UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO.1 TO
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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
- ----------- ----------------------------------------------------------- -----------------------
<s> <c>
1-9894 ALLIANT ENERGY CORPORATION 39-1380265
(a Wisconsin corporation)
222 West Washington Avenue
Madison, Wisconsin 53703
Telephone (608)252-3311
0-4117-1 INTERSTATE POWER AND LIGHT COMPANY 42-0331370
(an Iowa corporation)
Alliant Energy Tower
Cedar Rapids, Iowa 52401
Telephone (319)398-4411
IES Utilities Inc.
------------------
(Former name of Interstate Power and Light Company)
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/A is separately filed by Alliant Energy
Corporation, Interstate Power and Light Company and Wisconsin Power
and Light Company. Information contained in the quarterly report relating
to Interstate Power and Light Company and Wisconsin Power and Light Company is
filed by such registrant on its own behalf. Each of Interstate Power and
Light Company 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
April 30, 2001:
Alliant Energy Common stock, $.01 par value, 79,055,349
Corporation shares outstanding
Interstate Power Common stock, $2.50 par value, 13,370,788
and Light Company 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)
Alliant Energy's previously reported results for the three months ended
March 31, 2001 were based on the assumption that Southern Hydro's electricity
derivatives qualified for hedge accounting. Southern Hydro is a foreign
affiliate of Alliant Energy accounted for under the equity method of accounting.
Alliant Energy prepared its quarterly financial statements during 2001 based on
the independently prepared financial statements of Southern Hydro, which treated
these derivatives as qualifying for hedge accounting under SFAS 133. Upon a
further review of the accounting for such derivatives by Alliant Energy during
the fourth quarter, it was determined the derivatives did not qualify for hedge
accounting and that gains and losses attributable to changes in the fair value
of these derivatives should have been recognized in Alliant Energy's earnings in
the first three quarters of 2001. As required by U.S. generally accepted
accounting principles, all 2001 financial statements of Alliant Energy presented
herein have been restated to reflect this change. Alliant Energy's net income in
2000 and retained earnings as of January 1, 2000 were not impacted. The
undersigned registrants hereby amend Items 1, 2 and 3 of Part I of their
combined Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2001 to provide in their entirety as follows:
DEFINITIONS
Certain abbreviations or acronyms used in the text and notes of this combined Form 10-Q/A 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
IESU................................................ IES Utilities Inc.
IPC................................................. Interstate Power Company
IUB................................................. Iowa Utilities Board
Kewaunee............................................ Kewaunee Nuclear Power Plant
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
SFAS 133............................................ Accounting for Derivative Instruments and Hedging
Activities
South Beloit........................................ South Beloit Water, Gas & Electric Company
Southern Hydro...................................... Southern Hydro Partnership
Transportation...................................... Alliant Energy Transportation, Inc.
U.S. ............................................... United States
WP&L................................................ Wisconsin Power and Light Company
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31,
2001
Restated
(See Note 9) 2000
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
Operating revenues:
Electric utility $411,943 $373,622
Gas utility 289,818 130,134
Non-regulated and other 150,952 70,306
---------------------- -----------------------
852,713 574,062
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels 75,184 69,272
Purchased power 98,733 62,345
Cost of utility gas sold 238,258 82,113
Other operation and maintenance 238,196 169,678
Depreciation and amortization 84,622 75,911
Taxes other than income taxes 28,444 26,353
---------------------- -----------------------
763,437 485,672
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Operating income 89,276 88,390
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 49,744 40,618
Contingent interest on indexed senior notes - 39,493
Equity (income) loss from unconsolidated investments 7,073 (1,143)
Allowance for funds used during construction (2,302) (1,754)
Preferred dividend requirements of subsidiaries 1,680 1,678
Gain on sale of McLeodUSA Inc. stock - (10,206)
Miscellaneous, net (1,150) (12,054)
---------------------- -----------------------
55,045 56,632
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 34,231 31,758
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Income taxes 12,164 12,438
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of a change in
accounting principle, net of tax 22,067 19,320
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Cumulative effect of a change in accounting
principle, net of tax (12,868) -
---------------------- -----------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $9,199 $19,320
====================== =======================
- ---------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding (diluted) 79,198 79,271
====================== =======================
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings per average common share (basic and diluted):
Income before cumulative effect of a change
in accounting principle $0.28 $0.24
Cumulative effect of a change in accounting principle (0.16) -
---------------------- -----------------------
Net income $0.12 $0.24
====================== =======================
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends declared per common share $0.50 $0.50
====================== =======================
- ---------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3
ALLIANT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31,
2001
(Unaudited)
Restated December 31,
ASSETS (See Note 9) 2000
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $4,921,591 $5,203,069
Gas 576,863 574,390
Other 480,354 474,116
------------------ ------------------
5,978,808 6,251,575
Less - Accumulated depreciation 3,218,055 3,296,546
------------------ ------------------
2,760,753 2,955,029
Construction work in progress 141,829 130,856
Nuclear fuel, net of amortization 59,733 61,935
------------------ ------------------
2,962,315 3,147,820
Other property, plant and equipment, net of accumulated
depreciation and amortization of $219,707 and $209,072, respectively 600,500 571,487
------------------ ------------------
3,562,815 3,719,307
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 114,891 148,415
Accounts receivable:
Customer, less allowance for doubtful accounts
of $4,056 and $3,762, respectively 141,869 122,895
Unbilled utility revenues 87,775 124,515
Other, less allowance for doubtful accounts
of $678 and $484, respectively 121,210 45,829
Production fuel, at average cost 36,258 46,627
Materials and supplies, at average cost 56,273 55,930
Gas stored underground, at average cost 13,119 41,359
Regulatory assets 20,656 29,348
Prepaid gross receipts tax 17,316 23,088
Other 68,028 72,975
------------------ ------------------
677,395 710,981
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Investments:
Investment in available-for-sale securities of McLeodUSA Inc. 350,081 569,951
Investment in trading securities of McLeodUSA Inc. 135,861 220,912
Investments in unconsolidated foreign entities 545,290 507,655
Nuclear decommissioning trust funds 308,364 307,940
Other 241,063 132,203
------------------ ------------------
1,580,659 1,738,661
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 264,689 270,779
Deferred charges and other 282,487 294,038
------------------ ------------------
547,176 564,817
------------------ ------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $6,368,045 $6,733,766
================== ==================
- ----------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
4
ALLIANT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
March 31,
2001
(Unaudited)
Restated December 31,
CAPITALIZATION AND LIABILITIES (See Note 9) 2000
- -------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share amounts)
Capitalization:
Common stock - $0.01 par value - authorized 200,000,000 shares;
outstanding 79,055,349 and 79,010,114 shares, respectively $791 $790
Additional paid-in capital 950,554 947,504
Retained earnings 787,872 818,162
Accumulated other comprehensive income 100,722 271,867
Shares in deferred compensation trust - 64,589 and 28,825 shares,
respectively, at an average cost of $30.78 and $29.52 per share,
respectively (1,988) (851)
----------------------- -----------------------
Total common equity 1,837,951 2,037,472
----------------------- -----------------------
Cumulative preferred stock of subsidiaries, net 113,830 113,790
Long-term debt (excluding current portion) 2,233,430 1,910,116
----------------------- -----------------------
4,185,211 4,061,378
----------------------- -----------------------
- -------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds 91,400 92,477
Variable rate demand bonds 55,100 55,100
Commercial paper 164,610 283,885
Notes payable 86 50,067
Other short-term borrowings 56,954 110,783
Accounts payable 228,125 296,959
Accrued taxes 115,743 87,484
Other 188,063 177,580
----------------------- -----------------------
900,081 1,154,335
----------------------- -----------------------
- -------------------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 817,278 931,675
Accumulated deferred investment tax credits 63,004 67,364
Derivative liability 101,073 181,925
Pension and other benefit obligations 67,040 65,399
Environmental liabilities 63,327 64,532
Other 171,031 207,158
----------------------- -----------------------
1,282,753 1,518,053
----------------------- -----------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $6,368,045 $6,733,766
======================= =======================
- -------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31,
2001
Restated
(See Note 9) 2000
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $9,199 $19,320
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 84,622 75,911
Amortization of nuclear fuel 5,421 4,841
Amortization of deferred energy efficiency expenditures 7,952 7,280
Deferred tax benefits and investment tax credits (16,522) (20,075)
Gains on dispositions of assets, net (1,558) (10,644)
Equity (income) loss from unconsolidated investments, net 7,073 (1,143)
Contingent interest on indexed senior notes - 39,493
Cumulative effect of a change in accounting principle, net of tax 12,868 -
Other 5,224 (719)
Other changes in assets and liabilities:
Accounts receivable 11,839 16,488
Gas stored underground 28,240 17,218
Accounts payable (62,774) (23,874)
Accrued interest 7,753 13,987
Accrued taxes 28,259 26,366
Benefit obligations and other 32,140 21,270
--------------------- ---------------------
Net cash flows from operating activities 159,736 185,719
--------------------- ---------------------
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Common stock dividends declared (39,489) (39,498)
Net change in Resources' credit facility 97,500 (4,848)
Proceeds from issuance of exchangeable senior notes - 402,500
Proceeds from issuance of other long-term debt 201,140 108,457
Reductions in other long-term debt (546) (51,672)
Net change in other short-term borrowings (243,428) (119,032)
Other (5,794) (15,446)
--------------------- ---------------------
Net cash flows from financing activities 9,383 280,461
--------------------- ---------------------
----------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Construction and acquisition expenditures:
Utility (60,461) (60,447)
Non-regulated businesses and other (129,823) (457,213)
Nuclear decommissioning trust funds (15,437) (15,437)
Proceeds from dispositions of assets 8,365 11,054
Other (5,287) (10,306)
--------------------- ---------------------
Net cash flows used for investing activities (202,643) (532,349)
--------------------- ---------------------
----------------------------------------------------------------------------------------------------------------------------
Net decrease in cash and temporary cash investments (33,524) (66,169)
--------------------- ---------------------
- ----------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 148,415 113,669
--------------------- ---------------------
- ----------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $114,891 $47,500
===================== =====================
- ----------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the period for:
Interest $41,455 $25,795
===================== =====================
Income taxes $5,881 $3,092
===================== =====================
Noncash investing and financing activities:
Capital lease obligations incurred $3,220 $222
===================== =====================
- ----------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6
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 months ended March 31, 2001 and 2000, (b) the
consolidated financial position at March 31, 2001 and December
31, 2000, and (c) the consolidated statement of cash flows for
the three months ended March 31, 2001 and 2000, have been
made. Because of the seasonal nature of IESU's, WP&L's and
IPC's operations, results for the three months ended March 31,
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,
for the three months ended March 31 were as follows (in
thousands):
2001 2000
----------------------------
Net income $9,199 $19,320
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period, net of tax (1) (127,620) 284,458
Less: reclassification adjustment for gains included in net
income, net of tax (2) -- 6,328
------------- ------------
Net unrealized gains (losses) on securities (127,620) 278,130
------------- ------------
Foreign currency translation adjustments (47,592) 917
------------- ------------
Unrealized gains on derivatives qualified as hedges:
Unrealized holding gains arising during period, net of tax 270 --
Less: reclassification adjustment for losses included in net income,
net of tax (3,797) --
------------- ------------
Net unrealized gains on qualifying derivatives 4,067 --
------------- ------------
Other comprehensive income (loss) (171,145) 279,047
------------- ------------
Comprehensive income (loss) ($161,946) $298,367
============= ============
(1) Primarily due to quarterly adjustments to the estimated fair value of
Alliant Energy's investment in McLeod.
