UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Transition Period From to
Commission file number 1-14756.
AMEREN CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-1723446
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Chouteau Avenue, St. Louis, Missouri 63103
(Address of principal executive offices and Zip Code)
Registrant's telephone number,
including area code: (314) 621-3222
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
------------- ------------
Shares outstanding of each of registrant's classes of common stock as of April
30, 2000: Common Stock, $ .01 par value - 137,215,462
Ameren Corporation
Index
Page No.
Part I Consolidated Financial Information (Unaudited)
Management's Discussion and Analysis 2
Quantitative and Qualitative Disclosure
About Market Risk 6
Consolidated Balance Sheet
- March 31, 2000 and December 31, 1999 8
Consolidated Statement of Income
- Three months and 12 months ended
March 31, 2000 and 1999 9
Consolidated Statement of Cash Flows
- Three months ended March 31, 2000 and 1999 10
Notes to Consolidated Financial Statements 11
Part II Other Information 14
PART I. CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Ameren Corporation (Ameren) is a holding company registered under the Public
Utility Holding Company Act of 1935 (PUHCA). In December 1997, Union Electric
Company (AmerenUE) and CIPSCO Incorporated (CIPSCO) combined to form Ameren,
with AmerenUE and CIPSCO's subsidiaries, Central Illinois Public Service Company
(AmerenCIPS) and CIPSCO Investment Company (CIC), becoming subsidiaries of
Ameren (the Merger). As a result of the Merger, Ameren has a 60% ownership
interest in Electric Energy, Inc. (EEI). That interest is consolidated for
financial reporting purposes. Since the Merger, Ameren has formed AmerenEnergy,
Inc. (AmerenEnergy), Ameren Development Company, AmerenEnergy Resources Company,
and Ameren Services Company. AmerenEnergy, an energy marketing subsidiary,
primarily serves as a power marketing agent for the operating utility
subsidiaries and provides a range of energy and risk management services to
targeted customers. Ameren Development Company is a nonregulated subsidiary
encompassing Ameren's nonregulated products and services. AmerenEnergy Resources
Company (formerly known as Ameren Intermediate Holding Co., Inc.) holds the
Registrant's nonregulated generating operations (see discussion below under
"Electric Industry Restructuring"). Ameren Services Company provides shared
support services to Ameren and all of its subsidiaries.
The following discussion and analysis should be read in conjunction with the
Notes to Consolidated Financial Statements beginning on page 11, and the
Management's Discussion and Analysis of Financial Condition and Results of
Operation (MD&A), the Audited Consolidated Financial Statements and the Notes to
Consolidated Financial Statements appearing in the Registrant's 1999 Annual
Report to stockholders (which are incorporated by reference in the Registrant's
1999 Form 10-K).
References to the Registrant are to Ameren on a consolidated basis; however, in
certain circumstances, the subsidiaries are separately referred to in order to
distinguish between their different business activities.
RESULTS OF OPERATIONS
Earnings
First quarter 2000 earnings of $61 million, or $.45 per share, increased $7
million, or 5 cents per share, from 1999's first quarter earnings. Earnings for
the 12 months ended March 31, 2000, were $392 million, or $2.86 per share,
compared to $401 million, or $2.92 per share, for the preceding 12-month period.
Earnings and earnings per share fluctuated due to many conditions, primarily:
weather variations, credits to electric customers, electric rate reductions,
competitive market forces, sales growth, fluctuating operating costs (including
Callaway Nuclear Plant refueling outages), changes in interest expense, changes
in income and property taxes, and non-recurring charges for a targeted employee
separation plan and for coal contract termination payments.
The significant items affecting revenues, costs and earnings during the
three-month and 12-month periods ended March 31, 2000 and 1999 are detailed on
the following pages.
Electric Operations
Electric Operating Revenues Variations for periods ended March 31, 2000
from comparable prior-year periods
- ------------------------------------------------------------------------------
(Millions of Dollars) Three Months Twelve Months
- ------------------------------------------------------------------------------
Credit to customers $ 10 $ 25
Rate variations - (9)
Effect of abnormal weather (11) (68)
Growth and other 18 62
Interchange sales 60 208
EEI sales 10 32
- ------------------------------------------------------------------------------
$ 87 $250
- ------------------------------------------------------------------------------
-2-
The $87 million increase in first quarter electric revenues compared to the
year-ago quarter was primarily driven by increased interchange sales due to
strong marketing efforts, despite mild weather. Interchange sales increased 91
percent and industrial sales increased 5 percent for the first quarter of 2000
compared to the year-ago quarter. Weather sensitive residential and commercial
sales were relatively flat compared to the prior period. Also contributing to
the revenue increase was a decrease in the credits to Missouri electric
customers (see Note 5 under Notes to Consolidated Financial Statements for
further information).
Electric revenues for the 12 months ended March 31, 2000 increased $250 million
compared to the prior 12-month period. The increase in revenues was primarily
driven by increased interchange sales due to strong marketing efforts. Also
contributing to the revenue increase was an increase in EEI sales as well as a
decrease in the estimated credit to Missouri electric customers, partially
offset by rate decreases in Missouri (see Note 5 under Notes to Consolidated
Financial Statements for further information.) In addition, revenues decreased
due to a decline in residential and commercial sales resulting from milder
weather.
