UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
-------------
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
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 registrants were required
to file such reports), and (2) have been subject to such filing
requirements for the past 90 days. Yes X No
------- -------
This combined Form 10-Q is separately filed by Alliant Energy
Corporation, IES Utilities Inc. and Wisconsin Power and Light
Company. Information contained in the quarterly report relating
to IES Utilities Inc. and Wisconsin Power and Light Company is
filed by such registrant on its own behalf. Each of IES
Utilities Inc. and Wisconsin Power and Light Company makes no
representation as to information relating to registrants other
than itself.
Number of shares outstanding of each class of common stock as of
July 31, 2001:
Alliant Energy Common stock, $.01 par value, 79,106,573
Corporation 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 Common stock, $5 par value, 13,236,601 shares
Light Company outstanding (all of which are owned
beneficially and of record by Alliant Energy
Corporation)
CONTENTS
Page
----
Part I. Financial Information 4
Item 1. Consolidated Financial Statements 4
Alliant Energy Corporation:
---------------------------
Consolidated Statements of Income for the Three and Six Months Ended
June 30, 2001 and 2000 4
Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000 5
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2001 and 2000 7
Notes to Consolidated Financial Statements 8
IES Utilities Inc.:
-------------------
Consolidated Statements of Income for the Three and Six Months Ended
June 30, 2001 and 2000 16
Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000 17
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2001 and 2000 19
Notes to Consolidated Financial Statements 20
Wisconsin Power and Light Company:
----------------------------------
Consolidated Statements of Income for the Three and Six Months Ended
June 30, 2001 and 2000 22
Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000 23
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2001 and 2000 25
Notes to Consolidated Financial Statements 26
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 28
Item 3. Quantitative and Qualitative Disclosures About Market Risk 40
Part II. Other Information 41
Item 1. Legal Proceedings 41
Item 4. Submission of Matters to a Vote of Security Holders 41
Item 6. Exhibits and Reports on Form 8-K 43
Signatures 44
2
DEFINITIONS
Certain abbreviations or acronyms used in the text and notes of this combined Form 10-Q are defined below:
Abbreviation or Acronym Definition
- ----------------------- ----------
Alliant Energy...................................... Alliant Energy Corporation
ATC................................................. American Transmission Company, LLC
Capstone............................................ Capstone Turbine Corporation
Cargill-Alliant..................................... Cargill-Alliant, L.L.C.
Corporate Services.................................. Alliant Energy Corporate Services, Inc.
Dth................................................. Dekatherm
EAC................................................. Energy Adjustment Clause
FAC................................................. Fuel Adjustment Clause
FASB................................................ Financial Accounting Standards Board
IESU................................................ IES Utilities Inc.
IPC................................................. Interstate Power Company
IRS................................................. Internal Revenue Service
IUB................................................. Iowa Utilities Board
Kewaunee............................................ Kewaunee Nuclear Power Plant
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
MW.................................................. Megawatt
MWh................................................. Megawatt-Hour
NRC................................................. Nuclear Regulatory Commission
OCA................................................. Office of Consumer Advocate
PGA................................................. Purchased Gas Adjustment
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
South Beloit........................................ South Beloit Water, Gas & Electric Company
U.S. ............................................... United States
Whiting............................................. Whiting Petroleum Corporation
WP&L................................................ Wisconsin Power and Light Company
WUHCA............................................... Wisconsin Utility Holding Company Act
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
Operating revenues:
Electric utility $435,487 $393,843 $847,430 $767,465
Gas utility 63,432 54,653 353,250 184,787
Non-regulated and other 112,922 75,389 263,874 145,695
------------- ------------- ------------- -------------
611,841 523,885 1,464,554 1,097,947
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels 77,962 64,113 153,146 133,385
Purchased power 111,114 74,792 209,847 137,137
Cost of utility gas sold 42,066 31,869 280,324 113,982
Other operation and maintenance 196,986 188,362 435,182 358,040
Depreciation and amortization 86,154 77,970 170,776 153,881
Taxes other than income taxes 29,541 26,612 57,985 52,965
------------- ------------- ------------- -------------
543,823 463,718 1,307,260 949,390
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Operating income 68,018 60,167 157,294 148,557
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 47,587 41,794 97,331 82,412
Contingent interest on indexed senior notes - (39,493) - -
Equity income from unconsolidated investments (8,739) (1,565) (19,078) (2,708)
Allowance for funds used during construction (3,170) (2,885) (5,472) (4,639)
Preferred dividend requirements of subsidiaries 1,680 1,678 3,360 3,356
Gain on sale of McLeodUSA Inc. stock - - - (10,206)
Miscellaneous, net (3,956) (7,678) (5,106) (19,732)
------------- ------------- ------------- -------------
33,402 (8,149) 71,035 48,483
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Income before income taxes 34,616 68,316 86,259 100,074
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Income taxes 11,316 26,038 29,574 38,476
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
Net income $23,300 $42,278 $56,685 $61,598
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding (diluted) 79,175 79,012 79,187 79,223
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------------
Earnings per average common share (basic and diluted) $0.29 $0.54 $0.72 $0.78
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------------
Dividends declared per common share $0.50 $0.50 $1.00 $1.00
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
4
ALLIANT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30,
2001 December 31,
ASSETS (Unaudited) 2000
- ----------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $4,953,101 $5,203,069
Gas 582,459 574,390
Other 501,949 474,116
---------------- ----------------
6,037,509 6,251,575
Less - Accumulated depreciation 3,283,129 3,296,546
---------------- ----------------
2,754,380 2,955,029
Construction work in progress 168,289 130,856
Nuclear fuel, net of amortization 58,158 61,935
---------------- ----------------
2,980,827 3,147,820
Other property, plant and equipment, net of accumulated
depreciation and amortization of $222,375 and $209,072, respectively 650,241 571,487
---------------- ----------------
3,631,068 3,719,307
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 88,836 148,415
Restricted cash 44,179 3,512
Accounts receivable:
Customer, less allowance for doubtful accounts
of $4,478 and $3,762, respectively 93,738 122,895
Unbilled utility revenues 60,932 124,515
Other, less allowance for doubtful accounts
of $639 and $484, respectively 34,775 45,829
Production fuel, at average cost 40,840 46,627
Materials and supplies, at average cost 56,485 55,930
Gas stored underground, at average cost 27,696 41,359
Regulatory assets 18,235 29,348
Prepaid gross receipts tax 24,381 23,088
Other 62,796 69,463
---------------- ----------------
552,893 710,981
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------
Investments:
Investment in available-for-sale securities of McLeodUSA Inc. 185,516 569,951
Investment in trading securities of McLeodUSA Inc. 71,761 220,912
Investments in unconsolidated foreign entities 540,393 507,655
Nuclear decommissioning trust funds 315,303 307,940
Other 252,583 132,203
---------------- ----------------
1,365,556 1,738,661
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 268,020 270,779
Deferred charges and other 288,871 294,038
---------------- ----------------
556,891 564,817
---------------- ----------------
- ----------------------------------------------------------------------------------------------------------
Total assets $6,106,408 $6,733,766
================ ================
- ----------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5
ALLIANT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
June 30,
2001 December 31,
CAPITALIZATION AND LIABILITIES (Unaudited) 2000
- ------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Capitalization:
Common stock - $0.01 par value - authorized 200,000,000 shares;
outstanding 79,049,994 and 79,010,114 shares, respectively $790 $790
Additional paid-in capital 949,609 947,504
Retained earnings 795,863 818,162
Accumulated other comprehensive income (loss) (36,395) 271,867
Shares in deferred compensation trust - 67,018 and 28,825 shares
at an average cost of $30.79 and $29.52 per share, respectively (2,063) (851)
------------------ ------------------
Total common equity 1,707,804 2,037,472
------------------ ------------------
Cumulative preferred stock of subsidiaries, net 113,871 113,790
Long-term debt (excluding current portion) 2,262,147 1,910,116
------------------ ------------------
4,083,822 4,061,378
------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds 31,045 92,477
Variable rate demand bonds 55,100 55,100
Commercial paper 243,611 283,885
Notes payable 56 50,067
Other short-term borrowings 85,882 110,783
Accounts payable 203,895 296,959
Accrued taxes 71,090 87,484
Other 162,356 177,580
------------------ ------------------
853,035 1,154,335
------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 751,533 931,675
Accumulated deferred investment tax credits 61,672 67,364
Pension and other benefit obligations 68,244 65,399
Environmental liabilities 62,359 64,532
Derivative liability 43,863 181,925
Other 181,880 207,158
------------------ ------------------
1,169,551 1,518,053
------------------ ------------------
- ------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $6,106,408 $6,733,766
================== ==================
- ------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30,
2001 2000
- ----------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $56,685 $61,598
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 170,776 153,881
Amortization of nuclear fuel 8,514 8,903
Amortization of deferred energy efficiency expenditures 13,370 12,908
Deferred tax benefits and investment tax credits (13,882) (4,818)
Gains on dispositions of assets, net (6,584) (11,950)
Equity income from unconsolidated investments, net (19,078) (2,708)
Other 503 (6,137)
Other changes in assets and liabilities:
Accounts receivable 103,794 12,867
Accounts payable (86,559) (8,578)
Benefit obligations and other (6,701) (17,211)
------------------ ------------------
Net cash flows from operating activities 220,838 198,755
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (78,984) (78,987)
Net change in Resources' credit facility 142,500 49,152
Proceeds from issuance of exchangeable senior notes - 402,500
Proceeds from issuance of other long-term debt 202,459 117,866
Reductions in other long-term debt (70,154) (61,793)
Net change in other short-term borrowings (168,657) (24,332)
Other (36,142) (20,016)
------------------ ------------------
Net cash flows from (used for) financing activities (8,978) 384,390
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Construction and acquisition expenditures:
Utility operations (163,799) (136,347)
Non-regulated businesses and other (197,181) (517,991)
Nuclear decommissioning trust funds (17,658) (17,658)
Proceeds from formation of ATC and other asset dispositions 106,538 14,994
Other 661 (7,943)
------------------ ------------------
Net cash flows used for investing activities (271,439) (664,945)
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------
Net decrease in cash and temporary cash investments (59,579) (81,800)
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 148,415 113,669
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $88,836 $31,869
================== ==================
- ----------------------------------------------------------------------------------------------------------
Supplemental cash flows information:
Cash paid during the period for:
Interest $95,352 $76,759
================== ==================
Income taxes $53,270 $60,073
================== ==================
Noncash investing and financing activities:
Capital lease obligations incurred and other $19,664 $277
================== ==================
- ----------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
7
ALLIANT ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The interim consolidated financial statements included herein
have been prepared by Alliant Energy, without audit, pursuant
to the rules and regulations of the SEC. Accordingly, certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted,
although management believes that the disclosures are adequate
to make the information presented not misleading. The
consolidated financial statements include Alliant Energy and
its consolidated subsidiaries (including IESU, WP&L, IPC,
Resources and Corporate Services). These financial statements
should be read in conjunction with the financial statements
and the notes thereto included in Alliant Energy's, IESU's and
WP&L's latest Annual Report on Form 10-K.
In the opinion of management, all adjustments, which are
normal and recurring in nature, necessary for a fair
presentation of (a) the consolidated results of operations for
the three and six months ended June 30, 2001 and 2000, (b) the
consolidated financial position at June 30, 2001 and December
31, 2000, and (c) the consolidated statement of cash flows for
the six months ended June 30, 2001 and 2000, have been made.
Because of the seasonal nature of Alliant Energy's utility
operations, results for the three and six months ended June
30, 2001 are not necessarily indicative of results that may be
expected for the year ending December 31, 2001. Certain prior
period amounts have been reclassified on a basis consistent
with the 2001 presentation.
