EX-99 11 exhfs8.txt EX. FS-8 - FINANCIAL STATEMENTS OF AMEREN EXHIBIT FS-8 SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION OF AMEREN, CILCORP AND AES MEDINA VALLEY COGEN (NO. 4) L.L.C. We are providing the following summary unaudited pro forma combined condensed financial information to give you a better picture of what the results of operations and the financial position of the combined businesses of Ameren, CILCORP and AES Medina Valley Cogen (No.4) L.L.C. might have looked like had the Transaction and acquisition of Medina Valley occurred on January 1, 2001 for statement of operations purposes and September 30, 2002 for balance sheet purposes. Medina Valley began start-up operations in June 2001 and began commercial operations in September 2001. This information is provided for illustrative purposes only and is not necessarily indicative of what the results of operations or financial position of Ameren would have been if the acquisition of CILCORP and Medina Valley actually occurred on the dates assumed. In addition, this information is not necessarily indicative of what Ameren's future consolidated operating results or consolidated financial position will be. SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (In millions, except per share data)
FOR THE NINE FOR THE YEAR MONTHS ENDED ENDED SEPTEMBER 30, 2002 DECEMBER 31, 2001 (a) ------------------ --------------------- Operating Revenues $ 3,897 $ 5,298 Net Income from Continuing Operations 444 511 Earnings per Share: Basic 2.84 3.39 Diluted 2.83 3.38 Weighted Average Common Shares Outstanding 157 151 SEPTEMBER 30, 2002 ------------------ Working Capital $ 153 Property and Plant, net 9,859 Total Assets 13,046 Long-term Debt 4,376 Total Debt 4,665 Shareowners' Equity (both common and preferred) 4,502 Equity per Share (at period end) 28.32 (a) Includes Medina Valley's results of operations for the five months ended December 31, 2001.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The following unaudited pro forma combined condensed financial statements have been prepared to give effect to the proposed acquisition by Ameren of CILCORP and AES Medina Valley Cogen (No. 4), L.L.C. using the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined condensed financial statements. These pro forma statements were prepared as if the Transaction had been completed as of January 1, 2001 for statement of income purposes and September 30, 2002 for balance sheet purposes. The pro forma statements of income were prepared as if the acquisition of Medina Valley had been completed in June 2001, when Medina Valley began start-up operations. The unaudited pro forma combined condensed financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have actually been reported had the Transaction and acquisition of Medina Valley occurred, nor is it necessarily indicative of the future financial position or results of operations. The pro forma combined condensed financial statements include adjustments, which are based upon preliminary estimates, to reflect the allocation of the purchase price to the acquired assets and liabilities of CILCORP and Medina Valley. The pro forma adjustments do not reflect any estimates of cost savings or other efficiencies that may be achieved from the integration of Ameren, CILCORP and Medina Valley. The final allocation of the purchase price will be determined after the completion of the Transaction and acquisition of Medina Valley and will be based upon actual tangible and intangible assets acquired as well as liabilities assumed related to the acquisitions. Because the unaudited pro forma combined condensed financial statements are based upon preliminary estimates, the accompanying pro forma adjustments may differ materially based upon the final purchase price allocation. These unaudited pro forma combined condensed financial statements are based upon the respective historical consolidated financial statements of Ameren, CILCORP and Medina Valley and should be read in conjunction with the historical consolidated financial statements of Ameren and CILCORP and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the reports and other information Ameren and CILCORP have on file with the Securities and Exchange Commission (SEC). UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AMEREN CORPORATION, CILCORP INC. AND AES MEDINA VALLEY (NO. 4) L.L.C. (IN MILLIONS)
