XNYS:LNT Alliant Energy Corporation Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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Table of Contents

 

 

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, 2012

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

 

Commission
File Number

  

Name of Registrant, State of Incorporation,

Address of Principal Executive Offices and Telephone Number

  

IRS Employer
Identification Number

1-9894    ALLIANT ENERGY CORPORATION    39-1380265
   (a Wisconsin corporation)   
   4902 N. Biltmore Lane   
   Madison, Wisconsin 53718   
   Telephone (608)458-3311   
0-4117-1    INTERSTATE POWER AND LIGHT COMPANY    42-0331370
   (an Iowa corporation)   
   Alliant Energy Tower   
   Cedar Rapids, Iowa 52401   
   Telephone (319)786-4411   
0-337    WISCONSIN POWER AND LIGHT COMPANY    39-0714890
   (a Wisconsin corporation)   
   4902 N. Biltmore Lane   
   Madison, Wisconsin 53718   
   Telephone (608)458-3311   

This combined Form 10-Q is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-Q relating to Interstate Power and Light Company and Wisconsin Power and Light Company is filed by such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself.

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).    Yes  x    No  ¨

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

 

                        Smaller
     Large                  Reporting
     Accelerated      Accelerated    Non-accelerated      Company
     Filer      Filer    Filer      Filer

Alliant Energy Corporation

   x              

Interstate Power and Light Company

         x        

Wisconsin Power and Light Company

         x        

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Number of shares outstanding of each class of common stock as of March 31, 2012:

 

Alliant Energy Corporation   Common stock, $0.01 par value, 110,962,089 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

TABLE OF CONTENTS

 

     Page  

Forward-looking Statements

     1   

Part I.      Financial Information

     3   

Item 1. Condensed Consolidated Financial Statements (Unaudited)

     3   

Alliant Energy Corporation:

  

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2012 and 2011

     3   

Condensed Consolidated Balance Sheets as of March 31, 2012 and Dec. 31, 2011

     4   

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011

     6   

Interstate Power and Light Company:

  

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2012 and 2011

     7   

Condensed Consolidated Balance Sheets as of March 31, 2012 and Dec. 31, 2011

     8   

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011

     10   

Wisconsin Power and Light Company:

  

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2012 and 2011

     11   

Condensed Consolidated Balance Sheets as of March 31, 2012 and Dec. 31, 2011

     12   

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011

     14   

Combined Notes to Condensed Consolidated Financial Statements

     15   

1. Summary of Significant Accounting Policies

     15   

2. Utility Rate Cases

     16   

3. Receivables

     16   

4. Income Taxes

     17   

5. Benefit Plans

     19   

6. Common Equity

     23   

7. Debt

     23   

8. Investments

     24   

9. Fair Value Measurements

     24   

10. Derivative Instruments

     29   

11. Commitments and Contingencies

     30   

12. Segments of Business

     34   

13. Discontinued Operations and Assets and Liabilities Held for Sale

     35   

14. Asset Retirement Obligations

     36   

15. Variable Interest Entities

     36   

16. Related Parties

     36   

17. Earnings Per Share

     37   


Table of Contents
     Page  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     38   

Executive Summary

     38   

Strategic Overview

     40   

Rate Matters

     41   

Environmental Matters

     43   

Legislative Matters

     44   

Alliant Energy’s Results of Operations

     44   

IPL’s Results of Operations

     47   

WPL’s Results of Operations

     49   

Liquidity and Capital Resources

     51   

Other Matters

     54   

Market Risk Sensitive Instruments and Positions

     54   

Critical Accounting Policies and Estimates

     54   

Other Future Considerations

     55   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     56   

Item 4. Controls and Procedures

     56   

Part II. Other Information

     56   

Item 1. Legal Proceedings

     56   

Item 1A. Risk Factors

     57   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     57   

Item 6. Exhibits

     57   

Signatures

     58   


Table of Contents

FORWARD-LOOKING STATEMENTS

Statements contained in this report that are not of historical fact are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified as such because the statements include words such as “expect,” “anticipate,” “plan” or other words of similar import. Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all, of the risks and uncertainties of Alliant Energy Corporation (Alliant Energy), Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL) that could materially affect actual results include:

 

   

federal and state regulatory or governmental actions, including the impact of energy, tax, financial and health care legislation, and of regulatory agency orders;

 

   

IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of operating costs, fuel costs, transmission costs, deferred expenditures, capital expenditures, and remaining costs related to generating units that may be permanently closed, earning their authorized rates of return, and the payments to their parent of expected levels of dividends;

 

   

weather effects on results of utility operations;

 

   

the ability to continue cost controls and operational efficiencies;

 

   

the impact of IPL’s retail electric base rate freeze in Iowa through 2013;

 

   

the impact of WPL’s potential retail electric and gas rate freeze in Wisconsin through 2014;

 

   

the state of the economy in IPL’s and WPL’s service territories and resulting implications on sales, margins and ability to collect unpaid bills;

 

   

developments that adversely impact Alliant Energy’s, IPL’s and WPL’s ability to implement their strategic plans, including unanticipated issues with new emission control equipment for various coal-fired generating facilities of IPL and WPL, WPL’s purchase of the Riverside Energy Center (Riverside), IPL’s potential construction of a new natural gas-fired electric generating facility in Iowa, Alliant Energy Resources, LLC’s (Resources’) construction of and selling price of the electricity output from its new 100 megawatt (MW) wind project, and the potential decommissioning of certain generating facilities of IPL and WPL;

 

   

the impact of changes to government incentive elections for wind projects;

 

   

successful resolution of the pending challenge by interveners of the approval by the Public Service Commission of Wisconsin (PSCW) of WPL’s Bent Tree—Phase I wind project;

 

   

issues related to the availability of generating facilities and the supply and delivery of fuel and purchased electricity and the price thereof, including the ability to recover and to retain the recovery of purchased power, fuel and fuel-related costs through rates in a timely manner;

 

   

the impact that fuel and fuel-related prices may have on IPL’s and WPL’s customers’ demand for utility services;

 

   

the ability to defend against environmental claims brought by state and federal agencies, such as the United States of America (U.S.) Environmental Protection Agency (EPA), or third parties, such as the Sierra Club;

 

   

issues associated with environmental remediation efforts and with environmental compliance generally, including changing environmental laws and regulations and litigations associated with changing environmental laws and regulations;

 

   

the ability to recover through rates all environmental compliance and remediation costs, including costs for projects put on hold due to uncertainty of future environmental laws and regulations;

 

   

impacts of future tax benefits from deductions for repairs expenditures and mixed service costs and temporary differences from historical tax benefits from such deductions that are reversing into income tax expense in future periods;

 

   

the ability to find a purchaser for RMT, Inc. (RMT), to successfully negotiate a purchase agreement and to close the sale of RMT;

 

1


Table of Contents
   

continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;

 

   

inflation and interest rates;

 

   

changes to the creditworthiness of counterparties with which Alliant Energy, IPL and WPL have contractual arrangements, including participants in the energy markets and fuel suppliers and transporters;

 

   

issues related to electric transmission, including operating in Regional Transmission Organization (RTO) energy and ancillary services markets, the impacts of potential future billing adjustments and cost allocation changes from RTOs and recovery of costs incurred;

 

   

unplanned outages, transmission constraints or operational issues impacting fossil or renewable generating facilities and risks related to recovery of resulting incremental costs through rates;

 

   

Alliant Energy’s ability to successfully pursue appropriate appeals with respect to, and any liabilities arising out of, the alleged violation of the Employee Retirement Income Security Act of 1974 (ERISA) by Alliant Energy’s Cash Balance Pension Plan (Cash Balance Plan);

 

   

current or future litigation, regulatory investigations, proceedings or inquiries;

 

   

Alliant Energy’s ability to sustain its dividend payout ratio goal;

 

   

employee workforce factors, including changes in key executives, collective bargaining agreements and negotiations, work stoppages or additional restructurings;

 

   

impacts that storms or natural disasters in IPL’s and WPL’s service territories may have on their operations and recovery of, and rate relief for, costs associated with restoration activities;

 

   

access to technological developments;

 

   

any material post-closing adjustments related to any past asset divestitures;

 

   

material changes in retirement and benefit plan costs;

 

   

the impact of incentive compensation plans accruals;

 

   

the effect of accounting pronouncements issued periodically by standard-setting bodies;

 

   

the impact of adjustments made to deferred tax assets and liabilities from state apportionment assumptions;

 

   

the ability to utilize tax credits and net operating losses generated to date, and those that may be generated in the future, before they expire;

 

   

the ability to successfully complete tax audits and appeals with no material impact on earnings and cash flows;

 

   

the direct or indirect effects resulting from terrorist incidents, including cyber terrorism, or responses to such incidents; and

 

   

factors listed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Item 1A Risk Factors in the combined Annual Report on Form 10-K filed by Alliant Energy, IPL and WPL for the year ended Dec. 31, 2011 (2011 Form 10-K).

Alliant Energy, IPL and WPL assume no obligation, and disclaim any duty, to update the forward-looking statements in this report.