Fuel and Purchased Power Variations for periods ended March 31, 2000
from comparable prior-year periods
- --------------------------------------------------------------------------------
(Millions of Dollars) Three Months Twelve Months
- --------------------------------------------------------------------------------
Fuel:
Generation $ 14 $ 10
Price (6) (14)
Generation efficiencies and other (2) (8)
Coal contract termination payments - 52
Purchased power 44 153
EEI 5 35
- --------------------------------------------------------------------------------
$ 55 $ 228
- --------------------------------------------------------------------------------
The $55 million increase in first quarter fuel and purchased power costs
compared to the year-ago quarter was driven by increased generation and
purchased power, resulting from higher sales volume, partially offset by lower
fuel prices.
Fuel and purchased power costs for the 12 months ended March 31, 2000 increased
$228 million versus the comparable prior-year period primarily due to increased
generation and purchased power, resulting from higher sales volume, and
increased fuel and purchased power costs at EEI, partially offset by lower fuel
prices. Additionally, AmerenCIPS and two of its coal suppliers executed
agreements to terminate their existing coal supply contracts effective December
31, 1999 resulting in termination payments of $52 million. Total pretax fuel
cost savings expected to be realized from the coal contract terminations are
$183 million ($131 million net of termination payments) through 2010, with $66
million of pretax savings expected in the next three years.
Gas Operations
Gas revenues for the 12-month period ended March 31, 2000 increased $8 million
compared to the same year-ago period primarily due to an Illinois gas rate
increase effective February 1999, partially offset by a decline in retail sales
due to milder weather.
Gas costs for the 12 months ended March 31, 2000, increased $13 million compared
to the year-ago period primarily due to higher gas prices.
Other Operating Expenses
Other operating expense variations reflected recurring factors such as growth,
inflation, labor and benefit increases.
Other operations expenses increased $6 million for the three months ended March
31, 2000, compared to the comparable prior-year period, primarily due to higher
professional services expensed and automated meter reading installation costs.
For the twelve months ended March 31, 2000, expenses decreased by $4 million
compared to the same prior-year period primarily due to the capitalization of
certain costs (including computer software costs) that had previously been
expensed for the Registrant's Missouri electric operations.
Maintenance expenses for the three and 12 months ended March 31, 2000, increased
$3 million and $54 million, respectively, compared to the year-ago periods
primarily due to increased power plant maintenance and tree trimming activity.
-3-
Taxes
Income taxes increased $9 million for the three months ended March 31, 2000 and
decreased $5 million for the 12 months ended March 31, 2000 due to changes in
pretax income and a higher effective tax rate.
Other tax expense decreased $20 million for the 12-month period ended March 31,
2000, compared to the year-ago period, primarily due to a decrease in gross
receipts taxes related to the Registrant's Illinois jurisdiction. This decrease
is the result of the restructuring of the Illinois public utility tax whereby
gross receipts taxes are no longer recorded as electric revenues and gross
receipts tax expense.
Other Income and Deductions
The variation in miscellaneous, net for the 12-month period ended March 31,
2000, compared to the year-ago period, was primarily due to prior period
write-offs of certain nonregulated investments.
Balance Sheet
The $52 million decrease in trade accounts receivable and unbilled revenue was
due primarily to lower revenues in February and March 2000 compared to November
and December 1999.
Short-term debt increased $152 million primarily for borrowings to finance the
acquisition of new combustion turbine generators. See Liquidity and Capital
Resources below for further discussion.
Changes in accounts and wages payable and taxes accrued resulted from the timing
of various payments to taxing authorities and suppliers.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $208 million for the quarter ended
March 31, 2000, compared to $168 million during the same 1999 period.
Cash flows used in investing activities totaled $255 million and $66 million for
the three months ended March 31, 2000 and 1999, respectively. Construction
expenditures for the three months ended March 31, 2000, for constructing new or
improving existing facilities were $223 million, which included expenditures
associated with the purchase of combustion turbine generators. In addition, the
Registrant expended $6 million for the acquisition of nuclear fuel. The
Registrant received Board of Directors approval on April 25, 2000 to spend
approximately $160 million on capital expenditures relating to the replacement
of four steam generators at its Callaway Nuclear Plant. Installation is
scheduled to be completed in 2005. The impact on anticipated 2000 capital
expenditures will be insignificant.
Cash flows used in financing activities totaled $108 million for the three
months ended March 31, 2000, compared to $104 million during the same 1999
period. The Registrant's principal financing activities for the period included
the redemption of debt and the payment of dividends, partially offset by the
issuance of short-term and long-term debt. Proceeds from the issuance of certain
long-term debt have been set aside in an environmental bond redemption fund to
be used to retire existing long-term indebtedness in the second quarter. On
February 11, 2000, the Registrant's Board of Directors declared a quarterly
dividend of 63.5 cents per common share that was paid to shareholders on March
31, 2000. Common stock dividends paid for the 12 months ended March 31, 2000,
resulted in a payout rate of 89 percent of the Registrant's earnings to common
stockholders. Dividends paid to the Registrant's common shareholders relative to
net cash provided by operating activities for the same period were 36 percent.
