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~~United~~UNITED ~~States~~STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

(Mark One)

/x/	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~quarterly~~Quarterly ~~period~~Period ~~ended~~Ended ~~March 31~~June 30, 2001

ORor

/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-16315

AQUILA, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		47-0683480 (IRS Employer Identification No.)
Delaware	47-0683480
1100 Walnut Street, Suite 3300, Kansas City, Missouri (Address of principal executive offices)		64106 (Zip Code)
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1100 Walnut Street, Suite 3300, Kansas City, Missouri (Address of principal executive offices)	64106 (Zip Code)

~~816-527-1000 (~~Registrant's telephone number, including area code) : 816-527-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~/ /~~ No /x/ No

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class		Outstanding at ~~June~~August 110, 2001
Class A Common Stock, $0.01 par value		19,975,000
Class B Common Stock, $0.01 par value		80,025,000

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Information regarding the combined financial statements can be found on pages 3 through 810.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and results of operations can be found on pages 911 through 1417.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risk as described on pages 45 and 46 of the prospectus included in our Registration Statement on Form S-1 (File No. 333-51718). There have not been any material changes in our market risk since December 31, 2000.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Information on changes in securities can be found on page 1518.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Information on submission of matters to a vote of security holders can be found on page 15 18.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

~~None~~Exhibits and reports on Form 8-K can be found on page 18.

Part I. Financial Information

Item 1. Financial Statements

Aquila, Inc.
Combined Statements of Income—Unaudited

		Three Months Ended March 31,
		Three Months Ended June 30,
Dollars in millions, except per share amounts
		2001			2000
Sales
	Natural Gas	$	74,~~566~~824.26		$	23,~~568~~525.92
	Electricity		34,~~180~~800.94			1,~~290~~637.3
	Other		~~233~~279.90			~~162~~151.46
Total Sales			109,~~981~~904.0			45,~~021~~314.61
Cost of sales
	Natural Gas		74,~~416~~604.63			23,~~507~~460.79
	Electricity		34,~~129~~770.69			1,~~283~~606.81
	Other		~~189~~187.82			~~142~~124.02
Total Cost of sales			109,~~736~~562.04			35,~~933~~191.52
Equity in earnings of investments and partnerships			65.25			4.41
Gross profit			~~251~~347.21			92127.50
Administrative expenses			~~154~~159.51			6279.52
Depreciation expense			12.8			11.1
Depreciation and amortization expense			13.6			12.9
Other income			(515.62	)		(45.8	)
Earnings before interest and taxes			89189.56			2340.7
Interest expense			1.71			5.46
Earnings before income taxes			87188.85			1835.31
Provision in lieu of income taxes			3887.52			713.54
Net Income		$	49101.3		$	1021.87
Earnings per common share:
Basic and Diluted Weighted Average Shares Outstanding			85.78			85.78
Basic Earnings Per Common Share		$	1.05		$	.25
Basic and Diluted Earnings Per Common Share		$	.57		$	.13
Diluted Earnings Per Common Share		$	1.05		$	.25

See accompanying notes to combined financial statements.

Aquila, Inc. Combined ~~Balance~~Statements ~~Sheets~~of Income—Unaudited

Dollars in millions		March 31, 2001			December 31, 2000
		Six Months Ended June 30,
		(Unaudited)
Dollars in millions, except per share amounts
ASSETS
		2001			2000
Current Assets:
Sales
	Cash and cash equivalents	$	106.5		$	9.0
	Natural Gas	$	12,390.8		$	6,094.1
	Funds on deposit		258.3			149.5
	Electricity		7,981.3			2,927.6
	Accounts receivable, net		2,887.6			3,959.9
	Other		512.9			314.0
	Accounts and notes receivable from UtiliCorp		19.2			11.8
Total Sales			20,885.0			9,335.7
	Inventories		55.6			63.6
Cost of sales
	Price risk management assets		1,054.1			1,452.6
	Natural Gas		12,020.9			5,968.6
	Other		79.0			39.7
	Electricity		7,900.5			2,889.9
Total current assets			4,460.3			5,686.1
	Other		377.0			266.2
Property, plant and equipment, net			544.5			559.0
Total Cost of sales			20,298.4			9,124.7
Investments in subsidiaries and partnerships			409.2			408.0
Equity in earnings of investments and partnerships			11.7			8.5
Price risk management assets			903.7			744.5
Gross profit			598.3			219.5
Notes receivable			350.6			313.2
Administrative expenses			313.6			141.7
Other			163.7			176.4
Depreciation and amortization expense			26.4			24.0
Total Assets		$	6,832.0		$	7,887.2
Other income			(20.8	)		(10.6	)
LIABILITIES AND SHAREHOLDERS' EQUITY
Earnings before interest and taxes			279.1			64.4
Current Liabilities:
Interest expense			2.8			11.0
	Current maturities of long-term debt	$	12.5		$	12.5
Earnings before income taxes			276.3			53.4
	Short-term debt		27.1			25.7
Provision in lieu of income taxes			125.7			20.9
	Accounts payable		3,120.2			4,144.0
Net Income		$	150.6		$	32.5
	Accrued liabilities		289.0			316.0
Earnings per common share:
	Accounts and notes payable to UtiliCorp		14.6			6.0
Basic Earnings Per Common Share		$	1.65		$	.38
	Price risk management liabilities		986.5			1,290.5
Diluted Earnings Per Common Share		$	1.65		$	.38
	Customer deposits		518.7			362.4
Total current liabilities			4,968.6			6,157.1
Long-term Liabilities:
	Long-term debt, net		12.5			12.5
	Notes payable to UtiliCorp		—			47.6
	Price risk management liabilities		1,401.1			1,252.4
	Deferred income taxes and credits		93.0			105.2
	Other deferred credits		53.4			57.2
Total long-term liabilities			1,560.0			1,474.9
Shareholders' Equity:
Preference stock, $.68 par value; 200,000,000 shares authorized, 8,000,000 issued and outstanding			5.4			5.4
Class A common stock, $.01 par value; 550,000,000 shares authorized and none issued			—			—
Class B common stock, $.01 par value; 250,000,000 shares authorized and 85,775,000 shares issued and outstanding			.9			.9
Additional paid-in capital			241.0			241.0
Accumulated other comprehensive losses			(2.8	)		(1.7	)
Retained earnings			58.9			9.6
Total shareholders' equity			303.4			255.2
Total Liabilities and Shareholders' Equity		$	6,832.0		$	7,887.2

See accompanying notes to combined financial statements.

