<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 JUNE 30, 1996
[ ] 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 July
31, 1996:
Common Stock, $5 par value - 102,123,834
(excl. 42,990 treasury shares)
<PAGE> 2
UNION ELECTRIC COMPANY
INDEX
Page No.
Part I Financial Information (Unaudited)
Balance Sheet --
June 30, 1996 and December 31, 1995 2
Statement of Income --
Three Months, Six Months and Twelve Months Ended
June 30, 1996 and 1995 3
Statement of Cash Flows --
Six Months Ended June 30, 1996 and 1995 4
Notes to Financial Statements 5
Management's Discussion and Analysis 6 thru 10
Part II Other Information
<PAGE> 3
UNION ELECTRIC COMPANY Page 2
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
ASSETS: (Thousands of Dollars) June 30, December 31,
- -------
Property and plant, at original cost 1996 1995
------------ --------------
<S> <C> <C>
Electric $8,622,939 $8,473,501
Gas 178,845 174,231
Other 34,763 35,033
--------- ---------
8,836,547 8,682,765
Less accumulated depreciation and amortization 3,613,616 3,494,722
--------- ----------
5,222,931 5,188,043
Construction work in progress:
Nuclear fuel in process 148,706 121,460
Other 127,445 125,934
--------- ---------
Total property and plant, net 5,499,082 5,435,437
Regulatory asset - deferred income taxes 701,612 732,580
Deferred charges:
Unamortized debt expense 42,335 44,496
Nuclear decommissioning trust fund 81,778 73,838
Other 24,325 20,101
--------- ---------
Total deferred charges 148,438 138,435
Current assets:
Cash 15,970 1,025
Accounts receivable - trade (less allowance for doubtful
accounts of $5,320 and $6,925 at respective dates) 196,568 191,520
Unbilled revenue 122,837 82,098
Other accounts and notes receivable 22,413 21,602
Materials and supplies, at average cost -
Fossil fuel 54,830 46,381
Construction and maintenance 96,311 92,921
Other 7,102 12,470
--------- ---------
Total current assets 516,031 448,017
--------- ---------
Total Assets
$6,865,163 $6,754,469
========= =========
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 1,060,716 1,090,909
--------- ---------
Total common stockholders' equity 2,289,004 2,319,197
Preferred stock not subject to mandatory redemption 218,497 218,497
Preferred stock subject to mandatory redemption 624 650
Capital lease obligation 78,920 62,607
Long-term debt 1,755,585 1,710,585
Unamortized discount and premium on debt (9,297) (9,579)
--------- ---------
Long-term debt, net 1,746,288 1,701,006
--------- ---------
Total capitalization 4,333,333 4,301,957
Accumulated deferred income taxes 1,325,046 1,357,689
Accumulated deferred investment tax credits 163,430 166,524
Regulatory liability 210,160 216,502
Accumulated provision for nuclear decommissioning 83,451 75,511
Other deferred credits and liabilities 152,541 150,600
Current and accrued liabilities:
Current maturity of capital lease obligation 31,599 34,462
Current maturity of long-term debt 45,000 35,000
Accounts payable 108,665 169,012
Wages payable 33,599 36,605
Bank loans 70,000 19,600
Accumulated deferred income taxes 40,749 27,429
Income taxes accrued 37,211 29,986
Other taxes accrued 63,202 17,727
Interest accrued 45,033 46,244
Dividends accrued 3,312 3,312
Other 118,832 66,309
--------- ---------
Total current and accrued liabilities 597,202 485,686
--------- ---------
Total Capital and Liabilities $6,865,163 $6,754,469
========= =========
</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 Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------ ------------------ --------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
Operating revenues:
<S> <C> <C> <C> <C> <C> <C>
Electric $495,548 $500,081 $910,234 $908,829 $2,015,858 $ 1,959,548
Gas 13,930 13,402 58,478 51,614 94,678 84,969
Steam 102 92 259 247 452 445
-------- -------- -------- -------- ---------- ----------
Total operating revenue 509,580 513,575 968,971 960,690 2,110,988 2,044,962
Operating expenses:
Operations
Fuel and purchased power 88,893 81,180 176,978 170,079 372,057 338,762
Other 106,645 102,771 220,774 212,156 427,740 421,950
-------- -------- -------- -------- ---------- ----------
195,538 183,951 397,752 382,235 799,797 760,712
Maintenance 61,828 60,920 110,462 111,088 220,982 218,341
Depreciation and decommissioning 59,700 58,178 119,285 115,778 236,745 230,450
Income taxes 44,644 50,210 72,865 74,070 208,336 192,493
Other taxes 52,224 53,156 103,207 103,053 212,299 211,271
-------- -------- -------- -------- ---------- ----------
Total operating expenses 413,934 406,415 803,571 786,224 1,678,159 1,613,267
Operating income 95,646 107,160 165,400 174,466 432,829 431,695
Other income and deductions:
Allowance for equity funds used
during construction 2,121 1,016 3,823 2,908 7,742 5,539
Miscellaneous, net (2,481) 887 (1,586) 1,533 (9,099) (1,163)
-------- -------- ------- -------- ---------- ----------
Total other income/deductions, net (360) 1,903 2,237 4,441 (1,357) 4,376
Income before interest charges 95,286 109,063 167,637 178,907 431,472 436,071
Interest charges:
Interest 33,670 34,553 67,528 67,988 134,282 142,999
Allowance for borrowed funds
used during construction (2,331) (1,525) (3,978) (3,340) (6,744) (6,326)
-------- -------- -------- -------- -------- ----------
Net interest charges 31,339 33,028 63,550 64,648 127,538 136,673
