ML20140B526
| ML20140B526 | |
| Person / Time | |
|---|---|
| Site: | Callaway  |
| Issue date: | 12/31/1985 |
| From: | Schnell D UNION ELECTRIC CO. |
| To: | Harold Denton Office of Nuclear Reactor Regulation |
| References | |
| ULNRC-1272, NUDOCS 8603240217 | |
| Download: ML20140B526 (46) | |
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nual Meeting The Annual Meeting of Stockholders will convene at 10 a.m. 'lhesday, April 22, 1986 at Powell Symphony Itall, 718 North Grand, Saint Louis,311ssouri. n The Cover The St. Louis area is in the midst of an impresshe resurgence, renovating old structures and developing new projects. One of the most exciting projects is the transformation of the old, abandoned Union Station into a bustling commercial complex, shown on the cover of this report. This proj-ect and others are described on pages 6 and 7. ontents Letter To Stockholders y liighlighting Financial ltrformance w Sening An Exciting Area e Prosiding Reliable Senice m hieeting Customer Needs u
- llanaging For The Wuture u Officers And Directors n Responsibility For Financial Statements u Financial Resiew m Investor information m
1 l estment Review I_lighligh_ tS _ _ - _ ._ _ Ann _u_ al inc.re_a_se . l 10 Year ; l Year Ended Current Rate of _. _ -__De_ c_e_ mber 31, 19._85 - _ . - _ - Year Growth Earnings per Average Comnon Share $2.86 0.7 % 4.!n, Divi tendspComnon Share _ _ _ _ _ __ _ _ _ _ _
$ 1.78 3.5 3.4 Comnon Stock Price - Year Eixl $21% 2tL5 4.8 Book Va_lue per Common Share .
$ 18.48 6.3 2.2 Total Kilowatt-ilour Sales 27,294,943,000 1.S 2.7 i Electric Customers -liar End _ _ _
_ IJ19,000 _ l.6 1.1 ! l Commercial Kilowatt-ilour Sale 3 8,822,533,000 4.5 4.7 huhistrial Kilowatt-ilour Sales ._ _ _8,037,786_,000 1.4 __ l .6 Total Operating Revenues $ 1,591,763,000 12.7 10.6 Png_erty arul__P_lan_t -- - - i eros _s__I - li>a_r_ E_ n_d___
$6__,944_,0_12_,000 - - 5._S _10.4 _
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m o Our Stockholders: We are pleased to report that 1985 w~as a good year for Union Electric - one in which your Company continued to build on its tradition of soum! management amt to examine all aspects of our business ami imiustry as we prepare for the future. Among the yeath highlights were:
= A two cent per share increase in common stock earnings, from $2.84 in 1984 to $2.86 earned in 1985.
= A three cent per share increase in the common stock dividend in the third quarter. This brings the annual rate to $1.84 per share. *
= A 2% increase in total kilowatt-hour sales.
= An improved financial condition, stimulated by the caeh return on the investment in Callaway which the Company began earning during the second quarter.
= An increase in the quality ratings on our first mortgage bonds, due to our improved financial coalition.
The rate phase-in plans approved by the Missouri aml Illinois Commissions during the year provided reasonable assurances that the annual increases necessary to provide a return on the Callaway imestment will take place. We are optimistic that the positive aspects of these rate orders can offset the negative and that our internal cash flow will continue to improve as the Callaway-related rate increases are implemented. The disallowance of $414 million in Callaway con-struction costs was the most negative aspect of the Missouri ami Illinois rate or-ders. We believe the disallowances were uriustified in view of the fact that Callaway was one of the best nuclear construction projects in the country in terms of both cost and schedule. The Company has appealed both orders to the courts. We continue to be proud of the Callaway nuclear plant, and are particularly pleaud with how well the plant performed during its first year of operation. The capacity factor of over 80% achieved by Callaway is ex-ceptional for a new plant and is a credit to our nuclear team responsible for the operation of the facility We are confident that the plant will continue to perform well ami will provide an economical aml reliable source of energy for our senice area over the next decade and beyond. ' Completion of the Callaway plant marked the eml of a major expansion of our generating facilities. This has resulted in a substantial reduction in capital needs, which we project will average $200 million annually over the next five years. Because the_ efficient plants we have will enable us to provide a very competitive supply of electric energy, we do not expect to need any additional capacity until the late 1990s. We are proud of the fact that Union Electrich rates continue to be among the lowest in the country Our goal is to become an even more efficient producer of electric energy while maintaining a high quality of senice for our customers. During 1985, management of the Company strength-ened its strategic planning procedures, providing a soumi direction for the fu-ture. As a part of this emicavor, we established a Quality improvement Process i
upm that will involve our employees in efforts to improve the quality of every aspect of our operations. In addition to achieving cost savings, I am confident that these activities will contribute to improved ser\ ice to our customers and increasedjob satisfaction for our employees. E have efficient power plants and an excellent transmission system. We serve a gomi mix of residential, commercial, industrial, arul wholesale customem in a region with a very siable economy W have a highly-qualified management anal employee team that has the ability and the com-mitment to explore ami take new approaches to our business. E are very op-timistic about the future of l'nion Electric. Sincerely,
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b Dwa , William E. Cornelius President and Chief Executive Officer February 5,1986 St. Iouis .\lissouri h k h k h .$.N
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m iglilighting Financial Performance s - Exceeding book value h3 $3 per share. the Company's comnwin stock price nise to its highest lesel since 1971. Additionall3 in 19S.3. ratings of the Companyk first nuirtgage bmis were upgraded from Baa-2 to A-3 by Nlmlyk Inves-tors Service from BBB- to A- by Statulani & lbork. and froia 9 to S by I)nff & phelps. I nion Electrick preterred stm k and conuuercial paper ratings were also upgraded. Now. as l'nion Electric is advancing from an era of major capital esperaliture3 highlighted b3 $3 billion for construction of Callaway, a primary part of our strategic plan is to strengthen the Companyk financial position and fiscal
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perfonnanc- Impn nement.s in 1953 show conen te pnign ss havant thi.s objectiw: inen ased c' revenues. improved cash flow, arul an increased proportion of earnings represented by / cash. During 1985, the Missouri Public Service Commission { gnuited the Comp;uo inen ases in annual electric nnenues of appniximatelv M74 millioit I a An annual increase of $19 million for non-Callaway expenses was authorized in .lanuary. k Another Callaway-related onler became effective in April and authorized an increase of
$1.o million to be pha. sed in over six years. The first wark im rease of 1.i", amounts to j Alla million. And the second yeark increase of 19". . effective in April. !!Ni. total 3 $112 ,
million. [ In \ lay.19S.i. the Illinois Commerce Commission author- p i/ed a $M million increaw in annual electric reWnues owr a four-year phase-in petiod. In the first year. the Ir increase amounts to $21 million.
'lhe \liwiuri and Illinois Conunission onlets disallanmi M14 million of Callaway plant from rate base. Ilowewr. Ihe two onters did continue the 1.iji"o rate of return on common equit) granted in previous rate cases. But the $3S4 million /% - g not allowed in \lissouri. an<i the $3n million disallowed in Illinois haw the combined n ygf ette< t of reducing common shick earnings approximately $2 million. or .30 cent.s per b "7 E share ammallt The Company has appealed the onlets to the court.s. but the ultimate outcome of such appeals cannot he predicted.
[UI / Current accounting rules M gowndHR Ihe fa ilnpanvh linancial statenients do not DNjuin- ", a unte-off as a result of the ntre base disallowances. ' *V llowewr. if the Financial Accounting Standants Boant adopts a rule change under consideration. the Company f , would be required to write-off the $114 million disal-l l ' 4(d lowed. This wouhl result in a retroactne charge to 19sT> earnings of approximatel) 827n million net of taxes. , [F llowewr. silch a write-off wotild not affect the Companis abilits to continue to pas dividends. , .
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pp decisions, the lowa State Commen e Commission allowed f an interim rate increase of $13 milhon in September,198.i. j Alssi. the federal Ener$ l{egulatory ('olnmissilin pennit- k ted interim w hok sale customer rate increa+s of $12 million 7' in .lanuary. l!h.i and $.i million in .lanuar). I!Ni. l)epend- % ing on det isions expected in l!Ni. t hese increases an subject f' to refund. [I . l
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erving An Exciting Area m_- Union Electrick 24,00h uatel mile service area in .\liwuri, new suiraines centinue Illinois, and hava is characterized aryl strengthened by stable diversity. It is both tradi- te casnee the st. Leuss
; tionally rural and fashionably urban; it is not only iiulustrially-oriented, but also styrine. A seem in strice agrictdtuntlly-dirreted; it is well41ewloped azul mature, yet it is young arul still maturing. aundings ass made the f.'~ The Company's St. Louis headquarters are in the center of sr. lauls area one etthe
. a metrop<ditan region that is experiencing a major renais- , _,
sance. Since 1970, the area has created 160,000 new jobs l-azul has completed $17 billion in constniction. An addi-y %~ a4
- tional $1.6 billim in building pnijects is cuntntly mulenray p[: In addition to the restoration ..-
/ of Union Station azul the completion of St. louis Centre dur- e
.n- , ,
f ' ing 19S3, the list of other projects in St. leuis is unprece- ijp - :
.pM-M ., l 4g f 5.,:"!*:l dented: the Adam's .\ lark and Embassy Suit es hotels: Sout h-P[ 1 western Bell Telephonek 44-story office tower (another 31- -(1.f }
. ~ < . , . - , . .
'w
[ story Bell office building was recently announced): Edison
~
h g4f f ' : , ,t .] ' { ]: O {- .
., Brothers Stores headquarters: the 42-level .\letropolitan ;4 X , : q,. ... .f . . f a f ; .;
' "$. $ ~ ' 4 7 J% '. '., :' ,, . ..
#- Square; several parking garages: and Ihe construction arul x ed U. [f f ; , ., if-y 3.2 trnouttion of many other office buildings mil retail centers.
Qth. w %,e<.#-[- s Ottice and industrial com- ua9 . O'e
, plexes in St. Louis County arul along the interstate highway corridors also are part of the construction surge. Major N[ ." 7 : : .'.JlY;.;Y..5.1.71 h O NM 1
- f.' ?
<3 projects planned, mulenvay, or completed include:
ja w = d =The Legervls, a $300 million hotel, residential, azul recreational complex in Eureka, isreest etrice centersin p9p
-,4)Q= The Plaza, a $200 million shopping, office, arut entertainment center: Intorco Corpo- In tae us. ter rertene Missouri. tae nstien. rsakine ratro ' f y ~cq,g rate Tower, a MS million office building: azul the Galkria, a 45 million shopping center too firms. ~WC 4 - all in Clayton, Missouri.
M = Monsanto's $175 million Life Science Research Center and the $50 million One Forty One Executive Center office building - both in West St. louis County At lambert St. louis Intemational Airp st, w hich has climbed from twenty-thint to sixth among U.S. airports in passenger volume in the htst six years, a new $46 million passenger concourse has been completed. Already, plans totaling $150 million for additional airport facilities are being designed. The region's pmposal for a new light-rail passenger system progressed in 19S5. Congress appnned initial funds for the $250 million rail line which, uhen completed, would pnnide needed public transportation arwi urwloubtedly encour-age further economic development. Central Missouri's Lake of the Ozarks, which was created in 1931 when Union Electric built Bagnell Dam, continues its phenomenal growth. Since 19S0, more than 2,500 homes,2,000 corvlominiums arul apartments,750 nobile homes arwi 900 new commercial establishments have been added to Union Eketrick lines. About 25 miles west of St. leuis is the Wentzsille area, another rapidly gnming integral part of the Company's senice territory llere, a General Motors automotive assembly plant was opened two years ago. A second shift, with 3,000 newjobs, was added in July,1985.
