(As filed October 11, 2001)
File No. 70-9837
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------------------
FORM U-1/A
AMENDMENT NO. 2
TO
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
--------------------------------------------------------
ALLIANT ENERGY CORPORATION
222 West Washington Avenue
Madison, Wisconsin 53703
INTERSTATE POWER COMPANY
1000 Main Street
P.O. Box 759
Dubuque, Iowa 52004
IES UTILITIES INC.
Alliant Energy Tower
200 First Street SE
Cedar Rapids, Iowa 52401
(Names of companies filing this statement
and addresses of principal executive offices)
-----------------------------------------------------
ALLIANT ENERGY CORPORATION
222 West Washington Avenue
Madison, Wisconsin 53703
(Name of top registered holding company parent)
------------------------------------------------------
Edward M. Gleason, Vice President-Treasurer
and Corporate Secretary
Alliant Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703
(Name and address of agent for service)
---------------------------------------------------------
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Alliant Energy Corporation Thelen Reid & Priest LLP
222 West Washington Avenue 40 West 57th Street
Madison, Wisconsin 53703 New York, New York 10019
Kent Ragsdale, Managing Attorney
Alliant Energy Tower
Alliant Energy Corporate Services, Inc.
200 First Street SE
Cedar Rapids, Iowa 52401
2
The Application/Declaration filed in this proceeding on January 22, 2001,
as amended by Amendment No. 1, filed February 14, 2001, is hereby amended and
restated in its entirety to read as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
-----------------------------------
Alliant Energy Corporation ("Alliant Energy"), a registered holding company
under the Public Utility Holding Company Act of 1935, as amended (the "Act"),
and its wholly-owned public-utility subsidiaries, Interstate Power Company
("IPC") and IES Utilities Inc. ("IESU"), request authorization for the merger of
IPC into IESU (the "Merger") and for certain other transactions that are
incidental thereto. Alliant Energy, IPC and IESU are collectively referred to
herein as the "Applicants." The Merger will be governed by the Agreement and
Plan of Merger, as amended, between IESU and IPC, dated as of March 15, 2000
("Merger Agreement"), which is filed herewith as Exhibit B.
On February 14, 2001, the Commission issued a notice of the filing of the
Application/Declaration in this proceeding and an order authorizing IESU to
solicit proxies from the holders of the outstanding shares of IESU's preferred
stock ("Proxy Solicitation"), which were voted in favor of the Merger at a
special meeting of shareholders held on April 23, 2001.1 The form of proxy
statement used in the Proxy Solicitation is included in Exhibit C hereto.
1.1 Background.
----------
IPC was incorporated in 1925 under the laws of the State of Delaware.
Currently, IPC is a public utility engaged principally in the generation,
transmission, distribution and sale of electric energy. At December 31, 2000,
IPC served approximately 169,000 customers in 234 communities in portions of 25
counties in northern and northeastern Iowa, portions of 22 counties in southern
Minnesota, and portions of four counties in northwestern Illinois. IPC also
served approximately 51,000 natural gas customers in 41 communities in Illinois,
Minnesota and Iowa. At December 31, 2000, IPC owned interests in 12 principal
fossil-fueled electric generating stations having a total generating capacity of
1,067.7 MW. IPC also owns approximately 2,600 miles of electric transmission
lines and 222 substations. Its gas transportation and distribution system
consists of approximately 91 miles of 4-inch to 20-inch pipelines and 916 miles
of distribution mains. For the twelve months ended June 30, 2001, IPC had
operating revenues of $380,047,374, of which $304,958,840 (approximately 80%)
were derived from electric utility operations and $75,088,534 (approximately
20%) from gas operations. At June 30, 2001, IPC had total assets of
$656,120,000, including property, plant and equipment net of accumulated
depreciation totaling $527,135,000.
IPC is subject to regulation as a public utility by the Iowa Utilities
Board ("IUB"), the Minnesota Public Utilities Commission ("MPUC"), and the
Illinois Commerce Commission ("ICC") as to its retail electric and gas rates,
and by the Federal Energy Regulatory Commission ("FERC") as to wholesale
electric rates.
-------------------
1 Alliant Energy Corporation, et al., Holding Co. Act Release No. 27346
---------------------------------
(Feb. 14, 2001).
3
IESU was incorporated in 1925 under the laws of the State of Iowa as Iowa
Railway and Light Corporation. As of December 31, 2000, IESU provided retail
electric service to approximately 347,000 customers in 525 communities and
retail natural gas service to approximately 182,000 customers in 212 communities
in Iowa, wholesale electric service to five customers, and steam for heat and
industrial purposes in Cedar Rapids, Iowa. At December 31, 2000, IESU owned
interests in 13 principal fossil-fueled generating stations and one nuclear
generating station having a combined generating capacity of 1,945.7 MW. IESU
also owns approximately 4,448 miles of electric transmission lines and 577
substations, substantially all of which are in Iowa. Its gas distribution system
consists of approximately 139 miles of 4-inch to 10-inch pipelines and
approximately 3,836 miles of distribution mains. For the twelve months ended
June 30, 2001, IESU had operating revenues of $997,613,503, of which
$697,649,623 (approximately 70%) were derived from electric operations,
$267,735,564 (approximately 26.8%) from gas operations, and $32,228,316
(approximately 3.2%) from steam operations. At June 30, 2001, IESU had total
assets of $1,793,929,000, including property, plant and equipment net of
accumulated depreciation equal to $1,416,740,000.
