ML20071J518

Annual Financial Rept 1981

ML20071J518
Person / Time
Site:	Callaway
Issue date:	02/22/1982
From:	UNION ELECTRIC CO.
To:
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ML20071J497	List: ML20071J495 ML20071J518
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NUDOCS 8204270283
Download: ML20071J518 (38)

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New Tax Benefits Our Dhidend Reimestment and On Heinvested Dividends Stock Purchase Plan, which is entirely

'Ihe recently enacted federal mluntasy, permits the purchase of Economic Recmtry Tax Act of 1981 newly issued shares of Union Electric pnnides special treatment fbr share, common stock through optional cash 1.olders participating in dhidend payments ranging fn>m 510 to $5,000 reimestment programs of qualified monthly. 'Ihe Plan also permits the automatic reimestment of cash utilities. 'Ihe new tax law permits indisidual shareholders to elect to dhidends on the Company's common exclude fn>m taxable income up to stock in newly issued shares of such an aggregate of 5750 annually stock at prevailing market prices. All

( $1,500 in the case of joint returns) purcha3cs under the Plan are made of reimrsted disidends paid by without payment of any commission qualified public utilities during the or semce charge.

)rars 1982 through 1985.We Information regarding the expect our Dhidend Reimtstment Dhidend Reimestment and Stock and Stock Purchase Plan to qualify Purchase Plan may be obtained fbr this special tax treatment.

by writing:

Union Electric Company Stockholder Senices-G>de 1035 lbst Office ik)x 119 St. Inuis, AlO 63166.

Service Area Annual Meeting 1:nion Electric and certain 1he Annual Alceting of Stockholders will lowe -

subsidiaries, Alisv>uri Iburr &

comtne at 10 a.m. Tbesday, April 27,1982 Light Company, Alissouri at 'Ihe Chase.1 ark Plaza flotel, Edison Gimpany and Alissouri 212 N. Kingshigim ay, St. Inuis,310.

if Utilities Company, are primarily engaged in supplying electric 3

senice fbr the strategic center m

of America - a 24,0(X) square

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mile area in Alissouri, Illinois j and lowu. 'the Company is a i

member of one of the nation's largest powerpooling netwurks.

M lhe ability to interchange bulk pourr panides emergency g'

resent power and enables each utility sptem to build new plant capacity in the most etlicient and economical O s-.

=

manner.

Cover: Coal operations at the Company's 2.4 million kihmutt labadie Plant.

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j HIGHLIGHTO l

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4 1

Year Ended Annual Cliange Deceml>cr 31,1981 Current Year 10-Year Avemge

! Earnings per Average Cotumon Share.

$ 1.90

- 9.5 %

3. I %

1)ividends per Cominon Share.

$ 1.52 2.7 1.8 Conunon Sliares ()utstanding ( Average).

67,179,275 12.6 8.8 Average Cotumon Stock Equity.

$ 1,054,019,000 10.5 9.7

'li>tal Kilowatt llour Sales.

24,279,000,000

- 2.1 2.8 Sptem Capability (Kilowatts).

7,444,000 3.1 1

Price per 'Ibn of Coal.

$ 29.15 8.6 16.9 Coal Iturned ('Ibns).

I1,316,000

-3.5 5.2 l

l Interest on 1)cht.

$ 180,312,000 36.9 15.7

'Ibtal Indchtedness.

$ 1,872,180,000 15.5 9.1 I

1 l

Contents Generation Fuel Mix 2 i etter to Nockholders 5 cosi E Hydro

)

1:ncrgv in our Time E Nuclear i

6 'lln N.ir 1981 1s l'in.inci.il Natenients 28 Man.igement's I)iscussion/An.ilpis 30 l'iiuncial Infornution/lbsition 32 Nipplement.irp Natistical 1)ata Present 36 Officers and I)irectors I

1 4

Mid '80s l

I I

TO OUR CTOCKHOLDER2a

'"o year, no time, is without challenges and problems. And, while 1981 had its share of both, it was a year that provided a realistic basis a

fbr increased optimism about the Company's future.

Ofimmediate interest is the litet that our common stock carnings were S1.90 per share, which was a decline of 20 cents from the S2.10 we recorded in 1980.

The lower carnings reflect a cooler than normal summer in 1981 (contrasted with the extremely hot summer weather of 1980) and higher operating costs, which were only partly offset by rate increases authorized, ihr the most part, in the last half of the year.

"Ibtal kilowatt-hour sales Ihr the year were down 2 percent from 1980, primarily because of the weather-induced lower utilization of air conditioning equipment in 1981. The effect ofweather is particularly noticeable in our residential sales, which declined 8 percent from the prior year. Commercial sales increased IM percent while industrial sales were up 2 percent.

"During the year regu/alory

" "Y ' " Y' ' 9 E"'*'"

""' "" '""U Y"U authorities ap]nnt'ed rule rate increases which will add an aggregate of $125 incivases tubich tud. / add an million to the Company's annual revenues. Pending are aggivgale of S/25 nii///on /o '

rate cases totalling $119 million annually, including the Coni /xnifs annual the request we filed in August for an increase of $128 ivvenues.

million in Missouri electric rates. Applicable law requires that the Missouri Public Service Commission render a decision on that request by mid-July 1982.

As detailed in the body of this report, a portion of the dividends paid by the Company during 1981 on both common and preferred stock was considered a return of capital under the Internal Revenue Code and, as such, is not taxable as dividend income.

The Company currently estimates that approxi-mately half the dividends paid on common stock in 1982 will likewise be considered a return of capital and therefbre not taxable as dividend income. Preferred dividends in 1982, however, are expected to be fully taxable.

Of considerable significance was the Company's 2

ann (>uncenient in ()ctober that it was cancelling the second unit of the (:allawar Plant. which had been scheduled to go into operation in 1990. That decision t

was based on our conclusion that the mounting problems and cost of raising capital funds and the ever-deepening regulatorv morass brought us to the point where we could not justift exposing our stock-holders to the increased financial risks associated with the construction of that nuclear unit. It is cstimated that cancellation and other charges applicable to the cancelled unit will amount to approximatelv ro million aller taxes. The (:ompant will seek to recover such costs in its electric rates.

Weconomically-atIractive methad e continue to believe that nuclear-powered generation is a necessarv, safe, and electricity. and we look Ibrward to operation of the first I,150.000 kilowatt unit of the (:allaway Plant. That unit, which at vear-end was 80 percent completed, is scheduled to begin operating in early 1981 instead of API 5! !9b-d5 P IC V50lI5!

I P ANUCd-

< /w/n / />oux/w ri n i//iam / < orne/ms l'nion lilectric has long enjoyed certain natural advantages, including:

.our location at the population center of the countrv. with its hub of comniunication and transportation facilitics to markets in all

. ahnticlatI//yalv/ilableptel directions:

S(>llrceN - /I>T,)'e(I1N (>llr a customer mix which is divided almost elec/ricily has been 99percen/

equally between industrial. commercial and c(>al and b)rin> genen//ed residential;

( It' hen Ca//(IIIYI)'g(>eS in/(>

a manuliteturing diversitt tilat is probablv j

(>/>cnl//( All // It'/// />n>I'/(le unmatched anywhere. making lbr economic (th(>n/./U /lcrfen/ (>/'(n/r stability in the arca; and, genen//i(>n ). '

abundantiv-available fuel sources - for years j

our electricity has been 99 percent coal and hydro generated ( when (:allawar goes into operation it will provide about 20 percent of our generation ).

)

\\\\ hile these advantages provide a firm basis for l

belict in the future. the look ahead was enhanced l

l

appreciably by the improved realism apparent in 1981 on both the federal and state governmental levels.

Obviously, sound economic policy is fundamental to the well-being of the nation, and the federal adminis-tration is attacking the problem with reason and resolve not seen in years. In Missouri, recent decisions of the Public Service Commission evidence a more realistic understanding of the issues.

"... ours /s the inos/ capital-

'"ndoubtedly the most tangible improvement intensive busine<s...Ilomever; that 1981 provides to the Company's assessment ofits future is the new dimension of our con-following con pletion of the Calkumy Phnit in 1984, our struction budget. It is, of course, well known that ours

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""""'" h""I"'"";""d """"h ex/Jenditines[or construction requirements will remain high during 1982 and 1983 will be substantially less."

Ilowever, following completion of the Callaway Plant in 1984, our expenditures for construction will be substantially less. Moreover, in 1984 we will have an etlicient nuclear power plant in operation; its fueling secured through this century.

Thus do recent developments warrant the confidence with which the Union Electric team-management and employees - views the future.

Additionally and importantly, our team has the expertise and dedication necessary to the task.

A' CharlesJ. Dougherty Clxtirman and ChiefExecutive Officer R

William E. Cornelius hesident February 22,1982 St. I ouis, Missouri

.i

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I

AMERICAN RESOURCE 3 TO MEET OUR ENERGY NEEDO imuuuummmmmunuummummi It is regrettable that although the nuclear art was Energy In Our Time r mnded in diis connity. odwr nations hast rar surpaswd us in its dntlopnwnt, Stated simply, the world knows Society progresses with energy; without it, cisili-N'"I ""CI""' ILici is an important and necessary energy zation would regress.

smme. we m tlus country sed to deny dw mahty "Ihe limdamental truth of that statement has taken of diat fact, h can onMw hannfu! for aH of us on increased importance in recent times as unthinking, shortsighted, or misdirected indisiduals and groups seek

,nw meord is clear that gmtrnmental poh,cies to curtail or prohibit the utilization of a substantial mvr the last few decades hast impeded the growth and n casure of the basic energy s>urces now known to man.

dmiopment of domestic energy resources until today

'llu>se basic enciyy sources are coal, oil, natural gas, we am dependent on famign energy sources in a stry and uranium.

large measure. S,urely, the imprudence of that course "the limited antilability of two of such flicis - oil should be apparent to e tryone, li> fidlow the same and natural gas - has occasioned some concern on the path in dw case of nuclear enerr/, to stific the de riop-nwnt o at mumme, would be to reject tlw lewons part of those w ho fear an " energy crisis." Unfi>rtunately, the shortage in the domestic sup' ply of those energy of history.

sources was principally the creation and result of Realistically, we have not entered into a period of gmtrnmental policies.

resource exhaustion and shortage that is different from 1cdcral tax laws and emironmental regulations past history. 'the energy concern tixlay is basically the have deterred or pn>hibited the darlopment ofdomestic domestic shortage m the supply of oil and natural pts, oil resources. Witness, for instance, the curtailment of and our increased dependence on fbreign smrces fi>r depletion allowances that has discouraged investment, petroleum. It is very encouraging that the federal and the opposition to operation of off shore wells and government is now taking concrete steps to deal with that situation.

the Alaskan North Slope resources.

Sncral decades ago the federal government lilectricity, of course, is an energy converted from a established a ceiling price on natural gas. Ily pegging basic s>urce. In finct, electricity has been the instrument the prict at an artificially low level, that single regulation by which basic energy res>urces have been utilued to had the innitable two Ib!d cifect of( I) encouraging an attain our present high standard ofliving. lilectricity increased demand ( 2) while discouraging supply, hv tmlay is a necessity of life. Moreover, it is limdamental making such exploration, prospecting and risk taking to our security, our health, our enjoyment. And if we are

~

economically unattractive.

to have adectuate electric energy in the future, we must Coal has ahvays been our most abundantiv available continue to darlop all of our energy res>urces.

basic fiici. Ilowner, by the adoption of restrictions and White, as indicated, we are cheered by the action by the imposition of detailed and costly regulations, the of the feder:d administrati',a, we continue to be con-government has snrrelv curtailed the mining of coal.

cerned about the ability of the fnv to curb the many.

And unrealistic envinm' mental regulations have made it

'lhis ability goes to the not of the long and costly delap illegd or prohibitivelv costiv to burn much of the coal in all phases of business. Sadly, the informed majority is that could be mined.'

ollen thus ignored while the sociferous and unintbrmed l

Itranium as a basic energy source is relatively new fitw impede progress.

in man's knowledge. Ilut it is no longer novel or untested.

'ihe technical and scientific accomplishments in in litet, the generating capability of nucicar plants in the the I!nited States are tremendous. If we are to reap the I'nited States today exceeds the total electric generating full benefit of such adumcements, however, knowledge capacity in the country at the tune of World War ll.

and rationalism must prevail over ignorance and emotion.

