UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From to
Commission file number 1-3672.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
Illinois 37-0211380
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
607 East Adams Street, Springfield, Illinois 62739
(Address of principal executive offices and Zip Code)
Registrant's telephone number,
including area code: (217) 523-3600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
------------- ------------
Shares outstanding of each of registrant's classes of common stock as of August
14, 2001: Common Stock, no par value, held by Ameren Corporation (parent
company of Registrant) - 25,452,373
Central Illinois Public Service Company
Index
Page No.
Part I Financial Information
Item 1. Financial Statements (Unaudited)
Balance Sheet
- June 30, 2001 and December 31, 2000 9
Statement of Income
- Three months, six months and 12 months ended
June 30, 2001 and 2000 10
Statement of Cash Flows
- Six months ended June 30, 2001 and 2000 11
Notes to Financial Statements 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 2
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 7
Part II Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
10
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).
The unaudited financial statements of Central Illinois Public Service Company
(AmerenCIPS or the Registrant) appear on pages 9 through 14 of this report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The Registrant is a subsidiary of Ameren Corporation (Ameren), a holding company
registered under the Public Utility Holding Company Act of 1935 (PUHCA). Both
Ameren and its subsidiaries are subject to the regulatory provisions of the
PUHCA. The Registrant is a public utility operating company engaged principally
in the transmission, distribution and sale of electric energy and the purchase,
distribution, transportation and sale of natural gas in the state of Illinois.
The Registrant serves 325,000 electric and 175,000 gas customers in a 20,000
square-mile region of central and southern Illinois.
On May 1, 2000, following the receipt of all required state and federal
regulatory approvals, the Registrant transferred its electric generating assets
and liabilities, at historical net book value, to a newly created nonregulated
company, AmerenEnergy Generating Company (Generating Company), a subsidiary of
AmerenEnergy Resources Company (Resources Company), which is a wholly owned
subsidiary of Ameren (the Transfer). Discussion below under Results of
Operations reflects that as a result of the Transfer, from May 1, 2000, the
Registrant's operating revenues will only include revenues derived from its
traditional transmission and distribution operations, and those revenues it
receives from its native load customers, or new customers allowed choice of an
electric supplier under state law. Sales under certain wholesale contracts and
interchange sales will no longer be reflected in operating revenues of the
Registrant. Instead, those revenues will be recorded at Resources Company. The
Registrant's operating expenses will only include those expenses it incurs under
its traditional transmission and distribution operations, and for purchased
power under an electric power supply agreement with Resources Company's newly
created marketing subsidiary, AmerenEnergy Marketing Company (Marketing Company)
(the Power Supply Agreement).
The Registrant's financial statements include charges for services that Ameren
Services Company (Ameren Services), a wholly owned subsidiary of Ameren
Corporation, provides to the Registrant. Ameren Services provides shared support
services for all Ameren subsidiaries. Charges are based upon the actual costs
incurred by Ameren Services, as required by PUHCA.
The following discussion and analysis should be read in conjunction with the
Notes to Financial Statements beginning on page 12, and the Management's
Discussion and Analysis of Financial Condition and Results of Operations (MD&A),
the Audited Financial Statements and the Notes to Financial Statements appearing
in the Registrant's 2000 Form 10-K.
RESULTS OF OPERATIONS
Earnings
Second quarter 2001 earnings of $9 million decreased $10 million from 2000's
second quarter earnings. Earnings for the six months ended June 30, 2001
decreased $25 million from the year-ago period to $19 million. Earnings for the
12 months ended June 30, 2001 were $50 million, an $11 million decrease from the
preceding 12-month period.
Earnings fluctuated due to many conditions, primarily: sales growth, weather
variations, electric rate reductions, the Transfer, a gas rate increase,
competitive market forces, fluctuating operating costs, expenses relating to the
withdrawal from the electric transmission related Midwest Independent System
Operator (Midwest ISO), charges for coal contract termination payments, changes
in interest expense, and changes in income and property taxes.
The significant items affecting revenues, costs and earnings during the
three-month, six-month and 12-month periods ended June 30, 2001 and 2000 are
detailed below.
2
Electric Operations
Electric Operating Revenues Variations for periods ended June 30, 2001
from comparable prior-year periods
- -----------------------------------------------------------------------------------------------------------------------
(Millions of Dollars) Three Months Six Months Twelve Months
------------ ---------- -------------
- -----------------------------------------------------------------------------------------------------------------------
Effect of abnormal weather $ 3 $ 9 $ -
Growth and other - (15) (21)
Interchange sales (9) (47) (128)
- -----------------------------------------------------------------------------------------------------------------------
$ (6) $ (53) $ (149)
- -----------------------------------------------------------------------------------------------------------------------
Electric revenues for the three months ended June 30, 2001, decreased $6 million
compared to the prior three-month period primarily due to a decrease in
interchange sales, which are now being recorded at Resources Company as a result
of the Transfer. In addition, sales under certain wholesale contracts are no
longer being included in the Registrant's operating revenues as a result of the
Transfer. The decreases in interchange and wholesale sales were partially offset
by an increase in industrial sales of 93% due to a new industrial customer
contract that became effective in August 2000.
Electric revenues for the six months ended June 30, 2001, decreased $53 million
compared to the prior six-month period primarily due to a decrease in
interchange sales, which are now being recorded at Resources Company as a result
of the Transfer. In addition, sales under certain wholesale contracts are no
longer being included in the Registrant's operating revenues as a result of the
Transfer. The decreases in interchange and wholesale sales were partially offset
by increases in residential and commercial sales of 4% and 10%, respectively,
primarily due to warmer weather, and an increase in industrial sales of 50% due
to a new industrial customer contract that became effective in August 2000.
Electric revenues for the 12 months ended June 30, 2001 decreased $149 million,
compared to the same prior year period, primarily due to decreases in
interchange sales as a result of the Transfer. In addition, sales under certain
wholesale contracts are no longer being included in the Registrant's operating
revenues as a result of the Transfer. The decreases in interchange and wholesale
sales were partially offset by increases in weather-sensitive residential and
commercial sales of 4% and 6%, respectively, and an increase in industrial sales
of 61% due to a new industrial customer contract that became effective in August
2000.
Fuel and Purchased Power Variations for periods ended June 30, 2001
from comparable prior-year periods
- ----------------------------------------------------------------------------------------------------------------------
(Millions of Dollars) Three Months Six Months Twelve Months
------------ ---------- -------------
- ----------------------------------------------------------------------------------------------------------------------
Fuel:
Generation $ (11) $ (58) $ (148)
Coal contract termination payments - - (52)
Purchased power 34 107 268
- ----------------------------------------------------------------------------------------------------------------------
$ 23 $ 49 $ 68
- ----------------------------------------------------------------------------------------------------------------------
Fuel and purchased power costs for the three and six months ended June 30, 2001
increased $23 million and $49 million, respectively, versus the prior year
periods, primarily as a result of increased purchased power under provisions of
the Power Supply Agreement, partially offset by decreased generation resulting
from the Transfer.
The $68 million increase in fuel and purchased power costs for the 12 months
ended June 30, 2001 versus the prior-year period was primarily the result of
increased purchased power under the provisions of the Power Supply Agreement,
partially offset by decreased generation resulting from the Transfer and coal
contract termination payments of $52 million relating to agreements reached
between the Registrant and two of its coal suppliers to terminate their existing
coal supply contracts effective December 31, 1999.
Gas Operations
Gas revenues for the three-months ended June 30, 2001, decreased $20 million
compared to the same period in the prior year primarily due to decreased retail
sales and adjustments relating to the purchased gas adjustment clause pursuant
to which the Registrant recovers gas costs from its customers. Gas revenues for
the six-month and 12-month periods ended June 30, 2001 increased $33 million and
$73 million, respectively, compared to the same year-ago periods primarily due
higher gas costs recovered through the Registrant's purchased gas adjustment
clause, partially offset by lower retail sales.
3
Gas costs for the three-month period ended June 30, 2001 decreased $14 million
compared to the year-ago period primarily due to reduced retail sales and lower
gas prices. Gas costs for the six month and 12-month periods ended June 30,
2001, increased $35 million and $71 million, respectively, compared to the
year-ago periods primarily due to higher gas prices, partially offset by lower
retail sales.
Other Operating Expenses
Other operating expense variations reflected recurring factors such as growth,
inflation, labor and employee benefit costs and the Transfer.
Other operations expenses decreased $14 million for the six months ended June
30, 2001, compared to the same year-ago period primarily due to lower labor
costs resulting from the Transfer, partially offset by an increase in employee
benefits costs relating to changes in actuarial assumptions and investment
performance of employee benefit plans' assets. Other operations expenses
decreased $56 million for the 12 months ended June 30, 2001, compared to the
same year-ago period, primarily due to lower labor costs resulting from the
Transfer, partially offset by the charge in the fourth quarter of 2000 for
withdrawal from the Midwest ISO (see discussion below under "Electric Industry
Restructuring" for further information).
Maintenance expenses for the three months, six months and 12 months ended June
30, 2001 decreased $5 million, $15 million and $59 million, respectively, from
the comparable year-ago periods primarily due to decreased power plant
maintenance resulting from the Transfer.
Depreciation and amortization expenses decreased $3 million, $12 million and $30
million for the three months, six months and 12 months ended June 30, 2001,
respectively, compared to the same year-ago periods due to the decreased
depreciable property resulting from the Transfer.
Taxes
Income taxes for the three months, six months and 12 months ended June 30, 2001,
decreased $5 million, $14 million and $10 million, respectively, primarily due
to lower pretax income.
Other taxes for the three months, six months and 12 months ended June 30, 2001
decreased $9 million, $10 million and $15 million, respectively, primarily due
to lower property taxes and payroll taxes as a result of the Transfer.
Other Income and Deductions
For the six months and 12 months ended June 30, 2001, miscellaneous net
increased $12 million and $31 million, respectively, compared to same year-ago
periods, primarily due to interest income earned on the promissory note
receivable from Generating Company as part of the Transfer. See "Electric
Industry Restructuring" and Note 1 under Notes to Financial Statements for
further discussion of the promissory note.
Balance Sheet
The $28 million decrease in trade accounts receivable was due primarily to lower
sales and revenues in May and June 2001, compared to November and December 2000.
The $40 million reduction in intercompany notes receivable represents a payment
received from Generating Company as part of the debt service on the subordinated
promissory note. See "Electric Industry Restructuring" below for further
discussion.
Changes in accounts and wages payable, taxes accrued, and other accounts and
notes receivable resulted from the timing of various payments to taxing
authorities and suppliers. The $172 million reduction in intercompany notes
payable was due to the repayment of funds borrowed from the regulated money pool
(see Note 2 under Notes to Financial Statements for further discussion) and the
repayment of funds owed to Generating Company as a result of the Transfer.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $36 million for the six months
ended June 30, 2001, compared to $102 million during the same 2000 period.
Cash flows provided by investing activities totaled $18 million for the six
months ended June 30, 2001 and cash flows used by investing activities totaled
$20 million for the six months ended June 30, 2000. Construction expenditures
for the six months ended June 30, 2001, for constructing new or improving
existing facilities, were $22
4
million. The $40 million change in intercompany notes receivable represents
payment received from Generating Company as part of the debt service on the
subordinated promissory note (see "Electric Industry Restructuring" below for
further discussion).
