10-QPeriod: Q2 FY2010

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 9, 2010For Securities:AEE

Summary

Ameren Corporation's (AEE) Q2 2010 filing shows a decrease in net income attributable to Ameren Corporation to $152 million, or $0.64 per share, compared to $165 million, or $0.77 per share, in Q2 2009. This decline was primarily driven by weaker performance in the Merchant Generation segment, impacted by lower power prices and higher fuel costs, alongside unfavorable mark-to-market adjustments on energy transactions. The regulated segments, Missouri Regulated and Illinois Regulated, saw improved earnings due to factors like increased sales, favorable regulatory rate decisions, and disciplined cost management, which partially offset the weaker Merchant Generation results. Despite the year-over-year earnings dip, Ameren continues to navigate a complex regulatory and economic environment. Significant investments are planned for transmission infrastructure, environmental compliance, and system reliability. The company is also progressing with a corporate reorganization to merge its Illinois utilities and streamline its merchant generation operations, aiming for improved efficiency and transparency. Management is focused on managing costs and capital expenditures while ensuring access to capital markets, which remain a key focus given the ongoing economic recovery and regulatory proceedings.

Financial Highlights

45 data points
Beta

Revenue

$1.73B

Net Income

$152.00M

8.8% Net Margin

EPS (Diluted)

$0.64

Total Assets

$23.91B

Cash & Equivalents

$506.00M

Free Cash Flow

$133.00M

Financial Statements
Beta
Revenue$1.73B
Operating Expenses$1.39B
Operating Income$331.00M
Interest Expense$115.00M
Net Income$152.00M
EPS (Basic)$0.64
Shares Outstanding (Basic)238.40M

Key Highlights

  • 1Net income attributable to Ameren Corporation decreased to $152 million ($0.64/share) in Q2 2010 from $165 million ($0.77/share) in Q2 2009.
  • 2Merchant Generation segment performance declined due to lower power prices, higher fuel costs, and unfavorable mark-to-market adjustments.
  • 3Regulated segments (Missouri and Illinois) showed improved earnings driven by higher sales, favorable regulatory rate decisions, and cost management.
  • 4Ameren is advancing a corporate reorganization plan to merge its Illinois utilities (CIPS, CILCO, IP) into a single entity, Ameren Illinois, and streamline its merchant generation businesses.
  • 5Capital expenditures remain significant, particularly for environmental compliance and transmission infrastructure, with Ameren Transmission Company formed to focus on these investments.
  • 6UE received regulatory approval for a $230 million electric rate increase, effective June 2010, but is seeking a $12 million natural gas delivery rate increase.
  • 7Ameren Illinois Utilities faced a disappointing rate order, leading to reduced spending plans, but is pursuing rehearings on key issues.

Frequently Asked Questions

The decrease in net income was primarily due to weaker performance in the Merchant Generation segment, driven by lower power prices, higher fuel and transportation costs, and unfavorable mark-to-market adjustments on energy transactions. These factors were partially offset by improved earnings in the regulated segments.

Ameren is in the process of merging its Illinois utilities (CIPS, CILCO, and IP) into a single entity, Ameren Illinois Company. The plan also involves distributing AERG common stock from Ameren Illinois to Ameren, followed by a contribution of AERG stock to Resources Company. Necessary regulatory approvals from FERC have been obtained, and the transaction is expected to be completed by October 1, 2010.

Ameren's regulated utilities experienced mixed impacts from regulatory decisions. UE received a $230 million electric rate increase in Missouri, while Ameren Illinois Utilities received a more limited increase in Illinois, prompting reduced spending and appeals for rehearings on key issues. These decisions affect revenue generation and investment recovery.

Ameren anticipates significant capital expenditures, particularly for environmental compliance at its coal-fired plants and for transmission infrastructure investments through its newly formed subsidiary, Ameren Transmission Company. These investments are crucial for regulatory compliance, system reliability, and future earnings growth, though their recovery is subject to regulatory approval and market conditions.