<PAGE> 1
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 SEPTEMBER 30, 1995
[ ] 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 1-2967.
UNION ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Missouri 43-0559760
(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, 1995:
Common Stock, $5 par value - 102,123,834
(excl. 42,990 treasury shares)
<PAGE> 2
UNION ELECTRIC COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Part I Financial Information (Unaudited)
Balance Sheet --
September 30, 1995 and December 31, 1994 2
Statement of Income --
Three Months, Nine Months and Twelve Months
Ended September 30, 1995 and 1994 3
Statement of Cash Flows --
Nine Months Ended September 30, 1995 and 1994 4
Notes to Financial Statements 5 thru 7
Management's Discussion and Analysis 8 thru 12
Part II Other Information 13
</TABLE>
<PAGE> 3
UNION ELECTRIC COMPANY Page 2
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
ASSETS (Thousands of Dollars) September 30, December 31,
- ------ 1995 1994
------------ ------------
<S> <C> <C>
Property and plant, at original cost
Electric $8,441,276 $8,200,094
Gas 169,820 160,729
Other 35,007 35,033
---------- ----------
8,646,103 8,395,856
Less accumulated depreciation and amortization 3,454,662 3,305,582
---------- ----------
5,191,441 5,090,274
Construction work in progress:
Nuclear fuel in process 109,353 134,815
Other 100,187 119,473
---------- ----------
Total property and plant, net 5,400,981 5,344,562
Regulatory asset - deferred income taxes 726,788 732,478
Deferred charges:
Unamortized debt expense 45,733 49,432
Nuclear decommissioning trust fund 69,124 53,906
Other 22,635 22,508
---------- ----------
Total deferred charges 137,492 125,846
Current assets:
Cash 2,190 1,510
Temporary cash investments 72,835 -
Accounts receivable - trade (less allowance for doubtful
accounts of $7,182 and $6,277 at respective dates) 270,534 164,803
Unbilled revenue 58,983 71,321
Other accounts and notes receivable 19,816 17,691
Materials and supplies, at average cost -
Fossil fuel 55,434 61,533
Construction and maintenance 95,038 89,683
Other 14,215 15,274
---------- ----------
Total current assets 589,045 421,815
---------- ----------
Total Assets $6,854,306 $6,624,701
========== ==========
CAPITAL AND LIABILITIES:
- ------------------------
Capitalization:
Common stock, $5 par value, authorized 150,000,000 shares-
outstanding 102,123,834 shares (excluding 42,990 shares at
par value in treasury) $ 510,619 $ 510,619
Other paid-in capital 717,669 717,669
Retained earnings 1,130,808 1,040,766
---------- ----------
Total common stockholders' equity 2,359,096 2,269,054
Preferred stock not subject to mandatory redemption 218,497 218,497
Preferred stock subject to mandatory redemption 650 676
Capital lease obligation 63,476 88,038
Long-term debt 1,710,585 1,745,585
Unamortized discount and premium on debt (9,718) (10,134)
---------- ----------
1,700,867 1,735,451
Long-term debt, net ---------- ----------
4,342,586 4,311,716
Total capitalization 1,348,881 1,349,239
Accumulated deferred income taxes 168,068 172,705
Accumulated deferred investment tax credits 219,525 229,333
Regulatory liability 70,797 55,579
Accumulated provision for nuclear decommissioning 160,417 131,543
Other deferred credits and liabilities
Current and accrued liabilities: 34,295 30,318
Current maturity of capital lease obligation 35,000 38,000
Current maturity of long-term debt 107,436 61,575
Accounts payable 33,982 35,045
Wages payable 27,409 28,574
Accumulated deferred income taxes 95,291 36,481
Income taxes accrued 86,432 16,954
Other taxes accrued 57,372 55,909
Interest accrued 3,301 3,301
Dividends accrued 63,514 68,429
Other ---------- ----------
544,032 374,586
Total current and accrued liabilities ---------- ----------
$6,854,306 $6,624,701
Total Capital and Liabilities ========== ==========
</TABLE>
<PAGE> 4
Page 3
UNION ELECTRIC COMPANY
STATEMENT OF INCOME
(UNAUDITED)
(Thousands of Dollars Except Shares and Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
--------------------- ----------------- ---------------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Electric $704,741 $667,274 $1,613,570 $1,586,088 $1,997,016 $1,971,594
Gas 8,866 9,899 60,480 62,653 83,936 88,498
Steam 71 67 318 343 448 491
-------- -------- ---------- ---------- --------- ---------
Total operating revenues 713,678 677,240 1,674,368 1,649,084 2,081,400 2,060,583
Operating expenses:
Operations
Fuel and purchased power 110,611 96,027 280,690 256,906 353,345 352,847
Other 100,386 100,272 312,542 326,144 422,064 443,193
-------- -------- ---------- ---------- --------- ---------
210,997 196,299 593,232 583,050 775,409 796,040
Maintenance 52,254 49,598 163,342 140,105 220,997 202,275
Depreciation and decommissioning 58,591 56,762 174,369 168,135 232,279 223,938
Income taxes 114,422 106,067 188,492 194,065 200,848 197,094
Other taxes 63,891 63,041 166,944 165,299 212,122 210,369
-------- -------- ---------- ---------- --------- ---------
Total operating expenses 500,155 471,767 1,286,379 1,250,654 1,641,655 1,629,716
Operating income 213,523 205,473 387,989 398,430 439,745 430,867
Other income and deductions:
Allowance for equity funds used
during construction 1,850 1,204 4,758 4,340 6,186 5,968
Miscellaneous, net (10,304) 160 (8,772) 3,259 (11,629) 4,573
-------- --------- ----------- --------- ---------- ----------
Total other income/deductions, net (8,454) 1,364 (4,014) 7,599 (5,443) 10,541
Income before interest charges 205,069 206,837 383,975 406,029 434,302 441,408
Interest charges:
Interest 33,783 41,673 101,770 107,774 135,108 139,360
Allowance for borrowed funds
used during construction (1,321) (1,311) (4,661) (3,838) (6,336) (4,867)
-------- -------- -------- --------- --------- ---------
Net interest charges 32,462 40,362 97,109 103,936 128,772 134,493
Net income 172,607 166,475 286,866 302,093 305,530 306,915
Preferred stock dividends 3,312 3,312 9,938 9,939 13,250 13,252
-------- -------- -------- -------- -------- ---------
Earnings on common stock $169,295 $163,163 $276,928 $292,154 $292,280 $293,663
======== ======== ======== ======== ======== ========
Earnings per share of common stock
(based on average shares outstanding) $1.66 $1.60 $2.71 $2.86 $2.86 $2.88
===== ===== ===== ===== ===== =====
Dividends per share of common stock $0.61 $0.595 $1.83 $1.785 $2.44 $2.38
===== ====== ===== ====== ===== =====
Average number of common shares
outstanding (in thousands) 102,124 102,124 102,124 102,124 102,124 102,124
