<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 1998
[ ] 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 1-14756.
AMEREN CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-1723446
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
Shares outstanding of each of registrant's classes of common stock as of July
31, 1998:
Common Stock, $ .01 par value - 137,215,462
<PAGE>
Ameren Corporation
Index
Page No.
Part I Consolidated Financial Information (Unaudited)
Management's Discussion and Analysis 2
Consolidated Balance Sheet
- June 30, 1998 and December 31, 1997 7
Consolidated Statement of Income
- Three months, six months and 12 months ended
June 30, 1998 and 1997 8
Consolidated Statement of Cash Flows
- Six months ended June 30, 1998 and 1997 9
Notes to Consolidated Financial Statements 10
Part II Other Information
<PAGE>
PART I. CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Ameren Corporation (Ameren) is a newly created holding company which is
registered under the Public Utility Holding Company Act of 1935 (PUHCA). In
December 1997, Union Electric Company (AmerenUE) and CIPSCO Incorporated
(CIPSCO) combined to form Ameren, with AmerenUE and CIPSCO's subsidiaries,
Central Illinois Public Service Company (AmerenCIPS) and CIPSCO Investment
Company (CIC) becoming wholly-owned subsidiaries of Ameren (the Merger). As a
result of the Merger, Ameren has a 60% ownership interest in Electric Energy,
Inc. (EEI), which is consolidated for financial reporting purposes. In addition,
Ameren formed a new energy marketing subsidiary, Ameren Energy, Inc., which will
focus on power and gas marketing transactions, serving as a power marketing
agent for the operating companies and providing a range of energy and risk
management services to targeted customers.
The Merger was accounted for as a pooling-of-interests; therefore the
consolidated financial statements are presented as if the Merger were
consummated as of the beginning of the earliest period presented. However, the
consolidated financial statements are not necessarily indicative of the results
of operations, financial position or cash flows that would have occurred had the
Merger been consummated for the periods for which it is given effect, nor is it
necessarily indicative of the future results of operations, financial position
or cash flows.
The following discussion and analysis should be read in conjunction with
the Notes to Consolidated Financial Statements beginning on page 10, and the
Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A), the Audited Consolidated Financial Statements and the Notes
to Consolidated Financial Statements appearing in the Registrant's 1997 Annual
Report to stockholders.
References to the Registrant are to Ameren on a consolidated basis;
however, in certain circumstances, the subsidiaries are separately referred to
in order to distinguish between their different business activities.
RESULTS OF OPERATIONS
Earnings
Second quarter 1998 earnings of $84 million, or 61 cents per share,
increased $4 million, or 3 cents per share, from 1997's second quarter earnings.
Earnings for the six months ended June 30, 1998, totaled $124 million, or 90
cents per share, compared to year-ago earnings of $125 million, or 91 cents per
share. Earnings for the 12 months ended June 30, 1998, were $334 million, or
$2.43 per share, compared to $366 million, or $2.67 per share, for the preceding
12-month period. Excluding the extraordinary charge recorded in the fourth
quarter of 1997 to write off the generation-related regulatory assets and
liabilities of the Registrant's Illinois retail electric business, earnings for
the 12-month period ended June 30, 1998, were $385 million, or $2.81 per share.
Earnings and earnings per share fluctuated due to many conditions, the
primary ones being: weather variations, credits to electric customers, sales
growth, fluctuating operating costs, the write-off of certain generation-related
regulatory assets and liabilities, and merger-related costs. The significant
items affecting revenues, costs and earnings during the three-month, six-month
and 12-month periods ended June 30, 1998, and 1997 are detailed below.
