-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SarewhYSHe+BlVpVGHBCNjjJ81yD/t4rm3emL4zan7y2woLHyzGpVL/2TrW8BWWi FEuX+7qptxFA16tQhNvDYA== /in/edgar/work/20000811/0000107832-00-000096/0000107832-00-000096.txt : 20000921 0000107832-00-000096.hdr.sgml : 20000921 ACCESSION NUMBER: 0000107832-00-000096 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANT ENERGY CORP CENTRAL INDEX KEY: 0000352541 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 391380265 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09894 FILM NUMBER: 694781 BUSINESS ADDRESS: STREET 1: 222 WEST WASHNGTON AVENUE CITY: MADISON STATE: WI ZIP: 53703 BUSINESS PHONE: 6082523110 MAIL ADDRESS: STREET 1: P O BOX 2568 CITY: MADISON STATE: WI ZIP: 53701-2568 FORMER COMPANY: FORMER CONFORMED NAME: INTERSTATE ENERGY CORP DATE OF NAME CHANGE: 19980427 FORMER COMPANY: FORMER CONFORMED NAME: WPL HOLDINGS INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IES UTILITIES INC CENTRAL INDEX KEY: 0000052485 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 420331370 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04117 FILM NUMBER: 694782 BUSINESS ADDRESS: STREET 1: 200 FIRST ST SE STREET 2: IES TOWER CITY: CEDAR RAPIDS STATE: IA ZIP: 52401 BUSINESS PHONE: 3193984411 FORMER COMPANY: FORMER CONFORMED NAME: IOWA ELECTRIC LIGHT & POWER CO DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IOWA RAILWAY & LIGHT CORP DATE OF NAME CHANGE: 19670629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WISCONSIN POWER & LIGHT CO CENTRAL INDEX KEY: 0000107832 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 390714890 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00337 FILM NUMBER: 694783 BUSINESS ADDRESS: STREET 1: 222 W WASHINGTON AVE CITY: MADISON STATE: WI ZIP: 53703 BUSINESS PHONE: 6082523311 10-Q 1 0001.txt QUARTERLY PERIOD ENDED JUNE 30, 2000 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 June 30, 2000 ------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Name of Registrant, State of Incorporation, IRS Employer Commission Address of Principal Executive Offices Identification File Number and Telephone Number 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 July 31, 2000: Alliant Energy Corporation Common stock, $.01 par value, 79,002,896 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 and Six Months Ended June 30, 2000 and 1999 4 Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 7 Notes to Consolidated Financial Statements 8 IES Utilities Inc.: ------------------- Consolidated Statements of Income for the Three and Six Months Ended June 30, 2000 and 1999 11 Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 12 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 14 Notes to Consolidated Financial Statements 15 Wisconsin Power and Light Company: ---------------------------------- Consolidated Statements of Income for the Three and Six Months Ended June 30, 2000 and 1999 16 Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 17 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 19 Notes to Consolidated Financial Statements 20 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk 36 Part II. Other Information 36 Item 4. Submission of Matters to a Vote of Security Holders 36 Item 6. Exhibits and Reports on Form 8-K 38 Signatures 39
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 APB.......................................................... Accounting Principle Board Opinion ATC.......................................................... American Transmission Company, LLC Capstone..................................................... Capstone Turbine Corporation CEMS......................................................... Continuous Emission Monitoring System Corporate Services........................................... Alliant Energy Corporate Services, Inc. DAEC......................................................... Duane Arnold Energy Center DOJ.......................................................... United States Department of Justice Dth.......................................................... Dekatherm EAC.......................................................... Energy Adjustment Clause EPA.......................................................... United States Environmental Protection Agency FASB......................................................... Financial Accounting Standards Board FERC......................................................... Federal Energy Regulatory Commission IESU......................................................... IES Utilities Inc. International................................................ Alliant Energy International, Inc. IPC.......................................................... Interstate Power Company ISCO......................................................... Alliant Energy Industrial Services, Inc. ISO.......................................................... Independent System Operator IUB.......................................................... Iowa Utilities Board Kewaunee..................................................... Kewaunee Nuclear Power Plant kV........................................................... Kilovolt MAIN......................................................... Mid-America Interconnected Network, Inc. MAPP......................................................... Mid-Continent Area Power Pool McLeod....................................................... McLeodUSA Incorporated MD&A......................................................... Management's Discussion and Analysis of Financial Condition and Results of Operations MGP.......................................................... Manufactured Gas Plants MPUC......................................................... Minnesota Public Utilities Commission MWH.......................................................... Megawatt-Hour NMC.......................................................... Nuclear Management Company, LLC NOx.......................................................... Nitrogen Oxides NRC.......................................................... Nuclear Regulatory Commission NSP.......................................................... Northern States Power Company 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. RTO.......................................................... Regional Transmission Organization SEC.......................................................... Securities and Exchange Commission SFAS......................................................... Statement of Financial Accounting Standards Transportation............................................... Alliant Energy Transportation, Inc. U.S.......................................................... United States WDNR......................................................... Wisconsin Department of Natural Resources WEPCO........................................................ Wisconsin Electric Power Company Whiting...................................................... Whiting Petroleum Corporation WP&L......................................................... Wisconsin Power and Light Company WPSC......................................................... Wisconsin Public Service Corporation
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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 For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 - -------------------------------------------------------------------------------------------------------------------------------- (in thousands, except per share amounts) Operating revenues: Electric utility $393,843 $366,152 $767,465 $717,490 Gas utility 54,653 46,200 184,787 179,885 Non-regulated and other 124,069 73,762 241,163 135,594 -------------- -------------- -------------- -------------- 572,565 486,114 1,193,415 1,032,969 -------------- -------------- -------------- -------------- - -------------------------------------------------------------------------------------------------------------------------------- Operating expenses: Electric and steam production fuels 64,113 53,360 133,385 118,763 Purchased power 74,792 72,440 137,137 124,505 Cost of utility gas sold 31,869 22,666 113,982 104,009 Other operation and maintenance 237,042 180,225 453,508 334,403 Depreciation and amortization 77,970 70,475 153,881 144,115 Taxes other than income taxes 26,612 26,690 52,965 53,929 -------------- -------------- -------------- -------------- 512,398 425,856 1,044,858 879,724 -------------- -------------- -------------- -------------- - -------------------------------------------------------------------------------------------------------------------------------- Operating income 60,167 60,258 148,557 153,245 -------------- -------------- -------------- -------------- - -------------------------------------------------------------------------------------------------------------------------------- Interest expense and other: Interest expense 41,794 34,715 82,412 68,114 Contingent interest on indexed senior notes (39,493) - - - Allowance for funds used during construction (2,885) (1,782) (4,639) (3,716) Preferred dividend requirements of subsidiaries 1,678 1,677 3,356 3,353 Gains on sales of McLeodUSA Inc. stock - (33,826) (10,206) (33,826) Miscellaneous, net (9,243) (3,239) (22,440) (10,008) -------------- -------------- -------------- -------------- (8,149) (2,455) 48,483 23,917 -------------- -------------- -------------- -------------- - -------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 68,316 62,713 100,074 129,328 -------------- -------------- -------------- -------------- - -------------------------------------------------------------------------------------------------------------------------------- Income taxes 26,038 24,167 38,476 49,039 -------------- -------------- -------------- -------------- - -------------------------------------------------------------------------------------------------------------------------------- Net income $42,278 $38,546 $61,598 $80,289 ============== ============== ============== ============== - -------------------------------------------------------------------------------------------------------------------------------- Average number of common shares outstanding 79,002 78,214 78,999 77,997 ============== ============== ============== ============== - -------------------------------------------------------------------------------------------------------------------------------- Earnings per average common share (basic and diluted) $0.54 $0.49 $0.78 $1.03 ============== ============== ============== ============== - -------------------------------------------------------------------------------------------------------------------------------- Dividends declared per common share $0.50 $0.50 $1.00 $1.00 ============== ============== ============== ============== - -------------------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 2000 December 31, ASSETS (Unaudited) 1999 - ------------------------------------------------------------------------------------------------------------------------------- (in thousands) Property, plant and equipment: Utility - Plant in service - Electric $5,115,907 $5,032,675 Gas 554,600 540,874 Other 467,956 458,547 -------------------- ------------------- 6,138,463 6,032,096 Less - Accumulated depreciation 3,205,528 3,077,459 -------------------- ------------------- 2,932,935 2,954,637 Construction work in progress 135,567 119,276 Nuclear fuel, net of amortization 51,512 54,363 -------------------- ------------------- 3,120,014 3,128,276 Other property, plant and equipment, net of accumulated depreciation and amortization of $196,843 and $184,722, respectively 441,575 357,758 -------------------- ------------------- 3,561,589 3,486,034 -------------------- ------------------- - ------------------------------------------------------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 31,869 113,669 Accounts receivable: Customer, less allowance for doubtful accounts of $2,759 and $2,253, respectively 62,676 67,299 Unbilled utility revenues 43,310 48,033 Other, less allowance for doubtful accounts of $512 and $954, respectively 26,574 30,095 Income tax refunds receivable 32,076 14,611 Production fuel, at average cost 50,862 49,657 Materials and supplies, at average cost 55,454 52,440 Gas stored underground, at average cost 17,573 23,151 Regulatory assets 30,225 33,439 Prepaid gross receipts tax 21,976 20,864 Other 38,598 32,728 -------------------- ------------------- 411,193 485,986 -------------------- ------------------- - ------------------------------------------------------------------------------------------------------------------------------- Investments: Investment in McLeodUSA Inc. 1,175,449 1,123,790 Investments in foreign entities 580,473 198,055 Nuclear decommissioning trust funds 280,917 271,258 Other 132,068 59,866 -------------------- ------------------- 2,168,907 1,652,969 -------------------- ------------------- - ------------------------------------------------------------------------------------------------------------------------------- Other assets: Regulatory assets 253,189 263,610 Deferred charges and other 202,200 187,084 -------------------- ------------------- 455,389 450,694 -------------------- ------------------- - ------------------------------------------------------------------------------------------------------------------------------- Total assets $6,597,078 $6,075,683 ==================== =================== - ------------------------------------------------------------------------------------------------------------------------------- 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) June 30, 2000 December 31, CAPITALIZATION AND LIABILITIES (Unaudited) 1999 - -------------------------------------------------------------------------------------------------------------------------------- (in thousands, except share amounts) Capitalization: Common stock - $.01 par value - authorized 200,000,000 shares; outstanding 79,002,896 and 78,984,014 shares, respectively $790 $790 Additional paid-in capital 946,154 942,408 Retained earnings 560,190 577,464 Accumulated other comprehensive income 679,194 634,903 Shares in deferred compensation trust - 25,999 shares at an average cost of $29.52 per share (767) - ------------------- ------------------- Total common equity 2,185,561 2,155,565 ------------------- ------------------- Cumulative preferred stock of subsidiaries, net 113,714 113,638 Long-term debt (excluding current portion) 1,915,153 1,486,765 ------------------- ------------------- 4,214,428 3,755,968 ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------------------- Current liabilities: Current maturities and sinking funds 65,645 54,795 Variable rate demand bonds 55,100 55,100 Commercial paper 407,495 374,673 Notes payable 42,044 50,046 Capital lease obligations 11,481 13,321 Accounts payable 182,571 191,149 Accrued interest 29,082 24,818 Accrued taxes 76,779 78,825 Other 98,061 90,898 ------------------- ------------------- 968,258 933,625 ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Accumulated deferred income taxes 1,058,878 1,018,482 Accumulated deferred investment tax credits 70,292 71,857 Environmental liabilities 61,523 65,327 Pension and other benefit obligations 64,048 61,988 Other 159,651 168,436 ------------------- ------------------- 1,414,392 1,386,090 ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $6,597,078 $6,075,683 =================== =================== - -------------------------------------------------------------------------------------------------------------------------------- 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 Six Months Ended June 30, 2000 1999 - ----------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income $61,598 $80,289 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 153,881 144,115 Amortization of nuclear fuel 8,903 9,142 Amortization of deferred energy efficiency expenditures 12,908 13,250 Deferred taxes and investment tax credits (4,818) (8,487) Refueling outage provision 4,811 4,412 Gains on dispositions of assets, net (11,950) (37,591) Other (13,656) 1,502 Other changes in assets and liabilities: Accounts receivable 12,867 18,871 Notes receivable 1,320 7,813 Income tax refunds receivable (17,465) (3,572) Production fuel (1,205) 11,817 Gas stored underground 5,578 13,495 Accounts payable (8,578) (58,409) Adjustment clause balances 8,986 (9,240) Benefit obligations and other (14,425) 16,367 ----------------- ----------------- Net cash flows from operating activities 198,755 203,774 ----------------- ----------------- - ----------------------------------------------------------------------------------------------------- Cash flows from (used for) financing activities: Common stock dividends declared (78,987) (77,892) Proceeds from issuance of common stock 579 20,888 Net change in Resources' credit facility 49,152 15,495 Proceeds from issuance of other long-term debt 520,366 12,144 Reductions in other long-term debt (61,793) (67,016) Net change in other short-term borrowings (24,332) 59,240 Principal payments under capital lease obligations (5,239) (6,869) Other (15,356) 285 ----------------- ----------------- Net cash flows from (used for) financing activities 384,390 (43,725) ----------------- ----------------- - ----------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Construction and acquisition expenditures: Utility (136,347) (105,054) Non-regulated businesses (517,991) (78,654) Nuclear decommissioning trust funds (17,658) (17,658) Proceeds from disposition of assets 14,994 47,209 Shared savings program (6,676) (10,594) Other (1,267) 2,278 ----------------- ----------------- Net cash flows used for investing activities (664,945) (162,473) ----------------- ----------------- - ----------------------------------------------------------------------------------------------------- Net decrease in cash and temporary cash investments (81,800) (2,424) ----------------- ----------------- - ----------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of period 113,669 31,827 ----------------- ----------------- - ----------------------------------------------------------------------------------------------------- Cash and temporary cash investments at end of period $31,869 $29,403 ================= ================= - ----------------------------------------------------------------------------------------------------- Supplemental cash flow information: Cash paid during the period for: Interest $76,759 $68,166 ================= ================= Income taxes $60,073 $56,130 ================= ================= Noncash investing and financing activities: Capital lease obligations incurred $277 $18,252 ================= ================= - ----------------------------------------------------------------------------------------------------- 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 and six months ended June 30, 2000 and 1999, (b) the consolidated financial position at June 30, 2000 and December 31, 1999, and (c) the consolidated statement of cash flows for the six months ended June 30, 2000 and 1999, have been made. Because of the seasonal nature of IESU's, WP&L's and IPC's operations, results for the three and six months ended June 30, 2000 are not necessarily indicative of results that may be expected for the year ending December 31, 2000. Certain prior period amounts have been reclassified on a basis consistent with the 2000 presentation. 2. Alliant Energy's comprehensive income (loss), and the components of other comprehensive income (loss), net of taxes, were as follows (in thousands):
For the Three Months Ended June 30, For the Six Months Ended June 30, 2000 1999 2000 1999 ----------------------------------- --------------------------------- Net income $42,278 $38,546 $61,598 $80,289 Other comprehensive income (loss): Unrealized gains (losses) on securities: Unrealized holding gains (losses) arising during period, net of tax (1) (215,621) 84,742 68,837 159,773 Less: reclassification adjustment for gains included in net income, net of tax (2) -- (21,324) (6,328) (21,324) --------------- ------------- ------------- ------------- Net unrealized gains (losses) (215,621) 63,418 62,509 138,449 --------------- ------------- ------------- ------------- Foreign currency translation adjustments (19,135) (239) (18,218) (853) --------------- ------------- ------------- ------------- Other comprehensive income (loss) (234,756) 63,179 44,291 137,596 --------------- ------------- ------------- ------------- Comprehensive income (loss) ($192,478) $101,725 $105,889 $217,885 =============== ============= ============= =============
(1) Primarily due to quarterly adjustments to the estimated fair value of Alliant Energy's investments in McLeod and Capstone. Alliant Energy invested $10 million in Capstone in March 2000. Capstone and Resources also entered into a non-exclusive distribution agreement in which Resources will act as a distributor for Capstone's MicroTurbine power generation systems and solutions. (2) The first quarter 2000 earnings included a pre-tax gain of $10.2 million ($0.08 per share) from the sale of 150,000 shares (450,000 shares as adjusted for the 3-for-1 stock split effective April 24, 2000) of McLeod stock held by Alliant Energy. The second quarter 1999 earnings included a pre-tax gain of $33.8 million ($0.27 per share) from the sale of approximately 640,000 shares (approximately 3,840,000 shares as adjusted for both the 2-for-1 stock split effective July 26, 1999 and the 3-for-1 stock split effective April 24, 2000) of McLeod stock held by Alliant Energy. Alliant Energy still held beneficial ownership in approximately 57 million shares of McLeod stock as of June 30, 2000. IESU and WP&L had no other comprehensive income in the periods presented. 8 3. 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 June 30, 2000 ------------- Operating revenues $393,843 $54,653 $7,422 $455,918 $117,309 ($662) $572,565 Operating income (loss) 61,034 (4,746) 740 57,028 3,251 (112) 60,167 Net income 20,042 21,972 264 42,278 Three Months Ended June 30, 1999 ------------- Operating revenues $366,152 $46,200 $7,820 $420,172 $66,595 ($653) $486,114 Operating income (loss) 56,155 (2,018) 1,529 55,666 4,101 491 60,258 Net income (loss) 17,138 21,560 (152) 38,546 Six Months Ended June 30, 2000 ------------- Operating revenues $767,465 $184,787 $15,578 $967,830 $226,772 ($1,187) $1,193,415 Operating income (loss) 124,872 14,105 2,520 141,497 7,194 (134) 148,557 Net income (loss) 59,109 5,860 (3,371) 61,598 Six Months Ended June 30, 1999 ------------- Operating revenues $717,490 $179,885 $17,024 $914,399 $119,794 ($1,224) $1,032,969 Operating income 124,770 21,921 3,883 150,574 2,265 406 153,245 Net income (loss) 61,905 19,654 (1,270) 80,289
Non-regulated earnings for the three months ended June 30, 2000 included a reversal of the $24.8 million after-tax non-cash charge to net income recorded in the first quarter of 2000 due to a decrease in the stock price of McLeod at June 30, 2000 (the value of the McLeod stock impacts Alliant Energy's obligation under the 30-year exchangeable senior notes issued in February). Refer to "Alliant Energy Results of Operations - Interest Expense and Other" in MD&A for additional information. Resources' (i.e., the non-regulated businesses) assets increased $552 million during the first six months of 2000, primarily due to Alliant Energy's recent investment in various Brazilian utilities and the increase in market value of its investments in Capstone and McLeod. On January 25, 2000, Resources acquired a stake in four Brazilian electric utilities for a total of approximately $347 million. Intersegment revenues were not material to Alliant Energy's operations. 4. The provisions for income taxes are based on the estimated annual effective tax rate, which differs from the federal statutory rate of 35% principally due to: state income taxes, tax credits, effects of utility rate making and certain non-deductible expenses. 9 5. At June 30, 2000, Alliant Energy had $580 million of investments in foreign entities on its Consolidated Balance Sheet that primarily included investments in various Brazilian electric utilities, investments in various New Zealand and Australian utility entities, investments in various generation facilities in China and an investment in secured debentures of a development project in Mexico. The Brazil, China and a portion of both the New Zealand and Australian investments are accounted for under the equity method. The remainder of the New Zealand and Australian investments are accounted for under the cost method. The geographic concentration of Alliant Energy's investments in foreign entities at June 30, 2000, included investments of approximately $355 million in Brazil, $137 million in New Zealand and Australia, $72 million in China and $16 million in Mexico. 6. Summary financial information for Resources was as follows (in thousands): June 30, 2000 ------------- Current assets $103,938 Non-current assets 2,296,225 Current liabilities 263,397 Non-current liabilities (excludes minority interest) 551,322 Minority interest (primarily real estate joint ventures) 7,189 Refer to the "Non-regulated Businesses" column of Note 3 for summary income statement data of Resources. Alliant Energy has not presented separate financial statements for Resources because it is a wholly-owned subsidiary of Alliant Energy and because management has determined that such information is not material to holders of senior notes of Resources. Alliant Energy has fully and unconditionally guaranteed the payment of principal and interest on the senior notes. 7. On February 1, 2000, Resources completed a private placement of $402.5 million of exchangeable senior notes due 2030. The exchangeable senior notes have a stated interest rate of 7.25% through February 15, 2003 and 2.5% thereafter and are exchangeable for cash based upon a percentage of the value of McLeod Class A Common Stock. Refer to "Other Matters-Accounting Pronouncements" in MD&A for a further discussion. WP&L issued $100 million of senior unsecured debentures in March 2000 at a fixed interest rate of 7-5/8%, due 2010. The net proceeds from the sale of the debentures were primarily used to repay short-term debt. 10