On April 25, 2000, the Registrant's Board of Directors declared a quarterly
dividend for the second quarter of 2000 of 63.5 cents per common share that will
be paid to shareholders on June 30, 2000.
The Registrant plans to continue utilizing short-term debt to support normal
operations and other temporary requirements. The Registrant and its subsidiaries
are authorized by the Securities and Exchange Commission (SEC) under PUHCA to
have up to an aggregate $2.8 billion of short-term unsecured debt instruments
outstanding at any one time. Short-term borrowings consist of bank loans
(maturities generally on an overnight basis) and commercial paper (maturities
generally within 1 to 45 days). At March 31, 2000, the Registrant had committed
bank lines of credit aggregating $181 million, all of which was unused and
available at such date, which make available interim financing at various rates
of interest based on LIBOR, the bank certificate of deposit rate or other
options. The lines of credit are renewable annually at various dates throughout
the year. The Registrant has bank credit agreements, expiring at various dates
between 2000 and 2002, that support commercial paper programs totaling $800
million, $500 million of which is available for the Registrant's own use and for
the use of its subsidiaries. The remaining $300 million is available for the use
of the Registrant's regulated subsidiaries. At March 31, 2000, $551 million was
available under these bank credit agreements. The Registrant had $232 million of
short-term borrowings at March 31, 2000.
-4-
AmerenUE also has a lease agreement that provides for the financing of nuclear
fuel. At March 31, 2000, the maximum amount that could be financed under the
agreement was $120 million. Cash used in financing activities for the three
months ended March 31, 2000, included redemptions under the lease for nuclear
fuel of $2 million, offset by $1 million of issuances. At March 31, 2000, $116
million was financed under the lease.
The Registrant, in the ordinary course of business, explores opportunities to
reduce its costs in order to remain competitive in the marketplace. Areas where
the Registrant focuses its review include, but are not limited to, labor costs
and fuel supply costs. In the labor area, the Registrant has reached agreements
with many of the Registrant's major collective bargaining units which will
permit it to manage its labor costs and practices effectively in the future. The
Registrant also explores alternatives to effectively manage the size of its
workforce. These alternatives include utilizing hiring freezes, outsourcing and
offering employee separation packages. In the fuel supply area, the Registrant
explores alternatives to effectively manage its overall fuel costs. These
alternatives include diversifying fuel sources for use at the Registrant's
fossil power plants (e.g. utilizing low sulfur versus high sulfur coal), as well
as restructuring or terminating existing contracts with suppliers.
Certain of these cost reduction alternatives could result in additional
investments being made at the Registrant's power plants in order to utilize
different types of coal, or could require nonrecurring payments of employee
separation benefits or nonrecurring payments to restructure or terminate an
existing fuel contract with a supplier. Management is unable to predict which
(if any), and to what extent, these alternatives to reduce its overall cost
structure will be executed, as well as determine the impact of these actions on
the Registrant's future financial position, results of operations or liquidity.
RATE MATTERS
In February 2000, AmerenUE filed a request with the Missouri Public Service
Commission (MoPSC) to increase rates approximately $12 million annually for
natural gas service in its Missouri jurisdiction. The MoPSC has until January
2001 to render a decision.
See Note 5 under Notes to Consolidated Financial Statements for further
discussion of Rate Matters.
ELECTRIC INDUSTRY RESTRUCTURING
In December 1997, the Governor of Illinois signed the Electric Service Customer
Choice and Rate Relief Law of 1997 (the Law) providing for electric utility
restructuring in Illinois. This legislation introduces competition into the
supply of electric energy in Illinois.
One of the major provisions of the Law includes the phasing-in through 2002 of
retail direct access, which allows customers to choose their electric generation
supplier. The phase-in of retail direct access began on October 1, 1999, with
large commercial and industrial customers principally comprising the initial
group. The customers in this group represent approximately 10 percent of the
Registrant's total sales. As of March 31, 2000, the impact of retail direct
access on the Registrant's financial condition, results of operations, or
liquidity was immaterial. Retail direct access will be offered to the remaining
commercial and industrial customers on December 31, 2000, and to residential
customers on May 1, 2002.
In conjunction with another provision of the Law, on May 1, 2000, following the
receipt of all required State and Federal regulatory approvals, AmerenCIPS
transferred its electric generating assets and liabilities, at historical net
book value, to a newly created nonregulated company, AmerenEnergy Generating
Company (Generating Company), a subsidiary of the Registrant's wholly-owned
subsidiary, AmerenEnergy Resources Company, in exchange for a promissory note
from Generating Company in the principal amount of approximately $600 million
and Generating Company common stock. The promissory note has a term of five
years and bears interest at 7% based on a 10-year amortization. The transferred
assets represent a generating capacity of approximately 2,900 megawatts.
Approximately 45% of AmerenCIPS' employees were transferred to Generating
Company as a part of the transaction.
Also on May 1, 2000, an electric power supply agreement was entered into between
Generating Company and its newly created nonregulated affiliate, AmerenEnergy
Marketing Company (Marketing Company), also a wholly-owned subsidiary of
AmerenEnergy Resources Company. On the same date, Marketing Company entered into
an electric power supply agreement with AmerenCIPS to supply it sufficient power
to meet native load requirements. This agreement expires December 31, 2004.