Cash flows used in financing activities totaled $49 million for the six months
ended June 30, 2001, compared to $81 million during the same 2000 period. The
Registrant's principal financing activities for the quarter included the
redemption of long-term debt and the payment of intercompany notes payable,
partially offset by the issuance of long-term debt.
The Registrant plans to continue utilizing short-term debt to support normal
operations and other temporary requirements. The Registrant is authorized by the
Securities and Exchange Commission (SEC) under PUHCA to have up to $250 million
of short-term unsecured debt instruments outstanding at any one time. Short-term
borrowings consist of bank loans (maturities generally on an overnight basis)
and commercial paper (maturities generally within 1 to 45 days). At June 30,
2001, the Registrant had committed bank lines of credit aggregating $25 million
(all of which was unused and available at such date) which make available
interim financing at various rates of interest based on LIBOR, the bank
certificate of deposit rate or other options. The lines of credit are renewable
annually at various dates throughout the year. At June 30, 2001, the Registrant
had no outstanding short-term borrowings.
Also, the Registrant has the ability to borrow up to approximately $914 million
from Ameren or from two of Ameren's other subsidiaries, Union Electric Company
(AmerenUE) and Ameren Services, through a regulated money pool agreement. The
total amount available to the Registrant at any given time from the regulated
money pool is reduced by the amount of borrowings by AmerenUE or Ameren
Services, but increased to the extent AmerenUE or Ameren Services have surplus
funds and the availability of other external borrowing sources. The regulated
money pool was established to coordinate and provide for certain short-term cash
and working capital requirements of the Registrant, AmerenUE and Ameren Services
and is administered by Ameren Services. Interest is calculated at varying rates
of interest depending on the composition of internal and external funds in the
regulated money pool. For the three months and six months ended June 30, 2001,
the average interest rate for the regulated money pool was 4.38% and 4.94%,
respectively. At June 30, 2001, the Registrant had $51 million of intercompany
borrowings outstanding and $364 million available through the regulated money
pool subject to reduction for borrowings by AmerenUE or Ameren Services.
In April 2001, the Registrant filed with the SEC a shelf registration statement
on Form S-3 authorizing the offering from time to time of senior notes in one or
more series with an offering price not to exceed $250 million. The SEC declared
the registration statement effective in May 2001. In June 2001, the Registrant
issued $150 million of the senior notes with an interest rate of 6.625% due June
2011. Until the release date as described in the registration statement, the
senior notes will be secured by a related series of the Registrant's first
mortgage bonds. The proceeds of these senior notes were used to repay short-term
debt borrowed through the regulated money pool and first mortgage bonds maturing
in June 2001.
Subject to certain approvals, the Registrant intended to transfer $104 million
of tax-exempt pollution control loan obligations to Generating Company during
2001. During the second quarter 2001, it was determined that the transfer of the
tax-exempt pollution control loan obligations would not take place.
During the course of Ameren's resource planning, several alternatives are being
considered to satisfy anticipated regulatory load requirements for 2001 and
beyond for the Registrant, AmerenUE and Resources Company. AmerenUE has
purchased 500 megawatts of capacity and energy for the summer of 2001 (450
megawatts from Marketing Company). Alternatives being considered for the summer
of 2002 and beyond include the purchase of capacity and energy, among other
things. At this time, management is unable to predict which course of action it
will pursue to satisfy these requirements and their ultimate impact on the
Registrant's financial position, results of operations or liquidity.
The Registrant, in the ordinary course of business, explores opportunities to
reduce its costs in order to remain competitive in the marketplace. An area
where the Registrant focuses its review includes, but is not limited to, labor
costs. In the labor area, over the past two years, the Registrant has reached
agreements with all of the Registrant's major collective bargaining units which
will permit it to manage its labor costs and practices effectively in the
future. The Registrant also explores alternatives to effectively manage the size
of its workforce. These alternatives include utilizing hiring freezes,
outsourcing and offering employee separation packages.
5
Certain of these cost reduction alternatives could require nonrecurring payments
of employee separation benefits. Management is unable to predict to what extent
these alternatives to reduce its overall cost structure will be executed nor can
it determine the impact of these actions on its future financial position,
results of operations or liquidity.
ELECTRIC INDUSTRY RESTRUCTURING
Certain states are considering proposals or have adopted legislation that will
promote competition at the retail level. During 2000 and in early 2001,
deregulation laws established in the state of California, coupled with high
energy prices, increasing demands for power by users in that state, transmission
constraints, and limited generation resources, among other things, negatively
impacted several major electric utilities in that state. Federal and state
regulators and legislators have proposed and implemented, in part, different
courses of action to attempt to address these issues. The Registrant does not
maintain utility operations in the state of California, nor does it provide
energy directly to utilities in that state. At this time, the Registrant is
uncertain what impact, if any, changes in deregulation laws will have on future
federal and state deregulation laws, which could directly impact the
Registrant's future financial position, results of operations or liquidity.
In December 1997, the Governor of Illinois signed the Electric Service Customer
Choice and Rate Relief Law of 1997 (the Law) providing for electric utility
restructuring in Illinois. This legislation introduces competition into the
supply of electric energy at retail in Illinois.
One of the major provisions of the Law is the phasing-in through 2002 of retail
direct access, which allows customers to choose their electric generation
supplier. The phase-in of retail direct access began on October 1, 1999, with
large commercial and industrial customers principally comprising the initial
group. The remaining commercial and industrial customers were offered choice on
December 31, 2000. Commercial and industrial customers represent approximately
45% of the Registrant's total sales. As of June 30, 2001, the impact of retail
direct access on the Registrant's financial condition, results of operations and
liquidity was immaterial. Retail direct access will be offered to residential
customers on May 1, 2002.
The Transfer
In conjunction with another provision of the Law, on May 1, 2000, following the
receipt of all required state and federal regulatory approvals, the Registrant
transferred its electric generating assets and liabilities, at historical net
book value, to Generating Company in exchange for a subordinated promissory note
from Generating Company in the principal amount of $552 million and Generating
Company common stock (the Transfer). The promissory note has a term of five
years and bears interest at 7% based on a 10-year amortization. Debt service
during the term of the subordinated promissory note is payable solely from
"available cash," defined as cash available after payment of all operating and
maintenance expenses, senior debt service, capital expenditures, taxes and
reasonable reserves for working capital and other corporate purposes as
determined by Generating Company in its discretion. Any installment payment
amount that is not paid when due because of the available cash limitation will
be payable when available cash becomes sufficient to permit the payment, or else
carried forward to maturity. The transferred assets represent a generating
capacity of approximately 2,900 megawatts. Approximately 45% of the Registrant's
employees were transferred to Generating Company as a part of the transaction.
In conjunction with the Transfer, an electric power supply agreement was entered
into between Generating Company and a newly created nonregulated affiliate,
Marketing Company, also a wholly owned subsidiary of Resources Company. In
addition, Marketing Company entered into the Power Supply Agreement with the
Registrant to supply it sufficient energy and capacity to meet its obligations
as a public utility through December 31, 2004. A portion of the capacity and
energy supplied by Generating Company to Marketing Company will be resold to the
Registrant for resale to native load customers at rates specified by the
Illinois Commerce Commission (ICC) (which approximate the historical regulatory
rates for generation) or to retail customers allowed choice of an electric
supplier under state law at market based prices. In turn, the Registrant will
bill these customers at rates which approximate the costs the Registrant incurs
for its capacity and energy supplied by Marketing Company. For the three-month,
six-month and 12-month periods ended June 30, 2001, $100 million, $201 million
and $400 million, respectively, of the Registrant's purchased power was derived
under the Power Supply Agreement.
As a result of the Transfer, coupled with the Power Supply Agreement,
prospectively from May 1, 2000 through December 31, 2004, the Registrant's
operating revenues will include revenues derived from its traditional
transmission and distribution operations, as well as those revenues it receives
from its native load customers, or new customers allowed choice of an electric
supplier under state law. Sales under certain wholesale contracts and
interchange sales will no longer be reflected in operating revenues of the
Registrant. Instead, those revenues will be recorded at Resources Company. The
Registrant's operating expenses will include those expenses it incurs under its
6
traditional transmission and distribution operations, as well as purchased power
expenses incurred under the terms of the Power Supply Agreement.
In addition, as a result of the Transfer, the Registrant incurred a deferred
intercompany tax gain, which resulted in an additional deferred tax liability.
An intercompany tax receivable with Generating Company was established for the
deferred tax liability. This asset and liability will be amortized over twenty
years. At June 30, 2001, the Registrant's deferred tax liability and
intercompany tax receivable was $203 million.
Midwest ISO and Alliance RTO
In the fourth quarter of 2000, the Registrant announced its intention to
withdraw from the Midwest ISO and to join the Alliance Regional Transmission
Organization (Alliance RTO), and recorded a pretax charge to earnings of $8
million ($5 million after taxes), which related to the Registrant's estimated
obligation under the Midwest ISO agreement for costs incurred by the Midwest
ISO, plus estimated exit costs. During first quarter 2001, the Federal Energy
Regulatory Commission (FERC) conditionally approved the formation, including the
rate structure, of the Alliance RTO, and the Registrant announced that it had
signed an agreement to join the Alliance RTO. Also in the first quarter 2001, in
a proceeding before the FERC, the Alliance RTO and the Midwest ISO reached an
agreement that would enable the Registrant to withdraw from the Midwest ISO and
to join the Alliance RTO. In April 2001, this settlement agreement was certified
by the Administrative Law Judge of the FERC and submitted to the FERC
Commissioners for approval. The settlement agreement was approved by the FERC in
May 2001. Additional regulatory approvals of the SEC, FERC and the ICC may be
required in connection with various transactions involving the Alliance RTO
relating to its organization, capitalization and the possible transfer of
transmission assets. Such approvals, if required, will be sought at the
appropriate times. The Alliance RTO is expected to be operational by the end of
2001. At this time, the Registrant is unable to determine the impact that its
withdrawal from the Midwest ISO and its participation in the Alliance RTO will
have on its future financial condition, results of operation or liquidity.
ACCOUNTING MATTERS
In July 2001, the FASB issued SFAS No. 141, "Business Combinations," SFAS 142,
"Goodwill and Other Intangible Assets," and SFAS 143, "Accounting for Asset
Retirement Obligations." SFAS 141 requires business combinations to be accounted
for under the purchase method of accounting, which requires one party in the
transaction to be identified as the acquiring enterprise and for that party to
record the assets and liabilities of the acquired enterprise at fair market
value rather than historical cost. It prohibits use of the pooling-of-interests
method of accounting for business combinations. SFAS 141 is effective for all
business combinations initiated after June 30, 2001, or transactions completed
using the purchase method after June 30, 2001. SFAS 142 requires goodwill
recorded in the financial statements to be tested for impairment at least
annually, rather than amortized over a fixed period, with impairment losses
recorded in the income statement. SFAS 142 is effective for all fiscal years
beginning after December 15, 2001. SFAS 143 requires an entity to record a
liability and corresponding asset representing the present value of legal
obligations associated with the retirement of tangible, long-lived assets. SFAS
143 is effective for fiscal years beginning after June 15, 2002. SFAS 141 and
SFAS 142 are not expected to have a material effect on the Registrant's
financial position, results of operations or liquidity upon adoption. At this
time, the Registrant is unable to determine the impact of SFAS 143 on its
financial position, results of operations or liquidity upon adoption.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk represents the risk of changes in value of a physical asset or a
financial instrument, derivative or non-derivative, caused by fluctuations in
market variables (e.g., interest rates, equity prices, commodity prices, etc.).
