<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 2000
[ ] 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 October
31, 2000: 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
Quantitative and Qualitative Disclosures
About Market Risk 7
Consolidated Balance Sheet
- September 30, 2000 and December 31, 1999 9
Consolidated Statement of Income
- Three months, nine months and 12 months ended
September 30, 2000 and 1999 10
Consolidated Statement of Cash Flows
- Nine months ended September 30, 2000 and 1999 11
Notes to Consolidated Financial Statements 12
Part II Other Information 15
<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 holding company 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 subsidiaries of
Ameren (the Merger). As a result of the Merger, Ameren has a 60% ownership
interest in Electric Energy, Inc. (EEI). That interest is consolidated for
financial reporting purposes. Since the Merger, Ameren has formed AmerenEnergy,
Inc. (AmerenEnergy), Ameren Development Company, AmerenEnergy Resources Company,
and Ameren Services Company. AmerenEnergy, an energy marketing subsidiary,
primarily serves as a power marketing agent for the operating utility
subsidiaries and provides a range of energy and risk management services to
targeted customers. Ameren Development Company is a nonregulated subsidiary
encompassing Ameren's nonregulated products and services. AmerenEnergy Resources
Company holds the Registrant's nonregulated generating operations (see
discussion below under "Electric Industry Restructuring"). Ameren Services
Company provides shared support services to Ameren and all of its subsidiaries.
The following discussion and analysis should be read in conjunction with the
Notes to Consolidated Financial Statements beginning on page 12, 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 1999 Annual
Report to Stockholders (which are incorporated by reference in the Registrant's
1999 Form 10-K).
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
Third quarter 2000 earnings of $256 million, or $1.87 per share, increased $6
million, or 5 cents per share, from 1999's third quarter earnings. Earnings for
the nine months ended September 30, 2000, totaled $431 million, or $3.14 per
share, compared to the year-ago earnings of $391 million or $2.85 per share.
Earnings for the 12 months ended September 30, 2000, were $426 million, or $3.10
per share, compared to $417 million, or $3.04 per share, for the preceding
12-month period.
Earnings and earnings per share fluctuated due to many conditions, primarily:
sales growth, weather variations, credits to electric customers, electric rate
reductions, competitive market forces, fluctuating operating costs (including
Callaway Nuclear Plant refueling outages), changes in interest expense, changes
in income and property taxes, and non-recurring charges for a targeted employee
separation plan and for coal contract termination payments.
Based on the Company's earnings results for the nine months ended September 30,
2000, the Company now estimates that earnings per share for the year ending
December 31, 2000 will range between $3.25 and $3.35. In addition, the Company
estimates that earnings per share for the year ending December 31, 2001 will
range between $3.30 and $3.45.
The significant items affecting revenues, costs and earnings during the
three-month, nine-month and 12-month periods ended September 30, 2000 and 1999
are detailed on the following pages.
-2-
<PAGE>
Electric Operations
Electric Operating Revenues Variations for periods ended September 30, 2000
from comparable prior-year periods
--------------------------------------------------------------------------------
(Millions of Dollars) Three Months Nine Months Twelve Months
------------ ----------- -------------
--------------------------------------------------------------------------------
Rate variations $ - $ - $ 7
Credit to customers (10) (5) (13)
Effect of abnormal weather (22) (40) (43)
Growth and other 45 123 147
Interchange sales (22) 74 92
EEI 7 1 12
--------------------------------------------------------------------------------
$ (2) $ 153 $ 202
--------------------------------------------------------------------------------
The $2 million decrease in third quarter electric revenues compared to the
year-ago quarter was primarily driven by an increase in the estimated credits to
Missouri electric customers (see Note 5 under Notes to Consolidated Financial
Statements for further information) offset in part by an increase in total
kilowatthour sales of 1 percent. During the third quarter of 2000, commercial
sales increased 7 percent, while residential and industrial sales decreased 1
percent and 4 percent, respectively. In addition, wholesale and interchange
sales rose 50 percent and 3 percent, respectively.
Electric revenues for the first nine months of 2000 increased $153 million
compared to the prior-year period, primarily due to a 7 percent increase in
total kilowatthour sales. This increase was primarily driven by an increase in
interchange sales due to strong marketing efforts. In addition, commercial and
wholesale sales rose 6 percent and 53 percent, respectively, while residential
and industrial sales remained flat during the period. These increases were
offset in part by an increase in the estimated credits to Missouri electric
customers (see Note 5 under Notes to Consolidated Financial Statements for
further information).
Electric revenues for the 12 months ended September 30, 2000 increased $202
million compared to the prior 12-month period. The increase in revenues was
primarily driven by increased interchange sales due to strong marketing efforts
as well as higher commercial and wholesale sales. This increase was partially
offset by an increase in the estimated credit to Missouri electric customers
(see Note 5 under Notes to Consolidated Financial Statements for further
information).
Fuel and Purchased Power Variations for periods ended September 30, 2000
from comparable prior-year periods
--------------------------------------------------------------------------------
(Millions of Dollars) Three Months Nine Months Twelve Months
------------ ----------- -------------
--------------------------------------------------------------------------------
Fuel:
Generation $ 6 $ 21 $ 20
Price (8) (23) (16)
Generation efficiencies and other (4) (11) (19)
Coal contract termination payments - - 52
Purchased power variation (20) 45 78
EEI variation 16 20 32
--------------------------------------------------------------------------------
$ (10) $ 52 $ 147
--------------------------------------------------------------------------------
Fuel and purchased power costs for the third quarter decreased $10 million
versus the comparable prior-year period primarily due to decreased purchased
power and lower fuel prices, offset in part by increased generation.
Fuel and purchased power costs for the nine and 12 months ended September 30,
2000 increased $52 and $147 million, respectively, versus the comparable
prior-year period primarily due to increased generation and purchased power,
resulting from higher sales volume, partially offset by lower fuel prices.
