ML19347F299

Annual Financial Rept 1980

ML19347F299
Person / Time
Site:	Callaway
Issue date:	02/24/1981
From:	Cornelius W, Dougherty C UNION ELECTRIC CO.
To:
Shared Package
ML19347F298	List: ML19347F297 ML19347F299
References
NUDOCS 8105180291
Download: ML19347F299 (40)

Text

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liighlights Year Ended Annual Change December 31,1980 Currera Year 10. Year Aserage Earnings per Aserage Common Share. S 2.10 21.4 % 2.5 ",,

Dividends per Common Share . S 1.43 2.8 1.6 Common Shares Outstanding (Average) . 59,675,995 13.5 h.3 Average Common Stock Equity- S 953,960,(NNI 12.1 9.7 Residential Kilowatt-liour Sales . 8,446,(NN),(MN) I 1.9 5.5 Total Kilowatt.liour Sales . 24,795,(MN),(NN) 4.7 3.6 Peak Demand (Kilowatts) . 6,4(M,(NN) 9.5 4.0 System Capability (Kilowatts) . 7,471,(NM) -3.5 4.3 Price per Ton of Coal . S 26.85 3.2 17.4 Coal Burned (Tons) . II,730,(NNI -2.6 6.1 Interest on Debt . S 131.725,(NNI 23.1 13.4 Total Indebtedness . S 1,621,124,(MN) 13.3 h.2 Contenis Annual Meca 'ng 2 Letter to Stockholders The Annual Meeting of 4 The Year 1980 Stockholders will convene at 10 Importance of Electricity 10 a.m. Tuesday, April 28.1981 14 Financial Statements at the Stouffer's Riverfront Towers.

28 Management's Discussion / Analysis 200 South Fourth Street, 31 Selected Financial Information St. Louis, Missouri.

32 Supplementary / Statistical Data inside Hack Cover Officers and Directors l

_ O

To Our Stockholders:

Record earnings and increased dividends were obvious highlights of  !

3

(;

f

- {8 19h0. And, although major problems

- * , i remain, the most positive occurrence i c .  !

in the eventful year of 19N) was the M I l

action of the soters in November. 1 - "b .

On election day 1980, the voters

,[_-

oserwhelmingly rejected an ill- >"

advised anti-nuclear initiative * '

petition in hiissouri, and also _ %;d '

generated hope and promise by  ; [?.E ' l electing new administrations. ,

nationally and in hlissouri. W '

Common stock earnings of $2.10 per share compared very favorably i

g;' .

with the $1.73 recorded in 1979. -J The quarterly common stock dividend was increased from 36

, YO-Cg^

cents to 38 cents per share effect te ,

in the third quarier of 1950, bringing  % illiam 1:. Cornelius Charled. Douchert.*

the annual dividend rate to 51.52 These increased kilowatt-hour Through the years there have i per share.

sales illustrate the continuing been established standards of  !

growth in the use of electricity, in regulation which are objectise and "It is Union Electric's goal fact, our total kilowatt-hour sales which are universally accepted as base increased in 19 of the last 20 controlling principles of the and O/1//gullon to f)rovide years-and over those two acades regulatory process. These standards reliable electric service to. soen saies nave aimosi ,,igiea. require ,he Commissions to set rates erelyone [H our serPice perhaps ihe ruii exieni o< ihe ataieseiwnichenabiesineutiiity growing reliance on electricity is to maintain its financial integrity and ,

G re u. W C nd re /7Fo H d o/' o ul-best esidel.ced by the fact that the to attract capital. These are stand-I

j. 7g' '

average annual use of electricity by ards, incidentally, against which our residential customers has grown rates can be readily and j Theimproved earningswere due 24 i times in the last two decades- objectisely measured.

primarily to the extremelv hot from 3.575 kilowatt hours in 19N) to As the nation in recent years summer weather. the restructuring 9.M8 kilowatt-hours in 1980. has turned more and more to of rates which increased summer Clearly, the greater use of populism. electrie utility investors revenues, and rate increases. electricity offers an accurate throughout t he country has e suffered.

Additionally, the gain over 19/9 measure of the higher standard of in N1issouri oser this period, the living it produces. Indeed the fact situation has been esen worse, as the was magnified by the write-off in that year of approximately 21 cents per that electricity is now a basic various rating agencies hase graded share as a result of a court decision necessity of life is well established. Niissouri regulation at or near the outlawing fuel adjustment clauses in It is Union Electric's goal and bottom in the country. And as a 51issouri. obligation to proside reliable electrie capital-intensise business. our costs Total kilowatt-hour sales for service to eseryone in our sersice of operation have been unnecessarily 1980 increased 4.7 per cent oser area. We are proud of our record in increased because the poor quality of ,

1979, with residential sales up 12 meeting that responsibility. Such an regulation has resulted in a higher per cent. Commercial sales gained accomi.'ishment has become cost of money to us. All of which 7 per cent, but industrial s: des were increasingly difficult in recent years. adversely affects both our insestors down 3 per cent, reflecting the however, chiefly because the quality and customers. ,

impact of the recession. of regulation has deteriorated due to politicitation and lack of under-standing of Ihe economie facts of life. s

. i

Nor is it just in the matter of In fact, wearecurrently building On the question of nuclear r tes that recent regulation has been the nuclear Callaway Plant because waste. we continue in concert with contrary to the public interest. With it offers the most economical and the entire nuclcar indastry our increasing frequency, special efficient. the safest, and most en- efforts to have the federal interest groups have been obstructing vironmentally-acceptable method of government take the steps necessary construction projects-particularly generating the additional electricity to deal with this issue, which, generating plants. As a result of the which will be required by our incidentally,it has reserved to prolonged and often repetitive customers. Ilowever, an anti nuclear itself exclusively.

hearing process together with other group, by use of an initiative petition, At year end, construction of the governmental red tape,it now takes placed a measure on the November 4 first !.150JXX)Lilowatt unit of the more than twice as long to build a hiissouri ballot which would have Callaway Plant was over 75 per cent generating plant as it did just fifteen prohibited operation of the Callaway completed at a cost of 5958 million.

years ago-despite improved Plant until the federal gosernment The unit is scheduled to begin procedures and technical advances in has in operation an acceptable site operating in 1983.

the ensuing years. Also, it takes at for the permanent storage of spent We expect tw the current year least twice as long to build a power fuel. of 1981 will have it. share of plant in the United States today as , problems-particalarlyin viewof the it does in other countries. And, while , record finaacmg that will be inflation has hurt all Americans, the ". . . NDPC IN # HCh'[C(ICRi/ required to meet our construction cost of stretching out the construction gorennnent n'hich has schedule. Ilowever, the improved process is even more detrimental. pronflSet/ to re(htce the hur- understanding of the public, the The resultmg harm to both the utih.ty . spirit and dedication of our investor and the utility customer is den of regulaIIoriinul n.la employees. and the positive otwious-and yet the problem has nen' State achnn ,uSInt/lon. . . expectations of more responsible continued to grow with the rise of gosernment provide us with new activists and the politicization of confidence as we face the challenges regulation. Such a measure was a threat to ahead.

Thus do we find a basis for hope all hiissourians because it would in a new federal government which have deprived the state of necessary has promised to reduce the burden energy, thereby wreaking havoc on of regulation and in a new state its eitizens. Sforeover, the proposition kg A_h administration w hich has the oppor. was particularly ill-founded because y/

tunity to restore objectivity to th. the Callawa i Plant will have its own federally-licinsed and approved Charles J. Dougherty regulatory process, Ther'e is no doubt that society facility for the storage of the spent Chairman and Chief Execraire Officer progresses with energy: without it, fuel generated during the firs:

civilization would regress. That our twenty years of plant operation.

country needs to produce more Fortunately, the dire conse-energy today is widely acknowl edged. quences were avoided as the voters And nuclear power offers an of hiissouri overwhelmingly rejected William E. Corneh,us avaitable energy scurce with an the anti-nuclear proposition by a 61 to 39 per cent majority, defeating it Preudent outstanding and unmatched record for public safety, in every county in the state. The February 24,1981 victory was the direct result of an St. Louis, Missouri educational campaign carried out with great skill and resolve by knowl-edgeable and concerned citizens from all walks of life and by a stock-holder and employee effort which was truly inspirational.

1 1

The Year 1980 ,

parocularly m peraxis of unusuai the Com ,any has mor e t han J. ,ubled Earnings Up weather conditions when an oser the past tne years I oi msnmce.

unintmupwd supply of electricity n the c.nt of coal per n n burned fus Carnings per share of common criocal for so many people. rnen from si112 m IG to 52W stock for the sear PIN) were 52.10 as compared wnh $1."3 last seat A peak load of hmm in P N k'lowans was reached on July 14. I he use of oil n contined a

'I he merease m earnmes I tus was an increase of 9 per cent prmurdy to peak denund peii. ds reflected numerous sariatnIns. some "ser the presious record peak iset m and m PM comprned less th.m one of whici. were oilsettine. some 19~9t and reflected mereased use of per cem of f uel consumed temporary. Positne factors included additional summer res erues resultme elec:ncus for air cenditionmg and As reported last year the from the restructurine of rates. a other cooling apphances during the Company m Pr4 emered inni a tuel rate inercase effectne in N1.n . and abnormally hot 14Ni summcr lease arrangemem which prosided mt reased sales to residential and 'I he total electric heanng load for the fmancmg of up to *>lini commercial customers which were connected to the Company \ system milhon of nuclear fuel by a partly the effect of the estremely hot increased by 10 per cent during 19NL corporanon that w di purcha thn summer. ()tfsetting these fasorable llectric heat was instal led in 46 per f uel for t he Callawin Plant and lease esents were increased costs of fuel.

cent of all new commercial buildmgs labor. supphes and equipment. and in 30 per cent of all smgle-famdy higher interest espenses as a result residennal construction and in 52 of continump mflanon. In addition. per cent of all muln-f amils residennal the gain oser 19"9 was maemfied bs construction durmg the year m the

' ~

the write-off m that year of Companyi sersice area.

approximatek 21 cents per share as a result of a court dechion im. lawing fuel adjustment clauses in N1nsourt [)ivi(jengls lnereasect I he lloard of Directors mereased quarterly common stock disiden is Kilowatt-llour Sales Up f rom 36 cents to D cems per share Total kilowatt hour sales for the effectne m the third quarter of 19NL Scar rose 4.~ per c~nt os er i r9 thus raising the annual dnidend rate

s. des. with residential sales to 5132 per share. The total dnidend mereasing 12 per cent. commercial paid during 19N) was 51.45 per share sales mereasmg " per cent and and all dnidends paid on common industrial sales declining by 3 per and preferred stock during the year cent. reflectmg the impact of the are fully taxable as dnidend economic dow nt urn in 14NL income. The Company has paid cash The use of electrieny by dnidends on its common stock residential customers increased for each year since 1906 dranutically during the unusually g warm third quarter of 14NI- up M per cent oser 19"4 Fhis record. as Fuel Costs always durme periods of estreme Durine the sear. the (. omIuns weather conditions is positne - - -

burned 11.,3tWOH tons of coal and esidence of the importance of our fuel bill was $330 nulhon. ~I he electricity to the heahh and comfort cost of coal and other fuels used bs of the large and dnerse population i sersed bs the Company. It also emphasi<es t he ('ompanyi respiin- I neinvers insperi one of ihr ihree low sibillis to Ctinlinue to proside an pressure steam surhines which will drise ildequale slippls of dCKmdable the I nis I generator as ( allaway Plani.