The following discussion of Ameren's, including the Registrant's, risk
management activities includes "forward-looking" statements that involve risks
and uncertainties. Actual results could differ materially from those projected
in the "forward-looking" statements. Ameren handles market risks in accordance
with established policies, which may include entering into various derivative
transactions. In the normal course of business, Ameren and the Registrant also
face risks that are either non-financial or non-quantifiable. Such risks
principally include business, legal, operational and credit risk and are not
represented in the following analysis.
Ameren's risk management objective is to optimize its physical generating assets
within prudent risk parameters. Risk management policies are set by a Risk
Management Steering Committee, which is comprised of senior-level Ameren
officers.
7
Interest Rate Risk
The Registrant is exposed to market risk through changes in interest rates
through its issuance of both long-term and short-term variable-rate debt and
fixed-rate debt, commercial paper and auction-rate preferred stock. The
Registrant manages its interest rate exposure by controlling the amount of these
instruments it holds within its total capitalization portfolio and by monitoring
the effects of market changes in interest rates.
If interest rates increase one percentage point in 2002 as compared to 2001, the
Registrant's interest expense would increase by approximately $2 million and net
income would decrease by approximately $1 million. This amount has been
determined using the assumptions that the Registrant's outstanding variable-rate
debt, commercial paper and auction-rate preferred stock, as of June 30, 2001,
continued to be outstanding throughout 2002, and that the average interest rates
for these instruments increased one percentage point over 2001. The estimate
does not consider the effects of the reduced level of potential overall economic
activity that would exist in such an environment. In the event of a significant
change in interest rates, management would likely take actions to further
mitigate its exposure to this market risk. However, due to the uncertainty of
the specific actions that would be taken and their possible effects, the
sensitivity analysis assumes no change in the Registrant's financial structure.
Commodity Price Risk
The Registrant is exposed to changes in market prices for natural gas and
electricity. With regard to its natural gas utility business, the Registrant's
exposure to changing market prices is in large part mitigated by the fact that
the Registrant has a purchased gas adjustment clause (PGA) in place. The PGA
allows the Registrant to pass on to its customers its prudently incurred costs
of natural gas.
Since the Registrant does not have a provision similar to the PGA for its
electric operations, purchased power commodity price risk is mitigated in part
due to the fact that the Registrant has entered into a long-term contract with a
supplier for purchased power (see "Electric Industry Restructuring" above for
further discussion).
SAFE HARBOR STATEMENT
Statements made in this Form 10-Q which are not based on historical facts, are
"forward-looking" and, accordingly, involve risks and uncertainties that could
cause actual results to differ materially from those discussed. Although such
"forward-looking" statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions and
financial performance. In connection with the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Registrant is providing
this cautionary statement to identify important factors that could cause actual
results to differ materially from those anticipated. The following factors, in
addition to those discussed elsewhere in this report and in the Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, and in subsequent
securities filings, could cause results to differ materially from management
expectations as suggested by such "forward-looking" statements: the effects of
regulatory actions, including changes in regulatory policy; changes in laws and
other governmental actions; the impact on the Registrant of current regulations
related to the phasing-in of the opportunity for some customers to choose
alternative energy suppliers in Illinois; the effects of increased competition
in the future due to, among other things, deregulation of certain aspects of the
Registrant's business at both the state and federal levels; the effects of
withdrawal from the Midwest ISO and membership in the Alliance RTO; future
market prices for purchased power and natural gas, including the use of
financial instruments; average rates for electricity in the Midwest; business
and economic conditions; the impact of the adoption of new accounting standards;
interest rates; weather conditions; the impact of current environmental
regulations on utilities; monetary and fiscal policies; future wages and
employee benefits costs; and legal and administrative proceedings.
8
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
BALANCE SHEET
UNAUDITED
(Thousands of Dollars, Except Shares)
June 30, December 31,
ASSETS 2001 2000
- ------ ------------ -----------
Property and plant, at original cost:
Electric $1,204,806 $1,195,418
Gas 275,557 273,573
------------ -----------
1,480,363 1,468,991
Less accumulated depreciation and amortization 672,889 654,897
------------ -----------
807,474 814,094
Construction work in progress 10,156 6,558
------------ -----------
Total property and plant, net 817,630 820,652
------------ -----------
Investments and other assets:
Intercompany notes receivable 468,981 511,701
Intercompany tax receivable 187,661 194,975
Other assets 17,637 17,085
------------ -----------
Total investments and other assets 674,279 723,761
------------ -----------
Current assets:
Cash and cash equivalents 35,370 29,801
Accounts receivable - trade (less allowance for doubtful
accounts of $1,270 and $1,777, respectively) 132,944 160,996
Other accounts and notes receivable 34,335 25,035
Intercompany notes receivable 42,720 39,925
Intercompany tax receivable 15,221 15,809
Materials and supplies, at average cost -
Fossil fuel 26,414 22,560
Other 9,965 9,821
Other 5,911 6,240
------------ -----------
Total current assets 302,880 310,187
------------ -----------
Regulatory assets 15,521 12,541
------------ -----------
Total Assets $1,810,310 $1,867,141
============ ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock, no par value, 45,000,000 shares authorized -
25,452,373 shares outstanding $120,033 $120,033
Retained earnings 453,736 435,211
------------ -----------
Total common stockholder's equity 573,769 555,244
Preferred stock not subject to mandatory redemption 80,000 80,000
Long-term debt 606,954 463,174
------------ ------------
Total capitalization 1,260,723 1,098,418
------------ ------------
Current liabilities:
Current maturity of long-term debt 10,000 30,000
Intercompany notes payable 51,250 223,320
Accounts and wages payable 87,658 106,739
Accumulated deferred income taxes 19,657 19,639
Taxes accrued 16,762 13,899
Other 32,216 33,448
------------ ------------
Total current liabilities 217,543 427,045
------------ ------------
Accumulated deferred income taxes 264,584 273,505
Accumulated deferred investment tax credits 12,435 12,965
Regulatory liability 35,124 34,898
Other deferred credits and liabilities 19,901 20,310
------------ ------------
Total Capital and Liabilities $1,810,310 $1,867,141
============ ============
See Notes to Financial Statements.
9
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF INCOME
UNAUDITED
(Thousands of Dollars)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
---------------------- ------------------- ----------------------
2001 2000 2001 2000 2001 2000
---- ---- ---- ---- ---- ----
OPERATING REVENUES:
Electric $163,549 $169,331 $319,102 $371,834 $664,395 $813,833
Gas 5,959 25,788 111,795 78,612 209,954 137,133
Other 128 - 194 - 194 -
---------- ---------- ---------- --------- --------- ----------
Total operating revenues 169,636 195,119 431,091 450,446 874,543 950,966
OPERATING EXPENSES:
Operations
Fuel and purchased power 105,144 82,128 212,665 163,758 419,341 351,734
Gas (1,367) 12,446 78,938 44,160 145,113 74,510
Other 27,992 28,450 57,753 71,446 119,864 176,089
---------- ---------- ---------- --------- --------- ----------
131,769 123,024 349,356 279,364 684,318 602,333
Maintenance 6,584 11,549 13,329 28,053 29,739 89,067
Depreciation and amortization 11,939 15,236 24,130 36,586 48,628 79,053
Income taxes 7,420 11,958 12,080 26,121 29,539 39,718
Other taxes 2,375 11,167 11,877 22,403 28,106 42,851
---------- ---------- ---------- --------- --------- ----------
Total operating expenses 160,087 172,934 410,772 392,527 820,330 853,022
OPERATING INCOME 9,549 22,185 20,319 57,919 54,213 97,944
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used
during construction - - - - - (9)
Miscellaneous, net 9,801 7,439 19,892 7,816 39,956 8,765
---------- ---------- ---------- --------- --------- ----------
Total other income and (deductions) 9,801 7,439 19,892 7,816 39,956 8,756
INCOME BEFORE
INTEREST CHARGES 19,350 29,624 40,211 65,735 94,169 106,700
INTEREST CHARGES:
Interest 9,479 9,788 19,529 19,347 40,751 40,925
Allowance for borrowed funds used
during construction (67) (68) (132) 152 (522) 554
---------- ---------- ---------- --------- --------- ---------
Net interest charges 9,412 9,720 19,397 19,499 40,229 41,479
NET INCOME 9,938 19,904 20,814 46,236 53,940 65,221
PREFERRED STOCK DIVIDENDS 901 837 1,876 1,830 3,928 3,778
---------- ---------- ---------- --------- ---------- ---------
NET INCOME AFTER PREFERRED
STOCK DIVIDENDS $9,037 $19,067 $18,938 $44,406 $50,012 $61,443
========== ========= ========= ========= ========= =========
See Notes to Financial Statements.
10
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENT OF CASH FLOWS
UNAUDITED
(Thousands of Dollars)
Six Months Ended
June 30,
----------------------------
2001 2000
---- ----
Cash Flows From Operating:
Net income $20,814 $46,236
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 24,130 36,586
Allowance for funds used during construction (132) 152
Deferred income taxes, net (8,632) 14,713
Deferred investment tax credits, net (530) 755
Changes in assets and liabilities:
Receivables, net 18,752 (9,795)
Materials and supplies (3,998) 3,510
Accounts and wages payable (19,081) 36,453
Taxes accrued 2,863 (9,287)
Other, net 1,944 (17,655)
---------- ----------
Net cash provided by operating activities 36,130 101,668
Cash Flows From Investing:
Construction expenditures (21,672) (20,032)
Allowance for funds used during construction 132 (152)
Intercompany notes receivable 39,925 -
---------- ----------
Net cash provided by (used in) investing activities 18,385 (20,184)
Cash Flows From Financing:
Dividends on common stock - (36,114)
Dividends on preferred stock (1,876) (1,830)
Redemptions -
Long-term debt (25,000) (82,000)
Intercompany notes payable (172,070) (12,550)
Issuances -
Long-term debt 150,000 51,100
---------- ----------
Net cash used in financing activities (48,946) (81,394)
---------- ----------
Net change in cash and cash equivalents 5,569 90
Cash and cash equivalents at beginning of year 29,801 12,536
---------- ----------
Cash and cash equivalents at end of period $35,370 $12,626
========== ==========
Cash paid during the periods:
Interest (net of amount capitalized) $19,003 $21,882
Income taxes, net $14,890 $21,712
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTION:
In the second quarter of 2000, the Registrant transferred its electric
generating assets and liabilities, at historical net book value, to a newly
created nonregulated company, AmerenEnergy Generating Company, a subsidiary of
AmerenEnergy Resources Company, in exchange for a promissory note from
Generating Company in the principal amount of $552 million and Generating
Company common stock. The transaction also resulted in a deferred intercompany
tax gain liability and related tax receivable from AmerenEnergy Generating
Company in the amount of $219 million. See Note 1 in Notes to Financial
Statements for further information.
See Notes to Financial Statements.
