Annual Reports

 
Quarterly Reports

  • 10-Q (Nov 7, 2014)
  • 10-Q (Aug 7, 2014)
  • 10-Q (May 2, 2014)
  • 10-Q (Nov 7, 2013)
  • 10-Q (Aug 2, 2013)
  • 10-Q (May 3, 2013)

 
8-K

 
Other

Alliant Energy 10-Q 2006
Form 10-Q 03-31-06

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, 2006

 

or

o

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 o

 

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Alliant Energy Corporation

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Interstate Power and Light Company

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

 

Wisconsin Power and Light Company

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

 

 

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

Yes o

No x

 

Number of shares outstanding of each class of common stock as of April 28, 2006:

Alliant Energy Corporation

Common stock, $0.01 par value, 117,539,646 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

2

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

2

 

Alliant Energy Corporation:

 

 

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005

2

 

Condensed Consolidated Balance Sheets as of March 31, 2006 and Dec. 31, 2005

3

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended

 

 

    March 31, 2006 and 2005

5

 

Notes to Condensed Consolidated Financial Statements

6

 

Interstate Power and Light Company:

 

 

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005

24

 

Condensed Consolidated Balance Sheets as of March 31, 2006 and Dec. 31, 2005

25

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended

 

 

    March 31, 2006 and 2005

27

 

Notes to Condensed Consolidated Financial Statements

28

 

Wisconsin Power and Light Company:

 

 

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005

31

 

Condensed Consolidated Balance Sheets as of March 31, 2006 and Dec. 31, 2005

32

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended

 

 

    March 31, 2006 and 2005

34

 

Notes to Condensed Consolidated Financial Statements

35

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

48

Part II.

Other Information

48

Item 1A.

Risk Factors

48

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 6.

Exhibits

49

 

Signatures

49

1


 

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

For the Three Months Ended March 31,
  2006     2005      

(dollars in millions, except per share amounts)
Operating revenues:      
  Utility: 
    Electric  $583 .0 $498 .8
    Gas  290 .1 245 .3
    Other  21 .4 19 .3
  Non-regulated  36 .4 35 .4
 
   930 .9 798 .8
 

Operating expenses:  
  Utility: 
    Electric production fuel and purchased power  312 .2 209 .3
    Cost of gas sold  216 .3 179 .1
    Other operation and maintenance  156 .7 181 .2
  Non-regulated operation and maintenance  32 .1 35 .3
  Depreciation and amortization  67 .0 80 .1
  Taxes other than income taxes  26 .8 26 .4
 
   811 .1 711 .4
 

Operating income   119 .8 87 .4
 

Interest expense and other:  
  Interest expense  39 .7 44 .0
  Loss on early extinguishment of debt  90 .8 16 .0
  Equity income from unconsolidated investments  (13 .6) (2 .3)
  Allowance for funds used during construction  (2 .3) (2 .6)
  Preferred dividend requirements of subsidiaries  4 .7 4 .7
  Interest income and other  (13 .4) (8 .7)
 
   105 .9 51 .1
 

Income from continuing operations before income taxes   13 .9 36 .3
 

Income taxes   0 .8 9 .6
 

Income from continuing operations   13 .1 26 .7
 

Loss from discontinued operations, net of tax   (14 .7) (24 .3)
 

Net income (loss)   ($1 .6) $2 .4
 

Average number of common shares outstanding (basic) (000s)   117,037     116,032      
 

Average number of common shares outstanding (diluted) (000s)   117,343     116,369      
 

Earnings per average common share (basic and diluted):  
   Income from continuing operations  $0 .11 $0 .23
   Loss from discontinued operations  (0 .12) (0 .21)
 
   Net income (loss)  ($0 .01) $0 .02
 

Dividends declared per common share   $0 .2875 $0 .2625
 

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

2


ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

  March 31, December 31,
ASSETS 2006 2005

  (in millions)
Property, plant and equipment:      
  Utility: 
    Electric plant in service  $5,925 .6 $5,887 .3
    Gas plant in service  683 .7 679 .9
    Other plant in service  506 .3 508 .5
    Accumulated depreciation  (2,789 .4) (2,741 .7)
 
      Net plant  4,326 .2 4,334 .0
    Construction work in progress  136 .6 134 .3
    Other, less accumulated depreciation (accum. depr.)  3 .7 3 .2
 
          Total utility  4,466 .5 4,471 .5
 
  Non-regulated and other: 
    Non-regulated Generation, less accum. depr.  278 .7 280 .6
    Other non-regulated investments, less accum. depr.  58 .9 60 .6
    Alliant Energy Corporate Services, Inc. and other, less accum. depr.  50 .7 53 .5
 
          Total non-regulated and other  388 .3 394 .7
 
   4,854 .8 4,866 .2
 

Current assets:  
  Cash and temporary cash investments  50 .5 205 .3
  Restricted cash  50 .3 19 .4
  Accounts receivable: 
    Customer, less allowance for doubtful accounts  177 .9 171 .8
    Unbilled utility revenues  112 .9 143 .7
    Other, less allowance for doubtful accounts  91 .6 70 .5
  Production fuel, at average cost  65 .7 55 .7
  Materials and supplies, at average cost  40 .1 38 .0
  Gas stored underground, at average cost  34 .3 92 .1
  Regulatory assets  78 .7 86 .3
  Deferred income taxes  160 .4 12 .2
  Assets held for sale  207 .7 802 .6
  Other  56 .1 85 .8
 
   1,126 .2 1,783 .4
 

Investments:  
  Investments in unconsolidated foreign entities  111 .1 188 .6
  Investment in American Transmission Company LLC  157 .2 152 .4
  Other  86 .3 89 .1
 
   354 .6 430 .1
 

Other assets:  
  Regulatory assets  323 .2 349 .2
  Deferred charges and other  283 .2 304 .2
 
   606 .4 653 .4
 

Total assets   $6,942 .0 $7,733 .1
 

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

3


ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

  March 31, December 31,
CAPITALIZATION AND LIABILITIES 2006     2005      

  (in millions, except per      
  share and share amounts)    
Capitalization:      
  Common stock - $0.01 par value - authorized 240,000,000 shares; 
    outstanding 117,539,646 and 117,035,793 shares  $1 .2 $1 .2
  Additional paid-in capital  1,799 .6 1,788 .7
  Retained earnings  707 .0 742 .3
  Accumulated other comprehensive loss  (19 .4) (84 .6)
  Shares in deferred compensation trust - 272,985 and 258,214 shares 
    at an average cost of $27.66 and $27.41 per share  (7 .6) (7 .1)
 
       Total common equity  2,480 .8 2,440 .5
 
  Cumulative preferred stock of subsidiaries, net  243 .8 243 .8
  Long-term debt, net (excluding current portion)  1,638 .9 1,914 .8
 
   4,363 .5 4,599 .1
 

Current liabilities:  
  Current maturities  94 .0 151 .7
  Variable rate demand bonds  39 .1 39 .1
  Commercial paper  84 .0 263 .0
  Capital lease obligations  0 .3 40 .5
  Accounts payable  241 .8 355 .3
  Regulatory liabilities  110 .2 96 .2
  Accrued interest  31 .5 47 .4
  Accrued taxes  158 .5 115 .1
  Liabilities held for sale  63 .3 328 .2
  Other  145 .7 143 .8
 
   968 .4 1,580 .3
 

Other long-term liabilities and deferred credits:  
  Deferred income taxes  653 .1 529 .3
  Regulatory liabilities  591 .4 548 .2
  Pension and other benefit obligations  166 .7 256 .7
  Other  194 .1 215 .0
 
   1,605 .3 1,549 .2
 

Minority interest   4 .8 4 .5
 

Total capitalization and liabilities   $6,942 .0 $7,733 .1
 

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

4


ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months Ended March 31,
  2006     2005    

  (in millions)
Continuing Operations:      
Cash flows from operating activities:  
  Net income (loss)  ($1 .6) $2 .4
  Adjustments to reconcile net income to net cash flows from operating activities:  
    Loss from discontinued operations, net of tax  14 .7 24 .3
    Depreciation and amortization  67 .0 80 .1
    Other amortizations  12 .1 15 .3
    Deferred tax expense (benefit) and investment tax credits  (0 .1) 2 .3
    Equity income from unconsolidated investments, net  (13 .6) (2 .3)
    Distributions from equity method investments  5 .2 7 .6
    Loss on early extinguishment of debt  90 .8 16 .0
    Other  (14 .7) (1 .4)
  Other changes in assets and liabilities:  
    Accounts receivable  18 .6 17 .9
    Sale of utility accounts receivable  (15 .0) -  
    Gas stored underground  57 .8 44 .5
    Accounts payable  (90 .6) 13 .3
    Benefit obligations and other  (73 .9) (24 .4)
 
