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 March 31, 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 April
30, 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
- March 31, 1998 and December 31, 1997 6
Consolidated Statement of Income
- Three months and 12 months ended
March 31, 1998 and 1997 7
Consolidated Statement of Cash Flows
- Three months ended March 31, 1998 and 1997 8
Notes to Consolidated Financial Statements 9
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,
the Registrant formed a new energy marketing subsidiary, Ameren Energy, which
will focus on power 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 9, 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
First quarter 1998 earnings of $40 million, or 29 cents per share, declined $5
million, or 4 cents per share, from 1997's first quarter earnings. Earnings for
the 12 months ended March 31, 1998, were $330 million, or $2.40 per share,
compared to $359 million, or $2.62 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 March 31, 1998, were $381 million, or $2.78 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 and 12-month
periods ended March 31, 1998, and 1997 are detailed below.
In March 1998, the Registrant reported that it expects that 1998 earnings per
share will reach the higher end of the range of $2.50 to $2.75 per share.
<TABLE>
Electric Operations
<CAPTION>
Electric Operating Revenues Variations for periods ended March 31, 1998
from comparable prior-year periods
- -----------------------------------------------------------------------------------------------
(Millions of Dollars) Three Months Twelve Months
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Credit to customers $ 2 $ 28
Effect of abnormal weather (14) 2
Growth and other 21 31
Interchange sales (33) (71)
EEI (19) (13)
- ----------------------------------------------------------------------------------------------
$(43) $(23)
- ----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
The $43 million decline in first quarter electric revenues compared to the
year-ago quarter is primarily due to milder weather, decreased interchange sales
and lower sales to the Department of Energy by EEI. Weather-sensitive
residential sales declined 2 percent while commercial sales were flat compared
to 1997 quarterly sales, and industrial sales rose 2 percent, reflecting a
strong regional economy. Interchange sales decreased 47 percent due to market
conditions.
The $23 million decrease in electric revenues for the 12 months ended March 31,
1998 compared to the prior 12-month period is due to a 24 percent decline in
interchange sales, partially offset by lower credits to Missouri electric
customers. Residential sales remained flat, while commercial and industrial
sales increased 1 percent and 2 percent, respectively, reflecting a strong
regional economy.
<TABLE>
<CAPTION>
Fuel and Purchased Power Variations for periods ended March 31, 1998
from comparable prior-year periods
- -------------------------------------------------------------------------------------------------
(Millions of Dollars) Three Months Twelve Months
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Fuel:
Variation in generation $(16) $ 4
Price 2 (14)
Generation efficiencies and other 4 -
Purchased power variation (12) (41)
EEI (16) (15)
- -------------------------------------------------------------------------------------------------
$(38) $(66)
- -------------------------------------------------------------------------------------------------
</TABLE>
Fuel and purchased power costs for the three months ended March 31, 1998 versus
the comparable prior-year quarter declined $38 million resulting primarily from
lower interchange sales, as well as lower sales at EEI. The decrease in fuel and
purchased power costs for the 12 months ended March 31, 1998 versus the year-ago
period was driven mainly by lower purchased power costs due to decreased
interchange kilowatthour sales, as well as lower fuel prices, and a decline in
fuel and purchased power costs at EEI.
Gas Operations
Gas revenues for the three months ended March 31, 1998 compared to the
comparable prior-year period decreased $15 million primarily due to the effect
of milder weather on dekatherm sales to ultimate customers and lower gas costs
reflected in the purchased gas adjustment clause. Gas revenues for the 12-month
period ended March 31, 1998 decreased $18 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 clauses.
Gas costs for the three months and 12 months ended March 31, 1998 declined $16
million and $18 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 $7 million for the first quarter of 1998
compared to the same year-ago period due to increases in information
system-related costs, injuries and damages, automated meter costs and
advertising expenses. The $37 million increase in other operations expenses for
the 12 months ended March 31, 1998 compared to the prior 12-month period was
primarily due to increases in information system-related costs, labor and
injuries and damages expenses.