'ihe Enl Motor Company arvi Chrpler Ospiration ircently doubksi their shifts arul renovated their assembly plants in St. louis County, also.
All these decisions to build and to exparul made by major corporations and outside investors emphasize the strength of our exciting senice area.
;: =
e oviding Reliable Service cest-firedseweratsats Union Electrick nconi of pnniding nliable smice to nue arnised nt etthe than one million customers in parts of.\lissouri, Illinois, anl lowa, is exemplary. Ibrimlic h electr! city penersted er attitude surveys repeatedly confirm customer satisfaction with Union Electric's the camanarin tsas. depenlability. Mw than 931. of the Comptnyk total nwnues comes fmm - the sale of electricity Approximately m, is derived fnim Whi6 - the sale of natural gas. Union Electric also pnnides water senice in Cape Gintnleau, .\lissouri arul steam senice in [' p' q Jefferson City. .\lissouri. g&# Total kilowatt hour sales have increased at an annual rate ""
'4 of approximately 3T, over the la3t ten 3 ears. Imimrtantly, 1 - --
'E
,< $ anl contributing to the stability of Union Electrick busi-a .eiE, .
ness, sales to residential commercial, and itulustrial V w.n~w .f , : u
._ g 4
'f customers are evenly divided. This salidity is unterscored by tb Companyk well-diwrsified industrial base.
f'
.]g.N,.. [i .%fpgpK.h,pgg,r A[g.\loreover, Union Eh ctric continues to promote the use of
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f M// .p',! fy M ...] eh*ctric heat. Sustained growth in this segment of the
. U. :, N U . ' p[ . - C , : . . . market enables the Compmy, during the winter months, (f ;, ,%j d @ jz%: > f,;,., : to utilize in a better way facilities which were built to meet the high demands of the summer air conditioning Imul.
Ess etserpeneratise At year enl, the ehttric heating load connected to the Union Ek'etric system was 3.2 was trem anciesraewer million kilowatts, up Si, from 19S4.1)uring 1985, electric heating was installed in M s and s% asm arsre. of all new commercial and industrial buihlings,31% of all new homes, ant 781. of all - new apartments in Ihe senice area. Approximately 14JH N) residential heating units w ere L g added to Union Electric's lines, raising the number of customers heating their homes eh'etrically to approximately 140JWW). Also, more than 21JHH) commercial anl inlustrial structures senwl by the Company use electric heat. The Company continuously promotes the wise use of energy , and encourages Imul management, especially through off-peak energy use. Union Elec- [ trick existing pnver plants, together with capacity from the .loign Plant of Ekrtric Errrgy inc., should be adequate to pnnide a reliable energy supply well into the 1990s. Company management is very pleased with the Nuclear llegulatory Commission's evaluation of the overall performance of the Callaway plant. The NitCk Systematic Assessment of Licensee Ibrformance (SALP) report covered the period from I)ecember 1,1983 through .\ lay 31,1985. It addressed completion of major constmetion activities, preoperational anl startup testing, and commencement of full , power operation. In one area NitC officials recognized the mutual moleration anl support , between the corporate and plant site offices:
" ~/
. your management luts demonstrated an active involvement in assuring a quality '
operation of the facility" , , , , The SALP report also praised the Company for its training , of plant operators:
"Your operator licensing efforts resulted in an initial examination pass rate that was i i
~
significantly higher than the national averagel In one comprehensive conclusion, the NitC fount that: -
" Generally, performance of the facility has remained constant or treated upwant from /
the previous evaluation periml." " All ratings received by the Company were in the two high-est categories! This inlicates that the Company met or exceeded NIIC expectations in all rated areas. Y, y3 m7
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eeting Customer Needs e _3 Union Electric recognizes that in addition to providing reli- caestertfels rntseeis a M able, fairly-priced senice, it must not only assist customers in meeting energy needs, aissnes. sen-centsines E but it must also continue to be a good corporate citizen within the communities it serws. residentist, assiness. and Ib these emis, the Company has established and participated in sewral customer-help retan commastry en s
". _m programs.
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_] _-- Project comfort, a unique grant pmgram for low income and elderly customers, was . w.:ff.9l,,]fI 5- ?!J
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begun as a pilot effort in 1983 with Union Electric as the _..[= E l principal funder. The plan enables one room of a resi- g E
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.i M room are insulated; windows are cowred with thick plas- -k[$ "; ,-1 .( ,, h-y/ .. 4
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, a 1400-watt space heater is pnnided. This makes it possi- k
,hk .%,}M).l [r k[j ble to reduce energy usage while maintaining a comfortable V. 77 -
temperature in the " comfort-zone" room. Project Comfort ;. ? - . k. 4
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- had a 1985 budget of more than $270,000 funded by the Company and sewral public agencies.
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the elderly and those on fixed or low incomes.
.m Through Dollar More, Union Electric encourages customers imscre arscretissain g to contribute a dollar or more with their monthly bill payments.This helps proside finan- west sr. tesis casstr.
g cial aid far customers who require assistance in paying their utility bills. Administered Tae camales erestssur
-y by the United Way, Dollar More has provided $550/)00 for assistance to our needy wuicentsin mere taan M -m Other customer-aid programs include: EnergyWise, which (m swetune enits.
furnishes information on low-cost /no<ost approaches to home weatherization for senior mser er weles are Z citizens; a reasonable-cost home insulation financing plan, available to residential essecteste asre 9 customers; and an Energy Management Action Course which supplies, for churches ami erecirte aest.
-y spagogues, training on how to perform energy audits an! how to establish a system for monitoring energy consumption.
Budget billing, which allows customers to make equal monthly electric bill payments based on projected annual use, continues to grow as a popular way to manage energy costs. More than 14/)00 customers signed up for budget billing during 1985, the total number currently eniolled is over 80,000. In addition to these Company-sponsored programs, numerous dedicated employees volunteer their services to a variety of community activities and organizations.1b
. support the employees' commitment of personal time and effort, the Company established a Volunteers Involved in Programs (VIP) fund. This prosides financial grants to charitable organizations or projects in which our employ-ees am actiwly imnhwl. During the last year,33 VIP grants were enthusiastically awarded.
'r s__ g
_133 anaging For The Future The futun of any compan) is onl3 as somul as two factors: Its raretilll) reasidit d st rateRle Rtials alkl tihjt eti\es, alNl lhe abilit\ ti[lts nlanagernent arul eniployee team to carr3 out those long-range plans. \\e believe that I nion Electric h;o a iiianagenierit ariil ernphi\ee teain that itotifies civiliderice in flie ('iimpans's futinv. title colnponent of l~nion Electric's long-range plan Is to Q hDladell Ihe experiellre 4lI mallaReInt lli al all le\els ill Ihe folupan\. As a first step. \ ice- Y presidents responsible lot Customer Senice. Engineering aiul fonst nietion. Public Itela-tiiilb. lleRh 41al ()peratiillh. alki Italbilliwloll & l)istribution were rotated ditrlilg 196 in inder to nintilltje expalldilld Illalladelilellth t xperiellre, similar rea.wigilment5 will irill! ill Illtulv ) ears. Also, during 1985, a qualii3 huprosement Pn>ress was established to sene as an integral part of the management of I'nion Electric's business. = lt uill molw i Icano of emplo3ees at all lesels tbroughout the Compan) who will awist m identif\ing arul clinunatine barriers to achie\ing corporate coals and objectiws. The Quahts linprowment Unicess will proside an emironment wluch encourages inno\atiw ideas. qualit\ performance. improwd employee skills. and inen ased job satisfaction.
\\e haw already experienced benefits from qualit3 m,prowment efforts at fallawa\ plant. Although fallawa3 operations haw surpassed w oui expectations the in quenr3 of unplanned outages.while not unusual for new plants. t%%
presented an lip [Ho tlinit\ II4 a hirtIler iluprowinent ill the <piality of fallaway olera-t ions (the oioates were imariabl3 of short duration and did not impact plant safety). We orRanIZed an einplowe (ask [olce to identil\ mHlerl)ing cause3 for these outages atyl to implement correctiw artion Itecent operaling experience has demon.strated improve-ment in this aspect of fallawa3 operations. Research and Development is another part of the Companis planning for the future. In addit tor) to the fulnpall\'s ow n researril e[ forts, l'nioll Eiertrir is ari arIiw partiripant iii the Elertrir ibner l itesearch Institute (EPiti t Through this participation. it is possible for i nion Electric ami the approximately 300 other members to pool research aiul development funds. This cortsortium effect.s benefits from extertsiw 11 & I) effort.s which would be far he3oiul the financial capability of a single compan3 New tabor agreements, which j exten! through lune. IK. with uniorts repn>senting l'nion 'l Eh etric employees. wen accomplished during 19G These - acreements pro \ided for both wage increases awraging h on .lul3 1. IN and 0 C on .lul> l.19% and for improwments in retirement alul medical benefits.