Power will continue to be jointly dispatched between AmerenUE and Generating
Company.
-5-
The creation of the new subsidiaries and the transfer of AmerenCIPS' generating
assets and liabilities had no effect on the financial statements of the
Registrant as of the date of transfer.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial instrument,
derivative or non-derivative, caused by fluctuations in interest rates and
equity prices. The following discussion of the Registrant's risk management
activities includes "forward-looking" statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the "forward-looking" statements. The Registrant handles market risks in
accordance with established policies, which may include entering into various
derivative transactions. In the normal course of business, the Registrant also
faces risks that are either non-financial or non-quantifiable. Such risks
principally include business, legal, operational, and credit risk and are not
represented in the following analysis.
Interest Rate Risk
The Registrant is exposed to market risk through changes in interest rates,
through its issuance of both long-term and short-term variable-rate debt,
fixed-rate debt, commercial paper and auction market preferred stock. The
Registrant manages its interest rate exposure by controlling the amount of these
instruments it holds within its total capitalization portfolio and by monitoring
the effects of market changes in interest rates.
If interest rates increase one percentage point in 2001 as compared to 2000, the
Registrant's interest expense would increase by approximately $9 million and net
income would decrease by approximately $6 million. This amount has been
determined using the assumptions that the Registrant's outstanding variable rate
debt, commercial paper and auction market preferred stock as of March 31, 2000,
continued to be outstanding throughout 2001, and that the average interest rates
for these instruments increased one percentage point over 2000. The model does
not consider the effects of the reduced level of overall economic activity that
would exist in such an environment. In the event of a significant change in
interest rates, management would likely take actions to further mitigate its
exposure to this market risk. However, due to the uncertainty of the specific
actions that would be taken and their possible effects, the sensitivity analysis
assumes no change in the Registrant's financial structure.
Commodity Price Risk
The Registrant is exposed to changes in market prices for natural gas and fuel
and purchased power. With regard to its natural gas utility business, the
Registrant's exposure to changing market prices is in large part mitigated by
the fact that the Registrant has Purchased Gas Adjustment Clauses (PGA) in place
in both its Missouri and Illinois jurisdictions. The PGA allows the Registrant
to pass on to its customers its prudently incurred costs of natural gas.
Since the Registrant does not have a provision similar to the PGA for its
electric operations, the Registrant has entered into several long-term contracts
with various suppliers to purchase coal and nuclear fuel to manage its exposure
to fuel prices. With regard to the Registrant's exposure to commodity price risk
for purchased power and excess electricity sales, the Registrant has established
a subsidiary, AmerenEnergy, whose primary responsibility includes managing
market risks associated with the changing market prices for electricity
purchased and sold for the Registrant's operating subsidiaries, AmerenUE and
AmerenCIPS.
AmerenEnergy utilizes several techniques to mitigate its market risk for
electricity, including utilizing derivative financial instruments. A derivative
is a contract whose value is dependent on or derived from the value of some
underlying asset. The derivative financial instruments that AmerenEnergy is
allowed to utilize (which include forward contracts and futures contracts) are
dictated by a risk management policy, which has been reviewed with the Auditing
Committee of Ameren's Board of Directors. Compliance with the risk management
policy is the responsibility of a risk management steering committee, consisting
of Ameren officers and an independent risk management officer at AmerenEnergy.
As of March 31, 2000, the fair value of derivative financial instruments exposed
to commodity price risk was immaterial.
Equity Price Risk
The Registrant maintains trust funds, as required by the Nuclear Regulatory
Commission and Missouri and Illinois state laws, to fund certain costs of
nuclear decommissioning. As of March 31, 2000, these funds were invested
primarily in domestic equity securities, fixed-rate, fixed-income securities,
and cash and cash equivalents. By maintaining a portfolio that includes
long-term equity investments, the Registrant is seeking to maximize the returns
to be utilized to fund nuclear decommissioning costs. However, the equity
securities included in the Registrant's portfolio are exposed to price
fluctuations in equity markets, and the fixed-rate, fixed-income securities are
exposed to changes in interest rates. The
-6-
Registrant actively monitors its portfolio by benchmarking the performance of
its investments against certain indices and by maintaining, and periodically
reviewing, established target allocation percentages of the assets of its trusts
to various investment options. The Registrant's exposure to equity price market
risk is in large part mitigated due to the fact that the Registrant is currently
allowed to recover its decommissioning costs in its rates.
SAFE HARBOR STATEMENT
Statements made in this Form 10-Q which are not based on historical facts, are
"forward-looking" and, accordingly, involve risks and uncertainties that could
cause actual results to differ materially from those discussed. Although such
"forward-looking" statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions,
financial performance and the Year 2000 Issue. In connection with the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Registrant is providing this cautionary statement to identify important factors
that could cause actual results to differ materially from those anticipated. The
following factors, in addition to those discussed elsewhere in this report and
in the 1999 Annual Report to Stockholders (portions of which are incorporated by
reference in the Registrant's 1999 Form 10-K) and in subsequent securities
filings, could cause results to differ materially from management expectations
as suggested by such "forward-looking" statements: the effects of regulatory
actions; changes in laws and other governmental actions; the impact on the
Registrant of current regulations related to the phasing-in of the opportunity
for some customers to choose alternative energy suppliers in Illinois; the
effects of increased competition in the future due to, among other things,
deregulation of certain aspects of the Registrant's business at both the State
and Federal levels; future market prices for fuel and purchased power,
electricity, and natural gas, including the use of financial instruments;
average rates for electricity in the Midwest; business and economic conditions;
interest rates; weather conditions; fuel prices and availability; generation
plant performance; the impact of current environmental regulations on utilities
and generating companies and the expectation that more stringent requirements
will be introduced over time, which could potentially have a negative financial
effect; monetary and fiscal policies; future wages and employee benefits costs;
and legal and administrative proceedings.