======= ======= ======= ======= ======= =======
</TABLE>
<PAGE> 5
UNION ELECTRIC COMPANY Page 4
STATEMENT OF CASH FLOWS
UNAUDITED
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1995 1994
---- ----
<S> <C> <C>
Cash Flows From Operating:
Net income $286,866 $302,093
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 167,247 161,149
Amortization of nuclear fuel 25,597 32,932
Allowance for funds used during construction (9,419) (8,178)
Postretirement benefit accrual 19,569 19,633
Deferred income taxes, net (5,641) (9,038)
Deferred investment tax credits, net (4,637) (4,640)
Changes in assets and liabilities:
Receivables, net (95,518) (35,285)
Materials and supplies 744 (15,158)
Accounts and wages payable 44,798 (86,593)
Taxes accrued 128,288 133,275
Interest and dividends accrued or declared 1,463 22,658
Other, net 10,388 15,969
-------- --------
Net cash provided by operating activities 569,745 528,817
Cash Flows From Investing:
Construction expenditures (224,252) (232,095)
Allowance for funds used during construction 9,419 8,178
Nuclear fuel expenditures (30,405) (12,525)
-------- --------
Net cash used in investing activities (245,238) (236,442)
Cash Flow From Financing:
Dividends on preferred stock (9,938) (9,939)
Dividends on common stock (186,886) (182,291)
Environmental bond funds 4,443 11,129
Redemptions -
Nuclear fuel lease (61,552) (22,728)
Short-term debt - (59,600)
Long-term debt (38,000) (25,000)
Preferred stock (26) (26)
Issuances -
Nuclear fuel lease 40,967 37,943
Long-term debt - 100,000
-------- --------
Net cash used in financing activities (250,992) (150,512)
-------- --------
Net change in cash and cash equivalents 73,515 141,863
Cash and cash equivalents at beginning of period 1,510 1,297
-------- --------
Cash and cash equivalents at end of period $ 75,025 $143,160
======== ========
Supplemental disclosure of cash flow information:
Cash and cash equivalents include cash on hand and temporary
investments purchased with a maturity of three months or less
Cash paid during the period:
Interest (net of amount capitalized) $ 90,684 $ 71,646
Income taxes 138,515 141,390
</TABLE>
<PAGE> 6
Page 5
UNION ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 1 - Financial statement note disclosures, normally included in 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 Financial Statements included in the 1994
Annual Report on Form 10-K for information relevant to the financial
statements contained in this Form 10-Q, including information as to
the significant accounting policies of the registrant.
Note 2 - 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 to a fair statement
of the results for the periods presented. Registrant's 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 financial statements or
notes thereto.
Note 3 - 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, 1995 and 1994 are not necessarily
indicative of trends for any twelve-month period.
Note 4 - On July 21, 1995, the Missouri Public Service Commission approved an
agreement involving the registrant's Missouri electric rates. The
agreement provided for a rate decrease for all classes of Missouri
retail electric customers, effective August 1, 1995, reducing annual
revenues by $30 million. In addition, a one-time $30 million credit
to current Missouri electric customers reduced third quarter 1995
earnings approximately 18 cents per share. Also included is a
three-year plan which provides that earnings in excess of a 12.61
percent return on equity will be shared equally between customers and
stockholders and earnings above a 14 percent return on equity will be
credited to customers. Also, the agreement provides that no party
shall file for a general increase or decrease in registrant's
Missouri retail electric rates prior to July 1, 1998, except that the
registrant may file for an increase if certain adverse events occur.
Note 5 - On August 11, 1995, the registrant entered into an Agreement and Plan
of Merger (the "Merger Agreement") with CIPSCO Incorporated, an
Illinois corporation ("CIPSCO"), Arch Holding Corp., a newly formed
Missouri corporation (which was recently renamed as Ameren
Corporation) 50% owned by the registrant and 50% owned by CIPSCO
("Ameren"), and Arch Merger Inc., a newly formed Missouri corporation
and wholly owned subsidiary of Ameren ("Merger Sub"), pursuant to
which, among other things, Merger Sub will be merged with and into
the registrant and CIPSCO will be merged with and into Ameren (the
"Mergers"), with the result that the registrant and Central Illinois
Public Service Company, an Illinois corporation and the wholly owned
operating subsidiary of CIPSCO, as well as other direct subsidiaries
of CIPSCO, will continue as wholly owned operating subsidiaries of
Ameren. As a result of the Mergers, each outstanding share of the
registrant's common stock, par value $5.00 per share ("Common
Stock"), (other than shares with respect to which dissenters' rights
are perfected under applicable state laws) will be converted into the
right to receive one share of common stock of Ameren, par value $0.01
per share ("Ameren Common Stock"), each outstanding share of the
registrant's preferred stock, without par value, (other than shares
with respect to which dissenters' rights are perfected under
applicable state laws), will remain outstanding and unchanged and
each outstanding share of CIPSCO's common stock, without par value
("CIPSCO Common Stock") (including shares with respect to which
dissenters' rights are perfected under applicable state laws) will be
converted into the right to receive 1.03 shares of Ameren Common
Stock (or cash in lieu of fractional shares otherwise deliverable in
respect thereof). The business combination is intended to be
tax-free for income tax purposes and to be accounted for as a
"pooling of interests."
<PAGE> 7
Page 6
UNION ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Simultaneous with their execution and delivery of the Merger
Agreement, the registrant and CIPSCO entered into stock option
agreements (the "Stock Option Agreements"), pursuant to one of which
the registrant granted CIPSCO the right, upon the terms and subject
to the conditions set forth therein, to purchase up to 6,983,233
shares of Common Stock at a price of $35.94 per share, and pursuant
to the other of which CIPSCO granted the registrant the right, upon
the terms and subject to the conditions set forth therein, to
purchase up to 6,779,838 shares of CIPSCO Common Stock at a price of
$37.02 per share.