Moremtr, that nuclear power generation has established And gmtrnment must not prescribe costs which are a safety record never belbre equalled by any industry unjustified by the benefits thereby prmloced.

in any country.

I'nion I!!cctric recogni/cs and appreciates the Untbrtunately, hownvr, a very small minority, ndue of c!cctricity. We also know our duty to our w hich is apparently emotionally opined to nuclear imtstors and to our customers. We have a long-standing generation, has succeeded in significantly curbing the and proud record of delisering reliable electric senice.

darlopment of this great resource. In doing so, they We are dedicated to continuing that record.

ignore Imth nuclear power's uncontroverted record and Moremtr, we plan to continue to satisfv our the opinion of an mvrwhelming majority ofindividuals customers' needs with Americ;m resources: c'oal and who are knowledgeable on the subject.

uranium.

5

THE YEAR 1001 Earnings Decline liarnings per share of comnum stock were 51.90 in 198I, down 20 cents from the prior 3rar. Inwer sales because of a cooler summer this year and higher costs, w hich were only partially offset by rate increases, accounted fi>r the drop in carnings.

Sales Comparison Affected by Weather

'Ibtal kilowatt-hour sales for the year were down 2 percent fnnu 1980, primarily reticcting the reduced use of electricity thr air conditioning in 1981. Itesidential sales declined H percent, w hile conuncreial sales and industrial sales increased Ib percent and 2 percent, resiwctiwly.

ElectricIIcat Advances I)uring 1981 the electric heating load connected to the t'nion !!!cctric Earnings and Dividends s) Stem increased by 6.8 percent to 2,il1,1MH) kilowatis; c!cctric heat was E Earnings per Average Common Share installed in H percent of all new conuncrcial buildings, in 25 percent of all E Div6dends per Common Share licw homes, and in 12 percesit of all tiew apartments in the Corupany's ser ice area. Rapidly increasing prices ihr natural gas and oil haw created a greater interest in electric heating. At year end, more than 80,000 customers heated their homes electrically - an increase of almut 1,500 or 6 percent, mer 1980. Also, more than 13,tH)0 commercial structures had electric heat.

'ihe energy-cllicient electric heat pump is enjoying the fastest growth "a

rate of all heating s>3tems amilable to our residential customers because of its lower operating cost. A relatiwly new type of heat pump can be used in no conjunction with the customer's present Ibrnace.

i.o increased use of electric heat is important because it enabics the i ro Company to utilize, during the winter months, facilities w hich have been i ao built to supply the high demands of the summer air conditioning season.

.o Dividends Partly Tax-Free I)ividends paid on common stock during the year were 51.52 per share, as compared with 51.-s8 in 1980.1)ividends paid haw increased escry year a

since 19'5.

A gurtion of the dividends paid during the year on both common and n n n n n n n n so e'

preferred stock was considered a return of capital under the Internal Hewnue Code and, as such, not taxable as dividend income.

Kilowatt-Hour Sales

'lhirty percent of the 1981 first quarter common dividend and 100 E nes6dential percent of the subsequent common dividends in 1981 were not taxable as E commercial dividend income. Ninety.three percent of the preferred dividends paid ihr h

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the second third and Iburth quarters of 1981 wcre not taxable, but the g,

preferred dividends !br the 1981 first quarter were fully taxable as dividend aa nw income.

n

'Ihe Company currently estimates that approximately one-halt of the n

dividends paid on the common stock in 1982 will be considered a return of capital under the internal Revenue Code and thercibre not taxable as disidend income. Preferred disidends in 1982 are expected to be fully taxable.

Rate Increases Approved o

inJuly and August higher electric r;ues of approximately 565 million on u

an annual basis went into clicct for l'nion filectrie 31issouri customers. An u

increase in electric rates ihr Illinois customers, w hich became clicctive in n

April, will add 510.~ million to the Compan% annual rnenues. Also, in April I'nion Elect ric was permitted to place in cifcct, subject to reftmd, new electric rates in Iowa w hich are designed to provide additional annual restnues of

$3 6 million.

In Alarch the Federal 1:ncrgy Regulator / Conunission appnned l

increased wholesale electric r;ues, of 58 8 million annually, for municipal n n n n n n n n so si l

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and utility customers of the Company.

In alay the Company filed a new request with the Federal Energy Regulatory Commission to raise wholesale rates $19.1 million annually.

'lhe Commission reduced the request to $12.8 million and ordered these rnised rates to hea>me effectiw in July, subject to adjustment upon final determination.

In the aggregate, 5125 million of annual rate increases were authorized during the >rar li>r l'nion Electric and subsidiaries, of which about 560 million are reflected in 1981 rornues. Obviously, these increases, as well as other pending rate increase requests, will also increase rarnues in 1982.

On August 17 the Company filed a new request with the Missouri Public Senice Commission to raise electric rates by $128 million annually. 'lhat increase is pending and a decision is required by mid-July 1982.

Still pending in Missouri are rate increases fi>r subsidiary companies totalling $21 million on an annual basis.

Coal Supply Assured I)uring 1981 an agreement was signed which will provide in million tons of low. sulphur coal mer 20 years. Inng-term coal contracts supply appnnimately 85 wrcent of the Company's a>al requirements. All of the I

contracts provide coal at prices lower than prouiling market prices. Ily blending low-sulphur content coals with Ilh.aois a>als, we are ahic to comply with sulphur dioxide air quality regulations and continue to take advantage of the availability and lower cost of Illinois coals.

Nuclear Fuel Provided Tl rough Lease

'the Company has contn cts with suppliers u hich provide fiar sutlicient quantities of uranium fi>r the Callaway Plant through the year 2000. I'p to j

5200 million of nuclear fuel is being financed through a lease arrangement with Gateway Fuel Company, which is purchasing the fuel and leasing it to the Company with payments to begin u hen the plant begins operating. 'Ihe lene aners expenditures for the various elements of the nuc! car fuel cycle, including acquisition, comersion, enrichment and fabrication of uranium.

Construction Expenditures Reflect Inflationary Costs I)uring 1981 the Company spent $532 million (including 5160 million of allowance for funds used during construction) Ibr new construction, bring, a gross investment in property and plant to 51.5 billion. 'lhe 1981 Typical Monthly Electric Bills

"" i particulate emission control facilines and coal blending equipment and 5,.,,

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=**====6'a million for transmission and distribution facilities.

Approximately $1.3 billion has been expended on the Callaway project, isn w hich is 80 percent complete. 'Ihe aimpletion date Ihr the first 1,150,000

• 8= ^a-*

kilowatt unit was extended from April 1983 to early 1981. IIcarings befbre i e.a, the Atomic Safety and I.icensing ik>ard relating to the Operating I.icense eo

!Z twgan in Nowmber 1981 and are continuing. 'Ihe first unit is now expected

• oaa to cost $2.1 billion, up $500 million fn>m estimates of a year ago.

1o Washing n.O C In October the Company cancelled the second unit of the Callaway uta UC Plant, w hich had been scheduled to go into operation in 1990. 'Ihat decision

'O y

was based on our amclusion that the mourting pmblems and cost of raising capital funds and the otr-deegwning regulatory morass haw increased the n 4-=.--

'"[4". '***

linancial risks associated with the construction of nuclear generating facilities

y to an unacceptable lori. Cancellation and other charges applicable to l' nit 2 mi ci -

• are estimated to be appnnimately $70 million after taxes. 'the Company ne mtends to seek recovery of such costs m its c!cctric rates.

n n, "O

In 1982 the Company plans to spend $553 million ibr construction and in the fiw-year perim! 1982-1986, expenditures are expected to aggregate o

em no

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51.6 bilhon, as compared with last 3rar's estimate of $2..i billion fi>r the sune perimt Capital Requiretnents Provided Hy Many Sources v

'lhe Company's construction program in 1981 was largely financed j

through the sale of 53 in million of securities. In fact, H7 gwrcent of the Company's cash requirements fi>r construction in 1981 were generated by such sales, and it is estimated that 80 to 85 percent of such requirements in 1982 and 1983 will be pnnided fn>m sales of securities (see page 28).

Interest rates reached all. time highs in 1981 and the Company's total indebtedness at 3rar end reached about $1.9 billion, or $250 million greater than a year earlier. Consequently,1981 interest on debt increased by 5 49 million, or 37 percent, as compared with the year 1980.

In I'chniary 1981 the Company sold $150 million of 15% percent first mortgage bonds, 530 million of w hich w.is issued in July. In October the Miw>uri State limironmental Authority sold 515 million of tax-exempt five-amen==.a-

=

i *g, Q g g g M k%s%NQ@in,

> car 10 percent limironmental Impnntment Rntnue Notes, backed by r

the Company and supported by a bank Ictter of credit. 'lhe proceeds will be used Io fin.ince additional air pollution control equipment at the Meramec and labadie coal-fired generating plants.

^

In I)cccmber the Company issued 6.5 million new shares of common stock which pnnided 571 million of additional capital. Als>,in I)cccmber the Company recched 5 in million from a three->rar remhing credit with fi>rcign banks. 'Ihc cificthe interest rate on the credit agreement was I i% percent on I)cccmber 31,1981.

I)uring the 3rar, $19.1 million was imtsted by stockholders and employres through the Company's I)hidend Reimrstment and Stock Purchase Plan. At year-end 29,700 common shareholders, or alx>ut 17 percent of common shareholders, w cre participating in the Plan. Since the Plan was introduced inJuly 1976 it has pnnided the Company with more than 575 s

million of additional capital.

In l'ebruary 1982 the Company s>ld $75 million of preferred stock.

N

" ~

'Ihe annual disidend on this new 525 preferred stock is 51.00.

nniend Ingmentents Qndnue n

Construction Expenditures and Internal Generation of Funds

'lhe Company is meeting all air quality requirements, either by E construction (cash) mmplying wim appHeaW Mand.ie or by nWng necewuy nWhdons E internai runos tinder schedules appnntd by regulatory agencies. Major impnntments to the existing particulate control equipment hast been completed at the Meramec Plant and work on similar impnntments at the labadie Plant will continue until early 198 i.

i As part of a continuing cili >rt to sohr emin>nmental problems in a i

cost ellicient manner, the Company constructed facilities at its labadic Plant to burn oil with low lotis of polychlorinated biphenyls ( PCil), a fluid used in some of the Company's electrical equipment as an insulating medium.

'Ihis process was designed to destn>y the PCll compounds while reontring i

heat from the oil to generate electricity. After extensive testing and re icw by state and fideral agencies, the process was fi>rmally appnnrd, enabling the Company to dispose of this material in a safe and etlicient manner.

In the five year period 19~~ through 1981 the Company spent $162 million for eminmmental impnnement: and, in the live-> car period 1982-1986, expects to spend another $ltH) million on projects relating to emironmental protection.

In addition, the Company estimates that appn>ximately $235 million will be espended on emironmental contn>l at the Callaway Plant, of w hich

$36 million is anticipated during the 1982-1986 period.

n n n is a n n n so n II

THE YGAR 1981 Research and Development Advances w hen I/nion lla tric

'Ihe Company is participating in a demonstration coal gasification plant onry,/ etat tragnellIAnn w hich is now under construction in East AIton, Illinois. 'Ihe plant is scheduled and Osage Ibuvr l' tant, t/= inynnuutnient of to tw in operation in 1983, comtrting high-sulphur Illinois coal into

r. uter mutallake of emironmentally-acceptable, low litu gaseous fuel suitable for pourr plant ers irI I um Mng rate wE tw 600 tons per day, equivalent to about 50,000 kilowatts ti s

In't/= uenia 'lin Soth of electric generation. 'lhis project is being financed by Allis-Clulmers, the ann /nrsary of the State of Illinois, Electric lbwer Research Institute and a group of electric prvja-t uns ceMnutat uti!ities.

during 1981 In addition, since 1972 l'nion Electric has been a participant in the Electric lbwer Research Institute, which spoasors research projects for impnning electric power pnxluction and distribution. 'the range of work

$M 2,.1 includes fossil and nuclear plants, transmission and distribution technoh>gy, 9 '

cU,..,

new forms of c!can fuels and other energy sources such as solar and fusion.

V c--g Summer Storms Worst in Illstory Sewre storms in July were the worst in 1.'nion Electric's history. Strong winds, lightning and falling t ree limbs caused extensive damage to power lines.