-7-
AMEREN CORPORATION
CONSOLIDATED BALANCE SHEET
UNAUDITED
(Thousands of Dollars, Except Shares)
March 31, December 31,
ASSETS 2000 1999
- ------ --------- ------------
Property and plant, at original cost:
Electric $ 12,154,399 $ 12,053,411
Gas 497,871 491,708
Other 91,089 92,696
----------- ------------
12,743,359 12,637,815
Less accumulated depreciation and amortization 5,967,122 5,891,340
----------- ------------
6,776,237 6,746,475
Construction work in progress:
Nuclear fuel in process 95,294 88,830
Other 423,361 329,880
----------- -----------
Total property and plant, net 7,294,892 7,165,185
----------- -----------
Investments and other assets:
Investments 94,565 66,476
Nuclear decommissioning trust fund 193,438 186,760
Other 81,997 370,000
---------- -----------
Total investments and other assets 370,000 333,973
---------- -----------
Current assets:
Cash and cash equivalents 39,691 194,882
Environmental bond redemption fund 237,600 -
Accounts receivable - trade (less allowance for doubtful
accounts of $7,782 and $7,136 respectively) 215,433 216,344
Unbilled revenue 103,132 154,097
Other accounts and notes receivable 10,220 20,668
Materials and supplies, at average cost -
Fossil fuel 106,713 123,143
Other 117,287 130,081
Other 34,463 39,791
---------- -----------
Total current assets 864,539 879,006
---------- -----------
Regulatory assets:
Deferred income taxes 622,244 622,520
Other 163,614 176,931
Total regulatory assets 785,858 799,451
---------- -----------
Total Assets $ 9,315,289 $ 9,177,615
============ ============
CAPITAL AND LIABILITIES
Capitalization:
Common stock, $.01 par value, 400,000,000 shares authorized -
137,215,462 shares outstanding $ 1,372 $ 1,372
Other paid-in capital, principally premium on
common stock 1,582,501 1,582,501
Retained earnings 1,480,056 1,505,827
---------- ---------
Total common stockholders' equity 3,063,929 3,089,700
Preferred stock not subject to mandatory redemption 235,197 235,197
Long-term debt 2,342,821 2,448,448
---------- ---------
Total capitalization 5,641,947 5,773,345
---------- ---------
Minority interest in consolidated subsidiaries 3,988 4,010
Current liabilities:
Current maturity of long-term debt 300,735 128,867
Short-term debt 232,141 80,165
Accounts and wages payable 179,890 341,274
Accumulated deferred income taxes 70,654 70,719
Taxes accrued 232,541 155,396
Other 329,492 300,747
---------- ---------
Total current liabilities 1,345,453 1,077,168
---------- ---------
Accumulated deferred income taxes 1,482,761 1,493,634
Accumulated deferred investment tax credits 170,513 170,834
Regulatory liability 190,227 188,404
Other deferred credits and liabilities 480,400 470,220
---------- ---------
Total Capital and Liabilities $ 9,315,289 $ 9,177,615
============ ============
See Notes to Consolidated Financial Statements.
-8-
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
(Thousands of Dollars, Except Shares and Per Share Amounts)
Three Months Ended Twelve Months Ended
March 31, March 31,
--------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
OPERATING REVENUES:
Electric $ 723,059 $ 636,330 $ 3,374,319 $ 3,124,441
Gas 98,600 97,450 229,448 221,793
Other 3,717 2,122 9,338 7,066
------------- ------------- ------------- ------------
Total operating revenues 825,376 735,902 3,613,105 3,353,300
OPERATING EXPENSES:
Operations
Fuel and purchased power 239,938 184,995 1,028,220 800,213
Gas 57,987 55,050 134,386 121,692
Other 145,386 139,240 635,628 639,642
------------- ------------- ------------- ------------
443,311 379,285 1,798,234 1,561,547
Maintenance 74,957 72,310 373,520 319,318
Depreciation and amortization 93,364 89,474 354,429 351,023
Income taxes 44,251 35,230 267,891 272,992
Other taxes 60,915 59,916 247,591 267,944
------------- ------------- ------------- ------------
Total operating expenses 716,798 636,215 3,041,665 2,772,824
OPERATING INCOME 108,578 99,687 571,440 580,476
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during
construction 1,229 2,662 5,728 6,600
Miscellaneous, net (4,922) (2,265) (13,470) (1,728)
------------- ------------- ------------- ------------
Total other income and (deductions) (3,693) 397 (7,742) 4,872
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS 104,885 100,084 563,698 585,348
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest 41,893 44,415 165,753 178,500
Allowance for borrowed funds used during construction (1,599) (1,862) (6,860) (6,627)
Preferred dividends of subsidiaries 3,198 3,172 12,676 12,546
------------- ------------- ------------- ------------
Net interest charges and preferred dividends 43,492 45,725 171,569 184,419
------------- ------------- ------------- ------------
NET INCOME $ 61,393 $ 54,359 $ 392,129 $ 400,929
============= ============ ============= ============
EARNINGS PER COMMON SHARE - BASIC
AND DILUTED (Based on average shares outstanding) $ 0.45 $ 0.40 $ 2.86 $ 2.92
============= ============ ============= ============
AVERAGE COMMON SHARES OUTSTANDING 137,215,462 137,215,462 137,215,462 137,215,462
============= ============ ============= ============
See Notes to Consolidated Financial Statements.