11
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2001
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
Central Illinois Public Service Company (AmerenCIPS or the Registrant) is a
subsidiary of Ameren Corporation (Ameren), a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Ameren is the parent company of the
following operating subsidiaries: the Registrant, Union Electric Company
(AmerenUE), and AmerenEnergy Generating Company (Generating Company), a wholly
owned subsidiary of AmerenEnergy Resources Company (Resources Company). Both
Ameren and its subsidiaries are subject to the regulatory provisions of the
PUHCA. The Registrant is a public utility engaged principally in the
transmission, distribution and sale of electric energy and the purchase,
distribution, transportation and sale of natural gas in the state of Illinois.
Contracts among the Registrant and other Ameren subsidiaries--dealing with
interconnecting transmission lines and the exchange of electric power--are
regulated by the Federal Energy Regulatory Commission (FERC) or the Securities
and Exchange Commission (SEC). Administrative support services are provided to
the Registrant by a separate Ameren subsidiary, Ameren Services Company (Ameren
Services). The Registrant serves 325,000 electric and 175,000 gas customers in a
20,000 square-mile region of central and southern Illinois. The Registrant also
has a 20% interest in Electric Energy, Inc. (EEI), which is accounted for under
the equity method of accounting. EEI owns and/or operates electric generating
and transmission facilities in Illinois that supply electric power primarily to
a uranium enrichment plant located in Paducah, Kentucky.
In conjunction with the Illinois Electric Service Customer Choice and Rate
Relief Law of 1997 (the Law), on May 1, 2000, following the receipt of all
required state and federal regulatory approvals, the Registrant transferred its
electric generating assets and liabilities, at historical net book value, to
Generating Company in exchange for a promissory note from Generating Company in
the principal amount of $552 million and 1,000 shares of Generating Company
common stock (the Transfer). The promissory note bears interest at 7% and has a
term of five years payable based on a 10-year amortization. The transferred
assets represent a generating capacity of approximately 2,900 megawatts.
Approximately 45% of the Registrant's employees were transferred to Generating
Company as a part of the transaction.
In conjunction with the Transfer, an electric power supply agreement was entered
into between Generating Company and its newly created nonregulated affiliate,
AmerenEnergy Marketing Company (Marketing Company), also a wholly owned
subsidiary of Resources Company. In addition, Marketing Company entered into an
electric power supply agreement with the Registrant to supply it sufficient
energy and capacity to meet its obligations as a public utility through December
31, 2004 (the Power Supply Agreement). A portion of the capacity and energy
supplied by Generating Company to Marketing Company will be resold to the
Registrant for resale to native load customers at rates specified by the
Illinois Commerce Commission (ICC) (which approximate the historical regulatory
rates for generation) or to retail customers allowed choice of an electric
supplier under state law at market based prices. In turn, the Registrant will
bill these customers at rates which approximate the costs the Registrant incurs
for its capacity and energy supplied by Marketing Company. For the three-month,
six-month and 12-month periods ended June 30, 2001, $100 million, $201 million
and $400 million, respectively, of the Registrant's purchased power was derived
under the Power Supply Agreement.
As a result of the Transfer, coupled with the Power Supply Agreement,
prospectively from May 1, 2000 through December 31, 2004, the Registrant's
operating revenues will include revenues derived from its traditional
transmission and distribution operations, as well as those revenues it receives
from its native load customers, or new customers allowed choice of an electric
supplier under state law. Sales under certain wholesale contracts and
interchange sales will no longer be reflected in operating revenues of the
Registrant. Instead, those revenues will be recorded at Resources Company. The
Registrant's operating expenses will include those expenses it incurs under its
traditional transmission and distribution operations, as well as purchased power
expenses incurred under the terms of the Power Supply Agreement.
In addition, as a result of the Transfer, the Registrant incurred a deferred
intercompany tax gain, which resulted in an additional deferred tax liability.
An intercompany tax receivable with Generating Company was established for the
deferred tax liability. This asset and liability will be amortized over twenty
years.
12
Interim Financial Statements
Financial statement note disclosures, normally included in financial statements
prepared in conformity with generally accepted accounting principles, have been
omitted in this Form 10-Q pursuant to the Rules and Regulations of the SEC.
However, in the opinion of the Registrant, the disclosures contained in this
Form 10-Q are adequate to make the information presented not misleading. See
Notes to Financial Statements included in the 2000 Form 10-K for information
relevant to the financial statements contained in this Form 10-Q, including
information as to the significant accounting policies of the Registrant.
In the opinion of the Registrant, the interim financial statements filed as part
of this Form 10-Q reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the periods
presented.
Reclassifications
Certain reclassifications have been made to prior years' financial statements to
conform with 2001 reporting.
Factors Affecting Business
Due to the effect of weather on sales and other factors which are characteristic
of public utility operations, financial results for the periods ended June 30,
2001 and 2000, are not necessarily indicative of trends for any three-month,
six-month or 12-month period.
Note 2 - Related Party Transactions
The Registrant has transactions in the normal course of business with other
Ameren subsidiaries. These transactions are primarily comprised of power
purchases and sales, including power purchases derived under the Power Supply
Agreement between the Registrant and Marketing Company, and services received or
rendered. Intercompany receivables included in other accounts and notes
receivable were approximately $17 million and $8 million, respectively, as of
June 30, 2001 and December 31, 2000. Intercompany payables included in accounts
and wages payable totaled approximately $58 and $75 million, respectively, as of
June 30, 2001 and December 31, 2000.
In addition, the Registrant has the ability to borrow up to approximately $914
million from Ameren, AmerenUE or Ameren Services through a regulated money pool
agreement. The total amount available to the Registrant at any given time from
the regulated money pool is reduced by the amount of borrowings by AmerenUE or
Ameren Services, but increased to the extent AmerenUE or Ameren Services have
surplus funds and the availability of other external borrowing sources. The
regulated money pool was established to coordinate and provide for certain
short-term cash and working capital requirements of the Registrant, AmerenUE and
Ameren Services and is administered by Ameren Services. Interest is calculated
at varying rates of interest depending on the composition of internal and
external funds in the regulated money pool. For the three months and six months
ended June 30, 2001, the average interest rate for the regulated money pool was
4.38% and 4.94%, respectively. For each of the quarters ended June 30, 2001 and
2000, intercompany interest expense totaled approximately $2 million. For each
of the six-month periods ended June 30, 2001 and 2000, intercompany interest
expense totaled approximately $4 million. Intercompany interest expense totaled
approximately $8 million and $7 million, respectively, for the 12 months ended
June 30, 2001 and 2000. At June 30, 2001, the Registrant had $51 million of
intercompany borrowings outstanding and $364 million available through the
regulated money pool subject to reduction for borrowings by AmerenUE or Ameren
Services.
In conjunction with the Transfer, the Registrant incurred a deferred
intercompany tax gain, which resulted in an additional deferred tax liability.
An intercompany tax receivable with Generating Company was established for the
deferred tax liability. This asset and liability will be amortized over twenty
years. At June 30, 2001, the Registrant's deferred tax liability and
intercompany tax receivable was $203 million.
The Registrant's intercompany note receivable from Generating Company related to
the Transfer totaled approximately $512 million at June 30, 2001. Intercompany
interest income for the three months, six months and 12 months ended June 30,
2001 totaled approximately $9 million, $19 million and $39 million,
respectively.
Note 3 - Midwest ISO and Alliance RTO
In the fourth quarter of 2000, the Registrant announced its intention to
withdraw from the Midwest Independent System Operator (Midwest ISO) and to join
the Alliance Regional Transmission Organization (Alliance RTO), and recorded a
pretax charge to earnings of $8 million ($5 million after taxes), which related
to the Registrant's estimated obligation under the Midwest ISO agreement for
costs incurred by the Midwest ISO, plus estimated exit
13
costs. During first quarter 2001, the FERC conditionally approved the formation,
including the rate structure, of the Alliance RTO, and the Registrant announced
that it had signed an agreement to join the Alliance RTO. Also in the first
quarter 2001, in a proceeding before the FERC, the Alliance RTO and the Midwest
ISO reached an agreement that would enable the Registrant to withdraw from the
Midwest ISO and to join the Alliance RTO. In April 2001, this settlement
agreement was certified by the Administrative Law Judge of the FERC and
submitted to the FERC Commissioners for approval. The settlement agreement was
approved by the FERC in May 2001. Additional regulatory approvals of the SEC,
FERC and the ICC may be required in connection with various transactions
involving the Alliance RTO relating to its organization, capitalization and the
possible transfer of transmission assets. Such approvals, if required, will be
sought at the appropriate times. The Alliance RTO is expected to be operational
by the end of 2001. At this time, the Registrant is unable to determine the
impact that its withdrawal from the Midwest ISO and its participation in the
Alliance RTO will have on its future financial condition, results of operation
or liquidity.
Note 4 - Derivative Financial Instruments
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" became effective on January 1,
2001. SFAS 133 establishes accounting and reporting standards for derivative
financial instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities and requires recognition of all
derivatives as either assets or liabilities on the balance sheet measured at
fair value. The intended use of the derivatives and their designation as either
a fair value hedge, a cash flow hedge, or a foreign currency hedge will
determine when the gains or losses on the derivatives are to be reported in
earnings and when they are to be reported as a component of other comprehensive
income in stockholder's equity. SFAS 133 did not have a material impact on the
Registrant's financial position or results of operations upon adoption or during
the three and six months ended June 30, 2001.
Note 5 - Segment Information
Segment information for the three-month, six-month and 12-month periods ended
June 30, 2001 and 2000 is as follows:
- ------------------------------------------------------------------------------------------------------------
(in thousands) Electric Gas Other Total
- ------------------------------------------------------------------------------------------------------------
Three months ended June 30, 2001:
Revenues $163,549 $5,959 $128 $169,636
Operating Income 10,963 (1,542) 128 9,549
- -------------------------------------------------------------------------------------------------------------
Three months ended June 30, 2000:
Revenues $169,331 $25,788 -- $195,119
Operating Income 20,408 1,777 -- 22,185
- -------------------------------------------------------------------------------------------------------------
Six months ended June 30, 2001:
Revenues $319,102 $111,795 $194 $431,091
Operating Income 13,934 6,191 194 20,319
- -------------------------------------------------------------------------------------------------------------
Six months ended June 30, 2000:
Revenues $371,834 $78,612 -- $450,446
Operating Income 50,440 7,479 -- 57,919
- -------------------------------------------------------------------------------------------------------------
12 months ended June 30, 2001:
Revenues $664,395 $209,954 $194 $874,543
Operating Income 40,529 13,490 194 54,213
- -------------------------------------------------------------------------------------------------------------
12 months ended June 30, 2000:
Revenues $813,833 $137,133 -- $950,966
Operating Income 87,708 10,236 -- 97,944
- -------------------------------------------------------------------------------------------------------------
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Reference is made to "Regulation" section in Item 1. Business of the
Registrant's Form 10-K for the year ended December 31, 2000, for information
relating to a proposed settlement of the August 1996 complaint filed by the
Illinois Attorney General with the Illinois Pollution Control Board alleging
various violations of wastewater discharge permit conditions and ground water
standards at the Registrant's Hutsonville Power Station (now owned by its
affiliate, AmerenEnergy Generating Company). In accordance with the terms of the
settlement with the Illinois Environmental Protection Agency and the Illinois
Attorney General, AmerenEnergy Generating Company is implementing a remedial
action plan that includes the construction of a lined fly ash basin at the
Hutsonville Power Station and the closure of the existing unlined basin. The
Illinois Pollution Control Board approved the settlement effective as of March
15, 2001.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the annual meeting of stockholders of the Registrant held on April
24, 2001, the following matter was presented to the meeting for a vote and the
results of such voting are as follows:
Item (1) Election of Directors.