Aquila, Inc. Combined ~~Statements~~Balance ~~of Comprehensive Income—Unaudited~~Sheets

		Three Months Ended March 31,
Dollars in millions		June 30, 2001			December 31, 2000
Dollars in millions
		(Unaudited)
		2001			2000
ASSETS
Net Income		$	49.3		$	10.8
Current Assets:
Other comprehensive income (loss):
	Cash and cash equivalents	$	254.7		$	9.0
	Unrealized translation adjustments		1.3			.8
	Funds on deposit		288.6			149.5
	Unrealized cash flow hedge		(2.4	)		—
	Accounts receivable, net		3,408.9			3,959.9
Total Comprehensive Income		$	48.2		$	11.6
	Accounts and notes receivable from UtiliCorp		—			11.8
	Inventories		164.3			63.6
	Price risk management assets		931.5			1,452.6
	Other		89.6			39.7
Total current assets			5,137.6			5,686.1
Property, plant and equipment, net			574.2			559.0
Investments in subsidiaries and partnerships			454.0			408.0
Price risk management assets			561.5			744.5
Notes receivable			295.0			313.2
Other			118.0			176.4
Total Assets		$	7,140.3		$	7,887.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
	Current maturities of long-term debt	$	12.5		$	12.5
	Short-term debt		12.2			25.7
	Accounts payable		3,716.7			4,144.0
	Accrued liabilities		367.3			316.0
	Accounts and notes payable to UtiliCorp		26.6			6.0
	Price risk management liabilities		628.8			1,290.5
	Customer deposits		276.5			362.4
Total current liabilities			5,040.6			6,157.1
Long-term Liabilities:
	Long-term debt, net		12.5			12.5
	Notes payable to UtiliCorp		—			47.6
	Price risk management liabilities		1,144.8			1,252.4
	Deferred income taxes and credits		88.2			105.2
	Other deferred credits		112.8			57.2
Total long-term liabilities			1,358.3			1,474.9
Shareholders' Equity:
Preference stock, $.68 par value; 200,000,000 shares authorized, 28,380,000 and 8,000,000 issued and outstanding, respectively			19.3			5.4
Class A common stock, $.01 par value; 550,000,000 shares authorized, 19,975,000 and none issued and outstanding, respectively			.2			—
Class B common stock, $.01 par value; 250,000,000 shares authorized, 80,025,000 and 85,775,000 shares issued and outstanding, respectively			.8			.9
Additional paid-in capital			567.6			241.0
Accumulated other comprehensive losses			(6.7	)		(1.7	)
Retained earnings			160.2			9.6
Total shareholders' equity			741.4			255.2
Total Liabilities and Shareholders' Equity		$	7,140.3		$	7,887.2

See accompanying notes to combined financial statements.

Aquila, Inc. Combined Statements of ~~Cash~~Comprehensive ~~Flows~~Income—Unaudited

					Three Months Ended March 31,
			Three Months Ended June 30,						Six Months Ended June 30,
Dollars in millions
			2001		~~2001~~	2000		~~2000~~	2001			2000
Cash Flows From Operating Activities:
Net Income			$	101.3		$	21.7		$	150.6		$	32.5
	Net income				$	49.3		$	10.8
Other comprehensive income (loss):
	Adjustments to reconcile net income to net cash provided by operating activities:
	Unrealized translation adjustments			(7.5	)		(1.3	)		(6.2	)		(.5	)
		Depreciation expense				12.8			11.1
	Unrealized cash flow hedge			3.6			—			1.2			—
		Net change in price risk management assets and liabilities				79.3			(22.6	)
Comprehensive Income			$	97.4		$	20.4		$	145.6		$	32.0
		Deferred income taxes and credits				(12.2	)		(14.1	)
		Equity in earnings of investments and partnerships				(6.2	)		(4.4	)
		Dividends from investments and partnerships				3.6			3.0
		Changes in operating assets and liabilities:
			Accounts receivable			1,073.5			38.3
			Accounts payable and receivable to/from UtiliCorp, net			1.2			34.8
			Deposits, net			47.5			6.2
			Inventories			9.0			68.9
			Accounts payable and accrued liabilities			(1,050.8	)		(24.9	)
			Other			(29.5	)		62.7
Net cash provided by operating activities						177.5			169.8
Cash Flows From Investing Activities:
		Capital expenditures				(9.7	)		(19.5	)
		Additions to notes receivable, net				(37.4	)		(21.2	)
		Other				13.3			—
Net cash used in investing activities						(33.8	)		(40.7	)
Cash Flows From Financing Activities:
		Short-term borrowings, net				1.4			—
		Repayment of notes payable to UtiliCorp, net				(47.6	)		(121.6	)
		Cash dividends paid				—			(10.7	)
Net cash used in financing activities						(46.2	)		(132.3	)
Net increase (decrease) in cash and cash equivalents						97.5			(3.2	)
Cash and cash equivalents at beginning of period						9.0			6.0
Cash and cash equivalents at end of period					$	106.5		$	2.8

See accompanying notes to combined financial statements.