-9-
AMEREN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
(Thousands of Dollars)
Three Months Ended
March 31,
------------------------
2000 1999
---- ----
Cash Flows From Operating:
Net income $ 61,393 $ 54,359
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 90,279 87,026
Amortization of nuclear fuel 9,075 10,416
Allowance for funds used during construction (2,828)
(4,524)
Deferred income taxes, net (7,169)
(8,320)
Deferred investment tax credits, net (321) (2,007)
Changes in assets and liabilities:
Receivables, net 62,324 5,821
Materials and supplies 29,224 3,301
Accounts and wages payable (161,384) (116,164)
Taxes accrued 77,145 70,961
Credit to customers 14,011 23,408
Other, net 36,265 43,685
--------- ---------
Net cash provided by operating activities 208,014 167,962
Cash Flows From Investing:
Construction expenditures (223,375) (77,103)
Allowance for funds used during construction 2,828 4,524
Nuclear fuel expenditures (6,228) (2,381)
Other (28,089) 8,513
--------- ---------
Net cash used in investing activities (254,864) (66,447)
Cash Flows From Financing:
Dividends on common stock (87,132) (87,132)
Environmental bond redemption fund (237,600) --
Redemptions:
Nuclear fuel lease (1,818) (3,635)
Short-term debt -- (23,508)
Long-term debt (172,723) (5,000)
Issuances:
Nuclear fuel lease 1,356 3,617
Short-term debt 151,976 --
Long-term debt 237,600 11,500
--------- ---------
Net cash used in financing activities (108,341) (104,158)
Net increase in cash and cash equivalents (155,191) (2,643)
Cash and cash equivalents at beginning of year 194,882 76,863
--------- ---------
Cash and cash equivalents at end of period $ 39,691 $ 74,220
========= =========
Cash paid during the periods:
Interest (net of amount capitalized) $ 34,199 $ 29,261
Income taxes, net $ (4,527) $ (4,180)
See Notes to Consolidated Financial Statements.
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AMEREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2000
Note 1 - Ameren Corporation (Ameren) is a holding company registered under the
Public Utility Holding Company Act of 1935 (PUHCA). In December 1997, Union
Electric Company (AmerenUE) and CIPSCO Incorporated (CIPSCO) combined to form
Ameren, with AmerenUE and CIPSCO's subsidiaries, Central Illinois Public Service
Company (AmerenCIPS) and CIPSCO Investment Company (CIC), becoming subsidiaries
of Ameren (the Merger). As a result of the Merger, Ameren has a 60% ownership
interest in Electric Energy, Inc. (EEI). EEI owns and operates an electric
generation and transmission facility in Illinois that supplies electric power
primarily to a uranium enrichment plant located in Paducah, Kentucky. That
interest is consolidated for financial reporting purposes. Since the Merger,
Ameren has formed AmerenEnergy, Inc. (AmerenEnergy), Ameren Development Company,
AmerenEnergy Resources Company, and Ameren Services Company. AmerenEnergy, an
energy marketing subsidiary, primarily serves as a power marketing agent for the
operating utility subsidiaries and provides a range of energy and risk
management services to targeted customers. Ameren Development Company is a
nonregulated subsidiary encompassing Ameren's nonregulated products and
services. AmerenEnergy Resources Company (formerly known as Ameren Intermediate
Holding Co., Inc.) holds the Registrant's nonregulated generating operations.
Ameren Services Company provides shared support services to Ameren and all of
its subsidiaries.
The accompanying financial statements include the accounts of Ameren and its
consolidated subsidiaries (collectively the Registrant). All subsidiaries for
which the Registrant owns directly or indirectly more than 50 percent of the
voting stock are included as consolidated subsidiaries. Ameren's primary
operating companies, AmerenUE, AmerenCIPS and AmerenEnergy Resources Company,
are engaged principally in the generation, transmission, distribution and sale
of electric energy and the purchase, distribution, transportation and sale of
natural gas. The operating companies serve 1.5 million electric and 300,000
natural gas customers in a 44,500-square-mile area of Missouri and Illinois. All
significant intercompany balances and transactions have been eliminated from the
consolidated financial statements.
