-----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, Lkj5+g71iw8ySUf/jAOAZIZn2u1MBwilDGJ0ILpTsP06omaaDZVNmugncQJWxN7x fRvCsJGcVYPWptWB1I13xQ== 0000107832-03-000027.txt : 20030515 0000107832-03-000027.hdr.sgml : 20030515 20030515162945 ACCESSION NUMBER: 0000107832-03-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERSTATE POWER & LIGHT CO CENTRAL INDEX KEY: 0000052485 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 420331370 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04117 FILM NUMBER: 03705108 BUSINESS ADDRESS: STREET 1: 200 FIRST ST SE STREET 2: ALLIANT ENERGY TOWER CITY: CEDAR RAPIDS STATE: IA ZIP: 52401 BUSINESS PHONE: 3193984411 FORMER COMPANY: FORMER CONFORMED NAME: IES UTILITIES INC DATE OF NAME CHANGE: 19940107 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: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 390714890 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00337 FILM NUMBER: 03705112 BUSINESS ADDRESS: STREET 1: 4902 NORTH BILTMORE LANE STREET 2: PO BOX 77007 CITY: MADISON STATE: WI ZIP: 53707-1007 BUSINESS PHONE: 608-4583314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANT ENERGY CORP CENTRAL INDEX KEY: 0000352541 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 391380265 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09894 FILM NUMBER: 03705105 BUSINESS ADDRESS: STREET 1: 4902 NORTH BILTMORE LANE STREET 2: PO BOX 77007 CITY: MADISON STATE: WI ZIP: 53707-1007 BUSINESS PHONE: 608-458-3314 MAIL ADDRESS: STREET 1: 4902 NORTH BILTMORE LANE STREET 2: PO BOX 77007 CITY: MADISON STATE: WI ZIP: 53707-1007 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 10-Q 1 form10q0303.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 -------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______
Commission Name of Registrant, State of Incorporation, IRS Employer File Number Address of Principal Executive Offices and Telephone Number Identification Number - ----------- ----------------------------------------------------------- --------------------- 1-9894 ALLIANT ENERGY CORPORATION 39-1380265 (a Wisconsin corporation) 4902 N. Biltmore Lane Madison, Wisconsin 53718 Telephone (608)458-3311 0-4117-1 INTERSTATE POWER AND LIGHT COMPANY 42-0331370 (an Iowa corporation) Alliant Energy Tower Cedar Rapids, Iowa 52401 Telephone (319)786-4411 0-337 WISCONSIN POWER AND LIGHT COMPANY 39-0714890 (a Wisconsin corporation) 4902 N. Biltmore Lane Madison, Wisconsin 53718 Telephone (608)458-3311
This combined Form 10-Q is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-Q relating to Interstate Power and Light Company and Wisconsin Power and Light Company is filed by such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself. 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 [ ] Indicate by check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act). Alliant Energy Corporation Yes [ X ] No [ ] Interstate Power and Light Company Yes [ ] No [ X ] Wisconsin Power and Light Company Yes [ ] No [ X ]
Number of shares outstanding of each class of common stock as of April 30, 2003: Alliant Energy Corporation Common stock, $0.01 par value, 92,778,682 shares outstanding Interstate Power and Light Company 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 Light Company Common stock, $5 par value, 13,236,601 shares outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation)
TABLE OF CONTENTS Page ---- Part I. Financial Information 3 Item 1. Consolidated Financial Statements 3 Alliant Energy Corporation: --------------------------- Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002 3 Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 6 Notes to Consolidated Financial Statements 7 Interstate Power and Light Company: ----------------------------------- Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002 17 Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 18 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 20 Notes to Consolidated Financial Statements 21 Wisconsin Power and Light Company: ---------------------------------- Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002 22 Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 23 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 25 Notes to Consolidated Financial Statements 26 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3. Quantitative and Qualitative Disclosures About Market Risk 38 Item 4. Controls and Procedures 38 Part II. Other Information 38 Item 1. Legal Proceedings 38 Item 6. Exhibits and Reports on Form 8-K 39 Signatures 40 Certifications 41
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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 ARO......................................... Asset Retirement Obligation ATC......................................... American Transmission Company LLC Capstone.................................... Capstone Turbine Corporation Cargill-Alliant............................. Cargill-Alliant, LLC Corporate Services.......................... Alliant Energy Corporate Services, Inc. DAEC........................................ Duane Arnold Energy Center Dth......................................... Dekatherm EBITDA...................................... Earnings Before Interest, Taxes, Depreciation and Amortization EITF........................................ Emerging Issues Task Force EITF Issue 02-3............................. Issues Related to Accounting for Contracts Involved in Energy Trading and Risk Management Activities EITF Issue 98-10............................ Accounting for Contracts Involved in Energy Trading and Risk Management Activities Enermetrix.................................. Enermetrix, Inc. EPS......................................... Earnings Per Average Common Share FASB........................................ Financial Accounting Standards Board FIN......................................... FASB Interpretation No. FIN 46...................................... Consolidation of Variable Interest Entities GAAP........................................ Accounting Principles Generally Accepted in the U.S. IP&L........................................ Interstate Power and Light Company IRS......................................... Internal Revenue Service IUB......................................... Iowa Utilities Board Kewaunee.................................... Kewaunee Nuclear Power Plant McLeod...................................... McLeodUSA Incorporated MD&A........................................ Management's Discussion and Analysis of Financial Condition and Results of Operations MW.......................................... Megawatt MWh......................................... Megawatt-hour NG Energy................................... NG Energy Trading, LLC PSCW........................................ Public Service Commission of Wisconsin PUHCA....................................... Public Utility Holding Company Act of 1935 Resources................................... Alliant Energy Resources, Inc. SEC......................................... Securities and Exchange Commission SFAS........................................ Statement of Financial Accounting Standards SFAS 115.................................... Accounting for Certain Investments in Debt and Equity Securities SFAS 133.................................... Accounting for Derivative Instruments and Hedging Activities SFAS 143.................................... Accounting for Asset Retirement Obligations SmartEnergy................................. SmartEnergy, Inc. South Beloit................................ South Beloit Water, Gas and Electric Company Southern Hydro.............................. Southern Hydro Partnership Synfuel..................................... Alliant Energy Synfuel LLC TBD......................................... To Be Determined U.S. ....................................... United States of America Whiting..................................... Whiting Petroleum Corporation WP&L........................................ Wisconsin Power and Light Company
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PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS ALLIANT ENERGY CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months Ended March 31, 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------- (in thousands, except per share amounts) Operating revenues: Electric utility $443,025 $370,762 Gas utility 257,881 128,241 Non-regulated and other 194,884 72,433 -------------------- -------------------- 895,790 571,436 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Operating expenses: Electric and steam production fuels 72,415 62,610 Purchased power 129,315 72,337 Cost of utility gas sold 188,325 83,756 Other operation and maintenance 315,646 185,399 Depreciation and amortization 81,972 75,682 Taxes other than income taxes 26,076 27,788 -------------------- -------------------- 813,749 507,572 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Operating income 82,041 63,864 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Interest expense and other: Interest expense 55,514 44,487 Interest income from loans to discontinued operations, net (3,254) (3,366) Equity (income) loss from unconsolidated investments 4,254 (3,213) Allowance for funds used during construction (3,861) (1,654) Preferred dividend requirements of subsidiaries 4,158 1,682 Impairment of available-for-sale securities of McLeodUSA Inc. - 21,174 Miscellaneous, net 2,415 9,604 -------------------- -------------------- 59,226 68,714 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes 22,815 (4,850) -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Income taxes 8,176 2,941 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations 14,639 (7,791) -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from discontinued operations, net of tax (Note 8) (9,134) 17,534 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Income before cumulative effect of changes in accounting principles, net of tax 5,505 9,743 -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Cumulative effect of changes in accounting principles, net of tax (5,983) - -------------------- -------------------- - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) ($478) $9,743 ==================== ==================== - ------------------------------------------------------------------------------------------------------------------------------- Average number of common shares outstanding (diluted) 92,538 90,054 ==================== ==================== - ------------------------------------------------------------------------------------------------------------------------------- Earnings per average common share (basic and diluted): Income (loss) from continuing operations $0.16 ($0.09) Income (loss) from discontinued operations (0.10) 0.20 Cumulative effect of changes in accounting principles (0.07) - -------------------- -------------------- Net income (loss) ($0.01) $0.11 ==================== ==================== - ------------------------------------------------------------------------------------------------------------------------------- Dividends declared per common share $0.25 $0.50 ==================== ==================== - ------------------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, ASSETS 2003 2002 - -------------------------------------------------------------------------------------------------------------- (in thousands) Property, plant and equipment: Utility: Electric plant in service $5,481,700 $5,295,381 Gas plant in service 620,639 613,122 Other plant in service 543,102 530,456 Accumulated depreciation (3,388,047) (3,573,407) ---------------- ---------------- Net plant 3,257,394 2,865,552 Construction work in progress 324,695 263,096 Other, net 67,088 68,340 ---------------- ---------------- Total utility 3,649,177 3,196,988 ---------------- ---------------- Non-regulated and other, net: Non-regulated generation 209,882 156,699 International 170,309 171,179 Integrated Services 70,852 73,983 Investments 53,846 54,303 Corporate Services and other 72,371 75,282 ---------------- ---------------- Total non-regulated and other 577,260 531,446 ---------------- ---------------- 4,226,437 3,728,434 ---------------- ---------------- - -------------------------------------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 65,735 62,859 Restricted cash 9,247 9,610 Accounts receivable: Customer, less allowance for doubtful accounts of $4,439 and $4,364 114,984 69,413 Unbilled utility revenues 54,711 50,624 Other, less allowance for doubtful accounts of $948 and $845 68,646 60,107 Income tax refunds receivable 119,598 97,469 Production fuel, at average cost 53,866 63,126 Materials and supplies, at average cost 66,398 58,603 Gas stored underground, at average cost 7,467 62,797 Regulatory assets 70,171 46,076 Assets of discontinued operations (Note 8) 1,016,482 969,291 Other 60,001 74,314 ---------------- ---------------- 1,707,306 1,624,289 ---------------- ---------------- - -------------------------------------------------------------------------------------------------------------- Investments: Investments in unconsolidated foreign entities 390,302 373,816 Nuclear decommissioning trust funds 348,861 344,892 Investment in ATC and other 222,166 217,992 ---------------- ---------------- 961,329 936,700 ---------------- ---------------- - -------------------------------------------------------------------------------------------------------------- Other assets: Regulatory assets 429,721 302,365 Deferred charges and other 389,450 409,607 ---------------- ---------------- 819,171 711,972 ---------------- ---------------- - -------------------------------------------------------------------------------------------------------------- Total assets $7,714,243 $7,001,395 ================ ================ - -------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued) March 31, December 31, CAPITALIZATION AND LIABILITIES 2003 2002 - --------------------------------------------------------------------------------------------------------------------- (in thousands, except share amounts) Capitalization: Common stock - $0.01 par value - authorized 200,000,000 shares; outstanding 92,733,802 and 92,304,220 shares $927 $923 Additional paid-in capital 1,301,298 1,293,919 Retained earnings 734,676 758,187 Accumulated other comprehensive loss (181,930) (209,943) Shares in deferred compensation trust - 251,410 and 239,467 shares at an average cost of $28.21 and $28.80 per share (7,091) (6,896) -------------------- -------------------- Total common equity 1,847,880 1,836,190 -------------------- -------------------- Cumulative preferred stock of subsidiaries, net 205,063 205,063 Long-term debt (excluding current portion) 2,659,878 2,609,803 -------------------- -------------------- 4,712,821 4,651,056 -------------------- -------------------- - --------------------------------------------------------------------------------------------------------------------- Current liabilities: Current maturities and sinking funds 56,435 46,591 Variable rate demand bonds 55,100 55,100 Commercial paper 167,000 195,500 Other short-term borrowings 261,837 113,721 Accounts payable 310,418 282,855 Accrued taxes 102,042 105,521 Liabilities of discontinued operations (Note 8) 161,073 138,251 Other 210,487 184,771 -------------------- -------------------- 1,324,392 1,122,310 -------------------- -------------------- - --------------------------------------------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Accumulated deferred income taxes 639,061 630,625 Accumulated deferred investment tax credits 53,093 54,375 Asset retirement obligations (Note 11) 440,856 - Pension and other benefit obligations 189,842 181,010 Environmental liabilities 45,753 48,730 Other 257,973 269,864 -------------------- -------------------- 1,626,578 1,184,604 -------------------- -------------------- - --------------------------------------------------------------------------------------------------------------------- Minority interest 50,452 43,425 -------------------- -------------------- - --------------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $7,714,243 $7,001,395 ==================== ==================== - --------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ALLIANT ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2003 2002 - --------------------------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income (loss) ($478) $9,743 Adjustments to reconcile net income (loss) to net cash flows from operating activities: (Income) loss from discontinued operations, net of tax 9,134 (17,534) Depreciation and amortization 81,972 75,682 Other amortizations 16,510 10,923 Deferred tax expense (benefit) and investment tax (credits) 10,830 (19,025) Equity loss (income) from unconsolidated investments, net 4,254 (3,213) Distributions from equity method investments 2,969 4,227 Non-cash valuation charges 266 37,286 Cumulative effect of changes in accounting principles, net of tax 5,983 - Other (9,288) (7,749) Other changes in assets and liabilities: Accounts receivable (58,197) 16,652 Income tax refunds receivable (22,129) (8,774) Gas stored underground 55,330 29,559 Accounts payable 44,791 (33,855) Accrued taxes (3,479) 15,112 Other 28,175 36,939 ------------------ ----------------- Net cash flows from operating activities 166,643 145,973 ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Cash flows from (used for) financing activities: Common stock dividends (23,033) (44,851) Proceeds from issuance of common stock 6,854 14,285 Net change in Resources' credit facility - 85,115 Proceeds from issuance of other long-term debt 60,000 - Reductions in other long-term debt (670) (13,530) Net change in commercial paper and other short-term borrowings 119,616 (23,768) Net change in loans to discontinued operations (17,501) (25,672) Other (14,629) (565) ------------------ ----------------- Net cash flows from (used for) financing activities 130,637 (8,986) ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Construction and acquisition expenditures: Non-regulated businesses (180,286) (77,875) Regulated domestic utilities (103,432) (66,832) Corporate Services and other (1,007) (10,382) Nuclear decommissioning trust funds (3,455) (15,437) Other (6,224) 13,246 ------------------ ----------------- Net cash flows used for investing activities (294,404) (157,280) ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and temporary cash investments 2,876 (20,293) ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of period 62,859 67,886 ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at end of period $65,735 $47,593 ================== ================= - --------------------------------------------------------------------------------------------------------------------- Supplemental cash flows information: Cash paid (received) during the period for: Interest $40,167 $34,939 ================== ================= Income taxes, net of refunds ($3,517) $1,716 ================== ================= Noncash investing and financing activities: Capital lease obligations incurred $2,131 $448 ================== ================= - --------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6 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 GAAP 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 IP&L, WP&L, 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, IP&L's and WP&L's latest Annual Report on Form 10-K. In the opinion of management, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of (a) the consolidated results of operations for the three months ended March 31, 2003 and 2002, (b) the consolidated financial position at March 31, 2003 and Dec. 31, 2002, and (c) the consolidated statement of cash flows for the three months ended March 31, 2003 and 2002, have been made. Because of the seasonal nature of Alliant Energy's utility operations, results for the three months ended March 31, 2003 are not necessarily indicative of results that may be expected for the year ending Dec. 31, 2003. Certain prior period amounts have been reclassified on a basis consistent with the current period presentation. 2. Alliant Energy's comprehensive income, and the components of other comprehensive income, net of taxes, for the three months ended March 31 were as follows (in thousands):
2003 2002 ---------------- --------------- Net income (loss) ($478) $9,743 Unrealized holding losses on securities, net of tax (957) (5,350) Less: reclassification adjustment for losses included in net income (loss), net of tax (1) -- (16,185) ---------------- --------------- Net unrealized gains (losses) on securities (957) 10,835 ---------------- --------------- Foreign currency translation adjustments, net of tax 28,232 6,872 ---------------- --------------- Unrealized holding gains (losses) on derivatives, net of tax (5,274) 565 Less: reclassification adjustment for gains (losses) included in net income (loss), net of tax (6,012) 4,057 ---------------- --------------- Net unrealized gains (losses) on qualifying derivatives 738 (3,492) ---------------- --------------- Other comprehensive income 28,013 14,215 ---------------- --------------- Comprehensive income $27,535 $23,958 ================ ===============
(1) The 2002 earnings include after-tax losses of $12.9 million and $3.2 million related to asset valuation charges for Alliant Energy's McLeod (available-for-sale securities) and Capstone investments, respectively. 7 3. Certain financial information relating to Alliant Energy's significant business segments is presented below. Intersegment revenues were not material to Alliant Energy's operations.