 

2


Table of Contents

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,  
     2012     2011  
     (dollars in millions, except per share amounts)  

Operating revenues:

    

Utility:

    

Electric

   $ 572.4      $ 620.3   

Gas

     167.1        229.0   

Other

     13.7        16.7   

Non-regulated

     12.5        11.2   
  

 

 

   

 

 

 

Total operating revenues

     765.7        877.2   
  

 

 

   

 

 

 

Operating expenses:

    

Utility:

    

Electric production fuel and energy purchases

     159.9        194.0   

Purchased electric capacity

     61.5        57.8   

Electric transmission service

     81.4        73.6   

Cost of gas sold

     104.8        156.4   

Other operation and maintenance

     150.0        160.6   

Non-regulated operation and maintenance

     4.2        4.6   

Depreciation and amortization

     83.0        77.8   

Taxes other than income taxes

     25.3        25.1   
  

 

 

   

 

 

 

Total operating expenses

     670.1        749.9   
  

 

 

   

 

 

 

Operating income

     95.6        127.3   
  

 

 

   

 

 

 

Interest expense and other:

    

Interest expense

     38.9        40.5   

Equity income from unconsolidated investments, net

     (9.4     (9.9

Allowance for funds used during construction

     (3.8     (3.1

Interest income and other

     (1.1     (0.8
  

 

 

   

 

 

 

Total interest expense and other

     24.6        26.7   
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     71.0        100.6   
  

 

 

   

 

 

 

Income taxes

     27.7        22.4   
  

 

 

   

 

 

 

Income from continuing operations, net of tax

     43.3        78.2   
  

 

 

   

 

 

 

Income (loss) from discontinued operations, net of tax

     (4.4     1.5   
  

 

 

   

 

 

 

Net income

     38.9        79.7   
  

 

 

   

 

 

 

Preferred dividend requirements of subsidiaries

     4.0        6.2   
  

 

 

   

 

 

 

Net income attributable to Alliant Energy common shareowners

   $ 34.9      $ 73.5   
  

 

 

   

 

 

 

Weighted average number of common shares outstanding (basic) (000s)

     110,716        110,569   
  

 

 

   

 

 

 

Weighted average number of common shares outstanding (diluted) (000s)

     110,741        110,632   
  

 

 

   

 

 

 

Earnings per weighted average common share attributable to Alliant Energy common shareowners (basic and diluted):

    

Income from continuing operations, net of tax

   $ 0.36      $ 0.65   

Income (loss) from discontinued operations, net of tax

     (0.04     0.01   
  

 

 

   

 

 

 

Net income

   $ 0.32      $ 0.66   
  

 

 

   

 

 

 

Amounts attributable to Alliant Energy common shareowners:

    

Income from continuing operations, net of tax

   $ 39.3      $ 72.0   

Income (loss) from discontinued operations, net of tax

     (4.4     1.5   
  

 

 

   

 

 

 

Net income attributable to Alliant Energy common shareowners

   $ 34.9      $ 73.5   
  

 

 

   

 

 

 

Dividends declared per common share

   $ 0.45      $ 0.425   
  

 

 

   

 

 

 

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

 

 

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ALLIANT ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

     March 31,
2012
    December 31,
2011
 
     (in millions)  

ASSETS

    

Property, plant and equipment:

    

Utility:

    

Electric plant in service

   $ 8,212.9      $ 8,165.4   

Gas plant in service

     855.2        852.9   

Other plant in service

     514.4        510.1   

Accumulated depreciation

     (3,252.3     (3,206.0
  

 

 

   

 

 

 

Net plant

     6,330.2        6,322.4   

Construction work in progress:

    

Edgewater Generating Station Unit 5 emission controls (Wisconsin Power and Light Company)

     89.0        77.7   

Other

     205.8        179.5   

Other, less accumulated depreciation

     34.7        34.9   
  

 

 

   

 

 

 

Total utility

     6,659.7        6,614.5   
  

 

 

   

 

 

 

Non-regulated and other:

    

Non-regulated Generation, less accumulated depreciation

     276.0        270.6   

Alliant Energy Corporate Services, Inc. and other, less accumulated depreciation

     145.6        148.2   
  

 

 

   

 

 

 

Total non-regulated and other

     421.6        418.8   
  

 

 

   

 

 

 

Total property, plant and equipment

     7,081.3        7,033.3   
  

 

 

   

 

 

 

Current assets:

    

Cash and cash equivalents

     30.9        11.4   

Accounts receivable:

    

Customer, less allowance for doubtful accounts

     92.2        88.1   

Unbilled utility revenues

     62.2        75.1   

Other, less allowance for doubtful accounts

     92.7        114.9   

Income tax refunds receivable

     34.9        39.1   

Production fuel, at weighted average cost

     111.0        101.9   

Materials and supplies, at weighted average cost

     61.7        58.5   

Gas stored underground, at weighted average cost

     27.4        57.7   

Regulatory assets

     109.0        103.6   

Prepaid gross receipts tax

     31.4        40.2   

Assets held for sale

     66.8        119.6   

Prepayments and other

     60.4        60.5   
  

 

 

   

 

 

 

Total current assets

     780.6        870.6   
  

 

 

   

 

 

 

Investments:

    

Investment in American Transmission Company LLC

     242.3        238.8   

Other

     61.4        61.9   
  

 

 

   

 

 

 

Total investments

     303.7        300.7   
  

 

 

   

 

 

 

Other assets:

    

Regulatory assets

     1,380.4        1,391.4   

Deferred charges and other

     82.2        91.9   
  

 

 

   

 

 

 

Total other assets

     1,462.6        1,483.3   
  

 

 

   

 

 

 

Total assets

   $ 9,628.2      $ 9,687.9   
  

 

 

   

 

 

 

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

 

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ALLIANT ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

 

     March 31,
2012
    December 31,
2011
 
     (in millions, except per
share and share amounts)
 

CAPITALIZATION AND LIABILITIES

    

Capitalization:

    

Alliant Energy Corporation common equity:

    

Common stock—$0.01 par value—240,000,000 shares authorized; 110,962,089 and 111,018,821 shares outstanding

   $ 1.1      $ 1.1   

Additional paid-in capital

     1,510.0        1,510.8   

Retained earnings

     1,495.2        1,510.2   

Accumulated other comprehensive loss

     (0.8     (0.8

Shares in deferred compensation trust—249,298 and 262,735 shares at a weighted average cost of $32.10 and $31.68 per share

     (8.0     (8.3
  

 

 

   

 

 

 

Total Alliant Energy Corporation common equity

     2,997.5        3,013.0   

Cumulative preferred stock of Interstate Power and Light Company

     145.1        145.1   

Noncontrolling interest

     1.8        1.8   
  

 

 

   

 

 

 

Total equity

     3,144.4        3,159.9   

Cumulative preferred stock of Wisconsin Power and Light Company

     60.0        60.0   

Long-term debt, net (excluding current portion)

     2,728.2        2,703.1   
  

 

 

   

 

 

 

Total capitalization

     5,932.6        5,923.0   
  

 

 

   

 

 

 

Current liabilities:

    

Current maturities of long-term debt

     1.4        1.4   

Commercial paper

     57.0        102.8   

Accounts payable

     263.9        267.8   

Regulatory liabilities

     156.4        164.7   

Accrued taxes

     39.7        46.9   

Accrued interest

     46.6        46.6   

Derivative liabilities

     61.9        55.9   

Liabilities held for sale

     59.1        62.1   

Other

     87.3        107.0   
  

 

 

   

 

 

 

Total current liabilities

     773.3        855.2   
  

 

 

   

 

 

 

Other long-term liabilities and deferred credits:

    

Deferred income taxes

     1,637.7        1,592.2   

Regulatory liabilities

     726.1        745.4   

Pension and other benefit obligations

     309.6        312.7   

Other

     248.9        259.4   
  

 

 

   

 

 

 

Total long-term liabilities and deferred credits

     2,922.3        2,909.7   
  

 

 

   

 

 

 

Total capitalization and liabilities

   $ 9,628.2      $ 9,687.9   
  

 

 

   

 

 

 

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

 

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ALLIANT ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

     For the Three Months Ended March 31,  
     2012     2011  
     (in millions)  

Cash flows from operating activities:

    

Net income

   $ 38.9      $ 79.7   

Adjustments to reconcile net income to net cash flows from operating activities:

    

Depreciation and amortization

     83.6        78.8   

Other amortizations

     14.0        13.8   

Deferred tax expense (benefit) and investment tax credits

     31.9        (4.1

Equity income from unconsolidated investments, net

     (9.4     (9.9

Distributions from equity method investments

     8.6        8.3   

Other

     (1.8     1.3   

Other changes in assets and liabilities:

    

Accounts receivable

     63.9        (0.4

Sales of accounts receivable

     5.0        10.0   

Production fuel

     (9.1     32.6   

Gas stored underground

     30.3        34.4   

Regulatory assets

     (18.9     (137.1

Regulatory liabilities

     (26.5     159.2   

Derivative liabilities

     5.2        (25.9

Deferred income taxes

     13.2        45.0   

Other

     (13.9     (24.4
  

 

 

   

 

 

 

Net cash flows from operating activities

     215.0        261.3   
  

 

 

   

 

 

 

Cash flows used for investing activities:

    

Construction and acquisition expenditures:

    

Utility business

     (122.1     (229.4

Alliant Energy Corporate Services, Inc. and non-regulated businesses

     (13.5     (7.7

Other

     0.5        3.8   
  

 

 

   

 

 

 

Net cash flows used for investing activities

     (135.1     (233.3
  

 

 

   

 

 

 

Cash flows used for financing activities:

    

Common stock dividends

     (49.9     (47.1

Preferred dividends paid by subsidiaries

     (4.0     (4.7

Net change in commercial paper

     (20.8     (15.0

Other

     14.3        5.6   
  

 

 

   

 

 

 

Net cash flows used for financing activities

     (60.4     (61.2
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     19.5        (33.2

Cash and cash equivalents at beginning of period

     11.4        159.3   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 30.9      $ 126.1   
  

 

 

   

 

 

 

Supplemental cash flows information:

    

Cash paid (refunded) during the period for:

    

Interest, net of capitalized interest

   $ 38.8      $ 40.2   

Income taxes, net of refunds

   $ (0.1   $ (3.0

Significant noncash investing and financing activities:

    

Accrued capital expenditures

   $ 42.0      $ 28.6   

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

 

 

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INTERSTATE POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

     For the Three Months Ended March 31,  
     2012     2011  
     (in millions)  

Operating revenues:

    

