10-QPeriod: Q2 FY2004

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2004

Filed August 9, 2004For Securities:AEE

Summary

Ameren Corporation's second quarter 2004 results showed a slight increase in net income to $118 million, or $0.65 per share, compared to $110 million, or $0.68 per share, in the prior year's second quarter. This performance was impacted by increased maintenance costs related to the Callaway nuclear plant outage and dilution from the issuance of common shares to pre-fund the Illinois Power acquisition, which offset benefits from organic growth, favorable weather, stronger power prices, and a Midwest ISO exit fee refund. The company is actively pursuing the acquisition of Illinois Power, with significant progress in regulatory approvals, including FERC approval and expiration of the Hart-Scott-Rodino waiting period. The Illinois Commerce Commission (ICC) proceedings are ongoing, with expectations of a decision in the fall of 2004. Management anticipates the acquisition to be accretive to earnings in the first two years post-completion. Ameren's balance sheet shows total assets of $14.68 billion and total stockholders' equity of $5.24 billion as of June 30, 2004. Cash flows from operating activities were strong, providing $436 million for the six months ended June 30, 2004. The company also secured new revolving credit facilities totaling $700 million in July 2004 to support its corporate purposes.

Key Highlights

  • 1Net income for Q2 2004 was $118 million, a slight increase from $110 million in Q2 2003.
  • 2Earnings per share for Q2 2004 were $0.65, down from $0.68 in Q2 2003, primarily due to increased share count from equity financing for the Illinois Power acquisition.
  • 3Ameren is progressing with the Illinois Power acquisition, expecting to close by the end of 2004, with key regulatory approvals obtained and others pending.
  • 4Operating revenues increased to $1.152 billion in Q2 2004 from $1.088 billion in Q2 2003, driven by electric revenue growth and stronger power prices.
  • 5Cash flows from operating activities remained robust, totaling $436 million for the first six months of 2004.
  • 6The company expanded its credit facilities by $700 million in July 2004, enhancing liquidity.
  • 7Increased maintenance expenses due to the Callaway nuclear plant refueling outage negatively impacted operating income.

Frequently Asked Questions

Ameren's Q2 2004 financial performance was influenced by several factors. Positively, there was organic sales growth, a return to more normal summer weather leading to higher cooling demand, stronger power prices benefiting interchange sales, and a refund of Midwest ISO exit fees. Negatively, increased maintenance costs from the Callaway nuclear plant refueling outage and dilution from the issuance of new shares for the Illinois Power acquisition impacted results.

Ameren made significant progress on the Illinois Power acquisition in Q2 2004, securing FERC approval and completing equity financing. The acquisition is expected to close by the end of 2004, pending final regulatory approvals, notably from the Illinois Commerce Commission. Management anticipates the acquisition to be accretive to earnings in the first two years following completion.

Ameren generated strong cash flows from operating activities, totaling $436 million for the first six months of 2004. This provided ample liquidity, further bolstered by securing new revolving credit facilities totaling $700 million in July 2004. Investing activities primarily involved construction expenditures, while financing activities were dominated by equity issuances related to the Illinois Power acquisition and debt management.

Ameren faces several risks, including regulatory uncertainties surrounding the Illinois Power acquisition and future rate determinations, potential impacts of electric industry restructuring, increasing environmental compliance costs for emissions, operational risks at its nuclear plant (Callaway), and fluctuations in commodity prices. The company's access to capital markets and the potential impact of credit rating changes are also key considerations.