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l mura esponsibility For Financial Statements The management of Union Electric Company is re- Written policies arut procedures have been devel-spnsible for the information and representations contained ogxi arul are revised as necessary The Company maintains in the financial statements anl in other sections of this An- anl supports an extensive program ofinternal audits with ap-nual Report. The financial statements have been prepared in propriate management folknv up, conformity with generally accepted accounting principles The Boani of Directors, through its Auditing Com-consistently applied. 0ther information included in this report mittee comprised of outside directom, is resimnsible for en-is consistent, where applicable, with the financial statements. swing that both nuungement anl the iniepenlent acet untants lhe Company maintains a system of intemal ac- fulfill their respective responsibilities relative to the financial counting controls designed to pnnide reasonable assurance statements. Moreover, the inlepenlent accountants ham full as to the integrity of the financial records and the protection anl free access to meet with the Auditing Committee, with or of assets. Qualified penonnel are selected and an organiza- without management present, to discuss auditing or financial tion structure is maintained that provides for appropriate reporting matters. functional responsibility eport Of Independent Accountants One Centerre Plan Telephone 314 425 0500 St Louis. MO 63101 Price liittedmuse Q 1 Itbruary 5,1986 To the Stockholders and Board of Directors of Union Eketric Company In our opinion, the accompanying balance sheet anl the related statements of income, kog-term debt, preferred stock, retained earnings, other paid-in capital, and changes in financial position present fairly the financial position of Union Elcetric Company at December 31,1985 arvi 19M, and the results of its op rations and the changes in its financial position for each of the three years in the period enkxl December 31,1985, in conformity with generally ecepted accounting principles consistently applied. Our examinations of these state-ments were made in accordance with generally accepted auditing stantants arul accontingly included such tests of the accounting reconis an! such other auditing prucedures as we crmsidenxl necessary in the citruntstances. 4M0_ - I
1 I tatelnent Of Incotue Union Electric Company mm (Thouumis of Douars Ewept sture ami Per St,are Amounta l l
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Year 1985 War 1951 War 19S3 Operating Rewnues ('): Electric $ 1,489,257 $1.292,086 $1,281,151 Gas 99,124 108.GN) 101,599 Other 3,382 11.728 _ 15.033 Tbtal operating retenues 1,591,763 1,112.111 1,101,0S6 Operating Expenses: Operations Fuel arul purchased power 341,640 110,821 137,579 Other 312,271 251.911 259.536 653,911 692,762 697,115 Alaintenance 122,526 106.368 99,3')5 Depreciation 165,816 101,550 92.297 Income taxes 82,651 113,820 140,111 Other taxes (*) 150,000 127.62S 131.S98 Tbtal operating expenses 1,174,907 1,172 128 1,160,816 Operating Income 416,856 210.286 210.270 Other income and Deductions: Callaway rate phase-in plans 74,631 - - Allowance for equity funds used during construction 53,709 179.631 135,707 Aliscellaneous, net (6,696) 1.517 3. ItH) y
'Ibtal other income and deductions, net 121,614 181.151 139,197 Income Before Interest Charges _._
538,500 121.137 379.167 I Intercat Charges: Interest on debt 251,320 - 217,308 218.530 Allowance for borrowed fundsw Mr. < onstruction _ (53,015) _ , (150.035) (115.600) Net interest charges 201,275 97,273 102,930 Net income 337,225 321 lG1 276.537 Preferred Stock Dividends 49,836 50.185 46,118 Ecrnings on Common Stock $ 287,389 $ 273.979 $ 230.119 (*) includes license arul franchise taxes of $76,511.000, $68,172,000, aml $69,fiS2,000 ,f for the years 1985,1981, ami 1981, rispectisely. Ecntings per Share of Common Stock (basal on average shares outstanding) $2.86 $2.81 $2.66 > Dividends per Share of Common Stock $1.78 $1.72 f1.66 l Average Number of Common Shares Outstanding 100,403,016 96.574.699 86.711.2S2 See Notes to Financial Statements on pages 25,26,27,28, mal 29. t . . _ _ _ _ - - _ - _
rs alance Sheet Union Electric Company (Thousands of IMlars) Assets December 31,1985 December 31,1984 Property and Plant, at original cost: Electric $6,686,275 $3,322,193 Gas 85,697 81,368 Other 13,900 28,196 6,785,872 3,131,757 Less accumulated depreciation and amortization 1,354,197 1,13P;l 5,431,675 2,301,136 Construction work in progress: Callaway nuclear plant - 2,957,233 Nuclear fuel in pmcess 187,784 236,491 Settlement of uranium _ litigation (82,050) (116,224) Other 52,406 53.988 lbtal Property and Plant, Net 5,589,815 5,432,627 Deferred Charges and Other Assets: Callaway unit 2 construction abandonment 76,828 79,657 Callaway rate phase-in plans 74,631 - Unamortized debt expense 5,543 4,82S Unamortized bond defeasance cost 5,171 4,075 Nuclear decommissioning trust fund 1,529 - Other 16,974 15,750 lbtal Deferred Charges and Other Assets 180,676 101,310 Current Assets: Cash 3,421 1,669 Deposits for payment of interest and other deposits 1,619 -10,023 Accounts receivable - trade (less allowance for doubtful accounts of $1,350 and $2,291, at respective dates) 108,331 93,039 Unbilled rewnue 95,431 70,816 Other accounts and notes receivable 12,618 14,191 Materials and supplies, at average cost-Fbssil fuel 111,585 87,753 Construction and maintenance 70,640 58,148 Other 6,684 6,112 lbtal Current Assets 410,335 341,754 T1tal Assets $6,180,826 $5,878.691 See Notes to Financial Statements on pages 25,26,27,28, arx! 29. I \ - .
Em Capital And Liabilities December 31,1985 December 31,1981 Capitalization: Common stock, $5 par value, authorized 150,000,000 shares; outstanding 102,123,834 and 99,154,610 shares, at respective dates (excluding 42.990 shares at par value in treasury) $ 510,619 $ 495,773 Other paid-in capital, principally premium on common stock (see accompanying statement) 715,772 675.931 Retained earnings (see accompanying statement) 661,359_ 553.743
'Ibtal common shareholders' equity 1,887,750 1,721,150 Preference stock, $1 par value, authorized 7,500,000 shares -
none outstanding ____ Preferred stock not subject to mandatory redemption, including $1,486 premium (see accompanying statement) 356,270 356.270 Preferred stock subject to mandatory redemption (see accompanying statement) 173,160 178.936 Long-term debt (see accompanying statement) 2,463,333 2.466,161 Unamortized discount and premium on debt (8,646) (8,783) lbtal Capitalization 4,871,867 4.717,037 Accumulated Deferred hxes on Income 695,717 609,663 Accumulated Deferred Inwstment hr Cudits 111,479 123,749 Accumulated Provision for Nuclear Decommissioning 2,510 - Construction Commitments and Contingencies (Notes 10,11, and 12) Current Liabilities: Current maturity oflong-term debt 112,994 65,993 Accounts payable 142,183 112,103 Wages payable 26,939 22,182 Callaway unit 2 cancellation charges 23,917 21.0s9 Bank loans - 51,000 Income taxes accrued 42,314 21,511 Other taxes accrued 16,699 15,055 Interest accrued 82,347 65,821 Dividends declared 12,357 12,199 Other 39,503 31.359 lbtal Current Liabilities 499,253 12S,212 Tttal Capital and Liabilities $6,180,826 $5.878.691
ong-lbrin Debt m Union Electric Company (Thouunds or Donars i December 31,1985 December 31.1981 First mortgage bonds - note (a) 3M% Series due 1986 $ - $ lojn) 14%% Series due 1986 - 1jn) 16% Series due 1987 5,500 5.5(H) 4%% Series due 1988 3,000 3J00 4%% Series due 1989 35,000 35JKW) 4%% Series due 1990 50,000 T (NK) 11%% Series due 1990 - note (b) 2,600 2.9(M) 4%% Series due 1991 30,000 3010) 5% Series due 1991 2,000 2.te) 5%% Series due 1991 3,500 3,500 15%% Series due 1991 150,000 150,000 4%% Series due 1992 6,000 6,000 15% Series due 1992 125,000 125j)00 4%% Series due 1993 30,000 30je3 10M% Series due 1994 - note (b) 4,0G0 1.450 4%% Series due 1995 35,000 35JHW) 4M% Series due 1995 3,000 3Ju) 5%% Series due 1996 30,000 30,000 5%% Series due 1996 5,000 53)00 8%% Series due 1996 10,000 10j100 5%% Series due 1997 40,000 10j)00 5%% Series due 1997 5,000 5JkM) 7% Series due 1998 50,000 50JHH) 7.95% Series due 1998 4,000 4,0lk) 7%% Series due 1999 35,000 35.000 8% Series due 1999 5,000 5jun 8%% Series due 1999 40,000 10JN)0 l 9.95% Series due 1999 - note (b) 92,860 100,000 9% Series due 2000 60,000 GOMW) 7%% Series due 2001 50,000 50jo) 7%% Series due 2001 50,000 50fW)0 8%% Series due 2001 60,000 60,000 0%% Series due 2001 - note (b) 4,500 4,S00 9%% Series due 2001 - note (b) 2,608 2,782 9 K% Series due 2001 - note (b) 9,600 9,600 8%% Series due 2002 - note (b) 4,800 5,100 Th% Series due 2003 7,000 7,000 8%% Series due 2004 70,000 70.000 10% Series due 2001 - note (b) 9,000 9,5u0 10%"4, Series duc 2005 70,000 70,000 5.80% Series due 1992 to 2005- note (c) 27,08,5 27,085 8%% Series due 2006 70,000 70JU) 8%% Series due 2007 60,000 00JXHi 0 35% Series due 2008 - note (b) 55,000 55je0
-9.25-9.625% Series due 2000 to 2010 - note (c) 60,000 60jo) l 13% Series due 2013 100,000 10n#N)
- - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _________a
EM December 31,1985 December 31,1981 Unsecured loans - Foreign credit agrtwment, due 1987 to 1989 - note (d) $ 100,000 $ 100,000 Domestic credit agreement, due 1989 to 1990 - note (e) 275,000 275,000 Unsecured notes-6% - 9% Due to 1999 1,715 1,952 Missouri emironmental improvement - Revenue notes,10% Series due 1986 - 45,000 Revenue bonis,5.60-6.20% Series due 1989 to 2004 16,500 16,5W 1984 Series A due 2014 - note (f) 80,000 80,000 1984 Series B due 2014 - note (f) 80,000 S0,000 1984 Series C due 2014 - note (g) 47,500 47,500 1985 Series A due 2015 - note (h) 70,000 - 1985 Series B due 2015- note (h) 56,500 - Nuclear fuel lease - note (i) 165,605 195.965 Long-1brm Debt $2,463,333 $2.160.Inl (a) At December 31,1985, substantially all of the property ami plant was mortgaged under, ami subjeft to liens of, the respecthe indentures pursuant to which the bomis were issued. (b) To be retired by sinking fund - 11%% Series to 1989; 104% Series to 1993; 9.95% Series from 1956 to 1998; 9%% Series to 2000; each 9 W% Series to 2000; 8W% Series to 2001; 10% Series to 2003; am! 9.35% Series from 1959 to 2fM)7. (c) Environmental Improvement Series. (d) Credit agreement with certain foreign banks which permits the Company to borrow $100 million in term loans, on which interest rates will vary depending on market conditions ami the Company's selection of various options umler the agreement. At December 31,1985, such foreign herrowings were outstanding at an average annual interest rate of 8%%, based on the 30-day lendon Interbank Offered Rate (LIBOR). (e) Credit agreement with certain domestic banks which permits the Company to borrow $275 million in term bans, on which interest rates will vary depending on market comlitions amt the Companyh selection of various options unfer the agreement. At December 31,1985, such domestic borrowings were outstamling at an average annual interest rate of 8.87%, based on 60-d2y Certificate of Deposit rates. (f) Adjustable-fixed rate, interest rate at 84% per annum through May 31,1987; thereafter, interest rates will depeal on market com!itions anl the Company's option to select an adjusted rate for each annual period or a fixed rate until maturity. (g) Adjustable-fixed rate, interest rate at 7%% per annum through February 28,1986; thereafter, interest rates will depend on market coalith>ns and the Company's option to select an adjusted rate for each annual period or a fixed rate until maturity. (h) Interest rates, and the periods during which such rates apply, vary depemling on the Company's selection of certain defined rate modes. The average annualinterest rates at December 31,1985, for such Series A and Series B bonts, were 5.10% and 5.38%, respectively. (i) At December 31,1985, $59 million is included under current maturity oflong-term debt. (j) Union Electric Company has an intermediate term credit agreement with certain foreign banks which permits the Company to horrow up to $10 million through December 1987. At December 31,19S3, none of such foreign - borrowings were outstamling. See Notes to Financial Statements on pages 25,26,27,28, and 29.
zr referred Stock _ Union Electric Company (Thousands of Dollars) December 31,1985 December 31,19S1 Preferred Stock not subject to mandatory redemption: Preferred stock outstanding, without par value (entitled to cumulative dividends) - note (a) Stated value of $100 per share -
$7.44 Series - 550,000 shares $ 55,000 $ 55,000
$6.10 Series - 300,000 shares 30,000 30,000
$5I)0 Series A- 14,000 shares 1,400 1,100
$5.50 Series B- 3,000 shares 300 300
$4.75 Series - 20,000 shares 2,000 2,000
$4I)6 Series - 200,000 shares 20,000 20,000
$4.50 Series - 213,595 shares 21,359 21,359
$4.30 Series - 40,000 shares 4,000 1,000
$4 00 Series - 150,000 shares 15,000 15,000
$3.70 Series - 40,000 shares 4,000 1,000
$3IA Series - 130,000 shares 13,000 13/300 Stated value of $97.50 per share -
$8.00 Series of 1971 - 425,000 shares 41,437 -11,137 Stated value of $92.25 per share -
$8.00 Series - 350,000 shares 32,288 32,2S8 Stated value of $25 per share - .