2. Alliant Energy's comprehensive income (loss), and the
components of other comprehensive income (loss), net of taxes,
were as follows (in thousands):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
-------------- -------------- --------------- -------------
Net income $23,300 $42,278 $56,685 $61,598
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during
period, net of tax (1) (102,465) (215,621) (230,085) 68,837
Less: reclassification adjustment for gains
included in net income, net of tax (2) -- -- -- 6,328
-------------- -------------- --------------- -------------
Net unrealized gains (losses) on securities (102,465) (215,621) (230,085) 62,509
-------------- -------------- --------------- -------------
Foreign currency translation adjustments (20,052) (19,135) (69,795) (18,218)
-------------- -------------- --------------- -------------
Unrealized losses on derivatives qualified as hedges:
Unrealized holding losses arising during period,
net of tax (12,434) -- (12,164) --
Less: reclassification adjustment for gains (losses)
included in net income, net of tax 15 -- (3,782) --
-------------- -------------- --------------- -------------
Net unrealized losses on qualifying derivatives (12,449) -- (8,382) --
-------------- -------------- --------------- -------------
Other comprehensive income (loss) (134,966) (234,756) (308,262) 44,291
-------------- -------------- --------------- -------------
Comprehensive income (loss) ($111,666) ($192,478) ($251,577) $105,889
============== ============== =============== =============
(1) Primarily due to quarterly adjustments to the estimated fair
value of Alliant Energy's investments in available-for-sale
securities of McLeod and Capstone.
(2) The first quarter 2000 earnings included a pre-tax gain of
$10.2 million ($0.08 per basic and diluted share) from the
sale of 450,000 shares of McLeod stock held by Alliant
Energy. Alliant Energy still owned approximately 56 million
shares of McLeod stock as of June 30, 2001.
8
3. 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 8 due to Alliant Energy's
investment in Cargill-Alliant being recorded on Alliant
Energy's parent-only books for legal reporting, but included with
the non-regulated businesses information for segment reporting
(Alliant Energy considers this business as part of its
non-regulated business for management reporting). The "Net
income (loss)" line item was impacted. The "Net income (loss)"
line item is not allocated to the electric and gas segments for
management reporting purposes and therefore is included in "Other."
Intersegment revenues were not material to Alliant Energy's
operations. Certain financial information relating to Alliant
Energy's significant business segments is presented below:
Regulated Domestic Utilities Non- Alliant
--------------------------------------------------- regulated Energy
Electric Gas Other Total Businesses Other Consolidated
------------------------------------------------------------------------------------------------
(in thousands)
Three Months Ended June 30, 2001
- --------------------------------
Operating revenues $435,487 $63,432 $8,618 $507,537 $105,888 ($1,584) $611,841
Operating income (loss) 59,709 (5,097) 1,589 56,201 11,579 238 68,018
Net income (loss) 22,065 22,065 3,577 (2,342) 23,300
Three Months Ended June 30, 2000
- --------------------------------
Operating revenues $393,843 $54,653 $7,422 $455,918 $68,629 ($662) $523,885
Operating income (loss) 61,034 (4,746) 740 57,028 3,251 (112) 60,167
Net income 20,042 20,042 21,972 264 42,278
Six Months Ended June 30, 2001
- ------------------------------
Operating revenues $847,430 $353,250 $19,414 $1,220,094 $246,800 ($2,340) $1,464,554
Operating income 116,283 14,384 2,481 133,148 23,460 686 157,294
Net income (loss) 55,393 55,393 4,758 (3,466) 56,685
Six Months Ended June 30, 2000
- ------------------------------
Operating revenues $767,465 $184,787 $15,578 $967,830 $131,304 ($1,187) $1,097,947
Operating income (loss) 124,872 14,105 2,520 141,497 7,194 (134) 148,557
Net income (loss) 59,109 59,109 5,860 (3,371) 61,598
Resources' (i.e., the non-regulated businesses) assets
decreased $506 million during the first six months of 2001,
primarily due to the decrease in market value of its
investment in McLeod. Non-regulated income for the three
and six months ended June 30, 2001 included after-tax charges
to net income of $4.6 million and $7.4 million, respectively,
for non-cash valuation adjustments related to Alliant Energy's
obligation under certain 30-year exchangeable senior notes.
Non-regulated income for the three months ended June 30,
2000 included a reversal of the $24.8 million after-tax
non-cash charge to net income recorded in the first quarter of
2000 relating to the valuation of the 30-year exchangeable
senior notes.
4. The provisions for income taxes are based on the estimated
annual effective tax rate, which differs from the federal
statutory rate of 35 percent principally due to state income
taxes, tax credits, effects of utility rate making and certain
non-deductible expenses.
9
5. In January 2001, Resources acquired a stake in another Brazilian
electric utility. As of June 30, 2001, the total investment
in this Brazilian electric utility was approximately $98
million, of which approximately $60 million was paid in
January 2001 and the remainder is expected to be paid by the
end of the first quarter of 2002. This investment is accounted
for under the equity method of accounting.
WP&L, including South Beloit, transferred its transmission
assets with no gain or loss (approximate net book value of
$177 million) to ATC on January 1, 2001. In the second
quarter of 2001, WP&L received cash of $75 million and at June
30, 2001, had a $109 million equity investment in ATC, with an
ownership percentage of approximately 26 percent. WP&L
accounts for its investment in ATC under the equity method.
6. Alliant Energy continues to utilize derivative instruments to
manage its exposures to various market risks as described in
Alliant Energy's, IESU's and WP&L's Annual Report on Form 10-K
for the year ended December 31, 2000. The following
information supplements, and should be read in conjunction
with, Note 10(a) in Alliant Energy's "Notes to Consolidated
Financial Statements" in the 2000 Annual Report on Form 10-K.
For the six months ended June 30, 2001, income of $4.1 million
was recognized relating to the amount of hedge ineffectiveness
in accordance with SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." As of June 30, 2001, the
maximum length of time over which Alliant Energy is hedging
its exposure to the variability in future cash flows for
forecasted transactions is 9 months and Alliant Energy
estimates that gains of $0.9 million will be reclassified from
accumulated other comprehensive income into earnings within
the twelve months between July 1, 2001 and June 30, 2002 as
the hedged transactions affect earnings.
Included in "Miscellaneous, net" in Alliant Energy's
Consolidated Statements of Income for the six months ended
June 30, 2001 was expense of $149.2 million related to the
change in value of the McLeod trading securities, partially
offset by income of $138.1 million related to the change in
value of the derivative component of the exchangeable senior
notes.
7. In March 2001, IESU issued $200 million of senior unsecured
debentures at a fixed interest rate of 6-3/4%, due 2011. IESU
used a portion of the net proceeds to repay short-term
debt and long-term debt, and a portion will be used to retire $21
million of long-term debt maturing in the third quarter of
2001.
8. 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. No other Alliant Energy
subsidiaries are guarantors of Resources' debt issuances.
Alliant Energy's condensed consolidating financial statements
are as follows:
10
Alliant Energy Corporation
Condensed Consolidating Statements of Income
Three Months Ended June 30, 2001 and 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
------------------------------------------------------------------------
Three Months Ended June 30, 2001
- --------------------------------
Operating revenues:
Electric utility $- $- $435,487 $- $435,487
Gas utility - - 63,432 - 63,432
Non-regulated and other - 105,887 72,624 (65,589) 112,922
------------------------------------------------------------------------
- 105,887 571,543 (65,589) 611,841
------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels - - 77,962 - 77,962
Purchased power - - 111,114 - 111,114
Cost of utility gas sold - - 42,066 - 42,066
Other operation and maintenance 304 73,270 186,306 (62,894) 196,986
Depreciation and amortization - 16,950 69,204 - 86,154
Taxes other than income taxes - 4,088 28,049 (2,596) 29,541
------------------------------------------------------------------------
304 94,308 514,701 (65,490) 543,823
------------------------------------------------------------------------
Operating income (loss) (304) 11,579 56,842 (99) 68,018
------------------------------------------------------------------------
Interest expense and other:
Interest expense 2,837 17,136 29,895 (2,281) 47,587
Equity income from unconsolidated investments (2,091) (3,095) (3,553) - (8,739)
Allowance for funds used during construction - - (3,170) - (3,170)
Preferred dividend requirements of subsidiaries - - 1,680 - 1,680
Miscellaneous, net (24,851) (443) (5,247) 26,585 (3,956)
------------------------------------------------------------------------
(24,105) 13,598 19,605 24,304 33,402
------------------------------------------------------------------------
Income (loss) before income taxes 23,801 (2,019) 37,237 (24,403) 34,616
------------------------------------------------------------------------
Income tax expense (benefit) 501 (4,237) 15,152 (100) 11,316
------------------------------------------------------------------------
Net income (loss) $23,300 $2,218 $22,085 ($24,303) $23,300
========================================================================
Three Months Ended June 30, 2000
- --------------------------------
Operating revenues:
Electric utility $- $- $393,843 $- $393,843
Gas utility - - 54,653 - 54,653
Non-regulated and other - 68,629 76,670 (69,910) 75,389
------------------------------------------------------------------------
- 68,629 525,166 (69,910) 523,885
------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels - - 64,113 - 64,113
Purchased power - - 74,792 - 74,792
Cost of utility gas sold - - 31,869 - 31,869
Other operation and maintenance 352 52,466 202,881 (67,337) 188,362
Depreciation and amortization - 9,836 68,134 - 77,970
Taxes other than income taxes - 3,076 25,566 (2,030) 26,612
------------------------------------------------------------------------
352 65,378 467,355 (69,367) 463,718
------------------------------------------------------------------------
Operating income (loss) (352) 3,251 57,811 (543) 60,167
------------------------------------------------------------------------
Interest expense and other:
Interest expense 3,865 12,103 29,810 (3,984) 41,794
Contingent interest on indexed senior notes - (39,493) - - (39,493)
Equity (income) loss from unconsolidated investments (2,453) 1,083 (195) - (1,565)
Allowance for funds used during construction - - (2,885) - (2,885)
Preferred dividend requirements of subsidiaries - - 1,678 - 1,678
Miscellaneous, net (44,250) (1,845) (5,985) 44,402 (7,678)
------------------------------------------------------------------------
(42,838) (28,152) 22,423 40,418 (8,149)
------------------------------------------------------------------------
Income (loss) before income taxes 42,486 31,403 35,388 (40,961) 68,316
------------------------------------------------------------------------
Income tax expense (benefit) 208 11,025 15,348 (543) 26,038
------------------------------------------------------------------------
Net income (loss) $42,278 $20,378 $20,040 ($40,418) $42,278
========================================================================
11
Alliant Energy Corporation
Condensed Consolidating Statements of Income
Six Months Ended June 30, 2001 and 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
----------------------------------------------------------------------------
Six Months Ended June 30, 2001
- ------------------------------
Operating revenues:
Electric utility $- $- $847,430 $- $847,430
Gas utility - - 353,250 - 353,250
Non-regulated and other - 246,800 138,528 (121,454) 263,874
-------------------------------------------------------------------------
- 246,800 1,339,208 (121,454) 1,464,554
-------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels - - 153,146 - 153,146
Purchased power - - 209,847 - 209,847
Cost of utility gas sold - - 280,324 - 280,324
Other operation and maintenance 304 182,582 369,173 (116,877) 435,182
Depreciation and amortization - 32,118 138,658 - 170,776
Taxes other than income taxes - 8,640 53,882 (4,537) 57,985
-------------------------------------------------------------------------
304 223,340 1,205,030 (121,414) 1,307,260
-------------------------------------------------------------------------
Operating income (loss) (304) 23,460 134,178 (40) 157,294
-------------------------------------------------------------------------
Interest expense and other:
Interest expense 7,855 35,313 61,296 (7,133) 97,331
Equity income from unconsolidated investments (5,094) (5,492) (8,492) - (19,078)
Allowance for funds used during construction - - (5,472) - (5,472)
Preferred dividend requirements of subsidiaries - - 3,360 - 3,360
Miscellaneous, net (60,163) 290 (9,256) 64,023 (5,106)
-------------------------------------------------------------------------
(57,402) 30,111 41,436 56,890 71,035
-------------------------------------------------------------------------
