UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission Name of Registrant, State of Incorporation, IRS Employer
File Number Address of Principal Executive Offices and Telephone Number Identification Number
- ----------- ------------------------------------------------------------ --------------------------------------
1-9894 ALLIANT ENERGY CORPORATION 39-1380265
(a Wisconsin corporation)
222 West Washington Avenue
Madison, Wisconsin 53703
Telephone (608)252-3311
0-4117-1 IES UTILITIES INC. 42-0331370
(an Iowa corporation)
Alliant Energy Tower
Cedar Rapids, Iowa 52401
Telephone (319)398-4411
0-337 WISCONSIN POWER AND LIGHT COMPANY 39-0714890
(a Wisconsin corporation)
222 West Washington Avenue
Madison, Wisconsin 53703
Telephone (608)252-3311
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each
Title of Class Exchange on Which Registered
--------------- ----------------------------
Alliant Energy Corporation Common Stock, $.01 Par Value New York Stock Exchange
Alliant Energy Corporation Common Stock Purchase Rights New York Stock Exchange
IES Utilities Inc. 7-7/8% Quarterly Debt Capital Securities New York Stock Exchange
(Subordinated Deferrable Interest Debentures)
Wisconsin Power and Light Company 4.50% Preferred Stock, No Par Value American Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
Title of Class
--------------
IES Utilities Inc. 4.80% Cumulative Preferred Stock, Par Value $50 per share
Wisconsin Power and Light Company Preferred Stock (Accumulation without Par Value)
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) have been subject to such filing requirements
for the past 90 days. Yes [X] No[ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrants'
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [X]
This combined Form 10-K is separately filed by Alliant Energy
Corporation, IES Utilities Inc. and Wisconsin Power and Light
Company. Information contained in the annual report relating
to Wisconsin Power and Light Company and IES Utilities Inc. is
filed by such registrant on its own behalf. Each of Wisconsin
Power and Light Company and IES Utilities Inc. makes no
representation as to information relating to registrants other
than itself.
The aggregate market value of the voting and non-voting common
equity held by nonaffiliates as of January 31, 2001:
Alliant Energy Corporation $2.40 billion
IES Utilities Inc. $--
Wisconsin Power and Light Company $--
Number of shares outstanding of each class of common stock as of January 31, 2001:
Alliant Energy Corporation Common Stock, $.01 par value, 79,012,014 shares outstanding
IES Utilities Inc. Common Stock, $2.50 par value, 13,370,788 shares outstanding (all of which are owned
beneficially and of record by Alliant Energy Corporation)
Wisconsin Power and Light Company Common Stock, $5 par value, 13,236,601 shares outstanding (all of which are owned
beneficially and of record by Alliant Energy Corporation)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statements relating to Alliant Energy
Corporation's 2001 Annual Meeting of Shareowners and Wisconsin
Power and Light Company's 2001 Annual Meeting of Shareowners
are, or will be upon filing with the Securities and Exchange
Commission, incorporated by reference into Part III hereof.
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TABLE OF CONTENTS
Page Number
Part I
Item 1. Business 6
Item 2. Properties 23
Item 3. Legal Proceedings 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Part II
Item 5. Market for Registrants' Common Equity and Related Stockholder
Matters 27
Item 6. Selected Financial Data 28
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 30
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 49
Item 8. Financial Statements and Supplementary Data 49
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 122
Part III
Item 10. Directors and Executive Officers of the Registrants 122
Item 11. Executive Compensation 125
Item 12. Security Ownership of Certain Beneficial Owners and Management 126
Item 13. Certain Relationships and Related Transactions 126
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 126
Signatures 135
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DEFINITIONS
Certain abbreviations or acronyms used in the text and notes of this report are defined below:
Abbreviation or Acronym Definition
- ----------------------- -----------------------------------------------------
AFUDC Allowance for Funds Used During Construction
Alliant Energy Alliant Energy Corporation
ANR ANR Pipeline
APB Accounting Principles Board Opinion
ATC American Transmission Company, LLC
Btu British Thermal Unit
Capital Square Capital Square Financial Corporation
Capstone Capstone Turbine Corporation
Cargill Cargill Incorporated
CIPCO Central Iowa Power Cooperative
Corporate Services Alliant Energy Corporate Services, Inc.
DAEC Duane Arnold Energy Center
DOE United States Department of Energy
Dth Dekatherm
EAC Energy Adjustment Clause
EDS Electronic Data Systems Corporation
EITF Emerging Issues Task Force
EPA United States Environmental Protection Agency
FAC Fuel Adjustment Clause
FERC Federal Energy Regulatory Commission
ICC Illinois Commerce Commission
IES IES Industries Inc.
IESU IES Utilities Inc.
International Alliant Energy International, Inc.
Investments Alliant Energy Investments, Inc.
IPC Interstate Power Company
IRS Internal Revenue Service
ISCO Alliant Energy Integrated Services Company
ISO Independent System Operator
IUB Iowa Utilities Board
Kewaunee Kewaunee Nuclear Power Plant
KW Kilowatt
KWh Kilowatt-Hour
LTEIP Long-Term Equity Incentive Plan
MAIN Mid-America Interconnected Network, Inc.
MAPP Mid-Continent Area Power Pool
McLeod McLeodUSA Incorporated
MD&A Management's Discussion and Analysis of Financial Condition
and Results of Operations
MG&E Madison Gas & Electric Company
MGP Manufactured Gas Plants
MPUC Minnesota Public Utilities Commission
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Abbreviation or Acronym Definition
- ----------------------- -----------------------------------------------------
MW Megawatt
MWh Megawatt-Hour
NEIL Nuclear Electric Insurance Limited
NEPA National Energy Policy Act of 1992
NERC North American Electric Reliability Council
NGPL Natural Gas Pipeline Co. of America
NMC Nuclear Management Company, LLC
NNG Northern Natural Gas Company
NOx Nitrogen Oxides
NRC Nuclear Regulatory Commission
PGA Purchased Gas Adjustment
PRP Potentially Responsible Party
PSCW Public Service Commission of Wisconsin
PUHCA Public Utility Holding Company Act of 1935
Resources Alliant Energy Resources, Inc.
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
SFAS 133 Accounting for Derivative Instruments and Hedging Activities
SkyGen SkyGen Energy LLC
South Beloit South Beloit Water, Gas and Electric Company
STB U.S. Surface Transportation Board
Transportation Alliant Energy Transportation, Inc.
U.S. United States
WDNR Wisconsin Department of Natural Resources
WEPCO Wisconsin Electric Power Company
Whiting Whiting Petroleum Corporation
WNRB Wisconsin Natural Resources Board
WP&L Wisconsin Power and Light Company
WPLH WPL Holdings, Inc.
WPSC Wisconsin Public Service Corporation
WUHCA Wisconsin Utility Holding Company Act
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FORWARD-LOOKING STATEMENTS
Refer to "Forward-Looking Statements" in Item 7. MD&A for
information and disclaimers regarding forward-looking
statements contained in this Annual Report on Form 10-K.
PART I
This Annual Report on Form 10-K includes information relating
to Alliant Energy, IESU and WP&L (as well as IPC, Resources and
Corporate Services). Where appropriate, information relating
to a specific entity has been segregated and labeled as such.
ITEM 1. BUSINESS
A. GENERAL
In April 1998, IES, WPLH and IPC completed a merger resulting
in Alliant Energy. The primary first tier subsidiaries of
Alliant Energy include: IESU, WP&L, IPC, Resources and
Corporate Services. Among various other regulatory
constraints, Alliant Energy is operating as a registered public
utility holding company subject to the limitations imposed by
PUHCA. Alliant Energy was incorporated in Wisconsin in 1981.
Refer to "Utility Industry Outlook" in Item 7. MD&A for
additional information regarding Alliant Energy's utility
subsidiaries. A brief description of the primary first-tier
subsidiaries of Alliant Energy is as follows:
1) IESU - incorporated in Iowa in 1925 as Iowa Railway and
Light Corporation. IESU is a public utility engaged
principally in the generation, transmission, distribution and
sale of electric energy; the purchase, distribution,
transportation and sale of natural gas; and the provision of
steam services in selective markets, in the State of Iowa. In
Iowa, non-exclusive franchises, which cover the use of streets
and alleys for public utility facilities in incorporated
communities, are granted for a maximum of twenty-five years by
a majority vote of local qualified residents. At December 31,
2000, IESU supplied electric and gas service to approximately
347,000 and 182,000 customers, respectively. In 2000, 1999 and
1998, IESU had no single customer for which electric, gas
and/steam sales accounted for 10% or more of IESU's
consolidated revenues. Refer to Note 17 of IESU's "Notes to
Consolidated Financial Statements" in Item 8. for information
related to a merger agreement between IESU and IPC.
2) WP&L - incorporated in Wisconsin in 1917 as Eastern
Wisconsin Electric Company, is a public utility engaged
principally in the generation, transmission, distribution and
sale of electric energy; the purchase, distribution,
transportation and sale of natural gas; and the provision of
water services in selective markets. Nearly all of WP&L's
customers are located in south and central Wisconsin. WP&L
operates in municipalities pursuant to permits of indefinite
duration which are regulated by Wisconsin law. At December 31,
2000, WP&L supplied electric and gas service to approximately
414,000 and 165,000 customers, respectively. WP&L also had
approximately 19,000 water customers. In 2000, 1999 and 1998,
WP&L had no single customer for which electric, gas and/water
sales accounted for 10% or more of WP&L's consolidated
revenues. WPL Transco LLC was formed in Wisconsin in 2000 and
is the wholly-owned subsidiary of WP&L which holds the
investment in ATC. WP&L owns all of the outstanding capital
stock of South Beloit, a public utility supplying electric, gas
and water service, principally in Winnebago County, Illinois,
which was incorporated in 1908.
3) IPC - incorporated in 1925 under the laws of the State of
Delaware. IPC is a public utility engaged principally in the
generation, transmission, distribution and sale of electric
energy and the purchase, distribution, transportation and sale
of natural gas in the States of Iowa, Minnesota and Illinois.
At December 31, 2000, IPC provided electric and gas service to
approximately 169,000 and 51,000 customers, respectively. In
2000, 1999 and 1998, IPC had no single customer for which
electric and/or gas sales accounted for 10% or more of IPC's
consolidated revenues.
4) RESOURCES - incorporated in 1988 in Wisconsin, the majority
of Alliant Energy's non-regulated investments are organized
under Resources. Resources' wholly-owned subsidiaries at
December 31, 2000 include ISCO, International, Investments,
Transportation, Capital Square, EUA Cogenex Corporation and
Energy Performance Services, Inc. Alliant Energy also has a
50% ownership interest in a joint venture, which is managed by
Resources, with Cargill, named Cargill-Alliant LLC. Resources'
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businesses include global partnerships to develop energy
generation, delivery and infrastructure in growing
international markets and domestic businesses including oil and
gas operations, energy trading partnerships, energy and
environmental services, transportation services and affordable
housing companies.
5) CORPORATE SERVICES - subsidiary formed to provide
administrative services to Alliant Energy and its subsidiaries
as required under PUHCA.
Refer to Note 13 of the "Notes to Consolidated Financial
Statements" in Item 8. for further discussion of business
segments, which information is incorporated herein by
reference.
B. INFORMATION RELATING TO ALLIANT ENERGY ON A CONSOLIDATED
BASIS
EMPLOYEES
As of December 31, 2000, Alliant Energy had the following
employees (full-time and part-time):
Percentage
Number of Number of of Workforce
Number of Bargaining Unit Bargaining Covered by
Employees Employees Agreements Agreements
--------------- --------------------- ----------------- ------------------
IESU 1,712 1,116 6 65%
WP&L 1,555 1,452 1 93%
IPC 581 499 3 86%
Resources 2,648 84 5 3%
Corporate Services 1,386 -- -- --
--------------- --------------------- -----------------
Alliant Energy Total 7,882 3,151 15 40%
=============== ===================== =================
All bargaining agreements that expired in 2000 have been
ratified and renewed and no significant bargaining agreements
expire in 2001.
CAPITAL EXPENDITURE AND INVESTMENT AND FINANCING PLANS
Refer to "Liquidity and Capital Resources - Construction and
Acquisition Expenditures" in Item 7. MD&A and Note 11(a) of the
"Notes to Consolidated Financial Statements" in Item 8. for
discussion of anticipated construction and acquisition
expenditures for 2001-2005 and details regarding the financing
of future capital requirements.
Refer to "C. Information Relating to Utility Operations -
Electric Utility Operations - Power Supply" for information
related to IESU's and WP&L's plans for the development of new
electric power generation in Iowa and Wisconsin, respectively.
REGULATION
Alliant Energy operates as a registered public utility holding
company subject to regulation by the SEC under PUHCA. Alliant
Energy and its subsidiaries are subject to the regulatory
provisions of PUHCA, including provisions relating to the
issuance and sales of securities, acquisitions and sales of
certain utility properties, acquisitions and retention of
interests in non-utility businesses and the services provided
by Corporate Services to Alliant Energy and its subsidiaries.
Alliant Energy is subject to regulation by the PSCW. The PSCW
regulates, among other things, the type and amount of Alliant
Energy's investments in non-utility businesses. WP&L is also
subject to regulation by the PSCW as to retail utility rates
and service, accounts, issuance and use of proceeds of
securities, certain additions and extensions to facilities and
in other respects. WP&L is generally required to file a rate
case with the PSCW every two years based on a forward-looking
test year period. However, as one of the conditions for
approval of the 1998 merger which formed Alliant Energy, the
PSCW has required, with certain exception, that WP&L freeze for
four years on a post-merger basis retail electric, natural gas
and water rates. WP&L expects to file a rate case with the
PSCW in the third quarter of 2001.
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IESU and IPC operate under the jurisdiction of the IUB. The
IUB has authority to regulate rates and standards of service,
to prescribe accounting requirements and to approve the
location and construction of electric generating facilities
having a capacity in excess of 25,000 KW. Requests for rate
relief are based on historical test periods, adjusted for
certain known and measurable changes. The IUB must decide on
requests for rate relief within 10 months of the date of the
application for which relief is filed or the interim prices
granted become permanent. Interim rates, if allowed, are
permitted to become effective, subject to refund, no later than
90 days after the rate increase application is filed.
Notwithstanding this process, IESU and IPC agreed to a
four-year price cap effective with the merger as part of the
merger approval process.
IPC is also subject to regulation by the MPUC. Requests for
rate relief can be based on either historical or projected
data. The MPUC must reach a final decision within 10 months.
Interim rates are permitted. The MPUC also has jurisdiction to
approve IPC's capital structure on an annual basis.
In addition, IPC and South Beloit are subject to regulation by
the ICC for retail utility rates and service, accounts,
issuance and use of proceeds of securities, certain additions
and extensions to facilities and in other respects. Requests
for rate relief must be decided within 11 months.
FERC has jurisdiction under the Federal Power Act over certain
of the electric utility facilities and operations, wholesale
rates and accounting practices of IESU, WP&L and IPC, and in
certain other respects. In addition, certain natural gas
facilities and operations of the companies are subject to the
jurisdiction of FERC under the Natural Gas Act.
With respect to environmental matters, the EPA administers
certain federal statutes and has delegated the administration
of other environmental initiatives to the applicable state
environmental agencies. In addition, the state agencies have
jurisdiction over air and water quality standards associated
with fossil fuel fired electric generation and the level and
flow of water, safety and other matters pertaining to
hydroelectric generation.
WP&L and IESU are indirectly and directly subject to the
jurisdiction of the NRC, with respect to Kewaunee and DAEC,
respectively, and to the jurisdiction of the DOE with respect
to the disposal of nuclear fuel and other radioactive wastes
from Kewaunee and DAEC.
Refer to "Utility Industry Outlook" in Item 7. MD&A for
additional information regarding regulation and utility rate
matters.
C. INFORMATION RELATING TO UTILITY OPERATIONS
Alliant Energy realized 53%, 41%, 4% and 2% of its 2000
electric utility revenues in Iowa, Wisconsin, Minnesota and
Illinois, respectively. Approximately 89% of the electric
revenues were regulated by the respective state commissions
while the other 11% were regulated by FERC. Alliant Energy
realized 56%, 38%, 3% and 3% of its 2000 gas utility revenues
in Iowa, Wisconsin, Minnesota and Illinois, respectively.
IESU realized 100% of its 2000 electric and gas utility retail
revenues in Iowa. Approximately 95% of the 2000 electric
revenues were regulated by the IUB while the other 5% were
regulated by FERC. WP&L realized 98% of its 2000 electric
utility revenues in Wisconsin and 2% in Illinois.
Approximately 83% of the 2000 electric revenues were regulated
by the PSCW or the ICC while the other 17% were regulated by
FERC. WP&L realized 96% of its 2000 gas utility revenues in
Wisconsin and 4% in Illinois. IPC realized 73%, 21% and 6% of
its 2000 electric utility revenues in Iowa, Minnesota and
Illinois, respectively. Approximately 91% of the 2000 electric
revenues were regulated by the respective state commissions
while the other 9% were regulated by FERC. IPC realized 66%,
25% and 9% of its 2000 gas utility revenues in Iowa, Minnesota
and Illinois, respectively.
ELECTRIC UTILITY OPERATIONS
General - As of December 31, 2000, Alliant Energy's utility
subsidiaries provided electricity to approximately 930,000
retail customers in approximately 1,359 communities in Iowa,
southern and central Wisconsin, northern and northwestern
Illinois and southern Minnesota. The approximate number of
electric retail customers, communities and wholesale customers
served for each of the individual utilities at December 31,
2000 was as follows:
-8-
Retail Communities Wholesale
Customers Served Customers
---------- ------------ --------------
IESU 347,000 525 5
WP&L 414,000 600 28
IPC 169,000 234 9
2000 electric utility operations accounted for 74%, 80% and 85%
of operating revenues and 92%, 90% and 94% of operating income
for IESU, WP&L and IPC, respectively.
Electric sales are seasonal to some extent with the annual peak
normally occurring in the summer months. In 2000, the maximum
peak hour demands for IESU, WP&L and IPC were 2,067 MW on
August 31, 2000; 2,508 MW on August 31, 2000; and 996 MW on
August 14, 2000, respectively. In 2000, the maximum peak hour
demand for Alliant Energy was 5,397 MW on August 31, 2000,
which was the coincident peak of the entire Alliant Energy
system.
IESU maintains and operates transmission and substation
facilities connecting with its high voltage transmission
systems pursuant to a non-cancelable operation agreement (the
Operating Agreement) with CIPCO. The Operating Agreement,
which will terminate on December 31, 2035, provides for the
joint use of certain transmission facilities of IESU and
CIPCO. Alliant Energy has transmission interconnections at
various locations with twelve other transmission owning
utilities in the Midwest. These interconnections enhance the
overall reliability of the Alliant Energy transmission system
and provide access to multiple sources of economic and
emergency power and energy.
In May 2000, IESU and IPC transferred their regional
reliability memberships from the MAPP reliability
region to the MAIN region. Because WP&L was already a member
of MAIN, this transfer provided Alliant Energy additional
operating flexibility and eliminated duplicate reporting
requirements. MAIN is one of the ten regional members of
NERC. Each regional member of NERC is responsible for
maintaining reliability in its area through coordination of
planning and operations.
Refer to "Utility Industry Outlook" in Item 7. MD&A for
additional information regarding Alliant Energy's transmission
business. Refer to Item 2. Properties for additional
information regarding electric facilities.
Fuel - Refer to the Electric Operating Information tables for
details on the sources of electric energy for Alliant Energy,
IESU and WP&L from 1996 to 2000. The average cost of fuel per
million Btu's used for electric generation was as follows:
Nuclear Coal All Fuels
--------------- -------------- ---------------
IESU - 2000 $0.594 $0.925 $0.953
- 1999 0.581 0.899 0.914
- 1998 0.605 0.885 0.887
WP&L - 2000 0.424 1.152 1.115
- 1999 0.431 1.144 1.034
- 1998 0.450 1.171 1.085
IPC - 2000 N/A 1.062 1.146
- 1999 N/A 1.273 1.320
- 1998 N/A 1.287 1.344
Coal - Corporate Services, as an agent of IESU, WP&L and IPC,
has negotiated several agreements with different suppliers to
ensure that a specified supply of coal is available at known
prices for the respective utilities for calendar years 2001,
2002, and 2003. These contracts, in combination with existing
agreements, provide for a portfolio of coal supplies that cover
approximately 95%, 36% and 30% of the three utilities'
estimated coal supply needs for the years 2001 through 2003,
respectively. Management believes this portfolio of coal
supplies represents a reasonable balance between the risks of
insufficient supplies and those associated with larger open
positions subject to price volatility in the coal markets.
Remaining coal requirements will be met from either future
contracts or purchases in the spot market.
The majority of the coal utilized by the utility subsidiaries
is from the Wyoming Powder River Basin. A majority of this
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coal is transported by rail-car directly from Wyoming to the
utility subsidiaries' generating facilities, with the remainder
transported from Wyoming to the Mississippi River by rail-car
and then via barges to the final destination. As protection
against interruptions in coal deliveries, the utility
subsidiaries maintain average coal inventories at their
generating stations of 20 to 40 days for stations with
year-round deliveries and 20 to 150 days (depending upon time
of the year) for stations with seasonal deliveries.
Average fossil fuel costs are expected to increase in the
future due to price/rate adjustment provisions in existing coal
and transportation contracts and recent coal market trends.
Price adjustment provisions in existing coal contracts are
primarily based on changes in various indices (e.g. U.S.
Department of Labor Statistics Producer Price Indices and
Consumer Price Indices). Other factors which impact coal price
adjustment provisions are mine labor agreements and, if
enacted, changes in various laws and regulations. Rate
adjustment provisions in transportation contracts are primarily
based on changes in the Rail Cost Adjustment Factor as
published by the STB (refer to "Utility Industry Outlook -
Rates and Regulatory Matters" in Item 7. MD&A for information
regarding a case with the STB). In addition, fuel sulfur
restrictions and other environmental limitations have increased
significantly and will likely further increase the difficulty
and cost of obtaining adequate coal supplies. Refer to the
"Notes to Consolidated Financial Statements" in Item 8. for
discussion of the utilities' rate recovery of fuel costs (Note
1(j)) and for details relating to coal purchase commitments
(Note 11(b)).
Purchased Power - During 2000, approximately 18%, 29% and 29%
of IESU's, WP&L's and IPC's total MWh requirements,
respectively, were met through purchased power. Refer to Note
11(b) of the "Notes to Consolidated Financial Statements" in
Item 8. for details relating to purchased power and
transmission commitments.
Nuclear - Alliant Energy owns interests in two nuclear
facilities, Kewaunee and DAEC. Kewaunee, a 532 MW (net
capacity) pressurized water reactor plant, is operated by the
NMC under contract to WPSC and is jointly owned by WPSC
(41.2%), WP&L (41.0%) and MG&E (17.8%). In September 1998,
WPSC and MG&E finalized an arrangement in which WPSC will
acquire MG&E's 17.8% share of Kewaunee. This agreement, the
closing of which is contingent upon regulatory approval and the
steam generator replacement in the fall of 2001, will give WPSC
59.0% ownership in Kewaunee. After the change in ownership,
WPSC and WP&L will be responsible for the decommissioning of
the plant. WPSC and WP&L are discussing revisions to the joint
power supply agreement which will govern operation of the plant
after the ownership change takes place. The Kewaunee operating
license expires in 2013. DAEC, a 535 MW (net capacity) boiling
water reactor plant, is operated by the NMC under contract to
IESU which has a 70% ownership interest in the plant. The DAEC
operating license expires in 2014. The operations of the NMC
are described in greater detail below.
As co-owners of nuclear generating units, IESU and WP&L are
subject to the jurisdiction of the NRC. The NRC has broad
supervisory and regulatory jurisdiction over the construction
and operation of nuclear reactors, particularly with regard to
public health, safety and environmental considerations. The
operation and design of nuclear power plants is under constant
review by the NRC. IESU's and WP&L's anticipated
nuclear-related construction expenditures for 2001-2005 are
approximately $54 million and $29 million, respectively. Refer
to "Utility Industry Outlook - Rates and Regulatory Matters" in
Item 7. MD&A for additional information regarding the
operations of Kewaunee.
In April 1998, the PSCW approved WPSC's application for
replacement of the two steam generators at Kewaunee. The total
cost of replacing the steam generators will be approximately
$120 million, with WP&L's share of the cost being approximately
$49 million. Due to delays in the manufacture of the new steam
generators, the replacement work originally planned for the
spring of 2000 is now scheduled for the fall of 2001 and will
take approximately 60 days. The remaining life of Kewaunee, of
which WP&L is a co-owner, is based on the PSCW approved revised
end-of-life of 2010.
In 1999, Alliant Energy, Northern States Power Company, WPSC
and WEPCO announced the formation of and their investment in a
jointly-owned subsidiary, the NMC, the purpose of which was to
consolidate operation of the nuclear plants owned by their
utility subsidiaries and to provide similar capability for
other nuclear plant operators and owners. Consolidation of
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operation is expected to sustain long-term safety, optimize
reliability and improve the operational performance of the
nuclear generating plants. Alliant Energy, through its
subsidiary, Alliant Energy Nuclear LLC, initially had a 25%
ownership interest in the NMC. This ownership interest has
been reduced to 20% with the recent addition of CMS Energy
Corporation as an additional investor in the NMC. Combined,
the NMC member utility subsidiaries operated seven nuclear
generating units at five sites. The original four NMC members
and their utility subsidiaries have received the required state
and federal regulatory approvals for operation of their
respective nuclear plants by the NMC. This transfer of
operating responsibility was effective August 2000. The
utilities continue to own their plants, are entitled to energy
generated at the plants and retain the financial obligations
for the safe operation, maintenance and decommissioning of the
plants. All non-bargaining employees of IESU and Corporate Services at DAEC
were transferred to the NMC on January 1, 2001. In 2000, CMS
Energy Corporation announced plans to invest in the NMC in an
equal share to the existing investors and declared its
intention to transfer operating responsibility for the
Palisades Nuclear Plant operated by its utility subsidiary,
Consumers Energy Company, to the NMC upon receipt of regulatory
approvals.
Public liability for nuclear accidents is governed by the
Price-Anderson Amendments Act of 1988, which sets a statutory
limit of $9.5 billion for liability to the public for a single
nuclear power plant incident and requires nuclear power plant
operators to provide financial protection for this amount. As
required, IESU provides this financial protection for a nuclear
incident at DAEC through a combination of liability insurance
($200 million) and industry-wide retrospective payment plans
($9.3 billion). Under the industry-wide plan, each operating
licensed nuclear reactor in the U.S. is subject to an
assessment in the event of a nuclear incident at any nuclear
plant in the U.S. The owners of DAEC could be assessed a
maximum of $88.1 million per nuclear incident, with a maximum
of $10 million per incident per year (of which IESU's 70%
ownership portion would be approximately $61.7 million and $7
million, respectively) if losses relating to the incident
exceeded $200 million. These limits are subject to adjustments
for changes in the number of participants and inflation in
future years. Similarly, WP&L, as a 41% owner of Kewaunee, is
subject to an overall assessment of approximately $36.1 million
per incident, not to exceed $4.1 million payable in any given
year.
IESU and WP&L are members of NEIL, which provides $1.9 billion
of insurance coverage for IESU and $1.8 billion for WP&L on
certain property losses for property damage, decontamination
and premature decommissioning. The proceeds from such
insurance, however, must first be used for reactor
stabilization and site decontamination before they can be used
for plant repair and premature decommissioning. NEIL also
provides separate coverage for additional expenses incurred
during certain outages. Owners of nuclear generating stations
insured through NEIL are subject to retroactive premium
adjustments if losses exceed accumulated reserve funds. NEIL's
accumulated reserve funds are currently sufficient to more than
cover its exposure in the event of a single incident under the
primary and excess property damage or additional expense
coverages. However, IESU could be assessed annually a maximum
of $1.5 million for NEIL primary property, $2.8 million for
NEIL excess property and $1.2 million for NEIL additional
expenses if losses exceed the accumulated reserve funds. WP&L
could be assessed annually a maximum of $1.1 million for NEIL
primary property, $1.6 million for NEIL excess property and
$0.4 million for NEIL additional expense coverage. IESU and
WP&L are not currently aware of any losses that they believe
are likely to result in an assessment.
In the unlikely event of a catastrophic loss at Kewaunee or
DAEC, the amount of insurance available may not be adequate to
cover property damage, decontamination and premature
decommissioning. Uninsured losses, to the extent not recovered
through rates, would be borne by WP&L or IESU, as the case may
be, and could have a material adverse effect on those entities'
financial condition and results of operations.
The Nuclear Waste Policy Act of 1982 assigned responsibility to
the DOE to establish a facility for the ultimate disposition of
high level waste and spent nuclear fuel and authorized the DOE
to enter into contracts with parties for the disposal of such
material beginning in January 1998, in exchange for payments by
contract holders. IESU and WP&L entered into such contracts
and have made the agreed payments to the Nuclear Waste Fund
held by the U.S. Treasury. The companies were subsequently
-11-
notified by the DOE that it was not able to begin acceptance of
spent nuclear fuel by the January 31, 1998 deadline.
Furthermore, the DOE has experienced significant delays in its
efforts and material acceptance is now expected to occur no
earlier than 2010 with the possibility of further delay being
likely. Alliant Energy continues to monitor and evaluate its
options for recovery of damages due to the DOE's delay in
accepting spent nuclear fuel.
The Nuclear Waste Policy Act of 1982 also assigned
responsibility for interim storage of spent nuclear fuel to
generators of such spent nuclear fuel, such as IESU and WP&L.
In accordance with this responsibility, IESU and WP&L have been
and will continue storing spent nuclear fuel on site at DAEC
and Kewaunee, respectively, since plant operations began and
until removal of all spent nuclear fuel by the DOE to its
permanent repository occurs. Interim storage activities at
reactor sites, regardless of DOE delays, will extend after
final reactor shutdown. Planning has begun for construction of
a dry cask storage facility by IESU at DAEC to provide
assurance that both the operating and post-shutdown storage
needs are satisfied. With minor modifications planned for
2001, Kewaunee would have sufficient fuel storage capacity to
store all of the fuel it will generate through the end of the
NRC license life in 2013, however, no decisions have been made
concerning post-shutdown storage needs.
The Low-Level Radioactive Waste Policy Amendments Act of 1985
mandates that each state must take responsibility for the
storage of low-level radioactive waste produced within its
borders. The States of Iowa and Wisconsin are members of the
six-state Midwest Interstate Low-Level Radioactive Waste
Compact (Compact) which is responsible for development of any
new disposal capability within the Compact member states. In
1997, the Compact commissioners voted to discontinue work on a
proposed waste disposal facility in the State of Ohio because
the expected cost of such a facility was comparably higher than
other options currently available. Dwindling waste volumes due
to increased operational efficiencies at nuclear facilities and
continued access to existing disposal facilities were also
reasons cited for the decision. Disposal facilities located
near Barnwell, South Carolina and Clive, Utah continue to
accept the low-level waste and IESU and WP&L currently ship the
waste each produces to such sites, thereby minimizing the
amount of low-level waste stored on-site. Given technological
advances, waste compaction and the reduction in the amount of
waste generated, DAEC and Kewaunee each have on-site storage
capability sufficient to store low-level waste expected to be
generated over at least the next ten years. While Alliant
Energy is unable to predict how long these facilities will
continue to accept its waste, continuing access to these
facilities expands Alliant Energy's on-site storage capability
indefinitely.
WPSC purchases uranium concentrates, conversion services,
enrichment services, and fabrication services for nuclear fuel
assemblies at Kewaunee. New fuel assemblies replace used
assemblies that are removed from the reactor every 18 months
and placed in storage at the plant site pending removal by the
DOE. Uranium concentrates, conversion services, and enrichment
services are purchased at spot market prices, through a bid
process, or using existing contracts. Conversion services are
complete for nuclear fuel reloads in 2001 and 2003. A fixed
quantity of enrichment services are contracted through the year
2004. Additional enrichment services will be acquired under an
existing contract or by purchases on the spot market. Fuel
fabrication services are contracted well into the next decade.
WPSC's uranium inventory policy requires that sufficient
inventory exist for up to two reactor reloads of fuel. As of
December 31, 2000, approximately 884,000 pounds of yellowcake
(a processed form of uranium ore) or its equivalent were held
in inventory for the plant.
A contract for enrichment services and enriched uranium product
for DAEC with the U.S. Enrichment Corporation is effective
through September 2001 and has been extended through the next
delivery date, which is expected to be November 2002.
Fabrication of the nuclear fuel is being performed by General
Electric Company for fuel through the 2011 refueling of DAEC.
IESU believes that an ample supply of uranium and enrichment
services will be available in the future and intends to
purchase such uranium and enrichment services as necessary on
the spot market and/or via medium length (less than five years)
contracts to supplement its current contracts and meet its
generation requirements.
Additional discussions of various other nuclear issues relating
to Kewaunee and DAEC are included in Notes 1, 3, 9, 10, 11(f)
and 12 of the "Notes to Consolidated Financial Statements" in Item 8.
-12-
Power Supply - Wisconsin enacted electric reliability
legislation in 1998 (Wisconsin Reliability Act) with the goal
of assuring reliable electric energy for Wisconsin. The law
allows the construction of merchant power plants in the state
and streamlines the regulatory approval process for building
new generation and transmission facilities. As a requirement
of the legislation, the PSCW completed a regional transmission
constraint study. The PSCW is authorized to order construction
of new transmission facilities, based on the findings of its
constraint study, through December 31, 2004. WP&L notes that
it may take time for new transmission and power plant projects
to be approved and built in Wisconsin.
In July 1998, Alliant Energy and SkyGen announced an agreement
whereby SkyGen would build, own and operate a 450 MW power
plant in Wisconsin. Under the agreement, Alliant Energy will
purchase the capacity to meet the electric needs of its utility
customers, as outlined by the Wisconsin Reliability Act. A
December 2000 Wisconsin Supreme Court ruling, which upheld
earlier PSCW and WDNR decisions, ends any potential legal
challenges to this SkyGen project. The project is on target to
be in service by June 2001.
In December 2000, WP&L and SkyGen announced an agreement
whereby SkyGen would build, own and operate a 600 MW natural
gas fired power plant in Wisconsin at WP&L's Rock River plant.
WP&L has entered into a purchased power agreement for 453 MW of
the new plant's output. The plant is scheduled to be on-line
by the summer of 2003. The construction of the facility is
expected to assist WP&L in meeting its growing demands for
electricity, to place a greater reliance on internal generation
versus purchased power and to help WP&L maintain the required
18% reserve margin in Wisconsin.
Alliant Energy expects the implementation of deregulation in
its retail service territories will likely be delayed due to
recent events related to California's restructured electric
utility industry. While Illinois is preparing to make retail
choice available to residential customers in 2002,
participation in Alliant Energy's Illinois service territories
is expected to be minimal.
Iowa regulators are considering a bill to encourage
construction of new generating facilities in Iowa and reduce
the risk to utilities in contracting for power. Regulators in
Minnesota are considering a bill to ensure adequate generation
and transmission facilities. In Wisconsin, the PSCW hired a
consultant to perform a market power analysis for Wisconsin and
the Upper Peninsula of Michigan electric markets as part of the
requirements of Reliability 2000 legislation. In December
2000, the PSCW issued a report indicating that the study
"provides a useful starting point for the analysis of potential
horizontal market power problems in Wisconsin." The PSCW
agreed that complete and immediate wholesale and retail
deregulation as simulated in the study is not in the public
interest, especially in light of the developments in
California. The PSCW also agreed that more transmission is
needed and contracts between generators and customers may be an
effective form of market power mitigation and that horizontal
market power issues are a complex subject that will require
further study before actions to mitigate market power are
considered.
In March 2001, Alliant Energy's subsidiaries announced their interest
in developing new electric power generation capacity in Iowa and Wisconsin.
In Iowa, IESU announced a willingness to develop up to 1,200 MW of new
electric power generation over the next 10 years. In Wisconsin, WP&L filed
plans with the PSCW to develop up to 800 MW of new electric power generation
over the next 10 years. The Wisconsin plans include the addition of 500
MW of coal-fired and 100 MW of natural gas-fired generation by
2006 and an additional 200 MW of combined-cycle gas generation
by 2011. Both the Iowa and Wisconsin proposals are subject to various
conditions, including the receipt of applicable regulatory approval. At the
present time, Alliant Energy's subsidiaries have not determined the expected
costs or the associated financing of these proposals.
-13-
While Alliant Energy currently expects to meet utility customer
demands in 2001, unanticipated reliability issues could still
arise in the event of unexpected power plant outages,
transmission system outages or extended periods of extremely
hot weather.
Refer to "Utility Industry Outlook - Rates and Regulatory
Matters" in Item 7. MD&A for information on an IUB fuel
investigation.
Electric Environmental Matters - Alliant Energy is regulated in
environmental matters by a number of federal, state and local
agencies. Such regulations are the result of a number of
environmental laws passed by the U.S. Congress, state
legislatures and local governments and enforced by federal,
state and local agencies. The laws impacting Alliant Energy's
operations include, but are not limited to, the Safe Drinking
Water Act; Clean Air Act, as amended by the Clean Air Act
Amendments of 1990; National Environmental Policy Act; Toxic
Substances Control Act; Emergency Planning and Community
Right-to-Know Act; Resource Conservation and Recovery Act;
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986; Nuclear Waste Policy Act of
1982; Occupational Safety and Health Act; and the National
Energy Policy Act of 1992. Alliant Energy regularly obtains
federal, state and local permits to assure compliance with the
environmental protection laws and regulations. Costs
associated with such compliance have increased in recent years
and are expected to increase moderately in the future.
Refer to "Nuclear," "Liquidity and Capital Resources -
Environmental" in Item 7. MD&A and Note 11(e) of the "Notes to
Consolidated Financial Statements" in Item 8. for further
discussion of electric environmental matters.
-14-
Alliant Energy Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Electric Operating Information (Utility Only) 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (000s):
Residential $567,283 $541,714 $532,676 $521,574 $506,784
Commercial 349,019 329,487 317,704 307,941 296,345
Industrial 501,155 476,140 477,241 455,912 428,726
-----------------------------------------------------------------------------------
Total from ultimate customers 1,417,457 1,347,341 1,327,621 1,285,427 1,231,855
Sales for resale 173,148 155,801 199,128 192,346 181,365
Other 57,431 45,796 40,693 37,980 27,155
-----------------------------------------------------------------------------------
Total $1,648,036 $1,548,938 $1,567,442 $1,515,753 $1,440,375
===================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Electric Sales (000s MWh):
Residential 7,161 7,024 6,826 6,851 6,826
Commercial 5,364 5,260 4,943 4,844 4,720
Industrial 13,092 13,036 12,718 12,320 11,666
-----------------------------------------------------------------------------------
Total from ultimate customers 25,617 25,320 24,487 24,015 23,212
Sales for resale 4,906 5,566 7,189 6,768 7,459
Other 174 162 158 161 161
-----------------------------------------------------------------------------------
Total 30,697 31,048 31,834 30,944 30,832
===================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Customers (End of Period):
Residential 799,603 790,669 781,127 772,100 762,665
Commercial 123,833 122,509 121,027 119,463 117,846
Industrial 2,773 2,730 2,618 2,555 2,472
Other 3,316 3,282 3,267 3,281 3,207
-----------------------------------------------------------------------------------
Total 929,525 919,190 908,039 897,399 886,190
===================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Other Selected Electric Data:
Maximum peak hour demand (MW) (1) 5,397 5,233 5,228 5,045 4,953
Sources of electric energy (000s MWh):
Coal and gas 19,139 19,078 19,119 17,423 17,014
Purchased power 8,058 8,619 10,033 10,660 10,895
Nuclear 4,675 4,362 4,201 3,874 4,054
Other 427 528 504 565 392
-----------------------------------------------------------------------------------
Total 32,299 32,587 33,857 32,522 32,355
===================================================================================
Revenue per KWh from ultimate
customers (cents) 5.53 5.32 5.42 5.35 5.31
- ------------------------------------------------------------------------------------------------------------------------------------
(1) 2000 and 1999 data represent the coincident peak of the entire Alliant Energy system. 1998 to 1996 data represent a
summation of the individual peak demands of IESU, WP&L and IPC thus they do not represent the coincident peak of the
entire Alliant Energy system.
-15-
IES Utilities Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Electric Operating Information 2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (000s):
Residential $236,084 $230,422 $232,662 $227,496 $213,838
Commercial 182,068 176,251 168,672 162,626 153,163
Industrial 188,734 181,740 181,369 177,890 160,477
------------------------------------------------------------------------------------
Total from ultimate customers 606,886 588,413 582,703 568,012 527,478
Sales for resale 31,046 28,479 45,453 25,719 37,384
Other 13,527 11,058 11,267 10,539 9,411
------------------------------------------------------------------------------------
Total $651,459 $627,950 $639,423 $604,270 $574,273
====================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
Electric Sales (000s MWh):
Residential 2,742 2,685 2,661 2,682 2,642
Commercial 2,701 2,658 2,465 2,378 2,315
Industrial 5,053 5,072 4,872 4,743 4,436
------------------------------------------------------------------------------------
Total from ultimate customers 10,496 10,415 9,998 9,803 9,393
Sales for resale 1,044 1,392 1,763 794 1,746
Other 40 40 42 43 46
------------------------------------------------------------------------------------
Total 11,580 11,847 11,803 10,640 11,185
===================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
Customers (End of Period):
Residential 295,747 293,433 290,348 288,387 286,315
Commercial 50,498 49,952 49,489 48,962 48,593
Industrial 706 715 705 711 703
Other 448 449 479 442 437
----------------------------------------------------------------------------------
Total 347,399 344,549 341,021 338,502 336,048
====================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
Other Selected Electric Data:
Maximum peak hour demand (MW) 2,067 1,990 1,965 1,854 1,833
Sources of electric energy (000s MWh):
Coal and gas 6,675 6,543 6,417 5,499 4,936
Purchased power 2,243 3,104 3,385 2,789 4,177
Nuclear 3,117 2,548 2,682 2,904 2,753
Other 172 226 199 164 44
-----------------------------------------------------------------------------------
Total 12,207 12,421 12,683 11,356 11,910
===================================================================================
Revenue per KWh from ultimate
customers (cents) 5.78 5.65 5.83 5.79 5.62
- ----------------------------------------------------------------------------------------------------------------------------------
-16-
Wisconsin Power and Light Company
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Operating Information 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (000s):
Residential $229,668 $213,496 $198,770 $199,633 $201,690
Commercial 127,199 116,947 108,724 107,132 105,319
Industrial 190,085 171,118 162,771 152,073 143,734
------------------------------------------------------------------------------------
Total from ultimate customers 546,952 501,561 470,265 458,838 450,743
Sales for resale 115,715 102,751 128,536 160,917 131,836
Other 29,524 22,295 15,903 14,388 6,903
------------------------------------------------------------------------------------
Total $692,191 $626,607 $614,704 $634,143 $589,482
====================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Sales (000s MWh):
Residential 3,151 3,111 2,964 2,974 2,980
Commercial 2,031 1,980 1,898 1,878 1,814
Industrial 4,688 4,570 4,493 4,256 3,986
------------------------------------------------------------------------------------
Total from ultimate customers 9,870 9,661 9,355 9,108 8,780
Sales for resale 3,228 3,252 4,492 5,824 5,246
Other 63 54 59 60 57
------------------------------------------------------------------------------------
Total 13,161 12,967 13,906 14,992 14,083
====================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Customers (End of Period):
Residential 362,178 355,691 350,334 343,637 336,933
Commercial 49,350 48,696 47,857 46,823 45,669
Industrial 974 947 909 855 815
Other 1,923 1,893 1,860 1,875 1,820
------------------------------------------------------------------------------------
Total 414,425 407,227 400,960 393,190 385,237
====================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Other Selected Electric Data:
Maximum peak hour demand (MW) 2,508 2,397 2,292 2,253 2,124
Sources of electric energy (000s MWh):
Coal and gas 8,074 8,186 8,916 8,587 8,687
Purchased power 4,017 3,436 3,923 5,744 4,494
Nuclear 1,558 1,814 1,519 970 1,301
Other 248 288 288 355 303
------------------------------------------------------------------------------------
Total 13,897 13,724 14,646 15,656 14,785
====================================================================================
Revenue per KWh from ultimate
customers (cents) 5.54 5.19 5.03 5.04 5.13
- -----------------------------------------------------------------------------------------------------------------------------------
-17-
GAS UTILITY OPERATIONS
As of December 31, 2000, Alliant Energy's utility subsidiaries
provided retail natural gas service to approximately 398,000
customers in approximately 486 communities in Iowa, southern
and central Wisconsin, northern and northwestern Illinois and
southern Minnesota. The approximate number of customers and
communities served for each of the individual utilities at
December 31, 2000 was as follows:
Gas Communities
Customers Served
--------- -------------
IESU 182,000 212
WP&L 165,000 233
IPC 51,000 41
2000 gas utility operations accounted for 22%, 19% and 15% of
operating revenues and 7%, 9% and 6% of operating income for
IESU, WP&L and IPC, respectively. These operations include
providing gas services to transportation and retail customers.
In providing gas commodity service to retail customers, Corporate
Services administers a diversified portfolio of transportation
and storage contracts on behalf of each of the three
utilities. Transportation contracts with NNG, NGPL and ANR
allow access to gas supplies located in the U.S. and Canada.
Non-traditional arrangements provide IESU and WP&L with gas
delivered directly to their service territories. The maximum
daily delivery capacity of the individual utilities for 2000
was as follows:
NNG NGPL ANR Non-Traditional Total
----------------- ----------------- ------------------ ------------------- -----------------
IESU 145,996 Dth 63,014 Dth 61,737 Dth 15,000 Dth 285,747 Dth
WP&L 75,056 Dth -- 146,467 Dth 54,400 Dth 275,923 Dth
IPC 53,595 Dth 29,750 Dth -- -- 83,345 Dth
IESU, WP&L and IPC maintain purchase agreements with over 50
suppliers of natural gas from all gas producing regions of the
U.S. and Canada. The majority of the gas supply contracts are
for terms of six months or less, with the remaining supply
contracts having terms up to two years. The utilities' gas
supply commitments are index-based.
In addition to sales of natural gas to retail customers, IESU,
WP&L and IPC provide transportation service to commercial and
industrial customers by moving customer-owned gas through
their distribution systems to the customers' meter.
Revenues are collected for this service pursuant to
transportation tariffs.
The gas sales of the utility subsidiaries follow a seasonal
pattern. There is an annual base load of gas used for cooking,
heating and other purposes, with a large heating peak occurring
during the winter season. Natural gas obtained from producers,
marketers and brokers, as well as gas in storage, is utilized
to meet the peak heating season requirements. Storage
contracts allow the utilities to purchase gas in the summer,
store the gas in underground storage fields and deliver it in
the winter. Gas storage met approximately 24%, 29% and 17% of
IESU's, WP&L's and IPC's annual gas requirements in 2000,
respectively.
