Exhibit 99.1
[GRAPHIC OMITTED] ALLIANT ENERGY LOGO
Alliant Energy
Worldwide Headquarters
4902 North Biltmore Lane
P.O. Box 77007
Madison, WI 53707-1007
www.alliantenergy.com
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News Release
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FOR IMMEDIATE RELEASE Media Contact: Chris Schoenherr (608) 458-3924
Karen Whitmer (608) 458-4839
Investor Relations: Eric Mott (608) 458-3391
ALLIANT ENERGY ANNOUNCES 2002 EARNINGS
Company also affirms adjusted earnings guidance for 2003
MADISON, Wis. - Feb. 4, 2003 - Alliant Energy Corp. (NYSE: LNT) today
reported net income and earnings per share for 2002 of $106.9 million and
$1.18, respectively, compared to $172.4 million and $2.14 for 2001. Alliant
Energy's adjusted net income and adjusted earnings per share for 2002 were
$121.0 million and $1.33, respectively, compared to $195.1 million and $2.42
in 2001. A reconciliation and an explanation of the adjustments between
generally accepted accounting principles (GAAP) and the adjusted amounts is
attached.
"Our 2002 adjusted earnings are at the upper end of our previously
announced adjusted earnings guidance, laying the foundation for our
anticipated financial improvement in 2003," said Erroll B. Davis, Jr.,
chairman, president and CEO of Alliant Energy. "In addition, we remain
focused on the successful execution of the strategic actions we announced in
November 2002 to strengthen our financial profile and we are pleased with the
progress we have made thus far."
The decrease in earnings in 2002 compared to 2001 was primarily the
result of lower earnings from Alliant Energy's non-regulated businesses and
the dilutive impact of additional common shares outstanding. Alliant
Energy's domestic utility earnings increased slightly in 2002 compared to 2001
as higher electric and gas margins were largely offset by increased operating
expenses and a higher effective income tax rate.
As a result of Alliant Energy's announcement last November to sell
various businesses in 2003, the company is reporting income from continuing
and discontinued operations. The results included in the discontinued
operations include the company's oil and gas (Whiting), affordable housing
and Australian businesses. These amounts are reflected on the attached
consolidated statements of income. The company's previous adjusted earnings
guidance for 2002 did not reflect any income being reported as discontinued
operations or any specific adjustments necessary as a result of the company's
announcement in November 2002 to sell certain assets.
A conference call to review the 2002 earnings and other financial issues
is scheduled for Tuesday, Feb. 4 at 9:00 a.m., Central time. Alliant Energy
Chairman, President and CEO Erroll B. Davis, Jr., and Chief Financial Officer
Thomas M. Walker will host the call. The conference call is open to the
public and can be accessed in two ways. Interested parties may listen to the
call by dialing 800-441-0022 (no pass code is needed) or by listening to a
webcast of the call on the company's Web site at
www.alliantenergy.com/investors. A replay of the call will be available
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until Feb. 11, 2003 at 800-839-0860 (pass code 1364). An archive of the
webcast will be available on the company's Web site at
www.alliantenergy.com/investors.
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Alliant Energy is the parent company of two public utility companies -
Interstate Power and Light Company (IP&L) and Wisconsin Power and Light
Company (WP&L) - and of Alliant Energy Resources, Inc., the parent company
of Alliant Energy's non-regulated operations. Alliant Energy is an
energy-services provider that serves more than three million customers
worldwide.
Alliant Energy - 2002 Earnings
Page 2 of 9
February 4, 2003
A reconciliation of Alliant Energy's 2002 versus 2001 GAAP and adjusted
earnings per share is attached and should be referenced in relationship to
the following discussion of 2002 results.
Domestic Utility Operations - 2002 Compared to 2001
Utility net income in 2002 was $165.8 million compared to $164.9 million
in 2001. The higher electric margins were primarily due to the impact of
several rate increases implemented in 2002, more favorable weather conditions
in Alliant Energy's utility service territories in 2002 compared to 2001,
lower fuel and purchased power costs and continued modest retail customer
growth. These items were partially offset by lower industrial sales due to a
sluggish economy. The higher gas margins were largely due to several rate
increases implemented in 2002, improved results from WP&L's performance-based
commodity cost recovery program, continued modest retail customer growth and
the negative impact high gas prices in early 2001 had on gas consumption
during that period. The effective income tax rate in 2001 was reduced
significantly by the recognition of tax benefits realized to reflect a
favorable decision in a tax case. The increase in operating expenses was
primarily due to increased fossil and nuclear generation costs, and employee
benefit and energy delivery expenses. These items were partially offset by
lower depreciation expense and uncollectible account balances. Alliant
Energy is addressing these cost increases in various utility rate proceedings
that are currently pending.
