-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IpFzt8MwHKZRwIE0v4sKiKZDtqkZ23yBVDv0FmjbATFg8jexCwO6Yj5BVysFSdy9 iJB3egr6Zu43sb7TY+x+FQ== 0000950124-96-005041.txt : 19961118 0000950124-96-005041.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950124-96-005041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION ELECTRIC CO CENTRAL INDEX KEY: 0000100826 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 430559760 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02967 FILM NUMBER: 96663720 BUSINESS ADDRESS: STREET 1: P O BOX 149 CITY: ST LOUIS STATE: MO ZIP: 63166 BUSINESS PHONE: 3146213222 MAIL ADDRESS: STREET 1: P O BOX 149 CITY: ST LOUIS STATE: MO ZIP: 63166 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED 9-30-96 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, 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 October 31, 1996: Common Stock, $5 par value - 102,123,834 (excl. 42,990 treasury shares) 2 UNION ELECTRIC COMPANY INDEX Page No. Part I Financial Information (Unaudited) Balance Sheet -- September 30, 1996 and December 31, 1995 2 Statement of Income -- Three Months, Nine Months and Twelve Months Ended September 30, 1996 and 1995 3 Statement of Cash Flows -- Nine Months Ended September 30, 1996 and 1995 4 Notes to Financial Statements 5 & 6 Management's Discussion and Analysis 7 thru 11 Part II Other Information 3 UNION ELECTRIC COMPANY BALANCE SHEET Page 2 UNAUDITED
ASSETS: (Thousands of Dollars) September 30, December 31, - ------- 1996 1995 Property and plant, at original cost ------------ ------------ Electric $8,580,945 $8,319,632 Gas 181,899 174,231 Other 35,959 35,033 ---------- ---------- 8,798,803 8,528,896 Less accumulated depreciation and amortization 3,633,370 3,465,699 ---------- ---------- 5,165,433 5,063,197 Construction work in progress: Nuclear fuel in process 115,960 85,916 Other 64,990 125,934 ---------- ---------- Total property and plant, net 5,346,383 5,275,047 Regulatory assets: Deferred income taxes 696,852 732,580 Other 181,855 193,593 ---------- ---------- Total regulatory assets 878,707 926,173 Deferred charges: Unamortized debt expense 10,721 11,293 Nuclear decommissioning trust fund 85,629 73,838 Other 28,272 20,101 ---------- ---------- Total deferred charges 124,622 105,232 Current assets: Cash 19,427 1,025 Accounts receivable - trade (less allowance for doubtful accounts of $5,701 and $6,925 at respective dates) 248,862 191,520 Unbilled revenue 57,595 82,098 Other accounts and notes receivable 26,640 21,602 Materials and supplies, at average cost - Fossil fuel 67,205 46,381 Construction and maintenance 99,305 92,921 Other 12,672 12,470 ---------- ---------- Total current assets 531,706 448,017 ---------- ---------- Total Assets $6,881,418 $6,754,469 ========== ========== CAPITAL AND LIABILITIES: - ------------------------ Capitalization: Common stock, $5 par value, authorized 150,000,000 shares- 102,123,834 outstanding (excl. 42,990 at par value in treasury) $ 510,619 $ 510,619 Other paid-in capital 717,669 717,669 Retained earnings 1,178,543 1,090,909 ---------- ---------- Total common stockholders' equity 2,406,831 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 71,513 62,607 Long-term debt 1,665,585 1,710,585 Unamortized discount and premium on debt (9,153) (9,579) ---------- ---------- Long-term debt, net 1,656,432 1,701,006 ---------- ---------- Total capitalization 4,353,897 4,301,957 Accumulated deferred income taxes 1,322,536 1,357,689 Accumulated deferred investment tax credits 161,886 166,524 Regulatory liability 206,991 216,502 Accumulated provision for nuclear decommissioning 87,302 75,511 Other deferred credits and liabilities 152,517 150,600 Current and accrued liabilities: Current maturity of capital lease obligation 31,490 34,462 Current maturity of long-term debt 45,000 35,000 Accounts payable 73,082 169,012 Wages payable 36,908 36,605 Bank loans - 19,600 Accumulated deferred income taxes 42,345 27,429 Income taxes accrued 113,743 29,986 Other taxes accrued 82,794 17,727 Interest accrued 53,154 46,244 Dividends accrued 3,312 3,312 Other 114,461 66,309 ---------- ---------- Total current and accrued liabilities 596,289 485,686 ---------- ---------- Total Capital and Liabilities $6,881,418 $6,754,469 ========== ==========
4 Page 3 UNION ELECTRIC COMPANY STATEMENT OF INCOME (UNAUDITED) (Thousands of Dollars Except Shares and Per Share Amounts)
