10-Q 1 main10q.txt 10-Q ALLIANT ENERGY UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended 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 ----------- ----------------------------------------------------------- ----------------------- 1-9894 ALLIANT ENERGY CORPORATION 39-1380265 (a Wisconsin corporation) 222 West Washington Avenue Madison, Wisconsin 53703 Telephone (608)252-3311 0-4117-1 IES UTILITIES INC. 42-0331370 (an Iowa corporation) Alliant Energy Tower Cedar Rapids, Iowa 52401 Telephone (319)398-4411 0-337 WISCONSIN POWER AND LIGHT COMPANY 39-0714890 (a Wisconsin corporation) 222 West Washington Avenue Madison, Wisconsin 53703 Telephone (608)252-3311
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No ----- ------ This combined Form 10-Q is separately filed by Alliant Energy Corporation, IES Utilities Inc. and Wisconsin Power and Light Company. Information contained in the quarterly report relating to IES Utilities Inc. and Wisconsin Power and Light Company is filed by such registrant on its own behalf. Each of IES Utilities Inc. and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself. Number of shares outstanding of each class of common stock as of April 30, 2001: Alliant Energy Common stock, $.01 par value, 79,055,349 Corporation shares outstanding IES Utilities Inc. Common stock, $2.50 par value, 13,370,788 shares outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation) Wisconsin Power and Common stock, $5 par value, 13,236,601 shares Light Company outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation)
CONTENTS Page ---- Part I. Financial Information 4 Item 1. Consolidated Financial Statements 4 Alliant Energy Corporation: --------------------------- Consolidated Statements of Income for the Three Months Ended March 31, 2001 and 2000 4 Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 7 Notes to Consolidated Financial Statements 8 IES Utilities Inc.: ------------------- Consolidated Statements of Income for the Three Months Ended March 31, 2001 and 2000 19 Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 20 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 22 Notes to Consolidated Financial Statements 23 Wisconsin Power and Light Company: ---------------------------------- Consolidated Statements of Income for the Three Months Ended March 31, 2001 and 2000 24 Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 25 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 27 Notes to Consolidated Financial Statements 28 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 29 Item 3. Quantitative and Qualitative Disclosures About Market Risk 38 Part II. Other Information 38 Item 1. Legal Proceedings 38 Item 6. Exhibits and Reports on Form 8-K 39 Signatures 40
2 DEFINITIONS
Certain abbreviations or acronyms used in the text and notes of this combined Form 10-Q are defined below: Abbreviation or Acronym Definition ----------------------- ----------- Alliant Energy...................................... Alliant Energy Corporation ATC................................................. American Transmission Company, LLC Capstone............................................ Capstone Turbine Corporation Cargill-Alliant..................................... Cargill-Alliant, L.L.C. Corporate Services.................................. Alliant Energy Corporate Services, Inc. Dth................................................. Dekatherm EAC................................................. Energy Adjustment Clause FAC................................................. Fuel Adjustment Clause 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 South Beloit........................................ South Beloit Water, Gas & Electric Company Transportation...................................... Alliant Energy Transportation, Inc. U.S. ............................................... United States WP&L................................................ Wisconsin Power and Light Company WUHCA............................................... Wisconsin Utility Holding Company Act
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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 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 from unconsolidated investments (10,339) (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) ---------------------- ----------------------- 37,633 56,632 ---------------------- ----------------------- --------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 51,643 31,758 ---------------------- ----------------------- --------------------------------------------------------------------------------------------------------------------------------- Income taxes 18,258 12,438 ---------------------- ----------------------- --------------------------------------------------------------------------------------------------------------------------------- Net income $33,385 $19,320 ====================== ======================= --------------------------------------------------------------------------------------------------------------------------------- Average number of common shares outstanding (diluted) 79,198 79,271 ====================== ======================= --------------------------------------------------------------------------------------------------------------------------------- Earnings per average common share (basic and diluted) $0.42 $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.