$2.98 Series - 3,000,000 shares 75,000 75.000
$2.125 Series - 1,600,000 shares 40,000 -10.000 lbtal Preferred Stock Not Sub.iect to Mandatory Redemption $354,781 - $351.781 Preferred Stock subject to mandatory redemption:
Preferred stock outstanding, without par value (entitled to cumulatiw dividends) - note (a) Stated value of $100 per share -
$6.30 Series - 9,100 arvi 9l160 shares at respectim dates, due to 2020 - note (b) $ 910 $ 930 Stated value of $50 per share-
$1.60 Series - 1,425,000 arx! 1,500/100 shares at respective !
dates, due to 2004 - note (c) 71,250 75,000 Stated value of $25 per share -
$4.00 Series of 1982 - 3,000,000 shares due 1988 to 2007 75,000 75,000
$2.72 Series - 1,040,000 arvi 1,120,000 shares at respective dates, due to 1998 - note (d) 26,000 28f)00
'Ibici Preferred Stock Subject to Mandatory Redemption $173,160 $178.936 (a) Authorized Union Electric Company total preferred stock - 25,000,000 shares.
- (b) The Company is required to retire 260 shares at $100 per . share on June 1 of each year. -
(c) The Company is required to retire 75,000 shares at $50 per share on August 15 of each year. (d) The Company is required to retire 80.000 shares and has an option to redeem an additional 80,000 sharesiat $25 per share on November 15 of each year. See Notes to Financial Statements on pages 25,26,27,28, arvi 29.
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tatement or netained Earnings _ _ Union Electric Companyy;Emin (Thousands of DcIlars) Year 1985 Year 1984 Year 1983 Balance at Beginning of Period $552,743 $115.011 $3fA,771 Add: j Net income 337,225 324.Ir>1 276f>37 889,968 769.175 611,30S Deduct: s Preferred stock dhidends' 49,766 50,158 47,273 Common stock cash dhidends - $1.78, $1.72, and $1.66 per share, respectively 178,843 166,27I I15,748 Write-off of capital stock expense - - 3.276 228,609 216,132 196.297 (Under mortgage indentures as amended, free and unrestricted retained earnings at December 31,1985 amounted to $604,244) Balance at Close of Period $661,359 $552.743 $415.011 ' Includes dividends decered, applicable to subsequent periods. tatement Of Other Paid In Capital (Thousands of Dollars) Year 1985 Year 1984 Year 1983 Balance at Beginning of Period $675,934 $637.039 $,>ll,222 Excess of sales price owr par value of 6,000,0fM shares of common stock issued in 1983 - - 56,550 Excess of sales price over par udue of 2,901,122, 3,968,M0, aml 3,898,752 shares of common stock issued during 1985, 1984, and 1983, respectively, for dividdul reinvestment and stock purchase plan 39,058 31,293 35,301 Excess of sales price over par value of 68,102, 495,750, aml 377,789 shares of common stoc'< issued for employee stock ownership plan in 1985,19M, and 1983, respectively 888 4,530 3,780 Excess of stated value over purchase price of 80,000 shares
$2.72 Series preferred stock redeemed in each of the years 1985,1984, and 1983 55 239 101 Premium on preferred stock of former subsidiary company - -
85 Write-off of capital stock expense (163) (167) - Balance at Close of Period $715,772 $675,934 $637,039 See Notes to Financial Statements on pages 25,26,27,28, ami 29.
3 tatement Of Changes In Financial Position Union Electric Company (Thousands of Dollars) Year 1985 Year 1984 Year 1983 i Source of Funds: From operations - Net income $337,225 $321,164 $276,537 l Depreciation expense 171,416 101,550 92,297 Nuclear fuel amortization -51,944 - - Fuel expense during construction 31,027 - - Amortization of uranium litigation settlement (46,554) - - Deferred taxes on income (net) 86,054 201,492 79,591 Deferred investment tax credits (net) (12,270) (40,719) 42,251 Callaway rate phase-in plans (74,631) - - Alkwance for all funds used during construction (106,754) . (329.669) (251,307) 440,457 256,818 239,369 From financing and other sources-Issue oflong-term debt 226,500 367,500 110,000 Nuclear fuel lease 40,477 51,182 18,512 Issue of preferred stock - - 75,000 Issue of common stock - - 86,550 Divident reinvestment / stock purchase plans 54,792 61,146 60,163 Settlement of uranium litigation 12,380 - 11.261 12.556 Additional short-term debt - 19,500 - Net decreased working capital (excluding short-term debt and current maturities) 6,429 - 87,579 340,578 513.889 4S0,660 Total funds provided $781,035 $770.707 $720.029 Application of Funds: Gross plant expenlitures $285,897 $706,379 $686,029 Nuclear fuel expenditures 81,242 48,388 18.553 Allowance for all funds used during construction (106,754) (329,669) (251,307). Dividen!s on preferred anl common stock 228,609 ' 216,432 193,021 Nuclear fuel lease reimbursement 51,971 - - Restructured long-term unsecured debt , 100,000 - 10,000 Maturity oflong-term debt 67,699 10,728 2,223 < Hedemption of preferred stock 5,776 2,026 Reduced short-term debt 2.026 ) 51,000 - 35,000 ' Net increased working capital (excluding short-term debt and current maturities) - 111,331 - Net change in other funls 12,595 5.092 (6,116) lbtal funds applied $781,035 $770,707 $720.029 increases (Decreases) in Working Capital: Cash and deposit.s $ (6,652) $ (5,796) $ (19,722) Receivables, net 38,337 3,667 28,089 Fossil fuel 23,832 13,8til -(25,117) Other materials anl supplies 12,492 20,201 759 Accounts ani wages payable (31,237) 10,676 (38,352) CanceHation charges 172 17,796 4,031 Taxes accmed (19,417) 17,305 (14,695) Interest anl dividenis accmed or declared (16,384) (2,053) (19,318) Other (4,572) 5,671 (3,307) Net change in working capital $ (6.429) $111,3'11 $ (87,579) See Notes to Financial Satements on pages 25,26,27,28, an! 29.- 1 i
otes 'Ib Financial Statements Union Electric Company _m Note 1 - Summary of Accounting Iblicies This accounting practice is intended to offset the effect on The Company is subject to regulation by the Mis- carnings of the cost of financing construction aethity, aml re-souri Public Service Commission, Illinois Commerce Com- sults in treating such fimmeing costs in the same manner as mission, Iowa State Commerce Commission, anl the Ekleral constmetion charges for labor and materials. Energy Regulatory Commission. %e accounting policies of the Under accepted rate-making practice, cash recovery - Company are in acconlance with the rate-making practices of of AFC, as well as other construction costs, occurs when com-the regulatory authorities hming jurisdiction ami, as such, pleted projects are placed in service aml reflected in cus-conform to generally accepted accounting principles as ap- tomer rates. plied to regulated public utilities. A description of the Com- AFC rates are established by the Company consis-panyk significant accounting policies follows. tent with the methodology prescribed by the Paleral Energy Regulatory Commission. Awrage annual AFC rates were 11.5% in 1985,12.0% in 1984, ami 11.7% in 1983. AFC, net of taxes, t f additions to ami betterments of units of amounted to 28%,95%, aml 86% of earnings on common stock property and plant is capitalized. Cost includes labor, mate-f r 1985,19M, amt 1983, respective 4 rial, applicable taxes, pensions, ami certain other items, plus an allowance for fumis used during construction. Maintenance Callaway Rate Phase-In Plans expnditures and renewals of items not considered to be units The Callaway rate phase-in plans, effecthe in 1985 of property are charged to income as incurred. When units of as a result of regulatory commission onlers, prmide for (1) de-depreciable property are retired, the original cost and removal ferral of a cash mcovery of a portion of the common equity re-cost, less sahnge, are charged to accumulated depreciation. turn related to the Callaway plant during the early years of the plans with recowry of such deferrals in the later years of Depreciation the plans, (2) three-year amortization of certain Callaway re-Except for the Callaway nuclear plant, depreciation I ted accumulated deferred income taxes, and (3) two-year is prmided over the estimated lives of the various classes of am dzauon ome proceeds from the Companyk settlement depn ciable property by applying composite rates on a straight- , f uranium litigation with Westinghouse. line basis. Callaway plant depreciation is computed on a unit-The common equity return for which cash reemery of-pnxluction basis. Depreciation expense applicable to Cal-
. deferred unter the plans is recognized as income currently is laway plant costs disallowed from rate base by regulatory au-in the Statement of Income. Such noncash income amounted thorities is recorded in the Statement of Income under Other to $74.6 millic, for 1985 (26% of earnings on common stock Income ami Deductions. He prmision for depreciation in 1985 is equivalent to approximately 3.1% of the average depreciable I ' * )-
cost (3.1% in IDM aml 2.9% in 1983). The provision for depre- Unbilled Revenue ciation includes an allowance for future nuclear decommis- The Company reconis on its books the estimated sioning costs. amount of accrued, but unbilled, rewnue ami also the ac. cmed liability for the related taxes. Nuclear Fuel He cost of nuclear fuel is amortized to fuel expense Note 2-Income Axes on a unit-of-production basis. A provision for spent fuel dis- 'Ibtal income tax expense for 1985 resulted in an posal costs is charged to expense based on kiknvatt-hours effectim tax rate of 20% on earnings before income taxes (31% generated. in 1984 aml 34% in 1983). The principal reasons such amount is less than the 46% statutory Fhleral rate are as follmvs: income Taxes Deferred income taxes are prmided !br timing dif-ferences between book and taxable income as permitted for 1983 19A 1983 rate-making purposes. Investment tax credits utilized are de- Statutory Federal income tax rate 46% 46% 46% ferred ami amortized over the useful lives of the properties to increases (Decreases) from: Depula$n dhnen 9 2 2 which they relate. Callaway rate phase-in plans - Allowance for Funds Used During Construction Other income . (8) - - prior years' Allowance for fumis used during construction (AFC) is a utility imiustry accounting practice whereby the cost of
^"[Id [s Allowance for equity funds used borrowed fumis and the cost of equity fumis (preferred ami during construction (s) (18) (15) common shareholders' equity) applicable to the Companyk Miscellaneous, net (3) i I construction program are capitalized as a cost of construction. Effecthe Federal income tax rate 20% _ 31% _34%
i
]
a Notes 'Ib Financial Statements (continued) Union Electric Company Note 3 -Income 'Ikxes (continued) During the same three-year period, preferred stock, without par value, was issued and nxleemed as follows: 3,000,000 income tax expense mmponents for the years shown shares, $2.98 Series were issued in 1983. In December 1983, are as follows (in thousands): the Company issued shares of its preferred stock in exchange 1985 1984 1983 for former subsidiary companies' preferred Stock, as follows: lhxes currently payable (principally hderal): 20,000 shares, $4.75 Series; 40,000 shares, $4.30 Series; 14,000
" $ 39,454 $(H,280 $ H,M shares, $5.50 Series A; 3,000 shares, $5.50 Series B; and 9,620 n eIincomYn shares, $6.30 Series. In each of the years 1985,1984, and 1983, Miscellaneous, net (30,948) (634) 1,046 the Company redeemed 80,000 shares, $2.72 Series and 260 Deferred taxes (principally n M,Mmpany &mG,@
nderal). shares, $4.60 Senes. Included in operating expenses - 1.iberalized depreciation 96,350 97,006 21,279 Preferred Stock Ewntual Repair allowance 5,543 27,397 - Redemption Prices Current Minimum Allowance for borrowed funds used during construction 21,590 68,988 52,451 (Itr Shara) (lte Share)
$7.44 Series $102.50 $101.00 Other (primarily capitalized $6.40 Series 101.50 101.50 costs) 18,260 13,215 9,589 $5.50 Series A 110.00 110.00 Callaway rate phase-in plans $5.50 Series B 103.50 103.50 amortization of prior years' $4.75 Series 102.176 102.176 deferrals (81,356) - -
$4.56 Series 102.47 102.17 Other provisions deferred in $4.50 Series 110.00 llo.00 (a) prioryears (4,917) (5,114) (3,728) $4.30 Series 105.00 105.00
$4.00 Series 105.625 105.625 Included in other income - $3.70 Series 104.75 104.75 Miscellaneous, net (principally $3.50 Series i10.00 110.00 liberalized depreciation) 30,584 - -
$8.00 Series of 1971 98.50 98.50 Deferred Inwstment tax credits, net (12,270) (46.391) 49.054
'Ibtalincome tax expense $ 82.290 $143,186 8141.157
$2.125 Series 26.45 (b) 25.25
$6.30 Series (c) 101.50 100.00 Imestment tax credit carryforwards, unrecorded as $1.60 Series (d) 54.60 (b) 50.50 of December 31,1985, amounted to approximately $195 million f1982(e) 3, g) which may be utilized by the Company to reduce future in-come tax liabilities through 2000. (a) In the event of voluntary liquidation, $105.50.
