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[ALLIANT ENERGY]
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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FOR IMMEDIATE RELEASE Media Contact: Melanie Schmidt (608) 252-3187
Finance Contact: Bob Rusch (608) 252-3470
ALLIANT ENERGY REPORTS FIRST QUARTER 2000 EARNINGS
MADISON, Wis. - April 21, 2000 - Alliant Energy Corp. (NYSE:LNT) today
reported adjusted net income of $44.1 million, or $0.56 per share, for the first
quarter of 2000, excluding a $24.8 million, or $0.31 per share, non-cash charge
to net income to recognize an increase in the company's obligation relating to
certain 30-year exchangeable senior notes issued in February. Earnings for the
first quarter of 1999 were $41.7 million, or $0.54 per share. Upon adoption of a
new accounting principle later this year, Alliant Energy expects to realize a
significant one-time increase in income that will more than offset the $24.8
million charge.
"Alliant Energy continues executing its defend and grow strategy to
build value for its shareowners and customers," said Alliant Energy President,
CEO and Chair Erroll B. Davis, Jr. "We are prepared to meet the challenges ahead
by sticking to the sound business practices that contribute to continued
earnings growth and improved customer service."
The company's increase in earnings, excluding the non-cash charge, was
due to several factors, including: a pre-tax gain of $10.2 million realized from
the sale of 150,000 shares of the company's investment in McLeodUSA Inc.;
increased earnings from Alliant Energy's oil and gas and industrial services
businesses; and, income realized from settlement of a utility tax issue. These
items were partially offset by: higher utility operating expenses, largely due
to scheduled outages at several generating plants and higher energy conservation
expenses; the impact of milder weather conditions in the first quarter of 2000
compared to the comparable period in 1999; and, increased interest expense to
fund Alliant Energy's strategic growth initiatives.
The following are selected summaries of the unaudited results of
operations as reported for the periods shown:
Quarter Ended Twelve Months Ended
March 31 March 31
---------------------------------------------
2000 1999 2000 1999
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(in thousands, except per share amounts)
Operating revenues $620,850 $546,855 $2,271,958 $2,121,446
Adjusted net income $44,122 $41,744 $198,959 $109,544
Adjusted earnings per share
(basic and diluted) $0.56 $0.54 $2.53 $1.42
Net income $19,320 $41,744 $174,157 $109,544
Earnings per share (basic and
diluted) $0.24 $0.54 $2.21 $1.42
Alliant Energy is the parent company of three public utility companies - IES
Utilities Inc. (IES), Interstate Power Company (IPC) and Wisconsin Power and
Light Company (WP&L) - and of Alliant Energy Resources, Inc. (AER), the parent
company of Alliant Energy's diversified operations.
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Utility Operations
First quarter 2000 utility earnings were $39.1 million ($0.49 per
share) compared to $44.8 million ($0.57 per share) for the same period in 1999.
The decrease resulted primarily from higher operation and maintenance expenses
($0.08 per share), lower natural gas margins ($0.03 per share) and higher
depreciation expense ($0.02 per share). These items were offset partially by
interest income realized from a tax settlement ($0.03 per share) and a higher
electric margin ($0.02 per share).
"We maintain our focus on operational excellence - delivering on the
promise of value we made to our shareowners and our customers," said Davis.
"Alliant Energy takes seriously its commitment to reliability and works with
customers and others to implement responsible solutions that leverage
efficiencies and create long-lasting benefits."
The higher operation and maintenance expenses were due to costs
associated with scheduled outages at several generating plants, higher energy
conservation expenses and increased nuclear operating expenses. Alliant Energy
estimates that the milder weather conditions resulted in lower earnings of
approximately $0.06 per share ($0.03 electric; $0.03 gas) in the first quarter
of 2000 compared to the comparable period in 1999. The higher overall electric
margin was due to a rate recovery adjustment implemented at WP&L in March 1999
to recover higher purchased power and transmission costs as well as increased
sales to retail customers due to continued economic strength in the company's
utility service territory. These items were offset partially by higher purchased
power costs at WP&L.
Diversified Operations
Alliant Energy's diversified operations reported adjusted net income
of $8.7 million ($0.11 per share) in the first quarter of 2000, excluding the
$24.8 million non-cash charge related to the senior notes issued in February.
