SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report
(Date of earliest
event reported): February 1, 2000
Alliant Energy Corporation
(Exact name of registrant as specified in its charter)
Wisconsin 1-9894 39-1380265
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices, including zip code)
(608) 252-3311
(Registrant's telephone number)
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Item 5. Other Events.
On February 1, 2000, Alliant Energy Resources, Inc., a wholly-owned
subsidiary of Alliant Energy Corporation (the "Company"), completed a private
placement of 5,940,960 Exchangeable Senior Notes due 2030 (the "Exchangeable
Senior Notes") in accordance with Rule 144A under the Securities Act of 1933, as
amended. The Exchangeable Senior Notes were issued in the original aggregate
principal amount of $402.5 million and have an interest rate of 7.25% through
February 15, 2003 and 2.5% thereafter. The Exchangeable Senior Notes are
exchangeable for cash based upon a percentage of the value of McLeodUSA
Incorporated Class A Common Stock ("McLeodUSA Stock"). The Company has agreed to
fully and unconditionally guarantee the payment of principal and interest on the
Exchangeable Senior Notes. As described below, the issuance of the Exchangeable
Senior Notes may have certain accounting consequences for the Company that may
affect the Company's reported earnings.
Applicable accounting rules require the Company to record in the
Company's statement of income any increase or decrease in the settlement value
(i.e., the amount payable upon redemption or maturity) of the Exchangeable
Senior Notes that results from changes in the market value of McLeodUSA Stock.
Subject to applicable redemption premiums, the settlement value of the
Exchangeable Senior Notes at any point in time is generally (assuming no
deferrals of interest payments) the higher of (i) the original principal amount
plus accrued interest less cash dividends or other distributions on the
McLeodUSA Stock or (ii) the current market value of the shares of McLeodUSA
Stock attributable to the Exchangeable Senior Notes. Any increase or decrease in
the settlement value of the Exchangeable Senior Notes will be recorded as
subtractions from, or additions to, the Company's reported net income. A
significant increase in the market value of McLeodUSA Stock would significantly
decrease the Company's reported net income. Similarly, a significant decrease in
the market value of McLeodUSA Stock would significantly increase the Company's
reported net income, subject to the condition that the settlement value of the
Exchangeable Senior Notes will not be reduced below the original principal
amount plus accrued interest less cash dividends or other distributions on the
McLeodUSA Stock. These increases and decreases in reported investment income in
the Company's statement of income will be non-cash in nature and will be
reflected on the Company's balance sheet as increases and decreases in long-term
debt.
The Company records its investment in the McLeodUSA Stock (some of
which shares are attributable to the Exchangeable Senior Notes) at its fair
value, with changes in fair value recorded in other comprehensive income.
Although the Company is not required to do so under the indenture pursuant to
which the Exchangeable Senior Notes were issued, while the Exchangeable Senior
Notes remain outstanding, the Company may hold shares of McLeodUSA Stock at
least equal to the number of shares of McLeodUSA Stock attributable to the
Exchangeable Senior Notes outstanding (the "Reference Stock"). If the Company
continues to hold the Reference Stock, changes in the market value of the
Reference Stock would generally approximately offset any changes in long-term
debt, resulting in no material effect on the Company's reported common equity.
However, if the market value of the Reference Stock decreases to an amount less
than the settlement value of the Exchangeable Senior Notes, then the Company's
reported common equity will decrease by an amount equal to the difference
between the settlement value of the Exchangeable Senior Notes and the market
value of the Reference Stock. If the Company no longer holds the Reference
Stock, then the Company's reported common equity will increase or
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decrease to reflect changes in the Company's long-term debt resulting from
changes in the principal amount outstanding on the Exchangeable Senior Notes due
to fluctuations in the market value of McLeodUSA Stock.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), Accounting for Derivative
Instruments and Hedging Activities, which is required to be adopted by the
Company no later than January 1, 2001. The Company may choose to adopt SFAS 133
early. SFAS 133 may only be adopted on the first day of any quarter prior to the
required adoption date. SFAS 133 will require the Company to split the value of
the Exchangeable Senior Notes into a debt component and a derivative component.
Any changes in the fair value of the derivative component subsequent to the SFAS
133 adoption date will be reflected as an increase or decrease in the Company's
reported net income. At the date of initial adoption, SFAS 133 provides the
Company a one-time ability to transfer any of the Company's available-for-sale
securities, including a portion of its shares of McLeodUSA Stock, to the trading
category. At the date of any such transfer from available-for-sale to trading,
the Company would recognize in income the appreciation in the shares
transferred. Although the Company is not required to hold a number of shares of
McLeodUSA Stock equal to the number of Exchangeable Senior Notes outstanding, if
the Company does so and if the Company elects to make this transfer from
available-for-sale to trading, changes subsequent to the SFAS 133 adoption date
in the fair value of the shares of McLeodUSA Stock so transferred will be
reflected as an increase or decrease in the Company's reported net income.
Changes in the market value of the McLeodUSA Stock are expected to at least
partially offset changes in the fair value of the derivative component of the
Exchangeable Senior Notes; however, there may be periods with significant
non-cash increases or decreases to the Company's net income pertaining to the
Exchangeable Senior Notes and the related shares of McLeodUSA Stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLIANT ENERGY CORPORATION
Date: February 15, 2000 By: /s/ Daniel A. Doyle
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Daniel A. Doyle
Vice President, Chief Accounting and
Financial Planning Officer
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