~~AQUILA~~Aquila, ~~INC~~Inc. Combined Statements of Cash Flows—Unaudited

NOTES TO COMBINED FINANCIAL STATEMENTS

					Six Months Ended June 30,
Dollars in millions					Six Months Ended June 30,
Dollars in millions					2001			2000
Cash Flows From Operating Activities:
	Net income				$	150.6		$	32.5
	Adjustments to reconcile net income to net cash (used in) provided by operating activities:
		Depreciation and amortization expense				26.4			24.0
		Net change in price risk management assets and liabilities				(69.9	)		(88.2	)
		Deferred income taxes and credits				(16.9	)		10.3
		Equity in earnings of investments and partnerships				(11.7	)		(8.5	)
		Dividends from investments and partnerships				13.1			7.8
		Changes in operating assets and liabilities:
			Accounts receivable			552.2			(968.4	)
			Accounts payable and receivable to/from UtiliCorp, net			(4.5	)		34.8
			Inventories			(99.7	)		77.2
			Accounts payable and accrued liabilities			(377.6	)		1,011.1
			Other			52.9			41.8

				Sub-total		214.9			174.4
			Funds on deposit, net			(225.0	)		4.6

Net cash (used in) provided by operating activities						(10.1	)		179.0

Cash Flows From Investing Activities:
	Capital expenditures					(48.7	)		(32.4	)
	Investments in subsidiaries and partnerships					(6.9	)		(5.0	)
	Repayments of (additions to) notes receivable, net					18.2			(79.3	)
	Cash received on sale of related party investments					26.1			—
	Other					12.2			—

Net cash provided by (used in) investing activities						0.9			(116.7	)

Cash Flows From Financing Activities:
	Short-term borrowings, net					(13.5	)		—
	Repayment of notes payable to UtiliCorp, net					(47.6	)		(37.8	)
	Issuance of common stock, net					316.0			—
	Cash dividends paid					—			(10.7	)

Net cash provided by (used in) financing activities						254.9			(48.5	)

Net increase in cash and cash equivalents						245.7			13.8
Cash and cash equivalents at beginning of period						9.0			6.0

Cash and cash equivalents at end of period					$	254.7		$	19.8

See ~~(Unaudited)~~ accompanying notes to combined financial statements.

AQUILA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(Unaudited)

1. Summary of Significant Accounting Policies

The accompanying unaudited combined financial statements have been prepared in accordance with the accounting policies described in the combined financial statements and related notes included in our Registration Statements on Form S-1, as amended. We believe it is best to read this report in conjunction with our S-1 Registration Statements. The accompanying Balance Sheet as of December 31, 2000 was derived from our audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In our opinion, the accompanying combined financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair representation of our financial position and the results of our operations. Certain estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods shown have been made in preparing the combined financial statements. Actual results could differ from these estimates.

Certain prior year amounts in the combined financial statements have been reclassified where necessary to conform to the 2001 presentation.

New Accounting ~~Pronouncement~~Pronouncements

~~Effective~~Business January 1, 2001, we adopted SFAS No. 133 as amended by SFAS No. 137 and SFAS No. 138. These statements require us to recognize all derivative instruments on our balance sheet at fair value. These statements also establish new accounting rules for hedging instruments, which depend on the nature of the hedge relationship. A fair value hedge requires that the change in the fair value of a derivative instrument be offset against the change in the fair value of the underlying asset, liability, or firm commitment being hedged through earnings. A cash flow hedge requires that the change in the fair value of a derivative instrument be recognized in Other Comprehensive Income (OCI), a component of Shareholders' Equity, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffectiveness related to these hedges is recognized currently in earnings. As disclosed in further detail below, the first quarter 2001 unaudited combined financial statements include the provisions required by SFAS No. 133, while the first quarter 2000 unaudited combined financial statements were prepared in accordance with the applicable professional literature for derivatives and hedging instruments in effect at that time. Combinations

~~The adoption~~In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of ~~SFAS~~Financial Accounting Standards No. ~~133~~141, ~~caused~~"Business usCombinations" (SFAS 141). toSFAS 141 ~~record~~requires ~~transition~~that ~~adjustments~~all tobusiness ~~recognize~~combinations ~~our~~initiated ~~derivative~~after ~~instruments~~June 30, at2001, ~~fair~~be ~~value~~accounted ~~and~~for tousing ~~recognize~~ the ~~ineffective~~purchase ~~portion~~method of ~~the~~accounting. SFAS 141 also requires ~~change~~certain inadditional ~~fair~~disclosures ~~value~~regarding ofmaterial ~~our~~business ~~derivatives~~combinations. The adoption ~~cumulative~~of ~~effect~~this ofstandard ~~these~~is ~~transition~~not ~~adjustments~~expected ~~was~~to anhave ~~after-tax~~a ~~reduction~~material toeffect ~~OCI~~on ofour ~~approximately~~financial $2position or results of operations.~~2 million.~~

~~2. Initial~~Goodwill ~~Public~~and ~~Offering~~Other Intangible Assets

In ~~April~~June 2001, wethe FASB issued 14SFAS No. 142,~~225,000~~ ~~shares~~"Goodwill ofand ~~Class~~Other Intangible Assets" (SFAS A142). ~~common~~SFAS 142 ~~stock~~requires tothat, ~~the~~beginning ~~public~~on January 1, in2002, angoodwill ~~initial~~will ~~public~~no ~~offering~~longer atbe ~~$24~~systematically aamortized ~~share~~against earnings over an estimated useful life. WeThis ~~received proceeds~~statement ofwill ~~approximately~~require ~~$318 million~~that, ~~after~~no ~~deducting~~less ~~underwriting~~than ~~discounts~~annually, ~~commissions~~goodwill be tested for impairment and ~~other~~if ~~offering~~impaired, ~~expenses~~be written off against earnings at that time. AsWe ~~debt~~expect ~~owed~~that tothe ~~UtiliCorp~~adoption ~~has~~of ~~been~~this ~~repaid~~standard asin 2002 will result in discontinuing annual goodwill amortization of approximately ~~March~~$4.4 31million. As of June 30, 2001, we ~~have~~ ~~placed~~had ~~the~~total ~~net~~goodwill ~~proceeds~~ of $100.7 million. We are currently assessing the ~~offering~~potential ~~into~~impact, ~~short-term~~if ~~investments~~any, tothat bea ~~used~~goodwill ~~for~~impairment ~~working~~test could ~~capital~~have ~~and~~on ~~general~~our ~~corporate~~financial ~~purposes~~position or results of operations.