Additionally, for the 12 months ended September 30, 2000, AmerenCIPS and two of
its coal suppliers executed agreements to terminate their existing coal supply
contracts effective December 31, 1999 resulting in termination payments of $52
million. Total pretax fuel cost savings expected to be realized from the coal
contract terminations are $183 million ($131 million net of termination
payments) through 2010, with $66 million of pretax savings expected in the next
three years.
-3-
<PAGE>
Gas Operations
Gas revenues for the three, nine and 12-months ended September 30, 2000,
increased $7 million, $20 million and $27 million, respectively, compared to the
year-ago periods primarily due to increases in retail sales and gas costs,
coupled with an Illinois gas rate increase effective February 1999.
Gas costs for the three, nine and 12-months ended September 30, 2000, increased
$7 million, $17 million and $28 million, respectively, primarily due to higher
sales and gas prices.
Other Operating Expenses
Other operating expense variations reflected recurring factors such as growth,
inflation, labor and benefit increases.
Other operations expenses decreased $14 million for the three and nine
months ended September 30, 2000 compared to the prior-year periods primarily due
to lower employee benefits in 2000, resulting from changes in actuarial
assumptions, lower professional service expenses, offset in part by increased
expenses associated with the automated meter reading roll-out. Other operations
expenses decreased $26 million for the 12-month period ended September 30, 2000
compared to the same year-ago period primarily due to the capitalization of
certain costs (including computer software costs) that had previously been
expensed for the Registrant's Missouri electric operations based on an order
from the Missouri Public Service Commission in 1999.
Maintenance expenses for the nine and 12-months ended September 30, 2000,
increased $16 million and $47 million, respectively, compared to the year-ago
periods primarily due to increased scheduled power plant maintenance and
tree-trimming activity.
Taxes
Income taxes increased $27 million for the nine months ended September 30, 2000
due to higher pretax income.
Other Income and Deductions
The variation in miscellaneous, net for the nine and 12-month periods ended
September 30, 2000, compared to the year-ago periods, was primarily due to prior
period write-offs of certain nonregulated investments.
Balance Sheet
The $80 million increase in trade accounts receivable and unbilled revenue was
due primarily to higher revenues in August and September 2000 compared to
November and December 1999.
Short-term debt increased $390 million primarily for borrowings to finance the
acquisition of new combustion turbine generators. See Liquidity and Capital
Resources below for further discussion.
Changes in accounts and wages payable and taxes accrued resulted from the timing
of various payments to taxing authorities and suppliers.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $762 million for the nine months
ended September 30, 2000, compared to $854 million during the same 1999 period.
Cash flows used in investing activities totaled $633 million and $327 million
for the nine months ended September 30, 2000 and 1999, respectively.
Construction expenditures for the nine months ended September 30, 2000, for
constructing new or improving existing facilities were $658 million, which
included expenditures associated with the purchase of combustion turbine
generators (see Note 6 under Notes to Consolidated Financial Statements for
further information). In addition, the Registrant expended $12 million for the
acquisition of nuclear fuel. The Registrant received Board of Directors approval
on April 25, 2000 to spend approximately $160 million on capital expenditures
relating to the replacement of four steam generators at its Callaway Nuclear
Plant. Installation is scheduled to be completed in 2005. The impact on
anticipated 2000 capital expenditures will be insignificant.
Cash flows used in financing activities totaled $86 million for the nine months
ended September 30, 2000. The Registrant's principal financing activities for
the period included issuance of short-term and long-term debt, offset by the
redemption of long-term debt and the payment of dividends. On August 25, 2000,
the Registrant's Board of Directors declared a quarterly dividend for the third
quarter of 2000 of 63.5 cents per common share that was paid to shareholders on
September 29, 2000. Common stock dividends paid for the 12 months ended
September 30, 2000, resulted in a payout rate of 82 percent of the Registrant's
earnings to common stockholders. Dividends paid to the Registrant's common
shareholders relative to net cash provided by operating activities for the same
period were 42 percent.
-4-
<PAGE>
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 (SEC) under PUHCA to
have up to an aggregate $2.8 billion of short-term unsecured debt instruments
outstanding at any one time. Short-term borrowings consist of bank loans and
commercial paper (maturities generally within 1 to 45 days). At September 30,
2000, the Registrant had committed bank lines of credit aggregating $176
million, all of which was unused and 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 has bank
credit agreements, expiring at various dates between 2000 and 2002, that support
commercial paper programs totaling $800 million, $500 million of which is
available for the Registrant's own use and for the use of its subsidiaries. The
remaining $300 million is available for the use of the Registrant's regulated
subsidiaries. At September 30, 2000, $334 million was available under these bank
credit agreements. The Registrant had $470 million of short-term borrowings at
September 30, 2000.
AmerenUE also has a lease agreement that provides for the financing of nuclear
fuel. At September 30, 2000, the maximum amount that could be financed under the
agreement was $120 million. Cash used in financing activities for the nine
months ended September 30, 2000, included redemptions under the lease for
nuclear fuel of $8 million, offset by $7 million of issuances. At September 30,
2000, $116 million was financed under the lease.
On November 1, 2000, the Company issued in a private placement Senior
Notes, Series A due 2005 (Series A Notes) and Senior Notes, Series B due 2010
(Series B Notes) (collectively, the Senior Notes). The Series A Notes totaled
$225 million. Interest will accrue on the Series A Notes at a rate of 7.75% per
year and will be payable semiannually in arrears on May 1 and November 1 of each
year commencing on May 1, 2001. Principal of the Series A Notes will be payable
on November 1, 2005. Series B Notes totaled $200 million. Interest will accrue
on the Series B Notes at a rate of 8.35% per year and will be payable
semiannually in arrears on May 1 and November 1 of each year commencing on May
1, 2001. Principal of the Series B Notes will be payable on November 1, 2010.
