ML20044H380

1992 Annual Rept for Ies Industries,Inc

ML20044H380
Person / Time
Site:	Duane Arnold
Issue date:	12/31/1992
From:	Anderson C, Leslie Liu IES UTILITIES INC., (FORMERLY IOWA ELECTRIC LIGHT
To:
Shared Package
ML20044H376	List: ML20044H380 ML20044H384 NG-93-2048, Forwards 1992 Annual Rept for Ies Industries,Inc, Including Corn Belt Power Cooperative Financial Statement & 1992 Annual Rept for Central Iowa Power Cooperative
References
NUDOCS 9306080285
Download: ML20044H380 (73)

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Company Profile e Company, IES Industries, was reated in July,1991, by the

= merger of IE Industries Inc. and Elowa Southern Inc. These two

.,,[ holding companies, with widely

/jgn;own strengths in energy busi-Agnesses and clear successes in iT diversified investments, are ded-

[Idaied to providing value for IES

Yrdhtries sharehciders.

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1992 1991 5"'4"L s"g;a;;,

Operating revenues (000's)...........

$ 678,296

$ 661,538 $ 16,758

'3 Operating income (000's.)1.......

$ 109,024

$ 103,357 $ 5,667 5-Net income (000's).......i.L.'.......

48,711 44,657 $ 4,054 9: -

Earnings per average c6mmon share..

1.92 1.85 $

.07 4

Dividends declared per Eom' mon share. $

2.10 2.03 $

.07 3: *A a[ey Construction expenditures (000's)...

$ 191,834* $ 119,821

$ 72,013

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Funds provided internally?(000's)...

47,359 54,767 $ (7,408)

(14) '

Sales (>f electricity to'

.. ~.5,s customers (Kwh) (000's).............

7,132,671 7,244,209 (111,538)

(2)

Utility gas sales (dekatherrbs) (000's)..

37,035 37,129 (94)

Number of common shareholders.

34,838 32,507 2,331 7

Number of full-time employees.

2,702 2,46'

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• Inc ludes $t.1 rnation kor tne acquiskion ofIowa servite terntory troen union Electric Cornnurn.

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.g le year of 1992 was The th'eme of this achieve cost savings pany, including areas,

V ne of major actions,,

year's annual report is and operational effi-experiencing significant?"

following 1991,;a year "Our Mission in Action",

ciency. In 1992, by industrial growth and4,

in which many major

' reflecting ou"r 1992 combining adminis-expansion. In 1992? A decisions were made.

focus. ort; actions, goals, trative functions, our industrial sales L 1

The merger of IE Indus-and objectives.

purchasing lower cost growth was approxi-e

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tries Inc. and lowa fuels and containing mately 7 percent at lE r k, Southern Inc., the The ' Utility" operating expenses, e

exceeding our goal and%

and 5.6 percent at IS;,

acquisition of Union BusinessL we have been able to Electric Company's (UE)

The utility business achieve over $10 mil-outperforming national service area in Iowa, is the core business of lion in annual savings.

and regional averages.

and the addition of IES Industries (lES).

The savings realized in Additional utility Whiting Petroleum Therefore?we have 1992 are timely and a sales growth has also in our non-utility busi-devotedja great deal of portion are helpful to been prompted by the nesses were indeed

' our. management time our earnings in a year successful acquisition

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significant events in

' and. energy to assure its of economic uncer-of the Union Electric our quest to become suscessful; operation.

tainty and abnormal distribution properties a larger and stronger Th'e ~inteipation of Iowa weather conditions.

in southeast towa. The company better suited

' Electric (IE) and lowa.

The merger has also purchase has added for competition in an Southern (ISinctivities?

created a substantially approximately 1.2 bil-increasingly uncertain presented excellent,

" larger utility service lion Kwh in sales and environment.

opportunities to fierritory for our com-17,000 customers to y

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- our system, an increase non-utility businesses. In Financial Results The financial market of 25 percent in total 1992, after-tax returns on IES earnings for 1992 clearly viewed our per-sales at IE. This transac-equity for IES Transporta-were $1.92 per share, a i rmann favoraNy.

tion was completed by tion and lES Energy were 4 percent increase from The total return to our

_ hareholders was nearly year s end, as planned.

21.3 percent and 16 the earnings of 1991.

s The integration of this percent, respectively. Our Net income rose to $48.7 16 percent for 1992, new service area mto the goal for the diversitied million from $44.7 mil _

positioning us in the IE system represented a businesses is to earn monumental undertaking return exceeding that of.

lion in 1991. Of these top quartile in our peer returns, our core utility group utilities. In the for many of our emplov-the ut lity business. T he business contributed first quarter of 1993, ces at all lewis. We must contributions to our

$1.72 per share while the company issued credit them for their t orporate earnings by diversified business pro.

2.3 milo,on new shares metiyulous auention to these non-utility enter ~

of c mmon stock to vided $0.20 per share, The 1992 earnings finance recent acquisi,

detail and (areful plan-pnses were important, l

ning. T heir effort resulted partic ularly in a year were directly affected by tions. We are pleased this l

in ac (omplishing this sut h as 1992 when our lack of sales during the ner way wyl! miwd I

mission with minimum (ore business was signin.-

record-setting cool sum-I)y both individual and impact to our new t us_

cantiv atierted by sales institutional investors.

mer months in 1992.

tomers and communities.

shortf alls. In fact, we are Despite dramatic in-more convinced today creases in industrial Emergent Issues The Non-Utility that suong diversified growth and expansion, and Future Plans businesses will provide Businesses net electnc sales de-Finally, let us address us with more stabilized creased 1.2 percent some of the major We are satisfied with earnings, thus increasing at towa Electnc and strategic issues presently the financial performance shareholder value over 2.2 percent at lowa facing us, and also out-and steady grow th in our the long term.

Southern. Based on line our plans for 1993 degree days we estimate and beyond.

that the mild weather The comprehensive affected our earnings national energy legisla-by approximately $0.35 tion created by the 1992 X./

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per share.

Congress will fundamen-

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We are encouraged, tally change the way we however, that electric conduct our i.,osiness in

/,A sales volumes, discount-the future. While the new 4

.f ing the weather impact, legislation is far reaching

,7-rose nearly 3 percent in encompassing a wide

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our service territory.

spectrum of energy

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The significant growth in activities from innovative housing construction production to conserva-and in industrial expan-tion, our focus will be Customer service is a prior ty at Bill Fiala' fRailway Co. (CRANDIC) Custorrqrs conoxtor the Cedar napids and iowa city sion will bring not only on successful competit, ion camoic - /

new sources of revenue in a free market environ-

/.* ' rike Penford Products have noticeo that comrMment because of peopio in future years bul a!so ment. The competition

/ Nke Bd Fiala. BHrs extra effort has provide added stimula-will sose a new chal-I enabled him to become fammar with Penford's operation. He works eff,.

tion to the local economy lenge to us; however, it f ciently and can offer suggestions and job market.

will also create future when problerr$ arise. Penford gives 7 Sm credit for saving them time and opportunities at the ymoneyt because be egres about marketplace. With our s

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/ irs tough enough to heffp a job extended senic e territory In the non-utility Henry Wen, on scheduie when you're hghting.

and tran4 mission network, businesses, we will ac;ngg"grrr tne weetne,. sut Henry wen ned, -

comI)elitive industrial continue to seek out to weep c uactors womino.

regulators satisfied and neigh-energy pricing, and our opportunities in energy cors' happ whne he managed hands-on experience in and transportation areas.

tne ciosuee olthree ash a:sposai non-utility generation, We will selectively invest sogTQ'7M L"aM$ ^

S we believe that we will in businesses that are cmdens m ciosures were completed on time and unoer be able to meet the sch-supporting and will nud9N in coordination wth future challenges and generate increases in severm lowa Uectnc aepart-ments Henry kept the ioD poing profit from the opportuni-shareholder value over j ana camgo inc resp < s1 of ties available to us.

the long term, in addi-the contractors anu reguwors We also realize that in tion, we will consider nc $,s'ffC s """

order to be a successful niche investment -

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competitor in the energy opportunities in the business, we must con-fast-growing telecom-in 1993. Mr. Scheding tinue to excel in low cost munications area, served this company produc tion and efficient We are optimistic;is with distinction for operations, in 1992 we complete' tlWtirst' fourteen years. We oue substantial progress was quarter of 1%3. The; him gratitude for his made to integrate the rA begins to show; unwavering support, Iwo utility companies.

definitive indications of

. guidance and wise it is our plan to continue economic recovery,.

~ ' counsel. We wish him with the momentum and towa continues to the best in his retirement.

( reated in 1992 until experience growth in the merger is fully com-industrial expansion and J

pleted. We also plan job creation. We believe to extend our suu essful that the positive business C.R.S. Anderson cost (ontainment program environment coupled Chairman of the Board into 1993 and bevond.

with our planned objec-Our vision is to c reate tives will provide us with

.e a new enterprise which the basis for a success-x will integrate the ful year.

strengths and values Mr. Richard E. Scher-Lee Liu of both lowa Electric ling, a member of our President and and towa Southern into board of directors and Chief Executive Officer a new company effi-a member of the execu-ciently operated and tive committee / has better suited for the new retired and will not energy world.

seek re-election

/ if you've got a job to do, Dave Tubbs -

/ is your man. In spite of logging

/ the most overtime hours in. Iowa

/ Southernt southern distoct. Dave has -

/ an outstand ; record of community Dave Tubbs, / service He's dedicated 16 years to.

Une Machanic Iowa Southern / the fair board and, not surpnsingly,

/ was voted r-air Dad by the 4H club.

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/ High school football, wresthng. Pee

/ Wee basebatt Shnne circus and F

/ commun4 projects in Center /We OM jh gg / less volunteer spmt/ have all benef.tod from Davel se f-fl g j, 7; u g

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Movin P5tPff s1011 i c a t e Company's perfor -

Financial nce in 1992 was clearly ^

Performance reflection of its Mission in ActionbThe fundamen-lES reported earnings of

$1 2 per sham fm M2, tal Mission of the company is to build on its strong Compared to $1.85 per sham in W91. H M92 base of utility business, we ther had been diversify selectively into ther than one

""* I '.ldest on record, areas wherd it has a g/4

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and strategically position e rnings f r 1992 would d[/

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' the company to take have been $035 per share

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higher.1991 results were

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advantage.of profitable 4

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negatively impacted by sition of Union

$0.26 per share reflecting Electric Company's (UE) merger c sts and other

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transactions.

lowa electric service 3 hadIUM /'t was a Chnstmas Eve Art Carter will terri'ory, the ' merger with The total IES eamings

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Gas Forernan ' / never fof get In the fngid cold, a

. Whiting Petroleum Corpo-mHect a sigmficant mix Art Carter

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lowa Electnc heater on the gas border station in.

rat. ton (Whiting), prudent of utility and dlVersified b** ** E*

• rural Benton County overheated and :

.' cost Control, economic were frustratea by an open reuer -

development and reorgani-from lowa Electric Light started a spectacular fre. Firehghters

vatve tnar continued to tuei the blaze-zations in the utility busi-and Power Company Art Carter stepped in. He put on an (IE) and towa Southern

/ asbestos sust. alowed faefighters to ness are explicit examples soak n<m w tn frenoses and reached

^ of this Mission in Action.

Utilities Company 05) through the f!arnes to shut off the were $1.16 and $0.56 rehef valve. After a quick tnp home to While these are highlights, dry off, he returned and worked with the daily work of the 2,700 per sh re, respectively.

IES Indeies OES) e#op Earnings from diversified 14 thes om IE well into the night businesses contributed ees was integral and criti-

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cal to the overall 1992 IES

$020 per phare, with the performance. The stock Cedar Rapids and towa

{ market recognized this City Raihvay Company 1992 performance with a (CRANDIC) and Whiting nearly 16 percent total le ading the way.

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retum to shareholders,

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significantly exceeding n(.

returns for the utility industry as a whole.

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.f For many fammes, the IE Comerstone Christmas party is the only Christmas celebration they will have. Joy Huber 4-and Debbie Schebler helped make a three-year tradmon continue n! lE for f.

64 disadvantaged Cedar Raprds

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Adtninistrat Sect tary -

' families They cochaned the annual

- Cornerstone Chnstmas par *y, conect-Debbie Schebler,.

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...ing gifts and inrowing a big pa<ty for Supervisor Radoactive Waste 4' 130hds. The famibes said thanks by pg lowa Dectnc

1. pies.enting (E witn a beaut:ful oudt f

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Sales \\blumes its empioyees v, ora to prov,ee

[leClfl0 %11es solumes customer service that ts second

' " "* D I'V th*Y * '" d"d' were off slightly troni cated to ' satisfying custornt.

1991 levels. With normal protecting tne environment and n eather, how ever, electric building our comrnunities g

sales would hase increas-ed about.i. I per ent and l.fi per( ent, respet tis ely, for IE and 15. Industrial j'

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I elettric sales grew a note-c M

worthy 7.0 perc ent at IE and 5.6 percent at IS, E

dg with about 150 percent of the total IES increases

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.i Natural gas sales vol-As a result, retail electric approximately $5.5 mil-the merger in the first umes were generally flat, rates at IS were reduced lion, annually, full year.

due primarily to the mild by $4.5 million per year.

These units were con-weather. The number of In October,1991, an Managing a Merger solidated or functionally gas customers increased IE rate increase request Since the merger form _

integrated: Accounting, by 2.6 percent at il resulted in a $7.9 million ing IES.in 1991, achiev.

Communications, Diver-following a program increase. In addition, ing merger benefits has sified Businesses, Electric expanding the gas busi-approximately $4 million been a focal point for Dispatc h, Engineering ness in recent years.

per year is pending Action. Cost savings and and Planning, Environ-Further gas c ustomer appeal of the Iowa Utili-operational efficiencies mental Affairs, Finance, growth is exoected in ties Board (IUB) decision have been achieved Gas Supply and Dispatch, 1993 as the three-year to the courts.

through functional and Human Resources, gas expansion program A 1992 IS natural gas organizational changes.

Insurance Services, Inte-is concluded.

rate increase case was Most administrative grated Resource Plan-resolved early in 1993 functions were combined ning, legal Services, Rate Activity with an annual increase and operating costs were Marketing, Rates, Rate case activity w as of $1.6 million. A 1992 contained.: jointly pur-Regulatory Affairs and extensive in 1992. IS IE natural gas rate chasing lower cost fuels Shareholder Services.

completed an electric increase case awaits and dispatching gas Data Processing was rate reduction case filed a final decision by the

- and electric energy were consolidated through an in September,1991, by IUB, but agreemer't}

the primary reasons out-sourcing agreement the Iowa Office of Con-among the parties pro 1 IES achieved $10 million with Electronic Data sumer Advocate (OCA).

vides for an increase of in annual savings from Systems Corporation.