After the Mergers, Ameren will become a registered public utility
holding company under the Public Utility Holding Company Act of 1935,
as amended. The Mergers are conditioned upon, among other things,
approval by holders of two-thirds of the Common Stock and of the
preferred stock, without par value, of the registrant voting together
as a single class, by holders of two-thirds of the CIPSCO Common
Stock, and upon receipt of certain regulatory and governmental
approvals.
The Merger Agreement and certain related matters will be submitted to
shareholders of the registrant and CIPSCO for approval at meetings
expected to be held later this year. Also, in November 1995, the
registrant filed an application for approval of the merger with
the Missouri Public Service Commission and CIPSCO and the
registrant filed a joint application for approval of the merger
with the Illinois Commerce Commission. Shortly thereafter, the
registrant and CIPSCO will file a joint application for approval of
the merger with the Federal Energy Regulatory Commission. In those
applications, the registrant and CIPSCO seek recovery of merger
transaction costs and a sharing of net merger savings between
ratepayers and shareholders. The merger is expected to be
consummated by the end of 1996.
Note 6 - The registrant is regulated by the Missouri Public Service Commission
(MoPSC), Illinois Commerce Commission and the Federal Energy
Regulatory Commission. In accordance with Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation" (FAS 71), the registrant's financial statements
reflect assets and liabilities based on ratemaking prescribed by
those regulatory commissions.
At September 30, 1995, the registrant had recorded the following
regulatory assets and regulatory liabilities:
<TABLE>
<CAPTION>
(In Thousands)
Regulatory Assets
-----------------
<S> <C>
Income Taxes $726,788
Unamortized Debt Expense 11,484
Unamortized Loss on Reacquired Debt 34,249
--------
Total Regulatory Assets $772,521
========
Regulatory Liability
--------------------
Regulatory Liability - Income Taxes $219,525
========
</TABLE>
The registrant continually assesses the recoverability of its
regulatory assets. Under current accounting standards, regulatory
assets are reduced through a charge to earnings if and when it is
probable that such amounts will not be recovered through future
revenues.
<PAGE> 8
Page 7
UNION ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 7 - Electric rates charged to customers provide for recovery of Callaway
Plant decommissioning costs over the life of the plant, based on an
assumed 40-year life, ending with the expiration of the plant's
operating license in 2024. The Callaway site is assumed to be
decommissioned using the DECON (immediate dismantlement) method.
Based on the registrant's most recent study (August 1995),
decommissioning costs, including decontamination, dismantling and
site restoration, are estimated to be $433 million in current year
dollars and are expected to escalate about 4% per year through the
end of decommissioning activity in 2033. The registrant's previous
study, which was completed in 1993, estimated decommissioning costs
to be $383 million in 1993 dollars. Every three years, the MoPSC
requires the registrant to file updated decommissioning cost studies,
at which time electric rates may be adjusted to reflect changes in
estimates. The registrant believes that any future increases in the
estimated costs of decommissioning Callaway are probable of recovery
in rates. Costs collected from customers are deposited in an
external trust fund established to provide for Callaway's
decommissioning. Fund earnings are expected to average 9% to 10%
through the date of decommissioning. If the assumed return on trust
assets is not earned, the registrant believes it is probable that
such earnings deficiency will be recovered in rates. Trust fund
earnings, net of expenses, appear on the balance sheet as increases
in Nuclear decommissioning trust fund and in the Accumulated
provision for nuclear decommissioning.
The staff of the Securities and Exchange Commission has questioned
certain of the current accounting practices of the electric utility
industry, including the registrant, regarding the recognition,
measurement and classification of decommissioning costs for nuclear
generating stations in the financial statements of electric
utilities. In response to these questions, the Financial Accounting
Standards Board has agreed to review the accounting for removal
costs, including decommissioning. If current electric utility
industry accounting practices for such decommissioning are changed
(1) the annual provisions for decommissioning could increase, and (2)
trust fund income from the external decommissioning trusts could be
reported as investment income rather than as a reduction to
decommissioning expense. The registrant does not expect that changes
in the accounting for nuclear decommissioning costs will have a
material effect on the registrant's results of operations.
Note 8 - As discussed in Note 10 to the Notes to Financial Statements in the
registrant's 1994 Annual Report to Stockholders, which is
incorporated by reference in the registrant's 1994 Form 10-K, the
registrant is involved in various environmental, legal and
administrative proceedings, some of which involve substantial
amounts. The registrant believes that the outcome of these
proceedings will not have a material adverse effect on the
registrant's financial position, results of operations or liquidity.
<PAGE> 9
Page 8
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS
The registrant and CIPSCO Incorporated entered into a Merger Agreement
dated August 11, 1995. Information concerning such agreement is included in
Note 5 to the Financial Statements of this report, and in Item 5, Other
Information, included in Part II of this report.
RESULTS OF OPERATIONS
Third quarter 1995 common stock earnings were $169.3 million or $1.66 per
share, an increase of $6.1 million from 1994's third quarter. Earnings per
share in the third quarter of 1995 were 6 cents higher than in the comparable
1994 period despite a one-time credit to Missouri electric customers which
reduced electric revenues by $30 million and earnings by 18 cents per share.
Additionally, the registrant implemented a 1.8 percent rate decrease for
Missouri electric customers during the third quarter which reduced electric
revenues by $7 million and earnings by about 4 cents per share. (See Note 4 to
the Financial Statements of this report).
Common stock earnings for the nine months ended September 30, 1995 were
$276.9 million, a decrease of $15.2 million from the same period in 1994.
Earnings of $2.71 per share during the nine months ended September 30, 1995
were 15 cents lower than in the comparable 1994 period.
Common stock earnings for the twelve months ended September 30, 1995 were
$292.3 million, a $1.4 million decrease from the preceding twelve-month period.
Earnings of $2.86 per share for the twelve months ended September 30, 1995
decreased 2 cents per share from the twelve months ended September 30, 1994.
The increased earnings for the three months ended September 30, 1995 over
the comparable 1994 period reflect increased electric operating revenues, net
of the Missouri revenue adjustments noted above and reduced interest charges.
The higher third quarter revenues were primarily from increased electricity
sales this year due to unusually hot weather. These changes were partially
offset by increased operating expenses resulting from increased sales, and
merger-related expenses of $9 million.