       Net cash flows from operating activities  56 .7 195 .6
 
Cash flows from (used for) investing activities:  
    Construction and acquisition expenditures: 
       Utility business  (74 .8) (90 .9)
       Non-regulated businesses and other  (4 .3) (25 .5)
    Changes in restricted cash  (30 .9) 7 .5
    Proceeds from asset sales  564 .8 -  
    Purchases of securities within nuclear decommissioning trusts  (3 .5) (14 .0)
    Sales of securities within nuclear decommissioning trusts  51 .7 8 .0
    Changes in restricted cash within nuclear decommissioning trusts  (42 .5) 2 .8
    Other  (18 .5) (13 .7)
 
       Net cash flows from (used for) investing activities  442 .0 (125 .8)
 
Cash flows used for financing activities:  
    Common stock dividends  (33 .7) (30 .4)
    Proceeds from issuance of common stock  8 .8 7 .9
    Proceeds from issuance of long-term debt  39 .1 -  
    Reductions in long-term debt  (359 .9) (101 .4)
    Net change in short-term borrowings  (179 .0) (19 .0)
    Debt repayment premiums  (83 .0) (14 .8)
    Principal payments under capital lease obligations  (40 .2) (3 .5)
    Net change in loans with discontinued operations  (2 .7) (2 .6)
    Other  (2 .9) (7 .2)
 
       Net cash flows used for financing activities  (653 .5) (171 .0)
 
Net decrease in cash and temporary cash investments   (154 .8) (101 .2)
Cash and temporary cash investments at beginning of period   205 .3 202 .4
 
Cash and temporary cash investments at end of period   $50 .5 $101 .2
 

Discontinued Operations:  
Net cash flows from (used for) operating activities  ($6 .3) $13 .1
Net cash flows used for investing activities  (2 .6) (0 .9)
Net cash flows from (used for) financing activities  3 .8 (4 .4)
 
Net increase (decrease) in cash and temporary cash investments  (5 .1) 7 .8
Cash and temporary cash investments classified as held for sale at beginning of period  10 .7 62 .2
 
Cash and temporary cash investments classified as held for sale at end of period  $5 .6 $70 .0
 

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

5


 

ALLIANT ENERGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) General - The interim condensed consolidated financial statements included herein have been prepared by Alliant Energy Corporation (Alliant Energy), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S.) of America (GAAP) have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements include Alliant Energy and its consolidated subsidiaries (including Interstate Power and Light Company (IPL), Wisconsin Power and Light Company (WPL), Alliant Energy Resources, Inc. (Resources) and Alliant Energy Corporate Services, Inc. (Corporate Services)). These financial statements should be read in conjunction with the financial statements and the notes thereto included in Alliant Energy’s, IPL’s and WPL’s latest combined Annual Report on Form 10-K.

 

In the opinion of management, all adjustments, which unless otherwise noted are normal and recurring in nature, necessary for a fair presentation of the condensed consolidated results of operations for the three months ended March 31, 2006 and 2005, the condensed consolidated financial position at March 31, 2006 and Dec. 31, 2005, and the condensed consolidated statements of cash flows for the three months ended March 31, 2006 and 2005 have been made. Because of the seasonal nature of Alliant Energy’s utility operations, results for the three months ended March 31, 2006 are not necessarily indicative of results that may be expected for the year ending Dec. 31, 2006. A change in management’s estimates or assumptions could have a material impact on Alliant Energy’s financial condition and results of operations during the period in which such change occurred. Certain prior period amounts have been reclassified on a basis consistent with the current period presentation. Most reclassifications relate to the reporting of discontinued operations and assets and liabilities held for sale pursuant to Statement of Financial Accounting Standards (SFAS) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144). Unless otherwise noted, the notes herein have been revised to exclude discontinued operations and assets and liabilities held for sale for all periods presented.

 

(b) Regulatory Assets and Liabilities -

DAEC Sale - In January 2006, IPL completed the sale of its 70% ownership interest in the Duane Arnold Energy Center (DAEC) and recognized a gain based on the terms of the sale agreement. Pursuant to the Iowa Utilities Board (IUB) order approving the sale, the gain resulting from the sale was used to establish a regulatory liability. The regulatory liability is subject to change pending approval of certain post-closing adjustments related to the sale and regulatory review. The regulatory liability will be used to offset allowance for funds used during construction for future investments in new generation sited in Iowa and accretes interest at the monthly average U.S. Treasury rate for three-year maturities. At March 31, 2006, the regulatory liability related to the gain on the sale, including accrued interest, was $64.2 million and is reflected in “Other long-term liabilities and deferred credits - regulatory liabilities” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets. IPL also recognized changes in certain tax-related regulatory assets due to the tax impacts of the DAEC sale, which resulted in a $30.0 million reduction in “Other assets - regulatory assets” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets during the first quarter of 2006. Refer to Notes 3, 5(a) and 12 for additional information regarding the DAEC sale.

 

Fuel Cost Recovery - In 2005, WPL filed for a fuel-related rate increase of $96 million with the Public Service Commission of Wisconsin (PSCW) and an interim increase of such amount was granted and effective in the fourth quarter of 2005. Fuel-related costs decreased during the first quarter of 2006 and are currently projected to be lower than the cost estimates used to set interim rates. These decreases in fuel-related costs may result in final rates granted being lower than interim rates, which would require WPL to refund a portion of the interim rates collected. At March 31, 2006, WPL recorded a reserve for rate refund and associated interest, based on interim rates collected to date, of $17.4 million, which is reflected as a liability in “Current liabilities - regulatory liabilities” on Alliant Energy’s and WPL’s Condensed Consolidated Balance Sheets.

 

Coal Delivery Disruptions - WPL received approval from the PSCW to defer, beginning Aug. 3, 2005, incremental purchased power energy costs associated with coal conservation efforts at WPL due to coal delivery disruptions. At March 31, 2006 and Dec. 31, 2005, the retail portion of these incremental costs was $20.5 million and $12.3 million, respectively, which is reflected in “Other assets - regulatory assets” on Alliant Energy’s and WPL’s Condensed Consolidated Balance Sheets.

 

Derivatives - Refer to Note 8(a) for information regarding changes in IPL’s and WPL’s regulatory assets and liabilities during the first quarter of 2006 due to changes in the fair value of its derivative instruments.

6


 

(c) Common Shares Outstanding - A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per average common share (EPS) calculation for the three months ended March 31 was as follows (in thousands):

 

 

2006

 

2005

Weighted average common shares outstanding:

 

 

 

Basic EPS calculation

117,037

 

116,032

Effect of dilutive securities

306

 

337

Diluted EPS calculation

117,343

 

116,369

 

The following options to purchase shares of common stock were excluded from the calculation of diluted EPS as the exercise prices were greater than the average market price for the three months ended March 31:

 

 

2006

 

2005

Options to purchase shares of common stock

768,371

 

3,081,720

Weighted average exercise price of options excluded

$31.55

 

$29.48

 

(d) Property, Plant and Equipment - Effective Jan. 1, 2006, IPL implemented new depreciation rates from a recently completed depreciation study. IPL’s average rates of depreciation during the first quarter of 2006 were 2.8% for both electric and gas properties.

 

(e) Supplemental Financial Information - The other (income) and deductions included in “Interest income and other” in Alliant Energy’s Condensed Consolidated Statements of Income for the three months ended March 31 were as follows (in millions):

 

 

2006

 

2005

Interest income:

 

 

 

From loans to discontinued operations

($3.4)

 

($6.4)

Other

(3.9)

 

(2.3)

Currency transaction gains, net

(10.7)

 

--

Loss on sale of Brazil investments

4.8

 

--

Other

(0.2)

 

--

 

($13.4)

 

($8.7)

 

The supplemental cash flows information related to continuing operations for Alliant Energy’s Condensed Consolidated Statements of Cash Flows for the three months ended March 31 was as follows (in millions):

 

 

2006

 

2005

Cash paid during the period for:

 

 

 

Interest, net of capitalized interest

$55.8

 

$47.1

Income taxes, net of refunds

17.7

 

9.6

Noncash investing and financing activities:

 

 

 

Debt assumed by buyer of China generating facilities

13.7

 

--

Capital lease obligations incurred

--

 

0.9

 

(f) New Accounting Pronouncements - Refer to Note 5(b) for discussion of SFAS 123(R), “Share-Based Payment” (SFAS 123(R)), and historical pro forma impacts of share-based compensation expense on net income.