Income (loss) before income taxes 57,098 (6,651) 92,742 (56,930) 86,259
-------------------------------------------------------------------------
Income tax expense (benefit) 413 (8,098) 37,299 (40) 29,574
-------------------------------------------------------------------------
Net income (loss) $56,685 $1,447 $55,443 ($56,890) $56,685
=========================================================================
Six Months Ended June 30, 2000
- ------------------------------
Operating revenues:
Electric utility $- $- $767,465 $- $767,465
Gas utility - - 184,787 - 184,787
Non-regulated and other - 131,304 131,167 (116,776) 145,695
-------------------------------------------------------------------------
- 131,304 1,083,419 (116,776) 1,097,947
-------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels - - 133,385 - 133,385
Purchased power - - 137,137 - 137,137
Cost of utility gas sold - - 113,982 - 113,982
Other operation and maintenance 414 99,886 369,923 (112,183) 358,040
Depreciation and amortization - 17,834 136,047 - 153,881
Taxes other than income taxes - 6,390 50,551 (3,976) 52,965
-------------------------------------------------------------------------
414 124,110 941,025 (116,159) 949,390
-------------------------------------------------------------------------
Operating income (loss) (414) 7,194 142,394 (617) 148,557
-------------------------------------------------------------------------
Interest expense and other:
Interest expense 7,492 23,467 59,986 (8,533) 82,412
Equity (income) loss from unconsolidated investments (2,601) 180 (287) - (2,708)
Allowance for funds used during construction - - (4,639) - (4,639)
Preferred dividend requirements of subsidiaries - - 3,356 - 3,356
Gain on sale of McLeodUSA Inc. stock - (10,206) - - (10,206)
Miscellaneous, net (69,496) (5,294) (16,752) 71,810 (19,732)
-------------------------------------------------------------------------
(64,605) 8,147 41,664 63,277 48,483
-------------------------------------------------------------------------
Income (loss) before income taxes 64,191 (953) 100,730 (63,894) 100,074
-------------------------------------------------------------------------
Income tax expense (benefit) 2,593 (5,123) 41,623 (617) 38,476
-------------------------------------------------------------------------
Net income (loss) $61,598 $4,170 $59,107 ($63,277) $61,598
=========================================================================
12
Alliant Energy Corporation
Condensed Consolidating Balance Sheet
As of June 30, 2001
(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 $- $- $4,953,101 $- $4,953,101
Other - - 1,084,408 - 1,084,408
-------------------------------------------------------------------
- - 6,037,509 - 6,037,509
Less - Accumulated depreciation - - 3,283,129 - 3,283,129
Construction work in progress - - 168,289 - 168,289
Nuclear fuel, net of amortization - - 58,158 - 58,158
Other property, plant and equipment, net - 617,523 32,829 (111) 650,241
-------------------------------------------------------------------
- 617,523 3,013,656 (111) 3,631,068
-------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 12,783 46,059 29,994 - 88,836
Restricted cash - 43,084 1,095 - 44,179
Accounts receivable, net 2,330 86,127 185,463 (84,475) 189,445
Production fuel, at average cost - 879 39,961 - 40,840
Materials and supplies, at average cost - 4,132 52,353 - 56,485
Gas stored underground, at average cost - 2,781 24,915 - 27,696
Regulatory assets - - 18,235 - 18,235
Other 79,998 35,089 89,411 (117,321) 87,177
-------------------------------------------------------------------
95,111 218,151 441,427 (201,796) 552,893
-------------------------------------------------------------------
Investments:
Consolidated subsidiaries 1,834,660 - - (1,834,660) -
Investment in available-for-sale securities of McLeodUSA Inc. - 185,516 - - 185,516
Investment in trading securities of McLeodUSA Inc. - 71,761 - - 71,761
Other 35,912 618,594 453,788 (15) 1,108,279
-------------------------------------------------------------------
1,870,572 875,871 453,788 (1,834,675) 1,365,556
-------------------------------------------------------------------
-------------------------------------------------------------------
Deferred charges and other - 95,252 461,639 - 556,891
-------------------------------------------------------------------
Total assets $1,965,683 $1,806,797 $4,370,510 ($2,036,582) $6,106,408
===================================================================
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital $950,399 $232,743 $753,457 ($986,200) $950,399
Retained earnings 795,967 175,459 709,411 (884,974) 795,863
Accumulated other comprehensive income (loss) (36,395) (37,254) 859 36,395 (36,395)
Shares in deferred compensation trust (2,063) - - - (2,063)
-------------------------------------------------------------------
Total common equity 1,707,908 370,948 1,463,727 (1,834,779) 1,707,804
-------------------------------------------------------------------
Cumulative preferred stock of subsidiaries, net - - 113,871 - 113,871
Long-term debt (excluding current portion) 24,000 856,544 1,381,603 - 2,262,147
-------------------------------------------------------------------
1,731,908 1,227,492 2,959,201 (1,834,779) 4,083,822
-------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds - 9,485 21,560 - 31,045
Notes payable - 56 - - 56
Other short-term borrowings - 85,882 - - 85,882
Accounts payable 474 44,669 243,226 (84,474) 203,895
Accrued taxes - 11,556 59,534 - 71,090
Other 231,601 64,359 282,430 (117,323) 461,067
-------------------------------------------------------------------
232,075 216,007 606,750 (201,797) 853,035
-------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes (6,373) 247,941 509,965 - 751,533
Derivative liability - 43,863 - - 43,863
Other 8,073 71,494 294,594 (6) 374,155
-------------------------------------------------------------------
1,700 363,298 804,559 (6) 1,169,551
-------------------------------------------------------------------
Total capitalization and liabilities $1,965,683 $1,806,797 $4,370,510 ($2,036,582) $6,106,408
===================================================================
13
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
Restricted cash - 2,866 646 - 3,512
Accounts receivable, net 2,955 113,261 274,103 (97,080) 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
Regulatory assets - - 29,348 - 29,348
Other 220,628 27,309 60,179 (215,565) 92,551
-------------------------------------------------------------------
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
Other 30,511 579,803 337,484 - 947,798
-------------------------------------------------------------------
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
===================================================================
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 (loss) - 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
Notes payable 50,000 67 - - 50,067
Other short-term borrowings - 110,783 - - 110,783
Accounts payable 12,554 53,463 328,022 (97,080) 296,959
Accrued taxes - 21,916 65,568 - 87,484
Other 285,012 49,259 397,859 (215,565) 516,565
-------------------------------------------------------------------
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
===================================================================
14
Alliant Energy Corporation
Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2001 and 2000
(in thousands)
Alliant Energy Other Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-------------------------------------------------------------------
Six Months Ended June 30, 2001
- ------------------------------
Net cash flows from (used for) operating activities $39,996 $41,479 $199,613 ($60,250) $220,838
-------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (78,984) - (70,922) 70,922 (78,984)
Net change in Resources' credit facility - 142,500 - - 142,500
Proceeds from issuance of other long-term debt - 2,459 200,000 - 202,459
Reductions in other long-term debt - (9,594) (60,560) - (70,154)
Net change in other short-term borrowings (103,274) (65,383) - - (168,657)
Other 140,580 (40,358) (139,599) 3,235 (36,142)
-------------------------------------------------------------------
Net cash flows from (used for) financing activities (41,678) 29,624 (71,081) 74,157 (8,978)
-------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility operations - - (163,799) - (163,799)
Non-regulated businesses and other - (197,181) - - (197,181)
Proceeds from formation of ATC and other asset dispositions - 31,895 74,643 - 106,538
Other 13,891 6,285 (23,266) (13,907) (16,997)
-------------------------------------------------------------------
Net cash flows from (used for) investing activities 13,891 (159,001) (112,422) (13,907) (271,439)
-------------------------------------------------------------------
Net increase (decrease) in cash and temporary cash investments 12,209 (87,898) 16,110 - (59,579)
-------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 574 133,957 13,884 - 148,415
-------------------------------------------------------------------
Cash and temporary cash investments at end of period $12,783 $46,059 $29,994 $- $88,836
===================================================================
Supplemental cash flows information:
Cash paid (refunded) during the period for:
Interest $8,135 $35,502 $51,715 $- $95,352
===================================================================
Income taxes $1,702 ($11,360) $62,928 $- $53,270
===================================================================
Noncash investing and financing activities:
Capital lease obligations incurred and other $- $- $19,664 $- $19,664
===================================================================
Six Months Ended June 30, 2000
- ------------------------------
Net cash flows from (used for) operating activities $60,082 $1,420 $203,887 ($66,634) $198,755
-------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (78,987) - (40,170) 40,170 (78,987)
Net change in Resources' credit facility - 49,152 - - 49,152
Proceeds from issuance of exchangeable senior notes - 402,500 - - 402,500
Proceeds from issuance of other long-term debt - 17,866 100,000 - 117,866
Reductions in other long-term debt - (10,597) (51,196) - (61,793)
Net change in other short-term borrowings (24,330) (2) - - (24,332)
Other 38,288 (13,240) (47,124) 2,060 (20,016)
-------------------------------------------------------------------
Net cash flows from (used for) financing activities (65,029) 445,679 (38,490) 42,230 384,390
-------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility operations - - (136,347) - (136,347)
Non-regulated businesses and other - (513,485) (4,506) - (517,991)
Proceeds from dispositions of assets - 13,568 1,426 - 14,994
Other (23,305) 1,243 (27,943) 24,404 (25,601)
-------------------------------------------------------------------
Net cash flows from (used for) investing activities (23,305) (498,674) (167,370) 24,404 (664,945)
-------------------------------------------------------------------
Net decrease in cash and temporary cash investments (28,252) (51,575) (1,973) - (81,800)
-------------------------------------------------------------------
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 $395 $13,511 $17,963 $- $31,869
===================================================================
Supplemental cash flows information:
Cash paid (refunded) during the period for:
Interest $7,492 $19,796 $49,471 $- $76,759
===================================================================
Income taxes ($101) ($358) $60,532 $- $60,073
===================================================================
Noncash investing and financing activities:
Capital lease obligations incurred $- $- $277 $- $277
===================================================================
15
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating revenues:
Electric utility $185,095 $148,327 $340,226 $294,035
Gas utility 31,233 27,445 158,429 86,874
Steam 7,390 6,185 17,033 13,172
--------------- --------------- ----------------- ---------------
223,718 181,957 515,688 394,081
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels 38,172 28,995 64,924 61,634
Purchased power 43,617 17,718 76,443 31,140
Cost of gas sold 21,720 16,964 125,223 55,038
Other operation and maintenance 57,916 56,939 117,539 110,705
Depreciation and amortization 27,550 26,849 55,076 53,699
Taxes other than income taxes 12,250 12,057 23,206 23,932
--------------- --------------- ----------------- ---------------
201,225 159,522 462,411 336,148
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Operating income 22,493 22,435 53,277 57,933
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 12,934 12,584 26,035 25,595
Allowance for funds used during construction (1,590) (573) (2,579) (1,063)
Miscellaneous, net (2,336) (1,415) (4,388) (6,166)
--------------- --------------- ----------------- ---------------
9,008 10,596 19,068 18,366
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 13,485 11,839 34,209 39,567
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Income taxes 5,305 5,294 13,337 16,912
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Net income 8,180 6,545 20,872 22,655
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 229 229 457 457
--------------- --------------- ----------------- ---------------
- -------------------------------------------------------------------------------------------------------------------------------
Earnings available for common stock $7,951 $6,316 $20,415 $22,198
=============== =============== ================= ===============
- -------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
16
IES UTILITIES INC.
