ML20205F805
| ML20205F805 | |
| Person / Time | |
|---|---|
| Site: | Callaway  |
| Issue date: | 12/31/1986 |
| From: | Schnell D UNION ELECTRIC CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| ULNRC-1474, NUDOCS 8703310301 | |
| Download: ML20205F805 (42) | |
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9' STATEMENT OF POLICY We are a business en' t erprise-dependent for success 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 service of the highest quality to our customers-promptly, courteously, and efficiently-at the lowest prices consistent with paying fair wages and affording job 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 provided the funds to make such service possible.
As a private ecterprise entrusted with an essential public service, we recognize our civic responsibility in the communities we serve. We shall strive to advance the growth and welfare of these communities and shall participate in civic activities which fulfill that goal...for we believe this is both good citizenship and good business.
CONTENTS Letter to Shareholders 2 liighlighting Financial Performance 4 Improving Employee Capability and Effectiveness 6 Deferring the Need for New Generating Capacity 8 increasing Off Peak Demand 10 Maximizing Facility Utilization 12 Gaining QualityImprovement 14 Responsibility for Financial Statements 16 Financial Review 17 InvestorInformation 36 Officers and Directors 37 Annual Meeting: The AnnualMeeting On the Cover: A section of the power of Stockholders will convene at 10 a.m. system circuit diagram in the Load Tuesday, April 28, 1987 at Powell Dispatching Office at Union Electric's Symphony Itall,718 North Grand, Saint St. Louis headquarters.
Louis, Missouri.
. - . ._. .. ._ - . __ - . .- - - - - - . - _ _ _ _ _ _ _ _ _ _ ~
BUSINESS REVIEW Union Electric Company 1
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i IIIGIILIGIITS AnnualIncrease 10-Year Year Ended Current Rate of December 31,1986 Year Growth Earnings per Average Common Share $2.89 1.0% 4.5%
Dividends per Common Share $1.86 4.5 3.3 Common Stock Price-Year End $28.75 34.5 6.2 Book Value per Common Share $19.51 5.6 2.4 Property and Plant (gross) $7,161,890,000 3.2 10.1
, TotalOperating Revenues $1,807,182,000 13.5 10.2
- Total Kilowatt liour Sales 28,257,141,000 3.5 2.8 Residential Kilowatt-flour Sales 9,283,129,000 5.0 3.4 Commercial Kilowatt liour Sales 9,306,310,000 5.5 4.8 Industrial Kilowatt liour Sales 8,073,148,000 0.4 1.1 l
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prinntraly enunge,I in supp!_du < Irrtrir
.cru ire tu nu,rv tium one uni!!isort a urfarnev%
in lin'mirnicate a enter of \ nn rir n -
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'IU OUlt SIIAlWilOLDEllS:
__________.___~,__.___q We are gratified with the results of 1986. Earnings '
exceeded our expectations, common stock dividends increased, and our cash flow and financial condition continued to improve.
The $2.89 per common shar earned in 1986 exceeded 1985 earnings by 3 cents and substantially exceeded our :
forecast prepared one year ago which predicted a 10 to l 15 percent decline from 1985. The improved 1986 earnings reflect increased sales of electricity due to ,
unseasonably warm weather in the second and third
, quarters of 1986, the availability of low cost purchased power and our success at implementing a variety of cost control measures. ;
The second series of rate increases under our Callaway-related rate phase-in plans became effective in early 1986.
r Internal cash flow and the proportion of earnings repre- ,
william E. conwlius sented by cash will continue to increase as additional phase-in rate increases are implemented over the next several years. ;
Our newest power generating facility, the Callaway nuclear plant which was completed in December 1984, continues ,
to set industry standards. By the end of 1986, Callaway had produced more than 15 billion kilowatt hours of energy
-an all-time record amount of electricity generated by a ,
nuclear power plant in the first two years of operation.
Our other power generating facilities also continued to perfonn well, having produced in excess of 25 billion kilowatt hous of electricity during each of the past two years.
Early successes at cost control in 1986 included restruc-turing some of our debt so as to benefit from favorable interest rates, minimizing capital expenditures and reducing fuel costs. We see additional cost control opportunities for '
1987 and beyond.
We plan to devote significant marketing effort in the years L ahead toward increasing off-peak sales of electricity-principally electric heating. Marketing the electric heat pump to our residential customers presents the greatest potential. We have recently initiated an employee incentive !
program designed to support our marketing of the heat l pump. Growth in this market will result in a more efficient j 2
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utilization of our power plants from which both we and our customers will profit.
Looking to the future, our continuing emphasis on control of costs and marketing off-peak sales of electricity will provide a solid base for earnings and dividends.
Our customers are the ultimate key to our future success.
In 1986 we spotlighted our commitment to serve our customers through a television advertising campaign that featured our employees. The campaign conveyed the theme "We're here to serve You" and was extremely successful, emphasizing our belief that what is good for our customers is good for Union Electric.
The Tax Reform Act of 1986 provides us with an oppor-tunity to further contain the cost of our service to our customers. We have submitted a proposal to the Missouri Public Service Commission which is designed to allow our customers to receive the benefits that will accrue to the Company as a result of the new tax law.
Acid rain legislation continues to be a significant uncer-tainty. Congress did not act on proposed legislation in 1986. However, the issue is still very much alive. Proposed legislation has ignored the research results pmduced by the scientific community. We are supporting programs to study the causes and effects of acid rain and we have urged our legislators to consider the scientific results of these programs, not political rhetoric, as a basis for formulating national policy.
1986 was a good year for Union Electric and a year in which w e developed a solid foundation from which to grow and face the challenges of the future. I am confident that our highly <1ualified management and employee team has the commitment necessary to achieve our goals for the future.
Sincerely, William E. Cornelius President and Chief Executive Officer February 6,1987 St. Louis, Missouri 3
filGilLIGIITING FINANCIAI, l'EllFOIDIANCE l
l
, Earnings for 1986 were S2.89 per share, an increase of j. "J..- -
-^
( 3 cents over 1985. Common stock dividends were increased 2 cents per share in the fourth quarter of 1986, bringing
- the annual rate to $1.92 per share. The common stock dividend has been increased four times in the last five years.
l ,
l Cash flow and financial condition continued to improve as a result of the second series of rate increases under the Callaway related rate phase-in plans. Uhion Electric's .~ t common stock price rose to an all-time record level of $31% -
per share on August 21,1986, $10 per share above its high for 1985 and $12 per share above book value.
Total 1986 kilowatt-hour sales increased by 3%76 over '
1985, reflecting increases in sales to our residential and -
l commercial customers of 576 and 5%76, respectively. Sales .
to industrial customers remained at approximately the same I level as in 1985. Unseasonably wann weather in the second and third quarters of 1986 contributed to the increased residential and commercial sales. At year-end 1986, the electric heating load connected to our system was 3.3 million kilowatts, up 376 over 1985. During 1986, electric heating was installed in 4476 of all new commercial and industrial buildings,3576 of all new homes and 71% of all new apartments in our service area.
To benefit from favorable conditions in the financial markets, we restructured a $275 million domestic credit areement, a $300 million nuclear fuel lease, and a $40 million toreign l
I credit agreement; issued $100 million of 9%76 thirty-year bonds to retire short-term debt; issued $100 million of l 8%% ten-year bonds to repurchase and retire 1376 bonds; completed early redemption of 1676 and 11%76 bonds; l
l renegotiated fees for bank lines and letters of credit and I
exercised our option to double the sinking fund on the
$2.72 Series preferred stock. On February 15,1987, we plan to redeem the S4.00 Series of 1982 preferred stock.
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The continuing development of a highly skilled, motivated, l
and safety-conscious work force is essential to the cost-i effective operation of our facilities.
Union Electric's Training Centers located in Fenton, x '4; h -
. Missouri and at the Callaway plant are dedicated to meeting the special educational requirements for skilled employees who operate and maintain the Company's power plants.
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.' - Our Fenton Training Center has major programs in place to '
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.. q Our objective is to graduate three hundred employees
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Our Callaway Nuclear Training Center, a model within the ,
electric utility industry, provides state-of-the-art training for control room operators, maintenance personnel, and technicians. This Training Center features a full scale functioning plant control room simulator which provides realistic, hands-on training. Simulation of a wide variety of situations provides plant operators with an opportunity to l reinforce their proficiency.
The Company's commitment to excellence in operator train-ing and technical job skills was recognized in April 1986, when Callaway became the third nuclear plant in the country to achieve full accreditation of allits training programs l by the National Nuclear Accrediting Board, leading to Union Electric's membership in the National Academy for Nuclear Training.
~ _ _ . . . _ _ _ - _ _ _ _ _ . _ _ _ . _ _ _ _ _ _ _ _ _ _ . . _ _ _ _ _ _ _ - _ _ .
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A primary goal of the Company is to achieve greater plant utilization and an extension of the economically useful life of its existing facilities, thus deferring the need for major new construction. Key to achieving this goal is an ongoing facility modification program which is focused on extending the useful life of existing facilities, improving generating unit capability, maximizing thermal efficiency and minimizing the time that generating units are out of service.
A power plant contains an enormous number of inter-dependent systems. Systems this complex require constant monitoring as well as maintenance programs to ensure safe and efficient operation.
The Company inspects and tests critical boiler piping systems, in the field and in the laboratory, to determine the condition and the potential performance of piping systems that are subjected to steam pressures exceeding 2,000 pounds per square inch.
Labor agreements that permit increased flexibility in the use of skilled workers, along with sophisticated work planning and scheduling, are also contributing to improved generating unit availabilities.
We receive valuable input in our efforts to achieve greater plant utilization through our participation in the Electric Power Research Institute, a national research and develop-ment organization, funded by electric utility companies.
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To more effectively utilize our existing generating capacity, -
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m the residential customer. Union Electric is purchasing energy-efficient, heat pamp-equipped display homes in h
i strategically located major residential developments. These ~
display homes demonstrate to potential new home buyers the comfort and efficiency of the heat pump system and other energy controloptions.