Maintenance expenses for the first quarter of 1998 decreased $3 million compared
to the year-ago quarter due to a reduction in scheduled fossil plant
maintenance. The $2 million increase in maintenance expenses for the 12-month
period ended March 31, 1998 compared to the prior 12-month period was due to
increased scheduled fossil plant maintenance, partially offset by the absence of
a Callaway Plant refueling during the period. In April 1998, the Callaway Plant
commenced its scheduled refueling outage. The refueling outage was completed in
early May 1998.
Depreciation and amortization expense for the three-month period ended March 31,
1998 remained flat. For 12-month period ended March 31, 1998, depreciation and
amortization expense increased $4 million, versus the comparable 1997 period,
primarily due to increased depreciable property and the amortization of the
Missouri portion of merger-related costs which were recorded as a regulatory
asset upon Merger close under conditions of the Merger agreement.
3
<PAGE>
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
Registrant expects that its voluntary separation plan will result in a charge to
earnings in the third quarter of 1998 once it is known the number of employees
that will accept the terms of the plan. At this time, the Registrant is unable
to estimate the expected charge to earnings resulting from the voluntary
separation plan.
Taxes
Income taxes charged to operating expenses for the three months ended March 31,
1998 decreased $3 million versus the comparable 1997 period primarily due to
lower operating income. The $11 million decrease in income taxes charged to
operating expenses for the 12 months ended March 31, 1998 compared to the
year-ago period is primarily due to a lower effective tax rate.
Other Income and Deductions
Miscellaneous, net for the three months ended March 31, 1998 increased $1
million versus the comparable 1997 period, primarily due to reduced
merger-related costs. Miscellaneous, net increased $14 million for the 12-month
period ended March 31, 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 Merger agreement.
Interest and Preferred Dividends
Interest and preferred dividends for the three months and 12 months ended March
31, 1998, increased $1 million and $2 million, respectively, versus the
prior-year period, primarily due to an increase in long-term debt outstanding
compared to the prior year.
Balance Sheet
The $54 million decrease in trade accounts receivable and unbilled revenues was
due primarily to lower revenues in February and March 1998 compared to November
and December 1997.
Changes in accounts and wages payable, taxes accrued and other accruals resulted
from the timing of various payments to taxing authorities and suppliers.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $138 million for the three months
ended March 31, 1998, compared to $66 million during the same 1997 period.
Cash flows used in investing activities totaled $62 million and $95 million for
the three months ended March 31, 1998 and 1997, respectively. Construction
expenditures for the three months ended March 31, 1998 for constructing new or
improving existing facilities and complying with the Clean Air Act were $65
million. In addition, the Registrant expended $4 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 $41 million for the three months
ended March 31, 1998, compared to cash flows provided by financing activities of
$55 million during the same 1997 period. The Registrant's principal financing
activities for the three months ended March 31, 1998 included the issuance of
$65 million of long-term debt, the redemption of $35 million of long-term debt
and the payment of dividends. On February 13, 1998, the Registrant's Board of
Directors declared a quarterly dividend of 63.5 cents per common share which was
paid to shareholders on March 31, 1998. Common stock dividends paid for the 12
months ended March 31, 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
44 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 $1.6 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 March 31, 1998, the Registrant had committed
bank lines of credit aggregating $234 million (of which $176 million were unused
and $127 million were available at such date) which make available interim
financing at various rates of interest based on LIBOR, the bank certificate of
deposit rate or other options. The lines of credit are renewable annually at
various dates throughout the year. At March 31, 1998, the Registrant had $112
million of short-term borrowings. The Registrant also has
4
<PAGE>
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 were no
outstanding borrowings under this agreement as of March 31, 1998.
Additionally, AmerenUE has a bank credit agreement due 1999 which permits the
borrowing of up to $300 million on a long-term basis. At March 31, 1998,
AmerenUE had $75 million of borrowings outstanding against this credit
agreement.
AmerenUE also has a lease agreement which provides for the financing of nuclear
fuel. At March 31, 1998, the maximum amount that could be financed under the
agreement was $120 million. Cash provided from financing for the three months
ended March 31, 1998 included issuances under the lease for nuclear fuel of $1
million offset in part by $10 million of redemptions. At March 31, 1998, $109
million was financed under the lease.
