Alliant Energy Corp (LNT) 2004 Q1 法說會逐字稿

Thank you for holding, ladies and gentlemen, and welcome to the Alliant Energy's first-quarter 2004 earnings conference call. At this time, all lines are in a listen only mode. I would now like to turn the call over to your host, Eliot Protsch, Senior Executive Vice President and Chief Financial Officer of Alliant Energy.

Good morning and thank you for joining us today for Alliant Energy Corporation's conference call. We welcome those of you who are joining us on the call and also those of you who are joining us via the Web. We appreciate your participation.

With me today are Erroll Davis, Alliant Energy's Chairman and Chief Executive Officer, and Bill Harvey, President and Chief Operating Officer. Various other executives of the organization are also with us today. Our call is open to the general public and the media but the content is primarily designed for the financial community. We will have a question and answer period following to prepared remarks, and we'll plan to take as many questions as we can within the one-hour timeframe of today's call.

Earlier this morning, we issued a news release announcing Alliant Energy's first-quarter 2004 earnings and affirming our 2004 earnings guidance. If you haven't seen the release, a copy of it is available on our Web site in the Investors section.

Before we begin, I would like to remind you that the remarks we make on this call and our answers to your questions include forward-looking statements. These forward-looking statements are subject to risks that could cause our actual financial results to be materially different. Those risks include, among others, matters discussed in Alliant Energy's press release issued this morning and in Alliant Energy's filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements.

With that said, I will now turn over the call to Erroll Davis.

Thank you very much, Eliot. Good morning to you all and thank you again for taking time out of your busy day to join us for our call. It's a pleasure for me to be here this morning.

As demonstrated by our first-quarter results, we continued to successfully execute the strategy that we put in place last year. More specifically, earlier we reported income and earnings per share from continuing operations for the first quarter of 2004 of 34.1 million, or 31 cents per share. This compares quite favorably to income from continuing operations of 14.6 million and 16 cents per share over the first quarter of 2003. It, of course, represents a 94 percent increase in earnings per share from continuing operations.

If you look at total net income, that increased 32 cents per share in the first quarter, compared with -- from a loss of 1 cent per share in 2003.

As expected, our two domestic utilities, Interstate Power and Light Company and Wisconsin Power and Light, continue to provide the majority of our earnings. In the first quarter of 2004, they earned 36 cents per share, compared to 2003 earnings of 34 cents per share. Now, I would note that the 36 cents per share is computed based on the average shares outstanding in 2003. As many of you are aware, it is our practice to report the dilutive effect of additional shares outstanding as a separate earnings variance.

Our nonregulated businesses reported earnings of 4 cents per share from continuing operations in the first quarter of 2004, compared to a loss of 12 cents per share for the same period in 2003, which represents a 16 cent per share turnaround in these operations. Our nonregulated operations were profitable this quarter and we expect them to be profitable for the remainder of the year as well. However, we will not be satisfied until all of our businesses are earning an appropriate return on invested capital. We recognize that we still have work to do and we remain focused on the continued improvement of this portion of our business.

The results we have announced for the first quarter today also allow us to affirm our 2004 earnings guidance from continuing operations. As you are aware, this was $1.75 to $2 per share in total, which includes guidance for our domestic utilities operations of $1.70 to $1.90 per share. I should point out, however, that this guidance does include an updated estimate of 6 to 10 cents per share of charges within our nonregulated business related to debt repayment premiums we anticipate incurring as part of our continued debt reduction initiative. The guidance also includes any dilutive effects of any planned equity issuances for 2004. So, while the guidance has remained the same, we have included those two additional factors.

Now, over the past year and a half, I have talked a great deal about our -- what we call up Saibu (ph) ratio. Clearly, the successful execution in 2003 of the plan we announced in late 2002 is still a very strong foundation for us as we turn our focus toward the execution of our updated strategic plan.

We remain on track to meet our 2004 earnings guidance from continuing operations. We have made progress in implementing our domestic utility generation plan with a combined-cycle natural gas unit coming online this summer in Iowa and activities progressing for a new, simple-cycle natural gas plant to be placed in service in Wisconsin in 2005. Further, we continue to make lean Six-Sigma a part of our culture and a key component of how we do business on a daily basis. We remain on target to achieve a significant increase in the savings realized from this program in 2004, compared to 2003. We also continue to make progress in improving the financial performance in our Brazil investments. The key focus on successful execution continues at every level within this organization.