Electric utility

   $ 293.1      $ 330.2   

Gas utility

     92.8        131.9   

Steam and other

     12.8        15.4   
  

 

 

   

 

 

 

Total operating revenues

     398.7        477.5   
  

 

 

   

 

 

 

Operating expenses:

    

Electric production fuel and energy purchases

     74.1        96.8   

Purchased electric capacity

     41.0        39.3   

Electric transmission service

     55.5        47.9   

Cost of gas sold

     57.3        92.6   

Other operation and maintenance

     86.9        96.7   

Depreciation and amortization

     46.7        43.9   

Taxes other than income taxes

     13.3        13.2   
  

 

 

   

 

 

 

Total operating expenses

     374.8        430.4   
  

 

 

   

 

 

 

Operating income

     23.9        47.1   
  

 

 

   

 

 

 

Interest expense and other:

    

Interest expense

     19.7        19.9   

Allowance for funds used during construction

     (1.5     (1.4

Interest income and other

     (0.2     (0.2
  

 

 

   

 

 

 

Total interest expense and other

     18.0        18.3   
  

 

 

   

 

 

 

Income before income taxes

     5.9        28.8   
  

 

 

   

 

 

 

Income taxes

     7.4        1.7   
  

 

 

   

 

 

 

Net income (loss)

     (1.5     27.1   
  

 

 

   

 

 

 

Preferred dividend requirements

     3.2        5.4   
  

 

 

   

 

 

 

Earnings available (loss) for common stock

   $ (4.7   $ 21.7   
  

 

 

   

 

 

 

Earnings per share data is not disclosed given Alliant Energy Corporation is the sole shareowner of all shares of IPL's common stock outstanding during the periods presented.

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

 

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INTERSTATE POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

      March 31,
2012
    December 31,
2011
 
      (in millions)  

ASSETS

  

Property, plant and equipment:

    

Electric plant in service

   $ 4,703.8      $ 4,684.0   

Gas plant in service

     429.4        428.2   

Steam plant in service

     35.0        34.9   

Other plant in service

     251.5        246.4   

Accumulated depreciation

     (1,854.9     (1,833.8
  

 

 

   

 

 

 

Net plant

     3,564.8        3,559.7   

Construction work in progress

     107.7        96.6   

Other, less accumulated depreciation

     19.9        19.8   
  

 

 

   

 

 

 

Total property, plant and equipment

     3,692.4        3,676.1   
  

 

 

   

 

 

 

Current assets:

    

Cash and cash equivalents

     23.1        2.1   

Accounts receivable, less allowance for doubtful accounts

     51.9        75.2   

Income tax refunds receivable

     14.6        28.4   

Production fuel, at weighted average cost

     69.3        67.7   

Materials and supplies, at weighted average cost

     32.8        31.5   

Gas stored underground, at weighted average cost

     6.8        25.5   

Regulatory assets

     63.9        59.0   

Prepayments and other

     26.6        33.7   
  

 

 

   

 

 

 

Total current assets

     289.0        323.1   
  

 

 

   

 

 

 

Investments

     17.1        16.8   
  

 

 

   

 

 

 

Other assets:

    

Regulatory assets

     1,049.0        1,058.3   

Deferred charges and other

     19.1        19.2   
  

 

 

   

 

 

 

Total other assets

     1,068.1        1,077.5   
  

 

 

   

 

 

 

Total assets

   $ 5,066.6      $ 5,093.5   
  

 

 

   

 

 

 

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

 

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INTERSTATE POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

 

      March 31,
2012
     December 31,
2011
 
     (in millions, except per
share and share amounts)
 

CAPITALIZATION AND LIABILITIES

  

Capitalization:

     

Interstate Power and Light Company common equity:

     

Common stock—$2.50 par value—24,000,000 shares authorized; 13,370,788 shares outstanding

   $ 33.4       $ 33.4   

Additional paid-in capital

     927.7         927.7   

Retained earnings

     398.9         433.3   
  

 

 

    

 

 

 

Total Interstate Power and Light Company common equity

     1,360.0         1,394.4   

Cumulative preferred stock

     145.1         145.1   
  

 

 

    

 

 

 

Total equity

     1,505.1         1,539.5   

Long-term debt, net

     1,334.1         1,309.0   
  

 

 

    

 

 

 

Total capitalization

     2,839.2         2,848.5   
  

 

 

    

 

 

 

Current liabilities:

     

Commercial paper

     —           7.1   

Accounts payable

     136.7         118.2   

Accounts payable to associated companies

     27.3         36.7   

Regulatory liabilities

     117.8         137.1   

Accrued taxes

     48.3         43.8   

Accrued interest

     23.0         22.8   

Derivative liabilities

     30.1         24.5   

Other

     31.0         32.3   
  

 

 

    

 

 

 

Total current liabilities

     414.2         422.5   
  

 

 

    

 

 

 

Other long-term liabilities and deferred credits:

     

Deferred income taxes

     954.7         936.9   

Regulatory liabilities

     569.3         584.2   

Pension and other benefit obligations

     100.8         101.9   

Other

     188.4         199.5   
  

 

 

    

 

 

 

Total other long-term liabilities and deferred credits

     1,813.2         1,822.5   
  

 

 

    

 

 

 

Total capitalization and liabilities

   $ 5,066.6       $ 5,093.5   
  

 

 

    

 

 

 

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

 

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INTERSTATE POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

     For the Three Months Ended March 31,  
     2012     2011  
  

 

 

   

 

 

 
     (in millions)  

Cash flows from operating activities:

    

Net income (loss)

   $ (1.5   $ 27.1   

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

    

Depreciation and amortization

     46.7        43.9   

Deferred tax expense (benefit) and investment tax credits

     7.0        (37.3

Other

     1.3        2.0   

Other changes in assets and liabilities:

    

Accounts receivable

     18.3        10.4   

Sales of accounts receivable

     5.0        10.0   

Income tax refunds receivable

     13.8        (8.7

Production fuel

     (1.6     20.4   

Gas stored underground

     18.7        18.0   

Regulatory assets

     (9.0     (145.0

Regulatory liabilities

     (33.6     159.0   

Accrued taxes

     4.5        (28.4

Derivative liabilities

     4.5        (12.7

Deferred income taxes

     10.6        49.5   

Other

     (6.6     20.1   
  

 

 

   

 

 

 

Net cash flows from operating activities

     78.1        128.3   
  

 

 

   

 

 

 

Cash flows used for investing activities:

    

Utility construction and acquisition expenditures

     (56.6     (104.6

Other

     (4.8     (5.2
  

 

 

   

 

 

 

Net cash flows used for investing activities

     (61.4     (109.8
  

 

 

   

 

 

 

Cash flows from (used for) financing activities:

    

Common stock dividends

     (29.7     —     

Preferred stock dividends

     (3.2     (3.9

Repayment of capital to parent

     —          (29.8

Net change in commercial paper

     17.9        —     

Changes in cash overdrafts

     19.3        13.3   

Other

     —          0.1   
  

 

 

   

 

 

 

Net cash flows from (used for) financing activities

     4.3        (20.3
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     21.0        (1.8

Cash and cash equivalents at beginning of period

     2.1        5.7   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 23.1      $ 3.9   
  

 

 

   

 

 

 

Supplemental cash flows information:

    

Cash paid (refunded) during the period for:

    

Interest

   $ 19.4      $ 19.3   

Income taxes, net of refunds

   ($ 14.4   $ 22.0   

Significant noncash investing and financing activities:

    

Accrued capital expenditures

   $ 23.5      $ 16.6   

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

 

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WISCONSIN POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

     For the Three Months Ended March 31,  
      2012     2011  
     (in millions)  

Operating revenues:

    

Electric utility

   $ 279.3      $ 290.1   

Gas utility

     74.3        97.1   

Other

     0.9        1.3   
  

 

 

   

 

 

 

Total operating revenues

     354.5        388.5   
  

 

 

   

 

 

 

Operating expenses:

    

Electric production fuel and energy purchases

     85.8        97.2   

Purchased electric capacity

     20.5        18.5   

Electric transmission service

     25.9        25.7   

Cost of gas sold

     47.5        63.8   

Other operation and maintenance

     63.1        63.9   

Depreciation and amortization

     35.8        33.4   

Taxes other than income taxes

     11.3        11.2   
  

 

 

   

 

 

 

Total operating expenses

     289.9        313.7   
  

 

 

   

 

 

 

Operating income

     64.6        74.8   
  

 

 

   

 

 

 

Interest expense and other:

    

Interest expense

     20.0        20.1   

Equity income from unconsolidated investments

     (10.1     (9.4

Allowance for funds used during construction

     (2.3     (1.7

Interest income and other

     (0.1     —     
  

 

 

   

 

 

 

Total interest expense and other

     7.5        9.0   
  

 

 

   

 

 

 

Income before income taxes

     57.1        65.8   
  

 

 

   

 

 

 

Income taxes

     25.2        21.4   
  

 

 

   

 

 

 

Net income

     31.9        44.4   
  

 

 

   

 

 

 

Preferred dividend requirements

     0.8        0.8   
  

 

 

   

 

 

 

Earnings available for common stock

   $ 31.1      $ 43.6   
  

 

 

   

 

 

 

Earnings per share data is not disclosed given Alliant Energy Corporation is the sole shareowner of all shares of WPL's common stock outstanding during the periods presented.