Three Months Ended Nine Months Ended Twelve Months Ended September 30, September 30, September 30, ---------------------- ---------------------- ------------------------ 1996 1995 1996 1995 1996 1995 ---- ---- ---- ---- ---- ---- Operating revenues: Electric $733,785 $747,628 $1,716,061 $1,718,620 $2,151,551 $2,138,372 Gas 9,799 8,866 68,277 60,480 95,610 83,936 Steam 82 71 341 318 464 448 -------- -------- -------- -------- ---------- ---------- Total operating revenue 743,666 756,565 1,784,679 1,779,418 2,247,625 2,222,756 Operating expenses: Operations Fuel and purchased power 138,018 153,498 387,038 385,740 506,113 494,701 Other 101,395 100,386 322,169 312,542 428,748 422,064 -------- -------- -------- -------- ---------- ---------- 239,413 253,884 709,207 698,282 934,861 916,765 Maintenance 49,526 52,254 159,988 163,342 218,255 220,997 Depreciation and decommissioning 60,816 58,591 180,101 174,369 238,969 232,279 Income taxes 116,681 114,422 189,546 188,492 210,595 200,848 Other taxes 63,256 63,891 166,463 166,944 211,664 212,122 -------- -------- -------- -------- ---------- ---------- Total operating expenses 529,692 543,042 1,405,305 1,391,429 1,814,344 1,783,011 Operating income 213,974 213,523 379,374 387,989 433,281 439,745 Other income and deductions: Allowance for equity funds used during construction 1,137 1,850 4,960 4,758 7,028 6,186 Miscellaneous, net 1,225 (10,304) (361) (8,772) 2,430 (11,629) -------- -------- -------- -------- ---------- ----------- Total other income/deductions, net 2,362 (8,454) 4,599 (4,014) 9,458 (5,443) Income before interest charges 216,336 205,069 383,973 383,975 442,739 434,302 Interest charges: Interest 33,061 33,783 100,589 101,770 133,559 135,108 Allowance for borrowed funds used during construction (1,691) (1,321) (5,669) (4,661) (7,114) (6,336) -------- -------- -------- -------- ---------- ---------- Net interest charges 31,370 32,462 94,920 97,109 126,445 128,772 Net income 184,966 172,607 289,053 286,866 316,294 305,530 Preferred stock dividends 3,311 3,312 9,936 9,938 13,249 13,250 -------- ------- ------- --------- -------- -------- Earnings on common stock $181,655 $169,295 $279,117 $276,928 $303,045 $292,280 ======== ======== ======== ======== ======== ======== Earnings per share of common stock (based on average shares outstanding) $1.78 $1.66 $2.73 $2.71 $2.97 $2.86 ===== ===== ===== ===== ===== ===== Dividends per share of common stock $0.625 $0.61 $1.875 $1.83 $2.50 $2.44 ====== ===== ====== ===== ===== ===== Average number of common shares outstanding (in thousands) 102,124 102,124 102,124 102,124 102,124 102,124 ======= ======= ======= ======= ======= =======
5 UNION ELECTRIC COMPANY STATEMENT OF CASH FLOWS Page 4 UNAUDITED (Thousands of Dollars)
Nine Months Ended September 30, ------------------ 1996 1995 ---- ---- Cash Flows From Operating: Net income $289,053 $286,866 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 172,869 167,247 Amortization of nuclear fuel 32,198 25,597 Allowance for funds used during construction (10,629) (9,419) Postretirement benefit accrual (746) 19,569 Deferred income taxes, net 5,980 (5,641) Deferred investment tax credits, net (4,638) (4,637) Changes in assets and liabilities: Receivables, net (37,877) (95,518) Materials and supplies (27,208) 744 Accounts and wages payable (95,627) 44,798 Taxes accrued 148,824 128,288 Interest and dividends accrued or declared 6,910 1,463 Other, net 46,675 10,388 ----------- ---------- Net cash provided by operating activities 525,784 569,745 Cash Flows From Investing: Construction expenditures (241,899) (224,252) Allowance for funds used during construction 10,629 9,419 Nuclear fuel expenditures (26,001) (30,405) ----------- ---------- Net cash used in investing activities (257,271) (245,238) Cash Flows From Financing: Dividends on preferred stock (9,936) (9,938) Dividends on common stock (191,483) (186,886) Environmental bond funds 0 4,443 Redemptions - Nuclear fuel lease (25,659) (61,552) Short-term debt (19,600) 0 Long-term debt (35,000) (38,000) Preferred stock (26) (26) Issuances - Nuclear fuel lease 31,593 40,967 ----------- ---------- Net cash used in financing activities (250,111) (250,992) ----------- ---------- Net change in cash and cash equivalents 18,402 73,515 Cash and cash equivalents at beginning of period 1,025 1,510 ----------- ---------- Cash and cash equivalents at end of period $ 19,427 $ 75,025 =========== ========== 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) $ 83,197 $ 90,684 Income taxes 105,357 138,515
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 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 September 30, 1996 and 1995 are not necessarily indicative of trends for any three-month, nine-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 the third quarter 1995 under the agreement. Also included is a three-year plan which provides that earnings in excess of a 12.61 percent regulatory return on equity (ROE) will be shared equally between customers and shareholders and earnings above a 14 percent ROE will be credited to customers. The formula for computing the credit uses twelve-month results ending June 30, rather than calendar year earnings. During the first six months of 1996, the registrant recorded an estimated $45 million credit for the first year of the plan. This credit 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 (MPSC) 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. On September 25, 1996, the MPSC ordered that additional information be filed in November 1996 in connection with the merger proceeding. The MPSC is expected to issue a decision on the merger in early 1997. 