IESU is subject to regulation by the IUB with respect to its retail
electric and gas rates and service and by the FERC with respect to its wholesale
electric rates. IESU is also subject to regulation by the Nuclear Regulatory
Commission.
As a result of the three-way business combination in 1998 of IPC, IESU, and
Wisconsin Power and Light Company ("WPL"), another wholly-owned public-utility
subsidiary of Alliant Energy, the electric utility facilities of IPC, IES and
WPL are operated as an interconnected and coordinated electric utility system.
The electric generation facilities of IPC, IESU and WPL are jointly dispatched
using the principles of economic dispatch. A System Coordination and Operating
Agreement ("SCOA") on file at the FERC establishes the procedures for the
dispatch of the generation facilities of IPC, IESU and WPL and the allocation of
costs among them. Certain transmission services are available over their
combined transmission systems at a single rate in accordance with an open access
transmission tariff that has been filed with the FERC.
1.2 Summary of Proposed Transaction.
-------------------------------
Under the terms of the Merger Agreement, IPC will be merged into IESU. Upon
the consummation of the Merger, the surviving company will be renamed
"Interstate Power and Light Company." As a result of the Merger, all of IPC's
assets and liabilities will, by operation of law, become the assets and
liabilities of IESU, and IESU (under its new name) will operate as an electric
and gas utility company in portions of Iowa, Minnesota and Illinois.
At the time of the Merger, each share of IPC common stock that is issued
and outstanding or held in treasury immediately before the effective date of the
Merger will be canceled without payment. Shares of IESU common stock issued and
outstanding at the time of the Merger will be unaffected by the Merger and will
remain outstanding as issued and outstanding shares of common stock of the
surviving corporation.
The Merger has been approved by a majority of the votes entitled to be cast
by the holder of IESU common stock (all of which are held by Alliant Energy) and
by the holders of a majority of the outstanding shares of each class of IESU
preferred stock voting as individual classes. IESU currently has outstanding
4
366,406 shares of cumulative preferred stock, par value $50 per share, issued in
three series (4.30%, 4.80% and 6.10%) ("IESU Preferred Stock"). In addition, an
amendment to IESU's Amended and Restated Articles of Incorporation, as described
below, that is necessary in order to consummate the Merger was approved by the
holders of IESU's common stock and of each class of the IESU Preferred Stock,
all voting as separate classes.
The Merger has also been approved by the affirmative vote of holders of a
majority of the outstanding IPC common stock (all of which are held by Alliant
Energy) and IPC preferred stock entitled to vote, voting together as one class.
IPC currently has outstanding 761,381 shares of cumulative preferred stock, par
value $50 per share, issued in four series (4.36%, 4.68%, 7.76% and 6.40%) ("IPC
Preferred Stock"). Because Alliant Energy beneficially owns 92.8% of the
aggregate voting power of all IPC shareowners, its vote in favor of the Merger
assured approval of the Merger by IPC's shareholders.
At the time of the Merger, each share of IPC Preferred Stock will cease to
be outstanding and will be converted into and become the right to receive one
share of new Class A preferred stock ("New Class A Preferred Stock") of IESU,
the surviving corporation, to be issued in series that will correspond with each
series of the IPC Preferred Stock so converted. As indicated above, IESU's
shareholders also approved an amendment to IESU's Amended and Restated Articles
of Incorporation that authorizes the New Class A Preferred Stock. (See Exhibit
A-3 hereto). The New Class A Preferred Stock will be issued in series and each
series will have rights, designations and preferences that are substantially
identical to the corresponding series of IPC Preferred Stock that are currently
outstanding. The amendment only authorized enough shares of New Class A
Preferred Stock (namely, 761,381 shares) as are necessary in order to carry out
the exchange for the existing shares of IPC Preferred Stock.2
Shares of IESU Preferred Stock issued and outstanding prior to the
effective time of the Merger will be unaffected by the Merger and will remain
outstanding as shares of preferred stock of IESU following the Merger. Under
Iowa law (as applicable to IESU) and Delaware law (as applicable to IPC),
holders of IPC Preferred Stock and/or IESU Preferred Stock will have the right
to assert dissenters' rights and receive appropriate consideration for their
shares.