Since every homeowner replacing a central air conditioner represents a potential heat pump opportunity, we also have initiated an extensive training and marketing program designed to enlist the direct participation of our employees in identifying these residential marketing possibilities.
We have in place the programs to market off-peak energy sales. But to ensure success, we continue to emphasize that concern and caring for the customer's individual needs are essential first steps in creating a receptive market place.
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L Union Electric is increasing the capability of its existing generation, transmission and distribution systems by increasing design limits, operating load limits, and through life extension programs.
L. , ' As utilization of Union Electric's generation and trans-mission system increases in coming years, the Load Dispatching Office will provide the control necessary for efficient management of our electric system. Load Dispatching's primary role is to ensure overall system integrity-providing for customer power requirements without disrupting service.
During the course of a typical day, service demands fluctu-ate significantly. Load Dispatching determines the most economic means to meet these demands-by efficiently scheduling power within the system and by bringing on or offline generating units in the most cost effective manner.
Load Dispatching also directs the interchange of power with other utilities. This buying and selling of power is a
. key to providing reliable service at a minimum cost to our customers.
Looking to the future, a new Distribution Dispatching Cemer with advanced computer technology will further enhance service reliability. This new facility will include an updated emergency respmise system to expedite repairs during storms or other occurrences that disrupt service to e our customers.
13
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l Union Electric exists to provide a reliable supply of energy at competitive prices. Today, the entire utility industry is undergoing major changes, with increased business challenges arising from growing customer expectations, regulatory changes, and aggressive competition.
Our Quality Improvement Process serves as an integral l
, l component of our strategic plan to meet the challenges of l k the future. This process draws upon our greatest asset-the knowledge and experience of our employees. Together, i ,
through teamwork, employees use a problem-solving process to focus on the philosophy of people providing quality service. Employee teams at alllevels are working to
) -
improve the quality of even thing we do. Doing the right job, the right way, the first time is our standard of performance.
We believe this process will enable us to better respond i
to our evolving business environment and will promote reduced costs of operation, better service to customers, and increased job satisfaction for all employees.
i l
i 15
RESI*ONSHHLITY FOR FINANCIAL S'IATE3lENIS The management of Union Electric Company is responsible for the information and representations contained in the financial statements and in other sections of this Annual Report. The financial state-ments have been prepared in conformity with generally accepted accounting principles consistently applied. Other information included in this report is consistent, where applicable, with the financial ,
statements.
The Company maintains a system of internal accounting controls designed to provide reasonable assur-ance as to the integrity of the financial records and the protection of assets. Qualified personnel are selected and an organization structure is maintained that provides for appropriate functional responsibility.
Written policies and procedures have been developed and are revised as necessary. The Company maintains and supports an extensive program of internal audits with appropriate management follow up.
The Iloard of Directors, through its Auditing Committee comprised of outside directors, is responsible for ensuring that both management and the independent accountants fulfill their respective responsi-bilities relative to the financial statements. Moreover, the independent accountants have full and free access to meet with the Auditing Committee, with or without management present, to discuss auditing or financial reporting matters.
NEI' ORT OF INHEl'ENHENT A CCOUXIA NTS One Cemerre Pwa Te'epone 314 425 0500 St laws MO 63101 Price iIhierhouse &
February 6,1987 To the Stockholders and lloard of Directors of Union Electric Company We have examined the balance sheet of Union Electric Company as of December 31,1986 and 1985, and the related statements of income, long term debt, preferred stock, retained earnings, other paid in capital, and changes in financial position for each of the three years in the period ended December 31, 1986. Our examinations were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
As more fully described in Note 12, the Financial Accounting Standards lloard issued a statement in 1986 which pmvides that the disallowance of costs of a completed plant be recognized as a loss in the year the disallowance becomes probable and that the asset relative to an abandoned plant be recorded at the present value of the related costs expected to be recovered through rates. The statement will become effective in 1988.
In our opinion, the financial statements examined by us present fairly the financial position of Union Electric Company at December 31,1986 and 1985, and the results of its operations and the changes in its financial position for each of the three years in the period ended December 31,1986, in conformity with generally accepted accounting principles consistently applied.
AM0_-
16
SITIE11ENT OFINCO.11E Union Electric Company (Thousands of Dollars Except Share and Per Share Amounts)
Year 1986 Year 1985 Year 1984 Operating Res enues (*):
Electric $1,722,680 $1,489,257 $1,292,086 Gas 80,895 99,124 108,600 Other 3,607 3,382 11,728 Total opemting revenues 1,807,182 1,591,763 1,412,414 Operating Expenses:
Operations Fuel and purchased power 351,854 341,640 440,821 Other 334,275 312,271 251,941 686,129 653,911 692,762 Maintenance 148,173 122,526 106,368 Depreciation 180,360 165,816 101,550 Income taxes 92,352 82,654 143,820 Other taxes (*) 181,559 150,000 127,628 "Ibtal opemting expenses 1,288,573 1,174,907 1,172,128 Oper.iting Income 518,609 416,856 240,286 1
l Other Income and Deductions:
Callaway rate phase in plans 59,861 74,631 -
Allowance for equity funds used during construction 3,801 53,709 179,634 Miscellaneous, net (2,980) (6,696) 1,517 Total other income anri deductions, net 60,685 121,644 181,151 Income llefore Interest Charges 579,291 538,500 421,437 Interest Charges:
Interest on debt 217,409 254.320 247,308 Allowance for borrowed funds used during construction (12,008) (53,045) (150,035)
Net interest charges 235,491 201,275 97,273 Net Ineome 313,893 ,337,225 324,164 Preferred Stock I?ividends 49,215 49,836 50,185 Earnings on Common Stock $ 291,618 $ 287,389 $ 273,979 i'llncludes license and franchise taxes of $85,448,000, $76,514.000, and $68,172,0tX) for the years 1986.1985, and 1984, respectively.
Earnings per Sharc of Conunon Stock tbased on average shares autstanding) $2.S9 $2.86 $2.84 Dividemls per Share of Common Stock st.86 $1.78 $1.72 Average Number of Common Shares Outstamling 102,123,831 100,403.016 96,574,699 See Notes to Financial Statements on pages 25 thmugh 29.
17
IMIAACliSIlliffl' Union Electric Company (Thousandsof Dollars)
Asseis December 31,1986 December 31,1985 Property and Plant, at original cost:
Electric $6,841,297 ' $6,686,275 Gas 92,332 85,697 Other 14,288 13,900 6,950,917 6,785,872 Less accumulated depreciation and amortization 1,573,074 1,354,197 5,377,843 5,431,675 Construction work in progress:
Nuclear fuelin process 196,402 187,784 Settlement of uraniumlitigation (27,108) (82,050)
Other 41,679 52,406 Total property and plant, net 5,591,816 5,589,815 Deferred Charges and Other Assets:
Callaway unit 2 construction abandonment 117,812 76,828 Callaway rate phase-in plans 131,223 74,631 Unamortized debt expense 21,132 5,543 Unamortized bond defeasance cost 4,931 5,171 Nuclear decommissioning trust fund 5,228 1,529 Other 13,813 16,974
'llital deferred charges and other assets 297,139 180,676 Current Assets:
Cash 4,353 3,421 Deposits for payment of interest and other deposits 1,266 1,619 Accounts receivable-trade (less allowance for doubtful accounts of $4,058 and $4,350, at respective dates) 127,876 108,334 l
Unbilled revenue 82,120 95,434 Other accounts and notes receivable 10,173 12,618 Materials and supplies, at average cost-Fossil fuel 101,795 111,585 Construction and maintenance 93,123 70,640 Other 10,521 6,684
'll ital cur rent assets 431,527 410,335 Total Assets so,323,182 $6,180,826 See Notes to Financial Statements on pages 25 through 29.