7 Page 6 UNION ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 5 - (Continued) On November 7, 1996, the Hearing Examiner for the Illinois Commerce Commission issued a proposed order in connection with the registrant's and CIPSCO's merger proceedings. In the proposed order, the Hearing Examiner recommended that the merger between the registrant and CIPSCO be approved. In addition, the Hearing Examiner recommended that a decision on the registrant's and CIPSCO's proposals for sharing merger savings be made after the merger. The registrant and CIPSCO will be required to file a rate case or alternative regulation plan within one year after closing of the merger whereby an appropriate sharing of net merger savings between stockholders and customers will be determined at that time. The Hearing Examiner also recommended that the registrant's and CIPSCO's proposed transfer of the registrant's existing Illinois electric and gas facilities to CIPS be denied, but recommended that the joint dispatch agreement be approved. A final order from the Illinois Commerce Commission is expected by the end of 1996. On October 16, 1996, the Federal Energy Regulatory Commission (FERC) set the proposed merger for hearing. The FERC directed the presiding administrative law judge in the case to issue an initial decision no later than April 30, 1997. The FERC is expected to issue a decision on the merger by the end of 1997. Note 6 - In October 1996, the registrant resolved various financial reporting matters with the FERC. The resolution of these matters resulted in the reclassification of certain costs from electric plant and nuclear fuel in process to other regulatory assets, as well as the reclassification of interchange sales from purchased power expenses to electric revenues. These reclassifications were made to all prior-year financial data to conform with 1996 reporting. These reclassifications did not have a material adverse effect on the registrant's financial position, results of operations or liquidity. Note 7 - At September 30, 1996, and December 31, 1995, the registrant had recorded the following regulatory assets and regulatory liabilities:
Regulatory Assets: September 30, December 31, (In Thousands) 1996 1995 ------------ ----------- Income taxes $696,852 $732,580 Callaway costs 112,086 115,079 Contract termination costs 20,468 25,806 Department of Energy decommissioning assessment 18,456 19,505 Unamortized loss on reacquired debt 30,845 33,203 -------- -------- Total regulatory assets $878,707 $926,173 ======== ======== Regulatory Liability: (In Thousands) Income taxes $206,991 $216,502 ======== ========
8 Page 7 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 by the end of 1997. (See Note 5 to the Financial Statements of this report.) RESULTS OF OPERATIONS Third-quarter 1996 common stock earnings increased $12.4 million, or 12 cents per share, from 1995's third quarter to $181.7 million, or $1.78 per share. Common stock earnings for the nine months ended September 30, 1996 totaled $279.1 million, or $2.73 per share, an increase of $2.2 million, or 2 cents per share, from the same 1995 period. Common stock earnings for the twelve months ended September 30, 1996 were $303 million, or $2.97 per share, a $10.8 million, or 11 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, nine-month and twelve-month periods ended September 30, 1996 and 1995 are detailed below:
Electric Operating Revenues - --------------------------- (Millions of Dollars) Variations for periods ended September 30, 1996 from comparable prior-year periods --------------------------------------------------- Three Months Nine Months Twelve Months ------------ ----------- ------------- Rate variations $(4.1) $(19.6) $(26.0) Credits to customers 32.6 (13.3) (13.3) Effect of abnormal weather (81.9) (66.0) (48.0) Growth and other 44.7 91.6 97.5 Interchange sales (5.1) 4.7 3.0 ------ ------ ------ $(13.8) $ (2.6) $ 13.2 ====== ====== ======
The $13.8 million decrease in third-quarter electric revenues compared to the year-ago quarter is primarily due to lower kilowatthour sales resulting from milder summer weather. Third-quarter 1996 kilowatthour sales decreased 4 percent from the same quarter of 1995. Weather-sensitive residential and commercial sales declined 11 percent and 2 percent, respectively, while industrial sales grew 2 percent compared to the year-ago quarter. Interchange sales decreased 6 percent compared to the same prior-year period. The decrease in quarterly revenues was partly offset by growth in the registrant's service area, as well as by a one-time credit to Missouri electric customers recorded in the 1995 third quarter. (See Note 4 to the Financial Statements of this report.) Electric revenues for the first nine months of 1996 decreased $2.6 million as increased kilowatthour sales were more than offset by the effects of the rate decrease and the net increase in customer credits during the period. (See Note 4 to the Financial Statements of this report.) Year-to-date kilowatthour sales were up 3 percent from the comparable 1995 period. Residential, commercial and industrial sales each rose 3 percent, and interchange sales grew 6 percent. These increases reflect the positive effects of strong economic growth in the registrant's service area and leap year, partly offset by milder weather. 