The proceeds from the Senior Notes were $423.6 million, excluding transaction
costs. With the proceeds of the Senior Notes, the Company intends to paydown its
short-term intercompany borrowings outstanding at September 30, 2000, pay for
the construction of certain combustion turbine generators, as well as fund
working capital and other capital expenditure needs.
The Registrant, in the ordinary course of business, explores opportunities to
reduce its costs in order to remain competitive in the marketplace. Areas where
the Registrant focuses its review include, but are not limited to, labor costs
and fuel supply costs. In the labor area, the Registrant has reached agreements
with many of the it's major collective bargaining units which will permit it to
manage its labor costs and practices effectively in the future. The Registrant
also explores alternatives to effectively manage the size of its workforce.
These alternatives include utilizing hiring freezes, outsourcing and offering
employee separation packages. In the fuel supply area, the Registrant explores
alternatives to effectively manage its overall fuel costs. These alternatives
include diversifying fuel sources for use at the Registrant's fossil power
plants (e.g. utilizing low sulfur versus high sulfur coal), as well as
restructuring or terminating existing contracts with suppliers.
Certain of these cost reduction alternatives could result in additional
investments being made at the Registrant's power plants in order to utilize
different types of coal, or could require nonrecurring payments of employee
separation benefits or nonrecurring payments to restructure or terminate an
existing fuel contract with a supplier. Management is unable to predict which
(if any), and to what extent, these alternatives to reduce its overall cost
structure will be executed, as well as determine the impact of these actions on
the Registrant's future financial position, results of operations or liquidity.
RATE MATTERS
On October 17, 2000, the Missouri Public Service Commission (MoPSC) approved a
$4.2 million annual rate increase for natural gas service in AmerenUE's Missouri
jurisdiction. The rate increase became effective November 1, 2000.
With respect to AmerenUE's current electric three-year experimental alternative
regulation plan, in November 2000, the MoPSC approved a stipulation and
agreement of the parties regarding the credit to be paid by AmerenUE to its
Missouri electric customers for the plan year ended June 30, 1999. Based on the
provisions of the stipulation and agreement, the credit to be paid to electric
customers for the plan year ended June 30, 1999 will approximate $22 million.
See Note 5 under Notes to Financial Statements for further discussion of Rate
Matters.
-5-
<PAGE>
In September 2000, AmerenUE and AmerenCIPS filed a request with the Illinois
Commerce Commission (ICC) seeking authorization to transfer AmerenUE's
Illinois-based electric and natural gas businesses and its Illinois-based
distribution and transmission assets and personnel to AmerenCIPS. The
distribution and transmission assets and related liabilities will be transferred
from AmerenUE to AmerenCIPS at historical net book value. In October 2000,
AmerenUE filed a request with the MoPSC for approval of this transfer. The
transfer is also subject to regulatory filings and approvals of the Federal
Energy Regulatory Commission (FERC) and the Securities and Exchange Commission
(SEC).
ELECTRIC INDUSTRY RESTRUCTURING
In December 1997, the Governor of Illinois signed the Electric Service Customer
Choice and Rate Relief Law of 1997 (the Law) providing for electric utility
restructuring in Illinois. This legislation introduces competition into the
supply of electric energy in Illinois.
One of the major provisions of the Law includes the phasing-in through 2002 of
retail direct access, which allows customers to choose their electric generation
supplier. The phase-in of retail direct access began on October 1, 1999, with
large commercial and industrial customers principally comprising the initial
group. The customers in this group represent approximately 10 percent of the
Registrant's total sales. As of September 30, 2000, the impact of retail direct
access on the Registrant's financial condition, results of operations, or
liquidity was immaterial. Retail direct access will be offered to the remaining
commercial and industrial customers on December 31, 2000, and to residential
customers on May 1, 2002.
In conjunction with another provision of the Law, on May 1, 2000, following the
receipt of all required State and Federal regulatory approvals, AmerenCIPS
transferred its electric generating assets and liabilities, at historical net
book value, to a newly created nonregulated company, AmerenEnergy Generating
Company (Generating Company), a subsidiary of the Registrant's wholly-owned
subsidiary, AmerenEnergy Resources Company, in exchange for a promissory note
from Generating Company in the principal amount of approximately $552 million
and Generating Company common stock. In addition, on June 30, 2000, Generating
Company borrowed $50 million from Ameren to assist with the future purchase of
combustion turbine generators and to meet working capital needs. The promissory
notes each have a term of five years and bear interest at 7% based on a 10-year
amortization. The transferred assets represent a generating capacity of
approximately 2,900 megawatts. Approximately 45% of AmerenCIPS' employees were
transferred to Generating Company as a part of the transaction.
Also on May 1, 2000, an electric power supply agreement was entered into between
Generating Company and its newly created nonregulated affiliate, AmerenEnergy
Marketing Company (Marketing Company), also a wholly-owned subsidiary of
AmerenEnergy Resources Company. On the same date, Marketing Company entered into
an electric power supply agreement with AmerenCIPS to supply it sufficient power
to meet native load requirements. This agreement expires December 31, 2004.
Power will continue to be jointly dispatched between AmerenUE and Generating
Company.
The creation of the new subsidiaries and the transfer of AmerenCIPS' generating
assets and liabilities had no effect on the financial statements of the
Registrant as of the date of transfer.
MIDWEST ISO
On November 9, 2000, the Registrant announced its intention to withdraw from the
Midwest Independent System Operator (Midwest ISO) and to become a member of the
Alliance Regional Transmission Organization (Alliance RTO), pending the
necessary regulatory approvals. The Alliance RTO, including its rate structure,
is still subject to approval by the FERC. Accordingly, the Registrant is
currently unable to determine the impact that operation of the Alliance RTO, or
the withdrawal from the Midwest ISO, will have on its financial condition,
results of operations or liquidity.