SEPTEMBER 30, 2002 ---------------------------------------------------------------------------------------- HISTORICAL PRO FORMA -------------------------------------- --------------------------------------------- MEDINA FINANCING OTHER AMEREN CILCORP VALLEY ADJUSTMENTS ADJUSTMENTS COMBINED -------------------------------------- --------------------------------------------- Property and Plant, net $ 8,689 $ 901 $ 60 $ - $ 209 (b) $ 9,859 Goodwill & Intangible Assets, net - 579 - - 35 (c) 614 Investments & Other Assets 353 152 - - - 505 Other 712 28 4 - - 744 Current Assets 1,460 218 5 220(a) (579)(a)(g) 1,324 -------------------------------------------------------------------- ---------- TOTAL ASSETS $ 11,214 $ 1,878 $ 69 $ 220 $ (335) $ 13,046 ==================================================================== ========== Common Stockholders' Equity 4,047 550 21 220(a) (571)(d) 4,267 Preferred Stock 194 41 - - - 235 Long-term Debt 3,484 791 35 66 (e) 4,376 -------------------------------------------------------------------- ---------- Total Capitalization 7,725 1,382 56 220 505) 8,878 Current Maturity of Long-term Debt 255 27 1 - - 283 Short-term Debt 6 - - - - 6 Other Current Liabilities 769 114 6 - (7)(g) 882 Deferred Credits & Other Liabilities 2,459 355 6 - 177 (f) 2,997 -------------------------------------------------------------------- ---------- TOTAL CAPITAL AND LIABILITIES $ 11,214 $ 1,878 $ 69 $ 220 $ (335) $ 13,046 ==================================================================== ==========
See accompanying notes. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME AMEREN CORPORATION, CILCORP INC. AND AES MEDINA VALLEY (NO. 4) L.L.C. (IN MILLIONS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30, 2002 ------------------------------------------------------------------------------------- HISTORICAL PRO FORMA -------------------------------------- ------------------------------------------ MEDINA AMEREN CILCORP VALLEY ADJUSTMENTS COMBINED -------------------------------------- ------------------------------------------ OPERATING REVENUES $ 3,338 $ 579 $ 20 $ (40)(a) $ 3,897 OPERATING EXPENSES: Operations and maintenance 1,939 401 14 (44)(a)(c) 2,310 Depreciation and amortization 321 54 2 9 (d)(e) 386 Income taxes 265 14 - - (g) 279 Other taxes 211 31 - - 242 OPERATING INCOME 602 79 4 (5) 680 ----------------------------------- -------- ---------- OTHER INCOME AND (DEDUCTIONS) (21) 1 - - (20) INTEREST CHARGES AND PREFERRED DIVIDENDS 167 51 2 (4)(f) 216 ----------------------------------- -------- ---------- NET INCOME FROM CONTINUING OPERATIONS $ 414 $ 29 $ 2 $ (1) $ 444 =================================== ======== ========== EARNINGS PER SHARE: Basic $ 2.88 (h) $ 2.84 Diluted $ 2.87 (h) $ 2.83 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 144 13 (h) 157 Diluted 144 13 (h) 157
See accompanying notes. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME AMEREN CORPORATION, CILCORP INC. AND AES MEDINA VALLEY (NO. 4) L.L.C. (IN MILLIONS, EXCEPT PER SHARE DATA)
HISTORICAL ------------------------------------------ AMEREN CILCORP MEDINA VALLEY YEAR ENDED YEAR ENDED SEVEN MONTHS PRO FORMA DECEMBER DECEMBER ENDED DECEMBER ---------------------------------- 31, 2001 31, 2001 31, 2001 ADJUSTMENTS COMBINED ------------------------------------------ ---------------------------------- OPERATING REVENUES $ 4,506 $ 815 $ 11 $ (34) (a) $ 5,298 OPERATING EXPENSES: Operations and maintenance 2,874 564 9 (39)(a)(c) 3,408 Depreciation and amortization 406 86 1 (2)(b)(d)(e) 491 Income taxes 300 24 - 5 (g) 329 Other taxes 261 40 - - 301 ------------------------------------------------------------------------------------- OPERATING INCOME 665 101 1 2 769 OTHER INCOME AND (DEDUCTIONS) 13 (1) - - 12 INTEREST CHARGES AND PREFERRED DIVIDENDS 203 72 - (5)(f) 270 -------------------------------------------------------------- ---------- NET INCOME FROM CONTINUING OPERATIONS $ 475 $ 28 $ 1 $ 7 $ 511 ============================================================== ========== EARNINGS PER SHARE: Basic $ 3.46 (h) $ 3.39 Diluted $ 3.45 (h) $ 3.38 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 137 14 (h) 151 Diluted 138 14 (h) 152
See accompanying notes. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION On April 28, 2002, Ameren entered into an agreement with The AES Corporation to purchase all of the outstanding stock of CILCORP Inc., a wholly-owned subsidiary of The AES Corporation. CILCORP is the parent company of Peoria-based Central Illinois Light Company, which operates as CILCO. We also agreed to acquire AES Medina Valley Cogen (No. 4), L.L.C., another wholly-owned subsidiary of The AES Corporation, which indirectly owns a 40 megawatt, gas-fired electric generation plant. The total purchase price is approximately $1.4 billion, subject to adjustment for changes in CILCORP's working capital, and includes the assumption of CILCORP and AES Medina Valley debt at closing, estimated to be approximately $900 million, with the balance of the