7


 

(2) COMPREHENSIVE INCOME

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 millions):

 

2006

 

2005

Net income (loss)

($1.6)

 

$2.4

Unrealized holding gains (losses) on securities, net of tax

1.7

 

(0.8)

Less: reclassification adjustment for losses

 

 

 

included in net income, net of tax

--

 

(0.1)

Net unrealized gains (losses) on securities

1.7

 

(0.7)

Foreign currency translation adjustments, net of tax

(1.8)

 

1.2

Less: reclassification adjustment for losses

 

 

 

included in net income, net of tax

(51.9)

 

--

Net foreign currency translation adjustments

50.1

 

1.2

Minimum pension liability adjustments, net of tax

13.0

 

--

Unrealized holding gains (losses) on qualifying

 

 

 

derivatives, net of tax

0.2

 

(0.3)

Less: reclassification adjustment for losses

 

 

 

included in net income, net of tax

(0.2)

 

--

Net unrealized gains (losses) on qualifying derivatives

0.4

 

(0.3)

Other comprehensive income

65.2

 

0.2

Comprehensive income

$63.6

 

$2.6

 

(3) INCOME TAXES

The provision for income taxes for earnings from continuing operations is based on an estimated annual effective tax rate that excludes the impact of significant unusual or infrequently occurring items, discontinued operations or extraordinary items. The effective tax rate typically differs from the federal statutory rate of 35% principally due to state income taxes, the impact of foreign income and associated tax, tax credits, effects of utility ratemaking and certain non-deductible expenses. In addition, the provision for income taxes for earnings from continuing operations for the three months ended March 31, 2006 included $7 million of income tax benefits related to the sale of IPL’s interest in DAEC. These income tax benefits included the recognition of the unamortized balance of deferred investment tax credits and the reversal of excess deferred taxes related to DAEC property, plant and equipment. Pursuant to the IUB order approving the DAEC sale, these income tax benefits were excluded from the regulatory liability established upon the sale. Refer to Notes 1(b), 5(a) and 12 for further discussion of the DAEC sale.

 

In the first quarter of 2006, Alliant Energy reclassified $158 million of deferred tax assets from “Other long-term liabilities and deferred credits - deferred income taxes” to “Current assets - deferred income taxes.” The deferred tax assets included in “Current assets - deferred income taxes” represent the amount of deferred tax benefits from tax carryforwards related to capital losses, net operating losses and credits that Alliant Energy anticipates will be utilized within the next 12 months.

 

(4) SALES OF ACCOUNTS RECEIVABLE

In April 2006, IPL extended its utility customer accounts receivable sale program agreement through October 2006 and increased the maximum amount of receivables that can be sold from $125 million to $200 million. At March 31, 2006 and Dec. 31, 2005, IPL had sold $85 million and $100 million of utility customer accounts receivable, respectively.

8


 

(5) BENEFIT PLANS

(a) Pension Plans and Other Postretirement Benefits - The components of Alliant Energy’s qualified and non-qualified pension benefits and other postretirement benefits costs for the three months ended March 31 were as follows (in millions):

 

 

Pension Benefits

 

Other Postretirement Benefits

 

2006

 

2005

 

2006

 

2005

Service cost

$5.7

 

$5.0

 

$2.9

 

  $2.9

Interest cost

12.6

 

11.9

 

3.6

 

4.0

Expected return on plan assets

(14.5)

 

(13.7)

 

(1.8)

 

(1.7)

Amortization of:

 

 

 

 

 

 

 

Transition obligation (asset)

--

 

(0.1)

 

0.4

 

0.5

Prior service cost

0.8

 

0.9

 

(0.3)

 

(0.3)

Actuarial loss

3.4

 

2.2

 

1.2

 

1.6

    Income statement impacts

8.0

 

6.2

 

6.0

 

7.0

Curtailment loss (gain)

0.7

 

--

 

(0.3)

 

--

Settlement gain, net

(5.4)

 

--

 

(4.1)

 

--

 

$3.3

 

$6.2

 

$1.6

 

$7.0

 

The impacts of the curtailment and settlement in the above table resulted from FPL Energy Duane Arnold, LLC (FPL Energy) assuming certain DAEC employee pension and other postretirement benefit obligations and certain pension assets transferred to FPL Energy in connection with the DAEC sale in January 2006. The curtailment loss (gain) represents the unrecognized prior service cost attributable to DAEC employees who transferred to FPL Energy. The net settlement gain of $9.5 million represents accumulated benefit obligations of $29.5 million attributable to the transferred DAEC employees less pension assets transferred at closing of $13.2 million and recognition of settlement losses of $6.8 million relating to previously unrecognized actuarial losses and transition assets. The impacts of the curtailment and settlement were included as a component of the regulatory liability recorded with the DAEC sale and did not have an impact on Alliant Energy’s or IPL’s results of operations for the three months ended March 31, 2006. Refer to Notes 1(b), 3 and 12 for further discussion of the DAEC sale.

 

As result of the DAEC sale and certain amendments to Alliant Energy’s cash balance plan in the first quarter of 2006, Alliant Energy, IPL and WPL remeasured the assets and liabilities of certain of their qualified pension plans utilizing a 5.75% discount rate to calculate benefit obligations and their future net periodic pension costs. Alliant Energy, IPL and WPL utilized a 5.5% discount rate on their previous measurement date of Sep. 30, 2005. Alliant Energy, IPL and WPL did not modify any other key assumptions upon the remeasurements. The remeasurements of the qualified pension plans in the first quarter of 2006 resulted in the following decreases to certain amounts included on the Condensed Consolidated Balance Sheets (in millions):

 

 

Alliant

 

 

 

 

 

Energy

 

IPL

 

WPL

Additional minimum liability

$27.6

 

$21.8

 

$5.8

Intangible asset

1.3

 

1.2

 

0.1

Regulatory asset

5.1

 

--

 

5.1

Deferred income tax assets

8.2

 

7.9

 

0.4

Accumulated other comprehensive loss, net of tax

13.0

 

12.7

 

0.2

 

Alliant Energy estimates that funding for the pension and other postretirement benefits plans for 2006 will be approximately $80 million and $11 million, of which $77 million and $2 million, respectively, has been contributed through March 31, 2006.

 

(b) Equity Incentive Plans - On Jan. 1, 2006, Alliant Energy adopted SFAS 123(R), which requires share-based payments to employees to be recognized in the financial statements based on their fair values. Alliant Energy used the modified prospective transition method for the adoption, which resulted in no changes to Alliant Energy’s financial statements for prior periods. The impacts of adoption did not have a material impact on Alliant Energy’s financial condition or results of operations. The impact to Alliant Energy in periods subsequent to the adoption of SFAS 123(R) will largely be dependent upon the nature of any new share-based compensation awards issued to employees and the achievement of certain performance and market conditions related to such awards.

9


 

Alliant Energy has a 2002 Equity Incentive Plan (EIP) that permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units to key employees. At March 31, 2006, non-qualified stock options, restricted stock and performance shares were outstanding under the EIP and a predecessor plan under which new awards can no longer be granted. At March 31, 2006, approximately 1.2 million shares remained available for issuance under the EIP. Alliant Energy satisfies payouts related to equity awards under the EIP through the issuance of new shares of its common stock.

 

In the first quarter of 2006, Alliant Energy recognized $5.2 million of share-based compensation expense related to grants under the EIP and $1.9 million of related income tax benefits. As of March 31, 2006, total unrecognized compensation cost related to all share-based compensation awards was $9.7 million, which is expected to be recognized over a weighted average period of 2 years. Share-based compensation expense is recognized on a straight-line basis over the requisite service periods.

 

Performance Shares - Performance share payouts to key employees are contingent upon achievement over three-year periods of specified goals, which currently include metrics of total shareowner return relative to an investor-owned utility peer group. Nonvested performance share payouts are prorated at retirement based on time worked during the performance period and results of the performance criteria. Participants’ nonvested performance share payouts are forfeited when the participant voluntarily leaves Alliant Energy for reasons other than retirement. Performance shares can be paid out in shares of Alliant Energy’s common stock, cash or a combination of cash and stock and are modified by a performance multiplier, which ranges from zero to two, based on the performance criteria. At March 31, 2006, Alliant Energy anticipated all future payouts to be in the form of cash; therefore, performance shares were accounted for as liability awards. A summary of the performance shares activity for the three months ended March 31 is as follows:

 

 

2006

 

2005

 

Shares *

 

Shares *

Nonvested shares at Jan. 1

380,168

 

407,680

Granted

122,166

 

115,604

Vested

(133,552)

 

--

Forfeited

(91,252)

 

(118,029)

Nonvested shares at March 31

277,530

 

405,255

* Share amounts represent the target number of performance shares. Actual number of shares paid out, if vested, is dependent upon actual performance and may range from zero to 200% of the number of target shares.

 

Information related to nonvested performance shares and their fair values at March 31, 2006, by year of grant, is as follows:

 

 

  2006

 

  2005

 

  2004

Nonvested performance shares

89,879

 

83,577

 

104,074

Fair values of each nonvested performance share

$37.96

 

$34.59

 

$41.47

 

At March 31, 2006, fair values of nonvested performance shares were calculated using a Monte Carlo simulation to determine the anticipated total shareowner returns of Alliant Energy and its investor-owned utility peer group. Expected volatility was based on historical volatilities using daily stock prices over the past three years. Expected dividend yields were calculated based on the most recent quarterly dividend payments prior to the measurement date and stock prices at the measurement date. The risk-free interest rate is based on the three-year U.S. Treasury rate in effect as of the measurement date.

 

In the first quarter of 2006, Alliant Energy paid out $6.5 million in a combination of cash and stock related to the performance shares granted in 2003. No amounts were paid out related to performance shares during 2005.

 

Restricted Stock - Restricted stock issued under the EIP consists of time-based and performance-contingent restricted stock.