(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 held beneficial
ownership in approximately 56 million shares of McLeod stock as of March
31, 2001.
7
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 10 due to Alliant
Energy's investment in Cargill-Alliant being recorded on Alliant Energy's
parent's 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 Alliant
--------------------------------------------- Non-regulated Energy
Electric Gas Other Total Businesses Other Consolidated
--------------------------------------------------------------------------------------
(in thousands)
Three Months Ended
March 31, 2001
--------------
Operating revenues $411,943 $289,818 $10,796 $712,557 $140,912 ($756) $852,713
Operating income 56,574 19,481 892 76,947 11,880 449 89,276
Income (loss) before cumulative
effect of a change in accounting
principle, net of tax 33,328 33,328 (10,137) (1,124) 22,067
Cumulative effect of a change in
accounting principle, net of tax -- -- (12,868) -- (12,868)
Net income (loss) 33,328 33,328 (23,005) (1,124) 9,199
Three Months Ended
March 31, 2000
--------------
Operating revenues $373,622 $130,134 $8,157 $511,913 $62,675 ($526) $574,062
Operating income (loss) 63,839 18,850 1,780 84,469 3,943 (22) 88,390
Net income (loss) 39,067 39,067 (16,112) (3,635) 19,320
Resources' (i.e., the non-regulated businesses) assets decreased $320
million during the first three months of 2001, primarily due to the
decrease in market value of its investment in McLeod. The non-regulated
net loss for the three months ended March 31, 2001 included an after-tax
non-cash SFAS 133 valuation charge of $24 million relating to Resources'
equity method investment in Southern Hydro. Refer to Notes 6 and 9 for
additional information on Southern Hydro. The non-regulated net loss for
the three months ended March 31, 2000 included a $24.8 million after-tax
non-cash charge to net income to recognize an increase in Alliant Energy's
obligation relating to its 30-year exchangeable senior notes issued in
February 2000 (the charge was subsequently reversed in its entirety in the
second quarter of 2000).
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.
5. In January 2001, Resources acquired a stake in a Brazilian
electric utility. As of March 31, 2001, the total investment
in this Brazilian electric utility was approximately $100
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.
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. WP&L currently
expects to receive cash of $69 million in 2001 and at March
31, 2001, had a $102 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.
8
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 three months ended March 31, 2001, there was no
material earnings impact representing the amount of hedge
ineffectiveness in accordance with SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities." Alliant
Energy did not exclude any components of the derivative
instruments' gain or loss from the assessment of hedge
effectiveness and there were no reclasses into earnings as a
result of the discontinuance of hedges. As of March 31, 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 18 months and Alliant Energy
estimates that gains of $0.4 million will be reclassified from
accumulated other comprehensive income into earnings within
the twelve months between April 1, 2001 and March 31, 2002 as
the hedged transactions affect earnings.
Included in "Miscellaneous, net" in Alliant Energy's
Consolidated Statements of Income for the three months ended
March 31, 2001 was expense of $85.1 million related to the
change in value of the McLeod trading securities, partially
offset by income of $80.9 million related to the change in
value of the derivative component of the exchangeable senior
notes.
Southern Hydro, a foreign affiliate of Alliant Energy accounted for under
the equity method of accounting, enters into electricity derivative
contracts which have not been designated in hedge relationships,
in order to manage the electricity commodity price risk
associated with anticipated sales into the spot market. Beginning in
2001, these instruments were recorded at their fair value as a component of
"Investments in unconsolidated foreign entities" on the Consolidated
Balance Sheets and changes in fair value were recorded as a component of
"Equity (income) loss from unconsolidated investments" in the Consolidated
Statements of Income.
7. In March 2001, IESU issued $200 million of senior unsecured
debentures at a fixed interest rate of 6-3/4%, due 2011. A
portion of the net proceeds were used to repay short-term
debt and a portion will be used to refinance $81.6 million of
long-term debt maturing in 2001.
8. A reconciliation of the weighted average common shares
outstanding used in the basic and diluted earnings per share
calculation for the three months ended March 31 was as
follows:
2001 2000
---------------- ----------------
Weighted average common shares outstanding:
Basic earnings per share calculation 79,027,898 78,996,158
Effect of dilutive securities 170,384 275,217
---------------- ----------------
Diluted earnings per share calculation 79,198,282 79,271,375
================ ================
For the three months ended March 31, 2001 and 2000, 1,068,128
and 1,380,598 options, respectively, to purchase shares of
common stock, with an average exercise price of $31.55 and
$30.48, respectively, were excluded from the calculation of
diluted earnings per share as the exercise prices were greater
than the average market price.
9. Southern Hydro owns and operates hydroelectric generation facilities in
the state of Victoria in Australia. These generation facilities operate as
peaking units. Under the rules of the Australian market, Southern Hydro
must sell all of its production into a spot market in which the price
changes every five minutes and is set on the average of each half hour.
Electricity prices in this market can and have been very volatile. In
order to manage the electricity commodity price risk associated with
anticipated sales into the spot market, Southern Hydro has entered into a
variety of electricity derivative contracts with terms
of up to five years. The value of these derivative instruments
can change significantly as a result of changes in forward electricity
9
prices. These instruments do not qualify for hedge accounting under SFAS
133. Accordingly, per U.S. generally accepted accounting principles,
changes in the fair value of these derivatives, which are
non-cash valuation adjustments, must be reported in Southern Hydro's
earnings. Alliant Energy's share of the cumulative effect of Southern
Hydro's adoption of SFAS 133 at January 1, 2001 was a charge of $12.9
million. Alliant Energy's share of the change in fair value of these
instruments reduced net income by $11.3 million for the quarter ended March
31, 2001 and has been reflected in the Consolidated Statements of Income as
a $17.4 million reduction in "Equity (income) loss from unconsolidated
investments" and a $6.1 million reduction in "Income taxes."
