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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, 1994
[_] 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, 1994:
Common Stock, $5 par value - 102,123,834
(excl. 42,990 treasury shares)
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UNION ELECTRIC COMPANY
INDEX
Page No.
Part I Financial Information (Unaudited)
Balance Sheet --
June 30, 1994 and December 31, 1993 2
Statement of Income --
Three Months, Six Months and Twelve Months
Ended June 30, 1994 and 1993 3
Statement of Cash Flows --
Six Months Ended June 30, 1994 and 1993 4
Notes to Financial Statements 5
Management's Discussion and Analysis 6 thru 8
Part II Other Information
Page 2
UNION ELECTRIC COMPANY
----------------------
BALANCE SHEET
-------------
(UNAUDITED)
-----------
(Thousands of Dollars)
ASSETS
- ------
June 30, December 31,
1994 1993
---------- ------------
Property and plant, at original cost:
Electric $8,088,691 $7,916,493
Gas 154,662 149,167
Other 35,143 34,884
---------- ----------
8,278,496 8,100,544
Less accumulated depreciation and amortization 3,191,605 3,079,509
---------- ----------
5,086,891 5,021,035
Construction work in progress:
Nuclear fuel in process 109,185 101,265
Other 110,052 142,656
---------- ----------
Total property and plant, net 5,306,128 5,264,956
Regulatory asset - deferred income taxes 738,845 762,331
Deferred charges and other assets:
Unamortized debt expense 51,908 53,451
Nuclear decommissioning trust fund 49,660 44,420
Other 26,383 28,552
---------- ----------
Total deferred charges and other assets 127,951 126,423
Current assets:
Cash 175 1,297
Accounts receivable - trade (less allowance
for doubtful accounts of $6,566 and $5,858,
at respective dates) 177,351 178,559
Unbilled revenue 131,051 79,957
Other accounts and notes receivable 16,872 18,319
Materials and supplies, at average cost -
Fossil fuel 72,457 53,123
Construction and maintenance 93,769 87,450
Environmental bond fund 10,464 17,026
Other 6,524 6,129
---------- ----------
Total current assets 508,663 441,860
---------- ----------
Total Assets $6,681,587 $6,595,570
========== ==========
CAPITAL AND LIABILITIES
- -----------------------
June 30, December 31,
1994 1993
---------- ------------
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 985,311 977,880
---------- ----------
Total common stockholders' equity 2,213,599 2,206,168
Preferred stock not subject to
mandatory redemption 218,497 218,497
Preferred stock subject to
mandatory redemption 676 702
Long-term debt 1,830,038 1,777,153
Unamortized discount and premium on debt (10,411) (10,498)
---------- ----------
Total capitalization 4,252,399 4,192,022
Accumulated deferred income taxes 1,362,525 1,360,159
Accumulated deferred investment tax credits 175,794 178,887
Regulatory liability 235,161 266,399
Accumulated provision for nuclear decommissioning 51,333 46,093
Other deferred credits and liabilities 112,880 92,227
Current and accrued liabilities:
Current maturity of long-term debt 72,391 30,539
Accounts payable 86,981 153,474
Wages payable 35,151 37,326
Bank loans 26,500 59,600
Income taxes accrued 66,445 25,147
Accumulated deferred income taxes 28,840 28,871
Other taxes accrued 63,662 17,578
Interest accrued 47,332 41,252
Dividends declared 3,301 3,301
Other 60,892 62,695
---------- ----------
Total current and accrued liabilities 491,495 459,783
---------- ----------
Total Capital and Liabilities $6,681,587 $6,595,570
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Page 3
UNION ELECTRIC COMPANY
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STATEMENT OF INCOME
-------------------
(UNAUDITED)
(Thousands of Dollars Except Shares and Per Share Amounts)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------- ------------------- -----------------------
1994 1993 1994 1993 1994 1993
-------- -------- -------- --------- ---------- ----------
Operating revenues (*):
Electric $516,847 $488,359 $918,814 $891,824 $1,992,970 $1,937,370
Gas 16,003 23,756 52,754 73,096 79,210 110,082
Other 94 94 276 255 494 445
-------- -------- -------- -------- ---------- ----------
Total operating revenues 532,944 512,209 971,844 965,175 2,072,674 2,047,897
Operating expenses:
Operations
Fuel and purchased power 79,284 90,688 160,879 186,528 387,405 392,685
Other 104,653 105,475 225,872 225,378 446,029 418,225
-------- -------- -------- -------- ---------- ----------
183,937 196,163 386,751 411,906 833,434 810,910
Maintenance 48,122 43,804 90,507 81,787 198,818 169,203
Depreciation and nuclear
