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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
( ) Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to .
COMMISSION FILE NUMBER 1-14756
AMEREN CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-1723446
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1901 Chouteau Avenue, St. Louis, Missouri 63103
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (314) 621-3222
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $ .01 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X).
Aggregate market value of voting stock held by non-affiliates as of
March 5, 1999, based on closing prices most recently available as reported in
The Wall Street Journal: $5,377,199,525.
Shares of Common Stock, $ .01 par value, outstanding as of March 5,1999:
137,215,462 shares.
DOCUMENTS INCORPORATED BY REFERENCES.
Portions of the registrant's 1998 Annual Report to Stockholders (the
"1998 Annual Report") are incorporated by reference into Parts I, II and IV.
Portions of the registrant's definitive proxy statement for the 1999
annual meeting are incorporated by reference into Part III.
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TABLE OF CONTENTS
PART I PAGE
Item 1 - Business
General............................................................................. 1
Capital Program and Financing....................................................... 2
Rates............................................................................... 2
Fuel Supply......................................................................... 3
Regulation.......................................................................... 4
Industry Issues..................................................................... 5
Operating Statistics(1)............................................................. 6
Item 2 - Properties............................................................................... 6
Item 3 - Legal Proceedings........................................................................ 7
Item 4 - Submission of Matters to a Vote of Security Holders(2)
Executive Officers of the Company (Item 401(b) of Regulation S-K)....................................... 8
PART II
Item 5 - Market for Registrant's Common Equity and Related
Stockholder Matters(1).............................................................. 8
Item 6 - Selected Financial Data(1)............................................................... 9
Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations(1)........................................................ 9
Item 7A - Quantitative and Qualitative Disclosures about Market Risk(1)............................ 9
Item 8 - Financial Statements and Supplementary Data(1)........................................... 9
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure(2)
PART III
Item 10 - Directors and Executive Officers of the Registrant(1).................................... 9
Item 11 - Executive Compensation(1)................................................................ 9
Item 12 - Security Ownership of Certain Beneficial Owners
and Management(1)................................................................... 9
Item 13 - Certain Relationships and Related Transactions(1)........................................ 10
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K............................. 10
SIGNATURES ......................................................................................... 13
EXHIBITS ......................................................................................... 14
- ---------------------------------
(1) Incorporated by reference.
(2) Not applicable and not included herein.
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PART I
ITEM 1. BUSINESS.
GENERAL
The Registrant, Ameren Corporation (Ameren or the Company), was
incorporated in Missouri on August 7, 1995. On December 31, 1997, following the
receipt of all required approvals, CIPSCO Incorporated (CIPSCO) and Union
Electric Company (UE) combined with the result that the common shareholders of
CIPSCO and UE became the common shareholders of the Company, and the Company
became the owner of 100% of the common stock of UE and CIPSCO's utility
operating subsidiary, Central Illinois Public Service Company (CIPS) (the
Merger).
For additional information about the Merger, see "Overview" in
"Management's Discussion and Analysis" and Notes 1 and 2 to the "Notes to
Consolidated Financial Statements" on Pages 15, 28, and 29, respectively, of the
1998 Annual Report pages incorporated herein by reference.
Ameren is a public utility holding company registered under the
Public Utility Holding Company Act of 1935 (PUHCA) and does not own or operate
any significant assets other than the stock of its subsidiaries, including its
two utility operating subsidiaries, CIPS and UE. Dividends on Ameren's Common
Stock are dependent on distributions to be made to it by CIPS, UE, and its other
subsidiaries. The 1998 Annual Reports Form 10-K for CIPS and UE are available
from the Company upon request.
CIPS is an Illinois corporation organized in 1902. It supplies
electric and gas service to territories in central and southern Illinois having
an estimated population of 820,000 within an area of approximately 20,000 square
miles. UE was incorporated in Missouri in 1922, and is successor to a number of
companies, the oldest of which was organized in 1881. It is the largest electric
utility in the State of Missouri and supplies electric and gas service in
territories in Missouri and Illinois having an estimated population of 2,600,000
within an area of approximately 24,500 square miles, including the greater St.
Louis area.
On a consolidated basis, 93.3% of the Company's 1998 operating
revenues were derived from the sale of electric energy, 6.5% came from the sale
of natural gas, and 0.2% came from other sources. Consolidated electric
operating revenues as a percentage of total operating revenues for both of the
years 1996 and 1997 were 92%.
The Company also owns all of the common stock of other subsidiary
companies as follows: (a) CIPSCO Investment Company, a non-regulated investment
company incorporated in Illinois; (b) Ameren Services Company, a Missouri
corporation which provides administrative, accounting, legal, engineering,
executive, and other support services to Ameren affiliates; (c) AmerenEnergy,
Inc., a Missouri corporation which primarily serves as a power marketing agent
for the operating companies and provides a range of energy and risk management
services to targeted customers; and (d) Ameren Development Company, a
non-regulated holding company incorporated in Missouri. In addition, through its
operating subsidiaries, the Company owns 60% of the Common Stock of Electric
Energy, Inc., which owns and operates a generating plant with a nominal capacity
of 1,000 mW. Of the plant's total output, 60% is committed to the Department of
Energy, 10% to UE, 5% to CIPS, and the remainder to its other owners.