Deferred income taxes are provided for differences o [nsuRett certain retricu a ngarding nfunding latween book and taxable income to the extent permitted for (c) The Company is required to redeem 260 shares at $100 per share, rate-making purposes. At December 31,1985, the cumulathe plus accrued dividends, on June 1 of each year. net amount of income tax timing differences for which de. (d)The Company is required to redeem 75,000 shares at $50 per share ferred income taxes have not been provided was $1.43 billion. " A gu (,) The m a yis requi to retire 150,000 shares, and has an option i to redeem an additional 150,000 shares, at $25 per share on February ' Note 3- Capital Stock 15 of each year, commencing in 1988. During the three years ended December 31,1985, (f) The Company is required to retire 80,000 shares, and has an opthin common stock, $5 par value, was issued as follows: 6,000,000 to redeem an additional 80,000 shares, at $25 per share on November shams were issued in 1983. In addition, of the 26,000,000 shams 35 *I'"ChI '"'- reserved for the Union Electric Company Dividend Reimest-ment and Stock Purchase Plan, 2,901,122 shares, 3,968,640 shares, and 3,898,752 shares wue issued in 1985,19M, and 1983, respecthely; and of the 4,500,000 shares resmed for the l'nion Electric Company Employee Stock Ownership Plan,68,102 shams, 495,750 shams, arvi 377,789 shares were issued in 1985, 19M, and 1983, respectiwh
27 Note 4 - Preferred Stock Subject to Mandatory Note 7 -Shortilbrm Borrowings Redemption Short-tam bonowings of the Company consist of bank During the five years from December 31,1985, the loans (maturities not in excess of 270 days) and commercial amounts of prefened stock to be redeemed at stated ulue am: paper (maturities generally within 10-45 days). Information
$5,776,000 in each of the years 1986 and 1987; and $9,526,000 relathe to short-term borrowings is as follows (in thousamis in each of the years 1988,1989, and 1990. except rates):
1985 1984 1983 Note 5 - Debt Retirement Provisions Bank loans at year end - During the fin years from December 31,1985, the
^'nout utstanding -
- 51m $ als amounts of debt matmities am: $112,994,000 in 1986; $35,339,000 c.),Ng*,$,T,ye end 2 m 1987; $87,839,000 in 1988; $144,506,000 in 1989; and
$247,572,000 in 1990. Amounts for years subsequent to 1986 do [*j"jggate ainoun , _,,
not include nuclear fuel lease payments since the amounts of during the year s151,700 $205,750 sia,500 such payments are not currently determinable. daii g e m Debt retirement pnnisions contamed m. most mort- ings outstanding during the year - gage bond indentures of the Company require, subject to cer- Aggregate anmunt s 65,594 $119,871 $115,775 tain alternathes, the nxiemption annually of 1% of the principal Weighted cornposite interest rate 8.6'. I1.0% 9.7% amount (as dermed) of each series of bonds. In substantially all instances, as permitted by the indentures, the Company The above weighted composite interest rates were has been following the practice of pledging property additions calculated by dhiding the applicable interest expense for the in lieu of such redemptions. year by the average daily short-term borrmvings shown above. At December 31,1985, the Company had bank lines of credit aggregating $207 million (all of which were unused Note 6- Nuclear Fuel Lease i The Company has entered into a lease agreement at such date) which male anilable interim financing at urious which pro ides for the financing of the costs of up to .$300 mil. rees of interest, not to exceed prime, based on the Lomion lion of the Company's nuclear fuel. Pursuant to the terms of Interrbuk Offem! Itate (LIBOR), the bank certificate of deposit the lease, the Company has assigned to the lessor certain con. rate, or ether options, ami in support of which the Company-tracts for purchase of nuclear fuel. The lessor obtains through has both wriven and unwritten agreements with its lending the issuance of conunervial paper backed by letters of credit banks to pay annual fees ranging from 0.25% of the unused from commercial banks, or from direct loans from commercial Intion of the line of emlit to 0.375% of the line of credit. These banks, the necessary funis to purchase the fuel ami make in. lines of credit are renewable annually at various dates terest pa3ments when due. throughout the year. The Company is obligated to reimburse the lessor for all expentitures for nuckar fuel, interest, and irlated costs. Note 8 - Settlement of Uranium Litigation Obligations under this lease become due as the nuclear fuel in 1979, the Company and Westinghouse Electric is utilized at the Companyh Callaway plant. During 1985, the Corporation settkxl the Companyt suit to require Westing-- house to fulfill its contractual obligation to deliver 10 million Company reimbursed the lessor $66 million, including $11 mil. lion of interest clunges applicable to nuclear fuel in heat pounds of uranium U3 0, to the Company. The settlement pnwides for cash anl discounts on uranium, goods, an! sersices pre:luction. The Company has capitalized the cost, including mer the period 1980-2010. In acemlance with the Callaway rate certain interest costs, of the leased nuclear fuel and has re. phase-in plans effective in 1985, settlement proceeds realized mded the related lease obligation. During the years 1985,1984, as of December 1984 ($116 million) are being amortized mer and 1983, the Company capitalized related interest casts of $20.9 a two-year penod as a mfuction of fuel expense. million, $23.0 million, and $17.9 million based on an average interest rate of 9.2%,11.3%, and 10.0%, respectiveh
1 s a Notes 'Ib Financial Statements (continued) Union Electric Company Note 9 - Employee Retirement Plans and Related Benefits in late 1985 aal a Commission order is expected in the first The retirement plans covering employees of the quarter of 1986. The balance of such costs, applicable to other Company are financed thmugh irrevocable pension trusts amt regulatoryjurisdictions, is either presently being recowred in group annuity contracts. Re Company's policy is to fund pen- customers' rates, or unter mgulatory consideration. In the sion costs accmed. Costs of the retirement plans for the years opinion of management, unreemtred costs, if any would not j 1985,19&l, and 1983 were $ 17,200,000, $16,000,000, and $15,710,000, be mattrial to the financial position of the Company respectively, of which approximately 21%,29%, and 26%, m- The Companyh insurance coverage for its Callaway spectiwly,were charged to constmetion accounts. The afore- plant, the maximum amount currently amilable to the Com-mentioned amounts include current senice costs and prior pany, is as follows: senice costs which are being amortized owr twenty years. Property insurance cowrage of $500 mil-A comparison of estimated actuarial present mlue lion prosided by American Nuclear Insurers (ANI) of accumulated plan benefits anl plan net assets follows (in and 51utual Atomic Energy Liability Underwriters
- , millions)
- (51AELU).
At Deceinber 31, Excess pmperty insurance of $550 mil-1985 1984 1983 lion prmided by Nuclear Electric Insurance Lim-bred benefits $300 $261 $249 ited (NEIL), a mutual insurer established by the' Nonwsted benefits 35 23 26 utility inlustry Under this policy, the Company couki s335 s284 $275 be subject to a retrospectim premium assessment Net assets available for benefits $389 $308 $275 of up to $9.1 million in any one policyyear if NEllh property losses exceed available funds. He weighted average assumed rate of return used Excess property insurance of $85 million ind the actuanal pn'sent mlue of accumidated plan prmided b i U. In addition to prmiding pension benefits, the Com- rently limits liability to third parties to $650_ mil-pany prmides certain health care ami life insurance benefits li n f r each nuclear m, eident. Cmtrage of the first for retired employees. Substantially all of the Company's em- $160 milhon of such liability is pnnided by ANI ami ployees may become eligible for those benefits if they reach alAELU. The balance is prosided by utility imlustry retirement age while working for the Company The costs of retrospectne assessments. The Companyk maxi-retiree health care and life insurance benefits are recognized mum potential assessment unter this plan would on the basis of claims paid. Such costs tot 6d $3,253,000 anl be $5 million per incident but not more than $10
$2,464,000 for 1985 anl 1984, respectiwly million pe ar.