Customer senice personnel, dispatchers and line crews worked around the p

T clock until all senice w as restored. 'lhe Company and its employees received praise from neww media and customers for their ciforts in restoring senice.

Hagnell Dam CcIchmtes 50th Anniversary A celebration ofILignell Dam and Osage Ibwer Plant's 50th Anniversary culminated with an Open llouse for take Ozark area customers on h.Q g if Ottober 18,1981. 'Ihe 212,000 kilowatt Osage Plant initially pnnided approximately 20 percent of the electricity sold by the Company, but it now sents as a peaking plant.

When t'nion Electric completed the dam and power plant in 1931, the impoundment of water created the lake of the Ozarks, one of the largest man-nude lakes in the world. 'the area's thrising tourist business generates more than 5160 million in annual retail sales. 'Ihe area lus grown to include R to ar ngs verage g in,w,,,,, o,,

hundreds of lakeside resorts, campgrounds, and picnic and amusement E Ewnegs Cowwege areas, as well as Vacation and pernunent homes.

(nnes Enne@

lad >or Agrrements Signed tabor agreements which extend through June 30,1983 were negotiated with the unions representing l'nion Electric employees. 'Ihe amended agreements pnnided for general wage increases of approximately 9.5 percent in April,1981 and 9 percent July 1,1982, plus impnntments in other benefits-Management Changes i.o in April the floaal of Directors elected Robert O. Piening a Vice President. lie had been Director of Emplo)te Relations.

u.

'the lloard also elected Donald E Schnell a Vice President, cifective October 1. On that date he became head of the Nuclear Function, succeeding ie Vice President John K liryan who retired after more than 41 rars with 3

. n. E -

the Company.

f

.k EffectiIt August i Vice President 11. Clyde Allen, who had been in clurge of the Rates Function, assumed responsibility for Research and

_ gl. #h :,g' i b_".c.7 mw Dewlopment. Vice President Rotwrt O. Piening, who had headed Emplo)tc M' f, ' M(M j.

Relations, was put in charge of the Rates Function, and flerbert W. Inch was 9 $'A

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named Director of Emplo)te Relations.

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14

RESPONSIBILITY FOR FINANCIAL OTATEMENTS

'lhe management of l'nion 1:lectric O>mpany is resixmsihic for the information and representations contained in the financial statements and in other sections of this Annual Ihpirt. 'Ihe financial statements have been prepared in accordance with generally accepted accounting principles consistently applied. Other infi>rmation included in this report is consistent, w here applicable, with the financial statements.

'lhe Company maintains a sptem ofinternal accounting controls designed to pnwide reav>nable assurance as to the integrity of the financial records and the protection of assets. Qualified personnel are selected and an organi/ation structure is maintained that pnnides for appropriate functional responsibility. Written policies and procedures lure been developed and are revised as necessary. 'the Company maintains and supports an extensise program ofinternal audits with appropriate management liillow up.

'lhe financial statements h.nc been examined by Price Waterhouse, independent accountants, and their report appears below.

'the Ikunt of I)irectors, through its Auditing Committee comprised of outside directors, is responsible fi>r ensuring that lxith management and the independent accountants fulfill their respective resgx>nsibilities relative to the financial statements. Morcincr, the independent accountants have full and free access to meet with the Auditing Committee, with or without management present, to discuss auditing or financial regx>rting matters.

REPORT OF INDEPENDENT ACCOUNTANTS

/

ONE MEMORI AL ORIVE IICC suouis uomo2 aterhotise

> " 4 =-

1chruary li,1982

'li> the Stockholders and Ik>ard of I)irectors of l'nion l{tectric Company in our opinion, the accompanying conv>lidated balance sheet and the related consolidated statements of income, preferred stock, long term debt, retained carnings, uther paid-in capital and clunges in financial position present fairly the financial gwnition ofl'nion I?!cctric Company and its subsidiaries at I)cccmher.41,1981 and 1980, and the results of their operations and the clunges in their financial position for each of the three years in the period ended I)cccmher.41,1981, in conformity with generally accepted accounting principles consistently applied Our examinations of these statements uere made in accordance uith generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we con idered necessary in the circumstances.

AlfL Ii

CONSOLCATEJ STATEMENT OF INCOME Cliu>mands of Dollars) l Union lilectric and Subsidiaries Year 1981 Tiar 1980 Tiar 1979 Opensting Heve:mes ( * ):

!!!cctric..

$ 1,019,671 5 996,H93 5871,719 G.is..

72,861 67,577 60,537 Sicam.

I1,033 11,.iH6 10,172 Water.

1,971 1,920 1,369

'li>tal operating rewnues 1,105,536 1,077,H76 916.797 Openiting limpenses:

Operations I ucl and purchawd pimcr.

356,887 33i,628 302,IH2 Other.

200,506 185.071 165,193 557,393 519 i99 i67,675 51aintenance.

87,635 80,632 71,lH i Depreciation.

M1,310 78 H19 76,300 income taxes.

79,381 91,925 56,lHI Other taxes ( * ).

I17,128 I I 5,8 i5 108,991

'li>tal operating expenses 922,667 886,720 7H0,331 Openiting Inconic 182,889 191,156 166,i66 Other Incorne:

All<maince fi>r equity funds uwd during const ruction.

66,600 s5,357 31,215 Aliwellaneous, net.

(731) 3.638 H79

' Intal uther income 63,866

-iH,995 32,12i inconne liefore Interest and Other Iteens 266,755 210,151 198,590 Interest and Other Iterns:

Interest on debt.

180,312 131,725 106,995 Alkm;mcc for hornmed funds used during const niction.

(91,025)

(16,698)

( 26,8 iH)

Prelirred dividends of subsidiaries.

385 387 3H8

'li>tal interest and of her itcam 89,672 H5. i l-i 80.535 Net inconne 157,083 15i,737 11H.055 Prefermd Dividend Hequirements of Company 29,47H 29,695 26.9 iH i

l

[

litrnings on Conunon Stock

$ 127,605 5 125,0 il 5 91,107

( * ) includes lit ense and fratwhisc taxes of 55 s,661.tHHl 55 i,06H,tHN) and 5 i9, s67.1MH) li>r Ihe Scars 1981,1980 aint 1979 respectiwly.

liarnings per Share of Common Stock (based on awrage shares outstanding)

$1.90

$2.10

$ 1.73 Dividends Declared per Sham of Common Stock

$1.52 51..iH 5 I..i i Averuge Number of Common Shares Outstanding 67,179,275 59,675.995 52,5-*7.632 See.Yoles to I(nancial hlatenients un furp's 21. 25, 26 anell' I5

CONSOUDATE3 BALANCE SHEET (musands ofl>ollars) 1)cccmher 31, 1)cccmher 31, Union Electric and Subsidiaries 1981 1980 Asscts Property and Plant, at original co 4:

1:lectric.

$2,936,616 52.813.585 Gas.

70,002 664i6

.%Icam.

9,581 9.653 Water.

7,914 7.533 Other.

19,467 19,621 3,043,580 2.916.838 less accumulated depreciation.

915,9<>6 8 iH.826 2,127,584 2.068.012 l

Construction uork in progress:

Call.mry nuclear plant.

1,343,886 1.008.909 Nuclear fuel.

131,491 99.085

.s ttlement of uranium litigation.

(76,528)

(62.62i) e Other.

I12,138 M8.916 f

'Ibral property and plant, net 3,638,571 3.202.298 Insestments, at cost 5,871 i,263 I)cferred Charges:

Call.muy unit 2 construction abandonment.

H3,363 l'

l'namorti/cd lxmd defiasance cost.

4,652 1.8 17 l'namorti/cd del-espense.

4,035 3.226 Other.

3,820 5.896

' Intal defi rred charges 95,870 13.969 Current Assets:

Cash.

5,333 i,196 l

I)clmsits for payment of interest, and of her deposits.

39,567 19,620 Accounts reccisable - trade (less allowance for doubtful accounts of 51.198 and $ 1.080, at respectist dates).

~7,792 79.22 e l'nhilled resenue.

49,995 12.9 il i

Other accounts and notes reccicabic.

7,709 3.909 l

.\\laterials and supphes. at average cost -

I'ucl.

82,310 109,908 l

Construction and maintenance.

38,040 35,-186 l

Prepayments and other assets.

6,219 6.289

'lbtal current assets 306,965 331.57i

$4,0 a7,277 S3.552. I O 1 ke.Yoles to Iinctnciaal.\\litternents entlkaga 21. 29. 2(> conti2" l6 i

I)cccmher 31, 1)cccmher 3I, l'nion I!lectric and Subsidiaries 1981 1980 Capital and Liabilities Cipitalliation:

CAmtmost sitwk and Common stock, $5 par value, authori/cd retained earnings H H U N M U H H) shares; outstanding

~ I,7iS.HHS and 66.125.317 shares, at respectis e dates ( excluding -il,990 shares at par value in treasury).

$ 373,780 5 330,627 Other paid-in egtal, principally premium on common st<wk ( see accompanying statement ).

i6i, iso s I i,020 Retained earnings ( see accompan3 ing statement ),

32i,5-67 298,902

' Intal common sto(k and retained carnings 1,162,777 I,0 i3,519 Preference stock Preference stock, SI par ndue (entitled to cumulative di)idends), authori/cd

".500.t N H I shares - none outstanding Preferred stock Preferred stock not subject to mandatory redemption, including premium of S 1,57I

( see accompanying statement ).

281,355 281,355 Preli rred st<wk subject to mandatory redemption

( see accompanying statement ).

I10,014 112,0 in long-term debt Inng term debt (see accompanying statement ).

1,724,236 1,-179,7-46 l'namorti/cd diwount and premium on debt.

(i,309)

(517)

' Intal capitali/ation 3,276,073 2,916,173 Accumulated I)cferred Taxes on Income 238,153 166.167 Accumulated I)cferred Investment

'Ilis Credits 125,290 113. i7 s Construction Commitments and Contingencies (Notes 8 and 9)

Current I.iabilities:

Current maturity of long term dcht.

31,903 1,010 Accounts payable,

73,969 H3, iS9 Wages payabic.

17,598 l i,765 Callaway unit 2 cancellation charges, 52,000 llank loans 66,350 i l, ili Commercial paper, 5-i,000 99,160 Income taxes accrued.

IH,810 32,199 Other taxes accrued.

13,161 12,566 Interest acenied.

i3,662 32,825 I)isidends declared.

7,382

",376 Other current liabilitics.

30,926 31,205

' Intal current liabilitics i09,761 356,290

$ i,0 47,277 53.552,10i I7

PREFERRED STOCK rnionsands ofI)ollars)

I)cccmber 31, 1)cccmber 31.

Union I:.lectric and Sul>sidiaries 1981 1980 Preferred Stock not subject to mandatory redemption:

l'nion i;!cctric Osmpany Preferred stock, without par Stated value of slures outstanding, ndue (catitled to

$ 100 per slure -

cumulatiw dividends)-

57.6i Series - 550,(H M) shares.

$ 55,00()

5 55(HH) notc (a )

56.60 Setics - 300.(M H) slures.

30,000 30,(H)O 5 i.56 Scri.4 - 2(H),(HM) slures.

20,000 20,(M H) 56.50 $ cries - 213.595 slures.

21,359 21,359 5 a.(H) S tries - 150 (H H) slures.

15,(XH) 15 (H H) 53.70 Series - 10,(H N) slu res.

4,000 i.(H H) 53.50 Series - 130,(H N) slures.

13,000 13,(H)0 Stated nilue of slures outstanding.

597.50 per slure -

5H OO Series of 1971 - 125.(H Hi stures.

41,437 4l.437 Stated value of slures outstanding.

592.25 per slure-5H 00 Series ( 1969 ) - 350.(H H) slures.

32,288 32.288 Stated utInc of slures outstanding, 525.00 per slure -

52.125 Series-1,600.(HN) slurcs, 40,000 40,(H H)

'li>tal l'nion 1 lectric Company 272,084 272,08i P

Miw>i;ri limer & l.ight Comp.iny Preferred sto(L. 5100 p.ir s.301. Series - 20.(NH) slures.

2,000 2,(MN) nilue (cutilled to 3N01, Series - -10.(H H) slures.