"Our core regulated business remains strong and performed well
throughout what was a very turbulent and difficult year for the entire
industry," Davis said. "Maintaining continued operational excellence,
customer satisfaction and earning our allowed rate of return will remain our
top priorities in 2003."
Non-regulated Operations - 2002 Compared to 2001
Alliant Energy's non-regulated operations reported a net loss of ($61.0)
million in 2002 compared to net income of $6.1 million in 2001. On an
adjusted earnings basis, the net loss for 2002 was ($46.9) million compared
to net income of $28.9 million in 2001. The adjustments made to GAAP results
to derive adjusted earnings are the same as those reflected on the attached
reconciliation.
"While we are disappointed with the results from our non-regulated
operations in 2002, the results on an adjusted earnings basis would have been
break-even had it not been for the performance of our Brazilian investments,"
stated Davis. "We expect a significant improvement in financial results from
our non-regulated businesses in 2003 and are encouraged by their generation
of adjusted earnings of nearly $5 million in the fourth quarter of 2002."
The lower adjusted earnings from the Investments business unit were
largely due to lower earnings from the company's oil and gas (Whiting)
business due to lower oil and gas prices, higher operating expenses, lower
gains from dispositions of oil and gas properties in 2002 compared to 2001,
and because the 2001 results reflected a reduction in the estimated
dismantlement cost of an offshore oil and gas platform. These items were
partially offset by higher oil and gas sales volumes.
The lower results from the company's Mass Marketing business unit were
primarily due to the recording of a $0.05 per share non-cash goodwill
impairment charge and increases in the provisions for uncollectible accounts
at Alliant Energy's SmartEnergy subsidiary in 2002. In January 2003, Alliant
Energy decided to sell this business. The lower results from Alliant
Energy's Energy Technologies business unit resulted from the recording of
$0.08 per share of asset valuation charges in 2002 related to its portfolio
of energy technology investments.
Alliant Energy - 2002 Earnings
Page 3 of 9
February 4, 2003
The lower results from Alliant Energy's Non-regulated Generation and
Trading business unit were due to a lack of a full year of earnings from its
electricity trading joint venture in 2002 due to the company's sale of this
investment earlier this year and higher interest expense, partially offset by
earnings in 2002 from the company's synthetic fuel investment. Alliant
Energy recorded a $0.04 per share charge in 2002 related to the company's
decision to cancel a joint venture generation project in Michigan. The 2001
results also included a similar charge for a canceled generation project in
Illinois.
The lower results from the International business unit were primarily
due to a loss of ($47) million in 2002 from Alliant Energy's Brazil
investments compared to a loss of ($24) million in 2001. This impact was
partially offset by a $17 million improvement in results from the company's
other international investments, which together generated $16 million of
adjusted earnings in 2002.
The lower results from the Brazil investments were largely due to losses
incurred by Alliant Energy's investment in a gas-fired generating plant,
charges incurred in 2002 related to the recovery of the impacts of rationing
and other prior costs and higher interest expense. The loss from the
generating plant was due to the impact of a significant decline in the
currency rates associated with the debt issued to finance the plant and a
continued depressed wholesale energy market. The 2001 results also included
a charge related to the impacts of a settlement reached between the Brazilian
government and the distribution companies on the economic resolution of
various cost recovery issues. In addition, increased electric sales volumes
in 2002 compared to 2001, largely due to the impacts of the drought-driven
rationing program that was in place for approximately seven months in 2001
compared to only two months in 2002, also partially offset the lower
earnings.
The higher adjusted earnings from Australia were largely due to
increased generation and sales of renewable energy credits earned through the
generation of hydropower. The improved results from China were primarily due
to earnings from additional generation facilities added to the company's
China portfolio during 2001. The higher New Zealand earnings were largely
due to the 2001 earnings being depressed because of drought conditions.