Net income 63,947 76,035 104,087 114,259 303,934 299,398
Preferred stock dividends 3,313 3,313 6,625 6,626 13,249 13,251
-------- -------- -------- -------- -------- --------
Earnings on common stock $ 60,634 $ 72,722 $ 97,462 $107,633 $ 290,685 $ 286,147
======== ======== ======== ======== ======== ========
Earnings per share of common stock
(based on average shares outstanding) $ 0.59 $ 0.71 $ 0.95 $ 1.05 $ 2.85 $ 2.80
======== ======== ======== ======== ======== ========
Dividends per share of common stock $0.625 $ 0.61 $ 1.25 $ 1.22 $ 2.485 $ 2.425
======== ======== ======= ======== ======== ========
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>
Six Months Ended
June 30,
------------------
1996 1995
---- ----
Cash Flows From Operating:
<S> <C> <C>
Net income $104,087 $114,259
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 114,464 111,066
Amortization of nuclear fuel 21,219 14,963
Allowance for funds used during construction (7,801) (6,248)
Postretirement benefit accrual - 15,647
Deferred income taxes, net 5,303 (4,857)
Deferred investment tax credits, net (3,094) (3,093)
Changes in assets and liabilities:
Receivables, net (46,598) (45,355)
Materials and supplies (11,839) 6,039
Accounts and wages payable (63,353) 9,417
Taxes accrued 52,700 48,164
Interest and dividends accrued or declared (1,211) (7,665)
Other, net 58,440 (2,350)
-------- --------
Net cash provided by operating activities 222,317 249,987
Cash Flows From Investing:
Construction expenditures (175,383) (154,041)
Allowance for funds used during construction 7,801 6,248
Nuclear fuel expenditures (24,334) (23,893)
-------- ---------
Net cash used in investing activities (191,916) (171,686)
Cash Flows From Financing:
Dividends on preferred stock (6,625) (6,626)
Dividends on common stock (127,655) (124,591)
Environmental bond funds - 3,796
Redemptions -
Nuclear fuel lease (16,901) (56,891)
Long-term debt (35,000) (38,000)
Preferred stock (26) (26)
Issuances -
Nuclear fuel lease 30,351 29,967
Short-term debt 50,400 25,400
Long-term debt 90,000 90,000
-------- --------
Net cash used in financing activities (15,456) (76,971)
----------- ----------
Net change in cash and cash equivalents 14,945 1,330
Cash and cash equivalents at beginning of period 1,025 1,510
-------- --------
Cash and cash equivalents at end of period $ 15,970 $ 2,840
======== ========
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) $ 61,883 $ 69,005
Income taxes 63,289 80,570
</TABLE>
<PAGE> 6
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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 1995
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 June 30, 1996 and 1995 are not necessarily
indicative of trends for any three-month, six-month or 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 1.8 percent rate decrease for all classes of
Missouri retail electric customers, effective August 1, 1995,
reducing annual revenues by $30 million. In addition, a $30 million
credit was provided to Missouri electric customers in 1995 under the
agreement. Also included is a three-year plan which provides that
earnings in excess of a 12.61% regulatory return on equity (ROE) will
be shared equally between customers and shareholders and earnings
above a 14% ROE will be credited to customers. The formula for
computing the credit uses twelve-month results ending June 30, rather
than calendar year earnings. During the six months ended June 30,
1996, the registrant recorded an estimated $45 million credit for the
first year of the plan. This credit, which the registrant expects to
pay to Missouri customers later this year, was reflected as a
reduction in electric revenues.
Note 5 - On July 12, 1996, a joint agreement was filed with the Missouri
Public Service Commission that recommends approval of the merger
between the registrant and CIPSCO Incorporated. The registrant, the
Missouri Public Service Commission staff, the office of the Public
Counsel, several customer groups and others signed the agreement.
Agreement provisions include a new three-year alternative regulation
plan that would run from July 1, 1998 to June 30, 2001. Like the
current plan (see Note 4 above), the new plan provides that earnings
over a 12.61 percent ROE up to a 14 percent ROE would be shared
equally between customers and shareholders. The new three-year plan
would also return to customers 90 percent of all earnings above an
ROE of 14 percent up to 16 percent. Earnings above a 16 percent ROE
would be credited entirely to customers. Other agreement provisions
include: recovery over a 10-year period of the Missouri portion of an
estimated $71.5 million of merger-related transaction and transition
costs; a Missouri electric rate decrease, effective September 1,
1998, based on the weather-adjusted average annual credits to
customers under the current alternative regulation plan (see Note 4
above); and an experimental retail wheeling pilot program for 100
megawatts of electric power to be filed by the registrant no later
than March 1, 1997. Also, as part of the agreement, the registrant
will not seek to recover in Missouri the merger premium. The
exclusion of the merger premium from rates would not result in a
charge to earnings.