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

 

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WISCONSIN POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

      March 31,
2012
    December 31,
2011
 
     (in millions)  

ASSETS

  

Property, plant and equipment:

    

Electric plant in service

   $ 3,509.1      $ 3,481.4   

Gas plant in service

     425.8        424.7   

Other plant in service

     227.9        228.8   

Accumulated depreciation

     (1,397.4     (1,372.2
  

 

 

   

 

 

 

Net plant

     2,765.4        2,762.7   

Leased Sheboygan Falls Energy Facility, less accumulated amortization

     81.7        83.2   

Construction work in progress:

    

Edgewater Generating Station Unit 5 emission controls

     89.0        77.7   

Other

     98.1        82.9   

Other, less accumulated depreciation

     14.8        15.1   
  

 

 

   

 

 

 

Total property, plant and equipment

     3,049.0        3,021.6   
  

 

 

   

 

 

 

Current assets:

    

Cash and cash equivalents

     2.1        2.7   

Accounts receivable:

    

Customer, less allowance for doubtful accounts

     82.6        76.2   

Unbilled utility revenues

     62.2        75.1   

Other, less allowance for doubtful accounts

     39.1        38.2   

Production fuel, at weighted average cost

     41.7        34.2   

Materials and supplies, at weighted average cost

     27.5        25.7   

Gas stored underground, at weighted average cost

     20.6        32.2   

Regulatory assets

     45.1        44.6   

Prepaid gross receipts tax

     31.4        40.2   

Prepayments and other

     27.5        16.9   
  

 

 

   

 

 

 

Total current assets

     379.8        386.0   
  

 

 

   

 

 

 

Investments:

    

Investment in American Transmission Company LLC

     242.3        238.8   

Other

     19.4        19.8   
  

 

 

   

 

 

 

Total investments

     261.7        258.6   
  

 

 

   

 

 

 

Other assets:

    

Regulatory assets

     331.4        333.1   

Deferred charges and other

     36.6        44.7   
  

 

 

   

 

 

 

Total other assets

     368.0        377.8   
  

 

 

   

 

 

 

Total assets

   $ 4,058.5      $ 4,044.0   
  

 

 

   

 

 

 

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

 

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WISCONSIN POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

 

      March  31,
2012
     December 31,
2011
 
     

(in millions, except per

share and share amounts)

 

CAPITALIZATION AND LIABILITIES

  

Capitalization:

     

Wisconsin Power and Light Company common equity:

     

Common stock—$5 par value—18,000,000 shares authorized; 13,236,601 shares outstanding

   $ 66.2       $ 66.2   

Additional paid-in capital

     869.1         869.0   

Retained earnings

     510.2         507.2   
  

 

 

    

 

 

 

Total Wisconsin Power and Light Company common equity

     1,445.5         1,442.4   

Cumulative preferred stock

     60.0         60.0   

Long-term debt, net

     1,082.3         1,082.2   
  

 

 

    

 

 

 

Total capitalization

     2,587.8         2,584.6   
  

 

 

    

 

 

 

Current liabilities:

     

Commercial paper

     23.3         25.7   

Accounts payable

     85.0         98.5   

Accounts payable to associated companies

     19.0         20.5   

Regulatory liabilities

     38.6         27.6   

Accrued interest

     18.1         21.6   

Derivative liabilities

     31.8         31.4   

Other

     34.2         32.3   
  

 

 

    

 

 

 

Total current liabilities

     250.0         257.6   
  

 

 

    

 

 

 

Other long-term liabilities and deferred credits:

     

Deferred income taxes

     698.1         672.5   

Regulatory liabilities

     156.8         161.2   

Capital lease obligations—Sheboygan Falls Energy Facility

     102.3         103.3   

Pension and other benefit obligations

     127.6         128.0   

Other

     135.9         136.8   
  

 

 

    

 

 

 

Total long-term liabilities and deferred credits

     1,220.7         1,201.8   
  

 

 

    

 

 

 

Total capitalization and liabilities

   $ 4,058.5       $ 4,044.0   
  

 

 

    

 

 

 

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

 

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WISCONSIN POWER AND LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

     For the Three Months Ended March 31,  
             2012                     2011          
     (in millions)  

Cash flows from operating activities:

    

Net income

   $ 31.9      $ 44.4   

Adjustments to reconcile net income to net cash flows from operating activities:

    

Depreciation and amortization

     35.8        33.4   

Other amortizations

     11.0        10.6   

Deferred tax expense and investment tax credits

     23.7        30.8   

Equity income from unconsolidated investments

     (10.1     (9.4

Distributions from equity method investments

     8.6        8.3   

Other

     (0.4     4.3   

Other changes in assets and liabilities:

    

Income tax refunds receivable

     (6.4     31.4   

Production fuel

     (7.5     12.2   

Gas stored underground

     11.6        16.4   

Regulatory assets

     (9.9     7.9   

Accounts payable

     (10.7     (19.2

Derivative liabilities

     0.7        (13.2

Other

     16.0        15.5   
  

 

 

   

 

 

 

Net cash flows from operating activities

     94.3        173.4   
  

 

 

   

 

 

 

Cash flows used for investing activities:

    

Utility construction and acquisition expenditures:

     (65.5     (124.8

Other

     1.9        0.5   
  

 

 

   

 

 

 

Net cash flows used for investing activities

     (63.6     (124.3
  

 

 

   

 

 

 

Cash flows used for financing activities:

    

Common stock dividends

     (28.1     (27.7

Preferred stock dividends

     (0.8     (0.8

Net change in commercial paper

     (2.4     (15.0

Other

     —          (4.7
  

 

 

   

 

 

 

Net cash flows used for financing activities

     (31.3     (48.2
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (0.6     0.9   

Cash and cash equivalents at beginning of period

     2.7        0.1   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 2.1      $ 1.0   
  

 

 

   

 

 

 

Supplemental cash flows information:

    

Cash paid (refunded) during the period for:

    

Interest

   $ 23.5      $ 23.5   

Income taxes, net of refunds

   $ 12.2      ($ 33.2

Significant noncash investing and financing activities:

    

Accrued capital expenditures

   $ 16.3      $ 10.3   

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

 

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Table of Contents

ALLIANT ENERGY CORPORATION

INTERSTATE POWER AND LIGHT COMPANY

WISCONSIN POWER AND LIGHT COMPANY

COMBINED 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, IPL and WPL, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Alliant Energy’s condensed consolidated financial statements include the accounts of Alliant Energy and its consolidated subsidiaries (including IPL, WPL, Resources and Alliant Energy Corporate Services, Inc. (Corporate Services)). IPL’s condensed consolidated financial statements include the accounts of IPL and its consolidated subsidiary. WPL’s condensed consolidated financial statements include the accounts of WPL and its consolidated subsidiary. 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, 2012 and 2011, the condensed consolidated financial position at March 31, 2012 and Dec. 31, 2011, and the condensed consolidated statements of cash flows for the three months ended March 31, 2012 and 2011 have been made. Results for the three months ended March 31, 2012 are not necessarily indicative of results that may be expected for the year ending Dec. 31, 2012. A change in management’s estimates or assumptions could have a material impact on Alliant Energy’s, IPL’s and WPL’s respective 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 financial statement presentation. 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 Regulatory Liabilities -

Regulatory assets were comprised of the following items (in millions):

 

     Alliant Energy      IPL      WPL  
     March 31,      Dec. 31,      March 31,      Dec. 31,      March 31,      Dec. 31,  
     2012      2011      2012      2011      2012      2011  

Tax-related

   $ 639.2       $ 634.7       $ 618.2       $ 614.6       $ 21.0       $ 20.1   

Pension and other postretirement benefits costs

     510.5         514.1         263.6         264.9         246.9         249.2   

Derivatives

     83.1         77.7         38.1         33.5         45.0         44.2   

Asset retirement obligations

     57.4         65.9         39.7         48.7         17.7         17.2   

Environmental-related costs

     37.6         38.9         32.6         32.2         5.0         6.7   

Emission allowances

     30.0         30.0         30.0         30.0         —           —     

IPL’s electric transmission service costs

     22.9         24.9         22.9         24.9         —           —     

Debt redemption costs

     21.3         21.8         14.7         15.1         6.6         6.7   

Other

     87.4         87.0         53.1         53.4         34.3         33.6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,489.4       $ 1,495.0       $ 1,112.9       $ 1,117.3       $ 376.5       $ 377.7   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Regulatory liabilities were comprised of the following items (in millions):

 

     Alliant Energy      IPL      WPL  
     March 31,      Dec. 31,      March 31,      Dec. 31,      March 31,      Dec. 31,  
     2012      2011      2012      2011      2012      2011  

Cost of removal obligations

   $ 407.3       $ 404.9       $ 264.7       $ 261.9       $ 142.6       $ 143.0   

IPL’s tax benefit rider

     329.4         349.6         329.4         349.6         —           —     

IPL’s electric transmission assets sale

     42.8         45.1         42.8         45.1         —           —     

Energy conservation cost recovery

     37.2         29.6         7.0         4.7         30.2         24.9   

Commodity cost recovery

     10.5         23.8         8.6         23.2         1.9         0.6   

Other

     55.3         57.1         34.6         36.8         20.7         20.3   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 882.5       $ 910.1       $ 687.1       $ 721.3       $ 195.4       $ 188.8   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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IPL’s tax benefit rider—Alliant Energy’s and IPL’s “IPL’s tax benefit rider” regulatory liabilities in the above table decreased due to $20 million of regulatory liabilities used to credit IPL’s Iowa retail electric customers’ bills in the first quarter of 2012. Refer to Note 4 for additional details regarding IPL’s tax benefit rider.

(c) Utility Property, Plant and Equipment -

WPL’s Edgewater Unit 5 Emission Controls Project—WPL is currently installing a selective catalytic reduction (SCR) system at Edgewater Unit 5 to reduce nitrogen oxide (NOx) emissions at the generating facility. Construction began in the third quarter of 2010 and is expected to be completed by the end of 2012. The SCR is expected to help meet requirements under the Wisconsin Reasonably Available Control Technology (RACT) Rule, which require additional NOx emission reductions at Edgewater by May 2013. As of March 31, 2012, WPL recorded capitalized expenditures of $84 million and allowance for funds used during construction of $5 million for the SCR system in “Construction work in progress—Edgewater Generating Station Unit 5 emission controls” on Alliant Energy’s and WPL’s Condensed Consolidated Balance Sheets.