 

Time-based restricted stock - Restriction periods vary for each issuance of time-based restricted stock and currently range from two to five years. Nonvested shares of time-based restricted stock generally become vested upon retirement, except for certain shares that were awarded for retention purposes that are forfeited upon retirement. Compensation costs related to awards granted to retiree-eligible employees are generally expensed on the date of grant. Participants’ nonvested time-based restricted stock is forfeited when the participant voluntarily leaves Alliant Energy for reasons other than retirement. The fair value of time-based restricted stock is based on the average market price at the grant date. A summary of the time-based restricted stock activity for the three months ended March 31 is as follows:

10


 

 

2006

 

2005

 

 

 

Weighted

 

 

 

Weighted

 

 

 

Average

 

 

 

Average

 

Shares

 

Fair Value

 

Shares

 

Fair Value

Nonvested shares at Jan. 1

166,624

 

$27.11

 

77,285

 

$25.55

Granted

44,875

 

29.84

 

48,850

 

27.48

Vested

(15,413)

 

25.91

 

(3,868)

 

25.85

Forfeited

--

 

--

 

(500)

 

25.41

Nonvested shares at March 31

196,086

 

27.83

 

121,767

 

26.31

 

Performance-contingent restricted stock - Payouts of performance-contingent restricted stock grants are based on the achievement of certain performance targets (currently specified EPS growth). If performance targets are not met within the performance period, which currently ranges from two to four years, these restricted stock grants are forfeited. Nonvested shares of performance-contingent restricted stock are prorated at retirement based on time worked during the performance period and vest only if and when the performance criteria are met. Participants’ nonvested performance-contingent restricted stock is forfeited when the participant voluntarily leaves Alliant Energy for reasons other than retirement. The fair value of performance-contingent restricted stock is based on the average market price at the grant date. A summary of the performance-contingent restricted stock activity for the three months ended March 31 is as follows:

 

 

2006

 

2005

 

 

 

Weighted

 

 

 

Weighted

 

 

 

Average

 

 

 

Average

 

Shares

 

Fair Value

 

Shares

 

Fair Value

Nonvested shares at Jan. 1

70,489

 

$28.04

 

--

 

$--

Granted

79,074

 

28.19

 

74,723

 

28.04

Forfeited

--

 

--

 

(4,234)

 

28.04

Nonvested shares at March 31

149,563

 

28.12

 

70,489

 

28.04

 

Non-qualified Stock Options - Options granted to date under the plans were granted at the market price of the shares on the date of grant, vest over three years and expire no later than 10 years after the grant date. Options become fully vested upon retirement and remain exercisable at any time prior to their expiration date or for three years after the effective date of the retirement, whichever period is shorter. Options become fully vested upon death or disability and remain exercisable at any time prior to their expiration date or for one year after the effective date of the death or disability, whichever period is shorter. Participants’ options that are not vested become forfeited when participants leave Alliant Energy and their vested options expire after three months. No options have been granted since 2004. The fair value of stock options on the date of grant was based on the Black-Scholes pricing model. A summary of the stock option activity is as follows:

 

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

Average

 

Aggregate

 

 

 

Average

 

Remaining

 

Intrinsic

 

 

 

Exercise

 

Contractual

 

Value

 

Options

 

Price

 

Term

 

(in millions)

Outstanding at Jan. 1, 2006

3,663,813

 

$27.08

 

 

 

 

Options exercised

(342,949)

 

23.67

 

 

 

 

Options expired

(41,650)

 

30.75

 

 

 

 

Outstanding at March 31, 2006

3,279,214

 

27.39

 

5 years

 

$13.4

Exercisable at March 31, 2006

3,176,390

 

27.46

 

5 years

 

12.8

 

Alliant Energy had the following nonvested stock options as of March 31, 2006:

 

 

 

 

Weighted

 

 

 

Average

 

 

 

Exercise

 

Options

 

Price

Nonvested at Jan. 1, 2006

543,403

 

$21.60

Vested

(440,579)

 

20.76

Nonvested at March 31, 2006

102,824

 

25.21

11


 

Other information related to stock option activity for the three months ended March 31 was as follows (in millions):

 

 

2006

 

2005

Cash received from stock options exercised

$8.1

 

$2.2

Aggregate intrinsic value of stock options exercised

2.5

 

1.2

Income tax benefit from the exercise of stock options

1.0

 

0.5

Total fair value of stock options vested during period

1.3

 

3.9

 

Prior Year Pro Forma Expense - Prior to Jan. 1, 2006, Alliant Energy accounted for awards issued under its stock-based incentive compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees” (APB 25). Pursuant to APB 25, no stock-based compensation cost was reflected in net income in Alliant Energy’s Condensed Consolidated Statements of Income for stock options because all options granted under those plans had an exercise price equal to the market price of the underlying common stock on the date of grant. If Alliant Energy had applied the fair value recognition provisions of SFAS 123, “Accounting for Stock-Based Compensation,” to awards issued under these plans prior to the adoption of SFAS 123(R), the effect on net income and EPS for the three months ended March 31, 2005 would have been as follows (dollars in millions):

 

Net income, as reported

$2.4

Less: stock-based employee compensation income included in

 

reported net income, net of related tax effects

1.2

Add: stock-based employee compensation income determined under

 

the fair value-based method for all awards, net of related tax effects

1.1

Pro forma net income

$2.3

 

 

EPS (basic and diluted):

 

As reported and pro forma

$0.02

 

(6) DEBT

(a) Short-term Debt - Information regarding commercial paper at March 31, 2006 was as follows (dollars in millions; N/A = Not Applicable):

 

 

 

Parent

 

 

 

 

 

Consolidated

 

Company

 

IPL

 

WPL

Amount outstanding

$84

 

$--

 

$9

 

$75

Weighted average maturity

3 days

 

N/A

 

3 days

 

3 days

Discount rates

4.92-4.95%

 

N/A

 

4.95%

 

4.92%

Available capacity

$566 *

 

$100

 

$291

 

$175 *

*

In April 2006, WPL’s maximum short-term borrowing capacity authorized by the PSCW declined from $250 million to $195 million upon completion of the refinancing of its variable rate demand bonds.

 

(b) Long-term Debt - Resources completed the following debt retirements during the three months ended March 31, 2006 and 2005 and incurred pre-tax debt repayment premiums and charges for unamortized debt expenses related to these debt retirements that are recorded in “Loss on early extinguishment of debt” in Alliant Energy’s Condensed Consolidated Statements of Income as follows (dollars in millions):

 

 

 

 

 

 

Loss on Early

 

 

 

 

Principal

 

Extinguishment

Retirement Date

 

Debt Issuance

 

Retired

 

of Debt

March 2006

 

9.75% senior notes due 2013

 

$275

 

$80.2

January 2006

 

7% senior notes due 2011

 

83

 

10.6

 

 

 

 

$358

 

$90.8

 

 

 

 

 

 

 

February 2005

 

7.375% senior notes due 2009

 

$100

 

$16.0

 

In March 2006, WPL issued $39.1 million of unsecured variable rate pollution control revenue bonds due 2014 through 2015 and used the proceeds in April 2006 to retire its remaining $39.1 million of first mortgage bonds due 2014 through 2015. At March 31, 2006, the $39.1 million of proceeds were held with the trustee and therefore recorded in “Current assets - restricted cash” on Alliant Energy’s and WPL’s Condensed Consolidated Balance Sheets.

12


 

(7) INVESTMENTS

(a) Investments in Foreign Entities - The geographic concentration of Alliant Energy’s unconsolidated foreign investments was as follows (in millions):

 

New Zealand

 

Brazil

 

Total

March 31, 2006

$111.1

 

$--

 

$111.1

Dec. 31, 2005

116.4

 

72.2

 

188.6

 

Brazil - In January 2006, Alliant Energy completed the sale of all of its Brazil investments and received net proceeds of $150 million (after transaction costs), which it used for debt reduction at Resources. Upon completion of the sale, Alliant Energy removed from its Condensed Consolidated Balance Sheet the carrying amount of various assets and liabilities related to the sale, including $79 million of Brazil investments from “Investments in unconsolidated foreign entities,” $13 million of non-refundable deposits received by Alliant Energy as a result of an arbitration dispute from “Current liabilities - other” and $89 million of pre-tax foreign currency translation losses directly associated with its Brazil investments from “Accumulated other comprehensive loss.” At the date of the sale, the carrying value of these assets and liabilities exceeded the net proceeds by $4.8 million, resulting in a pre-tax loss on the sale recorded in “Interest income and other” in Alliant Energy’s Condensed Consolidated Statement of Income in the first quarter of 2006.

 

(b) Unconsolidated Equity Investments - Equity (income) loss from Alliant Energy’s unconsolidated investments accounted for under the equity method of accounting for the three months ended March 31 was as follows (in millions):

 

 

2006

 

2005

American Transmission Company LLC

($5.9)

 

($5.3)

Brazil

(3.4)

 

1.5

TrustPower Ltd.