9 Page 8 UNION ELECTRIC COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS (Continued) Electric revenues for the twelve months ended September 30, 1996 increased $13.2 million over the prior twelve-month period. The increase is due to a 4 percent increase in kilowatthour sales over the comparable year-ago period, partly offset by the rate decrease and the net increase in customer credits recorded during the period. (See Note 4 to the Financial Statements of this report.) The kilowatthour sales increase reflects strong economic growth in the registrant's service area, partially offset by milder weather during the period. Residential sales rose 5 percent, and commercial, industrial and interchange sales each grew 3 percent. Operating Expenses
Fuel and Purchased Power Variations for periods ended September 30, 1996 - ------------------------ from comparable prior-year periods (Millions of Dollars) ---------------------------------------------- Three Months Nine Months Twelve Months ------------ ----------- ------------- Fuel: Variation in generation $ (0.1) $ 10.4 $ 8.5 Price (5.3) (22.3) (24.3) Generation efficiencies (0.5) 3.2 4.6 Department of Energy assessment 0.1 (0.5) (0.7) Purchased power variation (9.7) 10.5 23.3 ------ ------ ------ $(15.5) $ 1.3 $ 11.4 ====== ====== ======
The decline in fuel and purchased power costs for the three months ended September 30, 1996 versus the comparable prior year quarter was primarily due to lower kilowatthour sales, reflected in reduced purchased power costs, and decreased fuel prices. The increases in fuel and purchased power costs for the nine months and twelve months ended September 30, 1996 versus the comparable prior-year periods were driven mainly by higher kilowatthour sales. Increases in purchased power costs and 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. Third-quarter 1996 operations expenses other than fuel and purchased power were up $1 million over last year's third quarter primarily due to higher gas purchased for resale costs. Third-quarter maintenance expenses declined $3 million primarily due to decreased expenses at the Callaway nuclear plant. Year-to-date operations expenses other than fuel and purchased power increased $10 million over the first nine months of 1995 primarily due to higher gas purchased for resale costs. Maintenance expenses declined $3 million as decreased Callaway expenses, caused by the absence of a nuclear plant refueling in the 1996 period compared to the prior-year nine-month period, more than offset increased fossil-plant expenses. For the twelve months ended September 30, 1996, operations expenses other than fuel and purchased power were up $7 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 expenses, and a reduction in injuries, damages and insurance premiums expenses. Maintenance expenses for the current twelve-month period decreased $3 million as increased fossil-plant maintenance expenses were more than offset by reduced Callaway and tree-trimming expenses. 10 Page 9 UNION ELECTRIC COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS (Continued) Depreciation expense for the three-month, nine-month and twelve-month periods ended September 30, 1996 increased $2 million, $6 million and $7 million, respectively, versus comparable 1995 periods, primarily due to increases in depreciable property. Income taxes charged to operating expenses for the three months ended September 30, 1996 increased $2 million versus the comparable 1995 period, primarily due to higher pretax income. Income taxes charged to operating expenses for the nine months and twelve months ended September 30, 1996 increased $1 million and $10 million, respectively, versus the comparable 1995 periods, principally due to a higher effective tax rate. Other Income and Deductions Miscellaneous other net income and deductions for the three-month and nine-month periods ended September 30, 1996 increased $12 million and $8 million, respectively, versus the comparable 1995 periods primarily due to merger-related expenses. Merger-related expenses totaled $1 million for the third quarter of 1996 compared to $9 million in 1995. Miscellaneous other net income and deductions increased $14 million for the twelve months ended September 30, 1996, versus the comparable 1995 period, primarily reflecting reduced charitable contributions and merger-related expenses. Merger-related expenses totaled $5 million during the twelve months ended September 30, 1996, compared to $9 million in the prior-year period. Interest Interest charges for the twelve months ended September 30, 1996 decreased $2 million versus the prior-year period, primarily due to a reduction of debt outstanding and lower 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, 1996 and 1995, AFC rates averaged 9.1 percent and 9.2 percent, respectively. Balance Sheet The $33 million increase in accounts receivable and unbilled revenues is due primarily to higher kilowatthour sales and revenues in August and September 1996 compared to November and December 1995. Changes in accounts payable, income taxes accrued and other tax accruals result from the timing of various payments to taxing authorities and suppliers. The $48 million increase in other current and accrued liabilities at September 30, 1996 compared to December 31, 1995 is primarily due to the estimated $45 million Missouri customer credit. (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. 