<PAGE> 7
Page 6
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, which was approved by the shareholders of both companies
in December 1995. The merged entity is expected to realize approximately $644
million in net savings over 10 years from combining certain operations of the
two companies and is expected to adopt Union Electric's dividend payment level.
However, the merger is conditioned upon, among other things, receipt of certain
regulatory and governmental approvals. The merger is expected to be
consummated in early 1997.
RESULTS OF OPERATIONS
Second-quarter 1996 common stock earnings decreased $12.1 million, or
12 cents per share, from 1995's second quarter to $60.6 million, or 59 cents
per share. Common stock earnings for the six months ended June 30, 1996
totaled $97.5 million, or 95 cents per share, a decrease of $10.1 million, or
10 cents per share, from the same 1995 period. Common stock earnings for the
twelve months ended June 30, 1996 were $290.7 million, or $2.85 per share, a
$4.6 million, or 5 cent-per-share, increase from the preceding twelve-month
period.
Earnings and earnings per share fluctuated due to many conditions, the
primary ones being: weather variations, electric rate reductions, credits to
electric customers, sales growth, fluctuating operating costs and
merger-related costs. The significant items affecting revenues, costs and
earnings during the three-month, six month and twelve-month periods ended June
30, 1996 and 1995 are detailed below:
Electric Operating Revenues
<TABLE>
<CAPTION>
(Millions of Dollars) Variations for periods ended June 30, 1996
from comparable prior-year periods
----------------------------------------------------
Three Months Six Months Twelve Months
------------ ---------- -------------
<S> <C> <C> <C>
Rate variations $(8.5) $(15.4) $(29.1)
Credits to customers (32.4) (45.9) (75.9)
Effect of abnormal weather 8.0 15.9 89.0
Growth and other 28.4 46.8 72.3
------ ------ ------
$ (4.5) $ 1.4 $ 56.3
====== ====== ======
</TABLE>
The $4.5 million decrease in second-quarter electric revenues compared
to the year-ago quarter is primarily due to an estimated $32.4 million credit
to Missouri electric customers recorded during the period, as well as a 1.8
percent Missouri electric rate decrease, implemented in August, 1995, which
reduced electric revenues $8.5 million. The customer credit and the rate
decrease relate to the agreement approved by the Missouri Public Service
Commission in July 1995. (See Note 4 to the Financial Statements of this
report.)
A $36.4 million increase in quarterly electric revenue due to growth
and weather partially offset the effects of the credit and the rate decrease.
1996 second-quarter kilowatthour sales were up 8 percent from the same quarter
of 1995, due to solid economic growth in the registrant's service area and
warmer-than-normal weather. Weather-sensitive residential and commercial sales
rose 16 percent and 5 percent, respectively, and industrial sales grew 3
percent compared to the year-ago quarter.
Electric revenues for the first six months of 1996 increased $1.4
million as higher sales more than offset the effects of the customer credit and
the rate decrease discussed previously. (See Note 4 to the Financial
Statements of this report.) Year-to-date kilowatthour sales were up 7 percent
from the comparable 1995 period. Residential sales increased 13 percent,
commercial sales rose 6 percent and industrial sales were up 3 percent. These
increases reflect the positive effects of weather, leap year, and growth in the
service area during the current period.
<PAGE> 8
Page 7
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Electric revenues for the 12 months ended June 30, 1996 increased $56.3
million over the prior twelve-month period. The increase is primarily due to
an 8 percent increase in kilowatthour sales over the comparable year-ago
period. This increase reflects hotter-than-normal weather during the 1995
third quarter, colder-than-normal temperatures in the 1996 first quarter and a
strong local economy. Residential sales increased 14 percent, commercial
sales rose 6 percent and industrial sales grew 3 percent. These increases were
partially offset by customer credits and the Missouri electric rate decrease.
(See Note 4 to the Financial Statements of this report.)
OPERATING EXPENSES
<TABLE>
<CAPTION>
Fuel and Purchased Power
- ------------------------ Variations for periods ended June 30, 1996
(Millions of Dollars) from comparable prior-year periods
------------------------------------------------
Three Months Six Months Twelve Months
------------ ---------- -------------
Fuel:
<S> <C> <C> <C>
Variation in generation $ 3.9 $ 10.5 $ 12.6
Price (10.6) (17.0) (19.1)
Generation efficiencies 1.4 3.7 5.8
Department of Energy assessment (0.3) (0.6) (1.1)
Net Interchange sales and purchased power
variation 13.3 10.3 35.1
----- ------ ------
$ 7.7 $ 6.9 $ 33.3
===== ====== ======
</TABLE>
The increases in fuel and purchased power costs for the three months,
six months and twelve months ended June 30, 1996 versus the comparable
prior-year periods were driven mainly by higher kilowatthour sales. Increases
due to greater net purchased power costs and increased generation were
partially offset by lower fuel prices.
Other Operating Expenses
Other operating expense variations reflect recurring conditions such as
growth, inflation and wage increases.
Second-quarter 1996 operations expenses other than fuel and purchased
power were up $4 million over last year's second quarter primarily due to
storm-related expenses, higher gas purchased for resale costs, and increased
regulatory expenses. Second-quarter maintenance expenses rose $1 million as
increased fossil-plant expenses related to scheduled maintenance projects more
than offset decreased nuclear expenses caused by the absence of a Callaway
nuclear plant refueling in the 1996 second quarter compared to last year's
second quarter.