decommissioning 56,191 54,581 111,373 108,786 222,220 218,081
Amortization of phase-in
plans deferred costs - - - - - 16,624
Income taxes 63,372 51,845 87,998 74,311 193,162 190,143
Other taxes (*) 53,516 50,518 102,258 98,038 211,133 204,840
-------- -------- -------- -------- ---------- ----------
Total operating
expenses 405,138 396,911 778,887 774,828 1,658,767 1,609,801
-------- -------- -------- -------- ---------- ----------
Operating income 127,806 115,298 192,957 190,347 413,907 438,096
Other income and deductions:
Allowance for equity funds
used during construction 1,483 1,479 3,136 2,878 6,676 5,139
Miscellaneous, net 462 1,483 3,099 1,739 5,278 17,585
-------- -------- -------- -------- ---------- ----------
Total other income
and deductions, net 1,945 2,962 6,235 4,617 11,954 22,724
-------- -------- -------- -------- ---------- ----------
Income before interest charges 129,751 118,260 199,192 194,964 425,861 460,820
Interest charges:
Interest 33,717 32,721 66,101 66,524 129,177 130,892
Allowance for borrowed
funds used during
construction (1,358) (1,307) (2,527) (2,610) (5,043) (4,770)
-------- -------- -------- -------- ---------- ----------
Net interest charges 32,359 31,414 63,574 63,914 124,134 126,122
-------- -------- -------- -------- ---------- ----------
Net income 97,392 86,846 135,618 131,050 301,727 334,698
Preferred stock dividends 3,314 3,445 6,627 7,126 13,587 14,155
-------- -------- -------- -------- ---------- ----------
Earnings on common stock $ 94,078 $ 83,401 $128,991 $123,924 $ 288,140 $ 320,543
======== ======== ======== ======== ========== ==========
Earnings per share of common
stock (based on average shares
outstanding) $ 0.92 $ 0.82 $ 1.26 $ 1.21 $ 2.82 $ 3.14
======== ======== ======== ======== ========== ==========
Dividends per share of common
stock $ 0.595 $ 0.58 $ 1.19 $ 1.16 $ 2.365 $ 2.30
======== ======== ======== ======== ========== ==========
Average number of common shares
outstanding (in thousands) 102,124 102,124 102,124 102,124 102,124 102,124
======== ======== ======== ======== ========== ==========
(*) Includes license and franchise taxes of $24,992,000 and $23,740,000,
respectively, for the three-month periods; $45,488,000 and $44,302,000,
respectively, for the six-month periods; and $98,977,000 and $95,147,000,
respectively, for the twelve-month periods ended June 30, 1994 and 1993.
Page 4
UNION ELECTRIC COMPANY
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STATEMENT OF CASH FLOWS
-----------------------
(UNAUDITED)
(Thousands of Dollars)
Six Months Ended
June 30,
-------------------
1994 1993
--------- ---------
Cash Flows From Operating:
Net income $ 135,618 $ 131,050
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 106,716 104,142
Amortization of nuclear fuel 21,873 29,760
Allowance for funds used during construction (5,663) (5,488)
Postretirement benefit accrual 14,005 16,248
Deferred income taxes, net (5,417) 27,260
Deferred investment tax credits, net (3,093) (4,138)
Changes in assets and liabilities:
Receivables, net (48,439) (74,699)
Materials and supplies (25,653) 35,454
Accounts and wages payable (68,668) (81,591)
Taxes accrued 87,382 67,968
Interest and dividends accrued or declared 6,080 (3,029)
Other, net 10,000 (16,999)
--------- ---------
Net cash provided by operating activities 224,741 225,938
Cash Flows From Investing:
Construction expenditures (163,763) (132,001)
Allowance for funds used during construction 5,663 5,488
Nuclear fuel expenditures (7,782) (26,085)
--------- ---------
Net cash used in investing activities (165,882) (152,598)
Cash Flows From Financing:
Dividends on preferred and common stock (128,154) (125,590)
Environmental bond funds 6,562 47,500
Redemptions -
Nuclear fuel lease (13,324) (28,138)
Short-term debt (33,100) -
Long-term debt (25,000) (529,500)
Preferred stock (26) (32,313)
Issuances -
Nuclear fuel lease 33,061 23,697
Short-term debt - 48,000
Long-term debt 100,000 490,000
Preferred stock - 33,000
--------- ---------
Net cash used in financing activities (59,981) (73,344)
--------- ---------
Net change in cash and cash equivalents (1,122) (4)
Cash and cash equivalents at beginning of period 1,297 2,257
--------- ---------
Cash and cash equivalents at end of period $ 175 $ 2,253
========= =========
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) $ 52,047 $ 62,594
Income taxes 56,345 27,150
Page 5
UNION ELECTRIC COMPANY
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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 1993
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.