Refer to the "Notes to Consolidated Statements" in Item 8. for
discussion of rate recovery mechanisms for natural gas costs
(Note 1(j)) and for discussion of gas commitments (Note
11(b)).
Gas Environmental Matters - Refer to Note 11(e) of the "Notes
to Consolidated Financial Statements" in Item 8. for discussion
of gas environmental matters.
-18-
Alliant Energy Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Gas Operating Information (Utility Only) 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (000s):
Residential $245,697 $185,090 $175,603 $225,542 $216,268
Commercial 127,104 89,118 85,842 115,858 108,187
Industrial 27,752 21,855 20,204 27,393 27,569
Transportation/other 14,395 18,256 13,941 25,114 23,931
-------------------------------------------------------------------------------
Total $414,948 $314,319 $295,590 $393,907 $375,955
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Gas Sales (000s Dekatherms):
Residential 32,026 30,309 28,378 33,894 37,165
Commercial 19,696 18,349 17,760 21,142 22,613
Industrial 5,350 5,963 5,507 6,217 6,856
Transportation/other 43,931 46,954 52,389 56,719 55,240
-------------------------------------------------------------------------------
Total 101,003 101,575 104,034 117,972 121,874
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Customers at End of Period
(Excluding Transportation/Other):
Residential 351,990 347,533 342,586 337,956 331,919
Commercial 44,654 44,289 43,825 43,316 42,658
Industrial 953 1,037 982 963 1,022
-------------------------------------------------------------------------------
Total 397,597 392,859 387,393 382,235 375,599
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Other Selected Gas Data:
Revenue per Dth sold
(excluding transportation/other) $7.02 $5.42 $5.45 $6.02 $5.28
Purchased gas costs per Dth sold
(excluding transportation/other) $4.88 $3.30 $3.22 $4.23 $3.61
- -----------------------------------------------------------------------------------------------------------------------------------
-19-
IES Utilities Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Gas Operating Information 2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (000s):
Residential $117,132 $88,302 $86,821 $110,663 $97,708
Commercial 57,671 40,459 39,928 54,383 46,966
Industrial 15,377 11,543 10,422 13,961 12,256
Transportation/other 6,001 5,521 4,108 4,510 3,934
---------------------------------------------------------------------------
Total $196,181 $145,825 $141,279 $183,517 $160,864
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Gas Sales (000s Dekatherms):
Residential 14,829 13,778 13,803 16,317 17,680
Commercial 8,753 8,077 8,272 9,602 10,323
Industrial 3,063 3,291 3,089 3,318 3,796
Transportation/other 10,061 10,236 11,316 10,321 10,341
---------------------------------------------------------------------------
Total 36,706 35,382 36,480 39,558 42,140
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Customers at End of Period
(Excluding Transportation/Other):
Residential 160,357 158,705 157,135 155,859 154,457
Commercial 21,751 21,661 21,530 21,431 21,364
Industrial 365 383 398 399 417
---------------------------------------------------------------------------
Total 182,473 180,749 179,063 177,689 176,238
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Other Selected Gas Data:
Revenue per Dth sold
(excluding transportation/other) $7.14 $5.58 $5.45 $6.12 $4.94
Purchased gas cost per Dth sold
(excluding transportation/other) $5.12 $3.51 $3.36 $4.33 $3.27
- ----------------------------------------------------------------------------------------------------------------------------------
Wisconsin Power and Light Company
- ----------------------------------------------------------------------------------------------------------------------------------
Gas Operating Information 2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (000s):
Residential $96,204 $69,662 $65,173 $84,513 $90,382
Commercial 54,512 35,570 33,898 45,456 46,703
Industrial 8,581 6,077 5,896 8,378 11,410
Transportation/other 5,855 9,461 6,770 17,536 17,132
--------------------------------------------------------------------------
Total $165,152 $120,770 $111,737 $155,883 $165,627
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Gas Sales (000s Dekatherms):
Residential 12,769 12,070 10,936 12,770 14,297
Commercial 8,595 7,771 7,285 8,592 9,167
Industrial 1,476 1,520 1,422 1,714 1,997
Transportation/other 13,680 13,237 12,948 17,595 18,567
---------------------------------------------------------------------------
Total 36,520 34,598 32,591 40,671 44,028
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Customers at End of Period
(Excluding Transportation/Other):
Residential 146,690 144,015 141,065 137,827 133,580
Commercial 17,583 17,380 17,058 16,653 16,083
Industrial 513 576 506 488 529
---------------------------------------------------------------------------
Total 164,786 161,971 158,629 154,968 150,192
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Other Selected Gas Data:
Revenue per Dth sold
(excluding transportation/other) $6.97 $5.21 $5.34 $6.00 $5.83
Purchased gas cost per Dth sold
(excluding transportation/other) $4.69 $3.00 $3.13 $4.30 $4.12
- ----------------------------------------------------------------------------------------------------------------------------------
-20-
D. INFORMATION RELATING TO NON-REGULATED OPERATIONS
Resources manages its wholly-owned subsidiaries and additional
investments through five distinct platforms: Integrated
Services, International, Investments, Mass Marketing and
Trading.
Integrated Services - offers a wide range of energy and
environmental services for businesses across the U.S. From
on-site generation and waste-water treatment to energy
management and indoor air quality, ISCO helps clients increase
the productivity, profitability and efficiency of their
operations. Alliant Energy Integrated Services Company, which
changed its name from Alliant Energy Industrial Services, Inc.
in early 2001, is executing its growth strategy as a
full-service, national energy-services company. The new name
reflects the breadth of services the group of companies
provides as well as the strength of the partnerships it seeks
to build with customers. In December 2000, Resources acquired
EUA Cogenex Corporation and Energy Performance Services, Inc.
These two companies are being merged with ISCO's wholly-owned
subsidiary Industrial Energy Applications, Inc. to form a new
company, Cogenex, to provide business customers with on-site
energy services. In December 2000, Resources also invested in
and developed a strategic partnership with Enermetrix.com,
Inc., an Internet-based energy-procurement retailer for
commercial and industrial customers, adding to the portfolio of
services that ISCO provides. In addition to these recent
acquisitions, ISCO is also a holding company for Heartland
Energy Group, Inc. (HEG), RMT, Inc. (RMT) and Alliant Energy
Integrated Services Company - Energy Solutions L.L.C. (Energy
Solutions). HEG offers commodities-based energy services
primarily related to supplying natural gas and owns several
natural gas and oil gathering systems in Texas. RMT is a
Madison, Wisconsin based environmental and engineering
consulting company that serves clients nationwide in a variety
of industrial market segments. RMT specializes in consulting
on solid and hazardous waste management, ground water quality
protection, industrial design and hygiene engineering, and air
and water pollution control. Energy Solutions provides energy
consulting services to commercial and industrial customers.
International - has invested in energy generation and
distribution companies and projects in developing markets
throughout the world. Currently, International has utility
operations in Brazil, New Zealand, Australia and China and an
investment in debentures of a development project in Mexico.
International has focused on these locations because of its
belief that they offer a growing demand for energy and are
receptive to foreign investment. International also has
developed partnerships with other entities who have intimate
knowledge of each local market's business trends and customs.
International's subsidiaries include Alliant Energy Holdings do
Brasil Ltda. (Brasil), Alliant International New Zealand
Limited (New Zealand), Alliant Energy Australia Pty. Ltd.
(Australia), Grandelight Holding Ltd. (Grandelight), Interstate
Energy Corporation Pte Ltd. (IECP), Alliant Energy Renewable
Resources Ltd. (AERR) and Alliant Energy de Mexico L.L.C.
(Mexico). Brasil has non-controlling equity investments in
several Brazilian utility entities. New Zealand holds a
non-controlling equity investment in TrustPower Ltd., a New
Zealand utility entity. Australia holds a non-controlling
equity investment in Southern Hydro Partnership, a
hydroelectric generation company in Australia. Grandelight
holds an investment in Peak Pacific Investment Company Ltd.
(Peak Pacific). Peak Pacific has been formed to develop
investment opportunities in generation infrastructure projects
in China. IECP holds a non-controlling equity investment in
two individual cogeneration facilities in China. AERR has been
formed for the purpose of investing in international renewable
resource projects. Mexico is organized to provide
utility-related services to a resort community in Mexico, of
which International has an investment in debentures. (Although
Mexico is a wholly-owned subsidiary of International, Mexico is
managed by ISCO.) Refer to Note 9 of Alliant Energy's "Notes
to Consolidated Financial Statements" in Item 8. for additional
information related to Alliant Energy's investments in foreign
entities.
Investments - invests in businesses supporting Alliant Energy's strategic focus.
Investments is a holding company whose primary wholly-owned subsidiaries include
Heartland Properties, Inc. (HPI) and Iowa Land and Building Company (Iowa Land).
HPI is responsible for performing asset management and facilitating the
development and financing of high quality, affordable housing in Alliant
Energy's utility service territory. Investments and HPI have an ownership
interest in approximately 80 such properties. Capital Square provides
mortgage-banking services to facilitate HPI's development and financing efforts
in the affordable housing market. Iowa Land is organized to pursue real estate
and economic development activities in
-21-
IESU's service territory. Investments also has direct and
indirect equity interests in various real estate ventures,
primarily concentrated in Cedar Rapids, and holds other passive
investments including an equity interest in McLeod. Refer to
Note 9 of Alliant Energy's "Notes to Consolidated Financial
Statements" in Item 8. for further discussion of the McLeod
investment. Investments also manages other wholly-owned
subsidiaries of Resources including Whiting and
Transportation. Whiting is organized to purchase, develop and
produce crude oil and natural gas. Transportation is a holding
company whose wholly-owned subsidiaries include the Cedar
Rapids and Iowa City Railway Company (CRANDIC), Williams Bulk
Transfer Inc. (Williams) and Transfer Services, Inc.
(Transfer). CRANDIC is a short-line railway that renders
freight service between Cedar Rapids and Iowa City. Williams'
and Transfer's operations include transloading and storage
services. Transportation also has a 75% equity investment in
IEI Barge Services, Inc. (Barge) which provides barge terminal
and hauling service on the Mississippi River.
In 2000, Resources also invested in distributed resources by
purchasing equity interests in Capstone and a venture capital
fund specializing in emerging energy-technology companies
called Nth Power Technologies Fund II, LP. While complementing
Alliant Energy's successful core utility operations, these
value-producing ventures allow Alliant Energy to stay on the
cutting edge of energy industry technology.
Mass Marketing - focused on developing and marketing
energy-related products and services that enhance customers'
comfort, security and lifestyles. Key programs include a
home-appliance-repair protection plan, as well as
home-protection and energy-efficiency products. In 2000, this
division expanded its catalog business by opening an on-line
storefront full of energy-smart products designed to help keep
Alliant Energy's customers safe, warm and comfortable
(powerhousecatalog.com). In addition, an investment in
SmartEnergy, Inc., an Internet-based company that sells power
to residential customers in deregulated states, positions
Alliant Energy to deliver value from the evolving retail energy
market.
Trading - Resources and international commodity trader Cargill
are partners in the joint venture Cargill-Alliant, L.L.C.
(Cargill-Alliant), an energy-trading company. In an
increasingly volatile market, this growing endeavor helps
utilities, municipalities, cooperative wholesale customers and
large retail customers in competitive markets reduce their
electricity costs and better manage their energy risks.
Additionally, Cargill-Alliant connects with another market
segment by providing fuel supply management (coal, oil and
natural gas), plant operations assistance and risk-management
consultation.
-22-
ITEM 2. PROPERTIES
WP&L
WP&L's principal electric generating stations at December 31,
2000, were as follows:
Name and Location Primary Fuel 2000 Summer Capability
of Station Type in Kilowatts
- ------------------------------------------------------------ ----------------- ----------------------------------------------
Kewaunee Nuclear Power Plant, Kewaunee, WI Nuclear 207,050 (1)
Nelson Dewey Generating Station, Cassville, WI Coal 227,470
Edgewater Generating Station #3, Sheboygan, WI Coal 76,000
Edgewater Generating Station #4, Sheboygan, WI Coal 231,880 (2)
Edgewater Generating Station #5, Sheboygan, WI Coal 306,000 (3)
Columbia Energy Center, Portage, WI Coal 489,720 (4)
----------------
Total Coal 1,331,070
Blackhawk Generating Station, Beloit, WI Gas 57,500
Rock River Generating Station, Beloit, WI Gas 162,000
Rock River Combustion Turbine, Beloit, WI Gas 159,500
South Fond du Lac Combustion Turbine
Units 2 and 3, Fond du Lac, WI Gas 167,640
Sheepskin Combustion Turbine, Edgerton, WI Gas 37,000
----------------
Total Gas 583,640
Kilbourn Hydro Plant, Wisconsin Dells, WI Hydro 9,000
Prairie du Sac Hydro Plant, Prairie du Sac, WI Hydro 30,000
Petenwell/Castle Rock Hydro Plants,
Wisconsin Rapids, WI Hydro 13,300 (5)
----------------
Total Hydro 52,300
----------------
Total generating capability 2,174,060
================
All KWs shown below represent the 2000 summer generating
capability.
(1) Represents WP&L's 41% ownership interest in this
505,000 KW generating station, which is operated by
WPSC.
(2) Represents WP&L's 68.2% ownership interest in this
340,000 KW generating unit, which is operated by WP&L.
(3) Represents WP&L's 75% ownership interest in this
408,000 KW generating unit, which is operated by WP&L.
(4) Represents WP&L's 46.2% ownership interest in this
1,060,000 KW generating station, which is operated by
WP&L.
(5) Represents WP&L's 33.3% ownership interest in
this 40,000 KW hydro plant, which is operated by
Wisconsin River Power Company.
WP&L owns 2,699 miles of electric transmission lines and 279
substations located adjacent to the communities served, of
which substantially all are in Wisconsin. Substantially all of
WP&L's facilities are subject to the lien of its First Mortgage
Bond indenture and are suitable for their intended use. Refer
to "Utility Industry Outlook" in Item 7. MD&A for information
related to WP&L's investment in ATC.
-23-
IESU
IESU's principal electric generating stations at December 31,
2000, were as follows:
Name and Location Primary Fuel 2000 Summer Capability
of Station Type in Kilowatts
- -------------------------------------------------------------------- ----------------- ----------------------------------------
Duane Arnold Energy Center, Palo, Iowa Nuclear 364,000 (1)
Ottumwa Generating Station, Ottumwa, Iowa Coal 324,000 (2)
Prairie Creek Station, Cedar Rapids, Iowa Coal 212,500
Sutherland Station, Marshalltown, Iowa Coal 137,000
Sixth Street Station, Cedar Rapids, Iowa Coal 65,000
Burlington Generating Station, Burlington, Iowa Coal 214,870
George Neal Unit 3, Sioux City, Iowa Coal 144,200 (3)
--------------
Total Coal 1,097,570
Peaking Turbines, Marshalltown, Iowa Oil 216,400
Centerville Combustion Turbines, Centerville, Iowa Oil 62,000
Diesel Stations, all in Iowa Oil 8,300
--------------
Total Oil 286,700
Grinnell Station, Grinnell, Iowa Gas 30,000
Agency Street Combustion Turbines,
West Burlington, Iowa Gas 76,700
Burlington Combustion Turbines, Burlington, Iowa Gas 68,000
Red Cedar Combustion Turbine, Cedar Rapids, IA Gas 22,700
--------------
Total Gas 197,400
----------------
Total generating capability 1,945,670
================
All KWs shown below represent the 2000 summer generating
capability.
(1) Represents IESU's 70% ownership interest in this
520,000 KW generating station, which is operated by
IESU.
(2) Represents IESU's 48% ownership interest in this
675,000 KW generating station, which is operated by
IESU.
(3) Represents IESU's 28% ownership interest in this
515,000 KW generating station, which is operated by
MidAmerican Energy Company.
IESU owns 4,448 miles of electric transmission lines and 577
substations, substantially all located in Iowa. IESU's
principal properties are suitable for their intended use and
are held subject to liens of indentures relating to its bonds.
-24-
IPC
IPC's principal electric generating stations at December 31,
2000, were as follows:
Name and Location Primary Fuel 2000 Summer Capability
of Station Type in Kilowatts
- --------------------------------------------------------------- ----------------- -----------------------------------------
Dubuque Units 2, 3 and 4, Dubuque, IA Coal 81,500
M. L. Kapp Plant Units 1 and 2, Clinton, IA Coal 254,900
Lansing Units 1, 2, 3 and 4, Lansing, IA Coal 323,000
George Neal Unit 4, Sioux City, IA Coal 141,900 (1)
Louisa Unit 1, Louisa, IA Coal 28,400 (2)
---------------
Total Coal 829,700
Fox Lake Plant Units 1, 2 and 3, Sherburn, MN Gas 113,500
Montgomery Combustion Turbine Unit 1, Montgomery, MN Oil 22,200
Fox Lake Plant Combustion Turbine Unit 4, Sherburn, MN Oil 21,300
Lime Creek Plant Combustion Turbine
Units 1 and 2, Mason City, IA Oil 70,400
Dubuque Diesel Units 1 and 2, Dubuque, IA Oil 4,600
Hills Diesel Units 1 and 2, Hills, MN Oil 4,000
Lansing Diesel Units 1 and 2, Lansing, IA Oil 2,000
---------------
Total Oil 124,500
---------------
Total generating capability 1,067,700
==============
All KWs shown below represent the 2000 summer generating
capability.
(1) Represents IPC's 21.5% ownership interest in this
660,000 KW generating station, which is operated by
MidAmerican Energy Company.
(2) Represents IPC's 4% ownership interest in this
710,000 KW generating station, which is operated by
MidAmerican Energy Company.
IPC owns 2,600 miles of electric transmission lines and 222
substations located in Iowa, Illinois and Minnesota.
Substantially all of IPC's facilities are subject to the lien
of its bond indenture securing IPC's outstanding First Mortgage
Bonds and are suitable for their intended use.
Resources
Resources' principal properties as of December 31, 2000 were as
follows:
Whiting - owns oil and gas properties in 19 states within
the U.S. Proven developed reserves were 14.9 million
barrels of oil and 134.4 million Dths of gas.
Investments, including HPI - provides affordable housing in
the Midwest and has a majority ownership in approximately 80
properties with a December 31, 2000 net book value of
approximately $125 million and has a consolidated real
estate venture with approximately 236,000 square feet of
office space in Cedar Rapids, Iowa with a December 31, 2000
net book value of approximately $13 million.
Peak Pacific - owns six combined heat and power plants
located in China.
IEA - offers standby generation, cogeneration, steam
production and propane air systems.
HEG (IEA at December 31, 2000) - owns an interest in natural
gas gathering systems and an oil gathering system which had
200 miles and 198 miles, respectively, of pipeline in Texas.
CRANDIC - has 112 railroad track miles all located within
Iowa.
-25-
ITEM 3. LEGAL PROCEEDINGS
Alliant Energy
In an effort to grow and expand as a Wisconsin-based company,
Alliant Energy and WP&L filed a federal lawsuit in October 2000,
seeking declaratory relief regarding whether certain provisions
of WUHCA are unconstitutional as a violation of the interstate
commerce and equal protection provisions of the U.S.
constitution. Alliant Energy and WP&L are challenging the
provisions of WUHCA which restrict ownership in utility holding
companies, limit the investments those companies can make and
place significant restrictions on companies that invest in
Wisconsin utility holding companies. Alliant Energy and WP&L
also requested that the court consider the constitutionality of
issues related to the asset cap on non-utility investments
imposed by WUHCA. Alliant Energy and WP&L were seeking only
declaratory relief and not damages in the litigation. In
February 2001, the lawsuit was dismissed based on lack of
allegations of "injury in fact." Alliant Energy and WP&L have
filed a motion for reconsideration with the court, which is
currently pending.
In July 1999, the PSCW found that Alliant Energy was in
violation of the PSCW's merger order because after Alliant
Energy exercised its right to withdraw from the Midwest ISO, it
had no proposal on file with the PSCW either to be in an ISO or
to spin off its transmission assets (Alliant Energy has
subsequently rejoined the Midwest ISO). The PSCW deferred
consideration of any remedies. Both Alliant Energy and the
intervenors in the proceeding had appealed the PSCW's decision
to the Dane County Circuit Court. The Court consolidated the
appeals into one proceeding and subsequently remanded the
proceeding back to the PSCW on the grounds that the PSCW's
order was not final. The PSCW has not taken any further action
in this matter since the remand.
Alliant Energy received an adverse ruling in 1999 from a U.S.
district court judge dealing with an income tax refund claim
Alliant Energy filed relating to capital losses disallowed
under audit by the IRS. The district court judge also
disallowed certain related deductions allowed by the IRS as an
offset against a tax refund due to Alliant Energy. Alliant
Energy has appealed the district court's ruling and such appeal
is pending. The IRS has appealed the decision which led to the
tax refund due to Alliant Energy and this appeal is also
pending. Alliant Energy believes the resolution of these
issues will not have a material adverse impact on its financial
condition or results of operations.
IESU
IESU and IPC have appealed to the Iowa State Board of Tax
Review, an agency of the State of Iowa, regarding assessments
of Iowa property tax made by the Director of the Iowa
Department of Revenue and Finance. The appeals involve
assessments for the years 1994 through 1998 and seek reduction
of the assessments reflecting the true value of the operating
property of the companies. At the present time, IESU and IPC
cannot predict what impact, if any, the appeals process will
have on their financial condition or results of operations.
WP&L
In the second quarter of 1999, WP&L received a demand for
arbitration from MG&E pursuant to the terms of joint plant
operating agreements between the parties regarding issues of
ownership and operation of the Columbia Energy Center. In
March 2001, an arbitration panel issued its decision upholding
WP&L's position that the plant was well-operated and maintained
and in compliance with the terms of the joint plant operating
agreements.
Refer to "Liquidity and Capital Resources - Environmental" in
Item 7. MD&A for information related to an EPA investigation
regarding WP&L's major coal-fired generating units in Wisconsin.
Environmental Matters
The information required by Item 3 with regards to
environmental matters is included in "C. Information Relating
to Utility Operations - Electric Utility Operations - Nuclear"
in Item 1. Business, "Liquidity and Capital Resources -
Environmental" in Item 7. MD&A and Note 11(e) of the "Notes to
Consolidated Financial Statements" in Item 8., which
information is incorporated herein by reference.
Rate Matters
The information required by Item 3 with regards to rate matters
is included in "Utility Industry Outlook - Rates and Regulatory
Matters" in Item 7. MD&A, which information is incorporated
herein by reference.
-26-
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANTS
- -------------------------------------
Information relating to the executive officers of Alliant
Energy, IESU and WP&L is included in Item 10. Directors and
Executive Officers of the Registrants.
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Alliant Energy's common stock trades on the New York Stock
Exchange under the symbol "LNT." Quarterly sales price ranges
and dividends with respect to Alliant Energy's common stock
were as follows:
2000 1999
----------------------------------------------------- --------------------------------------------------------
Quarter High Low Dividend High Low Dividend
First $37 3/4 $26 7/16 $0.50 $32 3/8 $26 3/8 $0.50
Second 31 7/8 25 3/4 0.50 30 7/8 26 1/2 0.50
Third 31 1/4 26 1/8 0.50 30 1/16 26 3/4 0.50
Fourth 32 1/8 28 5/8 0.50 28 13/16 25 3/16 0.50
------------- ----------------- -------------- --------------- -------------- -----------------
Year $37 3/4 $25 3/4 $2.00 $32 3/8 $25 3/16 $2.00
============= ================= ============== =============== ============== =================
Stock closing price at December 31, 2000: $31 7/8
Although Alliant Energy's practice has been to pay common stock
dividends quarterly, the timing of payment and amount of future
dividends are necessarily dependent upon earnings, financial
requirements and other factors.
At December 31, 2000, there were approximately 60,883 holders
of record of Alliant Energy's stock including underlying
holders in Alliant Energy's Shareowner Direct Plan.
Alliant Energy is the sole common shareowner of all 13,370,788
shares of IESU Common Stock currently outstanding. During 2000,
1999 and 1998, IESU declared dividends on its common stock of $59
million, $88 million and $19 million, respectively, to its
parent. No dividend payments were made in the last three
quarters of 1998 due to merger-related tax considerations. As a
result, the dividend payment in the first quarter of 1999 was
larger than IESU's historical quarterly payment. Under certain
circumstances, IESU has the right under terms of its debentures
to extend interest payments for periods not to exceed 20
consecutive quarters. It is IESU's current intent not to
exercise such right. In the event IESU did exercise this right,
it would limit IESU's ability to pay dividends, among other
things.
Alliant Energy is the sole common shareowner of all 13,236,601
shares of WP&L common stock currently outstanding. WP&L did
not declare common stock dividends during 2000 due to
management of its capital structure. During 1999 and 1998,
WP&L paid dividends on its common stock of $58 million each
year to its parent. WP&L's common stock dividends are
restricted to the extent that such dividends would reduce the
common stock equity ratio to less than 25%. Under rate order
UR-110, the PSCW ordered that it must approve the payment of
dividends by WP&L to Alliant Energy that are in excess of the
level forecasted in the rate order ($58.3 million), if such
dividends would reduce WP&L's average common equity ratio below
52.00% of total capitalization. The dividends paid by WP&L to
Alliant Energy since the rate order was issued have not
exceeded the level forecasted in the rate order.
Alliant Energy's utility subsidiaries each have common stock
dividend restrictions based on their respective bond indentures
and articles of incorporation. Each utility has restrictions
on the payment of common stock dividends that are commonly
found with preferred stock. In addition, IESU's and IPC's
ability to pay common stock dividends is restricted based on
requirements associated with sinking funds.
-27-
ITEM 6. SELECTED FINANCIAL DATA
Alliant Energy Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Information 2000 (1) 1999 (2) 1998 (3) 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands except for per share data)
Income Statement Data:
Operating revenues (4) $2,404,984 $2,127,973 $2,130,874 $2,300,627 $2,232,840
Operating expenses (4) 2,023,928 1,751,438 1,847,572 1,964,244 1,867,401
Operating income 381,056 376,535 283,302 336,383 365,439
Income before discontinued operations
and cumulative effect of a change
in accounting principle, net of tax 381,954 196,581 96,675 144,578 157,088
Discontinued operations, net of tax -- -- -- -- (1,297)
Cumulative effect of a change in accounting
principle, net of tax 16,708 -- -- -- --
Net income 398,662 196,581 96,675 144,578 155,791
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Data:
Weighted average common shares outstanding
- basic (000s) 79,003 78,352 76,912 76,210 75,481
Weighted average common shares outstanding
- diluted (000s) 79,193 78,395 76,929 76,212 75,484
Return on average common equity (5) 19.0% 10.5% 6.0% 9.5% 11.0%
Per Share Data:
Earnings per average common share - basic:
Income before discontinued operations and
cumulative effect of a change in
accounting principle $4.84 $2.51 $1.26 $1.90 $2.08
Discontinued operations -- -- -- -- ($0.02)
Cumulative effect of a change in accounting
principle $0.21 -- -- -- --
Net income $5.05 $2.51 $1.26 $1.90 $2.06
Earnings per average common share - diluted:
Income before discontinued operations and
cumulative effect of a change in
accounting principle $4.82 $2.51 $1.26 $1.90 $2.08
Discontinued operations -- -- -- -- ($0.02)
Cumulative effect of a change in
accounting principle $0.21 -- -- -- --
Net income $5.03 $2.51 $1.26 $1.90 $2.06
Dividends declared per common share $2.00 $2.00 $2.00 $2.00 $1.97
Book value at year-end (5) $25.79 $27.29 $20.69 $21.24 $18.91
Market value at year-end $31.88 $27.50 $32.25 $33.13 $28.13
- ------------------------------------------------------------------------------------------------------------------------------------
Other Selected Financial Data:
Construction and acquisition expenditures $1,066,464 $478,573 $372,058 $328,040 $412,274
Total assets at year-end (5) $6,733,766 $6,075,683 $4,959,337 $4,923,550 $4,639,826
Long-term obligations, net $2,128,496 $1,660,558 $1,713,649 $1,604,305 $1,444,355
Times interest earned before income taxes (6) 4.61X 3.38X 2.25X 2.90X 3.38X
Capitalization Ratios:
Common equity (5) 50% 57% 49% 51% 52%
Preferred stock 3% 3% 4% 3% 4%
Long-term debt, excluding current portion 47% 40% 47% 46% 44%
--------------------------------------------------------------------------
Total 100% 100% 100% 100% 100%
==========================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Includes $204 million ($2.58 per diluted share) of non-cash income related to Alliant Energy's adoption of SFAS 133 on
July 1, 2000 and $16 million ($0.20 per diluted share) of net income from gains on sales of McLeod stock in 2000.
(2) Includes $25 million ($0.32 per diluted share) of net income from gains on sales of McLeod stock in 1999.
(3) The 1998 financial results reflect the recording of $54 million of pre-tax merger-related charges.
(4) The 1999 results have been reclassified on a basis consistent with current year presentation; such reclassifications had no
impact on operating income or net income.
(5) In the third quarter of 1997, Alliant Energy began adjusting the carrying value of its investments in McLeod to its estimated
fair value, pursuant to the applicable accounting rules. At December 31, 2000, 1999, 1998 and 1997, the adjustment reflected
an unrealized gain of approximately $543 million, $1.1 billion, $291 million and $299 million, respectively, with a net of
tax increase to common equity of $317 million, $640 million, $170 million and $175 million, respectively.
(6) Represents income before income taxes plus preferred dividend requirements of subsidiaries plus interest expense divided by
interest expense.
-28-
IESU Year Ended December 31,
- ------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------
(in thousands)
Operating revenues $876,006 $800,696 $806,930 $813,978 $754,979
Earnings available for common stock 73,509 65,532 60,996 57,879 62,815
Cash dividends declared on common stock 58,633 87,951 18,840 56,000 44,000
Total assets 1,819,306 1,755,808 1,788,978 1,768,929 1,765,044
Long-term obligations, net 597,167 641,559 677,804 688,719 560,199
The 1998 financial results reflect the recording of $17 million of pre-tax merger-related charges.
WP&L Year Ended December 31,
- -----
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------
(in thousands)
Operating revenues $862,381 $752,505 $731,448 $794,717 $759,275
Earnings available for common stock 68,126 67,520 32,264 67,924 79,175
Cash dividends declared on common stock -- 58,353 58,341 58,343 66,087
Total assets 1,857,024 1,766,135 1,685,150 1,664,604 1,677,814
Long-term obligations, net 569,309 471,648 471,554 420,414 370,634
The 1998 financial results reflect the recording of $17 million of pre-tax merger-related charges.
-29-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Statements contained in this report (including MD&A) that are
not of historical fact are forward-looking statements intended
to qualify for the safe harbors from liability established by
the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ
materially from those expressed in, or implied by, such
statements. Some, but not all, of the risks and uncertainties
include: weather effects on sales and revenues; general
economic conditions in the utility subsidiaries' service
territories; federal, state and international regulatory or
government actions, including issues associated with the
deregulation of the domestic utility industry and the setting
of rates and recovery of costs; unanticipated construction and
acquisition expenditures; issues related to stranded costs and
the recovery thereof; unanticipated issues related to the
supply of purchased electricity and price thereof; unexpected
issues related to the operations of Alliant Energy's nuclear
facilities; unanticipated costs associated with certain
environmental remediation efforts being undertaken by Alliant
Energy; Alliant Energy's ability to successfully implement its
growth strategy, including the acquisition and operation of
foreign companies; unanticipated developments that adversely
impact Alliant Energy's strategy to grow its non-regulated
businesses; material changes in the value of Alliant Energy's
investments in McLeod and Capstone; technological developments;
employee workforce factors, including changes in key
executives, collective bargaining agreements or work stoppages;
political, legal, economic and exchange rate conditions in
foreign countries Alliant Energy has investments in; and
changes in the rate of inflation.
UTILITY INDUSTRY OUTLOOK
Overview - As a public utility holding company with significant
- --------
utility assets, Alliant Energy competes in an ever-changing utility industry.
Electric energy generation, transmission and distribution are in a period of
fundamental change resulting from legislative, regulatory, economic and
technological changes. These changes impact competition in the electric
wholesale and retail markets as customers of electric utilities are being
offered alternative suppliers. Such competitive pressures could result in
electric utilities losing customers and incurring stranded costs (i.e., assets
and other costs rendered unrecoverable as the result of competitive pricing)
which would be borne by security holders if the costs cannot be
recovered from customers.
Alliant Energy's utility subsidiaries are currently subject to regulation by
FERC, and state regulation in Iowa, Wisconsin, Minnesota and Illinois. FERC
regulates competition in the electric wholesale power generation market and each
state regulates whether to permit retail competition, the terms of such retail
competition and the recovery of any portion of stranded costs that are
ultimately determined to have resulted from retail competition. Alliant Energy
cannot predict the timing of a restructured electric industry or the impact on
its financial condition or results of operations but does believe it is well
positioned to compete in a deregulated competitive market. Although Alliant
Energy ultimately believes that the electric industry will be deregulated, the
pace of deregulation in its retail electric service territories will likely be
delayed due to recent events related to California's restructured electric
utility industry.
In 1999, Wisconsin enacted "Reliability 2000" legislation which included, among
other items, the formation of a Wisconsin transmission company (American
Transmission Company, or ATC) for those Wisconsin utility holding companies who
elected to take advantage of the modified asset cap law and others who elected
to join. ATC received all necessary regulatory approvals and began operations on
January 1, 2001. WP&L, including South Beloit, transferred its transmission
assets (approximate net book value of $177 million) to ATC on January 1, 2001.
WP&L will receive cash of $88 million in 2001 and currently has an $89 million
equity investment in ATC, resulting in no gain or loss for WP&L. WP&L does not
expect this transfer to result in a significant impact on its financial
condition or results of operations because it believes FERC will allow WP&L to
earn a return on the contributed assets comparable to the return currently
allowed by the PSCW and FERC. In addition to transferring its transmission
assets, WP&L also transferred ownership of its System Operations Center to ATC.
WP&L's ownership percentage
-30-
in ATC is approximately 26 percent and its investment is accounted for under the
equity method. Although no assurance can be given, it is currently anticipated
that ATC's dividend policy will support a return of a significant portion of
these earnings to the equity holders. ATC is expected to realize its revenues
from the provision of transmission services to both participants in ATC as well
as nonparticipants. ATC's current rates are subject to refund pending final
approval by FERC. ATC is a transmission-owning member of the Midwest ISO and the
MAIN Regional Reliability Council. At this time, the decision has been made not
to contribute IESU's and IPC's transmission assets to ATC.
In March 2001, Alliant Energy announced discussions with several other utilities
related to the viability of developing an independent transmission company for
various Midwest utilities not included in ATC. The present schedule is to make
the necessary filings with FERC and the various states by mid-2001, with a
possible operational date of late 2002 or early 2003. Alliant Energy is working
with Xcel Energy, Inc., MidAmerican Energy Holdings Company, Nebraska Public
Power District and Omaha Public Power District.
WP&L's transfer of its transmission assets to ATC and the
participation of IESU, WP&L and IPC in the Midwest ISO are
expected to comply with the provisions of a FERC order
requiring utilities to turn over voluntarily the operational
control of their transmission systems to a regional entity by
the end of 2001.
Rates and Regulatory Matters - As part of its merger approval,
- -----------------------------
FERC accepted a proposal by Alliant Energy's utility
subsidiaries which provides for a four-year freeze on wholesale
electric prices beginning with the effective date of the April
1998 merger forming Alliant Energy. Each of the utilities also
agreed with their respective state commissions to provide
customers a four-year retail electric and gas price freeze (the
ICC granted IPC and South Beloit a three-year rate freeze),
excluding the electric FAC and PGA clause, which commenced on
the effective date of the April 1998 merger. In Iowa, the
retail rate freeze excludes price changes due to
government-mandated programs (such as energy efficiency cost
recovery) and unforeseen dramatic changes in operations. In
Wisconsin, a re-opening of an investigation into WP&L's rates
during the rate freeze period, for both cost increases and
decreases, may occur only for single events that are not
merger-related and have a revenue requirement impact of $4.5
million or more. Assuming capture of the merger-related
synergies and no significant legislative or regulatory changes
negatively affecting its utility subsidiaries, Alliant Energy
does not expect the merger-related electric and gas price
freezes to have a material adverse effect on its financial
condition or results of operations.
In January 2001, the IUB issued an order requiring IESU and IPC
to file a joint fuel procurement plan in May 2001 for the
purpose of evaluating the reasonableness of the Iowa utilities'
fuel procurement contracts. While IESU and IPC cannot predict
the outcome of this process, it will result in formal hearings
for IESU and IPC in Iowa. These hearings may address fuel
procurement practices, changes in the fuel cost recovery
mechanism and contingency actions to ensure reliability for the
Summer of 2001.
In connection with a statewide docket to investigate compliance
issues associated with the EPA's NOx emission reductions, in
March 1999, the PSCW authorized deferral of all incremental NOx
compliance costs excluding internal labor and replacement
purchased-power costs. In March 2000, the PSCW issued an order
approving WP&L's NOx compliance plans, including additional
investments at several WP&L generating units. The order also
approved a 10-year straight-line depreciation method for NOx
compliance investments. Such depreciation is also being
deferred and WP&L anticipates recovery of all deferred NOx
compliance costs beginning with the first rate changes after
the rate freeze expires. The depreciation lives will be
reviewed every two years. Refer to "Liquidity and Capital
Resources - Environmental" for further discussion of the NOx
issue.
WP&L's retail electric rates are based in part on forecasted
fuel and purchased-power costs. Under PSCW rules, WP&L can
seek emergency rate increases if the annual fuel and
purchased-power costs are more than 3 percent higher than the
estimated costs used to establish rates. If WP&L's earnings
exceed its authorized return on equity, the incremental
revenues collected causing the excessive return are subject to
refund.
-31-
In December 2000, WP&L requested a $73 million (revised to $64
million) annual retail electric rate increase from the PSCW to
cover increases in WP&L's 2001 fuel and purchased-power costs
due to the continued increases in natural gas prices which
impact WP&L's generation costs and the increased costs of
purchased-power. The PSCW approved a $46 million interim
retail electric rate increase effective February 9, 2001. A
decision on a permanent rate increase is expected in the second
quarter of 2001. The PSCW also granted WP&L annual retail
electric rate increases of $14.8 million, $14.5 million and
$16.5 million in July 1998, March 1999 and May 2000,
respectively, due to higher fuel and purchased-power costs,
some of which have been caused by the transmission constraints
and electric reliability concerns in the Midwest. WP&L does
not believe any revenues collected to date are subject to
refund.
In November 1999, the PSCW allowed WP&L rate recovery of $6.3
million of its Year 2000 (Y2K) program expenditures, but it
denied rate recovery of the first $4.5 million. These costs
were expensed in 1999. The PSCW's decision to allow rate
recovery was appealed by certain intervenors in Dane County,
Wisconsin district court. In April 2000, the intervenors
withdrew their appeal. WP&L began recovering such costs in May
2000 and is amortizing the deferred costs as the amounts are
recovered in rates.
In February 2000, the PSCW issued an order allowing WP&L to
defer certain incremental costs it incurred after February 16,
2000 relating to the development of ATC. In December 2000, the
PSCW issued an order allowing WP&L to defer incremental
operating costs associated with ATC. Recovery of such costs
will be addressed in WP&L's next retail rate case.
In 2000, the NRC raised several areas of concern with
Kewaunee's operations. The concerns raised by the NRC are
estimated to result in additional operating costs to WP&L in
2001 of approximately $5 million. Additional operating costs
to WP&L over the period of 2002 through 2005 are estimated to
be approximately $20 million and will be included in a future
rate request. WP&L submitted a request to the PSCW for
deferral of incremental costs associated with this issue. The
NRC has acknowledged the safety record of Kewaunee and its
ability to continue operations.
WP&L is in the process of pursuing a rate complaint against
Union Pacific Railroad with the STB. WP&L believes Union
Pacific Railroad is charging an excessive rate for transporting
low-sulfur coal from the Powder River Basin to the Edgewater
Generating Station located in Sheboygan, Wisconsin. To contest
the rate, WP&L filed a rate case with the STB and upon the
expiration of the existing contract, began moving coal under a
tariff rate beginning January 1, 2000. Final briefs were filed
in December 2000 and the STB has until September 2001 to issue
a final decision. If the STB rules in WP&L's favor, a refund
to WP&L's customers will need to be considered in conjunction
with the electric FAC in Wisconsin.
Alliant Energy complies with the provisions of SFAS 71,
"Accounting for the Effects of Certain Types of Regulation."
SFAS 71 provides that rate-regulated public utilities record
certain costs and credits allowed in the rate making process in
different periods than for non-regulated entities. These are
deferred as regulatory assets or accrued as regulatory
liabilities and are recognized in the Consolidated Statements
of Income at the time they are reflected in rates. If a
portion of the utility's operations no longer complies with
SFAS 71, a write-down of related regulatory assets and possibly
other charges would be required, unless some form of transition
cost recovery is established by the appropriate regulatory body
that meets the requirements under generally accepted accounting
principles for continued accounting as regulatory assets during
such recovery period. In addition, each utility would be
required to determine any impairment of other assets and
write-down any impaired assets to their fair value. Alliant
Energy believes its utility subsidiaries currently meet the
requirements of SFAS 71.
ALLIANT ENERGY RESULTS OF OPERATIONS
Unless otherwise noted, all "per share" references in the
Results of Operations section refer to earnings per diluted
share.
-32-
Overview - Alliant Energy's earnings for 2000, 1999 and 1998
- --------
were as follows (in thousands, except per share amounts):
2000 1999 1998
---------------- --------------- ---------------
Net income $398,662 $196,581 $96,675
Average number of common shares outstanding (diluted) 79,193 78,395 76,929
Earnings per average common share (EPS) $5.03 $2.51 $1.26
EPS related to the adoption of SFAS 133 $2.58 -- --
EPS related to gains on sales of McLeod stock $0.20 $0.32 --
EPS related to merger expenses -- -- ($0.45)
Alliant Energy's 2000 earnings increase was primarily due to
$204 million of non-cash net income ($2.58 per share) relating
to Alliant Energy's adoption of a new accounting pronouncement,
SFAS 133, on July 1, 2000. Earnings in 2000 also benefited
from increased earnings at Alliant Energy's non-regulated oil
and gas and electricity trading businesses. Partially
offsetting these items were higher interest expense to fund
Alliant Energy's strategic growth initiatives, the dilutive
effect of Alliant Energy's January 2000 investment in several
Brazilian utilities and lower gains from certain asset sales in
2000 compared to 1999. Within the utility business, increased
electric margins were offset by higher operating expenses.
The 2000 utility earnings were $167.8 million ($2.12 per share)
compared to $161.1 million ($2.06 per share) for the same
period in 1999. The increase resulted primarily from higher
electric and gas margins ($0.28 and $0.03 per share,
respectively) and interest income realized from a tax
settlement at IESU ($0.03 per share). These items were offset
by increases in operation and maintenance ($0.15 per share),
depreciation and amortization ($0.15 per share) and interest
($0.04 per share) expenses. Lower taxes also contributed to
the earnings increase in 2000.
Resources reported net income of $236.8 million ($2.99 per
share) in 2000, including $204 million related to the adoption
of SFAS 133. Excluding the SFAS 133 income, earnings were
$0.41 per share in 2000. Net income for 1999 was $37.8 million
($0.48 per share). The decrease in 2000 earnings was due to
lower gains on sales of McLeod stock ($0.12 per share), the
dilutive impact of Alliant Energy's January 2000 investment in
several Brazilian utilities ($0.12 per share), a one-time
charge ($0.03 per share) related to a loss on a contract at
Alliant Energy's integrated services business and lower gains
from asset sales in New Zealand ($0.03 and $0.05 per share in
2000 and 1999, respectively). These items were partially
offset by significant earnings increases from Alliant Energy's
oil and gas ($0.20 per share) and electricity trading ($0.08
per share) businesses. Increased interest expense to fund
various other strategic growth initiatives also impacted the
earnings comparison. The dilutive impact of the Brazil
investment was higher than initially anticipated, largely due
to unexpected regulatory delays in the implementation of tariff
adjustments. Alliant Energy expects these delays to be
resolved in the first half of 2001 and expects the earnings
from the Brazil investments to be positive in 2001 and
subsequent years.
Alliant Energy's 1999 earnings increase was due to increased
earnings from non-regulated operations of $0.60 per share (of
which $0.32 per share was attributable to sales of McLeod
stock), higher electric and natural gas margins from utility
operations and lower utility operation and maintenance
expenses. Higher depreciation (excluding hedge losses in
WP&L's nuclear decommissioning trust fund) and interest expenses
partially offset these items. The 1998 results also included
approximately $54 million of pre-tax merger-related expenses
($0.45 per share).
The 1999 utility earnings were $161.1 million ($2.06 per share)
compared to $109.5 million ($1.42 per share) for 1998. The
increase in utility earnings resulted primarily from higher
electric and natural gas margins ($0.24 and $0.04 per share,
respectively), lower operation and maintenance expenses ($0.09
per share) and income realized from weather hedges ($0.04 per
share). Higher depreciation and interest expenses ($0.10 and
-33-
$0.02 per share, respectively) and a higher effective income
tax rate ($0.02 per share) partially offset these items. The
1998 utility results included approximately $0.42 per share of
merger-related expenses.
Resources reported net income of $37.8 million ($0.48 per
share) in 1999 compared to a net loss of $8.9 million (($0.12)
per share) for 1998. The 1999 earnings included gains realized
from several asset sales, including approximately 7 percent of
Alliant Energy's investment in McLeod ($0.32 per share), oil
and gas properties at Whiting ($0.08 per share) and certain New
Zealand electric distribution investments ($0.05 per share).
Earnings from Alliant Energy's electricity trading joint
venture ($0.06 per share), improved operating results from
Whiting ($0.03 per share) and improved earnings from Alliant
Energy's other non-regulated businesses ($0.03 per share) also
contributed to the increased earnings. The 1998 results for
Resources also included merger-related expenses ($0.03 per
share).