'ehed"'ed I" hecin Producing electricin

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I it to the comp.un the three states m whn h we operaie. .md f ederal regulaion laws rules (In I ebruary 24.19N1. the and eini rates to municipahties and and procedur es \loscoser the need Inasinium anhiunt til the f uCI lease t dher ulllllies ale regulated bs the b o priinipt and re.ivinable rate arrangement was mt reased f rom i eder.d I nergs Regul.nors requests and decmon'. has nes er

$1m nulhon to $20n nulhon ( 'om n nsso in \ppo numatels x2 per been so obs ious or importam as

'I he ('t Hdpans has ci uitIa(ls Is ir " ' ' '""O ' ""N' " "' ! ' "'

l oirranng wsenun conw troni sales (hgn milanon and ret ."ud Ingh nutlear fuel u nh maior ur.mium producers prosidmg f.ir suthcient wgulated bs Miwoun. about i1 per intemst r.nn i supphes of uramum for the first ant and 3 ;wr ant. msJwcasek.

trom salm in Uhnios and lowa and unit of ( allawa) Plant Ihrouch Ihe end of this centun. 1 per ant am denwd horn w holesale llate IIIereases in 1%0 WIM \n mere tse m electric rates b q

()nr requests hir raic increases I un in i lect ra l'ompans 's \ lissom i Ilate Adj,ustI11cI1!$ llequ,i red ar eminneh suppiirted by f acts cushimers w hich became ef fectne

'I he ('ompans \ rates are and esidence and are presented in N1as MI wdi add approsunateis $22 regulated bs comnussions m each .il accordance wah a my nad of state milhiin tii the ( ompany 's .mnual

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! The Year 1980 1

resenues At the same time. elecinc lilinon customers which,if approsed.

rates for those customers were will produce addnional annual S41'l Million of restructured by the N1:ssoun Pubhc resenues i>f approumately 51; Construction hervice Comnuwon. 'I he new rates niilln in I:spendit ures fiir ciinst r uctis in m are higher diaritip the siiriirner iniint hs t 'nn in i lectric. in Ni n enhr I'lNi were M21 nulln):1. iil u hic h and lower .lurmy the wmter months filetl for an increase in Niiwoini 52h'i nulhon was spent on the than preuous rates. elecirn rates designed to produce Callawas Pl.mt ()ther nuior

()ther rate mercases f or l'nn ,n an addioonal Yll milhon annuall)- construcoon espenditures durmy the I'lectnc and subsahary compames and m I)ccember filed for a rate year w ere 56'i milhon for transnuwon during the year totalled $1; n ilhon increase of W milhon m lowa. and dntribunon facihties and 52h on an annual basn still pendmg in Niissouri are rate nullion for particulate enuwon mcreases totalhng $10 nulhon for control facihties at co.il burmng subsnh.ny companies plants.

Rate Increases Peruling At the end of the year the firsi

"""""D""' ""

in Nia) I mon I:lectric requested complete with a total of 59;h milhon an lHCrease In eleCtliC rales II

\

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_ _ _____ _ _ _ . _ _ _ . _ _ _ _ _ _ _ _ _ _ _ ~ _.

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i having been invested in the project, aad increased regulatory require- Sl(X) million proceeds from the i Niajor construction milestones ments. The cost of the first unit is sale of 9.95 per cent first mortgage I

include completion of a 2Ghour now estimated at $1.59 billion. up bonds to an institutional ins estor concrete pour for the reactor $269 million from previous estimates. in 1979.

containment building dome. Union Electric Company has In uary 19N) a subsidiary substantial progress on construction applied to the Nuclear Regulatorv' .

""" " '"" "I I U "' P '# "' II

of the 550 foot cooling tower Commission for an Operating structure and completion of the License for the 1.150.(XX) kilowatt In July the State of Niissouri

' Services and Stores Iluilding. A Callaway Unit I and that application sold 560 million of tavexempt

. simulator of the Callaway control is pending.

in 1981 the Company will spend Environmental Improvement room was ordered for training plant Resenue Ilonds guaranteed by the j control room operators at the site. $N)9 million for construciion and in the fise-year period from 1981 1985.

Company and supported by the The completion date for the first issuance of a new series of Union expenditures are expected to be 52.5 unit was extended from October 1982 Electric first mortgage bonds. These to April 1983 due to delays principally-billion.

bonds carry an annual cost of resulting from the impact of strikes 9.855 per cent and hase a 27-year average saaturity. Proceeds will be Financing used to finance additional air The Company's financial pollution control equipment at the requirements for construction hieramee and Labadie coal fired i.

> - - expenditures are met through a generating plants. l combination of internally generated {

i]  % - . . .

funds and external financing.

in December the Company

~

_ issued 5.5 million new shares of Approximately 30 per cent of the common stock which eenerated 556

,[i %4. g 7 construction expen$litures in 19N) million of additional capital. j

, j/ / - - . was obtamed from internal!v t Duriag the year. 517 million was i

.:[ IlJ - 3

. generated funds, with the balance .

invested by shareholders and iY provided by the issuance of additional employees through the Company's i

e securities and the settlement of a Dividend Rein esiment and Stock kC lawsuit. In 19N) the Company completed new long-term financing Purchase Plan. 'T he Plan provides

'# common shareholders and employees  !

totalling $188 million, which

~

+ meluded bond and common s.:ock "".opponunity automatically to A remvest their disidends m the 3

• g L issues.

Company.s stock and to make i %' '

%~ In January 19N) the Company optional cash payments of up to l j H received the second 550 million of 55.(XX)in any month for the [

purchase of additional stock without l A. Additional new equipment is being in. paying a commission or sersice I stalled to imprme ahe climination of 115 charge. At year-end 26.206 common  !

ash emiukms f rom she stacks at labadie shareholders. or altut 16 per cent and 31eramec in compliance with more si,ingens opacity and parisculas, of the holders of common stock.

standards. were participating in the Plan.  !

11. when t'nion Elec ric huit . lag f>am Since the Plan was introduced in and the (hage hydroelectric power plant in July 1976. it has prosided the 1931. she impoundment of water created Company with more than 556 million she lake of the Diarks one of the largest of additional cap i tal.

man.made lakes in the world. Ihe Minh annisersary of the dam and the hydro- In addition, the Company electric plans will be celebrated during received $55 million from f 19MI.

C. A l'nion 1:lectric lineman *orLing on estinghouse Electrie Corporation espamion of the Company's ..early 14.ruMI as specified in our neelear fuel C . I miles of distribuelon lines. litigation settlement.

PD0ROR W

i I

The Year 1980 '

In late January 1981 ratings on the Company's mortgage bonds were Research and Developinent Executive Changes reduced from A to 1111114 by The Company is participatir.g in Following the Annual Meeting ,

Siandard and Poor's Corporation and major research projects to utilize on April 22. Ihe lloard of Directors i from A to llaa by Moody's high-sulphur coal and to find new elected Char:es J. Dougherty.

Investors Service. ways of planning for gencmtion of Chairman and William E. Cornelius, in February 1981 the Company electricity during peak-use periods as President. Mr. Cornelius is respon- l sold SIN) million of 15% per cent well as for intermediate load growth. sible for normal operations of the j ten-year maturity first mortgage After seseral years of research, Company and reports to Mr.  !

bonds, with the issuance of 530 ground was t roken in October for Dougherty, w ho continues as Chief  !

million of these lxmds to be delayed construction of a coal gasification Executis e Officer.  !

until July 1981. demonstration plant in East Alton. The ik>ard also elected Stewart j lilinois. The plant will be in W. Smith, Jr. an Executise Vice Presi- l operation in 1983, converting high- dent and Edgar J. Telihorst a Vice Environinental Regulations '"I P l*'

• i""I' '""' I"' " " " Pid'"'. Mr. Smith is responsible environmentally acceptable. low-Illu for the admimstratn e functions of The Company is presently in gaseous fuel suitable for power plant compliance with all sulphur dioxide use. Firing rate will be M) tons per air quality regulations and major day. equivalent to about S) improsements are being made in the megawatts of electric generation.

existing particulate control This project is being financed equipment at our Meramec and cooperatively by Allis Chalmers, the i imbadie plants to bring those plants State of Illinois, and a group of mio compliance with more sinngent electrie utilities, including Union opacity and carticulate standards. Electric. l The Companis schedule for The Company also continued its  !

( meeting the stiffer standards has research with four other mid western l been approsed by hic d. state, and utilities and the U.S. Department of l federal air quality regulatory Energy,on plans for a compressed air agencies. energy storage plant. Compressed 7 (

i in the fise-year perimi 1976 air would be pumped underground b **~' l through 1980, the Company spent during periods of low demand for h,7  !

5113 million for environmental electricity, and stored for later use

~

• improsement, and in the five-year in a combustion turbine to produce . i period 1981-1985, we expect tospend electricity during high demand  !

another 5200 million on construction projects relating to environmental periods. In the process. Ihe ef ficiency u a gg l of the combustion turbine is greatly Hil - I protection. increased.  !

In addition, the Company in addition, since 1972 Union m  !

estimates that an aggregate of Electric has been a participant with l approximately $5N) million will be other electric utilities in the Electric I expended on environmental control at Callaway Plant, of v.hich 5250 Power Research Institute, whi,b sponsors hundreds of research

-I l million is anticipater during the projects for improving electric p.m er ' e l

1981-198.s period.

.- {

production and distribution. The l range of its work includes fossil and

• j nuclev plants, transmission and J distribution technology. new forms  ;

of clean fuels, new energy sources  !

such as solar and fusior., and envi- I ronmental problems connected with i electric power technoh>gy. l

the Company and Nir. lelthorst ( )n J.muary ! . losi. Colberi \\. I ngineering and Construenon

! continues to be in charge of Power Lus. \ ice President-Regional retired replacing N11. Colteryahn

( )pe rat ions. from the ('on nany. He haJ been an eniployee since 105 and was elected Wit h sadness. w e repiirt a \ ice Pres' dent :n 14T Charles J D. I hc use of elet tricity by residential the death of \\. .\ltred }layes Schukai v.:is promoted to Dirtetor couomers in 19Niinercased b3 12 ; our I"'"'

on December 4 l'N i- ' 'I Ne9h 'H il I 'Pefdli'H' I'i succeed ""'I".c the unusually warm third quarter, reudential sales weit up 4 oser N1r. tiayes was Chairman Ntr. Lus the same period of the pres ious y ear.

of \\. Alf red Ilayes and 1:. I inemen awemble steel memocrs of a Coalpan). pension and trust ()n February I.1+1. li. C. transraission tower which will be part of a consultants. arid wi , on the Coltersahn. \' ice President in charus uuilosoli iransmiwion line t3 inn aHaway ant into the systent l'nion I lectric floard < >l of I neincerine and Construction.

Directors troll) 19bb h n I ND. also retired illter more than 441 scars I I "i' '"' d'li' C" '" ( ""1Pa ny coal-

'I w hen he treame an .\dsiser with the Company. }{e treame ii ln 14N . pr eI h h) the lioard. \ ice President in 191 floward N. ( ompany s power centration mis. hydro C.