All debt currently issued and outstanding by IESU and IPC will remain
outstanding after the Merger. As of June 30, 2001, IESU had a total of
$692,740,000 of outstanding long term debt, which included $234,400,000 of
collateral trust bonds, $51,000,000 of first mortgage bonds, $22,340,000 of
pollution control obligations, $50,000,000 of subordinated deferrable interest
debentures, and $335,000,000 of senior debentures, plus $28 million of capital
lease obligations, which are classified as long-term debt for financial
reporting purposes. As of June 30, 2001, IPC had a total of $173,150,000 of long
term debt outstanding, which included $144,000,000 of first mortgage bonds and
$29,150,000 of pollution control revenue bonds. IESU will assume all existing
debt, liabilities and other obligations of IPC. Following the Merger,
bondholders of the two companies will continue to be secured by the liens
created under their respective mortgage indentures.
-------------------
2 IESU's shareholders also approved a second amendment to IESU's Amended and
Restated Articles of Incorporation to change IESU's name to "Interstate
Power and Light Company."
5
The Merger has been structured to qualify for tax purposes as a tax-free
"reorganization" under Section 368(a) of the Internal Revenue Code. As a result,
no gain or loss will be recognized by IESU or IPC and the holders of IPC
Preferred Stock who exchange their shares for shares of New Class A Preferred
Stock will also not recognize any gain or loss. IPC and IESU expect that the
Merger will qualify as a common control merger for accounting and financial
reporting purposes. The accounting for a common control merger is similar to a
pooling of interests. Under this accounting treatment, the combination of the
ownership interests of the two companies is recognized and the recorded assets,
liabilities, and capital accounts are carried forward at existing historical
balances to the consolidated financial statements of IESU (as the surviving
company) following the Merger.
On a pro forma basis, giving effect to the Merger as of June 30, 2001, IESU
will have total assets of approximately $2,449,982,000, including net utility
plant of $1,937,620,000. IESU's pro forma consolidated capitalization as of
June 30, 2001 (assuming conversion of all IPC Preferred Stock to New Class A
Preferred Stock) will be as follows:
---------------------------------------- --------------------- -------
Common Equity $ 795,203,000 44.7%
---------------------------------------- --------------------- -------
Preferred Stock $ 53,908,000 3.0%
---------------------------------------- --------------------- -------
Long-term Debt (excl. current $ 867,316,000 48.8%
maturities)
---------------------------------------- --------------------- -------
Short-term Debt (incl. $ 61,412,000 3.5%
current maturities and borrowings from
Utility Money Pool)
---------------------------------------- --------------------- -------
Total $1,777,839,000 100%
---------------------------------------- --------------------- -------
The Merger is conditioned upon the receipt of all necessary regulatory
approvals from various state utility commissions, the FERC, and this Commission.
With the exception of the approval of the Commission, all regulatory approvals
have been obtained (see Items 4 and 6).
After consummation of the Merger, IESU (under its new name - Interstate
Power and Light Company) will continue to provide electric and gas service to
retail customers previously served by IPC under the same rates, terms and
conditions as those previously applicable to service by IPC. Moreover, costs
allocated to IPC's and IESU's customers will not change as a result of the
Merger. Specifically, IESU and IPC intend that all generation-related costs that
are allocated to IPC under the SCOA will not change as a result of the Merger.
Consequently, IPC's retail customers receiving bundled electric service will not
experience any rate changes solely due to the Merger. Fuel costs allocated to
IPC under the SCOA and charged through appropriate fuel cost adjustment clauses
in IPC's rates will not change as a result of the Merger. It is also expected
that following the Merger, non-fuel costs previously allocated to IPC under the
Alliant Energy system service company agreement will be allocated to IESU.
6
1.3 Purpose and Effect of the Merger.
--------------------------------
By merging IPC into IESU, the Applicants will simplify the corporate
structure of Alliant Energy's holding company system and reduce costs related to
redundant reporting requirements. In addition, the Applicants believe that the
Merger offers the following significant benefits to IESU and IPC and their
respective stockholders, employees and customers:
o Integration of Corporate and Administrative Functions--the Merger will
consolidate certain administrative functions of IESU and IPC, thereby
reducing non-labor corporate and administrative expenses. IESU and IPC
also expect to realize savings by eliminating certain redundant
maintenance contracts and eliminating some redundant operations
personnel. In addition, some savings in areas such as regulatory
costs, legal, audit and consulting fees are expected to be realized.
o Maintenance of competitive rates--following the Merger, IESU (as the
surviving company) will be better able to meet the challenges of the
increasingly competitive environment in the utility industry than
either IESU or IPC standing alone. The Merger will create the
opportunity for financial and operational benefits for customers in
the form of more competitive rates over the long term. The Merger also
offers shareholders greater financial strength and financial
flexibility.