Alliant Energy's previously reported results for the three months ended
March 31, 2001 were based on the assumption that Southern Hydro's
electricity derivatives qualified for hedge accounting. Alliant Energy
prepared its quarterly financial statements during 2001 based on the
independently prepared financial statements of Southern Hydro, which
treated these derivatives as qualifying for hedge accounting under SFAS
133. Upon a further review of the accounting for such derivatives by
Alliant Energy during the fourth quarter, it was determined the
derivatives did not qualify for hedge accounting and that gains and losses
attributable to changes in the fair value of these derivatives should have
been recognized in Alliant Energy's earnings in the first three quarters
of 2001. As required by U.S. generally accepted accounting principles,
all 2001 financial statements of Alliant Energy presented herein have been
restated to reflect this change. Alliant Energy's net income in 2000 and
retained earnings as of January 1, 2000 were not impacted. Details
regarding the changes for Alliant Energy were as follows (dollars in
thousands):
For the Three Months
Ended March 31, 2001
----------------------------------
As Originally
Reported Restated
---------------- -----------------
Consolidated Statement of Income
- --------------------------------
Interest expense and other:
Equity (income) loss from unconsolidated investments ($10,339) $7,073
Total interest expense and other 37,633 55,045
Income before income taxes 51,643 34,231
Income taxes 18,258 12,164
Income before cumulative effect of a change in accounting
principle, net of tax 33,385 22,067
Cumulative effect of a change in accounting principle, net of tax -- (12,868)
Net income 33,385 9,199
Earnings per average common share (basic and diluted):
Income before cumulative effect of a change
in accounting principle $0.42 $0.28
Cumulative effect of a change in accounting principle -- ($0.16)
Net income $0.42 $0.12
10
March 31, 2001
----------------------------------
As Originally
Reported Restated
----------------- ----------------
Consolidated Balance Sheet
- --------------------------
ASSETS
Investments:
Investments in unconsolidated foreign entities $577,961 $545,290
Total investments 1,613,330 1,580,659
Total assets 6,400,716 6,368,045
CAPITALIZATION AND LIABILITIES
Capitalization:
Retained earnings 812,058 787,872
Accumulated other comprehensive income 98,571 100,722
Total common equity 1,859,986 1,837,951
Total capitalization 4,207,246 4,185,211
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 827,914 817,278
Total other long-term liabilities and deferred credits 1,293,389 1,282,753
Total capitalization and liabilities 6,400,716 6,368,045
For the Three Months
Ended March 31, 2001
----------------------------------
As Originally
Reported Restated
----------------- ----------------
Consolidated Statement of Cash Flows
- ------------------------------------
Cash flows from operating activities:
Net income $33,385 $9,199
Adjustments to reconcile net income to net cash flows
from operating activities:
Deferred tax benefits and investment tax credits (10,428) (16,522)
Equity (income) loss from unconsolidated investments, net (10,339) 7,073
Cumulative effect of a change in accounting principle,
net of tax -- 12,868
10. Alliant Energy has fully and unconditionally guaranteed the
payment of principal and interest on various debt issued by
Resources and, as a result, is required to present condensed
consolidating financial statements. All other Alliant Energy
subsidiaries are non-guarantors of Resources' debt issuances.
Alliant Energy's condensed consolidating financial statements
are as follows:
11
Alliant Energy Corporation
Condensed Consolidating Statement of Income
Three Months Ended March 31, 2001
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
--------------------------------------------------------------------------------
Operating revenues:
Electric utility $-- $-- $411,943 $-- $411,943
Gas utility -- -- 289,818 -- 289,818
Non-regulated and other -- 140,912 65,904 (55,864) 150,952
-------------------------------------------------------------------------------
-- 140,912 767,665 (55,864) 852,713
-------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels -- -- 75,184 -- 75,184
Purchased power -- -- 98,733 -- 98,733
Cost of utility gas sold -- -- 238,258 -- 238,258
Other operation and maintenance -- 109,311 182,868 (53,983) 238,196
Depreciation and amortization -- 15,168 69,454 -- 84,622
Taxes other than income taxes -- 4,553 25,832 (1,941) 28,444
-------------------------------------------------------------------------------
-- 129,032 690,329 (55,924) 763,437
-------------------------------------------------------------------------------
Operating income -- 11,880 77,336 60 89,276
-------------------------------------------------------------------------------
Interest expense and other:
Interest expense 5,018 18,177 31,401 (4,852) 49,744
Equity (income) loss in unconsolidated subsidiaries (3,003) 15,015 (4,939) -- 7,073
Allowance for funds used during construction -- -- (2,302) -- (2,302)
Preferred dividend requirements of subsidiaries -- -- 1,680 -- 1,680
Miscellaneous, net (11,127) 732 (4,009) 13,254 (1,150)
-------------------------------------------------------------------------------
(9,112) 33,924 21,831 8,402 55,045
-------------------------------------------------------------------------------
Income (loss) before income taxes 9,112 (22,044) 55,505 (8,342) 34,231
-------------------------------------------------------------------------------
Income tax expense (benefit) (87) (9,955) 22,147 59 12,164
-------------------------------------------------------------------------------
Income (loss) before cumulative effect of a change
in accounting principle, net of tax 9,199 (12,089) 33,358 (8,401) 22,067
-------------------------------------------------------------------------------
Cumulative effect of a change in accounting
principle, net of tax -- (12,868) -- -- (12,868)
-------------------------------------------------------------------------------
Net income (loss) $9,199 ($24,957) $33,358 ($8,401) $9,199
===============================================================================
12
Alliant Energy Corporation
Condensed Consolidating Statement of Income
Three Months Ended March 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-----------------------------------------------------------------------------------
Operating revenues:
Electric utility $-- $-- $373,622 $-- $373,622
Gas utility -- -- 130,134 -- 130,134
Non-regulated and other -- 62,676 54,495 (46,865) 70,306
-----------------------------------------------------------------------------------
-- 62,676 558,251 (46,865) 574,062
-----------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels -- -- 69,272 -- 69,272
Purchased power -- -- 62,345 -- 62,345
Cost of utility gas sold -- -- 82,113 -- 82,113
Other operation and maintenance 62 47,421 167,041 (44,846) 169,678
Depreciation and amortization -- 7,998 67,913 -- 75,911
Taxes other than income taxes -- 3,314 24,984 (1,945) 26,353
-----------------------------------------------------------------------------------
62 58,733 473,668 (46,791) 485,672
-----------------------------------------------------------------------------------
Operating income (loss) (62) 3,943 84,583 (74) 88,390
-----------------------------------------------------------------------------------
Interest expense and other:
Interest expense 3,627 11,364 30,176 (4,549) 40,618
Contingent interest on indexed senior notes -- 39,493 -- -- 39,493
Equity income in unconsolidated subsidiaries (148) (903) (92) -- (1,143)
Allowance for funds used during construction -- -- (1,754) -- (1,754)
Preferred dividend requirements of subsidiaries -- -- 1,678 -- 1,678
Gain on sale of McLeodUSA Inc. stock -- (10,206) -- -- (10,206)
Miscellaneous, net (25,246) (3,449) (10,767) 27,408 (12,054)
-----------------------------------------------------------------------------------
(21,767) 36,299 19,241 22,859 56,632
-----------------------------------------------------------------------------------
Income (loss) before income taxes 21,705 (32,356) 65,342 (22,933) 31,758
-----------------------------------------------------------------------------------
Income tax expense (benefit) 2,385 (16,148) 26,275 (74) 12,438
-----------------------------------------------------------------------------------
Net income (loss) $19,320 ($16,208) $39,067 ($22,859) $19,320
===================================================================================
13
Alliant Energy Corporation
Condensed Consolidating Balance Sheet
As of March 31, 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 $-- $-- $4,921,591 $-- $4,921,591
Other -- -- 1,057,217 -- 1,057,217
--------------------------------------------------------------------------------
-- -- 5,978,808 -- 5,978,808
Less - Accumulated depreciation -- -- 3,218,055 -- 3,218,055
Construction work in progress -- -- 141,829 -- 141,829
Nuclear fuel, net of amortization -- -- 59,733 -- 59,733
Other property, plant and equipment, net -- 576,388 24,223 (111) 600,500
--------------------------------------------------------------------------------
-- 576,388 2,986,538 (111) 3,562,815
--------------------------------------------------------------------------------
Current assets:
Accounts receivable, net 2,406 103,977 313,514 (69,043) 350,854
Production fuel, at average cost -- 575 35,683 -- 36,258
Materials and supplies, at average cost -- 2,041 54,232 -- 56,273
Gas stored underground, at average cost -- 1,276 11,843 -- 13,119
Regulatory assets -- -- 20,656 -- 20,656
Prepaid gross receipt tax -- -- 17,316 -- 17,316
Other 36,056 110,021 151,720 (114,878) 182,919
--------------------------------------------------------------------------------
38,462 217,890 604,964 (183,921) 677,395
--------------------------------------------------------------------------------
Investments:
Consolidated subsidiaries 1,857,466 -- -- (1,857,466) --
Investment in available-for-sale securities of
McLeodUSA Inc. -- 350,081 -- -- 350,081
Investment in trading securities of McLeodUSA Inc. -- 135,861 -- -- 135,861
Other 33,668 621,661 439,388 -- 1,094,717
--------------------------------------------------------------------------------
1,891,134 1,107,603 439,388 (1,857,466) 1,580,659
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Deferred charges and other -- 90,837 456,339 -- 547,176
--------------------------------------------------------------------------------
Total assets $1,929,596 $1,992,718 $4,487,229 ($2,041,498) $6,368,045
================================================================================
14
Alliant Energy Corporation
Condensed Consolidating Balance Sheet (Continued)
As of March 31, 2001
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
-------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital $951,345 $232,743 $753,458 ($986,201) $951,345
Retained earnings 787,976 149,055 722,211 (871,370) 787,872
Accumulated other comprehensive income -- 100,685 37 -- 100,722
Shares in deferred compensation trust (1,988) -- -- -- (1,988)
-------------------------------------------------------------------------------
Total common equity 1,737,333 482,483 1,475,706 (1,857,571) 1,837,951
-------------------------------------------------------------------------------
Cumulative preferred stock of subsidiaries, net -- -- 113,830 -- 113,830