4,000

-6,(H M) cumulatiw disidends).

authori/cd '5.(H H) slures Preferred sto(k. 525 par nilue (cutitled to cumul.itise digidends), authori/cd IOO tN H) slures - none outstanding li>tal.\\liwpuri 1%>wer & l.ight (:stmpan)

$ 6,000

$ 6(HH)

(a1 Autluirient t'nion iIciine cannpan3 toial prs et rrul um L - 15 au niinu > 4urts Ih) \\utl>>nint %wiuri t 'tilnits Ownpan) intal pri et trol a.im L 50 tM Mi slurt s (t i lo ir rrtirtit tw sinking final (ill'lho ( annpany is rnluirnt to rt tire NdHu M> durrs aint lus an iptuni to nxtt s m an atkittu nul NiUM N> slurrs. Jt $25 [wr slure on NmrmlWT li of c.n h )CJr (clin ts hnurt 19H2.1 nnui lles tric t.onpan) iv. inst.4.t ulet. INN > Qurrs of' 5 6110 s rits prt fortrtl sim k Jt $25 st.itrtl %Jlue por slurr.

c

.W Nohs to finitucial Mstlerriertts ort pulps 21, 25, 26 engel 2~

18

l>cccanl>cr 31, 1)ccrinl>cr 31, finion lifectric and Sul>sidiaries 1981 1980 Preferred Stin-k su>t sul> ject to snandatory redernption (continecd):

Aliw>uri l'tilitics Comp.iny Prcierred stin k, 5100 par value 5't.

Series - I a,(HHi slures.

$ 1,600

$ 1A00 (entitled to cuninfatisc 5'\\.

Vries ofJune 1950 - 1,500 slures.

150 150 dis idend. ) - note ( l> )

5't.

Series of Septemlier 1950 - 1,500 slures.

150 150

' intal Aliwpuri l'tilitics Coniguny 1,700 1,700 Miw>uri l'dison Contjuny Prrferred stin k, $100 gur value

( entillnl to ( unnil.it n e l

disidends), autliori/cd 5.(HHI slures - none out,tanding Total preferred stink not sul>]cct to snandatory redeniption

$279,78 6 5279,78:

Preferred Stank sul> ject to snandatory redemption:

l'nion 1.lectric Comguny Prcli tred ste n k, w illiout p.ir Stated value of alures outstanding, value (cntitled to

$25.00 per slure -

rumulatis e dhidentis )-

52.72 Series - 1,360,(HM) and 1, s 10.1MH) note ( a )

slures at respectist dates, tlue to 1998-notes (c) and (d).

$ 3 6,(HH) 5 36.(H N)

Stated value of slures outstanding.

550 tH) per slure -

5s.60 $ crit s - 1,500.1HH) stures duc 1985 to 200 i - note (c ).

75,00()

75,t H N)

' Intal l'nion 1.lectric Company 109,000 1 1 1,t H H)

Aliw >uri l 'tilitics Company Preli rred sta n k, 5 it H) p ir value 5.70",,

Scrics-10,I in and 10,iOO (cntitled to cumularise slurcs at respectise dates, disidends) - note (l> )

due to 2020 - note (c).

1,016 1,0 'O Total preferred stank suhicct to enaculatory redernption

$110,01 s

$ 112.0 in 19

LONO-TERM DEST (musands orI)ollars)

December 31, 1)cccmber 31,

(?nion Electric asul Sulwidiaries 19H1 1980 l'nion 1:lectric Company I'irst mortgage Innds-3%% Series duc 198 )

30,(H M) note (a) 37.% Series duc 1986.

40,000 10,(H H) 1%% Series due 19H8.

35,mM) 35,(HH) 4T.% Series due 1990.

50,(MM) 50,(N H) 1%% Series duc 199I.

30,(MM) 30,(H M) 15%'b Series due 199I..

150,000 a h% Series duc 1993..

30,(MM) 30,(H H) 4b't Series duc 1995.

35,000 35,(H M) 5!yb Series due 1996..

30,(MM) 30,(H N) 5%'b Series duc 1997.

40,(MM) iO.(H Ml 7% Series duc 199H.

50,0(M) 50,(H H) 7%% Series duc 1999.

35,(MM) 35,(H H)

H%'b Series duc 1999.

40,(MM) lO,(H H) 9.95% Series due 1999 - note (h).

100,000 LOO,(H H) 9% Series due 2(HM).

(4),(MM) 60,(H N)

Tyb Series duc 2001.

50,(MM) 50,(H H) 7%% Series duc 2(Hil.

50,000 50.(H N)

H%'b Series due 200I.

(4),(MM) 60,(H)O HN% Series due 2(H) 6.

70,000 70.(H H)

IOb'b Series duc 2(Hl5.

70,000 70,(H)0 5.80% Series duc 1992 to 2005 - note (c).

27,0H5 27,0H5 H%'b Series due 2(H)6.

70,(MM) 70,000 H%% Series due 2007 60,000 60,(H H) 9.35'b Series due 2 OOH - note (h).

55,000 55,0(H) 9.25-9.625% Series due 2(H N) to 2010 - note (e).

60,000 60,(H N) l'nsecured loans litreign bank agreceqent -

note (d) 1)ue 19H 4.

40,000 1)omestic bank notes -

note (e) 1)ue 1985.

75,(MM) 75,(H;0

.\\liw >uri emironmental J

impro\\ ement -

1(ntnue notes 10% Series duc 19H6.

45,000 l(nenue bonds 5.60 6.20% Series duc 1989 to 2(H) 6.

16,500 16.5(H)

Nudcar fuel lease 131,427 99.035

'lbtal l'nion lilectric Company

$1,605,012

$ 1,367.620

(.i) At Derrnitrr.41.19Hl. witwtantially all of the pn qx-rty and plant u as niortg.igrt! unster. and wahp t to tiens of. tir tr3ntise indenturn purwunt to w hit h the furth urre iwrti (b Flo be rttirril19 sinking futul-t 'nsni i ks1ric C4 unpam. 9 9%. % rin inun 19H6 eo 1998,9 4M. Serio frum 19M9 eo 21MF. \\liwniri hmer & Iight Conqunt, s

10),1. Strin to 199 4.9%1. Scrin innu 19M2 to 21MMt.101. krin fnun $9H5 to 21NO, \\llwniri i tilitin OnnlMn).91de $rrios in un 1982 to 2tNM), and Shwniri i slivni Gunpany. I15 n. $rrin to 19H9; 9\\1. Serin to 2tMMt. Nii'.. Ann innu 19H 4 o 2 Mn.

t t c)I min ninwntal Impn nturnt Ntin.

.%'t* NoltW to lithilicitll Sicilelltetils olllktgtW 2 l. 25. 26 tiliti ?

20

1)cccmher 31 I)ctember 31.

linton 1:lectric ami Sidssidiaries 19H1 19H0 Allwpuri l'tmer & l.ight Onup.iny lirst np>rtg. ige tunuh-3Wt Series duc 19H 6.

7,5(M) 5 7,5(H) note (a )

1%'t. Series duc 1992..

6,(MM) 6.(H M)

IOW1. Series duc 199 i - su >te ( h)..

5,740 6,160 5%'t. Series duc 1996..

5,(MM) 5.(W10 5%1. Series due 1997.

5,000 5.(H H)

H't Series duc 1999..

5,(MM) 5.(H N) 9%'t. Series due 2001 - note (h).

I1,400 12JHM) 7WL. Series duc 2003.....

7,(MM) 7.(H Hi I O't.

Series due 200 4 - note (h).

10,000 iOJHH)

'lbtal.\\liw>uri 1%mvr & l.ight Onup.iny 62,660 63f>60

.\\liwouri l'ailitics Conipany l'irst morig.sge lunuis-SWV. Series duc 198 i.

1,000 ljHH' note (a)

-t h't. Series duc 1988...

3,(MN) 3.(H N) j 5%'t. Series due 199l..

3,500

,. $t H )

HWt. Series duc 1996.

10,MM) lu.(HH) 7.95'\\. Series due 1998.

4,000 W(HN) 9Wi. Series duc 200l - note (h).

5,700 6.(H M) l'nsecured notes l H'\\.

1)ue 1985...

5,(MM) 6't, 1)ue 1992 - note ( f).

2,135 2.240

'li>tal Aliw suri l'silitics Gimp.Iny 34,335 29.7-10 Aliwiuri I?div ul Opmpany l'irst mortgage lw>nds-I l'ii. Series due 1986.

6,000

't note (a )

1 I W). Series duc 1990 - note (h).

3,H00 gl. LOO 5't.

Series duc 1991.

2,(M)0 2JHN)

IWt. Series duc 1995.

3,(MM) 3,(H H) 9%'t, Series due 2001 - note (h).

3,304 3.17H HW). Series due 2002 - note ( h).

6,000 6JHN)

' Intal.\\liw nuri I diuin Onupany 22,106 18,578 l'nion O>lliery Onupany Secured note - note (g) 9't.

1)ue 1999.

145 I iH l

Inng-term debt

$1,72 4,236 51,679l'i6 tit )lnterrst rate was 1 eVt. im t kt ember 31.19H1 luwtl em a 3u (la) lauxh m Interitank Offerett Rate (lilM >R). udwgirnt rates will ur) (loprixling im ihr

( e mqunis wirt tu m of ari< un optuun umler alw agrtrnwnt (r) Interest rate uas IM. em lht endwr 31.19H1 luws! a m M. alune the current lunk prime init rest rate. aml the rate will ury lusul em tlw prime rate tim mgh 19H%

(l') Notrs thw in riguJI anniul inMallnwnts.

(gi N tr stur in rqtui nnnuhly installnwnts (in in 19Hl. t 'nnm I let tric ( ompan) rnterrti into a tour trar rnohing a rtthe agrernwnt u nh s ertam (b mwstic tumnwrrial h.mks u hi(h permits alw G mqum tolu rrow cp to $ltu million. at an interrst rair luwtl am lunk th unng prinw ratesit at tlw Omipanis optiim. the 1IIH)R rate. At Det omlwr 31.19H1.

rauw of wu h hmg term tirbt was outstamtmg. Imorr. the Gimgun) plans to twirnav 5%u milin m unmit t this agrrenwns in late 1(bnur.19H.L 21

CONSOLIZATE3 GTATEMENT OF RETAINE'O EARNING'3 cIhousands ofI)ollars)

Union lifectric and Subsidiaries Year 1981 Year 1980 Year 1979

$298,902 5262,202 52-i7,901 Italance at Ileginning of Period.

Add:

Net income.

157,083 15i,737 118,055 455,985

-i16,939 365,956 I)cduct:

Preferred stock dividends.

29,451 29,668 27,783*

Common stock cash dividends - $1.52, 51. i8 and $1. i i per share, respectivel).

101,735 88,105 75,507 Write-off of capital stock expense.

252 264 46i 131,438 I18.037 103,75i Italance at Close of Period (l'nder the mortgage indenture of l'nion filectric Company as amended, fice and unrestricted retained earnings at I)cccmher 31,1981 amounted to

$270,750) * *

$324,547 5298.902 5262,202

• Includes dividends declared, apphcable to subsequent periods.

• At 1)cccmher 31,1981 the aggregate retained earnings of the consolidated subsidiaries totalled 5 i0,165,00(); under the mortgage indentures of the consolidated subsidiaries, free and unrestricted retained earnings of such subsidiaries at 1)ecember 31,1981, amounted to $17,973.000.

CONSOLIDATED STATEMENT OF OTHER PAID-IN CAPITAL (Thousands of t)ollars)

Union lilectric and Subsidiaries Year 1981 Year 1980 Year 1979 Ilahnce at lleginning of Period.

$414,020

$374,189 5328,573 Add:

lixcess of sales price over par value of 6.500,(H)o,5,500,000 and 5,500,000 shares of common stock issued in 1981, 1980 and 1979, respectively,,

38,053 28,243 34,017 lixcess of sales price owr par value of I,780.268. I,522,38 i and I,0 I i,97 I shares of common stock issued during 1981,1980 and 1979, respectively, for dividend reinvestment and stock purchase plan.

10,244 9,520 8,44I lixcess of sales price owr par value of 350,300,306.02 i and 372.668 shares of common stock issued for tax reduction act stock ownership plan in 1981,1980 and 1979, respectiscly.

1,811 2,016 3,158 lixcess of stated value over purchase price of 80,(HH) shares of prefirred stock redeemed during 1981 and 1980.