CONSOLIDATED BALANCE SHEETS
June 30,
2001 December 31,
ASSETS (Unaudited) 2000
- --------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $2,278,922 $2,253,695
Gas 225,888 221,949
Steam 59,554 59,416
Common 164,146 146,536
----------------- -----------------
2,728,510 2,681,596
Less - Accumulated depreciation 1,449,731 1,392,766
----------------- -----------------
1,278,779 1,288,830
Construction work in progress 87,782 58,352
Leased nuclear fuel, net of amortization 44,137 45,836
----------------- -----------------
1,410,698 1,393,018
Other property, plant and equipment, net of accumulated
depreciation and amortization of $2,403 and $2,239, respectively 6,042 6,189
----------------- -----------------
1,416,740 1,399,207
----------------- -----------------
- --------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 9,478 6,755
Temporary cash investments with associated companies 41,840 -
Accounts receivable:
Customer, less allowance for doubtful accounts
of $608 and $587, respectively 9,975 54,660
Associated companies 1,528 2,696
Other, less allowance for doubtful accounts
of $517 and $373, respectively 8,521 17,329
Production fuel, at average cost 11,022 11,088
Materials and supplies, at average cost 24,302 26,232
Gas stored underground, at average cost 7,187 19,290
Adjustment clause balances - 14,776
Regulatory assets 6,306 14,839
Prepayments and other 2,805 3,442
----------------- -----------------
122,964 171,107
----------------- -----------------
- --------------------------------------------------------------------------------------------------------------
Investments:
Nuclear decommissioning trust funds 115,558 112,172
Other 6,281 6,276
----------------- -----------------
121,839 118,448
----------------- -----------------
- --------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 115,697 117,574
Deferred charges and other 16,689 12,970
----------------- -----------------
132,386 130,544
----------------- -----------------
- --------------------------------------------------------------------------------------------------------------
Total assets $1,793,929 $1,819,306
================= =================
- --------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
17
IES UTILITIES INC.
CONSOLIDATED BALANCE SHEETS (Continued)
June 30,
2001 December 31,
CAPITALIZATION AND LIABILITIES (Unaudited) 2000
- --------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Capitalization:
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 258,927 267,829
Accumulated other comprehensive loss - (18)
------------------ -----------------
Total common equity 571,396 580,280
------------------ -----------------
Cumulative preferred stock 18,320 18,320
Long-term debt (excluding current portion) 696,870 469,771
------------------ -----------------
1,286,586 1,068,371
------------------ -----------------
- --------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds 21,560 81,560
Capital lease obligations 16,620 12,651
Notes payable to associated companies - 101,095
Accounts payable 29,996 65,898
Accounts payable to associated companies 30,101 30,375
Accrued interest 14,303 10,843
Accrued taxes 45,457 48,069
Other 22,297 28,921
------------------ -----------------
180,334 379,412
------------------ -----------------
- --------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 212,330 224,164
Accumulated deferred investment tax credits 23,607 25,063
Environmental liabilities 27,601 29,521
Pension and other benefit obligations 25,162 26,884
Capital lease obligations 27,517 33,185
Other 10,792 32,706
------------------ -----------------
327,009 371,523
------------------ -----------------
- --------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $1,793,929 $1,819,306
================== =================
- --------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
18
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30,
2001 2000
- -----------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $20,872 $22,655
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 55,076 53,699
Amortization of leased nuclear fuel 5,687 6,730
Amortization of deferred energy efficiency expenditures 8,143 7,319
Deferred taxes and investment tax credits (7,804) (616)
Refueling outage provision (6,097) 4,811
Other (227) (309)
Other changes in assets and liabilities:
Accounts receivable 54,661 12,699
Gas stored underground 12,103 3,085
Accounts payable (32,594) 1,727
Adjustment clause balances 17,760 9,482
Manufactured gas plants insurance refunds (21,181) -
Benefit obligations and other (7,197) (7,499)
----------------- -----------------
Net cash flows from operating activities 99,202 113,783
----------------- -----------------
- -----------------------------------------------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (29,317) (29,316)
Preferred stock dividends (457) (457)
Proceeds from issuance of long-term debt 200,000 -
Reductions in long-term debt (60,560) (51,196)
Net change in short-term borrowings (101,095) 27,797
Principal payments under capital lease obligations (4,933) (5,239)
Other 8,630 (229)
----------------- -----------------
Net cash flows from (used for) financing activities 12,268 (58,640)
----------------- -----------------
- -----------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Utility construction expenditures (61,007) (53,783)
Nuclear decommissioning trust funds (3,004) (3,004)
Other (2,896) 249
----------------- -----------------
Net cash flows used for investing activities (66,907) (56,538)
----------------- -----------------
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and temporary cash investments 44,563 (1,395)
----------------- -----------------
- -----------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 6,755 5,720
----------------- -----------------
- -----------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $51,318 $4,325
================= =================
- -----------------------------------------------------------------------------------------------------------------
Supplemental cash flows information:
Cash paid during the period for:
Interest $22,477 $24,317
================= =================
Income taxes $24,387 $24,158
================= =================
Noncash investing and financing activities - Capital lease obligations
incurred and other $19,664 $277
================= =================
- -----------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
19
IES UTILITIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Except as modified below, the Alliant Energy Notes to
Consolidated Financial Statements are incorporated by
reference insofar as they relate to IESU.
1. The interim consolidated financial statements included herein
have been prepared by IESU, without audit, pursuant to the
rules and regulations of the SEC. Accordingly, certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted,
although management believes that the disclosures are adequate
to make the information presented not misleading. IESU is a
subsidiary of Alliant Energy. These financial statements
should be read in conjunction with the financial statements
and the notes thereto included in IESU's latest Annual Report
on Form 10-K.
In the opinion of management, all adjustments, which are
normal and recurring in nature, necessary for a fair
presentation of (a) the consolidated results of operations for
the three and six months ended June 30, 2001 and 2000, (b) the
consolidated financial position at June 30, 2001 and December
31, 2000, and (c) the consolidated statement of cash flows for
the six months ended June 30, 2001 and 2000, have been made.
Because of the seasonal nature of IESU's operations, results
for the three and six months ended June 30, 2001 are not
necessarily indicative of results that may be expected for the
year ending December 31, 2001.
2. IESU's comprehensive income, and the components of other
comprehensive income, net of taxes, were as follows (in
thousands):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
--------------------------------- ---------------------------------
Earnings available for common stock $7,951 $6,316 $20,415 $22,198
Other comprehensive income:
Reclassification adjustment for losses included
in earnings available for common stock related
to derivatives qualified as hedges, net of tax -- -- 18 --
--------------- --------------- --------------- ---------------
Other comprehensive income -- -- 18 --
--------------- --------------- --------------- ---------------
Comprehensive income $7,951 $6,316 $20,433 $22,198
=============== =============== =============== ===============
20
3. Certain financial information relating to IESU's significant business
segments is presented below. Intersegment revenues were not material to
IESU's operations.
Electric Gas Other Total
-----------------------------------------------------------------
(in thousands)
Three Months Ended June 30, 2001
- --------------------------------
Operating revenues $185,095 $31,233 $7,390 $223,718
Operating income (loss) 22,331 (1,059) 1,221 22,493
Earnings available for common stock 7,951 7,951
Three Months Ended June 30, 2000
- --------------------------------
Operating revenues $148,327 $27,445 $6,185 $181,957
Operating income (loss) 24,092 (1,992) 335 22,435
Earnings available for common stock 6,316 6,316
Six Months Ended June 30, 2001
- ------------------------------
Operating revenues $340,226 $158,429 $17,033 $515,688
Operating income 42,435 8,914 1,928 53,277
Earnings available for common stock 20,415 20,415
Six Months Ended June 30, 2000
- ------------------------------
Operating revenues $294,035 $86,874 $13,172 $394,081
Operating income 50,777 5,422 1,734 57,933
Earnings available for common stock 22,198 22,198
4. On April 23, 2001, shareowners of IESU and IPC approved, among other
things, the merger of IPC with and into IESU. The merger is currently
expected to be completed by January 1, 2002.
21
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating revenues:
Electric utility $178,297 $173,111 $368,688 $335,487
Gas utility 24,605 19,515 150,237 74,801
Water 1,228 1,239 2,381 2,409
--------------- --------------- --------------- ---------------
204,130 193,865 521,306 412,697
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric production fuels 28,195 26,703 63,267 50,501
Purchased power 50,796 38,063 103,166 71,820
Cost of gas sold 15,825 9,638 122,077 44,967
Other operation and maintenance 45,072 54,319 90,707 100,184
Depreciation and amortization 32,281 32,599 64,846 64,976
Taxes other than income taxes 8,553 7,417 16,859 14,628
--------------- --------------- --------------- ---------------
180,722 168,739 460,922 347,076
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Operating income 23,408 25,126 60,384 65,621
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 11,330 11,228 22,526 22,136
Equity income from unconsolidated investments (3,497) (199) (8,347) (291)
Allowance for funds used during construction (1,323) (2,088) (2,440) (3,150)
Miscellaneous, net (1,785) (2,154) (1,304) (6,141)
--------------- --------------- --------------- ---------------
4,725 6,787 10,435 12,554
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 18,683 18,339 49,949 53,067
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Income taxes 7,132 7,041 19,132 19,898
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Net income 11,551 11,298 30,817 33,169
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 828 828 1,656 1,656
--------------- --------------- --------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------
Earnings available for common stock $10,723 $10,470 $29,161 $31,513
=============== =============== =============== ===============
- ------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
22
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
June 30,
2001 December 31,
ASSETS (Unaudited) 2000
- ---------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $1,721,358 $2,007,974
Gas 276,483 273,457
Water 29,815 29,869
Common 233,328 223,921
----------------- ------------------
2,260,984 2,535,221
Less - Accumulated depreciation 1,291,978 1,380,723
----------------- ------------------
969,006 1,154,498
Construction work in progress 60,179 59,133
Nuclear fuel, net of amortization 14,021 16,099
----------------- ------------------
1,043,206 1,229,730
Other property, plant and equipment, net of accumulated
depreciation and amortization of $195 for both periods 379 369
----------------- ------------------
1,043,585 1,230,099
----------------- ------------------
- ---------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 6,245 2,584
Accounts receivable:
Customer 55,197 51,769
Associated companies 781 2,211
Other 9,927 13,865
Production fuel, at average cost 12,721 17,811
Materials and supplies, at average cost 22,000 21,639
Gas stored underground, at average cost 15,844 13,876
Prepaid gross receipts tax 24,381 23,088
Other 15,770 6,397
----------------- ------------------
162,866 153,240
----------------- ------------------
- ---------------------------------------------------------------------------------------------------------------
Investments:
Nuclear decommissioning trust funds 199,745 195,768
Other 123,183 14,362
----------------- ------------------
322,928 210,130
----------------- ------------------
- ---------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 87,802 88,721
Deferred charges and other 174,710 174,834
----------------- ------------------
262,512 263,555
----------------- ------------------
- ---------------------------------------------------------------------------------------------------------------
Total assets $1,791,891 $1,857,024
================= ==================
- ---------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
23
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS (Continued)
June 30,
2001 December 31,
CAPITALIZATION AND LIABILITIES (Unaudited) 2000
- --------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Capitalization:
Common stock - $5 par value - authorized 18,000,000 shares;
13,236,601 shares outstanding $66,183 $66,183
Additional paid-in capital 229,597 229,516
Retained earnings 370,011 371,602
Accumulated other comprehensive income (loss) 859 (4,708)
------------------ -----------------
Total common equity 666,650 662,593
------------------ -----------------
Cumulative preferred stock 59,963 59,963
Long-term debt (excluding current portion) 514,286 514,209
------------------ -----------------
1,240,899 1,236,765
------------------ -----------------
- --------------------------------------------------------------------------------------------------------------------
Current liabilities:
Variable rate demand bonds 55,100 55,100
Notes payable to associated companies 25,027 29,244
Accounts payable 78,114 120,155
Accounts payable to associated companies 35,742 32,442
Other 28,012 36,266
------------------ -----------------
221,995 273,207
------------------ -----------------
- --------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 219,994 222,819
Accumulated deferred investment tax credits 25,754 29,472
Customer advances 33,350 34,815
Environmental liabilities 7,527 7,564
Other 42,372 52,382
------------------ -----------------
328,997 347,052
------------------ -----------------
- --------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $1,791,891 $1,857,024
================== =================
- --------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
24
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30,
2001 2000
- ------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $30,817 $33,169
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 64,846 64,976
Amortization of nuclear fuel 2,827 2,173
Deferred taxes and investment tax credits (6,014) (6,721)
Equity income from unconsolidated investments, net (8,347) (291)
Other (4,756) (6,230)
Other changes in assets and liabilities:
Accounts receivable 1,940 8,651
Accounts payable (37,440) (9,579)
Benefit obligations and other 2,264 540
--------------------- -------------------
Net cash flows from operating activities 46,137 86,688
--------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends (30,752) -
Preferred stock dividends (1,656) (1,656)
Proceeds from issuance of long-term debt - 100,000
Net change in short-term borrowings (4,217) (96,958)
Other 82 (1,319)
--------------------- -------------------
Net cash flows from (used for) financing activities (36,543) 67
--------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Utility construction expenditures (66,259) (60,214)
Nuclear decommissioning trust funds (14,654) (14,654)
Proceeds from formation of ATC 74,643 -
Other 337 (6,846)
--------------------- -------------------
Net cash flows used for investing activities (5,933) (81,714)
--------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and temporary cash investments 3,661 5,041
--------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 2,584 3,555
--------------------- -------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $6,245 $8,596
===================== ===================
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental cash flows information:
Cash paid during the period for:
Interest $22,160 $18,418
===================== ===================
Income taxes $30,617 $30,016
===================== ===================
- ------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
25
WISCONSIN POWER AND LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Except as modified below, the Alliant Energy Notes to
Consolidated Financial Statements are incorporated by
reference insofar as they relate to WP&L.
