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Alliant Energy
Worldwide Headquarters
222 W. Washington Ave.
P.O. Box 192
Madison, WI 53701-0192
www.alliant-energy.com
News Release
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Media Contact: David Giroux at (608) 252-3924
Finance Contact: Bob Rusch at (608) 252-3470
ALLIANT ENERGY ANNOUNCES FIRST QUARTER NON-CASH ACCOUNTING CHARGE
MADISON, Wis.--Apr. 7, 2000--Alliant Energy Corporation (NYSE:LNT)
today announced it will incur a non-cash charge to net income of approximately
$25 million, or 31 cents per share, in the first quarter of 2000 to recognize an
increase in the company's obligation relating to certain 30-year exchangeable
senior notes it issued in February. The non-cash charge will not impact earnings
from operations nor the company's ability to pay dividends and is required under
generally accepted accounting principles that presently govern the accounting
for the senior notes.
The senior notes are exchangeable for cash based upon the value of
McLeodUSA (McLeod) Class A common stock (Nasdaq:MCLD). Due to the exchange
feature of the senior notes, any increase in the value of McLeod stock above
$77.23 per share results in a corresponding increase in Alliant Energy's
obligation under the senior notes. Current accounting principles do not allow
the increases in market value of the company's McLeod holdings to be reflected
in earnings, but require a charge against earnings to reflect the corresponding
increase in Alliant Energy's obligation under the senior notes.
Alliant Energy's holdings of McLeod will be reported at a value of
$1.6 billion at March 31, 2000, compared to a cost of $28 million, based on 19
million shares held and a market closing price of $84.81. The non-cash charge of
approximately $25 million is more than offset by the unrealized increase in
value of Alliant Energy's investment in McLeod stock.
The $402.5 million of exchangeable senior notes were issued with an
interest rate of 7.25% through February 15, 2003 and 2.5% thereafter. The
company will report the senior notes at a value of approximately $442 million at
March 31, 2000. The amount payable upon maturity of the notes is generally the
higher of: a) the original principal amount, as adjusted for any accrued
interest or distributions on the common stock of McLeod; or b) the current
market value of the shares of McLeod stock attributable to the exchangeable
senior notes.
The company is required to adopt SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, no later than January 1, 2001,
and is exploring various early adoption alternatives. Upon adoption of this new
accounting principle, Alliant Energy will have a one-time option to designate a
portion of its McLeod holdings as "trading" securities. This designation will
allow the company to realize a significant one-time increase in income relating
to the unrealized appreciation in value of such shares. The company expects that
this income
Alliant Energy-- First Quarter Earnings Charge
April 7, 2000
Page 2 of 2
will more than offset any charges it incurs prior to, and in connection with,
the adoption of SFAS No. 133 relating to changes in value of the senior notes.
Further, the accounting under SFAS No. 133 will allow the company to reflect in
earnings all future changes in the value of the shares of McLeod stock
designated as trading, which will substantially offset the earnings impact of
corresponding changes in the value of the senior notes.
Alliant Energy Corp. is a growing energy-services provider with
operations both domestically and internationally. Headquartered in Madison,
Wis., Alliant Energy provides electric, natural gas, water and steam services to
more than two million customers worldwide. Alliant Energy Resources, Inc., home
of the company's non-utility businesses, has operations and investments
throughout the United States as well as in Australia, Brazil, China, Mexico and
New Zealand.
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This press release includes forward-looking statements. These forward-looking
statements can be identified as such because the context of the statement
includes phrases such as "the company expects" or other words or phrases of
similar import. Similarly, statements that describe future plans or strategies
are also forward-looking statements. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those currently anticipated. Factors which could affect actual results
include, but are not limited to, changes in the market value of the company's
holdings in McLeodUSA, unanticipated delays in or issues arising in connection
with the company's adoption of SFAS No. 133 and the impact of any future changes
in accounting principles and practices on the company's financial condition or
results of operations. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements. The forward-looking statements included herein are made as of the
date hereof and Alliant Energy Corporation undertakes no obligation to update
publicly such statements to reflect subsequent events or circumstances.