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'j',/ have resulted from relentless economic devekpment e' forts.

-j These effons have strength-ened our position as an attractive bus + ness partner

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Electric Ssrvkel IES Energy Delivery & -

. Territory Acquisition

%w Nuclear Group and IES.

In1 MarchM992 DIES -

5*N Generation & Engineer-si ned a defini.tive agree-

. ing Group, consolidated

, ment to acquire the UE-Q the operations manage-lowa electric serviEe iow, ace d N ment across utilities.

-territory in the Fort -

Mand Power Con h

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Xut$'s$f[nN "i$h created to combine the

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of southeast? ' 0" cultures of IE and IS and to build upon the Iowa: Following1 -

}q strengths of both utilit.ies.

regulatory autholiz h l

amin acids, have j

As a result, operational ations/lE service 107 Economic units are being consoli-these 17,000 custom 2 Development development headlines.

1 dated to achieve consis-ers becameieffective at -

tency, efficiency and the end'ofl1992, Electnc industrial sales Those companies chose l

implementation of

.This service territdry is gr wth of 7.0 and 5.6 lowa and IES service.

"best practices."

expectedio indsas the, percent f r IE and IS, Their Korean, Finnith/

With these Actions, IE electric sale's v61urneb respectively, didn't just Kodak and Japanese IES is realizing some by about'25 percenti J Jappen. To a consider-ownership, respectively, 1

merger benefits without Industrial sales of IE (able extent that growth signify the attractiveness m

actually merging IE and -

should increase by abouty goccued as a msuh of of industrial locations

15. The next step, with L 50 percent, reflecting the~ t yeff tsyf the utility bus,i-m towa to multina-regulatory approvals, is to concentrated industrial 7 ness zn mnjungtion with tional firms.

move as soon as feasible base of southeast towa.

!! '.I c mmunit,es and-Expansion of ex,st,ng i

i i to realize additional The needs of existing cus;, pn direct contact with businesses, however, '

benefits from merging tomers and local in'dustryf Kust6mers IE5 service accounted for about 80 perntories have received;l {electnc growth This percent of IES industrial the utilities, will be the immediate7 --

n t!onal and internationa Following its Mission, focus of service in the

. IES does not invest simply area. For the longer term,o

(""*". tion for their ecg.

reflects the contiryuing L to attain a portfolio of the prospects are bright in mtc development

< growth in the gram pro 7 3

s businesses. Rather, it seeks for further industrial.

psuccesses The com.,ngy v cessing industnes such,.

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to realize the benefits of growth along the easterny KPMXlthdustries, prog as corn sugar, starch,; g j

cereals 4 alcohol,psine; ducing copper and brassyproducts; Genencor.16ters a

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fully utilizing its assets.

Iowa industrial corridor:

i Merging the utilit.ies wi i incluc ts t iis new 1 Lin'dustrialenzyrnesiand[s, o[inddstriaishles inclEU u - e e<

o nat.iona, Irid;/productng 1

ier so areas o t<

sooner rather than later is.

service territory.

consistent with the Mission.

• Ajinomoto7producingL

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L autornotive parts /and (selecied meatpacking.

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In just six months. Darryt Bradley 4: ?

became the " hub" of the opera-i'

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1 Providing a positive force for economic growth and stabMty, IES Transportation expanded and improved levels of ser-v:ce to both new and existing customers A dedication to cus:omer service is the focus for every employee.

Iow unemployment rate tors of about 65 percent These results are a credit of about 4 percent. Obvi-based on firm demands.

to the dedicated IES em-ously, the continued This will require contin-ployees. Daily, they strive -

economic development ued cost-based pricing, to assure that IES remains of IES service communi-incentives for off-peak competitive and able to e/

ties has been a good use, energy effic iency capitalize on opportunitiesL prescription for improving programs and programs suc h competitive position-the economic health of for voluntary interrupt-ing creates.

the state.

ibility of service during peak times.

Diversified Integrated Resource Businesses Planning Relentless Cost Disersified businesses The Compony's electric Control represent about 10 per-generating capacity is Long-term positioning cent of IES assets and rich in baseload capacity of IES requires that we contributed 10 percent of with approximately 51 per-continue to be highly consolidated net income.

cent coal,18 percent competitive in attracting IES invests in businesses nuclear,22 percent gas /cil additional growth to ser-which are expected to be and 9 percent purchased vice territories and to profitable and where IES power. This mix, com-

' thrive in a competitive has a comparative advan-bir'ed with aggressive environment. Cost control tage. It has focused pri-demand-side manage-is fundamental at IES marily on transportation ment programs, is ex-operating companies.

and energy-related indus pected to delay the need For 1992, control efforts tries. With the exception for additional base-load

. were effective. Utility of Denver-based Whiting, capacity until after the operations and mainte-the investments have year 2005. Some capacity

' nance expenses were been concer.trated in Iowa.

may, however, be acquired -

under budget, with Some of these invest-in the interim, based on nuclear operations under rnents are also designed strategic opportunity.

budget as well. Capital '

to support economic The integrated resource '

investments for the utili-development efforts in planning goal is to ties were also under.

communities serwd by achieve system load fac-

_ their budgetsj the utilities.-

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/N A radroad !s a hazardous place to It's atways nicd to impress the -

wom So, it is part<cularty signih.

Nuclear Regulatory Commission.

cant that no employee on the When the Duano. Arnold Energy Center was faced wdh inspe.cting CRANDIC ramoad sufiered a lost-time acc4 dent in 1992 Jtm rough surfaced overlays on the Colbert's coordinahon of IES recirculation systum, the choices, Transportation s sa'oty program were to resurface and reweld the -

,. Frank Dohmen,"

and his industry and commu-Overlays or come up with a new =

Mark Hut. ttrol; Qualtty Cor nity relations eHort have been a technique. Mark Huting and Frank ing, -, -

great azet to the Company. Bot.

Jim Colbert, Dohmen workod with a contractor Qua p n e peev w,

mor e importanUy. his efforts safety Director to develop a technique that was

' bwa EWctnc :

have he! ped to keep hs col-

/

IES Transportation recogn: zed by the NRC in;its.

' j:'.

most recent assessment of plant j

M, j;

icagues sa'er on the jon p/

4 performance as an approach to e problem sorving that was conseryg [ 4; [M f

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ativo and sonovattve q

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Transportation Business more effectively serve realized an after-tax ues to occupy profitable IES Transportation this market. The trans-return on equity of niches in the market yielded an after-tax rate portation business expec-16.5 percent for 1992.

for small generating of return on equity of tations are tied to the Since Whiting merged units and in marketing 21.5 percent for 1992.

strength of the industrial into IES early in 1992, natural gas, becoming The continuing perior.

base in the Cedar Rapids /

these first-year results are a core business itself mance of CRANDIC, Iowa City corridor-particularly noteworthy.

pursuing its profitable the short-line railroad, This operator of oil and expansion plan, is primarily responsible Energ>y-Related gas reserves in the U.S.

for these results. IEl Con.

Businesses has been successful in Successful tainer Services, the rail IES Energy, including attracting institutional Financing Strategy car cleaning and repair Whiting and Industrial investors to its limited The successful offering facility, was expanded to Energy Applications ilEA),

partnerships. IEA contin-of 2.3 million shares of

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b, Dwerubcabon Pto areas that

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are expected to be prohtable 4

and wtrere IES has a compara.

twe advantage has proven to be a successful strategy.

Expforation and development

,y,.

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attainable future growin and f, '

g n war of new energy reserves by

,,d

. a Whibng Petroleum exemphhes s,

hnancta! stabibty.

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IES common stock territory acquisition, the environment of purpose i

capped a period of signif-Whiting success, the that strives to create its

.j icant financial activity, industrial sales growth own opportunities. For taking advantage of and the relentless cost the benefit of customers, opportunities created control are Action high-employees and share-

~

by falling interest rates.

lights. The year, other-holders, this is the n;,

As of February,1993, wise, could simhly be continuing Mission in a

bond ratings of the utili-described as having been Action of IES.

ties were at or above the dramatically affected by target single-A level, abnormally mild weather.

y@//

e.,

wm c,

The common stock Actions taken consider-offering attracted consid-ably offset the negative erable institutional inter-consequences of factors, est, with approximately such as weather, outside M

1 million of the shares of IES's control. The year purchased by large of Action was a time institutions. The $30 for seizing' opportunities 1

per share price of these while remaining focused newly-issued shares on IES strengths. These reflects the positive Actions execute the Dale Walters it was a very tricky job wniting was expectations that IES fundamental strategb g sugr;ntegent '

dnugggyfddy $0[o*dS'iE$' "*

E w*

t 7

9 9

Will reahze its Mission plan: to be continually was iocated sooo feet beiow iuxury h nes, c untry club, iakes and over the long-term.

positioned to take tecnnology was used to steer ine cultivated fields. Directional dnlieng advantage of opportuni-A Continuing ties available to those j e g "n'b E 7 8t$'S $ f' Mission companies prepared 0:ary work of many on tnis pro:ect, Date Walters supervised the 24-hout to aCl-1992 clearly estab-day held work. spending many nights For 1993 and beyond, on site, grabbin a few hours sleep

.s ea y to fuM this fundamental IES in his pickup truck. he operation was a success, increasing Fort Collins oil the IES Mission in Action strategic plan w.H con-P*ggpA i

euon from mo to coo banels and provides the strong tinue and develop in an l

foundation for continuing success. Realizing merger benefits, the UE lowa 1

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Sometirres. advances 6n technology can be intimidating But, not to Barb Miliner Barb has been involved in the conversion of distribution maps to

~

Barb Miltner, cab ecad. an automated mapping Discrohne Engineer and facilmes management tool Her towa Electne interest and conos:ty in advanced technology have enabled the u%ty to develop programs that will make analysis of outages easer and speed service restoration to customers 15

).!.

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,r a

i l

r There is rarely a dull moment in -

Jack.ie Fullhart, shareholder services with a com-Supervisor of Shareholder Services pany as actwe as IES Industnes IE.S Industnes Dunng the past year and a half, Iowa Southern loc. and Whit #ng Petroleum stock were converted to IES Industnes and shareholder record keeping was brought in house in sprte OIthe stress asso-c:ated with the additiona; workload and tig'J leadhnes. Jache Fullhart and her 5:ah 6.we never forgotten that UVICe to the Shareholde73 jg their pr,onty 16

fp

.ny, M a.n a g Emb rttM D i s c u s sfiWn a n d A n a l y s i s. o f t h e uf 989dadiiibyre:r a;t i o ri s a n d F i n a n c i a l C o n d'i t<i o n muk.

following discussion analyzes Results of Operations ignificant changes in the com-The Company's major subsidiaries are Iowa ponents of net income and Electric Light and Power Company (IE) and towa financial condition from the Southern Utilities Company (IS), collectively referred to as the Utilities prior periods for IES Industries

"*P""9 ""' "'"*" I"""*d 5 4 I *II-Inc. (lES) and its consolidated lion during 1992 and decreased $35.7 million subs.dlaries u, he Company).

during 1991. The 1992 results were adversely affect-i.,

ed by extremely cool summer weather and a mild winter in the service territory of the Utilities. A discussion of the effect of the weather is included in the analysis of electric and gas revenues.

Results for 1991 were adversely affected by (1) a

$2.3 million after-tax write-off for the regulatory disallowance of previously deferred former manu-factured gas plant (FMGP) clean-up c osts, and (2) after-tax merger expenses of $3.7 million.

Net income for 1990 included $39.3 million from the gain on sale of Telecom* USA stock, partially offset by $4.1 million of valuation reserves related to certain investments (See Notes 12 and 13 of the Notes to Consolidated Financial Statements).

Accordingly, the Company's results of operations, liquidity and capital resources are principally affect-ed by the Utilities. The Utilities' contribution to the Company's net income inc reased (decreased) from comparable prior periods as follows:

IE 15 hn millionq 1992..

$ 3.2

$ (5.0) 1991.

$ 2.7

$ (0.9)

The Company's operating income increased

$5.7 million and $5.3 million during 1992 and 1991, respectively, as compared to prior years.

Reasons for the changes in the results of opera-tions are explained in the following discussion:

l i

17

t IlUttrit Revenues

[lectric revenue increased during 1991 bec ause of wh sales im mase (prim.udy wmbr dated Ile( trit resenues and Kw h sales in( reased (de-e and an electric rate in( tease that became etfe(tive

( reased) during 1992 and 1991 as compared with in M,uc h 1990.

the prior year as follows:

1442

'UUI lowa Southern -

on nn!hons) llectric revenues de( reased in 1992 because of Revenues:

substantially lower oli-system sales to other utihties, ll.

$ (2.7) $ fut the lower Kwh sales and the effect of a rate reduc-15.

(16.9) 10.5 tion that became effective in September 1991. See Total.

[.yy {l9;1 Note 3(b) of the Notes to Consolidated financial me r a Es(UWon of b Me mduc hon.

kw h sales (eu luding oli-systems salesP Il.

( 1.2 " o )

1.11 %

Ilu' pumary mason for the electric revenue 15..

(2.2%)

ti.2%

im rease for 1991 was the Kwh sales inc rease, partially offset by the effect of an annual rate lhe 1992 kwh sales det reases refle(t the unusual-redut tion of $ 3.7 million that be( ame effective ly mild weather conchtions in the Utilities'sen ice in September 1990.

terntory. Adjusting for the effe( ts of weather, l[ and 15 experiern ed Kwh sales in( reases of 3.3% and Gas revenues 1.11"., respe( tively. Residential sales, w hi( h are the Gas revenues and sales in therms (including trans-most wcather sensitive, decreased 9.5% for each of ported volumes) in( reased (dec reased) as c ompared the Utihties. Iluu eser, industrial sales, less sensitis e with the prior year as follows:

to w cather, int reased 7.0".. and 5.6%, respec tis ely, for il and 15. Approximately 211% of It's inc rease in 1992 1991 industrial sales was related to a brass, and (opper on mdhons) mill in ledar Rapids.

Gas Re enus lhe 1991 Kuh sales int reases are primarily It 7.2

$ 4.9 het ause of improsed economic (on(htions in lYs is..

1.2 0.9 senit e territory and variations in wcather.

Industrial I nergy The Utihties' electric tantis include energy adjust.

Applications, Inc. (llA)..

12.4

11. 4 ment (lauses (LAC) that are designed to c urrently

$ 20A $ 14.2 re(over the costs of fuel and the energy portion of g

pur( hased power in ( urrent hilhngs to customers.