11 Page 10 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. On September 25, 1996, the FERC set the open access tariff filing for hearing. The hearings are scheduled to begin April, 1997. 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. In addition under Order 889, utilities must separate their merchant function (buying and selling wholesale power) from their transmission and reliability functions. Based on its preliminary analysis, the registrant believes that Orders 888 and 889, 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 $526 million for the nine months ended September 30, 1996 compared to $570 million during the same 1995 period. Cash flows used in investing activities totaled $257 million and $245 million for the nine months ended September 30, 1996 and 1995, respectively. Construction expenditures for the nine months ended September 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 $26 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 $250 million for the nine months ended September 30, 1996, compared to $251 million during the same 1995 period. The registrant's principal financing activities for the nine months ended September 30, 1996 were the redemption of $35 million of First Mortgage Bonds, $20 million of short-term debt bank loans and the payment of dividends. On July 19, 1996, the registrant's Board of Directors declared a quarterly dividend of 62.5 cents per common share which was paid to shareholders September 30, 1996. Common stock dividends paid for the twelve months ended September 30, 1996 resulted in a pay out rate of 84% 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 43%. On October 11, 1996, the registrant's Board of Directors increased the quarterly common stock dividend to 63.5 cents per share. The registrant plans to utilize short-term debt as support for normal operations and other temporary requirements. The registrant is authorized by the 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, 1996, the registrant had committed banks lines of credit aggregating $169 million (of which all 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 1999 which permit the registrant to borrow up to $300 million and $200 million, respectively, on a long-term basis. At September 30, 1996, no such borrowings were outstanding. 12 Page 11 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 September 30, 1996, the maximum amount which could be financed under the agreement was $120 million. Cash provided from financing for the nine months ended September 30, 1996 included issuances for nuclear fuel of $32 million offset by $26 million of redemptions. At September 30, 1996, $103 million was financed under the lease. 13 Page 12 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, 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 September 30, 1996 gives effect to the Merger as if it had occurred at September 30, 1996. The unaudited pro forma combined condensed statements of income for the nine-month periods ended September 30, 1996 and 1995, and the twelve-month period ended September 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 nine-month periods ended September 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. 14 Page 13 AMEREN CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AT SEPTEMBER 30, 1996 (Thousands of Dollars)
ASSETS: As Reported (Note 1) Pro Forma - ------- ------------------------- Adjustments Pro Forma Property and plant UE CIPSCO (Notes 2,9) Combined ----- ------ ----------- --------- Electric $8,580,945 $2,355,551 $ 374,452 $11,310,948 Gas 181,899 236,594 - 418,493 Other 35,959 - - 35,959 ---------- ---------- ---------- ----------- 8,798,803 2,592,145 374,452 11,765,400 Less accumulated depreciation and amortization 3,633,370 1,184,008 265,107 5,082,485 ---------- ---------- ---------- ----------- 5,165,433 1,408,137 109,345 6,682,915 Construction work in progress: Nuclear fuel in process 115,960 - - 115,960 Other 64,990 61,546 3,922 130,458 ---------- ---------- ---------- ---------- Total property and plant, net 5,346,383 1,469,683 113,267 6,929,333 Regulatory assets: Deferred income taxes (Note 6) 696,852 42,479 - 739,331 Other 181,855 12,505 - 194,360 ---------- ---------- ---------- ---------- Total regulatory assets 878,707 54,984 - 933,691 Other assets: Unamortized debt