IES UTILITIES INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------- (in thousands) Operating revenues: Electric utility $148,327 $142,209 $294,035 $282,226 Gas utility 27,445 22,012 86,874 83,308 Steam 6,185 6,572 13,172 14,524 --------------- --------------- ----------------- --------------- 181,957 170,793 394,081 380,058 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Operating expenses: Electric and steam production fuels 28,995 12,285 61,634 38,873 Purchased power 17,718 27,142 31,140 40,292 Cost of gas sold 16,964 11,623 55,038 49,535 Other operation and maintenance 56,939 57,739 110,705 115,084 Depreciation and amortization 26,849 25,481 53,699 50,963 Taxes other than income taxes 12,057 12,468 23,932 25,083 --------------- --------------- ----------------- --------------- 159,522 146,738 336,148 319,830 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Operating income 22,435 24,055 57,933 60,228 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Interest expense and other: Interest expense 12,584 14,434 25,595 27,638 Allowance for funds used during construction (573) (535) (1,063) (1,384) Miscellaneous, net (1,415) (2,499) (6,166) (3,355) --------------- --------------- ----------------- --------------- 10,596 11,400 18,366 22,899 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 11,839 12,655 39,567 37,329 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Income taxes 5,294 5,611 16,912 15,828 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Net income 6,545 7,044 22,655 21,501 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Preferred dividend requirements 229 229 457 457 --------------- --------------- ----------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------- Earnings available for common stock $6,316 $6,815 $22,198 $21,044 =============== =============== ================= =============== - ------------------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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IES UTILITIES INC. CONSOLIDATED BALANCE SHEETS June 30, 2000 December 31, ASSETS (Unaudited) 1999 - ---------------------------------------------------------------------------------------------------------------- (in thousands) Property, plant and equipment: Utility - Plant in service - Electric $2,219,674 $2,196,895 Gas 211,526 207,769 Steam 59,866 59,929 Common 150,594 147,845 ------------------- ----------------- 2,641,660 2,612,438 Less - Accumulated depreciation 1,362,230 1,311,996 ------------------- ----------------- 1,279,430 1,300,442 Construction work in progress 56,077 37,572 Leased nuclear fuel, net of amortization 32,832 39,284 ------------------- ----------------- 1,368,339 1,377,298 Other property, plant and equipment, net of accumulated depreciation and amortization of $2,167 and $2,094, respectively 5,408 5,481 ------------------- ----------------- 1,373,747 1,382,779 ------------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 4,325 5,720 Accounts receivable: Customer, less allowance for doubtful accounts of $321 and $824, respectively 6,761 14,130 Associated companies 1,890 5,696 Other, less allowance for doubtful accounts of $370 and $817, respectively 11,340 12,864 Income tax refunds receivable 13,422 6,007 Production fuel, at average cost 13,721 12,312 Materials and supplies, at average cost 24,752 24,722 Gas stored underground, at average cost 8,377 11,462 Adjustment clause balances 1,618 11,099 Regulatory assets 17,212 18,569 Prepayments and other 1,973 2,921 ------------------- ----------------- 105,391 125,502 ------------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Investments: Nuclear decommissioning trust funds 109,855 105,056 Other 6,120 6,119 ------------------- ----------------- 115,975 111,175 ------------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Other assets: Regulatory assets 112,717 123,031 Deferred charges and other 12,623 13,321 ------------------- ----------------- 125,340 136,352 ------------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Total assets $1,720,453 $1,755,808 =================== ================= - ---------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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IES UTILITIES INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) June 30, 2000 December 31, CAPITALIZATION AND LIABILITIES (Unaudited) 1999 - -------------------------------------------------------------------------------------------------------------------- (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 245,835 252,953 ------------------ ----------------- Total common equity 558,304 565,422 ------------------ ----------------- Cumulative preferred stock 18,320 18,320 Long-term debt (excluding current portion) 490,645 551,079 ------------------ ----------------- 1,067,269 1,134,821 ------------------ ----------------- - -------------------------------------------------------------------------------------------------------------------- Current liabilities: Current maturities and sinking funds 60,560 51,196 Capital lease obligations 11,463 13,307 Notes payable to associated companies 84,743 56,946 Accounts payable 39,437 41,273 Accounts payable to associated companies 21,001 17,438 Accrued payroll and vacations 8,589 7,816 Accrued interest 8,888 10,833 Accrued taxes 44,331 44,259 Other 18,977 15,802 ------------------ ----------------- 297,989 258,870 ------------------ ----------------- - -------------------------------------------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Accumulated deferred income taxes 226,891 225,961 Accumulated deferred investment tax credits 26,554 26,682 Environmental liabilities 23,243 26,292 Pension and other benefit obligations 27,278 27,734 Capital lease obligations 21,369 25,977 Other 29,860 29,471 ------------------ ----------------- 355,195 362,117 ------------------ ----------------- - -------------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $1,720,453 $1,755,808 ================== ================= - -------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
13
IES UTILITIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 - -------------------------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income $22,655 $21,501 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 53,699 50,963 Amortization of leased nuclear fuel 6,730 6,092 Amortization of deferred energy efficiency expenditures 7,319 9,518 Deferred taxes and investment tax credits (616) (6,745) Refueling outage provision 4,811 4,412 Gain on disposition of assets, net (1,415) - Other 1,106 529 Other changes in assets and liabilities: Accounts receivable 12,699 13,537 Income tax refunds receivable (7,415) (1,366) Gas stored underground 3,085 8,486 Accounts payable 1,727 (22,567) Adjustment clause balances 9,482 (8,488) Benefit obligations and other (84) 3,596 ----------------- ------------------ Net cash flows from operating activities 113,783 79,468 ----------------- ------------------ - -------------------------------------------------------------------------------------------------------------------- Cash flows used for financing activities: Common stock dividends declared (29,316) (58,633) Dividends payable (229) (4,840) Preferred stock dividends (457) (457) Reductions in long-term debt (51,196) (50,140) Net change in short-term borrowings 27,797 29,706 Principal payments under capital lease obligations (5,239) (6,869) Other - (3) ----------------- ------------------ Net cash flows used for financing activities (58,640) (91,236) ----------------- ------------------ - -------------------------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Utility construction expenditures (53,783) (41,173) Nuclear decommissioning trust funds (3,004) (3,004) Proceeds from disposition of assets 1,415 - Other (1,166) 236 ----------------- ------------------ Net cash flows used for investing activities (56,538) (43,941) ----------------- ------------------ - -------------------------------------------------------------------------------------------------------------------- Net decrease in cash and temporary cash investments (1,395) (55,709) ----------------- ------------------ - -------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of period 5,720 57,904 ----------------- ------------------ - -------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at end of period $4,325 $2,195 ================= ================== - -------------------------------------------------------------------------------------------------------------------- Supplemental cash flow information: Cash paid during the period for: Interest $24,317 $24,714 ================= ================== Income taxes $24,158 $30,824 ================= ================== Noncash investing and financing activities-Capital lease obligations incurred $277 $18,252 ================= ================== - -------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
14 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 and six months ended June 30, 2000 and 1999, (b) the consolidated financial position at June 30, 2000 and December 31, 1999, and (c) the consolidated statement of cash flows for the six months ended June 30, 2000 and 1999, have been made. Because of the seasonal nature of IESU's operations, results for the three and six months ended June 30, 2000 are not necessarily indicative of results that may be expected for the year ending December 31, 2000. Certain prior period amounts have been reclassified on a basis consistent with the 2000 presentation. 2. 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 June 30, 2000 -------------------------------- Operating revenues $148,327 $27,445 $6,185 $181,957 Operating income (loss) 24,092 (1,992) 335 22,435 Earnings available for common stock 6,316 Three Months Ended June 30, 1999 -------------------------------- Operating revenues $142,209 $22,012 $6,572 $170,793 Operating income (loss) 23,803 (895) 1,147 24,055 Earnings available for common stock 6,815 Six Months Ended June 30, 2000 ------------------------------ Operating revenues $294,035 $86,874 $13,172 $394,081 Operating income 50,777 5,422 1,734 57,933 Earnings available for common stock 22,198 Six Months Ended June 30, 1999 ------------------------------ Operating revenues $282,226 $83,308 $14,524 $380,058 Operating income 49,140 8,052 3,036 60,228 Earnings available for common stock 21,044
15
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------ (in thousands) Operating revenues: Electric utility $173,111 $150,510 $335,487 $300,455 Gas utility 19,515 15,358 74,801 67,151 Water 1,239 1,248 2,409 2,500 --------------- --------------- --------------- --------------- 193,865 167,116 412,697 370,106 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Operating expenses: Electric production fuels 26,703 26,014 50,501 53,380 Purchased power 38,063 28,425 71,820 52,424 Cost of gas sold 9,638 5,798 44,967 36,979 Other operation and maintenance 54,319 49,207 100,184 84,419 Depreciation and amortization 32,599 28,407 64,976 59,546 Taxes other than income taxes 7,417 7,355 14,628 15,057 --------------- --------------- --------------- --------------- 168,739 145,206 347,076 301,805 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Operating income 25,126 21,910 65,621 68,301 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Interest expense and other: Interest expense 11,228 10,078 22,136 19,943 Allowance for funds used during construction (2,088) (1,109) (3,150) (2,032) Miscellaneous, net (2,353) 1,996 (6,432) (2,348) --------------- --------------- --------------- --------------- 6,787 10,965 12,554 15,563 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Income before income taxes 18,339 10,945 53,067 52,738 --------------- --------------- --------------- --------------- - --------------------------------------------------------------------------------------- ---------------------------------- Income taxes 7,041 3,992 19,898 19,497 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Net income 11,298 6,953 33,169 33,241 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Preferred dividend requirements 828 828 1,656 1,656 --------------- --------------- --------------- --------------- - ------------------------------------------------------------------------------------------------------------------------------ Earnings available for common stock $10,470 $6,125 $31,513 $31,585 =============== =============== =============== =============== - ------------------------------------------------------------------------------------------------------------------------------ The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
16
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEETS June 30, 2000 December 31, ASSETS (Unaudited) 1999 - --------------------------------------------------------------------------------------------------------------- (in thousands) Property, plant and equipment: Utility - Plant in service - Electric $1,968,757 $1,921,624 Gas 267,103 258,132 Water 28,396 27,770 Common 223,577 218,607 ----------------- ----------------- 2,487,833 2,426,133 Less - Accumulated depreciation 1,327,807 1,266,366 ----------------- ----------------- 1,160,026 1,159,767 Construction work in progress 58,445 66,784 Nuclear fuel, net of amortization 18,680 15,079 ----------------- ----------------- 1,237,151 1,241,630 Other property, plant and equipment, net of accumulated depreciation and amortization of $215 and $169, respectively 605 608 ----------------- ----------------- 1,237,756 1,242,238 ----------------- ----------------- - --------------------------------------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 8,596 3,555 Accounts receivable: Customer 18,670 22,061 Associated companies 1,335 5,067 Other 9,456 10,984 Production fuel, at average cost 15,779 20,663 Materials and supplies, at average cost 22,274 20,439 Gas stored underground, at average cost 7,907 8,624 Prepaid gross receipts tax 21,976 20,864 Other 7,116 9,275 ----------------- ----------------- 113,109 121,532 ----------------- ----------------- - --------------------------------------------------------------------------------------------------------------- Investments: Nuclear decommissioning trust funds 171,063 166,202 Other 15,673 15,272 ----------------- ----------------- 186,736 181,474 ----------------- ----------------- - --------------------------------------------------------------------------------------------------------------- Other assets: Regulatory assets 86,431 82,161 Deferred charges and other 155,017 138,730 ----------------- ----------------- 241,448 220,891 ----------------- ----------------- - --------------------------------------------------------------------------------------------------------------- Total assets $1,779,049 $1,766,135 ================= ================= - --------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
17
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEETS (CONTINUED) June 30, 2000 December 31, CAPITALIZATION AND LIABILITIES (Unaudited) 1999 - ---------------------------------------------------------------------------------------------------------------- (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 229,438 229,438 Retained earnings 335,103 303,476 ----------------- ----------------- Total common equity 630,724 599,097 ----------------- ----------------- Cumulative preferred stock 59,963 59,963 Long-term debt (excluding current portion) 514,132 414,673 ----------------- ----------------- 1,204,819 1,073,733 ----------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Current liabilities: Current maturities 1,875 1,875 Variable rate demand bonds 55,100 55,100 Notes payable to associated companies 28,791 125,749 Accounts payable 76,506 88,245 Accounts payable to associated companies 27,466 25,306 Other 30,184 30,283 ----------------- ----------------- 219,922 326,558 ----------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Accumulated deferred income taxes 229,439 235,838 Accumulated deferred investment tax credits 30,392 31,311 Customer advances 33,877 34,643 Environmental liabilities 10,300 10,861 Other 50,300 53,191 ----------------- ----------------- 354,308 365,844 ----------------- ----------------- - ---------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $1,779,049 $1,766,135 ================= ================= - ---------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
18
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 - -------------------------------------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income $33,169 $33,241 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 64,976 59,546 Amortization of nuclear fuel 2,173 3,050 Deferred taxes and investment tax credits (6,721) (4,258) Other (6,521) (620) Other changes in assets and liabilities: Accounts receivable 8,651 9,350 Income tax refunds receivable - (8,129) Production fuel 4,884 4,628 Accounts payable (9,579) (20,359) Benefit obligations and other (4,344) (4,255) --------------------- --------------------- Net cash flows from operating activities 86,688 72,194 --------------------- --------------------- - -------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Common stock dividends - (29,176) Preferred stock dividends (1,656) (1,656) Proceeds from issuance of long-term debt 100,000 - Net change in short-term borrowings (96,958) 32,236 Other (1,319) - --------------------- --------------------- Net cash flows from financing activities 67 1,404 --------------------- --------------------- - -------------------------------------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Utility construction expenditures (60,214) (48,600) Nuclear decommissioning trust funds (14,654) (14,654) Shared savings program (6,902) (7,723) Other 56 (153) --------------------- --------------------- Net cash flows used for investing activities (81,714) (71,130) --------------------- --------------------- - -------------------------------------------------------------------------------------------------------------------------------- Net increase in cash and temporary cash investments 5,041 2,468 --------------------- --------------------- - -------------------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of period 3,555 1,811 --------------------- --------------------- - -------------------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at end of period $8,596 $4,279 ===================== ===================== - -------------------------------------------------------------------------------------------------------------------------------- Supplemental cash flow information: Cash paid during the period for: Interest $18,418 $21,860 ===================== ===================== Income taxes $30,016 $32,885 ===================== ===================== - -------------------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
19 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 subsidiary. 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 and six months ended June 30, 2000 and 1999, (b) the consolidated financial position at June 30, 2000 and December 31, 1999, and (c) the consolidated statement of cash flows for the six months ended June 30, 2000 and 1999, have been made. Because of the seasonal nature of WP&L's operations, results for the three and six months ended June 30, 2000 are not necessarily indicative of results that may be expected for the year ending December 31, 2000. Certain prior period amounts have been reclassified on a basis consistent with the 2000 presentation. 2. 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 June 30, 2000 Operating revenues $173,111 $19,515 $1,239 $193,865 Operating income (loss) 25,737 (1,017) 406 25,126 Earnings available for common stock 10,470 Three Months Ended June 30, 1999 Operating revenues $150,510 $15,358 $1,248 $167,116 Operating income (loss) 22,540 (1,012) 382 21,910 Earnings available for common stock 6,125 Six Months Ended June 30, 2000 Operating revenues $335,487 $74,801 $2,409 $412,697 Operating income 56,796 8,039 786 65,621 Earnings available for common stock 31,513 Six Months Ended June 30, 1999 Operating revenues $300,455 $67,151 $2,500 $370,106 Operating income 57,889 9,565 847 68,301 Earnings available for common stock 31,585
20 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. From time to time, Alliant Energy, IESU or WP&L may make other forward-looking statements within the meaning of the federal securities laws that involve judgments, assumptions and other uncertainties beyond the control of such companies. These forward-looking statements may include, among others, statements concerning revenue and cost trends, cost recovery, cost reduction strategies and anticipated outcomes, pricing strategies, changes in the utility industry, planned capital expenditures, financing needs and availability, statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar comments concerning matters that are not historical facts. Investors and other users of the forward-looking statements are cautioned that such statements are not a guarantee of future performance and that 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, competitive factors, general economic conditions in the relevant service territory, federal and state regulatory or government actions, including issues associated with the deregulation of the utility industry, unanticipated construction and acquisition expenditures, issues related to stranded costs and the recovery thereof, 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 issues relating to establishing a transmission company, material changes in the value of Alliant Energy's investment in McLeod, technological developments, employee workforce factors, including changes in key executives, collective bargaining agreements or work stoppages, political, legal and economic 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, 1999. Set forth below are several developments relating to such regulatory environment. Across the nation, approximately half of the states (including Illinois) have passed legislation or issued regulatory rulings granting customers the right to choose their electric energy supplier. Legislation that would allow customers to choose their electric energy supplier was introduced in Iowa in 2000 but was never voted upon. At the federal level, a number of proposals to restructure the electric industry are currently under consideration. However, there continues to be a lack of consensus over how restructuring should be implemented and how much control the federal government should have over this process. Until one of the proposals gains significant bipartisan support, Alliant Energy believes there is unlikely to be final federal action to either facilitate or force states to open electricity markets to competition. 21 "Reliability 2000" legislation was enacted in Wisconsin in 1999. This legislation included, among other items, the formation of a Wisconsin transmission company for those Wisconsin utility holding companies who elect to take advantage of the asset cap law. WP&L currently expects to transfer its transmission assets to the transmission company (American Transmission Company, or ATC)at the end of 2000 and it is expected that the net book value of such assets (approximately $170 million) will become the new carrying value of its investment in ATC, resulting in no gain or loss for WP&L. In July 2000, the PSCW issued a ruling indicating that facilities with voltages of 50 kV and above are considered transmission facilities for purposes of transferring assets to ATC. At this time, Alliant Energy has decided not to contribute IESU's and IPC's transmission assets to ATC. WP&L does not expect this transfer to result in a significant impact on its financial condition or results of operations because it believes the FERC will allow WP&L to earn a return on the contributed assets comparable to the return currently allowed by the PSCW and FERC. WP&L will not be able to determine its exact ownership percentage in ATC until it is known which entities will participate in ATC, and the valuation of the assets each participant contributes is completed. However, WP&L expects its ownership interest to exceed 20%, but be less than 50%. As a result, WP&L expects to account for its investment in ATC under the equity method. Although no assurance can be given, it is currently anticipated that ATC's dividend policy will support a return of a significant portion of these earnings to the participants. ATC will realize its revenues from the provision of transmission services to both participants in ATC as well as nonparticipants. ATC is currently expected to begin operations on January 1, 2001. In December 1999, FERC issued Order 2000 which outlines requirements for utilities to voluntarily turn over operational control of their transmission system to a regional entity. FERC's timeline is to have the RTOs in operation by the end of 2001. Alliant Energy's current plans to contribute its Wisconsin transmission assets to ATC, in exchange for an equity interest, and to participate in the Midwest ISO are expected to comply with the provisions of Order 2000. In March 2000, FERC approved Alliant Energy's membership in the Midwest ISO as well as WP&L's transfer of its transmission assets. Each of the utilities 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 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 subsidiaries' operations becomes no longer subject to the provisions of SFAS 71 as a result of competitive restructurings or otherwise, 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 would meet the requirements under generally accepted accounting principles for continued accounting as regulatory assets during such recovery period. In addition, each utility subsidiary would be required to determine any impairment of other assets and write-down any impaired assets to their fair value. The utility subsidiaries believe they currently meet the requirements of SFAS 71 and will continue to monitor and assess this as the various utility industry restructuring initiatives progress. ALLIANT ENERGY RESULTS OF OPERATIONS Overview - Second Quarter Results - Alliant Energy reported net income of - --------------------------------- $42.3 million, or $0.54 per share (basic and diluted), for the second quarter of 2000 compared to $38.5 million, or $0.49 per share (basic and diluted), for the second quarter of 1999. The second quarter 2000 earnings included $24.8 million of non-cash income, or $0.31 per share, to reverse the non-cash charge recorded in the first quarter of 2000 for an increase in Alliant Energy's obligation under certain 30-year exchangeable senior notes issued in February. The second quarter 1999 earnings included $0.27 per share realized from the sale of certain shares of Alliant Energy's investment in McLeod last year. Excluding the 2000 non-cash income adjustment and the 1999 McLeod gain, earnings per share were $0.22 in both 2000 and 1999. 