Long-term debt (excluding current portion) 24,000 854,922 1,354,508 -- 2,233,430
-------------------------------------------------------------------------------
1,761,333 1,337,405 2,944,044 (1,857,571) 4,185,211
-------------------------------------------------------------------------------
Current liabilities:
Commercial paper 164,610 -- -- -- 164,610
Notes payable -- 86 -- -- 86
Other short-term borrowings -- 56,954 -- -- 56,954
Accrued taxes -- 19,997 95,746 -- 115,743
Other 1,835 108,781 635,993 (183,921) 562,688
-------------------------------------------------------------------------------
166,445 185,818 731,739 (183,921) 900,081
-------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes (6,563) 312,151 511,690 -- 817,278
Derivative liability -- 101,073 -- -- 101,073
Other 8,381 56,271 299,756 (6) 364,402
-------------------------------------------------------------------------------
1,818 469,495 811,446 (6) 1,282,753
-------------------------------------------------------------------------------
Total capitalization and liabilities $1,929,596 $1,992,718 $4,487,229 ($2,041,498) $6,368,045
===============================================================================
15
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:
Accounts receivable, net 224 98,932 194,083 -- 293,239
Production fuel, at average cost -- 1,379 45,248 -- 46,627
Materials and supplies, at average cost -- 2,086 53,844 -- 55,930
Gas stored underground, at average cost -- 2,983 38,376 -- 41,359
Regulatory assets -- -- 29,348 -- 29,348
Prepaid gross receipt tax -- -- 23,088 -- 23,088
Other 223,933 178,461 131,641 (312,645) 221,390
------------------------------------------------------------------------------
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
==============================================================================
16
Alliant Energy Corporation
Condensed Consolidating Balance Sheet (Continued)
As of December 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
--------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital $948,294 $232,684 $753,392 ($986,076) $948,294
Retained earnings 818,266 174,012 724,889 (899,005) 818,162
Accumulated other comprehensive income -- 276,591 (4,724) -- 271,867
Shares in deferred compensation trust (851) -- -- -- (851)
--------------------------------------------------------------------------------
Total common equity 1,765,709 683,287 1,473,557 (1,885,081) 2,037,472
--------------------------------------------------------------------------------
Cumulative preferred stock of subsidiaries, net -- -- 113,790 -- 113,790
Long-term debt (excluding current portion) 24,000 731,736 1,154,380 -- 1,910,116
--------------------------------------------------------------------------------
1,789,709 1,415,023 2,741,727 (1,885,081) 4,061,378
--------------------------------------------------------------------------------
Current liabilities:
Commercial paper 283,885 -- -- -- 283,885
Notes payable 50,000 67 -- -- 50,067
Other short-term borrowings -- 110,783 -- -- 110,783
Accrued taxes -- 21,916 65,568 -- 87,484
Other 13,681 113,639 807,441 (312,645) 622,116
--------------------------------------------------------------------------------
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
================================================================================
17
Alliant Energy Corporation
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2001
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
--------------------------------------------------------------------
Net cash flows from (used for) operating activities $20,926 $26,796 $146,371 ($34,357) $159,736
--------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (39,489) -- (36,037) 36,037 (39,489)
Net change in Resources' credit facility -- 97,500 -- -- 97,500
Proceeds from issuance of other long-term debt -- 1,140 200,000 -- 201,140
Net change in other short-term borrowings 34,068 (74,153) (100,687) (102,656) (243,428)
Other 680 (540) (8,035) 1,555 (6,340)
--------------------------------------------------------------------
Net cash flows from (used for) financing activities (4,741) 23,947 55,241 (65,064) 9,383
--------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility -- -- (60,461) -- (60,461)
Non-regulated businesses and other -- (123,121) (6,702) -- (129,823)
Other 3,309 9,691 (22,034) (3,325) (12,359)
--------------------------------------------------------------------
Net cash flows from (used for) investing activities 3,309 (113,430) (89,197) (3,325) (202,643)
--------------------------------------------------------------------
Net increase (decrease) in cash and temporary
cash investments 19,494 (62,687) 112,415 (102,746) (33,524)
--------------------------------------------------------------------
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 $20,068 $71,270 $126,299 ($102,746) $114,891
====================================================================
Supplemental cash flow information:
Cash paid during the period for:
Interest $4,783 $13,689 $22,983 $-- $41,455
====================================================================
Income taxes $1,000 $439 $4,442 $-- $5,881
====================================================================
Noncash investing and financing activities:
Capital lease obligations incurred $-- $-- $3,220 $-- $3,220
====================================================================
18
Alliant Energy Corporation
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2000
(in thousands)
Alliant Other
Energy Alliant Consolidated
Parent Energy Consolidating Alliant
Company Resources Subsidiaries Adjustments Energy
------------------------------------------------------------------------
Net cash flows from (used for) operating activities $21,411 $1,840 $186,970 ($24,502) $185,719
------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (39,498) -- (20,085) 20,085 (39,498)
Proceeds from issuance of exchangeable senior notes -- 402,500 -- -- 402,500
Proceeds from issuance of other long-term debt -- 8,457 100,000 -- 108,457
Reductions in other long-term debt -- (672) (51,000) -- (51,672)
Net change in other short-term borrowings (4,928) 10 (114,079) (35) (119,032)
Other 474 (17,569) (4,692) 1,493 (20,294)
------------------------------------------------------------------------
Net cash flows from (used for) financing activities (43,952) 392,726 (89,856) 21,543 280,461
------------------------------------------------------------------------
Cash flows from (used for) investing activities:
Construction and acquisition expenditures:
Utility -- -- (60,447) -- (60,447)
Non-regulated businesses and other -- (455,553) (1,660) -- (457,213)
Other (2,975) 8,400 (23,073) 2,959 (14,689)
------------------------------------------------------------------------
Net cash flows from (used for) investing activities (2,975) (447,153) (85,180) 2,959 (532,349)
------------------------------------------------------------------------
Net increase (decrease) in cash and temporary
cash investments (25,516) (52,587) 11,934 -- (66,169)
------------------------------------------------------------------------
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 $3,131 $12,499 $31,870 $-- $47,500
========================================================================
Supplemental cash flow information:
Cash paid during the period for:
Interest $3,262 $1,720 $20,813 $-- $25,795
========================================================================
Income taxes $1,014 $204 $1,874 $-- $3,092
========================================================================
Noncash investing and financing activities:
Capital lease obligations incurred $-- $-- $222 $-- $222
========================================================================
19
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31,
2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating revenues:
Electric utility $155,131 $145,708
Gas utility 127,196 59,429
Steam and other 9,643 6,987
------------------------ ------------------------
291,970 212,124
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric and steam production fuels 26,752 32,639
Purchased power 32,826 13,422
Cost of gas sold 103,503 38,074
Other operation and maintenance 59,623 53,766
Depreciation and amortization 27,526 26,850
Taxes other than income taxes 10,956 11,875
----------------------- ------------------------
261,186 176,626
----------------------- ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income 30,784 35,498
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 13,101 13,011
Allowance for funds used during construction (989) (490)
Miscellaneous, net (2,052) (4,750)
------------------------ ------------------------
10,060 7,771
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 20,724 27,727
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Income taxes 8,031 11,616
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 12,693 16,111
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 229 229
------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings available for common stock $12,464 $15,882
======================== ========================
- ----------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
20
IES UTILITIES INC.
CONSOLIDATED BALANCE SHEETS
March 31,
2001 December 31,
ASSETS (Unaudited) 2000
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $2,264,230 $2,253,695
Gas 222,891 221,949
Steam 59,554 59,416
Common 147,640 146,536
------------------- -------------------
2,694,315 2,681,596
Less - Accumulated depreciation 1,419,838 1,392,766
------------------- -------------------
1,274,477 1,288,830
Construction work in progress 67,218 58,352
Leased nuclear fuel, net of amortization 45,057 45,836
------------------- -------------------
1,386,752 1,393,018
Other property, plant and equipment, net of accumulated
depreciation and amortization of $2,321 and $2,239, respectively 6,107 6,189
------------------- -------------------
1,392,859 1,399,207
------------------- -------------------
- --------------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 10,400 6,755
Temporary cash investments with associated companies 102,746 -
Accounts receivable:
Customer, less allowance for doubtful accounts
of $665 and $587, respectively 54,296 54,660
Associated companies 2,454 2,696
Other, less allowance for doubtful accounts
of $563 and $373, respectively 7,649 17,329
Production fuel, at average cost 10,720 11,088
Materials and supplies, at average cost 26,763 26,232
Gas stored underground, at average cost 3,230 19,290
Adjustment clause balances 10,808 14,776
Regulatory assets 9,951 14,839
Prepayments and other 3,559 3,442
------------------- -------------------
242,576 171,107
------------------- -------------------
- --------------------------------------------------------------------------------------------------------------------------------
Investments:
Nuclear decommissioning trust funds 112,697 112,172
Other 6,276 6,276
------------------- -------------------
118,973 118,448
------------------- -------------------
- --------------------------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 116,382 117,574
Deferred charges and other 15,193 12,970
------------------- -------------------
131,575 130,544
------------------- -------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $1,885,983 $1,819,306
=================== ===================
- --------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
21
IES UTILITIES INC.