2
<PAGE>
<TABLE>
Electric Operations
<CAPTION>
Electric Operating Revenues Variations for periods ended June 30, 1998
from comparable prior-year periods
- ---------------------------- ---------------- ---------------- -----------------
(Millions of Dollars) Three Months Six Months Twelve Months
- ---------------------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
Credit to customers $(25) $(24) $(22)
Effect of abnormal weather 44 29 59
Growth and other 32 54 87
Interchange sales (3) (36) (90)
EEI (19) (37) (34)
- ---------------------------- ---------------- ---------------- -----------------
$ 29 $(14) $ -
- ---------------------------- ---------------- ---------------- -----------------
</TABLE>
The $29 million increase in second quarter electric revenues compared to
the year-ago quarter was primarily driven by increased native sales due to warm
weather, a strong regional economy and benefits realized from the elimination of
the retail electric fuel adjustment clause in the operating companies' Illinois
jurisdiction effective in the second quarter of 1998. Weather-sensitive
residential and commercial sales increased 19 percent and 8 percent,
respectively, while industrial sales rose 3 percent, reflecting a strong
regional economy. These increases were partially offset by a higher credit to
Missouri electric customers (see Note 5 under Notes to Consolidated Financial
Statements for further information), and lower sales by EEI, primarily to the
Department of Energy.
Electric revenues for the first six months of 1998 declined $14 million
compared to the prior-year period primarily due to a higher credit to Missouri
electric customers (see Note 5 under Notes to Consolidated Financial Statements
for further information), decreased interchange sales and lower sales to the
Department of Energy by EEI. Partially offsetting these decreases was an
increase in native sales of 5 percent due to warm weather compared to the
year-ago period and benefits realized from the elimination of the retail
electric fuel adjustment clause in the operating companies' Illinois
jurisdiction effective in the second quarter of 1998. Weather-sensitive
residential and commercial sales grew 7 percent and 4 percent, respectively,
while industrial sales rose 3 percent.
Electric revenues for the 12 months ended June 30, 1998, remained flat with
the prior 12-month period resulting from a 4 percent increase in native sales
due to favorable weather and a strong local economy, offset by an increase in
credits to Missouri electric customers (see Note 5 under Notes to Consolidated
Financial Statements for further information) and fewer interchange sales and
sales to the Department of Energy by EEI.
<TABLE>
<CAPTION>
Fuel and Purchased Power Variations for periods ended June 30, 1998
from comparable prior-year periods
- ---------------------------- ---------------- ---------------- -----------------
(Millions of Dollars) Three Months Six Months Twelve Months
- ---------------------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
Fuel:
Variation in generation $(5) $(21) $(20)
Price 8 9 (3)
Generation efficiencies
and other (3) 2 2
Purchased power variation 17 7 4
EEI variation (10) (27) (29)
- ---------------------------- ----------------- --------------- -----------------
$ 7 $(30) $(46)
- ---------------------------- ----------------- --------------- -----------------
</TABLE>
<PAGE>
Fuel and purchased power costs for the second quarter 1998 versus the
comparable prior-year quarter increased $7 million primarily due to increased
power purchases and higher energy prices, partially offset by lower fuel and
purchased power at EEI due to reduced kilowatthour sales. The $30 million
decrease in fuel and purchased power for the six months ended June 30, 1998,
compared to the year-ago period was primarily due to lower generation resulting
from the scheduled Callaway Nuclear Plant refueling outage, lower interchange
sales and a reduction at EEI due to fewer sales to the Department of Energy. The
$46 million decrease in fuel and purchased power costs for the 12 months ended
June 30, 1998, versus the prior-year period was driven mainly by reduced
generation
3
<PAGE>
primarily due to fewer interchange sales and lower fuel and purchased power at
EEI as a result of fewer sales to the Department of Energy.
While unprecedented prices for power purchases occurred in the marketplace
during the last week of June 1998, the Registrant was able to effectively manage
its power costs in the face of soaring wholesale electricity prices. Overall,
the abnormally high prices for power purchases in June had little impact on the
Registrant's financial results for the periods presented.
Gas Operations Gas revenues for the six months ended June 30, 1998,
decreased $12 million compared to the year-ago period primarily due to a
decrease in sales volume due to milder winter weather, as well as lower gas
costs reflected in the purchased gas adjustment clause, partially offset by the
annual $11.5 million rate increase in AmerenUE's Missouri jurisdiction,
effective February 1998. Gas revenues for the 12-month period ended June 30,
1998, decreased $17 million compared to the same year-ago period primarily due
to a decline in dekatherm sales to ultimate customers and lower gas costs
reflected in the purchased gas adjustment clause.