22 Earnings in the second quarter of 2000 benefited from higher electric utility margins primarily due to the favorable impact of approximately $10 million due to a change in estimate of WP&L's utility services rendered but unbilled at month-end and increased earnings from Alliant Energy's oil and gas and electricity trading businesses. Earnings in 2000 were also impacted by higher utility operating expenses, largely due to a planned refueling outage at Kewaunee, increased interest expense to fund Alliant Energy's strategic growth initiatives and the expected earnings dilution from Alliant Energy's recent investment in Brazil. Second quarter 2000 utility earnings were $20.0 million ($0.25 per share) compared to $17.1 million ($0.22 per share) for the same period in 1999. The increase resulted primarily from an increase in electric margin partially offset by higher other operation and maintenance expenses. Resources reported net income of $22.0 million ($0.28 per share) in the second quarter of 2000, including the $24.8 million non-cash income related to the exchangeable senior notes issued in February 2000. Net income for the second quarter of 1999 was $21.6 million ($0.27 per share), which included the McLeod gain. Excluding the 2000 non-cash income adjustment and the 1999 McLeod gain, second quarter earnings per share were ($0.04) in 2000 and $0.01 in 1999. Higher interest expense ($0.05 per share) to fund Resources' strategic growth initiatives and the expected dilutive effect of Resources' recent investment in Brazil ($0.04 per share for earnings before interest and taxes) contributed to the lower earnings in 2000. Resources expects the impact of the Brazilian investment will be dilutive to earnings in 2000 with positive contributions in subsequent years. These items were partially offset by the increased earnings from Resources' oil and gas ($0.03 per share) and electricity trading ($0.03 per share) businesses. The non-cash income of $24.8 million realized in the second quarter was a reversal of the $24.8 million non-cash charge recorded in the first quarter. The increase at March 31, 2000, in Alliant Energy's obligation relating to the exchangeable senior notes, reversed in the second quarter due to a decrease in the stock price of McLeod at June 30, 2000 (the value of the McLeod stock impacts Alliant Energy's obligation under the exchangeable senior notes). The adoption of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," is expected to mitigate these fluctuations in earnings. Refer to "Other Matters - Accounting Pronouncements" for additional information. Electric Utility Operations - Electric margins and MWH sales for Alliant - --------------------------- Energy for the three months ended June 30 were as follows:
Revenues and Costs MWHs Sold (in thousands) (in thousands) ---------------------------------- -------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- --------------- --------------- ----------- Residential $127,945 $123,379 4% 1,535 1,575 (3%) Commercial 83,674 77,534 8% 1,260 1,251 1% Industrial 127,209 116,780 9% 3,367 3,239 4% ----------------- --------------- --------------- --------------- Total from ultimate customers 338,828 317,693 7% 6,162 6,065 2% Sales for resale 43,717 37,364 17% 1,160 1,339 (13%) Other 11,298 11,095 2% 41 39 5% ----------------- --------------- --------------- --------------- Total revenues/sales 393,843 366,152 8% 7,363 7,443 (1%) =============== =============== Electric production fuels expense 60,167 49,827 21% Purchased power expense 74,792 72,440 3% ----------------- --------------- Margin $258,884 $243,885 6% ================= ===============
23 Electric margins and MWH sales for Alliant Energy for the six months ended June 30 were as follows:
Revenues and Costs MWHs Sold (in thousands) (in thousands) ---------------------------------- -------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- --------------- --------------- ----------- Residential $262,940 $253,659 4% 3,357 3,385 (1%) Commercial 161,524 149,557 8% 2,537 2,495 2% Industrial 238,753 219,381 9% 6,488 6,314 3% ----------------- --------------- --------------- --------------- Total from ultimate customers 663,217 622,597 7% 12,382 12,194 2% Sales for resale 77,611 73,578 5% 2,365 2,684 (12%) Other 26,637 21,315 25% 88 81 9% ----------------- --------------- --------------- --------------- Total revenues/sales 767,465 717,490 7% 14,835 14,959 (1%) =============== =============== Electric production fuels expense 125,713 111,136 13% Purchased power expense 137,137 124,505 10% ----------------- --------------- Margin $504,615 $481,849 5% ================= ===============
Electric margin increased $15.0 million, or 6%, and $22.8 million, or 5%, for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to the favorable impact of approximately $10 million due to a change in estimate of WP&L's utility services rendered but unbilled at month-end, increases of 2% in sales to retail customers resulting from economic growth in Alliant Energy's service territory and a WP&L rate recovery adjustment implemented in early May 2000 to recover higher purchased-power and transmission costs. Also contributing to the increase in electric margin for the six months ended June 30 was a $15 million annual rate recovery adjustment implemented in March 1999 at WP&L to recover higher purchased-power and transmission costs. Other revenues increased for the six months ended June 30 primarily due to WP&L conservation programs for which WP&L receives a return on invested capital. Higher purchased-power costs resulting from the planned Kewaunee outage and the impact of milder weather conditions partially offset these items for both periods. 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. Gas Utility Operations - Gas margins and Dth sales for Alliant Energy for the - ---------------------- three months ended June 30 were as follows:
Revenues and Costs Dekatherms Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $32,597 $26,602 23% 4,354 3,969 10% Commercial 15,466 12,495 24% 2,657 2,532 5% Industrial 3,716 3,649 2% 898 1,038 (13%) Transportation/other 2,874 3,454 (17%) 9,604 10,834 (11%) ----------------- --------------- -------------- --------------- Total revenues/sales 54,653 46,200 18% 17,513 18,373 (5%) ============== =============== Cost of gas sold 31,869 22,666 41% ----------------- --------------- Margin $22,784 $23,534 (3%) ================= ===============
24 Gas margins and Dth sales for Alliant Energy for the six months ended June 30 were as follows:
Revenues and Costs Dekatherms Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $112,208 $109,041 3% 17,428 18,805 (7%) Commercial 55,036 51,654 7% 10,433 11,091 (6%) Industrial 10,550 10,416 1% 2,586 2,957 (13%) Transportation/other 6,993 8,774 (20%) 22,001 25,443 (14%) ----------------- --------------- -------------- --------------- Total revenues/sales 184,787 179,885 3% 52,448 58,296 (10%) ============== =============== Cost of gas sold 113,982 104,009 10% ----------------- --------------- Margin $70,805 $75,876 (7%) ================= ===============
Gas margin decreased $0.8 million, or 3%, and $5.1 million, or 7%, for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999. The decrease for both periods is primarily due to the decline in sales resulting from milder weather. 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 and six months ended June 30 were as follows (in thousands):
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 --------------- ---------------- ---------------- --------------- ISCO $79,629 $37,493 $159,851 $66,899 Oil and gas (Whiting) 26,605 16,608 45,799 29,442 Steam 6,536 6,894 13,876 15,155 Transportation 5,217 5,218 10,006 10,442 Other 6,082 7,549 11,631 13,656 --------------- ---------------- ---------------- --------------- $124,069 $73,762 $241,163 $135,594 =============== ================ ================ ===============
ISCO revenues increased $42.1 million and $93.0 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to the second quarter 1999 acquisition of an oil gathering and transportation business in Texas. Oil and gas revenues increased for both periods due to higher oil and gas prices, partially offset by reduced gas volumes. Other Operating Expenses - Other operation and maintenance expenses for the - ------------------------ three and six months ended June 30 were as follows (in thousands):
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 --------------- ---------------- ---------------- --------------- Utility - IESU / WP&L / IPC $136,445 $129,246 $259,206 $239,839 ISCO 80,681 34,019 156,984 60,657 Oil and gas (Whiting) 9,384 7,124 16,733 14,658 Transportation 2,660 2,312 5,557 4,841 Other 7,872 7,524 15,028 14,408 --------------- ---------------- ---------------- --------------- $237,042 $180,225 $453,508 $334,403 =============== ================ ================ ===============
25 Other operation and maintenance expenses at the utility subsidiaries increased $7.2 million and $19.4 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to a planned second quarter 2000 refueling outage at Kewaunee, $3 million of one-time fees related to the transfer of the Iowa utility businesses from the MAPP reliability region to the MAIN region and higher transmission and distribution expenses at WP&L. Refer to "Power Supply" for additional information related to MAPP and MAIN. Also contributing to the increase were higher nuclear operations expense, the timing of MGP expenditures, and increased energy conservation expense at WP&L. Such increases were partially offset by lower employee benefit costs and the nonrecurrence of expenses in 1999 relating to Alliant Energy's Year 2000 readiness program. Other operation and maintenance expenses at ISCO increased $46.7 million and $96.3 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to expenses associated with the acquisition of the oil gathering and transportation business. Depreciation and amortization expense increased $7.5 million and $9.8 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to increased earnings in the WP&L nuclear decommissioning trust fund (offset entirely in "Miscellaneous, net"), increased amortization expenses and property additions. Interest Expense and Other - Interest expense increased $7.1 million and - -------------------------- $14.3 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to higher non-regulated and utility borrowings to fund Alliant Energy's strategic growth initiatives, including Resources' $347 million investment in several Brazilian electric utilities in January 2000. The non-cash income of $24.8 million realized in the second quarter was a reversal of the $24.8 million non-cash charge recorded in the first quarter. The increase at March 31, 2000, in Alliant Energy's obligation relating to the exchangeable senior notes, reversed in the second quarter due to a decrease in the stock price of McLeod at June 30, 2000 (the value of the McLeod stock impacts Alliant Energy's obligation under the exchangeable senior notes). The adoption of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," is expected to mitigate these fluctuations in earnings. Refer to "Other Matters - Accounting Pronouncements" for additional information. Alliant Energy sold 150,000 shares (450,000 shares as adjusted for the 3-for-1 stock split effective April 24, 2000) of its investment in McLeod in the first quarter of 2000, resulting in a pre-tax gain of $10.2 million. Miscellaneous, net income increased $6.0 million and $12.4 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to increased earnings in the WP&L nuclear decommissioning trust fund and an increase in equity income from Alliant Energy's electricity trading business. In addition, Alliant Energy realized $4.1 million from a tax settlement at IESU in the first quarter of 2000. Such increases were partially offset by the dilutive effect of Alliant Energy's recent investment in Brazil and a decrease in the IESU nuclear decommissioning trust fund earnings. Income Taxes - Income tax expense increased $1.9 million and decreased $10.6 - ------------ million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to changes in taxable income. The effective income tax rates were 37.2% for both the three- and six-month periods ended June 30, 2000, compared with 37.5% and 37.0%, respectively, for the same periods last year. IESU RESULTS OF OPERATIONS Overview - Second Quarter Results - IESU's earnings available for common - -------- stock decreased $0.5 million for the three months ended June 30, 2000, compared with the same period in 1999, primarily due to higher depreciation and amortization expense and a lower electric margin, partially offset by reduced other operation and maintenance expenses. 26 Electric Utility Operations - Electric margins and MWH sales for IESU for the - --------------------------- three months ended June 30 were as follows:
Revenues and Costs MWHs Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $50,192 $51,226 (2%) 582 595 (2%) Commercial 41,783 38,884 7% 643 618 4% Industrial 46,021 43,211 7% 1,302 1,292 1% ----------------- --------------- -------------- --------------- Total from ultimate customers 137,996 133,321 4% 2,527 2,505 1% Sales for resale 7,294 6,382 14% 254 341 (26%) Other 3,037 2,506 21% 10 11 9% ----------------- --------------- -------------- --------------- Total revenues/sales 148,327 142,209 4% 2,791 2,857 (2%) ============== =============== Electric production fuels expense 25,049 8,752 186% Purchased power expense 17,718 27,142 (35%) ----------------- --------------- Margin $105,560 $106,315 (1%) ================= ===============
Electric margins and MWH sales for IESU for the six months ended June 30 were as follows:
Revenues and Costs MWHs Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $105,134 $105,579 -- 1,266 1,288 (2%) Commercial 82,009 77,432 6% 1,276 1,246 2% Industrial 88,226 81,093 9% 2,515 2,474 2% ----------------- --------------- -------------- --------------- Total from ultimate customers 275,369 264,104 4% 5,057 5,008 1% Sales for resale 12,497 12,735 (2%) 501 682 (27%) Other 6,169 5,387 15% 21 21 -- ----------------- --------------- -------------- --------------- Total revenues/sales 294,035 282,226 4% 5,579 5,711 (2%) ============== =============== Electric production fuels expense 53,961 31,247 73% Purchased power expense 31,140 40,292 (23%) ----------------- --------------- Margin $208,934 $210,687 (1%) ================= ===============
Electric margin decreased $0.8 million, or 1%, and $1.8 million, or 1%, for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to reduced recoveries of approximately $1.8 million and $4.3 million, respectively, in concurrent and previously deferred expenditures for Iowa-mandated energy efficiency programs and the impact of milder weather conditions. Increased retail sales from economic growth in the service territory partially offset these items. The recovery for energy efficiency programs in Iowa is in accordance with IUB orders (a portion of these recoveries is offset as they are also amortized to expense in other operation and maintenance expense). 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. 27 Gas Utility Operations - Gas margins and Dth sales for IESU for the three - ---------------------- months ended June 30 were as follows:
Revenues and Costs Dekatherms Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $16,642 $13,034 28% 2,048 1,783 15% Commercial 7,617 5,968 28% 1,217 1,146 6% Industrial 2,187 2,033 8% 571 605 (6%) Transportation/other 999 977 2% 2,184 2,267 (4%) ----------------- --------------- -------------- --------------- Total revenues/sales 27,445 22,012 25% 6,020 5,801 4% ============== =============== Cost of gas sold 16,964 11,623 46% ----------------- --------------- Margin $10,481 $10,389 1% ================= ===============
Gas margins and Dth sales for IESU for the six months ended June 30 were as follows:
Revenues and Costs Dekatherms Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $53,856 $52,195 3% 8,104 8,638 (6%) Commercial 25,319 23,938 6% 4,689 5,035 (7%) Industrial 5,288 4,836 9% 1,382 1,478 (6%) Transportation/other 2,411 2,339 3% 5,102 5,462 (7%) ----------------- --------------- -------------- --------------- Total revenues/sales 86,874 83,308 4% 19,277 20,613 (6%) ============== =============== Cost of gas sold 55,038 49,535 11% ----------------- --------------- Margin $31,836 $33,773 (6%) ================= ===============
Gas margin increased $0.1 million, or 1%, and decreased $1.9 million, or 6%, for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999. The decrease for the six months ended June 30 was primarily due to reduced natural gas sales due to milder weather. 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 - ------------------------ decreased $0.8 million and $4.4 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999 largely due to decreases of $1.5 million and $4.1 million, respectively, in energy efficiency expenses, lower employee benefits costs and the nonrecurrence of expenses in 1999 on Year 2000 readiness efforts. Such decreases were partially offset by the timing of MGP expenditures and one-time fees related to the transfer from the MAPP reliability region to the MAIN region. Also offsetting the six-month decrease were higher nuclear operating expenses. IESU's depreciation and amortization expense increased $1.4 million and $2.7 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to property additions. Interest Expense and Other - Interest expense decreased $1.9 million and $2.0 - -------------------------- million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to lower nuclear decommissioning trust fund earnings, which were offset entirely in "Miscellaneous, net." The accounting for earnings on the nuclear decommissioning trust funds results in no net income impact. Miscellaneous, net income increases for earnings on the trust fund and the corresponding offset is recorded as interest expense. 28 Miscellaneous, net income decreased $1.1 million and increased $2.8 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999. For both periods a decrease in the nuclear decommissioning trust fund earnings previously described was partially offset by a gain on the sale of property in the second quarter of 2000. Also contributing to the increase for the six months ended June 30, 2000, was $4.1 million of interest income realized from a tax settlement in the first quarter of 2000. Income Taxes - IESU's income tax expense decreased $0.3 million and increased - ------------ $1.1 million for the three and six months ended June 30, 2000, respectively, compared with the same periods last year, primarily due to changes in taxable income. The effective income tax rates were 44.7% and 42.7% for the three and six months ended June 30, 2000, respectively, compared with 44.3% and 42.4%, respectively, for the same periods last year. WP&L RESULTS OF OPERATIONS Overview - Second Quarter Results - WP&L's earnings available for common - --------------------------------- stock increased $4.3 million for the three months ended June 30, 2000, compared with the same period in 1999. The increased earnings were primarily due to a change in estimate of WP&L's utility services rendered but unbilled at month-end, which was partially offset by a planned refueling outage at Kewaunee, which resulted in higher maintenance and purchased-power capacity costs, and increased interest expense. Electric Utility Operations - Electric margins and MWH sales for WP&L for the - ------------------------------ three months ended June 30 were as follows:
Revenues and Costs MWHs Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $54,563 $49,660 10% 669 717 (7%) Commercial 32,240 29,445 9% 463 494 (6%) Industrial 52,063 41,880 24% 1,205 1,115 8% ----------------- --------------- -------------- --------------- Total from ultimate customers 138,866 120,985 15% 2,337 2,326 -- Sales for resale 29,061 23,937 21% 773 762 1% Other 5,184 5,588 (7%) 13 14 (7%) ----------------- --------------- -------------- --------------- Total revenues/sales 173,111 150,510 15% 3,123 3,102 1% ============== =============== Electric production fuels expense 26,703 26,014 3% Purchased power expense 38,063 28,425 34% ----------------- --------------- Margin $108,345 $96,071 13% ================= ===============
29 Electric margins and MWH sales for WP&L for the six months ended June 30 were as follows:
Revenues and Costs MWHs Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $112,109 $103,549 8% 1,507 1,518 (1%) Commercial 61,935 56,461 10% 966 959 1% Industrial 93,333 81,479 15% 2,332 2,201 6% ----------------- --------------- -------------- --------------- Total from ultimate customers 267,377 241,489 11% 4,805 4,678 3% Sales for resale 54,018 48,866 11% 1,562 1,575 (1%) Other 14,092 10,100 40% 35 29 21% ----------------- --------------- -------------- --------------- Total revenues/sales 335,487 300,455 12% 6,402 6,282 2% ============== =============== Electric production fuels expense 50,501 53,380 (5%) Purchased power expense 71,820 52,424 37% ----------------- --------------- Margin $213,166 $194,651 10% ================= ===============
Electric margin increased $12.3 million, or 13%, and $18.5 million, or 10%, for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to the favorable impact of approximately $10 million due to a change in estimate of WP&L's utility services rendered but unbilled at month-end and a rate recovery adjustment implemented in early May 2000 to recover higher purchased-power and transmission costs. Also contributing to the six-month increase was a $15 million rate recovery adjustment implemented in March 1999 to recover higher purchased-power and transmission costs and a 3% increase in sales to retail customers due to economic growth in the service territory. Other revenues increased for the six months ended June 30, 2000 primarily due to conservation programs for which WP&L receives a return on its invested capital. Higher purchased-power costs resulting from the planned Kewaunee outage and the impact of milder weather conditions partially offset these items for both periods. Gas Utility Operations - Gas margins and Dth sales for WP&L for the three - ---------------------- months ended June 30 were as follows:
Revenues and Costs Dekatherms Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $11,470 $8,670 32% 1,694 1,470 15% Commercial 5,920 4,290 38% 1,117 991 13% Industrial 906 662 37% 192 178 8% Transportation/other 1,219 1,736 (30%) 2,772 2,695 3% ----------------- --------------- -------------- --------------- Total revenues/sales 19,515 15,358 27% 5,775 5,334 8% ============== =============== Cost of gas sold 9,638 5,798 66% ----------------- --------------- Margin $9,877 $9,560 3% ================= ===============
30 Gas margins and Dth sales for WP&L for the six months ended June 30 were as follows:
Revenues and Costs Dekatherms Sold (in thousands) (in thousands) ---------------------------------- ------------------------------- 2000 1999 Change 2000 1999 Change ----------------- --------------- ----------- -------------- --------------- ----------- Residential $44,483 $39,930 11% 6,987 7,327 (5%) Commercial 23,226 19,390 20% 4,467 4,484 -- Industrial 3,638 3,166 15% 779 837 (7%) Transportation/other 3,454 4,665 (26%) 6,841 6,738 2% ----------------- --------------- -------------- --------------- Total revenues/sales 74,801 67,151 11% 19,074 19,386 (2%) ============== =============== Cost of gas sold 44,967 36,979 22% ----------------- --------------- Margin $29,834 $30,172 (1%) ================= ===============