Electric Utility Operations - Electric margins and MWh sales
- ----------------------------
for Alliant Energy for 2000, 1999 and 1998 were as follows:
Revenues and Costs (in thousands) MWhs Sold (in thousands)
----------------------------------------------------------- ------------------------------------------------
2000 1999 * 1998 ** 2000 1999 * 1998 **
------------ ------------- ------- ------------ --------- --------- ---------- -------- --------- ------
Residential $567,283 $541,714 5% $532,676 2% 7,161 7,024 2% 6,826 3%
Commercial 349,019 329,487 6% 317,704 4% 5,364 5,260 2% 4,943 6%
Industrial 501,155 476,140 5% 477,241 -- 13,092 13,036 -- 12,718 3%
------------ ------------- ------------ --------- ---------- ---------
Total from ultimate
customers 1,417,457 1,347,341 5% 1,327,621 1% 25,617 25,320 1% 24,487 3%
Sales for resale 173,148 155,801 11% 199,128 (22%) 4,906 5,566 (12%) 7,189 (23%)
Other 57,431 45,796 25% 40,693 13% 174 162 7% 158 3%
------------ ------------- ------------ --------- ---------- ---------
Total revenues/sales 1,648,036 1,548,938 6% 1,567,442 (1%) 30,697 31,048 (1%) 31,834 (2%)
========= ========== =========
Electric production
fuels expense 271,073 247,136 10% 283,866 (13%)
Purchased power expense 294,818 255,446 15% 255,332 --
------------ ------------- ------------
Margin $1,082,145 $1,046,356 3% $1,028,244 2%
============ ============= ============
* Reflects the percent change from 1999 to 2000. ** Reflects
the percent change from 1998 to 1999.
Electric margin increased $35.8 million, or 3 percent, and
$18.1 million, or 2 percent, for 2000 and 1999, respectively.
The 2000 increase was primarily due to increased sales to
retail customers due to continued economic growth in Alliant
Energy's utility subsidiaries' service territories, a favorable
$10 million change in estimate of WP&L's utility services
rendered but unbilled at month-end, increased energy
conservation revenues and increased capacity sales. These
items were partially offset by higher purchased-power and fuel
expenses and the impact of milder weather conditions
(approximately $12 million) on electric margin in 2000 compared
to 1999. The 1999 margin also included a favorable $9 million
change in estimate of IESU's and IPC's utility services
rendered but unbilled at month-end in Iowa.
The 1999 increase was primarily due to separate $15 million
annual rate adjustments implemented at WP&L in July 1998 and
March 1999 to recover higher purchased-power and transmission
costs, a favorable $9 million change in estimate of IESU's and
IPC's utility services rendered but unbilled at month-end in
Iowa, increased retail sales of 3 percent due to more favorable
weather conditions in 1999 and economic growth in the service
territory. Partially offsetting these increases were reduced
recoveries of approximately $14 million in concurrent and
previously deferred expenditures for Iowa-mandated energy
efficiency programs, lower sales to off-system and wholesale
customers, higher purchased-power capacity costs in Iowa and
$3.2 million of revenues collected from WP&L customers in 1998
for a surcharge related to Kewaunee. The recovery for energy
efficiency programs in Iowa is in accordance with IUB orders (a
portion of these recoveries is offset as they are also
amortized to expense in other operation and maintenance
expense). The lower sales to off-system and wholesale
customers were primarily due to lower wholesale customer
contractual commitments and transmission constraints.
-34-
IESU's and IPC's electric tariffs include EACs that are
designed to currently recover the costs of fuel and the energy
portion of purchased-power billings (refer to Note 1(j) of
Alliant Energy's "Notes to Consolidated Financial Statements"
in Item 8. for discussion of the EAC). Refer to "Utility
Industry Outlook - Rates and Regulatory Matters" for additional
information on the IUB fuel investigation and the December 2000
FAC filing by WP&L.
Gas Utility Operations - Gas margins and Dth sales for Alliant
- -----------------------
Energy for 2000, 1999 and 1998 were as follows:
Revenues and Costs (in thousands) Dths Sold (in thousands)
---------------------------------------------------- -----------------------------------------------------
2000 1999 * 1998 ** 2000 1999 * 1998 **
------------ ------------------- ----------- ------ ----------- ---------- -------- ---------- ---------
Residential $245,697 $185,090 33% $175,603 5% 32,026 30,309 6% 28,378 7%
Commercial 127,104 89,118 43% 85,842 4% 19,696 18,349 7% 17,760 3%
Industrial 27,752 21,855 27% 20,204 8% 5,350 5,963 (10%) 5,507 8%
Transportation/other 14,395 18,256 (21%) 13,941 31% 43,931 46,954 (6%) 52,389 (10%)
------------ ------------ ----------- ----------- ---------- ----------
Total revenues/sales 414,948 314,319 32% 295,590 6% 101,003 101,575 (1%) 104,034 (2%)
=========== ========== ==========
Cost of utility gas sold 278,734 180,519 54% 166,453 8%
------------ ------------ -----------
Margin $136,214 $133,800 2% $129,137 4%
============ ============ ===========
* Reflects the percent change from 1999 to 2000. ** Reflects
the percent change from 1998 to 1999.
Gas margin increased $2.4 million, or 2 percent, and $4.7
million, or 4 percent, for 2000 and 1999, respectively. The
2000 increase was largely due to more favorable weather
conditions in the 2000 heating season compared to 1999. Due to
Alliant Energy's rate recovery mechanisms for gas costs, the
significant increase in Alliant Energy's cost of gas sold
during 2000 had little impact on gas margin. The 1999 increase
was primarily due to higher retail sales due to customer growth
and more favorable weather conditions in 1999. The 1999 sales
increase was partially offset by decreased recoveries of $2.6
million of concurrent and previously deferred energy efficiency
expenditures for Iowa-mandated energy efficiency program costs
in accordance with IUB orders (portions of these recoveries
offset as they are also amortized to expense in other operation
and maintenance expense).
IESU's and IPC's gas tariffs include PGA clauses that are
designed to currently recover the cost of utility gas sold
(refer to Note 1(j) of Alliant Energy's "Notes to Consolidated
Financial Statements" in Item 8. for discussion of the PGA).
Non-regulated and Other Revenues - Non-regulated and other
- --------------------------------
revenues for 2000, 1999 and 1998 were as follows (in millions):
2000 1999 1998
-------- -------- -------
ISCO $172 $126 * $127
Oil and gas production 94 63 65
Steam 30 28 27
Transportation 20 22 22
Other 26 26 27
-------- -------- -------
$342 $265 $268
======== ======== =======
* Refer to Note 1(a) of Alliant Energy's "Notes to Consolidated
Financial Statements" in Item 8. for additional information
related to a reclassification.
The 2000 ISCO increase was primarily due to various business
acquisitions in 2000, increased activity in Alliant Energy's
energy marketing business and greater demand for environmental
and engineering services. Oil and gas production revenues
increased in 2000 primarily due to higher oil and gas prices
(partially offset by hedging) and oil volumes, partially offset
by reduced gas volumes. The 1999 ISCO revenues decreased due
to reduced activity in the energy marketing business, mostly
-35-
offset by greater demand for environmental and engineering
services. Refer to Note 10(a) of Alliant Energy's "Notes to
Consolidated Financial Statements" in Item 8. for discussion of
oil swaps and collars and natural gas swaps at Whiting.
Other Operating Expenses - Other operation and maintenance
- ---------------------------
expenses for 2000, 1999 and 1998 were as follows (in millions):
2000 1999 1998
-------- -------- --------
Utility subsidiaries $497 $477 $540
ISCO 158 114 * 118
Oil and gas
production 37 35 38
Transportation 11 10 10
Other 32 33 37
-------- -------- --------
$735 $669 $743
======== ======== ========
* Refer to Note 1(a) of Alliant Energy's "Notes to Consolidated
Financial Statements" in Item 8. for additional information
related to a reclassification.
Other operation and maintenance expenses at the utility
subsidiaries increased $20 million in 2000 primarily due to:
(a) A planned refueling outage at Kewaunee.
(b) Higher expenses in the utility subsidiaries' energy
delivery and generation business units (including $3
million of one-time fees related to the transfer of the
Iowa utility businesses from the MAPP reliability region
to the MAIN region).
(c) Increases in administrative and general expenses.
(d) Higher energy conservation expenses.
The 2000 increases were partially offset by expenses incurred
in 1999 relating to Alliant Energy's Y2K program.
Other operation and maintenance expenses at ISCO increased $44
million in 2000 primarily due to increased expenses: at the
energy marketing business; from 2000 business acquisitions; and
at Alliant Energy's environmental and engineering services
business, including a one-time charge of $4 million related to
a loss on a contract.
Other operation and maintenance expenses at the utility
subsidiaries decreased $63 million in 1999 primarily due to the
following factors:
(a) $34 million of merger-related expenses incurred in 1998,
which were for employee retirements ($15 million),
separations ($13 million), relocations ($4 million) and
other ($2 million).
(b) Reduced expenses in the energy delivery and generation
business units.
(c) Lower energy efficiency expenses of $17 million in Iowa.
(d) A 1998 write-off of $9 million of certain employee
benefits-related regulatory assets at IESU, which resulted
from IESU's 1998 assessment regarding how certain employee
benefit costs were recovered in the rate making process in
Iowa. Based on such review, IESU concluded it could no
longer meet the required "probable" standard for SFAS 71.
(e) Reduced insurance-related expenses.
(f) Lower costs in 1999 due to merger-related operating
efficiencies.
The 1999 decreases were partially offset by higher expenses for
employee incentive compensation, Alliant Energy's Y2K program,
energy conservation expense at WP&L and employee benefits.
Other operation and maintenance expenses at ISCO decreased $4
million in 1999 primarily due to lower operation expenses in
the energy marketing business, partially offset by increased
demand for environmental and engineering services.
-36-
Depreciation and amortization expense increased $43.2 million
and decreased $0.4 million in 2000 and 1999, respectively. The
2000 increase was primarily due to utility property additions
and acquisitions at the non-regulated businesses, increased
earnings in the WP&L nuclear decommissioning trust fund of
approximately $20 million (offset entirely in "Miscellaneous,
net") and increased amortization expenses. The 1999 decrease
was primarily due to reduced earnings in WP&L's nuclear
decommissioning trust fund, lower depletion expense at Whiting
and the $3.2 million Kewaunee surcharge in 1998 at WP&L
(recorded in depreciation and amortization expense with a
corresponding increase in revenues resulting in no earnings
impact). These items were largely offset by increases in
depreciation expense due to utility property additions.
Interest Expense and Other - Interest expense increased $37.4
- --------------------------
million and $6.9 million in 2000 and 1999, respectively. The
2000 increase was primarily due to higher non-regulated and
utility borrowings to fund Alliant Energy's strategic growth
initiatives, including Resources' $347 million investment in
several Brazilian electric utilities in January 2000, and
higher interest rates associated with short-term debt
outstanding. The 1999 interest expense increase was primarily
due to higher utility and non-regulated borrowings and higher
nuclear decommissioning trust fund interest expense at IESU,
which was offset entirely in "Miscellaneous, net."
The accounting for earnings on the nuclear decommissioning
trust funds results in no net income impact. Miscellaneous,
net income increases for earnings on the nuclear
decommissioning trust funds at both WP&L and IESU. In
accordance with their respective regulatory requirements, the
corresponding offset is recorded through depreciation expense
at WP&L and interest expense at IESU.
On July 1, 2000, Alliant Energy adopted SFAS 133. Related to
the adoption, Alliant Energy recorded a $321.3 million gain
related to the designation of a portion of Alliant Energy's
McLeod holdings as "trading securities." This gain related to
the unrealized appreciation in value of approximately 27
percent of Alliant Energy's McLeod holdings. Alliant Energy
will reflect in earnings all future changes in the value of the
shares of McLeod stock designated as trading, which is expected
to substantially offset the earnings impact of corresponding
changes in the value of the derivative component of the 30-year
exchangeable senior notes issued by Resources in February 2000.
In 2000, Alliant Energy continued to sell limited shares of its
investment in McLeod to offset its start-up and growth-related
interest expenses and re-deploy such proceeds into strategic
earnings-generating investments. In 2000, Alliant Energy sold
approximately 1.3 million shares (as adjusted for the 3-for-1
stock split effective April 2000) of its investment in McLeod,
resulting in pre-tax gains of approximately $24 million. In
1999, Alliant Energy sold approximately 4.3 million shares (as
adjusted for both the 2-for-1 stock split effective July 1999
and the 3-for-1 stock split effective April 2000), or 7 percent
of its investment in McLeod, resulting in pre-tax gains of
approximately $40 million, of which approximately $10 million
was used for start-up expenses. As of December 31, 2000,
Alliant Energy beneficially owned 56.1 million shares of McLeod
common stock.
Miscellaneous, net income increased $30.3 million and $35.2
million in 2000 and 1999, respectively. The 2000 increase was
primarily due to a change of $102 million in the value of the
derivative component of Resources' exchangeable senior notes,
increased interest income (including nuclear decommissioning
trust fund earnings and $4 million recognized from a tax
settlement at IESU), increased earnings of $10 million from
Alliant Energy's electricity trading business and improved
operations from other Alliant Energy unconsolidated
non-regulated businesses. These items were partially offset by
a decrease of $103 million in value of the McLeod trading
securities, a decrease of $4 million in gains from sales of
certain investments at Whiting and New Zealand completed during
both periods and reduced income of $2 million realized from
weather hedges at WP&L. Refer to Note 10(b) of Alliant
Energy's "Notes to Consolidated Financial Statements" in Item 8.
for discussion of WP&L's weather hedges.
The 1999 increase in miscellaneous, net income was primarily
due to the non-recurrence of $17 million of merger-related
expenses incurred in 1998 for the services of Alliant Energy's
advisors and costs related to Alliant Energy's merger-related
-37-
name change; gains of $10 million and $6 million realized from
the sales of several oil and gas properties at Whiting and
certain New Zealand electric distribution investments,
respectively; a $7 million increase in pre-tax earnings from
Alliant Energy's electricity trading joint venture; and $5
million of income realized from weather hedges at WP&L. The
1999 increase in miscellaneous, net income was partially offset
by a decrease of $11 million in earnings in the nuclear
decommissioning trust funds.
Refer to Note 10(a) of Alliant Energy's "Notes to Consolidated
Financial Statements" in Item 8. for additional information
related to the exchangeable senior notes derivative, the McLeod
trading securities and the cumulative effect of a change in
accounting principle.
Income Taxes - The effective income tax rates for Alliant
- ------------
Energy were 38.1 percent, 37.2 percent and 36.0 percent in
2000, 1999 and 1998, respectively. Refer to Note 5 of Alliant
Energy's "Notes to Consolidated Financial Statements" in Item
8. for additional information.
IESU RESULTS OF OPERATIONS
Overview - IESU's earnings available for common stock increased
- ---------
$8.0 million and $4.5 million in 2000 and 1999, respectively.
The 2000 increase was primarily due to reduced other operation
and maintenance expenses, higher electric and gas margins and
lower tax expense primarily due to a lower effective income tax
rate. These items were partially offset by increased
depreciation and amortization expense due to property
additions. Higher interest income, largely due to a tax
settlement realized in 2000, also contributed to the increase.
The 1999 increase was primarily due to the nonrecurrence of $17 million of
merger-related expenses in 1998, the nonrecurrence of a $9 million regulatory
asset write-off in 1998, an approximate $5 million change in estimate
of IESU's unbilled revenues in 1999 and reduced maintenance
expenses. Such increases were partially offset by higher
depreciation and amortization expense, increased administrative
and general expenses and a higher effective income tax rate.
Electric Utility Operations - Electric margins and MWh sales
- ---------------------------
for IESU for 2000, 1999 and 1998 were as follows:
Revenues and Costs (in thousands) MWhs Sold (in thousands)
--------------------------------------------------------- -------------------------------------------------
2000 1999 * 1998 ** 2000 1999 * 1998 **
---------- ------------- -------- ------------- -------- -------- ---------- -------- --------- --------
Residential $236,084 $230,422 2% $232,662 (1%) 2,742 2,685 2% 2,661 1%
Commercial 182,068 176,251 3% 168,672 4% 2,701 2,658 2% 2,465 8%
Industrial 188,734 181,740 4% 181,369 -- 5,053 5,072 -- 4,872 4%
---------- ------------- ------------- -------- ---------- ---------
Total from ultimate
customers 606,886 588,413 3% 582,703 1% 10,496 10,415 1% 9,998 4%
Sales for resale 31,046 28,479 9% 45,453 (37%) 1,044 1,392 (25%) 1,763 (21%)
Other 13,527 11,058 22% 11,267 (2%) 40 40 -- 42 (5%)
---------- ------------- ------------- -------- ---------- ---------
Total revenues/sales 651,459 627,950 4% 639,423 (2%) 11,580 11,847 (2%) 11,803 --
======== ========== =========
Electric production
fuels expense 100,816 80,079 26% 99,362 (19%)
Purchased power
expense 83,575 82,402 1% 71,637 15%
---------- ------------- -------------
Margin $467,068 $465,469 -- $468,424 (1%)
========== ============= =============
* Reflects the % change from 1999 to 2000. ** Reflects the %
change from 1998 to 1999.
Electric margin increased $1.6 million and decreased $3.0
million, or 1%, for 2000 and 1999, respectively. The 2000
increase was primarily due to increased sales to retail
customers due to continued economic growth in IESU's service
territory, partially offset by the impact of a 1999 change in
estimate of utility services rendered but unbilled at month-end
of approximately $5 million, milder weather conditions in 2000
compared to 1999 and reduced recoveries of $3.8 million in
concurrent and previously deferred expenditures for
Iowa-mandated energy efficiency programs. The recovery for
energy efficiency programs in Iowa is in accordance with IUB
orders (a portion of these recoveries is offset as they are
also amortized to expense in other operation and maintenance
expense).
-38-
The 1999 decrease was primarily due to reduced recoveries of
$4.0 million in concurrent and previously deferred expenditures
for Iowa-mandated energy efficiency programs and increased
purchased-power capacity costs. Sales for resale decreased
significantly in 1999 primarily due to various resale customers
of IESU selecting another utility as their electricity provider
effective in early 1999. The loss of such customers has not
had a material impact on IESU's electric margins. Sales to
retail customers increased primarily due to continued economic
growth in IESU's service territory and more favorable weather
conditions. The 1999 electric margin also benefited from the
favorable $5 million change in estimate of IESU's utility
services rendered but unbilled at month-end.
IESU's electric tariffs include EAC's that are designed to
currently recover the costs of fuel and the energy portion of
purchased-power billings. Refer to Note 1(j) of Alliant
Energy's "Notes to Consolidated Financial Statements" in Item 8.
for discussion of the EAC and to "Utility Industry Outlook -
Rates and Regulatory Matters" for information on an IUB fuel
investigation.
Gas Utility Operations - Gas margins and Dth sales for IESU for
- -----------------------
2000, 1999 and 1998 were as follows:
Revenues and Costs (in thousands) Dths Sold (in thousands)
-------------------------------------------------------- --------------------------------------------------
2000 1999 * 1998 ** 2000 1999 * 1998 **
------------ ---------- ------ ------------ --------- --------- --------- --------- --------- --------
Residential $117,132 $88,302 33% $86,821 2% 14,829 13,778 8% 13,803 --
Commercial 57,671 40,459 43% 39,928 1% 8,753 8,077 8% 8,272 (2%)
Industrial 15,377 11,543 33% 10,422 11% 3,063 3,291 (7%) 3,089 7%
Transportation/other 6,001 5,521 9% 4,108 34% 10,061 10,236 (2%) 11,316 (10%)
------------ ---------- ------------ --------- --------- ---------
Total revenues/sales 196,181 145,825 35% 141,279 3% 36,706 35,382 4% 36,480 (3%)
========= ========= =========
Cost of gas sold 136,352 88,308 54% 84,642 4%
------------ ---------- ------------
Margin $59,829 $57,517 4% $56,637 2%
============ ========== ============
* Reflects the % change from 1999 to 2000. ** Reflects the %
change from 1998 to 1999.
Gas margin increased $2.3 million, or 4%, and $0.9 million, or
2%, for 2000 and 1999, respectively. The increases were
largely due to more favorable weather conditions. Due to
IESU's rate recovery mechanisms for gas costs, the significant
increase in IESU's cost of gas sold during 2000 had no impact
on gas margin. IESU's gas tariffs include PGA clauses that are
designed to currently recover the cost of utility gas sold.
Refer to Note 1(j) of Alliant Energy's "Notes to Consolidated
Financial Statements" in Item 8. for discussion of the PGA.
Other Operating Expenses - IESU's other operation and
- ------------------------
maintenance expenses decreased $7.2 million and $17.1 million
for 2000 and 1999, respectively. The 2000 decrease was
primarily due to a decrease of $3.5 million in energy
efficiency expenses, expenses incurred in 1999 relating to
IESU's Y2K program and lower employee benefits costs. These
items were partially offset by higher nuclear operation
expenses and one-time fees related to the transfer from the
MAPP reliability region to the MAIN region in 2000. The 1999
decrease was primarily due to the nonrecurrence of $10.5 million of
merger-related expenses in 1998, the nonrecurrence of a $9 million regulatory
asset write-off in 1998, reduced nuclear maintenance expenses of $4.0 million, a
$4.0 million decrease in energy efficiency expenses and
merger-related operating efficiencies realized in 1999. The
merger-related expenses were primarily for employee
retirements, separations and relocations. The regulatory asset
write-off resulted from IESU assessing in the fourth quarter of
1998 how certain employee benefit costs were recovered in the
rate making process in Iowa. Based on such review, IESU
concluded it could no longer meet the required "probable"
standard for SFAS 71. Such decreases were partially offset by
increased costs for employee incentive compensation, higher
employee benefit costs and higher expenses for the Y2K program
costs.
Depreciation and amortization expenses increased $7.0 million
and $7.1 million for 2000 and 1999, respectively, primarily due
to property additions and amortization of software.
-39-
Interest Expense and Other - Miscellaneous, net income
- ---------------------------
increased $1.3 million and $6.4 million for 2000 and 1999,
respectively. The 2000 increase was primarily due to $4.1
million of interest income recognized from a tax settlement in
2000, partially offset by lower other interest income. The
increase in 1999 resulted primarily from $6.0 million of
merger-related expenses in 1998 and higher nuclear
decommissioning trust fund earnings, which were partially
offset by a gain on an asset sale in 1998.
Income Taxes - The effective income tax rates were 40.2%, 42.6%
- ------------
and 40.1% in 2000, 1999 and 1998, respectively. Refer to Note
5 of IESU's "Notes to Consolidated Financial Statements" in
Item 8. for additional information.
WP&L RESULTS OF OPERATIONS
Overview - WP&L's earnings available for common stock increased
- ---------
$0.6 million and $35.3 million in 2000 and 1999, respectively.
The 2000 increase was primarily due to higher electric margins
and a reduced effective income tax rate, largely offset by
increased operation and maintenance, depreciation and
amortization and interest expenses. The 1999 increase was
primarily due to the nonrecurrence of $17.3 million of merger-related
expenses in 1998, higher electric and natural gas margins, reduced other
operation and maintenance expenses and income realized from
weather hedges. Such increases were partially offset by
increased depreciation and amortization expense (excluding
hedge losses in WP&L's nuclear decommissioning trust fund) and
higher interest expense.
Electric Utility Operations - Electric margins and MWh sales
- ---------------------------
for WP&L for 2000, 1999 and 1998 were as follows:
Revenues and Costs (in thousands) MWhs Sold (in thousands)
---------------------------------------------------------- -----------------------------------------------
2000 1999 * 1998 ** 2000 1999 * 1998 **
----------- ------------ --------- ------------- --------- --------- --------- ------ --------- -------
Residential $229,668 $213,496 8% $198,770 7% 3,151 3,111 1% 2,964 5%
Commercial 127,199 116,947 9% 108,724 8% 2,031 1,980 3% 1,898 4%
Industrial 190,085 171,118 11% 162,771 5% 4,688 4,570 3% 4,493 2%
----------- ------------ ------------- --------- --------- ---------
Total from ultimate
customers 546,952 501,561 9% 470,265 7% 9,870 9,661 2% 9,355 3%
Sales for resale 115,715 102,751 13% 128,536 (20%) 3,228 3,252 (1%) 4,492 (28%)
Other 29,524 22,295 32% 15,903 40% 63 54 17% 59 (8%)
----------- ------------ ------------- --------- --------- ---------
Total revenues/sales 692,191 626,607 10% 614,704 2% 13,161 12,967 1% 13,906 (7%)
========= ========= =========
Electric production
fuels expense 113,208 110,521 2% 120,485 (8%)
Purchased power
expense 146,939 107,598 37% 113,936 (6%)
----------- ------------ -------------
Margin $432,044 $408,488 6% $380,283 7%
=========== ============ =============
* Reflects the % change from 1999 to 2000. ** Reflects the %
change from 1998 to 1999.
Electric margin increased $23.6 million, or 6%, and $28.2
million, or 7%, during 2000 and 1999, respectively. The 2000
increase was primarily due to increased sales to retail
customers due to continued economic growth in WP&L's service
territory, a favorable $10 million change in estimate of
utility services rendered but unbilled at month-end and
increased energy conservation revenues. These items were
partially offset by the impact of milder weather conditions in
2000 compared to 1999 and higher purchased-power and fuel
expenses.
The 1999 increase was primarily due to separate $15 million
annual rate adjustments implemented at WP&L in July 1998 and
March 1999 to recover higher purchased-power and transmission
costs. An increase in retail sales of 3% due to more favorable
weather and economic growth within WP&L's service territory
also contributed to the increase. Partially offsetting the
1999 increase were lower sales to off-system and wholesale
customers due to transmission constraints and decreased
contractual commitments and $3.2 million of revenues collected
in 1998 for a surcharge related to Kewaunee.
-40-
Refer to "Utility Industry Outlook - Rates and Regulatory
Matters" for information on a WP&L FAC filing in December
2000.
Gas Utility Operations - Gas margins and Dth sales for WP&L for
- ----------------------
2000, 1999 and 1998 were as follows:
Revenues and Costs (in thousands) Dths Sold (in thousands)
------------------------------------------------------- ------------------------------------------------
2000 1999 * 1998 ** 2000 1999 * 1998 **
---------- ------------ --------- ---------- --------- --------- --------- -------- --------- ------
Residential $96,204 $69,662 38% $65,173 7% 12,769 12,070 6% 10,936 10%
Commercial 54,512 35,570 53% 33,898 5% 8,595 7,771 11% 7,285 7%
Industrial 8,581 6,077 41% 5,896 3% 1,476 1,520 (3%) 1,422 7%
Transportation/other 5,855 9,461 (38%) 6,770 40% 13,680 13,237 3% 12,948 2%
---------- ------------ ---------- --------- --------- ---------
Total revenues/sales 165,152 120,770 37% 111,737 8% 36,520 34,598 6% 32,591 6%
========= ========= =========
Cost of gas sold 107,131 64,073 67% 61,409 4%
---------- ------------ ----------
Margin $58,021 $56,697 2% $50,328 13%
========== ============ ==========
* Reflects the % change from 1999 to 2000. ** Reflects the %
change from 1998 to 1999.
Gas margin increased $1.3 million, or 2%, and $6.4 million, or
13%, during 2000 and 1999, respectively. The 2000 increase was
largely due to more favorable weather conditions in the 2000
heating season compared to 1999, partially offset by reduced
energy conservation revenues. Due to WP&L's rate recovery
mechanisms for gas costs, the significant increase in WP&L's
cost of gas sold during 2000 had no adverse impact on gas
margin. The 1999 increase was due to increased sales resulting
from customer growth of approximately 2% and more favorable
weather conditions in 1999.
Refer to "Interest Expense and Other" for discussion of income
realized from gas weather hedges in 2000 and 1999 and Note 1(j)
of Alliant Energy's "Notes to Consolidated Financial
Statements" in Item 8. for discussion of a gas cost adjustment
mechanism in place at WP&L.
Other Operating Expenses - Other operation and maintenance
- -------------------------
expenses increased $16.8 million and decreased $21.4 million
for 2000 and 1999, respectively. The 2000 increase was
primarily due to a planned refueling outage at Kewaunee, higher
expenses in the energy delivery business unit, increased energy
conservation expense and increased maintenance expenses. The
2000 increases were partially offset by expenses incurred in
1999 relating to WP&L's Y2K program. The 1999 decrease was
primarily due to the nonrecurrence of $11.2 million of merger-related
expenses in 1998 for employee retirements, separations and relocations,
reduced expenses in the energy delivery and generation business units,
reduced insurance-related expenses, lower nuclear expenses and
lower costs due to merger-related operating efficiencies. The
1999 decreases were partially offset by increased costs for
energy conservation, employee incentive compensation, expenses
incurred in 1999 relating to the Y2K program and employee
benefits expenses.
Depreciation and amortization expense increased $26.9 million
and decreased $6.2 million for 2000 and 1999, respectively.
The 2000 increase was primarily due to increased earnings in
the nuclear decommissioning trust fund of approximately $20
million, property additions and higher amortization expense.
The 1999 decrease was due to reduced earnings in the nuclear
decommissioning trust fund and the nonrecurrence of the $3.2 million Kewaunee
surcharge in 1998. The 1999 decrease was partially offset by
the impact of property additions. The accounting for earnings
on the nuclear decommissioning trust funds results in no net
income impact. Miscellaneous, net income is increased for
earnings on the trust fund, which is offset in depreciation
expense.
Interest Expense and Other - Interest expense increased $3.7
- --------------------------
million and $4.4 million in 2000 and 1999, respectively. The
2000 increase was primarily due to higher interest rates and
borrowings outstanding in 2000. The 1999 increase was
primarily due to higher short-term borrowings.
-41-
Miscellaneous, net income increased $18.4 million and decreased
$3.0 million in 2000 and 1999, respectively. The 2000 increase
was primarily due to increased earnings in the nuclear
decommissioning trust fund of approximately $20 million,
partially offset by reduced income of $2 million realized from
gas weather hedges. The 1999 decrease was primarily due to
lower earnings on the nuclear decommissioning trust fund,
partially offset by the nonrecurrence of $6.1 million of merger-related
expenses in 1998 and $5 million recognized in 1999 associated with the
settlement of gas weather hedges. Refer to Note 10(b) of
Alliant Energy's "Notes to Consolidated Financial Statements"
in Item 8. for additional information relating to the gas
weather hedges.
Income Taxes - The effective income tax rates were 37.5%, 39.2%
- ------------
and 41.0% in 2000, 1999 and 1998, respectively. Refer to Note
5 of WP&L's "Notes to Consolidated Financial Statements" in
Item 8. for additional information.
LIQUIDITY AND CAPITAL RESOURCES
Overview - Given Alliant Energy's financing flexibility,
- ----------
including access to both the debt and equity securities
markets, management believes it has the necessary financing
capabilities in place to adequately finance its capital
requirements for the foreseeable future. Alliant Energy's
capital requirements are primarily attributable to Resources'
acquisition and investment opportunities, its utility
subsidiaries' construction and acquisition programs and its
debt maturities. Alliant Energy expects to meet its future
capital requirements with cash generated from operations, sale
of investments and external financing. The level of cash
generated from operations is partially dependent on economic
conditions, legislative activities, environmental matters and
timely regulatory recovery of utility costs. Liquidity and
capital resources will be affected by costs associated with
environmental and regulatory issues. Changes in the utility
industry could also impact Alliant Energy's liquidity and
capital resources, as discussed in "Utility Industry
Outlook."
Cash Flows - In 2000, Alliant Energy's cash flows from
- ----------
financing activities increased $507 million primarily as a
result of $402.5 million of exchangeable senior notes issued in
February 2000 used to fund investments in the non-regulated
businesses, including a $347 million investment in Brazil in
January 2000. In 1999, Alliant Energy's cash flows from operating activities
decreased $45 million primarily due to changes in working
capital; cash flows used for financing activities decreased
$161 million largely due to changes in debt outstanding; and
cash flows used for investing activities increased $39 million
due to increased levels of construction and acquisition
expenditures, primarily in the non-regulated businesses,
partially offset by increased proceeds from sales of McLeod
stock and other investments.
In 2000, IESU's cash flows from operating activities increased
$49 million due to changes in working capital. IESU's cash
flows used for financing activities decreased $17 million in
2000 primarily due to increased common stock dividends in 1999
as no dividend payments were made in the last three quarters of
1998 due to merger-related tax considerations. As a result,
the dividend payment in the first quarter of 1999 was larger
than IESU's historical quarterly payment. Cash flows used for
investing activities increased $13 million in 2000 due to
increased levels of construction expenditures. In 1999, IESU's
cash flows from operating activities decreased $44 million primarily
due to changes in working capital; cash flows used for financing activities
increased $71 million in 1999 due to the increased common stock dividends
in 1999; and cash flows used for investing activities decreased $6 million in
1999 due to decreased construction expenditures.
In 2000, WP&L's cash flows used for financing activities
increased $20 million due to the reduction of short-term debt
outstanding and a capital contribution of $30 million in 1999
from Alliant Energy, partially offset by the issuance of $100
million of senior unsecured debentures in 2000 and no common
stock dividends declared in 2000 due to management of its
capital structure. In 1999, WP&L's cash flows from operating
activities decreased $14 million primarily due to changes in working
capital, partially offset by higher net income primarily due to
-42-
merger-related expenses in 1998; cash flows used for financing
activities decreased $34 million due to increased short-term
borrowings in 1999 and the $30 million capital contribution
from Alliant Energy, partially offset by the issuance of $60
million of debentures in 1998; and cash flows used for
investing activities increased $17 million primarily due to
increased construction expenditures.
Environmental - Alliant Energy's pollution abatement programs
- --------------
are subject to continuing review and are periodically revised
due to changes in environmental regulations, construction plans
and escalation of construction costs. While management cannot
precisely forecast the effect of future environmental
regulations on operations, it has taken steps to anticipate the
future while also meeting the requirements of current
environmental regulations.
Wisconsin is subject to the Clean Air Act due to its
non-attainment status with respect to the one-hour ozone
standard in the Lake Michigan region. The WDNR has developed a
rule that contains a plan for the state to meet the one-hour
ozone attainment standard. The plan focuses on rate of
progress requirements that are specified by the Clean Air Act
for the years 2002, 2005 and 2007. The rule requires NOx
reductions in counties that are currently in non-attainment of
the one-hour ozone standard which includes WP&L's Edgewater
power plant. Alliant Energy is currently evaluating various
alternatives to achieve the proposed reductions and to reduce
the emission levels at various power plants. Based on existing
technology, preliminary estimates indicate that capital
investments in the range of $30 to $40 million could be
required.
Revisions to the Wisconsin Administrative Code have been
proposed that could have a significant impact on WP&L's
operation of the Rock River Generating Station in Beloit,
Wisconsin. The proposed revisions will affect the amount of
heat that the generating station can discharge into the Rock
River. WP&L cannot presently predict the final outcome of the
rule, but believes that, as the rule is currently proposed, the
capital investments and/or modifications required to meet the
proposed discharge limits could be significant.
In 1998, the EPA issued the final report to Congress on the
Study of Hazardous Air Pollutant Emissions (HAPs) from Electric
Utility Steam Generating Units regarding hazardous air
pollutant emissions from electric utilities, which concluded
that mercury emissions from coal-fired generating plants were a
concern. The EPA is developing regulations that are expected
to be in place by 2004. In December 2000, the EPA made a
regulatory determination in favor of controlling HAPs
(including mercury) from electric utilities, which is being
challenged by utility industry groups in two lawsuits filed in
February 2001. Although the control of mercury emissions from
generating plants is uncertain at this time, Alliant Energy
believes that the capital investments and/or modifications that
may be required to control mercury emissions could be
significant.
Also in December 2000, the WNRB voted to allow the WDNR to
proceed with mercury rulemaking. WP&L and the other Wisconsin
Utility Association members have recommended to WNRB a workable
mercury program that protects reliability and does not
disadvantage Wisconsin when federal mercury rules are
developed. The WDNR has indicated its desire to have the
proposed rule written by the Spring of 2001. Alliant Energy
cannot presently predict the final outcome of the regulation,
but believes that capital investments and/or modifications
required could be significant.
WP&L has been notified by the EPA that it is a PRP with respect
to the MIG/DeWane Landfill Superfund Site. WP&L is
participating in the initiation of an alternate dispute
resolution process to allocate liability associated with the
investigation and remediation of the site. Management believes
that any likely action resulting from this matter will not have
a material adverse effect on WP&L's financial condition or
results of operations.
IPC has been notified by the EPA that it is a PRP with respect
to the Missouri Electric Works, Inc. (MEW) site in Cape
Girardeau, Missouri. IPC has been served with a complaint
filed by the MEW Site Trust Fund, the PRP group involved in
investigating and remediating the site, for response costs
incurred by the PRP group. IPC believes that it is not liable
as a PRP for this site because it did not arrange for the
disposal of any waste materials at the site. IPC has filed an
answer to the complaint and discovery is ongoing.
-43-
In 2000, WP&L was notified by Monroe County, Wisconsin that it
does not have liability for costs associated with the Monroe
County Interim Landfill in Sparta, Wisconsin. Monroe County
has decided that it will pay for the investigation and cleanup
of the landfill through community-wide funding.
In December 2000 and February 2001, the EPA requested certain
information relating to the historical operation of WP&L's
major coal-fired generating units in Wisconsin. WP&L has
responded to the December 2000 request and is in the process of
preparing its response to the February 2001 request. In some
cases involving similar EPA requests from other electric
generating facilities, penalties and capital expenditures have
resulted. WP&L cannot presently predict what impact, if any,
the EPA's request may have on its financial condition or
results of operations. However, any required remedial action
resulting from this matter could be significant.
A global treaty has been negotiated that could require
reductions of greenhouse gas emissions from utility plants. In
1998, the U.S. signed the treaty and agreed with other
countries to resolve all remaining issues by the end of 2000.
That deadline has not been met and significant differences
remain between the U.S. and other countries. At this time,
management is unable to predict whether the U.S. Congress will
ratify the treaty. Given the uncertainty of the treaty
ratification and the ultimate terms of the final regulations,
management cannot currently estimate the impact the
implementation of the treaty would have on Alliant Energy's
utility subsidiaries' operations.
Refer to Note 11(e) of the "Notes to Consolidated Financial
Statements" in Item 8. for further discussion of environmental
matters.
Long-Term Debt - At December 31, 2000, Resources had available
- --------------
$450 million of committed bank lines of credit extending
through October 2003 for direct borrowing or to support
commercial paper, of which $321 million of commercial paper was
outstanding and was classified as long-term debt. Commitment
fees are paid to maintain this facility and there are no
conditions restricting the unused credit. Currently, Resources
anticipates that this facility will be renewed upon
expiration.
In March 2000, WP&L issued $100 million of senior unsecured
debentures at a fixed interest rate of 7-5/8%, due 2010. The
net proceeds were primarily used to repay short-term debt. In
February 2000, Resources completed a private placement of
exchangeable senior notes due 2030, which were issued in the
original aggregate principal amount of $402.5 million.
In March 2001, IESU issued $200 million of senior unsecured
debentures at a fixed interest rate of 6-3/4%, due 2011. The
net proceeds were primarily used to refinance $81.6 million of
long-term debt maturing in 2001 and to repay short-term debt.
Alliant Energy has $607 million of long-term debt that will
mature prior to December 31, 2005. Depending on market
conditions, it is anticipated that a majority of the maturing
debt will be refinanced with the issuance of long-term
securities.
Refer to Note 8(b) of the "Notes to Consolidated Financial
Statements" in Item 8. for additional information on long-term
debt.
Short-Term Debt - At December 31, 2000, Resources had available
- ----------------
$150 million of committed bank lines of credit extending
through October 2001 for direct borrowing or to support
commercial paper. Commitment fees are paid to maintain this
facility and there are no conditions restricting the unused
credit. Currently, Resources anticipates that this facility
will be renewed upon expiration.
-44-
Alliant Energy also has $300 million of committed bank lines of
credit extending through October 2001 available for direct
borrowing or to support commercial paper, of which $284 million
of commercial paper was outstanding at December 31, 2000.
Commitment fees are paid to maintain these lines and there are
no conditions restricting the unused lines of credit. Alliant
Energy anticipates that this facility will be renewed upon
expiration. Alliant Energy has agreements with several
financial institutions to periodically borrow from uncommitted
"as-offered" credit lines in lieu of commercial paper. There
are no commitment fees associated with these agreements and $50
million of borrowings were outstanding under these agreements
at December 31, 2000.
In addition to funding working capital needs, the availability
of short-term financing provides the companies flexibility in
the issuance of long-term securities. The level of short-term
borrowing fluctuates based on seasonal corporate needs, the
timing of long-term financing and capital market conditions.
At December 31, 2000, IESU, WP&L and IPC were authorized by the
applicable federal or state regulatory agency to issue
short-term debt of $150 million, $128 million and $72 million,
respectively.
The utility subsidiaries participate in a utility money pool
that is funded, as needed, through the issuance of commercial
paper by Alliant Energy. Interest expense and other fees are
allocated based on borrowing amounts. The PSCW has restricted
WP&L from lending money to non-utility affiliates and
non-Wisconsin utilities. As a result, WP&L can only borrow
money from the utility money pool.
Alliant Energy anticipates that short-term debt will continue
to be available at reasonable costs due to current ratings by
independent utility analysts and credit rating services. Refer
to Note 8(a) of the "Notes to Consolidated Financial
Statements" in Item 8. for additional information on short-term
debt.
Sale of Accounts Receivable - To maintain flexibility in its
- ---------------------------
capital structure and to take advantage of favorable short-term
rates, IESU and WP&L use proceeds from the sale of accounts
receivable and unbilled revenues to finance a portion of their
long-term cash needs. Alliant Energy and the utility
subsidiaries have filed applications with the SEC and various
state regulatory agencies for approval of a combined accounts
receivable sale program whereby each utility, including IPC,
will sell their respective receivables through wholly-owned
special purpose entities to an affiliated financing entity,
which in turn will sell the receivables to an outside
investor. The new program would replace the existing programs
for IESU and WP&L, and would be substantially similar to the
prior programs. All necessary approvals are expected by
mid-2001.
Financial Guarantees and Commitments - Alliant Energy had
- -------------------------------------
certain off-balance sheet financial guarantees and commitments
outstanding at December 31, 2000. These largely consisted of
third-party borrowing arrangements and lending commitments,
guarantees of financial performance of syndicated affordable
housing properties and guarantees relating to Alliant Energy's
electricity trading joint venture and EUA Cogenex Corporation.
Refer to Note 11(d) of the "Notes to Consolidated Financial
Statements" in Item 8. for additional information.
Investments - Under PUHCA, certain investments of Alliant
- ------------
Energy in exempt wholesale generators and foreign utility
companies are limited to 50 percent of Alliant Energy's
consolidated retained earnings. Alliant Energy is pursuing
making the necessary regulatory filings requesting an increase
in this limitation. Under WUHCA, there is an asset cap
provision that limits certain non-utility assets in a utility
holding company to 25 percent of utility assets. Under the
provisions of the law, assets related to the provision of
various energy-related, environmental engineering and
telecommunications services are not included in the calculation
of either utility or non-utility assets.
Alliant Energy expects to pursue various potential business development
opportunities, including international as well as domestic investments, and is
devoting resources to such efforts. Foreign investments may carry a higher level
of risk than Alliant Energy's traditional domestic utility or non-regulated
investments. Such risks could include foreign government actions, economic and
currency risks and others. However, Alliant Energy will strive to select
investments where risks are both understood and manageable.
-45-
In January 2000, Resources acquired a stake in four Brazilian electric utilities
for a total of approximately $347 million (and has closed on additional
Brazilian investments in the first quarter of 2001). Refer to Note 9 of Alliant
Energy's "Notes to Consolidated Financial Statements" in Item 8. for additional
information related to Alliant Energy's investments in foreign entities. Alliant
Energy expects its Brazil investments will be slightly accretive to earnings in
2001 and generate significant earnings growth beginning in 2002.
Construction and Acquisition Expenditures - Capital expenditure
- ------------------------------------------
and investment and financing plans are subject to change as a
result of many considerations, including: changes in economic
conditions; variations in actual sales and load growth compared
to forecasts; requirements of environmental, nuclear and other
regulatory authorities; acquisition and business combination
opportunities; the availability of alternate energy and
purchased-power sources; the ability to obtain adequate and
timely rate relief; escalations in construction costs; and
conservation and energy efficiency programs. Refer to Note
11(a) of the "Notes to Consolidated Financial Statements" in
Item 8. for information on anticipated construction and
acquisition expenditures.
Alliant Energy's utility subsidiaries anticipate financing
utility construction expenditures during 2001-2005 through
internally generated funds supplemented, when required, by
outside financing. Funding of Resources' construction and
acquisition expenditures over that same period of time is
expected to be completed with a combination of external
financings, sales of investments and internally generated funds.
OTHER MATTERS
Market Risk Sensitive Instruments and Positions
Alliant Energy's primary market risk exposures are associated
with interest rates, commodity prices, equity prices and
currency exchange rates. Alliant Energy has risk management
policies to monitor and assist in controlling these market
risks and uses derivative instruments to manage some of the
exposures.
Interest Rate Risk - Alliant Energy is exposed to risk
- -------------------
resulting from changes in interest rates as a result of its
issuance of variable-rate debt. Alliant Energy manages its
interest rate risk by limiting its variable interest rate
exposure and by continuously monitoring the effects of market
changes in interest rates. Alliant Energy has also
historically used interest rate swap and interest rate forward
agreements to assist in the management of its interest
exposure. In the event of significant interest rate
fluctuations, management would take actions to minimize the
effect of such changes on Alliant Energy's results of
operations. Assuming no change in Alliant Energy's financial
structure, if variable interest rates were to average 1 percent
higher (lower) in 2001 than in 2000, interest expense and
pre-tax earnings would increase (decrease) by approximately
$8.0 million. Comparatively, if variable interest rates had
averaged 1 percent higher (lower) in 2000 than in 1999,
interest expense and pre-tax earnings would have increased
(decreased) by approximately $5.1 million. These amounts were
determined by considering the impact of a hypothetical 1
percent increase (decrease) in interest rates on the
variable-rate debt held by Alliant Energy as of December 31,
2000 and 1999.
Commodity Risk - Non-trading - Alliant Energy is exposed to the
- -----------------------------
impact of market fluctuations in the commodity price and
transportation costs of electricity, natural gas and oil
products it markets. Alliant Energy employs established
policies and procedures to manage its risks associated with
these market fluctuations including the use of various
commodity derivatives. Alliant Energy's exposure to commodity
price risks in its utility business is significantly mitigated
by the current rate making structures in place for the recovery
of its electric fuel and purchased energy costs as well as its
cost of natural gas purchased for resale. Refer to Note 1(j)
of Alliant Energy's "Notes to Consolidated Financial
Statements" in Item 8. for further discussion.
WP&L periodically utilizes gas commodity swap arrangements to
reduce the impact of price fluctuations on gas purchased and
injected into storage during the summer months and withdrawn
and sold at current market prices during the winter months.
