Alliant Energy Announces Second Quarter 2008 Results

MADISON, Wis., Aug. 6 /PRNewswire-FirstCall/ — Alliant Energy Corp. (NYSE:LNT) today announced net income and earnings per share (EPS) for the second quarter of 2008 of $60.8 million and $0.55, respectively, compared to $48.6 million and $0.43 for the same period in 2007. A summary of Alliant Energy’s second quarter earnings is as follows (net income in millions):


2008 2007
Earnings from continuing operations: Net Income EPS Net Income EPS
Utility $36.2 $0.33 $40.3 $0.36
Non-regulated 12.6 0.11 3.2 0.03
Parent (primarily interest income) 3.0 0.03 1.5 0.01
Total earnings from continuing operations 51.8 0.47 45.0 0.40
Income from discontinued operations 9.0 0.08 3.6 0.03
Net income $60.8 $0.55 $48.6 $0.43

EPS for Alliant Energy’s utility business contained two significant events that are non-recurring in nature in the second quarter of 2008 as compared to the same period in 2007. Severe Midwest flooding in June 2008 decreased earnings $0.07 per share while income tax benefits recognized from a U.S. federal income tax audit settlement, also in June 2008, increased earnings $0.07 per share. The other key drivers that reduced utility earnings include the negative factors of higher transmission-related costs at Interstate Power and Light Co. (IPL) and cooler weather on its electric margins. These items were partially offset by the annual adjustments to electric unbilled revenue estimates.

EPS for Alliant Energy’s non-regulated businesses were higher in the second quarter of 2008 as compared to the same period in 2007 primarily due to $0.04 of income tax benefits recognized from a U.S. federal income tax audit settlement in the second quarter of 2008 and $0.02 of increased earnings from the RMT WindConnect(R) business. EPS for the parent company was higher due to interest income earned on short-term investments purchased with a portion of the IPL electric transmission asset sale proceeds, which were distributed to the parent company in the fourth quarter of 2007.

“While our second quarter results contained some unusual impacts such as a settlement with the Internal Revenue Service on a U.S. federal income tax audit and the June flooding in our service territory , the utility and non- regulated operations continue to deliver positive results,” said Bill Harvey, Alliant Energy Chairman, President, and CEO. “During the second quarter, we also signed the largest contract in our company’s history, securing 500 megawatts of wind turbine generators from Vestas-American Wind Technology, Inc. Along with our proposed hybrid baseload coal units and energy efficiency programs, we expect wind to play an integral part of a plan to meet our customers’ future energy needs in a manner that balances reliability, economics, and the environment.”

Additional details regarding Alliant Energy’s second quarter EPS from continuing operations for 2008 and 2007 are as follows:

2008 2007 Variance
Utility operations:
Electric margins:
Annual unbilled revenue estimate adjustments $0.02 ($0.03) $0.05
Electric service disruptions due to severe
Midwest flooding in Q2 2008 (0.03) — (0.03)
Net impact of weather and weather hedges (0.02) 0.01 (0.03)
Lower purchased power capacity costs 0.03
at Wisconsin Power and Light Co (WPL)
Lower industrial sales at WPL (0.02)
Retail fuel-related impacts at WPL 0.06 0.05 0.01
Other (includes lower wheeling revenues due
to IPL’s transmission assets sale) (0.02)
Gas margins 0.01
Steam margins (primarily service disruption
from Midwest flooding in Q2 2008) (0.01)
Operating expenses:
Net impact from IPL’s electric transmission
assets sale (0.04)
Midwest flooding costs in Q2 2008, net of
estimated insurance recoveries (0.03) — (0.03)
Planned outage costs at M.L. Kapp Plant in
Q2 2008 (0.02)
Other (includes higher employee healthcare
costs) (0.02)
Changes in effective income tax rate:
U.S. federal income tax audit settlement in
Q2 2008 0.07 — 0.07
Other 0.01
Accretive effect of fewer shares outstanding 0.01
Total utility operations 0.33 0.36 (0.03)

Non-regulated operations:
U.S. federal income tax audit settlement in
Q2 2008 0.04 — 0.04
RMT and WindConnect(R) 0.03 0.01 0.02
Non-regulated Generation 0.03 0.02 0.01
Transportation 0.01 0.02 (0.01)
Other (primarily interest and taxes) — (0.02) 0.02
Total non-regulated operations 0.11 0.03 0.08

Parent company (primarily interest income) 0.03 0.01 0.02

Earnings per share from continuing operations $0.47 $0.40 $0.07

The following comments are offered to further explain three of the larger drivers of earnings performance during the second quarter of 2008.