expense 10,721 2,925 608 14,254 Nuclear decommissioning trust fund 85,629 - - 85,629 Investments in nonregulated activities - 110,808 - 110,808 Other 28,272 34,881 (3,284) 59,869 ---------- ---------- ---------- ---------- Total other assets 124,622 148,614 (2,676) 270,560 Current assets: Cash and temporary investments 19,427 13,074 9,886 42,387 Accounts receivable, net 248,862 54,274 16,816 319,952 Unbilled revenue 57,595 19,669 - 77,264 Materials and supplies, at average cost - Fossil fuel 67,205 48,442 9,087 124,734 Other 99,305 39,827 4,540 143,672 Other 39,312 46,025 3,243 88,580 ---------- ---------- ---------- ---------- Total current assets 531,706 221,311 43,572 796,589 ---------- ---------- ---------- ---------- Total Assets $6,881,418 $1,894,592 $ 154,163 $8,930,173 ========== ========== ========= ========== CAPITAL AND LIABILITIES: - ------------------------ Capitalization: Common stock (Note 2) $ 510,619 $ 356,812 $ (866,059) $ 1,372 Other stockholders' equity (Note 2) 1,896,212 310,978 866,059 3,073,249 ---------- ---------- ---------- ---------- Total common stockholders' equity 2,406,831 667,790 - 3,074,621 Preferred stock of subsidiary 219,121 80,000 - 299,121 Long-term debt 1,727,945 421,152 130,000 2,279,097 ---------- ---------- ---------- ---------- Total capitalization 4,353,897 1,168,942 130,000 5,652,839 Minority interest in consolidated subsidiary - - 3,534 3,534 Accumulated deferred income taxes 1,322,536 332,042 (6,810) 1,647,768 Accumulated deferred investment tax credits 161,886 49,722 - 211,608 Regulatory liability 206,991 109,421 - 316,412 Accumulated provision for nuclear decommissioning 87,302 - - 87,302 Other deferred credits and liabilities 152,517 33,210 4,753 190,480 Current liabilities: Current maturity of long-term debt 76,490 58,000 - 134,490 Short-term debt - 53,991 - 53,991 Accounts payable 73,082 42,851 16,951 132,884 Wages payable 36,908 10,727 - 47,635 Taxes accrued 238,882 12,700 8 251,590 Interest accrued 53,154 8,785 2,864 64,803 Other 117,773 14,201 2,863 134,837 ---------- ---------- ---------- ---------- Total current liabilities 596,289 201,255 22,686 820,230 ---------- ---------- ---------- ---------- Total Capital and Liabilities $6,881,418 $1,894,592 $ 154,163 $8,930,173 ========== ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 15 Page 14 AMEREN CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 1996 (Thousands of Dollars Except Shares and Per Share Amounts)
UE CIPSCO -- ------ Pro Forma (As Reported) (As Reported) Adjustments Pro Forma (Notes 1,4,10) (Notes 1,4,7) (Notes 2,9) Combined -------------- ------------- ----------- --------- OPERATING REVENUES: Electric $1,716,061 $ 560,188 $ 130,034 $2,406,283 Gas 68,277 101,280 - 169,557 Other 341 7,464 971 8,776 ---------- ---------- ---------- ---------- Total operating revenues 1,784,679 668,932 131,005 2,584,616 OPERATING EXPENSES: Operations Fuel and purchased power 387,038 205,023 68,671 660,732 Gas costs 42,455 60,227 - 102,682 Other 279,714 107,486 13,322 400,522 ---------- ---------- ---------- ---------- 709,207 372,736 81,993 1,163,936 Maintenance 159,988 43,005 13,157 216,150 Depreciation and amortization 180,101 64,810 11,341 256,252 Income taxes (Note 7) 189,546 43,260 6,128 238,934 Other taxes 166,463 43,505 1,503 211,471 ---------- ---------- ---------- --------- Total operating expenses 1,405,305 567,316 114,122 2,086,743 OPERATING INCOME 379,374 101,616 16,883 497,873 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 4,960 196 - 5,156 Minority interest in consolidated subsidiary - - (3,760) (3,760) Miscellaneous, net (361) (2,874) (5,528) (8,763) ---------- ---------- ----------- --------- Total other income and deductions, net 4,599 (2,678) (9,288) (7,367) INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS 383,973 98,938 7,595 490,506 INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest 100,589 27,876 7,595 136,060 Allowance for borrowed funds used during construction (5,669) (250) - (5,919) Preferred dividends of subsidiaries (Note 8) 9,936 2,794 - 12,730 ----------- ---------- ----------- ---------- Net interest charges and preferred dividends 104,856 30,420 7,595 142,871 NET INCOME $ 279,117 $ 68,518 $ - $ 347,635 ========== ========== =========== ========== EARNINGS PER SHARE OF COMMON STOCK (BASED ON AVERAGE SHARES OUTSTANDING) $2.73 $2.01 $2.53 ===== ===== ===== AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462 =========== ========== ========= ===========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 16 Page 15 AMEREN CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 1995 (Thousands of Dollars Except Shares and Per Share Amounts)