Now, with that very brief snapshot of where we are today, let me turn the call over to Bill Harvey, our President and COO, who will give you a bit more detail about our operation. He will then be followed by Eliot Protsch, our CFO, to make sure that all of these activities are put into the appropriate financial context and then we will take your questions after that. Bill?

Thanks, Erroll, and good morning, everyone. Our successful financial and operational results this quarter are a reflection of our concentration on three key areas, strategic focus, financial discipline and successful execution. It all begins with our domestic utility operations. Over the next month or so, we will conclude a successful winter and spring generation maintenance period and expect our equipment, as well as our people, to be prepared to meet our customers' summer demand. We expect to have our 565 MW combined-cycle natural gas-fired Emery plant online to serve our Iowa customers the summer. Given our future generation construction plans, it's very encouraging to see that the first plant we are constructing under our updated domestic generation plan remains both on-time and on budget. I believe that bodes well for our future success in power plant construction.

In Wisconsin, we expect the 600 MW combined-cycle natural gas-fired Riverside plant to be constructed by Calpine also to go online this summer. We have contracted for 453 MW of output from this new facility. I am happy to report that testing is underway at both facilities and both appear ready for commercial operation by June 1.

We continue to make steady progress towards our goal of having a 300 MW natural gas-fired simple-cycle (indiscernible) plant online in June of 2005 near Sheboygan Falls, Wisconsin. As we have discussed in the past, this site was already under development by Power Ventures Group, PVG, a subsidiary of Burns & McDonald. The significant (indiscernible) work that has already been completed at the site is paying dividends by allowing us to continue to move forward on a very aggressive timeline for commercial operation.

We are also proceeding on a two track process for state regulatory approvals. First, PVG will continue to work to secure all necessary permits and obtain a required certificate of public convenience and necessity from the Public Service Commission of Wisconsin. Upon successful completion of that process, our nonregulated generation business will purchase this fully permitted site from PVG and proceed to finance, construct and own the plant and lease it to our Wisconsin utility subsidiary to operate.

Second, we have filed several documents with the Public Service Commission of Wisconsin to demonstrate the need for additional generating capacity and to approve the working arrangement between our utility and non-utility affiliates. Later this spring, we expect to file the proposed lease agreement between our nonregulated generation business and Wisconsin Power and Light Company. This agreement will ultimately define the return on this investment and the cost to our customers, which we expect to be no greater than the cost of a more traditional rate-based plant over the life of the plant. We believe it will provide certainty for investors and customers and provide the Public Service Commission of Wisconsin with all the tools necessary to protect the customers' interests. In short, we believe it's an excellent model for the state as it seeks to secure a reliable energy future.

Last month, we issued a request for proposal for 100 MW of nameplate wind generating capacity to be online in Wisconsin in 2005. Moving forward with this component of our balance plan is, of course, contingent upon renewal of the federal renewable energy production tax credit. We remain very optimistic that this credit will be renewed and that these investments will go forward.

Our Wisconsin plan also calls for a 200 MW share of a new clean coal facility in 2010. Given the leadtimes necessary to build a coal-fired baseload plant, we expect to be making announcements on how we will move forward with this facility in the second or early third quarter of this year.

Working with our co-owner, Wisconsin Public Service Corporation, we continue to make solid progress on the pending sale of our interest in the Kewaunee nuclear power plant through Dominion Resources. It is our hope that this sale can be completed in time for Dominion to conduct the refueling and maintenance out of Kewaunee this fall.

We believe, overall, our generation plan is flexible, balanced and financially viable. We anticipate it will provide our customers with needed reliability but will, of course, also impact prices. There is a price to be paid for reliability but the price of unreliable service is far greater and the impacts even more devastating.

Let's shift our focus now to our nonregulated operations. We have seen additional financial improvement in Brazil again this quarter and expect to see that progress continue throughout the year. We're also continuing discussions with our partners on the future of this investment. While we work to resolve the differences we have with our partners, we remain committed to building on the progress made in improving the financial performance of these investments.

Our China and New Zealand investments remain profitable and we are optimistic that these ongoing businesses will make significant contributions for the continued improved financial performance of AER, although the Laguna del Mar investment of approximately $80 million remains a relatively small portion of our overall asset base. While we've made significant progress in the last year in the development of the project infrastructure, we have found the developer's pace and level of performance to be unacceptable and are moving to resolve that situation. As noted in a recent newspaper article, the market is ripe for this developed property and we will take those steps necessary to capture this opportunity. That may include restructuring a role for our partners or even replacing them. Our collateral is secure and it must be converted into cash via sales in a more timely manner than has been the case to date.