-6-
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial instrument,
derivative or non-derivative, caused by fluctuations in interest rates and
equity prices. The following discussion of the Registrant's risk management
activities includes "forward-looking" statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the "forward-looking" statements. The Registrant handles market risks in
accordance with established policies, which may include entering into various
derivative transactions. In the normal course of business, the Registrant also
faces risks that are either non-financial or non-quantifiable. Such risks
principally include business, legal, operational, and credit risk and are not
represented in the following analysis.
Interest Rate Risk
The Registrant is exposed to market risk through changes in interest rates,
through its issuance of both long-term and short-term variable-rate debt,
commercial paper and auction rate preferred stock. The Registrant manages its
interest rate exposure by controlling the amount of these instruments it holds
within its total capitalization portfolio and by monitoring the effects of
market changes in interest rates.
If interest rates increase one percentage point in 2001 as compared to 2000, the
Registrant's interest expense would increase by approximately $12 million and
net income would decrease by approximately $7 million. This amount has been
determined using the assumptions that the Registrant's outstanding variable rate
debt, commercial paper and auction market preferred stock as of September 30,
2000, continued to be outstanding throughout 2001, and that the average interest
rates for these instruments increased one percentage point over 2000. The model
does not consider the effects of the reduced level of overall economic activity
that would exist in such an environment. In the event of a significant change in
interest rates, management would likely take actions to further mitigate its
exposure to this market risk. However, due to the uncertainty of the specific
actions that would be taken and their possible effects, the sensitivity analysis
assumes no change in the Registrant's financial structure.
Commodity Price Risk
The Registrant is exposed to changes in market prices for natural gas and fuel
and purchased power. With regard to its natural gas utility business, the
Registrant's exposure to changing market prices is in large part mitigated by
the fact that the Registrant has Purchased Gas Adjustment Clauses (PGA) in place
in both its Missouri and Illinois jurisdictions. The PGA allows the Registrant
to pass on to its customers its prudently incurred costs of natural gas. With
regard to the Registrant's nonregulated generation operations, the Registrant is
exposed to changes in market prices for natural gas to the extent it must
purchase natural gas to run its combustion turbine generators. The Registrant
has entered into several long-term contracts with various suppliers to purchase
natural gas to manage its exposure to natural gas prices.
Since the Registrant does not have a provision similar to the PGA for its
electric operations, the Registrant has entered into several long-term contracts
with various suppliers to purchase coal and nuclear fuel to manage its exposure
to fuel prices. With regard to the Registrant's exposure to commodity price risk
for purchased power and excess electricity sales, the Registrant has established
a subsidiary, AmerenEnergy, whose primary responsibility includes managing
market risks associated with the changing market prices for electricity
purchased and sold for the Registrant's operating subsidiaries, AmerenUE and
AmerenCIPS.
AmerenEnergy utilizes several techniques to mitigate its market risk for
electricity, including utilizing derivative financial instruments. A derivative
is a contract whose value is dependent on or derived from the value of some
underlying asset. The derivative financial instruments that AmerenEnergy is
allowed to utilize (which include forward contracts and futures contracts) are
dictated by a risk management policy, which has been reviewed with the Auditing
Committee of Ameren's Board of Directors. Compliance with the risk management
policy is the responsibility of a risk management steering committee, consisting
of Ameren officers and an independent risk management officer at AmerenEnergy.
As of September 30, 2000, the fair value of derivative financial instruments
exposed to commodity price risk was immaterial.
Equity Price Risk
The Registrant maintains trust funds, as required by the Nuclear Regulatory
Commission and Missouri and Illinois state laws, to fund certain costs of
nuclear decommissioning. As of September 30, 2000, these funds were invested
primarily in domestic equity securities, fixed-rate, fixed-income securities,
and cash and cash equivalents. By maintaining a portfolio that includes
long-term equity investments, the Registrant is seeking to maximize the returns
to be utilized to fund nuclear decommissioning costs. However, the equity
securities included in the Registrant's portfolio are exposed to price
-7-
<PAGE>
fluctuations in equity markets, and the fixed-rate, fixed-income securities are
exposed to changes in interest rates. The Registrantactively monitors its
portfolio by benchmarking the performance of its investments against certain
indices and by maintaining, and periodically reviewing, established target
allocation percentages of the assets of its trusts to various investment
options. The Registrant's exposure to equity price market risk is in large part
mitigated due to the fact that the Registrant is currently allowed to recover
its decommissioning costs in its rates.
ACCOUNTING MATTERS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities and requires
recognition of all derivatives as either assets or liabilities on the balance
sheet measured at fair value. In June 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133," which delayed the effective date of
SFAS 133 to all fiscal quarters of all fiscal years, beginning after June 15,
2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities -an amendment of FASB
Statement No. 133," which amended certain accounting and reporting standards of
SFAS 133. Management believes that adoption of SFAS 133 will not have a material
impact on the Registrant's financial position or results of operations upon
adoption based on the derivative instruments that existed at September 30, 2000.
However, changing market conditions, and the volume of future transactions which
fall within the scope of SFAS 133, as amended, and the interpretations from the
FASB's Derivative Implementation Group could change management's current
assessment. As a result, SFAS 133, as amended, could increase the volatility of
the Registrant's future earnings and could be material to the Registrant's
financial position and 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. The following factors, in
addition to those discussed elsewhere in this report and in the 1999 Annual
Report to Stockholders (portions of which are incorporated by reference in the
Registrant's 1999 Form 10-K) and in subsequent securities filings, could cause
results to differ materially from management expectations as suggested by such
"forward-looking" statements: the effects of regulatory actions; changes in laws
and other governmental actions; the impact on the Registrant of current
regulations related to the phasing-in of the opportunity for some customers to
choose alternative energy suppliers in Illinois; the effects of increased
competition in the future due to, among other things, deregulation of certain
aspects of the Registrant's business at both the State and Federal levels;
future market prices for fuel and purchased power, electricity, and natural gas,
including the use of financial instruments; average rates for electricity in the
Midwest; business and economic conditions; interest rates; weather conditions;
fuel prices and availability; generation plant performance; the impact of
current environmental regulations on utilities and generating companies and the
expectation that more stringent requirements will be introduced over time, which
could potentially have a negative financial effect; monetary and fiscal
policies; future wages and employee benefits costs; and legal and administrative
proceedings.