At December 31, 1998, the Company and its subsidiaries had 7,450
employees. Approximately 70% of such employees are represented by local unions
affiliated with the AFL-CIO. For additional information on labor matters, see
Note 12 to the "Notes to Consolidated Financial Statements" on Page 38 of the
1998 Annual Report pages incorporated herein by reference.
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For additional information regarding the Company's business
operations, see "Management's Discussion and Analysis" on Pages 15-22 and the
Consolidated Financial Information on Pages 23-45 of the 1998 Annual Report
pages incorporated herein by reference.
CAPITAL PROGRAM AND FINANCING
The Company is engaged in a capital program under which capital
expenditures are expected to approximate $495 million in 1999. For the five-year
period 1999 through 2003, construction expenditures are estimated at $2.4
billion. This estimate includes capital expenditures for the purchase of six new
combustion turbines, as well as expenditures which will be incurred by the
Company to meet new air quality standards for ozone and particulate matter.
In addition to the funds required for construction during the
1999-2003 period, $520 million will be required to repay long-term debt as
follows: $202 million in 1999; $35 million in 2000; $30 million in 2001; $108
million in 2002; and $145 million in 2003. Amounts for years subsequent to 1999
do not include UE's nuclear fuel lease payments since the amounts of such
payments are not currently determinable.
Historically, CIPS and UE have financed those capital costs which
exceeded available internally generated funds through issuance of short-term
debt in the form of bank loans and commercial paper. As needed, the short-term
debt would be subsequently reduced by sales of long-term debt and equity
securities.
To issue first mortgage bonds and preferred stock, CIPS and UE
each must comply with earnings tests contained in their respective mortgages and
Articles of Incorporation. For the issuance of additional first mortgage bonds,
generally, earnings coverage of twice the annual interest charges on first
mortgage bonds outstanding and to be issued is required. Generally, for the
issuance of additional preferred stock, earnings coverage of one and one-half
times annual interest charges and preferred stock dividends is required under
the CIPS Articles, and earnings coverage of at least two and one-half times the
annual dividend on preferred stock outstanding and to be issued is required
under UE's Articles. The ability to issue such securities in the future will
depend on coverages at that time. Currently, each company expects to have
adequate coverage ratios for anticipated requirements.
For additional information on the Company's capital program and
financial needs, see "Liquidity and Capital Resources" in "Management's
Discussion and Analysis" on Page 17, and Notes 5, 7, 8, and 12 to the "Notes to
Consolidated Financial Statements" on Pages 32, 33 and 38, of the 1998 Annual
Report pages incorporated herein by reference.
RATES
For the year 1998, approximately 63%, 25%, and 12% of the
Company's electric operating revenues were based on rates regulated by the
Missouri Public Service Commission (MoPSC), the Illinois Commerce Commission
(ICC), and the Federal Energy Regulatory Commission (FERC) of the U. S.
Department of Energy, respectively.
The electric utility restructuring legislation in Illinois
included a 5% residential rate decrease for the Company's Illinois electric
customers, effective August 1, 1998. This rate decrease reduced electric
revenues approximately $6 million in 1998 and is expected to reduce electric
revenues by approximately $14 million annually thereafter, based on estimated
levels of sales and assuming normal weather conditions. See "Regulation" for
additional reference to this legislation.
The Company was also subject to an electric rate decrease for the
Company's Missouri customers, effective September 1, 1998. This rate decrease is
based on the weather-adjusted average
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annual credits to customers under an experimental alternative regulation plan
that ran from July 1, 1995 through June 30, 1998. The Company estimates that its
Missouri electric rate decrease should approximate $15 million to $20 million on
an annualized basis. However, the MoPSC staff has proposed adjustments to the
Company's estimate. The staff's adjustments, if ultimately accepted, could
increase the Company's proposed Missouri rate decrease by $15 million to $20
million.
As permitted by electric utility restructuring legislation in
Illinois, CIPS and UE have elected to eliminate the fuel adjustment clause on
sales of electricity in Illinois, thereby including a historical level of fuel
costs in base rates. The CIPS request was approved by the ICC in March 1998, and
the UE request was approved in April 1998.
In December 1997, the MoPSC approved a $12 million annual rate
increase for natural gas service in UE's Missouri jurisdiction. The rate
increase became effective in February 1998.
In June 1998, UE and CIPS filed requests with the ICC to increase
rates for natural gas service in the Illinois jurisdiction. In February 1999,
the ICC approved a $9 million annual rate increase. The rate increase became
effective in February 1999.
For additional information on "Rates", see "Regulation" section
below and Note 2 to the "Notes to Consolidated Financial Statements" on Page 29
of the 1998 Annual Report pages incorporated herein by reference.