In summary, we have had a very successful beginning to 2004. Our focus on execution and financial discipline is delivering the results we expected. We have always had strong utility operations and those operations continue to grow even stronger. We will continue to strengthen our nonregulated businesses and while pleased with the improvements we have seen, we will not be satisfied until our portfolio is turning -- (technical difficulty) -- expected returns.

With that, I will now return the call to Eliot.

Thanks, Bill. As has been discussed, the core of our strategic plan is to build and maintain the infrastructure necessary to provide our domestic utility customers with safe, reliable, competitively priced and environmentally sound service they both demand and deserve. Accomplishing this goal will obviously require us to make incremental capital investments.

Our 2004 forecasted cash flows from operations remain in the range of 500 to 600 million for the year. Our maintenance Capital Expenditures, as well as dividends on our common stock, will largely be covered by these cash flows from operations. Our anticipated Capital Expenditures are unchanged from our previous guidance at approximately 700 million in 2004 and 610 million in 2005.

We have filed a request with the Securities and Exchange Commission to increase the number of authorized common shares. We have also filed shelf registration statements for both of our domestic utilities as well as the parent company. Increasing the authorized number of common shares is still subject to shareowner approval. If approved, we believe this increase, together with the shelf registration statement and our current liquidity position, provides us with the necessary financial flexibility to fund our growth-oriented capital expenditures.

The shelf registration for Wisconsin Power and Light is up to 150 million in preferred stock and debt securities. The shelf registration for Interstate Power and Light allows for the sale of up to 210 million in preferred stock and debt securities. The shelf registration for the parent company is to periodically sell up to 300 million in common stock, common stock purchase contracts and related stock purchase units.

In addition, in connection with this registration statement, Alliant Energy has entered into a sales agreement with Cantor Fitzgerald and Company under which we may sell, from time to time, up to 7.5 million shares of common stock. As Erroll noted, our earnings guidance fully reflects our assumptions relating to our contemplated common equity issuance in 2004. However, it is our practice not to disclose the details of these assumptions.

Taken together, these steps provide the flexibility to raise up to 660 million in aggregate from the capital markets as required to fund our growth Capital Expenditures and to refinance maturing debt securities.

I would also stress the term "up to" simply provides us with the flexibility to precede with future financings at the appropriate time and pace. One should not construe that all of these financings will be consummated in one shot or at one specific time.

I would now like to review our liquidity and balance sheet ratios. First, allow me to reiterate our commitment to monetize our residual interest of approximately 1.1 million shares in Whiting Petroleum sometime in 2004. These shares are currently trading at around $25 per share, which is approximately $10 per share higher than our basis in this investment. We have not included anything in our current earnings guidance or any gain that we may realize on this sale, but our financing assumptions contemplate receipt of the cash from the sale.

We also remain committed to maintaining a debt to total capital ratio in the high 40 to low 50 percent range over the long-term. As of the end of the first quarter of 2004, our debt to total capital ratio was 47 percent, which represents the fourth consecutive quarter that we have lowered this ratio as a part of our continued balance sheet restoration effort. This was a significant driver for the decrease in our interest expense in the first quarter in 2004 of approximately $11 million. When compared to the same period in 2003, this represents a 20 percent reduction. The majority of this decrease was within the Company's nonregulated businesses.

As of March 31, we had no short-term debt outstanding at the parent company, leaving us with available facility liquidity of 200 million. Our domestic utilities had 123 million of commercial paper outstanding with the remaining available facility liquidity of 327 million. Combined with the cash and short-term investments we had as of March 31, our consolidated liquidity position exceeded 700 million at the end of the first quarter.

I will now discuss the status of several key regulatory and legislative activities impacting our core domestic utility business. On March 15, Interstate Power and Light filed for a retail electric rate increase of $149 million. More than 90 percent of our request is directly related to investments in the infrastructure of our electric systems. Of the total request, approximately 43 percent is associated with a the Emery facility and its supporting infrastructure and thus is covered by the basic rate making principles previously approved by the Iowa's Utility Board under the provision of Iowa House File 577. These principles included a return of 12.23 percent on the common equity component of the capital structure associated with this investment. The increased regulatory certainty provided under this legislation is what made the construction of this plant possible.