1. The interim consolidated financial statements included herein
have been prepared by WP&L, without audit, pursuant to the
rules and regulations of the SEC. Accordingly, certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted,
although management believes that the disclosures are adequate
to make the information presented not misleading. The
consolidated financial statements include WP&L and its
consolidated subsidiaries, including WPL Transco LLC and South
Beloit. WP&L is a subsidiary of Alliant Energy. These
financial statements should be read in conjunction with the
financial statements and the notes thereto included in WP&L's
latest Annual Report on Form 10-K.
In the opinion of management, all adjustments, which are
normal and recurring in nature, necessary for a fair
presentation of (a) the consolidated results of operations for
the three and six months ended June 30, 2001 and 2000, (b) the
consolidated financial position at June 30, 2001 and December
31, 2000, and (c) the consolidated statement of cash flows for
the six months ended June 30, 2001 and 2000, have been made.
Because of the seasonal nature of WP&L's operations, results
for the three and six months ended June 30, 2001 are not
necessarily indicative of results that may be expected for the
year ending December 31, 2001.
2. WP&L's comprehensive income, and the components of other
comprehensive income, net of taxes, were as follows (in
thousands):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
------------------------------- ------------------------------
Earnings available for common stock $10,723 $10,470 $29,161 $31,513
Other comprehensive income:
Unrealized gains on derivatives qualified as hedges:
Unrealized holding gains arising during period,
net of tax 837 -- 1,801 --
Less: reclassification adjustment for gains (losses)
included in earnings available for common
stock, net of tax 15 -- (3,766) --
-------------- --------------- -------------- --------------
Net unrealized gains on qualifying derivatives 822 -- 5,567 --
-------------- --------------- -------------- --------------
Other comprehensive income 822 -- 5,567 --
-------------- --------------- -------------- --------------
Comprehensive income $11,545 $10,470 $34,728 $31,513
============== =============== ============== ==============
26
3. Certain financial information relating to WP&L's significant
business segments is presented below. Intersegment revenues
were not material to WP&L's operations.
Electric Gas Other Total
------------------------------------------------------------------
(in thousands)
Three Months Ended June 30, 2001
- --------------------------------
Operating revenues $178,297 $24,605 $1,228 $204,130
Operating income (loss) 26,165 (3,125) 368 23,408
Earnings available for common stock 10,723 10,723
Three Months Ended June 30, 2000
- --------------------------------
Operating revenues $173,111 $19,515 $1,239 $193,865
Operating income (loss) 25,737 (1,017) 406 25,126
Earnings available for common stock 10,470 10,470
Six Months Ended June 30, 2001
- ------------------------------
Operating revenues $368,688 $150,237 $2,381 $521,306
Operating income 56,836 2,995 553 60,384
Earnings available for common stock 29,161 29,161
Six Months Ended June 30, 2000
- ------------------------------
Operating revenues $335,487 $74,801 $2,409 $412,697
Operating income 56,796 8,039 786 65,621
Earnings available for common stock 31,513 31,513
27
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The primary first tier subsidiaries of Alliant Energy include:
WP&L, IESU, 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. This MD&A
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. The following discussion and
analysis should be read in conjunction with the Consolidated
Financial Statements and Notes to Consolidated Financial
Statements included in this report as well as the financial
statements, notes and MD&A included in Alliant Energy's, IESU's
and WP&L's latest Annual Report on Form 10-K.
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: factors listed in the
"Outlook" section; 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 in which Alliant
Energy has investments; and changes in the rate of inflation.
UTILITY INDUSTRY REVIEW
A summary of the current regulatory environment is included in
the Form 10-K filed by Alliant Energy, IESU and WP&L for the year
ended December 31, 2000. Set forth below are several
developments relating to such regulatory environment that have
occurred since the start of the current year.
Rates and Regulatory Matters - 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. This filing
was completed in May 2001. While IESU and IPC cannot predict the
outcome of this process, hearings are scheduled for October
2001.
In April 2001, the OCA requested certain financial information
from IESU related to the electric utility operations within the
state of Iowa. IESU filed its response with the OCA in June
2001. In July 2001, the OCA requested certain financial information
from IPC related to the electric utility operations within the
state of Iowa. IPC is in the process of preparing its
responses. While IESU and IPC cannot predict the outcomes of this process,
such data requests could lead to an effort by the OCA to seek an
electric rate reduction for IESU and/or IPC in Iowa.
In December 2000, WP&L requested a $73 million annual retail
electric rate increase from the PSCW to cover increases in WP&L's
2001 fuel 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 8, 2001, which was replaced with a $58
million final increase effective June 19, 2001. The final order includes
a refund provision for fuel costs collected in rates that are in
excess of actual fuel costs incurred. In July 2001, WP&L
28
filed a motion for rehearing, alleging that the PSCW committed
material factual and legal errors in the final order relating to
the recovery of certain costs and the refund mechanism. In August 2001,
the PSCW denied the request for rehearing.
In 2000, the NRC raised several areas of concern with Kewaunee's operations.
Addressing the concerns raised by the NRC is expected to result in additional
operating costs to WP&L in 2001 of approximately $8 million. Additional
operating costs to WP&L over the period of 2002 through 2005 are estimated to
be approximately $25 million. In April 2001, the PSCW approved the deferral
of such incremental costs incurred after March 27, 2001. In July 2001, WP&L
requested a $19.2 million retail electric rate increase from the PSCW to
recover a portion of the costs associated with the increased Kewaunee operating
costs, and the replacement of the steam generators at Kewaunee (scheduled to be
replaced during an estimated 71-day outage beginning in September 2001). WP&L
expects that the remainder of the additional operating costs related to
Kewaunee will be recovered through future base rate filings with the PSCW.
The NRC has indicated that, with the actions already taken at Kewaunee, the
only remaining issues relating to that facility are of a low safety
significance. The expenditures at Kewaunee that were not deferred and which
are not subject to the rate increase request did not have a material impact
on earnings.
The last of Alliant Energy's price freezes related to its 1998 three-way
merger will expire in the second quarter of 2002. In August 2001, WP&L
filed a request with the PSCW for new base rates, which focus on
investments in reliability, customer service, technology and
environmental upgrades, as well as investments in its
infrastructure. The filing applies to retail electric ($85.9 million),
natural gas ($26.1 million) and water ($1.1 million) rates. WP&L expects
that any rate increases will take effect some time after April 14, 2002.
WP&L also plans to file a request later in 2001 for new wholesale electric
base rates. IESU and IPC are in the process of reviewing whether they will
need to file electric and/or gas base rate cases with the IUB in the
first half of 2002. At this time, there are no plans for filing
new base rate cases in Illinois or Minnesota.
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.
Overview - Second Quarter Results - Alliant Energy reported net
- ---------------------------------
income of $23.3 million, or $0.29 per share, for the second
quarter of 2001, compared to net income of $42.3 million, or
$0.54 per share, for the second quarter of 2000. Both periods
included non-cash valuation adjustments related to Alliant
Energy's obligation under certain 30-year exchangeable senior
notes - a charge of $0.06 per share was recorded in the second
quarter of 2001 while the second quarter of 2000 included income
of $0.31 per share to reverse charges recorded in the first
quarter of 2000.
The earnings increase of $0.13 per share, excluding the non-cash
valuation adjustments, was largely due to higher earnings from
Alliant Energy's non-regulated operations, led by another
significant increase in earnings from Alliant Energy's oil and
gas business. Improved results from Alliant Energy's Brazil
investments, the impact of lower interest rates and an increase
in earnings from utility operations also contributed to the
higher earnings. These items were partially offset by interest
and amortization expenses from several recent acquisitions by
Alliant Energy's integrated services business and increased
corporate expenses at the Alliant Energy parent.
29
Second quarter 2001 utility earnings were $22.1 million ($0.28
per share) compared to $20.0 million ($0.25 per share) for the
same period in 2000. The increase was primarily due to lower
operating expenses.
The non-regulated businesses reported net income of $3.6 million
($0.04 per share) in the second quarter of 2001, which included
the non-cash valuation charge of $4.6 million ($0.06 per share),
compared to net income of $22.0 million ($0.27 per share) in the
second quarter of 2000, which included the non-cash valuation income
of $24.8 million ($0.31 per share). Excluding these non-cash
adjustments, Resources' earnings increased $0.14 per share. Earnings per
share from Whiting increased from $0.04 per share in 2000 to
$0.15 per share in 2001. Such increase was due to higher gas
prices, increased oil and gas sales volumes and a gain realized
on an asset sale. Improved results at the International business
unit ($0.02 per share) were largely due to the Brazil
investments, partially offset by a slight decrease in earnings
from the China investments. Decreased earnings at the Integrated
Services business unit ($0.04 per share) were largely due to
additional goodwill amortization and interest expense from
several acquisitions completed in December 2000. The
impact of lower interest rates on Resources' variable rate
borrowings also contributed to the increased earnings.
Electric Utility Operations - Electric margins and MWh sales for
- ---------------------------
Alliant Energy for the three months ended June 30 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
-------------------------------- --------------------------------
2001 2000 Change 2001 2000 Change
--------------- --------------- ---------- --------------- --------------- ----------
Residential $135,034 $127,945 6% 1,549 1,535 1%
Commercial 95,421 83,674 14% 1,330 1,260 6%
Industrial 147,483 127,209 16% 3,217 3,367 (4%)
--------------- --------------- --------------- ---------------
Total from ultimate customers 377,938 338,828 12% 6,096 6,162 (1%)
Sales for resale 46,783 43,717 7% 1,246 1,160 7%
Other 10,766 11,298 (5%) 44 41 7%
--------------- --------------- --------------- ---------------
Total revenues/sales 435,487 393,843 11% 7,386 7,363 --
=============== ===============
Electric production fuels expense 73,428 60,167 22%
Purchased power expense 111,114 74,792 49%
--------------- ---------------
Margin $250,945 $258,884 (3%)
=============== ===============
Electric margins and MWh sales for Alliant Energy for the six
months ended June 30 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
-------------------------------- --------------------------------
2001 2000 Change 2001 2000 Change
--------------- --------------- ---------- --------------- --------------- ----------
Residential $284,721 $262,940 8% 3,520 3,357 5%
Commercial 180,475 161,524 12% 2,661 2,537 5%
Industrial 264,150 238,753 11% 6,200 6,488 (4%)
--------------- --------------- --------------- ---------------
Total from ultimate customers 729,346 663,217 10% 12,381 12,382 --
Sales for resale 95,206 77,611 23% 2,502 2,365 6%
Other 22,878 26,637 (14%) 86 88 (2%)
--------------- --------------- --------------- ---------------
Total revenues/sales 847,430 767,465 10% 14,969 14,835 1%
=============== ===============
Electric production fuels expense 141,701 125,713 13%
Purchased power expense 209,847 137,137 53%
--------------- ---------------
Margin $495,882 $504,615 (2%)
=============== ===============
30
Electric margin decreased $7.9 million, or 3%, and $8.7 million,
or 2%, for the three- and six-month periods, respectively,
primarily due to $10 million of income recorded in the second
quarter of 2000 for a change in estimate of WP&L's utility
services rendered but unbilled at month-end. This was largely
offset by the impact of electric sales growth, including
increased sales to higher-margin residential and commercial
customers, and lower purchased-power costs in 2001. Also
contributing to the six-month decrease were reduced energy
conservation revenues. Favorable weather conditions yielded an
estimated $11 million electric margin increase for the six months
ended June 30, 2001, compared with the same period last year,
when milder than normal weather conditions prevailed.