FUEL SUPPLY
COST OF FUELS YEAR
- ------------- -------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
UE
Per Million BTU - Coal 100.015(cent) 105.600(cent) 112.250(cent) 117.645(cent) 123.950(cent)
- Nuclear 48.803(cent) 47.472(cent) 47.499(cent) 48.592(cent) 49.932(cent)
- System 90.378(cent) 92.816(cent) 96.596(cent) 101.590(cent) 101.867(cent)
CIPS
Per Million BTU - System (Coal) 152.738(cent) 163.000(cent) 171.000(cent) 176.000(cent) 165.000(cent)
OIL AND GAS. The actual and prospective use of such fuels is
minimal, and the Company has not experienced and does not expect to experience
difficulty in obtaining adequate supplies.
COAL. Because of uncertainties of supply due to potential work
stoppages, equipment breakdowns and other factors, the Company has a policy of
maintaining a coal inventory consistent with its expected burn practices.
NUCLEAR. The components of the nuclear fuel cycle required for
nuclear generating units are as follows: (1) uranium; (2) conversion of uranium
into uranium hexafluoride; (3) enrichment of uranium hexafluoride; (4)
conversion of enriched uranium hexafluoride into uranium dioxide and the
fabrication into nuclear fuel assemblies; and (5) disposal and/or reprocessing
of spent nuclear fuel.
The Company has agreements and/or inventories to fulfill its
Callaway Nuclear Plant needs for uranium, enrichment, fabrication and conversion
services through 2002. Additional contracts will have to be entered into in
order to supply nuclear fuel during the remainder of the life of the Plant, at
prices which cannot now be accurately predicted. The Callaway Plant normally
requires refueling at 18-month intervals, with the next regular refueling
presently scheduled for the fall of 1999. In April 1999, the Company anticipates
that it will be necessary to perform a special refueling at the Plant for about
two
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weeks to replace certain fuel assemblies. This refueling is required to maintain
the full generating capability of the Callaway Plant until the scheduled fall
1999 refueling, and is not expected to have a material adverse effect on the
Company's financial condition, results of operations or liquidity.
Under the Nuclear Waste Policy Act of 1982, the U. S. Department of
Energy (DOE) is responsible for the permanent storage and disposal of spent
nuclear fuel. DOE currently charges one mill per nuclear generated kilowatt-hour
sold for future disposal of spent fuel. Electric rates charged to customers
provide for recovery of such costs. DOE is not expected to have its permanent
storage facility for spent fuel available until at least 2015. The Company has
sufficient storage capacity at the Callaway site until 2004 and is pursuing a
viable storage alternative. This alternative has been approved by the Nuclear
Regulatory Commission, and when implemented, will provide sufficient spent fuel
storage for the licensed life of the plant. The delayed availability of the
DOE's disposal facility is not expected to adversely affect the continued
operation of Callaway Plant.
For additional information on the Company's "Fuel Supply", see
Notes 12 and 13 to the "Notes to Consolidated Financial Statements" on Pages 38
and 40, respectively, of the 1998 Annual Report pages incorporated herein by
reference.
REGULATION
As a holding company registered under the PUHCA, Ameren, along
with its subsidiaries, is subject to the regulatory provisions of said Act,
including provisions relating to the issuance of securities, sales and
acquisitions of securities and utility assets, the services performed by Ameren
Services Company, and the activities of certain other subsidiaries.
CIPS and UE are subject to regulation, as applicable, by the
MoPSC and the ICC as to rates, service, accounts, issuance of equity securities,
issuance of debt having a maturity of more than twelve months, mergers, and
various other matters. Said companies are also subject to regulation by the FERC
as to rates and charges in connection with the transmission of electric energy
in interstate commerce and the sale of such energy at wholesale in interstate
commerce, mergers, and certain other matters. Authorization to issue debt having
a maturity of twelve months or less is obtained from the Securities and Exchange
Commission.
In December 1997, the Governor of Illinois signed the Electric
Service Customer Choice and Rate Relief Law of 1997 providing for electric
utility restructuring in Illinois. This legislation introduces competition into
the supply of electric energy in Illinois and, as a result, retail direct
access, which allows customers to choose their electric generation supplier,
will be phased in over several years. Access for commercial and industrial
customers will occur over a period from October 1999 to December 2000, and
access for residential customers will occur after May 1, 2002. For a discussion
of the Illinois legislation, as well as the current status of electric utility
restructuring in Missouri, see "Electric Industry Restructuring" in
"Management's Discussion and Analysis" and Note 2 to the "Notes to Consolidated
Financial Statements" on Pages 18 and 29, respectively, of the 1998 Annual
Report pages incorporated herein by reference.