7Asset Retirement Obligations

~~The~~In ~~following~~August 2001, ~~table~~the ~~below~~Financial ~~sets~~Accounting ~~forth~~Standards ~~our~~Board ~~shareholders'~~(FASB) ~~equity~~issued asStatement of ~~March~~Financial Accounting Standards No. 31143, ~~2001~~"Accounting onfor Asset Retirement Obligations" (SFAS 143). SFAS 143 requires companies to record the fair value of a liability for an ~~actual~~asset ~~basis~~retirement ~~and~~obligation onin the period in which it is incurred. When the liability is initially recorded, the entity will capitalize a ~~pro~~cost ~~forma~~by ~~basis~~increasing ~~giving~~the ~~effect~~carrying amount of the related asset. The liability will be accreted to its present value each subsequent period and the ~~receipt~~capitalized cost will be depreciated over the useful life of the related asset. Upon settlement of the liability, the company will record a gain or loss for the difference between the settled liability and the recorded amount. This standard will be in effect for us on January 1, 2003, although earlier application is encouraged. We have not yet completed our estimate of the effect of the ~~proceeds~~adoption ~~from~~of ~~the~~this ~~sale~~standard on our financial position or results of ~~shares~~operations at this time.

	As of March 31, 2001
Dollars in Millions
	Actual			Pro forma
Preference stock	$	5.4		$	5.4
Common stock		.9			1.0
Additional paid-in capital		241.0			558.9
Accumulated other comprehensive loss		(2.8	)		(2.8	)
Retained earnings		58.9			58.9
Total shareholders' equity	$	303.4		$	621.4

In connection with the offering, UtiliCorp sold 5,750,000 shares of our common stock at $24 a share. We did not receive any of the proceeds from the shares of stock sold by UtiliCorp.

As a result of our initial public offering, UtiliCorp owns Class B common stock representing approximately 80% of our outstanding shares, but approximately 98% of our combined voting power.

3. Reportable Segment Reconciliation

	Three Months Ended March 31,
Dollars in Millions
	2001		2000
Sales:
Wholesale Services	$	10,637.8	$	3,917.8
Capacity Services		343.2		103.8
Total	$	10,981.0	$	4,021.6
EBIT:
Wholesale Services	$	62.4	$	15.3
Capacity Services		27.1		8.4
Total	$	89.5	$	23.7

2. Earnings per Common Share

The following table shows the amounts used in computing basic and diluted earnings per common share for the three and six-month periods ended June 30, 2001 and 2000.

		Three Months Ended June 30,				Six Months Ended June 30,
In millions, except per share amounts		Three Months Ended June 30,				Six Months Ended June 30,
In millions, except per share amounts		2001		2000		2001		2000
Earnings available for common shares		$	101.3	$	21.7	$	150.6	$	32.5
Earnings per share:
	Basic	$	1.05	$	.25	$	1.65	$	.38
	Diluted	$	1.05	$	.25	$	1.65	$	.38

Weighted average number of common shares used in basic earnings per share			96.3		85.8		91.1		85.8
Per share effect of dilutive securities:
	Stock options		.3		—		.2		—

Weighted number of common shares and dilutive potential common shares used in diluted earnings per share			96.6		85.8		91.3		85.8

3. Initial Public Offering

In April 2001, we issued 14,225,000 shares of Class A common stock to the public in an initial public offering at $24.00 a share. We received net proceeds of approximately $316 million after deducting underwriting discounts, commissions and other offering expenses. We have used a portion of the proceeds to repay debt owed to UtiliCorp and have placed the remaining proceeds into short-term investments to be used for working capital and general corporate purposes.

In connection with the offering, UtiliCorp sold 5,750,000 shares of our Class A common stock at $24.00 a share. We did not receive any of the proceeds from the shares of stock sold by UtiliCorp.

As a result of our initial public offering, UtiliCorp owns Class B common stock representing approximately 80% of our outstanding shares, but approximately 98% of the combined voting power.

4. Related Party Transactions

During the second quarter of 2001, we completed three transactions with UtiliCorp in relation to our Canadian operations. Those transactions were as follows:

1.: We purchased the workforce of Aquila Canada Corp. (ACC) (a wholly owned subsidiary of UtiliCorp) for $4.3 million. As ACC is included in the combined financial statements, this transaction has been eliminated.
2.: We received $12.9 million from UtiliCorp for our preferred stock investment in a Canadian UtiliCorp subsidiary. The preferred stock was repurchased at the original issuance price.
3.: We sold back to UtiliCorp our 5% ownership of their Canadian investments. We received $13.2 million which approximates the gain connected with the sale.

As the above transactions were all transactions with a related party, the related net gain of $10.7 million was recorded as a capital transaction and credited to additional paid in capital.

5. Reportable Segment Reconciliation

	Three Months Ended June 30,				Six Months Ended June 30,
Dollars in Millions	Three Months Ended June 30,				Six Months Ended June 30,
Dollars in Millions	2001		2000		2001		2000
Sales:
Wholesale Services	$	9,631.0	$	5,165.6	$	20,268.8	$	9,083.4
Capacity Services		273.0		148.5		616.2		252.3

Total	$	9,904.0	$	5,314.1	$	20,885.0	$	9,335.7

EBIT:
Wholesale Services	$	148.5	$	25.3	$	210.9	$	40.6
Capacity Services		41.1		15.4		68.2		23.8

Total	$	189.6	$	40.7	$	279.1	$	64.4

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

AQUILA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Except where noted, the following discussion refers to the combined entity, Aquila, Inc. We conduct our business through two ~~principle~~principal segments—Wholesale Services and Capacity Services. Wholesale Services consists of ~~our~~Client ~~marketing and trading business~~Services; our structured ~~products~~capital, ~~and~~custom ~~service~~risk ~~business;~~products ~~our~~and ~~capital~~ consultative services business and ~~our~~Commodity ~~new~~Services; ~~initiatives~~where we manage risk. Capacity Services consists of our power generation assets, natural gas assets and coal assets. We service clients throughout North America, the United Kingdom and parts of continental Europe.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. These statements involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations, intentions, assumptions, and other statements that are not historical facts. We generally intend the words "may," "will," "should," "expect," "intend," "plan," "believe," "seek," "estimate," "continue," "announced," or the negative of these terms or similar expressions to identify forward-looking statements. Our actual results could differ materially from the forward-looking statements as a result of various factors. Some of these factors include:

•: political conditions in our regional, national and international markets, including legislative and regulatory initiatives regarding deregulation and restructuring of the energy industry;
•: changes in commodity prices and interest rates that could impact the value of our commodity portfolio;
•: unusual changes in weather and other natural phenomena, such as hurricanes, floods and unexpected changes in temperature, could dramatically affect commodity prices and thus the value of our commodity portfolio;
•: competition in the markets in which our businesses operate could decrease our profitability;
•: the success of our growth strategy, including our acquisition, control and disposition of assets;
•: economic and financial market conditions and the results of our financing efforts could affect our growth efforts and thus our profitability;
•: our successful development of new structured products and services which will provide new sources of revenue;
•: the pace of well connections to our gas gathering system that could affect the sales generated by our Capacity Services segment;
•: the value of the U.S. dollar relative to the British pound and Canadian dollar could affect financial results from foreign operations; and
•: additional state, federal and other regulations in the United States and in foreign countries in which we operate, including environmental regulations, that could cause us to incur additional expenses to comply with such regulation.

Forward-looking statements are only predictions and involve risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements. We, however, cannot guarantee future results, events, performance or achievements.

911

All forward-looking statements in this filing reflect our current views about future events and are based on assumptions we believe are reasonable. Except as required by law, including the securities law of the United States, we do not intend to update or revise any forward-looking statements.

RESULTS OF OPERATIONS

		Three Months Ended March 31,
		Three Months Ended June 30,						Six Months Ended June 30,
Dollars in Millions								~~Growth Rate~~
		2001			2000			2001		2000
Earnings Before Interest and Taxes:
	Wholesale Services	$	62148.45		$	1525.3		~~308~~$	%210.9	$	40.6
	Capacity Services		2741.1			815.4		~~223~~	%68.2		23.8
Total EBIT			89189.56			2340.7		~~278~~	%279.1		64.4
Interest expense			1.71			5.46			2.8		11.0
Provision in lieu of income taxes			3887.52			713.54			125.7		20.9
Net Income		$	49101.3		$	1021.87		~~356~~$	%150.6	$	32.5
Return on equity			45	%		17	%	165	%
Diluted Earnings per share		$	1.05		$	.25		$	1.65	$	.38
Earnings per share		$	.57		$	.13		338	%

~~Our~~The ~~first~~second quarter of 2001 ~~results~~was ~~were~~our atstrongest ~~record~~financial ~~levels~~earnings quarter to date. All business units posted marked increases over prior quarters. Net income for the 2001 second quarter and year-to-date grew at ~~356~~367% ~~over~~and ~~the~~363%, ~~2000~~respectively, ~~quarter~~over 2000. These strong results were driven by the following ~~reasons~~:

•: Commodity Services continues to perform well in both gas and power and was well balanced between products and regions. Our Wholesale Services business segment's EBIT for the quarter and year-to date was up 487% and 419%, respectively, over the corresponding 2000 results.
•: Strong client demand for products and physical delivery capabilities increased deal flow by 21% and 25% for the quarter and year to date, respectively.
•: Successfully optimized new generation assets by securing prices at above current market rates, which reflects on our ability to capture market opportunities. Our GPU International acquisition in December 2000 continues to perform stronger than expected. Our Capacity Services business segment's EBIT for the quarter and year-to-date was up 167% and 187%, respectively, over the corresponding 2000 financial periods.

These ~~record-level~~strong ~~financial~~ achievements ~~primarily~~ resulted in a trailing twelve-month return on equity of 4556%.

1012

WHOLESALE SERVICES

The table below summarizes the operations of our Wholesale Services business segment for the ~~first~~three ~~quarter~~and six months periods of each year.

		Three Months Ended March 31,
		Three Months Ended June 30,						Six Months Ended June 30,
Dollars in millions
		2001			2000			2001			2000
Sales		$	109,~~637~~631.80		$	35,~~917~~165.86		$	20,268.8		$	9,083.4
Cost of sales			109,~~443~~366.36			35,~~857~~076.74			19,809.9			8,934.1
Gross profit			~~194~~264.54			6089.12			458.9			149.3
Operating expenses:
	Administrative expenses		~~133~~128.73			4663.35			262.0			109.8
	Depreciation expense		3.6			3.1
	Depreciation and amortization expense		3.0			4.8			6.6			7.9
	Other income		(515.24	)		(4.64	)		(20.6	)		(9.0	)
Earnings before interest and taxes (EBIT)		$	62148.45		$	1525.3		$	210.9		$	40.6
Statistics:
Sub-unit breakdown:
	Physical gas volumes marketed per day (Bcf/d)		13.3			11.9
	Commodity Services EBIT	$	116.2		$	8.4		$	161.8		$	$16.5
	Electricity marketing volumes (MMWhs)		55.1			44.7
	Client Services EBIT		32.3			16.9			49.1			24.1
	Volumes delivered (Tbtue/d)		20.7			18.0
Total EBIT for Wholesale Services		$	148.5		$	25.3		$	210.9		$	40.6
	Average transactions per month		39,000			31,500
Operating Statistics:
	Electricity prices MWh (average)	$	57.77		$	28.87
	Physical gas volumes marketed per day (Bcf/d)		11.3			10.9			12.3			11.4
	Natural gas price per Mcf (average)	$	6.33		$	2.39
	Electricity marketing volumes (MMWhs)		77.4			40.0			132.5			84.6
	Volumes delivered (Tbtue/d)		21.2			16.3			20.9			17.1
	Average transactions per month (000's)		44.5			33.8			41.8			32.7
	Electricity prices MWh (average)	$	61.98		$	40.97		$	60.23		$	34.58
	Natural gas price per Mcf (average)	$	4.70		$	3.55		$	5.58		$	2.93