If.

0.0%

1.2%

See Note 1(i) of the Notes to Consolidated F inanc ial IS (1.1 Q 3.5%

Statements for discussion of the EAC.

lowd flectric.

Gas sales also refle(t the effect of mild weather in lhe resenue decrease in 1992 was primarily relat_

19 2. Adju', ting for the effects of weather, gas sales ed to the lower Kwh sales.1he adverse effet t of im mased 1.%, and 0.5% for IE and IS, respectively.

weather on electric mvenues was offset in part by T he Utilitici t<niffs include purt based gas adjust-the effet t of the rate inc rease that bec ame effet tive ment c lauws WGA) that am desigmM to cunently in December 1991. See Note 3(a) of the Notes to mc ow r the (ost of gas sold. See Note 1(i) of the Notes to Consolidated financial Statements for dis-Consolidated F inancial Statements for a disc ussion

( ussion of the PG A.

of IE's elet tric rate ( ase.

18 i

Y 4

1 9

a

/owa flectric -

generating stations and the lower electric sales. The Gas revenues increased in 1992 because of in-generation decrease during the refueling and main-creased (osts of gas recovered through the PGA tenance outages was substantially replaced by and the effect of an interim gas rate increase that purchased power. f uel for production inc reased became effec tive in September 1992. See Note 3(a)

$h4 million during 1991, primarily because of of the Notes to Consolidated financial Statements increases in fossil-fueled generation at the Utilities for a disc ussion of the gas rate inc rease.

partially offset by a change in generation mix at IE.

The 1991 increase in gas revenues resulted pri-The DAEC was shut down for a refueling outage in marily from the eiferis of a 1990 rate inc rease and 1990; during sut h outage, power was purc hased to the sales inc rease, partially offset by lower gas costs replace the reduced generation.

recoventi through the PGA.

Purchased power increased $4.5 million in 1992 because of increased purchases by 1E during the Iowa Southern -

refueling and maintenance outages. T he increase Gas revenues increased in 1992 because of was partially offset by lower purchases at IS related increased costs of gas recovered through the PGA to lower off-system sales. Purchased power and the effect of an interim gas rate inc rease that decreased $11.0 million during 1991 primarily be-became effective in September 1992, partially offset cause of purc hases made by lE' during the 1990 refu-by the low er sales. See Note 3(b) of the Notes to eling outage at the DAEC. There was no refueling Consolidated financial Statements for a discussion outage in 1991. Also contributing to the 1991 de-of the gas rate inc rease.

crease was a reduction in capacity payments under The increase in gas revenues for 1991 was primar-lE's contract with the City of Muscatine related to a ily because of the sales increase and the effects of a reduction in capacity from 90 Mw to 70 Mw.

1990 gas rate increase, partially offset by lower gas Gas purchased for resale increased $17.1 million costs recovered through the PGA.

and $8.3 million during 1992 and 1991, respec-Industrial Energy Applications -

tively. The increase for both years are substantially related to increased gas activities at Industrial T he increase in gas revenues for both years was primarily the result of inc reased natural gas market-Energy Applications (IEA). Increases in the cost of gas sold by the Utilities also contributed to the ing and delisery a(tisities.

1992 increase.

Other operating expenses increased $0.7 million Other Revenues and $17.2 million during 1992 and 1991, respec-Other revenues increased $15.5 million and tively. The 1992 increase included $5h million re-

$3.8 million during 1992 and 1991, respectively.

lated to Whiting. Other than Whiting, expenses de-Approximately $11 million of the 1992 increas" creased $4.9 million. The changes for both years relates to Whiting Petroleum Corporation (Whiting),

were affected by a regulatory disallowance of $3.9 see Note 2(a) of the Notes to Consolidated financial million recorded by IE in April 1991 after the Iowa Statements. The remaining 1992 inc rease and the Utilities Board (IUB) denied re(overy of previously l

1991 inc rease are because of increased operation defernd former manufactured gas plant (f MGP) l activities of IES's consolidated subsidiaries other clean-up costs. Lower non-labor costs at the DAEC than the Utilities and changes in IE's stean' and lower Nuclear Regulatory Commission (NRC) revenues.

fees, partially offset by increased labor and benefit costs at the Utilities, also affected 1992. The remain-Operating Expenses ing 1991 increase arises from higher labor and ben-fuel for production decreased $17.8 million dur-efit costs, increased FMGP clean-up (osts, increased ing 1992 primarily because of a nuclear refueling NRC fees and inc reased costs at IES's subsidiaries outage at the Duane Amold Energy Center (DAEC),

other than the Utilities.

maintenan(e outages at the Utilities' fossil-fueled 19

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,7 fu a

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Maintenanc e expenses increased during 1992 and Liquidity and Capital Resources 1991 by $0.2 million and $1.1 million, respectively.

The Company's capital requirements are primarily During both years, the increases primarily arose attributable to the Utilities' construction pmgrams, from in( reased maintenance at the fossd generatmg the Company's debt maturities and sinking fund plants of the Utilities. T he 1992 increase was sub-requirements and IES's diversification activities.

stantially offset by lower maintenance (osts at the Cash and temporary cash insestments decreased UA

$16.6 million during 1992. In 1992, internally gen-Depre(iation and amortization increased dun.ng erated cash (after dividends) was $47.4 million and l

both years primarily because of inoeases in utility the net proceeds from extemal financing activities f

plant in sersice. The ettect of the Whiting merger were $93.5 million. These funds were primarily also affe(ted 1992 and a $3.3 milhon increase in d for the agisition of utility property from the DAEC decommissioning provision atte(ted Union Electric Company (UD (See Note 2tb) of the 1991. Depreaation and amortization expenses for Notes to Consolidated Iinancial Statements) and both years inc lude $5.5 million for the DAEC de' construction expenditures, commissioning provision (olletted through rates.

It b micipated that the Company's future capital laxes other than income, increased $1.1 million rewirements will be met by both internally generat-and $2.7 millyn during 1992 and 1991, respective-ed cash and external financing. The level of inter-ly, because of mc reased property and payroll taxes.

nA ped wh is wi4> dendent won economic conditions, legislative activities, environ-Gain on Sale of Telecom* USA Stock mental maners and timely rate relief for the Utilities.

See Note 12 of the Notes to Consolidated finan-See Note 3 of the Notes to Consolidated financial tial Str.ements for a discussion of the gain on the Statements for a discussion of the Utilities' rate sale ei Telecom sto(L cases. Access to the long-term and short-term capi-tal and credit markets is necessary for obtaining Interest Expense and Other funds extemally.

I interest expense increased during both 1992 and The Utilities' liquidity and capital resources will l

1991 primarily because of increases in the average be affected by environmental and legislative issues,

)

amount of debt outstanding during those years.

including the ultimate disposition of FMGP issues, Interest expense related to the Utilities' reserves the Clean Air Act as amended, the National Energy for rate refunds also affected 1992.

Policy Act of 1992, and Iederal Energy Regulatory Miscellaneous, net increased by $3.8 million and Commission Order 636, as discussed in Note 14 of

$4.3 million in 1992 and 1991, respectively. Con-the N(>tes to Consolidated financial Statements.

tributing to the changes for both years were $6.2 Consistent with rate making principles, management million of merger expenses, and interest income at believes that the costs incurred for the above IE from a tax settlement, both recorded in 1991.

matters will not have a material adverse effect on income from temporary cash investments in 1992 the financial position or results of operations of was lower than 1991. The 1991 inaease was also the Company, affected by $6.8 million of valuation reserves The IUB has adopted rules which require the Util-recorded in 1990 (See Note 13 of the Notes to Con-ities to spend 2% of electric and 1.5% of gas gross solidated financial Statements).

retail operating revenues for energy efficiency pro-Federal and state income taxes increased $2.1 mil.

grams. Energy efficiency costs in excess of the lion in 1992 and decreased $25.0 million during amount in the most recent electric and gas rate 1991. The 1991 decrease primarily resulted from inc reased taxable income during 1990 associated with the gain on the sale of Telecom common stock.

20

I 4

1, 1

'Q

h cases are being recorded as regulatory assets, by the

[Ong-Term Financing Utilities. At Dec ember 31,1992, the Utilities had Other than the Utilities, periodic smk.ing rund re-

$8.8 million of suc h (osts recorded as regulatory irenwm whid m be wt b Ad'h Mdih assets. Ultimate recovery 4 these osts is antiopat-I e

he Mowig de will mMm @ m ed under (urrent rate makmg pnnoples.

Dec ember 31,1997:

Construction and on m e ns) lES debentures.

$ 45 Acquisition Program IE debt.

118 The Company's construction and acquisition 15 debt.

9 program anticipates expenditures of $153 million Other subsidiaries' deb'.

16 for 1993, of which approximately $100 million

$188 represents expenditures at IE and approximately

$31 million represents expenditures at 15. The re.

In January 1993, $ 13.0 million of the 1986 Series maining anticipated expenditures include 8-1/8% Debentures were redeemed and a defea-

$12 million for acquisitions to be made by Whiting.

sance was completed for the remainder of the Of this $131 million of Utility expenditures,38%

debentures. The Company intends to refinance represents expenditures for electric transmission the majority of the remaining debt maturities with and distribution facilities. 22% represents fossil.

long-term debt.

fueled generation expenditures and 15% represents in September 1992, IS issued through a public nuclear generation expenditures. Substantial com.

offering, $30 million of Series 7-1/4% first Mortgage mittnents hase been made in connec tion with Bonds due 2007. The proceeds of this issue were such expenditures.

used to retire IS's Series 8-1/2% and 8-3/4%

lhe Company's levels of (onstruction and acquisi-Preferred Stock, and the Series 4-3/8%,10% and tion expenditures are projected to be $174 million 9-1/4% first Mortgage Bonds. A $557,000 premium in 1994, $ 159 million in 1995,$151 million in on the preferred stock redemption was charged 1996 and $166 million in 1997. It is estimated that directly to retained earnings.

approximately 70% of construction expenditures In 1992, $2.4 million of Series 1992 Pollution will be provided by internally generated cash (atter Control Bonds, due 2010, and $1.0 million due dividends) for the live year period 1993-1997.

2000, were issued on behalf of IS. These bonds Capital expenditure, investment and financing have variable interest rates (3.90% at December 31, plans and estimates are subject to continual review 1992L The proceeds were used to retire $3.4 mil-and change. The capital expenditure and investment lion of pollution control obligations with interest program may be revised significantly as a result of rates of 8.50% and 8.75%.

many (onsiderations inc luding c hanges in econom-In March 1992, IE issued through a public offering ic conditions, variations in actual sales and load

$50 million of Series Z,7.60% first Mortgage Bonds growth compared to forecasts, requirements of envi-due 1999. The proceeds were used to retire short-ronmental. nuclear and other regulatory authorities, term debt and for other corporate purposes.

acquisition opixirtunities, the availability of altemate In March 1992, IES Diversified inc. (a wholly-energy and purchased power sources, the ability to ow ned subsidiary of IES) entered into a $50 million obtain adequate and timely rate relief, escalations in variable rate credit facility. At December 31,1992, construction costs and conservation and demand-

$7 million was borrowed, which is due side management programs.

21

I chruary 18,1993, with an interest rate of 3.875"o issued and outstanding at December 31, 1992; in January 1993, the credit tac ihty aas expanded to there were no limitations on the issuance of these

$100 milhon and an additional $48 rnilhon uas shares. In addition, IES had 5,000,000 shares of horrowed to finan( e the defeasan(e of the IES Cumulatise Preferred Stot k, no par value, autho-debentures. T he rate on this honowing is 1.812"o rized for issuance, none of w hic h were issued and and it matures in July 1993. The credit facility outstanding at Dec ember 31,1992.

extends through lanuary 1996. with two one-year The Company's capitahration ratios at year-end extensions available to l[S Disetsified. !nterest rates u ere as follows:

and maturity are set at the time of borrowing. The pre p;91 interest rate options are based upon quoted market Longlerm debt.

5(YL 47"b rates and the maturities are less than one year.

Preferred and preferenc e stoc k..

2 3

ILS Disersified intench to continue honowing under Common equity.

48 50 the renewal options of the facility and, accordingly, TURL T00%

this debt is (lassified as long-term in the Consolidat-

'""'"d"'"""""'d""#

ed Balan(e Sheets. The fatility contains cosenants

' ""'" 'd'*' """"le' M ""4"d as a current habthly in the tenn debt but h glebt is clawlw u hic h (ould restrict borrowing under the facility c onmbdated salam e 3neer.

based upon IES Diversified Inc.'s and the Compa-ny's ratios of debt to total capitahzation. At Decem-Short-Term Financing her 31,1992, suc h cosenants did not restric t the for interim financing, IE is authorized by the i ERL,

.nailability of funds under the f acility and they are Wi e umu@ 1994 up to $125 million of short-not expet ted to in the future.

notes. IS is currently authorized by the FERC to The Indentures pursuant to which the Utilities issue through 1993 up to 52. -3 nullion of short-term issue f irst Mortgage Bonds contain cosenants u h. h n

p gg

,d h finnim' p restric t the amount of additional bonds u hich may dm dm UWih Rexibility in the issuance oilong-be issued. At Dec ember 31,1992, suc h restn( hons term securities. At December 31,1992, IE and IS would have allowed il to issue $132 million and 15 had outstanding commercial paper balances of to issue $61 million of additional First Mortgage

$86., million and $3.3 million, respectis ely.

Bonds. The Utilities base shelf-registration state-h UWib hae e ments with separate ments effe(tise with the SLC and hase receised au-i nancial institutions to sell up to $50 million and thority from the federal Energy Reg $ atory Commis-9 5 dhm mps>% of h ir uWiW anous d

sion if ERC to issue $150 milhon of first Mortgage ei ble. At December 31,1992, IE and 15 had Bonds i$ 100 milhon for IE and $50 million for 15) sold $33 million and $,<.,< million, respec tivelv, of whic h $50 m.llion has been used to issue If.s i

under the agreements.

Series Z Iirst Mortgage Bonds and $30 million M

W dm Congw bd bd M

has been used to issue IS's Series 7-l/4"w first h

of credit ageregating $134.8 million DES -

Mortgage Bonds.