Wind Site in Green Lake and Fond du Lac Counties in Wisconsin—In 2009, WPL purchased development rights to an approximate 100 MW wind site in Green Lake and Fond du Lac Counties in Wisconsin. Due to events in the first quarter of 2011 resulting in uncertainty regarding wind siting requirements in Wisconsin and increased risks with permitting this wind site, WPL determined it would be difficult to sell or effectively use the site for wind development. As a result, WPL recognized a $5 million impairment in the first quarter of 2011 for the amount of capitalized costs incurred for this site. The impairment was recorded as a reduction in other utility property, plant and equipment, and a charge to “Utility—other operation and maintenance” in Alliant Energy’s and WPL’s Condensed Consolidated Statements of Income in the first quarter of 2011.

(d) Comprehensive Income (Loss)—For the three months ended March 31, 2012 and 2011, Alliant Energy had no other comprehensive income; therefore, its comprehensive income was equal to its net income for such periods. For the three months ended March 31, 2012 and 2011, IPL and WPL had no other comprehensive income; therefore their comprehensive income (loss) was equal to their earnings available (loss) for common stock for such periods.

(e) Cash Flows Presentation—Alliant Energy reports cash flows from continuing operations together with cash flows from discontinued operations in its Condensed Consolidated Statements of Cash Flows. Refer to Note 13 for details of cash flows from discontinued operations.

(2) UTILITY RATE CASES

WPL’s Retail Fuel-related Rate Case (2012 Test Year)—In December 2011, WPL received an order from the PSCW authorizing an annual retail electric rate increase of $4 million related to expected changes in retail electric production fuel and energy purchases costs (fuel-related costs). The December 2011 order also required WPL to defer direct Cross-State Air Pollution Rule (CSAPR) compliance costs that are not included in the fuel monitoring level and set a zero percent tolerance band for the CSAPR-related deferral. The 2012 fuel-related costs, excluding deferred CSAPR compliance costs, will be monitored using an annual bandwidth of plus or minus 2%. The rate change granted from this request was effective Jan. 1, 2012. Subsequent to the PSCW order issued in December 2011, the U.S. Court of Appeals for the D.C. Circuit stayed the implementation of CSAPR and as a result, the Clean Air Interstate Rule (CAIR) remains effective. Alliant Energy and WPL are currently unable to predict the final outcome of the CSAPR stay and its impact on their financial condition or results of operations.

(3) RECEIVABLES

Sales of Accounts Receivable—IPL maintains a Receivables Purchase and Sale Agreement (Agreement) whereby it may sell its customer accounts receivables, unbilled revenues and certain other accounts receivables to a third-party financial institution through wholly-owned and consolidated special purpose entities. In March 2012, IPL extended through March 2014 the purchase commitment from the third-party financial institution to which it sells its receivables. In exchange for the receivables sold, IPL receives cash proceeds from the third-party financial institution (based on seasonal limits up to $180 million), and deferred proceeds recorded in “Accounts receivable” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets.

 

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As of March 31, 2012 and Dec. 31, 2011, IPL sold $179.6 million and $195.3 million aggregate amounts of receivables, respectively. IPL’s maximum and average outstanding cash proceeds, and costs incurred related to the sales of accounts receivable program for the three months ended March 31 were as follows (in millions):

 

     2012      2011  

Maximum outstanding aggregate cash proceeds
(based on daily outstanding balances)

   $ 160.0       $ 130.0   

Average outstanding aggregate cash proceeds
(based on daily outstanding balances)

     143.0         91.4   

Costs incurred

     0.4         0.4   

The attributes of IPL’s receivables sold under the Agreement were as follows (in millions):

 

     March 31, 2012      Dec. 31, 2011  

Customer accounts receivable

   $ 116.1       $ 122.4   

Unbilled utility revenues

     48.7         65.4   

Other receivables

     14.8         7.5   
  

 

 

    

 

 

 

Receivables sold

     179.6         195.3   

Less: cash proceeds (a)

     145.0         140.0   
  

 

 

    

 

 

 

Deferred proceeds

     34.6         55.3   

Less: allowance for doubtful accounts

     1.7         1.6   
  

 

 

    

 

 

 

Fair value of deferred proceeds

   $ 32.9       $ 53.7   
  

 

 

    

 

 

 

Outstanding receivables past due

   $ 18.0       $ 15.9   

 

(a) Changes in cash proceeds during the first quarter of 2012 are recorded in “Sales of accounts receivable” in operating activities in Alliant Energy’s and IPL’s Condensed Consolidated Statements of Cash Flows.

Additional attributes of IPL’s receivables sold under the Agreement for the three months ended March 31 were as follows (in millions):

 

     2012      2011  

Collections reinvested in receivables

   $ 442.3       $ 475.3   

Credit losses, net of recoveries

     2.1         2.1   

(4) INCOME TAXES

Income Tax Rates—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 rates for Alliant Energy, IPL and WPL differ from the federal statutory rate of 35% generally due to effects of utility rate making, including the tax benefit rider, tax credits, state income taxes and certain non-deductible expenses. Changes in state apportionment rates caused by the planned sale of Alliant Energy’s RMT business also impacted the effective tax rates in 2012 for Alliant Energy, IPL and WPL. The income tax rates shown in the following table for the three months ended March 31 were computed by dividing income taxes by income from continuing operations before income taxes.

 

     2012     2011  

Alliant Energy

     39.0     22.3

IPL

     125.4     5.9

WPL

     44.1     32.5

State Apportionment—Alliant Energy, IPL and WPL utilize state apportionment projections to record their deferred tax assets and liabilities each reporting period. Deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts reported in the consolidated financial statements are recorded utilizing currently enacted tax rates and estimates of future state apportionment rates expected to be in effect at the time the temporary differences reverse. These state apportionment projections are most significantly impacted by the estimated amount of revenues expected in the future from each state jurisdiction for Alliant Energy’s consolidated tax group, including both its regulated operations and its non-regulated operations. In the first quarter of 2012, Alliant Energy, IPL and WPL recorded $15.2 million, $8.1 million and $7.0 million, respectively, of deferred income tax expense due to changes in state apportionment projections caused by the planned sale of Alliant Energy’s RMT business. These income tax expense amounts

 

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recognized in the first quarter of 2012 increased Alliant Energy’s, IPL’s and WPL’s effective income tax rates for continuing operations for such period by 21.4%, 137.3% and 12.3%, respectively.

IPL’s Tax Benefit Rider—In January 2011, the Iowa Utilities Board (IUB) approved a tax benefit rider proposed by IPL, which utilizes tax-related regulatory liabilities to credit bills of Iowa retail electric customers beginning in February 2011 to help offset the impact of recent rate increases on such customers. These regulatory liabilities are related to tax benefits from tax accounting method changes for repairs, mixed service costs and allocation of insurance proceeds from the floods in 2008. Alliant Energy’s and IPL’s effective tax rates for the three months ended March 31, 2012 and 2011 include the impact of reducing income tax expense with offsetting reductions to regulatory liabilities as a result of implementing the tax benefit rider. In the first quarters of 2012 and 2011, $20 million and $7 million, respectively, of tax benefit rider-related regulatory liabilities were used to credit IPL’s Iowa retail electric customers’ bills. The tax impacts of the tax benefit rider are currently expected to decrease Alliant Energy’s and IPL’s 2012 annual income tax rates for continuing operations by 12.2% and 37.5%, respectively. In the first quarter of 2011, the tax impacts of the tax benefit rider decreased Alliant Energy’s and IPL’s income tax rates for continuing operations by 8.9% and 22.9%, respectively.

Production Tax Credits—Alliant Energy has three wind projects that are currently generating production tax credits: WPL’s 68 MW Cedar Ridge wind project, which began generating electricity in late 2008; IPL’s 200 MW Whispering Willow—East wind project, which began generating electricity in late 2009; and WPL’s 200 MW Bent Tree—Phase I wind project, which began generating electricity in late 2010. For the three months ended March 31, production tax credits (net of state tax impacts) resulting from these wind projects were as follows (in millions):

 

     Alliant Energy      IPL      WPL  
         2012              2011              2012              2011              2012              2011      

Whispering Willow—East (IPL)

   $ 3.6       $ 2.8       $ 3.6       $ 2.8       $ —         $ —     

Bent Tree—Phase I (WPL)

     1.5         2.5         —           —           1.5         2.5   

Cedar Ridge (WPL)

     1.3         1.5         —           —           1.3         1.5   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6.4       $ 6.8       $ 3.6       $ 2.8       $ 2.8       $ 4.0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Deferred Tax Assets and Liabilities—In the first quarter of 2012, Alliant Energy’s, IPL’s and WPL’s non-current deferred tax liabilities recognized in “Deferred income taxes” on their Condensed Consolidated Balance Sheets increased $46 million, $18 million and $26 million, respectively. The increases in deferred tax liabilities were primarily related to property-related temporary differences recorded in the first quarter of 2012 from bonus depreciation deductions available in 2012. These items were partially offset by increases in deferred tax assets recorded in the first quarter of 2012 as a result of increasing federal and state net operating loss carryforwards primarily due to such bonus depreciation deductions.

Bonus Depreciation Deductions—In 2010, the Small Business Jobs Act of 2010 (SBJA) and the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the Act) were enacted. The most significant provisions of the SBJA and the Act for Alliant Energy, IPL and WPL are related to the extension of bonus depreciation deductions for certain expenditures for property that are placed in service through Dec. 31, 2012. Based on capital projects expected to be placed into service in 2012, Alliant Energy currently estimates its total bonus depreciation deductions to be claimed in its 2012 federal income tax return will be approximately $418 million ($114 million for IPL and $203 million for WPL).