RATE MATTERS
As a result of the Electric Service Customer Choice and Rate Relief Law of 1997
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.
ACCOUNTING MATTERS
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 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.
5
<PAGE>
<TABLE>
AMEREN CORPORATION
CONSOLIDATED BALANCE SHEET
UNAUDITED
(Thousands of Dollars, Except Shares)
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
- ------ ------------ ------------
<S> <C> <C>
Property and plant, at original cost:
Electric $11,539,426 $11,522,730
Gas 452,917 447,458
Other 80,745 36,023
----------- -----------
12,073,088 12,006,211
Less accumulated depreciation and amortization 5,361,923 5,285,434
----------- -----------
6,711,165 6,720,777
Construction work in progress:
Nuclear fuel in process 139,306 134,804
Other 110,799 131,504
----------- -----------
Total property and plant, net 6,961,270 6,987,085
----------- -----------
Investments and other assets:
Investments 92,778 97,188
Nuclear decommissioning trust fund 147,304 122,438
Other 73,331 64,915
----------- -----------
Total investments and other assets 313,413 284,541
----------- -----------
Current assets:
Cash and cash equivalents 45,824 9,696
Accounts receivable - trade (less allowance for doubtful
accounts of $5,301 and $4,845, respectively) 250,902 266,306
Unbilled revenue 64,409 102,864
Other accounts and notes receivable 51,293 49,765
Materials and supplies, at average cost -
Fossil fuel 96,852 93,431
Other 136,013 134,152
Other 39,211 55,002
----------- -----------
Total current assets 684,504 711,216
----------- -----------
Regulatory assets:
Deferred income taxes 639,324 639,792
Other 198,791 204,913
----------- -----------
Total regulatory assets 838,115 844,705
----------- -----------
Total Assets $ 8,797,302 $ 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 1,582,836 1,582,938
Retained earnings 1,387,312 1,434,658
----------- -----------
Total common stockholders' equity 2,971,520 3,018,968
Preferred stock not subject to mandatory redemption 235,197 235,197
Long-term debt 2,534,136 2,506,068
----------- -----------
Total capitalization 5,740,853 5,760,233
----------- -----------
Minority interest in consolidated subsidiary 3,534 3,534
Current liabilities:
Current maturity of long-term debt 45,131 52,241
Short-term debt 112,129 86,266
Accounts and wages payable 148,610 293,391
Accumulated deferred income taxes 42,700 35,809
Taxes accrued 169,267 110,566
Other 202,770 168,727
----------- -----------
Total current liabilities 720,607 747,000
----------- -----------
Accumulated deferred income taxes 1,548,297 1,556,981
Accumulated deferred investment tax credits 188,051 190,260
Regulatory liability 218,094 224,225
Other deferred credits and liabilities 377,866 345,314
----------- -----------
Total Capital and Liabilities $ 8,797,302 $ 8,827,547
=========== ===========
</TABLE>
6
<PAGE>
<TABLE>
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
(Thousands of Dollars, Except Shares and Per Share Amounts)
<CAPTION>
Three Months Ended Twelve Months Ended
March 31, March 31,
---------------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 606,100 $ 648,783 $ 3,021,494 $ 3,044,706
Gas 92,338 107,248 234,905 252,694
Other 2,372 3,632 11,291 13,351
------------- ------------- ------------- -------------
Total operating revenues 700,810 759,663 3,267,690 3,310,751
OPERATING EXPENSES:
Operations
Fuel and purchased power 164,905 202,640 798,710 864,435
Gas 52,204 67,838 145,045 163,092
Other 146,755 139,732 592,237 554,860
------------- ------------- ------------- -------------
363,864 410,210 1,535,992 1,582,387
Maintenance 65,003 67,539 307,705 305,857
Depreciation and amortization 86,854 86,512 346,342 342,709
Income taxes 29,911 32,844 231,246 242,222
Other taxes 64,746 67,097 269,360 272,583
------------- ------------- ------------- -------------
Total operating expenses 610,378 664,202 2,690,645 2,745,758
OPERATING INCOME 90,432 95,461 577,045 564,993
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 1,063 1,094 5,213 6,251