O 3 ndhm O'$104.8 million, IS - $20.0 million, in the first quarter of 1993, the Company sold lES Diversified - $7.5 million and Whiting - $1.0 2.3 million shares of its Common Stoc k. The shares million). C.ommitment tees are paid to maintain were pn(ed at $30 per share.

be hon ad Wem me no conditions uhich The Artn les of Incorporation oilE and b autho-he unused lines of credit. IE was using rize and limit the aggregate amount of additional

$8U ilhon d 6 he W mm comnwwial shares or,( umulatise Preterred Stot k and Lumula-paper and $.,, million to support pollution control ine heferent e Stock w hi(h may be issued. At obh.'na h.ons, and IS was using $.3 million of its 3

Det: ember 31,1992, IE < ould have issued an addi-lines to support (ommerc ial paper. IS also has a tional 700,000 shares of C.umulative Preferen( e letter of credit in the amount of $3.4 million sup-Stot k. but no additional shares of L.umulatne porting its variable rate pollution ( ontrol Preiened Stoc k. IS had 181,333 shares of Preferred obh.*gations.

Stoc k authon. zed for issuanc e, none of u hn. h were 22

[m

,y q

e 1N 1

f b-,'d POStretirement Benefits in revenues as depreciation. As a result, the Utilities Refer to Note 7 of the Notes to Consolidated haw muienged econgmic losses equivalent to the current year's impact of inflation on utility plant.

Financial Statements for a disc ussion of postretire-in ddition, the regulatory process imposes a sub-ment benefits other than pensions, including the stantial time lag between the time when operating rules adopted by the IUB. The rules provide for and capnal ms am inmnM and wkn they am current recovery of such costs through rates.

recovered. The Utilit,es do not expect the effects of i

inflation at current levels to have a significant effect Effects of Inflat on i

on its results of operations.

Under the rate making principles prescribed by the regulatory commissions to w hich the Utilities are subject, only the historical cost of plant is recoverable Selected Consolidated Quarterly Financial Data (U naudited)

The following unaudited mnsolidated quarterly the fair presentation of the results of operations and data, in the opinion of the Company, includes financial position.

all normal and recurring adjustments necessary for Quarter Ended March June September Dec ember 31 30 30 31 kn thousands, cu ept rer share amounts) 1992 Operating resenues.

$ 181,298 $ 148,442

$ 161,320

$ 187,236 Operating inc ome 24,286 19,091 38,439 27,208 Net income 10,046 8,341 18,555 11,769 Earnings per average common share 0.40 0.33 0.73 0.46 1991 Operating revenues.

$ 169,351

$ 146,951

$ 170,732

$ 174,504 Operating income 19,858 16,928 44,307 22,264 Net income 9,259 6,755 19,532 9,111 Earnings per average c ommon share.

0.38 0.28 0.81 0.38 The Utilities' results of operations are a significant results of Whiting Petroleum Company (Whiting) portion of the consolidated results. The above for 1992.

amounts were affected by seasonal weather condi-Second quarter 1991 results include a $3.9 million tions and the timing of utility rate changes. Rate pre-tax charge for deferred clean-up costs for former activities for the Utilities are discussed in Note 3 manufactured gas sites which were not permitted of the Notes to Consolidated Financial statements.

by the IUB to be recovered in IE's 1990 gas rate Refer to Management's Discussion and Analysis for case. Third quarter 1991 results include $4.9 million a discussion of the adverse effect of weather upon of pre tax expenses related to the merger with lowa 1992 results. Such adverse effect was primarily in Southem loc.

the third quarter. The financial data includes the i

23

,#7, yw-

• ,m t '

n.

~ m.

7 51 R e p.o r t o f I n d e p e n d e n t P u b l i cL A-c'c o,un t a n t s a

3 a du c To the Board of Directors of IES Industries Inc.

We base audited the accompanying consolidated balance sheets and statements of capitalization of IES Industries Inc. (an Iowa corporation) and subsidiary companies as of December 31,1992 and 1991, and the related consolidated statements of income, retained eamings and cash flows for each of the three years in the period ended December 31,1992. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial state-ments are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement,. An audit also includes assessing the accounting pnnciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

I In our opinion, the financial statements referred to above present fairly, in all materials respects, the finan-cial position of IES Industries Inc. and subsidiary companies as of December 31,1992 and 1991, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1992, in conformity with generally accepted accounting principles.

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Management's Responsibility for Financial Statements lhe Company's management has prepared and is responsible for the presentation, integrity and objectivity l

of the consolidated financial statements and related information included in this report. The consolidated financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and, in some cases, include estimates that are based upon management's judgment and the best available information, giving due consideration to materiality. Financial information contained else-where in this report is consistent with that in the consolidated financial statements.

T he Company maintains a system of internal accounting controls which it believes is adequate to provide reasonable assurance that assets are safeguarded, transactions are executed in accordance with management authorization and the financial records are reliable for preparing the consolidated financial statements. The system of internal accounting controls is supported by written policies and procedures, by a staff of internal auditors and by the selet tion and training of qualified personnel. The intemal audit staff conducts compre-hensive audits of the Company's system of intemal accounting controls. Management strives to maintain an adequate system of internal controls, recognizing that the cost of such a system should not exceed the bene-fits derived. In ac cordance with generally accepted auditing standards, the independent public auountants IArthur Andersen & CoJ, obtained a sufficient understanding of the Company's internal controls to plan their audit and determine the nature, timing and extent of other tests to be performed. No material internal control weaknesses have been reported to management, nor is management aware of any such weaknesses.

The Board of Directors, through its Audit Committee comprised entirely of outside directors, meets periodi-(ally with management, the internal auditor and Arthur Andersen & Co. to discuss financial reporting matters, internal (ontrol and auditing. To ensure their independence, both the internal auditor and Arthur Andersen &

Co. hase full and free auess to the Audit Committee.

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WC o n s o l i:d.ated Statements of Income 1

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Year Ended December 31

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1992 1991 1990 un thousancis, enept per share amount 9 Operating Resenues:

Electric..

$ 462,999 $ 482,578 $ 463,249 Gas.

167,082 146,237 132,083 Other.

48,215 32,723 28,882 678,296 661,538 624,214 Operating Expenses:

1 f uel for produc tion.

73,368 91,182 84,757 Purchased power 74,794 70,245 81,249 Gas purchased for resale 128,259 111,206 102,942 Other operating expenses.

142,348 141,626 124,469 Maintenance...

41,415 41,265 40,177 Depreciation and amortization 69,392 64,088 56,690 Taxes other than income taxes,

39,696 38,569 35,887 569,272 558,181 526,171 Operating income.

109,024 103,357 98,043 Gain on sale of Telecom* USA stock.

66,234 Interest expense and other:

Interest expense. _.

45,426 40,599 37,519 Allowance for funds used during construction.

(3,177)

(2,086)

(3,273)

Preferred and preference dividend requirements of subsidiaries.

1,729 2,170 2,400 Miscellaneous, net.

(7,495)

(3,700) 613 36,483 36.983 37,259 income before income tases..

72,541 66,374 127,018 Federal and state income taxes..

23J30 _ 21,717 _ 46,688 l

Net income.

$ 48,.711

$ 44,657 $ 80,330 Ascrage number of common shares outstanding.

25,389 24,156 23,848 Earnings per average common share.

1.92 1.85 5 3 37 The at c omp1m ung Notes to Conrolutated financ ial $tstements are an integral part cn these statements Consolidated Statements of Retained Earnings l

Year Ended December 31 1992 1991 1990 on thousant19 Balance at beginning of year

$ 202,882 $ 207,339 $ 170,300 Add:

Net inc ome.

48,711 44,657 80,330 l

Acquisition of Whiting Petroleum Corporation.

5,233 Deduct:

Cash dividends declared on common stoc k, at per l

share rates of $2.10, $2.03 arid $1.82, respectiselv.

53,350 49,114 43,291 Prefened stock redemption premiums of subsidiary..

557 Balance at end of year

($18,209,000 restric ted as to payment of cash dividendst

$ 202,919 $ 202,882 $ 207,339 1he an omiuns sng Notes to ( onsolodatalIinant ul Statements are an in!epral part of these statemente 25

Consolidated Balance Sheets December 31 Assets 1992 1991 on enousands)

Property, plant and equipment, at original cost:

Utility --

Plant in service -

[let tric.

$ 1,641,536 $ 1,490,921 Gas.

137,227 120,598 Other.

73j)70 68,589 1,852,733 1,680,108 Less - Act umulated depreciation.

759 7_54 691,015 1

1,092,979 989,093 leased nuclear fuel, net of amortization..

48,505 58,256 Construc tion work in progress..

30,324 26,370 1,171,1108 1,073,719 Other, net of a( cumulated depret iation and amortization of $27,835,000 and $ 14,713,000, respec tively.

92,961 67,240 1,264,769 1,140,959 Current assets:

Cash and temporary cash ins estments 7,341 23,966 Acc ounts rec eivable -

Customer, less reserve 16,fl53 19,619 Other.

10,449 10,695 Unbilled revenues.

111,390 19,088 Income tax refunds receivable.

13,026 19,400 Produttion fuel, at average cost..

21,621 23,227 Materials and supplies, at average cost.

211,866 27,150 Adjustment clause balances.

1,217 Prepayments and other.

28,575 20,478 146,338 163,623 Investments:

Nuclear decommissioning trust funds..

21,327 14,884 Diversified equity investments.

15,788 15,858 Other..

11,107 7,491 45,222 3flIU Other c.ssets:

Regulatory assets....

1111,215 91,224 Deferred charges and other.

19,838 14,453 13fl,053 105,677

$___l.594,382 $ 1,44 fly 2 1

lhe ac compsnr ung Notes to l'onsolici,ttml finant udi $tatemenl% die aun integral pJr1 of these st.Itements.

26

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Det ember 31 Capitalisation and Liabilities 1992 1991 on mousan(N Capitalization (See Consolidated Statements of Capitalization):

Common sto( k.

$ 279,810 $ 260,414 Retained earnings..

202,919 202,882 Total (ommon equity.

482,729 463,296 Preferred and preferent e sto( k of subsidiaries.

18,320 29,194 Long-term debt.

457f32 440,119 958,481 932,609 Current liabilities:

Short-term borrowings..

92,000 40,900 Capital lease obligations..

13,211 12,950 Sinking funds and ( urrent maturities.

45,398 7,843 A( counts payable.

31,856 51,278 At ( rued interest.

10,415 7,555 A(( rued taxes..

38,784 38,047 Adjustment clause balances.

2,905 At ( umulated refueling outage pros ision.

7,549 13,052 Dividends det lared aw aiting disbursement.

8,603 113 Other..

31,337 17,648 299,153 192,291 Other long-term liabilities:

Capital lease obligations..

35,294 45,306 liability under National [nergy Policy Act of 1992.

12,054 0 ns ironmental liabilities 10,415 7,699 Other..

25,944 23,163 83,707 76,168 Deferred credits:

Acc umulated defened income taxes.

205,698 197,323 Au umulated deferred investment tax ( redits 47,343 50,101 253,041 247.424 Commitments and contingencies (Note 14)

$ 1,594,382 $ 1,448,492 1

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Co n solid ated Sta te m e n ts of Ca pitalliiz:atio n u ::

December 31 1992 1991 On thousands)

Common equity:

Common stock - no par value - authorized 48,000,000 shares; outstanding 25,556,96 3 and 24,298,807 shares, respectively.

$ 279,810 $ 260,414 Retained earnings.

202,919 202,882 482,729 463,296 Preferred and preference stock of subsidiaries:

lowa Electric Light and Power Company -

Cumulative preferred stoc k.

18,320 18,320 Redeemable cumulative preference stock..

1,000 lowa Southern Utilities Company -

Redeemable preferred stock 11,549 18,320 30,869 Less - Amount to be redeemed within one year.

1,675 18,320 29,194 Long-term debt:

IES Industries Inc. -

Series 1986 debentures. 8-1/8%, due 1993..

45,000 45,000 lowa Electric Light and Power Company -

First mortgage bonds -

Series I,6-1/4%, due 1996.

15,000 15,000 Series K,8-5/8%, due 1999.

20,000 20,000 Series L,7-7/8%, due 2000.

15,000 15,000 Series M,7-5/8%, due 2002.

30,000 30,000 Series P & Q,6.70%, due 2006..

9,200 9,200 Series R,8-1/4%, due 2007.

25,000 25,000 Series W,9-3/4%, due 1995.

50,000 50,000 Series X. 9.42%, due 1995.

50,000 50,000 Series Y,8-5/8%, due 2001.

60,000 60,000 Series Z,7.60%, due 1499.

50,000 324,200 274,200 Pollution control obligations -

5.75%, due serially 1995-2003..

10,200 10,200 Variable rate (4.10% at December 31,1992)

Due 2003.

2,400 2,400

[Jue 2010..

5 300 5J00_

Total lowa Electric Light and Power Company.

342 100 292,100 28

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lowa Southern Utilities Company -

first mortgage bonds -

4-3/8% series, retired in 1992.

4,900 6-lal% series, due 1997 8,000 8,000 10% series, retired in 1992.

7,800 4-1/8% series, due 2001 21,000 21,000 7-3/8"4, series, due 2003.

10,000 10,000 9-1/4% series, retired in 1992.

10,000 7-1/4% series due 2007 30,000 8-1/4% serles, due 2008.

15f)00 15,000 84,000 76,700 l'ollution control obligations -

4.90% to 5.75%, due serially 1992 to 2003.

4,144 4,368 5.95%, due 2007, secured by first mortgage bonds.

10,000 10,000 8.50%, retired in 1992.

2,400 8.75%, retired in 1992.

1,000 Variable rate ( L90% at December 31,1992)

Due 2000..

1,000 Due 2010..

2,400 lotal lowa Southern Utilities Company.

101,544 94,468 ILS Diversified Credit Fa(ility.

7,000 Other subsidiaries' debt maturing through 1996.

9,108 16,422 504,752 447,990 Unamortized debt premium and (discount), net.

(1,922)

(1 703) 502,830 446,287 Less - Amount due within one year.

45,398 6,168 MK412 440,119

$ 958,481

$ '332,609 1he.n i ompannny b,otes to Consolidated IanJncial Statements are an untegral part of these stJtements.

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ww am Year Ended December 31 1992 1991 1990 On thousand9 Cash flows from operating activities:

Net income..

$ 48,711 $ 44,657 $ 80,330 Adjustments to reconcile net income to net cash flows from operating activities -

Depreciation and amortization... ~

69,392 64,088 56,690 Principal payments under capital lease obligations..

11,725 15,471 10,835 Deferred taxes and investment tax credits..

(1,374)

(14,547) - (10,577)

Amortization of deferred charges..

(364) 6,870 3,518 Refueling outage provision..........

(5,503) 11,553 (3,035)

Allowance for equity funds used during construction.,

(1,831)

(820)

(1,180) i Gain on sale of Telecom* USA stock - net of current taxes...

(32,467)

Other...

(2,790)

(2,415) 1,541 Total.

