01—Abstract
Summary
Summary of the 10-K filed March 11, 2004. Cited figures are marked; the original filing is the authoritative source.
Alliant Energy Corporation (LNT) reported 2003 net income of $183.5 milliona, or $1.81 per diluted share, up from $106.9 million ($1.18) in 2002, with operating revenues of $3.13 billion.
Income from continuing operations was $159.7 millionb ($1.57 per diluted share) versus $87.5 million in 2002. The company describes domestic utility operations as its core business and sole growth platform under an updated strategic plan, and says it completed the November 2002 plan to strengthen its financial profile. That plan included asset sales (Australian, affordable housing and SmartEnergy businesses, and an IPO of over 94% of WPC stock), reducing debt by approximately $875 million in 2003, a $318 million common equity offering in July 2003, and a cut in the annual common dividend from $2.00 to $1.00 per share.
Looking ahead, the company plans a domestic generation build-out of about 1,600 MW between 2004 and 2010, with expected capital expenditures of approximately $650 millionc over that period. Total construction and acquisition expenditures are estimated at $700 million for 2004 and $610 million for 2005.
The Emery gas plant (550 MW, $400 milliond) is expected in service in late second quarter 2004, and the sale of WP&L's 41% interest in Kewaunee to Dominion is expected to be completed by fall 2004. Risks include the Brazil investments, a negative credit outlook from Standard & Poor's, the unresolved WP&L labor contract, and pending federal legislation that could repeal PUHCA.
02—Key points
Key Highlights
- Net income rose to $183.5 million ($1.81 per diluted share) in 2003 from $106.9 million ($1.18) in 2002.
- Income from continuing operations was $159.7 million ($1.57 per diluted share), compared with $87.5 million in 2002.
- Debt was reduced by approximately $875 million in 2003 through asset sales, and $242 million of cash and temporary cash investments was held at year-end.
- Common equity offering of 17.25 million shares in July 2003 netted $318 million; the annual common dividend was reduced from $2.00 to $1.00 per share.
- Domestic utility electric margin rose $85.8 million (8%) and gas margin rose $25.8 million (18%) in 2003, driven by rate increases.
- Domestic generation plan adds about 1,600 MW between 2004 and 2010, with about $650 million of capital expenditures; Emery plant (550 MW) expected in service in late Q2 2004.
- Credit ratings were affirmed in January 2004, but Standard & Poor's outlook for all entities is negative; Moody's outlook is stable.
03—Questions
Frequently Asked Questions
What drove the improvement in Alliant Energy's 2003 earnings?
Higher electric and gas margins from rate increases implemented in 2003 and 2002 were the main driver for domestic utility income, which rose to $197.2 million from $165.8 million. Non-regulated results from continuing operations improved significantly, mainly from International and Integrated Services and lower non-cash valuation charges of $0.35 per share, partly offset by $0.10 per share of debt repayment premiums.
How much capital will Alliant Energy spend in the coming years?
The company anticipates construction and acquisition expenditures of $700 million in 2004 and $610 million in 2005. The domestic generation plan is expected to require about $650 million from 2004 through 2010, largely financed through external financings supplemented by internally generated funds.
Is the dividend safe after the 2003 cut?
The company reduced its targeted annual common dividend to $1.00 per share from $2.00 effective with the first-quarter 2003 payment. The filing states future dividends depend on earnings, capital requirements, financial condition and the ability of subsidiaries to pay dividends, and that the timing and amount are not assured.
What are the main risks flagged for investors?
The filing cites uncertainty over Brazil, where the company says it is discussing options to strengthen its investments and cannot predict the outcome of its review; a possible IRS challenge to exchangeable note interest deductions; the outcome of the WP&L labor agreement that expired in 2003; and possible credit rating downgrades, which could raise borrowing costs. Standard & Poor's outlook for all entities is negative.
What is the status of the Kewaunee sale and Emery plant?
WP&L has signed an agreement to sell its 41% interest in the Kewaunee nuclear plant to Dominion Energy Kewaunee, Inc., expected to close by fall 2004 pending PSCW and NRC approvals. IP&L's 550 MW Emery natural gas plant near Mason City, Iowa, costing about $400 million, is expected to be placed in service late in the second quarter of 2004.
04—Continue