U.S. Federal Income Tax Audit Settlement: In June 2008, Alliant Energy recorded the impacts of its finalized U.S. federal income tax audit for calendar years 2002 through 2004 and recorded known adjustments for the tax returns for calendar years 2005 and 2006. As a result, the company recognized benefits primarily related to additional research and development expenditures claimed through the audit as well as reduced interest costs. Alliant Energy’s utility business and non-regulated businesses recorded benefits in continuing operations of $0.07 and $0.04 per share, respectively. The settlement also resulted in a benefit of $0.08 per share allocated to discontinued operations largely related to Alliant Energy’s former Australia and China businesses.

Midwest Flooding: Electric and steam margins, as well as operating and maintenance expenses, were all adversely impacted by the June 2008 flooding that occurred in IPL’s service territory. The total flood-related impact recorded in the second quarter reduced utility earnings by $0.07 per share. Alliant Energy estimates that flood costs will reduce utility earnings for the remainder of 2008 by an additional $0.08 per share. The total estimated impact of the flooding in 2008 of $0.15 per share is less than the $0.20 per share originally estimated by the company primarily due to customers returning to service faster than anticipated. Alliant Energy continues to work with the relevant regulatory agencies on recovery of flood related costs that are not covered by insurance, the energy adjustment clause in Iowa, or export steam contract adjustments.

Retail Fuel-Related Impacts at WPL: In April 2008, WPL began collecting fuel-related costs at a higher interim rate as a result of its fuel rate adjustment filing that was made in March 2008. Since the time of the filing, WPL has experienced lower fuel costs than it projected for the second quarter. WPL recorded a reserve of $1 million in the second quarter in anticipation of a refund to customers when final fuel rates are implemented later this year.

2008 Earnings Guidance

Alliant Energy is increasing its 2008 earnings guidance range for earnings from continuing operations to $2.60 to $2.80 per share, which includes changes to both utility and non-regulated earnings ranges. The modest decrease at the utilities is primarily due to the impacts of the June 2008 Midwest flooding, which are partially offset by the recent settlement with the IRS on U.S. federal income tax audits of prior years and the benefits of our lean six sigma activities on improving productivity and controlling utility operating costs. The non-regulated businesses increase is driven by the tax settlement and improved results across the core operations of RMT WindConnect(R), Transportation, and non-regulated generation. Details of the current and prior guidance for 2008 are as follows:

Prior Flood Tax Revised
Guidance Impact Settlement Other Guidance
Utility business $2.23 – 2.43 $(0.15) $0.07 $0.05 $2.20 – 2.40
businesses 0.21 – 0.25 – 0.04 0.05 0.30 – 0.34
Parent company 0.08 – 0.10 – – – 0.08 – 0.10
Alliant Energy $2.55 – 2.75 $2.60 – 2.80

The guidance does not include the impact of any potential asset valuation charges that Alliant Energy may incur, the impact of certain non-cash valuation adjustments (including emission allowances), the impact of any future adjustments made to Alliant Energy’s deferred tax asset valuation allowances, the impacts of any cumulative effects of changes in accounting principles, any gains/losses and related tax impact that may be realized from possible sales of certain Alliant Energy assets that would be reported in earnings from continuing operations, or the potential tax impacts of capital costs components of the flooding yet to be finalized for which deferred tax expense is not recorded pursuant to Iowa tax rate making principles. Finally, the guidance also assumes that no businesses will be re-classified to “discontinued operations”.