Carryforwards—At March 31, 2012, tax carryforwards and associated deferred tax assets and expiration dates were estimated as follows (in millions):

 

Alliant Energy

   Carryforward
Amount
    Deferred
Tax Assets
    Earliest
Expiration Date
 

Federal net operating losses

   $ 1,043      $ 358        2028   

Federal net operating losses offset—uncertain tax positions

     (56     (20  

State net operating losses

     783        41        2014   

State net operating losses offset—uncertain tax positions

     (28     (2  

Federal tax credits

     116        114        2022   
    

 

 

   
     $ 491     
    

 

 

   

 

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IPL

   Carryforward
Amount
    Deferred
Tax Assets
    Earliest
Expiration Date
 

Federal net operating losses

   $ 475      $ 163        2028   

Federal net operating losses offset—uncertain tax positions

     (25     (9  

State net operating losses

     189        11        2022   

Federal tax credits

     29        29        2022   
    

 

 

   
     $ 194     
    

 

 

   

 

WPL

   Carryforward
Amount
    Deferred
Tax Assets
    Earliest
Expiration Date
 

Federal net operating losses

   $ 441      $ 151        2028   

Federal net operating losses offset—uncertain tax positions

     (31     (11  

State net operating losses

     148        7        2022   

State net operating losses offset—uncertain tax positions

     (28     (2  

Federal tax credits

     30        29        2022   
    

 

 

   
     $ 174     
    

 

 

   

Uncertain Tax Positions—It is reasonably possible that Alliant Energy, IPL and WPL could have material changes to their unrecognized tax benefits during the 12 months ending March 31, 2013 as a result of the expected issuance in 2012 of revenue procedures clarifying the treatment of repair expenditures for electric generation and gas distribution property. An estimate of the expected changes during the 12 months ending March 31, 2013 cannot be determined at this time.

(5) BENEFIT PLANS

(a) Pension and Other Postretirement Benefits Plans -

Net Periodic Benefit Costs (Credits)The components of net periodic benefit costs (credits) for Alliant Energy’s, IPL’s and WPL’s sponsored defined benefit pension and other postretirement benefits plans, and defined benefit pension plans amounts directly assigned to IPL and WPL, for the three months ended March 31 are included in the tables below (in millions). In the “IPL” and “WPL” tables below, the qualified defined benefit pension plans costs represent only those respective costs for IPL’s and WPL’s bargaining unit employees covered under the plans that are sponsored by IPL and WPL, respectively. Also in the “IPL” and “WPL” tables below, the other postretirement benefits plans costs (credits) represent costs (credits) for all IPL and WPL employees, respectively. The “Directly assigned defined benefit pension plans” tables below include amounts directly assigned to each of IPL and WPL related to IPL’s and WPL’s current and former non-bargaining employees who are participants in Alliant Energy and Corporate Services sponsored qualified and non-qualified defined benefit pension plans.

 

Alliant Energy

   Defined Benefit
Pension Plans
    Other Postretirement
Benefits Plans
 
   2012     2011     2012     2011  

Service cost

   $ 3.3      $ 2.9      $ 1.7      $ 2.1   

Interest cost

     13.0        13.0        2.6        3.6   

Expected return on plan assets

     (17.2     (16.0     (1.9     (1.9

Amortization of:

        

Prior service cost (credit)

     0.1        0.2        (3.0     (0.7

Actuarial loss

     8.3        5.2        1.6        1.4   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 7.5      $ 5.3      $ 1.0      $ 4.5   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

IPL

   Qualified Defined
Benefit Pension Plans
    Other Postretirement
Benefits Plans
 
   2012     2011     2012     2011  

Service cost

   $ 1.9      $ 1.6      $ 0.8      $ 0.8   

Interest cost

     4.3        4.2        1.1        1.7   

Expected return on plan assets

     (5.8     (5.0     (1.3     (1.3

Amortization of:

        

Prior service cost (credit)

     0.1        0.1        (1.6     (0.3

Actuarial loss

     2.5        1.4        0.9        0.8   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3.0      $ 2.3      ($ 0.1   $ 1.7   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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WPL

   Qualified Defined
Benefit Pension Plan
    Other Postretirement
Benefits Plans
 
   2012     2011     2012     2011  

Service cost

   $ 1.3      $ 1.2      $ 0.7      $ 0.8   

Interest cost

     4.1        4.0        1.0        1.4   

Expected return on plan assets

     (5.6     (5.0     (0.3     (0.3

Amortization of:

        

Prior service cost (credit)

     0.1        0.1        (1.0     (0.3

Actuarial loss

     3.1        1.8        0.6        0.5   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3.0      $ 2.1      $ 1.0      $ 2.1   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Directly assigned defined benefit pension plans

   IPL     WPL  
   2012     2011     2012     2011  

Interest cost

   $ 1.8      $ 1.9      $ 1.3      $ 1.4   

Expected return on plan assets

     (2.4     (2.4     (1.8     (1.8

Amortization of:

        

Prior service credit

     (0.1     (0.1     (0.1     (0.1

Actuarial loss

     1.0        0.7        0.9        0.7   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.3      $ 0.1      $ 0.3      $ 0.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Corporate Services provides services to IPL and WPL, and as a result, IPL and WPL are allocated pension and other postretirement benefits costs associated with Corporate Services employees. The following table includes the allocated qualified and non-qualified pension and other postretirement benefits costs associated with Corporate Services employees providing services to IPL and WPL for the three months ended March 31 (in millions):

 

     Pension Benefits      Other Postretirement  
     Costs      Benefits Costs  
     2012      2011      2012      2011  

IPL

   $ 0.5       $ 0.4       $ —         $ 0.4   

WPL

     0.3         0.3         —           0.2   

Estimated Future and Actual Employer ContributionsAlliant Energy’s, IPL’s, and WPL’s estimated and actual funding for the qualified defined benefit pension, non-qualified defined benefit pension and other postretirement benefits plans, and the directly assigned qualified and non-qualified defined benefit pension plans amounts for 2012 are as follows (in millions):

 

     Estimated for Calendar Year 2012      Actual Through March 31, 2012  
     Alliant Energy          IPL              WPL          Alliant Energy          IPL              WPL      

Qualified defined benefit pension plans

   $ —         $ —         $ —         $ —         $ —         $ —     

Non-qualified defined benefit pension plans (a)

     17.0         N/A         N/A         2.1         N/A         N/A   

Directly assigned defined benefit pension plans (b)

     N/A         0.8         0.2         N/A         0.2         —     

Other postretirement benefits plans

     5.4         1.1         3.9         2.2         1.1         1.0   

 

(a) Alliant Energy sponsors several non-qualified defined benefit pension plans that cover certain current and former key employees of IPL and WPL. Alliant Energy allocates pension costs to IPL and WPL for these plans.
(b) Amounts directly assigned to IPL and WPL for non-bargaining employees who are participants in Alliant Energy and Corporate Services sponsored qualified and non-qualified defined benefit pension plans.

Cash Balance PlanRefer to Note 11(b) for discussion of a class action lawsuit filed against the Cash Balance Plan in 2008 and the Internal Revenue Service (IRS) review of the tax qualified status of the Cash Balance Plan.

401(k) Savings PlansA significant number of Alliant Energy, IPL and WPL employees participate in defined contribution retirement plans (401(k) savings plans). For the three months ended March 31, Alliant Energy’s, IPL’s and WPL’s costs related to the 401(k) savings plans, which are partially based on the participants’ level of contribution, were as follows (in millions):

 

     Alliant Energy      IPL (a)      WPL (a)  
     2012      2011      2012      2011      2012      2011  

401(k) costs

   $ 5.2       $ 5.7       $ 2.7       $ 2.9       $ 2.3       $ 2.6   

 

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(a) IPL’s and WPL’s amounts include allocated costs associated with Corporate Services employees.

(b) Equity Incentive Plans—A summary of compensation expense and the related income tax benefits recognized for share-based compensation awards for the three months ended March 31 was as follows (in millions):

 

     Alliant Energy      IPL      WPL  
     2012      2011      2012      2011      2012      2011  

Compensation expense

   $ 1.6       $ 2.2       $ 0.8       $ 1.2       $ 0.7       $ 0.9   

Income tax benefits

     0.6         0.9         0.3         0.5         0.3         0.4   

As of March 31, 2012, total unrecognized compensation cost related to share-based compensation awards was $14.1 million, which is expected to be recognized over a weighted average period of between one and two years. Share-based compensation expense is recognized on a straight-line basis over the requisite service periods and is primarily recorded in “Utility—other operation and maintenance” in the Condensed Consolidated Statements of Income.

In the first quarter of 2012, Alliant Energy granted performance shares, performance units, performance-contingent restricted stock and performance contingent cash awards to certain key employees. Payouts of nonvested awards issued in 2012 are prorated at retirement, death, disability or involuntary termination without cause based on time worked during the first year of the performance period and achievement of the performance criteria. Upon achievement of the performance criteria, payouts of these awards to participants who terminate employment after the first year of the performance period due to retirement, death, disability or involuntary termination without cause are not prorated. Participants’ nonvested awards issued in 2012 are forfeited if the participant voluntarily leaves Alliant Energy or is terminated for cause.

Performance Shares and UnitsAlliant Energy assumes it will make future payouts of its performance shares and units in cash; therefore, performance shares and units are accounted for as liability awards.

Performance Shares—A summary of the performance shares activity for the three months ended March 31 was as follows:

 

     2012     2011  
     Shares (a)     Shares (a)  

Nonvested shares, Jan. 1

     236,979        234,518   

Granted

     45,612        64,217   

Vested (b)

     (111,980     (57,838
  

 

 

   

 

 

 

Nonvested shares, March 31

     170,611        240,897   
  

 

 

   

 

 

 

 

(a) Share amounts represent the target number of performance shares. Each performance share’s value is based on the price of one share of Alliant Energy’s common stock at the end of the performance period. The actual number of shares that will be paid out upon vesting is dependent upon actual performance and may range from zero to 200% of the target number of shares.
(b) In the first quarter of 2012, 111,980 performance shares granted in 2009 vested at 162.5% of the target, resulting in payouts valued at $8.0 million, which consisted of a combination of cash and common stock (6,399 shares). In the first quarter of 2011, 57,838 performance shares granted in 2008 vested at 75% of the target, resulting in payouts valued at $1.6 million, which consisted of a combination of cash and common stock (1,387 shares).