The Applicants believe that synergies from the Merger will generate cost
savings which would not be available absent the Merger, with no adverse
consequences for either customers or shareholders. Although there can be no
assurances that such results will be achieved, preliminary estimates by the
Applicants indicate that the Merger could result in potential net cost savings
(that is, after taking into account the costs incurred to achieve such savings)
of approximately $4.4 million during the ten-year period following the Merger.
The Merger will not have any negative impact on competition or on effective
local regulation. Accordingly, the Applicants believe that the Merger is in
accordance with the applicable standards of the Act and the rules and
regulations thereunder.
1.4 Other Related Matters.
---------------------
IESU and IPC participate with WPL and Alliant Energy Corporate Services,
Inc., in the Alliant Energy system utility money pool arrangement ("Utility
Money Pool") that is funded, as needed, through the issuance of commercial paper
by Alliant Energy and surplus funds invested by the money pool participants
(other than WPL). See File No. 70-9317; Holding Co. Act Release Nos. 26956 (Dec.
18, 1998) and 27304 (Dec. 15, 2000). IESU and IPC are currently authorized to
incur short-term borrowings from Alliant Energy and each other under the terms
of the Utility Money Pool in an aggregate principal amount at any time
outstanding not to exceed $150 million and $100 million, respectively, through
the remainder of the current authorization period (June 30, 2004). As of
June 30, 2001, IESU had approximately $42 million loaned to the Utility Money
Pool and IPC had approximately $40 million in outstanding borrowings under the
Utility Money Pool. Following the Merger, it is proposed that the limit on
borrowings by IESU, as the surviving company, be increased to $250 million,
7
which is equal to the sum of the current limits on borrowings by IPC and IESU.3
All other terms, conditions and limitations under the Utility Money Pool order
will continue to apply without change.
IESU and IPC are also currently authorized to issue and sell long-term
secured and unsecured debt securities from time to time through June 30, 2004.
IESU is authorized to issue and sell in one or more transactions any combination
of collateral trust bonds, senior unsecured debentures, and unsecured
subordinated debentures, and to enter into agreements with respect to tax-exempt
bonds, in an aggregate principal amount at any time outstanding not to exceed
$200 million. See File No. 70-9375; Holding Co. Act Release Nos. 26945 (Nov. 25,
1998) and 27306 (Dec. 15, 2000). IPC is authorized to issue and sell in one or
more transactions any combination of first mortgage bonds, senior unsecured
debentures, and unsecured subordinated debentures, and to enter into agreements
with respect to tax-exempt bonds, in an aggregate principal amount at any time
outstanding not to exceed $80 million. See File No. 70-9377; Holding Co. Act
Release Nos. 26946 (Nov. 25, 1998) and 27305 (Dec. 15, 2000). Following the
Merger, it is proposed that IESU's long-term debt limitation in File No. 70-9375
be increased to $300 million.4 All other terms, conditions and limitations on
IESU's authorization in File No. 70-9375 will continue to apply without change.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
------------------------------
The total fees, commissions and expenses paid or incurred in
connection with the Proxy Solicitation were approximately $206,518, as follows:
Filing fee under 1934 Act $ 9,518
Printing and mailing 20,000
Proxy solicitation agent 15,000
Attorneys fees and expenses 95,000
Accountants fees and expenses 65,000
Miscellaneous 2,000
--------
Total $206,518
Other fees, commissions and expenses incurred or to be incurred in
connection with the transactions proposed herein, which consist primarily of
attorneys' fees, are estimated at not more than $245,000.
-------------------
3 IPC's separate borrowing authorization under the Utility Money Pool order
will expire effective upon its merger into IESU.
4 IPC's authorization in File No. 70-9377 will expire effective upon its
merger into IESU.
8
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
3.1 General. Sections 6, 7, 9, 10, and 12 of the Act and Rules 43, 44,
-------
45 and 54 thereunder are applicable to the transactions. The proposed
transactions involve the merger of two wholly-owned public utility subsidiaries
of Alliant Energy and certain other related transactions. The electric and gas
utility operations of these two companies will be unaffected by the Merger. The
Merger will allow the companies to achieve a greater level of coordination in
both electric and gas operations and enable the companies to achieve greater
economies in capital costs, among other benefits. In addition, the Merger will
simplify the Alliant Energy corporate structure.
Section 12(e) of the Act and Rules 62 and 65 thereunder are applicable to
the Proxy Solicitation. As indicated, the holders of IESU Preferred Stock were
asked to approve the Merger and a related amendment to IESU's Amended and
Restated Articles of Incorporation to authorize the New Class A Preferred Stock
to be issued in the Merger. The designations, rights and preferences of each
series of the New Class A Preferred Stock will be substantially identical to the
corresponding series of IPC Preferred Stock for which it will be exchanged.