Regulated Domestic Utilities Non-regulated Businesses Alliant ---------------------------------------- --------------------------------- Energy Electric Gas Other Total International Other Total Other Consolidated -------------------------------------------------------------------------------------------------- (in thousands) Three Months Ended March 31, 2003 - --------------------------------- Operating revenues $443,025 $257,881 $10,859 $711,765 $28,471 $157,082 $185,553 ($1,528) $895,790 Operating income 36,754 35,054 1,450 73,258 5,783 2,659 8,442 341 82,041 Income (loss) from continuing operations 30,971 (8,386) (2,285) (10,671) (5,661) 14,639 Income (loss) from discontinued operations, net of tax -- 4,366 (13,500) (9,134) -- (9,134) Cumulative effect of changes in accounting principles, net of tax -- -- (5,983) (5,983) -- (5,983) Net income (loss) 30,971 (4,020) (21,768) (25,788) (5,661) (478) Three Months Ended March 31, 2002 - --------------------------------- Operating revenues $370,762 $128,241 $9,340 $508,343 $25,731 $38,731 $64,462 ($1,369) $571,436 Operating income (loss) 46,407 13,428 2,459 62,294 2,450 (696) 1,754 (184) 63,864 Income (loss) from continuing operations 26,977 (8,194) (24,441) (32,635) (2,133) (7,791) Income from discontinued operations, net of tax -- 16,685 849 17,534 -- 17,534 Net income (loss) 26,977 8,491 (23,592) (15,101) (2,133) 9,743
4. The provisions for income taxes for earnings from continuing operations are based on the estimated annual effective tax rate, which differs from the federal statutory rate of 35% principally due to state income taxes, the impact of foreign income and associated taxes, tax credits, effects of utility rate making and certain non-deductible expenses. 5. Alliant Energy utilizes derivative instruments to manage its exposures to various market risks as described in Alliant Energy's, IP&L's and WP&L's Annual Report on Form 10-K for the year ended Dec. 31, 2002. The following information supplements, and should be read in conjunction with, Note 10(a) in Alliant Energy's "Notes to Consolidated Financial Statements" in the Form 10-K for the year ended Dec. 31, 2002. For the three months ended March 31, 2003, no income or loss was recognized in connection with hedge ineffectiveness in accordance with SFAS 133. At March 31, 2003, the maximum length of time over which Alliant Energy hedged its exposure to the variability in future cash flows for forecasted transactions was 15 months (four months for discontinued operations) and Alliant Energy estimates that losses of $4.3 million (including losses of $3.9 million for discontinued operations) will be reclassified from accumulated other comprehensive loss into earnings within the twelve months between April 1, 2003 and March 31, 2004 as the hedged transactions affect earnings. 6. A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculation for the three months ended March 31 was as follows:
2003 2002 ------------- -------------- Weighted average common shares outstanding: Basic earnings per share calculation 92,511,062 89,964,212 Effect of dilutive securities 27,312 89,812 ------------- -------------- Diluted earnings per share calculation 92,538,374 90,054,024 ============= ==============
8 Options to purchase shares of common stock were excluded from the calculation of diluted earnings per share as the exercise prices were greater than the average market price for the three months ended March 31 as follows:
2003 2002 ------------- -------------- Options to purchase shares of common stock 4,799,336 1,831,088 Average exercise price $26.95 $30.86
The effect on net income (loss) and EPS if Alliant Energy had applied the fair value recognition provisions of SFAS 123, "Accounting for Stock-Based Compensation," to the stock options issued under its two stock-based incentive compensation plans for the three months ended March 31 was as follows (in thousands):
2003 2002 ------------- ------------- Net income (loss), as reported ($478) $9,743 Less: stock-based compensation expense, net of tax 891 644 ------------- ------------- Pro forma net income (loss) ($1,369) $9,099 ============= ============= EPS (basic and diluted): As reported ($0.01) $0.11 Pro forma ($0.01) $0.10
7. On Jan. 31, 2002, McLeod filed a pre-negotiated plan of reorganization in a Chapter 11 bankruptcy proceeding and the trading of McLeod's common stock was suspended by Nasdaq. Consequently, Alliant Energy discontinued accounting for its investment in McLeod under the provisions of SFAS 115 and reduced the cost basis of its investments to the last quoted market price on Jan. 30, 2002. In June 2002, Alliant Energy received from McLeod under its plan of reorganization an initial distribution of approximately 3.3 million shares of new common stock and classified 0.9 million and 2.4 million shares as trading and available-for-sale securities, respectively. With the receipt of the new McLeod common shares and the resumption of trading on Nasdaq, Alliant Energy resumed accounting for its McLeod investments under SFAS 115 and adjusted its cost basis to the quoted market price on the date the shares were received. As a result of these events, Alliant Energy recognized pre-tax impairment charges in 2002 for available-for-sale securities totaling $27.2 million ($21.2 million recognized in the first quarter of 2002 and $6.0 million recognized in the second quarter of 2002). 8. Alliant Energy announced in November 2002 its commitment to pursue the sale of, or other exit strategies for, certain non-regulated businesses in 2003. Alliant Energy has applied the provisions of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," to certain of its assets which were held for sale. SFAS 144 requires that a long-lived asset classified as held for sale be measured at the lower of its carrying amount or fair value, less costs to sell, and to cease depreciation, depletion and amortization. At Dec. 31, 2002, Alliant Energy's oil and gas (Whiting), Australian (including Southern Hydro) and affordable housing businesses were classified as held for sale. In January 2003, Alliant Energy also decided to sell SmartEnergy and, as a result, at March 31, 2003, such business has also been classified as held for sale. Alliant Energy completed the sale of its Australian business in late April. Alliant Energy previously indicated its intent to complete the remaining dispositions by year-end. The operating results for these businesses have been separately classified and reported as discontinued operations in Alliant Energy's Consolidated Financial Statements. A summary of the components of discontinued operations in Alliant Energy's Consolidated Statements of Income for the three months ended March 31 was as follows (in thousands):
2003 2002 ------------------ ------------------ Operating revenues $66,909 $40,133 Operating expenses 41,987 41,564 Interest expense (income) and other 31,493 (21,651) ------------------ ------------------ Income (loss) before income taxes (6,571) 20,220 Income taxes 2,563 2,686 ------------------ ------------------ Income (loss) from discontinued operations, net of tax ($9,134) $17,534 ================== ==================
9 "Interest expense (income) and other" in the first quarter of 2003 included pre-tax valuation adjustments of approximately $35 million to reflect updated estimates of the market value, less selling costs, of the $1 billion of assets classified as assets held for sale. Alliant Energy's Australian business enters into electricity derivative contracts that have not been designated as hedges (as defined by SFAS 133) to manage the electricity commodity price risk associated with anticipated sales into the spot market. Approximately $15 million and $28 million of pre-tax income included in "Interest expense (income) and other" in the first quarters of 2003 and 2002, respectively, in the previous table was related to the change in the fair value of these electricity derivative contracts. A summary of the components of assets and liabilities of discontinued operations on Alliant Energy's Consolidated Balance Sheets was as follows (in thousands):
March 31, 2003 Dec. 31, 2002 ------------------ ----------------- Assets of discontinued operations: Property, plant and equipment, net $642,723 $644,910 Current assets 143,426 113,866 Investments 6,741 6,824 Deferred charges and other 223,592 203,691 ------------------ ----------------- Total assets of discontinued operations $1,016,482 $969,291 ================== ================= Liabilities of discontinued operations: Current liabilities $78,628 $73,343 Other long-term liabilities and deferred credits 82,344 64,784 Minority interest 101 124 ------------------ ----------------- Total liabilities of discontinued operations 161,073 138,251 ------------------ ----------------- Net assets of discontinued operations $855,409 $831,040 ================== =================
A summary of the components of cash flows for discontinued operations for the three months ended March 31 was as follows (in thousands):
2003 2002 ---------------- --------------- Net cash flows from operating activities $9,932 $9,402 Net cash flows from financing activities 8,987 53,580 Net cash flows used for investing activities (2,554) (53,356) ---------------- --------------- Net increase in cash and temporary cash investments 16,365 9,626 Cash and temporary cash investments at beginning of period 16,043 5,775 ---------------- --------------- Cash and temporary cash investments at end of period $32,408 $15,401 ================ =============== Supplemental cash flows information: Cash paid (received) during the period for: Interest $7,071 $1,189 ================ =============== Income taxes, net of refunds $2,498 ($22) ================ ===============
9. Alliant Energy is in the process of evaluating the potential impacts of FIN 46 with respect to its off-balance sheet entities that it utilizes for its synthetic lease financings and utility accounts receivable sales program. As of March 31, 2003 and Dec. 31, 2002, Alliant Energy's utility subsidiaries had sold $227 million ($91 million and $136 million for IP&L and WP&L, respectively) and $202 million ($86 million and $116 million for IP&L and WP&L, respectively) of accounts receivables, respectively. 10 10. In accordance with the provisions of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others," at March 31, 2003 and Dec. 31, 2002, Alliant Energy had a guarantee outstanding to support an unconsolidated affiliate and third-party financing arrangement of approximately $4 million that is not included on Alliant Energy's Consolidated Balance Sheets. The guarantee expires in December 2007, the maturity date of the underlying debt. Alliant Energy has also guaranteed the residual value of its synthetic leases totaling $76 million in the aggregate that is not included on Alliant Energy's Consolidated Balance Sheets. The guarantees extend through the maturity of each respective underlying lease, the latest of which is April 2015. 11. Alliant Energy adopted SFAS 143 on Jan. 1, 2003, which provides accounting and disclosure requirements for retirement obligations associated with long-lived assets (AROs). SFAS 143 requires that when an asset is placed in service the present value of retirement costs for which Alliant Energy has a legal obligation must be recorded as liabilities with an equivalent amount added to the asset cost. The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity settles the obligation for its recorded amount or incurs a gain or loss. The scope of SFAS 143 as it relates to Alliant Energy primarily includes decommissioning costs for DAEC and Kewaunee. It also applies to a smaller extent to several other regulated and non-regulated assets including, but not limited to, active ash landfills, water intake facilities, underground storage tanks, groundwater wells, transmission and distribution equipment, easements, leases and the dismantlement of certain hydro facilities. Other than DAEC and Kewaunee, Alliant Energy's current AROs are not significant. Alliant Energy recorded the following balance sheet entries in the first quarter of 2003 related to SFAS 143 (in millions):
Adoption on Accretion and Jan. 1, 2003 Depreciation Total -------------- ---------------- ------------- Assets: Electric plant in service - IP&L $34 $-- $34 Electric plant in service - WP&L 24 -- 24 Utility accumulated depreciation - IP&L 100 -- 100 Utility accumulated depreciation - WP&L 148 -- 148 Other assets - regulatory assets - IP&L 124 5 129 Other assets - regulatory assets - WP&L 3 3 6 ------------- Total assets $441 ============= Liabilities: AROs - IP&L $258 $5 $263 AROs - WP&L 175 3 178 ------------- Total liabilities $441 =============
As it relates to regulated operations, Alliant Energy believes it is probable that any differences between expenses under SFAS 143 and expenses recovered currently in rates will be recoverable in future rates, and is deferring such expenses as a regulatory asset. Upon adoption of SFAS 143, Alliant Energy also recognized a $3.9 million impact as a cumulative effect of a change in accounting principle at its oil and gas business (which is reported as an asset held for sale and a discontinued operation at March 31, 2003). IP&L and WP&L have previously recognized removal costs as a component of depreciation expense and accumulated depreciation for other non-nuclear assets that do not have associated legal retirement obligations with regulatory rate recovery. As of Jan. 1, 2003, IP&L and WP&L estimate that they have approximately $275 million and $140 million, respectively, of such regulatory liabilities recorded in "Accumulated depreciation" on their Consolidated Balance Sheets. 11 If SFAS 143 had been adopted as of Jan. 1, 2000, IP&L and WP&L would have recorded ARO SFAS 143 liabilities of $258 million and $175 million at Dec. 31, 2002, $241 million and $161 million at Dec. 31, 2001 and $225 million and $147 million at Dec. 31, 2000, respectively. 12. Alliant Energy's natural gas trading business, NG Energy, is impacted by EITF Issue 02-3, which requires that all sales of energy and the related cost of energy purchased under contracts that meet the definition of energy trading contracts and that are derivatives under SFAS 133, must be reflected on a net basis in the income statement for all periods presented. Under the guidance of EITF Issue 98-10, Alliant Energy had reported its energy trading contracts and related gas in storage at fair market value, and reported related revenues and expenses on a gross basis in the income statement. EITF Issue 02-3 rescinded EITF Issue 98-10 on a prospective basis. Accordingly, any new contracts entered into after Oct. 25, 2002 have been reported on a historical cost basis rather than at fair market value unless the contract meets the definition of a derivative under SFAS 133. Alliant Energy adopted EITF Issue 02-3 on Jan. 1, 2003 for all contracts that were in place and storage gas acquired prior to Oct. 25, 2002, and reclassified prior period trading contracts on a net basis in the income statement. The impact of transitioning from reporting inventory and existing contracts that were not derivatives under SFAS 133 at fair value to historical cost resulted in a cumulative effect charge of $2.1 million (net of a deferred tax benefit of $1.4 million) in the first quarter of 2003. 13. In April 2003, Alliant Energy completed the sale of its Australian assets (including Southern Hydro) to New Zealand-based Meridian Energy Limited. The sale price was approximately $365 million. This sale provided for the repayment of approximately $150 million in debt in Australia. On an after-tax basis, the sale resulted in net cash proceeds to Alliant Energy of approximately $170 million and provides Alliant Energy with approximately $320 million available for debt reduction. 14. Alliant Energy has fully and unconditionally guaranteed the payment of principal and interest on various debt securities issued by Resources and, as a result, is required to present condensed consolidating financial statements. No Alliant Energy subsidiaries are guarantors of Resources' debt securities. Alliant Energy's condensed consolidating financial statements are as follows: 12