Gas costs for the six and 12 months ended June 30, 1998, declined $17
million and $21 million, respectively, compared to the year-ago periods. The
decreases in gas costs for these periods were due to lower dekatherm sales and
lower gas prices.
Other Operating Expenses
Other operating expense variations reflected recurring factors such as
growth, inflation, labor and benefit increases.
Other operations expenses increased $13 million and $20 million for the
three and six months ended June 30, 1998, respectively, compared to the same
year-ago periods primarily due to increased injuries and damages expense,
information system-related expenses and labor costs. The $44 million increase in
other operations expenses for the 12 months ended June 30, 1998, compared to the
prior 12-month period was primarily due to increased information system-related
expenses, labor costs and injuries and damages expense.
Maintenance expenses for the three and six months ended June 30, 1998,
increased $8 million and $6 million, respectively, compared to the year-ago
periods primarily due to the costs of refueling of the Callaway Nuclear Plant,
partially offset by a reduction in scheduled fossil plant maintenance. The
spring 1998 scheduled refueling was completed in 31 days. The $12 million
increase in maintenance expenses for the 12-month period ended June 30, 1998,
compared to the prior 12-month period was due to increased scheduled fossil
plant maintenance.
In March 1998, the Registrant announced plans to reduce its other operating
expenses, including plans to eliminate approximately 400 employee positions by
mid-1999 through a hiring freeze and a targeted voluntary separation plan (the
Plan). In July 1998, the Registrant offered separation packages to employees
whose positions are to be eliminated through the Plan. The Registrant expects
that the Plan will result in a charge to earnings in the third quarter of 1998
once the number of employees that will accept the terms of the Plan is known. At
this time, the Registrant is unable to estimate the expected charge to earnings
resulting from the Plan.
Taxes
The $12 million decrease in income taxes charged to operating expenses for
the 12 months ended June 30, 1998, compared to the year-ago period is primarily
due to lower operating income and a lower effective tax rate.
Other Income and Deductions Miscellaneous, net for the three months and six
months ended June 30, 1998, increased $3 million and $4 million, respectively,
versus the comparable 1997 periods, primarily due to reduced merger-related
costs. Miscellaneous, net increased $15 million for the 12-month period ended
June 30, 1998, compared to the year-ago period primarily due to the reversal of
the Missouri portion of merger-related costs which were recorded as a regulatory
asset upon Merger close under conditions of the Missouri Public Service
Commission order approving the Merger.
4
<PAGE>
Balance Sheet
The $70 million increase in trade accounts receivable and unbilled revenues
was due primarily to higher revenues in May and June 1998 compared to November
and December 1997.
Changes in accounts and wages payable, taxes accrued, other accruals and
other current assets resulted from the timing of various payments to taxing
authorities and suppliers.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $246 million for the six
months ended June 30, 1998, compared to $219 million during the same 1997
period.
Cash flows used in investing activities totaled $130 million and $209
million for the six months ended June 30, 1998 and 1997, respectively.
Construction expenditures for the six months ended June 30, 1998, for
constructing new or improving existing facilities and complying with the Clean
Air Act were $139 million. In addition, the Registrant expended $9 million for
the acquisition of nuclear fuel. Capital requirements for the remainder of 1998
are expected to be principally for construction expenditures and the acquisition
of nuclear fuel.
Cash flows used in financing activities were $78 million for the six months
ended June 30, 1998, compared to cash flows provided by financing activities of
$16 million during the same 1997 period. The Registrant's principal financing
activities for the six months ended June 30, 1998, included the issuance of $159
million of long-term debt, the redemption of $10 million of long-term debt and
the payment of dividends. On April 28, 1998, the Registrant's Board of Directors
declared a quarterly dividend of 63.5 cents per common share which was paid to
shareholders on June 30, 1998. Common stock dividends paid for the 12 months
ended June 30, 1998, resulted in a pay out rate of 101 percent of the
Registrant's earnings to common stockholders (88 percent excluding the
extraordinary charge). Dividends paid to the Registrant's common shareholders
relative to net cash provided by operating activities for the same period were
47 percent.
