01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Alliant Energy Corporation (LNT) reported 2009 net income attributable to common shareowners of $111.0 milliona, or $1.01 per diluted share, down from $288.0 million, or $2.61 per share, in 2008.
The decline was driven primarily by a $203 millionb pre-tax loss on early extinguishment of its Exchangeable Senior Notes due 2030, which the company repurchased for $241 million in 2009. Utility operations remained the core earnings driver, with utility earnings of $223.8 million ($2.03 per share) versus $241.3 million in 2008, while parent company and other results were a loss of $123.6 million. Operating revenues were $3,432.8 million, down from $3,681.7 million, reflecting lower sales volumes from weak economic conditions, cool summer weather and industrial customer transitions to self-generation.
The company's forward agenda is capital-intensive. Alliant forecasts construction and acquisition expenditures of $875 millionc in 2010, $865 million in 2011 and $780 million in 2012, centered on wind generation (IPL's Whispering Willow - West and WPL's Bent Tree - Phase I), environmental controls at coal plants, and the potential purchase of the Riverside Energy Center. Management raised the expected 2010 annual dividend to $1.58 per share from $1.50, and its 2009 dividend payout ratio was 74% of utility earnings against a stated goal of 60% to 70%.
Near-term regulatory outcomes are favorable in parts: IPL received a final Iowa retail electric rate increase of $84 milliond (about 7%) and WPL received an annual electric rate increase of $59 million (about 6%), both effective January 2010. Risks include a pending EPA enforcement matter alleging Clean Air Act violations at Nelson Dewey, Columbia and Edgewater, a class action over the Cash Balance Pension Plan with alleged underpayments of $24 million to $54 million, and a sharp rise in ITC transmission charges to IPL in 2010, estimated at $85 million to $95 million higher than 2009. Liquidity appears adequate, with $175 million of cash and $433 million of available revolving credit capacity at year-end 2009.
Total long-term debt, net was $2,404.5 million at Alliant Energy consolidated. Credit ratings are investment grade and stable across all entities, with Alliant Energy's senior unsecured debt rated BBB by S&P and Baa1 by Moody's.
02—Key points
Key Highlights
- Net income attributable to Alliant Energy common shareowners fell to $111.0 million ($1.01 per diluted share) from $288.0 million ($2.61 per share) in 2008, largely due to a $203 million pre-tax loss on early extinguishment of the Exchangeable Senior Notes due 2030.
- Operating revenues declined to $3,432.8 million from $3,681.7 million, with lower electric sales from cool summer weather and reduced industrial demand from economic conditions and two IPL customers moving to self-generation.
- Utility earnings were $223.8 million ($2.03 per share) versus $241.3 million ($2.19 per share) in 2008, while parent and other results were a loss of $123.6 million.
- Capital spending plans total $875 million in 2010, $865 million in 2011 and $780 million in 2012, driven by wind projects, environmental controls and AMI deployment.
- Final rate outcomes in early 2010 include an IPL Iowa electric increase of $84 million (about 7%) and a WPL electric increase of $59 million (about 6%), effective January 2010.
- The expected 2010 annual dividend was raised to $1.58 per share from $1.50, and the 2009 dividend payout ratio was 74% of utility earnings.
- Key legal and cost risks include an EPA notice of violation and Sierra Club notices of intent to sue regarding WPL plants, a Cash Balance Pension Plan class action with alleged underpayments of $24 million to $54 million, and IPL transmission charges from ITC expected to rise by $85 million to $95 million in 2010.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $3.43B$3.67B | −6.6% |
| Operating Expenses | $3.03B$3.18B | −4.7% |
| Operating Income | $396.20M$487.00M | −18.6% |
| Interest Expense | $154.90M$125.80M | +23.1% |
| Net Income | $129.70M$306.70M | −57.7% |
| EPS (Basic) | $1.01$2.61 | −61.3% |
| EPS (Diluted) | $1.01$2.61 | −61.3% |
| Shares Outstanding (Basic) | 110.27M110.17M | +0.1% |
| Shares Outstanding (Diluted) | 110.35M110.31M | 0.0% |
05—Questions
Frequently Asked Questions
Why did Alliant Energy's 2009 earnings decline so sharply?
Net income attributable to common shareowners was $111.0 million ($1.01 per diluted share) versus $288.0 million ($2.61 per share) in 2008. The largest single factor was a $203 million pre-tax loss on early extinguishment of the Exchangeable Senior Notes due 2030, recorded in the third quarter of 2009. Lower utility sales from cool summer weather and weak industrial demand, higher depreciation and interest from new capital projects, and a 2008 income tax audit benefit also reduced results, partly offset by Wisconsin combined reporting tax benefits.
What are the company's main capital investment plans?
Alliant Energy expects construction and acquisition expenditures of $875 million in 2010, $865 million in 2011 and $780 million in 2012. Major projects include IPL's 100 MW Whispering Willow - West wind project (expected 2012), WPL's 200 MW Bent Tree - Phase I wind project (Q4 2010 to Q1 2011, estimated cost $425 million to $460 million), the planned purchase of the 600 MW Riverside Energy Center (2013), and emission control projects at Lansing Unit 4, Ottumwa, Edgewater Unit 5 and Columbia.
How is the dividend positioned?
Alliant Energy declared $1.50 per share in 2009 and announced an expected 2010 annual dividend of $1.58 per share, a quarterly rate of $0.395 beginning with the February 12, 2010 payment. The company's stated goal is a payout of approximately 60% to 70% of utility earnings, and its 2009 payout was 74%. Payment of future quarterly dividends remains subject to board declaration.
What regulatory and legal matters could affect future results?
WPL received an EPA Notice of Violation and Sierra Club notices of intent to sue alleging Clean Air Act permitting violations at Nelson Dewey, Columbia and Edgewater, with civil penalties of up to $37,500 per day per violation possible. A class action against the Cash Balance Pension Plan alleges underpayments of $24 million to $54 million, with trial scheduled for June 2010, and a loss contingency of $5 million has been recorded. A shareowner derivative complaint related to the Exchangeable Notes is pending, and the company has moved to dismiss it.
What is the outlook for transmission costs and sales?
IPL's electric transmission service charges from ITC are expected to be $85 million to $95 million higher in 2010 than 2009, based on a proposed 2010 rate roughly 60% above the 2009 rate. The IUB authorized IPL to use $46 million of regulatory liabilities to offset part of the 2008 true-up component, and IPL plans Iowa and Minnesota rate filings in 2010 to recover the remainder. Management expects modest decreases in weather-normalized retail electric sales in 2010, with the full-year effects of industrial customer cogeneration and plant closures.
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