Gas margin increased $0.3 million, or 3%, and decreased $0.3 million, or 1%, for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999. Other Operating Expenses - Other operation and maintenance expenses increased - ------------------------ $5.1 million and $15.8 million for the three and six months ended June 30, 2000, respectively, compared to the same periods in 1999, primarily due to a planned second quarter 2000 refueling outage at Kewaunee and increased transmission and distribution expenses. Also contributing to the increase for the six months ended June 30 were increased energy conservation expense and higher nuclear operations expense. Partially offsetting such increases for both periods were reduced employee benefits costs. Depreciation and amortization expense increased $4.2 million and $5.4 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to increased earnings on the nuclear decommissioning trust fund (offset entirely in "Miscellaneous, net") and increased amortization expense. The accounting for earnings on the nuclear decommissioning trust funds results in no net income impact. Miscellaneous, net income increases for earnings on the trust fund and the corresponding offset is recorded as depreciation expense. Interest Expense and Other - Interest expense increased $1.2 million and $2.2 - --------------------------- million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to higher borrowings outstanding in 2000. Miscellaneous, net income increased $4.3 million and $4.1 million for the three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, due to increased earnings on the nuclear decommissioning trust fund. Income Taxes - Income taxes increased $3.0 million and $0.4 million for the - ------------- three and six months ended June 30, 2000, respectively, compared with the same periods in 1999, primarily due to changes in pre-tax income. The effective income tax rates were 38.4% and 37.5% for the three and six months ended June 30, 2000, respectively, compared with 36.5% and 37.0%, respectively, for the same periods last year. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities at Alliant Energy decreased $5 million for the six months ended June 30, 2000, compared with the same period in 1999, primarily due to changes in working capital. Cash flows from financing activities increased $428 million for the six months ended June 30, 2000, compared with the same period in 1999, primarily as a result of changes in the amount of debt outstanding. Cash flows used for investing activities 31 increased $502 million for the six months ended June 30, 2000, compared with the same period in 1999, due to increased levels of construction and acquisition expenditures primarily in the non-regulated businesses including the $347 million invested in Brazil in January 2000. Cash flows from operating activities at IESU increased $34 million for the six months ended June 30, 2000, compared with the same period in 1999, primarily due to changes in working capital. Cash flows used for financing activities decreased $33 million for the six months ended June 30, 2000, compared with the same period in 1999, due to decreased common stock dividends in 2000. The dividend payment in the first quarter of 1999 was larger than IESU's historical quarterly payment as no dividend payments were made in the last three quarters of 1998 due to merger-related tax considerations. Cash flows used for investing activities increased $13 million for the six months ended June 30, 2000, compared with the same period in 1999, due to increased levels of construction expenditures. Cash flows from operating activities at WP&L increased $14 million for the six months ended June 30, 2000, compared with the same period in 1999, primarily due to changes in working capital. Cash flows used for financing activities decreased $1 million for the six months ended June 30, 2000, compared with the same period in 1999, as WP&L did not declare a common stock dividend during the first six months of 2000 due to management of its capital structure. This was offset by changes in the amount of debt outstanding. Cash flows used for investing activities increased $11 million for the six months ended June 30, 2000, compared with the same period in 1999, primarily due to increased levels of construction expenditures. Future Considerations On January 25, 2000, Resources acquired a stake in four Brazilian electric utilities serving more than 820,000 customers for a total investment of approximately $347 million. As part of this investment, Resources acquired a 49.1% ownership interest in Companhia Forca e Luz Cataguazes-Leopoldina (Cataguazes), an electric utility. Cataguazes owns a majority stake in CENF, another electric utility company, as well as a majority interest in Energisa S.A., an energy development company. As part of the same investment, Resources directly acquired a 45.6% interest in Energisa S.A. itself, which holds majority stakes in two regulated utilities (Energipe and Celb). As part owner of Cataguazes, Resources will hold both indirect and direct interests in Energisa S.A. The investment is anticipated to dilute Alliant Energy's earnings per share by approximately 3% in 2000, with positive 32 contributions to earnings expected in subsequent years. Resources, through its wholly owned subsidiary, International, initially financed the Brazil investment with cash made available through the internal transfer of existing non-regulated corporate assets. Resources has entered into a shareholders agreement with the Brazilian companies, which would allow it to name two directors to the boards of each company and its subsidiaries. The agreement will also provide Resources with a role in selecting each company's management team, along with voting rights relating to critical issues at the Brazilian companies and their subsidiaries. The investment is accounted for under the equity method. As a result of a sale by Whiting of its interest in an offshore oil and gas production property in the fourth quarter of 1999, Whiting has a potential gain contingency of $500,000 relating to the sale that will be resolved in the fourth quarter of 2000. Such gain contingency has not yet been recognized in income. Refer to "Other Matters - Accounting Pronouncements" for a discussion of $402.5 million of exchangeable senior notes issued by Resources in February 2000. Financing and Capital Structure WP&L issued $100 million of senior unsecured debentures in March 2000 at a fixed interest rate of 7-5/8%, due 2010. The net proceeds from the sale of the debentures were primarily used to repay short-term debt. Refer to "Other Matters - Accounting Pronouncements" for a discussion of $402.5 million of exchangeable senior notes issued by Resources in February 2000. Capital Requirements Refer to "Other Matters - Environmental" for a discussion of various issues impacting Alliant Energy's future capital requirements. Nuclear Facilities - In February 1999, Alliant Energy, NSP, WPSC and WEPCO - ------------------ announced the formation of the NMC to sustain long-term safety, optimize reliability and improve the operational performance of their nuclear generating plants. Combined, the NMC members operate seven nuclear generating units at five plants. In October 1999, Alliant Energy received approval from the SEC, under PUHCA, to form Alliant Energy Nuclear LLC, whose purpose is solely to invest in the NMC. Such investment has been made and Alliant Energy Nuclear LLC now has a 25% ownership interest in the NMC. In November 1999, the NMC members applied to the NRC to allow the NMC to operate the plants owned or co-owned by the four utilities. Applications to the PSCW, MPUC and the SEC to allow the purchase of operating services were also made at that time. In May 2000, the NRC approved the transfer of operating authority to the NMC for DAEC and Kewaunee which was completed for both plants in August 2000. The utilities will continue to own their respective plants, be entitled to energy generated at the plants, and retain the financial obligations for their safe operation, maintenance and decommissioning. Rates and Regulatory Matters In February and April of 2000, the OCA requested certain financial information related to the electric utility operations within the state of Iowa from IESU and IPC, respectively. IESU and IPC have responded to its data requests including follow-up requests in May and June of 2000. While IESU and IPC 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 and/or IPC in Iowa. WP&L's retail electric rates are based in part on forecasted fuel and purchased-power costs. Under PSCW rules, WP&L can seek emergency rate increases if the annual costs are more than 3% higher than the estimated costs used to establish rates. If WP&L's earnings exceed its authorized return on equity, the incremental revenues collected causing the excessive return are subject to refund. WP&L does not believe any revenues collected to-date are subject to refund. In December 1999, WP&L requested a $26 million retail electric rate increase to reflect higher purchased-power and transmission costs. Effective May 5, 2000, the PSCW granted WP&L a $16.5 million annual retail electric rate increase. In April 2000, the intervenors who had appealed the PSCW's order to grant WP&L rate recovery of $6.3 million of its Year 2000 program expenditures withdrew their appeal. WP&L began recovering such costs in May 2000. 33 OTHER MATTERS Labor Issues The collective bargaining agreements at Alliant Energy cover approximately 50% of all Alliant Energy employees. All agreements that had expired in 1999 and 2000 have been ratified and renewed. There are no other agreements expiring in 2000. 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 1999 Form 10-K, except as noted below. Equity Price Risk - At June 30, 2000 and December 31, 1999, Alliant Energy - ----------------- had an investment in the stock of McLeod, a publicly traded telecommunications company, valued at $1,175 million and $1,124 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 within Resources' exchangeable senior notes. Refer to "Accounting Pronouncements" for additional information. A 10% increase (decrease) in the quoted market price of McLeod at June 30, 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. At June 30, 2000, the McLeod available for sale securities were valued at $852 million. A 10% increase (decrease) in the quoted market prices would have increased (decreased) the value of the investment by approximately $85 million. At December 31, 1999, Alliant Energy also had various investments accounted for under the cost method, in publicly traded utility companies in New Zealand and Australia which were valued at $97 million. A 10% increase (decrease) in the quoted market prices at December 31 would have increased (decreased) the value of the investment at December 31, 1999 by approximately $9.7 million. In the second quarter of 2000, Capstone completed its initial public offering and Alliant Energy's $10 million investment in Capstone was valued at $68 million at June 30, 2000. A 10% increase (decrease) in the quoted market price at June 30, 2000 would have increased (decreased) the value of the investment by approximately $6.8 million. 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 June 30, 2000 and December 31, 1999, Alliant Energy had a cumulative foreign currency translation loss of $27.8 million and $9.6 million, respectively, recorded in "Accumulated other comprehensive income" on its Consolidated Balance Sheets. The increase in the cumulative foreign currency translation loss is due to declines in both the New Zealand and Brazil exchange rates. Based on Alliant Energy's investments at June 30, 2000 and December 31, 1999, a 10% sustained increase (decrease) over the next twelve months in the foreign exchange rates of Australia, Brazil, China and New Zealand would increase (decrease) the cumulative foreign currency translation loss by $49.0 million and $17.2 million, respectively. The significant increase in the cumulative translation adjustment account at June 30 is primarily due to the increase in the amount of Resources' investment in Brazil at June 30, 2000 compared with December 31, 1999. Accounting Pronouncements In June 1998, the FASB issued SFAS 133, which has been amended by SFAS 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS 133, an amendment of SFAS 133" and SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of SFAS 133." SFAS 133 requires that every derivative instrument be recorded on the balance sheet as an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. SFAS 133 is effective for fiscal years beginning after June 15, 2000 and must be applied to: (a) derivative instruments; and (b) certain derivative instruments embedded in hybrid contracts that were issued, acquired or substantively modified after December 31, 1998. Alliant Energy, through the use of a cross-functional project team involving both Alliant Energy 34 employees and a consultant, has completed the process of identifying all derivative instruments, determining fair market values of derivatives, designating and documenting hedge relationships, and evaluating the effectiveness of those hedge relationships. As a result of the successful completion of this process, Alliant Energy adopted SFAS 133 as of July 1, 2000. SFAS 133 requires that as of the date of initial adoption, the difference between the fair market value of derivative instruments recorded on the balance sheet and the previous carrying amount of those derivatives be reported in net income or other comprehensive income, as appropriate, as the cumulative effect of a change in accounting principle in accordance with APB 20, "Accounting Changes." A limited number of Alliant Energy's fixed price commodity contracts are defined as derivatives under SFAS 133. Alliant Energy uses these contracts and other financial derivative instruments to mitigate commodity price risk related to the purchase or sale of natural gas, coal and oil in both its utility and non-regulated businesses. Alliant Energy has designated many of these instruments as hedges of the anticipated purchases or sales of the commodity. The fair market values of these derivative instruments have been recorded as assets and liabilities on the balance sheet and in the transition adjustment in accordance with the transition provisions of SFAS 133. Future changes in the fair market values of these instruments, to the extent that the hedges are effective at mitigating the underlying commodity risk, will be recorded in other comprehensive income. At the date the underlying transaction occurs, the amounts accumulated in other comprehensive income will be reported in the Consolidated Statements of Income. To the extent that the hedges are not effective, the ineffective portion of the changes in fair market value will be recorded directly in earnings. At maturity, the holders of Resources' exchangeable senior notes are paid the higher of the principal amount of the notes or an amount based on the value of McLeod common stock. SFAS 133 requires that Alliant Energy split the value of the notes into a debt component and a derivative component. The payment feature tied to McLeod stock is considered an embedded derivative under SFAS 133 that must be accounted for as a separate derivative instrument. Subsequent changes in the fair market value of the option will be reflected as an increase or decrease in Alliant Energy's reported net income. The carrying amount of the host debt security will be adjusted for amortization of the debt discount in accordance with the interest method as prescribed by APB 21, "Interest on Receivables and Payables." Prior to the adoption of SFAS 133, changes in fair value of all of Alliant Energy's McLeod stock had been recorded in the accumulated other comprehensive income component of shareowners' equity on Alliant Energy's Consolidated Balance Sheets, as these securities had been classified as available for sale. With the adoption of SFAS 133, Alliant Energy classified 15.6 million of its 57 million shares (adjusted for the 3-for-1 stock split effective April 24, 2000) of McLeod stock as trading securities. Subsequent changes in the fair value of the shares classified as trading will be reflected as increases or decreases in Alliant Energy's net income. These trading gains or losses are expected to correspond with and substantially offset changes in the intrinsic value of the derivative component of Resources' exchangeable senior notes. Changes in the time value portion of the derivative component will result in non-cash increases or decreases to Alliant Energy's net income. 35 The financial statement impact of recording the various SFAS 133 transactions at July 1, 2000 was as follows (in millions):
Amount Financial Statement Account Financial Statement Increase (Decrease) - ------------------------------------------------------------ -------------------------- ------------------------- Other assets Balance sheet $2.0 Other liabilities (a) Balance sheet 302.2 Cumulative effect of a change in accounting principle (other comprehensive income) (b) Balance sheet (6.6) Other comprehensive income (c) Balance sheet (187.3) Long-term debt (d) Balance sheet (310.3) Cumulative effect of a change in accounting principle (e) Income statement 16.7 Pre-tax gain on transfer to trading account (f) Income statement 321.4 Deferred tax expense (f) Income statement 134.1
(a) Includes the embedded derivative component of Resources' exchangeable senior notes of $283.7 million (b) Result of the difference between the new and previous carrying values of certain derivatives in accordance with the transition provisions of SFAS 133 (c) Represents the net of tax reduction to other comprehensive income resulting from the classification of approximately 15.6 million shares of McLeod as trading securities (equal to the amount of two line items in (f)) (d) Adjustment to the debt component of Resources' exchangeable senior notes (e) Primarily the result of establishing the required carrying values of both the derivative and the debt components associated with Resources' exchangeable senior notes as compared to the previous carrying values (f) Gain and tax expenses associated with the transfer of approximately 15.6 million shares of McLeod from available for sale securities to trading securities Environmental A summary of Alliant Energy's environmental issues is included in the Form 10-K, filed by Alliant Energy, IESU and WP&L for the year ended December 31, 1999. Set forth below are several developments relating to Alliant Energy's environmental issues. Pursuant to an internal review of operations in 1998, IPC discovered that Unit No. 6 at its generating facility in Dubuque, Iowa required a Clean Air Act Acid Rain permit and CEMS. IPC has informed its environmental regulators and has installed the CEMS and obtained the permit. Pursuant to its internal review, IPC also identified and disclosed to regulators a potentially similar situation at its Lansing, Iowa generating facility. In the second quarter of 1999, the EPA determined that Lansing units 1 and 2 are affected units. Therefore, in the third quarter of 1999, IPC installed the CEMS at both of these facilities and in December 1999, IPC submitted its certification to the EPA for the Lansing facility. IPC received a settlement offer from the EPA, dated December 3, 1999, to settle the matter for $550,000. IPC has since responded with a counteroffer, and the parties have reached an agreement in principle which contemplates a civil penalty payment and the performance of a supplemental environmental project with a combined value of approximately $400,000. In July 2000, a consent order was signed by the EPA and the DOJ approving this agreement. The amount becomes payable after a 30-day comment period. IPC had established the necessary liability for the expected settlement obligation relating to this issue. In October 1998, the EPA issued a final rule requiring 22 states, including Wisconsin, to modify their state implementation plans to address the NOx issue. On May 25, 1999, a federal appeals court delayed indefinitely the implementation of the rule. On March 3, 2000, the court affirmed EPA's NOx rule for the affected states. However, the court found that the EPA had failed to explain how Wisconsin contributes significantly to non-attainment in any other state and therefore vacated the rule for Wisconsin. This decision had been appealed by some of the affected states. On June 22, 2000, the ruling was upheld by the U.S. Court of Appeals and Wisconsin is still excluded. 36 Although Wisconsin is not included in the Federal rule, Wisconsin is still subject to the Clean Air Act due to its non-attainment status with respect to the one-hour ozone standard in the Lake Michigan region. WDNR has developed a draft rule that contains a plan for the state to meet the one-hour ozone attainment standard. The plan focuses on Rate of Progress requirements that are specified by the Clean Air Act for the years 2002, 2005 and 2007. The draft rule requires NOx reductions in a Primary Ozone Control Region consisting of counties that are currently in non-attainment of the one-hour ozone standard which includes WP&L's Edgewater power plant. The remaining Alliant Energy Wisconsin power plants will be included in a Secondary Ozone Control Region. The plan also includes performance standards and averaging within each Region. Alliant Energy is currently evaluating various alternatives to achieve the proposed reductions and continues to evaluate various options to reduce the emission levels. Based on existing technology, the preliminary estimates are that capital investments in the range of $50 million to $100 million could be required. Power Supply Alliant Energy transferred its IESU and IPC regional reliability membership from the MAPP reliability region to the MAIN region effective in May 2000. Given WP&L is already a member of MAIN, this will give Alliant Energy additional operating flexibility and will eliminate duplicate reporting requirements. Alliant Energy will continue to participate in the MAPP Regional Transmission Committee and the MAPP Power and Energy Market Committee. On April 25, 2000, Alliant Energy issued a request for proposal for a contract to construct a 500-600 megawatt power plant in Wisconsin. The construction of the facility will assist Alliant Energy in meeting its growing demands for electricity, will enable Alliant Energy to place a greater reliance on internal generation versus purchased-power and will also help Alliant Energy maintain the required 18% reserve margin in Wisconsin. Proposals were received in June 2000 and are currently being evaluated. Construction is anticipated to begin in the second quarter of 2001. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ALLIANT ENERGY At Alliant Energy's annual meeting of shareowners held on May 17, 2000, Erroll B. Davis, Jr., Lee Liu, Milton E. Neshek, Robert W. Schlutz and Wayne H. Stoppelmoor were elected as directors of Alliant Energy for terms expiring in 2003. The following sets forth certain information with respect to the election of these directors at the annual meeting. Name of Nominee Votes For Votes Withheld - -------------------- ---------- -------------- Erroll B. Davis, Jr. 64,035,461 1,423,810 Lee Liu 64,067,501 1,391,770 Milton E. Neshek 64,166,051 1,293,220 Robert W. Schlutz 64,251,281 1,207,990 Wayne H. Stoppelmoor 64,182,379 1,276,892 37 The following table sets forth the other directors of Alliant Energy whose terms of office continued after the 2000 annual meeting. Name of Director Year in Which Term Expires - ---------------- --------------------------- Jack B. Evans 2001 Joyce L. Hanes 2001 Arnold M. Nemirow 2001 Judith D. Pyle 2001 Alan B. Arends 2002 Rockne G. Flowers 2002 Katharine C. Lyall 2002 Anthony R. Weiler 2002 WP&L At WP&L's annual meeting of shareowners held on May 24, 2000, Erroll B. Davis, Jr., Lee Liu, Milton E. Neshek, Robert W. Schlutz and Wayne H. Stoppelmoor were elected as directors of WP&L for terms expiring in 2003. The following sets forth certain information with respect to the election of these directors at the annual meeting. Name of Nominee Votes For Votes Withheld - ------------------- ---------- --------------- Erroll B. Davis, Jr. 13,624,902 2,835 Lee Liu 13,624,967 2,770 Milton E. Neshek 13,624,932 2,805 Robert W. Schlutz 13,625,353 2,384 Wayne H. Stoppelmoor 13,625,175 2,562 The following table sets forth the other directors of WP&L whose terms of office continued after the 2000 annual meeting. Name of Director Year in Which Term Expires - ---------------- -------------------------- Jack B. Evans 2001 Joyce L. Hanes 2001 Arnold M. Nemirow 2001 Judith D. Pyle 2001 Alan B. Arends 2002 Rockne G. Flowers 2002 Katharine C. Lyall 2002 Anthony R. Weiler 2002 IESU At IESU's annual meeting of shareowners held on May 15, 2000, Erroll B. Davis, Jr., Lee Liu, Milton E. Neshek, Robert W. Schlutz and Wayne H. Stoppelmoor were elected as directors of IESU for terms expiring in 2003. Alliant Energy voted all of the outstanding shares of common stock of IESU (consisting of 13,370,788 shares) in favor of the election of the aforementioned individuals. 38 The following table sets forth the other directors of IESU whose terms of office continued. Name of Director Year in Which Term Expires - ---------------- -------------------------- Jack B. Evans 2001 Joyce L. Hanes 2001 Arnold M. Nemirow 2001 Judith D. Pyle 2001 Alan B. Arends 2002 Rockne G. Flowers 2002 Katharine C. Lyall 2002 Anthony R. Weiler 2002 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: The following Exhibits are filed herewith. --------- 10.1 Corporate Services Key Employee Deferred Compensation Plan, as amended and restated 10.2 Alliant Energy Deferred Compensation Plan for Directors, as amended and restated 10.3 Corporate Services Grantor Trust for Deferred Compensation Agreements 10.4 Alliant Energy Grantor Trust for Deferred Compensation Agreements 27.1 Financial Data Schedule for Alliant Energy Corporation at and for the period ended June 30, 2000 27.2 Financial Data Schedule for IES Utilities Inc. at and for the period ended June 30, 2000 27.3 Financial Data Schedule for Wisconsin Power and Light Company at and for the period ended June 30, 2000 (b) Reports on Form 8-K: - ------------------------ Alliant Energy Alliant Energy filed a Current Report on Form 8-K, dated April 7, 2000, reporting (under Item 5) that it will incur a non-cash charge to income of $25 million, or 31 cents per share, in the first quarter of 2000 to recognize an increase in Alliant Energy's obligation relating to certain 30-year exchangeable senior notes issued in February 2000. Alliant Energy filed a Current Report on Form 8-K, dated April 21, 2000, reporting (under Item 5) its earnings for the quarter ended March 31, 2000. WP&L - None. IESU - 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 10th day of August 2000.
