UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
January 20, 1998
AMEREN CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-1723446
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1901 Chouteau Avenue, St. Louis, Missouri 63103
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (314) 621-3222
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ITEM 5. OTHER EVENTS
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Reference is made to Management's Discussion and Analysis under the
captions "Electric Industry Restructuring" and "Contingencies" in Exhibit 99-2
of Form 8-K dated December 31, 1997, as amended by Form 8-K/A dated January 12,
1998, filed by the Registrant; to Forms 8-K dated December 16, 1997 filed by
Union Electric Company and Central Illinois Public Service Company ("CIPS"); and
to Form 8-K dated November 24, 1997 filed by CIPS, with the Securities and
Exchange Commission, for discussion of the potential impact to the Registrant of
the Electric Service Customer Choice and Rate Relief Law of 1997, which provides
for utility restructuring in Illinois, and for information regarding the coal
contract restructuring with a major coal supplier.
On January 20, 1998, the Registrant issued the news release filed as an
exhibit hereto, which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Exhibits.
Exhibit 99 - News Release dated January 20, 1998.
SIGNATURE
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.
AMEREN CORPORATION
(Registrant)
By /s/ James C. Thompson
--------------------------
James C. Thompson
Secretary
Date: January 20, 1998
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Exhibit Index
Exhibit No. Description
- ----------- -----------
99 News Release dated January 20, 1998.
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Ameren News Release
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, MO 63103
Contact:
Investor: Media:
Lynn Barnes Susan Gallagher
(314) 554-4829 (314) 554-2175
AMEREN CORPORATION DISCLOSES CHARGE THAT REDUCES
1997 EARNINGS; CAUTIONS ABOUT POTENTIALLY LOWER 1998 EARNINGS
St. Louis, Mo., Jan. 20, 1998---Ameren Corporation (NYSE: AEE), created by
the merger of Union Electric Company and CIPSCO Incorporated, today disclosed
that the company will record an extraordinary charge to earnings in the fourth
quarter of 1997. Ameren management also cautioned that 1998 earnings will likely
be lower than expected 1997 earnings, excluding the fourth quarter charge.
Recent legislative action resulted in the extraordinary charge to fourth
quarter, 1997 earnings. In December 1997, the governor of Illinois signed
electric industry restructuring legislation that introduces competition for
electric energy in Illinois. The law includes a 5% rate decrease for the
company's Illinois electric residential customers, beginning in August 1998. If
the company does not keep its rates below the Midwest average, the company would
then be subject to additional rate decreases in the years 2000 and 2002. The new
law also includes the phasing-in of retail direct access, which allows customers
to choose their electric generation supplier; the potential recovery of a
portion of stranded costs; and the option to eliminate the fuel adjustment
clause, among other provisions.
In a related matter, in November 1997, the Illinois Third District
Appellate Court reversed a December 1996 order of the Illinois Commerce
Commission (ICC) related to the restructuring of a coal contract with a major
supplier. That ICC order allowed recovery of a restructuring payment through the
fuel adjustment clause. In December 1997, the company requested a rehearing by
the court; that rehearing was denied this month. The company expects to appeal
this decision to the Illinois Supreme Court.
After evaluating the impact of the new law and taking into consideration
the recent appellate court decisions, Ameren management has determined that it
will be necessary to write-off the net generation-related regulatory assets of
its Illinois businesses in the fourth quarter of 1997. The company expects this
extraordinary charge to reduce earnings approximately $52 million, net of income
taxes, or 38 cents per share. Actual 1997 earnings will be reported in early
February 1998.
Ameren management also believes that 1998 earnings will likely be lower
than 1997 earnings, excluding the extraordinary fourth quarter charge. Earnings
for 1998 are expected to fall within the range of $2.50 to $2.75 per share.
Ameren management cited a number of contributing factors for the likely earnings
decline:
- Lower revenues. Lower revenues result primarily from rate reductions to
Illinois electric residential customers, due to recent restructuring
legislation, and an expected fall 1998 rate reduction to all Missouri
electric customers. The reduction to Missouri customers is tied to the
extension of the company's current alternative rate regulation plan.
- Higher operations and maintenance expenses. Contributing factors include
information systems-related costs, including those expenses the company
expects to incur in addressing issues associated with adapting computer
systems so that they are Year 2000 compliant, the scheduled refueling
outage at the Callaway Nuclear Plant (to begin in April 1998), as well as
other operating expenses. All of these expenses more than offset merger
cost savings at this time.
- Merger-related expenses. In 1997, prior-period merger expenses related to
the company's Missouri jurisdiction were reversed and capitalized, based
upon a Missouri Public Service Commission order, which had the effect of
increasing 1997 income. These capitalized merger costs will be amortized to
expense in future periods.
- Start-up costs associated with the formation of Ameren Energy, Inc., the
company's new power marketing and energy services subsidiary. Further,
management believes that, as a result of changes in circumstances, the
recent merger with CIPSCO Incorporated will be moderately dilutive to
former Union Electric shareholders.
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In addition, Ameren management believes that earnings pressure may continue
beyond 1998 as the company and the entire electric utility industry address the
impact of a number of issues, including potentially lower revenues and higher
operating expenses associated with industry restructuring, as well as
potentially higher capital expenditures and operating expenses related to new
air quality standards.
"Earnings pressure is going to be an issue that we, and others in the
electric utility industry, will face in the foreseeable future. As for this
situation's impact on our dividend, I can only say that we continue to expect
that Ameren will adopt Union Electric's historical dividend rate and that we
have no current plans to change that rate. However, we will continue to reassess
the dividend as competition in our industry unfolds. To address the earnings
issue, we are taking steps now to accelerate merger cost savings and realize
other expense reductions. We are also actively seeking earnings opportunities
through the formation of Ameren Energy," said Charles W. Mueller, Ameren
chairman, president and chief executive officer.
With assets of approximately $9 billion, Ameren serves 1.5 million electric
customers and 300,000 natural gas customers in a 44,500-square-mile area of
Missouri and Illinois. Ameren Corporation is based in St. Louis.
* * *
Safe Harbor Statement Statements made in this press release which are not
based on historical facts, are forward-looking and, accordingly, involve
risks and uncertainties that could cause actual results to differ
materially from those discussed. Although such forward-looking statements
have been made in good faith and are based on reasonable assumptions, there
is no assurance that the expected results will be achieved. These
statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions
and financial performance. In connection with "Safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, the company is
providing this cautionary statement to identify important factors that
could cause actual results to differ materially from those anticipated.
Factors include, but are not limited to, the effects of regulatory actions;
changes in laws and other governmental actions; competition; future market
prices for electricity; average rates for electricity in the Midwest;
business and economic conditions; weather conditions; fuel prices and
availability; generation plant performance; monetary and fiscal policies;
and legal and administrative proceedings.
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