Operation of the Company's Callaway Plant is subject to
regulation by the Nuclear Regulatory Commission. Its Facility Operating License
for the Callaway Plant expires on October 18, 2024. The Company's Osage
hydroelectric plant and its Taum Sauk pumped-storage hydro plant, as licensed
projects under the Federal Power Act, are subject to FERC regulations affecting,
among other things, the general operation and maintenance of the projects. The
license for the Osage Plant expires on February 28, 2006, and the license for
the Taum Sauk Plant expires on June 30, 2010. The Company's Keokuk Plant and dam
located in the Mississippi River between Hamilton, Illinois and Keokuk, Iowa,
are operated under authority, unlimited in time, granted by an Act of Congress
in 1905.
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CIPS and UE are regulated, in certain of their operations, by air
and water pollution and hazardous waste regulations at the city, county, state
and federal levels.
ENVIRONMENTAL ISSUES. On December 22, 1995, a complaint was filed
in the Circuit Court for the Seventh Judicial Circuit, Sangamon County, Illinois
against CIPS and several other defendants. The complaint seeks unspecified
monetary damages and alleges that, as a result of exposure to carcinogens
contained in coal tar at the CIPS Taylorville gas plant site, plaintiffs'
children had suffered from a rare form of childhood cancer known as
"neuroblastoma". The plaintiffs in this complaint are the plaintiffs who on
October 5, 1995 voluntarily dismissed claims in a similar complaint in the
Circuit Court for the Fourth Judicial Circuit, Christian County, Illinois. On
April 17, 1996, the Seventh Judicial Circuit Court, Sangamon County, Illinois
granted approval of the petition by CIPS requesting transfer of this case to the
Circuit Court for the Fourth Judicial Circuit, Christian County, Illinois. On
March 27, 1998, a jury awarded plaintiffs $3.2 million. CIPS continues to
believe it has meritorious defenses and has appealed the verdict. Management
believes that final disposition of this matter will not have a material adverse
effect on financial position, results of operations or liquidity of the Company.
On August 2, 1996, the Illinois Attorney General filed a
complaint with the Illinois Pollution Control Board alleging various violations
of wastewater discharge permit conditions and ground water standards at CIPS'
Hutsonville Power Station. The complaint seeks monetary penalties and the award
of attorney fees. CIPS, the Board and the Attorney General are continuing to
work on a plan to resolve these issues. While the Company cannot predict the
final outcome of this matter, it does not believe that the final resolution will
have a material adverse effect on financial position, results of operations or
liquidity of the Company.
For additional discussion of environmental matters, see
"Liquidity and Capital Resources" in Management's Discussion and Analysis" and
Note 12 to the "Notes to Consolidated Financial Statements" on Pages 17 and 38,
respectively, of the 1998 Annual Report pages incorporated by reference.
Other aspects of the Company's business are subject to the
jurisdiction of various regulatory authorities and, for additional information
on "Regulation", see Note 2 to the "Notes to Consolidated Financial Statements"
on Page 29 of the 1998 Annual Report pages incorporated herein by reference.
INDUSTRY ISSUES
The Company is facing issues common to the electric and gas
utility industries which have emerged during the past several years. These
issues include: the potential for more intense competition and for changing the
structure of regulation; changes in the structure of the industry as a result of
changes in federal and state laws; on-going consideration of additional changes
of the industry by federal and state authorities; continually developing
environmental laws, regulations and issues, including proposed new air quality
standards; public concern about the siting of new facilities; proposals for
demand side management programs; public concerns about nuclear decommissioning
and the disposal of nuclear wastes; and global climate issues. The Company is
monitoring these issues and is unable to predict at this time what impact, if
any, these issues will have on its operations, financial condition, or
liquidity.
Also see "Electric Industry Restructuring" in "Management's
Discussion and Analysis" and Note 12 to the "Notes to Consolidated Financial
Statements" on Pages 18 and 38 respectively, of the 1998 Annual Report pages
incorporated herein by reference.
YEAR 2000 ISSUE. The Year 2000 Issue relates to how dates are
stored and used in computer systems, applications, and embedded systems. As the
century date change occurs, certain date-sensitive systems need to be able to
recognize the year as 2000 and not as 1900. This inability to recognize and
properly treat the year as 2000 may cause these systems to process critical
financial and operational
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information incorrectly. For additional information on this issue, see "Year
2000 Issue" in "Management's Discussion and Analysis" on Page 19 of the 1998
Annual Report pages incorporated herein by reference.
OPERATING STATISTICS
The information on Pages 44 and 45 in the Company's 1998 Annual
Report is incorporated herein by reference.
ITEM 2. PROPERTIES.
In planning its construction program, the Company is presently
utilizing a forecast of kilowatthour sales growth of approximately 1.6% and peak
load growth of 1.3%, each compounded annually, and is providing for a minimum
reserve margin of approximately 15% to 18% above its anticipated peak load
requirements.
The Company is a member of one of the ten regional electric
reliability councils organized for coordinating the planning and operation of
the nation's bulk power supply - MAIN (Mid-America Interconnected Network)
operating primarily in Wisconsin, Illinois and Missouri. The Company's bulk
power system is operated as an Ameren-wide control area and transmission system
under the FERC approved Joint Dispatch Agreement between UE and CIPS. Ameren has
interconnections for transmission service and the exchange of electric energy,
directly and through the facilities of others, with twenty private utilities and
nine government utilities that operate control areas.