The decreased earnings for the nine months and twelve months ended
September 30, 1995 versus the prior nine-month and twelve-month periods also
reflects higher electric operating revenues, net of the Missouri revenue
adjustments noted above, and lower interest charges offset by increased
operating expenses and merger-related expenses. Operating expenses were up
primarily due to greater fuel and purchased power costs and increased
maintenance and depreciation expenses. The increased operating expenses for
the nine months ended September 30, 1995 were largely due to the Spring 1995
Callaway refueling outage.
The significant items affecting revenues, costs and earnings during the
three-month, nine-month and twelve-month periods ended September 30, 1995 and
1994 are detailed below:
<TABLE>
<CAPTION>
Electric Operating Revenues
(Millions of Dollars)
Variations for periods ended September 30, 1995
from comparable prior periods
------------------------------------------------------
Three Months Nine Months Twelve Months
------------ ----------- -------------
<S> <C> <C> <C>
Rate variations $ (39.9) $ (39.9) $ (39.9)
Effect of abnormal weather 55.1 34.8 24.3
Growth and other 22.3 32.6 41.0
------ ------ ------
$ 37.5 $ 27.5 $ 25.4
====== ====== ======
</TABLE>
As discussed previously, rate variations for the three months, nine months
and twelve months ended September 30, 1995 are attributable to the one-time $30
million credit to Missouri customers and the 1.8% rate decrease for Missouri
electric customers.
<PAGE> 10
Page 9
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Third quarter 1995 kilowatt-hour sales were up 10 percent from the same
quarter of 1994, primarily due to hot summer weather. Weather-sensitive
residential and commercial sales increased 19 percent and 7 percent,
respectively, from the year-ago quarter while industrial sales rose 4 percent.
Kilowatt-hour sales for the nine months ended September 30, 1995 were 4
percent higher from the comparable 1994 period. Residential sales increased 4
percent, commercial sales increased 3 percent and industrial sales grew 4
percent.
Kilowatt-hour sales for the twelve months ended September 30, 1995
increased 3 percent over the prior twelve-month period. Residential and
commercial customers increased 3 percent respectively, while sales to
industrial customers rose 4 percent.
<TABLE>
<CAPTION>
Operating Expenses
(Millions of Dollars)
Variations for periods ended September 30, 1995
from comparable prior periods
------------------------------------------------
Three Months Nine Months Twelve Months
------------ ----------- -------------
<S> <C> <C> <C>
Fuel:
Variation in generation $ 4.0 $ 3.1 $ 32.0
Price (0.1) 1.2 (24.2)
Generation efficiencies 0.7 0.5 5.1
Department of Energy assessment (0.3) 0.1 0.3
Net Interchange sales and purchased power
variation 10.3 18.9 (12.7)
----- ----- ------
$14.6 $23.8 $ 0.5
===== ===== ======
</TABLE>
The increased fuel and purchased power costs for the three months ended
September 30, 1995, versus the three months ended September 30, 1994, is
primarily due to greater net purchased power costs and increased generation
associated with the unusually hot 1995 summer.
The increased fuel and purchased power costs for the nine months ended
September 30, 1995, versus the nine months ended September 30, 1994, is
primarily due to greater net purchased power costs and increased generation,
resulting from the Callaway plant refueling outage this Spring and greater
electricity sales during the hot 1995 summer.
The fuel costs for the twelve months ended September 30, 1995, versus the
twelve months ended September 30, 1994, were almost unchanged reflecting lower
fuel prices and reduced net purchased power costs offset by increased
generation and reduced generation efficiencies.
Other operating expense variations reflect recurring conditions such as
growth, inflation and wage increases. During the three months ended September
30, 1995, versus the comparable 1994 period, operations expenses other than
fuel and purchased power were unchanged. Maintenance expenses during the
current three-month period were $3 million higher primarily due to greater
power plant maintenance.
During the nine months ended September 30, 1995, versus the comparable
1994 period, operations expenses other than fuel and purchased power, were $14
million lower, primarily due to an $11 million decrease in purchased gas costs
due primarily to lower gas prices, and lower employee welfare, injuries and
damages, insurance premiums, and research and development expenses.
Maintenance expenses for the current nine-month period were $23 million higher
primarily due to increases of $25 million for power plant maintenance offset by
a $2 million reduction in transmission/distribution system maintenance.
Callaway maintenance was $17 million higher, most of which was associated with
the Spring 1995 nuclear refueling and maintenance outage. Maintenance at other
power plants increased $8 million.
<PAGE> 11
Page 10
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Operating Expenses (Continued)
For the twelve months ended September 30, 1995, versus the prior
twelve-month period, operations expenses other than fuel and purchased power,
were $21 million lower, primarily due to a $18 million reduction in purchased
gas costs due primarily to lower gas prices, a $2 million decrease in labor
costs and a $1 million reduction in other expenses. Maintenance expenses for
the current twelve-month period increased $19 million primarily due to
increases of $16 million for power plant maintenance expenses.
Depreciation expense for the three-month, nine-month and twelve-month
periods ended September 30, 1995, versus the comparable 1994 periods, increased
$2 million, $6 million and $8 million, respectively, primarily due to increases
in depreciable property.
Other taxes charged to operating expenses increased during the three, nine
and twelve months ended September 30, 1995, versus the comparable 1994 periods
resulting primarily from increases in gross receipts taxes due to greater
electric sales.
Income taxes charged to operating expenses increased $8 million and $4
million, respectively, during the three and twelve months ended September 30,
1995, versus the comparable 1994 periods, primarily due to higher pretax
income. Income taxes charged to operating expenses decreased $6 million during
the nine months ended September 30, 1995, versus the comparable 1994 period,
primarily due to lower pretax income.
Other Income and Deductions
Miscellaneous other net income and deductions decreased $10 million, $12
million and $16 million for the three, nine and twelve months ended September
30, 1995, versus the comparable 1994 periods, primarily reflecting $9 million
of merger-related expenses (See Note 5 of Notes to Financial Statements in this
Report) and increased charitable contributions.
Interest
During the three, nine and twelve months ended September 30, 1995 versus
the comparable prior year periods, interest decreased $8 million, $6 million
and $4 million, respectively, primarily due to reduced other interest expense,
partially offset by higher interest rates on variable rate long-term debt.