Quarter Ended ~~March~~June 3130, 2001 as Compared to Quarter Ended ~~March~~June 3130, 2000

Sales and Cost of Sales

Sales and cost of sales for our Wholesale Services business segment increased ~~172~~86% and ~~171~~85%, respectively, in 2001 compared to ~~first~~second quarter 2000 resulting in a a gross profit increase of $~~134~~175.42 million. These increases were primarily due to the following factors:

•: A volatile pricing environment combined with strong client demand provided increased opportunity to execute our strategy and deliver products and services to our clients. Our commodity group was able to capture significant value while only consuming an average value at risk of $12.8 million.
•: An increase of 94% and 4% in electricity and gas volumes marketed, respectively, a combined 30% increase on a Tbtue/d basis and a 32% increase in the average number of transactions per month also contributed to an increase in gross profit, sales and cost of sales.
•: A 21% increase in term deal flow contributed to a 23% increase in gross profit stemming from our origination deals and our more highly structured products we refer to as our Client Services business. These include our GuaranteedWeather® and GuaranteedGeneration^SM products as well as our longer duration gas and electric transactions.
•: Higher natural gas and electricity prices significantly increased both sales and cost of sales in the 2001 quarter compared to 2000.

Administrative Expenses

Administrative expenses increased $8764.48 million, or ~~189~~102% in 2001 compared to 2000 due to our continued expansion, payroll associated with ~~approximately 150~~ additional employees and higher incentive ~~compensations~~expenses directly linked to our improved ~~profits~~financial performance in 2001.

11Other Income

Other income has increased by $11 million, or 250%, as earnings from our Capital Services group continues to grow due to our portfolio size increasing by 14% and a strong return mix comprised of both interest and equity.

Six Months Ended June 30, 2001 as Compared to Six Months Ended June 30, 2000

Sales and Cost of Sales

Sales and cost of sales for our Wholesale Services business segment increased 123% and 122%, respectively, in 2001 compared to 2000 resulting in a gross profit increase of $309.6 million. These increases were primarily due to the following:

•: A robust and volatile pricing environment provided increased opportunities to execute our strategy and deliver products and services to our clients.
•: An increase of 57% and 8% in electricity and gas volumes marketed, respectively, a 22% increase on a Tbtue/d basis and a 28% increase in the average number of transactions per month also contributed to an increase in gross profit, sales and cost of sales.
•: A 25% increase in term deal flow contributed to a 47% increase in gross profit stemming from our origination deals and are more highly structured products we call our Client Services business. These include our GuaranteedWeather® and GuaranteedGeneration^SM products as well as our longer duration gas and electric transactions.
•: Higher natural gas and electricity prices significantly increased both sales and cost of sales in 2001 compared to 2000.

Administrative Expenses

Administrative expenses increased $152.2 million, or 139% in 2001 compared to 2000 due to our continued expansion, payroll associated with approximately 169 additional employees and higher incentive expenses directly linked to our improved financial performance in 2001.

CAPACITY SERVICES

The table below summarizes the operations of our Capacity Services business segment for the ~~first~~three ~~quarter~~and six month periods of each year.

		Three Months Ended March 31,
		Three Months Ended June 30,						Six Months Ended June 30,
Dollars in millions
		2001			2000			2001			2000
Sales		$	~~343~~273.20		$	~~103~~148.85		$	616.2		$	252.3
Cost of sales			~~292~~195.78			75114.8			488.5			190.6
Equity in earnings of investments and partnerships			65.25			4.41			11.7			8.5
Gross profit			5682.7			3237.48			139.4			70.2
Operating expenses:
	Administrative expenses		2030.8			1615.27			51.6			31.9
	Depreciation expense		9.2			8.0
	Depreciation and amortization expense		10.6			8.1			19.8			16.1
	Other income		(0.4	)		(0.2	)
	Other expense/(income)		0.2			(1.4	)		(0.2	)		(1.6	)
Earnings before interest and taxes (EBIT)		$	2741.1		$	815.4		$	68.2		$	23.8
Statistics:
Operating Statistics:
	Gas throughput volumes (Mcf/d)		~~418~~378.0			~~484~~475.9			398.9			479.9
	Natural gas liquids produced (MBbls/d)		1521.6			2123.3			18.4			22.4
	Natural gas liquids price per gallon	$	.5347		$	.4644		$	.49		$	.44
	MW owned or controlled		4,~~107~~357			1,~~244~~096			4,357			1,096

Quarter Ended ~~March~~June 3130, 2001 as Compared to Quarter Ended ~~March~~June 3130, 2000

Sales and Cost of Sales

Sales and cost of sales for our Capacity Services businesses increased $~~239~~124.45 million and $~~216~~81.90 million, or ~~231~~84% and ~~286~~71%, respectively, in ~~the~~ 2001 ~~quarter~~ compared to ~~the~~second quarter 2000 ~~quarter~~representing ~~resulting~~$43.5 million inof athe gross profit increase ~~of $22~~.~~5 million.~~ The ~~stronger~~strong results were primarily due to the following factors:

•: The impact of the GPU International acquisition in December 2000 added approximately $16.3 million to gross profit in the 2001 quarter while adding $21.8 million and $5.5 million to sales and costs of sales, respectively.
•: We successfully optimized new generation assets by securing prices at above current market rates that significantly improved our margins for the 2001 quarter. We attempt to optimize asset positions with forward positions that can create earnings volatility from time to time. Generally, when we optimize asset positions with derivative instruments they are recorded at fair market value while the underlying asset position is reflected at historical cost. This tends to produce some earnings volatility.

Administrative Expenses

Administrative expenses increased $15.1 million or 96% in the 2001 quarter compared to 2000. The majority of this increase is directly related to the effects of our GPU International acquisition in December 2000.