Drivers for Alliant Energy’s earnings estimates include, but are not limited to:

— Flood related issues, including anticipated amount of operating and
maintenance expenses and property losses, timing of customers resuming
normal levels of service usage, levels of steam margins, and insurance
and regulatory recoveries
— Normal weather conditions in its utility service territories for the
remainder of 2008
— Ability to recover future purchased power, fuel and fuel-related costs
through rates in a timely manner
— Continuing economic development and sales growth in its utility service
— Continuing cost controls and operational efficiencies
— Ability of IPL and WPL to recover their operating costs and deferred
expenditures, and to earn a reasonable rate of return in current and
future rate proceedings
— Execution of IPL’s and WPL’s generation build-out and environmental
expenditure plans
— Ability to utilize tax capital losses generated to-date, and those that
may be generated in the future, before they expire
— Execution of RMT WindConnect(R) projects as planned

Projected Capital Expenditures

Alliant Energy is updating its previously announced capital expenditures for 2008 through 2010 to reflect the recently signed wind turbine generator agreement, flood related capital expenditures, and changes in costs and timing of certain environmental and other new generation projects (in millions):

2008 2009 2010
Utility Business:
Generation – new facilities
IPL Coal – Sutherland #4 $20 $345 $340
IPL Wind – Whispering Willow – East 180 240 10
WPL Coal – Nelson Dewey #3 15 300 470
WPL Wind – Bent Tree 25 150 290
WPL Wind – Cedar Ridge 125 — —
WPL Wind – Site TBD 10 35 155
Total generation – new facilities 375 1,070 1,265
Environmental 140 215 390
Advanced metering infrastructure 30 55 55
Other utility capital expenditures 475 375 375
Total utility business 1,020 1,715 2,085
Non-regulated businesses 15 10 10
$1,035 $1,725 $2,095

Earnings Conference Call

A conference call to review the second quarter 2008 results is scheduled for Wednesday, August 6th at 9:00 a.m. central time. Alliant Energy Chairman, President and Chief Executive Officer William D. Harvey and Senior Executive Vice President and Chief Financial Officer Eliot G. Protsch will host the call. The conference call is open to the public and can be accessed in two ways. Interested parties may listen to the call by dialing 866-454-4207 (United States or Canada) or 913-312-6697 (International), passcode 1629947. Interested parties may also listen to a webcast at In conjunction with the information in this earnings announcement and conference call, Alliant Energy posted supplemental information on its website. A replay of the call will be available through August 13, 2008, at 888-203-1112 (United States or Canada) or 719-457-0820 (International), passcode 1629947. An archive of the webcast will be available on the Company’s Web site at for 12 months.

Alliant Energy is the parent company of two public utility companies — Interstate Power and Light Company and Wisconsin Power and Light Company — and of Alliant Energy Resources, Inc., the parent company of Alliant Energy’s non-regulated operations. Alliant Energy is an energy-services provider with subsidiaries serving approximately 1 million electric and 400,000 natural gas customers. Providing its customers in the Midwest with regulated electricity and natural gas service is the Company’s primary focus. Alliant Energy, headquartered in Madison, Wis., is a Fortune 1000 company traded on the New York Stock Exchange under the symbol LNT. For more information, visit the Company’s Web site at