!N y --- - +-
Capital and Liabilities December 31,1986 December 31,1985 Capitalization:
Common stock, S5 par value, authorized 150,000,000 shares; outstanding 102,123,834 shares, at respective dates (excluding 42,990 shares at par value in treasury) S 510,619 $ 510,619 Other paid-in capital, principally premium on common stock (see accompanying statement) 715,772 715,772 Retained eamings (see accompanying statement) 766,151 661,359 Total common shareholders' equity 1,992,545 1,887,750 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) 165,384 173,160 Long term debt (see accompanying statement) 2,445,409 2,463,333 Unamortized discount and premium on debt (9,317) (8,646)
Total capitalization 4,950,291 4,871,867 Accumulated Deferred Taxes on Income 707,017 695,717 Accumulated Deferred Investment Tax Credits 158,980 111,479 Accumulated Provision for Nuclear Decommissioning 6,098 2,510 Construction Commitments and Contingencies (Notes 10,11, and 12)
Current Liabilities:
Current maturity of long-term debt 83,967 112,994 Accounts payable 145,835 142,183 Wages payable 27,312 26,939 Callaway unit 2 cancellation charges 2,337 23,917 Bankh)ans 30,000 -
Income taxes accrued 51,267 42,314 Other taxes accrued 17,511 16,699 Interest accrued 81,375 82,347 Dividends declared - ' 12,162 12,357 Other 19,300 39,503 Total current liabilities 501,066 499,253 Total Capital and Liabilities 56,323,482 86,180,826 19
IRW-TEIUl DENT Union Electric Company (Thousandsof Dollars)
Decemher 31,1986 December 31,1985 First Mortgage llonds-note (a) 16 % Series due 1987-note (b) S -
$ 5,500 4%% Series due 1988 3,000 3,000 4%% Series due 1988 35,000 35,000 4%% Series due 1990 50,000 50,000 11%% Series due 1990-note (b) - 2,600 4%% Series due 1991 30,000 30,000 5% Series due 1991 2,000 2,000 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 % Sedes due 1992 125,000 125,000 4%% Series due 1993 30,000 30,000 10%% Series due 1994-note (c) 3,610 4,060 4%% Series due 1995 35,000 35,000 4%% Series due 1995 3,000 3,000 5%% Sedes due 1996 30,000 30,000 5%% Series due 1996 5,000 5,000 8%% Series due 1996 10,000 10,000 8%% Series due 1996 100,000 -
5%% Series due 1997 10,000 40,000 5%% Series due 1997 5,000 5,000 7% Series due 1998 50,000 50,000 7.95% Series due 1998 4,000 4,000 7%% Series due 1999 35,000 35,000 8% Sedes due 1999 5,000 5,000 8%% Series due 1999 10,000 40,000 9.95% Series due 1999-note (c) 85,720 92,860 9% Sedes due 2000 60,000 60,000 7%% Series due 2001 50,000 50,000 7%% Series due 2001 50,000 50,000 8%% Series due 2001 60,000 60,000 9%% Series due 2001-note (c) 4,200 4,500 9%% Series due 2001-note (c) 2,13 1 2,608 9%% Series due 2001-note (c) 8,100 9,000 8%"; Sedes due 2002-note (c) 1,500 4,800 7%% Sedes due 2003 7,(MM) 7,000 8%"; Series due 2004 70,000 70,000 10% Series due 2004-note (c) 8,500 9,000 10%% Series due 2005 70,(MM) 70,000 5.80% Series due 1992 to 2005-note (d) 27,085 27,085 8%% Series due 2006 70,(MM) 70,000 8%"; Series due 2007 60,000 60,000 9.357; Series due 2008-note (c) 55,000 55,000 9.25-9.6257; Series due 2000 to 2010-note (d) 60,(MM) 60,000 13"; Series due 2013-note (b) 11,351 100,000 9%"; Series due 2016 100,0(M) -
20
pecember 31,1986 December 31,1985 Unsecured Loans-Foreign credit agreement, due 1987 to 1989-note (e) S 80,000 $ 100,000 Domestic credit agreement, due 1989 to 1990-note (D 275,000 275,000 Unsecured Notes-6% Due to 1999 1,610 1,715 Missouri Environmental Improvement-Revenue bonds,5.60-6.20% Series due 1989 to 2004 16,500 16,500 1984 Series A due 2014-note (g) 80,000 80,000 1984 Series 11 due 2014-note (g) 80,000 80,000 1984 Series C due 2014-note (h) 17,500 47,500 1985 Series A due 2015-note (i) 70,000 70,000 1985 Series 11due 2015-note (i) 56,500 56,500 Nuclear Fuel Lease-note (j) 70,969 165,605 Long-Term Debt s2,i 15,109 s2,463,333 (a) At December 31,1986, substantially all of the property and plant was mortgaged under, and subject to tiens of, the respective indentures pursuant to w hich the bonds were issued.
(b)In 1986, the Company completed early redemption of the 16"; Series and 11%"; Series,in their emirety, and repurchased and retired
$85.6 million of the 13". Series.
t c) To be retired by sinking fund - 10%*; Series to 1993; 9.95*; Series to 1998; 9%"; Series to 2000; each 9 %*; Series to 2000; 8%". Series to 2001; 10"; Series to 2003; and 9.35"; Series imm 1989 to 2007.
(d) Environmental lmprovement Series.
(e) Credit agreement with certain foreign banks w hich permits the Canpany to Inrow $100 million in term loans, on which interest rates will vary depending on market conditions and the Company's selection of various options under the agreement. At December 31, 1986, $100 million ($20 million is included under current matunty of long term debt) of such foreign borrowings were outstanding at an average annualinterest rate of 64";, based on the 30-day Iondon Interikmk Offered Rate t LillOR ),
if) Credit agreement with certain domestic banks which permits the Company to borrow $275 million in term loans, on which interest rates will vary depending on market conditions and the Company's selection of 5 arious options under the agreement. At December 31, 1986, such domestic burmwings were outstanding at an average annualinterest rate of 6.5T'; based on Certificate of Deposit rates.
(g) Adjustable fixed rate, interest rate at 8%'; per annum thmugh May 31,1987; thereafter, interest rates will depend on market conditions and the Company's option to select an adjusted rate for each annual period or a fixed rate until maturity.
th) Adjustable-fixed rate, interest rate at 5%"; per annum through February 28.1987; thereafter, interest rates will depend on market conditions and the Company's option to select an adjusted rate for each annual period or a fixed rat until maturity.
(i) Interest rates, and the periods during w hich such rates apply, vary depending on the Company's selection of certain defined rate nules. The average annual interest rates at December 31,1986, for such Series A and Series 11 bonds, were 4.16"; and 3.88";.
respectively.
tji At December 31,1986 and 1983, $M million and $39 million, respectively, are included under current maturity of long-term debt.
t k)linion Electnc Comp;my has an intennediate tenn credit agreement with certain foreign banks which pennits the Company to borrow up to $40 million through December 1991. At December 31,1986, none of such foreign borrowings were outstanding.
See Notes to Financial Statements on pages 25 through 29.
21
PREFERRED S7DCK Union Electric Company Clhousands of Dollars)
Decemher 31,1986 December 31,1985 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 S 55,000 $ 55,000
$6.40 Series - 300,000 shares 30,000 30,000
$5.50 Series A-14,000 shares 1,400 1,400
$5.50 Series B- 3,000 shares 300 300
$4.75 Series - 20,000 shares 2,000 2,000
$4.56 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 4,000
$4.00 Series - 150,000 shares 15,000 15,000
$3.70 Series- 40,000 shares 4,000 4,000
$3.50 Series - 130.000 shares 13,000 13,000 Stated value of $97.50 per share-
$8.00 Series of1971-425,000 shares 41,437 41,437 Stated value of $92.25 per share-
$8.00 Series-350,000 shares 32,288 32,288 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 40,000 T.:tal Preferred Stock Not Subject to Mandatory Redemption s354,784 $354,784 Preferred Stock Subject to Mandatory Redemption:
Preferred stock outstanding without par value (entitled to cumulative dividends)-note (a)
! Stated value of $100 per share-l $6.30 Series-8,840 and 9,100 shares at respective dates, due to 2020-note (b) S 884 $ 910 l
l Stated value of $50 per share-
$4.60 Series-1,350,000 and 1,425,000 shares at respective dates, due to 2004-note (c) 67,500 71,250 Stated value of $25 pershare-
$4.00 Series of 1982-3,000,000 shares due 1988 to 2007-note (d) 75,000 75,000
$2.72 Series-880,000 and 1,040,000 shares at respective l 22,000 26,000 dates, due to 1998-note (e) l Total Preferred Stock Subject to Mandatory Redemption s165,384 $173,160 (a) Authorized Union Electric Canpany total preferred stock-25,000.000 shares, ib) 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.
idi The Company has announced plans to redeem this Series,in its entirety, on February 15,1987, at $27.65 per share.
(e) The Company is required to retire 80.000 shares and has an option to redeem an additional 80.000 shares, at $25 per share on November 15 of each year.
See Notes to Financial Statements on pages 25 through 29.
l 22 i . . _
S7]tTE.lffWl'OF IfEDINED EARNINGS Union Electric Company (Thwsandsof l>Alars)
Year 1986 Year 19J5 Year 1984 Balance at Beginning of Period s 661,359 $552,743 S445,011 Add:
Netincome 343,893 337,225 324,164 1,005,252 889,968 769,175 Deduct:
Preferred stock dividends
- 49,148 49,766 50,158 Common stock cash dividends-$1.86, $1.78, and $1.72 per share, respectively 189,950 178,843 166,274 239,098 228,609 216,432 (Under mortgage indentures as amended, free and unrestricted retained earnings at December 31,1986 amounted to $709,039)
Balance at Close of Period s 766,154 $661,359 $552,743
' Includes dividends declared, applicable to subsequent pericxis.
SDTE3IEh"I' OF UlllER IMID-IN Ct PID L tThousands of IkAlars) l Year 1986 Year 1985 Year 1984 Balance at Beginning of Period s715,772 $675,934 S637,039 Excess of sales price over par value of 2,901,122 and 3,968,640 shares of common stock issued for dividend reinvestment and stock purchase plan during 1985 and 1984,respectively - 39,058 34,293 Excess of sales price over par value of 68,102 and 495,750 shares of common stock issued for employee stock ownership plan in 1985 and 1984, respectively -
888 4,530 Excess of stated value over purchase price of 80,000 shares $2.72 Series preferred stock redeemedin each of the years 1985 and 1984 - 35 239 Write-off of capital stock expense -
(163) (167)
Balance at Close of Period s715,772 $715,772 8675,934 See Notes to Financial Statements on pages 25 through 29.
23 u _ _ _ _ . .