ALLIANT ENERGY CORPORATION - -------------------------- Registrant By: /s/ Daniel A. Doyle Vice President-Chief Accounting and Financial Planning Officer - ----------------------- Daniel A. Doyle (Principal Accounting Officer and Authorized Signatory) IES UTILITIES INC. - ------------------ Registrant By: /s/ Daniel A. Doyle Vice President-Chief Accounting and Financial Planning Officer - ------------------------- Daniel A. Doyle (Principal Accounting Officer and Authorized Signatory) WISCONSIN POWER AND LIGHT COMPANY - --------------------------------- Registrant By: /s/ Daniel A. Doyle Vice President-Chief Accounting and Financial Planning Officer - ----------------------- Daniel A. Doyle (Principal Accounting Officer and Authorized Signatory)
40 EX-10.1 2 0002.txt EXHIBIT 10.1 EXHIBIT 10.1 ALLIANT SERVICES COMPANY KEY EMPLOYEE DEFERRED COMPENSATION PLAN (As Amended and Restated Effective January 1, 2000) Table of Contents ----------------- Page ---- ARTICLE 1 BACKGROUND..............................................1 ARTICLE 2 DEFINITIONS.............................................1 2.1 Account...................................................1 2.2 Affiliate.................................................1 2.3 Beneficiary...............................................1 2.4 Code......................................................1 2.5 Company...................................................1 2.6 Company Stock.............................................2 2.7 Compensation..............................................2 2.8 Deferred Compensation.....................................2 2.9 Disability................................................2 2.10 Effective Date............................................2 2.11 Eligible Employee.........................................2 2.12 Employer..................................................2 2.13 ERISA.....................................................2 2.14 Participant...............................................2 2.15 Plan......................................................2 2.16 Plan Year.................................................2 2.17 Plan Administrator........................................2 2.18 Retirement................................................2 2.19 Savings Plan..............................................2 2.20 Share Value...............................................2 2.21 Termination of Employment.................................3 2.22 Unforeseeable Emergency...................................3 ARTICLE 3 ADMINISTRATION..........................................3 3.1 Powers and Duties.........................................3 3.2 Delegation................................................3 ARTICLE 4 DEFERRED COMPENSATION...................................4 4.1 Participant Deferrals.....................................4 4.2 Employer Contributions....................................4 4.3 Deferred Compensation Accounts............................4 ARTICLE 5 PAYMENT OF DEFERRED COMPENSATION........................6 5.1 Payment of Deferred Compensation..........................6 5.2 Commencement of Payments..................................7 5.3 Method of Payment.........................................7 5.4 Amount of Payments........................................7 5.5 Form of Payments..........................................7 5.6 Participant Elections.....................................7 5.7 Emergency Payments........................................8 5.8 Tax Payments..............................................8 5.9 Facility of Payment.......................................8 5.10 Restrictions on Payments..................................8 ARTICLE 6 CLAIMS PROCEDURE........................................9 6.1 Decisions on Claims.......................................9 6.2 Review of Denied Claims...................................9 ARTICLE 7 FUNDING.................................................9 ARTICLE 8 AMENDMENT AND TERMINATION..............................10 ARTICLE 9 GENERAL PROVISIONS.....................................10 9.1 Status of Participants...................................10 9.2 No Guaranty of Employment................................10 9.3 Delegation of Authority..................................10 9.4 Legal Actions............................................10 9.5 Applicable Law...........................................10 9.6 Rules of Construction....................................10 9.7 Expenses of Administration...............................11 9.8 Indemnification..........................................11 ARTICLE 1 BACKGROUND ---------- Alliant Services Company (the "Company") has heretofore adopted the Alliant Services Company Key Employee Deferred Compensation Plan (the "Plan") to allow certain of its key employees to defer payment of part or all of their current compensation. The Plan Administrator of the Plan now wishes to revise the Plan in certain respects and, having reserved to itself the power to amend the Plan pursuant to Section 8 thereof, it hereby amends and restates the Plan as follows. ARTICLE 2 DEFINITIONS ----------- When the following words or phrases are used herein, they shall have the meanings set forth below unless otherwise specifically provided: 2.1 Account. An account which has been established for a Participant -------- pursuant to Section 4.3. Each such Account shall include one or more of the following sub-accounts: (a) Company Stock Account. The account established to record the Deferred ---------------------- Compensation which the Participant has elected to allocate to a Company Stock Account pursuant to Section 4.3(c). (b) Interest Account. The account established to record the Deferred ------------------ Compensation which the Participant has elected to allocate to an Interest Account pursuant to Section 4.3(c). Separate Accounts (and sub-accounts) shall be maintained for the portion of a Participant's Deferred Compensation (if any) that is distributable in a lump sum, and for the portion of a Participant's Deferred Compensation (if any) that is distributable in installments. Separate Accounts (and sub-accounts) shall also be maintained for each portion of a Participant's Deferred Compensation that is distributable at a different time. 2.2 Affiliate. A business organization that is under common control with ---------- the Company, as determined under Section 414(c) of the Code. 2.3 Beneficiary. The person or persons (including a trustee or trustees) ------------ designated as a Participant's Beneficiary in the last written instrument signed by the Participant for the purposes of this Plan and received by the Plan Administrator prior to the Participant's death. If no such person has been designated, the Participant's Beneficiary shall be the person or persons who constitute the Participant's beneficiary for the purposes of the Savings Plan. 2.4 Code. The Internal Revenue Code of 1986, as from time to time amended. ----- 2.5 Company. Alliant Services Company, and any successor or successors -------- thereto. 2.6 Company Stock. The Common Stock, $.01 par value, of Alliant Energy --------------- Corporation, as such stock may be reclassified, converted, or exchanged by reorganization, merger, or otherwise. 2.7 Compensation. A Participant's base salary and any incentive ------------- compensation earned by a Participant under a plan adopted by the Participant's Employer on or after the Plan's original Effective Date. 2.8 Deferred Compensation. The balance from time to time credited to a ----------------------- Participant's Accounts. 2.9 Disability. A Participant's eligibility for immediate benefits under ----------- his or her Employer's long-term disability plan. 2.10 Effective Date. The Plan's original Effective Date was the later of --------------- January 1, 1998 or the effective date of the Company's incorporation. The provisions of this amended and restated Plan are effective as of January 1, 2000, and shall apply to Participants who are Eligible Employees on or after such date. 2.11 Eligible Employee. An employee of an Employer who is a member of a ------------------- select group of management or highly compensated employees within the meaning of Section 201(2) of ERISA, and who has been designated by the Chief Executive Officer of the Company as being eligible to participate in the Plan. 2.12 Employer. The Company, and each Affiliate of the Company whose --------- employees have been designated as being eligible to participate in the Plan. 2.13 ERISA. The Employee Retirement Income Security Act of 1974, as from ------ time to time amended. 2.14 Participant. An Eligible Employee for whom an Account has been ------------ established pursuant to Section 4.3. 2.15 Plan. The Alliant Services Company Key Employee Deferred Compensation ----- Plan, as set forth herein, and as from time to time amended. 2.16 Plan Year. The 12 consecutive month period ending on each December 31. ---------- 2.17 Plan Administrator. The Compensation and Personnel Committee of the -------------------- Board of Directors of Alliant Energy Corporation. 2.18 Retirement. Termination of Employment at or after age 55 or by reason ----------- of Disability. 2.19 Savings Plan. The Alliant Services Company Retirement Savings 401(k) ------------- Plan. 2.20 Share Value. The price at which a share of Company Stock is deemed to ------------ have been purchased for a Participant's Account pursuant to Section 4.3(d). If shares of Company Stock are actually purchased on any date for the purposes of the Plan, and if such purchases are made in the open market or in privately negotiated transactions, the Share Value on such date will be the average weighted price of all of the shares that are purchased for the Plan on such date. In all other cases, Share Value will be the average (computed to four decimal points) of the high and low sales prices of shares of Company Stock as reported for the applicable date on the New York Stock Exchange Composite Transaction Tape. 2.21 Termination of Employment. Severance of a Participant's employment -------------------------- relationship with all of the Employers and their Affiliates. A transfer of employment among Employers or their Affiliates will not constitute a Termination of Employment. 2.22 Unforeseeable Emergency. A severe financial hardship to a Participant ------------------------- resulting from a sudden and unexpected illness or accident of the Participant or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or a similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. ARTICLE 3 ADMINISTRATION -------------- 3.1 Powers and Duties. Full power and authority to construe, interpret, and ------------------ administer this Plan is vested in the Plan Administrator. In particular, the Plan Administrator shall make each determination provided for in this Plan and may adopt such rules, regulations, and procedures, as it deems necessary or desirable to the efficient administration of the Plan. The Plan Administrator's determinations need not be uniform, and may be made by it selectively among persons who may be eligible to participate in the Plan. The Plan Administrator shall have sole and exclusive discretion in the exercise of its powers and duties hereunder, and all determinations made by the Plan Administrator shall be final, conclusive, and binding unless they are found by a court of competent jurisdiction to have been arbitrary and capricious. 3.2 Delegation. The Plan Administrator may delegate part or all of its ----------- duties to any person or persons, and may from time to time revoke such authority and delegate it to another person or persons. Each such delegation to a person who is not an employee of the Company or an Affiliate will be in writing, and a copy will be furnished to the person to whom the duty is delegated, who will file a written acceptance with the Plan Administrator. Any delegate's duty will terminate upon revocation of such authority by the Plan Administrator, upon withdrawal of such person's acceptance or, in the case of a delegate who is an employee of the Company or an Affiliate, upon the termination of such employment. Any person to whom administrative duties are delegated may, unless the delegation provides otherwise, similarly delegate part or all of such duties to another person. ARTICLE 4 DEFERRED COMPENSATION --------------------- 4.1 Participant Deferrals. An Eligible Employee may elect to defer up to ----------------------- 100% of his or her Compensation for any Plan Year. An election to defer Compensation shall be made in writing prior to the first day of the Plan Year to which it will apply or, if later, within 30 days after the Eligible Employee is first notified by the Plan Administrator of his or her eligibility to participate in the Plan, and it shall be subject to the following requirements: (a) The election may defer a percentage of the Participant's base salary, and/or a percentage of the Participant's incentive compensation. Amounts deferred from a Participant's base salary shall reduce the Participant's base salary in equal installments for each pay period during the Plan Year (or portion thereof) to which the election applies. Amounts deferred from a Participant's incentive compensation shall reduce the Participant's incentive compensation that is earned during the Plan Year on the date such incentive compensation would otherwise be paid to the Participant. (b) The election shall be irrevocable, and it shall apply to all Compensation payable for services performed by the Participant during the Plan Year to which the election applies following the date on which the election is received by the Plan Administrator, except that a Participant may terminate an election to defer Compensation if the Plan Administrator determines that the termination is necessary as a result of an Unforeseeable Emergency. 4.2 Employer Contributions. Each Employer shall credit to the Account of ------------------------ each Participant who is employed by that Employer an "Employer Contribution" in an amount equal to 50% of (a) minus (b), where: (a) is the lesser of: (i) the sum of the amounts (if any) contributed by the Participant to the Savings Plan during a Plan Year which were eligible for matching contributions under the Savings Plan, plus the amounts deferred by the Participant during the Plan Year pursuant to Section 4.1; or (ii) 6% of the Participant's base salary for the Plan Year; and (b) is the amount of any matching contributions that were made to the Savings Plan on behalf of the Participant for the Plan Year. Notwithstanding the foregoing, a Participant shall not receive an Employer Contribution for any Plan Year unless: (A) the Participant is employed by an Employer or an Affiliate on the last day of the Plan Year; or (B) the Participant's employment terminated during the Plan Year by reason of the Participant's Retirement or death. 4.3 Deferred Compensation Accounts. The Plan Administrator shall establish -------------------------------- one or more Accounts in the name of each Participant to record the Deferred Compensation payable to the Participant. Such Accounts shall be for bookkeeping purposes only, and shall not be deemed to create a fund or trust for the benefit of the Participant. Each Participant's Accounts shall be established, maintained, and periodically adjusted as follows: (a) Credits. The Plan Administrator shall credit the following amounts to a -------- Participant's Account: (i) Amounts deferred by a Participant pursuant to Section 4.1 shall be credited to the Participant's Account as of the dates on which they are applied to reduce the Participant's current Compensation. (ii) Amounts contributed on behalf of a Participant by the Participant's Employer pursuant to Section 4.2 shall be credited to the Participant's Account as of July 1 of the Plan Year for which such amounts are contributed. (b) Charges. The Plan Administrator shall charge to the Participant's -------- Account the amount of any payments made to or on behalf of the Participant, and the amount of any penalties imposed on the Participant pursuant to Section 5.6(b), as of the dates on which such payments are made or such penalties are imposed. (c) Participant Elections. When a Participant elects to defer Compensation ---------------------- pursuant to Section 4.1, the Participant may elect to have the deferred Compensation credited to a Company Stock Account or to an Interest Account, in such proportions as the Participant shall elect. Each such election shall be due by the due date for the election under Section 4.1, and it shall apply to all deferred Compensation and Employer Contributions for the Plan Year to which the election under Section 4.1 applies; provided, that a Participant's election for the Plan Year beginning on January 1, 2000 may also be applied to incentive compensation that was earned in the Plan Year ending on December 31, 1999 but is payable in the Plan Year beginning on January 1, 2000. If a Participant fails to make an election for any Plan Year, the election that was in effect for the previous Plan Year shall remain in effect for the current Plan Year. If no election was in effect for the previous Plan Year, the Participant's deferred Compensation and Employer Contributions will be allocated to the Interest Account. A Participant's elections pursuant to this paragraph shall be irrevocable. Deferred Compensation that has been allocated to a Company Stock Account may not thereafter be transferred to an Interest Account, and Deferred Compensation that has been allocated to an Interest Account may not thereafter be transferred to a Company Stock Account. (d) Company Stock Account. A Participant's Company Stock Account shall be ---------------------- maintained and adjusted as follows: (i) Deferred Compensation and Employer Contributions that are allocated to a Participant's Company Stock Account shall be deemed to have been invested in whole and fractional shares of Company Stock on a date selected by the Plan Administrator, which date shall be no later than ten business days following the date on which the deferred Compensation or Employer Contributions are credited to the Participant's Account, at a price equal to the Share Value on such date. (ii) A Participant's Company Stock Account shall be credited with the amount of any dividends that would have been paid to the Participant if the Participant had owned the shares of Company Stock that are credited to his or her Account when the dividends are paid. Amounts so credited shall be deemed to have been invested in additional shares of Company Stock on a date selected by the Plan Administrator, which date shall be no later than ten business days following the date on which the dividends are credited to the Participant's Account, at a price equal to the Share Value on such date. (iii) A Participant's Company Stock Account shall be equitably adjusted to reflect any change in the outstanding Company Stock by reason of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of shares, or any similar corporate change. (iv) The balance credited to a Participant's Company Stock Account as of any date shall be the number of whole and fractional shares of Company Stock that are deemed to be held by the Participant's Account on such date. (e) Interest Account. On the last day of each Plan Year, the average of the ----------------- balances credited to the Participant's Interest Account on the last day of each month during the Plan Year shall be credited with interest at a rate which is equal to the greater of: (i) the "Prime Rate" as reported in The Wall Street Journal on the first business day of the Plan Year; or (ii) the A-Utility Bond Rate yield (as reported in the Federal Reserve statistical release H.15) using the average of the rates reported for the last Friday of each month for the preceding year; provided, that in no event shall the rate of interest credited for any Plan Year be greater than 12% or less than 6%. The balance credited to a Participant's Interest Account as of any date shall be the accumulated deferred Compensation, Employer Contributions, and interest that are credited to such Account as of such date. ARTICLE 5 PAYMENT OF DEFERRED COMPENSATION -------------------------------- 5.1 Payment of Deferred Compensation. In the event of a Participant's ------------------------------------ Termination of Employment for reasons other than the Participant's death, the balance credited to the Participant's Accounts shall be paid to the Participant. In the event of a Participant's death, the balance credited to the Participant's Accounts shall be paid to the Participant's Beneficiary. 5.2 Commencement of Payments. Payment of a Participant's Deferred --------------------------- Compensation shall commence as follows: (a) Retirement. In the case of a Participant's Retirement, payment shall ----------- commence within 60 days after the date of the Participant's Termination of Employment or within 60 days after the last day of the Plan Year in which the Participant retires, as elected by the Participant pursuant to Section 5.6. If payment is made in annual installments, each installment after the first shall be paid within 31 days after the last day of the Plan Year in which the first installment was paid. (b) Death. In the case of a Participant' death, payment shall commence ----- within 60 days after the date the Participant's Beneficiary has been identified. (c) Other Termination of Employment. In the case of a Participant's ----------------------------------- Termination of Employment for reasons other than the Participant's death or Retirement, payment shall commence within 60 days after the date of the Participant's Termination of Employment. 5.3 Method of Payment. Payments due by reason of a Participant's death or ------------------ Retirement shall be made in a lump sum or in up to ten annual installments, as elected by the Participant pursuant to Section 5.6. Payments due by reason of a Participant's Termination of Employment for reasons other than a Participant's death or Retirement shall be made in a lump sum. 5.4 Amount of Payments. The amount of a lump sum payment shall be equal to ------------------- the balance credited to the Participant's Accounts as of a date selected by the Plan Administrator, which date shall not be more than 30 days prior to the date the lump sum is paid. The amount of an installment payment shall be equal to the balance credited to the Participant's Accounts as of a date selected by the Plan Administrator (which shall not be more than 30 days prior to the date the installment is paid), divided by the number of installments (including the current installment) remaining to be paid. 5.5 Form of Payments. Payments that are due from a Participant's Company ----------------- Stock Account shall be made in whole shares of Company Stock, plus cash in an amount equal to the Share Value of any fractional shares. Payments that are due from a Participant's Interest Account shall be made in cash. 5.6 Participant Elections. ---------------------- (a) When a Participant elects to defer Compensation pursuant to Section 4.1, the Participant may also make an election as to the time at which payment of such Deferred Compensation will commence following the Participant's Retirement, and the method (lump sum or installments) in which such Deferred Compensation will be paid following the Participant's death or Retirement. Each such election shall be due by the due date for the election under Section 4.1, and it shall apply to all Deferred Compensation that is attributable to the Plan Year to which the election under Section 4.1 applies. If a Participant fails to make an election for any Plan Year, the election that was in effect for the previous Plan Year shall remain in effect for the current Plan Year. If no election was in effect for the previous Plan Year, Deferred Compensation that is attributable to the current Plan Year will be distributed in a lump sum within 60 days after the date of the Participant's Termination of Employment. (b) A Participant may change an election as to the time and/or method of payment of the Deferred Compensation credited to any of the Participant's Accounts at any time by giving prior written notice to the Plan Administrator. Any change in a Participant's elections shall result in a penalty in the amount of 10% of the Deferred Compensation credited to the affected Accounts as of the date on which notice of the change is received by the Plan Administrator, which amount shall be forfeited to the Participant's Employer. 5.7 Emergency Payments. In the event of an Unforeseeable Emergency, the -------------------- Plan Administrator may direct a Participant's Employer to pay any part or all of a Participant's Deferred Compensation to the Participant prior to the time provided in Section 5.2, to the extent necessary to prevent severe financial hardship. Such action shall be taken only if the Participant submits a written application describing the circumstances which are deemed to justify the payment and the amount necessary to prevent severe financial hardship, together with such supporting evidence as the Plan Administrator may reasonably require. Payments shall not be made under this section to the extent the Participant's hardship is or may be relieved: (a) through reimbursement or compensation by insurance or otherwise; (b) by liquidation of the Participant's assets, to the extent this would not in itself cause severe financial hardship; or (c) by the termination of the Participant's election to defer Compensation. 5.8 Tax Payments. If there is a final determination that a Participant or ------------ Beneficiary should be taxed on part or all of the Participant's Deferred Compensation before it is actually paid, the Participant's Employer shall pay to the Participant or Beneficiary the portion of the Participant's Deferred Compensation that has been determined to be currently taxable. For the purposes of this section, a "final determination" means a determination by the Internal Revenue Service or a court of competent jurisdiction from which no further appeal may be taken, either because there is no further appeal available or because the time to take such appeal has expired. 5.9 Facility of Payment. An Employer may make payments due to a legally ------------------- incompetent person in such of the following ways as the Plan Administrator shall determine: (a) directly to such person; (b) to the legal representative of such person; or (c) to a near relative of such person to be used for the person's benefit. Any payment made in accordance with the provisions of this section shall be a complete discharge of the Employer's liability for the making of such payment. 5.10 Restrictions on Payments. Notwithstanding anything herein to the --------------------------- contrary, the Plan Administrator may postpone the issuance and delivery of shares of Company Stock to a Participant until the requirements of any securities exchange or system on which shares of Company Stock have been listed have been complied with, until any required registration or other qualification of such shares under applicable provisions of any State or Federal securities laws, rules or regulations has been completed, or until the requirements of any exemption from registration or other qualification have been satisfied. The Plan Administrator may restrict the transferability of any shares of Company Stock that are distributed pursuant to the Plan, legend any certificate evidencing any such shares, and place a stop transfer order in respect of such shares, to the extent it reasonably determines that such action is necessary to ensure compliance with any applicable securities or exchange law, regulation, or other requirement. ARTICLE 6 CLAIMS PROCEDURE ---------------- 6.1 Decisions on Claims. If a claim for benefits is denied, the Plan --------------------- Administrator shall furnish to the claimant within 90 days after its receipt of the claim (or within 180 days after such receipt if special circumstances require an extension of time) a written notice which: (a) specifies the reasons for the denial; (b) refers to the pertinent provisions of the Plan on which the denial is based; (c) describes any additional material or information necessary for the perfection of the claim and explains why such material or information is necessary; and (d) explains the claim review procedures. 