\1cCoy was n imed Director of and oil 1" 1

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P0] OfliGINA!. ~

The Importancs of Electricity James M. OTlynn, President, St. Louis Regional Commerce and Growth Association (RCGA)

Electricity has improved farming, manufacturing,

66{nergyis and processing techniques. It has also brought about .

becoming an in-higher standards of health care and water purification, creasingly significant effective treatment of sewage and plant wastes, and factor in the location

, practical processes 1or recycling many products. of business especially for manufacturing and industrial In other words, electricity has been a main instru.

I plants. The St. Louis region is j ment in improving the environment by making our air fortunate because energy is one of l and our streams cleaner, in the conquest and controlling our u.ajor resources; and that has of many diseases, in increasing the human life span, and, made our job at the RCGA easier.

B* ""S* it "' S possible to guarantee in making life more enjoyable. Simply stated, electricity ,

that the required electricity could be has been a major factor m produe.mg the quality of life supolied to the proposed new we now enjoy. General Motors plant in Wentzville Aware of the fact that electricity today is a basic (Missouri).we were able to keep this i

necessity of life, Union Electric is proud that it has been [n Pry g"7o' ,he

• P' Eion inves

able to provide dependable electric senice to our ment in the plant and the thousands customers. We plan to maintain that record. of jobs which will still be here when it is e mP leted. On another point.

On the pages immediately followir.g are statements almost as important as t he availabih,ty in ,vhich m. dividuals trom f.ive different areas of society of an adequate supply of energ~y at

express their evaluations of the importance of electricity. a reasonable cost is how its produc-tion relates to the overali environ- ,

ment. This is one of the great attributes of moving to nuclear energy l

for the generation of electricity. One '

l could say that Union Electric is doing .

more than fulfilling a commitment to  :

l assure the continued availability of l

l electricity at a reasonable cost by building a nuclear power plant.

They will be producing the kind of electricity that is in conformance with EPA clean air regulations; and l

this can only enhance our ability to attract new industry and jobs to the area."

l 10

l l

l l

Richard Mantia, Executive I

I $' Secretary. Treasurer, Building ard i Construction Trades Council 1 l

t

i:

i I

l L

? 'if*f 66 s ri. )

the mployment in building trades is Q.

• g k

i definitely linked to an adequate supply of e . electricity, but it

. goes even further. When we invite new plants to locate in our commu-nity we must have adequate energy j%;;,4.}

' g. y supplies. This means jobs not only

, 44 .

in initial construction but permanent

- )gy jobs and future growth for new

_ e -M homes schools, churches, manu-7 c.

,; facturers of construction materials ,

, >g and many other support activities.

g;j, 4( + Without it we would be on the no-growth course. We showed our

concern when Proposition 11 came up. Organized labor got whole-l f heartedly behind the Callaway Plant because without it jobs in our area e

y would be eliminated. We have an

, +^ < - _n _

_ _ sp- average of 28.000 workers in the building trades here. We're talking "The St. Louis region is atwut somewhere around 35.000 "This incansjobs not only jobs in the next 15 to 20 years, and in initial construction but l fortunate because eneigt. that may be conservative. Mith an i

is one of ourInafor adequate supply of power and with perinanent jobs andJkMure resources;. . . the river rail facilities and our gron'th for new hornes.

geographic location, we can have schools, churches. . . "

building boom in this area."

?00R ORBM ,t

The Importance of Electricity Robert R. MacDonahl, Jr., M.D., Janet J. Pettitt, President, Missouri President, St. Ionis Metropolitan llome Economics Association Medical Society  !

e.

\

= 4 "The family Nhvis an ~

g adequate supply of structure and unit

< electric energy as we know it today is changing dramati- I important? As I thought of all the cally because of facets of the medical community life-style, the economy and industry; and mulled over the question. I felt and energy usage will grow to keep l 1

it needed to be rephrased. Where .

up with these changes. More and ,

would we be if we didn't have more people are becoming involved '

electricity or nad never had it? The in the work force in some way. i answer is quite simple. We'd be back Therefore, the home of tomorrow  !

in the eighteen hundreds. Right now -

will be more automated and com- l we are on the threshold of computers puterized with appliances and taking on an incredible job in -

conveniences yet to be developed. ,

medicine and this would not have It will be equipped with more time-  :

been pasible without electricity. -- saving devices. giving the time- (

Just eight years ago, the CT scanner pressured family more desirable l was an infant in medical use. Today, opportunities. Clearly, electricity, is  !

because of the technology, we are the underlying factor in all effi- l able to gather diagnostic information ciencies in the home and a major  !

heretofore impossible to obtain. We contributor to maintaining and up- l can get it much faster so that -

grading our quality of life. It has been effective therapies can be admin- said that the U.S. economy needs to istered in the early stages of a disease. "P here would we he /[we grow at least 2.5 per cent per year There's simply no way even to if w rkers in the next two decades gjgg t hare cicctricit,k' 01 are to realize, at a minimum, the imagine where the medical com-munity wou!d be without electricity had never had it? The same economic expectation of because you only miss things when answer is quite sinipic. today's workers. Adequate supplies they're gone. True, most hospitals } ye 'd b e b a c k in f h e of electricity and all other energy have backup power to operate the . sources are needed to make this necessary life-support systems. But

. eghteen hun reds. .. possible and to shape the home for think of all the doctors' offices. the needs of the future family!

laboratories. nursing homes and medical equipment that can only function efficiently if electrichy is available."

12 300RBREAL!,

)

.m '

I I

Curtis M. Long, President, .; y l4y .g ig ,

Associated Industries of Missouri g

+1

! h g' . b.

31 l

, i

,Tg 3

M. . r.

...i '

. 4. l' J.o the best of -

...: ~

l g '

my knowledge, not -

• i:* o.ie of our 1.200

• :.. .... ' members would be

able to operate with-out electricity. So many of them are

^ -

u.-

J 2 manuheturers and their processes "

1]%@ are heavily dependent on adequate suppbes of electricity. However, k Trft.f 79 ,, - ,

q... - there's more to the need for elec- a

.y,]Jg tricity than just keeping the factories g y y {; ~ 7 , , .- .: .; .

runnmg as they are today. l1 the ,

j '

f past few years. there has be< n a s5ght '

. L'f ,. ,, ,,g'b$ decline in manufacturing iabs in h,. U  ;-

K[: Missouri. To reverse tb: rend.

adequate supph,es of e . tricity and l

_ A 1~ M," j7 ( [: 4.

a .

., , . , ~

, L

'@,*r ..) . 2~ . , .. Ts J .T .*

new facilities such as tne Callaway Plant. will play a key role. Further- /

/ [ '.

l w ..2 .n .y7 ,.. y . .

more. indust: is faced with the need '

l

~ h l '

to improve productivity. To increase the per man-hour Voduction of ,

g i  !

l

[

goods and services, more sophisti-cated equipment and processes will fG }

...e/cc/ricitr is the be required. This means more auto- "A// of the systeins necc/ec/

mati n: and automation itself is to control N'nlissions into unclerl, ring factor in all _

te of a lying INE UEf'UI'IIU ITUUI "UAIU~

efficiencies in the horne he ~'s 1 o tbe ~

ancl a niajor contributor to with environmental laws. such as miter. . nse large tlnantities inaintainint! anci upgracling the Clean Air Act and the Clean of electricit r. "

" ' ' ' ^ * ' ' ^ " " Y'"'"

our cIHality aflifc. " to control emissions into the a.ir and to treat wastewater before it is dis-charged into the rivers and streams use large quantities cf electricity. It boils down to the simple fact that our society needs adequate supplies of electricity.

13

Respo sibilityFcrFin:nci:1 St:t m:nts The management of Union Electric Company is responsible for the information and representations contained in the financial statements and in other sections of this Annual Report. The financial statements have been prepared in accordance with generally accepted accounting principles consistently applied. Other information included in this report is consistent, where applicable, with the financial statements.

The Company raaintains a system of internal accounting controls designed to provide reasonable assurance as to the integrity of the financial records and the protection of assets. Qualified personnel are selected and an organization structure is maintained that provides for appropriate functional responsibility.

Written policies and procedures have been developed and are revised as necessary. The Company maintains and supports an extensive program of internal audits with appropriate management follow up.

The financial statements have been examined by Price Waterhouse & Co., independent accountants, and their report appears below.

The Board of Directors, through its Auditing Committee comprised of outside directors,is responsible for ensuring that both management and the independent accountants fulfill their respective responsibilities relative to the financial statements. Moreover, the independent accountants have full and free access to meet with the Auditing Committee, with or without management present, to discuss auditing or financial reporting matters.

1 Report Of Independent Accountants u

p{.((- ONE WEWORIAL QRivE

57. louts. Wi$SOURI 63102 faterhouse &Co, - m e=

l February 14,1981

( To the Stockholders and Board of Directors of Union Electric Company In our opinion, the accompanying consolidated balance sheet and the related consolidated ,tatements of income, preferred stock, long-term debt, retained earnings, other paid-in capital and changes in financial position present fairly the financial position of Union Electric Company and its subsidiaries at December 31,1980 and 1979, and the results of their operations and the changes in their financial position for each of the three years in the period ended December 31,1980,in conformity with generally accepted accounting principles consistently applied. Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

k W

~

14

0:nsolid:t:d Stt:m:nt Of Ine:me(Thousandsof Dollars)

Union Electric a::d Subsidiaries Year 1980 Year 1979 Year 1978 Operating Resenues l*): Electric . S 996,893 5874,719 5844.473 Gas 67,577 60.537 50.150 Steam . 11,486 10.172 8.149 Water . 1,920 1.369 1.216 Total operating revenues 1,077,876 946.797 903.98X Operating Expenses: Operations Fuel and purchased power 334,428 302.182 256.h94 Other. 185,071 165.493 143.4h2 519.499 467.675 400.376 Maintenance . 80,632 71.184 6h.012 Depreciation 78,819 76.300 73.477 Income taxes. 91,925 56.181 b0.366 Other taxes . 115,845 198.991 105.525 Total operating expenses 886,720 7h0.331 727.756 Operating Income 191,156 166.466 176.232 Other Income: Allowance for equity funds used during construction . 45.'57 31.245 15.9hD Miscellaneous, net . 3,638 879 2.h96 Total other income 48,995 32.124 18.h76 Income Hefore Interest and Other items 240,151 198.590 195.10h Interest and Other Items: Interest on debt . 131,725 106.995 90.309 Allowance for borrowed funds used during construction . (46.698) (26,848) (15.489)

Preferred dividends of subsidiaries 387 388 390 Total interest and other items 85,414 b0.535 75.210 154,737 118.055 119.898

_Ne Ineome Preferred Disidend Requirements of Company 29,695 26.948 23.040 Earnings on Common Stock S 125,042 5 91.107 5 96.b58

(*) includes license end franchise taxes of 554.068,(XX). 549.467.(MN) and 548.367,(XX) for the years 1980.1979 and 1978. respectively.