)
S'IXIDIENT OF CilANGES IN FINANCIAL 14)SITION Union Electric Company (Thousandsof Dollars)
Year 1986 Year 1985 Year 1984 Source of Funds:
From operations-Netincome $313,893 $337,225 $324,164 Depreciation expense 185,879 171,416 101,550 Nuclear fuelamortization 57,685 51,944 -
Fuel expense during construction - 34,027 -
Amortization of uranium litigation settlement (63,143) (46,554) -
Deferred taxes on income (net) 11,330 86,054 201,492 Deferred investment tax credits (net) 47,501 (12,270) (40,719)
Callaway rate phase-in plans (59,861) (74,631) -
Allowance for all funds used during construction (15,812) (106,754) (329,669) 507,472 440,457 256,818 From financ,ing and other sources-Issue oflong-term debt 200,000 226,500 367,500 Nuclear fuellease 37,282 40,477 51,482 Dividend reinvestment / stock purchase plans - 54,792 61,146 Settlement of uraniumlitigation 8,201 12,380 14,261 Additional short-term debt 30,000 -
19,500 Net decreased woiking capital (excluding short-term debt and current maturities) - 6,429 -
275,483 340,578 513,889 Total funds provided ,
$782,955 S781,035 $770,707 Application of Funds:
[ Gross plant expenditures $145,056 $285,897 $706,379 Nuclear fuel expenditures 87,765 81,242 48,388 Allowance for all funds used during construction (15,812) (106,754) (329,669)
Dividends on preferred and common stock 239,098 228,609 216,432 Nuclear fuellease reimbursement 136,615 54,971 -
Retirement oflong-term debt 163,191 167,699 10,728 Redemption of preferred stock 7,776 5,776 2,026 Reduced short-term debt - 51,000 -
Net increased working capital (excluding short-term debt and current maturities) 23,352 - 111,331 Net changein other funds (4,116) 12,595 5,092
'Ibtal funds applied $782,955 $781,035 S770,707 Increases (Decreases) in Working Capital:
Cash and deposits S 579 S (6,652) $ (5,796)
Receivables, net 4,083 38,337 3,667 Materials and supplies 15,693 36,324 34,065 Accounts and wages payable (4,025) (34,237) 40,676 Cancellation charges 21,580 172 17,796 Taxes accrued (9,765) (19,417) 17,305 Interest and dividends accrued or declared 1,167 (16,384) (2,053)
Other (5,960) (4,572) 5,671 Net change in working capital S 23,352 S (6,429) 8111,331 See Notes to Financial Statements on pages 25 through 29.
21
NUIES 70 FIX,1NCIAL S7l17DIEX75 Union Electric Company Note 1-Summary of Accounting Policies results in treating such financing costs in the same manner The Company is subject to regulation by the Missouri Public as construction charges for labor and materials.
Service Commission, Illinois Commerce Commission, Iowa Under accepted rate-making practice, cash recovery of AFC, State Commerce Commission, and the Federal Energy Regu- as well as other construction costs, occurs when completed latory Commission. l'he accounting pohaes of the Company projects are placed in service and reflected in customer utes.-
are in accordance with the rate-making practices of the regu-latory authorities having jurisdiction and, as such, conform AFC rates are established by the Company consistent with to generally accepted accounting principles as applied to the methodology prescribed by the Federal Energy Regulatory regulated public utilities. A description of the Company's Commission. Average annual AFC rates were 10.4% in 1986, significant accounting policies follows. 11.5% in 1985,and 12.0% in 1984. AFC, net of taxes, amounted to 3%,28%, and 95% of earnings on common stock for 1986, Property and Plant 1985, and 1984, respectively.
The cost of additions to and betterments of units of property and plant is capitalized. Cost includes labor, material, appli. Callaway Rate Phase-In Plans cable taxes, pensions, and certain other items, plus an al. The Callaway rate phase-in plans effective in 1985 as a result lowance for funds used during construction. Maintenance of regulatory commission orders pmvide for (1) partial deferral expenditures and renewals of items not considered to be units of a cash recovery of costs related to the Callaway plant of property are charged to income as incurred. When units during the early years of the plans with recovery of such of depreciable property are retired, the original cost and deferrals in the later years of the plans, (2) three year amor-removal cost, less salvage, are charged to accumulated tization of certain Callaway related accumulated deferred depreciation. income taxes, and (3) two-year amortization of the proceeds from the Company's settlement of uranium litigation with Depreciat. ion Westinghouse
- Except for the Callaway nuclear plant, depreciation is provided over the estimated lives of the various classes of depreciable The amount of costs for which cash recovery is deferred property by applying composite rates on a straight-line basis. under the plans is recognized as income currently in the Callaway plant depreciation is computed on a unit-of-produc. Statement of income. Such noncash income amounted to tion basis. Depreciation expense applicable to Callaway plant $59.9 million and $74.6 million for 1986 and 1985, respec-costs disallowed from rate base by regulatory authorities is tively (20% and 26% of earnings on common stock for 1986 recorded in the Statement of Income under Other Income and and 1985, respectively).
Deductions. The provision for depreciation in 1986 is equiv- Unbilled Revenue alent to approximately 2.9% of the average depreciable cost The Company records on its books the estimated amount of (3.1% m, 198a and 1984). The provision for depreciation m- accrued, but unbilled, revenue and also the accrued liability cludes an allowance for future nuclear decommissiomng costs.
for the related taxes.
Nuclear Fuel Note 2-Income Taxes The cost of nuclear fuel is amertized to fuel expense on a Total income tax expense for 1986 resulted in an effective umt of production basu. A provision for spent fuel disposal tax rate of 20% on earnings before income taxes (20% in costs is charged to expense bascd on kilowatt hours generated. 1985 and 31% in 1984). The piincipal reasons such amount
~
Income Taxes is less than the 46% statutory Federal rate are as follows:
Deferred income taxes are provided for timing differences latween book and taxable income as permitted for rate-making 1986 19 m 1984 purposes. Investment tax credits utilized are deferred and go,,,,,yp ,a ,,,iincom ,,,,,,,, .6% 46% 46%
amoitized over the useful lives of the properties to which increases (Decreases) from:
they relate. Depreciation differences 9 9 2 Callaway rate phase-in plans-Allowance for Funds Used During Construction Otherincome (6) 18) -
Allowance for funds used during construction (AFC) is a Amortization of prior yean' tax deferrals (21) <t9> -
utility industry accounting practice whereby the cost of bor.
rowed funds and the cost of equity funds (preferred and
^""i' 'i"" "I "'""i"* 'i'i# 'i""
~
common shareholders' equity) applicable to the Company's giij'for equity funds used construction program are capitalized as a cost of construc- during enstmction - (5) (18) stiscellanems. net (2) 1) 1 tion. This accounting practice is intended to offset the effect on earnings of the cost of financing construction activity, and I:ficctise rederalincome tas rate 20% _20% y 25
NUIFID FINANCIAlo STl'lDllWIS (continued) Union Electric Company income tax expense components for the years shown are as Prererred Stock Eventual follows(in thousands): Nedemption Prices Current Minimum (Per Share) (Per Share) 1986 1985 N
$7.44 Series $102.50 $101.00 Taxes currently payable $6.40 Series 101.50 101.50 (principally Federal): $5.50 Series A 110.00 110.00 Included in operating expenses s 36,266 $ 39,4M $(l1,281) $5.50 Series B 103.50 103.50 Included in otherincome- M.75 Sedes 102.176 102.176 Miscellaneous, net (14,433) (30,M8) (634) H.56 Series 102.47 102.47
$4.50 Series 110.00 110.00 (a)
Deferred taxes M.30 Series 105.00 105.00 (principally Federal): $4.00 Series 105.625 105.625 Induded in operating expenses- $3.70 Series 104.75 104.75 Liberalized depreciation 100,509 96,350 97,006 $3.50 Series 110.00 110.00 Repair allowance 5.573 5,543 27,397 $8.00 Series of 1971 98.50 98.50 Allowance for borrowed funds $8.00 Series 96.25 93.25 used during construction 4,631 21,590 68,988 $2.98 Series 27.98 (b) 25.00 =
Other (primarily capitalized costs) 11,038 18,260 13.215 $2.125 Series 26.45 25.25 Callaway rate phase-in plans $6.30 Series (c) 101.50 100.00 amortization of prior years' N.60 Series (d) 54.60 (b) 50.50 deferrals (107,901) (81,356) -
$4.00 3eries of 1982 (e) 29.00 25.00 Other provisbns deferred in $2.72 Series if) 26.35 25.25 prior years (4,9 18) (4,917) (5,114)
(a) In the event of voluntary liquidation, $105.50.
Included in otherincome-(b) Redemption subject to certain restrictions regarding refunding operations.
I iz ep . 2,428 30,584 -
c npany is req red tWeern 26Wes at M per sWus accrued dividends, on June 1 of each year.
(d)'I he Company is required to redeem 75,000 shares at $50 per share on Defermiinvestment tax credits. net rati xpenses 47,18I (12,270) (46,391)
(e) pa y has nn unced plans to redeem,on February 15,1987, 5,759 the 3 million outstanding shares at a price of $27.65 per share, the Miscellaneous, net - -
redemption price at such date.
Totalincome tax expense s 86,106 8 82.290 $143,186 (f) The Company is required to retire 80,000 shares, and has an option to redeem an additional 80,000 shares, at $25 per share on November 15 Investment tax credit carryforwards, unrecorded as of **'"#*"'
December 31,1986, amounted to approximately $127 million Note 4-Preferred Stock Subject to Mandatory which may be utilized by the Company to reduce future Redemption income tax liabilities through 2001. During the five years from December 31,1986, the amounts f preferred stock outstanding at such date, required to be Deferred income taxes are provided for differences between redeemed at stated value are: $5,776,000 m 1987, and book and taxable income to the extent permitted for rate-
$9,526,000 m each of the years 1988 through 1991. However, making purposes. At December 31,1986, the cumulative net amount of income tax timing differences for which deferred $3,750,000 of the requirement m each of the years 1988 through 1991 will be ehmm, ated as a result of the Company's income taxes have not been provided was $1.1 billion.
announced plan to redeem the $4.00 Senes of 1982 Preferred Note 3-Capital Stock Stock on February 15, 1987 for a total cf $82,950,000 During the three years ended December 31,1986, common ($27.65 per share).
stock, $5 par value, was issued as follows: 2,901,122 and 3,968,640 shares were issued in 1985 and 1984, respectively, Note 5-Debt Retirement Provisions from the 26,000,000 shares reserved for the Union Electric During the five years from December 31,1986, the amounts f debt maturities totaling $759,874,000 are: $83,967,000 m, Company Dividend Reinvestment and Stock Purchase Plan; 1987; $87,539,000 in 1988; $144,206,000 in 1989; $245,873,000 and 68,102 and 495,750 shares were issued in 1985 and 1984, in 1990; and $198,289,000 in 1991. Amounts for years subse-respectively, from the 4,500,000 shares reserved for the quent to 1987 do not include nuclear fuellease payments since Union Electric Company Employee Stock Ownership Plan.
the amounts of such payments are not currently determinable.