CONSOLIDATED BALANCE SHEETS (Continued)
March 31,
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 265,634 267,829
Accumulated other comprehensive loss - (18)
-------------------- --------------------
Total common equity 578,103 580,280
-------------------- --------------------
Cumulative preferred stock 18,320 18,320
Long-term debt (excluding current portion) 669,838 469,771
-------------------- --------------------
1,266,261 1,068,371
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Current maturities and sinking funds 81,560 81,560
Capital lease obligations 14,753 12,651
Notes payable to associated companies - 101,095
Accounts payable 41,700 65,898
Accounts payable to associated companies 18,917 30,375
Accrued interest 13,686 10,843
Accrued taxes 67,687 48,069
Other 50,413 28,921
-------------------- --------------------
288,716 379,412
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 213,138 224,164
Accumulated deferred investment tax credits 24,259 25,063
Environmental liabilities 28,310 29,521
Pension and other benefit obligations 25,909 26,884
Capital lease obligations 30,304 33,185
Other 9,086 32,706
-------------------- --------------------
331,006 371,523
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $1,885,983 $1,819,306
==================== ====================
- ---------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
22
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31,
2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $12,693 $16,111
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 27,526 26,850
Amortization of leased nuclear fuel 3,998 3,357
Amortization of deferred energy efficiency expenditures 5,045 4,402
Deferred taxes and investment tax credits (5,894) (258)
Refueling outage provision 1,245 2,421
Other 366 147
Other changes in assets and liabilities:
Accounts receivable 10,286 9,599
Gas stored underground 16,060 9,611
Accounts payable (32,519) (21,189)
Accrued taxes 19,618 9,223
Adjustment clause balances 3,968 7,515
Benefit obligations and other (7,009) 9,053
--------------------- ---------------------
Net cash flows from operating activities 55,383 76,842
--------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from (used for) financing activities:
Common stock dividends declared (14,659) (14,658)
Preferred stock dividends (229) (229)
Proceeds from issuance of long-term debt 200,000 -
Reductions in long-term debt - (51,000)
Net change in short-term borrowings (101,095) 15,824
Principal payments under capital lease obligations (4,226) (1,882)
Other (2,235) -
--------------------- ---------------------
Net cash flows from (used for) financing activities 77,556 (51,945)
--------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Utility construction expenditures (21,809) (24,241)
Nuclear decommissioning trust funds (1,502) (1,502)
Other (3,237) (114)
--------------------- ---------------------
Net cash flows used for investing activities (26,548) (25,857)
--------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and temporary cash investments 106,391 (960)
--------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 6,755 5,720
--------------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $113,146 $4,760
===================== =====================
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid (refunded) during the period for:
Interest $8,768 $10,496
===================== =====================
Income taxes $ - ($528)
===================== =====================
Noncash investing and financing activities - Capital lease obligations incurred $3,220 $222
===================== =====================
- ---------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
23
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 months ended March 31, 2001 and 2000, (b) the
consolidated financial position at March 31, 2001 and December
31, 2000, and (c) the consolidated statement of cash flows for
the three months ended March 31, 2001 and 2000, have been
made. Because of the seasonal nature of IESU's operations,
results for the three months ended March 31, 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. IESU's comprehensive income, and the components of other
comprehensive income, net of taxes, for the three months ended
March 31 were as follows (in thousands):
2001 2000
------------ ------------
Earnings available for common stock $12,464 $15,882
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 $12,482 $15,882
============ ============
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 March 31, 2001
---------------------------------
Operating revenues $155,131 $127,196 $9,643 $291,970
Operating income 20,104 9,973 707 30,784
Earnings available for common stock 12,464 12,464
Three Months Ended March 31, 2000
---------------------------------
Operating revenues $145,708 $59,429 $6,987 $212,124
Operating income 26,685 7,413 1,400 35,498
Earnings available for common stock 15,882 15,882
4. The merger of IPC with and into IESU was approved by their respective
shareowners in April 2001 and by the SEC in October 2001. The merger was
effective January 1, 2002 and IESU changed its name to Interstate Power and
Light Company.
24
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended March 31,
2001 2000
- ------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating revenues:
Electric utility $190,391 $162,376
Gas utility 125,632 55,286
Water 1,153 1,170
------------------------ -------------------------
317,176 218,832
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Electric production fuels 35,072 23,798
Purchased power 52,370 33,757
Cost of gas sold 106,252 35,329
Other operation and maintenance 45,635 45,865
Depreciation and amortization 32,565 32,377
Taxes other than income taxes 8,306 7,211
------------------------ -------------------------
280,200 178,337
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Operating income 36,976 40,495
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Interest expense and other:
Interest expense 11,196 10,908
Equity income from unconsolidated investments (4,850) (92)
Allowance for funds used during construction (1,117) (1,062)
Miscellaneous, net 481 (3,987)
------------------------ -------------------------
5,710 5,767
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 31,266 34,728
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Income taxes 12,000 12,857
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Net income 19,266 21,871
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Preferred dividend requirements 828 828
------------------------ -------------------------
- ------------------------------------------------------------------------------------------------------------------------
Earnings available for common stock $18,438 $21,043
======================== =========================
- ------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
25
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
March 31,
2001 December 31,
ASSETS (Unaudited) 2000
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Property, plant and equipment:
Utility -
Plant in service -
Electric $1,710,515 $2,007,974
Gas 274,816 273,457
Water 29,881 29,869
Common 228,325 223,921
-------------------- --------------------
2,243,537 2,535,221
Less - Accumulated depreciation 1,266,055 1,380,723
-------------------- --------------------
977,482 1,154,498
Construction work in progress 57,476 59,133
Nuclear fuel, net of amortization 14,676 16,099
-------------------- --------------------
1,049,634 1,229,730
Other property, plant and equipment, net of accumulated
depreciation and amortization of $195 for both periods 376 369
-------------------- --------------------
1,050,010 1,230,099
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary cash investments 7,807 2,584
Accounts receivable:
Customer 45,689 51,769
Associated companies 1,256 2,211
Other 85,439 13,865
Production fuel, at average cost 11,531 17,811
Materials and supplies, at average cost 21,212 21,639
Gas stored underground, at average cost 6,621 13,876
Prepaid gross receipts tax 17,316 23,088
Other 6,245 6,397
-------------------- --------------------
203,116 153,240
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Investments:
Nuclear decommissioning trust funds 195,667 195,768
Other 115,753 14,362
-------------------- --------------------
311,420 210,130
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Other assets:
Regulatory assets 84,208 88,721
Deferred charges and other 173,329 174,834
-------------------- --------------------
257,537 263,555
-------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $1,822,083 $1,857,024
==================== ====================
- ---------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
26
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS (Continued)
March 31,
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 374,087 371,602
Accumulated other comprehensive income (loss) 37 (4,708)
-------------------- --------------------
Total common equity 669,904 662,593
-------------------- --------------------
Cumulative preferred stock 59,963 59,963
Long-term debt (excluding current portion) 514,248 514,209
-------------------- --------------------
1,244,115 1,236,765
-------------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Variable rate demand bonds 55,100 55,100
Notes payable to associated companies 34,849 29,244
Accounts payable 85,169 120,155
Accounts payable to associated companies 31,467 32,442
Accrued taxes 13,736 3,281
Other 24,759 32,985
-------------------- --------------------
245,080 273,207
-------------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------------
Other long-term liabilities and deferred credits:
Accumulated deferred income taxes 220,364 222,819
Accumulated deferred investment tax credits 26,174 29,472
Customer advances 34,134 34,815
Environmental liabilities 7,609 7,564
Other 44,607 52,382
-------------------- --------------------
332,888 347,052
-------------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total capitalization and liabilities $1,822,083 $1,857,024
==================== ====================
- -------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
27
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31,
2001 2000
- ------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net income $19,266 $21,871
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 32,565 32,377
Amortization of nuclear fuel 1,423 1,484
Deferred taxes and investment tax credits (4,626) (3,224)
Equity income from unconsolidated investments, net (4,850) (92)
Other (2,373) (2,762)
Other changes in assets and liabilities:
Accounts receivable 4,914 10,740
Production fuel 6,280 3,731
Gas stored underground 7,255 5,541
Prepaid gross receipts tax 5,772 5,216
Accounts payable (34,660) (6,365)
Accrued taxes 10,455 13,838
Benefit obligations and other 18,244 13,156
------------------------ ------------------------
Net cash flows from operating activities 59,665 95,511
------------------------ ------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows used for financing activities:
Common stock dividends (15,953) -
Preferred stock dividends (828) (828)
Proceeds from issuance of long-term debt - 100,000
Net change in short-term borrowings 5,605 (125,116)
Other 82 (1,320)
------------------------ ------------------------
Net cash flows used for financing activities (11,094) (27,264)
------------------------ ------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows used for investing activities:
Utility construction expenditures (28,379) (26,950)
Nuclear decommissioning trust funds (13,935) (13,935)
Other (1,034) (6,927)
------------------------ ------------------------
Net cash flows used for investing activities (43,348) (47,812)
------------------------ ------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and temporary cash investments 5,223 20,435
------------------------ ------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of period 2,584 3,555
------------------------ ------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at end of period $7,807 $23,990
======================== ========================
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Cash paid during the period for:
Interest $11,662 $7,949
======================== ========================
Income taxes $3,984 $2,227
======================== ========================
- ------------------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
28
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, 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 months ended March 31, 2001 and 2000, (b) the
consolidated financial position at March 31, 2001 and December
31, 2000, and (c) the consolidated statement of cash flows for
the three months ended March 31, 2001 and 2000, have been
made. Because of the seasonal nature of WP&L's operations,
results for the three months ended March 31, 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. WP&L's comprehensive income, and the components of other
comprehensive income, net of taxes, for the three months ended
March 31 were as follows (in thousands):
2001 2000
------------ ------------
Earnings available for common stock $18,438 $21,043
Other comprehensive income:
Unrealized gains on derivatives qualified as hedges:
Unrealized holding gains arising during period, net of tax 964 --
Less: reclassification adjustment for losses included in
earnings available for common stock, net of tax (3,781) --
------------ ------------
Net unrealized gains on qualifying derivatives 4,745 --
------------ ------------
Other comprehensive income 4,745 --
------------ ------------
Comprehensive income $23,183 $21,043
============ ============
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 March 31, 2001
---------------------------------
Operating revenues $190,391 $125,632 $1,153 $317,176
Operating income 30,671 6,120 185 36,976
Earnings available for common stock 18,438 18,438
Three Months Ended March 31, 2000
---------------------------------
Operating revenues $162,376 $55,286 $1,170 $218,832
Operating income 31,059 9,056 380 40,495
Earnings available for common stock 21,043 21,043
29
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: 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; further delays in
the implementation of tariff adjustments impacting Alliant Energy's Brazilian
operations; technological developments; employee workforce factors, including
changes in key executives, collective bargaining agreements or work stoppages;
political, legal, economic and exchange rate conditions in foreign countries
Alliant Energy has investments in; and changes in the rate of inflation.