Alliant Energy Corporation Condensed Consolidating Statements of Income for the Three Months Ended March 31, 2003 and 2002 Alliant Energy Other Alliant Consolidated Parent Energy Consolidating Alliant Company Resources Subsidiaries Adjustments Energy ------------------------------------------------------------------- Three Months Ended March 31, 2003 (in thousands) - --------------------------------- Operating revenues: Electric utility $- $- $443,025 $- $443,025 Gas utility - - 257,881 - 257,881 Non-regulated and other - 185,553 98,186 (88,855) 194,884 ------------------------------------------------------------------ - 185,553 799,092 (88,855) 895,790 ------------------------------------------------------------------ Operating expenses: Electric and steam production fuels - - 72,431 (16) 72,415 Purchased power - - 129,315 - 129,315 Cost of utility gas sold - - 188,325 - 188,325 Other operation and maintenance 312 167,263 224,932 (76,861) 315,646 Depreciation and amortization 8 8,119 77,710 (3,865) 81,972 Taxes other than income taxes 3 1,729 26,274 (1,930) 26,076 ------------------------------------------------------------------ 323 177,111 718,987 (82,672) 813,749 ------------------------------------------------------------------ Operating income (loss) (323) 8,442 80,105 (6,183) 82,041 ------------------------------------------------------------------ Interest expense and other: Interest expense 3,900 26,850 27,528 (2,764) 55,514 Interest income from loans to discontinued operations, net - (3,254) - - (3,254) Equity (income) loss from unconsolidated investments - 8,475 (4,221) - 4,254 Allowance for funds used during construction - - (3,908) 47 (3,861) Preferred dividend requirements of subsidiaries - - 4,158 - 4,158 Miscellaneous, net (7,910) 2,924 5,515 1,886 2,415 ------------------------------------------------------------------ (4,010) 34,995 29,072 (831) 59,226 ------------------------------------------------------------------ Income (loss) from continuing operations before income taxes 3,687 (26,553) 51,033 (5,352) 22,815 ------------------------------------------------------------------ Income tax expense (benefit) 4,165 (15,882) 20,032 (139) 8,176 ------------------------------------------------------------------ Income (loss) from continuing operations (478) (10,671) 31,001 (5,213) 14,639 ------------------------------------------------------------------ Loss from discontinued operations, net of tax - (9,134) - - (9,134) ------------------------------------------------------------------ Income (loss) before cumulative effect of changes in accounting principles, net of tax (478) (19,805) 31,001 (5,213) 5,505 ------------------------------------------------------------------ Cumulative effect of changes in accounting principles, net of tax - (5,983) - - (5,983) ------------------------------------------------------------------ Net income (loss) ($478) ($25,788) $31,001 ($5,213) ($478) ================================================================== Three Months Ended March 31, 2002 - --------------------------------- Operating revenues: Electric utility $- $- $370,762 $- $370,762 Gas utility - - 128,241 - 128,241 Non-regulated and other - 64,462 76,299 (68,328) 72,433 ------------------------------------------------------------------ - 64,462 575,302 (68,328) 571,436 ------------------------------------------------------------------ Operating expenses: Electric and steam production fuels - - 62,610 - 62,610 Purchased power - - 72,337 - 72,337 Cost of utility gas sold - - 83,756 - 83,756 Other operation and maintenance 508 54,820 196,274 (66,203) 185,399 Depreciation and amortization - 5,966 69,716 - 75,682 Taxes other than income taxes - 1,922 27,954 (2,088) 27,788 ------------------------------------------------------------------ 508 62,708 512,647 (68,291) 507,572 ------------------------------------------------------------------ Operating income (loss) (508) 1,754 62,655 (37) 63,864 ------------------------------------------------------------------ Interest expense and other: Interest expense 758 17,706 27,543 (1,520) 44,487 Interest income from loans to discontinued operations, net - (3,366) - - (3,366) Equity (income) loss from unconsolidated investments 229 1,052 (4,494) - (3,213) Allowance for funds used during construction - - (1,654) - (1,654) Preferred dividend requirements of subsidiaries - - 1,682 - 1,682 Impairment of available-for-sale securities of McLeodUSA Inc. - 21,174 - - 21,174 Miscellaneous, net (12,758) 16,068 (7,272) 13,566 9,604 ------------------------------------------------------------------ (11,771) 52,634 15,805 12,046 68,714 ------------------------------------------------------------------ Income (loss) from continuing operations before income taxes 11,263 (50,880) 46,850 (12,083) (4,850) ------------------------------------------------------------------ Income tax expense (benefit) 1,520 (18,394) 19,852 (37) 2,941 ------------------------------------------------------------------ Income (loss) from continuing operations 9,743 (32,486) 26,998 (12,046) (7,791) ------------------------------------------------------------------ Income from discontinued operations, net of tax - 17,534 - - 17,534 ------------------------------------------------------------------ Net income (loss) $9,743 ($14,952) $26,998 ($12,046) $9,743 ==================================================================
13
Alliant Energy Corporation Condensed Consolidating Balance Sheet as of March 31, 2003 Alliant Energy Other Consolidated Parent Alliant Energy Consolidating Alliant ASSETS Company Resources Subsidiaries Adjustments Energy ---------------------------------------------------------------------------------- Property, plant and equipment: (in thousands) Utility: Electric plant in service $- $- $5,481,700 $- $5,481,700 Other plant in service - - 1,163,741 - 1,163,741 Accumulated depreciation - - (3,388,047) - (3,388,047) Construction work in progress - - 324,695 - 324,695 Other, net - - 67,088 - 67,088 ---------------------------------------------------------------------------------- Total utility - - 3,649,177 - 3,649,177 ---------------------------------------------------------------------------------- Non-regulated and other, net: Non-regulated generation - 209,882 - - 209,882 Other - 294,870 72,619 (111) 367,378 ---------------------------------------------------------------------------------- Total non-regulated and other - 504,752 72,619 (111) 577,260 ---------------------------------------------------------------------------------- - 504,752 3,721,796 (111) 4,226,437 ---------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 2,322 57,883 5,530 - 65,735 Accounts receivable, net 6,838 97,494 324,317 (190,308) 238,341 Gas stored underground, at average cost - 568 6,899 - 7,467 Regulatory assets - - 70,171 - 70,171 Assets of discontinued operations - 1,016,482 - - 1,016,482 Other 326,774 137,740 148,589 (303,993) 309,110 ---------------------------------------------------------------------------------- 335,934 1,310,167 555,506 (494,301) 1,707,306 ---------------------------------------------------------------------------------- Investments: Consolidated subsidiaries 1,813,469 - 10 (1,813,479) - Other 11,823 449,209 500,297 - 961,329 ---------------------------------------------------------------------------------- 1,825,292 449,209 500,307 (1,813,479) 961,329 ---------------------------------------------------------------------------------- Other assets: Regulatory assets - - 429,721 - 429,721 Deferred charges and other 414 129,857 290,471 (31,292) 389,450 ---------------------------------------------------------------------------------- 414 129,857 720,192 (31,292) 819,171 ---------------------------------------------------------------------------------- Total assets $2,161,640 $2,393,985 $5,497,801 ($2,339,183) $7,714,243 ================================================================================== CAPITALIZATION AND LIABILITIES Capitalization: Common stock and additional paid-in capital $1,302,225 $232,743 $906,203 ($1,138,946) $1,302,225 Retained earnings 734,676 89,051 767,517 (856,568) 734,676 Accumulated other comprehensive loss (181,930) (138,618) (43,312) 181,930 (181,930) Shares in deferred compensation trust (7,091) - - - (7,091) ---------------------------------------------------------------------------------- Total common equity 1,847,880 183,176 1,630,408 (1,813,584) 1,847,880 ---------------------------------------------------------------------------------- Cumulative preferred stock of subsidiaries, net - - 205,063 - 205,063 Long-term debt (excluding current portion) 24,000 1,340,172 1,295,706 - 2,659,878 ---------------------------------------------------------------------------------- 1,871,880 1,523,348 3,131,177 (1,813,584) 4,712,821 ---------------------------------------------------------------------------------- Current liabilities: Other short-term borrowings 235,000 259,523 71,307 (303,993) 261,837 Accrued taxes 12,362 20,663 69,017 - 102,042 Liabilities of discontinued operations - 161,073 - - 161,073 Other 38,912 197,329 753,507 (190,308) 799,440 ---------------------------------------------------------------------------------- 286,274 638,588 893,831 (494,301) 1,324,392 ---------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Asset retirement obligations - - 440,856 - 440,856 Other 3,486 181,597 1,031,937 (31,298) 1,185,722 ---------------------------------------------------------------------------------- 3,486 181,597 1,472,793 (31,298) 1,626,578 ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- Minority interest - 50,452 - - 50,452 ---------------------------------------------------------------------------------- Total capitalization and liabilities $2,161,640 $2,393,985 $5,497,801 ($2,339,183) $7,714,243 ==================================================================================
14
Alliant Energy Corporation Condensed Consolidating Balance Sheet as of December 31, 2002 Alliant Energy Other Consolidated ASSETS Parent Alliant Energy Consolidating Alliant Property, plant and equipment: Company Resources Subsidiaries Adjustments Energy ---------------------------------------------------------------------------------- Utility: (in thousands) Electric plant in service $- $- $5,295,381 $- $5,295,381 Other plant in service - - 1,143,578 - 1,143,578 Accumulated depreciation - - (3,573,407) - (3,573,407) Construction work in progress - - 263,096 - 263,096 Other, net - - 68,340 - 68,340 ---------------------------------------------------------------------------------- Total utility - - 3,196,988 - 3,196,988 ---------------------------------------------------------------------------------- Non-regulated and other, net: Non-regulated generation - 156,699 - - 156,699 Other - 299,355 75,503 (111) 374,747 ---------------------------------------------------------------------------------- Total non-regulated and other - 456,054 75,503 (111) 531,446 ---------------------------------------------------------------------------------- - 456,054 3,272,491 (111) 3,728,434 ---------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 4 47,236 15,619 - 62,859 Accounts receivable, net 9,034 78,590 284,151 (191,631) 180,144 Gas stored underground, at average cost - 26,668 36,129 - 62,797 Regulatory assets - - 46,076 - 46,076 Assets of discontinued operations - 969,291 - - 969,291 Other 263,598 124,594 159,694 (244,764) 303,122 ---------------------------------------------------------------------------------- 272,636 1,246,379 541,669 (436,395) 1,624,289 ---------------------------------------------------------------------------------- Investments: Consolidated subsidiaries 1,817,341 - 10 (1,817,351) - Other 11,660 430,173 494,867 - 936,700 ---------------------------------------------------------------------------------- 1,829,001 430,173 494,877 (1,817,351) 936,700 ---------------------------------------------------------------------------------- Other assets: Regulatory assets - - 302,365 - 302,365 Deferred charges and other - 127,834 309,356 (27,583) 409,607 ---------------------------------------------------------------------------------- - 127,834 611,721 (27,583) 711,972 ---------------------------------------------------------------------------------- Total assets $2,101,637 $2,260,440 $4,920,758 ($2,281,440) $7,001,395 ================================================================================== CAPITALIZATION AND LIABILITIES Capitalization: Common stock and additional paid-in capital $1,294,842 $232,743 $906,261 ($1,139,004) $1,294,842 Retained earnings 758,187 114,838 773,556 (888,394) 758,187 Accumulated other comprehensive loss (209,943) (166,947) (42,996) 209,943 (209,943) Shares in deferred compensation trust (6,896) - - - (6,896) ---------------------------------------------------------------------------------- Total common equity 1,836,190 180,634 1,636,821 (1,817,455) 1,836,190 ---------------------------------------------------------------------------------- Cumulative preferred stock of subsidiaries, net - - 205,063 - 205,063 Long-term debt (excluding current portion) 24,000 1,290,205 1,295,598 - 2,609,803 ---------------------------------------------------------------------------------- 1,860,190 1,470,839 3,137,482 (1,817,455) 4,651,056 ---------------------------------------------------------------------------------- Current liabilities: Other short-term borrowings 85,000 194,482 79,003 (244,764) 113,721 Accrued taxes 9,743 13,655 82,123 - 105,521 Liabilities of discontinued operations - 138,251 - - 138,251 Other 143,453 218,443 594,552 (191,631) 764,817 ---------------------------------------------------------------------------------- 238,196 564,831 755,678 (436,395) 1,122,310 ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- Other long-term liabilities and deferred credits 3,251 181,345 1,027,598 (27,590) 1,184,604 ---------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- Minority interest - 43,425 - - 43,425 ---------------------------------------------------------------------------------- Total capitalization and liabilities $2,101,637 $2,260,440 $4,920,758 ($2,281,440) $7,001,395 ==================================================================================