During the same three-year period, preferred stock, without Debt retirement provisions contained in most moitgage bond par value, was redeemed as follows: m 1986,160,003 shares, .
. dentures of the Company require, subject to certam alter-in and in each of the years 1985 and 1984,80,000 shares, $2.72 ,
Series were redeemed. The Company redeemed 260 shares, natives, the redemption annually of 1"5 of the pnncipal mount (as defined) of each series of bonds. In substantially
$6.30 Series in each of the years 1986,1985, and 1984. Also all instances, as permitted by the mdentures, the Company in each of the years 1986 and 1985, the Company redeemed 75,000 shares, $4.60 Series. p s been following the practice of pledging property additions m h,eu of such redemptions.
26
' Note 6--Nuclear Fuel Lease 0.375% of the lines of credit. These lines of credit are renew-The Company has a lease agreement which provides for the able annually at various dates throughout the year.
financing of the costs of up to $300 million of the Company's Note 8-Settlement of Uraniumi Litigation nuclear fuel. Pursuant to the terms of the lease, the Company In 1979, the Company and Westinghouse Electric Corpomtion has assigned to the lessor certam contracts for purchase of settled the Company's suit to require Westinghouse to fulfill nudear fuel. The lessor obta,ms, through the issuance of com' its contractual obligation to deliver 10 million pounds of
.mercial paper backed by the Company s credit or from direct uranium Ua0s to the Company. The settlement provides for loans under a committed revolving credit agreement from
- cash and discounts on uranium, goods, and services over the commercial banks, the necessary funds to purchase the fuel period 1980-2010. In accordance with Callaway rate phase-in -
and make mterest payments when due.
plans effective in 1985, settlement proceeds are being amortized The Company is obligated to reimburse the lessor for all as a reduction of fuel expense over a two-year period ending expenditures for nuclear fuel, interest, and related costs. in 1987.
Obligations under this lease become due as the nudear fuel Note 9-Employee Retirement Plan and
_ is utilized at the Company's Callaway nudear plant. During Related Benefits 1986, the Company reimbursed the lessor $64 million, in-The Company has a non-contributory, defined-benefit retire-cluding $7 milhon of interest charges applicable to nuclear ment plan covering substantially all of it3 employees. Benefits .
fuel in heat production, and $80 million for fuel repurchased are based on years of service and the employees' compen fmm lessor, sation during years of employment. The Company's funding The Company has capitalized the cost, including certain policy is to contribute annually at least the minimum amount interest costs, of the leased nudear fuel and has recorded required by government funding standards, but not more than the related lease obligation. During the years 1986, 1985, that which can be deducted for Federalincome tax purposes.
and 1984, the Company capitalized related interest costs of Plan assets consist principally of common stocks and fixed
$16.0 million, $20.9 million, and $23.0 million based on an income securities (including $7 million of Company securities).
average interest rate of 8.0%,9.2%, vid 11.3%, respectively.
Retirement plan costs for the years 1986,1985, and 1984 Nota 7-Short-Term Borrowings were $11 million, $17 million, and $16 million, respectively, Short term borrowings of the Compa'iy consist of bank loans of which approximately 17%,21%, and 29%, respectively, (maturities not in excess of 270 days) and commercial paper were charged to construction accounts. The Company's adop-(maturities generally within 10-45 days). Information relative tion in 1986 of Statement of Financial Accounting Standards to short term borrowings is as follows (in thousands except No. 87," Employers' Accounting for Pensions" reduced retire-rates): ment plan costs $6 million.
1986 1985 1984 The plan's funded status at December 31, 1986 follows
' Haik loses at year end- (in millions):
Amountoutstanding - 530.000 - S 51,000 Actuarial present salue of benefit obligations:
Cunpositeinterest rate 7.5% -
9.3% Vested benefit obligation $(301) i Commercial paper at year end - - -
Maximum aggregate short-term Accumulated benefit obligation $(338) barmwings at any month end Projected benefit obligation for service rendered d1 ring the 3 car $91,0uo $154,700 $205,750 to date $(122)
Plan assets at fair value 433 Average daily shmt-terne hormwings outstanding during the year- Excess of plan assets over progected benefit Aggregate amount $45,130 $ 65,594 $119,871 obligation - 11 ,
Weighted compositeinterest rate 7.7% 8.6% 11.0 % Unrecognized net lose 8 U""cognied ad amds aWanuary 1,1987 (17)
The above weighted composite interest rates were calculated Pwpaid pension cat at Duembu 31,1986 5 2 by dividing the applicable interest expense for the year by the average daily short term borrowings shown above. Net retirement plan cost for 1986 induded the following -
components (in milhansh At December 31,1986, the Company had bank lines of credit Service cut-benefits earned during the period 5 12 i aggregating $212 million ($182 million of which were unused 29
'"""" **"I on prointed benent ohHgaHon l at such date) which make available interim financing at Actual return on plan assets (16)
, vanous rates of interest, not to exceed prime, based on the Net amortization and deferral 16 London Interbank Offered Rate (LIBOR), the bank certificate set retirement plan cost s 11 of deposit rate, or other options, and in support of which the Company has both written and unwritten agreements with its The weighted average discount rate and rate of increase in tending banks to pay annual fees ranging fmm 0.125% to future compensation used in determining the actuarial present 27
M/ES 10 FIXINCIA1,NTl'lDIEVlhnunn Union Elcetric Company value of the projected benefit obligation were 7.5% and 6%, Excess property insurance of $85 million provided respectively. The expected long-term rate of return on plan by ANIand AIAELU.
assets was 75%.
The Atomic Energy Act, as amended, currently In addition to providing pension benefits, the Company pro- limits liability to third parties to $695 million for vides certain health care and life insurance benefits for retired each nuclear incident. Coverage of the first $160 employees. Substanti ally all of the Company's employees million of such liability is provided by ANI and may become eligible for those benefits if they reach retire- M AELU. The balance is provided by utility indus-ment age while working for the Company. The costs of retiree try retrospective assessments. The Company's health care and life insurance benefits are recognized on the maximum potential assessment under this plan basis of claims paid. Such costs totaled $5 million, $3 million, would be $5 million per incident but not more than and $2 million for 1986,1985, and 1984, respectively. $10 million per year.
Note 10-Construction Commitments Accidental outage replacement power cost insur-The Company is engaged in a construction program under ance pmvided by NEIL. Thereunder, the Company which expenditures averaging approximately $200 million is insured for up to $1.5 million per week for one are anticipated during each of the next five years. year, commencing 26 weeks after initiation of the outage, and for up to 80.8 million per week for an Note 11-Contingencies additional year. Under this policy, the Company
, On October 9,1981, the Company canceled construction of could be subject to a maximum annual retmspec-Unit No. 2 at its Callaway plant. At December 31,1986, $66 tive premium assessment of up to $2.8 million.
million (net of taxes) has been deferred. Such amount repre-sents construction costs, cancellation charges, and $28 million To the extent that any losses arising from a nuclear incident (net of taxes) of Callaway Unit No. I construction costs allo. at Callaway plant exceed, or are not subject to, the limits of cated to Unit No. 2 by the hiissouri Public Service Commis. insurance, or to the extent such insurance becomes unavail-sion and the Federal Energy Regulatory Commission (see able in the future, the Company will retain the risk of loss as Note 12 regarding the Financial Accounting Standards Board), a self-insurer. Although the Company has no reason to antic-ipate a serious nuclear incident at Callaway plant, if such an In 1983, the hiissouri Commission ruled that recovery of such incident did occur, it could have a material but presently cancellation costs applicable to the Missouri junsdiction (860 undeterminable adverse impact on the Company's financial million)is barred by a state statute which pmhibits recovery, position.
in rates, of costs of a facility before it is fully operational and used for service. The Company appealed and in 1985 the The Company is involved in legal or administrative proceed-Missouri Supreme Comt ruled that the statutory ban does ings before various courts and agencies with respwt to matten not apply to canceled plants and remanded the issue to the arising in the ordinary course of business, some of which Missouri Commission for further proceedings. In March 1986, involve substantial amounts. Management is of the opinion the Missouri Commission again denied recovery of such can. that the final disposition of these proceedings will not have cellation costs. The Company has appealed the Commission's a material adverse effect on the financial position of the decision. The balance of such costs, applicable to other regu. Company.
latory jurisdictions, is presently being recovered in customers' mtes. In the opinion of management, unrecovered costs,if any, Note 12-Callaway Nuclear Plant would not be material to the financial position of the Company. By order dated March 29,1985, the Missouri Public Service Commission authorized an increase in annual elatric revenues The Company's insurance coverage for its Callaway plant, of $455 million for Callaway-related expenditures. That in-the maximum amount currently available to the Company, is crease is being phased in over a six year period. The increase as follms in the first year, effective April 1985, was $149 million (15";);
Property insurance coverage of $500 million pro- the increase in the second year, effective April 1986, was vided by American Nuclear Insurers (ANI) and $112 million (102; to be followed by four years of 7.3%
Mutual Atomic Energy Liability Underwriters increases. (As a result of future income tax expense reduc-(MAELU). tions expected to be realized from the Tax Refonn Act of 1986, Excess propeny insurance of $575 million pro-I" .
enp M h Company pmposed to the Missouri vided by Nuclear Electric Insurance Limited Commissmn that the rate increase in each of the final four (NEIL), a mutual insurer established by the utility I".^ " . redud fnnn m to M,w h hhssoun Q o on Company,s pmposal m industry. Under this policy, the Company could be subject to a retrospective premium assessment of ""S]8 3 up to $8.6 million in any one policy year if NEllis By updated order of April 2,1986, the Illinois Commerce property losses exceed availabie funds. Commission authorized an increase in annual ekctric revenues 2tt
of $60 million which is being phased in over a fouryear ance that future regulatory actions will permit full rate recog-period. The increase in the first year, effective May 1985, was nition of these costs. In the opinion of management, un-
$21 million (16%); the increase in the second year, effective recovered aists, if any, would not be material to the financial May 1986, was $15 million (9.7%); to be followed by two years positionof theCompany.
of 6.8% and 6.7% increases. Under the Nuclear Waste Policy Act of 1982, the U.S. Depart-
! During 1986, the Iowa State Commerce Commission and an ment of Energy (DOE) is responsible for the pennanent i Administrative Law Judge of the Federal Energy Regulatory storage and disposal of spent nuclear fuel. IX)E currently Commission authorized increases in annual electric revenues charges one mill per kilowatt-hour generated for future dis-totaling $50 million, which are being implemented through posal of spent fuel. Electric rates charged to customers pro-rate phasein plans comparable to those ordered by the vide for recovery of such costs.