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ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS March 31, 2001 December 31, ASSETS (Unaudited) 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 577,961 507,655 Nuclear decommissioning trust funds 308,364 307,940 Other 241,063 132,203 ------------------ ------------------ 1,613,330 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 $6,400,716 $6,733,766 ================== ================== ---------------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS (Continued) March 31, 2001 December 31, CAPITALIZATION AND LIABILITIES (Unaudited) 2000 ------------------------------------------------------------------------------------------------------------------------------- (in thousands, except share amounts) Capitalization: Common stock - $0.01 par value - authorized 200,000,000 shares; outstanding 79,055,349 and 79,010,114 shares, respectively $791 $790 Additional paid-in capital 950,554 947,504 Retained earnings 812,058 818,162 Accumulated other comprehensive income 98,571 271,867 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 1,859,986 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 ----------------------- ----------------------- 4,207,246 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 827,914 931,675 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 ----------------------- ----------------------- 1,293,389 1,518,053 ----------------------- ----------------------- ------------------------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $6,400,716 $6,733,766 ======================= ======================= ------------------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ALLIANT ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2001 2000 ---------------------------------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income $33,385 $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 (10,428) (20,075) Gains on dispositions of assets, net (1,558) (10,644) Equity income from unconsolidated investments, net (10,339) (1,143) Contingent interest on indexed senior notes - 39,493 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.
7 ALLIANT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The interim consolidated financial statements included herein have been prepared by Alliant Energy, without audit, pursuant to the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. The consolidated financial statements include Alliant Energy and its consolidated subsidiaries (including IESU, WP&L, IPC, Resources and Corporate Services). These financial statements should be read in conjunction with the financial statements and the notes thereto included in Alliant Energy's, IESU's and WP&L's latest Annual Report on Form 10-K. In the opinion of management, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of (a) the consolidated results of operations for the three 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 $33,385 $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 (49,743) 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) (173,296) 279,047 ------------- ------------ Comprehensive income (loss) ($139,911) $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. 8 3. Various differences exist between segment reporting information for the non-regulated businesses and Resources' information in Alliant Energy's condensed consolidating financial statements in Note 9 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 Net income (loss) 33,328 33,328 1,181 (1,124) 33,385 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 $287 million during the first three months of 2001, primarily due to the decrease in market value of its investment in McLeod. Non-regulated earnings 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. 9 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. 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. 10 9. 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:
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 in unconsolidated subsidiaries (3,003) (2,397) (4,939) -- (10,339) Allowance for funds used during construction -- -- (2,302) -- (2,302) Preferred dividend requirements of subsidiaries -- -- 1,680 -- 1,680 Miscellaneous, net (35,313) 732 (4,009) 37,440 (1,150) ----------------------------------------------------------------------------------- (33,298) 16,512 21,831 32,588 37,633 ----------------------------------------------------------------------------------- Income (loss) before income taxes 33,298 (4,632) 55,505 (32,528) 51,643 ----------------------------------------------------------------------------------- Income tax expense (benefit) (87) (3,861) 22,147 59 18,258 ----------------------------------------------------------------------------------- Net income (loss) $33,385 ($771) $33,358 ($32,587) $33,385 =================================================================================== 11 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 ===================================================================================
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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 1,881,652 -- -- (1,881,652) -- 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 33,668 654,332 439,388 -- 1,127,388 -------------------------------------------------------------------------------- 1,915,320 1,140,274 439,388 (1,881,652) 1,613,330 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Deferred charges and other -- 90,837 456,339 -- 547,176 -------------------------------------------------------------------------------- Total assets $1,953,782 $2,025,389 $4,487,229 ($2,065,684) $6,400,716 ================================================================================
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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 812,162 173,241 722,211 (895,556) 812,058 Accumulated other comprehensive income -- 98,534 37 -- 98,571 Shares in deferred compensation trust (1,988) -- -- -- (1,988) ------------------------------------------------------------------------------- Total common equity 1,761,519 504,518 1,475,706 (1,881,757) 1,859,986 ------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------- 1,785,519 1,359,440 2,944,044 (1,881,757) 4,207,246 ------------------------------------------------------------------------------- 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) 322,787 511,690 -- 827,914 Derivative liability -- 101,073 -- -- 101,073 Other 8,381 56,271 299,756 (6) 364,402 ------------------------------------------------------------------------------- 1,818 480,131 811,446 (6) 1,293,389 ------------------------------------------------------------------------------- Total capitalization and liabilities $1,953,782 $2,025,389 $4,487,229 ($2,065,684) $6,400,716 ===============================================================================
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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 ==============================================================================
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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 ================================================================================
16
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 ====================================================================
17
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 ========================================================================
18
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.