6.2 Review of Denied Claims. Upon the written request of the claimant ------------------------- submitted within 60 days after his or her receipt of such written notice, the Plan Administrator shall afford the claimant a full and fair review of the decision denying the claim and, if so requested, permit the claimant to review any documents which are pertinent to the claim, permit the claimant to submit issues and comments in writing, and afford the claimant an opportunity to meet with appropriate representatives of the Plan Administrator as a part of the review procedure. Within 60 days after its receipt of a request for review (or within 120 days after such receipt if special circumstances, such as the need to hold a hearing, require an extension of time) the Plan Administrator shall notify the claimant in writing of its decision and the reasons for its decision and shall refer the claimant to the provisions of the Plan which form the basis for its decision. ARTICLE 7 FUNDING ------- This Plan is intended to be "unfunded" for the purposes of the Code and Title I of ERISA; however, nothing herein shall prevent an Employer, in its sole discretion, from establishing a trust of the type commonly known as a "rabbi trust" to assist it in meeting its obligations under the Plan. ARTICLE 8 AMENDMENT AND TERMINATION ------------------------- The Plan Administrator may amend or terminate this Plan at any time and for any reason; provided, that no amendment or termination of the Plan shall alter a Participant's right to receive payment of amounts previously credited to the Participant's Account. ARTICLE 9 GENERAL PROVISIONS ------------------ 9.1 Status of Participants. Each Participant and Beneficiary shall be a ------------------------ general unsecured creditor of his or her Employer with respect to amounts payable hereunder, this Plan constituting a mere promise by the Employers to make benefit payments in the future. A Participant's or Beneficiary's right to receive payments under the Plan are not subject in any manner to anticipation, alienation, sale, assignment, pledge, encumbrance, attachment, or garnishment by the creditors of the Participant or the Participant's Beneficiaries. 9.2 No Guaranty of Employment. The establishment of this Plan shall not --------------------------- give a Participant any legal or equitable right to be continued in the employ of an Employer, nor shall it interfere with an Employer's right to terminate the employment of any of its employees, with or without cause. 9.3 Delegation of Authority. Whenever, under the terms of this Plan, an ------------------------- Employer is permitted or required to do or perform any act, it shall be done or performed by the Board of Directors of the Employer, by any duly authorized committee thereof, or by any officer of the Employer duly authorized by the articles of incorporation, bylaws, or Board of Directors of the Employer. 9.4 Legal Actions. No Participant, Beneficiary, or other person having or -------------- claiming to have an interest in this Plan shall be a necessary party to any action or proceeding involving the Plan, and no such person shall be entitled to any notice or process, except to the extent required by applicable law. Any final judgment which is not appealed or appealable that may be entered in any such action or proceeding shall be binding and conclusive on all persons having or claiming to have any interest in this Plan. 9.5 Applicable Law. This Plan shall be construed and interpreted in ---------------- accordance with the laws of the State of Wisconsin, except to the extent the same are preempted by ERISA or other federal law. 9.6 Rules of Construction. Wherever any words are used herein in the ----------------------- masculine gender, they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections of this Plan are inserted for convenience of reference, are not a part of this Plan, and are not to be considered in the construction hereof. The words "hereof," "herein," "hereunder," and other similar compounds of the word "here" shall mean and refer to the entire Plan, and not to any particular provision or section. 9.7 Expenses of Administration. All expenses and costs incurred in ----------------------------- connection with the administration or operation of the Plan shall be paid by the Employers and/or any trust of the type described in Article 7. 9.8 Indemnification. Each Employer shall, to the extent permitted by its ---------------- articles of incorporation and bylaws, and by the laws of the state in which it is incorporated, indemnify any employee or director of an Employer or an Affiliate providing services to the Plan against any and all liabilities arising by reason of any act or omission, made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto. To record the adoption of the Plan as set forth above, the undersigned has executed this document this ___ day of ________________, _________, for and on behalf of the Company. ALLIANT SERVICES COMPANY By ___________________________________________ As its ___________________________________________ ATTEST: _______________________________ As its ________________________ EX-10.2 3 0003.txt EXHIBIT 10.2 EXHIBIT 10.2 ALLIANT ENERGY CORPORATION DEFERRED COMPENSATION PLAN FOR DIRECTORS (As Amended and Restated Effective January 1, 2000) Table of Contents ----------------- Page ---- ARTICLE 1 BACKGROUND..............................................1 ARTICLE 2 DEFINITIONS.............................................1 2.1 Account...................................................1 2.2 Affiliate.................................................1 2.3 Beneficiary...............................................1 2.4 Code......................................................1 2.5 Company...................................................2 2.6 Company Stock.............................................2 2.7 Compensation..............................................2 2.8 Deferred Compensation.....................................2 2.9 Effective Date............................................2 2.10 Eligible Director.........................................2 2.11 Participant...............................................2 2.12 Plan......................................................2 2.13 Plan Year.................................................2 2.14 Plan Administrator........................................2 2.15 Retirement................................................2 2.16 Share Value...............................................2 2.17 Termination of Directorship...............................3 2.18 Unforeseeable Emergency...................................3 ARTICLE 3 ADMINISTRATION..........................................3 3.1 Powers and Duties.........................................3 3.2 Delegation................................................3 ARTICLE 4 DEFERRED COMPENSATION...................................3 4.1 Participant Deferrals.....................................3 4.2 Deferred Compensation Accounts............................4 ARTICLE 5 PAYMENT OF DEFERRED COMPENSATION........................5 5.1 Payment of Deferred Compensation..........................5 5.2 Commencement of Payments..................................6 5.3 Timing of Payments........................................6 5.4 Amount of Payments........................................6 5.5 Form of Payments..........................................6 5.6 Participant Elections.....................................7 5.7 Emergency Payments........................................7 5.8 Tax Payments..............................................7 5.9 Facility of Payment.......................................8 5.10 Restrictions on Payments..................................8 ARTICLE 6 CLAIMS PROCEDURE........................................8 6.1 Decisions on Claims.......................................8 6.2 Review of Denied Claims...................................8 ARTICLE 7 FUNDING.................................................9 ARTICLE 8 AMENDMENT AND TERMINATION...............................9 ARTICLE 9 GENERAL PROVISIONS......................................9 9.1 Status of Participants....................................9 9.2 No Guaranty of Directorship...............................9 9.3 Delegation of Authority...................................9 9.4 Legal Actions............................................10 9.5 Applicable Law...........................................10 9.6 Rules of Construction....................................10 9.7 Expenses of Administration...............................10 9.8 Indemnification..........................................10 ARTICLE 1 BACKGROUND ---------- Alliant Energy Corporation (formerly known as Interstate Energy Corporation and referred to herein as the "Company") has heretofore adopted a deferred compensation plan (the "Plan") to allow its Directors to defer payment of part or all of their current compensation. The Company now wishes to revise the Plan in certain respects and, having reserved to itself the power to amend the Plan, it hereby amends and restates the Plan as follows. ARTICLE 2 DEFINITIONS ----------- When the following words or phrases are used herein, they shall have the meanings set forth below unless otherwise specifically provided: 2.1 Account. An account which has been established for a Participant pursuant to Section 4.2. Each such account shall include one or more of the following sub-accounts: (a) Company Stock Account. The account established to record a Participant's deferred Stock Compensation, and the deferred Cash Compensation which a Participant has elected to allocate to a Company Stock Account pursuant to Section 4.2(c). (b) Interest Account. The account established to record the deferred Cash Compensation which a Participant has elected to allocate to an Interest Account pursuant to Section 4.2(c). Separate Accounts (and sub-accounts) shall be maintained for the portion of a Participant's Deferred Compensation (if any) that is distributable in a lump sum, and for the portion of a Participant's Deferred Compensation (if any) that is distributable in installments. Separate Accounts (and sub-accounts) shall also be maintained for each portion of a Participant's Deferred Compensation that is distributable at a different time. 2.2 Affiliate. A corporation that is under common control with the Company, as determined under Section 414(c) of the Code. 2.3 Beneficiary. The person or persons (including a trustee or trustees) designated as a Participant's Beneficiary in the last written instrument signed by the Participant for the purposes of this Plan and received by the Plan Administrator prior to the Participant's death. If no such person has been designated, the Participant's Beneficiary shall be the Participant's surviving spouse, if any, otherwise the Participant's estate. 2.4 Code. The Internal Revenue Code of 1986, as from time to time amended. 2.5 Company. Alliant Energy Corporation, and any successor or successors thereto. 2.6 Company Stock. The Common Stock, $.01 par value, of the Company, as such stock may be reclassified, converted, or exchanged by reorganization, merger, or otherwise. 2.7 Compensation. The annual retainer payable to an Eligible Director for his or her services as a member of the Company's Board of Directors. An Eligible Director's Compensation shall include the Director's: (a) Cash Compensation, being that portion of the Director's annual retainer that is payable in cash; and (b) Stock Compensation, being that portion of the Director's annual retainer that is payable in shares of Company Stock. 2.8 Deferred Compensation. The balance from time to time credited to a Participant's Accounts. 2.9 Effective Date. The Plan's original Effective Date was June 27, 1990. The provisions of this amended and restated Plan are effective as of January 1, 2000, and shall apply to Participants who are Eligible Directors on or after such date. 2.10 Eligible Director. Any individual who is a member of the Company's Board of Directors on the first day of a Plan Year, and who is not an employee of the Company. 2.11 Participant. An Eligible Director for whom an Account has been established pursuant to Section 4.2. 2.12 Plan. The Alliant Energy Corporation Deferred Compensation Plan for Directors, as set forth herein, and as from time to time amended. 2.13 Plan Year. The 12 consecutive month period ending on each December 31. 2.14 Plan Administrator. The Nominating and Governance Committee of the Board of Directors of the Company. 2.15 Retirement. Termination of Directorship at or after age 70. 2.16 Share Value. The price at which a share of Company Stock is deemed to have been purchased for a Participant's Account pursuant to Section 4.3(d). If shares of Company Stock are actually purchased on any date for the purposes of the Plan, and if such purchases are made in the open market or in privately negotiated transactions, the Share Value on such date will be the average weighted price of all of the shares that are purchased for the Plan on such date. In all other cases, Share Value will be the average (computed to four decimal points) of the high and low sales prices of shares of Company Stock as reported for the applicable date on the New York Stock Exchange Composite Transaction Tape. 2.17 Termination of Directorship. Termination of a Participant's membership on the Board of Directors of the Company for any reason. 2.18 Unforeseeable Emergency. A severe financial hardship to a Participant resulting from a sudden and unexpected illness or accident of the Participant or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or a similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. ARTICLE 3 ADMINISTRATION -------------- 3.1 Powers and Duties. Full power and authority to construe, interpret, and administer this Plan is vested in the Plan Administrator. In particular, the Plan Administrator shall make each determination provided for in this Plan and may adopt such rules, regulations, and procedures as it deems necessary or desirable to the efficient administration of the Plan. The Plan Administrator's determinations need not be uniform, and may be made by it selectively among persons who may be eligible to participate in the Plan. The Plan Administrator shall have sole and exclusive discretion in the exercise of its powers and duties hereunder, and all determinations made by the Plan Administrator shall be final, conclusive, and binding unless they are found by a court of competent jurisdiction to have been arbitrary and capricious. 3.2 Delegation. The Plan Administrator may delegate part or all of its duties to any person or persons, and may from time to time revoke such authority and delegate it to another person or persons. Each such delegation to a person who is not an employee or Director of the Company or an Affiliate will be in writing, and a copy will be furnished to the person to whom the duty is delegated, who will file a written acceptance with the Plan Administrator. Any delegate's duty will terminate upon revocation of such authority by the Plan Administrator, upon withdrawal of such person's acceptance or, in the case of a delegate who is an employee or Director of the Company or an Affiliate, upon the termination of such employment or directorship. Any person to whom administrative duties are delegated may, unless the delegation provides otherwise, similarly delegate part or all of such duties to another person. ARTICLE 4 DEFERRED COMPENSATION --------------------- 4.1 Participant Deferrals. An Eligible Director may elect to defer up to 100% of his or her Compensation for any Plan Year. An election to defer Compensation shall be made in writing prior to the first day of the Plan Year to which it will apply or, if later, within 30 days after the Eligible Director is first notified by the Plan Administrator of his or her eligibility to participate in the Plan, and it shall be subject to the following requirements: (a) Amounts deferred from a Participant's Compensation shall reduce the Participant's Compensation for the Plan Year (or portion thereof) to which the election applies. (b) The election shall be irrevocable with respect to all Compensation payable for services performed by the Participant during the Plan Year following the date on which the election is received by the Plan Administrator, except that a Participant may terminate an election to defer Compensation if the Plan Administrator determines that the termination is necessary as a result of an Unforeseeable Emergency. 4.2 Deferred Compensation Accounts. The Plan Administrator shall establish one or more Accounts in the name of each Participant to record the Deferred Compensation payable to the Participant. Such Account shall be for bookkeeping purposes only, and shall not be deemed to create a fund or trust for the benefit of the Participant. Each Participant's Account shall be established, maintained, and periodically adjusted as follows: (a) Credits. Amounts deferred by a Participant pursuant to Section 4.1 shall be credited to the Participant's Account as of the dates on which they are applied to reduce the Participant's Compensation. (b) Charges. The Plan Administrator shall charge to the Participant's Account the amount of any payments made to or on behalf of the Participant as of the dates on which such payments are made. (c) Participant Elections. When a Participant elects to defer Cash Compensation pursuant to Section 4.1, the Participant may elect to have the deferred Compensation credited to a Company Stock Account or to an Interest Account, in such proportions as the Participant shall elect. Each such election shall be due by the due date for the election under Section 4.1, and it shall apply to all deferred Cash Compensation for the Plan Year to which the election under Section 4.1 applies. If a Participant fails to make an election for any Plan Year, the election that was in effect for the previous Plan Year shall remain in effect for the current Plan Year. If no election was in effect for the previous Plan Year, the Participant's deferred Cash Compensation will be allocated to the Interest Account. A Participant's elections pursuant to this paragraph shall be irrevocable. Deferred Compensation that has been allocated to a Company Stock Account may not thereafter be transferred to an Interest Account, and Deferred Compensation that has been allocated to an Interest Account may not thereafter be transferred to a Company Stock Account. (d) Company Stock Account. A Participant's Company Stock Account shall be maintained and adjusted as follows: (i) All of a Participant's deferred Stock Compensation shall be credited to the Participant's Company Stock Account. (ii) The portion of a Participant's deferred Cash Compensation which is allocated to the Participant's Company Stock Account shall be deemed to have been invested in whole and fractional shares of Company Stock on a date selected by the Plan Administrator, which date shall be no later than ten business days following the date on which the deferred Compensation or Employer Contributions are credited to the Participant's Account, at a price equal to the Share Value on such date. (iii) A Participant's Company Stock Account shall be credited with the amount of any dividends that would have been paid to the Participant if the Participant had owned the shares of Company Stock that are credited to his or her Account when the dividends are paid. Amounts so credited shall be deemed to have been invested in additional shares of Company Stock on a date selected by the Plan Administrator, which date shall be no later than ten business days following the date on which the dividends are credited to the Participant's Account, at a price equal to the Share Value on such date. (iv) A Participant's Company Stock Account shall be equitably adjusted to reflect any change in the outstanding Company Stock by reason of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of shares, or any similar corporate change. (v) The balance credited to a Participant's Company Stock Account as of any date shall be the number of whole and fractional shares of Company Stock that are deemed to be held by the Participant's Account on such date. (e) Interest Account. On the last day of each Plan Year, the average of the balances credited to the Participant's Interest Account on the last day of each month during the Plan Year shall be credited with interest at a rate which is equal to the greater of: (i) the "Prime Rate" as reported in The Wall Street Journal on the first business day of the Plan Year; or (ii) the A-Utility Bond Rate yield (as reported in the Federal Reserve statistical release H.15) using the average of the rates reported for the last Friday of each month for the preceding year; provided, that in no event shall the rate of interest credited for any Plan Year be greater than 12% or less than 6%. The balance credited to a Participant's Interest Account as of any date shall be the accumulated deferred Cash Compensation and interest that are credited to such Account as of such date. ARTICLE 5 PAYMENT OF DEFERRED COMPENSATION -------------------------------- 5.1 Payment of Deferred Compensation. In the event of a Participant's Termination of Directorship for reasons other than the Participant's death, the balance credited to the Participant's Account shall be paid to the Participant. In the event of a Participant's death, the balance credited to the Participant's Account shall be paid to the Participant's Beneficiary. 5.2 Commencement of Payments. Payment of a Participant's Deferred Compensation shall commence as follows: (a) Deferrals to a Specific Year. If a Participant has elected pursuant to Section 5.6 to receive payment of his or her deferrals for any Plan Year in a specific year, payment of the Participant's Deferred Compensation that is attributable to such Plan Year shall commence: (i) during the first 31 days of the year elected by the Participant; or (ii) within 60 days after the last day of the Plan Year in which the Participant's Termination of Directorship occurs; whichever is earlier. (b) Deferrals to Termination of Directorship. If a Participant has elected pursuant to Section 5.6 to receive payment of his or her deferrals for any Plan Year following the Participant's Termination of Directorship, payment of the Participant's Deferred Compensation that is attributable to such Plan Year shall commence within 60 days after the date of the Participant's Termination of Directorship or within 60 days after the last day of the Plan Year in which the Participant's Termination of Directorship occurs, as elected by the Participant pursuant to Section 5.6. Notwithstanding the foregoing, if a Participant's Termination of Directorship occurs by reason of the Participant's death, payment will commence within 60 days after the date the Participant's Beneficiary has been identified. 5.3 Timing of Payments. Payments of a Participant's Deferred Compensation shall be made in a lump sum or in up to ten annual installments, as elected by the Participant pursuant to Section 5.6; provided, that all payments due by reason of a Participant's death shall be made in a lump sum. 5.4 Amount of Payments. The amount of a lump sum payment shall be equal to the balance credited to the Participant's Account as of a date selected by the Plan Administrator, which date shall not be more than 30 days prior to the date the lump sum is paid. The amount of an installment payment shall be equal to the balance credited to the Participant's Account as of a date selected by the Plan Administrator (which shall not be more than 30 days prior to the date the installment is paid), divided by the number of installments (including the current installment) remaining to be paid. The first annual installment will be paid on the date as of which payment of the Participant's Deferred Compensation is scheduled to commence. Each annual installment after the first shall be paid within 31 days after the last day of the calendar year in which the previous installment was paid. 5.5 Form of Payments. Payments that are due from a Participant's Company Stock Account shall be made in whole shares of Company Stock, plus cash in an amount equal to the Share Value of any fractional shares. Payments that are due from a Participant's Interest Account shall be made in cash. 5.6 Participant Elections. Subject to the foregoing provisions of this Article 5, when a Participant elects to defer Compensation pursuant to Section 4.1, the Participant may also elect: (a) the calendar year in which payment of such Deferred Compensation will commence, which calendar year shall be: (i) subsequent to the Plan Year next following the Plan Year to which the election applies; and (ii) no later than the calendar year of the Participant's anticipated Retirement; or (b) to have payment of such Deferred Compensation commence within 60 days following the Participant's Termination of Directorship; or (c) to have payment of such Deferred Compensation commence within 60 days following the last day of the calendar year of the Participant's Termination of Directorship; and (d) to receive payment of such Deferred Compensation in a lump sum or in up to ten annual installments. Each such election shall be due by the due date for the election under Section 4.1, and it shall apply to all Deferred Compensation that is attributable to the Plan Year to which the election under Section 4.1 applies. If a Participant fails to make an election for any Plan Year, the election that was in effect for the previous Plan Year shall remain in effect for the current Plan Year. If no election was in effect for the previous Plan Year, Deferred Compensation that is attributable to the current Plan Year will be distributed in a lump sum on the fourth Friday of the month following the Participant's Termination of Directorship. 5.7 Emergency Payments. In the event of an Unforeseeable Emergency, the Plan Administrator may direct the payment of any part or all of a Participant's Deferred Compensation to the Participant prior to the time provided in Section 5.2, to the extent necessary to prevent severe financial hardship. Such action shall be taken only if the Participant submits a written application describing the circumstances which are deemed to justify the payment and the amount necessary to prevent severe financial hardship, together with such supporting evidence as the Plan Administrator may reasonably require. Payments shall not be made under this section to the extent the Participant's hardship is or may be relieved: (a) through reimbursement or compensation by insurance or otherwise; (b) by liquidation of the Participant's assets, to the extent this would not in itself cause severe financial hardship; or (c) by the termination of the Participant's election to defer Compensation. 5.8 Tax Payments. If there is a final determination that a Participant or Beneficiary should be taxed on part or all of the Participant's Deferred Compensation before it is actually paid, the Company shall pay to the Participant or Beneficiary the portion of the Participant's Deferred Compensation that has been determined to be currently taxable. For the purposes of this section, a "final determination" means a determination by the Internal Revenue Service or a court of competent jurisdiction from which no further appeal may be taken, either because there is no further appeal available or because the time to take such appeal has expired. 5.9 Facility of Payment. The Company may make payments due to a legally incompetent person in such of the following ways as the Plan Administrator shall determine: (a) directly to such person; (b) to the legal representative of such person; or (c) to a near relative of such person to be used for the person's benefit. Any payment made in accordance with the provisions of this section shall be a complete discharge of the Company's liability for the making of such payment. 5.10 Restrictions on Payments. Notwithstanding anything herein to the contrary, the Plan Administrator may postpone the issuance and delivery of shares of Company Stock to a Participant until the requirements of any securities exchange or system on which shares of Company Stock have been listed have been complied with, until any required registration or other qualification of such shares under applicable provisions of any State or Federal securities laws, rules or regulations has been completed, or until the requirements of any exemption from registration or other qualification have been satisfied. The Plan Administrator may restrict the transferability of any shares of Company Stock that are distributed pursuant to the Plan, legend any certificate evidencing any such shares, and place a stop transfer order in respect of such shares, to the extent it reasonably determines that such action is necessary to ensure compliance with any applicable securities or exchange law, regulation, or other requirement. ARTICLE 6 CLAIMS PROCEDURE ---------------- 6.1 Decisions on Claims. If a claim for benefits is denied, the Plan Administrator shall furnish to the claimant within 90 days after its receipt of the claim (or within 180 days after such receipt if special circumstances require an extension of time) a written notice which: (a) specifies the reasons for the denial; (b) refers to the pertinent provisions of the Plan on which the denial is based; (c) describes any additional material or information necessary for the perfection of the claim and explains why such material or information is necessary; and (d) explains the claim review procedures. 