-8-
<PAGE>
<TABLE>
<CAPTION>
AMEREN CORPORATION
CONSOLIDATED BALANCE SHEET
UNAUDITED
(Thousands of Dollars, Except Shares)
September 30 December 31,
ASSETS 2000 1999
----------- ------------
<S> <C> <C>
Property and plant, at original cost:
Electric00 $ 12,623,029 $12,053,411
Gas 506,822 491,708
Other 96,410 92,696
------------ -----------
13,226,261 12,637,815
Less accumulated depreciation and amortization 6,159,140 5,891,340
------------ -----------
7,067,121 6,746,475
Construction work in progress:
Nuclear fuel in process 100,975 88,830
360,247 329,880
------------ -----------
Total property and plant, net 7,528,343 7,165,185
------------ -----------
Investments and other assets:
Investments 40,162 66,476
Nuclear decommissioning trust fund 194,294 186,760
Other 89,049 80,737
------------ -----------
Total investments and other assets 323,505 333,973
------------ -----------
Current assets:
Cash and cash equivalents 237,537 194,882
Accounts receivable - trade (less allowance
for doubtful accounts of $10,397 and $7,136
respectively) 302,742 216,344
Unbilled revenue 147,432 154,097
Other accounts and notes receivable 29,186 20,668
Materials and supplies, at average cost -
Fossil fuel 130,398 123,143
Other 118,928 130,081
Other 39,684 39,791
----------- -----------
Total current assets 1,005,907 879,006
----------- -----------
Regulatory assets:
Deferred income taxes 600,359 622,520
Other 163,568 176,931
----------- -----------
Total regulatory assets 763,927 799,451
----------- -----------
Total Assets $ 9,621,682 $ 9,177,615
=========== ===========
CAPITAL AND LIABILITIES
Capitalization:
Common stock, $.01 par value, 400,000,000
shares authorized - 137,215,462 shares
outstanding $ 1,372 $ 1,372
Other paid-in capital, principally premium
on common stock 1,581,871 1,582,501
Retained earnings 1,675,073 1,505,827
---------- -----------
Total common stockholders' equity 3,258,316 3,089,700
Preferred stock not subject to
mandatory redemption 235,197 235,197
Long-term debt 2,305,212 2,448,448
---------- -----------
Total capitalization 5,798,725 5,773,345
---------- -----------
Minority interest in consolidated subsidiaries 3,955 4,010
Current liabilities:
Current maturity of long-term debt 59,697 128,867
Short-term debt 469,743 80,165
Accounts and wages payable 254,979 341,274
Accumulated deferred income taxes 57,464 70,719
Taxes accrued 325,445 155,396
Other 298,068 300,747
---------- -----------
Total current liabilities 1,465,396 1,077,168
---------- -----------
Accumulated deferred income taxes 1,537,825 1,493,634
Accumulated deferred investment tax credits 166,333 170,834
Regulatory liability 185,561 188,404
Other deferred credits and liabilities 463,887 470,220
---------- -----------
Total Capital and Liabilities $ 9,621,682 $ 9,177,615
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-9-
<PAGE>
<TABLE>
<CAPTION>
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
(Thousands of Dollars, Except Shares and Per Share Amounts)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
------------------ ----------------- -------------------
2000 1999 2000 1999 2000 1999
----- ----- ---- ---- ---- ----
OPERATING REVENUES:
<S> <C> <C> <C> <C> <C> <C>
Electric $1,158,197 $1,160,693 $2,774,047 $2,620,792 $3,440,845 $3,238,026
Gas 36,275 29,675 181,447 161,600 248,145 220,948
Other 939 3,094 5,597 6,856 6,484 8,777
---------- ---------- ---------- ---------- ---------- ----------
Total operating revenues 1,195,411 1,193,462 2,961,091 2,789,248 3,695,474 3,467,751
OPERATING EXPENSES:
Operations
Fuel and purchased power 285,157 295,625 770,259 718,493 1,025,043 878,446
Gas 23,632 16,481 106,549 89,840 148,158 120,404
Other 166,008 180,202 469,654 483,661 615,475 641,474
---------- ---------- ---------- ---------- ---------- ----------
474,797 492,308 1,346,462 1,291,994 1,788,676 1,640,324
Maintenance 79,155 80,976 267,653 252,115 386,411 339,720
Depreciation and amortization 96,533 90,140 283,092 266,782 366,849 356,110
Income taxes 163,706 162,985 287,196 259,996 286,070 285,379
Other taxes 75,535 70,326 203,219 191,435 258,376 250,313
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 889,726 896,735 2,387,622 2,262,322 3,086,382 2,871,846
OPERATING INCOME 305,685 296,727 573,469 526,926 609,092 595,905
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used
during construction 1,250 1,141 4,079 6,029 5,211 7,615
Miscellaneous, net (5,481) (2,784) (13,481) (6,718) (17,576) (4,050)
----------- ---------- ---------- ---------- ----------- ----------
Total other income and (deductions) (4,231) (1,643) (9,402) (689) (12,365) 3,565
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 301,454 295,084 564,067 526,237 596,727 599,470
INTEREST CHARGES AND PREFERRED
DIVIDENDS:
Interest 44,223 43,396 129,411 131,444 166,242 176,726
Allowance for borrowed funds
used during construction (2,136) (1,292) (5,928) (5,359) (7,692) (6,837)
Preferred dividends of subsidiaries 3,230 3,161 9,469 9,455 12,664 12,603
----------- ----------- ---------- ----------- ----------- ---------
Net interest charges and preferred 45,317 45,265 132,952 135,540 171,214 182,492
dividends
NET INCOME $ 256,137 $ 249,819 $ 431,115 $ 390,697 $ 425,513 $ 416,978
========== ========== ========== ========== ========== ==========
EARNINGS PER COMMON SHARE -
BASIC AND DILUTED (Based on
average shares outstanding) $1.87 $1.82 $3.14 $2.85 $3.10 $3.04
========== ========== ========= ========== ========== ==========
AVERAGE COMMON SHARES
OUTSTANDING 137,215,462 137,215,462 137,215,462 137,215,462 137,215,462 137,215,462
=========== =========== =========== =========== =========== ===========
</TABLE>
<
See Notes to Consolidated Financial Statements.