Non-Voted
Name For Withheld Brokers
---- --- -------- -------------
Paul A. Agathen................... 26,178,389 5,269 0
Warner L. Baxter.................. 26,178,394 5,264 0
Donald E. Brandt.................. 26,178,379 5,279 0
Charles W. Mueller................ 26,178,384 5,274 0
Gary L. Rainwater................. 26,178,389 5,269 0
ITEM 5. OTHER INFORMATION.
Any stockholder proposal intended for inclusion in the proxy material
for the Registrant's 2002 annual meeting of stockholders must be received by the
Registrant by November 30, 2001.
In addition, under the Registrant's By-Laws, stockholders who intend to
submit a proposal in person at an annual meeting, or who intend to nominate a
director at a meeting, must provide advance written notice along with other
prescribed information. In general, such notice must be received by the
Secretary of the Registrant not later than 60 nor earlier than 90 days prior to
the first anniversary of the preceding year's annual meeting. For the
Registrant's 2002 annual meeting of stockholders, written notice of any
in-person stockholder proposal or director nomination must be received not later
than February 23, 2002 or earlier than January 24, 2002.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a)(i) Exhibits.
4.1 - Supplemental Indenture dated June 1, 2001 to Indenture
of Mortgage or Deed of Trust dated October 1, 1941,
from AmerenCIPS to U.S. Bank Trust National
Association and Patrick J. Crowley, as Trustees,
relating to Senior Note Mortgage Bonds Series BB
6.625%, due 2011.
12 - Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements, 12 Months
ended June 30, 2001.
(a)(ii) Exhibits Incorporated by Reference.
15
10.1 - Alliance Agreement establishing the Alliance
Independent Transmission System Operator, Inc.,
Alliance Transmission Company, Inc. and Alliance
Transmission Company, LLC and Amendment to admit
AmerenCIPS and AmerenUE (June 30, 2001 Ameren
Corporation Form 10-Q, Exhibit 10.1).
(b) Reports on Form 8-K. None.
Note: Reports of Ameren Corporation on Forms 8-K, 10-Q and Form 10-K
are on file with the SEC under File Number 1-14756.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL ILLINOIS PUBLIC
SERVICE COMPANY
(Registrant)
By /s/ Warner L. Baxter
------------------------------------------------
Warner L. Baxter
Vice President and Controller
(Principal Accounting Officer)
Date: August 14, 2001
16
Exhibit 4.1
WHEN RECORDED
MAIL TO:
James A. Tisckos
Central Illinois Public Service
Company
607 East Adams Street
Springfield, IL 62739
================================================================================
Executed in 100 Counterparts, No. 002 .
-----
SUPPLEMENTAL INDENTURE
DATED JUNE 1, 2001
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
TO
U.S. BANK TRUST NATIONAL ASSOCIATION
and PATRICK J. CROWLEY,
AS TRUSTEES
(SUPPLEMENTAL TO THE INDENTURE OF MORTGAGE OR DEED OF TRUST DATED OCTOBER 1,
1941, EXECUTED BY CENTRAL ILLINOIS PUBLIC SERVICE COMPANY TO CONTINENTAL
ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO AND EDMOND B. STOFFT, AS
TRUSTEES)
(PROVIDING FOR FIRST MORTGAGE BONDS,
SENIOR NOTES SERIES BB)
================================================================================
This instrument was prepared by Steven R. Sullivan, Vice President, General
Counsel and Secretary of Central Illinois Public Service Company, 1901 Chouteau
Avenue, St. Louis, Missouri 63103.
THIS SUPPLEMENTAL INDENTURE, dated June 1, 2001, made and
entered into by and between CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, a
corporation organized and existing under the laws of the State of Illinois
(hereinafter commonly referred to as the "Company"), and U.S. BANK TRUST
NATIONAL ASSOCIATION (formerly First Trust National Association, formerly First
Trust of Illinois, National Association, successor trustee to Bank of America
Illinois, formerly Continental Bank, formerly Continental Bank, National
Association and formerly Continental Illinois National Bank and Trust Company of
Chicago), a national banking association having its office or place of business
in the City of Chicago, Cook County, State of Illinois (hereinafter commonly
referred to as the "Trustee"), and Patrick J. Crowley (successor Co-Trustee), of
the City of Montvale, Bergen County, State of New Jersey, as Trustees under the
Indenture of Mortgage or Deed of Trust dated October 1, 1941, heretofore
executed and delivered by the Company to Continental Illinois National Bank and
Trust Company of Chicago and Edmond B. Stofft, as Trustees, as amended by the
Supplemental Indentures dated, respectively, September 1, 1947, January 1, 1949,
February 1, 1952, September 1, 1952, June 1, 1954, February 1, 1958, January 1,
1959, May 1, 1963, May 1, 1964, June 1, 1965, May 1, 1967, April 1, 1970, April
1, 1971, September 1, 1971, May 1, 1972, December 1, 1973, March 1, 1974, April
1, 1975, October 1, 1976, November 1, 1976, October 1, 1978, August 1, 1979,
February 1, 1980, February 1, 1986, May 15, 1992, July 1, 1992, September 15,
1992, April 1, 1993, June 1, 1995, March 15, 1997, June 1, 1997 and December 1,
1998, heretofore executed and delivered by the Company to the Trustees under
said Indenture of Mortgage or Deed of Trust dated October 1, 1941; said
Indenture of Mortgage or Deed of Trust dated October 1, 1941, as amended by said
Supplemental Indentures, being hereinafter sometimes referred to as the
"Indenture"; and said U.S. Bank Trust National Association and Patrick J.
Crowley, as such Trustees, being hereinafter sometimes referred to as the
"Trustees" or the "Trustees under the Indenture";
WITNESSETH:
WHEREAS, the Company has entered into an Indenture dated as of
December 1, 1998 (the "Senior Note Indenture") with The Bank of New York, as
trustee (the "Senior Note Trustee") providing for the issuance of senior notes
thereunder (the "Notes"); and
WHEREAS, the Company has determined, by resolutions duly adopted
by its Board of Directors and the Executive Committee thereof, pursuant to the
Senior Note Indenture, as security for the Notes to be issued thereunder, to
issue to the Senior Note Trustee bonds of an additional series under and to be
secured by the Indenture, as hereby amended, to be known and designated as First
Mortgage Bonds, Senior Notes Series BB (hereinafter sometimes referred to as the
"bonds of Senior Notes Series BB"), and the bonds of Senior Notes Series BB
shall be authorized, authenticated and issued only as registered bonds without
coupons, and to execute and deliver this supplemental indenture, pursuant to the
provisions of Article I, as amended, Section 6 of Article II and Article XVI of
the Indenture, for the purpose of (1) creating and authorizing $150,000,000
aggregate principal amount of bonds of Senior Notes Series BB and setting forth
the form, terms, provisions and characteristics thereof, (2) modifying or
amending certain provisions of the Indenture in the particulars and to the
extent hereinafter specifically provided,
2
and (3) specifically describing and conveying to the Trustees, upon the trusts
and for the purposes of the Indenture, as hereby amended, certain additional
properties which the Company has constructed or otherwise acquired subsequent to
September 30, 1998, except property of the character expressly excepted or
excluded from the lien of the Indenture by the terms thereof, and which are
owned by the Company at the date of the execution hereof and are subject in any
event to the lien and effect of the Indenture; and
WHEREAS, the bonds of Senior Notes Series BB shall be issued to
the Senior Note Trustee in connection with the issuance by the Company of its
6.625% Senior Notes due 2011 (the "Senior Notes"); and
WHEREAS, the execution and delivery of the Company of this
supplemental indenture have been duly authorized by the Board of Directors of
the Company and the Executive Committee thereof; and the Company has requested,
and hereby requests, the Trustees to enter into and join with the Company in the
execution and delivery of this supplemental indenture; and
WHEREAS, the bonds of Senior Notes Series BB to be authorized,
authenticated and issued only in the form of registered bonds without coupons,
and the bonds of Senior Notes Series BB and the certificate of the Trustee
thereon shall be substantially in the following form, to wit:
[form of bond]
No. $
------------- ---------
ILLINOIS COMMERCE COMMISSION
Identification No. 6187
NOTWITHSTANDING ANY PROVISIONS HEREOF OR IN THE INDENTURE
THIS BOND IS NOT ASSIGNABLE OR TRANSFERABLE EXCEPT AS
PERMITTED OR REQUIRED BY SECTION 4.04 OF THE INDENTURE,
DATED AS OF DECEMBER 1, 1998, BETWEEN CENTRAL ILLINOIS PUBLIC SERVICE
COMPANY AND THE BANK OF NEW YORK, AS TRUSTEE.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
First Mortgage Bond, Senior Notes Series BB
Original
Issue Dated Maturity
Date Date Date CUSIP
---- -------- ---- -----
* *
Interest
Interest Payment Record
Rate Dates Dates
-------- ----- -----
3
%
REGISTERED OWNER
---------------------------------------------------------------
PRINCIPAL AMOUNT DOLLARS
--------------------------
* To be completed in accordance with the terms of Section 1 of Article I
hereof.
Central Illinois Public Service Company, an Illinois
corporation (hereinafter referred to as the "Company"), for value received,
hereby promises to pay to the Registered Owner specified above, as trustee under
the Senior Note Indenture hereinafter referred to, or registered assigns, the
Principal Amount specified above on the Maturity Date specified above, and to
pay to the Registered Owner interest on said sum from the Dated Date hereof, at
the Interest Rate specified above, payable half-yearly on the Interest Payment
Dates specified above, until said principal sum is paid. The interest so payable
on any Interest Payment Date will be paid, subject to certain exceptions
provided in the Supplemental Indenture dated June 1, 2001, hereinafter referred
to, to the Registered Owner at the close of business of the Trustee hereinafter
referred to on the immediately preceding Record Date. Both the principal of and
the interest on this bond shall be payable in immediately available funds at the
office or agency of the Senior Note Trustee hereinafter referred to, in any coin
or currency of the United States of America which at the time of payment is
legal tender for public and private debts.
Under an Indenture dated as of December 1, 1998 (the "Senior
Note Indenture") between the Company and The Bank of New York, as trustee (the
"Senior Note Trustee"), the Company will issue, concurrently with the issuance
of this bond, an issue of Notes under the Senior Note Indenture entitled "___%
Senior Notes due 20__ (the "Senior Notes"). Pursuant to Article IV of the Senior
Note Indenture, this bond is issued to the Senior Note Trustee to secure any and
all obligations of the Company under the Senior Notes and any other series of
senior notes from time to time outstanding under the Senior Note Indenture.
Payment of principal of, or premium, if any or interest on, the Senior Notes
shall constitute payments on this bond as further provided herein and in the
Supplemental Indenture dated June 1, 2001 pursuant to which this bond has been
issued (the "Supplemental Indenture").