Missouriand Illinois Commissions. Callaway plant decommissioning costs are estimated to be j
The phase in plan rate increases improve the Company's cash $139 million in current year dollars. Electric rates charged to flow and the pmportion of earnings represented by cash. customers provide for recovery of decommissioning costs over However, the regulatory commission orders which authorized the life of the Callaway plant. Amounts so collected fmm the rate phase in plans also disallowed a total of $440 million customers are deposited in a trust fund which has been estab-of Callaway plant cost from rate base (including $44 million, lished to provide for decommissioning costs. At December 31,
$28 million net of taxes, allocated to the canceled Callaway 1986, $5,228,000 was on deposit in the decommissioning Unit No. 2, see Note 11). The disallowance of such costs trust fund.
fmm rate base has the effect of reducing eamings by approx-imately $50 million annually. Note 13-Supplementary Income Statement Information At the time the regulatory commission orders were issued, 1986 maa mm generally accepted accountmg pnnaples did not require an (Thousandsof Dollarsi immediate write-off and charge to income as a result of the minienance and repairs.chargni Callaway plant costs disallowed from rate base. Ilowever, m direcoy to-December 1986, the Financial Accounting St:mdards Ibard operating expenses si is.173 $122.526 s106.368 Other accounts tal N,663 8.37F 7.573 issued Statement of Financial A counting Standards No. 90,
" Regulated Enterprises- Accounting for Abandonments and sisa.838 $13nw sii3.9n Disallowances of Plant Costs"(SFAS 90). SFAS 90 requires neprecianon,acpiction and that in 1988 the Company recognize a write-off and charge to amortisation or risca and intangible a*ets. charged directly to:
income as a result of the costs disallowed from rate base. The write-off and charge to income, appmximately $220 million "i"'"6"x "M*" s 76s79 $163.319 $101.53o net of taxes, will be recorded retroactively in the 1985 financial $$""[""d d"'""6""' $"n"3 8y,$ gg, statements. gg, g., gg.e mm Ims other than panoH and SFAS 90 also requires that in 1988 the Company recognize a '"
write-down to the present value of the amount of the canceled '"'"l"$','j"'""d d"""d F Callaway Unit No. 2 costs expected to be recovered thmugh Real estate and persmal pn,peny s 77,22 s no.939 $ i3m3 rates (see Note 11). This write down is required because the 1.icense and franchise 83.i9: 76.31 68.n2 expected recovery of such o>sts does not include a return on Miellaneous isan ifo7 1.683 such costs from the date of cancellation through the recovery in ts 12 135.180 lus30 Other accounts 3.331 13.007 13.9:3 period. The write-down and charge to income, approximately
$20 million net of taxes, will be recorded retroactively in the sins. tin $188.18J $128x3 1981 financial statements. tal A substandal ponion of amounts charged to other accounts is allocated to
~
The write off and write down required by SFAS 90 will not o,,$"O""u"n'ts i,'f b"",I"t*""N""NI""t986. ms3. and m8: were affect the Company's ability to pay dividends, and the impact s 16J17.000. $13.820.000, and s t2.698.im. resperin ely.
on earnings for years subsequent to write-off and write down act The amounts of royaltin and adsernsing omts were not nutenal.
is not material.
Due to the timing of construction expenditures, rate increase requests filed by the Company have not included approxi-mately $163 million of Callaway plant cost. The Company is This report and the financial statementa containrd herein are submitted unable to estimate when tt will request regulatory consider- f. r ownfornudon of the 5tdholders of the Company and are not intended atioli of these costs. Although the Company believes that to inante, or for u<c in o,nnerunn with, any sale or purchase of any these costs are reasonable and prudent, it can give no assur- wcunties of the Company.
SEIECIED FINANCLtL INFOIUIMION Union Electric company (Thousands of Ibtl. irs Except Share and l'er Share Anmunts and Ratimd 1986 1985 1984 1983 i
Results of Operations Operating revenues $1,807,182 $1,591,763 $1,412,414 $1,401,086 Operating expenses 1,288,573 1,174,907 1,172,128 1,160,816 Operatingincome 518,609 416,856 240,286 240,270 Allowance forall funds used during construction 15,812 106,754 329,669 251,307 Callaway rate phase in plans 59,861 74,631 - -
Miscellaneousincome and deductions, net (2,980) (6,696) 1,517 3,490 Interest on debt 217,109 254,320 247,308 218,530 Net income 313,893 337,225 324,164 276,537 l' referred stock dividends 4 9,2-15 49,836 50,185 46,118 Earnings on common stock 291,618 287,389 273,979 230,419 Average common shares outstanding 102,123,831 100,403,016 96,574,699 86,744,282 Assets, Obligations, and Ecluity Capital (Year End)
'lbtal assets $6,323,182 $6,180,826 $5,878,691 $5,205,556 1 ong-term debt obligations 2,136,092 2,454,687 2,457,381 2,108,047 l' referred stock subject to mandatory redemption 165,38-1 173,160 178,936 180,962 l' referred stock not subject to mandatory redemption 356,270 356,270 356,270 356,270 Common equity 1,992,515 1,887,750 1,724,450 1,555,501 FinancialIndices .
Earnings per share of common stock (based on average shares outstanding) 52.89 $2.86 $2.84 $2.66 Cash dividends per share of o>mmon stock 51.86 $1.78 $1.72 $1.66 Return on average common stock equity 15.31% 15.99*; 16.90"; 16.4975 Ratioof eamings to fixed charges (a) 2.73 2.61 2.88 2.90 llook value percommon share $19.51 $18.18 $17.39 $16.43 Capitalization Ratios (Year End)
Common equity 10.3 % 38.77; 36.6"; 37.07; l'referTed stock not subject to mandatory redemption 7.2 7.3 7.5 8.5 l' referred stock subject to mandatory redemption 3.3 3.6 3.8 8.3 1.ong ierm debt 19.2 50.I 52.1 50.2 100.0 % 100.0?; I00.0"; I00.0?;
tal f.arnings used in ownputing the ratio of ranungs to fixed diargei ronsist of not ino,rne plas fised iharge$ Onterest on debt and an appropriate anu punt of rentals charged to operating ex penws and income taxes.
.lO
- 1982 1981 1980 1979 1978 1977 1976
.f
$1,217,705 $1,105,536 $1,077,876 $946,797 $903,988 $765,102 $682,456 1,013,054 922,647 886,720 780,331 727,756 605,963 518,342 204,651 182,889 191,156 166,466 176,232 159,139 164,114 198,093 155,625 92,055 58,093 31,469 - 19,022 12,379 3,660 (734) 3,638 879 2,896 ~ 1,389 (2,554) 200,554 180,312 131,725 106,995 90,309 83,624 78,136 205,850 157,468 155,124 118,443 '120,288 95,926 95,803 40,344 29,863 30,082 27,336 23,430 20,758 20,033 165,506 127,605 125,042 91,107 96,858 75,168 75,770 76,251,024 67,179,275 59,675.995 52,577,432 48,260,596 45,110,245 40,795,152 i
- $4,630,797 $4,047,277 $3,552,104 - $3,168,998 $2,800,209 $2,521,181 $2,316,039 2,000,405 _1,719,927 1,479,229 1,307,990 1,238,860 1,189,080 1,118,418 I82,988 110,014 112,040 114,066 41,092 41,118 41,144 I
281,355 281,355 281,355 281,355 281,355 281,355 241,355 1,328,061 1,162,777 1,043,549 930,375 836,020 733,111 634,400 1
i i
$2.17 S1.90 $2.10 $1.73 $2.01 $1.67 $1.86 i
$1.58 $1.52 $1.48 $1.44 $1.40 $1.36 $1.34 13.93 % 12.11% 13.11% 10.71% 12.61 % 10.68% 12.19 %
j 2.50 2.30 2.85 2.62 3.20 2.83 2.80
,1
$15.73 $15.55 $15.78 $15.82 $16.11 $15.66 $15.46 1
l 35 0% 35.5% 35.8% 35.3 % 34.9 % 32.7% 31.2 %
7,4 8.6 9.7 10.7 11.7 12.5 11.9 f
4.8 3.4 3.8 4.3 1.7 1.8 2.0
.; 52.8 52.5 50.7 49.7 51.7 53.0 54.9 *
- 100.0 % 100.0"; 100.0"6 100.0 % 100.0 % 100.0 % 100.0 %
l j 31
MANAGDIEN1"S I ISCUSSION AND ANAIXS5 ~ Union Electric Company Results of Operations The increase in total fuel and purchased power costs in 1986 primarily reflects increased sales of electricity to residential Earnings and eamings per share fluctuated due to many and commercial customers. The decrease in 1986 fuel costs conditions, the primary conditions being: the effect of weather attributable to reduced generation and the increase in 1986 variations, growth in customers' use of electricity, the timing net interchange sales and purchased power costs primarily and amounts of rate increases, and fluctuating operating costs. reflect the increased availability and utilization of relatively With implementation in early 1986 of the second series of low-cost purchased power.
mte increases under the Callaway rate phase-in plans, the The large reduction in total fuel and purchased power costs Company's internal cash flow improved and the proportion of in 1985 primarily reflects improved efficiencies and greater earnings represented by cash increased (see Note 12 under interchange sales due to the initial impact of the additional Notes to Financial Statements for information concerning such generation available from the Callaway plant which was first mte increases). Ilowever, AFC and the partial deferml of reflected in operations in early 1985.
a cash recovery of costs related to the Callaway plant during Other Werating Expenses- Variation from Prior Year the early years of the Callaway rate phase-in plans (both Mnm of man im w85 ma4 noncash income items) constituted a significant portion of "
camings (see AFC and Callaway Rate Phase-In Plans below). * *d['*"*,*"n**,*]h r than fuel and purchased power $16.6 $57.0 -
The impacts of the more significant items affecting revenues, ' ~
costs, and earnings during the past several years are analyzed $"'"""ie n$
and discussed below.