Miscellaneous, net (3,146) (4,092) (9,398) (22,970)
------------- ------------- ------------- -------------
Total other income and deductions (2,083) (2,998) (4,185) (16,719)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 88,349 92,463 572,860 548,274
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 47,495 46,071 186,792 181,253
Allowance for borrowed funds used during construction (2,261) (1,702) (8,021) (7,530)
Preferred dividends of subsidiaries 3,188 3,117 12,603 15,836
------------- ------------- ------------- -------------
Net interest charges and preferred dividends 48,422 47,486 191,374 189,559
INCOME BEFORE EXTRAORDINARY CHARGE 39,927 44,977 381,486 358,715
------------- ------------- ------------- -------------
EXTRAORDINARY CHARGE (NET OF
INCOME TAXES) -- -- (51,820) --
------------- ------------- ------------- -------------
NET INCOME $ 39,927 $ 44,977 $ 329,666 $ 358,715
============= ============= ============= =============
EARNINGS PER COMMON SHARE - BASIC
AND DILUTED (Based on average shares outstanding)
Income before extraordinary charge $ 0.29 $ 0.33 $ 2.78 $ 2.62
Extraordinary charge -- -- (0.38) --
------------- ------------- ------------- -------------
Net income $ 0.29 $ 0.33 $ 2.40 $ 2.62
============= ============= ============= =============
AVERAGE COMMON SHARES OUTSTANDING 137,215,462 137,215,462 137,215,462 137,215,462
============= ============= ============= =============
</TABLE>
7
<PAGE>
<TABLE>
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
(Thousands of Dollars)
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1997
--------- --------
<S> <C> <C>
Cash Flows From Operating:
Net income $ 39,927 $ 44,977
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 84,463 85,100
Amortization of nuclear fuel 9,617 9,834
Allowance for funds used during construction (3,324) (2,796)
Deferred income taxes, net (6,830) 249
Deferred investment tax credits, net (2,209) (2,376)
Changes in assets and liabilities:
Receivables, net 52,331 57,287
Materials and supplies (5,282) 10,550
Accounts and wages payable (144,781) (113,699)
Taxes accrued 58,701 55,777
Other, net 55,664 (79,250)
--------- ---------
Net cash provided by operating activities 138,277 65,653
Cash Flows From Investing:
Construction expenditures (64,946) (91,986)
Allowance for funds used during construction 3,324 2,796
Nuclear fuel expenditures (4,422) (3,722)
Other 4,410 (2,520)
--------- ---------
Net cash used in investing activities (61,634) (95,432)
Cash Flows From Financing:
Dividends on common stock (87,132) (83,813)
Redemptions -
Nuclear fuel lease (10,407) (4,615)
Short-term debt -- (16,743)
Long-term debt (35,000) (40,000)
Preferred stock -- (63,924)
Issuances -
Nuclear fuel lease 1,161 11,910
Short-term debt 25,863 22,600
Long-term debt 65,000 230,000
--------- ---------
Net cash provided by (used in) financing activities (40,515) 55,415
Net increase in cash and cash equivalents 36,128 25,636
Cash and cash equivalents at beginning of year 9,696 11,899
--------- ---------
Cash and cash equivalents at end of period $ 45,824 $ 37,535
========= =========
Cash paid during the periods:
Interest (net of amount capitalized) $ 29,319 $ 28,682
Income taxes, net $ (1,675) $ 3,101
</TABLE>
8
<PAGE>
AMEREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 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. The Registrant has a 60% interest in Electric Energy, Inc. (EEI).
EEI owns and operates an electric generating 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 March 31, 1998 and 1997 are not necessarily indicative of trends for any
three-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 three months ended March 31, 1998, the Registrant recorded
an estimated $10 million credit for the third year of the plan compared to a $20
million credit recorded for 1997. This credit, which the Registrant expects to
pay to Missouri customers later this year, was reflected as a reduction in
electric revenues. The final amount of the credit will depend on several
factors, including the Registrant's earnings for the 12 months ending June 30,
1998.