Earnings per Share of Common Stock (based on aserage shares outstanding) S2.10 51.73 52.01 Disidends Declared per )

Share of Common Stock $1.48 51.44 51.40 l Aserage Number of Common Shares Outstanding 59.675,995 52.577.432 4h.260.596 See Notes to financiid Statemca,' on pages 24. 25 2(> and 27.

i .,

Consolidat:d B:lanca Shrt (Thousandsof Dollars) l 1

1 December 31, December 31.

U:fon Electric and Subsidiaries 1980 1979 Assets Property and Plant, at original cost : Electric $2,813.585 52.727.017 Gas 66,446 63.M7 Steam 9,653 9.875 Water 7,533 7.153 Other. 19,621 18.949 2,916,838 2.826.641 Less accumulated depreciation 848,826 766.147 2,068.012 2.040.494 Construction work in progress:

Callaway nuclear plant . 1,008,909 719.523 Nuclear fuel 99,085 40.213 Settlement of uranium litigation (62.624) -

Other 88,916 63.351 Total property and plant. net 3.202,298 2.663.581 Insestments, at cost 4,263 3.976 Deferred Charges: Generating station construction ibandonment 3,557 5.336 Unamortized bond defeasance cost 4,847 5.042 Unamortized debt expense 3,226 3.035 Other. 2,339 357 Total deferred charges 13 969 13.770 Cerrent Assets: Cash 4,196 5.841 Deposits for payment of interest and other deposits 49,620 10,503 l

Accounts receivable-trade tiess allowance for doubtful accounts of l 79,224 83.648 l

51.0b0 and sh84.at respective dates)

Unbilled resenue 42,942 41,552 Other accounts and notes receivable 3,909 23.282 Materials and supplies, at aserage cost-l 109,908 b5.107 Fuel Construction and maintenance 35,486 32.039 Prepayments and other a. sets 6.289 5.699 Total current assets 331,574 287.671

$3,552.104 53.163.998 to

December 31, December 31.

Union Electne and Subsidiaries 19MI 1979 Capital and Liabilities Capitalization:

Common stock and Common stock. 55 par value, authorized retained earnings 100.(XXMXXI and 75.000.000 shares.

at respective dates: outstanding 66.125.317 and 58.796.909 shares, at respective dates (excluding 42.990 shares at par value in treasury) S 330.627 5 293.984 Other paid-in capital. principally premium on common stock Isee accompanying statement) 414.020 374.159 Retained earnings (see accompanying statement) 298.902 262.202 Total common stock and retained earnings 1.043.549 930.375 Preference stock Preference stock. 51 par value (entitled to cumulative dividends), authorized 7.500.000 shares-none outstanding Preferred stock Preferred stock not subject to mandatory redemption, including premium of 51.571 tsee accompanying statement) 281.355 251.355 Preferrec stock subject to mandatory redemption (see accompanying statement) 112.040 114.066 Long-term debt Long-term debt tsee accompanying statement) 1.479,746 1.306.hul Unamortized premium and discount on debt (517) 1.130 Total capitalization 2,916,173 2.633.756 Accumulated Deferred Tases on income 166.167 123.291 Accumulated Deferred Insestment Tas Credits 113.474 87.556 Current Liabilities: Current maturity oflong-term debt 1.010 26.(MN Accounts payable 83.459 85.502 Wages payable . 14,765 14.505 Bank loans . 41,425 36.N x)

Commercial paper 99,460 N1.300 income taxes accrued 32,199 24.073 Other taxes accrued 12,566 12.036 Interest accrued - 32.M25 28.866 Disidends declared 7.376 7.443 Other current liabilities 31.205 25.726 Total current liabilities 3?6.290 324.365 Construction Commitments (Note 9)

$3.552,104 13.165.995 See Notes to Financial Statemenn on pmes 24. 25. 26 and 22 17

Pref;rred Stock (Thousands of Dollars)

December 31, December 31.

Unkm Electric and Subsidiaries 1980 1979 Preferred Stock not subject to mandatory redemption:

Union Electric Company Preferred stock. without par Stated value of shares outstanding, value (entitled to cumulative $100 per share-dividends)- note (a) 57.44 Series-550,000 shares . S 55,0(H) 5 55.(XX) 56.40 Series-300.000 shares . 30,(WHI 30.(XXI

$4.56 Series-200,000 shares . 20,(MM) 20.000 54.50 Series-213.595 shares . 21,359 21.359 i 54.00 Series-150,000 shares . 15,(MM) 15.(XX) 53.70 Series- 40.000 shares . 4,000 4,000 53.50 Series-130,000 shares . 13,lMM) 13,000 Stated value of shares outstanding.

597.50 per share-58.00 Series of 1971-425,000 shares 41.437 41.437 Stated value of shares outstanding.

592.25 per share-58.00 Series (1969)-350,000 shares - 32.288 32.2b8 Stated value of shares outstmding.

525.00 per share-52.125 Scries-1.600.000 shares . 40,(WM) 40.000 l

Tota! Union Electric Company 272,084 272.084 ,

i Missouri Power & Light Company Preferred stock,5100 par value 4.30% Series-20.000 shares . 2,(MM) 2,000 (entitled to cumulatise 3.90 % Series-40.000 shares . 4,(MMI 4,0(X) disidends), authorized 75 (XX) shares-outstanding Preferred stock,525 par value (entitled to cumulative disidends), authorized 400.0(X) shares-none outstanding Total Missouri Power & Light Company S 6,(MMI 5 6.000 tal Authorized Union Electric Company total preferred stock- 15fXA).000 shares.  ;

ibl Authaired Mmouri Utilities Company total preferred stock -50.000 shares. (

Ic) To be retired by sinking fund.

'[

ed) The Company is reouired to retire M)JXX) shares and has an option to redeem an additional 60JX0 snares.

at $25 per thare on November 15 of each year.

See Notes to Financial Statements on pages 24. 25. 26 and 27 l t

iM

December 31, December 31.

Union Electric and Subsidiaries 1980 1979 Preferred Stock not subject to mandatory redemption (continuedh hlissouri Utilities Company 5% Series- 14.000 shares . S 1,400 5 1.400 Preferred stock 5100 par value 5% Series of June 1950 - 1.500 shares . 150 150 (entitled to cumulative dividends)-note (b) -outstanding 5% Series of September 1950-1.500 shares 150 150 1,700 1.700 Total hlissouri Utilities Company Missouri Edison Company Preferred stock, $100 par value (entitled to cumulative dividends), authorized 5.000 shares-none outstanding Total preferred stock not subject to mandatory redemption S279.784 5279.784 Preferred Stock subject to mandatory rei r 4 tion:

Union Electric Company Preferred stock, without par Stated value of shares outstanding, value (entitled to cumulative 525.00 per share-dividendst- note (a) 52.72 Series- 1.440,000 and 1,520.000 shares at respective dates, due to 1998- notes (cl and (d) S 36JMM) 5 38.000 Stated value of shares outstanding.

550.00 per share-54.60 Series-1.500.000 shares due 1985 to 2004-note (c) 75,(MMI 75.000 Total Union Electric Company 1II,(N)0 113.000 i

Missouri Utilities Company Preferred stock, 5100 par value 5.70% Series-10.400 and 10.660 (entitled to cumulative shares at respective dates, dividend A-note (b)-outstanding due to 2020-note (c) 1.040 IJX6 Total preferred stock subject to mandatory redemption S112.040 $114.066 19

Long-T;rm Debt (Thousands of Dollars)

December 31, December 31.

Union Electric and Subsidiaries 1980 1979 Union Electric Company First mortgage bonds-note (a) 3%% Series due 1982 S 30,(MM) 5 30.000 3%% Series due 1986 40.000 40.000 4%% Series due 1988 35,(MM) 35.(XX) 4%% Series due 1990 50,(MM) 50.000 44% Series due 1991 30,000 30.000 4%% Series due 1993 30,0(Mi 30.000 4h% Series due 1995 35,000 35.000 5%% Series due 1996 30,000 30.000 5%% Series due 1997 40,000 40.000 7% Series due 1998 50,(MM) 50.000 7h% Series due 1999 35,000 35,000 8%% Series due 1999 40,000 40.000 9.95% Series due 1999-note (b) . 100,000 50.000 9% Series due 2000 60,(MM) 60.(X10 7?8% Series due 2001 50,000 50.000 7%% Series due 2001 50,000 50.000 8%% Series due 2001 60,000 60.000 8%% Series due 20N 70,(M)0 70.000 10b% Series due 2005 .. 70,000 70.000 5.80% Series due 1992 to 2005-note (c) . 27,085 27.055 8%% Series due 2006 70,000 70.00()

8%% Series due 2007 60,000 60.0(X) 9.35% Series due 2008-note (b) 55,000 55.000 9.25-9.625% Series due 2000 to 2010- note (c) 60,(MM) -

Unsecured bank notes-note (di Due 1985. 75.000 75.000 Missouri environmental Series 1974, interest rates averaging improvement revenue bonds 6.21% due 1989 to 20N 16,500 16.500 Nuclear fuel lease 99.035 40.139 Total Union Electric Company $1,367,620 51,198.724 (si At December 31,19x0. substantially all of the property and plant uas mortgaged under. and subject to liens of. the respectise indentures pursuant to which the bonds were issued.

tb) To be retired by sinking fund-Union Electric Company.9.95% Series from 1966 to 1998; 9.35% Series from 1989 to 2007; Missouri Power & Light Company.10b% Series to 1993; 9h% Series from 1982 to 2fxx);

10% Series from 1985 to 2003: Missouri Utihties Company.94% Series from 19M2 to 2tXKh and Mmouri Ediwn Company.115% Series to 1989; 9h% Series to 2tXNh M' 2% Series from 1983 to 2fM)l.

(c) Ensironmental Improsement Series.

Id) Interest rate was 20.75% on December 31.19N based on 1/4*a abose the current bank prime interest rate, tnd the rate will sary based on the prime rate through 1985.

le) Notes due in equal annual installments.

If) Note due in equal monthly installments.

tgiin February 19x1. Union Electric Company so!d 5150fxN)JXo.t5%'. Series.1(k> ear. First Mortgage Bonds, with the issuar.ss of $30JWW).utK) c' these bonds so be delayed until July 19xi.

Ihn in January 19A1. Missouri 8khson Company contracted to sell 54JXW)JN A).14%*e 5enes. 5-year. First Mortgage Bonds. ith the issuance of these bonds to be delayed until February 19kl.

See Notes to Financial Statements on pages 21. 25, 26 and 27 20

December 31. December 31.

Union Electric and Subsidiaries 1980 1979 Missouri Power & l.ight Company First mortgage bonds-note (al 3!4% Series due 1984 S 7.5(M) 5 7.500 4%% Series due 1992 ... 6 (MMI 6.000

'10%% Series due 1994-note (b) 6,160 6.580 558% Serier due 1996 5.(MMI 5.000 55h% Series !ae 1997 5,(M)0 5,(X)0 8% Series due 1999 ..