Due to the formation of ATC on January 1, 2001, electric margin
for the three and six months ended June 30, 2001 included
expenses of $7 million and $14 million, respectively. Such
expenses were offset by equity income, lower depreciation expense
and reduced other operation and maintenance expenses, resulting in
no significant net income impact due to the formation of ATC. Refer
to Note 5 of Alliant Energy's "Notes to Consolidated Financial
Statements" in Item 1. for additional information related to ATC.
IESU's and IPC's electric tariffs include EAC's that are designed
to currently recover the costs of fuel and the energy portion of
purchased-power billings. 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.
Refer to "Utility Industry Review - Rates and Regulatory Matters" for
discussion of an IUB fuel investigation and a WP&L FAC filing.
Gas Utility Operations - Gas margins and Dth sales for Alliant
- ----------------------
Energy for the three months ended June 30 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
-------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
--------------- --------------- ----------- -------------- --------------- -----------
Residential $34,337 $32,597 5% 3,645 4,354 (16%)
Commercial 16,710 15,466 8% 2,213 2,657 (17%)
Industrial 5,410 3,716 46% 892 898 (1%)
Transportation/other 6,975 2,874 143% 10,638 9,604 11%
--------------- --------------- -------------- ---------------
Total revenues/sales 63,432 54,653 16% 17,388 17,513 (1%)
============== ===============
Cost of utility gas sold 42,066 31,869 32%
--------------- ---------------
Margin $21,366 $22,784 (6%)
=============== ===============
Gas margins and Dth sales for Alliant Energy for the six months
ended June 30 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $200,894 $112,208 79% 19,225 17,428 10%
Commercial 105,765 55,036 92% 11,272 10,433 8%
Industrial 20,033 10,550 90% 2,522 2,586 (2%)
Transportation/other 26,558 6,993 280% 24,597 22,001 12%
----------------- --------------- -------------- ---------------
Total revenues/sales 353,250 184,787 91% 57,616 52,448 10%
============== ===============
Cost of utility gas sold 280,324 113,982 146%
----------------- ---------------
Margin $72,926 $70,805 3%
================= ===============
Gas revenues and cost of utility gas sold increased significantly
for the three- and six-month periods due to the large increase in
natural gas prices. Gas margin decreased $1.4 million, or 6%,
and increased $2.1 million, or 3%, for the three and six months
ended June 30, 2001, respectively, compared with the same periods
in 2000. Gas margins for both periods were reduced due to
31
impacts of the higher natural gas costs as some customers either
chose alternative fuel sources or used less natural gas.
Contributing to the six-month increase were increased sales
volumes from more favorable weather conditions in 2001 which
contributed an estimated $9 million increase in gas margin,
partially offset by losses associated with current commodity
costs at WP&L, which are shared by ratepayers and shareowners.
IESU's and IPC's gas tariffs include PGA clauses that are
designed to currently recover the cost of utility gas sold.
Non-regulated and Other Revenues - Details regarding Alliant
- --------------------------------
Energy's non-regulated and other revenues and data relating to Whiting's
oil and gas operations for the three and six months ended June 30 were as
follows:
Three Months Six Months
------------------------------------ ------------------------------------
Non-regulated and other revenues (in thousands): 2001 2000 2001 2000
---------------- ----------------- ------------------ ---------------
Integrated Services $48,210 $30,949 $132,410 $64,383
Investments:
Whiting (oil and gas) 36,356 26,605 79,131 45,799
Other 6,526 5,746 12,497 11,071
International 9,654 -- 15,941 --
Other 12,176 12,089 23,895 24,442
---------------- ----------------- ------------------ ---------------
$112,922 $75,389 $263,874 $145,695
================ ================= ================== ===============
Three Months Six Months
------------------------------------ -----------------------------------
2001 2000 2001 2000
----------------- ---------------- ------------------ ---------------
Whiting's volumes sold (in thousands):
Oil (barrels) 532 393 1,097 728
Gas (thousand cubic feet) 4,460 4,180 8,782 7,891
Whiting's product prices:
Oil $25.15 $25.78 $25.34 $25.51
Gas $4.26 $3.54 $5.12 $3.04
The increased Integrated Services revenues were due to
acquisitions in the third and fourth quarters of 2000 of various
energy services businesses and higher natural gas prices.
Ongoing acquisitions of additional oil and gas properties had a
significant impact on the increased Whiting sales volumes. The 2001
International revenues resulted from the December 2000 change from
the equity method of accounting to the consolidation method for an
investment in China.
Other Operating Expenses - Other operation and maintenance
- ------------------------
expenses for the three and six months ended June 30 were as
follows (in thousands):
Three Months Six Months
----------------------------------- -----------------------------------
2001 2000 2001 2000
--------------- ---------------- ---------------- ---------------
Utility $125,538 $136,445 $255,627 $259,206
Integrated Services 45,457 32,001 125,642 61,516
Investments:
Whiting (oil and gas) 11,366 9,384 23,096 16,733
Other 4,139 4,577 8,211 8,965
International 7,664 875 16,129 2,224
Other 2,822 5,080 6,477 9,396
--------------- ---------------- ---------------- ---------------
$196,986 $188,362 $435,182 $358,040
=============== ================ ================ ===============
Other operation and maintenance expenses at the utility
subsidiaries decreased $10.9 million and $3.6 million for the
three- and six-month periods, respectively, primarily due to
costs incurred in 2000 for: 1) a scheduled refueling outage at
32
Kewaunee; and 2) one-time fees associated with the transfer of the
Iowa utility business from the MAPP reliability region to the
MAIN region. Administrative and general expenses contributed to
the three-month decrease while they partially offset the
six-month decrease. Higher fossil-plant maintenance expenses
partially offset the three-month decrease. The Integrated
Services increases were primarily due to expenses associated with
the acquisitions of the various energy services businesses and
the higher natural gas costs. The increase at Whiting was
primarily due to the increased production volumes. The
International increases were primarily due to the December 2000 change
from the equity method of accounting to the consolidation method for
an investment in China.
Depreciation and amortization expense increased $8.2 million and
$16.9 million for the three- and six-month periods, respectively,
primarily due to the acquisitions at the non-regulated
businesses, utility property additions and increased amortization
expenses.
Taxes other than income taxes increased $2.9 million and $5.0
million for the three- and six-month periods, respectively,
primarily due to increased payroll, gross receipts and property
taxes.
Interest Expense and Other - Interest expense increased $5.8
- --------------------------
million and $14.9 million for the three- and six-month periods,
respectively, primarily due to higher non-regulated and utility
borrowings to fund Alliant Energy's strategic growth initiatives,
including Resources' investment in a Brazilian electric utility in
January 2001 of approximately $60 million. The impact of lower
interest rates on Alliant Energy's variable rate borrowings
partially offset these increases.
In the second quarter of 2000, Alliant Energy reversed a first
quarter 2000 charge of $39.5 million for contingent interest
relating to Alliant Energy's obligation under certain 30-year
exchangeable senior notes.
Equity income (loss) from Alliant Energy's unconsolidated
investments for the three and six months ended June 30 was as
follows (in thousands):
Three Months Six Months
---------------------------------- ----------------------------------
2001 2000 2001 2000
---------------------------------- ----------------------------------
ATC $3,242 $-- $8,026 $--
Cargill-Alliant 2,091 2,453 5,094 2,601
Australia/New Zealand 2,702 1,368 4,923 1,368
China 988 (27) 2,391 248
Brazil 185 (1,965) (1,295) (739)
Other (469) (264) (61) (770)
---------------- ---------------- ----------------- --------------
$8,739 $1,565 $19,078 $2,708
================ ================ ================= ==============
Equity income from unconsolidated investments increased $7.2
million and $16.4 million for the three- and six-month periods,
respectively, primarily due to ATC beginning operations on
January 1, 2001 and a first quarter 2000 acquisition in
Australia. All of Alliant Energy's remaining prospective tariff
adjustments in Brazil were implemented in the second quarter of
2001, resulting in improved results in Brazil for the three-month period.
The six-month increase was also impacted by higher earnings from Alliant
Energy's energy-trading joint venture with Cargill-Alliant due to more
buyers turning to energy experts to help them find stable, reliable sources
of supply in the wake of volatile energy costs. Refer to "Outlook" for
additional information regarding Brazil.
Alliant Energy sold 450,000 shares of its investment in McLeod in
the first quarter of 2000, resulting in a pre-tax gain of $10.2
million, or $0.08 per share.
Miscellaneous, net income decreased $3.7 million and $14.6
million for the three- and six-month periods, respectively,
primarily due to charges of $64.1 million and $149.2 million for
the three and six months ended June 30, 2001, respectively,
related to the change in value of the McLeod trading securities,
partially offset by income of $57.2 million and $138.1 million,
respectively, related to the change in value of the derivative
component of Resources' exchangeable senior notes. Such
decreases were partially offset by a $3 million gain on the sale
of properties at Whiting in the second quarter of 2001. Also
contributing to the six-month decrease were $4.1 million of
33
interest income recognized at IESU in the first quarter of 2000
from a tax settlement and income realized from weather hedges at
WP&L in the first quarter of 2000.
Income Taxes - The effective income tax rates were 31.2% and
- ------------
33.0% for the three- and six-month periods ended June 30, 2001,
respectively, compared with 37.2% for the same periods last
year. The decrease for both periods was primarily due to
higher tax credits.
IESU RESULTS OF OPERATIONS
Overview - Second Quarter Results - IESU's earnings available for
- ---------------------------------
common stock increased $1.6 million for the three months ended
June 30, 2001, compared with the same period in 2000, primarily
due to an increased electric margin and a lower effective income
tax rate, partially offset by higher other operation and
maintenance expenses.