The Registrant plans to continue utilizing short-term debt to support
normal operations and other temporary requirements. The Registrant and its
subsidiaries are authorized by the Securities and Exchange Commission under
PUHCA to have up to an aggregate $1.7 billion of short-term unsecured debt
instruments outstanding at any one time. Short-term borrowings consist of bank
loans (maturities generally on an overnight basis) and commercial paper
(maturities generally within 10 to 45 days). At June 30, 1998, the Registrant
had committed bank lines of credit aggregating $234 million (all of which was
unused and $179 million was available at such date) which make available interim
financing at various rates of interest based on LIBOR, the bank certificate of
deposit rate or other options. The lines of credit are renewable annually at
various dates throughout the year. The Registrant also has a bank credit
agreement due 2003 which permits the borrowing of up to $200 million on a
short-term basis. This credit agreement is available for the Registrant's own
use and for the use of its subsidiaries. There was $20 million outstanding under
this agreement as of June 30, 1998. At June 30, 1998, the Registrant had $78
million of short-term borrowings.
Additionally, AmerenUE has a bank credit agreement due 2000 which permits
the borrowing of up to $300 million on a long-term basis, all of which was
unused and $116 million was available at June 30, 1998.
AmerenUE also has a lease agreement which provides for the financing of
nuclear fuel. At June 30, 1998, the maximum amount that could be financed under
the agreement was $120 million. Cash used in financing for the six months ended
June 30, 1998, included redemptions under the lease for nuclear fuel of $51
million offset in part by $8 million of issuances. At June 30, 1998, $75 million
was financed under the lease.
5
<PAGE>
RATE MATTERS
As a result of the Electric Service Customer Choice and Rate Relief Law of
1997 (the Law) providing for electric utility restructuring in Illinois,
AmerenUE and AmerenCIPS filed proposals with the Illinois Commerce Commission
(ICC) to eliminate the electric fuel adjustment clause for Illinois retail
customers, thereby including a historical level of fuel costs in base rates. The
ICC approved AmerenCIPS' and AmerenUE's filings on March 25, 1998 and April 28,
1998, respectively.
In June 1998, AmerenUE and AmerenCIPS filed residential rate reduction
tariffs with the ICC to comply with the requirements of the Law. Under
provisions of the Law, a rate decrease of 5 percent will become effective for
Illinois residential electric customers beginning August 1, 1998.
Also in June 1998, AmerenUE and AmerenCIPS filed requests with the ICC to
increase rates for natural gas service $17 million annually in the Illinois
jurisdiction. The ICC has until May 1999 to render a decision.
See Note 5 under Notes to Consolidated Financial Statements for further
discussion of Rate Matters.
ACCOUNTING MATTERS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities and
requires recognition of all derivatives in the balance sheet measured at fair
value. SFAS 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. Earlier application is encouraged, but permitted
only as of the beginning of any fiscal quarter that begins after issuance of the
standard. At this time, the Registrant is unable to determine the impact of SFAS
133 on its financial position or results of operations upon adoption.
In February 1998, the Financial Accounting Standards Board issued SFAS 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS
132 revises employers' disclosures about pension and other postretirement
benefit plans. SFAS 132 is effective for fiscal years beginning after December
15, 1998, although earlier application is encouraged. SFAS 132 is not expected
to have a material impact on the Registrant's financial position or results of
operations upon adoption.
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 provides guidance on accounting for the costs of
computer software developed or obtained for internal use. Under SOP 98-1,
certain costs which are currently expensed by the Registrant may be capitalized
and amortized over some future period. SOP 98-1 is effective for fiscal years
beginning after December 15, 1998, although earlier application is encouraged.
At this time, the Registrant is unable to determine the impact of SOP 98-1 on
its financial position or results of operations upon adoption.
SAFE HARBOR STATEMENT
Statements made in this Form 10-Q which are not based on historical facts,
are forward-looking and, accordingly, involve risks and uncertainties that could
cause actual results to differ materially from those discussed. Although such
forward-looking statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions and
financial performance. In connection with the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Registrant is providing
this cautionary statement to identify important factors that could cause actual
results to differ materially from those anticipated. 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.
