10-QPeriod: Q3 FY2002

AMEREN CORP Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 14, 2002For Securities:AEE

Summary

Ameren Corporation's (AEE) third quarter and year-to-date 2002 results show a decrease in net income compared to the prior year, primarily driven by the impact of a Missouri electric rate case settlement, increased employee benefit costs, and a soft economic environment affecting industrial sales. Despite these headwinds, the company has maintained a strong cash flow from operations and is actively managing its financial position through various debt and equity financings. Significant strategic developments include the ongoing acquisition of CILCORP Inc. and preparations for future infrastructure investments, demonstrating a focus on long-term growth and operational efficiency. Key financial indicators reveal a decline in earnings per share for both the quarter and year-to-date periods, largely due to rate reductions from the Missouri settlement and higher benefit costs, partially offset by favorable weather and the absence of a nuclear plant refueling outage in the year-to-date period. The company's balance sheet shows growth in property and plant, reflecting ongoing investments, and an increase in cash and cash equivalents compared to year-end 2001. Ameren continues to navigate a complex regulatory and competitive landscape, with forward-looking statements indicating potential challenges in 2003 and beyond, necessitating cost-reduction initiatives and strategic planning.

Key Highlights

  • 1Net income for the nine months ended September 30, 2002, was $414 million, a decrease from $420 million in the same period of 2001.
  • 2Earnings per share (diluted) for the nine months ended September 30, 2002, were $2.87, down from $3.06 in the prior year.
  • 3The company reported $733 million in net cash provided by operating activities for the nine months ended September 30, 2002, an increase from $723 million in the prior year.
  • 4Ameren entered into an agreement to purchase CILCORP Inc. for approximately $1.4 billion, subject to regulatory approvals.
  • 5A settlement was reached in the Missouri electric rate case, which is estimated to reduce 2002 net earnings by $32 million or 22 cents per share.
  • 6The company announced a voluntary retirement program in November 2002, expecting a significant long-term savings but incurring a Q4 2002 charge of $30-$50 million.
  • 7Total assets increased to $11.214 billion as of September 30, 2002, from $10.401 billion at December 31, 2001.

Frequently Asked Questions

The primary driver for the decrease in net income was the impact of the Missouri electric rate case settlement, which resulted in rate reductions and program funding expenses. Other contributing factors included increased employee benefit costs and a decline in industrial sales due to the soft economy.

Ameren entered into an agreement to purchase CILCORP Inc. for approximately $1.4 billion. The transaction is subject to various regulatory approvals, including from the Illinois Commerce Commission, FERC, SEC, and FCC. While a Second Request under the Hart-Scott-Rodino Act has extended the review period, the company expects the acquisition to close by March 2003 and has resolved outstanding issues with the ICC Staff.

The settlement of the Missouri electric rate case is estimated to reduce 2002 net earnings by $32 million, or 22 cents per share. This reduction is due to rate decreases, program funding obligations, and a decrease in depreciation expense. The settlement also includes a rate moratorium until January 1, 2006.

Ameren anticipates challenges to earnings in 2003 and beyond due to weak energy markets, a soft economy, higher employee benefit costs, and escalating insurance and security costs. The company is evaluating several initiatives to enhance revenues and reduce costs, including managing employee headcount, modifying benefit plans, and reviewing capital expenditures.