Electric Utility Operations - Electric margins and MWh sales for
- ---------------------------
IESU for the three months ended June 30 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $58,227 $50,192 16% 600 582 3%
Commercial 51,906 41,783 24% 697 643 8%
Industrial 59,972 46,021 30% 1,273 1,302 (2%)
----------------- --------------- -------------- ---------------
Total from ultimate customers 170,105 137,996 23% 2,570 2,527 2%
Sales for resale 11,338 7,294 55% 296 254 17%
Other 3,652 3,037 20% 10 10 --
----------------- --------------- -------------- ---------------
Total revenues/sales 185,095 148,327 25% 2,876 2,791 3%
============== ===============
Electric production fuels expense 33,638 25,049 34%
Purchased power expense 43,617 17,718 146%
----------------- ---------------
Margin $107,840 $105,560 2%
================= ===============
Electric margins and MWh sales for IESU for the six months ended
June 30 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
--------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
---------------- --------------- ----------- -------------- --------------- -----------
Residential $116,876 $105,134 11% 1,335 1,266 5%
Commercial 93,801 82,009 14% 1,334 1,276 5%
Industrial 102,098 88,226 16% 2,432 2,515 (3%)
---------------- --------------- -------------- ---------------
Total from ultimate customers 312,775 275,369 14% 5,101 5,057 1%
Sales for resale 20,387 12,497 63% 547 501 9%
Other 7,064 6,169 15% 20 21 (5%)
---------------- --------------- -------------- ---------------
Total revenues/sales 340,226 294,035 16% 5,668 5,579 2%
============== ===============
Electric production fuels expense 53,479 53,961 (1%)
Purchased power expense 76,443 31,140 145%
---------------- ---------------
Margin $210,304 $208,934 1%
================ ===============
Electric margin increased $2.3 million, or 2%, and $1.4 million,
or 1%, for the three- and six-month periods, respectively,
primarily due to electric sales growth, including increased sales
to higher-margin residential and commercial customers, partially
offset by increased purchased-power capacity costs. Also
contributing to the six-month increase were more favorable
34
weather conditions in the first quarter of 2001 compared to the
first quarter of 2000, when milder than normal weather conditions
prevailed.
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 "Utility Industry Review -
Rates and Regulatory Matters" for discussion of an IUB fuel
investigation.
Gas Utility Operations - Gas margins and Dth sales for IESU for
- ----------------------
the three months ended June 30 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $17,061 $16,642 3% 1,703 2,048 (17%)
Commercial 7,933 7,617 4% 986 1,217 (19%)
Industrial 3,626 2,187 66% 611 571 7%
Transportation/other 2,613 999 162% 2,314 2,184 6%
----------------- --------------- -------------- ---------------
Total revenues/sales 31,233 27,445 14% 5,614 6,020 (7%)
============== ===============
Cost of gas sold 21,720 16,964 28%
----------------- ---------------
Margin $9,513 $10,481 (9%)
================= ===============
Gas margins and Dth sales for IESU for the six months ended June
30 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $94,480 $53,856 75% 9,126 8,104 13%
Commercial 48,496 25,319 92% 5,243 4,689 12%
Industrial 10,041 5,288 90% 1,375 1,382 (1%)
Transportation/other 5,412 2,411 124% 5,458 5,102 7%
----------------- --------------- -------------- ---------------
Total revenues/sales 158,429 86,874 82% 21,202 19,277 10%
============== ===============
Cost of gas sold 125,223 55,038 128%
----------------- ---------------
Margin $33,206 $31,836 4%
================= ===============
Gas revenues and cost of gas sold increased significantly for the
three- and six-month periods due to the large increase in natural
gas prices. Such increases had no impact on IESU's gas margin
given its rate recovery mechanism for gas costs. Gas margin
decreased $1.0 million, or 9%, and increased $1.4 million, or 4%,
for the three and six months ended June 30, 2001, respectively.
Gas margins for both time periods were negatively impacted by
higher natural gas costs as some customers either chose
alternative fuel sources or used less natural gas. The six-month
increase was largely due to more favorable weather conditions in
the first quarter of 2001 compared with the first quarter of
2000.
IESU's gas tariffs include PGA clauses that are designed to
currently recover the cost of gas sold.
Other Operating Expenses - IESU's other operation and maintenance
- ------------------------
expenses increased $1.0 million and $6.8 million for the three-
and six-month periods, respectively, primarily due to increased
energy delivery, fossil-plant maintenance and nuclear expenses,
partially offset by reduced administrative and general expenses
and one-time fees incurred in the second quarter of 2000
associated with the transfer from the MAPP reliability region to
the MAIN region.
35
Interest Expense and Other - Miscellaneous, net income increased
- --------------------------
$0.9 million and decreased $1.8 million for the three- and
six-month periods, respectively. The six-month decrease was
primarily due to interest income recognized from a tax settlement
in the first quarter of 2000, partially offset by increases in
other interest income.
Income Taxes - The effective income tax rates were 39.3% and
- ------------
39.0% for the three and six months ended June 30, 2001,
respectively, compared with 44.7% and 42.7%, respectively, for
the same periods last year. The decrease for both periods was
due to decreases in property-related temporary differences for
which deferred taxes are not provided pursuant to rate making
principles.
WP&L RESULTS OF OPERATIONS
Overview - Second Quarter Results - WP&L's earnings available for
- ---------------------------------
common stock increased $0.3 million for the three months ended
June 30, 2001, compared with the same period in 2000, primarily
due to reduced operating expenses, largely offset by reduced
electric and gas margins.
Electric Utility Operations - Electric margins and MWh sales for
- ---------------------------
WP&L for the three months ended June 30 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $54,635 $54,563 -- 702 669 5%
Commercial 33,603 32,240 4% 499 463 8%
Industrial 53,705 52,063 3% 1,160 1,205 (4%)
----------------- --------------- -------------- ---------------
Total from ultimate customers 141,943 138,866 2% 2,361 2,337 1%
Sales for resale 32,529 29,061 12% 883 773 14%
Other 3,825 5,184 (26%) 17 13 31%
----------------- --------------- -------------- ---------------
Total revenues/sales 178,297 173,111 3% 3,261 3,123 4%
============== ===============
Electric production fuels expense 28,195 26,703 6%
Purchased power expense 50,796 38,063 33%
----------------- ---------------
Margin $99,306 $108,345 (8%)
================= ===============
Electric margins and MWh sales for WP&L for the six months ended
June 30 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $121,213 $112,109 8% 1,609 1,507 7%
Commercial 68,130 61,935 10% 1,041 966 8%
Industrial 101,973 93,333 9% 2,256 2,332 (3%)
----------------- --------------- -------------- ---------------
Total from ultimate customers 291,316 267,377 9% 4,906 4,805 2%
Sales for resale 67,872 54,018 26% 1,728 1,562 11%
Other 9,500 14,092 (33%) 33 35 (6%)
----------------- --------------- -------------- ---------------
Total revenues/sales 368,688 335,487 10% 6,667 6,402 4%
============== ===============
Electric production fuels expense 63,267 50,501 25%
Purchased power expense 103,166 71,820 44%
----------------- ---------------
Margin $202,255 $213,166 (5%)
================= ===============
Electric margin decreased $9.0 million, or 8%, and $10.9 million,
or 5%, for the three- and six-month periods, respectively,
36
primarily due to a second quarter 2000 change in estimate of
WP&L's utility services rendered but unbilled at month-end of $10
million, the impact of the formation of ATC and lower energy
conservation revenues. Such decreases were partially offset by
electric sales growth, including increased sales to higher-margin
residential and commercial customers. More favorable weather
conditions in the first quarter of 2001 compared to the first
quarter of 2000, when milder than normal weather conditions
prevailed, also partially offset the six-month decrease. Refer
to "Utility Industry Review - Rates and Regulatory Matters" for
discussion of a WP&L FAC filing in December 2000.
Due to the formation of ATC on January 1, 2001, electric margin
for the three and six months ended June 30, 2001 included
expenses of $7 million and $14 million, respectively. Such
expenses were offset by equity income, lower depreciation expense
and reduced other operation and maintenance expenses, resulting in no
significant net income impact due to the formation of ATC. Refer to
Note 5 of Alliant Energy's "Notes to Consolidated Financial
Statements" in Item 1. for additional information related to ATC.
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.
Gas Utility Operations - Gas margins and Dth sales for WP&L for
- ----------------------
the three months ended June 30 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $12,931 $11,470 13% 1,470 1,694 (13%)
Commercial 6,963 5,920 18% 979 1,117 (12%)
Industrial 1,085 906 20% 156 192 (19%)
Transportation/other 3,626 1,219 197% 3,150 2,772 14%
----------------- --------------- -------------- ---------------
Total revenues/sales 24,605 19,515 26% 5,755 5,775 --
============== ===============
Cost of gas sold 15,825 9,638 64%
----------------- ---------------
Margin $8,780 $9,877 (11%)
================= ===============
Gas margins and Dth sales for WP&L for the six months ended June
30 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
---------------------------------- -------------------------------
2001 2000 Change 2001 2000 Change
----------------- --------------- ----------- -------------- --------------- -----------
Residential $80,024 $44,483 80% 7,578 6,987 8%
Commercial 43,959 23,226 89% 4,663 4,467 4%
Industrial 6,751 3,638 86% 736 779 (6%)
Transportation/other 19,503 3,454 465% 8,554 6,841 25%
----------------- --------------- -------------- ---------------
Total revenues/sales 150,237 74,801 101% 21,531 19,074 13%
============== ===============
Cost of gas sold 122,077 44,967 171%
----------------- ---------------
Margin $28,160 $29,834 (6%)
================= ===============
Gas revenues and cost of gas sold increased significantly for the
three- and six-month periods due to the large increase in natural
gas prices. Gas margin decreased $1.1 million, or 11%, and $1.7
million, or 6%, for the three- and six-month periods,
respectively, primarily due to impacts of the higher natural gas
costs as some customers either chose alternative fuel sources or
used less natural gas. Also contributing to the six-month
decrease were losses associated with current commodity costs,
which are shared by ratepayers and shareowners, partially offset
by increased natural gas sales due to more favorable weather
conditions in the first quarter of 2001 compared to the first
quarter of 2000.
37
Other Operating Expenses - Other operation and maintenance
- ------------------------
expenses decreased $9.2 million and $9.5 million for the three-
and six-month periods, respectively, primarily due to lower
nuclear expenses and the impact of the formation of ATC. The
lower nuclear expenses were primarily due to a planned second
quarter 2000 refueling outage at Kewaunee.
Taxes other than income taxes increased $1.1 million and $2.2
million for the three- and six-month periods, respectively, due
to increased gross receipts and payroll taxes.
Interest Expense and Other - Equity income from unconsolidated
- --------------------------
investments increased $3.3 million and $8.1 million for the
three- and six-month periods, respectively, due to ATC
beginning operations on January 1, 2001.
Miscellaneous, net income decreased $4.8 million for the
six-month period primarily due to income realized from weather
hedges in the first quarter of 2000.
Income Taxes - The effective income tax rates were 38.2% and 38.3% for the
- ------------
three and six months ended June 30, 2001, respectively, compared with
38.4% and 37.5%, respectively, for the same periods last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows for Six-Month Periods - Alliant Energy's cash flows from
- --------------------------------
operating activities increased $22 million primarily due to changes in
working capital; cash flows from financing activities decreased $393 million
primarily due to net changes in the amount of debt outstanding; and cash
flows used for investing activities decreased $394 million primarily due to
the January 2000 Brazil investment. IESU's cash flows from operating
activities decreased $15 million primarily due to a scheduled nuclear
refueling outage in the second quarter of 2001 and cash flows from financing
activities increased $71 million primarily due to changes in the amount of
debt outstanding. WP&L's cash flows from operating activities decreased
$41 million primarily due to changes in working capital; cash flows used
for financing activities increased $37 million primarily due to the payment of
common stock dividends in 2001; and cash flows used for investing activities
decreased $76 million due to proceeds received from the transfer of its
transmission assets to ATC. WP&L did not declare a common stock dividend
in 2000 as part of the management of its capital structure.
Long-Term Debt - Refer to Note 7 of Alliant Energy's "Notes to
- --------------
Consolidated Financial Statements" in Item 1. for discussion of
long-term debt issued by IESU in March 2001.
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 received all necessary approvals in late March 2001
for a combined accounts receivable sale program whereby each
utility, including IPC, sells its respective receivables on a limited
recourse basis through wholly-owned special purpose entities to an
affiliated financing entity, which in turn sells the receivables to an
outside investor. The new program became operational in the second
quarter of 2001 and replaces the previously existing programs for
IESU and WP&L.