The following table sets forth information with respect to the
Company's generating facilities and capability at the time of the expected 1999
peak.
GROSS KILOWATT
ENERGY INSTALLED
SOURCE PLANT LOCATION CAPABILITY
------ ----- -------- ------------
Coal Labadie Franklin County, MO 2,400,000
Rush Island Jefferson County, MO 1,224,000
Newton Newton, IL 1,170,000
Sioux St. Charles County, MO 1,006,000
Meramec St. Louis County, MO 925,000
Coffeen Coffeen, IL 950,000
Meredosia Meredosia, IL 359,000
Grand Tower Grand Tower, IL 202,000
Hutsonville Hutsonville, IL 161,000
------------
Total Coal 8,397,000
Nuclear Callaway Callaway County, MO 1,196,000
Hydro Osage Lakeside, MO 212,000
Keokuk Keokuk, IA 126,000
------------
Total Hydro 338,000
Oil and Venice Venice, IL 442,000
Natural Other Various 566,000
Gas ------------
Total Oil and
Natural Gas 1,008,000
Pumped-
storage Taum Sauk Reynolds County, MO 440,000
------------
TOTAL 11,379,000
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As of December 31, 1998, CIPS owned approximately 4,700 circuit
miles of electric transmission lines. CIPS operates one propane-air plant and
4,800 miles of gas mains. As of that date, UE owned approximately 3,300 circuit
miles of electric transmission lines. UE operates three propane-air plants and
2,800 miles of gas mains. Other properties of the companies include distribution
lines, underground cable, office buildings, warehouses, garages and repair
shops.
Substantially all of the properties and plant of CIPS and UE are
subject to the direct first liens of the indentures securing their first
mortgage bonds.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in legal and administrative proceedings
before various courts and agencies with respect to matters arising in the
ordinary course of business, some of which involve substantial amounts.
Management believes that the final disposition of these proceedings will not
have a material adverse effect on its financial position, results of operations
or liquidity.
For additional information on legal and administration
proceedings, see "Rates" and "Regulation Environmental Issues" under Item 1
herein and Notes 2 and 12 to the "Notes to Consolidated Financial Statements" on
Pages 29 and 38, respectively, of the 1998 Annual Report pages incorporated
herein by reference.
Reference is being made to Note 12 of the "Notes to Consolidated
Financial Statements" for a discussion of the August 1998 decision of the
National Labor Relations Board (NLRB) which upheld the lawfulness of CIPS' 1993
lockout of its unions. In December 1998, the NLRB denied the unions' motions for
reconsideration of its decision. Subsequently, in December 1998, the unions
filed a joint motion for a rehearing of their motions for reconsideration. On
March 5, 1999, the NLRB denied the unions' motion for reconsideration. The
Company expects that the unions will pursue a judicial appeal of the NLRB's
decision.
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Statements made in this report which are not based on historical
facts, are forward-looking and, accordingly, involve risks and uncertainties
that could cause actual results to differ materially from those discussed.
Although such forward-looking statements have been made in good faith and are
based on reasonable assumptions, there is no assurance that the expected results
will be achieved. These statements include (without limitation) statements as to
future expectations, beliefs, plans, strategies, objectives, events, conditions
and financial performance and the Year 2000 Issue. In connection with the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company is providing this cautionary statement to identify important factors
that could cause actual results to differ materially from those anticipated.
Factors include, but are not limited to, the effects of: regulatory actions;
changes in laws and other governmental actions; competition; future market
prices for fuel and purchased power, electricity, and natural gas, including the
use of financial instruments; average rates for electricity in the Midwest;
business and economic conditions; interest rates; weather conditions; fuel
prices and availability; generation plant performance; monetary and fiscal
policies; future wages and employee benefits costs; and legal and administrative
proceedings.
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INFORMATION REGARDING EXECUTIVE OFFICERS REQUIRED BY ITEM 401(B) OF
REGULATION S-K:
DATE FIRST ELECTED
AGE AT OR APPOINTED TO
NAME 12/31/98 PRESENT POSITION PRESENT POSITION
---- -------- ---------------- ----------------
Charles W. Mueller 60 Chairman, President and
Chief Executive Officer,
and Director 12/31/97
Donald E. Brandt 44 Senior Vice President 12/31/97
Steven R. Sullivan 38 Vice President, General Counsel 7/1/98
and Secretary 9/1/98
Warner L. Baxter 37 Vice President 5/1/98
and Controller 12/31/97
Jerre E. Birdsong 44 Treasurer 4/23/96
All officers are elected or appointed annually by the Board of
Directors following the election of such Board at the annual meeting of
stockholders held in April. There are no family relationships between the
foregoing officers of the Company. Except for Messrs. Baxter and Sullivan, each
of the above-named executive officers has been employed by the Company or its
affiliates for more than five years in executive or management positions. Mr.
