10-QPeriod: Q3 FY2010

AMEREN CORP Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 8, 2010For Securities:AEE

Summary

Ameren Corporation (AEE) reported a significant shift from net income in Q3 2009 to a net loss in Q3 2010, largely driven by a substantial $589 million goodwill and other asset impairment charge recognized in the Merchant Generation segment. This impairment reflects the challenging market conditions for merchant power, including lower electricity prices and the potential impact of stricter environmental regulations. The company completed a major corporate reorganization on October 1, 2010, merging its Illinois utilities into a single entity, Ameren Illinois Company (AIC), and rebranding its Missouri utility as Ameren Missouri. The regulated utility segments, Ameren Missouri and Ameren Illinois, showed improved performance due to higher rates, warmer weather driving demand, and successful cost management, partially offsetting the significant impairment charges. Ameren is actively managing its capital expenditures, with planned investments focused on environmental compliance, infrastructure reliability, and transmission projects. The company also refinanced its credit facilities in September 2010, securing a $2.1 billion credit line with improved terms. While facing ongoing regulatory proceedings and potential environmental compliance costs, Ameren appears to maintain adequate liquidity and access to capital markets. Investors should monitor the outcomes of pending rate cases and environmental regulatory developments, as these will significantly influence future financial performance.

Financial Highlights

45 data points
Beta

Revenue

$2.27B

Net Income

-$167.00M

-7.4% Net Margin

EPS (Diluted)

$-0.70

Total Assets

$23.63B

Cash & Equivalents

$608.00M

Free Cash Flow

$515.00M

Financial Statements
Beta
Revenue$2.27B
Operating Expenses$2.18B
Operating Income$89.00M
Interest Expense$130.00M
Net Income-$167.00M
EPS (Basic)$-0.70
Shares Outstanding (Basic)239.30M

Key Highlights

  • 1Ameren reported a net loss of $167 million in Q3 2010, compared to a net income of $227 million in Q3 2009, primarily due to a $589 million goodwill and other asset impairment charge in the Merchant Generation segment.
  • 2The company completed a significant corporate reorganization, merging its Illinois utilities into Ameren Illinois Company (AIC) and rebranding its Missouri utility as Ameren Missouri.
  • 3Regulated utility segments (Ameren Missouri and Ameren Illinois) showed improved operating performance, driven by rate increases, favorable weather, and cost control measures.
  • 4Ameren refinanced its credit facilities in September 2010, increasing its available liquidity to $1.58 billion under the new agreements.
  • 5UE filed a rate case in September 2010 seeking an $263 million annual revenue increase, primarily for infrastructure investments and environmental compliance.
  • 6Significant capital expenditures are planned for environmental compliance and infrastructure upgrades, with ongoing evaluations to align spending with regulatory recovery and market conditions.
  • 7The company is actively managing its exposure to commodity price risks through hedging strategies and by monitoring market conditions.

Frequently Asked Questions

Ameren reported a net loss of $167 million in the third quarter of 2010, primarily due to a significant $589 million noncash goodwill and other asset impairment charge recognized in its Merchant Generation segment. This impairment was driven by a decline in market prices for electricity and the potential impact of stricter environmental regulations.

Ameren merged its three Illinois utilities into a single entity, Ameren Illinois Company (AIC), and rebranded its Missouri utility as Ameren Missouri. The company also distributed its Ameren Energy Generating Company (AERG) stock to Resources Company. These changes are intended to lower costs, increase efficiency, and improve financial reporting transparency.

Ameren maintains adequate liquidity through operating cash flows, cash reserves, and access to committed bank credit facilities, which were refinanced in September 2010 to provide $2.1 billion in credit. The company plans to finance its capital expenditures, including those for environmental compliance and infrastructure upgrades, through a mix of debt and equity, aiming to maintain a regulated capital structure of approximately 50-55% equity.

Ameren is actively involved in regulatory proceedings, including rate cases for its utility operations (UE and AIC) seeking revenue increases to recover investments and comply with regulations. Environmental compliance, particularly for coal-fired generation, is expected to require significant capital expenditures and potentially increase operating costs, with the ultimate impact dependent on the finalization and stringency of various EPA regulations and state implementation plans. The company is evaluating its exposure and potential recovery mechanisms through rates.