UTILITY INDUSTRY OUTLOOK
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
will be made by May 15, 2001. While IESU and IPC cannot predict
the outcome of this process, it will result in formal hearings.
These hearings may address fuel procurement practices and changes
in the fuel cost recovery mechanism.
In April 2001, the OCA requested certain financial information
from IESU related to the electric utility operations within the
state of Iowa. IESU is in the process of preparing its
responses. While IESU cannot predict the outcome of this
process, such data requests could lead to an effort by the OCA to
seek an electric rate reduction for IESU in Iowa.
In December 2000, WP&L requested a $73 million (revised to $61
million) annual retail electric rate increase from the PSCW to
cover increases in WP&L's 2001 fuel and purchased-power costs due
to the continued increases in natural gas prices which impact
WP&L's generation costs and the increased costs of
purchased-power. The PSCW approved a $46 million interim retail
electric rate increase effective February 9, 2001. A decision on
a permanent rate increase is expected in the second quarter of
2001.
30
In 2000, the NRC raised several areas of concern with Kewaunee's
operations. The concerns raised by the NRC are estimated to
result in additional operating costs to WP&L in 2001 of
approximately $5 million. Additional operating costs to WP&L
over the period of 2002 through 2005 are estimated to be
approximately $20 million and will be included in a future rate
request. In April 2001, the PSCW approved the deferral of
incremental costs associated with this issue incurred after March
27, 2001. The expenditures that were not deferred did not have a
material impact on earnings. The NRC has acknowledged the safety
record of Kewaunee and its ability to continue operations.
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 - First Quarter Results - Alliant Energy reported net income of $9.2
- --------------------------------
million, or $0.12 per share, for the first quarter of 2001, compared to net
income of $19.3 million, or $0.24 per share, for the first quarter of 2000.
Net income for the first quarter of 2001 included a non-cash valuation charge
of $24.2 million, or $0.30 per share, relating to Alliant Energy's share of
the cumulative effect of Southern Hydro's adoption of SFAS 133 on January 1,
2001 ($0.16 per share) and the change in fair value of Southern Hydro's
electricity derivative contracts ($0.14 per share). Refer to Notes 6 and 9
of Alliant Energy's "Notes to Consolidated Financial Statements" for
additional information on Southern Hydro. The prior period earnings included
a non-cash accounting charge of $24.8 million, or $0.31 per share, to
recognize an increase in Alliant Energy's obligation relating to certain
30-year exchangeable senior notes (the charge was subsequently reversed in
its entirety in the second quarter of 2000).
The earnings comparison between 2001 and 2000 earnings, excluding the $24.2
million and $24.8 million non-cash charges, was significantly impacted by the
timing of Alliant Energy's continued limited sales of its investment in
McLeod. First quarter 2000 results included a gain of $0.08 per share from
the sale of McLeod stock while Alliant Energy did not sell any shares of
McLeod in the first quarter of 2001. Also, first quarter 2000 results
included income of $0.03 per share from a tax settlement item. Further, a
non-cash accounting charge of $0.03 per share was recorded in the first
quarter of 2001. Improved results from Alliant Energy's oil and gas business
($0.17 per share in 2001 and $0.05 per share in 2000) were substantially
offset by higher utility operating expenses and lower results from Alliant
Energy's investments in Brazil.
First quarter 2001 utility earnings were $33.3 million ($0.42 per share)
compared to $39.1 million ($0.49 per share) for the same period in 2000. The
decrease was primarily due to higher natural gas and fuel prices, increased
other utility operating expenses and $0.03 per share of income in 2000 from a
tax settlement, partially offset by higher sales volumes from more favorable
weather in 2001.
Resources reported a net loss of $23.0 million (($0.29) per share) in the
first quarter of 2001, which included the $24.2 million ($0.30 per share)
non-cash valuation charge relating to the adoption of SFAS 133 at Southern
Hydro, compared to a net loss of $16.1 million (($0.20) per share) in the
first quarter of 2000, which included the $24.8 million ($0.31 per share)
non-cash charge related to the senior notes. The lower earnings, excluding
the 2001 and 2000 non-cash charges, were largely due to: 1) no sales of
31
McLeod stock in the first quarter of 2001 while the first quarter of 2000
included a gain of $0.08 per share; and 2) the first quarter of 2001 included
a non-cash accounting charge of $0.03 per share related to the net valuation
of the exchangeable senior notes and the associated McLeod shares designated
as trading securities. Alliant Energy's oil and gas business had another
strong quarter, increasing $0.12 per share over first quarter 2000 results.
However, this increase was virtually offset by lower results from Alliant
Energy's Brazil investments ($0.06 per share), lower results from Alliant
Energy's integrated services business ($0.02 per share) and increased
interest expense to fund Alliant Energy's strategic growth initiatives and
costs related to the pursuit of new business opportunities.
Electric Utility Operations - Electric margins and MWh sales for
- ---------------------------
Alliant Energy for the three months ended March 31 were as
follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
----------------------------- ----------------------------
2001 2000 Change 2001 2000 Change
--------------- ------------- --------- -------------- ------------- ---------
Residential $149,687 $134,995 11% 1,971 1,821 8%
Commercial 85,054 77,850 9% 1,331 1,278 4%
Industrial 116,667 111,544 5% 2,982 3,120 (4%)
--------------- ------------- -------------- -------------
Total from ultimate customers 351,408 324,389 8% 6,284 6,219 1%
Sales for resale 48,423 33,894 43% 1,257 1,205 4%
Other 12,112 15,339 (21%) 42 48 (13%)
--------------- -------------
-------------- -------------
Total revenues/sales 411,943 373,622 10% 7,583 7,472 1%
============== =============
Electric production fuels expense 68,274 65,545 4%
Purchased power expense 98,733 62,345 58%
--------------- -------------
Margin $244,936 $245,732 --
=============== =============
Electric margin decreased $0.8 million for the first quarter of
2001, compared with the same period in 2000, primarily due to
higher fuel and purchased-power expenses, decreased energy
conservation revenues and lower sales to industrial customers,
largely offset by higher sales volume from more favorable weather
in 2001. Favorable weather conditions yielded an estimated $11
million electric margin increase compared to the first quarter
2000, when milder than normal weather conditions prevailed.
Refer to "Utility Industry Outlook - Rates and Regulatory
Matters" for discussion of a WP&L FAC filing in December 2000.
In the first quarter of 2001, electric margin was approximately
$7 million lower due to the formation of ATC. Such expenses
were virtually offset by equity income, reduced other operation
and maintenance expenses and lower depreciation expense. 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. Refer to "Utility Industry Outlook -
Rates and Regulatory Matters" for discussion of an IUB fuel
investigation.