UE CIPSCO -- ------ Pro Forma (As Reported) (As Reported) Adjustments Pro Forma (Notes 1,4,10) (Notes 1,3,7) (Notes 2,9) Combined -------------- ------------- ------------ ------------ OPERATING REVENUES: Electric $1,718,620 $ 544,886 $ 115,808 $2,379,314 Gas 60,480 87,523 - 148,003 Other 318 5,860 244 6,422 ---------- ---------- ---------- ---------- Total operating revenues 1,779,418 638,269 116,052 2,533,739 OPERATING EXPENSES: Operations Fuel and purchased power 385,740 189,447 51,527 626,714 Gas costs 35,051 48,322 - 83,373 Other 277,491 113,897 14,452 405,840 ---------- ---------- ---------- ---------- 698,282 351,666 65,979 1,115,927 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 1,391,429 545,595 99,587 2,036,611 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 =========== ========== ========= ===========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 17 Page 16 AMEREN CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME TWELVE MONTHS ENDED SEPTEMBER 30, 1996 (Thousands of Dollars Except Shares and Per Share Amounts)
UE CIPSCO -- ------ Pro Forma (As Reported) (As Reported) Adjustments Pro Forma (Notes 1,4,10) (Notes 1,3,4,7) (Notes 2,9) Combined -------------- --------------- ----------- ---------- OPERATING REVENUES: Electric $2,151,551 $ 718,785 $ 170,168 $3,040,504 Gas 95,610 143,363 - 238,973 Other 464 10,777 1,081 12,322 ---------- ---------- ---------- ---------- Total operating revenues 2,247,625 872,925 171,249 3,291,799 OPERATING EXPENSES: Operations Fuel and purchased power 506,113 263,801 88,054 857,968 Gas costs 58,655 85,959 - 144,614 Other 370,093 148,958 18,018 537,069 ---------- ---------- ---------- ---------- 934,861 498,718 106,072 1,539,651 Maintenance 218,255 64,311 17,060 299,626 Depreciation and amortization 238,969 85,792 15,222 339,983 Income taxes (Note 7) 210,595 47,206 7,778 265,579 Other taxes 211,664 56,985 1,918 270,567 ---------- ---------- ---------- --------- Total operating expenses 1,814,344 753,012 148,050 2,715,406 OPERATING INCOME 433,281 119,913 23,199 576,393 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction 7,028 486 - 7,514 Minority interest in consolidated subsidiary - - (4,921) (4,921) Miscellaneous, net 2,430 (7,088) (8,283) (12,941) ----------- ---------- ----------- ---------- Total other income and deductions, net 9,458 (6,602) (13,204) (10,348) INCOME BEFORE INTEREST CHARGES AND PREFERRED DIVIDENDS 442,739 113,311 9,995 566,045 INTEREST CHARGES AND PREFERRED DIVIDENDS: Interest 133,559 36,489 9,995 180,043 Allowance for borrowed funds used during construction (7,114) (274) - (7,388) Preferred dividends of subsidiaries (Note 8) 13,249 3,748 - 16,997 ----------- ---------- ----------- ---------- Net interest charges and preferred dividends 139,694 39,963 9,995 189,652 NET INCOME $ 303,045 $ 73,348 $ - $ 376,393 ========== ========== =========== ========== EARNINGS PER SHARE OF COMMON STOCK (BASED ON AVERAGE SHARES OUTSTANDING) $2.97 $2.15 $2.74 ===== ===== ===== AVERAGE COMMON SHARES OUTSTANDING (Note 2) 102,123,834 34,069,542 1,022,086 137,215,462 =========== ========== ========= ===========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. 18 Page 17 AMEREN CORPORATION NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS 1. Reclassifications were 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 were immaterial and were not 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 twelve months ended September 30, 1996 included $5.7 million of system development expenses. Net income for the nine months ended September 30, 1995 included CIPSCO's pre-tax charges of $5.8 million for a voluntary separation program. 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. Merger-related costs (which include transaction costs and costs to achieve such savings) are currently estimated to be approximately $73 million (including costs for financial advisors, attorneys, accountants, consultants, filings, printing, system integration, relocation, etc.). None of these estimated cost 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, 1996 included merger-related costs of $5.3 million, net of income taxes, for the registrant, and $4.5 million and $9.3 million, net of income taxes, for CIPSCO, respectively. Net income for the nine months ended September 30, 1995 included merger-related costs of $9.0 million, net of income taxes, for the registrant. 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 were 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 were reclassified to conform to this reporting presentation. 9. Pro forma adjustments were 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 were eliminated. 10. Net income for the nine and twelve months ended September 30, 1996 included credits for Missouri electric customers which reduced revenues and pre-tax income of the registrant by $45 million. Net income for the nine months ended September 30, 1995 included a credit to Missouri electric customers which reduced revenues and pre-tax income of the registrant by $30 million. 19 Page 18 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, 1996. Exhibit 12(b) - Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements, 12 Months Ended September 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) November 13, 1996 By /s/ Donald E. Brandt -------------------------------- Donald E. Brandt Senior Vice President Finance and Corporate Services EX-12.