The gas commodity swaps in place approximate the forecasted
storage withdrawal plan during this period. Therefore, market
-46-
price fluctuations that result in an increase or decrease in
the value of the physical commodity are substantially offset by
changes in the value of the gas commodity swaps. To the extent
actual storage withdrawals vary from forecasted withdrawals,
WP&L has physical commodity price exposure. A 10 percent
increase (decrease) in the price of gas would have an
insignificant impact on the combined fair market value of the
gas in storage and related swap arrangements in place as of
December 31, 2000 and 1999.
Whiting is exposed to market risk in the pricing of its oil and
gas production. Historically, prices received for oil and gas
production have been volatile because of seasonal weather
patterns, supply and demand factors, transportation
availability and price, and general economic conditions.
Worldwide political developments have historically also had an
impact on oil prices. Alliant Energy periodically utilizes oil
and gas swaps and forward contracts to mitigate the impact of
oil and gas price fluctuations. Based on Whiting's estimated
gas and crude oil sales in 2001, and the swaps and forward
contracts outstanding for such period, a sustained 10 percent
increase (decrease) in gas and crude oil prices would impact
Alliant Energy's pre-tax 2001 earnings by approximately $14.5
million. A sustained 10 percent increase (decrease) in prices
during 2000 would have impacted Alliant Energy's 2000 pre-tax
earnings by approximately $3.8 million, based on Whiting's
estimated gas and forward contracts outstanding at December 31,
1999.
Commodity Risk - Trading - Alliant Energy is exposed to market
- ------------------------
risks through its electricity commodity trading business, which
is primarily conducted through Alliant Energy's 50/50 joint
venture with Cargill. The joint venture's trading activities
principally consist of marketing and trading over-the-counter
forward contracts for the purchase and sale of electricity.
The majority of the forward contracts represent commitments to
purchase or sell electricity at fixed prices in the future and
require settlement by physical delivery of electricity or are
netted out in accordance with industry trading standards. The
market prices used to determine fair values reflect the joint
venture's best estimate considering various factors, including
closing exchanges and over-the-counter quotations, time value,
volatility and credit risk factors. The joint venture manages
the market risks inherent in its trading activities through
established trading and risk management policies and tools.
The principal tool utilized is a one-day variance/covariance
value-at-risk model with assessment adjustments made based on
weather, transmission availability, generation outages and
other factors. The estimated one-day market Value-at-Risk
(VAR) for the joint venture as of December 31, 2000 and 1999
was $1.5 million and $0.3 million, respectively, which was
calculated with a 99 percent confidence level. The low,
average and high VAR in 2000 were $0.1 million, $0.9 million
and $2.0 million, respectively, and in 1999 were $0.1 million,
$0.3 million and $1.5 million, respectively.
Equity Price Risk - IESU and WP&L maintain trust funds to fund
- ------------------
their anticipated nuclear decommissioning costs. As of
December 31, 2000 and 1999, these funds were invested primarily
in domestic equity and debt instruments. Fluctuations in
equity prices or interest rates will not affect Alliant
Energy's consolidated results of operations as such fluctuations
are recorded in equally offsetting amounts of investment income
and depreciation (WP&L) or interest (IESU) expense when they
are realized. In February 2001, WP&L entered into a four-year
hedge on equity assets in its nuclear decommissioning trust
fund.
At December 31, 2000 and 1999, Alliant Energy had an investment in the stock of
McLeod, a publicly traded telecommunications company, valued at $791 million and
$1,124 million, respectively. In addition to the equity risk associated with the
investment in McLeod, Alliant Energy also has equity risk related to the option
liability embedded within Resources' exchangeable senior notes. Refer to Note
10(a) of Alliant Energy's "Notes to Consolidated Financial Statements" in Item
8. for further discussion. A 10 percent increase (decrease) in the quoted market
price at December 31, 2000 would not have a significant impact on net income as
any resulting increase (decrease) in the value of the option would be
substantially offset by a corresponding increase (decrease) in the value of the
McLeod shares classified as trading (valued at $221 million at December 31,
2000). At December 31, 2000, the McLeod available-for-sale securities were
valued at $570 million. A 10 percent increase (decrease) in the quoted market
price would have increased (decreased) the value of the investment by $57
million. A 10 percent increase (decrease) in the quoted market price at December
31, 1999 would have increased (decreased) the value of the investment by
approximately $112 million. Refer to Note 9 of Alliant Energy's "Notes to
Consolidated Financial Statements" in Item 8. for discussion of how Alliant
Energy accounts for its investment in McLeod.
-47-
At December 31, 2000 and 1999, Alliant Energy had various
investments, accounted for under the cost method of accounting,
in publicly traded utility companies in New Zealand which were
valued at $10 million and $97 million, respectively. A 10
percent increase (decrease) in the quoted market prices at
December 31 would have increased (decreased) the value of the
investments at December 31, 2000 and 1999 by approximately $1.0
million and $9.7 million, respectively.
In the second quarter of 2000, Capstone completed its initial
public offering and Alliant Energy's $10 million investment in
Capstone was valued at $41 million at December 31, 2000. A 10
percent increase (decrease) in the quoted market price at
December 31, 2000 would have increased (decreased) the value of
the investment by approximately $4.1 million.
Currency Risk - Alliant Energy has investments in various
- --------------
countries where the net investments are not hedged, including
Australia, Brazil, China and New Zealand (Alliant Energy also
had investments in Singapore as of December 31, 1999). As a
result, these investments are subject to currency exchange risk
with fluctuations in currency exchange rates. At December 31,
2000 and 1999, Alliant Energy had a cumulative foreign currency
translation loss of $60.0 million and $9.6 million,
respectively, recorded in "Accumulated other comprehensive
income" on its Consolidated Balance Sheets that primarily
related to decreases in value of the Brazil currency (real) and
New Zealand dollar in relation to the U.S. dollar. Based on
Alliant Energy's investments at December 31, 2000 and 1999, a
10 percent sustained increase (decrease) over the next 12
months in the foreign exchange rates of Australia, Brazil,
China and New Zealand (and Singapore as of December 31, 1999)
would increase (decrease) the cumulative foreign currency
translation gain/loss by $46.5 million and $17.2 million,
respectively. The significant increase in currency risk at
December 31, 2000 is primarily due to the increase in the
amount of Resources' investment in Brazil at December 31, 2000
compared with December 31, 1999.
Refer to Notes 1(n) and 10 of Alliant Energy's "Notes to
Consolidated Financial Statements" in Item 8. for further
discussion of Alliant Energy's derivative financial instruments.
Cargill
The initial term of Alliant Energy's electricity commodity
trading joint venture with Cargill expires in October 2002. At
this time, Alliant Energy cannot predict if this agreement will
be renewed upon expiration.
OUTLOOK
Assuming normal weather conditions, Alliant Energy's utility
subsidiaries' ability to recover their purchased-power and fuel
costs, continued economic growth in the utility subsidiaries'
service territories, increased growth and profitability of
Alliant Energy's non-regulated businesses and stable business
conditions, Alliant Energy currently estimates that diluted
earnings per share from continuing operations for 2001 will be
within the $2.40 to $2.60 range. Alliant Energy's strategic
plan includes aggressively investing in generation and other
energy-related projects; better connecting with customers
through enhanced service reliability and e-business
initiatives; and growing the non-regulated side of its business
through partnerships and acquisitions in generation projects,
international markets and other strategic initiatives. Alliant
Energy believes that successful implementation of these
strategies will contribute significantly to Alliant Energy
achieving its targeted annual growth rate in earnings from
continued operations of 7 to 10 percent. Alliant Energy
expects its non-regulated businesses to contribute 25 percent
of such earnings within the next two to four years.
-48-
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Quantitative and Qualitative Disclosures About Market Risk are
reported under "Other Matters - Market Risk Sensitive
Instruments and Positions" in Item 7. MD&A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Alliant Energy Page Number
- ---------------- -------------
Report of Management 50
Report of Independent Public Accountants 51
Consolidated Statements of Income for the Years Ended
December 31, 2000, 1999 and 1998 52
Consolidated Balance Sheets as of December 31, 2000 and 1999 53
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998 55
Consolidated Statements of Capitalization as of December 31, 2000 and 1999 56
Consolidated Statements of Changes in Common Equity for the Years Ended
December 31, 2000, 1999 and 1998 57
Notes to Consolidated Financial Statements 58
IESU
- ----
Report of Independent Public Accountants 91
Consolidated Statements of Income for the Years Ended
December 31, 2000, 1999 and 1998 92
Consolidated Balance Sheets as of December 31, 2000 and 1999 93
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998 95
Consolidated Statements of Capitalization as of December 31, 2000 and 1999 96
Consolidated Statements of Changes in Common Equity for the Years Ended
December 31, 2000, 1999 and 1998 97
Notes to Consolidated Financial Statements 98
WP&L
- ----
Report of Independent Public Accountants 107
Consolidated Statements of Income for the Years Ended
December 31, 2000, 1999 and 1998 108
Consolidated Balance Sheets as of December 31, 2000 and 1999 109
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998 111
Consolidated Statements of Capitalization as of December 31, 2000 and 1999 112
Consolidated Statements of Changes in Common Equity for the Years Ended
December 31, 2000, 1999 and 1998 113
Notes to Consolidated Financial Statements 114
Refer to Note 14 of Alliant Energy's, IESU's and WP&L's "Notes to Consolidated Financial Statements" for the quarterly
financial data required by Item 8.
-49-
ALLIANT ENERGY CORPORATION REPORT ON THE FINANCIAL INFORMATION
Alliant Energy Corporation management is responsible for
the information and representations contained in the
financial statements and in other sections of this Annual
Report. The consolidated financial statements that follow
have been prepared in accordance with generally accepted
accounting principles. In addition to selecting
appropriate accounting principles, management is
responsible for the manner of presentation and for the
reliability of the financial information. In fulfilling
that responsibility, it is necessary for management to
make estimates based on currently available information
and judgments of current conditions and circumstances.
Through a well-developed system of internal controls,
management seeks to ensure the integrity and objectivity
of the financial information presented in this report.
This system of internal controls is designed to provide
reasonable assurance that the assets of the company are
safeguarded and that the transactions are executed
according to management's authorizations and are recorded
in accordance with the appropriate accounting principles.
The Board of Directors participates in the financial
information reporting process through its Audit Committee.
/s/ Erroll B. Davis, Jr.
- ------------------------
Erroll B. Davis, Jr.
Chairman, President and Chief Executive Officer
/s/ Thomas M. Walker
- --------------------
Thomas M. Walker
Executive Vice President and Chief Financial Officer
/s/ John E. Kratchmer
- ---------------------
John E. Kratchmer
Corporate Controller and Chief Accounting Officer
January 29, 2001
-50-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareowners of Alliant Energy Corporation:
We have audited the accompanying consolidated balance sheets
and statements of capitalization of Alliant Energy Corporation
(a Wisconsin Corporation) and subsidiaries as of December 31,
2000 and 1999, and the related consolidated statements of
income, cash flows and changes in common equity for each of the
three years in the period ended December 31, 2000. These
financial statements and the supplemental schedule referred to
below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and supplemental schedule based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Alliant Energy Corporation and subsidiaries as of
December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule
listed in Item 14(a)(2) is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not
part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to
be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 29, 2001
-51-
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
Operating revenues:
Electric utility $1,648,036 $1,548,938 $1,567,442
Gas utility 414,948 314,319 295,590
Non-regulated and other 342,000 264,716 267,842
---------------- ---------------- ----------------
2,404,984 2,127,973 2,130,874
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels 288,621 262,305 297,685
Purchased power 294,818 255,446 255,332
Cost of utility gas sold 278,734 180,519 166,453
Other operation and maintenance 734,675 669,111 742,971
Depreciation and amortization 322,334 279,088 279,505
Taxes other than income taxes 104,746 104,969 105,626
---------------- ---------------- ----------------
2,023,928 1,751,438 1,847,572
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Operating income 381,056 376,535 283,302
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 173,614 136,229 129,363
Allowance for funds used during construction (8,761) (7,292) (6,812)
Preferred dividend requirements of subsidiaries 6,713 6,706 6,699
Gain on reclassification of investments (321,349) - -
Gains on sales of McLeodUSA Inc. stock (23,773) (40,272) -
Miscellaneous, net (66,158) (35,903) (736)
---------------- ---------------- ----------------
(239,714) 59,468 128,514
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 620,770 317,067 154,788
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Income taxes 238,816 120,486 58,113
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in
accounting principle, net of tax 381,954 196,581 96,675
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Cumulative effect of a change in accounting
principle, net of tax 16,708 - -
---------------- ---------------- ----------------
- -----------------------------------------------------------------------------------------------------------------------
Net income $398,662 $196,581 $96,675
================ ================ ================
- -----------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding - basic 79,003 78,352 76,912
================ ================ ================
- -----------------------------------------------------------------------------------------------------------------------
Earnings per average common share - basic:
Income before cumulative effect of a change
in accounting principle $4.84 $2.51 $1.26
Cumulative effect of a change in accounting principle 0.21 - -
---------------- ---------------- ----------------
Net income $5.05 $2.51 $1.26
================ ================ ================
- -----------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding - diluted 79,193 78,395 76,929
================ ================ ================
- -----------------------------------------------------------------------------------------------------------------------
Earnings per average common share - diluted:
Income before cumulative effect of a change
in accounting principle $4.82 $2.51 $1.26
Cumulative effect of a change in accounting principle 0.21 - -
---------------- ---------------- ----------------
Net income $5.03 $2.51 $1.26
================ ================ ================
- -----------------------------------------------------------------------------------------------------------------------
Dividends declared per common share $2.00 $2.00 $2.00
================ ================ ================
- -----------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-52-
ALLIANT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $5,203,069 $5,032,675
Gas 574,390 540,874
Other 474,116 458,547
------------------ ------------------
6,251,575 6,032,096
Less - Accumulated depreciation 3,296,546 3,077,459
------------------ ------------------
2,955,029 2,954,637
Construction work in progress 130,856 119,276
Nuclear fuel, net of amortization 61,935 54,363
------------------ ------------------
3,147,820 3,128,276
Other property, plant and equipment, net of accumulated
depreciation and amortization of $209,072 and $184,722, respectively 571,487 357,758
------------------ ------------------
3,719,307 3,486,034
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 148,415 113,669
Accounts receivable:
Customer, less allowance for doubtful accounts
of $3,762 and $2,253, respectively 122,895 67,299
Unbilled utility revenues 124,515 48,033
Other, less allowance for doubtful accounts
of $484 and $954, respectively 45,829 30,095
Notes receivable, less allowance for doubtful
accounts of $484 and $153, respectively 9,968 6,328
Production fuel, at average cost 46,627 49,657
Materials and supplies, at average cost 55,930 52,440
Gas stored underground, at average cost 41,359 23,151
Regulatory assets 29,348 33,439
Prepaid gross receipts tax 23,088 20,864
Other 63,007 41,011
------------------ ------------------
710,981 485,986
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Investments:
Investment in available-for-sale securities of McLeodUSA Inc. 569,951 1,123,790
Investment in trading securities of McLeodUSA Inc. 220,912 -
Investments in unconsolidated foreign entities 507,655 198,055
Nuclear decommissioning trust funds 307,940 271,258
Other 132,203 59,866
------------------ ------------------
1,738,661 1,652,969
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 270,779 263,610
Deferred charges and other 294,038 187,084
------------------ ------------------
564,817 450,694
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $6,733,766 $6,075,683
================== ==================
- ----------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-53-
ALLIANT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
December 31,
CAPITALIZATION AND LIABILITIES 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See Consolidated Statements of Capitalization):
Common stock $790 $790
Additional paid-in capital 947,504 942,408
Retained earnings 818,162 577,464
Accumulated other comprehensive income 271,867 634,903
Shares in deferred compensation trust (851) -
---------------------- ----------------------
Total common equity 2,037,472 2,155,565
---------------------- ----------------------
Cumulative preferred stock of subsidiaries, net 113,790 113,638
Long-term debt (excluding current portion) 1,910,116 1,486,765
---------------------- ----------------------
4,061,378 3,755,968
---------------------- ----------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds 92,477 54,795
Variable rate demand bonds 55,100 55,100
Commercial paper 283,885 374,673
Notes payable 50,067 50,046
Other short-term borrowings 110,783 -
Accounts payable 296,959 191,149
Accrued taxes 87,484 78,825
Other 177,580 129,037
---------------------- ----------------------
1,154,335 933,625
---------------------- ----------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 931,675 1,018,482
Accumulated deferred investment tax credits 67,364 71,857
Derivative liability 181,925 -
Environmental liabilities 64,532 65,327
Pension and other benefit obligations 65,399 61,988
Other 207,158 168,436
---------------------- ----------------------
1,518,053 1,386,090
---------------------- ----------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 11)
- -----------------------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $6,733,766 $6,075,683
====================== ======================
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-54-
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $398,662 $196,581 $96,675
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 322,334 279,088 279,505
Amortization of nuclear fuel 18,933 17,494 17,869
Amortization of deferred energy efficiency expenditures 25,609 25,435 27,083
Deferred tax expense (benefits) and investment tax (credits) 115,045 (16,258) (27,720)
Gains on dispositions of assets, net (43,148) (61,667) (6,505)
Equity (income) loss from unconsolidated investments, net (19,138) (3,008) 1,339
Gain on reclassification of investments (321,349) - -
Cumulative effect of a change in accounting principle, net of tax (16,708) - -
Impairment of oil and gas properties - 3,276 9,678
Impairment of regulatory assets - - 8,969
Other (1,114) (1,240) (2,451)
Other changes in assets and liabilities:
Accounts receivable (147,812) (16,407) 15,349
Gas stored underground (18,208) 2,862 6,351
Accounts payable 105,810 (13,148) 11,663
Benefit obligations and other 12,933 10,121 29,957
-------------- ------------------ ------------------
Net cash flows from operating activities 431,849 423,129 467,762
-------------- ------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (157,964) (156,489) (140,679)
Dividends payable (167) 13 (15,458)
Proceeds from issuance of common stock 1,069 36,491 33,832
Net change in Resources' credit facility 181,652 (113,657) 70,492
Proceeds from issuance of exchangeable senior notes 402,500 - -
Proceeds from issuance of other long-term debt 121,525 281,299 77,544
Reductions in other long-term debt (64,837) (95,520) (27,663)
Net change in other short-term borrowings 156,990 169,587 (40,216)
Other (31,077) (18,631) (15,583)
-------------- ------------------ ------------------
Net cash flows from (used for) financing activities 609,691 103,093 (57,731)
-------------- ------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Construction and acquisition expenditures:
Utility (304,656) (285,668) (269,133)
Non-regulated businesses and other (761,808) (192,905) (102,925)
Nuclear decommissioning trust funds (22,100) (22,100) (20,305)
Proceeds from dispositions of assets 111,509 93,443 16,677
Other (29,739) (37,150) (29,847)
-------------- ------------------ ------------------
Net cash flows used for investing activities (1,006,794) (444,380) (405,533)
-------------- ------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and temporary cash investments 34,746 81,842 4,498
-------------- ------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 113,669 31,827 27,329
-------------- ------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $148,415 $113,669 $31,827
============== ================== ==================
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the period for:
Interest $163,728 $130,214 $126,376
============== ================== ==================
Income taxes $116,895 $141,150 $84,916
============== ================== ==================
Noncash investing and financing activities:
Capital lease obligations incurred $20,419 $25,040 $1,426
============== ================== ==================
- ------------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-55-
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31,
2000 1999
- ------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Common equity:
Common stock - $.01 par value - authorized 200,000,000 shares;
outstanding 79,010,114 and 78,984,014 shares, respectively $790 $790
Additional paid-in capital 947,504 942,408
Retained earnings 818,162 577,464
Accumulated other comprehensive income 271,867 634,903
Shares in deferred compensation trust - 28,825 shares
at an average cost of $29.52 per share (851) -
----------------- -----------------
Total common equity 2,037,472 2,155,565
----------------- -----------------
- ------------------------------------------------------------------------------------------------------------------
Cumulative preferred stock of subsidiaries, net (Note 7(b)) 113,790 113,638
----------------- -----------------
- ------------------------------------------------------------------------------------------------------------------
Long-term debt:
First Mortgage Bonds:
4.75% variable rate at December 31, 1999, retired in 2000 - 1,875
8-5/8% to 9-1/8%, due 2001 81,000 81,000
7.75%, due 2004 62,000 62,000
4.85% variable rate at December 31, 2000 to 7.6%, due 2005 88,000 88,000
7-1/4% to 8%, due 2007 55,000 55,000
5% variable rate at December 31, 2000, due 2014 8,500 8,500
4.85% to 5.15% variable rate at December 31, 2000, due 2015 30,600 30,600
8-5/8%, due 2021 25,000 25,000
7-5/8%, due 2023 94,000 94,000
9.3%, due 2025 27,000 27,000
8.6%, due 2027 90,000 90,000
----------------- -----------------
561,100 562,975
Collateral Trust Bonds:
7.65%, retired in 2000 - 50,000
7.25%, due 2006 60,000 60,000
6-7/8%, due 2007 55,000 55,000
6%, due 2008 50,000 50,000
5.5% to 7.0%, due 2023 69,400 69,400
----------------- -----------------
234,400 284,400
Pollution Control Revenue Bonds:
5.45% to 5.75%, retired in 2000 - 1,196
5.75%, due 2001 to 2002 1,120 1,120
5.10% to 5.75% at December 31, 2000, due 2003 5,080 5,080
4.3% through 2003, due 2005 to 2008 4,950 4,950
6.25%, due 2009 1,000 1,000
4.05% through 2004 to 6.30% at December 31, 2000, due 2010 16,550 16,550
6.35%, due 2012 5,650 5,650
4.2% through 2004, due 2013 7,700 7,700
4.25% through 2003, due 2023 10,000 10,000
----------------- -----------------
52,050 53,246
Other long-term debt:
Credit facility (6.37% to 6.65% at December 31, 2000) 320,500 -
Debentures, 5.7% to 7.0%, due 2007 to 2008 165,000 165,000
Senior Debentures, 6-5/8% to 7-5/8%, due 2009 to 2010 235,000 135,000
Subordinated Deferrable Interest Debentures, 7-7/8%, due 2025 50,000 50,000
Senior notes, 7-3/8% to 8.59%, due 2004 to 2009 274,000 274,000
Exchangeable senior notes, 7.25% through 2003, 2.5% thereafter, due 2030 402,500 -
Multifamily Housing Revenue Bonds, 5.05% to 7.55%, due 2001 to 2036 33,366 34,095
Other, 0% to 11%, due 2001 to 2045 71,793 45,926
----------------- -----------------
2,399,709 1,604,642
----------------- -----------------
Less:
Current maturities (92,477) (54,795)
Variable rate demand bonds (55,100) (55,100)
Unamortized debt premium and (discount), net (342,016) (7,982)
----------------- -----------------
Total long-term debt (excluding current portion) 1,910,116 1,486,765
----------------- -----------------
- ------------------------------------------------------------------------------------------------------------------
Total capitalization $4,061,378 $3,755,968
================= =================
- ------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-56-
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY
Accumulated Shares in
Additional Other Deferred Total
Common Paid-In Retained Comprehensive Compensation Common
Stock Capital Earnings Income (Loss) Trust Equity
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
1998:
Beginning balance (a) $765 $868,903 $581,376 $173,512 $- $1,624,556
Comprehensive income:
Net income 96,675 96,675
Other comprehensive income (loss):
Unrealized losses on securities, net of tax (b) (4,589) (4,589)
Foreign currency translation adjustments (7,062) (7,062)
Minimum pension liability adjustment,
net of tax of $808 1,156 1,156
-----------
Total comprehensive income 86,180
Common stock dividends (140,679) (140,679)
Common stock issued 11 36,263 36,274
Treasury stock (36) (36)
----------- ----------- ----------- ------------- ------------- -----------
Ending balance 776 905,130 537,372 163,017 - 1,606,295
1999:
Comprehensive income:
Net income 196,581 196,581
Other comprehensive income (loss):
Unrealized gains on securities:
Unrealized holding gains arising
during period, net of tax (b) 499,668 499,668
Less: reclassification adjustmentfor gains
included in net income, net of tax of $14,986 25,286 25,286
------------- -----------
Net unrealized gains on securities 474,382 474,382
------------- -----------
Foreign currency translation adjustments (2,496) (2,496)
------------- -----------
Total comprehensive income 668,467
Common stock dividends (156,489) (156,489)
Common stock issued 14 37,278 37,292
----------- ----------- ----------- ------------- ------------- -----------
Ending balance 790 942,408 577,464 634,903 - 2,155,565
2000:
Comprehensive income:
Net income 398,662 398,662
Other comprehensive income (loss):
Unrealized losses on securities:
Unrealized holding losses arising
during period, net of tax (b) (105,292) (105,292)
Less: adjustment for gain on reclassification
of investments included in net income, net
of tax of $134,053 187,296 187,296
Less: reclassification adjustment for other gains
included in net income, net of tax of $8,426 16,370 16,370
------------- -----------
Net unrealized losses on securities (308,958) (308,958)
------------- -----------
Foreign currency translation adjustments (50,400) (50,400)
------------- -----------
Unrealized losses on derivatives qualified as hedges:
Unrealized holding losses arising during period due
to cumulative effect of a change in accounting
principle, net of tax of ($4,693) (6,582) (6,582)
Other unrealized holding losses arising during period,
net of tax of ($2,560) (3,427) (3,427)
Less: reclassification adjustment for losses included
in net income, net of tax of ($4,502) (6,331) (6,331)
------------- -----------
Net unrealized losses on qualifying derivatives (3,678) (3,678)
------------- -----------
Total comprehensive income 35,626
Common stock dividends (157,964) (157,964)
Common stock issued 5,096 (851) 4,245
----------- ----------- ----------- ------------- ------------- -----------
Ending balance $790 $947,504 $818,162 $271,867 ($851) $2,037,472
=========== =========== =========== ============= ============= ===========
(a)The beginning accumulated other comprehensive income (loss) balance was related to:1) $174,688 of unrealized gains on securities,
net of tax; 2)($20)of foreign currency translation adjustments; and 3)($1,156) of minimum pension liability adjustment, net of tax.
(b) Net of tax expense (benefit) of ($3,218), $351,314, and ($77,853) in 1998, 1999 and 2000, respectively.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-57-
ALLIANT ENERGY CORPORATION
--------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General - The consolidated financial statements include the
accounts of Alliant Energy and its consolidated subsidiaries. Alliant
Energy is an investor-owned public utility holding company, whose
primary subsidiaries are IESU, WP&L, IPC, Resources and Corporate
Services. The utility subsidiaries are engaged principally in the
generation, transmission, distribution and sale of electric energy; the
purchase, distribution, transportation and sale of natural gas; and
water and steam services in Iowa, Wisconsin, Minnesota and Illinois.
Resources (through its numerous direct and indirect subsidiaries) has
established global partnerships to develop energy generation, delivery
and infrastructure in growing international markets. Resources also has
domestic businesses including oil and gas operations, energy trading
partnerships, energy and environmental services, transportation services
and affordable housing companies. Corporate Services is the subsidiary
formed to provide administrative services to Alliant Energy and its
subsidiaries as required under PUHCA.
The consolidated financial statements reflect investments in controlled
subsidiaries on a consolidated basis. All significant intercompany
balances and transactions, other than certain energy-related
transactions affecting the utility subsidiaries, have been eliminated
from the consolidated financial statements. Such energy-related
transactions are made at prices that approximate market value and the
associated costs are recoverable from customers through the rate making
process. The financial statements are prepared in conformity with
accounting principles generally accepted in the U.S., which give
recognition to the rate making and accounting practices of FERC and
state commissions having regulatory jurisdiction. The preparation of
the financial statements requires management to make estimates and
assumptions that affect: a) the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements; and b) the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Unconsolidated investments for which Alliant Energy has at least a 20
percent non-controlling voting interest are generally accounted for
under the equity method of accounting. These investments are stated at
acquisition cost, increased or decreased for Alliant Energy's equity in
net income or loss, which is included in "Miscellaneous, net" in the
Consolidated Statements of Income and decreased for any dividends
received. Investments that do not meet the criteria for consolidation
or the equity method of accounting are accounted for under the cost
method.
Certain prior period amounts have been reclassified on a basis
consistent with the current year presentation. The 1999 "Non-regulated
and other" revenues and "Other operation and maintenance" expenses have
been reclassified in accordance with EITF 99-19, "Reporting Revenue
Gross as a Principal versus Net as an Agent," which was adopted in the
fourth quarter of 2000. Such reclassifications had no impact on net
income.
(b) Regulation - Alliant Energy is a registered public utility holding
company subject to regulation by the SEC under PUHCA. The utility
subsidiaries are subject to regulation by FERC and their respective
state regulatory commissions (IUB, PSCW, MPUC and ICC).
(c) Regulatory Assets - Alliant Energy is subject to the provisions of
SFAS 71, "Accounting for the Effects of Certain Types of Regulation,"
which provides that rate-regulated public utilities record certain costs
and credits allowed in the rate making process in different periods than
for non-regulated entities. These are deferred as regulatory assets or
accrued as regulatory liabilities and are recognized in the Consolidated
Statements of Income at the time they are reflected in rates. At
December 31, 2000 and 1999, regulatory assets of $300.1 million and
$297.0 million, respectively, were comprised of the following items (in
millions):
-58-
2000 1999
------ -------
Tax-related (Note 1(d)) $154.2 $156.1
Environmental liabilities (Note 11(e)) 66.8 67.2
Energy efficiency program costs 51.6 53.1
Other 27.5 20.6
------ -------
$300.1 $297.0
====== =======
If a portion of the utility subsidiaries' operations becomes no longer
subject to the provisions of SFAS 71 as a result of competitive
restructuring or otherwise, a write-down of related regulatory assets
would be required, unless some form of transition cost recovery is
established by the appropriate regulatory body that would meet the
requirements under generally accepted accounting principles for
continued accounting as regulatory assets during such recovery period.
In addition, each utility subsidiary would be required to determine any
impairment of other assets and write-down such assets to their fair
value.
(d) Income Taxes - Alliant Energy follows the liability method of
accounting for deferred income taxes, which requires the establishment
of deferred tax assets and liabilities, as appropriate, for all
temporary differences between the tax basis of assets and liabilities
and the amounts reported in the financial statements. Deferred taxes
are recorded using currently enacted tax rates.
Except as noted below, income tax expense includes provisions for
deferred taxes to reflect the tax effects of temporary differences
between the time when certain costs are recorded in the accounts and
when they are deducted for tax return purposes. As temporary
differences reverse, the related accumulated deferred income taxes are
reversed to income. Investment tax credits have been deferred and are
subsequently credited to income over the average lives of the related
property. As part of the affordable housing and oil and gas production
businesses, Alliant Energy is eligible to claim certain tax credits.
Consistent with Iowa rate making practices for IESU and IPC, deferred
tax expense is not recorded for certain temporary differences (primarily
related to utility property, plant and equipment). As the deferred
taxes become payable (over periods exceeding 30 years for some
generating plant differences) they are recovered through rates.
Accordingly, IESU and IPC have recorded deferred tax liabilities and
regulatory assets for certain temporary differences, as identified in
Note 1(c). In Wisconsin, the PSCW has allowed rate recovery of deferred
taxes on all temporary differences since August 1991. WP&L established
a regulatory asset associated with those temporary differences occurring
prior to August 1991 that will be recovered in future rates.
(e) Common Shares Outstanding - Weighted average common shares
outstanding used to calculate basic and diluted earnings per share for
2000, 1999 and 1998 were as follows:
Weighted Average 2000 1999 1998
- ----------------------------------------------------------------------- --------------- --------------- ---------------
Common shares outstanding - basic earnings per share calculation 79,002,643 78,352,186 76,912,219
Effect of dilutive securities 190,134 42,961 16,412
Common shares - diluted earnings per share calculation 79,192,777 78,395,147 76,928,631
In 2000, 1999 and 1998, 1,358,597, 1,275,355 and 151,803 options,
respectively, to purchase shares of common stock, with average exercise
prices of $30.27, $30.55 and $31.48, respectively, were excluded from
the calculation of diluted earnings per share as the exercise prices
were greater than the average market price.
(f) Temporary Cash Investments - Temporary cash investments are stated
at cost, which approximates market value, and are considered cash
equivalents for the Consolidated Balance Sheets and the Consolidated
Statements of Cash Flows. These investments consist of short-term
liquid investments that have maturities of less than 90 days from the
date of acquisition.
-59-
(g) Depreciation of Utility Property, Plant and Equipment - The utility
subsidiaries use a combination of remaining life and straight-line
depreciation methods as approved by their respective regulatory
commissions. The remaining life of DAEC, of which IESU is a co-owner,
is based on the NRC license end-of-life of 2014. The remaining life of
Kewaunee, of which WP&L is a co-owner, is based on the PSCW approved
revised end-of-life of 2010. Depreciation expense related to the
decommissioning of DAEC and Kewaunee is discussed in Note 11(f). The
average rates of depreciation for electric and gas properties,
consistent with current rate making practices, were as follows:
IESU WP&L IPC
------------------------------------- ---------------------------------------- ------------------------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
---------- ------------- ------------ ------------ ------------- ------------- ------------ ------------ ----------
Electric 3.5% 3.5% 3.5% 3.6% 3.6% 3.6% 3.5% 3.6% 3.6%
Gas 3.5% 3.5% 3.5% 4.1% 3.9% 3.8% 3.6% 3.6% 3.4%
(h) Property, Plant and Equipment - Utility plant (other than
acquisition adjustments) is recorded at original cost, which includes
overhead and administrative costs and AFUDC. At December 31, 2000 and
1999, IESU had $24.4 million and $25.6 million, respectively, of
acquisition adjustments, net of accumulated amortization, included in
utility plant ($5.5 million and $5.7 million, respectively, of such
balances are currently being recovered in IESU's rates). The aggregate
gross AFUDC recovery rates, computed in accordance with the prescribed
regulatory formula, were as follows:
2000 1999 1998
------------------ ------------------- -------------------
IESU 6.6% 7.9% 8.9%
WP&L 10.8% 5.4% 5.2%
IPC 6.5% 5.3% 7.0%
Other property, plant and equipment is recorded at original cost. Upon
retirement or sale of other property and equipment, the cost and related
accumulated depreciation are removed from the accounts and any gain or
loss is included in "Miscellaneous, net" in the Consolidated Statements
of Income. Ordinary retirements of utility plant, including removal
costs less salvage value, are charged to accumulated depreciation upon
removal from utility plant accounts and no gain or loss is recognized.
(i) Operating Revenues - Alliant Energy accrues revenues for services
rendered but unbilled at month-end. In 2000 and 1999, Alliant Energy
recorded increases of $10 million (WP&L) and $9 million (IESU and IPC),
respectively, in the estimate of utility services rendered but unbilled
at month-end due to the implementation of refined estimation processes.
(j) Utility Fuel Cost Recovery - IESU's and IPC's tariffs provide for
subsequent adjustments to their electric and natural gas rates for
changes in the cost of fuel, purchased energy and natural gas purchased
for resale. Changes in the under/over collection of these costs are
reflected in "Electric and steam production fuels" and "Cost of utility
gas sold" in the Consolidated Statements of Income. The cumulative
effects are reflected on the Consolidated Balance Sheets as a current
asset or current liability, pending automatic reflection in future
billings to customers. At IESU and IPC, purchased-power capacity costs
are not recovered from electric customers through EACs. Recovery of
these costs must be addressed in base rates in a formal rate proceeding.
WP&L's retail electric rates are based in part on forecasted fuel and
purchased-power costs. Under PSCW rules, WP&L can seek emergency rate
increases if the annual costs are more than 3 percent higher than the
estimated costs used to establish rates. WP&L has a gas performance
incentive which includes a sharing mechanism whereby 40 percent of all
gains and losses relative to current commodity prices, as well as other
benchmarks, are retained by WP&L, with the remainder refunded to or
recovered from customers.
-60-
(k) Nuclear Refueling Outage Costs - The IUB allows IESU to collect, as
part of its base revenues, funds to offset other operation and
maintenance expenditures incurred during refueling outages at DAEC. As
these revenues are collected, an equivalent amount is charged to other
operation and maintenance expense with a corresponding credit to a
reserve. During a refueling outage, the reserve is reversed to offset
the refueling outage expenditures. Operating expenses incurred during
refueling outages at Kewaunee are expensed by WP&L as incurred. The
next scheduled refueling outages at DAEC and Kewaunee are anticipated to
commence in Spring 2001 and Fall 2001, respectively.
(l) Nuclear Fuel - Nuclear fuel for DAEC is leased. Annual nuclear
fuel lease expenses include the cost of fuel, based on the quantity of
heat produced for the generation of electricity, plus the lessor's
interest costs related to fuel in the reactor and administrative
expenses. Nuclear fuel for Kewaunee is recorded at its original cost
and is amortized to expense based upon the quantity of heat produced for
the generation of electricity. This accumulated amortization assumes
spent nuclear fuel will have no residual value. Estimated future
disposal costs of such fuel are expensed based on kilowatt-hours
generated.
(m) Translation of Foreign Currency - Assets and liabilities of
international investments, where the local currency is the functional
currency, have been translated at year-end exchange rates and related
income statement results have been translated using average exchange
rates prevailing during the year. Adjustments resulting from
translation have been recorded in other comprehensive income.
(n) Derivative Financial Instruments - Alliant Energy uses derivative
financial instruments to hedge exposures to fluctuations in interest
rates, certain commodity prices and volatility in a portion of natural
gas sales volumes due to weather. Alliant Energy also utilizes
derivatives to mitigate the equity price volatility associated with
certain investments in equity securities. Alliant Energy does not use
such instruments for speculative purposes. In accordance with SFAS 133,
as amended by SFAS 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities - an Amendment of SFAS 133," the fair
value of all derivatives are recorded as assets or liabilities on the
Consolidated Balance Sheets and gains and losses related to derivatives
that are designated as, and qualify as hedges, are recognized in
earnings when the underlying hedged item or physical transaction is
recognized in income. Gains and losses related to derivatives that do
not qualify for, or are not designated in hedge relationships, are
recognized in earnings immediately. Alliant Energy has a number of
commodity purchase and sales contracts for both capacity and energy that
have been designated, and qualify for, the normal purchase and sale
exception in SFAS 138. Based on this designation, these contracts are
not accounted for as derivative instruments.
Alliant Energy is exposed to losses related to financial instruments in
the event of counterparties' nonperformance. Alliant Energy has
established controls to determine and monitor the creditworthiness of
counterparties in order to mitigate its exposure to counterparty credit
risk. Alliant Energy is not aware of any counterparties that will fail
to meet their obligations.
Refer to Note 10 for further discussion of Alliant Energy's derivative
financial instruments.
(2) MERGER
In April 1998, IES, WPLH and IPC completed a merger resulting in Alliant
Energy. The merger was accounted for as a pooling of interests and the
accompanying Consolidated Financial Statements, along with the related
notes, are presented as if the companies were combined as of the
earliest period presented.
In association with the merger, Alliant Energy eliminated 167 positions
in 1998 and recorded $15 million of expenses during 1998 in "Other
operation and maintenance" expense related to the employee separation
benefits to be paid to the impacted employees. The bulk of the
positions eliminated were administrative in nature and resulted from no
longer needing certain duplicative positions given the consolidation of
the three companies. The departure dates for the impacted employees
varied based on the need for their services during the transition period
as well as certain other factors. The balance of the accrual at
December 31, 2000 and 1999 was $0 and $1.0 million, respectively. As of
December 31, 1999, all of the terminated employees had actually left the
organization. The balance remaining in the accrued liability at
December 31, 1999 related to payments to certain terminated executives
-61-
that were being paid out over an 18 to 36 month period pursuant to the
terms of their respective severance agreements. The only significant
adjustments made to the liability after the initial accrual were to
reflect the actual payments of the employee separation benefits.
In association with the merger, Alliant Energy entered into a three-year
consulting agreement, which expires in the second quarter of 2001, with
Wayne Stoppelmoor, the Chief Executive Officer of IPC prior to the
consummation of the merger. Under the terms of the agreement, Mr.
Stoppelmoor, who was also Vice Chairman of Alliant Energy's Board of
Directors until April 2000, receives annual fees of $324,500, $324,500
and $200,000 for his services during the respective periods of the
agreement.
(3) LEASES
IESU has a capital lease covering its 70 percent undivided interest in
nuclear fuel purchased for DAEC. Annual nuclear fuel lease expenses
(included in "Electric and steam production fuels" in the Consolidated
Statements of Income) for 2000, 1999 and 1998 were $16.0 million, $12.7
million and $14.2 million, respectively. Alliant Energy's operating
lease rental expenses for 2000, 1999 and 1998 were $25.2 million, $24.6
million and $21.6 million, respectively. Alliant Energy's future
minimum lease payments are as follows (in millions):
Less: amount Present value of
representing net minimum capital
2001 2002 2003 2004 2005 Thereafter Total interest lease payments
--------- ---------- --------- --------- ---------- ------------- ----------- ----------------- -----------------
Operating leases $29.8 $33.3 $31.9 $29.6 $26.7 $99.4 $250.7 N/A N/A
Capital leases 18.2 12.4 7.9 7.3 3.3 3.2 52.3 $6.2 $46.1
(4) UTILITY ACCOUNTS RECEIVABLE
Utility customer accounts receivable, including unbilled revenues, arise
primarily from the sale of electricity and natural gas. At December 31,
2000 and 1999, the utility subsidiaries were serving a diversified base
of residential, commercial and industrial customers and did not have any
significant concentrations of credit risk.
Similar accounts receivable financing arrangements exist through 2001
for IESU and WP&L, in which they may sell up to a combined maximum
amount of $215 million of accounts receivable to a financial institution
on a limited recourse basis. Accounts receivable sold include
receivables arising from sales to customers and to other public,
municipal and cooperative utilities, as well as from billings to the
co-owners of the jointly-owned electric generating plants operated by
IESU and WP&L. Alliant Energy receives a fee for billing and collection
functions, which remain the responsibility of the respective utilities,
that approximates fair value. In 2000, 1999 and 1998, Alliant Energy
received approximately $1.6 billion, $1.5 billion and $1.8 billion,
respectively, in aggregate proceeds from these facilities. IESU and
WP&L use proceeds from the sale of accounts receivable and unbilled
revenues to finance a portion of their long-term cash needs. Included
in the Consolidated Statements of Income for 2000, 1999 and 1998, were
fees associated with these sales of $9.0 million, $7.1 million and $8.7
million, respectively.
-62-
(5) INCOME TAXES
The components of federal and state income taxes for Alliant Energy for
the years ended December 31 were as follows (in millions):
2000 1999 1998
--------- -------- --------
Current tax expense $136.9 $146.1 $95.0
Deferred tax expense (benefit) 119.5 (10.8) (22.2)
Amortization of investment tax credits (4.5) (5.5) (5.6)
Affordable housing tax credits (6.9) (5.9) (6.6)
Oil, gas and alternative fuel credits (6.2) (3.4) (2.5)
--------- -------- --------
$238.8 $120.5 $58.1
========= ======== ========
Included in "Cumulative effect of a change in accounting principle, net
of tax" in the Consolidated Statements of Income is $9.8 million of
income tax expense related to the adoption of SFAS 133 on July 1, 2000.
The overall effective income tax rates shown below for the years ended
December 31 were computed by dividing total income tax expense by income
before income taxes and preferred dividend requirements of subsidiaries.
2000 1999 1998
---------------- ---------------- ---------------
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefits 6.7 6.4 8.0
Affordable housing tax credits (1.1) (1.9) (4.1)
Amortization of investment tax credits (0.9) (1.7) (3.4)
Adjustment of prior period taxes (1.0) (1.7) (0.4)
Merger expenses -- -- 2.4
Oil, gas and alternative fuel credits (1.0) (1.0) (1.6)
Property donation -- (0.3) (1.5)
Effect of rate making on property related differences 0.8 2.2 1.8
Other items, net (0.4) 0.2 (0.2)
---------------- ---------------- ---------------
Overall effective income tax rate 38.1% 37.2% 36.0%
================ ================ ===============
The accumulated deferred income tax (assets) and liabilities included on
the Consolidated Balance Sheets at December 31 arise from the following
temporary differences (in millions):
2000 1999
-------- ---------
Property related $673.6 $669.5
McLeod investment 318.5 455.1
Other (60.4) (106.1)
-------- ---------
$931.7 $1,018.5
======== =========
As of December 31, 2000 and 1999, Alliant Energy had not recorded U.S.
tax provisions of approximately $4.4 million and $1.4 million,
respectively, relating to approximately $12.6 million and $4.1 million,
respectively, of unremitted earnings from foreign investments as these
earnings are expected to be reinvested indefinitely.
(6) BENEFIT PLANS
(a) Pension Plans and Other Postretirement Benefits - Alliant Energy
has several non-contributory defined benefit pension plans that cover
substantially all of its employees. Benefits are based on the
employees' years of service and compensation. Alliant Energy also
provides certain postretirement health care and life benefits to
eligible retirees. In general, the health care plans are contributory
with participants' contributions adjusted annually and the life
insurance plans are non-contributory.
-63-
The weighted-average assumptions as of the measurement date of September
30 are as follows:
Qualified Pension Benefits Other Postretirement Benefits
------------------------------------------- ------------------------------------------
2000 1999 1998 2000 1999 1998
------------ --------------- ------------ ------------ ------------- -------------
Discount rate 8.00% 7.75% 6.75% 8.00% 7.75% 6.75%
Expected return on plan assets 9% 9% 9% 9% 9% 9%
Rate of compensation increase 3.5-4.5% 3.5-4.5% 3.5-4.5% 3.5% 3.5% 3.5%
Medical cost trend on covered charges:
Initial trend range N/A N/A N/A 9% 7% 8%
Ultimate trend range N/A N/A N/A 5% 5% 5-6%
The components of Alliant Energy's qualified pension benefits and other
postretirement benefits costs are as follows (in millions):
Qualified Pension Benefits Other Postretirement Benefits
------------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
------------- ------------ ---------- ---------- ---------- ----------
Service cost $11.1 $12.8 $13.8 $3.7 $5.5 $5.1
Interest cost 36.7 35.6 35.4 9.8 10.4 9.7
Expected return on plan assets (45.7) (46.2) (47.2) (5.3) (5.0) (3.7)
Amortization of:
Transition obligation (asset) (2.4) (2.4) (2.4) 3.9 4.3 4.7
Prior service cost 2.6 2.5 2.8 (0.3) (0.3) (0.3)
Actuarial loss (gain) (1.0) 0.2 (0.9) (1.9) (0.8) (1.2)
------------- ------------ ---------- ---------- ---------- ----------
Total $1.3 $2.5 $1.5 $9.9 $14.1 $14.3
============= ============ ========== ========== ========== ==========
During 1998, Alliant Energy recognized an additional $10.3 million of
costs in accordance with SFAS 88, "Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits," for severance and early retirement programs. In addition,
during 1999 and 1998, Alliant Energy recognized $0.5 million and $10.2
million, respectively, of curtailment charges relating to Alliant
Energy's other postretirement benefits.