purchase price in cash. The pro forma combined condensed financial statements assume the cash component of the purchase price will be financed through prior and future issuances of new common equity by Ameren and available cash. The purchase will include CILCORP's regulated natural gas and electric businesses in Illinois serving approximately 205,000 and 200,000 customers, respectively, of which approximately 150,000 are combination electric and gas customers. In addition, the purchase includes approximately 1,200 megawatts of largely coal-fired generating capacity most of which is expected to be nonregulated in 2003. Upon completion of the acquisition, expected by March 2003, CILCO will become an indirect Ameren subsidiary, but will remain a separate utility company, operating as AmerenCILCO. The transaction is subject to the approval of the Illinois Commerce Commission, the Securities and Exchange Commission under the Public Utilities Holding Company Act, the Federal Energy Regulatory Commission, the expiration of the waiting period under the Hart-Scott-Rodino Act and other customary closing conditions. The purchase price allocation utilized for purposes of the unaudited pro forma combined condensed financial statements is preliminary. The final determination of the allocation of purchase price will be determined based on the fair value of assets acquired and the fair value of liabilities assumed as of the date that the acquisition is consummated. The purchase price allocation will remain preliminary until Ameren is able to (a) complete a third party valuation of acquired property and plant and intangible assets, (b) conduct a detailed review of the value of deferred tax assets and liabilities of CILCORP, and (c) evaluate the fair value of other assets and liabilities acquired. Because the unaudited pro forma combined condensed financial statements are based upon preliminary estimates, the pro forma adjustments may differ materially based upon the final purchase price allocation. NOTE 2 - PRO FORMA ADJUSTMENTS Balance Sheet The following adjustments reflected in the unaudited pro forma combined conden sed balance sheet at September 30, 2002 reflect the estimated impact of events that are directly attributable to the acquisition by Ameren of CILCORP and Medina Valley. (a) To record the net proceeds ($220 million) of an anticipated equity offering of 5.5 million common shares by Ameren to partially fund the cash purchase price for the CILCORP acquisition to be paid to The AES Corporation of approximately $540 million. In September 2002, Ameren issued 8.1 million common shares that generated net proceeds of $327 million after underwriters' fees to fund a portion of the cash purchase price. (b) To adjust CILCORP and Medina Valley's property and plant ($209 million) to the estimated fair value based on a preliminary valuation report from an independent third party appraisal firm. (c) To eliminate CILCORP's historical goodwill and intangible assets of $579 million and to record goodwill arising from the transaction of $527 million and specifically-identifiable intangible assets of $87 million. Goodwill was determined as follows: Cash purchase price, including transaction and related costs..$ 572 Debt assumption, including current maturities................. 920 Other liabilities assumed..................................... 651 Preferred stock assumed....................................... 41 Tangible assets acquired...................................... (1,570) Specifically-identifiable intangible assets acquired.......... (87) -------- Allocation to goodwill........................................$ 527 ======== Specifically-identifiable intangible assets are comprised of emission credits ($47 million), trade names ($15 million), and customer contracts ($25 million). The estimated fair value of these assets have been based on a preliminary valuation report from an independent third party appraisal firm. Emission credits will be amortized as fuel is burned. Customer contracts have an estimated life between 10 and 20 years. Trade names have indefinite lives. (d) To eliminate CILCORP and Medina Valley's historical common stock, retained earnings, treasury stock, and accumulated comprehensive income. (e) To adjust CILCORP's 8.7% notes due 2009 and 9.375% notes due 2029 to the estimated fair value based on current market conditions for notes of similar maturity and Ameren's credit profile. (f) To accrue additional liability for CILCORP's pension plan ($80 million) to reflect the fair value of liabilities at September 30, 2002 and to conform CILCORP's actuarial assumptions to Ameren's actuarial assumptions. To record deferred taxes attributable to the tax