317 52 Ilahnce at Close of Period

$4&i,450 5 il i,020 5374,189

.W Notes to 1111tIIIcitti Mitternertis Ort l kips 2i. 29, 26 tIIIt! F ll

CONSOLIZATE D CTATEMENT OF CHANGE]

IN FINANCIAL POSITION ( nionsands orl>oliars)

Union Electric and Sul>sidiaries Year 1981 Rar 1980 Rar 1979 Source of Funds:

17 rom operations -

Net income.

$157,083 515i,737 s i 18,055 Provision for depreciation.

83,715 H1,027 78,35i Provision fi>r deterred taxes on income ( net ).

71,986 il,876 27,78i Pnnision for deferred imtstment tax credits (net ).

I1,816 25,918 31,909 Allowance f er all funds used during construction.

(155,625)

(92,055)

(58,093) 169,005 212,503 198,009 I)isidend reinvestment and stock purchase plans.

22,708 20,678 1H,537 Issue o.' mortgage Ix mds.

I 5 i,000 I l 5,000 55,000 issue of preferred stock.

75,(H M)

Issue of conunon stock.

70,558 55,713 61,517 issue of long-term unsecured debt.

90,000 75.O(H)

Settlement of uranium litigation.

13,906 62,624 Nuclear fuel lease.

32,392 58,896 10,139 Transfer of Callaway unit 2 costs to deferred chargc3.

31,363 Net decrease in working capital (excluding short-tenn loans and current maturity oflong-tenu debt )

67,722 Additional short-term bank loans and connuercial i3.985 67,300

_ paper.

' Intal funds provided

$651,652 56i1.129 5515.502 Application ofl'unds:

Gross pl.mt expenditurcs.

$532,650 5 il1,275 539 i 9H i Nuc! car fuel.

32,606 58.H72 i,998 Allowance ihr all funds used during construction.

(155,625)

(92,055)

(58,093) l'nion lilectric dividends on preferred stock and conunon stock.

131,186 117,773 103,290 Alaturity of mortgage Ixmds.

39i 25.89i i,97 i Reduced short tenn bank loans and conuncrcial paper.

20,535 Redemption of prefi rred stock.

2,026 2,026 2,026 Restructured long-tenn unsecured debt.

"5.00()

Net change in defirred charges.

81,901 199 (l.H15)

Net increase in working capital (excluding short-term loans and current mat urity oflong tenu debt ).

30.96i 63,38 i Net change in other funds.

5,679 i.iHI 1,758

' Intal funds applied

$651,652 56-ii,129

% 15.502 Increases (1)ecreases) in Working Capital:

Cash and deposits.

$ (8,916) 5 37 i?2 5 3.811 i

Receivables. net.

9,421 (22,i07) 31,5 i i l'uci.

(27,598) 2i.801 15,909 Other materials and supplies.

2,554 3,i17 6,151 Accounts and wages pavahic.

6,657 2,086 (7,989)

. Cancellation charges.

(52,000)

Taxes accrued.

12,79i (8.656) 31,172 Interest and disidends acenied or declared.

(10,1+43)

(3,892)

( 3.7 60)

Other.

209 (l.889)

(13.i81)

$(67,722) 5 30,96i 5 63,380 Air Nol<W to l'stetriciell Altllenterlis olijklys 21. 25,.% tirttil' I

23

NOTEJ TO FINANCIAL STATEMENTS Ullon Electric and Subsidiaries Note 1-Summary of Accounting Policies Allowance for Funds Used During Construction 1hc G)mpany and its utility subsidiaries are subject to "Ihe Federal onergy Regulatory Commission Unifbrm Sptem regulation by the Missouri Public Sersice Commission, Illinois of Accounts defines allowance fbr funds used during Commerce Commission, Iowa State Commerce G)mmission construction (AFC), which is a non-cash item, as the net cost and the Frderal Energy Regulatory Commission. 'Ihe fbr the period of construction of horrowed funds used fbr aco>unting policies of the companies are in accordance with construction purgx>ses and a reasonable rate on other funds the rate. making practices of the regulatory authorities hasing when v> used.

jurisdiction and, as such, conform to generally accepted During the three years ended December 31,1981, the accounting principles as applied to regulated public utilities.

Company recorded AFC at various rates, compounded semi-A description of the Company's significant accounting annually. 'Ihe net rates reflect the Company's policy of gw)?icies follows.

deferring the income tax effect app;;abic to the horrowed Principles of Consolidation funds portion of the AFC rate. 'Ihe average annad AFC rates

'Ihe consolidated financial statements include the accounts were 11.42% (8.73% net)in 1981,9.75% (7.65% nety 131980 of the Company and its subsidiaries, all of which are wholly.

and 9.45% (7.38% net)in 1979.

owned. In the process of consolidation, all intercompany Unbilled Revenue imestments and accounts and all intercompany sales and 1he Company records on its books the estimated amount profits are climinated.

of accrued, but unbilled, rewnue and alv> the accrued liability for the related taxes.

Property and Plant

'ihe cost of additions to and hetterments of units of property and plant is capitalized. Cost includes labor, material, Note 2-Income Taxes applicahic taxes, pensions and certain other items, plus an allowance Ibr funds used during construction. Maintenance Ibtal income tax expense was less than the amount expenditures and renewals ofitems not considered to be units computal by multiplying the income-hefore.t:tx by the statutory Federal income tax rate.1hc reasons fbr this of property are charged to income as incurred. When units of depreciable property are retired, the original cost and difference !br the years in which shown are as fbilows (in thousands):

removal cost, less sahuge, are charged to accumulated depreciation.

,9gg

,9,9 Dcpreciation

.I.ax computui at statutmy Ihr financial statement purposes, depreciation is pnnided rate on book income-owr the estimatal lives of the various classes of depreciable before-tax.

$108,078 5113,024 5 80.22I property by applying composite rates on a straight.line basis.

I"""'C I UCC'C"*'*) I" '

• the provisions for depreciation in 1981,1980 and 1979 were I**

equivalent to approximately 2.8% of the average depreciable Additional depreciation 3,451 1,901 100 Allommcc for equity Income Taxes funds used during Deferred income taxes are pnnided Ihr substantially all construction.

(30,347) (21 668) (I4,570) timing differences between lxx>k and taxable income as investment tax credits.

(2,007)

(I,9 10)

(2,410) pennitted ihr rate-making purposes. Substantially all imrst-Miscellaneous. net.

(1,305)

(350)

( E002) ment tax credits utili/cd are deferred and amortized mtr the

'lotal.

$ 77,870 $ 90.967 5 56,339 useful lives of the properties to w hi(h they relate.

l 1t

Income tax expense c<nnponents (in thousands).

1)uring the same peruxl, preferred stock, without par sulue, 1981 1980 1979 was issued and retk emed as follows: l'nion lilectric Company issued 1,5(H),(HM) shares, 51.60 Series in 1979; l'nion lilectric included in operating expenses -Taxes Company redeemed 80,000 shares, 52.72 Series in each of currently payable:

the years 1981,1980 and 1979;and, Aliw>uril?tilities l'ederal.

$ (3,706) 5 11,00H 5(12,606)

Company redeemed 260 shares,5.70% Series in each of the State.

(841) 4,8 11 3,691

} cars 1981,1980 and 1979.

I)cferred taxes E*"' "*I (principally I'ederal):

liberali/ed Redernption Prices Current Alinimum depreciation.

14,177 12,17H 13,307 (Per $ hare)

Ihpair allowance.

6,712 2,913 Union lilectric Company Allowance for 56.10 Series.

5101.50 5101.50 hornmrd funds 51.56 Series.

102.47 102.17 used during 5.j.50 Series I10.00 110.00(a) construction.

44,107 22,160 12,997 s i.OO Series.

105.625 105.625 Construction

$3.70 Series.

101.75 101.75 abandonment.

14,000 53.50 Series.

i10.00 110.00 Other(principally 5 HAH) Series ( l'X>9).

99.25 93.25 capitali/cd costs) 6,553

<l,H38 1,598 58 00 Series of 1971.

101.50 98.50 Pnnisions deferred

$7.11 Series.

105.00 101.00 in prior ycars.

(6,851)

(3,120)

(3,031) 52.72 Scries (c).

27.75(h) 25.25 I)cferred imrstment tax 52.125 Series.

27.15(b) 25.25 credits, net.

11,942 30,27H 37,112 54.60 $ cries (d).

Sf60(h) 50.50 79,381 91,925 56,IHI Current pnnision in.

Aliw>uri Ibwer & IJght Company cluded in otherincome (1,511)

(958)

ISH 4.30% Series.

102.176 102.176 5.90% Setics.

105~(H) 105'00

)

$ 77,870 5 90,% 7 5 56,339

'Ibtal.

Missouri l'tilities Company 5 UU

• SCFICS-I IU'UU I IU UU Note 3-Capital Stock 1)uring the three >rars ended I)cccmher 31,1981, common 5.00% Series ofjune 1950.

103.50 103.50 SAMU' bCIIC""I stock, 55 par value, was issued as follows:

i 6,500,(HHi,5,500,000 and 5,500,00() shares were issued in S(ptember 1950...

10MO 10350 5.70% Series (e).

103.00 100.00 1981,1980 and 1979, respectively. In addition, of the 10,(HM),(H)O shares resenrd for the l'nion filectric Company (a) in the nent ed uduntary hipiidanon. Sini 50 I)isidend Reinvestment and Stock Purchase Plan I,780,268,

() nctk-mpin >n suinet t io certain resc ritiions regardmg rrrundmgigierat k>ns, 1,522,381 and I,014,97 I shares were issued in 1981,1980

.['"9"di,};,,,ul' "' ""b'u's"$"

s$5)")i I'i>n'"' '." ' nI"" N ii I'

n and 1979, respectiwly; and of the 2,500,(H)0 shares resenrd each rar.

3 for ihe Union lilectric Company Tax Reduction Act Stock (d)* O*'tuny h nyuind to nsleem 75.inx) aurn ai sso per aure on Ownership Plan,350,300,306.02 f and 372,66H sharcs were gc3)[,,$'j,*]'.h nu1x\\r ti n1 np rem Hin dun s at S HMi per issued in 1981,1980 and 1979, respectiwly.

Murr, plus at a nust aniiirruts. im June 4 cat h rar 3

25

NOTE] TO FINANCIAL CTATEZENTS (continued)

Union Electric and Subsidiaries Note 4-Preferred Stock Subject to Mandatoty Note 7-Compensating Halances and Hedemption Short-Term Horruwings l>uring the five years in>m 1)cccmfrr 31,1981, the anmunts Short-term Imrnmings of the G>mpany and its subsidiaries of preferred stock to be redcen cd at par or statcd value are:

consist oflunk kuns (maturities not in excess of 270 dap) 52,026.tHH)in 1982; 52,026,000 in 1983; $2,026.(HN)in 198 i; and commercial paper (maturities generally within 30-15 55,776,tHH)in 1985; and 55,776,000 in 1986 dap). Infi>rmation regarding such consolidated simrt-term Imrnm ings is as Ibilows (in thousands except rates):

Note 5-Debt Hetirement Provisions 1981 1980 1979 I)uring the fiw 3rars fnnn I)cccmber 31,1981, the amounts Amounts outstanding of debt maturities are: 531,903,000 in 1982; $2,203,000 in at ) tar end -

1983; 550,703,000 in 1981; $H2,70i,000 in 1985; and llank loans.

$66,350 5iI,125 536,600

$98.8 61,tHH) in 1986. ( Amounts do not include nuclear fuel G>mmercial lease payments since the timing and the amounts of such paper.

$54,000 599,i60 560,300 payments are not currently determinable-see Note 10).

G>mposite interest I)cht retirement pnnisions contained in the mortgage Imn1 rates at year end -

indentures ofIhe Gunpany and its subsidiaries require, llank loans.

13.8%

21.0%

15.0't sub;cct to certain alternatiws, the redemption annually of I'%

G>mmercial of the principal amount (as defined) of each series ofImnds.

paper, 13.6%

19A's i 1.0%

in lieu of such redemptions, except in one instance, the Maxinmm aggregate Company and its subsidiaries haw been fi>llowing the practice anunmt outstanding of utilizing pn>perty additions as Iwrmitted by the indentures.

at any month end during the 3rar.

$167,275 5110,885 5168,555 Note 6-Hetirement Plans Average daily short.