117,966 i24,857

- 105,655 Other changes in assets and liabilities -

Accounts receivable, including unbilled revenues..

(4,000)

(5,920) 207 Sale of utility accounts receivable..

7,710 (5,000) 5,000 Accounts payable.

1,295 3,697 (3,056)

Accrued taxes...._.....

7,111 (24,922)

(17,970)

Provision for rate refunds.

(5,407)

(1,689)

(15,444)

Other........

5,145 152 (2,341)

Net cash flows from operating activities.

129,820 91,175

-72,051 Cash flows from financing activities:

Dividends on common stock.

(53,350)

(49,114)

(43,291)

Proceeds from issuance of common stock.

10,726 8,052 6,660 Proceeds from issuance of long-term debt.

114,400 95,505 1,922 Net change in short-term borrowings..

51,100 (9,100) 31,150 Sinking fund requirements and reductions in long-term debt and preferred and preference stock.

(70,158)

(33,460)

.(21,585)

Principal payments under capital lease obligations..

(12,337)

-(14,738)

(9,460).

Dividends declared awaiting disbursement..

8,490 113 Other...................

(248)

(92)

(300)

Net cash flows from financing activities..

48,623 t2,834)

(34,904)

Cash flows from investing activities:

Construction and acquisition expenditures -

Utility.

(171,013) (105,009)

(95,075)

Ot her......

(20,821)

(14,812)

(8,079)

Nuclear decommissioning trust funds.

(5,532)

(5,505)

' (2,001)

Proceeds from sale of Telecom* USA stock.

103,345 Other......._.....

2,298 (2,318)

(2,207).

Net cash flows from investing activities..

(195,068) (127,644)

(4,017)

Net increase (decrease) in cash and temporary cash investments..

(16,625)

(39,303) 33,130

'i Cash and temporary cash investments at beginning of year..

_ 23 966 63 2_6__9 30139_

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Cash and temporary cash investments at end of year.

7,341 $ 23,966 $ ' 63,269 Supplemental cash flow information:

Cash paid during the year for -

Interest..

$ 42,480 $ 41,284 $ 37,610

$ 23,539 $ 55,720 $ 40,868 income taxes.

l Noncash investing and financing activities -

l Capital lease obligations incurred..

1,973 $ 11,874 - $ :6,010 The accompanying Notes to Consohdatalfinancial $tatements are an integralpart of these statements.

30

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Notes t'o Consolidated Financial Statements (1) Summary of SignifiCant cred through the ratemaking process. At December Accounting Policies:

l i ' #2' "8"I"'"'Y "" *"'" '"'nprised f the tollowing items, and were reflected. the Consoh-in (af Basis o/ Consolidation _

dated Balance Sheets as follows:

Regulatory The Consolidated financial Statements include the Assets au ounts of IES lodustries Inc. DES) and its consoli-nn m a nns>

dated subsidiaries kollectively the Company). All Dsed hw M.

$7M signific ant subsidones for w hic h IES owns directly Employee pension and or indirectly mor< nan 50% of the voting stoc k are benefit costs.

10.8 in(luded as ( onsolidated subsidiaries. IES's principal National Energy Policy Act*

12.9 wholly-owned subsidiaries are towa Electric Light Environmental liabilities

• 12.6 and Power Company UE) and towa Southern Utilities Energy efficiency programs..

8.8 Company dS), (ollectisely referred to as "the Utili_

Cancelled plant costs.

I ties", and IES Diversified Inc. HES Disersifiedt in-urmnt amounts reflected in vestments for w hic h the Company has at least a Prepayments and other.

3.6 20% interest are generally acc ounted for under the Regulatory Assets.

$ 118.2 equity method of accounting. These investments are stated at acquisition cost, increased or dec reased for

. h wm N ior further dm uwon n/ these stems.

the Company's equity in undistributed net income or loss, whic h is included in " Interest expense and (d)locome Taxes -

other - Miscellaneous, net" in the Consolidated The Company follows the liability method of ac-Statements of Income.

(ounting for deferred income taxes which mandates All significant intercompany balanc es and transac-the establishment of deferred tax liabilities and tions have been eliminated from the Consolidated assets, as appropriate, for all temporary differenc es financial Statements, other than energy related between the tax hasis of assets and liabilities and transactions. Such transactions are made at prices the amounts reported in the financial statements.

w hic h approximate market value and the associated Deferred taxes are re(orded using currently enacted costs are recoverable from the Utilities' c ustomers tax rates.

through the ratemaking process.

Euept as noted below, income tax expense in-Certain prior period amounts have been reclassified c ludes provisions for deferred taxes to reflect the tax on a basis consistent with the 1992 presentation.

effects of temporary differences between the time (h Ref;ulation -

when certain costs are ret orded in the accounts and ILS is currently exempt from regulation under the when they are deducted for tax return purposes. As Public Utility Holding Company Act of 1935. The temporary differences reverse, the related acc umu-Utilities are subject to regulation by the towa Utili_

lated deferred income taxes are reversed to income.

Investment tax credits have been deferred and are ties Board UUB) and the lederal Energy Regulatory Commission (IlRC).

subsequently credited to income over the average lives of the related property.

(c) Regubtory Asset * ~

Consistent with ratemaking practices for the Utili-The Utilities are subject to the provisions of State-ties, deferred tax expense is not recorded for certain ment of financial Accounting Standards No. 71 temporary differences (primarily related to utility "Ac(ounting for the Effe(ts of Certain Types of Regu-property, plant and equipment). According' ly, the lation" (SF AS 71). The regulatory assets represent Utilities have recorded deferred tax liabilities and probable future revenue to the Utilities associated regulatory assets, as discussed in Note 1(c) above.

with certain incurred costs as these costs are ret ov-31

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le! 7emporan Cash Investments -

by IE for 1992-1990 were 8.(s, 8.1"h and 9.55, lemporarv (ash imestments are stated at (ost respectively. IS's gross rates were 10.4"6 for 1992 u hit h approximates roarket value and are consid-and 11.0% for 1991 and 1990.

cred t ash equivalents for the Consohdated State-

,h) Operating Revenues -

ments of Cash flow s. These imestments (onsist of

.T he C.ompany ac uues revenues for servic es ren-short-term liquid investments whi( h hase n.aturities dered but unbilled at month-end.in order to more of less than 90 days from the date of ac quisition.

properly mal ( h revenues with expenses.

sti Depre(iation at Utihty Property.

"I A0l"*'"' (.Id"**

• Plant and [quipment -

ne tariffs provide for subsequent adjust-lhe aserane rates of depreciation for electric and gas pmperties were as follons:

menh to}M det tric and natural gas rates for

( hanges in the (ost ot fuel and purchased energy and in the cost of natural gas purc hased for resale.

pm jyyj jyyn Channes in the under/over collection of these costs low a [let trit :

a rededed in "f uel for produdion" and " Gas pur-Elechic.

L6%

L3"n 3.5"o

(

ed for resale,, in the Consolidated Statements of Cas.

3.0" o 3.0",

3.0",

Inc ome. The cumulative effects are reflected in the low a Southem:

C.onsohdated Balanw Shmts as a current asset or I lei tric.

L4%

3.4 % L 3" o Gas.

2.9".

2.9"o 2.9"a

( urrent liability, pending automatic refle(tion in future billings to c ustomers.

The above rates inc lude the Duane Arnold EnerMY til Accumulated Re/ueling Outage Pros ision -

center <DAEC), w hic h is being deprec iated oser a The IUB allows IE to c ollec t, as part of its base m year life using a remaining life method.

res enues, funds to offset operation and maintenance Based on a 1992 site. specific study, IE's 70%

expenditures incurred during refueling outages at share of the estimated cost to decommission the the DAEC. As these resenues are collected, an DAEC and return the underhing property to its origi-equivalent amount is c harged to other operating and nal ' tate approximated 5242 million in 1992 dol ~

maintenanc e expenses with a corresponding credit lars. The lesel of annual recovery through rates of to a reserte. During a refueling outage, the reserve det ommissioning (osts is $5.5 million, w hich IE is resersed to offset the refueling outage deposits in external trust funds. Decommissioning npenditures.

costs, at the level (ollected through rates, are in-(luded in " Depreciation and amortization" expense (2) Mergers and Acquisitions:

in the Consondated Statements of Income. In add.

i-tion to the 521.3 million invested in the trust funds uwerger with Whitins' Petroleum Corporation -

as indicated in the Consolidated Balanc e Sheets, IE Effective February 18,1992, W,hiting etroleum p

has an internal decommissioning reserve of $21s Corporation (Whitmg) merged w. h IES. See Note 8 it million recorded as ac cumulated deprec.iation.

for information conceming the common shares.is-(g) AI!on anc e for f unds Uwd During Construction -

sued in connection with the merger, whic h was The allowanc e for funds used during construction a(counted for as a pooling of interests. The merger (Af CL w hich represents the cost during the is not material to the Consolidated financial State-constru( tion period of funds used for constructior.

ments and, accordingly, prior period Consolidated purposes, is capitalized by the Utihties as a comps Financial Statements have not been restated and are nent of the cost of utility plant. The amount of AFC presented as if the merger had occurred on applicable to debt funds and to other (equity) funds, lanuary 1,1992.

a non-c ash item, is c omputed in ac cordance with the prescobed f f RC formula. The gross rates used 32

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an At December 31.1991, Whiting had $20.5 mil-cost through rates will be addressed in future IE rate lion of assets. The following summarizes operating pro (eedings. See Note 14 for a disc ussion of the revenues, operating inc ome and net in(ome for the pun base power contracts between IE and UE asso-years 1991 and 1990.

(iated with this anguisition.

991 199" (3) Rate Matters:

on thousando Operating Resenue

$ 9,144 $ 8.211 (allowa Electric -

Operating income.

2,078 3,013 1992 Gas Rate case:

Net in< ome 1,768 3,008 in July 1992, IE applied to the IUB for an inuease in gas rates of $6.3 million annually, or 5.9% IE Whiting uses the fall cost method of ac counting requested an interim increase of $5.9 million annu-for its oil and gas properties. Ac cordingly, all costs ally, and the IllB authorized an interim increase of of ac quisition, exploration and development of

$5.4 million annually, effectise September 30, properties are capitalized. Amortization of prosed 1992. The interim increase, w hic h is subject to re-oil and gas properties is calculated using the units of fund, reflects recovery of the cost of postretirement production method. At December 31,1992, capital-benefits other than pensions calculated pursuant ized costs less related accumulated amortization do to Statement of financial Accounting Standards not eu eed the sum of (1) the present value of future No.106 (Sf AS 106) which became effective net revenue from estimated production of prosed oil January 1,1993. (See Note 7 for a further discus-and gas reserses (cal ( ulated using current prices);

sion of SF AS 106.)

plus (2) the c ost of properties not being amortized, if in Dec ember 1992, IE, the Offic e of Consumer any; plus D) the lower of cost or estimated fair value Advocate IOCA) and the interrenors in the rate case of unprosed properties inc luded in the costs being filed two stipulations with the IUB settling all issues amortized, if any; less (4) income tax efie( ts related in the proceeding except for rate design and class to differences in the book and tax basis of oil and cost of service issues. In January 1993, heatings gas properties.

were held on the open issues. If the stipulations are dn Ac quisition ofIowa Sercice Tenitory appr red, the final increase will approximate the ot Union llectric Company.

interim level. IE expec ts a final rate order from the IUB in the second quarter of 1993. At December Effectise December 31,1992, lE ac quired the 31,19 2, $2.0 million in gas revenues had been lowa distribution system and a portion of the Iowa to cted subject to refund.

transmission facilities of Union Electric Company (UE) for $65.0 million in cash ($58.8 million pur.

1991 Electric Rate Case:

chase price and $6.2 million for working capital In October 1991, IE applied to the IUB for an in-item 4. Electric sales in UE's lowa territory were ap-crease in interim and final retail electric rates of proximately 1.2 bilhon Kwh in 1992, with revenues

$18.9 million annually, or 6.0% The IUB approved of $52.2 million from approximately 17,200 cus-an interim rate increase of $15.6 million, annually, tomers. The acquisition was accounted for as a pur-w hic h became effective in December 1991, subject chase. The net book value of the acquired assets to refund, was approximately $34.4 million and the amount of the purchase price in euess of the book value

($ 30 6 million) was recorded as an acquisition ad-justment. Re(overy of the ac quisition adjustment 33

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In July 1W2. the IUB issued its

• final Decision interim increase.15 expects a final rate order from and Order" approving an annual ele< tric rate in-the IUB in the second quarter of 1993. At December c rease of $7.9 million. T he application of double 31,1991 $0.2 million in gas imnues had bwn les erage ratemaking theory to IE's capital strut ture t olle( ted subject to refund.

ac ( ounted for approximately $4 million of the dii-1991 Electric Rate Deucase:

ference between the interim rate level and the in Scen6er 1991, the OCA filed a petition with amount aHowed in the Order. Atter a hmited rehear-the IUB requesting a redu(tion in IS's ele (tric ing of this issue, the IUB issued its " Order on Re-retail rates of approximately $ 10.1 million, or 10%

hearing" in Dec ember 1992, whic h atiirmed the n Ldv 1992, the IUB approved a reduction of $4.5 origirul de( ision.

million on an annual basis, etie( tive retroac tis ely to IE has appealed the ILlB's Order to the lowa September 1991. The resulting refund, w hit h was Distric t Court. No decision is antic ipated from the remed a rewnues uere colleded, was substan-court before late 1993, at the earliest. tile is suc-t all (ompleted in 1992.

(essful in its appeal, the amount of the annual res-enue increase would approximate $11.5 million.

(4) Leases:

Il u dl refund dow n to the level of res enues that would result if it wms the appeal. At Dec ember 31.

IE has a c apital lease coming q vo una..M u

19n2, suc h refund would approximate $4.7 million, interest in nuclear fuel purc hased for the D AEL.

including interest. If IE loses the appeal, an addition.

