10-QPeriod: Q1 FY2004

AMEREN CORP Quarterly Report for Q1 Ended Mar 31, 2004

Filed May 10, 2004For Securities:AEE

Summary

Ameren Corporation's first quarter 2004 earnings showed a year-over-year increase, excluding a one-time accounting gain in the prior year. This growth was driven by the inclusion of CILCORP's results, higher emission credit sales, and improved sales due to a recovering economy, partially offset by milder weather and increased fuel costs. The company announced a significant acquisition of Illinois Power, valued at approximately $2.3 billion, and has taken steps to secure financing through equity issuance. Regulatory approvals for this acquisition are progressing, with a targeted closing by the end of 2004. The company also reported on operational highlights, including increased electric and gas margins, and discussed ongoing strategic initiatives and market risks, such as regulatory changes and commodity price volatility.

Key Highlights

  • 1Net income for the quarter was $97 million, or $0.55 per diluted share, compared to $101 million, or $0.63 per diluted share, in the prior year's first quarter. Excluding a $18 million gain from an accounting change in the prior year, net income increased.
  • 2Ameren announced a definitive agreement to acquire Illinois Power for approximately $2.3 billion, a transaction expected to close by year-end 2004 and is subject to regulatory approvals.
  • 3The company raised approximately $853 million in equity financing in February 2004 to partially fund the Illinois Power acquisition, while also issuing an additional $28 million through its DRPlus and 401(k) plans.
  • 4Total operating revenues increased to $1.216 billion from $1.108 billion in the prior year's first quarter, driven by higher electric and gas revenues.
  • 5Operating income improved to $216 million from $201 million, reflecting increased revenues and managed operating expenses.
  • 6Cash flow from operating activities increased to $244 million from $226 million, providing solid liquidity for ongoing operations and investments.
  • 7The company is actively managing market risks, including interest rate, credit, equity price, and commodity price risks, through various hedging strategies and financial instruments.

Frequently Asked Questions

Ameren reported net income of $97 million, or $0.55 per diluted share, for the first quarter of 2004. This compares to $101 million, or $0.63 per diluted share, in the first quarter of 2003. Excluding a one-time gain from an accounting change in the prior year, the company saw an increase in earnings due to factors like the CILCORP acquisition and improved sales.

The most significant strategic development is the announced acquisition of Illinois Power for approximately $2.3 billion, which is targeted to close by the end of 2004, pending regulatory approvals. Ameren also raised substantial equity financing to support this transaction and continues to manage its diverse portfolio of regulated and non-regulated utility and energy businesses.

Utility operations, which include electric and gas transmission and distribution, saw increased revenues. The company experienced higher electric margins driven by CILCORP's inclusion and improved economic conditions, though this was partially offset by weather and higher fuel costs. Gas margins also improved due to rate increases, despite milder weather.

Ameren generated strong cash flow from operations ($244 million) which supported its investing and financing activities. The company has access to committed credit facilities totaling $874 million and manages its liquidity through money pools for regulated and non-regulated businesses. The equity financing for the Illinois Power acquisition is a key capital management activity.