Baxter was previously employed by PricewaterhouseCoopers LLP. Mr. Sullivan was
previously employed by Anheuser Busch Companies, Inc.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
On October 9, 1998, the Company adopted a Shareholder Rights Plan
and declared a dividend of one preferred share purchase right (a Right) for each
outstanding share of common stock, par value $ .01 per share, of the Company.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $ .01 per share, of the Company at a price of $180 per one one-hundredth
of a share of such Preferred Stock, subject to adjustment. The Rights will
become exercisable if someone buys 15 percent or more of the Company's common
stock. In addition, if someone buys 15 percent or more of the Company's common
stock, each right will entitle its holder (other than that buyer) to purchase a
number of shares of the Company's common stock having a market value of twice
the Right's $180 exercise price. If the Company is acquired in a merger, each
Right will entitle its holder to purchase a number of the acquiring company's
common shares having a market value at the time of twice the Right's exercise
price.
The Rights will expire on October 9, 2008. The Rights do not have
voting or dividend rights, and until they become exercisable, have no dilutive
effect on the per-share earnings of the Company. The Company has 4 million
shares of Preferred Stock initially reserved for issuance upon exercise of the
Rights. There is no Junior Participating Preferred Stock issued or outstanding.
For additional information on the Shareholder Rights Plan, see
Note 6 to the "Notes to Consolidated Financial Statements" on Page 32 of the
1998 Annual Report pages incorporated herein by reference.
Additional information required to be reported by this item is
included on the inside back cover of the 1998 Annual Report and is incorporated
herein by reference.
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ITEM 6. SELECTED FINANCIAL DATA.
Information for the 1993-1998 period required to be reported by
this item is included on Page 43 of the 1998 Annual Report and is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Information required to be reported by this item is included on
Pages 15 through 22 of the 1998 Annual Report and is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information required to be reported by this item is included under
"Market Risk Related to Financial Instruments and Commodity Instruments" in
"Management's Discussion and Analysis" on Page 20 of the 1998 Annual Report and
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Company on Pages 23 through 42,
the report thereon of PricewaterhouseCoopers LLP appearing on Page 14 and the
Selected Quarterly Information on Page 27 of the 1998 Annual Report are
incorporated herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning directors required to be reported by this
item is included under "Item (1): Election of Directors" in the Company's 1999
definitive proxy statement filed pursuant to Regulation 14A and is incorporated
herein by reference.
Information concerning executive officers required by this item
is reported in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Any information required to be reported by this item is included
under "Compensation" in the Company's 1999 definitive proxy statement filed
pursuant to Regulation 14A and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Any information required to be reported by this item is included
under "Security Ownership of Management" in the Company's 1999 definitive proxy
statement filed pursuant to Regulation 14A and is incorporated herein by
reference.
9
12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Any information required to be reported by this item is included
under "Item (1): Election of Directors" in the Company's 1999 definitive proxy
statement filed pursuant to Regulation 14A and is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Financial Statements: *
Page From 1998
Annual Report
-------------
Consolidated Report of Independent Accountants.................................. 14
Consolidated Statement of Income - Years 1998, 1997, and 1996................... 23
Consolidated Balance Sheet - December 31, 1998 and 1997......................... 24
Consolidated Statement of Cash Flows - Years 1998, 1997, and 1996............... 26
Consolidated Statement of Retained Earnings
- Years 1998, 1997, and 1996................................................. 27
Notes to Consolidated Financial Statements...................................... 28
*Incorporated by reference from the indicated pages of the 1998
Annual Report
2. Financial Statement Schedule:
The following schedule, for the years ended December 31, 1998,
1997 and 1996, should be read in conjunction with the
aforementioned financial statements (schedules not included have
been omitted because they are not applicable or the required data
is shown in the aforementioned financial statements).
Pages Herein
------------
Report of Independent Accountants on Financial
Statement Schedule........................................................... 11
Valuation and Qualifying Accounts (Schedule II)................................. 12
3. Exhibits: See EXHIBITS beginning on Page 14
(b) Reports on Form 8-K. The Registrant filed a report on Form 8-K
dated October 8, 1998 reporting on the impact of its employee
separation plan and on the effect of the final rule issued in
September 1998 by the United States Environmental Protection
Agency pertaining to nitrogen oxide emissions. Further, a report
dated October 14, 1998 was filed reporting the adoption of a
shareholders rights plan and declaration of the associated
dividend.