In conjunction with the Illinois Electric Service Customer Choice and Rate
Relief Law of 1997, on May 1, 2000, following the receipt of all required State
and Federal regulatory approvals, AmerenCIPS transferred its electric generating
assets and liabilities, at historical net book value, to a newly created
nonregulated company, AmerenEnergy Generating Company (Generating Company), a
subsidiary of the Registrant's wholly-owned subsidiary, AmerenEnergy Resources
Company, in exchange for a promissory note from Generating Company in the
principal amount of approximately $600 million and Generating Company common
stock. The promissory note has a term of five years and bears interest at 7%
based on a 10-year amortization. The transferred assets represent a generating
capacity of approximately 2,900 megawatts. Approximately 45% of AmerenCIPS'
employees were transferred to Generating Company as a part of the transaction.
Also on May 1, 2000, an electric power supply agreement was entered into between
Generating Company and its newly created nonregulated affiliate, AmerenEnergy
Marketing Company (Marketing Company), also a wholly-owned subsidiary of
AmerenEnergy Resources Company. On the same date, Marketing Company entered into
an electric power supply agreement with AmerenCIPS to supply it sufficient power
to meet native load requirements. This agreement expires December 31, 2004.
Power will continue to be jointly dispatched between AmerenUE and Generating
Company.
Note 2 - Financial statement note disclosures, normally included in consolidated
financial statements prepared in conformity with generally accepted accounting
principles, have been omitted in this Form 10-Q pursuant to the Rules and
Regulations of the Securities and Exchange Commission. However, in the opinion
of the Registrant, the disclosures contained in this Form 10-Q are adequate to
make the information presented not misleading. See Notes to Consolidated
Financial Statements included in the 1999 Annual Report to Stockholders (which
are incorporated by reference in the Registrant's 1999 Form 10-K) for
information relevant to the consolidated financial statements contained in this
Form 10-Q, including information as to the significant accounting policies of
the Registrant.
Note 3 - In the opinion of the Registrant, the interim financial statements
filed as part of this Form 10-Q reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
the periods presented. The Registrant's consolidated financial statements were
prepared to permit the information
-11-
required in the Financial Data Schedule (FDS), Exhibit 27, to be directly
extracted from the filed statements. The FDS amounts correspond to or are
calculable from the amounts reported in the consolidated financial statements or
notes thereto.
Note 4 - Due to the effect of weather on sales and other factors which are
characteristic of public utility operations, financial results for the periods
ended March 31, 2000 and 1999, are not necessarily indicative of trends for any
three-month or twelve-month period.
Note 5 - In July 1995, the Missouri Public Service Commission (MoPSC) approved
an agreement establishing contractual obligations involving the Registrant's
Missouri retail electric rates. Included was a three-year experimental
alternative regulation plan (the Original Plan) that ran from July 1, 1995
through June 30, 1998, which provided that earnings in those years in excess of
a 12.61% regulatory return on equity (ROE) be shared equally between customers
and stockholders, and earnings above a 14% ROE be credited to customers. The
formula for computing the credit used twelve-month results ending June 30,
rather than calendar year earnings.
The MoPSC staff proposed adjustments to the Registrant's estimated customer
credit for the final year of the Original Plan ended June 30, 1998, which were
the subject of regulatory proceedings before the MoPSC in 1999. In December
1999, the MoPSC issued a Report and Order (Order) concerning these proposed
adjustments. Based on the provisions of that Order, the Registrant revised its
estimated final year credit to $31 million. Subsequently, in December 1999, the
Registrant filed a request for rehearing of the Order with the MoPSC, asking
that it reconsider its decision to adopt certain of the MoPSC staff's
adjustments. The request was denied by the MoPSC and in February 2000, the
Registrant filed a Petition for Writ of Review with the Circuit Court of Cole
County, Missouri, requesting that the Order be reversed. The appeal is pending
and the ultimate outcome can not be predicted; however, the final decision is
not expected to materially impact the financial condition, results of operations
or liquidity of the Registrant. A partial stay of the Order was granted by the
Court pending the appeal.
A new three-year experimental alternative regulation plan (the New Plan) was
included in the joint agreement authorized by the MoPSC in its February 1997
order approving the Merger. Like the Original Plan, the New Plan requires that
earnings over a 12.61 percent ROE up to a 14 percent ROE be shared equally
between customers and stockholders. The New Plan also returns to customers 90
percent of all earnings above a 14 percent ROE up to a 16 percent ROE. Earnings
above a 16 percent ROE are credited entirely to customers. The New Plan runs
from July 1, 1998 through June 30, 2001. During the three months ended March 31,
2000, the Registrant recorded an estimated $10 million credit (4 cents per
share) for the plan year ending June 30, 2000 that the Registrant expects to pay
its Missouri electric customers. In total, the Registrant has recorded an
estimated credit of $30 million as of March 31, 2000 for the plan year ending
June 30, 2000, compared to an estimated $20 million credit recorded over the
same period last year. These credits were reflected as a reduction in electric
revenues. The final amount of the credit will depend on several factors,
including the Registrant's earnings for 12 months ended June 30, 2000. As of
March 31, 2000, the Registrant has also reflected an estimated $25 million
credit it expects to pay its Missouri electric customers for the plan year ended
June 30, 1999. The Registrant's proposed credit is still under review by the
MoPSC staff and the Office of the Public Counsel.