5,(MMI 5.000 9h% Series due 2001-note (b) 12 (MMI 12.000 7%% Series due 2003 7,(HMI 7,000 10% Series due 2004-note (b) 10,(MMI 5.000 Total Missouri Power & Light Company 63,660 59.083 Missouri Utilities Company First mortgage bonds-note tal 5%*e Series due 1984 1,(MMI 1.000 412% Series due 1988 3.(MM) 3,000 5%% Series due 1991 3,500 3.500 834*e Series due 1996 10.IMMI 10.000 7.95"e Series due 1996 4,(MMI 4.0(X) 914% Series due 2001-note (b) 6.(MMI 6.000 Unsecured notes-note del 6*e Due 1992. 2.240 2.345 Total Missouri Utilities Company 29,740 29.845 Missouri Edison Company First mortgage bonds-note (al 1134% Series due 1990-note th) 4.100 4.400 5% Series due 1991 2 (MMI 2.0(M) 4%% Series due 1995 3,(MMI 3.000 94% Seri'es due 2001-note (b) 3,478 3.652 8%% Series due 2002-note (b) 6.0(M) 6.000 Unsecured notes-note ter 7-73 2". Due 1981 -

7 Totai Missouri Edison Company 18,578 19.059 Union Colliery Company Secured note-note (f) 9% Due 1999 148 152 1.ong. term debt $1.479,746 St.306,NO 1.

Consolid: tad St:t:m:nt Of R trin:d Errnings (Thousands of Dollarst Year 1980 Year 1979 Year 1978 ,

Union Electric and Subsidiaries 5218.865

$262,202 5247.901 Balance at Beginning of Period 154,737 118.055 119.898 Add: Net income 416,939 365.956 338.763 29,668 27.783* 23J)40 Deduct: Preferred stock dividends .

I Common stock dividends-51.48. 51.44 75.507 67.576 88,105 and 51.40 per share, respectively . 246 264 464 Write-off of capital stock expense .

118,037 103.754 90.h62 H: lance at Close of Period (Under the mortgage indenture of Union Electric Company as amended, free and unrettricted retained earnings at December 31,1980 amounted to

$298,902 5262.202 5247.901

$245.105) a

' Includes dividends declared. applicable to subsequent periods.

• • Under the mortgage indentures of the consolidated subsidiaries, free and unrestricted retained earnings of such subsidiaries at December 31.19hd amounted to 514.930lMXL Consolidated Statement Of Other Paid-In Capital tThousands of Dollarsi Year 1980 Year 1979 Year 1978 Uzion Electric and Subsidiaries 5280.187

$374,189 5328.573 B: lance at Heginning of Period Excess of sales price over par value of Add:

5.500.000,5.500J)00, and 4.000fKK) shares of common stock issued in 1960, 28,243 34.017 38.080 1979 and 1978 respectively .

Excess of sales price over par value of 1.522.384,1.014.971 and 808.379 shares of common stock issued during 1980,1979 and 1978 respectively, for dividend reinvestment and stock 8.441 7.446 9,520 purchase plan -

Excess of sales price over par value of 306.024,372.668 and 289.086 shares of common stock issued for tax reduction act stock ownership plan in 1980.1979 2,016 3.15M 2.hno and 1978. respectively .

Excess of stated value over purchase price cf 80J)00 shares of preferred stock -

redeemed during 1980. 52 -

$414,020 5374.1b9 532h.573 Balana at Close of Period See Notes to Financial Statements on pages 24, 25. 26 and 22 22

Ccusolidat:d Strt:m:nt Of Ch:ng s In Fin:nci:1 Pcsitirn(Thousandsof Dollarst Union Electric and Subsidiaries Year 1980 Year 1979 Year 1978 Source of Funds: From operations-Net income . S154,737 5118.055 5119.898 Provision for depreciation . 78,819 76,300 73.477 Provision for deferred taxes on income tnet) . 42.876 27.784 26.097 Provision for deferred investment tax credits (net) . 25,918 31.909 22.035 Allowance for all funds used during construction . (92,055) (58,093) (31.469) 210,295 195.955 210,038 Dividend reinvestment and stock purchase plans . 20,678 18,537 15,793 Issue of mortgage bonds. 115,000 55,000 55,000 1ssue of preferred stock . -

75.000 -

Issue of common stock . 55,743 61,517 58,080 1ssue of long-term unsecured notes . 75,(MK) - 75,000 Settlement of uranium litigation . 62.624 - -

Nuclear fuel lease . 58,896 40,139 -

Net change in deferred charges . I199) 1,815 9.068 Additional short term bank loans and commercial paper . 4U'h5 67.300 6.550 Total funds provided 8642,022 5515.263 5429.529 Application of Funds: Gross plant expenditures . S421,275 5394.984 5320.397 Nuclear fuel . 58.872 4,998 2.695 Allowance for all funds used during construction . (92,055) (58.093) (31,4691 Union Electric dividends on preferred stock and common stock . 117,773 103,290 90.616 Maturity of mortgage bonds . 25,894 4,974 -

Redemption of preferred stock 2,026 2.026 26 Restructuredlong-term unsecured notes . 75.(MN) - 75,000 Ne. change in working capital (excluding short-term loans and current maturity of long-term debt) - 30.964 63,360 (28,w4)

Net change in other funds . 2.273 (296) 558 Total funds applied S642.022 5515.263 5429.529 r

Changes in Components of Working Capital : Cash and deposits S 37,472 5 3.814 5 (1.767)

Receivables, net . (22.407) 31,544 22.626 Fuel . 24.W)1 15,909 9.772 Other materials and supplies . 3.447 6.151 2.347 Accounts and wages payable . 2.086 (7.989) (M.576)

Taxes accrued . (8.654) 31.172 (23.3381 Interest and dividends accrued or declared . (3.892) (3.7401 (2.137)

Other (1.889) (13.481) (1.421 S 30,964 5 63.380 5128.494)

See Notes to Financial Statements on pages 24, 25. 26 and 27 23

Notes To Financial St:t me:ts Union Electric and Subsidiaries With respect to all property additions after 1974. and Nota 1-Summary of Accounting Policies prior additions in Illinois, the reductions in taxes Th3 Company and its utility subsidiaries are subject to applicable to the liberalized depreciation methods r:gul: tion by the Missouri Public Service Commission, described above are accounted for as deferred income Illinois Commerce Commission, Iowa State Commerce taxes and amortized over the estimated usefullives of Commission and the Federal Energy Regulatory the related propeities. In addition, the Company Commission. The accounting policies of the companies normalizes the income tax effects of the above-mentioned e_r in accordance with the rate-making practices of the repair allowance, the debt component of the allowance I regulatory authorities having jurisdiction and, as such, for funds used during construction, and taxes capitalized.

conform to generally accepted accounting principles as The Company normalizes the additional investment tax rpplied to regulated public utilities. A description of the credit benefits resulting from the Tax Reduction Act of Company's significant accounting policies follows, 1975 with respect to properties in all states. The Principles of Consolidation Company is continuing to flow-through to income the 4*e The consolidated financial statements include the investment tax credit on Missouri and fowa properties recounts of the Company and its subsidiaries.all of which which are not qualified progress expenditures under the tre wholly-owned. In the process of consolidation, all Tax Reduction Act of 1975.

intercompany investments and accounts and all inter- Allowance for Funds Used During Construction company sales and profits are eliminated. The Federal Energy Regulatory Commission Uniform Property and Plant System of Accounts defines allowance for funds used The cost of additions to and betterments of units of during construction ( AFCI. which is a non-cash item. as property and plant is capitalized. Cost includes labor, the net cost for the period of construction of borrowed material, applicable taxes, pensions and certain other funds used for construction purposes and a reasonable items, plus an allowance for funds used during construc- r te on other funds when so used.

l tion. Maintenance expenditures and renewals of items not During the three years ended December 31.1950. the considered to be units of property are charged to income Company recorded AFC at various rates, compounded as incurred. When units of depreciable property are semi-annually.The net rates reflect the Company's policy retired, the original cost and removal cost, less salvage, f deferring the income tax effect applicable to the are charged to accumulated depreciation. borrowed funds portion of the AFC rate. The average Depreciation annual AFC rates were 9.75% (7.65% net) in 1960. 9.45%

For financial statenant purposes. depreciation is pr - (7.3M. net) in 1979 and 8.65% (6.55% net) in 1978.

vided over the estimated lives of the various classes of Unbilled Resenue depreciable property by applying composite rates on a The Company records on its books the estimated straight line basis. The provisions for depreciation in m unt of accrued, but unbilled, revenue and also the 1980,1979 and 1978 were equivalent to approximately ' accrued liability for the related taxes.

2.8% of the average depreciable cost.

Income Tases Note 2-Pro Forma Earn.gs on Common Stock For income tax purposes, the Company computes in December 1980. the Company sold 5,500.000 shares depreciation using the most libcralized methods allowed of common stock. Earnings on common stock on a pro by the Internal Revenue Code. Net depreciable property forma basis for the year 1980 would have been 52.02 per l

(

and plant used in this computation excludes costs share after giving effect to the application of the net l (primarily repair allowance, the allowance for funds used proceeds to the Company from the aforementioned sale during construction, and certain taxes) w hich are charged of common stock to retire short-term borrowings to property and plant for financial statement purposes outstanding at the date of the sale.

but are treated as expenses when incurred for income tax purposes.

24

Nota 3-Income Taxes Note 4-Capital Stock Total income tax expense was less than the amount During the three years ended December 31,1980.

computed by multiplying the income-before-tax by the common stock. 55 par value, was issued as follows:

statutory Federalincome tax rate. The reasons for this 5.500.0(XL 5.500.000 and 4.00MX)0 shares were issued in difference for the years in which shown are as follows 19h0,1979 and 1978, respectively. In addition of the (in thousands): 6.000.000 shares reserved for the Union Electric Company 1980 1979 1978 Dividend Reinvestment and Stock Purchase Plan.

1.522.3h4.1.014,971 and 608.379 shares were issued in Tax computed at statutory 19h0.1979 and 1978, respectively: and of the 2.500.000 rite en book income- shares reserved for the Union Electric Company Tax ~

before-tax . S113.024 5h0,221 595,788 Reduction Act Stock Ownership Plan. 306,024. 372.66h increases (Decreases) in and 2h9,056 shares were issued in 19h0.1979 and 1976, tax from: respectively.

Additional depreciation 1.901 100 (1,560)

During the same period, preferred stock, without par Allowance for equity value, was issued and redeemed as follows: Union funds used during Electric Company issued 1.500.000 shares 54.60 Series construction . (21.668) (14,570) (7.940) in 1979: Union Electric Company redeemed 60,000 investment tax credits . I1.940) 12.410 > (2,231) shares. 52.72 Series in each of the years 1980 and 1979:

Niiscellaneous, net (350) (7.002) (4,398' and, Niissouri Utilities Company redeemed 260 shares.

Total . S 90.967 556.339 579,659 5.70% Series in each of the years 1950,1979 and 1976.