Approximately 48 percent of the request covers other infrastructure investments made to ensure reliable service throughout our Iowa service territory -- (technical difficulty) -- we have requested an authorized rate of return on common equity of 11.4 percent versus the current authorized return on equity of 11.15 percent to apply to all rate-based balances other than the Emery generation station. This filing also includes a request for an interim increase of 106 million. Under the Iowa Utility Board processes, we expect the interim order to be issued in mid June. The final quarter in this case is expected in January of 2005.

While our current rate filing in Iowa will not be affected by this development, in March 2004, Senate-filed 2240 was enacted by the Iowa Legislature and subsequent signed by Governor Vilsack. File 2240 provides for interim rates to be implemented within ten days of a rate filing subject to refund versus the current 90 day standard. In addition this new legislation allows the Iowa Utility Board to consider post test year adjustments within nine months of the conclusion of the file test year. As with House File 577, Iowa has once again demonstrated that it is responsive and supportive of infrastructure development while protecting the interests of both investors and consumers.

On February 20, Wisconsin Power and Light filed for a 15.8 million fuel-only already retail electric rate increase request. On March 29, the Public Service Commission of Wisconsin issued its order in the interim request, granting the full 15.8 million. A final decision in this case is expected in three to five months. This filing was made under the provisions of the revised fuel rules recently adopted by the Public Service Commission of Wisconsin. As a result, Alliant Energy and Wisconsin Power and Light was (sic) able to significantly reduce regulatory lag while the Wisconsin Public Service Commission of Wisconsin continues to maintain appropriate consumer protection, given that interim rates are implemented subject to refund with interest.

In all of these regulatory and legislative proceedings, we believe the various governmental entities have been responsive and supportive of our mission to provide safe, reliable utility service at competitive prices for our customers and provide a fair return to our investors. We have met with numerous members of the financial community over the last several months and have heard a number of these individuals express similar positive observations. The regulatory processes have been refined where appropriate to provide for more timely decisions, increased regulatory certainty and continue to provide the level of consumer protection that has been a hallmark of utility regulation in both Iowa and Wisconsin. This will obviously benefit all of our stakeholders as we move forward with a utility build-out program of a magnitude that our company has not seen in many years.

In summary, our earnings remain on target. Our liquidity and overall financial condition are sound and our future financing plans are both flexible and executable. In short, our commitment to financial discipline and crisp execution is paying off to our customers and our shareholders. All of us at Alliant Energy continue -- tend to continue to work very hard to keep it that way.

Finally, I would like to point out that our Investor Relations activities for the remainder of the second quarter include attending the upcoming American Gas Association and Edison Electric Institute financial conferences. My colleagues and I look forward to personally meeting with many of you at these upcoming conferences.

I will now turn the call back to Erroll Davis.

Thank you very much, Bill and Eliot. As you can see hopefully, we have successfully built on the positive momentum of 2003 by delivering a very strong first quarter. Clearly, however, as we all know, one quarter does not a year make, but we are certainly committed to maintaining this momentum. There are challenges and hard work in front of us but we have a seasoned team in place and we have certainly proven that we can meet these challenges and deliver quality results. We are quite proud of what we have accomplished and seek to deliver consistent returns that add value to our shareowners through both income and share price appreciation. We're building strength and value for all of our stakeholders and we look forward to maintaining that momentum through 2004.

With that, that concludes the formal part of our presentation. So let me turn the call back over to the conference call operator to explain how the question and answer session will work.

(OPERATOR INSTRUCTIONS). Dave Parker with Robert Baird.

Good morning, everyone, and congratulations on a good quarter -- another one. Several questions -- first off, thanks for the detailed update on the regulatory proceedings. Just one question of Iowa -- did I miss a news item? Did Iowa grant you interim rates relief or is that expected here in the next few days?

That's expected 90 days after the filing, so I believe that's mid-June -- (Multiple Speakers).

Right. Secondly, maybe you could describe how the new seasonal rates for Wisconsin Power and Light may affect the following quarters in 2004?

As you know that the seasonal rates went into effect in April of last year and so we will have year-over-year comparisons, going forward. So, we just see an aberration in Quarter One here.

Okay, fine. Lastly, the premiums to retire debt -- how are you treating those on the income statement? Are those being, for instance, expensed or are those amortized over some period -- (Multiple Speakers)?