I uture purc hases or tuel may also be added to the al refund. including interest, uould be required fuel leaw. T his leaw pmwes for annual one year

<S4.2 million at Du ember 31,1992). IE is resersing eensions untu Dewmbs 31. 2023, which K for the effect of both refunds and, acwrdingly, there intends to exercise through the DAEL,s operating n ill be no effe( t on elet tric revenues, net int orne life. Interest (osts under the lease are based on and earnings per as erage c ommon share w hen the wmnm ial paper (osts incuned by the lessor. IE is refunds are made if the appeal is lost. lilE wins the responsible for the payment of taxes, maintenance, appeal, any excess reserse will be reserwd to in.

operating (ost, ri'k or, loss and insuran<. e relatmg to

( ome. The initial refund is expected to be made in the leawd furb the first half of 1991 The lessor has an $80 million medit agreement with a bank supporting the nuclear tuel lease. The d>i lon a Souther" -

agreement continues on a year to year basis through 1992 Gas Rate Case:

Dec ember 31,2023 unless either party provides in July 1992,15 applied to the IUB for an inc rease at least a three year notice of termination; no in gas rates of $2.3 million annually, or 61h.. IS such notice of termination has been provided by requested an interim inc rease of $2.1 million and either party.

the IUB authorized an interim inc rease of $1.9 mil-Annua! nuc lear fuel lease expenses include the lion, ef fet tis e September 30,1992. The interim in-cost of fuel, based on the quantity of heat produced c rease. u hic h is subjet t to refund, refle( ts recosery for the generation of electric energy, plus the of costs associated with SFAS 106.

lessor's interest costs related to fuel in the reactor in Dec ember 1992,15 and the OCA filed two stip-and administrative expenses. These expenses (in-ulations with the IUB settling all issues in the pro-c iuded in fuel for production) for 1992-1990 were (eeding. li the stipulations are appros ed, the

$12.9 million, $17.5 million and $13.1 million, increase will be slightly less than the lesel of the respec tively.

34

7 a

ry, n s

b&" > ',

31 3

~

,w Q

m T he Company's operating lease rental expenses (6) Income Taxes:

were $7.7 million for 1992 and $7.4 million for

• *P""""

both 1991 and 1990.

taxes for the years ended December 31, were 1he Company future minimum lease payments s

fg;jg by year are as tollows:

1992 1991 1990

(... apital Operating on mmion a Year Lease teases un thousands)

Current tax expense.

$ 25.2 $ 36.3 $ 57.3 Defened tax expense.

1.4 (11.7) (7.7) 199I.

$ 14,635 $ 4,002 Aniortization of 1994..

9,384 3,841 inwstnwnt tax credit.

(2.8)

(2.9)

(2.9) 1995..

6,77/

3,650

$ 23.8 $ 21.7 $ 46.7 1996..

7,241 3,459 1997.

8,029 3,110 1998-2005 12,907 15J>4_3 The oserall effective income tax rates shown 58,973 M 705 below were computed by dividing total intome tax Less: Amount expense by inc ome before income taxes.

representing interest 10,468 Present value of net Year EndW minimum capital December 31, lease payments..

$ 48,503 1992 1991 1990 (5) Utility Accounts Receivable:

statutory rederal mcome tax rate..

34.0 % 34.0 % 34.0 %

Customer accounts rec eivable, in< luding unbilled Add (deduc0:

revenues, arise primarily from the sale of electricity Amortization of and natural gas. At December 31,1992, the Utilities investment tax credits.

(3.9)

(4.3) (2.3) were serving a diversified base of residential, Amortization through wmmercial and industrial customers consisting of tariffs of (ertain anumulated ddmed approximately 325,000 electric (ustomers and income taxes....

(0.1 )

(1.3) (0.4) 168,000 gas c ustomers.

Preferred and preference lhe Utilities bas e entered into agreements to dividend requirements sell, with limited rewurse, undivided fractional of subsidiaries..

0.8 1.1 0.7 interests in their respe(tive pools of utility accounts State income taxes, net recehable. Costs associated w ith this program of federal benefits..

5.8 6.6 6.0 are included in "Other operating expenses" in the Property basis and other Consolidated Statements of Income.

temporary diffwenws for which deferred Speo.fic terms of the respective sales are taxes are not provided as follows:

under ratemaking principb..._

0.4 2.3 1.9 U

6 Reversal through tariffs on mahon" of deferred taxes provided Maximum amount at rates in excess of the whic h can be sold.

$ 50

$ 15 current statutory federal Amount sold at inmme tax rate.

(2.4)

(3.9) (1.3)

AdP.tnwn! of prior Dec ember 31,1992.

$ 35 5 7.7 penod taxes.

(1.6)

(1.7) (0.5)

June Dec ember Other items, net.

(0.1)

(0.1)

(1.3)

Expiration date 1994 1993 Overall effective income tax rate.

32M% 322.% M%

i 35

'QQ

,2:

u U

f !h' al ( unlulaie(l (lett't rell in(()nle (d\\es ds st. t 1 he ( <>nii>(inents <>i the ;>ensi< >n pr< n isi<>n for the forth belosv and in the Consolulatml Balan(e Sheets years 1992-1990 are as follows:

atw f rom the following temporary dirterenc es:

At [In ember 11.

Un tbnuundst jyqj

qq) nn nulhonH bervi( c ( ost.

$ 4,529 $ 4,587 $ 4,2J8 Interest cost on

\\riung trom property related lein[n trary dif feren< e(.

$ 23()

5220 projated henefit

\\ rising itorn other obligation.

10,219 9,090 8,292 Awumed return temporary ditteren< es

_ j 24)

_Qt )

$_2()6~~ $yp on plans' awets.

(11,il72)(10,163) (10,000)

- - ~ ~.

~

Amortization of U) Retirement Plans:

"* ".*H."I'eq sa in.

m (2m a 29; Amortization of Ihe Company has one (ontributory and three prior service cost..

9%

785 513 non4 oninhutory retirement plans u hic h, (olla tise-Amortization of ly, (os er substantially all of its employees. Plan unre( ognized plans' benetits are generally based on years of settic e and assets as of c ompensation during the emplo)ees' latter years lanuary 1,1987

__(389)

(389)

(189)

Pension ( ost.

3,308 3,890 2,525 of employ ment. Payments made from the pension A@u ment to tunds to retired employees and beneficiaries during funding Iml.

2B (2 17) (1,591) 1992 totaled 510.4 nullion.

Iotal pension ( osts I he Cornpany's poli ( y is to funtl the peny.on ( ost paid to the Trustees..

$~. f' '02 $_ "l6,3 $- 91.1 3

~

~-

at an amount wlu. h is al least equal to the mini-t mum funding requirements mandated hv the I'"# U" b'N JN I mployee Retirement inc ome Sec urity Act (E RIS A) and w hic h does not eu ced the maximum tax deductible amount for the sear.

Pursuant to the prosisions of SF AS 71, c ertain adjustments to the Utihties' pension proxision are ne(ewary to teile( f the du ounting for pension (osts allowed in their most rec ent rate cases.

36

?

. ;#1 4

h i

s i

"I N

1 A ret on(iliation of the funded status of the plans in connet tion with the UE acquisition discussed to the amounts re(ognved in the Consolidated Bal-in Note 2(b), IE assumed the pension liability for ant e Sheets is presented below :

the former UE emplosees who became IE employ-ces. UE u.ll fund IE's pension plan for the accrued c end" pension liabihty up to the ac quisition date (approxi-mateiv so a minioma he 19"2 fair market value d plans' assets inc ludes the estimated rec eivable from Iair market value of UE We 199' projeded benefit obligation also in-plans assets.

$180,31!8 5177,248 A( tuanal present value (ludes the former U[ employees. The annual effect of benef:ts rendered on pension cost and funding related to the former to date -

UE employees is expe( ted to be immaterial to the A(( umulated benefits Company's total pension costs.

based on c ompensation The Company c urrentiv provides certain postre-to date, in<. luding vested tirement heahh (are benefits and through December benefits of 592,787,000 31,199 expensed such (osts as benefits were paid, and $93.323,000 respe( ti(ely 101,929 101,11 j u hi(h was (onsistent with ratemaking pra( tices.

Additional benetits based Su(h costs totahad 52.2 million,52.0 million and on estimated f uture

$1.4 million for 1992-1990, respectis ely.

salary les els 31,fl97 36.664 Life (tive January 1,1993, the Company adopted holected benefit

$W 106, u hit h requires the a((rual of the expe( t-obligation..

133,826 i 3 <, / 9 a.

Plans' assets in eu ess "d ("'t of postretirement benefits other than pen-of projected benefit sions during the emplo3ees' years of service. The obligation..

46,562 19,451 assumptions and calculations involved in determin-Remaining unret ognized ing the SFAS 106 a(( rual basically parallel pension net asset custing at at ( ounting. T he postretirement benefit obligation January 1,1987, beiny um' I,19911 transition obli proximately $50 million and will'gation) was ap-amortized over 20 years..

(. 331)

( 5., 2 0)

3, be amortized os er Linre( ogni/ed prior sersi(e(ost.

15,197 12,673 20 years. T he SFAS 106 postretirement benefit (osts Unte(ognized net gain.

(53,513)

(41,731) for 1993, inc luding amortization of the transition Prepaid pension cost obligation, will approxirnate $8.5 million.

re(ognized in the lhe IUB has adopted rules stating that postretire-( onsolidated ment benefits other than pensions will be. included Balanc e Sheets.

$ 2,91:3 $

2,6,.,_

in the ratemaking proc ess pursuant to the provision Assumed rate of icturn, oi SI A5106. The rule also specifies that a rnaximum all plans..

ILOO%

8 00" period of 20 ) ears is to be used to amortize the Range of weighted average - - - - - - - -

transition obligation and that all amounts ( olle(led discount rates of projected are to be funded into an external trust to make ben-behetit obhgation iiir

'O P" # * "5 M '"*"

"b' the plans..

fl.25% 5.7L7.5(n, Range of assumed rates Utilities anticipate recosery of suc h costs through of in( rease in future rates. Therefore, adoption of SF AS 106 will not c ompensation levels have a significant effect on the Company's results for the plans..

4M5.75% 4.;(L;.75".

of operations.

37

y NC '. c.

o

/

.o u

(8) Common SlOCk:

shares, respe(tively, outstandmg at both December T he following table presents information relating 31,1992 an(J 1991. These shares are redeemable at the opHon of IE upon 30 days notice at $51.00, to the issuance oi tommon stock.

550.25 and $51.00 per share, respe(tisely, plus Common Stot L accrued dividendt Number of Shares

\\'arious issues of the Company's preferred and Outstandmu Amount preferenc e stock are authorized for issuance, of m thousandu whic h none were issued or outstanding at Decem-

Balance, her 31.1992. These issues consisted of 5,000,000 Dec ember 31, '989 23,679,363 5 244,672 shares of IES Cumulative Preferred Stock (no par Stot k plan is uanc es*

295,719 _,L12J value),183,3 3 3 shares of IS Redeemable Preferred Balanc e, Sto( k (5 30 par valuei and 7G0,000 shares of IE Dec ember 31,1990..

23.975.082 251,793 Cumulatise Preference Stock 15100 par value). In Stot k plan issuances' 325,858 8.705 19E 381978 a of IS RedmM Pn M Adjustments (2,1 13) 184)

S.tock and 10,000 shares of IE Cumulative Preter-gg;,y g, ence Stoc k were redermed.

De( ember 31,1991.

24,298,807 260,414 Stock plan issuanc es*

404,124 11,473 Shares issued in

(] ()) D e b(;

(onjunc tion with Whiting merger.

8;1832

~,9 2 1 p1 Loop Term Debt -

BaI""C "-

IE's Indenture and 15's Deed of Trust securing the Dec ember 31,1992.

23,556,963 $ 279.810 Utilities, respectis e rirst Mortgage Bonds constitute Shares resen ed for issuan(e nec t fie t rnortgage liens upon substantially all tan-pursuant to the Compan3 's gible public utility property.

stoc k plans at T he Series P and Q Bonds secure the obligation De( ember 31,1992*

1,058,988 of IE with respect to tuo series of pollution control retenue bonds issued by tuo lowa rnunit ipalities.

D;udend Kerm e tment and u d Purduse Plan f mp/m ee Total sinking fund requirements, w hich maIr be stu u k i urt hase eu n imt,1,n ce sar una l'uns Long-1erm im ena r Plan ut loN' and a h> tine sth k r > phon Plant met by pledging additional property under the terms

• l'r, man /s re!Aes to i ash gn menN for nat fronal shares of IE's Indenture and IS's Deed of Trust, and debt b > h,a a % suibero inc share?n,Is fers pur,.uant to the j 3 99 p 997 jg g

ful\\ 1.1U41 men:er ori the following page.

in lariuary 1993,513.0 million of the 1986 Series Lifective with the Whiting merger, IES issued stock HW, & nturn wwe re&emW and a Mea-options to replace existing stock options held by sam e was c mpkted for the mnainder of the Whiting sto( kholders. At December 31,1992, there entun The Company m.tends to refinance the were options outstanding to purc hase 15,204 maiority of the remaining debt maturium uith shares of IES common stock at option prices rang-longtenn debt.

ing from $6.30 to $18.40 per share, expiring in Iebruary 2000.

(9) Preferred and Preference Stock:

II has 466,406 shares of Cumulative Preferred Stoc k, $50 par s alue, authorized for issuanc e at De-(ember 31,1992, of which the 6.10%, 4.80"w and 4.30'N. Series had 100,000,146,406 and 120,000 38

D,- ' '

s

? L-

~

-~

~

Qf A

.Q 3~

9

$j!N

• MMy

,A io

c..

?

,fWA W

_ [

j[

pg;;

$l

+

44 %

_B gr 1 L'4

.1 44 b

t)eht Maturities on thousands)

Debt issue 1993 1994 1995 1996 1997 lowa Electric -

Sinking Fund Requirements.

$ 1,050 $ 1,050

$ 1,050 900 $

900 Pollution Control,5.75%.

300 300 300 Series W 50,000 Series X 50,000 Series J.

15,000 Series P & Q.

840 840 lowa Southern -

Sinking fund Requirements.

430 430 430 430 430 Pollution Control.

224 224 140 140 140 6-1/8% Series.

8,000 lES Diversified -

Variable Rate Credit f acility.

7,000*

Other Subsidiaries' Debt.

198 210 8,614 86 IES -

1986 Series 8-1/8% Debentures 45])00 Total.

$ 53,902 $ 1,914

$ 110,534 5 17,696 5 10,610

• Refer to MJnagement 5 tkc u% ion and AnJlph (Of a diSCU% ion Ollh54 L hOf ac5lilV.

f (b) Short-Term Debt -

Current assets and current liabilities -

At December 31,1992, the Company had The carrying amount approximates fair value bank lines of credit aggregating $134.8 million because of the short maturity of such financial (lES - $ 1.5 million, IE - $104.8 million,15 - $ 20.0 instruments.

million, IES Diversified - $7.5 million and Whiting -

Nuclear decommissioning trust /unds -

$1.0 million). IE was using $7.7 million of its knes T.hese ast funds are stated at fa.ir value.in the of credit to support pollution control obligations Consolidatt<f Balance Sheets.

and $86.7 m.llion to sup;x>rt commercial paper, i

and 15 was using $5.3 million of its lines of credit Redeemable prett< red stock o/ subsidiary -

to support commercial paper. Commitment fees are The estimated nir value of this stock of $10.9 paid to maintain these lines and there are no condi-million was basec upon quoted market prices.

tions whic h restrict the unused lines of credit.