6
<PAGE>
AMEREN CORPORATION
------------------
CONSOLIDATED BALANCE SHEET
--------------------------
UNAUDITED
---------
(Thousands of Dollars, Except Shares)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
- ------ ----------- -----------
<S> <C> <C>
Property and plant, at original cost:
Electric $11,634,439 $11,522,730
Gas 457,629 447,458
Other 81,594 36,023
----------- -----------
12,173,662 12,006,211
Less accumulated depreciation and amortization 5,440,491 5,285,434
----------- -----------
6,733,171 6,720,777
Construction work in progress:
Nuclear fuel in process 97,088 134,804
Other 119,533 131,504
----------- -----------
Total property and plant, net 6,949,792 6,987,085
----------- -----------
Investments and other assets:
Investments 85,368 97,188
Nuclear decommissioning trust fund 148,699 122,438
Other 67,927 64,915
----------- -----------
Total investments and other assets 301,994 284,541
----------- -----------
Current assets:
Cash and cash equivalents 47,084 9,696
Accounts receivable - trade (less allowance for doubtful
accounts of $6,437 and $4,845, respectively) 299,262 266,306
Unbilled revenue 139,942 102,864
Other accounts and notes receivable 49,962 49,765
Materials and supplies, at average cost -
Fossil fuel 97,939 93,431
Other 135,869 134,152
Other 28,832 55,002
----------- -----------
Total current assets 798,890 711,216
----------- -----------
Regulatory assets:
Deferred income taxes 636,850 639,792
Other 192,857 204,913
----------- -----------
Total regulatory assets 829,707 844,705
----------- -----------
Total Assets $ 8,880,383 $ 8,827,547
=========== ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock, $.01 par value, authorized 400,000,000 shares -
outstanding 137,215,462 shares $ 1,372 $ 1,372
Other paid-in capital, principally premium on
common stock 1,582,746 1,582,938
Retained earnings 1,383,739 1,434,658
----------- -----------
Total common stockholders' equity 2,967,857 3,018,968
Preferred stock not subject to mandatory redemption 235,197 235,197
Long-term debt 2,581,499 2,506,068
----------- -----------
Total capitalization 5,784,553 5,760,233
----------- -----------
Minority interest in consolidated subsidiary 3,534 3,534
Current liabilities:
Current maturity of long-term debt 82,185 52,241
Short-term debt 77,503 86,266
Accounts and wages payable 163,252 293,391
Accumulated deferred income taxes 64,240 56,094
Taxes accrued 176,218 110,566
Other 220,502 168,727
----------- -----------
Total current liabilities 783,900 767,285
----------- -----------
Accumulated deferred income taxes 1,529,333 1,536,696
Accumulated deferred investment tax credits 184,354 190,260
Regulatory liability 208,514 224,225
Other deferred credits and liabilities 386,195 345,314
----------- -----------
Total Capital and Liabilities $ 8,880,383 $ 8,827,547
=========== ===========
</TABLE>
7
<PAGE>
AMEREN CORPORATION
------------------
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
UNAUDITED
---------
(Thousands of Dollars, Except Shares and Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
--------------------------- --------------------------- ---------------------------
1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 780,808 $ 752,223 $ 1,386,908 $ 1,401,006 $ 3,050,079 $ 3,050,199
Gas 39,277 36,646 131,615 143,894 237,536 254,469
Other 1,692 2,952 4,064 6,584 10,031 12,607
------------ ------------ ------------ ------------ ------------ ------------
Total operating revenues 821,777 791,821 1,522,587 1,551,484 3,297,646 3,317,275
OPERATING EXPENSES:
Operations
Fuel and purchased power 207,179 199,757 372,084 402,397 806,132 852,199
Gas 23,085 24,118 75,289 91,956 144,012 165,480
Other 155,136 142,116 301,891 281,848 605,257 561,040
------------ ------------ ------------ ------------ ------------ ------------
385,400 365,991 749,264 776,201 1,555,401 1,578,719
Maintenance 92,425 84,368 157,428 151,907 315,762 303,445
Depreciation and amortization 86,061 86,450 172,915 172,962 345,953 344,620
Income taxes 58,798 57,085 88,709 89,929 232,959 244,727
Other taxes 70,935 65,435 135,681 132,532 274,860 271,947