19
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.
20
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.
21
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.
22 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
23
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.
24
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.
25
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.
26
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.
27 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
28 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. In 2000, the NRC raised several areas of concern with Kewaunee's operations. The concerns raised by the NRC are estimated to 29 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 $33.4 million, or $0.42 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. 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 $24.8 million non-cash accounting charge, 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 net income of $1.2 million ($0.01 per share) in the first quarter of 2001 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 2000 non-cash charge, were largely due to: 1) no sales of 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. 30 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. 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% =============== =============
31 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 ========= ========== 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. 32 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 2.2 -- China investments 1.4 0.3 Brazil investments (1.5) 1.2 Other 0.4 (0.5) ------ ------- $10.3 $1.1 ====== ======= Equity income from unconsolidated investments increased $9.2 million in the first quarter of 2001, compared with the same period in 2000, due to 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. These items were partially offset by 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. Alliant Energy expects to have the prospective tariff adjustments in Brazil implemented in the second quarter of 2001. Refer to "Outlook" for additional information regarding Brazil. Alliant Energy sold 450,000 shares of its investment in McLeod in the first quarter of 2000, resulting in a pre-tax gain of $10.2 million, or $0.08 per share. Miscellaneous, net income decreased $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 34.2% and 37.2%, respectively. 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. 33 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% =============== =============
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. 34 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 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. 35 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. 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 --------------------------- 36 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. 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 $109.7 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 $47.8 million and $46.5 million, respectively. 37 OUTLOOK Alliant Energy currently estimates that earnings per share from continuing operations for 2001 will be in the $2.40 to $2.60 range. Drivers for Alliant Energy's 2001 earnings estimate include, but are not limited to: normal weather conditions in its utility service territories; continued economic development and sales growth in its utility service territories; ability to recover its purchased power and fuel costs, both domestically and internationally; ability to realize gains on the continued limited sales of its McLeod investment to help offset start-up and growth-related interest expenses in its diversified businesses and to redeploy such proceeds into more strategic earnings-generating investments; improved profitability of its international investments; improved profitability of its non- regulated businesses as a whole, including oil and gas, electricity trading, integrated energy and transportation services; continued strong oil and gas prices; and other stable business conditions. In addition, the accuracy of the earnings estimate is further subject to future developments relating to Alliant Energy's utility investments in Brazil. Brazil is continuing to experience drought conditions and the Brazilian government has announced an electricity rationing program effective June 1st in response to the country's power shortage (Brazil relies on hydroelectric plants for the majority of its electricity). The program details are not yet final thus Alliant Energy is currently unable to estimate the impact on its 2001 earnings; however, Alliant Energy expects the impact will be dilutive. Based on the drought and other business conditions in Brazil, Alliant Energy also cannot currently predict what impact its Brazil investments may have on its earnings beyond 2001. Alliant Energy's other non-regulated businesses, especially oil and gas and electricity