The assumed medical trend rates are critical assumptions in determining
the service and interest cost and accumulated postretirement benefit
obligation related to postretirement benefit costs. A one percent
change in the medical trend rates for 2000, holding all other
assumptions constant, would have the following effects (in millions):
1 Percent 1 Percent
Increase Decrease
------------- -------------
Effect on total of service and interest cost components $1.6 ($1.4)
Effect on postretirement benefit obligation $11.4 ($10.3)
-64-
A reconciliation of the funded status of Alliant Energy's plans to the
amounts recognized on Alliant Energy's Consolidated Balance Sheets at
December 31 is presented below (in millions):
Qualified Pension Benefits Other Postretirement Benefits
---------------------------------- --------------------------------------
2000 1999 2000 1999
-------------- --------------- ---------------- -----------------
Change in benefit obligation:
Net benefit obligation at beginning of year $481.0 $528.4 $127.8 $153.3
Service cost 11.1 12.8 3.7 5.5
Interest cost 36.7 35.6 9.8 10.4
Plan participants' contributions -- -- 1.6 1.5
Plan amendments 3.6 -- (3.8) (2.5)
Actuarial loss (gain) (13.8) (60.7) 2.4 (29.9)
Curtailments -- -- -- (0.3)
Gross benefits paid (35.0) (35.1) (10.8) (10.2)
-------------- --------------- ---------------- -----------------
Net benefit obligation at end of year 483.6 481.0 130.7 127.8
-------------- --------------- ---------------- -----------------
Change in plan assets:
Fair value of plan assets at beginning of year 525.9 506.3 68.3 55.1
Actual return on plan assets 63.1 54.7 8.7 8.2
Employer contributions 2.3 -- 15.2 13.6
Plan participants' contributions -- -- 1.6 1.6
Gross benefits paid (35.0) (35.1) (10.8) (10.2)
-------------- --------------- ---------------- -----------------
Fair value of plan assets at end of year 556.3 525.9 83.0 68.3
-------------- --------------- ---------------- -----------------
Funded status at end of year 72.7 44.9 (47.7) (59.5)
Unrecognized net actuarial gain (69.2) (39.0) (38.3) (39.3)
Unrecognized prior service cost 24.2 23.2 (1.2) (1.5)
Unrecognized net transition obligation (asset) (5.8) (8.2) 44.8 52.4
-------------- --------------- ---------------- -----------------
Net amount recognized at end of year $21.9 $20.9 ($42.4) ($47.9)
============== =============== ================ =================
Amounts recognized on the Consolidated
Balance Sheets consist of:
Prepaid benefit cost $41.8 $39.1 $1.6 $0.6
Accrued benefit cost (19.9) (18.2) (44.0) (48.5)
-------------- --------------- ---------------- -----------------
Net amount recognized at measurement date 21.9 20.9 (42.4) (47.9)
-------------- --------------- ---------------- -----------------
Contributions paid after 9/30 and prior to 12/31 -- -- 1.5 6.9
-------------- --------------- ---------------- -----------------
Net amount recognized at 12/31 $21.9 $20.9 ($40.9) ($41.0)
============== =============== ================ =================
The benefit obligation and fair value of plan assets for the
postretirement welfare plans with benefit obligations in excess of plan
assets were $124.5 million and $73.2 million, respectively, as of
September 30, 2000 and $121.3 million and $58.7 million, respectively,
as of September 30, 1999. The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the pension plans
with benefit obligations in excess of plan assets were $231.4 million,
$225.9 million and $219.8 million, respectively, as of September 30,
1999. As of September 30, 2000, there were no pension plans with
benefit obligations in excess of plan assets.
Alliant Energy sponsors several non-qualified pension plans that cover
certain current and former officers. At December 31, 2000 and 1999, the
funded balances of such plans totaled approximately $5 million. Alliant
Energy's pension benefit obligation under these plans was $26.2 million
and $28.0 million at December 31, 2000 and 1999, respectively. Alliant
Energy's pension expense under these plans was $3.6 million, $2.5
million, and $4.5 million in 2000, 1999 and 1998, respectively.
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In 2000, Alliant Energy revised its deferred compensation plans allowing
certain key employees and directors to defer payment of part or all of
their current compensation in that participants can now elect to
allocate their deferred compensation among a company stock account or an
interest account, which are held in grantor trusts. At December 31,
2000, the value of the trusts totaled approximately $1 million.
A significant number of Alliant Energy employees also participate in
defined contribution pension plans (401(k) plans). Alliant Energy's
contributions to the plans, which are based on the participants' level
of contribution, were $8.1 million, $7.4 million, and $7.7 million in
2000, 1999 and 1998, respectively.
(b) Long-Term Equity Incentive Plan - Alliant Energy has a long-term
equity incentive plan that permits the grant of non-qualified stock
options, incentive stock options, restricted stock, performance shares
and performance units to key employees. As of December 31, 2000,
non-qualified stock options, restricted stock, performance shares and
performance units had been granted. The maximum number of shares of
Alliant Energy common stock that may be issued under the plan is 3.8
million.
Options granted to date under the plan were granted at the fair market
value of the shares on the date of grant, vest over three years and
expire no later than 10 years after the grant date with the exception of
participants that retire. Options become fully vested upon retirement
and remain exercisable at any time prior to their expiration date, or
for three years after the effective date of the retirement, whichever
period is shorter. Participants' options that are not vested become
forfeited when participants leave Alliant Energy and their vested
options expire after three months. A summary of the stock option
activity for 2000, 1999 and 1998 is as follows:
2000 1999 1998
----------------------------- ----------------------------- ----------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
----------------------------- ----------------------------- ----------------------------
Outstanding at beginning of year 1,543,028 $30.32 751,084 $30.83 191,800 $28.98
Options granted 899,094 28.59 824,564 29.88 636,451 31.32
Options exercised (15,486) 30.03 -- -- (8,900) 28.59
Options forfeited (160,774) 29.90 (32,620) 30.55 (68,267) 30.49
----------------------------- ----------------------------- ----------------------------
Outstanding at end of year 2,265,862 $29.67 1,543,028 $30.32 751,084 $30.83
============================= ============================= ============================
Exercisable at end of year 962,073 $30.12 333,782 $30.80 38,250 $27.50
The range of exercise prices for the options outstanding at December 31,
2000 was $27.50 to $31.56. The value of the options using the
Black-Scholes pricing method was as follows:
2000 1999 1998
-------------- --------------- --------------
Value of options based on Black-Scholes model $7.71 $4.71 $4.93
Volatility 32.7% 20.2% 21%
Risk free interest rate 5.7% 5.8% 5.8%
Expected life 10 years 10 years 10 years
Expected dividend yield 6.3% 6.7% 7.0%
Alliant Energy follows APB 25, "Accounting for Stock Issued to
Employees," to account for stock options. No compensation cost is
recognized because the option exercise price is equal to the market
price of the underlying stock on the date of grant. Had compensation
cost for the plan been determined based on the Black-Scholes value at
the grant dates for awards as prescribed by SFAS 123 "Accounting for
Stock-Based Compensation," pro forma net income and earnings per share
would have been:
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2000 1999 1998
------------- ------------- -------------
Pro forma net income (in millions) $391.7 $192.7 $93.5
Pro forma earnings per share (basic) 4.96 2.46 1.22
Pro forma earnings per share (diluted) 4.95 2.46 1.22
In 1999, 65,752 shares of restricted stock with a three-year restriction
period were awarded, 62,490 of which were outstanding at December 31,
2000. Any unvested shares of restricted stock become fully vested upon
retirement. Participants' unvested restricted stock becomes forfeited
when the participant leaves Alliant Energy. Compensation cost, which is
recognized over the three-year restriction period, was $0.6 million and
$0.4 million in 2000 and 1999, respectively.
The payout to key employees of Corporate Services for performance shares
is contingent upon achievement over a three-year period of specified
earnings per share growth and specified levels of total return to
shareowners of Alliant Energy compared with an investor-owned utility
peer group. The payout to key employees of Resources for performance
shares is contingent upon achievement over a three-year period of
specified earnings per share growth. Performance shares are paid out in
shares of Alliant Energy's common stock or a combination of cash and
stock and are modified by a performance multiplier, which ranges from 0
to 2, based on the three-year average performance criteria. Performance
shares have an intrinsic value equal to the market price of a share on
the date of grant. Prior to 1998, performance units had been granted
which represent accumulated dividends on the shares underlying the
non-qualified stock options based on the annual dividend rate at the
grant date. As of December 31, 2000, there were no performance units
outstanding. Pursuant to APB 25, Alliant Energy accrues expenses for
performance shares and performance units over the three-year period the
services are performed and recognized $0.4 million, $1.6 million and
$0.2 million of expense in 2000, 1999 and 1998, respectively.
(7) COMMON AND PREFERRED STOCK
(a) Common Stock - During 2000, 1999 and 1998, Alliant Energy issued
26,100 shares; 1,353,971 shares and 890,035 shares, respectively, of
common stock under its various stock plans. In addition, 260,039 shares
were issued in 1998 in connection with the acquisition of oil and gas
properties. Pursuant to the Shareowner Direct Plan, beginning in
January 2000, Alliant Energy obtained shares of Alliant Energy common
stock on the open market, rather than through original issue. At
December 31, 2000 and 1999, Alliant Energy had a total of 5.0 million
and 7.0 million shares, respectively, available for issuance pursuant to
its Shareowner Direct Plan, LTEIP and 401(k) Savings Plan.
Alliant Energy has a Shareowner Rights Plan whereby rights will be
exercisable only if a person or group acquires, or announces a tender
offer to acquire, 15 percent or more of Alliant Energy's common stock.
Each right will initially entitle shareowners to buy one-half of one
share of Alliant Energy's common stock. The rights will only be
exercisable in multiples of two at an initial price of $95.00 per full
share, subject to adjustment. If any shareowner acquires 15 percent or
more of the outstanding common stock of Alliant Energy, each right
(subject to limitations) will entitle its holder to purchase, at the
right's then current exercise price, a number of common shares of
Alliant Energy or of the acquirer having a market value at the time of
twice the right's per full share exercise price. The Board of Directors
is also authorized to reduce the 15 percent ownership threshold to not
less than 10 percent.
Alliant Energy's utility subsidiaries each have common stock dividend
restrictions based on their respective bond indentures and articles of
incorporation, and restrictions on the payment of common stock dividends
commonly found with preferred stock. In addition, at IESU and IPC their
ability to pay common stock dividends is restricted based on
requirements associated with sinking funds. WP&L's common stock
dividends are restricted to the extent that such dividend would reduce
the common stock equity ratio to less than 25 percent. Also the PSCW
ordered that it must approve the payment of dividends by WP&L to Alliant
Energy that are in excess of the level forecasted in the rate order
($58.3 million), if such dividends would reduce WP&L's average common
equity ratio below 52.00 percent of total capitalization. The dividends
paid by WP&L to Alliant Energy since the rate order was issued have not
exceeded such level.
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In 2000, 12 non-employee directors received up to $20,000 each in
Alliant Energy common stock as part of the director's compensation
program, for total of approximately $222,000. In 1999, matching
contributions of $2,500 each were made to nine non-employee directors.
(b) Preferred Stock - In 1993, IPC issued 545,000 shares of 6.40%, $50
par value preferred stock with a final redemption date of May 1, 2022.
Under the provisions of the mandatory sinking fund, beginning in 2003,
IPC is required to redeem annually $1.4 million, or 27,250 shares of the
preferred stock.
The carrying value of Alliant Energy's cumulative preferred stock at
December 31, 2000 and 1999 was $114 million. The fair market value,
based upon the market yield of similar securities and quoted market
prices, at December 31, 2000 and 1999 was $90 million and $97 million,
respectively. Information related to Alliant Energy's cumulative
preferred stock of subsidiaries, net at December 31 was as follows:
2000 1999
-------------- ---------------
(in thousands)
Par/Stated Authorized Shares Mandatory
Value Shares Outstanding Series Redemption
$100 * 449,765 4.40% - 6.20% No $44,977 $44,977
$25 * 599,460 6.50% No 14,986 14,986
$50 466,406 366,406 4.30% - 6.10% No 18,320 18,320
$50 ** 216,381 4.36% - 7.76% No 10,819 10,819
$50 ** 545,000 6.40% $53.20 / share 27,250 27,250
-------------- ---------------
116,352 116,352
Less: unamortized expenses (2,562) (2,714)
-------------- ---------------
$113,790 $113,638
============== ===============
* 3,750,000 authorized shares in total. ** 2,000,000 authorized
shares in total.
(8) DEBT
(a) Short-Term Debt - To provide short-term borrowing flexibility and
security for commercial paper outstanding, Alliant Energy and its
subsidiaries maintain bank lines of credit, of which most require a
fee. The utility subsidiaries participate in a utility money pool,
which is funded, as needed, through the issuance of commercial paper by
Alliant Energy. Interest expense and other fees are allocated based on
borrowed amounts. The PSCW has restricted WP&L from lending money to
non-utility affiliates and non-Wisconsin utilities. As a result, WP&L
can only borrow money from the utility money pool. As of December 31,
2000, IESU, WP&L and IPC had money pool borrowings of $101.1 million,
$29.2 million and $68.2 million, respectively. As of December 31, 1999,
IESU, WP&L and IPC had money pool borrowings of $56.9 million, $125.7
million and $39.2 million, respectively. Information regarding
short-term debt and lines of credit are as follows (dollars in
millions):
2000 1999 1998
--------------- ----------------- -----------------
As of year end:
Commercial paper outstanding $283.9 $374.7 $64.5
Discount rates on commercial paper 6.4-6.7% 5.6-6.5% 5.1-6.6%
Notes payable outstanding $50.1 $50.0 $51.8
Interest rates on notes payable 6.5% 6.3% 5.4-7.0%
For the year ended:
Average amount of short-term debt
(based on daily outstanding balances) $236.4 $185.9 $126.6
Average interest rate on short-term debt 6.5% 5.4% 5.6%
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(b) Long-Term Debt - IESU's indentures securing its First Mortgage
Bonds and its Collateral Trust Bonds constitute direct first mortgage
liens and a second lien while First Mortgage Bonds remain outstanding,
respectively, upon substantially all tangible public utility property.
Substantially all of WP&L's and IPC's utility plant is secured by their
First Mortgage Bonds. WP&L and IESU also maintain unsecured indentures
relating to the issuance of debt securities.
Resources is party to a three-year credit agreement with various banking
institutions that extends through October 2003, with one-year extensions
available upon agreement by the parties. Unused borrowing availability
under this agreement is also used to support Resources' commercial paper
program. A combined maximum of $450 million of borrowings under this
agreement and the commercial paper program may be outstanding at any one
time. Interest rates are based on quoted market prices and maturities
are set at the time of borrowing and are less than one year. At
December 31, 2000, Resources had $321 million of commercial paper
outstanding backed by this facility with interest rates ranging from
6.37%-6.65%. Resources intends to continue issuing commercial paper
backed by this facility and no conditions existed at December 31, 2000
that would prevent the issuance of commercial paper or direct borrowings
on its bank lines.
In February 2000, Resources completed a private placement of $402.5
million of exchangeable senior notes due 2030, with a stated interest
rate of 7.25% through February 2003 and 2.5% thereafter. The notes are
exchangeable for cash based upon a percentage of the value of McLeod
Class A Common Stock. Alliant Energy has agreed to fully and
unconditionally guarantee the payment of principal and interest on the
exchangeable senior notes. The proceeds were used to repay commercial
paper issued to capitalize Resources' wholly-owned exempt
telecommunications company and, indirectly through an internal transfer
of assets, to assist in funding the January 2000 investment in Brazil,
as well as for general corporate purposes.
Debt maturities for 2001 to 2005 are $92.5 million, $3.8 million, $327.9
million, $89.4 million and $93.8 million, respectively. Depending upon
market conditions, it is currently anticipated that a majority of the
maturing debt will be refinanced with the issuance of long-term
securities.
The carrying value of Alliant Energy's long-term debt at December 31,
2000 and 1999 was $2.1 billion and $1.6 billion, respectively. The fair
market value, based upon the market yield of similar securities and
quoted market prices, at December 31, 2000 and 1999 was $2.4 billion and
$1.6 billion, respectively.
(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of Alliant Energy's current assets and current
liabilities approximates fair value because of the short maturity of
such financial instruments. Since the utility subsidiaries are subject
to regulation, any gains or losses related to the difference between the
carrying amount and the fair value of its financial instruments may not
be realized by Alliant Energy's shareowners. Information relating to
various investments held by Alliant Energy that are marked to market as
a result of SFAS 115, "Accounting for Certain Investments in Debt and
Equity Securities," were as follows (in millions):
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December 31, 2000 December 31, 1999
------------------------------- -----------------------------
Net Unrealized
Carrying/Fair Net Unrealized Carrying/Fair Gains/
Value Gains/ (Losses) Value (Losses)
-------------- ---------------- ------------- ---------------
Available-for-sale securities:
Nuclear decommissioning trust funds:
Equity securities $128 $50 $112 $57
Debt securities 180 3 159 (3)
Total 308 53 271 54
Investment in McLeod 570 317 1,124 640
Investment in Capstone 41 20 -- --
Investments in New Zealand/Australia 10 (1) 97 4
Trading securities:
Investment in McLeod 221 (a) -- --
(a) Adjustments to the trading securities are reflected in earnings in
the "Miscellaneous, net" line in the Consolidated Statements of Income.
Nuclear Decommissioning Trust Funds - As required by SFAS 115, IESU's
and WP&L's debt and equity security investments in the nuclear
decommissioning trust funds are classified as available-for-sale. As of
December 31, 2000, $110 million, $24 million and $46 million of the debt
securities mature in 2001-2010, 2011-2020 and 2021-2035, respectively.
The fair market value of the nuclear decommissioning trust funds was as
reported by the trustee, adjusted for the tax effect of unrealized gains
and losses. Net unrealized holding gains were recorded as part of
accumulated provision for depreciation. The funds realized
gains/(losses) from the sales of securities of $5.0 million, ($7.9)
million and $1.2 million in 2000, 1999 and 1998, respectively (cost of
the investments based on specific identification were $213.4 million,
$120.1 million and $71.9 million, respectively, and proceeds from the
sales were $218.4 million, $112.2 million and $73.1 million,
respectively).
Investment in McLeod - At December 31, 2000 and 1999, Alliant Energy
held beneficial ownership in 56.1 million and 57.4 million shares of
common stock, respectively, (including 4.7 million and 7.8 million
unexercised vested options, respectively) in McLeod, a
telecommunications company. Alliant Energy had 40.5 million shares
classified as available-for-sale and 15.6 million shares as trading at
December 31, 2000. McLeod declared a 3-for-1 stock split effective
April 2000 (the December 1999 shares have been adjusted for the split).
The cost basis of the investment, including the cost to exercise the
options, was $30.5 million and $30.7 million at December 31, 2000 and
1999, respectively. Pursuant to the provisions of SFAS 115, the
carrying value of Alliant Energy's investment in McLeod is adjusted to
the estimated fair value each quarter based on the closing price at the
end of the quarter. Adjustments to the available-for-sale securities do
not impact earnings as the unrealized gains or losses, net of taxes, are
recorded directly to the common equity section of the Consolidated
Balance Sheets as a component of "Accumulated other comprehensive
income." In addition, any such gains or losses are reflected in current
earnings only at the time they are realized through a sale. Adjustments
to the trading securities are reflected in earnings in the
"Miscellaneous, net" line in the Consolidated Statements of Income.
Alliant Energy realized gains from the sales of McLeod
available-for-sale securities of $23.8 million and $40.3 million in 2000
and 1999, respectively (cost of the investments based on the
first-in-first-out method were $0.2 million and $0.6 million,
respectively, and proceeds from the sales were $24.0 million and $40.9
million, respectively). Refer to Note 10(a) for information on the SFAS
133 impact of Alliant Energy's investment in McLeod.
Alliant Energy's ability to sell the McLeod stock is subject to various
restrictions. Alliant Energy has an agreement with McLeod which
provides that until December 31, 2001, Alliant Energy and its affiliates
generally may not sell or otherwise dispose of shares of McLeod stock
beneficially owned by Alliant Energy and its affiliates, other than to a
subsidiary of Alliant Energy, without the prior written consent of the
Board of Directors of McLeod. However, the agreement provides that the
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Board of Directors of McLeod may permit Alliant Energy and its
affiliates to sell a specified number of shares of McLeod stock per
quarter during specified time periods. In addition, if Alliant Energy
and its affiliates are not provided the opportunity to sell, on an
annual basis, an aggregate number of shares of McLeod stock equal to 15
percent of the shares of McLeod stock owned by Alliant Energy and its
affiliates as of December 31, 1998, then Alliant Energy may terminate
the agreement.
Investments in Foreign Entities - At December 31, 2000 and 1999, Alliant
Energy had investments in unconsolidated foreign entities that included
investments in various New Zealand and Australian utility entities,
various generation facilities in China and debentures of a development
project in Mexico. Also at December 31, 2000, Alliant Energy had
investments in various Brazilian utilities. At December 31, 2000, a
portion of the New Zealand investments were accounted for under the cost
method and the other unconsolidated equity investments were accounted
for under the equity method. The carrying and fair values for the
investments accounted for under SFAS 115 are listed in the previous
table. Alliant Energy also had a generation investment of $50 million
in China at December 31, 2000 that is consolidated.
In January 2000, Resources acquired a non-controlling interest in four
Brazilian electric utilities serving more than 820,000 customers for a
total investment of approximately $347 million. As part of this
investment, Resources acquired a 49.1 percent ownership interest in
Companhia Forca E Luz Cataguazes-Leopoldina (Cataguazes), an electric
utility. Cataguazes owns a majority stake in CENF, another electric
utility company, as well as a majority interest in Energisa S.A., an
energy development company. As part of the same investment, Resources
directly acquired a 45.6 percent interest in Energisa S.A. itself, which
holds majority stakes in two regulated utilities (Energipe and Celb).
As part owner of Cataguazes, Resources holds both indirect and direct
interests in Energisa S.A.
The geographic concentration of Alliant Energy's unconsolidated foreign
investments at December 31 was as follows (in millions):
New Zealand
Brazil /Australia China Mexico Other Total
-------- --------------- ------- -------- ------- --------
2000 $319 $140 $30 $18 $1 $508
1999 -- 125 62 10 1 198
(10) DERIVATIVE FINANCIAL INSTRUMENTS
(a) Accounting for Derivative Instruments and Hedging Activities -
Alliant Energy adopted SFAS 133 as of July 1, 2000. SFAS 133 requires
that every derivative instrument be recorded on the balance sheet as an
asset or liability measured at its fair value and that changes in the
derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met.
SFAS 133 requires that as of the date of initial adoption, the
difference between the fair value of derivative instruments recorded on
the balance sheet and the previous carrying amount of those derivatives
be reported in net income or other comprehensive income, as appropriate,
as the cumulative effect of a change in accounting principle in
accordance with APB 20, "Accounting Changes." In the third quarter of
2000, Alliant Energy recorded net income of $16.7 million for a
cumulative effect of a change in accounting principle representing the
impact of adopting SFAS 133 as of July 1, 2000. This transition
adjustment was primarily the result of the difference between the
carrying amount of Resources' exchangeable senior notes issued in
February 2000 under the applicable accounting principles in effect at
June 30, 2000, and the carrying values of the debt and derivative
components of the notes as determined in accordance with SFAS 133 as of
July 1, 2000. Transition adjustments relating to Alliant Energy's other
derivative instruments had no material impact on net income.
A limited number of Alliant Energy's fixed price commodity contracts are
defined as derivatives under SFAS 133. The fair values of these
derivative instruments have been recorded as assets and liabilities on
the balance sheet and in the transition adjustment in accordance with
the transition provisions of SFAS 133. Changes in the fair values of
these instruments subsequent to July 1, 2000, to the extent that the
derivatives are designated in cash flow hedging relationships and are
effective at mitigating the underlying commodity risk, are recorded in
other comprehensive income. At the date the underlying transaction
occurs, the amounts accumulated in other comprehensive income are
reported in the Consolidated Statements of Income. To the extent that
the hedges are not effective, the ineffective portion of the changes in
fair value is recorded directly in earnings.
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The financial statement impact of recording the various SFAS 133
transactions at July 1, 2000 was as follows (in millions):
Amount
Financial Statement Account Financial Statement Increase (Decrease)
- ------------------------------------------------------------- -------------------------- --------------------------
Other assets Balance sheet $2.0
Other liabilities (a) Balance sheet 302.2
Cumulative effect of a change in accounting principle
(other comprehensive income) Balance sheet (6.6)
Other comprehensive income (b) Balance sheet (187.3)
Long-term debt (c) Balance sheet (310.3)
Cumulative effect of a change in accounting principle Income statement 16.7
Pre-tax gain on transfer to trading account (d) Income statement 321.4
Deferred tax expense (d) Income statement 134.1
(a) Includes the embedded derivative component of Resources'
exchangeable senior notes of $283.7 million
(b) Represents net of tax reduction to other comprehensive income
resulting from classification of approximately 15.6 million shares of
McLeod as trading securities (equal to net amount of two line items
in (d))
(c) Adjustment to the debt component of Resources' exchangeable senior
notes
(d) Gain and tax expenses associated with the transfer of
approximately 15.6 million shares of McLeod from available-for-sale
securities to trading securities
During 2000, $6.7 million of net losses included in the cumulative
effect of a change in accounting principle component of accumulated
other comprehensive income were reclassified into earnings, resulting in
a remaining balance of $0.1 million as of December 31, 2000.
As of December 31, 2000, Alliant Energy held derivative instruments
designated as cash flow hedging instruments and other derivatives. The
cash flow hedging instruments are comprised of natural gas swaps and
coal purchase and sales contracts which are used to manage the price of
anticipated coal purchases and sales. WP&L utilizes gas commodity swap
arrangements to reduce the impact of price fluctuations on gas purchased
and injected into storage during the summer months and withdrawn and
sold at current market prices during the winter months pursuant to the
natural gas cost incentive sharing mechanism with customers in
Wisconsin. The gas commodity swaps in place hedge the forecasted sales
of natural gas withdrawn from storage during this period.
In 2000, a net gain of approximately $0.4 million was recognized in
earnings (recorded in gas revenues) representing the amount of hedge
ineffectiveness. Alliant Energy did not exclude any components of the
derivative instruments' gain or loss from the assessment of hedge
effectiveness and there were no reclasses into earnings as a result of
the discontinuance of hedges. As of December 31, 2000, the maximum
length of time over which Alliant Energy is hedging its exposure to the
variability in future cash flows for forecasted transactions is 18
months and Alliant Energy estimates that losses of $3.7 million will be
reclassified from accumulated other comprehensive income into earnings
within the 12 months between January 1, 2001 and December 31, 2001 as
the hedged transactions affect earnings.
Alliant Energy's derivatives that have not been designated in hedge
relationships include the embedded derivative component of Resources'
exchangeable senior notes, oil swaps and collars, natural gas swaps and
electricity price collars.
At maturity, the holders of Resources' exchangeable senior notes are
paid the higher of the principal amount of the notes or an amount based
on the value of McLeod common stock. SFAS 133 requires that Alliant
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Energy split the value of the notes into a debt component and a
derivative component. The payment feature tied to McLeod stock is
considered an embedded derivative under SFAS 133 that must be accounted
for as a separate derivative instrument. This component is classified
as a "Derivative liability" on the Consolidated Balance Sheets.
Subsequent changes in the fair value of the option are reflected as
increases or decreases in Alliant Energy's reported net income. The
carrying amount of the host debt security, classified as long-term debt,
is adjusted for amortization of the debt discount in accordance with the
interest method as prescribed by APB 21, "Interest on Receivables and
Payables."
Prior to the adoption of SFAS 133, changes in fair value of all of
Alliant Energy's McLeod stock had been recorded in the accumulated other
comprehensive income component of shareowners' equity on Alliant
Energy's Consolidated Balance Sheets, as these securities had been
classified as available-for-sale. With the adoption of SFAS 133 on July
1, 2000, Alliant Energy designated 15.6 million shares of its beneficial
ownership in approximately 57 million shares of McLeod stock as trading
securities. Subsequent changes in the fair value of the shares
designated as trading are reflected as increases or decreases in Alliant
Energy's net income. These trading gains or losses are expected to
correspond with and substantially offset changes in the intrinsic value
of the derivative component of Resources' exchangeable senior notes.
Changes in the time value portion of the derivative component will
result in non-cash increases or decreases to Alliant Energy's net
income. Included in "Miscellaneous, net" in Alliant Energy's
Consolidated Statements of Income for 2000 was expense of $102.5 million
related to the change in value of the McLeod trading securities, largely
offset by income of $101.8 million related to the change in value of the
derivative component of the exchangeable senior notes.
Whiting is exposed to commodity price risk in the pricing of its oil and
gas production. Alliant Energy has previously utilized oil swaps and
collars and natural gas swaps, which have not been designated in hedge
relationships, to mitigate the impact of oil and gas price
fluctuations. These derivatives are recorded at their fair value as a
component of "Derivative liability" on the Consolidated Balance Sheets
and as a component of "Non-regulated and other" revenues in the
Consolidated Statements of Income.
Alliant Energy's utility businesses use electricity price collars, which
have not been designated in hedge relationships, to manage energy costs
during supply/demand imbalances. As of December 31, 2000, these
derivatives were recorded at their fair value as derivative assets,
derivative liabilities and regulatory assets on the Consolidated Balance
Sheets in Iowa, and as derivative assets and derivative liabilities on
the Consolidated Balance Sheets and purchased-power expense in the
Consolidated Statements of Income in Wisconsin.
(b) Weather Derivatives - WP&L uses weather derivatives to reduce the
impact of weather volatility on its natural gas sales volumes. EITF
99-2, "Accounting for Weather Derivatives," requires the use of the
intrinsic value method to account for non-exchange traded weather
derivatives. In August 2000, WP&L entered into a non-exchange traded
weather floor with a contract period from November 1, 2000 to March 31,
2001 that requires the counterparty pay WP&L $11,000 per heating
degree-day less than 5,600 during the contract period. The maximum
payout amount by the counterparty on this floor is $7 million. WP&L
paid a premium to enter into this contract, which is being amortized to
expense over the contract period. In August 1999, WP&L entered into a
non-exchange traded "weather collar" with a contract period from
November 1, 1999 to March 31, 2000. The maximum payout amount was $5
million.
(c) Nuclear Decommissioning Trust Fund Investments - WP&L previously
entered into an equity collar that used written options to mitigate the
effect of significant market fluctuations on its common stock
investments in its nuclear decommissioning trust funds. The program was
designed to protect the portfolio's value while allowing the funds to
earn a total return modestly in excess of long-term expectations over
the two-year hedge period, which was settled in December 2000. The
notional amount of the options was $78 million at December 31, 1999.
The options were reported at fair market value each reporting period.
These fair value changes did not impact net income as they were recorded
as equally offsetting changes in the investment in nuclear
decommissioning trust funds and accumulated depreciation. The option
liability fair value exceeded the premium received by $17.8 million at
December 31, 1999, as reported by the trustee.
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(11) COMMITMENTS AND CONTINGENCIES
(a) Construction and Acquisition Program - Alliant Energy anticipates
2001 construction and acquisition expenditures will be approximately
$851 million, consisting of $388 million for its utility subsidiaries'
operations, $257 million for business development initiatives at
Resources and $206 million for energy-related international
investments. During 2002-2005, Alliant Energy expects to spend
approximately $1.4 billion for its utility subsidiaries' operations,
$667 million for business development initiatives at Resources and $358
million for energy-related international investments.
(b) Purchased-Power and Transmission, Coal and Natural Gas Contracts -
Corporate Services has entered into purchased-power and transmission,
coal and natural gas supply, transportation and storage contracts. The
natural gas supply commitments are all index-based. Alliant Energy
expects to supplement its coal and natural gas supplies with spot market
purchases as needed. Alliant Energy's minimum commitments are as
follows (dollars and Dths in millions; MWhs and tons in thousands):
Natural gas supply,
Purchased-power and Coal (including transportation and storage
transmission transportation) contracts
---------------------------- ---------------------------- -----------------------------
Dollars MWhs Dollars Tons Dollars Dths
----------- ------------ ------------ ------------ ------------- -----------
2001 $74.2 926 $59.6 15,890 $125.1 221
2002 47.0 280 21.8 8,470 74.4 192
2003 32.6 280 16.8 7,564 41.7 158
2004 16.2 219 10.4 5,257 11.9 58
2005 8.0 -- 5.0 2,300 11.3 57
(c) Information Technology Services - Corporate Services has an
agreement, expiring in 2004, with EDS for information technology
services. Alliant Energy's anticipated operating and capital
expenditures under the agreement for 2001 are estimated to total
approximately $14 million. Future costs under the agreement are
variable and are dependent upon Alliant Energy's level of usage of
technological services from EDS.
(d) Financial Guarantees and Commitments - Alliant Energy has financial
guarantees, which were generally issued to support third-party borrowing
arrangements and similar transactions, amounting to approximately $27
million and $17 million outstanding at December 31, 2000 and 1999,
respectively. Such guarantees are not reflected in the consolidated
financial statements. Management believes that the likelihood of
Alliant Energy having to make any material cash payments under these
agreements is remote.
As part of Alliant Energy's electricity trading joint venture with
Cargill, both Alliant Energy and Cargill have made guarantees to certain
counterparties regarding the performance of contracts entered into by
the joint venture. Revocable guarantees of approximately $160 million
and $95 million have been issued, of which approximately $42 million and
$20 million were outstanding at December 31, 2000 and 1999,
respectively. Under the terms of the joint venture agreement, any
payments required under the guarantees would be shared by Alliant Energy
and Cargill on a 50/50 basis to the extent the joint venture is not able
to reimburse the guarantor for payments made under the guarantee.
Alliant Energy has also made guarantees to certain counterparties
regarding the performance of certain energy-related contracts. As of
December 31, 2000, the amount of the guarantees outstanding was
approximately $70 million.
As of December 31, 2000 and 1999, Alliant Energy had extended
commitments to provide $3.9 million and $6.1 million, respectively, in
nonrecourse, permanent financing to developers which were secured by
affordable housing properties. Alliant Energy anticipates other lenders
will ultimately finance these properties.
-74-
During 2000, WP&L committed to transfer all of its transmission assets
to ATC. This transfer occurred on January 1, 2001, at the net book
value of the assets. WPL Transco LLC, a wholly-owned subsidiary of
WP&L, will hold the resulting investment in ATC and follow the equity
method of accounting.
(e) Environmental Liabilities - Alliant Energy had recorded the
following environmental liabilities, and regulatory assets associated
with certain of these liabilities, as of December 31 (in millions):
Environmental liabilities 2000 1999 Regulatory assets 2000 1999
--------------- --------------- -------------- --------------
MGP sites $48.0 $48.0 MGP sites $54.3 $54.4
NEPA 10.4 11.1 NEPA 11.9 12.6
Oil and gas properties 13.0 13.0 Other 0.6 0.2
-------------- --------------
Other 0.5 1.0 $66.8 $67.2
============== ==============
--------------- ---------------
$71.9 $73.1
=============== ===============
MGP Sites - IESU, WP&L and IPC have current or previous ownership
- ----------
interests in 34, 14 and 9 sites, respectively, previously associated
with the production of gas for which they may be liable for
investigation, remediation and monitoring costs relating to the sites.
IESU, WP&L and IPC have received letters from state environmental
agencies requiring no further action at three, four and one site(s),
respectively. The companies are working pursuant to the requirements of
various federal and state agencies to investigate, mitigate, prevent and
remediate, where necessary, the environmental impacts to property,
including natural resources, at and around the sites in order to protect
public health and the environment.
Each company records environmental liabilities based upon periodic
studies, most recently updated in the third quarter of 2000, related to
the MGP sites. Such amounts are based on the best current estimate of
the remaining amount to be incurred for investigation, remediation and
monitoring costs for those sites where the investigation process has
been or is substantially completed, and the minimum of the estimated
cost range for those sites where the investigation is in its earlier
stages. It is possible that future cost estimates will be greater than
current estimates as the investigation process proceeds and as
additional facts become known. The amounts recognized as liabilities
are reduced for expenditures made and are adjusted as further
information develops or circumstances change. Costs of future
expenditures for environmental remediation obligations are not
discounted to their fair value. Management currently estimates the
range of remaining costs to be incurred for the investigation,
remediation and monitoring of all utility subsidiary sites to be
approximately $33 million to $62 million.
Under the current rate making treatment approved by the PSCW, the MGP
expenditures of WP&L, net of any insurance proceeds, are deferred and
collected from gas customers over a five-year period after new rates are
implemented. The MPUC also allows the deferral of MGP-related costs
applicable to the Minnesota sites and IPC has been successful in
obtaining approval to recover such costs in rates in Minnesota. The IUB
has permitted utilities to recover prudently incurred costs. Regulatory
assets have been recorded by each of the utility subsidiaries, which
reflect the probable future rate recovery, where applicable.
Considering the current rate treatment, and assuming no material change
therein, the utility subsidiaries believe that the clean-up costs
incurred for these MGP sites will not have a material adverse effect on
their respective financial conditions or results of operations.
Settlement has been reached with all of IESU's and WP&L's insurance
carriers regarding reimbursement for its MGP-related costs and all
issues have been resolved. IPC has settled with all but one of its
insurance carriers. Insurance recoveries available as of both December
31, 2000 and 1999 for IESU, WP&L and IPC were $18.5 million, $2.1
million and $5.3 million, respectively. Pursuant to their applicable
rate making treatment, IESU and IPC have recorded their recoveries in
"Other long-term liabilities and deferred credits" and WP&L has recorded
its recoveries as an offset against its regulatory assets.
-75-
National Energy Policy Act of 1992 - NEPA requires owners of nuclear
- -----------------------------------
power plants to pay a special assessment into a "Uranium Enrichment
Decontamination and Decommissioning Fund." The assessment is based upon
prior nuclear fuel purchases. IESU and WP&L recover the costs
associated with this assessment over the period the costs are assessed.
Alliant Energy continues to pursue relief from this assessment through
litigation.
Oil and Gas Properties Dismantlement and Abandonment Costs - Whiting is
- -----------------------------------------------------------
responsible for certain dismantlement and abandonment costs related to
various off-shore oil and gas platforms (and related on-shore plants and
equipment), the most significant of which is located off the coast of
California. Whiting estimates the total costs for these properties to
be approximately $13 million, which it has accrued. The most
significant expenditures are not expected to be incurred until 2004.
(f) Decommissioning of DAEC and Kewaunee - Pursuant to the most recent
electric rate case orders, the IUB and PSCW allow IESU and WP&L to
recover $6 million and $16 million annually for their share of the cost
to decommission DAEC and Kewaunee, respectively. Decommissioning
expense is included in "Depreciation and amortization" in the
Consolidated Statements of Income and the cumulative amount is included
in "Accumulated depreciation" on the Consolidated Balance Sheets to the
extent recovered through rates.
Additional information relating to the decommissioning of DAEC and
Kewaunee included in the most recent electric rate orders was as follows
(dollars in millions):
DAEC Kewaunee
----------------------------- --------------------------
Assumptions relating to current rate recovery amounts:
Alliant Energy's share of estimated decommissioning cost $252.8 $212.5
Year dollars in 1993 2000
Method to develop estimate NRC minimum formula Site-specific study
Annual inflation rate 4.91% 5.83%
Decommissioning method Prompt dismantling Prompt dismantling and
and removal removal
Year decommissioning to commence 2014 2013
After-tax return on external investments:
Qualified 7.34% 5.62%
Non-qualified (DAEC rate adjusted annually) 5.80% 6.97%
External trust fund balance at December 31, 2000 $112.2 $195.8
Internal reserve at December 31, 2000 $21.7 $--
After-tax earnings on external trust funds in 2000 $3.4 $11.3
The rate recovery amounts for DAEC only include an inflation estimate
through 1997. Both IESU and WP&L are funding all rate recoveries for
decommissioning into external trust funds and funding on a tax-qualified
basis to the extent possible. All of the rate recovery assumptions are
subject to change in future regulatory proceedings. In accordance with
their respective regulatory requirements, IESU and WP&L record the
earnings on the external trust funds as interest income with a
corresponding entry to interest expense at IESU and to depreciation
expense at WP&L. The earnings accumulate in the external trust fund
balances and in accumulated depreciation on utility plant.
IESU's 70 percent share of the estimated cost to decommission DAEC based
on the most recent site-specific study completed in 1998 is $334.2
million, in 1998 dollars. This study includes the costs to terminate
DAEC's NRC license and to return the site to a greenfield condition.
IESU's 70 percent share of the estimated cost to decommission DAEC based
on the most recent NRC minimum formula, using the direct disposal
method, is $355.3 million in 1999 dollars. The NRC minimum formula is
intended to apply only to the cost of terminating DAEC's NRC license.
The additional decommissioning expense funding requirements which should
result from these updated studies are not reflected in IESU's rates.
-76-
(g) Legal Proceedings - Alliant Energy is involved in legal and
administrative proceedings before various courts and agencies with
respect to matters arising in the ordinary course of business. Although
unable to predict the outcome of these matters, Alliant Energy believes
that appropriate reserves have been established and final disposition of
these actions will not have a material adverse effect on its financial
condition or results of operations.
(12) JOINTLY-OWNED ELECTRIC UTILITY PLANT
Under joint ownership agreements with other Iowa and Wisconsin
utilities, the utility subsidiaries have undivided ownership interests
in jointly-owned electric generating stations and related transmission
facilities. Each of the respective owners is responsible for the
financing of its portion of the construction costs. Kilowatt-hour
generation and operating expenses are divided on the same basis as
ownership with each owner reflecting its respective costs in its
Consolidated Statements of Income. Information relative to the utility
subsidiaries' ownership interest in these facilities at December 31,
2000 is as follows (dollars in millions):
Accumulated Construction
Fuel Ownership Plant in Provision for Work-In-
Type Interest % Service Depreciation Progress
------------ ----------------------- --------------- ------------------ -------------------
IESU
Ottumwa Unit 1 Coal 48.0 $189.1 $107.3 $2.1
Neal Unit 3 Coal 28.0 59.5 33.7 0.1
DAEC Nuclear 70.0 510.6 281.7 18.3
--------------- ------------------ -------------------
$759.2 $422.7 $20.5
--------------- ------------------ -------------------
WP&L
Columbia Energy Center Coal 46.2 $175.4 $103.6 $0.5
Edgewater Unit 4 Coal 68.2 53.0 33.6 1.6
Edgewater Unit 5 Coal 75.0 230.2 98.6 0.3
Kewaunee Nuclear 41.0 136.8 108.1 21.4
--------------- ------------------ -------------------
$595.4 $343.9 $23.8
--------------- ------------------ -------------------
IPC
Neal Unit 4 Coal 21.5 $83.5 $53.9 $--
Louisa Unit 1 Coal 4.0 24.7 13.2 --
--------------- ------------------ -------------------
$108.2 $67.1 $--
--------------- ------------------ -------------------
$1,462.8 $833.7 $44.3
=============== ================== ===================
(13) SEGMENTS OF BUSINESS
Alliant Energy's principal business segments are:
o Regulated domestic utilities - consists of IESU, WP&L and IPC,
serving customers in Iowa, Wisconsin, Minnesota and Illinois, and is
broken down into three segments: a) electric operations; b) gas
operations; and c) other, which includes the water and steam
businesses and the unallocated portions of the utility business.
Various line items in the following tables are not allocated to the
electric and gas segments for management reporting purposes and
therefore are included in "Other."
o Non-regulated businesses - represents the operations of Resources
and its subsidiaries. This includes global partnerships to develop
energy generation, delivery and infrastructure in growing
international markets and domestic businesses including oil and gas
operations, energy trading partnerships, energy and environmental
services, transportation services and affordable housing companies.
o Other - includes the operations of Alliant Energy's parent company
and Corporate Services, as well as any reconciling/eliminating
entries.
Various differences exist between segment reporting information for the
non-regulated businesses and Resources' information in Alliant Energy's
condensed consolidating financial statements in Note 15 due to Alliant
Energy's investment in Cargill-Alliant, LLC being recorded on Alliant
Energy's parent's book for legal reporting, but included with the
non-regulated businesses information for segment reporting (Alliant
-77-
Energy considers this business as part of its non-regulated business for
management reporting). The following segment reporting line items were
impacted: net (income) loss from equity method subsidiaries; income tax
expense (benefit); net income (loss); total assets; and investments in
equity method subsidiaries.
Intersegment revenues were not material to Alliant Energy's operations
and there was no single customer whose revenues were 10 percent or more
of Alliant Energy's consolidated revenues. Refer to Note 9 for a
breakdown of Alliant Energy's international investments by country.