-10-
<PAGE>
<TABLE>
<CAPTION>
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
(Thousands of Dollars)
Nine Months Ended
September 30,
-----------------------
2000 1999
---- ----
Cash Flows From Operating:
<S> <C> <C>
Net income $ 431,115 $ 390,697
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 273,841 259,447
Amortization of nuclear fuel 27,714 30,823
Allowance for funds used during construction (10,007) (11,388)
Deferred income taxes, net 11,976 (16,493)
Deferred investment tax credits, net (4,501) (6,021)
Changes in assets and liabilities:
Receivables, net (88,251) (82,561)
Materials and supplies 3,898 (12,072)
Accounts and wages payable (86,295) (34,619)
Taxes accrued 170,049 188,824
Pension and postretirement benefits (2,974) 33,192
Credit to customers (20,507) 42,510
Other, net 55,862 71,519
--------- ---------
Net cash provided by operating activities 761,920 853,858
Cash Flows From Investing:
Construction expenditures (657,622) (342,352)
Allowance for funds used during construction 10,007 11,388
Nuclear fuel expenditures (11,691) (19,662)
Other 26,314 23,829
--------- ---------
Net cash used in investing activities (632,992) (326,797)
Cash Flows From Financing:
Dividends on common stock (261,395) (261,395)
Redemptions:
Nuclear fuel lease (8,276) (11,332)
Short-term debt -- (58,528)
Long-term debt (491,050) (60,000)
Issuances:
Nuclear fuel lease 7,270 60,045
Short-term debt 389,578 --
Long-term debt 277,600 58,400
--------- ---------
Net cash used in financing activities (86,273) (272,810)
Net change in cash and cash equivalents 42,655 254,251
Cash and cash equivalents at beginning of year 194,882 76,863
--------- ---------
Cash and cash equivalents at end of period $ 237,537 $ 331,114
========= =========
Cash paid during the periods:
Interest (net of amount capitalized) $ 118,111 $ 111,005
Income taxes, net $ 157,399 $ 157,774
See Notes to Consolidated Financial Statements.
</TABLE>
-11-
<PAGE>
AMEREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2000
Note 1 - Ameren Corporation (Ameren) is a holding company 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 subsidiaries
of Ameren (the Merger). As a result of the Merger, Ameren has a 60% ownership
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. That
interest is consolidated for financial reporting purposes. Since the Merger,
Ameren has formed AmerenEnergy, Inc. (AmerenEnergy), Ameren Development Company,
AmerenEnergy Resources Company, and Ameren Services Company. AmerenEnergy, an
energy marketing subsidiary, primarily serves as a power marketing agent for the
operating utility subsidiaries and provides a range of energy and risk
management services to targeted customers. Ameren Development Company is a
nonregulated subsidiary encompassing Ameren's nonregulated products and
services. AmerenEnergy Resources Company holds the Registrant's nonregulated
generating operations. Ameren Services Company provides shared support services
to Ameren and all of its subsidiaries.
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 percent of the
voting stock are included as consolidated subsidiaries. Ameren's primary
operating companies, AmerenUE, AmerenCIPS and AmerenEnergy Generating Company, a
wholly owned subsidiary of AmerenEnergy Resources Company, are engaged
principally in the generation, transmission, distribution and sale of electric
energy and the purchase, distribution, transportation and sale of natural gas.
The operating companies serve 1.5 million electric and 300,000 natural gas
customers in a 44,500-square-mile area of Missouri and Illinois. All significant
intercompany balances and transactions have been eliminated from the
consolidated financial statements.
In conjunction with the Illinois Electric Service Customer Choice and Rate
Relief Law of 1997, on May 1, 2000, following the receipt of all required State
and Federal regulatory approvals, AmerenCIPS transferred its electric generating
assets and liabilities, at historical net book value, to a newly created
nonregulated company, AmerenEnergy Generating Company (Generating Company), a
subsidiary of the Registrant's wholly-owned subsidiary, AmerenEnergy Resources
Company, in exchange for a promissory note from Generating Company in the
principal amount of approximately $552 million and Generating Company common
stock. In addition, on June 30, 2000, Generating Company borrowed $50 million
from Ameren to assist with the future purchase of combustion turbine generators
and to meet working capital needs. The promissory notes each have a term of five
years and bear interest at 7% based on a 10-year amortization. The transferred
assets represent a generating capacity of approximately 2,900 megawatts.
Approximately 45% of AmerenCIPS' employees were transferred to Generating
Company as a part of the transaction.
Also on May 1, 2000, an electric power supply agreement was entered into between
Generating Company and its newly created nonregulated affiliate, AmerenEnergy
Marketing Company (Marketing Company), also a wholly-owned subsidiary of
AmerenEnergy Resources Company. On the same date, Marketing Company entered into
an electric power supply agreement with AmerenCIPS to supply it sufficient power
to meet native load requirements. This agreement expires December 31, 2004.
