MADISON, Wis., Aug. 6 /PRNewswire-FirstCall/ -- Alliant Energy Corp.
(NYSE: LNT) today announced net income and earnings per share (EPS) for the
second quarter of 2008 of $60.8 million and $0.55, respectively, compared to
$48.6 million and $0.43 for the same period in 2007. A summary of Alliant
Energy's second quarter earnings is as follows (net income in millions):
(Logo: http://www.newscom.com/cgi-bin/prnh/20020405/LNTLOGO)
2008 2007
Earnings from continuing operations: Net Income EPS Net Income EPS
Utility $36.2 $0.33 $40.3 $0.36
Non-regulated 12.6 0.11 3.2 0.03
Parent (primarily interest income) 3.0 0.03 1.5 0.01
Total earnings from continuing operations 51.8 0.47 45.0 0.40
Income from discontinued operations 9.0 0.08 3.6 0.03
Net income $60.8 $0.55 $48.6 $0.43
EPS for Alliant Energy's utility business contained two significant events
that are non-recurring in nature in the second quarter of 2008 as compared to
the same period in 2007. Severe Midwest flooding in June 2008 decreased
earnings $0.07 per share while income tax benefits recognized from a U.S.
federal income tax audit settlement, also in June 2008, increased earnings
$0.07 per share. The other key drivers that reduced utility earnings include
the negative factors of higher transmission-related costs at Interstate Power
and Light Co. (IPL) and cooler weather on its electric margins. These items
were partially offset by the annual adjustments to electric unbilled revenue
estimates.
EPS for Alliant Energy's non-regulated businesses were higher in the
second quarter of 2008 as compared to the same period in 2007 primarily due to
$0.04 of income tax benefits recognized from a U.S. federal income tax audit
settlement in the second quarter of 2008 and $0.02 of increased earnings from
the RMT WindConnect(R) business. EPS for the parent company was higher due to
interest income earned on short-term investments purchased with a portion of
the IPL electric transmission asset sale proceeds, which were distributed to
the parent company in the fourth quarter of 2007.
'While our second quarter results contained some unusual impacts such as a
settlement with the Internal Revenue Service on a U.S. federal income tax
audit and the June flooding in our service territory , the utility and non-
regulated operations continue to deliver positive results,' said Bill Harvey,
Alliant Energy Chairman, President, and CEO. 'During the second quarter, we
also signed the largest contract in our company's history, securing 500
megawatts of wind turbine generators from Vestas-American Wind Technology,
Inc. Along with our proposed hybrid baseload coal units and energy efficiency
programs, we expect wind to play an integral part of a plan to meet our
customers' future energy needs in a manner that balances reliability,
economics, and the environment.'
Additional details regarding Alliant Energy's second quarter EPS from
continuing operations for 2008 and 2007 are as follows:
2008 2007 Variance
Utility operations:
Electric margins:
Annual unbilled revenue estimate adjustments $0.02 ($0.03) $0.05
Electric service disruptions due to severe
Midwest flooding in Q2 2008 (0.03) -- (0.03)
Net impact of weather and weather hedges (0.02) 0.01 (0.03)
Lower purchased power capacity costs 0.03
at Wisconsin Power and Light Co (WPL)
Lower industrial sales at WPL (0.02)
Retail fuel-related impacts at WPL 0.06 0.05 0.01
Other (includes lower wheeling revenues due
to IPL's transmission assets sale) (0.02)
Gas margins 0.01
Steam margins (primarily service disruption
from Midwest flooding in Q2 2008) (0.01)
Operating expenses:
Net impact from IPL's electric transmission
assets sale (0.04)
Midwest flooding costs in Q2 2008, net of
estimated insurance recoveries (0.03) -- (0.03)
Planned outage costs at M.L. Kapp Plant in
Q2 2008 (0.02)
Other (includes higher employee healthcare
costs) (0.02)
Changes in effective income tax rate:
U.S. federal income tax audit settlement in
Q2 2008 0.07 -- 0.07
Other 0.01
Accretive effect of fewer shares outstanding 0.01
Total utility operations 0.33 0.36 (0.03)
Non-regulated operations:
U.S. federal income tax audit settlement in
Q2 2008 0.04 -- 0.04
RMT and WindConnect(R) 0.03 0.01 0.02
Non-regulated Generation 0.03 0.02 0.01
Transportation 0.01 0.02 (0.01)
Other (primarily interest and taxes) -- (0.02) 0.02
Total non-regulated operations 0.11 0.03 0.08
Parent company (primarily interest income) 0.03 0.01 0.02
Earnings per share from continuing operations $0.47 $0.40 $0.07
The following comments are offered to further explain three of the larger
drivers of earnings performance during the second quarter of 2008.