'lhe retirement plans emering employees of the Gimpany

'CI* I*ff""I"M' and its subsidiaries are financed through irremcable pension outstanding during trusts and gnmp annuity contracts. 'lhe policy is to fund alw 3 ras pension costs accrued. Some plans were amended during 1981,

^8M*Md'C amount.

$136,116 590,425 593,5 is 1980 and 1979 to pnnide increased benefits. G>sts of the retirement plans fi>r the ) tars 1981,1980 and 1979 were Weighted com-512,515,000, 5 I la 17,0m) and 59, i90,000, respectiwly, of P"'I'C *'CfCSI

rate, 17.8%

13A't 1I.7%

which approxinutely 22T was charged to construction accounts. 'the afbrementioned amounts include current senice costs plus prior senice costs u hich are being amortiicd

'Ihe alxnr weighted composite interest rates were calculated by dividing the applicable interest expense for the mer twentv vears.

A comparison of estimated actuarial present salue of year by the average daily short term Imrrowings shown alxnr accumulated plan benefits and plan net assets lbilow3 (in At I)cccmher 31,1981, the Gimpany and its subsidiaries millions).

had bank lines of credit aggregating 5121,220,000 which make available interim financing at the prime rate ofinterest.

At I)cccmher 31, in support of such lines of credit, the G>mpany has unwritten 1981 1980 1979 agreements with the majority of its lending banks to nuintain Vested.

$216 5225

$203 awrage compensating balances equisalent to 8% of the line of cadit as detennined from Ihe bank records. In addition, at Nomrsted.

i

'i

'i I)cccmber 31,1981, the G>mpany had commitments fnnu

$ 50 SRH SM banks aggregating 570,000.000 ( $30,000,(H)O to expire Net assets available Ihr August 31,1982; $10,000,000 to expire September 12,1982; henefits.

$179 5172 5I52 55.000,000 to expire September 30,1982; 510,000,000 to expire October 31,1982; $5,000,WHi to expire November 25,

'lhe weighted awrage assumed rate of return used in 1982; and $10,000.000 to expire 1)cccmher 31,1982). Ihr determining the actuarial present value of accumulated plan these commitments the G>mpany pap an annual fee of 0.25%

benefits was 6% for the 3rars 1981,1980 and 19~9.

on Ihe unused portions of the commitments.

26 j

Note 8-Construction Commitments based on an average interest rate of 17.6% and 14.7%,

The Company and its subsidiaries are engaged in a respecthcly. Related interest costs capitalized during the irar construction program under which expenditures of 1979 were immaterial.

approxi:nately 51.6 billion are anticipated during the next five tears, of which expenditures of 5553,(XX),(XX) and Note 11-Supplementary Income Statement 5142,(HX),(XX) are estimated to be made in 1982 and 1983, Information respectively.

1981 1980 1979 (Thousands of Dollars)

Note 9-Contingencies Maintenance and repairs, On October 9,1981, the Company cancelkd construction charged directly to:

of Unit No. 2 at its Callaway nuclear plant which unit had been Operating expenses

$87,435 580,632 571,18i scheduled to be placed in service in 1990. At December 31, Other accounts (a) 4,768 4,805 4,074 1981, 570 million, representing construction costs

$92,203 585,437 575,258 accumulated to that date plus estimated cancellation charges (net of taxes), has been deferred. As soon as practicable the Depreciation, depletion O>mpany will request from regulatory agencies having and amortization of jurisdiction appnnul to amortire and reontr such costs in its fixed and intangible ekctric rates. All costs which are denied recovery in rates by assets, charged any agency will be written off and charged against income directly to:

during the period the denial becomes final. In the opinion of Operating expenses

$81,310 578,819 576,300 management, the effect of such unrec nrred costs, if any, Other accounts (a) 2,435 2,208 2,054 wuuld not be material to ahe financial position of the Ozmpany.

_$83,745 581,027 578,354 axes, other than Note 10-Nuclear Fuel Irase-Capitalized payn>ll and income

'lhe Osmpany has entered into a lease agreement which taxes, charged pnnides for the financing of the costs of up to $200,(XX),(HH)

( ectly to:

of the O>mpany's nuclear fuel. Pursuant to the tenus of the Operating ynws-lease, the Company has assigned to the lessor certain contracts

"""I**'"'"""

for purchase of nuclear fuel. 'lhe lessor will obtain through personal property $ 51,977 5 53,128 5 50,651 the issuance of commercial paper backed by letters of credit

""""*"""'I from commercial banks, or from direct loans from commercial franchise.

54,664 54,068 49,467

)

banks, the necessary ftmds to purchase the fuel and make Other.

1,338 1,389 1,137 interest payments when due.

'1he O>mpany is unconditionally obligated to reimburse 107,979 108,585 101,258 the lessor for all expenditures for nuclear fuel, interest and Other accounts.

7,907 5,442 3,584 related costs. Obligations under this lease will become

$115,886 5114,027 5104,842 current at such time as the nuclear fuel is engaged in heat pnxluction at the O>mpany's Callaway nuclear plant, which is (a) A substantial portion of amounts charged to other accounts scheduled for completion in early 198 f.

is alh>cated to operating expenses through clearing accounts.

In accordance with state regulatory commissions

• policies, (b)1he amounts of payroll taxes for the 3rars 1981,1980 and the Company is capitalizing the cost, including interest costs, 1979 were 59,149,(XX), 57,260,(XX) and $7,733,(XX),

of the leased nuclear fuel and is recording the related lease respecthrly.

obligation. During the yrars 1981 and 1980, the Company (c)1he amounts of royulties and adwrtising costs were not capitalized related interest costsof 519,753,(XX)and 59,518.(Xx) material.

'lhis 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 ofits subsidiaries.

l 27

MANAGEMENT'S DISCUSSION AND ANALYSI2-LIQUIDITY AND CAPITAL RESOURCES Union Electric and Subsidiaries Consolidated capital expenditures for the construction The types, amounts and timing of future financings will program totalled $1.9 billion during the fim years ended depend upon market conditions, regulatory actions, law, rate December 31,1981 (see " Capital Requirements Pnnided Ily Jewis and other factors. The Company's objective is to Many Sources" on page I1). Such expenditures are estimated maintain, approximately, the consolidated capitalization to aggregate $1.6 billion mer the next fiw years,1982 through ratios, as presently established (see Capitalization Ratios 1986, including $553 million in 1982 and 5162 million in under Financial Ibsition on page 31).

1983. 'Ihe estimated cash requirements for this construction

'Ihe Company and its subsidiaries plan to continue to utilize program, excluding amounts for allowance for funds used slu>rt term debt as interim supimrt between long-term during const ruction and nuclear fuel which is being leased, are financing. Consolidated awrage daily short term borrowings

$372 million for 1982 and F229 million for 1983. 'lhe outstanding during 1981 aggregated 5136.1 million with a Company presently anticipart aar 15 to 20% of such cash weighted composite interest rate of 17.8% At December 31, requirements in the 3rars 1982 auJ 1983 will be obtained 1981, bank lines of credit and credit commitments from banks from internally generated funds, assuming a major portion of aggregated $191.2 million, not including the re uhing credit the $l28 million rate increase request pending in Missouri is agreement mentioned alxnt; and, at such date $120.1 million authori/cd to become cifectiw in 1982. In 1984 and of slmrt. term bank loans and commercial paper uns out-thereafter, the internal generation of cash is expected to standing, including 566cl million in bank loans (see Note 7 impnne dranutically w hen Callaway Unit No.1 is completed under Notes to Financial Statements). 'the Company and its at a cost of approximately $2.1 billion and is included in rate subsidiaries are authorized by the Federal Energy Regulatory base.

Commission to incur up to $3 47 million of short term

)

In addition to the funds required ihr construction durinM unsecured indebtedness; howntr, short-term debt is not the 1982 1986 period, 528 i million will be required to retire expected to exceed $200 million.

long term debt maturing during the period and for sinking

'the Company has entered into a nuclear fuel lease pnniding ftmd payments on first mortgage Imnds and preferred stock for the financing of up to $200 million of nuclear fuel. At (see Notes i and 5 under Notes to Financial Statements).

December 31,1981, SI31 million of nuclear fuel had been During 1981,519.1 million was invested by shareholders financed under the lease.

and employees through the Company's Dividend Reimtstment irg station which became cifectiw in the State of Missouri and Stock Purchase Plan. At 3rar-end 29,700 common in late 1981 may have the unintended effect of preventing or shareholders, or about 17 percent of common shareholders, limiting companies from issuing additional securities under were participating in the Plan. Ihc Company is in the process certain instruments secured by real property such as the of expanding the Plan to include customers and taking the mortgage pursuant to which the Company's first mortgage necessary steps to make preferred shareholders' dividends Imnds are issued. 'the Company belints that it has sullicient eligible for reinvestment in its common stock. 'Ihc Company flexibility to permit it to issue unsecured long-term debt cannot estinute what cifect these changes or tax exemptions instead of the first mortgage Imnds it plans to issue (although included under the Economic Rec nrry Tax Act of 1981 may possibly at a higher cost ) to finance the alxnr described have on the Plan.

construction expenditures. Remedial legislation has been At December 31,1981 there was more than 531 million of intnxtuced in the Missouri legislature which the Company unused proceeds on deposit with a Trustee under a 1981 belints can be enacted by the time the Company would Environmental Impnntment financing, which will be utili/cd ultimatelv need to sell additional bonds.

to finance nov Imilution control nacilities ( $56 million was

'lhe mortgage indenture of the Company requires a expended from Emironmental Impnntment financing in the minimum Inti of carnings Ihr the issuance of additional 3rar 1981 alone).

Imnds. Such requirement may restrict the issuance of In February,1982, the Company sold $75 million of additional mortgage bonds, unless substantial rate reliefis preferred stock. 'lhe annual disidend on this new $25 received in 1982.

preferred stock is 5 s.00. In 1981, the Company entered into For data relative to Supplementary Infbrmation on Inflation a four year rauhing credit agreement with certain domestic and Changing Prices, see pages 32 and 33 commercial banks w hich permits the Company to borrow up to $100 million, at an interest rate based on bank floating prime rates or, at Ihe Compans option, Ihe I.ondon Interitank Offered Rate. At December 31,1981, none of such long-term debt was outstanding: howntr, the Company imrnmed 550 million under this agreement on libruary 22,1982 and such amount is required to be retired in 1985.

28

MANAGEMENTO DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Union Electric and Subsidiaries liarnings and earnings per share lluctuated due to conditions

• 1bliowing the 51issouri Supreme Court decision in 1979 unique to this industry in general and this company in declaring fuel adjustment clauses unlawful in Slisv>uri, the particular: weather, untimely and inadequate rate increases, Cumpany discontinued deferring such titel costs collectible dilution from additonal shares issued, unrecovered fuel cost under the clause.

increases, and the substitution of the alkm ance fi>r funds used Other Operations during onwiruction (a sum-cash item) for the ability to

'Ihe cost of operations, other than fuel and purchased reanrr in cash the cost of funds invested in facilities under power, increased ammally due alnu>st entirciv to recurring construction. 'Ihe impact of the nmre significant of these items omditions, such as gnm$h, inflation and wagc increases.

~

is discussed below.

Staintenance Electric Opentting Revenues

'Ihe variations in maintenance reflected normal increases principally due to higher costs of repair parts and wage N,ariation trom Prior T, ear increases and two major storms in the summer of 1981.

I98I I98U I

Depreciation

(.\\lillions of Dollars)

'lhe variations in depreciation resulted from increases in Tariffs and fiici clauses.

$ 48.2 5 70.3 526.9 depreciabic property. No changes were made in depreciation Kilowatt-hour sales.

(20s)

F.3 2.2 rates during the periods.

I.icenw/ franchiw taxes.

i6

1. I Income Taxes

$ 22.8 5122.2 530.2 Income taxes fluctuated in response to pretax income and Variations in c!cctric operating rnrnues were the result of wrre also reduced in 1979 when the federal income tax general rate increases, fuct adjustment clauses, weather, rate was reduced fn>m 18"o to 16". I:or additional details gnm th and economic condition, see Notes I and 2 under Notes to l'inancial Statements.

Signilicant electric rate increases were granted by the Other Taxes Aliwmri Public Senice Commission in mid-1980

'lhese increases generally reflect increased gross receipts (appnnimately 522 million annually) and mid-1981 taxes on greater rntnues and higher payroll taxes due to (appnnimately 565 million annually). In addition. clicctive increases in social security taxable wage bases and rates.