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses 693,619 659,329 1,303,997 1,323,531 2,724,935 2,743,458
OPERATING INCOME 128,158 132,492 218,590 227,953 572,711 573,817
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used
during construction 1,204 880 2,267 1,974 5,537 4,944
Miscellaneous, net (1,640) (4,927) (4,786) (9,019) (6,111) (21,399)
------------ ------------ ------------ ------------ ----------- ------------
Total other income and deductions (436) (4,047) (2,519) (7,045) (574) (16,455)
INCOME BEFORE INTEREST
CHARGES AND PREFERRED
DIVIDENDS 127,722 128,445 216,071 220,908 572,137 557,362
INTEREST CHARGES AND
PREFERRED DIVIDENDS:
Interest 42,732 47,350 90,227 93,421 182,174 183,686
Allowance for borrowed funds
used during construction (1,728) (1,725) (3,989) (3,427) (8,024) (6,841)
Preferred dividends of subsidiaries 3,086 3,134 6,274 6,251 12,555 14,732
------------ ------------ ------------ ------------ ------------ ------------
Net interest charges and preferred
dividends 44,090 48,759 92,512 96,245 186,705 191,577
INCOME BEFORE
EXTRAORDINARY CHARGE 83,632 79,686 123,559 124,663 385,432 365,785
------------ ------------ ------------ ------------ ------------ ------------
EXTRAORDINARY CHARGE
(NET OF INCOME TAXES) -- -- -- -- (51,820) --
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME $ 83,632 $ 79,686 $ 123,559 $ 124,663 $ 333,612 $ 365,785
============ ============ ============ ============ ============ ============
EARNINGS PER COMMON SHARE -
BASIC AND DILUTED (Based on
average shares outstanding)
Income before extraordinary charge $ 0.61 $ 0.58 $ 0.90 $ 0.91 $ 2.81 $ 2.67
Extraordinary charge -- -- -- -- (0.38) --
------------ ------------ ------------ ------------ ------------ ------------
Net income $ 0.61 $ 0.58 $ 0.90 $ 0.91 $ 2.43 $ 2.67
AVERAGE COMMON SHARES
OUTSTANDING 137,215,462 137,215,462 137,215,462 137,215,462 137,215,462 137,215,462
</TABLE>
8
<PAGE>
AMEREN CORPORATION
------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
UNAUDITED
---------
(Thousands of Dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows From Operating:
Net income $ 123,559 $ 124,663
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 167,895 170,137
Amortization of nuclear fuel 16,182 19,901
Allowance for funds used during construction (6,256) (5,401)
Deferred income taxes, net (11,462) (1,237)
Deferred investment tax credits, net (5,906) (4,752)
Changes in assets and liabilities:
Receivables, net (70,231) (8,274)
Materials and supplies (6,225) 12,611
Accounts and wages payable (130,139) (104,822)
Taxes accrued 65,652 75,399
Credits to customers 42,316 (25,321)
Other, net 60,187 (33,492)
---------- ----------
Net cash provided by operating activities 245,572 219,412
Cash Flows From Investing:
Construction expenditures (138,849) (199,350)
Allowance for funds used during construction 6,256 5,401
Nuclear fuel expenditures (9,352) (10,401)
Other 11,820 (4,488)
---------- ----------
Net cash used in investing activities (130,125) (208,838)
Cash Flows From Financing:
Dividends on common stock (174,264) (168,023)
Redemptions -
Nuclear fuel lease (51,152) (12,717)
Short-term debt (8,763) --
Long-term debt (10,000) (106,000)
Preferred stock -- (63,924)
Issuances -
Nuclear fuel lease 7,620 20,703
Short-term debt -- 54,413
Long-term debt 158,500 292,000
---------- ----------
Net cash provided by (used in) financing activities (78,059) 16,452
Net increase in cash and cash equivalents 37,388 27,026
Cash and cash equivalents at beginning of year 9,696 11,899
---------- ----------
Cash and cash equivalents at end of period $ 47,084 $ 38,925
========== ==========
Cash paid during the periods:
Interest (net of amount capitalized) $ 88,005 $ 84,889
Income taxes, net $ 81,053 $ 72,808
</TABLE>
9
<PAGE>
AMEREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
Note 1 - Effective December 31, 1997, following the receipt of all required
state and federal regulatory approvals, Union Electric Company (AmerenUE) and
CIPSCO Incorporated (CIPSCO) combined to form Ameren Corporation (Ameren)(the
Merger). The accompanying consolidated financial statements (the financial