U.S. Federal Income Tax Audit Settlement: In June 2008, Alliant Energy
recorded the impacts of its finalized U.S. federal income tax audit for
calendar years 2002 through 2004 and recorded known adjustments for the tax
returns for calendar years 2005 and 2006. As a result, the company recognized
benefits primarily related to additional research and development expenditures
claimed through the audit as well as reduced interest costs. Alliant Energy's
utility business and non-regulated businesses recorded benefits in continuing
operations of $0.07 and $0.04 per share, respectively. The settlement also
resulted in a benefit of $0.08 per share allocated to discontinued operations
largely related to Alliant Energy's former Australia and China businesses.
Midwest Flooding: Electric and steam margins, as well as operating and
maintenance expenses, were all adversely impacted by the June 2008 flooding
that occurred in IPL's service territory. The total flood-related impact
recorded in the second quarter reduced utility earnings by $0.07 per share.
Alliant Energy estimates that flood costs will reduce utility earnings for the
remainder of 2008 by an additional $0.08 per share. The total estimated
impact of the flooding in 2008 of $0.15 per share is less than the $0.20 per
share originally estimated by the company primarily due to customers returning
to service faster than anticipated. Alliant Energy continues to work with the
relevant regulatory agencies on recovery of flood related costs that are not
covered by insurance, the energy adjustment clause in Iowa, or export steam
contract adjustments.
Retail Fuel-Related Impacts at WPL: In April 2008, WPL began collecting
fuel-related costs at a higher interim rate as a result of its fuel rate
adjustment filing that was made in March 2008. Since the time of the filing,
WPL has experienced lower fuel costs than it projected for the second quarter.
WPL recorded a reserve of $1 million in the second quarter in anticipation of
a refund to customers when final fuel rates are implemented later this year.
2008 Earnings Guidance
Alliant Energy is increasing its 2008 earnings guidance range for earnings
from continuing operations to $2.60 to $2.80 per share, which includes changes
to both utility and non-regulated earnings ranges. The modest decrease at the
utilities is primarily due to the impacts of the June 2008 Midwest flooding,
which are partially offset by the recent settlement with the IRS on U.S.
federal income tax audits of prior years and the benefits of our lean six
sigma activities on improving productivity and controlling utility operating
costs. The non-regulated businesses increase is driven by the tax settlement
and improved results across the core operations of RMT WindConnect(R),
Transportation, and non-regulated generation. Details of the current and
prior guidance for 2008 are as follows:
Prior Flood Tax Revised
Guidance Impact Settlement Other Guidance
Utility business $2.23 - 2.43 $(0.15) $0.07 $0.05 $2.20 - 2.40
Non-regulated
businesses 0.21 - 0.25 - 0.04 0.05 0.30 - 0.34
Parent company 0.08 - 0.10 - - - 0.08 - 0.10
Alliant Energy $2.55 - 2.75 $2.60 - 2.80
The guidance does not include the impact of any potential asset valuation
charges that Alliant Energy may incur, the impact of certain non-cash
valuation adjustments (including emission allowances), the impact of any
future adjustments made to Alliant Energy's deferred tax asset valuation
allowances, the impacts of any cumulative effects of changes in accounting
principles, any gains/losses and related tax impact that may be realized from
possible sales of certain Alliant Energy assets that would be reported in
earnings from continuing operations, or the potential tax impacts of capital
costs components of the flooding yet to be finalized for which deferred tax
expense is not recorded pursuant to Iowa tax rate making principles.