Year-to-date operations expenses other than fuel and purchased power
increased $9 million over the first six months of 1995 mostly due to higher gas
purchased for resale costs and storm-related costs. Maintenance expenses for
the six-month period declined $1 million as decreased Callaway expenses more
than offset increased fossil-plant expenses.
For the twelve months ended June 30, 1996, operations expenses other
than fuel and purchased power were up $6 million versus the comparable year-ago
period. The rise is primarily due to higher gas purchased for resale costs and
increased labor expenses, partially offset by a decrease in employee benefits
expense, and a reduction in injuries, damages and insurance premiums expenses.
Maintenance expenses for the current twelve-month period increased $3 million
as increased fossil-plant maintenance expenses were partially offset by reduced
Callaway and tree-trimming expenses.
<PAGE> 9
Page 8
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Depreciation expense for the three-month, six-month and twelve-month
periods ended June 30, 1996 increased $2 million, $4 million and $6 million,
respectively, versus the comparable 1995 periods, primarily due to increases in
depreciable property.
Income taxes charged to operating expenses for the three months and six
months ended June 30, 1996 decreased $6 million and $1 million, respectively,
versus the comparable 1995 periods, primarily due to lower pretax income.
Income taxes charged to operating expenses for the twelve months ended June 30,
1996 increased $16 million, versus the comparable 1995 period, principally due
to greater pretax income and a higher effective tax rate.
Other Income and Deductions
Miscellaneous other net income and deductions decreased $3 million for
the three-month and six-month periods ended June 30, 1996 versus the comparable
1995 periods resulting primarily from merger-related expenses. Merger-related
expenses totaled $3 million for the second quarter and $4 million year-to-date.
Miscellaneous other net income and deductions decreased $8 million for
the twelve months ended June 30, 1996, versus the comparable 1995 period,
primarily reflecting $13 million of merger-related expenses partially offset by
reduced charitable contributions.
Interest
Interest charged for the twelve months ended June 30, 1996 decreased $9
million versus the prior-year period, primarily due to reductions in other
interest expense, partially offset by higher 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 June 30, 1996 and 1995 AFC, rates averaged 9.2 percent for each of the
periods.
Balance Sheet
The $46 million increase in accounts receivable and unbilled revenues
is due primarily to higher kilowatthour sales in May and June 1996 compared to
November and December 1995. The higher sales caused increases in revenue, as
well as increased budget billing accounts receivable balances.
Changes in the accounts payable, income taxes accrued and other tax
accruals result from the timing of various payments to taxing authorities and
suppliers.
The $53 million increase in other current and accrued liabilities at
June 30, 1996 compared to December 31, 1995 is primarily due to the $45 million
Missouri customer credit discussed previously. (See Note 4 to the Financial
Statements of this report.)
Rate Matters
See Notes 4 and 5 under Notes to Financial Statements of this report.
<PAGE> 10
Page 9
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
On April 24, 1996 the Federal Energy Regulatory Commission (FERC)
issued Orders 888 and 889 which are intended to promote competition in the
wholesale electric energy market. FERC requires transmission-owning public
utilities, such as the registrant, to provide transmission access and service
to others in a manner similar and comparable to that which the utility has by
virtue of ownership. In Order 888, FERC requires that a single tariff be used
by the utility in providing transmission service. Order 888 also provides for
the recovery of stranded costs. On July 9, 1996 the registrant filed an open
access tariff under FERC Order 888.
Order 889 established the Standards of Conduct and information
requirements that transmission owners must adhere to in doing business under
the open access rule. Under Order 889, utilities must obtain transmission
service for their own use in the same manner its customers will obtain service,
thus mitigating market power through control of transmission facilities.
The registrant is currently evaluating Orders 888 and 889. Based on
its preliminary analysis, the registrant believes that these Orders, which
relate to its wholesale business, will not have a material adverse effect on
its financial condition, results of operations or liquidity.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by the registrant's operations totaled $222 million for
the six months ended June 30, 1996 compared to $250 million during the same
1995 period.
Cash flows used in investing activities totaled $192 million and $172
million for the six months ended June 30, 1996 and 1995, respectively.
Construction expenditures for the six months ended June 30, 1996 were for
constructing new or improving existing facilities, purchasing railroad coal
cars and complying with the Clean Air Act. In addition, the registrant
expended $24 million for the acquisition of nuclear fuel. Capital requirements
for the remainder of 1996 are expected to be principally for construction
expenditures and the acquisition of nuclear fuel.
Cash flows used in financing activities were $15 million for the six
months ended June 30, 1996 compared to $77 million during the same 1995 period.
The registrant's principal financing activities for the six months ended June
30, 1996 were the redemption of $35 million of First Mortgage Bonds, the
issuance of $50 million of short-term debt bank loans and $90 million of
long-term debt under a revolving credit agreement and the payment of dividends.
On April 23, 1996, the registrant's Board of Directors declared a quarterly
dividend of 62.5 cents per common share which was paid to shareholders June 28,
1996. Common stock dividends paid for the twelve months ended June 30, 1996
resulted in a pay out rate of 87% of the registrant's earnings to common
shareholders. Dividends paid to registrant's common shareholders relative to
net cash provided by operating activities for the same period were 41%.