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 would be credited entirely to customers.
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
9
<PAGE>
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.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders of the Registrant held on
April 28, 1998, the following matters were presented to the meeting for a vote
and the results of such voting are as follows:
<TABLE>
Item (1) Election of Directors.
<CAPTION>
Non-Voted
Name For Withheld Brokers
<S> <C> <C> <C>
William E. Cornelius.................... 116,430,967 3,630,427 0
Clifford L. Greenwalt................... 116,197,459 3,863,935 0
Thomas A. Hays.......................... 116,464,635 3,596,759 0
Richard A. Liddy........................ 116,526,980 3,534,414 0
Gordon R. Lohman........................ 116,336,620 3,724,774 0
Richard A. Lumpkin...................... 116,530,171 3,531,223 0
John Peters MacCarthy................... 116,541,375 3,520,019 0
Hanne M. Merriman....................... 115,912,698 4,148,696 0
Paul L. Miller, Jr...................... 116,553,412 3,507,982 0
Charles W. Mueller...................... 116,517,878 3,543,516 0
Robert H. Quenon........................ 116,396,595 3,664,799 0
Harvey Saligman......................... 116,435,105 3,626,289 0
Charles J. Schukai...................... 116,563,157 3,498,237 0
Janet McAfee Weakley.................... 116,313,750 3,747,644 0
James W. Wogsland....................... 116,162,903 3,898,491 0
</TABLE>
<TABLE>
Item (2) Board Proposal re Long-Term Incentive Plan.
<CAPTION>
Non-Voted
For Against Abstain Brokers *
<S> <C> <C> <C>
106,175,592 10,612,259 3,271,412 900
</TABLE>
<TABLE>
Item (3) Stockholder Proposal re Report on Callaway Plant
Decommissioning Cost.
<CAPTION>
Non-Voted
For Against Abstain Broker *
<S> <C> <C> <C>
7,528,171 85,696,831 6,961,975 19,874,186
<FN>
* Broker shares included in the quorum but not voting on the items.
</FN>
</TABLE>
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. During the quarter, the Registrant filed
a report on Form 8-K dated January 20, 1998 reporting the impact of utility
restructuring legislation in Illinois and the expectation of lower earnings for
1998. Further by Form 8-K dated March 13, 1998, the Registrant reported
consolidated revenues and net income for January 1998.
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)
May 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 MARCH 31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 6,961,270
<OTHER-PROPERTY-AND-INVEST> 240,082
<TOTAL-CURRENT-ASSETS> 684,504
<TOTAL-DEFERRED-CHARGES> 73,331
<OTHER-ASSETS> 838,115
<TOTAL-ASSETS> 8,797,302
<COMMON> 1,372
<CAPITAL-SURPLUS-PAID-IN> 1,582,836
<RETAINED-EARNINGS> 1,387,312
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,971,520
0
235,197
<LONG-TERM-DEBT-NET> 2,455,889
<SHORT-TERM-NOTES> 112,129
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 14,444
0
<CAPITAL-LEASE-OBLIGATIONS> 78,247
<LEASES-CURRENT> 30,687
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,899,189
<TOT-CAPITALIZATION-AND-LIAB> 8,797,302
<GROSS-OPERATING-REVENUE> 700,810
<INCOME-TAX-EXPENSE> 29,911
<OTHER-OPERATING-EXPENSES> 580,467
<TOTAL-OPERATING-EXPENSES> 610,378
<OPERATING-INCOME-LOSS> 90,432
<OTHER-INCOME-NET> (2,083)
<INCOME-BEFORE-INTEREST-EXPEN> 88,349
<TOTAL-INTEREST-EXPENSE> 45,234
<NET-INCOME> 39,927
3,188
<EARNINGS-AVAILABLE-FOR-COMM> 39,927
<COMMON-STOCK-DIVIDENDS> 87,132
<TOTAL-INTEREST-ON-BONDS><F1> 0
<CASH-FLOW-OPERATIONS> 138,277
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
<FN>
<F1>Required on fiscal year-end only
</FN>
</TABLE>