Performance Units—A summary of the performance unit activity for the three months ended March 31 was as follows:

 

     2012     2011  
     Units (a)     Units (a)  

Nonvested units, Jan. 1

     42,996        23,128   

Granted

     24,686        23,975   

Forfeited

     (878     (569
  

 

 

   

 

 

 

Nonvested units, March 31

     66,804        46,534   
  

 

 

   

 

 

 

 

(a) Unit amounts represent the target number of performance units. Each performance unit’s value is based on the average price of one share of Alliant Energy’s common stock on the grant date of the award. The actual payout for performance units is dependent upon actual performance and may range from zero to 200% of the target number of units.

 

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Fair Value of Awards—Information related to fair values of nonvested performance shares and units at March 31, 2012, by year of grant, were as follows:

 

     Performance Shares     Performance Units  
     2012     2011     2010     2012     2011     2010  
     Grant     Grant     Grant     Grant     Grant     Grant  

Nonvested awards

     45,612        62,170        62,829        24,686        21,693        20,425   

Alliant Energy common stock closing price on March 31, 2012

   $ 43.32      $ 43.32      $ 43.32         

Alliant Energy common stock average price on grant date

         $ 43.05      $ 38.75      $ 32.56   

Estimated payout percentage based on performance criteria

     93     105     161     93     105     161

Fair values of each nonvested award

   $ 40.29      $ 45.49      $ 69.75      $ 40.04      $ 40.69      $ 52.41   

At March 31, 2012, fair values of nonvested performance shares and units were calculated using a Monte Carlo simulation to determine the anticipated total shareowner returns of Alliant Energy and its investor-owned utility peer groups. 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 rates announced prior to the measurement date and stock prices at the measurement date. The risk-free interest rate was based on the three-year U.S. Treasury rate in effect as of the measurement date.

Restricted StockRestricted stock consists of time-based and performance-contingent restricted stock.

Time-based restricted stock—A summary of the time-based restricted stock activity for the three months ended March 31 was as follows:

 

     2012      2011  
           Weighted            Weighted  
           Average            Average  
     Shares     Fair Value      Shares     Fair Value  

Nonvested shares, Jan. 1

     35,800      $ 30.87         70,033      $ 32.27   

Granted

     —          —           5,000        39.86   

Vested

     (32,466     29.95         (33,516     35.34   
  

 

 

      

 

 

   

Nonvested shares, March 31

     3,334        39.86         41,517        30.71   
  

 

 

      

 

 

   

Performance-contingent restricted stock—A summary of the performance-contingent restricted stock activity for the three months ended March 31 was as follows:

 

     2012      2011  
           Weighted            Weighted  
           Average            Average  
     Shares     Fair Value      Shares     Fair Value  

Nonvested shares, Jan. 1

     301,738      $ 32.60         296,190      $ 32.32   

Granted

     45,612        43.05         64,217        38.75   

Vested

     (65,172     32.56         (53,274     37.93   

Forfeited

     (70,527     39.93         (5,395     38.00   
  

 

 

      

 

 

   

Nonvested shares, March 31

     211,651        32.42         301,738        32.60   
  

 

 

      

 

 

   

Non-qualified Stock OptionsA summary of the stock option activity for the three months ended March 31 was as follows:

 

     2012      2011  
           Weighted            Weighted  
           Average            Average  
           Exercise            Exercise  
     Shares     Price      Shares     Price  

Outstanding, Jan. 1

     63,889      $ 24.21         163,680      $ 24.51   

Exercised

     (13,400     24.83         (20,591     27.79   
  

 

 

      

 

 

   

Outstanding and exercisable, March 31

     50,489        24.04         143,089        24.04   
  

 

 

      

 

 

   

 

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The weighted average remaining contractual term for options outstanding and exercisable at March 31, 2012 was between one and two years. The aggregate intrinsic value of options outstanding and exercisable at March 31, 2012 was $1.0 million.

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

 

     2012      2011  

Cash received from stock options exercised

   $ 0.3       $ 0.6   

Aggregate intrinsic value of stock options exercised

     0.2         0.2   

Income tax benefit from the exercise of stock options

     0.1         0.1   

Performance Contingent Cash Awards—A summary of the performance contingent cash awards activity for the three months ended March 31 was as follows:

 

     2012     2011  
     Awards     Awards  

Nonvested awards, Jan. 1

     46,676        23,428   

Granted

     36,936        23,975   

Vested (a)

     (21,605     —     

Forfeited

     (1,533     —     
  

 

 

   

 

 

 

Nonvested awards, March 31

     60,474        47,403   
  

 

 

   

 

 

 

 

(a) In the first quarter of 2012, 21,605 performance contingent cash awards granted in 2010 vested, resulting in cash payouts valued at $0.9 million.

(6) COMMON EQUITY

Common Share ActivityA summary of Alliant Energy’s common stock activity during the three months ended March 31, 2012 was as follows:

 

Shares outstanding, Jan. 1

     111,018,821   

Equity incentive plans (Note 5(b))

     (5,116

Other (a)

     (51,616
  

 

 

 

Shares outstanding, March 31

     110,962,089   
  

 

 

 

 

(a) Includes shares transferred from employees to Alliant Energy to satisfy tax withholding requirements in connection with the vesting of certain restricted stock under the equity incentive plans.

Dividend RestrictionsAs of March 31, 2012, IPL’s amount of retained earnings that were free of dividend restrictions was $323 million. As of March 31, 2012, WPL’s amount of retained earnings that were free of dividend restrictions was $84 million for the remainder of 2012.

Restricted Net Assets of Subsidiaries—As of March 31, 2012, the amount of net assets of IPL and WPL that were not available to be transferred to their parent company, Alliant Energy, in the form of loans, advances or cash dividends without the consent of IPL’s and WPL’s regulatory authorities was $1.0 billion and $1.4 billion, respectively.

Capital Transactions with Subsidiaries—In the first quarter of 2012, IPL and WPL paid common stock dividends of $29.7 million and $28.1 million, respectively, to their parent company.

(7) DEBT

(a) Short-term Debt—Information regarding commercial paper issued under Alliant Energy’s, IPL’s and WPL’s credit facilities classified as short-term debt and other short-term borrowings was as follows (dollars in millions; Not Applicable (N/A)):

 

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     Alliant Energy     Parent               

At March 31, 2012

   (Consolidated)     Company     IPL      WPL  

Commercial paper:

         

Amount outstanding

   $ 57.0      $ 33.7      $ —         $ 23.3   

Remaining maturity

     2 days        2 days        N/A         2 days   

Weighted average interest rates

     0.3     0.4     N/A         0.3

Available credit facility capacity (a)

   $ 918.0      $ 266.3      $ 275.0       $ 376.7   

 

     Alliant Energy     IPL     WPL  

For the quarter ended March 31

   2012     2011     2012     2011     2012     2011  

Maximum amount outstanding
(based on daily outstanding balances)

   $ 102.8      $ 96.5      $ 35.4      $ 12.1      $ 32.7      $ 96.5   

Average amount outstanding
(based on daily outstanding balances)

   $ 66.4      $ 55.4      $ 12.8      $ 1.2      $ 13.1      $ 55.4   

Weighted average interest rates

     0.3     0.3     0.4     0.3     0.2     0.3

 

(a) Alliant Energy’s and IPL’s available credit facility capacities reflect outstanding commercial paper classified as both short- and long-term debt at March 31, 2012. Refer to Note 7(b) for further discussion of $25 million of commercial paper outstanding at March 31, 2012 classified as long-term debt.

(b) Long-term Debt—As of March 31, 2012, $25 million of commercial paper was recorded in “Long-term debt, net” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets due to the existence of long-term credit facilities that back-stop this commercial paper balance, along with Alliant Energy’s and IPL’s intent and ability to refinance these balances on a long-term basis. As of March 31, 2012, this commercial paper balance had a remaining maturity of 3 days and a 0.4% interest rate.

(8) INVESTMENTS

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

 

     Alliant Energy     WPL  
     2012     2011     2012     2011  

American Transmission Company LLC (ATC)

   ($ 9.9   ($ 9.2   ($ 9.9   ($ 9.2

Other

     0.5        (0.7     (0.2     (0.2
  

 

 

   

 

 

   

 

 

   

 

 

 
   ($ 9.4   ($ 9.9   ($ 10.1   ($ 9.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Summary financial information from the unaudited financial statements of ATC for the three months ended March 31 was as follows (in millions):

 

     2012      2011  

Operating revenues

   $ 147.7       $ 139.6   

Operating income

     78.1         76.5   

Net income

     58.1         54.2   

(9) FAIR VALUE MEASUREMENTS

Fair Value of Financial InstrumentsThe carrying amounts of Alliant Energy’s, IPL’s and WPL’s current assets and current liabilities approximate fair value because of the short maturity of such financial instruments. Carrying amounts and the related estimated fair values of other financial instruments at March 31, 2012 and Dec. 31, 2011 were as follows (in millions):

 

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     Alliant Energy      IPL      WPL  
     Carrying      Fair      Carrying      Fair      Carrying      Fair  
     Amount      Value      Amount      Value      Amount      Value  

March 31, 2012

                 

Assets:

                 

Money market fund investments

   $ 21.3       $ 21.3       $ 21.3       $ 21.3       $ —         $ —     

Derivative assets (Note 10)

     10.4         10.4         5.9         5.9         4.5         4.5   

Deferred proceeds (sales of receivables) (Note 3)

     32.9         32.9         32.9         32.9         —           —     

Capitalization and liabilities:

                 

Long-term debt (including current maturities) (Note 7(b))

     2,729.6         3,317.0         1,334.1         1,582.0         1,082.3         1,409.0   

Cumulative preferred stock of subsidiaries

     205.1         220.6         145.1         161.4         60.0         59.2   

Derivative liabilities (Note 10)

     83.2         83.2         38.1         38.1         45.1         45.1   

Dec. 31, 2011

                 

Assets:

                 

Derivative assets (Note 10)

     15.7         15.7         10.6         10.6         5.1         5.1   

Deferred proceeds (sales of receivables) (Note 3)

     53.7         53.7         53.7         53.7         —           —     

Capitalization and liabilities:

                 

Long-term debt (including current maturities) (Note 7(b))

     2,704.5         3,325.3         1,309.0         1,560.4         1,082.2         1,439.0   

Cumulative preferred stock of subsidiaries

     205.1         222.5         145.1         164.3         60.0         58.2   

Derivative liabilities (Note 10)

     78.0         78.0         33.6         33.6         44.4         44.4   

Valuation Techniques -

Money market fund investments—As of March 31, 2012, money market fund investments were measured at fair value using quoted market prices on listed exchanges.