32
Gas Utility Operations - Gas margins and Dth sales for Alliant
- ----------------------
Energy for the three months ended March 31 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
----------------------------- ---------------------------
2001 2000 Change 2001 2000 Change
--------------- ------------- --------- ------------- ------------ ---------
Residential $166,557 $79,611 109% 15,580 13,073 19%
Commercial 89,055 39,570 125% 9,059 7,776 16%
Industrial 14,623 6,834 114% 1,630 1,688 (3%)
Transportation/other 19,583 4,119 375% 13,959 12,398 13%
--------------- -------------
------------- ------------
Total revenues/sales 289,818 130,134 123% 40,228 34,935 15%
============= ============
Cost of utility gas sold 238,258 82,113 190%
--------------- -------------
Margin $51,560 $48,021 7%
=============== =============
Gas revenues and cost of utility gas sold increased significantly
primarily due to the large increase in natural gas prices during
the first quarter of 2001, compared with the same period in
2000. Gas margin increased $3.5 million, or 7%, primarily due to
higher sales volumes from more favorable weather in 2001, which
contributed an estimated $9 million increase in gas margin. The
weather benefit was partially offset by impacts of the higher
natural gas costs as some customers either chose alternative fuel
sources or used less natural gas. WP&L's margins were also
negatively impacted by the higher gas costs from losses
associated with current commodity costs, 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 - Non-regulated and other
- ---------------------------------
revenues for the three months ended March 31 were as follows (in
thousands):
2001 2000
-------- ---------
Integrated Services $84,199 $33,433
Oil and gas production 42,776 19,195
Steam 11,186 7,340
Transportation 4,639 4,788
Other 8,152 5,550
--------- ----------
$150,952 $70,306
========= ==========
Non-regulated and other revenues increased $80.6 million for the
first quarter of 2001, compared with the same period in 2000,
primarily due to increased revenues in Integrated Services
related to acquisitions in the third and fourth quarters of 2000
of various energy services and energy conservation businesses and
increased revenues due to higher natural gas prices. Also
contributing to the increase were higher oil and gas production
revenues due to higher gas prices and increased volumes due to
various acquisitions in 2000.
Other Operating Expenses - Other operation and maintenance
- ------------------------
expenses for the three months ended March 31 were as follows (in
thousands):
2001 2000
-------- ---------
Utility subsidiaries $130,089 $122,761
Integrated Services 80,186 29,517
Oil and gas production 11,729 7,349
Transportation 2,991 2,897
Other 13,201 7,154
--------- ----------
$238,196 $169,678
========= ==========
33
Other operation and maintenance expenses at the utility
subsidiaries increased $7.3 million in the first quarter of 2001,
compared with the same period in 2000, primarily due to higher
administrative and general and nuclear expenses, partially offset
by reduced generation business unit expenses. Other operation
and maintenance expenses in Integrated Services increased $50.7
million in the first quarter of 2001, compared with the same
period in 2000, primarily due to expenses associated with the
acquisitions of the various energy services and energy
conservation businesses and the increased natural gas costs. The
oil and gas production increase was primarily due to the 2000
acquisitions. The increase in "other" was primarily due to
expenses from the International business unit and costs related to
the pursuit of new business opportunities.
Depreciation and amortization expense increased $8.7 million in
the first quarter of 2001, compared with the same period in 2000,
primarily due to the acquisitions at the non-regulated businesses
and utility property additions.
Interest Expense and Other - Interest expense increased $9.1
- --------------------------
million in the first quarter of 2001, compared with the same
period in 2000, primarily due to higher non-regulated and utility
borrowings to fund Alliant Energy's strategic growth initiatives,
including Resources' investments in several Brazilian electric
utilities in January 2000 and January 2001 of approximately $347
million and $60 million, respectively.
Alliant Energy recorded $39.5 million, or $0.31 per share, of
contingent interest on indexed senior notes in the first quarter
of 2000 to recognize an increase in Alliant Energy's obligation
relating to certain 30-year exchangeable senior notes (the charge
was subsequently reversed in its entirety in the second quarter
of 2000).
Equity income (loss) from Alliant Energy's unconsolidated
investments for the three months ended March 31 was as follows
(in millions):
2001 2000
------ -------
ATC $4.8 $--
Cargill-Alliant 3.0 0.1
Australia/New Zealand investments (15.2) --
China investments 1.4 0.3
Brazil investments (1.5) 1.2
Other 0.4 (0.5)
------ -------
($7.1) $1.1
====== =======
Equity income from unconsolidated investments decreased $8.2 million in the
first quarter of 2001, compared with the same period in 2000, due to $17.4
million of non-cash SFAS 133 valuation charges from Southern Hydro,
lower results from Alliant Energy's Brazil investments primarily
due to continued regulatory delays in the implementation of tariff
adjustments and higher-than-expected commercial losses at one of its operating
companies. These items were partially offset by ATC beginning operations on
January 1, 2001; improved operations 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; and a first quarter 2000 acquisition at Alliant Energy's Australian
investment. Alliant Energy expects to have the prospective tariff adjustments in
Brazil implemented in the second quarter of 2001.
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 $10.9 million for the first
quarter of 2001, compared with the same period in 2000, primarily
due to a charge of $85.1 million related to the change in value of
the McLeod trading securities, $4.1 million of 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, partially offset by income of $80.9 million related to the
change in value of the derivative component of Resources'
exchangeable senior notes.
Income Taxes - The effective income tax rates for the first
- ------------
quarter of 2001 and 2000 were 33.9% and 37.2%, respectively.
34
Cumulative Effect of a Change in Accounting Principle - In the first quarter
- -----------------------------------------------------
of 2001, Alliant Energy recorded a charge of $12.9 million relating to the
adoption of SFAS 133 on January 1, 2001 at Southern Hydro.
IESU RESULTS OF OPERATIONS
Overview - First Quarter Results - IESU's earnings available for
- --------------------------------
common stock decreased $3.4 million for the first quarter of
2001, compared with the same period in 2000, primarily due to
increased other operation and maintenance expenses and lower
interest income due to a tax settlement realized in the first
quarter of 2000, partially offset by increased gas margin.
Electric Utility Operations - Electric margins and MWh sales for
- ---------------------------
IESU for the three months ended March 31 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
----------------------------- ---------------------------
2001 2000 Change 2001 2000 Change
--------------- ------------- --------- ------------- ------------ ---------
Residential $58,649 $54,942 7% 735 684 7%
Commercial 41,895 40,226 4% 638 632 1%
Industrial 42,126 42,205 -- 1,159 1,214 (5%)
--------------- ------------- ------------- ------------
Total from ultimate customers 142,670 137,373 4% 2,532 2,530 --
Sales for resale 9,049 5,203 74% 251 247 2%
Other 3,412 3,132 9% 9 10 (10%)
--------------- -------------
------------- ------------
Total revenues/sales 155,131 145,708 6% 2,792 2,787 --
============= ============
Electric production fuels expense 19,841 28,912 (31%)
Purchased power expense 32,826 13,422 145%
--------------- -------------
Margin $102,464 $103,374 (1%)
=============== =============
Electric margin decreased $0.9 million, or 1%, for the first
quarter of 2001, compared with the same period in 2000, primarily
due to lower sales to industrial customers and increased
purchased-power capacity costs. Such decreases were partially
offset by more favorable 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 Outlook -
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 March 31 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
----------------------------- ---------------------------
2001 2000 Change 2001 2000 Change
--------------- ------------- --------- ------------- ------------ ---------
Residential $77,419 $37,214 108% 7,423 6,055 23%
Commercial 40,563 17,702 129% 4,257 3,472 23%
Industrial 6,415 3,101 107% 764 811 (6%)
Transportation/other 2,799 1,412 98% 3,144 2,919 8%
--------------- -------------
------------- ------------
Total revenues/sales 127,196 59,429 114% 15,588 13,257 18%
============= ============
Cost of gas sold 103,503 38,074 172%
--------------- -------------
Margin $23,693 $21,355 11%
=============== =============
35
Gas revenues and cost of gas sold increased significantly
primarily due to the large increase in natural gas prices during
the first quarter of 2001, compared with the same period in
2000. Such increase had no impact on IESU's gas margin given its
rate recovery mechanism for gas costs. Gas margin increased $2.3
million, or 11%, primarily due to increased natural gas sales due
to more favorable weather conditions in the first quarter of 2001
compared with the first quarter of 2000. This increase was
partially offset by impacts of the higher natural gas costs as
some customers either chose alternative fuel sources or used less
natural gas.
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 $5.9 million in the first quarter of 2001,
compared with the same period in 2000, primarily due to increased
administrative and general and generation business unit
expenses.
Interest Expense and Other - Miscellaneous, net income decreased
- --------------------------
$2.7 million in the first quarter of 2001, compared with the same
period in 2000, primarily due to interest income recognized from
a tax settlement in the first quarter of 2000.
Income Taxes - The effective income tax rates were 38.8% and
- ------------
41.9% in the first quarter of 2001 and 2000, respectively.
WP&L RESULTS OF OPERATIONS
Overview - First Quarter Results - WP&L's earnings available for
- --------------------------------
common stock decreased $2.6 million for the first quarter of
2001, compared with the same period in 2000, primarily due to the
impact of higher gas and fuel prices, partially offset by
favorable weather conditions in the first quarter of 2001
compared to the first quarter 2000 when milder weather conditions
prevailed.