(A) 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHANGES 1 EXHIBIT 12(a) UNION ELECTRIC COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31, 12 Months ------------------------------------------------------------- Ended September 30, 1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- (Thousands of Dollars Except Ratios) Net income for the Period $321,512 $302,748 $297,160 $320,757 $314,107 $316,294 -------- -------- -------- -------- -------- -------- Add: Taxes Based on income 218,954 197,009 182,716 203,827 207,734 210,972 -------- -------- -------- -------- -------- -------- Fixed Charges: Interest on Debt 163,061 125,798 124,430 135,608 129,239 128,828 (*) Amortization of Premium and Discount, Less Expense on Debt; and Bond Defeasance Cost 4,148 9,521 5,170 5,504 5,502 4,731 Rentals (See note) 1,171 908 1,314 1,299 3,330 3,303 -------- -------- -------- -------- -------- -------- Total Fixed Charges 168,380 136,227 130,914 142,411 138,071 136,862 -------- -------- -------- -------- -------- -------- Earnings Available for Fixed Charges $708,846 $635,984 $610,790 $666,995 $659,912 $664,128 ======== ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges 4.21 4.66 4.66 4.68 4.78 4.85 ==== ==== ==== ==== ==== ====
(*) Total annual interest charges on all bonds for the twelve months ended September 30, 1996 was $112,951,000. Note: Represents the interest factor applicable to rentals. EX-12.(B) 3 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHANGES 1 EXHIBIT 12(b) UNION ELECTRIC COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
Year Ended December 31, 12 Months ------------------------------------------------------------- Ended September 30, 1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- (Thousands of Dollars Except Ratios) Net income for the period $321,512 $302,748 $297,160 $320,757 $314,107 $316,294 Add: Taxes based on income 218,954 197,009 182,716 203,827 207,734 210,972 Fixed charges (see below) 168,380 136,227 130,914 142,411 138,071 136,862 ------- -------- -------- -------- -------- -------- Earnings available for fixed charges and preferred stock dividend requirements of Registrant $708,846 $635,984 $610,790 $666,995 $659,912 $664,128 ======== ======== ======== ======== ======== ======== Fixed charges: Interest on debt $163,061 $125,798 $124,430 $135,608 $129,239 $128,828 Amortization of premium and discount, less expense, on debt; and bond defeasance cost 4,148 9,521 5,170 5,504 5,502 4,731 Rentals (see note) 1,171 908 1,314 1,299 3,330 3,303 -------- -------- -------- -------- -------- -------- Total fixed charges $168,380 $136,227 $130,914 $142,411 $138,071 $136,862 Preferred stock dividend requirements of Registrant* (Adjusted for income tax effect) 22,213 21,852 21,537 20,514 20,808 20,875 -------- -------- -------- -------- -------- -------- Total fixed charges and preferred stock dividend requirements $190,593 $158,079 $152,451 $162,925 $158,879 $157,737 ======== ======== ======== ======== ======== ======== Ratio of earnings to fixed charges and preferred dividends 3.72 4.02 4.01 4.09 4.15 4.21 ==== ==== ==== ==== ==== ====
Note: Represents the interest factor applicable to rentals. * See following page for supporting computation. 2 EXHIBIT 12(b) (continued) UNION ELECTRIC COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
Year Ended December 31, 12 Months ------------------------------------------------------------- Ended September 30, 1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- (Thousands of Dollars Except Ratios) 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% 66.7% ----- ----- ----- ----- ----- ----- Income tax effect on non-deductible preferred stock dividends* $8,154 $7,794 $7,450 $7,262 $7,558 $7,626 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 $20,875 ======= ======= ======= ======= ======= ======= Note: Calculated as follows - Net income before income taxes $540,466 $499,757 $479,876 $524,584 $521,841 $527,266 Less net income 321,512 302,748 297,160 320,757 314,107 316,294 -------- -------- -------- -------- -------- -------- Excess - Taxed based on income $218,954 $197,009 $182,716 $203,827 $207,734 $210,972 ======== ======== ======== ======== ======== ======== - Percentage of net income 68.1% 65.1% 61.5% 63.5% 66.1% 66.7% ===== ===== ===== ===== ===== =====
* Income tax adjustment to reflect pretax earnings required to meet preferred ** stock dividend. Dividends deductible on federal income tax return. EX-27 4 FINANCIAL DATA SCHEDULE
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) BALANCE SHEET, STATEMENT OF INCOME, STATEMENT OF CASH FLOWS, EXHIBIT 12(A) STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 PER-BOOK 5,346,383 85,629 531,706 38,993 878,707 6,881,418 510,619 717,669 1,178,543 2,406,831 598 218,497 1,656,432 0 0 0 45,000 26 71,513 31,490 2,451,031 6,881,418 1,784,679 189,546 1,215,759 1,405,305 379,374 4,599 383,973 94,920 289,053 9,936 279,117 191,483 112,951 525,784 2.73 2.73
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