(2.7)

 

(2.8)

Nth Power Technologies Fund II LP

(0.9)

 

0.2

Kaufman and Broad NexGen LLC (1)

--

 

4.7

Other

(0.7)

 

(0.6)

 

($13.6)

 

($2.3)

(1)

Investment in a synthetic fuel processing facility that was sold in the fourth quarter of 2005. The synthetic fuel project generated equity losses which were more than offset by tax credits and the tax benefit of the losses generated.

 

(8) DERIVATIVE FINANCIAL INSTRUMENTS

(a) Accounting for Derivative Instruments - Alliant Energy records derivative instruments at fair value on the balance sheet as assets or liabilities. For IPL and WPL, changes in the derivatives’ fair values are generally recorded with offsets to regulatory assets or liabilities. At March 31, 2006 and Dec. 31, 2005, current derivative assets were included in “Other current assets,” non-current derivative assets were included in “Deferred charges and other,” current derivative liabilities were included in “Other current liabilities” and non-current derivative liabilities were included in “Other long-term liabilities and deferred credits” on the Condensed Consolidated Balance Sheets as follows (in millions):

 

 

Alliant Energy

 

IPL

 

WPL

 

March 31,

 

Dec. 31,

 

March 31,

 

Dec. 31,

 

March 31,

 

Dec. 31,

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

Current derivative assets

$10.0

 

$20.6

 

$1.6

 

$7.8

 

$8.4

 

$12.7

Non-current derivative assets

1.8

 

9.7

 

0.2

 

4.2

 

0.2

 

4.4

Current derivative liabilities

42.4

 

24.2

 

20.5

 

5.2

 

21.9

 

19.0

Non-current derivative liabilities

12.2

 

3.0

 

6.0

 

1.5

 

6.2

 

1.5

 

IPL and WPL have entered into several purchase contracts to supply fixed-price natural gas for its natural gas-fired electric generating facilities. Significant decreases in natural gas prices during the first quarter of 2006 have changed the fair value of these contracts and resulted in decreases in derivative assets and increases in derivative liabilities. As a result of changes in the fair value of these contracts, the counterparties to these contracts have required IPL and WPL to provide $18 million and $6 million of cash collateral, respectively, which are recorded in “Other accounts receivable” on the respective Condensed Consolidated Balance Sheets.

13


 

(b) Weather Derivatives - In 2005, Corporate Services, as agent for IPL and WPL, and WPL on behalf of itself, entered into a combination of put options and swap agreements based on heating degree days (HDD) to reduce the impact of weather volatility on IPL’s and WPL’s margins for the period Nov. 1, 2005 to March 31, 2006. The actual HDD during this period were lower than those specified in the contracts resulting in Alliant Energy receiving $7.0 million ($3.8 million for IPL and $3.2 million for WPL) of payments from the counterparty, the majority of which was received in April 2006. In the first quarter of 2006, gains resulting from changes in the value of these weather derivatives were recorded as follows (in millions):

 

 

Alliant Energy

 

IPL

 

WPL

Allocated to gas utility operating revenues

$5.6

 

$2.7

 

$2.9

Allocated to electric utility operating revenues

2.8

 

1.8

 

1.0

 

$8.4

 

$4.5

 

$3.9

 

(9) COMMITMENTS AND CONTINGENCIES

(a) Purchase Obligations - Alliant Energy, through its subsidiaries Corporate Services, IPL and WPL, has entered into purchased power, coal, and natural gas supply, transportation and storage contracts for its utility business. As of March 31, 2006, minimum future commitments related to Alliant Energy’s utility business for purchased power (excluding operating leases), coal and natural gas were $2.2 billion, $373 million and $257 million, respectively. Refer to Note 12 for details on a long-term purchased power agreement entered into upon IPL’s sale of its interest in DAEC in January 2006, the amount of which is included in the purchased power commitments.

 

(b) Guarantees and Indemnifications - Alliant Energy provided indemnifications associated with various sales of its non-regulated and utility businesses/assets for losses resulting from potential breach of the representations and warranties made by Alliant Energy on the sale dates and for the breach of its obligations under the sale agreements. Alliant Energy believes the likelihood of having to make any material cash payments under these indemnifications is remote. Alliant Energy has not recorded any material liabilities related to the indemnifications as of March 31, 2006. The terms of the indemnifications provided by Alliant Energy at March 31, 2006 for the various sales were as follows (in millions):

 

Businesses/Assets Sold

 

Disposal Date

 

Maximum Limit

 

Expiration Date

Australia

 

Second quarter of 2003

 

$61 (a)

 

October 2007

Energy services

 

Second quarter of 2005

 

18

 

October 2006

Kewaunee Nuclear Power Plant (Kewaunee)

 

Third quarter of 2005

 

12 (b)

 

July 2006

Oil pipeline system

 

Fourth quarter of 2005

 

None identified

 

None identified

Synfuel

 

Fourth quarter of 2005

 

12 (c)

 

None identified

China

 

First quarter of 2006

 

37 (d)

 

February 2009

DAEC

 

First quarter of 2006

 

30 (e)

 

January 2009

Brazil

 

First quarter of 2006

 

10

 

January 2011

Other

 

Various

 

3

 

Various

  (a)

Based on exchange rates at March 31, 2006

  (b)

Indemnification provided by WPL

  (c)

Amount will increase in future periods based on additional tax credits earned by buyer

  (d)

Related to three generating facilities sold in February 2006

  (e)

Indemnification provided by IPL

 

(10) SEGMENTS OF BUSINESS

Certain financial information relating to Alliant Energy’s business segments is as follows (Int’l = International). Intersegment revenues were not material to Alliant Energy’s operations. At Dec. 31, 2005, IPL had $459 million of assets included within the DAEC sale agreement which were removed from total assets of the “Utility Business - Electric” segment upon the sale of IPL’s interest in DAEC in January 2006. Refer to Notes 1(b), 3, 5(a) and 12 for further discussion of the DAEC sale.

 

 

 

 

 

 

 

Alliant

 

Utility Business

 

Non-regulated Businesses

 

 

 

Energy

 

Electric

Gas

Other

Total

 

Int’l

Other

Total

 

Other

 

Consolidated

 

(in millions)

Three Months Ended March 31, 2006

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

$583.0

$290.1

$21.4

$894.5

 

$--

$37.9

$37.9

 

($1.5)

 

$930.9

Operating income (loss)

83.3

35.4

0.3

119.0

 

(2.5)

3.3

0.8

 

--

 

119.8

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

 

65.0

 

2.8

(55.8)

(53.0)

 

1.1

 

13.1

Income (loss) from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

operations, net of tax

 

 

 

--

 

1.2

(15.9)

(14.7)

 

--

 

(14.7)

Net income (loss)

 

 

 

65.0

 

4.0

(71.7)

(67.7)

 

1.1

 

(1.6)

14


 

 

 

 

 

 

 

 

Alliant

 

Utility Business

 

Non-regulated Businesses

 

 

 

Energy

 

Electric

Gas

Other

Total

 

Int’l

Other

Total

 

Other

 

Consolidated

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

$498.8

$245.3

$19.3

$763.4

 

$--

$37.3

$37.3

 

($1.9)

 

$798.8

Operating income (loss)

68.6

25.9

(1.1)

93.4

 

(3.0)

(2.9)

(5.9)

 

(0.1)

 

87.4

Income (loss) from continuing

 

 

 

 

 

 

 

 

 

 

 

 

operations

 

 

 

41.8

 

(6.4)

(10.6)

(17.0)

 

1.9

 

26.7

Loss from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

operations, net of tax

 

 

 

--

 

(13.6)

(10.7)

(24.3)

 

--

 

(24.3)

Net income (loss)

 

 

 

41.8

 

(20.0)

(21.3)

(41.3)

 

1.9

 

2.4

 

(11) DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

Alliant Energy has completed the disposal, or is currently pursuing the disposal, of numerous non-regulated and utility businesses and other assets in order to strengthen its financial profile and narrow its strategic focus and risk profile. At or before March 31, 2006, the following businesses qualified as assets held for sale as defined by SFAS 144:

 

Business/Asset

 

Disposal Date

 

Segment

Non-regulated businesses:

 

 

 

 

Energy services (Cogenex Corp. and affiliates)

 

Second quarter of 2005

 

Non-regulated - Other

Biomass facility

 

Second quarter of 2005

 

Non-regulated - Other

Oil gathering pipeline system

 

Fourth quarter of 2005

 

Non-regulated - Other

Gas gathering pipeline systems

 

Second quarter of 2006

 

Non-regulated - Other

China

 

Expected to be completed

 

Non-regulated - International

 

 

by June 2006 (a)

 

 

Mexico

 

Expected by Sep. 2006

 

Non-regulated - Other

Utility businesses/assets:

 

 

 

 

WPL’s water utility in Ripon, Wisconsin

 

Third quarter of 2005

 

Utility - Other

WPL’s interest in Kewaunee

 

Third quarter of 2005

 

Utility - Electric

IPL’s interest in DAEC (Note 12)

 

First quarter of 2006

 

Utility - Electric

WPL’s water utility in South Beloit, Illinois

 

Expected in 2006

 

Utility - Other

WPL’s electric and gas utility assets in Illinois

 

Expected in 2006

 

Utility - Electric and Gas

IPL’s electric and gas utility assets in Illinois

 

Expected in 2006

 

Utility - Electric and Gas

(a)

Three of 10 generating facilities were sold in 2005. Three additional generating facilities were sold in February 2006. One additional generating facility was sold in April 2006.