This press release includes forward-looking statements. These forward-looking statements can be identified as such because the statements include words such as “expect” or other words of similar import. Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Actual results could be affected by the following factors, among others: federal and state regulatory or governmental actions, including the impact of energy-related and tax legislation and regulatory agency orders; their ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of operating costs, capital expenditures and deferred expenditures, the earning of reasonable rates of return and the payment of expected levels of dividends; current or future litigation, regulatory investigations, proceedings or inquiries; developments that adversely impact their ability to implement their strategic plans including unanticipated issues in connection with construction of their new generating facilities and WPL’s potential purchases of the Riverside Energy Center and Alliant Energy Resources, Inc.’s electric generating facility in Neenah, Wisconsin; issues related to the availability of their generating facilities and the supply and delivery of fuel and purchased electricity and price thereof, including the ability to recover and retain purchased power, fuel and fuel-related costs through rates in a timely manner; the impact fuel and fuel-related prices and other economic conditions may have on their customers’ demand for utility services; issues associated with environmental remediation efforts and with environmental compliance generally including changing environmental laws and regulations and the ability to recover through rates all environmental compliance costs; potential impacts of any future laws or regulations regarding global climate change or carbon emissions reductions; weather effects on results of operations; financial impacts of hedging strategies, including the impact of weather hedges on their earnings; unplanned outages at their generating facilities and risks related to recovery of incremental costs through rates; the direct or indirect effects resulting from terrorist incidents or responses to such incidents; unanticipated impacts that storms or natural disasters in their service territories may have on their operations, including uncertainties associated with efforts to remediate the effects of the June 2008 Midwest flooding, reimbursement of storm-related costs covered by insurance, rate relief for costs associated with restoration and impacts of the flooding on the economic conditions of the effected service territories; economic and political conditions in their service territories; the growth rate of ethanol and biodiesel production in their service territories; Alliant Energy’s ability to achieve and/or sustain its dividend payout ratio goal; any material post-closing adjustments related to any of their past asset divestitures; employee workforce factors, including changes in key executives, collective bargaining agreements or work stoppages; continued access to the capital markets under competitive terms and rates; access to technological developments; issues related to electric transmission, including operating in the Midwest Independent Transmission System Operator (MISO) energy market, the impacts of potential future billing adjustments from MISO and recovery of costs incurred; inflation and interest rates; the impact of necessary accruals for the terms of their incentive compensation plans; the effect of accounting pronouncements issued periodically by standard-setting bodies; their ability to continue cost controls and operational efficiencies; their ability to utilize tax capital losses generated to date, and those that may be generated in the future, before they expire; their ability to successfully complete ongoing tax audits and appeals with no material impact on their earnings and cash flows. Without limitation, the expectations with respect to projected earnings in the “2008 Earnings Guidance” section and projected capital expenditures in the “Projected Capital Expenditures” section of this press release are forward-looking statements and are based in part on certain assumptions made by Alliant Energy, some of which are referred to in the forward-looking statements. Alliant Energy cannot provide any assurance that the assumptions referred to in the forward-looking statements or otherwise are accurate or will prove to be correct. Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on Alliant Energy’s ability to achieve the estimates or other targets included in the forward-looking statements. The forward-looking statements included herein are made as of the date hereof and Alliant Energy undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.

Note: Unless otherwise noted, all “per share” references in this release refer to earnings per diluted share.


For the Three Months For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
(dollars in millions, except per share amounts)
Operating revenues:
Electric $576.7 $565.5 $1,144.4 $1,119.0
Gas 121.1 94.0 429.6 382.3
Other 15.6 15.4 33.5 33.4
Non-regulated 114.0 71.3 211.9 124.2
827.4 746.2 1,819.4 1,658.9

Operating expenses:
Electric production fuel and
purchased power 305.2 292.9 606.7 573.2
Cost of gas sold 86.8 60.9 318.9 272.8
Other operation and maintenance 169.0 142.3 333.8 306.9
Non-regulated operation and
maintenance 96.5 60.1 177.3 101.4
Depreciation and amortization 61.7 66.0 123.3 132.0
Taxes other than income taxes 26.2 27.0 52.3 54.8
745.4 649.2 1,612.3 1,441.1

Operating income 82.0 97.0 207.1 217.8

Interest expense and other:
Interest expense 30.3 27.7 60.0 57.3
Equity income from unconsolidated
investments, net (7.2) (7.0) (14.7) (14.5)
Allowance for funds used during
construction (4.2) (1.9) (7.4) (3.4)
Preferred dividend requirements
of subsidiaries 4.7 4.7 9.4 9.4
Interest income and other (4.2) (2.4) (11.3) (10.9)
19.4 21.1 36.0 37.9

Income from continuing operations
before income taxes 62.6 75.9 171.1 179.9

Income taxes 10.8 30.9 51.2 69.7

Income from continuing operations 51.8 45.0 119.9 110.2

Income from discontinued operations,
net of tax 9.0 3.6 9.0 2.3

Net income $60.8 $48.6 $128.9 $112.5

Weighted average number of common
shares outstanding (basic) (000s) 110,168 112,778 110,158 114,099