The registrant plans to utilize short-term debt as support for normal
operations and other temporary requirements. The registrant is authorized by
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 June 30, 1996, the registrant had
committed banks lines of credit aggregating $184 million (of which $114 million
was unused 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 pays to its lending banks
annual fees up to 0.10%. 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 June 30,
1996, $90 million of such borrowings were outstanding.
<PAGE> 11
Page 10
UNION ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Additionally, the registrant has a lease agreement which provides for the
financing of nuclear fuel. At June 30, 1996, the maximum amount which may be
financed under the agreement is $120 million. Cash provided from financing for
the six months ended June 30, 1996 included issuances for nuclear fuel of $30
million offset by $17 million of redemptions. At June 30, 1996, $111 million
was financed under the lease.
On May 1, 1996, the registrant redeemed $30,000,000 of 5-1/2% Series First
Mortgage Bonds, due on that date, at a price of 100% of the principal amount.
<PAGE> 12
Page 11
PART II. OTHER INFORMATION
ITEM 5.OTHER INFORMATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
AMEREN CORPORATION
On August 11, 1995, the registrant and CIPSCO Incorporated ("CIPSCO")
entered into an Agreement and Plan of Merger, which was subsequently approved by
the shareholders of both parties. The merger ("Merger") is further conditioned
on, among other things, receipt of regulatory and governmental approvals; is
expected to be consummated in early 1997; and will result in a newly formed
holding company, Ameren Corporation. 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 Merger. The unaudited pro forma combined condensed
balance sheet at June 30, 1996 gives effect to the Merger as if it had occurred
at June 30, 1996. The unaudited pro forma combined condensed statements of
income for the six-month periods ended June 30, 1996, 1995 and the twelve-month
period ended June 30, 1996, give effect to the Merger as if it had occurred at
the beginning of the periods presented. These statements are prepared on the
basis of accounting for the Merger 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 Merger been consummated on the date, or at the
beginning of the periods, for which the Merger is 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 six-month
periods ended June 30, 1996 and 1995, are not necessarily indicative of trends
for any twelve-month period.
Also see Part I, Note 5, Notes to Financial Statements.
<PAGE> 13
Page 12
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET
AT JUNE 30, 1996
(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 $8,622,939 $2,342,630 $ 374,741 $11,340,310
Gas 178,845 233,403 - 412,248
Other 34,763 - - 34,763
---------- ---------- ---------- -----------
8,836,547 2,576,033 374,741 11,787,321
Less accumulated depreciation and amortization 3,613,616 1,165,985 260,354 5,039,955
---------- ---------- ---------- -----------
5,222,931 1,410,048 114,387 6,747,366
Construction work in progress:
Nuclear fuel in process 148,706 - - 148,706
Other 127,445 51,974 2,886 182,305
---------- ---------- ---------- ----------
Total property and plant, net 5,499,082 1,462,022 117,273 7,078,377
Regulatory asset - deferred income taxes (Note 6) 701,612 43,339 - 744,951
Other assets:
Unamortized debt expense 42,335 15,781 624 58,740
Nuclear decommissioning trust fund 81,778 - - 81,778
Investments in nonregulated activities - 109,121 - 109,121
Other 24,325 32,521 (3,284) 53,562
---------- --------- ---------- ----------
Total other assets 148,438 157,423 (2,660) 303,201
Current assets:
Cash and temporary investments 15,970 11,484 2,889 30,343
Accounts receivable, net 196,568 78,623 20,164 295,355
Unbilled revenue 122,837 23,752 - 146,589
Materials and supplies, at average cost -
Fossil fuel 54,830 41,103 6,817 102,750
Other 96,311 40,281 4,707 141,299
Other 29,515 17,653 3,467 50,635
---------- ---------- ---------- ----------
Total current assets 516,031 212,896 38,044 766,971
---------- ---------- ---------- ----------
Total Assets $6,865,163 $1,875,680 $ 152,657 $8,893,500
========== ========== ========== ==========
CAPITAL AND LIABILITIES:
- ------------------------
Capitalization:
Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372
Other stockholders' equity (Note 2) 1,778,385 293,135 866,059 2,937,579
---------- ---------- ---------- ----------
Total common stockholders' equity 2,289,004 649,947 - 2,938,951
Preferred stock of subsidiary 219,121 80,000 - 299,121
Long-term debt 1,825,208 464,077 130,000 2,419,285
---------- ---------- ---------- ----------
Total capitalization 4,333,333 1,194,024 130,000 5,657,357
Minority interest in consolidated subsidiary - - 3,534 3,534
Accumulated deferred income taxes 1,325,046 326,341 (6,937) 1,644,450
Accumulated deferred investment tax credits 163,430 50,560 - 213,990
Regulatory liability 210,160 111,945 - 322,105