The joint agreement approved by the MoPSC in its February 1997 Order approving
the Merger also provided for a Missouri electric rate decrease, retroactive to
September 1, 1998, based on the weather-adjusted average annual credits to
customers under the Original Plan. The rate decrease was impacted by the Order
issued by the MoPSC in December 1999 relating to the estimated credit for the
third year of the Original Plan and a settlement reached between the Registrant,
the MoPSC staff and other parties relating to the calculation of the
weather-adjusted credits. Based on those results, the Registrant estimates that
its Missouri electric rate decrease will be $17 million on an annualized basis.
This estimate is subject to the final outcome of the above-referenced court
appeal of the Order.
Note 6 - Segment information for the three month and 12 month periods ended
March 31, 2000 and 1999 is as follows:
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- ---------------------------------------------------------------------------------------------
Regulated Reconciling
(in millions) Utilities All Other Items * Total
- ---------------------------------------------------------------------------------------------
Three months ended March 31, 2000:
Revenues $ 816 $ 68 $ (59) $ 825
Net Income 60 1 -- 61
- ---------------------------------------------------------------------------------------------
Three months ended March 31, 1999:
Revenues $ 714 $ 48 $ (26) $ 736
Net Income 53 1 -- 54
- ---------------------------------------------------------------------------------------------
12 months ended March 31, 2000:
Revenues $3,558 $262 $(207) $ 3,613
Net Income 391 1 -- 392
- ---------------------------------------------------------------------------------------------
12 months ended March 31, 1999:
Revenues $3,265 $198 $(110) $ 3,353
Net Income 397 4 -- 401
- ---------------------------------------------------------------------------------------------
* Elimination of intercompany revenues.
-13-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
Reference is made to "Liquidity and Capital Resources" in Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial
Statements of the Registrant's 1999 Annual Report to Stockholders which are
incorporated by reference in the Registrant's Form 10-K for the year ended
December 31, 1999, for information regarding the United States Environmental
Protection Agency's (EPA) issuance in 1997 of National Ambient Air Quality
Standards for ozone and particulate matter. In May 1999, the United States Court
of Appeals for the District of Columbia Circuit remanded the ambient air quality
standard regulations to the EPA for reconsideration. In January and February
2000, the parties to the litigation filed petitions for review before the United
States Supreme Court. The Supreme Court has not decided whether to accept the
case for review. At this time, the Registrant is unable to predict the ultimate
impact of those revised air quality standards on its future financial condition,
results of operation or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
At the annual meeting of stockholders of the Registrant held on April 25,
2000, the following matters were presented to the meeting for a vote and the
results of such voting are as follows:
Item (1) Election of Directors.
Non-Voted
Name For Withhold Brokers(1)
---- --- -------- ----------
William E. Cornelius......... 104,321,203 3,549,979 0
Clifford L. Greenwalt........ 104,133,464 3,737,718 0
Thomas A. Hays............... 104,353,862 3,517,320 0
Richard A. Liddy............. 102,425,986 5,445,196 0
Gordon R. Lohman............. 104,298,725 3,572,457 0
Richard A. Lumpkin........... 104,375,309 3,495,873 0
John Peters MacCarthy........ 104,335,677 3,535,505 0
Hanne M. Merriman............ 104,339,301 3,531,881 0
Paul L. Miller, Jr........... 104,407,850 3,463,332 0
Charles W. Mueller........... 104,354,451 3,516,720 0
Robert H. Quenon............. 104,242,764 3,628,418 0
Harvey Saligman.............. 104,298,943 3,572,239 0
Janet McAfee Weakley......... 104,151,451 3,719,731 0
James W. Wogsland............ 104,174,925 3,696,257 0
Item (2) Stockholder Proposal re Report on Callaway Plant Releases.
Non-Voted
For Against Abstain Brokers(1)
--- ------- ------- ----------
9,351,400 73,610,301 5,477,760 19,431,721
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Continued)
Item (3) Stockholder Proposal re Cumulative Voting.
Non-Voted
For Against Abstain Brokers(1)
--- ------- ------- ----------
28,066,037 56,080,567 4,286,447 19,438,131
(1) Broker shares included in the quorum but not voting on the items.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
The following instruments defining the rights of holders of certain
unregistered long-term debt of the Registrant's two operating utility
subsidiaries, Central Illinois Public Service Company (AmerenCIPS) and
Union Electric Company (AmerenUE) have not been filed with the
Securities and Exchange Commission but will be furnished upon request.
1. Loan Agreement dated March 1, 2000, between AmerenCIPS and
Illinois Development Finance Authority (IDFA) in connection
with the IDFA's $51,100,000 Pollution Control Revenue
Refunding Bonds (AmerenCIPS Project) Series 2000A due March
1, 2014.
2. Loan Agreement dated as of March 1, 2000 between AmerenUE
and the State Environmental Improvement and Energy Resources
Authority of the State of Missouri (EIERA) in connection
with the EIERA's $186,500,000 Environmental Improvement
Revenue Refunding Bonds (AmerenUE Project) ($63,500,000
Series 2000A, $63,000,000 Series 2000B, and $60,000,000
Series 2000C) due March 1, 2035.
(b) Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMEREN CORPORATION
(Registrant)
By /S/ Donald E. Brandt
------------------------
Donald E. Brandt
Senior Vice President, Finance
(Principal Financial Officer)
Date: May 15, 2000
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