Earnings per weighted average
common share (basic):
Income from continuing operations $0.47 $0.40 $1.09 $0.97
Income from discontinued
operations 0.08 0.03 0.08 0.02
Net income $0.55 $0.43 $1.17 $0.99

Weighted average number of common
shares outstanding (diluted)
(000s) 110,322 113,026 110,313 114,390

Earnings per weighted average
common share (diluted):
Income from continuing operations $0.47 $0.40 $1.09 $0.96
Income from discontinued
operations 0.08 0.03 0.08 0.02
Net income $0.55 $0.43 $1.17 $0.98

Dividends declared per common share $0.35 $0.3175 $0.70 $0.635


June 30, December 31,
ASSETS 2008 2007
(in millions)
Property, plant and equipment:
Electric plant in service $5,670.4 $5,633.7
Gas plant in service 741.0 726.3
Other plant in service 468.4 466.8
Accumulated depreciation (accum. depr.) (2,689.8) (2,692.5)
Net plant 4,190.0 4,134.3
Construction work in progress:
Whispering Willow – East Wind Farm 151.2 —
Cedar Ridge Wind Farm 109.5 41.8
Other 179.5 153.6
Other, less accum. depr. 22.5 4.6
Total utility 4,652.7 4,334.3
Non-regulated and other:
Non-regulated Generation, less accum. depr. 234.9 240.5
Other non-regulated investments, less accum. depr. 63.9 66.1
Alliant Energy Corporate Services, Inc.
and other, less accum. depr. 40.9 39.0
Total non-regulated and other 339.7 345.6
4,992.4 4,679.9

Current assets:
Cash and cash equivalents 573.9 745.6
Accounts receivable:
Customer, less allowance for doubtful accounts 141.2 154.7
Unbilled utility revenues 102.3 151.6
Other, less allowance for doubtful accounts 75.8 40.6
Income tax refunds receivable 74.5 13.5
Production fuel, at weighted average cost 90.2 92.2
Materials and supplies, at weighted average cost 49.0 45.6
Gas stored underground, at weighted average cost 37.1 70.5
Regulatory assets 28.7 58.5
Derivative assets 108.1 34.1
Other 95.3 65.4
1,376.1 1,472.3

Investment in American Transmission Company LLC 181.6 172.2
Other 68.5 65.7
250.1 237.9

Other assets:
Regulatory assets 478.5 491.7
Deferred charges and other 306.8 307.9
785.3 799.6

Total assets $7,403.9 $7,189.7


June 30, December 31,
(in millions, except per
share and share amounts)
Common stock – $0.01 par value – authorized
240,000,000 shares; outstanding 110,455,511
and 110,359,314 shares $1.1 $1.1
Additional paid-in capital 1,494.2 1,483.4
Retained earnings 1,254.3 1,205.2
Accumulated other comprehensive income 2.8 0.2
Shares in deferred compensation trust – 245,095
and 294,196 shares at a weighted average cost
of $30.93 and $29.65 per share (7.6) (8.7)
Total common equity 2,744.8 2,681.2

Cumulative preferred stock of subsidiaries, net 243.8 243.8
Long-term debt, net (excluding current portion) 1,403.2 1,404.5
4,391.8 4,329.5

Current liabilities:
Current maturities 138.5 140.1
Commercial paper 207.0 81.8
Other short-term borrowings 0.1 29.5
Accounts payable 355.5 346.7
Regulatory liabilities 125.1 86.5
Accrued taxes 51.6 74.7
Other 197.9 177.7
1,075.7 937.0

Other long-term liabilities and deferred credits:
Deferred income taxes 856.1 822.9
Regulatory liabilities 673.1 656.4
Pension and other benefit obligations 200.1 206.4
Other 205.0 233.6
1,934.3 1,919.3