Power will continue to be jointly dispatched between AmerenUE and Generating
Company.
The creation of the new subsidiaries and the transfer of AmerenCIPS' generating
assets and liabilities had no effect on the financial statements of the
Registrant as of the date of transfer.
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 1999 Annual Report to Stockholders (which
are incorporated by reference in the Registrant's 1999 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.
-12-
<PAGE>
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 September 30, 2000 and 1999, are not necessarily indicative of trends for
any three-month, nine-month or twelve-month period.
Note 5 - In July 1995, the Missouri Public Service Commission (MoPSC) approved
an agreement establishing contractual obligations involving the Registrant's
Missouri retail electric rates. Included was a three-year experimental
alternative regulation plan (the Original Plan) that ran from July 1, 1995
through June 30, 1998, which provided that earnings in those years in excess of
a 12.61% regulatory return on equity (ROE) be shared equally between customers
and stockholders, and earnings above a 14% ROE be credited to customers. The
formula for computing the credit used twelve-month results ending June 30,
rather than calendar year earnings.
The MoPSC staff proposed adjustments to the Registrant's estimated customer
credit for the final year of the Original Plan ended June 30, 1998, which were
the subject of regulatory proceedings before the MoPSC in 1999. In December
1999, the MoPSC issued a Report and Order (Order) concerning these proposed
adjustments. Based on the provisions of that Order, the Registrant revised its
estimated final year credit to $31 million. Subsequently, in December 1999, the
Registrant filed a request for rehearing of the Order with the MoPSC, asking
that it reconsider its decision to adopt certain of the MoPSC staff's
adjustments. The request was denied by the MoPSC and in February 2000, the
Registrant filed a Petition for Writ of Review with the Circuit Court of Cole
County, Missouri, requesting that the Order be reversed. The appeal is pending
and the ultimate outcome can not be predicted; however, the final decision is
not expected to materially impact the financial condition, results of operations
or liquidity of the Registrant. A partial stay of the Order was granted by the
Court pending the appeal.
A new three-year experimental alternative regulation plan (the New Plan) was
included in the joint agreement authorized by the MoPSC in its February 1997
order approving the Merger. Like the Original Plan, the New Plan requires that
earnings over a 12.61 percent ROE up to a 14 percent ROE be shared equally
between customers and stockholders. The New Plan also returns to customers 90
percent of all earnings above a 14 percent ROE up to a 16 percent ROE. Earnings
above a 16 percent ROE are credited entirely to customers. The New Plan runs
from July 1, 1998 through June 30, 2001. At September 30, 2000, the Registrant
has recorded estimated credits that the Registrant expects to pay its Missouri
electric customers of $20 million, $35 million and $25 million for the plan
years ended June 30, 2001, June 30, 2000, and June 30, 1999, respectively.
During the three months ended September 30, 2000, the Registrant recorded an
estimated credit of $20 million (8 cents per share) for the plan year ended June
30, 2001. No credits under the New Plan were recorded during the same period
last year. For the nine months ended September 30, 2000, the Registrant recorded
estimated credits in total of $35 million (15 cents per share) for plan year
under the New Plan compared to $30 million (12 cents per share) in the prior
period. These credits were reflected as a reduction in electric revenues. The
final amount of the credits will depend on several factors, including the
Registrant's earnings for the respective 12 months ended June 30.
In November 2000, the MoPSC approved a stipulation and agreement of the parties
regarding the credit to be paid by the Registrant to its Missouri electric
customers for the plan year ended June 30, 1999. Based on the provisions of the
stipulation and agreement, the credit to be paid to electric customers for the
plan year ended June 30, 1999 will approximate $22 million.
The joint agreement approved by the MoPSC in its February 1997 Order approving
the Merger also provided for a Missouri electric rate decrease, retroactive to
September 1, 1998, based on the weather-adjusted average annual credits to
customers under the Original Plan. The rate decrease was impacted by the Order
issued by the MoPSC in December 1999 relating to the estimated credit for the
third year of the Original Plan and a settlement reached between the Registrant,
the MoPSC staff and other parties relating to the calculation of the
weather-adjusted credits. Based on those results, the Registrant estimates that
its Missouri electric rate decrease will be $17 million on an annualized basis.
This estimate is subject to the final outcome of the above-referenced court
appeal of the Order.
-13-
<PAGE>
Note 6- - The Company's union employees are represented by the International
Brotherhood of Electrical Workers and the International Union of Operating
Engineers. These employees comprise approximately 68% of the Company's
workforce. New contracts with collective bargaining units representing
approximately 59% of these employees were ratified in 1999 with terms expiring
in 2002. New contracts with collective bargaining units representing
approximately 21% of these employees were ratified in 2000 with terms expiring
in 2003. In August 2000, the remaining collective bargaining units representing
approximately 19% of the Registrant's union employees, ratified the Company's
last, best and final offer for a new contract with a term expiring in 2003.
Note 7- On November 9, 2000, the Registrant announced its intention to withdraw
from the Midwest Independent System Operator and to become a member of the
Alliance Regional Transmission Organization (Alliance RTO), pending the
necessary regulatory approvals. The Alliance RTO, including its rate structure,
is still subject to approval by the FERC. Accordingly, the Registrant is
currently unable to determine the impact that operation of the Alliance RTO, or
the withdrawal from the Midwest ISO, will have on its financial condition,
results of operations or liquidity
Note 8- In September 2000, AmerenUE and AmerenCIPS filed a request with the
Illinois Commerce Commission (ICC) seeking authorization to transfer AmerenUE's
Illinois-based electric and natural gas businesses and its Illinois-based
distribution and transmission assets and personnel to AmerenCIPS. The
distribution and transmission assets and related liabilities will be transferred
from AmerenUE to AmerenCIPS at historical net book value. In October 2000,
AmerenUE filed a request with the MoPSC for approval of this transfer. The
transfer is also subject to regulatory filings and approvals of the Federal
Energy Regulatory Commission (FERC) and the Securities and Exchange Commission.