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. In May 2001, Alliant Energy filed an application with
the SEC to request, among other things, aggregate investment
authority with respect to exempt wholesale generators and foreign
utility companies in the amount of $1.75 billion. The
application is currently under review with the SEC. Alliant
Energy expects the SEC will approve an increase in
Alliant Energy's investment authority from 50 percent to 100
percent of consolidated retained earnings in the third quarter of
2001 and reserve jurisdiction over the increase to $1.75 billion
to a later date.
In July 2001, Alliant Energy and Resources made another on-going,
routine filing with the SEC requesting, among other things, approval
for a program of external financing, credit support agreements and
other related proposals for the period through December 31, 2004.
38
Construction and Acquisition Expenditures - To help ensure
- -----------------------------------------
electric service reliability for its customers, Alliant Energy has
announced a program called PowerPledge, which is designed to increase
Alliant Energy's power supply, upgrade existing systems and use more
renewable energy sources. Through this program, Alliant Energy's utility
subsidiaries plan to invest $2 billion over the next five years (beginning
in 2001) in utility infrastructure designed to improve reliability.
Alliant Energy's subsidiaries also announced their interest in
developing new electric power generation capacity in Iowa and
Wisconsin over the next 10 years with an estimated investment of
$2.5 billion. 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 announced plans 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 and the receipt of
a reasonable return on IESU's and WP&L's investments.
OTHER MATTERS
Refer to Note 4 of IESU's "Notes to Consolidated Financial Statements"
in Item 1. for discussion of a merger between IESU and IPC that is
currently expected to be completed by January 1, 2002.
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. Alliant
Energy's market risks have not changed materially from the market
risks reported in the 2000 Form 10-K, except as noted below.
Equity Price Risk - At June 30, 2001 and December 31, 2000, Alliant Energy
- -----------------
had an investment in the stock of McLeod, a publicly traded telecommunications
company, valued at $257 million and $791 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. A 10 percent increase (decrease) in
the quoted market price at June 30, 2001 and 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 $72 million and $221 million at June 30, 2001 and December 31,
2000, respectively). At June 30, 2001 and December 31, 2000, the McLeod
available-for-sale securities were valued at $185 million and $570 million,
respectively. A 10 percent increase (decrease) in the quoted market price at
June 30, 2001 and December 31, 2000 would have increased (decreased) the
value of the investment of the available-for-sale securities by $19 million
and $57 million, respectively.
Currency Risk - Alliant Energy has investments in various
- -------------
countries where the net investments are not hedged, including
Australia, Brazil, China and New Zealand. As a result, these
investments are subject to currency exchange risk with
fluctuations in currency exchange rates. At June 30, 2001 and
December 31, 2000, Alliant Energy had a cumulative foreign
currency translation loss of $130 million and $60 million,
respectively, recorded in "Accumulated other comprehensive
income" on its Consolidated Balance Sheets that primarily related
to decreases in value of the Brazil real, New Zealand dollar and
Australian dollar in relation to the U.S. dollar. Based on
Alliant Energy's investments at June 30, 2001 and December 31,
2000, a 10 percent sustained increase (decrease) over the next 12
months in the foreign exchange rates of Australia, Brazil, China
and New Zealand would increase (decrease) the cumulative foreign
currency translation gain/loss by $47 million and $46 million,
respectively.
Accounting Pronouncements
In July 2001, the FASB issued SFAS 141, "Business Combinations,"
which requires that, among other things, all business combinations
be accounted for under the purchase method for business combinations
initiated after June 30, 2001. Use of the pooling-of-interests
method is no longer permitted.
39
In July 2001, the FASB issued SFAS 142, "Goodwill and Other
Intangible Assets," which will result in goodwill no longer being
amortized to earnings. Rather, goodwill will be subject to at
least an annual assessment for impairment by applying a
fair-value-based test. The amortization of goodwill
existing as of June 30, 2001 ceases upon adoption of SFAS 142,
which will be January 1, 2002 for Alliant Energy. Alliant Energy
has not yet fully quantified the impacts of SFAS 142 on its
financial condition or results of operations.
OUTLOOK
Alliant Energy currently estimates that earnings per share from
continuing operations for 2001 will be in the $2.40 to $2.55
range. Drivers for Alliant Energy's 2001 earnings estimate
include, but are not limited to: normal weather conditions in its
utility service territories; continued economic development and
sales growth in its utility service territories; continued cost
control and operational efficiencies in its utility operations;
ability to recover its purchased-power and fuel costs, both
domestically and internationally; ability to offset start-up and
growth-related interest expenses in its non-regulated businesses
with sales of non-strategic assets and to redeploy such proceeds
into more strategic earnings-generating investments; continued
improved profitability of its international investments;
continued improved profitability of its non-regulated businesses as
a whole, including oil and gas, electricity trading, integrated
energy and transportation services; stable oil and gas prices;
and other stable business conditions. In addition, the accuracy
of the earnings estimate is further subject to future
developments relating to Alliant Energy's utility investments in
Brazil.
Brazil is experiencing drought conditions, which will have a
negative impact on Alliant Energy's 2001 earnings given that the
large majority of generation in Brazil is hydroelectric. However,
Alliant Energy expects to be able to mitigate a significant
portion of this negative earnings impact as a result of its current
ability to sell its excess energy into the wholesale power
market. The Brazilian government is currently reviewing the
make-up of such market in Brazil and thus it is possible that changes
in current government regulations could be forthcoming. Assuming
Alliant Energy can continue to sell its excess energy into the
market under the current government regulations, Alliant Energy
still expects the impact its Brazilian investments will have on
its 2001 earnings will be minimal. In addition, several of
Alliant Energy's other non-regulated businesses continue to
generate strong earnings which also should offset some or all of
the impact of the Brazil drought.
Alliant Energy's strategic plan includes aggressively investing
in generation and other energy-related projects; better
connecting with customers through enhanced service reliability,
value-added products and services, 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 several years.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures About Market Risk are
reported under Item 2. MD&A "Other Matters - Market Risk
Sensitive Instruments and Positions."
40
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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 filed a
motion for reconsideration with the court, which was denied in
April 2001. Alliant Energy and WP&L have appealed the lower court's
rulings to the 7th Circuit Court of Appeals. Briefing of the appeal
will be concluded by mid-August, with a decision expected by Fall 2002.
Alliant Energy and WP&L cannot currently predict the outcome of this
litigation.
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
appealed the district court's ruling and the IRS appealed the
decision which led to the tax refund due to Alliant Energy. In
June 2001, the U.S. Court of Appeals for the Eighth Circuit ruled
in Alliant Energy's favor with respect to both tax issues. In
July 2001, the government filed a petition for rehearing with the
U.S. Court of Appeals related to the capital losses allowed in
the Eighth Circuit opinion. Alliant Energy believes the
resolution of these issues will not have a material adverse
impact on its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ALLIANT ENERGY
At Alliant Energy's annual meeting of shareowners held on May 23,
2001, Jack B. Evans, Joyce L. Hanes, David A. Perdue and Judith
D. Pyle were elected as directors of Alliant Energy for terms
expiring in 2004. The following sets forth certain information
with respect to the election of these directors at the annual
meeting.
Name of Nominee Votes For Votes Withheld
- --------------- --------- --------------
Jack B. Evans 66,623,375 1,231,621
Joyce L. Hanes 66,508,598 1,346,398
David A. Perdue 66,537,899 1,317,097
Judith D. Pyle 66,553,302 1,301,694
The following table sets forth the other directors of Alliant
Energy whose terms of office continued after the 2001 annual
meeting.
Name of Director Year in Which Term Expires
- ---------------- --------------------------
Alan B. Arends 2002
Katharine C. Lyall 2002
Anthony R. Weiler 2002
Erroll B. Davis, Jr. 2003
Lee Liu 2003
Robert W. Schlutz 2003
Wayne H. Stoppelmoor 2003
Effective as of the date of the annual meeting, Rockne G. Flowers
and Milton E. Neshek both retired and Arnold M. Nemirow resigned
from the Alliant Energy board of directors.
41
WP&L
At WP&L's annual meeting of shareowners held on May 30, 2001,
Jack B. Evans, Joyce L. Hanes, David A. Perdue and Judith D. Pyle
were elected as directors of WP&L for terms expiring in 2004.
The following sets forth certain information with respect to the
election of these directors at the annual meeting.
Name of Nominee Votes For Votes Withheld
- --------------- --------- --------------
Jack B. Evans 13,594,143 3,402
Joyce L. Hanes 13,593,660 3,885
David A. Perdue 13,593,974 3,571
Judith D. Pyle 13,594,171 3,374
The following table sets forth the other directors of WP&L
whose terms of office continued after the 2001 annual meeting.
Name of Director Year in Which Term Expires
- ---------------- --------------------------
Alan B. Arends 2002
Katharine C. Lyall 2002
Anthony R. Weiler 2002
Erroll B. Davis, Jr. 2003
Lee Liu 2003
Robert W. Schlutz 2003
Wayne H. Stoppelmoor 2003
Effective as of the date of the annual meeting, Rockne G. Flowers
and Milton E. Neshek both retired and Arnold M. Nemirow resigned
from the WP&L board of directors.
IESU
At IESU's annual meeting of shareowners held on May 16, 2001,
Jack B. Evans, Joyce L. Hanes, David A. Perdue and Judith D. Pyle
were elected as directors of IESU for terms expiring in 2004.
Alliant Energy voted all of the outstanding shares of common
stock of IESU (consisting of 13,370,788 shares) in favor of the
election of the aforementioned individuals.
The following table sets forth the other directors of IESU whose
terms of office continued after the 2001 annual meeting.
Name of Director Year in Which Term Expires
- ---------------- --------------------------
Alan B. Arends 2002
Katharine C. Lyall 2002
Anthony R. Weiler 2002
Erroll B. Davis, Jr. 2003
Lee Liu 2003
Robert W. Schlutz 2003
Wayne H. Stoppelmoor 2003
Effective as of the date of the annual meeting, Rockne G. Flowers
and Milton E. Neshek both retired and Arnold M. Nemirow resigned
from the IESU board of directors.
42
A special meeting of shareowners of IESU was convened on April 3, 2001, was
adjourned, and reconvened on April 23, 2001. At the meeting, Alliant Energy
voted all of the outstanding shares of common stock of IESU (consisting of
13,370,788 shares) in favor of the following matters. In addition, the
following matters were submitted to a vote of preferred shareowners.
4.30% Series 4.80% Series 6.10% Series
------------------ ------------------- -------------------
Approval and adoption of the Agreement and Plan of Merger,
dated as of March 15, 2000, as amended, by and between IESU
and IPC
Votes for 112,058 74,882 69,558
Votes against 340 14,440 874
Votes abstain -- 1,702 177
Broker non-votes -- -- --
Approval and adoption of the amendment to IESU's Amended
and Restated Articles of Incorporation creating the
class of new IESU Class A preferred stock
Votes for 112,058 74,877 69,050
Votes against 340 14,328 1,524
Votes abstain -- 1,819 35
Broker non-votes -- -- --
Approval and adoption of the amendment to IESU's Amended
and Restated Articles of Incorporation changing IESU's
name to Interstate Power and Light Company upon the
effectiveness of the merger
Votes for 111,058 74,748 69,135
Votes against 1,340 14,442 874
Votes abstain -- 1,834 600
Broker non-votes -- -- --
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
---------
None.
(b) Reports on Form 8-K:
--------------------
Alliant Energy - None.
IESU - None.
WP&L - None.
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Alliant Energy Corporation, IES Utilities Inc. and
Wisconsin Power and Light Company have each duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized on the 10th day of August 2001.
ALLIANT ENERGY CORPORATION
- --------------------------
Registrant
By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer
- -------------------------
John E. Kratchmer (Principal Accounting Officer and Authorized Signatory)
IES UTILITIES INC.
- ------------------
Registrant
By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer
- -------------------------
John E. Kratchmer (Principal Accounting Officer and Authorized Signatory)
WISCONSIN POWER AND LIGHT COMPANY
- ---------------------------------
Registrant
By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer
- -------------------------
John E. Kratchmer (Principal Accounting Officer and Authorized Signatory)
44