3.2 Rule 54 Analysis. The transactions proposed herein are also subject to
----------------
Section 32(h)(4) of the Act and Rule 54 thereunder. Rule 54 provides that, in
determining whether to approve any transaction that does not relate to an
"exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"), as
defined in Sections 32 and 33, respectively, the Commission shall not consider
the effect of the capitalization or earnings of any subsidiary which is an EWG
or FUCO upon the registered holding company system if paragraphs (a), (b) and
(c) of Rule 53 are satisfied.
Alliant Energy is in compliance with all requirements of Rule 53(a).
Alliant Energy's "aggregate investment" (as defined in Rule 53(a)(1)(i)) in all
EWGs and FUCOs is currently $355.5 million, or about 36.5% of Alliant Energy's
"consolidated retained earnings" (also as defined in Rule 53(a)(1)(ii) and
including Alliant Energy's accumulated other comprehensive income) for the four
quarters ended June 30, 2001 ($972.7 million). In addition, Alliant Energy has
complied and will comply with the record-keeping requirements of Rule 53(a)(2),
the limitation under Rule 53(a)(3) on the use of the personnel of Alliant
Energy's domestic operating utilities to render services to EWGs and FUCOs, and
the requirements of Rule 53(a)(4) concerning the submission of copies of certain
filings under the Act to retail regulatory commissions. Finally, none of the
circumstances described in Rule 53(b) has occurred or is continuing. Rule 53(c)
is by its terms inapplicable, as the proposed transaction does not involve the
issuance of securities to finance an investment in any EWG.
ITEM 4. REGULATORY APPROVALS.
--------------------
Various aspects of the Merger have been approved by the IUB, the ICC and
the MPUC. In addition, IPC has made a notice filing with the ICC with respect to
the transfer of its electric properties to IES. Copies of the petitions and
notice to the IUB, the ICC and the MPUC are filed herewith as Exhibits D-1, D-2,
D-3 and D-4. Copies of the approval orders issued by these commissions are filed
as Exhibits D-5, D-6, and D-8 hereto.
9
The Merger is also subject to approval by the FERC under section 203 of the
Federal Power Act. On March 31, 2000, IESU and IPC filed a joint application
with the FERC for approval of the Merger, and on July 7, 2000, the FERC issued
its order approving the Merger. Copies of the joint application and FERC order
are filed as Exhibits D-9 and D-10 hereto.
ITEM 5. PROCEDURE.
---------
The Applicants request that the Commission's Order with respect to the
Merger be issued as soon as practicable and that such Order remain effective
through January 31, 2002. The Applicants further request that there should not
be a 30-day waiting period between issuance of the Commission's orders and the
date on which the orders are to become effective, hereby waive a recommended
decision by a hearing officer or any other responsible officer of the
Commission, and consent that the Division of Investment Management may assist in
the preparation of the Commission's decision and/or orders, unless the Division
opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
A. - EXHIBITS.
--------
A-1 Amended and Restated Articles of Incorporation of IESU.
(Incorporated by reference to Exhibit 3.5 of IESU's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, in File No. 0-4117-1.)
A-2 Bylaws of IESU, as amended, effective as of January 30,
2001. (Incorporated by reference to Exhibit 3.6 to IESU's
Annual Report on Form 10-K for the year ended December 31,
2000).
A-3 Proposed Articles of Amendment to Amended and Restated
Articles of Incorporation of IESU. (See Appendix D to
Exhibit C).
B Agreement and Plan of Merger, as amended, dated as of
March 15, 2000, between IESU and IPC. (See Appendix A to
Exhibit C).
C Registration Statement on Form S-4 of IESU, as amended,
including Proxy Statement/Prospectus to be used in
connection with Merger. (Incorporated by reference to File
No. 333-53846).
D-1 Copy of Petition to the IUB. (Form SE - Paper Format).
D-2 Copy of Petition to the ICC for approval of transfer of gas
properties. (Previously filed).
D-3 Notice to the ICC of transfer of electric properties.
D-4 Copy of Petition to the MPUC. (Previously filed).
10
D-5 Copy of Order of the IUB. (Previously filed).
D-6 Copy of Order of the ICC approving transfer of gas
properties.
D-7 Deleted.5
D-8 Copy of Order of the MPUC. (Form SE - Paper Format).
D-9 Copy of Petition to the FERC. (Previously filed).
D-10 Copy of Order of the FERC. (Previously filed).
E Map of IESU and IPC Service Areas. (Form SE - Previously
filed).
F Opinion of Counsel.
G Form of Federal Register Notice. (Previously filed).
B. FINANCIAL STATEMENTS.
--------------------
FS-1 Consolidated Balance Sheet of IES Utilities Inc., as of
June 30, 2001. (Incorporated by reference to IES Utilities
Inc.'s Quarterly Report on Form 10-Q for the six months
ended June 30, 2001, File No. 0-4117-1).
FS-2 Consolidated Statement of Income of IES Utilities Inc. for
the twelve months ended June 30, 2001.
FS-3 Consolidated Balance Sheet of Interstate Power Company, as
of June 30, 2001.