Allowance for Funds Used During Construction (AFC)
Variations in AFC track construction work in progress and changes were not
significant for the reporting periods. During the twelve-month periods ended
September 30, 1995 and 1994, AFC rates averaged 9.3 percent and 9.2 percent,
respectively.
Balance Sheet
The $93.4 million increase (40%) in accounts receivable and unbilled
revenues is due primarily to an increase in revenues of 60% for the months of
August and September 1995, compared to the months of November and December
1994.
Changes in the accounts payable, income taxes accrued and other taxes
accrued balances are due primarily to the timing of various payments to taxing
authorities and suppliers.
<PAGE> 12
Page 11
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Rate Matters
See Notes 4 and 5 under Notes to Financial Statements of this report.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by the registrant's operations was $570 million for the nine
months ended September 30, 1995 compared to $529 million during the same period
in 1994.
Cash flows used in investing activities totaled $245 million and $236
million for the nine months ended September 30, 1995 and 1994, respectively.
Construction expenditures for the nine months ended September 30, 1995 were for
constructing new or improving existing facilities, purchasing of rail cars and
expenditures for complying with the Clean Air Act. In addition, the registrant
expended $30 million for the acquisition of nuclear fuel. Capital requirements
for the remainder of 1995 are expected to be principally for construction
expenditures and the acquisition of nuclear fuel.
Cash flows used in financing activities were $251 million for the nine
months ended September 30, 1995 compared to $151 million during the same period
in 1994. The registrant's principal financing activities for the nine months
ended September 30, 1995 were the redemption of $38 million of First Mortgage
Bonds and the payment of dividends. On October 13, 1995, the Board of
Directors of the registrant increased the quarterly common stock dividend to
62.5 cents per share from 61 cents, increasing the indicated annualized common
stock dividend to $2.50 per share. Common stock dividends paid for the twelve
months ended September 30, 1995, resulted in a pay out rate of 85% of
registrant's earnings to common stockholders. Common stock dividends paid to
registrant's common stockholders in relation to net cash provided by operating
activities for the same period were 43%.
The registrant plans to continue utilizing short-term debt as support for
normal operations and other temporary requirements. The registrant is
authorized by the Federal Energy Regulatory Commission (FERC) to have
outstanding at any one time up to $600 million of short-term unsecured debt
instruments. Short-term borrowings of the registrant consist of bank loans
(maturities generally on an overnight basis) and commercial paper (maturities
generally within 10-45 days). At September 30, 1995, the registrant had
committed banks lines of credit aggregating $184 million (none of which was
used 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, and in support of which the registrant has agreements with its lending
banks to pay annual fees up to 0.125%. These lines of credit are renewable
annually at various dates throughout the year. The registrant also has bank
credit agreements due 1998 and 1999 which permit the registrant to borrow up to
$300 million and $200 million, respectively, on a long-term basis. At
September 30, 1995, no such borrowings were outstanding.
Additionally, the registrant has a lease agreement which provides for the
financing of nuclear fuel. At September 30, 1995, the maximum amount which may
be financed under the agreement is $120 million. Cash provided from financing
for the nine months ended September 30, 1995 included issuances for nuclear
fuel of $41 million offset by $62 million of redemptions resulting in a $21
million net reduction of cash from financing. At September 30, 1995, $98
million was financed under the lease.
For a discussion of Callaway Plant decommissioning costs, see Note 7 to
the Notes to Financial Statements of this report.
See Note 8 to the Notes to Financial Statements of this report for a
discussion of issues existing at September 30, 1995 that could affect the
registrant.
<PAGE> 13
Page 12
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of (FAS 121). This
statement establishes standards for the impairment of long-lived assets and
certain identifiable intangible assets. In addition, FAS 121 requires that
regulatory assets which are no longer probable of recovery through future
revenues be charged to earnings. FAS 121 will be effective as of January 1,
1996. FAS 121 is not expected to have a material effect on the registrant's
financial position or results of operations upon adoption.
<PAGE> 14
Page 13
PART II. OTHER INFORMATION
ITEM 5. OTHER MATTERS
MERGER AGREEMENT WITH CIPSCO INCORPORATED
As reported in its Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, the registrant, on August 11, 1995, entered into an Agreement
and Plan of Merger (the "Merger Agreement") with CIPSCO Incorporated. Further
information concerning the Merger Agreement and proposed merger transaction is
included in Note 5 to the Notes to Financial Statements in Part I of this
report. Details of the proposed transaction will be included in the Joint
Proxy Statement/Prospectus which will be sent to the shareholders of both
parties in connection with shareholder voting on the merger.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information combines the
historical balance sheets and statements of income of the registrant and
CIPSCO, including their respective subsidiaries, after giving effect to the
Mergers. The unaudited pro forma combined condensed balance sheet at September
30, 1995 gives effect to the Mergers as if they had occurred at September 30,
1995. The unaudited pro forma combined condensed statements of income for the
nine-month periods ended September 30, 1995 and 1994, and the 12-month period
ended September 30, 1995 give effect to the Mergers as if they had occurred at
the beginning of the periods presented. These statements are prepared on the
basis of accounting for the Mergers as a pooling of interests and are based on
the assumptions set forth in the notes thereto. In addition, the pro forma
financial information does not give effect to the expected synergies of the
transaction.
The following pro forma financial information has been prepared from, and
should be read in conjunction with, the historical financial statements and
related notes thereto of the registrant and CIPSCO. The following information
is not necessarily indicative of the financial position or operating results
that would have occurred had the Mergers been consummated on the date, or at
the beginning of the periods, for which the Mergers are being given effect nor
is it necessarily indicative of future operating results or financial position.
In addition, due to the effect of weather on sales and other factors which are
characteristic of public utility operations, financial results for the
nine-month periods ended September 30, 1995 and 1994 are not necessarily
indicative of trends for any twelve-month period.