Preferred Stock Eventual Income tax expense components tin thousands):

Redemption Prices Current Niinimum 1980 1979 1978 (Per Share)

Included in operatine -

Union Electric Company expenses-Taxes currently payable: 56.40 Series 5101.50 5101.50 Federal S 14.008 5412.406i 524.026 54.56 Series - 102.47 102.47 State. 4.841 3.691 4.445 54.50 Series 110.00 110.00i a i Deferred taxes 54.00 Series 105.625 105.625 Iprincipally Federal 1: $3.70 Series 104.75 104.75 Liberalized 53.50 Series . 110.00 110.00 depreciation . I2.178 13,307 10,988 58.00 Series t 1969I . 99.25 93.25 Repair allowance 6.742 2,913 6,792 58.00 Series of 1971. 1(M.50 98.50 57.44 Series , 105.00 101.00 Allowance for borrowed funds 52.72 Series tc) - 27.75ib) 25.25 used during 52.125 Series . 27.151bl 25.25 construction . 22.160 12.997 7.595 54 60 Seriesidi . 54.601 b) 50.50 Other (principally N1issouri Power & Light Company capitalized costs) 4.838 1,598 3,666 4.30% Series . 102.176 102.176 Provisions deferred 3.90% Series . 105.00 105.00 in prior years . (3.120) 13.031) (2.944) Niissouri Utilities Company Deferred investment tax 5 00% Series 110.00 110.00 credits, net . 30.278 37.112 25.798 - d'., Series of June 1950. 103.50 103.50 91.925 56 181 80.366 5.00% Series of Current provision included September 1950. 103.50 103.50 in other income . (95M) 158 (707) 5.70% Series Ie) . 103.00t bl 100.00 >

Total . S 90.967 556.339 579.659 ,,, in ,he neni of soluniary liquidaik,n. st0530.

tbl Redemption subject to cerram restrictkins regardmg refundmg operations.

ic) The Company h required to retire NUE O shares. and has an opam to redeem an additional Nuiin shares. at 525 per share on Nosember 15 of each sear.

edi The Compisny is required to redeem 75.180 shares at W per share on August 15 of each S ci .commendng in 196 see Wwuri l'tihtin Company is required to redeem 2td sharn at Sitio per share. plus as. rued dnidends. on June 1 of each year.

25

Notes To Finrcial St:t:me:ts (continued)

Union Electric and Subsidiaries Note 5-Preferred Stock Subject to Mandatory Note 8-Compensating Halances and Redemption Short-Term Horrowings During the five years from December 31,1980, the Short-term borrowings of the Company and its amounts of preferred stock to be redeemed at par or subsidiaries consist of bank loans (maturities not in stated value are: 52.026,(XX)in each year 1981 through excess of 270 days) and commercial paper 1 maturities 1984, and 55,776.000 in 1985. generally within 30-45 days). Information regarding such consolidated short-term borrowings is as follows Note 6-Debt Retirement Provisions (in thousands):

During the five years from December 31,1980 the 1980 1979 1978 amcunts of debt maturities are: 51,010,000 in 1981: Amounts outstanding

$31,903.000 in 1982: $2.203.000 in 1983: 510,703,000 in at year end-1984: and $77,7(M,000 in 1985. ( Amounts do not include $41,425 536,600 514,4(X)

Bank loans -

nuclear fuel lease payments since the timing and the Commercial amounts of such payments are not currently paper. $99,460 560,300 515,2(X) determinable-see Note 10p, Composite interest Debt retirement provisions contained in the mortgage rates at year end-bond indentures of the Company and its subsidiaries Bank loans 21.0% 15.0% 11.5 %

require, subject to certain alternatives, the rederr.ption Commercbl annually of 1% of the principal amount tas defined) of per. 19.4 % 14.0 % 10.8 %

each series of bonds. In lieu of such redemptions, except g in one instance, the Company and its subsidiaries ha5 amount outstandit.c been following the practice of utihzmg property add.itions y month end '

as permitted by the mdentures. during the year S140,885 5148,555 5101,540 Average daily short-Note 7-Retirement Plans term borrowings The retirement plans covering employees of the outstanding during Company and its subsidiaries aie financed through the ~ year-irrevocable pension trusts and group annuity contracts. Aggregate The policy is to fund pension costs accrued. Such plans amount . $90,425 593,545 342.321 were amended during 1980 and 1979 to provide increased Weighted com-benefits. Costs of the retirement plans for the years 1980- posite interest 1979 and 1978 were 511.417,000,59,490,(XX), and rate. 13.4 % 11.7 % 7.6%

59,166,000, respectively, of which approximately 20% vas charged to construction accounts. The aforementioned The above weighted composite interest rates were amounts include prior service costs which are being calculated by dividing the applicable interest expense amortized over twenty years. for the year by the average daily short-term borrowings A comparison of estimated actuarial present value of shown above.

accumulated plan benefits and plan net assets follows At December 31,1960, the Company and its subsid-(m millionsh iaries had bank lines of credit aggregating 5120,820,000 l

At December 31, which make available interim financing at the prime 1979 1978 r te of interest. In support of such lines of credit, the 1980 Company has unwritten agreements with the majority Vested . $225 5203 5169 of ts lending banks to maintain average compensating Nonvested . 3 3 3 balances equivalent to 8% of the line of credit as

$228 52 % $172 determined from the bank records. In addition, at December 31,1980, the Company had commitments from Net assets available for banks aggregating 5M5,000,0u0 (550,000.000 to expire benefits . S172 5152 5140 August 31,1981: 510.000,00() to expire September 12.

1981: 515,000,000 to emire September 30,1951: and Tne weighted average assumed rate of return used in $!0,000,000 to expire October 31,1981L For these determining the actwrial present value of accumulated commitments the Company pays annual fees u hich range plan benefits was 6% for the years 1960,1979 and 1978. from 0.25% to 0.375% on the unused portions of the commitments.

26

Note 9-Construction Commitments Note 11-Supplementary incorie Statement The Company and its subsidiaries are engaged in a Information construction program under which expenditures of approximately 52.5 billion are anticipated during the next 1980 1979 1978 five years, of which expenditures of 5509,000,000 and 5461,000,000 are estimated to be made in 1981 and 1982, (Thousands of Dollarsi respectively. hiaintenance and repairs, charged directly to:

Note 10-Nuclear Fuel Lease-Capitalized $80.63 571,184 568.012 Operating expenses On November 27,1979, the Company entered into a 4,803 4,074 4.075 Other accounts (a).

lease agreement which provides for the financing of the

$85,437 575,258 572,087 costs of up to 5100,000,000 of the Company's nuclear fuel.

Pursuant to the terms of the lease, the Company has Depreciation, depletion assigned to the lessor certain contracts for purchase of and amortization of nuclear fuel. The lessor will obtain through the issusace fixed and intangibk of commercial paper backed by letters of credit from assets, charged commercial banks, or from direct loans from commercial directly to:

banks, the necessary funds to purchase the fuel and make Operating expense. S78,819 576,300 573,477 mterest payment wh'.n due. Othe. accounts (a). 2,208 2.054 1,741 The Company is unconditionally obligated to reimburse $81,027 578,354 575.218 the lessor for all expenditures for nuclear fuel, interest and related costs. Obligations under this lease will become Taxes, other than current at such time as the nuclear fuelis engaged in payroll and income heat production at the Company's Callaway nuclear taxes,chstged plant, the first . nit of which is scheduled for completion directly to:

in early 1983. Operating expenses-In accordance with state regulatory commissions' Real estate and policies, the Company is capitalizing the cost, including personal property S 53,128 5 50,654 5 50,336 interest costs, of the leased nuclear fuel and is recording License and the related lease obligation. During the year 1980, the 54, % 8 49,467 48,367 franchise .

Company capitalized related interest costs of 59.518,000 Other . 1,389 1.137 1,110 based on an average interest rate of 14.7%.Related interest 108,585 101.258 99.813 costs capitalized during the year ended December 31,1979 5,442 3.584 2.350 Other accounts .

were immaterial.

S114,027 5104.842 5101 163 (a) A substantial portion of amounts charged to other accounts is allocated to operating expenses through clearing accounts.

(b) The amounts of payroll taxes for the years 1980.

1979 and 1978 were 57,260.000,57,733,000 and

$5,712,000, respectively.

(c) The amounts of royalties, rents, advertising, and research and development costs were not material.

This report and the financial statements contained herein are submitted for the information of the stockholders of the Company and are not intended to induce, or for use in connection with, any sale or purchase of any securities of the Company, or any of its subsidiaries.

27

Management's Discussion cnd Analysis- l Results of Operations  ;

Union Electric and Subsidiaries Consolidated earnings amounted to 5125 million in Fuel adjustment c auses contributed about 570 million 1960, an increase of SM r.illion over 1979 and 528 million to the increased revenues in 197h. Howeser. in 1979 and over 1978. Earnings per share of $2.10 in 19N) were 37c 19h0 respectively, following a Niissouri Supreme Court greater than 1979 and 9e over 1978. decision in 1979 declaring electric fuel clauses unlaw ful.

Conditius which contributed to there increases are resenues from the Missouri fuel clause were discontinued explained below. While earnings are expected to remain but were offset about evenly by a simultaneous increase reasonaHy stable during the immediately following years, in basic tariffs. At that time a 57 million fuel clause earnings per share, because of the dilutive effect of new surcharge collected earlier was refunded to Missouri shares issued. are expected to decline until substantial customers. No further material decrease in resenues rate increases are realized. has been experienced to date as a result of the loss of the Missouri fuel clause, how, ser. unless the fuel clause is reinstated anv future increases in fuel costs will hase to Electric Operating Revenues ~

be recovered through formal rate proceedings.

Growth in total kilowatt-hour sales since 1977 has been A discussion of the variations in ett -trie operating relatis ely minor, as evidenced by a 2.4% compound annual revenues, which represent ou r 90% of total operating rate of growth. despite substantial 19h0 sales to residential revenues follows: and commercial customers because of near record Variation from summer temperatures. Residential and commerci' 1 Prior Yes.r customers recorded annual growth rates of 4.6% and 3.0%. respectively. w hile industrial sales nave declined 1980 1979 1976 to a level below 1977. The unusual 19h0 weather added

, Minions of nouarsi about 533 million to resenues.

i Tariffs and fuel clauses S 70.3 526.9 5111.1 l Kilowatt hour sales 47.3 2.2 13.0 l License / franchise tases 4.6 1.1 7.3 Operating Expenses

$122.2 530.2 5131.4 The chances in operatine expenses were as follows:

Increases in each of the past three sears were the result of combinations of general rate increases for Union Fuel and Purchased Power Variation from Electric Company and each of the subsidiaries at various Prior Year times during the periods. char:ges in fuel adjustment 1980 1979 197h clauses. weather growth and economic conditions. Muions of Dollaro Significant electric rate increases were gr;:nted by the Fuel:

Missouri Public Service Commission early in 1978 Variation in generation (approximately 533 million annually) and in mid-19hD of electricity . S (6.0) 5 9 514.9i (approximately 522 million annually). In addition. Price increases 20.7 25.3 73.7 effectise May 30.19h0 the Missouri Commission Deferred fuel termination . I14.0) 14.0 -

restructured rates applicable to all classifications of Generation and fuel customers to increase rates June through October and efficiencies ( 7.5 ) t 10.h i 2.4 decrease rates November through May. Approximately Purchased and interchange i 520 million was added to 1960 resenaes as a result of that power 39.0 15.9 i1.3i restructuring.

l S32.2 545.3 569.9 Purchased and interchange power in 1979 and 1930 l reflects lower interchange net sales transactions w nh I

other power systems.

The Company has been a net seller of interchange energy since 1975 anJ espects to continue to esport such l power in the foieseeable future. The market for energy l sales to neightwing utilities was somewhat unfasorable during the past two years but this condition is not expected to continue.