15
Alliant Energy Corporation Condensed Consolidating Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 Alliant Energy Other Alliant Consolidated Parent Energy Consolidating Alliant Company Resources Subsidiaries Adjustments Energy ----------------------------------------------------------------- Three Months Ended March 31, 2003 (in thousands) - --------------------------------- Net cash flows from (used for) operating activities ($1,864) ($20,575) $198,454 ($9,372) $166,643 ----------------------------------------------------------------- Cash flows from (used for) financing activities: Common stock dividends (23,033) - (37,039) 37,039 (23,033) Proceeds from issuance of other long-term debt - 60,000 - - 60,000 Net change in commercial paper and other short-term borrowings (9,729) 65,040 64,305 - 119,616 Net change in loans to discontinued operations - (17,501) - - (17,501) Other 5,143 (3,688) (14,118) 4,218 (8,445) ----------------------------------------------------------------- Net cash flows from (used for) financing activities (27,619) 103,851 13,148 41,257 130,637 ----------------------------------------------------------------- Cash flows from (used for) investing activities: Construction and acquisition expenditures: Non-regulated businesses - (180,286) - - (180,286) Regulated domestic utilities - - (212,279) 108,847 (103,432) Corporate Services and other - - (1,007) - (1,007) Other 31,801 107,657 (8,405) (140,732) (9,679) ----------------------------------------------------------------- Net cash flows from (used for) investing activities 31,801 (72,629) (221,691) (31,885) (294,404) ----------------------------------------------------------------- Net increase (decrease) in cash and temporary cash investments 2,318 10,647 (10,089) - 2,876 ----------------------------------------------------------------- Cash and temporary cash investments at beginning of period 4 47,236 15,619 - 62,859 ----------------------------------------------------------------- Cash and temporary cash investments at end of period $2,322 $57,883 $5,530 $- $65,735 ================================================================= Supplemental cash flows information: Cash paid (received) during the period for: Interest $3,223 $9,621 $27,323 $- $40,167 ================================================================= Income taxes, net of refunds ($3,902) ($7,278) $7,663 $- ($3,517) ================================================================= Noncash investing and financing activities: Capital lease obligations incurred $- $- $2,131 $- $2,131 ================================================================= Three Months Ended March 31, 2002 - --------------------------------- Net cash flows from (used for) operating activities $11,687 ($710) $148,724 ($13,728) $145,973 ----------------------------------------------------------------- Cash flows from (used for) financing activities: Common stock dividends (44,851) - (34,673) 34,673 (44,851) Net change in Resources' credit facility - 85,115 - - 85,115 Net change in commercial paper and other short-term borrowings (7,593) (2,603) (15,511) 1,939 (23,768) Net change in loans to discontinued operations - (25,672) - - (25,672) Other 14,329 (13,731) (1,582) 1,174 190 ----------------------------------------------------------------- Net cash flows from (used for) financing activities (38,115) 43,109 (51,766) 37,786 (8,986) ----------------------------------------------------------------- Cash flows from (used for) investing activities: Construction and acquisition expenditures: Non-regulated businesses - (77,875) - - (77,875) Regulated domestic utilities - - (66,832) - (66,832) Corporate Services and other - - (10,382) - (10,382) Other 22,103 19,345 (21,520) (22,119) (2,191) ----------------------------------------------------------------- Net cash flows from (used for) investing activities 22,103 (58,530) (98,734) (22,119) (157,280) ----------------------------------------------------------------- Net decrease in cash and temporary cash investments (4,325) (16,131) (1,776) 1,939 (20,293) ----------------------------------------------------------------- Cash and temporary cash investments at beginning of period 6,381 60,237 3,207 (1,939) 67,886 ----------------------------------------------------------------- Cash and temporary cash investments at end of period $2,056 $44,106 $1,431 $- $47,593 ================================================================= Supplemental cash flows information: Cash paid (received) during the period for: Interest $243 $7,873 $26,823 $- $34,939 ================================================================= Income taxes, net of refunds $- ($25) $1,741 $- $1,716 ================================================================= Noncash investing and financing activities: Capital lease obligations incurred $- $- $448 $- $448 =================================================================
16
INTERSTATE POWER AND LIGHT COMPANY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months Ended March 31, 2003 2002 - -------------------------------------------------------------------------------------------------------------------- (in thousands) Operating revenues: Electric utility $230,329 $199,003 Gas utility 126,677 71,742 Steam 9,482 8,050 -------------------- -------------------- 366,488 278,795 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Operating expenses: Electric and steam production fuels 34,201 32,342 Purchased power 45,056 28,159 Cost of gas sold 91,771 46,360 Other operation and maintenance 84,587 80,656 Depreciation and amortization 40,427 36,211 Taxes other than income taxes 15,700 16,916 -------------------- -------------------- 311,742 240,644 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Operating income 54,746 38,151 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Interest expense and other: Interest expense 17,044 16,274 Allowance for funds used during construction (2,544) (980) Miscellaneous, net (800) (428) -------------------- -------------------- 13,700 14,866 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Income before income taxes 41,046 23,285 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Income taxes 16,089 10,410 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Net income 24,957 12,875 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Preferred dividend requirements 3,330 855 -------------------- -------------------- - -------------------------------------------------------------------------------------------------------------------- Earnings available for common stock $21,627 $12,020 ==================== ==================== - -------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
17
INTERSTATE POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, ASSETS 2003 2002 - ------------------------------------------------------------------------------------------------------------------ (in thousands) Property, plant and equipment: Electric plant in service $3,572,531 $3,451,547 Gas plant in service 330,254 326,470 Steam plant in service 59,737 59,737 Other plant in service 200,507 195,328 Accumulated depreciation (2,096,140) (2,163,371) ------------------ ----------------- Net plant 2,066,889 1,869,711 Construction work in progress 245,770 166,350 Other, net 49,710 50,529 ------------------ ----------------- 2,362,369 2,086,590 ------------------ ----------------- - ------------------------------------------------------------------------------------------------------------------ Current assets: Cash and temporary cash investments 1,577 6,076 Accounts receivable: Customer, less allowance for doubtful accounts of $917 and $894 63,977 42,647 Associated companies 37,180 79,105 Other, less allowance for doubtful accounts of $295 and $388 27,012 27,898 Production fuel, at average cost 32,958 36,852 Materials and supplies, at average cost 33,309 28,821 Gas stored underground, at average cost 4,269 19,450 Regulatory assets 42,402 18,077 Prepayments and other 12,664 13,941 ------------------ ----------------- 255,348 272,867 ------------------ ----------------- - ------------------------------------------------------------------------------------------------------------------ Investments: Nuclear decommissioning trust funds 123,501 121,158 Other 13,507 13,492 ------------------ ----------------- 137,008 134,650 ------------------ ----------------- - ------------------------------------------------------------------------------------------------------------------ Other assets: Regulatory assets 328,294 199,691 Deferred charges and other 40,615 44,608 ------------------ ----------------- 368,909 244,299 ------------------ ----------------- - ------------------------------------------------------------------------------------------------------------------ Total assets $3,123,634 $2,738,406 ================== ================= - ------------------------------------------------------------------------------------------------------------------ The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
18
INTERSTATE POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued) March 31, December 31, CAPITALIZATION AND LIABILITIES 2003 2002 - -------------------------------------------------------------------------------------------------------------------- (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 477,617 477,701 Retained earnings 374,511 374,428 Accumulated other comprehensive loss (18,887) (18,887) ------------------ ------------------ Total common equity 866,668 866,669 ------------------ ------------------ Cumulative preferred stock 145,100 145,100 Long-term debt (excluding current portion) 827,467 827,389 ------------------ ------------------ 1,839,235 1,839,158 ------------------ ------------------ - -------------------------------------------------------------------------------------------------------------------- Current liabilities: Current maturities and sinking funds 5,080 5,080 Commercial paper 75,500 - Accounts payable 108,252 83,126 Accounts payable to associated companies 60,205 41,537 Accrued interest 13,719 14,628 Accrued taxes 61,185 62,135 Accumulated refueling outage provision 10,934 13,845 Other 46,396 40,946 ------------------ ------------------ 381,271 261,297 ------------------ ------------------ - -------------------------------------------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Accumulated deferred income taxes 319,277 313,308 Accumulated deferred investment tax credits 30,255 31,135 Asset retirement obligations 262,752 - Pension and other benefit obligations 93,144 88,449 Regulatory liabilities 74,831 78,995 Environmental liabilities 39,717 39,849 Other 83,152 86,215 ------------------ ------------------ 903,128 637,951 ------------------ ------------------ - -------------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $3,123,634 $2,738,406 ================== ================== - -------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
19
INTERSTATE POWER AND LIGHT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2003 2002 - ------------------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income $24,957 $12,875 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 40,427 36,211 Amortization of leased nuclear fuel 2,965 3,615 Amortization of deferred energy efficiency expenditures 926 983 Deferred tax expense (benefit) and investment tax (credits) 4,890 (2,180) Refueling outage provision (2,912) 2,005 Other (652) 272 Other changes in assets and liabilities: Accounts receivable 21,481 17,640 Gas stored underground 15,181 13,888 Accounts payable 36,593 (9,793) Adjustment clause balances (22,306) (8,345) Other 8,326 8,798 ------------------- ----------------- Net cash flows from operating activities 129,876 75,969 ------------------- ----------------- - ------------------------------------------------------------------------------------------------------------- Cash flows from (used for) financing activities: Common stock dividends (21,544) (20,086) Preferred stock dividends (3,330) (855) Net change in short-term borrowings 75,500 (8,801) Principal payments under capital lease obligations (3,969) (3,516) Other 8,261 3,104 ------------------- ----------------- Net cash flows from (used for) financing activities 54,918 (30,154) ------------------- ----------------- - ------------------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Utility construction expenditures (181,015) (38,260) Nuclear decommissioning trust funds (2,736) (1,502) Other (5,542) (6,058) ------------------- ----------------- Net cash flows used for investing activities (189,293) (45,820) ------------------- ----------------- - ------------------------------------------------------------------------------------------------------------- Net decrease in cash and temporary cash investments (4,499) (5) ------------------- ----------------- - ------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of period 6,076 87 ------------------- ----------------- - ------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at end of period $1,577 $82 =================== ================= - ------------------------------------------------------------------------------------------------------------- Supplemental cash flows information: Cash paid (received) during the period for: Interest $16,742 $16,044 =================== ================= Income taxes, net of refunds ($7,390) $ - =================== ================= Noncash investing and financing activities: Capital lease obligations incurred $2,131 $448 =================== ================= - ------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
20 INTERSTATE 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 IP&L. 1. The interim consolidated financial statements included herein have been prepared by IP&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 GAAP 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 IP&L and its consolidated subsidiaries. IP&L is a direct subsidiary of Alliant Energy. These financial statements should be read in conjunction with the financial statements and the notes thereto included in IP&L's latest Annual Report on Form 10-K. In the opinion of management, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of (a) the consolidated results of operations for the three months ended March 31, 2003 and 2002, (b) the consolidated financial position at March 31, 2003 and Dec. 31, 2002, and (c) the consolidated statement of cash flows for the three months ended March 31, 2003 and 2002, have been made. Because of the seasonal nature of IP&L's operations, results for the three months ended March 31, 2003 are not necessarily indicative of results that may be expected for the year ending Dec. 31, 2003. Certain prior period amounts have been reclassified on a basis consistent with the current period presentation. 2. For the three months ended March 31, 2003 and 2002, IP&L had no other comprehensive income, thus IP&L's comprehensive income was equal to its earnings available for common stock for both periods. 3. Certain financial information relating to IP&L's significant business segments is presented below. Intersegment revenues were not material to IP&L's operations.