Upon any payment of the principal of, premium, if any, and
interest on, all or any portion of the Senior Notes, whether at maturity or
prior to maturity by redemption or otherwise or upon provision for the payment
thereof having been made in accordance with Section 5.01(a) of the Senior Note
Indenture, bonds of Senior Notes Series BB in a principal amount equal to the
principal amount of such Senior Notes and having both a corresponding maturity
date and interest rate shall, to the extent of such payment of principal,
premium, if any, and interest, be deemed paid and the obligation of the Company
thereunder to make such payment shall be discharged to such extent and, in the
case of the payment of principal (and premium, if any), such bonds shall be
surrendered to the Company for cancellation as provided in Section 4.08 of the
Senior Note Indenture. The Trustee (as hereinafter defined) may at anytime and
all times conclusively assume that the obligation of the Company to make
payments with respect to the principal of and premium,
4
if any, and interest on the Senior Notes, so far as such payments at the time
have become due, has been fully satisfied and discharged pursuant to the
foregoing sentence unless and until the Trustee shall have received a written
notice from the Senior Note Trustee signed by one of its officers stating (i)
that timely payment of principal, or premium or interest on, the Senior Notes
has not been made, (ii) that the Company is in arrears as to the payments
required to be made by it to the Senior Note Trustee pursuant to the Senior Note
Indenture, and (iii) the amount of the arrearage.
For purposes of Section 4.09 of the Senior Note Indenture,
this bond shall be deemed to be the "Related Series of Senior Note First
Mortgage Bonds" in respect of the Senior Notes.
This bond is one of the bonds issued and to be issued from
time to time under and in accordance with and all secured by the indenture of
mortgage or deed of trust dated October 1, 1941, executed and delivered by the
Company to U.S. Bank Trust National Association (formerly First Trust National
Association, formerly First Trust of Illinois, National Association, successor
trustee to Bank of America Illinois, formerly Continental Bank, formerly
Continental Bank, National Association and formerly Continental Illinois
National Bank and Trust Company of Chicago and hereinafter referred to as the
"Trustee") and Edmond B. Stofft, as Trustees, and the various indentures
supplemental thereto, including the Supplemental Indenture pursuant to which
$150,000,000 in aggregate principal amount of the First Mortgage Bonds, Senior
Notes Series BB are authorized, each executed and delivered by the Company to
the Trustees under said indenture of mortgage or deed of trust dated October 1,
1941, prior to the authentication of this bond (said indenture of mortgage or
deed of trust and said supplemental indentures being hereinafter referred to,
collectively, as the "Indenture"); and said U.S. Bank Trust National Association
and Patrick J. Crowley (successor Co-Trustee) being now the Trustees under the
Indenture. Reference to the Indenture and to all supplemental indentures, if
any, hereafter executed pursuant to the Indenture is hereby made for a
description of the property mortgaged and pledged, the nature and extent of the
security and the rights of the holders and Registered Owners of said bonds and
of the Trustees and of the Company in respect of such security. By the terms of
the Indenture the bonds to be secured thereby are issuable in series, which may
vary as to date, amount, date of maturity, rate of interest, redemption
provisions, medium of payment and in other respects as in the Indenture
provided.
This bond is not redeemable except on the respective dates, in
the respective principal amounts and for the respective redemption prices that
correspond to the redemption dates for, the principal amounts to be redeemed of,
and the redemption prices for, the Senior Notes, and except upon written demand
of the Senior Note Trustee following the occurrence of an Event of Default under
the Senior Note Indenture and the acceleration of the senior notes, as provided
in Section 8.01 of the Senior Note Indenture.
In case of certain events of default specified in the
Indenture, the principal of this bond may be declared or may become due and
payable in the manner and with the effect provided in the Indenture. No recourse
shall be had for the payment of the principal of or interest on this bond, or
for any claim based hereon, or otherwise in respect hereof or of the Indenture
or any indenture supplemental thereto, to or against any incorporator,
stockholder, officer or director, past, present or future, of the Company, or of
any predecessor or successor corporation, either directly or
5
through the Company, or such predecessor or successor corporation, under any
constitution or statute or rule of law, or by the enforcement of any assessment,
penalty, or otherwise, all such liability of incorporators, stockholders,
directors and officers being waived and released by the Registered Owner hereof
by the acceptance of this bond and being likewise waived and released by the
terms of the Indenture.
This bond shall not be assignable or transferable except as
permitted or required by Section 4.04 of the Senior Note Indenture. This bond is
exchangeable by the Registered Owner hereof, in person or by attorney duly
authorized, at the principal office or place of business of the Trustee under
the Indenture, upon the surrender and cancellation of this bond and the payment
of any stamp tax or other governmental charge, and upon any such exchange a new
registered bond or bonds without coupons, of the same series and maturity and
for the same aggregate principal amount, will be issued in exchange heretofore;
provided, that the Company shall not be required to exchange any bonds of Senior
Notes Series BB for a period of ten (10) days next preceding an Interest Payment
Date with respect to such bonds.
As provided in Section 4.11 of the Senior Note Indenture, from
and after the Release Date (as defined in the Senior Note Indenture), the
obligations of the Company with respect to this bond shall be deemed to be
satisfied and discharged, this bond shall cease to secure in any manner any
senior notes outstanding under the Senior Note Indenture, and, pursuant to
Section 4.08 of the Senior Note Indenture, the Senior Note Trustee shall
forthwith deliver this bond to the Company for cancellation.
This bond shall not be valid or become obligatory for any
purpose unless and until it shall have been authenticated by the execution by
the Trustee or its successor in trust under the Indenture of the Trustee's
Certificate endorsed hereon.
IN WITNESS WHEREOF, Central Illinois Public Service Company
has caused this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its corporate seal
or a facsimile thereof to be affixed or imprinted hereon and attested by the
manual or facsimile signature of its Secretary or one of its Assistant
Secretaries.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
By
------------------------------------------
President
ATTEST:
By
------------------------------
Secretary
6
This bond is one of the bonds of the series designated
therein, described in the within mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------------
Authorized Officer
[end of form of bond]
NOW, THEREFORE, in consideration of the premises and of the sum
of One Dollar ($1.00) duly paid by the Trustees to the Company, and of other
good and valuable considerations, the receipt whereof is hereby acknowledged,
and for the purpose of further assuring to the Trustees under the Indenture
their title to, or lien upon, the property hereinafter described, under and
pursuant to the terms of the Indenture, as hereby amended, and for the purpose
of further securing the due and punctual payment of the principal of and
interest and the premium, if any, on all bonds which have been heretofore or
shall be hereafter issued under the Indenture and indentures supplemental
thereto and which shall be at any time outstanding thereunder and secured
thereby and $150,000,000 aggregate principal amount of the Senior Notes, and for
the purpose of securing the faithful performance and observance of all the
covenants and conditions set forth in the Indenture and/or in any indenture
supplemental thereto, the Company has given, granted, bargained, sold,
transferred, assigned, pledged, mortgaged, warranted the title to and conveyed,
and by these presents does give, grant, bargain, sell, transfer, assign, pledge,
mortgage, warrant the title to and convey unto U.S. BANK TRUST NATIONAL
ASSOCIATION and PATRICK J. CROWLEY, as Trustees under the Indenture as therein
provided, and their successors in the trusts thereby created, and to their
assigns, all the right, title and interest of the Company in and to any and all
premises, plants, property, leases and leaseholds, franchises, permits, rights
and powers, of every kind and description, real and personal, which have been
acquired by the Company through construction, purchase, consolidation or merger,
or otherwise, subsequent to September 30, 1998, and which are owned by the
Company at the date of the execution hereof, together with the rents, issues,
products and profits therefrom, excepting, however, and there is hereby
expressly reserved and excluded from the lien and effect of the Indenture and of
this supplemental indenture, all right, title and interest of the Company, now
owned, in and to (a) all cash, bonds, shares of stock, obligations and other
securities not deposited with the Trustee or Trustees under the Indenture, and
(b) all accounts and bills receivable, judgments (other than for the recovery of
real property or establishing a lien or charge thereon or right therein) and
chooses in action not specifically assigned to and pledged with the Trustee or
Trustees under the Indenture, and (c) all personal property acquired or
manufactured by the Company for sale, lease, rental or consumption in the
ordinary course of business, and (d) the last day of each of the demised terms
created by any lease of
7
property leased to the Company and under each and every renewal of any such
lease, the last day of each and every such demised term being hereby expressly
reserved to and by the Company, and (e) all gas, oil and other minerals now or
hereafter existing upon, within or under any real estate of the Company subject
to, or hereby subjected to, the lien of the Indenture.
Without in any way limiting or restricting the generality of the
foregoing description or the foregoing exceptions and reservations, the Company
hereby expressly gives, grants, bargains, sells, transfers, assigns, pledges,
mortgages, warrants the title to and conveys unto said U.S. BANK TRUST NATIONAL
ASSOCIATION and PATRICK J. CROWLEY, as Trustees under the Indenture, and unto
their successor or successors in trust, and their assigns, under the trusts and
for the purposes of the Indenture, as hereby amended, the properties described
in Schedule A to this supplemental indenture, which is incorporated herein by
reference with the same force and effect as if set forth at length herein, and
which properties have been acquired by the Company, through construction,
purchase, consolidation or merger, or otherwise, subsequent to September 30,
1998 (except as otherwise indicated in said Schedule A), and which are owned by
the Company at the date of the execution hereof together with the tenements,
hereditaments and appurtenances thereunto belonging or appertaining, TO HAVE AND
TO HOLD all said property, rights and interests forever, BUT IN TRUST,
NEVERTHELESS, upon the trusts, for the purposes and subject to all the terms,
conditions, provisions and restrictions of the Indenture, as hereby amended.
And upon the considerations and for the purposes aforesaid, and
in order to provide, pursuant to the terms of the Indenture, for the issuance
under the Indenture, as hereby amended, of bonds of Senior Notes Series BB and
to fix the terms, provisions and characteristics of the bonds of Senior Notes
Series BB, and to modify or amend the Indenture in the particulars and to the
extent hereinafter in this supplemental indenture specifically provided, the
Company hereby covenants and agrees with the Trustees as follows:
ARTICLE I
SECTION 1. A series of bonds issuable under the Indenture, as
hereby amended, to be known and designated as "First Mortgage Bonds, Senior
Notes Series BB" and which shall be executed, authenticated and issued only in
the form of registered bonds without coupons, is hereby created and authorized.
The bonds of Senior Notes Series BB and the Trustee's Certificate to be endorsed
thereon shall be substantially in the form thereof hereinbefore recited. Each
bond of Senior Notes Series BB is to be issued and registered in the name of The
Bank of New York, as trustee, or a successor trustee (said trustee or any
successor trustee being hereinafter referred to as the "Senior Note Trustee"),
under the Indenture dated as of December 1, 1998 between the Company and the
Senior Note Trustee (the "Senior Note Indenture"), to secure any and all
obligations of the Company under the Senior Notes and any other series of Notes
from time to time outstanding under the Senior Note Indenture. Each bond of
Senior Notes Series BB shall be dated as of the Interest Payment Date thereof to
which interest was paid next preceding the date of issue, unless (a) issued on
an Interest Payment Date thereof to which interest was paid, in which event it
shall be dated as of such issue date, or (b) issued prior to the occurrence of
the first Interest Payment Date thereof to which interest was paid, in which
event it shall be dated the Original Issue Date specified in the form of bond.