There is a separate line. They are expensed.

Okay, so they're being expensed. So, I guess, when we look at guidance year-over-year, obviously those won't be incurred in 2005? So, we will see more of the interest savings falling to the bottom-line, or the earnings?

We will certainly have lower interest costs.

The guidance, David, is net of what we expect to incur in connection with debt reduction premiums (inaudible) as Erroll indicated, includes our estimate savings affect.

Right, so if you -- in your guidance, 6 to 10 cents for additional debt pay-down or premiums associated with additional debt pay-down -- those are expensed this year, so next year, we will see more of the interest rate savings fall to the bottom-line I guess is my question?

Correct.

Lastly, I am laying out $660 million or up to $660 million of access to the capital markets. Over what time period does that -- are we talking two, three, four years?

This will be contingent upon our build schedule. Again, we're looking at probably a three to five year time frame for that -- (multiple speakers).

David Grumhaus with Copia Capital.

Good morning and congrats on a nice quarter. Can you talk a little bit about the equity plan with Cantor Fitzgerald? Essentially, you've given them the right to 7.5 million shares of stock and they can sort of (indiscernible) that out when they see fit or you will give them the green light to do it? How do you envision that working?

This is Eliot. First of all, the mechanics of the plan is posed in our various filings but to your specific question, we make the decision as to whether or not we wish to place any equity through them with regard to a particular transaction. They are merely our agents.

Do you envision doing that in a couple of chunks or just doing it intermittently, or is that to be determined?

It's basically to be determined. It could be both.

Again, it will be basically the needs of our build-out program for the utility, so -- (technical difficulty) -- always maintain appropriate capital ratios.

But you do envision that being done in this year?

I think, again, the key here is that our guidance only reflects the equity that we contemplate through sales via this particular mechanism and our dividend re-investment plan in 2004 as required on our CapEx program and maintain appropriate balance sheet ratios.

Okay. The second question for you on the utilities, which obviously had additional strong performance this quarter. I think you said, on the 10-K, that the seasonal rates were going to cost you about $6 million quarter-over-quarter. Is that correct?

That is the impact compared with last year's. They are not going to -- (Multiple Speakers).

Right, but you had a $6 million negative impact in this quarter versus the first quarter last year. Is that correct?

Yes, but no impact, going forward.

Right, I understand that. As you overcame that, rate relief was obviously a help. Can you talk a little bit about -- it sounds like retail sales were very strong. Was that really the big driver in the quarter in terms of being able to increase the net income on the domestic utility side?

It was primarily, of course, just driven by rate increases. The weather, of course, was less than favorable.

What was the amount of the weather affect?

In terms of weather, our normal weather, in Madison, for example, would be about 36/60 degree days and we were about 35/24, so we are a little less in Madison. As we get over to Cedar Rapids, normal is 34/79 and we were at 33/98.

I think the thing to look at, on a year-over-year basis, however, is that the heating degree days were a lot higher than normal last year because we had a much colder winter than we did last year. So, what you see offsetting seasonal electric rates and fewer heating days, of course, is differences in pricing due to -- and that is shown in the margins increases. We are still seeing I don't think tremendously significant but some pick-up in the economy.

Daniele Seitz with Maxcor Financial.

Good morning. I just was wondering and possibly (indiscernible) somewhere but I didn't see it. What was the currency strength (indiscernible) how much did it contribute to the up-tick in international results?

Currency did you say?

Yes.

Yes, the currency was pretty stable on a year-over-year basis. To be frank, what we see in Brazil, the currency is a lot better than we had forecast for the year, so there's probably a little upside potential in that for us. For example, in Brazil, it was 2.89 at the end of March; that's pretty -- been stable for a couple of quarters, but we had expected some softening and that is included in our forecast. So, there is some further potential upside there, we believe, in currency. But we're not going to get into the business of predicting currencies.

No, I understand -- (technical difficulty) -- contribute to the numbers a little bit?

Our forecast, you know, it's obviously in the first-quarter forecast that that contributed a bit. As I said, in going forward, our projections for the year probably contain not a lot of change in that but perhaps a little softening. So, to the extent that it stays stable, there is potentially some upside.

Some upside?

Yes.

For the rest of the year, okay. Just quickly, do you have capitalization ratio goals for year end '05? Do you want to deliver -- (technical difficulty) -- or you are satisfied with the satisfied with 11 now?