 

Certain assets and liabilities of the businesses/assets listed in the above table have been classified as held for sale on Alliant Energy’s Condensed Consolidated Balance Sheets at March 31, 2006 and Dec. 31, 2005. The operating results of the non-regulated businesses listed in the above table have been separately classified and reported as discontinued operations in Alliant Energy’s Condensed Consolidated Statements of Income. The operating results of the utility businesses/assets listed in the above table have not been reported as discontinued operations.

 

A summary of the components of discontinued operations in Alliant Energy’s Condensed Consolidated Statements of Income for the three months ended March 31 was as follows (in millions):

 

2006

 

2005

Operating revenues

$30.0

 

$44.6

Operating expenses:

 

 

 

Operating expenses (excluding valuation adjustments) (a)

26.2

 

51.9

Valuation charges - Mexico business (b)

26.0

 

--

Valuation charges (reversals) - China business (c)

(0.7)

 

11.6

Other valuation charges (d)

0.2

 

6.8

Interest expense and other:

 

 

 

Interest expense (e)

4.1

 

7.2

Interest income and other

(0.1)

 

(0.2)

Loss before income taxes

(25.7)

 

(32.7)

Income tax benefit (f)

(11.0)

 

(8.4)

Loss from discontinued operations, net of tax

($14.7)

 

($24.3)

15


 

(a)

In the first quarter of 2005, Alliant Energy recorded a $4.1 million pre-tax charge to operating expenses related to a guarantee outstanding to support a third-party financing arrangement related to its biomass facility.

(b)

In the first quarter of 2006, Alliant Energy recorded a pre-tax, non-cash valuation charge of $26.0 million as a result of declines in the fair value of its Mexico business. The fair value was estimated using updated market information from bid information recently received from several potential buyers for the Mexico business.

(c)

In the first quarter of 2005, Alliant Energy recorded a pre-tax, non-cash valuation charge of $11.6 million, net of allocation to minority interest, as a result of declines in the fair value of several of its China generating facilities due to the impacts of increased coal and transportation costs. The fair values were estimated using a combination of expected discounted future cash flows and market value indicators.

(d)

In the first quarter of 2005, Alliant Energy recorded pre-tax valuation charges of $6.8 million (energy services business-$5.4 million and biomass facility-$1.4 million) to reflect updated estimates of the market value, less selling costs, of assets classified as held for sale.

(e)

In accordance with Emerging Issues Task Force Issue 87-24, “Allocation of Interest to Discontinued Operations,” Alliant Energy has allocated interest expense to its China and Mexico businesses based on the amount of debt incurred by Resources that was specifically attributable to the operations and capital requirements of these respective businesses. In the first quarter of 2006 and 2005, the amount of interest expense allocated to its China business was $1.7 million and $3.2 million, respectively. In the first quarter of 2006 and 2005, the amount of interest expense allocated to its Mexico business was $1.5 million and $1.3 million, respectively.

(f)

The provision for income taxes for the three months ended March 31, 2005 was lower than the federal statutory rate of 35% primarily due to the impact of foreign results and associated taxes, including no significant tax benefits recorded in the first quarter of 2005 on the valuation charges related to its China generating facilities.

 

A summary of the components of assets and liabilities held for sale on Alliant Energy’s Condensed Consolidated Balance Sheets was as follows (in millions):

 

March 31, 2006

 

Dec. 31, 2005

Assets held for sale:

 

 

 

Property, plant and equipment, net

$155.5

 

$486.1

Current assets (including cash)

31.4

 

84.4

Investments

5.7

 

194.7

Other assets

15.1

 

37.4

   Total assets held for sale

207.7

 

802.6

Liabilities held for sale:

 

 

 

Current liabilities (includes current portion of long-term debt)

36.8

 

58.4

Long-term debt

5.4

 

12.3

Asset retirement obligations (AROs)

--

 

179.0

Other long-term liabilities and deferred credits

7.1

 

52.6

Minority interest

14.0

 

25.9

   Total liabilities held for sale

63.3

 

328.2

       Net assets held for sale

$144.4

 

$474.4

 

A summary of the components of cash flows for discontinued operations for the three months ended March 31 was as follows (in millions):

 

2006

 

2005

Cash flows from (used for) operating activities

($6.3)

 

$13.1

 

 

 

 

Cash flows used for investing activities

(2.6)

 

(0.9)

 

 

 

 

Cash flows from (used for) financing activities (excluding intercompany cash flows)

1.1

 

(7.0)

Net change in loans with continuing operations

2.7

 

2.6

Net cash flows from (used for) financing activities

3.8

 

(4.4)

 

 

 

 

Net increase (decrease) in cash and temporary cash investments

(5.1)

 

7.8

Cash and temporary cash investments held for sale at beginning of period

10.7

 

62.2

Cash and temporary cash investments held for sale at end of period

$5.6

 

$70.0

 

 

 

 

Supplemental cash flows information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$0.6

 

$0.8

Income taxes, net of refunds

$0.3

 

$0.3

16


 

(12) SALE OF IPL’S INTEREST IN DAEC

In January 2006, IPL completed the sale of its 70% ownership interest in DAEC to FPL Energy. Under the sales agreement, FPL Energy purchased IPL’s interest in the nuclear generating facility and related inventories (nuclear fuel and material and supplies) and assumed various liabilities of IPL in exchange for net proceeds to IPL of $331 million. Such proceeds were net of purchase price adjustments, cash payments made at closing to FPL Energy and certain transaction-related costs. IPL used $130 million of the net proceeds to reduce its short-term debt, $125 million to reduce its level of accounts receivable sold and the remainder for investments in short-term securities and general corporate purposes. In January 2006, IPL retired its capital lease obligation, including interest through the closing date, covering its 70% undivided interest in nuclear fuel for DAEC for $40 million. In March 2006, IPL used the investments in short-term securities, along with other funds, to pay a dividend of $110 million to Alliant Energy pursuant to the IUB order approving the DAEC sale.

 

The cash payments made by IPL to FPL Energy at closing were in connection with FPL Energy’s assumption of decommissioning, employee benefit and certain other liabilities related to DAEC. The sales proceeds and related cash payments are subject to various post-closing adjustments, which have been estimated and included in IPL’s financial statements as of March 31, 2006. The post-closing adjustments are anticipated to be settled in the second quarter of 2006. In addition to the proceeds received by IPL, other Alliant Energy subsidiaries received $7 million in proceeds from FPL Energy related to other property purchased by FPL Energy and reimbursement for Alliant Energy’s forfeiture of its membership interest in the Nuclear Management Company upon the sale of DAEC.

 

IPL previously established two decommissioning funds to cover the eventual decommissioning of DAEC. Upon closing of the sale, FPL Energy assumed responsibility for the eventual decommissioning of the facility and received the equivalent of $203 million of nuclear decommissioning trust assets, which included the qualified and non-qualified decommissioning trust fund assets of IPL valued at $188 million at the closing date, and a cash payment. On the closing date, the value of the decommissioning funds and the cash payments made exceeded the $203 million in decommissioning trust assets required to be transferred to FPL Energy by $8 million. The $8 million of excess decommissioning trust assets were retained by IPL and were included as a component of the regulatory liability related to the sale as discussed below.

 

Pursuant to the IUB order approving the sale, the gain resulting from IPL’s portion of the sale served as the basis to establish a regulatory liability of approximately $64 million. Refer to Notes 1(b), 3 and 5(a) for additional discussion.

 

As of the closing date, IPL’s share of the carrying value of the assets and liabilities sold was as follows (in millions):

 

Assets:

 

 

Liabilities:

 

Investments

$188

 

AROs

$180

Property, plant and equipment, net *

242

 

Regulatory liabilities

48

Other

29

 

 

$228

 

$459

 

 

 

* Includes nuclear fuel, net of amortization

 

IPL’s assets and liabilities related to the DAEC sale agreement had been classified as held for sale on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets as of Dec. 31, 2005.

 

Upon closing of the sale, IPL entered into a long-term purchased power agreement with FPL Energy to buy energy and capacity from DAEC. The purchased power agreement extends through February 2014, concurrent with expiration of DAEC’s current operating license. As of March 31, 2006, IPL’s future minimum payments, assuming a 90% capacity factor, related to this agreement are estimated at $112 million from April through December 2006, $156 million for 2007, $157 million for 2008, $167 million for 2009, $171 million for 2010 and $595 million for 2011 through 2014.