IS also has a letter of credit in the amount of Long-term debt -

$3.4 million supporting its variable rate pollution The carrying amoui:t of long-term debt was control obligations.

$503 million compared to estimated fair value of

$519 million. The estimated fair value of long-(11) Estimated Fair Value term debt is based upon quoted market prices.

of FinanCialInstrumentS:

Since the Utilities are subject to regulation, any The estimated fair values of financial instruments gains or losses related to the difference between at December 31,1992 and the basis upon which the carrying amount and the fair value of financial they were estimated are as follows:

instruments may not be realized by the Company's shareholders.

39

% 5

',hj i

i 1

~l (12) Gain on Sale of Total c apacity charges under the alxne contracts

""" 5 241 "'i"i"" 'i"

""2 ^"d "i" i"'"'"

TeleCom* USA Stock:

527.8 million, $21.9 million. $14.2 nu?"",'$ 11.6 llion During 1990, ILS tendered its 2,460,000 shares million and $8.8 million for the years 1993-1997, of Teleosm* US A common stoc k and recorded a respectis ely, pre-tax gain of $66.2 million.

H } Coal Contract Commitments -

(13) Valuation of Certain Assets:

T he Udhnes hamntwed into ajal supply con-tracts whic h expire between 1993 and 2001 for

" Miscellaneous, net" in the Consolidated State-their fowil-fueled generating stations. At December ments of Income included a $6.8 million pre-tax 31,1992, the (ontracts c over approximatelv $124

( harge in 1990 for valuation reserses related to million of coal os er the life of the contracts, w hich certain investments.

includes $33 million expected to be incurred in 1993. The Utilities expect to supplement these coal (14) Commitments and contraus uith spot market purchases to fulfill their Contingencies:

future fossil fuel needs.

ta) Construc tion l'rogram -

@ InformaHon Technolo;w Services -

T he Company's construction and acquisition pro-In Nosember 1992, the Company entered into an gram anticipates expenditures of $15 3 million for aprennent with Electronic Data Systems Corpora-1993 w hic h indudes approximately $100 million at non (EDS) for information tec hnology services. The IE, $31 million at IS and $12.0 million at Whiting.

tenu of the uintrad is tudw yean and the contrad hubstantial ( ommitments base been made in (on_

k We(t to &dning taminadon kn h Compa-nm tion u ith suc h expenditures.

"Y""CP"k*""'" d" NYOOM #d Y

lower oserall cost than it would experience by inter-th> l'un hae l'on er Contrat Is -

nally prosiding these sersices. The Company's IE has purc hase power contracts uith (1) the City minimum commitment under the agreement for of Muscatine, lowa u hich expires on April 30, 1993 is estimated to be approximately $8.2 million, 199 L for annual capac ity purchases of 70 Mw, and of whic h $ 3.4 million represents costs for non-i2) with Terra Comfort Company (Terra Comfort), a rec uning projects. Future costs under the agreement u holly.ow ned subsidiary of IE S Diversified. for an-are variable and are dependent upon the Company's nual (apa its portbases of 114 Mw w hit h expires level of usage of tec hnological servic es from EDS, on Dewmber 31,1994.

as well as inflation.

In ( onne(tion with the at quisition of the UE M Nuc lear Insurance Programs -

properties dist ussed in Note 2(b), IE will pun base The price Anderson Amendments Att of 1988 power from UE under a ine-year firm capacity (on.

tra(t with a 1993 requirement of 120 Mw of deliv.

(1988 Act) provides IE with the benefit of $7.8 bil-ered ( apac ity de(lining to 60 Mw in 1997. IE will lion of pub.lic liability (overage consisting of also purchase an additional maximum interruptible

$200 million of insurance and $7.6 billion of poten-Hal retroactive assessments from the ow ners of capacity of 54 Mw of 25 l12 power. This 34 Mw pun base will extend through 1998 and will(ontin.

nuclear power plants. Under the 1988 Act, IE could ue thereafter unless either party gnes a three-year be assessed a maximum of $66 million per nucbar notic e of canc ellation.

incident. with a maximum of $10 million per year 1he (osts of capa< ity pur(hases for these (ontracts foi w hic h IE's 70% ownership portion would be are refleded in "purt hased power" and Terra Com.

$46 million and $7 million respectively) if losses fort's resenue related to its contra (t is inc luded in

"()ther reserues" in the Consolidated Statements of Inc ome.

40

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+

' n,, g? ^ ',, }#l '

3?&?

g,

,n v gy W ~

i e

y ~,;

u g& g '-

o 4

3 ss v

r i

+-

ca q, S j..n

- 1 fA t

y 7,

$W-

$ M.kua;&AW relating to the ac cidents exceeded $200 million.

been recotded by the Utilities to reflect thc future These limits are subjet t to adjustments for inflation recovery which is being provided through rates.

in future years.

Consistent with past rate treatment, management Pursuant to provisions in various nuclear insur-believes that the clean-up costs incurred by the ance policies, IE (ould be assessed retroactive pre-Utilities for these FMGP sites will not have a materi-miums in connection with a futcre accident at a al adverse effect on the financial position or results nuclear facility owned by a utility participating in of operations of the Utilitie, the particular insurance plan. With respect to excess (g) C/ van Air Act -

property damage and replacement power cover-ages. IE could be assessed a maximum of $4.0 mil-The Clean Air Amendments Act of 1990 (Act) re-lion and $1.0 million, respectively, if the insurer's quires emissions of sulfur dioxide and nitrous oxide losses relating to an accident exc eeded its resers es.

to be reduced below their 1985 national levels. The While assessments may also be made for losses in pr visions i the Act will be implemented in two certain prior years, IE is not aware of any losses in phases; Phase I by 1995 and Phase 11 by 2000.

such years w hich it believes are likely to result in The Utilities expect to meet the requirements of an assessment.

the Act by fuel switching a,d through capital expen-ditures primarily related to fuel burning equipment I/) Environmentalliabilities -

and boiler modifications. The Utilities had capital At December 31,1992, the C apany had record-expenditures of $1.0 million during 1992 and ed $13.2 million of environmental liabilities which, estimate additional capital expenditures at $26.7 pursuant to generally accepted accountirg princi-million, inc luding $9.6 million in 1993.

ples, represents the minimum amount of the th) National Energy Policy Act -

estimated range of such costs which the Company expects to incur.

The National Energy Policy Act of 1992 requires The Utilities have been nam (d as Potentially wners of nuclear power plants to pay a special Responsible Parties (PRP's) for certain former manu-assessment into a " Uranium Enrichment Decontami-factured gas plant (FMGP) sites by either the towa nation and Decommissioning Fund." The assess-Department of Natural Resources (!DNR) or the En_

ment is based upon prior nuclear fuel purchases and vironmental Protection Agency (EPAL lhe Company for the DAEC approximates $1.23 million annually is working with the IDNR and EPA to investigate the through 2007, of which IE's 70% share is $0.9 mil-Utilities' 27 sites and to determine the appropriate li n. IE expects to recoser the costs associated with remediation activities which may be needed to miti.

this assessment through its electric fuel adjustment gate health and environmental concerns. Suc h cl uw. lE's 70% share of the total assessment, investigations are expected to be completed by payable over the 15 year period, has been recorded 1999 and site-specific remediations are anticipated as a liability in the Consolidated Balance Sheets, to be completed within 3 years after the completion with a corresponding regulatory asset.

of the investigations of each site. The Utilities may (i) rfRC Order 636 -

be required to monitor these sites for a number of The FERC issued Order No. 636 in April 1992.

years upon completion of remediation.

The Order (1) requires the Utilities' pipeline suppli-The Utilities are pursuing insurance and third ers to unbundle their services so that pipeline sales' party cost sharing for FMGP clean-up costs. The transportation and storage services are operated and arnount of shared costs, if any, (an not be reason-ably determined and, accordingly, has riot been used to reduce the recorded liability. These estimates are subject to continuing review. Corre-sponding regulatory assets of 512.6 million have l

41

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i M

)

y

)

g~

M M4 b.Nr. Lw e k en d.-

t i

billed as separate and distin( t services, (2) requires Onumwa Neal the pipeline suppliers to offer *no notice" trans-DAEC Unit 1 Unit 3 portation service under which firm transporters

($ in neons)

(suc h as the Utilities) can receive delivery of ga' Utility plant in service.

5472.6 $179.0 $ 42.2 up to their (ontractual capacity lesel on any day Accumulated without prior sc heduling,0) allows pipehnes to depreciation..

$200.2 $ (>4.6 $ 20.f>

abandon long-term (one year or more) transporta-Construction work tion sers ic e to a customer whenever the customer in progress..

$ 9.0 $

0.5 $ __.

fails to match the highest rate and longest term (up Plant capacity - Mw.

530 708 515 to 20 y ears) offered to the pipeline by other Percent ownership.

70%

48% 28%

( ustomers for the particular capacity, and (4) pro-In-service date 1974 1981 1975 s ides for a me( hanism under w hich pipelines can re( over prudently incurred transition costs (16) S,egnlents of Business:

associated with the restructuring process.

In the fourth quarter of 1992, the Utilities' The principal business segments of IES are the pipeline suppliers submitted proposals to the Ff RC generation, transmission, distribution and sale of to comply with the Order. The Utilities base inter-electric energy by the Utilities and the purchase, vened and are participating in the pipeline proceed.

distribution and sale of natural gas by the Utilities ings, including settlement negotiations. The and Industrial Energy Applications, Inc. Certain outcome of these proceedings which is unknown financial information relatiny to IEs's significant at this time is expected to be effective for the 1993_

segments of business is presented below:

1994 heating season. The Order is not expected to Year Ended December 31 affect the ability of the Utilities to provide reliable 1992 1991 1990 service and the Utilities believe any transition costs onrbousanuu that the FERC would allow the Utilities' pipeline Operating results:

suppliers to collect would be recoverable from the Res enues -

Utilities' customers based upon regulatory treatment Electric.. 5 462,999 $ 482,578 5 463,249 of similar (osts.

Gas.

167,082 146,237 132,083 Operating income -

Electric.

90,891 100,402 92,733 (15) Jo tly-Owned Gas...

9,164 65*

3,257 in Electric Utility Plant:

Other information:

Depreciation and amortization -

Under Jomt ownersh.ip agreements with other Electric.

59,707 57,612 51,312 lowa utilities, the Utilities have undivided owner-Gas.

4,024 3,480 3,112 ship interests in jo: n.y-owned electric generating Construction and acquisition stations and related transmission facilities. Each expenditures -

Electric.

154,902 77,646 83,084 of the respective owners is responsible for the G s.

17,323 21,100 6,390 financ ing of its portion of the construction cc~ts.

Assets -

Kilowatt +our generation and operating expenses identifiable assets -

are divided on the same basis as ownership with Electric.. 1,226,614 1,115,310 1,080,367 eac h owner refle(ting its respective costs in its Gas.

147,.3 5 113.670 86.002 9

statements of income. Information relative to the 1,374,009 1,228,980 1,166,369 Utilities' ownership interest in these facilities at Other corporate ssets.

220,373 219,512 234,433 December 31,1992 is as follows:

Total consolidated assets.11,594,382 $1,448,492 $1,400 802 2

• Inc ludes s $ 3.9 rnilloon pre-lan write.off of pres iousiv dererresi 1 A1Gr clean-up c osts pursuant to disallanant e of rewvery in an tuli order 42

34 i

.ympmoC urt telI noinU murt yru,tnret e civrw awoIiu nwnrisiuq ca eht,o( noill,m 16$ seltoh cnI

• 416,7 216,8 780,9 397,8 001,9 499,8

-snart g'000()semulov detrop

. )s nidulcni( selas htD sag 964,219,1 693,550,2 588,481,2 108,853,2 617,155,2 277,494,2

..)s 000( )metsys-ffo gnidulcxe('selas hwK cirtcelE 41 2 38 4 20 5 11 5 18 4 15 3

. sexat emocni erofeb demac tseretni semiT 126,9 979,01 598,91 653,71 168,71 360,62

. )s 000( serutidnep e noitcurtsnoC 949,311 359,321 952,431 958,341 607,451 155,361

_)s 000( noitaicerpeD detalumuc(A 228,163$ 002,963 $

854,873 $

713 993$

407,014$

806,724 $ )s 000( e tivres a > elp ytilitU rehtuoS awol

-snart g'000( )semulos detrop 192,72 267,03 369,03 396,72 920,82 140,112

.)s nidulcni( selas htD sag 500,814,4 923,407,4 985,684,4 533,125,4 394,296,4 998,736,4

..)s 000( )metsys-ffo gnidul ue( selas hwK cirtceiL 12 3 56 2 08 2 63 2 91 2 34 2

. sexat emo cni erofeb denrae tseretni semiT 946,74 449,16 420,06 917,77 841,78

• 059,441 ts 0001 serutidnepxe noit (urtsnoC 536,873 871,014 109,444 253,594 903,635 302,695

. )s 000( noitaicerpeD detalumuccA 337,300,1$ 731,740,1$ 290,790,1 $ 965,881,15 404,962,1 $ 521,524,1$.

..)s 000( ecivres

'ni tnalp ythitU i

-cirtcelE awol

atad laicnanif ytilitU detceleS 06 2 31 3 01 3 54 4 96 2 36 2

..sexat emocni erofeb demae tseretni semiT 194,26 018,18 183,78 451,301 128,911

'438,191 Ls 000f serutidnepxe noitcurtsnoC

729, 084,99 486,721 382,541 441,551

.)s 000t stessa ythitu noN 898,26,1$ 212,972,1$ 516,243,1$ 937,141,1 $

771 208,004 294,844,1 $ 2lf 3,495,1$.

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.emocni ten 818,,24 555,25 295,35 031,08 753,44 79 101 340 420,901

.emo (ni gnitarepO 939,065 $ 023,606 $ 838,601 412,89 835,301 559 995 5 426 $

166 $ 692,1176 $

.eunever gnitarepO

)s 000( atad tnemetats emocni 7891 8891 9891 0991 1991 2991 o h-.

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w Five year

( ompound rate of growth 1992 1991 1990 1989 1988 1987 Operating revenue (000's):

Residential & Rural.

$ 177,625 5 189,194 $ 185,302 5 175,899 $ 180,520 $ 171,683 Commercial..

124,829 124,320 119,908 112,662 110,587 107,792 Industrial.

103,886 100,733 97,788 94,222 97,723 96,803 Street lighting and public authorities.