Electric Gas Other Total ------------------------------------------------------- (in thousands) Three Months Ended March 31, 2003 --------------------------------- Operating revenues $230,329 $126,677 $9,482 $366,488 Operating income 38,030 15,443 1,273 54,746 Earnings available for common stock 21,627 Three Months Ended March 31, 2002 --------------------------------- Operating revenues $199,003 $71,742 $8,050 $278,795 Operating income 27,898 8,180 2,073 38,151 Earnings available for common stock 12,020
4. IP&L utilizes synthetic leases to finance certain utility railcars that were not included on IP&L's Consolidated Balance Sheets. IP&L has guaranteed the residual value of its synthetic leases totaling $6.8 million in the aggregate. The guarantees extend through the maturity of each respective underlying lease, the latest of which is January 2009. 21
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months Ended March 31, 2003 2002 - ----------------------------------------------------------------------------------------------------------------- (in thousands) Operating revenues: Electric utility $212,696 $171,759 Gas utility 131,204 56,499 Water 1,377 1,290 -------------------- -------------------- 345,277 229,548 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Operating expenses: Electric production fuels 38,214 30,269 Purchased power 84,259 44,177 Cost of gas sold 96,554 37,396 Other operation and maintenance 65,673 51,107 Depreciation and amortization 33,419 33,506 Taxes other than income taxes 8,645 8,950 -------------------- -------------------- 326,764 205,405 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Operating income 18,513 24,143 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Interest expense and other: Interest expense 9,706 10,196 Interest income (1,855) (6,545) Equity income from unconsolidated investments (4,116) (4,387) Allowance for funds used during construction (1,317) (674) Miscellaneous, net 2,176 404 -------------------- -------------------- 4,594 (1,006) -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Income before income taxes 13,919 25,149 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Income taxes 3,804 9,404 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Net income 10,115 15,745 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Preferred dividend requirements 828 828 -------------------- -------------------- - ----------------------------------------------------------------------------------------------------------------- Earnings available for common stock $9,287 $14,917 ==================== ==================== - ----------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
22
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, ASSETS 2003 2002 - ----------------------------------------------------------------------------------------------------------------- (in thousands) Property, plant and equipment: Electric plant in service $1,909,169 $1,843,834 Gas plant in service 290,385 286,652 Water plant in service 33,447 33,062 Other plant in service 249,411 242,329 Accumulated depreciation (1,291,907) (1,410,036) ----------------- ----------------- Net plant 1,190,505 995,841 Construction work in progress 78,925 96,746 Other, net 17,379 17,811 ----------------- ----------------- 1,286,809 1,110,398 ----------------- ----------------- - ----------------------------------------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments 1,074 8,577 Accounts receivable: Customer, less allowance for doubtful accounts of $1,686 and $1,770 15,224 7,977 Associated companies 37,938 21,484 Other, less allowance for doubtful accounts of $653 and $458 25,517 18,191 Production fuel, at average cost 16,413 18,980 Materials and supplies, at average cost 25,723 22,133 Gas stored underground, at average cost 2,630 16,679 Regulatory assets 27,769 27,999 Prepaid gross receipts tax 20,541 27,388 Other 4,351 8,599 ----------------- ----------------- 177,180 178,007 ----------------- ----------------- - ----------------------------------------------------------------------------------------------------------------- Investments: Nuclear decommissioning trust funds 225,360 223,734 Investment in ATC and other 134,226 133,043 ----------------- ----------------- 359,586 356,777 ----------------- ----------------- - ----------------------------------------------------------------------------------------------------------------- Other assets: Regulatory assets 101,427 102,674 Deferred charges and other 222,234 236,741 ----------------- ----------------- 323,661 339,415 ----------------- ----------------- - ----------------------------------------------------------------------------------------------------------------- Total assets $2,147,236 $1,984,597 ================= ================= - ----------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
23
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued) March 31, December 31, CAPITALIZATION AND LIABILITIES 2003 2002 - --------------------------------------------------------------------------------------------------------------------- (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 325,603 325,603 Retained earnings 393,093 399,302 Accumulated other comprehensive loss (24,425) (24,108) ------------------ ----------------- Total common equity 760,454 766,980 ------------------ ----------------- Cumulative preferred stock 59,963 59,963 Long-term debt (excluding current portion) 468,240 468,208 ------------------ ----------------- 1,288,657 1,295,151 ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Current liabilities: Variable rate demand bonds 55,100 55,100 Commercial paper 56,500 60,000 Accounts payable 87,871 90,869 Accounts payable to associated companies 54,603 43,276 Accrued taxes 5,816 19,353 Regulatory liabilities 17,300 16,938 Other 29,593 29,064 ------------------ ----------------- 306,783 314,600 ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Other long-term liabilities and deferred credits: Accumulated deferred income taxes 194,251 191,894 Accumulated deferred investment tax credits 22,839 23,241 Asset retirement obligations 178,104 - Pension and other benefit obligations 60,575 58,921 Customer advances 35,416 36,555 Other 60,611 64,235 ------------------ ----------------- 551,796 374,846 ------------------ ----------------- - --------------------------------------------------------------------------------------------------------------------- Total capitalization and liabilities $2,147,236 $1,984,597 ================== ================= - --------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
24
WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2003 2002 - -------------------------------------------------------------------------------------------------------------------- (in thousands) Cash flows from operating activities: Net income $10,115 $15,745 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 33,419 33,506 Amortization of nuclear fuel 1,525 1,481 Amortization of deferred energy efficiency expenditures 9,434 3,590 Deferred tax expense (benefit) and investment tax (credits) 2,315 (4,033) Equity income from unconsolidated investments, net (4,116) (4,387) Distributions from equity method investments 2,744 4,227 Other (2,634) (6,808) Other changes in assets and liabilities: Accounts receivable (31,027) 12,791 Gas stored underground 14,049 12,812 Prepaid gross receipts tax 6,847 6,418 Accounts payable 27,157 (23,081) Accrued taxes (13,537) 11,356 Other 161 27,240 ------------------- ------------------- Net cash flows from operating activities 56,452 90,857 ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------- Cash flows used for financing activities: Common stock dividends (15,496) (14,588) Preferred stock dividends (828) (828) Net change in short-term borrowings (3,500) (34,592) Other (9,025) 2,369 ------------------- ------------------- Net cash flows used for financing activities (28,849) (47,639) ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Utility construction expenditures (31,264) (28,572) Nuclear decommissioning trust funds (719) (13,935) Other (3,123) (711) ------------------- ------------------- Net cash flows used for investing activities (35,106) (43,218) ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------- Net decrease in cash and temporary cash investments (7,503) - ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of period 8,577 307 ------------------- ------------------- - -------------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at end of period $1,074 $307 =================== =================== - -------------------------------------------------------------------------------------------------------------------- Supplemental cash flows information: Cash paid during the period for: Interest $10,581 $10,780 =================== =================== Income taxes, net of refunds $16,274 $1,701 =================== =================== - -------------------------------------------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
25 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 GAAP have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. The consolidated financial statements include WP&L and its consolidated subsidiaries. WP&L is a direct subsidiary of Alliant Energy. These financial statements should be read in conjunction with the financial statements and the notes thereto included in WP&L's latest Annual Report on Form 10-K. In the opinion of management, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of (a) the consolidated results of operations for the three months ended March 31, 2003 and 2002, (b) the consolidated financial position at March 31, 2003 and Dec. 31, 2002, and (c) the consolidated statement of cash flows for the three months ended March 31, 2003 and 2002, have been made. Because of the seasonal nature of WP&L's operations, results for the three months ended March 31, 2003 are not necessarily indicative of results that may be expected for the year ending Dec. 31, 2003. Certain prior period amounts have been reclassified on a basis consistent with the current period presentation. 2. WP&L's comprehensive income, and the components of other comprehensive loss, net of taxes, for the three months ended March 31 were as follows (in thousands):
2003 2002 ------------ --------------- Earnings available for common stock $9,287 $14,917 Unrealized holding gains (losses) on derivatives, net of tax (5,914) 222 Less: reclassification adjustment for gains (losses) included in earnings available for common stock, net of tax (5,597) 4,287 ------------ --------------- Net unrealized losses on qualifying derivatives (317) (4,065) ------------ --------------- Other comprehensive loss (317) (4,065) ------------ --------------- Comprehensive income $8,970 $10,852 ============ ===============
3. Certain financial information relating to WP&L's significant business segments is presented below. For the three months ended March 31, 2003, gas revenues included $17 million for sales to the electric segment. All other intersegment revenues were not material to WP&L's operations.