Minority interest 2.1 3.9

Total capitalization and liabilities $7,403.9 $7,189.7


For the Six Months
Ended June 30,
2008 2007
(in millions)
Cash flows from operating activities:
Net income $128.9 $112.5
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 123.3 132.0
Other amortizations 23.2 24.0
Deferred tax expense (benefit) and investment
tax credits (5.7) 18.6
Equity income from unconsolidated investments, net (14.7) (14.5)
Distributions from equity method investments 12.8 9.9
Other 2.4 (13.7)
Other changes in assets and liabilities:
Accounts receivable (9.7) 95.1
Sale of accounts receivable 40.0 —
Income tax refunds receivable (61.0) (13.6)
Gas stored underground 33.4 1.9
Derivative assets (90.7) 2.1
Regulatory assets 15.8 81.9
Accounts payable 34.9 4.7
Accrued taxes (22.9) 1.9
Derivative liabilities (4.5) (56.3)
Regulatory liabilities 52.3 (21.1)
Accrued incentive compensation and other (7.3) (64.7)
Net cash flows from operating activities 250.5 300.7

Cash flows used for investing activities:
Construction and acquisition expenditures:
Utility business (429.5) (230.3)
Alliant Energy Corporate Services, Inc. and
non-regulated businesses (14.3) (10.5)
Proceeds from asset sales 2.4 124.1
Purchases of emission allowances — (23.9)
Other 18.0 22.8
Net cash flows used for investing activities (423.4) (117.8)

Cash flows from (used for) financing activities:
Common stock dividends (77.1) (72.8)
Repurchase of common stock (1.5) (235.6)
Proceeds from issuance of common stock 1.3 32.6
Reductions in long-term debt (3.1) (222.5)
Net change in short-term borrowings 95.8 165.7
Other (14.2) 9.0
Net cash flows from (used for) financing
activities 1.2 (323.6)

Net decrease in cash and cash equivalents (171.7) (140.7)
Cash and cash equivalents at beginning of period 745.6 266.0
Cash and cash equivalents at end of period $573.9 $125.3


June 30, June 30,
2008 2007
Common shares outstanding (000s) 110,456 111,921
Book value per share $24.85 $22.30
Quarterly common dividend rate per share $0.35 $0.3175


Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Utility electric sales
(000s of MWh)
Residential 1,599 1,602 3,741 3,660
Commercial 1,476 1,475 2,987 2,973
Industrial 3,133 3,236 6,192 6,243
Retail subtotal 6,208 6,313 12,920 12,876
Sales for resale:
Wholesale 882 875 1,824 1,683
Bulk power and other 327 548 592 1,129
Other 43 41 87 86
Total 7,460 7,777 15,423 15,774

Utility retail electric customers
(at June 30)
Residential 840,709 837,840
Commercial 134,190 133,258
Industrial 2,861 2,922
Total 977,760 974,020

Utility gas sold and transported
(000s of Dth)
Residential 3,990 3,581 19,086 17,725
Commercial 2,952 2,736 12,922 11,572
Industrial 962 754 2,476 2,481
Retail subtotal 7,904 7,071 34,484 31,778
Interdepartmental 466 334 735 837
Transportation / other 12,366 13,099 31,277 29,559
Total 20,736 20,504 66,496 62,174

Utility retail gas customers
(at June 30)
Residential 363,430 361,340
Commercial 45,131 45,035
Industrial 578 587
Total 409,139 406,962

Margin increases (decreases) from
net impacts of weather
(in millions) –
Electric margins –
Weather impacts on demand
compared to normal weather ($6) $ — $ — $1
Gains from weather derivatives 3 2 — —
Net weather impact ($3) $2 $ — $1

Gas margins –
Weather impacts on demand
compared to normal weather $1 ($1) $9 $ —
Losses from weather derivatives — — (3) (2)
Net weather impact $1 ($1) $6 ($2)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 Normal(b) 2008 2007 Normal(b)
Cooling degree days
(CDDs) (a)
Cedar Rapids, Iowa (IPL) 26 89 99 26 89 99
Madison, Wisconsin (WPL) 28 69 70 28 69 70
Heating degree days
(HDDs) (a)
Cedar Rapids, Iowa (IPL) 797 657 682 4,723 4,110 4,001
Madison, Wisconsin (WPL) 840 751 860 4,780 4,260 4,329

(a) Alliant Energy entered into weather derivatives based on CDDs and HDDs
to reduce potential volatility on its margins from the impacts of
weather during the months of June through August and January through
March, respectively.

(b) Normal degree days are calculated using a 20-year rolling average.

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Source: Alliant Energy Corp.