statements) reflect the accounting for the Merger as a pooling of interests and
are presented as if the companies were combined as of the earliest period
presented. However, the financial information is not necessarily indicative of
the results of operations, financial position or cash flows that would have
occurred had the Merger been consummated for the periods for which it is given
effect, nor is it necessarily indicative of future results of operations,
financial position or cash flows. The outstanding preferred stock of AmerenUE
and Central Illinois Public Service Company (AmerenCIPS), a subsidiary of
CIPSCO, were not affected by the Merger.
The accompanying financial statements include the accounts of Ameren and
its consolidated subsidiaries (collectively the Registrant). All subsidiaries
for which the Registrant owns directly or indirectly more than 50% of the voting
stock are included as consolidated subsidiaries. Ameren's primary operating
companies, AmerenUE and AmerenCIPS, are engaged principally in the generation,
transmission, distribution and sale of electric energy and the purchase,
distribution, transportation and sale of natural gas in the states of Missouri
and Illinois. The Registrant also has a non-regulated investing subsidiary,
CIPSCO Investment Company (CIC), and a non-utility energy marketing subsidiary,
Ameren Energy, Inc. The Registrant has a 60% interest in Electric Energy, Inc.
(EEI). EEI owns and operates an electric generation and transmission facility in
Illinois that supplies electric power primarily to a uranium enrichment plant
located in Paducah, Kentucky.
All significant intercompany balances and transactions have been eliminated
from the consolidated financial statements.
Note 2 - Financial statement note disclosures, normally included in
consolidated financial statements prepared in conformity with generally accepted
accounting principles, have been omitted in this Form 10-Q pursuant to the Rules
and Regulations of the Securities and Exchange Commission. However, in the
opinion of the Registrant, the disclosures contained in this Form 10-Q are
adequate to make the information presented not misleading. See Notes to
Consolidated Financial Statements included in the 1997 Form 10-K for information
relevant to the consolidated financial statements contained in this Form 10-Q,
including information as to the significant accounting policies of the
Registrant.
Note 3 - In the opinion of the Registrant, the interim financial statements
filed as part of this Form 10-Q reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
the periods presented. The Registrant's consolidated financial statements were
prepared to permit the information required in the Financial Data Schedule
(FDS), Exhibit 27, to be directly extracted from the filed statements. The FDS
amounts correspond to or are calculable from the amounts reported in the
consolidated financial statements or notes thereto.
Note 4 - Due to the effect of weather on sales and other factors which are
characteristic of public utility operations, financial results for the periods
ended June 30, 1998 and 1997, are not necessarily indicative of trends for any
three-month, six-month or twelve-month period.
Note 5 - On July 21, 1995, the Missouri Public Service Commission (MoPSC)
approved an agreement involving AmerenUE's Missouri electric rates. The
Agreement included a three-year experimental alternative regulation plan that
provides that earnings in excess of a 12.61 percent regulatory return on equity
(ROE) will be shared equally between customers and shareholders and earnings
above 14 percent ROE will be credited to customers. The formula for computing
the credit uses twelve-month results ending June 30, rather than calendar year
earnings. During the six months ended June 30, 1998, the Registrant recorded an
estimated $43 million credit for the third year of the plan, compared to a $20
million credit recorded for the same 1997 period. This credit, which the
Registrant expects to pay to Missouri customers later this year, was reflected
as a reduction in electric revenues.