Electric Gas Other Total -------------------------------------------------------- (in thousands) Three Months Ended March 31, 2003 --------------------------------- Operating revenues $212,696 $131,204 $1,377 $345,277 Operating income (loss) (1,276) 19,611 178 18,513 Earnings available for common stock 9,287 Three Months Ended March 31, 2002 --------------------------------- Operating revenues $171,759 $56,499 $1,290 $229,548 Operating income 18,509 5,248 386 24,143 Earnings available for common stock 14,917
4. WP&L utilizes synthetic leases to finance certain utility railcars and a utility radio dispatch system that were not included on WP&L's Consolidated Balance Sheets. WP&L has guaranteed the residual value of its synthetic leases totaling $14.3 million in the aggregate. The guarantees extend through the maturity of each respective underlying lease, the latest of which is April 2015. 26 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The primary first tier subsidiaries of Alliant Energy include: IP&L, WP&L, 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, IP&L and WP&L (as well as 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, IP&L's and WP&L's latest Annual Report on Form 10-K. FORWARD-LOOKING STATEMENTS Statements contained in this report that are not of historical fact are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all, of the risks and uncertainties include: factors listed in "Other Matters - Other Future Considerations;" weather effects on sales and revenues; economic and political conditions in Alliant Energy's domestic and international service territories; federal, state and international regulatory or governmental actions, including the ability to obtain adequate and timely rate relief, including recovery of operating costs and earning reasonable rates of return, and to pay expected levels of dividends; Alliant Energy's ability to complete proposed asset divestitures at expected values and on expected timelines; unanticipated construction and acquisition expenditures; issues related to the supply of purchased electricity and price thereof, including the ability to recover purchased-power and fuel costs through rates; risks related to the operations of Alliant Energy's nuclear facilities; costs associated with Alliant Energy's environmental remediation efforts and with environmental compliance generally; developments that adversely impact Alliant Energy's ability to implement its strategic plan; improved results from Alliant Energy's Brazil investments, the ability of Alliant Energy's Brazil investments to refinance certain debt outstanding and no material adverse changes in the rates allowed by the Brazilian regulators; improved performance by Alliant Energy's other non-regulated businesses as a whole; no material permanent declines in the fair market value of, or expected cash flows from, Alliant Energy's investments; continued access to the capital markets; Alliant Energy's ability to continue cost controls and operational efficiencies; Alliant Energy's ability to identify and successfully complete proposed acquisitions and development projects; access to technological developments; employee workforce factors, including changes in key executives, collective bargaining agreements or work stoppages; and changes in the rate of inflation. Alliant Energy assumes no obligation, and disclaims any duty, to update the forward-looking statements in this report. STRATEGIC ACTIONS Alliant Energy has taken several steps to implement the plan it outlined in November 2002 to strengthen its financial profile: o In April 2003, Alliant Energy completed the sale of its Australian assets to New Zealand-based Meridian Energy Limited. The sale price was approximately $365 million. While Alliant Energy is still in the process of finalizing the calculation of the gain realized on the sale, it currently estimates it will realize an after-tax gain of approximately $40 million in the second quarter of 2003 on the sale of its Australian assets. This sale provided for the repayment of approximately $150 million in debt in Australia. On an after-tax basis, the sale resulted in net cash proceeds to Alliant Energy of approximately $170 million and provides Alliant Energy with approximately $320 million available for debt reduction. This is the first major step in meeting Alliant Energy's up to $800 million to $1 billion debt reduction plan to be completed through the divestiture of certain businesses. The amount of proceeds ultimately received from these divestitures, and the timing of the completion of the transactions, are subject to a variety of factors, including the transaction structures Alliant Energy utilizes to exit these businesses. 27 o Alliant Energy is making progress on the divestitures of its affordable housing, oil and gas and SmartEnergy businesses. o Alliant Energy's plan also includes a $200 to $300 million equity offering that is expected to be completed in the second half of 2003, dependent on market conditions. In April 2003, Alliant Energy filed a shelf registration statement with the SEC covering up to $400 million of securities for Alliant Energy and Resources. The net proceeds from any Alliant Energy offerings will be used to make capital contributions to its domestic utility subsidiaries, which may use these capital contributions for financing the development and construction of new generation (including Alliant Energy's Power Iowa initiative) and distribution facilities, funding additional working capital, financing other capital expenditures and other general corporate purposes. Alliant Energy may also use the net proceeds from any offering to repay debt. o Another component of Alliant Energy's plan is strict cost controls which includes utilizing a Six Sigma program to identify a host of projects that will result in more efficient operations. Alliant Energy is in the early stages of this project. RATES AND REGULATORY MATTERS A summary of the regulatory environment is included in the Form 10-K filed by Alliant Energy, IP&L and WP&L for the year ended Dec. 31, 2002. Set forth below are several recent developments relating to the regulatory environment. Alliant Energy's merger-related price freezes expired in April 2002 in all of its primary domestic utility jurisdictions and it has been addressing the recovery of its utility cost increases through numerous rate filings. WP&L has received final orders in three of its rate cases and has two other rate cases pending. IP&L has received a final order in its electric rate case and an oral decision in its gas rate case. Details of these rate cases are as follows (dollars in millions):
Expected Interim Interim Final Final Final Utility Filing Increase Increase Effective Increase Effective Effective Case Type Date Requested Granted (1) Date Granted (1) Date Date Notes - ----------------- -------- ------------- ----------- ------------ ----------- ------------ ----------- ---------------- -------- WP&L: 2002 retail E/G/W Aug. 2001 $104 $49 April 2002 $82 Sept. 2002 N/A 2003 retail E/G/W May 2002 123 -- N/A 81 April 2003 N/A (2) 2004 retail E/G/W March 2003 87 TBD TBD TBD TBD Jan. 2004 (3) Wholesale E Feb. 2002 6 6 April 2002 3 Jan. 2003 N/A Wholesale E March 2003 5 -- N/A TBD TBD July 2003 (4) IP&L retail - IA E March 2002 82 15 July 2002 26 TBD June 2003 (5) IP&L retail - IA G July 2002 20 17 Oct. 2002 13 TBD July 2003 (6) ----------- ------------ ------------ Total $427 $87 $205 =========== ============ ============
(1) Interim rate relief is implemented, subject to refund, pending determination of final rates. The final rate relief granted replaces the amount of interim rate relief granted. (2) The 2003 request was updated from $101 million as announced earlier to $123 million primarily due to updated variable fuel costs based on current market conditions. In its April 2003 final order, the PSCW authorized a 12% return on common equity. (3) In May 2003, the increase requested was increased from $65 million to $87 million. (4) WP&L has a rate change moratorium agreement with a wholesale customer group that will expire in July 2003. The requested rates are expected to go into effect in July 2003, subject to refund. (5) The final rate order was received in April 2003 and reflects an 11.15% return on common equity. (6) An oral decision was received in April 2003 for a final increase of $13 million; the final order is expected in May 2003. Since the final increase is lower than the interim relief granted in October 2002, a refund plan must be filed with the IUB. IP&L is reserving all amounts related to the anticipated refund. 28 A significant portion of the rate increases included in the previous table reflect the recovery of increased costs incurred by IP&L and WP&L, or costs they expect to incur, thus the increase in revenues related to these rate increases are not expected to result in a corresponding increase in income. IP&L announced in April 2003 that it will not file for an Iowa electric rate increase in 2003, based on 2002 test year information, due to the fact that the case would have been modest and to ensure the case that IP&L expects to file in 2004 would not be delayed awaiting a decision on a case that would have been filed in 2003. The case IP&L expects to file in 2004 will include costs associated with the $400 million 500-MW combined cycle natural gas plant currently under construction in Iowa. IP&L, WP&L and South Beloit are currently in the process of determining what other rate case filings may be made in 2003. In 2002, IP&L filed with the IRS for a change in method of accounting for tax purposes for 1987 through 2001 that would allow a current deduction related to mixed service costs. Such costs had previously been capitalized and depreciated for tax purposes over the appropriate tax lives. This change would create a significant current tax benefit which has not been reflected in IP&L's results of operations pending a decision from the IUB on the required rate making treatment of the benefit. In its April 2003 order, the IUB approved IP&L's proposed accounting treatment to defer the tax savings resulting from the change of accounting method until the IRS audit on this issue is complete. The rate making impact will be addressed once the issue is resolved with the IRS which is expected to happen in 2004. There would be no material negative impact on IP&L's results of operations or financial position should the IRS reject IP&L's proposal. ALLIANT ENERGY RESULTS OF OPERATIONS Unless otherwise noted, all "per share" references in the Results of Operations section refer to earnings per diluted share. Overview - First Quarter Results - Alliant Energy's net income (loss) and EPS - -------------------------------- for the first quarter were as follows:
2003 2002 ----------------------------- -------------------------- Net Income EPS Net Income EPS Earnings (loss) from continuing operations: ----------------------------- -------------------------- Utility $31.0 $0.34 $27.0 $0.30 Non-regulated (Resources) (10.7) (0.12) (32.6) (0.36) Alliant Energy parent and other (5.7) (0.06) (2.2) (0.03) ----------------------------- -------------------------- Total earnings (loss) from continuing operations 14.6 0.16 (7.8) (0.09) Earnings (loss) from discontinued operations: Operating results (increase largely due to higher oil/gas prices) 4.0 0.04 (2.4) (0.02) Non-cash valuation and other accounting adjustments: Southern Hydro SFAS 133 income 6.8 0.07 19.9 0.22 Discontinuing depreciation, depletion and amortization of assets held for sale 7.9 0.09 -- -- Valuation adjustments and selling costs (27.8) (0.30) -- -- ----------------------------- -------------------------- Total earnings (loss) from discontinued operations (9.1) (0.10) 17.5 0.20 Cumulative effect of changes in accounting principles (6.0) (0.07) -- -- ----------------------------- -------------------------- Net income (loss) ($0.5) ($0.01) $9.7 $0.11 ============================= ==========================
The higher utility earnings from continuing operations were largely due to increased gas and electric margins, which were partially offset by higher other operating expenses. The significant improvement in non-regulated results from continuing operations was primarily due to $0.26 per share of asset valuation charges recorded in the first quarter of 2002. Improvements in the results of the underlying operations of Alliant Energy's non-regulated businesses were largely offset by higher interest expense. Alliant Energy recorded after-tax valuation adjustments of $26 million in the first quarter of 2003 to reflect updated estimates of the market value, less selling costs, of the $1 billion of assets it has classified as assets held for sale. 29 Domestic Electric Utility Margins - Electric margins and MWh sales for - --------------------------------- Alliant Energy for the three months ended March 31 were as follows (in thousands):
Revenues and Costs MWhs Sold ------------------------------------- ------------------------------------ 2003 2002 Change 2003 2002 Change ------------------------------------- ------------------------------------ Residential $166,148 $137,247 21% 2,070 1,874 10% Commercial 92,129 77,792 18% 1,388 1,295 7% Industrial 120,285 108,080 11% 2,895 2,846 2% ---------------------------- --------------------------- Total from ultimate customers 378,562 323,119 17% 6,353 6,015 6% Sales for resale 51,241 36,410 41% 1,332 1,202 11% Other 13,222 11,233 18% 50 44 14% ---------------------------- --------------------------- Total revenues/sales 443,025 370,762 19% 7,735 7,261 7% =========================== Electric production fuels expense 65,860 58,760 12% Purchased-power expense 129,315 72,337 79% ---------------------------- Margin $247,850 $239,665 3% ============================
Electric margin increased $8.2 million, or 3%, primarily related to the impact of various rate increases implemented in 2002 and higher sales volumes largely due to more favorable weather conditions in the first quarter of 2003 compared to the same period in 2002 as well as continued modest retail customer growth. Alliant Energy continued to see modest improvements in the economy in its utility service territories as evidenced by a 2% increase in electric sales to industrial customers in the first quarter of 2003 compared to the same period in 2002. These items were partially offset by higher purchased-power and fuel costs at WP&L. WP&L does not expect the significant under recovery of purchased-power and fuel costs it experienced in the first quarter of 2003 to continue throughout the remainder of 2003, due to new rates effective April 2003. In addition, under PSCW rules, WP&L can seek emergency rate increases if its annual purchased-power and fuel costs are more than 3% higher than the estimated costs used to establish rates. WP&L continues to monitor this issue closely. Gas Utility Margins - Gas margins and Dth sales for Alliant Energy for the - ------------------- three months ended March 31 were as follows (in thousands):
Revenues and Costs Dths Sold -------------------------------------- ------------------------------------- 2003 2002 Change 2003 2002 Change -------------------------------------- ------------------------------------- Residential $148,944 $76,586 94% 15,943 13,419 19% Commercial 76,522 37,996 101% 9,265 7,830 18% Industrial 12,072 6,041 100% 1,665 1,469 13% Transportation/other 20,343 7,618 167% 14,732 12,814 15% ---------------------------- ---------------------------- Total revenues/sales 257,881 128,241 101% 41,605 35,532 17% ============================ Cost of utility gas sold 188,325 83,756 125% ---------------------------- Margin $69,556 $44,485 56% ============================