The lower results from the company's Integrated Services business unit
were largely due to asset valuation charges of $0.08 per share in 2002.
These items were partially offset by the elimination of goodwill amortization
expense in compliance with new accounting rules effective in 2002. In the
fourth quarter of 2002, Alliant Energy reversed the valuation allowance of
$0.05 per share recorded in the second quarter of 2002 related to its loan
receivable in connection with the development of infrastructure in a resort
community near the Baja peninsula in Mexico. This reversal was based on the
receipt of an updated independent appraisal that indicated the value of
Alliant Energy's collateral exceeded the loan balance plus accrued interest
as a result of improvements made to the project in the latter half of 2002.
Fourth Quarter Results
Alliant Energy's net income and earnings per share for the fourth
quarter of 2002 were $46.1 million and $0.50, respectively, compared to $56.1
million and $0.66 for 2001. Alliant Energy's adjusted net income and
adjusted earnings per share for the fourth quarter of 2002 were $56.9 million
and $0.62, respectively, compared to $62.0 million and $0.73 in 2001. Refer
to the attachments to this news release for a reconciliation and an
explanation of the adjustments between the GAAP and adjusted amounts.
Alliant Energy - 2002 Earnings
Page 4 of 9
February 4, 2003
Utility net income for the fourth quarter of 2002 was $49.3 million
compared to $40.0 million for the same period in 2001. The increase was due
to the impact of several rate increases implemented in 2002, lower fuel and
purchased power costs, including an adjustment to a previously provided
reserve for a potential rate refund, more favorable weather conditions in
2002 compared to the same period in 2001 and continued modest retail customer
growth. Electric industrial sales increased slightly more than 1% in the
fourth quarter of 2002 compared to the same period in 2001. This represents
the first time in ten quarters that sales volumes in the current quarter
exceeded sales from the same quarter in the prior year. These items were
partially offset by higher operating expenses, lower interest income from tax
refunds and the impact of a higher effective income tax rate.
Alliant Energy's non-regulated operations reported a net loss of ($6.2)
million in the fourth quarter of 2002 compared to net income of $8.5 million
for the same period in 2001. On an adjusted earnings basis, income for the
quarter was $4.6 million and $14.4 million in 2002 and 2001, respectively.
The adjustments to GAAP results are the same as those reported in the
attached reconciliation. The decrease in adjusted earnings was largely due
to lower earnings from Whiting, the SmartEnergy goodwill impairment charge
and the charge related to the canceled non-regulated generation project in
Michigan. These items were partially offset by a $13 million increase in
adjusted earnings from the International business unit, which generated
adjusted net income of $10 million in the fourth quarter of 2002, and the
income from the reversal of the previously recorded valuation allowance
related to Alliant Energy's loan receivable from the development project in
Mexico.
Earnings from the parent company were $0.05 per share lower in the
fourth quarter of 2002 largely due to tax benefits recognized in 2001 from a
favorable tax case decision, partially offset by lower operating expenses in
2002. Adjusted earnings were also lowered by $0.05 per share due to the
dilutive impact of additional common shares outstanding in 2002.
Re-audits
As a result of Alliant Energy's decision to sell various businesses in
2003, GAAP requires Alliant Energy to reclassify the operations of these
businesses as discontinued operations in its historical financial statements
for the years ended Dec. 31, 2002, 2001 and 2000, at the time it files its
Annual Report on Form 10-K for the year ended Dec. 31, 2002. The company's
former independent public auditor, Arthur Andersen LLP, has ceased to audit
publicly held companies. The rules of the Securities and Exchange Commission
would have permitted the use of Arthur Andersen LLP's latest audit report on
prior period financial statements had there been no changes to those prior
period financial statements. Due to the changes to the prior period financial
statements to reclassify the operations of the businesses to be sold as
discontinued operations, the company is required to have another firm
re-audit those financial statements. Alliant Energy has engaged its current
independent auditor, Deloitte & Touche LLP, to re-audit the financial
statements of Alliant Energy, IP&L and WP&L for the years ended Dec. 31, 2001
and 2000. The re-audits are in process but are not expected to be completed
until March 2003. If the re-audits result in adjustments to the historical
financial statements, an adjustment of the 2002 financial results may also be
necessary.