effect of pro forma adjustments ($83 million) and to adjust certain of CILCORP's coal supply contracts with greater than market prices to estimated fair market value ($14 million). (g) To eliminate $7 million in accounts receivable and accounts payable related to electricity, natural gas, steam, chilled water sales and other agreements between Ameren, CILCORP and Medina Valley and to reflect the estimated cash paid for transaction and related costs of approximately $32 million. Statements of Income The following adjustments are reflected in the pro forma combined condensed statements of income to reflect the estimated impact of the Transaction and the acquisition of Medina Valley on the historical combined results of Ameren, CILCORP and Medina Valley for the nine months ended September 30, 2002 and on the historical combined results of Ameren and CILCORP for the year ended December 31, 2001 and Medina Valley for the seven months ended December 31, 2001. Medina Valley began start-up operations in June 2001 and began commercial operations in September 2001. The income tax effect of certain pro forma adjustments was calculated using an estimated 40% effective tax rate. (a) To eliminate the effects of electricity, natural gas, steam, chilled water sales and other agreements between Ameren, CILCORP and Medina Valley (September 30, 2002 - $40 million; December 31, 2001 - $34 million). (b) To remove amortization of historical goodwill previously reported by CILCORP (December 31, 2001 - $15 million). (c) To record a credit to expense to amortize the fair value adjustment of $14 million for CILCORP coal contracts that have prices in excess of the estimated fair market value, excluding Ameren synergies, based on a three year life and required minimum quantities (September 30, 2002 - $4 million; December 31, 2001 - $5 million). (d) To increase depreciation for the effect of the fair value adjustment of $209 million of CILCORP's property and plant based on an estimated 25 year life (September 30, 2002 - $6 million; December 31, 2001 - $8 million). (e) To amortize the fair value adjustment of $47 million for emission credits as fuel is burned (September 30, 2002 - $2 million; December 31, 2001 - $3 million) and estimated definite-lived customer contracts of $25 million, utilizing estimated useful lives between 10 and 20 years (September 30, 2002 - $1 million; December 31, 2001 - $2 million). (f) To record an interest expense credit related to the amortization of the $66 million fair market value adjustment to CILCORP's debt based on the average remaining life of the debt. (g) To reflect the tax effect of the pro forma adjustments at the combined estimated federal and state statutory rate of 40%. (h) Pro forma basic and diluted earnings per common share are computed by dividing the pro forma net income attributable to common stockholders by Ameren's weighted-average number of common shares outstanding, plus shares issued or expected to be issued to complete the financing of the cash portion of the purchase. NOTE 3 - CILCORP NON-RECURRING ITEMS During 2001, CILCORP settled preacquisition contingencies related to a fuel adjustment clause refund and an out-of-market long-term coal supply contract resulting in charges against net liabilities established at the time of CILCORP's acquisition by The AES Corporation in 1999. The settlement of these contingencies resulted in the reversal of an accrued liability and a credit to operations of approximately $23 million, net of taxes, which is reflected in CILCORP's income statement for the year ended December 31, 2001. As of December 31, 2001, all significant preacquisition contingencies related to CILCORP's acquisition by The AES Corporation were resolved. Ameren expects to recognize synergies related to the Transaction and acquisition of Medina Valley associated with coal supply management, enhancement of generation assets, elimination of duplicate corporate and administrative services, and other staffing efficiencies. The expected benefits of these synergies, the most significant of which are related to coal supply management, are not included in the pro forma combined condensed financial statements. Coal costs averaged $41 per ton, including transportation, for CILCORP in 2001. Even with the renegotiation of certain coal supply agreements, we believe CILCORP's coal costs under existing contracts, including transportation, will average approximately $34 per ton for 2002. Ameren's coal costs, including transportation, averaged approximately $19 per ton in 2001, and coal for its Illinois operations averaged approximately $23 per ton. Each $1 per ton savings would reduce CILCORP's coal costs by approximately $3 million.