I I 2n

i Operating E.spenses (continuedi Other Items Other changes were as follows:

Following the Missouri Supreme Court decision in 1979 declaring fuel adjustment clauses unlaw ful in " ""I '"". I *

• Pnor lear Missouri, the Corr;,any discontinued deferring such fuel 1980 1979 1978 costs collectible under the clause.

eMillions of Dollaro Other Operations Variation from Interest on debt S24.7 516.7 56.7 Prior Year Preferred dividends . 2.7 3.9 2.7 1980 1979 1978 Allowance for funds used during construction ( AFC) 34.0 26.6 12.4 iMillions of Dollarsi Miscellaneous other income.

Normal increases due to 2.8 12.0) 1.5 net .

growth. inflation and wage increases . S12.7 58.8 57.0 Settlement of a lawsui; The increases in interest and preferred disidends were against Westinghouse due o the issuance of securities o finance heconstruction Electrie Corporation program and higher interest and preferred dividend rates based on generator failures at on certain of such securities. AFC increased due to an the Company's Labadie Plant increased amount of Construction Work in Progress in 1971 and 1972 - 3.8 (3.8) and to increased AFC rates.

increases due primarily to 6.9 9.4 5.1 Interest on debt of the Company and its subsidiaries higher cost of purchased gas will increase substantially in 1981. reflecting a significant

$19.6 522.0 58.3 portion of the 523 million annualinterest requirement n t e recent mi on sale of Union Electric Company M:intenance er es Urst m rtgage bonds (see note (g) under The variations in maintenance reflected normal e ng erm e i st tement n pages 20 and 21n.

increases principally due to higher costs of repair parts The amount of AFC will contmue to increase and wage increases. .

sigmficantly and constitute a substantial portion of earnings. until such time as Unit 1 of the Callaway nuclear Depreciation ntgoes nt commercial operation and is included in The variations in depreciation resulted from increases '"*e base and its costs reflected m electric rates. This in depreciable properts. No chances were made in umt is presently scheduled for 1983.

depreciation rates during the perihls.

Income Tases income tases fluctuated in response to pretas income and were further reduced in 1979 w hen the federalincome tax rate was reduced from 48". - 46% For additional details see the Notes to Financial S: 'ements.

Other Tases These increases generally refleet h.gher real .: state taxes due to property dditions. and increased gross receipts tases on greater resenues.

29

Management's Discussion and Acalysis-Liquidity and Capital Resources Union Elecede and Subsidiaries Consolidated capital expenditures for the construction The Company plans to continue to utilize short-term program totalled $1.6 billion during the five years ended debt as interim support between long-term financing.

December 31,1980, including 5421 million and $395 Consolidated average daily short-term borrowings out-million in 1980 and 1979, respectively. of which approx- standing during 1980 aggregated $90,425.000 with a imately 30% was generated internally. Such expenditures weighted composite interest rate of 13.4% At December tre estimated to aggregate 52.5 billion over the next five 31,1980, the Company and its subsidiaries had bank lines y ars,1981 through 1985, including 5509 million in 1981 of credit and credit commitments from banks aggregating cnd 5461 million in 1982.The estimated cash requirements $205,820,000, not including the revolving credit agree-for this construction program, excluding amounts for ment mentioned above. (See Note 8 under Notes to ellowance for funds used during construction and nuclear Financial Statements). The Company is authorized by the fuel which is being leased, are 5382 million for 1981 and Federal Energy Regulatory Commission to incur up to

$298 million for 1982. The Company presently anticipates 5300 million of short-term unsecured i- Sbtedness.

that approximately 10% of such cash requirements in The Company has entered mto a nuclear fuellease cyh of the years 1981 and 1982 will be obtained from providing for the financing of up to $200 million of internally ge aerated funds, assuming reasonable rate relief nuclear fuel.

in 1981. In 1983 and thereafter, the internal generation In hnuary,1981, Standard and Poor's Corporation of cash is expected to improve dramatically when lowered its ratings on the Company's first mortgage Callaway Unit No. I is completed at a cost of approx- bonds and collateralized pollution control revenue bonds imately $1.6 bilhon and is include <' in rate base. to BBB+ from A , preferred stock to BBB- from BBB in addition to the funds required for construction and commercial paper to A3 from A2. Moody's Investors during the 1981-1985 period,5137.4 millim will be required Service also lowered its ratings on the Company's first to retire long-term debt maturing dut; # the period and mortgage bonds, secured indebtedness and preferred I

for sirking fund payments on first mortgage bonds and stock to Baa from A. commercial paper to P3 from P2, preferred stock. (See Notes 5 and 6 under Notes t and continued its rating on the Company's unsecured Financial Statements.) indebtedness at Baa.

At December 31,1980 there was more than 540 million Such lowered ratings will increase the cost of any such of unused proceeds on deposit with a Trustee under a 1980 securities issued, and may impair the Company's ability 560 million Environmental Improvement Bond issue, to issue its securities, and may restrict its access to the which will be utilized to finance new pollution control commercial paper market.

ficilities. The mortgage indenture of the Company requires a The Company expects to enter into a four-year minimum level of earnings for the issuance of additional r:volving credit agreement with certain commercial banks bond;. Such requirement may restrict the issuance of c rly in 1981 which would permit the Company to borrow additional mortgr r,e bonds in 1981 and beyond, unless up to $100 million at any one time. substantial rate relief is received in 1981.

l In February,1981, the Company sold $150 million of For data relative to Supplementary Information on l

15% per cent ten-year maturity first mortgage bonds. Inflation and Changing Prices see pages 32 and 33.

The types, amounts and timing of future financings will dipend upon markct conditions, regulatory actions, rate 1;vels, and other factors. The Company's objective is to maintain, approximately, the consolidsted capitalization r:tios, as presently established (see Capitalization Ratios under Financial Position on page 35).

30

Selected Fin:nci:1 lirm:ti:n Union Electric and Subsidiaries Year Ended December 31, 1980 1979 1978 1977 1976 (Thousands of dollars except share and per share amounts and ratios)

$1,077,876 5946,797 5903,988 5765,102 5682,456 Operating revenues .

886,720 780,331 727,756 605,963 518,342 Operating expenses .

191,156 166,466 176,232 159,139 1M,114 Operating income .

Allowance for funds used during construction (All it nds prior to January 1,1977 and equity funds after December 31,1976) . 45,357 31,245 15,980 8,301 12.379 3,638 879 2,896 1,389 (2.554)

Other income-miscellaneous .

132,112 107,383 90,699 84,015 78.529 Interest on debt and other items .

Allowance for borrowed funds used I during construction after

. December 31,1976. 46,698 26,848 15,489 10,721 -

154,737 118,055 119,898 95,535 95,410 Net income .

Preferred dividend requirements of 29,695 26,948 23,040 20,367 19,M0 Company .

125,042 91,107 96,858 75,168 75,770 Earnings on common stock .

Earnings per share of common stock (basea on average shares outstanding) . S2.10 51.73 $2.01 51.67 $1.86 Cash dividends declared per share of common stock . $1.48 51.44 $1.40 $1.36 51.34 Average number of common shares ,

outstanding . 59,675,995 52,577,432 48,260,596 45,110,245 40,795,152 Return on average common stock 13.11% 10.71 % 12.61% 10.68 % 12.19 %

equity .

Ratio of earnings to fixed charges (a) . 2.85 2.61 3.18 2.81 2.79 S3,552,104 52,168,998 52,800,209 52,521,181 52,316,039 Total assets .

1,479,229 1,307,990 1,238,860 1,189,080 1,118,418 long-term debt obligations .

112,040 114,066 41,092 41,118 41,144 Redeemable preferred stock .

(a) Earnings used in computing the ratio of earnings to fixed charges consist of net income plus fixed charges

, interest on debt, preferred dividends of subsidiaries and an appropriate amount of rentals charged to operating expenses) and income taxes.

i Nuie: See pages 28 and 29for Management's Discussion and Analysis of the Results of Operations covering the three years ended December 31.1980.

31 .

l j

S:pple:nrtry Idorm: tion on Infi: tion cnd Chrgi:g Prie:s (unaudited)

Union Electric and Subsidiaries Accumulated Depreciation Estimates of the effects of inflation and changing prices The accumulated provision for depreciation for both on the operations of the Company for the year ending constant dollar and current cost was determined by December 31.1980, are presented in accordance with the applying to the adjusted amounts of each major class of requirements of Financial Accounting Standards Board plant, the same percentage relationship that existed (FASB) Statement No. 33. Tinancial Reporting and between gross plant and accumulated provision for Changing Prices.' Statement No. 33 requires that historical depreciation on an historical basis.

costs be adjusted to reflect the effects that general iriflation (constant dollar) and changes in specific prices Depreciation Espense g

Depreciation expense for the year 19N) applicable to (current costi have had on the Company's operations.

constant dollar and current cost property was 517Al21JKX)

The adjusted data is not intended as a substitute for and 5197,4h6J)00, respectivel) . 'I he actual 19N) earnings reported on an historical cost basis, but rather depreciation expense was 578,bl9 JtX).

to give some perspectise as to the approximate effects of The adjusted amounts were determined by applying to changesin the purchasing power of the dollar. the indexed property and plant values the same straight-Property, Plant and Equipment line book rates used for historical purposes.

The estimated value in average 1980 dollars of property, Reduction of Property, Plant and Equipment to plant and equipment, including construction work in Net Recoserable Cost progress, was determined by applying the Consumer Price The regulatory process limits the Company to the Index for All Urban Consumers to the histo ical cost of recovery of the historical cost of property and plant plant. The current cost estimates were measured by through depreciation. Therefore, any excess of property applying the Handy-Whitman Index of Public Utility and plant in constant dollars or current cost must be Construction Cost to each major class of plant. Current reduced to the net recoverable cost, which is historical cost approximates the cost of currently replacing existing cost. The amount of this excess occurring in 19N)is plant. The adjusted plant data ur. der either tN constant reported on the Consolidated Statement of income dollar or current coct methods does not indicate the Adjusted for Changing Prices.

Company's future capital requirements because actual Gain from Decline of Purchasing Power of Net replacement of existing plant will occur over many years and will not identically replace existing plant. Amounts Owed The Company, by hasing assets such as receivables.

At December 31.1980, the constant doilar and current inventory and deferred charges.suffersalossof purchasing cost of property, plant and equipment net of accumulated power during periods of inflation because after cons ersion, depreciation were 56.061.706J100 and $7.134.876JD). the ( ash received for these items will purchase less.

respectively, while historical or net recoverable est was Conversely, the Company has significant amoums of long-53.202.29MJMX).The cunent cost and constant dollar term debt tand some ref undable preferred stocki values differ because specific prices of plant have outstanding w hich will be paid back with " cheaper" dollars.

increased at a rate different from that of generalinflation.

Consolidated Statement of Income Adjusted for Changing Prices Constant Dollar Current Cost For the Year Ended December 31.1980 iThousands of aserage 1950 dollars) 5 125.042 5 125.042 Earnings on common stock, as reported 194.302) t i18.667)

Additional depreciation expense .

