10-QPeriod: Q1 FY2003

AMEREN CORP Quarterly Report for Q1 Ended Mar 31, 2003

Filed May 14, 2003For Securities:AEE

Summary

Ameren Corporation reported a net income of $101 million for the three months ended March 31, 2003, a significant increase from $59 million in the prior year period. This growth was bolstered by favorable weather, increased electric margins from efficient generation, and higher interchange sales, alongside the impactful acquisition of CILCORP which closed on January 31, 2003. The adoption of SFAS 143 for Asset Retirement Obligations also contributed a one-time gain of $18 million. While the company's operating cash flows nearly doubled year-over-year, the investing activities saw a substantial outflow due to the CILCORP and Medina Valley acquisitions. The company is actively managing its capital structure, issuing common stock and debt to finance its operations and acquisitions. Despite challenges like weak economic conditions and regulatory rate reductions, Ameren is implementing cost-saving measures and pursuing gas rate increases to mitigate pressures and maintain profitability.

Key Highlights

  • 1Net income increased by 71% to $101 million ($0.63 per share) for Q1 2003 compared to $59 million ($0.42 per share) in Q1 2002.
  • 2The acquisition of CILCORP for approximately $1.4 billion, closed on January 31, 2003, significantly impacted financial results, contributing $80 million in electric revenues and adding $3 million in net income from CILCORP's operations.
  • 3Operating cash flows more than doubled to $226 million in Q1 2003 from $110 million in Q1 2002, driven by improved earnings and margins.
  • 4Investing activities used $629 million in Q1 2003, primarily due to $488 million spent on the CILCORP and Medina Valley acquisitions.
  • 5Ameren issued $248 million in net proceeds from common stock sales in Q1 2003 to fund the CILCORP acquisition.
  • 6The company adopted SFAS 143, resulting in a $216 million increase in asset retirement obligations and a $110 million increase in net property and plant, with a net after-tax gain of $18 million recognized upon adoption.
  • 7Credit ratings from Moody's and Standard & Poor's were adjusted following the CILCORP acquisition, with the outlook changing to stable for most ratings.

Frequently Asked Questions

The significant increase in earnings was driven by several factors including favorable weather conditions leading to higher electric and gas sales, increased electric margins due to greater use of low-cost generating units, higher earnings from interchange sales due to improved power prices, and the recent acquisition of CILCORP.

The acquisition of CILCORP, completed on January 31, 2003, for approximately $1.4 billion, significantly impacted the company's financial statements. It added substantial assets and liabilities, increased operating revenues and expenses, and required significant cash outflow for investment activities, partially funded by equity issuances.

Ameren adopted SFAS 143, 'Accounting for Asset Retirement Obligations,' on January 1, 2003. This resulted in the recognition of additional asset retirement obligations and a corresponding increase in net property and plant. A net after-tax gain of $18 million was recognized upon adoption, primarily from the elimination of non-legal obligation costs of removal for non-rate-regulated assets from accumulated depreciation.

Ameren's liquidity is primarily supported by cash flows from operations. The company also utilizes short-term and long-term debt, along with equity issuances, to fund its capital requirements. As of March 31, 2003, Ameren had access to committed credit facilities totaling $694 million and $294 million in cash and cash equivalents.