Alliant Energy - 2002 Earnings
Page 5 of 9
February 4, 2003
2003 Adjusted Earnings Guidance
Alliant Energy affirms its previously disclosed adjusted earnings
guidance of $1.65 to $1.90 per diluted share for 2003. The guidance assumes
adjusted earnings from the regulated domestic utilities to be between $1.75
and $1.95 per diluted share in 2003. The earnings guidance does not include
any potential gains, losses, accounting adjustments (including the
discontinuance of depreciation, depletion and amortization expense for the
businesses reported as discontinued operations) or other charges and/or
income related to the proposed asset sales, the impact of certain non-cash
SFAS 133 valuation adjustments or any asset valuation charges that Alliant
Energy may incur in 2003. Because the scope of these potential adjustments
is not presently known, Alliant Energy is unable to estimate their potential
impact. The guidance includes $0.20 to $0.30 per diluted share of expected
adjusted earnings, as defined above, from the businesses Alliant Energy
expects to exit in 2003 prior to the respective estimated transaction dates.
This last assumption is highly dependent on the accuracy of Alliant Energy's
estimates as to the closing dates of the proposed asset transactions.
Drivers for Alliant Energy's earnings estimates include, but are not limited
to:
o Normal weather conditions in its domestic and international utility
service territories
o Economic development and sales growth in its utility service territories
o Continuing cost controls and operational efficiencies
o Ability of its domestic and international utility subsidiaries to
recover their operating costs, and to earn a reasonable rate of return,
in current and future rate proceedings as well as their ability to
recover purchased power and fuel costs
o Improved results of its Brazil investments and no material adverse
changes in the rates allowed by the Brazilian regulators
o Improved results from its other non-regulated businesses
o No additional material permanent declines in the fair market value of,
or expected cash flows from, Alliant Energy's investments
o Other stable business conditions, including an improving economy
o Continued access to the capital markets
o Ability of Alliant Energy to successfully execute its proposed asset
sales at values and timelines that are consistent with the assumptions
underlying its earnings guidance
This press release includes forward-looking statements. These
forward-looking statements can be identified as such because the statements
include words such as "expects" or "estimates" or other words of similar
import. Similarly, statements that describe future financial performance or
plans or strategies are also forward-looking statements. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those currently anticipated. Actual results could be
affected by such factors as: the factors listed in the "2003 Adjusted
Earnings Guidance" section of this press release; regulatory or governmental
actions, including with respect to rates and payment of dividends; economic
and political conditions in Alliant Energy's domestic and international
service territories; unanticipated issues related to Alliant Energy's ability
to implement its strategic plan, especially as it relates to international
investments; Alliant Energy's ability to identify and successfully complete
proposed asset divestitures, acquisitions and development projects; material
changes in the value of Alliant Energy's investments; access to technological
developments; and inflation rates. These factors should be considered when
evaluating the forward-looking statements and undue reliance should not be
placed on such statements. Without limitation, the expectations with respect
to projected earnings in the "2003 Adjusted Earnings Guidance" section of
this press release are forward-looking statements and are based in part on
certain assumptions made by Alliant Energy, some of which are referred to in
the forward-looking statements. Alliant Energy cannot provide any assurance
that the assumptions referred to in the forward-looking statements or
otherwise are accurate or will prove to be correct. Any assumptions that are
inaccurate or do not prove to be correct could have a material adverse effect
on Alliant Energy's ability to achieve the estimates or other targets
included in the forward-looking statements. The forward-looking statements
included herein are made as of the date hereof and Alliant Energy undertakes
no obligation to update publicly such statements to reflect subsequent events
or circumstances.
Note: Unless otherwise noted, all "per share" references in this release
refer to earnings per diluted share.