<PAGE> 15
Page 14
AMEREN CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET
AT SEPTEMBER 30, 1995
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ASSETS As Reported (Note 1) Pro Forma
- ------ -------------------- Adjustments Pro Forma
Property and plant UE CIPSCO (Notes 2,9) Combined
----- ------ ----------- ---------
<S> <C> <C> <C> <C>
Electric $8,441,276 $2,287,538 $ 374,294 $11,103,108
Gas 169,820 223,660 - 393,480
Other 35,007 - - 35,007
---------- ---------- ---------- -----------
8,646,103 2,511,198 374,294 11,531,595
Less accumulated depreciation and amortization 3,454,662 1,115,529 246,430 4,816,621
---------- ---------- ---------- -----------
5,191,441 1,395,669 127,864 6,714,974
Construction work in progress:
Nuclear fuel in process 109,353 - - 109,353
Other 100,187 51,940 1,389 153,516
---------- ---------- ---------- ----------
Total property and plant, net 5,400,981 1,447,609 129,253 6,977,843
Regulatory asset - deferred income taxes (Note 6) 726,788 45,589 - 772,377
Other assets:
Unamortized debt expense 45,733 16,813 673 63,219
Nuclear decommissioning trust fund 69,124 - - 69,124
Investments in nonregulated activities - 98,539 - 98,539
Other 22,635 41,332 (2,014) 61,953
---------- ---------- ---------- ----------
Total other assets 137,492 156,684 (1,341) 292,835
Current assets:
Cash and temporary investments 75,025 9,185 327 84,537
Accounts receivable, net 270,534 78,261 21,665 370,460
Unbilled revenue 58,983 16,993 - 75,976
Materials and supplies, at average cost -
Fossil fuel 55,434 39,595 6,890 101,919
Other 95,038 51,606 5,600 152,244
Other 34,031 13,430 3,527 50,988
---------- ---------- ---------- ----------
Total current assets 589,045 209,070 38,009 836,124
---------- ----------- ---------- ----------
Total Assets $6,854,306 $1,858,952 $ 165,921 $8,879,179
========== ========== ========== ==========
CAPITAL AND LIABILITIES:
- ------------------------
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders' equity (Note 2) 1,848,477 308,098 866,059 3,022,634
---------- ---------- ---------- ----------
Total common stockholders' equity 2,359,096 664,910 - 3,024,006
Preferred stock of subsidiary 219,147 80,000 - 299,147
Long-term debt 1,764,343 478,850 130,000 2,373,193
---------- ---------- ---------- ----------
Total capitalization 4,342,586 1,223,760 130,000 5,696,346
Minority interest in consolidated subsidiary - - 3,534 3,534
Accumulated deferred income taxes 1,348,881 324,041 (5,842) 1,667,080
Accumulated deferred investment tax credits 168,068 53,074 - 221,142
Regulatory liability 219,525 114,569 - 334,094
Accumulated provision for nuclear decommissioning 70,797 - - 70,797
Other deferred credits and liabilities 160,417 - 5,613 166,030
Current liabilities:
Current maturity of long-term debt 69,295 - - 69,295
Short-term debt - - 6,800 6,800
Accounts payable 107,436 48,955 20,101 176,492
Wages payable 33,982 11,260 - 45,242
Taxes accrued 209,132 23,473 86 232,691
Interest accrued 57,372 8,610 2,885 68,867
Other 66,815 51,210 2,744 120,769
---------- ---------- ---------- ----------
Total current liabilities 544,032 143,508 32,616 720,156
---------- ---------- ---------- ----------
Total Capital and Liabilities $6,854,306 $1,858,952 $ 165,921 $8,879,179
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 16
Page 15
AMEREN CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1995
(THOUSANDS OF DOLLARS EXCEPT SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------ Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,4,10) (Notes 1,3) (Notes 2,9) Combined
-------------- ----------- ----------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $1,613,570 $ 544,886 $ 138,378 $2,296,834
Gas 60,480 87,523 - 148,003
Other 318 5,860 244 6,422
---------- ---------- ---------- ----------
Total operating revenues 1,674,368 638,269 138,622 2,451,259
OPERATING EXPENSES:
Operations
Fuel and purchased power 280,690 189,447 74,097 544,234
Gas Costs 35,051 48,322 - 83,373
Other 277,491 113,897 14,452 405,840
---------- ---------- ---------- ----------
593,232 351,666 88,549 1,033,447
Maintenance 163,342 46,690 14,038 224,070
Depreciation and amortization 174,369 62,280 11,866 248,515
Income taxes (Note 7) 188,492 41,826 6,208 236,526
Other taxes 166,944 43,133 1,496 211,573
---------- ---------- ---------- ----------
Total operating expenses 1,286,379 545,595 122,157 1,954,131
OPERATING INCOME 387,989 92,674 16,465 497,128
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 4,758 600 - 5,358
Minority interest in consolidated subsidiary - - (3,396) (3,396)
Miscellaneous, net (8,772) 1,915 (5,153) (12,010)
---------- ---------- ---------- ----------
Total other income and deductions, net (4,014) 2,515 (8,549) (10,048)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 383,975 95,189 7,916 487,080
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 101,770 25,157 7,916 134,843
Allowance for borrowed funds used during
construction (4,661) (49) - (4,710)
Preferred dividends of subsidiaries (Note 8) 9,938 2,896 - 12,834
---------- ---------- ---------- ----------
Net interest charges and preferred dividends 107,047 28,004 7,916 142,967
NET INCOME $ 276,928 $ 67,185 $ - $ 344,113
========== ========== ========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.71 $1.97 $2.51
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462
=========== ========== ========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 17
Page 16
AMEREN CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1994
(THOUSANDS OF DOLLARS EXCEPT SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------ Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Note 1) (Note 1) (Notes 2,9) Combined
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $1,586,088 $ 537,013 $ 181,129 $2,304,230
Gas 62,653 100,724 - 163,377
Other 343 6,660 108 7,111
---------- ---------- ---------- ----------
Total operating revenues 1,649,084 644,397 181,237 2,474,718
OPERATING EXPENSES:
Operations
Fuel and purchased power 256,906 190,014 117,952 564,872
Gas Costs 45,928 61,835 - 107,763
Other 280,216 109,795 14,380 404,391
---------- ---------- ---------- ----------
583,050 361,644 132,332 1,077,026
Maintenance 140,105 45,378 13,465 198,948
Depreciation and amortization 168,135 60,610 9,035 237,780
Income taxes (Note 7) 194,065 42,247 7,787 244,099
Other taxes 165,299 42,972 1,480 209,751
---------- ---------- ---------- ----------
Total operating expenses 1,250,654 552,851 164,099 1,967,604
OPERATING INCOME 398,430 91,546 17,138 507,114
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 4,340 504 - 4,844
Minority interest in consolidated subsidiary - - (4,110) (4,110)
Miscellaneous, net 3,259 2,673 (6,193) (261)
---------- ---------- ---------- ----------