.\\1.n 30,1980 the Aliwmri Commission restnictured rates apl$licable to all classifications of customers to increase rates ter henn June through October and decrease rates November thnmgh Interest and Preferred Dividends Ntay. Appnnimately 520 million was added to 1980 rornues

'ihe increases in interest and preferred dividends were duc (oliset in 1981 rntnues) as a result of that restructuring.

to the issuance of additional securitics to finance the In 1979, following a Niiwmri Supreme Court decision construction pn> gram at higher rates.

declaring electric lisci clauses unt.m ful, a 5" million hic!

'Ihc increase in 1981 reflects the annualinterest requirement clause surcharge collected earlier was retimded to Aliw>uri on the $150 million sale in early 1981 ofl'nion lilectric Company liS'b Series first mor'tgage Imnds, and higher i

customers.

'lhe unusually hot 1980 weather added about 533 million interest rates and the greater amount of short-term debt to normal rntnues w hile the cooler than normal 1981 outstanding during 1981.

summer reduced normal rnenues about 513 million.

Allowance for I unds Used During Opentting Expenses construction (AFC)

Al'C increased due to an increased amount of Construction

'lhe changes in operating expenses were as fi>llows:

Wori in Progress and to increased Al:C rates. 'lhe amount of Al'C will continue to increase significantiv and constitute a I uct and substantial portion of carnings. until suclitime as the Purchased Power Variation from Prior Year Callaway nuclear plant goes into commercial operation and 1981 1980 19 9 is included in rate base and its o>sts reflected in electric rates.

Ihis plant is presently scheduled fi>r o>mpletion in early 198 s.

l'uel:

(31illions of Dollars)

Variation in generation.

. $(17,6) 5 ( 6.0 )

5

.9 Price increases.

31.6 207 25.3

• Deferred fiici termination.

( l s.0)

I LO I:lliciencies.

.H

( ~.5 )

( 10 H)

Purchased and interchange gx m cr.

7.7 39 0 15.9

$ 22.5 5 32.2 5 85.3 29 l

SELECTEJ FINANCIAL INFORMATION Union Electric and Subshilaries Year Ended December 31, 1981 1980 1979 1978 1977

(' thousands of dollars except share and per share amounts and ratios)

$1,105,536 51,077,876 5916,797 5903,988 5765,102 Operating revenues..

Operating expenses.

922,647 886,720 780,331 727,756 605,963 Operating income.

182,889 191,156 166,466 176,232 159,139 Allowance for equity funds used 64,600 45,357 31,245 15,980 8,301 during construction..

Other income - miscellaneous.

(734) 3,638 879 2,896 1,389 Interest on debt and other items..

180,697 132,112 107,383 90,699 81,0 h Allowance for horrowed funds used 91,025 46,698 26,818 15,189 10,721 during construction.

Net income.

157,083 151,737 118,055 119,898 95,535 Preferred dividend requirements of Company..

29,478 29,695 26,918 23,010 20,367 Earnings on common stock.

127,605 125,012 91,107 96,858 75,168 Earnings per share of common stock (based on :ncrage shares outstanding).

$1.90 52.10 51.73 52.01 51.67 Cash dividends declared per share of common stock.

$1.52 51.48 5 I,-i i 51.10

$ 1.36 Average number of common shares outstanding.

67,179,275 59,675,995 52,577,.i32 18,260,596 45,110,215 Return on awrage common stock equity.

12.11%

13.1 l'L 10.71'Y.

12.61*t 10.68't Ratio of carnings to fixed charges (a).

2.29 2.85 2.61 3.18 2.81

'Ibral assets.

$4,047,277

$3,552,101 53,168,998 52,800,209 52,521,181 Inng-term dcht obligations.

1,719,927 1,179,229 1,307,990 1,238,860 1,189,080 Redeemable preferred stock.

I10,014 112,010 114,066

-11,092 11,118 u) Earnings used in computing the ratio of carnings to fixed charges consist of net income plus fixed charges (interest on debt, preferred divid.mds of subsidiaries and an appropriate amount of rentals charged to operating expenses) and income taxes.

1 30

FINANCIAL POSITIsN Union Electric and Subsidiaries December 31, 1981 1980 1979 1978 1977

(' thousands of dollars except share and per share amounts and ratios)

Assets Propertics (at original cost).

$4,554,567 54,051,121 53,649,728

$3,266,522 52,953,865 Irssaccumulated depreciation.

915,996 818,826 786,147 725,448 662,516 3,638,571 3,202,298 2,863,581 2,541,076 2,291,329 Receivables, nct.

135,4 %

126,075 148,482 116,938 94,312 Fuel supplies.

82.310 109,908 85,107 69,198 59,i26 other assets.

190,900 113,823 71,828 72,999 76,1I4 i

j Total Assets

$4,047,277 53,552,101 53,168,998 52,800,209

$2,521,IH1 Capital and Liabilities Capitalization:

Common stock and retained earnings-Common stock.

$ 373,780 5 330,627 5 293,986 5 259,5 a6 5 234,059 other paid-in capital.

464,450

-s I 1,020 37-s,189 328,573 280,187 Retained earnings.

324,547 298,902 262,20)

'i7,901 218,865 Common equity.

1,162,777 1,0i3,549 930,375 836,020 733,111 Preferred stock not subject to mandatory red mption.

281,355 281,355 281,355 281,355 281,355 Preferred stock subject to mandatoty redemg tion.

110,014 112,010 11-i,066 j 1,092 41,I18 inng-term debt obligations.

1,719,927 1, e 9,229 1,307,990 1,238.860 1,189,080

'lbtal capitalization 3,274,073 2,916,173 2,633,786 2,397,327 2,266,661 t

Accumulated deferred taxes on income.

238,153 166,16" 123,29I 95,507 69,410 i

l Accumulated deferred l

investment tax credits.

125,290 113.-47i 87,556 55,6#7 33,612 Accounts and wages paphic.

91,567 98.22i 100,310 92,321 57,745 Short-term debt including current maturities, 152,253 141,895 122,909 31.692 23,155 Other liabilitics.

165,941 116,171 101,116 124,715 92,595 Total Capital and 1.iabilities

$4,047,277 53,552,101 53,168,998 52.800,209 52,521,181 Colninon Stock Data Number of shares outstanding.

74,755,885 66,125,317 58,796,909 51,909,270 46,811,805 llook value per share,

$15.55 515.78 515.82 516.11 515.66 Capitalization Ratios Common equity.

35.5%

35.8%

35.31, 34.9'Y, 3 2.~1, Preferred stock not subject to mandatory redemption, 8.6 9.7 10.7 11.7 12.5 Preti rred stock subject to mandatory redemption, 3.4 3.8 4.3 1.~

1.8 1.ong-term debt.

52.5 50.7 19.~

51.'

53.0

'Ibtal 100.0%

100.0"i, I OO.0"n 100.01, 100.0",

31

SUPPL.EMENTARY INFORMATION ON INFLATION AND CHANGING PRICES (UNAUDITED)

J Union lilectric and Subsidiaries Estimates of the effects ofinflation and changing prices on Accumulated Depreciation the operations of the Company for the yrar ended December lhe accumulated pnnision ihr depreciation for both 31,1981, are presented in accordance with the requirements constant dollar and current cost was determined by applying oflinancial Accounting Standards lloard (FASil) Statement to the adjusted amounts for each functional class of plant, the No. 33, "linancial Reporting and Changing Prices." Statement same percentage relationship that existed between gross plant No. 33 requires that historical costs be adjusted to reflect the and the associated accumulated pnnision for depreciation effects that general inflation (constant dollar) and changes on an historical basis.

in specific prices (current o>st) have had on the Company's Depreciation Expense operations. 'lhe adjusted data is not intended as a substitute Depreciation expense ihr the year 1981 applicabic to for carnings reported on an historical cost basis, but rather constant dollar and current cost property was $19-1,076,(XX) to giw some perspective as to the approximate effects of and 5218,-169,(HX), respectively. 'lhe actual 1981 depreciation changes in the purchasing gwmer of the dollar.

expense was SHI,310,(XX).

Pmperty, Plant and Equipment

'ihe adjusted amounts were detennined by applying to the lhe estimated value in average 1981 dollars ofproperty, plant indexed property and plant values the same straight-line and equipment, including construction work in progress, book rates used Ihr historical purposes.

was determined by applying the Consumer Price Index lbr Reduction of Pmperty, Plant and Equipment to Net All l'rban Consumers to the historical cost of plant. 'lhe Recovemble Cost current cost estimates were primarily measured by applying The regulatory process limits the Company to the recovery the llandy. Whitman Index of Public tltility Construction of the historical' cost of property and plant through depreci.

Cost to each major class of plant, turrent cost approximates ation. Therefore, any excess of property and plant in constant Ihe wst of currently replaang existing plant. ihe adjusted dollars or current cost must be reduced to the net recowrable plant data under either the constant dollar or current cost cost, which is historical cost, while the rate-making process methods does not indicate the Company's future capital does not reflect the current cost of replacing utility plant, requirements because actual replacement of existing plant past practice indicates the Company will be allowed to earn will occur over many ) tars and will not identically replace on the increased cost ofits net imestment after these facilities existing plant.

are replaced. 'Ihe excess of constant dollar and current cost At December 31,1981, the constant dollar and current mer historical cost property and plant occurring in 1981 was cost of property, plant and equipment, net of accumulated 5178.359,tXH) and 5167,315,tHH), respectiwly.

deprecialion, were 57.012,985.(HH) and 58,095,611,000, respectivelv, w hile historical or net recoverable cost was Gain From Decline in Purchasing Power of Net

~

Amounts Owed 53.638,57 I,tH)o. 'lhe current cost and constant do!!ar values differ because specific prices of plant haw increased at a rate

'lhe Company, by hasing assets such as receivables, fuel and different from that ofgeneralinflation.

materials inventory and deferred charges, suffers a loss of purchasing power during periods of inflation because after l

l l

Consolidated Statement ofIncome Adjusted for Changing Prices For the Year Ended December 31,1981 Constant Dollar Current Cost

(

(in 'lhousands of Awrage 1981 Dollars) l Earnings on common stock as reported.

5 127,603 5 12",605 Additional depreciation expense.

(l12,766)

(137,159) l'arnings (loss) on oimmon stock, as adjusted (excluding reduction to net recowrable aist).

1i.839 *

(9,55i)

Reduction to net reuntrable cost.

(178.359)

(167,315)

Relatiw price changes.

13,319 *

• Gain from decline in purchasing lwmer of net amounts oued.

162H~9 162.879 Net crosion of oimmon shareholders' equity 5

(6-i I )

5 (6iI) l

• Earnings on common stock on a constant dollar basis would haw been a loss of $163,520.tHH) if it reflected the reduction of $178,359.(HH) to net reontrabic cost.

• Ikpresents the excess of specific price changes. 5661.62 s.tHH), in 1981 owr the increase for 1981 in general prices of property and plant, $6 68.2 5.(HHL 32

conwrsion, the cash recciwd for these items will purchase

'Ihe net crosion on comnum shareholders' equity, in 1981, less. More than offsetting these assets, howcwr, are significant including the effect fnnn changing prices, anmunted to a loss amounts of long. term debt, refundable preferred stock, of 5611,tHM) or le per share. Also, because lederal income tax deferred income taxes and current liabilitics which will be policy prohibits the deduction of inflation-adjusted deprecia-repaid with " cheaper" dollars. 'Ihus, fi>r 1981, the Company tion expense finr income taxes, the Company's 1981 cffectim experienced a net " gain" of $162.H79.000 from having an income tax rate was 62 percent fi>r constant dollar and 7H excess of monetary liabilit ies mrr monetary assets. ( Invest ments

[wrcent under current cost, each of which is greater than the and unamortiecd inwstment tax credits were considered as lederal statutory rate of 16 percent. Failure of regtdatory and nonmonetary items; nonreftmdable preferred stock was taxing authorities to recogniic in allowable depreciation the included in shareholders equity).

current cost of plant, has serious implications. It sewrcly limits Genend the amount of funds that are generated internally tbr use in As allowed by Statement No. 33, other than depreciation replacing or modernizing aging and obsolete assets.

expense, none of the other income statement items, including Rates authoriecd by regulatory agencies must be sullicient income taxes, were adjusted.

to permit the replacing ofplant and equipment when necessary tbr rate. making purposes, the amount of depreciation as well as present the purchasing gwwer of common equity expense included in the O>mpany's allowed rewnues is based capital. As shown on the live Year Comparisam of Selected on historical or original cost. 'lhe O>mpany's inability to Suppicmentary Financial 1)ata, to haw retained the same reflect the effects of inflation and changing prices resulted in purchasing power as they had in 1977, the Onrpany's 1981 regurted earnings of $l27JiO5JHM)or $1.90 per share common shareholders should have recciwd 1981 common rather than the more realistic carnings of SI 1.H39,000 or 22e dividends of 52 0 i per share and the realized returns on per share on a constant dollar basis, or a loss of 59,55 6,tHM) common equity should have been sullicient to permit the or I se per share on a current cost basis regmrted on the Fiw common stock to sell at about $22.00 per share or more Year Gimparison of Selected Supplementary Financial I)ata.

than twice the actual year-end price.