Certain financial information relating to Alliant Energy's significant
business segments and products and services is presented below:
Regulated Domestic Utilities
--------------------------------------------------- Non-regulated Alliant Energy
Electric Gas Other Total Businesses Other Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
(in millions)
2000
Operating revenues $1,648.0 $415.0 $33.4 $2,096.4 $311.3 ($2.7) $2,405.0
Depreciation and
amortization expense 252.6 27.7 3.1 283.4 38.9 -- 322.3
Operating income 330.6 26.6 4.5 361.7 19.2 0.2 381.1
Interest expense, net of AFUDC 103.1 103.1 53.3 8.5 164.9
Preferred dividends 6.7 6.7 -- -- 6.7
Net income from equity
method subsidiaries (0.5) (0.5) (18.6) -- (19.1)
Gain on reclassification of
investments -- -- (321.3) -- (321.3)
Gains on sales of McLeod stock -- -- (23.8) -- (23.8)
Miscellaneous, net (other than
equity income) (23.3) (23.3) (21.1) (2.7) (47.1)
Income tax expense 107.9 107.9 130.6 0.3 238.8
Cumulative effect of a change
in accounting principle,
net of tax -- -- 16.7 -- 16.7
Net income (loss) 167.8 167.8 236.8 (5.9) 398.7
Total assets 3,402.2 554.4 427.2 4,383.8 2,333.3 16.7 6,733.8
Investments in equity method
subsidiaries 6.5 6.5 487.3 -- 493.8
Construction and acquisition
expenditures 265.9 35.8 3.0 304.7 750.7 11.1 1,066.5
- ------------------------------------------------------------------------------------------------------------------------------------
-78-
Regulated Domestic Utilities
---------------------------------------------------- Non-regulated Alliant Energy
Electric Gas Other Total Businesses Other Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
(in millions)
1999
Operating revenues $1,548.9 $314.3 $32.1 $1,895.3 $235.0 ($2.3) $2,128.0
Depreciation and
amortization expense 219.3 25.2 2.9 247.4 31.7 -- 279.1
Operating income (loss) 345.1 27.4 5.3 377.8 (1.3) -- 376.5
Interest expense, net of AFUDC 100.7 100.7 24.8 3.4 128.9
Preferred dividends 6.7 6.7 -- -- 6.7
Net (income) loss from equity
method subsidiaries (0.3) (0.3) (2.9) 0.2 (3.0)
Gains on sales of McLeod stock -- -- (40.3) -- (40.3)
Miscellaneous, net (other than
equity income/loss) (5.4) (5.4) (27.6) 0.1 (32.9)
Income tax expense (benefit) 115.0 115.0 6.9 (1.4) 120.5
Net income (loss) 161.1 161.1 37.8 (2.3) 196.6
Total assets 3,321.8 477.6 385.2 4,184.6 1,855.6 35.5 6,075.7
Investments in equity method
subsidiaries 5.7 5.7 74.0 -- 79.7
Construction and acquisition
expenditures 246.9 35.5 3.3 285.7 192.1 0.8 478.6
- -----------------------------------------------------------------------------------------------------------------------------------
Regulated Domestic Utilities
---------------------------------------------------- Non-regulated Alliant Energy
Electric Gas Other Total Businesses Other Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------
(in millions)
1998
Operating revenues $1,567.5 $295.6 $31.2 $1,894.3 $238.7 ($2.1) $2,130.9
Depreciation and
amortization expense 219.4 23.7 2.6 245.7 33.8 -- 279.5
Operating income (loss) 271.5 16.0 5.6 293.1 (8.6) (1.2) 283.3
Interest expense, net of AFUDC 97.0 97.0 23.3 2.3 122.6
Preferred dividends 6.7 6.7 -- -- 6.7
Net (income) loss from equity
method subsidiaries (0.9) (0.9) 2.2 -- 1.3
Miscellaneous, net (other than
equity income/loss) 3.5 3.5 (8.0) 2.4 (2.1)
Income tax expense (benefit) 77.2 77.2 (17.2) (1.9) 58.1
Net income (loss) 109.6 109.6 (8.9) (4.0) 96.7
Total assets 3,268.5 477.0 386.0 4,131.5 869.2 (41.4) 4,959.3
Investments in equity method
subsidiaries 5.2 5.2 49.4 -- 54.6
Construction and acquisition
expenditures 233.7 33.2 2.3 269.2 102.9 -- 372.1
- ------------------------------------------------------------------------------------------------------------------------------------
-79-
Products and Services
- ---------------------
Revenues
- ------------------------------------------------------------------------------------------------------------------------------------
Regulated Non-regulated
- ----------------------------------------------- ----------------------------------------------------------------------------------
Total
Integrated Oil and Gas Non-regulated
Year Electric Gas Other Services Production Transportation Other Businesses
- ----------------------------------------------- ----------------------------------------------------------------------------------
(in millions)
2000 $1,648.0 $415.0 $33.4 $172.2 $94.1 $20.1 $24.9 $311.3
1999 1,548.9 314.3 32.1 126.0 62.6 21.6 24.8 235.0
1998 1,567.5 295.6 31.2 127.2 64.6 22.0 24.9 238.7
- ------------------------------------------------------------------------------------------------------------------------------------
(14) SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter Ended
--------------------------------------------------------------------------
March 31 June 30 September 30 December 31
---------------- ------------------ -------------------- --------------
(in millions, except per share data)
2000
- ----
Operating revenues $574.1 $523.9 $603.2 $703.8
Operating income 88.4 60.2 140.0 92.5
Income before cumulative effect of a
change in accounting principle, net of tax (a) 19.3 42.3 259.5 60.9
Cumulative effect of a change in
accounting principle, net of tax (a) -- -- 16.7 --
Net income (a) 19.3 42.3 276.2 60.9
Earnings per average common share - diluted: (a)
Income before cumulative effect of
a change in accounting principle 0.24 0.54 3.28 0.76
Cumulative effect of a change in
accounting principle -- -- 0.21 --
Net income 0.24 0.54 3.49 0.76
1999
- ----
Operating revenues $546.9 $477.9 $571.5 $531.7
Operating income 93.0 60.2 130.8 92.5
Net income (b) 41.7 38.6 71.5 44.8
Earnings per average common
share (basic and diluted) (b) 0.54 0.49 0.91 0.57
(a) The third quarter of 2000 includes $204 million ($2.58 per diluted
share) of non-cash income related to Alliant Energy's adoption of
SFAS 133 on July 1, 2000. The first and fourth quarters of 2000
include $7 million ($0.09 per diluted share) and $9 million ($0.11
per diluted share), respectively, of net income from gains on sales
of McLeod stock.
(b) The second and fourth quarters of 1999 include $21 million ($0.27
per diluted share) and $4 million ($0.05 per diluted share),
respectively, of net income from gains on sales of McLeod stock.
(15) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Alliant Energy has fully and unconditionally guaranteed the payment of
principal and interest on various debt issued by Resources and, as a
result, is required to present condensed consolidating financial
statements. All other Alliant Energy subsidiaries are non-guarantors of
Resources' senior notes. Alliant Energy's condensed consolidating
financial statements are as follows:
-80-
Alliant Energy Corporation
Condensed Consolidating Statement of Income
Year Ended December 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-----------------------------------------------------------------------------
Operating revenues:
Electric utility $-- $-- $1,648,036 $-- $1,648,036
Gas utility -- -- 414,948 -- 414,948
Non-regulated and other -- 311,262 294,507 (263,769) 342,000
-----------------------------------------------------------------------------
-- 311,262 2,357,491 (263,769) 2,404,984
-----------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels -- -- 288,621 -- 288,621
Purchased power -- -- 294,818 -- 294,818
Cost of utility gas sold -- -- 278,734 -- 278,734
Other operation and maintenance 703 240,171 751,888 (258,087) 734,675
Depreciation and amortization -- 38,952 283,382 -- 322,334
Taxes other than income taxes -- 12,992 98,379 (6,625) 104,746
-----------------------------------------------------------------------------
703 292,115 1,995,822 (264,712) 2,023,928
-----------------------------------------------------------------------------
Operating income (loss) (703) 19,147 361,669 943 381,056
-----------------------------------------------------------------------------
Interest expense and other:
Interest expense 17,350 53,297 121,250 (18,283) 173,614
Allowance for funds used during construction -- -- (8,761) -- (8,761)
Preferred dividend requirements of subsidiaries -- -- 6,713 -- 6,713
Gain on reclassification of investments -- (321,349) -- -- (321,349)
Gains on sales of McLeodUSA Inc. stock -- (23,773) -- -- (23,773)
Miscellaneous, net (422,137) (25,021) (32,294) 413,294 (66,158)
-----------------------------------------------------------------------------
(404,787) (316,846) 86,908 395,011 (239,714)
-----------------------------------------------------------------------------
Income (loss) before income taxes 404,084 335,993 274,761 (394,068) 620,770
-----------------------------------------------------------------------------
Income taxes 5,422 125,456 106,996 942 238,816
-----------------------------------------------------------------------------
Income (loss) before cumulative effect of a
change in accounting principle, net of tax 398,662 210,537 167,765 (395,010) 381,954
-----------------------------------------------------------------------------
Cumulative effect of a change in accounting
principle, net of tax -- 16,673 35 -- 16,708
-----------------------------------------------------------------------------
Net income (loss) $398,662 $227,210 $167,800 ($395,010) $398,662
=============================================================================
-81-
Alliant Energy Corporation
Condensed Consolidating Statement of Income
Year Ended December 31, 1999
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
----------------------------------------------------------------------------------
Operating revenues:
Electric utility $-- $-- $1,548,938 $-- $1,548,938
Gas utility -- -- 314,319 -- 314,319
Non-regulated and other -- 235,039 274,616 (244,939) 264,716
----------------------------------------------------------------------------------
-- 235,039 2,137,873 (244,939) 2,127,973
----------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels -- -- 262,305 -- 262,305
Purchased power -- -- 255,446 -- 255,446
Cost of utility gas sold -- -- 180,519 -- 180,519
Other operation and maintenance 286 194,577 712,943 (238,695) 669,111
Depreciation and amortization -- 31,692 247,396 -- 279,088
Taxes other than income taxes -- 9,979 100,479 (5,489) 104,969
----------------------------------------------------------------------------------
286 236,248 1,759,088 (244,184) 1,751,438
----------------------------------------------------------------------------------
Operating income (loss) (286) (1,209) 378,785 (755) 376,535
----------------------------------------------------------------------------------
Interest expense and other:
Interest expense 8,230 24,871 113,177 (10,049) 136,229
Allowance for funds used during construction -- -- (7,292) -- (7,292)
Preferred dividend requirements of subsidiaries -- -- 6,706 -- 6,706
Gains on sales of McLeodUSA Inc. stock -- (40,272) -- -- (40,272)
Miscellaneous, net (203,972) (30,702) (10,316) 209,087 (35,903)
----------------------------------------------------------------------------------
(195,742) (46,103) 102,275 199,038 59,468
----------------------------------------------------------------------------------
Income (loss) before income taxes 195,456 44,894 276,510 (199,793) 317,067
----------------------------------------------------------------------------------
Income tax expense (benefit) (1,125) 6,562 115,805 (756) 120,486
----------------------------------------------------------------------------------
Net income (loss) $196,581 $38,332 $160,705 ($199,037) $196,581
==================================================================================
-82-
Alliant Energy Corporation
Condensed Consolidating Statement of Income
Year Ended December 31, 1998
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-------------------------------------------------------------------------------
Operating revenues:
Electric utility $-- $-- $1,567,442 $-- $1,567,442
Gas utility -- -- 295,590 -- 295,590
Non-regulated and other -- 238,676 175,627 (146,461) 267,842
-------------------------------------------------------------------------------
-- 238,676 2,038,659 (146,461) 2,130,874
-------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels -- -- 297,685 -- 297,685
Purchased power -- -- 255,332 -- 255,332
Cost of utility gas sold -- -- 166,453 -- 166,453
Other operation and maintenance 2,304 203,925 679,503 (142,761) 742,971
Depreciation and amortization -- 33,835 245,670 -- 279,505
Taxes other than income taxes -- 9,525 99,801 (3,700) 105,626
-------------------------------------------------------------------------------
2,304 247,285 1,744,444 (146,461) 1,847,572
-------------------------------------------------------------------------------
Operating income (loss) (2,304) (8,609) 294,215 -- 283,302
-------------------------------------------------------------------------------
Interest expense and other:
Interest expense 6,016 23,298 106,681 (6,632) 129,363
Allowance for funds used during construction -- -- (6,812) -- (6,812)
Preferred dividend requirements of subsidiaries -- -- 6,699 -- 6,699
Miscellaneous, net (101,341) (5,777) 849 105,533 (736)
-------------------------------------------------------------------------------
(95,325) 17,521 107,417 98,901 128,514
-------------------------------------------------------------------------------
Income (loss) before income taxes 93,021 (26,130) 186,798 (98,901) 154,788
-------------------------------------------------------------------------------
Income tax expense (benefit) (1,911) (17,232) 77,256 -- 58,113
-------------------------------------------------------------------------------
Net income (loss) $94,932 ($8,898) $109,542 ($98,901) $96,675
===============================================================================
-83-
Alliant Energy Corporation
Condensed Consolidating Balance Sheet
As of December 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
------------------------------------------------------------------------------
ASSETS
Property, plant and equipment:
Utility -
Plant in service -
Electric $-- $-- $5,203,069 $-- $5,203,069
Other -- -- 1,048,506 -- 1,048,506
------------------------------------------------------------------------------
-- -- 6,251,575 -- 6,251,575
Less - Accumulated depreciation -- -- 3,296,546 -- 3,296,546
Construction work in progress -- -- 130,856 -- 130,856
Nuclear fuel, net of amortization -- -- 61,935 -- 61,935
Other property, plant and equipment, net -- 553,911 17,687 (111) 571,487
------------------------------------------------------------------------------
-- 553,911 3,165,507 (111) 3,719,307
------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 574 133,957 13,884 -- 148,415
Accounts receivable, net 224 98,932 194,083 -- 293,239
Production fuel, at average cost -- 1,379 45,248 -- 46,627
Materials and supplies, at average cost -- 2,086 53,844 -- 55,930
Gas stored underground, at average cost -- 2,983 38,376 -- 41,359
Other 223,359 44,504 170,193 (312,645) 125,411
------------------------------------------------------------------------------
224,157 283,841 515,628 (312,645) 710,981
------------------------------------------------------------------------------
Investments:
Consolidated subsidiaries 1,884,976 -- -- (1,884,976) --
Investment in available-for-sale securities of
McLeodUSA Inc. -- 569,951 -- -- 569,951
Investment in trading securities of McLeodUSA Inc. -- 220,912 -- -- 220,912
Investments in unconsolidated foreign entities -- 507,655 -- -- 507,655
Other 30,511 72,148 337,484 -- 440,143
------------------------------------------------------------------------------
1,915,487 1,370,666 337,484 (1,884,976) 1,738,661
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Deferred charges and other -- 104,339 460,478 -- 564,817
------------------------------------------------------------------------------
Total assets $2,139,644 $2,312,757 $4,479,097 ($2,197,732) $6,733,766
==============================================================================
-84-
Alliant Energy Corporation
Condensed Consolidating Balance Sheet (Continued)
As of December 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital $948,294 $232,684 $753,392 ($986,076) $948,294
Retained earnings 818,266 174,012 724,889 (899,005) 818,162
Accumulated other comprehensive income -- 276,591 (4,724) -- 271,867
Shares in deferred compensation trust (851) -- -- -- (851)
-------------------------------------------------------------------------------
Total common equity 1,765,709 683,287 1,473,557 (1,885,081) 2,037,472
-------------------------------------------------------------------------------
Cumulative preferred stock of subsidiaries, net -- -- 113,790 -- 113,790
Long-term debt (excluding current portion) 24,000 731,736 1,154,380 -- 1,910,116
-------------------------------------------------------------------------------
1,789,709 1,415,023 2,741,727 (1,885,081) 4,061,378
-------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds -- 10,917 81,560 -- 92,477
Commercial paper 283,885 -- -- -- 283,885
Other short-term borrowings -- 110,783 -- -- 110,783
Accounts payable -- 51,231 245,728 -- 296,959
Other 63,681 73,474 545,721 (312,645) 370,231
-------------------------------------------------------------------------------
347,566 246,405 873,009 (312,645) 1,154,335
-------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes (6,415) 411,614 526,476 -- 931,675
Derivative liability -- 181,925 -- -- 181,925
Other 8,784 57,790 337,885 (6) 404,453
-------------------------------------------------------------------------------
2,369 651,329 864,361 (6) 1,518,053
-------------------------------------------------------------------------------
Total capitalization and liabilities $2,139,644 $2,312,757 $4,479,097 ($2,197,732) $6,733,766
===============================================================================
-85-
Alliant Energy Corporation
Condensed Consolidating Balance Sheet
As of December 31, 1999
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-------------------------------------------------------------------------------
ASSETS
Property, plant and equipment:
Utility -
Plant in service -
Electric $-- $-- $5,032,675 $-- $5,032,675
Other -- -- 999,421 -- 999,421
-------------------------------------------------------------------------------
-- -- 6,032,096 -- 6,032,096
Less - Accumulated depreciation -- -- 3,077,459 -- 3,077,459
Construction work in progress -- -- 119,276 -- 119,276
Nuclear fuel, net of amortization -- -- 54,363 -- 54,363
Other property, plant and equipment, net -- 350,681 7,188 (111) 357,758
-------------------------------------------------------------------------------
-- 350,681 3,135,464 (111) 3,486,034
-------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 28,647 65,086 19,936 -- 113,669
Accounts receivable, net 150 47,278 97,999 -- 145,427
Production fuel, at average cost -- -- 49,657 -- 49,657
Materials and supplies, at average cost -- 1,313 51,127 -- 52,440
Gas stored underground, at average cost -- -- 23,151 -- 23,151
Other 222,313 18,724 151,681 (291,076) 101,642
-------------------------------------------------------------------------------
251,110 132,401 393,551 (291,076) 485,986
-------------------------------------------------------------------------------
Investments:
Consolidated subsidiaries 1,568,848 -- -- (1,568,848) --
Investment in available-for-sale securities of
McLeodUSA Inc. -- 1,123,790 -- -- 1,123,790
Investments in unconsolidated foreign entities -- 198,055 -- -- 198,055
Other 16,218 15,061 299,845 -- 331,124
-------------------------------------------------------------------------------
1,585,066 1,336,906 299,845 (1,568,848) 1,652,969
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Deferred charges and other -- 28,561 422,133 -- 450,694
-------------------------------------------------------------------------------
Total assets $1,836,176 $1,848,549 $4,250,993 ($1,860,035) $6,075,683
===============================================================================
-86-
Alliant Energy Corporation
Condensed Consolidating Balance Sheet (Continued)
As of December 31, 1999
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital $943,198 $232,508 $752,109 ($984,617) $943,198
Retained earnings 577,568 (53,198) 637,429 (584,335) 577,464
Accumulated other comprehensive income -- 634,903 -- -- 634,903
-------------------------------------------------------------------------------
Total common equity 1,520,766 814,213 1,389,538 (1,568,952) 2,155,565
-------------------------------------------------------------------------------
Cumulative preferred stock of subsidiaries, net -- -- 113,638 -- 113,638
Long-term debt (excluding current portion) 24,000 326,700 1,136,065 -- 1,486,765
-------------------------------------------------------------------------------
1,544,766 1,140,913 2,639,241 (1,568,952) 3,755,968
-------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds -- 1,724 53,071 -- 54,795
Commercial paper 235,825 138,848 -- -- 374,673
Accounts payable 65 23,116 167,968 -- 191,149
Other 51,744 33,981 518,360 (291,077) 313,008
-------------------------------------------------------------------------------
287,634 197,669 739,399 (291,077) 933,625
-------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes (5,988) 480,489 543,981 -- 1,018,482
Other 9,764 29,478 328,372 (6) 367,608
-------------------------------------------------------------------------------
3,776 509,967 872,353 (6) 1,386,090
-------------------------------------------------------------------------------
Total capitalization and liabilities $1,836,176 $1,848,549 $4,250,993 ($1,860,035) $6,075,683
===============================================================================
-87-
Alliant Energy Corporation
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
----------------------------------------------------------------------
Net cash flows from (used for) operating activities $390,155 $15,222 $428,195 ($401,723) $431,849
----------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (157,964) -- (80,340) 80,340 (157,964)
Net change in Resources' credit facility -- 181,652 -- -- 181,652
Proceeds from issuance of exchangeable senior notes -- 402,500 -- -- 402,500
Proceeds from issuance of other long-term debt -- 21,525 100,000 -- 121,525
Reductions in other long-term debt -- (13,641) (51,196) -- (64,837)
Net change in other short-term borrowings 48,060 110,805 (1,875) -- 156,990
Other 4,454 (13,962) (25,922) 5,255 (30,175)
----------------------------------------------------------------------
Net cash flows from (used for) financing activities (105,450) 688,879 (59,333) 85,595 609,691
----------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility -- -- (304,656) -- (304,656)
Non-regulated businesses -- (750,687) (11,121) -- (761,808)
Proceeds from dispositions of assets 2,281 105,892 3,336 -- 111,509
Other (315,059) 9,565 (62,473) 316,128 (51,839)
----------------------------------------------------------------------
Net cash flows from (used for) investing activities (312,778) (635,230) (374,914) 316,128 (1,006,794)
----------------------------------------------------------------------
Net increase (decrease) in cash and temporary
cash investments (28,073) 68,871 (6,052) -- 34,746
----------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 28,647 65,086 19,936 -- 113,669
----------------------------------------------------------------------
Cash and temporary cash investments at end of period $574 $133,957 $13,884 $-- $148,415
======================================================================
Supplemental cash flow information:
Cash paid (refunded) during the period for:
Interest $17,220 $49,013 $97,495 $-- $163,728
======================================================================
Income taxes ($2,350) ($20,891) $140,136 $-- $116,895
======================================================================
Noncash investing and financing activities:
Capital lease obligations incurred $-- $-- $20,419 $-- $20,419
======================================================================
-88-
Alliant Energy Corporation
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 1999
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
------------------------------------------------------------------------
Net cash flows from (used for) operating activities $198,525 $32,561 $402,622 ($210,579) $423,129
------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (156,489) (8,161) (178,699) 186,860 (156,489)
Net change in Resources' credit facility -- (113,657) -- -- (113,657)
Proceeds from issuance of other long-term debt -- 270,349 10,950 -- 281,299
Reductions in other long-term debt -- (34,430) (61,090) -- (95,520)
Net change in other short-term borrowings 221,325 (1,738) (50,000) -- 169,587
Other (179,656) (579) 168,829 29,279 17,873
------------------------------------------------------------------------
Net cash flows from (used for) financing activities (114,820) 111,784 (110,010) 216,139 103,093
------------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility -- -- (285,668) -- (285,668)
Non-regulated businesses -- (192,067) (838) -- (192,905)
Proceeds from dispositions of assets -- 90,145 3,298 -- 93,443
Other (55,170) 9,731 (61,980) 48,169 (59,250)
------------------------------------------------------------------------
Net cash flows from (used for) investing activities (55,170) (92,191) (345,188) 48,169 (444,380)
------------------------------------------------------------------------
Net increase (decrease) in cash and temporary
cash investments 28,535 52,154 (52,576) 53,729 81,842
------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 112 12,932 72,512 (53,729) 31,827
------------------------------------------------------------------------
Cash and temporary cash investments at end of period $28,647 $65,086 $19,936 $-- $113,669
========================================================================
Supplemental cash flow information:
Cash paid (refunded) during the period for:
Interest $8,079 $22,658 $99,477 $-- $130,214
========================================================================
Income taxes ($2,993) ($3,612) $147,755 $-- $141,150
========================================================================
Noncash investing and financing activities:
Capital lease obligations incurred $-- $-- $25,040 $-- $25,040
========================================================================
-89-
Alliant Energy Corporation
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 1998
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-----------------------------------------------------------------------
Net cash flows from (used for) operating activities $61,753 $49,265 $444,602 ($87,858) $467,762
-----------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (140,679) (2,011) (85,953) 87,964 (140,679)
Net change in Resources' credit facility -- 70,492 -- -- 70,492
Proceeds from issuance of other long-term debt -- 2,594 74,950 -- 77,544
Other 71,270 (34,001) (48,522) (53,835) (65,088)
-----------------------------------------------------------------------
Net cash flows from (used for) financing activities (69,409) 37,074 (59,525) 34,129 (57,731)
-----------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility -- -- (269,133) -- (269,133)
Non-regulated businesses -- (102,585) (340) -- (102,925)
Other 1,746 13,490 (48,711) -- (33,475)
-----------------------------------------------------------------------
Net cash flows from (used for) investing activities 1,746 (89,095) (318,184) -- (405,533)
-----------------------------------------------------------------------
Net increase (decrease) in cash and temporary
cash investments (5,910) (2,756) 66,893 (53,729) 4,498
-----------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 6,022 15,688 5,619 -- 27,329
-----------------------------------------------------------------------
Cash and temporary cash investments at end of period $112 $12,932 $72,512 ($53,729) $31,827
=======================================================================
Supplemental cash flow information:
Cash paid (refunded) during the period for:
Interest $5,992 $22,275 $98,109 $-- $126,376
=======================================================================
Income taxes ($2,430) ($21,943) $109,289 $-- $84,916
=======================================================================
Noncash investing and financing activities:
Capital lease obligations incurred $-- $-- $1,426 $-- $1,426
=======================================================================
-90-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareowners of IES Utilities Inc.:
We have audited the accompanying consolidated balance
sheets and statements of capitalization of IES Utilities
Inc. (an Iowa corporation) and subsidiaries as of December
31, 2000 and 1999, and the related consolidated statements
of income, cash flows and changes in common equity for
each of the three years in the period ended December 31,
2000. These financial statements and the supplemental
schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and supplemental
schedule based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and significant estimates made by management, as well
as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of IES Utilities Inc. and subsidiaries as of
December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three
years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the
United States.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule
listed in Item 14(a)(2) is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not
part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to
be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 29, 2001
-91-
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating revenues:
Electric utility $651,459 $627,950 $639,423
Gas utility 196,181 145,825 141,279
Steam and other 28,366 26,921 26,228
-------------------- -------------------- --------------------
876,006 800,696 806,930
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels 118,364 95,247 113,181
Purchased power 83,575 82,402 71,637
Cost of gas sold 136,352 88,308 84,642
Other operation and maintenance 215,741 222,921 239,972
Depreciation and amortization 108,064 101,053 93,965
Taxes other than income taxes 46,117 49,266 48,537
-------------------- -------------------- --------------------
708,213 639,197 651,934
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income 167,793 161,499 154,996
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 50,962 51,852 52,354
Allowance for funds used during construction (2,572) (2,366) (3,351)
Miscellaneous, net (5,070) (3,818) 2,589
-------------------- -------------------- --------------------
43,320 45,668 51,592
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 124,473 115,831 103,404
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income taxes 50,050 49,385 41,494
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 74,423 66,446 61,910
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 914 914 914
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings available for common stock $73,509 $65,532 $60,996
==================== ==================== ====================
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-92-
IES UTILITIES INC.
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $2,253,695 $2,196,895
Gas 221,949 207,769
Steam 59,416 59,929
Common 146,536 147,845
-------------------- -------------------
2,681,596 2,612,438
Less - Accumulated depreciation 1,392,766 1,311,996
-------------------- -------------------
1,288,830 1,300,442
Construction work in progress 58,352 37,572
Leased nuclear fuel, net of amortization 45,836 39,284
-------------------- -------------------
1,393,018 1,377,298
Other property, plant and equipment, net of accumulated
depreciation and amortization of $2,239 and $2,094, respectively 6,189 5,481
-------------------- -------------------
1,399,207 1,382,779
-------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 6,755 5,720
Accounts receivable:
Customer, less allowance for doubtful accounts
of $587 and $824, respectively 54,660 14,130
Associated companies 2,696 5,696
Other, less allowance for doubtful accounts
of $373 and $817, respectively 17,329 12,864
Production fuel, at average cost 11,088 12,312
Materials and supplies, at average cost 26,232 24,722
Gas stored underground, at average cost 19,290 11,462
Adjustment clause balances 14,776 11,099
Regulatory assets 14,839 18,569
Prepayments and other 3,442 8,928
-------------------- -------------------
171,107 125,502
-------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Investments:
Nuclear decommissioning trust funds 112,172 105,056
Other 6,276 6,119
-------------------- -------------------
118,448 111,175
-------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 117,574 123,031
Deferred charges and other 12,970 13,321
-------------------- -------------------
130,544 136,352
-------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $1,819,306 $1,755,808
==================== ===================
- ------------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-93-
IES UTILITIES INC.
CONSOLIDATED BALANCE SHEETS (Continued)
December 31,
CAPITALIZATION AND LIABILITIES 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See Consolidated Statements of Capitalization):
Common stock $33,427 $33,427
Additional paid-in capital 279,042 279,042
Retained earnings 267,829 252,953
Accumulated other comprehensive loss (18) -
-------------------- --------------------
Total common equity 580,280 565,422
-------------------- --------------------
Cumulative preferred stock 18,320 18,320
Long-term debt (excluding current portion) 469,771 551,079
-------------------- --------------------
1,068,371 1,134,821
-------------------- --------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds 81,560 51,196
Capital lease obligations 12,651 13,307
Notes payable to associated companies 101,095 56,946
Accounts payable 65,898 41,273
Accounts payable to associated companies 30,375 17,438
Accrued interest 10,843 10,833
Accrued taxes 48,069 44,259
Other 28,921 23,618
-------------------- --------------------
379,412 258,870
-------------------- --------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 224,164 225,961
Accumulated deferred investment tax credits 25,063 26,682
Environmental liabilities 29,521 26,292
Pension and other benefit obligations 26,884 27,734
Capital lease obligations 33,185 25,977
Other 32,706 29,471
-------------------- --------------------
371,523 362,117
-------------------- --------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 11)
- ----------------------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $1,819,306 $1,755,808
==================== ====================
- ----------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-94-
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $74,423 $66,446 $61,910
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 108,064 101,053 93,965
Amortization of leased nuclear fuel 13,867 11,400 12,513
Amortization of deferred energy efficiency expenditures 14,320 16,000 18,707
Deferred taxes and investment tax credits (13,253) (6,399) (17,921)
Refueling outage provision 7,787 (5,150) (4,001)
Impairment of regulatory assets - - 8,969
Other 714 1,355 (346)
Other changes in assets and liabilities:
Accounts receivable (41,995) (2,979) 9,690
Accounts payable 37,562 (7,729) 3,158
Accrued taxes 3,810 (11,036) (3,701)
Adjustment clause balances (3,677) (14,530) 8,829
Benefit obligations and other 9,366 13,272 14,341
----------------- ------------------ ------------------
Net cash flows from operating activities 210,988 161,703 206,113
----------------- ------------------ ------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows used for financing activities:
Common stock dividends declared (58,633) (87,951) (18,840)
Dividends payable - (4,840) 4,840
Preferred stock dividends (914) (914) (914)
Proceeds from issuance of long-term debt - - 10,000
Reductions in long-term debt (51,196) (50,140) (10,140)
Net change in short-term borrowings 44,149 56,946 -
Principal payments under capital lease obligations (15,813) (12,887) (13,250)
Other - (20) (137)
----------------- ------------------ ------------------
Net cash flows used for financing activities (82,407) (99,806) (28,441)
----------------- ------------------ ------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Utility construction expenditures (121,116) (107,342) (115,371)
Nuclear decommissioning trust funds (6,008) (6,008) (6,008)
Other (422) (731) 1,381
----------------- ------------------ ------------------
Net cash flows used for investing activities (127,546) (114,081) (119,998)
----------------- ------------------ ------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and temporary cash investments 1,035 (52,184) 57,674
----------------- ------------------ ------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 5,720 57,904 230
----------------- ------------------ ------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $6,755 $5,720 $57,904
================= ================== ==================
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the period for:
Interest $43,678 $47,307 $50,177
================= ================== ==================
Income taxes $60,255 $70,779 $64,738
================= ================== ==================
Noncash investing and financing activities -
Capital lease obligations incurred $20,419 $25,040 $1,426
================= ================== ==================
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-95-
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31,
2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Common equity:
Common stock - $2.50 par value - authorized 24,000,000 shares;
13,370,788 shares outstanding $33,427 $33,427
Additional paid-in capital 279,042 279,042
Retained earnings 267,829 252,953
Accumulated other comprehensive loss (18) -
--------------------- ---------------------
580,280 565,422
--------------------- ---------------------
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative preferred stock:
Cumulative, par value $50 per share, not mandatorily redeemable
- authorized 466,406 shares; 366,406 shares outstanding:
6.10% series, 100,000 shares outstanding 5,000 5,000
4.80% series, 146,406 shares outstanding 7,320 7,320
4.30% series, 120,000 shares outstanding 6,000 6,000
--------------------- ---------------------
18,320 18,320
--------------------- ---------------------
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt:
Collateral Trust Bonds:
7.65% series, retired in 2000 - 50,000
7.25% series, due 2006 60,000 60,000
6-7/8% series, due 2007 55,000 55,000
6% series, due 2008 50,000 50,000
7% series, due 2023 50,000 50,000
5.5% series, due 2023 19,400 19,400
--------------------- ---------------------
234,400 284,400
First Mortgage Bonds:
Series Y, 8-5/8%, due 2001 60,000 60,000
9-1/8% series, due 2001 21,000 21,000
7-1/4% series, due 2007 30,000 30,000
--------------------- ---------------------
111,000 111,000
Pollution Control Revenue Bonds:
5.75%, due serially 2001 to 2003 2,800 2,996
Variable rate (5.1% at December 31, 2000), due 2003 to 2010 10,100 11,100
Variable/fixed rate series 1998 (4.25% through 2003), due 2023 10,000 10,000
--------------------- ---------------------
22,900 24,096
Subordinated Deferrable Interest Debentures, 7-7/8%, due 2025 50,000 50,000
Senior Debentures, 6-5/8%, due 2009 135,000 135,000
--------------------- ---------------------
553,300 604,496
--------------------- ---------------------
Less:
Current maturities (81,560) (51,196)
Unamortized debt premium and (discount), net (1,969) (2,221)
--------------------- ---------------------
469,771 551,079
--------------------- ---------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total capitalization $1,068,371 $1,134,821
===================== =====================
- --------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-96-
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY
Accumulated
Additional Other Total
Common Paid-In Retained Comprehensive Common
Stock Capital Earnings Income (Loss) Equity
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
1998:
Beginning balance $33,427 $279,042 $233,216 $ - $545,685
Earnings available for common stock 60,996 60,996
Common stock dividends (18,840) (18,840)
----------- ------------ ------------- ---------- ---------------
Ending balance 33,427 279,042 275,372 - 587,841
1999:
Earnings available for common stock 65,532 65,532
Common stock dividends (87,951) (87,951)
----------- ------------ ------------- ---------- ---------------
Ending balance 33,427 279,042 252,953 - 565,422
2000:
Comprehensive income:
Earnings available for common stock 73,509 73,509
Other comprehensive income (loss):
Unrealized losses on derivatives qualified as hedges:
Unrealized holding gains arising during period
due to cumulative effect of a change in
accounting principle, net of tax of $36 51 51
Other unrealized holding gains arising during
period, net of tax of $153 215 215
Less: reclassification adjustment for gains
included in net income, net of tax of $201 284 284
---------- ---------------
Net unrealized losses on qualifying derivatives (18) (18)
---------- ---------------
Total comprehensive income 73,491
Common stock dividends (58,633) (58,633)
----------- ------------ ------------- ---------- ---------------
Ending balance $33,427 $279,042 $267,829 ($18) $580,280
=========== ============ ============= ========== ===============
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-97-
IES UTILITIES INC.
------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Except as modified below, the Alliant Energy Notes to
Consolidated Financial Statements are incorporated by reference
insofar as they relate to IESU.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General - The consolidated financial statements include
the accounts of IESU and its consolidated subsidiaries. In the
fourth quarter of 1999, IESU's subsidiaries were merged into
IESU. IESU is a subsidiary of Alliant Energy and is engaged
principally in the generation, transmission, distribution and
sale of electric energy; the purchase, distribution,
transportation and sale of natural gas; and steam services.
All of IESU's retail customers are located in Iowa.
(c) Regulatory Assets - At December 31, 2000 and 1999,
regulatory assets of $132.4 million and $141.6 million,
respectively, were comprised of the following items (in
millions):
2000 1999
----------- ------------
Tax-related (Note 1(d)) $84.7 $83.0
Environmental liabilities (Note 11(e)) 35.6 32.4
Energy efficiency program costs 8.8 22.2
Other 3.3 4.0
----------- ------------
$132.4 $141.6
=========== ============
(d) Income Taxes - Alliant Energy files a consolidated federal
income tax return. Under the terms of an agreement between
Alliant Energy and its subsidiaries, the subsidiaries calculate
their respective federal income tax provisions and make
payments to or receive payments from Alliant Energy as if they
were separate taxable entities.
(i) Operating Revenues - IESU accrues revenues for services
rendered but unbilled at month-end. In 1999, IESU recorded a
$5 million increase in the estimate of utility services
rendered but unbilled at month-end due to the implementation of
a refined estimation process.
(3) LEASES
IESU's operating lease rental expenses for 2000, 1999 and 1998
were $9.6 million, $8.9 million and $9.0 million,
respectively. IESU's future minimum lease payments by year are
as follows (in millions):
Capital Operating
Year Leases Leases
- ------------------------------------ ------------------ --------------------
2001 $18.0 $8.7
2002 12.4 6.8
2003 7.8 6.5
2004 7.3 6.3
2005 3.3 4.3
Thereafter 3.2 22.2
------------------ --------------------
52.0 $54.8
====================
Less: Amount representing interest 6.2
------------------
Present value of net minimum
capital lease payments $45.8
==================
-98-
(4) UTILITY ACCOUNTS RECEIVABLE
An accounts receivable financing arrangement exists through
2001 for IESU, in which it may sell up to a maximum amount of
$65 million of accounts receivable to a financial institution
on a limited recourse basis. Accounts receivable sold include
receivables arising from sales to customers and to other
public, municipal and cooperative utilities, as well as from
billings to the co-owners of the jointly-owned electric
generating plants operated by IESU. IESU receives a fee for
billing and collection functions, which remain IESU's
responsibility, that approximates fair value. In 2000, 1999
and 1998, IESU received approximately $0.7 billion, $0.6
billion and $0.8 billion, respectively, in aggregate proceeds
from this facility. IESU uses proceeds from the sale of
accounts receivable and unbilled revenues to finance a portion
of its long-term cash needs. Included in IESU's Consolidated
Statements of Income for 2000, 1999 and 1998, were fees
associated with these sales of $4.0 million, $3.1 million and
$3.8 million, respectively.
(5) INCOME TAXES
The components of federal and state income taxes for IESU for
the years ended December 31 were as follows (in millions):
2000 1999 1998
------------ ------------- ----------
Current tax expense $63.3 $55.8 $59.4
Deferred tax expense (11.6) (3.8) (15.3)
Amortization of investment tax credits (1.6) (2.6) (2.6)
------------ ------------- ----------
$50.1 $49.4 $41.5
============= ============ ==========
The overall effective income tax rates shown below for the
years ended December 31 were computed by dividing total income
tax expense by income before income taxes.
2000 1999 1998
---------------- ---------------- --------------
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefits 7.2 7.0 6.6
Effect of rate making on property related differences 4.6 5.1 1.5
Amortization of investment tax credits (2.2) (2.2) (2.5)
Adjustment of prior period taxes (4.0) (2.7) (1.4)
Other items, net (0.4) 0.4 0.9
---------------- ---------------- --------------
Overall effective income tax rate 40.2% 42.6% 40.1%
================ ================ ==============
The accumulated deferred income tax (assets) and liabilities
included on the Consolidated Balance Sheets at December 31
arise from the following temporary differences (in millions):
2000 1999
--------- ---------
Property related $269.8 $276.2
Investment tax credit related (17.0) (18.9)
Other (28.6) (31.3)
--------- ---------
$224.2 $226.0
========= =========
-99-
(6) BENEFIT PLANS
(a) Pension Plans and Other Postretirement Benefits - IESU has
two non-contributory defined benefit pension plans that cover
substantially all of its employees. Benefits are based on the
employees' years of service and compensation. IESU also
provides certain postretirement health care and life benefits
to eligible retirees. In general, the health care plans are
contributory with participants' contributions adjusted annually
and the life insurance plans are non-contributory.
The weighted-average assumptions as of the measurement date of
September 30 are as follows:
Qualified Pension Benefits Other Postretirement Benefits
------------------------------------------ ----------------------------------------
2000 1999 1998 2000 1999 1998
------------- ---------------------------- ------------- -------------- -----------
Discount rate 8.00% 7.75% 6.75% 8.00% 7.75% 6.75%
Expected return on plan assets 9% 9% 9% 9% 9% 9%
Rate of compensation increase 3.5% 3.5% 3.5% N/A N/A N/A
Medical cost trend on covered charges:
Initial trend range N/A N/A N/A 9% 7% 8%
Ultimate trend range N/A N/A N/A 5% 5% 6%
The components of IESU's qualified pension benefits and other
postretirement benefits costs are as follows (in millions):
Qualified Pension Benefits Other Postretirement Benefits
-------------------------------------------- -------------------------------------
2000 1999 1998 2000 1999 1998
----------- ------------ ----------- ---------- ---------- --------
Service cost $2.4 $2.6 $2.9 $0.9 $1.5 $1.5
Interest cost 7.9 7.6 8.0 3.6 4.4 4.2
Expected return on plan assets (11.0) (10.3) (11.3) (2.6) (2.0) (1.1)
Amortization of:
Transition obligation (asset) (0.2) (0.2) (0.2) 1.8 1.8 1.9
Prior service cost 1.0 0.9 0.9 -- -- --
Actuarial gain (1.0) -- (0.4) (0.9) -- --
----------- ------------ ----------- ---------- ---------- --------
Total ($0.9) $0.6 ($0.1) $2.8 $5.7 $6.5
=========== ============ =========== ========== ========== ========
During 1998, IESU recognized $1.2 million of curtailment
charges relating to IESU's other postretirement benefits.
The pension benefit cost shown above (and in the following
tables) represents only the pension benefit cost for bargaining
unit employees of IESU covered under the bargaining unit
pension plan that is sponsored by IESU. The pension benefit
cost for IESU's non-bargaining employees who are now
participants in other Alliant Energy plans was $1.2 million,
$0.9 million and $2.7 million for 2000, 1999 and 1998,
respectively, including a special charge of $1.9 million in
1998 for severance and early retirement window programs. In
addition, Corporate Services provides services to IESU. The
allocated pension benefit costs associated with these services
was $1.3 million, $1.2 million and $0.5 million for 2000, 1999
and 1998, respectively. The other postretirement benefit cost
shown above for each period (and in the following tables)
represents the other postretirement benefit cost for all IESU
employees. The allocated other postretirement benefit cost
associated with Corporate Services for IESU was $0.3 million,
$0.4 million and $0.2 million for 2000, 1999 and 1998,
respectively.
The assumed medical trend rates are critical assumptions in
determining the service and interest cost and accumulated
postretirement benefit obligation related to postretirement
benefit costs. A one percent change in the medical trend rates
for 2000, holding all other assumptions constant, would have
the following effects (in millions):
1 Percent 1 Percent
Increase Decrease
------------- --------------
Effect on total of service and
interest cost components $0.7 ($0.6)
Effect on postretirement benefit
obligation $5.1 ($4.9)
-100-
A reconciliation of the funded status of IESU's plans to the
amounts recognized on IESU's Consolidated Balance Sheets at
December 31 is presented below (in millions):
Qualified Pension Benefits Other Postretirement Benefits
--------------------------------- ------------------------------------
2000 1999 2000 1999
-------------- -------------- --------------- ---------------
Change in benefit obligation:
Net benefit obligation at beginning of year $102.3 $113.1 $46.8 $65.2
Service cost 2.4 2.6 0.9 1.5
Interest cost 7.9 7.6 3.6 4.4
Plan participants' contributions -- -- 0.4 0.4
Plan amendments 2.3 -- (0.6) (1.0)
Actuarial loss (gain) (6.0) (14.3) 1.0 (20.1)
Gross benefits paid (6.4) (6.7) (3.4) (3.6)
-------------- -------------- --------------- ---------------
Net benefit obligation at end of year 102.5 102.3 48.7 46.8
-------------- -------------- --------------- ---------------
Change in plan assets:
Fair value of plan assets at beginning of year 126.1 118.7 30.3 21.7
Actual return on plan assets 11.5 14.1 6.2 5.6
Employer contributions -- -- 6.9 6.2
Plan participants' contributions -- -- 0.4 0.4
Gross benefits paid (6.4) (6.7) (3.4) (3.6)
-------------- -------------- --------------- ---------------
Fair value of plan assets at end of year 131.2 126.1 40.4 30.3
-------------- -------------- --------------- ---------------
Funded status at end of year 28.7 23.8 (8.3) (16.5)
Unrecognized net actuarial gain (30.8) (25.4) (20.3) (18.6)
Unrecognized prior service cost 10.1 8.9 (0.2) (0.3)
Unrecognized net transition obligation (asset) (1.2) (1.4) 21.2 23.6
-------------- -------------- --------------- ---------------
Net amount recognized at end of year $6.8 $5.9 ($7.6) ($11.8)
============== ============== =============== ===============
Amounts recognized on the Consolidated
Balance Sheets consist of:
Prepaid benefit cost $6.8 $5.9 $-- $--
Accrued benefit cost -- -- (7.6) (11.8)
-------------- -------------- --------------- ---------------
Net amount recognized at measurement date 6.8 5.9 (7.6) (11.8)
-------------- -------------- --------------- ---------------
Contributions paid after 9/30 and prior to 12/31 -- -- 0.1 3.4
-------------- -------------- --------------- ---------------
Net amount recognized at 12/31 $6.8 $5.9 ($7.5) ($8.4)
============== ============== =============== ===============
Alliant Energy sponsors several non-qualified pension plans
which cover certain current and former officers. The pension
expense allocated to IESU for these plans was $1.4 million,
$0.8 million and $1.4 million in 2000, 1999 and 1998,
respectively.
A significant number of IESU employees also participate in
defined contribution pension plans (401(k) plans). IESU's
contributions to the plans, which are based on the
participants' level of contribution, were $2.1 million, $2.0
million and $2.8 million in 2000, 1999 and 1998, respectively.
(7) COMMON AND PREFERRED STOCK
(b) Preferred Stock - The carrying values of IESU's
cumulative preferred stock at December 31, 2000 and 1999 was
$18 million. The fair market value, based upon the market
yield of similar securities and quoted market prices, at
December 31, 2000 and 1999 was $13 million and $12 million,
respectively.
-101-
(8) DEBT
(a) Short-Term Debt - Information regarding IESU's short-term
debt was as follows (dollars in millions):
2000 1999 1998
--------------- --------------- ----------------
As of year end:
Money pool borrowings $101.1 $56.9 $--
Interest rate on money pool borrowings 6.6% 5.8% N/A
For the year ended:
Average amount of short-term debt
(based on daily outstanding balances) $70.3 $15.5 $--
Average interest rate on short-term debt 6.5% 5.3% N/A
(b) Long-Term Debt - IESU's debt maturities for 2001 to 2005
are $81.6 million, $0.5 million, $4.1 million, $0 and $0,
respectively. The carrying value of IESU's long-term debt at
December 31, 2000 and 1999 was $551 million and $602 million,
respectively. The fair market value, based upon the market
yield of similar securities and quoted market prices, at
December 31, 2000 and 1999 was $542 million and $573 million,
respectively.
(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL
INSTRUMENTS
Information relating to investments held by IESU that are
marked to market as a result of SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities," were as
follows (in millions):
December 31, 2000 December 31, 1999
------------------------------- ------------------------------
Net Net Unrealized
Carrying/Fair Unrealized Carrying/Fair Gains/
Value Gains Value (Losses)
--------------- --------------- ------------- ---------------
Available-for-sale securities:
Nuclear decommissioning trust funds:
Equity securities $47 $24 $47 $28
Debt securities 65 1 58 (1)
--------------- --------------- ------------- ---------------
Total $112 $25 $105 $27
=============== =============== ============= ===============
Nuclear Decommissioning Trust Funds - As required by SFAS 115,
IESU's debt and equity security investments in the nuclear
decommissioning trust funds are classified as
available-for-sale. As of December 31, 2000, $35 million, $10
million and $20 million of the debt securities mature in
2001-2010, 2011-2020 and 2021-2030, respectively. The fair
market value of the nuclear decommissioning trust funds was as
reported by the trustee, adjusted for the tax effect of
unrealized gains and losses. Net unrealized holding gains were
recorded as part of accumulated provision for depreciation.
