10-QPeriod: Q3 FY2008

AMEREN CORP Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 10, 2008For Securities:AEE

Summary

Ameren Corporation (AEE) reported mixed financial results for the nine months ended September 30, 2008, compared to the same period in 2007. While consolidated net income increased to $548 million from $510 million, driven by factors like net unrealized mark-to-market gains and a significant coal contract settlement, the third quarter showed a decline in net income to $204 million from $244 million. This decline was primarily attributed to higher fuel prices, unfavorable weather, increased operating expenses, and net unrealized mark-to-market losses on non-qualifying hedges. Significant regulatory developments occurred, including rate increases authorized by the Illinois Commerce Commission (ICC) for CIPS, CILCO, and IP, effective October 1, 2008, which are expected to improve earnings. Union Electric (UE) in Missouri filed for a substantial revenue increase and awaits a decision by March 2009. The company is managing its liquidity effectively, with available liquidity of approximately $1.45 billion at October 31, 2008, but is proactively reducing 2009 capital and operating expenditures in its non-rate-regulated generation business due to capital market disruptions.

Financial Highlights

23 data points
Beta

Revenue

$2.06B

Net Income

$204.00M

9.9% Net Margin

Cash & Equivalents

$206.00M

Free Cash Flow

$234.00M

Financial Statements
Beta
Revenue$2.06B
Operating Expenses$1.63B
Operating Income$428.00M
Interest Expense$113.00M
Net Income$204.00M
Shares Outstanding (Basic)210.30M

Key Highlights

  • 1Consolidated net income increased year-over-year for the nine months ended September 30, 2008 ($548 million vs. $510 million), but decreased for the third quarter ($204 million vs. $244 million).
  • 2Illinois regulated utilities (CIPS, CILCO, IP) received rate increases effective October 1, 2008, totaling $161 million annually, which should improve earnings.
  • 3Union Electric (UE) is awaiting a regulatory decision on its $251 million electric revenue increase request by March 2009.
  • 4Ameren is managing its liquidity prudently, with $1.45 billion available at October 31, 2008, and is reducing non-regulated generation capital and operating expenditures by $400-500 million for 2009 due to market uncertainties.
  • 5The company experienced net unrealized mark-to-market losses on non-qualifying hedges, impacting quarterly results negatively.
  • 6A $60 million lump-sum payment from a coal supplier to Genco helped offset higher fuel costs for the nine-month period.
  • 7Capital expenditures increased year-over-year, particularly for power plant scrubber projects and reliability improvements, reflecting ongoing investment in infrastructure.

Frequently Asked Questions

The decrease in net income for the third quarter of 2008 was primarily due to higher fuel prices, unfavorable weather conditions, increased operating expenses, and net unrealized mark-to-market losses on non-qualifying hedges.

The Illinois Commerce Commission (ICC) authorized net annual revenue increases totaling $161 million for CIPS, CILCO, and IP, effective October 1, 2008. These increases are expected to improve earnings, although the utilities are evaluating future rate case filings due to ongoing cost pressures.

Ameren has significant available liquidity of approximately $1.45 billion at October 31, 2008. The company is proactively reducing 2009 capital and operating expenditures in its non-rate-regulated generation business by $400-500 million and is reviewing other cost-saving opportunities across the company to mitigate risks associated with market uncertainty.

UE filed for an annual electric revenue increase of approximately $251 million. The Missouri Public Service Commission (MoPSC) staff recommended an increase of $51 million. A decision from the MoPSC is expected by March 2009, with new rates potentially effective that same month.