Accumulated provision for nuclear decommissioning 83,451 - - 83,451
Other deferred credits and liabilities 152,541 - 4,753 157,294
Current liabilities:
Current maturity of long-term debt 76,599 15,000 - 91,599
Short-term debt 70,000 38,482 - 108,482
Accounts payable 108,665 52,109 17,925 178,699
Wages payable 33,599 10,358 - 43,957
Taxes accrued 141,162 14,677 69 155,908
Interest accrued 45,033 9,459 420 54,912
Other 122,144 52,725 2,893 177,762
---------- ---------- ---------- ----------
Total current liabilities 597,202 192,810 21,307 811,319
---------- ---------- ---------- ----------
Total Capital and Liabilities $6,865,163 $1,875,680 $ 152,657 $8,893,500
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 14
<TABLE>
<CAPTION>
UE CIPSCO
---------- ------
(As Reported) (As Reported)
(Notes 1,4,10) (Notes 1,4,7)
-------------- -------------
<S> <C> <C>
OPERATING REVENUES: Electric $910,234 $ 341,210
Gas 58,478 85,359
Other 259 5,082
---------- ----------
Total operating revenues 968,971 431,651
OPERATING EXPENSES:
Operations
Fuel and purchased power 176,978 131,646
Gas costs 34,571 52,681
Other 186,203 69,207
---------- ----------
397,752 253,534
Maintenance 110,462 30,971
Depreciation and amortization 119,285 43,130
Income taxes (Note 7) 72,865 21,294
Other taxes 103,207 29,384
---------- ----------
Total operating expenses 803,571 378,313
OPERATING INCOME 165,400 53,338
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 3,823 77
Minority interest in consolidated subsidiary - -
Miscellaneous, net (1,586) (1,062)
---------- ----------
Total other income and deductions, net 2,237 (985)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 167,637 52,353
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 67,528 17,487
Allowance for borrowed funds used during
construction (3,978) (98)
Preferred dividends of subsidiaries (Note 8) 6,625 1,864
----------- ----------
Net interest charges and preferred dividends 70,175 19,253
NET INCOME $ 97,462 $ 33,100
========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $0.95 $0.97
===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542
=========== ==========
<CAPTION>
Pro Forma
Adjustments Pro Forma
(Notes2,9) Combined
---------- ---------
<S> <C> <C>
OPERATING REVENUES: Electric $ 96,703 $1,348,147
Gas - 143,837
Other 789 6,130
---------- ----------
Total operating revenues 97,492 1,498,114
OPERATING EXPENSES:
Operations
Fuel and purchased power 54,864 363,488
Gas costs - 87,252
Other 9,396 264,806
---------- ----------
64,260 715,546
Maintenance 9,232 150,665
Depreciation and amortization 7,601 170,016
Income taxes (Note 7) 4,048 98,207
Other taxes 1,028 133,619
---------- ---------
Total operating expenses 86,169 1,268,053
OPERATING INCOME 11,323 230,061
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction - 3,900
Minority interest in consolidated subsidiary (2,482) (2,482)
Miscellaneous, net (3,719) (6,367)
----------- ---------
Total other income and deductions, net (6,201) (4,949)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 5,122 225,112
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 5,122 90,137
Allowance for borrowed funds used during
construction - (4,076)
Preferred dividends of subsidiaries (Note 8) - 8,489
----------- ----------
Net interest charges and preferred dividends 5,122 94,550
NET INCOME $ - $ 130,562
=========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $0.95
=====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 1,022,086 137,215,462
========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 15
Page 14
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1995
(Thousands of Dollars Except Shares and Per Share Amounts)
<TABLE>
<CAPTION>
UE CIPSCO
-- ------
(As Reported) (As Reported)
(Note 1) (Notes 1,3,7)
-------- -------------
OPERATING REVENUES:
<S> <C> <C>
Electric $908,829 $ 316,688
Gas 51,614 74,290
Other 247 3,428
---------- ---------
Total operating revenues 960,690 394,406
OPERATING EXPENSES:
Operations
Fuel and purchased power 170,079 117,094
Gas costs 28,216 43,069
Other 183,940 76,536
---------- ----------
382,235 236,699
Maintenance 111,088 30,672
Depreciation and amortization 115,778 41,275
Income taxes (Note 7) 74,070 15,105
Other taxes 103,053 28,349
---------- ----------
Total operating expenses 786,224 352,100
OPERATING INCOME 174,466 42,306
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 2,908 377
Minority interest in consolidated subsidiary - -
Miscellaneous, net 1,533 1,337
---------- ----------
Total other income and deductions, net 4,441 1,714
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 178,907 44,020
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 67,988 16,658
Allowance for borrowed funds used during
construction (3,340) (31)
Preferred dividends of subsidiaries (Note 8) 6,626 1,939
----------- ----------
Net interest charges and preferred dividends 71,274 18,566
NET INCOME $ 107,633 $ 25,454
========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $1.05 $0.75
===== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542