Note 10 - Construction Commitments insurance prmided by NEIL Themunder, the Com-The Company is engaged in a construction program pany is insured for up to $1.3 million per week for under which expenditures of approximately $200 million are one year, commencing 26 weeks after initiation of anticipated during each of the next five years. the outage, and for up to $0.7 milhon per week for an additional year. Under th,s i policy, the Company Note 11 - Contingencies . could be subject to a maximum annual retrospec-On October 9,1981, the Company canceled constme- tive premium assessment of up to $3.1 milhon. tion of Unit NoL 2 at its Callaway plant. At December 31,1985, 'Ib the extent that any losses ansing from a nuclear
$40 million, representing construction costs accumulated to incident at Callaway plant exceed, or are not subject to, the limits of insurance, or to the extent such insurance becomes that date plus estimated cancellation charges (net of taxes) has been deferred. By order dated October 21,1983, the 51i3- unamilable in the future, the Company will retain the nsk of souri Public Senice Commission ruled that recovery of such loss as a self-insurer. Although the Company has no reason to cancellation costs applicable to the alissourijurisdiction ($34 anticipate a serious nuclear mc,ident at Callaway plant, if such million) is barred by a state statute which prohibits recowry, an neulent did occur,it could have a material but presently I in rates, of costs of a facility before it is fully operational ami undetermmable adverse impact on the Companyk financud used for senice. De Company appealed and by a decision dated P"Sil "-
Fbbruary 26,1985, the 5hssoun Supreme Court ruled that the h Gw b MW b W MWh statutory ban does not apply to canceled plants and remanded proceedings before various courts anl agencies with respect the issue to the 5fissoun Commission for further proceedings. to matters arising in the ordinary course of business, some of The alissouri Commisskm completed hearings on this matter l _ . . . . . .-
l l l 4 which involve substantial amounts. Management is of the msts am masonable arut pmdent, it can gim no assunmee that opinion that the final disposition of these pmceedings will not future regulatory actions will permit full rate recognition of 1 have a material adverse effect on the financial position of the these costs. Company Under the Nuclear Waste Iblicy Act of 1982, the U.S. Department of Eneigy (DOE) is responsible for the perma-Note 12 - Callaay Nuclear Plant nent storage and disposal of spent nuclear fuel. DOE currently During 1985, the Missouri Public Senice Commis- charges one mill per kilowatt-hour generated for future dis-sion issued orders granting the Company increases in annual posal of spent fuel. Electric rates charged to customers pro-electric rewnues aggregating appmximately $474 million. An side for recovery of such costs. order effectim in January 1985 authorized an annual increase Callaway plant decommissioning costs are esti-of $19 million for non-Callaway related egenditures. An order mated to be $126 million in current year dollars. Electric rates effectim in April 1985 authorized an increase of $455 million, charged to customers provide for recovery of decommissioning which is to be phased in over a six-year period. The increase costs over the life of the Callawny plant. Amounts so collected in the first year is $140 million (15%). The Missouri Commis. from customers are deposited in a trust furul which has been sioni order included a disallowance from rate base of $384 established to provide for decommissioning costs. At Decem-million of Callaway pla 't cost. ber 31,1985, $1,529,000 was on deposit in the decommissioning In May 1985, the Illinois Commerce Commission au- trust furul. thorized an increase in annual electric rewnues of $56 mil-tion, which is to be phased in owr a four-year period. The Note 13 - Supplementary Income Statement Information increase in the first year is $21 million (16%). The Illinois Commissions onler included a disallowance from rate base of 1983 1984 1933
$30 million of Callaway plant cost. (Thousands of Dollars)
The rate increases improw the Companyk cash flow Maintenance and repairs, charged arul reduce the portion of earnings contributed by allowance for furwis used during constmetion. The total amount disal-d$'d'p rating expenses $122,526 s106,3rd s 99,393 Other accounts (a) 8,378 7.573 5,888 lowed from rate base in Missouri and Illinois ($414 million) sl30,901 $113,981 $10.>.283 has the effect of reduemg earnings by approximately $50 mil. lion annually. He Company has appealed the orders to the courts, but the ultimate outcome of the appeals cannot be (p'j ti f
'x ntan b sets, charged directly to:
predicted. Operating expenses $163,319 $101,510 $ 92,297 Generally accepted accounting principles do not re- Other income and deductions 8,097 - - quire an immediate write-off and charge to income as a result Other accounts (a) 3,216 2.891 3.018 of the $114 million disallowed fmm rate base by the Missouri sl74,632 s104.441 s 95.315 arvi Illinois Commissions. Ilowever, the Financial Accounting Taxes, other than payroll and in. Standants Board ("FASB") has recently published a proposed come taxes, charged directly to: amendment to generally accepted accounting principles that Operating expenses-would require the Company to write-off the $414 million dis-
- I "*'^ *"d I*""^I P'"peny s 56,m s 4wa s 48,426 alkiwed. He pmposed amenlment pnnides that the writeoff,
$270 million net of taxes, be reconled as a retroactive charge
$"e$3eN"' $2 $$ ,
135,180 114,930 119,830 to 198a earnings. Such a write-off would not affect the Com- Other accounts 13,007 13,913 11,403 panyt ability to continue to pay dividervis. The FASB is not $148,187 $128.873 sl31.233
# " " EE U ""
f .d 6-(a) A substantial portion of amounts charged to other accounts is allocated to operating expenses through clearing accounts. Due to the timmg of construction expervlitures, rate (b) The amounts of payroll taxes for the years 198.3,1981, and 1983 increase requests filed by the Company haw not included ap. were $14,820,000, $12,698,000, and $12,068,000, respectively. proximately $170 million of Callaway plant cost. The Company (c) The amounts of royalties and advertising costs were not material. is unable to estimate when it will request regulatory consid-eration of these costs. Although the Company beliews that these This report and the fmancial statements contained herein are sub-mitted for the information of the stockholders of the Corrpany and are not intended to induce, or for use in connection with, any sale or purchase of any securities of the Company. t
nera elected FinancialInfor~mation Union Electric Company (Thousands of Dollars Except Share and Per Share Amounts and Ratios) 1985 1984 1983 1982 Results of Operations Operating revenues $ 1,591,763 $1,412,414 $1,401,0S6 $1,217,705 Operating expenses 1,174,907 1,172,128 1,160,816 1,013.051 Operating income 416,856 240,2S6 210,270 201,651 Allowance for all funds used during construction 106,751 329,669 251,307 198,0 5 Callaway rate phase-in plans 74,631 - - - Miscellaneous income and deductions, net (6,696) 1,517 3,490 3,660 Interest on debt 254,320 217,308 218.530 200,554 Net income 337,225 321,164 276.537 205,850 Preferred stock dividends 49,836 50,185 46,118 40,341 Earnings on common stock 287,389 273,979 230,419 165,506 Average common shares outstanding 100,403,016 96,574,C99 b6.744.282 76.251,021 Assets, Obligations, and Equity Capital (Year End) lbtal assets $6,180,826 $5,878,691 $5.205,556 $ 1.630,797 Long-term debt obligations 2,154,687 2,457,381 2,108,047 2JKK),105 Preferred stock subject to mandatory redemption 173,160 178,936 1S0,962 182.958 Preferred stock not subject to mandatory redemption 356,270 356,270 356,270 281,355 Common equity 1,887,750 1,721.150 1.555.501 1.328.061 Financial Indices I Earnings per share of common stock. (based on average shares outstanding) 82.86 $2.81 $2.66 $2.17 Cash diddends per share of common stock $1.78 $1.72 $1.66 $1.58 Return on average common stock equity 15.99"l, 16.901 16.49% 13.93% Ratio of earnings to fixed charges (a) 2.64 2.58 2.90 2.50 (a) Earnings used in computing the ratio of earnings to fixed charges consist of net income plus fixed charges (interest on debt and an appropriate amount of rentals charged to operating expenses) and income taxes. i
n 1981 1980 1979 1978 1977 1976 1975 $1,105,536 $1,077,876 $916,797 $903,988 $765,102 $682,456 $583,155 922,617 886,720 780,331 727,756 605,963 518,312 416,569 182,8S9 191,156 166,166 176/232 159,139 161,111 136,886 l 155,625 92,055 58,093 31,169 19,022 12,379 23,107 (734) 3,638 879 2,896 1,389 (2,5T>l) 1,403 150,312 131,725 106,995 90,309 83,621 78,136 74,967 157,46S 155,121 118,413 120,288 95,926 95,803 86,429 29,863 30,089 97,336 23,130 20,758 20,033 20,038 127,605 125,012 91,107 96,858 75,168 75,770 66,395 67,179,2, a 09.675.995 52.577,132 48.260,596 15,110,215 40,795.152 37,210,134 $ 1.017,277 $3,552,101 $3,168,99S $2,800,209 $2,521,181 $2,316.039 82,162,312 1,719,927 1,179,229 1,3W,990 1,238,860 1,189,0S0 1,118,118 1,021,717 110,014 112.010 111,066 11,092 41,118 41,111 41,170 281,355 281,355 281,355 281,355 281,355 211,355 211,355 1,162,777 1,013,519 930,375 836.020 733,111 631,400 608,860
$1.90 $2.10 $1.73 $2.01 $1.67 $1.86 $1.78 81.52 $1.48 $1.I1 $1.10 $1.36 $1.31 $1.28 12.11 % 13.11 % 10.71% 12.61% 10.68't 12.19 % 11.98%
2.30 2.85 2.62 3.20 2.83 2.80 2.52 I l
in w ra anagement's Discussion And Analysis- __ Union Electric Company Results Of Operations Earnings and earnings per share fluctuated due to Operating Expenses many corxlitions, the primary coalitions being the effect of weather variations. the timing and amounts of rate increases, Fuel and Purchased ther Variation from Prior Year arxl fluctuating operating costs. With implementation of the (Minions of Dollars) 1983 1984 19s3 Callaway-related rate increases in 1985, the Company's cash tiow improved and the portion of earnings contributed by Fuel: Allowance for Funds Used During Construction (AFC) Increased generation $ 55.9 $29.0 $10.7 - decreased (see Note 12 urxler Notes to Financial Statements [i("j',{i,,,igs S (y) 32 23 for mformation concerning such rate mereases). Ilowever, AFC Mnortistis of uranium and the deferral of a cash recovery of a portion of the common litigation settlement (46.6) - - equity return related to the Callaway plant during the early other efficiencies 4.2 (.5) (.4) Net interchange sales and purchased years of the Callaway rate phase-in plans (both noncash in. Pom variations (73.0) (28.5) 212 come items) constituted a significant portion of 1985 earnings.
$(99.2) $ 12 $n9 The portion of earnings contributed by such noncash income items is expected to decline in 1986 (see AFC anxi Callaway .
.g .g gp ,g q Rate Phase-in Ilans discussions below). costs in 1985 primarily reflects impnel efficiencies azul gn ater The i,mpact of the nore significant items affecting nterchange sales due to the impact of the additional gener-revenues, costs, and earnings during the past several years is ation available from the Callaway plant which was first re-analyzed ami discussed below. .
11ected .m operat. ions m early 198a.. The increase in 1983 net interchange sales and pur-Electric Operating Revenues chased power primarily reflected additional power required Variation from Prior Year during the extremely hot 1983 sununer. iltis high summer usage (Millions of Dollars) 1985 1981 1983 did not reoccur in 19M w hen temperatures were near-normal. In 1985, the Callaway plant accounted for $37 mil-Rote variations $180.1 $(21.8) $ 57.7 [jon of the increase in operations expense other than fuel aml Effect of meather variations (12.7) (25.5) 513 purchased power, $14 million of the increase in maintenance Growth and other 29.8 a8.2 a6.3 g gg ggg; g g g
$197.2 $ 10.9 $169.3 pense. Other variations in such costs during the years 1983
. through 1985 generally reflected recurring coalitions, such as The increase in 1985 electne revenues applicable to E% inflation, an! wage inemases. Ihvewr, in 19M the mst rate variations reflects the first-year increases of the Callaway of operations expense other than fuel ami purchased power rate phase-m plans. decreased primarily due to reduced natural gas purchases for The reduction in 19M electne revemies applicable msale.
, [
to rate variations reflects lower rates charged to customers of The 1985 increase in other taxes charged to oper-former subsidiary companies merged into Umon Electne ating expenses is attributable to a $8 million increase in li-Company at year emi 1983, am! fuel cost refumis. cense and franchise taxes resulting from increased revenues Electne rate increases were granted by the M.issouri ami a $12 million increase in real estate taxes resulting from Public Sernce Commissuyn m rmd 1983 (approximately $30 operation of the Callaway plant ami reassessment of Missouri milhon annually), and mid-1982 (approximately $6a milhon real estate taxes. annually). In 1985, reduced income taxes reflected the rapid The effect of year-to-year weather variations on elec- amortization of certain Callaway-related accumulated de-tn,e rewnues was relatively minor during 1985; however,1984 ferred income taxes. Ilowewr, with the exception of such am-near-normal summer temperatures, when compared with an ortization, income taxes during the years 1983 through 1985 extremely hot preceding summer, effected a $2a m,lhon i re- W inemased in msponse to increases in protax income (see duction m electne revenues. The extremely hot 19S3 summer Callaway Rate Phase-In Plans below an! Note 2 unter Notes anl slightly cooler-than-normal pmceding summer caused 1983 to Financial Statements). electne revenues to increase by nore than $50 million over the prior year. The annual increases in electric revenues attributed to grath an! other causes primarily reflect the economic re-covery in the Company's service area as evidenced by contin-uing inemases in sales of ch'etricity to commemial amt inhistrial l customers.
n Liquidity And Capital Resources Interest and Preferred Dividends Cmstmetion expentitures of approximately $200 The increases in interest on debt anni prefermi div. million are expected to be made in each of the years 19S6 idends generally were due to the issuance of additional se. through 1990. The Company completed the construction of its curities to finance the construction program. Callaway plant in late 1984 (its first new major power plant since 1977). Additional electric generation capacity is not an-I Allowance For Funds I' sed During Construction (AFC) ticipated until the late 1990s. In addition to the funds requimi for construction In recent years, AFC has constituted a substantial dun.ng the 1986-1990 period, $668 milhon, meluding $119 mil-partion of earnings ami, until 1985, continually increased due li n for 1986, will be requimi to retire maturing kog-term debt to a greater amount of a>nstmetion work in progress, primar- ' aml for smking fund payments on first mortgage boruls azul ily the $3 billion Callawayplant anxlincreased AFC rates (see prefened stock. The total amount of maturities during this fim-Note i urxler Notes to Financial Statements). AFC declined year peri d does mt melude nuclear fuel lease payments for substantially after the Callaway plant was reflected in electric years subsequent to 1986, since the amounts of such payments rates in eariy 1985; AFC will further decline in 1986 when AFC are n t currently deternunable. is expected to total only $13 million. A nuclear fuellease pnnides for the financm, g of up i Callaway Rate Phase In Plans to $300 million of the Company's nuclear fuel requirements.