Earnings on common stock, as adjusted texcluding reduction to 30.740* 6.375 net recoverable cost). (259.958) i121.7901 Reduction to net recoverable cost . - tll3.N)3)

Relative price changes" ,

Gain from decline in purchasing 194.661 194.661 power of net amounts owed 5 (34.5571 5 134.557)

Net erosion of common shareholders equity

• Earnings on common stock on a constant dollar basis would have been a loss of $229.21 reduction to net recoverable cost of $259.958JXXL

• • Represents the excess of general price changes 15779.661JWM)) in 1980 over the in of property and plant (5665.85MJNMh.

.U

For the year 1980 the Company experienced a net " gain" deduction of inflation adjusted depreciation expense for of $194,661.000 from having m excess of monetary income taxes. the Company's 19N) effective income tax liabilities over monetary assets. rate was 5h*6 fo, constant dollar and 70S. under current e st. each of which is greater than the Federal statutory General rate of 46*e. Failure of regulatory and taxing authorities As allowed by Statement No.33.other than depreciation to recogni e in allowable depreciation the current cost of expense, none of the other income statement items were plant. has serious implications. It se,erely hmits the adjusted.

amount of funds that are generated internally for use For rate-making purposes, the amount of depreciation in rep lacing or modernizing aging and obsolete assets.

expense included in the Company's allowed revenues is based on historical or original cost. The Company's Rates authorized by regulatory agencies must be inability to reflect the effects of inflation and changing sufficient to permit the replacing of plant and equipment prices resulted in 1950 reported earnings of 5:25.042 (XX) when necessary as well as preserve the purchasing power or 52.10 per share rather than the more realistic earnings of common equity capital. As shown on the Five Year of $30.740.000 or 520 per share on a constant dollar Comparison of Selected Supplementary Financial Data, basis, or 56.375.000 or iIC per share on a current cost to have retained the same purchasing power as tbay had basis reported on the Five Year Comparison of in 1976. the Company's common shareholders should have Selected Supplementary Financial Data. The total effect received 1960 common dividends of $1.94 per share and the on common shareholders' equity. in 1960. from changing realized returns on common equity should have been prices, amounted to a loss of $34.557.000 or 5hc per share. sufficient to permit the common stock to sell at about Also, because Federal income tax policy prohibits the $23.00 per s%re or about twice the year-end price.

Fise Year Comparison of Selected Year Ended December 31.

Supplementary Financial Data Adjusted for Effects of Changing Prices 1980 1979 1; 76 1977 1976 tThousands except per share amounts:

Operating res enues:

As reported 51.077.876 5 946.797 5 903.9hh 5 765.102 5682.456 Adjusted for general inflation . 1.077.876 1.075.(XX) 1.142.000 1.040.(XX) 95S 000 Earnings (loss) on common stock (escluding reduction to net recoserable cost):

As worted . 5125.042 591.107 Adjusted for general inflation . 30.740 16.733 Current cost basis . 6.375 (14.6791 Earnings (loss) per share of common stock (escluding reduction to net recoserable cost):

As reported . 52.10 51.71 Adjusted for general inflation . .52 .32 Current cost basis .11 (.28)

Shareholders equity (net assets), at year end:

Historical cost . 51.324.904 51.211.730 Adjusted for general inflation . 1.265.426 1.300.805 Excess of general price changes oser increase in the specific lesel of prices $113.803 5186.981 Gain from decline in purchasing power of net amounts owea ,

5194.661 5208.057 Ca.,h disidends acciared per common share:

Act ual . 51.4X 51.44 51.40 $1.36 51.34 Adjusted for general inflation 1.4N 1.63 1.77 1.85 1.94 31arket prict per share at year end:

Actual 51078 512 513in $15 51 %

20ia '-

sdjusted for general inflation . 10's 13 % 1678 a As erage consumer price indes . 246.8 217.4 195.4 IMI.5 170.5 Note: Adjusted amounts are in aserage 1980 dollars.

33

Supplem:ntary Selected Qrrt:rly Int:rm ti:n Union Electric and Subsidiaries Earnings Per Average Earnings Share of on Common Operating Operating Net Common Stock Revenues Income Income Stock Outstanding (Thousands of Dollars) (Dollars)

Quarter Ended:

March 31,1980. $249,892 $37,758 S27,825 $20,394 $0.35 March 31,1979. 240,256 41,950 29,581 23,821 0.46 June 30,1980. 244,501 46,753 37,338 29,908 0.50 June 30,1979. 218,142 37,470 24,383 18,137 0.35 Sepiember 30,1980 . 353,434 78,447 69,300 61,869 1.04 September 30,1979. 261,903 49,993 38,760 31.275 0.60 December 31,1980 . 230,049 28,198 20,274 12,871 0.21 December 31,1979. 226,496 37,053 25,331 17,874 0.33 Quarterly Common Stock Data m Union Eletric Company 1980 Price Range (2) 1980 1979 Price Ra:qt2) 1979 liigh Low Dividends (3' Quarter Ended:

High Low Dividends

$12H $ 9% 36c March 31 - 514 % $13% 36c 12 % 10 36 June 30 14 131/8 36 12 % 11 % 38 September 30 14u 13 % 36 12 IDH 38 Decemb:r 31. 13 % 11 36 (1) At December 31,1980, Union Electric Company coramon stock shareholders totalled 168.582.

(2) Based on transactions recorded on the New York a' tock Exchange.

(3) Restriction on the payment of common stock dividends at December 31,1980: Consolxiated Retained Earnings amounted to 5298,902,000 as of December 31,1980; however, under the mortgage indenture of Union Electric Company, as amended. 553,797,000 of such retained earnings was restricted against payment of common dividends-except those payable in cornmon stock.

Construction Forectst(Thousandsof Dollars)

Union Electric and Subsidiaries 19ol 1982 1983 1984 1985 Construction Expenditures:

Callaway nuclear plant . 5309,400 $289,600 5274.300 5332,500 5428,500 All other facilities . 199,200 171,200 164,600 127,800 158.W)0 Total 5508,600 5460,800 5438,900 5460.300 5567,400 i

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Finrci:1 Positi:n(Thousands of Dollars)

Unica Electric and Subsidiaries December 31, 1980 1979 1978 1977 1976 Assets Property, net of accumulated depreciation S3,202,298 52,863.581 52,541.074 52,291,329 52.121.482 Receivables, net . 126.075 143,482 116,938 94,312 84,190 Fuel supplies 109.908 85,107 69,198 59,426 43.6';9 Other assets . 113.823 71,828 72.999 76.114 66.668 Total Assets $3,552,104 53,168,998 52.800.209 52.521,181 52,316,039 Capital and Liabilities Capitalization:

Common stock and retained earnings-Common stoc k . S 330,627 5 293.984 5 293,546 5 234,059 5 205,172 Other paid-in capital . 414.020 374.189 328,573 280.167 222,038 Retained earnings 298,902 262.202 247.901 118.565 207.190 Common equity 1.N3,549 930.375 836,020 733.I11 634,400 Preferred stock not subject to mandatory reden ption . 281,355 281,355 281.355 281.355 241.355 Preferred stock subject to mandatory redemption 112.040 114.066 41,092 41,118 41,144 Long-term debt 1,479,229 1,307,990 1,238 h60 1,159.080 1,118.415 Total capita;ization 2,916,171 2.633,786 2.397.327 2.244.6M 2.035.317 Accumulated deferred taxes on income . 166,167 123.291 95.507 69.410 39,724 Accumulated deferred investment tax credits 113,474 87,556 55,M7 33.612 9.M7 Accounts and wages payable . 98,224 100,310 92,321 57,745 60,486 Short term debt including current maturities 141,895 122,939 34,692 23,155 67,162 Other liabilities . 116,171 101.146 124.715 92,595 103,701 Total Capitaland tlabilities $3,552,104 53,168.998 52,800.209 52 521,181 52,316.039 Common Stock Data Number of shares outstanding 66,125,317 58,796,909 51,909.270 46,811.805 41.034.349 Book valre per share . $15.78 515.82 516.11 515.66 515.46 Capitalization Ratios Common equity . 35.8 % 35.3% 34.9 % 32.7% 31.2 %

Preferred stock not subject to mandatory redemption 9.7 10.7 11.7 12.5 11.9 Preferred stock subject to mandatory redemption 3.8 4.3 1.7 1.8 2.0 Long-term debt . 50.7 49.7 51.7 53.0 54.9 Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

35

Operc. ting St:tistics 1 l

Dnion Electric and Subsidiaries 1980 1979 1978 1977 1976 1970 Electric Operating Resenues ((XX)l:

Residential $402,160 5333.251 5331.128 52M3.124 5248,784 5121.861 Commercial . 306,486 265.278 253.279 219.806 195.568 89.403 Industrial 233,854 221.617 209.440 169,834 154.539 72.(X k)

Other electric utilities . 35,619 34,185 31,565 24.(M0 21,432 12,479 Miscellaneous 18,774 20.388 19.061 16.232 14.677 6.944 Total $996,893 5874.719 5844.473 5713,036 5635 (XX) 5302.687 .

Kilowatt flour Sales ((XX).(XXb:

Residential _ 8,446 7,546 7.670 7.389 6.625 5.014 Commercial 6,913 6,463 6.332 6.331 5,823 4.785 Indust rial . 7.616 7,858 7,738 7,656 7,221 6.137 Othet electric utilities 1,435 1.341 1,317 1,263 1,171 1.242 Miscellaneous . 385 481 460 442 519 356 Total 24,795 23.689 23.517 23,081 21.359 17.534 Electric Customers tend of yeart:

Residential 862,406 853.908 845.074 832.251 821.5M 723.099 Commercial 106,428 101,355 99.751 99.105 95..!48 77,349 Industrial 5.328 5.334 5.348 5.225 5.459 4.890 Electrie utilities 24 24 24 24 24 20 Other 2,950 2.917 2.753 2,312 1.472 1.062 Total 977,136 963.538 952,950 938,917 923.767 806.420 Residential Customer Data i Aseragel:

Kilowatt hours used 9,848 8.893 9,167 8.956 8.114 6.971 Annual electric bill . S468.92 5392.74 5395.74 5343.16 5304.71 5169.41 Resenue/ kilowatt hour- 4.76c 4.42c 4.32c 3.83c 3.76c 2.43c System Gross Instantaneous Peak Demand (Kilowatts) . 6,404,(MM) 5,846FK) 5,813.(XX) 5.837,(XX) 5.582.000 4.362.(XX)

System Capability at Time of Peak Including Net of Firm Purchase and Sale of Capacity (Kilowatts) 7,471,(MN) 7,739.(XX) 6.873.fXX) 6.891.0(X) 6,913.(XX) 5.078.(XX)

Generating Capability at Time of Peak IKilowatts) 6,824,(MM) 6,947,(XX) 6.718.(XX) 6M)7,(XX) 6,439.(XX) 4,223.(XX)

System Net integrated flour  ;

Peak Demand (Kilowatts) . 6,107,tMM) 5#)9.(XX) 5.528.fXX) 5.525.(XX) 5.284.(XX) 4.191.(XX)

Load Factor (Net integrated Houri 50,1 % 52.4 % 52.7 % 51.8 % 50.2 % 51.3 % .

l l Coal Hurned iTons) 11,730,(MM) 12.037.(XX) I I .866.(XX) I I,915.(X X) I I,069.0(X) 6.624.(XX) ,

I Price per Ton of Coal S26.85 526.0! 524.15 517.86 515.(M 55M) ,

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