Gas revenues and cost of utility gas sold increased significantly due to the large increase in natural gas prices from the first quarter of 2002. Due to Alliant Energy's rate recovery mechanisms for gas costs, these increases alone had little impact on gas margin. Gas margin increased $25.1 million, or 56%, primarily due to various rate increases, increased sales, which were largely due to more favorable weather conditions and continued modest retail customer growth, and improved performance related to WP&L's performance-based commodity cost recovery program (which are shared by ratepayers and shareowners). Refer to "Rates and Regulatory Matters" for discussion of various electric and gas rate filings. 30 Non-regulated and Other Revenues - Details regarding Alliant Energy's - -------------------------------- non-regulated and other revenues for the three months ended March 31 were as follows (in thousands): 2003 2002 ----------------- --------------- Integrated Services $147,753 $32,538 International 28,471 25,731 Investments 6,021 5,952 Other (includes eliminations) 12,639 8,212 ----------------- --------------- $194,884 $72,433 ================= =============== The increased Integrated Services revenues were primarily due to increased gas revenues at Alliant Energy's natural gas trading business, NG Energy, largely due to higher natural gas prices and volumes. Other Operating Expenses - Other operation and maintenance expenses for the - ------------------------ three months ended March 31 were as follows (in thousands): 2003 2002 --------------- --------------- Utility $150,260 $131,763 Integrated Services 139,195 27,954 International 19,762 20,345 Investments 3,737 3,714 Other (includes eliminations) 2,692 1,623 --------------- --------------- $315,646 $185,399 =============== =============== The utility increase was primarily due to increased fossil and nuclear generation, energy conservation and employee benefits expenses. A significant portion of these cost increases are being recovered as a result of the rate increases implemented in 2002 and 2003. Refer to "Rates and Regulatory Matters" for additional information. The Integrated Services increase was largely driven by the same factors impacting the revenue variance. Depreciation and amortization expense increased $6.3 million primarily due to increased software amortizations and utility property additions, partially offset by lower earnings on WP&L's nuclear decommissioning trust fund. The accounting for earnings on the nuclear decommissioning trust fund results in no net income impact. Miscellaneous, net income increases for earnings on the trust fund and the corresponding offset is recorded through depreciation expense for WP&L. Interest Expense and Other - Interest expense increased $11.0 million - -------------------------- primarily due to higher average borrowing rates and additional debt outstanding at Resources and the parent company. Equity income (loss) from Alliant Energy's unconsolidated investments for the three months ended March 31 was as follows (in thousands): 2003 2002 ------------- ------------- ATC $3,894 $4,113 New Zealand 837 518 China* 325 318 Cargill-Alliant (sold in 2002) -- (229) Brazil (4,586) (1,694) Synfuel (began operations 5/02) (4,894) -- Other 170 187 ------------- ------------- ($4,254) $3,213 ============= ============= * Majority of investments are accounted for under the consolidation method. 31 Equity income from unconsolidated investments decreased $7.5 million. The increased loss for Brazil was primarily due to higher interest expense at Alliant Energy's Brazilian utility investments. In the second quarter of 2002, Synfuel, a direct subsidiary of Resources, purchased an equity interest in a synthetic fuel processing facility which generates operating losses at its fuel processing facility, which are more than offset by tax credits and the tax benefit of the losses the project generates. All tax benefits are included in "Income taxes" in Alliant Energy's Consolidated Statements of Income. Refer to Note 7 of Alliant Energy's "Notes to Consolidated Financial Statements" for discussion of the asset valuation charge recorded by Alliant Energy in the first quarter of 2002 related to its McLeod available-for-sale securities. Miscellaneous, net income increased $7.2 million due to the recording in the first quarter of 2002 of pre-tax asset valuation charges for other-than-temporary declines in value of Alliant Energy's investments in Enermetrix of $8.5 million and Energy Technologies of $5.0 million. These charges were partially offset by lower earnings on WP&L's nuclear decommissioning trust fund. Income Taxes - The effective income tax rate for the first quarter of 2003 - ------------ was 30.3% while the effective rate for the same period in 2002 was not meaningful given the insignificant amount of pre-tax income (loss) from continuing operations in such period. The first quarter 2003 rate was lower than the statutory federal income tax rate of 35% largely due to the impact of tax credits, which was partially offset by the impact of state taxes. Income (Loss) from Discontinued Operations - The 2003 decrease of $26.7 - ------------------------------------------ million in income from discontinued operations was largely due to the recording of after-tax valuation adjustments of $26.1 million to reflect updated estimates of the market value, less selling costs, of the $1 billion of assets classified as assets held for sale. Lower non-cash SFAS 133 income related to the valuation of electricity derivatives at Southern Hydro was offset by the impact of discontinuing depreciation, depletion and amortization of Alliant Energy's assets held for sale in 2003 and higher oil and gas prices at Whiting. Refer to Note 8 of Alliant Energy's "Notes to Consolidated Financial Statements" for further discussion of Alliant Energy's discontinued operations. Cumulative Effect of Changes in Accounting Principles - In the first quarter - ----------------------------------------------------- of 2003, Alliant Energy recorded after-tax charges of $4 million and $2 million for the cumulative effect of changes in accounting principles related to the adoption on Jan. 1, 2003 of SFAS 143 and EITF Issue 02-3 within its oil and gas and Integrated Services businesses, respectively. The oil and gas business has been classified as held for sale as of Dec. 31, 2002 and March 31, 2003. Refer to Notes 11 and 12 of Alliant Energy's "Notes to Consolidated Financial Statements" for further information. IP&L RESULTS OF OPERATIONS Overview - First Quarter Results - Earnings available for common stock - -------------------------------- increased $9.6 million, primarily due to higher electric and gas margins and a lower effective income tax rate, partially offset by increased other operating expenses and preferred dividend requirements. 32 Electric Utility Margins - Electric margins and MWh sales for IP&L for the - ------------------------ three months ended March 31 were as follows (in thousands):
Revenues and Costs MWhs Sold -------------------------------------- ------------------------------------- 2003 2002 Change 2003 2002 Change -------------------------------------- ------------------------------------- Residential $89,700 $75,965 18% 1,156 1,023 13% Commercial 54,269 46,081 18% 858 788 9% Industrial 69,223 62,867 10% 1,847 1,834 1% --------------------------- --------------------------- Total from ultimate customers 213,192 184,913 15% 3,861 3,645 6% Sales for resale 10,334 7,998 29% 303 309 (2%) Other 6,803 6,092 12% 26 27 (4%) --------------------------- --------------------------- Total revenues/sales 230,329 199,003 16% 4,190 3,981 5% =========================== Electric production fuels expense 27,646 28,492 (3%) Purchased-power expense 45,056 28,159 60% --------------------------- Margin $157,627 $142,352 11% ===========================
Electric margin increased $15.3 million, or 11%, primarily due to higher sales volumes, largely due to more favorable weather conditions in the first quarter of 2003 compared to the same period in 2002 as well as continued modest retail customer growth, and the impact of the interim retail rate increase effective July 2002. Gas Utility Margins - Gas margins and Dth sales for IP&L for the three months - ------------------- ended March 31 were as follows (in thousands):
Revenues and Costs Dths Sold ---------------------------------------- ------------------------------------- 2003 2002 Change 2003 2002 Change ---------------------------------------- ------------------------------------- Residential $78,210 $43,860 78% 9,445 7,938 19% Commercial 38,629 21,503 80% 5,264 4,496 17% Industrial 7,055 3,467 103% 1,090 884 23% Transportation/other 2,783 2,912 (4%) 8,343 7,926 5% ---------------------------- ---------------------------- Total revenues/sales 126,677 71,742 77% 24,142 21,244 14% ============================ Cost of gas sold 91,771 46,360 98% ---------------------------- Margin $34,906 $25,382 38% ============================
Gas revenues and cost of gas sold increased significantly due to the large increase in natural gas prices from the first quarter of 2002. Such increases alone had no impact on IP&L's gas margin given its rate recovery mechanism for gas costs. Gas margin increased $9.5 million, or 38%, primarily due to the impact of the interim retail rate increase effective October 2002 and increased sales largely due to more favorable weather conditions. Refer to "Rates and Regulatory Matters" for discussion of IP&L's electric and gas rate filings. Other Operating Expenses - Other operation and maintenance expenses increased - ------------------------ $3.9 million, primarily due to increased administrative and general and fossil generation expenses, partially offset by decreased energy delivery expenses. Depreciation and amortization expense increased $4.2 million, primarily due to increased amortization of software and the impact of continued property additions. Income Taxes - The effective income tax rates were 39.2% and 44.7% for the - ------------ first quarter of 2003 and 2002, respectively. The decrease was primarily due to an increase in the Alliant Energy tax benefit allocated to IP&L pursuant to the provisions of PUHCA and decreases in property-related temporary differences for which deferred taxes were not provided pursuant to rate making principles. 33 Preferred Dividend Requirements - Preferred dividend requirements increased - ------------------------------- $2.5 million due to an increase in the principal amount of preferred stock outstanding and a higher dividend rate. WP&L RESULTS OF OPERATIONS Overview - First Quarter Results - Earnings available for common stock - -------------------------------- decreased $5.6 million, primarily due to increased operation and maintenance expenses and decreased electric margins, partially offset by higher gas margins and a lower effective income tax rate. Electric Utility Margins - Electric margins and MWh sales for WP&L for the - ------------------------ three months ended March 31 were as follows (in thousands):
Revenues and Costs MWhs Sold --------------------------------------- ------------------------------------- 2003 2002 Change 2003 2002 Change --------------------------------------- ------------------------- ----------- Residential $76,448 $61,282 25% 914 851 7% Commercial 37,860 31,711 19% 530 507 5% Industrial 51,062 45,213 13% 1,048 1,012 4% ---------------------------- ------------------------- Total from ultimate customers 165,370 138,206 20% 2,492 2,370 5% Sales for resale 40,907 28,412 44% 1,029 894 15% Other 6,419 5,141 25% 24 17 41% ---------------------------- ------------------------- Total revenues/sales 212,696 171,759 24% 3,545 3,281 8% ========================= Electric production fuels expense 38,214 30,269 26% Purchased-power expense 84,259 44,177 91% ---------------------------- Margin $90,223 $97,313 (7%) ============================
Electric margin decreased $7.1 million, or 7%, primarily due to higher purchased-power and fuel costs, partially offset by the implementation of rate increases in 2002 and higher sales volumes largely due to more favorable weather conditions in the first quarter of 2003 compared to the same period in 2002 as well as continued modest retail customer growth. WP&L continued to see improvements in the economy as evidenced by a 4% increase in sales to industrial customers in the first quarter of 2003 compared to the same period in 2002. WP&L does not expect the significant under recovery of purchased-power and fuel costs it experienced in the first quarter of 2003 to continue throughout the remainder of 2003, due to new rates effective April 2003. In addition, under PSCW rules, WP&L can seek emergency rate increases if its annual purchased-power and fuel costs are more than 3% higher than the estimated costs used to establish rates. WP&L continues to monitor this issue closely. Gas Utility Margins - Gas margins and Dth sales for WP&L for the three months - ------------------- ended March 31 were as follows (in thousands):
Revenues and Costs Dths Sold --------------------------------------- ------------------------------------- 2003 2002 Change 2003 2002 Change --------------------------------------- ------------------------------------- Residential $70,734 $32,726 116% 6,498 5,481 19% Commercial 37,893 16,493 130% 4,001 3,334 20% Industrial 5,017 2,574 95% 575 585 (2%) Transportation/other 17,560 4,706 273% 6,389 4,888 31% ----------------------------- ------------------------- Total revenues/sales 131,204 56,499 132% 17,463 14,288 22% ========================= Cost of gas sold 96,554 37,396 158% ----------------------------- Margin $34,650 $19,103 81% =============================
Gas revenues and cost of gas sold increased significantly due to the large increase in natural gas prices from the first quarter of 2002. Due to WP&L's rate recovery mechanism for gas costs, these increases alone had little impact on gas margin. Gas margin increased $15.5 million, or 81%, primarily 34 due to the implementation of a rate increase in 2002, increased sales, which were largely due to more favorable weather conditions and continued modest retail customer growth, and improved results from WP&L's performance-based commodity cost recovery program. Refer to "Rates and Regulatory Matters" for discussion of WP&L's electric and gas rate filings. Other Operating Expenses - Other operation and maintenance expenses increased - ------------------------ $14.6 million, primarily due to higher fossil and nuclear generation, energy conservation and employee benefits expenses. A significant portion of these cost increases are being recovered as a result of the rate increases implemented in 2002. Depreciation and amortization expense remained virtually unchanged due to higher software amortizations, offset by decreased earnings on the nuclear decommissioning trust fund. The accounting for earnings on the nuclear decommissioning trust fund results in no net income impact. Interest income increases for earnings on the trust fund and the corresponding offset is recorded through depreciation expense. Interest Expense and Other - Interest income decreased $4.7 million due to - -------------------------- decreased earnings on the nuclear decommissioning trust fund. Income Taxes - The effective income tax rates were 27.3% and 37.4% for the - ------------ first quarter of 2003 and 2002, respectively. The decrease was primarily due to an increase in the Alliant Energy tax benefit allocated to WP&L pursuant to the provisions of PUHCA. LIQUIDITY AND CAPITAL RESOURCES Cash Flows for the Three-Month Periods - Selected information from Alliant - -------------------------------------- Energy's, IP&L's and WP&L's Consolidated Statements of Cash Flows for the three months ended March 31 was as follows (dollars in thousands):
Alliant Energy IP&L WP&L ----------------------- ----------------------- ----------------------- 2003 2002 2003 2002 2003 2002 Cash flows from (used for): ----------- ----------- ----------- ----------- ----------- ----------- Operating activities $166,643 $145,973 $129,876 $75,969 $56,452 $90,857 Financing activities 130,637 (8,986) 54,918 (30,154) (28,849) (47,639) Investing activities (294,404) (157,280) (189,293) (45,820) (35,106) (43,218)
Alliant Energy's cash flows from financing activities increased $140 million primarily due to net changes in the amount of debt issued and retired and lower common stock dividends due to the dividend reduction implemented in the first quarter of 2003; cash flows used for investing activities increased $137 million primarily due to the 2003 acquisition by Resources of a natural gas-fired power plant in Wisconsin. IP&L's cash flows from operating activities increased $54 million primarily due to changes in working capital; cash flows from financing activities increased $85 million primarily due to net changes in the amount of short-term debt issued and retired; and cash flows used for investing activities increased $143 million primarily due to increased construction and acquisition expenditures associated with the construction of the natural gas plant currently under construction in Iowa as part of its Power Iowa program. WP&L's cash flows from operating activities decreased $34 million primarily due to changes in working capital. Common Equity - In November 2002, Alliant Energy announced its intentions to - ------------- raise approximately $200 million to $300 million of common equity in 2003, dependent on market conditions. The PSCW has indicated it will require an additional equity infusion of $200 million by Alliant Energy into WP&L by July 2003. The final PSCW order issued in April 2003 includes a customer refund provision if the timing and/or amount of the equity infusion differs from the assumptions included in the WP&L rate case. Debt - Alliant Energy and its subsidiaries are party to various credit - ---- facilities and other borrowing arrangements. The aggregate borrowing capacity under short-term credit agreements of Alliant Energy and its subsidiaries at March 31, 2003 was $845 million. At March 31, 2003, the total amount borrowed under these facilities was $402 million leaving unused capacity of $443 million. In addition, Resources had a $250 million standby credit facility at March 31, 2003. Borrowing capacity under this facility was reduced by approximately $170 million due to proceeds realized in April 2003 from Alliant Energy's sale of its Australian assets. There are no 35 borrowings currently outstanding under such facility. Alliant Energy also had $27 million of short-term borrowings outstanding at March 31, 2003 related to various generation projects in China. Alliant Energy's, IP&L's and WP&L's credit facility agreements contain various covenants, including the following:
Covenant Description Covenant Requirement Status at March 31, 2003 - ------------------------------------------ ------------------------- ---------------------------- Alliant Energy: Consolidated debt-to-capital ratio * Less than 65% 60.8% Consolidated net worth * At least $1.4 billion $1.8 billion EBITDA interest coverage ratio * At least 2.5x 3.5x IP&L debt-to-capital ratio Less than 58% 50.0% WP&L debt-to-capital ratio Less than 58% 40.9%
* In compliance with the agreements, results of discontinued operations have been included in the covenant calculations. Alliant Energy is also subject to a PUHCA requirement whereby Alliant Energy's common equity balance must be at least 30% of its total consolidated capitalization, including short-term debt. Alliant Energy's common equity ratio as of March 31, 2003, as computed under such requirement, was 35.2%. Information regarding commercial paper and bank facility borrowings at March 31, 2003 was as follows (dollars in millions):
Alliant Energy (Parent) IP&L WP&L ------------------------ ------------------- ------------------ Commercial paper outstanding $35.0 $75.5 $56.5 Weighted average maturity of commercial paper 1 day 5 days 15 days Discount rates on commercial paper 2.0% 1.45-1.60% 1.36-1.50% Bank facility borrowings $235.0 -- -- Interest rates on bank facility borrowings 4.56-5.00% -- --
Off-Balance Sheet Arrangements - A summary of Alliant Energy's off-balance - ------------------------------ sheet arrangements is included in the Form 10-K filed by Alliant Energy, IP&L and WP&L for the year ended Dec. 31, 2002. Alliant Energy's off-balance sheet arrangements have not changed materially from those reported in the 2002 Form 10-K. Environmental - A summary of Alliant Energy's environmental matters is - ------------- included in the Form 10-K filed by Alliant Energy, IP&L and WP&L for the year ended Dec. 31, 2002. Alliant Energy's environmental matters have not changed materially from those reported in the 2002 Form 10-K. Construction and Acquisition Expenditures - In February 2003, Resources - ----------------------------------------- announced the purchase of a 309-MW, non-regulated, natural gas-fired power plant in Wisconsin for $109 million, which Resources financed with a $73 million 8-year secured credit facility ($60 million of borrowings were outstanding at March 31, 2003), which is non-recourse to Alliant Energy. The entire power output of the facility is sold under contract to Milwaukee-based We Energies through June 2008. OTHER MATTERS Market Risk Sensitive Instruments and Positions - Alliant Energy's primary - ----------------------------------------------- market risk exposures are associated with interest rates, commodity prices, equity prices and currency exchange rates. Alliant Energy has risk management policies to monitor and assist in controlling these market risks and uses derivative instruments to manage some of the exposures. A summary of Alliant Energy's market risks is included in the Form 10-K filed by Alliant Energy, IP&L and WP&L for the year ended Dec. 31, 2002. Alliant Energy's market risks have not changed materially from those reported in the 2002 Form 10-K, except as described below. 36 Currency Risk - Alliant Energy has investments in various countries where the net investments are not hedged, including Brazil, China and New Zealand. As a result, these investments are subject to currency exchange risk with fluctuations in currency exchange rates. At March 31, 2003, Alliant Energy had a cumulative foreign currency translation loss, net of any tax benefits realized, of $136 million, which related to decreases in value of the Brazil real of $135 million and New Zealand dollar of $6 million and an increase in the value of the Australian dollar of $5 million, all in relation to the U.S. dollar. This loss is recorded in "Accumulated other comprehensive loss" on Alliant Energy's Consolidated Balance Sheets. Based on Alliant Energy's investments at March 31, 2003, a 10% sustained increase/decrease over the next 12 months in the foreign exchange rates of Brazil, China and New Zealand would result in a corresponding increase/decrease in the cumulative foreign currency translation loss of $48 million. Alliant Energy's equity income (loss) from its foreign investments is also impacted by fluctuations in currency exchange rates. In addition, Alliant Energy has currency exchange risk associated with the debt issued to finance a thermal plant constructed by Alliant Energy and its Brazilian partners. For the three months ended March 31, 2003, Alliant Energy recorded pre-tax income of $0.5 million related to its share of the foreign currency transaction gains/losses on such debt. Based on the loan balance and currency rates at March 31, 2003, a 10% change in the currency rates would result in a $2.8 million pre-tax increase/decrease in net income. Accounting Pronouncements - In April 2003, the FASB issued SFAS 149, - ------------------------- "Amendment of SFAS 133 on Derivative Instruments and Hedging Activities," which amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133. The amendments set forth in SFAS 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS 133 and when a derivative contains a financing component that warrants special reporting in the statement of cash flows, as well as amending certain other existing pronouncements. Those changes will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS 149 is effective for contracts entered into or modified after June 30, 2003, except for certain implementation issues and certain provisions of forward purchase and sale contracts and for hedging relationships designated after June 30, 2003. Alliant Energy is in the process of evaluating the potential impacts of SFAS 149. Critical Accounting Policies - A summary of Alliant Energy's critical - ---------------------------- accounting policies is included in the Form 10-K filed by Alliant Energy, IP&L and WP&L for the year ended Dec. 31, 2002. Alliant Energy's critical accounting policies have not changed materially from those reported in the 2002 Form 10-K. Other Future Considerations - In addition to items discussed earlier in MD&A, - --------------------------- the following items could impact Alliant Energy's future financial condition or results of operations: IP&L appealed to the Iowa State Board of Tax Review, an agency of the State of Iowa, regarding assessments of Iowa property tax made by the Director of the Iowa Department of Revenue and Finance. The appeals involved assessments for the years 1994 through 1998 and sought reduction of the assessments reflecting the true value of the operating property of the companies. In April 2003, IP&L settled this matter with the Iowa Department of Revenue and Finance. IP&L will receive a refund of $9 million for prior taxes paid. The refund will be realized by future credits to property taxes resulting in pre-tax reductions in property tax expense of $4.5 million, $3.0 million and $1.5 million in 2003, 2004 and 2005, respectively. In addition, IP&L's property tax liability on a going forward basis will be reduced by approximately $2.1 million annually, also beginning in September 2003. Alliant Energy holds unconsolidated investments in certain Brazilian electric utility companies. The Brazilian utilities are negotiating with creditors to restructure and convert up to $180 million (of which approximately $50 million is due in June 2003), as converted from local currency to U.S. dollars, of short-term and long-term debt currently outstanding into new long-term debentures and other longer term debt. In April 2003, Standard and Poor's issued a rating on the debentures of 'brBBB+' with a negative outlook. Following completion of the negotiations, the proposed refinancing would be subject to approval by the shareowners of the Brazilian utilities which is expected in the near term. The refinancing is also subject to other approvals in the ordinary course and final closing that are currently expected to be complete in June 2003. If the refinancing is not completed as anticipated and the Brazilian utilities are unable to extend or repay certain obligations outstanding, then the liquidity position of the Brazilian utilities may be 37 significantly adversely affected. In such an event, Alliant Energy is not required to invest any additional capital in Brazil but it could lead to material asset valuation charges as relates to Alliant Energy's investments in its Brazilian utilities. 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." ITEM 4. CONTROLS AND PROCEDURES Within 90 days prior to the date of filing this Quarterly Report on Form 10-Q, Alliant Energy, IP&L and WP&L carried out evaluations, under the supervision and with the participation of their management, including their Chief Executive Officer, Chief Financial Officer and Disclosure Committee, of the effectiveness of the design and operation of Alliant Energy's, IP&L's and WP&L's disclosure controls and procedures pursuant to the requirements of the Securities Exchange Act of 1934, as amended. Based on those evaluations, the Chief Executive Officer and the Chief Financial Officer concluded that Alliant Energy's, IP&L's and WP&L's disclosure controls and procedures were effective as of the date of such evaluation. There have been no significant changes in Alliant Energy's, IP&L's and WP&L's internal controls, or in other factors that could significantly affect internal controls, subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Alliant Energy On April 17, 2003, a purported class action shareowner lawsuit was filed against Alliant Energy, Erroll B. Davis, Jr., Thomas M. Walker and John E. Kratchmer in the U.S. District Court for the Western District of Wisconsin as Case No. 03-C-0191. Substantially similar cases were filed in the same court on April 29, 2003 as Case No. 03-C-218-S and on May 14, 2003 as Case No. 03-C- 242. Alliant Energy expects that these cases and any additional similar cases will be consolidated into one action. The actions were allegedly brought on behalf of purchasers of Alliant Energy securities from Jan. 29, 2002 through July 18, 2002. The complaints allege that the defendants made false and misleading statements relating to Alliant Energy's expected performance of its various non-regulated businesses. Alliant Energy believes these actions are without merit and intends to defend them vigorously, but cannot predict the outcome at this time. IP&L IP&L appealed to the Iowa State Board of Tax Review, an agency of the State of Iowa, regarding assessments of Iowa property tax made by the Director of the Iowa Department of Revenue and Finance. The appeals involved assessments for the years 1994 through 1998 and sought reduction of the assessments reflecting the true value of the operating property of the companies. In April 2003, IP&L settled this matter with the Iowa Department of Revenue and Finance. IP&L will receive a refund of $9 million for prior taxes paid. The refund will be realized by future credits to property taxes resulting in pre-tax reductions in property tax expense of $4.5 million, $3.0 million and $1.5 million in 2003, 2004 and 2005, respectively. In addition, IP&L's property tax liability on a going forward basis will be reduced by approximately $2.1 million annually, also beginning in September 2003. 38 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: The following Exhibits are filed herewith or incorporated by --------- reference. 10.1 Key Executive Employment and Severance Agreement, dated April 11, 2003, by and between Alliant Energy and each of J.E. Kratchmer and B.A. Siehr (incorporated by reference to Exhibit 10.4 to Alliant Energy's Form 10-Q for the quarter ended March 31, 1999) 99.1 Written Statement of the Chairman, President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 for Alliant Energy 99.2 Written Statement of the Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 for Alliant Energy 99.3 Written Statement of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 for IP&L 99.4 Written Statement of the Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 for IP&L 99.5 Written Statement of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 for WP&L 99.6 Written Statement of the Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 for WP&L (b) Reports on Form 8-K: -------------------- Alliant Energy Alliant Energy filed a Current Report on Form 8-K, dated Feb. 4, 2003, reporting (under Item 9) that it issued a press release announcing its earnings for the fourth quarter and year ended Dec. 31, 2002. IP&L - None. WP&L - None. 39 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Alliant Energy Corporation, Interstate Power and Light Company 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 15th day of May 2003.
ALLIANT ENERGY CORPORATION - -------------------------- Registrant By: /s/ John E. Kratchmer Vice President-Controller and Chief Accounting Officer - ------------------------- John E. Kratchmer (Principal Accounting Officer and Authorized Signatory) INTERSTATE POWER AND LIGHT COMPANY - ---------------------------------- Registrant By: /s/ John E. Kratchmer Vice President-Controller and Chief Accounting Officer - ------------------------- John E. Kratchmer (Principal Accounting Officer and Authorized Signatory) WISCONSIN POWER AND LIGHT COMPANY - --------------------------------- Registrant By: /s/ John E. Kratchmer Vice President-Controller and Chief Accounting Officer - ------------------------- John E. Kratchmer (Principal Accounting Officer and Authorized Signatory)
40 CERTIFICATIONS I, Erroll B. Davis, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Alliant Energy Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Erroll B. Davis, Jr. ------------------------ Erroll B. Davis, Jr. Chairman, President and Chief Executive Officer 41 I, Thomas M. Walker, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Alliant Energy Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Thomas M. Walker -------------------- Thomas M. Walker Executive Vice President and Chief Financial Officer 42 I, Erroll B. Davis, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Interstate Power and Light Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Erroll B. Davis, Jr. ------------------------ Erroll B. Davis, Jr. Chairman and Chief Executive Officer 43 I, Thomas M. Walker, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Interstate Power and Light Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Thomas M. Walker -------------------- Thomas M. Walker Executive Vice President and Chief Financial Officer 44 I, Erroll B. Davis, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Wisconsin Power and Light Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Erroll B. Davis, Jr. ------------------------ Erroll B. Davis, Jr. Chairman and Chief Executive Officer 45 I, Thomas M. Walker, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Wisconsin Power and Light Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Thomas M. Walker -------------------- Thomas M. Walker Executive Vice President and Chief Financial Officer 46 EX-99 3 exhibit99pt1.txt EXHIBIT 99.1 Exhibit 99.1 Written Statement of the Chairman, President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman, President and Chief Executive Officer of Alliant Energy Corporation (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Erroll B. Davis, Jr. - ------------------------ Erroll B. Davis, Jr. May 15, 2003 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 4 exhibit99pt2.txt EXHIBIT 99.2 Exhibit 99.2 Written Statement of the Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief Financial Officer of Alliant Energy Corporation (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Thomas M. Walker - -------------------- Thomas M. Walker May 15, 2003 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 5 exhibit99pt3.txt EXHIBIT 99.3 Exhibit 99.3 Written Statement of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman and Chief Executive Officer of Interstate Power and Light Company (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Erroll B. Davis, Jr. - ------------------------ Erroll B. Davis, Jr. May 15, 2003 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 6 exhibit99pt4.txt EXHIBIT 99.4 Exhibit 99.4 Written Statement of the Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief Financial Officer of Interstate Power and Light Company (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Thomas M. Walker - -------------------- Thomas M. Walker May 15, 2003 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 7 exhibit99pt5.txt EXHIBIT 99.5 Exhibit 99.5 Written Statement of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman and Chief Executive Officer of Wisconsin Power and Light Company (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Erroll B. Davis, Jr. - ------------------------ Erroll B. Davis, Jr. May 15, 2003 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 8 exhibit99pt6.txt EXHIBIT 99.6 Exhibit 99.6 Written Statement of the Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief Financial Officer of Wisconsin Power and Light Company (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Thomas M. Walker - -------------------- Thomas M. Walker May 15, 2003 A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----