. At December 31,1985, $225 million of nuclear fuel was fi-The Callaway rate phase .m plans, effect.ive m 19Sa.
nanced urxler the lease. as a result of regulatory commission orders, proside for (1) de-Union Electric has term hjan emlit agreements ag-fmal of a cash recovery of a portion of the aimmon equity re-gregating $375 millim with certain domestic anl famign banks turn related to the Callaway plant during the early years of which were fully utilized at December 31,1985. Such agree-the plans with recowry of such deferrals m the later years of ments expire in'1989 arul 1990. the plans, (2) three-year amortization of certam Callaway-re-In addition, the Company has an intermediate-term lated accumulated deferred income taxes, aml (3) two-year credit agmement with certain fomign banks which permits the amortization of the proceeds from the Company's settlement Company to borrow up to $10 million through December 1987. 3, none f sud fomMn knuwings wrm uit t r f which cash recowry ' (( g is deferred under the plans is recognized as income currently The Company presently anticipates that 1936 exter-m the Statement of income. Such noncash income amounted nal cash somres will include a $100 million first nutgage Iml to $74.6 million for 19S5 (26% of earnings on common stock) ssue, the nuclear fuel lease, anl additional long-term debt. at:1 is expected to constitute approximately 25% to 30% of Internal generation of funds for construction, during the pe-earnings m common stock thmugh 1988. Aller 1988, the amount riod 1986-1990, is expected to increase significantly, as com-of this noncash meome item is expected to trerxl downward. pami with recent years when Callawny plant omstmetion was financed almost entirely from the sale of securities and bank loans. The Company plans to continue to utilize short-term debt as support for normal operations or other temporary re-quirements. Awrage daily short-term borrowings outstanling during 1985 were $65.6 million. At December 31,1985, unused bank lines of emlit ami credit commitments fmm banks ag-gregated $207 million, not including the intermediate-term emlit agreement mentioned above. (See Note 7 unter Notes to Financial Statements.) Union Electric is authorized by the Federal Energy Regulatory Commission to incur up to $300 million of short-tenn unsecured inlebtedness; however, thort-term debt is not expected to exceed $200 million. Ihr data relative to Supplementary information on inflation arvi Changing Prices, see pages 36 and 37. I l l u
l m Selected quarteridisorniation nion Eintru-em (Thousands of Douars Except h r Sture Amour ts) Earnings Earnings on Per Share Operating Operating Net Common of Sto(k Revenues income income Stock Outstanding Quarter Ended March 31,1985 $316,338 $ 53,790 $ 79,812 $ 67,313 $.68 March 31,1984 312.113 IS.51s 6S,115 55,565 .fi9 June 30,1985 378,981 115,665 85,161 72,667 .73
, June 30,19&l 310.317 62,10S 50,590 6X,33b .s l September 30,1985 493,025 152,594 '119,931 107,476 1.07 September 30,1984 122.26I hS.301 111.173 98.620 1.02 December 31,1985 37a,410 91,807 52,288 39,903 .39 December 31,1984 307.660 11,026 63,953 51,155 .52 omnion Stock Prices And_Dividendsm Itr Share 1985 Price Range 1985 19S4 Price Range 1984 Illgh Low Dividendsm Quarter Ended liigh low Dividends
$17% $15% 43e March 31 $1 W $12% 13(
19 % 17 % 43 June 30 13K 12 -13 19 % 16 % 16 September 30 11% 12 13 2 174 1674 16 1)ecember 31 16K 13 % 43 (1) At December 31,19s5,l'nion Electric Company common stak shareholders totaled 171,691. (New birk Stock / Exchange s3mbol: L Ei!) (2) At December 31 1983, retained earning < anviunted to $661,359.tNNh under the Compan3h amended mortgage indentures $57,ll3,tWX) of total retained earnings was restricted against pa3 ment of common disidends - except those pa3able in common stock.
inancial Position Union Electric Company n (Thous.mds of Dollan Exc(pt Share and Per Share Amounts and Ratios) December 31 1985 1951 ' 1953 19S2 1981 i Assets Properties (at original cast) $6,911.012 $6,563,218 $5,858,551 $5,190,779 $ 1,551,567 Less accumulated depreciation 1,354,197 1,130,621 1,062,765 981,656 915,996 1 5,589,815 5,132,627 1,795,789 1,200,123 3,638,571 l Receivables, net 216,386 178,019 171,382 116.293 135,496 ! Fossil fuel 111,585 - 87,753 73,8S9 99,006 82,310 Other assets 263,040 150,262 161,196 179,375 190,000
'Ibtal Assets $6,180,826 $5,878.691 $5.205.556 $ 1,610,797 $ 1,017,277 Capital and Liabilities Capitalization:
Common stock and retained earnings - Common stock $ 510,619 $ 195,773 $ 173,451 $ 422,06S $ 373,780 Other paid-in capital 715,772 675,941 637,039 511,222 (GI,450 Retained earnings 661,359 552,713 415,011 2 4.771 321,517 3 Conunon equity 1,887,750 1,721,150 1,555,501 1,328.061 1,162,777' Preferred stock not subject to mandatory redemption 356,270 356,270 356,270 281.355 281,355
- Preferred stock subject to mandatory redemption 173,160 178,936 180,962 182,988 110,011 Long-term debt obligations 2,451,687 2,457,381 2,108,017 2,000,105 1,719,927 Total capitalization 1,871,867 1,717,037 1,200,780 3,792,809 3,271,073 Accmnulated deferred taxes on income 695,717 609,663 108,171 323,580 238,153 Accumulated deferred imestment tax credits 111,179 123,749 164,168- 122,217 125,290 Accumulated provision for nuclear decommissioning 2,510 - - - -
Accounts and wages payable 169,122 131,885 175,561 137,209 91,567 Short-term debt including current maturities 112,991 116,993 12.228 69,323 152,253 Other liabilities 217,137 176,41 214.318 180,659 165.911
'Ibtcl Capital and Liabilities $6,180,826 $5,878,691 $5,205,556 $ 1,630,797 $ 1,017,277 Common Equity Data Number of shares out standing 102,123,831 99,151,610 91,690,220 84,413,679 71,755,885 Book value per common share $ 18.18 $17.39 $16.13 $15.73 $15.55 Capitalization Ratios Common equity 38.7% 36.6% 37.0% 35.0% 35.5%
Preferred stock not s ibject to mandatory redemp lon' 7.3 7.5 8.5 7.4 8.6 Preferred stock subjet t to mandatory redempti m 3,6 3.8 4.3 1.8 3.1 Longterm debt 50.4 52.1 50.2 52.8 52.5
'Ibtal Capitalization 100,0 % -100.0 % 100.0 % 100.0 % 100.0 %
numsra upplementary Information On Inflation And Changing Prices Union Electric company (l'naudited) Estimatal effects of inflation armi changing prices Statement of income on the operations of the Company for the year ended Decem. AWusted for Changing Prices 1:?r 31,1985, are presented in acconlance with the require. % ar Ended December 31,1985 ments of Financial Accounting Stanlants IkunL IIistorical msts (In Millions of Average Dollars) ! ha v been adjusted to reflect the effect that changes in spe- - Current cific prices (current cost) have had on the Companyk oper- Cost ations. The adjusted data is not intenk'd as a substitute for Common stock earnings * $287 earnings reported on an historical cost basis, but rat her to giw Additional depreciation (191) some perspectim as to the approximate effects of changing Common stock earnings adjusted i prices on the Companyk imestment ami operations. (excluding a@ustment to net reemerable cost) 96 Adjustment to net reemerable cost 149 Property, Plant, and Equipment Relative price changes" (162) The estimated current cost of property, plant, an! Gain from decline in purchasing pmer of equipment, including construction work in progress, was de- net amounts owed 120 tmnimi by applying the llanlyWhitman "hulex of public Ltility Net change in common equity $203 Constmetion Costs" to the historical cost of each major class .As reported. of plant. Current cost approximates the cost of currently re- " Current cost represents the excess of general price changes ($387 placing existing plant. The plant imestment at current cost million) in 1985 over the increase for such year in specific prices dcas not indicate the Companyk future capital requirements of pmperty and plant ($225 million). since actual existing plant replacement will occur owr many Depreciation Expense yean and will not identically replace present plant. Npnviation expense f r the year 10Sa, applicable to At December 31,1985, the current cost of property current cost property was $362,*m,000. The actual 1983 de-plant, anl equipmeat, net of accumulated depreciation wEs, . preciati n expense was $171,116,000.
$10,532,522,000 while historical or net recoverable cost was The adjusted amount w~ts determined by applying to
$5,589,815,000.
the current cost of property anl plant the same straight line book rates used for hi.storical purposes. Accumulated Depreciation The accumulated prmision for depreciation on a Reduction of Property, Plant, and Equipment current cost basis was determmed by applying to the adjusted amounts for each functional class of plant, the same percent-to M ReceaW Gst Irgulaury pmmss litnits me Compmy to the age relationship that existed between gross plant arul the as. , sociated accumulatal pnnision for depn ciation on an hist (rical "*Y.)f the historical cost of pmperty armi plant through basis, depreciation. Therefore, any excess of property and plant on a current cost basis must be reduced to net reemvrable cost, which is historical cost. While the rate-making pmcess does not reflect the current cost of replacing utility plant, past practice irvlicates the Company will be allowed to earn on arvi l to reemvr the increased cost of its net investment after these facilities are replaced. Gain from Decline in Purchasing Ibwer of Net Amounts owed The Company, by having assets such as receivables, fuel ani materials imentory , arvi defern d charges, suffers a loss of purchasing power during periods of inflation because aller comersion, the cash received for these items will pur-chase less. More than offsetting such assets, however, are sig-nificant anv>unts of kog-tmn debt, refuntable prefenul stock, deferred income taxes,and current liabilities which will be re-paid with dollars of reduced purchasing power.Thus, for 1985, the Company experienced a net " gain" of $120,252,000 from l l l
having an excess of monetary liabilities over monetary assets. currently reflect the effects of inflation and changing prices (Investments and unamortized burstment tax credits were resulted in 1985 reported earnings of $287,389,000 or $2.86 per
. mnsidard as nonmnnetary items; nontefundable prefermi stak share rather than the more realistic current cost earnings of was included in shareholders' equity). $96,372,000 or 80.96 per share.