Note 9 - Segment information for the three-month, nine-month and 12-month
periods ended September 30, 2000 and 1999 is as follows:
-------------------------------------------------------------------------------
Regulated Reconciling
(in millions) Utilities All Other Items * Total
-------------------------------------------------------------------------------
Three months ended September 30, 2000:
Revenues $1,093 $289 $(187) $1,195
Net Income 232 24 -- 256
--------------------------------------------------------------------------------
Three months ended September 30, 1999:
Revenues $1,185 $ 62 $ (54) $1,193
Net Income 248 2 -- 250
--------------------------------------------------------------------------------
Nine months ended September 30, 2000:
Revenues $2,787 $551 $(377) $2,961
Net Income 396 35 -- 431
--------------------------------------------------------------------------------
Nine months ended September 30, 1999:
Revenues $2,742 $182 $(135) $2,789
Net Income 387 4 -- 391
--------------------------------------------------------------------------------
12 months ended September 30, 2000:
Revenues $3,500 $611 $(416) $3,695
Net Income 392 34 -- 426
--------------------------------------------------------------------------------
12 months ended September 30, 1999:
Revenues $3,397 $230 $(159) $ 3,468
Net Income 408 9 -- 417
--------------------------------------------------------------------------------
* Elimination of intercompany revenues.
-14-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
On June 23, 2000, the United States Environmental Protection Agency (EPA)
notified Union Electric Company (AmerenUE), the Registrant's subsidiary, and
numerous other companies that certain properties in Sauget, Illinois, may
contain soil and groundwater contamination. From approximately 1926 until 1976,
AmerenUE operated a power generating facility and currently owns and operates
electric transmission facilities in the area. AmerenUE has joined with nine
other companies to perform an investigation of soil and groundwater conditions
in the area and is currently negotiating with the EPA the terms of an
Administrative Order on Consent that provides for the performance of such work.
The investigation process should take approximately two years. At this time, the
Registrant is unable to predict the ultimate impact of the Sauget site on its
future financial position, results of operations or liquidity.
On September 25, 2000, the United States Department of Justice was granted
leave by the United States District Court - Southern District of Illinois to add
numerous additional parties, including AmerenUE, to a pre-existing lawsuit
between the government and Monsanto Chemical Company and others. The government
seeks recovery of response costs under the Comprehensive Environmental Response
Compensation Liability Act of 1980 (commonly known as CERCLA or Superfund),
incurred in connection with an Illinois Superfund site referred to as Dead
Creek. AmerenUE owns a transmission line which traverses the creek. The
Registrant believes that the final resolution of this lawsuit will not have a
material adverse effect on its financial position, results of operations or
liquidity.
Reference is made to "Regulation" section in Item 1. Business of the
Registrant's Form 10-K for the year ended December 31, 1999 and Item 1. Legal
Proceedings in Part II of the Registrant's Form 10-Q for the quarterly period
ended June 30, 2000, for information relating to litigation concerning the
alleged exposure to carcinogens contained in coal tar at the Taylorville,
Illinois, manufactured gas plant site of Central Illinois Public Service Company
(AmerenCIPS), the Registrant's subsidiary. On October 4, 2000, the Illinois
Supreme Court granted AmerenCIPS' request to review a decision issued by the
Illinois Appellate Court in March 2000 which upheld a $3.2 million verdict in
favor of the plaintiffs against AmerenCIPS. The Registrant believes that final
disposition of this matter will not have a material adverse effect on its
financial position, results of operations or liquidity.
On August 24, 2000, Steven and Tina Brannon sued the Registrant and its
subsidiaries, AmerenCIPS and AmerenEnergy Generating Company in the Circuit
Court of Christian County, Illinois. The suit alleges that AmerenCIPS and others
were negligent in the manner in which AmerenCIPS' manufactured gas plant site
was remediated in Taylorville, Illinois, therefore, wrongfully causing the death
of their son. The Brannon's son was born in 1992, diagnosed with neuroblastoma
in 1996, and died in 1998. The remediation occurred in 1987. Plaintiffs seek
unspecified compensatory damages in excess of $50,000. The Registrant believes
that the final resolution of this lawsuit will not have a material adverse
effect on its financial position, results of operations or liquidity.
Reference is made to Item 1. Legal Proceedings in Part II of the
Registrant's Form 10-Q for the quarterly period ended June 30, 2000, for
information relating to a lawsuit filed in the Circuit Court of Madison County,
Illinois, by twenty-three named plaintiffs alleging negligence on behalf of
AmerenCIPS and Dover Elevator Company (Dover) for injuries arising out of an
elevator accident which occurred at the AmerenCIPS' Newton Power Plant in
November 1996. In mid-October 2000, a settlement agreement was entered into
which (i) capped all of the plaintiffs' damages and (ii) apportioned fault
between AmerenCIPS and Dover as to approximately one-half of the plaintiffs. The
settlement is the subject of a confidentiality agreement. Subsequently, an
apportionment trial was held between AmerenCIPS and Dover as to the remaining
plaintiffs. The jury found AmerenCIPS ninety-five percent at fault and Dover
five percent at fault. The Registrant has adequate insurance to cover the
settlement and the judgment entered in these proceedings. As such, the final
resolution of this lawsuit will not have a material adverse effect on the
Registrant's financial position, results of operations or liquidity.
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)
By /S/ Donald E. Brandt
---------------------
Donald E. Brandt
Senior Vice President, Finance
(Principal Financial Officer)
Date: November 14, 2000
-15-