It would be our intent to continue to strengthen our balance sheet because we are basically looking at the high 40s, you know, low 50s for our consolidated debt ratio, recognizing that, as we fund out our Capital Expenditure program, that we will have some movement in those ratios.

Yes. At the end of the first quarter, our debt to total Cap ratio was 47 percent and as Eliot -- (Multiple Speakers).

Okay, then (indiscernible) maybe that was it -- (Multiple Speakers) -- probably --.

Again, we are doing to things, of course. We are paying down some high premium debt, so we will continue to reduce that debt, but were also, of course, in an aggressive building program and so we will -- again, as Eliot mentioned, we're committed to the high 40s, low 50s but again, it will be driven by our need to put utility infrastructure in place and our ability to maintain an appropriate capital ratio for those projects.

Given your CapEx program, how much do you think you will do -- I'm going to say quickly (indiscernible) do you think further in '04 or '05 or just (indiscernible) the two years combined?

As I said, our total capital program we have announced before is about $700 million. Out of that 700 million, our maintenance capital is about 475 of that; our cash flow is 500 to 600 million. So, to the extent that we have to go to the capital market, we already have out there a number of shelf offerings that will allow us to issue both equity and/or debt and preferred stock in the various operating utilities. So, that really is probably all we want to indicate in terms of timing. Again, it's going to be driven by our build programs. We will spend 700 million this year in capital. We will spend 600 million next year in next maintenance capital. Both those years will be about 475 to 500.

Thank you.

Gregg Orrill with Lehman Brothers.

Thanks, good morning. I was wondering if you could break out the pieces of international in the quarter versus last year?

Let me see if I can do that. I'm not sure I can do it versus last year as well but Brazil certainly was profitable the for us. In the country, there were about 12.6 million at the pair; that translates to about 2 million. China was about 4 million. New Zealand was about 2 million. I really don't have, on the tip of my tongue here, last year's numbers.

Fadulah Marti (ph) with Zimmer Lucas (ph) Partners.

Good morning. I'm trying to make sure that I understand. When you talk about your guidance for this year in terms of $1.75 to $2, can you help us in terms of what the fully diluted share count is that you are utilizing for that?

I appreciate your continuing to seek that exact number but as we said, we obviously are not going to give that exact number out, but we are suggesting that that guidance include whatever dilution we need to maintain the capital structure, given our build program. So, I don't expect to have to announce, at some point, that earnings are lower because of further dilution.

Can you talk a little bit about -- again, I'm a little confused with this Cantor Fitzgerald arrangement. Do they handle your dividend reinvestment plan? Can you remind us how much that is and whether that would be fulfilled through that?

No, this is Eliot. They cannot hander handle our dividend reinvestment plan which, of course, has been in place for a number of years and we have the option to both issue original issue stock or acquire shares on the market. That is separate and distinct from this continuous equity placement program.

Our dividend reinvestment plan I believe takes in about $40 million a year, a little less than that if we choose to use original issue shares for the capital that comes in. Again, the continuous equity program, using Cantor Fitzgerald as our agent, is separate and distinct from that. They are our agent with us deciding when and how much equity we wish to place.

I apologize but I really need to sort of stop there and just indicate again that again our guidance issued for the year fully reflects the compensated equity that we believe we will need to put into the balance sheet this year. Included in that will, of course, be what we might issue through Cantor Fitzgerald or other mechanisms.

I want to make sure if I heard that number properly. It was 40 million of dividend reinvestment of the new issue stock over the course of 2004?

It's probably closer to the 30.

It varies, obviously, with optional cash payments that come in and what we decide to with the money that comes in, whether we go original issue or purchase on the market. But as Erroll said, 30 might be a more realistic number, given what we're currently seeing.

Is there any reason that, right now, there would be an open market purchase as opposed to new issuers (indiscernible) issue currently?

That decision is made on the basis of our view of the market and our cash needs.

I guess, in terms of CapEx, in order to think about the necessity for external financing, given that the Iowa plant is almost basically done here, can you help us a little bit in terms of the lumpiness of the other major CapEx projects in terms of the generation, you know, when the significant dollars are or (indiscernible) those are going to be required?

This is Bill Harvey. If you look beyond the Emery generating station, the lumpiness with respect to incremental generation will come predominantly from one source, that being Sheboygan Falls single-cycle projects that we mentioned earlier. That will entail roughly half $1 million of incremental -- $50 million, $50 million of incremental capital expenditure in '04 and 30 million in '05.