The funds realized gains/(losses) from the sales of securities
of ($0.2) million, $2.5 million and $0.4 million in 2000, 1999
and 1998, respectively (cost of the investments based on
specific identification were $11.3 million, $25.5 million and
$14.3 million, respectively, and proceeds from the sales were
$11.1 million, $28.0 million and $14.7 million, respectively).
(11) COMMITMENTS AND CONTINGENCIES
(a) Construction and Acquisition Program - IESU anticipates
2001 utility construction and acquisition expenditures will be
approximately $152 million. During 2002-2005, IESU expects to
spend approximately $466 million for utility construction and
acquisition expenditures.
(b) Purchased-Power and Transmission, Coal and Natural Gas
Contracts - Corporate Services has entered into purchased-power
and transmission, coal, and natural gas supply, transportation
and storage contracts as agent for IESU, WP&L and IPC. The gas
supply commitments are all index-based. Based on the System
Coordination and Operating Agreement, Alliant Energy annually
-102-
allocates purchased-power contracts to the individual
utilities. Such process considers factors such as resource
mix, load growth and resource availability. Refer to Note 16
for additional information. In addition, Corporate Services
has entered into various coal contracts as agent for IESU, WP&L
and IPC. Contract quantities are allocated to specific plants
at the individual utilities based on various factors including
projected heat input requirements, combustion compatibility and
efficiency. However, for 2001, 2002 and 2003, system-wide
contracts of $21.3 million (5.1 million tons), $1.7 million
(0.5 million tons), and $1.7 million (0.5 million tons),
respectively, have not yet been allocated to the individual
utilities due to the need for additional analysis of combustion
compatibility and efficiency. Corporate Services expects to
supplement its coal and natural gas supplies with spot market
purchases as needed. The minimum commitments directly assigned
to IESU are as follows (dollars and Dths in millions; MWhs and
tons in thousands):
Natural gas supply,
Purchased-power and Coal (including transportation and storage
transmission transportation) contracts
-------------------------- --------------------------- ------------------------------
Dollars MWhs Dollars Tons Dollars Dths
----------- ----------- ----------- ----------- ------------- ------------
2001 $11.2 -- $16.0 4,096 $69.3 101
2002 7.7 -- 5.6 2,473 42.3 85
2003 7.7 -- 5.4 2,401 16.0 64
2004 2.2 -- 3.6 1,767 0.7 2
2005 -- -- 3.6 1,767 0.2 2
(c) Information Technology Services - Corporate Services has
an agreement, expiring in 2004, with EDS for information
technology services. IESU's anticipated operating and capital
expenditures under the agreement for 2001 are estimated to
total approximately $11 million. Future costs under the
agreement are variable and are dependent upon IESU's level of
usage of technological services from EDS.
(d) Financial Guarantees - IESU had financial guarantees,
which were generally issued to support third-party borrowing
arrangements and similar transactions, amounting to $17 million
outstanding at December 31, 2000 and 1999. Such guarantees
were not reflected in the consolidated financial statements.
Management believes that the likelihood of IESU having to make
any material cash payments under these agreements is remote.
(e) Environmental Liabilities - IESU had recorded the
following environmental liabilities, and regulatory assets
associated with certain of these liabilities, as of December 31
(in millions):
Environmental liabilities 2000 1999 Regulatory assets 2000 1999
- ------------------------- --------------- --------------- ------------------ -------------- --------------
MGP sites $28.0 $24.5 MGP sites $27.9 $24.5
NEPA 6.8 7.0 NEPA 7.5 7.7
Other 0.3 0.3 Other 0.2 0.2
--------------- --------------- -------------- --------------
$35.1 $31.8 $35.6 $32.4
=============== =============== ============== ==============
MGP Sites - Management currently estimates the range of
remaining costs to be incurred for the investigation,
remediation and monitoring of all IESU's sites to be
approximately $18 million to $37 million.
(13) SEGMENTS OF BUSINESS
IESU is a regulated domestic utility, serving customers in
Iowa, and is broken down into three segments: a) electric
operations; b) gas operations; and c) other, which includes the
steam business and the unallocated portions of the utility
business. Various line items in the following tables are not
allocated to the electric and gas segments for management
reporting purposes and therefore are included in "Other."
Intersegment revenues were not material to IESU's operations
and there was no single customer whose revenues exceeded 10
percent or more of IESU's consolidated revenues. Certain
financial information relating to IESU's significant business
segments is presented below:
-103-
Electric Gas Other Total
- ---------------------------------------------------------------------------------------------------------------
(in millions)
2000
Operating revenue $651.4 $196.2 $28.4 $876.0
Depreciation and amortization expense 97.0 9.1 2.0 108.1
Operating income 153.7 11.3 2.8 167.8
Interest expense, net of AFUDC 48.4 48.4
Miscellaneous, net (5.1) (5.1)
Income tax expense 50.1 50.1
Net income 74.4 74.4
Preferred dividends 0.9 0.9
Earnings available for common stock 73.5 73.5
Total assets 1,465.3 239.6 114.4 1,819.3
Construction and acquisition expenditures 104.7 15.7 0.7 121.1
- ---------------------------------------------------------------------------------------------------------------
1999
Operating revenue $628.0 $145.8 $26.9 $800.7
Depreciation and amortization expense 91.0 8.2 1.9 101.1
Operating income 149.6 8.4 3.5 161.5
Interest expense, net of AFUDC 49.5 49.5
Miscellaneous, net (3.8) (3.8)
Income tax expense 49.4 49.4
Net income 66.4 66.4
Preferred dividends 0.9 0.9
Earnings available for common stock 65.5 65.5
Total assets 1,449.2 201.1 105.5 1,755.8
Construction and acquisition expenditures 92.7 13.8 0.8 107.3
- ---------------------------------------------------------------------------------------------------------------
1998
Operating revenue $639.4 $141.3 $26.2 $806.9
Depreciation and amortization expense 84.7 7.6 1.7 94.0
Operating income 143.4 7.6 4.0 155.0
Interest expense, net of AFUDC 49.0 49.0
Miscellaneous, net 2.6 2.6
Income tax expense 41.5 41.5
Net income 61.9 61.9
Preferred dividends 0.9 0.9
Earnings available for common stock 61.0 61.0
Total assets 1,440.8 201.2 147.0 1,789.0
Construction and acquisition expenditures 100.5 14.1 0.8 115.4
- ---------------------------------------------------------------------------------------------------------------
-104-
(14) SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter Ended
-----------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
-------------------- ------------------ -------------------- --------------------
(in millions)
2000
Operating revenues $212.1 $182.0 $230.9 $251.0
Operating income 35.5 22.4 75.9 34.0
Net income 16.1 6.5 37.4 14.4
Earnings available for common stock 15.9 6.3 37.1 14.2
1999
Operating revenues $209.3 $170.8 $228.3 $192.3
Operating income 36.2 24.1 72.1 29.1
Net income 14.4 7.0 35.5 9.5
Earnings available for common stock 14.2 6.8 35.3 9.2
(16) RELATED PARTY ISSUES
In association with the 1998 merger that resulted in the formation
of Alliant Energy, IESU, WP&L and IPC entered into
a System Coordination and Operating Agreement which became
effective with the merger. The agreement, which has been
approved by FERC, provides a contractual basis for coordinated
planning, construction, operation and maintenance of the
interconnected electric generation and transmission systems of
the three utility companies. In addition, the agreement allows
the interconnected system to be operated as a single entity
with off-system capacity sales and purchases made to market
excess system capability or to meet system capability
deficiencies. Such sales and purchases are allocated among the
three utility companies based on procedures included in the
agreement. The sales amounts allocated to IESU were $15.4
million, $18.1 million and $18.0 million for 2000, 1999 and
1998, respectively. The purchases allocated to IESU were $70.6
million, $71.3 million and $56.0 million for 2000, 1999 and
1998, respectively. The procedures were approved by both FERC
and all state regulatory bodies having jurisdiction over these
sales. Under the agreement, IESU, WP&L and IPC are fully
reimbursed for any generation expense incurred to support the
sale to an affiliate or to a non-affiliate. Any margins on
sales to non-affiliates are distributed to the three utilities
in proportion to each utility's share of electric production at
the time of sale.
Pursuant to a service agreement approved by the SEC under
PUHCA, IESU receives various administrative and general
services from an affiliate, Corporate Services. These services
are billed to IESU at cost based on payroll and other expenses
incurred by Corporate Services for the benefit of IESU. These
costs totaled $100.0 million, $93.9 million and $59.3 million
for 2000, 1999 and 1998, respectively, and consisted primarily
of employee compensation, benefits and fees associated with
various professional services. Corporate Services began
operations in May 1998 upon the consummation of the merger. At
December 31, 2000 and 1999, IESU had an intercompany payable to
Corporate Services of $27.9 million and $16.4 million,
respectively.
-105-
(17) INTERSTATE POWER AND LIGHT COMPANY MERGER
On March 15, 2000, the boards of directors of IESU and IPC
approved a merger agreement (as amended on November 29, 2000)
that will result in IPC merging with and into IESU (the
"Agreement"). Completion of the merger is subject to attaining
the necessary regulatory approvals and the
affirmative vote of the IPC common and preferred shareowners
voting together as a single class and the IESU common
shareowners and preferred shareowners of each series voting
separately as individual classes. The vote is expected in
the second quarter of 2001. Under the Agreement, each share of IPC common
stock outstanding will be cancelled without payment and each
share of IPC preferred stock outstanding will be cancelled and
converted into the right to receive one share of a new class of
IESU Class A preferred stock with substantially identical
designations, rights and preferences as the previously
outstanding IPC preferred stock. IPC and IESU
are both wholly-owned operating subsidiaries of Alliant
Energy. As such, the transaction will be accounted for as a
common control merger.
The following illustrates the impact of the merger if it had
occurred as of January 1, 1998 (in thousands):
2000 1999 1998
------------------ ------------------- -------------------
Operating revenues $1,234,007 $1,142,801 $1,162,819
Earnings available for common stock 99,724 93,896 77,278
-106-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareowners of Wisconsin Power and Light Company:
We have audited the accompanying consolidated balance
sheets and statements of capitalization of Wisconsin Power
and Light Company (a Wisconsin corporation) and
subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, cash flows and
changes in common equity for each of the three years in
the period ended December 31, 2000. These financial
statements and the supplemental schedule referred to below
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and supplemental schedule based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and significant estimates made by management, as well
as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Wisconsin Power and Light Company and
subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each
of the three years in the period ended December 31, 2000,
in conformity with accounting principles generally
accepted in the United States.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule
listed in Item 14(a)(2) is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not
part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to
be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 29, 2001
-107-
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating revenues:
Electric utility $692,191 $626,607 $614,704
Gas utility 165,152 120,770 111,737
Water 5,038 5,128 5,007
-------------------- -------------------- --------------------
862,381 752,505 731,448
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric production fuels 113,208 110,521 120,485
Purchased power 146,939 107,598 113,936
Cost of gas sold 107,131 64,073 61,409
Other operation and maintenance 188,967 172,131 193,578
Depreciation and amortization 139,911 113,037 119,221
Taxes other than income taxes 29,163 30,240 30,169
-------------------- -------------------- --------------------
725,319 597,600 638,798
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income 137,062 154,905 92,650
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 44,644 40,992 36,584
Allowance for funds used during construction (5,365) (4,511) (3,049)
Miscellaneous, net (16,536) 1,836 (1,129)
-------------------- -------------------- --------------------
22,743 38,317 32,406
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 114,319 116,588 60,244
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income taxes 42,918 45,758 24,670
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change
in accounting principle, net of tax 71,401 70,830 35,574
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cumulative effect of a change in accounting
principle, net of tax 35 - -
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 71,436 70,830 35,574
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 3,310 3,310 3,310
-------------------- -------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings available for common stock $68,126 $67,520 $32,264
==================== ==================== ====================
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-108-
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $2,007,974 $1,921,624
Gas 273,457 258,132
Water 29,869 27,770
Common 223,921 218,607
-------------------- --------------------
2,535,221 2,426,133
Less - Accumulated depreciation 1,380,723 1,266,366
-------------------- --------------------
1,154,498 1,159,767
Construction work in progress 59,133 66,784
Nuclear fuel, net of amortization 16,099 15,079
-------------------- --------------------
1,229,730 1,241,630
Other property, plant and equipment, net of accumulated
depreciation and amortization of $195 and $169, respectively 369 608
-------------------- --------------------
1,230,099 1,242,238
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 2,584 3,555
Accounts receivable:
Customer 51,769 22,061
Associated companies 2,211 5,067
Other 13,865 10,984
Production fuel, at average cost 17,811 20,663
Materials and supplies, at average cost 21,639 20,439
Gas stored underground, at average cost 13,876 8,624
Prepaid gross receipts tax 23,088 20,864
Other 6,397 9,275
-------------------- --------------------
153,240 121,532
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Investments:
Nuclear decommissioning trust funds 195,768 166,202
Other 14,362 15,272
-------------------- --------------------
210,130 181,474
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 88,721 82,161
Deferred charges and other 174,834 138,730
-------------------- --------------------
263,555 220,891
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $1,857,024 $1,766,135
==================== ====================
- ---------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-109-
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS (Continued)
December 31,
CAPITALIZATION AND LIABILITIES 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See Consolidated Statements of Capitalization):
Common stock $66,183 $66,183
Additional paid-in capital 229,516 229,438
Retained earnings 371,602 303,476
Accumulated other comprehensive loss (4,708) -
-------------------- --------------------
Total common equity 662,593 599,097
-------------------- --------------------
Cumulative preferred stock 59,963 59,963
Long-term debt (excluding current portion) 514,209 414,673
-------------------- --------------------
1,236,765 1,073,733
-------------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities - 1,875
Variable rate demand bonds 55,100 55,100
Notes payable to associated companies 29,244 125,749
Accounts payable 120,155 88,245
Accounts payable to associated companies 32,442 25,306
Other 36,266 30,283
-------------------- --------------------
273,207 326,558
-------------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 222,819 235,838
Accumulated deferred investment tax credits 29,472 31,311
Customer advances 34,815 34,643
Environmental liabilities 7,564 10,861
Other 52,382 53,191
-------------------- --------------------
347,052 365,844
-------------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 11)
- -------------------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $1,857,024 $1,766,135
==================== ====================
- -------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-110-
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $71,436 $70,830 $35,574
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 139,911 113,037 119,221
Amortization of nuclear fuel 5,066 6,094 5,356
Deferred taxes and investment tax credits (12,077) (12,618) (7,529)
Other (16,003) 2,432 (2,089)
Other changes in assets and liabilities:
Accounts receivable (29,733) (13,423) 12,845
Accounts payable 39,046 8,482 19,452
Benefit obligations and other (21,797) (11,854) (5,509)
------------------ ------------------ -------------------
Net cash flows from operating activities 175,849 162,980 177,321
------------------ ------------------ -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends - (58,353) (58,341)
Preferred stock dividends (3,310) (3,310) (3,310)
Proceeds from issuance of long-term debt 100,000 - 60,000
Reductions in long-term debt (1,875) - (8,899)
Net change in short-term borrowings (96,505) 48,950 (4,201)
Capital contribution from parent - 30,000 -
Other (1,242) - (1,966)
------------------ ------------------ -------------------
Net cash flows from (used for) financing activities (2,932) 17,287 (16,717)
------------------ ------------------ -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Utility construction expenditures (131,640) (131,915) (117,143)
Nuclear decommissioning trust funds (16,092) (16,092) (14,297)
Other (26,156) (30,516) (29,845)
------------------ ------------------ -------------------
Net cash flows used for investing activities (173,888) (178,523) (161,285)
------------------ ------------------ -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and temporary cash investments (971) 1,744 (681)
------------------ ------------------ -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 3,555 1,811 2,492
------------------ ------------------ -------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $2,584 $3,555 $1,811
================== ================== ===================
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the period for:
Interest $40,455 $38,330 $33,368
================== ================== ===================
Income taxes $54,676 $47,164 $31,951
================== ================== ===================
- ------------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-111-
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31,
2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Common equity:
Common stock - $5.00 par value - authorized 18,000,000 shares;
13,236,601 shares outstanding $66,183 $66,183
Additional paid-in capital 229,516 229,438
Retained earnings 371,602 303,476
Accumulated other comprehensive loss (4,708) -
--------------------- ---------------------
662,593 599,097
--------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cumulative preferred stock:
Cumulative, without par value, not mandatorily redeemable - authorized
3,750,000 shares, maximum aggregate stated value $150,000,000:
$100 stated value - 4.50% series, 99,970 shares outstanding 9,997 9,997
$100 stated value - 4.80% series, 74,912 shares outstanding 7,491 7,491
$100 stated value - 4.96% series, 64,979 shares outstanding 6,498 6,498
$100 stated value - 4.40% series, 29,957 shares outstanding 2,996 2,996
$100 stated value - 4.76% series, 29,947 shares outstanding 2,995 2,995
$100 stated value - 6.20% series, 150,000 shares outstanding 15,000 15,000
$25 stated value - 6.50% series, 599,460 shares outstanding 14,986 14,986
--------------------- ---------------------
59,963 59,963
--------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Long-term debt:
First Mortgage Bonds:
1984 Series A, variable rate (5% at December 31, 2000), due 2014 8,500 8,500
1988 Series A, variable rate (5.15% at December 31, 2000), due 2015 14,600 14,600
1990 Series V, 9.3%, due 2025 27,000 27,000
1991 Series A, variable rate (4.85% at December 31, 2000), due 2015 16,000 16,000
1991 Series B, variable rate (4.85% at December 31, 2000), due 2005 16,000 16,000
1991 Series C, retired in 2000 - 1,000
1991 Series D, retired in 2000 - 875
1992 Series W, 8.6%, due 2027 90,000 90,000
1992 Series X, 7.75%, due 2004 62,000 62,000
1992 Series Y, 7.6%, due 2005 72,000 72,000
--------------------- ---------------------
306,100 307,975
Debentures, 7%, due 2007 105,000 105,000
Debentures, 5.7%, due 2008 60,000 60,000
Debentures, 7-5/8%, due 2010 100,000 -
--------------------- ---------------------
571,100 472,975
--------------------- ---------------------
Less:
Current maturities - (1,875)
Variable rate demand bonds (55,100) (55,100)
Unamortized debt premium and (discount), net (1,791) (1,327)
--------------------- ---------------------
514,209 414,673
--------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total capitalization $1,236,765 $1,073,733
===================== =====================
- ------------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-112-
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY
Accumulated
Additional Other Total
Common Paid-In Retained Comprehensive Common
Stock Capital Earnings Income (Loss) Equity
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
1998:
Beginning balance $66,183 $199,170 $320,386 $ - $585,739
Earnings available for common stock 32,264 32,264
Common stock dividends (58,341) (58,341)
Common stock issued 268 268
------------ ------------ ------------ ------------- ------------
Ending balance 66,183 199,438 294,309 - 559,930
1999:
Earnings available for common stock 67,520 67,520
Common stock dividends (58,353) (58,353)
Capital contribution from parent 30,000 30,000
------------ ------------ ------------ ------------- ------------
Ending balance 66,183 229,438 303,476 - 599,097
2000:
Comprehensive income:
Earnings available for common stock 68,126 68,126
Other comprehensive income (loss):
Unrealized losses on derivatives qualified as hedges:
Unrealized holding losses arising during period
due to cumulative effect of a change in
accounting principle, net of tax of ($430) (642) (642)
Other unrealized holding losses arising during
period, net of tax of ($3,634) (5,151) (5,151)
Less: reclassification adjustment for losses
included in net income, net of tax of ($769) (1,085) (1,085)
------------- ------------
Net unrealized losses on qualifying derivatives (4,708) (4,708)
------------- ------------
Total comprehensive income 63,418
Common stock issued 78 78
------------ ------------ ------------ ------------- ------------
Ending balance $66,183 $229,516 $371,602 ($4,708) $662,593
============ ============ ============ =============== ============
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
-113-
WISCONSIN POWER AND LIGHT COMPANY
---------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Except as modified below, the Alliant Energy Notes to
Consolidated Financial Statements are incorporated by reference
insofar as they relate to WP&L.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General - The consolidated financial statements include
the accounts of WP&L and its consolidated subsidiaries. WP&L
is a subsidiary of Alliant Energy and is engaged principally in
the generation, transmission, distribution and sale of electric
energy; the purchase, distribution, transportation and sale of
natural gas; and water services. Nearly all of WP&L's retail
customers are located in south and central Wisconsin. WP&L's
principal consolidated subsidiaries are WPL Transco LLC and
South Beloit.
(c) Regulatory Assets - At December 31, 2000 and 1999,
regulatory assets of $92.4 million and $85.9 million,
respectively, were comprised of the following items (in
millions):
2000 1999
------ -------
Tax-related (Note 1(d)) $37.6 $43.4
Energy efficiency program costs 19.8 7.0
Environmental liabilities (Note 11(e)) 16.6 19.1
Other 18.4 16.4
------- ------
$92.4 $85.9
======= ======
(d) Income Taxes - Alliant Energy files a consolidated federal
income tax return. Under the terms of an agreement between
Alliant Energy and its subsidiaries, the subsidiaries calculate
their respective federal income tax provisions and make
payments to or receive payments from Alliant Energy as if they
were separate taxable entities.
(3) LEASES
WP&L's operating lease rental expenses for 2000, 1999 and 1998
were $7.9 million, $7.7 million and $6.4 million,
respectively. WP&L's future minimum lease payments by year are
as follows (in millions):
Operating
Year Leases
- -------------- -----------
2001 $14.0
2002 16.5
2003 15.5
2004 15.1
2005 15.2
Thereafter 64.2
-----------
$140.5
===========
(4) UTILITY ACCOUNTS RECEIVABLE
An accounts receivable financing arrangement exists through
2001 for WP&L, in which it may sell up to a maximum amount of
$150 million of accounts receivable to a financial institution
on a limited recourse basis. Accounts receivable sold include
receivables arising from sales to customers and to other
public, municipal and cooperative utilities, as well as from
billings to the co-owners of the jointly-owned electric
generating plants operated by WP&L. WP&L receives a fee for
billing and collection functions, which remain WP&L's
responsibility, that approximates fair value. In 2000, 1999
and 1998, WP&L received approximately $0.9 billion, $0.9
billion and $1.0 billion, respectively, in aggregate proceeds
from this facility. WP&L uses proceeds from the sale of
accounts receivable and unbilled revenues to finance a portion
of its long-term cash needs. Included in WP&L's Consolidated
Statements of Income for 2000, 1999 and 1998, were fees
associated with these sales of $5.0 million, $4.0 million and
$4.9 million, respectively.
-114-
(5) INCOME TAXES
The components of federal and state income taxes for WP&L for
the years ended December 31 were as follows (in millions):
2000 1999 1998
---------- --------- ---------
Current tax expense $55.0 $58.4 $32.2
Deferred tax expense (10.2) (10.7) (5.6)
Amortization of
investment tax credits (1.9) (1.9) (1.9)
---------- --------- ---------
$42.9 $45.8 $24.7
========== ========= =========
The overall effective income tax rates shown below for the
years ended December 31 were computed by dividing total income
tax expense by income before income taxes.
2000 1999 1998
---------------- ----------------- ----------------
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefits 6.0 6.3 7.8
Amortization of investment tax credits (1.6) (1.6) (3.1)
Adjustment of prior period taxes (0.8) (0.3) --
Merger expenses -- -- 2.5
Amortization of excess deferred taxes (1.3) (1.3) (2.5)
Other items, net 0.2 1.1 1.3
---------------- ----------------- ----------------
Overall effective income tax rate 37.5% 39.2% 41.0%
================ ================= ================
The accumulated deferred income tax (assets) and liabilities
included on the Consolidated Balance Sheets at December 31
arise from the following temporary differences (in millions):
2000 1999
--------- ---------
Property related $260.5 $271.9
Investment tax
credit related (19.7) (21.0)
Other (18.0) (15.1)
--------- ---------
$222.8 $235.8
========= =========
(6) BENEFIT PLANS
(a) Pension Plans and Other Postretirement Benefits - WP&L has
two non-contributory defined benefit pension plans that cover
substantially all of its employees. Benefits are based on the
employees' years of service and compensation. WP&L also
provides certain postretirement health care and life benefits
to eligible retirees. In general, the health care plans are
contributory with participants' contributions adjusted annually
and the life insurance plans are non-contributory.
The weighted-average assumptions as of the measurement date of
September 30 are as follows:
Qualified Pension Benefits Other Postretirement Benefits
------------------------------------------- -----------------------------------------------
2000 1999 1998 2000 1999 1998
-------------- -------------- ------------- -------------- -------------- -----------------
Discount rate 8.00% 7.75% 6.75% 8.00% 7.75% 6.75%
Expected return on plan assets 9% 9% 9% 9% 9% 9%
Rate of compensation increase 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
Medical cost trend on covered charges:
Initial trend range N/A N/A N/A 9% 7% 8%
Ultimate trend range N/A N/A N/A 5% 5% 5%
-115-
The components of WP&L's qualified pension benefits and other
postretirement benefits costs are as follows (in millions):
Qualified Pension Benefits Other Postretirement Benefits
------------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------- ----------- ---------- ---------- -----------
Service cost $3.0 $3.8 $3.2 $1.4 $1.6 $1.7
Interest cost 8.9 8.9 8.5 3.3 2.7 2.6
Expected return on plan assets (12.9) (12.9) (12.8) (1.6) (1.5) (1.5)
Amortization of:
Transition obligation (asset) (2.1) (2.1) (2.1) 1.2 1.2 1.3
Prior service cost 0.4 0.4 0.5 -- -- --
Actuarial loss (gain) -- 0.2 -- (0.8) (0.9) (1.1)
------------ ------------- ----------- ---------- ---------- -----------
Total ($2.7) ($1.7) ($2.7) $3.5 $3.1 $3.0
============ ============= =========== ========== ========== ===========
During 1998, WP&L recognized an additional $0.6 million of
costs in accordance with SFAS 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits," for severance and early
retirement programs. In addition, during 1998, WP&L recognized
$3.6 million of curtailment charges relating to WP&L's other
postretirement benefits.
The pension benefit cost shown above (and in the following
tables) represents only the pension benefit cost for bargaining
unit employees of WP&L covered under the bargaining unit
pension plan that is sponsored by WP&L. The pension benefit
cost for WP&L's non-bargaining employees who are now
participants in other Alliant Energy plans was ($1.3) million,
($1.8) million and $3.0 million for 2000, 1999 and 1998,
respectively, including a special charge of $3.6 million in
1998 for severance and early retirement window programs. In
addition, Corporate Services provides services to WP&L. The
allocated pension benefit costs associated with these services
was $1.3 million, $1.2 million and $0.6 million for 2000, 1999
and 1998, respectively. The other postretirement benefit cost
shown above for each period (and in the following tables)
represents the other postretirement benefit cost for all WP&L
employees. The allocated other postretirement benefit cost
associated with Corporate Services for WP&L was $0.3 million,
$0.4 million and $0.2 million for 2000, 1999 and 1998,
respectively.
The assumed medical trend rates are critical assumptions in
determining the service and interest cost and accumulated
postretirement benefit obligation related to postretirement
benefit costs. A one percent change in the medical trend rates
for 2000, holding all other assumptions constant, would have
the following effects (in millions):
1 Percent Increase 1 Percent Decrease
----------------------- -------------------------
Effect on total of service and interest cost components $0.4 ($0.4)
Effect on postretirement benefit obligation $3.0 ($2.9)
-116-
A reconciliation of the funded status of WP&L's plans to the
amounts recognized on WP&L's Consolidated Balance Sheets at
December 31 is presented below (in millions):
Qualified Pension Benefits Other Postretirement Benefits
--------------------------------- -------------------------------------
2000 1999 2000 1999
-------------- -------------- ---------------- --------------
Change in benefit obligation:
Net benefit obligation at beginning of year $117.2 $132.3 $42.4 $40.3
Service cost 3.0 3.8 1.4 1.6
Interest cost 8.9 8.9 3.3 2.7
Plan participants' contributions -- -- 1.2 1.2
Actuarial loss (gain) (6.2) (20.8) (1.3) 0.8
Gross benefits paid (7.0) (7.0) (4.7) (4.2)
-------------- -------------- ---------------- --------------
Net benefit obligation at end of year 115.9 117.2 42.3 42.4
-------------- -------------- ---------------- --------------
Change in plan assets:
Fair value of plan assets at beginning of year 147.6 137.5 17.9 15.1
Actual return on plan assets 15.7 17.1 1.5 1.8
Employer contributions -- -- 3.5 4.0
Plan participants' contributions -- -- 1.2 1.2
Gross benefits paid (7.0) (7.0) (4.7) (4.2)
-------------- -------------- ---------------- --------------
Fair value of plan assets at end of year 156.3 147.6 19.4 17.9
-------------- -------------- ---------------- --------------
Funded status at end of year 40.4 30.4 (22.9) (24.5)
Unrecognized net actuarial loss (gain) (8.2) 0.8 (15.0) (14.5)
Unrecognized prior service cost 4.3 4.7 (0.2) (0.2)
Unrecognized net transition obligation (asset) (3.7) (5.8) 13.8 14.9
-------------- -------------- ---------------- --------------
Net amount recognized at end of year $32.8 $30.1 ($24.3) ($24.3)
============== ============== ================ ==============
Amounts recognized on the Consolidated
Balance Sheets consist of:
Prepaid benefit cost $32.8 $30.1 $0.9 $0.6
Accrued benefit cost -- -- (25.2) (24.9)
-------------- -------------- ---------------- --------------
Net amount recognized at measurement date 32.8 30.1 (24.3) (24.3)
-------------- -------------- ---------------- --------------
Contributions paid after 9/30 and prior to 12/31 -- -- 0.6 1.0
-------------- -------------- ---------------- --------------
Net amount recognized at 12/31 $32.8 $30.1 ($23.7) ($23.3)
============== ============== ================ ==============
The benefit obligation and fair value of plan assets for the
postretirement welfare plans with benefit obligations in excess
of plan assets were $37.1 million and $9.5 million as of
September 30, 2000 and $36.5 million and $8.4 million,
respectively, as of September 30, 1999.
Alliant Energy sponsors several non-qualified pension plans
that cover certain current and former officers. The pension
expense allocated to WP&L for these plans was $1.2 million,
$0.8 million and $0.8 million in 2000, 1999 and 1998,
respectively.
A significant number of WP&L employees also participate in
defined contribution pension plans (401(k) plans). WP&L's
contributions to the plans, which are based on the
participants' level of contribution, were $2.1 million, $2.0
million and $2.4 million in 2000, 1999 and 1998, respectively.
-117-
(7) COMMON AND PREFERRED STOCK
(b) Preferred Stock - The carrying value of WP&L's cumulative
preferred stock at December 31, 2000 and 1999 was $60 million.
The fair market value, based upon the market yield of similar
securities and quoted market prices, at December 31, 2000 and
1999 was $44 million and $49 million, respectively.
(8) DEBT
(a) Short-Term Debt - Information regarding WP&L's short-term
debt was as follows (dollars in millions):
2000 1999 1998
----------------- ---------------- -----------------
As of year end:
Notes payable outstanding $-- $-- $50.0
Interest rate on notes payable N/A N/A 5.4%
Money pool borrowings $29.2 $125.7 $26.8
Interest rate on money pool borrowings 6.6% 5.8% 5.2%
For the year ended:
Average amount of short-term debt
(based on daily outstanding balances) $25.5 $77.1 $48.4
Average interest rate on short-term debt 6.2% 5.2% 5.6%
(b) Long-Term Debt - WP&L's debt maturities for 2001 to 2005
are $0, $0, $0, $62.0 million and $88.0 million, respectively.
The carrying value of WP&L's long-term debt at December 31,
2000 and 1999 was $569 million and $472 million, respectively.
The fair market value, based upon the market yield of similar
securities and quoted market prices, at December 31, 2000 and
1999 was $584 million and $469 million, respectively.
(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL
INSTRUMENTS
Information relating to investments held by WP&L that are
marked to market as a result of SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities," were as
follows (in millions):
December 31, 2000 December 31, 1999
------------------------------- ------------------------------
Net Net Unrealized
Carrying/Fair Unrealized Carrying/Fair Gains/
Value Gains Value (Losses)
--------------- --------------- ------------- ---------------
Available-for-sale securities:
Nuclear decommissioning trust funds:
Equity securities $81 $26 $65 $29
Debt securities 115 2 101 (2)
--------------- --------------- ------------- ---------------
Total $196 $28 $166 $27
=============== =============== ============= ===============
Nuclear Decommissioning Trust Funds - As required by SFAS 115,
WP&L's debt and equity security investments in the nuclear
decommissioning trust funds are classified as
available-for-sale. As of December 31, 2000, $75 million, $14
million and $26 million of the debt securities mature in
2001-2010, 2011-2020 and 2021-2035, respectively. The fair
market value of the nuclear decommissioning trust funds was as
reported by the trustee, adjusted for the tax effect of
unrealized gains and losses. Net unrealized holding gains were
recorded as part of accumulated provision for depreciation.
The funds realized gains/(losses) from the sales of securities
of $5.2 million, ($10.4) million and $0.8 million in 2000, 1999
and 1998, respectively (cost of the investments based on
specific identification were $202.1 million, $94.6 million and
$57.6 million, respectively, and proceeds from the sales were
$207.3 million, $84.2 million and $58.4 million,
respectively).
-118-
(11) COMMITMENTS AND CONTINGENCIES
(a) Construction and Acquisition Program - WP&L anticipates
2001 utility construction and acquisition expenditures will be
approximately $138 million. During 2002-2005, WP&L expects to
spend approximately $667 million for utility construction and
acquisition expenditures.
(b) Purchased-Power and Transmission, Coal and Natural Gas
Contracts - Corporate Services has entered into purchased-power
and transmission, coal, and natural gas supply, transportation
and storage contracts as agent for WP&L, IESU and IPC. The gas
supply commitments are all index-based. Based on the System
Coordination and Operating Agreement, Alliant Energy annually
allocates purchased-power contracts to the individual
utilities. Such process considers factors such as resource
mix, load growth and resource availability. Refer to Note 16
for additional information. In addition, Corporate Services
has entered into various coal contracts as agent for WP&L, IESU
and IPC. Contract quantities are allocated to specific plants
at the individual utilities based on various factors including
projected heat input requirements, combustion compatibility and
efficiency. However, for 2001, 2002 and 2003, system-wide
contracts of $21.3 million (5.1 million tons), $1.7 million
(0.5 million tons) and $1.7 million (0.5 million tons),
respectively, have not yet been allocated to the individual
utilities due to the need for additional analysis of combustion
compatibility and efficiency. Corporate Services expects to
supplement its coal and natural gas supplies with spot market
purchases as needed. The minimum commitments directly assigned
to WP&L are as follows (dollars and Dths in millions; MWhs and
tons in thousands):
Natural gas supply,
Purchased-power and Coal (including transportation and storage
transmission transportation) contracts
---------------------------- ---------------------------- -----------------------------
Dollars MWhs Dollars Tons Dollars Dths
----------- ------------ ------------ ------------ ------------- -----------
2001 $53.2 864 $14.0 4,523 $39.6 93
2002 34.3 219 9.8 3,673 26.9 88
2003 21.8 219 5.5 2,957 22.9 79
2004 14.0 219 5.5 2,957 11.2 56
2005 8.0 -- -- -- 11.1 55
(c) Information Technology Services - Corporate Services has
an agreement, expiring in 2004, with EDS for information technology services.
WP&L's anticipated operating and capital expenditures under the agreement for
2001 are estimated to total approximately $2 million. Future costs under the
agreement are variable and are dependent upon WP&L's level of
usage of technological services from EDS.
(e) Environmental Liabilities - WP&L had recorded the following environmental
liabilities, and regulatory assets associated with certain of these liabilities,
as of December 31
(in millions):
Environmental liabilities 2000 1999 Regulatory assets 2000 1999
- ------------------------- --------------- --------------- ----------------- -------------- --------------
MGP sites $4.5 $7.3 MGP sites $11.7 $14.2
NEPA 3.6 4.1 NEPA 4.4 4.9
Other 0.1 0.1 Other 0.5 --
--------------- --------------- -------------- --------------
$8.2 $11.5 $16.6 $19.1
=============== =============== ============== ==============
MGP Sites - Management currently estimates the range of remaining
- ---------
costs to be incurred for the investigation, remediation and monitoring of all
WP&L's sites to be approximately $4 million to $5 million.
(13) SEGMENTS OF BUSINESS
WP&L is a regulated domestic utility, serving customers in
Wisconsin and Illinois, and is broken down into three segments:
a) electric operations; b) gas operations; and c) other, which
includes the water business and the unallocated portions of the
utility business. Various line items in the following tables
are not allocated to the electric and gas segments for
management reporting purposes and therefore are included in
"Other." Intersegment revenues were not material to WP&L's
operations and there was no single customer whose revenues
exceeded 10 percent or more of WP&L's consolidated revenues.
Certain financial information relating to WP&L's significant
business segments is presented below:
-119-
Electric Gas Other Total
- -------------------------------------------------------------------------------------------------------------------
(in millions)
2000
Operating revenue $692.2 $165.2 $5.0 $862.4
Depreciation and amortization expense 122.9 15.9 1.1 139.9
Operating income 123.2 12.2 1.7 137.1
Interest expense, net of AFUDC 39.3 39.3
Net income from equity method subsidiaries (0.5) (0.5)
Miscellaneous, net (other than equity income) (16.0) (16.0)
Income tax expense 42.9 42.9
Net income 71.4 71.4
Preferred dividends 3.3 3.3
Earnings available for common stock 68.1 68.1
Total assets 1,344.9 226.1 286.0 1,857.0
Investments in equity method subsidiaries 4.8 4.8
Construction and acquisition expenditures 114.2 15.1 2.3 131.6
- -------------------------------------------------------------------------------------------------------------------
1999
Operating revenue $626.6 $120.8 $5.1 $752.5
Depreciation and amortization expense 97.5 14.5 1.0 113.0
Operating income 139.3 13.8 1.8 154.9
Interest expense, net of AFUDC 36.5 36.5
Net income from equity method subsidiaries (0.7) (0.7)
Miscellaneous, net (other than equity income) 2.5 2.5
Income tax expense 45.8 45.8
Net income 70.8 70.8
Preferred dividends 3.3 3.3
Earnings available for common stock 67.5 67.5
Total assets 1,310.5 200.3 255.3 1,766.1
Investments in equity method subsidiaries 5.2 5.2
Construction and acquisition expenditures 111.2 18.2 2.5 131.9
- -------------------------------------------------------------------------------------------------------------------
1998
Operating revenue $614.7 $111.7 $5.0 $731.4
Depreciation and amortization expense 104.7 13.6 0.9 119.2
Operating income 87.4 3.6 1.7 92.7
Interest expense, net of AFUDC 33.5 33.5
Net income from equity method subsidiaries (0.8) (0.8)
Miscellaneous, net (other than equity income) (0.3) (0.3)
Income tax expense 24.7 24.7
Net income 35.6 35.6
Preferred dividends 3.3 3.3
Earnings available for common stock 32.3 32.3
Total assets 1,276.4 195.9 212.9 1,685.2
Investments in equity method subsidiaries 5.2 5.2
Construction and acquisition expenditures 99.6 16.0 1.5 117.1
-120-
(14) SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter Ended
-----------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
------------------- ------------------ --------------------- --------------------
(in millions)
2000
Operating revenues $218.8 $193.9 $199.6 $250.1
Operating income 40.5 25.1 36.9 34.6
Net income 21.9 11.3 17.6 20.6
Earnings available for common stock 21.0 10.5 16.8 19.8
1999
Operating revenues $203.0 $167.1 $186.8 $195.6
Operating income 46.4 21.9 32.5 54.1
Net income 26.3 6.9 14.2 23.4
Earnings available for common stock 25.4 6.1 13.4 22.6
(16) RELATED PARTY ISSUES
In association with the 1998 merger that resulted in the formation
of Alliant Energy, IESU, WP&L and IPC entered into
a System Coordination and Operating Agreement which became
effective with the merger. The agreement, which has been
approved by FERC, provides a contractual basis for coordinated
planning, construction, operation and maintenance of the
interconnected electric generation and transmission systems of
the three utility companies. In addition, the agreement allows
the interconnected system to be operated as a single entity
with off-system capacity sales and purchases made to market
excess system capability or to meet system capability
deficiencies. Such sales and purchases are allocated among the
three utility companies based on procedures included in the
agreement. The sales amounts allocated to WP&L were $28.6
million, $23.8 million and $23.6 million for 2000, 1999 and
1998, respectively. The purchases allocated to WP&L were
$130.7 million, $101.0 million and $70.0 million for 2000, 1999
and 1998, respectively. The procedures were approved by both
the FERC and all state regulatory bodies having jurisdiction
over these sales. Under the agreement, IESU, WP&L and IPC are
fully reimbursed for any generation expense incurred to support
a sale to an affiliate or to a non-affiliate. Any margins on
sales to non-affiliates are distributed to the three utilities
in proportion to each utility's share of electric production at
the time of the sale.
Pursuant to a service agreement approved by the SEC under
PUHCA, WP&L received various administrative and general
services from an affiliate, Corporate Services. These services
are billed to WP&L at cost based on payroll and other expenses
incurred by Corporate Services for the benefit of WP&L. These
costs totaled $103.4 million, $96.5 million and $53.9 million
for 2000, 1999 and 1998, respectively, and consisted primarily
of employee compensation, benefits and fees associated with
various professional services. Corporate Services began
operations in May 1998 upon the consummation of the merger. At
December 31, 2000 and 1999, WP&L had an intercompany payable to
Corporate Services of $30.6 million and $24.7 million,
respectively.
-121-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
ALLIANT ENERGY
The information required by Item 10 relating to directors and
nominees for election of directors at the 2001 Annual Meeting
of Shareowners is incorporated herein by reference to the
relevant information under the caption "Election of Directors"
in Alliant Energy's Proxy Statement for the 2001 Annual Meeting
of Shareowners (the 2001 Alliant Energy Proxy Statement), which
will be filed with the SEC within 120 days after the end of
Alliant Energy's fiscal year. The information required by Item
10 relating to the timely filing of reports under Section 16 of
the Securities Exchange Act of 1934 is incorporated herein by
reference to the relevant information under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" in the
2001 Alliant Energy Proxy Statement. The executive officers of
Alliant Energy as of the date of this filing are as follows
(figures following the names represent the officer's age as of
December 31, 2000):
Executive Officers of Alliant Energy
Erroll B. Davis, Jr., 56, was elected Chairman of the Board
- ---------------------
effective April 2000, has served as President and Chief
Executive Officer (CEO) since 1990 and has been a board member
since 1988.
William D. Harvey, 51, was elected Executive Vice
- ------------------
President-Generation effective April 1998. Prior thereto, he
served as Senior Vice President since 1993 at WP&L.
James E. Hoffman, 47, was elected Executive Vice
- ----------------
President-Business Development effective April 1998. Prior
thereto, he served as Executive Vice President since 1996 at
IES and Executive Vice President-Customer Service & Energy
Delivery from 1995 to 1997 at IESU.
Eliot G. Protsch, 47, was elected Executive Vice
- -----------------
President-Energy Delivery effective April 1998. Prior thereto,
he served as Senior Vice President since 1993 at WP&L.
Barbara J. Swan, 49, was elected Executive Vice President and
- ---------------
General Counsel effective October 1998. She previously served
as Vice President-General Counsel from 1994 to 1998 at WP&L.
Thomas M. Walker, 53, was elected Executive Vice President and
- -----------------
Chief Financial Officer (CFO) effective April 1998. Prior
thereto, he served as Executive Vice President and CFO since
1996 at IES and IESU.
Pamela J. Wegner, 53, was elected Executive Vice
- -----------------
President-Corporate Services effective October 1998. She
previously served as Vice President-Information Services and
Administration from 1994 to 1998 at WP&L.
Edward M. Gleason, 60, has served as Vice President-Treasurer
- -------------------
and Corporate Secretary since 1993.
John E. Kratchmer, 38, was elected Corporate Controller and
- -------------------
Chief Accounting Officer effective October 2000. He previously
served as Assistant Controller since April 1998 and as Manager
of Financial Reporting and Property from 1996 to 1998 at IES.
NOTE: None of the executive officers listed above is related
to any member of the Board of Directors or nominee for director
or any other executive officer.
Mr. Davis has an employment agreement with Alliant Energy
pursuant to which his term of office is established. All other
executive officers have no definite terms of office and serve
at the pleasure of the Board of Directors.
-122-
Additional Officers of Alliant Energy
Joan M. Thompson, 43, was elected Assistant Controller
- -----------------
effective June 2000. She previously served as Manager-IESU and
IPC Accounting since February 1999, Manager-IESU Accounting
from 1998 to 1999, and Manager of Taxes and Payroll from 1994
to 1998 at IES.
Linda J. Wentzel, 52, was elected Assistant Corporate Secretary
- ----------------
effective May 1998. She previously served as Executive
Administrative Assistant since 1995 at Alliant Energy.
Enrique Bacalao, 51, was elected Assistant Treasurer effective
- ----------------
November 1998. Prior to joining Alliant Energy, he was Vice
President, Corporate Banking from 1995 to 1998 at the Chicago
Branch of The Industrial Bank of Japan, Limited.
IESU
IESU's directors are identical to Alliant Energy, but are elected by consent
action. The information required by Item 10 relating to directors and nominees
for election of directors at the 2001 Annual Meeting of Shareowners is
incorporated herein by reference to the relevant information included under the
caption "Election of Directors" in the 2001 Alliant Energy Proxy Statement,
which will be filed with the SEC within 120 days after the end of IESU's fiscal
year. The information required by Item 10 relating to the timely filing of
reports under Section 16 of the Securities Exchange Act of 1934 is incorporated
herein by reference to the relevant information under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" in the 2001 Alliant Energy Proxy
Statement. The executive officers of IESU as of the date of this filing are as
follows (figures following the names represent the officer's
age as of December 31, 2000):
Executive Officers of IESU
Erroll B. Davis, Jr., 56, was elected Chairman of the Board
- --------------------
effective April 2000 and CEO effective April 1998. Mr. Davis
is also an officer of Alliant Energy and WP&L.
Eliot G. Protsch, 47, was elected President effective April
- ------------------
1998. Mr. Protsch is also an officer of Alliant Energy and
WP&L.
William D. Harvey, 51, was elected Executive Vice
- ------------------
President-Generation effective October 1998. Mr. Harvey is
also an officer of Alliant Energy and WP&L.