Six Months Ended June 30, 2001 as Compared to Six Months Ended June 30, 2000

Sales and Cost of Sales

Sales and cost of sales for our Capacity Services businesses increased $363.9 million and $297.9 million, respectively, in the six months ending June 30, 2001 compared to 2000 representing $66.0 million of the gross profit increase. The stronger results were primarily due to the following factors:

•: The GPU International acquisition in December 2000 added approximately $35.4 million to gross profit in 2001 while adding $47.2 million and $11.8 million to sales and costs of sales, respectively.
•: We successfully optimized new generation assets by securing prices at above current market rates that significantly improved our margins in the 2001 year-to-date results. We attempt to optimize asset positions with forward positions that can create earnings volatility from time to time. Generally, when we optimize asset positions with derivative instruments they are recorded at fair market value while the underlying asset position is reflected at historical cost. This tends to produce some earnings volatility.
•: Stronger natural gas prices favorably impacted our gas storage operations as we were able to capitalize on larger spreads between injection and withdrawal prices.

Equity in Earnings of Investments and Partnerships

Improved earnings in ~~the~~ 2001 ~~quarter~~ over ~~the~~ 2000 ~~quarter~~ relates to our 50% equity interest in the Oasis Pipeline. In December 2000, we obtained an additional 15% interest in the Oasis Pipeline Company that brought our total ownership up to 50%. The additional earnings mainly stem from the increase in ownership and transportation opportunities that existed due to high demand in the West ~~during the first quarter of 2001~~.

Administrative Expenses

Administrative expenses increased $419.67 million or 2862% in ~~the~~ 2001 ~~quarter~~ compared to 2000. The majority of this increase is directly related to the effects of our GPU International acquisition in December 2000.

SIGNIFICANT BALANCE SHEET MOVEMENTS

Total assets at ~~March~~June 3130, 2001 decreased by $~~1,055~~746.29 million compared to December 31, 2000. This decrease is primarily attributable to the following:

•: Cash increased by $245.7 million primarily related to the $316 million of net proceeds received from the initial public offering that was completed in April 2001.
•: Funds on deposit increased $139.1 million due to price fluctuations and our over-all position in our gas and power trading business.
•: Accounts receivable decreased $551.0 million primarily due to the seasonality and price fluctuations of our gas and power trading business.
•: Inventories increased by $100.7 million as storage facilities were replenished at higher prices with a total of 16.9 BCF being added since December 31, 2000.
•: Price risk management assets decreased by $704.1 million due to a change in market prices of gas and power which can fluctuate significantly.

~~Total liabilities at March 31, 2001 decreased by $1,103.4 million compared to December 31, 2000. This decrease is primarily attributable to the following:~~ 16

Total liabilities at June 30, 2001 decreased by $1,233.1 million compared to December 31, 2000. This decrease is primarily attributable to the following:

•: Accounts payable decreased by $427.3 million primarily due to the seasonality and price fluctuations of our gas and power trading business.
•: Price risk management liabilities decreased by $769.3 million due to a change in market prices of gas and power which can fluctuate significantly.
•: Customer deposits decreased by $85.9 million due to price fluctuations and our customers' over-all position in our gas and power trading business.

LIQUIDITY AND CAPITAL RESOURCES

We are subject to various demands on cash stemming from price changes of commodities and the resultant impact on cash requirements. We have managed our liquidity needs through a variety of methods that include a credit facility, borrowings from UtiliCorp, selling accounts receivable through a bank facility and commodity sales contracts. Our Wholesale Services business relies on our ability to manage liquidity and cash. At ~~March~~June 3130, 2001, our total cash and cash equivalents was $~~106~~254.57 million, an increase of $97245.57 million from December 31, 2000. The increase in cash is primarily due to our ~~cash~~initial ~~flow~~public ~~from~~offering ~~operations,~~that ~~which~~was ~~for~~completed ~~the~~in ~~three~~April 2001 ~~months~~that ~~ended~~raised ~~March 31,~~a ~~2001,~~net ~~was~~ $~~177.5~~316 million. ~~This~~Cash ~~reflects~~flows ~~our~~from operations were fairly flat as strong ~~financial~~operating ~~performance~~results ~~and~~before ~~favorable~~margin ~~working~~deposits ~~capital~~were ~~management~~offset ~~(the~~by ~~timing~~$225 million of customer deposit refunds and additional cash ~~receipts~~deposits required from ~~accounts~~us ~~receivable~~due to price fluctuations and ~~cash~~our ~~payments~~over-all ~~relating~~position toin ~~accounts~~our ~~payable).~~gas ~~Partially~~and ~~offsetting operating~~power ~~cash~~trading business. Cash flows ~~for~~from ~~the~~investing ~~quarter~~activities were ~~$37.4 million~~also offairly ~~additional~~flat ~~investments~~as ~~made~~capital expenditures were offset by ~~our~~cash received ~~Capital~~on ~~Services~~note ~~business~~receivable ~~through~~repayments and on the ~~issuance~~sale of ~~additional~~certain ~~loans~~investments to UtiliCorp. We also reduced our ~~UtiliCorp~~ notes payable to UtiliCorp by $47.6 million during the ~~quarter~~year.

13 We have a $125 million letter of credit facility with a group of banks that is used to support our trading and other activities. At June 30, 2001, approximately $58 million was outstanding against this facility. This facility expires in December 2001. We anticipate that this facility will become part of a larger corporate revolver that we plan to put in place in the fourth quarter. As part of the transition agreement with UtiliCorp, we can borrow needed funds from UtiliCorp until it completes the distribution of our stock. UtiliCorp intends to distribute our shares to its shareholders after it receives a favorable letter ruling from the Internal Revenue Service that such a distribution will be tax-free to its shareholders and providing that market conditions warrant the distribution. We also have a $275 million accounts receivable sales program (all of which is used) to help fund short-term cash needs.