The only other variable outstanding which, is difficult to predict at this juncture, is the extent to which we may invest additional capital in wind development during that time frame but that won't be material in that time frame.

So the Wisconsin facility would require about half $1 billion of capital expenditures during the course of --?

Fifty million '04, 30 million '05.

Fifty? I apologize, 50 and 30.

I stammered and stuttered through that, so the confusion is mine.

Fadulah, total CapEx for '04 is about 700. It's about 600 in '05. Out of debt 700, 475 is maintenance capital in '04 and about 500 in '05. So, once you take out the 50 for the Sheboygan Falls facility in '04 and the 30 in '05, again, what you see left is other AER needs, which is about probably around 80 to $100 million in '04 and about 70 million in '05. Most of that is China, which will use its own cash to fund and build out the portfolio there. China is presently sitting on somewhere between 70 and $90 million worth of cash right now as we speak. So, that would be expended to build out the portfolio as we have discussed over time there.

I guess one last thing -- AER, I'm wondering about any potential divestitures of property that could occur during the remainder of 2004.

Obviously, we have already stated that we would be divesting Whiting, our shares in Whiting. Other than that, we've made no announcements about any divestitures or change in strategy within AER.

Asher Kahn (ph) with SAC Capital.

Good morning and congrats on a good quarter. Can you tell us how the variances for Brazil will be for the remaining three quarters -- that situation stand right now with the increase and everything?

I didn't hear the last part of your question.

I was just trying to get a better sense of what the variances for Brazil would be for the remaining three quarters of the year.

If you recall, last year, Brazil was profitable in-country the entire year. We certainly expect it to be profitable for the entire year again; we expect it to be more profitable. It was profitable at the parent only in the last quarter of the last year. That profitability has continued into the first quarter of this year, and we expect that profitability at the parent to continue for the entire year as well. So, we expect continued improvement in such things as line losses and collections in-country as well.

If I heard right, you said you were exploring your relationship over there. Does that mean an exit, or I was just trying to get a better sense of the terminology used in the conference call at the beginning.

Anyone that has been following us for any period of time understands the challenges we have had in Brazil. We have a partnership there and any of you who are in partnerships or married know that those are often challenging relationships. We have certainly put pressure on our Brazilian partners over the last several years to turn this operation around and to produce quality earnings. They have done so and again, we continue in discussions about what are the appropriate structures to maximize the return on our investment, going forward. But we're having those discussions in the context of improving profitability and improving performance. So, that is not code for exiting Brazil. As we have mentioned on other occasions that we will tend to look at our entire international portfolio, from a holistic perspective. And again, in the short-term, we were interested in getting Brazil to profitability and that has occurred.

Okay. I also just -- not to be it to death, but the Cantor Fitzgerald relationship -- is there timing for that or is it just an open-end commitment?

It is essentially open-ended but again, we have a budget for what we believe we will need to bring onto the balance sheet for common equity. All of the common equity that we intend to issue this year is fully reflected in the guidance that has been issued.

(OPERATOR INSTRUCTIONS). Jay Anderson with Anderson Engineer (ph).

Is there any contemplation for further investment or looking at investment in India, which is (indiscernible)?

You might want to speak up just a little bit.

Okay. I'm trying to discern whether or not there's an interest in further investments outside the U.S. like in India, which is next to China?

let me be candid here. We have been focused, over the last several years, on strengthening our balance sheet. Our access to capital, of course, is finite and what we have seen, in terms of major change, is that the capital needs of our domestic utility are now demanding all the lion's share of our capital. So, I would suggest we probably have a few if any plans or capability to expand our international investment at this time. In fact, the ones that are expanding are using their own cash to do so because of the capital needs of our domestic utility. So, I would not -- we don't have people beating the bushes looking for projects in other countries at the moment.

With no more questions ,this concludes our call today. I would like to take this time to thank you for your anticipation this morning and for your continued support of Alliant Energy. A replay of the call will be available through May 7, 2004 at 800-642-1687 domestic and 706-645-9291 international. Callers should reference conference ID number 6683733. In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the Investors section of the Company's Web site at www.alliantenergy.com/investors later today. If members of the investment community have follow-up questions, they should contact Becky Johnson in Investor Relations at 608-458-3267. Thank you.