=========== ==========
<CAPTION>
Pro Forma
Adjustments Pro Forma
(Notes2,9) Combined
------------ ----------
OPERATING REVENUES:
<S> <C> <C>
Electric $ 91,488 $1,317,005
Gas - 125,904
Other 143 3,818
---------- ----------
Total operating revenues 91,631 1,446,727
OPERATING EXPENSES:
Operations
Fuel and purchased power 48,169 335,342
Gas costs - 71,285
Other 10,011 270,487
---------- ----------
58,180 677,114
Maintenance 9,471 151,231
Depreciation and amortization 8,050 165,103
Income taxes (Note 7) 4,209 93,384
Other taxes 1,030 132,432
---------- ---------
Total operating expenses 80,940 1,219,264
OPERATING INCOME 10,691 227,463
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction - 3,285
Minority interest in consolidated subsidiary (2,164) (2,164)
Miscellaneous, net (3,314) (444)
----------- -------
Total other income and deductions, net (5,478) 677
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 5,213 228,140
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 5,213 89,859
Allowance for borrowed funds used during
construction - (3,371)
Preferred dividends of subsidiaries (Note 8) - 8,565
----------- ----------
Net interest charges and preferred dividends 5,213 95,053
NET INCOME $ - $ 133,087
=========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $0.97
=========== =====
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 1,022,086 137,215,462
========= ===========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
<PAGE> 16
Page 15
AMEREN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
TWELVE MONTHS ENDED JUNE 30, 1996
(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 1,3,4,7) (Notes 2,9) Combined
-------------- --------------- ---------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric $ 2,015,858 $ 728,006 $ 187,754 $ 2,931,618
Gas 94,678 140,676 - 235,354
Other 452 10,825 1,000 12,277
----------- ---------- ---------- ----------
Total operating revenues 2,110,988 879,507 188,754 3,179,249
OPERATING EXPENSES:
Operations
Fuel and purchased power 372,057 262,778 104,201 739,036
Gas costs 57,607 83,667 - 141,274
Other 370,133 148,039 18,533 536,705
----------- ---------- ---------- ----------
799,797 494,484 122,734 1,417,015
Maintenance 220,982 68,295 17,702 306,979
Depreciation and amortization 236,745 85,118 15,299 337,162
Income taxes (Note 7) 208,336 51,961 7,696 267,993
Other taxes 212,299 57,647 1,909 271,855
----------- ---------- ---------- ---------
Total operating expenses 1,678,159 757,505 165,340 2,601,004
OPERATING INCOME 432,829 122,002 23,414 578,245
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during
construction 7,742 589 - 8,331
Minority interest in consolidated subsidiary - - (4,876) (4,876)
Miscellaneous, net (9,099) (4,697) (8,313) (22,109)
----------- ---------- ----------- ----------
Total other income and deductions, net (1,357) (4,108) (13,189) (18,654)
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 431,472 117,894 10,225 559,591
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 134,282 34,598 10,225 179,105
Allowance for borrowed funds used during
construction (6,744) (140) - (6,884)
Preferred dividends of subsidiaries (Note 8) 13,249 3,775 - 17,024
----------- ---------- ----------- ----------
Net interest charges and preferred dividends 140,787 38,233 10,225 189,245
NET INCOME $ 290,685 $ 79,661 $ - $ 370,346
=========== ========== =========== ==========
EARNINGS PER SHARE OF COMMON STOCK
(BASED ON AVERAGE SHARES OUTSTANDING) $ 2.85 $ 2.34 $2.70
===== ===== =====
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 CORPORATION
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 six months ended June 30, 1995 includes CIPSCO's
pre-tax charges of $5.8 million for a voluntary separation program.
Net income for the twelve months ended June 30, 1996 includes $5.7
million of system development expenses.
4. The allocation between the registrant and CIPSCO and their customers of
the estimated cost savings resulting from the merger, 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 have been reflected in the pro forma
combined condensed financial statements. However, net income for the
six months and twelve months ended June 30, 1996 include merger
transaction costs and costs to achieve such savings of $4.4 million and
$13.2 million, net of income taxes, for the registrant and $2.1 million
and $6.8 million, net of income taxes, for CIPSCO, respectively.
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. The
registrant and CIPSCO hold 40% and 20% ownership interests,
respectively, in EEI and account 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 six and twelve months ended June 30, 1996 includes
credits for Missouri electric customers which reduced revenues and
pre-tax income of the registrant by $45 million and $76 million,
respectively.
<PAGE> 18
Page 17
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 June 30, 1996.
Exhibit 12(b) - Computation of Ratio of Earnings to Fixed
Charges and Preferred Stock Dividend
Requirements, 12 Months Ended
June 30, 1996.