Alliant Energy - 2002 Earnings
Page 6 of 9
February 4, 2003
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
2002 2001
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(in thousands, except per share amounts)
Operating revenues:
Electric utility $1,752,534 $1,756,556
Gas utility 393,986 487,877
Non-regulated and other 462,292 380,243
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2,608,812 2,624,676
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Operating expenses:
Electric and steam production fuels 303,625 310,689
Purchased power 362,501 403,166
Cost of utility gas sold 248,994 360,911
Other operation and maintenance 957,144 828,125
Depreciation and amortization 310,617 302,643
Taxes other than income taxes 104,236 102,184
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2,287,117 2,307,718
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Operating income 321,695 316,958
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Interest expense and other:
Interest expense 186,538 185,604
Interest income from loans to discontinued operations, net (15,959) (9,938)
Equity (income) loss from unconsolidated investments 12,825 (18,799)
Allowance for funds used during construction (7,696) (11,144)
Preferred dividend requirements of subsidiaries 6,172 6,720
Impairment of available-for-sale securities of McLeodUSA Inc. 27,218 --
Miscellaneous, net 220 (12,497)
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209,318 139,946
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Income from continuing operations before income taxes 112,377 177,012
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Income taxes 36,108 50,767
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Income from continuing operations 76,269 126,245
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Income from discontinued operations, net of tax 30,612 58,985
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Income before cumulative effect of a change in
accounting principle, net of tax 106,881 185,230
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Cumulative effect of a change in accounting
principle, net of tax -- (12,868)
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Net income $106,881 $172,362
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Average number of common shares outstanding (basic) 90,897 80,498
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Earnings per average common share (basic):
Income from continuing operations $0.84 $1.57
Income from discontinued operations 0.34 0.73
Cumulative effect of a change in accounting principle -- (0.16)
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Net income $1.18 $2.14
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Average number of common shares outstanding (diluted) 90,959 80,636
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Earnings per average common share (diluted):
Income from continuing operations $0.84 $1.57
Income from discontinued operations 0.34 0.73
Cumulative effect of a change in accounting principle -- (0.16)
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Net income $1.18 $2.14
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Dividends declared per common share $2.00 $2.00
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Alliant Energy - 2002 Earnings
Page 7 of 9
February 4, 2003
A reconciliation of Alliant Energy's GAAP and adjusted net income and
earnings per share (EPS) is as follows (net income in millions):
2002 Net 2002 2001 Net 2001
Income * EPS Income * EPS
------------- ---------- ------------ ----------
GAAP earnings $106.9 $1.18 $172.4 $2.14
Less following (charges)/income:
McLeodUSA asset valuation charge (1) (16.5) (.18) -- --
Southern Hydro SFAS 133 impact (2) 11.2 .12 (2.0) (0.02)
Senior notes (PHONES) SFAS 133 valuation charges (2) (2.9) (.03) (20.8) (0.26)
Australian tax adjustments (3) ** (8.2) (.09) -- --
Affordable housing tax adjustments (4) ** (1.3) (.01) -- --
Discontinuing depreciation, depletion and
amortization of assets held for sale (5) ** 3.5 .04 -- --
------------- ---------- ------------ ----------
Adjusted earnings (6) $121.0 $1.33 $195.1 $2.42
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* Individual amounts in the respective column do not total due to rounding
** Adjustments resulting from Alliant Energy's November 2002 announcement
stating its intent to sell various assets in 2003; these adjustments do not
reflect core operating results of the ongoing businesses and were not
reflected in Alliant Energy's previous 2002 adjusted earnings guidance of
$1.25 - $1.35 per share
(1) Charge excluded as gains from sales of McLeodUSA stock have also been
excluded from adjusted earnings in prior periods
(2) Reflects non-cash valuation adjustments that have been excluded to
enhance comparability of financial results between years
(3) A U.S. tax provision was recorded in the fourth quarter of 2002 on all
of Alliant Energy's Australian earnings, including past unremitted
earnings, given Alliant Energy no longer intends to reinvest such earnings
indefinitely due to its intentions to sell this business
(4) Charge related to Alliant Energy no longer being able to state it is
more likely than not it can utilize past net operating losses (NOLs) from
this business for future tax benefits given its intentions to sell such
business
(5) Under the applicable accounting rules, Alliant Energy discontinued
recording these expenses for its oil and gas, affordable housing and
Australian businesses effective Dec. 1, 2002
(6) Adjusted earnings is a non-GAAP measure of accounting and should be
evaluated in connection with GAAP information. Alliant Energy believes the
presentation of adjusted earnings provides investors with another measure
to consider, in conjunction with the GAAP results, which could provide a
meaningful comparison of Alliant Energy's performance by eliminating
non-cash/other charges and income that may affect comparability between
years and may impact an assessment of Alliant Energy's ongoing performance.