Barbara J. Swan, 49, was elected Executive Vice President and
- ----------------
General Counsel effective October 1998. Ms. Swan is also an
officer of Alliant Energy and WP&L.
Thomas M. Walker, 53, was elected Executive Vice President and
- ----------------
CFO in 1996. Mr. Walker is also an officer of Alliant Energy
and WP&L.
Pamela J. Wegner, 53, was elected Executive Vice
- -----------------
President-Corporate Services effective October 1998. Ms.
Wegner is also an officer of Alliant Energy and WP&L.
Edward M. Gleason, 60, was elected Vice President-Treasurer and
- -----------------
Corporate Secretary effective April 1998. Mr. Gleason is also
an officer of Alliant Energy and WP&L.
Dundeana K. Langer, 42, was elected Vice President-Customer
- ------------------
Operations effective December 2000. She previously served as
Vice President-Customer Services and Operations since September
1999 at IESU and WP&L, Vice President-Customer Operations from
1998 to 1999 at IESU, Vice President-Customer Services from
1998 to 1999 at WP&L, Assistant Vice President-Field Operations
from 1997 to 1998 and General Manager-Operations & Director
Process Redesign Implementation from 1996 to 1997 at IESU. Ms.
Langer is also an officer of WP&L.
Daniel L. Mineck, 52, was elected Vice President-Performance
- -----------------
Engineering and Environmental effective October 1998. He
previously served as Assistant Vice President-Corporate
Engineering since 1996. Mr. Mineck is also an officer of WP&L.
-123-
Kim K. Zuhlke, 47, was elected Vice President-Engineering,
- --------------
Sales and Marketing effective September 1999. He previously
served as Vice President-Customer Operations since October
1998. Mr. Zuhlke is also an officer of WP&L.
John E. Kratchmer, 38, was elected Corporate Controller and
- -----------------
Chief Accounting Officer effective October 2000. Mr. Kratchmer
is also an officer of Alliant Energy and WP&L.
NOTE: None of the executive officers listed above is related
to any member of the Board of Directors or nominee for director
or any other executive officer.
Mr. Davis has an employment agreement with Alliant Energy
pursuant to which his term of office is established. All other
executive officers have no definite terms of office and serve
at the pleasure of the Board of Directors.
Additional Officers of IESU
Daniel L. Siegfried, 41, was elected Assistant Corporate
- --------------------
Secretary effective April 1998. He also serves as Senior
Attorney for Alliant Energy. Previously he served as Senior
Environmental Counsel from 1992 to 1998 at IES.
Linda J. Wentzel, 52, was elected Assistant Corporate Secretary
- -----------------
effective May 1998. Ms. Wentzel is also an officer of Alliant
Energy and WP&L.
Enrique Bacalao, 51, was elected Assistant Treasurer effective
- ---------------
November 1998. Mr. Bacalao is also an officer of Alliant Energy
and WP&L.
Steven F. Price, 48, was elected Assistant Treasurer effective
- ---------------
April 1998. Mr. Price is also an officer of WP&L.
WP&L
The information required by Item 10 relating to directors and nominees for
election of directors at the 2001 Annual Meeting of Shareowners is incorporated
herein by reference to the relevant information under the caption "Election of
Directors" in WP&L's Proxy Statement for the 2001 Annual Meeting of Shareowners
(the 2001 WP&L Proxy Statement), which will be filed with the SEC within 120
days after the end of WP&L's fiscal year. The information required by Item 10
relating to the timely filing of reports under Section 16 of the Securities
Exchange Act of 1934 is incorporated herein by reference to the relevant
information under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" in the 2001 WP&L Proxy Statement. The executive officers of WP&L as
of the date of this filing are as follows (figures following the names represent
the officer's age as of December 31, 2000):
Executive Officers of WP&L
Erroll B. Davis, Jr., 56, was elected Chairman of the Board
- --------------------
effective April 2000 and CEO effective April 1998. He
previously served as President and CEO of WP&L since 1988 and
has been a board member of WP&L since 1984. Mr. Davis is also
an officer of Alliant Energy and IESU.
William D. Harvey, 51, was elected President effective April
- -----------------
1998. He previously served as Senior Vice President since 1993
at WP&L. Mr. Harvey is also an officer of Alliant Energy and
IESU.
Eliot G. Protsch, 47, was elected Executive Vice
- -----------------
President-Energy Delivery effective October 1998. He
previously served as Senior Vice President from 1993 to 1998 at
WP&L. Mr. Protsch is also an officer of Alliant Energy and
IESU.
Barbara J. Swan, 49, was elected Executive Vice President and
- ----------------
General Counsel effective October 1998. She previously served
as Vice President-General Counsel from 1994 to 1998 at WP&L.
Ms. Swan is also an officer of Alliant Energy and IESU.
Thomas M. Walker, 53, was elected Executive Vice President and
- -----------------
CFO effective October 1998. Mr. Walker is also an officer of
Alliant Energy and IESU.
-124-
Pamela J. Wegner, 53, was elected Executive Vice
- -----------------
President-Corporate Services effective October 1998. She
previously served as Vice President-Information Services and
Administration from 1994 to 1998 at WP&L. Ms. Wegner is also
an officer of Alliant Energy and IESU.
Edward M. Gleason, 60, was elected Vice President-Treasurer and
- ------------------
Corporate Secretary effective April 1998. He previously served
as Controller, Treasurer, and Corporate Secretary since 1996.
Mr. Gleason is also an officer of Alliant Energy and IESU.
Dundeana K. Langer, 42, was elected Vice President-Customer
- -------------------
Operations effective December 2000. She has previously served
as Vice President-Customer Services and Operations since
September 1999 and Vice President-Customer Services from 1998
to 1999. Ms. Langer is also an officer of IESU.
Daniel L. Mineck, 52, was elected Vice President-Performance
- ----------------
Engineering and Environmental effective April 1998. Mr. Mineck
is also an officer of IESU.
Kim K. Zuhlke, 47, was elected Vice President-Engineering,
- --------------
Sales & Marketing effective September 1999. He previously
served as Vice President-Customer Operations since April 1998
at WP&L and since October 1998 at IESU and as Vice
President-Customer Services and Sales from 1993 to 1998 at
WP&L. Mr. Zuhlke is also an officer of IESU.
John E. Kratchmer, 38, was elected Corporate Controller and
- ------------------
Chief Accounting Officer effective October 2000. Mr. Kratchmer
is also an officer of Alliant Energy and IESU.
NOTE: None of the executive officers listed above is related
to any member of the Board of Directors or nominee for director
or any other executive officer.
Mr. Davis has an employment agreement with Alliant Energy
pursuant to which his term of office is established. All other
executive officers have no definite terms of office and serve
at the pleasure of the Board of Directors.
Additional Officers of WP&L
Linda J. Wentzel, 52, was elected Assistant Corporate Secretary
- -----------------
effective May 1998. She previously served as Executive
Administrative Assistant since 1995 at Alliant Energy. Ms.
Wentzel is also an officer of Alliant Energy and IESU.
Enrique Bacalao, 51, was elected Assistant Treasurer effective
- ----------------
November 1998. Mr. Bacalao is also an officer of Alliant
Energy and IESU.
Steven F. Price, 48, was elected Assistant Treasurer effective
- ----------------
April 1998. He previously served as Assistant Corporate
Secretary since 1992 at Alliant Energy and WP&L and as
Assistant Treasurer since 1992 at Alliant Energy. Mr. Price is
also an officer of IESU.
ITEM 11. EXECUTIVE COMPENSATION
ALLIANT ENERGY
The information required by Item 11 is incorporated herein by reference to the
relevant information under the captions "Compensation of Directors,"
"Compensation of Executive Officers," "Stock Options," "Long-Term Incentive
Awards," "Certain Agreements and Transactions" and "Retirement and Employee
Benefit Plans" in the 2001 Alliant Energy Proxy Statement, which will be filed
with the SEC within 120 days after the end of Alliant Energy's fiscal year.
IESU
The directors as well as the CEO and the four other most highly compensated
executive officers for IESU are the same as for WP&L. Therefore, the information
required by Item 11 is incorporated herein by reference to the relevant
information under the captions "Compensation of Directors," "Compensation of
Executive Officers," "Stock Options," "Long-Term Incentive Awards," "Certain
Agreements and Transactions" and "Retirement and Employee Benefit Plans" in the
2001 WP&L Proxy Statement, which will be filed with the SEC within 120 days
after the end of IESU's fiscal year.
-125-
WP&L
The information required by Item 11 is incorporated herein by
reference to the relevant information under the captions
"Compensation of Directors," "Compensation of Executive
Officers," "Stock Options," "Long-Term Incentive Awards,"
"Certain Agreements and Transactions" and "Retirement and
Employee Benefit Plans" in the 2001 WP&L Proxy Statement, which
will be filed with the SEC within 120 days after the end of
WP&L's fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
ALLIANT ENERGY
The information required by Item 12 is incorporated herein by
reference to the relevant information under the caption
"Ownership of Voting Securities" in the 2001 Alliant Energy
Proxy Statement, which will be filed with the SEC within 120
days after the end of Alliant Energy's fiscal year.
IESU
To IESU's knowledge, no shareowner beneficially owned five
percent or more of IESU's 4.80% Cumulative Preferred Stock as
of December 31, 2000. None of the directors or executive
officers of IESU own any shares of IESU's 4.80% Cumulative
Preferred Stock.
WP&L
The information required by Item 12 is incorporated herein by
reference to the relevant information under the caption
"Ownership of Voting Securities" in the 2001 WP&L Proxy
Statement, which will be filed with the SEC within 120 days
after the end of WP&L's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) Consolidated Financial Statements
---------------------------------
Refer to "Index to Financial Statements" in Item 8.
Financial Statements and Supplementary Data.
(a) (2) Financial Statement Schedules
------------------------------
Report of Independent Public Accountants on Schedules
Schedule II. Valuation and Qualifying Accounts and Reserves
NOTE: All other schedules are omitted because they are not
applicable or not required, or because that required
information is shown either in the consolidated financial
statements or in the notes thereto.
(a) (3) Exhibits Required by Securities and Exchange Commission
- ---------------------------------------------------------------
Regulation S-K
- --------------
The following Exhibits are filed herewith or incorporated
herein by reference. Documents indicated by an asterisk (*)
are incorporated herein by reference.
2.1* Agreement and Plan of Merger, dated as of November
10, 1995, by and among WPLH, IES, IPC and AMW
Acquisition, Inc. (incorporated by reference to
Exhibit 2.1 to Alliant Energy's Form 8-K, dated
November 10, 1995)
2.2* Amendment No. 1 to Agreement and Plan of Merger and
Stock Option Agreements, dated May 22, 1996, by and
among WPLH, IES, IPC, a Delaware corporation, AMW
Acquisition, Inc., WPLH Acquisition Co. and IPC, a
Wisconsin corporation (incorporated by reference to
Exhibit 2.1 to Alliant Energy's Form 8-K, dated May
22, 1996)
2.3* Amendment No. 2 to Agreement and Plan of Merger,
dated August 16, 1996, by and among WPLH, IES, IPC, a
Delaware corporation, WPLH Acquisition Co. and IPC, a
Wisconsin corporation (incorporated by reference to
Exhibit 2.1 to Alliant Energy's Form 8-K, dated
August 15, 1996)
-126-
2.4* Agreement and Plan of Merger, dated as of March 15,
2000, as amended on November 29, 2000, between IESU
and IPC (incorporated by reference to Appendix A to
the joint proxy statement/prospectus of IESU, dated
February 13, 2001 (Registration No. 333-53846))
3.1* Restated Articles of Incorporation of Alliant Energy,
as amended (incorporated by reference to Exhibit 3.2
to Alliant Energy's Form 10-Q for the quarter ended
June 30, 1999)
3.2 Bylaws of Alliant Energy, as amended, effective as of
January 30, 2001
3.3* Restated Articles of Incorporation of WP&L, as
amended (incorporated by reference to Exhibit 3.1 to
WP&L's Form 10-Q for the quarter ended June 30, 1994)
3.4 Bylaws of WP&L, as amended, effective as of January
30, 2001
3.5* Amended and Restated Articles of Incorporation of
IESU (incorporated by reference to Exhibit 3.5 to
IESU's Form 10-Q for the quarter ended June 30, 1998)
3.6 Bylaws of IESU, as amended, effective as of January
30, 2001
4.1* Indenture of Mortgage or Deed of Trust dated
August 1, 1941, between WP&L and First Wisconsin Trust
Company (Firstar Bank, N.A., successor) and George B.
Luhman (Brian J. Gardner, successor), as Trustees,
filed as Exhibit 7(a) in File No. 2-6409, and the
indentures supplemental thereto dated, respectively,
January 1, 1948, September 1, 1948, June 1, 1950,
April 1, 1951, April 1, 1952, September 1, 1953,
October 1, 1954, March 1, 1959, May 1, 1962,
August 1, 1968, June 1, 1969, October 1, 1970, July 1,
1971, April 1, 1974, December 1, 1975, May 1, 1976,
May 15, 1978, August 1, 1980, January 15, 1981,
August 1, 1984, January 15, 1986, June 1, 1986,
August 1, 1988, December 1, 1990, September 1, 1991,
October 1, 1991, March 1, 1992, May 1, 1992, June 1,
1992 and July 1, 1992 (Second Amended Exhibit 7(b) in
File No. 2-7361; Amended Exhibit 7(c) in File
No. 2-7628; Amended Exhibit 7.02 in File No. 2-8462;
Amended Exhibit 7.02 in File No. 2-8882; Second
Amendment Exhibit 4.03 in File No. 2-9526; Amended
Exhibit 4.03 in File No. 2-10406; Amended
Exhibit 2.02 in File No. 2-11130; Amended Exhibit 2.02
in File No. 2-14816; Amended Exhibit 2.02 in File
No. 2-20372; Amended Exhibit 2.02 in File No. 2-29738;
Amended Exhibit 2.02 in File No. 2-32947; Amended
Exhibit 2.02 in File No. 2-38304; Amended
Exhibit 2.02 in File No. 2-40802; Amended Exhibit 2.02
in File No. 2-50308; Exhibit 2.01(a) in File
No. 2-57775; Amended Exhibit 2.02 in File No. 2-56036;
Amended Exhibit 2.02 in File No. 2-61439;
Exhibit 4.02 in File No. 2-70534; Amended Exhibit 4.03
in File No. 2-70534; Exhibit 4.02 in File
No. 33-2579; Amended Exhibit 4.03 in File No. 33-2579;
Amended Exhibit 4.02 in File No. 33-4961;
Exhibit 4.24 in File No. 33-45726, Exhibit 4.25 in
File No. 33-45726, Exhibit 4.26 in File No. 33-45726,
Exhibit 4.27 in File No.33-45726, Exhibit 4.1 to
WP&L's Form 8-K dated March 9, 1992, Exhibit 4.1 to
WP&L's Form 8-K dated May 12, 1992, Exhibit 4.1 to
WP&L's Form 8-K dated June 29, 1992 and Exhibit 4.1
to WP&L's Form 8-K dated July 20, 1992)
4.2* Rights Agreement, dated January 20, 1999, between
Alliant Energy and Firstar Bank Milwaukee, N.A.
(incorporated by reference to Exhibit 4.1 to Alliant
Energy's Registration Statement on Form 8-A, dated
January 20, 1999)
4.3* Indenture, dated as of June 20, 1997, between WP&L
and Firstar Trust Company (Firstar Bank, N.A.,
successor), as Trustee, relating to debt securities
(incorporated by reference to Exhibit 4.33 to
Amendment No. 2 to WP&L's Registration Statement on
Form S-3 (Registration No. 33-60917))
4.4* Officers' Certificate, dated as of June 25, 1997,
creating WP&L's 7% debentures due June 15, 2007
(incorporated by reference to Exhibit 4 to WP&L's
Form 8-K, dated June 25, 1997)
-127-
4.5* Officers' Certificate, dated as of October 27,
1998, creating WP&L's 5.70% debentures due October
15, 2008 (incorporated by reference to Exhibit 4 to
WP&L's Form 8-K, dated October 27, 1998)
4.6* Officers' Certificate, dated as of March 1, 2000,
creating WP&L's 7-5/8% debentures due March 1, 2010
(incorporated by reference to Exhibit 4 to WP&L's
Form 8-K, dated March 1, 2000)
4.7* Indenture of Mortgage and Deed of Trust, dated as of
September 1, 1993, between IESU (formerly Iowa
Electric Light and Power Company (IE)) and The First
National Bank of Chicago (Bank One Trust Company,
National Association, successor), as Trustee
(Mortgage) (incorporated by reference to Exhibit 4(c)
to IESU's Form 10-Q for the quarter ended
September 30, 1993), and the indentures supplemental
thereto dated, respectively, October 1, 1993,
November 1, 1993, March 1, 1995, September 1, 1996
and April 1, 1997 (Exhibit 4(d) in IESU's Form 10-Q
dated November 12, 1993, Exhibit 4(e) in IESU's Form
10-Q dated November 12, 1993, Exhibit 4(b) in IESU's
Form 10-Q dated May 12, 1995, Exhibit 4(c)(i) in
IESU's Form 8-K dated September 19, 1996 and Exhibit
4(a) in IESU's Form 10-Q dated May 14, 1997)
4.8* Indenture of Mortgage and Deed of Trust, dated as of
August 1, 1940, between IESU (formerly IE) and The
First National Bank of Chicago (Bank One Trust
Company, National Association, successor), Trustee
(1940 Indenture) (incorporated by reference to
Exhibit 2(a) to IESU's Registration Statement, File
No. 2-25347), and the indentures supplemental thereto
dated, respectively, March 1, 1941, July 15, 1942,
August 2, 1943, August 10, 1944, November 10, 1944,
August 8, 1945, July 1, 1946, July 1, 1947, December
15, 1948, November 1, 1949, November 10, 1950,
October 1, 1951, March 1, 1952, November 5, 1952,
February 1, 1953, May 1, 1953, November 3, 1953,
November 8, 1954, January 1, 1955, November 1, 1955,
November 9, 1956, November 6, 1957, November 4, 1958,
November 3, 1959, November 1, 1960, January 1, 1961,
November 7, 1961, November 6, 1962, November 5, 1963,
November 4, 1964, November 2, 1965, September 1,
1966, November 30, 1966, November 7, 1967, November
5, 1968, November 1, 1969, December 1, 1970, November
2, 1971, May 1, 1972, November 7, 1972, November 7,
1973, September 10, 1974, November 5, 1975, July 1,
1976, November 1, 1976, December 1, 1977, November 1,
1978, December 1, 1979, November 1, 1981, December 1,
1980, December 1, 1982, December 1, 1983, December 1,
1984, March 1, 1985, March 1, 1988, October 1, 1988,
May 1, 1991, March 1, 1992, October 1, 1993, November
1, 1993, March 1, 1995, September 1, 1996 and April
1, 1997 (Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
2(a) in File No. 2-25347, Exhibit 2(a) in File No.
2-25347, Exhibit 2(a) in File No. 2-25347, Exhibit
4.10 in IESU's Form 10-K for the year 1966, Exhibit
4.10 in IESU's Form 10-K for the year 1966, Exhibit
4.10 in IESU's Form 10-K for the year 1967, Exhibit
4.10 in IESU's Form 10-K for the year 1968, Exhibit
4.10 in IESU's Form 10-K for the year 1969, Exhibit 1
in IESU's Form 8-K dated December 1970, Exhibit 2(g)
in File No. 2-43131, Exhibit 1 in IESU's Form 8-K
dated May 1972, Exhibit 2(i) in File No. 2-56078,
Exhibit 2(j) in File No. 2-56078, Exhibit 2(k) in
File No. 2-56078, Exhibit 2(l) in File No. 2-56078,
Exhibit 1 in IESU's Form 8-K dated July 1976, Exhibit
1 in IESU's Form 8-K dated December 1976, Exhibit
2(o) in File No. 2-60040, Exhibit 1 in IESU's Form
-128-
10-Q dated June 30, 1979, Exhibit 2(q) in Form S-16
in File No. 2-65996, Exhibit 2 in IESU's Form 10-Q
dated March 31, 1982, Exhibit 4(s) in IESU's Form
10-K for the year 1981, Exhibit 4(t) in IESU's Form
10-K for the year 1982, Exhibit 4(u) in IESU's Form
10-K for the year 1983, Exhibit 4(v) in IESU's Form
10-K for the year 1984, Exhibit 4(w) in IESU's Form
10-K for the year 1984, Exhibit 4(b) in IESU's Form
10-Q dated May 12, 1988, Exhibit 4(c) in IESU's Form
10-Q dated November 10, 1988, Exhibit 4(d) in IESU's
Form 10-Q dated August 13, 1991, Exhibit 4(c) in
IESU's Form 10-K for the year 1991, Exhibit 4(a) in
IESU's Form 10-Q dated November 12, 1993, Exhibit
4(b) in IESU's Form 10-Q dated November 12, 1993,
Exhibit 4(a) in IESU's Form 10-Q dated May 12, 1995,
Exhibit 4(f) in IESU's Form 8-K dated September 19,
1996 and Exhibit 4(b) in IESU's Form 10-Q dated May
14, 1997)
4.9* Indenture or Deed of Trust dated as of February 1,
1923, between IESU (successor to Iowa Southern
Utilities Company (IS) as result of merger of IS and
IE) and The Northern Trust Company (Bank One Trust
Company, National Association, successor) and Harold
H. Rockwell (Lawrence Dillard, successor), as
Trustees (1923 Indenture) (incorporated by reference
to Exhibit B-1 to File No. 2-1719), and the
indentures supplemental thereto dated, respectively,
May 1, 1940, May 2, 1940, October 1, 1945, October 2,
1945, January 1, 1948, September 1, 1950, February 1,
1953, October 2, 1953, August 1, 1957, September 1,
1962, June 1, 1967, February 1, 1973, February 1,
1975, July 1, 1975, September 2, 1975, March 10,
1976, February 1, 1977, January 1, 1978, March 1,
1979, March 1, 1980, May 31, 1986, July 1, 1991,
September 1, 1992 and December 1, 1994 (Exhibit B-1-k
in File No. 2-4921, Exhibit B-1-l in File No. 2-4921,
Exhibit 7(m) in File No. 2-8053, Exhibit 7(n) in File
No. 2-8053, Exhibit 7(o) in File No. 2-8053, Exhibit
4(e) in File No. 33-3995, Exhibit 4(b) in File No.
2-10543, Exhibit 4(q) in File No. 2-10543, Exhibit
2(b) in File No. 2-13496, Exhibit 2(b) in File No.
2-20667, Exhibit 2(b) in File No. 2-26478, Exhibit
2(b) in File No. 2-46530, Exhibit 2(aa) in File No.
2-53860, Exhibit 2(bb) in File No. 2-54285, Exhibit
2(bb) in File No. 2-57510, Exhibit 2(cc) in File No.
2-57510, Exhibit 2(ee) in File No. 2-60276, Exhibit 2
in File No. 0-849, Exhibit 2 in File No. 0-849,
Exhibit 2 in File No. 0-849, Exhibit 4(g) in File No.
33-3995, Exhibit 4(h) in File No. 0-849, Exhibit 4(m)
in File No. 0-849 and Exhibit 4(f) in File No.
0-4117-1)
4.10* Indenture (For Unsecured Subordinated Debt
Securities), dated as of December 1, 1995, between
IESU and The First National Bank of Chicago (Bank One
Trust Company, National Association, successor), as
Trustee (Subordinated Indenture) (incorporated by
reference to Exhibit 4(i) to IESU's Amendment No. 1
to Registration Statement, File No. 33-62259)
4.11* Indenture (For Senior Unsecured Debt Securities),
dated as of August 1, 1997, between IESU and The
First National Bank of Chicago (Bank One Trust
Company, National Association, successor), as Trustee
(incorporated by reference to Exhibit 4(j) to IESU's
Registration Statement, File No. 333-32097)
4.12 Officer's Certificate, dated as of August 4, 1997,
creating IESU's 6-5/8% Senior Debentures, Series A,
due 2009
4.13* Officers' Certificate, dated as of March 6, 2001,
creating IESU's 6-3/4% Series B Senior Debentures due
2011 (incorporated by reference to Exhibit 4 to
IESU's Form 8-K, dated March 6, 2001)
4.14* The Original through the Nineteenth Supplemental
Indentures of IPC to The Chase Manhattan Bank and
Carl E. Buckley and C. J. Heinzelmann, as Trustees
(James P. Freeman, successor, as Trustee), dated
January 1, 1948 securing First Mortgage Bonds
(incorporated by reference to Exhibits 4(b) through
4(t) to IPC's Registration Statement No. 33-59352
dated March 11, 1993)
-129-
4.15* Twentieth Supplemental Indenture of IPC to The
Chase Manhattan Bank and C. J. Heinzelmann (James P.
Freeman, successor), as Trustees, dated May 15, 1993
(incorporated by reference to Exhibit 4(u) to IPC's
Registration Statement No. 33-59352 dated March 11,
1993)
4.16* Indenture, relating to Resources' debt securities,
dated as of November 4, 1999, among Resources,
Alliant Energy, as Guarantor, and Firstar Bank, N.A.,
as Trustee, (incorporated by reference to Exhibit 4.1
to Resources' and Alliant Energy's Registration
Statement on Form S-4 (Registration No. 333-92859),
and the indentures supplemental thereto dated,
respectively, November 4, 1999 and February 1, 2000
(Exhibit 4.2 in File No. 33-92859 and Exhibit 99.4 in
Alliant Energy's Form 8-K dated February 1, 2000)
4.17* Registration Rights Agreement, related to
Resources' exchangeable senior notes due 2030, dated
as of February 1, 2000, among Resources, Alliant
Energy and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (incorporated by reference to Exhibit
99.5 to Alliant Energy's Form 8-K dated February 1,
2000)
4.18* Purchase Agreement, relating to Resources'
exchangeable senior notes due 2030, dated as of
January 26, 1999, among Resources, Alliant Energy and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
(incorporated by reference to Exhibit 99.2 to Alliant
Energy's Form 8-K dated February 1, 2000)
10.1* Service Agreement by and among WP&L, South Beloit,
IESU, IPC, and Corporate Services (incorporated by
reference to Exhibit 10.1 to Alliant Energy's Form
10-Q for the quarter ended June 30, 1998)
10.2* Service Agreement by and among Resources, IPC
Development Company, Inc. and Corporate Services
(incorporated by reference to Exhibit 10.2 to Alliant
Energy's Form 10-Q for the quarter ended June 30,
1998)
10.3* System Coordination and Operating Agreement dated
April 11, 1997, among IESU, IPC, WP&L and Corporate
Services (incorporated by reference to Exhibit 10.3
to Alliant Energy's Form 10-Q for the quarter ended
June 30, 1998)
10.4* Joint Power Supply Agreement among WPSC, WP&L, and
MG&E, dated February 2, 1967 (incorporated by
reference to Exhibit 4.09 of WPSC in File No. 2-27308)
10.5* Joint Power Supply Agreement among WPSC, WP&L, and
MG&E, dated July 26, 1973 (incorporated by reference
to Exhibit 5.04A of WPSC in File No. 2-48781)
10.6* Basic Generating Agreement, Unit 4, Edgewater
Generating Station, dated June 5, 1967, between WP&L
and WPSC (incorporated by reference to Exhibit 4.10
of WPSC in File No. 2-27308)
10.7* Agreement for Construction and Operation of
Edgewater 5 Generating Unit, dated February 24, 1983,
between WP&L, WEPCO and WPSC (incorporated by
reference to Exhibit 10C-1 to WPSC's Form 10-K for
the year 1983 (File No. 1-3016))
10.7a* Amendment No. 1 to Agreement for Construction and
Operation of Edgewater 5 Generating Unit, dated
December 1, 1988 (incorporated by reference to
Exhibit 10C-2 to WPSC's Form 10-K for the year 1988
(File No. 1-3016))
10.8* Revised Agreement for Construction and Operation of
Columbia Generating Plant among WPSC, WP&L, and MG&E,
dated July 26, 1973 (incorporated by reference to
Exhibit 5.07 of WPSC in File No. 2-48781)
10.9* Operating and Transmission Agreement between CIPCO
and IESU (incorporated by reference to Exhibit 10(q)
to IESU's Form 10-K for the year 1990)
10.10* DAEC Ownership Participation Agreement dated June 1,
1970 between CIPCO, Corn Belt Power Cooperative and
IESU (incorporated by reference to Exhibit 5(kk) to
IESU's Registration Statement, File No. 2-38674)
-130-
10.11* DAEC Operating Agreement dated June 1, 1970 between
CIPCO, Corn Belt Power Cooperative and IESU
(incorporated by reference to Exhibit 5(ll) to IESU's
Registration Statement, File No. 2-38674)
10.12* DAEC Agreement for Transmission, Transformation,
Switching, and Related Facilities dated June 1, 1970
between CIPCO, Corn Belt Power Cooperative and IESU
(incorporated by reference to Exhibit 5(mm) to IESU's
Registration Statement, File No. 2-38674)
10.13* Basic Generating Agreement dated April 16, 1975
between Iowa Public Service Company, Iowa Power and
Light Company, Iowa-Illinois Gas and Electric Company
and IESU for the joint ownership of Ottumwa
Generating Station-Unit 1 (OGS-1) (incorporated by
reference to Exhibit 1 to IESU's Form 10-K for the
year 1977)
10.13a* Addendum Agreement to the Basic Generating Agreement
for OGS-1 dated December 7, 1977 between Iowa Public
Service Company, Iowa-Illinois Gas and Electric
Company, Iowa Power and Light Company and IESU for
the purchase of 15% ownership in OGS-1 (incorporated
by reference to Exhibit 3 to IESU's Form 10-K for the
year 1977)
10.14* Second Amended and Restated Credit Agreement dated as
of September 17, 1987 between Arnold Fuel, Inc. and
the First National Bank of Chicago and the Amended
and Restated Consent and Agreement dated as of
September 17, 1987 by IESU (incorporated by reference
to Exhibit 10(j) to IESU's Form 10-K for the year
1987)
10.15 Asset Contribution Agreement between ATC and WEPCO,
WP&L, WPSC, MG&E, Edison Sault Electric Company and
South Beloit, dated as of December 15, 2000
10.15a Addenda to the Asset Contribution Agreement between
ATC and WEPCO, WP&L, WPSC, MG&E, Edison Sault
Electric Company and South Beloit, dated as of
December 15, 2000
10.16 Operating Agreement of ATC, dated as of January 1,
2001
10.17* Third Amended and Restated November 1998
Stockholders' Agreement entered into as of March 10,
2000, by and among McLeod, Alliant Energy,
Investments and certain other principal stockholders
of McLeod (incorporated by reference to Exhibit 10.2
to Alliant Energy's Form 10-Q for the quarter ended
March 31, 2000)
10.18* Third Amended and Restated January 1999
Stockholders' Agreement entered into as of March 10,
2000, by and among McLeod, Alliant Energy,
Investments and certain other principal stockholders
of McLeod (incorporated by reference to Exhibit 10.3
to Alliant Energy's Form 10-Q for the quarter ended
March 31, 2000)
10.19* Amendment No. 1 to Third Amended and Restated
November 1998 Stockholders' Agreement entered into as
of March 10, 2000, by and among McLeod, Alliant
Energy, Investments and certain other principal
stockholders of McLeod, dated as of July 7, 2000
(incorporated by reference to Exhibit 10.1 to Alliant
Energy's Form 10-Q for the quarter ended September
30, 2000)
10.20* Amendment No. 1 to Third Amended and Restated
January 1999 Stockholders' Agreement entered into as
of March 10, 2000, by and among McLeod, Alliant
Energy, Investments and certain other principal
stockholders of McLeod, dated as of July 7, 2000
(incorporated by reference to Exhibit 10.2 to Alliant
Energy's Form 10-Q for the quarter ended September
30, 2000)
10.21#* Alliant Energy LTEIP, as amended (incorporated by
reference to Exhibit 10.1 to Alliant Energy's Form
10-Q for the quarter ended June 30, 1999)
-131-
10.22#* Alliant Energy 1998 Officer Incentive Compensation
Plan (incorporated by reference to Exhibit 10.16 to
Alliant Energy's Form 10-Q for the quarter ended June
30, 1998)
10.23#* Restricted Stock Agreement pursuant to the Alliant
Energy LTEIP (incorporated by reference to Exhibit
10.1 to Alliant Energy's Form 10-Q for the quarter
ended March 31, 1999)
10.24#* Alliant Energy Key Employee Deferred Compensation
Plan (incorporated by reference to Exhibit 4.2 to
Alliant Energy's Registration Statement on Form S-8
dated December 1, 2000)
10.25#* Key Employee Deferred Compensation Plan
(incorporated by reference to Exhibit 10(n) to IES's
Form 10-K for the year 1987)
10.25a#* Amendments to Key Employee Deferred Compensation
Agreement for Key Employees (incorporated by
reference to Exhibit 10(v) to IES's Form 10-Q for the
quarter ended March 31, 1990)
10.26#* Alliant Energy Deferred Compensation Plan for
Directors (incorporated by reference to Exhibit 4.1
to Alliant Energy's Registration Statement on Form
S-8 dated December 1, 2000)
10.27#* IPC Irrevocable Trust Agreement dated April 30,
1990 (incorporated by reference to Exhibit 99.f to
IPC's Form 10-K for the year 1993)
10.28#* IPC Irrevocable Trust Agreement dated December 1997
(incorporated by reference to Exhibit 99.7 to IPC's
Form 10-K for the year 1997)
10.29#* Alliant Energy Grantor Trust for Deferred
Compensation Agreements (Key Employees) (incorporated
by reference to Exhibit 4.4 to Alliant Energy's
Registration Statement on Form S-8 (Registration No.
33-51126))
10.30#* Alliant Energy Grantor Trust for Deferred
Compensation Agreements (Directors) (incorporated by
reference to Exhibit 4.3 to Alliant Energy's
Registration Statement on Form S-8 (Registration No.
33-51126))
10.31#* Form of Supplemental Retirement Agreement
(incorporated by reference to Exhibit 10.15 to
Alliant Energy's Form 10-Q for the quarter ended June
30, 1998)
10.32#* Supplemental Retirement Plan (incorporated by
reference to Exhibit 10(l) to IES's Form 10-K for the
year 1987)
10.33# Alliant Energy Excess Plan
10.34#* Supplemental Retirement Agreement by and between
Alliant Energy and E.B. Davis, Jr., W.D. Harvey, J.E.
Hoffman, E.G. Protsch, B.J. Swan, P.J. Wegner and
T.M. Walker (incorporated by reference to Exhibit
10.1 to Alliant Energy's Form 10-Q for the quarter
ended March 31, 2000)
10.35#* Key Executive Employment and Severance Agreement,
dated March 29, 1999, by and between Alliant Energy
and Erroll B. Davis, Jr. (incorporated by reference
to Exhibit 10.2 to Alliant Energy's Form 10-Q for the
quarter ended March 31, 1999)
10.36#* Key Executive Employment and Severance Agreement,
dated March 29, 1999, by and between Alliant Energy
and each of J.E. Hoffman, W.D. Harvey, E.G. Protsch,
P.J. Wegner, T.M. Walker and B.J. Swan (incorporated
by reference to Exhibit 10.3 to Alliant Energy's Form
10-Q for the quarter ended March 31, 1999)
-132-
10.37#* Key Executive Employment and Severance Agreement,
dated March 29, 1999, by and between Alliant Energy
and each of T.L. Aller, E.M. Gleason, D.K. Langer,
D.L. Mineck, D.R. Sharp and K.K. Zuhlke (incorporated
by reference to Exhibit 10.4 to Alliant Energy's Form
10-Q for the quarter ended March 31, 1999)
10.38#* Employment Agreement by and between Alliant Energy
and Erroll B. Davis, Jr., amended and restated as of
March 29, 1999 (incorporated by reference to Exhibit
10.5 to Alliant Energy's Form 10-Q for the quarter
ended March 31, 1999)
10.39#* Severance Agreement by and between Alliant Energy and
Anthony J. Amato (incorporated by reference to
Exhibit 10.28 to Alliant Energy's Form 10-Q for the
quarter ended June 30, 1998)
10.40#* Consulting Agreement by and between Alliant Energy
and Wayne H. Stoppelmoor (incorporated by reference
to Exhibit 10.2 to Alliant Energy's Form 10-Q for the
quarter ended June 30, 1999)
10.41# Severance Agreement and Release by and among
Alliant Energy, ATC and John Ebright
10.42#* Executive Tenure Compensation Plan as revised
November 1992 (incorporated by reference to Exhibit
10A to Alliant Energy's Form 10-K for the year 1992)
10.42a#* Amendment to Executive Tenure Compensation Plan
adopted February 23, 1998 (incorporated by reference
to Exhibit 10.19a to Alliant Energy's Form 10-Q for
the quarter ended June 30, 1998)
21 Subsidiaries of Alliant Energy and WP&L
23.1 Consent of Independent Public Accountants for Alliant Energy
23.2 Consent of Independent Public Accountants for IESU
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the
registrants agree to furnish to the SEC, upon request, any
instrument defining the rights of holders of unregistered
long-term debt not filed as an exhibit to this Form 10-K. No
such instrument authorizes securities in excess of 10% of the
total assets of Alliant Energy, WP&L or IESU, as the case may
be.
Documents incorporated by reference to filings made by Alliant
Energy under the Securities Exchange Act of 1934, as amended,
are under File No. 1-9894. Documents incorporated by reference
to filings made by WP&L under the Securities Exchange Act of
1934, as amended, are under File No. 0-337. Documents
incorporated by reference to filings made by IES under the
Securities Exchange Act of 1934, as amended, are under File No.
1-9187. Documents incorporated by reference to filings made by
IESU under the Securities Exchange Act of 1934, as amended, are
under File No. 0-4117-1. Documents incorporated by reference
to filings made by IPC under the Securities Exchange Act of
1934, as amended, are under File No. 1-3632.
# - A management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
--------------------
Alliant Energy - None.
IESU - None.
WP&L - None.
-133-
SCHEDULE II -VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Additions
-------------------------------
Balance, Charged to Charged to Other Balance,
Description January 1 Expense Accounts (1) Deductions (2) December 31
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Valuation and Qualifying Accounts Which are Deducted in the Balance Sheet From the Assets to Which They Apply:
Accumulated Provision for Uncollectible Accounts:
Alliant Energy
Year ended December 31, 2000 $3,360 $3,779 $1,616 $4,025 $4,730
Year ended December 31, 1999 3,128 2,909 -- 2,677 3,360
Year ended December 31, 1998 2,636 3,740 -- 3,248 3,128
IESU
Year ended December 31, 2000 $1,641 $1,730 $-- $2,411 $960
Year ended December 31, 1999 1,415 2,268 -- 2,042 1,641
Year ended December 31, 1998 854 2,840 -- 2,279 1,415
WP&L
Year ended December 31, 2000 $6 $2 $-- $-- $8
Year ended December 31, 1999 8 -- -- 2 6
Year ended December 31, 1998 12 -- -- 4 8
Note: The above provisions relate to various customer, notes and other receivable balances included in various line items on
the respective Consolidated Balance Sheets.
Other Reserves:
Accumulated Provision for Injuries & Damages, Workers' Compensation, Litigation and Other Miscellaneous Reserves:
Alliant Energy
Year ended December 31, 2000 $7,995 $8,505 $-- $4,011 $12,489
Year ended December 31, 1999 7,458 5,479 -- 4,942 7,995
Year ended December 31, 1998 6,400 7,738 -- 6,680 7,458
IESU
Year ended December 31, 2000 $2,618 $2,234 $-- $1,121 $3,731
Year ended December 31, 1999 3,129 2,036 -- 2,547 2,618
Year ended December 31, 1998 5,033 215 -- 2,119 3,129
WP&L
Year ended December 31, 2000 $2,994 $1,282 $-- $1,587 $2,689
Year ended December 31, 1999 2,799 1,937 -- 1,742 2,994
Year ended December 31, 1998 1 2,798 -- -- 2,799
Reserve for Merger-Related Employee Separation Charges:
Alliant Energy
Year ended December 31, 2000 $968 $-- $-- $968 $--
Year ended December 31, 1999 5,712 -- -- 4,744 968
Year ended December 31, 1998 -- 9,950 -- 4,238 5,712
IESU
Year ended December 31, 2000 $678 $-- $-- $678 $--
Year ended December 31, 1999 1,893 -- -- 1,215 678
Year ended December 31, 1998 -- 3,551 -- 1,658 1,893
WP&L
Year ended December 31, 2000 $-- $-- $-- $-- $--
Year ended December 31, 1999 766 -- -- 766 --
Year ended December 31, 1998 -- 867 -- 101 766
(1) In 2000, Alliant Energy acquired EUA Cogenex Corporation and assumed an accumulated provision for uncollectible
accounts of $1.6 million.
(2) Deductions are of the nature for which the reserves were created. In the case of the accumulated provision for
uncollectible accounts, deductions from this reserve are reduced by recoveries of amounts previously written off.
-134-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on the 29th day of March 2001.
ALLIANT ENERGY CORPORATION
By: /s/ Erroll B. Davis, Jr.
----------------------------
Erroll B. Davis, Jr.
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
indicated on the 29th day of March 2001.
/s/ Erroll B. Davis, Jr. Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)
- ------------------------
Erroll B. Davis, Jr.
/s/ Thomas M. Walker Executive Vice President and Chief Financial Officer (Principal Financial Officer)
- --------------------
Thomas M. Walker
/s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)
- ----------------------
John E. Kratchmer
/s/ Alan B. Arends Director /s/ Milton E. Neshek Director
- ------------------ ---------------------
Alan B. Arends Milton E. Neshek
/s/ Jack B. Evans Director /s/ David A. Perdue Director
- ----------------- ---------------------
Jack B. Evans David A. Perdue
/s/ Rockne G. Flowers Director /s/ Judith D. Pyle Director
- --------------------- -------------------
Rockne G. Flowers Judith D. Pyle
/s/ Joyce L. Hanes Director /s/ Robert W. Schlutz Director
- ------------------ ---------------------
Joyce L. Hanes Robert W. Schlutz
/s/ Lee Liu Director /s/ Wayne H. Stoppelmoor Director
- ------------ -------------------------
Lee Liu Wayne H. Stoppelmoor
/s/ Katharine C. Lyall Director /s/ Anthony R. Weiler Director
- ----------------------- ---------------------
Katharine C. Lyall Anthony R. Weiler
/s/ Arnold M. Nemirow Director
- ---------------------
Arnold M. Nemirow
-135-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on the 29th day of March 2001.
IES UTILITIES INC.
By: /s/ Erroll B. Davis, Jr.
----------------------------
Erroll B. Davis, Jr.
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
indicated on the 29th day of March 2001.
/s/ Erroll B. Davis, Jr. Chairman, Chief Executive Officer and Director (Principal Executive Officer)
- ------------------------
Erroll B. Davis, Jr.
/s/ Thomas M. Walker Executive Vice President and Chief Financial Officer (Principal Financial Officer)
- --------------------
Thomas M. Walker
/s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)
- ----------------------
John E. Kratchmer
/s/ Alan B. Arends Director /s/ Milton E. Neshek Director
- ------------------ ---------------------
Alan B. Arends Milton E. Neshek
/s/ Jack B. Evans Director /s/ David A. Perdue Director
- ----------------- ---------------------
Jack B. Evans David A. Perdue
/s/ Rockne G. Flowers Director /s/ Judith D. Pyle Director
- --------------------- -------------------
Rockne G. Flowers Judith D. Pyle
/s/ Joyce L. Hanes Director /s/ Robert W. Schlutz Director
- ------------------ ---------------------
Joyce L. Hanes Robert W. Schlutz
/s/ Lee Liu Director /s/ Wayne H. Stoppelmoor Director
- ------------ -------------------------
Lee Liu Wayne H. Stoppelmoor
/s/ Katharine C. Lyall Director /s/ Anthony R. Weiler Director
- ----------------------- ---------------------
Katharine C. Lyall Anthony R. Weiler
/s/ Arnold M. Nemirow Director
- ---------------------
Arnold M. Nemirow
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on the 29th day of March 2001.
WISCONSIN POWER AND LIGHT COMPANY
By: /s/ Erroll B. Davis, Jr.
----------------------------
Erroll B. Davis, Jr.
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
indicated on the 29th day of March 2001.
/s/ Erroll B. Davis, Jr. Chairman, Chief Executive Officer and Director (Principal Executive Officer)
- ------------------------
Erroll B. Davis, Jr.
/s/ Thomas M. Walker Executive Vice President and Chief Financial Officer (Principal Financial Officer)
- --------------------
Thomas M. Walker
/s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)
- ----------------------
John E. Kratchmer
/s/ Alan B. Arends Director /s/ Milton E. Neshek Director
- ------------------ ---------------------
Alan B. Arends Milton E. Neshek
/s/ Jack B. Evans Director /s/ David A. Perdue Director
- ----------------- ---------------------
Jack B. Evans David A. Perdue
/s/ Rockne G. Flowers Director /s/ Judith D. Pyle Director
- --------------------- -------------------
Rockne G. Flowers Judith D. Pyle
/s/ Joyce L. Hanes Director /s/ Robert W. Schlutz Director
- ------------------ ---------------------
Joyce L. Hanes Robert W. Schlutz
/s/ Lee Liu Director /s/ Wayne H. Stoppelmoor Director
- ------------ -------------------------
Lee Liu Wayne H. Stoppelmoor
/s/ Katharine C. Lyall Director /s/ Anthony R. Weiler Director
- ----------------------- ---------------------
Katharine C. Lyall Anthony R. Weiler
/s/ Arnold M. Nemirow Director
- ---------------------
Arnold M. Nemirow
-137-
EXHIBIT INDEX
Exhibit Description
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3.2 Bylaws of Alliant Energy, as amended, effective as of January 30, 2001
3.4 Bylaws of WP&L, as amended, effective as of January 30, 2001
3.6 Bylaws of IESU, as amended, effective as of January 30, 2001
4.12 Officer's Certificate, dated as of August 4, 1997, creating IESU's 6-5/8% Senior Debentures, Series A, due
2009
10.15 Asset Contribution Agreement between ATC and WEPCO, WP&L, WPSC, MG&E, Edison Sault Electric Company and
South Beloit, dated as of December 15, 2000
10.15a Addenda to the Asset Contribution Agreement between ATC and WEPCO, WP&L, WPSC, MG&E, Edison Sault Electric
Company and South Beloit, dated as of December 15, 2000
10.16 Operating Agreement of ATC, dated as of January 1, 2001
10.33 Alliant Energy Excess Plan
10.41 Severance Agreement and Release by and among Alliant Energy, ATC and John Ebright
21 Subsidiaries of Alliant Energy and WP&L
23.1 Consent of Independent Public Accountants for Alliant Energy
23.2 Consent of Independent Public Accountants for IESU