
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act of 1939 in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act of 1939.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions referred to in Item 15 of
this registration statement, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
amendment no. 1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Des Moines, State of Iowa, on December 26,
2002.
MIDAMERICAN ENERGY COMPANY
By: /s/ Paul J. Leighton
---------------------
Name: Paul J. Leighton
Title: Assistant General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
amendment no. 1 has been signed by the following persons in the capacities and
as of the dates indicated.
Signature Title Date
- --------- ----- ----
* Chairman of the Board and December 26, 2002
- ------------------------- Director (principal executive
David L. Sokol officer)
* Vice President and Controller December 26, 2002
- ------------------------- (principal financial officer and
Thomas B. Specketer principal accounting officer)
*By /s/ Paul J. Leighton
Attorney-In-Fact
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
1.1 Form of Distribution Agreement
1.2* Form of Underwriting Agreement
4.1 Form of Indenture (Senior Debt Securities)
4.2 Form of Indenture (Subordinated Debt Securities)
5.1 Opinion of Latham & Watkins regarding the validity of the debt securities
5.2 Opinion of Paul J. Leighton, Esq. regarding the validity of the preferred securities
12.1 Computation of Ratios of Earnings to Fixed Charges and computation of Ratios of
Earnings to Fixed Charges plus Preferred Stock Dividend Requirements
15.1 Awareness Letter of Deloitte & Touche LLP
23.1 Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1)
23.2 Consent of Paul J. Leighton, Esq. (included in his opinion filed as Exhibit 5.2)
23.3 Consent of Deloitte & Touche LLP
24.1 Power of Attorney
25.1* Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
1939 (Senior Debt Securities)
25.2* Statement of Eligilibity and Qualification (Form T-1) under the Trust Indenture Act of
1939 (Subordinated Debt Securities)
- ----------
* To be filed as an exhibit to an amendment hereto or as an exhibit to a
document to be incorporated by reference herein.