Electric Utility Operations - Electric margins and MWh sales for
- ---------------------------
WP&L for the three months ended March 31 were as follows:
Revenues and Costs MWhs Sold
(in thousands) (in thousands)
----------------------------- ---------------------------
2001 2000 Change 2001 2000 Change
--------------- ------------- --------- ------------- ------------ ---------
Residential $66,578 $57,546 16% 907 838 8%
Commercial 34,527 29,695 16% 542 503 8%
Industrial 48,268 41,270 17% 1,096 1,127 (3%)
--------------- ------------- ------------- ------------
Total from ultimate customers 149,373 128,511 16% 2,545 2,468 3%
Sales for resale 35,343 24,957 42% 845 789 7%
Other 5,675 8,908 (36%) 16 21 (24%)
--------------- -------------
------------- ------------
Total revenues/sales 190,391 162,376 17% 3,406 3,278 4%
============= ============
Electric production fuels expense 35,072 23,798 47%
Purchased power expense 52,370 33,757 55%
--------------- -------------
Margin $102,949 $104,821 (2%)
=============== =============
Electric margin decreased $1.9 million, or 2%, for the first
quarter of 2001, compared with the same period in 2000, primarily
due to higher fuel and purchased-power expenses, decreased energy
conservation revenues and lower sales to industrial customers.
Such decreases were partially offset by more favorable weather
conditions in the first quarter of 2001 compared to the first
quarter of 2000, when milder than normal weather conditions
prevailed. Refer to "Utility Industry Outlook - Rates and
Regulatory Matters" for discussion of a WP&L FAC filing in
December 2000.
In the first quarter of 2001, electric margin was approximately
$7 million lower due to the formation of ATC. Such expenses
were virtually offset by equity income, reduced other operation
36
and maintenance expenses and lower depreciation expense. Refer
to Note 5 of Alliant Energy's "Notes to Consolidated Financial
Statements" in Item 1. for additional information related to ATC.
Gas Utility Operations - Gas margins and Dth sales for WP&L for
- -----------------------
the three months ended March 31 were as follows:
Revenues and Costs Dths Sold
(in thousands) (in thousands)
----------------------------- ---------------------------
2001 2000 Change 2001 2000 Change
--------------- ------------- --------- ------------- ------------ ---------
Residential $67,093 $33,013 103% 6,108 5,293 15%
Commercial 36,996 17,306 114% 3,684 3,350 10%
Industrial 5,666 2,732 107% 580 587 (1%)
Transportation/other 15,877 2,235 610% 5,404 4,069 33%
--------------- -------------
------------- ------------
Total revenues/sales 125,632 55,286 127% 15,776 13,299 19%
============= ============
Cost of gas sold 106,252 35,329 201%
--------------- -------------
Margin $19,380 $19,957 (3%)
=============== =============
Gas revenues and cost of gas sold increased significantly
primarily due to the large increase in natural gas prices during
the first quarter of 2001, compared with the same period in
2000. Gas margin decreased $0.6 million, or 3%, primarily due to
impacts of the higher natural gas costs as some customers either
chose alternative fuel sources or used less natural gas. WP&L's
margins were also negatively impacted by the higher gas costs
from losses associated with current commodity costs, which are
shared by ratepayers and shareowners. Such decreases were
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.
Other Operating Expenses - Other operation and maintenance
- ------------------------
expenses decreased $0.2 million for the first quarter of 2001,
compared with the same period in 2000, primarily due to lower
generation and energy delivery business unit expenses, largely
offset by higher administrative and general expenses.
Interest Expense and Other - Equity income from unconsolidated
- --------------------------
investments increased $4.8 million in the first quarter of 2001,
compared with the same period in 2000, due to ATC beginning
operations on January 1, 2001. Refer to Note 5 of Alliant
Energy's "Notes to Consolidated Financial Statements" in Item 1.
for discussion of WP&L's investment in ATC.
Miscellaneous, net income decreased $4.5 million for the first
quarter of 2001, compared with the same period in 2000, primarily
due to lower income realized from weather hedges.
Income Taxes - The effective income tax rates were 38.4% and
- -------------
37.0% in the first quarter of 2001 and 2000, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows - For the first quarter of 2001 compared with the same
- ----------
period in 2000, Alliant Energy's cash flows from operating
activities decreased $26 million primarily due to changes in
working capital. Cash flows from financing activities decreased
$271 million primarily due to net changes in the amount of debt
outstanding. Cash flows used for investing activities decreased
$330 million primarily due to the January 2000 Brazil
investment.
For the first quarter of 2001 compared with the same period in
2000, IESU's cash flows from operating activities decreased $21
million primarily due to changes in working capital. Cash flows
from financing activities increased $130 million primarily due to
$200 million of senior debentures issued in 2001, partially
offset by other net changes in debt outstanding. For the first
quarter of 2001 compared with the same period in 2000, WP&L's
cash flows from operating activities decreased $36 million
primarily due to changes in working capital.
37
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, will sell its respective receivables
through wholly-owned special purpose entities to an affiliated
financing entity, which in turn will sell the receivables to an
outside investor. The new program, expected to be operational in
the second quarter of 2001, would replace the existing programs
for IESU and WP&L, and would be substantially similar to the
prior programs.
Construction and Acquisition Expenditures - To help ensure
- -----------------------------------------
electric 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 estimated at $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 filed plans with the PSCW to develop up to 800
MW of new electric power generation over the next 10 years.
The Wisconsin plans include the addition of 500 MW of coal-fired
and 100 MW of natural gas-fired generation by 2006 and an additional
200 MW of combined-cycle gas generation by 2011. Both the Iowa and
Wisconsin proposals are subject to various conditions, including
the receipt of applicable regulatory approval and the receipt of a
reasonable return on IESU's and WP&L's investments.
OTHER MATTERS
Market Risk Sensitive Instruments and Positions
Alliant Energy's primary market risk exposures are associated
with interest rates, commodity prices, equity prices and currency
exchange rates. Alliant Energy has risk management policies to
monitor and assist in controlling these market risks and uses
derivative instruments to manage some of the exposures. Alliant
Energy's market risks have not changed materially from the market
risks reported in the 2000 Form 10-K, except as noted below.
Commodity Risk - Non-trading - Southern Hydro, a foreign affiliate of Alliant
- ----------------------------
Energy accounted for under the equity method of accounting, owns and operates
hydroelectric generation facilities in the state of Victoria in Australia.
These generation facilities operate as peaking units. Under the rules of the
Australian market, Southern Hydro must sell all of its production into a spot
market in which the price changes every five minutes and is set on the
average of each half hour. Electricity prices in this market can and have
been very volatile. In order to manage the electricity commodity price risk
associated with anticipated sales into the spot market, Southern Hydro enters
into a variety of electricity derivative contracts with terms of up to five
years. The value of these derivative instruments can
change significantly as a result of changes in forward
electricity prices. These instruments do not qualify for hedge accounting
under SFAS 133. Accordingly, per U.S. generally accepted accounting
principles, changes in the fair value of these derivatives, which are
non-cash valuation adjustments, must be reported in Southern
Hydro's earnings. Southern Hydro management believes its ownership of the
physical generating facilities that are not marked-to-market, combined with
the electricity derivative contracts, act as an economic hedge to volatile
electricity prices, such that Southern Hydro's net economic exposure to
volatile electricity prices over the next five years is managed within
reasonable limits. Alliant Energy has not presented market risk data for
Southern Hydro since it is accounted for as an equity method investment.
38
Equity Price Risk - At March 31, 2001 and December 31, 2000,
- ------------------
Alliant Energy had an investment in the stock of McLeod, a
publicly traded telecommunications company, valued at $486
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 March
31, 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 $136 million and $221
million at March 31, 2001 and December 31, 2000, respectively).
At March 31, 2001 and December 31, 2000, the McLeod
available-for-sale securities were valued at $350 million and
$570 million, respectively. A 10 percent increase (decrease) in
the quoted market price at March 31, 2001 and December 31, 2000
would have increased (decreased) the value of the investment of
the available-for-sale securities by $35 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 March 31, 2001 and
December 31, 2000, Alliant Energy had a cumulative foreign
currency translation loss of $107.6 million and $60.0 million,
respectively, recorded in "Accumulated other comprehensive
income" on its Consolidated Balance Sheets that primarily related
to decreases in value of the Brazil currency (real), New Zealand
dollar and Australian dollar in relation to the U.S. dollar.
Based on Alliant Energy's investments at March 31, 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 $45.6 million and $46.5 million, respectively.
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."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Alliant Energy Corporation, Interstate Power and Light Company
and Wisconsin Power and Light Company have each duly caused this
amendment to be signed on its behalf by the undersigned thereunto
duly authorized on the 30th day of January 2002.
ALLIANT ENERGY CORPORATION
- --------------------------
Registrant
By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer
- -------------------------
John E. Kratchmer (Principal Accounting Officer and Authorized
Signatory)
INTERSTATE 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)
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)
39