17


 

(13) ASSET RETIREMENT OBLIGATIONS

Pursuant to SFAS 143, “Accounting for Asset Retirement Obligations,” (SFAS 143) and Financial Accounting Standards Board Interpretation No. (FIN) 47, “Accounting for Conditional Asset Retirement Obligations - an interpretation of SFAS 143,” a reconciliation of the changes in AROs associated with long-lived assets is as follows (in millions):

 

 

Alliant Energy

 

IPL

 

WPL

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

Balance at Jan. 1

$35.8

 

$0.9

 

$24.9

 

$--

 

$10.9

 

$0.9

Liabilities incurred

1.1

 

--

 

1.1

 

--

 

--

 

--

Accretion expense

0.4

 

0.1

 

0.3

 

--

 

0.1

 

0.1

Liabilities settled

(0.4)

 

--

 

--

 

--

 

(0.4)

 

--

Balance at March 31

$36.9

 

$1.0

 

$26.3

 

$--

 

$10.6

 

$1.0

 

Refer to Note 12 for AROs included in liabilities held for sale relating to the sale of IPL’s interest in DAEC.

 

(14) VARIABLE INTEREST ENTITIES

After making an ongoing exhaustive effort, Alliant Energy concluded it was unable to obtain the information necessary from the counterparties (subsidiaries of Calpine Corporation (Calpine)) to the Riverside and RockGen purchased power agreements to determine whether the counterparties are variable interest entities per FIN 46R, “Consolidation of Variable Interest Entities,” and if Alliant Energy is the primary beneficiary. These agreements are currently accounted for as operating leases. The counterparties sell some or all of their generating capacity to WPL and can sell their energy output to WPL. Alliant Energy’s maximum exposure to loss from these agreements is undeterminable due to the inability to obtain the necessary information to complete such evaluation. For the three months ended March 31, 2006 and 2005, Alliant Energy’s (primarily WPL’s) costs, excluding fuel costs, related to the Riverside agreement were $7.5 million and $7.9 million, respectively. For the three months ended March 31, 2006 and 2005, WPL’s costs, excluding fuel costs, related to the RockGen agreement were $3.8 million and $7.1 million, respectively.

 

(15) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Alliant Energy has fully and unconditionally guaranteed the payment of principal and interest on the exchangeable senior notes 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. The “Other Alliant Energy Subsidiaries” column includes amounts for IPL, WPL and Corporate Services. Alliant Energy’s condensed consolidating financial statements are as follows:

18


 

Alliant Energy Corporation Condensed Consolidating Statements of Income (Unaudited)

  Alliant Energy   Other Alliant   Consolidated
  Parent   Energy Consolidating Alliant
  Company Resources Subsidiaries Adjustments Energy
 
Three Months Ended March 31, 2006 (in millions)
Operating revenues:            
  Utility: 
    Electric  $-   $-   $583 .0 $-   $583 .0
    Gas  -   -   290 .1 -   290 .1
    Other  -   -   21 .4 -   21 .4
  Non-regulated  -   37 .9 73 .5 (75 .0) 36 .4
 
   -   37 .9 968 .0 (75 .0) 930 .9
 
Operating expenses:  
  Utility: 
    Electric production fuel and purchased power  -   -   312 .2 -   312 .2
    Cost of gas sold  -   -   216 .3 -   216 .3
    Other operation and maintenance  -   -   156 .7 -   156 .7
  Non-regulated operation and maintenance  0 .7 32 .9 65 .6 (67 .1) 32 .1
  Depreciation and amortization  -   2 .6 70 .5 (6 .1) 67 .0
  Taxes other than income taxes  -   1 .6 26 .7 (1 .5) 26 .8
 
   0 .7 37 .1 848 .0 (74 .7) 811 .1
 
Operating income (loss)   (0 .7) 0 .8 120 .0 (0 .3) 119 .8
 
Interest expense and other:  
  Interest expense  0 .1 14 .3 30 .5 (5 .2) 39 .7
  Loss on early extinguishment of debt  -   90 .8 -   -   90 .8
  Equity income from unconsolidated investments  -   (7 .2) (6 .4) -   (13 .6)
  Allowance for funds used during construction  -   -   (2 .3) -   (2 .3)
  Preferred dividend requirements of subsidiaries  -   -   4 .7 -   4 .7
  Interest income and other  0 .1 (14 .4) (1 .1) 2 .0 (13 .4)
 
   0 .2 83 .5 25 .4 (3 .2) 105 .9
 
Income (loss) from continuing operations before income taxes   (0 .9) (82 .7) 94 .6 2 .9 13 .9
 
Income tax expense (benefit)   0 .9 (29 .7) 29 .6 -   0 .8
 
Income (loss) from continuing operations   (1 .8) (53 .0) 65 .0 2 .9 13 .1
 
Loss from discontinued operations, net of tax   -   (14 .7) -   -   (14 .7)
 
Net income (loss)   ($1 .8) ($67 .7) $65 .0 $2 .9 ($1 .6)
 
Three Months Ended March 31, 2005  
Operating revenues:  
  Utility: 
    Electric  $-   $-   $498 .8 $-   $498 .8
    Gas  -   -   245 .3 -   245 .3
    Other  -   -   19 .3 -   19 .3
  Non-regulated  -   37 .3 71 .1 (73 .0) 35 .4
 
   -   37 .3 834 .5 (73 .0) 798 .8
 
Operating expenses:  
  Utility: 
    Electric production fuel and purchased power  -   -   209 .3 -   209 .3
    Cost of gas sold  -   -   179 .1 -   179 .1
    Other operation and maintenance  -   -   181 .2 -   181 .2
  Non-regulated operation and maintenance  0 .1 37 .1 63 .5 (65 .4) 35 .3
  Depreciation and amortization  -   4 .4 81 .0 (5 .3) 80 .1
  Taxes other than income taxes  -   1 .7 26 .6 (1 .9) 26 .4
 
   0 .1 43 .2 740 .7 (72 .6) 711 .4
 
Operating income (loss)   (0 .1) (5 .9) 93 .8 (0 .4) 87 .4
 
Interest expense and other:  
  Interest expense  0 .1 17 .9 27 .2 (1 .2) 44 .0
  Loss on early extinguishment of debt  -   16 .0 -   -   16 .0
  Equity (income) loss from unconsolidated investments  -   3 .7 (6 .0) -   (2 .3)
  Allowance for funds used during construction  -   -   (2 .6) -   (2 .6)
  Preferred dividend requirements of subsidiaries  -   -   4 .7 -   4 .7
  Interest income and other  (1 .2) (7 .8) (0 .8) 1 .1 (8 .7)
 
   (1 .1) 29 .8 22 .5 (0 .1) 51 .1
 
Income (loss) from continuing operations before income taxes   1 .0 (35 .7) 71 .3 (0 .3) 36 .3
 
Income tax expense (benefit)   (1 .4) (18 .7) 29 .5 0 .2 9 .6
 
Income (loss) from continuing operations   2 .4 (17 .0) 41 .8 (0 .5) 26 .7
 
Loss from discontinued operations, net of tax   -   (24 .3) -   -   (24 .3)
 
Net income (loss)   $2 .4 ($41 .3) $41 .8 ($0 .5) $2 .4
 

19


Alliant Energy Corporation Condensed Consolidating Balance Sheet as of March 31, 2006 (Unaudited)

  Alliant Energy     Consolidated
  Parent   Alliant Energy Consolidating Alliant
  Company Resources Subsidiaries Adjustments Energy
 
ASSETS (in millions)
Property, plant and equipment:            
  Utility: 
      Electric plant in service  $-   $-   $5,925 .6 $-   $5,925 .6
      Gas plant in service  --   --   683 .7 --   683 .7
      Other plant in service  --   --   506 .3 --   506 .3
      Accumulated depreciation  --   --   (2,789 .4) --   (2,789 .4)
      Leased Sheboygan Falls Energy Facility, net  --   --   118 .6 (118 .6) --  
      Other, net  --   --   140 .3 --   140 .3
 
          Total utility  --   --   4,585 .1 (118 .6) 4,466 .5
 
  Non-regulated and other, net  --   200 .4 51 .0 136 .9 388 .3
 
   --   200 .4 4,636 .1 18 .3 4,854 .8
 
Current assets:  
  Cash and temporary cash investments  36 .5 13 .2 0 .8 --   50 .5
  Restricted cash  --   9 .3 41 .0 --   50 .3
  Gas stored underground, at average cost  --   --   34 .3 --   34 .3
  Deferred income taxes  --   155 .8 12 .5 (7 .9) 160 .4
  Assets held for sale  --   150 .9 56 .8 --   207 .7
  Other  307 .8 55 .6 683 .1 (423 .5) 623 .0
 
   344 .3 384 .8 828 .5 (431 .4) 1,126 .2
 
Investments:  
  Consolidated subsidiaries  2,125 .4 --   --   (2,125 .4) --  
  Investments in unconsolidated foreign entities  --   111 .1 --   --   111 .1
  Other  14 .3 11 .9 217 .3 --   243 .5
 