The Callaway plant effect on 198G operating expenses, versus Electric Operating Revenues comparable 1985 expenses, reflects a full year of Callaway Variation from Prior Year operations as compared to a partial year in 1985, and costs estinions of Mare 1986 1985 1984 attributable to the first Callaway plant refueling in early 1986.
Other variations in operating expenses during the years 1984 cNf n aUcrvariations . 5 Gnmth and other 3o.7 29.8 58.2 through 1986 generally reflected recurring conditions such as s233.1 s197.2 s 10.9 growth, inflation, and wage increases. However, in 1986, opera-tions expense, other than fuel and purchased power and Callaway-The increases in 1985 and 1986 electric revenues applicable t related costs, increased $5 million, primarily reflecting rate variations reflect the first and second series of mte in- higher power plant operations costs, provisions for insurance creases under the Callaway rate phase-in plans. and tree trimming costs, partially offset by reduced natural The reduction in 1984 electric revenues applicable to rate gas purchases for resale and decreased pension expense. Also, variations reflects lower rates charged to customers of fonner in 1986, maintenance expense, other than Callaway-related subsidiary companies merged into Union Electric Company maintenance, increased $8 million, primarily reflecting in-at year-end 1983, and fuel cost refunds. creased power plant maintenance. In 1984, the cost of opera-tions expense, other than fuel and purchased power, decreased The effect of weather van.ations on 1986 electnc revenues $8 million primarily due to reduced natural gas purchases primarily reflects increased sales of electricity due to unsea- for resale.
sonably warm weather in the second and third quartem of The 1986 increase m. other taxes charged to operating ex-1986. The effect of the weather variations on 1985 electric revenues was relatively minor; however,1984 nearnormal penses is attributable to a $9 million increase in license and franchise taxes resulting from increased revenues, and a $20 summer temperatures, when compared with an extremely hot 1983 summer, effected a $25 million reduction in electric milhon ,mcrease m real estate taxes reflecting increased tax rates, pmperty additions, and a full year of Callaway operations.
revenues.
The 1985 increase in other taxes charged to operating ex-Opemting Expenses penses is attributable to a $8 million increase in license and ruct and Purcha cd Power- variation imm Prior Year franchise taxes, and a $12 million increase in real estate taxes istinionsof Maro 1986 1985 198: resulting fmm operation of the Callaway plant and reassess-ment of Missouri real estate taxes.
riation in generation s(39.2) $ 55.9 s 29.0 Price increases 21.0 10.2 a.2 Income taxes generally increased in response to higher pre-tax Amortization of uranium income (see Callaway Rate Phase-In Plans below and Note 2 iitigation sentement (16.6) i:6 6i -
under Notes to Financial Statements). However, the increase
$r$d "ti nNfhN l.9 s.I l.5, in income taxes resulting from higher pre-tax income was Net interchange sales and purcha cd partially offset by rapid amortization of certain Callaway-pmer s ariation 2.1 aa.oi < 28.5 > related accumulated deferred income taxes in 1986, and more s 10.2 s s 2i $ 3.2 than offset by such amortization in 1985.
32
Izterest on Debt ments. (See Note 7 under Notes to Financial Statements.)
The 1986 decrease in interest on debt primarily reflects Union Electric is authorized by the Federal Energy Regulatory reduced interest rates on long-term debt issues, reduced Commission to incur up to $300 million of short-term short-term interest rates, and reduced average daily short- unsecured indebtedness; however, short term debt is not term bormwings. The preceding yearto-year increases in expected to exceed approximately $250 million.
interest on debt genemlly were due to the issuance of additional securities to finance the constmction program. Tax Reform Act of 1986 The Tax Reform Act of 1986 (TRA) contains numerous Allowance for Funds Used During Construction (AFC) provisons likely to affect the Company. The most significant in recent years prior to early 1985, AFC constituted a sub.
provisons of the TRA with respect to the Company are a stantial portion of eamings due to the amount of construction reduced marginal corporate income tax rate, restrictions on work in progress, primarily the $3 billion Callaway plant, the utilization of mvestment tax credit carryforwards, and and increased AFC rates (see Note 1 under Notes to Financial eh,mmation of the mvestment tax credit on future construction Statements). Ifowever, AFC declined substantially after the expenditures. Through 1988, while total provisions for Federal Callaway plant was reflected in operations in early 1985. income taxes are expected to be reduced as a result of the Ccilaway Rate Phase-In Plans reduced tax rate, the amount of income taxes currently The Callaway rate phase-in plans, effective in 1985 as a result payable is expected to increase principally as a result of the of regulatory commission orders, provide for (1) partial defer- restrictions on utilization of investment tax credit carry-ral of a cash recovery of costs related to the Callaway plant forwards. Such an increase in income taxes currently payable during the early years of the plans with recovery of such will reduce the amount of cash generated internally. In years deferrals in the later years of the plans, (2) three-year amor- beyond 1988, as a result of the reduced tax rate, both total tization of certain Callaway related accumulated deferred provisions for Federal income taxes and the amount of income income taxes, and (3) two year amortization of the proceeds taxes currently payable are expected to decrease with a cor-from the Company's settlement of uranium litigation with responding expected increase in cash generated internally.
Westinghouse. However, the Company has proposed to the Missouri Public Service Commission that the income tax benefits realized The amount of costs for which cash recovery is deferred fmm the TRA be passed on to ratepayers (See Note 12 under under the plans is recognized as income currently in the Notes to Fm, anc,al i Statements). As a result of the Company s Statement of Income. Such noncash income amounted to $59.9 substantially reduced levels of construction, ehmmation of million and $74.6 million for 1986 and 1985, respectively, the mvestment tax credit on future construction expenditures (20% and 26% of earnings on common stock, respectively),
is not expected to have a matenal effect on the Company.
and is expected to constitute approximately 20% to 30% of earnings on common stock through 1988. After 1988, the Ell'ects ofInflation and Changing Prices amount of this noncash mcome item is expected to trend The Company's financial statements reflect the historical cost downward. of events and transactions occurring at times when the pur-chasing power of the dollar was different from the present.
Liquidity and Capital Resources ,
The effects of inflation and changing prices on the Company,s Construction expenditures of appmximately $200 million are expected to be made in each of the years 1987 through 1991. '.""ncial stakments am most sigmftcant in the areas of depre-ci t. ion md property, plant, and equipment.
The Company completed the construction of its Callaway plant in late 1984. Additional electric generation capacity The current replacement cost of the Company's utility plant is not anticipated before the late 1990s. For funds required substantially exceeds its recorded historical cost. However, in addition to constniction expenditures, see Notes 4 and 5 the regulatory process limits the Company to the recovery of under Notes to Financial Statements. the historical cost of utility plant thmugh depreciation. While the regulatory process does not reflect the current cost of A nuclear fuel lease pmvides for the financing of up to
$300 million of the Company's nuclear fuel requirements. At ". placing utility plant, past practice mdicates the Company will be allowed to cam on and to recover the ,mereased cost December 31,1986, $125 million of nuclear fuel was financed of its net mvestment after facilities are replaced.
under the lease.
e Company, by having assets such as receivables, fuel In addition, the Company has an intennediate tenu credit and matenah inwnmy, and Mned days, incurs a loss agreement with ceitain foreign banks which permits the of purchasmg power during periods of inflation because after Comp:my to bonuw up to $40 million through December 1991. conversi n, the cash received for these items will purchase At December 31,1986, none of such foreign bonuwings were re than offsetting such assets, however, are sigmficant ss.
outstanding' amounts of long term debt, preferred stock subkct to manda-The Company plans to continue to utilize short tenu debt as tory redemption, deferred income taxes, and current liabilities support for nonnal operations or other temporary require- which will be repaid with dollars of reduced purchasing p<m er.
