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AMEREN CORP Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 31, 2003
Period End
December 31, 2002
Security
AEE
In the record · 2016–202610-K1110-Q328-K155

AEE filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 155 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · Aug ’19Aug ’19
  3. Leadership change8-K · Oct ’21Oct ’21
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 31, 2003. Cited figures are marked; the original filing is the authoritative source.

Ameren Corporation's 10-K for fiscal 2002, filed March 31, 2003, describes a registered public utility holding company whose largest subsidiary, AmerenUE (Union Electric), serves about 1.2 million electric and 130,000 gas customers in Missouri and west central Illinois.

The most consequential event in the filing is the January 31, 2003 closing of the approximately $1.4 billiona CILCORP acquisition from The AES Corporation, which added Central Illinois Light Company (AmerenCILCO), about 200,000 electric and 205,000 gas customers, and roughly 1,200 MW of largely coal-fired generation, most of which is expected to become non-rate-regulated in 2003. About $900 million of CILCORP and Medina Valley debt and preferred stock was assumed, and the roughly $500 million cash component was funded by Ameren's 2002 and early 2003 common stock issuances. Investors should note that the acquisition's purchase price is still subject to working capital adjustments, and CILCORP's 2002 and 2001 figures may be restated, though management describes those changes as noncash and without impact on Ameren's own statements.

Financing and regulatory risk are the other focal points. AmerenUE issued $184 millionb of 5.50% senior secured notes due 2034 in March 2003 and planned to use the proceeds to redeem higher-coupon bonds and repay short-term debt. Several of AmerenCILCO's and CILCORP's financing arrangements contain ratings triggers and covenants, including a minimum common equity requirement and a $45 million annual dividend limit, which constrain how cash moves up to the parent.

Regulated revenue is split roughly 60% Missouri PSC, 25% Illinois ICC and 15% FERC, and the filing names the stipulation resolving the Missouri excess-earnings complaint and pending FERC transmission matters (including GridAmerica) as key items to watch. Operationally, the company remains heavily coal-dependent (about 82% of fuel supply), with a Callaway nuclear plant and combustion turbines providing peaking capacity. Environmental exposure centers on EPA NOx rules, with AmerenCILCO's compliance estimated at $123 millionc, of which $75 million was spent through 2002.

Management states that legal proceedings are not expected to be material, and that disclosure controls were deemed effective. Financial statements are incorporated by reference from the 2002 Annual Report, so the figures themselves are not contained in this document.

02—Key points

Key Highlights

  1. Completed the approximately $1.4 billion acquisition of CILCORP from AES on January 31, 2003, adding about 200,000 electric and 205,000 gas customers in Illinois and roughly 1,200 MW of mostly coal-fired capacity.
  2. Assumed about $900 million of CILCORP and Medina Valley debt and preferred stock, with about $500 million paid in cash funded by 2002 and early 2003 common stock issuances.
  3. Acquired the 40 MW AES Medina Valley gas-fired cogeneration plant on February 4, 2003, which became a subsidiary of AmerenEnergy Resources.
  4. AmerenUE issued $184 million of 5.50% senior secured notes due 2034 in March 2003 to refinance higher-cost 8.25% first mortgage bonds and repay short-term debt.
  5. Regulated revenue is concentrated in Missouri (about 60% of electric operating revenues) and Illinois (about 25%), with FERC jurisdiction over about 15%, so rate decisions drive financial results.
  6. Fuel mix is heavily coal-based (about 82% of fuel supply), with nuclear at about 13% and natural gas at about 2%, leaving the company exposed to coal price and supply conditions.
  7. Environmental NOx compliance for AmerenCILCO is estimated at $123 million, with $75 million already spent through 2002 and a May 31, 2004 deadline; CILCORP and AmerenCILCO financing covenants add constraints on upstream dividends.

03—Questions

Frequently Asked Questions

  1. Why did Ameren acquire CILCORP, and how was it financed?

    Ameren acquired CILCORP to complement its existing Illinois electric and gas operations, since CILCO's service territory is contiguous to Ameren's. The total purchase price was about $1.4 billion. Roughly $900 million was assumed as CILCORP and Medina Valley debt and preferred stock, and about $500 million was paid in cash from Ameren's September 2002 issuance of 8.05 million common shares and early 2003 issuance of 6.325 million shares.

  2. Could the CILCORP financials change, and does that affect Ameren?

    Yes. Management said revenue, operating income, net income from continuing operations and total assets for 2002 and 2001 may change as the company reviews CILCORP's and AmerenCILCO's financial statements. CILCORP and AmerenCILCO planned to file Form 12b-25 and then their 10-Ks within 15 days of March 31, 2003. Management described the expected changes as noncash and said they will not affect Ameren's own financial statements or the assumptions underlying the acquisition.

  3. What constraints limit cash moving from CILCORP and AmerenCILCO to the parent?

    CILCORP's $475 million senior notes indenture limits dividends and intercompany loans to affiliates unless its debt-to-capital ratio is at or below 0.67 and its interest coverage is at least 2.2x; at year-end 2002 these were 0.60 and 2.72x, and a one-notch Fitch upgrade to BBB would lift the restriction. AmerenCILCO's $100 million bank term loan requires minimum common equity of about $301 million (actual $329 million) and caps dividends to CILCORP at $45 million per year. Certain AmerenCILCO facilities also carry rating-based default triggers.

  4. What regulatory and environmental issues could affect future earnings?

    Rates set by the Missouri PSC, Illinois ICC and FERC are the most important factor in financial results. The filing also flags the MoPSC Missouri excess-earnings complaint settlement, pending FERC transmission matters including GridAmerica (expected to become operational in spring 2003 subject to MoPSC approval), and EPA NOx ozone rules requiring state compliance by May 31, 2004. Management said it believes it is in material compliance with existing environmental regulations and that legal proceedings will not have a material adverse effect.

04—Continue

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