The bonds of Senior Notes Series BB shall be due and payable
8
in the principal amount and on the Maturity Date specified below, shall bear
interest from the date thereof at the Interest Rate per annum specified below
payable half-yearly on the Interest Payment Dates specified in the form of bond
to the Registered Owner as specified on the registry books of the Trustee at the
close of business of the Trustee on the applicable Record Date as provided in
Section 3 of this Article I.
Series Maturity Date Principal Amount Interest Rate
------ ------------- ---------------- -------------
BB June 15, 2011 $150,000,000 6.625%
The bonds of Senior Notes Series BB shall be payable, as to both
principal and interest, in immediately available funds, at the office or agency
of the Senior Note Trustee, in any coin or currency of the United States of
America which at the time of payment is legal tender for public and private
debts.
SECTION 2. Anything contained in Section 14 of Article I of the
Indenture, or elsewhere in the Indenture, to the contrary notwithstanding, only
the person in whose name any of the bonds of Senior Notes Series BB is
registered (the "Registered Owner") at the close of business on any Record Date,
as hereinafter defined, with respect to any Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment Date
notwithstanding the cancellation of such bonds upon any transfer or exchange
subsequent to the Record Date and prior to such Interest Payment Date; provided,
however, that if and to the extent the Company shall default in the payment of
the interest due on such Interest Payment Date, such defaulted interest shall be
paid to the persons in whose names outstanding bonds of Senior Notes Series BB
are registered on the Record Date to be established by the Trustee for payment
of such defaulted interest.
Upon any payment of the principal of, premium, if any, and
interest on, all or any portion of the Senior Notes, whether at maturity or
prior to maturity by redemption or otherwise or upon provision for the payment
thereof having been made in accordance with Section 5.01(a) of the Senior Note
Indenture, bonds of Senior Notes Series BB in a principal amount equal to the
principal amount of such Senior Notes and having both a corresponding maturity
date and interest rate shall, to the extent of such payment of principal,
premium, if any, and interest, be deemed paid and the obligation of the Company
thereunder to make such payment shall be discharged to such extent and, in the
case of the payment of principal (and premium, if any), such bonds of Senior
Notes Series BB shall be surrendered to the Company for cancellation as provided
in Section 4.08 of the Senior Note Indenture. The Trustee may at anytime and all
times conclusively assume that the obligation of the Company to make payments
with respect to the principal of and premium, if any, and interest on the Senior
Notes, so far as such payments at the time have become due, has been fully
satisfied and discharged pursuant to the foregoing sentence unless and until the
Trustee shall have received a written notice from the Senior Note Trustee signed
by one of its officers stating (i) the timely payment of principal, or premium
or interest on, the Senior Notes has not been made, (ii) that the Company is in
arrears as to the payments required to be made by it to the Senior Note Trustee
pursuant to the Senior Note Indenture, and (iii) the amount of the arrearage.
9
SECTION 3. The term "Record Date" as used herein with respect to
any Interest Payment Date (other than an Interest Payment Date for the payment
of defaulted interest) shall mean the applicable Record Date specified in the
form of bond next preceding such Interest Payment Date, or, if such Record Date
shall be a legal holiday or a day on which banking institutions in the City of
Chicago, Illinois, are authorized by law to close, then the next preceding day
which shall not be a legal holiday or a day on which such institutions are so
authorized to close.
SECTION 4. The bonds of Senior Notes Series BB are not
redeemable except on the respective dates, in the respective principal amounts
and for the respective redemption prices that correspond to the redemption dates
for, the principal amounts to be redeemed of, and the redemption prices for, the
Senior Notes, and except as set forth in Section 5 hereof.
In the event that the Company redeems any Senior Notes prior to
maturity in accordance with the provisions of the Senior Note Indenture, the
Senior Note Trustee shall on the same date deliver to the Company the bonds of
Senior Notes Series BB in principal amounts corresponding to the Senior Notes so
redeemed, as provided in Section 4.08 of the Senior Note Indenture. The Company
agrees to give the Senior Note Trustee notice of any such redemption of the
Senior Notes on or before the date fixed for any such redemption.
SECTION 5. Upon the occurrence of an Event of Default under the
Senior Note Indenture and the acceleration of the Senior Notes, the bonds of
Senior Notes Series BB shall be redeemable in whole upon receipt by the Trustee
of a written demand (hereinafter called a "Redemption Demand") from the Senior
Note Trustee stating that there has occurred under the Senior Note Indenture
both an Event of Default and a declaration of acceleration of payment of
principal, accrued interest and premium, if any, on the Senior Notes specifying
the last date to which interest on such Senior Notes has been paid (such date
being hereinafter referred to as the "Initial Interest Accrual Date") and
demanding redemption of the bonds of Senior Notes Series BB. The Company waives
any right it may have to prior notice of such redemption under the Indenture.
Upon surrender of the bonds of Senior Notes Series BB by the Senior Note Trustee
to the Trustee, the bonds of Senior Notes Series BB shall be redeemed at a
redemption price equal to the principal amount thereof plus accrued interest
thereon from the Initial Interest Accrual Date to the date of the Redemption
Demand; provided, however, that in the event of a rescission or annulment of
acceleration of Notes pursuant to the last paragraph of Section 8.01(a) of the
Senior Note Indenture, then any Redemption Demand shall thereby deemed to be
rescinded by the Senior Note Trustee although no such rescission or annulment
shall extend to or affect any subsequent default or impair any right consequent
thereon.
SECTION 6. For purposes of Section 4.09 of the Senior Note
Indenture, the bonds of Senior Notes Series BB shall be deemed to be the
"Related Series of Senior Notes First Mortgage Bonds" in respect of the Senior
Notes.
SECTION 7. The bonds of Senior Notes Series BB shall not be
assignable or transferable except as permitted by Section 4.04 of the Senior
Note Indenture. Any such transfer shall be effected at the principal office or
place of business of the Trustee under the Indenture. The bonds of Senior Notes
Series BB are exchangeable by the Registered Owner thereof, in person or
10
by attorney duly authorized, at the principal office or place of business of the
Trustee under the Indenture, upon the surrender and cancellation of said bonds
and the payment of any stamp tax or other governmental charge, and upon any such
exchange a new registered bond or bonds without coupons, of the same series and
maturity and for the same aggregate principal amount, will be the same series
and maturity and for the same aggregate principal amount, will be issued in
exchange theretofore; and provided, that the Company shall not be required to
exchange any bonds of Senior Notes Series BB for a period of ten (10) days next
preceding an Interest Payment Date with respect to bonds of Senior Notes Series
BB.
The bonds of Senior Notes Series BB shall, from time to time, be
executed on behalf of the Company and sealed with the corporate seal of the
Company, all in the manner provided or permitted by Section 6 of Article I of
the Indenture, as follows:
(a) bonds of Senior Notes Series BB executed on behalf of the
Company by its President or a Vice-President and/or by its Secretary or
an Assistant Secretary may be so executed by the facsimile signature of
such President or Vice-President and/or of such Secretary or Assistant
Secretary, as the case may be, of the Company, or of any person or
persons who shall have been such officer or officers, as the case may
be, of the Company on or subsequent to the date of this supplemental
indenture, notwithstanding that he or they may have ceased to be such
officer or officers of the Company at the time of the actual execution,
authentication, issue or delivery of any of such bonds, and any such
facsimile signature or signatures of any such officer or officers on any
such bonds shall constitute execution of such bonds on behalf of the
Company by such officer or officers of the Company for the purposes of
the Indenture, as hereby amended, and shall be valid and effective for
all purposes, provided that all bonds shall always be executed on behalf
of the Company by the signature, manual or facsimile, of its President
or a Vice-President and of its Secretary or an Assistant Secretary, and
provided, further, that none of such bonds shall be executed on behalf
of the Company by the same officer or person acting in more than one
capacity; and
(b) such corporate seal of the Company may be a facsimile, and
any bonds of Senior Notes Series BB on which such facsimile seal shall
be affixed, impressed, imprinted or reproduced shall be deemed to be
sealed with the corporate seal of the Company for the purposes of the
Indenture, as hereby amended, and such facsimile seal shall be valid and
effective for all purposes.
SECTION 8. As provided in Section 4.11 of the Senior Note
Indenture, from and after the Release Date (as defined in the Senior Note
Indenture), the obligations of the Company with respect to the bonds of Senior
Notes Series BB shall be deemed to be satisfied and discharged, the bonds of
Senior Notes Series BB shall cease to secure in any manner any Notes outstanding
under the Senior Note Indenture, and, pursuant to Section 4.08 of the Senior
Note Indenture, the Senior Note Trustee shall forthwith deliver the bonds of
Senior Notes Series BB to the Company for cancellation.
11
ARTICLE II
SECTION 1. Sections 10 and 16 of Article III of the Indenture
are, and each of them is, hereby amended by striking out the words " Series X
through Series Z, Series 1995-1, Series 1997-1, Series 1997-2, Senior Notes
Series AA-1 and Senior Notes Series AA-2" wherever the same occur in each of
said sections, and by inserting, in lieu thereof, the words "Series X through
Series Z, Series 1995-1, Series 1997-1, Series 1997-2, Senior Notes Series AA-1,
Senior Notes Series AA-2 and Senior Notes Series BB" and the Company hereby
covenants and agrees to observe and comply with the provisions of said sections
as hereby amended.
ARTICLE III
SECTION 1. The provisions of this supplemental indenture shall
become and be effective from and after the execution hereof, and the Indenture,
as hereby amended, shall remain in full force and effect.
SECTION 2. Each reference in the Indenture, or in this
supplemental indenture, to any article, section, term or provision of the
Indenture shall mean and be deemed to refer to such article, section, term or
provision of the Indenture, as hereby amended, except where the context
otherwise indicates.
SECTION 3. All the covenants, provisions, stipulations and
agreements in this supplemental indenture contained are and shall be for the
sole and exclusive benefit of the parties hereto, their successors and assigns,
and of the holders and Registered Owners from time to time of the bonds of
Senior Notes Series BB and of the coupons issued and outstanding from time to
time under and secured by the Indenture, as hereby amended, and the Senior Note
Trustee, for the benefit of the holder or holders of the Senior Notes.
This supplemental indenture has been executed in a number of
identical counterparts, each of which so executed shall be deemed to be an
original.
At the time of the execution of this supplemental indenture, the
aggregate principal amount of all indebtedness of the Company outstanding, or to
be presently outstanding, under and secured by the Indenture, as hereby amended,
is $438,000,000, evidenced by First Mortgage Bonds of the series listed below,
issued by the Company under said Indenture and now outstanding or to be
presently issued by it under said Indenture, as follows:
Principal
Series Interest Rate (%) Maturity Date Amount ($)
------ ----------------- ------------- ---------
X 7-1/2 July 1, 2007 50,000,000
Y 6-3/4 September 15, 2002 23,000,000
Z 6-3/8 April 1, 2003 40,000,000
1995-1 6.49 June 1, 2005 20,000,000
1997-1 6.89 September 15, 2001 5,000,000
1997-1 6.94 March 15, 2002 5,000,000
12
1997-1 6.96 September 15, 2002 5,000,000
1997-1 6.99 March 15, 2003 5,000,000
1997-2 7.05 June 1, 2006 20,000,000
1997-2 7.61 June 1, 2017 40,000,000
Senior Notes AA-1 5.375 December 15, 2008 15,000,000
Senior Notes AA-2 6.125% December 15, 2028 60,000,000
Senior Notes BB 6.625% June 15, 2011 150,000,000 (a)
-----------
TOTAL........ $438,000,000
(a) To be presently issued by the Company under said Indenture.