Rates authorized by regulatory agencies must be General sufficient to pernut the ivplacing of plant anl equipment when Depreciation expense was the only income state- necessary as well as preserw the purchasing power of com- 1 ment item that was adjusted. mon equity capital. 'Ib haw retauni the same purchasing pour i Fbr rate-making purposes, the amount of deprecia- as they had in 1981, the Companyk a>mme sharehokkrs shoukt tion expense included in the Companyk allowed revenues is have receiwd 1983 common dhidends of $1.80 per share as based on historical or original cost. The Companyk inability to compared with the actual $1.78. l 4-Fise Year Comparison of Selected Years Ended December 31, Supplementary Financial Data - Adjusted for Effects of Changing Prices 1985 -1984 1983 1982 1981 j (in Millions of Average 1985 Dollars Except j IVr Share and "As Reported" Amounts) Operating rewnues: As reported $1,592 $1,412 $1,401 $1,218 $1,106 4 Adjusted for generalinflation 1,592- 1,463 1,513 - 1,357 1,308 ~ l Earnings (loss) on common stock (excluding reduction to net recowrable cost): As reported 8 287 8 274 8 230 $ 166 8 128 Based on current cost 96 110 76 17 (11)' r Earnings (loss) per share of common stock (excluding reduction to net recowrable cost): As reported $ 2.86 8 2.84 8 2.66 $ 2.17 $ 1.90 Based on current cost .96 1.14 .87 .23 (.17) Excess (deficiency) of general price changes owr increase in the ! specificlewl of prices $ 162 $ 67 4'(72) ~$ (36) $ (16) Shareholders' equity (net assets), at year end: . IIistorical cost (as reported) $2,244' $2,081 81,912 $1,609 $1,444 i Adjusted for current cost 2,208 2,125 2,030 1,773 1,653 Gaim from decline in purchasing power of net amounts owed $ 120 $ 117 $ 104 8 93 . $ 193 - Cash dividends declared per common share: Actual $ 1.78 $ 1.72 $ !.66 $ 1.58 . $ 1.52 Adjusted for generalinflation 1.78 1.78 1.79 1.76 - 1.80 Market price per share, at year end: . Actual $21% $ 16% - 8 12 % $ 13K $ 10% Adjusted for generalinflation 21 ' 16 % 13 % 15 % 12 % i Awrage Consumer Price Index (CPI-U) 322.2 311.1 298.4 280.1 272.4 l
M PSOlting Statistics _ _ ___ Union Electric Company 1985 19R1 19S3 19S2 Electric Operating Revenues (OtHI): Residential $ 572,123 $ 195,416 $ 52-1,792 $ 126,213 Commercial 501,913 130,913 102,737 363,826 Industrial 335,576 291,215 251,397 257,320 Other electric utilities 56,078 50,702 Ifi.128 -12,650 31iscellaneous 23,267 20.h50 25.500 21.816 Tbtal Electric Operating Revenues $ 1,189,257 $ 1.292.056 $1.281.151 $ 1.111.555 i Kilowatt Ilour Sales (INNUNU): Residential 8,811 5.71i1 h,979 7,906 Commercial 8,823 S.111 7.653 7,339 Industrial 8,038 7,92X TcliS 7,130 Other electric utilities 1,130 1,503 1.198 1,112 aliscellaneous 160 16i 321 110 lbtal Kilowatt llour Sales 27,295 2fi.500 25.929 21.097 Electric Customers (End of war): Residential 901,777 855.026 879.156 S69,811 Commercial 109,099 1(Hi.760 110,01S 109,917 Industrial 6,333 fi,331 5,126 o,132 Electric utilities 23 21 21 21 Other 1,110 1.100 3.2% 3.241 lbtal Electric Customers 1,018,612 1.002.511 997Ji31 9xS.lSI Residential Customer Data ( Average): Kilowatt-hours used 9,901 9.951 10.2S3 9,108 Annual electric bill $611.02 5562.60 $601.03 $ 190.96 Revenue per kilowatt-hour 6.17e 5.65c 5.8 10 5.39c Gross Instantaneous IVak Demand (Kilowatts) 6,335,000 fi.S 10J H H) 6.59SJ H H) 6.161JH H) Ccpability at Time of IVak, including Net Purchases (Kilowatts) 8,231,000 7.912JH o 7.633Joo 7.631 J H H1 Generating Capability at Time of IVak (Kilowatts) 8,097,000 ti.952J Hi0 6.914J H10 6.951JH H) Coal llurned ('lhns) 10,126,000 ll.S20JHHI I I.371 J H Hi ll.0S6JH N) Price per 1bn of Coal _
$3 f.92 $33.76 $33.33 $:n15
. . . . . _ ... . 1
l M 1981 19SO 1979 1978 1977 1976 1975
$ 3S9,182 $402.160 $313,251 $331.128 $283,121 $21S,781 $220,174 321.-ItH) 306,186 265,278 253.279 219,8(Hi 195.568 162,079 250,812 233.851 221,617 209,110 169,831 Ital.539 127.939 39.789 35,619 31,1S5 31,565 21.010 21,132 19,812 1S.158 18.771 20.3S8 19,061 16.232 11.677 12.973 $1.019.671 $9fHi.893 $574,719 $811,173 $713.036 $635.(HN) $512.977 7.7T;6 S.116 7.516 7,670 7,389 6.625 6,807 7.021 6,913 6.163 6,332 6,331 5.823 5,551 7.76, ,.616 ,,8 18 7,738 7,fiS6 7.221 6,855 1,120 1.135 1.311 1.317 1.263 1.171 1,222 312 3S5 -lSI 160 4 12 519 TAHi 21.279 2 f.795 23.6S9 23.517 23.081 21.359 20.91i S70,066 562.100 853.! MIS 815.074 832.251 821,561 810,702 108.561 106,-128 101.355 99.751 99,105 95.21S 93.818 5 20, a.32S 5.331 5,3 IS 5.225 5,159 5.368 21 21 21 21 21 21 25 3.065 2.950 2.917 2,753 2.312 1.172 1,350 956.923 977.136 !Hi3.T)3X 952.950 938,917 923.767 911.293 , 8.955 9.8 18 S.S93 9,167 S 956 8,1i 1 8,159 8119.35 816S.92 $392.71 $395.74 $313.I6 $301.71 $273.62 102c 1.760 1.120 1.320 3.83t 3.76e 3.23<
6.29taHH) 6.101.(H H) 5.S16.000 5.813.(H H) 5.837.(H K) 5.5X2,t H H) 5.363,000 7,l l t.(H K) 7,16S.(H H) 7,739.(H N) fi.873.0(H) 6.591.fHHi 6.913.txH) 0.171.(H N) 6.87!Up) 6.821.000 6.917.0l H) fi.718.(H H) 6.607,(H H) 6.1:r.).(H H) 5.!H12.000 l l.316 lH H) li.73tuMH) 12.037.tH N) ll.S66.tH)0 ll.915.0(H) I I .069.(H H) 10.089.(H)0
$29.15 $26.85 $26.02 $21.15 $17.86 $1501 $13.12 1
m estor Information Union Electric Company
'Ihx Status of Dividends Office Registrars Under the Internal Revenue Code,1985 first quarter 1901 Gratiot Street For Preferred Stock common dhidends are fully taxable as dhidend income.
llowever,3 percent of second quarter common dhiderxis arxl ftgiSj.{ g;1ytmen ,n of St. leuis mss 13 percent of both third arxl fourth quarter'comnuin dividervis f0il gx St. louis,310 Gll66 are considered a return of capital atx1, therefore, are not taxa- SL leuis,510 63166 The Chase ble as dhiderxl income. This equals an annualized nontaxable llanhattan llank rate of 7.4 percent for common stock shareholders whose I holdings were constant throughout the year. Preferred stock Transfer Agents Mion) New Erk, NY 10015 R>r Preferred Stock dhideruls are fully taxable. Union Electric The Economic Recowry Tax Act of 1981 allows exclu- Company St. leuls,510 63166
$ $"""*"n sion from taxable income of an aggregate of $750 annually National llank of
($1,500 in the case ofjoint returns) of dhideix!s reimested in stercantile Dust . St. leuis common stos.k of qualified utilities. This provision expired Company - St. leui,s,510 Gil66
' i" I Ikcember 31,1985.
kl If[0 s l66 h"o"s,*,*I"'"'" Dhidend Reinwstment And Stock Purchase Plan 1anur turers ni n-
, {. rust
'Ihe Dhidetti Reimestment and Stock Puttimse Plan Trust Company pnnides common and preferred stockholders, employees, arul New York, NY 10015 Trustees, customers the oppatunity to putthase shares of commn stock For Common Stock Transfer Agents, of the Company by automatically reinvesting dhidetuls arul/or (?nion Electric Registrars And inwsting optional cash payments. [t.Su s,310 Gil66 Paying Agents Effective January 1,1986, Cnion Electric ameruled its Dhiderxl Reimestment arm! Stock Purrhase Plan to include j",'{'["**
- the option to pnnide shares of common stock sold urvler the of St. leuis Centerre T ust 1 Plan through market purchases. The Company is presently St. leuis,510 63101 C p nf oprating the Plan uruler that option rather than the use of slanufacturers St. leuis,510 63101 l new issue stock. This change was made because of reduced llanover m e" constmetion experrlitures armi capital needs, arti coincides with T,mst , ,nk
^ ,
the expiration of the special tax treatment for participants in of St. leuis, T ustee such plans discussed abow. SL leuis, slo G1102 Other aspects of the Plan remain unchanged, llarris Trust arvl including the pnnision that participants are able to purchase Savings Bank - an mng,- shares of Company common stock without brokerage commis-sions or senice charges.
- Chicago,IL 60600 Information regarding the Company's Dividend Continental lilinois Heinwstment anl Stock Purchase Plan may be obtained by National Bank aivl writing to: Trust Company of Union Electric Company Chicago, Trustee, Chicago, IL (469, Stockholder Senices Department - Code 103~>
Bankers Trust PO. Box 149 Company St. lou.is, MO 63166 New York, NY 10015 e
tatement Of Policy We are a business enterprise-dependent for suc-cess on the high quality and fair price of our service; on the skill, courtesy and loyalty of our employees; on the confidence of our investors; and on the ability of our management to forecast and provide for the energy requirements of our area. In the conduct of our business, we will render ser-vice of the highest quality to our customers-promptly, courteously and effi- l ciently-at the lowest prices consistent with paying fair wages and affordingjob l satisfaction and security to our employees, providing modern facilities for our customers' expanding needs for energy service; and paying a fair return to our investors who have prodded the funds to make such service possible. As a private enterprise entrusted with an essential public service, we recognize our civic responsibility in the communities we sene. We shall strive to advance the growth and welfare of these communities and shall , participate in civic actidties which fulfill that goal . . . for we believe this is both l good citizenship and good business. ( f' l
UVION Bulk nate Eu?CMUC us. ibstage
'4,3
, PAID St. Louis, M0 EO 09 II0 Itrmit No.140 St. Louis, MO 63166 s.
n __ ________.._._______.___.-__.________.m._____ _ _ _ _ _____m _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _
~3 sau ' '* '
- l
UNION ELECTRIC COMMNY 1901 Grotiot Street St. Louis Donald F.Schnell Vice President March 14, 1986 Mr. Harold R. Denton, Director ULNRC-1272 Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555
Dear Mr. Denton:
DOCKET NO. 50-483 CALLAWAY PLANT Transmitted herewith are twenty-five (25) i copies of the Union Electric Company 1985 Annual Report. This information is submitted in accordance with 10CFR50.71(b). Very truly yours, I % !V g Donald F. Schnell JMC/lkr Enclosures l l l J h Momng Address: RO Box 149, St. Louis MO 63166 id
.J
e .Jo .o cc: Gerald Charnoff, Esq. Shaw, Pittman, Potts & Trowbridge 1800 M. Street, N.W. Washington, D.C. 20036 Nicholas A. Petrick Executive Director SNUPPS 5-Choke Cherry Road Rockville, Maryland 20850 C. W. Hehl Division of Projects and Resident Programs, Chief, Section lA U.S. Nuclear Regulatory Commission Region III 799 Roosevelt Road Glen Ellyn, Illinois 60137 Bruce Little Callaway Resident Office U.S. Nuclear Regulatory Commission RRil Steedman, Missouri 65077 Paul O'Connor Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Mail Stop 316 7920 Norfolk Avenue
! Bethesda, MD 20014 Manager, Electric Department Missouri Public Service Commission P.O. Box 360 Jefferson City, MO 65102 l
c l _-_- :__._._ __ ___. _ ___ ____ _._- :_-___.___._ __-. ___-_ ,. _ _ . _J}}