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, 1994 and 1993 are not necessarily
indicative of trends for any twelve-month period.
Note 4 - Electric rates charged to customers provide for recovery of Callaway
Plant decommissioning costs over the life of the plant, based on an
assumed 40-year life, ending with expiration of the plant's operating
license in 2024. The Callaway site is assumed to be decommissioned
using the DECON (immediate dismantlement) alternative.
Decommissioning costs, including decontamination, dismantling and
site restoration, are estimated to be $372 million in current year
dollars and are expected to escalate 4.5% per year through the end of
decommissioning activity in 2033. Decommissioning costs are charged
to depreciation expense over Callaway's service life and amounted to
$6.7 million in 1993 and $3.3 million in the first six months of
1994. Every three years, the Missouri Public Service Commission
(MoPSC) requires the registrant to file updated cost studies for
decommissioning Callaway and rates may be adjusted at such times to
reflect changes in assumptions. The MoPSC has approved the costs
currently being collected from customers and deposited in an external
trust fund established to provide for Callaway's decommissioning.
Fund earnings are expected to average 10.4% thru 2017 and 8.4%
thereafter until 2033. If the assumed return on trust assets is not
earned, the registrant believes it is probable that such earnings
deficiency will be recovered in rates. Trust fund earnings, net of
expenses appear on the balance sheet as increases in Nuclear
decommissioning trust fund and in the Accumulated provision for
nuclear decommissioning.
Page 6
UNION ELECTRIC COMPANY
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS
Second quarter 1994 common stock earnings were $94.1 million, an increase of
$10.7 million from the second quarter of 1993. Earnings of 92 cents per share
in the second quarter of 1994 were 10 cents higher than in the comparable 1993
period.
Common stock earnings for the six months ended June 30, 1994 were $129.0
million, an increase of $5.1 million from the same period in 1993. Earnings of
$1.26 per share during the six months ended June 30, 1994 were 5 cents higher
than in the comparable 1993 period.
Common stock earnings for the twelve months ended June 30, 1994 totaled
$288.1 million, a $32.4 million decrease from the preceding twelve-month period.
Earnings of $2.82 per share during the twelve months ended June 30, 1994
decreased 32 cents from the twelve months ended June 30, 1993.
The increased earnings for the three and six months ended June 30, 1994 over
the comparable 1993 periods, reflect higher electric revenues and lower electric
fuel and purchased power costs. Partially offsetting these benefits were
increased other operating expenses and higher taxes.
The lower earnings for the twelve months ended June 30, 1994 versus the prior
twelve-month period reflects registrant's $18 million net gain on the sale of
its Iowa and northern Illinois electric properties in December, 1992, higher
income taxes from increased federal and Missouri rates and greater operating
expenses, partially offset by increased electric revenues, lower fuel prices and
reduced interest expenses. The higher operating expenses are the result of a
Callaway plant nuclear refueling in the Fall of 1993, expenses associated with
the 1993 summer floods and accruing postretirement benefits costs beginning in
January, 1993.
The impact of the more significant items affecting revenues, costs and
earnings during the three-month, six-month and twelve-month periods ended June
30, 1994 and 1993 is detailed below:
Electric Operating Revenues
- ---------------------------
(Millions of Dollars)
Variations for periods ended June 30, 1994
from comparable prior periods
------------------------------------------
Three Months Six Months Twelve Months
------------ ---------- -------------
Rate variations.............. $ - $ - $(23.4)
Effect of abnormal weather... 22.1 8.1 52.6
Growth and other............. 6.4 18.9 26.4
----- ----- ------
$28.5 $27.0 $ 55.6
----- ----- ------
Second quarter 1994 kilowatt-hour sales increased 6 percent from the same
quarter of 1993, primarily due to hot June weather this year. Residential and
commercial sales each increased almost 8 percent while less weather-sensitive
industrial sales increased about 1 percent.
Kilowatt-hour sales for the six months ended June 30, 1994 were 3 percent
higher than the comparable 1993 period, primarily due to the warmer than normal
weather in the second quarter; temperatures were greater than 90 degrees for 16
days in June 1994. Residential and commercial sales increased 3 percent and 5
percent, respectively, with industrial sales increasing 1 percent.
Kilowatt-hour sales during the twelve months ended June 30, 1994 were up 3
percent from the twelve-month period ending June 30, 1993. Residential and
commercial sales increased 7 percent and 4 percent, respectively, while sales to
industrial customers decreased by 6 percent.