A reconciliation of Alliant Energy's GAAP and adjusted net income and EPS for
the fourth quarter is as follows (net income in millions):
Q4 2002 Q4 2001
Net Q4 2002 Net Q4 2001
Income EPS Income EPS
------------ ------------ ------------ ------------
GAAP earnings $46.1 $0.50 $56.1 $0.66
Less following (charges)/income:
Southern Hydro SFAS 133 impact (5.1) (.06) (4.7) (0.06)
Senior notes (PHONES) SFAS 133 valuation charges 0.3 -- (1.2) (0.01)
Australian tax adjustments (8.2) (.09) -- --
Affordable housing tax adjustments (1.3) (.01) -- --
Discontinuing depreciation, depletion and
amortization of assets held for sale 3.5 .04 -- --
------------ ------------ ------------ ------------
Adjusted earnings (1) $56.9 $0.62 $62.0 $0.73
============ ============ ============ ============
(1) Refer to the above table for a description of the adjustments made here
and the use of adjusted earnings
Alliant Energy - 2002 Earnings
Page 8 of 9
February 4, 2003
A reconciliation of Alliant Energy's 2002 versus 2001 EPS is as follows:
Adjusted
GAAP Earnings
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2001 earnings per share $2.14 $2.42
2002 EPS increase/(decrease) versus 2001:
Utility operations:
Electric margins .39 .39
Gas margins .13 .13
Effective income tax rate (.09) (.09)
Operating expenses (.37) (.37)
Other (.05) (.05)
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Total utility operations .01 .01
Non-regulated operations business units:
Investments (.32) (.34)
Mass Marketing (.12) (.12)
Energy Technologies (.09) (.09)
Non-regulated Generation and Trading * (.08) (.08)
International - (.07)
Integrated Services (.06) (.06)
Other (primarily interest expense/income) (.16) (.18)
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Total non-regulated operations (.83) (.94)
Parent company .01 .01
Dilutive effect of additional shares outstanding (.15) (.17)
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2002 earnings per share $1.18 $1.33
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GAAP non-regulated EPS by business unit Year Ended December 31,
- --------------------------------------- --------------------------------------
2002** 2001 Variance
------------ ---------- ------------
Investments $0.33 $0.65 ($0.32)
International (0.34) (0.34) --
Mass Marketing (0.16) (0.04) (0.12)
Energy Technologies (0.11) (0.02) (0.09)
Integrated Services (0.10) (0.04) (0.06)
Non-regulated Generation and Trading* (0.08) -- (0.08)
Other (2002 includes McLeodUSA valuation charge) (0.30) (0.14) (0.16)
------------ ---------- ------------
Total GAAP EPS (diluted) ($0.76) $0.07 ($0.83)
============ ========== ============
Adjusted non-regulated EPS by business unit Year Ended December 31,
- ------------------------------------------- --------------------------------------
2002** 2001 Variance
------------ ----------- -----------
Investments $0.31 $0.65 ($0.34)
International (0.38) (0.31) (0.07)
Mass Marketing (0.16) (0.04) (0.12)
Energy Technologies (0.11) (0.02) (0.09)
Integrated Services (0.10) (0.04) (0.06)
Non-regulated Generation and Trading* (0.08) -- (0.08)
Other (0.06) 0.12 (0.18)
------------ ----------- -----------
Total adjusted EPS (diluted) ($0.58) $0.36 ($0.94)
============ =========== ===========
* Alliant Energy sold its interest in its electricity trading joint venture
in 2002.
** The 2002 EPS amounts have been computed based on the average shares
outstanding in 2001. Alliant Energy reports the dilutive impact of
increased shares outstanding as a separate earnings variance item.
Alliant Energy - 2002 Earnings
Page 9 of 9
February 4, 2003
KEY STATISTICS
Year Ended December 31,
2002 2001
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Domestic utility electric sales from ultimate customers 25,455 25,277
(thousands of MWh)
Total domestic utility electric sales 30,457 30,381
(thousands of MWh)
Utility gas sold & transported 103,038 101,518
(thousands of dekatherms)
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Book value per share at December 31 $19.89 $21.39
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