6.2 Review of Denied Claims. Upon the written request of the claimant submitted within 60 days after his or her receipt of such written notice, the Plan Administrator shall afford the claimant a full and fair review of the decision denying the claim and, if so requested, permit the claimant to review any documents which are pertinent to the claim, permit the claimant to submit issues and comments in writing, and afford the claimant an opportunity to meet with appropriate representatives of the Plan Administrator as a part of the review procedure. Within 60 days after its receipt of a request for review (or within 120 days after such receipt if special circumstances, such as the need to hold a hearing, require an extension of time) the Plan Administrator shall notify the claimant in writing of its decision and the reasons for its decision and shall refer the claimant to the provisions of the Plan which form the basis for its decision. ARTICLE 7 FUNDING ------- This Plan is intended to be "unfunded" for the purposes of the Code; however, nothing herein shall prevent the Company, in its sole discretion, from establishing a trust of the type commonly known as a "rabbi trust" to assist it in meeting its obligations under the Plan. ARTICLE 8 AMENDMENT AND TERMINATION ------------------------- The Nominating and Governance Committee of the Board of Directors of the Company may amend or terminate this Plan at any time and for any reason; provided, that no amendment or termination of the Plan shall alter a Participant's right to receive payment of amounts previously credited to the Participant's Account. ARTICLE 9 GENERAL PROVISIONS ------------------ 9.1 Status of Participants. Each Participant and Beneficiary shall be a general unsecured creditor of the Company with respect to amounts payable hereunder, this Plan constituting a mere promise by the Company to make benefit payments in the future. A Participant's or Beneficiary's right to receive payments under the Plan are not subject in any manner to anticipation, alienation, sale, assignment, pledge, encumbrance, attachment, or garnishment by the creditors of the Participant or the Participant's Beneficiaries. 9.2 No Guaranty of Directorship. The establishment of this Plan shall not give a Participant any legal or equitable right to be continued as a member of the Board of Directors of the Company. 9.3 Delegation of Authority. Whenever, under the terms of this Plan, the Company is permitted or required to do or perform any act, it shall be done or performed by the Board of Directors of the Company, by any duly authorized committee thereof, or by any officer of the Company duly authorized by the articles of incorporation, bylaws, or Board of Directors of the Company. 9.4 Legal Actions. No Participant, Beneficiary, or other person having or claiming to have an interest in this Plan shall be a necessary party to any action or proceeding involving the Plan, and no such person shall be entitled to any notice or process, except to the extent required by applicable law. Any final judgment which is not appealed or appealable that may be entered in any such action or proceeding shall be binding and conclusive on all persons having or claiming to have any interest in this Plan. 9.5 Applicable Law. This Plan shall be construed and interpreted in accordance with the laws of the State of Wisconsin, except to the extent the same are preempted by any applicable federal law. 9.6 Rules of Construction. Wherever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections of this Plan are inserted for convenience of reference, are not a part of this Plan, and are not to be considered in the construction hereof. The words "hereof," "herein," "hereunder," and other similar compounds of the word "here" shall mean and refer to the entire Plan, and not to any particular provision or section. 9.7 Expenses of Administration. All expenses and costs incurred in connection with the administration or operation of the Plan shall be paid by the Company and/or by any trust of the type described in Article 7. 9.8 Indemnification. The Company shall, to the extent permitted by its articles of incorporation and bylaws, and by the laws of the state in which it is incorporated, indemnify any employee or Director of the Company or an Affiliate providing services to the Plan against any and all liabilities arising by reason of any act or omission, made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto. To record the adoption of the Plan as set forth above, the undersigned has executed this document this ___ day of ________________, ____________, for and on behalf of the Company. ALLIANT ENERGY CORPORATION By ------------------------------------------ As its --------------------------------------- ATTEST: - ------------------------------- As its------------------------- EX-10.3 4 0004.txt EXHIBIT 10.3 EXHIBIT 10.3 ALLIANT SERVICES COMPANY GRANTOR TRUST FOR DEFERRED COMPENSATION AGREEMENTS ------------------------------------ THIS AGREEMENT, made this ______ day of __________________, 2000, by and between ALLIANT SERVICES COMPANY (the "Company") and MARSHALL & ILSLEY TRUST COMPANY (the "Trustee"); W I T N E S S E T H: -------------------- WHEREAS, the Company has adopted or entered into the nonqualified deferred compensation plans and agreements (the "Plans") listed in Appendix A; WHEREAS, the Company has incurred or expects to incur liability under the terms of such Plans with respect to the individuals participating in such Plans; WHEREAS, the Company wishes to establish a trust (the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Company's creditors in the event of the Company's Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plans; WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and WHEREAS, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plans; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: SECTION 1 ESTABLISHMENT OF TRUST ---------------------- 1.1 The Company hereby deposits with the Trustee, in trust, the sum of $1,000, which shall become the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. 1.2 The Trust hereby established shall be irrevocable. 1.3 The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. 1.4 The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3.1 herein. 1.5 Within ten business days following a Change in Control, the Company shall make an irrevocable contribution to the Trust in an amount that is equal to the sum of the participants' and beneficiaries' account balances established pursuant to the terms of the Plans as of the date of the Change in Control. 1.6 As of each December 31 following a Change in Control ("Valuation Date"), the Company shall determine the amount of the contribution which would have been required pursuant to Section 1.5 if the Change in Control had occurred on such Valuation Date. If the amount so determined exceeds the fair market value of the Trust assets on such Valuation Date, the Company shall, within ten business days following such Valuation Date, make an irrevocable contribution to the Trust in an amount which is not less than such excess. 1.7 The Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with the Trustee to augment the principal to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. The Plan participants and their beneficiaries shall have no right to compel any such discretionary deposits. 1.8 The Trustee shall have no obligation to compel any deposits that are required pursuant to this Agreement. SECTION 2 PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES ----------------------------------------------------- 2.1 The Company shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Plan participant (and his or her beneficiaries), or that provides a formula or other instructions acceptable to the Trustee for determining the amounts so payable, the form in which such amounts are to be paid (as provided for or available under the Plans), and the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustee shall make payments to the Plan participants and their beneficiaries in accordance with the most recent Payment Schedule received by the Trustee. Based exclusively upon direction from the Company as to time and amounts, the Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plans and, based exclusively upon direction from the Company, shall pay amounts withheld to taxing authorities. The Trustee acts solely as the Company's agent for purposes of reporting and withholding on payments from the Trust, and the Company shall be solely responsible for determining that such amounts have been reported, withheld and paid to appropriate taxing authorities in a timely manner. 2.2 The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plans shall be determined by the Company or such party as it shall designate under the Plans, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plans. 2.3 The Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plans. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, the Company shall make the balance of each such payment as it falls due. The Trustee shall notify the Company where principal and earnings are not sufficient. SECTION 3 TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT ---------------------------------------------- 3.1 The Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if it is unable to pay its debts as they become due, or if it is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 3.2 At all times during the continuance of this Trust, as provided in Section 1.4 hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below. 3.3 The Board of Directors and the Chief Executive Officer of the Company shall have the duty to inform the Trustee in writing of the Company's Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries. 3.4 Unless the Trustee has actual knowledge of the Company's Insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. (a) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Plans or otherwise. (b) The Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent). 3.5 Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3.2 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance. SECTION 4 PAYMENTS TO COMPANY ------------------- Except as provided in Section 3 hereof, after the Trust has become irrevocable, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plans. SECTION 5 INVESTMENT AUTHORITY -------------------- 5.1 The Trustee shall have the following powers and duties with respect to the investment of the assets of the Trust: (a) Except as otherwise specifically provided herein, and subject to such investment guidelines as may be adopted by the Company and delivered to the Trustee, the Trustee may invest, reinvest, and hold the assets of the Trust in whatever form of investment the Trustee may see fit (including, but not limited to, contracts or policies of insurance), and in making or holding such investments, the Trustee shall not be restricted to those investments which are authorized by the laws of any state for the investment of trust funds. (b) In addition to the general investment powers set forth above in this Section 5.1, the following provisions shall apply: (i) Investment Guidelines and Directives. Prior to the occurrence of a ------------------------------------ Change in Control, and subject to the Company's authority to appoint an investment manager, the Trustee shall manage, acquire, or dispose of the assets of the Trust in accordance with this Agreement and the directions of the Company or its designee. To the extent permitted by law, the Trustee shall not be liable for any investment made pursuant to the Company's or its designee's direction. (ii) Trustee Powers. The Trustee shall have the following powers, ---------------- rights and duties subject to Section 8 and the other provisions of this Trust Agreement. The Trustee shall exercise such powers only upon the direction of an investment manager, where such powers relate to an investment manager Account, upon the direction of the Company or its designee prior to a Change in Control, and in its sole discretion otherwise: (A) To receive and hold all contributions paid to it by the Company; provided, however, that the Trustee shall have no duty to require any contributions to be made to it; (B) To effectuate the written investment instructions given by the Company or its designee without regard to any law now or hereafter in force limiting investments of fiduciaries; (C) To retain in the Trust for investment, any property deposited with the Trustee hereunder; (D) To have the authority to invest and reinvest assets of the Trust in shares of common or preferred stock, bonds, notes, debentures, short-term securities, mutual funds (including any such fund from which the Trustee or any affiliate thereof receives an investment management fee or any other fee), common Trust funds, and other property, real or personal, of any kind; to purchase and sell "put" or "call" options on publicly traded securities; and to acquire, hold, manage, operate, sell, contract to sell, grant options with respect to, convey, exchange, transfer, abandon, lease, manage, and otherwise deal with respect to assets of the Trust; (E) To acquire, hold or dispose of insurance or annuity contracts as directed by the Company or its designee; (F) To borrow from anyone such amount or amounts of money necessary to carry out the purpose of this Trust and for that purpose to mortgage or pledge all or any part of the Trust; (G) To retain in the Trust for investment or pending distributions, any portion of the Trust in cash deemed appropriate by the Trustee; (H) To establish accounts in any affiliate of the Trustee and in such other banks and financial institutions as the Trustee deems appropriate to carry out the purposes of the Trust; (I) To deposit securities with a clearing corporation as defined in Article Eight of the Uniform Commercial Code; to hold the certificates representing securities, including those in bearer form, in bulk form with and to merge such certificates into certificates of the same class of the same issuer which constitutes assets of other accounts or owners, without certification as to the ownership attached; and to utilize a book-entry system for the transfer or pledge of securities held by the Trustee or by a clearing corporation, provided that the records of the Trustee shall indicate the actual ownership of the securities and other property of the Trust Fund; (J) To participate in and use the Federal book-entry Account system, a service provided by the Federal Reserve Bank for its member banks for deposit of Treasury securities; and (K) To hold securities or property in the name of the Trustee or its nominee or nominees or in such other form as it deems best with or without disclosing the Trust relationship, providing the records of the Trust shall indicate the actual ownership of such securities or other property. 5.2 Prior to the occurrence of a Change in Control, the Company may at any time, and from time to time, appoint one or more investment managers to manage and control all or any part of the Trust's assets. Any such investment manager shall be a registered investment adviser under the Investment Advisers Act of 1940; a bank, as defined in that Act; or an insurance company that is qualified to manage, acquire or dispose of the Plans' assets under the laws of more than one state. The Company shall notify the Trustee of any appointment of an investment manager by delivery to the Trustee of a copy of the document under which the investment manager was appointed to act as such hereunder and shall specify to the Trustee that portion of the Trust Fund which shall be an "Investment Manager Account." Upon receipt of written notice of the appointment of an investment manager, the Trustee shall segregate the portion of the assets of the Trust to be managed by the investment manager into a separate Investment Manager Account. During the term of such appointment, the investment manager with respect to its Investment Manager Account shall have the sole responsibility for the investment and reinvestment of the Investment Manager Account subject to its investment management, and shall certify in writing to the Trustee the identity of the person or persons authorized to give instructions or directions on its behalf. The Trustee shall follow such directions and shall be under no duty to review any investment to be acquired, held or disposed of pursuant to such directions nor to make any recommendation with respect to the disposition or continued retention of any such investment. The Trustee shall have no liability for acting without question on the direction of, or failing to act in the absence of any direction from an investment manager. The Trustee and any investment manager appointed hereunder shall each exercise their respective fiduciary responsibilities with respect to the assets of the Plan, including (without limitation) any responsibility of diversification, as if the portion of the Trust Fund under its management constituted the entirety of the assets of the Plan. The Company, or some other fiduciary named by it, shall be responsible for the overall diversification of the entire Trust Fund. Notwithstanding the foregoing, any appointment by the Company of an investment manager shall terminate upon the occurrence of a Change in Control, and neither the Company, nor any successor to the Company, shall thereafter have any power to appoint an investment manager with respect to any portion of the assets of the Trust. In the event that an investment manager appointed hereunder should resign or be removed, or upon the termination of the appointment of an investment manager due to the occurrence of a Change in Control, the Trustee shall, upon receiving written notice thereof, manage the investment of that portion of the Trust Fund which was an Investment Manager Account under the management of such investment manager at the time of such resignation, removal or termination, unless and until the Trustee shall be notified of the appointment of another investment manager. 5.3 The Trustee may invest in shares of the Common Stock, $.01 par value, of Alliant Energy Corporation ("Company Stock"). All rights associated with shares of Company Stock that are held by the Trust shall be exercised by the Trustee, and shall in no event be exercisable by or rest with Plan participants. 5.4 The Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. SECTION 6 DISPOSITION OF INCOME --------------------- During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. SECTION 7 ACCOUNTING BY TRUSTEE --------------------- The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. Within 60 days following the close of each calendar year, and within 60 days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. SECTION 8 RESPONSIBILITY OF TRUSTEE ------------------------- 8.1 The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company or an investment manager which is contemplated by, and in conformity with, the terms of the Plans or this Trust and is given in writing by the Company or such investment manager. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. 8.2 If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Company agrees to indemnify the Trustee against the Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. 8.3 The Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. 8.4 The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder, and may reasonably compensate them out of the Trust assets. 8.5 The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. 8.6 Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7700-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. 8.7 If the Trustee is at any time acting as a successor trustee or succeeds to responsibilities hereunder for management of part or all of the assets constituting the Trust Fund, the Company hereby agrees to hold the Trustee harmless from and against all claims, expenses (including reasonable counsel fees), liabilities, damages, actions, or other charges incurred or assessed against it as successor trustee, as a direct or indirect result of any act or omission of a predecessor trustee or any other person charged under any agreement affecting the assets of the Trust for investment responsibility with respect to such assets. 8.8 The Company recognizes that a burden of litigation may be imposed on the Trustee, as a result of some act or transaction for which it has no responsibility or over which it has no control under this Agreement. Accordingly, and in consideration of the Trustee's agreement to act as trustee hereunder, the Company hereby agrees to indemnify and hold the Trustee and its affiliates, directors, officers, and employees harmless from and against all claims, expenses (including reasonable counsel fees), liabilities, damages, actions, or other charges incurred by or assessed against the Trustee, as a direct or indirect result of anything done or omitted by Trustee in reliance upon the directions (or absence of directions) of the Company or any investment manager. SECTION 9 COMPENSATION AND EXPENSES OF TRUSTEE ------------------------------------ The Company shall pay all administrative and the Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. SECTION 10 RESIGNATION OR REMOVAL OF TRUSTEE --------------------------------- 10.1 The Trustee may resign at any time by written notice to the Company, which shall be effective 30 days after receipt of such notice unless the Company and the Trustee agree otherwise. 10.2 Prior to a Change in Control, the Trustee may be removed by the Company on 30 days notice or upon shorter notice accepted by the Trustee. Following a Change in Control, the Trustee may not be removed by the Company unless 65% of all employees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans consent in writing to such removal. 10.3 Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within 30 days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. 10.4 If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under Section 10.1 or 10.2 of this section. If no such appointment has been made, the Trustee may appoint a successor Trustee or it may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. SECTION 11 APPOINTMENT OF SUCCESSOR ------------------------ 11.1 If the Trustee resigns or is removed in accordance with Section 10.1 or 10.2 hereof, the Company, or if a Change in Control shall previously have occurred the Company and at least 65% of all employees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans, may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer. 11.2 The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and the Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event or any condition existing at the time it becomes a successor Trustee. SECTION 12 AMENDMENT OR TERMINATION ------------------------ 12.1 This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable after it has become irrevocable in accordance with Section 1.2 hereof. 12.2 The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plans. Upon termination of the Trust any assets remaining in the Trust shall be returned to the Company. 12.3 Notwithstanding the foregoing: (a) This Trust Agreement may not be amended by the Company prior to a Change in Control without the written approval of any Plan participant or beneficiary whose rights or protections under a Plan or this Agreement may be reduced, impaired, or otherwise adversely affected by the amendment. (b) This Trust Agreement may not be amended by the Company following a Change in Control without the written approval of all employees or former employees of the Company who are, or may become, entitled to the payment of benefits pursuant to the Plans. (c) The Company may terminate this Trust prior to the date specified in Section 12.2 upon the written approval of all employees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans. SECTION 13 MISCELLANEOUS ------------- 13.1 Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. 13.2 Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 13.3 This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin, except to the extent the same are preempted by federal law. 13.4 This Trust Agreement shall be binding upon, and shall inure to the benefit of, any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company. The Company (and any successor to the Company) may not otherwise assign its obligations under this Trust Agreement without the prior written approval of all employees or former employees of the Company who are, or may become, entitled to the payment of benefits pursuant to the Plans. 13.5 For the purposes of this Trust Agreement: (a) "Change in Control" means the occurrence of any one of the events set forth in the following paragraphs: (i) any Person (other than (A) Alliant Energy Corporation or any Subsidiary, (B) a trustee or other fiduciary holding securities under any employee benefit plan of Alliant Energy Corporation or any Subsidiary, (C) an underwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directly or indirectly, by the shareowners of Alliant Energy Corporation in substantially the same proportions as their ownership of stock in Alliant Energy Corporation ("Excluded Persons")) is or becomes the Beneficial Owner, directly or indirectly, of securities of Alliant Energy Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from Alliant Energy Corporation or its affiliates after January 20, 1999, pursuant to express authorization by the Board that refers to this exception) representing 20% or more of either the then outstanding Shares or the combined voting power of Alliant Energy Corporation's then outstanding voting securities; or (ii) the following individuals cease for any reason to constitute a majority of the number of Directors of Alliant Energy Corporation then serving: (A) individuals who, on January 20, 1999, constituted the Board and (B) any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Directors of Alliant Energy Corporation, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) whose appointment or election by the Board or nomination for election by Alliant Energy Corporation's shareowners was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors on January 20, 1999, or whose appointment, election or nomination for election was previously so approved (collectively the "Continuing Directors"); provided, however, that individuals who are appointed to the Board pursuant to or in accordance with the terms of an agreement relating to a merger, consolidation, or share exchange involving Alliant Energy Corporation (or any Subsidiary) shall not be Continuing Directors for purposes of the Plan until after such individuals are first nominated for election by a vote of at least two-thirds of the then Continuing Directors and are thereafter elected as Directors by the shareowners of Alliant Energy Corporation at a meeting of shareowners held following consummation of such merger, consolidation or share exchange; and, provided further, that in the event the failure of any such Persons appointed to the Board to be Continuing Directors results in a Change in Control, the subsequent qualification of such Persons as Continuing Directors shall not alter the fact that a Change in Control occurred; or (iii) Alliant Energy Corporation after January 20, 1999 consummates a merger, consolidation or share exchange with any other corporation or issues voting securities in connection with a merger, consolidation or share exchange involving Alliant Energy Corporation (or any Subsidiary), other than (A) a merger, consolidation or share exchange which results in the voting securities of Alliant Energy Corporation outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of Alliant Energy Corporation or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of Alliant Energy Corporation (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of Alliant Energy Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from Alliant Energy Corporation or its affiliates after January 20, 1999, pursuant to express authorization by the Board that refers to this exception) representing 20% or more of either the then outstanding Shares or the combined voting power of Alliant Energy Corporation's then outstanding voting securities; or (iv) the shareowners of Alliant Energy Corporation approve a plan of complete liquidation or dissolution of Alliant Energy Corporation or Alliant Energy Corporation effects a sale or disposition of all or substantially all of its assets (in one transaction or a series of related transactions within any period of 24 consecutive months), other than a sale or disposition by Alliant Energy Corporation of all or substantially all of Alliant Energy Corporation's assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of Alliant Energy Corporation immediately prior to such sale. Notwithstanding the foregoing, no "Change in Control" shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Shares immediately prior to such transaction or series of transactions continue to own, directly or indirectly, in the same proportions as their ownership in Alliant Energy Corporation, an entity that owns all or substantially all of the assets or voting securities of Alliant Energy Corporation immediately following such transaction or series of transactions. (b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (i) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act and (ii) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report). (c) "Board" or "Board of Directors" means the Board of Directors of Alliant Energy Corporation. (d) "Director" means any individual who is a member of the Board of Directors of Alliant Energy Corporation. (e) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto. (f) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (g) "Shares" means the shares of common stock of Alliant Energy Corporation. (h) "Subsidiary" means any corporation, partnership, venture, or other entity in which Alliant Energy Corporation, directly or indirectly, has at least an 80% ownership interest. SECTION 14 EFFECTIVE DATE -------------- The effective date of this Trust Agreement shall be date first above written. * * * * * IN WITNESS WHEREOF, this instrument has been executed as of the date first above written. ALLIANT SERVICES COMPANY By: ______________________________________ As its: __________________________________ MARSHALL & ILSLEY TRUST COMPANY By: ______________________________________ As its: __________________________________ APPENDIX A PLANS ----- The following plans and agreements shall be funded through the Trust: 1. Alliant Services Company Key Employee Deferred Compensation Plan EX-10.4 5 0005.txt EXHIBIT 10.4 EXHIBIT 10.4 ALLIANT ENERGY CORPORATION GRANTOR TRUST FOR DEFERRED COMPENSATION AGREEMENTS ------------------------------------ THIS AGREEMENT, made this ______ day of __________________, 2000, by and between ALLIANT ENERGY CORPORATION (the "Company") and MARSHALL & ILSLEY TRUST COMPANY (the "Trustee"); W I T N E S S E T H: -------------------- WHEREAS, the Company has adopted or entered into the nonqualified deferred compensation plans and agreements (the "Plans") listed in Appendix A; WHEREAS, the Company has incurred or expects to incur liability under the terms of such Plans with respect to the individuals participating in such Plans; WHEREAS, the Company wishes to establish a trust (the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Company's creditors in the event of the Company's Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plans; WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and WHEREAS, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plans; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: SECTION 1 ESTABLISHMENT OF TRUST ---------------------- 1.1 The Company hereby deposits with the Trustee, in trust, the sum of $1,000, which shall become the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. 