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13
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Ameren Corporation
Our audits of the financial statements referred to in our report dated February
4, 1999 appearing in the 1998 Annual Report to Shareholders of Ameren
Corporation (which report and financial statements are incorporated by reference
in this Annual Report on Form 10-K) also included an audit of the Financial
Statement Schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion,
this Financial Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
St. Louis, Missouri
February 4, 1999
11
14
AMEREN CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Col. A Col. B Col. C
------ ------ ------
Additions
-------------------------------------
(1) (2)
Balance at Charged to
beginning costs and Charged to
Description of period expenses other accounts
----------- --------- -------- --------------
Year ended December 31, 1998
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $4,845,328 $21,167,000
========== ===========
Year ended December 31, 1997
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $5,795,332 $12,648,812
========== ===========
Year ended December 31, 1996
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $7,524,965 $12,100,000
========== ===========
Col. A Col. D Col. E
------ ------ ------
Balance at
end of
Description Deductions period
----------- ---------- ------
(Note)
Year ended December 31, 1998
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $17,619,673 $8,392,655
=========== ==========
Year ended December 31, 1997
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $13,598,816 $4,845,328
=========== ==========
Year ended December 31, 1996
Reserves deducted in the balance sheet from
assets to which they apply:
Allowance for doubtful accounts $13,829,633 $5,795,332
=========== ==========
Note: Uncollectible accounts charged off, less recoveries.
12
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
AMEREN CORPORATION
(Registrant)
CHARLES W. MUELLER
Chairman, President and
Chief Executive Officer
Date March 29, 1999 By /s/ Steven R. Sullivan
------------------------- ---------------------------------
(Steven R. Sullivan, Attorney-in-Fact)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
SIGNATURE TITLE
--------- -----
/s/ C. W. Mueller Chairman, President, Chief
- -------------------------------------------------- Executive Officer and Director
CHARLES W. MUELLER (Principal Executive Officer)
/s/ Donald E. Brandt Senior Vice President
- -------------------------------------------------- (Principal Financial and Accounting Officer)
DONALD E. BRANDT
/s/ Warner L. Baxter Vice President and Controller
- -------------------------------------------------- (Principal Accounting Officer)
WARNER L. BAXTER
/s/ William E. Cornelius
- -------------------------------------------------- ------------------------------------------------
WILLIAM E. CORNELIUS, Director HANNE M. MERRIMAN, Director
/s/ Clifford L. Greenwalt /s/ Paul L. Miller, Jr.
- -------------------------------------------------- ------------------------------------------------
CLIFFORD L. GREENWALT, Director PAUL L. MILLER, JR., Director
/s/ Thomas A. Hays /s/ Robert H. Quenon
- -------------------------------------------------- ------------------------------------------------
THOMAS A. HAYS, Director ROBERT H. QUENON, Director
/s/ Richard A. Liddy /s/ Harvey Saligman
- -------------------------------------------------- ------------------------------------------------
RICHARD A. LIDDY, Director HARVEY SALIGMAN, Director
/s/ Gordon R. Lohman /s/ Charles J. Schukai
- -------------------------------------------------- ------------------------------------------------
GORDON R. LOHMAN, Director CHARLES J. SCHUKAI, Director
/s/ Richard A. Lumpkin /s/ Janet McAfee Weakley
- -------------------------------------------------- ------------------------------------------------
RICHARD A. LUMPKIN, Director JANET McAFEE WEAKLEY, Director
/s/ John Peters MacCarthy /s/ James W. Wogsland
- -------------------------------------------------- ------------------------------------------------
JOHN PETERS MacCARTHY, Director JAMES W. WOGSLAND, Director
By /s/ Steven R. Sullivan March 29, 1999
---------------------------------------
(Steven R. Sullivan, Attorney-in Fact)
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16
EXHIBITS
EXHIBITS FILED HEREWITH
EXHIBIT NO. DESCRIPTION
3(i) - Certificate of Amendment to the Restated Articles of
Incorporation filed with the Secretary of State of the State
of Missouri on December 14, 1998.
10.1 - Long-Term Incentive Plan of 1998.
10.2 - Change of Control Severance Plan.
10.3 - Deferred Compensation Plan for Members of the Ameren
Leadership Team.
10.4 - Deferred Compensation Plan for Members of the Board of
Directors.
13 - Those pages of the 1998 Annual Report incorporated herein by
reference.
21 - Subsidiaries of the Company.
23 - Consent of Independent Accountants.
24 - Powers of Attorney.
27 - Financial Data Schedule.
EXHIBITS INCORPORATED BY REFERENCE
The following exhibits heretofore have been filed with the
Securities and Exchange Commission pursuant to requirements of the Acts
administered by the Commission. Such exhibits are identified by the references
following the listing of each such exhibit, and they are hereby incorporated
herein by reference.
EXHIBIT NO. DESCRIPTION
2 -Agreement and Plan of Merger, dated as of August 11, 1995, by
and among the Company, CIPSCO Incorporated, UE, and Arch
Merger Inc. (June 30, 1995 Form 10-Q/A (Amendment No. 1),
Exhibit 2(a).)
3(i) -Restated Articles of Incorporation of the Company.
(Registration No. 33-64165, Annex F.)
3(ii) - By-Laws of the Company as amended to December 31, 1997.
(1997 Form 10-K, Exhibit 3(ii).)
4.1 -Indenture of Mortgage and Deed of Trust of Union Electric
Company dated June 15, 1937, as amended May 1, 1941, and
Second Supplemental Indenture dated May 1, 1941.
(Registration No.
2-4940, Exhibit B-1.)