Page 7
UNION ELECTRIC COMPANY
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Operating Expenses
- ------------------
(Millions of Dollars)
Variations for periods ended June 30, 1994
from comparable prior periods
----------------------------------------------
Three Months Six Months Twelve Months
------------- ------------ -------------
Fuel:
Variation in generation............................. $ (1.1) $ (1.6) $(40.2)
Price............................................... (15.7) (31.1) (19.6)
Amortization of uranium litigation settlement....... - - (.1)
Generation efficiencies............................. (3.7) (2.9) (2.8)
Department of Energy assessment..................... .5 .8 1.2
Net Interchange sales and purchased power variation.. 8.6 9.2 56.3
------ ------ ------
$(11.4) $(25.6) $ (5.2)
------ ------ ------
The decreased fuel and purchased power costs during the three-month and six-
month periods ended June 30, 1994 versus the comparable periods in 1993, reflect
lower fuel prices, reduced fossil fuel generation and increased generating
efficiencies partially offset by higher net purchased power costs.
The decreased fuel costs for the twelve months ended June 30, 1994, versus
the twelve months ended June 30, 1993, reflect reduced fossil-fueled generation
caused by 1993 flood-interrupted coal deliveries and Callaway plant's nuclear
refueling outage in the Fall of 1993, lower fuel prices and increased generating
efficiencies partially offset by increased net purchased power costs.
Other operating expense variations reflect recurring conditions such as
growth, inflation and wage increases. During the three months ended June 30,
1994, versus the comparable 1993 period, operations expenses, other than fuel
and purchased power, decreased $1 million, primarily due to lower employee
welfare costs. Maintenance expenses during the same period increased $4
million, primarily reflecting increased expenses at our fossil-fueled power
plants.
During the six months ended June 30, 1994, versus the comparable 1993 period,
operations expenses, other than fuel and purchased power, were essentially
unchanged. Maintenance expenses during the same period were $9 million higher
primarily due to increased power plant maintenance.
For the twelve months ended June 30, 1994, versus the prior twelve-month
period, operations expenses, other than fuel and purchased power, increased $28
million, primarily due to a $13 million increase in accruing employee
postretirement benefit expenses, a $7 million increase in labor costs, and
higher pension, professional service, regulatory fees, computer services and
tree trimming costs. Maintenance expenses during the same period increased $30
million primarily due to the Callaway plant nuclear refueling outage in the Fall
of 1993, flood-related expenses and increased power plant maintenance.
Depreciation expense for the three-month, six-month and twelve-month periods
ended June 30, 1994, versus the comparable 1993 periods increased $2 million, $3
million and $4 million, respectively, primarily due to increases in depreciable
property.
Elimination of the amortization of phase-in credits associated with the
registrant's nuclear plant phase-in plan reduced operating expenses by $17
million for the twelve months ended June 30, 1994.
Other taxes charged to operating expenses during the three-month, six-month
and twelve-month periods ended June 30, 1994, versus the comparable prior
periods, increased $3 million, $4 million, and $6 million, respectively,
primarily due to increased real estate and gross receipts taxes.
Page 8
UNION ELECTRIC COMPANY
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE RESULTS OF OPERATIONS (Continued)
Operating Expenses (Continued)
- ------------------
Income taxes charged to operating expenses during the three and six months
ended June 30, 1994, versus the comparable prior periods, increased $12 million
and $14 million, respectively, primarily due to higher pre-tax income and
increased federal and Missouri income tax rates. During the twelve months ended
June 30, 1994, versus the twelve months ended June 30, 1993, income taxes
increased $3 million primarily due to increased federal and Missouri income tax
rates.
Other Income and Deductions
- ---------------------------
Miscellaneous other net income and deductions decreased $12 million for the
twelve months ended June 30, 1994, versus the twelve months ended June 30, 1993,
reflecting the gain on the sale of the registrant's Iowa and northern Illinois
electric distribution properties in December 1992, partially offset by lower
miscellaneous income deductions.
Interest
- --------
During the three months ended June 30, 1994, versus the comparable 1993
period, interest increased $1 million primarily reflecting increased debt
outstanding and higher interest rates on variable rate debt.
During the twelve months ended June 30, 1994 versus the comparable prior year
period, interest decreased $2 million, primarily reflecting the reduction of
total debt outstanding.
Allowance for Funds Used During Construction (AFC)
- --------------------------------------------------
Variations in AFC track variations in construction work in progress and were
not significant for the reporting periods. During the twelve-month periods
ended June 30, 1994 and 1993, AFC rates averaged 8.5 percent and 7.0 percent,
respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
Liquidity and Capital Resources
- -------------------------------
As required, on June 1, 1994, the registrant redeemed 260 shares of $6.30
Series preferred stock, stated value $100 per share.
PART II. OTHER INFORMATION
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, 1994.
Exhibit 12(b) - Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements, 12
Months Ended June 30, 1994.
(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 12, 1994 By /s/ Donald E. Brandt
------------------------------------
Donald E. Brandt
Senior Vice President
Finance and Corporate Services