Total other income and deductions, net 7,599 3,177 (10,303) 473
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 406,029 94,723 6,835 507,587
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 107,774 24,826 6,835 139,435
Allowance for borrowed funds used during
construction (3,838) (231) - (4,069)
Preferred dividends of subsidiaries (Note 8) 9,939 2,568 - 12,507
---------- ---------- ---------- ----------
Net interest charges and preferred dividends 113,875 27,163 6,835 147,873
NET INCOME $ 292,154 $ 67,560 $ - $ 359,714
========== ========== ========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.86 $1.98 $2.62
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,107,706 1,023,231 137,254,771
=========== ========== ========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 18
Page 17
AMEREN CORP.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1995
(THOUSANDS OF DOLLARS EXCEPT SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------ Pro Forma
(As Reported) (As Reported) Adjustments Pro Forma
(Notes 1,4,10) (Notes 1,3) (Notes 2,9) Combined
-------------- ----------- ----------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $1,997,016 $ 705,300 $ 202,438 $2,904,754
Gas 83,936 125,218 - 209,154
Other 448 7,969 317 8,734
---------- ---------- ---------- ----------
Total operating revenues 2,081,400 838,487 202,755 3,122,642
OPERATING EXPENSES:
Operations
Fuel and purchased power 353,345 251,300 113,763 718,408
Gas costs 49,218 71,530 - 120,748
Other 372,846 144,170 20,024 537,040
---------- ---------- ---------- ----------
775,409 467,000 133,787 1,376,196
Maintenance 220,997 66,488 19,649 307,134
Depreciation and amortization 232,279 82,769 16,607 331,655
Income taxes (Note 7) 200,848 48,661 8,160 257,669
Other taxes 212,122 56,178 1,945 270,245
---------- ---------- ---------- ----------
Total operating expenses 1,641,655 721,096 180,148 2,542,899
OPERATING INCOME 439,745 117,391 22,607 579,743
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 6,186 726 - 6,912
Minority interest in consolidated subsidiary - - (4,840) (4,840)
Miscellaneous, net (11,629) 2,744 (7,257) (16,142)
---------- ---------- ---------- -----------
Total other income and deductions, net (5,443) 3,470 (12,097) (14,070)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 434,302 120,861 10,510 565,673
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 135,108 33,551 10,510 179,169
Allowance for borrowed funds used during
construction (6,336) (107) - (6,443)
Preferred dividends of subsidiaries (Note 8) 13,250 3,838 - 17,088
---------- ---------- ---------- ----------
Net interest charges and preferred dividends 142,022 37,282 10,510 189,814
NET INCOME $ 292,280 $ 83,579 $ - $ 375,859
========== ========== ========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $2.86 $2.45 $2.74
===== ===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,078,037 1,022,341 137,224,212
=========== ========== ========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 19
Page 18
AMEREN CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. Reclassifications have been made to certain "as reported" account
balances reflected in the registrant's and CIPSCO's financial
statements to conform to this reporting presentation (See Notes 6, 7
and 8). All other financial statement presentation and accounting
policy differences are immaterial and have not been adjusted in the pro
forma combined condensed financial statements.
2. The pro forma combined condensed financial statements reflect the
conversion of each share of the registrant's Common Stock ($5 par
value) outstanding into one share of Ameren Common Stock ($.01 par
value) and the conversion of each share of CIPSCO Common Stock (no par
value) outstanding into 1.03 shares of Ameren Common Stock, as provided
in the Merger Agreement. The pro forma combined condensed financial
statements are presented as if the companies were combined during all
periods included therein.
3. Net income for the nine months and twelve months ended September 30,
1995 includes a pre-tax charge of $6.3 million for CIPSCO's voluntary
separation program.
4. The allocation between the registrant and CIPSCO and their customers of
the estimated cost savings resulting from the Mergers, net of the costs
incurred to achieve such savings, will be subject to regulatory review
and approval. Transaction costs are currently estimated to be
approximately $22 million (including fees for financial advisors,
attorneys, accountants, consultants, filings and printing). None of
these estimated cost savings or the costs to achieve such savings have
been reflected in the pro forma combined condensed financial
statements. However, net income for the nine months and twelve months
ended September 30, 1995 includes a charge of $9 million, net of income
taxes, for merger transaction costs.
5. Intercompany transactions (including purchased and exchanged power
transactions) between the registrant and CIPSCO during the periods
presented were not material and, accordingly, no pro forma adjustments
were made to eliminate such transactions.
6. CIPSCO's regulatory asset related to deferred income taxes was
reclassified from the regulatory liability account balance to conform
to this reporting presentation.
7. CIPSCO's income taxes are reflected as operating expenses to conform to
this reporting presentation.
8. Currently, the registrant's Preferred Stock is not issued by a
subsidiary; subsequent to the Merger, the registrant's Preferred Stock
will be issued by a subsidiary of Ameren. As a result, the
registrant's preferred dividend requirements have been reclassified to
conform to this reporting presentation.
9. Pro forma adjustments have been made to consolidate the financial
results of Electric Energy, Inc. (EEI), which will, in substance, be a
60% owned subsidiary of Ameren subsequent to the Merger. Prior to the
Merger, the registrant and CIPSCO held 40% and 20% ownership interests,
respectively, in EEI and accounted for these investments under the
equity method of accounting. All intercompany transactions between the
registrant, CIPSCO and EEI have been eliminated.
10. Net income for the nine and twelve months ended September 30, 1995
includes a one-time credit to Missouri electric customers which reduced
revenues and pre-tax income of the registrant by $30 million.
<PAGE> 20
Page 19
PART II. OTHER INFORMATION (Continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 12(a) - Computation of Ratio of Earnings to Fixed
Charges, 12 Months Ended September 30, 1995.
Exhibit 12(b) - Computation of Ratio of Earnings to Fixed
Charges and Preferred Stock Dividend
Requirements, 12 Months Ended September 30,
1995.
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.