33
Ol' ERA 71NC Sl't?7S7/CS Union Electric Company 1986 1985 1984 1983 i
Electric Operating Revenues (000): i
$ 524,792 l Residential 5 681,002 S 572,423 $ 495,346 Commercial 580,323 501,913 430,913 402,737 Industrial 373,196 335,576 294,245 281,397 Otherelectric utilities 63,428 56,078 50,702 46,428 Miscellaneous 21,731 23,267 20,880 25,800 Total Electric Operating Revenues $1,722,680 S1,489,257 $1,292,086 $1,281,154 l
Kilowatt-1Iour Sales (000,000):
Residential 9,283 8,844 8,764 8,979 Commercial 9,306 8,823 8,441 7,653 Industrial 8,073 8,038 7,928 7,478 Other electric utilities 1,150 1,430 1,503 1,498 Miscellaneous 1 15 160 164 321 Total Kilowatt-1Iour Sales 28,257 27,295 26,800 25,929 Electric Customers (End of year):
Residential 916,261 901,777 888,026 879,156 Commercial 111,322 109,099 106,760 110,048 Industrial 6,595 6,333 6,334 5,126 Electric utilities 21 23 24 24 Other 1,498 1,410 1,400 3,297 T:tal Electric Customers 1,035,697 1,018,612 1,002,544 997,651 Residential Customer Data ( Average):
Kilowatt hours used 10,227 9,901 9,951 10,283 Annualelectric bill $750.24 $611.02 $562.60 $601.03 Revenue per kilowatt hour 7.3 Ic 6.47c 5.65c 5.84c Gross Instantaneous Peak Demand (Kilowatts) 6,810,000 6,335,000 6,810,000 6,598,000 Ccpability at Time of Peak, including Net Purchases (Kilowatts) 7,955,000 8,231,000 7,912,000 7,633,000 Generating Capability at Time of Peak (Kilowatts) 8,031,000 8,097,000 6,952,000 6,948,000 Coal 13nrned (Tons) 9,961,000 10,126,000 11,820,000 11,371,000 Price per'lhn of Coal $37.01 $34.79 $33.76 $33.33 31
1982 1981 1980 1979 1978 1977 1976
$ 426,213 S 389,182 $402,160 $333,251 S331,128 $283,124 $248,784 363,826 321,400 306,486 265,278 253,279 219,806 195,568 257,320 250,842 233,854 221,617 209,440 169,834 154,539 42,650 39,789 35,619 34,185 31,565 24,040 21,432 21,846 18,458 18,774 20,388 19,061 16,232 14,677
$1,111,855 $1,019,671 $996,893 $874,719 $844,473 $713,036 $635,000 7,906 7,756 8,446 7,546 7,670 7,389 6,625 7,339 7,024 6,913 6,463 6,332 6,331 5,823 7,130 7,767 7,616 7,858 7,738 7,656 7,221 1,412 1,420 1,435 1,341 1,317 1,263 1,171 310 312 385 481 460 442 519 24,097 24,279 24,795 23,689 23,517 23,081 21,359 869,844 870,066 862,406 853,908 845,074 832,251 821,564 109,947 108,561 106,428 101,355 99,751 99,105_ 95,248 5,132 5,207 5,328 5,334 5,318 5,225 5,459 24 24 - 24 24 24 24 24 3,234 3,065 2,950 2,917 2,753 2,312 1,472 988,181 986,923 977,136 963,538 952,950 938,917 923,767 9,108 8,955 9,848 8,893 9,167 8,956 8,114
$490.96 $449.35 $468.92 ' $392.74 $395.74 $343.16 $304.71 5.39c 5.02c 4.76c 4.42c 4.32c 3.83c 3.76c 6,161,000 6,296,000 6,401,000 5.816,000 5,813,000 5,837,000 5,582,000 7,631,000 7,444,000 7,468,000 7,739,000 6,873,000 6,891,000 6,913,000 6,951,000 6,879,000 6,824,000 6,947,000 6,718,000 6,607,000 6,439,000 11,086,000 11,316,000 11,730,000 12,037,000 11,866,000 11,915,000 11,069,000
$30.45 $29.15 $26.85 $26.02 $24.15 $17.86 S15.04 35
SELEClED QUAlt1EltlXINFOIUIATION union Electric company tThousandsof th41ars Except Per Share Amounts >
Earnings Eamings on Per Share Operating Operating Net Common of Stock i Revenues Income income Stock Outstanding Quarter Ended: Starch 31,1986 5376,782 S 88,958 5 53,778 $ 41,421 S .11 March 31,1985 346,338 53,790 79,842 67,343 .68 June 30,1986 458,838 142,309 92,333 79,975 .78 June 30,1985 378,981 115,665 85,164 72,667 .73 September 30,1986 575,508 186,512 141,968 129,655 1.27 September 30,1985 493,025 152,594 119,931 107,476 1.07 December 31,1986 396,051 100,830 55,814 43,597 .43 December 31,1985 373,419 94,807 52,288 39,903 .39 CO.10HAN S10CK PRICES AND DIVIDENDS a >
1986 Price Range 1986 1985 Price Range 1985 Iligh Low Dividends <2) Quarter Ended liigh Low Dividends PerShare: 525 % $20% 46C Starch 31 $17% $15% 43c 25% 22% 46 Juna30 19% 17 % 43 31% 25 46 September 30 19% 16% 46 31 27% 48 Decemher 31 21% 16% 46
(!) At December 31,1986. Union Electric Company common stock shareholders totaled 152.569.1New Erk Stock Exchange symbol: UEP.)
(2) At December 31,1986, retained earnings amounted to $766.154,000; under the Company's amended mortgage indentures
$57,115,000 of total retained eamirgs was restricted against payment of common dividends-except those payable in common st<ck.
INVES1DR INFOlulATION Dividend Reinvestment and Stock Purchase Plan OITice The Chase The Boatmen's 1901 Gratiot Street Manhattan Bank National Bank of The Dividend Reinvestment and Stock Purchase St. Louis, MO (National St. Louis, Trustee Plan provides common and preferred stockholders, (314)621-3222 Association) St. Louis, M0 63102 employees, and customers the opportunity to purchase New Wrk, NY 10015 IIarris Trust and Stailing Address shares of common stock of the Company, without the p.o. Box 149 Savings Bank payment of brokerage commissions or service charges, St. Louis, MO 63166 Registrars and J. L. Spreng, For Common Stock Co-Trustees by automatically reinvesting dividends and/or investing Chicago,IL 60690 optional cash payments. TransferAgents The Boatmen's LaSalle National For Preferred Stock National Bank of Bank, Trustee Effective January 1,1986, Union Electric amended and Common Stock St. Louis uis, 3166 Weap, M M its Dividend Reinvestment and Stock Purchase Plan to Union Electric provide shares of common stock sold under the Plan N!anufacturers llankers Trust Company St. Louis, MO 63166 er Trust omp n through market purchases. ,
{Ian Information regarding the Company's Dividend Rein- j\fa""
- n { New Wrk, NY 10015 ContinentalIllinois
. Nation 1 B nk and vestment and Stock Purchase Plan may be obtained by Company writing to: New York, NY 10015 Trustees, Trust Company of Transfer Agents, Chicago Union Electric Company Registrars, and Chicago,IL 60697 Registrars Stockholder Services Department-Code 1035 Paying Agents For Preferred Stock p ,p g ,
P.O. Box 149 St. Louis, MO 63166 The Boatmen's llonds National Bank of Centerre Trust St. Louis St. Louis, MO 63166 Company of i
St. Louis, Trustee St. Louis. MO 63101 l
? 31,
OFFICERS MI)IllREC7DRS Officers Board of Directors William E.Cornelius J. A. Haer 11 President and Chief Executive Officer Management Business Consultant:
Earl K.Dille F rmer Chairman and Chief Executive Executive Vice President 'f ,g p Stew:rt W. Smith,Jr.
- Executive Vice President '
Ca n of the Board and Chief Executive James J. Heisman Officer-Vice President-Customer Senice Ilill.Behan Lumber Company, wholesaler and Ihmaid E. lirandt retailer of lumber and allied building products.
Vice President and Controller Sam II. Cook Charles A.llremer Chairman-Vice President-Supply Service Central Bancompany and its subsidiary, Central Bank, which conducts a general David C. Ilarrison . banking business.
Vice President-Regional West
' William E. Cornelius G J Presi II*V.' dent-Engineering and President and Chief Executive Officer Vice Construction ' Earl K. Dille
- "I * * * " "
William E.Jaudes Vice President and General Counsel ' Charles J. Dougherty Former Chairman and Chief Executive Officer i.rancis R. l.cngefeld Vice President-Regional East *Edwin S. Jones "Former Chainnan of the lh>ard-IM Centerre Bancorporation.
IIM rt %. dent-iluman Resources Vice Presi
" John Peters StacCarthy li.G.Sleyer . President and Director-Vice President-Computer Services Centerre Bancorporation, a bank holding Charles W.MueIIer company.
Vice President-Finance
- Richard A.Meyer Robert O. Piening "Former President-Vice President-Rates Anheuser Busch,Inc.
William A.Sanford John K. Riedy Vice President-Industrial Relations Consultant. Former Chairman of Donald F.Schnell the ik>ard-INTERCO, INCORPORATED.
Vice President-Nuclear
- Stewart W. Smith, Jr.
Charles J.Schukal Vice President-Transmission and Executive Vice President Distribution EdgarJ.Telthorst Adviser to the Board Vice President-Power Operations Isaac II. Grainger
- 11. E. Wnertenbrecher, Jr. Former President-Chemical Bank.
Vice President-Public Relations J:mes C.Thompum Secretary
' Member of Executive Committee I A I. I" " Member of Auditing Committee f ,su n
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Union Etscraic a
1901 Gratiot Street St. Louis Donald F. Schnell Vce President March 24, 1987 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk ,
Washington, D.C. 20555 Gentlemen: ULNRC- 1474 DOCKET NO. 50-483 CALLAWAY PLANT TransmittrA herewith are twenty-five (25) copies of the Union Electric Conpany 1986 Annual Report. This information is submitted in accordance with 10CFR50.71(b).
Very truly yourc, Donald P. Schnell WEK/ dis Enclosures t@" , 9 Masling Address: P.O. Box 149. St. Louis, MO 63166
1 e
cc: Gerald Charnoff, Esq.
Shaw, Pittman, Potts & Trowbridge 2300 N. Street, N.W.
Washington, D.C. 20037 J. O. Cermak CFA, Inc.
3356 Tanterra circle Brookville, MD 20833 W. L. Forney Division of Projects and Resident Programs, Chief, Section lA U.S. Nuclear Pegulatory Commission Region III 799 Roosevelt Road Glen Ellyn, Illinois 60137 Druce Little Callaway Resident Office U.S. Nuclear Regulatory Commission RR#1 Steedman, Missouri 65077 Paul O'Connor (2)
Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Conniasion Mail Stop 316 7920 Norfolk Avenue Dethesda, MD 20014 Manager, Electric Department Missouri Public Service Conmission P.O. Box 360 Jefferson City, MO 65102 l
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