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)
August 13, 1996 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>
Year Ended December 31, 12 Months
------------------------------------------------------------- Ended
June 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C> <C>
Net income for the Period $321,512 $302,748 $297,160 $320,757 $314,107 $303,934
-------- -------- -------- -------- -------- --------
Add:
Taxes Based on income 218,954 197,009 182,716 203,827 207,734 206,198
-------- -------- -------- -------- -------- --------
Fixed Charges:
Interest on Debt 163,061 125,798 124,430 135,608 129,239 129,087(*)
Amortization of Premium and
Discount, Less Expense on Debt;
and Bond Defeasance Cost 4,148 9,521 5,170 5,504 5,502 5,195
Rentals (See note) 1,171 908 1,314 1,299 3,330 3,302
-------- -------- -------- -------- -------- --------
Total Fixed Charges 168,380 136,227 130,914 142,411 138,071 137,584
-------- -------- -------- -------- -------- --------
Earnings Available for Fixed Charges $708,846 $635,984 $610,790 $666,995 $659,912 $647,716
======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 4.21 4.66 4.66 4.68 4.78 4.7
==== ==== ==== ==== ==== ===
</TABLE>
(*) Total annual interest charges on all bonds for the twelve months ended
June 30, 1996 was $113,813,000. 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>
Year Ended December 31, 12 Months
------------------------------------------------------------- Ended
June 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(Thousands of Dollars Except Ratios)
<S> <C> <C> <C> <C> <C> <C>
Net income for the period $321,512 $302,748 $297,160 $320,757 $314,107 $303,934
Add:
Taxes based on income 218,954 197,009 182,716 203,827 207,734 206,198
Fixed charges (see below) 168,380 136,227 130,914 142,411 138,071 137,584
------- -------- -------- -------- -------- --------
Earnings available for fixed charges
and preferred stock dividend
requirements of Registrant $708,846 $635,984 $610,790 $666,995 $659,912 $647,716
======== ======== ======== ======== ======== ========
Fixed charges:
Interest on debt $163,061 $125,798 $124,430 $135,608 $129,239 $129,087
Amortization of premium and discount,
less expense, on debt; and
bond defeasance cost 4,148 9,521 5,170 5,504 5,502 5,195
Rentals (see note) 1,171 908 1,314 1,299 3,330 3,302
-------- -------- -------- -------- -------- --------
Total fixed charges $168,380 $136,227 $130,914 $142,411 $138,071 $137,584
Preferred stock dividend requirements
of Registrant* (Adjusted for income
tax effect) 22,213 21,852 21,537 20,514 20,808 21,001
-------- -------- -------- -------- -------- --------
Total fixed charges and preferred
stock dividend requirements $190,593 $158,079 $152,451 $162,925 $158,879 $158,585
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges
and preferred dividends 3.72 4.02 4.01 4.09 4.15 4.08
==== ==== ==== ==== ==== ====
</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>
Year Ended December 31, 12 Months
------------------------------------------------------------- Ended
June 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(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 $ 14,059 $ 14,058 $ 14,087 $ 13,252 $ 13,250 $ 13,249
Less deductible preferred stock
dividends** 2,085 2,085 1,973 1,816 1,816 1,816
------- ------- ------- ------- ------- -------
Non-deductible preferred stock
dividends $ 11,974 $ 11,973 $ 12,114 $ 11,436 $ 11,434 $ 11,433
======= ======= ======= ======= ======= =======
Excess of net income before income
taxes over net income (percentage)
See note below 68.1% 65.1% 61.5% 63.5% 66.1% 67.8%
----- ----- ----- ----- ----- -----
Income tax effect on non-deductible
preferred stock dividends* $ 8,154 $ 7,794 $ 7,450 $ 7,262 $ 7,558 $ 7,752
Add:
Deductible preferred stock
dividends (above) 2,085 2,085 1,973 1,816 1,816 1,816
Non-deductible preferred stock
dividends (above) 11,974 11,973 12,114 11,436 11,434 11,433
------ ------ ------ ------ ------ ------
Preferred stock dividend requirements
of Registrant. (Adjusted for income
tax effect) $ 22,213 $ 21,852 $ 21,537 $ 20,514 $ 20,808 $ 21,001
======= ======= ======= ======= ======= =======
Note: Calculated as follows -
Net income before income taxes $540,466 $499,757 $479,876 $524,584 $521,841 $510,132
Less net income 321,512 302,748 297,160 320,757 314,107 303,934
-------- -------- -------- -------- -------- --------
Excess - Taxed based on income $218,954 $197,009 $182,716 $203,827 $207,734 $206,198
======== ======== ======== ======== ======== ========
- Percentage of net income 68.1% 65.1% 61.5% 63.5% 66.1% 67.8%
===== ===== ===== ===== ===== =====
</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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 5,499,082
<OTHER-PROPERTY-AND-INVEST> 81,778
<TOTAL-CURRENT-ASSETS> 516,031
<TOTAL-DEFERRED-CHARGES> 66,660
<OTHER-ASSETS> 701,612
<TOTAL-ASSETS> 6,865,163
<COMMON> 510,619
<CAPITAL-SURPLUS-PAID-IN> 717,669
<RETAINED-EARNINGS> 1,060,716
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,289,004
598
218,497
<LONG-TERM-DEBT-NET> 1,746,288
<SHORT-TERM-NOTES> 70,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 45,000
26
<CAPITAL-LEASE-OBLIGATIONS> 78,920
<LEASES-CURRENT> 31,599
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,385,231
<TOT-CAPITALIZATION-AND-LIAB> 6,865,163
<GROSS-OPERATING-REVENUE> 2,110,988
<INCOME-TAX-EXPENSE> 208,336
<OTHER-OPERATING-EXPENSES> 1,469,823
<TOTAL-OPERATING-EXPENSES> 1,678,159
<OPERATING-INCOME-LOSS> 432,829
<OTHER-INCOME-NET> (1,357)
<INCOME-BEFORE-INTEREST-EXPEN> 431,472
<TOTAL-INTEREST-EXPENSE> 127,538
<NET-INCOME> 303,394
13,249
<EARNINGS-AVAILABLE-FOR-COMM> 290,685
<COMMON-STOCK-DIVIDENDS> 127,655
<TOTAL-INTEREST-ON-BONDS> 113,813
<CASH-FLOW-OPERATIONS> 611,842
<EPS-PRIMARY> 2.85
<EPS-DILUTED> 2.85
</TABLE>