UNION ELECTRIC COMPANY
(Registrant)
November 8, 1995 By /s/ Donald E. Brandt
-------------------------
Donald E. Brandt
Senior Vice President
Finance and Corporate Services
<PAGE> 1
EXHIBIT 12(a)
UNION ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 Months
Year Ended December 31, Ended
------------------------------------------------------------- September 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C> <C>
Net income for the Period $294,219 $321,512 $302,748 $297,160 $320,757 $305,530
-------- -------- -------- -------- -------- --------
Add:
Taxes Based on income 191,532 218,954 197,009 182,716 203,827 196,875
-------- -------- -------- -------- -------- --------
Fixed Charges:
Interest on Debt 183,215 163,061 125,798 124,430 135,608 129,605(*)
Amortization of Premium and
Discount, Less Expense on Debt;
and Bond Defeasance Cost 4,369 4,148 9,521 5,170 5,504 5,503
Rentals (See note) 1,114 1,171 908 1,314 1,299 2,846
-------- -------- -------- -------- -------- --------
Total Fixed Charges 188,698 168,380 136,227 130,914 142,411 137,954
-------- -------- -------- -------- -------- --------
Earnings Available for Fixed Charges $674,449 $708,846 $635,984 $610,790 $666,995 $640,359
======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 3.57 4.21 4.66 4.66 4.68 4.64
==== ==== ==== ==== ==== ====
</TABLE>
(*) Total annual interest charges on all bonds for the twelve months ended
September 30, 1995 was $115,334,000.
Note: Represents the interest factor applicable to rentals.
<PAGE> 1
EXHIBIT 12(b)
UNION ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
12 Months
Year Ended December 31, Ended
------------------------------------------------------------- September 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C> <C>
Net income for the period $294,219 $321,512 $302,748 $297,160 $320,757 $305,530
Add:
Taxes based on income 191,532 218,954 197,009 182,716 203,827 196,875
Fixed charges (see below) 188,698 168,380 136,227 130,914 142,411 137,954
------- -------- -------- -------- -------- --------
Earnings available for fixed charges
and preferred stock dividend
requirements of Registrant $674,449 $708,846 $635,984 $610,790 $666,995 $640,359
======== ======== ======== ======== ======== ========
Fixed charges:
Interest on debt $183,215 $163,061 $125,798 $124,430 $135,608 $129,605
Amortization of premium and discount,
less expense, on debt; and
bond defeasance cost 4,369 4,148 9,521 5,170 5,504 5,503
Rentals (see note) 1,114 1,171 908 1,314 1,299 2,846
-------- -------- -------- -------- -------- --------
Total fixed charges $188,698 $168,380 $136,227 $130,914 $142,411 $137,954
Preferred stock dividend requirements
of Registrant *(Adjusted for income
tax effect) 22,901 22,213 21,852 21,537 20,514 20,613
-------- -------- -------- -------- -------- --------
Total fixed charges and preferred
stock dividend requirements $211,599 $190,593 $158,079 $152,451 $162,925 $158,567
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges
and preferred dividends 3.19 3.72 4.02 4.01 4.09 4.04
==== ==== ==== ==== ==== ====
</TABLE>
Note: Represents the interest factor applicable to rentals.
* See following page for supporting computation.
<PAGE> 2
EXHIBIT 12(b)
(continued)
UNION ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
12 Months
Year Ended December 31, Ended
------------------------------------------------------------- September 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C> <C>
Computation of preferred stock
dividend requirements of Registrant,
adjusted for income tax effect*
Preferred stock dividend
requirements of Registrant, as
shown on statement of earnings $14,693 $14,059 $14,058 $14,087 $13,252 $13,250
Less deductible preferred stock
dividends** 2,085 2,085 2,085 1,973 1,816 1,816
------- ------- ------- ------- ------- -------
Non-deductible preferred stock
dividends $12,608 $11,974 $11,973 $12,114 $11,436 $11,434
======= ======= ======= ======= ======= =======
Excess of net income before income
taxes over net income (percentage)
See note below 65.1% 68.1% 65.1% 61.5% 63.5% 64.4%
----- ----- ----- ----- ----- -----
Income tax effect on non-deductible
preferred stock dividends* $8,208 $8,154 $7,794 $7,450 $7,262 $7,363
Add:
Deductible preferred stock
dividends (above) 2,085 2,085 2,085 1,973 1,816 1,816
Non-deductible preferred stock
dividends (above) 12,608 11,974 11,973 12,114 11,436 11,434
------ ------ ------ ------ ------ ------
Preferred stock dividend requirements
of Registrant. (Adjusted for income tax
effect) $22,901 $22,213 $21,852 $21,537 $20,514 $20,613
======= ======= ======= ======= ======= =======
Note: Calculated as follows -
Net income before income taxes $485,751 $540,466 $499,757 $479,876 $524,584 $502,405
Less net income 294,219 321,512 302,748 297,160 320,757 305,530
-------- -------- -------- -------- -------- --------
Excess - Taxed based on income $191,532 $218,954 $197,009 $182,716 $203,827 $196,875
======== ======== ======== ======== ======== ========
- Percentage of net income 65.1% 68.1% 65.1% 61.5% 63.5% 64.4%
===== ===== ===== ===== ===== =====
</TABLE>
* Income tax adjustment to reflect pretax earnings required to meet preferred
stock dividend.
** Dividends deductible on federal income tax return.
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 5,400,981
<OTHER-PROPERTY-AND-INVEST> 69,124
<TOTAL-CURRENT-ASSETS> 589,045
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<TOTAL-ASSETS> 6,854,306
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<RETAINED-EARNINGS> 1,130,808
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,359,096
624
218,497
<LONG-TERM-DEBT-NET> 1,700,867
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
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26
<CAPITAL-LEASE-OBLIGATIONS> 63,476
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<TOT-CAPITALIZATION-AND-LIAB> 6,854,306
<GROSS-OPERATING-REVENUE> 1,674,368
<INCOME-TAX-EXPENSE> 188,492
<OTHER-OPERATING-EXPENSES> 1,097,887
<TOTAL-OPERATING-EXPENSES> 1,286,379
<OPERATING-INCOME-LOSS> 387,989
<OTHER-INCOME-NET> (4,014)
<INCOME-BEFORE-INTEREST-EXPEN> 383,975
<TOTAL-INTEREST-EXPENSE> 97,109
<NET-INCOME> 286,866
9,938
<EARNINGS-AVAILABLE-FOR-COMM> 276,928
<COMMON-STOCK-DIVIDENDS> 186,886
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<EPS-PRIMARY> 2.71
<EPS-DILUTED> 2.71
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