13
IN WITNESS WHEREOF, said Central Illinois Public Service Company
has caused this instrument to be executed in its corporate name by its President
or a Vice President and its corporate seal or a facsimile thereof to be hereunto
affixed and to be attested by its Secretary or an Assistant Secretary, and said
U.S. Bank Trust National Association, for the purpose of entering into and
joining with the Company in the execution of this supplemental indenture, has
caused this instrument to be executed in its corporate name by one of its
Assistant Vice Presidents and its corporate seal to be hereunto affixed and to
be attested by one of its Vice Presidents, and said Patrick J. Crowley, for the
purpose of entering into and joining with the Company in the execution of this
supplemental indenture, has signed and sealed this instrument; all as of the day
and year first above written.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
By /s/ G. W. Moorman
-------------------------------------------
G.W. Moorman
Vice President
(CORPORATE SEAL)
ATTEST:
/s/ J.A. Tisckos
----------------------
J.A. Tisckos
Assistant Secretary
U.S. BANK TRUST NATIONAL ASSOCIATION
By /s/ Amy S. Roberts
-------------------------------------------
Amy S. Roberts
Vice President
(CORPORATE SEAL)
ATTEST:
/s/ Patricia V. Marshall
-------------------------
Patricia V. Marshall
Assistant Secretary
/s/ Patrick J. Crowley (SEAL)
-------------------------------------------
Patrick J. Crowley
14
STATE OF ILLINOIS )
) ss
COUNTY OF SANGAMON )
I, Janet K. Cooper, a Notary Public in and for said County in
the State aforesaid, do hereby certify that G.W. Moorman, Vice President of
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, a corporation organized and existing
under the laws of the State of Illinois, and J.A. Tisckos, Assistant Secretary
of said corporation, who are both personally known to me to be the same persons
whose names are subscribed to the foregoing instrument as such officers,
respectively, of said corporation, and who are both personally known to me to be
such officers, appeared before me this day in person and severally acknowledged
that they signed, sealed and delivered said instrument as their free and
voluntary act as such officers, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
Given under my hand and official seal this 8th day of June,
2001.
/s/ Janet K. Cooper
-------------------------
Notary Public
(NOTARIAL SEAL)
15
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
I, Doris Ware, a Notary Public in and for Richmond County in the
State aforesaid, do hereby certify that:
(a) Amy S. Roberts, a Vice President of U.S. BANK TRUST NATIONAL
ASSOCIATION, a national banking association, and Patricia V. Marshall,
an Assistant Secretary of said association, who are both personally
known to me to be the same persons whose names are subscribed to the
foregoing instrument as such officers, respectively, of said
association, and who are both personally known to me to be such
officers, appeared before me this day in person and severally
acknowledged that they signed, sealed and delivered said instrument as
their free and voluntary act as such officers, and as the free and
voluntary act of said association, for the uses and purposes therein set
forth; and
(b) Patrick J. Crowley, personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared
before me this day in person and acknowledged that he signed, sealed and
delivered said instrument as his free and voluntary act, for the uses
and purposes therein set forth.
Given under my hand and official seal this 7th day of June,
2001.
/s/ Doris Ware
-----------------------
Doris Ware
Notary Public
(NOTARIAL SEAL)
16
Schedule A
TO THE SUPPLEMENTAL INDENTURE DATED JUNE 1, 2001
OF CENTRAL ILLINOIS PUBLIC SERVICE COMPANY TO
U.S. BANK TRUST NATIONAL ASSOCIATION AND
PATRICK J. CROWLEY AS TRUSTEES
The properties of the Company acquired through construction, purchase,
consolidation or merger or otherwise subsequent to September 30, 1998 and prior
to April 1, 2001 referred to in the foregoing Supplemental Indenture, located in
the counties of Adams, Christian, Coles, Effingham, Ford, Franklin, Fulton,
Jackson, Jersey, Macon, Mason, McDonough, Menard, Peoria, Perry, Pike, Richland,
Shelby, Vermilion, and Williamson in the State of Illinois as described as
follows:
FIRST. The following described electric transmission line of the Company on
single steel poles, located in the State of Illinois:
From To
- --------------------------------------------------------------------------------
Location County Location County KV
- --------------------------------------------------------- --------- ------
Gibson City Ford Gibson City Power Plant Ford 138
South Substation (owned by AmerenEnergy
Generating Company)
SECOND. The following described (a) gas distribution mains, and (b) one gas
distribution system, of the Company located in the State of Illinois, as
follows:
(a) Gas distribution mains:
Location
- ------------------------------------------------ Approximate
Community County length in feet
- ---------------------- ------------------ ------------------
Athens Menard 11,901
Benton Franklin 4,383
Canton Fulton 32,928
Carbondale Jackson 18,773
Carterville Williamson 3,150
Charleston Coles 10,500
Collison Vermilion 9,841
DuQuoin Perry 4,869
Effingham Effingham 22,240
Glasford Peoria 5,055
Griggsville Pike 2,650
Havana Mason 3,934
Heartville Effingham 15,287
Herrin Williamson 16,172
17
Location
- ------------------------------------------------ Approximate
Community County length in feet
- ---------------------- ------------------ ------------------
Jerseyville Jersey 3,179
Macomb McDonough 4,519
Macon Macon 4,461
Marion Williamson 11,960
Mattoon Coles 26,479
Milton Pike 3,568
Murphysboro Jackson 11,556
Petersburg Menard 9,299
Quincy Adams 60,941
Sesser Franklin 6,061
Shelbyville Shelby 3,716
Taylorville Christian 3,903
Topeka Mason 8,300
West Frankfort Franklin 10,582
- --------------------------------------------------------------------------------
(b) Gas distribution system:
Location
----------------------------------------------------
Community County
------------- ------------
Collison Vermilion
THIRD. The following described real estate situated in Richland County, Illinois
(Property Index Number: 1-06-34-350-082; Common Street Address: 506 N. Camp,
Olney, IL):
That portion of Grantor's property, formerly being a part of Illinois Central
Railroad Company's Newton, Illinois to Evansville, Indiana Branch Line right of
way, being 50 feet wide on the Westerly side and varying in width on the
Easterly side of said Railroad Company's Main Track centerline, located upon,
over and across the Northeast Quarter of the Southwest Quarter of Section 34,
Township 4 North, Range 10 East of the Third Principal Meridian, Richland
County, Illinois, bounded on the North by the North line of said Northeast
Quarter of the Southwest Quarter and bounded on the South by a line parallel
with and 260 feet normally distant North of the North line of Locust Street in
the City of Olney, Richland County, Illinois.
Hereinabove described property is also bounded on the South by the North line of
property conveyed to John D. Hurn & Son, Inc., by deed dated March 10, 1997.
FOURTH. The following described real estate situated in Jackson County, Illinois
(Property Index Number: 15-16-460-008; Common Street Address: No address has
been assigned.):
All that portion of the Illinois Central Railroad Company's (formerly Illinois
Central Gulf Railroad Company) 200 foot wide Station Ground property at
Carbondale, Illinois, located on Grantor's Chicago to Cairo, Illinois Main Line
right of way in the Southwest Quarter of the
18
Southeast Quarter of Section 16, Township 9 South, Range 1 West of the Third
Principal Meridian, in the City of Carbondale, Jackson County, Illinois,
described as follows:
Commencing at the Southeast corner of Lot 173 in Carbough's Subdivision as per
the recorded plat thereof, said point also being the intersection of the North
right of way line of Oak Street and the Westerly right of way line of said
Railroad Company's Station Ground property;
Thence Northerly along the last said Westerly right of way line, also being
along the Easterly line of Lots 173 through 179 in said Carbough's Subdivision,
Lots 340 through 343 in McCulloch's Subdivision, as per the recorded plat
thereof, and Lots 219 through 223 in John Dougherty's Subdivision, as per the
recorded plat thereof, a distance of 710 feet, more or less, to the Southeast
corner of Lot 218 in the said John Dougherty's Subdivision, and the POINT OF
BEGINNING for this description:
Thence Easterly at right angles to the last described course a distance of 60
feet, more or less, to a point on a line parallel with and 25 feet normally
distant Westerly from the said Railroad Company's Southbound Main Tract
centerline;
Thence Northerly along the last said parallel line a distance of 379.5 feet,
more or less, to its intersection with the Easterly extension of the North line
of Lot 213 in the aforesaid John Dougherty's Subdivision;
Thence Westerly along the said Easterly extension of the North line of said Lot
213 a distance of 60 feet, more or less, to the Northeast corner of said Lot 213
in John Dougherty's Subdivision and a point in the Westerly right of way line of
said Railroad Company's Station Ground property;
Thence Southerly along said Westerly right of way line, also being the Easterly
line of said Lots 213 through 218 in the said John Dougherty's Subdivision, a
distance of 379.5 feet, more or less, to the point of beginning. Containing
22,770 square feet, more or less.
19
Exhibit 12
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
12 Months
Ended
Year Ended December 31, June 30,
---------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
Thousands of Dollars Except Ratios
Net Income $77,393 $38,620 $80,147 $53,980 $79,362 $53,940
Add- Extraordinary items net of tax - 24,853 - - - -
---------- -------- -------- -------- -------- ------------
Net income from continuing operations 77,393 63,473 80,147 53,980 79,362 53,940
Taxes based on income 47,286 33,922 45,412 30,763 43,661 29,592
---------- -------- -------- -------- -------- ------------
Net income before income taxes 124,679 97,395 125,559 84,743 123,023 83,532
---------- -------- -------- -------- -------- ------------
Add- fixed charges:
Interest on long term debt 31,409 32,271 37,260 38,223 28,935 28,861
Other interest 4,636 2,875 1,647 3,373 8,497 8,839
Amortization of net debt premium,
discount, expenses and losses 1,709 1,643 1,132 1,139 2,880 2,795
---------- -------- -------- -------- -------- ------------
Total fixed charges 37,754 36,789 40,039 42,735 40,312 40,495
---------- -------- -------- -------- -------- ------------
Earnings available for fixed charges 162,433 134,184 165,598 127,478 163,335 124,027
========== ======== ======== ======== ======== ============
Ratio of earnings to fixed charges 4.30 3.64 4.13 2.98 4.05 3.06
========== ======== ======== ======== ======== ============
Earnings required for preferred dividends:
Preferred stock dividends 3,721 3,715 3,745 3,833 3,882 3,928
Adjustment to pre-tax basis 2,273 1,985 2,122 2,185 2,135 2,156
---------- -------- -------- -------- -------- ------------
5,994 5,700 5,867 6,018 6,017 6,084
Fixed charges plus preferred stock dividend
requirements 43,748 42,489 45,906 48,753 46,329 46,579
========== ======== ======== ======== ======== ============
Ratio of earnings to fixed charges plus
preferred stock dividend requirements 3.71 3.15 3.60 2.61 3.52 2.66
========== ======== ======== ======== ======== ============