1.2 The Trust hereby established shall be irrevocable. 1.3 The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. 1.4 The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3.1 herein. 1.5 Within ten business days following a Change in Control, the Company shall make an irrevocable contribution to the Trust in an amount that is equal to the sum of the participants' and beneficiaries' account balances established pursuant to the terms of the Plans as of the date of the Change in Control. 1.6 As of each December 31 following a Change in Control ("Valuation Date"), the Company shall determine the amount of the contribution which would have been required pursuant to Section 1.5 if the Change in Control had occurred on such Valuation Date. If the amount so determined exceeds the fair market value of the Trust assets on such Valuation Date, the Company shall, within ten business days following such Valuation Date, make an irrevocable contribution to the Trust in an amount which is not less than such excess. 1.7 The Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with the Trustee to augment the principal to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. The Plan participants and their beneficiaries shall have no right to compel any such discretionary deposits. 1.8 The Trustee shall have no obligation to compel any deposits that are required pursuant to this Agreement. SECTION 2 PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES ----------------------------------------------------- 2.1 The Company shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Plan participant (and his or her beneficiaries), or that provides a formula or other instructions acceptable to the Trustee for determining the amounts so payable, the form in which such amounts are to be paid (as provided for or available under the Plans), and the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustee shall make payments to the Plan participants and their beneficiaries in accordance with the most recent Payment Schedule received by the Trustee. Based exclusively upon direction from the Company as to time and amounts, the Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plans and, based exclusively upon direction from the Company, shall pay amounts withheld to taxing authorities. The Trustee acts solely as the Company's agent for purposes of reporting and withholding on payments from the Trust, and the Company shall be solely responsible for determining that such amounts have been reported, withheld and paid to appropriate taxing authorities in a timely manner. 2.2 The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plans shall be determined by the Company or such party as it shall designate under the Plans, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plans. 2.3 The Company may make payment of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plans. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, the Company shall make the balance of each such payment as it falls due. The Trustee shall notify the Company where principal and earnings are not sufficient. SECTION 3 TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT ---------------------------------------------- 3.1 The Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if it is unable to pay its debts as they become due, or if it is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 3.2 At all times during the continuance of this Trust, as provided in Section 1.4 hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below. 3.3 The Board of Directors and the Chief Executive Officer of the Company shall have the duty to inform the Trustee in writing of the Company's Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to Plan participants or their beneficiaries. 3.4 Unless the Trustee has actual knowledge of the Company's Insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. (a) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Plans or otherwise. (b) The Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent). 3.5 Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3.2 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance. SECTION 4 PAYMENTS TO COMPANY ------------------- Except as provided in Section 3 hereof, after the Trust has become irrevocable, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust assets before all payment of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plans. SECTION 5 INVESTMENT AUTHORITY -------------------- 5.1 The Trustee shall have the following powers and duties with respect to the investment of the assets of the Trust: (a) Except as otherwise specifically provided herein, and subject to such investment guidelines as may be adopted by the Company and delivered to the Trustee, the Trustee may invest, reinvest, and hold the assets of the Trust in whatever form of investment the Trustee may see fit (including, but not limited to, contracts or policies of insurance), and in making or holding such investments, the Trustee shall not be restricted to those investments which are authorized by the laws of any state for the investment of trust funds. (b) In addition to the general investment powers set forth above in this Section 5.1, the following provisions shall apply: (i) Investment Guidelines and Directives. Prior to the occurrence of a Change in Control, and subject to the Company's authority to appoint an investment manager, the Trustee shall manage, acquire, or dispose of the assets of the Trust in accordance with this Agreement and the directions of the Company or its designee. To the extent permitted by law, the Trustee shall not be liable for any investment made pursuant to the Company's or its designee's direction. (ii) Trustee Powers. The Trustee shall have the following powers, rights and duties subject to Section 8 and the other provisions of this Trust Agreement. The Trustee shall exercise such powers only upon the direction of an investment manager, where such powers relate to an investment manager Account, upon the direction of the Company or its designee prior to a Change in Control, and in its sole discretion otherwise: (A) To receive and hold all contributions paid to it by the Company; provided, however, that the Trustee shall have no duty to require any contributions to be made to it; (B) To effectuate the written investment instructions given by the Company or its designee without regard to any law now or hereafter in force limiting investments of fiduciaries; (C) To retain in the Trust for investment, any property deposited with the Trustee hereunder; (D) To have the authority to invest and reinvest assets of the Trust in shares of common or preferred stock, bonds, notes, debentures, short-term securities, mutual funds (including any such fund from which the Trustee or any affiliate thereof receives an investment management fee or any other fee), common Trust funds, and other property, real or personal, of any kind; to purchase and sell "put" or "call" options on publicly traded securities; and to acquire, hold, manage, operate, sell, contract to sell, grant options with respect to, convey, exchange, transfer, abandon, lease, manage, and otherwise deal with respect to assets of the Trust; (E) To acquire, hold or dispose of insurance or annuity contracts as directed by the Company or its designee; (F) To borrow from anyone such amount or amounts of money necessary to carry out the purpose of this Trust and for that purpose to mortgage or pledge all or any part of the Trust; (G) To retain in the Trust for investment or pending distributions, any portion of the Trust in cash deemed appropriate by the Trustee; (H) To establish accounts in any affiliate of the Trustee and in such other banks and financial institutions as the Trustee deems appropriate to carry out the purposes of the Trust; (I) To deposit securities with a clearing corporation as defined in Article Eight of the Uniform Commercial Code; to hold the certificates representing securities, including those in bearer form, in bulk form with and to merge such certificates into certificates of the same class of the same issuer which constitutes assets of other accounts or owners, without certification as to the ownership attached; and to utilize a book-entry system for the transfer or pledge of securities held by the Trustee or by a clearing corporation, provided that the records of the Trustee shall indicate the actual ownership of the securities and other property of the Trust Fund; (J) To participate in and use the Federal book-entry Account system, a service provided by the Federal Reserve Bank for its member banks for deposit of Treasury securities; and (K) To hold securities or property in the name of the Trustee or its nominee or nominees or in such other form as it deems best with or without disclosing the Trust relationship, providing the records of the Trust shall indicate the actual ownership of such securities or other property. 5.2 Prior to the occurrence of a Change in Control, the Company may at any time, and from time to time, appoint one or more investment managers to manage and control all or any part of the Trust's assets. Any such investment manager shall be a registered investment adviser under the Investment Advisers Act of 1940; a bank, as defined in that Act; or an insurance company that is qualified to manage, acquire or dispose of the Plans' assets under the laws of more than one state. The Company shall notify the Trustee of any appointment of an investment manager by delivery to the Trustee of a copy of the document under which the investment manager was appointed to act as such hereunder and shall specify to the Trustee that portion of the Trust Fund which shall be an "Investment Manager Account." Upon receipt of written notice of the appointment of an investment manager, the Trustee shall segregate the portion of the assets of the Trust to be managed by the investment manager into a separate Investment Manager Account. During the term of such appointment, the investment manager with respect to its Investment Manager Account shall have the sole responsibility for the investment and reinvestment of the Investment Manager Account subject to its investment management, and shall certify in writing to the Trustee the identity of the person or persons authorized to give instructions or directions on its behalf. The Trustee shall follow such directions and shall be under no duty to review any investment to be acquired, held or disposed of pursuant to such directions nor to make any recommendation with respect to the disposition or continued retention of any such investment. The Trustee shall have no liability for acting without question on the direction of, or failing to act in the absence of any direction from an investment manager. The Trustee and any investment manager appointed hereunder shall each exercise their respective fiduciary responsibilities with respect to the assets of the Plan, including (without limitation) any responsibility of diversification, as if the portion of the Trust Fund under its management constituted the entirety of the assets of the Plan. The Company, or some other fiduciary named by it, shall be responsible for the overall diversification of the entire Trust Fund. Notwithstanding the foregoing, any appointment by the Company of an investment manager shall terminate upon the occurrence of a Change in Control, and neither the Company, nor any successor to the Company, shall thereafter have any power to appoint an investment manager with respect to any portion of the assets of the Trust. In the event that an investment manager appointed hereunder should resign or be removed, or upon the termination of the appointment of an investment manager due to the occurrence of a Change in Control, the Trustee shall, upon receiving written notice thereof, manage the investment of that portion of the Trust Fund which was an Investment Manager Account under the management of such investment manager at the time of such resignation, removal or termination, unless and until the Trustee shall be notified of the appointment of another investment manager. 5.3 The Trustee may invest in shares of the Common Stock, $.01 par value, of the Company ("Company Stock"). All rights associated with shares of Company Stock that are held by the Trust shall be exercised by the Trustee, and shall in no event be exercisable by or rest with Plan participants. 5.4 The Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. SECTION 6 DISPOSITION OF INCOME --------------------- During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. SECTION 7 ACCOUNTING BY TRUSTEE --------------------- The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. Within 60 days following the close of each calendar year, and within 60 days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. SECTION 8 RESPONSIBILITY OF TRUSTEE ------------------------- 8.1 The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company or an investment manager which is contemplated by, and in conformity with, the terms of the Plans or this Trust and is given in writing by the Company or such investment manager. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. 8.2 If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Company agrees to indemnify the Trustee against the Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. 8.3 The Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. 8.4 The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder, and may reasonably compensate them out of the Trust assets. 8.5 The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. 8.6 Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7700-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. 8.7 If the Trustee is at any time acting as a successor trustee or succeeds to responsibilities hereunder for management of part or all of the assets constituting the Trust Fund, the Company hereby agrees to hold the Trustee harmless from and against all claims, expenses (including reasonable counsel fees), liabilities, damages, actions, or other charges incurred or assessed against it as successor trustee, as a direct or indirect result of any act or omission of a predecessor trustee or any other person charged under any agreement affecting the assets of the Trust for investment responsibility with respect to such assets. 8.8 The Company recognizes that a burden of litigation may be imposed on the Trustee, as a result of some act or transaction for which it has no responsibility or over which it has no control under this Agreement. Accordingly, and in consideration of the Trustee's agreement to act as trustee hereunder, the Company hereby agrees to indemnify and hold the Trustee and its affiliates, directors, officers, and employees harmless from and against all claims, expenses (including reasonable counsel fees), liabilities, damages, actions, or other charges incurred by or assessed against the Trustee, as a direct or indirect result of anything done or omitted by Trustee in reliance upon the directions (or absence of directions) of the Company or any investment manager. SECTION 9 COMPENSATION AND EXPENSES OF TRUSTEE ------------------------------------ The Company shall pay all administrative and the Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. SECTION 10 RESIGNATION OR REMOVAL OF TRUSTEE --------------------------------- 10.1 The Trustee may resign at any time by written notice to the Company, which shall be effective 30 days after receipt of such notice unless the Company and the Trustee agree otherwise. 10.2 Prior to a Change in Control, the Trustee may be removed by the Company on 30 days notice or upon shorter notice accepted by the Trustee. Following a Change in Control, the Trustee may not be removed by the Company unless 65% of all employees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans consent in writing to such removal. 10.3 Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within 30 days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. 10.4 If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under Section 10.1 or 10.2 of this section. If no such appointment has been made, the Trustee may appoint a successor Trustee or it may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. SECTION 11 APPOINTMENT OF SUCCESSOR ------------------------ 11.1 If the Trustee resigns or is removed in accordance with Section 10.1 or 10.2 hereof, the Company, or if a Change in Control shall previously have occurred the Company and at least 65% of all employees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans, may appoint any third party, such as a bank trust department or other party that may be granted corporate trustee powers under state law, as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer. 11.2 The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and the Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event or any condition existing at the time it becomes a successor Trustee. SECTION 12 AMENDMENT OR TERMINATION ------------------------ 12.1 This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable after it has become irrevocable in accordance with Section 1.2 hereof. 12.2 The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plans. Upon termination of the Trust any assets remaining in the Trust shall be returned to the Company. 12.3 Notwithstanding the foregoing: (a) This Trust Agreement may not be amended by the Company prior to a Change in Control without the written approval of any Plan participant or beneficiary whose rights or protections under a Plan or this Agreement may be reduced, impaired, or otherwise adversely affected by the amendment. (b) This Trust Agreement may not be amended by the Company following a Change in Control without the written approval of all employees or former employees of the Company who are, or may become, entitled to the payment of benefits pursuant to the Plans. (c) The Company may terminate this Trust prior to the date specified in Section 12.2 upon the written approval of all employees or former employees of the Company who are or may become entitled to the payment of benefits pursuant to the Plans. SECTION 13 MISCELLANEOUS ------------- 13.1 Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. 13.2 Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 13.3 This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin, except to the extent the same are preempted by federal law. 13.4 This Trust Agreement shall be binding upon, and shall inure to the benefit of, any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company. The Company (and any successor to the Company) may not otherwise assign its obligations under this Trust Agreement without the prior written approval of all employees or former employees of the Company who are, or may become, entitled to the payment of benefits pursuant to the Plans. 13.5 For the purposes of this Trust Agreement: (a) "Change in Control" means the occurrence of any one of the events set forth in the following paragraphs: (i) any Person (other than (A) the Company or any Subsidiary, (B) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any Subsidiary, (C) an underwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directly or indirectly, by the shareowners of the Company in substantially the same proportions as their ownership of stock in the Company ("Excluded Persons")) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates after January 20, 1999, pursuant to express authorization by the Board that refers to this exception) representing 20% or more of either the then outstanding Shares or the combined voting power of the Company's then outstanding voting securities; or (ii) the following individuals cease for any reason to constitute a majority of the number of Directors of the Company then serving: (A) individuals who, on January 20, 1999, constituted the Board and (B) any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) whose appointment or election by the Board or nomination for election by the Company's shareowners was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors on January 20, 1999, or whose appointment, election or nomination for election was previously so approved (collectively the "Continuing Directors"); provided, however, that individuals who are appointed to the Board pursuant to or in accordance with the terms of an agreement relating to a merger, consolidation, or share exchange involving the Company (or any Subsidiary) shall not be Continuing Directors for purposes of the Plan until after such individuals are first nominated for election by a vote of at least two-thirds of the then Continuing Directors and are thereafter elected as Directors by the shareowners of the Company at a meeting of shareowners held following consummation of such merger, consolidation or share exchange; and, provided further, that in the event the failure of any such Persons appointed to the Board to be Continuing Directors results in a Change in Control, the subsequent qualification of such Persons as Continuing Directors shall not alter the fact that a Change in Control occurred; or (iii) the Company after January 20, 1999 consummates a merger, consolidation or share exchange with any other corporation or issues voting securities in connection with a merger, consolidation or share exchange involving the Company (or any Subsidiary), other than (A) a merger, consolidation or share exchange which results in the voting securities of the Company outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates after January 20, 1999, pursuant to express authorization by the Board that refers to this exception) representing 20% or more of either the then outstanding Shares or the combined voting power of the Company's then outstanding voting securities; or (iv) the shareowners of the Company approve a plan of complete liquidation or dissolution of the Company or the Company effects a sale or disposition of all or substantially all of its assets (in one transaction or a series of related transactions within any period of 24 consecutive months), other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, no "Change in Control" shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Shares immediately prior to such transaction or series of transactions continue to own, directly or indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately following such transaction or series of transactions. (b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (i) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act and (ii) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report). (c) "Board" or "Board of Directors" means the Board of Directors of the Company. (d) "Director" means any individual who is a member of the Board of Directors of the Company. (e) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto. (f) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (g) "Shares" means the shares of common stock of the Company. (h) "Subsidiary" means any corporation, partnership, venture, or other entity in which the Company, directly or indirectly, has at least an 80% ownership interest. SECTION 14 EFFECTIVE DATE -------------- The effective date of this Trust Agreement shall be date first above written. IN WITNESS WHEREOF, this instrument has been executed as of the date first above written. ALLIANT ENERGY CORPORATION By: ------------------------------------------ As its: -------------------------------------- MARSHALL & ILSLEY TRUST COMPANY By: ------------------------------------------ As its: -------------------------------------- APPENDIX A PLANS ----- The following plans and agreements shall be funded through the Trust: 1. Alliant Energy Corporation Deferred Compensation Plan for Directors EX-27.1 6 0006.txt FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the June 30, 2000 Financial Statements included in Alliant Energy Corporation's Form 10-Q and is qualified in its entirety by reference to such Financial Statements. 0000352541 ALLIANT ENERGY CORPORATION 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 PER-BOOK 3,120,014 2,610,482 411,193 202,200 253,189 6,597,078 790 945,387 1,239,384 2,185,561 24,612 89,102 1,915,153 42,044 55,100 407,495 65,645 0 21,455 11,481 1,779,430 6,597,078 1,193,415 38,476 1,044,858 1,044,858 148,557 37,285 185,842 82,412 64,954 3,356 61,598 78,987 144,775 198,755 0.78 0.78 Includes $679,194 of Accumulated Other Comprehensive Income. Income tax expense is not included in Operating Expense in the Consolidated Statements of Income.
EX-27.2 7 0007.txt FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the June 30, 2000 Financial Statements included in IES Utilities Inc.'s Form 10-Q and is qualified in its entirety by reference to such Financial Statements. 0000052485 IES UTILITIES INC. 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 PER-BOOK 1,368,339 121,383 105,391 12,623 112,717 1,720,453 33,427 279,042 245,835 558,304 0 18,320 490,645 84,743 0 0 60,560 0 21,369 11,463 475,049 1,720,453 394,081 16,912 336,148 336,148 57,933 7,229 65,162 25,595 22,655 457 22,198 29,316 38,922 113,783 0 0 Income tax expense is not included in Operating Expense in the Consolidated Statements of Income. Earnings per share of common stock is not reflected because all common shares are held by Alliant Energy Corporation.
EX-27.3 8 0008.txt FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the June 30, 2000 Financial Statements included in Wisconsin Power and Light Company's Form 10-Q and is qualified in its entirety by reference to such Financial Statements. 0000107832 WISCONSIN POWER AND LIGHT COMPANY 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 PER-BOOK 1,237,151 187,341 113,109 155,017 86,431 1,779,049 66,183 229,438 335,103 630,724 0 59,963 514,132 28,791 55,100 0 1,875 0 0 0 488,464 1,779,049 412,697 19,898 347,076 347,076 65,621 9,582 75,203 22,136 33,169 1,656 31,513 0 41,602 86,688 0 0 Income tax expense is not included in Operating Expense in the Consolidated Statements of Income. Earnings per share of common stock is not reflected because all common shares are held by Alliant Energy Corporation.
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