   2,139 .7 123 .0 217 .3 (2,125 .4) 354 .6
 
Other assets   3 .2 183 .9 592 .5 (173 .2) 606 .4
 
Total assets   $2,487 .2 $892 .1 $6,274 .4 ($2,711 .7) $6,942 .0
 
CAPITALIZATION AND LIABILITIES  
Capitalization:  
  Common stock and additional paid-in capital  $1,800 .8 $257 .4 $1,375 .4 ($1,632 .8) $1,800 .8
  Retained earnings  706 .4 (285 .4) 797 .5 (511 .5) 707 .0
  Accumulated other comprehensive loss (income)  (19 .4) 18 .3 (37 .7) 19 .4 (19 .4)
  Shares in deferred compensation trust  (7 .6) --   --   --   (7 .6)
 
       Total common equity  2,480 .2 (9 .7) 2,135 .2 (2,124 .9) 2,480 .8
 
  Cumulative preferred stock of subsidiaries, net  --   --   243 .8 --   243 .8
  Long-term debt, net (excluding current portion)  --   292 .1 1,346 .8 --   1,638 .9
 
   2,480 .2 282 .4 3,725 .8 (2,124 .9) 4,363 .5
 
Current liabilities:  
  Current maturities  --   9 .0 85 .0 --   94 .0
  Commercial paper  --   --   84 .0 --   84 .0
  Capital lease obligations  --   0 .1 0 .2 --   0 .3
  Accounts payable  0 .6 13 .9 332 .3 (105 .0) 241 .8
  Accrued interest  --   8 .3 23 .2 --   31 .5
  Accrued taxes  (0 .3) 40 .6 139 .3 (21 .1) 158 .5
  Liabilities held for sale  --   55 .8 7 .5 --   63 .3
  Other  3 .9 321 .5 275 .9 (306 .3) 295 .0
 
   4 .2 449 .2 947 .4 (432 .4) 968 .4
 
Other long-term liabilities and deferred credits:  
  Pension and other benefit obligations  4 .4 5 .0 157 .3 --   166 .7
  Other  (1 .6) 150 .7 1,443 .9 (154 .4) 1,438 .6
 
   2 .8 155 .7 1,601 .2 (154 .4) 1,605 .3
 
Minority interest   --   4 .8 --   --   4 .8
 
Total capitalization and liabilities   $2,487 .2 $892 .1 $6,274 .4 ($2,711 .7) $6,942 .0
 

20


Alliant Energy Corporation Condensed Consolidating Balance Sheet as of December 31, 2005 (Unaudited)

  Alliant Energy   Other   Consolidated
  Parent   Alliant Energy Consolidating Alliant
  Company Resources Subsidiaries Adjustments Energy
 
ASSETS (in millions)
Property, plant and equipment:            
  Utility: 
      Electric plant in service  $-   $-   $5,887 .3 $-   $5,887 .3
      Gas plant in service  --   --   679 .9 --   679 .9
      Other plant in service  --   --   508 .5 --   508 .5
      Accumulated depreciation  --   --   (2,741 .7) --   (2,741 .7)
      Leased Sheboygan Falls Energy Facility, net  --   --   120 .2 (120 .2) --  
      Other, net  --   --   137 .5 --   137 .5
 
          Total utility  --   --   4,591 .7 (120 .2) 4,471 .5
 
  Non-regulated and other, net  --   203 .1 53 .6 138 .0 394 .7
 
   --   203 .1 4,645 .3 17 .8 4,866 .2
 
Current assets:  
  Cash and temporary cash investments  160 .4 12 .6 32 .3 --   205 .3
  Restricted cash  --   17 .5 1 .9 --   19 .4
  Gas stored underground, at average cost  --   --   92 .1 --   92 .1
  Deferred income taxes  --   1 .9 10 .6 (0 .3) 12 .2
  Assets held for sale  --   286 .9 515 .7 --   802 .6
  Other  47 .5 47 .7 686 .7 (130 .1) 651 .8
 
   207 .9 366 .6 1,339 .3 (130 .4) 1,783 .4
 
Investments:  
  Consolidated subsidiaries  2,221 .2 --   --   (2,221 .2) --  
  Investments in unconsolidated foreign entities  --   188 .6 --   --   188 .6
  Other  14 .1 11 .3 216 .1 --   241 .5
 
   2,235 .3 199 .9 216 .1 (2,221 .2) 430 .1
 
Other assets   7 .7 188 .5 667 .8 (210 .6) 653 .4
 
Total assets   $2,450 .9 $958 .1 $6,868 .5 ($2,544 .4) $7,733 .1
 
CAPITALIZATION AND LIABILITIES  
Capitalization:  
  Common stock and additional paid-in capital  $1,789 .9 $255 .3 $1,375 .2 ($1,630 .5) $1,789 .9
  Retained earnings  741 .9 (217 .7) 893 .1 (675 .0) 742 .3
  Accumulated other comprehensive loss  (84 .6) (33 .9) (50 .7) 84 .6 (84 .6)
  Shares in deferred compensation trust  (7 .1) --   --   --   (7 .1)
 
       Total common equity  2,440 .1 3 .7 2,217 .6 (2,220 .9) 2,440 .5
 
  Cumulative preferred stock of subsidiaries, net  --   --   243 .8 --   243 .8
  Long-term debt, net (excluding current portion)  --   582 .2 1,332 .6 --   1,914 .8
 
   2,440 .1 585 .9 3,794 .0 (2,220 .9) 4,599 .1
 
Current liabilities:  
  Current maturities  --   91 .7 60 .0 --   151 .7
  Commercial paper  --   --   263 .0 --   263 .0
  Capital lease obligations  --   0 .1 40 .4 --   40 .5
  Accounts payable  1 .2 24 .3 384 .1 (54 .3) 355 .3
  Accrued interest  --   22 .8 24 .6 --   47 .4
  Accrued taxes  1 .8 70 .4 79 .6 (36 .7) 115 .1
  Liabilities held for sale  --   93 .7 234 .5 --   328 .2
  Other  6 .6 73 .6 239 .0 (40 .1) 279 .1
 
   9 .6 376 .6 1,325 .2 (131 .1) 1,580 .3
 
Other long-term liabilities and deferred credits:  
  Pension and other benefit obligations  2 .6 4 .6 268 .1 (18 .6) 256 .7
  Other  (1 .4) (13 .5) 1,481 .2 (173 .8) 1,292 .5
 
   1 .2 (8 .9) 1,749 .3 (192 .4) 1,549 .2
 
Minority interest   --   4 .5 --   --   4 .5
 
Total capitalization and liabilities   $2,450 .9 $958 .1 $6,868 .5 ($2,544 .4) $7,733 .1
 

21


Alliant Energy Corporation Condensed Consolidating Statements of Cash Flows (Unaudited)

  Alliant Energy   Other Alliant   Consolidated
  Parent   Energy Consolidating Alliant
  Company Resources Subsidiaries Adjustments Energy
 
Three Months Ended March 31, 2006 (in millions)
Continuing Operations:                      
 Net cash flows from (used for) operating activities   $5 .5 ($50 .1) $111 .0 ($9 .7) $56 .7
 
 Cash flows from investing activities:  
     Construction and acquisition expenditures: 
        Utility business  --   --   (74 .8) --   (74 .8)
        Non-regulated businesses and other  --   (1 .5) (2 .8) --   (4 .3)
     Changes in restricted cash  --   8 .1 (39 .0) --   (30 .9)
     Proceeds from asset sales  --   230 .6 334 .2 --   564 .8
     Purchases of securities within nuclear decommissioning trusts  --   --   (3 .5) --   (3 .5)
     Sales of securities within nuclear decommissioning trusts  --   --   51 .7 --   51 .7
     Changes in restricted cash within nuclear decommissioning trusts  --   --   (42 .5) --   (42 .5)
     Other  154 .1 0 .3 (19 .2) (153 .7) (18 .5)
 
        Net cash flows from investing activities  154 .1 237 .5 204 .1 (153 .7) 442 .0
 
 Cash flows used for financing activities:  
     Common stock dividends  (33 .7) --   (160 .6) 160 .6 (33 .7)
     Proceeds from issuance of long-term debt  --   --   39 .1 --   39 .1
     Reductions in long-term debt  --   (359 .9) --   --   (359 .9)
     Net change in short-term borrowings  (258 .5) 258 .5 (179 .0) --   (179 .0)
     Debt repayment premiums  --   (83 .0) --   --   (83 .0)
     Principal payments under capital lease obligations  --   --   (40 .6) 0 .4 (40 .2)
     Other  8 .7 (2 .4) (5 .5) 2 .4 3 .2
 
        Net cash flows used for financing activities  (283 .5) (186 .8) (346 .6) 163 .4 (653 .5)
 
 Net increase (decrease) in cash and temporary cash investments   (123 .9) 0 .6 (31 .5) --   (154 .8)
 Cash and temporary cash investments at beginning of period   160 .4 12 .6 32 .3 --   205 .3
 
 Cash and temporary cash investments at end of period   $36 .5 $13 .2 $0 .8 $-   $50 .5
 
Disconti