We are ~~have~~in athe ~~$125 million~~process ~~letter~~ of ~~credit~~completing ~~facility~~the ~~with~~financing ~~a group~~ of ~~banks~~a ~~that~~power isplant ~~used~~in toClay ~~support our trading and other activities. At March 31~~County, ~~2001,~~Illinois for approximately $63150 million ~~was~~and ~~outstanding~~the ~~against~~financing ~~this facility. This facility expires in July 2001. We will request an extension~~ of ~~this~~ten ~~facility~~additional ~~from~~GE ~~participating banks during the second quarter~~turbines ~~and~~secured ~~anticipate~~last ~~that~~January. ~~this~~Our ~~facility~~financing ~~will~~strategy ~~become~~with ~~part~~respect ofto aour ~~larger~~power ~~corporate~~plant ~~revolver~~development ~~that~~program weis ~~plan~~ to ~~put~~first infinance ~~place~~these inassets ~~the~~using ~~third~~an ~~quarter.~~off-balance Assheet ~~part~~structure ofand ~~the~~then ~~transition agreement with UtiliCorp, we can borrow~~permanently ~~needed~~finance ~~funds from UtiliCorp until they complete~~ the ~~distribution~~projects ofwith ~~our~~non-recourse ~~stock~~project-level debt. ~~UtiliCorp~~We ~~intends~~generally todo ~~distribute~~not ~~our~~intend ~~shares~~ to ~~its~~hold ~~shareholders~~100% ~~after~~ownership itpositions ~~receives~~in athese ~~favorable~~plants ~~letter~~long-term, ~~ruling~~meaning ~~from~~we ~~the Internal Revenue Service that such a distribution~~ will bemonetize ~~tax-free to its shareholders and providing that market conditions warrant the distribution. We also have a $275 million~~or ~~accounts~~repackage ~~receivable~~assets ~~sales~~to ~~program~~take ~~(all~~advantage of ~~which~~market ~~is used) to help fund short-term cash needs~~opportunities.

We are in the process of completing the financing of a power plant in Clay County, Illinois for approximately $150 million and the financing of the ten additional GE turbines secured last January. Our financing strategy with respect to our power plant development program is to first finance these assets using an off-balance sheet structure and then permanently finance the projects with non-recourse project-level debt. We generally do not intend to hold 100% ownership positions in these plants long-term, meaning we will monetize or repackage assets to take advantage of market opportunities.

Effects of Our Separation From UtiliCorp

Under agreements between UtiliCorp and us, we are required to indemnify UtiliCorp for taxation costs, including taxes payable by UtiliCorp on the indemnification amounts paid by us, if we cause the distribution of our stock by UtiliCorp to fail to be tax-free. We do not currently maintain capital resources to fund potential indemnification payments to UtiliCorp for this purpose. We believe the probability of an event occurring that would require us to make these payments is sufficiently low and sufficiently under our control that we do not allocate liquidity for this contingency. If, however, the contingency should occur, we believe we could fund the indemnification payments through cash flows from operations, new borrowings and, if necessary, asset sales. Payment of this obligation could materially affect our financial condition and our earnings and impair our ability to achieve our growth strategy.

1417

Part II . Other Information

Item 2. Changes in Securities and Use of Proceeds

Our registration statements for the sale of our common stock (Registration Statement Nos. 333-51718 and 333-59412) were declared effective by the Securities and Exchange Commission on April 23, 2001. We registered a total of 19,975,000 shares of our Class A common stock under the registration statements with 14,225,000 being offered by us and the remaining 5,750,000 offered by UtiliCorp. The managing underwriters in the offering were Lehman Brothers Inc., Merrill Lynch Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Credit Lyonnais Securities (USA) Inc., and J.P. Morgan Securities Inc.

The initial public offering commenced on April 24, 2001 and was completed with all shares sold on April 27, 2001. A total of 19,975,000 shares were sold at a per share public price offering of $24.00. This included 2,475,000 shares that were sold upon exercise of the underwriters' over-allotment option. Of the total shares sold, we received net proceeds of $~~318~~316.0 million, after deducting approximately $19.6 million of underwriter discounts and commissions and $45.7 million of other expenses. UtiliCorp received net proceeds of $130.1 million, after deducting approximately $7.9 million of underwriter discounts. Expenses of the offering were direct payments to persons other than officers, directors, affiliates or persons owning 10% or more of our securities.

AsWe ~~debt~~have ~~owed~~used toa ~~UtiliCorp~~portion ~~has~~of ~~been~~the ~~repaid~~proceeds asto ofrepay ~~March 31,~~debt ~~2001,~~owed weto UtiliCorp and have placed the net remaining proceeds of the offering into short-term investments to be used for working capital and general corporate purposes.

Item 4. Submission of Matters to a Vote of Security Holders

On ~~February~~April 85, 2001, UtiliCorp, acting in its capacity as our ~~sole~~sold shareholder, executed a written consent in lieu of a special meeting of our sole shareholder approving ~~an amendment to~~ our ~~certificate~~2001 ofincentive ~~incorporation~~plan toand ~~change~~the ~~our~~amended ~~name~~and ~~from~~restated ~~Aquila~~certificate ~~Energy~~of ~~Corporation~~incorporation toin ~~Aquila, Inc.~~the ~~This~~form ~~amendment~~outlined ~~became~~in ~~effective~~our onprospectus ~~February~~dated April 2123, 2001.

Item 6. Exhibits

(a)

List of exhibits

3.1: Restated Certificate of Incorporation.

(b): Reports on Form 8-K

~~(a)~~No reports ~~List~~on Form 8-K were filed during the second quarter of ~~Exhibits:~~2001

~~None~~ 18

(b) Report on Form 8-K

No reports on Form 8-K were filed during the first quarter of 2001.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AQUILA, INC. ~~By: /s/ DAN STREEK Dan Streek Chief Financial Officer Signing on behalf of the registrant and as principal financial and accounting officer.~~

~~Date~~By: ~~June~~ 1,/s/ ~~2001~~DAN STREEK Dan Streek Chief Financial Officer Signing on behalf of the registrant and as principal financial and accounting officer.

16 Date: August 13, 2001

QuickLinks

PART II—OTHER INFORMATION

Part I. Financial Information

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Part II. Other Information

Item 2. Changes in Securities and Use of Proceeds

Item 4. Submission of Matters to a Vote of Security Holders

Item 6. Exhibits

Signatures

Filing Compare · AQUILA MERCHANT SERVICE INC