FS-4 Consolidated Income Statement of Interstate Power Company
for the twelve months ended June 30, 2001.
FS-5 Unaudited Pro Forma Combined Balance Sheet of IES Utilities
Inc. (Interstate Power and Light Company), as of June 30,
2001.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
The transaction that is the subject of this Application/Declaration
does not involve a "major federal action" nor does it "significantly affect the
quality of the human environment" as those terms are used in section 102(2)(C)
of the National Environmental Policy Act. Such transaction will not result in
changes in the operation of the Applicants that will have an impact on the
environment. The Applicants are not aware of any federal agency that has
-------------------
5 The transfer of IPC's electric properties to IES, as described in the
Notice filed as Exhibit D-3, is permitted to take place without formal
action by the ICC upon expiration of the statutory notice period.
11
prepared or is preparing an environmental impact statement with respect to the
transaction that is the subject of this Application/Declaration.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned companies have duly caused this
Application/Declaration filed herein, as amended, to be signed on their behalf
by the undersigned thereunto duly authorized.
ALLIANT ENERGY CORPORATION
By: /s/ Edward M. Gleason
------------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
INTERSTATE POWER COMPANY
By: /s/ Edward M. Gleason
------------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
IES UTILITIES INC.
By: /s/ Edward M. Gleason
------------------------------------
Name: Edward M. Gleason
Title: Vice President-Treasurer and
Corporate Secretary
Date: October 11, 2001
12
FS-2
IES UTILITIES INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Twelve Months Ended June 30,
2001 2000
--------------------------------------------------------------------------------
OPERATING REVENUES:
Electric utility $697,649,623 $639,758,928
Gas utility 267,735,564 149,391,405
Steam 32,228,316 25,450,610
Other - 117,588
------------ ------------
997,613,503 814,718,531
------------ ------------
--------------------------------------------------------------------------------
OPERATING EXPENSES:
Electric production fuels 100,333,922 102,793,490
Steam production fuels 21,319,652 15,213,856
Purchased power 128,877,756 73,250,680
Cost of gas sold 206,536,551 93,811,681
Other operation 171,560,510 169,103,008
Maintenance 51,015,108 49,439,640
Depreciation and amortization 109,441,295 103,788,392
Taxes other than income taxes 45,390,982 48,114,600
------------ ------------
834,475,776 655,515,347
------------ ------------
--------------------------------------------------------------------------------
OPERATING INCOME 163,137,727 159,203,184
------------ ------------
--------------------------------------------------------------------------------
INTEREST EXPENSE AND OTHER:
Interest expense 47,709,827 47,461,635
Interest expense - intercompany 3,692,521 2,347,226
Interest income (4,116,389) (7,044,009)
Interest income - intercompany (914,511) -
Dividend income (9,816) (10,245)
Allowance for equity funds used
during construction (1,073,536) (482,956)
Allowance for borrowed funds used
during construction (3,014,605) (1,562,665)
Equity income from unconsolidated
investments - (1,779)
Other deductions 1,748,879 427,501
------------ ------------
44,022,370 41,134,708
------------ ------------
--------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 119,115,357 118,068,476
------------ ------------
--------------------------------------------------------------------------------
INCOME TAXES 46,475,256 50,468,293
------------ ------------
--------------------------------------------------------------------------------
NET INCOME 72,640,101 67,600,183
------------ ------------
--------------------------------------------------------------------------------
PREFERRED DIVIDEND REQUIREMENTS 914,376 914,376
------------ ------------
--------------------------------------------------------------------------------
EARNINGS AVAILABLE FOR COMMON STOCK $ 71,725,725 $ 66,685,807
============ ============
--------------------------------------------------------------------------------
FS-3
INTERSTATE POWER COMPANY
CONSOLIDATED BALANCE SHEET (Unaudited)
AS OF JUNE 30, 2001
ASSETS:
Property, plant and equipment:
Utility:
Plant in service:
Electric $ 952,820,412
Gas 80,088,971
Other 15,105,164
--------------
Subtotal 1,048,014,547
Less - Accumulated depreciation (541,419,626)
--------------
Total net plant in service 506,594,921
Construction work in progress 20,327,060
--------------
Total utility plant, net 526,921,981
Other property, plant and equipment, net 212,781
--------------
Total property, plant and equipment 527,134,762
--------------
Current assets:
Cash and cash equivalents 1,288,652
Accounts receivable - customers 5,595,252
Accounts receivable - other 1,712,899
Unbilled utility revenues 10,177,689
Current notes receivable 819,598
Allowance for doubtful accounts (accounts receivable - customers) (346,367)
Intercompany receivables (accounts, notes, dividends, taxes, etc.) 1,033,208
Income taxes receivable 1,656,649