I ive Year Comparison of Selected Supplementary Financial Data Year Endeel December 31, Adjusted for Effects of Changing Prices 19H1 19H0 1979 1978 1977 (In 'lhousands of Awrage 1981 Dollars Except l'er Share and "As Reported" Amounts)

Openiting revenues:

As reported.

51,105,536 51,077,876 5 916,797 5 903,988 5 765,102 Adjusted li>r general inflation.

1,105,536 1,190,t H H)

I,l H6,t H H)

I,260,0(M) 1,1 lH,(M)0 Earnings (loss) on common stock (excludhig reduction to net recovemble cost):

As reported.

5127/>05 5 125.062 5 91,107 Adjusted li>r general inflation.

I(,839 33,928 IHcl69 liased on current cost.

(9,55 f )

7,036 (16,202)

Earnings (loss) per share of common stock (excluding reduction to net recovemble cost):

As reported.

51.90

$2.10 51.73 Adjusted fi>r general inflation.

.22

.57 35 liased on current cost.

(.16 )

.12

(.3 I)

Shareholders equity (net assets), at year end:

Ilistorical cos:( as reported ).

51 ci i l.132 51,326,901 51,211,730 Adjusted tbr both gencr;d inflation and current cost.

1,397el-17 1,396/>H6 1,135,735 Excess (deficiency) of genemi price changes over increase in the specific level of prices.

5 (l3.3 19) 5125/>08 5 206,376 Gain from decline in purchasing power of net amounts owed.

5162,H79 5211,853 5 229,67i Cash dividends declawd per common share:

Actual.

51,52 51.68 51.-61 51.60 51.36 Adjusted ihr general inflation.

I.52 1.63 1.80 1.95 2.01 Market price per share, at year end:

Actual.

5103 5103i 512 513 %

SIS Adjusted for general inflation.

10 %

1Ib li%

18 12 Average consumer pricc index.

272

11nion Electric Company 1981 Price Range (2) 1981 1980 Price Range (2) 1980 Quarter Ended:

liigh im Diddends Iligh Inw Dividends (3)

$11 %

$10 38f

. March 31.

512 %

59%

36c 11 %

10 %

38

. June 30.

12%

10 36 11 %

10 38

. September 30.

12%

IiM 38 11%

93 38

. December 31.

12 10%

38

( I) At thremtwr 31.19H1. I'nion l'ks'tric Cnmpany ownn>>n stm k stun luiklers totalktl 173.2H3

( 2) llasetl on trans.x tions rotunkst on the Nw Wrk Newk I st hange.

(3) Rntriction on the payment of unnnuin sam k (lisitk1xts at thremtwr 31.19H1: (innw>littatetl Retairust I arnings ana nmttsi to 5321.5 47 tM N) as of Iktrmtwr 31,19Hl; lu mtwr. urnfer the nmrtg.lge irulenture of l'nion 1.let tric Gunpany, as anu1xlett. 55179'.0t M1 of sta h retairrt! rarnings was restrirtetl against pa)nwns of tumnum (lisittorals - extrpt ilm nc pavahir in ownnuin stmk.

CINSTRUCTION FORECAST clhousands or Dollars) linion Electric and Subsidiaries 1982 1983 198 i 1985 1986 Construction E.spendittitrs:

Callamty nuclear pl. tnt.

5369.H00

$303,300

$ H3.000 5

5 All other f.tcilitics.

182.700 138,500 171,100 167.700 231.300

'lbtal 5552,500

$ e a 1.800

$25 6.100

$ 167.700 5231.300 3i

OPERATING STATISTIC 3 Union lilectric and Subsidiaries 1981 1980 1979 1978 1977 1971 Eltctric Operutinu, Revenues ((HN)):

Residential.

$ 389,182 5102,160 5333,251 5331,128 52H3,12 6 5131,-s3M 1

Commercial.

321,400 306AH6 265.27H 253,279 219,806 95,316 Industrial.

250,842 233.H5i 221,617 209,i10 169,831 76,897 Other clectric utilitics, 39,789 35,619 31,1H5 31,565 2-i,0 iG 14,601 51iscellaneous.

18,458 18,774 20,3H8 19,061 16,232 7,712

'listal

$1,019,671 5996,893 5H71,719 5Hiid73

$713,036 5325,96i Kilowatt Ilour S: des (000,000):

Residential.

7,756 H,i16 7,516 7.670 7,389 5,653 Commercial.

7,026 6,913 6,-163 6,332 6.331 1,957 Industrial.

7,767 7.616 7,858 7,738 7,656 6,333 Other clectric utilitics.

1,420 I,i35 1,3 11 1,317 1,263 1,338 Aliscell.mcous.

312 385 iHI 160 i62 393

'Ibtal 2i,279 2i,795 23,6H9 23,517 23,08I IH,671 Electric Customers (I:nd of year):

Residential, 870,066 862,106 H53,90H H i5,07 i H32,251 735,115 Cnmmercial.

108,561 IO6, i28 101,355 99,751 99,105 79,.iH i Indust rial.

5,207 5,328 5,33i 5,3 68 5,225 5,075 I{lectric utilitics.

26 21 21 2i 21 20 Other.

3,065 2.950 2,917 2,753 2,312 1,09i

'li>tal 986,923 977,136 963,53H 952,950 938,917 H20,788 Residential Customer Data ( Average):

Kilowatt hours used.

H,955 9,H 18 H,893 9,167 H,956 7,49s Annual clectric hill.

$4 69.35 5 s6H.92 5392.7i 5395.7i 5363.16 5180.63 Hornuc per kilowatt hour.

5.02 <

1.76c

.iA2c 1.32c 3.83c 2.lle Systern Gross Instantaneous Peak Dernand (Kilowatts),

6,296,000 6AOi,(HN) 5,H i6,000 5,H 13,(M H) 5,H37,(H)0 j,503,(H N)

Systern Capability at Tirne of Peak, including Net of IIran Purchase and Sale of Capacity ( Kilowatts).

7,444,000 7, i68,(H M) 7,739,000 6,873,000 6,891,000 5,6H2,(H)0 Generating Capability at Tiene of Peak (Kilowatts).

6,879,000 6,H2 i,000 6,9 i7,(HM) 6,7 I H,000 6f>07,000 1,957,(NH)

Systern Net Integruted Ilour Peak Dennand (Kilow.itts).

6,014,000 6,107.000 SJ>09.000 5,528,(H H) 5,525,000 4,280,000 Inad l' actor (Net Integrated llour).

49.7%

50.1 T.

52aT.

52.7't 51.HT.

52.8%

Coal Iturned ('Ibns).

11,316,000 l I,730,0(X) 12.037,(MH)

I 1,866,(H H) l I,915,(XX) 6,966,(M H)

Price per Ton of Coal.

$29.15 526.H5 526.02 526.15 517.H6 56.38 e

35

OFFICERS AND DIRECTORJ OfHcers Board of Directors CharlesJ. Dougherty J. A. Ilaer II (1stinnan and (1rief Kurutire Oplcer flusimss Gansultant;lionmr(Julinnan and (1rief Enrutire Oficer-Stix, llaer &

William E. C,ornelius l'uller, which operates department thsident stores.

Earl K. Dille

• W. L Ilchan,Jr.

Eurutive l'it e lhsident (1ktinnan oflin'istuntieinti (1>hfEwruttie OjJ7ctr-Ibil itchan Stewart W. S.mith,Jr.

lumtwr Company. w!w>Icsalcr &

Eurutuc 17celhshient retailer oflumber and allied building II. Clple Allen P"'d"

lyce lhsident - Rewarch Sam II. Cook and Ikiclopnwnt cyy,innan - Central llancompany and its subsidian. Central llank, whith conducts J. I* I.. l a general' hanking business.

. rle l' ice Ihsklent and Ctantnoihr

• William E. Cornelius bl. E. Galewood lh>sident iTcc thsident-Supply Senice

• Earl K. Dille G.J. llaven E"Y"'i '" ih'id'"'

i7ce Ihsident - Transmission and I)istribution

• CharlesJ. Dougherty Itobert O. Yiening (1*'i"""" ""d O'i'iE*T"'i Olli'

lyre lhsident - Rate'

• Edwin S. Jones William A. Sanford

• it'""*r (1xiinnan of the ltrumi-Centerre llancorporation. a 17cc thsident - Industrial Relations multihank holding company.

Donald E Schnell

• Itichard A. Meyer 17cc thsident - Nuclear

, Retioni,fr>nner Ihsident -

EdgarJ. Telthorst Anheuser llusch. Inc.

l' ice lhsident - lbw cr Operations blerle T. Weishans (Jurir,nant <>fslu Isaunxlanid 17ce thsident - l'inance (1rief Ewrutiis> Ogirav - INTI:RCO. a manufacturcr and retailer of consumer

11. E. Wuertenbaccher,Jr.

pnx!ucts and senices.

17cc thsident - Customer Senice

• Slewart W. Smilh,Jr.

Willialu E.Jaudes Enrutise 17cc thsident (hvustd Cronnsel

• • lloward I Wung C. W. MUCIler lionner ihsident a5 sci (iktinnan -

hnistuvr American Zine Company. engaged in mining and marketing of nonfirnius G.11. Mtirniy metals.

N rovtary Advisers to the lloard Isaac II. Grainger Ikonner thsident - Chemical Ilank J. W. McAli e isonnes-(Itsinnsut eoflin Il<sutt

• \\temins of1.m talitt* t committer

• * \\leming rof. imliling (' ommitt<v c

/

Office Statement ofIN>licy 1901 Gratiot Nrcet We are a business enterprise -

N. Iouis,510 0106213222 dependent for success on the high quality and fair price of our senice:

Mailing Addre" on the skill, courtesy, and lo)2lty of our len, si ) 63166 eniplo)tes; on Om conMence of out' imrstors; and on the ability of our management to forecast and pnnide Transfer Agents for the electric prmtr requirements of For Preferred Stock our area.

Stercantile Thnt O>mpany in the conduct of our business, we National Aw>ciation will render senice of the highest N. Inuis,310 63166 quality to our customers - promptly, slanufacturers llaruner courteously, and efficiently-at the lhnt Ormpany lowrst prices consistent with paying fair New Ti>rk, NY 10015 wages and affbrding job satisfaction and For Common Stock security to our emplo}res, praniding Centerrelhnt O>mpany mm!crn facilitics for our customers' of N. Inuis expanding needs for electric senice; N. Inuis AIO 63101 and paying a fair return to our imtstors slanufacturers llanmer who have pnnided the fiands to make

.' 3,$I such senice possible.

nogg As a private enterprise entnoted with an essential public senice, we Registmm

'"E" I "" ' '

"P '"'

'I'"

For Preferred Stock 1hc Iknatmeris National llank of N. Inuis.

Ihese communitles and shall partscipate N. Inuis, MO 63166 in cisic actisitics u hich fulfill that 1hc Chase Manhattan Itank goal..for we belicsr this is both pxx1 (National Aw>ciation) citi/cuship and pHxl business.

New York, NY 10015 Ior Gunmon Stock 1he Ikiatmeris National llank of N. Inuis N. Inuis, MO 63166 Manufacturers llarunrr 1 hot Osmpany New Wrk, NY 10015 Trustee, Transfer Agents, Registmm, and INiying Agents For Iirst Mortgage Honds Centerre'Innt O>mpany of N. Inuis, 7iustm M. Inuis, MO 6311O llankers Ihnt Osmpany e

New York, NY 10015

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