Derivative assets and derivative liabilities—Alliant Energy, IPL and WPL periodically use derivative instruments for risk management purposes to mitigate exposures to fluctuations in certain commodity prices, transmission congestion costs and currency exchange rates. Alliant Energy, IPL and WPL maintain risk policies that govern the use of derivative instruments. Alliant Energy’s, IPL’s and WPL’s derivative instruments as of March 31, 2012 and Dec. 31, 2011 were not designated as hedging instruments. Alliant Energy’s, IPL’s and WPL’s derivative instruments as of March 31, 2012 and Dec. 31, 2011 included electric physical forward purchase contracts and swap contracts to mitigate pricing volatility for the electricity purchased to supply to IPL’s and WPL’s customers; electric physical forward sale contracts to offset long positions created by reductions in electricity demand forecasts; natural gas swap contracts to mitigate pricing volatility for the fuel used to supply to the natural gas-fired electric generating facilities they operate; natural gas options to mitigate price increases during periods of high demand or lack of supply; financial transmission rights (FTRs) acquired to manage transmission congestion costs; natural gas physical forward purchase and natural gas option contracts to mitigate pricing volatility for natural gas supplied to IPL’s and WPL’s retail customers; and natural gas physical purchase and sale contracts to optimize the value of natural gas pipeline capacity.

IPL’s and WPL’s swap, option and physical forward commodity contracts were non-exchange-based derivative instruments and were valued using indicative price quotations available through a pricing vendor that provides daily exchange forward price settlements, from broker or dealer quotations or from on-line exchanges. The indicative price quotations reflected the average of the bid-ask mid-point prices and were obtained from sources believed to provide the most liquid market for the commodity. IPL and WPL corroborated a portion of these indicative price quotations using quoted prices for similar assets or liabilities in active markets and categorized derivative instruments based on such indicative price quotations as Level 2. IPL’s and WPL’s commodity contracts that were valued using indicative price quotations based on significant assumptions such as seasonal or monthly shaping and indicative price quotations that could not be readily corroborated were categorized as Level 3. IPL’s and WPL’s swap, option and physical forward commodity contracts were predominately at liquid trading points. IPL’s and WPL’s FTRs were measured at fair value each reporting date using monthly or annual auction shadow prices from relevant auctions. Refer to Note 10 for additional details of derivative assets and derivative liabilities.

 

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Deferred proceeds (sales of receivables)—The fair value of IPL’s deferred proceeds related to its sales of receivables program was calculated each reporting date using the cost approach valuation technique. The fair value represents the carrying amount of receivables sold less the allowance for doubtful accounts associated with the receivables sold and cash proceeds received from the receivables sold. Deferred proceeds represent IPL’s maximum exposure to loss related to the receivables sold due to the short-term nature of the collection period. Refer to Note 3 for additional information regarding deferred proceeds.

Long-term debt (including current maturities)—For long-term debt instruments that are actively traded, the fair value was based upon quoted market prices for similar liabilities each reporting date. For long-term debt instruments that are not actively traded, the fair value was based on discounted cash flow methodology and utilizes assumptions of current market pricing curves at each reporting date. Refer to Note 7(b) for additional information regarding long-term debt.

Cumulative preferred stock of subsidiaries—The fair value of IPL’s 8.375% cumulative preferred stock was based on its closing market price quoted by the New York Stock Exchange on each reporting date. The fair value of WPL’s 4.50% cumulative preferred stock was based on the closing market price quoted by the NYSE Amex LLC on each reporting date. The fair value of WPL’s remaining preferred stock was calculated based on the market yield of similar securities.

Valuation HierarchyFair value measurement accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy and examples of each are as follows:

Level 1—Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date. As of March 31, 2012, Level 1 items included money market fund investments, IPL’s 8.375% cumulative preferred stock and WPL’s 4.50% cumulative preferred stock.

Level 2—Pricing inputs are quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active as of the reporting date. As of March 31, 2012 and Dec. 31, 2011, Level 2 items included IPL’s and WPL’s non-exchange traded commodity contracts. Level 2 items as of March 31, 2012 also included the remainder of WPL’s cumulative preferred stock and substantially all of the long-term debt instruments.

Level 3—Pricing inputs are unobservable inputs for assets or liabilities for which little or no market data exist and require significant management judgment or estimation. As of March 31, 2012 and Dec. 31, 2011, Level 3 items included IPL’s deferred proceeds, and IPL’s and WPL’s FTRs and certain commodity contracts.

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. Items subject to fair value measurement disclosure requirements were as follows (Not Applicable (N/A); in millions):

 

      March 31, 2012      Dec. 31, 2011  
     Fair      Level      Level      Level      Fair      Level      Level      Level  

Alliant Energy

   Value      1      2      3      Value      1      2      3  

Assets:

                       

Money market fund investments

   $ 21.3         21.3       $ —         $ —         $ —         $ —         $ —         $ —     

Derivatives—commodity contracts

     10.4         —           4.9         5.5         15.7         —           3.4         12.3   

Deferred proceeds

     32.9         —           —           32.9         53.7         —           —           53.7   

Capitalization and liabilities:

                       

Long-term debt (including current maturities)

     3,317.0         —           3,316.5         0.5         N/A         N/A         N/A         N/A   

Cumulative preferred stock of subsidiaries

     220.6         171.1         49.5         —           N/A         N/A         N/A         N/A   

Derivatives—commodity contracts

     83.2         —           62.6         20.6         78.0         —           64.8         13.2   

 

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      March 31, 2012      Dec. 31, 2011  
     Fair      Level      Level      Level      Fair      Level      Level      Level  

IPL

   Value      1      2      3      Value      1      2      3  

Assets:

                       

Money market fund investments

   $ 21.3       $ 21.3       $ —         $ —         $ —         $ —         $ —         $ —     

Derivatives—commodity contracts

     5.9         —           2.3         3.6         10.6         —           1.3         9.3   

Deferred proceeds

     32.9         —           —           32.9         53.7         —           —           53.7   

Capitalization and liabilities:

                       

Long-term debt

     1,582.0         —           1,582.0         —           N/A         N/A         N/A         N/A   

Cumulative preferred stock

     161.4         161.4         —           —           N/A         N/A         N/A         N/A   

Derivatives—commodity contracts

     38.1         —           23.1         15.0         33.6         —           28.6         5.0   
     March 31, 2012      Dec. 31, 2011  
     Fair      Level      Level      Level      Fair      Level      Level      Level  

WPL

   Value      1      2      3      Value      1      2      3  

Assets:

                       

Derivatives—commodity contracts

   $ 4.5       $ —         $ 2.6       $ 1.9       $ 5.1       $ —         $ 2.1       $ 3.0   

Capitalization and liabilities:

                       

Long-term debt

     1,409.0         —           1,409.0         —           N/A         N/A         N/A         N/A   

Cumulative preferred stock

     59.2         9.7         49.5         —           N/A         N/A         N/A         N/A   

Derivatives—commodity contracts

     45.1         —           39.5         5.6         44.4         —           36.2         8.2   

In accordance with IPL’s and WPL’s fuel and natural gas recovery mechanisms, prudently incurred costs from derivative instruments are recovered from customers in the future after any losses are realized. Based on these recovery mechanisms, the changes in the fair value of derivative liabilities resulted in comparable changes to regulatory assets and the changes in the fair value of derivative assets resulted in comparable changes to regulatory liabilities on the Condensed Consolidated Balance Sheets.

The significant unobservable inputs (Level 3 inputs) used in the fair value measurement of IPL’s and WPL’s commodity contracts are forecasted electricity and natural gas prices, and the expected volatility of such prices. Significant changes in any of those inputs would result in a significantly lower or higher fair value measurement. Information for fair value measurements using significant unobservable inputs (Level 3 inputs) for the three months ended March 31 was as follows (in millions):

 

      Derivative Assets and (Liabilities), net        
     Commodity Contracts     Foreign Contracts     Deferred Proceeds  

Alliant Energy

   2012     2011     2012      2011     2012     2011  

Beginning balance, Jan. 1

   ($ 0.9   $ 2.8      $ —         $ 4.7      $ 53.7      $ 152.9   

Total losses (realized/unrealized) included in changes in net assets (a)

     (12.5     (0.5     —           —          —          —     

Transfers into Level 3 (b)

     (3.8     —          —           —          —          —     

Transfers out of Level 3 (c)

     5.3        —          —           —          —          —     

Settlements (d)

     (3.2     (3.4     —           (2.6