Production fuel, at average cost 16,217,519
Materials and supplies, at average cost 6,051,025
Gas stored underground, at average cost 1,884,328
Regulatory assets 5,631,256
Restricted cash 918,043
Prepayments and other 3,334,295
--------------
Total current assets 55,974,046
--------------
Investments:
Cash surrender value - life insurance policies 2,265,486
Other 4,896,111
--------------
Total investments 7,161,597
--------------
Other assets:
Regulatory assets 64,520,519
Non-current notes receivable 576,667
Unamortized debt expenses 1,108,221
Deferred charges and other (356,169)
--------------
Total other assets 65,849,238
--------------
--------------
Total assets $ 656,119,643
==============
INTERSTATE POWER COMPANY
CONSOLIDATED BALANCE SHEET (Unaudited) (Continued)
AS OF JUNE 30, 2001
CAPITALIZATION AND LIABILITIES:
Capitalization:
Common stock and additional paid-in capital $ 142,880,189
Retained earnings 80,926,877
--------------
Total common equity 223,807,066
--------------
Preferred stock (optional sinking fund) 10,819,050
Preferred stock (mandatory sinking fund) 24,768,940
Long-term debt (excluding current portion) 170,445,526
--------------
Total capitalization 429,840,582
--------------
Current liabilities:
Notes payable to associated companies 39,851,613
Capital lease obligation 13,814
Accounts payable 9,796,964
Dividends payable - preferred 598,570
Intercompany payables (accounts, notes, dividends, taxes, etc.) 11,688,974
Accrued payroll and vacations 2,903,665
Accrued interest 2,506,255
Accrued other taxes (property, payroll, etc.) 13,333,190
Environmental liabilities 1,112,000
Current derivative liability 1,363,985
Other current liabilities 2,389,438
--------------
Total current liabilities 85,558,468
--------------
Deferred credits and other non-current liabilities:
Accumulated deferred income taxes 92,639,793
Accumulated deferred investments tax credit 12,310,886
Pension and other benefit obligations 8,974,086
Capital lease obligation 47,895
Environmental liabilities 14,164,035
Customer advances 432,052
Other 12,151,846
--------------
Total long-term liabilities 140,720,593
--------------
--------------
Total liabilities and capitalization $ 656,119,643
==============
FS-4
INTERSTATE POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Twelve Months Ended June 30,
2001 2000
--------------------------------------------------------------------------------
OPERATING REVENUES:
Electric utility $304,958,840 $297,513,760
Gas utility 75,088,534 41,409,493
------------ ------------
380,047,374 338,923,253
------------ ------------
--------------------------------------------------------------------------------
OPERATING EXPENSES:
Electric production fuels 60,755,266 51,276,988
Purchased power 60,366,551 67,832,842
Cost of gas sold 54,298,625 24,620,448
Other operation 74,984,223 71,976,150
Maintenance 16,767,352 17,881,602
Depreciation and amortization 36,770,425 33,208,304
Taxes other than income taxes 17,739,652 14,864,582
------------ ------------
321,682,094 281,660,916
------------ ------------
--------------------------------------------------------------------------------
OPERATING INCOME 58,365,280 57,262,337
------------ ------------
--------------------------------------------------------------------------------
INTEREST EXPENSE AND OTHER:
Interest expense 13,697,244 13,579,261
Interest expense - intercompany 3,295,851 1,895,675
Interest income (790,824) (539,940)
Allowance for equity funds used
during construction 566 276,180
Allowance for borrowed funds used
during construction (851,461) (816,981)
Other income (1,578,783) (1,540,163)
------------ ------------
13,772,593 12,854,032
------------ ------------
--------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 44,592,687 44,408,305
------------ ------------
--------------------------------------------------------------------------------
INCOME TAXES 15,564,426 17,433,475
------------ ------------
--------------------------------------------------------------------------------
NET INCOME 29,028,261 26,974,830
------------ ------------
--------------------------------------------------------------------------------
PREFERRED DIVIDEND REQUIREMENTS 2,491,932 2,484,882
------------ ------------
--------------------------------------------------------------------------------
EARNINGS AVAILABLE FOR COMMON STOCK $ 26,536,329 $ 24,489,948
============ ============
--------------------------------------------------------------------------------
FS-5
INTERSTATE POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 2001
(IN THOUSANDS)
PRO FORMA
ADJUSTMENTS PRO FORMA
IESU IPC (SEE NOTE 1) COMBINED
----------------------------------------------
ASSETS
PROPERTY, PLANT AND EQUIPMENT:
Utility -
Plant in service -
Electric $2,278,922 $ 952,821 $ - $3,231,743
Gas 225,888 80,089 - 305,977
Steam 59,554 - - 59,554
Common 164,146 15,104 - 179,250
----------------------------------------------
2,728,510 1,048,014 - 3,776,524
Less - Accumulated depreciation 1,449,731 541,419 - 1,991,150
----------------------------------------------
1,278,779 506,595 - 1,785,374
Construction work in progress 87,782 20,327 - 108,109
Leased nuclear fuel, net 44,137 - - 44,137