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17
EXHIBIT NO. DESCRIPTION
4.2 - Supplemental Indentures to the Union Electric Company
Mortgage
DATED AS OF FILE REFERENCE EXHIBIT NO.
March 1, 1967 2-58274 2.9
April 1, 1971 Form 8-K, April 1971 6
February 1, 1974 Form 8-K, February 1974 3
July 7, 1980 2-69821 4.6
May 1, 1990 Form 10-K, 1990 4.6
December 1, 1991 33-45008 4.4
December 4, 1991 33-45008 4.5
January 1, 1992 Form 10-K, 1991 4.6
October 1, 1992 Form 10-K, 1992 4.6
December 1, 1992 Form 10-K, 1992 4.7
February 1, 1993 Form 10-K, 1992 4.8
May 1, 1993 Form 10-K, 1993 4.6
August 1, 1993 Form 10-K, 1993 4.7
October 1, 1993 Form 10-K, 1993 4.8
January 1, 1994 Form 10-K, 1993 4.9
December 1, 1996 Form 10-K, 1996 4.36
4.3 - Indenture of Mortgage or Deed of Trust dated October 1,
1941, from CIPS to Continental Illinois National Bank and
Trust Company of Chicago and Edmond B. Stofft, as Trustees.
(Exhibit 2.01 in File No. 2-60232.)
4.4 - Supplemental Indentures dated, respectively September 1,
1947, January 1, 1949, February 1, 1952, September 1, 1952,
June 1, 1954, February 1, 1958, January 1, 1959, May 1, 1963,
May 1, 1964, June 1, 1965, May 1, 1967, April 1, 1970, April
1, 1971, September 1, 1971, May 1, 1972, December 1, 1973,
March 1, 1974, April 1, 1975, October 1, 1976, November 1,
1976, October 1, 1978, August 1, 1979, February 1, 1980,
February 1, 1986, May 15, 1992, July 1, 1992, September 15,
1992, April 1, 1993, and June 1, 1995 between CIPS and the
Trustees under the Indenture of Mortgage or Deed of Trust
referred to above (Amended Exhibit 7(b) in File No. 2-7341;
Second Amended Exhibit 7.03 in File No. 2-7795; Second
Amended Exhibit 4.07 in File No. 2-9353; Amended Exhibit 4.05
in file No. 2-9802; Amended Exhibit 4.02 in File No. 2-10944;
Amended Exhibit 2.02 in File No. 2-13866; Amended Exhibit
2.02 in File No. 2-14656; Amended Exhibit 2.02 in File
No.2-21345; Amended Exhibit 2.02 in File No. 2-22326; Amended
Exhibit 2.02 in File No. 2-23569; Amended Exhibit 2.02 in
File No. 2-26284; Amended Exhibit 2.02 in File No. 2-36388;
Amended Exhibit 2.02 in File No. 2-39587; Amended Exhibit
2.02 in File No. 2-41468; Amended Exhibit 2.02 in File No.
2-43912; Exhibit 2.03 in File No. 2-60232; Amended Exhibit
2.02 in File No. 2-50146; Amended Exhibit 2.02 in File No.
2-52886; Second Amended Exhibit 2.04 in File No. 2-57141;
Amended Exhibit 2.04 in File No. 2-57557; Amended Exhibit
2.06 in File No. 2-62564; Exhibit 2.02(a) in File No.
2-65914; Amended Exhibit 2.02(a) in File No. 2-66380; and
Amended Exhibit 4.02 in File No. 33-3188; Exhibit 4.02 to
Form 8-K dated May 15, 1992; Exhibit 4.02 to Form 8-K dated
July 1, 1992; Exhibit 4.02 to Form 8-K dated September 15,
1992; Exhibit 4.02 to Form 8-K dated March 30, 1993; Exhibit
4.03 to Form 8-K dated June 5, 1995; Exhibit 4.03 to Form 8-K
dated March 15, 1997; Exhibit 4.03 to Form 8-K dated June 1,
1997; and Exhibit 4.02, Post-Effective Amendment No. 1 in
File No. 333-18473.)
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18
EXHIBIT NO. DESCRIPTION
4.5 - Agreement, dated as of October 9, 1998, between the Company
and First Chicago Trust Company of New York, as Rights Agent,
which includes the form of Certificate of Designation of the
Preferred Shares as Exhibit A, the form of Right Certificate
as Exhibit B and the Summary of Rights as Exhibit C. (October
14, 1998 Form 8-K, Exhibit 4.)
4.6 - Indenture dated as of December 1, 1998 from CIPS to the Bank
of New York relating to CIPS' Senior Notes, 5.375% due 2008
and 6.125% due 2028. (Exhibit 4.03, Post-Effective Amendment
No. 1 to File No. 333-18473.)
Note: Reports of Union Electric Company on Forms 8-K, 10-Q and 10-K are on
file with the SEC under File Number 1-2967.
Reports of Central Illinois Public Service Company on Forms 8-K, 10-Q
and Form 10-K are on file with the SEC under File Number 1-3672.
16