10
<PAGE>
A new three-year experimental alternative regulation plan was included in
the joint agreement approved by the MoPSC in its February 1997 order approving
the Merger. Like the current plan, the new plan requires that earnings over a
12.61 percent ROE up to a 14 percent ROE will be shared equally between
customers and stockholders. The new three-year plan will also return to
customers 90 percent of all earnings above a 14 percent ROE up to a 16 percent
ROE. Earnings above a 16 percent ROE will be credited entirely to customers. The
joint agreement also provides for a Missouri electric rate decrease, effective
September 1, 1998, based on the weather-adjusted average annual credits to
customers under the current experimental alternative regulation plan.
Note 6 - Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income" became effective on January 1, 1998. SFAS 130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in the financial
statements with the same prominence as other financial statement components.
Adoption of SFAS 130 did not have a material effect on the financial position,
results of operations, liquidity or presentation of financial information of the
Registrant.
Note 7 - Certain reclassifications were made to prior-year financial
statements to conform with current-period presentation.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Any stockholder proposal intended for inclusion in the proxy material for
the Registrant's 1999 annual meeting of stockholders must be received by
November 23, 1998.
In addition, under the Registrant's By-Laws, shareholders who intend to
submit a proposal in person at an Annual Meeting, or who intend to nominate a
director at a Meeting, must provide advance written notice along with other
prescribed information. In general, said notice must be received by the
Secretary of the Registrant not later than 60 nor earlier than 90 days prior to
the Meeting. For the Registrant's 1999 annual meeting of stockholders, such a
proposal should be received not later than February 27, 1999 nor earlier than
January 28, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. None
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.
AMEREN CORPORATION
(Registrant)
August 13, 1998 By /s/ Donald E. Brandt
---------------------------
Donald E. Brandt
Senior Vice President, Finance
12
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
Exhibit 27
AMEREN CORPORATION
10-Q JUNE 30, 1998
FINANCIAL DATA SCHEDULE UT
PUBLIC UTILITY COMPANIES AND PUBLIC UTILITY HOLDING COMPANIES
APPENDIX E TO ITEM 601 (C) OF REGULATION S-K
(Thousands of Dollars Except Per Share Amounts)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 6,949,792
<OTHER-PROPERTY-AND-INVEST> 234,067
<TOTAL-CURRENT-ASSETS> 798,890
<TOTAL-DEFERRED-CHARGES> 67,927
<OTHER-ASSETS> 829,707
<TOTAL-ASSETS> 8,880,383
<COMMON> 1,372
<CAPITAL-SURPLUS-PAID-IN> 1,582,746
<RETAINED-EARNINGS> 1,383,739
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,967,857
0
235,197
<LONG-TERM-DEBT-NET> 2,519,592
<SHORT-TERM-NOTES> 77,503
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 69,445
0
<CAPITAL-LEASE-OBLIGATIONS> 61,907
<LEASES-CURRENT> 12,740
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,936,142
<TOT-CAPITALIZATION-AND-LIAB> 8,880,383
<GROSS-OPERATING-REVENUE> 1,522,587
<INCOME-TAX-EXPENSE> 88,709
<OTHER-OPERATING-EXPENSES> 1,215,288
<TOTAL-OPERATING-EXPENSES> 1,303,997
<OPERATING-INCOME-LOSS> 218,590
<OTHER-INCOME-NET> (2,519)
<INCOME-BEFORE-INTEREST-EXPEN> 216,071
<TOTAL-INTEREST-EXPENSE> 86,238
<NET-INCOME> 123,559
6,274
<EARNINGS-AVAILABLE-FOR-COMM> 123,559
<COMMON-STOCK-DIVIDENDS> 174,264
<TOTAL-INTEREST-ON-BONDS><F1> 0
<CASH-FLOW-OPERATIONS> 245,572
<EPS-PRIMARY> 0.90
<EPS-DILUTED> 0.90
<FN>
<F1> Required on fiscal year-end only
</FN>
</TABLE>