----------------------------------------------
1,410,698 526,922 - 1,937,620
Other property, plant and equipment, net 6,042 213 - 6,255
----------------------------------------------
1,416,740 527,135 - 1,943,875
----------------------------------------------
-------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and temporary cash investments 9,478 1,288 - 10,766
Temporary cash investments with
associated companies 41,840 - - 41,840
Accounts receivable:
Customer, net 9,975 15,427 - 25,402
Associated companies 1,528 1,034 (67) 2,495
Other, net 8,521 1,713 - 10,234
Production fuel, at average cost 11,022 16,218 - 27,240
Materials and supplies, at average cost 24,302 6,051 - 30,353
Gas stored underground, at average cost 7,187 1,884 - 9,071
Regulatory assets 6,306 5,631 - 11,937
Prepayments and other 2,805 6,727 - 9,532
----------------------------------------------
122,964 55,973 (67) 178,870
----------------------------------------------
-------------------------------------------------------------------------------------------
INVESTMENTS:
Nuclear decommissioning trust funds 115,558 - - 115,558
Other 6,281 7,162 - 13,443
----------------------------------------------
121,839 7,162 - 129,001
----------------------------------------------
-------------------------------------------------------------------------------------------
OTHER ASSETS:
Regulatory assets 115,697 64,521 - 180,218
Deferred charges and other 16,689 1,329 - 18,018
----------------------------------------------
132,386 65,850 - 198,236
----------------------------------------------
-------------------------------------------------------------------------------------------
TOTAL ASSETS $1,793,929 $ 656,120 ($67) $2,449,982
==============================================
-------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ARE
AN INTEGRAL PART OF THIS STATEMENT.
INTERSTATE POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 2001
(In thousands)
PRO FORMA
ADJUSTMENTS PRO FORMA
IESU IPC (SEE NOTE 1) COMBINED
----------------------------------------------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 33,427 $ 34,221 ($34,221) $ 33,427
Additional paid-in capital 279,042 108,659 34,221 421,922
Retained earnings 258,927 80,927 - 339,854
----------------------------------------------
Total common equity 571,396 223,807 - 795,203
Cumulative preferred stock, not
mandatorily redeemable 18,320 10,819 - 29,139
Cumulative preferred stock,
mandatorily redeemable - 24,769 - 24,769
Long-term debt (excluding current portion) 696,870 170,446 - 867,316
----------------------------------------------
1,286,586 429,841 - 1,716,427
----------------------------------------------
-------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Current maturities and sinking funds 21,560 - - 21,560
Capital lease obligations 16,620 14 - 16,634
Notes payable to associated companies - 39,852 - 39,852
Accounts payable 29,996 9,797 - 39,793
Accounts payable to associated companies 30,101 11,690 (67) 41,724
Accrued interest 14,303 2,507 - 16,810
Accrued taxes 45,457 13,333 - 58,790
Other 22,297 8,365 - 30,662
----------------------------------------------
180,334 85,558 (67) 265,825
----------------------------------------------
-------------------------------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes 212,330 92,639 - 304,969
Accumulated deferred investment tax credits 23,607 12,310 - 35,917
Environmental liabilities 27,601 14,164 - 41,765
Pension and other benefit obligations 25,162 8,974 - 34,136
Capital lease obligations 27,517 48 - 27,565
Other 10,792 12,586 - 23,378
----------------------------------------------
327,009 140,721 - 467,730
----------------------------------------------
-------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION AND LIABILITIES $1,793,929 $ 656,120 ($67) $2,449,982
==============================================
-------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ARE
AN INTEGRAL PART OF THIS STATEMENT.
INTERSTATE POWER AND LIGHT COMPANY
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined financial statements for the surviving company,
Interstate Power and Light Company (IP&L), combine the historical consolidated
balance sheets and statements of income of IES Utilities Inc. (IESU) and
Interstate Power Company (IPC) as adjusted by various balance sheet pro forma
adjustments identified in Note 1. Pro forma income statement adjustments were
not required. We have included all material adjustments known to us at this time
which impact the reporting periods shown.
These pro forma combined financial statements set forth the restated combined
financial data that will be presented for future comparative financial data for
the merged company. These statements are prepared on the basis of accounting for
the merger as a common control merger and are based on the assumptions set forth
in the notes hereto.
THE FOLLOWING INFORMATION IS NOT NECESSARILY INDICATIVE OF THE FINANCIAL
POSITION OR OPERATING RESULTS THAT WOULD HAVE OCCURRED HAD THE MERGER BEEN
CONSUMMATED ON THE DATE, OR AT THE BEGINNING OF THE PERIODS, FOR WHICH THE
MERGER IS BEING GIVEN EFFECT NOR IS IT NECESSARILY INDICATIVE OF FUTURE
OPERATING RESULTS OR FINANCIAL POSITION.