trading, continue to generate strong earnings which may offset some or all of the impact of the Brazil dilution. Alliant Energy's strategic plan includes aggressively investing in generation and other energy-related projects; better connecting with customers through enhanced service reliability and e-business initiatives; and growing the non-regulated side of its business through partnerships and acquisitions in generation projects, international markets and other strategic initiatives. Alliant Energy believes that successful implementation of these strategies will contribute significantly to Alliant Energy achieving its targeted annual growth rate in earnings from continued operations of 7 to 10 percent. Alliant Energy expects its non-regulated businesses to contribute 25 percent of such earnings within the next two to four years. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and Qualitative Disclosures About Market Risk are reported under Item 2. MD&A "Other Matters - Market Risk Sensitive Instruments and Positions." PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In an effort to grow and expand as a Wisconsin-based company, Alliant Energy and WP&L filed a federal lawsuit in October 2000, seeking declaratory relief regarding whether certain provisions of WUHCA are unconstitutional as a violation of the interstate commerce and equal protection provisions of the U.S. constitution. Alliant Energy and WP&L are challenging the provisions of WUHCA which restrict ownership in utility holding companies, limit the investments those companies can make and place significant restrictions on companies that invest in Wisconsin utility holding companies. Alliant Energy and WP&L also requested that the court consider the constitutionality of issues related to the asset cap on non-utility investments imposed by WUHCA. Alliant Energy and WP&L were seeking only declaratory relief and not damages in the litigation. In February 2001, the lawsuit was dismissed based on lack of allegations of "injury in fact." Alliant Energy and WP&L filed a motion for reconsideration with the court, which was rejected in April 2001. Alliant Energy has begun preparations to appeal the case, which could come before the Federal Court of Appeals in Chicago. 38 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: The following Exhibits are filed herewith or --------- incorporated by reference. Documents indicated by an asterisk (*) are incorporated herein by reference. 3.1* Bylaws of Alliant Energy, as amended, effective as of January 30, 2001 (incorporated by reference to Exhibit 3.2 to Alliant Energy's Form 10-K for the year 2000) 3.2* Bylaws of WP&L, as amended, effective as of January 30, 2001 (incorporated by reference to Exhibit 3.4 to WP&L's Form 10-K for the year 2000) 3.3* Bylaws of IESU, as amended, effective as of January 30, 2001 (incorporated by reference to Exhibit 3.6 to IESU's Form 10-K for the year 2000) 4.1* Officers' Certificate, dated as of March 6, 2001, creating IESU's 6-3/4% Series B Senior Debentures due 2011 (incorporated by reference to Exhibit 4 to IESU's Form 8-K, dated March 6, 2001) 10.1* Operating Agreement of ATC, dated as of January 1, 2001 (incorporated by reference to Exhibit 10.16 to Alliant Energy's Form 10-K for the year 2000) (b) Reports on Form 8-K: -------------------- Alliant Energy Alliant Energy filed a Current Report on Form 8-K, dated February 20, 2001, as amended by Alliant Energy's Current Report on Form 8-K/A dated March 1, 2001, reporting (under Item 5) summary operating statistics and recent developments regarding IESU and IPC. IESU IESU filed a Current Report on Form 8-K, dated February 20, 2001, as amended by IESU's Current Report on Form 8-K/A dated March 1, 2001, reporting (under Item 5) summary operating statistics and recent developments regarding IESU and IPC. IESU filed a Current Report on Form 8-K, dated March 6, 2001, reporting (under Item 5) that on March 6, 2001, IESU agreed to sell $200 million of senior unsecured debentures at a fixed interest rate of 6-3/4%, due 2011. WP&L - None. 39 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Alliant Energy Corporation, IES Utilities Inc. and Wisconsin Power and Light Company have each duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 11th day of May 2001. ALLIANT ENERGY CORPORATION -------------------------- Registrant By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer ------------------------- John E. Kratchmer (Principal Accounting Officer and Authorized Signatory) IES UTILITIES INC. ------------------ Registrant By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer ------------------------- John E. Kratchmer (Principal Accounting Officer and Authorized Signatory) WISCONSIN POWER AND LIGHT COMPANY --------------------------------- Registrant By: /s/ John E. Kratchmer Corporate Controller and Chief Accounting Officer ------------------------- John E. Kratchmer (Principal Accounting Officer and Authorized Signatory) 40