5,410 6,332 6,478 6,282 6,378 6,522 Total from ultimate c onsumers..

411,750 420,579 409,476 389,065 395,208 382,800 Sales for resale.

111,602 19,745 19,582 18,214 17,104 16,211 Off-system.

28,304 36,596 31,144 28,281 30,332 29,544 Other.

4,34jl 5.6;8 3,047 2,971 3,015 (10.557)

_ 5_482.578 $ 461.249 5_.418.531__ _ _ $ 445,659 $-~TT998 4

$ 462,999 Energy sales (000's Kwh):

Residential & Rural.

2,1311,768 2,367,979 2,254,913 2,222,152 2,269,001 2,113,462 0.4%

Commen ial..

1,771,357 1,764,495 1,686,132 1,626,046 1,579.086 1,469,570 3.8 Industrial.

2,612,803 2,467,533 2,312,109 2,236,388 2,359,596 2,225,026 3.3 Street lighting and public authorities.

60,991 87,022 88.305 86,635 88,870 87,385 (6.9)

Total to ultimate consumers..

6,603,919 6,687,029 6,341,459 6,171,221 6,296,553 5,895,443 2.3 Sales for resale.

528,732 557,180 538,677 500,253 463,172 435,031 4.0 Sales of ele ( tric ity fo c ustomers.

7,132,671 7,244,209 6,880,136 6,671,474 6,759,725 6,330,474 2.4 Off-system.

2,275,616 2,738,159 2,282,204 1,959,828 2,075,037 2,002,614 2.6 9,408,21C 9.982.368 4.162.340 8.611,302 8,834,762 8,333,088 2.5 Sources of electric energy (000's Kwh)

Generation-f ossil, primarily coal.

4,317,154 4,758,720 4,354,697 4,063,974 4,403,738 4,229,046 Nuc lear

• 2,402,501 2,902,768 2,108,100 2,228,068 2,214,243 1,766,319 ilydro..

7,579 6.547 4,195 1,902 3,300 5,153 6,727,234 7,668.035 6,466,992 6,293,944 6,621,281 6,000,518 Pur(hases.

3,322,182 2,994.216 3,282,886 2,891,808 2,810,225 2,891,375 10,049,416 10,662,251 9,749.878 9,185,752 9,431,506 8.891,893 Net capability at time of peak load (Kw)-

lowa Electric-Generating capability.

1,071,600 1,072,150 1,081,250 1,053,050 1,052,550 1,019,650 Purc hase capability.

184,000 204,000 179.000 170.000 90,000 90,000 1,255,600 1.276,150 1,260,250 1,223.050 1,142,550 1,109,650 2,5 %

Net peak load (Kw)"

934,363 1,045,819 1,004,924 991,150 1,031,185 978,322 (0.9 %)

lowa Southern -

Generating capability.

647,000 647,000 603,450 579,950 579,950 579,950 Pur( hase ( apability.

23,000 23,000 Capac ity ( redits"'

18,960 20,650 670,000 670,000 622,410 600.600 579,950 579,950 2.9 %

Net peak load (Kw)"

491,078 561,787 542,902 495,093 512,679 472,926 0.8 %

Number of customers at year-end 325,172 305,663 304,265 302,532 300,701 299,967 1.6%

Revenue per Kwh (excluding off-system)-

If.

7.14 e 7.11 c 7.19c 6.85c 6.69c 6.87c 15.

4.15 4.19 4.54 4.71 4.89 4.44

- Rovov%vnt% u 2 v,, unduled intermt in the Ir.mv smotiinero center a ha h a oveu mi br it.

' ha minutes unteg.a:ecl.

• *

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c,i h Gas Operating Comparison I iW y('df

( ompounti I dit' (il p,rt M ifi 1992 1991 1990 1989 1988 1987 Operating resenue (000's):

Residential.

S 7f1,6115 5 74,114 5 66,51 1 5 68,751 $ 71,484 5 61,624 Commer c ial.

39,780 37.613 31,'178 38,035 18,418 32,680 Industnal..

18J49 17 181 2 L;00 21172 24f 91 R11y 1

137,114 129,110 121,191 131.978 135,095 118,511

( )t her 2,341 1.908 1 S84 1.421 1,514 2,408 139,455 1 11.018 125,275 1 13,881 136,609 120,919 lhokerage 27h2Z 19,214 6E08 1 049 826 S 167,082 5 146.2 U 5 112,08i 5 114.910 5 137,415 5 120,919

--=_==

= - =.. = = = = =

E nergy sales (000's dekatherms):

Resn jential.

15,098 15,371 1 4, 11 ;

17278 15,571 11,551 2.2"o Commen ial.

11,479 9,384 8,798 9E34 9,521 8,328 0.4 Industrial.

6,175 5.400 6640 7,404 7 780 7,9 11 (4.9) 29,752 10,940 29,753 13.141 12,876 29,810 -

Industiia! - transp< rted

\\ ()l ulllUs..

7 2_f_I I (i I H4 h,7 $ $

I t,' H I4 b,498 5.()9 5 /.4 f

1< ital solumes delivered by the l/tilities.

37,035 U,129 36,486 40,0;0 39,374 34,905 1.2 8t oker age 14,fl30 7f66 4,465 624 441

_??b5 f ??] = S);45' =)U@lA AUW =N'UU5 U 2

=

Operating Statistics:

Lost per dekathenn of gm puu hased for resale-1[

53.35 53.12 5121

$2.88

$3.15

$ 3.09 15..

3.41 1.31 1.41 3.20 3.5 '

3.47 Sendout capabihty at time of peak demand (dekatherms in U00%

1[.

2 0 0,3114 198,696 199,635 204.922 218.224 251.211 (4.4)'%

15..

72,1186 67,867 67S08 66,218 82,007 83,419 (2.7)

Peak daily sendout (dekatheims in 000'u---

IL.

1118,437 197,722 203,845 227,835 217,869 195,682 (OEPL

15..

66,552 68,622 68,244 83,765 68,327 56,131 3.5 Number of (ustomers at year-end 167,1113 164,078 161,794 160,792 159,931 160,143 0.9 %

Resenue per dekatherm sold (culuding transported solumes)-

11

$4.64

$ 4.21

$4.18 53.91

$ 4.05

$ 3.91 IS.

4.48 4.08 4.05 4.25 4.34 4.18 1

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gjard of Directors

/ ficers C.R.S. Anderson tE1 Chairman of the Board or the Comlun>

IES Inclustries Inc.

l. Wayne Bevis (Al President, ChiviIwc uth e O'fu er and C.R.S. Anderson (66-36) Cluirman vithe Boant Dsrec tur. Rolsc reen Cornpuny nvendow and Unor Alanutacturingt, l'ella, hm a Lee Liu (5%35) Preudent and Chief (wcutive Ditner Robert F. Ureu er Retinvl Chairman vithe thunt and Chici Blake O. Fisher Ir. (48-21 Eurutive Vice President and r

Evc utn-e Ottu er. towa Southern Utriares CompanV.

Chiet Iinant ial Ottic er Centervdle, lon a Rene. H. Male.s t60-2) President and Group iwc utive.

Dr. George Daly IMO Dean, c onege vinusmess Generarn>n and E ngineering (;roup Admimstration, The Unnersity of hma. Iona Oty. kma Larry D. Root (Sh-22) Presulent and Group twcutive, Blake O. Fisher, \\r. twrutive vic e cresident and chief rnergy pelivery and Nuc lear Group Financial Ottu er of the Compans Steven Carr 08-1) General Counsel and sn retary G. Sharp Lannom, tv ca prendent and Chret Im utne Peter W. Dietr. h (53-5) vice crerident-ec Otiwer, Delong $portswear. Inc.,

tsportmear Alanuta< tunngt Grinnell lona Onporate Des clopment Dr. Salomon Levy to nesident, s. Ievv Inc orporated Robert ). Nucharski (60-181 vue President-An ounting.

t[cgineering and Manm:ement Consultmgl Irvasurer and Assistant Secretary Canrphell, Caldomra Dr. Robert 1. Latham (50-9) vice hesident.

Lee Liu tNh[] neudent and Chiet i us utn e Otth er of Corin> rate Aitairs and Planning the Compm>

Thomas R, Scl don (545) vwe nesidentdluman Remurce%

Rene H. Males nesulent and crouo rur utise. Generation Stephen W. Southwick (46-1h vic e ensident-and Ingincenng Group 01 the ('om;unY General Sers u es Robert D. Ray iM rnsident and Chier i m uin e Odh er, Blue i ros and Blue bhwld vi km a.

tinswance). Des Momer Iowa lowa Electric l.lght anct Power Company Da\\id Q. Rved iAl A romey and Cownelor at Ian, kansas Lee Liu (5s3 5) Chainnan of the Board and iitn Musouri Chivi E uruta e Oftu er Larry D. Rnot nesulent and Group 1 m utn v. Ineoa Larry D. Root (56-22) rusident and Chicioperating Offic er Delteerp and Nut lear Group of the ( ompany Ulake O. Iisher, lr. (48-2) Im utwe vu e ensident and Henry Ro)er i[hD Chairman of the H urd and Pnsiden!.

Chwi Iinantial Ottu rr I,rsur Hants C'edar Raput,. N A. Calar Ravnfr Iona Steren Carr 08-ilbecretary Rithard E. Scherling* iNntJ Retued Men hant' lohn F. Frani, lr. (3 h l> vic e nesident-Nut lear

( nlar RJpIds. In M a Ruhert W. St hIut1 (A t neudent, Sc hiuu i nierpnses Robert 1. Kucharski t60;'IB) vn e neudent-At c ounting.

I "* " '" A A * ~ '"' W" * *'

d )n erutoniIam ong and RetadingL Columbus func tion Ioa a Ric hard W. Mt Gaughy (62-12) vice nesulent-ruxtuction Anthony R. Weiler tNi nesident and Chiet I m utise Harold W. Rchrauer (55-20) vn e ensident-[njynevnny

( Prin er l h trenden A lastman l' omnun. oIunuture Phih.p D. Ward Obi 4) \\,u.e ensident 1icid Operations

\\tanutat lurer & Untnhutan. Hurknytan. lon a Iowa Southern Utilities Company 1

l

\\ ec LIU (5%35)(hairman vt the Board and l

Chret [ tet utne Otin er

/ ' Nn hard I bc hedmn retaed Rene H Males (60-21 Preudent and ChiviOperating Otin er

/ lebruars 4. l'N i j I c;ums in parenthesn represent Ulake O. Eisher, lr.14n.21(m otive vu e presideor and

( luet Isnanc ul Onicer y

f ue and years of.en u e

,/ l[5 Intiastries Inc.

Dean Ek%trom (4 7-h Vic e President and General Manager i[3 Mender het unve ( omnutter

/ U\\! Mendmr Audit Comimt!"e Robert l. Ku(harsk..i (60- 13) vu e ensident-Au ounting.

7nwumr and Astant M n lay

[ (Nf Member Nonunalmg (Tomnuttee

/ (O Meniber ( ompensation L ommittee Ben R. Rosencrants (6142) vice neudent Darnhutum 46

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nnual Meeting ypliCate Accounts and Mailings es The annual meeting of the shareholders uill Shareholders sometimes receive more than one l

be held at 2:00 p.m., Central Daylight Time on Annual Re;1 ort because shares owned by one share-l Tuesday, May 18,1993 at the if: Tower,6th th>or, holder may be registered with slight variations in 200 First Street SL in Cedar Rapids, Iowa. A proxy names. T he Company is requimd to mail an Annual statement with respect to this meeting will be mailed Report to each name on the shareholder list unless on or about April 8,1993, All common shareholders the shareholder requests that duplicates be eliminat-are c ordially invited to attend. Howeser, those who ed. To eliminate duplicate mailings, please send a are unable to attend in person are urged to promptly written nyuest to Shareholder Services.

sign and retum their proxy.

h~ DCk Exchange Listing Midend Yayment Dates ed Scheduled Disidend Payment and Record Dates IES Industries Inc. < omrnon stock is listed on the for 1993 are:

New York Stot k Eu hange under the wmbol IES-Record Dates Payment Date Newspaper listmgs orten use the symbol IES IND.

Mart h 12,1993 April 1,1993

{

lune 11,1993 July 1,1993 September 10,1993 October 1,1993

- neral Inqu..lfles De<cmbe,io.i993 ianuary i,1994 Shareholder inquiries, int luding the replacement Dividends paid on common stock in 1992 were of dividend ( hec ks, address ( hanges, transfer or fully taxable for federal income tax purposes.

reissuante of st(x k certitit ates, and requests from

~

the general pubhc for any financial publications

/

/

may he directed to:

J 0-K Available on Request IES !ndustries inc.

The Company files annually with the Securities Atto: Shareholder 5ervic es and Euhange Commission an Annual Report form P.O. Box 351, Cedar Rapids, Iowa 52406 10-K. This required report contains certain other 1-800-247-9785 or 319-398-7755 information not made a part of this report. The

@YM Company n ill be happy to send you a copy of our 1992 form 10-K without charge. Requests should

/, ere to Buy and Sell Stock be made to Shareholder Serviws.

Common stot k may be pun based and sold pri-h~fer Agent & Reg,Strar vately or on the open market through a brokerage firm. A shareholder enrolled in the Company's anS l

Disidend Reinsestment and Sto(k Pur(hase Plan e

IES Industnes Inc.

can purc hase additional (ommon stock with no Stoc k Transfer Dept.

brokerage fees through the optional cash teature 300 Sheridan Avenue, Centerville, Iowa 32544 of the Plan.

l-800-627-9070 or 515-437-5205 Shares held in the Disidend Reim estment and Stoc k Pun base Plan can be sold through the Plan IIS Industries-Common Stoc k Administrator upon aritten request of the sharehold-lou a Electric Light and Pou er Company-er, a ho w ill re(eive all proc ceds of the sak s k ss Preferred and Preferenc e Stoc k any brokerage ( ommission.

,, ~ ~ - -

s J

j IStee j

yldend Reinvestment and The first National Bank of Chicago, Chicago, Illinois btOCN YuTChase Ylan IES Industries-Indenture The Company has a Dividend Reimestment and lon a flecinc Light and Pon er Company-Stoc k Purchase Plan uhich allows shareholders to Mortgage and D rd of Trust automatically reinsest their cash dividends in addi' lowa Southem Utilities Company -Deed of Trust tional shares of common stoc k. IES Industnes Inc.,

Shareholder Sersiws, Pn Box 351, Cedar Rapids, Iowa 52406 acts as the Plan Administrator. A prospectus des (nbing the Plan can be obtained by w nting to Shareholder Servic es.

47

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