Upon adoption of a new accounting principle later this year, Alliant Energy
expects to realize a significant one-time increase in income that will more than
offset the $24.8 million charge.
The increase in diversified earnings, excluding the non-cash charge,
was substantially due to the gain realized on the sale of the McLeod shares
($0.08 per share) and the increased earnings from the company's oil and gas
($0.06 per share) and industrial services ($0.02 per share) businesses. These
items were offset partially by higher net interest expense ($0.03 per share) to
fund the company's strategic growth initiatives, including its recent $347
million investment in several Brazilian electric utilities. The company expects
the impact of the Brazilian investment will be dilutive to earnings by
approximately three percent in 2000 with positive contributions in subsequent
years.
"We entered the Latin American utility market and created a strong
partnership that we believe will build a stronger economic future for us and for
our shareowners," said Davis.
Non-Cash Accounting Charge
AER issued $402.5 million of exchangeable 30-year senior notes in
February with an interest rate of 7.25% through February 15, 2003, and 2.5%
thereafter. 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.
Specific accounting principles govern the exchangeable senior notes.
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. The closing price of the McLeod stock at March 31, 2000, was
$84.81; thus, the senior notes had a value of approximately $442 million at
March 31, 2000. The non-cash charge recorded as a result of this increase did
not impact earnings from operations nor will it impact Alliant Energy's ability
to pay dividends.
If the McLeod stock price closes below $84.81 per share on June 30,
2000, Alliant Energy in the second quarter will reverse the proportionate share
of the non-cash charge recorded in the first quarter.
The McLeod stock prices in this release do not reflect McLeod's
announcement of a 3-for-1 stock split effective April 24, 2000.
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 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 offset substantially the earnings
impact of corresponding changes in the value of the senior notes.
--- --- ---
Alliant Energy provides electricity, natural gas, water and steam to
over two million customers worldwide. Through its diversified subsidiaries,
Alliant Energy also provides energy products and services to domestic and
international markets; provides industrial services, including environmental,
engineering and transportation services; invests in affordable housing
initiatives; and, invests in various other strategic initiatives.
More information about Alliant Energy is available on the World Wide
Web at www.alliant-energy.com.
# # #
This press release includes forward-looking statements. These forward-looking
statements can be identified as such because the statement includes words such
as "expects" or "estimates" or other words 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 that
could cause actual results to differ materially from those currently
anticipated. Actual results could be affected by such factors as: weather
conditions; regulatory or governmental actions; economic and political
conditions in Alliant'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; material
changes in the value of Alliant Energy's McLeodUSA investment; ability to
introduce products and services; 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. 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.
ATTACHMENT: Consolidated Income Statement with Key Statistics (1 page)
ALLIANT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months
Ended March 31,
2000 1999
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(in thousands, except
per share amounts)
Operating revenues:
Electric utility $373,622 $351,338
Gas utility 130,134 133,684
Non-regulated and other 117,094 61,833
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620,850 546,855
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Operating expenses:
Electric and steam production fuels 69,272 65,404
Purchased power 62,345 52,065
Cost of utility gas sold 82,113 81,343
Other operation 186,537 130,365
Maintenance 29,929 23,812
Depreciation and amortization 75,911 73,640
Taxes other than income taxes 26,353 27,239
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532,460 453,868
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Operating income 88,390 92,987
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Interest expense and other:
Interest expense 40,618 33,400
Contingent interest on indexed senior notes 39,493 -
Allowance for funds used during construction (1,754) (1,934)
Preferred dividend requirements of subsidiaries 1,678 1,676
Gain on sale of McLeodUSA Inc. stock (10,206) -
Miscellaneous, net (13,197) (6,771)
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56,632 26,371
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Income before income taxes 31,758 66,616
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Income taxes 12,438 24,872
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Net income $19,320 $41,744
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Average number of common shares outstanding 78,996 77,780
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Earnings per average common share
(basic and diluted) $0.24 $0.54
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KEY STATISTICS
For the Three Months
Ended March 31,
2000 1999
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Utility electric sales from ultimate customers 6,219 6,130
(thousands of MWH)
Total utility electric sales 7,472 7,516
(thousands of MWH)
Utility gas sold & transported 34,935 39,923
(thousands of dekatherms)
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Book value per share at March 31 $30.60 $21.71
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